Wingreens Farms, a packaged foods brand, saw its net loss nearly double to INR 180 crore in the last financial year, up from INR 93 crore in FY22. This substantial increase in losses was primarily driven by a significant uptick in expenses, outweighing the growth in operating revenue.

According to information obtained from Tofler, Wingreens Farms, the Gurugram-based company, reported a 50% increase in operating revenue for the fiscal year 2023, reaching INR 307 crore. This is in contrast to the INR 205 crore reported in the preceding year, as per regulatory filings.

Total expenses surged by 73% to INR 491 crore in FY23, primarily driven by an increase in the cost of goods sold and elevated advertising and promotional expenses.

In the fiscal year ending in March 2023, Wingreens Farms allocated INR 114 crore to marketing costs, representing over a fifth of its total expenditures. This marked an increase from INR 63 crore in FY22.

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Founded in 2011, the Peak XV Partners-backed company has shifted from a direct-to-consumer (D2C) strategy to focus more on offline channels to enhance unit economics.

Arjun Srivastava, the Co-Founder and deputy managing director of Wingreens Farms, explained that the losses in FY23 expanded due to an “aggressive direct-to-consumer (D2C) push” implemented across all the company’s brands.

“We soon realised that unit economics did not favourably support a D2C strategy and we put D2C on hold and focussed on other channels. As a group, 70% of our revenue comes from offline channels – modern trade and general trade. We have also made very good progress in quick-commerce channels which are growing at a fast pace,” Srivastava said.

The company is currently in the process of raising $10 million (around INR 82 crore) in a bridge round of funding, with a valuation of around $205 million.

According to filings with the Registrar of Companies (RoC), Wingreens Farms has so far received INR 62 crore as part of this round, including contributions from existing investors such as Peak XV, Investcorp, Omidyar Networks, and the Grand Anicut Fund of Anicut Capital.

Cofounders Arjun Srivastava and Anju Srivastava have also participated in the round.

In addition to the Wingreens brand, the company also holds the Raw Pressery juice brand, the Saucery gourmet dips brand, and the Postcard packaged snacks brand. It acquired Raw Pressery in January 2021 and Postcard in April 2022.

Meanwhile, Price Waterhouse, the company’s auditor, has raised concerns about specific accounting practices in its FY23 results, particularly regarding the goodwill recognized by the firm for Postcard. The auditor observed the identification of a “material weakness in the operating effectiveness of the company’s internal financial controls over financial reporting as of March 31, 2023.”

Responding to a query on the note, Srivastava said, “Auditors have raised concern over the fall in revenue of our newest addition to the portfolio – Postcard. The Postcard brand and business was purely a D2C business. Post acquisition, we took a call at the group level to put a pause on D2C, because the unit economics were negative. Postcard business was put on a temporary hold”.

“We plan to bring Postcard back in a different avatar with an offline business model. We are clear that there is intrinsic value in the brand and the business, and we have plans to relaunch it in the near future,” he added.

Looking ahead, Srivastava mentioned that for the current financial year, the company has opted to consolidate all its acquisitions and focus on achieving profitability at the EBITDA level (earnings before interest, taxes, depreciation, and amortization).