Fintech startup Lendingkart turned profitable in the financial year 2022-23 (FY23) with a consolidated net profit of INR 118.8 Cr as against a net loss of INR 203.4 Cr in the prior fiscal, helped by a huge decline in its spending towards impairment loss on financial assets, loans and advances.
Lendingkart’s operating revenue also jumped 29.5% to INR 798.4 Cr in the reported fiscal year from INR 616.4 Cr in FY22.
Founded in 2014 by Harshvardhan Lunia, Lendingkart has an NBFC licence and disburses loans to micro, small and medium enterprises (MSMEs). The startup has two main revenue sources – income from interest and its financial services offerings.
Lendingkart earned INR 425.6 Cr from interest during the year under review, a drop of over 25% year-on-year (YoY). However, its income from other financial services, which includes platform fees, jumped more than 700% YoY to INR 372.8 Cr.
Including commission income from insurance and other non-operating income, Lendingkart’s total revenue stood at INR 858 Cr in FY23 as against INR 643.1 Cr in the previous year.
It is pertinent to note that Lendingkart announced the acquisition of digital lending platform Upwards during the reported fiscal year. However, the startup said in its FY23 financials filing that the transaction was still under requisite regulatory approvals.
Zooming Into The Expenses
Though the fintech startup saw an increase in its non-operating expenses, Lendingkart’s total expenses declined 15.5% to INR 751.5 Cr in FY23 from INR 889 Cr in the prior year following a sharp decrease in spending towards the impairment of financial instruments.
Cost Of Impairment: The startup’s impairment loss on financial assets, loans and advances declined to INR 112.1 Cr in FY23. Lendingkart had spent INR 434.7 Cr on provisions and loan write-offs in the previous fiscal year.
Besides, the startup also spent INR 414.7 Cr as additional Covid provisions, which comprised provisions carried on the restructured portfolio and management overlay other than the restructured portfolio, in FY22.
Finance Cost: Lendingkart’s finance cost increased 4.5% to INR 249.7 Cr in FY23 from INR 238.8 Cr in the previous year.
As per the startup’s disclosure, its finance cost included interest and other borrowing costs on funds used by the group for financing activities and other business requirements.
Lendingkart spent INR 93.2 Cr as interest expense on debt securities, which declined around 2% YoY.
On the other hand, its interest expense on non-current loans from banks also declined 14% YoY to INR 70.6 Cr in FY23.
However, the finance cost rose due to an increase in other borrowing costs.
Employee Cost: Lendingkart’s employee benefit expenses increased over 57% to INR 113.3 Cr in FY23 from INR 71.9 Cr in the previous fiscal. In that, INR 136.6 Cr was spent on salaries and wages.
The company’s employee share based payment (equity settled) declined slightly to INR 8.4 Cr during the year under review.
Advertising Promotional Expenses: The startup spent INR 27.6 Cr in advertising as against INR 13.2 Cr spent in the bucket in FY22.
It is pertinent to note that the fintech startup had roped in Indian actor Rajkummar Rao as its brand ambassador in FY23 for its brand campaigns.
Miscellaneous Expenses: Lendingkart spent INR 55.7 Cr towards miscellaneous expenses in FY23, which more than doubled YoY.
Miscellaneous expenses included corporate guarantee fees, branding fees, software expenses, marketing and sales promotion expenses, among others, in FY23.
Some of the other major expense buckets for Lendingkart included legal professional charges, training recruitment expenses, commission paid to other selling agents, and sovereign guarantee fees.
Earlier this year, Lendingkart secured $24 Mn in a long-term debt funding from growth-stage debt financing platform EvolutionX Debt Capital to drive further growth and enable financing to more MSMEs across India.
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