We have this and more in today’s edition of the ETtech Morning Dispatch.
Also in this letter:
■ MCA glitches remain a pain point for private firms
■ Nykaa CEO optimistic about fashion demand after Q3 numbers
■ March 6 licence deadline for Uber in Maharashtra
Smartphone shipments 2022: Online retailers pip offline stores
Online platforms, led by Flipkart and Amazon, in 2022 overtook offline retailers in annual shipments of smartphones for the first time when both channels were operating at their normal capacity, unmarred by lockdowns.
What happened? According to data from research firm IDC India, shipments from manufacturers’ factories to online channels hit a record-high share of 53% in CY22 even as they declined 6% year-on-year in absolute terms due to a fall in demand.
Tepid consumer demand impacted the offline segment much more, with shipments to retail stores declining 15% year-on-year in 2022.
Details: Sales and promotions, aided by preferential platform pricing and online-exclusive deals and discounts, helped ecommerce players outsell brick-and-mortar peers in recent months, analysts told us.
Some misses for online: Market experts believe the aggressive push from online players might have also backfired for some brands in 2022.
Filip for offline: Market research firm Counterpoint Research believes a renewed push from brands such as Redmi and Realme will help offline stores as they account for 30-45% of sales of these brands. The growth of the premium segment will also help offline channels grow, Counterpoint analyst Shilpi Jain said.
“We believe, as markets open up, the offline channels will make a comeback and regain some lost share,” said Prachir Singh, a senior research analyst at Counterpoint Research. “In 2023, we believe, the online channels’ share will drop to 47%.”
Not selling Thyrocare, will cut cash burn: PharmEasy founders tell board
Hi, this is Digbijay in Bengaluru. PharmEasy held its board meeting earlier this month. We have the details of what the founders told the board. Let’s dive in:
Thyrocare not for sale: Amid speculation that PharmEasy may have to sell the diagnostic business, founders of API Holdings – parent of PharmEasy – told the board Thyrocare is not for sale. The company also told the board it will postpone its IPO timelines to 2025 and focus on cutting its monthly burn.
Austerity measures: PharmEasy clocked a burn of Rs 30 crore in December, but has cut back on costs. For January, the company told the board, the burn was down to Rs 15 crore.
It wants to hit operating profit by the September quarter now, even though internally it is aiming to achieve the milestone by the June quarter.
Slide in grey market: Even as PharmEasy has postponed IPO plans, the secondary value of its stock in the grey market has slipped to below Rs 30 per share, indicating a significant drop in its valuation. Sources added that PharmEasy’s secondary shares are available at around Rs 25 for bulk purchases.
“People have bought the stock at Rs 100 and even at Rs 130. Now, you can buy at around Rs 25 per share for bulk trades,” a person familiar with the grey market said.
Private firms grapple with issues as MCA portal continues to face glitches
Several private companies are facing challenges in their business operations due to persistent technical problems with the Ministry of Corporate Affairs (MCA) portal.
The issue: The MCA has transitioned to a new version of the portal, V3, from V2 last year and this is the first major filing season when companies are required to use the updated portal.
To understand the problem, consider the PAS-3 form, also known as the “Return of allotment”. This form must be filed on the MCA portal within 30 days of a company raising capital and allotting new shares.
According to experts, due to the current portal difficulties, companies are unable to file this form and as a result, cannot access the funds raised from the allotment of shares.
Staring at auditor red flags: Due to the delay in filings, these companies are now staring at the possibility of auditor red flags and fines, they added.
Underlying demand for beauty, fashion strong: Nykaa CEO Falguni Nayar
FSN E-Commerce Ventures, the parent of omnichannel beauty and fashion retailer Nykaa, has announced a significant drop in its consolidated net profit. The company’s net profit for the quarter ending December 31 was Rs 8.48 crore, a 71% decrease from Rs 29.01 crore in the year-ago period.
Quote unquote: “We are seeing similar momentum continue in January and February. Unfortunately, a lot of listed companies get governed by year-on-year comparisons and if you see a year ago, it was a very strong quarter… our growth had to be on top of a strong number,” Nykaa’s founder & CEO Falguni Nayar told reporters following the results announcement.
Growing GMV: Nykaa Fashion has delivered a GMV and revenue growth of 50% YoY and 43% YoY, respectively. Fashion now contributes to 25.9% of GMV. Other businesses led by its e-B2B initiative SuperStore now contribute 6.1% of the GMV, up from 2.4% in the third quarter of the previous fiscal year.
Surging expenses: Nykaa’s expenses rose by 36% to reach Rs 1,455 crore during the quarter, compared to Rs 1,067 crore in the same period of the previous year.
Also read | Tech earnings a mixed bag in Q3: check key highlights
Apply for valid licences by March 6 in Maharashtra, SC asks Uber India
The Supreme Court on Monday asked cab aggregator Uber India to apply for valid licences in Maharashtra by March 6, to continue its services in the state. It gave the state government two weeks to decide on Uber’s application after that.
Quote unquote: “You (Uber) apply for a licence or adhere to guidelines … You cannot operate under an interim order of the court. You cannot work as an aggregator without a licence, which is a statutory mandate… We are of the view that an interim order permitting them to operate without a licence cannot stand, as an aggregator cannot work without a licence. Uber to apply for a license within three weeks, on or before March 6, 2023,” a bench led by Chief Justice of India D Y Chandrachud said.
However, the judges clarified that it was a matter of policy of the state government, but it affects the cab aggregator’s right to continue with its business for the grant of a valid licence.
Catch-up quick: Last year, the apex court had ordered status quo on the Bombay High Court order that directed cab aggregators, including Ola and Uber, to apply for valid licences, after the central government’s Motor Vehicle Aggregator (MVA) Guidelines, 2020.
Other Top Stories by Our Reporters
InsuranceDekho raises $150 million in funding: Insurtech platform InsuranceDekho has raised $150 million in a mix of equity and debt funding, led by Goldman Sachs Asset Management and TVS Capital Fund. Investcorp, Avataar Ventures and LeapFrog Investments also invested as part of the equity funding. The share allotment to some of these investors began in January.
Daimler Truck’s R&D centre to add up to 750 jobs in Bengaluru: Daimler Truck Innovation Centre India (DTICI) plans to add 650-750 jobs in its Bengaluru centre by 2024, a senior executive said. DTICI is the truck maker’s largest such facility outside Germany and currently employs around 2,200 engineers.
Global Picks We Are Reading
■ TikTok is reportedly working on paywalled videos and a revamped creator fund (The Verge)
■ The AI Boom That Could Make Google and Microsoft Even More Powerful (WSJ)
■ Made in Eindhoven: the small Dutch city that became a tech powerhouse (FT)
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