Indian e-commerce cart hits a plateau
Behind numerous headlines of a cash crunch hitting major Indian e-commerce companies, and their valuations being questioned, is a revelation not too many people are talking about. Indian e-commerce was emblematic of frenetic growth until very recently, but the last six to eight months have seen the industry come to a grinding halt, making it an inflection point for all the players involved. TOI accessed and analysed data for top e-tailers, which revealed that the online retail market stagnated between May 2015 and 2016 in terms of the value of goods sold. While in May last year, the e-commerce biggies clocked a gross merchandise value, or GMV, run rate of $9 billion, that number has only inched up to about $10 billion at the end of May this year, translating into an 11% annual growth. In December last year, the total GMV run rate had reached $10.5 billion on the back of the festive season, which typically sees a rush of discounting from all e-tailers. GMV is overall sales on an online marketplace, excluding discounts and returns which are an integral part of the e-commerce market. The data gleaned from primary research and vetted by multiple stakeholders in the industry indicated that Flipkart, the country’s largest online retail player, has seen its GMV run rate stall at about $4 billion for almost a year, while an aggressive Amazon has gone from clocking $1 billion to $2.7 billion in gross sales. However, Amazon’s operations in India only began three years ago and it’s been gaining ground on a smaller base. What’s worth noting is that Flipkart notched up a 400% growth the year before, when it’s GMV zoomed from $1 billion to $4 billion, post which the numbers have gone flat. Gurgaon-based Snapdeal, on the other hand, has seen an almost 50% knock-down in sales numbers after similar highs it touched exactly a year ago. The company said as of June, its GMV run rate was more than $2.5 billion. An email sent to Flipkart’s spokesperson did not elicit a response till the time of going to press. In an earlier interaction with TOI, Amit Agarwal, Amazon’s India head, had said the online retailer hadn’t witnessed any signs of a slowdown and, instead, had grown shipments impressively at 150% in the first quarter of the calendar year. E-commerce companies earn anywhere between 5% and 15% in commission from sellers, which makes up their revenue. GMV had been the key metric for all e-tailers in India to show rapid growth and ratchet up their valuations in multi-billion-dollar fund-raises over the past two years. But with sales staying flat or declining, most e-commerce players are now starting to focus on returning customers, which their founders keep stressing in media interactions. GMV run rate varied from month to month and is pretty jagged, depending on promotions and discounts that are available at the time. But the data collated by TOI points to a palpable slowdown for the first time after a heady period of growth. Reduced Discounting Slowing Growth? Post March this year, most e-tailers have reduced promotional campaigns after the Indian government introduced new policy guidelines for online marketplaces. The fresh rules prohibit online retailers from offering discounts directly. Cash burn for Amazon, for instance, had risen up to almost $80-90 million per month in the early part of the year – more than double of Flipkart’s – but has since stabilized, people privy to the matter said. Amazon’s Agarwal, when asked about it recently, did not give details on the mounting cash burn involved in weaning away Indian consumers from rivals. An investor who has been tracking e-commerce says if the market has momentarily stopped growing, it’s because online players have reduced investments into market development. A slug of risk capital came into India’s online commerce industry, with Flipkart leading the pack. Founded in 2007 as an online bookstore, the Bengaluru-based poster boy of India’s thriving startup ecosystem scooped up $3.2 billion, a majority of the funding coming over the past two years, while Snapdeal collected $1.3 billion. The Jeff Bezos-led Amazon, too, has been pumping billions into India, the latest being a $3-billion investment announcement – taking its overall commitment for the country to $5 billion in three years of launching here. Has Online Consumer Base Capped Out? India’s online shopping market, according to rough estimates, is 60-70 million, and is expected to go up to 100 million in the next few years. A notable spike happened in the past three years, but the divide between tier I and