Monthly Archives: July 2016

SoftBank acquire ARM

SoftBank bets on the future of Internet Of Things, and acquires ARM Holdings for $31.4 Billion

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The News…

Japan-based SoftBank Group (SBG) and UK-based ARM Holdings has entered into an agreement wherein Softbank would be acquiring ARM for a whooping $31 Billion (£24 Billion) in an all cash transaction. This is a price that is more than 70 times of ARM’s net earnings in 2015.

Softbank Group is a telecommunications and Internet Corporation that holds a diversified portfolio of Broadband, Fixed-line Telecommunications, eCommerce, Internet, Technology Services, Finance, Media and Marketing, Semiconductor Design, and other businesses.

ARM Holdings is the semiconductor and software design firm that is in the design of ARM processors (CPUs) business and whose microchips are used in many technologies including: Televisions, Smartphones and tablets, Drones, Smart home, Smart cities, Smart cars, Wearable tech, etc., and has clients like Apple and Samsung, and collecting royalties on each chip made. ARM is considered to be market dominant (with 95% market share) in the field of processors for mobile phones (smartphones or otherwise) and tablet computers.

TRIVIA: SoftBank already had ties with ARM through its earlier acquisition of Sprint (the American wireless carrier company), and had spoken with ARM’s Chairman about two weeks before the finalization, regarding a possible takeover.

By owning it, SoftBank has become one of the most important and impactful tech companies in the world. Masayoshi Son (Chairman, SoftBank), a man that has been widely known to make smart investments which have given back huge returns, including investing $20 Mn in Alibaba in 2000 that is worth $65 Bn today, acquisition of Vodafone’s Japanese arm for $15 Bn, acquisition of Sprint (4th largest telecom in the US), etc.; is still calling the ARM acquisition to be his company’s most important one yet.

Masayoshi Son believes that this is one of the most important acquisitions for the company and ARM would act as the perfect catalyst for SoftBank’s growth strategy going forward.

Going ahead, SoftBank intends to invest in ARM, support their management team, accelerate their strategy and give them a free hand to allow the company to invest heavily in Internet of Things. Softbank has also promised to double ARM’s 1600 employees over the next five years, as well.

This acquisition will be the third-largest proposed corporate merger of 2016, and the second-largest chip deal (after Avago Technologies’ $37 billion deal for Broadcom), on record.

SoftBank is financing the deal with a £7.3 Bn loan and £16.7 Bn in cash from their reserves that they have raised from the recent sales of stakes in Alibaba and Supercell.

The deal has already been approved by SBG’s Board of Directors, and is awaiting approval from ARM’s shareholders and of the English court.

The acquisition is expected to be completed by the third quarter of 2016 (period ending on 30th September 2016), post which, ARM will become a wholly-owned subsidiary of Softbank, but would continue to function as an independent business.

This is the largest ever acquisition deal in Europe from an Asian country ever!

The Brexit Angle…

There are many speculations going around the expert and media circles, that the deal took place right after Britain left EU, and that it had been a result of the pound’s fall after the EU referendum making it cheaper for foreign buyers to acquire UK companies.

Here’s a food for thought…

Even though, the deal came just weeks after the referendum, but ARM’s customer base is global and was always protected from Brexit.

Additionally, if this would be a ruthless takeover, why would Softbank want to preserve the ARM’s organization including existing senior management team, brand and culture, keep the company independent, and pledge to double the employee headcount?

And most importantly –– since ARM books its sales in Dollars, the falling pound had further boosted the company’s share price since the vote, making it further more expensive for SoftBank. In fact, the company had had to raise its offer price three times to secure a deal.

Why did SoftBank acquire ARM?

Softbank currently holds a massive debt of more than $100 Bn, which mainly has occurred to finance many of company’s acquisitions.

So why would a company that holds such huge debts, go for such an enormous acquisition? What does this acquisition signify for SoftBank?

To begin with – now there are two ways to look at this acquisition: As a telecom player, it wouldn’t make much sense; they would rather buy a hardware maker. But if you look at it from an investment firm’s perspective, there cannot be a better deal.

If you see closely, the smartphone wave has peaked and the Internet of Things (IoT) category is already becoming mainstream. Softbank are looking at the next wave of devices!

As per a research by Juniper Research, it is being anticipated that the number of IoT connected devices is going to rise of over 285% and grow to 38.5 billion by 2020, from 13.4 billion in 2015.

In the last some time, as technology firms look to get ahead in IoT, a lot of acquisition activity in the semiconductor space has seen to be taking place. Take for instance – last year, Qualcomm bought CSR for $2.4 Bn, and Intel had acquired Altera for $16.7 Bn.

Like it or not – the Singularity (when artificial intelligence will overtake human intelligence) is coming. And it will take over, not just in terms of knowledge, but in terms of intelligence!

Think of it — By 2040, each individual would roughly hold more than 1000 devices that would be connected to the internet, and there would be no devices that won’t be connected.

Imagine — your fridge, your washing machine, even your hairbrush, is being controlled by your computer, and everyday appliances are now transformed into intelligent, thinking and analytical machines.

Now think – how much would you end up paying to own the technology behind those devices?

Yeah!!! That’s where ARM comes in.

That’s exactly the vision of Masayoshi Son, who is now betting on the future!

Masayoshi Son is widely known to have an eye for potentially transformative industries and trends, and accounts for several such successful investments, and according to him this deal is really about the investment horizon, and an attempt to become the market leader of Internet of Things.

And ARM Holdings’ chip designs, apart from being used in smartphones are also used in IoT devices such as wearables, trackers, devices for smart city implementations and so on.

In fact, the Processor giant (ARM) is developing its own Operating System for the Internet of Things (IoT), called mbed, which aims to make it easier for companies entering the space to pick up an ARM-based chip and quickly set up a working connected device.

Masayoshi Son had been following ARM for the last 10 years, but only decided to invest in a firm that provides the technology in nearly all smartphones, when the market and company was ready!

IoT is going to be the biggest paradigm shift in human history and ARM will be the center of the Internet of Things, in which everything will be connected.

And with ARM’s designs being used in this larger addressable market; investing in a company that stands to have a much bigger install base, does in fact, makes perfect sense for SoftBank from an investment perspective.

This might help to explain why Softbank is paying close to a 50% premium for ARM Holdings!

Indian Online Jewellery Market – Trends & Opportunities

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India is deemed to be the hub of the global jewellery market because of its low costs and availability of high-skilled labour. India is the world’s largest cutting and polishing centre for diamonds, with the cutting and polishing industry being well supported by government policies.

Evidently, India is widely known to have the largest culture of jewellery since centuries, more than anywhere else in the world. These –– jewellery, gold and precious stones are deeply rooted in our tradition that date back as far back as far as to the start of the Indian civilization itself.

For women and many families (especially in Tier III cities where many women do not own a credit card or even a bank account), jewellery is also used as a form of financial security as well.

