Mastercard-backed fintech startup Instamojo has shut down its core payments business after the Reserve Bank of India rejected its application to operate as a licensed payments aggregator in September, citing non-compliance with eligibility criteria.

Consequently, Instamojo has shifted its focus away from payments following the regulatory setback, The Morning Context reported.

Instamojo has promptly ceased its business operations after the RBI rejected its payment aggregator application. While payment companies typically have 180 days to wind down operations following a rejection, Instamojo has chosen an immediate shutdown, indicating that they would not reapply as well.

According to the report, InstaMojo is actively seeking a potential buyer as its founders aim to exit the business. Additionally, the startup has faced challenges in securing funding over the past few months, encountering difficulties with both existing and new investors.

Founded in 2012 by Sampad Swain, Akash Gehani and Aditya Sengupta, Instamojo is an ecommerce platform for independent businesses, direct-to-consumer (D2C) brands and micro, medium and small enterprises (MSMEs) that enable them to start, manage and grow their business online.

In early 2019, the startup raised INR 50 Cr as a part of its Series B funding round from Gunosy Capital, Japanese payments firm AnyPay and existing investors. It also counts Kalaari Capital and Blume Ventures among its investors.

Queries sent to Instamojo did not elicit any response till the filing of this article.

Introduced by the RBI in March 2020, the payment aggregator framework requires all payment gateway operators to obtain a license for acquiring merchants and implementing digital payment solutions.

Payment aggregators (PAs) facilitate merchants and ecommerce platforms in accepting payments by providing their technological infrastructure for streamlined online transactions. However, the licensing process, initiated three years ago, has become challenging and cumbersome procedure for payment solution providers.

Strict regulations from the central bank have resulted in numerous PA applications, including those from Paytm and LivQuik, remaining in a state of uncertainty. Even prominent names like MobiKwik’s Zaakpay faced delays and had to submit multiple applications before obtaining their licenses.

Earlier in February, RBI granted in-principal authorisation to 32 existing payment aggregators (PAs) to act as online PAs.

Amazon (Pay) India Pvt Ltd, Paymate India Ltd, Razorpay Software Pvt Ltd, Pine Labs Pvt Ltd and Zomato Payments Pvt Ltd were among the PAs that had been granted in-principle authorisation.

As per a report, the Indian payment gateways market is projected to grow to $2.68 Bn by 2027.

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Paytm’s parent company, One97 Communications, is among the nine stocks newly incorporated into the MSCI Global Standard Index. Following its inclusion, One97 Communications observed its shares reaching the highest level this month.

Paytm shares are presently trading at INR 912.30, reflecting a 2% increase. The stock has registered a remarkable 72% gain in the year 2023.

IIFL Alternative Research estimates potential stock inflows at $140 Mn, while Nuvama Alternative and Quantitative Research anticipates inflows of $162 Mn.

Recently, Paytm announced a 49% year-on-year decrease in its consolidated net loss, amounting to INR 291.7 Cr for the quarter ending September 2023. Operating revenue experienced a significant 31% surge, reaching INR 2,518.6 Cr, propelled by robust expansion in the payments and financial services sector.

Meanwhile, shares of Paytm slumped as much as 10.6% to INR 882.1 during the intraday trading on the BSE on October 23 after the company released its Q2 FY24 earnings.

In addition to Paytm, IndusInd Bank, Tata Motors ‘A’ (Tata Motors DVR), and Suzlon Energy shares are also among the nine stocks included in the MSCI Global Standard Index.

As per the latest announcement by the global index provider, other stocks added to the MSCI India Index include APL Apollo Tubes, Macrotech Developers, Persistent Systems, Polycab India, and Tata Communications.

The changes in constituents for the MSCI Global Standard Indexes will take place at the close of November 30, 2023.

At the same time, MSCI has not removed any stocks from the India index.

Passive funds globally monitor the Morgan Stanley Capital International (MSCI) indices. Any additions or upward adjustments in stock weightages within these global benchmarks are likely to attract inflows from passive funds aligned with these indexes.

Morgan Stanley Capital International or MSCI is known for its stock indices. The MSCI Index includes stocks from developed markets worldwide, as defined by MSCI. It covers securities from 23 countries but excludes stocks from emerging and frontier economies, making its global scope somewhat narrower. In contrast, the MSCI All Country World Index (ACWI) incorporates both developed and emerging nations. Additionally, MSCI offers a Frontier Markets index, which includes another 31 markets.

The MSCI India Index is crafted to gauge the performance of the large and mid-cap segments within the Indian market. Encompassing 122 constituents, the index effectively spans about 85% of the entire Indian equity universe.

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BYJU’S-owned upskilling platform Great Learning’s India business net loss soared 1.2X to INR 357.3 Cr in the financial year 2022-23 (FY23) from INR 307.1 Cr in the previous fiscal. However, excluding the “exceptional items” worth INR 120.6 Cr, the edtech startup’s FY23 loss would be INR 221.7 Cr, a 27.8% markdown from FY22.

The platform’s revenue from operations jumped 1.3X to INR 391.4 Cr in FY23 from INR 307.1 Cr in FY22, as per its filings with the Ministry of Corporate Affairs. Total income grew 1.2X to INR 392.9 Cr in FY23 from INR 316.1 Cr in FY22.

Meanwhile, Great Learning was able to control the rise in its expenses. Total expenses declined to INR 614.5 Cr in FY23 from INR 633.1 Cr in FY22. In FY23, the edtech firm’s top expenditure was on employee benefits, although it decreased to INR 327.8 Cr from INR 345.6 Cr in FY22.

Advertising promotional expenses, another significant portion of overall expenses, decreased to INR 159.1 Cr in FY23 from INR 170.5 Cr in FY22.

On a unit economics level, the expenditure was INR 1.57 to generate one rupee of operating revenue.

Founded by Arjun Nair, Hari Nair, and Mohan Lakhamraju in 2013, Great Learning offers comprehensive, industry-relevant programs across various technology, data and business domains.

Earlier, it was reported that the founders of Great Learning, the platform acquired by BYJU’S in 2021 for $600 Mn, are reportedly in talks with investors to raise funds to buy the company back from the Byju Raveendran-led embattled decacorn.

Last month, lenders of BYJU’S appointed risk advisory firm Kroll to protect the “charged assets” of both Great Learning Pte and the edtech firm’s Singapore entity Byju’s Pte. Ltd.

The main objective of the appointment was to safeguard and maintain the assets and businesses belonging to Great Learning, which includes its subsidiary, Northwest Education Pte. Ltd., and Byju’s Pte. Ltd., Kroll said.

Recently, BYJU’S released a part of its FY22 numbers. Without disclosing net loss, BYJU’S said the standalone EBITDA loss declined to INR 2,253 Cr in FY22 from INR 2,406 Cr in FY21. On the other hand, total income jumped to INR 3,569 Cr from INR 1,552 Cr in FY21.

While the complete financial statements for FY22 are yet to be disclosed, BYJU’S co-founder and CEO, Byju Raveendran said in an internal mail sent to employees the company is set to initiate the audit process for FY23 soon.

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The Competition Commission of India (CCI) has approved Mirae Group’s proposal to acquire a minority stake in logistics company Shadowfax.

“Commission approves the proposed acquisition of (a) minority stake in Shadowfax Technologies Private Limited by the Mirae Group Entities,” said the markets watchdog in a social media post. 

Mirae Global is a South Korea-based financial services giant that operates in India through its subsidiary Mirae Asset Capital Markets. 

As per CCI, Mirae Asset plans to undertake the acquisition via its ‘Late Stage Opportunities Fund.’ The deal will also entail the right of appointment of a Mirae’s representative on Shadowfax’s board of directors. 

The proposed combination involves… contemporaneously with the completion of the share acquisition, an acquisition of a right to appoint a director on the board of Target, collectively by Mirae Asset Naver New Growth Fund I (Mirae I), Mirae Asset– GS Retail New Growth Fund I (Mirae II), Mirae Asset– Naver Asia Growth Investment Pte. Ltd (Mirae III) and Mirae IV,” said a CCI order. 

It is pertinent to note that all deals beyond a certain threshold require CCI’s permission. The markets regulator has been tasked with keeping an eye on unfair business practices among businesses and promoting fair competition in the marketplace.

This comes three months after reports surfaced that logistics startup Shadowfax was giving finishing touches to its $60 Mn funding round after more than a year of deliberations. Back then, it was reported that TPG NewQuest would headline the funding round.

