Thursday 11 November 2021

Why Paytm may not see the big listing pop like Zomato and Nykaa

 NEW DELHI: Paytm’s initial public offering (IPO), being touted as the biggest in India’s corporate history, was subscribed 36 per cent on Tuesday, the second day of bidding.  It received bids for 1.74 crore equity shares against offer size of 4.83 crore shares.

The portion set aside for retail investors was subscribed 1.07 times, while the reserved portion of non-institutional investors was subscribed only 3 per cent. Qualified institutional buyers have put in bids for 29 per cent shares of the portion set aside for them. 

However, oversubscribed by 10x, the anchor round saw participation from a wide range of global investors such as Singapore’s GIC, Canada Pension Plan Investment Board, and BlackRock. Through this round of financing, Paytm has already raised almost half of its Rs 18,300 crore target but the asking valuationsfor a loss-making firm are looking a bit stretched for many analysts.   Paytm's muted subscription so far is starkly different from the bumper listing of Nykaa last week that got a 100 per cent retail subscription within the first hour.  So what are the reasons for the lackluster investor demand for Paytm’s IPO?  Lofty valuation: The Paytm initial share sale aims to raise Rs 18,300 crore at a band of Rs 2,080-2,150, valuing the company at Rs 1.39 lakh crore at the top end. The IPO is valued at 43.7 times FY21 price-to-sales, which translates into a discount of 12 per cent to the recently-listed unicorn, Zomato.  "The lofty valuation of Paytm has kept investors away from rushing to subscribe to the IPO on the first day like noticed in the past several IPOs. It looks like the subscription from the retail investors is mainly for the listing gains. In FY21, when use of digital wallet and mobile payments surged, the company posted a decline in the revenues. Despite a 60 per cent cut in marketing and promotional expenses, the losses continued and the road to profitability is unclear," said Guarav Garg, head of research at CapitalVia Global Research.  It is still loss-making: Paytm is in its 11th year of operations as a digital payment company, but is still a loss-making firm.   It has posted losses for the last 8 consecutive years while spending billions into a variety of business segments including insurance sales, wealth management, digital gold, travel and movie ticketing, fantasy sports, e-commerce, and also launched a payments bank (a bank operating on a smaller scale without involving any credit risk).  “We expect to continue to incur net losses for the foreseeable future and we may not achieve profitability in the future,” the company stated in its DRHP.  “Our profitability depends on the cost-effectiveness of our business…when we become a listed company, we will incur additional significant legal, accounting,and other expenses that we did not incur as an unlisted company,” Paytm said in the prospectus.   Moreover, while the revenue of the company has been growing, their market share has actually been shrinking.  "This is an additional problem for companies going public as in order to show a better picture while going public, whether it is Zomato or Paytm, in pursuit of lower losses they tend to give up market share. If they are competing with companies which are still private and venture capital funded, it becomes an unequal race as the private investors are still willing to underwrite losses whereas the public listed company does not want to do it to the same extent. The result is loss of market share for the listed entity," according to Devina Mehra, co-founder and chairperson at First Global.  It's a Chinese company!  The fintech firm has listed the fact that it is a “foreign-owned and controlled company” as a risk in the draft offer document it filed with market regulator the Securities and Exchange Board of India.   Paytm is backed by Japan’s Softbank, China’s Alibaba and Ant Group, and Hong Kong’s Elevation Capital. Alibaba's Ant Group, with a 29.7% stake, is Paytm's largest shareholder.   Ant Group, Alibaba, and SAIF Partners (a Hong-Kong based private equity firm) collectively own more than 50% of the shares. So while Paytm's origins and business are in India, it's now primarily a Chinese-owned company, and foreign ownership is a matter of concern when it comes to financial stability.   "It's not just the losses at the operational level that is keeping investors wary of Paytm's IPO. But the fact that the company has significant Chinese ownership, a web of transactions with 30 odd subsidiaries and over 40 cases of litigationagainst it, seem to be key concern. Competition against deep pocketedbehemoths like Google, Amazon and Facebook in the payment space may keep the company devoid of profits for many years, especially if it stays volume focused," said Tanushree Banerjee, senior research analyst at Equitymaster.  