As per the statistics from the Gems and Jewellery Export promotion Council (GJEPC) – with home to more than 500,000 players India exports 95% of the world’s diamonds, and the sector plays a very important role in the economy by contributing around 6-7% of the country’s GDP. UAE, US, Russia, Singapore, Hong Kong, Latin America and China are the biggest importers of Indian jewellery.

The industry contributed $39.9 billion in terms of foreign exchange earnings in FY 2014-15 to the economy, making the gem and Jewellery industry the second largest exporter after petrochemicals. Its total market size is supposed to touch $90 Billion in 2018.

OVERVIEW: Online jewellery market in India…!

There was a time, not many years ago, when in India, buying gold traditionally meant a trip to the trusted family jeweller! But clearly, the times are changing, and a booming eCommerce market that is being forecasted to touch $3.6 Billion in the next three years, that is roughly 20% of the global market size estimated at $18 Billion, is starting to challenge all conventional mediums.

This growth of the offline market, along with the growth in the global jewellery market has fuelled the rise of trade of jewellery through the online medium as well. While the online jewellery market currently accounts for a minuscule 4% – 5% of the total figures, but it is seen to be growing gradually and is all set to capture 10% – 20% of the market by 2020.

Some of the driving factors that have caused this growth include the changing lifestyles, growing disposable income and the outlook and buying patterns of the consumers.

Indian consumers are now in a mood to prefer look for greater transparency, better service and a more convincing value proposition keeping in mind the brand and trend, and are ready to pay the price for it. In fact, they are now more willing to spend more on branded jewellery with premium for high quality and inventive designs, as well. These consumers are becoming more and more comfortable shopping online, thus adding on to the growth of the segment.

To capitalize on this moment, the Jewellery sellers are coming up with innovative ways, from personalization to curation to home trial options, to address consumer’s concerns. They are offering convenience in various forms along with other incentives like giving them time to decide, not making it obligatory for customers to purchase at their very first visit, etc to lure the customers, as well.

India’s biggest diamond and gold jewellery retailer – Gitanjali Gems, who sells its products through more than 4000 points of sales spread across India, the US, the Middle East and Europe, and uses a range of Bollywood actors including Shah Rukh Khan and Katrina Kaif as Brand Ambassadors; has tied up with several online marketplaces including Amazon.com, Flipkart.com, EBay, and Jewelsouk, to sell its products.

The growth potential of the sector has convinced Ratan Tata (Chairman Emeritus of the Tata Group) so much that he has invested in a Bangalore-based online jewellery store BlueStone from his personal pockets. Other than him, many other investors are now becoming very keen on investing in the sector too!

Additionally, Tata Group’s Titan has also bought a stake in Chennai-based online jewellery retailer CaratLane, as well.

Other than that, New Delhi-based PC Jeweller has also tied up with US-based online jeweller Blue Nile to evaluate the potential of the Indian market and are also in plans to launch their own website to replicate the comfort and convenience associated with shopping at its luxury showrooms, as well.

The metropolitan cities such as Delhi/NCR, Mumbai, Chennai, Pune and Bangalore have been the growth drivers in the Indian market. Young Indians between the age group of 24 and 35 years are their major target audience.

Plus the recent easing of import curbs on gold bars and coins by the Central Government has also further boosted the growth of the online trade. Established retail jewellers are aggressively seen to be tying up with popular eCommerce sites like eBay, Amazon and Flipkart, along with strengthening their own websites to make the most of the eCommerce space. The online market gives these established brands the leverage to offer a wider range of designs without keeping physical stocks.

Looking at the potential of the Gems and Jewellery sector; the Government of India has taken various measures for the upliftment of the sector as a whole. It has recently been declared as a focus area for export promotion, several steps are being undertaken to promote investments and to upgrade technology and skills to promote ‘Brand India’ in the international market, and most importantly the Indian government has recently also allowed 100% Foreign Direct Investment (FDI) in the sector through the automatic route as well.

Who are the major players in the online industry?

The eCommerce in jewellery in India is mainly divided into four categories of players: the established offline jewellers that offer items online using the marketplaces such as Flipkart, those who act as just facilitators by providing an online platform to the jewellers, those who get their products from dedicated vendors or even manufactures in small scale and then sell it online, and those who offer various items on their platform with jewellery being one of them.

But overall, the online jewellery market share is divided amongst few major players and 20 odd eCommerce players, wherein 41% of consumers prefer gitanjalishop.com to shop, 18% use CaratLane.com, 11% use bluestone.com, 10%  prefer pcjeweler.com, 7% people prefer titan.co.in, 5% visit amazon.com, and 4% are loyal to snapdeal.com.

Although, due to the small size of the market, many players have been hesitant to enter but there has been a dramatic rise in several offline vendors moving online who have started selling their inventory through marketplace business model.

The jewellery market is currently led by CaratLane, Bluestone and a few newbies! India’s first ever and the largest online jewellery store is CaratLane. The company was founded in 2008 and one of their founders comes from a family-owned traditional jewellery business and was inspired by BlueNile. Talking about their Business Model – while all other Indian online jewellery portals have opted for a B2B (Business to Business) or marketplace model, CaratLane uses a B2C model wherein it acts as a manufacturer and sells directly to the consumers.

But instead of maintaining a conventional inventory, the company has opted for an innovative strategy. They have tied up with a strong network of ‘4000 vendors globally’, who supply products on request. The company has been acquired by Titan and had raised a total of $52 Mn in the past.

CaratLane is eyeing a yearly sales goal of $226M by 2020 in India, and has closed 2015 at roughly $53 Mn.

The other only major player in the online space is BlueStone that started in 2011. Bluestone too, follows more-or-less a similar business model like CaratLane, wherein they act as manufacturers and instead of holding an inventory, they too cater to made-to-order items.

It has received an investment from Ratan Tata (Chairman Emeritus of the Tata Group) and has raised a total of $31 Mn so far from several investors to fuel their rapid growth. BlueStone has annual revenues worth ₹100 crores with a ticket size of roughly ₹15,000.

Others in this segment include – Craftsvilla, Voylla, Jewelsouk, Youshine, along with major marketplaces like Amazon, Flipkart, Snapdeal, Jabong, Myntra, and offline players like Gitanjali Gems, PC Jewellers, etc…

One of the biggest benefits that a customer gets when they purchase jewellery online, especially in metro cities, is convenience, along with a variety of options, competitive pricing, etc.

And again, almost all of these brands use Television, Radio, and Social Network to promote their brand.

Other than these, the online segment is also seeing the entry of many new players with unique business models. One such being – Cult Curators! It was founded by Sanjana Bhuwalka & Aanchal Rathee, and is an online platform that showcases global jewellery designers, and help you to find unique approaches to design, new materials used in jewellery and overall.

Then there are new companies like LaElegante and Eristona that aim at providing affordable jewellery to the masses, who have recently entered the market as well. But, unlike the rest of their competitors, these newly born companies – VelvetCase and WearYourShine run marketplaces to help offline retailers sell online.

