By Entrackr
Tata 1mg chased growth during FY22 and FY23 and its collection spiked over two-fold in both fiscal years. But the company appears to have prioritized the bottom line in the fiscal year ending March 2024. As a result, its revenue grew by only 21%, and at the same time it cut down losses by 75% in FY24.
Tata 1mg’s revenue from operations increased to Rs 1,968 crore in FY24 from Rs 1,627 crore in FY23, its consolidated financial statements sourced from the Registrar of Companies (RoC) show.
Income from the sale of medicines formed 81.3% of Tata 1mg’s total revenue which increased 24% to Rs 1,599 crore in FY24. Lab test fees, patient support programme, advertising, shipping, were other revenue drivers for the Gurugram-based firm.
The Prashant Tandon-led company also earned Rs 23 crore from interest, gain of financial assets, and other miscellaneous avenues which pushed its total income to Rs 1,991 crore in FY24.
See TheKredible for the detailed revenue breakup.
Since 1mg operates with inventory, the cost of procurement of medicines accounted for 56% of the overall expenditure. This cost grew by just 8.5% to Rs 1,289 crore in FY24.
Tata 1mg’s spends on employee benefits, information technology, legal, advertising, commissions, packaging, fulfillment, and other overheads took its total cost up by 20.4% to Rs 2303 crore in FY24.
Head to TheKredible for the complete expense breakdown.
- Cost of materials consumed
- Employee benefits expenses
- Information technology
- Legal professional charges
- Advertising promotional
- Commission paid sole buying agents
- Secondary packing
- Others
The decent scale and controlled cost helped Tata 1mg to reduce losses by 75% to Rs 313 crore in FY24 from Rs 1,255 crore in FY23. Its EBITDA margin stood at -10.85% in FY24. On a unit level, Tata 1mg spent Rs 1.17 to earn a rupee in the previous fiscal year.
Cevat: The primary reason for the substantial losses in FY23 was the FVTPL cost (non-cash in nature), which amounted to Rs 668 crore.
Tata Digital acquired a 55% stake in 1mg in June 2021 but since then it gained around 8.5% additional stake in the e-medicine platform. According to TheKredible, Tata Digital currently holds a 63.5% stake in 1mg which was last valued at 1.25 billion. As per Fintrackr’s estimates, its enterprise value to revenue multiple stood at 4.87X.
| EBITDA Margin | -71.66% | -10.85% |
| Expense/₹ of Op Revenue | ₹1.78 | ₹1.17 |
| ROCE | -341.99 | NA |
While the focus on bottomline is understandable as part of a large umbrella like the Tata Group, where freedom is proportional to financial performance,Tata 1mg’s cost control measures have another reason. It is probably no longer worthwhile to acquire customers at a high cost where customers have basically flunked the loyalty test. That has made most e-commerce players a lot more reticent about indiscriminate discounting and the likes in favor of much more data led, targeted campaigns. Of course, with a turkey as large as Tata Neu around, one would expect Tata 1mg to get a lot more leeway however.