During the 2015-17 period, there were several intra-city trucking services including TruckSumo, LetsTransport and TruckSuvidha. While the majority of these companies are yet to attain significant scale, Mahindra-owned logistics startup Porter grew its scale 2X in FY20.
Porter’s revenue from operations has doubled for the logistics startup to Rs 274 crore in FY20 as compared to Rs 136.7 crore in FY19.
The spike in revenues was subsequent to its merger with Mahindra’s Orizone business solutions which was approved by National company law Tribunal in April last year. The Mumbai based entity operates as an intracity logistics marketplace across seven cities in India and claims to have more than 1 lakh driver-partners.
Porter distinguishes itself from other new age trucking platforms such as Rivigo and BlackBuck as it operates with a fleet of smaller vehicles: from two-wheelers to mini-trucks and tempos, offering services within cities.
Porter’s 2x growth in scale can also be substantiated by the similar jump in fleet operation costs which grew from Rs 133.06 crore in FY19 to Rs 267.07 crore in FY20. These costs made up the bulk of the expenditure of the company, constituting 70.3% of the total expenditure incurred by Porter in FY20.
To keep up with the growth in scale, the company spent on employee benefits which increased by 70.4% to Rs 47.8 crore during FY20 from Rs 28.05 crore in FY19. Expenditure on advertisements and promotions quadrupled to nearly Rs 10 crore in FY while subcontractor costs grew by 82.6%, adding another Rs 4.2 crore to the expense sheet.
With backing from Mahindra & Mahindra and existing investors, Porter spent heavily to scale up its operations. Its total expenditure grew 2.1X to around Rs 380 crore in FY20 from Rs 180 crore it spent in FY19.
On the unit level, the company spent Rs 1.38 to earn a single rupee on operating revenue during FY20. For the fiscal ended in March 2020, Porter’s loss increased 2.5X to Rs 104.1 crore as compared to Rs 41.4 crore it had lost in FY19. Earlier this year, the company raised Rs 140 crore from Lightstone Global Fund.
During FY20, Porter’s net cash outflow from operations grew by 75.2% to Rs 70.6 crore as compared to cash outflows of Rs 40.3 in FY10. But even with the doubled size of operations, EBITDA margins have remained stable at nearly -28.25% and the company will have to work to improve its operational efficiencies going forward.
Merger with Mahindra’s Orizone executed at the start of FY20 and fundraising through the issue of shares amounting to Rs 69 crore came as a godsend for the logistics startup as subsequent losses had eroded its net worth.
At the end of FY20, the company sported outstanding losses of nearly Rs 240 crore on its balance sheet. Subsequent to the merger Porter’s total assets grew 3.25X to Rs 106.1 crore at the end of FY20 but around 63.7% of these assets are attributable to goodwill and recognition of brand value generated during the merger transaction.