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Udaan’s revenue shot up 6X to Rs 5,919 Cr in FY21


B2B e-commerce platform Udaan remains the leader in the wholesale procurement space among startups and has recently raised another $250 million to fuel its growth story.

It seems travel constraints and disruptions of traditional supply chains due to Covid 19 created a whole new world of opportunities for the Lightspeed-backed company during the fiscal and Udaan saw its revenues shoot up 6X to Rs 5,919 crore in FY21 from only Rs 978 crore in FY20.

The sale of traded goods on the online platform by Udaan was the leading revenue driver for the company, accounting for 94.41% of the annual revenues. These sales surged 8.8X to Rs 5,588.4 crore during FY21 from only Rs 632.7 crore in FY20.


The company also collects platform fees from other sellers in the platform and such collection grew by 7.5% to Rs 188 crore in FY21.

Udaan offers financing services to traders on its platform and collects interest and processing fees from them. Credit facilities are given to sellers and buyers trading on the Udaan platform bear interest ranging from 0% to 24% per annum and having a maturity period of 7 to 90 days.

The platform’s revenue from financing services grew by 96% YoY to Rs 34.1 crore while its loan book grew by 46.8% from 217.5 crores at the end of FY20 to 319.3 at the end of FY21.

Provision of delivery (logistics services) and cash collection services to its customers generated Rs 59.5 crore whereas sales of returned goods as scrap brought in another Rs 33.7 crore for the B2B Unicorn during FY20-21.  

The company had raised $280 million at the start of Q4 FY21 as it was operating at an exponential scale during that period and fulfilling 8X the orders as compared to the corresponding quarter in FY20.

Procurement of stock in trade from manufacturers is the largest cost centre for Udaan, accounting for 63.3% of its annual costs with FMCG being its biggest product line. Cost of goods sold grew in line with sales, up 8.5X to Rs 5,531.7 crore in FY21 as compared to Rs 650.3 crore in FY20.

At the start of FY21, Udaan had laid off around 1,000 contract staff at the height of the first wave of the pandemic to conserve capital. It eventually hired more during the rest of the fiscal as order volumes multiplied and contract manpower costs grew by nearly 3% to Rs 620.5 crore.  

The Bengaluru-based startup’s employee costs doubled during this hyper-growth phase, with staff costs the second-largest expense, making up 10.6% of its total costs. Employee benefit payments doubled from Rs 430 crore made in FY20  to Rs 923.5 crore in FY21 and included ESOP payments of Rs 240 crore (i.e. nearly 26% of the salaries paid). 


Overall the six-year-old company incurred  Rs 8,742 crore in total expenses during FY21, 2.4X more as compared to Rs 2,675.2 crore booked in FY20. On a unit level, it spent Rs 1.48 to earn a single rupee of operating revenue, improving by 60.6% from Rs 3.76 spent for the same during FY20.

The combination of increased operational efficiency and the growth in sales has helped the firm reduce its annual losses by 1.4% YoY to Rs 2,482.3 crore in FY21 even with an 8.8X surge in scale. EBITDA margins have improved significantly from -226.3% in FY20 to -37.3% during FY21.

Is Udaan a marketplace?

While these numbers seem impressive, its income statement indicates that it’s more of an inventory-led play. This is also evident from its collections from marketplace fees which contributed barely 3% of Udaan’s total income. 

We understand that food and FMCG contribute over 75% of Udaan’s sales and 100% foreign direct investment (FDI) is allowed in food centred B2B e-commerce plays. Still, it’s surprising that over 94% of Udaan’s sales have come from food and FMCG verticals. The company has churned Rs 5,588.4 crore in revenue from the trade of goods (via inventory led play) in FY21.

Udaan declined to comment on the story.

Even if Udaan were to claim that the pandemic had led to bumper growth in its food and FMCG biz which together contributed over 94% of its total collection in FY21, it won’t detract from the inventory led model premise as the company had generated around 65% of its revenue via the sale of traded goods in FY20 as well. 


Until FY19, the sale of traded goods was not a significant part of Udaan’s income and its operating revenue couldn’t cross Rs 50 crore. The operational revenue then took a steep jump, growing around 21X to Rs 978 crore in FY20 with the sale of goods (Rs 638 crore) making most of this upsurge.

The trading model, while a ticket to high topline, is a low margin business, unlike the marketplace model, once it achieves scale. It should be interesting to see what drove Udaan to go full throttle on the trading model, while seemingly allowing the marketplace model to catch up later, or perhaps even give up in time? 

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