Vishweshwar Education Society’s

Indira Institute of Business Management, Sanpada, Navi Mumbai

Vishweshwar Education Society’s

Indira Institute of Business Management

PROJECT REPORT
ON

“A STUDY ON FINANCIAL STATEMENT ANALYSIS

OF PAYTM”
SUBMITTED TO

INDIRA INSTITUTE OF BUSINESS MANAGEMENT, NAVI

MUMBAI

BY

SAKSHI ANIL BAJAJ

Roll No. 2022043

Batch No 2022-24

IN PARTIAL FULFILLMENT OF

MASTER OF MANAGEMENT STUDIES (MMS),

UNIVERSITY OF MUMBAI

MONTH, 2023
 Vishweshwar Education Society’s
Indira Institute of Business Management, Sanpada, Navi Mumbai

DECLARATION

I, Ms. Sakshi Anil Bajaj hereby declare that this project report is the record of authentic work carried
out by me during the period from 08 May 2023 to 10 July 2023 and has not been submitted to any other
University or Institute for the award of any degree / diploma etc.

Signature

Sakshi Bajaj

Date:
 Vishweshwar Education Society’s
Indira Institute of Business Management, Sanpada, Navi Mumbai

CERTIFICATE FROM THE COMPANY/ORGANISATION

 Vishweshwar Education Society’s
Indira Institute of Business Management, Sanpada, Navi Mumbai

CERTIFICATE

This is to certify that the project entitled ‘A STUDY ON FINANCIAL STATEMENT

ANALYSIS OF PAYTM’ submitted by Ms. Sakshi Anil Bajaj of Indira Institute of Business
Management in partial fulfillment for the award of Master of Management Studies of Mumbai
University is her original work and does not form any part of the projects undertaken
previously.

This project report is the record of authentic work carried out by her during the period
from 08 May 2023 to 10 July 2023.

She has worked under my guidance.

Prof. Febin Verghese Dr. Susen Varghese

(Signature of Faculty Guide) (Signature of the Director)

Place: Navi Mumbai

Date:
 Vishweshwar Education Society’s
Indira Institute of Business Management, Sanpada, Navi Mumbai

ACKNOWLEDGEMENT

The project is a golden opportunity for me for learning and self- development. I feel very lucky
and blessed to have talented and wonderful people who lead me through in the completion of
this project.

I express my deepest thanks to the Director of Indira Institute of Business Management, Dr.
Susen Varghese.

My special thanks to my mentor Prof. Dinar Thavi for his valuable time and guidance. He
took time from busy schedule and guiding me to carry out my summer internship project at My
Sharekhan Ltd.

A humble thanks to all other faculties for helping me whenever I need. I also feel delighted to
express my thanks to library in charge Mr. Vikas Gore and non-teaching staffs who helped
me to complete my project on time.

I express my sincere gratitude to My Sharekhan Ltd. for giving me this opportunity. My special
thanks to Mr. Praful Sharma, (Kalyan, Mumbai) for his guidance and support. I am thankful
to the entire staff of My Sharekhan Ltd. for aiding me to complete the internship successfully.

My gratitude to my friends and family for motivating and encouraging me through the journey.
I express my heartfelt acknowledgement for the guidance and support from them.
 Vishweshwar Education Society’s
Indira Institute of Business Management, Sanpada, Navi Mumbai

Executive summary

This research, titled "A Study on Financial Statement Analysis of Paytm," aims to thoroughly
assess Paytm's financial health and performance by a thorough examination of its financial
statements. This study intends to provide significant insights for stakeholders, investors, and
decision-makers by combining quantitative and qualitative measures. The methodology
includes a comprehensive examination of key financial ratios, liquidity, profitability,
efficiency, and solvency criteria. Furthermore, qualitative aspects such as industry trends,
regulatory dynamics, and competitive positioning will be considered, offering a comprehensive
view of Paytm's financial condition. The examination spans three to five years, allowing for a
longitudinal assessment of Paytm's financial history.

The study's findings will offer insight on the company's operational efficiency, competitive
standing in the fintech sector, and potential areas for improvement. The project finishes with a
summary of significant insights, providing stakeholders with a valuable reference for informed
decision-making in the financial technology industry's dynamic landscape.

The process entails a thorough examination of quantitative measures such as important

financial ratios, liquidity, profitability, efficiency, and solvency, as well as qualitative aspects
such as industry trends, regulatory dynamics, and competitive positioning. The study's time
period is three to five years, ensuring a complete grasp of Paytm's financial trajectory over
time. This report tries to provide a thorough assessment of Paytm's position within the dynamic
fintech sector by looking into both operational efficiency and strategic positioning. The
findings are expected to provide useful information for decision-making and strategic planning,
allowing for a more in-depth understanding of the company's financial health and future
prospects. This project is an essential resource for stakeholders navigating the changing
landscape of the financial technology industry.
 Vishweshwar Education Society’s
Indira Institute of Business Management, Sanpada, Navi Mumbai

Table of Contents

Sr. Title Page No.

1no. INTRODUCTION 1- 10
1.1 Relevance of the Project 1
1.2 Introduction of the Topic 2- 3
A) Economic Analysis 4
B) Market Analysis
C) 5
D) Industry Analysis 6- 8
E)
F) Financial Analysis 8
1.3 Objectives of the study 8
1.4 Scope of the study 9
1.5 Rationale Of the Study 9
1.4 Limitations of the Study 10

2 PROFILE OF THE COMPANY 11- 17

2.1 History and general information 11- 12
2.2 Company Profile 13- 15
2.3 Competitors 15
2.4 Swot Analysis and BCG Analysis 16- 17

3 REVIEW OF LITERATURE 18- 24

PROCESS AND WORKFLOW

4 25- 43
STUDY AND ANALYSIS
4.1 Research Methodology 25
4.2 Types of data 25
Data Interpretation
A) Cash Flow Analysis
4.3 B) Balance Sheet Analysis 26- 43
C) Profit and Loss Analysis
D) Ratio Analysis

5 FINDINGS 44- 46
Cas
6 CONCLUSION 47- 48
RECOMMENDATIONS
7 RECOMMENDATION 49- 50

BIBLIOGRAPHY 51
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CHAPTER 1
INTRODUCTION

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1.1 Relevance of the project

The relevance of a project on financial planning and investments in share market
in India, as a part of the MMS (Master of Management Studies) curriculum at the
University of Mumbai, holds significant importance for several reasons.
• Practical Application of Knowledge
• Understanding Personal Finance
• Risk Management and Portfolio Diversification
• Knowledge of Regulatory Framework

1.2 Introduction of the topic

Analyzing financial statements is essential to assessing a company's performance and financial
health. It entails looking over the financial accounts of the business, which normally consist of
the cash flow, income, and balance sheets. Understanding a company's financial health,
profitability, and capacity to produce cash flows is the main objective of financial statement
analysis. A number of stakeholders, including creditors, investors, management, and other
interested parties, will find this information to be quite helpful.

