Cairn tax dispute: Delhi HC issues notice to I-T department
The Delhi High Court issued a notice today to the Income Tax (IT) Department over Cairn Energy’s tax plea. The IT department has assured the UK-based explorer that the tax demand shall not be enforced till June 30. Cairn Energy has been battling a ‘retrospective tax’ demand of Rs 29,000 crore on capital gains it received in a 2006 restructure of its Indian unit. Sources have learned talks are under way with the government regarding the proposal made by the Finance Minister in the Budget. Cairn Energy has initiated its long-winded arbitration proceedings in Singapore. The Delhi High Court will resume hearing on August 4.
Maharashtra looking to collaborate with Shanghai, St. Petersburg to solve infra, housing issues
The government of Maharashtra is looking to collaborate with global cities including China’s Shanghai and Russia’s St. Petersburg to resolve its infrastructure and housing issues, said Chief Minister Devendra Fadnavis. “Mumbai is struggling with infrastructure and affordable housing issues. We are keen to learn from experiences of global cities. There’s lot to learn from these cities including Shanghai’s affordable housing model and St. Petersburg’s water transport,” Fadnavis said at the concluding session of the BRICS Friendship Cities Conclave 2016 in Mumbai. The state government is looking to collaborate and seek St. Petersburg’s expertise on making Mumbai’s Mithi River navigable. Separately, Fadnavis also added that the government has sought a report from the Aurangabad Divisional Commissioner on water supply and requirement of water for breweries there. The state government will consider action based on this report in the next 3-4 days, he said. He was responding to queries regarding Shiv Sena’s demand that the government should stop water supply to beer manufacturing units in the drought-hit Marathwada region in order to tackle shortage of drinking water.
Government to consider two new SEZ proposals on April 28
Government will on April 28 consider two new proposals, including from Infosys, for setting up Special Economic Zones (SEZs). The proposals will be taken up by the Board of Approval (BoA) for SEZ, chaired by Commerce Secretary Rita Teaotia. Infosys Ltd has proposed to set up an IT/ITeS zone in Bengaluru over an area of over four hectares. Chhindwara Plus Developers Ltd has proposed to set up a multi-product SEZ in Madhya Pradesh over an area of 1,320 hectares. Further, as many as 19 developers and units have sought more time to complete their projects which are under different stages of completion. Wipro Ltd has requested for further extension of its letter of approval for setting up an IT SEZ in Bengaluru. “The developer has been granted two extensions, validity period of which is upto May 26. The developer has requested for further extension so as to implement the project,” the agenda of the BoA meeting said. Similarly, Vedanta Aluminium Ltd has sought extension of the validity period of formal approval, granted for setting up an SEZ for manufacture and export of aluminium in Odisha, beyond May 22. Others who have sought more time include Brooke Bond Real Estate, Avash Logistic Park, Sealand Ports and Indofil Industries. SEZs are exports hubs which contribute to about 23 per cent to the country’s total outbound shipments. The commerce ministry is taking steps to revive investors’ interest in these zones. Exports from such zones in 2014-15 stood at Rs 4,63,770 crore as compared to Rs 4,94,077 crore in the previous fiscal.
Government chalks out Rs 25,000-crore road map for construction of highways in 12 hill states
The government is preparing a Rs 25,000-crore plan for construction of about 2,000 kilometres of highways in 12 hill states in the country. Officials said the highest number of highway kilometres will be awarded in Arunachal Pradesh, followed by Jammu and Kashmir, Mizoram, Himachal Pradesh and Manipur. Majority of these projects will be awarded as per the government funded model of engineering, procurement and construction or EPC while a few high traction projects that connect religious places in Himachal Pradesh and Jammu and Kashmir will be taken up in accordance with the newly conceived hybrid annuity model, they said. The target for the current fiscal for these states is more than double of that in 2015-16, when the government managed to award projects adding to a little less than 1,000 km. “Projects worth Rs 10,000 crore were awarded in hill states last year, only 10% of the total projects awarded in the country. This year, we’re focusing more on hill states as they border with China, Nepal and Pakistan, and are of high strategic importance to India,” a senior transport ministry official said, requesting not to be named. The Prime Minister’s Office has also asked the road transport and highways ministry to increase the pace of road development in these states. The ministry plans to award projects of about 300 km in Arunachal Pradesh, 256 in Mizoram, close to 250 km each in Jammu and Kashmir and Himachal Pradesh, 100 km in Manipur and the remaining in Uttarakhand, Assam, Sikkim, Nagaland and West Bengal. Most of these projects will be undertaken by the newly constituted National Highways and Industrial Development Corporation. “In all these states, we will be dividing our road contracts into small packages so that they can be awarded to local contractors to generate road building capacity at local level and increase local employment,” the official said. In 2015-16, the ministry awarded about 10,000 km of highway contracts worth Rs 1 lakh crore. The construction pace picked up, with the government constructing nearly 6,300 km at the rate of almost 18 km a day on average. For the current year, the target is to construct nearly 10,000 km that will accelerate the pace of road construction to 28 km per day. In the budget for the current fiscal, the road transport and highways ministry got an allocation of Rs 57,000 crore and the National Highways Development Authority has been allowed to raise tax-free bonds worth Rs 15,000 crore.
