Mumbai-based point of sales solutions provider Mswipe recently made headlines after reports that it plans to enter into acquisition talks to address challenges of business runway. However, Mswipe founder and CEO Manish Patel has now directly denied any plans that the company is looking to get acquired.
Speaking to Inc42, Patel denied the media report (now deleted) earlier this week which claimed that Mswipe has 3-4 months of runway left, and is looking to be acquired for around $200 Mn. In response, Mswipe claimed in a media statement that it has 36 months of runway left and has achieved company-wide cash breakeven in March 2020.
Speaking about how the runway was stretched after cutting costs, Patel said that the company revisited some of its expenditure this month, reviewed them to ensure business continuity and extend the runway. He also clarified that the company is not relying on credit lines for the runway but has optimised costs.
About the runway, Patel said the process of reviewing costs began late last year.
“It is a combination of both, we have been consciously optimising the costs till March, post-March, we have further optimised the costs in April. It is a combination of an ongoing process of over six months and some acceleration in March and April.”
Patel explained that variable costs such as server setups, IT infrastructure and more is dependent on the volume of the business coming in and make up a large part of overall costs. Since business is low, this cost has come down to a large extent. In terms of fixed costs, which have been cut by almost 40%, Patel told us that employee salaries and income make up the majority portion of it, so that was the first thing to be optimised. Mswipe has put in place 30% company-wide pay cuts while management has taken a 50% pay cut to curb expenses.
As for layoffs, 10% of the total workforce has been let go, which includes field executives, as part of the quarterly and annual performance reviews which began in February.
On being questioned about the report on the company’s performance, Patel said that Mswipe is exploring its legal options. “We have consulted our legal team and that is a revenue matter and they will get back to me. Our instruction to them is that we need to proceed with the matter legally.”
In terms of business, Patel said that during the lockdown, Mswipe products are still being used by kiranas, pharmacies, hospitals and other retail points that are operational. During the lockdown, the company is focused on holding its position and will resume sales activity post-lockdown.
Patel also said that he expects the business growth to return to normalcy in 6-8 months by conservative estimates.
In FY19, on a consolidated basis, the company’s income was INR 277.6 Cr, a 34% increase and expenses were INR 335.7 Cr, a 25% Y-o-Y increase, and loss fell 5% to INR 58 Cr. for FY20, the company claims to have 50% Y-o-Y growth.
For FY20, the company said it is estimating a topline of INR 350 Cr through commissions and sales. On its product roadmap for 2020, Patel said that the company will continue to focus on its growth strategy given the impact on the market, and will soon be launching additional products geared towards the new reality.