Info Edge invested Rs 288 crore in 4B Networks, of which Rs 276 crore was stock and Rs 12 crore was loan. In its Q3 FY23 financial statements, the business stated that it wiped down its stakes in 4B Networks owing to alleged financial irregularities.
Sanjeev Bikhchandani, co-founder of Info Edge, stated on Friday that the investment in 4B Networks, a proptech business formed by Rahul Yadav, was a mistake.
Bikhchandani told analysts after Info Edge announced its Q1 FY24 earnings, “Sometimes we make mistakes.” Investors make mistakes… 4B was a typo. I believe we must accept it. You can’t just write off Rs 288 crore and claim it wasn’t a mistake. “I made a mistake,” Bikhchandani said.
“Companies fail, but fraud is a different story,” he continued.
Info Edge invested Rs 288 crore in 4B Networks, of which Rs 276 crore was stock and Rs 12 crore was loan.
In its Q3 FY23 financial statements, the business stated that it wiped down its stakes in 4B Networks owing to alleged financial irregularities. Info Edge owned 57 percent of 4B Networks.
Info Edge has launched a forensic investigation on 4B Networks for failing to provide business information. It has also filed an application with the Delhi High Court and will begin arbitration with the company on August 14.
Bikhchandani stated that they had evaluated problems internally and determined whether anything needed to be changed, due diligence tightened, and so on.
After 4B Networks declined to divulge its financial information, Info Edge launched a forensic examination in June.
“What are the signals and indicators and red flags that emerge during conversations with founders where you know there may be a problem, how do we deal with other situations in case anything comes up — which thankfully has not happened yet,” Bikhchandani added.
Bikhchandani stated of investments from InfoEdge Ventures’ second fund, “We are finding it easier, the valuations are lower, the round sizes are smaller, and we are being careful.”
He also stated that the company’s board of directors met on Friday to explore actions to improve controls and manage risks related with its portfolio investments’ corporate governance.
On Friday, Info Edge reported that its consolidated revenue increased 14% to Rs 626 crore, while net profit decreased 50% to Rs 147 crore in the June quarter (Q1) of fiscal year 2023-2024, owing to weak billings growth of its recruiting platform Naukri due to a drop in IT sector job openings.
Billing for the June quarter fell by 0.2 percent year on year to Rs 523 crore, according to a regulatory filing on August 11.
The business turned a profit after a net loss of Rs 503 crore in the fourth quarter of FY23 as a result of several of its early-stage startup investments going wrong or seeing substantial declines in valuation, during a financial winter following the epidemic.
Revenue in the recruiting industry increased by 15.3 percent year on year in Q1 FY23, while revenue in the real estate business increased by 24.6 percent.
The company’s operational profit increased by 37.2 percent to Rs 208.9 crore on a standalone basis for the June quarter, compared to Rs 152.3 crore in the same quarter the previous year.
According to the corporation, the standalone business produced Rs 144.6 crore in cash from operations during the quarter.
