B2B e-commerce market 6 times larger than B2C: SME lenders
Companies like Capital Float, Lending Kart and Indifi Technologies that lend to small and medium enterprises are increasingly partnering with B2B ecommerce platforms such as OfBusiness and Tolexo to provide financing options to sellers and buyers on the marketplaces. The lenders say B2B ecommerce -where the transaction is between businesses, unlike in B2C where one party is the consumer – could become their strongest segment by 2017, as they estimate 25-30% of the profit to come from this space. “This is a very crucial segment for lending companies,” said Gaurav Hinduja, cofounder of Capital Float. “We can expect to see up to 20x growth in applications this year; we are expecting to receive up to 500 applications from buyers and sellers on a monthly basis.” The loan size could range from a few thousand rupees to Rs 5 lakh for Capital Float. The company offers a paylater option to sellers and buyers, with it making upfront payments for the goods and collecting payments in 30-60 days. According to Hinduja, providing financing options to sellers on the B2B platform is different from the B2C space, where sellers are limited to retailers and wholesalers. “The B2B platform gives access to unorganised and diverse sectors from manufacturing, apparel and healthcare sellers, sourcing both raw materials and consumer durables. Many of them are traditional businesses entering the digital ecosystem,” he added. Companies such as Indifi and LendingKart also expect B2B to see more trac tion than B2C. “Working capital cycles for B2B are longer, they need higher financing and there are also buyers looking for credit options to purchase products. The loan ticket sizes of companies generating Rs 1-50 crore annual revenue could range from Rs 5-35 lakh,” said Alok Mittal, cofounder Indifi. According to Mukul Sachan, cofounder of LendingKart, India’s B2B ecommerce market is six times larger than B2C and is expected to reach $700 billion by 2020.”There is massive untapped potential within this segment and that’s why we have closed several partnerships with players in this space,” he said. B2B platforms view these partnerships as a positive sign as abundant credit options are lik ely to lead to a dramatic increase in their average order value. SME lending companies offer interest rates of 15-19%.Through credit card, these are 24-36%. Since it is the nascent stage of the partnerships, SME lending players could not comment on the default interest rate in the B2B ecommerce segment. Kyle Juszczyk Womens Jersey
Smart cities mission: Rajasthan sprints ahead, set to start work in Udaipur
Within months of his election in May 2014, Prime Minister Narendra Modi made a bold commitment to build 100 smart cities throughout India. Cut to present. The smart cities movement is gathering pace. Last week, Chandigarh, Lucknow, Panaji and Raipur are among the 13 urban areas that were selected to be developed as smart cities. The new additions are to the list of 20 cities that were selected in January; 40 more will be added to the list by the year-end. Each city will be given R500 crore by the Centre over five years. The states will have to make a matching contribution. “The new additions to the list of 20 smart cities are from the 23 fast track cities which had been asked to submit their updated plans by mid April. With these additions, it is expected that the distribution of smart cities across individual states will become more balanced,” says Arindam Guha, senior director, Deloitte in India. Meant to change the way urban India lives, smart cities will enjoy uninterrupted power and water supply, internet connectivity, e-governance along with quality infrastructure, says Jagan Shah, director, National Institute of Urban Affairs. “The mission for smart cities is very clear in its objective that the identity of the city in terms of heritage and economic activities will be retained while strengthening the core infrastructure and improving the quality of life.” Without doubt, cities’ ambitions to become “smarter” range from the use of information and digital infrastructure to manage the energy and water use in buildings to the creation of intelligent transport networks to minimise congestion. “However what is more important is what kind of models individual cities will adopt for procurement and implementation,” says Guha of Deloitte. “We are already seeing widely varying models with some cities going for two packages, one for the PAN city solution and the other for area development. Certain other cities are in the process of appointing a single project management unit which would then support them in procurement of specialised solution providers in areas like solid waste management, water supply, sanitation etc.” Rajasthan shows the way forward Meanwhile, Rajasthan