MC Interview| I cannot tell you how elated I am. This mission is going to change India: IPO-bound Paytm's Vijay Shekhar Sharma

Asia's Tech News Daily

#IPI, #PayTm, #Vijay Shekhar Sharma

Vijay Shekhar Sharma, Chief Executive Officer of Paytm.

Legend has it that the Paytm headquarters in Noida has a poster that says- Go Big or Go Home. 

Go Big is what Paytm founder and CEO Vijay Shekhar Sharma is about to do, as the company he founded over 2 decades ago gets ready for the biggest IPO in India’s history.

The payments and financial services player is preparing for an Rs 18,300 crore initial public offering (IPO) that will open for subscription between November 8 and 10, 2021 at a price band of Rs 2,080- Rs 2,150, This is India’s largest market debut, a record that was previously held by Coal India, which raised Rs 15,000 crore over a decade ago.

The $20 billion IPO is a huge milestone and vindication for Sharma, who hails from a village named Harduaganj near Aligarh, Uttar Pradesh.

Founded in 2000, One97, the parent company of Paytm spent almost a decade catering to the mobile VAS (value-added services) market. It made its first pivot with the launch of a mobile recharge platform in 2010 and today has an ecosystem that spans payments, credit, insurance, merchants, wealth management, and e-commerce services.

In this interview with Moneycontrol, Sharma and Paytm’s President and Group CFO Madhur Deora spoke about why they decided to go public, monetization plans, the path to profitability, competition, and what the IPO means for India.

Edited Excerpts:

It’s been a long 21-year journey for you- from VAS to becoming India’s leading fintech player. Now you are launching India’s biggest IPO. What finally made you go public? Was it to give investors an exit- considering 10,000 crores from this issue is an offer for sale by existing shareholders? 

Vijay: There is a tremendous amount of work that goes into running a company and this kind of milestone where we can take this to mass investors, where we can go for an IPO is incredible. I never thought it would happen so fast. The pandemic accelerated every journey- swing from consumer to merchant mindset to readiness for an IPO. It is better for us to become an India-listed entity and India story instead of waiting for a foreign listing. We took a decision to list in India, and if in India, how about doing it now? Surprisingly, our IPO process started in the month of April, we had much less time to prepare. But the company, maturity, and scale have been tremendously good.

You already have one of the highest user nos in India- 337 million users and over 21 mn merchants. Will you now use the IPO proceeds for more customer acquisition or to monetize this user base- by cross-selling credit, insurance, wealth advisory, etc? 

Vijay: Our ambition is half a billion Indians- that is our holy grail. The user base will be headed towards that as a milestone. We believe that consumers, merchants, and customers on our platform have the opportunity to generate revenues and profits for the platform. Not all 500 mn will be revenue or profit-worthy. Our obligation and success will be benchmarked by how many people we bring on financial services, to how many people we bring to the mainstream of the economy. We will continue to invest and acquire customers. We will acquire even more customers.

Vijay, one thing that we see is that Paytm is so diverse and vast today- where will its biggest sources of revenue come from? If you have to simplify and break down your business and revenue model to a retail investor- what would you say to them?

Vijay: The primary story of Paytm is payments. It is our core moat where we acquire consumers and merchants. And then we offer financial services with our partners. Payments, commerce, financial services – that is our stack. Every line item of that is a large business by itself. We don’t have to spend CAC(customer acquisition cost) to buy everything- if a customer comes for payment, he or she can become eligible for credit, they may book a bus ticket. I would say a large number of customers converted as user of financial services or commerce makes all the revenue and we believe more and more customers will mature towards this. It is easy to understand the model- payment is a customer acquiring and retention moat, there is commerce and financial services. The best way to look at it is how many customers, how much of revenue and what is the contribution margin- it means the company is able to monetize per customer better.

How have your newer initiatives such as broking and lending played out? 

