Angel investors and early institutional shareholders of ecommerce unicorn Meesho are reportedly in discussions with potential investors to divest their stake. WestBridge Capital and Norwest Venture Partners are reportedly among the investment firms engaging in discussions with Meesho’s early investors.

As per ET’s report, talks are underway for a transaction at a valuation ranging between $3-$3.5 Bn, but this figure may change. The publication further said that WestBridge has expressed interest in acquiring more shares in Meesho, while Norwest Venture Partners has also participated in the discussions.

The ongoing conversations primarily revolve around the negotiation of deal pricing, with early investors expressing their desire to exit the investment at this juncture.

It is to be noted that investment firm WestBridge Capital acquired a stake in the ecommerce unicorn in a secondary transaction from its early and long-term backer Venture Highway in October. Venture Highway sold a part of its stake in the ecommerce startup to earn over 50X return.

Venture Highway is reportedly considering the sale of its remaining 1% stake in Meesho during this round of transactions.

Founded in 2015 by Vidit Aatrey and Sanjeev Barnwal, Meesho is backed by other marquee investors such as SoftBank, Peak XV, Fidelity Investments, Prosus & Naspers, and Meta.

The startup, once hailed as the poster child of social ecommerce, made a strategic pivot in 2022 to become a marketplace. This move places the company in direct competition with industry giants such as Flipkart and Amazon. The company is best poised to disrupt the duopoly of Amazon and Walmart-owned Flipkart, as per analysts.

As we reported this week, analysts believe Meesho’s zero commission model for sellers who offer unbranded products targeted at consumers from middle-low income households has worked for the Bengaluru-based ecommerce unicorn which has captured 7% of the ecommerce market share in India.

The ecommerce major was the brightest star in Prosus’ India portfolio in the first half (H1) of the financial year 2023-24 (FY24). As per half-yearly financial data released by Prosus, Meesho clocked an internal return rate (IRR) of 32% for the investor.

Meesho reported an operating revenue of INR 5,735 Cr in FY23, a 77% increase over INR 3,232 Cr in the previous fiscal year, it said in a blog last week.

Fashnear Technologies, the parent entity of Meesho, reported a net loss of INR 1,675 Cr in FY23, a 48% drop from INR 3,248 Cr in the previous year.

However, Meesho is yet to file its financial statements for the financial year 2022-23 (FY23) with the Ministry of Corporate Affairs (MCA).

The post Meesho’s Early Investors Consider Secondary Sales At $3-$3.5 Bn Valuation appeared first on Inc42 Media.

Listed food delivery platform Zomato has increased the platform fee to INR 4 per order across key markets from INR 3, according to information on its app.

The new rates are effective from January 1.

According to sources cited in an ET report, New Year’s Eve saw platform fees temporarily upped to as high as INR 9 per order in certain markets.

“These are business calls which we take basis various factors from time to time,” a Zomato spokesperson was cited by ET as saying on the platform fee hike.

Incidentally, Sunday (December 31) was also when Zomato saw its order volume during New Year’s Eve shoot up to all-time high levels. Taking to X, CEO Deepinder Goyal noted that the number was bigger than the combined number of orders the food delivery platform had clocked for New Year’s Eve over the past six years.

Platform Fee Driving Revenue In Food Delivery

Zomato started charging a platform fee on orders on its platform in August last year, starting with INR 2 and increasing to INR 3 across major markets. Zomato’s closest rival Swiggy began charging an INR 2 fee as well, which was later hiked to INR 3.

The two platforms are charging a platform fee beyond the delivery charge, which is waived for customers of their respective loyalty programmes. The platform fee, however, applies to Zomato Gold and Swiggy One members as well.

Incidentally, Zomato’s quick commerce arm Blinkit also charges an INR 2 platform fee per order.

While it might not be a popular decision among users, platform fees have improved the revenues of food delivery startups. For instance, in its July-September quarterly results, Zomato attributed an improvement in the percentage of what it makes (also called a take rate) on each food delivery order to the platform fee.

According to a November research note by Jefferies, Zomato’s take rate in the September quarter of FY24 was 24.1%, improving 28 basis points (0.28 percentage points) from a year earlier and 32 basis points from the previous three-month period.

Platform fee is also being talked about as a major factor in Zomato turning its fortunes around and becoming profitable over the past two quarters. It reported a profit after tax of INR 36 Cr during the quarter ended September 30, 2023. In the April-June quarter, it had reported a net profit of INR 2 Cr.

Shares of the foodtech giant ended trading 0.7% higher at INR 124.50 on the BSE on Monday (January 1).

The post Zomato Hikes Platform Fee To INR 4 Per Order Across Major Cities appeared first on Inc42 Media.

Fresh tax trouble has mounted for foodtech giant Zomato as tax authorities have now slapped a notice of INR 4.2 Cr on the startup for alleged short payment of goods and services tax (GST).

This comes close on the heels of the Gurugram-based listed foodtech giant receiving an INR 401.7 Cr show cause notice from the Directorate General of GST Intelligence, Pune Zonal Unit, over unpaid tax on delivery charges collected from the customers last week.

Zomato has received three orders from Sales Tax Officer, Ward 300, Delhi and Deputy Commissioner, DGSTO-4, Bengaluru, Karnataka alleging short payment of GST along with applicable interest and penalty under Section 73 of the Central Goods and Services Tax Act, 2017 (‘CGST Act, 2017’), Delhi Goods and Services Tax Act, 2017 (‘DGST Act, 2017’) and Karnataka Goods and Services Tax Act, 2017 (‘KGST Act, 2017’), with an amount totalling to INR 4.24 Cr, the company said in an exchange filing.

“The authorities in Delhi and Karnataka seem to have issued the above orders dated December 30 and 31, 2023 without giving due consideration to our response submitted earlier. We believe that we have a strong case on merit and the company will be filing appeals against the orders before the appropriate appellate authorities,” Zomato said in the filing.

The company’s shares opened at INR 124.65 apiece during Monday session, up 0.77% compared to its previous close at INR 123.7.

Earlier also, reports surfaced that the food delivery giants Zomato and Swiggy reportedly received notices for a cumulative goods and services tax (GST) worth INR 1,000 Cr, as the tax authorities now view delivery charges collected by these platforms as their revenue.

It is important to note that in January last year, the Centre added ‘restaurant services’ and cloud kitchens under the purview of Section 9(5) of the CGST Act, 2017, which led to the likes of Swiggy and Zomato paying 5% GST on ‘restaurant services’ they offer.

However, it continued to remain unclear whether delivery services and fees collected from that would also be taxed.

The delivery fees charged by both Swiggy and Zomato have consistently been a subject of debate, drawing controversy from various viewpoints.

In 2016, Swiggy started the practice of implementing food delivery fees. Subsequently, Zomato followed suit by introducing its delivery charges.

Having set a standard for delivery fees, Zomato then introduced a loyalty programme, now acknowledged as Zomato Gold. Under this programme, customers can circumvent delivery fees by subscribing to a monthly plan, which also offers additional perks.

Similarly, Swiggy introduced Swiggy One, adopting the concept of exempting delivery fees through a subscription model and accompanying it with supplementary benefits.

Zomato and Swiggy deliver 1.8 Mn to 2 Mn orders per day across the country. The introduction of a new Goods and Services Tax (GST) could potentially disrupt their cash flow.

Meanwhile, both platforms have started imposing a platform fee on orders, with charges varying between INR 2 and INR 5 per order. Notably, this fee applies universally to all customers, irrespective of whether they are subscribed to any specific loyalty programme.

Zomato reported its second consecutive profitable quarter, with profit after tax surging to INR 36 Cr during the September quarter of the financial year 2023-24 (FY24). This was an 18X jump from PAT of INR 2 Cr in the preceding quarter.

The post Zomato In Hot Soup, Gets GST Demand Notice Of INR 4.2 Cr appeared first on Inc42 Media.

Ecommerce unicorn Meesho, which counts SoftBank, Peak XV, Fidelity Investments, Prosus & Naspers and Meta among its marquee investors, has reported an operating revenue of INR 5,735 Cr in FY23, a 77% increase over INR 3,232 Cr in the previous fiscal year.

In a blog on Friday (December 29), the startup announced that besides an increase in its sales, it has also managed to narrow its losses.

