BrainBees Solutions Ltd, which operates omnichannel kidswear brand FirstCry, has filed its red herring prospectus (RHP) with the Securities and Exchange Board of India (SEBI).

As per RHP, the company’s initial public offering (IPO) will open on August 6 and close on August 8. The price band for the IPO will be announced on August 1.

The Pune-based company has reduced the size of its fresh issue by around 8% to INR 1,666 Cr from INR 1,816 Cr.

FirstCry is offering equity shares with a face value of INR 2 each, totaling up to INR 1,666 Cr, while the offer for sale (OFS) component comprises shareholders selling 5.4 Cr equity shares.

According to its RHP, FirstCry will use the net proceeds from the IPO for several key expenditures. The company plans to spend INR 108.1 Cr on setting up new modern stores under the ‘BabyHug’ brand (INR 93.9 Cr) and establishing a warehouse in India (INR 14.2 Cr).

Additionally, INR 93.1 Cr will be allocated for lease payments for existing identified modern stores owned and operated by the company in India.

Investment in the subsidiary Digital Age will total INR 299.6 Cr, with INR 169 Cr dedicated to setting up new modern stores under the FirstCry brand and other home brands, and INR 130.6 Cr for lease payments for existing identified modern stores owned and controlled by Digital Age in India.

For overseas expansion, FirstCry will invest INR 155.6 Cr in the subsidiary FirstCry Trading, which includes INR 72.6 Cr for setting up new modern stores and INR 83 Cr for establishing warehouses in KSA.

Furthermore, INR 169 Cr will be invested in the subsidiary GlobalBees Brands for acquiring an additional stake in step-down subsidiaries. The company will also allocate INR 200 Cr towards sales and marketing initiatives and INR 57.6 Cr for technology and data science costs, including cloud and server hosting-related expenses.

Lastly, funding for inorganic growth through acquisition is also planned, although a specific amount is not mentioned.

FirstCry’s initial offer size was INR 1,816 Cr, as per its draft red herring prospectus (DRHP). The Supam Maheshwari-led ecommerce unicorn first filed its DRHP in December.

Later, it refiled its DRHP after markets regulator Securities and Exchange Board of India (SEBI) claimed that the Supam Maheshwari-led startup failed to disclose certain key indicators in its draft papers filed last December.

The company reported a revenue of INR 6,481 Cr in FY24, up 15% from INR 5,633 Cr in FY23, as per filings. It narrowed its losses to INR 321 Cr in FY24, down 34% from INR 486 Cr in FY23.

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Shares of B2B marketplace IndiaMART tanked 6% during intraday trading today (July 31) to INR 2,955.45 after it reported an addition of 1,500 subscribers during June quarter (Q1) of the financial year 2024-25 (FY25).

The shares were trading at INR 2944.80 at 12:03 PM, as compared to INR 3146.55 at previous close.

During Q1, IndiaMART experienced a decline in traffic, falling to 267 Mn from 269 Mn by the end of the March quarter. This marked the third consecutive month of decreasing traffic.

However, the company posted a 37.3% rise in its consolidated net profit to INR 114 Cr in the Q1 FY25 from INR 83 Cr in the same period last year.

The company’s operating revenue grew 17.4% to INR 331.3 Cr in the quarter under review from INR 282.1 Cr in Q1 FY24.

IndiaMART’s revenue from web and related services increased at the same rate, 17.4% year-on-year (YoY), to INR 315.6 Cr in Q1 FY25, while revenue from accounting software services rose 16.3% YoY to INR 15.7 Cr.

The company said in a statement that its collections from customers grew 14% to INR 366 Cr during the quarter, which primarily comprised standalone collections of INR 341 Cr and Busy Infotech’s collections of INR 24 Cr.

IndiaMART’s total expenses increased a mere 3.5% to INR 221.9 Cr in Q1 FY25 from INR 214.4 Cr in the year-ago quarter.

Employee expenses continued to be the biggest expense head for the company, growing 15.2% to INR 143.2 Cr during the quarter under review from INR 124.3 Cr in Q1 FY24.

Earlier this year, IndiaMART acquired a 10% stake in fraud detection startup Baldor Technologies for INR 89.7 Cr (about $10.7 Mn) via a secondary transaction.

Baldor Technologies offers products and solutions for know-your-customer (KYC), background verifications, risk mitigation, digital onboarding and digital privacy under the brand name IDfy.

The post IndiaMART Shares Tank 6% After Low Subscriber Addition In June Quarter appeared first on Inc42 Media.

Open Network for Digital Commerce (ONDC) has launched interoperable QR code to empower every seller, from local artisans to neighborhood shopkeepers.

ONDC’s interoperable QR code, which is currently in its alpha phase, allows sellers to generate a unique QR code that customers can scan using an ONDC-registered buyer app, starting with magicpin and Paytm, and soon expanding across the entire network after initial testing.

“ONDC’s interoperable QR code breaks down the barriers that have held small businesses back. Now, every seller has the power to reach customers digitally, just like the ecommerce giants. It’s a massive leap towards an open, inclusive, and democratised digital marketplace,” said T Koshy, MD and CEO of ONDC.

Sellers can display their QR codes anywhere—on storefronts, products, marketing materials, or social media—allowing them to connect with customers both offline and online. Consumers can simply scan the code with any QR scanner app or ONDC Buyer Apps, such as Paytm and magicpin, to be linked directly to the seller’s online store through their preferred buyer app.

“This isn’t just a new feature; it’s a catalyst for economic growth and digital inclusion. Millions of businesses will come online, creating new opportunities and driving India’s digital economy forward,” Koshy added.

Launched in 2021, ONDC is an initiative by the Department for Promotion of Industry and Internal Trade (DPIIT), under the Ministry of Commerce & Industry. It aims to promote open networks for the exchange of goods and services over digital or electronic networks. ONDC is a Digital Public Infrastructure based on a network model, rather than an app or platform.

ONDC is an open-source platform designed to democratise ecommerce in India and bring small businesses online. As a private non-profit initiative supported by DPIIT, ONDC strives to make ecommerce more accessible across the country. Companies such as Delhivery, Paytm, PhonePe, Uber, IDFC Bank, Kotak, Shiprocket, Dunzo, and Tata Neu have integrated their services with ONDC.

Recently, the government informed the Parliament that the ONDC now has more than 5.7 Lakh sellers and service providers on the platform.

In a written reply to the Rajya Sabha, Minister of State (MoS) for Electronics and Information Technology Jitin Prasada said that ONDC has 71 seller applications, 22 buyer applications, and 16 logistics service providers and there are a total of over 5.7 Lakh sellers and service providers on the network.

The post ONDC Launches Interoperable QR Code appeared first on Inc42 Media.

EV startup ElectricPe has raised $3 Mn in its Pre-Series A funding round led by Green Frontier Capital, along with participation from all existing investors, including Blume Ventures, Micelio Fund and NB Ventures.

The startup will use the fresh funds to fuel its growth and innovation initiatives. It will also help the company to expand into new locations.

Founded in May 2021 by Avinash Sharma and Raghav Rohila, ElectricPe’s full-stack allows users to identify, access and pay for EV charging points regardless of their charging type.

In addition to the app, ElectricPe’s multi brand stores present prospective buyers with a wide range of E-2 wheelers to choose from while also offering users EV financing, servicing and subscription plans.

ElectricPe currently operates more than 25,000 public chargers. The app claims to have experienced a 30% month-on-month growth rate and has facilitated over 28 Mn green kilometers for its regular users. It also claims to have captured over 15% of the market share of all personal EV 2-wheeler sales in Bengaluru within eight months.

“We have always believed in stage-by-stage funding, and this $3 Mn investment marks the closure of our pre-series A round at $8 Mn, which began last year with $5 Mn. ElectricPe will continue to address the gaps in the sector and build ‘the defacto’ single platform to cater to all EV needs for our customers,” said Avinash Sharma, cofounder and CEO of ElectricPe.

In January last year, ElectricPe raised $5 Mn in its Pre-Series A funding round led by Green Frontier Capital, Blume Ventures, and Micelio Fund.

The development comes at the heart of India’s EV segment witnessing abuzz with the major Indian EV players like Ola Electric and Ather Energy eyeing for public listing in the coming times.

