Written By Naveen Menezes & Alnoor Peermohamed, ET Bureau

BENGALURU: Ola’s licence to operate cab services in Karnataka is set to be restored after it pays a penalty levied by the state transport department, possibly as early as Monday.

The transport department has decided to lift the six-month suspension imposed on Ola on Friday for running “illegal bike taxi services” in violation of its licence after the chief minister intervened.

“I convened a meeting on the directions of chief minister HD Kumaraswamy. The chief minister wants the suspension order to be revoked and I have conveyed the same to the officials,” Karnataka chief secretary TM Vijay Bhaskar, who held separate meetings with the transport department and Ola representatives on Saturday, told ET. “It’s up to the department to decide on the penalty.”

Order has ‘Served its Purpose’

Social welfare minister Priyank Kharge said that neither he nor the chief minister could be part of the meeting with the transport department and Ola representatives due to the election code of conduct. “The issue has been resolved,” he said. “Ola has agreed to pay the penalty on Monday. Cab services will not be affected.”

The amount will be decided by State Transport Authority, a quasijudicial entity, on Monday. “I cannot decide (the penalty) on my own,” said transport commissioner VP Ikkeri. “The question of how much the penalty is going to be is like asking a judge what his judgement is going to be.” If Ola does not pay the penalty, the department will act as per the law, he said.

Ola declined to comment. On Friday, it said it would work with officials to resolve the matter. “Usually we levy a penalty of Rs 50,000 per offence,” said a senior transport department official who didn’t want to be named. “Since it’s a very different violation, we will have to study the number of offences Ola has committed. We may have to seek legal opinion too.” The transport department believes the suspension order on Ola had “served its purpose”, the person said.

“In spite of warning Ola multiple times over the last one month, they continued to operate illegal bike taxi services on their platform,” he said. “We had even seized two-wheelers, but in vain. It’s only when we warned them of withdrawing the licence that the company has removed bike taxi services on Friday.”

Ola will be keen on getting the suspension lifted as quickly as possible. “To an organisation the size of Ola, I would expect that any fine the government would levy would not be material,” said Vikrant Kumar, a partner at law firm L&L Partners. “What will really affect Ola is if the direction (suspension) is upheld, because the revenue loss over six months will be severe and will give a huge boost to its competitors.”

The transport department ordered the company to suspend all operations, including four-wheeler cabs, within the next three days in a letter sent to Ola parent ANI Technologies Pvt. Ltd. on March 18. “This notification is unfortunate, and we look forward to an opportunity to address these concerns directly with state officials to find a solution for our driver partners and millions of Ola users in Karnataka,” Ola had said in a statement.

The state transport department had issued a notice to Ola February 15, warning the company that it would suspend its aggregator licence if it did not comply with the ban on bike taxis. ET had reported this development on February 18, after which the state said it seized more than 400 bike taxis attached to Ola and rival Rapido.

“Regulatory run-ins for ride-hailing companies aren’t an Indiaspecific issue; this happens in many other markets including fairly advanced economies,” said Devangshu Dutta, chief executive of consulting firm Third Eyesight. “The constant gripe that traditional taxi players have is that they are forced to follow strict rules, whereas ride-hailing firms are not as strictly regulated, and this has created tension everywhere.”

Bengaluru, where Ola is headquartered, is also its single largest market in the country. The city is estimated to have 120,000 cabs, out of which around 65,000 operate on the Uber and Ola platforms interchangeably, state authorities and experts said.

Source: economictimes

After restructuring its prices, the British retail giant is focussing on womenswear and lingerie to expand in India.

Written By Ankita Rai

After nearly two decades of operations here in India, British retailer Marks & Spencer (M&S) has launched Rethink, its first India-specific marketing campaign. It seems like the brand has done a bit of rethinking itself. The retail major has launched a revamped product range at competitive prices, and also brought in a service proposition by introducing in-store stylists. M&S India has identified womenswear and lingerie as its key focus areas, with an eye on tier II markets for expansion.

“India is the second largest market outside the UK with 71 stores. It is the only market where we have a dedicated approach focussed solely on the Indian consumer, rather than repurposing any products launched elsewhere,” says James Munson, MD, Marks & Spencer India.

