Monthly Archives: April 2017

Amazon Prime a key differentiator for the US e-commerce firm in India

Amazon Prime now accounts for nearly a third of Amazon India’s active customer base. Prime subscribers spend at least 15% more than non-Prime customers and place more orders on an average every month.

Bengaluru: Amazon’s flagship membership programme Prime, which has helped the e-commerce giant lock in millions of online users in the US, is proving to be a key differentiator for the retailer in India as well, a report said.

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Data from the report by market researcher RedSeer Consulting, shows the number of Prime subscribers in India rose rapidly during the October-December quarter, reaching 5-6 million at the end of December.

Prime now accounts for nearly a third of Amazon’s active customer base with 25-30% of Indian customers opting for it, the report said. These estimates include paying and non-paying subscribers.

Prime subscribers spend at least 15% more than non-Prime customers and place more orders on an average every month, the data shows. They seem to be more satisfied as well: according to RedSeer, average Net Promoter Score (NPS)—an indicator of customer satisfaction—for Prime customers in India was 40% against 24% for non-Prime customers.

In less than nine months since Prime launched in India, it accounts for one out of every three orders that Amazon delivers to customers—highlighting how consumers are increasingly paying for quicker and more reliable deliveries and hence are increasing their online spending budgets on platforms that offer such membership programmes.

Prime has become a key lever for Amazon in its battle against arch-rival Flipkart. A significant part of Prime’s growth is also being driven by its online video streaming service, which competes with Netflix and Hotstar.

The Indian numbers mirror a phenomenon that Amazon first witnessed in its home market, the US, when it first launched Prime in 2005. Over the last decade, Prime became one of the biggest levers of Amazon’s growth in the US, as the online retailer sold more to existing customers, who typically ended up shopping more from Amazon after signing up for Prime.

“We’ve seen a big rise in frequency as well as a big lift in actual order values from Prime customers,” Akshay Sahi, head of Amazon Prime in India, said in an interview with Mint earlier in April. “What happens is, apart from mobile phones, any of the other categories are not one-time purchase categories. Because you just keep buying more and more of those things. Your fashion budget will move more towards Amazon, your electronics budget will move more towards Amazon, your consumables budget moves more towards Amazon because of the loyalty you have and the experience you enjoy and the programme that you’re a part of.”

Last July, Amazon India launched its annual Prime membership programme in more than 100 cities, offering one-day and two-day delivery on hundreds of thousands of products and exclusive discounts for an initial price of Rs499 per year.

Prime was the single biggest-selling product among the 15 million units sold on Amazon India during a five-day sale in October. Amazon expanded the service by adding video content in December through Amazon Prime Video, pitting it against Netflix and Hotstar.

Prime’s success in India may force arch-rival Flipkart to re-think its strategy towards paid subscription services. So far, Flipkart has not actively promoted its own loyalty programme for consumers, as the e-commerce firm privately believes that Indian shoppers typically don’t care or pay for delivery and convenience or content.

“Flipkart is missing out big-time by not promoting its own membership service as aggressively as Amazon. They still have an opportunity to educate customers and offer them that option of quicker and cheaper deliveries, but they have to get into this game quickly,” said Harminder Sahni, founder and managing director, Wazir Advisors, a consulting firm.

Livemint : April 25, 2017

Ola valuation falls to $3 billion after raising funds from SoftBank

Ola received Rs1,675 crore from SoftBank in November as part of a bigger fund raising round that will lower the company’s valuation to about $3 billion from $4.5 billion

Ola founder Bhavish Aggarwal. The online taxi firm is in fundraising talks with new investors to get at least $500 million more

Amazon gets RBI nod for e-wallet in India

Amazon’s e-wallet will be broader in scope than its Pay Balance service and will not be restricted to Amazon-based transactions
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Bengaluru: Amazon India has received the Reserve Bank of India’s (RBI) approval to launch its own digital wallet in India, paving the way for the American online retail giant to gain a slice of India’s fast-growing digital payments business.

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Amazon India, which had applied for what is called a Prepaid Payment Instrument (PPI) licence nearly a year ago, will now look to take on established rivals such as Paytm and Freecharge as it prepares to launch a prepaid wallet service that will be broader in scope than its Pay Balance service and will not be restricted to Amazon-based transactions.

In December, Amazon had launched its Pay Balance service in order to boost cashless transactions. While Pay Balance works in a similar manner to other mobile wallet services, it was restricted to transactions on Amazon.

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Amazon confirmed the development, but did not comment on the broader scope of what its wallet service could look like and whether it would cover areas such as bill payments.

