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Home Business Start-Up Paytm Lost Rs. 4 Crore Per Day in FY'16

Paytm Lost Rs. 4 Crore Per Day in FY'16

Author: Team Zailet

Thanks to the government’s demonetization move, and its own canny marketing efforts, Paytm has entered the mainstream consciousness like no startup that’s preceded it. Paytm says it’s on track to meet its 2019 growth targets by early next year.

But this rapid growth has come at a price. Paytm saw its net losses climb four-fold to Rs 1,549 crore for the year ended March 31, 2016, according to documents filed with the Registrar of Companies (RoC). The Noida-based One97 Communications, which runs Paytm, had reported a loss of Rs 372 crore a year ago compared to a profit of over Rs 5 crore during financial year ended March 2014 as cashbacks, marketing and discounting have hit the company over the past two years.


Paytm’s managed to garner at lot of customers – it has over 15 crore users now – but they have also been expensive to acquire. The company, though, is better placed than e-commerce players which have been also burning large amounts of money to win over customers. There’s little loyalty in e-commerce, and customers regularly switch between e-commerce providers. Paytm, on the other hand, creates strong network effects through its payments ecosystem. If Paytm’s use becomes commonplace, customers and merchants will willingly join its platform, making it more useful for everyone else who uses it. As such, Paytm’s customer acquisition costs should likely fall over time. Also, Paytm is currently the undisputed market leader, and shouldn’t find it hard to raise money, in spite of its ballooning losses. 


Paytm's founder Vijay Shekhar Sharma drew an annual salary of about Rs 3.1 crore in the 2015-16 fiscal compared to Rs 2.3 crore the year before, according to the filing. TOI reported last week that Sharma, who held over 21% stake in One97 Communications, sold 1% of his holding to raise Rs 325 crore to fund his planned payments bank, having got an in-principle approval from the country's central bank.




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