Into The World Of Paytm: Pioneering Ecommerce, Digital Payments

Post-demonetisation, the happiest of people were found in One97 Communications. The company had publicly thanked Prime Minister Narendra Modi for giving the biggest push ever for digital payments. Even though this has recently landed the company into a controversy for allegedly sharing user data with the government, the company has achieved a number of successes under its hat.

Soon the company ticked off several milestones ranging from recording 200 Mn customers to a Gross Transaction Value of $20 Bn (March 2018), registering over 1 Bn transactions per quarter. With a valuation of $10 Bn (as of January 2018), the company has been rapidly expanding its portfolio from just digital payments to ecommerce with Mall, started its own payments bank with Payments Bank, and has also ventured into Wealth Management, insurance segment and Gold services.

With multiple portfolios, the revenues and losses of the company have been taking dips as well as crossing targets.

It is to be noted that One97 Communications, since 2016, has divided its businesses into multiple subsidiaries: Paytm Payments Bank, Paytm Ecommerce, Paytm Financial Services among others.

We have dived into the world of financials for Paytm and One97 Communications to consolidate the highlights of this journey.

One97 Communications:

On the revenue front, One97 Communications has been on a rocky foot oscillating between highs and lows. The company’s total revenue for FY17 stood at $122 Mn (INR 828.6 Cr) which is a 38.6% increase against FY16 revenues of $88 Mn (INR 597.8 Cr).

However, the losses have also been on a see-saw peddling from a massive amount of $229 Mn (INR 1,496.7 Cr) for FY16 and then reaching $133 Mn (INR 899.6 Cr) for FY17, a 39% low from the previous year.

The loss figure for FY17, however, includes a one-time exceptional item of $87.7 Mn (INR 591.3 Cr), which takes its overall loss (before exceptional item) to $186.8 Mn (INR 1,259.5 Cr). This is slightly higher than the $174.7 Mn (INR 1,177.6 Cr) loss (before exceptional item) reported in FY16.

 

Its overall expenses went up by 17.6% from $263.32 Mn (INR 1,775 Cr) in FY16 to $309.78 Mn (INR 2,088.1 Cr) in FY17.

Most of its expenses were on advertising and promotion for which it spent $143.78 Mn (INR 969.4 Cr) in FY17, a decrease of 39% when compared to $199.75 Mn (INR 1,346.8 Cr) in FY16.

Paytm also spent $49.50 Mn (INR 333.7 Cr) on employee and staff related expenses in FY17. This includes gratuity payments, PF contribution, salaries and other employee costs.

Mobile Value-added Business

The mobile value-added business offered through One97.com is for services like mobile marketing, caller tunes, talk time recharges, etc.

This has reportedly contributed 45% of the revenues for the company in FY17, generating a profit of $7.26 Mn (INR 49 Cr) in the year, a 122% jump from $3.26 Mn (INR 22 Cr) in the year prior to that.

Paytm Payments Bank

Headed by Renu Satti, Paytm Payments Bank records 180 Mn customers. It reported a revenue of $366.45K (INR 2.47 Cr) against the losses of $4.5 Mn (INR 30.71 Cr).

Paytm parent One97 Communications, on the other hand, issued a public notice in December 2016 that it would be transferring its wallet business, to the newly-incorporated payment bank entity.

 

A month later, it received a nod from the Reserve Bank of India to formally launch the Payments Bank. Finally, three months after receiving the license, Payments Bank officially commenced operations in May 2017 and later in November 2017, it was formally inaugurated by Finance Minister Arun Jaitley.

Till date, it has raised a total funding of $61.78 Mn (INR 400 Cr).

Paytm Ecommerce

Paytm Mall is the ecommerce subsidiary of Paytm, which started operating as a consumer shopping app in February 2017.

As per the company website, it currently has over 10 Cr customers, 500 categories and has already reached 39K pin codes in India.

 

Paytm Mall claims that it will close FY18 at a GMV run rate of $3 Bn, with a target of reaching a $10 Bn run rate by the end of FY19.

However, barely a year old company posted revenues of $1.08 Mn (INR 7.34 Cr) against losses of $2.02 Mn (INR 13.63 Cr).

Paytm as an entity is targeting multiple markets through its portfolio services.

Paytm Mall is looking at the Indian ecommerce industry, which is currently a market worth $200 Bn. While, Paytm’s digital payments focus is targeted at, as predicted by Credit Suisse, at India’s digital payments industry which is expected to grow five-fold to reach $1 Tn by 2023.

As a company backed by conglomerates like Alibaba and SoftBank, Paytm with the strength of its subsidiaries is ready for its next generation of growth.