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BW Businessworld

It’s Getting Bigger & Bigger

The big billion sale by etailers; CPSE expenses under the government lens; Dip in venture capital flows and more

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Come festive season and the top e-commerce rivals — Flipkart, Amazon, and Snapdeal, part of India’s $23-billion online retail market, do not leave any stone unturned to outcompete each other. Each of the companies hosted their annual festive season sales in October and they have all claimed big success and shared new record numbers, much better than the previous years. Amazon India said in a statement that its Great Indian Festival was bigger than any online shopping event in the country so far. As per media reports, Flipkart sold goods worth Rs 1,400 crore ($210 million) on a single day, making it the highest ever single-day sales for the e-tailer. Snapdeal said it had sold more than 11 million units during its Unbox Diwali Sale over five days, with over 50 per cent of the orders being made in the prepaid mode. The numbers clearly indicate that e-tailers are going strong in the festive season. After Dussehra, we need to watch out for Diwali now.
— Ayushman Baruah

Poor Inflows
Should the alarm bells be ringing for companies in quest of venture capital (VC)? At least the numbers and data sets say so. Sample this: for the July-September quarter around $1.05 billion worth of VC investments came into the. But this was around 70 per cent lower than last year’s figure of $3.4 billion across 156 deals. According to the latest report by KPMG International and CB Insights, while the quantum of investments have declined, investors are focused on two specific features in companies. Those that have a “clear business model” and those that offer “greater profitability potential”. But India is not alone in this. Apparently, the global numbers too have been down to a two-year low of $24.1 billion across 1,983 deals in the July-September quarter. But all is not lost yet. “VC investment in India has rebounded in the third quarter compared to the second...over the next few quarters, Series B and C deals are expected to increase as high-quality early-stage companies grow and seek out new funding,” the report noted. This should be reason enough to cheer — Ashish Sinha

Expenses Under The Lens
In a recent review of expenses incurred by state and central public sector enterprises (CPSEs), it was discovered that around Rs 270 crore was spent on air travel alone. Aiming to drastically cut the cost of flying by the personnel of state and CPSEs, particularly those under the coal, power, petroleum and renewable energy ministries, the Energy PSU Task Force has recommended joining forces and approaching airlines, particularly the national carrier Air India, as a single ‘big buyer’. The motive is clear: Get maximum discounts, cut unplanned travel expenses. This approach is expected to result in a direct saving of around Rs 25-30 crore or even more depending on the negotiations and discounts offered. Earlier, most PSUs were approaching the airlines as independent entities. It seems these initiatives have a distinct stamp of being monitored by the PMO. After all, haven’t we heard PM Modi talk about finding better solutions to challenges on several occasions?
— Ashish Sinha

Green Capital
Forget Basel-III capital norms which in kick in from fiscal 2019 and dud-loan provisioning and their impact on bank’s bottom-line. A new beast had reared its head — Climate Change Protocol. Reserve Bank of India (RBI) deputy governor S.S. Mundra did not elaborate on this at the 3rd SBI Banking and Economics Conclave in Mumbai, but noted: “Discussion in the international forum is veering towards penalising industries which add to carbon emissions and banks may be forced to hold additional capital for loans to such industries on account of increased risk weights.” The above must be seen along with the dud-loan devil we are aware of and on whose account more pain is in the offing. It is felt the system could be looking at significantly higher incremental provisioning in the coming year. Incidentally, the total earnings before provision and taxes for the banking sector stood at Rs 2,46,067 at end-fiscal 2016 even as there is considerable divergence between the earnings of different bank groups. More pain is on the cards.
— Raghu Mohan

Regional Connect
The government has finally launched a plan to connect smaller towns across India with flights. Named UDAAN, the scheme is part of an ambitious programme to integrate India as a unified market. Along with the path-breaking GST, this could prove to be an important fillip for small entrepreneurs with big dreams. As per the scheme, regional flights of one-hour duration would cost Rs 2,500. According to various surveys, there are at least 100 towns in India that would benefit from air services. Building of new airports is part of the plan. But critics are of the opinion that the government is going about it the wrong way. They seem to think that passengers travelling on busy trunk routes will be charged extra to subsidise the new regional air services. According to them, a better way is to provide the right incentives for private players to build new airports and launch new airlines. The Kochi airport is cited as an example of what private capital and enterprise can do. There is no doubt India needs more airports and more airlines. But Will UDAAN deliver?
— Sutanu Guru

A Journey Of Ups, Downs And Hurrahs
For the 30-stock BSE Sensex it’s been a fantabulous 30-year trajectory — of happy, tragic, and crazy rides, often jaw-dropping moments — and plunging lines — due to recessions, booms and busts, wars, and so on. Launched on 14 October 14 1986 with a market capitalisation of Rs 14,800 crore taking the base year as 1979, the BSE Sensex boasts a nominal value of Rs 47.8 lakh crore today. One of the most followed indices in the world, it has scraped the lower circuit thrice — in 2004, 2007 and 2008 — and hit the upper circuit but once in 2009. From its base of 100, it took 20 years to reach 10,000. In fewer than two years, thereafter, it rocketed up another 10,000 points. The moot point, though, is: had you invested Rs 1 lakh in the Sensex on 14th October 1986, your money would have grown 47 times. Wonder what the next 30 years will bring!
— Clifford Alvares


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