India will play a critical role in the evolution of the global app ecosystem in the coming decade, a Google Play executive has said.
“From leading in-app adoptions to emerging as a large global developer hub, India will play a critical role in the evolution of the global app ecosystem in the coming decade,” Google Play Partnership’s director Aditya Swamy said on Thursday (August 18).
He made the comments while celebrating the app marketplace’s ten years of operations.
“India is today uniquely positioned to become a leading hub for global app innovation and there is tremendous potential for Indian startups across the country – regardless of size and geography – to thrive in the global app ecosystem,” said Swamy.
Swamy also said that the tech giant will continue to invest in local initiatives to solve local challenges.
“…we will continue to invest in initiatives that enable a diverse range of developers to build helpful apps and successful businesses on Play,” he added.
Besides, Google Play also said that Indian apps and games saw a 200% increase in active monthly users and an 80% increase in consumers spends on Play Store in 2021 as compared to 2019. Apart from that, users outside the country also spent 150% more time on Indian apps in 2021 compared to 2019.
The executive also said that the company is ‘committed to India’s thriving app and developer ecosystem’ and to build a local and helpful Play for India.
“We will continue to bring the best of our global experience and innovation to India, while staying focused on solving for local opportunities and challenges”, added Swamy.
The app marketplace also said that it aims to enable developers to reach 2.5 Bn monthly active users in 190 countries across the globe on Google Play Store.
The tech giant also claimed that it scans more than 125 Bn apps per day to protect users from abusive or malicious apps, and has trained more than 80,000 developers in India at its Play Academy since 2018, the highest in the world.
Google Play Store was launched in 2012 with the merger of Android Market, Google Music and Google eBookStore. The app marketplace caters to the 95.1% of the Indian audience which owns an Android phone and allows users to download apps directly.
Of late, the app marketplace has been facing some peculiar challenges in India. Considering its stranglehold over the Indian markets, it has been in the line of fire for alleged market dominance.
In March this year, the Competition Commission of India (CCI) termed Play Store’s billing policy ‘unfair’ and ‘discriminatory.’ The app marketplace has also been in the dock for allegedly suppressing products of competitors and promoting its own products, and charging hefty amounts from developers and forcing its payments systems on developers.
According to an Inc42 report, India had the second-highest app downloads in the world, with more than 27 Bn downloads in 2021.
The Reserve Bank of India (RBI) on Thursday (August 18) slapped a fine of INR 5.93 Lakh on fintech firm Obopay Mobile Technology for non-compliance with the central bank’s rules.
The fine was imposed for not following certain provisions of master directions related to prepaid payment instruments (PPIs) and know your customer (KYC).
“The RBI has imposed monetary penalty of INR 5,93,000/- on Obopay Mobile Technology India Private Limited for non-compliance with certain provisions of the Master Directions on PPIs dated August 27, 2021 and the Master Direction – KYC Direction, 2016 dated February 25, 2016,” the RBI said in a release.
The penalty was imposed under Section 30 of the Payment and Settlement Systems Act, 2007.
The RBI issued a show-cause notice to the fintech firm after the central bank observed certain lacunae with regards to KYC compliance. Accordingly, Obopay made its case before the central bank.
“After considering the entity’s response, RBI concluded that the aforesaid charge of non-compliance with RBI directions was substantiated and warranted imposition of monetary penalty,” the statement said.
The central bank also added that the action was initiated based on deficiencies in regulatory compliance and was not intended to pronounce upon the validity of any transaction or agreement entered into by the entity with its customers.
The last few months have seen the central bank step up regulatory actions for the fintech sector. In June, the RBI barred non-bank fintech players from loading their PPIs with credit lines.
Earlier this month, the central bank also released its first set of guidelines for digital lending to put in place adequate risk management controls to increase customer confidence and resolute the space.
This comes weeks after another fintech player Jupiter Capital was fined INR 82 Lakh for breach of norms on submission of credit information. Last month, the central bank also slapped a fine of INR 1.67 Cr on Ola Financial Services for non-compliance with KYC guidelines.
The Centre is reportedly mulling legislation to regulate data collection and data usage policies of big tech companies.
As part of the process, the government has kicked off inter-ministerial dialogue for consultations on the matter and to chart the next course of action.
Sources privy to the development told Mint that the talks saw participation by the Ministry of Corporate Affairs, the Ministry of Electronics and Information Technology, and the Competition Commission of India (CCI).
Among the proposals discussed at the meeting was a suggestion to formulate a new Digital Markets Act to govern business practices including data collection and usage by tech giants. Besides this, the panel also proposed to introduce certain guidelines in the Competition Act itself to address concerns surrounding the new-age digital companies.
The authorities are also looking at global best practices to form a consensus, the report said.
This comes amid concerns over alleged use of data by big tech firms for stifling competition in the market. The issue gathered further steam after the Parliamentary Standing Committee on Commerce in a report on ‘Promotion and Regulation of E-Commerce in India’ called for strengthening its ‘ex-ante’ approach to regulate competition in the space, as against the ‘ex-post’ model in vogue currently.
Essentially, in the ex-post model, the norm is that regulatory action takes place once issues related to derailing of competition arise. On the other hand, the ex-ante model acts beforehand and will entail issuing a code of conduct for big tech companies on how to act on matters involving data collection and use.
The report also called for identifying entities that act as ‘gatekeeper’ platforms and sought a minimum threshold for such firms on parameters such as number of registered users, sellers, number of transactions, volume of data aggregated, among others.
The deliberations come at a time when a host of big tech companies are under the scanner of the government for alleged market dominance and antitrust litigations.
Search giant Google’s billing policy has been labelled as ‘unfair’ and ‘discriminatory’ by the CCI, while an antitrust investigation is currently underway against the company for abuse of position.
Ecommerce platform Amazon has been subject to multiple raids by the CCI over alleged violation of competition laws. It has previously also been in the dock for allegedly favouring sellers that it had a stake in.
Smartphone manufacturer Apple is currently subject to a CCI probe on alleged unfair business practices pertaining to its app store policies. Social media platforms Meta and Twitter also have a slew of litigations pending against them in different courts in the country.
The Institute of Chartered Accountants of India (ICAI) is looking into several chartered accountants (CAs) to investigate their role in helping Chinese loan apps that are setting up shop in India and operating in a regulatory grey area.
According to an ET report, some CAs have allegedly signed various documents for these apps such as incorporation documents without proper due diligence.
For the uninitiated, any company looking to get into the lending business needs to be licensed as a non-banking financial company (NBFC) by the Reserve Bank of India (RBI). This process is quite stringent even for Indian entities and the process becomes more difficult for foreign companies.
However, some NBFCs created dummy entities in India for Chinese entities to use for digital lending in India. ICAI is investigating the role of CAs in certifying the documents for these Chinese companies.