Too much competition 

Paytm does have the advantage of being in the Indian mobile payment market the longest, with the biggest user base. But competitors like PhonePe and GooglePay have outdone Paytm in the UPI app ecosystem.   PhonePe and Google Pay together had an 80 per cent share of the UPI transactions in September 2021. PhonePe had the most number of UPI transactions in September 2021 (1,653.19 million), followed by Google Pay (1,294.56 million) and Paytm (462.71 million).   Paytm has a share of 13 per cent in overall UPI payments but it has the largest share of India’s merchant payments market. However, competitors like Google, Apple, Amazon, and Facebook have very deep pockets. So, their entry into the payments space, will make Paytm's growth sustainability very uncertain.  "In Paytm’s case, where there is the strength of the network effects -- it’s the largest digital payments from a merchant’s perspective -- it has a long runway to capitalize on that and hopefully generate some profits along the way," Rakhi Prasad, an investment manager with Alder Capital told Bloomberg TV.   "These are very high risk bets" she added, over the medium- to long-term horizon. “Nothing is really going to happen in the short-term. I would say demand will come through but maybe not a big listing pop that we may have been seeing in some other companies.  Viability concerns  It is the peer-to-merchant segment (P2M) where Paytm is the true leader with a 50 per cent share, and this is the market where it will make its money.   However, the commission it earns on all the transactions routed through its payment gateway solution is still low. It has dropped from 2.18 per cent in 2016– 17 to 0.79 per cent in 2020–21 as the company prioritised acquiring users and user transactions. But when compared to international peers, its economic viability is a long way off.   "Companies like American Express, Papal, Shopify, and Square, have take rates between 2 per cent and 3 per cent. This is because they handle a variety of financial transactions. Mastercard's take rate is 1.8 per cent. Visa's is much lower at 1.1 per cent. Alibaba owned Ant Financial, perhaps the company that Paytm has most closely modelled itself on, has 1.4 per cent. But makes up for it withhuge transaction volumes," explained Banerjee.  Adapting to regulatory norms  Since Paytm has a number of subsidiaries, and a finger in every pie - payment bank, e-commerce, insurance, and broking - it will have to adapt to a host of new regulations. Probably more than any other fintech player in the country, cautions Banerjee.  Moreover, 24 of the 43 litigations currently against Paytm, involve its subsidiaries. "The web of transactions between the company, its founder, and subsidiaries is a key sustainability risk," Banerjee added.

Nykaa founder ’s wealth tops $6.5 billion after blockbuster IPO

 Falguni Nayar’s beauty startup has jolted her to the ranks of the world’s richest.  Nayar, who owns about half of Nykaa, is now worth about $6.5 billion as shares of the firm surged as much as 89% when they started trading Wednesday. She’s become India’s wealthiest self-made female billionaire, according to the Bloomberg Billionaires Index.  

FSN E-Commerce Ventures, Nykaa’s parent entity, is India’s first woman-led unicorn to hit the stock exchange. It priced its initial public offering at the top end of a marketed range, raising 53.5 billion rupees ($722 million). The stock was up 78% as of 10:36 a.m. in Mumbai. 

