TCS bullish on digital India; Amazon offers to help Future Retail

By Kevin Colleran On Jan 23, 2022

Tata Consultancy Services (TCS), which grew 15% year on year (YoY) by revenue in Q3, believes the Indian market will be platform-driven as more businesses and government entities digitise their processes. It said businesses across banking, financial services, insurance, retail and manufacturing have been adopting these solutions heavily since the launch of India Stack.

Also in this letter:

Amazon offers help to Future Retail, with conditions
75% of founders are bullish on fundraising in 2022
FB critics call for release of India human rights review

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India will lead growth for platform offerings, says TCS

TCS COO N Ganapathy Subramaniam

Tata Consultancy Services believes that the Indian market will be platform-driven, and that by positioning itself with the right apps and platforms in this space, it will see traction from government and businesses. The company is also bullish on the low-code and no-code platform solutions with almost 24 wins with the offering during Q3.

“We believe that India will be a platform-driven market. They are going after digital in a big way, be it in insurance, banking or manufacturing. Thanks to the India Stack, many of these things are happening,” TCS COO N Ganapathy Subramaniam said during the company’s Q3 results.

He said TCS is positioning itself to provide apps and platforms that can integrate with India’s digital stack and provide solutions to customers across government, industry or even B2C.

TCS has the edge: Gaurav Vasu, founder at research firm Unearthinsight, noted that the top Indian IT service firms have all worked towards increasing their platform offerings in India but TCS has managed to leverage it better.

“TCS and Infosys have both bagged major government projects and positioned their platform offerings like BaNCs and Finacle in the India market. However, TCS has a stronghold in the government sector. In fact, its Passport Seva project was also renewed recently,” Vasu said.

The Passport Seva project had attracted bids from its rivals during the renewal process but was eventually won by TCS. IT services firms are also keen on participating in opportunities for low-code and no-code platform solutions which are also in high demand in the domestic market, added Vasu, as in case of the TCS MasterKraft, which reported 24 wins during Q3.

Amazon offers financial help to Future Retail, with a rider

Amazon has offered financial assistance to cash-strapped Future Retail Ltd, with which it is embroiled in a legal battle over FRL’s planned sale of assets to Reliance Industries for nearly Rs 25,000 crore.

Yes, but: The offer comes with a rider. The US firm has warned Mumbai-based FRL not to sell any of its retail stores without Amazon’s consent.

“We reiterate our willingness and ability to assist FRL in addressing any financial concerns of FRL, within the framework of the agreements, including the solution proposed in the term sheet between Samara Capital, and FRL, which contemplated an infusion of [Rs 7,000 crore] in FRL,” Amazon wrote in a letter sent to FRL’s independent directors on Wednesday.

In the letter, which ET has reviewed, Amazon warned Future Retail that it was prohibited from “directly or indirectly taking any steps to transfer, dispose, alienate or encumber FRL’s retail assets” without Amazon’s consent.

It said any sale of small format stores without Amazon’s consent “would be in violation of the injunctions which continue to operate and are binding on FRL and directors of FRL, including the independent directors of FRL,” Amazon said, adding that it was “more than willing” to explore effective solutions to assist FRL.

Response: “Yes, we have received the letter and we are going to discuss it later today,” FRL’s independent director Ravindra Dhariwal said. “This is the first time they (Amazon) have given an offer. So, we will discuss it,” Dhariwal said. He added that the three independent directors of FRL were slated to meet on Thursday evening.

On hold: Earlier this month, we reported that lenders of Future Retail were likely to seek buyers for its small-format stores to recover dues worth Rs 3,494.5 crore after it failed to honour payments scheduled on December 31. Lenders were preparing to sell Easyday and Heritage Fresh stores numbering about 850 across India.

But now sources have told us that lenders of Future Retail have decided not to go ahead with the sale of small-format stores as they failed to receive implicit support from RIL for the proposed plan. Amazon’s letter, which was also sent to banks, prompted the lenders to hit pause on the proposal, people briefed on the matter said.

Tweet of the day

75% of founders expect funding environment to improve in 2022

After a standout 2021, in which a record $38 billion of capital poured into India’s startup ecosystem, three out of four startup founders believe the fundraising environment will be even stronger in 2022, according to an industry report.

