Shares of Paytm owner One97 Communications were gaining on Monday as the fintech major began layoffs as it deals with business disruptions since March this year.
What Happened: The company announced it is laying off an undisclosed number of employees as part of its restructuring plan announced by CEO Vijay Shekhar Sharma in May. The company said it will provide outplacement support for a smooth transition.
In a letter to shareholders in May, Sharma had said the firm would focus on its core businesses and improve cost efficiencies to create a leaner organisation, hinting at the likelihood of layoffs in the future.
Sharma said the employee costs of the firm have risen significantly over the years because of their investments in tech and financial services. While investments will continue, the firm will also take steps to cut employee costs, Sharma said, adding that these measures could save up to ₹400 crore-₹500 crore annually.
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Lingering Hit: The fintech firm’s sales employee headcount in the March 2024 quarter fell by about 3,500 to 36,521 personnel on a quarter-on-quarter basis, mainly due to the impact of the Reserve Bank of India's ban on services of Paytm Payments Bank.
The company statement said that its human resource teams are actively coordinating with over 30 firms that are currently hiring and are providing assistance to employees who have opted to share their information, facilitating their immediate outplacement. Paytm will also pay bonuses due to employees, it said.
However, Paytm did not disclose the number of employees affected by the restructuring.
The Reserve Bank of India (RBI) had barred Paytm Payments Bank Limited (PPBL), an associate of Paytm, from accepting deposits, credit transactions, or top-ups in any customer accounts, wallets and FASTags, keeping in view the interest of customers, including merchants, from March 15 onwards.
Price Action: Shares of Paytm were up 3.68% at ₹395.35 in afternoon trade on Monday. The stock has dropped nearly 40% since the start of the year.
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