Debashis Mitra, the president of ICAI was cited as saying that the ICAI will refer those cases to the disciplinary committee where lapses are found. He added that the institute had been receiving references from the government since January.
Chinese loan apps are not the only domain where the role of the CAs has been called into question. Earlier this year, during an investigation into a local unit of Chinese ecommerce major Alibaba, the Ministry of Corporate Affairs (MCA) alleged that a CA had helped register the entity by fabricating documents.
The Registrar of Companies (RoC), along with the Serious Fraud Investigation Office (SFIO) launched a probe earlier this year into several shell companies acting as a front for Chinese lenders. Along with them, the Enforcement Directorate (ED) also launched a probe earlier this year into these Chinese loan apps.
It is prudent to mention here that these Chinese loan apps had been using a loophole in the regulatory guidelines to operate in India.
Since RBI’s process for licensing an NBFC is really difficult to get through, these Chinese companies signed a Memorandum of Understanding (MoU) with some of the defunct Indian NBFCs to operate as a lending app in India.
These lending apps have recently come under fire because of their shady lending practices, high rates of interest and extortionate methods of recovery, which included unethical tactics.
Food chains like McDonald’s, Domino’s and Pizza Hut are focussing on their own apps to drive direct traffic — this has been one of the trending topics on social media over the last week. But why?
Over the last few years, food aggregators have managed to change the habits of urban consumers. And the pandemic has accelerated this irreversible change of ordering stuff online — be it food, grocery, furniture or cars!
But along with getting the customers comfortable with the idea of shopping online, the past two years provided businesses with a means to speak & build relations with their customers directly. This combined with the high commission charges of 3rd party aggregators like UberEats, Zomato and more, is the major factor behind the focus of food chains shifting to their own apps.
The Big Shift Of Fast Food Chains!
Although dining at restaurants is going up again in 2022, there has been a dramatic shift in the way fast food chains look at their business.
Online delivery and drive-through pickups form a significant proportion of their revenues and it has become increasingly important to own, optimise and automate their own delivery management.
Needless to say, technology is the only way to help fast food chains do it.
Why Not Food Aggregators?
Commissions with a capital ‘C’.
In the quest for unit economics, food aggregators charge up to 30% in commissions from restaurants and this shaves off a big chunk of the profits for a restaurant. Food aggregators certainly bring in more volumes but with these kinds of margins, it forces a fast food chain to think about owning their own deliveries.
Apart from the margins, customer experience is another big reason. A lot of the time, especially with the rise of dark kitchens, the end customer doesn’t have clear communication with respect to where the food has been prepared because of multiple stickers on the packaging.
By handling their own deliveries, large fast food chains can maintain a consistent end customer experience.
Technology And Automation
To combat these issues, fast food chains are upping their technology game. This can be either done by building the entire technology inhouse or adapting existing delivery automation platforms such as LogiNext, Shipsy, Locus, FarEye and the likes.
However, there are several components of delivery management technology:
Delivery Driver Management
One of the crucial calls a fast food chain has to take is on managing delivery drivers. A lot of CXOs mull over the right mix between in-house drivers and 3rd party drivers — a tech platform helps them arrive at the right solution and increase delivery driver efficiency multifold.
Route Optimisation And Auto Allocation
Until very recently, fast food chains would usually assign orders to a driver once he or she is at the store, and the drivers would deliver orders according to their own routes. This, however, often leads to inefficiencies in the system.
Route optimisation technology and auto allocation orders can result in efficiency gains to the tune of 150% and above!
We’ve seen restaurants going from an average of one delivery every hour to three deliveries every hour per rider!
A Great Customer Experience
Along with reduced delivery times and greater efficiency, one of the biggest plus points of handling your deliveries is the complete control over the delivery experience — which is at par or better than that provided by 3rd party aggregators.
With the ability to have their custom branding on tracking links and running contextual promotions and offers, fast food chains can really up their game in terms of communicating in real time with their customers.
What Does The Future Hold
All in all, online ordering is an irreversible change that has set in. In-dine innovation will drive more people to fast food chains but online deliveries will remain equally critical and large fast food chains are right on their money by focussing on their own apps.
We can expect to see more fast food chains investing in tech platforms to bring their delivery management inhouse which would help them open up new revenue opportunities by utilising their drivers’ spare time.
This is a domain ripe for innovation and several progressive fast food chains are betting big on technology to up their revenue game and deliver a great customer experience.
The Securities Exchange Board of India (SEBI) has come out with new guidelines for Alternative Investment Funds (AIFs) and Venture Capital Funds (VCFs) that invest abroad.
In the latest guidelines, SEBI has done away with the clause of the investee company having an Indian connection. AIFs can invest in securities of companies incorporated outside India. Further, according to certain conditions, VCs can invest in off-shore venture capital companies.
Previously, Indian funds could only invest 25% of their funds in foreign companies having an Indian connection – an office in India. But only last year, SEBI had been mulling the definition of ‘India connection’, while the ceiling of 25% remains.
According to the circular published by SEBI on August 17, 2022, AIFs or VCFs can invest in a foreign company from a country whose securities market regulator is a signatory to the International Organization of Securities Commission’s (IOSCO) Multilateral Memorandum of Understanding or a signatory to the bilateral Memorandum of Understanding with SEBI.
Further, the circular states that AIFs and VCFs will not invest in a company from a country identified in the public statement of the Financial Action Task Force (FATF). According to SEBI, some of these countries have no strategic anti-money laundering (AML) measures or are deficient in countering the financing of terrorism.
The circular has also explicitly disallowed AIFs and VCFs from investing in a country that has not made sufficient progress in addressing the AML deficiencies or has not committed to an action plan developed with FATF to address such deficiencies.
SEBI has also allowed investors to reinvest their sales proceeds in foreign companies with a ceiling of $1.5 Bn, up from $750 Mn until 2021. It is also reportedly discussing with the RBI to double the limit to $3 Bn.
“If an AIF/VCF liquidates investment made in an overseas investee company previously, the sale proceeds received from such liquidation to the extent of investment made in the said overseas investee company shall be available to all AIFs/VCFs (including the selling AIF/VCF) for reinvestment,” the regulator stated.
The guidelines have come into effect immediately, SEBI has stated.
A lower court has passed a judgement in the favour of Huawei Telecommunications’ CEO Li Xiongwei. The local court has granted conditional bail to Xiongwei only if he submits an interest-bearing fixed deposit receipt (FDR) of INR 5 Lakh and two Indian individuals as sureties.
According to the ET report, the trial court has asked Huawei India’s CEO to submit FDR in the name of the principal district and sessions judge, Tis Hazari Delhi.
