PwC India Steps Down as Paytm Payments Services' Auditor: New Developments Unfold

Surprising Resignation and New Appointment
In a surprising turn of events, PricewaterhouseCoopers (PwC) India has resigned from its position as the auditor of Paytm Payments Services, the payments aggregator arm of Paytm. Paytm officially confirmed this unexpected development on August 7, and subsequently, the Kolkata-based SR Batliboi and Associates LLP has taken over as the new official auditor. The transition became effective on the same day, marking a significant change in Paytm's financial landscape.

Impact on Paytm's Shares
The news of PwC's resignation had a swift impact on Paytm's parent company, One97 Communications Ltd, as its shares experienced a nearly 3 percent drop on the Bombay Stock Exchange (BSE) in the wake of the announcement. This drop was in comparison to the previous day's closing price of Rs 850.75 per share, highlighting the market's response to the unexpected shift.

Reasons Behind PwC's Exit
The departure of PwC as Paytm Payments Services' auditor can be attributed to a strategic alignment within the larger group. The decision was driven by a change in auditors at the holding company level, indicating a move towards enhancing synergies and consistency in the group's audit process. PwC, however, clarified that its resignation was not prompted by any concerns or issues raised by the Statutory Auditors.

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Adherence to Regulatory Norms
The decision to appoint SR Batliboi and Associates as the new auditors aligns with regulatory guidelines. In March, Paytm had already signaled its intent to bring in new auditors after the completion of PwC's five-year term. This step follows the provisions of Section 139 (2) of the Companies Act, 2013, which recommends auditor rotation after a five-year tenure for listed companies. The move also aims to ensure transparency and maintain a robust audit process.

Seamless Transition after Financial Reporting
PwC's resignation followed shortly after Paytm's parent company, One97 Communications Limited, disclosed its financial results for the quarter ending on June 30, 2023. Despite economic challenges, Paytm showcased impressive performance metrics during this period. The company registered a remarkable 39.4 percent growth in revenue and managed to curtail losses by 45 percent, reducing them from Rs 645 crore to Rs 358 crore in the first quarter.

Positive Performance Indicators
Paytm's financials revealed promising indicators of progress. The net payment margin witnessed an upswing, driven by increased revenues from merchant subscriptions. Additionally, the payment processing margin saw improvement, fueled by the accelerated growth of non-UPI transactions, including card payments and EMI instruments.

CEO's Stake Acquisition and Resilient Asset Management
In parallel to these developments, Paytm's CEO, Vijay Shekhar Sharma, and Antfin reached an agreement that would solidify Sharma's stake in the company. This arrangement would see Sharma acquiring a significant 10.3 percent stake in Paytm. The transfer of ownership will occur through an off-market transaction from Antfin to an overseas entity wholly owned by Sharma, known as Resilient Asset Management B.V. This move solidifies Sharma's position as the largest shareholder in Paytm.

Current Market Position
As of the latest trading updates, Paytm's shares were being traded at Rs 831.75 per share, experiencing a 2.23 percent decrease on BSE.The surprising departure of PwC India as Paytm Payments Services' auditor, followed by the appointment of SR Batliboi and Associates, marks a pivotal shift in Paytm's financial landscape. These developments reflect the company's commitment to adhering to regulatory norms, maintaining transparency, and driving positive growth despite economic challenges. The simultaneous stake acquisition by Paytm's CEO further underscores the company's evolving trajectory and its determination to secure a stronger foothold in the ever-changing business landscape.

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