Necessity is the mother of invention and logistics is the soul of every invention. With the ever-increasing ecommerce and exports boom in India, requiring seamless and timely intercity, intracity, and international transfer of goods, logistics is at the core of the growth and continuous movement of various sectors in the country.
Consider this: One off-day can cause losses worth a whopping $146 Mn (INR 1000 Cr) to the $140 Bn worth logistics sector in India.
In this increasingly competitive space, a few startups are causing disruption by introducing revolutionising solutions in the market. As we continue to examine the Indian startup ecosystem closely, we dived into the financials of two of the biggest players in the logistics space in India — BlackBuck and Rivigo — and found some interesting things to ponder upon. The biggest of them all — Delhivery — is prepping for an IPO.
Employee-Friendly Or Not, The Costs Tell It All
Founded in 2014, Rivigo, one of the fastest startups to become a unicorn in India, claims to have a fleet of 2,100 trucks and a network across 150 Indian cities. The company has raised $125 Mn in funding till now and has identified the use case for having its own technology-enabled fleet, which is also its USP to grow in the market.
On the other hand, BlackBuck, which started its operations in 2015, has 120K trucking partners across 300 locations. The startup has raised about $100 Mn in funding. It differentiates itself among both customers and suppliers on the following three big claims — truckload availability, “fairest price ever” in the market, and a “never-before-seen experience” on the platform, in terms of execution.
For the benefit of its 800 employees, BlackBuck spent INR 38.77 Cr ($5.65 Mn) in FY17, which is 6% of its total operational expenses. This was a 336% jump from its INR 8.88 Cr ($1.29 Mn) employee benefit expenses in FY16. The employee expense rate, which is quite less than the industry average of employee expense, doesn’t include expenses on truck drivers.
BlackBuck earns about 15-20% commission for providing business to trucks it hires. It has truck services listed on its platform and does an intelligent match for customers, based on their requirements.
Rivigo, meanwhile, is speculated to have nearly 1,770 employees, on whom it spent INR 74.21 Cr ($10.82 Mn) in FY 17 — 16% of its total operating expenses. In FY16, the company spent INR 17.31 Cr ($2.52 Mn) on employee benefits, as it increased its workforce and also the number of the trucks in its fleet to 2,100.
Income And Expenses: Who Is Running Their Business Better?
Bengaluru-based BlackBuck posted a total income of INR 566.83 Cr ($82.67 Mn) in FY 17, a 597% increase from its INR 81.25 Cr ($11.85 Mn) income in FY16. This was because the company increased its portfolio of services and expanded its operations. The income from operations also witnessed a 623% spike, reaching INR 563.54 Cr ($82.19 Mn) in FY17.
The Gurugram-headquartered Rivigo recorded a total income of INR 401.82 Cr ($58.60 Mn) in FY17, up by 370% from its FY16 income of INR 148.61 Cr ($21.67 Mn). The company reported total expenses of INR 462.64 Cr ($67.48 Mn) in FY17 and an operational income of INR 387 Cr ($56.45 Mn) in the same period.
The total expenses posted by BlackBuck for FY17 were INR 645.6 Cr($94.17 Mn), against INR 97.55 Cr ($14.23 Mn) in FY16.
However, the real game-changer for both the companies in the logistics war is their transportation cost.
Rivigo spent a total of INR 344.64 Cr ($50.26 Mn) in transportation for FY17. Of this, INR 282.5 Cr ($41.20 Mn) was trip expenses and remaining were the expenses on contracted services, with no expenses on cost of freight. The company spent INR 62 Cr ($9.06 Mn) in FY17 on contracted services of its pilots i.e. drivers.
In FY17, BlackBuck reported transportation costs of INR 573.82 Cr ($83.69 Mn), including the cost of loading and unloading — INR 10.36 Cr ($1.51 Mn); cost of other transport — INR 10.79 Cr ($1.57 Mn); and cost of freight — INR 55.26 Cr ($80.61 Mn). These three comprised 96% of the total transportation cost of the company in FY17.
As a truck aggregator, BlackBuck is spending much more than Rivigo (which owns a fleet) on transportation. However, BlackBuck had an edge over its rival in employee benefit expenses and in total income.
Both the startups posted huge losses for FY17. While BlackBuck saw losses worth INR 86.61 Cr ($12.63 Mn) in FY17 compared to INR 16.48 Cr ($2.4 Mn) in FY16, Rivigo suffered INR 137.1 Cr ($20 Mn) losses against INR 5.48 Cr ($800K) in FY16.
Another major difference for the companies were their respective balance sheets. Rivigo, because of fleet ownership, had tangible assets worth INR 302.02 Cr ($44.06 Mn) in FY17. This is huge compared to BlackBuck’s INR 1.305 Cr ($190K) in FY16.
The India Market Opportunity In Logistics
According to Novonous market research, road freight is the largest transportation segment in India, constituting around 63% of the total freight movement across the country.
Inter-city logistics accounts for a massive 95% of road freight movement.
Logistics startups such as 4tigo, Locus, and Loginext are leveraging advanced technologies such as IoT, big data, artificial intelligence, and machine learning to bring innovation and disruption in the logistics sector.
These startups are developing solutions with a view to improving productivity, transparency, end-to-end visibility, warehouse and yard management, fleet management, fuel cost management, customer relations and accessibility, real-time tracking, and accountability.
The Indian logistics sector, which is poised to touch $307 Bn by 2020, has always been crucial to the country’s infrastructure and economic development.
The technology has been a boon as well as a curse. As players like BlackBuck and Rivigo revolutionise logistics for companies and consumers, their efforts are applaudable for making the job easier and faster for truck drivers–the real heroes of logistics.
[This is a part of the What The Financials (WTF) series launched by Inc42 Datalabs. We would be exploring the financial health of Startups and discuss its key metrics of growth, to read more articles click here.]