Author: Mugdha Variyar

Ed-tech sector set to bring out self-regulation code; government issues advisory against misselling

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The ed-tech industry, which is under fire, with the government issuing an advisory to warn customers against misselling and other practices by some ed-tech platters, is working to bring out a self-regulation code, sources told CNBC TV 18.

Industry body Internet and Mobile Association of India (IAMAI) has been working with members, which include the leading ed-tech players, to bring out some form of self-regulation that will protect the interests of the customer.

The government has taken note of rising complaints against some ed-tech companies of misleading consumers and put out a stern advisory on December 23, in which it has warned citizens to “carefully evaluate” offer of free services promised by ed-tech companies and also alerted that “some ed-tech companies are luring parents in the garb of offering free services and getting the Electronic Fund Transfer (EFT) mandate signed or activating the Auto-debit feature, especially targeting the vulnerable families.”

The education Ministry has put out a list of Dos and donts, which include warning customers to “avoid Automatic debit option for payment of subscription fee,” and “Avoid credit/debit cards registration on apps for subscriptions,” and to “not trust the “Success stories” shared by ed-tech companies without proper checks.”

The ministry has also asked ed-tech companies to comply with the Consumer Protection (E-Commerce) Rules, 2020 and the Advertising Standards Council of India’s Code for Self-Regulation and to ensure transparency in advertisements.

There have been multiple Social media posts and reports about ed-tech company Byju’s that cite instances of misleading and misselling, which has led to a concern with the ed-tech sector.

Byju’s did not respond to CNBCTV18’s queries on the advisory and customer complaints.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Amazon to acquire Cloudtail parent Prione from Catamaran

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Amazon is set to acquire the stake of Narayana Murthy-owned Catamaran in Prione Business Services Private Ltd, the parent company of Cloudtail India Private Ltd, one of the largest sellers on the e-commerce giant’s India platform.

Prione Business Services, was set up as a joint venture (JV) between Catamaran and Amazon in 2014. The entity will be acquired by Amazon subject to requisite regulatory approvals, both companies said on Wednesday.

“Amazon will acquire Catamaran’s shareholding in Prione in compliance with applicable laws including all assets and liabilities. The businesses of the joint venture shall continue under the leadership of the current management and on receipt of regulatory approvals, the board of Prione & Cloudtail will take steps to complete the transaction in compliance with applicable laws,” the joint statement said.

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On August 9, 2021, both Catamaran and Amazon had announced their decision to not continue the JV beyond the end of its current term of May 2022. The announcement had come on the same day when the Supreme Court dismissed petitions by Amazon as well as of rival Flipkart to quash a probe by the competition watchdog over alleged practices such as preferential treatment to sellers.

Both companies announced on August 9 that Prione Business Services, the joint venture between Amazon and Catamaran is coming up for renewal on May 19, 2022 and that the two partners have mutually decided to not continue their joint venture beyond the end of its current term.

Amazon had to lower its stake in Prione in 2019 from 49 percent to 24 percent to meet the Press Note 2 (2018) guidelines, with Catamaran buying out the rest of the stake. The guidelines state that foreign ecommerce companies cannot hold equity in any seller on the platform.

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While Amazon did not clarify the next course of action post the acquisition, Cloudtail will legally not be allowed to sell on the platform to comply with the rules.

“The business of Prione and Cloudtail will continue as usual, till receipt of all regulatory approvals. Catamaran and Amazon have a high compliance bar and we conduct all business activities in compliance with applicable laws. We will ensure that the transaction is in compliance with applicable laws,” Amazon said in a statement.

The move comes even as Amazon is facing a probe from the Competition Commission of India over alleged anti-competitive practices such as preferential treatment to some sellers such as Cloudtail, on the basis of a complaint filed by Delhi Vyapar Mahasangh, a traders’ association.

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Some online seller bodies, such as the All India Online Vendors Association (Aiova) have said they are “exploring ways to challenge this combination agreement.”

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Snapdeal DRHP: Softbank, Foxconn, Sequoia among selling shareholders; revenue, losses drop in FY21

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Snapdeal has filed its DRHP for an initial public offering (IPO) that comprises a fresh issue of equity shares worth up to Rs 1,250 crore and an offer-for-sale (OFS) of up to 30,769,600 equity shares by existing shareholders.

Snapdeal’s founders, Kunal Bahl and Rohit Bansal are not selling any of their holding in the IPO. Blackrock, Temasek, eBay, Intel Capital, Nexus Venture Partners, Tybourne, RNT Associates, Premji Invest, and others will also not sell any of their shares in the IPO.

The selling shareholders include SoftBank, Foxconn, Myriad Opportunities, Madison India, Sequoia Capital, Ontario Teacher’s Pension Plan Board, who are collectively selling less than 8 percent of the company’s pre-offer equity share capital.

