PB Fintech, the parent company of insurtech player Policybazaar, said the company has a history of losses, and its offline expansion as an insurance broker will mean more expenses for the company.
This was cited by the company as part of its risk factor in its draft red herring prospectus for its upcoming Rs 6000 crore IPO.
The company had a good fiscal, as it saw revenue from operations increase by 15.0percent, toRs 886 crore in FY2021 from 771 crore in FY2020, while losses halved to Rs 150 cr in Fy21.
However, the increase in the company's revenue from Policybazaar was partially offset by a decrease in the revenue from its lending platform Paisabazaar during the same period primarily due to the impact of the COVID-19 pandemic and related lockdown measures.
Strong FY21 for Policybazaar
Revenue from Insurance Web Aggregator Services increased by 17.6percent toRs 606 crore in Fiscal 2021 fromRs 515 crore in Fiscal 2020, driven by higher insurance commissions and outsourcing services fees earned from our Insurer Partners.
The company sold 7.2 million insurance policies in Fiscal 2021, up from 5.9 million in Fiscal 2020 resulting in an increase in premium toRs 4701 crore in Fiscal 2021 from Rs 3758 crore in Fiscal 2020.
Revenue from Other Services increased by 9.5percent toRs 279 in Fiscal 2021 fromRs 255 crore in Fiscal 2020 primarily due to the increase in revenue from online marketing services which was partially offset by a decrease in Paisabazaar's revenue.
As a result of the COVID-19 pandemic and government-mandated lockdowns and RBI moratorium on loan interest payments, Paisabazaar’s revenues were significantly reduced in the first two quarters of Fiscal 2021 due to constraints on its lending partners, the company said in the prospectus.
While there was some recovery in the third and the fourth quarter of Fiscal 2021, the loan disbursals sold by lending partners on Paisabazaar decreased toRs 2916 crore in Fiscal 2021 fromRs 6549 crore in Fiscal 2020.
Option grants to employees increases: PB Fintech's employee benefit expense increased by 6.4percent, toRs 554 crore in Fiscal 2021, primarily due to increase in employee share-based payment expense on account of additional grants of options in Fiscal 2021 as compared to Fiscal 2020.
Employee base falls: The expenses were partially offset by a decline in number of employees to 7,310 as of March 31, 2021 from 9,301 as of March 31, 2020.
Office rental costs fall: The company's depreciation and amortisation expense decreased by 12.5percent, primarily due to decrease in the total number of outstanding office leases in Fiscal 2021 from Fiscal 2020. In Fiscal 2021, the company said it reduced the number of physical offices and renegotiated the lease rentals for many of itsoffices to address the impact of COVID-19. The company's finance cost also decreased by 3.3percent, primarily due to decrease in theinterest on lease liabilities in FY2021, driven by shut down of some of the offices and renegotiation of lease rentals for many other offices.
Ad spend falls: Advertising and promotion expenses of the company decreased by 17.4percent, toRs 367 crore in Fiscal 2021, primarily due to reduced advertisement expenses relating to Paisabazaar as a result of constraints on lending partners
Risk Factors - "History Of Losses'
"We have a history of losses and we anticipate increased expenses in the future," the company said.
After ZOmato, Paytm and MObikwik, Policybazaar will be another loss-making IPO, with the company citing rising expenses as a risk factor, especially as
The company says it expects to continue to expend substantial financial and other resources on, among others, developing a physical channel and "investing behind experiments".
Policybazaaar last month received an insurance broker license from the regulator, allowing it to set up physical outlets for customer service.
"These efforts may be more costly than we expect and may not result in increased revenue or growth in our business. Any failure to increase our revenue sufficiently to keep pace with our investments and other expenses could prevent us from achieving or increasing profitability or positive cash flow on a consistent basis. If we are unable to successfully address these risks and challenges or if we are unable to generate adequate revenue growth and manage our expenses and cash flows, we may continue to incur significant losses in the future and our business, cash flows, financial condition and results of operations could be adversely affected," the company said.
First Published: IST