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Apna Mart's Meteoric Growth in FY23 Comes with Caveats

In the fiscal year ending March 2023, Apna Mart, a hyperlocal grocery platform targeting smaller cities in India, witnessed an astounding 770% surge in revenue, reaching Rs 32.2 crore compared to Rs 3.7 crore in the previous fiscal year. Founded in 2021 by Chetan Garg and Abhishek Singh, the company operates as a franchise-driven offline grocery and FMCG chain, also offering online ordering services primarily in cities like Jamshedpur, Ranchi, Raipur, Dhanbad, and Asansol, positioning itself as a counterpart to DMart for smaller urban areas.

However, this remarkable growth was accompanied by a significant increase in expenses, driven by aggressive spending on promotions, manpower, and employee benefits. The cost of materials, forming the largest cost component for the company, surged by 809.9% to Rs 31.6 crore, while employee benefit expenses soared to Rs 9 crore, including ESOP costs.


With expanding manpower charges, marketing costs, legal expenses, and other operating costs, Apna Mart's total expenditure skyrocketed to Rs 53.9 crore in FY23 compared to Rs 4 crore in FY22, leading to a substantial bottom-line loss of Rs 21.8 crore against a modest profit of Rs 8 lakh in the previous fiscal year.


The company's operating cash outflows worsened to Rs 23.4 crore negative, while net cash flows stood at Rs 1.8 crore positive. Apna Mart's financial metrics, including EBITDA margin (-66.37%) and ROCE (-449.17%), indicate significant challenges in generating operational profits.


Despite these hurdles, Apna Mart has attracted investor interest, with talks of raising $15-20 million in funding from prominent investors such as Accel and Sequoia (now Peak XV Partners). The company has already secured over $14 million in funding from investors like Accel Partners, Peak XV Partners, Disruptors Capital, Sparrow Capital, and 2 am Ventures, valuing the firm at Rs 397 crore or $48 million.


Looking ahead, Apna Mart faces tough challenges, particularly in maintaining margins and overcoming regional market scrutiny. The founders, with their professional backgrounds, need to navigate carefully, considering the historical failures of retail ventures in the region. Local brands may offer a competitive edge, but the company must ensure product quality meets market standards.


As Apna Mart continues its growth trajectory, its ability to address these challenges will be closely observed, especially as it navigates the competitive landscape of India's smaller cities.


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