Advisers Urge India's Paytm Shareholders to Remove CEO
India-based digital payments provider Paytm saw its shares drop to their lowest level in two weeks when a proxy advisory firm urged shareholders to oust the company's CEO.
As Bloomberg News reported Friday (Aug. 12), Institutional Investor Advisory Services India Ltd. (IIAS) is recommending that shareholders vote to replace Paytm Founder Vijay Shekhar Sharma as chief executive.
Paytm, which competes with Google and Walmart’s PhonePe for a piece of the Indian digital payment market, is set to hold its general meeting on Aug. 19.
IIAS argued that Sharma had talked publicly, on several occasions before Paytm went public, about the company becoming profitable, something that has yet to happen. The firm says it is concerned about Sharma's ability to get the company to profitability.
“It is a very positive development that proxy firms are questioning not only governance but also the performance of the key leaders,” said Abhay Agarwal, a fund manager at Piper Serica Advisors Ltd.
Read more: India’s Payments Company Paytm’s Shares Bounce Up 6% on Earnings Surge
“Once the confidence is lost in the ability of the senior management to make the right business decisions, it is quite natural that one should seek replacement of the same.”
PYMNTS reported Monday (Aug. 8) that Paytm might achieve operational profitability by September 2023. That was after the company saw its shares reach their highest level in almost six months after the company's parent, One 97 Communications, reported an 89% surge in revenue for the quarter.
The company saw a higher number of monthly users, additional payment devices and more disbursal of loans which brought Paytm's revenue to $211.16 million (16.8 billion rupees), or an increase from 8.91 billion rupees in 2021.
Learn more: Paytm CEO: Investors Don’t Have Access to User Data
Paytm has run into some trouble this year, being audited by the Reserve Bank of India over allegations it engaged in data sharing with organizations based in China and failed to set up proper know-your-customer documentation. Paytm has denied these claims.
Around the same time, the central bank blocked Paytm's Payments Bank for adding new customers pending an audit of its IT systems.