With the support of the Aditya Birla Group, GIVA has achieved a noteworthy milestone in the fast-paced world of jewelry and fashion by surpassing the INR 100 Cr operational revenue threshold for the fiscal year that concluded on March 31, 2023. The 2019 startup has had incredible growth; from INR 84 Cr in the previous fiscal year to INR 165 Cr in FY23, its operating revenue increased by 97%. But despite this achievement, there have been difficulties, as seen by the sharp increase in net loss and higher total expenses.
Credits: The Economic Times
Financial Performance:
1. Operating Revenue Soars: GIVA’s achievement in crossing the INR 100 Cr mark in operating revenue underscores its growing presence in the jewellery market. The 97% surge to INR 165 Cr in FY23 showcases the brand’s ability to capture consumer interest and meet their evolving preferences.
2. Total Revenue Growth: The total revenue, inclusive of other income, reached INR 167 Cr in FY23, a noteworthy 98% increase from INR 84.5 Cr in the previous year. This signals a holistic growth approach by GIVA, not solely relying on core operating revenue.
3. Escalating Net Loss: Despite the revenue growth, the startup’s net loss experienced a significant uptick, rising by 138% to INR 45.2 Cr during the year under review. This aspect prompts a closer look at the company’s financial management strategies and potential areas for improvement.
Expenditure Analysis:
1. Marketing Costs Take Center Stage: GIVA’s commitment to brand awareness is evident in its increased spending on selling and marketing expenses, totaling INR 77 Cr in FY23. This represents a substantial 64% surge from the INR 47 Cr spent in the previous year. The allocation of funds towards advertising, brand promotion, and photoshoots aligns with the competitive nature of the jewellery market.
2. Procurement Costs Reflect Demand Surge: The significant surge in procurement costs, rising by 114% to INR 74.3 Cr in FY23, suggests a heightened demand for GIVA’s jewellery. This demand-driven increase positions the company well in terms of market acceptance, but effective cost management remains crucial.
3. Employee Benefit Expenses Surge: The opening of more retail stores by GIVA during FY23 resulted in a substantial rise in employee benefit expenses, escalating by an impressive 306% to INR 21 Cr. This expansion strategy, while contributing to brand visibility, necessitates a balanced approach to managing associated costs.
4. EBITDA Margin Deterioration: The EBITDA margin, a key indicator of operational efficiency, deteriorated to -25.3% in FY23 from -22.2% in FY22. This downturn underscores the challenges GIVA faces in maintaining profitability amidst its ambitious growth plans.
Funding and Investors:
GIVA’s journey has been supported by substantial funding rounds, with investments exceeding $45 Mn from notable backers such as Premji Invest and A91 Partners. The recent Series B funding round, led by Premji Invest with a $35 Mn infusion, signifies investor confidence in GIVA’s potential and vision for the future.
Market Competition and Impact:
GIVA has strong competitors in the rapid fashion jewelry market, such as BlueStone, which is sponsored by Ratan Tata, Tata-owned CaratLane, and Melorra, which is funded by Lightbox. The market dynamics are further complicated by Titan’s acquisition of CaratLane, GIVA’s rival, earlier this year at a valuation above $2 billion.
The financial decisions made by GIVA have a variety of effects. The brand’s attractiveness and potential for ongoing success are highlighted by its revenue growth and successful funding rounds, on the one hand. However, the growing net loss and rising costs present problems that call for calculated answers. The market competition makes it the more imperative for GIVA to set itself apart and improve operational effectiveness.
Conclusion:
GIVA, which is celebrating its financial milestone of surpassing INR 100 Cr in operating revenue, finds itself in a precarious position with both opportunities and problems. The way the business handles losses, controls spending, and maneuvers through the competitive environment will determine how it develops in the fast-paced world of fast fashion jewelry. In the upcoming years, investors and industry observers will be closely observing GIVA as it attempts to strike a balance between expansion and financial sustainability.
