Paper Boat weathers storm season, makes operating profit

After a year of slowing sales, ethnic drinks brand Paper Boat is back on the high ground.

Hector Beverages, the company that owns and sells the juice brand, posted a 71% increase in revenues at ? 118 crores for fiscal 2018, compared with Rs 69 crore the previous year and is targeting Rs 200 crore this year.

It also trimmed the net loss and claimed to have posted a profit on an operational basis, or before interest, tax, depreciation, and amortization, in May.

The Sequoia Capital and Hillhouse Capital-backed company managed to reduce net losses for FY18 by over 43% to come in at Rs 44 crore as compared to Rs 78 crore in FY17. With this, the firm has been able to retain its CAGR at about 70% over a large part of its 7-year journey.

The FY18 financials shared by the firm are unaudited and may see some changes when the audited report is submitted.

Hector Beverages’ growth in FY18 is significant as it comes after a year which saw the firm grow its slowest, at a rate of 12.5% in FY17.

While industry insiders attributed FY17’s slowing sales to health-conscious consumers who cut back on sugar products, Hector Beverages maintains that it was a result of shutting down its energy drink brand Tzinga, change in distribution strategy along with demonetization which rendered a washout in sales in October-December 2016 for the firm.

“There were 2-3 months where we neither had direct nor indirect distribution and almost zero sales gave it was coupled with demonetization. That led to the impact on FY17 revenues but at the end of FY18, the brand has bounced back stronger and May has been our first Ebitda positive month,” said Neeraj Kakkar, co-founder of Hector Beverages. Hector Beverages has had a successful run since former Coca-Cola employees Neeraj Kakkar and Neeraj Biyani founded it in 2010. While its first product was energy drink Tzinga, the company shifted complete focus to the ethnic drinks segment two years later and managed to create a niche for itself, growing at a stellar pace since 2012 until 2016.

The first quarter of FY19 has seen the firm clock monthly revenues of Rs 20 crore and Kakkar expects to end FY19 with revenues crossing Rs 200 crore.

Source:-https://retail.economictimes.indiatimes.com/news/food-entertainment/grocery/paper-boat-weathers-storm-season-makes-operating-profit/64758101

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