Tata 1mg Achieves Remarkable Growth: FY23 Revenue Soars 2.5X to Impressive Rs 1,627 Crores

Tata 1mg Achieves Remarkable Growth: FY23 Revenue Soars 2.5X to Impressive Rs 1,627 Crores

Online pharmacy platform 1mg has exhibited impressive and sustainable growth throughout the fiscal year 2022-2023 (FY23), a period that marked its first full year operating under Tata Digital. Notably, 1mg’s growth trajectory has been characterized by substantial revenue expansion without excessive cash burn, indicating its ability to efficiently manage its financial resources.

1mg’s consolidated financial statements, as submitted to the Registrar of Companies, reveal a remarkable surge in revenue from operations during FY23. The platform’s revenue spiked by 2.5 times, reaching Rs 1,627 crore in FY23, up from Rs 627 crore in the preceding fiscal year, FY22. This significant growth follows the company’s doubling of revenue in FY22, when it increased from Rs 309 crore in the fiscal year 2020-2021 (FY21). This consistent and robust growth underscores 1mg’s ability to capitalize on market opportunities, enhance its service offerings, and effectively serve its expanding customer base.

1mg’s performance in FY23, under the umbrella of Tata Digital, showcases its strategic alignment and successful integration within the Tata Group. The platform’s strong financial performance, combined with prudent financial management practices, positions it favorably for continued growth and innovation in the competitive online pharmacy and healthcare technology sector.

1mg’s revenue structure in FY23 showcased the prominence of its product sales, primarily medicines, which contributed to 79.3% of the platform’s total operating revenue. The revenue generated from product sales saw a substantial growth of 2.1 times, reaching Rs 1,290 crore in FY23. Additionally, the platform’s services and other operations, encompassing services like diagnostics, testing, and consultations, contributed Rs 337 crore to its overall income.

In the financial year ending March 2023, 1mg also earned Rs 7 crore from interest on fixed deposits, diversifying its income streams.

1mg’s expenditure distribution revealed that the cost of materials constituted 41.1% of the overall expenses. This expense category surged 3.3 times to reach Rs 1,188 crore during FY23. Furthermore, the company’s employee benefit costs and legal cum professional expenses increased by 61% and 71% respectively, amounting to Rs 354 crore and Rs 94 crore in FY23.

These financial insights highlight 1mg’s concerted efforts to expand its product and service offerings, manage its costs, and invest in its human resources and legal support, all contributing factors to its substantial growth and solid financial performance during FY23.

1mg demonstrated prudent financial management by reducing its advertising spending by 25%, which amounted to Rs 135 crore during the previous fiscal year. The company also allocated Rs 35 crore towards its IT costs, contributing to an overall expenditure of Rs 1,088 crore in FY23.

It’s important to note that 1mg reported a figure of Rs 668 crore as a net loss on remeasurement of financial liability designated at Fair Value Through Profit or Loss (FVTPL). This accounting entry represents a non-cash expenditure.

Despite the company’s scale-outpacing expenditure, its losses increased by 2.2 times, reaching Rs 1,254 crore in FY23. However, when excluding the expenses related to the financial liability at FVTPL, the company’s profit and loss statement would show an improved performance.

On a unit level, 1mg spent Rs 1.78 to earn a unit of operating revenue during FY23. This information underscores the company’s efforts to manage its expenses and improve its operational efficiency.

1mg was separated from Healthkart in 2015 and later integrated into Tata Digital in mid-2021. Following the acquisition of a majority stake, Tata Digital injected approximately $40 million into the company, contributing to its transformation into a unicorn—a term used to describe a privately-held startup with a valuation exceeding $1 billion. According to mandatory disclosure by Tata Sons, the conglomerate invested Rs 720 crore to secure a 62.97% ownership in 1mg.

Tata Digital has built a portfolio that includes three unicorns, namely BigBasket, Cult.fit, and 1mg. However, similar to 1mg, the other two unicorns are also experiencing financial losses.

The move to invest in and support startups like 1mg aligns with Tata Digital’s strategy of expanding its presence in the digital space by partnering with innovative companies in various sectors. While these startups might be incurring losses at present, the aim is often to leverage their technology and customer base to drive growth and profitability in the future.

In FY23, BigBasket’s business-to-consumer (B2C) segment expended nearly Rs 9,000 crore to generate Rs 7,434 crore in revenue during the same fiscal year. Similarly, Cult.fit invested around Rs 1,000 crore to attain revenue of Rs 216 crore in FY22. The audited financial statements for Cult.fit’s performance in FY23 are still pending.

1mg appears to have a relatively stronger potential for achieving profitability or reducing losses. This trajectory could be aided by the support from Tata Digital and the Tata Group, as well as the evolving market dynamics. The digital space in sectors like healthcare and e-commerce is undergoing consolidation, which could result in the exit of weaker players and the strengthening of more resilient ones. As competition narrows down, companies with a solid strategic position and financial backing, such as 1mg under Tata Digital’s umbrella, might have an advantage in working toward a more sustainable financial position.