Globally, M&S faces stiff competition from fast fashion brands such as H&M and Zara. In India, both H&M and Zara have crossed the Rs 1,000-crore sales mark, while M&S claims to have done so, too, in February this year. Will M&S’s revamped efforts help it create impact in a highly competitive market?

Devangshu Dutta, chief executive, Third Eyesight, says that Zara and H&M have clear audiences in the bigger cities — the young, fashion conscious lot with high disposable incomes. “Marks & Spencer’s pricing strategy is to focus on the upper-middle-class consumers, not limited to the metros. There is growth opportunity there.”

According to company filings, Marks and Spencer Reliance Retail India’s revenue has shown a steady growth of around 10% CAGR from Rs 620.82 crore in FY15 to Rs 899.93 crore in FY18. This growth has been attributed to price restructuring, local sourcing and a strong focus on women’s fashion.

“Womenswear and lingerie are our fastest growing businesses. In fact, the lingerie business has seen 40% growth in the last two years. At present, menswear and womenswear contribute equally to our business,” says Munson.

Currently, M&S has 10 standalone lingerie stores in key metros and tier II cities like Lucknow and Jaipur. It plans to open six stores in the next two months, of which three will be lingerie and beauty stores.

Rationalising the price tag

Getting the pricing right has been vital to M&S’s India story. “When M&S entered India, it merely duplicated what it was doing in the UK. It was out-priced in the market. The local sourcing supply chain was not developed, while sizing was a big issue,” says Ankur Bisen, SVP, retail and consumer product division, Technopak.

However, today, a t-shirt for women could be priced at Rs 599, while a dress could cost Rs 1,499. “Around 65% of our range in women’s tops is below Rs 2,500. Last year, we reduced the prices of kidswear by 20% across the range,” Munson informs.

Almost 30% of its products are sourced from India itself.

Sourcing locally has helped cut prices further. Almost 30% of its products are sourced from India itself. In fact, India is one the top five sourcing hubs for the company’s global business. It works with 111 factories in India, with over one lakh employees.

Making inroads

With rising competition in metros from other global players, M&S is strengthening its e-commerce play and also expanding its footprint beyond the metros. A fifth of its turnover is from the non-metro markets, such as Ahmedabad, Bhubaneswar, Guwahati, Kochi and Coimbatore. Munson shares that upto 44% of the company’s online sales (via Amazon, Flipkart, Myntra, Ajio and Jabong) comes from tier I and II markets. In fact, M&S is seeing online sales growing at 75% y-o-y.

At present, it has 22 stores across 19 tier II cities; each store reflects the local trends and needs. For instance, at M&S Kochi, linen clothing is on offer all year round, given the climatic conditions, Munson shares.

According to experts, M&S needs to work on its product range and positioning to drive growth. “Unlike fast fashion brands, M&S’s global positioning is core fashion and basics, with a gender-neutral positioning; it is a family store. Therefore, it will see growth in small cities,” says Bisen.

Bisen believes that M&S will also need to connect with the millennials — the cohort H&M and Zara appeal to — with relevant products. Besides, he says, “the casualisation of fashion and online integration” could pose challenges for the brand.

Source: financialexpress

Written By Aditi Shrivastava & Samidha Sharma, ET Bureau

BENGALURU | NEW DELHI: In what would be one of the most significant consolidation moves in the sector, Uber Eats, the food delivery arm of the global ride-hailing platform, is in final stages of negotiations to sell its India business to rival Swiggy, three people privy to the development told ET. The deal, which is expected to close by next month, will be Swiggy’s largest acquisition till date, and Uber’s first divestment of its food business globally.

The transaction is likely to be a share swap, sources said, giving Uber about 10% stake in the Bengaluru-based company last valued at $3.3 billion.

The development is in line with Uber’s global strategy to cut down on losses as it prepares for a public offering at a possible valuation of $120-150 billion. For the ride-hailing giant, Uber Eats alone is estimated to be valued at over $20 billion. The business generated $1.5 billion in revenue globally in the first quarter of 2018, according to US-based tech news portal, The Information.

