Also in this letter:
- IndiaTech urges govt to frame online gaming rules
- UpGrad eyes IPO in next 24 months, says cofounder
- HCL Tech underpaid its H-1B workers, report claims
Flipkart in talks to lead $100 million funding in Ninjacart
Flipkart’s looking to step up its grocery game. Sources told us the ecommerce platform is in advanced talks to lead a new $100 million funding round in Ninjacart, a fresh produce supply chain startup.
If the deal goes through, it will be one of Flipkart’s largest investments in a startup. It will bump Ninjacart’s valuation up from $500 million to around $750-800 million, the sources said, adding that Walmart is also likely to participate in the round.
Last year, Walmart and Flipkart had together invested around $30 million after having first backed the startup in 2019.
Strategic investment: The latest infusion will deepen Flipkart’s partnership with Ninjacart as it looks to take on formidable rivals such as Reliance Industries’ JioMart, Amazon India and Tata’s BigBasket.
It is also scaling its online store Supermart and 90-minute hyperlocal delivery service Flipkart Quick, which focuses on groceries.
Flipkart’s wider grocery selling service, which competes with Amazon Fresh and JioMart, is currently in 500-600 cities, up from just 100 earlier this year. “They were in around 100 cities earlier in the year and scaled it to more than 500 before the Big Billion Days sale. Flipkart will continue to focus heavily on groceries and will be expanding across the country. Ninjacart’s support on the supply side will be crucial,” said one of the sources.
Dual approach: Ecommerce firms are increasingly favouring a dual approach on groceries —quick deliveries on a few items and a wide range of products with discounts and other incentives. “Having control over the supply chain helps ensure a wider selection of products, higher quality control, certainty in terms of supply, and better unit economics,” said Ankur Pahwa, a partner at EY India.
According to data from PGA Labs, India’s e-grocery market will hit $22 billion by FY25 from around $3 billion in FY21. BigBasket was the market leader in FY21 with around 37% of the market. Amazon had a 15% share while Grofers had 13%, Flipkart 11%, and JioMart 4%.
Grocery wars: India’s booming online grocery sector had a busy November.
Startup body urges govt to frame rules around online gaming
A startup industry association has asked the government to draw up rules for online gaming In India, including age- and genre-based classifications.
IndiaTech, whose members include companies such as Dream11 and Mobile Premier League, has written to IT Minister Ashwini Vaishnaw to set standards similar to those of the Entertainment Software Rating Board (ESRB)—a self-regulatory body that assigns age and content ratings to video games in the US, Canada and Mexico.
It also recommended that the regulations include AI-based interventions to monitor and reduce potential addictions, and limits on the amount of money that gamers can spend—and win—among other things.
It said online skill-based casual games and sports-based games should be recognised as predominantly skill-based and non-addictive.
Quote: “People from civil society feel that online gaming may be addictive and lead to behavioural issues besides causing financial stress,” said Rameesh Kailasam, president and CEO of IndiaTech. “Before the governments and lawmakers jump to any form of conclusion, we wanted to present guiding principles and means to regulate the industry and for government and industry to jointly work towards a Code for Responsible Online Gaming.”
Gaming sector feels the heat: The letters come at a time when state legislatures and various union ministries have raised concerns about gaming addiction among children.
On December 3, Rajya Sabha member and senior BJP leader Sushil Kumar Modi said the government should regulate the online gaming industry and impose a uniform tax on it, warning that online gaming was becoming a “major addiction” among young Indians.
The next day the Ministry of Education also issued a slew of advisories, in which it said that “playing online games leads to a serious gaming addiction which has been considered as a gaming disorder”.
The online gaming industry has also been under fire in several states, including Karnataka, one of the top three states in terms of revenue for the gaming sector. The Karnataka Police (Amendment) Act, 2021, which came into effect on Oct. 5, banned online “games of chance”. Later that month, the police in Bengaluru registered an FIR against Dream11 on a complaint from a city resident that it was violating the new law.
Tweet of the day
UpGrad won’t go public as small-cap or mid-cap stock, says founder
upGrad cofounder Ronnie Screwvala.
Edtech firm UpGrad Education, which became a unicorn earlier this year, is looking to go public in the next 18-24 months, a senior company executive told us.