How to overcome challenges faced by the segment?

Yes, selling jewellery online is hard. Very hard! That too when you have at the least seven to 10 offline retailers within 10 km from where ever one lives.

As much as drastic growth the segment has been receiving, but the online jewellery sector still remains to be in its nascent stages and still has a long way to go! And goes without saying, it also has its share of challenges that it faces too.

Some of the top ones being: –

  1. Creating a clear differentiator from the Offline market
  2. Creating the trust factor, since it involves high value transactions
  3. Personalisation: Giving them the visual, touch and feel factor
  4. Affordable Pricing
  5. Manufacturer-retailer connect
  6. Shopping Experience
  7. Cataloging

And many more….!

To solve these problems, these online majors have been implementing various unique strategies.

To begin with, there is a huge need of awareness in online jewellery shopping industry, and the company blogs and adverts are effectively being used to fix this. It is only because of mediums like social media and their awareness strategies, the sector is seen to be booming.

The companies are also seen to be educating customers about the certification program and technicalities the companies perform to maintain the authenticity of the products.

Next, the biggest rival of these online brands are the offline stores; who in fact are seen to be coming online too!

You walk down any street of any metropolitan city, and you’ll find dozes of jewellery stores. And when it comes to buying jewellery, a majority of the Indian audience prefers to go for their trusted offline jeweller who they have been going to since years.

To fix this, CaratLane and Bluestone offer their customers easily accessible online education about how to choose the right gemstone and precious metal, along with trust certificates, affordable pricing, Try-at-Home policy, 30 days exchange policy, Virtual Try-On app that acts like a mirror with a real-time 3D projection of a fashion item on your looks, visual search technology,

Unlike the offline rivals, these online players provide a different proposition altogether. They don’t target the mother with her high-value purchases, but focus on the working daughter’s discretionary spend. This means they directly or indirectly compete for the same share of the wallet as that of consumer electronics gadgets or even apparels and accessories.

Having said that – even though big brands like Amazon and Flipkart sell precious jewellery, and many offline players are also coming in, but it is going to be an extremely difficult task for them to compete with the industry majors like CaratLane and Bluestone for the market share, as the buying behaviour of customers is different when they buy precious jewellery as opposed to them buying a mobile or some other product.

Avast Acquires AVG for $1.3 Billion and reshuffles the computer security deck!

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About the acquisition — Avast acquires AVG

It has recently been announced that Security giant Avast has acquired fellow Czech-based antivirus software maker AVG for a whooping total of around $1.3 Bn.

Started 25 years ago in Prague, Avast Software is the maker of mobile and PC security in the world and provides protection to more than 230 million people and businesses with their security applications. With a market share of more than a fifth of the global antivirus software market, they have been ranked at the top several times by the consumers on popular download portals worldwide, and are also among the ones to be certified by VB100, AV-Comparatives, AV-Test, OPSWAT, ICSA Labs, and West Coast Labs, as well.

Founded in the early 90s, the NYSE listed AVG is again one of the leading providers of software services to secure devices, data and people. Their portfolio includes services and products for mobile devices and desktops such as internet security, performance optimization, location services, data controls and insights, and privacy and identity protection, along with cloud security and remote monitoring and management (RMM) solutions for the Business clients, as well.

Evidently, the computer security space is largely dominated by a handful of major players! And when two of the biggest of them decide to team up, it becomes certain that it would send ripple effects across the freeware, desktop & mobile antivirus software, and business security suite industries, and will majorly re-shuffle the security software deck, as well.

The two parties have entered into a purchase agreement in which Avast buy all of the outstanding ordinary shares of AVG for $25 per share in cash. Avast would be financing the acquisition partly by using the cash balances it holds, along with committed debt financing from third party lenders.

The proposed transaction is not subject to a financing condition. In fact, Avast has already received a financing commitment of $1.685 Bn from Credit Suisse Securities, Jefferies International Limited and UBS Investment Bank, collectively. Additionally, they (Avast) personally have also contributed $150 Mn in equity investment to fund the transaction as well.

During the course of the deal, Jefferies International Limited was their exclusive Financial Advisor, and “White & Case LLP” and “De Brauw Blackstone Westbroek N.V.” were their Legal Advisors. While on the other end, “Morgan Stanley & Co. LLC” was the Financial Advisor, and “Orrick, Herrington & Sutcliffe LLP” and “Allen & Overy LLP” were the Legal Advisors to AVG. “Bridge Street Securities LLC” acted as the independent financial advisors to the supervisory board of AVG.

A recent data from software-maker OPSWAT points out that Avast’s 15% market share along with AVG’s 5% would surpass Microsoft’s 15.9% market share, making the combined company the biggest antivirus software firm by number of active users, in the world.

The deal will give Avast access to more than 400 million devices that currently use Avast or AVG’s software, which includes 250 million PC and Mac users, and 160 million mobile users.

This increase in scale will help Avast to create more technically advanced personal security and privacy products, and will also give Avast access to AVG’s Zen mobile technology for controlling the protection of all a family’s devices.

Clearing the air, Avast also confirmed that the AVG brand will not be disappearing, and in fact, they would be using a combination of the two brands owing to associated strengths in different markets.

This transaction has been unanimously approved by the Management Board and Supervisory Board of both the companies, and has recommended the offer for acceptance to the AVG shareholders.

Although, they haven’t started planning about the team integration yet, but in the coming few months, one of the first tasks for them would be to analyze and plan the organization. And there would also be some staff reductions, given that there would be duplication of several roles.

The transaction is expected to close before October 2016, depending on the time taken by regulatory review.

Why did this Acquisition take place?

To begin with – the computer security market has seen to be entering the consolidation phase! This deal comes less than a month after antivirus pioneer Symantec Corporation acquired Cyber-Defense vendor Blue Coat Systems Inc for $4.65 Billion.

Now, coming to the topic of discussion; quite honestly, the real objective of the acquisition of AVG was long time plans! The security industry is maturing; the PC space, to be specific. And with time, scalability would become very important for companies, which would eventually lead to consolidation. So Avast wanted to be one of the early adopters of the change, and become one of the larger players in the industry.

Basically, the deal is aimed at acquiring long term scale and geographical breadth, and transform into a company that not only builds out its security offerings that serve existing customers with “more advanced” products, but also has a firm eye on emerging growth opportunities such as in the Internet of Things (a name used to refer to the network connecting physical devices, ranging from fridges to cars and clothes, to the internet).

And since Internet of Things (IoT), is widely known to be a security nightmare for consumers, it has opened up a wide range of opportunities for the experienced security players to step in and address the issues.

So with the technological depth and geographical breadth that the new organization will attain, it would be in a much better position to take advantage of emerging growth opportunities in all such areas.

As the definition of online security has seen to be drastically shifting from being device-centric, to being concerned with devices, data and people, this deal is definitely going to turn out to be equally (if not more) beneficial for AVG as well! Joining hands with Avast gives them the leverage to accelerate investments in growing markets and continue to focus on offering wide-ranging and simple-to-use solutions for consumers and businesses.

