Paytm’s parent company One97 Comunications’ restructuring exercise wherein it separated its online retail from its payments business has helped it to overcome losses by over 40%, according to filings of Company with Registrar of Companies (RoC).
The Company enter in E-Commerce platform into Paytm E-commerce (Paytm Mall) while it became a 49% shareholder in the payments bank business because of regulatory reasons in mid-2016.
Paytm E-Commerce was incorporated in August 2016 and it acquired the retail marketplace business of One97 effective from March 2017 for rupees 620 crore, as per the documents filed with RoC, including rupees 213 crore for intangible assets such as ‘non compete right’ and ‘right to use brand’. Paytm E-Commerce in turn, showed losses of only rupees 13.63 crore in FY17 and the Paytm Paymens Bank showed losses of rupees 30 crores for the same period.
Patym E-commerce had paid rupees 620 crore to One97 Communication for the transfer of assets during restructuring. This is likely to have brought down the losses for the parent Company . One97 is yet to file its detailed financial statement with RoC in XBRL Mode.
Companies restructure for multiple reasons it could be to have different balance sheets for different businesses or to hive off different businesses so that they can work with other businesses or to sell the demerged business or to reduce debt by promoters or investors.
The entire contents of this article are solely for information purpose and have been prepared on the basis of relevant provisions and as per the information existing at the time of the preparation by the Author. Compliance Calendar LLP and the Author of this Article do not constitute any sort of professional advice or a formal recommendation. The author has undertaken utmost care to disseminate the true and correct view and doesn’t accept liability for any errors or omissions. You are kindly requested to verify and confirm the updates from the genuine sources before acting on any of the information’s provided hereinabove. Compliance Calendar LLP shall not be responsible for any loss or damage in any circumstances whatsoever.