Investors of MapMyIndia continue to dump shares, sending it lower by another 5% in early trade on December 3 and inviting strong reactions over its decision to hive off the B2C segment.
The new venture will be run by Rohan Verma, the current CEO and Executive Director at MapMyIndia (CE Info Systems), with the company taking a 10% stake in the new entity and providing an additional funding of Rs 35 crore via a CCD, stock exchanges were informed on Monday.
However, several market participants criticised the decision, with Ambareesh Baliga asking on social media platform X if the decision is 'shortchanging' the shareholders? "Another shocking example of using public co for private gains - B2C business shud have been a subsidiary of MapMyIndia instead of shortchanging the public shareholders? Investors are sure to dump this stock - Will Independent Directors be mute spectators?"
Money manager Sanjay Dutt too pointed out that the decision is a 'related-party transaction' involving shareholder funds.
Cumulatively, shares of MapMyIndia are down close to 10% in two trading session. The company's market capitalisation has fallen to around Rs 8,700 crore, and the shares are down 18% YTD to lowest level in over a year.
CEO Rohan Verma will be relinquishing all executive responsibilities in CE Info Systems and continue on the board as a non-executive Director from April 2025, in an effort to promote 'strategic initiatives'.
"MapmyIndia will continue to focus on its core B2B and B2B2C business, which has a large and growing addressable market, and where MapmyIndia is the market leader with a strong track record of growth and profitability," Rakesh Verma, co-founder and CMD, MapmyIndia has said earlier this month after the earnings call.
The company has been aggressively advertising as well as ramping up cloud infrastructure to amplify its consumer business over the last one year. In the last 1-2 years, it reached from 10 million to almost 28 million downloads, largely supported by advertising and marketing expense, and increasing cloud expenses.
During the September quarter earnings call, co-founder Rakesh Verma had said the company plans to ramp up Mappls app download in the next year, "We are constantly experimenting, but our goal for the next 1 year is to focus on increasing the Mappls App downloads. The other things are on the side people are experimenting with. And good things will come out of it. So there could be like in-app advertising, the Mappls Gadgets are there, which you can go on an online subscription, commission income from travel expenses. These are some of the ways that consumer businesses can think of monetizing the Mappls App."
"...here is the dilemma that we tried to address in our Board meeting today. And we had a 1.5-hour long discussion, and the Board felt very comfortable to tell us that we have the cash in our
company, so we should go ahead with it and do our best to see that the consumer Mappls App grows as fast as possible," Rakesh Verma had told analysts after the earnings call.
During the September quarter, MapMyIndia parent CE Info Systems reported 8.2% on-year decline in consolidated net profit to Rs 30.33 crore, while the EBITDA fell by 7.5% YoY to Rs 37.5 crore. The EBITDA margin reduced to 36.1% in Q2FY25 as against 44.5% in the year-ago period. Despite a strong growth in top line, the operating margin was hit due to investments in the consumer business.
The management had said the fall in EBITDA is because the company is chasing growth 'for the future', and it will 'help us in FY27-28 and beyond' as it builds the business.
The new company will be using MapmyIndia’s retail brand Mappls, and the company will continue to have access to the same. Rohan Verma will hold 90% stake in the new company while the balance 10% will be with MapmyIndia.
The CCD will convert to equity either after 10 years or at a 25 percent discount to any 3rd party valuation of new company, whichever is earlier, the company said, adding that the terms have been approved by the board. Future capital requirement will be taken up by the MapmyIndia board at an appropriate time, it added.
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