Even though Udaan is known to be a B2B e-commerce marketplace, the majority of its revenue during FY19 has trickled in from being a credit provider. The Bengaluru-based firm earned Rs 14.71 crore via interest on loans during FY19, according to its regulatory filings.
This is almost four times higher than what it earned through the sale of goods, licencing, and cash collection fees of Rs 4.27 crore. The company further made Rs 3.81 crore through transportation fees and Rs 2.3 crore through liquidation sale of inventories.
These numbers essentially mean that the largest revenue for the firm were made through credit business, followed by marketplace and logistics fees. Udaan’s financial filing reveals that the firm is essentially a financial service company for traders than a marketplace for supplies. The short term loans and advances handed out by the company stood at Rs 236.25 crore at the end of FY19, increasing 16.75X from Rs 14.11 crore at the end of FY18.
This can be gauged from the breakups of Rs 11.83 crore total operating revenue in FY19. Another possible reason for this tilt towards credit revenues is also because Udaan has been known to be either not charging commissions or providing marketplace services at a discounted price.
Udaan certainly is an outlier in the B2B supplies procurement space through a full-stack model – sourcing-logistics-lending and its ability to raise a staggering amount of capital. It took the shortest duration ~24 months for it to become a unicorn — startups that are valued at $1 billion or higher.
Liquidation of present inventories cost Udaan a lot of money during FY19 as it focused more on providing credit facility to traders. It wrote off assets worth Rs 32.92 crore including advances worth Rs 7.7 crore in the last fiscal.
According to RoC filings, legal charges for the Bengaluru-based firm shot up 17.7X to Rs 20.34 crore in FY19 as compared to Rs 1.15 crore in FY18. Transportation and distribution expenses increased 2.15x to Rs 45.52 crore in FY19 from Rs 21.17 crore in FY18
As expected, total expenses blew up 5.5X to Rs 363 crore in FY19 as compared to Rs 66.03 crore in the preceding fiscal. On employee benefit front, the company spent Rs 47.22 crore, a 3.6X jump from Rs 13.08 crore in FY18. Outsourced manpower cost surged by 8.5X to Rs 85.26 crore in FY19 from Rs 10.04 crore in FY18.
Interestingly, Udaan shelled out Rs 40.62 crore on buyer refunds during FY19 which grew 95X as compared to Rs 43.12 lakhs in the preceding fiscal.
As far as overall losses are concerned, the company recorded a total loss of Rs 338.2 crore during FY19. During FY18, it had posted Rs 59.5 crore loss.
Udaan funded these expenses mostly through the issue of shares to its Singapore-based parent entity which brought in Rs 630.84 crore during FY19 and borrowed another Rs 15.9 crore in the same period.
Udaan, founded by former Flipkart executives Amod Malviya, Sujeet Kumar and Vaibhav Gupta, raised $373 million at a valuation of $2.3 billion in August, after several months of struggle.
It is a horizontal platform offering products across categories, credit and logistics services to retailers all over the country. In contrast, other firms in this space, including the likes of Jumbotail, Moglix and Ninjacart are vertical-focused B2B e-commerce platforms offering products in a specific category. Another established firm that Udaan competes with is IndiaMART, which recently went public. IndiaMART is a horizontal platform, similar to Udaan.
After the B2C e-commerce buzz, recent investor interest has been towards the B2B e-commerce firms and rightly so. Around 14 million online users are powering the $525 billion B2B market, which is set to become a $700 billion industry.