Business Tantra

The BharatPe board has initiated an independent audit at the company. Has the board informed you about what exactly they are looking at?

I have been informed that there is a corporate governance review by the board, which is an all-encompassing thing. Personally I am not aware of any audit, or anything for which an audit needs to be done.

Just to be clear about the facts, BharatPe as a company is audited by one of the ‘big four’. We have Deloitte as our auditors. Till FY21, our audits have been complete and have been taken on board by the board already. We have raised money across five rounds from institutional investors and all of them have done their due diligence at the point of putting money. So in addition to the annual audit we have also been subjected to diligence every six months.

In addition to this, I have also been the CFO at Grofers and I have done a lot many diligence on companies before as an investment banker as well. I have always put the highest governance standards in the company.

Even if you look at our board, it is the only fintech board which has two ex-chairmen of two public sector banks, Mr Rajnish Kumar from State Bank of India and Mr Kewal Handa from Union Bank as independent board members on the board as well. Even though we are not required to, going beyond the standards of even a listed company, all our financials are reported by the fifth of the following month, every month. So from an overall governance perspective, we can comfortably say that we are following the highest forms of governance, even though we are not required to.

Through all of these audits that you have spoken of, were there any corporate governance concerns or related party issues raised or discussed at the board level?

Absolutely not. There has never been any instance of this nature which has been discussed at any level of detail.

If you look at us as a business, leave aside all this audit and stuff, our Series-E, which we priced in May 2021 and closed in July-August, valued us at $3 billion. At the close of that round, we had cumulatively raised $615 million. Even as on date, out of that $615 million, we would have spent $150 million-odd.

Why am I reiterating this? Because if you look at it commercially, you will not find, across sectors, including fintech, any player which has been valued at $3 billion plus, and has spent less than $150 million.

As of date we would have $465 million cash in hand and out of that $465 million, $365 million is within BharatPe itself and another $100 million is with Unity Small Finance Bank as pure cash.

I just want to put this on record that not only have we been extremely successful as a business, almost a dream run, we have also done it at a previously unknown and undelivered, low level of cash burn. I urge you to check these facts with anyone.

My belief is that the company is worth at least $6 billion, because from the last round (of fund raising) our business is up 50%, we have got the bank license, we have got PMC (Punjab & Maharashtra Cooperative Bank) merged in to the bank license. We have also launched two new products since the last round. One is the 12% club which is the largest P2P (peer-to-peer) platform in the country now and the other is Postpe, which is already in the top three BNPL (buy now pay later) plays in the country now.

Q: Among the allegations being looked into is that of inflated invoices from merchants working with BharatPe and related party transactions. What’s your response?

Since the beginning of this year, I have been put through a lot of allegations, right? None of them have ever stuck.

Let’s start with the Kotak thing, which was absolutely blown out of proportion. I saw news articles being written, me getting crucified for no rhyme and reason. Eventually what happened? No one complained, neither the bank nor any individual. No one claimed the audio, nothing came out of it. It’s like taking a non-issue and just making noise around it, just hoping something sticks.

Q: Kotak Mahindra Bank did put out a statement specifically talking about inappropriate language used by you. So it’s not like they haven’t said anything.

No, no, no. Here’s the thing. That’s what Kotak said. My point is that people linked that fake audio and the misappropriate language that they quoted as being “rude” and then saying that “Oh, this is that call”. So I am saying people have also jumped to conclusions. I would also urge you to go back and read it, it said that we will take appropriate legal recourse, right? What’s happened? So you can’t just pick up selectively what the other person is saying and not in its entirety.

In any case, my limited point is, and this is something I have been telling people as well, see I am out there, I am on Shark Tank everyday. I have been out there for 33 episodes. People see me and know how consistently I act. I am an extremely introverted person, I am shy. I don’t socialise, I don’t drink, I don’t smoke and therefore it becomes very, very easy for anyone to paint a narrative about me, because there is not much of a narrative of me coming from my side.

