IPO-bound Paytm Narrows Losses To Rs 1,701 Cr, Reduces Expenses In FY21

As it readies for its mega initial public offering later this year, digital payments company Paytm narrowed its losses 42 per cent to Rs 1,701 crore in the financial year ended March 31, from Rs 2,942 crore a year ago.

The company has been focused on getting on the road to profitability as it prepares for its IPO and is expected to file its Draft Red Herring Prospectus with the markets regulator Securities and Exchange Board of India next month.

Revenue from operations fell 14.5 per cent to Rs 2,802.41 crore during the year, according to the company's annual report, which is yet to be filed to the Registrar of Companies.

In FY20, Paytm had recorded a one time "recovery of marketing expense" of Rs 255 crore under "other operating revenue". Excluding this one time expense, the revenue in FY20 was Rs 3,025 crore.

Marketing and promotional expenses also more than halved to Rs 532 crore in FY21, from Rs 1,397 crore a year ago.

"Despite a significant disruption in the business of our merchant partners due to the ongoing pandemic especially in the first half of the year, we have had a minimal impact on revenues, due to strong recovery in the second half of the year," said a Paytm spokesperson.

Total expenses were also down 28 per cent to Rs 4,782 crore during the financial year.

"The Company has considered the possible effects that may result from Covid-19, on the carrying amount of the receivables, investments, goodwill etc. While making the assessment the Company has taken cognizance of internal and external information up to the date of approval of Financial Statements. The Company based on current estimates expects the carrying amount of the above assets will be recovered," Paytm has noted in its annual report.

Paytm has investors such as Ant Financial, which holds around 37 per cent stake; SoftBank Vision Fund and Elevation Capital (the erstwhile SAIF Partners), which have around 20 per cent stake each; and founder and Chief Executive Officer Vijay Shekar Sharma, who holds 14.67 per cent stake.

The IPO plan received in-principle approval from Paytm’s board on Friday. If successful, this could be the biggest IPO by an Indian company, breaking Coal India’s 2010 record of Rs 15,475 crore.

Paytm is also targeting a valuation of $25-30 billion, 1.5-1.8 times the current $16 billion. A recent report by Bernstein Research says that Paytm is not just a financial app provider but a group of synergistic fintech platforms.

The Paytm ecosystem covers payments (wallet/UPI), merchant acquiring, credit saving, asset management, insurance and broking services to complement its ecommerce/e-ticketing platforms.

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