Vijay: The most important financial service vertical and company vertical that we launched during the lockdown was credit – where the customers and merchants were offered credit from our financial institution partners. A credit product we created, Paytm postpaid is popular. The number of customers is so small that we can see a 100 percent growth year on year. Credit as a need for this country is an important thing. RBI in 2020 brought a guideline that made this business model more kosher. Credit is a huge opportunity. By partnering with banks and NBFCs, we believe we will be able to amplify this opportunity.

The payment acceptance is still in the early stages. We have a lot more equipment coming after QR Code, sound box and POS device. That will be our next focus.

What are your plans with regards to a small finance bank license? You spoke about how you will be partnering only with the banks. Is that why you’re not applying for an NBFC license?

Vijay: The plan is very very clear. We will not apply for an NBFC license. We would remain focused on partnering with financial institutions just because RBI hasn’t even clarified it as a business model.

As far as Paytm Payment Bank is concerned, it has its own journey. Potentially on the day when RBI permits it could apply for Paytm small finance bank license and that is logical to do because there would be many other products we would be able to distribute because of that.

Paytm’s plan is not contingent or changing on the basis of payment bank becoming a small finance bank.

In terms of the valuation have you left enough money on the table for shareholders, do you think it is a fair valuation in terms of the price band?

Madhur: We absolutely think so. That was an important benchmark for us which is not only the valuation but also making sure that we have really high-quality investors who are joining us as a part of the journey.

At least to the extent we could, we want to make sure that we get really really high-quality investors on Paytm’s cap-table, people who understand this journey, who understand how big commerce and cloud can be, how big payments can be, how good financial services can be.

A lot of numbers (valuation) were rumored, none of them were from us … $22-25 bn and all. But it was important for us to leave enough and more not just for retail investors which should always be an objective but also for the highest quality institutional investors. This exercise was not about getting the last rupee or dollar of valuation.

Have any of Paytm’s businesses attained enough scale where it is generating cash to fund other businesses?

Madhur: Our model is that our payments business- consumers and merchants that makes revenue and is profitable. all of the other businesses whether it is commerce and cloud or financial services adds significant profitability and contribution margin on top. Which is why what you would have seen is that last year our contribution profit for the whole year was about 13% and in the first quarter the number was 27%.

So we are seeing a significant jump in contribution margin partly because of payments becoming more efficient but partly because of other line items of businesses which have a very high contribution margin. So we are seeing that trajectory in our business. Two years ago this number was negative.

So we have come a long way in becoming very very efficient as a business.

One thing which I would point to which is there in our RHP is that we did 2.8 million loans in the last quarter just in the September quarter alone. In the entire year, last year that was 3 million and that is a profitable business and is growing very fast. We see multiple such businesses, whether it is cloud, advertising, commerce, or financial services becoming very sizable in terms of their contribution margin.

In the last couple of years, the competition in sectors such as payments, lending, broking, and overall financial services has intensified. Going forward what sort of an outlook does Paytm have? Also, your Q1 FY22 numbers show growth in revenue but also losses due to higher expenses. Paytm’s losses stood at Rs 382 crore for the quarter ended June 2021. How will you grow with profitability? What is the vision?

Vijay: India market has three key beauties.

It has a large number of underserved customers. You can have ten more large banks and then still India will not be able to say that we have more than enough. GDP growth is possible only when banks start to lend or lending institutions start to lend and then the capital goes into the economy. That possibility can only happen when there is so much competition and none of the competition is the zero-sum competition. It always has addressed a new segment and a new market opportunity.

In India, we need more number and types of companies, institutions that are able to accelerate credit to the small person, business, or individual. This is an underserved market.

Second, there is a large customer base like you and me who are smartphone (users). Desktop internet models or branch model is continuously in decline because now more and more things are happening on a smartphone.

The third is a market where there is a new product to serve to the customers.

Thanks to all these for the next 3-5 years, we are not even concerned about what kind of growth potential could come. The only swing that you could see would be due to something beyond our hands meaning some market situation or micro situation.

India’s financial services sector is continuously going to grow and we all have an advantage. I am not even concerned about the competition. I am actually saying that more players grow the market. We saw it in payments five years ago.

