The fiscal year ending March 2021 was a notable one for the largest e-grocer BigBasket for two milestones. First: Tata Digital initiated the process of buying a controlling stake in the company at the end of FY21.
Second: BigBasket’s B2B arm has crossed Rs 6,500 crore revenue threshold in FY21.
While a lot has been written around its acquisition by the 154-year-old Tata group, not much was known about BigBasket’s financial numbers during FY21. Fintrackr has analysed the annual financial statements of its B2B procurement entity Supermarket Grocery Supplies Private Limited (SGSPL) filed with RoC to understand the growth of BigBasket’s wholesale business.
Bigbasket’s B2b arm recorded a 73% growth in its operating revenue to Rs 6,558 crore in FY21 from Rs 3,794 crore in the previous fiscal year (FY20). Revenue from the wholesale of grocery and other household products constitutes 97.5% of the company’s total operating revenue. These collections shot up by 72.4% to Rs 6,395.26 crore in FY21 from Rs 3,710 crore in FY20.
SGSPL also provides services such as advertising on BigBasket platform, and warehousing and also collects commissions from suppliers. All of these services collectively contributed 2.3% to the company’s coffers. Income from these services increased 83.5% to Rs 150 crore in FY21 from Rs 81.64 crore in FY20. The company also sold goods amounting to Rs 13.16 crore as scrap during the fiscal ended in March 2021.
Keeping in line with rising revenues, SGSPL’s expenses shot up 57.5% to Rs 6,983.57 crore in FY21 from Rs 4,433 crore in the previous fiscal year (FY20).
The purchase of traded goods was the biggest cost center for the company contributing 82.8% in the total expenses. This cost of procurement shot up by 65.7% to Rs 5,779 crore in FY21 from Rs 3,488 crore in FY20.
Employee benefit expenses formed only 6.1% of the B2B arms’ annual expenditure and these payments grew by 21.4% to Rs 428 crore in FY21 as compared to Rs 353 crore in FY20. These employee benefits also included share-based payments worth Rs 44.2 crore.
Since the company’s scale has soared over 73%, costs for transportation and subcontractors also increased 36% and 81% to Rs 112.15 crore and Rs 107.71 crore respectively in FY21. These expenses include the cost of transportation, management of supply chain hubs and cost of freight inwards.
The good part is that BigBasket’s B2b arm has achieved impressive growth numbers with close to 50% reduction in advertising and promotional expenses. This cost has shrunk 49.3% to Rs 75.13 crore in FY21 from Rs 148.11 crore in FY20. Clearly, shrinking delivery options for consumers and possibly larger order values during the pandemic helped as the average order value grew significantly.
The cost of packing materials increased 83.3% to Rs 74.6 crore in FY21 while the cost incurred on Information Technology increased 41% to Rs 59.5 crore in FY21 from Rs 42.17 crore in FY20.
Due to an increase in order volume and control of expenses (particularly marketing), SGPL’s losses shrank 32.4% to Rs 413.16 crore in FY21 from Rs 611 crore in FY20. The company also managed to reduce cash outflows by 77% to Rs 242 crore in FY21 from Rs 1,051 crore in FY20.
On a unit level, Big Basket’s B2b arm has spent Rs 1.06 to make a rupee. With the improved margin and good inventory turnover ratio, it’s moving close to profitability.
With FY22 behind us, chances are that while the firm may not move into profits, as the Tata’s clean up the books by capitalising expenses faster like most long term acquirers, the future looks very promising for the firm, having survived the toughest period of the grocery e-com battles. The control on employee costs, besides advertising and promotion, is also a sign the firm has established itself with a core user base, even as broader synergies with various Tata group entities kick in.