It has to be noted that Huawei India’s CEO approached a local court urging a bail plea and also, challenging the look-out circular (LOC) issued against him by the I-T department. He earlier filed a petition in Delhi High Court but the Apex Court directed the trial court (local court) to pass judgement on the matter.
In a recent hearing, the local court said that Huawei India’s CEO is a foreign national and if he seeks to leave India and would not return then his personal bond (FDR) will become worthless.
After observing the I-T department’s documents that mentioned Huawei India’s CEO presence will be required in the ongoing investigation, the local court has directed the I-T department to officially submit a letter of request and LOC proforma in a sealed cover within a week.
Meanwhile, Huawei India’s CEO was commanded to inform the I-T department seven days prior to leaving India if the LOC gets revoked.
At the time of investigation, Xiongwei was not giving access to auditing books and emails of key professionals in the management team such as the CFO of Huawei India. The probe was conducted on the grounds of money laundering and tax evasion.
Besides this, Huawei’s auditor also informed the I-T department that the data dump shared by Huawei India is not sufficient to audit financial books. The auditor further said that the data dump shared by the Chinese smartphone maker has to be reconciled with its financial statements.
The auditor’s statement also supported the I-T department’s claims that Huawei’s data dump is not sufficient to ascertain its taxable income.
In the last two years, the Centre has been probing various Chinese players that are operating in the country for evading taxes and moving their revenue to Chinese parents. Some of these Chinese firms are Vivo, Oppo and Honor.
Besides this, the Indian government has also reduced the participation of Chinese investors or investment companies in the country’s business ecosystem. All these changes have been made after the Chinese and Indian armies clashed on Himalayan borders in 2020. The clash bittered relations between the two countries and thus, reduced their codependency.
Vijay Shekhar Sharma, the founder and CEO of listed fintech giant Paytm is set to face a vote of confidence from investors today (August 19) to decide whether he will continue at the helm of the company during the annual general meeting (AGM) to happen today.
The move comes as last week, the advisory firm Institutional Investor Advisory Services India Limited (IiAS) opposed reappointing Sharma as Paytm CEO. IiAS cited unfulfilled commitments made by Sharma.
“Vijay Shekhar Sharma has made several commitments in the past to make the company profitable, however, these have not played out,” IiAS added. The advisory firm also added that the fintech’s board must consider professionalising the management.
According to its latest operating performance update report filed with the BSE, Paytm disbursed 2.9 Mn loans or almost 4X more than the corresponding period last year. At the same time, its monthly transacting users (MTU) reached 77.6 Mn for July 2022.
Arguably one of India’s most recognisable startups, Paytm went public in November last year in India’s largest-ever tech startup IPO. However, that fanfare was short-lived as Paytm’s shares fell sharply from its IPO price of INR 2,150 per share, hitting an all-time low of INR 510 a few months ago.
A primary reason for Sharma’s leadership being called into question is the amount of market cap that Paytm has lost since going public. At the time of reporting (August 19, 2022, 11:50 AM), Paytm’s shares traded at INR 776.45 apiece.
Therefore, in less than a year, Paytm’s shares have lost 63.88% of their value. The company’s market cap stands at $6.31 Bn at present, 44% lower than its last private valuation of $11.2 Bn, per Inc42 data.
Sharma’s remuneration has also become a matter of debate. According to IiAS, the current Paytm CEO will receive over INR 796 Cr as minimum remuneration in FY23, comprising 21 Mn stock options at an INR 9 apiece even if Paytm makes losses.
The two factors, combined with mounting losses and profitability being still more than a year away have brought Vijay Shekhar Sharma to the impeachment that will take place later today.
The level of consumer base and user data is going to determine if mergers of digital businesses will come under the Competition Commission of India (CCI) ambit.
These parameters will determine ‘significant business operations’ in India, CCI chief Ashok Kumar Gupta said, as per a Business Standard report.
CCI Chief Gupta is of the view that the local nexus criteria for the purpose of the deal value threshold should be based on factors that affect valuations of an entity in new-age markets.
“These criteria would largely be based on market-facing factors such as the number of users, the number of contracts, the aggregate amount of payment received, etc. of the target that are not completely reflected in assets and turnover as recorded in the financial statements,” he said as quoted in the report.
However, following consultations and through deliberations, regulations related to digital M&As would be finalised.
With the local nexus criterion, M&A transactions where the target exclusively operated abroad or had limited business operations in India would be excluded, Gupta added.
The Competition (Amendment) Bill, which was introduced in the monsoon session of the parliament, has been referred to the Jayant Sinha-led Standing Committee of Finance for review.
To examine the Bill and give its report, the panel has been given a timeline of three months.
Under the Bill, a minimum deal value of INR 2,000 Cr has been proposed as a criterion for notification to CCI.
Currently, the companies in the process of M&A have to seek CCI approval in regards to deal size and turnover.
“Entities operating a successful business model in newage business command significant valuation, yet have insignificant assets and no or insignificant turnover recorded in their financial statements,” CCI Chief noted while explaining the necessity of additional criteria such as deal value.
According to him, the INR 2,000 Cr threshold is in line with the global jurisdictions like Germany and Austria.
There have been 1,100 mergers and acquisition (M&A) deals in the Indian startup ecosystem since 2015, as per Inc42’s ‘The State of Indian Startup Ecosystem Report, 2022’.While the first half of 2022 has already witnessed 175 deals, the report predicts the number to reach 1200 by the end of the year.
“Over the last year, we have seen Sunstone grow and continue to upgrade the quality of education provided to every student. Seeing its potential to be a major disruptor, we are excited to double down our investment to support its mission of transforming the higher education sector in India,” said Sandeep Singhal, managing partner of Westbridge Capital.
Founded in 2019 by Ashish Munjal and Piyush Nangru, the Delhi-based startup offers a slew of undergraduate and postgraduate courses such as BBA, BCA, BCom, MCA and MBA, among others. It follows a pay-after-placement business model and thus, has formed partnerships with over 40 institutions in 30+ cities across the country.
“The Indian higher education system is at the brink of a long overdue transformation. Sunstone is well positioned to enable this change and impact the lives of millions of students. Over the years, we have made significant strides in the direction but still have a long way to go as the market opportunity and problem we are trying to solve for, is very large,” Munjal said.
Sunstone claims to record 10x growth in the last two years. It also aims to expand its geographical footprint to 100 Indian cities.
In the Indian edtech sector, which is likely to become a $10.4 Bn market by 2025, Sunstone competes with the likes of UpGrad, BYJU’S and Unacademy.
On the flip side, the country’s edtech sector is facing unprecedented challenges since the beginning of 2022. Funding winter, low market sentiment, geopolitical tensions, market inflation and impending economic slowdown are some of the challenges that the edtech startups are grappling with.
To tackle these problems, the edtech startups have adopted cost-cutting measures including downsizing their businesses, laying off employees and pivoting business models, in turn, foraying into offline space.
