Vahdam Teas losses spike 3.4X in FY23 with flat revenue


Direct-to-consumer (D2C) tea brand Vahdam Teas has posted a flat growth in revenue in the fiscal year ending March 2023 but the company losses soared 3.4X due to a spike in its procurement and advertising costs.

Vahdam Teas’s revenue from operations increased 2% to Rs 204 crore in FY23 from Rs 200 crore in FY22, its consolidated financial statements sourced from the Registrar of Companies (RoC) shows.

Financial FY23

FY22 FY23










Amount in ₹ Cr

Founded in 2015, Vahdam is a d2c brand that procures teas directly from plantations and manufactures and packages them in-house. The sale of tea and related beverages were the two avenues of operating revenue for the Delhi-based company. It also had an ‘other income’ of Rs 8.42 crore from the interest on bank deposits during the last fiscal year.

The United States of America accounted for 67% of the total revenue, whereas Europe and India contributed 17% and 6.3% respectively. According to its website, it has 3 million plus customers across the globe.

Having major sales outside India, the cost of freight and forwarding was the largest cost center for the company, marking up 27.5% of the overall expenditure. This cost increased by 21.7% to Rs 73 crore in FY23 whereas advertising cum promotion cost increased by 7% to Rs 62 crore in FY23.

The cost of procurement of teas, employee benefit cost, sale commissions, legal cum professional fees, and other overheads spiked the total expenditure by 17.8% to Rs 265 crore in FY23 from Rs 225 crore in FY22.

See TheKredible for the detailed expense breakup.

Expense Breakdown

Total ₹ 225 Cr
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Total ₹ 265 Cr
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  • Cost of materials consumed
  • Employee benefit expense
  • Freight and Forwarding
  • Advertising
  • Sales commission
  • Others

Significantly, the audit reports of Vahdam showed qualified remarks by the auditor (S.R Batliboi & Associates LLP). “The holding company’s internal financial controls concerning documentation of approval for the purchase and concerning inventories i.e periodic updation of the bill of materials and reconciliation of standard Vs actual consumption and determination of closing inventories as at year-end were not operating effectively which could result in a potential material misstatement of inventory and cost of materials consumed balance in the financial statements,” the report said.

The flat scale and high procurement as well as freight cost led Vahdam to post a 3.4X spike in its losses which flew to Rs 55 crore in FY23 from Rs 16 crore in FY22. Its ROCE and EBITDA margin worsened to -49% and -23% respectively. On a unit level, it spent Rs 1.30 to earn a rupee in FY23.


FY22 FY23
Expense/Rupee of ops revenue ₹1.13 ₹1.30
ROCE -8% -49%
EBITDA Margin -5% -23%

Besides the rap on the knuckles from its auditor, Vahdam Tea will have to continue to grapple with the two biggest challenges in its business. The cost of procurement and freight. Both require deep expertise and a continuous focus on sweating higher efficiency from existing infra or costs. 

Having said that, the other big risk remains global tastes and trends when it comes to tea, which is seen as a very mature category offering low growth broadly. As a mass market drink usually priced at the lower end of the spectrum in the beverages category, premium teas for richer markets face the challenge of changing demographics as well, as newer users remain harder to find to expand markets. Vahdam has done the obvious by focusing on the premium end, and gone one better with endorsements from Oprah(69 years old) , Ellen DeGeneres (65 years old) and even Mariah Carey(54 years old)  on their site. You will know they have truly cracked it when you see the 33 year old  Taylor Swift join these worthies.  

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