WayCool is one of the companies under the radar that has scaled up well. While Ninjacart dominates the narrative in the fresh produce supply chain space, WayCool emerged as the largest revenue making entity in FY19 with a topline of Rs 193.6 crore.
And, the Lightbox-backed firm is likely to be ahead in terms of revenue among its peers in FY20 as well. WayCool’s revenue from operations has scaled up 41% to Rs 273.2 crore in FY20 from Rs 193.6 crore as the company onboarded more clients on its agri-products supply chain platform.
While the company has managed to push its collections, the margins have not improved and as a result, the company posted a loss of Rs 97.3 crore in FY20, registering an upsurge of around 81% as compared to losses of 53.8 crore during FY19. EBITDA margins worsened from -21.8% to -29.7% in FY20 during the same period.
The increase in supplies is evident from the surge in the purchase of stock materials by the Chennai-based company. Such costs grew by 41.6% from Rs 191 crore in FY19 to Rs 270.4 crore in FY20. WayCool claims to have a network of 40,000 farmers across India
The purchase of stock in trade is the single biggest cost factor for WayCool, accounting for 72.1% of the total expenditure incurred by the company. Employee benefit expenses also shot up, growing 2.2x to Rs 34.1 crore in FY20 as compared to Rs 15.3 crore spent on the same during FY19.
Waycool claims to handle 350+ tonnes of food products per day, across 8,000 clients and expenditure on the packaging and related materials also account for substantial share for the total expenses. These costs on material consumed and secondary packaging have increased by 84% from Rs 10.76 crore in FY19 from nearly Rs 20 crore.
Another Rs 10.5 crore was spent on warehouse facility management and other related expenses and costs on advertisement grew by 41% to Rs 2.4 crore in FY20.
The surge in scale has pushed the total expenditure incurred by the company to increase by more than 51%, from Rs 248.6 crore in FY19 to around Rs 375 crore during FY20. WayCool spent Rs 1.37 to earn a single rupee of operating revenue during FY19.
The pursuit to push sales and increase the overall scale of the business came at a cost as the net cash outflow from operations grew by more than 67% to Rs 103.6 crore during FY20 as compared to cash outflows of Rs 62 crore in FY19.
To bolster its operations, WayCool also raised $37.5 million in equity and debt funding led by LightBox Ventures in FY20. Entrackr had exclusively reported the company’s financing that also saw the participation of Dutch development bank FMO and LGT Lightstone Aspada.
The company utilised these funds to improve its working capital position, reducing its current liabilities by more than 50% to Rs 47.4 crore while current assets doubled to Rs 182.23 crore. The company held cash reserves of nearly Rs 116 crore ready for deployment by the end of FY20.
After the latest infusion of capital, total assets grew by more than 91% to reach Rs 207.8 crore ast the end of March 2020 while asset turnover ratio saw a slight improvement from 1.71 times in Fy19 to 1.75 times during FY20 on account of increased efficiencies.
The financial performance of WayCool in FY20 appears to be sound. However, it requires controlling expenses to bring more stability in the business in the coming years. If we compare the revenues of the companies in the supply chain space, WayCool is undoubtedly an underdog that has not been talked about much.
Experts tracking the supply chain space point out that WayCool’s business isn’t very tech-oriented. According to them, the platform acts as a sourcing platform for restaurants and large retail stores in south India with limited technological interference in the process.
Unlike WayCool, Ninjacart positions itself as a tech-enabled sourcing platform for retailers that predicts demand and supply patterns. Importantly, WayCool supplies fresh farm produce as well as grains to restaurants and retail stores while Ninjacart only deals in fresh farm produce.
It’s worth noting that restaurants comprise a sizable chunk of business for WayCool and according to a report by foodtech major Zomato, 40% of restaurants may shut down forever due to the pandemic. The adverse effect of the pandemic on restaurants may impact WayCool’s financial projections negatively in FY21.