Founded in 2015 by Vaibhav Khandelwal and Abhishek Bansal, Shadowfax is a third-party logistics platform that caters to hyperlocal and delivery businesses. While Meesho is its biggest client, the company also counts big names such as Myntra, Zomato-owned Blinkit, Decathlon, Flipkart, and BigBasket as its customers. 

Shadowfax claims to deliver to more than 15,000 pincodes across the country and processes 15 Lakh orders a day and employs a workforce of 30 Lakh. 

Backed by names such as Mirae, Flipkart, Qualcomm Ventures and Eight Roads Ventures, the startup has raised more than $120 Mn till date. 

Curiously, the approval comes weeks after the competition watchdog gave its assent to a similar proposal filed by the Ontario teachers’ fund to acquire a minority stake in XpressBees. A week after that, the logistics unicorn bagged $80 Mn from the investment arm of the pension fund, Teachers’ Venture Growth (TVG).

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What is Proof of Concept (POC)?

A proof of concept (POC), also known as a proof of principle, is a critical step for early stage SaaS startups to assess the potential success of a product idea. It enables the product team to test whether the concept is technically feasible and financially viable before raising funds for product development. 

There could be other barriers, too, such as poor supply (think of rare earths), logistics constraints, inadequate quality control, or policy bumps. Developing a POC can help uncover many of these challenges and gather valuable feedback early on to ensure informed decisions are made without much risk.

Creating a POC is essential before developing a SaaS product. But if it does not pass viability assessment or fails to meet potential investors’ expectations, most founders will drop the idea without investing more time, money and resources.

A POC is not a prototype or a physical model used to test design and functionality. It evaluates a product idea, while a prototype is an early sample created to validate/improve product design and basic usage. A minimum viable product (MVP) comes well after a POC and prototyping, representing a usable version of the product with just the core features. MVPs can be used for testing and feedback.

Five Key Areas Covered In A POC

• The POC should explain the general idea behind a SaaS product, including its features, development costs, timeline, maintenance requirements and pricing. It also identifies the people needed to bring the concept to life.
• Founder/s should also define the product’s target market and analyse competition, market conditions and potential demand.
• If a company is already operational, a POC should include current and previous financials for covering development costs, as well as staffing, sales & marketing and miscellaneous expenditure. For a first-time venture, POC will be required but it won’t be able to produce financials. A clear financial plan should be in place to get investors’ buy-in.
• A POC should be able to determine if the SaaS product has a target audience with whom SaaS companies want to engage for marketing products. It should explain how they intend to use the product (casual versus professional usage) and whether there is a significant pain point that justifies paid usage. In brief, it will meticulously evaluate users’ needs and demands.
• A POC should outline marketing strategies to connect with potential customers. It should also provide details of important tools to be used for planning promotional activities and budget allocations.

Three Challenges Plaguing A Proof Of Concept 

Stakeholders’ alignment: It is essential to involve key decision-makers while creating the proof of concept. If stakeholders are not present initially, it can lead to delays and difficulties in reaching a consensus at a later stage. Therefore, everyone who needs to be part of the process should be on board to iron out discrepancies.

Customer pain points: Writing a good POC depends on clearly understanding customers’ pain points and the best solution. Failure to identify these issues may result in a generic list of inane features rather than addressing specific needs. In her book Escaping the Build Trap, Melissa Perri puts product initiatives as the master tool to achieve the strategic intent, the guiding vision of an organisation. Hence, every product must create value for its potential customers, which must be reflected in a POC. Conversely, a wishy-washy draft can kill a sound concept and impact its launch.

Internal resistance: Internal resistance may arise when certain individuals within the company have disagreements or display concerns that can slow down the development of POC. So, it is crucial to identify and address these issues through effective communication and collaboration within the team.

Creating A Proof Of Concept In Seven Easy Steps

Developing a POC is critical, as it demonstrates the viability of a proposed product, underlines its scope/scalability and helps pinpoint risks and obstacles. Here are seven industry best practices to write a proof of concept:

• Set up the team to be involved in POC drafting. This should include decision-makers, product teams, writers and other stakeholders, as collaboration is the key.
• Start by defining the core idea of the SaaS product in the POC. It should mention what the product aims to solve, outline its objectives and list necessary resources.
• Answer essential questions such as the product’s feasibility, potential market and the technology needed.
• Some companies create a prototype for testing if the idea seems feasible.
• Provide an estimated timeframe and quantify efforts needed for product development. This will help with planning and resource allocation.
• Gather feedback from product teams, project managers and experts within the company for modifications, if necessary.
• If the POC is approved, create a proposal to outline the next steps towards product development.

The post Here’s Everything You Need To Know About Proof Of Concept appeared first on Inc42 Media.

India’s D2C market has rapidly evolved from its early days in 2013-14 into a burgeoning sector, projected to reach a $300 Bn market size by 2030. With D2C brands now integral to people’s everyday choices, from personal care to food and beverages, their influence is unmistakable. 

The sector’s growth is further underscored by the successful public market entries of players like Nykaa and Mamaearth, showcasing promising prospects for investors and brands.

While major D2C names often capture the spotlight, numerous emerging brands across India are revolutionising consumer habits with their innovative approaches. These brands are not only challenging established ecommerce giants and traditional brands but are also setting new standards in brand building and customer experience.

At Inc42, we have been at the forefront of recognising these trailblazers. Our journey began with a virtual D2C summit in 2020 and has since expanded to form a comprehensive community encompassing D2C founders, ecosystem contributors and investors. Our interactions with these stakeholders have given us insights into how emerging brands are making remarkable strides in captivating their audiences.

In keeping with our yearly tradition, we are glad to announce the third edition of Inc42’s flagship list – FAST42. With FAST42, just like the previous years, we aim to shed a spotlight on India’s top 42 fastest-growing brands, highlighting their significant role in shaping the D2C sector’s future, as well as identifying new and emerging brands with the potential to disrupt their categories.

The third edition, in collaboration with Simpl and Emiza, FAST42 2024 aims to nurture and recognise India’s rapidly expanding D2C brands and to facilitate these brands’ discovery by investors, attract top talent and generate new business prospects.

What Is FAST42?

The FAST42 list is a compilation showcasing outstanding D2C brands distinguished by their innovative strategies and notable growth in revenues. 

The FAST42 list of brands is categorised under two heads — ‘Growth’ and ‘Emerging.’ 

Each year, Inc42 publishes an interactive online ranking that details the journey of these brands, covering their inception, growth trajectory, key milestones and future ambitions. You can explore the previous year’s ranking here.

In the past editions, we’ve seen over 2,000 applications, a number we expect to exceed as the D2C ecosystem continues to flourish. This presents a growing opportunity for an increasing number of brands to gain recognition and be featured in this exclusive list.

Some of our recognised brands, such as — XYXX, SuperBottoms, Perfora, Snitch, Pilgrim, among others, have grown multifold ever since they made their debut on the FAST42 list.

Understanding The Application Criteria

Growth Category

In this category, India’s fastest-growing D2C brands are ranked on the basis of the highest revenue growth rates between FY2021 and FY2023.

The brands should:

• Be founded before April 2021
• Have generated at least INR 1 Cr in revenue in FY21
• Have generated at least INR 7 Cr in revenue in FY 23
• Have generated at most INR 100 Cr in revenue in any financial year
• Be privately held, for profit; based in India and independent entity 
• Should sell its own products via its own website as a key sales channel

Emerging Category

This category is for India’s emerging D2C brands who have the potential to disrupt a category. Brands will be selected by Inc42’s editorial team.

The brands should:

• Be founded on or after April 2021
• Have generated at least INR 50 Lakh in revenue in any financial year
• Have generated at most INR 7.5 Cr in revenue in any financial year
• Be privately held, for profit; based in India and independent entity 
• Should sell its own products via its own website as a key sales channel

Why D2C Brands Should Apply

With a readership spanning founder and VC ecosystems, FAST42 can offer brands access to new business opportunities and help them get discovered by investors and talent.

Here’s why D2C brands should apply:

• Brand Exposure: Get an opportunity to be seen and evaluated by Inc42’s editors, reporters and analysts. Selected brands can use this recognition as an exclusive badge of honour.
• Employer Branding: The esteemed list will raise awareness about your brand and its potential as a desirable workplace.
• Visibility: Winners will take the spotlight on the Inc42 website. Inc42 journalists will also delve into intriguing brands and trends showcased in the list.
• Credibility: Earn the prestigious Inc42 seal of approval for pioneering an innovative D2C startup in India.

