Separately, in a statement to the exchanges on Friday, Paytm said that its loan disbursements increased four-fold to 2.9 million in July. However, the total loan value increased by more than six times. 2,090 crores.
“We continue to work with our partners to review the evolving macro environment, and accordingly, a slight reduction in our growth can be expected. That said, we continue to see substantial growth and upsell opportunities in this business and are focused on book quality (given the potential for macro headwinds),” the disclosure said.
However, this was not enough for Paytm shares to recover. Paytm shares fall 4.82% 786 on BSE.
The company’s shares came under pressure after Paytm’s proposal to re-appoint Vijay Shekhar Sharma as chief executive officer for another five years was opposed by advisory firm Institutional Investor Advisory Services India Ltd (IIAS). .
In a detailed report, the advisory firm also flagged the remuneration fixed for the post.
Sharma’s FY23 remuneration is estimated 796.28 crore, which includes 21 million stock options at an exercise price of 9, a deep discount on the market value on the date of grant (the fair value spread over the vesting period), noted in the IIAS report. He was granted 46.5% of the entire stock option pool, equivalent to 3.2% of the outstanding share capital. But no disclosure has been made about the implied conditions, the report said.
“His total remuneration is higher than the level of remuneration of CEOs of all S&P BSE Sensex companies – and most of these companies are profitable. The company is seeking shareholder approval for the remuneration proposed as minimum remuneration – which will be paid to him , even if the company continues to report losses,” the report said opposing his remuneration.
The proxy advisor also opposed the proposal to re-appoint Ravi Chandra Adusumalli as director. Edusumalli is an early investor in Paytm, Founder and Managing Partner at Elevation Capital (formerly SAIF Partners).
“We note that Ravi Chandra Adusumalli is a member of the audit committee. We express concern over the issues raised by the auditors, that there have been delays in repayment of loans and advances granted, and that the Company, despite reporting staggering losses, proposes to incur hundred crore ( 10 crore) on annual charitable donations,” the report noted, also criticizing Adusumalli for attending less than half of the board’s meetings in FY12.
Supporting the appointment of Madhur Deora as a whole-time director, the report raised a red flag on his remuneration.
“We estimate Madhur Deora’s remuneration as: 358.5 million ( 35.85 crore) for FY23, which is high for the size and performance of the business and not in line with peers,” it said.
Deora has been associated with Paytm since 2016. He was earlier with Citigroup Global Markets India.
IIAS further said in the report that the company’s share price has declined 64 per cent since the listing. 2,150), resulting in the destruction of wealth for the shareholders.
“Vijay Shekhar Sharma has made several commitments in the past to make the company profitable. However, they have not played. We believe that the Board should consider professionalizing the management.”
Paytm net loss widens Loss of Rs 644.4 crore in June quarter 380.2 crore in the corresponding quarter of the last financial year.
The IIAS report also states that it is concerned about debt (including interest) 106.8 crore to five entities, where repayment has been delayed. It states that the nature of the relationship with some of these entities is unclear.
Earlier this week, SoftBank Group Corp said it has reduced its investment in Paytm by $400 million for the quarter ended June, adding to a total loss of $23.1 billion for the period.
The technology firm’s investment in One97 Communications cost $1.4 billion in 2017, created through a mix of primary and secondary share purchases.
According to its financial statements, the fair value of its investments at the end of June 30 was $1 billion, indicating an on-paper loss of $400 million.
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