Tag: india

The Online Cab Industry – How it Stacks up!

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

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Ashkal Javed used to work in the sales and marketing department of a telecom company before he quit his job to become a driver for an online cab aggregator. The promise of earning one lakh rupees a month and upgrading his lifestyle seemed lucrative. However, things did not go as they were expected. “Incentives have reduced drastically and I can’t even pay my EMIs now,” shares Javed.

Javed is just one of those many online cab drivers who are struggling to make their ends meet. Low fare bookings, fall in driver incentives and preference towards bookings on company owned cars are some of the concerns that these cab drivers have raised in the ongoing strike.

A quick analysis of the daily commuter market in India shows that of the total 130-150 million trips, about 2 million are through online cab aggregators. Data by RedSeer Management Consulting shows that online daily trips are expected to increase more than 50% to 5.4 million by 2020.

Over the last couple of years, players like Ola and Uber have been working on cashing-in on this massive opportunity. Armed with an innovative business model, these aggregators built a strong network of driver partners to penetrate into this developing market. “The offer was too tempting. High incentives, zero commission and huge monthly earnings lured me into becoming a driver partner. I used to earn a minimum of Rs 70,000 a month in the early days,” says Rasul Sheikh, a cab driver, adding that his monthly income went down by 50%.

Data from RedSeer Management Consulting also draws a comparison of monthly take home between Online and Offline (black and yellow) players. In 2017, the average take home for an offline player stood at a flat 17,000 rupees. For online cab drivers, monthly payouts have fallen from 27,000 rupees in the January to March 2017 period to 19,000 in the July to September period.

With the focus on profitability and reduction in cash burn, aggregators have been trimming spending on driver incentives. In October to December 2016, 60 per cent of the gross booking value was spent by cab aggregators as driver incentives. This number has dipped to 16 per cent in just one year. However, consultants say that driver incentives are likely to stabilise at this level.

Commenting on the strike and driver protests, an Ola Spokesperson said, “Interest of our driver partners and customer convenience are of paramount importance to us. While, we have seen a slight improvement in our services in Mumbai, however for the situation to improve significantly it is imperative that intimidation of driver partners and vandalism of their cars by vested interests be stopped. New economy companies like us are counting on the police for normalcy to return. ”

An Uber spokesperson said, “We regret the disruption caused to our rider and driver community by a small group of individuals. We remain committed to serving the city, ensuring driver partners can continue to access stable earning opportunities, while giving riders a convenient option to get around their city.

The Hon’ble Bombay High Court issued an injunction prohibiting unions, their leaders and anybody else from obstructing the activities of Uber driver partners. We welcome this, and hope that it will enable drivers to stay behind the wheel, something many have been telling us they wish to do.

We have been listening to our driver partners all along and are committed to ensuring that Uber remains an attractive entrepreneurial opportunity for them. While the authorities have taken steps to ensure minimal disruption to our rider and driver communities, we hope that they will continue to enforce the order passed by the High Court.”

In light of this scenario, the key challenges that these cab aggregators continue to face are managing growth versus profitability and balancing driver demands with customer satisfaction.

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

India second worst performing market so far, says Sakthi Siva of Credit Suisse

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

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India is part of the ‘Expensive 4’ club as it is among the four most expensive markets in the region. The premium for India had gone above 50% and the valuations have improved, said Sakthi Siva, Managing Director of Credit Suisse  adding “it is not enough to upgrade our recommendations”.

So far this year,  India has been the second worst performing market, added Siva.

On the earnings front, Siva said that for 3 to 4 consecutive years, India has seen earnings downgrade. While others in the region have seen strong earnings upgrade last year.

“However, the house has not always been underweight on India”, she said, adding that they had been overweight from 2013 to August 2015.

She also expressed that issues like politics and banking are also areas of concerns, especially if political issues slowdown the reform process.

“The hope is that banking sector issues get sorted out soon”, she said.

When asked if she had seen signs of capitulation for emerging markets and Asian equities from the start of this year, she said India is not in capitulation territory yet, while markets like Taiwan and Japan are in capitulation territory.

Below is the transcript of the interview.

Sonia: I want to start off by asking you your view on India because you had been underweight on India for a while and now the Indian markets have actually grossly underperformed most emerging markets since the start of the year, what is the call now?

A: We are still underweight at this point in time. The reason for being underweight are firstly valuations and secondly earnings revisions. On valuations, India has been in what we call the expensive four club, which is the four most overvalued markets in the region. The premium has been above 50 percent. So, as you correctly pointed out, India so far this year is now the second worst performing market and as a result the valuation premium has come below 50 percent. So, we are looking at India but it is still in our expensive four. So, I guess my answer to your question is while the valuations have improved at this point probably not enough for us to upgrade our recommendation.

The second reason for the underweight is actually earnings revisions which are very poor. India has had almost 3-4 consecutive years of earnings downgrades, whereas the rest of the region has seen certainly strong earnings upgrades last year and even this year the revisions are flat. So, India is still trailing the other markets in terms of earnings revisions.

