One97 Communications, the parent company that owns Paytm, has taken another route of raising funds for its operations. The company has pledged whatever it owns in the form of liquid assets with the ICICI Bank, which enables it to avail a credit line of up to Rs 1,400 crores from the bank. These funds will be utilized to meet the working capital needs of the company, according to a report in Mint.
This move to pledge its current assets worth Rs 7,085.1 crore (valued as on March 31, 2018) has been done since the company could borrow only up to Rs 400 crore before this. Banks donâ€™t lend so easily to corporate entities against intangible assets.
Paytm is at the crossroads; its digital payments and wallet business is growing rapidly one but the real cash burn is happening in the ecommerce Paytm Mall business where losses are mounting year after year. The company is under pressure from some marquee investors to push the ecommerce business and take the leaders Amazon and Flipkart head on. But that is easier said than done. Paytm is trying to evolve a middle path, adopting the O2O model where it can leverage the large mass of retail outlets it has already cultivated to push the online retail business. But these efforts again funds and part of the funds raised from the bank may be deployed there. It has already hired some senior personnel to focus on this line of the business.
And to better the prospects in the fintech business, the company is trying to expand in some of the overseas market. It has already started something in Japan, in association with the SoftBank Group and also has a presence in Canada. On last count, the valuation of the Paytm group as represented by the parent One97 Communications is close to Rs 45,000 crore.
Another area being explored in the hospitality business where Paytm has acquired a hotel booking app NightStay and has built an inventory of 5,000 properties in different segments.