Broadly speaking, credit rating is an assessment of the creditworthiness of a business. A good credit rating means strong financials and a high likeliness of paying off financial obligations timely.

There are about 6 credit rating agencies in India that provide ratings to businesses. These ratings can be provided to a business as a whole or on a specific financial obligation ‘technically called instrument’ of the business. The duration of these financial obligations vary and are typically categorized as long term and short term. Either way, they denote the financial health and creditworthiness of the business.

These ratings are typically categorized into long term and short term along with the type of the instrument for which the rating is issued. These are usually denoted in alphanumeric symbols. Having more letters in the rating is generally better than fewer letters, and being earlier in the alphabet indicates higher quality.

Without getting into nuances of credit ratings, this article provides you a guideline on how to interpret any credit rating issued to a business:

Note: A plus (+) or minus (-) sign may be appended to the above ratings to indicate relative standing within each rating category. Example: AAA+ is a higher rating than AAA.

While talking about credit ratings, we can’t skip the concept of ‘Investment grade ratings‘. This term denotes companies with strong financial strength and capacity to pay back their financial obligations. All ratings equal and above BBB- are categorized as investment-grade ratings. For example, specific debentures of Tata Motors are rated as ‘AA’ (investment grade rating). However, instruments of Jet Airways have been rated as ‘D’.

1. Make a list of competitors: Yes, that’s the starting step. Make sure you have chosen competitors of similar size. In case you don’t know your competitors, ask your customers who else they compared you with. Google, IndiaMart, JustDial, and other B2B websites are other places to discover them.
2. Evaluate their sales and growth: Evaluate their sales in the last 2-3 years. Have they been increasing or declining? What are the reasons? Have they launched a new product line? Have they aggressively cut prices? Compare the gross and net profit margins over the last years to evaluate any price cutting.
3. Evaluate major expenses as percentage of sales: Identify the important expense heads in your industry. Example ‘Cost of goods sold’, ‘Freight charges’, ‘Wages and salaries’ are important expense heads in a manufacturing business. Identify the amount your competitors are spending on them for the last 2-3 years. Compare this amount to their sales for that year. Evaluate how their ratio with sales has changed over time. This will give insights into how they are shaping their business model.
4. Evaluate these two important ratios: Ratios like ‘Outstanding days receivables’, ‘Outstanding days payables’ are crucial in understanding the competitor’s negotiation power with their suppliers and customers. Calculate these ratios for your competitors for the last 2-3 years and see how they have been reshaping. You can also find them in financial reports provided by Tofler on companies.
5. Websites and other social profiles: Follow your competitors on social media if they are active there or other b2b websites. Check out the reviews of people on their services and products. It will give you an idea of how they deal with customers, complaints and their overall mindset. You will be surprised by the insights you can get from here.

1. Background check of the founders: Evaluate the experience and educational background of the founders and the core team. Try to get references if you can. Do they have any experience in the problem they are aiming to solve? How much fieldwork they have put into the problem and how much research has been done in finding the solution? And foremost, are the people of character and integrity?
2. Check financials: For early-stage startups, financials would not be available but for others, it is crucial to understand their financials. Even if there are no revenues yet, you may like to get a sense of where is expenditure being done? Does it resonate with their story?
3. Other recent funding rounds and valuation: Check any recent funding rounds in the startup. Please use the funding documents filed with regulatory authorities to evaluate their recent funding rounds and the valuations claimed therein. The startup itself should be able to share those documents or you may get them from MCA or Tofler.
4. Other investors and their other investees: You may want to meet the existing investors or check out other companies in which they are already invested. You can do this for free with the ‘company network’ feature at Tofler. This will give a sense of their investing style and you can evaluate whether it resonates with yours.

From rumours about acquisition to CEO’s spat with the Board of directors, sacking of its CEO followed by mass firings, Housing.com and its ex-CEO Rahul Yadav have consistently been in news, mostly for the wrong reasons, during the past one year. While they are still trying to recover from their year of turmoil, their report card for FY 14-15 is out and they don’t seem to have done too well.