Nayar, who formerly led a top Indian investment bank, founded Nykaa in 2012 just months before turning 50. Back then, most Indian women bought makeup and hair-care products at neighborhood mom-and-pop stores where the selection was scanty and trials unheard of.   The startup has since grown into the country’s leading beauty retailer, buoying online sales with demo videos by glamorous Bollywood actors and celebrities and more than 70 brick-and-mortar stores. Nykaa, derived from the Sanskrit word for heroine, sells items including exfoliation creams, bridal make-up essentials and hundreds of shades of lipstick, foundation and nail color to suit Indian skin tones, skin types and local weather. Its sales surged 35% to $330 million in the year ended in March, according to its filing. Nykaa is a profitable company, a rarity among the internet startups making a debut in the public markets.  Nayar owns her company stake through two family trusts and and seven other promoter entities. Her Ivy League-educated daughter and son, who run different Nykaa units, are among the promoters.   While Nayar is India’s richest self-made female billionaire, Savitri Jindal, who controls the OP Jindal Group conglomerate founded by her late husband, is the nation’s wealthiest woman. Her fortune is valued at $12.9 billion, according to the Bloomberg Billionaires Index, a ranking of the world’s 500 richest people.  Nykaa’s IPO is one of the many consumer Internet companies making its debut this year amid a soaring stock market. Paytm, India’s leading digital payments firm backed by Warren Buffett’s Berkshire Hathaway Inc. and Masayoshi Son’s SoftBank Group Corp. closes for subscription on Wednesday. One97 Communications Ltd., its operator, is vying for a $2.5 billion listing, the nation’s biggest. 

While Nykaa has changed Indians’ outlook from making do with just a lipstick and kajal eyeliner, “we have a long way to go,” Nayar told Bloomberg ahead of the IPO. Women -- and even men -- in the country of 1.3 billion people are just beginning to open their wallets to splurge on make-up and grooming products. 

Wednesday 3 November 2021

Rural development ministry ties up with Flipkart to sell products made by artisans

 The rural development ministry has tied up with e-commerce giant Flipkart to sell products made by millions of artisans under the Deendayal Antyodaya Yojana – National Rural Livelihood Mission (DAY-NRLM) program on the e-commerce platform. The move will help artisans reach 10 crores of Flipkart's existing customers, thus substantially scaling their outreach. 

“India’s homegrown e-commerce marketplace Flipkart has signed a memorandum of understanding (MoU) with the ministry of rural development for Deendayal Antyodaya Yojana – National Rural Livelihood Mission (DAY-NRLM) program,” the rural development ministry said in a statement.

“The move will help empower local businesses and self-help groups (SHGs), especially those that are led by women, by bringing them into the e-commerce fold,” it said.

“We are identifying and collaborating with all possible partners who can contribute to this cause and partnership between DAY NRLM and Flipkart will help in the process,” rural development minister Giriraj Singh said. 

According to Minister Singh, rural products from SHGs have huge potential for acceptance among the masses in India and abroad and e-commerce platforms will prove to be an effective tool to harness it. “This MoU will enable rural women to sell their products to more than 10 crores of Flipkart's customers,” he added. 

The MoU is a part of the Flipkart Samarth program and aims to provide skilled yet under-served communities of craftsmen, weavers and artisans with national market access through the Flipkart marketplace, as well as dedicated support for knowledge and training.

The Flipkart Samarth program was launched in 2019 as a sustainable and inclusive platform to empower underserved domestic communities and businesses with better opportunities and livelihoods. Flipkart Samarth is currently supporting the livelihoods of over 9,50,000 artisans, weavers and craftsmen across India, and is continuously working towards bringing even more sellers onto the platform. 

The rural development ministry’s DAY-NRLM program with its outreach in 6768 blocks of 706 districts across all 28 states and 6 UTs has 7.84 crore women mobilized into more than 71 lakh SHGs.

Under the mission, poor women from different cross-sections of class and caste form into SHGs and their federations, providing financial, economic, and social development services to their members for enhancing their income and quality of life.

Saturday 30 October 2021

Meesho undertakes third ESOP buyback worth $5.5 million

 Mumbai: Meesho is undertaking a $5.5-million ESOP buyback — its third so far — for all eligible current and former employees with vested stocks, even as it looks to build enough firepower to take on the likes of Amazon and Flipkart in India’s ecommerce market. The social commerce platform, which recently raised $570 million in a funding round led by Fidelity Management and B Capital Group, repurchased employee stock ownership plans worth $6 million in two previous rounds — $1 million in February 2020 and $5 million in November 2020 — with across-the-board participation. Separately, Google is in talks to invest in Meesho at a valuation of $4.9 billion, ETtech reported on Oct. 22. 