tier II cities is still very wide. The top 6-8 cities contribute 90% of sales for all the consumer internet players, including app-based cab aggregators like Ola and Uber. In an earlier interaction with TOI, Binny Bansal, co-founder & CEO, Flipkart, said the e-commerce major was keenly looking at ways to tap into its existing base of users. “There are 50-60 million consumers buying online today. Given the large base, it makes sense to ensure you are selling more to the same customers as that opportunity is big enough compared to three years back,” he had said. Snapdeal’s co-founder & CEO Kunal Bahl, too, has reiterated his focus on the e-tailer’s high-value consumers, suggesting GMV was not the metric his company was chasing anymore. “Our GMV run rate continues to be healthy and above $2.5 billion. We are significantly focused on delivering the best experience, growing our net revenue which has increased three times in the last 12 months,” a Snapdeal spokesperson said in an emailed response to TOI. GMV was described by many as a vanity metric during the past few years when e-commerce registered exponential growth. “The moment of reckoning is coming or may have come already for Indian e-commerce companies. The ease with which these companies have been able to raise money from VCs may have made them all sloppy, and the test then will be which ones can now work on the ‘building-a-business’ channel. As for whether
Govt to expand airstrip at Rangeilunda
Odisha government has decided to expand the airstrip at Rangeilunda at an estimated cost of Rs.44 crore to facilitate landing of 40 to 70 seated turboprop aircraft. The existing airstrip with a 900-m runway is on 40 acre of land. Another 40 acres of land, including 30 acre of private land is required to upgrade it to 1,874-m runway, officials said today. A high-level official team led by special secretary in the general administration department, AK Meena visited the airstrip on Friday. “The works department has prepared a detail project report (DPR) at Rs.44 crore, including Rs.14 crore for land acquisition. The project report was submitted to the government,” said Executive Engineer, Works department, Berhampur, PK Das. “We have asked the Ganjam district administration to start the land acquisition process soon,” said Meena. The state government will provide funds for land acquisition to the district administration. A culvert will be built on the nearby canal and the Berhampur-Gopalpur road diverted slightly. Eddie Vanderdoes Jersey
Cong. against diversion of Eluru Canal for airport expansion
The Congress is against the shifting (diversion) of Eluru Canal by 13.5 km to facilitate expansion of the Gannavaram airport. APCC vice-president and former Minister Devineni Rajasekhar said that the State government, which came to power predominantly on the votes of farmers, was giving little respect to their problems. He said that the Airports Authority of India initially suggested that it was enough to shift the Eluru Canal by 6 km, but the Telugu Desam government had come up with a second plan under which the Eluru Canal would be shifted by 13.5 km from it current location. Mr. Rajasekhar said while in the first plan the government needed to acquire only 195 acres, in the second plan it required 425 acres. Marcus Peters Jersey
Regional connectivity scheme: Govt plans to levy departures on trunk routes
The government plans to impose a levy of Rs 7,000-8,000 per domestic departure flight on all trunk routes to subsidise airfare on operations to unconnected cities, Minister for Civil Aviation Ashok Gajapathi Raju said. This levy is estimated to generate Rs 500 crore annually to be used to fund the Regional Connectivity Scheme (RCS), under which airlines will offer services at an all inclusive airfare not exceeding Rs 2,500 for a one-hour flight. “I think as of now it (levy) will come close to Rs 500 crore annually and we have four regions — North, South, East, West — to begin with,” Raju said, adding that the levy could be Rs 7,000-8000 per departure flight. While clearing the National Civil Aviation Policy 2016 earlier this month, the Union Cabinet announced the Regional Connectivity Scheme as the ‘centerpiece’ of its policy, aiming to raise the sale of domestic tickets to 30 crore in five years from 8 crore in 2015. Besides the levy, the subsidised fare of Rs 2,500 will be funded through exemption to airlines from a host of charges, sharply lower services tax on tickets and reduced value added tax (VAT) on aviation turbine fuel. The government changed its earlier plan to levy a 2 per cent cess on each ticket to fund the RCS. Raju said the ministry thought a levy per departure flight may result in airlines absorbing some of the charge and not passing it on to the customer entirely. The government plans to start the RCS from second quarter of 2016-17. Troy Stecher Authentic Jersey
