Power2SME, a B2B e-commerce platform, showcased notable growth with improved unit economics evident in its financial performance for the fiscal year ending March 2023. The company achieved a 50% growth in gross margin while also trimming losses by 9%, primarily through reductions in employee benefits and other expenses.
According to its consolidated financial statements filed with the Registrar of Companies (RoC), Power2SME’s gross revenue surged to Rs 1,056 crore in FY23 from Rs 703 crore in FY22.
Power2SME specializes in providing raw materials such as steel, chemicals, inks, paints, metals, and polymers, along with financial services, to SMEs through its subsidiary entities.
The sale of goods accounted for 99% of the total gross revenue, with the remaining revenue coming from interest and finance (operating). Additionally, the company generated Rs 6 crore from interest on current and non-current investments (non-operating), bringing its total revenue to Rs 1,063 crore in FY23.
Procurement costs constituted 93.4% of the total expenditure for the e-commerce platform. With its growing scale, this cost rose by 49.6% to Rs 1,019 crore in FY23 from Rs 681 crore in FY22.
Other expenses, including employee benefits, insurance, legal and professional fees, advertising, finance charges, and overheads, contributed to the overall expenditure rising to Rs 1,091 crore in FY23 from Rs 740 crore in FY22.
This decent growth trajectory and effective cost management enabled Power2SME to reduce its losses by 9% to Rs 28.5 crore in FY23. Its Return on Capital Employed (ROCE) and EBITDA margin improved to -10% and -0.6%, respectively, with a cost of Rs 1.03 incurred to earn a rupee in FY23.
Power2SME last secured funding of $36 million in equity in January 2018, accumulating around $80 million in total funding to date. According to startup data intelligence platform TheKredible, Accel holds the largest stake at 26.1%, followed by Kalaari Capital and Inventus Capital. Co-founder and CEO Narayan Ramaswamy currently commands a 12.17% stake in the company.
Despite its last funding round in 2018, Power2SME is evidently striving to fulfill its potential, and its ongoing growth trajectory may prompt another round of funding soon. The company’s decision not to venture into user lending yet is intriguing and could become a focus area in the future. The substantial scale and operational improvements hint at significant developments ahead for the firm. Stay tuned for potential updates on its progress.