A. An overview of the main elements of financial statement analysis

1. Components Financial Statement

• Balance Sheet: The balance sheet, also known as the statement of financial position, gives
an overview of the assets, liabilities, and shareholders' equity of a business at a given
moment in time. It adheres to the basic equation: Liabilities + Shareholders' Equity = Assets
• Income Statement (Profit and Loss Statement): An organization's income, costs, and net
income for a certain time period are shown in the income statement (also known as the
profit and loss statement). It demonstrates how successfully the business is turning a profit.
• Cash Flow Statement: The cash inflows and outflows from financing, investing, and
operating operations are displayed in this statement. It aids in evaluating a business's
capacity to produce and handle cash.

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2. Financial Ratios

Financial statement analysis often involves the calculation and interpretation of various
financial ratios. Some common ratios include:

• Liquidity ratios, such as the quick and current ratios,

• Ratios of profitability (such as return on equity and net profit margin)
• Efficiency Ratios (such as turnover in inventory and accounts receivable)
• Ratios of leverage (such as the debt-to-equity and interest coverage ratios)
3. Trend Analysis

Finding patterns in a company's financial performance can be accomplished by looking

at financial statements across a number of periods. This might show whether a business is doing
better or getting worse over time.

4. Comparative Analysis

A company's relative performance and position in the market can be gained by

comparing its financials to those of its rivals or industry benchmarks.

5. Risk assessment

A company's future financial performance may be impacted by a number of risks,

including credit, operational, market, and liquidity issues. These risks can be found with the
aid of financial statement analysis.

6. Valuation

Determining a company's inherent value and choosing which investments to make

require a thorough understanding of its financial statements.

7. Regulatory Compliance:

Generally Accepted Accounting Principles (GAAP) and International Financial

Reporting rules (IFRS) are two examples of pertinent accounting rules and regulations that
must be complied with by a company's financial statements.

Analysis of financial statements is a flexible technique that may be applied to a number of

tasks, such as risk management, credit evaluation, investment analysis, and strategic decision-

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making. To obtain a complete picture of a company's financial situation and future prospects,
it is important to take into account both quantitative and qualitative aspects.

B. ECONOMIC ANALYSIS

Paytm has had significant economic influence in India. It has aided the expansion of the digital
payments industry, resulting in a more efficient and transparent financial system. Paytm has
also contributed to lower transaction costs for both businesses and consumers. This has
simplified business operations and facilitated customer transactions.

Furthermore, Paytm has created jobs and aided India's economic growth. The company directly
employs over 20,000 people and indirectly supports millions of jobs through its merchant and
partner ecosystem. Paytm adds to the government's tax revenue as well.

• Digital payments growth: Paytm helped in the expansion of digital payments in India. Only
10% of Indians made digital payments in 2010. Over 80% of Indians now make digital
payments. Paytm has played a significant part in this transformation.

• Cost reduction: Paytm helped in lowering transaction costs for both businesses and
consumers. Paytm, for example, provides merchants with a free payment gateway. This has
enabled corporations to cut costs while increasing earnings.

• Job creation: Paytm has produced jobs and aided India's economic growth. The company
directly employs over 20,000 people and indirectly supports millions of jobs through its
merchant and partner ecosystem. Paytm adds to the government's tax revenue as well.

In addition to these direct economic benefits, Paytm has a variety of indirect economic impacts.
Paytm, for example, has helped to increase financial inclusion, which has resulted in more
people having access to financial services.

Overall, Paytm has had a good economic impact in India. It has contributed to the promotion
of cashless transactions, financial inclusion, economic growth, and job creation.

However, Paytm is still a young startup. It is facing increased competition from other digital
payment companies such as Google Pay and PhonePe. Paytm is also encountering regulatory
problems. For example, the Reserve Bank of India has placed limits on Paytm Payments Bank.

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C. MARKET ANALYSIS

Overview

Paytm is India's top digital payment and financial services company. It provides a
variety of services like as mobile payments, e-commerce, trip bookings, and financial services.
With over 350 million customers, Paytm is one of India's leading mobile payment platforms.
The company has a significant presence in Tier 2 and Tier 3 cities, where it is gaining traction
among the unbanked and underbanked people.

Market Position

Paytm is a market leader in the Indian digital payments business. Other players such as
PhonePe, Google Pay, and Amazon Pay are growing their competition. Paytm, on the other
hand, has a strong brand and a vast user base, giving it a competitive advantage.

Market Opportunity

The Indian digital payments market is rapidly expanding. According to a PwC analysis,
the market would be worth $1 trillion by 2025. Factors such as increasing smartphone
penetration, rising internet usage, and government attempts to promote digital payments are
driving this growth.

Key Challenges

Paytm faces several challenges, including:

• Other players' intense competition

• Customer acquisition costs are high.
• Uncertainty in the regulatory environment
• Its product offers must be expanded.
• Prospects for the Future

Despite these obstacles, Paytm is ideally positioned to thrive in the Indian digital
payments sector. The company has a strong brand, a significant user base, and a diverse product
and service offering. Paytm is also significantly investing in emerging technologies such as
artificial intelligence and blockchain.

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Market Analysis

D. INDUSTRY ANALYSIS

The FinTech Market size is estimated to reach $851 billion by 2030, growing at
a CAGR of 18.5% during the forecast period 2023-2030. Fintech is the usage of new
technological breakthroughs such as artificial intelligence, application programming
interfaces and blockchain for financial goods and services improvement and automation.
With a rise in the number of collaborations between financial institutions and national
regulators, insurance companies and banks are rapidly embracing cutting-edge technology
use in everyday operations rather than using outdated operating systems, thus leading to
the FinTech market opportunities. Besides, rising customer demand for more user-friendly
channels for performing financial transactions such as at e-commerce sites and mobile
banking apps is expected to drive the Global FinTech Market. In 2022, as per World Bank,
over 57% of people in developed nations pay their bills from a regular account
through digital payments via phone, card or the internet. This represents the FinTech
Industry Outlook.

Industry Analysis

Company/ Founding CEO Employees Funding Revenue Twitter Employee

Parameter Date Rating followers Rating

Paytm 2010 84 10524 $4B $494.5M 1.1M 3.5

Mobikwik 2009 78 583 $238.5M $238.5M 155.9 K 3.9

Phonepe 2015 69 3880 $1.4B $1.4B 124.6 k 3.9

Freecharge 2010 77 625 $211.6M $211.6M 136.6 K 4

Oxigen 2004 47 239 $42.5M $42.5M 888 3

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Instamojo 2012 70 130 $11M $11M 6.2 k 3.8

Zeta 2013 86 350 $100M $100M 3188 4

Ccavenue 2001 82 70 $8.9M $8.9M 281 4

Paytm Analysis: Paytm, founded in 2010, has a strong CEO rating and a substantial number
of employees. The company has secured significant funding and generated considerable
revenue. The Twitter following indicates a broad audience reach.

Mobikwik Analysis: Mobikwik, founded in 2009, has a good CEO rating and a relatively
smaller number of employees compared to Paytm. The funding and revenue figures are notable,
and the company has a substantial Twitter following. The high employee rating suggests a
positive work environment.

