Flipkart believes online retailing will reflect the offline trend of smaller apparel brands making up the lion's share of future sales.

The Bengaluru-based e-tailer has launched an exclusive Handloom Store for saris and related products and is working with small entrepreneurs and weavers to bring them on board.

"If you look at offline retailing of fashion products and apparel, branded goods are a small fraction of the market. A lot of sales comes from small entrepreneurs, manufacturers, and weavers," said Ankit Nagori, senior vice-president, marketplace, at Flipkart.

"With our fashion business scaling up so fast, it is important that we start replicating the offline mix," he told Business Standard.

India has close to 20 million small and medium entrepreneurs manufacturing products that can be sold through e-commerce. According to Nagori, only about 30,000 small sellers retail online.

Brushing aside concerns of quality of unbranded products, Nagori said Flipkart ran two levels of checks, proactive and reactive, to ensure consumers received what they ordered. Flipkart audits each seller before bringing it on board by checking capabilities and quality of offerings. It is building a system to predict seller behaviour. Higher than acceptable faults will result in action to protect consumer interests.

"There is no reason why unbranded products cannot sell online. Product reviews and ratings make buying decisions easier. Specific sellers will become brands on their own because they sell great quality for less," Nagori said.


In September 2014, Flipkart launched its exclusive Handloom Store, where it brought on board weavers from Varanasi. The company began with 20 sellers and is looking to expand to 100 soon.

Nagori said handicraft and hand-woven products would be cheaper online than at emporiums because of the exclusion of middle-men. He expects the descriptions and detailing of products on Flipkart's website to encourage consumers to buy them. Return policies will also reassure customers.

Flipkart is running several training programmes across the country to bring more small entrepreneurs on board. It is also partnering industry and government bodies to reach more sellers.

BEING INCLUSIVE

    A lot of sales comes from small entrepreneurs, manufacturers, and weavers, according to Ankit Nagori, senior vice-president, marketplace, Flipkart
    Flipkart aims at replicating this trend in online retail
    In September 2014, it launched its exclusive Handloom Store, where it brought on board weavers from Varanasi
    It is running several training programmes across the country to bring more small entrepreneurs on board
    To address concerns of quality of unbranded products, Nagori said the company ran two levels of checks to ensure consumers received what they ordered

 "Where is Flipkart's complete business model? Forget about valuation. I want to know Flipkart’s business model. I want to know how you will be profitable?" thundered Rakesh Jhunjhunwala in an interview to CNBC-TV18 with fellow investors Ramesh Damani and N Jayakumar.

The discussion was on irrational valuations of e-commerce companies. When Jayakumar asked if these valuations is similar to the 2000 dot com party, Jhunjhunwala smirked and replied ‘You have any doubt’.

So why are smart investors shying away from investing in e-commerce companies like Flipkart, while private equity players are willing to bet on them?

In the CNBC interview, Jhunjhunwala raised questions on the completed business model. A business model is complete only when the company posts cash profit and becomes self-sustaining. Flipkart and other e-commerce companies are surviving on private equity money. None of them are profitable and nowhere close to being profitable in the near future. Jhunjhunwala is right in questioning the astronomical valuations commanded by these companies.

Flipkart raised nearly $2 billion in 2014 with the final tranche of $700 million being raised at a valuation of $11-12 billion. Flipkart’s valuation had zoomed in 2014 among the private equity players. The company raised $210 million in May 2014 at a valuation of nearly $3.5 billion, its second funding of $1 billion in July 2014 was done at a valuation of $7billion and the last one in December 2014 was around $11-12 billion. Valuations have jumped 3-4 times in a span of one year.

During this entire period, the company has shown no signs of becoming profitable. However, to its credit the company has grown rapidly in terms of gross merchandise value (GMV). Between 2013 and 2014, Flipkart has grown five times in volume terms and currently does a GMV of $4 billion. The company intends to double this to $8 billion (Rs 50,000 crore) by December 2015.

But does it make money. The answer is a clear no. As per data from the Registrar of Companies accessed by Mint,  Flipkart India entities did business of Rs 3,035.8 crore and reported a loss of Rs 719.5 crore for the year ended March 2014. In FY13, these entities had posted a revenue of Rs 1,195.9 crore and loss of Rs 344.6 crore.

But for Flipkart, making losses was a conscious decision. In an interview to Business Standard (Read here), the company’s promoters said “Profitability is not a focus area. It’s a strategic decision. We can be profitable from today if we want. We can stop investing in one area and start making profits; it’s definitely possible. But we don’t want to remain as a small profitable company.”

