Info Edge Writes Off Investment in Bijnis but Remains Optimistic about Investing in Indian Startups
- ByStartupStory | May 29, 2023
Info Edge India Ltd, a consumer internet group, has reported losses in the quarter ending on March 31, 2023. During this period, the company wrote off its investments worth Rs 76.6 crore in Bizcrum Infotech, the parent company of B2B startup Bijnis. This action follows closely after Info Edge’s previous write-off of its Rs 276 crore investment in 4B Networks, founded by Rahul Yadav, in the December quarter.
Info Edge, the owner of approximately 26% stake in Bijnis, justified its decision to write off its investment in the startup based on the principles of conservatism and prudence. The company took into consideration Bijnis’ ongoing cash burn and limited availability of cash in relation to its buyback obligations, which involved unspecified liabilities. Bijnis, supported by renowned investors like Sequoia Capital, Matrix Partners, and Westbridge Capital, concluded a Series B funding round of $30 million in September 2021.
Bijnis, the startup, has successfully raised a total of $43.5 million in funding. In addition to the support from angel investors based in Delhi, including Deepinder Goyal, the CEO of Zomato, and the founders of OfBusiness, Asish Mohapatra and Ruchi Kalra, the company has gained significant financial backing.
In a statement clarifying the write-off, Info Edge Ventures’ principal, Rishabh Katiyar, that it was a “technical write-off” caused by the unspecified liabilities on Bijnis, which may materialise owing to the buyback obligations provisioned in the shareholders’ agreement. “This liability is contingent in nature and has been factored in based on the conservative accounting policies followed by the company…,” Katiyar said.
“Therefore, this is not a reflection on the company’s financial performance, the market opportunity and the value proposition. Further, this liability would only materialise if the company is unable to provide an exit to the key investors via other exit mechanisms like third party sale, listing, among other mechanisms captured in the agreements by a specified date in future and all key shareholders together choose to exercise the buyback right as an exit mechanism,” Katiyar added.
Bijnis, established in 2015 by Siddharth Vij, Chaitanya Rathi, Siddharth Rastogi, and Shubham Agarwal, is a technology platform that facilitates connections between manufacturers and retailers in the fashion and lifestyle sectors. It offers various features, including third-party payment solutions and logistics services.
The write-off of its investment in Bijnis significantly impacted Info Edge’s financial performance. The company recorded a net loss of Rs 272.8 crore (attributable to equity holders) in the quarter ending March 2023, in contrast to a net profit of Rs 628.9 crore reported during the same period the previous year.
According to the Registrar of Companies’ regulatory filings, Bijnis reported operating revenues of Rs 25 crore for the fiscal year ending March 31, 2022. This represented a 57% increase from the previous fiscal year, FY21. However, the startup also experienced a significant widening of losses, reaching Rs 54.6 crore in FY22 compared to Rs 18.3 crore in FY21.
Despite these financial challenges, Info Edge’s management expressed optimism regarding investments in startups. During the post-earnings call with analysts, Sanjeev Bikhchandani, the promoter and executive vice-chairman of Info Edge, stated that it was an opportune time to invest in Indian startups, particularly for those with an 8-10 year investment horizon.
Sanjeev Bikhchandani’s remarks are made amidst a slowdown in funding within the Indian startup ecosystem, following the prosperous period of 2021. Additionally, crossover funds have marked down the valuations of prominent unicorn startups like Swiggy, Byju’s, Pine Labs, and PharmEasy. The current situation makes it challenging to anticipate when the ecosystem will rebound. However, Bikhchandani emphasized that Info Edge is being cautious about valuations, entrepreneurs, and cost-efficiency when making investment decisions. Info Edge has provided support to various consumer internet startups, including Zomato, Policybazaar, Adda24x7, and more.
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