According to an Inc42 analysis, more than 11,360 employees have been sacked by the edtech players to date. Meanwhile, a few edtech startups–Udaay, Crejo and have closed shutters permanently.
After sending show cause notices to the electric scooter manufacturers for multiple fire incidents, the central government is now reportedly planning to impose monetary penalties for using unsafe batteries in those vehicles that led to such safety incidents.
While the government doesn’t plan to take any severe action given electric vehicles (EV) is a nascent industry, it believes that a penalty would “act as a deterrent for companies compromising on quality”, as per a Mint report.
The development comes on the back of union minister Nitin Gadkari’s statement last month that his ministry issued a show-cause notice to the CEOs and MDs of escooter companies involved in the fire incidents to explain the reasons as to why the relevant Sections of the Motor Vehicles Act should not be invoked against them.
He had then said that further steps would be taken after receiving their responses.
Meanwhile, the Central Consumer Protection Authority (CCPA) had also issued notices to four to five EV manufacturers asking reasons behind fires in their vehicles and why no actions would be taken against them.
The notices had followed multiple fire incidents reported in the escooters manufactured by Okinawa Autotech, Ola Electric, Pure EV, Jitendra EV, and Boom Motors, some of which were also deadly in nature, and investigations finding issues with battery quality and more.
As per the publication’s latest report on the issue, an official has said that the escooter manufacturers have replied to the notices the government had sent and the latter is taking action.
“The action cannot be very severe. We have to punish them, but it’s a nascent industry. We have to punish them for failure to comply, at the same time we should not kill them,” the official was quoted as saying.
Moreover, the official emphasised that electric two-wheelers are the future of India.
“Batteries should be connected in series. These people (EV makers) are connecting them parallelly also. Parallel connection will lead to serious problems. Battery management system is useless most of the time. Venting mechanism is absent in almost all and connections are also parallel in most of the batteries,” the person added.
A Look At The Govt’s Past Measures
The government had formed two committees after the safety incidents shot up during the summer season in India.
The Centre for Fire, Explosive and Environment Safety (CFEES), which is the fire science and engineering arm of Defence Research & Development Organisation (DRDO) had first found that defects in batteries, including the designs of the battery packs and modules of the escooters involved in such incidents.
Later, another experts panel found that their battery management systems (BMS) were seriously deficient and identified a lack of proper ‘venting mechanism’ for overheated cells.
As per the official’s statement, the Centre has also asked the escooter companies to stop selling vehicles with faulty batteries and discard such batteries. In fact, while the cases were on the rise, the Union Transport Ministry had indeed asked the two-wheeler EV manufacturers to halt new model launches till the investigations into the fire incidents were on.
The government had also ordered the escooter manufacturers to voluntarily recall their defective vehicles. As per the latest government data, 6,656 EVs have so far been recalled by three manufacturers following that.
Meanwhile, the Bureau of Indian Standards (BIS) has released performance standards for EV batteries in the country to ensure further safety.
The sales of electric two-wheelers in India are expected to jump to 78% of the total two-wheeler sales by 2030, helped by government policies, technology, infrastructure, and consumer acceptance, a recent Redseer report said.
Fundamentum Partnership has raised $227 Mn for its second fund to invest in Indian startups. The fund has been oversubscribed by $77 Mn from its initial corpus of $150 Mn.
The fund will write off cheques between $10 Mn and $15 Mn in growth-stage tech startups operating in the consumer internet and enterprise software space for a period of three to four years. It will also make follow-on investments in the selected startups.
In addition, the fund will lead or co-lead funding rounds worth $25-$40 Mn in four to five growth-stage tech startups every year.
“The second fund is significantly oversubscribed. We plan to continue the same strategy as used in Fund I – investing in tech-driven enterprises from India. We like to back missionary entrepreneurs who have an unwavering focus on customer experience,” said Sanjeev Aggarwal, cofounder and general partner of Fundamentum.
Founded in 2017 by industry veterans Nandan Nilekani and Sanjeev Aggarwal, Fundamentum is a tech-focussed investment firm. Besides investing in startups, the VC company also provides mentorship to startups. Logistic SaaS startup Fareye, healthcare startup Ayu Health and tech infra startup Probo are some of the startups backed by it.
Fundamentum initially had a corpus of $100 Mn which was extended to $200 Mn. It primarily participates in $10Mn to $25 Mn fundraising rounds, according to its LinkedIn profile.
“Digital acceleration has dramatically increased technology spending across the world. India has all the ingredients in place—capital, entrepreneurs, stories of success, and liquidity. In this decade, we will see entrepreneurs making a material impact on the country at scale as the digital intensity of society increases,” Nilekani said.
Fundamentum’s first fund invested in early-stage to growth-stage startups including PharmEasy and Spinny that entered the unicorn club. Its portfolio companies have together raised more than $1 Bn, according to the statement.
Interestingly, Fundamentum’s second fund, which will back growth-stage Indian startups, has launched at a time when growth-stage startups have lost their luster in the business ecosystem. At the moment, several growth-stage startups are striving hard for survival owing to unfavorable market conditions.
In such a scenario, industry players such as Ola, Meesho, Unacademy and Cars24, among others are adopting cost-cutting measures to trim expenses. Pivoting the business is another business strategy that is commonly used to keep the wheels turning.
The government may drop the proposal for setting up a centralised data protection authority (DPA) in the new privacy bill it is working on. The concept of DPA was proposed in the Personal Data Protection Bill, which was withdrawn by the government earlier this month after facing a lot of criticism from privacy advocates and tech companies.
In place of the DPA, the government is planning to introduce a grievance redressal mechanism for aggrieved individuals, Hindustan Times reported.
“A lot of the functions that were allotted to DPA were out of its remit; the collection, storage and sharing of personal data will either be worked into the law itself or be included in the rules that will be made under the law,” the report quoted an official as saying.
According to the official, the government does not want to not overwhelm one authority and increase compliance costs for small companies.
Another official was quoted as saying that the government is looking at making the bill as uncomplicated as possible.
While a grievance redressal mechanism is being considered for users who feel that their data has been misused, nothing has been finalised yet. Moreover, the proposals will be circulated as a draft for public feedback.
Earlier this month, the government withdrew the Personal Data Protection Bill after 81 amendments were proposed by a joint parliamentary committee (JPC). At the time of the withdrawal, the government said it was planning to introduce a new Bill.
“Considering the report of the JPC, a comprehensive legal framework is being worked upon. Hence, in the circumstances, it is proposed to withdraw The Personal Data Protection Bill, 2019 and present a new bill that fits into the comprehensive legal framework,” Minister of Electronics and Information Technology (MeitY) Ashwini Vaishnaw said.
