Defunct ZestMoney's FY23 revenues grew 72.3% before shutting shop; bad debts surged 2.7X

Goldman Sachs-backed fintech lender ZestMoney faced mounting challenges, marked by a significant rise in expenses, particularly in bad debts.

Defunct ZestMoney's FY23 revenues grew 72.3% before shutting shop; bad debts surged 2.7X

Tuesday January 02, 2024,

3 min Read

Camden Town Technologies Pvt Ltd, the parent company of the defunct lender ZestMoney, reported a robust 72.3% increase in operating revenues to Rs 249.82 crore in FY23, driven by a surge in merchant commissions and technology usage charges.

In FY23, the fintech company generated Rs 26 crore in merchant commissions, reflecting a 2.8X increase compared to Rs 8 crore earned in FY22.

Additionally, income from technology usage charges grew 3.3X to Rs 43 crore in FY23 from Rs 13 crore in FY22. In April last year, ZestMoney had entered into an agreement with PhonePe, allowing the UPI app to use its technology stack and provide lending SaaS to NBFCs.

"The Company has entered into a one-time software licensing arrangement with a lender, providing co-ownership of its technology platform (intellectual property) for a licensing fee of Rs. 21,360 lakhs. The fee has been adjusted against a full and final settlement of the loan outstanding of Rs.14,800 lakhs and the balance amount has been received by the Company," it said in the financial earnings report.

Despite positive revenue trends, ZestMoney's parent observed a surge in expenses, reaching Rs 662.27 crore in FY23 from Rs 543.85 crore in FY22. Bad debts increased by 2.7X, reaching Rs 438 crore in FY23 from Rs 158.26 crore in FY22.

The company allocated Rs 71.55 crore for salaries, bonuses, and allowances in FY23, contributing to a total expenditure of Rs 93.39 crore on employee benefits. On December 5, the fintech company announced its decision to wind down operations and let go of its remaining 150 employees.

"The Company has made a severance payout of Rs.267.26 lakhs (Rs 2.68 crore) to 100 employees (representing two months of compensation) who have separated from the Company," the report noted.

Camden Town's losses saw a 3.4% increase, rising from Rs 398.82 crore in FY22 to Rs 412.44 crore in FY23.

The crisis at Zest Money started after the Reserve Bank of India barred non-bank institutions from loading credit lines into prepaid payment instruments, typically e-wallets.

The lender started crumbling after PhonePe called off the potential acquisition of ZestMoney for a sum ranging between $200-300 million. PhonePe decided to abandon the deal, citing concerns related to due diligence.

Lizzie Chapman, Priya Sharma, and Ashish Anantharaman, Co-founders of ZestMoney, officially resigned from the company in May last year, just a few weeks after the deal fell through.

Abhishek Sharma, former Head of Growth; Mandar Satpute, former Chief Banking Officer; and Mohit Chhajer, former Vice President of Finance and Financial Operations—all appointed from within the company—assumed leadership roles at ZestMoney in May this year.

Edited by Kanishk Singh