Founded in 2012, Housing is a Mumbai based real estate search portal, where users can sell/buy or rent/let-out their properties. Housing.com is operated by Locon Solutions Private Limited.

Financial Performance

Housing has reported a total revenue of INR 12.7 crores in FY 14-15, which is nearly six times of its revenue in the previous fiscal. Out of this, INR 5.5 crores is revenue from operations. Against this, they have reported a net loss of whopping INR 279 crores which is also about six times of its loss in the previous fiscal. One of its major competitors, CommonFloor, had reported a revenue of INR 45 crores with a loss of INR 86 crores in the same period.

With their much talked about ‘Look up’ campaign, it is easy to guess that their largest expense was on Advertising and promotions – 42% of total expenses- in the fiscal. This was followed by HR expenses – 29% of total expenses. Notable, they spent a huge sum of INR 27 crores on ‘Legal professional charges’. Following chart illustrates the breakup of Housing’s expenses.

Founders

The Company was founded by 12 IIT students – Rahul Yadav, Neeraj Bhunwal, Abhishek Anand, Snehil Buxy, Sanat Ghosh, Ravish Naresh, Amit Raj, Rishab Agarwal, Advitya Sharma, Jaspreet Saluja, Vaibhav Tolia, Saurbah Goyal.

Of these, Rishab Agarwal, Saurabh Goyal, Vaibhav Tolia left early on. With the ouster of founder and CEO Rahul Yadav, none of the founders is now a director in the company. It is not known to us if one or more of them are still employed with Housing. This is how Housing’s company network now looks:

Funding & Shareholding

The Company survived through angel funding rounds until April 2013 when Nexus Ventures invested in housing.com. Nexus Ventures funded three consecutive rounds of housing.com until Helion Ventures joined them post May 2014. Their largest funding round of INR 572 Crores (~USD 88 million), led by Softbank, came in December 2015. Here is a summary of their funding so far:

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Source: Documents filed by the company with Registrar of Companies

While it was reported widely in the news that their erstwhile CEO Rahul Yadav had announced distributing his equity holding in the company among its employees, as per the documents filed by the Company with the Registrar of Companies, Rahul Yadav still holds 5% of its shares. According to the documents, its current shareholding looks like this:

Since Housing sacked its CEO Rahul Yadav this July, they have closed down a few of the business lines, cut down their employee strength drastically and have revamped almost all of their senior management. There have been news of their acquisition talks with Quickr, which did not seem to materialize, and stake sale talk with Snapdeal and Newscorp. It looks like the new CEO Jason Kothari still has a long tough path ahead to get the house(ing) in order. Nonetheless, Housing.com surely seems to have a lesson or five for the upcoming entrepreneurs on what-not-to-do-with-your-startup.

For annual reports, balance sheets, profit and loss, company research reports, directors and other financial information on Indian Companies, head over to www.tofler.in – the business research platform.

This article was originally published here by Team Tofler.

Author– Vishal, a Sci-fi enthusiast, engineer by mistake and writer by choice, combines his eye for numbers with a natural flair for storytelling to churn out Tofler’s blogs.

Editor –  Anchal, co-founder at Tofler, is a CA, CS and has more than 5 years experience in company analysis. She likes to explore and track companies, their performance and senior management.

Foodpanda (Pisces eServices Private Limited) has reported its latest revenue figures for FY 14-15. The company earned a revenue of INR 4.7 crores in FY 14-15 compared to INR 69 lacs the previous fiscal (580% growth in revenues). The losses grew 5 times from INR 7 crores to INR 36 crores in the same period.

Financial Performance

The revenue from operations stood at INR 4.6 crores. This includes ‘Commission from restaurants (98%), ‘Income from Marketing’ (1.1%) and ‘Income from Registration’ (0.9%). Following chart depicts their year on year Revenue from PAT since inception.

