Tata Digital had acquired a majority stake in online grocery company BigBasket at a valuation of $1.8 billion in May last year. This was the largest acquisition for the iconic group in the startup space and is playing a pivotal role in Tata’s digital ambitions. The Bengaluru-based company has also managed some growth (17%) from its consumer-facing biz but its losses surged 4X during the fiscal year ending March 2022.
Innovative Retail Concepts Private Limited, which handles sales and home delivery of groceries for BigBasket’s B2C unit, has posted operating revenue of Rs 7,098.4 crore ($935 million) in FY22, according to its annual financial statement filed with the Registrar of Companies (RoC).
Groceries and household products were the major source of revenue for BigBasket (B2C) constituting 97% of the total operating revenue, which grew 14% to Rs 6,882 crore in FY22 from Rs 6,037 crore in the previous fiscal year (FY21).
The Hari Menon-led company also derives some revenue from advertisements, hosted on its mobile app and website, which formed 2.4% of the operating revenue or worth around Rs 173.2 crore in FY22. However, this revenue was nil in FY21. License, membership fees and sale of scrap collectively recorded an increase of 50% to Rs 43.4 crore in FY22.
Keeping in step with the growth in sales, the total expenses of Innovative Retail also surged 26% to Rs 7,931.8 crore ($1.04 billion as per dollar rate in March) in FY22 from Rs 6,292 crore in FY21. Wholesale purchases have been the largest cost center for the company, contributing 73.2% of the total expenses. The cost of procurement grew 7.9% to Rs 5,807.3 crore in FY22 from Rs 5,382.5 crore in FY21.
Employee benefits was the second major expenditure constituting 9.3% of the company’s overall cost. These expenses shot up 3.1X to Rs 739.2 crore in FY22 from Rs 236.70 crore in the previous fiscal year (FY21). This expense also included share based payments of Rs 191.17 crore which were settled in cash.
As the scale grew, the cost of transportation and subcontractors charges also soared 42.7% and 267.7% to Rs 454.4 crore and Rs 117.20 crore respectively.
Fintrackr’s analysis further found that BigBasket (B2C) splurged on advertising last year which increased 15.8X to Rs 186.5 crore in FY22 from Rs 11.80 crore in the previous fiscal year (FY21). The company spent another Rs 113.7 crore and Rs 78.58 crore on rent & utilities (power, repair, security) along with information technology (IT) and communication in FY22.
In the end, the company’s losses surged 4X to Rs 812.7 crore ($107 million) in FY22 from Rs 202.7 crore in the previous financial year (FY21).
Unlike FY21 when BigBasket had a cash inflow of Rs 58.85 crore, it posted cash outflows of Rs 1,591 crore in FY22 from operating activities majorly due to a steep increase in losses. On a unit level, BigBasket’s B2C arm spent Rs 1.12 to earn a single unit of operating revenue during the last fiscal year.
In FY21, the combined revenue of BigBasket’s B2B (Supermarket Grocery Supplies Private Ltd) and B2C units stood at Rs 12, 595 crore. This includes Rs 6,568 crore from B2B while the remaining from the BC2 arm. While the B2C arm has already crossed the Rs 7,000 crore mark in FY22, the combined entity is likely to see a significant rise in total revenue in the last fiscal year. Its B2B company is yet to file FY22’s results.
That would be in line with the scale up in ambitions after Tata came in. As evident in the hike in ad spends too. However, it is now that the nitty gritty of better warehousing and inventory management is going to matter, areas where a conglomerate like the Tata group can really add value.
With erstwhile competitors like Zomato-owned Blinkit, Zepto, Swiggy Instamart and Dunzo crashing and burning in the quick delivery fight, expect BigBasket to settle in for a breakout year soon.