Chaayos, India’s popular tea café chain, has announced an otherwise difficult yet noteworthy fiscal year 2024 (FY24), where operational scale was flat and the company did report positive EBITDA. The company, however, aligned with the growing trend of Indian startups to keep growth in control and focus more on profitability over aggressive growth as it has curtailed losses more than 50% than in the preceding fiscal year.
PC: Snackfax
Financial Summary
Chaayos’ consolidated financial statement filed with the Registrar of Companies said that the revenue from operations of the company was up 4.85% to ₹248.5 crore in FY24 from ₹237 crore in FY23, though its physical expansion has not taken off with more than 200 outlets in key cities such as Delhi-NCR, Mumbai, and Bengaluru.
Chaayos primarily earns through its core offerings, which consist of various teas and snacks. Interestingly, the company has obtained 95.32% of its operational revenue from manufactured goods, specifically tea, which increased by 3.1% to ₹236.87 crore. Revenue from traded goods, which consists of snacks and tea leaves, nearly doubled, increasing 98.52% to ₹10.74 crore. Income from services declined sharply by 51.89% to ₹0.89 crore, which suggests the company needs to re-evaluate its service lines.
The cost front was complete with excellent cost control measures by Chaayos. But the company still cut losses by managing them at 50.6% by FY24 at ₹54 crore as against the same period the previous year. More significantly, Chaayos still posted a healthy EBITDA of ₹28.35 crore even when the sale grew flat.
The biggest cost head, employee benefits, rose by 4.45% to ₹81.15 crore. On the other hand, the cost of materials decreased by 11% to ₹76.54 crore, reflecting proper supply chain management. Other key costs were stable depreciation costs at ₹51.83 crore, and a fall of 4.62% in commissions to ₹26 crore. Altogether, Chaayos could bring down its overall expenses by 11.07% and bring down that number to ₹325.21 crore from ₹365.68 crore in FY23.
Chaayos’s premiumization focus along with a well-balanced strategy of online as well as offline sales has made it a suitable contender in the competitive landscape. However, there are challenges when the company aims to maintain the margins while seeking expansion in market share. The firm has cited the need for innovation and replicating its business model at lower cost and more efficiently.
As of March 2024, Chaayos stood with ₹181.42 crore of current assets. Cash and bank balances at ₹89.16 crore stood with the company. The ROCE for the company stood at -6.02%. EBITDA margins were seen at 10.45%, which requires significant improvement so that the company achieves higher profitability.
Chaayos has reached a decisive stage twelve years since its formation. Although the flat operational scale may be a concern, the attainment of EBITDA positivity and significant loss reduction shows the company’s strength in a tough market. Chaayos, therefore, is poised to take on the shifting tides of the food and beverage industry in India with its emphasis on cost management and strategic positioning. The coming years will be defining for the brand as it attempts to balance growth with sustainable profitability through further refinement of its approach.
