What The Financials
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Bengaluru-based gourmet meat startup Licious has reported steady growth in the financial year 2020 by cutting down its losses by 66% to INR 146.3 Cr. The company’s revenue for the year ended March 31, 2020 grew to INR 138 Cr, while its expenses reached INR 283.8 Cr.
While its losses have reduced from FY2019’s INR 438.7 Cr to INR 146.3 Cr, this huge drop is not representative of the growth in business, but rather due to fair value loss on financial liabilities measured at a fair value of INR 376.9 Cr. In FY2020, Licious incurred a fair value loss on the financial liability measured at a fair value of INR 145.2 Cr and a gain on derecognition of financial liability INR 144.7 Cr.
So it would be more pertinent to look at the company’s growth through sale of products rather than the bottomline. Compared to the previous year, Licious’ revenue has increased 75% from INR 78.96 Cr, while the expenses have grown 102% from INR 140.7 Cr.
About 91% or INR 125.3 Cr of the company’s earnings in FY2020 came from the sale of products — meat, seafood, marinades and eggs. This particular component grew by 90% in 2020, compared to 2019, and is a direct indicator of growth for the company.
The rest 9% came through non-operational sources such as interest on investments and finance income. The company also earned about INR 3 Cr as returns on its mutual fund investments, growing 76% from FY2019’s INR 1.7 Cr.
Founded in 2015 by Abhay Hanjura and Vivek Gupta, Licious works in a farm-to-fork model and owns the entire backend supply chain for the products it sells. This also included stringent cold chain control, procurement, processing, storage and delivery of products to businesses and consumers. Last year, the company received a certification of FSSC22000, which is one of the highest food safety certifications in the world.
Supply Chain Spending Remains Low For Licious
Despite the supply chain being a key focus, Licious’ spending towards maintenance and infrastructure was low compared to other factors. Its spending on ‘Transportation Distribution Expenses’ grew 120% from INR 5.5 Cr in FY2019 to INR 12.1 Cr in FY2020. Its power and fuel cost increased 76% to INR 3.9 Cr, machinery repairs increased 109% to INR 2.3 Cr and information technology cost almost doubled to INR 5.1 Cr.
Among the major expenses, the company spent about 36.8% (INR 104.3 Cr) of its expenditure on material consumed, while another 22.7% (INR 37.35 Cr) was on employee benefits expenses. The company’s advertising spending also grew 162% to INR 49.3 Cr to make up for 17.4% of the total expenses made in FY2020.
Licious may see increases in these areas in the coming years as well as it aims to expand its presence to more cities and regions. The company has been raising funding over the last couple of years citings these expansion plans and has managed to increase its presence from seven cities in December 2019 to 14 cities currently.
It has raised about $94.5 Mn till date from 16 investors such as 3one4 Capital, Bertelsmann India Investment, Vertex Ventures, Sistema Asia Fund and others. It has last raised $30 Mn in Series E back in December 2019.
The plan with this funding was to deepen its supply chain operations for key cities such as Delhi, Chennai, Pune, Mumbai, Hyderabad and Chennai. Licious also had plans to strengthen its omnichannel presence and launched new products in the ready-to-eat segment soon after.
Will Licious Inch Towards Profitability In FY2021?
Despite strong growth in FY2020, there are plenty of indications that Licious would have seen an uptick in users as ecommerce services for essential products and meat and groceries boomed.
While the Covid-19 rumours about poultry to human transmission and then the bird flu breakout in late 2020 and in the new year complicated things, Licious claimed to have seen no impact at all in terms of the revenue. The company also said it hired 1,500 people in the months after the lockdown, so it definitely has also increased its spending in FY21. The founders also claimed that the supply chain grew by 80% between March and May last year.
So it will be interesting to see how this reflects on the financials.
“We own and deploy a proprietary supply chain that allows us to monitor, safeguard and control the safety and quality of the product at every stage of procurement, processing, and transportation, right up until it is delivered to the customer’s doorstep,” the company’s spokesperson had previously told Inc42.