High Cash Burn

“It is prudent to be invested in Swiggy than burn capital competing for the same set of restaurants and consumers,” said a source in the know of the deal. “This should bring some rationality to the cashguzzling food-delivery market,” this person added, hinting that discounts are likely to significantly reduce post integration.

In the past year or so, both Swiggy and Gurgaon-based Zomato have been raising capital as they have gone on a tear to acquire new customers. Along with these two, the market has seen heightened discounting by Uber Eats and Ola’s Foodpanda which has led to high cash burn by these companies.

Sources said that Uber Eats had also held discussions with Zomato, but those talks fell through. In an emailed statement to ET, spokespersons for Uber and Swiggy said, “We do not comment on rumour or speculation.”

Uber Eats India racked up a cash burn of around $25 million on an average 9 million orders a month, a top executive at the firm told ET. Swiggy burns about $40-45 million a month on its food business, according to industry estimates.

The deal talks come at a time when Uber’s India rival Ola has put its food business under Foodpanda in the slow lane, and cut marketing and customer acquisition costs by two-thirds. The company is now focusing on its own private labels and cloud kitchens which include The Great Khichdi Experiment, Lovemade and FLRT brands.

“Last-mile logistics is an operations-heavy, low-margin business. In the long run, I don’t see how the market can sustain so many parallel micro-logistics networks,” said Kartik Hosanagar, professor of technology & digital business at The Wharton School.

Over the last couple of months, Uber Eats has grown in markets such as Hyderabad, Chennai and Pune. Experts say consolidation has been on the cards in the food-delivery business. “Consolidation will happen due to the thin operating margins and market acquisition costs, which will place enormous pressure on the companies to raise capital,” said Devangshu Dutta, chief executive of Third Eyesight, a specialist retail consulting firm.

In India, Uber Eats was launched in May 2017 and is currently present in 37 cities across the country. Swiggy’s largest investor, South African media and internet conglomerate Naspers, has been particularly bullish on the market potential in the Indian food delivery space.

“Food delivery is a perfect example of our strategy in action with online platform capabilities that address a large offline societal need in a high-growth market. It’s still early days, but if you look at the growth in revenue and the underlying operating metrics, it gives us real confidence in the potential here,” said Naspers CEO Bob van Dijk in a recent investor call.

Source: economictimes

Written By Sagar Malviya, ET Bureau

MUMBAI: 7-Eleven, the world’s largest convenience store chain, is in advanced talks with India’s Future Group to enter one of the fastest-growing retail markets. If the plan goes ahead, the Kishore Biyani-owned retail company will open and operate small format 7-Eleven stores in India as a master franchisee, said two people aware of the development.

A deal may be announced as early as March, they said. “While the stores will have products across categories, foods will have a greater focus,” one of the persons said.

Seven & i Group, which owns 7-Eleven among other retail formats, posted annual revenue of $100 billion through nearly 66,000 stores globally.

The Japanese-owned, US-headquartered 7-Eleven generates nearly a third of its sales in the Asian country. The Future Group’s latest move will be pitched against round-the clock convenience store chain Twenty Four Seven, promoted by Modi Enterprises and In & Out, which is run by state-owned Bharat Petroleum Corp Ltd.

Seven & i Group and Future Group didn’t respond to queries.

“Future Group has a number of neighbourhood stores through their own format launches and through acquisitions. Some of them could surely be repurposed to 7-Eleven convenience stores, while there could be other franchisees appointed for specific sites or territories,” said Devangshu Dutta, chief executive at consultancy firm Third Eyesight. “However, becoming a franchisee entails costs and restrictions. The question is whether there is enough margin available in the business to allow for so many tiers of stakeholders.”

A partnership between the two will help Future Group reach out to buyers beyond their own outlets in the modern trade segment, analysts said.

Future Group, which runs 1,444 stores in 409 cities, generates most of its revenue from food and grocery retailing. It has three smaller store brands — Easy Day, Heritage Retail, and Nilgiri’s — that have been acquired in the past few years and contribute 15% to sales. A recent report by Antique Broking expects Future Group’s small-store business to breakeven at an Ebidta (earnings before interest, taxes, depreciation, and amortisation) level by the end of FY19. A year ago, like 7-Eleven to the mix will make the group more attractive to prospective investors, an analyst said.