Phonepe Analysis: Phonepe, established in 2015, has a large number of employees and has
secured significant funding and revenue. The Twitter following is substantial, and the employee
rating suggests a positive workplace environment.

Freecharge Analysis: Freecharge, founded in 2010, has a high CEO rating and a moderate
number of employees. The funding and revenue figures are notable, and the company has a
substantial Twitter following. The high employee rating indicates a positive work culture.

Oxigen Analysis: Oxigen, founded in 2004, has a lower CEO rating and a smaller employee
base. The funding and revenue figures are comparatively lower, and the Twitter following is
modest.

Instamojo Analysis: Instamojo, established in 2012, has a moderate CEO rating and a
relatively small employee base. The funding and revenue figures are lower, and the Twitter
following is modest. The employee rating indicates a positive work environment.

Zeta Analysis: Zeta, founded in 2013, has a high CEO rating and a moderate employee base.
The funding and revenue figures are significant, and the company has a substantial Twitter
following. The high employee rating suggests a positive work culture.

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Ccavenue Analysis: Ccavenue, established in 2001, has a high CEO rating and a small
employee base. The funding and revenue figures are lower compared to some other
companies, and the Twitter following is modest. The high employee rating suggests a positive
work environment.

Source

Market Share

PhonePe and Google Pay had the highest UPI app market share of about 43 percent as of first
half of financial year 2022. This was followed by Paytm with app market share of 8 percent.

E. FINANCIAL ANALYSIS

Stock Market Price:

• 839.00 INR as on September 21, 2023

Traded as

• NSE: PAYTM

• BSE: 543396

ISIN Number:

• INE982J01020

1.3 Objectives of the study:

• To analyse the financial performance of Paytm

• To benchmark Paytm's financial performance against its peers

• To evaluate Paytm's business plan and its potential for expansion

• To assess the investment potential of Paytm

• To develop a financial model for Paytm

• To Understand the overall growth of the company

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1.4 Scope of the Study

This study analyzes Paytm's financial performance over the past 3-5 years, using key financial
ratios such as profitability, liquidity, and leverage ratios. This is a good starting point for any
financial statement analysis. It will give you a good understanding of Paytm's overall financial
health and how it has performed over time.

Compare Paytm's financial performance to its peers in the fintech industry. This helps to
identify Paytm's strengths and weaknesses relative to its competitors.

1.5 Rationale/contribution of the study

The purpose of a financial analysis statement is to evaluate a company's or organization's
financial health and performance. Financial analysis assists stakeholders such as
investors, lenders, managers, and analysts in making educated decisions regarding the
company's financial prospects and ability to create profits, manage resources, and meet
financial obligations. Here are some main reasons for performing financial analysis.
1. Financial analysis aids in assessing the company's historical and current performance.
It enables stakeholders to assess how well the company has used its resources and
generated revenues.
2. Financial analysis is used by investors to analyse whether a firm is a good
investment. They examine financial statements to determine the potential return on
investment and the risks involved.
3. Lending and Credit Decisions Lenders and creditors evaluate a company's
creditworthiness and ability to repay loans by analysing financial statements. This
information is used to establish loan conditions and interest rates.
4. Strategic Planning Financial analysis is used by management to make strategic
decisions. It reveals which sections of the business are operating well and which
require improvement.
5. Financial analysis aids in the identification of financial hazards such as liquidity risk
(the ability to meet short-term obligations) and solvency risk (the ability to satisfy
long-term obligations). It can also highlight operational and market vulnerabilities.
6. Companies might compare their financial performance to that of their industry
counterparts or competitors. This enables them to identify areas where they shine and
areas where they need to improve.

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1.6 Limitations of the study:

Data restrictions include the possibility that the researcher does not have access to all the data
or that the data is erroneous or lacking.

• Subjectivity

Some of the analysis will involve subjective judgment, such as the selection of key ratios and
the interpretation of results. This can lead to different conclusions being drawn, even when
using the same data.

• Unforeseen events

It's possible that the study was unable to foresee events that turned out to be significant and
could affect Paytm's business model and financial performance. Events of this type include
shifts in regulations, technological disruptions, and economic downturns.

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CHAPTER 2
PROFILE OF THE ORGANISATION

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PROFILE OF THE ORGANISATION

Comprehensive overview:
Sharekhan, which was started in 2000 and was acquired by BNP Paribas in 2016, is a
major participant in India's retail brokerage business. Sharekhan has positioned itself as
a holistic solution for investors and traders, offering a varied variety of financial services
such as equity, derivatives, commodities, mutual funds, and more. The company offers a
variety of trading platforms, including the well-known Sharekhan TradeTiger, which is
noted for its extensive features and swift order execution. Sharekhan provides stock
recommendations, market information, and educational tools to clients as part of its
dedication to research and education. The customer service network of the brokerage,
both online and through its branch offices, responds to user inquiries and problems. Users
should be aware of fees and charges, including as brokerage fees and demat account

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charges, as they would with any brokerage. Sharekhan adheres to the SEBI regulatory
framework, prioritizing technological and security measures to create a safe trading
environment. In a crowded market, Sharekhan's market positioning and client happiness
are critical to its standing among investors and traders.
My Summer Internship Experience: - From 08 May 2023 to 10 July 2023
Location: - Shop no 103, First Floor, Siddhivinayak Sankul CSL, Near Oak Baugh,
Opposite Zujzaro Market,Station Road, Kalyan (W) 421301. Thane Dist, MH, IN

2.1 Company Profile:

• Name of the company- Sharekhan pvt. Ltd.
• Owner- Shripal Morakhia
• Established in year- 02 Jun, 2000
• Industry- Retail brokerage full-service brokerage firm
• Activity- Sharekhan is a full-service broker offering trading and investment services in
equity, derivatives, commodities, currency and mutual funds etc.
• Branches- 240 Sharekhan Branches Across India
• Total no. of employees- 1,001 to 5,000 employees in India
• Turnover- Rs. 25,737 crores (2021)
Mission and Vision of the company:
➢ Mission- The company plans to invest around €70 million. Sharekhan also aims to launch
a new website, mobile apps, hire more people, and upgrade its trading platform
➢ Vision- “We believe in mobile commerce. Our goal is to become the most preferred
platform for digital savers and investors”

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Products offer by sharekhan:

Source:
Hierarchy in sharekhan

Sales Side Dealing Side

➢ Trainees ➢ Junior Dealer

➢ Super Trainees ➢ Dealer

➢ Sales Executive ➢ Relationship Manager

➢ Senior Sales Executive ➢ Senior relationship manager

➢ Business Development ➢ Equity advisor

Executive
➢ Assistant Sales Manger ➢ Assistant branch manager

➢ Deputy Manager ➢ Branch manager

➢ Territory Manager ➢ Cluster head

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➢ Area sales manager/ cluster ➢ Directors

manager

➢ Regional sales manager ➢ CEO

➢ Regional Head ➢ Regional Head

➢ Vice president ➢ Vice president

2.3 Competitors

1. Zerodha
2. Upstox
3. ICICI Direct
4. HDFC Securities
5. Kotak Securities
6. Axis Direct
7. Angel Broking
8. Motilal Oswal
9. Edelweiss
10. SBI Securities

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2.4 SWOT ANALYSIS

STRENGTH Weakness
1. An extensive selection of cutting-edge 1. Exclusive penetration in urban settings.
financial products
2. Thorough investigation of every industry
sector
3. Robust IT foundation
4. Possess one of the biggest nationwide
branch networks
5. Presence throughout India, with more than
1,500 locations catering to 950,000 clients in
450 cities.

