Delhivery CEO says ‘no conflict’ between growth, profits, Mensa spreads its wings

Every Indian startup that has listed on the stock markets so far has faced one question from investors – how does it plan to turn a profit? Delhivery, the latest startup to become a public company, said on Monday that its revenue in the March quarter more than doubled from last year to Rs 2,071 crore, while net profit remained flat at Rs 119.8 crore. Earlier today, its CEO and CBO told us “growth and profits are not conflicting objectives” for the company.

Credit: Giphy

Also in this letter:
■ Mensa Brands expands global footprint amid downturn
■ Attero to spend $1B on battery recycling plants amid EV boom
■ ETtech explainer: What are Esops?

Delhivery can grow without compromising on profits, says CEO

Sahil Barua

Delhivery CEO and cofounder, Sahil Barua

Delhivery does not see its planned growth coming at the cost of profits, the company’s senior management told us on Tuesday, a day after it reported its maiden earnings.

Catch up quick: The Gurugram-based startup, which listed on the bourses last week, more than doubled its revenue from operations to Rs 2,071 crore in the quarter ended March 2022, from Rs 1,031 crore in the same quarter a year ago.

It reported a net loss of Rs 119.8 crore, nearly the same as in the same quarter a year ago.

Public-market investors have been wary of new-age firms’ ability to show profits or a path to profitability.

Yes, but: Delhivery cofounder and chief executive officer Sahil Barua and Sandeep Barasia, the chief business officer, told ET in a post-earnings call that its operating leverage would kick in even as it continues to chase growth.

“Growth and profits are not conflicting objectives for us at an operating level. The challenges that investors rightly have is if you are losing money at the unit level,” Barua said.

He added that the company is better placed to face inflationary pressure on both fronts – fuel and labour. It has passed on the fuel price hike to its business to business (B2B) clients while it is able to absorb the cost better in its B2C business, he said.

Gig workers turn scarce: On May 11 we reported that an acute shortage of delivery personnel is emerging as a major concern for online platforms.

Zomato, Swiggy and Zepto, among others, are seeing delivery timelines being stretched as workers battle rising fuel prices and overall inflation, with some even choosing to return to pre-pandemic jobs.

Mensa Brands expands its global footprint amid downturn

Ananth Narayanan

Ecommerce roll-up platform Mensa Brands, founded by former Myntra CEO Ananth Narayanan, is aggressively expanding into international markets including the US, Middle East and Canada.

Growing in a downturn: The expansion comes after Mensa hit a net revenue run rate of Rs 1,500 crore ($200 million) in its first year of operations. Net revenue is the sale value of goods excluding returns and discounts.

Narayanan told ET that over 30% of the company’s revenue now comes from markets outside India, and that 50% of its brand portfolio is available outside the country.

Mensa already operates 20 online brands and will look to add another 20 more, he said.

Secret sauce: Narayanan described the company’s technology as the “secret sauce” that has helped it achieve scale with positive unit economics.

Narayanan also said he expects acquisitions to get cheaper as funding dries up, especially in the rollup commerce space, which received record seed funding rounds in 2021.

Roll-ups in a tight spot: Mensa’s trajectory has diverged from those of other companies in the ecommerce roll-up space since those heady days, including that of Thrasio, the US company that pioneered the business model in 2018.

In early May we reported that Thrasio may review its ambitious India strategy amid a global shake-up at the firm, which included replacing its CEO.

While many such companies in India started out with the same objective and similar funding rounds, well-funded ones such as Mensa Brands and Globalbees have cornered a substantial chunk of investments and acquired a plethora of brands, as we reported on April 20.

This has left smaller players such as Upscalio, Goat, 10Club, Powerhouse91, Evenflow and Bzaar struggling to catch up.

India’s Attero to spend $1B on battery recycling plants amid EV boom


India’s biggest electronic recycling firm Attero Recycling will spend $1 billion to set up plants across Poland, Ohio and Indonesia as demand for electric vehicles (EVs) explodes worldwide, CEO Nitin Gupta told Reuters.

Attero was started in 2008 by Nitin and Rohan Gupta. It is backed by the World Bank and serves clients such as Samsung Electronics and Hyundai.

Big goal: Attero, which recycles lithium-ion battery waste, plans to ramp up its processing capacity from 11,000 tonnes to 30,000 tonnes by 2027 — about 15% of the world’s demand for lithium, cobalt and graphite.

Start dates: Attero’s factory in Poland will be operational by the fourth quarter of 2022, Ohio in the third quarter of 2023 and Indonesia by the first quarter of 2024, the company said. Investments in the factories will be made mainly through internal accruals.

Tweet of the day

ETtech Explainer: What are Esops?


Gone are the days of conventional salary packages. Employees, especially those at tech companies and startups, are increasingly demanding stock options (Esops), through which they can own stakes in the companies they work at and (hopefully) benefit from their growth.

What are Esops? Esops are contracts that allow employees to buy a set number of the company’s shares at an agreed-upon price. Esops have a vesting period, during which they cannot be “exercised”, or turned into shares. This means employees need to work at a company for a certain number of years before they can benefit from Esops.

This assumes, however, that the company will do well in the future. If its valuation erodes significantly, Esops can quickly become worthless.

Why are they offered? Companies mainly offer Esops to attract and retain their top talent. They are also used as a tool to instil more ownership among employees for improving performance.

Top Esops in India

Esops in India: In India, many companies primarily offer shares at a heavily discounted rate to their employees. Paytm recently announced an Esop with an exercise price of just Rs 9.

Several Indian startups have issued Esops so far, with Flipkart’s Rs 17,000-crore plan being the largest.

Click here to read the full explainer

Dubai’s Swvl to lay off over 400 employees


Mobility startup Swvl will lay off over 400 employees – about 32% of its workforce – to reduce costs and improve operational efficiency as tech startups continue to suffer amid the ongoing downturn.

Automation: “Such reductions will focus on roles which have been automated by investments in the company’s engineering and product and support functions,” the startup said.

Season of layoffs: Tech companies worldwide have been laying off people amid rising inflation, the Russia-Ukraine war and recession fears. Tech startups in the US laid off over 15,000 people in May alone. In India, startups such as FrontRow, MPL, Trell, Meesho, Unacademy and others have laid off over 7,000 people over the past few months.

With funding shrinking and prices increasing, conditions are expected to worsen in the coming months. Y Combinator, Sequoia and Beenext have already fired off cautionary notes to their portfolio companies.

Today’s ETtech Top 5 newsletter was curated by Zaheer Merchant in Mumbai and Ruchir Vyas in New Delhi. Graphics and illustrations by Rahul Awasthi.

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