FAST42 2024 is dedicated to celebrating and acknowledging the unique journeys of India’s D2C brands, offering them ample exposure to accelerate their growth to the next level.

Applications are open until December 20, and the much-anticipated list will be revealed at a grand event in Delhi, scheduled for February 2024.

The post Announcing FAST42 2024: Discovering India’s Fastest-Growing D2C Brands appeared first on Inc42 Media.

Business-to-business ecommerce solutions provider ElasticRun has nearly doubled its losses in the financial year 2023. The Pune-based unicorn has incurred a net loss of INR 618.82 Cr against a loss of INR 358.59 Cr in FY22, a 72.57% YoY increase.

Meanwhile, the startup’s revenue from operations saw a YoY increase of 24.71% to INR 4,754.86 Cr from INR 3,812.65 Cr in FY22. Further, the total revenue saw a YoY increase of 26.71% to INR 4,851.09 Cr from INR 3,828.24 Cr in the previous fiscal.

Founded in 2016 by Sandeep Deshmukh, Saurabh Nigam and Shitiz Bansal, ElasticRun’s tech platform acts as an extended arm of FMCG companies’ direct distribution networks in rural areas and enables these businesses to reach kirana stores in the hinterland.

The startup generates revenue through its tech platform which acts as an extended arm of FMCG companies’ direct distribution networks in rural areas and enables these businesses to reach kirana stores in the hinterlands of the country. It also offers logistics and warehousing services to these small businesses.

ElasticRun generates the majority of its revenue by selling products. It procures products from FMCG brands and sells them directly to local retail stores in rural areas.

As per its filings with the Ministry of Corporate Affairs, ElasticRun generated revenue of INR 4,383.39 Cr through sales of products in FY22, whereas it earned INR 368.34 Cr through sale of services.

The Expense Breakdown

ElasticRun’s total expenditure surged 30.65% YoY to INR 5,469.91 Cr from INR 4,186.66 Cr in FY22.

Increased employee benefit expenses: The company registered a YOY increase of 71.99% in employee benefits to INR 345.26 Cr from INR 200.74 Cr in FY22.

More than doubled finance costs: The finance costs saw a YoY increase of almost 2X, as it reached INR 8.08 Cr from INR 3.91 Cr in FY22.

Meanwhile, the company’s cash & cash equivalents at the end of March 31, 2023, saw a YoY decrease of 91.33% to 101.45 Cr from INR 1170.57 Cr in FY22.

In February last year, ElasticRun raised $330 Mn in funding led by SoftBank Vision Fund 2 and Goldman Sachs Asset Management. This was the round which marked its entry into the unicorn club. Overall, the unicorn has raised a total funding of $434.8 Mn and also counts Avataar Venture Partners, Prosus Ventures, Kalaari Capital, Innoven Capital and Abu Dhabi’s Chimera Investment, among others, as its investors.

The post SoftBank-Backed ElasticRun’s FY23 Loss Doubles To INR 619 Cr appeared first on Inc42 Media.

Hospitality giant OYO reportedly plans to prepay nearly a third of its outstanding term loan B (TLB) via a debt buyback process. 

As per news agency PTI, OYO plans to make payments to the tune of INR 1,620 Cr ($195 Mn) to repurchase 30% of its outstanding TLB. While the repayment of the debt is scheduled for June 2026, the exercise will reportedly be fully funded with cash on the balance sheet and from the cash collateral account.

As per the report, the travel tech major will execute the buyback deal at par value via a public bidding process, which commenced on November 14 and will go on till November 18. In the event bids breach the stipulated amount, OYO will then buy the loan back on a pro-rata basis.

The buyback exercise is expected to reduce OYO’s annual interest liabilities by more than INR 225 Cr. At the end of November 13, OYO’s debt paper reportedly closed at 90 cents on the dollar. 

This comes close on the heels of OYO cofounder and CEO Ritesh Agarwal telling top brass, in an internal email, that OYO was on the way to report its maiden profitable quarter in the second quarter (Q2) of the financial year 2023-24 (FY24) with a profit after tax (PAT) of INR 16 Cr. 

Curiously, a month ago, the Delhi NCR-based hospitality unicorn was said to be in talks to refinance its $660 Mn TLB with Apollo Management. The loan was taken at the height of the Covid-19 pandemic in 2021 as the hospitality business came to a standstill the world over. 

In the past, the startup led by Ritesh Agarwal publicly announced that it was operationally profitable in FY23, with an adjusted EBITDA of INR 277 Cr. During the fiscal year, the IPO-bound hospitality unicorn slashed its net losses 34% YoY to INR 1,286.5 Cr against a 14% YoY increase in operating revenue to INR 5,463.9 Cr in FY23. 

The company had also noted that it was well-placed to achieve an adjusted EBITDA of nearly INR 800 Cr in FY24. It is largely on the back of this turnaround that the startup expects to fund the prepayment of TLB. 

Meanwhile, plans are underway for OYO’s much-awaited IPO, which has seen the departure of key executives, including OYO’s India CEO Ankit Gupta and head of OYO Europe Mandar Vaidya. Many key appointments have also been made amid a major management reshuffle at the company. 

Amid all this, Agarwal is all set to join Shark Tank India’s upcoming season as the newest shark.

The post Flush With Funds, OYO To Prepay INR 1,620 Cr Via Debt Buyback Exercise appeared first on Inc42 Media.

The Reserve Bank of India (RBI) reportedly appointed executive director P Vasudevan as the new head of the fintech department earlier this month. With this, Vasudevan has become the second top official of the department since its formation in early 2022. 

Sources told The Economic Times that Vasudevan has taken over the reins from the incumbent chief and RBI executive director Ajay Kumar Choudhary, who is said to have retired. As per the report, Choudhary has now been appointed to the board of the Reserve Bank Innovation Hub.

“He has immense experience handling the payment ecosystem in the country, which will help him while dealing with the growing fintech ecosystem in the country,” a senior fintech executive reportedly said. 

The RBI hived off a separate fintech department in 2022 to foster innovation and provide impetus to the burgeoning Indian fintech industry. It is this department that industry stakeholders have to coordinate with for regulatory push and policymaking. 

Industry executives told the publication that Vasudevan will likely focus on streamlining coordination between various supervisory departments and ironing out policy bottlenecks. 

The fintech department will be an additional charge for Vasudevan who already oversees currency management, the corporate strategy and budget department at the central bank. 

This comes barely three months after Vasudevan was appointed as the executive director of the central bank in July this year. The RBI executive previously served as the chief general manager in charge of the department of payment and settlement systems before the elevation. 

The new appointment comes as the central bank has issued a slew of diktats and directives to streamline the entire fintech ecosystem. Just this month, the RBI issued rules to directly regulate entities facilitating cross-border payments. 

It has also been tightening its grip around fintech players, especially payment aggregators, and mandating greater compliance with rules and regulations. In September, RBI deputy governor T. Rabi Sankar also pitched for the creation of self-regulatory organisations (SROs) in the fintech sector to tackle key issues such as market integrity, data privacy, and cybersecurity.

A flurry of diktats from the RBI in the past one year also forced companies to pivot while the business models of many other players have also been rendered useless. 

As the fintech space grows in prominence, it remains to be seen how the space evolves. With a new official at the helm of affairs, all eyes are now on Vasudevan as to how he walks the tightrope between regulation and innovation.

The post P Vasudevan Takes Over The Reins Of RBI’s Fintech Department appeared first on Inc42 Media.

Online travel aggregator Yatra Online saw its consolidated net losses surge nearly 11X year-on-year (YoY) to INR 17.1 Cr in the second quarter (Q2) of the financial year 2023-24 (FY24) on the back of a fall in revenues. In contrast, the company reported a net loss of INR 1.56 Cr in the year-ago period. Sequentially, the company posted a net profit of nearly INR 6 Cr in Q1 FY24. 

Revenues from operations jumped 14% YoY to INR 94.1 Cr in Q2 FY24 compared to INR 82.4 Cr in Q2 FY23. On a quarter-on-quarter (QoQ) basis, operating revenue declined 14.5% from INR 110.1 Cr in Q1 FY24.

Including other income, total income rose 8% YoY to INR 97.3 Cr in the quarter ended September 2023. 