Nimesh: Given that you had a valuation concerns for India for a very long time, now that the markets have corrected, the expectation is that the earnings are going to pickup, how much more downside do you see for Indian equities which will make you comfortable from a valuation perspective?

A: From a valuation perspective, for us we tend to make a strong underweight call when the premium is over 50 percent. The premium for India went above 50 percent I think about two years ago – in August 2015. So, we had been underweight for quite a long time. However it is not always that we are underweight. I do like to remind you that after taper in June 2013, India actually joined our cheapest four and we were actually overweight India all the way from 2013 till August 2015. So, it is not so much absolute downside that we are talking about for India, it is more relative. So, we think that while the premium has come below 50 percent, we would like to see it come down a bit more. So, we would like to see probably another 5 percent underperformance relative to the other regional markets before we consider an upgrade of India.

Sonia: Apart from valuations and earnings revisions that you spoke about there are other issues that India has been plagued with as well, one of course is the banking related scams, the other is the political turmoil and the evolving story there, how worried would you be about these issues and do you think they could India down further?

A: Those issues are also there but for us the two factors that we focus on particularly as I said in our regional context are valuations and earnings revisions. With the BJP in the last by elections, the fact that the opposition parties are starting to come together and may be if that slows the pace of reform, that is an additional concern. However at this point as I said our bigger concern is the valuations and the earnings revisions. India has trailed regional markets on earnings revision for now 3-4 years. So, there was always an excuse – it was demonetisation or GST. However India’s earnings downgrades preceded these two episodes. Obviously the banking sector thing has also contributed but that also hopefully will get sorted out soon.

Nimesh: You track the flows very closely and while the FIIs are net sellers across Asia since the beginning of this year, still we haven’t seen a capitulation so to speak. You talk to a lot of investors at the conference, what is the sense that you pick up? Are the investors now worried about any signs of capitulation for emerging market and Asian equities in the first half of this year?

A: The good news is, on a rolling 12 months, we define capitulation as foreigners being net sellers on a rolling 12 months. At the moment that number is now zero. So, we have not yet got to negative. So, we will also get more excited both about India as well as the region if that number goes negative. The last time we had foreign investor capitulation was two years ago in January 2016 and we made a big buy call at that time. At this point as I said we are still at zero. However if we do get a bit more foreign selling, we actually would officially be in capitulation territory.

Some markets are already in capitulation territory, markets like Taiwan, even Japan. India is still on a rolling 12 months basis still at a positive number at this point.

Nimesh: While FIIs are still positive on Indian equities, the bigger strength for the equity markets locally has been the domestic flows. You talk to lot of our Indian counterparts as well. Any sense of the domestic liquidity can dry up little bit if there is a sharper correction for Indian equities in 2018?

A: I am not sure whether the domestic flows dry up. In fact I think one of the reasons why India did well last year despite quite a lot of earnings misses, I think was the domestic flows. You have also got other markets like Thailand as well where the domestic flows have helped to support these markets. However our view is that it is normally the foreign investor that drives the overall trend. So, we would again be happier to upgrade India if and when we see foreign investor capitulation, if and when India’s premium comes down further and if and when earnings revisions start getting less negative. There were a couple of months – in November-December where India’s earnings revisions turned positive but they once again turned negative so far this year.

Sonia: What is your sectoral view now because couple of years ago you were very positive on metals and we saw huge rally in names like Hindalco since then. Of course at the start of this year these stocks have come off a bit, but how are you positioned in terms of sectors now in India?

A: Our positioning has not changed much. We like IT as well as metals. So, more in the cyclical sectors. We do like HCL Tech on the IT space, we still continue to like Hindalco.

On the materials space, it wasn’t so much an argument about demand, it was more an argument that we are starting to see supply cuts and that may help to prolong the commodity cycle.

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

CBI moves Delhi High Court against acquittal of accused in 2G spectrum case

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

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The Central Bureau of Investigation has moved Delhi High Court against the acquittal of the prime accused, A Raja in the 2G spectrum case, reports CNN-News18.

A special CBI court ordered the acquittal of former Telecom Minister A Raja, Kanimozhi and others – the prime accused in the case – in December 2017.  The special judge O.P. Saini observed that the investigation agency started its case with “great enthusiasm and ardour” but at the final stage of the trial, the prosecution moved in “two different directions without any coordination”.

The case was considered to be the biggest scam independent India has ever seen. The CBI had filed its first charge sheet in 2010 in the case relating to the inconsistencies in issuing licences and allocating 2G spectrum. The case was brought to light when the United Progressive Alliance was in power.

The-then CAG report had revealed that the 2G spectrum licences had been issued to telcos at underestimated prices which led to a loss of Rs 1.76 lakh crore to the government.

The licences have been believed to be issued on a ‘First Come First Served’ (FCFS) policy, which was not clearly defined. Adding to this, it was sold at 2001 prices, and not 2008 prices, which was the current year at that time.

Raja had been accused of taking bribes to change the rules which will benefit certain companies and individuals. He had allegedly changed the cut-off date for the application for a licence and sold the spectrum at price charged in 2001.