The expenses for the company were INR 41 crores in FY 15 (INR 7.7 crores in FY 14). The loss for the year stood at INR 36 crores, whereas the accumulated losses over the three year stood at INR 47 crores. The accumulated losses have eroded the net worth of the company. The net worth as on 31^st March, 2015 was a negative of 2.7 crore rupees. After March 2015, the parent company has infused around INR 66 crores of funds in the company.

The major expense for the company was ‘TV and Radio Advertisement’ expense, which stood at INR 18 crores (44% of the total expenses). This particular expense and a lot of other apparent discrepancies were discussed in detail in this article by Mint. Other major expenses were ‘Discount Voucher’ expense at INR 8.3 crores (20% of expenses) and employee expenses at INR 6.4 crores (16% of expenses). Following is a breakup of the expenses.

Interestingly, by the financial year end, Foodpanda identified some of the much talked about “certain case of restaurants which were non-existing or which were misusing the company’s discount vouchers by generating fake orders” (as mentioned in their Auditor’s report). The company puts the loss due to these frauds at INR 7.6 lacs and calls it “not material in comparison to the scale of operation of the company”. This loss is shown under the expense head of ‘Discount Voucher’.

Food-tech scenario in India

The following graph benchmarks Foodpanda revenue and losses against some of its major competitors in the food tech industry.

While Faaso’s (2010) and Zomato (2010) have been around for more than 5 years, Foodpanda (2012), TinyOwl  (2014), Swiggy (2013) are relatively newer players. Foodpanda claims to be present in 100+ cities compared to Zomato in 10,000 cities (across 23 countries, however, primarily it is a restaurant discovery platform), Faaso’s in 10 cities, Swiggy in 8 cities and TinyOwl in 6 cities.

Food-tech has been a heavily funded sector so far and almost all key players have raised multiple rounds of funding. Following chart illustrates the funding of key players (estimated from documents filed with the Registrar of Companies) in the sector so far.

Of late, Foodpanda has been delving into several new service offerings such as corporate food ordering service and food delivery on trains with irctc. Zomato launched its food ordering app this year, which directly competes with Foodpanda’s business. However, Zomato has an edge over its competition due of its long presence and a deep penetration in the market through its restaurant listing business. Competing with Zomato and other upcoming players and apparently having a lot to fix at home, Foodpanda seems to be in for a tough ride ahead.

This article was originally published here by Team Tofler.

Author– Vishal, a Sci-fi enthusiast, engineer by mistake and writer by choice, combines his eye for numbers with a natural flair for storytelling to churn out Tofler’s blogs.

Editor –  Anchal, founder at Tofler, is a CA, CS and has more than 5 years experience in company analysis. She likes to explore and track companies, their performance and senior management.

Urban Ladder Home Décor Solutions Pvt. Ltd., which owns and operates Urban Ladder, has reported its latest revenue figures. Urban Ladder’s operating revenue grew from INR 11 crores in FY 13-14 to INR 13 crores in FY 14-15, while the losses surged from INR 7.6 crores to INR 58.5 crores in the same period.

Financial Performance

Urban Ladder’s total revenue stood at INR 19.2 crores – INR 12.98 Cr from operations and INR 6.23 other income – in FY 14-15 compared to INR 11.9 crores (INR 11 Cr from operations) in the previous fiscal.

Looking at their P&L, it appears that they have shifted from an inventory led model to a marketplace model during FY 13-14 to 14-15. Revenue from ‘Sale of furniture’, which contributed 74% of their revenue from operations in previous fiscal, was nil in this one.

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Total revenue from operations grew by only 18% this fiscal. A total ‘Other Income’ of INR 6.2 crores, was mainly comprised of the ‘interest income and income from sale of current investments’. The book value of the current investments stood at INR 300 crores as on 31^st March, 2015. Following chart depicts their year on year revenue and PAT.