EV and clean energy startup Simple Energy has also secured $20 Mn ( over INR 167 cr) this week in its Series A funding round led by SaaS startup Klarity’s chief growth officer and existing investor Balamurugan Arumugam.

The post EV Charging Aggregator ElectricPe Nets $3 Mn From Existing Investors appeared first on Inc42 Media.

Listed gaming giant Nazara Technologies has sought approval from its shareholders for an increase in the limits to provide loans, guarantees, securities, or make investments.

The proposal includes granting loans on favourable terms and conditions to any person(s) or other corporate bodies. Additionally, it includes providing guarantees or securities in connection with loans taken by the company’s subsidiaries, associates, or other corporate bodies.

Furthermore, Nazara aims to acquire securities of various corporate bodies through subscription, purchase, or other means, in one or more tranches, up to an aggregate amount of INR 2,100 Cr.

Explaining the need for this, Nazara said it has been making investments in giving loans to its various subsidiaries, associates and other corporate bodies from time to time.

“The company has been constantly looking for opportunities in the market for acquisition/ investment in new businesses as part of its inorganic growth strategy. In order to make optimum use of funds available with the company and also to achieve long-term strategic and business objectives, the board of directors of the company proposes to make use of the same by making strategic acquisitions and investment in other bodies corporate or granting loans, giving guarantee or providing security to other body corporate as and when required,” it added.

Meanwhile, the gaming company has also sought approval from its shareholders for the acquisition of 2,614 fully paid-up equity shares, representing 24.54% of the paid-up share capital of Paper Boat Apps Private Limited, a subsidiary of the company. This acquisition will be from Anupam Dhanuka, considered a material related party transaction.

It has also sought approval for the acquisition of 2,543 fully paid-up equity shares, representing 23.88% of the paid-up share capital of its subsidiary Paper Boat Apps, from Anshu Dhanuka, classified as a material related party transaction.

It is pertinent to note that Anupam and Anshu are the cofounders and whole time directors of Paper Boat Apps.

Last week, Nazara announced that it would be acquiring an additional 48.42% stake in Paper Boat Apps. The transaction, valued at INR 300 Cr and to be paid in cash in tranches, will raise Nazara’s ownership in Paper Boat Apps to 100%.

Paper Boat Apps is the developer and publisher of children’s digital gamified learning app ‘Kiddopia’, a gaming app for kids in the US. Nazara will also consider merging Paper Boat Apps into the company at the appropriate time to bring home gamified learning IP ‘Kiddopia’.

Nazara first acquired a 50.91% stake in Paper Boat Apps in 2019.

For the last few months, Nazara has been increasing its stakes in companies in which it invested earlier. In May, it announced acquiring another 28.12% stake in Nextwave Multimedia Private Limited, the developer of the mobile cricket game franchise World Cricket Championship, for INR 21.6 Cr.

Nazara-backed NODWIN Gaming’s Singapore-based subsidiary, NODWIN Gaming International Pte. Ltd, also picked up an additional 43.49% stake in Freaks 4U Gaming GmbH for around €23.4 Mn (about INR 212.9 Cr).

Nazara’s consolidated net profit declined 98% year-on-year (YoY) to INR 18 Lakh in Q4 FY24. Its operating revenue also declined 8% YoY to INR 266.2 Cr in the quarter.

The post Nazara Seeks Shareholders’ Nod For Increasing Limit For Granting Loans appeared first on Inc42 Media.

Logistics company DTDC has partnered with drone maker Skye Air Mobility to deliver parcels via drones.

The first drone delivery covered a distance of 7.5 km from Bilaspur to Gurugram Sector 92 in just 3-4 minutes, the company said in a statement.

Following the launch in Gurugram, DTDC plans to expand its drone delivery service to other key locations across India. The next phase of this initiative will focus on identifying strategic regions where drone deliveries can offer the most significant impact, it added.

Building on its physical network of more than 16,000 channel partners, DTDC aims to further optimise the management of approximately 155 Mn parcels annually.

With this new move, DTDC wants to offer agile and hassle-free deliveries while contributing to eco-friendly logistics by reducing carbon emissions and traffic congestion.

“The partnership aims to address the evolving logistics landscape, driven by digitalisation and changing consumer behaviours, presenting us with an opportunity to redefine last-mile logistics in this country,” said Abhishek Chakraborty, chief executive officer of DTDC Express Ltd.

DTDC’s key rival Blue Dart also started drone deliveries last month in partnership with Skye Air. Back then, the company said it will initially focus on ecommerce deliveries and will deploy drones to offer last-mile services, although it did not specify the cities where the service will be operational.

In May, listed logistics unicorn Delhivery announced that it would set up a wholly-owned subsidiary, Delhivery Robotics India, to manufacture drones and provide freight air transportation services. Late last year, Shiprocket also partnered with Skye Air for drone deliveries around Gurugram.

As per an Inc42 report, the Indian drone market is expected to reach a size of $13 Bn by 2030, growing at a CAGR of 21% between 2022 and 2030. Two drone startups – DroneAcharya and ideaForge – also went public in the last couple of years.

The post DTDC Partners Skye Air Mobility For Drone Delivery Of Parcels appeared first on Inc42 Media.

Shares of Go Digit General Insurance rallied over 8% to touch INR 374.05 apiece after opening on the BSE on Monday (July 29).

However, the shares shed some of the gain later in the day. GoDigit shares were trading at INR 351.10 at 12:42 PM, as compared to INR 345.45 at previous close.

This comes after the unicorn reported robust financial performance last week for the first quarter of the financial year 2024-25 (Q1 FY25).

Go Digit General Insurance’s profit after tax (PAT) went up 74% to INR 101 Cr in the June quarter (Q1) of the fiscal year 2024-25 (FY25) from INR 58 Cr in the year-ago quarter.

On similar lines, Go Digit’s total gross written premium (GWP) jumped 22.2% year-on-year to INR 2,660 Cr in the quarter ended June 2024. The insurtech startup clocked a GWP of INR 2,178 Cr in Q1 FY24.

The surge came largely on the back of growth in third-party motor, health, travel, and personal accident premiums.

Go Digit’s net earned premium rose to INR 1,824 Cr during the period under review from INR 1,475 Cr in the year-ago quarter.

The insurtech startup’s total income, including net earned premium, income from investments, and other income, jumped more than 24% YoY to INR 2,076 Cr during the period under review.

Founded in 2017 by Kamesh Goyal, Go Digit leverages technology to offer insurance policies across verticals such as health, motor vehicle, travel, and property. The startup is backed by the likes of Fairfax, Peak XV Partners, A91 Partners, among others.

The insurtech startup made a muted debut on the bourses earlier this year, with its shares listing at a premium of 5% to the issue price on the NSE.

Earlier this year, the Insurance Regulatory and Development Authority of India (IRDAI) has imposed a penalty of INR 1 Cr on IPO-bound Go Digit General Insurance for non-disclosure of a change in the conversion ratio of compulsorily convertible preference shares (CCPS).

The post Go Digit Shares Jump 8% In Morning Trade appeared first on Inc42 Media.

The Union Budget 2024-25 has introduced a host of new measures aimed at bolstering the growth of micro, small, and medium enterprises (MSMEs). Among these, the credit guarantee scheme for MSMEs has brought another ray of hope for much-needed financial support.

Finance minister Nirmala Sitharaman also announced plans to establish ecommerce export hubs in a public-private partnership (PPP) model to empower MSMEs and traditional artisans to sell their products in international markets.

These hubs will operate under a seamless regulatory and logistic framework, offering a comprehensive range of trade and export-related services under one roof, significantly enhancing the ease of doing business for small and medium enterprises, the FM said.

Despite MSME-related products accounting for 45.73% of India’s total exports in FY24, industry experts believe that the true potential of this sector remains untapped.

Historically, documentation and cumbersome compliance requirements have imposed substantial costs on small to medium sellers, creating barriers to enter into the ecommerce export market.

Will this change with the Union Budget 2024?

Compliance: Key Challenge For MSME Cross-Border Trade

One of the major challenges that hindered MSMEs selling outside India is the lack of understanding of foreign regulations and their inability to adhere to the intricate compliance standards required for international trade.

According to Tanmay Kumar, chief financial officer of logistics unicorn Shiprocket, managing and delivering orders to global markets affordably is a significant hurdle. Besides this, there are intricacies such as documentation, certifications, customs procedures, and adherence to different countries’ import-export policies.

