SUMMARY
Last week, the advisory firms IiAS, SES and InGovern Research Services opposed reappointing Sharma as Paytm CEO
In less than a year, Paytm’s shares have lost almost 64% of their value, with the market cap being 44% lower than its last private valuation
While Sharma said that Paytm would hit profitability by September 2023, the fintech’s Q1 FY23 results show a 69% rise in consolidated loss YoY
Vijay Shekhar Sharma, the founder and CEO of listed fintech giant Paytm is set to face a vote of confidence from investors today (August 19) to decide whether he will continue at the helm of the company during the annual general meeting (AGM) to happen today.
The development comes as last week, the advisory firm Institutional Investor Advisory Services India Limited (IiAS) opposed reappointing Sharma as Paytm CEO. IiAS cited unfulfilled commitments made by Sharma.
“Vijay Shekhar Sharma has made several commitments in the past to make the company profitable, however, these have not played out,” IiAS added. The advisory firm also added that the fintech’s board must consider professionalising the management.
After IiAS, two more advisory firms, Stakeholders Empowerment Services (SES) and InGovern Research Services opposed Paytm’s move to reappoint Sharma as the CEO.
It is prudent to note here that Sharma has publicly said that Paytm would hit profitability as soon as September 2023. However, Paytm’s Q1 FY23 results show an increase of 69% in consolidated loss year-on-year, reaching INR 645.4 Cr. The fintech major also recorded an 89% increase in revenue from operations in Q1 FY23.
According to its latest operating performance update report filed with the BSE, Paytm disbursed 2.9 Mn loans or almost 4X more than the corresponding period last year. At the same time, its monthly transacting users (MTU) reached 77.6 Mn for July 2022.
Arguably one of India’s most recognisable startups, Paytm went public in November last year in India’s largest-ever tech startup IPO. However, that fanfare was short-lived as Paytm’s shares fell sharply from its IPO price of INR 2,150 per share, hitting an all-time low of INR 510 a few months ago.
A primary reason for Sharma’s leadership being called into question is the amount of market cap that Paytm has lost since going public. At the time of reporting (August 19, 2022, 11:50 AM), Paytm’s shares traded at INR 776.45 apiece.
Therefore, in less than a year, Paytm’s shares have lost 63.88% of their value. The company’s market cap stands at $6.31 Bn at present, 44% lower than its last private valuation of $11.2 Bn, per Inc42 data.
Sharma’s remuneration has also become a matter of debate. According to IiAS, the current Paytm CEO will receive over INR 796 Cr as minimum remuneration in FY23, comprising 21 Mn stock options at an INR 9 apiece even if Paytm makes losses.
The two factors, combined with mounting losses and profitability being still more than a year away have brought Vijay Shekhar Sharma to the impeachment that will take place later today (August 19) at the Paytm AGM.
