BY THE NUMBERS

Paper Boat

Superman of traditional recipes?

Hector Beverages has successfully commercialised Indian ethnic drinks like aamras, jaljeera and aam panna under the brand name Paper Boat. And it has steadily gained popularity in the market, if we were to go by this financial year’s numbers. Founded in 2009 by Neeraj Kakkar and Neeraj Biyani—both former Coca-Cola India employees—the FMCG startup has established itself as an alternative to fizzy drinks and fruit juices. The company’s steadily growing popularity has attracted many investors, starting with NR Narayana Murthy’s venture capital fund Catamaran Investment, which invested Rs 15 crore in 2011. The firm now has five major investors, including Sequoia Capital.

PAPERBOAT

Hector Beverages Private Limited

Name as per MCA records

Neeraj Kakkar

Founder and CEO

Bengaluru

Headquarters

INVESTORS

Sequoia Capital

Hillhouse Capital Group

Sofina

Catamaran Ventures

RIVALS

Dabur Yoodley

B Natural

Raw Pressery

What has Paper Boat been up to, in the last year?

After cashing in on traditional local drinks, the company entered the ethnic snacks segment and launched its first food product last year. Peanut chikki (brittle) was the first traditional sweet which hit the Indian market last year under the Paper Boat brand. It went deeper into the sweet meat category as well. In a BusinessLine article, Neeraj Kakkar said, “Products like groundnut sweet, a traditional Indian sweet, ideally fits Paper Boat’s DNA. Possibly the next product in line would be aam paapad.” News reports from VCCircle suggest that the company received a fresh round of funding from existing investors and debt from Trifecta Capital Advisors.

Results

Rs 68.92 crore: The sales revenue of Hector Beverages in FY17. In the last fiscal year, the revenue had doubled on a year-on-year basis from Rs 31 crore to about Rs 61.2 crore. Compared to that, this is just a marginal growth of around 12.55%.

Rs 30 crore: The total cost on advertising and marketing during the financial year—a significant drop of 32% compared to FY16.

Rs 30.02 crore: Salaries paid to employees in FY17; a 8.41% increase from FY16.

Rs 78 crore: The total loss incurred in FY17, down 7% compared to last year. While the founders believe that reducing the advertising cost will lead to profitability, the reduction in loss does not seem to be in line with its ambitions.

Where is the company headed?

Speaking to Mint last year, both the founders said that the company will be profitable if they reduced the cost on advertising and marketing; they did and the loss didn’t turn to zero. For Paper Boat to turn profitable, the company will have to amp up its sales. It will now have to find ways to make its marketing dollars give more bang for their buck. If Paper Boat wants to take the same route, expect more pressure on digital platforms to make sales tick. There is also a chance that Paper Boat will increase its distribution channels as time goes by. But there is always the fear of losing market share to more traditional players such as Dabur’s Yoodley and new age Raw Pressery, which target similar, if not same, customers.

Clarification: Paper Boat’s operation revenue for FY16 was written as Rs 63 crore when it was actually Rs 61.2 crore. The error is regretted.

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