The management of CE Info Systems, the parent entity of MapMyIndia brand has said that they will not be utilising any of the company's funds for the new consumer business that has been set up, and instead, the hived off B2C segment will be run using the promoter's 'own funds'.
However, shares of CE Info Systems continue to face selling pressure, lower by over 8% in trade on December 3 to slip below its listing price, as investors continue remain apprehensive about the business impact of the decision to hive off the consumer business.
In conversation with CNBC-TV18 on December 3, MapMyIndia clarified that after deliberations with minority shareholders, the new entity company will not take the Rs 35 crore investment offer through CCDs as additional funds.
"We've heard the concerns of minority shareholders over the last few days, and for that reason, I am not going to be taking this CCD money from MapMyIndia. I will put in my own funds to run this consumer business. I hope that allays the concerns that people have," Rohan Verma, the current CEO and Executive Director at MapMyIndia (CE Info Systems) said.
"Everything we have done is in the interest of MapMyIndia. Its a good B2B company with a large addressable market, growing, profitable already. So, that trajectory should continue," he added.
Regarding the 10% equity in the new entity, the management said MapMyIndia is getting 10% share in the new consumer business only for Rs 10 lakh, and both companies will be able to use the Maapls brands. "Its a way to show how much conviction we have, and MapMyIndia gets the benefit of being a 10% shareholder in the company." Rohan Verma said he intends to take on Google Maps through the consumer facing entity, which he will be focusing on.
Rakesh Verma, co-founder and CMD, CE Info Systems added the brand Mappls will be used by both B2C as well as B2B and B2B2C entities for five years at no additional royalty.
Shares of the map company have been under selling pressure after the management's decision to hive off the consumer business to be run by the founder's son, who will step down from executive role by April next year. Several market participants criticised the decision raising questions whether the decision was 'shortchanging' the shareholders.
Co-founder and CMD Rakesh Verma added that CE Info Systems' B2C business will still have an annual cash burn rate of Rs 30 crore, which will continue to increase.
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