To sum it up – what you see happening here is, a number of old companies trying to find ways to consolidate and buy new technologies and get access to growth in new markets, to maintain their superiority in them market. In fact industry players are expecting more such deals to take place, in the near future!

Our Take

The first thought that crossed many people’s mind is that, do antivirus companies matter anymore? I mean, $1.3 Billion is a lot of money, for a company, in an industry that is slowly fading away. Presumably, of course!

But turns out – they do. More than you know!

The news of one antivirus company buying another, at first, sounds like Nokia buying BlackBerry. Because none of them matter anymor

But when you look closely, the picture is very different. They are no more just, antivirus companies, and have transitioned from the PC space to devices. In fact, they’ve turned into larger, security solutions companies.

We can’t predict human behaviour. We don’t know for sure, when we as users would expose ourselves to vulnerabilities.

With the changing times, everyone and everything but evolve. If they don’t, they tend to fade away! Every company needs new customers and access to new markets, and this is a step taken by Avast in that direction. In this context – many giant companies are betting on Internet of Things to take the world by storm. So instead of fighting with each other, Avast and AVG decided to team up.

Take for instance – the acquisition of MacAfee by Intel. They did so to get ahead in the IoT space. And when companies like Intel, bank heavily on something, the Internet of things, then you can be sure tee a lot more action in the industry.

Yes, indeed it would have made more sense for AVG to buy Avast, given that they AVG has a better revenues, staffing and is more valuable than Avast; but overall, Avast is much better when it comes to their growth, sustainability, higher valuation and are publically traded.

Nevertheless – looking at the acquisition, it seems like a natural industry consolidation, along with an effort to exist rather than highlighting the importance of antivirus programs.

SAP joins the likes of Microsoft, Oracle, Target, etc, and launches their accelerator programe – SAP Start-up Studio!

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With many multinational giants partnering with start-ups to leverage their technology solutions in the market; corporate incubation and accelerator programmes have started to take the centre stage in the last few years. However, the Indian start-up ecosystem still remains to be ripe. There still are a lot of gaps that need to be filled in this market!

To capitalise in this market, and to help the start-ups with their desired needs, SAP too joined the likes of Microsoft, Oracle, etc., and recently launched SAP Start-up Studio!

What is SAP Start-up Studio?

Founded in April 1972, SAP SE (Systems, Applications & Products in Data Processing) is a German software corporation that develops enterprise software that helps businesses to manage their operations and customer relations effectively. With regional offices spread across 130 countries, 293,500 customers spread across 190 countries, revenues worth €20+ Billion and 76,986 employees; SAP is the world’s largest business software company and the third-biggest independent software provider by revenue.

Their offerings include: Business Solutions, Industry Solutions, Solutions for Small and Midsize Enterprises, Platforms and frameworks, Legacy Platforms and many others, that include products like ––– Customer Relationship Management (CRM), Enterprise Resource Planning (ERP), Product Lifecycle Management (PLM), Supply Chain Management (SCM), Supplier Relationship Management (SRM), that

This German software maker has recently launched their first 12-month accelerator programme called – SAP Start-up Studio and has picked Bangalore for its first start-up incubation centre. SAP has invested about $50 Mn (₹380 crores) in the facility

This SAP Start-up Studio at SAP Labs campus in Whitefield (Bangalore) will include a 75-seat incubator that would mainly be focused on nurturing early/disruptive stage start-ups within the domains of Internet of Things (IoT), Big Data, Cloud, along with verticals in retail and healthcare.

Their offerings would include financial assistance, access to space, technology, infrastructure, mentoring and business consulting, to early stage start-ups.

With an end goal of fine-tuning the business of these start-ups and take them to their next stage of growth ––– every year SAP would take around 10 start-ups, provide them with the needed tools and resources and then give them access to the large base of SAP customers where appropriate.

The companies that have an idea or early prototype will be eligible to become a part of the programme and would be provided with guidance and support in building their business also by giving them access to SAP’s huge ecosystem of customers and partners. If required, SAP may also take an equity position in the company as well.

Which companies have been selected for the accelerator programme?

As of date – seven companies have been selected for the accelerator programme and have also received an undisclosed amount in funding.

These companies come from diversified backgrounds including – healthcare, retail, manufacturing, Internet of things (IoT) and B2B commerce.

As a matter of fact, SAP has also expressed keen interest in taking an equity position and referring a start-up to their M&A team for the next stage of growth if required.

The start-ups that made the cut are: –

  1. CloudKare: a cloud-based inter-operable electronic health record platform that makes healthcare efficient by removing paper from the ecosystem.
  2. BluBirch: an end-to-end reverse supply solution to maximise value from unutilised/returned IT inventory of retailers, enterprises, and OEMs (Order Equipment Manufacturers)
  3. ai: a Ratan Tata-funded company that provides a chat-bot concierge that closes transactions by accepting customer orders and fulfils it through partner merchants.
  4. Sellerworx: an eCommerce technology solution that helps SMEs (Small Medium Enterprises) manage their online operations across marketplaces such as Amazon, Flipkart, etc., and become active on eCommerce platforms
  5. Stratawiz: an app that helps to enhances the performance, productivity and engagement of sales teams with themes such as gamification.
  6. Moglix: an online marketplace to buy industrial products
  7. Ecolibrium Energy: an energy analytics platform that helps business optimise their power consumption and manage their usage of energy well. It is a device-and-high-end automated analytics play that offers insights into using their energy resources better.

There are three more start-ups that will make it to the Studio that would be named over the next few months.

Why did SAP start an Accelerator Programme in India?

According to NASSCOM (National Association of Software and Services Companies), being home to one of the fastest growing ecosystems of start-ups and one of the most fertile grounds for new businesses; India is now being recognised as one of the most beneficial markets for start-ups. The number of new companies launched in India has also grown by 40% in the last one year.

They, for a fact, realise that start-up innovations are happening in India and they also recognise that they have to support the Start-up Policy that was launched earlier this year by the Prime Minister of India.

Hence, the aim of SAP Startup Studio is to support Indian start-ups with a complete ecosystem, and since this initiative perfectly fits into their philosophy of fostering entrepreneurship and promoting innovation for growth and development; SAP Start-up Studio will definitely serve as a catalyst to further accelerate the growth of start-ups.

In fact, during the launch of the SAP Start-up Studio initiative, SAP Labs also announced that they are even changing their HR policies to encourage their 8000 odd employees to become entrepreneurs. If any employee wishes to start their own company, they can take a two-year sabbatical from the company and do so. If the start-up succeeds, then they can continue their business or they can come back to SAP.

Having said that – SAP’s entry into the start-up space started in India is not new! The company has been involved with start-ups here, in a stealth mode since the last two years now.

It has also been running a social entrepreneurship and innovation programme in collaboration with the Centre for Innovation, Incubation and Entrepreneurship (SAPCIIE) at the Indian Institute of Management (Ahmedabad).

