 "Sandeep Deshmukh, co-founder & CEO, ElasticRun")
Sandeep Deshmukh, co-founder & CEO, ElasticRun
Going back to basics has helped many startups emerge from the funding winter with a stronger business and a clear road to profitability. Pune-based ElasticRun is an example of such focus as it now eyes operational profitability by the end of October 2024.
Sandeep Deshmukh, co-founder and CEO, ElasticRun, said: “We are close to achieving operating profitability. We see that happening by the end of October 2024. This is being driven by our focus on regional brands.”
The Softbank and Prosus Venture-backed ElasticRun, which runs distribution for FMCG products in rural areas, has made several changes in its business over the last two years, which has also meant closing down or moving away from segments that were not running efficiently.
The business-to-business ecommerce player has, for instance, focused on working with regional brands as they give better margins and also allow them to partner with these brands in marketing.
“Regional brands give better margins than national brands. In some cases, it can go upwards of 14 per cent,” said Deshmukh. The company’s take rate has gone up by almost three times.
While working with regional brands, the company realised that though these brands have good products, they have no distribution muscle. ElasticRun has emerged as a scale-up platform for regional brands, where the company has helped them with marketing muscle and increased penetration in other regions.
Deshmukh shares that the company is working with close to 100 brands nationally in this space.
In FY23, the firm also pulled out of cities like Madhya Pradesh, Uttar Pradesh, and West Bengal as it started to focus on profitability.
“We will reinstate the markets we recoiled from early this year. This will happen between October and March,” added Deshmukh. However, he did not pinpoint specific states or timeline sequences for when the company will start expanding in the mentioned regions.
The company will also expand its store reach from 2.5 lakh stores to 3.5 lakh to 4 lakh stores by the end of FY2025.
ElasticRun has a presence in over 75,000 villages and works with over 200 brands.
When asked if the company is raising funds, Deshmukh said that the firm is perhaps among those handful of unicorns that are sitting on a strong bank balance. “We raised $330 million in FY22. Most of this money is in the bank unutilised. The company has an extremely strong cash position, and we are very well-funded for a long journey,” he clarified.
According to media reports, ElasticRun’s FY23 revenue came in at Rs 4,754.86 crore, however, its loss widened to Rs 618.82 crore. This is up from a loss of Rs 358.6 crore in FY22.
First Published: Jul 16 2024 | 6:56 PM IST