Almost 92% of founders who attempted to raise capital in 2021 said they had a favourable experience and 75% of them expected the environment to get better this year, revealed the Startup Outlook Report 2022 by venture debt firm InnoVen Capital.

Of the 100 startup founders across stages and sectors such as fintech, SaaS, D2C, logistics, education, and B2B who were surveyed, 83 have a higher bias for growth over profitability, the report said.

Inflection point: “2021 will be remembered as the year when the Indian venture ecosystem hit an inflection point,” said Ashish Sharma, managing partner of InnoVen Capital India. “Perhaps the most promising aspect was the IPO story, with Zomato and Nykaa leading the way.”

Other findings: A mere 20% of startups surveyed claim to be Ebitda positive, while 51% aim to turn Ebitda profitable in the next two years, the report said.

Encouraged by successful initial public offerings, notably those of Zomato and Nykaa, 71% of founders believe that an IPO is the likely mode of exit for their investors. This is a significant increase over 2020, when 47% of founders held that view. And 58% founders said they would prefer to list in India, compared to just 30% in 2020, the report said.

ETtech Done Deals

■ M2P Fintech, a financial infrastructure provider, has raised $56 million in a funding round led by New York-based private equity firm Insight Partners. ET had first reported in October last year that the company was in talks to raise fresh funds at a valuation of $600 million.

■ Stader Labs, a cryptocurrency staking management platform, has raised $12.5 million in a funding round led by Three Arrows Capital, pushing its valuation to $450 million. The startup was valued at $50 million when it had raised its seed round in October last year.

■ La Renon Healthcare, a pharmaceutical company backed by Sequoia Capital and A91 Partners, has acquired 51% stake in Enaltec Labs, a senior company official said. The deal pegs Enaltec’s post-money valuation at Rs 180-200 crore.

Facebook critics call for release of India human rights review

Facebook critics have called on the world’s largest social network to release a human rights impact assessment it commissioned in 2020 to investigate hate speech on its platforms in India.

The company, which is now called Meta Platforms Inc., faces increasing scrutiny over its handling of abuses on its services, particularly after whistleblower Frances Haugen leaked internal documents showing its struggles monitoring problematic content in countries where it was most likely to cause harm.

In a letter sent to the company this month and made public on Wednesday, rights groups— including Amnesty International, Human Rights Watch and India Civil Watch International— urged Facebook to release the report.

Gare Smith, partner and chair of global business and human rights practice at the US law firm Foley Hoag, which Facebook commissioned to carry out the assessment, said: “Such projects are complex, particularly in a country as diverse and large as India.”

Meta’s director of human rights policy Miranda Sissons said in a statement: “Given the complexity of this work, we want these assessments to be thorough. We will report annually on how we’re addressing human rights impacts, in line with our Human Rights Policy.”

ETtech Opinion: Startup predictions for 2022

I am sitting at home in the midst of another Covid-19 wave.

Why does this matter? Well I think since the pandemic struck, every form of prediction is foolhardy. Things can change overnight. We’ve seen unprecedented creation and unprecedented loss.

But even though it’s a fool’s errand, predicting the future is also the extension of dreaming with conviction. So here we go.

Risky, record-breaking year: 2021 was a crazy year for the Indian investor. More than 50 unicorns, $63 billion in private equity and venture capital money, more than 1,000 disclosed deals, the Sensex up to 61,000 points. Meanwhile, global VC investments jumped to $643 billion, almost twice as much as the $335 billion recorded in 2020.

The bulls are running and the bears are in hiding. The internal line in such runs is that it’s a great time to be a founder and a bad time to be an investor. High valuations kill investor returns.

I think this coming year will be one of consolidation, correction and exits. While many investors still believe the party will continue, my sense is that the cycle is going to turn this year.

Venture capital is a “risk-on” asset class. With the largest money tap in the world turned on at the beginning of the pandemic, the Fed printed $ 4.6 trillion in the last 20 months.

That money had to be deployed somewhere.

With yields at all-time lows, “risk-on” asset classes were the norm. But with yields set to rise, capital will now fly to safety. That’s why I expect the Indian ecosystem to enter a phase of correction, consolidation and exits.

Click here to read the full column by Aviral Bhatnagar, founder of A Junior VC.