Monday, 25 February 2019

PAYTM (One97 Communications Ltd) Losses surging in 2019-2020!

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One97 Communication Ltd the parent company of “Paytm” sees its losses to double in the year starting 1st April, 2019. This rise in losses in Paytm are attributed to the aggressive expansion push by parent company to take on bigger rivals in the e-commerce space such as Amazon, Walmart-flipkart, etc.
One97 Communications Ltd had reported losses of Rs. 1490 Crs (Standalone) & Rs.1604 Crs (Consolidated) in FY2018 which was almost double compared to losses reported in FY2017 of Rs. 880 Crs (Standalone) & Rs.900 Crs (Consolidated). The reasons attributed to this losses were huge capital expenditures in creating brand and establishing its business activities.
Due to aggressive expansion and market capturing strategies Paytm expects its losses to surge to around Rs. 2100 Crs and a negative net free cash flow of Rs.1400 Crs in FY2020.
One97 has launched 25 subsidiaries and 5 associate companies in less than a decade. Out of these 8 of them had reported huge and significant losses, which has made the company to plan scaling down its cash – burning online businesses or selling stake in them and augment its offline business venture.
Paytm group is losing more money in its online retail business than its digital payments services. The online retail business Paytm Mall” reported a loss of Rs. 1787.55 Crs on total revenue of Rs. 774 Crs in FY 2018.
So in order to reduce the losses and negative cash flow trend since years One97 increased its working capital limit from currently Rs.400 crs from bank to Rs. 1400 Crs from ICICI Bank in Feb, 2019 by hypothecation of all its current assets worth Rs.7085Crs as on 31stMarch 2018 and mutual fund investments.

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