Madhur: We are in a very different market. In the US for eCommerce to grow, malls had to shut down. That’s just not the market we are living in, in India, where there is a huge amount of untapped opportunity.

Just to go back to your questions on financials, we will continue to focus on growing our contribution margin. In the meantime, I want to reiterate that we will continue to make investments in growing our merchant network, technology. We need to make investments as we go along but the focus would be to get to a very meaningful contribution profit.

From a village in Aligarh to helming the biggest IPO in India- it is the stuff of startup legend. What emotions are you going through today?

We all write about the great American dream. I believe the time has come to write stories and books on the great Indian saga.

I wish that we as Paytm and teammates become the champion of it, stand for and inspire many more to come to do that. We believe we are the change agent that will bring these financial services to the nook and corner which will grow the common economy and we all will rise again. Our success is not a success of generating more money or more profit. Our success will be the success when the financial services whether it is credit, banking, insurance, it is not premium customers’ product but is a common customers’ product in an easy to understand way.

I cannot tell you how elated I am. Today is the day when we are starting a journey to invite many more to join our mission and to everyone who is potentially going to join, this is a mission to change the fate of this country and not just to make money.

It will be an understatement and failure of us to benchmark the money that the Paytm journey makes. It will be a better success than how much of our economy grew because of our IPO.

Internet Explorer Channel Network
Asia's Tech News Daily
News Related


RBI maintains status quo, but continues to send indirect signals on tightening interest rates

The Monetary Policy Committee (MPC) members decided to keep interest rates unchanged, at least for now. Broadly, the path of interest rate from now onwards is upwards, which is referred ... Read more »

Shriram Properties IPO fully subscribed on Day 2, retail portion booked 5.58 times

Shriram Properties IPO The maiden public issue of Shriram Properties has seen a 1.02 times subscription, so far, garnering bids for 2.99 crore equity shares against an offer size of 2.93 ... Read more »

IIFL Home Finance NCD offer: Should you invest?

IIFL Home Finance (IIFLHF) has launched non-convertible debentures (NCD) for investors. Are the interest rates attractive enough in light of the risks? Should you invest in this NCD? What’s on ... Read more »

IPO on the cards, but a couple of years away: Razorpay's Harshil Mathur

The last couple of months, the stock market has seen the entry of many new-age internet consumer companies such as Nykaa , Paytm , Zomato and many others waiting to ... Read more »

Would urge youngsters to know more about Constituent Assembly proceedings: PM Modi

PM Narendra Modi Noting that the Constituent Assembly met for the first time on this day 75 years ago, Prime Minister Narendra Modi on Thursday urged youngsters to know more ... Read more »

IAF copter crash: Search on for black box

Image credit: News18 The Flight Recorder, more popularly known as ‘Black Box’, of the ill-fated Indian Air Force helicopter that crashed near here on Wednesday, killing Chief of Defence Staff, ... Read more »

Parliament LIVE Updates: Rajnath Singh to brief Rajya Sabha at 11:30 and Lok Sabha at 12:15 on IAF chopper crash

Parliament Winter Session LIVE Updates: The proceedings of Lok Sabha and Rajya Sabha will resume on ninth day of Winter Session of Parliament with Defence Minister Rajnath Singh to brief both houses ... Read more »

Dollar up to 73.65 rubles, euro not changed on Moscow Exchange

The dollar went up by 6 kopecks Read more »

Gold Prices Today: Yellow metal likely to remain volatile, support around Rs 47,800-47,660

Gold Prices, Silver Prices Gold prices were flat on December 9 in the international markets as the US dollar and Treasury yields firmed ahead of key inflation data that could ... Read more »

Parliament LIVE Updates: Rajnath Singh to brief Lok Sabha at 11:30 and Rajya Sabha at 12:15 on IAF chopper crash

Parliament Winter Session LIVE Updates: The proceedings of Lok Sabha and Rajya Sabha will resume on ninth day of Winter Session of Parliament with Defence Minister Rajnath Singh to brief both houses ... Read more »