“We continue to see meteoric progress not only as a business but also in our efforts to democratise internet commerce for everyone,” Vidit Aatrey, founder and chief executive officer of Meesho said in a statement on Friday. “As we hire across the board and scale our tech and product talent by 2.5X, ESOPs will give employees high ownership, while providing more opportunities for wealth creation.” 

Meesho is among the several consumer internet startups that have recently undertaken ESOP buybacks worth a cumulative $545.8 million. These firms include Swiggy, Zomato, Unacademy, Razorpay, Moglix, Zetwerks, Zerodha, PhonePe, Udaan, Cred, Paytm, Acko and Licious. 

The abundance of ESOP buyback programmes has employees asking to be included in the pool upfront, even if the cash in hand is less to begin with, industry stakeholders had told ET previously.

Nykaa IPO subscribed 4.86 times


Retail investors, whose investments cannot exceed  ₹2 lakh per individual, subscribed to 6.34 times the 4.73 million shares on offer, data showed. (Bloomberg)
Retail investors, whose investments cannot exceed 2 lakh per individual, subscribed to 6.34 times the 4.73 million shares on offer, data showed. (Bloomberg)

The institutional investor category was subscribed 4.77 times, while the non-institutional category comprising high-net-worth individuals was subscribed 418% or 4.18 times.

The initial public offering (IPO) of FSN E-Commerce Ventures Ltd, which owns Nykaa, was subscribed 4.86 times excluding the anchor book on Friday, the second day of the three-day offering.

As of 5 pm, the IPO received applications for 127.75 million shares against 26.28 million shares on offer, stock exchange data showed. The institutional investor category was subscribed 4.77 times, while the non-institutional category comprising high-net-worth individuals was subscribed 418% or 4.18 times.

Retail investors, whose investments cannot exceed 2 lakh per individual, subscribed to 6.34 times the 4.73 million shares on offer, data showed.

Separately, the Fino Payments Bank IPO was subscribed 51% on the first day of its three-day offering closing on 2 November.

The overall book, excluding the anchor allotment, was subscribed 0.51 times.

Thursday 28 October 2021

10 things to watch out for in Paytm's RHP as the company heads closer to its mega IPO

Paytm, India’s leading digital ecosystem for consumers and merchants, is headed for a public market debut — a much-awaited one as it is going to be the country’s largest IPO.

On October 22, the company received approval from SEBI for its IPO and it has now filed the Red Herring Prospectus.

Here are the ten things that stand out in the company’s RHP

1. Issue size increased: Paytm is headed for a Rs18,300cr IPO — the largest market debut in India yet. It had hiked its IPO issue size from the earlier Rs16,600cr as it received increased investor demand.

2. Paytm adoption goes up: Paytm, which has the country’s largest internet ecosystem as per Redseer, has seen its user base grow in the first three months of FY22. As per the company’s RHP, Paytm’s total user base has increased to 337 million registered consumers and over 21.8 million registered merchants, as of June 30, 2021. This is reflected in transacting users too - with the monthly transacting users going up to 57.4 mn, as of September 30, 2021 (a 33% YoY increase).

3. Big jump in revenue: For the three months ended June 2021, Paytm has seen a huge uptick in its revenues driven by its payments and financial services offerings. The company’s revenue is up by 46% to Rs9,480 million in Q1FY22, from Rs6,494 million in Q1FY21. Paytm’s losses stood at Rs3,819 million for the three months ended June 2021.

4. Payment and Financial services contribute to almost 80% of the revenue: Paytm’s bet in the financial services space has taken off as the payments and financial services vertical contributes to almost 80% of the company’s revenue.  As per the company’s RHP, for Q1FY22, the company’s payments and financial services revenue alone stood at Rs6,894 million.

