Paytm operator One97 Communications Ltd is set to extend Rs 743 crore funding to two companies owned by founder Vijay Shekhar Sharma ahead of its Rs 21,800 crore IPO.
A notice to Paytm shareholders said that the proposal will be put to vote at the company’s annual meeting on 30 June, according to a report by Mint.
According to the proposal, Paytm will buy Rs 491.93 crore worth of optionally convertible debentures in VSS Holdings Pvt. Ltd.
The debentures will mature in 10 years and bear annual interest of 15%, the report said. VSS Holdings will utilise the funds for its primary business activities.
Paytm’s other proposal is to loan Rs 250.79 crore to VSS Investco Pvt. Ltd through inter-corporate deposits, or ICDs, according to the report by the daily.
VSS Investco will have to repay the amount within 12 months or before Paytm’s IPO. Sharma will raise external funding or sell his shares in the company to repay the loan. Paytm said this money, too, will be used for the principal business activities of VSS Investco.
Both VSS Holdco and VSS Investco were incorporated in January 2020 and are engaged in similar businesses.
Paytm has proposed to pay Sharma a salary of Rs 4 crore a year, even though it has recorded lower revenues and a loss in FY21, which the firm attributed to curbs on businesses due to the pandemic, the report said.
The company’s loss has narrowed to Rs 1,704 crore in FY21.
Paytm’s board has approved Sharma’s remuneration of Rs 4 crore for fiscal 2022 and said that this will be the minimum compensation for Sharma regardless of the company’s financial performance, according to the note to shareholders.
DH was unable to independently verify the report.
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