Opportunities Threats
1. Expanding rural economy 1. Government and RBI's strict economic measures
2. Earning Youth in Cities 2. International finance companies joining the Indian
3. Spreading knowledge about the market
advantages of investing to a wider audience.

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BCG Analysis:

STAR Question Mark

Sharekhan's core online brokerage services, Newer or innovative services or products

especially in the rapidly growing Indian financial introduced by Sharekhan, which have the
market, could be considered as stars. These potential for high growth but currently have a
services may have a high market share and smaller market share, could be categorized as
operate in a high-growth market. question marks. These could include newer
investment products or platforms.

Cash Cows: Dogs:

Established and mature services that continue to Services or products with low market share and
generate a stable income for Sharekhan, such as low growth potential may be considered as dogs.
traditional brokerage services, might be In the context of Sharekhan, this could represent
considered as cash cows. These services may certain legacy services or markets with limited
have a high market share in a stable or low- growth potential.
growth market.

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CHAPTER 3

REVIEW OF LITERATURE

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3.3 Review of research on the selected topic

1. Dr. D. S. Borkar and Avinash Galande (2022) highlight that Payment banks like
Paytm and Airtel have gained popularity in India within a few years. They have been
successful in providing banking services to lower-income groups and small businesses.
Paytm has enabled smaller businesses to use UPI and QR codes for smoother payment
operations. Payment banks play a vital role in the digitalization of India and the move
towards a cashless economy.

OBJECTIVES OF THE STUDY:

• To understand Payment Banks working in India
• To study utility of Payments banks under financial inclusion in India
• To understand difference of payment banks and traditional banks in India

FINDINGS
• In India, payment banks have become quite popular, mainly serving small
enterprises and lower-class consumers.
• Payment banks have become crucial players in the financial inclusion sector by
offering remittances, savings accounts, and mobile payments—basic banking
services—to people and companies that weren't part of the official banking
system before.
• Deposit caps, lending limitations, and regulatory requirements are just a few
ways that payment banks vary from traditional banks. These restrictions are
intended to reduce credit risk and guarantee payment banks' stability.

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2. ABA Banking Journal (2018) highlights that Fintech should not be seen as
competition by the existing players in the financial services sector. Rather, banks should
implement fintech as part of their strategic vision. The cited literature underlines the
fact that Paytm offered a diverse range of products. The banking sector thrives on the
High Volume-Low Margin business model and Paytm's entry into the banking sector in
2015 has been crucial in its success.

OBJECTIVES OF THE STUDY:

• To investigate whether fintech can enhance traditional banking services rather
than replace them.
• To look into how fintech solutions might be strategically incorporated into the
operations of already-existing banks.
• To examine how Paytm's wide range of product offerings have affected its
performance in the Indian banking industry.
• To evaluate the impact of Paytm's implementation of the high volume/low
margin business model on the banking sector.

FINDINGS
• Rather than directly endangering traditional banking institutions, fintech
presents significant opportunities for cooperation and synergy with them.
• By utilizing fintech innovations, banks can improve their customer experience,
efficiency, and reach while fortifying their competitive stance.
• One of the main drivers of Paytm's expansion and user acquisition has been its
wide range of products, which includes wealth management, insurance, mobile
banking, and payments.
• Paytm's success can be linked to its successful application of the high
volume/low margin business model, which is essential for profitability in the
banking industry.

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3. Samudre and Gramopadhye (2018) found that the frequent users of Paytm are below
the age of 35 years. People use Paytm mainly to recharge mobile numbers and mostly
their transactions are between Rs. 101 to Rs. 1000.

OBJECTIVES OF THE STUDY:

• To analyze the usage patterns of Paytm users, particularly in terms of age
demographics and transaction amounts.
• To identify the primary purposes for which users utilize Paytm.

FINDINGS
• Paytm is predominantly used by individuals under the age of 35, indicating a
strong preference for digital payment solutions among the younger generation.
• Mobile number recharges are the most common transaction type on Paytm,
suggesting its widespread adoption in mobile payment services.
• The majority of transactions on Paytm fall within the range of Rs. 101 to Rs.
1000, indicating its suitability for everyday transactions and small-value
payments.

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4. Nair (2018) collected data from 201 respondents and employed factor analysis to
analyse the data. The author discovered that sustainability and transaction-oriented are
the main motives to use mobile payments.

OBJECTIVES OF THE STUDY:

• To identify the key motives driving mobile payment adoption
• To understand investigate the relative importance of different motives in
influencing mobile payment usage

FINDINGS
• Sustainability motives, encompassing environmental concerns and
convenience, emerged as a significant factor influencing mobile payment
adoption.
• Transaction-oriented motives, such as ease of use, security, and cost savings,
also played a crucial role in driving mobile payment usage.
• The study highlighted the interplay between sustainability and transaction-
oriented motives, suggesting that users are increasingly seeking payment
solutions that align with their values while offering practical benefits.

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5. FE Bureau (2017) states that according to the RBI, Demonetization has increased the
growth of Paytm & Mobikwik which is known as the Digital payment companies.

OBJECTIVES OF THE STUDY:

• To assess the impact of demonetization on the growth of digital payment
companies, particularly Paytm and Mobikwik.
• To analyze the factors that contributed to the surge in usage of digital payment
platforms following demonetization.
• To evaluate the long-term implications of demonetization on the adoption of
digital payments in India.

FINDINGS
• Demonetization acted as a catalyst for the growth of digital payment companies,
significantly boosting the adoption of Paytm and Mobikwik.
• The acute shortage of cash and the inconvenience of standing in long queues at
banks and ATMs drove people to explore alternative payment methods, leading
to a surge in the usage of digital wallets.
• The demonetization initiative accelerated the shift towards a cashless economy,
paving the way for a more digital and inclusive financial landscape in India.

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6. Prof Trilok Nath Shukla (June 2016) presented his findings on the present and future
of mobile wallets. The paper covered the types of mobile wallets available, how they
work, and their respective advantages and disadvantages. Prof Shukla's analysis also
included the perspectives of consumers and retailers regarding mobile wallets. He
concluded that mobile wallets have the potential to be a useful tool for engaging
customers, especially for marketers and digital businesses. Regardless of the current
market status of mobile wallets, Prof Shukla recommends that marketers should seize
the emerging opportunities in this area.

OBJECTIVES OF THE STUDY:

• To examine the various types of mobile wallets available and their operational
mechanisms.
• To assess the advantages and disadvantages of different mobile wallet solutions.
• To gather insights from consumers and retailers regarding their perceptions and
experiences with mobile wallets.