The proceeds of the issue will be used for funding growth initiatives, expanding logistics capabilities, and enhancing the company’s tech infrastructure, with Rs 900 crore marked for organic growth initiatives.

Snapdeal may also consider private placement of Rs 250 crore before the IPO, as per the filing.

Financials of the company

Snapdeal, which is a value commerce platform, has seen revenue fall sharply in FY21 to Rs 471 crore, nearly 45 percent down from the previous year.
The total income fell to Rs 510 crore, down 44 percent YoY.

The company was also able to pare losses in FY21, which were down 54 percent to Rs 125 core. In H1 of FY22, or for the period ending September 2021, the company saw revenue of Rs 238 crore and loss of Rs 177 crore.

The company has also seen a strong recovery in sales in FY22 , with the number of delivered units growing to 8.59 million in the September quarter, up 40 percent year on year. The net merchandise value has also grown to Rs 374 crore in Q2 of the current fiscal, up compared to Rs 311 crore in the same period last year.

Risks

Snapdeal’s DRHP lists the draft ecommerce rules proposed by the Consumer Affairs Department, which looks to restrict ‘flash sales’ and impost a fallback liability on ecommerce entities, among the external risks for the company, citing an increase in costs and adverse effect on operations.

The company has also cited the Social Security Code, which aims to give benefits to gig workers and would require e-comemrce platforms to partially fund the schemes, stating that it could increase labour costs and affect business and financial performance.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Juspay raises $60 million from Softbank Vision Fund

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Juspay Technologies has announced it raised $60 million in Series C funding led by SoftBank Vision Fund 2 with participation from existing investors VEF and Wellington Management.

Founded in 2012, Juspay processes 11 million transactions per day, including those for leading merchants like Amazon, Flipkart and Swiggy.

The company’s offerings include Juspay Safe, a payment browser that simplifies payment authentication, HyperSDK, a payments SDK distribution installed across 250 million mobile phones, and Express Checkout, a payments orchestration platform to boost transaction success rates.

“Juspay has been in the forefront, building foundational infrastructure by unifying and enhancing hundreds of diverse payment options in a neutral way. We believe in ecosystem innovations like UPI and OCEN (Open Credit Enablement Network) and have built a deep value-driven culture to support such initiatives. This funding will help us scale up our mission in India and expand globally,” said Vimal Kumar, Founder and CEO of Juspay.

Vishal Gupta, Director, SoftBank Investment Advisers, said, “Juspay is one of the most innovative deep tech companies in India’s fast growing digital payments market. It is solving the complex needs of an evolving fintech ecosystem. We believe in Juspay’s vision to simplify payments for billions of people globally and deliver higher revenue at lower cost for merchants.”

Juspay has a suite of UPI products for merchants, banks and ecosystem players. Its product “UPI In a Box” offers a UPI stack which powers Amazon, Cred, Swiggy and others. It also offers On-Cloud UPI PSP which powers the UPI stack for banks like Axis Bank and Yes Bank.

Juspay intends to invest the funds in technology and product development to scale its business in payments and product adjacencies like credit both in India and globally. Avendus Capital has advised Juspay in this funding round.

Juspay counts Amazon, Flipkart, Cred, Swiggy, Tata, Airtel, Vodafone, Jio, ICICI Prudential, BigBasket, PharmEasy, Ola, Uber, MPL, UrbanCompany, Digit, Acko, MakeMyTrip, RedBus, BookMyShow, PhonePe and Unacademy among others as its customers.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Swiggy to invest $700 million in grocery delivery vertical Instamart

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Food ordering and delivery platform, Swiggy Thursday announced that the company will invest $700 million in its express grocery delivery service Instamart.

Launched in Gurugram and Bengaluru in 2020, Swiggy said Instamart is now serving customers across 18 cities and doing over 1 million orders per week. The company said by January 2022, it will make deliveries in 15 minutes by having the network of dark stores very close to the majority of its customers.

“At our current growth trajectory, Instamart is set to reach an annualised gross merchandise value (GMV) run rate of $1 billion in the next three quarters. With our food delivery business trending at a $3 billion annualised GMV run rate, and Instamart’s super-charged growth, we’re very excited about our convenience mission coming to life in a very big way,” said Sriharsha Majety, CEO, Swiggy.

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The platform offers products across categories like fresh fruits and vegetables, daily bread and eggs, cooking essentials, beverages, instant food and munchies, personal and baby care, home and cleaning, specially curated to suit the demand requirements of each location. It is available in Ahmedabad, Bengaluru, Chennai, Coimbatore, Chandigarh, Delhi, Gurugram, Hyderabad, Indore, Jaipur, Kolkata, Kochi, Lucknow, Ludhiana, Mumbai, Noida, Pune and Vizag.

