Exclusive: Paytm Money spent around Rs 50 to earn a single rupee in FY19

Paytm is a formidable player in Indian digital space with stakes in payments, commerce, financial services and partial banking (via payments banks). While commerce business didn’t work-out as it was expected and has been going through a pivot, its mutual fund investment app Paytm Money claimed to have the fastest growth in registration and user acquisition.

On completing its first year, Paytm Money recently claimed 3.3 million users and 40% growth in SIP registration. The company ticks all the boxes when it comes to growth, buzz, media attention and good reviews. However, to do so, it lost a lot of money in FY19.

Paytm Money has spent roughly Rs 37.62 crore in total to generate a turnover of Rs 76.26 lakhs in FY19. It essentially means that it spent around Rs 49.33 to earn a single rupee in the last fiscal year.

According to One97 Communication’s annual report shared with its investors (Entrackr has a copy of the same), Paytm Money had incurred losses of Rs 36.85 crore. It’s worth noting that the mutual fund investment firm began operations in September last year and has invested about Rs 20.15 crore in financial assets. 

The company shared its annual report with its shareholders earlier this week, representing the financial results for the seven operational months in the last fiscal year.

As per the report, Paytm Money has total assets worth Rs 46.82 crore. As a result, the asset turnover ratio comes to around 0.016 times or 1.6%. It highlights the firm's inability to deploy the assets efficiently, and it was not able to generate enough revenues to justify the heavy investments in assets. 

The company’s balance sheet also sports a negative shareholder’s equity of Rs 40.53 Crore, indicating Paytm Money will have to switch its gears before it further erodes its capital.

Widening its horizon, Paytm Money is eyeing to foray into equity investment segment. It already got the regulator approval and will launch stockbroking service in ongoing fiscal. 

One97 Communications recently elevated Pravin Jadhav as Managing Director and chief executive officer of Paytm Money. Previously, he was a whole-time director at the firm. The holding firm also plans to invest Rs 250 crore in the subsidiary over the next two years.

Losing substantial money by deep-pocketed startups for the sake of growth is not a new thing in India. Almost all consumer Internet companies have been bleeding profusely while chasing scale, transactions and MAUs-DAUs. Paytm Money is no exception. On the lines of the last financial year, it is likely to keep losing money in the coming years as well.