Fashnear Technologies, the parent entity of Meesho, reported a net loss of INR 1,675 Cr in FY23, a 48% drop from INR 3,248 Cr in the previous year. 

It is pertinent to note that Meesho is yet to file its financial statements for the financial year 2022-23 (FY23) with the Ministry of Corporate Affairs (MCA).

The startup attributed the increase in revenue to increased transaction frequency of its existing customers, widening category mix and redoubled focus on improving monetisation through various value-added seller services.

Besides, Meesho claims to have achieved profitability in the Q2 of FY24. The startup in its blog said that it has reported an operating revenue of INR 3,521 Cr in the first six months of FY24, which is 37% higher than the previous year. It further added that during the same period, its loss stood at INR 141 Cr. 

Meesho has attributed the increase in topline of FY24 to its app download numbers. The startup said it achieved 14.5 Cr app downloads in 2013, whereas it crossed the milestone of 500 Mn downloads in the first half of FY24.

The startup also launched Meesho Mall during FY23 to cater to users with the growing demand of branded products. The startup in the last six months said that Meesho Mall has processed around 2 Cr orders, with more than 75% coming from Tier II cities.

Besides increasing the revenue stream, the startup underlined that it has also reduced its burn by capping customer acquisition costs, server and infrastructure costs, among others.

“…While maintaining the high growth witnessed in FY 2022-23 and H1FY 2023-24, Meesho has been able to optimise the selling, general and administrative expenses (SG&A) significantly on the back of its high mindshare with consumers resulting in organic traction as well due to the significant operating leverage inherent to a marketplace business,” the blog read.

The development comes close on the heels when Prosus, one of the backers of  Meesho, said that the startup was the brightest star in its India portfolio  in the first half (H1) of the financial year 2023-24 (FY24). 

As per half-yearly financial data released by Prosus, Meesho clocked an internal return rate (IRR) of 32% for the investor.

Founded in 2015 by Vidit Aatrey and Sanjeev Barnwal, the startup has raised around a billion dollars in funding and is valued close to $5 Bn till date.

The startup which was the poster child of the social ecommerce startup later in 2022 pivoted to a marketplace place, thus throwing its hat in the ring in a space which is dominated by giants like Flipkart and Amazon.

The post Meesho’s FY23 Loss Halves To INR 1,675 Cr; Sales Zoom 77% To INR 5,735 Cr appeared first on Inc42 Media.

Foodtech giant Zomato has received an INR 401.7 Cr show cause notice from the Directorate General of GST Intelligence, Pune Zonal Unit, over unpaid tax on delivery charges collected from the customers, it said in an exchange filing.

The notice received on December 26 to show cause as to why an alleged tax liability of the said amount for the period between October 29, 2019 and March 31, 2022 should not be demanded from the company.

“The company strongly believes that it is not liable to pay any tax since the delivery charge is collected by the company on behalf of the delivery partners. Further, in view of the contractual terms and conditions mutually agreed upon, the delivery partners have provided the delivery services to the customers and not the company. This is also supported by opinions from our external legal and tax advisors. The company will be filing an appropriate response to the notice,” Zomato said.

The Gurugram-based company’s shares opened at INR 124.90 apiece during Thursday session, 1.7% lower as compared to its previous close at INR 127.05.

Earlier also reports surfaced that the food delivery giants Zomato and Swiggy reportedly received notices for a cumulative goods and services tax (GST) worth INR 1,000 Cr, as the tax authorities now view delivery charges collected by these platforms as their revenue.

It is important to note that in January 2022, the Centre added ‘restaurant services’ and cloud kitchens under the purview of Section 9(5) of the CGST Act, 2017, which led to the likes of Swiggy and Zomato paying 5% GST on ‘restaurant services’ they offer.

However, it continued to remain unclear whether delivery services and fees collected from that would also be taxed.

The delivery fees charged by both Swiggy and Zomato have consistently been a subject of debate, drawing controversy from various viewpoints.

In 2016, Swiggy started the practice of implementing food delivery fees. Subsequently, Zomato followed suit by introducing its delivery charges.

Having set a standard for delivery fees, Zomato then introduced a loyalty programme, now acknowledged as Zomato Gold. Under this programme, customers can circumvent delivery fees by subscribing to a monthly plan, which also offers additional perks.

Similarly, Swiggy introduced Swiggy One, adopting the concept of exempting delivery fees through a subscription model and accompanying it with supplementary benefits.

Zomato and Swiggy deliver 1.8 Mn to 2 Mn orders per day across the country. The introduction of a new Goods and Services Tax (GST) could potentially disrupt their cash flow.

Meanwhile, both platforms have started imposing a platform fee on orders, with charges varying between INR 2 and INR 5 per order. Notably, this fee applies universally to all customers, irrespective of whether they are subscribed to any specific loyalty program.

Zomato reported its second consecutive profitable quarter, with profit after tax surging to INR 36 Cr during the September quarter of the financial year 2023-24 (FY24). This was an 18X jump from PAT of INR 2 Cr in the preceding quarter.

The post Zomato Slapped With INR 402 Cr Tax Notice, But Foodtech Giant Says It’s Not Liable To Pay appeared first on Inc42 Media.

Flipkart Internet Private Limited, the B2C arm of Walmart-owned Flipkart, saw its operating revenue near the INR 15,000 Cr mark in the year ended March 31, 2023. The marketplace arm’s operating revenue zoomed 42% to INR 14,845.8 Cr in the financial year 2022-23 (FY23) from INR 10,477.4 Cr in FY22.

Flipkart Internet primarily earns revenue through commission charges and other services it offers to merchants, including advertising of products. Including other income, the B2C arm’s total revenue rose 41% to INR 15,044 Cr during the year under review from INR 10,640.5 Cr in FY22.

The company also managed to reduce its cash burn, which helped it reduce its net loss by 9% to INR 4,026.5 Cr during the year under review from INR 4,419.5 Cr in FY22.

Where Did Flipkart’s B2C Arm Spend?

The online marketplace arm’s total expenditure stood at INR 19,043 Cr in FY23, an increase of 27% from INR 15,024.3 Cr in FY22.

Employee Benefit Expenses: The company spent INR 4,482.2 Cr on paying employee salaries, PF contributions, gratuity, among other employee welfare benefits. This number was 20% higher than INR 3,735.7 Cr in FY22. Employee benefit expenses also included ESOP expenses of INR 2,155 Cr in FY23, a jump of 29% from INR 1,668.6 Cr in FY22.

Transportation Cost:  The B2C arm spent INR 6,571.2 Cr on transportation expenses in FY23, an increase of 30% from INR 5,045.6 Cr in the previous fiscal year. Transportation cost comprises expenses incurred by the company to move products from one point to another.

Advertising Expenses: To further attract more users to its B2C marketplace, Flipkart spent INR 2,407 Cr on advertising, an increase of 24% from INR 1,945.9 Cr in FY22.

It must be noted that Flipkart’s B2B or wholesale arm, Flipkart India Private Ltd, reported a 9% rise in operating revenue to INR 55,823.9 Cr in FY23 from INR 50,992.5 Cr in FY22. Its net loss rose to INR 4,845.7 Cr, a 1.4X increase from INR 3,404.3 Cr in FY22.

The fresh development comes at a time when amidst the ongoing funding winter, Flipkart has bagged a whopping $600 Mn from its parent Walmart. The startup is likely to raise another $400 Mn in this funding to take on its rival Amazon India.

Flipkart to date has raised over $14 Bn in funding and counts backers such as Tencent, Softbank, Tiger Global, Microsoft, among many others. However, over 70% of the company’s stake is now owned by US retail giant Walmart. 

The post Flipkart’s B2C Arm’s Sales Near INR 15,000 Cr Mark, FY23 Loss Dips To INR 4,026 Cr appeared first on Inc42 Media.

As businesses must embrace tech-driven strategies in times of rapid digitalisation and industrial automation, adopting digital escrow services is increasingly sought for fast and reliable digital payments. 

The traditional escrow infrastructure has been here for a long time, though. Put simply, it is a legal arrangement where a neutral third party (usually a bank/financial institution) holds assets/funds on behalf of the transacting parties until the deal is closed satisfactorily after meeting the terms and conditions mutually agreed upon. Escrow keeps transactions safe and protects buyers and sellers from financial fraud or non-fulfilment of obligations. However, the traditional route to escrow operations has been inconvenient and time-consuming all along.

