Also in this letter:
■ Some IT workers start voluntarily returning to office
■ Crypto paper soon, but law will take time: economic affairs secy
■ Delhivery clocks Rs 119.8 crore loss in Q422, revenue doubles
CCI studies papers on alleged nexus between ecomm firms and sellers
The investigation arm of the Competition Commission of India (CCI) is reviewing documents that suggest financial dealings between leading ecommerce companies and their preferred sellers, sources told us.
It has now sought more time from the commission to review these documents, which were found during raids on vendors last month following allegations of violation of competition law by ecommerce majors Amazon and Flipkart.
Originally, the director general of the CCI was to complete its investigation by the first week of June.
Quote: “Deep discounting is a key antitrust issue that CCI is probing. Documents pertaining to the acquisition costs of goods will provide more insights on who is subsidising these goods,” the person said. “Also, since some of the ecommerce companies themselves own shares in the online vendors, CCI is examining the terms of such equity investments.”
This is the first non-cartel case in which the antitrust regulator used its powers of search and seizure.
Case history: The Delhi Vyapar Mahasangh (DVM), an affiliate of the Confederation of All India Traders (CAIT), had approached the CCI in 2020, alleging abuse of market dominance and competition law violation by Flipkart and Amazon.
The CCI issued a prima facie order in January 2021 asking for an investigation into these allegations.
Amazon and Flipkart appealed against the order in the Karnataka High Court, which in July 2021 refused to stay the investigation. In August 2021, the Supreme Court upheld the Karnataka High Court order and allowed the investigation to continue.
CCI targets sellers: In late April, the CCI searched the offices of some of the country’s largest online sellers including Amazon-owned Cloudtail and Appario Retail, a joint venture entity between the American online giant and the Patni group. It also visited some of the alpha sellers of Flipkart and Meesho.
And last week we reported that the CCI was turning up the heat on small and medium businesses that deal with the large ecommerce platforms.
Lawyers privy to the development told us several online vendors had received information requests from CCI in the past few months. Its queries were said to be around input costs and details of their business arrangements with the digital platforms.
Some IT workers start voluntarily returning to office
More employees are voluntarily reporting to work from offices at IT service providers such as Infosys, HCL Technologies, Wipro and Tech Mahindra, though these companies haven’t yet mandated a return to office.
Yes, but: Over 90% of the IT sector workforce continues to work remotely.
“We still have about 94% of our workforce operating remotely. However, we are seeing more employees who are in our office locations attend office for one or two days a week and the numbers are steadily increasing,” said Richard Lobo, executive vice president, head HR, Infosys.
The Bengaluru-based company is also seeing a larger number of project huddles and team-building programmes, which result in rising attendance on some days.
Similarly, HCL Technologies has noted an uptick in the number of employees coming to its campuses even as hybrid work continues.
Since April, fully vaccinated Wipro employees have been voluntarily returning to work from its India campuses, thrice a week, on Mondays, Wednesdays, and Fridays, the company said.
Crypto paper soon, but law will take time: economic affairs secy
The union government is planning a fresh consultation paper on cryptocurrency soon, though a law on the digital assets is likely to take time, secretary of economic affairs Ajay Seth said.
On the sidelines of a finance ministry event, Seth told reporters, “Our consultation paper is fairly ready. We have gone into a deep dive into this.” He did not mention when it was likely to be put out, but sources told us it could be expected in August.
Law will take time: The economic affairs secretary said a law on cryptocurrencies may take some more time as India is waiting for an international framework on it and is closely engaging with the International Monetary Fund and the World Bank.
Last December, the government listed the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021 during the winter session of Parliament. But the bill was not introduced.
Subsequently, in the budget for 2022-23, the government imposed a 30% tax on gains made from virtual digital assets, along with a 1% tax deducted at source on all crypto transactions. However, the government later clarified that taxation did not mean legalisation.
TWEET OF THE DAY
Delhivery clocks Rs 119.8 crore loss in Q4 2022, revenue doubles
New-age logistics company Delhivery reported consolidated losses of Rs 119.8 crore for the fiscal fourth quarter, widening slightly from the same period last year.
Revenue from operations was Rs 2,071.7 crore in the January-March period, from Rs 1,002.6 crore in the year-ago period. Total income more than doubled to Rs 2,127 crore from Rs 1,031.7 crore.