Besides data protection, the withdrawn bill also covered other areas like cybersecurity, national data governance policy, data management and safety. However, Minister of State in MeitY Rajeev Chandrasekhar said that the bill would have hurt startups, while the big tech companies would have just hired more lawyers to comply with the regulations.
The data protection bill was first drafted in 2017 by a panel led by retired Supreme Court Judge BN Srikrishna. Later, the Personal Data Protection Bill was introduced in the Parliament in 2019.
However, following opposition by political parties, it was sent to the parliamentary panel for discussion. The panel submitted its report to the Parliament last year, following which the Personal Data Protection Bill, 2021 was presented.
Fintech startup Uni Card on Friday (August 19) said it is temporarily suspending card services for its products – Uni Pay 1/3rd Card and the Uni Pay 1/2 Card. The decision comes in view of the Reserve Bank of India’s (RBI) guidelines that barred non-bank prepaid payment instrument (PPIs) issuers from loading PPIs with credit lines.
Uni Cards said it is “proactively” suspending the card services for its customers, which will begin in phases starting Friday and will be concluded by Monday (August 22).
“Bearing in mind that the Uni Card was used for urgent needs like fee payments, medical bills and emergencies, we have ensured that every one of our customers will have access to their credit line through Uni Cash,” the startup said in a statement.
Uni Cash is built to help customers transfer their credit lines directly and instantly to their bank account, the startup said, adding that it is also extending a zero-charge partial limit on Uni Cash till September 21.
“With a free partial limit enabled, our customers will not face any disruptions while using their funds. We are building something really exciting. Like always, it’s first-of-a-kind and never been done before,” Uni Cards founder and CEO Nitin Gupta said.
While Uni Pay 1/3rd Card allows users to pay their monthly spends in three parts in three months for no extra charges, Uni Pay ½ Card allows paying in two parts over two months.
Uni Cards, founded in 2020 by Gupta, Prateek Jindal and Laxmikant Vyas, is a Bengaluru-based fintech startup that offers differentiated credit products to customers. It launched its flagship product Uni Pay 1/3rd Card in June 2021.
Uni claims to be currently operating across 130 Indian cities including Bengaluru, Delhi, Mumbai, Hyderabad, Pune, Chennai, Kolkata, Ahmedabad, and Lucknow, among others.
RBI Guideline For PPI Issuers
Of late, the RBI has been tightening the regulations for the fintech sector, and Uni Card’s action is in response to the central bank’s circular for non-bank PPI issuers.
“The PPI-MD (PPI-master direction) does not permit loading of PPIs from credit lines. Such practice, if followed, should be stopped immediately. Any non-compliance in this regard may attract penal action under provisions contained in the Payment and Settlement Systems Act, 2007,” the central bank said in a notification issued to the non-bank PPI issuers on June 20.
Following this, several startups including Jupiter, EarlySalary and KreditBee temporarily halted transactions on their prepaid cards.
As per recent reports, not only Uni but Slice and LazyPay are also likely to face more trouble as their prepaid card partner State Bank of Mauritius India (SBM Bank India) is planning to pause onboarding of new customers for prepaid cards till there is more clarity on the RBI’s guidelines.
Meanwhile, the RBI slapped a fine of INR 5.93 Lakh on fintech firm Obopay Mobile Technology on Thursday for non-compliance with certain provisions of the Master Directions on PPIs and other issues.
The central bank recently also came out with its first set of guidelines for digital lending.
The Indian fintech market is one of the fastest-growing segments globally, estimated to reach $1.3 Tn by 2025, growing at a compound annual growth rate (CAGR) of 31%, as per an Inc42 report.
The Delhi High Court has asked the Enforcement Directorate (ED) to file its reply by September 5, 2022 in response to cryptocurrency exchange WazirX’s petition to set aside the agency’s legal proceedings against it for violation of the Foreign Exchange Management Act.
In January 2022, WazirX filed a writ petition in the court seeking to set aside the ED proceedings with regards to the show cause notices served to its parent company, Zanmai Labs.
The Delhi High Court, in its interim order on January 18, 2022, said, “Noting the fact that an adjournment is sought, the Adjudicating Authority, on whose behalf the communication dated December 28, 2021 was issued, shall adjourn the hearing to a date beyond the date fixed by this Court in these proceedings.”
In June 2021, the ED had served a show cause notice to WazirX for allegedly violating the Foreign Exchange Management Act, 1999 (FEMA) in transactions involving cryptocurrencies worth INR 2,790.74 Cr.
“It was seen that the accused Chinese nationals had laundered proceeds of crime worth about INR 57 Cr by converting Indian Rupee (INR) deposits into cryptocurrency Tether (USDT) and then transferred it to Binance (exchange registered in the Cayman Islands) Wallets based on instructions received from abroad,” the enforcement agency said in a statement then.
ED Didn’t Follow FEMA Adjudication Rules: WazirX
WazirX counsel Dayan Krishnan contended that the ED failed to follow the statutory mandate of Rule 4(3) and (4) of the Foreign Exchange Management (Adjudication Proceedings and Appeal) Rules, 2000 (FEMA Adjudication Rules) and failed to communicate any reasons which could justify the continuance of the proposed enquiry as contemplated under Section 13 of FEMA.
According to Rule 4(3) of FEMA Adjudication Rules, if the Adjudicating Authority favours holding an inquiry against the accused in a case, it should issue a notice fixing a date for the appearance of that person either personally or through his legal practitioner or a chartered accountant duly authorised by him.
Further, Rule 4(4) states that on the date fixed, the Adjudicating Authority shall explain to the person proceeded against or his legal practitioner or the chartered accountant, as the case may be, the contravention alleged to have been committed by such person indicating the provisions of the Act or of rules, regulations, notifications, direction or orders or any condition subject to which an authorisation is issued by the Reserve Bank of India in respect of which contravention is alleged to have taken place.
Krishnan alleged that the ED did not follow the due procedure in this regard. He also cited the orders of Delhi High Court in J.P. Morgan India versus ED in 2021 and of Bombay High Court in Shashank Vyankatesh Manohar versus Union of India, highlighting that Rule 4 envisages a two-tier enquiry and it was, therefore, essential for the ED to communicate the reasons to justify a formal inquiry under Section 13 of the FEMA.
The ED, however, submitted that the writ petition is not maintainable at the stage when the Enforcement Officer proceeds to initiate a formal enquiry as contemplated under Rule 4(5) of the FEMA Adjudication Rules.
The next hearing in the case is scheduled for September 5.
WazirX And Other Crypto Exchanges Under The Scanner
It must be noted that Zanmai Lab also filed a separate writ petition against the Indian government and the ED in Bengaluru High Court in June 2022, challenging the summons served by the ED under Section 37(1) and (3) of FEMA, Section 131(1) of the Income Tax Act, and Section 30 of the Code of Civil Procedure, 1908.
