News Update

Vijay Shekhar Sharma seeks to reset Paytm after IPO fiasco

• ByStartupStory     |    July 29, 2022

Paytm was the poster child for India’s IT companies, only to see its value plummet by two-thirds since its IPO and be a symbol of the industry’s demise. Now, its creator pledges a greater emphasis on financial achievement to persuade investors of the company’s possibilities.

According to Vijay Shekhar Sharma, 44, the digital payments firm is on track to become India’s first online company to reach $1 billion in annual sales by the end of this fiscal year in March. The brand, previously known as One97 Communications Ltd., is also moving its focus from expansion to profitability, according to Sharma in his first comprehensive interview since the high-profile public launch in November.

The collapse of Paytm’s stock price worsened a crisis for India’s startups, sending valuations tumbling as investors became concerned about their profits prospects. Young companies – hundreds of which had achieved unicorn status as cash poured into everything from online shopping to digital schooling in the country of 1.4 billion – saw their fundraising plans abruptly halted. To make matters even worst, the crisis in Ukraine and worries of a global recession clouded the image of companies throughout the world in 2022.

One step toward rebuilding confidence, according to the company’s founder and CEO, is to deconstruct Paytm’s income structure. He described its operations in two brief lines: Paytm is in the payment industry, and it sells loans.

For example, its Sound Box is a $2-per-month subscription that promptly reconciles payments & announces a successful transaction over a speaker at the merchant’s counter. Another product creates a unique QR code for every transaction and allows customers to pay quickly using Paytm’s smartphone app as well as other applications – a concept that is already widely used in China.

Sharma has progressively expanded Paytm’s loan division to broaden the company’s reach. While competing with established banks is difficult, Paytm is certain it can win over people in what is now a credit-starved industry. Paytm has begun to offer additional analytics in both transactions and loans. It has provided more data on customers, income sources, and loan disbursements, placing investors on par with members of the board – and the statistics have so far exceeded internal expectations, according to Sharma.

“In retrospect, the pricing and timing appear erratic,” Sharma added. “We weren’t prepared for this because we’re used to private entrances where things are much more under control.” Sharma has informed investors in recent months that his approach will enable Paytm to reach operational break-even by Sept 2023. The firm has reduced expenditure and is considering exiting a costly cricket sponsorship as well as canceling an arrangement to purchase insurer Raheja QBE General Insurance. “Previously, the team was like, ‘Cricket sponsorship? that’s so fantastic!’ to now, ‘How much money can we save if we give it up?'” remarked the CEO.

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