Why Corporate giants are actively getting involved with start-ups in India?

To understand this, we must zoom out and take a look at the start-up ecosystem from a broader perspective!

For the first 10-15 years, the multinationals were setting up GICs (global in-house centres) here to save money. The initial push for the GICs had come from the reforms in TRIPS (Trade-Related Aspects of Intellectual Property Rights).

These reforms provided an IP (intellectual property) protection, due to which, the R&D centres had mushroomed. During that time, more than 85% of the patents that were filed in India came out of the labs of multinational companies. Then suddenly, it all became about talent, and GICs became value centres.

And recently, since the last few years, this has moved on to tapping start-ups, and the GICs are now looking for breakthrough innovations that will help their parent companies.

According to a report filed by consultancy firm Zinnov, there are more than 40 accelerators in India and one-third of them have been started by the multinationals.

In fact, some giants like Google and Microsoft have adopted a two-branched strategy wherein they invest, as well as incubate start-ups. Google Capital ( the in venture arm of the Google) has already invested in four Indian start-ups, while their accelerator programme called – Google Launchpad has recently inducted its second six-month mentorship batch that takes place at the Google headquarters in Silicon Valley.

Other than these, most recent entrants include – Cisco, Autodesk, Amazon Web Services, Oracle, Microsoft Ventures, Target, etc. At par with these MNC’s; the International Institute of Information Technology Bangalore (IIIT-B) and the Indian Institute of Management Bangalore (IIM-B) have also entered into a Memorandum of Understanding (MoU), to enable them to work together to provide deep technology and business mentorship for young technology start-ups and entrepreneurs, as well.

These new-age programmes offered by the corporates come with a mutually beneficial partnership that provide luring benefits to the small companies such as innovative solutions and a ready market to test them.

Clearly, large corporates are now realising the imminent threat that they face from these young, growing and disruptive start-ups. They realise that it is in their best interests that these start-ups use their technology and these programmes are a good way to make ensure this.

And the recent initiatives implemented by the government, especially the Digital India, Make in India and Smart Cities projects; the multinationals have further attracted these corporates towards the third largest start-up ecosystem.

Being the third most lucrative and emerging start-up destination (behind the US and the UK), last couple of years have been phenomenal for the start-up ecosystem in India.

Evidently, it remains a fact that, start-ups are the fastest to develop a product and make it ready for the market. India accounts for more than 4200 start-ups, out of which 72% of the founders are below the age of 35. The recent policy changes and the technological evolution have helped the ecosystem furthermore.

Due to these factors, the multinationals have been quick to understand the scope of this energetic community, making India a destination of choice for the corporate accelerators!

Aditya Birla Fashion and Retail triumphs Myntra, and acquires Forever 21 for $26 Million

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The news…

So the latest news is that “Aditya Birla Fashion and Retail” or as they like to call themselves – ABFRL, has acquired the global clothing brand “Forever 21” in the Indian market for $26 Mn (that is ₹175.52 crores approx).

They have executed a business transfer (not share transfer) agreement with “Diana Retail” and “DLF Brands” for the acquisition of the business undertaking of Diana Retail with effect from July 1st of 2016. Diana Retail is the franchisee of Forever 21 brand in India.

As per the BSE filing by ABFRL, the transfer includes the acquisition of, all of Forever 21 brand including their eCommerce channel that operates in the Indian market, which will now become a part of ABFRL’s Madura Fashion & Lifestyle division.

The news that was first announced by ABFRL in May this year, finally saw the daylight when the Board of Directors of ABFRL in-principally approved the proposal to enter into a binding Memorandum of Understanding [MoU] with Forever 21. This MoU states in detail, the acquisition of the exclusive online and offline rights of the global brand – Forever 21 for the Indian market along with their existing store network in India from their current franchisee i.e. Diana Retail Private Limited.

Although, the details of the deal have not been disclosed, but keeping in mind the longer vision that both the companies hold, it is being assumed that they have signed a long-term partnership together that probably spans to more than a decade.

This announcement on the 6th of July boosted Aditya Birla Fashion’s stock prices to end with gains of nearly 1.29% at ₹145.45 on the BSE, and further rose to a 2.34% growth to ₹148.85 on the 7th of July as well. Aditya Birla Fashion’s revenue stands at ₹1442 crores, and Diana Retail’s revenue was at ₹262 crores (2015-16).

Interestingly, Flipkart-owned online fashion store Myntra was also in talks to buy the rights of Forever 21, as well. They were in advanced talks to manage the local business of the US fashion retail chain.

Myntra, since a while was looking at ways to make an entry into offline retailing and was also exploring the possibilities of opening its branded offline stores, and with such moves, the eCommerce firm was trying to de-risk their business from being online-only focus brand. And Forever 21 opportunity would have helped them gain the desired momentum.

In fact, handshakes had also happened between the two parties and the documentation was also happening.

But then ABFRL came and stole the show, and acquired the rights for global fashion chain Forever 21 in the country from DLF Brands.

What factors led to the acquisition of Forever 21?

 Forever 21’s perspective

Founded in 1984, Forever 21 Inc is the 5th largest speciality fashion retailer of women’s, men’s and kids clothing and accessories, based in Los Angeles (California). It is most known for offering the hottest and latest fashion trends at a great value to consumers.

Globally, Forever 21 operates more than 730 stores in 48 countries with retailers in the United States, Australia, Brazil, Canada, China, France, Germany, Hong Kong, India, Israel, Japan, Korea, Latin America, Mexico, Philippines and United Kingdom.

Forever 21 had entered the India market through the franchise route in 2011. It had partnered with Dubai-based “Sharaf Retail“, but since the business failed to scale up in the next two years; the Dubai company was asked to close down the lone store in New Delhi in early 2013.

Post that, Forever 21 cancelled their franchise agreement with them, formed a joint venture with DLF Brands and opened ten stores — in the National Capital Region (NCR), Mumbai, Pune, Bangalore, Thane and Hyderabad.

Even after working along with its Indian counterpart DLF for around three years, the apparel company Forever 21 that then had 12 stores across Mumbai, Delhi and Bangalore, had been dissatisfied with the pace at which they were growing.

Initially, the JV between Forever 21 and DLF brands was being noted as a pitch perfect partnership, and Forever 21 was to occupy a space at a competitive rent in DLF owned malls.

The company had originally planned for 50 stores in five years; in addition to Chandigarh, where it already had a presence, the US firm also wanted to expand to other Tier II cities such as Coimbatore and Surat, as well.

But over the period of time, Forever 21 realised that DLF’s malls were not always the most lucrative shopping destinations for the consumers.

Even after being amongst the top three or four brands in the fast fashion space, being one of the best performing international brand in India and even after maintaining its run rate or average trading density (which was much higher than the industry majors) despite competition from newer entrants like Zara, H&M and Gap; Forever 21 still highly lacked the needed partner, to reach where it aimed to!

