BharatPe’s Grover Seeks to Sell His Stake; crypto exchanges face another tax headache

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Three days after we reported that a preliminary audit report by BharatPe found evidence of serious fraud at the fintech unicorn, sources tell us that its embattled co-founder Ashneer Grover is in talks with investors to sell his stake. 9.5% in the $2.8 billion startup. But will he be able to discharge himself of his actions before the publication of the final audit report?

Also in this letter:

The Equalization Tax Headache For Crypto ExchangesGovernment Will Use AI To Reduce Power Distribution LossesElastic Run Is 2022’s Sixth Startup Unicorn

BharatPe founder Grover in talks to sell 9.5% stake

BharatPe co-founder and MD Ashneer Grover.

BharatPe co-founder Ashneer Grover has been in talks with investors to sell his 9.5% stake in the fintech startup, potentially paving the way for his full exit from the company, two people in the know tell us.

Quick catch-up: The discussions, initiated by Grover, follow an ongoing investigation and an independent audit by BharatPe, which indicated financial irregularities at the start.

The company and its founder have been embroiled in a month-long controversy sparked by a leaked audio clip in which Grover allegedly abused and threatened a Kotak Mahindra Bank employee.

Numbered days? The secondary sale signals that Grover could be ousted from the company once the final findings of ongoing investigations are submitted. We reported on January 31 that Grover had hired attorneys in anticipation of such a situation.

Two people familiar with the developments said Grover was rushing to complete the stake sale before the final findings of the investigation were filed with the company’s board. BharatPe is currently valued at $2.8 billion.

“While Grover is offering his stake at full price (current valuation), he would be content to sell at a valuation of around $1 billion…but finding a buyer will not be easy, given the events of the past month” , said another person. aware of developments.

Grover’s move to monetize his property follows his request for a Rs 4,000 crore settlement, which was rejected by BharatPe’s board, as ET reported on February 4. “He (Grover) wanted to leave but keep his shares…but the board is trying to get him out without pay,” another person quoted above said.

Final reports soon: Consulting firm Alvarez and Marsal, which is auditing the company, is expected to submit its final report by the end of February. PwC is also looking into how the startup works. The company’s board said it would take action once the final reports are available.

Crypto tax will create an equalization levy headache for exchanges

The government’s decision to impose a 1% withholding tax on crypto transactions is expected to trigger another tax complication in the form of an equalization levy for cryptocurrency exchanges, tax experts have said.

To explain? Indeed, in most cases, crypto assets purchased by Indian residents through exchanges are sourced from people not based in the country, they said.

The equalization levy is applicable to foreign players and when services are sold by non-Indians.

It is often unclear whether the seller of a crypto transaction is in India or not, as most exchanges have holding entities overseas, experts said. Many companies have moved to the Seychelles, British Virgin Islands, Mauritius, Singapore or Dubai to protect themselves from Indian laws in recent years.

Also, in many cases, exchanges would fall under the definition of “e-commerce” players for the 2% equalization levy to kick in, they said.

How it will work: When exchanges deduct 1% TDS, it will be recorded as “consideration” on their books, tax experts said. This “matching” will in turn attract the 2% equalization levy, they said.

Yes, but: the equalization levy could only be a temporary pain point. As a signatory to the Organization for Economic Co-operation and Development (OECD) global tax agreement, India is likely to scrap unilateral measures such as the equalization tax, tax experts have said.

Tweet of the day

Government to deploy AI to reduce huge power distribution losses

The government plans to use artificial intelligence (AI) through established IT players and startups to reduce high distribution losses, the biggest problem facing India’s power sector.

India’s overall technical and commercial (AT&C) losses are among the highest in the world, worse than those of Bangladesh.

Technology service providers will use AI, machine learning, blockchain and IoT technologies to analyze data and find solutions.

Through the use of advanced technologies, nightclubs will be well equipped to make decisions regarding loss reduction, demand forecasting, differential day rate and renewable energy integration. “Increased technological interventions will help facilitate the operational and financial viability of distribution companies,” said a senior government official.

About 14 discoms from nine states including Tamil Nadu and Madhya Pradesh have expressed interest.

For each nightclub issue identified, four or five technology providers, two to three confirmed players and one or two start-ups will be pre-selected on the basis of their proposals. Startup TSPs will receive a grant of up to Rs 40 lakh, while no financial assistance will be provided to non-startups.