‘Allow private players to train air traffic control officers’: Civil Aviation Ministry
Allowing private players to set up training facilities for air traffic control officers will help in addressing manpower shortage in air traffic management activities, says a report. Air Navigation Services (ANS) comes under state-owned Airports Authority of India (AAI) and for quite sometime there has been a shortage of air traffic controllers. A report prepared by industry body Assocham and consultancy KPMG has said the number of Air Traffic Control Officers (ATCOs) grew to 2,600 last year but there is a shortage of around 1,500 such people. Noting that staff crunch is a cause for concern, the report suggested enhancing capacity at existing ATCO training facilities and also permit private entities to carry out training activities. The Civil Aviation Ministry may consider the option of allowing private players to set up ATCO training facilities, subject to adequate supervision by the Airports Authority of India (AAI), it said. “This may be started in a Public Private Partnership (PPP) mode first and thereafter be made fully open to private sector in the long run,” the report said, adding partnership with international ATC training institutes should also be explored. Currently, there are ATC training facilities at the Civil Aviation Training College, Allahabad and at the Hyderabad airport. Karl Mecklenburg Womens Jersey
Government allows airlines to import up to 18 year old planes
Domestic airlines can now import aircraft that are up to 18 years old into the country with the government amending more than two-decade rules in this regard. The move is expected to provide a fillip for the government’s ambitious efforts to boost regional air connectivity as it gives more leeway for operators in expanding their fleet. Till now, aircraft that are more than 15 years old were not allowed to be imported. As part of larger efforts to improve the ease of doing business in the domestic aviation sector, which has huge growth potential, the Directorate General of Civil Aviation (DGCA) has made changes to rules that had come into effect way back in July 1993. With the revised norms, pressurised aircraft that are not over 18 years old or those which have not completed 50 per cent of design economic pressurisation cycle can be imported. Marqise Lee Jersey
RIL knew about KG-D6 and ONGC block connectivity in 2003, suggests regulatory filings by Niko Resources
Reliance Industries knew way back in 2003 that its Dhirubhai gas fields in Bay of Bengal block KG-D6 will drain out natural gas from adjacent block of ONGC, regulatory filings by its partner Niko Resources indicate. Canada’s Niko had on April 6, 2004 filed with Toronto Stock Exchange an “Appraisal Report as of March 31, 2003 on Block KG-DWN-98/3 (KG-D6)” natural gas reserves it had commissioned from DeGolyer and MacNaughton (M&M). In the report, D&M stated: “Development of the KG-DWN- 98/3 block will be capable of depleting the OFIP (Original Gas In-Place) on the KG-OS-IG block.” KG-OS-IG block lies adjacent to KG-D6 and belongs to state-owned Oil and Natural Gas Corp (ONGC) which had taken RIL to Delhi High Court in May 2014 alleging its gas had been produced by the private firm. Under court directions, RIL and ONGC appointed D&M to study if the gas fields in their blocks are inter-connected. The US-based consultant in its final report submitted in December 2015 stated that as much as 11.122 billion cubic meters of ONGC gas has migrated to Dhirubhai-1 and 3 (D1 & D3) field located in the KG-DWN-98/3 (KG-D6) Block of RIL. The government thereafter appointed a one-man committee under A P Shah to decide on compensation to be paid to ONGC. The panel is to submit its report by next month end. Niko, which holds 10 per cent stake in KG-D6 block, had in 2003 commissioned D&M report to understand viability of the gas discoveries made in the KG-D6 block in 2002. “The OGIP and associated reserves that are located off the KG-DWN-98/3 block have been included as possible reserves attributable to development of the KG-DWN-98/3 block,” D&M had said in the 2003 report. “The reserves associated with that portion of the OGIP would require a separate stand-alone development by the owner of the block (KG-OS-IG) which could prove cost