One 97 Communications Ltd (Paytm) shares are in focus today, as the company informed BSE and NSE that it has received a Rs 611.17 crore show cause notice from the Directorate of Enforcement in relation to alleged contraventions of certain provisions of the Foreign Exchange Management Act, 1999 (FEMA) by the online payment service provider. Paytm insisted there is no impact of the matter on Paytm’s services to its consumers and merchants, and all of its services are fully operational and secure, as always. The alleged contraventions relate to certain investment transactions relating to OCL, LIPL and NIPL, Paytm told stock exchanges. The case pertained to acquisition of two subsidiaries namely Little Internet Private Limited (LIPL) and Nearbuy India Private Limited (NIPL) -- erstwhile Groupon, along with certain Directors & Officers, for the years 2015 to 2019. "Certain alleged contraventions attributable to two acquired companies - Little Internet Pvt Limited and NearBuy India Pvt Ltd pertain to a period when these were not subsidiaries of the company," Paytm noted. Paytm shares are down 27 per cent year-to-date but are still up 71 per cent in the past one year. To resolve the matter in accordance with applicable laws and regulatory processes, Paytm is seeking necessary legal advice and evaluating appropriate remedies. "Paytm upholds principles of transparency, governance, and compliance in all its business practices. This matter is being addressed with a focus on resolving it in accordance with applicable laws. There is no impact of this matter on Paytm’s services to its consumers and merchants, and all services are fully operational and secure, as always," it said.
Paytm's primary focus is on payments and upselling financial services to payment customers. The company processes a GMP of Rs 5 lakh crore from consumers to merchants every quarter through UPI and cards. Of this, 80 per cent is processed through UPI, which has significantly cannibalized debit card usage, while the remaining 20 per cent is processed through credit cards. Paytm recently informed stock exchanges about the completion of sale of 100 per cent stake by its subsidiary company Mobiquest Mobile Technologies in its wholly-owned subsidiary Xceed IT Solutions. The transaction has been completed, it said on February 22.
The company reported a narrowing of losses at Rs 208 crore for the December quarter compared with Rs 222 crore in the corresponding quarter last year. Revenue for the quarter fell 36 per cent YoY to Rs 1,828 crore compared with Rs 2,850 crore in the same quarter last year. This was in line with Street expectations.