This seems to be easier said than done. The company is now looking at tapping the equity markets for raising money and needs to tighten its belt and turn profitable. For this, the company has recently recruited Sanjay Baweja as its CFO. The former Tata Communications CFO has already got into the cost cutting mode to streamline its operations. In an interview he said that the company is moving in a cost containment mode where their fixed costs will become smaller. The aim being to make most of the cost variable.

A back of the envelope calculation based on the numbers with the Registrar of Companies and the GMV data shows that Flipkart earns around 10-12 per cent of the GMV as revenue. But it’s cost of handling these goods are around 15 per cent. Since volumes are only ensured by huge discounts and high advertisement cost, cutting costs will not be easy.

The company will need serious cost cutting just to turn profitable. As Rakesh Jhunjhunwala said in the interview, the real companies who have given returns to investors had been built by the cash flows generated by the business and not by spending investor’s money. Flipkart has a long way to go.

Unfortunately, none of the  e-commerce companies have managed to handle growth and profitability at the same time. The cash burn model of Flipkart is good to raise valuation in the opaque private equity market but in the real world (read equity markets), the company will have to show real profits and give returns to investors to raise more funds.

Since Flipkart’s model is a money guzzler, the real test of the company and the model will be post listing of the IPO. Had Flipkart been listed a few years back, they would not have been able to raise money as frequently as they did last year. Perhaps, we are nearing the doomsday when either the bubble will burst or we will have some rationality and fewer discounts in the e-commerce space. "Where is Flipkart's complete business model? Forget about valuation. I want to know Flipkart’s business model. I want to know how you will be profitable?" thundered Rakesh Jhunjhunwala in an interview to CNBC-TV18 with fellow investors Ramesh Damani and N Jayakumar.

The discussion was on irrational valuations of e-commerce companies. When Jayakumar asked if these valuations is similar to the 2000 dot com party, Jhunjhunwala smirked and replied ‘You have any doubt’.

So why are smart investors shying away from investing in e-commerce companies like Flipkart, while private equity players are willing to bet on them?

In the CNBC interview, Jhunjhunwala raised questions on the completed business model. A business model is complete only when the company posts cash profit and becomes self-sustaining. Flipkart and other e-commerce companies are surviving on private equity money. None of them are profitable and nowhere close to being profitable in the near future. Jhunjhunwala is right in questioning the astronomical valuations commanded by these companies.

Flipkart raised nearly $2 billion in 2014 with the final tranche of $700 million being raised at a valuation of $11-12 billion. Flipkart’s valuation had zoomed in 2014 among the private equity players. The company raised $210 million in May 2014 at a valuation of nearly $3.5 billion, its second funding of $1 billion in July 2014 was done at a valuation of $7billion and the last one in December 2014 was around $11-12 billion. Valuations have jumped 3-4 times in a span of one year.

During this entire period, the company has shown no signs of becoming profitable. However, to its credit the company has grown rapidly in terms of gross merchandise value (GMV). Between 2013 and 2014, Flipkart has grown five times in volume terms and currently does a GMV of $4 billion. The company intends to double this to $8 billion (Rs 50,000 crore) by December 2015.

But does it make money. The answer is a clear no. As per data from the Registrar of Companies accessed by Mint,  Flipkart India entities did business of Rs 3,035.8 crore and reported a loss of Rs 719.5 crore for the year ended March 2014. In FY13, these entities had posted a revenue of Rs 1,195.9 crore and loss of Rs 344.6 crore.

But for Flipkart, making losses was a conscious decision. In an interview to Business Standard (Read here), the company’s promoters said “Profitability is not a focus area. It’s a strategic decision. We can be profitable from today if we want. We can stop investing in one area and start making profits; it’s definitely possible. But we don’t want to remain as a small profitable company.”

This seems to be easier said than done. The company is now looking at tapping the equity markets for raising money and needs to tighten its belt and turn profitable. For this, the company has recently recruited Sanjay Baweja as its CFO. The former Tata Communications CFO has already got into the cost cutting mode to streamline its operations. In an interview he said that the company is moving in a cost containment mode where their fixed costs will become smaller. The aim being to make most of the cost variable.

A back of the envelope calculation based on the numbers with the Registrar of Companies and the GMV data shows that Flipkart earns around 10-12 per cent of the GMV as revenue. But it’s cost of handling these goods are around 15 per cent. Since volumes are only ensured by huge discounts and high advertisement cost, cutting costs will not be easy.

The company will need serious cost cutting just to turn profitable. As Rakesh Jhunjhunwala said in the interview, the real companies who have given returns to investors had been built by the cash flows generated by the business and not by spending investor’s money. Flipkart has a long way to go.

