Blacklisting of your relationship manager is going to be a reality now

Blacklisting of your relationship manager is going to be a reality now

Target oriented advisers have been mis-selling mutual funds to gullible investors, of whom many are the first timers. Such practices have resulted in fizzling interest of retail investors in taking mutual fund route. Being concerned over this, the Securities and Exchange Board of India (SEBI) has decided to come down heavily on those who mis-sell. In September 2012, SEBI issued an order to Association of Mutual Funds in India (AMFI) to allot unique identification number to all employees, relationship managers and all other salesmen who sell mutual fund products. Till now it was relatively difficult to catch hold of the one who really perpetrated the mis-selling. And now, June 2013 has been the deadline for complying with the requirement of allotting Employee Unique Identification Number (EUIN).


The allotting EUIN would help bring down the malpractices while selling financial instruments. You see, employees of banks and other distributors have been quoting the AMFI Registration Number (ARN) till now for being able to claim commission; and apparently they are always under pressure to garner greater business. This leads them to mis-sell.This initiative will  hold them personally responsible for their advice would go long way in protecting investors' interest. For them it would be detrimental now to mis-sell since it would be easy to nail them down.

By introducing EUIN, SEBI has taken a one more step in the direction of rooting out mis-selling. Early this year, SEBI had issued (Investment Advisers) Regulations, 2013 enunciating requirements related to obtaining a certificate of registration, qualification, capital adequacy, period of validity of the certificate, and has also mentioned other general obligations and responsibilities on the part of investment advisors.

Flipkart struggles to retain senior managers

At least seven senior and mid-management executives have quit the e-commerce firm in the past four months 

 

Flipkart, founded by Sachin Bansal (left) and Binny Bansal, offers salary increases of 10-20% to attract experienced executives for senior management roles from bigger companies.

Flipkart Online Services Pvt. Ltd is struggling to retain senior and middle managers at a crucial stage in the company’s efforts to maintain high growth while shifting its business model.

At least seven senior and mid-management executives have quit the e-commerce firm in the past four months, according to two people with direct knowledge of the matter.

Rajesh Choudhary, vice-president, finance; Aswin Chandrasekaran, head of Flipkart’s books business; Ashok Banerjee, vice-president, engineering; have resigned, the people said, requesting anonymity.

Rohit Jalan, senior software automation engineer; Prasanna V., engineering manager for Flipkart’s seller platform; Gaurav Lochan, engineering manager of digital; and Marcus Terry, director, seller operations; have also resigned, the people said.

Five of the seven executives confirmed they had resigned but wouldn’t disclose the reasons or their next moves. Mint couldn’t reach the other two people.

The management churn comes as the company is shifting to a marketplace model from its direct online retail business to control costs and comply with regulations related to foreign direct investment (FDI). The shift may slow the growth rate at the company, which has been increasing its sales in triple digits in the past three years, analysts have said.

Flipkart said in February that chief financial officer Karandeep Singh had quit due to personal reasons, without elaborating.

The company, founded by Sachin Bansal and Binny Bansal in 2007, offers salary increases of 10-20% to attract experienced executives for senior management roles from bigger companies such as Google Inc. and VMware Inc., a third person familiar with the matter said, also declining to be named.

Sachin Bansal is the chief executive and Binny Bansal the chief operating officer.

Of the senior executives who resigned this year, Banerjee, was hired from Twitter in San Francisco and Choudhary from liquor company Pernod Ricard.

“They have a leadership issue at the top. If you look at it, Sachin and Binny don’t have the same amount of experience as some of the people they have hired for these senior management positions, and as a result it’s tough for some of these guys to work under them,” said the third person, who is an executive at a recruiting firm that hires people for start-ups and technology firms.

Many young companies face similar problems of retaining experienced people, said Shashi Kiran, associate director of TiE-Bangalore, an organization that advises and mentors entrepreneurs.

Very few recent Indian start-ups have reached Flipkart’s size and faced accompanying difficulties with managing growth and poaching of its top talent.

“Every company goes through these stages,” Kiran said. “And they’re going through their own.”

Flipkart is one of the largest firms in India’s fast-growing e-commerce market, which is valued at $10 billion, according to a May report by consultancy Technopak Advisors Pvt. Ltd.

“Employees join or exit companies for a number of reasons and we would not like to comment on specific individuals,” a Flipkart spokesperson said by email.