“Future Retail has always maintained it is FDI (foreign direct investment) compliant, which essentially means they are looking to sell stakes. A portfolio of retail brands including an international chain brings more heft to the company so that it attracts invest-Trent Hypermarket, a joint venture between the Tata Group and Tesco exited its small store business that operated under the Star Daily brand.

Adding a brand name ments from global retailer. However, investors are also being cautious now due to changing regulation in the retail sector,” said Abneesh Roy, senior vice president, institutional equities, Edelweiss Securities.

Globally, corner shops including 7-Eleven in Japan, Taiwan, Thailand and Singapore, Lawson in Japan and Oxxo in Mexico are among the largest retailers in their respective markets, reflecting the growing business of small outlets in several countries despite the presence of international supermarket and hypermarket chains. Since 2012, most of the large grocery retailers in the country have reduced store sizes by 13-35% to drive more profit through higher revenue per square feet.

In India, smaller stores or kiranas still account for nearly 90% of the all consumer products sales. Future Consumer, which sells its own brands of snacks, cookies and other packaged foods at its Big Bazaar stores, gets about a quarter of its sales from about 120,000 general stores.

Source: economictimes

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Premji-backed iD Fresh Food bets big on its coffee decoction biz

admin

February 11, 2019

Written By Deepti Govind

P.C. Musthafa, CEO, iD Fresh Food India Pvt. Ltd. (Jithendra M/ Mint)

BENGALURU : Azim Premji-funded iD Fresh Food India Pvt. Ltd has an ambitious plan. The company’s founder and chief executive, P.C. Musthafa, believes his newly-launched coffee decoction business has the potential to grow to ₹100 crore in a year.

The company, which test-marketed the coffee decoction products in the last three months of 2018, expects the business to generate about ₹2.5 crore in revenue in February itself.

“We’re getting good feedback. The products are getting sold out on almost the same day; the travel pack especially is doing wonders for us. We got the product and the packaging right,” said Musthafa in an interview. He added that launching a ₹10 travel sachet pack was the “right decision”.

The company began operations in 2006 as a small store in Bengaluru selling fresh, branded, good quality idli and dosa batter. It is following the same strategy with coffee too. Rather than giving consumers a ready-to-use powder, it is retaining the freshness of its coffee by wet-grinding beans into a decoction.

About 8-9 months ago, the company had also launched vada batter in a pack that allowed consumers to make traditional doughnut-like South Indian vadas with ease. That has not been performing as well as expected due to supply chain issues, Musthafa said, adding that he is working to rectify the issue.

iD, according to Musthafa, used more than ₹100 crore of the ₹150 crore that it raised from PremjiInvest, the family office of Wipro chairman Azim Premji, in March 2017 to expand production capacity. While it currently has the capacity to make 1.3-1.4 million idlis per day, with the expansion, that number will go up to 4-5 million a day.

As for coffee, the company’s decoction has been test-marketed in 2,000-2,500 outlets across the country so far. Its overall distribution reach across products is around 10,000 outlets. Musthafa plans to launch all the company’s products in Delhi, Kolkata and Gujarat and also plans to introduce its decoction in some international markets.

The startup’s other new products include vada batter and an expanded superfoods range. This, along with geographical expansion, is expected to help the startup’s revenue to grow 45% in 2019-20, according to Musthafa.

He expects overall revenue to grow between 19% and 25% in the current 2018-19 financial year to around Rs220 crore.

But are the expectations too lofty? Devangshu Dutta, CEO of retail consultancy Third Eyesight, believes there are a bunch of people today who are not able to brew their own coffee—whether it is for lack of time, good raw materials or the know-how.

He concludes, “The challenge is of ensuring freshness and penetrating deeply. iD has the capability to penetrate fairly deep, and they’ve built up a reputation and a momentum for their products in the market. Based on the platform that they’ve built, it is not an unthinkable target.”

Source: livemint

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