5. Contribution margin goes up: Paytm’s contribution margin also rose significantly to 27.4% in Q1FY22, up from 14.9% in Q1FY21.

6. Bullish on GMV: Paytm GMV has increased from Rs697 billion in the three months ended June 30, 2020 to Rs1,469 billion in the three months ended June 30, 2021. The take rate, defined as ratio of the total revenue from operations to GMV, for the first quarter of FY 2022 was 0.61%, marginally lower compared to the previous quarter as COVID-19 affected the category mix of the company’s offline merchants (particularly with respect to offline devices subscriptions and MDR revenues) and commerce merchants.

7. Lending goes big: Paytm has been betting big on its lending vertical. And as per its RHP, it has taken off and how. The company in its RHP stated that in Q2FY22 it disbursed 2.84 million loans.

8. Merchants drive big numbers: Paytm merchant transactions have increased from 3.8 billion in FY 2019 to 5.2 billion in FY 2020, and to 5.9 billion in FY 2021, and from 1.0 billion in three months ended June 30, 2020 to 2.3 billion in the three months ended June 30, 2021. Revenue from payment services to merchants went up Rs1979 million in Q1FY21 to Rs3340 million in Q1FY22 

9. On a hiring spree: Paytm has grown its employee base as at the end of june 30, 2021 the company’s total on roll employee count stood at 10,266.

10. Expansion into international markets: While Paytm continues to innovate and provide better products and services to its consumers and merchants in India, the company believes there is a large opportunity to leverage its technology infrastructure and expand to international markets. In 2017, it piloted the bill payment services in Canada and in 2018, it partnered with Softbank Corp. and Yahoo Japan Corporation to launch PayPay, a leading digital payments and financial services company in Japan. Paytm continues to explore international opportunities, especially in the developed markets, where it can either launch its merchant services, or collaborate with partners to launch consumer facing platforms. 

Nykaa IPO opens today for subscription; Garners Rs2,396cr from anchor investors

The company in consultation with merchant bankers has finalised allocation of 21,296,397 equity shares to anchor investors, at Rs1,125 per share, the upper end of the price band, as per a BSE circular.

FSN E-Commerce Ventures Limited – Nykaa on Wednesday has mopped up Rs2,396cr from 174 anchor investors ahead of its initial public offering. The offer will open for subscription on October 28.

The company in consultation with merchant bankers has finalised allocation of 21,296,397 equity shares to anchor investors, at Rs1,125 per share, the upper end of the price band, as per a BSE circular.

BlackRock Global Funds, Fidelity Funds, Nomura, Government of Singapore, Monetary Authority of Singapore, Canada Pension Plan Investment Board, T Rowe Price, Tiger Global Investments Fund, Goldman Sachs and Morgan Stanley are among the investors that participated in the anchor book.

The Price Band of the offer has been fixed at Rs1,085 to Rs1,125 per Equity Share.

The bids can be made for a minimum of 12 Equity Shares and in multiples of 12 Equity Shares thereafter.

The Equity Shares offered through Red Herring Prospectus are proposed to be listed on BSE and NSE.

The offer includes a reservation of up to 250,000 Equity Shares for purchase by eligible employees (“Employee Reservation Portion”).

Snapdeal Shows The Way With Speedy ODR

New Delhi: Digital payments and financial services firm Paytm on Monday said it  ..

This growth is visible through the millions of products that get bought and sold across the country every day. Data released by the Department of Consumer Affairs (DCA), Ministry of Consumer Affairs, shows that as shoppers rapidly migrate to online platforms, there has been an increase in consumer disputes about e-commerce. In the last four years, nearly 22% of all consumer grievances in India were related to the e-commerce sector.

While consumer grievances are handled expeditiously by most e-commerce platforms, a small proportion of residual cases may remain intractable. Some of these cases head towards India’s courts, where they can take years as they wind their way through the judicial system.

Snapdeal believes that in a progressive online ecosystem, the process of resolving any outstanding disputes should be as simple and as fast as the process of making an online purchase.