Tata Realty to invest Rs 150 crore to develop ultra-luxury apartments at Delhi's Hailey Road

Representative image Tata Realty and Infrastructure Ltd is planning to invest around Rs 150 crore to develop ultra-luxury residential spaces near Hailey Road in Delhi. The firm has sought requisite ... Read more »

Dr. Reddy's inks pact with Singapore firm to commercialise Trastuzumab biosimilar in select countries

Representative image Prestige BioPharma Ltd, a Singapore-based firm and Dr. Reddy’s Laboratories Ltd., on Thursday announced that the two companies have entered into a binding agreement for an exclusive partnership ... Read more »

Gland Pharma share price up 2% on tentative approval from USFDA for Cangrelor

Gland Pharma share price advanced 2 percent in the early trade on December 9 after the company received a tentative approval from the United States Food and Drug Administration (USFDA) for ... Read more »

RaiITel Corporation gains 4% on Rs 210-crore order from Ircon International

RaiITel Corporation of India share price rose 4 percent in the early trade on December 9 after the company received orders worth Rs 210 crore from Ircon International. “RaiITel Corporation ... Read more »

Consumer confidence at 7-month high

Consumer confidence improved for a third straight month in November to reach a seven-month high, according to a survey by the University of the Thai Chamber of Commerceshowed on Thursday. ... Read more »

HP Adhesives sets IPO price band at Rs 262-274 per share

HP Adhesives IPO price band set at Rs 262-274 HP Adhesives has set the price band for its maiden public offer at Rs 262-274 per share. Investors will be able ... Read more »

Record 29 million-dollar HDB flats sold in November; resale prices rise at faster pace

The highest transaction price in the non-mature estates is a $970,000 five-room loft unit at Treelodge @ Punggol. SINGAPORE – Housing Board resale flat prices rose for the 17th consecutive ... Read more »

Cryptocurrency Prices today on December 9: Bitcoin falls marginally while Ethereum, Terra rise

The global crypto market capitalisation fell by 0.04 percent over the last 24 hours to stand at $2.36 trillion. Bitcoin, currently trading at $49,893.84 saw a fall in its market ... Read more »

Exclusive | Biocon in talks with Mylan to merge biosimilar businesses, plans IPO after merger: Sources

Representative Image (Source: ShutterStock) Biocon is in talks with Mylan for a merger of Biocon Biologics with Mylan’s biosimilar business to achieve scale and unlock value, sources with direct knowledge ... Read more »

Climate change: China's NDRC outlines peak-emissions strategy for data centres, 5G networks to support net-zero goals

China has outlined its strategy to contain emissions in “digital infrastructure” involving data centres and high-speed (5G) telecommunications networks, setting key targets towards its 2060 carbon-neutrality goal. The government will ... Read more »

UK PM Boris Johnson moves to Plan B COVID measures as 131 more Omicron cases recorded

Boris Johnson was speaking at the annual gathering of the Confederation of Business Industry (CBI). British Prime Minister Boris Johnson on Wednesday announced tougher measures such as work from home where possible, ... Read more »

Omicron could spread faster but it''s still not certain: WHO

Omicron variant [Representative image] The World Health Organization says early evidence suggests the omicron variant may be spreading faster than the highly transmissible delta variant but brings with it less ... Read more »

Closure of last Popeyes buffet in the US dubbed 'end of an era'

America’s Last Popeyes Buffet Says It’s Closing Forever The last remaining Popeyes buffet in the US has officially closed due to the pandemic that shuttered dining rooms, according to radio ... Read more »

Apple inches closer to $3 trillion market capitalization

Source: Reuters Apple Inc is within striking distance of a $3 trillion market capitalization, a milestone that would make it as big as the world’s fifth largest economy after Germany, ... Read more »

With large appetite for growth, organised restaurants may see 15% CAGR till 2025

The Indian food service industry has had a roller-coaster ride in the past two years, with coronavirus-induced lockdowns disrupting operations, leading to huge losses in the initial months, followed by ... Read more »

Ofgem 'inaction on unfit energy suppliers leaves households with £2.6bn bill'

