Online auto classifieds firm CarTrade slammed the brakes on spending in the financial year 2016-17 even as in-house portal CarWale, which focuses on new cars, emerged as the growth driver of its overall business.
On a standalone basis, used car specialist CarTrade posted a net loss of Rs 13 crore in 2016-17, a massive improvement from the Rs 134 crore it had recorded in the previous fiscal, according to its filings with the Registrar of Companies (RoC).
This was aided by a significant reduction in spending on advertising as expenditure fell to Rs 65 crore in 2016-17 from Rs 176 crore in 2015-16.
It was also the first full year since CarTrade made the most prominent of its five acquisitions — CarWale — in a deal estimated at almost $100 million. Consolidated financials provide clear insights into the contribution of the new portal.
CarWale alone accounted for Rs 53 crore out of the joint entity's net sales of Rs 78 crore in 2016-17. In other words, its revenue was more than double that of CarTrade, which reported net sales of Rs 25 crore, only slightly higher than the Rs 23 crore it reported during the fiscal ending March 2016.
“This [financial data] is 17 months old. Used cars business is now 70% of our revenue by March 2018,” said Vinay Sanghi, co-founder and chief executive of CarTrade. “Our business is seeing rapid growth and have been consistently improving margins.”
He added that the firm had moved businesses to different divisions after acquiring CarWale.
CarTrade has yet to provide profit and loss statements for the fiscal ending March 2018.
Losses and outlook
While CarTrade's standalone loss stood at Rs 13 crore on revenue of Rs 25 crore for 2016-17, CarWale posted a loss of Rs 21 crore on significantly higher revenue.
CarWale also drastically reduced its loss from the Rs 91 crore it reported for the year ending March 2016.
On a consolidated basis, CarTrade managed to reduce its losses from the Rs 146 crore it had reported in the financial year ending March 2016.
A person familiar with the development told TechCircle that the company is likely to have achieved operational break-even in 2017-18.
Earlier this year, CarTrade had agreed to buy Shriram Group’s unit that sells used trucks, buses and other vehicles for Rs 156.4 crore ($24.5 million).
For the year ended March 31 2017, Shriram Automall had reported an income from operations at Rs 80 crore, as against Rs 75 crore in the previous year 2015-16. It had a net profit of Rs 8.3 crore during the same period as against net profit of Rs 5.4 crore for 2015-16.
CarTrade can possibly add a portion of Shriram's revenue and profit numbers to its consolidated accounts for the year ended March 2018.
Story so far
Founded in 2009 by Sanghi, former chief executive of Mahindra First Choice, the company is backed by investors such as Temasek Holdings, Warburg Pincus and Tiger Global.
In all, CarTrade, run by Mumbai-based MXC Solutions India Pvt. Ltd, has so far raised more than $240 million.
Rajan Mehra, managing director at Nirvana Venture Advisors and former country head of eBay India, is also founder-director at the company.
In May last year, CarTrade had acquired vehicle inspection firm Adroit Technical Services Pvt. Ltd.
CarTrade has several competitors in the online space while the offline space has seen the auto manufacturing companies entering the business. Its main rival is Jaipur-based CarDekho. Other funded companies in the space include Droom, Spinny and Truebil.
CarTrade also competes with classified portals such as Quikr and OLX.