MapMyIndia Will Not Invest In Rohan Verma's Upcoming B2C Venture: Chairman Rakesh Verma

MapMyIndia's parent firm, CE Info Systems Ltd., is not going to invest Rs 35 crore, in its outgoing Chief Executive Officer and Executive Director Rohan Verma's new consumer focused venture, said Co-founder and Chairman Rakesh Verma said. The board has approved the fund infusion for this purpose earlier.

Rakesh Verma's clarification comes after Rohan Verma announced he would step down as the chief executive officer and wholetime director of the company, on Nov. 29. Rohan will, however, continue as a non-executive director of the company.

Earlier MapMyIndia announced the approval of its board of directors to invest Rs 35 crore through Compulsorily Convertible Debentures in the new business-to-consumer company, being set up by Rohan Verma.

The company changed its plans to invest the money and will not make any investments in the new venture, Rakesh Verma, told NDTV Profit.

“MapMyIndia was also planning to invest Rs 35 crore of CCD money into that company. Having heard the street yesterday, Rohan Verma has decided not to take any money from MapMyIndia,” he clarified.

However, MapMyIndia will continue to hold a 10% stake in the upcoming B2C venture.

“Rohan has a desire to build a consumer business and for that purpose, he wanted to float a new company, in which, MapMyIndia is taking a 10% stake for Rs 10 lakh,” said Rakesh Verma, who is also the managing director of MapMyIndia.

Revealing the reason behind his decision, Rohan Verma said he created a separate company to focus on the B2C business.

“MapMyIndia is a B2B and B2B2C company and enjoys a strong profit margin and Ebitda margin and is also growing. The addressable market is also very large in the B2B space and MapMyIndia is a leader in that,” he said.

“For that trajectory to continue uninhibited without any drag, not doing consumer business in the company, whether as a vertical, subsidiary or even as an associate, is important for the company's discipline. Because I have a desire to do consumer business, it is better to do it outside. I will be putting my own funds to do this business,” the outgoing CEO added.

In the previous quarter the company witnessed a margin drag of 4-5%, and it would have further gone down with the continuing of the consumer business, Rakesh Verma said.

“The expenses in a consumer business are unlimited, so the drag will go away and a normal margin will come back. The impact of that will happen from the Q4 itself,” he said, explaining the reason behind separating the consumer business.

Shares of MapMyIndia's parent CE Info Systems Ltd. opened flat at Rs 1,538 apiece on the NSE on Wednesday, before dropping to Rs 1,513. The counter was trading 0.04% down at Rs 1,537.50 as of 09:23 a.m. In comparison, benchmark Nifty 50 was 0.15% higher at 24,493.75 points.