Urban Ladder Home Decor Solutions Pvt Ltd

URBAN LADDER HOME DECOR SOLUTIONS

Company Report: India-ecommerce-Unlisted 25 SEP 2014

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COMPANY BACKGROUND

Beginning

Urban Ladder Home Decor Solutions Pvt Ltd (ULHDSPL) was incorporated in Feb’12, just over 2 years ago. In that time, it has emerged as the leading name in furniture e-commerce in India, having raised 3 key rounds of funding aggregating over Rs 145 crore (Rs 1450m or about USD 24m).

ULHDSPL was promoted by Ashish Goel and Rajiv Srivatsa (both ~36). They were batchmates at Indian Institute of Management, Bangalore, from where they graduated in 2004. After their MBAs, they followed separate career paths: Srivatsa was first with Cognizant and then with Yahoo! in various roles, while Goel worked with McKinsey & Co. and then joined Amar Chitra Katha as the chief operating officer. Their last jobs brought them back to Bangalore around the same time. In September 2011, one was on the verge of leaving a job, the other just about to join a start-up, when they decided to seize the moment and launch their own baby. (Source: www.livemint.com)

Promoters

The current common equity of Urban Ladder is just over 10,000 shares. The 2 promoters Rajiv and Ashish hold 5,000 shares each.

Name No of Shares (%)

Ashish Goel 5,000 49.5%

Rajiv Srivatsa 5,000 49.5%

Others 100 1.0% Total 10,100 100.0%

From FY13 Annual Report

Board of Directors

Name Designation

Ashish Goel COO & Director

Koyambedu Ravi Rajiv Srivatsa CEO & Director

Vani Kola Director

Deepak Gaur Director (SAIF Nominee)

Ravi Mehta Director (Steadview Nominee)

Address

RE-308 , Purva Riviera

Marathahalli, Bangalore – 560 037

Karnataka, India

Financial Summary

Year ending June 30 FY11 FY12 FY13

Net Sales (Rs m) 0.0 0.0 25.4

EBITDA (Rs m) 0.0 0.0 -24.8

EBITDA Margin (%)

-97.5

PAT (Rs m) 0.0 0.0 -222.9

Net worth (Rs m) 0.0 0.0 28.3

Debt (Rs m) 0.0 0.0 0.0

Auditors M/s. PRV & Company, Chartered Accountants No. 610, 3rd Floor, 80ft Road, 6th Block Koramangala, Bangalore – 560095 Karnataka, India

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India-Ecommerce-Unlisted Urban Ladder 25 Sep’14

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The PE investor (Kalaari) held a nominal 100 shares each as on Mar’13, and the rest as convertible preference shares.

Post Mar’13, the company has done two more rounds of fund raise (described in section Funding and Future Plans)

The chart below shows likely shareholding on a fully diluted basis (note, these are IBR estimates, could be marginally wrong).

BUSINESS HIGHLIGHTS

Marketplace: Urban Ladder is a market place. As of Jun’14, it had 7 sellers whose products it was offering. The company intends to increase this number to 15 by Mar’15. Over a period of time, this will be increased to 50 sellers.

Geographies: Urban Ladder initially launched on an all-India basis with outsourced courier services. However, it quickly moved to inhouse logistics, and scaled down operations to 3 cities of Mumbai, Delhi and Bangalore to have better control on delivery and logistics costs.

It now delivers in 7 cities, having added Chennai, Pune, Hyderabad, Ahmedabad & Gandhinagar to the original three. As per media reports, the company intends to stay in these 7 cities in the near term, probably till Dec’14 or Mar’15, and will add more cities after that.

Ashish Goel was quoted in a Sep’14 as saying “We have decided to continue to deepen our focus in these cities for a while and refrain from increasing [our presence in other] cities for the next four months. Until December, we have decided to double the business and then figure out on what’s the right answer on expansion. We have a list of cities where we want to go to, but the growth in the existing cities

has been so crazy that we have decided to focus on them for now”. (Source: http://firstbiz.firstpost.com/)

People: Urban Ladder currently has around 100 employees, and is expected to double team size to 200 people by March 2015

FINANCIAL HIGHLIGHTS

FY13 was the first financial year of ULHDSPL. It declared revenues of Rs 24.5m, and incurred total expenses of Rs 50m, resulting in an EBITDA loss of Rs 25m.

However, since then the company has grown rapidly. The promoters were recently quoted as saying that they are doing 100-200 orders daily, with an average order size of Rs 15,000. This implies a revenue of Rs 1.5-3.0m on a daily basis. This suggests ULHDSPL could be headed for Rs 1000m (Rs1bn) plus turnover in FY15.

The company intends to achieve a turnover of Rs 952 crore (Rs 9.52b or about USD 160m) by FY19. The company expects to become profitable in FY18.

FUNDING AND FUTURE PLANS

As mentioned above, the company has raised 3 rounds of funding:

Rs 50m from Kalaari Capital in Oct’12

Rs 213m from SAIF in Oct’13

Rs 1204m in Jun’14 made of

Rs 701m Steadview Capital (invested from 3

funds)

Rs 296m from SAIF

Rs 207m from Kalaari

Summarising:

Funding Round Month Amount (Rs m)

Series A Oct'12 50.3

Series B Oct'13 213.4

Series C Jun'14 1,203.7



As per our estimates, the progression of valuations is as follows:

This suggests the valuations have moved sharply. For example, the gap between Series B and Series C is around 8 months, well less than a year. In this period, valuation seems to have moved by an amazing 5.6x!

This may be great new for the early investor Kalaari, which seems to have invested ~Rs 260m, and could be holding a stake of ~21% at a fully diluted level. This could mean the value of Kalaari’s investment could already be nearly 3x.

The larger Series C round seems to be at a pre money of Rs 2.32b (or a post money of around Rs 3.53b).

89.1 412.5

2,323.8

139.4 625.9

3,527.5

Series A Series B Series C

Deal Valuations (Rs mn)

Pre Money Post Money



FINANCIAL DETAILS

(FY13 was the first financial year of this company)

P&L (Rs mn) FY11 FY12 FY13

Net Sales

25.4

EBITDA

-24.8

Margin (%)

-97.5

Interest

0.0

Other Income

2.2

PBDT

-22.6

Depreciation

0.3

Extraordinary Item

0.0

PBT

-22.9

PAT

-22.9

PAT Margin (%) -90.2

Balance Sheet

(Rs mn) FY11 FY12 FY13

Liabilities

Equity Capital 0 0 1.2 Reserves 0 0 27.1 Shareholder Funds 0 0 28.3 Debt 0 0 0.0 Deferred tax liability 0 0 0.0 Other Long Term Lialilites 0 0 0.0 Total Liabilities 0 0 28.3

Assets

Fixed Assets (net) 0 0 1.4 Investments 0 0 0.0

Inventories 0 0 11.1 Debtors 0 0 1.4 Cash 0 0 18.5 Loans & Advances 0 0 2.6 Other CA 0 0 0.0

CL & Provisions 0 0 6.8 Net Current Assets 0 0 26.8 Misc Expenses 0 0 0.0



Total Assets 0 0 28.3

Ratios

N.a.

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