Paytm parent posts wider FY18 loss despite hiving off wallet, e-commerce businesses

One97 Communications Ltd has reported a wider loss for the financial year ended March 2018 even after it carved out separate companies for the digital wallet and e-commerce businesses under its Paytm brand.

The company’s consolidated net loss for 2017-18 expanded to Rs 1,604 crore from Rs 899 crore the year before, its filings with the Registrar of Companies shows. Pre-tax loss widened to Rs 1,598 crore for 2017-18 from Rs 668 crore.

The company, which provides mobile value-added services among other offerings, did not disclose its revenue for 2017-18.

Email queries to a spokesperson for One97 Communications seeking reasons for the wider loss didn’t elicit a response.

The latest results reverse the previous year’s trend when its net loss had shrunk to Rs 899 crore from Rs 1,496.8 crore for 2015-16 owing to exceptional items to the tune of Rs 591.32 crore.

Consolidated revenue from operations for 2016-17 had risen 35% to Rs 640 crore from Rs 474 crore the year before. However, it had spent nearly thrice the amount it made in revenue; its total expenditure grew to Rs 2,044 crore from Rs 1,775.51 crore.

The company’s loss for 2017-18 was first reported by business news website BloombergQuint.

The wider loss, however, doesn’t appear to have dented the company’s appeal to investors.

On Tuesday, One97 said it had received investment from billionaire Warren Buffett-led multinational conglomerate Berkshire Hathaway Inc. While the company didn’t disclose the amount, multiple media reports pegged the deal value around Rs 2,500 crore ($356 million).

One97, led by founder Vijay Shekhar Sharma, had separated its e-commerce and payments businesses under Paytm E-Commerce Pvt. Ltd and Paytm Payments Bank Ltd, respectively, in 2016. Last year, it launched its payments bank and moved its digital wallet Paytm under this unit. Sharma owned 51% of Paytm Payments Bank while One97 held the remaining stake.

Paytm E-Commerce is majority-owned by Alibaba Group Holdings, after the Chinese conglomerate put in $200 million into the entity along with venture capital firm SAIF Partners in June 2017. Japan's SoftBank Group Corp holds a significant minority stake in Paytm E-commerce, which operates Paytm Mall, after investing about $400 million in the company.

One97 didn’t itself own any significant stake in Paytm E-commerce, although its employee trust did hold a stake in the marketplace operator, according to the online retailer’s shareholding data for 2016-17.

Alibaba and SoftBank are separately also investors in One97. In May 2017, SoftBank had invested $1.4 billion (about Rs 9,000 crore then) in One97.