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

Modi’s chief economic adviser says that country is not performing well in the exports

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

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India’s net exports are not doing well even as the global economy is on the recovery path, said Bibek Debroy, the head of Economic Advisory Council to the Prime Minister (EAC-PM). The statement was made by the Niti Aayog member on Monday at an event that was organized by FICCI.

Debroy pointed out that even though the country would want to push exports, it may not be as smooth as exporters would want it to be. This according to Debroy is due to the fact that while they will like a depreciation in the exchange rates, this may not be effective due to the high volume of capital inflow in to the economy. “Net exports is not doing well. During high growth years, net exports performed much better … that world economy has not been doing that bad,” he was quoted as saying in the PTI report.

While stating that it could be ideal if the Central Bank i.e. RBI intervened Debroy added that this market intervention too will have its own costs.

The statement by Debroy comes after the country saw exports grow by 4.5% last month, the lowest it experienced in the last four months after shipments of engineering, textiles and gems and jewellery declined while trade deficit narrowed to a five-month low of $12 billion.

“India has always been in favour of multilateral trading system”, he said and added that the country can increase its import duties as long as they are below the bound rates. Debroy said that some of India’s tariff rates are misaligned and the country has signed plethora of free trade agreements.

India’s trade prospects

Claiming that for the first time, Commerce Ministry and Ministry of External Affairs (MEA) are working together unlike in the past, he said that country’s trade prospects will depend on the efforts being made to improve logistics, integrate investments in the global supply-chain, improve the business environment and develop infrastructure.

Debroy voiced his support for the reforms being ushered in by the Modi government. Claiming they were fundamental in nature he said that it will take time to bear fruit in terms of improvements in GDP and productivity and added that “you fix India and trade will fix itself.”

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

All 39 Indians kidnapped in Iraq dead, says Sushma Swaraj

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

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External Affairs Minister Sushma Swaraj confirmed that the 39 Indians who were kidnapped by extremists in 2014 in Mosul are dead.

The minister informed Rajya Sabha that the 39 bodies were exhumed from a mount in Badoosh in Iraq.

DNA testing led to the identification of 38 as being those of the missing Indians. She said that they were informed on Monday, where 38 DNA matched, while, 39th DNA matched 70%.

She added that Minister of State for External Affairs, VK Singh will be going to Iraq in order to bring back all the bodies with proofs to India.

Last year, Swaraj firmly refused to declare the 39 Indians dead without evidences.”It is a sin to declare a person dead without concrete evidence. I will not do this sin”, Swaraj said in Lok Sabha last year.

When the case was brought to light, India had asked Iraq for help in locating the missing Indians after Iraqi forces recaptured Mosul from IS.

The 39 persons, most of whom hailed from Punjab, were working on projects near Mosul when they were kidnapped during their evacuation.

(With inputs from PTI and ANI)

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

Only 5% of adult Indian population successfully establish own business, says GEM India Report

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

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Only five percent of the adult Indian population engaged in “early-stage entrepreneurial activities”, establish their own business, making it one of the lowest rates in the world, finds Global Entrepreneurship Monitor (GEM) India Report 2016-17.

The survey which was conducted among 3,400 respondents aged between 18 and 64 years stated that only 11 percent of India’s adult population was engaged in “total early-stage entrepreneurial activity (TEA), out of which, more than 50% have low-growth expectation.

The report prepared by Gandhinagar-based Entrepreneurship Development Institute of India (EDI) and its associates also suggested that the business discontinuation rate of the country is among the highest, 26.4 percent. In 1.3 percent cases, bureaucratic hurdles led to the discontinuation.

Whereas, seven per cent of businesses failed due to financial crisis, 6.5 per cent due to personal reasons, 16.9 per cent because of lack of profit and 58.4 per cent due to ‘other’ reasons.

According to the report, around 4 percent of the population accounts for “nascent entrepreneurs” who are believed to be active in setting up businesses. Whereas, seven 7 percent are the owner-managers of businesses existing for less than 3.5 years.

Among the BRICS economies, Brazil has the highest numbers with 17% established business ownership rate and South Africa, the lowest with 3 per cent.

China has a slightly higher rate of 8 per cent.

(With inputs from PTI)

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

India’s market underperformance could continue, expect volatility: Udayan Mukherjee

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

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For Indian equity market, politics has a strong influence on the sentiment and so, it could impact the market. Although, we are seeing earnings recovery and growth, once the low base effect plays out, we may not see major upticks and the underperformance could continue, analysed Udayan Mukherjee, the former managing director of CNBC-TV18.

Mukherjee stated that the country has been underperforming in other global markets that could continue because there are factors which are only unique to India besides things like commodity prices, trade war etc. that impact other markets. “So, one should expect more volatility going ahead”, he said.

According to him, the market sentiment also depends on how the liquidity considerations play out by the end of this month, especially, the numbers of domestic institutions. “If the mutual funds need to sell to give out dividends to avoid capital gains tax and that puts some technical pressure on the market and the level of 10,100 might be difficult to hold,” he said, adding that otherwise the market might trade sideways over the next few days unless we have a big global trigger.

About politics, he said that the market has started pricing around a political scenario that 2019 could be a difficult road for BJP than it was in 2014.

For full discussion, watch video

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