Patanjali struggles to meet demand for products

Patanjali struggles to meet demand for products

Even as Baba Ramdev’s Patanjali Ayurved aims to double its turnover in the current financial year, it is struggling to meet the demand for its products.

Patanjali has signed exclusive deal with Future Group and sells its products through large hypermarkets such as D-Mart, Star Hyper and Reliance. Apart from this, Patanjali products are sold through a large network of shops, Ayurvedic stores and pharmacies. For instance, a store executive at Star Hyper, run by Trent-Tesco combine, said they had planned to set up a separate section for Patanjali products but couldn’t do so because of erratic supplies. “There’s no point in having a separate rack and displaying a few products on it,” said the executive.

According to a senior executive at a large retail chain, the fill rates of Patanjali products are in the range of 40-50 per cent. On the other hand, multinational consumer goods companies such as Nestlé and HUL have a fill rate of 85-90 per cent.

Fill rate in this case means the rate at which the goods are supplied by a manufacturer against a retailer’s order. To put it simply, if a retailer orders 100 products and the manufacturer supplies 90, then the fill rate is 90 per cent.(more)

Five years after split, Honda rides strong but Hero remains No 1

Japanese automobile major Honda has consolidated its two-wheeler presence in the five years since its split from Indian partner Hero while remaining away from the coveted numero uno slot. The company was aspiring to overtake Hero by 2015/2016. Hero's solo journey has been marked by higher profitability but a declining market share, a function of its dependence on motorcycles. Against a flat to low-single digit growth performance by motorcycles, scooter sales have grown by double-digit for three consecutive years, benefiting Honda.

It was in end-March 2011 that the two partners effectively ended their 26-year partnership. Both had their unique challenges. Hero had all along depended on the partner for technology and had to focus on developing in-house research and development (R&D) capabilities. For Honda, developing mass products and expanding of network was key. While having a partnership with Hero, Honda had started selling scooters about 15 years ago independently. In subsequent years, motorcycles were also launched under its own brand.

Both have moved ahead. Honda has expanded from about 800 sales outlets to a reasonably strong 4,500 touch points. The wider product portfolio, improved network and booming scooter market have helped Honda move up from a share of 15 per cent at the time of split to 26 per cent. Honda's biggest gain seems to have come from Bajaj Auto, which also vacated the No 2 slot for the Japanese firm. In the past five years, Bajaj's share in the domestic two-wheeler market has slipped from 20 per cent to 11.5 per cent.

Hero has seen its market share dip from 44 per cent to 39 per cent, as rural uncertainties and successive sub-normal monsoons impacted motorcycles sales. But, the company has made significant progress on the R&D front. It has set-up its first dedicated Rs 850-crore R&D centre last month. The 247-acre facility near Jaipur will have 600 engineers by the end of this year. Hero had a tiny three-acre R&D setup before the Jaipur centre came up. The centre will be led by Hero's chief technology officer Markus Braunsperger, who came from BMW in 2014 after a 25-year-long stint in R&D, production and strategy roles.

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GoAir and SpiceJet woo passengers with discounts

Two airlines are giving offers of cheaper tickets and discounts at hotels/cafes.GoAir is offering discounts up to 50 per cent at select hotels, cafes, spas and gift outlets through its boarding pass privilege scheme. SpiceJet has launched a pre-paid-cum-loyalty card called SpiceClub, which gives members discounted and free tickets on occasions such as birthdays and anniversaries. 

GoAir said its customers could avail of the discounts on presenting their boarding passes at any of the partner outlets within 30 days of their travel. SpiceJet said their card, designed to enhance engagement with frequent flyers, while also targeting new customers, offers privileges such as a free ticket on one's birthday, up to 50 per cent off on domestic air tickets for two on an anniversary, free vouchers, priority check-in and updates about new offers. The loyalty card membership has a minimum fee of Rs 599 and customers can avail of benefits worth Rs 5,999.

Amit Srivastava, vice-president at SpiceJet, said: “We are always looking at ways and means to serve our customers better. Customer satisfaction automatically translates into highest Passenger Load Factor (over 90 per cent here for the past 10 months) and higher ancillary revenue.”Read More.

Trai may issue fresh paper on WhatsApp, Skype

The Telecom Regulatory Authority of India (Trai) is contemplating issuing a fresh consultation paper for regulation of over-the-top (OTT) messaging services like WhatsApp and Skype in accordance with recently announced net neutrality principles.

"The issues have changed over the past year when the consultation paper was first announced. We have to look at the OTT industry together with net neutrality as many aspects are interlinked," a Trai official told Business Standard. No decision has yet been taken on whether there should be a fresh paper on the issue. "It is in the very initial stages," the official said. Mobile users can access OTT services via the Internet but these ride on telecom networks and are not bound by any regulations.

The availability of affordable Smartphones has led to the growth of OTT services, which in turn increases data volumes for telecom companies. But for increased traffic, telecom companies need to invest in upgrading their networks.

The Trai paper was issued in March 2015 and comments were received under the earlier chairman Rahul Khullar. Khullar retired in mid-May and the regulator got a new chairman, RS Sharma, in August 2015. But final recommendations are yet to be announced.

The major contention in the OTT paper is voice calls offered by WhatsApp,Skype and others, which telecom operators allege is eating into their revenue. Voice calls on telecom networks are 12.5 times more expensive than those through OTT services; in the case of messages, the difference is 16 times. A one-minute phone call costs 50 paise, while a one-minute call made through the Internet costs 4 paise, according to Trai.

"Technology can't be stopped. We can't kill innovation but we need to address the regulatory arbitrage between telecom operators and OTT players. One is under a licensing regime, while the other is not. No doubt OTT is driving the data revenue of telecom players, but one has to look at the security aspect as well," another Trai official added.

