FinTech major Paytm‘s CEO has reportedly warned of potential job cuts and plans to trim non-core assets following its first-ever decline in sales on May 22. Paytm CEO Vijay Shekhar Sharma in a letter to the shareholders stated that the company will focus on its core businesses and improve cost efficiencies to create a leaner organization.
Sharma highlighted that the employee costs of the firm has increased significantly over the years because of their investments in technology and financial services. He said that the firm will also take steps to cut employee costs, adding that these measures could save up to Rs 400-500 crore annually.
For the coming year…we expect reductions in other employee costs. We expect annualized people cost savings of ₹400-₹500 crore.Vijay Shekhar Sharma, CEO, Paytm
Leverage AI for revenue generation
The fintech CEO also added that Paytm’s use of artificial intelligence (AI) to improve customer care, which he believes will lead to new revenue streams and cost savings.
“Our ongoing experiments and learnings in AI promise to revolutionize customer and merchant care for the financial industry, while also unlocking new avenues for revenue generation and cost savings,” he stated.
“We anticipate tangible results from these initiatives in the coming quarters, further bolstering our competitive advantage in the market,” Sharma added.
Strengthen governance amidst regulatory intervention
Sharma further said that the company is taking various steps to strengthen the governance framework across Paytm’s group entities (especially regulated entities) by appointing subject matter experts as advisors or independent directors, reviewing various processes etc.
I am ensuring that we have greater regulatory engagement and have higher focus on compliance, in letter and in spirit.Vijay Shekhar Sharma, CEO, Paytm
“I am proud of the talent we have in our company, the culture of resilience and entrepreneurship. We remain more committed than ever towards growth, profitability, and maintaining robust governance and compliance,” Sharma added.
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FinTech giant’s record losses
One 97 Communications Ltd, which owns fintech startup Paytm, on Wednesday reported a consolidated net loss of Rs 550.5 crore for the quarter ended March 31, 2024, as against a consolidated net loss of Rs 167.5 crore recorded in the same quarter in the previous fiscal.
It was further wider than the net loss of Rs 221.7 crore reported in the third quarter of FY24, latest filing with the exchanges showed.
This significant increase in loss is largely attributed to reduced margins following the RBI‘s ban on PPBL.
Consolidated revenue from operations for Q4 FY24 came in at Rs 2,267.1 crore, as against Rs 2,850 crore recorded in the December 2023 quarter. It was also lower than the revenue of Rs 2,334.5 crore recorded in the quarter ended March 31, 2023.
Paytm said that the impact in revenues were due to temporary disruptions in business operations.
Paytm further noted that the active device base has plummeted by 10 Lakhs due to a higher attrition in February and March.
This was mainly due to RBI barring Paytm Payments Bank from onboarding new users and from offering various services including UPI payments and deposits.