Meanwhile, expenses continued to drag the company down. In Q2 FY24, total expenses zoomed more than 25% YoY to INR 113.5 Cr, up from INR 90.5 Cr in the year-ago period. 

Employee benefit expenses emerged as the biggest cost centre and contributed INR 36.6 Cr to the total expenses in Q2 FY24. Other expenses stood at INR 18.6 Cr and service costs accounted for nearly INR 16 Cr in Q2 FY24. 

Yatra claims to be one of the country’s largest online travel companies in terms of gross booking revenues and competes with the likes of players such as MakeMyTrip and EaseMyTrip. Yatra also claims to cater to more than 700 corporate customers and offer hotel bookings, holiday packages and homestays. 

The online travel aggregator claims to have more than 1.03 Lakh hotels in India and over 15 Lakh hotels available on its platform for booking. The Indian arm of the Nasdaq-listed Yatra Inc. made a muted debut on the Indian bourses in September this year. 

The stock got listed at INR 127.50 per share on the NSE and INR 130 on the BSE against the issue price of INR 142. Since then, the company has been hovering around the same range. Yatra closed 0.32% lower at INR 138.60 on the BSE on Tuesday (November 11).

The post After A Profitable Q1 FY24, Yatra Online Slips Into Loss In Q2 appeared first on Inc42 Media.

Agritech startup DeHaat, which counts Peak XV Partners (formerly known as Sequoia Capital India and Southeast Asia) and Sofina Ventures as its marquee investors, has acquired the fruit export business of Ahmedabad-based listed fruit export firm Freshtrop Fruits in an all-cash deal. The financial terms of the deal have been kept under wraps.

Under the deal, DeHaat has absorbed Freshtrop’s export network and grading, packing and precooling centres, and manpower, including the top leadership team, into its ecosystem, it said in a statement.

Founded in 1992 by Ashok Motiani and his family, Frestrop exports grapes and other fruits, including pomegranate and mango, from India to countries including the UK and the ones that fall under the European Union, among others. 

Over the last 25 years, the company claims to have continuously invested in innovative technology and operates out of two packhouse facilities in Maharashtra. 

This is DeHaat’s seventh acquisition, and it aims to fully leverage the rapidly growing Indian export market to provide better market access and price discovery to Indian farmers, the statement added.

DeHaat’s cofounder and CEO Shashank Kumar said that this investment aligns with the startup’s vision to not only boost the grape exports from India but also develop research and development capabilities to grow new varieties of grapes, offering improved value propositions to farmers across the western India.

“We established our export business 18 months ago and are today exporting more than 20 agri-produce from India to the Middle East, UK & EU. We see strong synergies around the complementary core competencies between DeHaat & Freshtrop,” Kumar said. 

He added that Freshtrop’s employees, along with the founding family and its external stakeholders will continue to remain actively involved in the business as they were. Meanwhile,   the company will be able to leverage DeHaat’s network and resources for market expansion, technology for the development of new grape varieties and technology-led deeper pre-harvest support for farmers.

Founded in 2012 by Amrendra Singh, Shyam Sundar, Adarsh Srivastav and Shashank Kumar, Patna and Gurugram-based DeHaat offers end-to-end agricultural services to farmers. Its services include the distribution of high-quality agri-inputs, customised farm advisory, access to financial services and market linkages for selling their produce.

Since its inception, the startup claims to have served over 2 Mn farmers across 11 states in India through its digital network of over 11,000 ‘DeHaat Centers’.

The startup said in the statement that it boasts a network of over 1,500 stock-keeping units, delivering over 15,000 orders per day to more than 15 countries. 

Through this partnership, the startup aims to offer its full-stack agri services, including high-quality inputs, personalised advisory, financing, insurance & access, to wider global markets. 

Interestingly, the announcement comes after the startup reported an over 253% YoY rise in its FY22 loss to INR 1,563.9 Cr. Last year, DeHaat secured $60 Mn in a Series E round, which took the total amount raised in the round to $106 Mn.

The post Peak XV Backed DeHaat Snaps Up Fruit Export Business Of Freshtrop appeared first on Inc42 Media.

Mumbai-based cloud kitchen giant Rebel Foods’ operating revenue crossed the INR 1,000 Cr mark in the financial year ending on March 31, 2023. 

As per the recent financial statements filed with the Registrar of Companies, Rebel Foods, the parent company of both Faasos and Behrouz Biryani, reported an operating revenue of INR 1,195.2 Cr in FY23, up 39% from INR 858.6 Cr a fiscal ago. 

Founded in 2011 by Kallol Banerjee and Jaydeep Barman, Rebel Foods is a cloud kitchen startup, which houses popular brands such as Faasos, Behrouz Biryani, Ovenstory Pizza,

Mandarin Oak, The Good Bowl, SLAY Coffee, and Sweet Truth. 

The startup’s primary source of income is through the sale of its food items. Including other income, the startup earned a total revenue of INR 1,258.7 Cr in FY23, a 1.3X markup from INR 907.5 Cr it had generated in FY22. Meanwhile, the startup posted a loss of INR 656.5 Cr in FY23, up 23% year-on-year (YoY).

Expenses That Ate Into Rebel Food’s Revenue In FY23?

During the year under review, the startup’s total expenditure rose to INR 1,827 Cr, up 28% from INR 1,428.9 Cr it had spent a year ago. 

Procurement Cost Became The Biggest Contributor: Being a cloud kitchen, Rebel Foods spent most of its money on procuring raw materials. During the period under review, the startup’s procurement cost rose to INR 577.5 Cr from INR 446.4 Cr in FY22. 

Employee Expenses: The startup’s employee benefit expenses, which mostly comprised salaries, increased 34% YoY to INR 405.4 Cr in FY23. In June, Rebel Foods granted employee stock ownership plans (ESOPs) to 5,000 employees. The company has 2,743 employees as per its LinkedIn profile. 

Advertising Expenses Rise Mildly: Advertising expenses rose a mere 5% rise to INR 197.9 Cr in FY23 from INR 188.5 Cr in FY22.

Besides, the startup spent INR 163.3 Cr on commissions paid to other selling agents, mainly Swiggy and Zomato. 

On a unit economics level, Rebel Foods spent INR 1.5 to earn every rupee from operations. The startup’s EBITDA margin improved to -37.8% in FY23 from -46.4% in FY22. 

To date, the startup has raised a little over $500 Mn and counts Goldman Sachs, Peak XV Partners, InnoVen Capital, Trifecta Capital, and Qatar Investment Authority (QIA) among its backers. The startup claims that it has over 450 kitchens across 70 cities in the country. The startup primarily competes against the likes of Curefoods, Biriyani By Kilo, Freshmenu, among others. 

The post Faasos Parent Rebel Foods Breaches The INR 1,000 Cr Revenue Mark In FY23 appeared first on Inc42 Media.

After raising $50 Mn in its Series C funding round led by Tiger Global in June 2022, lending tech unicorn slice has now secured INR 75 Cr (around $9 Mn) from Stride Ventures in a debt funding round. 

The startup has passed a special resolution to allot 7,500 non-convertible debentures (NCD) at an issue price of INR 1 Lakh per share, slice’s regulatory filing with the Registrar of Companies (RoC) showed. The debentures issued by the company are non-convertible and have an interest rate of 14.25% per annum.

A separate filing noted that the debt funding round may reach INR 300 Cr (around $35 Mn). The development was first reported by Entrackr.

The funding round comes a month after slice and North East Small Finance Bank (NESFB) announced their merger. The joint venture seeks to integrate advanced technology solutions with initiatives to promote financial inclusion at the grassroots level, an official statement noted.

slice acquired a 5% stake in Guwahati-headquartered bank for about $3.42 Mn in March.

Founded in 2016 by Rajan Bajaj, the lending tech unicorn had to pivot after the Reserve Bank of India’s (RBI) mandate on prepaid payment instruments (PPIs) from last year. slice used to issue credit cards with pre-loaded credit lines, which the RBI has since made impossible.

Now, slice facilitates personal loans and UPI payments via its app, even though the fintech unicorn obtained a PPI licence last December. The fintech unicorn has raised $340 Mn to date and was valued at over $1.5 Bn during its Series C round.

In FY22, slice’s consolidated net loss widened 2.5X to INR 253.7 Cr from INR 100.4 Cr in FY21. Its operating revenue jumped 4.2X to INR 283.1 Cr from INR 67.7 Cr in FY21.

The post Fintech Unicorn slice Secures $9 Mn From Stride Ventures In Debt Funding appeared first on Inc42 Media.