Plus, international shipping can be expensive, and MSMEs may not have the same negotiating power as larger enterprises to secure better rates and services from logistics providers.

Many MSMEs lack the resources to conduct thorough market research to identify demand trends and potential markets for their products. This limits their ability to strategically position their products in the global marketplace. Dealing with multiple currencies and ensuring secure and timely payments can also be challenging, Kumar added.

The government’s Export Data Processing and Monitoring System (EDPMS) regulates the inflow and outflow of foreign currency, affecting export incentives and compliance.

Simplifying the regulatory maze is one big step towards enabling MSMEs to tap the global opportunity.

Besides compliance, MSMEs face challenges such as limited awareness of demand in different countries and unfamiliarity with international legal requirements, said Nishith Maheshwari, head of digital business loans at NBFC giant InCred.

Many MSMEs lack the resources to conduct thorough market research to identify demand trends and potential markets for their products. This limits their ability to strategically position their products in the global marketplace, added Shiprocket CFO Kumar

In addition, managing and delivering orders to global markets affordably is another significant hurdle. International shipping can be expensive, and MSMEs may not have the same negotiating power as larger enterprises to secure better rates and services from logistics providers, he added.

What Role Will Ecommerce Export Hubs Play?

The ecommerce export hubs, which the government has been working on for some time, could be the answer to many of these problems. It aims to simplify the compliance process and address existing issues through technology.

As per earlier reports, the regulatory framework to enable the setting up and functioning of ecommerce export hubs will be ready by September.

“The ecommerce export hubs should aim to provide market intelligence and customer preference insights, offering market research tools, simplifying documentation and regulatory processes, and facilitating access to trade finance,” Maheshwari said.

Shiprocket’s Kumar echoed the same saying that the hubs can offer access to critical market intelligence, helping MSMEs understand the export potential of their products and identify key demand markets. The insights will enable MSMEs to plan their entry into international markets more effectively.

Many of those we spoke to believe the export hubs can provide integrated financial services, including secure payment gateways and currency management tools, mitigating the risks associated with international transactions.

While the budget did not directly address this point, Shopclues MD Anuraag Gambhir pointed out that there is a significant need for skill-building and capacity-building as well. This would help MSMEs establish an online presence and then expand to international markets using the export hubs.

The Primary Challenge: Access To Capital

While the ecommerce hub will open new opportunities for MSMEs, the basic challenge remains access to capital. For a long time, this has been the main bottleneck for MSMEs. This is down to their limited ability to expand due to a lack of viable financing options or the requirement for collateral and guarantees.

The government’s proposed initiatives for MSMEs with regards to credit can help address this issue. For context, the finance minister announced a credit guarantee scheme for the MSME during her budget speech. The scheme will help in facilitating term loans to MSMEs for the purchase of machinery and equipment without collateral or third-party guarantee.

Moreover, Small Industries Development Bank of India (SIDBI) will open new branches to expand its reach to serve all major MSME clusters within three years and provide direct credit to them.

The new credit guarantee scheme, with a corpus of INR 100 Cr, is expected to enhance capital expenditure within MSMEs, particularly for machinery and equipment financing, Shachindra Nath, founder and managing director, UGRO Capital said.

He added that the value of machinery in many industries, such as CNC printers or plastic moulding machines, is often not well assessed. By providing a credit guarantee, this scheme aims to improve capital expenditure and support MSMEs in acquiring essential equipment.

As per Nath, another important aspect of the new scheme is its potential to improve partnerships between NBFCs and banks. The government has proposed that MSME credit from public sector banks should no longer rely solely on external assessments but also consider their digital footprint.

“This means banks will use data such as GST information and account aggregation data to assess creditworthiness. This shift is expected to encourage collaboration between public sector banks and NBFCs, leveraging digital data for more accurate lending decisions,” he added.

In addition, the term loans to MSMEs for purchase of machinery and equipment without collateral or third-party guarantee can boost the overall manufacturing potential of India as well. In India, the manufacturing sector has faced challenges, particularly with ecommerce companies importing products from China due to gaps in local manufacturing capabilities, as pointed out by Sunil Jhunjhulwala, cofounder of activewear maker Technosport.

Unlike other sectors, manufacturing often relies heavily on debt financing, which typically requires collateral. “The government’s initiative to guarantee manufacturing debt and review collateral requirements is expected to significantly enhance capital availability for the sector. This support could enable more investment in manufacturing, addressing the current reliance on debt and helping to boost domestic production,” he added.

The Indian MSME sector, which contributes approximately 30% to India’s GDP and accounts for nearly 45.73% of the country’s total exports, represents a significant and underutilised economic force. With over 63 mn MSMEs estimated to be operating in India across diverse industries, the sector holds immense potential for driving economic growth, job creation, and innovation.

By addressing fundamental barriers to capital access and simplifying the export process, it remains to be seen whether the Budget 2024’s measures can finally unlock the latent economic power long believed to be held in the MSME sector.

The post Beyond Borders: Budget 2024 Looks To Uplift MSME Exports, Financing appeared first on Inc42 Media.

To promote investment and foster employment, finance minister Nirmala Sitharaman proposed cutting corporate tax rate on foreign companies to 35%.

“To attract foreign capital for our development needs, I propose to reduce the corporate tax rate on foreign companies from 40 to 35%,” Sitharaman said while presenting the Union Budget 2024-25 (FY25).

In addition to the corporate tax rate, the government has also proposed easing norms for foreign direct investment (FDI).

“FDI and overseas investment rules will be simplified to facilitate foreign direct investment, nudge prioritisation, and promote opportunities for using Indian rupee as a currency for overseas investment,” FM said during her budget speech.

Interestingly, the government has also proposed to abolish the angel tax for all classes of investors to boost the startup ecosystem and entrepreneurship in India.

The post Budget 2024: Corporate Tax Rate For Foreign Companies Cut To 35% appeared first on Inc42 Media.

Finance minister Nirmala Sitharaman on July 23 9 (Tuesday) announced plans to establish ecommerce export hubs in a public-private partnership (PPP) model to empower MSMEs and traditional artisans to sell their products in international markets.

These hubs will operate under a seamless regulatory and logistic framework, offering a comprehensive range of trade and export-related services under one roof, significantly enhancing the ease of doing business for small and medium enterprises (SMEs), the FM said while presenting the Union Budget for the financial year 2024-25.

The FM added that the government will facilitate setting up of 100 food quality and safety testing labs with National Accreditation Board for Testing and Calibration Laboratories (NABL).

She also announced a credit guarantee scheme for MSMEs in the manufacturing sector. The government will provide MSMEs in the manufacturing sector with a guarantee cover of up to INR 100 Cr.

It will allow MSMEs to secure loans without providing collateral or a third-party guarantee. Additionally, term loans will be made available to facilitate the purchase of machinery, further supporting the growth and operational efficiency of SMEs.

The post Union Budget 2024-25: Centre To Establish Ecommerce Export Hubs In PPP Model To Spur MSME Growth In Global Market appeared first on Inc42 Media.

As part of its efforts to bolster employment and enhance skills, finance minister Nirmala Sitharaman allotted INR 1.48 Lakh Cr for education, employment, and skilling initiatives in the Union Budget 2024-25 (FY25).

“We particularly focus on employment, skilling MSMEs, and supporting the middle class. I’m happy to announce the Prime Minister’s package of five schemes and initiatives to facilitate employment, skilling, and other opportunities for 4.1 Cr youth over a five-year period,” Sitharaman said while presenting the Budget.

This focus on education and skilling can give a boost to the country’s edtech sector , which is plagued by several challenges.

FM also said that employment and skilling are among the nine priorities of the government.

The post Union Budget 2024-25: Edtech Sector Gets Boost As Govt Earmarks INR 1.48 Lakh Cr For Education, Skilling appeared first on Inc42 Media.

The Competition Commission of India (CCI) has intensified its scrutiny of the $8.5 Bn merger between Reliance Industries and Walt Disney’s India media assets, reportedly asking the companies nearly 100 questions, including specifics on sports rights.

In a confidential submission to the antitrust body in May, Reliance and Disney said that their merger would not harm competition. The companies argued that the cricket rights, which will expire in 2027 and 2028, will open up opportunities for rival bidders. They also highlighted that advertisers would still be able to target cricket audiences effectively.