NHAI comes up with a proposal to decongest NCR; seeks views
NHAI has come up with a proposal in for decongesting the National Capital Region traffic by constructing link roads, flyovers and underpasses. The National Highways Authority of India (NHAI) has also created a separate cell to work on decongesting Delhi and the NCR, which comprises 13 districts of Haryana, UP’s 7 and 2 of Rajasthan as well as boats of over 88.50 lakh vehicles. It has uploaded the proposal for decongesting the NCR on its website and urged architects, town-planners and other citizens to send in their suggestions and comments by April 30. “NHAI has prepared a decongestion proposal for Delhi. It recognises the urgency of decongesting Delhi and the critical need to optimise limited capital resources, while giving citizens maximum connectivity and comfort,” it said in a statement. The NCR is India’s largest and world’s second largest urban cluster with a population of over 54 million. It has an area of 46,208 sq km out of which NCT-Delhi has an area of around 1483 sq km and Central NCR (CNCR) has about 2000 sq km. NHAI has proposed to provide an efficient connectivity through radial routes of outer ring road with Eastern Peripheral Express (EPE) and Western Peripheral Expressway (WPE), which will decongest Delhi. It proposes to connect Azadpur to Sonipat, Kashmiri Gate to Baghpat, Nizamuddin Bridge to Dasna, Lajpat Nagar to Kherli Kankar in Haryana and Bhikaji Cama Place to NBRC Gate on NH-8 in Haryana among others for radial connectivity of Outer Ring Road to EPE and WPE. It also proposed to decongest the settlement areas through elevated corridor or by rerouting the networks by a green field alignment. Besides, NHAI says that new links to NH-8 will further decongest Delhi-Gurgaon road, Palam area, Aya Nagar, Vasant Kunj and MG (Mehrauli-Gurgaon) Road. In order to decongest NH-8/Gurgaon, NHAI proposes a links to connect Vasant Kunj to Aya Nagar on Gurgaon-Mehrauli road (NH-236), Sikandarpur/Guru Dronacharya Metro station to NSG Gate on NH-8, among tohers. To decongest the Delhi-Gurgaon section of the NH-8, NHAI proposed construction of flyover and underpass at Hero Honda Chowk on Delhi-Gurgaon Expressway as well as constructing of underpasses, overpasses etc. for improvement of 3 junctions at IFFCO Chowk, Signature Chowk and Rajiv Chowk. Road Transport Minister Nitin Gadkari has said Delhi’s pollution has been catching all attention and government will solve it in 2 years with thrust on improving road designs, decongesting traffic and promoting eco-friendly fuel. In November 2015, Prime Minister Narendra Modi laid the foundation of 3 National Highway projects – Eastern Peripheral Highway, Western Peripheral Highway and eight-laning of NH between Mukarba Chowk in Delhi and Panipat in Haryana. The projects, with a combined length of 341 km will be built at an estimated cost of Rs 10,166 crore and will run through Haryana, Uttar Pradesh and Delhi.