Amid an ongoing legal battle with WalkMe, the Whatfix founder and CEO, Khadim Batti, has told his employees that litigation was a common competitive tactic in international markets and that the Israeli SaaS major has a history of doing the same.

“We believe that our success in the marketplace has led to this litigation. This legal matter does not impact our day-to-day operations or our ability to serve our customers,” Batti said in an email to Whatfix’s employees, ET reported, citing the email.

“WalkMe has a history of resorting to legal action against competition,” Batti added. 

The email comes as Indian media widely reported the ongoing legal proceedings in the United States District Court for the Northern District of California in the US between the two SaaS companies.

The Bone Of Contention

WalkMe has levelled several allegations against the SoftBank Vision Fund and Peak XV Partners-backed startup, Whatfix. In a complaint filed on August 8, the Nasdaq-listed Israeli company alleged that Whatfix gained unauthorised access to its systems, sought to interfere with customer relationships, made misleading advertising claims about its products and used its design mark without permission.

According to the court documents accessed by Inc42, WalkMe alleged that Whatfix had interfered with multiple WalkMe customer relationships and induced those customers to breach their subscription agreements with WalkMe. 

The company added that those customers provided Whatfix employees with user accounts and log-in credentials. WalkMe further alleged that the Whatfix employees used their access to gain “unauthorised insight into and copy WalkMe’s system features, functionality, and data.”

The lawsuit against Whatfix comes as the startup reported a net loss of INR 328.33 Cr in the financial year 2022-23 (FY23), down 53% compared to a loss of INR 706.26 Cr in FY22. The SoftBank-backed startup’s operating revenue rose 65.14% to INR 284.74 Cr in FY23 from INR 172.42 Cr in FY22.

The legal tussle also comes as the Indian SaaS startup is looking to raise a new funding round and is in discussions with prospective investors. Whatfix has raised $140 Mn in funding so far from investors, including SoftBank, Peak XV, Eight Roads Venture, F-Prime Capital, Anupam Mittal, Cisco Investments and Helion Ventures.

The post WalkMe Uses Litigation To Suppress Competition: Whatfix CEO To Employees appeared first on Inc42 Media.

In yet another development in the Mahadev app scam, the Mumbai Police have booked 32 people, including the director of Dabur Gaurav Burman and company chairman Mohit Burman under sections 420, 465, 467, 468, 471, and 120 (B) of the Indian Penal Code (IPC).

Citing the FIR, an ET report said that Mohit Burman has been listed as the 16th accused while Gaurav Burman is the 18th accused in the Mahadev betting app scam. 

The FIR was registered on a complaint filed by social activist Prakash Bankar on November 7. The social activist claimed that people have been defrauded to the tune of INR 15,000 Cr.

However, the Burman family of Dabur group has denied any involvement or role as alleged by the Mumbai Police.

“We have not received any formal communication on any such FIR. However, we have sighted the FIR which is being circulated to media houses. The FIR is patently false and baseless. Nothing could be further from the truth than as wrongly stated in the FIR,” said a spokesperson for the family.

Incidentally, the FIR also names actor Sahil Khan as accused number 26. Khan is accused of running another betting app related to Mahadev’s betting app, Khiladi.

“Sahil is not only accused of promotion but of earning huge profits by operating the app,” the FIR stated.

The development comes as dozens of big names and Bollywood celebrities have been included in various chargesheets and complaints registered by the police and the Directorate of Enforcement (ED). 

Last month, the ED filed a chargesheet in the Mahadev app scam, including the promoters Saurabh Chandrakar and Ravi Uppal, along with 12 other celebrities.

These include the likes of Ranbir Kapoor, Shraddha Kapoor and Huma Qureshi, among other Bollywood A-listers.

The scam, which came to light after Chanrakar’s lavish wedding in Dubai, has made headlines for the past month or so. While the investigation is on, the two promoters have denied any wrongdoing. 

In a statement sent to Inc42 last month, the duo said that the ED investigation was focussed on ‘scapegoating’ them rather than revealing the truth. They also claimed that a third person by the name of Subham Soni was the principal architect behind the Mahadev app, who operated the app through an entity based in the tax haven of Saint Vincent and the Grenadines.

As per media reports, the proceeds of the crime in the case are estimated to be around INR 6,000 Cr, of which ED has provisionally attached INR 41 Cr. A PMLA court will now likely take cognisance of the chargesheet during the next scheduled hearing on November 25.

The post Mahadev App Case: Dabur Group’s Chairman, Director Among 32 Booked By Mumbai Police appeared first on Inc42 Media.

In an attempt to replace the existing Cable Television Networks (Regulation) Act, the Ministry of Information and Broadcasting (MIB) has floated the much-anticipated draft Broadcasting Services (Regulation) Bill, 2023, for public consultation.

This move is expected to be a game changer for over-the-top (OTT) platforms in India as this bill seeks to take all such platforms under its purview. Notably, OTT platforms are currently regulated under the IT Act, 2000.

“The bill streamlines regulatory processes, extends its purview to cover the OTT content and digital news, and introduces contemporary definitions and provisions for emerging technologies,” the ministry said in a statement.

MIB added that it addresses a long-standing need to consolidate and update the regulatory provisions for various broadcasting services under a single legislative framework. This move streamlines the regulatory process, making it more efficient and contemporary, it added.

How Does The Broadcasting Bill Define OTT?

As per the draft Bill, “OTT broadcasting service” refers to a broadcasting service that provides on-demand or live content to subscribers in India through the internet or a computer resource. This includes a curated catalogue of programmes that are either owned, licensed, or contracted for transmission, excluding closed networks.

The definition also extends to cases where accessing content on non-smart televisions or viewing devices requires additional hardware or software, or a combination thereof, such as a set-top-box, dongle, or software keys.

OTT broadcasting shall not include social media intermediaries and their users, as defined by rules under the Information Technology Act, 2000, or any other entities notified by the government, the bill added.

Moreover, for OTT broadcasting services, compliance responsibility with all requirements under this bill lies with the operator providing the programme or content, not with the network operator or internet service provider.

Key Details On The Regulation

While the majority of broadcasting network operators must obtain a licence from the Centre, streaming platforms are only required to “intimate” the government if they surpass a specified subscriber or viewer threshold. To prevent “genuine hardship” for OTT broadcasters, the central government holds the authority to grant exemptions from the Act’s provisions through guidelines.

“Any person providing an OTT broadcasting service in India, with such number of Indian subscribers or viewers as may be prescribed, shall, within one month from the notification of this act or its meeting the prescribed threshold, provide an intimation to the central government of its operations,” the draft said.

Furthermore, the bill introduces a differentiated approach for programme and advertisement codes, tailored to different services. It mandates self-classification by broadcasters and enforces robust access control measures for restricted content.

In case of any violation of the programme or advertising code, OTT platforms will also be required to pay a penalty. The penalty for the initial violation is a fine of up to INR 20,000, while subsequent contraventions may incur a penalty of up to INR 1 Lakh.

The Indian OTT market is a bustling segment, including domestic players like Zee5, SonyLIV, and JioCinema alongside international majors such as Disney+ Hotstar, Amazon, and Netflix.

Revenue of the Indian video over-the-top (OTT) market is set to double from $1.8 Bn in 2022 to $3.5 Bn by 2027, according to PwC’s latest report. Further, the Indian OTT market is expected to grow at a CAGR of 14.32% over the next five years against the global OTT segment’s rate of 8.4%.

The post New Broadcasting Bill Taking OTTs Under Its Ambit Extended For Public Consultation appeared first on Inc42 Media.

Insurtech major Go Digit General Insurance, which is gearing up for its initial public offering (IPO), has received a show cause notice and multiple advisories from the Insurance Regulatory and Development Authority of India (IRDAI) last month, the company said in a new addendum to its draft prospectus filed with the Securities And Exchange Board of India (SEBI).

The development comes at a time when the company’s IPO is yet to receive final approval from the SEBI even after Go Digit refiled its draft red herring prospectus (DRHP) addressing certain concerns that the market regulator had raised earlier.

Go Digit revealed that the show cause notice from IRDAI has alleged non-disclosure of change in the conversion ratio of the CCPS issued by Go Digit Infoworks Services (GDISPL), the parent of Go Digit General Insurance, to FAL Corporation.

FAL Corporation is a part of Canada-based Fairfax Financial Holdings, which is one of the major investors in Go Digit.

