ProcMart, a leading B2B procurement marketplace, has experienced a remarkable surge in growth over the past two fiscal years, with its gross merchandise value (GMV) increasing fivefold in FY23 and FY24 when compared to FY22. In FY24, the company achieved a 3X GMV growth, but its profit plummeted by 56.5%.
Key Highlights:
- Gross Revenue: ProcMart’s gross revenue skyrocketed by over 200% to Rs 621.5 crore in FY24, up from Rs 206.07 crore in FY23.
- Profitability: Despite strong growth, the company’s profit nosedived by 56.5% to Rs 73 lakh in FY24, down from Rs 1.68 crore in FY23.
- EBITDA Margin: ProcMart’s EBITDA margin was at 1.33% in FY24, indicating thin margins.
- ROCE: The company’s return on capital employed (ROCE) was at 5.45% in FY24.
- Fundraising: ProcMart has raised over $40 million in funding across three rounds, with its last funding round being $30 million co-led by Fundamentum and Edelweiss Discovery Fund in April this year.
Business Model:
ProcMart operates in the B2B procurement space, offering a wide range of products, including industrial automation, electrical, mechanical, electronics, IT items, abrasive, fasteners, safety & security items, and various tools & consumables. The company also provides business procurement assistance services. The sale of these products accounted for 98% of the total gross revenue in the last fiscal year.
Concerns:
The thin margins in the B2B procurement space have prompted companies to explore new revenue streams, such as contract manufacturing, financing, and more. ProcMart, for now, seems to be sticking to the plain vanilla procurement based model. However, as it scales up, it will be interesting to see if it sticks to the model or finds its own way into a higher margin revenue stream.
Conclusion:
ProcMart’s rapid growth in the B2B procurement marketplace is a testament to the company’s strong operational efficiency and ability to scale quickly. However, the thin margins and decreased profitability raise concerns about the company’s long-term sustainability.