The Snapdeal way

Using the pandemic-related disruption as the trigger, Snapdeal has started using “Online Dispute Resolution" (ODR) - to make resolutions tech-enabled, easy, and fast.

To enable this, Snapdeal roped in Sama, an online dispute resolution (ODR) specialist, who resolves disputes faster and more cost-efficiently with the help of technology and a network of highly skilled professionals.

As part of this initiative, Snapdeal launched a pilot project with Sama Suljhao Manch, to resolve pending consumer disputes. The results of the pilot highlight the role that technology and processes can play in reducing delays and facilitating win-win outcomes for all stakeholders.

Nearly 240 cases, where consumers expressed their interest in exploring a reconciliation process, were covered under the project. Of these, a comprehensive dispute resolution was achieved in nearly 130 cases, thus achieving a 54% success rate. Cases that usually take up to three years to resolve, were settled by the Sama Suljhao Manch within 15 days!

The ODR process brought both sides to the negotiation table through an online mediation services platform with the help of an expert neutral conciliator. Empowered with reconciliatory powers under the Indian Arbitration and Conciliation Act, 1996, the conciliator persuaded concerned parties to arrive at mutually agreeable terms that are legally binding to both parties. This way, Sama succeeded in resolving several consumer disputes amicably and quickly.

Besides accelerating the settlement process, the exercise also delivered an additional benefit to Snapdeal in terms of building stronger relationships with its users. According to Snapdeal’s General Counsel, Smriti Subramanian, “Snapdeal’s users appreciate our proactive approach in resolving matters. They also recognise that our approach to the issues is not adversarial but is in fact both collaborative and adaptive. As a responsible e-commerce player with strong social and governance policies, placing the user first has always been Snapdeal’s endeavour."

ODR is the way forward

Saturday 16 October 2021

After India report, US mulls bill to fix Amazon's predatory practices


After India report, US mulls bill to fix Amazon's predatory practicesWashington/New Delhi: After a report accused Amazon of secretly exploiting internal data from its marketplace to copy products sold by other companies and manipulate search results, a group of US Senators has announced plans to introduce a nondiscrimination bill that could rejig Amazon's online marketplace.

The American Choice and Innovation Online Act, led by Senators Amy Klobuchar (D-Minnesota) and Chuck Grassley (R-Iowa), would prevent platforms like Amazon, Apple and Google from using their online dominance to disadvantage other firms, reports The Verge.

"When dominant tech companies exclude rivals & kill competition, it hurts small businesses and can increase costs for YOU," Klobuchar said in a tweet on Thursday.

"My new bipartisan legislation with Grassley will establish new rules of the road to prevent large companies from boxing out their smaller competitors," he added.

The third-party sellers have long accused Amazon of similar anti-competition behaviour.

In India, the Alliance of Digital India Foundation (ADIF) and the Confederation of All India Traders (CAIT) have condemned Amazon's "predatory playbook" of allegedly copying, rigging and killing Indian brands, urging the government for timely intervention.

CAIT National President B.C. Bhartia and Secretary General Praveen Khandelwal demanded an immediate CBI investigation into the charges made in the report.

A Reuters report had revealed that Amazon team in India "secretly exploited internal data from to copy products sold by other companies, and then offered them on its platform", and also "rigged Amazon's search results" so that the company's products would appear on top.

Sijo Kuruvilla George, Executive Director, ADIF, said that it brings to light Amazon's blatant disregard for competition laws, intellectual property rights and disgraceful predatory practices.

"The manner in which the e-commerce giant has targeted the Indian market and leading brands in the country is highly deplorable and brings into question the credibility of Amazon as a good faith operator in the Indian startup ecosystem," George said.

The report alleged that among the victims of Amazon's anti-market practices was a popular shirt brand in India called John Miller that is owned by Kishore Biyani-founded Future Group, currently embroiled in a legal battle with Amazon.