It was early 2020 when Vineet Singh (former CBO of the fintech unicorn MobiKwik) sold his car to an online platform that promised a fund transfer within 30 minutes. But after numerous follow-ups and a 10-day payment delay, frustration peaked, prompting him to find a way out of transaction mismanagement. But setting up an escrow account via the traditional route could have taken up to 140 days due to the enormous paperwork and lengthy verification procedures.

Taking note of the growing demand for plug-and-play digital escrow capabilities, Singh and Dinesh Kumar (former sales head at MagicBricks) launched Castler in 2021, a cloud-based EaaS (escrow as a service) web platform offering domestic and cross-border solutions for enterprises. In May 2023, Kumar Amit (former VP of enterprise business at Razorpay) joined the startup as cofounder & COO. Five months later, Ritesh Tiwari (former senior executive at Visa, the UK and Ireland) came in as cofounder and chief product officer. 

The core mission of Castler is to significantly reduce the turnaround time required to open escrow accounts and provide quick and secure digital escrow solutions for B2B and B2C customers. The startup takes 14 business days to open a fully functional digital escrow account as it automates sign-ups, handles identity verification through eKYC, enables online e-agreement signing via eStamp and verifies the merchant’s identity at the time onboarding using AI/ML once the merchant is onboarded.

Post these procedures, it opens an escrow account on behalf of the transacting parties. Next, buyers can deposit the money in the escrow accounts; sellers can monitor the fund status, and the money is finally released from escrow accounts and sent to sellers’ accounts when buyers get their products.   

The fintech SaaS startup has a subscription-based revenue model and caters to various industry segments such as logistics, retail, real estate, fintech and more. It has partnered with nine leading banks to help customers operate escrow accounts. Castler also raised $7 Mn from marquee investors, including Venture Catalysts++, Flipkart Ventures, Capital 2B (an Info Edge fund) and IIFL Fintech Fund, Zerodha’s Rainmatter, 9Unicorns among others.

According to Singh, the platform has more than 5K active escrow accounts and completed 5 Lakh transactions in November 2023. The fintech SaaS boasts a customer retention rate of 80%, clocked INR 1 Cr in revenue in FY23 and targets 6x revenue growth in the current financial year. 

Bridging The Trust Gap: The Castler Way

“Globally, escrow has been proven effective in addressing trust deficits, securing financial transactions and verifying identities. With India poised to become a $5 Tn economy by 2025, the potential for escrow to solve key challenges faced by businesses and consumers is immense,” said Singh.

A look at India’s global status further solidifies his statement. According to a World Bank report, India ranked 163 in 2020 out of 190 countries in the ‘enforcing contracts’ category. To climb the ladder further and be in the top echelon, the country will require more streamlined processes, seamless payments management and enhanced transparency to iron out trust issues. Digital escrow could be the ideal solution to achieve these and more.

The startup lists various use cases demonstrating how customers can benefit from a fast and secure transaction ecosystem. Castler covers each service component, from business verification and opening escrow accounts (for sales, business deals, property leasing, lending, brokerage and more) to transaction processing and transaction management through a dedicated CRM system. In addition, transacting parties have constant access to a web dashboard for real-time status tracking.

Castler enables seamless API integration, allowing a user to sync its escrow solutions with existing systems and applications. Besides, API integration with partner banks helps it service various business requirements, such as cash collection or invoice discounting.

The startup has built multiple layers of protocols to ensure compliance and risk management per banking norms. Each transaction on the platform undergoes verification and approval by a SEBI-backed trusteeship company responsible for safeguarding assets or funds until the pre-set terms and conditions are fulfilled by all parties and the deal is completed.

Additionally, it is a PCI DSS-certified startup working closely with leading banks, which have in-house data security and compliance audit systems. For context, PCI DSS, short for Payment Card Industry Data Security Standard, is a compliance standard mandatory for any organisation handling card payments.

“Our PCI and bank partners conduct audits per defined time intervals to ensure there is no security or compliance gap in the system,” said Singh.

Apart from digital EaaS, the startup caters to B2B customers in various capacities. For example, it works like a trusted intermediary in digital lending scenarios, ensuring that loan disbursals and repayments are processed smoothly and securely. In the case of invoice discounting, it can assist lenders in securing their receivables. 

In the B2C space, Castler currently provides escrow services for tenants’ security deposits. When a tenant moves into a rental property, a security deposit is typically paid to the landlord to cover potential damages or unpaid rent at the end of the lease. Now, a landlord can open a digital escrow account on Castler to safeguard this amount until the lease ends.

Castler has two revenue streams. On one hand, it operates like any other SaaS platform and charges a monthly or annual subscription fee to its customers. On the other hand, it works as TSP to banks.

Pitfalls And Growth

At first, Castler’s chances to hit it big dwindled as incumbent banks were sceptical about partnering with a digital escrow startup. The founders also realised that hard-selling their business pitches would not get a stamp of approval from these banks. To win them over, they sought investors who could validate the startup’s credibility. Once the startup proved its potential to the marquee investors, the banks followed the suit.

“We reached out to Venture Catalysts++ (VCats) during our idea stage in Jan 2021 and raised $1 Mn at the ideation stage,” said Singh.

Set up in 2016, Mumbai-based VCats is a sector-agnostic and multi-stage VC investor with BluSmart (EV ride-sharing), Beardo (D2C brand for men’s grooming), fintech unicorn BharatPe, Shiprocket and others in its portfolio. Given its track record, VCats’ backing turned out to be a game-changer for Castler, increasing its credibility among bankers and providing lucrative opportunities to expand its customer base through the VC firm’s extensive industry connections. 

“VCats’ vast and active founders’ network enabled us to offer our escrow services to many startups seeking funding through the VCats syndicate,” added Singh.

Additionally, the VC firm gave access to top funding events attended by large domestic and global VCs and family offices. 

Castler leveraged this exposure well and raised two more rounds of funding. In May 2023, it raised $5 Mn in a pre-Series A round led by Capital 2B (an Info Edge fund) and IIFL Fintech Fund. This round also saw participation from Venture Catalysts along with Stride Ventures, Rainmatter, 9Unicorns and FAAD Network. In September, it bagged an additional $5.5 Mn as part of its ongoing pre-Series A and got Flipkart Ventures to be part of this funding. 

Castler aims to bolster its expansion strategy for both domestic and cross-border escrow services and establish partnerships with over 25 banks, targeting substantial growth in the coming years with the fresh funding. 

Can New Entrants Dominate The Digital Escrow Market In India?

Globally, the SaaS escrow market is estimated to reach $18.4 Bn by 2031 from $5.4 Bn in 2021, growing at a CAGR of 13.4% for the projected period, a report by Allied Market Research says. It also suggests that the growth was fuelled by the Covid-19 pandemic when an increase in digital payments prompted the need for secure and cloud-based solutions.

Closer home, things could only get better. According to a Redseer report, India’s overall B2B payments market is estimated to grow from nearly $8 Tn in FY22 to $10-11 Tn by FY26. However, 50-60% of the current payments are done via cash and cheque. Given the growing adoption of digital payments, escrow transactions can rise exponentially, enhancing contract compliance and quickly resolving business disputes. 

Aware of the shape of things to come, homegrown fintech super-apps like Razorpay and Cashfree Payments or proptech startup Square Yards have diversified into the digital escrow space, challenging a host of pure-play startups like Castler and Escrowpay. 

One way to survive the growing competition is to move away from the broad-range escrow space and develop specialised services for niche customers. After all, various escrow markets are now emerging fast, dealing in M&A, real estate or even intellectual property. Others may look at focus and technology shifts and explore the scope of a decentralised escrow payment system, as blockchain technology is a core element triggering escrow growth. Think of Descrow and its community-driven solutions, which can give banks and big fintechs a run for their money.

However, industry insiders are still betting big on digital escrow players like Castler and its ilk, as this sub-industry is still scratching the surface. With the rise in digital-first enterprises and borderless business transactions, winners will be those who can improve and diversify their escrow services, prioritise data security and keep expenditures on a tight leash. 

That’s a tall order, but certainly not undoable.

The post How Ex MobiKwik & Razorpay Execs’ Escrow As A Service Startup Castler Is Transforming B2B Payments appeared first on Inc42 Media.

