Flat revenues and cash burn unchanged: What internal documents reveal about Licious' business

Abhay Hanjura & Vivek Gupta, co-founders, Licious

At a time when the founders of Licious – Abhay Hanjura and Vivek Gupta – are talking about how they are putting their meat delivery startup on a profitable path, internal documents that Moneycontrol accessed reveal that their decision has come at the cost of a flattish revenue trajectory even in FY24.

While regulatory filings showed that the Temasek-backed startup saw its top line jump 64 percent from Rs 430 crore in FY21 to Rs 706 crore in FY22, the company’s revenues seemed to have flatlined after that. Reports suggested that Licious had ended FY23 with a revenue of Rs 700 crore, less than half of Rs 1,500 crore that it had initially projected. Five months into FY24, Licious looks to be treading a similar path.

Licious’ monthly revenues have remained in the Rs 62-68 crore range in all the months of FY24 so far. In April, the company had clocked a revenue of Rs 62.9 crore which then reduced by a notch to Rs 62.5 crore in May. While Licious' sales increased slightly to Rs 64.5 crore in June and then to Rs 68.1 crore in July, the spike was short-lived as the company’s revenue moderated back to Rs 62.6 crore in August, internal documents accessed by Moneycontrol showed.

Even as Licious’ business returned to normalcy in August, the company – in its internal communication – said the 8 percent sequential fall last month was only a one time drop because fewer people consumed meat during the festival season. While Licious sounded optimistic about September, it still expects revenues to decline in the coming months too. The business is likely to enter a more stable phase only after Diwali in November, the company said in the documents.

The revenues of the April-June quarter totalled to Rs 189.9 crore which translates to an annualised revenue run rate of Rs 759.9 crore for Licious, based on a back-of-the-envelope calculation. Just like the previous quarter, Licious is likely to end the current quarter with a total revenue of about Rs 180-200 crore, indicating that FY24 is likely to be another year of flat revenue growth for Licious.

“Licious has switched from a growth rate of around 20 percent month-on-month (MoM) to now grow at just around 6-8 percent MoM. That is because capital has become difficult to access and investors are no longer looking at only the topline,” a person aware of the company’s workings said.

The company declined to respond to Moneycontrol’s queries.

To be sure, Licious’ business is a seasonal one and demand for its products fluctuates across the year, largely because of festivals which are days when several people do not consume meat, meaning that the final revenue amount for FY24 could be different.

Accounting for festivals and other days, there are about 100 days in a year where meat consumers prefer not to eat animal meat. To offset the loss in sales from those days, Licious even forayed into the plant-based meat category with the launch of Uncrave last year, but adoption of the product appears to be in the slow lane since there have been no incremental revenue gains.

While Licious believes Uncrave has the potential to bring in additional revenue, the D2C unicorn, which largely sells meat and seafood, apart from ready-to-cook and ready-to-eat products, is also strengthening its offline presence to create more income streams. In June, the startup opened five offline stores across the Delhi-NCR belt and is likely to increase its footprint in the months to come.

The diversification is natural since the online meat delivery market is projected to only be a $80-85 billion opportunity by 2024, up from $40-45 billion in 2019, as per Redseer. Following the pandemic, ordering online has caught on, although costs are almost 50 percent higher compared to the local meat shop, the report added.

Unchanged cash burn

While Licious’ monthly cash burn dropped in some months, it has also seen a spike in the other, remaining largely in the Rs 22-26 crore range. In April, Licious had burnt Rs 25.6 crore which then increased to Rs 26.3 crore in May while the burn reduced in June, it remained stagnated after that. In June, Licious burnt Rs 23.8 crore which was further reduced to Rs 22.1 crore in July and remained there in August, too, the internal documents showed.

On a year-on-year (YoY) basis, Licious’ burn had reduced by around 40 percent, the person cited above said.

Founded by Gupta and Hanjura in 2015, Licious has grown fast and is the highest-funded company in the fresh animal protein business category. The company has raised about $490 million from Vertex Ventures, Bertelsmann India Investments, 3one4 Capital and several others. The Kamath brothers, Boat’s Aman Gupta and others are the prominent angel investors at Licious, which was last valued at $1.5 billion when it raised $150 million in March last year, as per Tracxn, a private markets data provider.

The online meat delivery market is a tough one to operate in. While Swiggy shut its meat marketplace, smaller players like Tendercuts were sold to larger companies.

Apart from local butchers, Licious – which is the largest in the space – primarily competes with Amazon-backed FreshToHome which has raised about $290 million so far.