Earlier this month, the ED conducted searches on one of the directors of Zanmai Labs and issued an order to freeze Zanmai’s bank balances to the tune of INR 64.67 Cr.
The Karnataka High Court is likely to hear the case on August 24.
WazirX is not the only Indian crypto exchange which is under the lens of the ED. The enforcement agency, in its investigation of a slew of fintech apps, has found that various crypto exchanges were allegedly used as a tool to send money from India to abroad, China in particular. Earlier this month, it also froze assets worth INR 370 Cr belonging to a Bengaluru-based company lying with the Indian entity of crypto exchange Vauld.
The ED has been separately investigating the role of WazirX and Binance in particular for allegedly violating FEMA regulations.
Amid exodus of top executives from the company, SoftBank Vision Fund’s India head Sumer Juneja has reportedly been entrusted with additional responsibilities to oversee investments in Europe, Middle-East and Africa (EMEA) markets.
“This is a huge leg up for Sumer based on his performance in less than 4 years. Narendra Rathi and Sarthak Misra will play a bigger role in helping Sumer take the India operations forward,” sources familiar with the development told Moneycontrol.
Juneja will report to Rajeev Misra as the latter transitions out of his role as the chief executive officer (CEO) of SoftBank Investment Advisers, the report said.
However, Misra will continue to lead the company as the CEO of Vision Fund 1.
A source was quoted as saying that Juneja will shuttle between India and the UK every month, spending 10 days in the country and the rest in London.
“Sumer has made 14 investments (till now). Most have done well…”, a source added.
Rathi and Sarthak Misra, who have been assigned the duty of assisting Juneja, were promoted as investment directors last year. In total, SoftBank has just 12 people managing its operations in the country, overseeing assets worth $20 Bn.
Juneja joined SoftBank in 2018 and helped set up the company’s India presence. Since then, he has led SoftBank to invest in multiple domains such as ecommerce, edtech, fintech, among others. He also serves on the board of multiple major startups, including Swiggy, Lenskart, and Ola.
According to Juneja’s LinkedIn profile, he previously worked with Norwest Venture Partners and Goldman Sachs.
Upheaval At SoftBank?
Juneja’s elevation comes at a time of major upheaval within the company. Rajeev Misra, who has been one of the top executives within the firm, has been slowly giving up all his titles to begin work on his investment fund.
He has been picking up executives from SoftBank to build the workforce at his new fund. Last week, it was widely reported that managing partners at the company’s Vision Fund, Munish Varma and Yanni Pipilis, were leaving SoftBank to join Rajeev Misra’s fund.
The exodus has put the spotlight on the Masayoshi Son-led company as it grapples with the increasing brain drain. Since March 2020, as many as 10 top executives have left the firm.
SoftBank has also come under fire from investors after a lackluster financial performance in the quarter ending June. The Japanese conglomerate reported its largest-ever quarterly loss of $23.4 billion in the quarter under review, largely on account of poor performance of its flagship tech investments.
The poor show also prompted Son to announce layoffs, saying that the company was looking to cut costs owing to mounting losses.
After causing a bit of a stir with Blinkit’s printouts-as-a-service, Zomato has now quietly introduced intercity food delivery under the Intercity Legends branding.
The idea is as straightforward as it sounds: Zomato has listed a handful of restaurants from a number of cities in India. One can simply place the order as one would any regular Zomato order.
Inc42 was able to access the Zomato Intercity Legends through the main app, but it would seem the service is not yet available for all users.
Zomato says all food is packed by the restaurant and then refrigerated before being shipped via air or road to reach customers the next day. However, some orders may take longer than one day to reach customers.
We placed an order for 1 Kg of biryani from Hyderabad, which the app currently says would be delivered the next day, presumably via air cargo. We will update this article with images of the packaging and the final product as soon as it arrives.
A Zomato spokesperson told Inc42 that intercity delivery is still in the early stages of being tested. “It’s an experimentation basis customer requests we had garnered in recent times. We are glad to be connecting Indians all over, to the most legendary food, synonymous with the cities onboarded as a part of the Intercity Legends offering. It’s too early for us to share any details,” the spokesperson said.
But given that Zomato has tried many such experiments and abandoned them – including Zomato Wings most recently, and grocery delivery and nutraceuticals in the past – the question we need to ask is whether this business is really viable at this moment for Zomato. Plus, intercity food delivery will not exactly be an cost-efficient play and there’s a big logistics challenge as per founders in this space. So what’s the big idea behind this latest strange experiment by Deepinder Goyal and Zomato?
Unit Economics Of Intercity Delivery
It’s not exactly clear which audience Zomato is targeting with its intercity food deliveries. Incidentally, the launch is close to the festive season in India, which is expected to kick off next month. This time of the year could see some traction in terms of bulk orders for festivities at home or offices.
But it remains to be seen whether the nostalgia factor is enough of a pull for customers to place intercity orders when a metro such as Delhi, Mumbai or Bengaluru has no dearth of options.
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Even accounting for the heightened sense of nostalgia that some metrodwellers might feel for their hometown food during the festive season, our estimate is that Zomato would need customers to place multiple high-value orders for it to recoup the cost.
That’s because the first intercity purchase has an associated discount that immediately halves Zomato’s gross margins.
For instance, our order was priced at INR 700 including taxes, the cost of the dish (INR 280) and the cost of delivery and shipping (INR 350). The same order placed within the city of Hyderabad had a final price of INR 350. So essentially, customers would be paying nearly 2X for some items depending on the dishes.
While that seems like a healthy margin for Zomato, the company is also offering a discount of INR 200 for a customer’s first intercity order, and a further discount for bulk orders. So it is paying INR 200 from its own pocket for the first order – leaving it with INR 150 as the gross margin, which is then further shared with delivery partners and vendors.
We do not imagine that Zomato retains a big portion of this final fee considering that sending food via air cargo is very unlikely to be cheaper than delivering the same parcel a few kilometres away locally on a two-wheeler.
Besides, the cost of moving food from airport to home would be higher for many customers — Zomato is also likely to need finishing stations or distribution hubs for these parcels in cities with higher volumes.
Zomato did not respond to our questions about the cost structure of intercity food delivery, nor about its logistics strategy, which as we will see is key to this segment.
Jumping Logistics Hurdles
Besides this, food packaging is said to be the biggest success factor in intercity deliveries. “Aside from the logistics challenge, Zomato will have to ensure that food packaging is not compromised. Orders cannot have the same shoddy packaging that restaurants sometimes use locally,” said the founder of a Kolkata–based intercity food delivery platform.
