Duroflex revenue touches Rs 900 crore in FY22, slips into losses

Duroflex private limited, which sells mattresses under the labels of Duroflex and Sleepyhead, was in the headlines during FY22 for raising $60 million after a gap of three years.

Backed by Norwest Venture Partners and Lighthouse Funds, the  D2C sleep solution cum furniture company managed to increase its revenue by 57.5% to Rs 893 crore in FY22 from Rs 567 crore in the previous fiscal year (FY21), according to the company's regulatory filings with MCA.

Duroflex offers mattresses, furniture, bed linen, pillows and accessories through its website, offline stores and e-commerce marketplaces such as Amazon and Flipkart. Revenue from the sale of products is the only source of revenue for the Bengaluru-based company. It also earned another Rs 6.86 crore in FY22 mostly from interest on current investments.

The company manufactures rubberised coir, polyurethane foam products and spring mattresses. Thus the cost of materials is the largest cost center for the company constituting around 59% of the total expenses. Such costs surged 67.7% to Rs 545 crore in FY22 from Rs 325 crore in FY21.

The advertisement and promotional expenses for Duroflex grew twofold to Rs 85 crore in FY22 from Rs 41 crore in the previous fiscal year (FY21). It's worth noting that during FY22 (September 2021), the company appointed actress Alia Bhat as its brand ambassador.

Employee benefit expenses for the brand grew 67% to Rs 75 crore in FY22 from Rs 45 crore in the previous fiscal year (FY21). As the scale surged, transportation costs for the company ballooned 2.2X to Rs 57 crore in FY22.

The company added another Rs 78 crore collectively on contract labor and distribution expenses, pushing the overall cost to Rs 929 crore in FY22 from Rs 541 crore in the preceding fiscal year (FY21).

With the surge of almost 57% in their scale, the total expenditure also grew 72% in FY22, and as a result, Duroflex recorded a loss of Rs 32.26 crore in FY22. The company was profitable at Rs 20.49 crore in FY21.

On unit economics, it spent Rs 1.05 to earn a single unit of operating revenue. Due to such a spike in the total expenses, the ROCE and EBITDA margin of the company worsened to -5.43% and -0.67% respectively in FY22.

The company directly competes with Sequoia-backed Wakefit, which crossed Rs 400 crore revenue mark in FY21, Mumbai-based SleepyCat which is backed by DSG Consumer Partners and Samma Capital, Sleep Company, and others. For the record, Wakefit has actress Rashmika Mandanna as its brand ambassador and is targeting Rs 1,000 crore in revenues in FY22.