Paytm's Vijay Shekhar Sharma on Wednesday said that the fintech firm is expecting a near-term impact on its revenue and profitability from the Reserve Bank of India's regulatory crackdown it faced earlier this year. In a letter to shareholders, Sharma said that the company is expecting near-term financial impact to revenue and profitability due to disruptions faced in business in Q4. The company booked a one-time loss of Rs 227 crore as impairment from its investments in PPBL.
“This includes steady state impact due to pausing of PPBL wallet. We had also paused a few other payments and loan products to our customers during the last quarter, and I am happy to share that many such products have been restarted or in the process of starting soon,” Sharma said in the letter.
It is to be noted that the RBI on January 31, 2024, asked Paytm Payments Bank Limited (PPBL) to stop offering banking services effective March 15, 2024, on the back of concerns of non-compliance with regulatory guidelines.
The company said that it expects the full impact of RBI's actions are likely be felt in the first quarter results of FY25 as it warned that revenue during the 3-month period could slip to Rs 1,500 crore to Rs 1,600 crore. The fintech firm expects improvements from the second quarter of FY25, "based on restarting certain paused products and achieving steady growth in operating metrics".
One97 Communications, which runs Paytm, reported a net loss of 550 crore rupees in Q4 of FY24, which is three times higher than Q4 FY23.
The company's revenues were down 20% and margins also took a hit due to RBI's ban on Paytm Payments Bank. The revenue from operations was down by 2.9 per cent year on year (YoY) at Rs 2,267 crore, against Rs 2,334 crore in the same period last year.
The letter also mentioned the company's focus on significant cost efficiencies, including a leaner organizational structure, driven by Artificial Intelligence capabilities and a focus on core business.
While investments will continue, the firm will also take steps to cut employee costs, Sharma said, adding that these measures could save up to Rs 400-500 crore annually.
Sharma also said One 97 Communications will be taking steps to “strengthen the governance framework across our group entities (especially regulated entities)” by appointing subject matter experts as advisors of independent directors.
Shares of One 97 Communications closed at Rs 368.85, up by 4.86%.