Fintech unicorn BharatPe reported an 182% increase in standalone revenue from operations to INR 904 Cr in FY23 from INR 321 Cr in the previous fiscal year, helped by growth and strategic advancements across its key business segments. 

In a statement, the startup, which is continuing its legal battle with its former MD Ashneer Grover, also said that its loss before tax narrowed 84% to INR 886 Cr in FY23 from INR 5,594 Cr in FY22.

BharatPe’s EBITDA loss also declined by about INR 158 Cr in FY23, it said in a statement. However, the startup did not disclose its net loss for the reported period. 

BharatPe posted a consolidated operating revenue of INR 456.8 Cr in FY22 and a net loss of INR 5,610.7 Cr in FY22.

The company’s consolidated figures would include financial performance of subsidiaries Resilient Capital Private Limited, Loyalty Solutions & Research Private Limited, Resilient Payments Private Limited, and NBFC Trillion Loans.

Meanwhile, BharatPe said its merchant lending division witnessed a 129% increase in loans facilitated, reaching INR 5,339 Cr in FY23. The startup’s Swipe business saw a 63% increase in total payment volume and installation of approximately 8 Lakh new soundbox devices in FY23, it claimed.

“Going forward, our strategic focus is on sustained profitability, scaling lending, POS, and soundbox businesses, and launching new merchant-centric products. We are committed to building a sustainable business, fostering financial inclusion…,” said Nalin Negi, CFO and interim CEO at BharatPe.

The company currently claims to have a registered network of over 1.3 Cr merchants across more than 450 cities and process over 370 Mn UPI transactions. BharatPe also claims to have facilitated the disbursement of loans of over INR 12,400 Cr, in partnership with NBFCs to date. BharatPe’s POS business processes payments of over INR 29,000 Cr annually on its machines, it said. 

Backed by the likes of Peak XV Partners, Ribbit Capital, Insight Partners, Beenext, Dragoneer Investment Group, Steadfast Capital, Steadview Capital, and Tiger Global, BharatPe has so far raised over $583 Mn in equity.

Recently, the fintech platform claimed to have turned EBITDA positive in the month of October while its annualised revenue crossed INR 1,500 Cr mark in FY24.

The post BharatPe Revenue Up By Nearly 3X In FY23, Earns INR 904 Cr Against INR 886 Cr Loss Before Tax appeared first on Inc42 Media.

Chinese smartphone maker Infinix is weighing local manufacturing of laptops in India within a year for which it has been in talks with original design manufacturers.

The brand, which forayed into selling laptops in India in 2021, holds a 7-8% share on the ecommerce platform Flipkart. Currently, it imports all the laptops sold in the country, Mint reported.

“We’re evaluating going into production of laptops in India, and the other things we can do here. We’re talking to players for local production but the challenge is the ecosystem, which is essential,” Anish Kapoor, chief executive officer at Infinix India, told Mint.

Infinix is looking at a time frame of less than a year to begin production within the country to comply with the policy changes that will come into effect on laptop imports from next year.

As of November 1 this year, the government introduced an import management system allowing unrestricted import of IT hardware products like laptops, tablets, personal computers, servers, and ultra-small form factor devices for one year. 

After November 1, 2024, imports will gradually be restricted each year, determined by factors such as the previous year’s import amounts, local production, and quantities exported from India.

The Indian government has given the nod to 110 applications, including those from major hardware players like Dell, Apple, HP, Lenovo, IBM, Asus, Samsung, Xiaomi, Cisco Commerce India, Siemens, and Bosch, seeking authorisation to import laptops, computers, and other IT hardware products.

Earlier, the union government rescinded plans to impose a licensing regime on import of IT hardware products, including laptops and computers. Rather than opting for licensing mandates, the Centre then announced that authorities would regulate inbound shipments of such products through an ‘import management system,’ which came into effect on November 1.

The new import management system will enable the companies to bring shipments into the country through mere authorisation by detailing quantity and value. 

While the import restrictions will be imposed till 2030 and reviewed thereafter, the year-long period aims to give companies that do not make the products in India, an adequate time frame to create local manufacturing capacities.

Infinix is set to join overseas brands like HP and Dell in either enhancing their manufacturing capabilities or partnering with electronics manufacturing service (EMS) providers for local production.

India continues to heavily rely on foreign imports for computers and laptops, with a consistent influx of such products into the country. According to a Canalys report, vendors delivered over 3.9 Mn desktops, notebooks, and tablets to India from April to June 2023, reflecting a 15% year-on-year decline.

Infinix may benefit from the six-year PLI scheme for IT hardware products, which includes laptops. With an outlay of INR 17,000 Cr, the scheme aims to attract investments and generate direct employment for 75,000 people, expecting incremental production worth INR 3.35 Tn. Dixon Technologies’ subsidiary Padget Electronics and Optiemus Electronics are among the 32 approved applicants under the scheme.

Meanwhile, the brand, which is part of the Transsion Group reported significant growth in Q3 2023. According to IDC’s Worldwide Quarterly Mobile Phone Tracker, Infinix secured a position among the top 10 global smartphone brands by shipments. Infinix’s substantial year-on-year increase in units, reaching 4.2 Mn units showcased a growth of 74.8% compared to the same quarter last year. 

It operates in more than 70 global markets and is known for innovative technologies like the Ultra HD (4K/60FPS) front camera in the ZERO 30 5G and the GT 10 Pro, renowned for its cyberpunk style and high-quality gaming performance.

Infinix Mobility, founded in 2013,  designs, manufactures and markets smart devices globally under the Infinix brand.

The post Chinese Firm Infinix Looks To Manufacture Laptops In India appeared first on Inc42 Media.

North East Small Finance Bank (NESFB) has appointed former Andhra Bank executive Satish Kumar Kalra as its interim managing director (MD) and chief executive officer (CEO).

In a statement, the bank said that it has already received approval from the Reserve Bank of India (RBI) and the company’s board for the appointment. 

This comes a couple of months after slice and the Guwahati-based bank announced plans to merge the two entities. 

As part of his responsibilities, Kalra will spearhead the ongoing merger process between slice and NESFB. 

With four decades of experience under his belt, he will also look to optimise the bank operations and ensure a ‘seamless cultural integration’ of the two entities.

Commenting on his appointment, Kalra added, “I am deeply honoured to assume this role. This is a unique opportunity to be at the helm of what is poised to be a groundbreaking merger in the banking industry – a cross-cultural collaboration between two entities set to redefine the financial landscape by leveraging NESFB’s grassroots banking and slice’s digital prowess.”

As per the company, Kalra, in his role, will oversee the bank’s strategic growth going forward and will be responsible for ensuring compliance with regulatory standards. In a statement, NESFB also said that it will leverage his expertise to enhance branch management and bolster the bank’s asset base.

“We are at a pivotal juncture in our journey, and the appointment of Mr Satish Kumar Kalra as Interim MD & CEO stands testament to our commitment towards excellence and sustainable growth… His strategic vision aligns perfectly with our goals, and we are eager to witness the innovation and progress he will undoubtedly bring to NESFB,” said the bank’s independent director Tapan Kumar Hazarika.

An alumnus of Kurukshetra University and a Certified Associate of the Indian Institute of Banker (CAIIB), Kalra has also served Andhara Bank as its MD, CEO (incharge) and executive director. He was responsible for driving growth in credit disbursals and branch additions. 

His areas of expertise include treasury management, non-performing asset (NPA) credit management, and risk management. In his previous stints, Kalra also served in various roles at PNB GILTS, Indbank Merchant Banking Services, JK Cement, and Can Fin Homes, among others. 

With this, the stage has been set for slice’s merger with the Guwahati-based small finance bank. The RBI accorded its approval to the proposal for the merger in October, months after the fintech startup picked up a 5% stake in the bank for $3.42 Mn (INR 28 Cr).

In October, slice had said that the move would enable the consolidated entity to expand tech-enabled financial accessibility nationwide.

However, the merger will enable the fintech startup to acquire an SFB licence and weather the regulatory uncertainty that plagues the larger fintech sector. In addition, the move will pave the way for slice to bolster its credit and banking ambitions as regulated entities have access to funds (via customer deposits) for credit at a better rate than most fintechs and NBFCs.

The move especially bodes well for slice whose business model was rendered pointless after RBI’s diktat on PPI last year. While the company pivoted, the merger will enable it to largely subvert any such regulatory storm while scaling up. 