Flipkart, which raised $150 million last year from investors including Tiger Global, is being probed by the Enforcement Directorate related to compliance with FDI rules.

India allows foreign investment in the marketplace model, where independent merchants sell products to shoppers through sites such as Flipkart, but it is banned in direct online retail.

 

New norm to hit e-commerce firms, cash-and-carry chains in India

Chains such as Bharti Walmart may have to restructure operations owing to new definition of ‘group companies’ 

 

A file photo of a store run by the Bharti Walmart joint venture.

 

Indian e-commerce companies and so-called cash-and-carry or wholesale chains such as Bharti Walmart Pvt. Ltd may have to restructure their operations after the industry department on Monday issued a new definition of “group companies”.
If a company is able to exercise direct or indirect voting right of at least 26% or appoint at least half the board in another company or other companies, then the companies are group companies, says the new definition.
The elaboration from the ministry would appear to be in response to a clarification sought by Bharti Walmart. Bharti Enterprises Ltd and Wal-Mart Stores Inc. set up a 50:50 joint venture in 2007 that is engaged in wholesale cash-and-carry trade.
In April 2010, at a time when foreign direct investment in retail stores wasn’t yet allowed, the government placed a limit of 25% on sales of cash-and-carry companies to retail stores that were part of the same group. Bharti Walmart had sought a clarification on the definition of group companies and was in favour of doing away with such restrictions, especially with the government allowing a maximum of 51% foreign investment in retail stores in September 2012.
Monday’s circular from the ministry may mean that Bharti Enterprises will have to reduce its stake in Bharti Walmart to below 26% if it wants to source more than 25% of the products for its retail stores, branded Easy Day, from the joint venture.
A Bharti Walmart spokesperson said in an email: “We are studying the government’s clarification on the definition of group companies issued today.”
The Indian partners will need to dilute their stake in the wholesale entity to less than 26%, said an expert at a law firm with knowledge of how wholesale cash-and-carry joint ventures operate.
“This will imply a lot of restructuring for both existing players in wholesale cash-and-carry that have joint ventures with foreign companies as well as e-commerce companies,” said the person, who spoke on condition of anonymity.
The new definition could also hit several e-commerce companies that have set up back-end companies through which they route foreign investments. These companies, in turn, sell to the front-end companies that sell to customers. India doesn’t allow any foreign investment in e-commece retailers although it allows up to 100% foreign investment in back-end companies.
The move will affect most e-commerce companies, said the representative of an industry body. “Though I have not seen the circular, this could make anybody who does inventory- based retail trade with foreign equity investment seem illegal. Retail e-commerce should not be a collateral damage to any policy meant for the offline retail trade,” said Subho Ray, president of the Internet and Mobile Association of India.
Spokespersons for Flipkart.com and Myntra.com couldn’t immediately be reached for comment.
Monday’s clarification goes against the spirit of the 51% cap on foreign investment in supermarkets (or multi-brand retail), but the government may be playing it safe with many states yet to approve this, said an analyst who asked not to be identified.
Indeed, the definition of group companies is “more stringent than similar definitions under other regulations such as the Competition Act, which keeps the threshold limit at 50% for the definition of group companies”, said Akash Gupt, executive director at PricewaterhouseCoopers.
Bharti is already being investigated by a government arm for violating foreign investment rules by indirectly receiving significant downstream investment in its subsidiary company that runs the Easy Day chain. Although such investments were eventually held to be legal by the government, and the investment made by the retailer is in keeping with the rules allowing foreign direct investment in supermarkets, the company may have jumped the gun in going ahead with the investment before either of the changes was notified.
The industry department announced on Monday that Himachal Pradesh has given its consent for foreign investment in supermarkets. The government has left it to the states to decide whether they want multi-brand retail investment. The Congress won the assembly elections in the state in December last year.

Amazon’s Indian online marketplace opens today

With the India launch, Amazon now offers the marketplace platform in 10 countries


Since India does not allow foreign direct investment (FDI) in direct online retail, a marketplace model is the easiest way for companies such as Amazon to get access to a fast-growing market, but one which is still in its nascent stages

US online retailer Amazon.com Inc. said it would launch an online marketplace—where independent merchants could sell products directly to shoppers—in India on Wednesday.
Over the past two years or so, many Indian e-commerce a dozen firms including Flipkart.com, Snapdeal.com and Infibeam.com have started providing online services for buying and selling. The marketplace model allows e-commerce companies to save on storage and other inventory-related costs as the products are held by the merchants.
Since India does not allow foreign direct investment (FDI) in direct online retail, a marketplace model is the easiest way for companies such as Amazon to get access to a fast-growing market, but one which is still in its nascent stages.
No large Indian e-commerce company has yet reported a profit and experts say that the market is there for the taking.
Amazon, one of the world’s biggest and well-known online companies, started out as an online retailer but has been beefing up its higher-margin marketplace business over the past few years. It now offers the marketplace platform in 10 countries.