According to a Redseer report, there are nearly 20 million households addressable by quick commerce in India, and quick commerce is expected to grow at 10-15x to reach a market size of $5 billion by 2025.

Top-ups and unplanned purchases account for two-thirds of India’s consumables spending, as per the report. In metros and Tier 1 cities, 70 percent of the purchases are unplanned and top-ups. There are multiple well-funded players in the space. Grofers recently turned unicorn with a $120 mullion fundraise led by Zomato.

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Zepto, founded in 2020 by two 19-year-old Standford dropouts, raised $60 million from the likes of Glade Brook Capital, Nexus, and Y Combinator. Swiggy closed a $1.25 billion fundraising in July this year led by SoftBank Vision Fund 2 and long-term investor Prosus, and the company had said the funding would accelerate both food and non-food businesses. Dunzo raised $40 million in January from investors including Google and Lightbox. Ride-hailing platform Ola has also entered the grocery delivery service.

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

RBI payment rules not helping SaaS companies, says Freshworks’ Girish Mathrubootham

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Nasdaq-listed Freshworks’ founder and CEO Girish Mathrubootham called on the Reserve Bank of India to create a whitelist of “good” companies so that they are not affected by the rules on payments.

RBI’s auto-debit guidelines for recurring payments kicked in from October, following which subscribers of various services had to renew their standing instructions, while it also brought in additional layer of authentication for payments above Rs 5000.

Mathrubootham said that the rules were not helping SaaS companies.

“Some rules are not helping SaaS companies when it comes to RBI and payment infrastructure. We should have a whitelist of good companies to let them build their business,” Mathrubootham said while speaking at the Nasscom product Conclave on Wednesday.

The rules have impacted several SaaS companies and other startups who rely on recurring mandates or their services.

RBI said it brought in the rules to protect customers following complaints of auto-debit transactions being done without consent.

“There can be some improvement in RBI payment infrastructure. I know rules exist to protect consumers, but if a whitelist of good companies is allowed, they can grow their business,” Mathrubootham said.

Mathrubootham added that the Indian government along with state governments have come up with several encouraging policies for startups in recent years.

Freshworks, started by Mathrubootham in Chennai, became one of the first SaaS companies from India to list on Nasdaq in September.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Ola to raise $500 million in Term Loan B, gets B3 rating from Moody’s

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Ride-hailing platform Ola is looking to raise as much as $500 million in debt as a Term Loan B, which will also open to ratings from credit agencies.

Moody’s Investors Service has assigned a first-time B3 corporate family rating (CFR) to ANI Technologies Pvt Ltd (Ola). Moody’s has assigned a B3 rating to the company’s proposed senior secured term loan.

Ola’s wholly-owned subsidiaries — Ola Netherlands B.V. and Ola USA Inc — are the borrowers. B3 falls under the non-investment grade category. The loan is guaranteed by Ola and its subsidiaries engaged in ride-hailing services, Moody’s said.

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“Ola’s B3 CFR reflects its loss-making operations and high execution risks associated with its international expansion plans as well as its venture into India’s competitive and fragmented food delivery and vehicle commerce sectors,” said Stephanie Cheong, a Moody’s assistant vice president and analyst.

Ola has ambitions of expanding its presence in the UK, Australia and New Zealand, Moody’s note said. Moody’s expects a high level of spending will be required to support Ola’s growth plans, such that the company’s annual cash burn (cash flow from operations less capital expenditures) will double to $140 million for at least the next two years, from $73 million in the year ending 31 March 2021 (fiscal 2021).

Moreover, Moody’s added that Ola’s cash and cash equivalents of $279 million as of March 31, 2021, will just cover the company’s expected cash burn and scheduled debt maturities through December 2022.

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“As a result, the B3 rating is also premised on the successful completion of Ola’s term loan transaction as planned, which will provide the required liquidity to sustain its operations beyond the next 12 months, as well as execute its growth plans,” says Cheong, who is Moody’s Lead Analyst for Ola.

On the other hand, the ratings will likely face downward pressure if the proposed transaction is delayed or if the funds raised are lower than the company’s target of $500 million, in the absence of any alternative funding that shores up liquidity by year-end, Moody’s added.

The company is currently in the midst of completing pre-IPO funding round to raise equity from new and existing investors and also targets to complete a public listing by the first half of 2022.

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Oyo dismisses allegations by FHRAI to Sebi over IPO

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Hospitality firm Oyo on Monday has dismissed allegations made by the Federation of Hotel & Restaurant Associations of India (FHRAI) to Sebi, in which the association had called for the suspension of the company’s proposed IPO citing alleged anti-competitive practices, fraud, and inadequate disclosures in DRHP.

Meanwhile, FHRAI has also filed a fresh civil appeal against the NCLAT’s July order in which it had closed an insolvency case against an Oyo subsidiary. FHRAI had approached Sebi in October asking the regulator to reject Oyo’s DRHP and suspend the proposed IPO.