The CCI has now sought further details through two sets of questions, including why YouTube, which primarily features free, user-generated content, should be considered in the same market as subscription streaming services like Netflix and Disney, news agency Reuters reported.

In response, Reliance and Disney have argued that YouTube also offers licenced, paid content and boasts a wide reach.

The CCI has also inquired about the ownership and duration of sports rights held by the companies, as well as details on previous bidders for these rights.

However, the report added that the CCI is not currently raising concerns about the rights but is gathering information.

Earlier this year, RIL and Viacom 18 and The Walt Disney Company announced the signing of binding agreements to set up a joint venture that would combine the businesses of Viacom18 and Star India Private Limited.

The merged entity will have over 100 TV channels and two leading over-the-top platforms – Disney+ Hotstar and JioCinema. It will exclusively hold the rights to distribute Disney’s content in India, in addition to Reliance and Viacom18-owned sports content. Additionally, RIL said it would invest INR 11,500 Cr in the JV to fuel its growth.

Experts told Inc42 earlier that the merged entity will have the content to cater to all segments of viewers and grab a big market share in the Indian media and entertainment space. Besides, it is also set to disrupt the country’s OTT landscape.

In its financial report for the second quarter of 2024, US based entertainment major Walt Disney said it incurred over $2 Bn charges due to goodwill impairments related to Star India and entertainment linear networks in India.

The company said that the dent could be attributed to entering a binding agreement with Reliance Industries Limited in the quarter to contribute Star India’s operations in a new joint venture.

The post CCI Intensifies Scrutiny Of Reliance-Disney Merger With Nearly 100 Questions appeared first on Inc42 Media.

Until two years ago, AI was not a prominent topic of discussion at the government level. However, with increasing conversations about generative AI and machine learning, it is now gaining prominence alongside sectors like semiconductor manufacturing, spacetech, and other emerging industries. As Finance Minister Nirmala Sitharaman prepares to present the full Union Budget 2024 on Tuesday (July 23), industry stakeholders expect more clarity from the government.

A month after the last interim budget, the cabinet announced the India AI Mission, a fund of funds. Developments since then have indicated that a large share of this allocation will focus on infrastructure such as GPUs.

For context, in March, the Union Cabinet approved an outlay of INR 10,372 Cr for five years for the India AI Mission, aiming to foster innovation in the sector through public-private partnerships (PPPs). The Centre has earmarked INR 4,500 Cr for AI computing infrastructure, equipped with GPUs.

“Now, of course, that was a high-level announcement, but something more concrete is expected. I don’t think it will come in the budget speech itself, but at least in the budget details. When they come out with the fine print, we need to see what this means for the segment and when it will be executed,”Ashwin Raguraman, cofounder of Bharat Innovation Fund, said.

Industry stakeholders are expecting a follow-up conversation or an update on the implementation and the next steps, he added. ”Is there anything else they are planning, such as the subsidisation of hardware infrastructure for startups? These are all areas that could be discussed further,” he added.

This sentiment was echoed across the board when Inc42 spoke to AI startup founders and investors. As infrastructure remains the most challenging hurdle for the AI industry in India, all of them are seeking more concrete announcements and policies in this regard.

Cutting Costs And Tackling Infrastructure Hurdles

The biggest challenge in a startup is the substantial upfront cost required for training and fine-tuning machine learning models. These models need significant computation power—CPU, GPU, and other resources.

If the government could offer support, such as subsidising these costs for entrepreneurs or founders for the first three years, it would make a huge difference, Aman Goel, cofounder and CEO of GreyLabs AI, told us.

For example, if import duties on GPUs or related hardware were waived or reduced, or if GST components were lowered, it would significantly decrease the cost of entry. This would encourage more entrepreneurs to enter the space, speed up innovation, and make customers more willing to experiment with new technologies, the GreyLabs CEO added.

“The government is already implementing some public infrastructure initiatives, like AI models for India. If they could offer these resources at an affordable rate, it would be incredibly beneficial for startups like ours,” he added.

India’s ambitious plan to build 10,000 GPUs might seem impressive, but in the context of the global AI race, it’s not a large figure, a policymaker said. When OpenAI developed GPT-4: it took approximately 25,000 GPUs running for three months to train a model with a trillion parameters.

“In a country where startups often struggle with limited access to capital, relying on just 10,000 GPUs may fall short of fostering a thriving indigenous AI ecosystem,” he said. However, he also mentioned that even 10,000 GPUs would be a big step to begin with, especially when very few startups in India are building foundational models.

Beyond Financial Support: Acceleration And Collaboration

Besides looking at a boost for the AI infrastructure, the AI startups also want to engage with the government at a bigger level, and increase collaboration with government agencies.

“AI startups also need customers, especially in the B2B sector. However, reaching out to large companies, government can be challenging. While organisations like NASSCOM assist with this, more collaboration opportunities and support mechanisms could further enhance the connection between startups and large enterprises,” Raga AI’s Agarwal said.

In addition, industry stakeholders believe that increasing the number of incubators could significantly benefit AI startups. To explain this need, IvyCap’s Guta said that there are approximately 30,000 accelerators globally, while India has only about 800 to 815, which accounts around 2.7% of the global total. This is despite India being one of the largest startup ecosystems in the world, with over 1.4 Lakh startups.

Bharat Innovation’s Raguraman also acknowledged the need for more accelerators but added that support must extend beyond the pre-seed stage. While incubators are vital for nurturing seed-stage and pre-seed startups, the government should also focus on policies that advance startups beyond these initial phases.

“It’s important to not only create a robust pipeline of early-stage startups but also to provide substantial support for those that are more mature or on the path to maturity. This could involve creating policies and programs that work in conjunction with incubators, investment funds, and infrastructure providers such as data centers,’ he said.

The government should use existing incubators and create strategies to help startups move from early stages to growth levels. While private venture capital is important, the government also needs to play a strategic role in supporting startups throughout their development, according to him.

Should AI Be Up For Tax Benefits?

“One area where support would be immensely beneficial is tax benefits. Early stage startups often face significant challenges in generating revenue and raising capital in the initial years. By offering tax incentives to AI startups, the government could alleviate some of this financial pressure,” Gaurav Agarwal, founder of Raga AI, said.

On the other hand, Vikram Gupta, founder and managing partner of IvyCap Ventures, thinks both the government and other stakeholders should focus on developing accelerators, angel networks, and seed-stage capital to support early-stage startups. This support can only be effective if accompanied by tax incentives, he added.

For example, in the UK, individual investors can deduct their investments in startups from their taxable income, recognising these investments as contributions to economic growth and job creation. However, India currently lacks such incentives, according to Gupta.

“Additionally, there should be parity in the treatment of long-term capital gains between public and private markets. In India, private investments are treated as a high-risk asset class with long-term capital gains taxed at 40% after two years, compared to just 10% for public markets after one year. This discrepancy discourages investors from putting their money into startups, as they prefer the lower risk and better tax treatment of public markets,” Gupta said.

To attract more investors, there is a need to offer extra incentives for investing in this asset class and remove obstacles such as unclear angel tax regulations, which have been a concern for over five years. Making these changes would make it easier and more appealing for individuals to bet on startups, which will eventually help emerging sectors like AI.

Most importantly, all of this requires a stable AI policy. Industry stakeholders emphasised the urgent need for clear and consistent AI regulations so that startups can align with them and focus on developing new products. However, it is crucial that the government ensures these policies do not stifle innovation, as has occurred in other emerging areas such as crypto in the past.

The post Union Budget 2024-25: AI Startups Seek Infra Boost, Govt Collaboration Opportunities appeared first on Inc42 Media.

The Indian government’s ban on Chinese apps and products in 2020 saw two massive casualties. Everyone knows about TikTok, but fast fashion brand Shein was equally as big in India four years ago.

But the India setback did not halt Shein’s global momentum, just as it did not stop TikTok from becoming what it is today. Shein became the world’s largest online-only fashion company in 2022.

Valued at a staggering $10 Bn, the brand accounted for nearly one-fifth of the global fast-fashion market in 2022, outpacing giants such as Zara and H&M. To put things in context, Shein was founded in 2008, whereas Zara was incorporated in 1975 and H&M in 1947.

In India, Shein set the market on fire. Launched in India in 2018, the brand was already a major player by 2020, dominating online searches and influencer-led content. But the ban in 2020 meant all that came to a halt.

