The year 2018 was quite an eventful year with respect to business. The chief news makers seem to be e-commerce & banking sectors. I have tried to pick ten most significant business news with respect to India from various sources (mentioned at the end).
1. Walmart acquires stake in Flipkart
The year saw the biggest e-commerce deal with the Walmart’s $16 billion (Rs 1.05 lakh crore) acquisition of Flipkart. Walmart Inc bought 77 per cent stake in Flipkart. It was Walmart’s biggest deal giving the US retailer access to Indian e-commerce market, estimated to grow to USD 200 billion within a decade.
Flipkart was individually in news because its co-founder Binny Bansal resigned as Group CEO following a probe into allegations of ‘serious personal misconduct’.
2. Indian startups shining
Around 1,000 deals were signed by Indian startups in 2018 with areas like e-commerce, fintech, sustainability and renewable energy, transportation and logistics, and more. Indian startups are estimated to have raised $38.3 billion in funding in 2018, behind only the US and China, a report by Yostartups quoted.
Flipkart's $16 billion deal with American retailer Walmart accounted for the biggest piece of the pie, followed by Swiggy raising about $1.3 billion over three deals, and OYO picking up $1 billion in 2018, the report said. Other big funding deals included those by Paytm Mall ($895 million), ReNew Power ($495 million), Byju's ($422 million) and Zomato ($410 million).
3. Change in FDI policy for e-com sector
The government announced changes to the Foreign Direct Investment (FDI) policy for the ecommerce sector. A new rule inserted in the policy bars any entity related to ecommerce platforms from selling on that site and imposes a limit on how much one vendor can sell on a particular portal. The policy also prohibits ecommerce platforms from giving any preferential treatment to any supplier. Cashbacks, exclusive sales, brand launches, preferential services or programmes such as Amazon Prime and Flipkart Plus could run into difficulties under the new dispensation that seeks to ensure that these platforms are truly impartial marketplaces.
4. TRAI’s new framework for broadcasters
In December 2018, The Supreme Court paved the way for the implementation of the Telecom Regulatory Authority of India's (TRAI) new regulatory framework for broadcasting and cable services. This new tariff structure basically allows consumers to select and pay only for the channels they wish to view, and requires TV broadcasters to disclose the maximum retail price (MRP) of individual channels as well as that of bouquets.
5. Merger of Nationalised Banks
The government approved the merger of Dena Bank and Vijaya Bank with Bank of Baroda (BoB) to make it a globally competitive lender. With the merger, BoB will become the third largest bank after State Bank of India and ICICI Bank.
6. Patel resigns as RBI Governor
Urjit Patel resigned from his post as Reserve Bank governor on December 10, nearly a year before his term ended. Though Urjit Patel cited personal reasons behind his resignation, it is widely believed that differences over central bank’s capital policy framework led to his resignation.
7. Banking Fraud
India’s biggest banking fraud came to light in February 2018 at a Mumbai branch of the Punjab National Bank. Nirav Modi and his uncle Mehul Choksi, the two renowned diamantaires, allegedly siphoned around Rs 14,000 crore from Punjab National Bank over a period of seven years.
8. Kochhar steps down
The year also witnessed the fall of Chanda Kochhar, India’s one of the most celebrated women bankers in the country, who resigned as CEO of ICICI Bank in October. Chanda Kochar's resignation came after a whistle-blower accused her of unfairly granting loans to NuPower Renewables, a firm founded by her husband. Kochar’s 34-year-long association with ICICI bank came to an end amid questions of conflict of interest, lack of disclosures, and quid pro quo.
9. HUL to acquire GSK CH India
Unilever's Indian arm, Hindustan Unilever Ltd (HUL) will acquire GlaxoSmithKline Consumer Healthcare Ltd (GSK CH India) via an all-equity merger, valuing the total business of the latter at Rs 31,700 crore. GSK CH India is the market leader in the health food drinks (HFD) category, with popular brands such as Horlicks and Boost.
10. Jet Airways gasping for air
Jet Airways owed banks Rs 8,414 crore as of March 2018, according to its annual report. The airline, lost nearly 70 percent of its market value in 2018 as it faced a crippling cash crunch. Higher fuel prices and inability to increase fares in India’s competitive market led to three straight quarters of losses and forced it to delay salaries. The banks are now worried about these loans turning sour. The fact remains that Jet Airways is gasping for air. Jet has survived a near-death experience once before, in 2013, Abu Dhabi's Etihad Airways injected $600 million of capital for a 24 percent stake in the airline. The airline is in talks with Etihad a second time and with Indian conglomerate Tata Sons for fresh funds or a stake sale.
Dr. Tripti Barthwal
(She holds more than 20 years of teaching & research experience besides being Trainer & Consultant to several Government Departments, PSUs & Banks.)