“In terms of the Notice, the change in the conversion ratio of 6,300,000 CCPS issued by GDISPL to FAL Corporation, from ‘1 CCPS for 2.324 equity shares’ to ‘2.324 CCPS for each equity share’, which was reflected by way of an amendment to the JV Agreement dated August 11, 2022, is a material change to the information furnished at the time of applying for registration to the IRDAI,” the company’s regulatory disclosure to SEBI said.

As per the notice, Go Digit was expected to provide the details of such change to the IRDAI but it did not furnish the “full particulars”. Hence, IRDAI has also alleged that the startup is in violation of Section 26 of the Insurance Act.

If an adverse order is passed against Go Digit and its officers responsible for the non-compliance, the insurtech unicorn would be slapped with a maximum penalty of INR 1 Lakh for each day during which such failure continues, or INR 1 Cr, whichever is lower, the addendum mentioned.

Besides, IRDAI has also issued certain advisories and cautioned Go Digit on a few aspects.

The advisory notice has been issued for failing to take the insurance regulator’s approval for the change in remuneration of its Chief Executive Officer (CEO) on the account of the change in ESAR 2018 (employee stock appreciation rights scheme) to ESOP 2018 (employee stock option plans) and for failing to inform IRDAI of the retrospective grant of ESARs prior to the date of grant of the company’s certificate of registration.

“In the event the IRDAI is not satisfied with our responses or we fail to adhere to the advisories and cautions issued by the IRDAI, we may be subject to warnings, show-cause notices and/ or penalties in the future, which would, amongst other things, adversely impact our brand and reputation,” Go Digit said in its regulatory disclosure to SEBI.

Meanwhile, the IRDAI has also cautioned the startup to ensure due care and correct disclosures in the offer documents, of the position in relation to the commission on long-term policies and that acquisition costs incurred in the year, among several other advisories issued.

It is pertinent to note that Go Digit filed its DRHP with the SEBI in August last year. Within months, it also received the IRDAI’s approval to launch the IPO in November last year though SEBI had kept the IPO in ‘abeyance’.

In March this year, the startup refiled the DRHP with the market regulator for its $440 Mn, addressing the latter’s concerns about its ESOPs. 

In the latest filing, Go Digit said its erstwhile Go Digit – Employee Stock Appreciation Rights Plan, 2018 has been amended and changed to ESOP 2018, pursuant to the resolutions passed by the board and shareholders on March 21, 2023 and March 27, 2023, respectively. 

Founded in 2017 by Kamesh Goyal, Go Digit offers insurance policies across verticals including motor vehicle, health, travel, and property. Besides Prem Watsa’s Fairfax, the startup is also backed by prominent names such as Sequoia, cricketer Virat Kohli, and actor Anushka Sharma. 

Go Digit’s IPO comprises a fresh issue of shares worth INR 1,250 Cr and an offer for sale (OFS) of 109.45 Mn shares.

The post IPO Bound Go Digit Gets Show Cause Notice, Multiple Advisories From Insurance Regulator appeared first on Inc42 Media.

US-based electric vehicle (EV) maker Tesla is mulling to double the number of components it imports from India, Union Minister of Commerce and Industry, Piyush Goyal, said in a post on social media platform X.

Goyal wrote the post after paying a visit to Tesla’s state-of-the-art manufacturing facility at Fremont, California. “Proud to see the growing importance of Auto component suppliers from India in the Tesla EV supply chain. It is on its way to double its components imports from India.”

He added that he was delighted to see talented Indian engineers and finance professionals working across senior positions and contributing to the growth of the global electric vehicle giant. 

Though at the Tesla plant, Goyal could not meet the company’s Chief Executive Officer (CEO) Elon Musk, the minister is expected to see the latter sometime during this visit to the US. In the meeting, the two sides will discuss Tesla’s plans to set up an Indian factory which will manufacture a $24,000 worth car model, reported Reuters. 

In September Goyal said that Tesla plans to source components worth $1.7 Bn to $1.9 Bn this year from Indian vendors after buying $1 Bn worth of components last year.

In a bid to speed up the process of Tesla’s entry into the Indian market, the government is reportedly planning to expedite the approvals. The government is planning to provide all the necessary clearances to the company by January 2024. 

The development comes at a time when the Indian government is considering tax reduction on the import of fully assembled EVs for up to five years.  

Experts are of the view that this will attract global companies like Tesla and Vinfast, among others, to not only manufacture and assemble EVs in the country but also import fully assembled versions.

The government is reportedly working on an EV policy designed to enable global car manufacturers to import electric vehicles at reduced duty rates, provided they commit to eventually start the manufacturing process in India. However, the policy is yet to be finalised.

The post Tesla Mulls Doubling Import Of Parts From India: Piyush Goyal appeared first on Inc42 Media.

The Indian government is considering the possibility of implementing tax reductions on imported fully assembled electric vehicles (EVs) for a duration of up to five years. This strategic move aims to attract companies such as Tesla to not only sell but also potentially manufacture its electric cars within the country.

The government is formulating an EV policy designed to enable global car manufacturers to import electric vehicles at reduced duty rates, provided they commit to eventually manufacture EVs in India, Bloomberg reported.

However, a final decision on the policy’s outline is yet to be made.

In 2021, Tesla sought a reduction in import duties for its EVs. Tesla was seeking to lower the rates from the existing 70%-100% range to 40%, depending on the import value of its vehicles.

Tesla CEO Elon Musk is expected to meet with Commerce and Industry Minister Piyush Goyal later this week to have discussions about the company’s plans to establish a factory in India. Goyal is currently in San Francisco for ministerial engagements related to the Indo-Pacific Economic Framework and the Asia-Pacific Economic Cooperation.

Tesla is actively pursuing entry into the Indian market, one of the most promising automotive markets globally, driven by the increasing demand for EVs among India’s expanding middle class.

On the other hand, Tesla’s potential investment holds the promise of supporting the government’s agenda to boost manufacturing’s contribution to India’s GDP and simultaneously generate employment opportunities.

Tesla plans to source components worth $1.7 Bn to $1.9 Bn this year from local vendors after buying $1 Bn worth of components last year, Goyal said earlier.

“…Tesla already last year bought $1 Bn of components from all of you sitting here. I have a list of companies who supplied to Tesla. This year their target is nearly $ 1.7 bn or $ 1.9 bn…,” said Minister Goyal.

It was reported earlier that the Indian government is working to expedite approvals for Tesla’s potential entry into the country, with a goal of providing all the necessary clearances by January 2024.

A recent meeting conducted by the Prime Minister’s Office reviewed the upcoming phase of EV manufacturing in India, which includes Tesla’s investment proposal.

India’s growing demand for EVs has garnered interest from both international and local tech firms, as well as emerging startups. Acer, the Taiwanese tech giant, has recently made its foray into the Indian EV market by licensing its brand to eBikeGo, a mobility startup.

Meanwhile, VinFast disclosed intentions to invest between $150 Mn and $200 Mn in India, aiming to establish a completely knocked-down (CKD) assembly unit in the country.

Alongside Tesla, automotive giants such as Audi and Mercedes-Benz are also eagerly positioning themselves to seize opportunities within the burgeoning Indian EV ecosystem.

Overall, total EV registrations in India across categories grew to 1.32 Lakh units in October from 1.28 Lakh units in September. As of now, a total of 12,27,195 EVs have been registered in India in 2023.

The post India Contemplates Five-Year Tax Cut On EV Imports To Attract Tesla appeared first on Inc42 Media.

The Income Tax (I-T) Department in India is currently conducting investigations into the Indian units of Apple, Google, and Amazon regarding potential tax non-payment. 

Authorities, as part of a probe initiated in 2021, have sought detailed clarifications from several tech giants concerning their transfer pricing (TP) practices, as per an ET report. 

The department is contemplating a tax demand of over INR 5,000 Cr, having rejected numerous justifications provided by the companies in question.

The Indian arms involved in the matter are Apple India Pvt Ltd, Amazon Seller Services India Pvt Ltd and Google India Digital Services Pvt Ltd.

The central issue in this case revolves around the methods used for transfer pricing (TP) adjustments, which the tax department believes may lead to significant tax liabilities. This investigation covers multiple assessment years and is currently under scrutiny and legal process at various levels. 

According to an ET report, both Amazon and Apple have engaged PwC for representation in this matter. 

