Media Matrix Worldwide and the Related Party Transactions maze

On CNBC-TV18's special segment Under The Lens, we bring to you Media Metrix Worldwide, a stock that was locked in an upper circuit on Tuesday, but remains 38% lower over the last 12 months.

Here's a look at what is behind the buzz surrounding the stock:

Media Matrix Worldwide is a B2B-focused technology and services provider, specializing in Value Added Services across the mobile and digital ecosystem.

It runs its business through two subsidiaries - NexG Devices Pvt Ltd, which handles procurement and distribution of mobile handsets for brands like Vivo, Xiaomi, Realme, Tecno and Ite and Media Matrix Enterprises Pvt. Ltd., which primarily invests in new and existing projects basically an investment arm.

The parent company has extended a corporate guarantee of ₹232 crore for NexG as of financial year 2025.

Here’s where things get interesting the scale of Related Party Transactions:

As per SEBI rules, any related party transaction crossing ₹1,000 crore or 10% of consolidated turnover needs shareholder approval. For financial year 2025, Media Matrix reported a revenue of ₹1,887 crore. That means any related party transaction above ₹188.7 crore needs to be cleared by shareholders.

However, according to its annual report, NexG's related party transactions with Infotel Business Solutions (IBSL) stood at over ₹430 crore. This includes sale of services worth ₹20 crore, goods worth ₹175 crore, purchases worth ₹195 crore. This, along with loans given and taken worth ₹20 crore each.

Look at the related party transactions of NexG with NexG Ventures (NVIPL), a similar structure to the one highlighted with IBSL, including sales and purchases of goods and services worth ₹230 crore, plus loans.

NexG with Madelin Enterprises and Media Matrix Enterprises (MMEPL) has a similar structure with more loans, followed by MMEPL with Infotel Access Enterprises (IAEPL), have transactions worth ₹270 crore each between them.

In the notes to account, Media Metrix Worldwide has marked ₹2,076 crore as sales to IAEPL, purchases from IBSL are worth ₹617 crore, while purchases from IAEPL are worth ₹6.5 crore. All of this, while the company's own reported revenue was ₹1,887 crore.

What About The Balance Sheet? Here, equity in NexG has been marked as ₹2,759 crore, equity in MMEPL is worth ₹2,103 crore, while debentures in MMEPL are valued at over ₹10,220 crore. All this, when cash flow from operations were at a negative ₹26 crore during the previous financial year.

The promoter group holds 59.3% stake at the end of the June quarter, and it’s clear that Media Matrix is operating more like a holding and funding company than an independent tech business.

Yes, related party transactions are common in conglomerates but here, the scale is massive. So massive, that the company’s revenues, costs, and loans are almost entirely intra-group.

For investors, the key question is this when almost the entire business runs within the promoter group itself, can minority shareholders really expect independent growth? Only time will tell.