Logistics company Rivigo expects to turn profitable in the current financial year as the firm has been able to keep costs in check. Sales have also been brisk since its relay trucking model allows it to reduce transit time considerably, thereby charging a premium from customers.
Co-founder Gazal Kalra said fuel, truck driver salaries, toll charges, maintenance costs and EMI (on vehicles, it owns its fleet of trucks) form the major expenses of the company with fuel and employee costs accounting for the bulk of it. While technical innovations, one that allows the firm to monitor drivers’ fuel consumption helps it trim fuel bill, its relay trucking model aids in reducing employee expenses.
Kalra said that a relay trucking model is one where drivers change over after every few hundred kilometres of driving through a network of change over stops called relay pit-stops and then get rostered back to their home base.
To put it simply, a typical transporter would station its fleet of trucks at production centres (like Chennai, acts an auto hub) and drivers would need to migrate to that centre from far-flung areas such as Bihar or Rajasthan, inflating their wage bill in the process. “For 3,000 trucks, we have a network of 70 pit stops in India and they (drivers) are hired all across which means in a pit stop I need only a certain number of drivers (usually depends on the number of consignments to be dispatched per day). Our wages have not gone up in the past four years because the cost of living for a relay pilot is much lower,” Kalra said.
Nonetheless, Gurgaon-based Rivigo’s losses increased by about 100% to `244.95 crore in the year to March 2018 compared to the previous year. During the period, rate of revenue growth also declined. While revenues grew by around 166% to `388.42 crore in FY17 against the year-ago period, in FY18 revenues increased by over 70% to `692.47 crore, data sourced from business intelligence platform Tofler showed.
Already a unicorn, Rivigo is likely to raise another round of funding this fiscal, Kalra said. Sources said the firm is in talks to raise up to $100 million. Last month, the firm raised $65 million from Warburg Pincus, SAIF Partners and others. So far, Rivigo has so far raised close to $280 million.
Kalra said the company incurred losses as it had been rolling out new businesses every year since its launch in 2014 which entailed significant costs. “Starting this year, lots of cost-efficiencies have kicked in, revenues are growing. We will be hitting profitability this year,” Kalra said. Rivigo provides services to over 5,000 customers across more than 20 sectors. “There is customer willingness to pay for a better service. Faster transit is a capability,” Kalra added without commenting on the premium they charge.
Rivigo that competes with firms like Delhivery and BlackBuck delivers to about 29,000 pin codes in India and claims to have the largest network coverage. The firm, however, is not looking at international expansion currently.