BharatPe appoints interim CFO; board, management aiming for IPO in 18-24 months: chairman

With founder Ashneer Grover and wife Madhuri Jain exiting BharatPe’s management following allegations of financial irregularities, the company is in search for a permanent CFO and Kumar said the process was in an “advanced stage”.

In an interview to ET, Kumar said the board, management, founders and chief executive Suhail Sameer were aligned on the company’s growth plan and wanted to take it public in the next 18-24 months, as the business continued to grow. The board will also be expanded with more independent directors in future, he said.

“As far as the company is concerned, the business is doing well, and numbers are good. Even for March, we are expecting that all the numbers will be very good. So, there is no impact on business,” he said. “On governance, we have put an interim CFO. We are recruiting a CFO; the process is on and there is a short list. Internal auditors — both a permanent employee and outsourcing of internal audits — that is being put in place. All of the policies are being reviewed,” Kumar said, adding that a final report on governance is expected to be submitted in the next few days.

The leaked contents of a purported interim report by A&M had mentioned the involvement of Jain and her brother in financial irregularities at the firm.

Kumar said over the next three months, there would be significant changes across processes as part of a comprehensive action plan.

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On March 2, BharatPe had said Grover and his family members were engaged in
extensive misappropriation of funds and siphoned money away from the company’s accounts and “grossly abused company expense accounts in order to enrich themselves and fund their lavish lifestyles”. Grover, who was managing director at the company,
sent his resignation letter to the board at midnight before BharatPe issued the statement.

Kumar told ET that there had been investor queries for funding the company. Despite the negative press, BharatPe’s valuation should be higher than the last valuation of $2.8 billion, he said, citing growth in its key businesses and stake in Unity Small Finance Bank as well as consumer lending business like PostPe as the reasons. He said BharatPe’s business model had never been an issue with investors and that it had adequate cash for now.

“Number of merchants, TPV (total payment value) are growing. I would expect valuation will definitely be higher despite all the negative attention in the media. There is interest, there are inquiries, people are willing to come and join to be part of the growth story,” Kumar said.

According to him he was not worried about BharatPe’s valuation or had any concerns.

“Whatever strategic tweak is required (in business), that will also be done. It’s an ongoing process. On IPO also, we are very clear in mind that we go with some positive numbers on profits. There is a path to profitability before you go for an IPO,” Kumar said, adding that the management and the board have a comprehensive plan in place for the IPO roadmap. “We know what to do.”

Even as it lays out the plan for taking BharatPe public, Grover has been the face of the company. Commenting on who will be the new face of the company, Kumar, a former chairman of State Bank of India, said BharatPe was not in the “film industry business” that it needed a face. The company needs to be evaluated based on business numbers like sales growth and profit, he said.

While startups early on can’t be expected to do everything right from Day 1, once they attain a certain scale and growth, governance can’t be ignored, he said. After the developments at BharatPe, governance issues have come out in firms like
social commerce startup Trell and real-estate
construction material startup Infra.Market.

He reiterated that BharatPe met the “fit and proper” criteria to be an investor in Unity Small Finance Bank and that there were no regulatory concerns on BharatPe itself.

“No individual is an investor from BharatPe’s side,” he said.

Grover’s Allegation on Kumar


Grover had attacked Kumar in one of his letters to the board in February, saying the
entire governance review was a “façade” and that it was “riddled with premeditation, bias and prejudice”.

Kumar
declined to respond to individual remarks during the interaction with ET. However, he said the implication that a founder inviting him to the board should not be seen as he was now obligated to the founder for the invite.

“Somebody has to approach me and talk to me to appoint me on any board. Tomorrow, Suhail Sameer wants someone to be on the board, he will go and talk but if expects that the person is ‘obligated’, then .. what are you trying to say,” Kumar asked. “The best way to deal with it is to maintain dignity and be silent. Let people evaluate.”