Exclusive: Paytm Mall’s CFO and Exec Director quits amidst business struggles

Paytm Mall’s executive director Rudra Dalmia has resigned from his position less than a year after he took over, according to two people familiar with the development. Dalmia, who was also on the board of the company, was elevated in June 2019 in a bid to help revive Paytm Mall’s business by changing strategies and coming up with a new business plan. 

“Dalmia resigned last month and is currently serving his notice period,” said one of the sources requesting anonymity. “His abrupt departure from the company raises questions on the coherence and longevity of Paytm Mall's strategy.”

In June 2019, Dalmia was elevated to the post of executive director and was its de-facto CEO of Paytm Mall. An MBA graduate from Cornell University, New York, Dalmia is a senior executive with more than 20 years of experience, including as the country head and  MD of Saxobank India. He has also worked at Dawnay Day, International and eBookers Shared Services India.

His departure from Paytm Mall without completing even a year highlights the continuing struggles of Paytm Mall — Paytm’s commerce vertical that was launched to compete with Flipkart and Amazon India.

Responding to Entrackr queries, Paytm Mall spokesperson has denied his exit and Dalmia couldn't be reached immediately for comment. And after the story was published, Dalmia denied the development in a tweet.

Paytm's foray into the marketplace was built on heavy cashback and discounts which sometimes went as high as 100% just to inflate sale volumes. However, as Paytm Mall started cutting back on these perks, its business volumes started falling sharply last year. The quality of sellers and products had also become questionable. 

To counter this, Paytm Mall launched an O2O (online to offline) model that sought to create a hyperlocal business by connecting local sellers to buyers close by. This was an attempt to improve unit economics in parts of the business and was being led directly by Dalmia. More recently, Paytm Mall had also started to build a wholesale business and there were discussions around shutting down loss-making B2C operations and focus on B2B operations. 

Dalmia’s resignation also outlines the fact that Paytm Mall hasn’t been able to find a leader with a long term commitment after the departure of Amit Sinha, who was the firm’s chief operating officer and main representative.

“In fact, the lack of cohesion and direction has been a recurrent problem at Paytm Mall. Its range extends from the latest iPhone 11 to kitchen knives, from laptops to toothpaste. In an attempt to serve all requirements for everybody, it has failed to carve out a clear position for itself,” added the person quoted above.

Presently, Paytm Mall is caught between high GMV (gross merchandise value which is a proxy for gross sales) global players like Amazon and Walmart on one side, who continue to spend large amounts on the operations and high-efficiency players like Snapdeal, who have created a niche for themselves by focusing on the value segment.

Paytm Mall's inability to hold onto its key executives is not. In May 2019, Sinha, the COO of Paytm Mall left after allegedly being pushed to take responsibility for the poor performance of Paytm Mall. 

His departure, after 11 years of being a close confidant of Vijay Shekhar Sharma, had created quite a stir at Paytm, with rumours that he was made blamed for decisions that were made by others. 

Around the same time, there were some senior-level exists within the Paytm group, including that of Kiran Vasirreddy, COO of Paytm. A similar churn was seen at Paytm Bank where Shinjini Kumar had a short stint as the CEO before moving on. 

The last two years have seen immense turmoil at Paytm as it floundered on various counts. In 2019, the board appointed a forensic audit conducted by E&Y, which unearthed fraud relating to the management of cashback at Paytm. More than 100 individuals were questioned and close to 20-25 were fired after being found involved. 

Moreover, the financials of Paytm and Paytm Mall too have come under investor and media scrutiny due to the high quantum of related party transactions, which introduce opacity into the working of both the entities. In FY 2019, nearly 50% of the expenditure of Paytm Mall was towards related party transactions. 

In a recent interview with Fortune, Sharma admitted that "cash burn in e-commerce is like a drug that just makes you feel high but the real revenue and growth require you to work harder." 

The story has been updated with Dalmia's denial.