Paytm Bleeds Red As Net Loss Increases by 312% In FY16 To Rs 1534 Cr; Creates Separate Ecommerce Business

As per a recent filing with the registrar of companies, Paytm is bleeding red, on a massive scale.

Compared to financial year 2014-15, Paytm has reported 312% more net loss for the financial year ending March, 2016. As per the details provided to the registrar, Paytm incurred net loss of Rs 1534 crore for the period 2015-16, compared to Rs 372 crore net loss in 2014-15.

Interestingly, last year, Paytm posted revenues of Rs 337 crore, against which, net loss of Rs 372 crore was reported. However, this year, Paytm has refused to share the revenue numbers; only net loss of Rs 1534 crore has been reported.

Earlier this year, Paytm had allocated a budget of Rs 400 crore for marketing their new payments bank, besides announcing to hire 3000 people for the same purpose. Besides, they are paying Rs 2.42 crore for every cricket match played by Indian cricket team till 2019.

Most probably, this increased net loss of 312% amounts to such endeavors; although no official statement has been released regarding the same.

For the next financial year, Paytm is pretty bullish, as they have estimated revenues of Rs 869 crore, which is an increase of 157% compared to 2014-15.

As per the recent filings, Paytm has been valued at USD 2.29 billion as on June 30, 2016.

Another interesting revelation from the RoC filing: Total of 2500 ‘preferential ‘ shares have been allocated to Naveen Tewari (Inmobi), Neeraj Arora (WhatsApp) and Ruchi Chandrakant Sangvi, and in turn they raised Rs 2.47 crore.

Total of 46.2 million shares were allocated by the company, as they said, “The amount invested in this offer will be utilised in the manner set forth in the business plan approved by the board of directors,”

Compared to Rs 491 crore as of March, 2015, their GMV had increased to Rs 717 crore as of June, 2015, an increase of 46%. Their estimated GMV for 2015-16 is $3.1 billion, as marketplace orders increased to 1.35 million as on June, 2015, compared to 7,80,000 as on March, 2015.

Paytm To Spin Off Ecommerce Division

In a related news, Paytm’s founding company, One97 Communications Ltd is all set to create a separate entity for controlling their ecommerce marketplace & payments business. The new name of this entity would be Paytm E-Commerce Pvt. Ltd.

Created on August 16, this new entity lists Vijay Shekhar Sharma, founder of One97 Communications Ltd as the majority shareholder. As per rumors, this new entity shall now raise more funds to compete in the cut-throat ecommerce business.

Paytm E-Commerce Pvt. Ltd. will now control both payments and online retail business arm of One97 Communications Ltd.

An unnamed person on condition of anonymity said, “Paytm has already started talking to existing investors, including Alibaba Group, to infuse fresh capital in the new entity,”

On this recent restructuring of the company, Vijay Shekhar Sharma diplomatically said, “Payments and e-commerce have different growth cycles and we believe e-commerce business can be a sizeable opportunity going forward.”

This is indeed an interesting development, considering the fact that Alibaba holds 41% stake in One97 Communications Ltd; and have been aggressive in recent months to launch their own ecommerce venture in India.

They have already planned to open a massive 20,000 sq feet office in Bengaluru, where Flipkart and Amazon has their headquarters. And recently, they poached Flipkart’s HR Head to expand their own operations in India.

Will Alibaba integrate Paytm’s ecommerce arm into their own and then launch a counterattack to take on Amazon and Flipkart?

We will keep you updated as more details come in..