prohibitive.” When contacted, RIL said, “We have already made our detailed submission to the Shah Committee regarding the filing made by Niko. It would be inappropriate to comment on the submission itself in deference to Justice Shah’s instructions to the parties to maintain strict confidentiality.” Sources said while ONGC in its submissions to the Shah panel has pointed to the Niko filing to buttress its case, RIL told the panel that comments made in the Appraisal Report “suggest that there was a possibility of connectivity, but only that and is not firm evidence of it.” According to RIL, it was not until D&M undertook its detailed 14-month study and analysis (at a cost of over USD 2 million) and furnished the 2015 Report that reservoir connectivity was indicated. It further stated that the Appraisal Report was in public domain since 2003 and ONGC “could have raised with RIL or (upstream regulator) DGH any issues that it felt required attention or discussion, that than 10 years later, as it did.” To the AP Shah Committee, RIL cited the D&M’s comments that independent development of resources in ONGC’s block would be ‘cost prohibitive’ to state that they were “not commercially viable” on a standalone basis. This implied that to produce them, they had to be necessary produced with neighbouring fields. RIL in its submission stated that the 2003 appraisal report provided “very little from a technical perspective and nothing that is helpful in any joint development consideration” of the adjacent blocks. “The Appraisal Report comprised of a simplistic consideration of seismic data and very limited well data confined to discover wells in Block KG-DWN-98/3, with no modelling but rather with a reliance on D&M’s general experience in geology,” it said. It went on to state that seismic data may suggest continuity of channels across block boundaries, but is entirely insufficient in conclusively establishing presence of reservoir and reservoir connectivity. “Well data from the ONGC blocks was only available to RIL in late 2013 and post-production pressure values from ONGC blocks were obtained by ONGC in the early 2015 through MDT survey in three of their wells,” it said. The 2003 Appraisal Report, RIL said, “relates to wells A1, B1, B2, and C1 of D1-D3 reservoir; it does not give consideration to wells A5, A9, A13 or B8 i.e., the wells which ONGC (wrongfully) claim have caused the alleged drainage and which it made specific complaint of in its Writ Petition (in the Delhi High) that lead to the Terms of Reference (of the AP Shah Committee).” The company went on to add that it at all times confined its Petroleum Operations to its Contract Area and its exploration and development activities were approved by the Management Committee headed by DGH. Seth DeValve Authentic Jersey
Oilex Ltd planning new well at Cambay
Oilex Ltd plans to drill a vertical well at the Cambay Block in Gujarat state in India once it can get the finances. The well will target the Eocene siltstone (EP-IV or Y Zone) and is essential prior to drilling a horizontal extension for potential later fracking and exploitation of the Eocene siltstones. Detailed planning for this well is still being finalised and is subject to JV/Budget approvals. At end May, Oilex had cash A$6.3mln and was talking with joint venture partner Gujarat State Petroleum Corporation over money it is owed and the budget for the coming year. The junior is currently bearing all of the ongoing costs of the joint venture, though it recently settled its legal dispute with shareholder Zeta. Production from Cambay in May was 42 barrels per day and from Bhandut-3 the gas equivalent of 120 barrels per day. Jonathan Salomon, managing director, said: “Last week’s agreement with Zeta Resources Limited to end legal proceedings between the parties has provided Oilex with a clearer path forward and was a key priority for us. The revitalised management team can now gather momentum on the path to the potential development of Cambay that reflects what was learned from the previous wells. “We look forward now to resolving issues with GSPC and progressing work at Cambay”. Kole Calhoun Womens Jersey
Government strikes out 16 million bogus ration cards, to save Rs 100 billion