“We are pleased to receive our PPI licence from the RBI. Our focus is providing customers a convenient and trusted cashless payments experience. RBI is in the process of finalizing the guidelines for PPIs. We look forward to seeing a continuation of the low-limit wallet dispensation with simplified KYC (know-your-customer norms) and authentication. This will allow us to help customers adopt digital payments at scale and thereby contribute towards making India a less-cash economy,” said Sriram Jagannathan, vice-president of payments at Amazon India.

Amazon’s new wallet service will look to address a vital problem in the world of payments — like other wallet services such as Paytm, it will help customers bypass the two-step authentication process for online payments using credit or debit cards and makes the process smoother for online shoppers, thus plugging a key gap in the payments process that reduces the risk of loss of business from online shoppers.

In September, mobile payments start-up PhonePe Internet Pvt. Ltd, which is owned Flipkart (Amazon’s biggest rival in India), launched an app based on the Unified Payments Interface (UPI) platform, which was a key bet for Flipkart, given how payments are still largely an unsolved problem in both online and offline commerce.

Amazon received the PPI licence in late-March. The development comes weeks after the RBI issued guidelines on issuance and operation of PPI licences, indicating potentially stricter norms for mobile wallet players as the central bank looks to ramp up focus on security and customer protection.

RBI raised the minimum capital requirement for digital wallet operators by nearly five times and introduced a directive for full compliance with Know-Your-Customer (KYC) norms, among other new guidelines, causing an outcry among top digital payments firms.

Following the guidelines, top leaders from the payments industry met RBI officials to discuss some of the clauses, including the KYC mandate, which they argued would act as a deterrent towards expanding the digital payments business.

“We hope the government and RBI would continue to encourage multiple ways to shift consumers from cash behaviour by recognising the value of digital wallets, used especially for making small value payments to large merchants like e-commerce, government, IRCTC, utility or insurance companies,” said Amazon’s Jagannathan.

Livemint : April 13, 2017

Vedanta, Cairn India finish merger to form $15.6-bn market cap entity

Cairn Energy will have a 5% holding in Vedanta after the merger of Cairn India

New Delhi: Consolidating Vedanta’s position as one of the world’s largest diversified natural resources companies, Vedanta and Cairn India have completed their merger process on Tuesday.

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The merged entity will have a market capitalisation of $15.6 billion, and higher free float — outstanding shares available in the public sphere — of 49.9 per cent. “Vedanta will have one of the strongest balance sheets in the Indian corporate sector with flexibility to balance capital allocation to the highest return projects while providing a strong and stable dividend,” a company statement said on Tuesday.

According to the deal, shareholders of Cairn India will receive for each equity share held one equity share of face value Rs 1 each and four 7.5 per cent Redeemable Preference Shares in Vedanta with a face value of Rs 10 each. Cairn India shareholders, who will become shareholders of Vedanta, would also receive an interim dividend of Rs 17.7 per equity share as approved by the Vedanta board on March 30, 2017. Vedanta will arrange for a third-party facility enabling a cash exit for RPS holders at par within 30 days from issuance.

Navin Agarwal, chairman of Vedanta, said, “We are pleased to have completed the Vedanta-Cairn India merger and are very excited about the future of the combined company. I would like to thank the shareholders of both companies for their support for this transaction and welcome the Cairn India shareholders into Vedanta’s shareholder register. With world class assets in metals and mining, and oil and gas, Vedanta will fuel India’s economic growth and generate value for all stakeholders.”

Edinburgh-based Cairn Energy will have a 5 per cent holding in Vedanta after the merger of Cairn India. Cairn Energy, which has an ongoing tax dispute with the Government of India, will also get four preferential shares in the merged entity under a July 22 scheme announced by the Vedanta promoters.

Sudhir Mathur, acting chief executive officer, Cairn India said, “I am very excited about Vedanta’s commitment to grow our oil and gas business. The merger with Vedanta will de-risk Cairn India by providing access to a portfolio of diversified. Tier-I, low-cost, long-life assets, to deliver significant near-term growth, while retaining the substantial upside from our oil & gas business.”

Flipkart raises $1.4 billion from eBay, Microsoft, Tencent, acquires eBay India

After the fundraising from Microsoft and eBay, Flipkart may get more capital soon as SoftBank may invest in the e-commerce firm if Snapdeal’s sale goes through

SAIC signs deal with General Motors to take over Halol plant

New Delhi: China’s largest automaker SAIC Motor Corp has signed a deal with General Motors to buy its GM India’s Halol plant in Gujarat, the company said in a filing with the Shanghai Stock Exchange on Wednesday.