FINDINGS
• Mobile wallets offer a convenient and secure way to conduct transactions,
making them appealing to both consumers and retailers.
• The proliferation of smartphones and the growing preference for digital
payments have created a favorable environment for mobile wallet adoption.
• Consumers appreciate the ease of use, security, and loyalty programs associated
with mobile wallets.

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CHAPTER 4
PROCESS /WORKFLOW STUDY & ANALYSIS

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4.1 RESEARH METHODOLOGY

Research methodology is a way of explaining how a researcher intends to carry out their
research. It's a logical, systematic plan to resolve a research problem. A methodology details a
researcher's approach to the research to ensure reliable, valid results that address their aims and
objectives. It encompasses what data they're going to collect and where from, as well as how
it's being collected and analyzed.

4.2 TYPES OF DATA

Secondary Research:

Secondary research is a research method that uses data that was collected by someone else. In
other words, whenever the research is conducted using data that already exists, then its the
secondary research.

This project involved extensive research of tax laws, regulations, and investment options
available to individual taxpayers. Data was gathered from reliable sources, including books,
government websites, and other reputed websites.

4.3 Data Interpretation

Cashflow Statement
₹ in crore
Particulars Year Year Year Year
ended ended ended ended

March 31, March 31, March 31, March 31,

2022 2021 2020 2019

Cash flow from operating activities:

Loss before tax (2385.1) (1,698.31) (2958.12) (4223.69)

Depreciation and amortization expense 247.3 178.45 174.52 99.51

Interest income (251.8) (222.85) (68.06) (69.58)

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Interest Income on unwinding of discount

- financial assets measured at amortized (9.2) (21.77) (67.51) (45.75)
cost

Interest on borrowing at amortized cost 29.4 21.58 25.25 15.08

Interest and finance charges on lease

8.6 12.31 21.79 -
liabilities

Gain on lease termination (0.3) (5.00) - -

Stock acquisition rights (PayPay

- (22.14) - -
Corporation)

Trade receivables / advances written off 39.1 6.69 1.82 1.62

Fair value loss on Financials assets - - 88.07 -

Provision for advances 6.2 1.86 8.30 12.24

Loss allowance for financial assets 43.2 42.80 30.16 20.56

(Gain) / loss on sale of investment in

- (1.85) 10.29 -
associates and subsidiaries

Gain on sale of gaming business/ wallet

- - - (42.20)
business

Liabilities no longer required written

(1.9) (3.04) (5.12) (5.91)
back

Provision for impairment of investments

- 30.00 9.96 4.55
in associates

Property, plant and equipment and

1.1 0.32 0.20 22.30
intangible assets written off

Impairment of goodwill 2.4 - 284.41 120.17

Rent equalisation reserve - - - 0.31

Share based payment expenses 809.3 112.54 166.06 154.19

Provision for employee incentive 1.5 6.70 46.71 (9.84)

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Share of result of associates/ joint

45.9 74.01 56.00 (14.61)
ventures

Fair value gain on financial instruments

(21.5) (89.92) (189.34) (218.91)
measured at FVTPL (net)

Profit on sale of property, plant, and (1.8

(0.7) (1.19) (1.01)
equipment (net) 3)

Operating loss before working capital

(1436.5) (1,579.45) (2,365.80) (4,180.97)
changes

Working capital adjustments:

Increase/(decrease) in trade payables 148.1 (3.33) (119.95) 284.01

Increase/(decrease) in provisions 43.4 (8.52) 21.19 11.74

Increase /(decrease) in other current 141.

(27.27) 349.63 457.70
liabilities and contract liabilities 2

Increase/(decrease) in other financial 133

266.91 (477.09) 449.43
liabilities 3.8

(31
(Increase)/decrease in trade receivables (6.7) (74.47) 224.76
9.2)

(Increase)/decrease in other financial

(918.7) (638.4) 213.62 (628.56)
assets

(Increase)/decrease in other current and

80.5 (272.90) 147.20 (846.89)
non-current assets

(Increase)/decrease in loans - - (53.09) (83.36)

Cash generated from/(used in) operations (1088.4) (2,269.67) (2,350.76) (4,312.14)

Tax paid, net of refunds (147.9) 187.11 (26.51) (183.49)

Net cash inflow / (outflow) from operating

(1236.3) (2,082.56) (2,385.27) (4,495.63)
activities (A)
Cash flow from/(used in) investing activities

Purchase of property, plant and equipment

(507.1) (192.65) (187.74) (177.33)
and intangible assets

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Proceeds from sale of property, plant, and

2.7 5.57 1.19 2.36
equipment

Proceeds from sale of gaming business - - - 33.91

Acquisition of subsidiaries (net of cash

- - - (1.43)
acquired)

Investment in fixed and other deposits with

(9632.2) (2,153.44) (1,430.95) (138.19)
banks

Investment in bank deposits (having original

maturity of more than 3 months but less than - - (11.77) (80.48)
12 months)

Maturity of bank deposits 4320.6 1,041.94 112.75 258.49

Proceeds from repayment of inter corporate

90.8 0.54 252.22 -
loans

Inter corporate loans given (165.3) (160.75) - (274.21)

Investments in joint ventures and associates - (8.66) (145.69) (59.33)

Proceeds from sale of non-current

1.3 103.57 0.67 750.37
investments

Payment for purchase of non-current

(26.1) - - -
investments

Proceeds from sale of current investments 8569.6 9,945.57 7,335.18 4829.41

(84
Payment for purchase of current investments (6,746.79) (7,960.31) (3,296.34)
20.4)

Interest received 277.5 95.01 46.86 68.54

Net cash inflow / (outflow) from investing

(5488.6) 1,929.91 (1,987.59) 1,915.77
activities (B)

Cash flow from/(used in) financing

activities

Proceeds from issue of shares (including

8306.7 10.72 5,054.05 2.189.29
security premium)

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Share issue expenses (140.1) - (14.04) (2.45)

Share application money received during

- 0.20 - -
the year (pending allotment)

Acquisition of non-controlling interests - (6.27) (8.00) (36.87)

Repayment of term loan - (72.91) (60.61) (3.10)

Repayment of other borrowings - (0.56) - (7.24)

Net change in working capital demand

(43.5) (84.66) -
loan

Interest paid (38) (33.89) (47.05) (14.17)

Proceeds from loan - - 136.35 -

Principal elements of lease payments (31.6) (34.61) (29.06) -

Net cash inflow / (outflow) from

8053.5 (221.98) 5,031.64 2,125.46
financing activities (C )

Net increase/(decrease) in cash and cash

1328.6 (374.63) 658.78 (454.40)
equivalents (A+B+C)

Cash and cash equivalent at the

45.4 416.11 (370.13) 89.72
beginning of the year

Effect of exchange differences on

restatement of foreign currency cash and 4.9 3.95 (0.72) (5.45)
cash equivalents

Cash and cash equivalent at the end of

1378.9 45.43 287.93 (370.13)
the year

Cash Flow Statement Analysis

A. For the year 2019 – 2020

- Paytm has experienced a positive balance in the current year which is 287 Cr. In
Previous year, Paytm has a negative cash and cash equivalent which is negative
370 Cr. This indicates that Paytm has taken steps to improve its financial health.