Transfer pricing principally aims to curb price manipulation in transactions within corporate groups, thereby reducing tax evasion. By setting transfer prices at arm’s length, or market rates, countries attempt to prevent corporations from shifting profits to low-tax areas. This practice encompasses dealings with both tangible and intangible assets. Compliance with transfer pricing laws in their operational jurisdictions is crucial for companies to mitigate tax-related complications and maintain equitable business operations.

The Income Tax Department is reportedly investigating the three technology behemoths regarding transactions associated with advertisement, marketing, and promotion expenses, payments for royalty, trading and software development segments, as well as marketing support services.

Apple, headquartered in Cupertino, California, holds the title of the world’s most valuable company, boasting a market capitalisation just shy of $3 Tn. Alphabet Inc, the parent company of Google, holds the fourth position in the valuation rankings, while Amazon holds the fifth spot.

In the case of Apple, the focus of the tax investigation primarily centres on the Indian arm’s procurement of finished products from its original equipment manufacturers and subsequent sales in the domestic market.

“While the company argues this is not an international transaction and thus falls outside the purview of taxation, the department contends it to be a deemed international transaction,” a person familiar with the matter informed ET. “The department found that the taxpayer wasn’t paying any royalty on trading, as the assessee couldn’t prove exploitation of the intellectual property, resulting in the royalty amount being benched to nil.”

In the case of Apple India, on expenses related to trading segments, the Income Tax Department has rejected the company’s justifications, leading to an alleged tax liability of hundreds of crores, according to another tax official.

Despite this, the company has seen a significant surge in net profit, increasing by 76% to INR 2,229 Cr, marking the fastest growth in net profit for the company in India over the past five years. Analysts anticipate a rapid increase in the percentage of iPhones manufactured in India, currently over 7%, in the coming years.

These cases go through different resolution stages, such as the dispute resolution panel, Commissioner of Income Tax (Appeals), Income Tax Appellate Tribunal (ITAT), and potentially the high court and Supreme Court. Companies can also choose the Mutual Agreement Procedure (MAP) for an alternative tax dispute resolution under Direct Tax Avoidance Agreements (DTAA).

The post India Tax Probe: Apple, Google, And Amazon May Face INR 5,000 Cr Tax Demand appeared first on Inc42 Media.

While Fintech unicorn Razorpay plans to relocate its parent company to India through a cross-country merger, this move could incur a tax payment of $250 Mn – $300 Mn in its current domicile, the United States.

This plan involves a merger between its US-registered entity and its Indian arm.

Razorpay and its investors are contemplating a merger at a reduced valuation from its peak of $7.5 Bn in 2021. Despite this, advisors on both sides of the deal, including those in the US and KPMG and Deloitte in India, are hesitant due to the paced growth trajectory of the payments processor over the past two years, ET reported.

A reduced valuation would proportionally decrease the tax liability; however, a significant reduction might face challenges in obtaining regulatory approval.

“Yes, there have been discussions to value the company at $3 Bn – $4 Bn, but external advisors are of the view that it may not be cleared by US authorities because of the company’s steady growth over the last year or so, even as peers in the US have seen correction in their valuations,” a source said as quoted in the report.

Razorpay is set to pursue approval from the National Company Law Tribunal (NCLT) within the next two months for the merger. Additionally, the company will appoint an auditor for the valuation discussions.

The fintech unicorn is also looking at raising a new round of funding from investors in 2024 to cover the tax payout. The uncertainty surrounding the duration of NCLT approval has prompted this strategic move.

Razorpay’s decision to relocate is primarily motivated by its goal to list on Indian stock exchanges within the next two to three years. This strategic move is also aimed at enhancing the company’s ability to navigate the regulatory landscape more effectively.

Razorpay has reportedly held discussions with government officials as well regarding the requisite approvals needed for the relocation process.

Founded by Shashank Kumar and Harshil Mathur in 2014 as a payment gateway platform, the startup has branched out into SME payroll management, banking, lending, payments, insurance among others, over the years.

In 2021, Razorpay bagged $375 Mn in its Series F round from Lone Pine Capital, Alkeon Capital, and TCV, among others, at a valuation of $7.5 Bn. Razorpay entered the unicorn club in 2020 after bagging $100 Mn from Singapore’s GIC and Sequoia Capital, among others.

Razorpay’s standalone net profit widened 20% to INR 7.3 Cr in the financial year 2021-22 (FY22) from INR 6.1 Cr in FY21 due to a strong growth in its business.

The startup’s revenue from operations surged 76% to INR 1,481 Cr from INR 841.2 Cr in FY21.

A growing trend among major players in the Indian startup scene is the consideration of “reverse flipping” — relocating their headquarters back to India. Triggered by PhonePe’s shift, which paid INR 8,000 Cr to shift domicile, for a potential public listing, this move has encountered challenges.

As per an Inc42 survey published earlier this year, over 77% venture capital funds and 65% angels said that after the SVB collapse, founders are rethinking overseas registration, with tax implications deterring a return to India for startups registered in the US.

The post Reverse Flip: Razorpay’s Cross-Country Merger May Incur $250-300 Mn Tax appeared first on Inc42 Media.

Have you ever dreamed of starting your own D2C business, but felt overwhelmed by the challenges? You’re not alone. I’ve been there too. Starting an ecommerce business is a big undertaking, but it’s also incredibly rewarding. I’m here to tell you that it’s possible to achieve your dreams, even if you’re starting small.

The initial overwhelm is real. But starting a D2C business is more accessible than you might think. Thinking about why is it important?

Wider Exposure: With the internet, your customers can come from anywhere in the world. And with the recent surge in online shopping, you have the potential to reach more customers than ever before.

24/7 Shop: Imagine having a business that runs itself, allowing you to make money while you sleep. Automation can make this a reality for you, freeing up your time so you can focus on growing your business and pursuing other interests.

Low Startup Costs: Don’t let budget concerns stop you from starting your own ecommerce business. There are many ways to save money, and you can even find free online store options.

Starting an ecommerce business in India can be daunting, but it’s also an exciting opportunity. Here’s a step-by-step guide to help you get started:

Step 1: Determine Your Niche & Products

Find the perfect products and niche to solve problems for your customers, with steady demand and low competition.

Step 2: Conduct Market Research

Learn about similar products, the competition, and who your ideal customers are.

Step 3: Create a Business Plan

A well-structured plan provides clear guidance for all aspects of your business, from branding and marketing to sales and finance.

Step 4: Source Your Products

Choose the best business model for you: make your own products, buy wholesale, or dropship.

Step 5: Find A Business Name and Logo

Create a brand name and logo that will capture people’s attention and stick in their minds.

Step 6: Create An Ecommerce Website

Start your online business by choosing the right ecommerce platform for you.

Step 7: Prepare for Launch

Make sure your store has high-quality product photos, optimised SEO, and a reliable shipping strategy.

Step 8: Get Your First Customer

Use digital marketing and social media to connect with your target audience and start building relationships. This will help you attract your first customers and grow your business.

The first step is always the hardest, but it’s essential for success. Starting an ecommerce business is an exciting journey full of opportunities, learning, and growth. 

The post A Step-By-Step Guide To Start A D2C Ecommerce Business appeared first on Inc42 Media.

What Is Customer Segmentation?

Customer segmentation is all about categorising a company’s customer base into distinct groups based on critical parameters. While creating customer segments, a SaaS player may only consider primary data or delve deep into tech aspirations, product innovations and business goals.

Typically, SaaS providers will start with basic information such as business type and size, industry/sector, locations and markets, revenue and technology solutions in use. However, they will move on to more granular analysis to tailor their products and services, communications, and sales and marketing strategies to resonate better with each customer group and profile.

This is no easy task, as SaaS players need to enhance customer engagement at pre- and post-sales levels based on the data insights revealed by these groups. More importantly, routine data crunching may not be adequate for this purpose, leading to many pitfalls and a subsequent loss of business. In simple terms, a holistic blend of data, creativity, business perception and knowledge of market trends is needed to create these segments and meet their unique needs and preferences.

Whether SaaS companies are leveraging customer segmentation to drive growth in existing markets or using the datavantage to explore new geographies, this exercise is essential for maximising revenue and delivering personalised customer experiences. Ultimately, it ensures that resources are allocated efficiently, customer satisfaction is optimised and companies can thrive in competitive markets.