This comes close on the heels of the fintech startup raising INR 75 Cr from Stride Ventures in a debt funding round. 

slice clocked a net loss of INR 405.8 Cr in the financial year 2022-23 (FY23), up 60% from INR 253.7 Cr in FY22.

The post Veteran Banker Satish Kalra Named North East SFB’s MD, To Spearhead slice Merger appeared first on Inc42 Media.

Amid its decision to scale down small-ticket loans, fintech giant Paytm has sacked hundreds of employees citing the increasing usage of artificial intelligence-led automation.

Sources told Inc42 that the Vijay Shekhar Sharma-led company has been adopting AI wherever possible to drive up efficiency, which resulted in layoffs.

Besides, the company is in the midst of its appraisal cycle and the fired employees also include those who have not been meeting performance standards, the sources added.

While Inc42 couldn’t ascertain the number of employees impacted by the layoff exercise, a report by ET said 1,000 employees have lost their jobs.

The company, without disclosing the number of employees impacted, confirmed the layoffs in a statement.

“We are transforming our operations with AI-powered automation to drive efficiency, eliminating repetitive tasks and roles to drive efficiency across growth and costs, resulting in a slight reduction in our workforce in operations and marketing. We will be able to save 10-15% in employee costs as AI has delivered more than we expected it to. Additionally, we constantly evaluate cases of non-performance throughout the year,” the company told Inc42 in the statement.

It added that the core payments business may see an increase of 15,000 employees in the coming year.

“With a dominant position in the payments platform and a proven profitable business model, we will continue to innovate for India. In this, insurance and wealth will be a logical expansion of our platform, in continuation of our focus on the existing businesses,” the company said. 

It is pertinent to mention that Sharma, last week, said that Paytm is aiming to generate an operating profit in under a year by bolstering its online wealth management services and onboarding more merchants on its network, coupled with cost savings from AI automation.

The development comes at a time when the fintech company has decided to scale down its small-ticket loans business of less than INR 50K, which predominantly comprises its postpaid loan business, following tightening of norms around unsecured lending by the Reserve Bank of India (RBI).

Postpaid loans below INR 50K loans comprised 72-75% of Paytm’s total disbursements in the BNPL category in the September quarter. 

At a time when Paytm is seeing a rise in competition with the full-fledged fintech foray of Jio Financial Services and its arch rival PhonePe’s efforts to diversify its offerings, the decision to scale down the lending business is expected to challenge the company. Many of the brokerages have also slashed their estimates for the fintech giant. 

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Garagepreneurs Internet Private Limited (GIPL), the parent entity of fintech unicorn slice, saw its net loss surge to INR 405.8 Cr in the financial year 2022-23 (FY23), as per a report by credit rating agency CARE Ratings.

This translates to an increase of 60% from the net loss of INR 253.7 Cr which it reported in FY22.

“During FY23, GIPL has reported a loss of INR 405.78 Cr due to higher opex and sharp reduction in assets under management (AUM) levels on account of various regulatory changes,” the rating agency said.

The report, dated October 13, also saw CARE Ratings placing the ratings of Quadrillion Finance Private Limited (QFPL), the non-banking finance company (NBFC) of GIPL, on ‘Credit Watch with Negative Implications’ following the announcement of a corporate restructuring for the merger with the North East Small Finance Bank Limited (NESFB).

It is pertinent to note that slice announced its merger with the NESFB in October this year after receiving a nod for the same from the Reserve Bank of India (RBI).

Meanwhile, CARE Ratings said that GIPL’s credit cost (on average AUM basis) stood at 11.93% in FY23 as against 4.60% in FY22. Given regulatory shifts and the sustained increase in operating expenses and credit costs, GIPL is anticipated to register annual losses on a consolidated basis for FY24 as well, it added. 

The company is projected to achieve monthly breakeven at the consolidated level in Q4 FY24.

On QFPL, the report said it reported a net profit of INR 2.38 Cr in FY23 as compared to INR 9.22 Cr in FY22. During Q1 FY24, it reported a profit of INR 5.27 Cr. 

“QFPL had added resources including manpower to support higher level of AUM leading to relatively higher opex. Opex as a percentage of average tangible total asset (%) stood at 15.41% during FY23 and 18.00% during Q1FY24,” CARE Ratings said.

Founded in 2016 by Rajan Bajaj, slice had to pivot after the Reserve Bank of India (RBI) barred NBFCs from offering credit on prepaid card instruments (PPI). slice, which used to issue credit cards with pre-loaded credit lines, now offers personal loans and UPI payments facility. 

The unicorn was also said to have received PPI licence from the RBI last year.

Earlier this year, slice raised INR 75 Cr (around $9 Mn) from Stride Ventures in a debt funding round. 

The post Fintech Unicorn slice’s Net Loss Rises To INR 405.8 Cr In FY23 appeared first on Inc42 Media.

Traveltech major EaseMyTrip has acquired a non-controlling stake of about 13% in Eco Hotels and Resorts Limited in a share swap deal to enter the hotel and hospitality industry.

“…the company’s investment in equity shares of Eco Hotels India Private Limited is swapped with equity shares of Eco Hotels and Resorts Limited in the ratio of 1:1 and the company has acquired 40,00,000 equity shares of INR 10 each of Eco Hotels and Resorts Limited, issued on preferential basis,” said EaseMyTrip in a statement.

The startup said that the primary objective of the strategic investment in Eco Hotels is to acquire a minority interest and promote environmentally friendly practices within the hospitality sector. 

All the hotels operated by Eco Hotels will be carbon net zero hotels, claimed EaseMyTrip.

Eco Hotels and Resorts Limited is a BSE-listed company promoted by Eco Hotels UK PLC. Eco Hotels aims to become a leading owner, developer and asset manager of three-star premium and economy brands in the BRICS and N11 (Next 11) economies, with India being the primary focus.

The hospitality company currently claims to have completed the development of two brands, with one prototype Ecolodge operating in Kochi at Kerala.

Commenting on the acquisition, Nishant Pitti, cofounder and CEO of EaseMyTrip, said that the strategic decision reflects the online travel aggregator’s commitment to sustainable and responsible business practices. 

“Our choice to invest in stakes aligns with our vision to contribute positively to the growth of eco-friendly and green hotels. This investment marks another milestone in our journey to diversify our portfolio and enhance the travel experiences we offer to our customers,” said Pitti.

It is pertinent to mention that EaseMyTrip has acquired multiple companies over the last two years as it looks to expand its offerings and diversify its portfolio.

Shares of EaseMyTrip were trading marginally higher at INR 38.32 on the BSE by 2.45 PM IST.

Meanwhile, V K Tripathi, executive chairman of Eco Hotels and Resorts, said on the stake acquisition, “This is not just a business decision; it’s a calculative move towards expanding our horizons and presenting guests with an elevated, ecoconscious, and luxurious experience that aligns seamlessly with our commitment to a greener and more sustainable future.”

EaseMyTrip reported a 66% year-on-year (YoY) jump in its consolidated net profit to INR 47 Cr in Q2 FY24 on an operating revenue of INR 142 Cr, which jumped 31% YoY.

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General Atlantic-backed fintech giant PhonePe’s net loss crossed the INR 2,500 Cr mark in the financial year ended March 31, 2023. The Bengaluru-based decacorn’s consolidated net loss rose 39% to INR 2,795.3 Cr in the financial year 2022-23 (FY23) from INR 2,013.7 Cr in the previous fiscal year due to a sharp increase in its ESOP expenses.

PhonePe’s operating revenue surged an impressive 77% to INR 2,913.7 Cr during the year under review from INR 1,646.2 Cr in FY22. In comparison, the operating revenue of the startup’s archrival, Paytm, zoomed 61% to INR 7,990.3 Cr in FY23.

PhonePe primarily earns revenue through its payments and allied services. It earned INR 2,707.1 Cr from this revenue stream during the year under review as compared to INR 1,6301.4 Cr in the previous fiscal year.

Founded in December 2015 by Sameer Nigam, Rahul Chari, and Burzin Engineer, PhonePe offers financial services to users. It offers digital payments service, mutual funds and insurance products.

Earlier this year, PhonePe attributed the increase in its revenue in FY23 to growth in money transfers, mobile recharges and bill payments.