The company did not disclose anything more on the agreement in its Shanghai filing.

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The Shanghai-based manufacturer and the American giant had been in talks regarding the handover of the plant, where GM India started making Opel cars in 1996, and Chevrolets from 2003. The facility with an annual production capacity of 110,000 volumes was underutilised over the last few years due to its falling sales and failure to revive with no good product mix.

Last year, Detroit-headquartered General Motors pulled back its $1 billion investment in India amid falling sales and consequent plunge in market share. The company will end operations at the Halol plant on April 28.

SAIC, formerly Shanghai Automotive Industrial Corporation, will take over the plant’s operations as it plans to enter India soon. The Competition Commission’s had already given approval to SAIC Motor HK, part of China’s SAIC Motor Corp, in January this year to acquire certain assets of the Halol plant.

In China, SAIC Motor Corp makes cars in joint ventures with General Motors Co and Volkswagen AG in addition to own-brand vehicles. The company in its Shanghai Stock Exchange filing also reported a 7.4% jump in 2016 profits, though missing its own expectations marginally.

Meanwhile, General Motors India will continue making cars at its Talegaon factory near Pune which has annual capacity of 170,000 volumes. The Chevrolet India-parent last month also signed a three-year wage agreement with 2,500 workers of the Talegaon plant. Under the wage pact for the period April 1, 2017 to March 31, 2020, the average salaries of the employees will go up by Rs 22,000 at the end of the period.

Detroit is also taking a good second look at GM’s India plans now, since none of its recent products have failed to steer a turnaround for the company.

Hindustan Business: April 05, 2017

WhatsApp set to roll out digital payment service in India

WhatsApp is working to launch digital payment service in India in the next six months

A job advertisement on WhatsApp’s website said it was looking for a candidate who understands India’s Unified Payments Interface (UPI) and the BHIM payments app that enable money transfers.

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Mumbai: Instant messaging app WhatsApp, owned by Facebook Inc, is mulling a foray into digital payment services in India, its first such offering globally, and has advertised to hire a digital transactions lead in the country.

A WhatsApp move into digital payments in India, its biggest market that is home to 200 million of its billion plus global users, would replicate similar moves by messaging apps like Tencent Holdings Ltd’s WeChat in China.

WhatsApp is working to launch person-to-person payments in India in the next six months, news website The Ken reported earlier on Tuesday, citing unnamed sources.

A job advertisement on WhatsApp’s website said it was looking for a candidate with a technical and financial background – who understands India’s Unified Payments Interface (UPI) and the BHIM payments app that enable money transfers and merchant payments using mobile numbers – to be its digital transactions lead for the country.

“India is an important country for WhatsApp, and we’re understanding how we can contribute more to the vision of Digital India,” a WhatsApp spokesman said, referring to a flagship government programme that aims to boost the use of Internet-based services in the country.

“We’re exploring how we might work with companies that share this vision and continuing to listen closely to feedback from our users,” the spokesman said, declining to elaborate further.

Digital transactions in India have surged after Prime Minister Narendra Modi’s shock ban of certain high-value bank notes in November that accounted for more than 80% of the country’s currency in circulation at the time.
In February, WhatsApp’s co-founder, Brian Acton, had told local media that the app was in early stages of investigating digital payments in the country and that he had talked to the Indian government about the matter.

Just last week, Swedish communications app Truecaller, which has a large user base in India, started a mobile payment service in the country based on the UPI platform.

Livemint: April 05, 2017

OMCs to invest Rs 90,000 cr on fuel upgrade by 2020

Bhubaneswar: Oil marketing companies (OMCs) will be investing Rs 90,000 crore by 2020 on fuel upgradation programme.

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“The oil companies have spent more than Rs 28,000 crore after 2010 which is in addition to Rs 35,000 crore that was already spent till 2010. They will further spend Rs 28,000 crore by 2020 for meeting the BS-VI specifications which will take the total investment to Rs 90,000 crore only on fuel upgradation programme itself,” said K D Tripathi, secretary, ministry of Petroleum and Natural Gas at the launching of BS-IV grade fuels across the country.

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“Our fuel quality standards have been gradually tightened since the mid 90’s. Investing on fuel quality improvement was critical to the success of the vehicular emissions programme. Our refineries have achieved the target with the introduction of advanced technologies with significant capital expenditure”, he added.

