Sugar Cosmetics posts Rs 222 Cr revenue in FY22, losses surge 3.6X

Over the past four to five years, direct-to-consumer (D2C) beauty brands have grown at a breakneck pace with startups like MamaEarth and Sugar Cosmetics dominating the market. While MamaEarth’s revenue grew 2X and touched the Rs 950 crore mark in FY22, Sugar also managed to grow its top line by 75.6% to Rs 222 crore during the fiscal year ending March 2022.

Although its top line grew, Sugar seems to have lost its projected revenue of Rs 300 crore for FY22 with a significant margin.


Collection from the sale of cosmetic and beauty products rose by 75.6% to Rs 221.8 crore in FY22 from Rs 126.34 crore in FY21. The company collected Rs 3 lakh as export incentives. Apart from this, Sugar also booked a non-operating income of Rs 2 crore which includes interest earned on current investments.


Sugar sells its products on e-commerce marketplaces including Amazon, Nykaa, and Myntra. It also retails through its own website and mobile apps to facilitate sales outside India. In addition, the brand leverages social media channels to reach its target audiences through advertising campaigns, paid partnerships, and influencer marketing programs. According to the company, lipsticks are a big seller for the brand, contributing about 60% of the revenue followed by face products. During FY22, it also entered the hair category through the acquisition of ENN beauty.

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In terms of costs, advertising and sales promotion costs accounted for 32.5% of total expenditure. The cost increased 2.8X to Rs 97.54 crore in FY22 from Rs 34.36 crore in FY21. Another major expense was the cost of procurement of cosmetic products from manufacturers and rose by around 63% to Rs 66.35 crore during FY22.


Employee benefit expenses increased by 85% to Rs 35.52 crore during the year from Rs 19.2 crore in FY21. Sugar employs outsourcing and labor support for its supply chain operations and spent Rs 43.61 crore on the same. This cost increased by more than 98% from Rs 22 crore in FY21.

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The Vineeta Singh-led company incurred freight and packaging charges of Rs 13.25 crore in FY22 which increased by 50.6% from Rs 8.8 crore booked in the previous fiscal year (FY21). Going beyond the revenue, the company’s total expenditure almost doubled to Rs 300 crore in FY22 from Rs 149 crore in FY21.

On expenses, the company’s losses widened 3.6X to Rs 76.2 crore in FY22 against Rs 21.1 crore booked during FY21. High cash burn led to a 4X rise in operating cash outflow to Rs 84 crore during the last fiscal compared to Rs 20.6 crore in FY21.

Coming to ratios, EBITDA and ROCE margin declined to -30.19% and -78.75% during the year. At the unit level, the Mumbai-based company spent Rs 1.35 crore to earn operating income in FY22.

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In May, Sugar scooped up $50 million in the Series D round led L Catterton with participation from existing investors such as A91 Partners, Elevation Capital, and India Quotient. During the fundraising, the company being claimed that its current annual revenue rate is around Rs 500 crore and expects to reach Rs 2,000 crore in the next 24-36 months.

Although the company did not meet its own target, it appears to have grown well in FY22 with more customers turning to native D2C brands. That said, most D2C companies see their growth plateau at some point for reasons like high customer acquisition costs, among others. And with rising inflation, consumers may not spend as much on necessities like cosmetics, which could be a reflection of Sugar Cosmetics’ financial situation in the ongoing fiscal.


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