The board of Paytm’s parent One 97 Communications Limited (OCL) has approved an investment of up to Rs 950 crore in a joint venture Paytm General Insurance Limited (PGIL) for a 74% stake.
The investment will be phased in over a period of 10 years. In a regulatory filing, the company stated that OCL would initially hold a 49% stake in PGIL, with the remaining 51% owned by VSS Holdings Pvt Ltd (VHPL), owned by Vijay Shekhar Sharma, managing director, OCL.
After the investment, OCL will hold 74% in PGIL, reducing VHPL’s stake in the insurance venture to 26%. PGIL will be a subsidiary of OCL.
The OCL Board has re-appointed Sharma as Managing Director of the company for five years till December 18, 2027. The company’s group CFO and president Madhur Deora was appointed to the board as a full-time director for the next five years.
The general insurance initiative comes after OCL’s efforts to acquire Mumbai-headquartered Raheja QBE General Insurance Company Limited failed.
On Friday, Digital Financial Services Player reported a `7.8 billion loss for the March quarter due to higher costs related to payment processing, marketing and employee benefits.
Revenue rose 89% year-on-year to Rs 1,541 crore, with Ebitda (before ESOPs) up 12% yoy for the quarter. For FY22, revenue increased 77% to Rs 4,974 crore.
The company’s Ebitda loss for FY22 (before ESOP) has shrunk from Rs 1,655 crore in the previous year to Rs 1,518 crore.
The company believes that it will see an accelerated reduction in Ebitda losses and is on track to make a profit in the September 2023 quarter (before ESOP).
OCL stocks have lost more than 50% this year due to a bearish level of technical stocks in the global market and also due to regulatory issues of the company.
“PGIL wants to register and operate a general insurance business. PGIL has not yet started its general insurance business, which is currently subject to the receipt of registration certificate from Irdai (Insurance Regulatory and Development Authority of India), ”the stock exchange said in its filing.