Visit site: https://www.amazon.in/

In emails sent to eBay users, CEO John Donahoe said the legislation unfairly burdens small online merchants

EBay recruits users in push against sales tax legislation

In emails sent to eBay users, CEO John Donahoe said the legislation unfairly burdens small online merchants 

 

The scope of eBay’s lobbying effort suggests the company may have more to lose than Amazon if the legislation becomes law in its current form.  

EBay Inc chief executive John Donahoe began emailing millions of users of the company’s online marketplace on Sunday in an unprecedented lobbying effort to change looming Federal sales tax legislation.
The e-commerce giant plans to send emails from Donahoe to at least 40 million eBay users, including most sellers on the marketplace. The first messages were sent out Sunday morning.
In the emails, Donahoe said the legislation, known as the Marketplace Fairness Act, unfairly burdens small online merchants and asked eBay users to send an email message to members of Congress asking for changes.
The legislation, due to be voted on by the Senate in coming days, gives states the power to compel retailers outside their borders to collect online sales tax. Currently, states can only require merchants with a physical presence within their borders to collect.
The legislation includes an exemption for merchants that generate less than $1 million in annual out-of-state revenue.
Donahoe argued in the emails that merchants with less than $10 million in annual out-of-state sales, or fewer than 50 employees, should be exempt. Reuters viewed copies of the emails.
In emails to eBay sellers, Donahoe singled out Amazon.com Inc, eBay’s main rival, which supports the current legislation.
“This legislation treats you and big multi-billion dollar online retailers - such as Amazon - exactly the same,” Donahoe wrote. “Those fighting for this change refuse to acknowledge that the burden on businesses like yours is far greater than for a big national retailer.”
Amazon generates more than $10 million in sales every 90 minutes, giving the world’s largest Internet retailer more resources than a typical small merchant to collect sales tax in all states, Donahoe argued.
EBay has tapped its users in a major way once before. In 2006, when Meg Whitman was CEO, she emailed users about the issue of net neutrality and the need to keep the Internet open. In that effort, Whitman emailed fewer than 10 million users.
“It’s the biggest grass-roots effort by eBay ever,” said Brian Bieron, senior director of global public policy at eBay. “It’s coming to a head in Congress and now’s the time to give our users the opportunity to share their thoughts.”
The scope of eBay’s lobbying effort suggests the company may have more to lose than Amazon if the legislation becomes law in its current form.
Amazon supported a $500,000 annual sales exemption in an earlier version of the legislation, arguing that anything higher would give too many small online sellers an unfair tax advantage over larger retailers.
Amazon also runs a popular marketplace for online sellers, however eBay is still particularly popular with small sellers.
Wayne Johnson, who runs fly fishing retailer Anglers Habitat in Caldwell, Idaho, generates about $2.5 million in annual sales on eBay.
If the legislation passes in its current form, Johnson said he would re-organize his business to get annual out-of state online sales below the $1 million threshold.
That would involve laying off most of his staff, which currently consists of eight full-time employees and an accountant, he said.
More worryingly for eBay, Johnson said he would start selling through Amazon’s marketplace because Amazon handles warehouse storage, order fulfillment and shipping.
Amazon charges extra fees for these services, meaning Johnson’s business may be less profitable, but he said he would be able to keep running the online operation with very few staff.
“That’s where I would go if this bill passes,” Johnson added. “I could do that business with just my son and me.”

Myntra looking to launch online marketplace

Over the long term, Myntra expects to generate 20-25% of its sales from the online marketplace 

 

Myntra is one of the few remaining purely online retailers in India as increasingly such companies are adopting the marketplace model to survive. 