The watchdog says it will bring forward within weeks a series of reforms to demonstrate it is serious about the need for reform within the market after it was found wanting during the spike in wholesale energy costs this year. Read more »

Kerala lottery Result: 'Karunya Plus KN-398' lottery winners to be announced at 3 pm

Kerala had set up India’s first lottery department in 1967. Kerala Lottery Result: The Kerala State Lottery Department will announce winners of the ‘Karunya Plus KN-398’ lottery on December 9 ... Read more »

Lottery Sambad Result December 9: 'Dear Bangabhumi Bhagirathi' lottery winners to be announced at 4 pm

Results of the West Bengal State Lottery Sambad ‘Dear Bangalakshmi Teesta’ are announced every Monday at 4 pm. Lottery Sambad Result: The West Bengal State Lottery Department will announce the results of its ... Read more »

Buzzing Stocks | M&M, RailTel Corporation, HCL Tech and others in news today

Mahindra & Mahindra: Reliance BP Mobility (RBML), operating under the brand name Jio-BP and The Mahindra Group, announced a non-binding agreement for exploring creation of electric vehicle products and services, alongside ... Read more »

Hong Kong stocks advance for third day as China policy easing bets gain traction

Hong Kong stocks climbed for a third day as an official report showed China’s factory-gate inflation eased last month from a 26-year high, bolstering the case for more policy easing ... Read more »

Google to give additional $1,600 staff bonus globally this year

Alphabet Inc’s Google said on Wednesday it will give an additional bonus to its employees globally this year, as the tech giant pushes back its return-to-office plan. Google will give ... Read more »

South African regulator approves Pfizer booster vaccine after surge in COVID cases

South Africa has approved the use of Pfizer‘s coronavirus booster vaccine for people aged over 18 years, amid mounting concern following a record of almost 20,000 infections overnight, largely ascribed ... Read more »

'Growth remains inequitable, needs nurturing before it once again realises full potential'

Indranil Pan, Chief Economist at YES Bank A lot has been written about the second quarter GDP that came in at 8.4 percent year-on-year after a 20.1 percent spurt in ... Read more »

General Rawat was strong proponent of India-US defence partnership: US

The Indian Air Force on December 8 confirmed the demise of Chief of Defence Staff (CDS) General Bipin Rawat, his wife and 11 others who were on board a chopper ... Read more »

Lyft pushes back staff's return to office until 2023 at earliest

Lyft’s offices will fully reopen in February as planned but returning will be optional for the whole year. NEW YORK (BLOOMBERG) – Lyft said employees can work remotely for the ... Read more »

US dollar stays soft, with Omicron still top of mind

The dollar failed to pick up ground on most major peers on Thursday as markets saw optimism in early data hinting the Omicron variant of the new coronavirus may not ... Read more »

US Senate passes Republican bill to overturn Joe Biden vaccine mandate

US President Joe Biden (AP Photo/Alex Brandon) The Democratic-controlled U.S. Senate on Wednesday approved a Republican measure that would overturn President Joe Biden’s COVID-19 vaccine-or-test mandate for private businesses, with ... Read more »

Zuckerberg, Chan to invest up to $3.4 billion for science advances

The company that runs the philanthropy of Facebook CEO Mark Zuckerberg and his wife, Priscilla Chan, is investing up to $3.4 billion to advance human health over 10 to 15 ... Read more »

GM's Cadillac Lyriq SUV enters the fray in China as battle intensifies in world's largest EV market

General Motors (GM) has joined the battle for supremacy in China’s increasingly crowded electric vehicle (EV) market, after its new SUV received a warm response from buyers in the mainland. ... Read more »

Famous maid cafe promises out-of-the-ordinary experience in biggest flagship in Akihabara

The cafe allows customers to meet cute maids who can sing and dance, which is one of the reasons why it is very popular. Infinia Co. Ltd. will open its ... Read more »
On you will find lots of free English exam practice materials to help you improve your English skills: grammar, listening, reading, writing, ielts, toeic