The loss for the company grew to INR 58.5 crores in FY 14-15 as against INR 7.6 crores in FY13-14. While the revenue grew only marginally this fiscal, certain expenses saw a tremendous increase – Advertising and Marketing expenses (grew by a whopping ten times) and Employee expenses (almost quadrupled) – thus increasing Urban Ladder’s losses many folds. There was also a spurt in the Courier and Delivery Charges (from INR 81 lacs to INR 4.9 crores) and Labour Charges (from INR 58 lacs to INR 3.9 crores). The company provides free home delivery of furniture and free installation.

About Urban Ladder

Urban Ladder was co-founded by Ashish Goel and Rajiv Srivatsa in 2012. It provides an online marketplace for furniture and home décor and operates across 30 cities in India. It provides the service through the website as well as 3 different mobile apps. Its major competitors include Goldman Sachs backed Pepperfry and Rocket Internet backed FabFurnish. As per the documents available with the Registrar of Companies, so far it has raised around INR 460 crores from multiple investors including Kalaari Capital, Sequoia Capital, SAIF Partners, Steadview Capital, Anand and Venky LLC, Ratan Tata and Massachusetts Institute of Technology (MIT) among others.

Urban Ladder was one of the early entrants in the online furniture retail space, which used to be a niche till a few years back. With a strong focus on quality, they are trying to build their USP on high end designs and great customer experience. With several established players and many more new ones coming in this space, battle is only going to get more intense.

This article was originally published here by Team Tofler.

Author– Vishal, a Sci-fi enthusiast, engineer by mistake and writer by choice, combines his eye for numbers with a natural flair for storytelling to churn out Tofler’s blogs.

Editor –  Anchal, founder at Tofler, is a CA, CS and has more than 5 years experience in company analysis. She likes to explore and track companies, their performance and senior management.

A.M. Marketplaces Private Limited which owns and operates Limeroad, the social discovery e-commerce platform for women, has reported its latest revenue figures. The company earned revenue of INR 15.6 crores in FY 14-15 compared to INR 2.6 crores in FY 13-14. However, the company’s losses more than doubled to INR 32.5 crore from INR 14.3 crore in the previous fiscal.

Financial Performance

The revenue from operations grew from INR 1.8 crores in FY 14 to INR 9.3 crores in FY 15. This (60% of total revenue) is comprised of ‘Commission Income’ (55%), ‘Shipping Charges’ (3%) and ‘Collection Charges’ (1%). Other Income (Income from Interest on Bank Deposits) contributed 40% to the total revenue at INR 6.3 crores.

The expenses stood at INR 48 crores. The biggest expense was the Advertisement and Sales Promotion expense at INR 18.2 crores, 38% of the total expenses. The following is a breakup of the expenses:

About Limeroad

Limeroad is a unique ecommerce platform that allows its users (women) to create and share different looks apart from shopping on the website as well. Ankush Mehra, Suchi Mukherjee and Prashant Malik, the founders came up with this unique proposition for women through a ‘social ecommerce platform’, where they can create a unique look, from a range of products available on the app, on a virtual scrapbook and share and sell the look as well. The range includes clothing, accessories, footwear, bags and home and décor products from various brands and SME vendors.

The company has raised a total of INR 298 crores (~$50 million) in three rounds of funding from Tiger Global, Lightspeed Venture and Matrix Partners.

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Although not a direct competitor, Jabong and Myntra are key players among lifestyle e-tailers in India. Roposo and Zivame can be considered among direct competition of Limeroad. Limeroad has approached fashion e-commerce with a novel approach. With consumers facing a problem of plenty, for every such platform, engaging their users is the key and Limeroad seems to be doing that well.

This article was originally published here by Team Tofler.

Author– Vishal, a Sci-fi enthusiast, engineer by mistake and writer by choice, combines his eye for numbers with a natural flair for storytelling to churn out Tofler’s blogs.

Editor –  Anchal, founder at Tofler, is a CA, CS and has more than 5 years experience in company analysis. She likes to explore and track companies, their performance and senior management.