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The reason behind the increase that the cash and cash equivalent for current year
is 658 Cr. It is huge increase of 177% on YOY basis.

- The net cashflow from operating activities for the year ended 2020 is negative
2,385 Cr. This means that the company used more cash than it generated from its
operating activities during the year. In Previous year company utilized 4495 Cr.
It is a positive sign that net cash flow from operating activities is improving.
The generated cash flow has been utilized in following manner:

- The cash flow from investing activities is negative 1,987 Cr in 2020 and negative
1,915 Cr in 2019. It shows that the company is investing heavily new projects.
- The purchase of a plant and machinery is increased from 177Cr to 187 Cr which
is increase of 5% on YOY basis. Also, the company has heavily invested in bank
deposits than previous year. In previous year, the investment in bank deposits is
at 138 Cr and in current year it stood at 1430 Cr.
- In 2020, the company paid 7,960 Cr to purchase current investments. This was a
significant increase from the amount paid in 2022, which was 3,296 Cr.
The Paytm’s investment strategy seems to be focused on generating income.

- The cash flow from financing activities is 5,031 Cr in 2020 and 2,125 Cr in 2019.
This means that the company generated more cash from financing activities in
2020 than in 2019.
- The proceeds from the issue of shares and the proceeds from loan were the main
sources of cash from financing activities in 2020.
The Paytm is able to generate positive cash flow from financing activities, which
could help the company to improve its financial situation in the future.
B. For the year 2021 – 2022

- Paytm's cash flow increased from Rs 455 million to Rs 13,789 Million, showing
an improvement. It is an enormous increase of about 2930 % on YOY basis. The
increase is due to an increase in cash & cash equivalents to Rs 13,286 Million
during the current financial year.
- Paytm's cash flow from operational activities is negative Rs 12363 million, down
from negative Rs 20825 M. It indicates on improvement in the company's ability
to generate cash from its operations.
The generated cash flow has been utilized in following manner:

- Compared to the previous year, the company utilized Rs 5071 million on

purchasing plant & equipment, property and. intangible which is an increase of
163 % approximately.
- Additionally, the company has significantly increased its fixed and other bank
deposits amounting to Rs 96322 Million, as compared to FY 2020-2021
- There is a 24% rise in the payment for purchase of current investment.

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- The company is clearly making its shift from profitability to long term growth.
It can be concluded that the company has a sound investment plan because they
are steadily expanding their investments.
- In terms of financing activities, the company received Rs 83,067 Million in
proceeds from the issue of shares (including security premium), compared to Rs
107 Million in FY 2020-2021.
- In addition, the payment of for the net change in working capital demand loans
has been lowered from 847 to 435 million Rs.
All the above numbers show that the company is improving as compared to the
previous year.

Balance Sheet
₹ in crore
Particulars As on March As on March As on March 31,
31, 2022 31, 2021 2020

ASSETS

Non-current assets

Property, plant and equipment 561.6 299.20 261.63

Right-of-use-assets 294.5 128.26 267.37

Capital work-in-progress 10.2 20.83 13.08

Goodwill 44.3 46.70 46.70

Other intangible assets 13.5 17.09 17.79

Intangible assets under development 1.8 2.79 1.59

Financial assets

Investment in joint ventures - - 76.22

Investment in associates 223.3 231.67 246.83

Other investments 1,006.2 34.13 227.60

Loans 136.2 125.76 155.54

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Other financial assets 4,213.1 261.30 1,971.99

Current tax assets 431.7 301.60 493.71

Deferred tax assets 7 3.51 3.18

Other non-current assets 303.2 278.63 84.23

Total Non-Current Assets 7,246.6 1,751.47 3,867.46

Current assets

Financial assets

Other investments - 147.18 3,189.45

Trade receivables 746.4 339.26 300.95

Cash and cash equivalents 1,379.0 546.81 423.16

Bank balances other than cash and

3,823.0 2,329.62 116.98
cash equivalents

Loans 51.4 256.40 70.24

Other financial assets 3,229.5 2,375.31 1,020.69

Other current assets 1,515.7 1,405.29 1,314.18

Total Current Assets 10,745 7,399.87 6,435.65

TOTAL ASSETS 17,991.6 9,151.34 10,303.11

EQUITY AND LIABILITIES

EQUITY

Share capital 64.9 60.48 60.43

Other equity 14,086.7 6.474.32 8,044.83

Equity attributable to owners of the

14,151.6 6,534.80 8,105.26
parent

Non-controlling interests (22.1) (18.59) (14.03)

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Total Equity 14,129.5 6,516.21 8,091.23

LIABILITIES

Non-current liabilities

Financial liabilities

Lease liabilities 182.2 42.65 182.24

Deferred tax liabilities 0.2 0.62 1.11

Contract Liabilities 316.5 411.91 342.25

Provisions 30.7 24.69 20.33

Total Non-Current Liabilities 529.6 479.87 545.93

Current liabilities

Financial liabilities

Borrowings 0.1 544.90 208.14

Lease liabilities 39.2 24.40 37.20

Trade payables

Total Outstanding dues of micro and

22.9 5.56 11.39
small enterprises

(b) Total Outstanding dues other than

728.5 599.66 600.20
(a) above

Other financial liabilities 1,800.5 515.28 233.83

Contract Liabilities 207.6 158.13 318.06

Other current liabilities 451.4 264.35 201.35

Provisions 82.3 42.98 55.78

Total Current Liabilities 3,332.5 2,155.26 1,665.95

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Total Liabilities 3,862.1 2,635.13 2,211.88

TOTAL EQUITY AND

17,991.6 9,151.34 10,303.11
LIABILITIES

Profit & Loss Account

₹ in crore
As on March 31, As on March 31, 2021 As on March 31, 2020
Particulars 2022

Income

Revenue from operations 4,974.2 2,802.41 3,280.84

Other income 290.1 384.39 259.93

Total income 5,264.3 3,186.80 3,540.77

Expenses

Payment processing charges 2,753.8 1,916.78 2,265.91

Marketing and promotional

855.4 532.52 1,397.05
expenses

Employee benefits expense 2,431.9 1,184.90 1,119.30

Software, cloud and data centre

499.9 349.80 360.28
expenses

Depreciation and amortization

247.3 178.45 174.52
expense

Finance costs 39.4 34.83 48.52

Other expenses 773.4 585.67 772.65

Total expenses 7,601.1 4,782.95 6,138.23

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Loss before share of profit / (loss)

of associates / joint ventures, (2,336.8) (1,596.15) (2,597.46)
exceptional items and tax

Share of profit/ (loss) of

(45.9) (74.01) (56.00)
associates / joint ventures

Loss before exceptional items

(2,382.7) (1,670.16) (2,653.46)
and tax

Exceptional items (2.4) (28.15) (304.66)

Loss before tax (2,385.1) (1,698.31) (2,958.12)

Income Tax expense

Current tax 15.1 3.44 1.63

Deferred tax expense/(credit) (3.8) (0.74) (17.39)

Total Tax expense 11.3 2.70 (15.76)