They wanted an aggressive play in the country to compete with brands like H&M and Gap, who were aggressively multiplying their store presence. They clearly weren’t getting that from DLF, which meant DLF had to go!

And consequently Forever 21 opted to team up with ABFRL!

ABFRL’s perspective

Aditya Birla Fashion and Retail (ABFRL) was formed after the consolidation of the branded apparel businesses of Aditya Birla Group that included Aditya Birla Nuvo Ltd’s (ABNL’s) Madura Fashion division and ABNL’s subsidiaries – Pantaloons Fashion & Retail Limited (PFRL) and Madura Garments Lifestyle Retail Company Limited (MGLRCL), in May 2015. This consolidation created India’s largest pure-play Fashion and Lifestyle Company with a strong bouquet of leading fashion brands and retail formats and annual sales of ₹5290 crores.

Post the consolidation, PFRL was renamed to Aditya Birla Fashion and Retail (ABFRL), with over 7,000 points of sale in over 375 cities and towns.

Unlike DLF brands, ABFRL is known to be one of the largest apparel players in the country, with apparel as their core category for the company, and also has manufacturing units that could become sourcing hubs for Forever 21 as well.

Forever 21 was a brand that many women had fallen in – and out of – love with. They were the perfect fit for the young, cash-strapped customers who wanted to get their hands on stylish clothing.

Ultimately, the name “Forever 21” says it all!

To a young woman who can’t legally drink yet, turning 21 is the dream. This cheap, short-lived fashion doesn’t bother this consumer.

And Forever 21 targets exactly that girl, who is not yet interested in purchasing quality clothes; but instead, just wants to look good. And when that girl moves on, another crop of girls entering that age group, enter Forever 21’s target audience.

Additionally, on the business end, as per a recent poll conducted by Goldman Sachs and Teen Vogue amongst its fashion influencers between the ages 13 and 29, it was noticed that, these age segment of girls not only like Forever 21 – they love it!

Beating other –fast-fashion majors like Urban Outfitters and H&M; Forever 21 came in at number 8 on the list of brands that matter to fashion-forward “It Girls”, and also topped the ‘Love List’ as well.

Keeping all these factors in mind, Forever 21 would have been the perfect fit for ABFRL to maintain its dominance in the fast fashion space. Along with that, this partnership would also help them in expanding their market in the foreign territory by using Forever 21’s expertise and connects!

End Note

The acquisition by ABFRL is being noted as a strategic intent to position themselves as the largest integrated branded fashion player in the country, more specifically in the women’s wear segment, which is currently growing at more than 20%.

While on the other end, since Forever 21 has built a very strong franchise in India in the last few years and has already become a brand of choice for fashion focused women; it aims to become one of the largest women’s wear brands in the country too.

And the emergence of the young demographics of the country along with fast fashion segment, offers them the perfectly blended opportunity for rapid growth for the brand as well.

Hence, for a brand like Forever 21, that is focused on teen fashion at moderate prices (₹800 -₹7000) and an aggressive expansion agenda, ABFRL is more than strategic and perfect fit.

And, thus the partnership of Forever 21 and ABFRL is a clear win-win!

 

Nykaa.com: a one stop destination for all the beauty and wellness products!

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The Beauty & Wellness space in India stands at a whooping ₹50,000 crores and is set to grow at a 15-17% rate Y-o-Y. But, aside for a few biggies, there aren’t many beauty-focused multi-brand retail format eCommerce stores in the market.

Having said that – technology is evolving, and since the consumers are getting more aware of international trends, the Indian beauty market remains to be an untapped market, which, with the entry of new players, is getting crazier and interesting at the same time.

What is Nykaa.com?

Started in April 2012 and operated by FSN eCommerce Ventures – Nykaa is a Mumbai based eCommerce premier online beauty and wellness destination that offers beauty and wellness products for men and women at best prices.

Derived from the Sanskrit word “Nayaka” that literally means “Actress” or one in the spotlight, Nykaa.com is all about celebrating the star in you…

With 35000 products from more than 400 curated, well priced and 100% genuine brands, Nykaa offers a comprehensive range of makeup, skincare, hair care, fragrances, bath and body, luxury and wellness products for both, women and men.

Additionally, one can also avail beauty services such as Spa/Salon, At Home, Skin Treatments, Makeup Artists, Diet Consultants, Gyms, Misc. Services, etc, as well.

As your beauty buddy, Nykaa also offers expert advice and guidance, through their must-read Beauty and Makeup Blog – ‘Beauty Book’, which accounts from 25 leading makeup stylists, skin, hair, personal care and wellness experts who answer any questions or concerns that one may have related to beauty, health, nutrition and personal care. This section also includes a Virtual Makeover tool to try and share different makeup looks as well.

Beyond that, Nykaa also has a section called – ‘Ask Nykaa’, which is a community of fellow members of the portal for all the questions and doubts that one may have before they purchase a product from the site.

Accolades & CSR

‘The Most Innovative Ecommerce Company’ award at the e-Tales Awards (2015)

Collaborated with Femina to host the ‘Nykaa.com Femina Beauty Awards’ (2015 and 2016)

Nykaa raised funds for Project ‘Nanhi Kali’ (an Indian NGOs for Girl child Education that provides primary education to underprivileged girl children in India) on the occasion of International Women’s Day (2015)

What is their Business and Operating Model?

Unlike bigger e-commerce players who prefer the marketplace model, Nykaa believes in storing most of their inventory; 85%, to be specific! This leads to a much more superior user experience with extra fast delivery.

Below mentioned are the steps to place the order: –

  • Visit www.nykaa.com
  • Click on “Account” on the top right-hand corner of the page and then “Sign Up” to register with Nykaa
  • Once you have shortlisted your choice of purchase, click the “Add to bag” button to add them to your shopping bag
  • Click on your shopping bag on the top-right corner to use the offered discount coupons by clicking on “Got a Coupon Code? Apply it here”.
  • Next, click on the “Checkout” button and fill in the email address, shipping address, and payment details.
  • Then, click on “place order” to go ahead
  • Once the order is placed, you will see a confirmation page with an order number. This would also be emailed to you as well.
  • After the ordered products pass through the final round of quality check and inspection, they are packed and handed over to Nykaa’s trusted delivery partners and are delivered
  • The orders are dispatched within 1-4 business days (excluding Sundays and public holidays). Nykaa ships their products across the country with the help of leading and reliable courier companies.
  • Some of their payment options include: Debit and Credit Cards, Net banking, Cash on Delivery, PayUmoney, Wallets, e-Gift cards, Wallets, e-Gift cards

Additionally, to maintain the reputation for product quality and reliability, Nykaa makes sure to put in all the efforts to do so, from – random sampling of products that are near expiry, surprise checks at the warehouse to make sure all quality control measures are implemented, and choosing the most reliable courier partners across the country.

Plus, to ensure that no fake products are sold, Nykaa also controls the entire value chain from product sourcing to final sale too.

For any queries, feel free to contact them on support@nykaa.com or chat with them by clicking on the “Chat with us” tab at the bottom of the screen.

