Over the last 18 to 20 months, growth and late-stage Indian startups have increasingly focused on achieving profitability. Many have successfully reduced their losses in FY24, although their growth was limited due to a significant decrease in cash burn. Chaayos has demonstrated this trend, reporting a reduction in losses exceeding 50%, while its operational scale remained steady for the fiscal year ending March 2024.
According to its consolidated financial statement filed with the Registrar of Companies (Roc), Chaayos’ revenue from operations climbed by 4.85%, reaching Rs 248.5 crore in FY24, up from Rs 237 crore in FY23.
The company offers a diverse range of teas and various snacks and beverages, with options for dine-in, takeaways, and online ordering. It operates over 200 outlets across Delhi-NCR, Mumbai, and Bengaluru.
Chaayos’ primary revenue sources include the sales of manufactured products, particularly tea, which constituted 95.32% of its total revenue. This segment saw a 3.1% increase, totalling Rs 236.87 crore in FY24. Meanwhile, revenue from traded goods (including snacks and tea leaves) nearly doubled, skyrocketing by 98.52% to Rs 10.74 crore, although income from services plummeted by 51.89% to Rs 0.89 crore.
Additionally, the company generated Rs 22.7 crore from non-operating sources, elevating its total income to Rs 271.2 crore for the last fiscal year.
On the expense side, Chaayos’ largest cost category, employee benefit expenses, increased by 4.45% to Rs 81.15 crore in FY24. Conversely, the cost of materials decreased by 11% to Rs 76.54 crore. Significant costs also included stable depreciation expenses of Rs 51.83 crore and commissions, which decreased by 4.62% to Rs 26 crore. Miscellaneous expenses contributed Rs 89.69 crore to the company’s overall expenditures.
Ultimately, Chaayos managed to lower its total expenses by 11.07%, bringing it down to Rs 325.21 crore in FY24 from Rs 365.68 crore in FY23.
Due to stringent expense management across various sectors, the company’s losses decreased by 50.6% to Rs 54 crore in FY24. Notably, Chaayos reported a positive EBITDA of Rs 28.35 crore in FY24, with its ROCE and EBITDA Margin at -6.02% and 10.45%, respectively.
On a per unit basis, Chaayos spent Rs 1.31 to generate one rupee of operating revenue in FY24. As of March 2024, the firm reported current assets amounting to Rs 181.42 crore, which includes Rs 89.16 crore in cash and bank balances.
Like many marketers, Chaayos has been heavily investing in premiumisation, even as the distribution between online and offline sales remains fairly balanced. Both strategies present challenges from a margin standpoint; premiumisation pits the company against strong competitors, while online sales often require sacrificing margins.
The firm stands at a pivotal moment, twelve years after its inception. It is a respected brand with a number of unique innovations and experiences, as well as a certain level of scale. However, the pressing challenge is to replicate this success at reduced costs and within a shorter timeframe. The critical question now is whether Chaayos has a strategy in place.
