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Tractor Junction Expands Threefold in FY23 but Reports Rs 7.5 Crore Losses

Tractor Junction, a prominent rural vehicle marketplace, demonstrated impressive growth, nearly tripling its scale during the fiscal year ending March 2023 (FY23). However, this rapid expansion led to the company recording losses for the first time since its inception five years ago.

According to the consolidated annual financial statement filed with the Registrar of Companies, Tractor Junction's revenue from operations surged by 196.2% to Rs 26.84 crore in FY23 compared to Rs 9.06 crore in FY22.

Founded by Shivani Gupta and Rajat Kumar, Tractor Junction serves as a comprehensive platform facilitating the buying, selling, financing, and insuring of new and used tractors, farm equipment, and rural commercial vehicles. Additionally, it offers valuable information and verified reviews on farm machinery, empowering users to make informed decisions and ensuring transparency in pricing.

The bulk of Tractor Junction's revenue, accounting for 55%, was generated from the sale of tractors, with the remainder coming from service sales. The services segment primarily involves providing advertising services to Original Equipment Manufacturers (OEMs) by generating leads from their website and subsequently selling those leads.

In FY23, the company also generated Rs 1.75 crore in non-operating revenue through interest and gains on financial assets, bringing its total income to Rs 28.6 crore.

However, the substantial growth in revenue was accompanied by a significant increase in expenses. Material costs, constituting 42% of total expenditure, surged over 20 times to Rs 14.54 crore in FY23 from Rs 71 lakh in FY22. Similarly, employee benefit costs more than doubled to Rs 9.35 crore, while advertising and publicity expenses rose by 56.1% to Rs 3.81 crore during the same period.

Consequently, Tractor Junction's total expenditure skyrocketed over fourfold to Rs 34.67 crore in FY23 from Rs 8.28 crore in FY22.

Despite its robust revenue growth, the company reported losses of Rs 7.46 crore in FY23, a significant downturn from the Rs 67 lakh profit recorded in FY22. The impact of cash burn was evident in operating cash outflows, which surged to around Rs 17 crore during the fiscal year.

In terms of financial performance indicators, Tractor Junction's EBITDA margin and Return on Capital Employed (ROCE) stood at -19.41% and -15.36%, respectively, in FY23. On a unit level, the company spent Rs 1.29 to earn a rupee of operating revenue during the fiscal year.

While Tractor Junction's expansion efforts have propelled its revenue growth, the company faces challenges in managing its escalating expenses and restoring profitability amidst intensifying competition in the rural vehicle marketplace.


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