The founder, who did not wish to be named, said that his startup has resources parked throughout the day at airports in the cities where it is operational, since it offers 12-hour delivery. Zomato’s next-day delivery might not require this extent of coverage. Besides this, the founder added that his startup manages the last-mile fulfillment completely in-house to ensure sanctity of packages.
But questions linger about Zomato’s packaging partners, the supply chain on ground and of course whether the company will be making any margin on this delivery. There are, however, certain operational capabilities that Zomato could leverage for this.
The first is Hyperpure, which is the company’s B2B platform for procurement by restaurants. Hyperpure’s fresh produce supply chain connects transit zones to the HoReCa segment, and Zomato could very well leverage this chain to set up a reverse flow of prepared food items back to transit zones such as airports or truck/bus stations.
This might very well boost utilisation of resources dedicated to Hyperpure and give Zomato a greater economy of scale in that business.
Further, this way Zomato might also be able to reduce the direct costs incurred for intercity deliveries.
The other strategy that Zomato could use is leveraging its investment in logistics tech unicorn Shiprocket. Zomato invested in the company in December last year and since then Shiprocket has acquired a number of startups and has also raised a fresh round this week to enter the unicorn club.
Shiprocket has the deeper logistics capability required for intercity movement of goods and perishables, which could prove to be advantageous for operational efficiency.
According to a customer service rep from Zomato, the company is using a third-party logistics partner for fulfilment, but the rep did not reveal the name of the partner.
Zomato Intercity Product Drawbacks
Beyond the operational hurdles, at this pilot stage, there are some product drawbacks as well with Zomato Intercity Legends. For one, Zomato claims that the service is meant for iconic dishes, but then deems any and all versions of a particular dish as iconic.
There’s no rationale for picking the specific restaurants that have been listed under the intercity section, and the inventory is lacking. Bengaluru, for instance, has just six restaurants listed currently.
Of course, more restaurants are likely to join the service if and when it scales up. But at the moment it’s a sparse collection.
Zomato has not explained why it has picked those particular restaurants, save for a descriptive copy of the restaurant’s history within the ordering menu. The section also does not indicate how the food will be packaged or how secure it might remain in transit.
The lack of transparency around these aspects did give us some pause when placing the order. We were also not clearly informed by the customer service about the refunds associated with a misdelivered order or tampering.
Zomato’s Half-Baked Experiments
The printouts delivery announcement by Zomato-owned Blinkit this week has also raised some eyebrows and concerns about whether this is solving any great problem. There have also been questions about data security and whether the documents sent for printing would be stored by Zomato.
“Blinkit intends to be an organisation which is always innovating for our customers, and being able to provide services that help them lead better lives remains at the core of our mission. With this mindset, we recently launched our printout delivery services in a few locations (including Sector 43 and Golf Course Road) in Gurgaon. The launch price is ₹9/₹19 per page (excluding the delivery charges), with ₹9 for black-and-white pages and ₹19 for colour pages,” a company spokesperson said.
The company added it looks forward to launching printout deliveries in more locations (including Delhi) in the near future “provided we notice the service being useful for our customers”.
At least, Zomato admits that it’s a wait-and-watch game for printout delivery and has not jumped in with both feet yet.
If printout delivery or intercity delivery do not gain traction, it won’t be the first time that Zomato is forced to abandon a new play. It had looked to launch grocery delivery service twice before acquiring Blinkit and had also unsuccessfully forayed into private label nutraceuticals. Both these in-house efforts were shut down last year.
Another pilot project that has seemingly lost steam is Zomato Instant, which drew plenty of criticism. The 10-minute food delivery service was piloted in Gurugram, but plans to launch it in Bengaluru did not take off. Zomato said Instant is also in the testing phase currently but did not elaborate on its expansion.
Besides concerns about food quality and safety, many had pointed out that the 10-minute promise puts undue pressure on delivery partners and creates an unsafe working environment for these part-time workers.
The primary criticism was that Zomato was overburdening its fleet with Zomato Instant, when workers were already working over 12 hours in some cases to earn a living through regular Zomato delivery.
In any case, Zomato was not able to adequately convince critics about how this would solve the unit economics challenges for its core business, which has been loss-making throughout its existence.
Zomato Stock Crashes On Friday
The delivery giant saw losses grow to INR 1,222.5 Cr in FY22, compared to INR 816.4 Cr in FY21. But in its most recent quarterly reports, the consolidated quarterly loss fell to INR 186 Cr from INR 360 Cr in June 2021. The improved performance had given Zomato investors plenty of confidence that the company might turn things around from the financial perspective.
After months of turmoil and decline, the encouraging quarterly report helped boost the share price and Zomato surged more than 13% last Friday (August 12) to reach INR 61.75 from a week-ago price of INR 54.50.
The end of the lock-in period for its pre-IPO investors in July after one year of listing had added to Zomato’s woes as many of its investors sold shares. Investors such as Uber, Moore Strategic Ventures, Sequoia Capital and Tiger Global offloaded their stake in the food delivery startup after the lock-in period expired.
Throughout the past week Zomato has shown steady gains in stock price, but in the last trading session of the current week (August 19), Zomato crashed by over 8.4% to end the week at INR 61.40 from a 30-day high of INR 69.20. The decline is likely to have been triggered by a spate of profit booking as Zomato’s shares rose in the past couple of weeks.
Zomato: Public Co Or Startup?
The spate of experiments by Zomato in the past few months, and its teasers dressed as new services tells us Zomato and Deepinder Goyal are not short on ideas, but that is no guarantee that some of these ideas will mature into profitable businesses and therefore create value for shareholders.
Intercity food delivery, printout delivery and 10-minute food delivery — all very catchy verticals, but are these really what Zomato needs to solve the profitability puzzle? Some of these seem like shots in pitch dark.
One aspect that has been overlooked is the subscription revenue that Zomato earned from Zomato Pro. This particular feature has been put on hold currently, and its reintroduction will be keenly watched by the market. At the moment, though, the pilot projects and experiments have not done enough to enthuse Zomato’s shareholders to hold their positions.
Viacom18 bagging the digital rights of the Indian Premier League (IPL) for the next five seasons would make its OTT platform Voot the leading player in the Indian market in a few years, brokerage JM Financial said in a report.
While Voot currently has around 2% share in India’s OTT market, the IPL is likely to catapult it to the leadership position in a few years’ time, the report said, adding that Voot would also benefit from Reliance’s parentage as it can leverage the massive user base of telecom giant Jio.
Disney-Star lost the digital rights of IPL to Reliance-owned Viacom18 in the auction conducted by the Board of Control for Cricket in India (BCCI) in June. Viacom18 won the digital rights for the marquee cricket tournament for a whopping INR 23,758 Cr.
A lot of questions were raised on the media company’s ability to recover the huge amount. However, JM Financial said that the broadcaster’s digital arm Voot can break even in the fifth year (2027) of the upcoming IPL cycle.