The Walmart-owned company also said that the growth in revenue was driven by the launch and scale-up of new products and businesses such as smart speakers, rent payments, and insurance distribution. PhonePe said its smart speaker deployment stood at 4.1 Mn as of  August 31, 2023. 

Meanwhile, its market share in the total payments value (TPV) for UPI stood at 50.54% in the month of March 2023. PhonePe competes against the likes of Paytm, Google Pay, and CRED in the UPI transactions category.

Including other income, PhonePe’s consolidated total income grew over 80% to INR 3,084.6 Cr in FY23 from INR 1,692.7 Cr in the previous fiscal year.

Where Did PhonePe Spend?

The digital payments giant’s total expenses shot up 59% to INR 5,886.3 Cr in FY23 from INR 3,705.6 Cr in FY22.

Employee Benefit Expenses Zoom: Employee costs accounted for the lion’s share of the total expenses of PhonePe. The startup spent INR 3,096 Cr on employees in FY23, an increase of 78% from INR 1,741 Cr in the previous fiscal year. Within this, ESOP expenses increased 73% to INR 2,057 Cr from INR 1,185.8 Cr in FY22.

Advertising Expenses Decline: The startup’s advertising cost dropped 23% to INR 671.3 Cr in FY23 from INR 866.2 Cr in the previous fiscal year.  

IT Costs Rise: Being a fintech company, PhonePe has to spend on IT infrastructure. In FY23, its IT expenses rose 54% to INR 216.3 Cr from INR 139.8 Cr a year ago. 

After raising nearly $1 Bn in 2023, PhonePe has been on an expansion spree, launching multiple new offerings, including separate apps for ecommerce (Pincode) and investment tech (Share.Market) and also its own apps store, Indus Appstore.

Earlier today, the startup also rolled out a new feature on the platform that will allow its users to manage their credit cards and pay bills and loans.

The post Walmart-Backed PhonePe’s Loss Crosses INR 2,500 Cr Mark In FY23 appeared first on Inc42 Media.

Walmart-backed ecommerce major Flipkart is reportedly looking to raise a fresh funding of $1 Bn, with the US retail giant committing $600 Mn.

This fresh infusion will likely value Flipkart at about 5-10% premium to its last valuation of $33 Bn, ET reported, citing sources.

Besides Walmart and other existing shareholders, the Bengaluru-based ecommerce major’s round will also see new investors joining the cap table, the report said.

Flipkart confirmed Walmart’s infusion of $600 Mn in the company but said that the rest is speculative. Walmart also informed about its fresh infusion in a regulatory filing.

Walmart acquired 77% stake in Flipkart in 2018 for $16 Bn, valuing the company at $22 Bn. After the separation of PhonePe from the group last year, Flipkart’s valuation stood at $33 Bn.

Recently, during the six months ended July 31, 2023, Walmart spent $3.5 Bn to acquire Flipkart shares from non-controlling stakeholders, including Tiger Global and Accel.

Flipkart also plays a major role in the US-based ecommerce giant’s earnings performance each quarter. Walmart said in its recent Q3 2023 earnings statement that its India operations were impacted due to the late arrival of the festive season, and as the Flipkart Big Billion Days sales shifted from Q3 last year to Q4 this year.

“The timing of Flipkart’s Big Billion Days pressured International sales growth, as the event moved from Q3 last year to Q4 last year. So we expect the timing to be a benefit to Q4’s growth rate for the segment,” Walmart had said.

Meanwhile, Flipkart continues to incur losses. Flipkart India, the B2B arm of the company, saw its standalone net loss widen over 42% year-on-year to INR 4,845.7 Cr in FY23 while its operating revenue increased 9.7% to INR 55,923.9 Cr.

In FY22, Flipkart Internet, the ecommerce giant’s marketplace arm, also reported widened losses.

The post Walmart To Inject $600 Mn Into Flipkart During A Billion Dollar Funding Round appeared first on Inc42 Media.

Foodtech major Swiggy has begun charging restaurants a 2% ‘collection fee’ on all orders to facilitate payments from customers on the food delivery platform. 

While the company declined to comment on the matter, sources told Inc42 that the platform has begun levying the new charge. As per reports, the fee will be deducted from the payouts to the listed restaurants.

This comes days after the company informed select partner restaurants about the impending move. 

As per a correspondence seen by The Economic Times, Swiggy said, “Commencing from December 20, 2023, we will be introducing a standardised 2% collection fee on all orders. This fee is designed to facilitate smooth customer payments on the Swiggy platform. It is important to note that this amount will be subtracted from your payouts.”

Interestingly, Swiggy is following the suite of competitor Zomato, which already imposes a similar ‘payment gateway fee’ of around 1.8% on all orders. However, the new development from Swiggy comes more than four to five years after the Deepinder Goyal-led company instituted its gateway fee. 

Meanwhile, the move seems to have sparked a major discontent within a section of the members of the National Restaurants Association of India (NRAI). The industry body’s vice president and founder of QSR chain Wow! Momo, Sagar Daryani, reportedly termed the new charges by Swiggy an ‘unwelcome distraction’.

He told ET that the ‘collection fee’ is essentially a method of indirectly raising commission costs. However, the NRAI declined to comment on Inc42’s queries on the matter. 

The new charge could likely be part of Swiggy’s strategy to create alternative revenue streams and boost its top line as it prepares for a public listing later next year. Just this year, the foodtech major also hiked its platform fee to INR 3 per order, irrespective of cart order, to enhance unit economics and spruce up revenues. 

As per reports, Swiggy’s average order value hovers around INR 400, which means that a 2% collection fee would translate into an additional INR 8 in revenue per order for Swiggy. This could pave the way for better unit economics for the company as it looks to show a healthy balance sheet to investors while filing for its IPO papers. 

As per the half yearly financial report of Swiggy’s investor Prosus, the startup’s food delivery business saw a 28% year-on-year growth in gross merchandise value (GMV) to $1.43 Bn in the first six months of FY24. 

The foodtech major was also one of the best performers in the Dutch investor’s books with an IRR of 7% in H1 FY24. 

The post Swiggy Follows Zomato’s Footsteps, Introduces 2% Collection Fee On Restaurant Partners appeared first on Inc42 Media.

Fintech startup EnKash has received the final approval from the Reserve Bank of India (RBI) to operate as a payment aggregator under the brand name ‘Olympus’.

In a statement, EnKash said with the licence in place, it aims to further drive innovation in B2B payments.

The fintech startup had received the in-principle approval from the central bank for the payment aggregator licence in January this year.

The RBI introduced the payment aggregator framework in March 2020. Under the norms, all payment gateway operators need to obtain a licence to acquire merchants and deploy digital payments solutions.

Commenting on the final approval, EnKash cofounder Yadvendra Tyagi said, “We are thrilled to have received approval from the Reserve Bank of India, making us the first new applicant in the cohort. This affirms our unwavering commitment to maintaining regulatory standards and highlights the significance of our role in advancing the industry.”

Founded by Naveen Bindal, Hemant Vishnoi and Tyagi in 2017, EnKash operates a spend management platform that allows enterprises to manage payables, receivables and expenses. It claims to have issued over 8 Lakh corporate cards till now.

Since its inception, EnKash claims to have aided over 2,50,000 businesses in digitising and decentralising corporate payments. 

The startup last raised $20 Mn in April last year in its Series B round led by Ascent Capital. Overall, Enkash has raised a total funding of $23 Mn till date and counts the likes of MayField India, Baring India, and Axilor Ventures among its backers.

The latest development comes a day after it was reported that fintech startups Razorpay, Cashfree Payments, and neobank Open received final approval from the RBI to operate as payment aggregators.

As per the latest data, the central bank has so far granted in-principle authorisation to 37 existing payment aggregators, including  Zomato and Infibeam Avenues. Besides, it has granted the in-principle approval to around 24 payment aggregators and returned applications of over 60.

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Fintech major Paytm is aiming to generate an operating profit in under a year by bolstering its online wealth management services and onboarding more merchants on its network, coupled with cost savings from AI automation.

Paytm founder and CEO Vijay Shekhar Sharma made the projection in an interview with Bloomberg, highlighting the company’s plans to hire over 50,000 salespeople to onboard more merchants and revamp its online wealth management services.

“We have learned and we will amplify our ability to serve India, its small merchants and businesses,” Sharma was quoted as saying. “We should be crossing about 50 Mn merchant-base signed up on the Paytm platform in the year.”