TV18 Home Shopping Network Limited, which owns and operates HomeShop18 has reported its latest revenue figures for FY 14-15. Total revenue figure stood at INR 450 crores compared to INR 368 crores in previous fiscal, registering a growth of 22%. The loss figures doubled from INR 84 crores in FY 13-14 to INR 175 crores FY 14-15.

Financial Performance

The revenue from operations stood at INR 444 crores which grew by 23% over the previous year. This is comprised of ‘Commission on sale of products’ (98%), ‘Reimbursement of freight and collection expenses’ (1%) and ‘Sponsorship income’ (1%).

The company’s expenses increased from INR 452 crores to INR 619 crores. The breakup of the expenses is as follows:

About HomeShop 18

HomeShop 18 is among the leading digital commerce platforms in the country. It has presence across TV, web and mobile. However, the TV channel contributed 99% to the company’s revenues in FY14-15. The company offers digital, clothing, lifestyle and appliances from over 1500 brands in the country and operates on a marketplace model. As per its Directors Report – The Company has a combined reach of around 250 million consumers and has placed over 33 million orders in the last seven years. They also claim to be one of the largest marketing & distribution platform for mobiles and digital cameras in the country.

How does HomeShop 18 fare compared to its peers

The biggest player in this segment is Shop CJ Alive (backed by Star India), followed by HomeShop 18 (backed by Network 18) and Naaptol, which initially started as an e-commerce platform. Combined together they hold 85% share of the television home shopping market. The following chart summarizes their past two years’ turnover figures:

Though HomeShop 18 was the first entrant among the three in 2006, its operations started in 2008 only. Naaptol (2008) and Shop CJ (2008) came around later. Other new entrants in the segment include Best Deal TV and Den Snapdeal TV.

Although the number of internet users in India is on the rise, TV still has the largest viewership and maximum reach as far as households are concerned. This fact has led a number of players to enter into the TV Home Shopping segment. In fact, Snapdeal partnered with Den to launch Den Snapdeal TV in September last year, and it is among the bigger TV shopping portals in India.

This article was originally published here by Team Tofler.

Author– Vishal, a Sci-fi enthusiast, engineer by mistake and writer by choice, combines his eye for numbers with a natural flair for storytelling to churn out Tofler’s blogs.

Editor –  Anchal, founder at Tofler, is a CA, CS and has more than 5 years experience in company analysis. She likes to explore and track companies, their performance and senior management.

Jabong, the online fashion e-tailer, earned a revenue of INR 1083 crores in FY 14-15, double of that in previous year. The loss figures stood at 4% of the total revenue at INR 44 crores.

Financial Performance

The company has registered triple digit growth since inception. In the financial year ending March this year, Jabong reported a revenue of INR 1083 crores, which is a growth of 105% over the previous year figure of INR 527 crores. The company is yet to break even and made a loss of INR 44 crores in the period as compared to INR 17 crores in previous fiscal.

About Jabong

Xerion Retail Private Limited operates the e-retail platform jabong.com for trading of lifestyle products like apparels, footwear, jewelry and accessories. Co-founded by Arun Chandra Mohan, Lakshmi Potluri and Praveen Sinha in 2011, Jabong has been among the leading fashion and lifestyle platforms in the country. It offers more than 2000 brands including Adidas, American Tourister, Gucci, Lee Cooper, Reebok, Van Heusen, UCB, etc. The company operates on an inventory-led model.

Jabong is a Global Fashion Group company, which operates fashion ecommerce companies across 27 countries. Jabong also offers Indian ethnic apparels across the globe through its international arm jabongworld.com.

Revenue Model

The company operates on an inventory-led model and around 98% of the revenue comes from the sale of the goods, the goods being the finished products that it keeps as inventory. In effect, the major expense for the company is the ‘Purchase of goods’ which stood at INR 837 crores. The other major expense was the logistics expense which stood at INR 161 crores. It does not charge any shipping fee from the customers. The discounting charges were INR 6.3 crores. The following chart gives a break-up of the expenses.

