“While our dependence on sales of our top 10 products has been declining with increasing contributions from our other products, any decrease in the sales of our top 10 products, whether due to increase in sale of products or market share of competitors with similar products or any other reason, will adversely affect our business, results of operations, financial condition and cash flows,” the company said in its red herring prospectus (RHP) dated October 23.
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For the year-ended March 31, Honasa’s top 10 products accounted for 27.38% to its Rs 1,492.75 crore operating revenue, down from 30.17% of Rs 943.46 crore in the previous year, according to the RHP.
Honasa, which also owns the brands The Derma Co and BBlunt, plans to launch its initial public offering (IPO) on October 31.
For the June quarter, the company’s revenue from operations stood at Rs 464.49 crore, up 49% from a year ago. Net profit stood at Rs 9.24 crore, according to the RHP. In the year-ago quarter, the company had reported a loss of Rs 2.51 crore.
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The company has attributed the year-on-year growth in quarterly operating revenue to higher sales under its flagship Mamaearth brand, which accounted for the bulk of its topline.“Under the Mamaearth brand, we had higher sales of products across the face care, hair care, body care, baby care and colour care categories,” the company said.
Honasa, however, said that over time, the Mamaearth brand’s contribution to overall operating revenue, excluding revenue from sale of services, has fallen. For the June quarter, Mamaearth reported operating revenue of Rs 303.63 crore, representing 67.1% of Honasa’s total revenue from operations. In comparison, in the year-ago period, the brand’s topline was at Rs 256.78 crore, or 87.1% of Honasa’s total revenue from operations.
For the full year, Mamaearth’s contribution to the company’s topline was 81.9%, down from 93% in FY22 and 96.1% in FY21.
In FY23, Honasa reported a net loss of Rs 150.97 crore. In the previous year, it had reported a net profit of Rs 14.44 crore. Its operating revenue, however, increased 58% year-on-year to Rs 1,492.75 crore.
Also, while Honasa’s top product lines contributed increasingly less to its operating revenue, the share of its new stock-keeping units (SKUs) — launched by the company during FY23 — to its revenue from operations also fell to 18.7% compared with 21% in FY22.
In FY23, Honasa introduced 301 new SKUs compared with 159 in FY22.
Offline push
Over time, the company has increased its sales push on its offline channel. In FY23, its sales from offline channels stood at Rs 539.41 crore, accounting for 36.1% of the company’s total revenue from operations. It was 28.9% in FY22 and 18.6% in FY21.
Consequently, sales from online channels declined.
One of the areas where Honasa plans to deploy the proceeds from the proposed IPO is offline outlets.
“We intend to open new Mamaearth exclusive brand outlets (EBOs) across a mix of mall stores and high-street outlets in India,” it said in the RHP. “We intend to leverage this channel to curate a richer brand experience for our consumers and deepen engagement with them in the offline retail environment.”
As of June 30, the company had 85 EBOs, up from 77 as of March 31.
Now, even as the company pushes its offline sales channel, the online channel continues to be its mainstay in terms of revenue. However, within the online channels, Honasa’s dependency on third-party ecommerce marketplaces such as Amazon, Flipkart and Nykaa has increased.
In FY23, online sales from Honasa’s direct-to-consumer (D2C) channels — such as its own websites and mobile application–contributed 42.13% to its online sales compared with 45.21% in FY22.
For the first quarter of FY24, the contribution of D2C channels to Honasa’s online sales was 35.65%, while that of third-party ecommerce marketplaces had increased to 64.35%.
