Tata-backed Cult.fit’s loss widens slightly, eyes profitability by FY24

“In the first three months of FY22, fitness centres were completely shut. However, we had costs of keeping the centres and employees. While gyms reopened in July, they were not allowed to run at 50% capacity. As a result, revenues did not rebound to the full potential,” Naresh Krishnaswamy, business head, Cult.fit, told Mint.

In the last financial year, the company also made a string of acquisitions to support its inorganic expansion. “The acquisitions have costs associated with it, which adds to the losses,” Krishnaswamy explained.

The health and wellness platform operated by CureFit Healthcare Pvt. Ltd posted a 34% year-on-year growth in revenue to ₹215.7 crore, as per its annual financial statement filed with the Registrar of Companies.

While Cult.fit made significant gains in the last fiscal, it is yet to match and beat its performance in FY20, in which it posted a revenue of about ₹496 crore. However, leaving the pandemic blues behind, the company is now eyeing a splendid comeback with FY23.

“We have significantly grown over FY20, and are much bigger than what we were pre-pandemic. The fitness business and the fitness products business are driving the growth for the company. These businesses combined will help us to be operationally profitable in FY24,” Krishnaswamy said.

Cult.fit became a unicorn in November last year after the company raised $50 million in cash from Zomato Ltd at a valuation of $1.5 billion. In 2020, the company raised ₹832 crore in a funding round led by the Singapore government-backed Temasek and other investors such as GableHorn Investments and Ascent Capital.

In the financial year under review, the company acquired a majority stake in F2 Fun & Fitness to become the master franchise partner for Gold’s Gym in India. At that time, Gold’s Gym was the second-largest fitness chain in India operating over 140 centres in 90 plus cities.

Prior to this, the company acquired multiple fitness firms, including sports discovery platform Fitso, gym aggregator Fitternity, San Francisco-based fitness company Onyx, and Bengaluru-based a1000yoga and integrated mental wellness platform Seraniti.

Founded in 2016 by Mukesh Bansal and Ankit Nagori, Cult.fit also provides healthcare services via Care.fit as well as the mental wellness unit Mind.fit. It also sells healthy food, fitness products, and branded merchandise.

Cult.fit hived off its food business Eat.fit as Curefoods in October 2020, with Nagori heading the new venture. Nagori had swapped his equity in Cure Fit for larger ownership in CureFoods.

In FY22, the Bengaluru-headquartered company saw its expense grow one-third to nearly ₹1000 crore from ₹756 crore in the last fiscal. Employee benefits expense contributed about 30% of the overall cost at ₹292 crore in FY22, up from ₹211 crore in the year-ago period.

In FY22, the company spent close to ₹89 crore on marketing while its cost for purchasing raw materials stood at ₹37 crore. It also spent ₹88.4 crore on finished goods in FY22.

Finance costs and legal professional charges stood at ₹72 crore and ₹86 crore, respectively, in the last financial year. Also, the company paid ₹13.5 crore as a commission to agents.