On a sequential basis, losses reduced by 5.5% to Rs 119.8 crore from a loss of Rs 126.5 crore in the third quarter. Revenue from operations grew by 3% to Rs 1,995 crore sequentially.
For the financial year 2022 (FY22), consolidated losses were Rs 1,011 crore, compared to Rs 415.7 crore in FY21. Total consolidated revenue more than doubled to Rs 7,038.4 crore in FY22 from Rs 3,838.2 crore in FY21.
Delhivery debuted on the public market on May 24, with the company raising Rs 5,235 crore.
ETtech Done Deals
■ Direct-to-consumer (D2C) beauty and personal care brand Sugar Cosmetics has raised $50 million led by L Catterton with participation from existing investors A91 Partners, Elevation Capital and India Quotient.
■ Alternative data insights start-up Synaptic said it has closed a $20 million Series B funding round led by Valor Equity Partners. It will use the funds to continue investing in product innovations, double down on its data science capabilities and partnerships with data vendors, and expand its go-to-market teams in key global financial hubs.
■ Vendekin Technologies, which makes unattended retail technology solutions, said it has raised Rs 8.5 crore in a funding round led by Better Capital, with participation from existing investors CP Gurnani’s Family Office and Vineet Nayyar’s Family Office.
FrontRow lays off 145 employees, MPL to sack 100
Two startups announced layoffs on Monday.
Driving the news: Edtech firm FrontRow has laid off close to 145 full-time and contractual employees, almost 30% of its workforce, as funding dries up amid the market downturn.
Meanwhile, esports app Mobile Premier League (MPL) is laying off 100 people, or about 10% of its workforce, and is exiting Indonesia.
FrontRow: The company confirmed the layoffs to us, and said they were undertaken to increase efficiencies and lengthen the company’s runway. It said most of the layoffs were from the sales and business development teams.
MPL: In an email to employees, the company wrote, “The last few months have been insane. The philosophy of growth at all costs is now reversed. The market is now rewarding profitable growth over growth at all costs,” MPL cofounders Sai Srinivas and Shubh Malhotra said in an email to employees.
Edtech firms lead startup layoffs: After years of hypergrowth, edtech firms are bracing for a slowdown in funding and a few, including Unacademy and Vedantu, have laid off employees in recent months to cut costs and increase efficiencies. But edtech firms aren’t the only ones in a tight spot.
Other startups that have laid off employees in the past few months include social commerce platforms Trell and Meesho, used cars platform Cars24, and digital health platform Mfine.
Funding freeze: We reported on Monday morning that big-ticket funding rounds have suffered a huge blow in the past two months. From April to May 16, there were only nine funding rounds of more than $100 million, totalling a little over $2 billion. There were 27 such deals in January-March, according to data sourced from New York-based analytics platform CB Insights.
Flipkart promotes two executives to senior VP in shuffle
Homegrown ecommerce firm Flipkart has promoted many executives, including two key executives to senior vice president (SVP), according to an internal memo that we have reviewed.
Bharath Ram and Guddeti Bharath Reddy have been elevated as SVPs, while Sharon Pais, who was moved to Myntra as its chief business officer, has been made a VP.
Ram joined Flipkart in March 2020 and led user acquisition and retention in Flipkart’s entire tech and product team, known internally as One Tech.
Pais was also given the P&L responsibility for its social commerce platform Shopsy in February last year.
Reddy is a Flipkart veteran and has been leading One Tech’s operations.
Other Top Stories By Our Reporters
HRW warning on edtech apps: Educational apps and websites run by government and private entities of the 49 most populous countries indulged in practices that put children’s privacy and safety at risk, Human Rights Watch (HRW) said in a report.
Stock reward for Freshworks CEO: Freshworks has offered CEO Girish Mathrubootham a multi-year stock award that would have nine million shares accrue to him in phases, according to an SEC filing in April.
Global Picks We Are Reading
■ Netflix cracks down on password sharing, but early efforts in Peru are a mess (Rest Of World)
■ Robots pick up more work at busy factories (WSJ)
■ A face search engine anyone can use is alarmingly accurate (NYT)
Today’s ETtech Morning Dispatch was curated by Zaheer Merchant in Mumbai. Graphics and illustrations by Rahul Awasthi.
