Paytm on track to become profitable next year: CEO

Speaking at the company’s first annual general meeting, Paytm Managing Director and CEO Vijay Shekhar Sharma answered questions on the depressed stock price of the company, when the company’s shares will reach the issue price. 2,150, and when it will achieve profitability.

“There is a difference between a small company being profitable and a large company being profitable. Our ambition is to become a large scale company and become profitable,” said Sharma, speaking extensively in Hindi, Shareholder Questions at Profitability Time. said in response to. Paytm’s losses widened 644 crore in the first quarter of FY23 from Rs. 380.2 crore in the same quarter last year, though its revenue for the same period grew over 86%. close on paytm stock 771.85 on Friday, a recovery of 4.66% over the previous month.

Sharma said the company was on track to become profitable by September 2023. “Till 2019, the company was focusing on expansion, after which it focused on monetization through its payments and loan divisions,” Sharma said. He attributed the weak share price to the poor. Investor sentiment and macroeconomic factors, linking the firm, had no effect on managing the stock beyond its focus on profits.

“From the shareholders letter, we see that the definition of profitability has been revised. We do not support redefining companies,” said Hetal Dalal, President and Chief Operating Officer, Institutional Investor Advisory Services (IIAS). How profitability is determined to suit individual needs.

In a shareholder letter earlier this year, Sharma had said the company would aim to achieve operating profitability, which he defined as EBITDA before ESOP cost. Ebitda is short for earnings before interest, tax and amortization, and ESOP stands for employee stock option.

Sharma categorically reiterated the concerns over his remuneration, saying that his stock options granted in FY22 will not vest until the company reaches the IPO market cap. Sharma’s remuneration 796 crore, including stock options granted in FY22, was one of the proposals put up for vote ahead of the AGM. Proxy advisory firms have questioned Esop’s grant to Sharma as he is practically a permanent director on the board and in light of the poor performance of Paytm stock.

Sharma is not classified as a promoter, but he is the founder of Paytm, he holds around 14% of the stock in the company, including through his family trust.

Sharma said the company doesn’t want to distract from expanding overseas, though he noted that Paytm was already in Japan through its investment in SoftBank-backed PayPay. “We have no plans to expand internationally in the short and medium term. We want to focus on achieving profitability and generating revenue. There are many markets in India to grow in the field of payments and loans. We don’t want any distractions,” Sharma said, adding that the company may look at international expansion in two or three years.

Group Chief Financial Officer (CFO) Madhur Deora said there are no plans to make any acquisitions in the short and medium term. “We are more builders than buyers,” Deora said. It was easier for the company to build on a large scale than it was to acquire.

Ahead of the AGM, shareholders voted on five general resolutions on the adoption of the FY22 financial statements, the reappointment of Sharma as managing director and CEO; and the reappointment of Deora as Group CFO, Chairman and Executive Director; Ravi Adusumili’s reappointment on the board; Contribution to charitable organizations; and two special proposals on remuneration of Sharma and Deora. The company did not disclose the voting results at press time.

While Alibaba Group holds around 25 per cent stake in the company, Paytm also has other investors like SoftBank, Elevation Capital and CPPIB. Sharma holds around 9% stake in Paytm directly and an additional 5% through a family trust.

The three proxy advisory firms had advised investors to vote against the reappointment of Sharma and Edusumili, raising concerns over management compensation.

“Vijay Shekhar Sharma has incorporated himself in the Company through the Articles of Association of the Company – he has Board Nomination Rights, even if diluted by more than 50% from his existing 8.9% equity stake, as long as He either holds an executive position or holds 3.1 million shares of not less than 2.5% of Paytm’s paid-up share capital. He is also not liable to retire from rotation, which effectively makes him a permanent director. “How is he different from a promoter? And to that extent, giving him stock options is not in line with regulatory thinking – Indian rules do not allow promoters to give stock options,” said the broker of IIAS.

first article