Voot is estimated to reach 400 Mn monthly active users by 2027, the brokerage said. Moreover, the growth in users can result in advertisement revenue of INR 2,160 Cr and subscription revenue of INR 3,000 Cr by 2027 from IPL alone.
“However, on a cumulative basis, Voot’s revenue over 2023-27 is likely to fall short of the media rights value it has paid, as per our current estimates. That said, the knock-on effect of IPL – higher subscribers and active user base and cross-sell opportunity – should help it recoup the media rights’ investment, in our view,” the report said.
Star India (which was rebranded as Disney Star after Walt Disney acquired 20th Century Fox in 2018) won the TV and digital rights for the IPL for a five-year period during the 2017 auction. Leveraging IPL media rights, the broadcaster acquired a leadership position for Disney+Hotstar in India’s crowded OTT market. After losing the digital rights, industry experts told Inc42 earlier that it could lose up to 50% of its subscriber base.
Meanwhile, Star India is expected to break even for its IPL TV broadcasting rights in the third year of current circle i.e. 2025. The broadcaster’s IPL driven ad-revenue is expected to grow at a CAGR of 10% to INR 6,100 Cr in 2027 from INR 4,100 Cr in 2023.
“At an annual media rights cost of INR 47.15 Bn (5 year rights cost at INR 23.6 Bn), Star India can break even in 2025, the third year of the current cycle. Note, we have not assumed any incremental subscription revenue for Star India as they are the incumbent broadcaster for IPL,” the report added.
IPL’s reach now exceeds 400 Mn TV viewers and 300 Mn digital viewers in India alone. Although TV currently dominates IPL viewership, the tournament also benefits from the rising OTT user base as incremental viewership along with incremental advertising expenditure emanate from such platforms, the report added.
In addition, the rising popularity of short form videos also helps IPL as a lot of unique viewers see specific events such as highlights and wickets. Hence, it expands the non-live user base and extends the match’s monetisation potential beyond live streaming, the brokerage said.
The Securities Exchange Board of India (SEBI) on Friday (August 19) said it has joined the Reserve Bank of India’s (RBI’s) account aggregator framework.
SEBI has allowed asset management companies (AMCs), depositories and other firms to operate as financial information providers (FIPs).
“The FIPs in the securities market will provide the financial information, as specified in clause 3(ix) of the RBI Master Directions, to the customers and financial information users who furnish the consent artifact through any of the Account Aggregators registered with RBI,” SEBI said in a circular.
SEBI also noted that the financial information pertaining to the securities markets will be furnished by FIPs via account aggregators after receiving valid permission from the users.
The circular, issued under Section 11(1) of the Securities and Exchange Board of India Act, 1992, will come into effect immediately.
Further, SEBI also directed the FIPs to enter into a contractual agreement with account aggregators (AAs) to specify the rights and obligations of each party and modalities of dispute resolution mechanism.
Apart from this, the FIPs have also been entrusted to ensure the verification of the validity of the user consent, its usage and the credentials of the AAs.
The market watchdog also ordered the FIPs to deploy scalable information technology (IT) solutions to ensure secure workflows to the AAs. It also asked the information providers to build adequate safeguards in the system to curb any unauthorised access and ensure protection from cyber attacks.
“There shall be adequate safeguards built in IT systems of FIPs in the securities markets to ensure that it is protected against unauthorised access, alteration, destruction, disclosure or dissemination of records and data,” the circular said.
The Account Aggregator Framework
Account aggregation involves compiling financial data from multiple sources all at one place. This will enable collection of financial data from multiple inputs, ranging from loans to investments, at one place to ensure seamless sharing of information with financial institutions and service providers.
It aims to ensure quick sharing of data with explicit permission of users, all while eliminating the need for paperwork.
In this framework, AAs will act as an intermediary and the information will come from FIPs such as banks and AMCs and will be subsequently forwarded to financial information users (FIUs) that request the data. The framework aims to streamline financial inclusion, especially in the lending space.
According to Inc42, India’s overall fintech opportunity is estimated to surge to $1.3 Tn by 2025, led largely by the lendingtech, which is likely to account for 47% or $616 Bn of the total market.
Fintech major Paytm on Friday (August 19) held its first annual general meeting (AGM) since listing on the stock markets in November last year.
Paytm CEO Vijay Shekhar Sharma answered a majority of questions of the shareholders as he tried to address investor concerns on the falling share prices of the financial services startup and its losses, sources said.
“As a listed company, Paytm is focussed on expansion and profitability,” Sharma said.
He also reiterated that the company is well poised to achieve EBITDA profitability by September 2023.
Several shareholders expressed their views and asked questions regarding the company’s fortunes and the future roadmap. In response, Sharma elaborated on the fintech major’s performance in the preceding year and listed new initiatives launched by the company, the sources added.
Responding to a clutch of questions, the CEO touted India’s large market opportunity to fuel Paytm’s growth in the coming years. He said that the Noida-based company continues to deploy devices such as soundbox and electronic data capture (EDC) machines across the country to scale operations and increase its merchant base.
Sharma reportedly also said that Paytm has no immediate plans to venture overseas and is looking at its India business to generate profits.
“The tech we are making is world-class. Our plan is to make India business profitable and generate free cash flows. Expand brokerage, and insurance. And then we will think about going into international markets,” the CEO said.
Amidst all these, most of the anger from shareholders was directed at Paytm over its stock price. From a record high of INR 1,955, the market correction has wiped off more than 60% of investor wealth in the last nine months. The shares fell 1.86% on Friday to INR 771.85 on the BSE.
An investor attending the meeting reportedly accused the company of cheating retail investors instead of driving growth. “Everyone who purchased shares during the IPO is cursing the management. I do not think the company can achieve profitability even in FY24,” an investor was quoted as saying in the report.
A slew of contentious resolutions were up for debate at the AGM, including one for reappointment of Sharma as the fintech player’s MD and increasing his remuneration. The company has so far not disclosed the stakeholders’ call on the matter.
Earlier this month, three proxy advisory firms – Institutional Investor Advisory Services (IiAS), Stakeholders Empowerment Services (SES) and InGovern Research Services – opposed the proposal for reappointment and increasing the remuneration of Sharma.
In its latest monthly report for July, Paytm said that it disbursed 2.9 Mn loans worth INR 2,090 Cr during the month. It also reported that its monthly transacting users (MTUs) increased 41% year-on-year (YoY) to 77.6 Mn last month, while total device deployment in the country stood around 4.1 Mn.
In the first quarter of the financial year 2022-23 (FY23), Paytm’s consolidated loss widened by 69% YoY to INR 645.4 Cr. However, revenue from operations grew 89% YoY to INR 1,680 Cr in Q1 FY23.