is moving ahead at a rapid pace in terms of development of smart cities. In January this year, the Modi government announced a list of the first 20 cities to be developed as smart cities, and Jaipur and Udaipur made it to that list. Rajasthan was the first state to submit smart city plans in January this year. The state has proposed a total investment of R6,457 crore over the next five years for developing Ajmer, Jaipur, Kota and Udaipur as smart cities, as part of the Smart City Challenge. Rajasthan has also taken the lead in setting up special purpose vehicles (SPV) for the implementation of smart city plans. The state has set up an 11-member SPV for Jaipur and a 13-member body for Udaipur. These vehicles will approve, sanction and execute the projects besides mobilising resources from various sources to ensure timely and efficient execution of plans. Industry forum Ficci and Udaipur Municipal Corporation (UMC) have signed a memorandum of understanding for developing Udaipur as a smart city. The two came together to collaborate in areas of creation of financial plans for various sectors and creation of innovative sources of the municipal finance, project based support for projects in areas like transport, solid waste management, water supply, housing, sewerage, health, education, storm water drainage etc. Rajpal Singh Shekhawat, urban development and local self government minister in Rajasthan government, told FE: “A smart city is about inclusive growth, quality of life, happiness index, convenience of living and being green. Some cities may have been ‘smart’ earlier but to be counted as ‘smart’ in 2016 was different in the context of having planned core infrastructure as well as a clean and sustainable environment.” Shekhawat said that each city has its own strength in terms of heritage, geographical location and environment. The Smart City Mission will keep these factors in mind while developing smart cities in Rajasthan. “There cannot be a universal formula for developing a smart city—however making governance citizen friendly and cost effective will be one of the key objectives. It will also expand housing opportunities for all.” Manjit Singh, principal secretary, local self government, said Rajasthan government is fully geared up for the smart city projects. Special purpose vehicles (SPVs) have already been created. The project management consultants (PMC) will be appointed by the end of this month and the work will begin by June 15 next month. Jordan Willis Womens Jersey
Food biz operators shell out 38L fine
The Food and Drugs Administration (FDA) has recovered over Rs 38.33 lakh from 441 food manufacturers, packers and labellers in Pune as a fine for not filing their annual returns in time for the financial year 2014-15. The FDA has also directed licensed food business operators, having an annual turnover of Rs 12 lakh and above, to submit their returns by May 31, failing which a fine of Rs 100 a day would be levied. “Food business operators are asked to submit annual returns of their transactions made till March-end after the new Act came into force in August 2011. The Act aims at bringing the food industry under one umbrella by scrapping all old licences. The food industry needs to be regulated in order to ensure food safety,” said Shashikant Kekare, joint commissioner (food), FDA, Pune. The city has over 9,000 licensed food business operators, who have an annual turnover of Rs 12 lakh and above. They include food manufacturers, distributors, wholesalers, retailers, recyclers, processors, transporters, restaurants, hotels and catering business operators. “As per the Food Safety and Standards Act and Regulations 2011 (licensing and registration), the business operators have to submit the returns in the particular format (form D-1). Only owners of milk businesses have been asked to submit the returns in half yearly format as given in form D-2,” said Dilip Sangat, assistant commissioner (food), FDA, Pune. Jim Brown Jersey
China to open e-commerce, other sectors to foreign investment
China will lift restrictions to investments by foreign firms in a range of service industry sectors, including e-commerce, logistics, accounting and auditing, the China Securities News quoted commerce minister Gao Hucheng as saying. Gao said China would also promote the orderly opening of other service fields including finance, education, culture and health care, the report published on Saturday said without elaborating or giving a time-frame. China’s trade in services would exceed $1 trillion by 2020, the minister predicted. The Ministry of Commerce has previously said the value of China’s services trade was expected to exceed $750 billion this year. The Chinese government has been attempting to guide the economy away from a reliance on investment and exports to one largely orientated towards services and underpinned by domestic demand. Gao’s comments come on the eve of bilateral meetings in early June between China and the United States at which U.S. officials are poised to press their Chinese counterparts to take steps to improve the business and investment climate and open Chinese growth sectors to U.S. investment. The Obama administration is negotiating a bilateral investment treaty with China, and U.S. negotiators have said they are still awaiting a new “negative list” of sectors that Beijing wants to keep off limits. Larry Fitzgerald Jersey
