One97 Communications Ltd, which runs wallet firm Paytm, is likely to see its losses surge to Rs 2,100 crore for the financial year 2019-20, a report by business daily Mint stated, citing a confidential report by investment bank Corporate Professionals Capital.
The burn is primarily driven by Paytm’s efforts to take on rivals Walmart-backed Flipkart and Amazon India in the online business space, said the report. One97 had hived off its payments bank and e-commerce businesses into separate entities.
One97 reported consolidated net loss of Rs 1,604 crore for the financial year 2017-18. Mint said that One97 will likely report its first profit of Rs 207.61 crore for fiscal 2021 and Rs 8,512.69 crore by fiscal 2026. The company has projected a negative net free cash flow of Rs 1,400 crore in fiscal 2020.
One97 had recently pledged its assets to ICICI Bank to increase its borrowing limit from Rs 400 crore to Rs 1,400 crore, its filings with the Registrar of Companies (RoC) show. According to reports, pledging its assets worth Rs 7,085.1 crore will help the company pump capital into its online to offline retail, which includes its investment in grocery e-tailer BigBasket and other regional retailers. The company had expanded its financial services business earlier this year through a mutual funds distribution platform under Paytm Money led by Pravin Jadhav.
According to Mint, the company's recent hire, Raghu Chakravarthi from online grocery company BigBasket, will spearhead the online to offline initiative.
According to multiple media reports, Paytm was said to be shifting its focus away from e-commerce, which is a separate entity not related to One 97, and will streamline its operations for other initiatives. However, CEO and founder Vijay Shekhar Sharma denied the reports, stating that the online marketplace was expected to double its gross merchandise volume (GMV), a metric for total value of goods sold, to $2 billion by March 2019.
One97 was valued at over $10 billion in August 2018 when Warren Buffet-led Berkshire Hathaway invested close to Rs 2,500 crore for a 3-4% stake in the company.