Mamaearth vs distributors; PharmEasy’s financials

Honasa Consumer, Mamaearth's parent, addressed recent allegations, labelling them as "misinformation." This and more in today’s ETtech Top 5.

Also in the letter:
■ Deepinder Goyal's job post
■ Nvidia’s surge
■ Seasoned founders rise

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Varun Alagh and Ghazal Alagh, founders, Honasa Consumer

Honasa Consumer, the parent company of Mamaearth, rejected allegations of substantial unsold inventory as "misinformation", following claims made by a key distributors' group.

Driving the news: The All India Consumer Products Distributors Federation (AICPDF) had raised concerns about near-expiry inventory that, it claimed, caused a financial burden of Rs 300 crore for distributors.

Also Read: Honasa Consumer shares plummet to 52-week low on Q2 loss

Honasa Consumer denied this in a filing with stock exchanges.

Tell me more: The company explained that its total inventory in the distribution value-chain stood at Rs 40.69 crore, against the quoted figure of Rs 300 crore.

“Claims from our general trade channel partners pertaining to market schemes pending with the company for settlement are only Rs 4.73 crore as of September 30, 2024 (as against the quoted figure of ~Rs 50 crore of unsettled credit notes by AICPDF),” the filing said.

Yes, but: However, JK Vaishnave, general secretary of AICPDF told ET, “It becomes a huge problem for distributors if the stock expires… We don’t want inventory of more than 15 days. Currently, it is running into several months.”

Overhaul: Mamaearth has initiated a significant restructuring of its general trade strategy, adopting a direct distributor model and phasing out its current super stockist structure.

Due to this move, the company took a beating in the September quarter, reporting a net loss of Rs 19 crore and a 7% on-year drop in operating revenue.

The company’s stock plummeted since the results, falling over 30% in a week. Its market capitalisation fell under $1 billion. It was listed in November 2023 at around $1.2 billion.

Source: BSE

Also Read: Impact of distribution changes higher than expected; taking steps to bring growth back to Mamaearth: CEO Varun Alagh

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Mumbai-based online pharmacy PharmEasy has reported a 15% on-year decline in its revenue for 2023-24 while its net loss halved.

Financials:

• Revenue for FY24 at Rs 5,664 crore vs Rs 6,644 crore in FY23
• Net loss fell to Rs 2,533 crore from Rs 5,212 crore a year ago
• Sales of medicines (goods) for FY24 were Rs 5,008 crore
• Revenue from lab tests and other services stood at Rs 652 crore.

Context: This comes after PharmEasy underwent a major restructuring of its cap table, slashing its valuation by 90% from its 2021 peak of $5.6 billion. Manipal Group chief Ranjan Pai and Prosus Ventures, TPG and Temasek were among investors who pumped in Rs 3,500 crore through a rights issue to service the firm’s debt and restructure the business.

Rising costs: After the restructuring, PharmEasy has prioritised profitability through cost-cutting and steady growth.

• Total expenses this year were Rs 7,255 crore, down from Rs 8,974 crore a year ago, but still significant in comparison to revenue.
• Exceptional costs included Rs 342 crore in early redemption charges for non-convertible debentures.

Also Read:PharmEasy CEO has three-year lock-in, Ranjan Pai to get three board seats

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Zomato CEO Deepinder Goyal

Zomato CEO Deepinder Goyal said on Thursday he received more than 18,000 applications for the post of his chief of staff, which sparked a backlash online throughout Tuesday and Wednesday for asking prospective candidates to pay Rs 20 lakh for the first year. Making such a controversial posting on X got him some flak online.

Tell me more: The Zomato chief later posted on X stating, “This wasn’t just another hiring post. As some people pointed out, the “you have to pay 20 lacs” was just merely a filter.” He explained that charging candidates Rs 20 lakh was never the company’s intention. Instead, it was a way to identify individuals who valued the opportunity without being constrained by financial considerations.

Social media response: Taking a jab at Goyal, users questioned the need for such a filter saying, "There must be many out there who have the right intent but money would be a deterrent." Another user said, “Anyone who thinks this is a bad idea is not the right candidate for the job. Great filtration process, gonna use this. ”

Quote, unquote: "And I really hope that "pay the company to get a job" doesn't become a norm in this world- that's not cool. Money is an essential thing to keep people's lives running, and I believe in paying more than market rate, so that money doesn't come in the way of great work", Goyal said later on Thursday.

Also Read: Zomato leads food delivery with 58% market share in Q1, Blinkit tops quick commerce: Motilal Oswal

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Nvidia CEO Jensen Huang

Nvidia, the world’s largest publicly traded company by market capitalisation, surpassed Wall Street expectations with its Q3 earnings, reported after market close on Wednesday. The company continued its streak of remarkable financial growth, fuelled by surging demand for AI technologies. However, despite the strong performance, Nvidia's stock slipped following the announcement.

Also Read: India can build and export next-gen AI software, says Nvidia CEO Jensen Huang

Details: Nvidia posted earnings per share (EPS) of $0.81 on revenue of $35.1 billion outperforming analyst predictions of $0.74 EPS on $33.2 billion in revenue. The strong demand for high-power AI chips is the reason for the elevated performance which is the “driving force” of the "age of AI", according to CEO Jensen Huang.

Stocks: Although there is a surge in Nvidia’s revenue, the company’s growth pace has slowed from around 260% or so in the last few quarters. Nvidia's $37.5 billion sales forecast for Q4 which shows a 7% growth from the previous quarter, is but the weakest growth since the quarter that ended in January 2023.

Also Read: Nvidia offers to jointly develop chip with India

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Nearly half of the startups securing seed-stage funding are helmed by experienced entrepreneurs, according to a recent study.

Attracting funds: According to a report titled ‘The First Cheque Report 2024’ by Jungle Ventures, these founders are raising significantly more funds than first-time entrepreneurs. Their businesses are largely concentrated on the top-10 funded sectors, such as fintech, retail, enterprise and healthtech.


Signs of thaw: Seed-stage funding and deals declining since 2022 have started showing signs of stabilising. The total seed funding in 2024 so far stands at just over $1 billion, nearly matching the $1.2 billion raised in 2023 and compared with $1.9 billion in 2022.


Also Read: ETtech In-depth: How a diversified capital pool is changing dealmaking for Indian startups

Today’s ETtech Top 5 newsletter was curated by Vaibhavi Khanwalkar and Blessy Reji in Bengaluru.