Tata 1mg, a leading epharmacy owned by Tata Digital, witnessed a significant improvement in its financial performance during the financial year 2023-24 (FY24). The Bengaluru-based startup reported a sharp reduction in losses, narrowing down by 75% to INR 313 crore compared to INR 1,254.8 crore in FY23. This impressive achievement reflects a combined effect of revenue growth and a strategic approach to cost management.
Revenue Growth Outpaces Loss Reduction
While Tata 1mg prioritized improving its bottom line, the company also achieved notable revenue growth in FY24. Operating revenue rose 21% year-on-year, reaching INR 1,967.7 crore compared to INR 1,627 crore in the previous fiscal year. This follows a significant revenue surge of 2.6x in FY23, highlighting the company’s consistent growth trajectory.
Breakdown of Revenue Streams
Tata 1mg’s primary revenue sources include:
- Medicine Sales: The company generates the majority of its revenue through sales of medicines, with this segment witnessing a 25% increase to INR 1,615 crore in FY24 from INR 1,290 crore in FY23.
- Lab and Diagnostics Services: Offering lab tests and diagnostics services contributes to Tata 1mg’s revenue stream.
- Loyalty Program: The company also generates revenue through its loyalty program, incentivizing repeat customers.
- Other Income: Additional income streams contribute a minor portion of the total revenue.
Cost Management Efforts Lead to Reduced Expenses
Despite the rise in operating revenue, Tata 1mg successfully managed to cut its total expenditure by 20% in FY24. The total expense figure reached INR 2,302.7 crore, a significant decrease from INR 2,893.6 crore in FY23. This cost management strategy played a crucial role in narrowing down losses. As a marketplace model, procurement costs are a major expense for Tata 1mg. The company managed to control this expense, with procurement reaching INR 1,290 crore in FY24, representing a 9% increase compared to the previous year.
Employee Cost Management
- Employee benefits saw a modest rise of 5% to INR 373.5 crore in FY24 compared to INR 544.3 crore in FY23.
- Tata 1mg demonstrated significant cost optimization in advertising expenses. These costs declined by 37% to INR 84 crore in FY24 from INR 135.2 crore in FY23, indicating a potentially more targeted marketing strategy.
Tata Digital’s Backing and Future Outlook
Tata 1mg’s journey is intertwined with Tata Digital’s vision for a super app, Tata Neu. The Tata Group acquired a majority stake in Tata 1mg (then 1mg) in June 2021. This strategic investment provided crucial backing for the epharmacy’s growth.
Later in 2022, Tata 1mg achieved unicorn status by raising $40 million in a funding round led by Tata Digital. This further strengthened the company’s financial position and growth prospects. With Tata Digital holding over 66% stake in Tata 1mg’s parent entity at the end of FY23, the association is expected to play a key role in the epharmacy’s future endeavors.
Competitive Landscape and Conclusion
Tata 1mg operates in a competitive landscape populated by established players like PharmEasy, Netmeds, and Practo. The company’s focus on efficient cost management and strategic partnerships with the Tata Group has positioned it well for sustained growth in the epharmacy market. By continuously optimizing its operations and expanding its service offerings, Tata 1mg aims to solidify its position as a leading player in India’s online healthcare ecosystem.
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