MapMyIndia CEO Rohan Verma to step down, float new venture: 6 key things investors should know | Stock Market News
Source: Live Mint
Bengaluru-based digital maps startup MapMyIndia’s parent company, C.E. Info Systems Ltd, announced in an exchange filing on November 29 that the company’s chief executive officer, Rohan Verma, would step down and start a new business-to-consumer (B2C) venture.
C.E. Info Systems Ltd shares closed 8.92 per cent lower at ₹1,538.65 in Tuesday’s trading session, compared to ₹1,689.30 at the previous close. The shares have been falling since the markets opened on Monday after the CEO’s stepping down announcement became public. Mint reported earlier that the shares closed 3.5 per cent lower on Monday.
Here are six key things investors should know
Regulatory requirement: As per the regulatory requirements, Rohan Verma needs to forfeit all executive role responsibilities in MapMyIndia. Verma will be able to stay on the company’s board as a Non-Executive Director, effective April 1, 2025, according to the exchange filing.
Stakeholding: MapMyIndia will invest ₹35 crore via compulsory convertible debentures (CCDs) in exchange for a 10 per cent stake in Rohan Verma’s new B2C venture. The remaining 90 per cent stake will be owned by Verma.
The CCDs will be converted into equity shares either after 10 years or at a 25 per cent discount to any third-party valuation of the new entity, whichever is earlier.
Restructuring: The new B2C entity will use MapMyIndia’s retail brand, Mappls, whereas MapMyIndia will continue to use the brands of its B2B2C and B2G2C offerings.
Mappls Mall and Travel will soon be transferred to the new company along with Mappls gadgets for the consumers and will be marketed through D2C or e-commerce channels.
Autonomy: According to the exchange filing, MapMyIndia will have access to the anonymized data collected by the Mappls app to improve the company’s map data. The newly formed entity will operate as an independent one and bear all the expenses related to the business, people costs, marketing costs, and cloud costs.
New B2C business: Verma’s new B2C business aims to showcase MapMyIndia’s core strengths of the B2B and the B2B2C segments. While doing so, the new entity has assured MapMyIndia investors that it will focus on its own B2C segment, as per the statement.
“The proposed consumer business will complement and showcase MapMyIndia’s core market strength of B2B and B2B2C while focusing exclusively on the B2C segment,” Rakesh Verma, chairman and managing director of MapMyIndia, noted in an official statement on December 1.
Disclosures: The company also disclosed that MapMyIndia founders Rakesh Verma and Rashmi Verma will not be part of the new venture. This gives Rohan Verma the chance to “concentrate his energies on building the B2C business,” as per the BSE filing.
The company also said, “The consumer business which is a cash consuming business will not affect MapMyIndia’s books since MapMyIndia will be a minority stakeholder in the newly formed, independent entity.”
Analysts Opinion
Mint reported earlier that analysts expressed concerns over minority shareholders getting a raw deal because of this transaction.
“On the face of it, this looks like the shareholders of MapMyIndia are taking all the risks with limited upside in the form of their equity stake in the new company. The best way would have been to start as a 100% subsidiary and then get external validation so that the whole value creation would reside with the shareholders of MapMyIndia. The CEO could have been compensated with performance-based stock options,” V. Balakrishnan, a former chief financial officer at Infosys Ltd and founder of Exfinity Ventures, a venture capital fund, told Mint.
As this is a related-party transaction, the board and the audit committee should tell shareholders the potential of the new business, he said.
“MapMyIndia is funding ₹35 crore through CCDs, which is less than 10 per cent of the company’s revenue of ₹379.4 crore; this transaction would not need approval from MapMyIndia’s minority shareholders,” Verma earlier told Mint after stating that the consumer business was becoming a “distraction.”
Two proxy advisory firms also questioned the transaction, as per the earlier report.
Disclaimer: The views and recommendations above are those of individual analysts, experts, and brokerage firms, not Mint. We advise investors to consult certified experts before making any investment decisions.
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