Kirana commerce platform ElasticRun entered into the coveted unicorn club after raising $300 million from Softbank at the end of the last fiscal year. The company’s valuation surged to over $1 billion in February and has come on the back of a rapid ramp-up during FY22.
ElasticRun’s scale grew 3.5X to Rs 3,813 crore in FY22, according to the company’s annual financial statement with the Registrar of Companies (RoC).
The B2B e-commerce platform aggregates supply from over 400 FMCG brands and provides logistics and warehousing services to rural stores in over eighty thousand villages across 26 states in India. The wholesale trade of goods accounted for 91.5% of the operating revenue which spiked 4.1X to Rs 3,487 crore in FY22. The rest came from logistics and distribution services which increased 36.4% to Rs 326 crore during the last fiscal year.
The company also has made Rs 12.26 crore from interest on fixed deposits.
On the expense front, procurement of FMCG goods turned out to be the largest cost center for ElasticRun which formed 82% of the overall cost. This expenditure soared 4.2X to Rs 3,431 crore in FY22. Logistics and distribution accounted for 10% of the total expenses and increased 74.5% to Rs 417 crore. Meanwhile, ElasticRun’s expenditure on employees grew 2.6X to Rs 202 crore.
With a spike of 3.5X in total expenses, ElasticRun’s losses ballooned 3.7X and stood at Rs 373 crore in FY22. Meanwhile, its ROCE and EBITDA margin improved to -14.52% and -9.44% in FY22.
On a unit level, ElasticRun spent Rs 1.10 to earn a single rupee in FY22.
The fine margins of the kirana commerce business are usually compensated by high volumes, which explains the strong growth and promise seen in ElasticRun. However, like retail business, cost control will be as decisive as volume growth, and adding higher margin segments to the business. The FMCG category is increasingly offering more such opportunities, and when it comes to rural areas, possibly bigger opportunities in higher margin segments as rural incomes increase. Linked intrinsically to overall growth rates thus, and with its huge spread, ElasticRun will be hoping for a great run on the back of strong rural growth for the country as a whole.