Waycool, a major player in the B2B food and agritech market, has also announced its plans to raise ₹110 crore in debt from Grand Anicut. That is the second round of debt that Waycool has been raising in the last four months, thus showcasing a need for further capital in order to operate steadily in the face of increasing competition in the food distribution and agritech market.
PC: Infomance
The board of Waycool has sanctioned the issue of 1,100 non-convertible debentures at an issue price of ₹1,00,000 each to service this financing round. The debt will have an 18% annual coupon rate and a tenure of 18 months. In addition to the regular interest rate, a further 4% interest has been agreed upon by both Waycool and Grand Anicut, indicating that the funds are urgent and that the company has a hard time raising equity finance.
This loan arrangement reveals that Waycool is in need of maintaining liquidity, as the firm is seeking to meet its current financial requirements. The proceeds of this debt are to be applied for general corporate purposes. This can encompass operational expenditures, scaling up their supply chain, or upgrading their technological capacities.
Waycool has so far managed to raise about $160 million from several investors among them Lightrock, International Finance Corporation, FMO. The company was last valued at $700 million in a previous equity round and was still in negotiating terms over more than $50 million funding that would have pushed its valuation into ranges of about $900 million to 1 billion dollars. Those negotiations didn’t, however translate to a successful round of funding.
Despite showing a phenomenal 62% growth in operating revenue, at ₹1,251 crore for FY23, Waycool has also been facing substantial issues. On the loss book, the concern has been at a dreadful 89% at ₹685 crore for the same period. These numbers make quite evident the strain the company is under and that maybe some more funding options are required to steady the firm’s operations.
Founded by Karthik Jayaraman and Sanjay Dasari, Waycool is an integrated supply chain company, which sources fresh produce, including dairy products, directly from farmers and sells them to retailers and restaurants. The company also manages private label brands and handles distribution for FMCG companies, making it a critical intermediary between producers and consumers in the food supply chain.
This niche in the agritech competitive landscape has been achieved through innovative approaches to sourcing and distribution by Waycool, but the increasing losses clearly indicate that the company needs to optimize its operational efficiencies and explore sustainable growth strategies.
The reason Waycool opted for $13 million debt financing from Grand Anicut was the urgency to raise capital in support of operations as losses grew and negotiations over equity funding did not work. The months ahead would thus be the decisive ones in its financial well-being and its position in the market. Success will depend upon whether it uses them effectively or not to steer its way out of the difficult times within the agritech sector and move on to become a sustainable firm over the long run.
