Also in this letter:
Payment gatewaysunder EDscanner Policybazaarfiles for IPO
- Rural data use jumped 400% in a year, says govt
‘We’ve spent about a third of what the competition has’
After its hugely successful IPO last month, Zomato will continue to chase growth and build a long-term business, undeterred by questions about its (lack of) profitability and eye-popping valuation, cofounder and chief executive Deepinder Goyal told us in an interview.
Here’s a sampling of what he said:
On the IPO: Goyal said “life hasn’t changed drastically” after Zomato raised more than $1 billion from public markets last month. “This was beyond anyone’s expectations and anyway we had kept our expectations very low. What we got was very good,” he said. Zomato’s market capitalisation stood at Rs 1.09 lakh crore as of Monday.
On the timing of the IPO: “Business was doing very well and it was a natural progression. There was no reason not to do an IPO. There were no external factors that made us take that decision.”
On the pressures that come with being a public company: “I have not been looking at the stock for the past few days. We will continue to focus on our work. There is no pressure. In fact, in the private markets we were scrutinised every month. Now that we are public, it’s every quarter. So it’s a much better life.”
On the Grofers investment and looking beyond food delivery: “Grofers was the only large standalone e-grocer left on the market and that was what prompted Zomato to back it. “We don’t have much idea (about the online grocery business) and are just trying to learn. We think it’s a big space but we are not sure if we want to do it in the long-term or not. The investment in Grofers is separate. We have our own grocery offering, under a marketplace model, which went live in Delhi a few days ago.”
On offering huge discounts: “We are in a very dynamic business… and take weekly or sometimes daily calls on our discounting strategy. There’s no pressure on us after becoming a public company. We are focussed on doing the right things for the business. We have spent about a third of what the competition has to get here. Why should we change what has been working for us?”
Also read our in-depth Zomato IPO coverage:
ED investigates payment gateway firms in money laundering case
The Enforcement Directorate (ED) is investigating a number of Indian payment gateway companies under the Prevention of Money Laundering Act (PMLA) for allegedly allowing Indian customers to transfer money to Chinese betting apps.
This was possible, investigators said, because the payment gateways didn’t conduct adequate due diligence of the Chinese apps.
The agency is also questioning the companies to find out whether they made benefitted from this. If they did, the money could be considered proceeds of crime.
This is the first time the ED is investigating such companies under PMLA.
Which companies? Investigators are looking at
What the companies said: “Some of our merchants were being investigated by the Bengaluru ED. We have cooperated fully and shared all the required information. The authorities were satisfied with our due diligence protocols,” a Cashfree spokesperson said.
- “We had categorically informed ED that we did not onboard any such merchants due to our rigorous verification system. We have in-depth checks and reject any suspicious merchant straightaway,” an Infibeam spokesperson said.
- A Razorpay spokesperson said the company had no comment to offer.
- Paytm and BillDesk are yet to reply to our queries, which were sent on Friday evening.
Due-diligence rules: Under India’s Foreign Exchange Management Act (FEMA) guidelines, payment gateways are required to conduct due diligence before processing any transactions to prevent money-laundering.
Crypto exchanges under scanner too: On Friday, we reported that the ED was looking into whether Binance, the world’s largest cryptocurrency exchange and parent firm of Indian crypto exchange WazirX, had a role to play in the Chinese betting apps case. That was a month after the agency sought an explanation from WazirX itself for transactions worth Rs 2,790.74 crore on its platform that were allegedly in violation of foreign exchange rules.
Tweet of the day
Policybazaar files for IPO
PolicyBazaar parent PB Fintech has filed a draft red herring prospectus (DRHP) with the markets regulator, the Securities and Exchange Board of India (Sebi), to raise Rs 6,017 crore through an IPO.
Details: The firm will raise Rs 3,750 crore by issuing new shares and the remaining Rs 2,267 crore ($305 million) through a secondary sale of shares via an offer for sale (OFS). SoftBank will sell shares worth Rs 1,875 crore while founders including chief executive Yashish Dahiya will sell shares worth up to Rs 392.50 crore.
- PB Fintech is also in talks to raise around Rs 750 crore through a private placement of equity shares ahead of the IPO.
Financials: Losses for the Gurugram-based firm narrowed to Rs 150 crore in FY21 from Rs 304 crore in FY20 and Rs 346 crore in FY19, according to the company’s IPO documents. Total income jumped to Rs 957 crore in FY21, from Rs 855.6 crore in FY20 and Rs 528.8 crore in FY19.
PolicyBazaar will be the second big firm in Info Edge’s portfolio to go public after Zomato, which had a blockbuster public market debut last month.
Pushback from legacy firms: News of the IPO comes at a time when several incumbents in India’s legacy insurance industry, including the largest private sector general insurer ICICI Lombard and public sector behemoth Life Insurance Corporation of India, have either partially or completely refrained from listing their products with third-party online brokers.
HDFC Ergo also recently delisted its products from online marketplaces, including PolicyBazaar, we reported on Monday.
Rural data use jumps 400% in a year
Data consumption in rural areas has increased by 400% in the past year, official data showed.
The government’s initiative to provide Wi-Fi hotspots and fibre-to-home (FTH) connections in India’s hinterlands has garnered more than 1.3 million Wi-Fi registered users. More than two million household subscribers are set to benefit from high-speed connections by December, according to officials.
By the numbers
Data consumption through BharatNet optic fibre, operated and maintained by the government’s Common Service Centres (CSCs) in nearly 1,00,000 panchayats, surpassed 13,000 terabytes as of June. This is an increase from 6,000 TB in the same period in 2020 and 300-400 TB in 2019, the data showed.
PM launches voucher-based digital payments
Prime Minister Narendra Modi on Monday launched a voucher-based digital payment mode called e-RUPI.
The digital payment solution, developed by the National Payments Corporation of India in partnership with several government agencies, works using the Unified Payments Interface (UPI) architecture and will first be used for Covid-19 vaccinations at private hospitals, the PM said, and after that for PMJAY payouts, healthcare benefits and for scholarship and ration payments.
Koo says it took down 498 posts in July
Homegrown Twitter clone Koo has published its social media compliance report for July, as required under the revised IT rules.
The report showed 14.5% (498) of the 3,431 Koo posts reported by the community in July were removed, while ‘other action’ was taken against the remaining posts.
Last week, we reported that the Delhi High Court had given Twitter a ‘last opportunity’ to show its compliance with the IT rules.
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