The Indian government’s ban stemmed from fears of Shein’s Chinese parent company storing or transferring data of Indian customers to China. While the ban itself came under a tense geopolitical climate, one could say that Shein’s exit left a gap in India’s fashion market which D2C brands quickly filled.

Brands such as Urbanic, Twenty Dresses, Cilory, attempted to fill the void but couldn’t quite match Shein’s popularity. Indeed, VCs also backed fast fashion and casual wear startups such as The Souled Store, Virgio, NewMe and others which looked to replicate the Shein formula.

Ecommerce unicorn Meesho has also looked to fill the gap with affordable fashion and a similar content-led sales strategy that worked wonders for Shein.

While many of these brands have grown in scale over the past four years, none of them — at least so far — have quite replicated the magic of Shein and how quickly it disrupted the market.

And that’s arguably why Shein’s re-entry into India through a partnership with Reliance Retail is a big deal.

Shein joins the Mukesh Ambani-led conglomerate’s exclusive portfolio of over 50 brands, including Silk Feet, Jivers, Xlerate, Feet Up, Dhuni by Avaasa, Riva, John Player Select, Kidlyboo, and Altair. Besides this, Reliance Retail has similar deals with designer labels such as Kenzo, Y3, Marc Jacobs, ​​Coach, Steve Madden, Kate Spade, among others.

It’s clear why Shein has looked to re-enter India, where the fast fashion industry is projected to reach a size of $30 Bn by FY23, as per a Redseer report. The overall fashion segment grew at a modest 6% YoY in FY24, whereas the fast fashion subsegment surged by up to 40% in the same period. Now, Shein is back to grab a large chunk of the market once again, though there’s definitely a lot different about this Shein.

Reliance Punches Shein’s Ticket To India

The first thing that we need to note is that Shein is not back as a standalone entity, but its products will be available on Reliance Retail’s apps and physical stores. Shein is not operating business in India — Reliance is said to be bringing in former Meta director Manish Chopra to lead the brand.

Shein’s parent entity will receive a licence fee as a share of profits generated solely within India. The operations will be managed by a company wholly owned by Reliance Retail. Crucially, all data and the app itself will be hosted and stored within India, ensuring that Shein has no access to or control over this data.

These are some of the key factors behind Shein’s comeback to India being approved by the government nearly one year ago.

Reliance Retail is set to launch the Chinese fast-fashion label Shein within the coming weeks. Further, to diversify its supply chain and promote domestic industries, Shein reportedly will be sourcing goods from India for its global operation in the Middle East and other markets.

More than anything else, fast fashion brands and indeed other some of the more premium brands need to worry about the Reliance factor. Shein’s brand name and Reliance’s massive resource base are a deadly combo.

Reliance Retail’s fashion ecommerce app Ajio directly competes with Myntra, Nykaa Fashion, Meesho, Amazon India, Flipkart, Tata Cliq, and other platforms. From a distribution point of view, Ajio will be the exclusive storefront for Shein, and exclusivity is a big deal in fashion ecommerce.

Ajio commands around 30% market share based on monthly active users (MAUs), data sourced from AllianceBernstein shows.

Flipkart Group’s Myntra maintains the highest market share in terms of active users, surpassing 50%. However, the report notes a decrease in transaction frequency, with Myntra’s GMV growing only 12% in FY23 compared to 35% in FY22.

“Shein’s re-entry may have a somewhat negative impact on Nykaa Fashion, as Nykaa primarily targets the premium fashion segment. In contrast, Myntra caters to both the mass and premium fashion markets and already has strong brand recognition in the fashion industry. Therefore, the impact on Myntra might be mild, whereas Nykaa Fashion could feel more significant effects,” Karan Taurani, SVP, at Elara Capital said.

He added that Shein is part of a broader strategy by Reliance Retail to expand its portfolio of brands. In that sense, Shein is just another addition to its portfolio.

A Myntra executive admitted to Inc42 that Ajio has an edge when it comes to exclusivity, but added that Myntra has also introduced Gen Z-focussed features which are gaining fast traction. Myntra’s focus on in-house brands or private labels is paying off, however, at the same time, the company is also looking to snap up more exclusive brand partnerships.

Should D2C Brands Worry?

One thing that Ajio cannot afford to do is give Shein more prominence. Fashion ecommerce marketplaces are quick to see gaps in terms of sales of particular brands and look to woo them to their side. In this regard, Shein will be competing with a number of D2C brands as well as international labels in fast fashion.

As per Inc42 data, between 2018 and 2023, D2C fashion brands captured almost 93% of the total funding raised in the Indian fashion ecommerce space.

The Myntra executive quoted above believes that Shein will definitely disrupt D2C fashion brands in India as many of them target the Gen Z audience, but they are also looking to protect margins and break into the premium segment.

The D2C landscape in fashion includes the likes of Andamen, House Of Rare, Bombay Shirt Company, Snitch, Damensch, The Souled Store among others. And there are houses of brands such as Mensa Brands, TMRW and others which combined have dozens of brands across categories in fashion. It’s not easy to stand out, and Shein will have to fight for its space on the aisles.

Most of these brands are looking to widen their net margins by adding premium products. Premiumisation is a major thesis among Indian D2C brands right now as they realise many of them are targeting a very limited cream of the market.

On the other hand, Shein has built its reputation on affordability. So is Shein actually directly competing with these players? Market experts believe that Shein is not successful just because of its pricing, but its use of data.

“Brands with the right product and high-quality service should attract customers who are not price-sensitive. A price-oriented brand is not a major threat; the real risk is if your product fails to keep up with market trends. Fashion-driven brands could take your business away if your product quality and service do not meet customer expectations. However, if your product is trendy, the quality is high, and your service is good, you should be safe in retaining customers who are not focused on price,” Devangshu Dutta, founder and CEO of Third Eyesight, said.

Those in the industry do believe that one brand cannot conquer the fashion market. That simply does not happen with the fashion industry, which is why there is so much depth in the market. Shein’s success will lead to the emergence of more D2C brands that look to mimic the data-led, trend-first model.

“The potential of the Indian market is evident, and it’s becoming increasingly exciting. This means that many companies will emerge in this category to serve this customer base. It validates the hypothesis we had two and a half years ago: the Indian consumer is evolving, and fashion should evolve along with them. From that perspective, Shein’s entry justifies and validates our hypothesis,” the founder of a Bengaluru-based GenZ-focussed fashion brand said.

Good brands always emerge from intense competitive churn, and Indian brands have the potential to go global if they hit it big. “Competing against Shein and building a successful business will open new opportunities for us and strengthen our execution and agility,” the founded quoted above added.

Is Shein Ready For Second Innings?

Now, coming back to Shein, it remains to be seen if it will be able to gain popularity like its first stint in India. One must remember that Shein tried to make a comeback in India in 2021 after the government’s ban through ecommerce giant Amazon, but the brand supposedly did not get much traction.

“I think the case of visibility is different when comparing Amazon and Reliance Retail. Through Reliance Retail, the visibility could be much higher compared to Amazon because Reliance Retail already has a very wide portfolio of fashion brands, including more than 25-30 luxury brands across various categories. It’s all about creating visibility, generating buzz, and going to market together in terms of marketing efforts. Reliance has a very strong omnichannel presence, both online and offline,” Elara Capital’s Taurani said.

While Amazon is, of course, a large ecommerce phenomenon, the platform is not a primary port-of-call for online fashion shoppers. This is why Shein could potentially perform better with Reliance Retail.

“We have to wait and see how Shein performs in India. We will need to observe how this unfolds to comment on its visibility and performance, both online and offline. In marketplaces, brands compete daily, and Shein’s strength has always been its designs. We’ll have to closely watch how Reliance leverages this strength,” an industry analyst said.

The post How Shein-Reliance Nexus Will Shake Up India’s Online Fashion Market appeared first on Inc42 Media.

Nazara Technologies Limited has picked up an additional 48.42% stake in Paper Boat Apps Pvt Ltd (PBA) from its promoters Anupam and Anshu Dhanuka.

The transaction, valued at INR 300 Cr and to be paid in cash in tranches, will raise Nazara’s ownership in PBA to 100%, the company said in a filing.