Flipkart’s logistics arm does business for rivals and is even looking beyond ecommerce
When Sachin and Binny Bansal founded Flipkart in 2007, they often ended up jumping on their own vehicles in the initial months to make deliveries. While Flipkart showed plenty of promise early on (first as an online book seller and then foraying into dozens of other categories), the founders discovered that the backend wasn’t strong enough to keep pace with their ambitious plans. So the duo founded Ekart, a distinct logistics business, to keep pace with exploding orders. What started off with barely a dozen people in 2010, has today grown into a meaty business for the parent, with some 15,000 feet on the street and a couple of thousand managers administering the staff. “We wanted logistics partners to support cash on delivery and returns, which was absent or evolving in the industry,” says Neeraj Aggarwal, senior director, delivery operations, Flipkart. “This was absent and we ended up building our own expertise.” As Flipkart has made some inroads into the logistics market with its own business, the top management has also begun to think of life beyond the parent. This will be done not only by looking for business from competing ecommerce companies, but also by extending Ekart into new industries too, says Aggarwal. “By 2020, ecommerce alone should give Ekart revenues of $2.5 billion,” he says. “We will be very disappointed if we aren’t able to open up newer lines of business by then and build a much larger business.” Already, Flipkart has made some investments to catalyse growth in its logistics unit. It has backed MapmyIndia, an online mapping solutions provider, and Blackbuck, an online logistics market place, in December 2015. “Logistics, according to some reports, will be a $250-300 billion opportunity in the next five-six years,” Aggarwal says. “We want to evolve into a major player in this booming market.” Flipkart’s bullishness is driven by the fact that the industry it seeks to explore is dominated by small players with little or no use of technology and engineering services to improve their business. Additionally, legacy logistics players have been slow to tap the demand from ecommerce companies, allowing the likes of Ekart to come up and thrive. “The largest four or five players will account for no more than $3-4 billion of an industry that is expected to be $100 billion in size,” says Aggarwal. “There’s an opportunity to make a major dent in this market.”
FDI inflows up 37 per cent to $39.32 billion in 2015
Foreign direct investment (FDI) into the country increased by 37 per cent to USD 39.32 billion during 2015. The foreign investment inflows stood at USD 28.78 billion in 2014, according to data by the Department of Industrial Policy and Promotion (DIPP). Computer hardware and software sector attracted the highest FDI, followed by services, trading business, automobile industry and chemicals. Singapore emerged as the biggest FDI source, followed by Mauritius, US, Netherlands and Japan. The government has taken several steps to promote investments through a liberal FDI policy. It has relaxed norms in several sectors, including single brand retail, e-commerce and construction. “The focus on improving ease of doing business in the country and relaxation of norms would help in attracting more and more FDI,” an official said. The Economic Survey 2015-16 had said that a favourable policy regime and sound business environment have facilitated increase in FDI flows into the country.
With the ecommerce industry set to hit $100 billion by 2020, can logistics business be far behind?
In the next couple of months QikPod, a company backed by the likes of Flipkart and ace investor Accel Partners, plans to unveil dozens of lockers across Bengaluru in information technology parks and commercial and residential complexes. Founded by serial entrepreneur Ravi Gururaj, this venture wants to recast how deliveries are made in India’s white-hot ecommerce industry. The venture that is still under wraps wants to do this by moving from a synchronous system of parcels hand-delivered by courier firms, to an asynchronous model, where shipments are left in a secure locker to be unlocked with a code sent by text message to users. Rather than fret about being at home or at work to receive a delivery and deal with repeated calls for directions from delivery agents, QikPod’s lockers will aid ecommerce firms with more and faster deliveries. QikPod’s business model also envisions aggregation rather than fragmentation of demand Flipkart can deliver 1,000 parcels to a single neighbourhood or IT park, rather than make time-consuming and costly individual deliveries. “We want to have our lockers where consumers live, work, transit and shop,” Gururaj says. Deepak Garg, co-founder, Rivigo, August 2014 FOCUS AREA: Re-inventing long-distance truck freighting; INVESTOR: SAIF Partners; STATUS/PLANS: Has set up 40 pit stops across the country, has enlisted 200 drivers and owns 800 trucks. Expanding its fleet and headcount to be a national player. “In Bengaluru alone, we will have 2,000 to 3,000 lockers operational soon.” Three-and-a-half months after launching, Qikpod is in the final stages of operationalising its business, with its network expected to operate even on 2G networks. The company is leaning on its investors Foxconn, Delhivery and Flipkart to fine-tune the manufacturing and placement of these units. Reach Every Pincode Existing logistics operators have failed to keep pace with the growth of an industry expected to cross $100 billion in size by 2020. This has pushed entrepreneurs to devise outof-the-box solutions. “We are solving the biggest headache