In a response to FHRAI’s letter to Sebi, which Oyo sent to both FHRAI and Sebi, the company said it is not involved in anti-competitive agreements as alleged. The company also said it is not in a dominant position and hence cannot abuse its position, citing a 2019 CCI order.

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On allegations that Oyo has avoided contractual obligations with hotel partners by invoking force majeure, the company said it was “constrained” to invoke force majeure provisions due to pandemic, and that no fraud was committed.

FHRAI had also alleged that the company had not made adequate disclosures of outstanding litigations against them in the DRHP and that it would impact retail investors.

Oyo, however, has said all outstanding litigation against the company has been disclosed in the DRHP. Oyo had filed its DRHP with Sebi on October 1 for raising Rs 8,430 crore through an IPO. It is still to receive the regulator’s approval.

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Oyo did not respond to queries. FHRAI said it “rejects “Oyo’s response and added that Oyo must resolve issues of hoteliers and claimants. “FHRAI will wait for Sebi’s decision,” the association said in a statement. FHRAI files a civil appeal against the NCLAT order on the Oyo subsidiary insolvency case.

In a separate matter, the FHRAI filed a civil appeal against the NCLAT order in which it had given relief to Oyo from an insolvency proceeding against a subsidiary. The matter will be heard in the Supreme Court on Dec 15.

NCLT Ahmedabad in April had launched IBC proceedings against Oyo subsidiary over payment default. However, the NCLAT had closed the insolvency process against the company in July.

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Following that, a Siliguri-based hotel owner challenged NCLAT’s decision in the Supreme Court, and FHRAI also filed applications to intervene in the case.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

RBI recommendations on digital lending positive for Paytm, company says

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The recent report by the Reserve Bank of India’s (RBI) working group on digital lending, which looks to disallow credit risk-sharing with unregulated players under the First Loss Default Guarantee (FLDG) model will be good for the ecosystem and for Paytm’s business model, the company’s management said during their Q2 earnings call with analysts Saturday evening.

“It is important that digital lending space gets further organised. We are completely aligned with regulations. If the new guidelines get implemented, it will strengthen how Paytm has been doing business compared to others, especially with FLDG,” the management said.

“It will be positive for our business model, and it will remove so-called smaller players in the ecosystem. The RBI has called out FLDG. We work complementarity, that is why the scale and revenue growth,” CEO Vijay Shekhar Sharma told analysts. “The number of partners queuing up to join our platform to offer credit is so high that we are looking to hire more engineers for the integration,” he added.

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The management was asked whether the guidelines could impact the company’s business, especially around its Buy Now Pay Later (BNPL) product.

“Our lending partner BNPL disbursal is directly with the merchant’s account. The working group has observed that a lot of BNPL disbursals happen to prepaid products. The BNPL business we run is in line with what is being recommended,” the management said.

Analysts also asked about the penetration of the financial services business is among the company’s 63 million monthly transacting users.

Also Read: Explained: How RBI plans to rein in illegal digital lending

Paytm’s management said penetration among monthly transacting users on lending is 2 percent on BNPL products, while on equity trading business, the penetration is less than 0.5 BNPL. The company also added that when the user of a payment moves to wealth or lending, there is no incremental customer acquisition cost.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Karan Johar, Yuvraj Singh invest in Carl Pei’s Nothing

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Consumer tech brand Nothing, which announced funding of $50 million as part of its Series A last month has disclosed that film producer and director Karan Johar, cricketer Yuvraj Singh, and fashion designer Sabyasachi Mukherjee also joined the round as investors.

The digital content creator and entrepreneur Ranveer Allabadia and independent music composer and singer Jasleen Royal have also come on board as backers of Nothing, the company said on Tuesday.

Nothing was launched by OnePlus co-founder Carl Pei late last year.

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Manu Sharma, vice president and general manager of Nothing India said, “The market is overdue for a new player to bring passion back to the field of consumer tech; one that celebrates artistry and hopes to organise our digital life in one connected space. We are excited that our new strategic and private investors from India feel the same and believe in our vision & mission. In 2021 we successfully launched one of the most anticipated tech products of the year, Nothing ear (1) and we assure you, this is just the beginning.”

Nothing has so far raised a total of $74 million. In December last year, the company had raised $7 million in seed financing from prominent investors, including Tony Fadell (inventor of the iPod), Casey Neistat (YouTuber), Kevin Lin (co-founder of Twitch) and Steve Huffman (CEO of Reddit). In February this year, the company raised $15 million from GV (formerly Google Ventures.).

Nothing, a London-based consumer tech company launched its debut ear (1) in August 2021 and entered India with the product through a partnership with e-commerce giant Flipkart.

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Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow