Indian e-commerce space is a capital guzzling business where poster-boys Flipkart and Amazon have recorded a total loss of Rs 11,144 crore. If we include Snapdeal and Paytm Mall, the collective losses of top four e-commerce firms soared to Rs 12,501 crore during FY19.
While Flipkart and Amazon continue to lose capital in FY19, Snapdeal and Paytm Mall have controlled their losses during the year ending March 2019. Snapdeal had cut losses by 70% whereas Paytm Mall has been able to shrink losses by 34.5%.
According to Paytm Mall’s annual financial statements, the operating revenue of the Noida-based firm recorded a 20% increase to Rs 892.77 crore in FY19 from Rs 744.15 crore in the preceding fiscal. Around 86% of total revenue ~ Rs 767 crore ~ has come from providing marketing and payment gateway services to sellers.
Another Rs 66.7 crore were made through brand promotions and Rs 50.05 crore from shipping fees. Apart from operating revenue, the company made Rs 75.12 crore through mutual funds in FY19, a 2.5X jump from around Rs 30 crore in FY18.
Importantly, Paytm Mall sold mutual funds worth Rs 2,572 crore during the last fiscal and made purchases worth Rs 2,344 crore as well. At the end of FY19, it held financial assets worth Rs 850.58 crore.
Paytm Mall’s total assets grew a healthy 35.3% during FY 19 to Rs 2010.42 crore from Rs 1,485.54 crore in FY18. The company has been investing heavily on its operational side of the business. It poured in an investment worth Rs 10 crores to start Paytm Wholesale, a fully owned subsidiary which will deal in wholesale goods.
During FY19, the ecommerce company received Rs 2,231.45 crores through the issue of capital which were promptly used to set off a massive chunk of current financial liabilities. As a result, the total liabilities of the company went down by 43.6% to around Rs 712 crore at the end of last fiscal in contrast to the total liabilities worth Rs1.262.4 it had at the start of FY19.
At the same time, Paytm Mall also tightened its purse strings during FY19 as the total expenditure dropped by 17.11% from Rs 2,581 crore in FY18 to Rs 2,139.6 crore in FY19. Further, losses were reduced by 34.5% during the last fiscal to Rs 1,171.44 crore.
Expenses on advertisements and promotions in FY19 declined drastically to Rs 317.22 crore, only a third of the total advertising expenses of Rs 944.21 crore it spent during FY18. Likewise, employee benefit expenses grew a mild 11.6% from Rs 158.75 crore in FY18 to Rs 177.16 crore in FY19.
Notably, the income statement also included miscellaneous expenses worth Rs 1,408.17 crores, making up around 66% of the total expenses spent by the company during the year ended in March 2019.
Group synergies were strong and Paytm Mall employed services from a bunch of Paytm’s group companies as the gross value of transactions with related parties during FY 19 stood at Rs 3,610 crore, growing more than 87% from the figure of Rs 1,926 crore in FY18.
Significantly, Paytm Mall was charged a total Rs 1072.5 crores by One97 Communications (Paytm) during FY19, out of which Rs 547.8 crore were charged in royalty fees for using Paytm’s brand, Rs 314.2 crore for availing payment gateway service and another Rs 210.51 crore for using other ancillary services.
Another Paytm group company, XpressBees was employed for providing logistics services and was paid Rs 110.09 crore during FY19
While the e-commerce firm reigned in its total expenses, net cash outflow from business operations shot up by 65.5% from Rs 1,234 crore in FY18 to Rs 2,043 crore in FY19.
The commerce business of Paytm hasn’t picked up as it was anticipated by the company and its investors. Although, Paytm Mall had a perfect opportunity for about two years to clinch the third position in Indian e-commerce space as Snapdeal and ShopClues were not in good shape.
The company also struggled in FY19 with falling scale, churn at the top level and fraud hatched by employees at the Noida-based company. These events also lead to a forensic audit for misconduct by auditing firm E&Y.
While the company had raised $160 million from eBay in July this year, existing backers – SoftBank and Alibaba didn’t put any money in the company.