Paper Boat Apps is the developer and publisher of children’s digital gamified learning app ‘Kiddopia’, a gaming app for kids in the US. Nazara will also consider merging Paper Boat Apps into the company at the appropriate time to bring home gamified learning IP ‘Kiddopia’, it said.

This step will allow Nazara to benefit from healthy cash flows that can be reinvested for organic as well as inorganic growth, it added further.

Back in 2019, Nazara acquired a 50.91% stake in Paper Boat Apps.

Paper Boat Apps posted a consolidated revenue of INR 219.4 Cr and an EBITDA of INR 56.1 Cr in FY24, as of March 2024, Nazara claimed.

“At Nazara, we believe an IP such as Kiddopia has immense potential that can be unlocked through several new initiatives and acquiring full ownership underscores our commitment to intensifying our efforts in the gamified learning sector,” Nitish Mittersain, CEO and joint managing director of Nazara Technologies, said.

For the last couple of months, Nazara and its subsidiaries are increasing stakes in earlier investments. In May, Nazara announced acquiring another 28.12% stake in Nextwave Multimedia Private Limited, the developers of the mobile cricket game franchise World Cricket Championship, for INR 21.6 Cr.

The fresh acquisition of a 100% stake in Nextwave will help Nazara in strengthening its portfolio of offerings in the virtual interactive sports genre in India and other emerging markets, the gaming and entertainment giant said.

Nazara Technologies-backed NODWIN Gaming’s Singapore-based subsidiary, NODWIN Gaming International Pte. Ltd, also picked up an additional 43.49% stake in Freaks 4U Gaming GmbH for around €23.4 Mn (~ INR 212.9 Cr).

Meanwhile, Nazara’s consolidated net profit declined 98% year-on-year (YoY) to INR 18 Lakh in Q4 FY24. Its operating revenue also declined 8% YoY to INR 266.2 Cr in the quarter.

The post Nazara Buys Paper Boat Apps For INR 300 Cr To Boost Kiddopia’s Global Expansion appeared first on Inc42 Media.

The Supreme Court has adjourned till July 31 pleas challenging retrospective goods and services tax notices to online gaming and casino firms.

During the session, the court ordered the segregation of some anti-profiteering matters that were mistakenly included with the gaming cases, a source told Inc42.

Moreover, the court has also directed the petitioners to jot down notes to get a clarity of arguments, a lawyer present at the hearing said.

The government had submitted a comprehensive counter-affidavit on the gaming issue only recently, on Monday. The petitioners requested additional time to respond, which the court granted, allowing them until July 31, 2024, to file their rejoinders.

Additionally, any petitioner from cases transferred from various High Courts can submit their written statements by the same date. Both sides’ lead counsels were also given until July 31, 2024, to finalise their common compilations.

As of December, real-money gaming companies had received 71 show-cause notices for alleged GST evasion amounting to INR 1.12 Lakh Cr in 2022-23 and the first seven months of 2023-24, excluding interest and penalties.

On Wednesday, gaming major Nazara Technologies subsidiaries, Openplay Technologies Pvt Ltd and Halaplay Technologies Pvt Ltd, received substantial tax notices from the Director General of GST Intelligence, Kolkata.

Openplay Technologies was served a show cause notice under Section 74(1) of the CGST Act, 2017, and the State SGST Act, 2017, with a proposed liability amounting to INR 845.72 Cr for the period from 2017-18 to 2022-23, Nazara said in an exchange filing.

Last year, the GST Council decided to impose a 28% GST on online real-money gaming on the full face value of the bets. Several online gaming startups, including Gameskraft, Delta Corp and others received notices to pay INR 1.12 Lakh Cr GST, following which many have moved courts challenging the tax notices.

More than 50% of online gaming companies in India witnessed stagnant or declining revenues after the government imposed 28% GST, a recent report released jointly by EY and US-India Strategic Partnership Forum (USISPF) said, based on the latter’s survey of 12 such companies.

The post SC Adjourns Pleas Challenging Retrospective GST Notices To RMG Firms Till July 31 appeared first on Inc42 Media.

The government will reportedly meet tech executives, startups and industry bodies this week to discuss verifying children’s ages and getting parental consent under the Digital Personal Data Protection Act 2023.

According to a senior government official, most earlier solutions like using Aadhaar, Digi-Locker, or a one-time electronic token to verify children’s ages and confirm their relationship with the consenting guardian have been deemed “unfeasible”, ET reported.

With Aadhaar, the primary issue is establishing the relationship between a child and the parent. In several cases, the data is not updated to reflect the latest changes, such as address updates or the passing away of a parent, the official added.

Proposals such as the use of Digi-Locker or a one-time electronic token do not work well with the fast-paced technological changes, especially when it comes to age verification on social media and personal communication platforms, another official was quoted as saying in the report.

The DPDP Act defines users below the age of 18 as children and mandates that social media or internet intermediaries, known as data fiduciaries, must not process any data of any child without explicit parental consent.

It was reported earlier that social media platforms are exploring methods like QR codes, virtual Aadhaar IDs, or age verification at the app store level to comply with the DPDP Act of 2023.

The provision faced resistance from industry executives concerned about the privacy implications of the tools used to establish children’s age and parental connection.

Last year in November, in response to incidents of children encountering online predators on social media, the government reportedly devised a strategy. This aimed to offer social media and internet intermediaries multiple options to enforce age-gating and effectively manage parental consent.

The DPDP Act became law after being passed in the Lok Sabha and in the Rajya Sabha last year. President Droupadi Murmu gave her consent to the Bill on August 11, 2023.

The DPDP Bill directs setting up a Data Protection Board of India to ensure its implementation. In case of any personal data breach, the board will be responsible for looking into the matter, inquiring into the breach, and imposing penalties.

The post Govt To Meet Industry Stakeholders Over Children Age Verification Under DPDP Act appeared first on Inc42 Media.

GenZ-focussed fashion startup Newme has raised $18 Mn in its Series A funding round led by venture capital firm Accel. The round also saw participation from existing investors including Fireside Ventures and AUM Ventures.

The Bengaluru-based startup plans to utilise the funds primarily on three areas — bolstering its supply chain, investing in data science and technology, and offline expansion, Newme cofounder and CEO Sumit Jasoria told Inc42.

“Innovation in the supply chain is critical for our business… Another crucial area is technology and data science, where we aim to deepen our expertise and attract more talent,” Jasoria said.

The startup will also use a part of the freshly raised capital for talent acquisition, he added.

Launched in 2022 by Jasoria, along with Vinod Naik, Shivam Tripathi, and Himanshu Chaudhary, Newme sells women apparel. The startup claims to launch 500 fresh designs every week and have nearly 9,000+ styles live on the website targeting Gen-Z female shoppers.

Currently, Newme has six retail stores across five cities – Bengaluru, Hyderabad, Indore, Mumbai and Chandigarh. It plans to launch its seventh store soon in Dehradun. By March 2025, the startup plans to have 15 stores across Mumbai, Pune, Delhi NCR, and Bengaluru.

“We are seeing tremendous growth and customer enthusiasm for our offline business. Our stores are performing exceptionally well, and we are one of the few brands in India securing ground store locations in malls. This demonstrates the traction we’re gaining with our customers. Looking at the long-term business prospects, we’re very excited about our journey in offline expansion, and we believe it will only get stronger from here,” Jasoria said.

Meanwhile, Newme app and website together boast 35-40 lakh registered users. Currently, the startup nearly 40-50% of its orders from metros and Tier-I cities, with Bengaluru and Hyderabad contributing a significant share. Tier-I & II cities together account for about 75% of its demand, while the remaining 25% comes from other cities.

Jasoria said that the startup grew almost 7X in 2023 and is on track for 4X-5X growth in the ongoing year. He added that the focus continues to be on increasing its market share.

The funding round comes almost six months after the fashion brand raised $5.4 Mn in seed funding from Fireside Ventures, AUM Ventures, 2AM Ventures and All In Capital.

The startup competes in the highly competitive and crowded GenZ-focussed fast fashion market. While prominent fashion brands like Myntra and Ajio have introduced GenZ-focussed offerings on their platforms, global fast fashion giant is also set to re-enter India in partnership with Reliance Retail.

Commenting on the competition, the founder said that Newme’s supply chain is its biggest strength. “We are, perhaps, the only brand today that launches 500 new designs on a weekly basis. No other brand does this, and it’s a unique advantage that is difficult to replicate due to the complexities of building such an efficient supply chain,” Jasoria said.

