PayTm spent Rs 1,000 Cr on advertising in FY23; losses at Rs 1,775 Cr

One 97 Communications, the parent company of the beleaguered fintech major Paytm, hiked its marketing and promotional expenses significantly in the fiscal year FY23. 

The company spent a whopping Rs 1,069 crore in advertising and promotional activities in the last fiscal year, about 25 percent more than the previous year (Rs 855 Cr) and about two-fold compared to FY21 (Rs 532 Cr), according to the company’s consolidated financial report. 

Its revenue from operations in the last fiscal was Rs 7,990 Cr, up from Rs 4,974 Cr in FY22 although its expenses shot up to Rs 10,000 Cr in the fiscal from Rs 7,600 Cr a year before. 

However, the company was able to bring down its losses to Rs 1,775 Cr in the fiscal from Rs 2,396 Cr. 

Auditor’s note

PayTm consolidated report’s auditor Amitesh Dutta, partner of Price Waterhouse Chartered Accountants LLP, has flagged the KYC and FDI issues raised by RBI in the consolidated report. 

The auditor also mentioned that they didn't audit 12 subsidiaries of PayTm whose cumulative assets are over Rs 2,000 Cr. 

He writes in his note under “Emphasis of Matter”, “We draw your attention to Note 42(a) to the Consolidated Financial Statements, relating to one of the Subsidiary Company, which describes that the Subsidiary Company's application for authorization to set up Payment System (‘PA application’), to the Department of Payment and Settlement Systems, Reserve Bank of India(“RBI”), was returned. The Subsidiary Company has further been advised by the RBI to resubmit its application after the receipt of approval from the Government of India ('GoI'), on past downward investment from One 97 Communications Limited (the holding company), in compliance with Foreign Direct Investment (FDI) Guidelines. If GoI does not provide such approval, the Subsidiary Company has been directed to inform RBI immediately. The response to the Subsidiary Company's application to the GoI for the aforesaid approval, is presently awaited.”

“Attention is drawn to note no. 2(e) regarding the receipt of the Comprehensive Systems IT Audit (RBI) report during the year recommending strengthening of IT outsourcing processes and operational risk management, including KYC/AML at the Bank. The Bank's compliance to the RBI's report is currently being validated by the RBI. Our conclusion is not modified in respect of the above matter,” he stated further. 

One 97 Communications is in the business of providing payment and financial services which primarily includes payment facilitator services, facilitation of consumer and merchant lending to consumers and merchants, wealth management etc.

It also provides commerce and cloud services which primarily consists of aggregators for digital products, ticketing business, providing voice and messaging platforms to the telecom operators and enterprise customers and other businesses, etc.