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Writer's pictureRISHI KORDE

ZestMoney, facing challenges, records a loss of INR 412 crore in the fiscal year 2022-23.




Struggling buy now, pay later (BNPL) startup ZestMoney reported a net loss of INR 412.4 Cr for the fiscal year ending March 31, 2023, representing a slight increase of 3% from the INR 398.8 Cr loss reported in FY22. Despite a 76% growth in revenue from operations to INR 243.7 Cr, the startup is grappling with challenges, and its future appears uncertain.

ZestMoney, founded in 2015 by Lizzie Chapman, Priya Sharma, and Ashish Anantharaman, collaborates with non-banking finance companies (NBFCs) to offer loans to retail customers. The company is reportedly on the verge of closure.

Total revenue, including other income, experienced a 72% rise to INR 249.8 Cr during the reviewed year, up from INR 145 Cr in the preceding fiscal year.

Expenditures for ZestMoney increased by 22% to INR 662.2 Cr in FY23 compared to INR 543.8 Cr in FY22. Service deficiency charges, accounting for 26.4% of expenses at INR 175.2 Cr, decreased by 25%. Marketing and advertising expenses surged by 69% to INR 165 Cr, constituting nearly 68% of the operating revenue. Employee benefit expenses rose by 40% to INR 130.4 Cr.

At the unit economics level, ZestMoney spent INR 2.7 to earn every rupee in FY23. As of March 31, 2023, the startup's bank balance was INR 20.3 Cr, with approximately INR 50 Lakh in cash and cash equivalents, and the remainder in short-term FD serving as securities for loans.

ZestMoney, once a prominent player in the BNPL sector, faced a downturn after negotiations with Walmart-backed PhonePe for acquisition fell through due to issues related to due diligence, valuation, and shareholding structure. Following this, all three co-founders left the company, leading to layoffs of over 30% of the workforce. Prosus, a major backer, wrote off its $38 Mn investment in ZestMoney.

The startup defaulted on payments of around INR 25 Cr to a financial institution and debenture holders, including Alterica Capital Fund, Trifecta Capital Fund, Ghalla & Bhansali Securities Pvt Ltd. Reports suggest that DMI Finance and Aditya Birla Finance are in talks for a potential firesale acquisition of ZestMoney.


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