Pune-based healthy snacks brand True Elements witnessed a 37% surge in its net loss for the financial year ending on March 31, 2023. During FY23, the startup reported a net loss of INR 18.6 Cr, marking a 1.3X increase compared to the INR 13.6 Cr loss incurred in the previous fiscal year. This substantial rise in losses was primarily driven by a significant uptick in expenses.
Despite observing a growth in operating revenue during FY23, the D2C startup faced a situation where the increase in expenses exceeded the expansion in sales.
In the examined fiscal year, the startup disclosed an operating revenue of INR 57.3 Cr, marking a notable 25.2% rise from the INR 45.8 Cr recorded in the preceding financial year. True Elements generates its revenue by selling products through both online platforms and offline retail outlets.
Taking into account other sources of income, the overall revenue experienced a substantial 31% increase, reaching INR 60.8 Cr in FY23 compared to INR 46.5 Cr in the preceding fiscal year.
Meanwhile, the total expenditure in FY23 saw a significant uptick, soaring over 44% to INR 84.2 Cr from INR 58.4 Cr in the previous fiscal year. The most substantial contributor to the startup’s expenses, at 43%, was the procurement cost. Notably, the cost of materials consumed also surged by over 43%, climbing from INR 25.5 Cr in the previous year to INR 36.5 Cr in FY23.
In FY23, the startup allocated INR 14.4 Cr toward employee benefit expenses, reflecting a notable 36% rise compared to the INR 10.6 Cr spent in the previous fiscal year. Employee benefit expenses encompass employee salaries, PF contributions, gratuities, and other employee-related benefits. According to LinkedIn, the startup currently employs a workforce of 89 individuals.
The most significant surge in expenses for the startup was observed in advertising, with costs soaring by 95% to INR 15 Cr in FY23, compared to INR 7.7 Cr in the previous year.
In terms of unit economics, True Elements expended INR 1.4 to generate each rupee from its operations during the reviewed year. Unfortunately, its EBITDA margin worsened, declining to -32.3% in FY23 from -16.48% in FY22.
In May last year, FMCG giant Marico made a strategic move by acquiring a 54% stake in the startup, the details of which were not disclosed. This substantial equity position was obtained through a combination of primary infusion and secondary buyout. As part of the arrangement, the existing leadership team of True Elements was to maintain its independent management of the brand.
Established in 2013 by Puru Gupta and Sreejith Moolayil, True Elements specializes in providing packaged nutritious breakfast items such as oats, muesli, flakes, and granola. Additionally, the startup offers a range of healthy snacks.
In the Indian market, True Elements faces competition from well-funded international titans like Kelloggs and Quaker, along with emerging startups such as The Whole Truth, Slurrp Farm, and Wingreens Farms.
It’s worth mentioning that Beardo, another direct-to-consumer (D2C) startup under Marico’s ownership, shifted from profitability in FY22 with a profit of INR 70 lakh to a loss of INR 6.1 crore in FY23. During the same period, its operating revenue showed a modest growth of just 12.4%, reaching INR 106.6 crore.