MapmyIndia Shelves Rs 35 Crore Investment Plan Amid Investor Concerns Over B2C Venture

CE Info Systems, known for its MapmyIndia brand, has decided not to proceed with a Rs 35 crore investment in a new B2C venture. This venture was to be led by CEO Rohan Verma. The company's board had initially approved this plan on November 29. However, concerns from minority shareholders prompted a reevaluation of the investment strategy.

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Despite the change in plans, MapmyIndia will still acquire a 10% equity stake in the new company. Rohan Verma confirmed this on Tuesday. He will hold the remaining 90% stake and step down from his executive role at CE Info Systems by April 1, 2025. However, he will remain on the board as a non-executive director.

Investment Concerns and Shareholder Reactions

The decision to form the new venture was made after considering various regulatory and financial factors. Rakesh Verma, co-founder and Chairman & Managing Director of MapmyIndia, explained this during an investor call. The absence of a royalty agreement for using the Mappls app in the new venture raised questions among investors. The management stated that such an agreement would be considered after five years.

Investors expressed concerns about the transparency and fairness of the agreement between MapmyIndia and the proposed venture. An investor representative highlighted that the terms were not favourable for minority investors. These concerns were echoed by other investors during discussions.

Financial Performance and Stake Distribution

Rohan Verma and his family collectively own 51.67% of MapmyIndia, with his father, Rakesh Verma, holding 41.66%. The board had previously approved acquiring a 10% stake in the new venture for Rs 10 lakh, valuing it at Rs 1 crore. Additionally, they had sanctioned Rs 35 crore through Compulsorily Convertible Debentures (CCDs) for further funding.

The proposed entity aimed to offer a retail version of the Mappls app. Despite shelving the investment plan, MapmyIndia's financial performance remains strong. The company reported a consolidated profit of Rs 30.35 crore for Q2 ending September 2024 and Rs 134.38 crore for the fiscal year 2023-24.

This strategic shift reflects CE Info Systems' response to shareholder feedback while maintaining its focus on growth opportunities through innovative ventures.