OfBusiness closes FY21 with a double jump in sales and a profit of 56 Cr

The capital goods and services procurement platform OfBusiness was the 18th startup to reach the Unicorn milestone earlier this year after raising $ 360 million in two months in consecutive rounds led by Softbank and Tiger Global.

That makes it one of a handful of startups among the 39 to become unicorns that year. While operating profit doubled, profit increased 72% for the fiscal year ended March 2021.

The Delhi-based company recently released its financial results for the most recent financial year and we sifted through the numbers to understand how the company increased its profits during the financial year devastated by Covid.

OfBusiness operating income doubled to Rs 1,748 crore in FY21 compared to around Rs 850 crore in FY20. Around 85.47% of this income comes from the sale of industrial goods and raw materials. Revenue increased 2.2-fold to Rs 1,494.1 billion in FY21 compared to Rs 665.6 billion in FY20.

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OfBusiness also provides credit lines to buyers on its platform and has generated 12.5% ​​of its income from financial services. This income increased 33.7% to Rs 219.3 billion in FY21 compared to Rs 164 billion in FY20.

Contractual and other related operating income also increased 70.4% year over year to Rs 34.6 billion in FY21.

Purchasing of manufactured goods and raw materials, including building materials, chemicals, and agricultural products, has emerged as the largest cost center, accounting for 86.4% of OfBusiness’s total spend in FY21.

The cost of capital goods and materials increased to Rs 1,451.1 billion in FY21 in line with sales and revenue, up 124.7% from Rs 645.7 billion in the previous fiscal year (FY20).

Since OfBusiness also provided line credit services to its customers, the cost of financing is the second largest cost to the six-year-old company. These costs increased 47.4% year over year to Rs 99.8 billion, accounting for nearly 6% of FY21 expenses.

OfBusiness

As the operational volume doubled in FY21, the flow of orders on the B2B procurement platform also increased and as a result, transportation costs increased 94.3% YoY to Rs 17.1 billion.

Overall, the company’s total spending doubled to Rs 1,680 billion in FY21 compared to Rs 815 billion in the previous fiscal year (FY20). At the unit level, OfBusiness spent Rs 0.96 to earn one rupee in FY21.

Even during the fiscal year affected by supply chain interruptions and locks, OfBusiness managed to reduce the average warehouse age by almost 20% from 127 days in FY20 to 102 days in FY21. Annual profit is also up 72.4% to Rs 55.7 billion in FY21 from Rs 32.3 billion in FY20.

of the businessA double increase in sales with a profit increase of over 72% sets OfBusiness apart from other unicorns. Interestingly, Infra.Market was also another competitor in the infrastructure supplier business profitable in FY21 with a 3.5 fold increase in its operating income to Rs 1,243 crore.

The success of these two startups in terms of profitability indicates both the size of the opportunity and the need for a disciplined approach to gaining market share. The favored startup moves such as discounts or other cuts will not work here because the market is simply too big to have any meaningful effect. It is the old-fashioned virtues of more efficient and reliable deliveries, quality of products, and other supporting services that work.

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