How SaaS Companies Segment B2B Customers

Source: Secondary Sources

Four Key Challenges Of Customer Segmentation

• Access to adequate and good quality data: Amassing,analysing and updating a vast quantity of relevant and reliable data can be extremely challenging at times. To effectively manage data, SaaS providers should determine their requirements, implement data management systems, integrate data capture through customer feedback and other tools and use AI/ML for data insights. Unless data is validated/cleaned regularly or synced with ground realities such as changes in market trends, competition or customer preferences, errors will creep in and distort analytics.A significant pitfall here could be adherence to data privacy regulations. SaaS companies need to opt for permissible data usage, ensure transparent data collection and implement data security measures if they want to leverage customer data for business growth.
• Getting the segmentation criteria right: Developing an effective strategy for customer segmentation can take time and effort, given there are too many criteria to consider, from demographics, requirements, spending and tech usage to value creation, retention and more. Overall, it will be a complex manoeuvre involving qualitative research and in-depth statistical analysis. To choose the most suitable criteria, SaaS companies should focus on the right datasets aligning with their business objectives. For instance, if a company wants to push its revenue at the earliest, it will focus on onboarding a large number of customers with immediate requirements and explore datasets to identify that segment. However, the company may not be able to retain so many customers in the long run. On the other hand, companies targeting customer retention or high-value enterprise deals for long-term growth will take their time and tap into areas for maximising customer satisfaction or creating innovative, value-added products. Eventually, customer segmentation will be a dynamic procedure wherein different criteria and methodologies will be compared and tested to make sure that they work for specific business goals.
• Getting the segment size and the segment number right: Determining the right number of segments and right-sizing each is crucial for optimum growth. If there are too many segments or too many businesses in those groups, customising one’s offerings becomes difficult. Again, going too granular may lead to faulty resource allocation and a rise in costs and operational complexities without adding any real value. To achieve optimal segmentation, one should balance breadth and depth, consider capabilities and measure outcomes via critical metrics like customer acquisition, retention, revenue and profitability.
• Effective communication and collaboration: Until a SaaS company thoroughly understands its customer segments, goals and expectations, it is difficult to become partners in growth. In contrast, one can easily customise communication and collaboration strategies when customer segmentation aligns well with customers’ needs, values and vision. Staying attuned at every step is the way to achieve desired outcomes.

Five Ways To Boost SaaS Growth With Customer Segmentation

• Better efficacy of products and services:With a suitable model in place, SaaS companies get a better understanding of each segment as entities are broadly based on similarities. Consequently, they can improve the products and services required by each group.
• Increased revenue potential:Customer segmentation allows SaaS companies to target high-value businesses/enterprises and increase revenue through innovative products and services, upgrades and cross-selling.
• Better price matching:Market knowledge and customer data help strategise sustainable pricing for different customer segments.
• Enhanced customer service:Again, a good understanding of customer profiles and segments improves customer service by providing personalised experiences along each touchpoint and promptly resolving unique grievances. This further boosts profits and customer retention.
• R&D boost:Finally, segmentation drives R&D, enabling research teams to focus on each segment for the most suitable solutions. This approach simplifies identifying pain points and innovating new products. Understanding user requirements from the get-go further increases the chances of product success.

The post Everything You Need To Know About Customer Segmentation appeared first on Inc42 Media.

The Indian online real money gaming industry is used to being in the eye of the storm. From periodic bans by various state governments to uproar from a section of society, the homegrown online gaming industry has somehow always endured and made its way through choppy waters.

While the regulatory shenanigans are nothing new, what came as a bolt from the blue was the GST Council’s decision to impose 28% Goods and Services Tax (GST) on the sector, sending all stakeholders in a tizzy.

The move thrusted the entire online real money gaming ecosystem in a state of flux as the focus suddenly turned from fearing adverse regulations to a long bill of tax evasion. What followed was a bloodbath that left many jobless and brought down the shutters on many gaming companies.

The aftermath was largely in line with what industry stakeholders predicted as the looming taxation challenges and a flurry of notices took the sheen away from a sector that once basked in glory. And all of this happened in a span of a few months, courtesy a single order from the GST Council.

The Council, in July this year, announced its decision to impose a 28% GST on the amount being paid at the entry level for online gaming. In August, amendments to the Central Goods and Services Tax (Amendment) Bill, 2023 and the Integrated Goods and Services Tax (Amendment) Bill, 2023 were approved by the GST Council. Later, the Parliament approved these amendments.

Finally, real money gaming platforms entered the new tax regime on October 1. While some states are yet to amend the GST law, they would apply the amendment retrospectively from October 1.

In line with the predictions, the increase in taxation seems to have an immediate impact on the online real money gaming industry and startups in the sector are reeling due to squeezed margins, decline in user spending, and no clarity about the future path.

Poker Bears The Brunt – Most Impacted Sub-Segment 

While at least a full quarter is needed to understand the complete impact of the changes in GST law, its effects are visible in the revenue margins and user spending of gaming platforms within a month of the changes coming into effect, according to industry stakeholders.

Platforms that offer online poker games are the most impacted by the changes in taxation, as per industry sources. The reason behind this is that the platform fee for poker used to be lower, at around 3-4%, as against 10%-15% for rummy and above 15% for many fantasy gaming leagues. 

While poker platforms are absorbing some of the impact of the increase in GST rate for now, they have started passing on some of the increase to the users by charging 4%-5% higher platform fee. As a result, many of the platforms have not only seen a 10%-20% decline in their user base but also a 20% fall in their user margins.

It must be noted that online poker platform Spartan Poker  fired 125 employees or 40% of its total workforce after the new tax regime kicked in. It was not immediately clear which departments were impacted by the company’s retrenchment move. 

Rummy is the second most affected segment in real money gaming, as per the industry sources. 

Meanwhile, the ongoing men’s cricket World Cup seems to be acting as a shield for fantasy gaming platforms, as they have not seen any impact of the new tax regime so far. However, it seems it is only a matter of time before these platforms too begin to feel the heat. For now, the prominent fantasy platforms, many of which are well funded, are absorbing the increase in cost, but this is, of course, not a long-term solution.

Disappearing Offers & Bonuses Impact User Sentiment

An official of an online rummy platform pointed out that the current practice of absorbing the increase in costs is not a sustainable solution.

The decision to tax online real money gaming platforms at 28% on full face value will hit the bottom line of all the players in the industry, no matter how well funded they are, he explained. He added that the impact of the new tax regime is already visible as not only has the number of users depositing money on these platforms decreased but also the quantum of deposits for the platform he works with.

To recap, under the new regulations, a flat 28% tax applies to the total value of bets for online games, irrespective of whether they are games of skill or chance. Previously, a lower 18% GST was levied, specifically on the platform fee for skill-based games. For instance, with a platform fee of 20% on a INR 100 bet, the GST under the previous tax regime would be INR 3.6 (18% of INR 20), which has now shot up to INR 28.

“There is a percentage of users out there who are just not happy with this new regime. If we are subsidising this 28% tax, the kind of offers and bonuses that the industry used to provide players cannot be provided any more. Users are not happy with this and there is a clear drop there,” the aforementioned official said.

Revenue Estimates Revised Downwards

The real money gaming sector has been a key revenue driver for the overall Indian gaming industry. However, as the new GST regime begins showing its impact on the online real money gaming sector, the overall growth projections for the Indian gaming industry are being revised downwards.

In a recent report, Lumikai, a gaming-focused venture capital fund, which last year said the Indian gaming industry would have a revenue of $8.6 Bn by the end of FY27, said it now expects this number to be at $7.5 Bn by the end of FY28.

The Indian online real money gaming industry, which generated a revenue of $3.1 Bn in FY23 and grew at a robust 33% during the year, is likely to see a sharp slowdown in growth as recent taxation policies are anticipated to impede further expansion, it said.

“Growth in RMG over the coming years is expected to be muted due to recent tax policies and industry consolidation,” the report added. 

Inc42 earlier reported that a consolidation wave in the online gaming industry is expected due to the new tax regime. However, the landscape has shifted, with major industry players now facing show-cause notices for alleged tax evasions. 

Such has been the impact of the move that Dream Sports, which runs fantasy gaming platform Dream11 and is among the few profitable players in the segment, is also considering diversifying into sectors like sports commerce, content, fitness, among others. 

Additionally, there has been no update on the regulatory front so far despite the industry filing applications for self-regulatory organisations (SROs) in July. As such, the future of the sector seems to be hanging in balance.

The post Doom And Gloom In Real Money Gaming Industry As New GST Regime Begins To Show Effects appeared first on Inc42 Media.