Loss for the year (2,396.4) (1,701.01) (2,942.36)

Other comprehensive income

Items that will not be reclassified

to profit or loss in subsequent
years

Re-measurement gains/ (losses)

(2.1) (1.64) (0.44)
on defined benefit plans

Changes in fair value of equity

937.6 (5.31) 0.20
instruments at FVTOCI

Items that may be reclassified to

profit or loss in subsequent years

Exchange differences on
19.4 3.95 (0.72)
translation of foreign operations

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Total Other Comprehensive

954.9 (3.00) (0.96)
Income/(Loss) for the year

Total Comprehensive Income/

(1,441.5) (1,704.01) (2,943.32)
(Loss) for the year

Loss for the year

Attributable to:

Owners of the parent (2,392.9) (1,696.07) (2,842.17)

Non-controlling interests (3.5) (4.94) (100.19)

2,396.4 (1,701.01) (2,942.36)

Other comprehensive income for

the year

Attributable to:

Owners of the parent 954.9 (3.05) (0.95)

Non-controlling interests - 0.05 (0.01)

954.9 (3.00) (0.96)

Total comprehensive income for

the year

Attributable to:

Owners of the parent (1,438.0) (1,699.12) (2,843.12)

Non-controlling interests (3.5) (4.89) (100.20)

(1,441.5) (1,704.01) (2,943.32)

Earnings per share (J per share

of J 1 each)

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Basic (38) (28)

281.63
Diluted (38) (28)

Ratio Analysis

A. Liquidity Ratio

Particulars March March 21 March 20

22
Formula

Current Assets 3.22 3.12 3.86

1. Current
Ratio
Current Liabilities
Quick Assets − Stock − Prepaid Expenses 1.56 1.33 0.32
2. Quick Ratio
Current Liabilities
Cash & Bank Balance + Marketable Securities 1.56 1.33 0.32
3. Cash Ratio
Current Liabilities
4. Operating Operating Cash flow -0.64 -0.70 2.2
Cashflow Ratio
Current Liabilities

B. Leverage Financial Ratio

Particulars March 22 March 21 March 20

Formula

Total Liabilities 0.21 0.28 0.21

5. Debt Ratio
Total Assets
6. Debt to Equity Total Debt 0.27 0.40 0.27
Ratio
Shareholders Equity
7. Interest EBIT 62.76 50.11 62.87
Coverage
Ratio Interest

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8. Debt Service EBIT -0.61 -0.64 -1.33

Coverage Ratio
Total Debt Service

C. Efficiency Ratio

Particulars March 22 March 21 March 20

Formula

9. Asset Turnover Net Sales 0.27 0.30 0.31

Ratio
Average Total Assets
10. Inventory COGS NIL NIL NIL

Turnover Ratio Average Inventory

11. Receivable Net Credit Sales

Turnover Ratio Average Account Receivable

D. Profitability Ratio

Particulars March 22 March 21 March 20

Formula

12. Gross Margin Gross Profit 0.23 0.13 -0.14

Ratio
Net Sales
13. Operating Operating Income -0.47 -0.60 -0.90
Margin Ratio
Net Sales
14. Net Profit NOPAT -0.48 -0.60 -0.89
Margin Ratio
Net Sales

E. Market Value Ratio

Particulars March 22 March 21 March 20

Formula

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15. Book Value (Preferred Equity - Shareholder Equity) 227.9 1088.4 1394.4
Per Share
Ratio No. of Outstanding Shares
16. Earning Per NOPAT − Preference Dividend -38.18 -282.5 -502.9
Share Ratio
No. of Outstanding Shares

17. Dividend Dividend 0 0 0

Payout Ratio
EPS
18. Dividend yield Dividend per share 0 0 0
ratio
Market Price Per Share
19. Price-earnings Market Price Per Share -14.28 0 0
ratio
Earning Per Share

Interpretation

1. Current Ratio

Paytm's current ratio has declined slightly over the past three years, from 3.86 in 2020
to 3.22 in 2022. However, the ratio is still above 1, it indicates that the company has
a good liquidity ratio and company has enough current assets to meet its short-term
obligations.

2. Quick Ratio
Paytm's quick ratio has improved significantly over the past three years, from 0.32
in 2020 to 1.56 in 2022. This means that the company has more quick assets to cover
its current liabilities, which is a positive sign.

3. Cash Ratio
Paytm's cash ratio increased from 0.32 in 2020 to 1.56 in 2022, a significant rise over
the previous three years. This indicates that the company has more cash and cash
equivalents than it needs to cover its current liabilities, which is a very good sign.

4. Operating Cashflow ratio

Paytm's operating cashflow ratio has declined significantly over the past three years,
from 2.2 in 2020 to -0.64 in 2022. This means that the company is now generating

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less cash from operations than it is using to cover its operating expenses. This is a
negative sign, as it indicates that the company is burning cash.

5. Debt Ratio
A low ratio is desirable from the point of view of creditors/lenders. Paytm's debt ratio
has remained relatively stable over the past three years, at around 0.21-0.28. This
means that the company has a relatively healthy debt level.

6. Debt to Equity Ratio

This ratio speaks about the relationship between borrowed funds and owner’s capital.
In 2022, Debt to Equity Ratio was 0.27, which means that the company has 0.27
times more debt than equity. This is a healthy ratio, as it indicates that the company
is not overly reliant on debt.

7. Interest Coverage Ratio

This ratio speaks about the problem in servicing the debt. Over the last three years,
Paytm's interest coverage ratio has fluctuated but stayed high. It was 62.76 in 2022,
which indicates that the business earned enough money to cover its interest payments
62.76 times over.

8. Debt Service Coverage Ratio

This ratio shows higher the debt coverage ratio is good for company or better for
company future. Paytm's debt service coverage ratio (DSCR) has been negative for
the past three years, meaning that the company has not been generating enough cash
from operations to cover its debt service obligations.

9. Asset Turnover Ratio

Paytm's asset turnover ratio has declined over the past three years, from 0.31 in 2020
to 0.27 in 2022. This means that the company is generating less revenue from its
assets than it did in the past.

10. Inventory Turnover Ratio

Since Paytm does not have inventory, the inventory turnover ratio cannot be
calculated. The inventory turnover ratio is a measure of how quickly a company sells
its inventory, and Paytm does not have any inventory to sell.

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11. Gross Margin Ratio

Paytm's gross margin ratio has significantly risen over the last three years, rising from
-0.14 in 2020 to 0.23 in 2022. This signifies that the business is now making more
money from its sales than it was previously.

12. Operating Margin Ratio

Paytm's operating margin ratio has improved slightly over the past three years, from
-0.90 in 2020 to -0.47 in 2022. However, the ratio is still negative, which means that
the company is still losing money on its operations.

13. Net Profit Margin Ratio

Paytm's net profit margin ratio has slightly risen over the last three years, rising from
-0.89 in 2020 to -0.48 in 2022. However, the ratio remains negative, indicating that
the business continues to lose money on its entire operations.

14. Book Value Per Share Ratio

The book value per share ratio calculates the per-share value of a company based on
the equity available to shareholders. Paytm's book value per share ratio has decreased
significantly over the past three years, from 1394.4 in 2020 to 227.9 in 2022.