While Flipkart and Snapdeal have been offering lifestyle products to their customers since their early days, Amazon also started offering lifestyle products this year. Myntra, its largest competitor, was acquired by Flipkart in May 2014. Its other competitors include Yepme, Yebhi, Koovs, Fashion and You among others.

Jabong had been at par in sales with Myntra till the time Myntra got acquired, but has been losing the market share ever since. There were talks of Jabong’s acquisition by Paytm this September following the exit of founding team. It was reported at the time that Jabong was being valued at somewhere between $500 million and $800 million. It appears that the acquisition did not go through, instead, there were plans to overhaul the senior management.

This article was originally published here by Team Tofler.

Author– Vishal, a Sci-fi enthusiast, engineer by mistake and writer by choice, combines his eye for numbers with natural flair for storytelling to churn out Tofler’s blogs.

Editor –  Anchal, founder at Tofler, is a CA, CS and has more than 5 years experience in company analysis. She likes to explore and track companies, their performance and senior management.

Locodel Solutions Private Limited which owns and operates the app only hyper local delivery service, Grofers has reported its annual returns with the Registrar of Companies for the financial year 2014-15. The company reported revenue of INR 86 lacs at a loss of INR 3.9 crores in the year.

About Grofers

Grofers was founded in 2013 by Saurabh Kumar and Albinder Dhindsa. It offers a wide range of products for instant delivery through its mobile app. According to Grofers’ website, it offers more than 1,20,000 products across various categories including fresh produce, grocery, bakery, cosmetics, household and recently electronic goods as well. The app provides the users the choice to order goods from nearby local stores and get those delivered within 90 minutes of placing the order. It is present across 26 cities in India.

Grofers is in its third year of operations. The company had initially started as a B2B service and later switched to the hyperlocal B2C model. It had launched its mobile app last year in December for customers use.

Financial Performance of Grofers

The company reported a revenue of INR 86 lacs in FY14-15 compared to INR 1.8 lacs in FY13-14. Out of INR 86 lacs, INR 73 lacs was revenue from operations. The company realizes its revenue from the commission on sale of products and reimbursement of freight and collection expenses from the vendors.

The company made a loss of INR 3.9 crores in FY14-15 compared to a loss of INR 2.8 lacs the previous fiscal. Largest expense head was ‘Employee Expenses’ at INR 2.2 crores, followed by ‘Manpower Supply charges’ at INR 61 lacs and ‘Advertising Promotional Expense at INR 60 lacs’.

According to Grofers’ website, their mobile app has 1.6 million downloads and it took only 10 days for Grofers to spread across 17 cities in the country. Evidently, the company has been on a major expansion spree in the past few months. This has been fueled by 3 rounds of funding received from Sequoia and Tiger Global. As per the documents filed with the Registrar of Companies, it had raised INR 305 crores (~$50 million) till August this year. It was widely reported in the news that Grofers had raised another $120 million in November 2015, from a group of investors led by Softbank, but they have not filed any documents for the same.

The other major players in the hyperlocal groceries delivery include BigBasket (operational in 13 cities) and Peppertap (operational in 19 cities). There are currently more than 20 startups operating across India in this space after a few of them shut shops this year.

Recently, major e-commerce players have jumped in to get a share of the hyperlocal pie as well. Flipkart Nearby and Amazon Kirana are operational in Bangaluru and are offering groceries at customer’s doorsteps. Ola also launched their Ola Store to provide instant delivery of groceries. Hyperlocal seems to be the buzzword and early entrants (and heavily funded) players like Grofers seem to be at the forefront in this space. As the segment matures and looks to consolidate, few big acquisitions may be on the cards. For now, they have made lives easier for a large number of people.

This article was originally published here by Team Tofler.

Author– Vishal, a Sci-fi enthusiast, engineer by mistake and writer by choice, combines his eye for numbers with natural flair for storytelling to churn out Tofler’s blogs.

Editor –  Anchal, founder at Tofler, is a CA, CS and has more than 5 years experience in company analysis. She likes to explore and track companies, their performance and senior management.