Raghavendra Kamath, Business Standard
Mumbai, 25 January 2017

According to Propstack, a data analytics firm for commercial property transactions, various Amazon entities have leased about 1.3 million sq ft since 2008.

Amazon launched its online marketplace in India in 2013 but had been present in the country for eight years for research and development services.

An Amazon India spokesperson said: “As a policy, we do not comment on what we may or may not do in the future.”

Properly consultant Colliers International elaborated on the latest activity by Amazon as the year closed — 100,000 sq ft in the Mohan Co-operative area in Delhi, 150,000 sq ft in Ambience Corporate Tower 2 in Gurgaon and 300,000 sq ft in World Trade Tower Noida.

Before that, through 2016, it leased 90,000 sq ft at Ambience Corporate Tower II NH8 in Gurgaon and 350,000 sq ft at Mindspace, Madhapur, in Hyderabad.

Rival Flipkart, which operates through Flipkart India, Flipkart Internet and Flipkart Payment Gateway, recently took 600,000-sq ft office space in an Embassy group project in Bengaluru.

“Amazon has been investing systematically in expanding its product portfolio, bringing Indian merchants on to their Indian and global platform, and expanding its delivery infrastructure,” said Devangshu Dutta, chief executive officer at retail consultancy Third Eyesight.

Dutta said with its plans to grow private labels and the current e-commerce foreign direct investment regulations which require companies to increase the share of unrelated merchants, the Bezos-led company requires significant organisational capacity and hence is growing office spaces.

Added Raja Seetharaman, director at PropStack, “Amazon is going ‘all out’ in the battle for e-commerce market share in India. They realise that India would be their next biggest market outside the US. With a median age of 27 and growth rate of 6.5-7 per cent, Amazon is willing to invest ‘whatever it takes’ to win.”

The company’s long-term investments, along with futuristic technology like drone deliveries, which it is already piloting in the US, indicate that Amazon is well positioned to be a leader in the e-commerce sector, Seetharaman said.

LEASE DEALS IN 2016

• Leases 100,000 sq ft in Mohan Co-operative Area in Delhi
• Takes 150,000 sq ft in Ambience Corporate Tower 2 in Gurgaon
• Takes 300,000 sq ft in World Trade Tower in Noida
• Takes 90,000 sq ft at Ambience Corporate Tower II NH8 in Gurgaon
• Takes 30,000 sq ft in BKC in Mumbai
• Takes 350,000 sq ft at Mindspace, Madhapur in Hyderabad

Source: Colliers International

(Published in Business Standard)

Suparna Goswami, Forbes
Bengaluru, 17 January 2017

Are we seeing a pattern of investor overreach into startups in India?

With this latest SoftBank connection, many are starting to lament how young businesses in India are facing excessive interference from venture capitalists. Some experts tracking the ecosystem have written about the number of years left before “impatient investors take control of the startups” – but how well founded are these suspicions? I spoke with a few local venture capitalists for their side of the story, and perhaps unsurprisingly, many were upset with the media for “sensationalizing” a trend that’s not quite the harbinger it appears to be.

Dev Khare from Lightspeed India Partners Advisors, a VC firm, says things shouldn’t be viewed as black and white. “Just because Flipkart announced a professional CEO who happens to have an association with its investor firm Tiger Global Management doesn’t mean [its] founders no longer will have a say in the company,” says Khare.

“In the end it all boils down to making money. If a company isn’t doing well, the equity that VCs and founders jointly hold will have no value. I don’t see this as a battle between VCs and founders,” he says.

For other VCs, it’s all about the individual needs of a company, and labelling the investor’s role as “interference” is the wrong way to approach the issue.

Tarun Davda, managing partner with VC firm Matrix Partners believes that all investors look out for the wellbeing of their investment, no matter how that presents itself.

“We’re helpful when asked for advice but never fool ourselves into believing that we know more about the business than the founders,” says Davda.

He believes there are often cases where founders feel they can better serve their company by bringing on a more experienced CEO, particularly where founders may lack the experience or skills to take a company ahead through all stages of evolution. Davda provides the example of Google, probably the biggest startup success story of our generation, which had to bring in Eric Schmidt as its CEO early in their journey.

Devangshu Dutta, managing partner of venture accelerator PVC Partners, chalks up the media reaction to local culture. Dutta says Indians have a habit of looking down on founders for handing control over to an outsider.

“There is no harm in accepting that sometimes a company needs a new person at the helm to turn around things,” says Dutta. “In India, we tend to take these things as failures; but [they] could be the outcome of well thought out strategic decisions.”

