Paytm: PwC resigns as auditor of Paytm Payments Services, stock down nearly 3%
This transition follows a strategic alignment of auditors at the holding company level to enhance synergy and consistency in the groups audit process. PwCs departure coincides with the release of Paytms impressive financial results for the June quarter, showcasing notable revenue growth and reduced losses.
In a surprising development, PricewaterhouseCoopers (PwC) India has stepped down as the auditor of Paytm Payments Services. The payments aggregator, Paytm, confirmed this on August 7. Following this resignation, the Kolkata-based SR Batliboi and Associates LLP has been appointed as the new official auditor. The company said that the new auditors took over the role effective August 7.
Reacting to the development, shares of Paytm parent One97 Communications Ltd dropped nearly 3 percent on BSE in trade on Tuesday compared to its previous close of Rs 850.75 apiece.
Reasons behind PwC's resignation
PwC's departure as Paytm Payments Services' auditor is attributed to a change in auditors at the holding company level. The alignment of the auditor of Paytm Payments Services with the holding company's auditor is seen as a strategic move to enhance synergies and consistency within the group's audit process. PwC confirmed issuing an audit report dated May 2, 2023, for the financial statements ending March 31, 2023. Additionally, the firm provided a limited review report dated July 19, 2023, for the unaudited special purpose interim condensed financial statements for the quarter ending June 30, 2023.
Paytm's earlier announcement in March signalled the proposal of SR Batliboi and Associates as the new auditors after the completion of PwC's five-year term. This decision adheres to Section 139 (2) of the Companies Act, 2013, which recommends auditor rotation after a term of five years for listed companies. Importantly, the resignation was not due to any concerns or issues raised by the Statutory Auditors. This move aligns Paytm with its holding company, One97 Communications Limited's appointment of S.R. Batliboi and Associates as its auditor.
Resignation after June quarter financial results release
PwC's resignation comes shortly after Paytm's parent company, One97 Communications Limited, disclosed its financial results for the quarter ending on June 30, 2023. During this period, despite economic challenges, Paytm reported an impressive 39.4 percent revenue growth. Notably, the company also managed to reduce its losses by 45 percent, from Rs 645 crore to Rs 358 crore in Q1.
Paytm's overall performance metrics indicate positive progress. The net payment margin rose, driven by increased merchant subscription revenues. Similarly, the payment processing margin improved, driven by the faster growth of non-UPI transactions, such as card and EMI instruments.
In a parallel development, Paytm's CEO, Vijay Shekhar Sharma, and Antfin reached an agreement. As a result, Sharma is set to acquire a substantial 10.3 percent stake in Paytm. This move solidifies Sharma's position as a prominent stakeholder, making him the largest shareholder in Paytm. The stake acquisition will be facilitated through an off-market transfer from Antfin to an overseas entity wholly owned by Sharma, known as Resilient Asset Management B.V.
Shares of Paytm were trading at Rs 831.75 apiece, down 2.23 per cent, on BSE at 12:07 PM.
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