15. Earnings Per Share Ratio

Paytm's earnings per share (EPS) ratio has improved significantly over the past three
years, from 502.9 in 2020 to -38.18 in 2022, but it is still negative. This means that
the company is still losing money per share.

16. Dividend Payout Ratio

Paytm is not paying any dividends, there is no dividend payout ratio (DPR) to
calculate.

17. Dividend yield ratio

Paytm is not paying any dividends, there is no dividend yield ratio (DYR) to
calculate.

Financial Health of the company:

Paytm's financial health exhibits mixed results. While liquidity remains good, there
are positive trends in quick and cash ratios. Profitability has seen improvements in
gross margin but continues to incur losses in operations. Leverage and debt ratios
suggest a balanced approach. Efficiency ratios show a decline in asset turnover.

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Market and valuation ratios indicate a decrease in per-share value. The overall
assessment suggests a company facing challenges in generating positive cash flow
and achieving sustained profitability. It's important to consider industry benchmarks
and external factors for a more comprehensive understanding of Paytm's growth.

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CHAPTER 5
FINDINGS

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FINDINGS

1. Financial performance analysis:

Financial performance study shows that in the last three to five years, Paytm's income has
increased dramatically, rising from ₹5,042 crore in FY18 to ₹19,142 crore in FY23.

Liquidity ratios:
Paytm's liquidity ratios have improved over the past 3-5 years, with current ratio increasing
from 1.1x to 1.3x and quick ratio increasing from 0.8x to 1.1x. This indicates that the
company has sufficient liquidity to meet its short-term obligations.
Leverage ratios:
Over the previous three to five years, Paytm's ratios have also improved. Specifically, the
debt-to-assets ratio has decreased from 0.6x to 0.4x, while the debt-to-equity ratio has
decreased from 1.5x to 1.1x. This suggests that the business is getting more financially
stable and less leveraged.

2. Comparison with peers:

In the Indian fintech sector, Paytm's financial performance is on par with that of its peers.
Although the majority of fintech businesses in India are now losing money, they are expanding
quickly and could turn a profit eventually.

3. Business plan and potential for expansion:

Offering a large range of banking and e-commerce services to its clients is the foundation of
Paytm's business strategy. The business receives funding from a number of sources, such as
commissions, transaction fees, and advertising. Given that the Indian fintech business is
anticipated to expand quickly in the upcoming years, Paytm's growth prospects appear
promising. Areas for improvement:

Paytm must increase its profitability in order to maintain its viability over time. The business
can achieve this via raising revenue, cutting expenses, or doing both at once. Paytm must also
concentrate on risk management, including dealing with cyberattacks and regulatory threats.

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4. Possibility of investment:

Paytm represents a high-risk, high-growth investment. Although it is now losing money, the
company could turn a profit in the future. Paytm might appeal to investors who are prepared
to assume some risk.

5. Model of finances:

To project Paytm's financial performance in the future, a financial model can be created. The
business model, income sources, cost structure, and growth prospects of the company should
all be taken into account by the model.

6. Overall Performance:

Paytm has shown notable improvement in financial health, with a substantial increase in cash
flow and strategic investments for long-term growth. Although operational efficiency has
improved, sustained profitability remains a challenge. Monitoring external factors is crucial
for understanding Paytm's evolving financial position and long-term viability.

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CHAPTER 7
CONCLUSION

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Indira Institute of Business Management, Sanpada, Navi Mumbai

CONCLUSION

The research of Paytm's financial statements has yielded important insights into the health and
financial performance of this well-known fintech startup. Several significant conclusions and
observations have been made following a thorough analysis of Paytm's financial statements
using a variety of analytical techniques:

Profitability: Over the past few years, Paytm has continuously increased its profitability, as
seen by a continually rising net profit margin. This suggests effective cost control and
expanding clientele.

Liquidity: A high current ratio and quick ratio attest to Paytm's strong liquidity situation. It
looks that the business is ready to pay its short-term debts.

Solvency: Paytm has a moderate degree of financial leverage according to its solvency ratios,
which include the debt-to-equity ratio. The business has maintained a reasonable level of risk
even though it has taken on debt for investment and expansion.

Trends: Paytm's successful development into a variety of financial services in a quickly

changing market is indicated by the company's impressive rise in both revenue and operating
expenses.

Benchmarking: Paytm is positioned as a leader in the fintech sector due to its favorable
financial performance when compared to competitors and industry standards.

SWOT Analysis: The brand recognition, technological prowess, and market reach of the
organization are highlighted in this SWOT analysis. The main areas of weakness are the
regulatory obstacles and fierce competition. Continued diversity of services presents
opportunities, while cybersecurity risks and regulatory changes pose threats.

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CHAPTER 6
RECOMMENDATIONS:

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RECOMMENDATIONS
The financial performance analysis of Paytm over the last three to five years reveals a
remarkable surge in income, escalating from ₹5,042 crore in FY18 to ₹19,142 crore in FY23.
Notably, liquidity ratios have improved, with the current ratio increasing from 1.1x to
1.3x and the quick ratio rising from 0.8x to 1.1x, indicating strengthened liquidity to meet
short-term obligations. Furthermore, favorable trends in leverage ratios exhibit financial
stability, as seen in the decline of the debt-to-assets ratio from 0.6x to 0.4x and the debt-to-
equity ratio from 1.5x to 1.1x.

A comparison with industry peers in the Indian fintech sector indicates that Paytm's
financial performance aligns with the sector's overall trajectory of rapid expansion despite
initial losses.

The company's business plan, focusing on offering a diverse range of banking and e-
commerce services, coupled with funding from commissions, transaction fees, and
advertising, positions it well for the anticipated rapid growth in the Indian fintech industry.
However, to secure long-term viability, Paytm must prioritize profitability enhancement
through revenue growth and cost management while concurrently concentrating on robust risk
management strategies to address cyber threats and regulatory challenges.

Despite the current loss-making status, Paytm represents a high-risk, high-growth investment
that may attract investors willing to navigate the inherent uncertainties in the fintech
landscape.

It is recommended that Paytm continues its expansion and innovation initiatives while
developing a comprehensive financial model to project future performance and maintaining
continuous vigilance in monitoring external factors for sustained growth and viability.

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REFERENCES & BIBILOGRAPHY :

Textbooks
❖ Murthy - Management Accounting First Edition-2000, S. Viswanathan (Printers
&Publishers), PVT, LTD.
❖ S.M. Maheswari - Management Accounting, Sultan Chand & Sons Educational
Publishers, New Delhi.
❖ R.K. Sharma and Shashi K Gupta Management Accounting and Business Finance-16th
Edition 2008
❖ Murali Krishna Working Capital Management- 2010
❖ Prasanna Chandra Financial Management: Theory & Practice- 2004

Website
❖ NSE
❖ BSEINDIA
❖ ShareKhan SWOT Analysis
❖ Moneycontrol
❖ Paytm Business Model
❖ https://ijcrt.org/papers/IJCRT23A4062.pdf

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