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Paytm no longer using short-term working capital facilities from banks

After Q3FY22 earnings, the company had said that it is well-funded with net cash, cash equivalent and investable balance of Rs 10,215 crore

Paytm
Photo: Bloomberg
Deepsekhar Choudhury Bengaluru
3 min read Last Updated : Mar 27 2022 | 9:26 PM IST
Paytm is no longer using the previous short-term working capital facilities from banks due to ample liquidity, and as a result, the charge on current assets in both the parent companies and its subsidiaries were released last week, according to a source close to the developments.

The company declined to comment on the matter.

After Q3FY22 earnings, the company had said that it is well-funded with net cash, cash equivalent and investable balance of Rs 10,215 crore. Regulatory filings in February also showed that the company had utilised just Rs 141 crore of the Rs 8,113 crore it had raised in its initial public offering.

“Companies sometimes pay off their short term working capital loans when they have a large amount of capital in the bank. This helps them to get back their collateral – which may just be shares in the company that are convertible to equity in case of tech companies,” said the chief financial officer of a Bengaluru-based fintech start-up who did not want to be named.

According to him, tech companies may also use intellectual property like patent and software as collateral, but financial institutions in India do not generally agree to such an arrangement.

Paytm shares were trading at Rs 546.20 on BSE at the close of trading on Friday, down 75 per cent from IPO (initial public offering) price of Rs 2,150. On Wednesday, the fintech major’s shares had hit a lifetime low of Rs 520.


The company’s stock has been in a free fall at a time when technology companies’ stock prices have been pummeled the world over. However, Paytm has also faced the ire of analysts who have questioned its earnings from loan disbursals and thinly-spread out business model across cloud services, gaming and e-commerce, among other things.

In the December quarter, Paytm saw its revenue increase 89 per cent to Rs 1,456 crore on a year-on-year basis, whereas net loss widened 45 per cent to Rs 778 crore.

However, the company said that its contribution profit (defined as revenue from operations less payment processing charges, promotional cashback and incentives, and other direct costs) improved to 31.2 per cent of revenue in Q3FY22 from 8.9 per cent in Q3FY21.

One of India’s leading fintech companies, Paytm’s lending business scaled to 4.1 million loan disbursals during the first two months of the March quarter (y-o-y growth of 449 per cent), with approximately 2.2 million loans disbursed in February 2022. This aggregates to a total loan value of Rs 2,095 crore (y-o-y growth of 366 per cent).

Topics :PaytmBanksworking capital

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