Sharma’s interaction with the publication came days after Paytm faced a major setback in its growth trajectory due to the Reserve Bank of India (RBI) tightening regulations around unsecured loans. 

Earlier this month, Paytm said that it would scale down its small-ticket loans of less than INR 50K, which predominantly comprise its postpaid loan business. However, to compensate for this major change, the company said it would increase its focus on the merchant and personal loan business.

Multiple brokerages cut their estimates on Paytm’s various metrics such as revenue and EBITDA in the medium to long term following the changes in its loan disbursal business.

Besides, Paytm’s share price also took a hit, falling to more than a seven-month low. While the shares were trading over 80% year to date till October, they nosedived due to the company’s decision to scale down postpaid loans. Shares of Paytm are currently trading a little over 15% higher.

Besides the loan disbursement business, which comprises a relatively smaller part of the company’s total revenue, Paytm also has a payments business. It had around 38 Mn merchants as of September, of which nearly 10 Mn paid for offerings such as QR codes, Paytm soundboxes, and card machines.

Paytm also operates wealth management platform Paytm Money. Speaking to Bloomberg, the Paytm boss said that the company now wants to double down on this business, layering it with AI, as India’s middle class is increasingly going online to invest in the capital markets.

Meanwhile, by using automation, Paytm also plans to bring down its employee costs.

“We will be able to save the targeted 10% to 15% that we had planned in employee costs, all because AI has actually delivered more than what we expected it to,” Sharma said. 

The statements also come at a time Paytm is seeing a rise in competition. Most recently, Jio Financial Services’ marked its full-fledged foray into the fintech space, while PhonePe is also looking to diversify its offerings and launched stock broking platform Share.Market earlier this year.

The post Paytm Betting On Paytm Money, Merchants & AI To Turn Operationally Profitable In A Year appeared first on Inc42 Media.

The Reserve Bank of India (RBI) has issued guidelines to all regulated entities including banks and non-banking financial companies (NBFCs) to not make investments in any alternative investment funds (AIFs) that have invested in a borrower or investee of that lender.

In November last year, the Securities and Exchange Board of India (SEBI) informed RBI about instances of non-bank financiers evergreening loans through the AIF route.

Reportedly SEBI has detected at least a dozen cases involving $1.8 Bn to $2.4 Bn where AIFs have been misused to circumvent rules of other financial regulators including the RBI.

In October this year, Ananth Narayan G, a whole-time member of SEBI, said the regulator had come across multiple instances of entities using alternative investment funds to circumvent financial norms and urged the industry to form a quasi-self-regulatory body. SEBI has also seek commitment from fund managers to make sure that AIFs will not be misused.

The guidelines have been issued in order to curb such misuse of AIF funds.

What Are Evergreen Loans?

In simple terms, evergreen loans are the loans which never end. This means that to repay the earlier unpaid loan, the regulated entity offers the borrower another loan through AIF as an investment vehicle. AIF, being a  private credit fund, looks for such deals with the belief that with a small investment these companies could bounce back.

Banks and NBFCs resort to such loans to showcase low percentage of non-performing assets (NPAs) in their books.

“In some cases, non-bank lenders have sold non-performing loans (NPLs) to AIFs that they have partially set up themselves. The fresh funds received by the AIFs are then used to repay the original debt, preventing the loans from being classified as bad loans. This practice is seen as a classic example of evergreening,” said Mayank Mehra, managing partner, SphitiCap.

Key Guidelines Issued By RBI

To address concerns relating to possible evergreening through this route, it is advised as under:

Regulated entities (REs) shall not make investments in any scheme of AIFs which has downstream investments either directly or indirectly in a debtor company of the RE to which the RE currently has or previously had a loan or investment exposure anytime during the preceding 12 months.

If an AIF scheme, in which RE is already an investor, makes a downstream investment in any such debtor company, then the RE shall liquidate its investment in the scheme within 30 days from the date of such downstream investment by the AIF. 

If REs have already invested into such schemes having downstream investment in their debtor companies as on date, the 30-day period for liquidation shall be counted from the date of issuance of this circular. REs shall forthwith arrange to advise the AIFs suitably in the matter.

In case REs are not able to liquidate their investments within the above-prescribed time limit, they shall make 100% provision on such investments.

In addition, investment by REs in the subordinated units of any AIF scheme with a ‘priority distribution model’ shall be subject to full deduction from RE’s capital funds.

This move by the RBI has been seen in the right direction by some. According to reports, the credit exposure of banks to NBFCs stood at INR 14.8 Lakh Cr in October 2023, indicating a 22.1% year-on-year (y-o-y) growth. Further, there are currently more than 1200 registered alternative investment funds in the country as of December 2023. If remain unregulated, this poses a significant risk to the economy considering that bad NPAs may lead to a liquidity crisis in the banks, thereby triggering the ripple effect. 

However, there is a flip side to this coin as well. According to Punit Shah, Partner, Dhruva Advisors, the intention of the move by RBI is to prevent evergreening of loans by Banks, NBFCs etc. However, the circular prohibits any exposure by these entities to specified AIFs, which can be extremely damaging and can have unintended negative impact on the AIF industry, especially sponsored by financial services players.

The post RBI Tightens Norms For Banks, NBFCs Investing In AIFs appeared first on Inc42 Media.

Fintech unicorn BharatPe is looking to secure INR 500 Cr debt through unlisted non-convertible debentures (NCDs).

Although a final decision on the issue price is pending, the company plans to secure the funds in multiple tranches throughout the upcoming year, ET reported.

BharatPe’s board sanctioned the fundraising initiative last week. Additionally, the board also approved the appointment of Colin Bryant, chief operating officer (Private Equity) and general partner at the US-based hedge fund Coatue, as a director. Bryant is set to succeed Rahul Kishore, the previous nominee from Coatue who departed the fund in November.

Furthermore, the company elevated its General Counsel, Sumeet Singh, to the position of a whole-time director. Singh, who assumed roles at BharatPe in 2021, has been instrumental in overseeing corporate strategy, corporate affairs, and fundraising. In February of the current year, he was appointed as an additional executive director.

Peak XV-backed BharatPe last raised $370 Mn at a valuation of $2.9 Bn in 2021. Earlier in September, it was reported that BharatPe was in talks with existing investors to raise $100 Mn in a new round of funding.

Meanwhile, the fintech startup has claimed to have turned EBITDA positive in the month of October. The startup said that its annualised revenue has crossed INR 1,500 Cr in FY24, a 31% increase from FY23.

BharatPe’s lending vertical, in October alone, has facilitated loans exceeding INR 640 Cr for its merchants in partnership with its NBFC, demonstrating a 36% year-on-year jump as compared to FY22. The startup has facilitated loans worth INR 12,400 Cr since its foray into the lending business in late 2019.

The post BharatPe Looking To Raise INR 500 Cr Debt In The Upcoming Year appeared first on Inc42 Media.

Reiterating her stance on 28% GST on the online gaming sector, Finance Minister Nirmala Sitharaman on Tuesday (December 19) said that the valuation rules for levying the tax on entry level bets are prospective in nature. 

“28% is the tax and as to who it will apply to and on whom the incidence will fall is clearly explained…The valuation rule to exclude winnings is prospective. So, I hope there is no confusion on that,” said Sitharaman during a discussion on the CGST (Second Amendment) Bill in Lok Sabha.

The FM made the comments in response  to a query from Biju Janata Dal Member of Parliament (MP) Sarmistha Sethi.

Citing an example, the FM said that if a user places a bet of INR 1,000, a GST of 28% would be levied. However, if the user wins INR 300 and then places another bet of INR 1,300, including the winning amount, then the GST would not be levied on the INR 300 winning amount which has been redeployed.

On the other hand, if a user loses the original INR 1,000 amount and places a new bet, then the new amount would be considered a fresh bet and would attract 28% GST.

At the centre of this row is the GST Council’s decision, in August this year, that said that 28% GST is applicable on online gaming. 

Eventually, the government notified amendments in law and the new changes came into effect on October 1. But the bone of contention appears to be the tug of war over the supposed retrospective effect of the rule. 

Since the promulgation of the new law pertaining to GST on online gaming, enforcement agencies have sent a flurry of notices to online gaming platforms for alleged tax evasion. 