According to an Inc42 report, India’s fashion ecommerce sector is set to grow at a CAGR of 25% to reach a size of $112 Bn by 2030. Within this market, the women’s apparel and accessories segment is expected to lead, capturing a substantial 50% market share by 2030.

The post Exclusive: Fashion Startup Newme Raises $18 Mn In Series A Led By Accel appeared first on Inc42 Media.

“It’s not the end of the world, as we thought a few months ago,” a top executive of an online gaming company said following the meeting of the GST Council last month.

Reeling under the impact of the 28% GST regime, the online gaming industry saw a glimmer of hope after the GST Council meeting. While the Council didn’t review the contentious 28% GST imposed on the industry, it recommended the insertion of Section 11A in CGST Act to address the problem of retrospective taxation.

Section 11A gives the power to the GST Council to overrule retrospective tax demands in cases where lower rates were initially paid due to industry-wide trade practices rather than isolated instances. The gaming industry is hoping that this can address its woes.

But before we delve into this, let’s take a look at the current state of the online gaming industry. The sector has been under significant strain due to the imposition of 28% GST on the total value of bets placed. This taxation regime came into effect on October 1 last year.

This steep increase in taxation has been a subject of contention, with industry stakeholders arguing that it stifles growth and innovation. Compounding the issue, many gaming firms have been served substantial tax notices for periods dating back to 2018. This has created financial uncertainty and operational hurdles.

Despite these challenges, gaming companies have shown resilience. Over the three quarters after the imposition of the new tax regime, gaming firms have found ways to navigate the financial turbulence. Now, they are looking at the GST Council for a relief.

Decline In Revenues & Consolidation

While the new GST regime came into effect nearly 10 months ago, gaming companies have yet not started passing the burden of the higher tax to consumers. As a result, the top lines of all major players have been impacted, with operating revenue dropping by an average of 45%, an executive of a gaming unicorn said. In some cases, the decline has been as big as 60%, the executive added.

The companies have resigned to the fact that their growth estimates have been pushed back by two years. Before the new taxation regime came into effect, many gaming companies had started generating profit or were on the path to profitability in FY24, after enduring a long period of cash burn. Now, that progress has gone in vain, the executive said.

Among the major gaming startups, Dream11 posted a 32% rise in its net profit to INR 187.83 Cr in FY23 from INR 141.97 Cr in the previous fiscal year. Games24X7 managed to narrow its loss by 29% to INR 199.60 Cr in FY23 from INR 282.40 Cr in FY22. On similar lines, gaming unicorn Mobile Premier League (MPL) saw its consolidated net loss plunge 81% to $37.04 Mn during the year from $194.47 Mn in FY22.

While deep-pocketed firms still have cash to burn, the revenues of smaller players have seen a drastic decline following the increase in GST levy. Companies that only have rummy and poker in their portfolios have suffered a major blow, an executive of another gaming startup said. Many of these companies are now looking for acquisition by bigger players, the executive added.

Last year, Inc42 also reported that many online gaming companies were looking at sale or acquihire opportunities following the GST Council’s decision to levy 28% GST on full value of bets. The trend played out this year.

Earlier this year, metaverse and gaming tech startup OneVerse Gaming bought online poker platform Calling Station and fantasy sports platform BatBall11 to strengthen its foothold in the gaming space. OneVerse Gaming also acquired online game development studio Spartan Poker for an undisclosed amount. Last year, gaming unicorn Dream11 also acquired fantasy cricket platform Sixer.

In addition to the increase in GST rate, major gaming players are now involved in legal battles over retrospective tax notices sent to them. The finance ministry stated in December last year that 71 show cause notices were issued to online gaming companies for alleged GST evasion amounting to over INR 1.12 lakh Cr during the financial years 2022-23 and 2023-24.

Section 11A To The Rescue?

The insertion of Section 11A, if approved by parliament, can address some of the pressing tax-related concerns of the gaming industry and save them from the litigation wars.

“Once it is brought in, it will definitely help all those people who have not yet paid the additional taxation,” Abhishek Malhotra, founding partner of TMT Law Practice, said.

The government’s stance was very clear when it challenged the Karnataka High Court order in the Gameskraft case in the Supreme Court. But the recommendation to insert Section 11A has raised hopes, he added.

For the uninitiated, the Centre moved the Supreme Court last year, challenging the Karnataka High Court’s decision to quash the INR 21,000 Cr show-cause notice sent to Gameskraft. The apex court later stayed the High Court’s order.

The insertion of Section 11A will provide relief to companies from retrospective tax demands for lower tax payments made under previously unclear or unspecified rates..

“Given the evolving nature of the GST law in India, the GST Council recommended insertion of Section 11A in the Central Goods and Services Tax Act, 2017, which will now provide the government powers, on the recommendations of the Council, to allow regularisation of non-levy or short levy of GST, where tax was being short paid or not paid due to common trade practices,” Ranjeet Mahtani, partner of Dhruva Advisors, said.

Meanwhile, EPWA President Shivani Jha said that the industry is hopeful that the insertion of Section 11A will lead to the waiver of show-cause notices, sent to gaming companies for INR 1.2 Lakh Cr, during the next GST Council meeting.

“It is the most pragmatic way forward as there is no way the industry can pay the claim amount, as they are 15-20 times their revenues,” she added.

However, it is not certain yet if the gaming sector would be considered under the new section, if it is introduced. As per industry players, there has been no such indication from the government side yet .

“All companies are cautious and careful in their approach, and while the government is aware of our situation and at least open to considering new ideas, no one is entirely sure of the outcomes. We remain hopeful that the government will be mindful of our needs and request that they continue to consider our perspectives,” a gaming company executive, who didn’t want to be named, said.

With stakeholders cautiously hopeful for a relief, the path forward hinges on continuing ongoing dialogues with policymakers and proactive industry initiatives.

[Edited by Vinaykumar Rai]

The post Nine Months Of New GST Regime: What Gaming Startups Feel About Retrospective Tax Demands? appeared first on Inc42 Media.

Gaming major Nazara Technologies is facing tax scrutiny as its subsidiaries, Openplay Technologies Pvt Ltd and Halaplay Technologies Pvt Ltd, have received substantial tax notices from the Director General of GST Intelligence, Kolkata.

On July 16, 2024, Openplay Technologies was served a Show Cause Notice under Section 74(1) of the CGST Act, 2017, and the State SGST Act, 2017, with a proposed liability amounting to INR 845.72 Cr for the period from 2017-18 to 2022-23, Nazara said in an exchange filing.

Similarly, Halaplay Technologies has been notified of a proposed tax liability of INR 274.21 Cr under the CGST Act, 2017, for the same period. Together, these notices represent a total proposed tax liability of over INR 1,119.93 Cr.

“These claims are in relation to calculation of GST based on the sums pooled by players as opposed to gross gaming revenues. Both subsidiaries are reviewing the notices with their legal counsels and tax advisors to determine their future course of action,” Nazara said.

For the quarter ended March, 2024 , these subsidiaries collectively contributed to less than 2% of the company’s revenues and less than 1% of its profit, it noted.

Last year, Nazara Technologies received a GST show cause notice from the Mumbai office of the Directorate of GST Intelligence (DGGI) worth INR 2.84 Cr, the listed online gaming startup informed the bourses on Wednesday (September 27).

Last year, the GST Council decided to impose a 28% GST on online real-money gaming on the full face value of the bets. This decision faced heavy criticism from industry stakeholders, including gaming startups, industry bodies, and investors, who wrote to the government urging a reconsideration. Despite the criticism, the GST Council remained firm in its decision.

In August, amendments to the Central Goods and Services Tax (Amendment) Bill, 2023 and the Integrated Goods and Services Tax (Amendment) Bill, 2023 were approved by the GST Council. Later, the Parliament approved these amendments.

Several online gaming startups, including Gameskraft, Delta Corp and others received notices to pay INR 1.12 Lakh Cr GST, following which many have moved courts challenging the tax notices.

More than 50% of online gaming companies in India witnessed stagnant or declining revenues after the government imposed 28% GST, a recent report released jointly by EY and US-India Strategic Partnership Forum (USISPF) said, based on the latter’s survey of 12 such companies.