Closed deals ETtech

■ Elastic Run raised $300 million in a funding round led by SoftBank Group Corp, with participation from Goldman Sachs. The fundraising, which includes a secondary share sale of $32 million, values ​​the B2B e-commerce company at $1.5 billion, making the Pune-based company India’s sixth unicorn so far this year. ■ Polygon (Matic) raised $450 million in a round led by Sequoia Capital India. The team will use the funds to solidify their lead in the Ethereum scale race.

■ British fintech giant Revolut has injected 340 crore rupees (about $45.5 million) into Revolut India as part of its first round of investment in its Indian arm, CEO Paroma Chatterjee said.

■ Zomato CEO Deepinder Goyal and his core team have invested in Amit Lakhotia’s Park+, an app for motorists. This, while the Zomato co-founder sold his stakes in companies where the food delivery major entered as an investor.

■ Invact Metaversity, a startup at the intersection of education and the metaverse, has raised funds from over 70 angel investors. The company, launched by India’s former Twitter CEO Manish Maheshwari, is now valued at $33 million.

■ Trifecta Capital raised Rs 1,500 crore towards the final close of its first equity fund, Trifecta Leaders Fund-I. This includes a green shoe option of Rs 375 crore.

INFOGRAPHIC OVERVIEW

Paytm’s increased revenue gives it more operating leverage: CFO

Paytm CFO Madhur Deora.

One97 Communications, the owner of Paytm which reported a larger quarterly net loss last week, said increased revenue and a reduced operating loss gave it more leeway to continue investing in the business. ‘business.

The financials: The company reported a loss of Rs 780 crore for the December quarter, compared to a loss of Rs 474 crore a quarter earlier. Revenue increased by 34% from the previous quarter to Rs 1,460 crore.

Chief Financial Officer Madhur Deora said the digital payments and e-commerce company will continue to work to reduce its operating loss as well as improve contribution margins and operating revenue. our revenues are increasing and Ebitda losses are decreasing. So the fact that we can continue to invest in our business while reducing our losses is very encouraging,” Deora said during an interaction with ET on Monday.

Why Meta’s Collapse Boosts TCS’s Appeal, Infosys

The more than 26% decline in Meta Platforms Inc.’s stock price last week appeared to closely follow the tech-heavy Nasdaq’s downtrend in a bizarre throwback to the turn of the millennium.

Such a rapid reversal in the fortunes of Big Tech stocks – most of which are based on covid-fueled gains – has raised a big question mark over the fate of India’s outsourcing behemoths and their stock market valuations.

India’s outsourcing sector accounts for about a tenth of the country’s gross domestic product and more than a quarter of India’s top 15 listed companies by value. TCS, Infosys, HCL Technologies and Wipro together are worth more than all of India’s public sector banks, and all of the listed automakers and steelmakers. But history is in their favor. The Y2K event 20 years ago helped set the benchmarks for Indian technology from Tokyo to Toronto. The pandemic-triggered digitalization globally is expected to bolster revenues and profitability for Indian tech powerhouses that have a scale few on the planet can match.

Expert Speech: Raamdeo Agrawal, one of India’s best-known long-term wealth creators, wrote on the pages of ET after the Union Budget 2022-23 that tech remains one of its preferred choices, regardless of the national macroeconomic situation. “Budget or no budget, I remain very bullish on Indian IT,” Agrawal wrote. “Global digitalization is like another moment of the year 2000 for the sector.” (Read more)

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Quantum technology can add $310 billion to India’s economy by 2030: In India, sectors such as manufacturing, high tech, banking and defense are likely to lead the adoption of quantum technologies to critical and large-scale use cases, Nasscom says in a report. (Read more)

L&T in agreement with Microsoft for cloud solutions: the two companies will set up a joint governance group to define future platform designs, investments and commercial/business models to meet the emerging technological requirements of the regulated sector . (Read more)

Tech Mahindra partners with Yellow.ai: Through this partnership, the two companies will work to develop next-generation conversational AI solutions to elevate omnichannel capabilities. (Read more)

Global Choices We Read

Uber and its delivery rivals reveal closely guarded data to antitrust investigators (The Information)Facebook could shut down in the EU without a new data transfer agreement (Axios)They made millions on Luna, Solana and Polygon: the boom in Crypto Beyond Bitcoin (NYT) ETtech Today Morning Dispatch was hosted by Zaheer Merchant in Mumbai. Graphics and illustrations by Rahul Awasthi.

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