Startups nudge staff to change work culture
Employees at startups, which were once fledgling firms but are now established in their fields, are being given challenging KRAs, key result areas to measure performance outcomes. A highly competitive operating environment is driving this shift towards a new work culture. While Bigbasket has told its employees that 50% of their increments will now depend on the kind of customer feedback the company receives, etail giant Snapdeal, which not only faces competition from Amazon and Flipkart but other vertical players as well, wants employees to gear up to its new vision of 20 million daily transacting users by 2020, for which the company has drafted new KRAs.The company has broken down the target into individual goals which it wants employees to adhere to. On the other hand, Paytm has for the first time introduced new parameters in the evaluation of its people. These include leadership principles, which are behavioural in nature, such as ownership, speed, trust and transparency. Such changes, said experts, are being necessitated by the stage of growth these companies are in it’s a stage when the founders believe they need to weave in a culture that binds everyone together. With Snapdeal setting a new vision, the entire company is being geared into looking for “unique users”. Its digital marketing team now looks solely at “users” (how many/how frequent/conversions) way more than any other metrics. Naturally, to meet this vision, employee behaviour and KRAs had to be changed. To facilitate this, the company has put in place a structure to ensure there are periodic reviews and feedback is given on individual KRAs and goals. A programme on mentoring and development too has been rolled out. Saurabh Nigam, VP-HR, Snapdeal, said: “The finalization of vision and mission was a process of self-discovery undertaken by the founders. The visioning exercises involved multiple sessions involving both the founders wherein they recounted their personal journeys, motivations, ups and downs in the meteoric rise of Snapdeal. They clarified what Snapdeal means to them and where they want to see it in the future. Once articulated, the same was refined further with different function heads, with the realities of the organization and our capabilities.” For this, Snapdeal roped in EY to help through multiple interventions and arrive at a new vision of making the organization the “most reliable and frictionless ecommerce company”. “As an organization grows, it’s very important that there is a uniform culture. If we don’t do that it would be very difficult to build the synergy within the organization,” said Nigam. For online payment platform Paytm, propagating and sustaining a culture of ethics and values is critical. This was easier to manage when the organization had a couple of hundred employees. As it expanded to become a 3,000-4,000 strong company, Paytm realized it needs to do a lot more in a structured manner. So it introduced new parameters in the evaluation of people in addition to the usual measurement of performance based on outcomes against KRAs. Amit Sinha, VP – business planning and people, Paytm, said: “People at Paytm were always empowered to take decisions and execute them quickly. But with a large number of new hires, the company found it difficult to maintain this culture of swiftness in execution of ideas. New joinees were not comfortable enough in taking decisions. They would wait for approval. We have started re-emphasizing the need to execute with speed. If we don’t do that, things will move slower.” Similarly, online grocer Bigbasket, which is present in 8 tier-1 and 19 tier-2 cities, is on an expansion mode. Thus customer feedback becomes a key parameter to judge employee performance and the company has decided to align this to employee increments. Hari T N, HR head, Bigbasket, said: “We have identified certain core values to elevate the culture. These are taking ownership, respect of personal freedom, acting with speed and focusing on internal customer so that they can keep the external customer happy.” Michal Neuvirth Womens Jersey
Flipkart effect: Startups may lose sheen in job market