Government has eliminated 16 million duplicate and bogus ration cards that will help save about Rs 100 billion in subsidy bill annually, said Finance Secretary Ashok Lavasa. In addition, the government has saved Rs 148.72 billion by offering subsidy on cooking gas (LPG) directly to consumers and direct benefit transfer (DBT) is planned to be extended to 150 schemes by the end of this year, he told PTI here. DBT makes use of Aadhaar or the unique identification number to identify beneficiaries, under which benefits are transferred directly to their bank accounts, thus preventing diversion and misuse. This has resulted in removal of duplicate beneficiaries, which has led to significant savings across welfare schemes. “That (the total savings made from using DBT) estimate differs from scheme to scheme. We are yet to compile that. There are some indications about weeding out of bogus ration cards. So, more than 16 million ration cards have been weeded out,” said Lavasa, who also holds the charge of the Department of Expenditure. “And on this account alone, the estimation is about Rs 100 billion savings.” As on March 31, 2015, there were 110 million households with public distribution system (PDS) ration cards. Similarly, DBT on LPG, code named PAHAL, has helped weed out Rs 35 million duplications and bogus users, helping save Rs 149.82 billion in annual fuel subsidy. “Same is the response in MNREGA, about 10 per cent savings have been reported in 2015-16 because of elimination of bogus job cards,” he said. Citing an example, the secretary said Haryana has informed the Centre that it has wiped out 6,00,000 fake beneficiaries for kerosene. The government intends to extend DBT to other schemes for better targeting and stamping out bogus users, thus checking diversion to non-intended beneficiaries, he said. “The intention of the government is that by the end of this year, we have about 150 schemes which we want to cover under DBT. Till April this year, we have extended it to about 65-odd schemes. So, more than doubling,” he said. Nearly 310 million beneficiaries, Lavasa said, have been covered by DBT and more than Rs 19 million disbursed to them directly under various schemes like MNREGA and PAHAL. DBT for kerosene was to be rolled out next with a pilot project to be soon launched in 33 districts, he said, adding that a similar test run for food and fertiliser is in the offing in select districts this year. A national scholarship portal is being created that will integrate all scholarship schemes handled by different departments to make it more transparent and easy to administer. “The intended beneficiaries will have access to all the data through our portal. It avoids duplication of work,” he said, adding that pension payment would be integrated too. According to Lavasa, DBT is a way of rationalisation, systematising and computerising schemes. “Once you start systematising things, these are the unintended benefits and these benefits are there for everybody,” he added. David Krejci Jersey
India, second largest buyer of Iranian crude
Iran’s crude oil exports to India in March 2016 surges from 290 to 505 thousand barrels per day turning the South Asian country into Iran’s second largest oil customer. During sanction years, India purchased about 20 per cent of Iran’s oil exports equal to an average of 200 thousand barrels per day. Following the implementation of the Joint Comprehensive Plan of Action (JCPOA), India increased its oil imports from Iran as Indian refineries have made new oil purchase proposals. The surge in oil exports marks a significant achievement for the Iranian government in development of activities in regional markets after the removal of sanctions. In March 2016, India’s Essar Oil refinery ranked first in importing crude oil from Iran while Mangalore Refinery and Petrochemicals Limited (MRPL) stood in the second place. Also after a six-year hiatus, Reliance Petroleum Limited of India purchased a shipment of oil condensate produced at Iran’s Forouzan oilfield. On the basis of a report released by Iranian Ministry of Oil’s Office for OPEC affairs and relations with energy organizations, the average volume of India’s imports from Iran reached 4.35 million barrels per day in the first three months of the year 2016 indicating a 500-thosand increase as compared to same period a year earlier. Iran remains as the third supplier of India’s oil demands following Saudi Arabia and Iraq. The South Asian country’s imports from Iran reach a total of 505 thousand barrels in March revealing a 290-thousad growth as compared to February, 2016. Currently, Iran ranks third among oil exporters to India while at the beginning of 2016 the country only stood in the sixth place. Recently, Reuters touched upon Iran’s oil exports to India reporting “India’s crude oil imports from Iran have reached more than 500 thousand barrels per day marking the highest level in the past five years. Shea Theodore Jersey