Myntra.com, one of India’s biggest online clothing and footwear retailers, may launch a marketplace platform within a year as it looks to offer products such as boutique fashion brands.
Over the long term, Myntra expects to generate 20-25% of its sales from the online marketplace, where independent merchants will sell products directly to shoppers, chief executive Mukesh Bansal said in an interview.
Myntra is one of the few remaining purely online retailers in India as increasingly such companies are adopting the marketplace model to survive after burning hundreds of millions of dollars of investors’ cash on chasing customers. The business model allows companies to save on inventory related costs and provides them access to foreign direct investment (FDI), which is banned in direct online retail. “Long term, it’ll be a hybrid model that will evolve for online firms. I definitely see us having some component of marketplace model,” Bansal said.
“Small boutiques with quality fashion look interesting for the marketplace. We’ll take one boutique at a time in a careful way so that the customer experience doesn’t suffer,” he said.
In the past 18 months, more than a dozen firms including Amazon.com Inc.’s India business Junglee.com, Infibeam.com, ShopClues.com and Tradus.com launched or converted to the marketplace model. Flipkart.com announced its marketplace entry earlier this month.
“If you were to look at Myntra and if you were to ask a retail consumer, ‘what do you associate it with?’, given the kind of advertising they do, it would be things like apparel, fashion, accessories, etc., rather than things like books or cellphones, which you would associate with someone like Flipkart,” said Ajeet Khurana, a venture capitalist at angel investor group Mumbai Angels.
“In light of this, allowing third parties to sell books on your site is different than allowing third parties to sell apparel on your site.”
Bansal said Myntra will take its time to ramp up its marketplace platform.
“We will be very patient about it and understand everything—it’ll be a five-year journey or longer. If you have a marketplace model where any distributor can get their products listed, they will control pricing, so price clash may happen. For us, there won’t be any overlap. The brand that we have in inventory model, we will not have in marketplace, and vice versa,” he said.
Myntra aims to double its revenue to Rs.800 crore this financial year partly as it gains market share from the exit of some online retailers. The company gets 80% of its sales from clothes and footwear and 20% from accessories such as belts and watches. “If you look at the past 12 months, a lot of companies such as 99labels.com have declined in size. We’re taking full advantage of that. Our repeat customers are also spending more so our revenue per customer will increase significantly,” Bansal said.
Myntra, which has raised more than $70 million from investors including Accel Partners and Tiger Global Management since it launched in 2007, will not need funds for two years, he said.
“Now the big question that investors have is: whether online retailers can become profitable? We strongly believe we will be the first e-commerce player in India on a reasonable scale to achieve profitability. Hopefully, next year, we will break even,” Bansal said.
 

Now betting on e-commerce: HUL chief executive

CEO Nitin Paranjpe attributes growth to HUL’s focus on emerging categories and the success of existing strategies 

 

Even though modern retail and consumer discretionary spending slackened in a weak Indian economy, Hindustan Unilever Ltd (HUL) posted a 16% growth in sales for the year ended March. In an interview on the sidelines of the March quarter earnings press conference, chief executive officer (CEO) and managing director Nitin Paranjpe attributed the growth to the company’s focus on emerging categories and the success of existing strategies. Edited excerpts:
You managed to put up a good show in a slowing market.
We are pleased with both results for the (full fiscal 2013) year and (the January-March) quarter. They indicate that our strategy to deliver growth is playing out. It is based on doing two things. First, making sure that we are managing the business for the current term. The second part is to future-proof this business by developing a point of view on India and Indians of tomorrow, and developing a set of capabilities that will position us well as this new future emerges.
Could you elaborate on that?
Our position on consumers and trends has simply been that we are going to see an India where people will have more money, where consumption is changing and so are aspirations. We will see growth in consumption over a period of time and this will spawn many new segments and categories, which will offer benefits to consumers. We have seen some of that play out this year.
But there is a consumer demand slowdown as well. How has it affected HUL?
That has been true for the last couple of quarters. However, we remain convinced that the medium- to long-term future remains strong for consumption. Some of the slowdown is due to the overall environment that we find ourselves in. Consumer sentiment has, therefore, got impacted in the recent past. Inflation levels also have been stubbornly high and this has impacted consumers in the short term.
I hasten to add the slowdown is from higher levels of growth. It doesn’t mean that categories and markets are not growing. Second, growth rates may seem lower due to the dynamics between price and volume. Right now, we have a benign cost environment as a result of which price increases in our categories have been relatively low.
Also, some of the price increases we took a year ago have annualized. It is a a combination of these things which is tempering and moderating consumer demand, particularly in discretionary categories, (such as) packaged foods and skincare, where we are seeing some softening.
Emerging categories in personal care have become a Rs.1,000 crore market now. What does this mean in terms of portfolio changes?
Our portfolio has changed completely in the last three-four years. Look at brands such as Vaseline. Two years ago, we just had a petroleum jelly. Today look at the range—lotions, skin-lightening products, a range for men. Just totally transformed. Likewise with Ponds, which was just a cold cream and talc. Today, you have the anti-ageing products, premium skin-lightening products, and the finest of offerings that we have anywhere in the world. Take new categories that we are developing. A few years ago, we did not have face washes. Now we have almost 50 packs across the portfolio across brands and this sort of transformation is happening everywhere, not just in personal care. There are categories of the future everywhere, whether it is laundry with fabric conditioners or tea with tea bags.
E-commerce and integrated retail are the new emerging themes in the consumer space. Are you planning to develop these channels in India?
Almost 10 years ago, we called out modern trade as one of our categories of the future even before anyone could predict that it will become so large. We trained our people, sent them overseas to work with Walmart and Tesco, and we built the depth and understanding of the channel to make it as strong as our traditional channel. Modern trade now contributes close to 15% of our overall revenue. We have now called out e-commerce and feel it will become large in the future. We are building capabilities and benefiting from Unilever’s experience in developed markets.