The post Nazara Subsidiaries Receive Tax Notices Worth INR 1,119.93 Cr appeared first on Inc42 Media.

Deep-tech focussed fund Unicorn India Ventures, which is currently raising its third fund of INR 1,000 Cr, has announced a partial exit from neo diagnostics startup Sascan Meditech.

The VC firm had invested INR 2 Cr in Sascan across 2 rounds and the first investment was made in 2020.

The partial exit from Sascan has generated 6X returns for the fund as UIV continues to hold a substantial stake in the company, it said in a statement.

Founded by Subhash Narayana in 2015, Thiruvananthapuram-based Sascan Meditech focuses on developing affordable healthcare products and solutions for cancer care based on Biophotonics and allied technologies. The startup aims to make these products available through sustainable business models and create impact among the population at the base of the pyramid.

Sascan has two distinct products: OralScan, a multimodal image capturing device that uses multi-spectral imaging technology at its core for non-invasive and real-time screening of oral cancer and biopsy guidance and CerviScan, a product developed to replace the conventional digital colposcop.

“The founder, Dr Narayanan, is a seasoned entrepreneur marrying technology and purpose to provide health innovation in an affordable manner for the bottom of the pyramid population. The solutions devised by Dr Narayan would help under-priveleged populations in India and third world countries in early detection of cancer.,” Anil Joshi, managing partner of Unicorn India Ventures, said.

Bhaskar Majumdar and Anil Joshi incorporated UIV in 2015. A year later the duo floated their Operating Fund I, with a fund size of INR 100 Cr. The UIV founders on September 5, 2023, announced the first close of the INR 1,000 Cr Fund III at INR 225 Cr.

UIV ventures boldly invests into Tier II cities, becoming one of the first VCs to invest in founders from locales like Cochin, Trivandrum, Hyderabad, Jaipur, Pune, and Goa.

In terms of sectors, UIV actively invests in areas that are regulated or have the potential for government intervention. Majumdar told Inc42 earlier that only those sectors will grow in the country that are able to win the trust of the government.

Earlier this year, nanotech medical startup Piscium raised INR 6 Cr as a part of its Series A funding round led by Unicorn India Ventures.

The post Unicorn India Ventures Partially Exits Sascan Meditech With 6X Returns appeared first on Inc42 Media.

Electric vehicle (EV) maker Ola Electric is reportedly likely to be valued at around $4.5 Bn for its upcoming IPO, a decline of 16-20% from its last funding round. 

In its last funding round of $384 Mn in October last year, led by Singapore’s investment firm Temasek, Ola Electric was valued at around $5.4 Bn. However, Reuters cited a source as saying that this valuation is expected to drop due to a “recalibration” of tech stock valuations globally. 

While the final valuation is still subject to change, it is unlikely to reach the $6 Bn target that Ola Electric’s founder, Bhavish Aggarwal, had hoped for the IPO, the report added citing sources.

Meanwhile, a source told Inc42 that the book building process is ongoing and the final valuation is yet to be determined. The company aims to price the IPO attractively, ensuring it offers value to investors. The reported figure is a close estimate, the source added.

Ola Electric filed its draft red herring prospectus with the Securities and Exchange Board of India (SEBI) for an INR 5,500+ Cr IPO in December last year. Last month, it received the regulator’s nod for the public issue.

Founded by Ola Cabs cofounder Aggarwal, Ola Electric is an EV manufacturer with five scooter models. It is one of the biggest players in the two-wheeler EV space in the country. It operates a comprehensive omnichannel distribution network, which included 935 experience centres and 414 service centres, as of October 2023.

Earlier this year, Ola Electric secured INR 410 Cr (around $50 Mn) in debt funding from EvolutionX Debt Capital via non-convertible debentures (NCDs). The company raised funding by issuing 41,000 NCDs at an issue price of INR 1 Lakh each, as per its filing with the Registrar of Companies (RoC).

As it gears up for its IPO, the company has undertaken a company-wide restructuring exercise to cut costs and streamline operations. The EV player was also said to be planning to sack nearly 400-500 employees.

Ola Electric’s net loss widened 88% to INR 1,471.6 Cr in the financial year 2022-23 (FY23) from INR 783.4 Cr in the previous year. Operating revenue surged 605% year-on-year (YoY) to INR 2,630.9 Cr in FY23. 

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Bengaluru-based edtech startup Simplilearn’s chief product officer Anand Narayanan has stepped down from his position after his 8-year stint with the company.

“After an absolutely amazing 8+ years with Simplilearn as their Chief Product Officer, I have decided to move on and find my next passion project. “why?” you may ask…sometimes the “why” is simply that you realise that someone else can take your role and bring a lot more energy to it since you have been doing it for a bit too long,” Narayanan said in a Linkedln post.

“As a shareholder and well wisher of the company I couldn’t see past that…so it is time to move on and retain that passion and energy in me that my team respects and values,” he added.

Although he did not divulge any details on his next venture, he hinted at changing industry. “ I am quite energised by the thought of changing industries (for the 5th time) and getting back to a lot of personal learning and growth. Edtech has been kind to me..but it’s time for another personal disruption!,” he said.

Narayanan joined the edtech venture in 2016 as vice president, product and engineering. Later, he was elevated to the position of CPO in 2017. At Simplilearn, he led all product decisions from the day to day tactical to the long-ranging strategic. Before Simplilearn, he worked with Dell, Rackspace, among others.

Founded in 2010 by Krishna Kumar, Simplilearn offers online upskilling courses in segments such as cyber security, cloud computing, project management and data science to students and working professionals.

It also offers courses in association with educational institutions and global organisations like IBM, Microsoft, Amazon, Meta, and KPMG.

In 2021, private equity firm Blackstone acquired a majority stake in the startup for $250 Mn. A year later, Simplilearn raised $45 Mn in a fresh funding round led by venture capital firm GSV Ventures.

Last December, Simplilearn fired around 200 employees citing their poor performance.

The layoffs affected employees at various levels, with the sales team being hit the hardest. Other departments, including marketing and operations, were also impacted by the layoffs.

Simplilearn’s consolidated net loss widened 36.5% in the financial year 2022-23 (FY23) to INR 244.2 Cr from INR 178.9 Cr in FY22, hurt by a sharp rise in certain expense heads.

The Blackstone-backed startup registered a 50.3% rise in its operating revenue to INR 684 Cr during the year under review from INR 455.2 Cr in FY22.

The post Simplilearn’s Chief Product Officer Anand Narayanan Steps Down After 8 Years appeared first on Inc42 Media.

Beauty and fashion ecommerce major Nykaa has allotted 1.73 Lakh equity shares to its employees under its employee stock option plan (ESOP) schemes.

“We wish to inform you that the Nomination and Remuneration Committee of FSN E-Commerce Ventures Limited (‘Company’) on July 15, 2024 has allotted 173,800 equity shares,” Nykaa said in an exchange filing. 

The company said that the equity shares were allotted pursuant to the exercise of vested stock options under ESOP schemes. 

As per the stock’s last closing, the newly-allotted shares have a cumulative value of INR 3.13 Cr.

The development comes nearly a month after Nykaa allocated more than 4.73 Lakh equity shares under the ESOP scheme. Prior to that, it granted 4.05 Lakh stock options under its ESOP scheme in May this year.

According to Inc42’s Indian Startup Founder Survey 2023, about 55% of founders are banking on ESOPs to attract the Indian workforce back to the startup ecosystem in 2024. This strategy has led many companies to allocate stock options to their employees. 

For instance, logistics unicorn Delhivery announced the allotment of 75,000 stock options under its ESOP 2012 just last week. A number of other startups, including Paytm, CarTrade, PocketFM, Spinny, and Cred, also granted shares to their employees in the past couple of months.

Meanwhile, Nykaa has projected a strong revenue growth of around 22-23% year-on-year for the first quarter of FY25. The company anticipates its gross merchandise value (GMV) to rise in the mid-twenties percentage range year-over-year.

As part of its Middle East push, Nykaa’s step-down subsidiary Nessa International Holdings recently incorporated a wholly-owned subsidiary in Qatar – Nysaa Cosmetics Trading.

Nykaa’s consolidated net profit rose 80% year-on-year to INR 69 Cr in FY24, while operating revenue grew 24% to INR 6,385.6 Cr.

Shares of Nykaa ended almost flat today at INR 180.45 on the BSE.

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