Amazon is also facing an inquiry by the Competition Commission of India (CCI) over alleged anti-competitive practices and a parallel inquiry by the Enforcement Directorate for violation of domestic laws.

The Directorate General of Goods and Service Tax Intelligence (DGGI) has also issued a show-cause notice to one of its subsidiaries, Cloudtail, for evasion of GST and indirect taxes.

E-com players log $4.6 billion sales in India festive week, Flipkart leads


E-com players log $4.6 billion sales in India festive week, Flipkart leadsNew Delhi: The e-commerce players registered a whopping $4.6 billion (nearly Rs 32,000 crore) sales during the first week of the festive season -- a 23 per cent on-year growth -- driven by mobiles and fashion products, a new report showed on Thursday.

Flipkart Group emerged as the leader during the festive week sales, with 64 per cent market share, followed by Amazon with 28 per cent market share.

Smartphones worth Rs 68 crore were purchased every hour across the platforms during the October 2-10 sale period, according to data provided by homegrown market research firm RedSeer.

RedSeer had forecast a sale of $4.8 billion (over Rs 36,000 crore) in the first week of the festive sale.

"Constructs were built carefully by the platforms through BNPL (buy now pay later) schemes and bank tie-ups, as well as seller-driven discounts to serve up the most competitive prices of top leading brands and serve the aspiring customer," said Ujjwal Chaudhry, associate partner at RedSeer Consulting.

The overall online shopper base grew by 20 per cent compared to last year, with tier II population contributing to 61 per cent of all shoppers.

The overall gross merchandise value (GMV) per shopper has grown by 1.04X.

After a poor showing during last year, customer demand for fashion was back this year with affordable models and new platforms targeting tier II users.

Online fashion platform Meesho has been able to garner a 39 per cent share with their affordable offerings targeting a typical Indian household looking for good-value products.

However, the demand for other categories like home furnishings and decor were subdued during the festive week.

With 40 million shoppers coming from tier 2 cities and beyond, the festive sales were dictated by affordability schemes.

With affordability schemes and an aspiring customer base, the GMV per user went from Rs 4,980 in 2020 to Rs 5,034 in 2021, the report said.

Thursday 14 October 2021

Nykaa gets Sebi nod for IPO, to file revised DRHP today to increase primary issue size


Nykaa gets Sebi nod for IPO, to file revised DRHP today to increase primary issue sizeMumbai: IPO-bound lifestyle retailer Nykaa received clearance from the Securities and Exchange Board of India (Sebi) on Thursday for an initial public offering, sources with knowledge of the development said. The company is likely to file an updated draft red herring prospectus with the market regulator Sebi on Thursday to increase the primary issue size from Rs 525 crore to Rs 630 crore, according to banking sources.

The IPO will also include an offer for sale (OFS) in which existing shareholders will sell up to 431.1 lakh shares.

The Sanjay Nayar Family Trust, a promoter, will sell 48 lakh shares and other investors that will dilute their stakes include TPG, Light House India Fund, JM Financials, Yogesh Agencies, Sunil Kant Munjal, Harindarpal Singh Banga, Narotam Sekhsaria, and Mala Gaonkar, according to the company’s draft IPO prospectus, which it had filed in August.

Founder Falguni Nayar and her family will continue to own a majority stake in the company even after the IPO. Currently, the Falguni Nayar Family Trust and Sanjay Nayar Family Trust hold 22.33% and 25.72% in the firm, respectively.

The company has appointed investment banks such as Kotak Mahindra Capital, BofA Securities, ICICI Securities, Citibank, Morgan Stanley and JM Financial to manage its public issue.

Nykaa is among the only few profitable etailers in India. It reported a net profit of Rs 61.96 crore in FY21 compared to a net loss of Rs 16.34 crore in FY20. Its revenues also grew 38% to Rs 2,453 crore in FY21.

It said it would use Rs 130 crore to repay its debts and Rs 200 crore to market its brands.