It may be noted that the fuel upgradation programme took off with the notification of vehicular emission norms for new vehicles in 1991. BS 2000 (Bharat Stage 1) vehicle emission norms were introduced for new vehicles from April 2000 and this was followed by BS-II emission norms for new cars in Delhi from 2000 and extended to the other metros in 2001. BS- III was implemented in phases during 2005-2010. The current BS-IV fuel with 50 ppm sulphur was introduced in year and today, it covered the entire country.

However, the government, in 2016, has decided to meet the international best practices to leapfrog directly to BS-VI norms by skipping BS-V altogether by April 1, 2020.

There are about 23 oil refineries in India with a combined capacity of 230 million tonnes per annum.

“Today, we begin a new era of clean transportation fuels that will benefit 1.25 billion citizens of our country by substantially reducing pollution levels in our cities,” Dharmendra Pradhan, minister of state for Petroleum and Natural Gas said.

He also complimented the OMCs- Indian Oil Corporation Ltd (IOCL), Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation (HPCL) for working in unison to launch the BS-IV grade fuels as per the schedule.

Business Standard: April 01, 2017

Govt awards 128 regional routes to Air India, SpiceJet among others

Under UDAN, Air India, Air Deccan, SpiceJet, Air Odisha and Turbo Megha have got rights to fly 128 routes which will require them to cap half the seats at about 50%

New Delhi: Flights offering seats for as little as Rs2,500 will connect big cities and small town India starting next month after the aviation ministry on Thursday authorized five airlines to operate on so-called regional routes.

Tata Sons to invest Rs 10,000 crore in group companies

Mumbai: Among the first decisions taken by N Chandrasekaran as chairman of Tata Sons was to tighten the holding company’s control over the $103-billion conglomerate, recently shaken up by a power struggle between Cyrus Mistry and Ratan Tata.

The Tata Sons board approved a resolution to invest up to Rs 10,000 crore in various Tata group companies at the first board meeting chaired by Chandrasekaran on February 21.

“Resolved that approval of the board of directors be and is hereby granted to the company to invest amounts not exceeding Rs 10,000 crore for subscribing to issues of securities and/or purchasing securities in various companies of which Tata Sons Ltd is the promoter and/or a shareholder,” according to the resolution, a copy of which has been filed with the Ministry of Corporate Affairs.

The filing didn’t give any reasons or mention the companies in which the funds would be invested.

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The board, on the same day, also decided to raise up to Rs 7,000 crore by selling bonds to refinance debt, invest in securities or provide loans to companies.

The fund-raising could be done in one or more tranches. “We do not share information on such matters. Suffice it to say that, from time to time, Tata Sons raises funds as part of its ongoing activities,” Debasis Ray, Tata Sons group spokesperson, told ET in an email.

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Chandrasekaran’s rise to the top job at the 149-year-old conglomerate in February followed a battle for control after former chairman Mistry was unexpectedly ousted in October last year. The board said it had lost confidence in his leadership, naming Ratan Tata as interim chairman before Chandrasekaran was picked as a permanent replacement.

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Mistry has launched a legal battle against the Tatas at the National Company Law Tribunal. The Shapoorji Pallonji group, owned by Mistry’s family, has an 18.4% stake in Tata Sons.

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During the fight for control, Mistry refused to step down from the chairmanship of listed Tata companies. Ratan Tata had to rely on Tata Sons’ shareholding and the support of institutional investors to remove him from these boards.

Tata Sons, an investment holding company of the Tata Group, holds shares in more than 100 Tata companies, including 29 publicly listed enterprises that have a combined market capitalisation of about $116 billion. It earns money through the payment of dividend, fees and interest by Tata group companies.

“I look forward to working with all the group entities, bringing the group together to make an impact both in terms of business and also in terms of the society, at large,” Chandrasekaran had said on the morning of February 21, just before heading for his first board meeting as chairman.

He sees binding the group together— with its three-tier structure of Tata Trusts at the top, Tata Sons in the middle and then the operating companies —as a key responsibility that comes with the job.

Chandrasekaran, popularly known as Chandra, is the first non-Parsi and third non-Tata chairman of the Tata group. The group’s debt burden amounted to Rs 2.26 lakh crore ($33.7 billion) on March 31last year. The investment company reported a standalone profit of Rs 3,013 crore in the previous financial year, a 67% fall from Rs 9,062 crore a year earlier. On a consolidated basis, profit rose 21% to Rs 23,119 crore.

Debt stood at Rs 225,740 crore as of March 31, 2016.

The Economic Times : March 29, 2017