Unfortunately, none of the  e-commerce companies have managed to handle growth and profitability at the same time. The cash burn model of Flipkart is good to raise valuation in the opaque private equity market but in the real world (read equity markets), the company will have to show real profits and give returns to investors to raise more funds.

Since Flipkart’s model is a money guzzler, the real test of the company and the model will be post listing of the IPO. Had Flipkart been listed a few years back, they would not have been able to raise money as frequently as they did last year. Perhaps, we are nearing the doomsday when either the bubble will burst or we will have some rationality and fewer discounts in the e-commerce space.

5. Demand in India exists across 4,000-5,000 towns and cities, but there is no significant presence of physical retail in almost 95% of these. High real estate cost is one of the main reasons why organised retail is unable to expand at speeds expected earlier. Real estate as a percentage of sales is 14 times higher than in the US. For large retailers in India, it is 7% of sales as compared to 0.5% for Walmart.

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भारतीय प्रतिभूति एवं विनिमय बोर्ड :सेबी: ने शुक्रवार को निवेशकों तथा आम लोगों को धन जुटाने की गैरकानूनी योजनाओं के प्रति आगाह करते हुए कहा कि वे इन इकाइयों के ऊंचे रिटर्न के वादे के लालच में न आएं। 

नियामक ने धन जुटाने की अवैध योजनाएं चलाने वाली 63 कंपनियों की सूची भी सार्वजनिक की है। 

इससे पहले सेबी ने दिसंबर, 2014 में ऐसी 51 इकाइयों के नाम सार्वजनिक किए थे। सेबी ने यह चेतावनी इसलिए जारी की है, क्योंकि ऐसे मामले सामने आएं हैं जबकि कुछ इकाइयां गैरकानूनी निवेश योजनाओं के जरिये अभी भी धन जुटा रही हैं, जबकि नियामक ने उनसे और धन न जुटाने व कोई नई योजना पेश नहीं करने का निर्देश दिया है।


Concerned over a number of ponzi operators continuing to collect funds even after being barred to do so, regulator Sebi today cautioned investors and general public against dealing with such entities and not be lured by promises of high returns.

Making public a list of 51 entities, which included many from West Bengal, the capital market watchdog asked investors not to invest in their illegal schemes that claim to offer much higher returns than banks and other registered entities.



Further, Sebi has asked the investors to report such unauthorised money pooling activities to the market regulator, state authorities including police "immediately, along with appropriate details/documents".

The list of 51 entities banned by Sebi from raising funds include names like Saradha Realty India, Rose Valley Real Estate & Constructions, Sai Prasad Properties, Sun-plant Agro, NGHI Developers India and MPS Greenery Developers.

"It has come to the notice of Securities and Exchange Board of India (Sebi) that certain companies/entities unauthorisedly, without obtaining registration and illegally are collecting/mobilising money from the general investors by making false promises, assuring high return, etc," the market regulator said.

"Investors are advised to be careful if returns offered by the person/entity is very much higher than the return offered by regulated entities like banks, deposits accepted by companies, registered NBFCs, mutual funds etc," Sebi said.

The regulator further said it "does not regulate any scheme or arrangement made or offered by Cooperative Society, Deposits accepted by Non-Banking Financial Companies (NBFCs), among others, and investors should not invest in any company that is not registered and regulated.

Companies blacklisted by Sebi also include PACL, Sumangal Industries, MVL Ltd, KBCL India, Nicer Green, Alchemist Infra Realty, HBN Dairies, Kim Infrastructure & Developers, Green Ray International, Royal Twinkle Star Club, Ecogreen Realestate (India) Ltd, Peers Allied Corporation, Green Buds Agro Farm.

Collectively, these entities are estimated to have raised over Rs 1 lakh crore from the public.

Sebi said it has observed that certain entities were mobilising money under investment schemes even after the market regulator "directed the entity not to collect any further money, not to launch any new schemes etc, which is unauthorised and illegal".

The market regulator, since January 01, 2011, has passed orders against 51 entities and their respective directors carrying on unregistered 'Collective Investment Schemes (CIS).

Out of these, orders have been passed against 32 entities in 2014 itself.

Sebi said it does not regulate entities in businesses like chit funds, pension schemes, as also banned activities like multi-level marketing and pyramid schemes.

It also asked investors to bring such schemes to the notice of various agencies such as RBI, CBI, Ministry of Corporate Affairs, PFRDA, IRDA, state and police authorities, besides Sebi.
Sebi has been given greater powers to deal with the ponzi menace, which typically involves money being raised from investors with promise of high returns and old investors being given returns from funds collected from new subscribers to such schemes.


