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Throughout the fiscal year 2022-2023 (FY23), the online pharmacy platform Tata 1mg demonstrated exceptional and steady growth. Notably, 1mg’s growth trajectory has been marked by significant revenue growth without excessive cash burn, suggesting its ability to manage its financial resources efficiently.
The consolidated financial accounts submitted by 1mg with the Registrar of Companies show a tremendous increase in revenue from operations during FY23. The platform’s revenue increased by 2.5 times in FY23, hitting Rs 1,627 crore, up from Rs 627 crore in the previous fiscal year, FY22. This large gain follows the company’s income more than doubling in FY22, when it grew from Rs 309 crore in fiscal year 2020-2021 (FY21). This steady and robust growth demonstrates 1mg’s ability to capitalize on market possibilities, improve its service offerings, and efficiently serve its growing client base.
The performance of Tata 1mg in FY23 under the banner of Tata Digital demonstrates its strategic alignment and successful integration into the Tata Group. The platform’s outstanding financial performance, along with cautious financial management procedures, puts it in a good position for continued expansion and innovation in the competitive online pharmacy and healthcare technology sector.
In FY23, Tata 1mg’s revenue structure emphasized the importance of its product sales, especially medications, which accounted for 79.3% of the platform’s total operating revenue. The revenue earned from product sales increased by 2.1 times in FY23, reaching Rs 1,290 crore. Furthermore, the platform’s services and other operations, which include diagnostics, tests, and consultations, contributed Rs 337 crore to its entire revenue.
Tata 1mg earned Rs 7 crore in interest on fixed deposits in the fiscal year ended March 2023, diversifying its income streams.
According to 1mg’s spending allocation, the cost of materials accounted for 41.1% of total expenses. During FY23, this expense category increased 3.3 times to Rs 1,188 crore. Furthermore, the company’s employee benefit costs and legal and professional fees climbed by 61% and 71%, totaling Rs 354 crore and Rs 94 crore, respectively, in FY23.
These financial insights demonstrate Tata 1mg’s concerted efforts to increase its product and service offerings, manage costs, and invest in human resources and legal assistance, all of which contributed to the company’s significant growth and good financial performance in FY23.
Tata 1mg Management Statics
Tata 1mg displayed careful financial management by cutting its advertising spending by 25% over the previous fiscal year, which amounted to Rs 135 crore. In addition, the company committed Rs 35 crore for IT costs, leading to an overall expenditure of Rs 1,088 crore in FY23.
It’s worth noting that 1mg recorded a net loss on remeasurement of financial liabilities classified as Fair Value Through Profit or Loss (FVTPL) of Rs 668 crore. This accounting entry denotes a non-cash expense.
Despite the company’s outstripping expenditure, losses climbed by 2.2 times to Rs 1,254 crore in FY23. However, eliminating the expenses associated with FVTPL’s financial liability, the company’s profit and loss statement would indicate improved performance.
During FY23, 1mg invested Rs 1.78 to earn a unit of operating income. This data highlights the company’s efforts to control costs and increase operational efficiency.
Tata 1mg was spun out from Healthkart in 2015 and will be absorbed by Tata Digital in mid-2021. Following the acquisition of a controlling stake, Tata Digital invested around $40 million in the company, helping it to become a unicorn—a privately held startup with a valuation exceeding $1 billion. According to Tata Sons’ statutory declaration, the firm committed Rs 720 crore to gain a 62.97% stake in 1mg.
Big Basket Quarter Results in FY23
BigBasket, Cult.fit, and 1mg are among the three unicorns in Tata Digital’s portfolio. However, the other two unicorns, like 1mg, are experiencing financial losses.
The decision to invest in and promote startups like 1mg is consistent with Tata Digital’s aim of extending its presence in the digital realm through partnerships with innovative enterprises across industries. While some firms may be losing money right now, the goal is frequently to harness their technology and client base to promote future development and profitability.
BigBasket’s business-to-consumer (B2C) sector spent approximately Rs 9,000 crore in FY23, but generated Rs 7,434 crore in sales. Similarly, Cult.fit invested over Rs 1,000 crore to generate Rs 216 crore in revenue in FY22. Cult.fit’s audited financial statements for FY23 performance are still pending.
Tata 1mg looks to have a higher potential for attaining profitability or lowering losses. This trajectory could be supported by Tata Digital and the Tata Group, as well as changing market conditions. Consolidation is occurring in the digital domain in sectors such as healthcare and e-commerce, which may result in the withdrawal of weaker businesses and the strengthening of more resilient ones. Companies with a strong strategic position and financial backing, such as 1mg under Tata Digital’s umbrella, may have an edge in working toward a more sustainable financial position as competition tightens.