Aim to make Paytm first choice to fulfil customer’s needs: Vikas Garg, deputy CFO, Paytm | Interview

By: |
Published: November 27, 2019 2:07:27 AM

. Deputy CFO Vikas Garg tells Asmita Dey that the Noida-based company is registering 15% quarter-on-quarter growth in revenue on a consistent basis.

Vikas Garg, paytmVikas Garg

Digital payments firm Paytm has just raised $1 billion in funding led by T Rowe Price, which is the largest by an Indian start-up so far this year, valuing the company close to $16 billion. Deputy CFO Vikas Garg tells Asmita Dey that the Noida-based company is registering 15% quarter-on-quarter growth in revenue on a consistent basis. Garg says the funds will be used to build on its payment and financial services businesses. Excerpts:

Paytm has raised $1 billion in recent funding. How will the funds be utilised?

The fundraise will allow us to invest Rs 10,000 crore additionally into India’s payment & financial services businesses. With this investment, we will double down on online and offline payment products and businesses. Our aim is to make the Paytm app as the first choice and the only app needed to fulfil customer’s everyday payment needs. We will also invest this money to build financial services for common people, especially those who are left out from the formal financial services ecosystem.

Your losses increased by 166% year-on-year in FY19. Why did you incur such huge losses? What is the financial outlook for FY20?

We would first like to inform that Paytm has achieved profitability at the contribution margin level. Our contribution margin has increased from -30% to +12% of revenue. We are registering 15% quarter-on-quarter growth in revenue on a consistent basis. We are implementing AI (artificial intelligence) to optimise variable costs such as marketing and payment gateway. Last financial year, we significantly expanded our payments business. We have also started new verticals in financial services, these investments have now started yielding returns and are contributing to revenue growth in the current year. Thanks to UPI, our payment gateway costs have reduced significantly. We continue to spend on marketing and have signed up as title sponsor for international and domestic cricket matches in India.

What will be the firm’s business strategy going ahead?

We are focused on making Payments Bank the default go-to bank for Indian consumers, small and medium enterprises as well as in urban and semi-urban areas. We are building wealth services for our customers, which started with digital gold and later we launched mutual funds with Paytm Money. The team is working to launch more wealth creation opportunities. We are also expanding into newer businesses like insurance, lending, and investments.

The Paytm Mall business is facing stiff competition from deep-pocketed Amazon and Flipkart. How is it faring? Losses, although narrowed by 35% in FY19, still remains elevated.

Paytm Mall is focusing on profitability with reduced costs of logistics. In my understanding, they are targeting EBITDA break-even by FY2022. While other online retailers are focused on a pure warehouse or online-led model, they also incur huge costs on the supply side, discounting and logistics. Paytm Mall learned that by partnering with local shopkeepers and merchants, they can create more local supply while logistics can be taken care of by the shops.

Reports indicate Paytm is lagging in UPI transactions. What do you have to say about the competition from Google Pay and PhonePe in the payments space?

Paytm is a market leader in the overall digital payments ecosystem in India. When it comes to actual transactions where a customer is paying to merchants for genuine use cases, we are the largest contributor to UPI transaction volumes. Basis this only, Paytm Payments Bank has been given an audacious target by the ministry of IT as well on overall digital payments transactions for this year.

Get live Stock Prices from BSE, NSE, US Market and latest NAV, portfolio of Mutual Funds, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Financial Express is now on Telegram. Click here to join our channel and stay updated with the latest Biz news and updates.

Next Stories
1‘Unless India substantively change way business is done, MSMEs can’t capitalise on China opportunity’
2Godrej Properties sees strong sales this year despite COVID-19; cash flow may pose challenges
3Paytm Mall plans new tech jobs in Bengaluru, set to hire 300 people; trims losses by this much