Darling of jobseekers till recently, the startup space may lose some sheen in the job market as management and tech graduates might prefer joining ‘safer companies’ after the Flipkart fiasco, say experts. The e-commerce major has deferred joining dates for campus hires from IIM Ahmedabad and IITs citing restructuring of its businesses, for which it has got a lot of flak from the colleges as well as the industry. Reports suggest Flipkart is not the only company from e-commerce and related sectors to have deferred the joining dates for their campus hires and there are many others including InMobi, CarDekho and Hopscotch. According to industry and HR experts, it might also bring a lot of pressure on reputation, success and unpredictability of the educational institutions concerned as it disturbs their placement track record. “Startups would definitely lose sheen because of this ‘fiasco’,” staffing services firm TeamLease Services Assistant Vice President Sudeep Sen said. The job seekers might begin thinking that it is good to earn a little less and join an established organisation, rather than a startup, he added. The startups are, however, confident of passing through this turbulent phase and get back their attractiveness. “Of course, it will have some adverse impact on startup attractiveness. However, each industry goes through it — a period of euphoria followed by calmness and then stability sets in. The startups will become attractive again once they become more stable,” e-commerce firm Zopper CEO and Co-Founder Neeraj Jain said. Few years back, not many people were interested in working for startups because everyone associated some high risk with startups. This changed in last few years, but again startups will not be preferred by new people entering the job market, Jain added. Flipkart, which has been the posterchild of Indian e-commerce industry, has also seen mark-downs in the value of its shares by a number of investors like Fidelity Investments and T Rowe Price and Morgan Stanley. The overall early-stage private equity investments has also seen a sharp decline in the first four months of this year. According to PwC, early-stage PE investments saw a decline of 57 per cent in value terms and 25 per cent in volume terms during January-April 2016. According to Wealthy.in Founder Aditya Agarwal, the delay in hiring plans of companies like Flipkart is a direct response to the prevailing environment. “World over, technology stocks have taken a beating in last one year and Indian companies are no different. Exuberance of the past is also hurting some of these companies and a sudden shift to focus on efficiency rather than growth has hurt their recruitment drive,” Agarwal said. This whole episode however has a blessing in disguise for startups that are doing well. They will have more talent to choose from and at lower costs, some experts opined. Luis Aparicio Authentic Jersey
Nirmala Sitharaman takes startups’ plea on tax exemption period to Finance Ministry
To make Startup India more lucrative, the Ministry of Commerce & Industry has approached the Ministry of Finance with an industry proposal to widen the income tax exemption period from the current three years. “I have been interacting with the startups and a lot of them are in touch with us directly. The decisions which have to be taken by finance we are forwarding it. Finance is also favourably inclined to help them out because this is a major initiative,” Minister of State for Commerce & Industry Nirmala Sitharaman told ET. Startups want the tax holiday to be extended to up to seven years because no company breaks even in three years. They say a longer-duration tax concession would not only encourage entrepreneurship but also enable companies to expand operations, generate employment and hire quality talent. The government’s Startup Action Plan of January 2016 had stated that with cash constraints and limited avenues of finances available to startups, a tax holiday in the initial years can be very helpful. The government earlier provided similar tax breaks to the software and information technology industry. “Access to capital is the biggest requirement for a startup. The business starts to get viable only after five years. If we are trying to foster growth and create jobs through startups, then more time to absorb losses is a must,” said Gaurav Kachru, founder of 5ideas Startup Superfuel, a seed fund that invests in startups. Prime Minister Narendra Modi launched Startup India in January, offering incentives such as the three-year income tax holiday, which is subject to non distribution of dividend, and capital gains tax exemption for investments in newly formed manufacturing micro, small and medium enterprises by individuals. To benefit from these incentives, startups must first be declared eligible entities by the Inter-Ministerial Board of Certification, set up by the Department of Industrial Policy & Promotion to validate the innovative nature of the business. Ron Hextall Womens Jersey