What kind of partnerships do they have?

Nykaa.com sells over 350 brands and 35,000 products and ships to almost 9,000 zip codes in more than 900 cities across the country.

To achieve that, they have partnerships with some of the world’s best personal care giants including Unilever, P&G, L’Oreal, Beiersdorf, Johnson & Johnson, along with popular Indian brands like VLCC, Khadi, Parachute, Himalaya, etc, and have also partnered with India’s top distributors of international luxury and premium brands.

Nykaa.com is also the only authorized online retailer of luxury fragrances in India that offer top-of-the-line luxury fragrances from brands such as Calvin Klein, DKNY, Davidoff, Yves Saint Laurent, Giorgio Armani and L’Occitane, as well.

What strategies have they adopted?

Nykaa focuses on targeting the beauty conscious Indian woman; more specifically, their customers fall in the age groups between 18 and 34, where the Female: Male ratio is 75:25. To target this audience, Nykaa follows unique strategies!

Nykaa started with commercial marketing from April 2013!

The company has categorised their customers into three types: First – are the ones who are short on time, and eCommerce is perfect for them; Second – are the ones who are the beauty addicts, who know exactly what they are going to buy; and lastly third – are the ones who are newbies and don’t have much about makeup or beauty and don’t really know what to look for.

In a constantly evolving internet, their marketing mix sometimes almost changes daily, and primarily focus on the content.

Firstly, the company offers a lot of education through their online magazine “Beauty Book”, and also have a YouTube channel called “Nykaa TV” on which they keep uploading a number of how-to videos.

They also have videos and content on their product pages, and also showcase something called “Nykaa Decodes” where they carry articles and also have experts answering online too.

To promote this content, Nykaa makes heavy use of social media platforms for lead generation and also launches various offers to convert them into sales. With the lucrative and attracting contents and videos posted frequently, the company has used effectively the social media platforms.

Using the social media and their content, Nykaa, as a brand has managed to gain a pan-India presence amongst their targeted audience.

Other than that, they also provide various offers and discount coupons to customers and as well.

More recently, since the launch of their own Private Label and Beauty Services it has become imperative for them to extend their marketing strategy to some amount of offline activation; hence, Nykaa also has taken a bold decision and opted to try out Experiential Marketing for their promotion, as well. This will allow consumers of Nykaa engage with them more, and get more deeply involved with their journey as a brand.

As a strategy, they would be bringing in a range of creative elements to their customers at different periods of the year 2016.

Who leads the brand?

Nykaa.com is the entrepreneurial dream of Falguni Nayar and was founded in April 2012.

She is married to Sanjay Nayar (CEO – KKR India, the India wing of the American private equity firm that specializes in leveraged buyouts), and has two children – a son who works with Morgan Stanley in New York, and a daughter, who works with Falguni itself.

A mantra that she lives by is – “Retail is all about Detail” and is often heard propagating the same too. Hence, her close eye to detail, keen involvement in every aspect of the firm and passion for the business are the qualities that make her a great leader.

Falguni is an IIM-A (Master of Business Administration – Finance, General) pass out and had completed her graduation from the Sydenham College in Accounting and Business/Management, as well.

She started her career with A. F. Ferguson & Co in 1985 and went on to work with them for more than 8 years.

In 1993, Falguni joined Kotak Mahindra Bank as a Head of their Investment Banking division.

After eight years of managing their international operations in the US and the UK; Falguni then moved on to take over the role of Managing Director of their investment banking business in 2005. Over the period of 10 years, she successfully leads the firm to become India’s leading IPO bankers and was also the key person behind the closure of a number of successful M&As as well.

Finally, in 2012, she left Kotak to start her own venture – Nykaa.com!

Other than that, she was a Founding Member of the Asia Society in India, and also sits on the boards of several companies, including the Aviva Insurance Board, Dabur India, Tata Motors (as an Independent Member), as well.

Over the period of time, – she also has managed to receive many accolades throughout her career. The most notable ones include: –

  • the FICCI Ladies Organization (FLO) award for the top woman achiever in the field of banking
  • the Business Today award recognizing her as one of the top 25 women in business

How has been their growth so far?

Falguni founded Nikaa.com when she was looking at various business options. This one particular trend that she noticed was countries like Japan, France, and Europe had stores like Harrods, Bloomingdale’s and Saks Fifth Avenue that offered a wide range of beauty products and fragrances. But unlike them, even after having a huge demand, India did not have many such outlets.

Later, she also studied and observed Sephora – a US-based multi-brand retailer, which offered its customers an unbiased advice about multiple brands and products.

Around that time, the eCommerce sector had begun to take off in 2012 when she quit investment banking. There was a need for a multi-brand retail format in the beauty business in India, and the millennials exactly knew what they wanted and were also open to change.

So if you wanted to cater to such customers, a few brands on display would not have been enough; but instead, you’d need performance-based products!

She understood that this segment had a large market to be catered and eCommerce would be more efficient way to service all the customers with a long-tail inventory market in India.

Hence, inspired by the concept and a keen interest in the segment; Falguni along with her banker husband Sanjay Nayar, started Nykaa.com. The Nayars invested $2 Mn from their own pockets and controlled roughly 95% stake, while employees held the remaining stake.

They started off with an extensive selection of curated and branded products through an initial offering of 100+ brands and 4000+ SKUs (stock keeping units), and received their first order on 24th October 2012.

In the next two years, not only did Nykaa open their first physical store in Delhi’s T-3 Terminal (August 2014), but were also booking a staggering growth of 323%, with 1.5 million visitors and 50,000 unique visitors a month.

They had now expanded to over 350 brands and 35,000 products and were also claiming to have sold more than 1.25 million products to 178,659 customers till date.

They were now directly competing with companies like Purple, as well as large online retailers such as Amazon.

More recently, the company has also introduced their privately labeled products in the bath and body care category and have also expanded their physical outlet to Mumbai airport as well.

Talking about their funding – Nykaa.com has raised a total of $12.9M from a clutch of investors, including high-net-worth individuals (HNIs), non-resident Indians (NRIs) and family offices, along with TVS Capital, Atul Nishar, Harsh Mariwala, Dalip Pathak (who established the India business for private equity firm Warburg Pincus, LLC in 1994), Techpro Ventures Private Limited, etc…

Going ahead, Nykaa aims to open offline stores in Mumbai, Delhi, and Bangalore by the end of this year. They also intend to raise roughly ₹100 crores more, to expand their private labels and offline stores, and for marketing and setting up warehouses.

“In our last fund raise we got a post-money valuation of ₹425 crore and now we expect the pre-money valuation to get better as we start talking to our investors.

Nykaa will be expanding their brick-and-mortar presence under the Nykaa Lux brand, and are in plans to grow up to 30 stores by 2020.

 

Eros Now partners with Micromax to offer digital content

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The News:

Eros International Plc, a leading company in the Indian film entertainment industry that operates Eros Now, recently announced that it had got into a strategic partnership with its Indian counterpart, and the 2nd largest mobile vendor in India – Micromax Informatics to offer digital content to the consumers.