As part of interim directions, Sebi directs the entities and its directors to stop collecting further money under any schemes, not to launch any new scheme or float any new companies/firm to raise fresh moneys, not to divert or alienate any assets or money collected.

Through its final directions, Sebi debars the company and its directors from accessing the capital markets, the regulator said, while explaining its enforcement procedures against such entities.

Sebi further said that Gift Collective Investment Management Company Ltd is the only company registered with it to undertake CIS activities.

Source Link - www.sebi.gov.in 

S.No. Case Name Date of SEBI Order
1 Sunplant Agro Ltd 03-05-2011
2 NGHI 06-11-2012
3 MPS Greenery 06-12-2012
4 Nicer Green Forest Ltd 12-03-2013
5 Maitreya Services Pvt. Ltd 25-03-2013
6 Osian's Connoissurers of Art Ltd 15-04-2013
7 Saradha Realty India Ltd 23-04-2013
8 Alchemist Infra Realty Ltd 21-06-2013
9 Sumangal Industries Ltd 09-07-2013
10 HBN Dairies & Alled Ltd1 02-07-2013
11 Sai Prasad Foods Ltd. 17-07-2013
12 Sai Prasad Properties Ltd 17-07-2013
13 Maitreya Plotters & Structures Pvt. Ltd 30-08-2013
14 Samruddha Jeevan Foods India Ltd 31-10-2013
15 Servehit Housing & Infrastructure India Ltd 31-10-2013
16 Orient Resorts (India) Pvt. Ltd 26-11-2013
17 Green Ray International Limited 03-02-2014
18 Royal Twinkle Star Club Ltd. 07-03-2014
19 Peers Allied Corportaion Ltd 23-04-2014
20 Green Buds Agro Farm I Ltd 16-05-2014
21 M/s. KBCL India Ltd 26-05-2014
22 Adel Landmarks Ltd (Era Landmarks Ltd) 05-06-2014
23 JSR Dairies Ltd 05-06-2014
24 Nikhara Bharath Construction Company Ltd. 12-06-2014
25 Haldhar Realty and Enterprises Ltd 17-06-2014
26 Rose Valley Real Estate & Constructions Ltd. 18-06-2014
27 Beetal Livestocks & Farms (Pvt) Ltd 25-06-2014
28 Ramel Industries Ltd 11-07-2014
29 Remac Realty India Ltd 15-07-2014
30 Sunshine Agro Global Ltd (Sunshine Forestry Pvt. Ltd) 15-07-2014
31 Ally Multi-Trade India Pvt. Ltd. 22-07-2014
32 Sai Prasad Corporation Ltd 22-07-2014
33 Nicer Green Housing and Infrastructure Developers Ltd 28-07-2014
34 Dhanolty Developers Ltd 30-07-2014
35 JSV Developers India Ltd. 31-07-2014
36 HNC Infrastructures and Shares India Ltd 05-08-2014
37 Shubham Kroti Foods Pvt. Ltd 08-08-2014
38 Viswas Real Estates and Infrastructure India Ltd 08-08-2014
39 IHI Developers India Ltd 11-08-2014
40 PACL 22-08-2014
41 Step Up Marketing Pvt. Ltd. 22-08-2014
४२ SPNJ Land Projects and Developers India Ltd 17-09-2014
43 G N Dairies Limited 31-10-2014
44 Sheen Agro and Plantation Ltd 14-11-2014
45 Garima Real Estate and Allied Ltd. 24-11-2014
46 Raghav Capital & Infrastructure Ltd. 24-11-2014
47 Shree Sai Space Creation Ltd 24-11-2014
48 Arise Bhoomi Developers Ltd 02/12/2014
49 Sai Multi Services (Prop. Sanjay B Tenginkai) 02/12/2014
50 Vee Realties India Limited 02/12/2014
51 Kim Infrastructure & Developers Ltd 08-12-2014
52 KMJ Land Developers India Ltd 09/12/2014
53 Kalbut Real Estate Ltd 10/12/2014
54 Wisdom Agro Tech India Ltd 10/12/2014
55 Blessing Agro Farm India Ltd 15/12/2014
56 Skylark Land Develpers Ltd 15/12/2014
57 Ken Infratech Ltd 17-12-2014
58 MVL Limited 19-12-2014
59 Ecogreen Realestate (India) Limited 26-12-2014
60 Sai Prakash Propertis Development Ltd 26/12/2014
61 Karmbhoomi Real Estate Ltd 30/12/2014
62 G.C.A. Marketing Private Limited 30/12/2014
63 Sai Prakash Organic Food Ltd. 06/01/2015 - See more at: http://www.prompttimes.com/prompttimes/5444/State/PB/1/News#sthash.ZLxs8Amy.dpuf