Pvt sector urged to invest in civil aviation industry
The private sector should invest in the aviation industry and ensure high quality of products for the growth of the sector without too much dependence on the government, said K Harinarayana, aviation expert and former Vice-Chancellor of the University of Hyderabad. He was speaking at a seminar on the sector in the Vignan group of educational institutions here on Friday. “Aerospace sector does not have space for too many OEM suppliers but they have to retain their competitiveness by delivering high quality,” he said. He said the government would have to support the development of the ecosystem of high quality suppliers in the aerospace industry. While everyone cannot become a prime manufacturer, there is scope for OEM suppliers of assemblies and sub-assemblies, Harinarayana said. The private sector should stop looking to the government for everything. “The Indian aviation industry has to jump from early phase to maturity phase. It has happened in the automobile industry and can be done in the aviation industry too,” he said. The new aviation policy will open up tremendous opportunity in the maintenance, repair and overhaul (MRO) field and Indian companies can take up manufacture of regional civil feeder aircraft to provide connectivity to regional airports. “There is a strong need for a new generation regional transport aircraft and there are lessons to be learned from countries such as Brazil in the development of the aviation industry, Harinarayana added. Antwaun Woods Authentic Jersey
Jet Airways to take back 6 Boeing planes from Etihad for use in its core market
Private carrier Jet Airways will take back all six wide-body Boeing aircraft leased out to its investment partner Etihad Airways in the next six months and deploy them on some of its core routes including to the Gulf. The six B777-300 ER aircraft are expected to be put into service from August and some of them are likely to be used in the domestic sector as well, Jet Airways Chief Financial Officer (CFO) and acting Chief Executive Amit Agarwal said during a post-earnings analysts’ call recently. “Our wide body (Boeing 777) aircraft currently on lease to partner airline Etihad will be taken back and operationalised from August. Based on the market condition, our plan is to upgrade some of the existing A330 routes with B-777,” Agarwal said. “We will be careful and cautiously deploy these aircraft in the domestic market,” he said. These ultra long-haul operation planes had been wet-leased to Etihad, which holds 24 per cent stake in the Naresh Goyal-owned private airline. Wet lease is an arrangement in which the lessor provides an aircraft along with the cockpit and cabin crew and pays for its maintenance and insurance. The company which wet leases the plane pays by the hours it is operated. In dry lease, only the aircraft is leased out. The Mumbai-based full service airline, along with its subsidiary JetLite, has a total of 116 aircraft, with 92 of them being on operating lease and rest 24 owned by it. “This (replacement of Airbus A330 with B 777) will subsequently result in additional capacity in our core market India and Gulf,” Agarwal said. Jet Airways, the second largest domestic carrier by market share, also plans to deploy these long-haul planes to destinations like Amsterdam, Paris and Toronto by replacing the existing wide-body Airbus A330s, a Jet official had said early last month. Amsterdam became the airline’s new overseas gateway for international operations to Europe and beyond from late March, replacing Brussels. Staying profitable for the fourth straight quarter, Jet Airways posted a net profit of Rs 426 crore in January-March, primarily aided by lower fuel expenses and higher passenger numbers. In the financial year ending March 2016, the airline posted its first annual profit after eight years, recording a net profit of Rs 1,212 crore. In the corresponding period, it had a net loss of Rs 2,097 crore. Miro Heiskanen Jersey
India sitting on bilaterals, want to change that: Civil Aviation Minister Ashok Gajapathi Raju
