Moglix improves unit economics; spent Rs 1.22 to earn a single rupee in FY19

B2B e-commerce firms have garnered the interest of investors over the last few years due to its potential to burn less cash when compared to B2C e-commerce companies. One such startup is vertical B2B e-commerce start-up Moglix which is an industrial good marketplace. During the financial year FY19, Moglix saw a high jump in revenue and expenses even as it improved its unit economics.  

The company clocked Rs 217 crore in revenue from operations during FY19, a 3.5X jump from Rs 62.4 crore in FY18, as it ramped up the scale of its B2B industrial procurement services. Almost 97% of Moglix’s revenues were made through the sale of industrial equipment and supplies, while the remaining came from the commission on sales on its platform and other ancillary IT related services.

The firm’s overall expenses for FY19 swelled up 3X to Rs 265.8 crore from Rs 91 crore spent during FY18. Despite that, the company improved its unit economics. Moglix spent around 

Rs 1.22 to earn a single rupee of operational revenue as compared to FY18 when it spent Rs 1.46. This shows a 16.4 % improvement in the unit spending for the industrial procurement firm amidst countrywide manufacturing slowdown.

Total loss for the year ending March 2019 grew only 68% to Rs 48.08 crores from Rs 28.6 crore in FY18 as compared to the aforementioned 3x rise in total expenses.

According to the company’s regulatory filings, purchase of stock in trade went up in the direction of revenues and rose 3.6x to Rs 213 crore in FY19 from Rs 62.4 crore. Buying the stock of industrial supplies was the biggest cost factor and made up 80.13% of the total expenditure incurred by the company. 

The inventory at the end of March 2019 stood at Rs 17.9 crore, up Rs 15.08 crores and trade receivable also increased by Rs 29.21 as compared to FY18

To process these increased number of orders, expenses incurred on employee benefit also grew 2.13x to Rs 35.4 crore in FY19 from Rs 16.6 crores in the previous fiscal. Other expenditure included shipping, packing and transaction expenses which amounted to Rs 12.18 crore as compared to Rs 5.62 crore in FY18. 

Being a B2B player, spends on promotions during FY19 were kept minimal at Rs 5.64 crore, a step down for the same figure as compared to FY18.

It also pumped capital in the business to fuel the growing scale of the company the last fiscal. Moglix’s Indian entity received Rs 47.7 crores through the issue of capital and sold all its current investments worth Rs 6 crore to pour money in operations. It also raised Rs 19.4 crore through debt capital and incurred finance cost of  Rs 1.2 crore during FY19

Moglix plans to set up industrial distribution centers in 25 major manufacturing hubs across the country. For this, the company raised $60 million in a round led by Tiger Global and Sequoia Capital in July. Other investors of the start-up include Accel Partners, Jungle Ventures, Venture Highway and International Finance Corporation (IFC), among others. 

Moglix offers industrial supplies including electrical, lighting, office stationery, cleaning, housekeeping, among others. The company claims to have an assortment of over 4,50,000 products across more than 30 categories serving over 1,50,000 small and medium enterprises. Its deliveries reach over 25,000 pin codes from a high supplier base of more than 2,000.