ShopKirana, a B2B e-commerce platform backed by Info Edge, faced hurdles scaling its operations in FY24. While gross revenue declined by over 6%, the company successfully narrowed its losses by more than 30%, reflecting a concerted effort to optimize costs amidst challenging circumstances.
Revenue Decline Amidst Operational Adjustments
In FY24, ShopKirana’s consolidated gross revenue dropped to ₹639.16 crore, a 6.26% decline from ₹681.81 crore in FY23, according to its financial statement filed with the Registrar of Companies (RoC). The bulk of its operational revenue—₹637.32 crore—came from product sales, which saw a 6.3% dip.
However, revenue from services grew significantly, soaring 85.29% to ₹1.26 crore. Non-operating revenue added ₹4.2 crore to the overall total, pushing the company’s total revenue to ₹643.37 crore.
Operational Focus: Streamlined Costs
ShopKirana’s cost optimization strategies led to notable reductions across key expense categories:
- Cost of materials: Down 7.14% to ₹627.3 crore.
- Employee benefit expenses: Reduced by 17.65% to ₹35 crore.
- Transportation costs: Dropped 23.57%.
- Other expenses: Fell 24.95%.
This disciplined cost management saw total expenses decrease by 8.81% to ₹698.63 crore in FY24.
Balancing Growth and Sustainability
ShopKirana’s core business model involves connecting retailers and brands via a mobile app to streamline procurement, inventory management, delivery routes, and payments. The platform also offers financial services, including banking and loan facilities, making it a critical enabler for small and medium businesses.
Despite the revenue decline, the company’s efforts to balance cost efficiency with service improvements were evident in the significant rise in service revenue and reduced operational losses.
Financial Metrics and Current Assets
- Loss Reduction: ShopKirana reduced its losses by 30.5% to ₹55.25 crore in FY24.
- Margins: Return on capital employed (ROCE) stood at -69.6%, while EBITDA margin reached -7.85%.
- Unit Economics: The company spent ₹1.09 to earn a rupee in FY24.
- Assets: As of March 2024, ShopKirana reported ₹90.75 crore in current assets, including ₹27.8 crore in cash and bank balances.
Challenges Ahead
While cost reduction measures have borne fruit, ShopKirana’s ability to reignite revenue growth will be pivotal in the coming fiscal years. The decline in product sales highlights potential market pressures or shifts in demand that need to be addressed to regain momentum.
The company’s operational model and expanded service offerings remain strengths, but leveraging these for higher revenue will be key to achieving long-term sustainability.
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