Info Edge writes off Rs 186 Cr from startup investment portfolio for FY18

While the company posted a net profit for FY18, it categorised Rs 186 crore as written off/exited/provisioned in its startup investment portfolio.

If investments in startups are risky, then Info Edge India Limited lives with it. The company, which runs portals like Naukri.com, Jeevansathi, 99Acres.com and others, written off over Rs 100 crore in its startup investment portfolio over the last one year.

While the company posted a net profit for the financial year 2018, it categorised Rs 186 crore as written off/ exited/ provisioned in its startup investment portfolio for quarter ending March 31, 2018. The number had stood at Rs 83 crore as of January 30, 2017, thus taking the total written off amount in the company's startup portfolio over the last one year to more than Rs 100 crore.

Info Edge spokesperson, in an email reply, said, "If you compare our May 16 vs May 17 vs May 18 presentations, the write off before FY16-17 was Rs 36 crore which rose by Rs 79 crore in FY16-17 to reach Rs 115 crore by Mar 17, and then rose by Rs 71 crore in FY17-18 to Rs 186 crore by Mar 18."

The startups that played a role in taking this figure up for Info Edge are, primarily, Studyplaces Inc (Studyplaces.com), Ninety Nine Labels Pvt Ltd (www.99labels.com), Nogle Technologies Pvt Ltd (www.floost.com), Canvera Digital Technologies Pvt Ltd (www.canvera.com) Kinobeo Software Pvt Ltd (www.mydala.com), and Green Leaves Consumer Services Pvt Ltd (www.bigstylist.com).

Among its portfolio of active investee companies, Info Edge has Zomato, PolicyBazaar, Happily Unmarried, Gramophone and others in its basket. Recently, Info Edge partly sold its stake in Zomato for $50 million in a secondary share sale to Ant Financials, and diluted its stake in Zomato to about 31 percent post the fresh capital infusion. These active investee companies have helped Info Edge to cross-subsidise the cash burn it has incurred in loss-making startups.

Info Edge has not filed its annual report for FY18. The company, in its last annual report, stated, “There is a probability that this entire investment (in investee startups) might not generate returns, and absorb more cash in the incubation/early phase. These are calculated risks, which is part of the company’s growth strategy. Also, the reported equity holdings in the investee companies may not translate into an equivalent economic interest on account of the terms of investment including senior rights given to an investor or a group of investors or ESOP dilution.”

For the financial year 2017-18, Info Edge’s consolidated net profit stood at Rs 500.9 crore, as against a consolidated net loss of Rs 42.6 crore in the previous financial year. The total income for the company was up by about 11 percent at Rs 1,077 crore, as against Rs 970.4 crore in FY 2016-17 on a consolidated basis.

In a filing with BSE, Chintan Thakkar, CFO, Info Edge, said, “We have ended the year with a strong growth of 36.6 percent YoY in net cash from operations. It is encouraging to see the rebound of growth in 99acres.com in the second half of FY18. The billings of 99acres.com in Q3 and Q4 grew 54 percent and 43 percent, respectively, YoY with the cash break even.”

Startup investments are considered to be a high-risk activity, and many VCs and fund houses have burnt their fingers by investing in the ecosystem. Recently, State Bank of India, the country’s largest lender, said it has failed to park any investment from its Rs 50-crore fund, which was initiated to support Indian fintech companies.