E-commerce start-ups in struggle for survival

Well-funded sites such as Myntra, Snapdeal and Jabong are increasingly being approached by struggling start-ups with takeover proposal

 


As investors become increasingly parsimonious about giving money to e-commerce start-ups, sites are shutting down at a faster pace than before if they can’t stay alive by allowing themselves to be acquired at rock-bottom rates, executives and analysts said.
Sites such as Indiaplaza.com, Rock.in and Urban Touch, which raised anywhere between $1 million (around 5.5 crore today) and $10 million each, have either drastically cut back on operations or gone out of business since the beginning of the year.
In the past six months, 136 e-commerce start-ups have folded, according to data collected by Ashish Sinha, who runs the website NextBigWhat. The rate of closures has increased by roughly four times since September, compared with the preceding eight-month period, according to data compiled by Microsoft Corp.’s India Accelerator programme.
“There are other closures that we haven’t even tracked. It (shutdown) used to be a story once in three months, then once in two months. At the beginning of the year, it used to be once a month, now it’s two-three a month,” said Mukund Mohan, CEO-in-residence at Microsoft Accelerator, which helps and advises start-ups across India, China, the US and Israel. “Their revenue growth is not enough. The customer acquisition cost is very high. So they are not able to get funding. A lot of these companies would have needed a lot of funding for a lot of time. Now the investors are saying no,” he said.
Apart from investors providing follow-on funding to their portfolio companies, e-commerce firms are finding it tough to raise money, said Deepak Srinath, who leads the technology and emerging sectors practice at Allegro Capital Advisors, an investment bank.
“A lot of closures are not even announced. They just phase out operations, they aren’t investing, but the website is still there. The pace of shutdowns and consolidation has increased and it will increase further in the coming months,” he said.
Based on Internet activity, social media presence and founders’ current financial position, there are at least 100 more start-ups on the verge of shutting down, said Sinha of NextBigWhat.
Many small sites may be shutting down but sites that are financed to a “reasonable degree” are still going strong, said Alok Mittal, managing director at investment firm Canaan India.
Some of these well-funded sites such as Myntra, Snapdeal and Jabong are increasingly being approached by struggling start-ups with takeover proposals. “We’ve gotten proposals in the high single digits from sites in fashion retail to acquire them over the past three to four months, all of which we rejected. We’ve seen some of these shut down or get acquired,” said Manu Kumar Jain, a co-founder at online retailer Jabong.
Private equity firms such as SAIF Partners and Tiger Global, which have pumped in hundreds of millions in various e-commerce start-ups, are also merging some of their portfolio companies to cut losses. In February, apparel retailer Zovi.com bought rival Inkfruit.com, both of which are owned by SAIF Partners.
With some investors still eager to invest in the industry, a few sites that have cut back on operations are clinging to the hope of a revival.
Koolkart, a Bangalore-based retailer, shut last week, shortly after one co-founder quit. However, Suneil Chawla, another founder, said the site would be operational again in six-eight weeks. “One of the co-founders left, so we have to revamp,” he said. “It’s only a matter of time.” Gaurav Kachru, a partner with a new early stage venture capital firm 5ideas Startup Superfuel Fund, said they are searching for new online retailers, particularly those serving niche markets.