Accel Partners-backed B2B marketplace for custom manufacturing Zetwerk has scaled at a rapid pace in its second year of operations. In FY20, the infrastructure company has recorded more than 20X jump in its operating revenue. Its topline grew from Rs 16.45 crore in FY19 to nearly Rs 331 crore in FY20.
Zetwerk earned 89% of this income through the manufacturing of fabricated or machined metal products and tools and the rest 11% was collected through the construction and maintenance of water canals, reservoirs including irrigation systems.
The whopping surge in the scale of the three-year-old firm was well reflected in its expense sheet as well. Zetwerks’s total expenditure shot up 17X from Rs 21 crore in FY19 to nearly Rs 360 crore in FY20.
Expenses incurred in the purchase of raw materials and stock in trade stood out as the biggest cost factor for the company, making up nearly 80% of the total expenses. Such costs increased 19.6X from Rs 14.6 crore in FY19 to Rs 286.6 crore in FY20.
To keep up with the rise in the scale, the company outsourced a chunk of job work, which led to subcontracting costs shooting up 48X to Rs 21.2 crore in FY20 as compared to Rs 44.2 Lakhs in FY19. Further, employee benefit expenses also grew 7.9X to Rs 27.92 crore during FY20 from Rs 3.52 crore in FY19.
Due to the nature of its business, Zetwerk’s cash burn ballooned to accommodate growth. Net cash outflow from operations grew 7.72X to Rs 115.3 crore in FY20 from Rs 14.92 crore in FY19.
While its losses grew 6.5X to Rs 29.05 crore in FY20, it has managed to improve its EBITDA margin drastically from -25.23% in FY19 to -5.23% for the fiscal ended in March 2020.
Zetwerk funded the increased cash burn through its equity and debt financing. The company raised Rs 224 crore through issue of preference capital and borrowed another Rs 137.64 crore during FY20. A large portion of these loans was working capital loans for projects undertaken last year and Zetwerk paid a pretty penny as a finance cost. Such costs grew 40X to Rs 11.3 crore in FY20 as compared to Rs 28.5 lakhs spent on the same in FY19.
Zetwerk’s assets grew 5.5X from Rs 77 crore in FY19 to Rs 424.08 crore at the end of fiscal ended in March 2020 with its asset turnover ratio improving from 0.43X in FY19 to 1.32X in FY20.
It’s worth noting that Zetwerk had also raised a $21 million Series C round in July this year. Entrackr had exclusively reported the fundraising that veiled Zetwerk in the north of $243 million.
Zetwerk’s financial performance in FY20 has been impressive with a major leap in its revenue. If we compare its topline from other growth-stage startups in the B2B and B2C domains, Zetwerk seems to have solid business metrics. The drastic improvement in its EBITDA margin is a good sign for a company that is just three years old.