Eros Now is Eros International Plc’s leading on-demand Bollywood and regional language entertainment network accessible anytime, anywhere, on most Internet-connected screen including mobile, web, and TV.

While, Micromax Informatics Limited is one of the leading mobile phone players in the world is currently the 2nd largest mobile vendor in India with a market share of 14.1 percent, with an offline presence in more than 560 districts through 130,000 retail outlets and online presence through its own e-store and leading e-commerce players in India.

As a part of the deal, Eros Now be attempting to bring endless entertainment to Micromax consumers, by providing them with cutting edge OTT (Over the top) digital content and video-on-demand service, through a preinstalled smartphone app.

For all those who are confused; Over-the-top content (OTT) is the delivery of audio, video, and other media over the Internet without the involvement of a multiple-system operator in the control or distribution of the content. (Source: Wikipedia)

Simply put – OTT is the term used for the delivery of film and TV content via the Internet, by charging a minimal subscription fee. Hotstar, for example!

Micromax smartphone users have the option of choosing their subscription package (₹49/ month or ₹99/ month), duration (that ranges from one month to a year), and get access to unique content that would be offered by Eros Now.

These subscriptions would include a range of exciting features, such as: offline viewing of content, full-length movies, thematic curated playlists, watch-lists, regional language filters, video progression, subtitles, and a lot more. This also includes TV shows from Sony TV, Sab TV and Hum TV for its audience. Plus, the service will also let users in rural areas enjoy content even on low bandwidths too. Additionally, music-lovers also get to enjoy individual music tracks and music video playlists using the app as well.

The growth of fast and reliable internet, and access to affordable big screen devices, has led India to the cusp of a digital revolution. And India being a nation that is simply crazy about TV shows and Movies, this comes as refreshing news for many.

How will this partnership benefit Eros and Micromax?

Beginning with Eros – in the recent times, Eros has been aggressively and strategically partnering with brands in various ways. For instance, in the beginning of this year, Eros Now signed a platform and content deal with Telecom operator Idea Cellular, which would enable Idea 4G customers to purchase subscription at affordable rates and watch movies, originals and short form videos.

Then, just last month itself, they partnered with Amazon.com to offer their video-on-demand (VOD) service Eros Now on Amazon Fire TV, to showcase their arsenal of Bollywood and regional language films, music and originals to Amazon Fire TV users across the US, UK and Western Europe, too.

All this came just after other telecom operators such as Airtel and Reliance had launched their own services Wynk Movies and Reliance Jio, respectively, to offer full suite of Movies, Music, News etc.

Eros Now, at this point boasts of more than 3,000 movies in multiple languages in its catalogue, and is seen to be growing this list, at an exceeding fast rate. And through this deal, they will get to leverage Micromax’s existing millions as well as new Smartphone user base and also their 1.5 Lakh retail outlets in India, where they can channelize their digital content.

Rishika Lulla Singh (CEO – Eros Digital), further adds to this and says, “With this partnership we will be expanding our ability to provide entertainment on-the-go, anywhere and anytime to Micromax’s new acquisition of 3.5 Mn users every month and also their existing base of more than 30 Mn connected users.”

Talking about the benefits of Micromax – after the success of their Canvas series and subsidiary, Yu Televentures, Micromax has also seen to working aggressively towards building its services portfolio to offer convenience and exceptional digital experience to its consumers.

For instance, in April this year, Micromax announced a strategic partnership with digital payments company TranServ and global payments technology major Visa to offer the next generation of payments solutions in India. The partnership would use Visa’s unique digital payments products and TranServ’s fin-tech capabilities to promote indigenous digital payment infrastructure.

Speaking about the venture, Vikas Jain (Co-founder – Micromax Informatics Limited) said that, “We are extremely excited about this partnership, as it promises to make the digital content from cinema, movies and videos available to our urban and rural customers.” Beyond urban cities in India, Micromax has found mobile internet to be one of the most favored connectivity options in rural cities. This tie up helps us to enhance the experience for our customers beyond hardware specifications. The rich content library of Eros Now promises to become a part of the daily digital consumption of our customers.”

So if you look at the partnership closely; it’s a win-win for both, Eros and Micromax! This partnership simplifies the task of discovering great content anytime, anyplace, and on a device of your choice.

How can OTT (Over the Top) Content, speed up digital India’s success?

This may look a little confusing, but I’ll try to keep it uncomplicated!

Now, to begin with – there are four statistics that we need to look at!

First – at this point, there are about 66 Mn unique connected video viewers and about 1.3 Mn OTT (over the top) paid video subscribers, in India.

Second – the “fixed broadband subscriber” numbers are set to jump from 16.6 Mn in 2015 to 28.3 Mn by 2021, and the “wireless broadband subscribers” would increase from 120 Mn to 622.1 Mn during the same period, in India.

Third – to capitalize on this huge market, many of the telecom operators have started offering 3G and 4G services at affordable prices, as well. Basically, faster internet!

And the Fourth – India will also have about 170 million smartphone users by 2016.

So, when you sum it up – low-cost smartphones, along with low tariff rates, faster internet and more Internet usage would in turn, further drastically increase the consumer demand for online content in the coming years.

Overall, Digitization is transforming the television viewing experience, altogether!

This has also led to emergence of numerous OTT service providers in the past two years including – broadcasters, portals, start-ups, and video aggregators such as Netflix and Hotstar.

And this is exactly where VOD (Video on demand) or OTT (Over the top) players intend to leverage on the market opportunities.

Keeping these statistics in mind, content owners and aggregators are using non-TV platforms to improve reach and generate revenues through subscription and advertisement, as well.

Such projections also explain why OTT firms in India are betting on this market!

Having said that – even after the increase in traction and the entry of Netflix and domestic players like Hotstar; a single definitive business model in the country’s OTT (over the top) content market still seems to be missing.

By a single definitive business model, we mean – a model which would not charge the consumer to watch the same content on both, the TV and Internet! Charging for Niche Programming, is fine, but what about the rest?

The problem here is that, the development of mobile services is very different from the satellite and pay TV industry.

Of course there is no doubt that – Mobile has great potential as a content distribution platform! But for this to materialize, two fundamentals of: increase of smartphones and strong networks providing internet services covering the entire country, must be met.

However, the bigger question is that – “How do you develop a business model in which you would convince the viewers to pay the content owner again, for the same content you can or have viewed on the TV (that you paid for), on the second screen (the internet)?” Hotstar is a fine example of how a broadcaster can create a second screen.

And it is also not viable for content owners to enter into an arrangement in which they do not make subscription and advertising revenues.

Nevertheless, the solution to all that will find its way, in due course of time!

But speaking overall, the OTT is definitely a great market and will see a rapid growth in the near future.

Plus, the bonus to everything else is that- the unsolved and deeply spread Piracy problem of India will also see a decline!