News Update

In FY22, Cult.fit lost close to Rs 700 Cr while revenue increased by 34%

• ByStartupStory     |    November 11, 2022

Cult. fit (formerly Cure. fit), a health and wellness platform, increased its revenue in FY22 by more than 34% to Rs 216 crore. This comes after the Mukesh Bansal-led company was severely harmed by the covid-induced shutdown, which caused its topline to decrease from over Rs 500 crore in FY20 to Rs 161 crore in FY21. However, the increase in sales continues to come at a hefty price, with losses close to Rs 700 crore. In FY22, operating revenue for Cult.fit increased 34% to Rs 216 crore, according to the annual financial report submitted to the Registrar of Companies (RoC). Cult.fit’s primary source of income, accounting for 65.3% of operational income, is the fitness vertical. This income increased by 35.6% to Rs. 141 crores during the last fiscal year. Revenue from direct-to-consumer and healthcare services (via Care.fit and Mind.fit) surged 21X to Rs 63 crore in FY22, but sales of sporting goods and other products sold under the brand name Cult decreased 68% to Rs 12 crore.Cult.fit became the 36th unicorn of 2021 during FY22 by acquiring $100 million from food tech giant Zomato and $75 million from Tata Digital.

Cult.fit’s only focus was the fitness vertical after splitting off its cloud kitchen vertical Eat.fit [under Curefoods], and owing to lockdown constraints, it had to move most of its business online. Employee benefits costs for Cult.fit emerged as the greatest cost centre, accounting for around 30% of the total cost, despite the company’s efforts to streamline its operations, lay off a significant number of people, and shift to digital. In FY22, this expense grew by 38.4% to Rs 292 crore, including Rs 69 crore for ESOP costs. Ankit Nagori, the other co-founder of Cult.fit, is now in charge of Eat.fit, but the company has also spun out Care.fit into Sugar.fit.The second significant expense for Cult.fit with the fitness-focused business is the cost of purchasing gear and equipment, which climbed 5X to Rs 103 crore in FY22. The company’s expenditures on advertising and promotion increased by 25.4% to Rs 89 crore in FY22.

For the physical centres it manages, the company has lease financing arrangements in place; in FY22, these expenditures decreased by 7% YoY to Rs 72 crore. More than 200 of the more than 600 facilities that Cult.fit now operates are centres. In FY22, costs for legal and IT services were recorded at Rs 86 crore and Rs 20 crore, respectively, raising the total cost by more than 31% to Rs 996 crore for the fiscal year ended March 2022. Over a dozen startups have also been purchased by Cult.fit in recent years. It took over seven startups in 2021 alone. In order to become the master franchise partner for Gold’s Gym in India, the group purchased a majority position in F2 Fun & Fitness India Pvt Ltd earlier this year. The company’s losses increased by 3% to Rs 690 crore in FY22 as expenses approached Rs 1,000 crore. To put it another way, each unit of operating revenue cost the business Rs 4.61.

Although Cult.fit has struggled to keep costs under control, the company apparently plans to go public in 12 to 18 months. The company asserts that its primary gym operation is now profitable. Future quarters will show whether or not that assertion is valid, although it is true that the company’s costs have remained surprisingly stable despite fluctuating revenue figures. Fitness industry players we’ve spoken with in the past have consistently cited problems with the business model, where most agree that being local or hyperlocal beats any kind of standard state or national-level plan. It should be interesting to see the development Cult.fit finally makes in FY23 as it continues to work to disprove them with the support of its investors.

Follow Startup Story