The target: The company is currently clocking an annualised revenue run rate of $250 million and will look to list when this hits $500 million, which it expects to happen in FY23. “I don’t want the company to list as a small-cap or a mid-cap stock and hence I want it to reach a critical mass before we go public,” Ronnie Screwvala, its cofounder and chairman, told us in an exclusive interview.
Bucking the funding trend: The company has so far raised just $185 million—in a single round—from investors, the lowest among its major peers. Temasek Holdings, International Finance Corp, and IIFL Group participated in that August fundraising, pegging upGrad’s valuation at $1.2 billion.
“Not having diluted much early on gave us a lot of flexibility to stick to our conviction and strategy on not getting distracted by what others (investors) ask us to do,” Screwvala said.
The founders hold more than 70% in the company, which Screwvala said might drop to 51% by the time the company is ready for a listing.
‘Don’t need billions’: He said growing an edtech business does not require much capital.
“You don’t need billions of dollars to create a category-defining business like ours. For me personally, having been on both sides of being an acquirer and a company that was acquired, I have come to realise ROCE (return on capital employed) is all that matters,” he said. “We might look to raise one or two more rounds before we go for an IPO,”
He said the company had no immediate plans to raise money despite interest from funds. But sources told us the company was stitching up a larger round of $300-$350 million, likely valuing the firm around $3-3.5 billion.
HCL Tech underpaid its H-1B workers, report claims
HCL Technologies underpaid H-1B visa holders by up to $95 million in the last few years, the Economic Policy Institute said in a report, based on its analysis of an internal document.
- The document, released as part of a whistleblower lawsuit against the firm, found that the company paid H-1B workers lower wages compared to similarly employed US workers, the non-profit think tank said.
Claim: “Victims include not only the H-1B workers but also the US workers who are either displaced or whose wages and working conditions degrade when employers are allowed to underpay skilled migrant workers with impunity,” it said.
Response: “HCL Technologies is strictly compliant with all relevant rules and regulations and is committed to pay wages to all employees in accordance with applicable laws,” a spokesperson for HCL Technologies said.
HCL Technologies is among India’s top three software services firms, and among the top 10 recipients of H-1B visas issued annually.
Separately, a new immigration bill in the United States has called for more stringent norms for issuing H-1B visas to skilled workers.
- The American Tech Workforce Act of 2021, proposed in the United States House of Representatives, calls to end the Optional Practical Training (OPT) programme as it mostly benefits Big Tech firms by way of tax breaks, allowing them to hire workers at a lower cost.
The Bill was introduced by Republican Study Committee Chairman Jim Banks as part of a Republican Study Committee Initiative to hold Big Tech accountable, it said. It will have to first be approved by the House, and then the Senate before it can be signed into law.
PM Modi’s Twitter account ‘very briefly compromised’
Prime Minister Narendra Modi.
Prime Minister Narendra Modi’s Twitter handle was “very briefly compromised”, his office said on early Sunday morning, adding that the account has been restored shortly after.
The account using the handle @narendramodi, which has over 7.3 crore followers on the microblogging site, has since been restored, the Prime Minister’s office said in a tweet.
- “The matter was escalated to Twitter and the account was immediately secured,” it said. “In the brief period that the account was compromised, any Tweet shared must be ignored.”
Twitter, on its part, said PM Modi’s account was “not compromised due to any breach of Twitter’s systems”. It said “there are no signs of any other impacted accounts at this time”.
Before the account was secured, a tweet was sent from the account with a URL falsely stating that India had officially adopted Bitcoin as legal tender, and that the country had bought 500 BTC which it would distribute to citizens.
IT MNCs to reopen India offices with 50% staff by mid-2022
Several global IT firms intend to start ramping up India office operations between January and June, with at least 50% of personnel back at their workstations by mid-2022 for a few days in the week to start with, if the third wave of the pandemic stays under control.
Companies involved in office space management working for IT companies say that they are planning to scale up operations starting next year, while keeping a close eye on the Omicron variant’s spread.
- Employees under 45 years of age are being asked to return to work under a hybrid model that involves attending office on two-three days a week, they said.
“Culturally, there was a misalignment and employees will have to return to the office from next year onwards,” said Nitish Murthy, global head of facilities management group Brillio. “We have almost doubled our headcount globally during the pandemic and require more space to expand now.”
Plans to return to work had been thrown off course by the second wave and then the Omicron threat, forcing companies to extend work-from-home policies until December.
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