Udaan revenue increased 6X to 5,919 Cr in fiscal year 21

B2B e-commerce platform Udaan remains the leader in the wholesale sourcing space among startups and recently raised another $ 250 million to fuel its growth story.

It looks like travel constraints and disruption to traditional supply chains from Covid 19 created a whole new world of opportunity for the Lightspeed-backed company during the year and Udaan saw its revenue increase by 6X to hit 5,919 crore in FY 21 from just Rs 978 crore in FY20.

The sale of goods traded on the online platform by Udaan was the company’s main revenue driver, accounting for 94.41% of annual revenue. These sales jumped 8.8 times to Rs 5,588.4 crore in FY21 from just Rs 632.7 crore in FY20.

The company also collects platform fees from other platform vendors and this collection increased 7.5% to Rs 188 crore in FY21.

Udaan provides financing services to merchants on its platform and collects interest and processing fees from them. Credit facilities are provided to sellers and buyers who trade on the Udaan platform, bearing interest ranging from 0% to 24% per annum and having a maturity of 7 to 90 days.

The platform’s revenue from financing services grew 96% year-on-year to Rs 34.1 crore, while its loan portfolio grew 46.8% from 217.5 crore to end of year 20 to 319.3 end of year 21.

Providing delivery services (logistics services) and cash collection to its customers generated Rs 59.5 crore while sales of returned goods as scrap brought in an additional Rs 33.7 crore for B2B Unicorn during exercise 20-21.

The company had raised $ 280 million at the start of the fourth quarter of FY21 as it was operating at an exponential scale during that period and filled orders 8 times over the corresponding quarter of FY20.

Purchasing commercial inventory from manufacturers is the most important cost center for Udaan, accounting for 63.3% of its annual costs, with FMCG being its largest product line. Cost of goods sold increased in line with sales, up 8.5 times to Rs 5,531.7 crore in FY21 from Rs 650.3 crore in FY21 20.

At the start of FY21, Udaan had fired around 1,000 contract workers at the height of the first wave of the pandemic to conserve capital. He eventually hired more for the remainder of the year as order volumes surged and contract labor costs rose nearly 3% to Rs 620.5 crore.

The Bengaluru-based startup’s personnel costs doubled during this hyper-growth phase, with personnel costs being the second largest expense, accounting for 10.6% of its total costs. Employee benefit payments doubled from Rs 430 crore in FY20 to Rs 923.5 crore in FY21 and included ESOP payments of Rs 240 crore (i.e. say nearly 26% of salaries paid).


Overall, the six-year-old company incurred Rs 8,742 crore in total expenditure in FY21, 2.4 times more than Rs 2,675.2 crore booked in FY 20. At the level Unit, he spent Rs 1.48 to earn a single rupee of operating income, improving by 60.6% from Rs 3.76 spent for the same in FY20.

The combination of increased operational efficiency and sales growth has helped the company reduce its annual losses by 1.4% year-on-year to Rs 2,482.3 crore in FY21, even with a scale increase of 8.8 times. EBITDA margins improved significantly from -226.3% in FY20 to -37.3% in FY21.

Is Udaan a market place?

While those numbers look impressive, its income statement indicates that this is a stocks game, not a market. This is also evident in his market fee collections which contributed barely 3% of Udaan’s total income.

We understand that food and FMCG contributes around two-thirds of Udaan’s sales and that 100% of foreign direct investment (FDI) is allowed in food-focused B2B and B2C e-commerce games. . Still, it’s surprising that over 94% of Udaan’s sales come from the food and FMCG verticals. The company has changed Rs 5,588.4 crore in revenue from merchandise trade (via inventory driven play) in FY21.

Udaan declined to comment on the story.

Even if Udaan were to claim that the pandemic resulted in exceptional growth in its food and FMCG business which together contributed over 94% of its total collection in FY21, that will not detract from the premise of the inventory-driven model as the company generated around 65% of its revenue through the sale of traded goods in FY2020 as well.


Until FY19, the sale of traded goods was not a significant part of Udaan’s income, and its operating income could not exceed Rs 50 crore. Operating income then rose sharply, increasing by around 21X to Rs 978 crore in FY20, with the sale of merchandise (Rs 638 crore) contributing most of the upsurge.

The business model, although it is a ticket to high revenue, is a low-margin business unlike the market model, once it reaches scale. It should be interesting to see what made Udaan go all-in on the business model, while apparently allowing the market model to catch up later, or maybe even give up in time?

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