BQ Exclusive: Losses For Paytm’s Parent Firm Surged In FY19

Vijay Shekhar Sharma promoted One97 Communications Ltd., the parent company of Paytm, has reported a surge in losses for financial year 2018-19.

The company reported a loss of Rs 4,217.20 crore on a consolidated basis for the financial year ended March 2019, compared with Rs 1,604.34 crore in the year ago period, according to the annual report sent out by the company to shareholders. BloombergQuint has seen a copy of the annual report.

A email sent to the company and a text message sent to Vijay Shekhar Sharma did not elicit an immediate response.

Revenue from operations rose marginally to Rs 3232.01 crore in FY19, up from Rs 3,052 crore in FY18. Expenses, however, surged to Rs 7,730 crore in FY19, compared to Rs 4,864 crore a year ago.

The company also saw debt levels rise during the year to Rs 695.4 crore as of the end of March 2019 from Rs 241.6 crore a year ago.

Loss-Making Businesses

One97 Communications has nearly 27 subsidiaries, associates or joint ventures, according to the annual report. While One97 reported a standalone loss of Rs 3959.78 crore, other top money losers include deals and discovery platforms Little Internet Pvt Ltd. and Nearby Indian Pvt Ltd., wealth management unit Paytm Money Ltd., and Insider.in ticketing platform operator Wasteland Entertainment Pvt Ltd.

One 97 said while 56 percent of the company's turnover comes from payments business, the rest is contributed by commerce.

Surging Expenses

Explaining the significant jump in losses, the company said that it had incurred large capital expenditure during the year. In all, the parent spent nearly $1 billion, about Rs 7,730.14 crore, in expenses alone in FY19.

The company has incurred huge capital expenditure in creating a brand and establishing its business activity. We have incurred a considerable amount in various capital and operational expenditures which resulted into losses during the financial year.

One97 Communication Ltd Annual Report

One 97’s standalone expenses on the payments gateway nearly doubled to Rs 2,241 crore, followed by marketing and promotion expenses worth Rs 2,805 crore. It spent nearly Rs 561 crore on advertisements alone.

The annual report further states that it is focusing on strengthening its position in various business segments like the payments bank, insurance and insurance broking, travel ticketing, hotel, mobile wallet services etc. and that would result into better turnover in coming fiscal years.

“We are committed to grow this business further and turn it into a profitable business in the years ahead,” the annual report said.

The company’s losses have been on the rise for the last three financial years, rising from Rs 900 crore in FY17, shows data from annual reports filed by the company.

One97, which started in 2010 as a mobile recharge services provider, offers a host of payment solutions including a digital wallet and the Paytm Payments Bank. It also counts the Paytm Mall as part of its units.

The Alibaba Group is One97’s largest shareholder with 38.19 percent stake, followed by SAIF Partners, which holds 19.91 percent, and the SoftBank Group, which holds 19.69 percent, according to the filings. Founder Vijay Shekhar Sharma owns 15.73 percent. Berkshire Hathaway holds 2.96 percent. These are the top five shareholders at Paytm.

(Updates an earlier version to correct the shareholding of SAIF Partners).