Varun Alagh on Cash-Flow Discipline

Advertising efficiency became the second flashpoint. Mamaearth reportedly spent about 40% of revenue on marketing with a Return on Advertising Spends (ROAS) of roughly 2.6, compared to Nykaa's 7.8 and Hindustan Unilever's 10.6. That gap raised the question of whether the brand's growth was sustainable without continued heavy ad-spend reinvestment — a structural challenge for D2C brands at scale.

Kuruganti further questioned the marketing math: Mamaearth's FY22 marketing expenditure was roughly ₹391 crore against sales of ₹932 crore — implying Honasa was spending around 40% of revenue on advertising. He flagged that Honasa itself disclosed plans to deploy roughly ₹186 crore of IPO proceeds for marketing, raising concerns that public-market money would fund ongoing ad-spend rather than capacity-building.

Honasa's revenue trajectory was cited as both a strength and a weakness: revenue from operations moved from ₹1,097.84 million in FY20 to ₹4,599.9 million in FY21 to ₹9,434.65 million in FY22 — a 4.2x step-up then a 2x step-up. Strong growth, but critics argued the growth had been purchased with disproportionate ad-spend, not earned through durable brand equity.

On the marketing playbook, Varun is emphatic that purpose, sustainability and being toxin-free drive brand conversations, and that millennials trust other millennials — making influencer marketing the most important channel for the company. Honasa works with thousands of influencers each month and intends to keep doubling down on that channel, an approach that subsequently drew scrutiny for its high advertising-to-revenue ratio.