And in reality, for many startups the Flipkart and Snapdeal episodes are a non-issue; founders are aware of their capabilities and strengths, and their limitations.

Ganesh Shankar, founder of FluxGen Technologies, an IoT startup, is fine to pass on the reins of the company to a person who doesn’t alter the company culture too much. “I guess I [would] be glad if I can find a person willing to take on the top leadership role provided he or she has the experience to scale the business,” he says.

Others view it as a matter of practicality, that these seemingly hard decisions are part of the fiduciary responsibility of the VCs towards their LPs.

Pallav Pandey, CEO of startup BroEx, doesn’t believe that VCs interfere in a company’s affairs unless they’re forced to. “Both founders and investors are stakeholders and after having given enough time to founders [to succeed], if it is inevitable that a new CEO needs to be brought in to steer the company forward, then it should be done,” he says.

However, not all agree with this view. One startup founder I spoke with, who asked not to be named because of the potential harm to his business’ relationships, says the reality of a boardroom meeting is darker than what’s usually projected.

“Founders and VCs are fair-weather friends. One can’t expect things to be always amicable. The main flip side of raising huge funds is that somewhere down the line a founder’s opinion gets diluted. That’s a hard reality,” the founder says.

(Published in Forbes)

Sharleen Dsouza, Bloomberg Quint
Mumbai, 9 January 2017

Patanjali, which largely operates in the north, offers products for as low as Rs 25.

Why South India…

“Traditionally, the southern market consumer is a strong user of ayurvedic products, which could have made HUL consider launching the product initially in the south,” said Devangshu Dutta, chief executive officer at Third Eyesight, a retail and consumer products consulting firm.

“Our current focus is to ensure a successful launch of the new range in these markets to build a scalable and profitable model. We will consider the expansion to other markets at a suitable time going forward,” HUL said in an emailed response to BloombergQuint

There are several well-established brands in the south, the largest market for ayurvedic products, and HUL will find it difficult to make inroads, says Sageraj Bariya, vice-president and analyst at East India Securities.

“(HUL) has been present in the ayurvedic segment with Lever Ayush for a long time, but this has not been their core competency area. In terms of price points, Hindustan Unilever will be competing closely with Patanajli, which has products in a similar price range. It looks difficult for Lever Ayush to really give a stiff competition to Patanjali and other players in the south,” Bariya says.

There are more than 15 ayurvedic brands in southern states, the prominent being Dhathri Ayurveda, Sakunthala, Pankajakasthuri, Heena and Siso.

Patanjali, which has done well in north India, has also managed to make a mark in the south despite local ayurvedic brands having a strong presence, says brand consultant Hairsh Bijoor, founder of Harish Bijoor Consults Inc.

Pricing Pressure

In terms of pricing, HUL is competing with Patanjali head-on. The largest consumer goods company in the country has priced its products in the Rs 30-130 range, close to that of Patanjali’s Rs 25-110.

South-based Ayurvedic brands have priced their skin-care products 30 percent lower and toothpastes 20 percent lower compared to other major brands in the space.

In December 2015, HUL had acquired Kerala-based Moson Group’s Indulekha for Rs 330 crore, just when competition in the ayurvedic segment had started to witness some momentum.

HUL decided to relaunch Lever Ayush to compete even more fiercely in the ayurvedic space by offering lower prices as Indulekha products are more premium in terms of pricing.

“Despite having Indulekha in their portfolio, the company has re-launched Lever Ayush as HUL wants a larger market share in the ayurvedic space, and I expect the company to launch more ayurvedic products going ahead,” said Prashant Agarwal, joint managing director at business consulting firm Wazir Advisors.

Arvind Singhal, chairman of management consulting firm Technopak Advisors, believes HUL’s strong distribution channel will help the company.

Patanjali Factor

Lever Ayush, launched in 2001, failed to perform because the ayurvedic market was relatively small, though growing at a steady pace, experts say.

“With the entrance of Patanjali, the Yoga guru awakened the latent demand for ayurvedic products, which is now an eye-opener for other FMCG companies to get aggressive in the ayurvedic space, as every consumer player wants a share in the expanding ayurvedic market,” said Agarwal.

Patanjali’s turnover grew over two-fold to Rs 5,000 crore in the financial year 2015-16. The company sees it rising to Rs 40,000 crore by 2018-19, according to an Axis Capital report released on December 12, 2016.

(Published in BloombergQuint)