What gives you satisfaction after being minister for two years? It has been a learning experience. Certain non-performing assets (NPA) have started performing. For instance, Boeing set up an MRO (maintenance, repair and overhaul) facility in Nagpur. For Boeing it must have been the slowest MRO ever — it took 7-8 years. What was the problem? The aircraft tried to reach the facility and the taxiway was not built. Hundreds of crores of rupees worth of assets — which would have given x number of jobs — was unutilised because it was not complete. Timelines were set, now work has started. It still has to reach full capacity. What were the sticky issues after you took charge? How far have you moved? The sticky points are: you have about 31-32 airports of Airport Authority of India today where flights can probably land and take off, but it’s not happening. You can call it low-hanging fruit. There is nothing cheap about an airport. It is basic infrastructure. Even if you put a low price of Rs 100 crore on each of these, that is Rs 3,100 crore of non-performing assets ready to perform, but not performing. In the BJP manifesto, there was an issue of regional connectivity. We are trying to make that a reality. One of the major constraints is: passenger traffic is increasing, but the number of aircraft is not. The aircraft are getting bigger in size. And some of these places will not be able to accommodate those big aircraft. So we need smaller aircraft to make regional connectivity a reality in our country. Two years ago, you talked about a civil aviation policy. The policy is yet to be announced, isn’t that a failure on your part? I don’t think it is a failure. No doubt it is slow, but it is in an advanced stage now. It has gone through its rounds like agnipariksha. First of all, there was no comprehensive policy in the past. It was just knee-jerk reactions to some situations. Why do you need a policy? Because it gives economic activity a chance to plan. It will come out shortly, but I won’t put a time frame.Is a consensus eluding it? A consensus can never happen in certain situations, but a better understanding can. For the first time, a draft policy was thought of, put on the Net in the public domain, suggestions were called for, lots of suggestions came. Many states do not understand aviation. Those who understand it have benefited — the aviation-friendly states. They have cornered quite a bit of growth. My own state (Andhra Pradesh), for instance. Before we were bifurcated, we had planned an airport in Shamshabad when I was in the state government. We brought down the tax on aviation turbine fuel to 4 per cent. After the project came, the government hiked it to 16 per cent. When the state was bifurcated, it became 16 per cent. I had a chat with the CM, who asked if it should be brought down to 0. As a former finance minister of the state, I suggested: maximum 2, minimum 1. He decided on 1. The state witnessed huge growth. But look at Delhi. Since passenger traffic is inelastic, they increased tax from 20 per cent to 25 per cent. West Bengal wouldn’t reduce VAT in Kolkata, but brought it down in Bagdogra. What holds for Air India in time to come? It is a beautiful Air India. The airline’s problem is cohesiveness. If they work as a team, they will deliver. No government can commit taxpayers’ money for eternity. They have to pull up their socks. They have made operating profit for the first time in so many years. This is a good trend. If they keep the momentum going. I would like it to survive. You won’t look at Air India as a candidate for disinvestment? Its books are not at that level, there will be interest. As far as Air India is concerned, they have to develop confidence for others to see value. Only then can these options be considered. They have the capability. Growth in passenger traffic has been quite good. What about cargo? We are concentrating only on passenger traffic while the world’s largest airline is cargo. The airport is like a road. You run a truck on it, you run a bus on it, you can run a mini-van on it. And India is blessed — you name the climate and we have it, from snow-capped peaks to deserts. But there is a mindset that cargo is not glamorous. But it will contribute to the economy, it will gain from the economy. So we need a push. As it is, Indian cargo is doing well in terms of percentage growth – 6-7 per cent — but it is on a minuscule activity. E-commerce is also growing. There are a lot more areas. Outside the country, dwell time is an issue. We are working with them so that it comes to internationally acceptable levels. How do you see the way forward for India’s bilateral with other countries? Has it been optimum? I don’t want to go the way it was handled in the past, but it doesn’t make economic sense. The air service agreements, or bilateral as we call it, are done on a level playing field with countries. If you look at today’s position, we are not able to perform on it, the partners are able to perform. If you break it down further, whether its the public sector or private sector, India is sitting on bilaterals, not performing. That is what we want to change. If 100 seats are opened up in a particular destination, it means India gets 50 seats and the partner country gets 50 seats. If a country is able to allocate 62 per cent of its bilateral, we are able to allocate just 32-33 per cent of our bilateral. We want a transparent procedure of auction for