Industry leaders slam Amazon for 'manipulating' search to boost its products in India


Industry leaders slam Amazon for 'manipulating' search to boost its products in IndiaNew Delhi: Industry leaders on Wednesday slammed Amazon for allegedly manipulating search results to boost its own product lines in India which is one of largest growth markets for the e-commerce giant.

A Reuters report, that scanned thousands of pages of internal Amazon documents, revealed that Amazon team in India "secretly exploited internal data from to copy products sold by other companies, and then offered them on its platform", and also "rigged Amazon's search results" so that the company's products would appear on top.

Confederation of All India Traders (CAIT) Secretary General Praveen Khandelwal said that this should be duly probed by the Indian government.

"@narendramodi Ji, it's astonishing that Govt agencies have not taken any cognisance or have asked #reuters to share the papers," he tweeted.

The report alleged that among the victims of Amazon's anti-market practices was a popular shirt brand in India called John Miller that is owned by Kishore Biyani-founded Future Group currently embroiled in a legal battle with Amazon.

"Amazon decided to 'follow the measurements of' John Miller shirts down to the neck circumference and sleeve length, the document states", according to the report.

A spokesperson for Biyani's Future Group was quoted as saying in the report that "they (Amazon) are in a powerful position of being both an online marketplace operator and a seller and collector of data. This is leading to misuse of consumer and seller data giving them the power to kill Indian entrepreneurs and their brands".

Amazon said in a statement that: "As Reuters hasn't shared the documents or their provenance with us, we are unable to confirm the veracity or otherwise of the information and claims as stated. We believe these claims are factually incorrect and unsubstantiated".

Amazon has been at the centre of controversy in India after recent reports of bribery charges against its legal representatives and associated legal firms in the country.

The company is also facing an inquiry by the Competition Commission of India (CCI) over alleged anti-competitive practices and a parallel inquiry by Enforcement Directorate for violation of domestic laws.

The Directorate General of Goods and Service Tax Intelligence (DGGI) has also issued a show-cause notice to one of its subsidiaries, Cloudtail, for evasion of GST and indirect taxes.

Amazon has also legally challenged Future Group's deal with Reliance Retail to sell its retail, wholesale, logistics, and warehouse businesses to Reliance Retail Ventures.

According to CAIT, Amazon's clarification on legal professional charges is "a blatant lie in order to hide its illegal business practices and is inconsistent with the regulatory filings of Amazon and its group companies".

In a letter to Commerce and Industry Minister Piyush Goyal, CAIT had said that Amazon has spent Rs 5,262 crore towards legal professionals.

Further, even if one were to accept Amazon's clarification that the legal charges were merely Rs 52 crore, Amazon must clarify without delay to whom was the remainder, i.e. Rs 5,210 crore, was paid as professional charges, it said in the letter.

"Amazon is hell bent on discrediting Prime Minister Narendra Modi's tireless efforts to protect small traders and safeguard their interests. Amazon's business practices have instead been destroying these very traders and have caused large scale unemployment in the sector. It is only expedient in public interest that an urgent and time-bound inquiry by the CBI must be ordered into Amazon India's self-admitted charges," CAIT said.

Amazon, the world's largest online retailer, has reportedly initiated an investigation into the conduct of its legal representatives in India.

"We have zero tolerance for corruption. We take allegations of improper actions seriously, investigate them fully, and take appropriate action. We are not commenting on specific allegations or the status of any investigation at this time," a company spokesperson had said in a statement.

However, CAIT demanded: "It is also suggested that Amazon India's operations, in all forms, must be suspended before it does any more damage or resorts to any other financial irregularity. A strong example must be set here so that it proves to be a deterrent for Amazon and companies like it from taking Indian law and government agencies for granted."

Last month, Panchjanya, a journal with RSS leanings, opened an attack on Jeff Bezos-founded Amazon, with a cover story calling it the second generation of the East India Company that entered India with business interests but ended up colonising the country for 200 years.

The cover story with Bezos picture accused Amazon of indulging in corrupt practices after allegations of bribery surfaced against it.