Libas Achieves Rs 500 Crore Revenue in FY24

Libas, renowned as a direct-to-consumer brand in ethnic and fusion wear, neared Rs 500 crore in revenue during the fiscal year ending March 2024. Despite this growth, a rise in expenditures related to advertising and employee benefits resulted in a significant 64% decline in profits during the same timeframe.

Libas’ Revenue and Growth

Libas saw a 38% increase in its revenue from operations, reaching Rs 487 crore in FY24, up from Rs 352 crore in FY23, according to its financial statement obtained from the Registrar of Companies (RoC).

As a digital-first women’s ethnic wear brand, Libas offers a diverse range of products including kurtis, salwar suits, dresses, and bottoms in various fabrics such as cotton, silk, and georgette. Sales from these products were the only source of income for the company in FY24.

Expense Overview

The substantial growth in revenue came with a sharp rise in expenses, which increased by 45% to Rs 483 crore in FY24, up from Rs 334 crore the previous year. Material costs constituted the largest part of Libas’s expenses, accounting for over 61% of total costs, which increased by 41% to Rs 296 crore.

The company experienced a significant rise in advertising expenditures, which surged by 121% to Rs 42 crore. Employee benefits also saw a substantial increase of 56%, totalling Rs 28 crore. Additionally, shipping costs reached Rs 49 crore. For detailed expense breakdowns, various sources may provide further insights.

Profit and Financial Performance

Due to the sharp increase in advertising and employee costs, Libas reported a 64% drop in profit, falling to Rs 5 crore in FY24 from Rs 14 crore in FY23. The company indicated a Return on Capital Employed (ROCE) of 26.32% and an EBITDA margin of 3.06%. On a per-unit basis, Libas recorded spending of Re 0.99 to generate every rupee in revenue.

Current Financial Standing

By March 2024, this Delhi-based company reported current assets amounting to Rs 269 crore, with inventory representing Rs 154 crore of that total. Notably, its cash and bank balance was reported as a mere Rs 30 lakh.

Investment and Ownership

According to data from various startup intelligence platforms, Libas has secured $18 million in funding from India Advantage Fund. The company’s co-founders, Sidhant Keshwani and Sunil Keshwan, collectively hold 84% ownership of the firm.

Challenges in the Women’s Ethnic Wear Market

The women’s ethnic wear market is highly competitive, yet Libas has managed to approach Rs 500 crores in revenue. Each achievement in this sector requires considerable effort, especially with constantly evolving consumer trends. Libas faces significant challenges ahead if it aspires to improve its profit margins. The journey to recovery is not straightforward, as tough decisions lie ahead regarding exports, offline strategies, and advertising cutbacks. Unlike many fashion brands that have faced challenges, the ethnic wear segment is robust, evidenced by continued saree sales.

Top brands have pivoted towards a premiumisation model after establishing a solid reputation for quality. However, with Libas’s online approach, adapting to these market demands may prove challenging, indicating that the brand will need to make critical decisions shortly.