for ecommerce companies and their customers the last 10 metres of the last mile,” says Gururaj. Other ventures are focusing on problems further afield. For example, Deepak Garg and Gazal Kalra founded Rivigo a couple of years ago to recast trucking in India. Mayank Kumar, cofounder, OPINIO, June 2015 FOCUS AREA: Hyperlocal delivery INVESTORS: Delhivery, Sands Capital, Accel Partners STATUS/PLANS: Doing 50,000 deliveries a month, expects to increase this to one million in 12 months A broken road-freighting system has ensured that ecommerce companies take a week or longer for products to be shipped. So Rivigo has set up a series of pit stops across the country for truckers and signed up a couple of thousand drivers. “Sensitivity to turnaround is much higher in ecommerce and we can offer 50-70% faster deliveries than our competitors,” says Garg. According to Garg, the biggest impediment to speedy movement is low or non-availability of drivers. “In long-distance surface movement, a lot of wastage happens because drivers are not available,” he says. “We follow a driver-relay mechanism where drivers change but the truck never stops.” As per the Rivigo business model, a driver returns home the same day and doesn’t have to stay away from his family either. Dhruvil Sanghvi, co-founder, LOGINEXT, November 2014 FOCUS AREA: Logistics optimisation platform INVESTOR: Paytm STATUS/PLANS: Working with 50 large enterprises and 150 SMEs; wants to treble this in a year. On the road and the ground, these refinements can make significant differences. For instance, apples shipped from Azadpur Mandi in Delhi can reach Coimbatore in just three days, compared with 10 days conventionally. Similarly, mango shipments from Vijayawada in Andhra Pradesh can reach Guwahati in three days. Earlier, mango shipments used to be restricted to a 1,500 km radius to avoid spoilage. With Rivigo, high-quality mangoes can reach consumers across the country. These kinds of numbers are attractive for ecommerce companies looking to squeeze more profitability out of their operations. “Logistics is a key enabler for ecommerce,” says Ashish Chitravanshi, vice president, operations, Snapdeal. “It is a differentiator from a customer experience point of view and an important growth driver for business.” Sapan Jain, founder, BLUBIRCH, March 2015 FOCUS AREA: Reverse logistics INVESTORS: Chicago Capital Ventures, Sanjay Mehta STATUS/PLANS: Works with 3,000-plus partners and is in talks to add more ecommerce companies to its platform In the last 18 months, Snapdeal has expanded its warehouse footprint to 50 and has over 2 million square feet in operation. Which means, it is now dealing with over two dozen logistics providers and betting on technology to keep its operations functioning smoothly. “We now get orders from distant parts of the country. We have 63 fulfilment centres in 25 cities to keep pace. The northeast, a largely ignored part, accounts for 12% of our business,” says Chitravanshi. He says the firm leans on technology extensively (to do realtime package tracking, for example) to stay ahead of the competition. “We want to reach every pincode in the country,” he says. Parcel Grows Bigger According to a recent report by management consultancy KPMG, 1-1.2 million transactions happen daily in India’s ecommerce industry. Apparel (43%), electronics (24%) and books (22%) account for most of them. From $200 million in 2014, KPMG estimates that the opportunity for ecommerce logistics will grow by a CAGR (compound annual growth rate) of around 48% to reach $2.2 billion by 2020. The report says the ecommerce logistics market is evenly split between in-house logistics firms (like Flipkart’s Ekart) and third-party providers. As the industry ventures further into the hinterland companies like Flipkart and Snapdeal get 60-70% of their business from small towns now the focus on logistics will increase. And as the emphasis shifts from standard to specialised deliveries, logistics providers will need to invest in newer capabilities and infrastructure, the report notes. If industry leader Flipkart’s unit has ambitious growth plans, the biggest churn could happen when Amazon and Alibaba leverage their financial muscle to recast the ecommerce logistics backbone in India. As they slowly but surely expand in India, these two
After Zomato, Snapdeal, Grofers, more startups brace for second round of layoffs
Indian startups bracing for another year of drastic belt-tightening are expected to lay off hundreds more this year, bowing to pressaure from investors to trim flab and restructure operations. Several of the job cuts are expected to be a result of the rapid automation being introduced at leading startups to handle routine tasks, as well as because of a spate of mergers and acquisitions among emerging businesses anticipated this year, according to industry analysts tracking the developments. For investors, there’s more than one reason to cheer: In addition to lowering expenses for startups, the layoffs will give the firms organisational and monetary bandwidth to focus on hiring high-value experts having niche skills crucial to advancing growth. Already, some of the country’s biggest startups online marketplace Snapdeal; restaurant discovery and food ordering platform Zomato; and on-demand delivery startup Grofers have let go hundreds of employees over the past eight months as they seek to rationalise costs and build healthier balance sheets. “It’s inevitable,” said Sunit Mehra, managing partner at executive search firm Hunt Partners. “In 2014-15, there was huge rampup (in hiring) that wasn’t done in a planned manner. A lot of numbers got added just for the sake of adding