Flipkart opposes entry tax by states: Why it is a fight to the finish

The products you buy online are likely to get costlier if state governments have their way. Uttarakhand government has imposed an entry tax of 10 per cent on goods purchased from e-commerce firms. Bihar and Assam have already imposedan entry tax, which is now likely to be imposed by several other states.

An entry tax is a tax that a state government imposes on goods coming in from other states.

Naturally the e-commerce industry is crying foul as it increases the cost of the goods for its customer. Flipkart has already moved the Uttarakhand High Court (HC) against the 10 per cent entry tax. In a petition filed with the court in February, Flipkart argued that the state’s move to impose such a high entry tax was discriminatory.

This is a classic case of fight between two parties, both claiming to be victims.

It is an established fact that aggressive pricing by e-commerce companies has not only hurt the brick and mortar retail setup but has also affected the companies themselves who follow such predatory pricing. Most of the e-commerce companies operating in India are making losses as they fight for market share under-pricing each other, in many cases below the cost of purchase. In the process the mom-and-pop retailer shop, are also taking a hit. Madhya Pradesh’s finance minister is on record saying that 20-30 per cent of the state’s commerce has shifted online.

From the e-tailers point of view, imposition of entry tax is an additional barrier and goes against the spirit of free access to market. It is a case of the honest taxpayer getting taxed twice. Taxes are imposed at the point of sale and then again when it enters a new state (entry tax). E-tailers are complaining against this double taxation which is increasing the cost of goods for the final customer.

State governments have a point when they say that e-commerce companies have impacted their tax collections. Sales tax revenue has fallen as shops in the states have either closed down or have posted lower sales. These governments want their pound of flesh in tax collection from the goods that are sold in their state without paying any taxes as well as want to protect their local industry, which in many non-producing states are these small retailers.

We can draw a parallel between the actions of the state governments with that of the centre who decided to impose high level of taxes (import duties) on steel imports. Cheap steel was destroying the domestic industry leading to closure and loss of jobs. Similarly cheap goods from e-commerce companies who have the benefit of bulk purchase and are not the manufacturers themselves, has been destroying the state’s industry, employment and government’s revenue. In order to safeguard these, the entry tax seems to be a solution, however crude it may appear.

Truecaller in talks with start-ups

In an effort to tap on the start-up system in India and open a new revenue stream, phone number identification app Truecaller is planning to get into tie-ups with e-commerce giants such as Snapdeal, Flipkart and other online players which require phone number verification on their customers and other related services.

The company also said they hope to have 200 million users in India by the end of this year. Currently, they have 120 million users in the country, which is the company’s biggest market. It has 200 million users globally.

Alan Mamedi and Nami Zarringhalam, founders of the Stockholm, a Sweden-based company founded in 2009, are in India with a number of StartUps. Last month Truecaller introduced a new software development kit (SDK) on Thursday that lets third party applications verify users via phone numbers. “We want to personlise e-commerce for the users and that is where we want to pitch in. We want the company and the customer to be connected better, starting from first contact to last-mile delivery,” said Mamedi.

TrueSDK, a software development kit is the first product from the company for the app developer community that enables third-party apps to easily on board users with their existing Truecaller profile and verified phone numbers. Developers can use the service to sign up, update user information, or verify user's phone number identity in their mobile apps through user consent.

“TrueSDK for us was the first stepping stone and the reason we built it was a lot many developers asked us on how they could use Truecaller. They asked why they have to build an infrastructure around verifying phone numbers and bear the cost of doing the same, when someone else has already done so as Truecaller is a directory of verified phone numbers,” added Mamedi. 

While Mamedi did not give out any names but sources in the company said that they have had talks with a number of companies including major e-commerce players such as Flipkart and Snapdeal to get into tie-ups with them

“We have had a series of engagements with a number of start-ups including e-commerce companies in topline category and they have shown a lot of interest in the product,” said Kari Krishnamurthy, Vice President, Growth and Partnerships, Truecaller.

How Apple and big publishers pushed e-books toward failure

Apple suffered a final defeat in its legal fight with the Justice Department over e-books Monday, when the Supreme Court refused to hear the company's appeal. When the case was filed in April 2012 it was seen as a fight over the future of the digital book industry, with Apple Inc. and the five biggest publishers aligned against Amazon.com Inc. While Apple and its allies lost in court, their vision for the industry won out. It hasn't been good for e-books. Read More.

Paytm, US firm in tech tie-up for payments bank

With a view to launching its payments bank, Paytm has tied up with US-based FIS Global, for technology, say sources close to the company. The bank may come by the second half of the next year.

Sources added the deal would be worth Rs 150 crore and the contract would span five years. FIS is a Fortune 500 company.

Paytm is a mobile payment and commerce platform owned by One97 Communications.  Founded by Vijay Shekhar Sharma, Paytm plans to turn its 120-million wallet users into account holders of its payments bank once it is launched, it is learnt.

Banks ask Supreme Court to stop Vijay Mallya leaving India

The Supreme Court on Tuesday agreed to hear a plea filed by a consortium of 17 PSU banks seeking a direction that industrialist Vijay Mallya be restrained from leaving India. The apex court will take up the matter on Wednesday. mybs.inRead More

Maruti Suzuki to launch compact SUV Brezza today

Maruti Suzuki will formally launch the Vitara Brezza on Tuesday, its first serious attempt to break into the already-competitive sport utility vehicle segment.

Designed and fully developed in India by Indian engineers, the Brezza will take on the likes of Ford EcoSport and Mahindra TUV300 (in the sub-4 meter category) as well as the Hyundai Creta and Renault Duster.