Direct-to-consumer tea brand Vahdam Teas achieved significant financial improvement in FY24, cutting its losses by 68% to ₹17.7 crore. While revenue growth was modest at 10.6%, rising to ₹225.2 crore from ₹203.6 crore in FY23, the Delhi-based company tightened its operations and enhanced its unit economics.
Modest Revenue Growth Led by International Markets
Vahdam’s revenue from operations was driven primarily by international markets. The United States remained its largest revenue contributor, accounting for 68.5% of the total operating revenue. Sales in the U.S. rose 12% to ₹154.2 crore, reinforcing its dominance as the brand’s strongest market.
India showed impressive growth, with revenue increasing by 18% to ₹14.84 crore. Europe and other global markets added ₹37.4 crore and ₹18.8 crore, respectively, reflecting steady growth of around 5-6%.
Notably, the company earned an additional ₹10 crore from non-operating activities, which pushed its total revenue to ₹235 crore.
Cost Optimizations Drive Improved Margins
One of Vahdam’s standout achievements was its ability to bring down expenses, leading to better margins:
- Advertising Expenses: Reduced by 18.9% to ₹50 crore, reflecting strategic spending.
- Freight and Forwarding Charges: Dropped by 7% to ₹68 crore, easing operational pressures.
- Cost of Materials: Remained stable at ₹47 crore, showcasing efficient sourcing.
However, employee benefit expenses increased by 18.4% to ₹29 crore, indicating investments in talent to support growth. Other overheads were pegged at ₹58.9 crore.
Expense Control and Profitability
The company’s total expenses fell by 4.7%, amounting to ₹253 crore in FY24 compared to ₹265.5 crore in the previous year. The improved expense-to-earning ratio of ₹1.12 demonstrates better cost management.
Key metrics like ROCE (-13.2%) and EBITDA margin (-4.26%) reflected ongoing challenges, but the steep reduction in losses signals a strong move toward profitability.
Future Outlook
Vahdam Teas’ ability to grow in competitive international markets like the U.S. while controlling costs positions it well for future expansion. As global interest in premium Indian teas continues to rise, the company’s focus on direct sourcing and quality can help sustain growth.
Its progress in FY24 highlights the delicate balance between scaling operations and maintaining financial discipline—a balance Vahdam seems to be mastering.
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