Paytm parent One97 Communications posts wider operating loss for FY17

One97 Communications Ltd, the parent of mobile wallet Paytm, reported a wider operating loss for the financial year ended March 2017 as it continued to burn cash heavily.

The company’s consolidated loss before exceptional items, interest, tax, depreciation and amortisation expanded to Rs 1,304 crore (about $200 million) from Rs 1,204.6 crore the year before, according to its filings with the Registrar of Companies.

Net loss, however, shrank to Rs 899.6 crore from Rs 1,496.8 crore thanks to so-called exceptional items to the tune of Rs 591.32 crore.

The company didn’t elaborate on the exceptional items. Email queries to a Paytm spokesperson didn’t receive a response till the time of filing this article.

Consolidated revenue from operations rose 35% to Rs 640 crore for 2016-17 from Rs 474 crore the previous year. Other income, which includes profit from sale of investments, increased to Rs 188.4 crore from Rs 123.6 crore.

However, the company was spending nearly thrice it made in revenue. Its total expenditure grew to Rs 2,044 crore from Rs 1,775.51 crore. Staff costs more than doubled to almost Rs 334 crore from Rs 143 crore while miscellaneous expenses nearly tripled to Rs 600 crore. Advertising expenses fell to nearly Rs 969.5 crore from Rs 1,347 crore, helping control overall expenditure.

The consolidated financials include numbers from One97’s units and associates including its e-commerce and digital wallet businesses.

In 2016, One97 had decided to hive off its e-commerce business into Paytm E-commerce Pvt. Ltd, which operates Paytm Mall. It also transferred its wallet business to Paytm Payments Bank Ltd.

Paytm E-commerce Pvt. Ltd reported net sales of Rs 7 crore in 2016-17 and a loss of Rs 13.6 crore. The e-commerce unit was hived off almost at the end of 2016-17, so the small revenue likely reflects the few days it functioned as an independent entity and most of its revenue for the year was captured in the consolidated financials of One97.

One97, founded by Vijay Shekhar Sharma, and its e-commerce unit have raised a substantial amount in funding from Japan’s SoftBank Group Corp, China’s Alibaba Group and a bunch of other investors.

Last year, Alibaba and venture capital firm SAIF Partners invested about Rs 1,334 crore ($200 million) in Paytm E-commerce.

Separately, SoftBank invested $1.4 billion (about Rs 9,000 crore) in One97.

Last month, regulatory filings showed that SoftBank and Alibaba were investing a total of Rs 2,892 crore in Paytm E-commerce.