SUMMARY
This consists of INR 80.77 Cr for net assets, INR 12.32 Cr for ICD (Inter-corporate deposits) given and reduced by Non-Controlling Interest payable of INR 2,80.27 Cr
While Info Edge’s cash infusion in the startup stood at INR 288 Cr, the rest is the notional loss from a higher valuation that the startup commanded earlier
The company has cited reasons such as excessive cash burn, prevailing liquidity issues and significant uncertainty towards funding options as the reason for write-off
Internet giant Info Edge has written off a total loss of INR 532.25 Cr in Rahul Yadav’s proptech startup 4B Networks in Q2 FY23. Info Edge had invested in the company via its partly owned subsidiary Allcheckdeals India Pvt Ltd.
This consists of INR 80.77 Cr for net assets, INR 12.32 Cr for ICD (Inter-corporate deposits) given and reduced by Non-Controlling Interest payable of INR 2,80.27 Cr, as per Indian accounting standards (IND AS), as mentioned in the filing with Ministry Of Corporate Affairs.
While Info Edge’s cash infusion in the startup stood at INR 288 Cr, the rest is the notional loss from a higher valuation than the startup commanded earlier. The startup had a valuation of INR 719 Cr, mentioned as Goodwill in the MCA filing before Info Edge had to write down its entire investment made through its wholly owned subsidiary ALLcheckdeals India.
The company has cited reasons such as excessive cash burn, prevailing liquidity issues and significant uncertainty towards funding options as the reason for write-off.
“The Company continues to explore various options in best interest of stakeholders and will re-evaluate such position, if and when underlying assumptions relating to survival and sustainability of investee company,” as mentioned in Info Edge’s Q2 FY23 financial statement.
To be noted, Info Edge had returned to black in the previous quarter after reporting a net loss of INR 503.2 Cr in the March quarter of FY23 amid write-off of investment in Rahul Yadav’s 4B Networks and Bijnis.
The internet giant reported a consolidated net profit of INR 239.7 Cr in the September quarter (Q2) of the financial year 2023-24 (FY24), a jump of 155.3% from INR 93.9 Cr in the year-ago quarter helped by cost control measures and growth in two verticals – Naukri.com and 99acres.com.
In May 2022, Info Edge acquired a majority stake in 4B Networks, investing INR 137 Cr in the Mumbai-based startup and increasing its stake to 57.16% on a fully diluted basis. Overall, it has invested about INR 280 Cr+ and holds over 65% stake in the company.
4B Networks, which was incorporated in November 2020, is engaged in the business of enabling real estate developers and brokers to communicate with each other and conduct their business via the Broker Network Platform.
In the past few months, several criminal complaints have been filed against Yadav and others at the company. In October this year, Info Edge also filed a complaint with the Economic Offences Wing (EOW) of Mumbai Police against Broker Network founder and former Housing.com cofounder Rahul Yadav over alleged cheating to the tune of INR 288 Cr.
These are currently being investigated by Mumbai Police as well as other law enforcement authorities (more on these later). An earlier deep dive by Inc42 into Yadav’s fifth startup 4B Networks suggested that the startup is on the brink of collapse.
