PhonePe Founder Seeks Domicile Regulations Reform After Rs 8,000 Crore Tax Hit
The company is also set to make an accumulated loss of Rs 7,300 crore by the end of this fiscal.
There are over 20 unicorns who are vying to move their businesses to India if the local laws around it are tweaked to ease the process, according to Sameer Nigam, founder of PhonePe.
"We have almost 20 unicorns who have reached out to us about how can we make this easier," Nigam said, in a YouTube live session. They are in talks with the government to make it easier for the businesses to move back domicile to India, he said.
Underscoring the obstacles, he said that the digital payments provider's investors have paid almost Rs 8,000 crore in taxes following the company's domicile move from Singapore to India that was completed last month.
The company is also set to make an accumulated loss of $900 million (Rs 7,300 crore) by the end of the fiscal, an amount that could have been offset against future profit.
"That is a very stiff shock if the business is not yet at maturity and is few years away from an IPO," Nigam said.
During the move, the company's employees lost all incentives that were given to them through Employee Stock Ownership Plan as the vesting period gets reset.
"Another challenge was to convince several thousands of employees that their ESOPs are back to zero vesting at a one-year cliff because the law in India says if you migrate to an ESOP plan, you still have to start with a new one-year cliff. I think that the law needs to change. It is not progressive. It is disincentivising India-focused, India-based startups from changing domicile," Nigam said.
However, it worked out for the company as PhonePe has "very long-term investors like Walmart, Tencent and other balance sheet investors who can take a multi-decade view", he said.
PhonePe's public listing is still "a few years away", Nigam said, without disclosing the specifics.
Learning from the initial public offerings in 2021, Nigam said that the Indian markets will take "a while before it can appreciate" pre-profit listings at a significant valuation.
Besides profitability, PhonePe is also aiming to scale and diversify its business before it decides to list on the Indian bourses, he said.