Q: You are maintaining that the audio was fake, but you did send that notice. Do you regret that because that sort of escalated this situation? Or do you believe there is legal merit in you questioning the lack of allocation?

I think on that matter I have been extremely, extremely clear. I had applied for two IPOs (initial public offering) before that, one was Zomato and the other was CarTrade. This was the third IPO (FSN E-commerce) I was applying for. Same process was followed, same relationship manager. On the date of the IPO, the relationship manager misrepresented to me and I have that on whatsApp as a conversation.

Q: And that is not the conversation that was put out on social media. Is that what you are saying?

I don’t know what was put out on social media. But let me just complete. My real conversation with my relationship manager, he misrepresented to me that Kotak (Group) was not financing the IPOs or was not arranging financing for their IPOs at that point of time, especially Nykaa. I checked with the market and they said “No, we have got the financing and they are financing”. So I reached back to them and then they became incommunicado and they also stalled me from speaking to their seniors. So I was not listened to and so I asked my general counsel to send a notice saying that this has been promised, I have signed the documents and now I am being told this. So please arrange it, else I will have the option of seeking damages.

Now the relationship manager got caught on the wrong foot, because he had told me a lie that Kotak was not financing, which was not the case. So to protect himself he said that “Oh yeah, but Mr Grover spoke to me rudely”. That’s what is the response that came from them. So it was an act of self protection from the RM (relationship manager), and I replied to that response saying what stupidity is this? I am the aggrieved party here and you are acting like an aggrieved party. Nov. 8, I sent the final notice saying I deny everything that is being said by your relationship manager. And that was the end of it because I was clear that I am not here to make money off Kotak or seek damages.

Q: Allegations have also been raised about your acquisition of Payback India. You were part of American Express, years before you started BharatPe. The CEO of Payback India was hired at BharatPe just months before you acquired Payback India. The allegations seem to suggest that not everything was kosher with that deal. What would you say to that?

It is a figment of someone’s wild imagination. Let me give you numbers. Payback India was a company that was bought at an equity valuation of $8 million. The company had about $10 million cash in hand, so $18 million was what we paid for the acquisition, but essentially $8 million. The company has a $25 million topline and $2 million profit after tax. Of all the people who are saying anything, I challenge them to find a single loyalty company with a $25 million topline and a $2 million profit after tax, which we can buy at $8 million and I will be happy to put personal money to buy it.

Look at the numbers, right? I think someone should be putting a medal on my chest for swinging that deal. I knew Amex was keen on getting out of that business and that’s why I could swing such a good deal. That business will give 100 million credit worthy customers, which forms a great base for our product Postpe.

Q: But has that 100 million customer base translated into a base for Postpe?

No it’s work in progress. But in just three months of launch, we have 2.5 million downloads on Postpe. On a monthly basis we are disbursing $40 million out.

We understand that the Articles of Association of Bharatpe allow the board to buyback shares owned by a founder, if an event of fraud is proven. Is this why you have hired legal counsel?

A: I think it is unfortunate that terms like fraud are being used. But I am not surprised anymore because so much has been thrown at me previously, I think the only two things which are yet to be thrown at me are murder and other serious crimes. Which is fine, I will let the press have a field day writing whatever they want to write.

I think a lot has been read into the Articles of Association. I would urge you to pick up any company’s Articles of Association, they are all the same. It’s the same set of lawyers drafting the SHAs (shareholder agreements) for everyone. There is no merit in reading into all this.

I think with respect to my lawyers, I am very, very clear as a person. If someone wants to have a straight conversation with me, I am more than capable of having a very, very simple and straight communication, with 10-11-12 heavy weights in the same room. I don’t get fazed, I have a very strong spine. But if in a conversation lawyers are brought in, then I will also bring in my lawyers.

I have never had a single complaint against me, I have never had an FIR (first information report) against me. I have never been part of any personal litigation ever. I am not a litigative person at all. Having said that if someone litigates against me, I have a 100% track record of defending myself.