Car rental agency

Zoomcar Sales Decrease 72.6% and Record Losses of INR 152 Cr in FY21

The Bengaluru-based startup recorded an after-tax loss of INR 152.6 Cr, down 60.5% from the INR 427.5 Cr recorded in FY20

The startup spent INR 168.5 Cr in FY21, down 62.2% from the INR 721 Cr it committed in FY20

Its sales fell drastically to INR 79.3 Cr, down 72.6% from INR 289.7 Cr in FY20.

IPO-linked Zoomcar saw its revenue from sales drop drastically to INR 79.3 Cr, down 72.6% from INR 289.7 Cr in FY20

While there was a drop in sales revenue following the contagious virus outbreak, the startup’s other revenue jumped 519% in FY21. Zoomcar defines its other income as dividend and interest income.

Zoomcar’s other revenue for FY21 increased to INR 24.3 Cr in FY21 from INR 3.9 Cr in FY20. For FY21, the car rental startup’s total revenue was INR 103.6 Cr compared to INR 293.7 Cr recorded during FY20.

Along with declining revenue, the startup also cut its after-tax losses by 2.5 times in the financial year ending March 31, 2021. The Bengaluru-based startup recorded an after-tax loss of INR 152.6 Cr , a drop of 60.5% from INR 427.5. Cr recorded it in FY20.

One of the big reasons Zoomcar saw lower losses has to be attributed to lower expenses, thanks to the ongoing pandemic. India went through several lockdowns due to the onset of the pandemic between April 2020 and March 31, 2021.

Let’s explain Zoomcar expenses here:

The startup spent INR 168.5 Cr in FY21, down 62.2% from the INR 721 Cr it incurred in FY20.

Almost most major components of Zoomcar’s spending fell.

  • Expenditure on employee benefits increased from INR 92.5 Cr to INR 74.5 Cr in FY21
  • Finance cost decreased from INR 61.5 Cr in FY20 to INR 52.3 Cr in FY21
  • Depreciation, depletion and amortization cost dipped to INR 48.5 Cr in FY21 from INR 153.6 Cr in FY20.

However, what caught our eye was Zoomcar’s “other expenses,” which saw a staggering 76.6% drop in FY21.

Zoomcar saw its other expenses drop to INR 96.7 Cr in FY21 from INR 413.6 Cr in FY20.

Other expenses include consumption of stores and spare parts, electricity and fuel, rent, building repairs, machinery repairs and insurance.

For FY21, Zoomcar spent INR 8.6 Cr on electricity and fuel, a significant drop from INR 23.4 Cr, meaning fewer vehicles needed fuel/electricity, which is a key indicator that Zoomcar experienced a drop in bookings from April 2020 to March. 2021 or he didn’t have the fleet of vehicles he had before.

Another indicator was the rent. The startup in FY21 had spent INR 14.3 Cr on rent, which appears to be the rent for its offices and garages combined. In fiscal 2020, Zoomcar had burned INR 112.6 Cr in rent, further underscoring the drop in its operations.

The startup’s financial report acknowledged that the pandemic has negatively impacted its business.

“The persistent cases of COVID-19 and developments surrounding the pandemic have had a material adverse impact on all aspects of the Company’s business. Significant events affecting travel and the broader economy have historically impacted vehicle rental volumes, with the magnitude of the impact typically determined by how long the event influences travel decisions as well as general economic conditions. The COVID-19 outbreak and the resulting economic conditions have had, and the Company believes will continue to have, a material adverse impact on its operations and vehicle rental volumes, as well as on its financial results and liquidity, and such impact negative could continue well beyond the containment of the epidemic, ” the mentioned financial report.

He also stressed that he cannot guarantee his assumptions for estimating liquidity needs, as the startup has never faced a pandemic before. It therefore plans to manage its cash flow by reducing capital expenditures, operating expenses and the number of vehicles in its fleet.

Zoomcar further received an investment of INR 271 Cr from its holding company between April and November 2021.

Last year in November, Zoomcar received external funding worth $92 million from SternAegis Ventures and other international family offices. To date, the startup has raised over $290 million in funding.

Founded in 2012 by David Back (who left the company in 2015) and Greg Moran, Zoomcar began as a D2C car rental service. Later, it also introduced a shared subscription model where users can rent their car if it is idle. Currently, Zoomcar has a fleet of over 10,000 cars in 45 cities in India.

The startup counts renowned investors Sony, NKM Capital, InnoVen among others among its backers. Founder Morane has confirmed that Zoomcar is considering a public listing in the US market.

The startup plans to break into the US by creating a new Special Purpose Acquisition Company (SPAC). It remains to be seen with such financial performance, how will Zoomcar pull off an IPO as it goes through a SPAC route, especially when all the tech companies are seeing their hyper-inflated valuations undergo a market correction.