them.” Employee costs at India’s leading startups account for about 35% of their overall cash-burn rates, according to industry analysts, who add that the move to shed personnel is being driven by investors struggling to find ways to earn meaningful returns on the millions of dollars they have poured into Indian startups. “These are definitely testing times for the startup ecosystem,” said Aditya Rao, chief executive of services startup LocalOye. “2016 is the year where everyone is trying to re-evaluate their strategies and put a strong focus on revenues and margins more than anything else.” The Tiger Global Management and Lightspeed Venture Partners-backed firm laid off about 60 employees in November, giving them about three months’ salary towards severance. Startups “are being forced to bring down their operating expenses drastically and look to be profitable at the gross margin level,” said Anil Kumar, chief executive of hiring firm RedSeer Management Consulting, an advisory firm that tracks online businesses in India. The move to ruthlessly prune workforces follows two years of unmitigated growth for India’s biggest startup ventures that saw them emerge as the poster boys of hiring at India’s top engineering and management schools. But that trend has ground to a halt as deep-pocketed risk capital investors such as Tiger Global and SoftBank, which were among the most active backers of Indian startups, toned down their hyper-aggressive investment strategies. “A few big funds led the investment charge and created these investor consortiums. The new investors did not undertake the necessary due diligence and have now started asking questions,” said Kumar. Employee exits at startups have become more frequent this year. In March, real estate website CommonFloor laid off about 100 employees, two months after it was acquired by Warburg Pincus and Tiger Global-backed Quikr. “As part of the overall integration exercise, we have been analysing all our assets and believe it is best to consolidate our physical as well as people assets based on our business needs,” a Quikr spokesperson said in an email to ET. The previous month, Snapdeal, which is backed by SoftBank, Foxconn and Alibaba Group, put about 200 employees at its call centre on a so-called performance improvement plan that has led to several staff exits. “Some of the employees have chosen not to go through the performance improvement plan and have instead opted to exit… The PIP process is expected to cover about 200 team members,” a company spokesperson said. Snapdeal denied any plans for layoffs. “We categorically deny any plans to reduce the team strength in any of the functions or verticals at Snapdeal. We have neither laid off nor do we intend to lay off anybody across the company,” the spokesperson said. In December, Rocket Internet-backed Foodpanda India laid off more than 300 employees, who accounted for about 15% of its total workforce at the time. Two months earlier, Zomato, which counts Sequoia Capital and Temasek among its backers, too, laid off around 300 employees, a bulk of them in the United States. “Of course, investors are always part of the conversation,” said Saurabh Kochhar, chief executive of Foodpanda India. “There’s no sense in ‘stupid growth’. The business model has to make basic sense.”
Flipkart stake marked down 15% by T Rowe Price
A mutual fund managed by T Rowe Price has marked down its shares of India’s most valued internet company Flipkart by 15%, the second investment firm after Morgan Stanley to resort to such a move. T Rowe Price had first invested in the Bengaluru-based in December 2014, when the e-tailer announced a $700 million round of funding which also participation from sovereign wealth fund Qatar Investment Authority and Hong Kong-based hedge fund Steadview Capital. T Rowe Price’s markdown of its Flipkart shares is part of a global trend, as the mutual fund has slashed value of world’s most valued startups like ride hailing start up Uber Technologies and home rental website AirBnB. T Rowe marked the value of its Flipkart shares at $120.69 per unit, according to its filings made for March quarter, as compared to the value of $142.26 assigned to them at the end of December 2015. The markdown would peg Flipkart’s valuation close to $13 billion, as compared to the $15.2 billion when it last raised capital in July 2015. The markdown by T Rowe Price is not as drastic as Morgan Stanley, which said in a regulatory filing in February that it had valued its Flipkart’s shares at $103.97 a piece down from $142.24 a piece, pegging Flipkart’s valuation at $11 billion. Flipkart’s other key shareholders are New York-based investment firm Tiger Global Management, South African media giant Naspers, Singapore sovereign wealth GIC, Russian billionaire Yuri Milner’s DST Global and early stage investment firm Accel. The markdowns come at a time when India’s largest internet companies are facing a tougher fundraising climate, as Flipkart has been looking to shore up its new round of funding since late 2015. Flipkart is competing with US-based Amazon and local rivals like Snapdeal, Shopclues and PayTM to maintain its leadership position in the Indian e-tailing market, which Goldman Sachs projects will expand to $36 billion in 2016-17 from $11 billion in 2014-15. Shoring up new round of funding will be key to how aggressively Flipkart is able to fend off Amazon during the festive season in last quarter of 2016, when both the players hold their flagship sale events. Flipkart is already looking to build a much more leaner and focused organisation by September, as it is targeting gross profit by then by cutting burn rate and focusing on larger categories.