The Centre recently informed the Parliament that the Directorate General of GST Intelligence has issued notices to the tune of INR 1.12 Lakh Cr to multiple online gaming companies for alleged short payment of taxes.

Meanwhile, the 28% GST has triggered an adverse domino effect on the homegrown ecosystem. When the new tax was levied, industry stakeholders had warned that the move could lead to job losses and put a spanner in the works for the budding ecosystem. 

Since then, startups such as Fantok, Quizzy, OWN have temporarily shut operations while big names such Mobile Premier League and Hike have laid off employees in droves. There have also been a barrage of legal cases filed by online gaming firms such as Games24x7 and Head Digital Works challenging the respective GST notices issued to them by the enforcement agencies. 

The regulatory flux has also resulted in the drying up of capital for online gaming firms, leading to layoffs and shutting down of ailing verticals to extend runway and conserve cash. Amid the tussle, the Indian government is mulling extending an olive branch to the ecosystem and is considering setting up a Group of Ministers (GoM) to address issues related to the industry.

The post Valuation Rules For Levying 28% GST On Online Gaming Prospective In Nature: FM Sitharaman appeared first on Inc42 Media.

IPO-bound ecommerce furniture startup Pepperfry posted a marginal decline in its net loss in the financial year ended March 31, 2023. The Mumbai-based startup’s net loss narrowed 3% to INR 187.6 Cr in the financial year 2022-23 (FY23) from INR 194 Cr in the previous fiscal year.

Founded in January 2012 by late Ambareesh Murty and Ashish Shah, Pepperfry sells a wide range of furniture and other home products through its website, ecommerce marketplaces, and offline stores. 

The startup’s operating revenue rose 10% to INR 272.3 Cr during the year under review as against INR 246.9 Cr in the previous fiscal year.  

Pepperfry primarily generates revenue from the commission it earns by connecting customers with the merchants on its website. The startup earned INR 241 Cr from this in FY23, an increase of 7.4% from INR 224.4 Cr in the previous fiscal year.

Including other income, Pepperfry’s total income stood at INR 290.3 Cr, a jump of 10% from INR 264.3 Cr in FY22

Where Did Pepperfry Spent?

The startup’s overall expenses increased 3% to INR 474 Cr from INR 458 Cr in FY22.

Procurement Cost: Being an ecommerce marketplace, the startup’s biggest expense was the procurement cost. It spent INR 282 Cr on procurement in FY23, an increase of 36% from INR 207.4 Cr in the previous fiscal year.

Employee Benefit Expenses: Pepperfry’s employee benefit expenses rose 6% to INR 86 Cr in FY23 from INR 80.9 Cr in the previous fiscal year. Employee costs include salaries, provident fund payments, gratuity, among others. The small increase indicates that the startup’s headcount didn’t see a big rise this year. 

Advertising Expenses: While ecommerce marketplaces are known for spending big on advertising, Pepperfry managed to bring down its marketing expenses in FY23. The startup spent INR 106 Cr on advertising in FY23, a decline of 18% from INR 129.8 Cr in the previous year.

Pepperfry raised $23 Mn from its existing investors, including institutional investors and family offices, in September this year. It has raised around $300 Mn across multiple rounds till date and counts the likes of Pidilite, Goldman Sachs, Bertelsmann India, and Innoven among its backers.

Unfortunately, its cofounder CEO Murthy passed away in August this year. Shah later took the CEO role.

The startup, which competes against the likes of Urban Ladder, has been preparing for its initial public offering (IPO) since early 2022. It even converted itself into a public entity in May last year. However, like many other startups, it postponed its plans to go public considering the slowdown in the equity markets last year.

The post Pepperfry’s FY23 Loss Narrows Marginally To INR 188 Cr, Sales Up 10% appeared first on Inc42 Media.

Japanese investment major SoftBank offloaded 2.53% of its stake in PB Fintech in multiple block deals worth a cumulative INR 913.7 Cr.

SoftBank’s SVF Python II (Cayman) Limited held 1.97 Cr shares, or a 4.39% stake, in the parent entity of the insurtech platform Policybazaar in the quarter ended September 2023. 

Following the deal on Friday (December 16) involving 1.14 Cr shares, SoftBank is now expected to hold 83.23 Lakh shares in PB Fintech.

The offloaded shares were lapped up by Societe Generale, HDFC Mutual Fund, Goldman Sachs (Singapore) Pte, Smallcap World Fund, ICICI Prudential Life Insurance Company Limited, and a few others.

While Societe Generale and HDFC Mutual Fund bought 15.5 Lakh PB Fintech shares each in block deals, Government Pension Fund Global bought 16.5 Lakh offloaded shares. New World Fund lapped up 16.4 Lakh shares from SVF Python II’s offloaded stake.

SoftBank’s stake sale in PB Fintech comes a year after the Japanese conglomerate sold over 5% stake in the company last year.

Following SoftBank’s stake sale, shares of PB Fintech fell 2.3%, ending Friday’s session at INR 789.45 on the BSE.

SoftBank’s stake sale in PB Fintech comes a week after it offloaded 9.35 Cr shares of foodtech giant Zomato in an INR 1,127 Cr block deal last Friday, likely exiting the company.

In November, SVF Doorbell (Cayman) had also offloaded 2.5% of its stake in logistics unicorn Delhivery for almost INR 740 Cr. 

The Japanese investment major has been cutting its shareholding in most Indian listed entities since last year amid its increasing losses.

Meanwhile, PB Fintech has been seeing an improvement in its bottom line for the last few quarters. Its net loss declined over 89% year-on-year (YoY) to INR 21 Cr in Q2 FY24. The fintech major also reported its third consecutive adjusted EBITDA-positive quarter in Q2.

On Friday, PB Fintech also informed the exchanges that Income Tax (IT) officials ‘visited’ the offices of its subsidiary Paisabazaar earlier this week.

The post SoftBank’s Stake Sale Continues, Offloads 1.14 Cr PB Fintech Shares Worth INR 914 Cr appeared first on Inc42 Media.

Listed startup PB Fintech informed the bourses that Income Tax (IT) sleuths ‘visited’ the offices of its subsidiary Paisabazaar earlier this week.

In a filing with the BSE, the fintech major said that the visits were conducted on December 13 and 14 and pertained to certain vendors of Paisabazaar.

“We hereby inform you that the Income Tax officials visited Paisabazaar, a wholly owned subsidiary and PB Fintech Limited on 13th & 14th December, 2023 and enquired about certain vendors of Paisabazaar,” said the company. 

The company said that it has furnished information sought by the officials and will continue to provide further details that might be required by the Department in future. Assuaging the investors, PB Fintech added that the business operations of Paisabazaar continue as usual and were not impacted on account of the visits. 

This comes nearly two months after the Securities and Exchange Board of India (SEBI) imposed a fine of INR 1 Lakh on Paisabazaar for employing a principal officer without requisite qualification. The markets regulator then said that Paisabazaar cofounder and chief executive officer (CEO) Naveen Kukreja, who was also the company’s principal officer, did not possess the National Institute of Securities Markets (NISM) certification.

The visits come when Paisabazaar has been clocking hefty revenue growth while scaling up operations. Paisabazaar closed the second quarter (Q2) of the financial year 2023-24 (FY24) with a revenue of INR 154 Cr, contributing little more than 25% to the parent PB Fintech’s core quarterly revenues.

At the end of the September quarter, the credit marketplace vertical clocked an annual loan disbursal rate of INR 16,600 Cr, having disbursed loans worth INR 4,129 Cr on the platform during the three-month period.

Meanwhile, PB Fintech reported a loss of INR 21 Cr in the second quarter (Q2) of the financial year 2023-24 (FY24), down more than 89% year-on-year (YoY). Meanwhile, revenues soared 42% YoY to INR 812 Cr during the same period. 

The quarter ended September 2023 was the third consecutive adjusted EBITDA-positive quarter for PB Fintech. The company’s consolidated EBITDA, excluding ESOP costs, hovered around the INR 13 Cr mark in Q2 FY24 against an adjusted EBITDA loss of INR 53 Cr during the same period last year. 

Last month, PB Fintech chairman and CEO Yashish Dahiya affirmed that the company would begin clocking profits from Q3 onwards.

Meanwhile, PB Fintech closed the day 2.31% lower at INR 789.45 on the BSE on Friday (December 16).

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