VyaparNeeti

START-UPS ON THEIR JOURNEY OF BEING PUBLIC

Zomato, Nykaa, PayTM, Delhivery — They’re all pitching up to go public. It’s more or less as if the Indian start-up ecosystem met at formerly and decided this was the most seasonable moment to IPO in India. But why? Why now? Well, we can’t say for sure. But we can presume on the matter.

For starters, this whole IPO rush isn’t just limited to India’s coveted tech start-ups (if you can still call them that). The IPO bug has stunk everyone. Between April and May this time, 20 companies have filed their prospectus. That’s them telling the controller — “We ’re ready to go public.”

And the list includes companies from colorful disciplines. We’re talking about airline companies, quick service cafes, life wisdom companies, small finance banks, asset operation companies, and so on.

But that still doesn’t tell us why these people are so agitated. What’s so special about the present moment?

Well, one possible reason could be this — “There’s just a lot of money going around now.” And we know what you’re allowing — “ At a time when the frugality is in the doldrums, who’s got money? Where is it floating exactly”?

The answer to that's a bit complicated. But you can suppose of it this way. Central banks have been pumping new money into rotation in the expedients of easing some of the effects of the epidemic. This money enters the banking system and ultimately makes its way into fiscal requests — substantially stocks. And that means there’s ample money floating around in big institutions that have the fiscal muscle- power to invest in IPOs. So, the argument goes that start-ups are confident about generating substantial interest if they were to go public right now. The alternate argument is that we're formally in a bull run.

Stocks are on the up. They're going to the moon, some say. And if you ever wanted the Indian public to subscribe to your vision and the IPO, this seems like a veritably good time, doesn’t it?

Indeed if you’re a loss-making reality, the bull run could incentivize investors to pour in new money. They’ll go where the flow takes them. They like instigation. And if this plan works out well, perhaps these start-ups could command an indeed advanced valuation than they first anticipated.

Another proposition is that several internet startups including the likes of Zomato have served from the epidemic. Their figures are more robust now. Sure, you could argue that the first many months of the lockdown weren’t inescapably conducive for business, but also numerous start-ups have gone on to acquire new guests, bolster their financials and add a bit of steadiness on topmost. They would have done it anyway considering numerous of them have been aspiring to go public for a while now, but the epidemic expedited this action.

Eventually, there’s the nonsupervisory aspect nothing is talking about. SEBI has functioned on making it relaxed for startups to list in India. There was a time when internet start ups went to the US. And effects were looking enough bleak until SEBI introduced the Originators Growth Platform and made changes to make it easy for Indian start ups to list domestically. Rumour has it that the controller may continue to push reforms in a shot to list further Indian start ups in India.

So yeah, all in all, there may be numerous factors at play then and indeed if not all of these start-ups list in 2021, you could go that they will list sooner than latterly.

Author: Aanchal Agrawal

What is stopping Tesla to enter India?

In today’s blog, we will witness why Tesla is not able to make its debut in India.

In the current scenario India is considered to be a sleeping giant in the Electronic Vehicle (EV) market, globally. This is not only because it is the world's fifth-largest auto market, but mainly because of its huge potential to grow. With Indian government finally realising the potential & importance of the EV market, our country, with huge middle class population, is attempting to lessen its carbon footprint, with inexpensive labour and raw materials to bring the tremendous benefits of EV adoption across the board.

This is why the world is surprised with the absence of Tesla from the Indian market. Tesla being the most well-known brand globally, has yet to create an impact in India. However, this absence is not due to a lack of effort.

Tesla is chasing the Indian market since 2019. To put a highlight on its efforts, the company has already registered in Bengaluru and has been hiring people in India. Moreover, seven Tesla cars have received certifications by the Indian Authorities – declaring them as roadworthy. Considering everything, Tesla cars are still not on roads yet. Adding on to this, Elon Musk – founder of Tesla, recently replied to a relevant tweet by saying, “Still working through a lot of challenges with the government”.

We don’t know if this was an honest reply or a well thought strategy, but his reply to a tweet sparked a significant political uproar. People started blaming the Indian government on social media and it was followed a dramatic stunt to get Elon Musk’s attention. Ministers from at least four major Indian states started sending invites to Musk, writing tweets to him, trying to convince him to set up Tesla’s factory in their state. They even started promising to provide land, infrastructure, a quicker approval procedure, and much more.

See how tempting this must have been for him? With just one reply to a tweet, he grabbed all the attention.

Moving forward, Elon Musk and the government have been in discussions for years, and it's unlikely that the issue originates solely from one single problem. There are several other problems as well. For instance, Import duties. Last July, he even admitted it while giving a reply to a random Twitter user.

He said, “We want to do so (launch in India), but import duties are the highest in the world by far of any large country! Moreover, clean energy vehicles are treated the same as diesel or petrol, which does not seem entirely consistent with the climate goals of India”.

Now, let’s look at our country’s import duties.

Import duties in India are some of the highest in the world. Stating a few facts – “India currently levies a 60% tax when you import a car priced below $40,000 and 100% for above $40,000. In contrast, most western countries like US and Canada apply single-digit rates, with emerging markets like China and Brazil levying rates of 22% and 35% respectively”.

Therefore, if we look at current import duties by India, even the basic Tesla model would cost more than ₹60 lakhs, which won’t be affordable to most Indian families.

When asked by government, they say that this move helps local manufacturers of India and will provide incentives to those who manufacture within India, helping in “Make in India” campaign.

However, if we analyse Tesla’s situation, they are not ready to manufacture their cars in India yet, as they are unsure of the supporting conditions provided in India. In other words, they want to first test if Indians are ready and are accepting the idea of futuristic cars, and then enter fully and manufacture locally as well. Moreover, EV cars are not widely accepted and its sales are just around 1% of total vehicles sold in India currently. Historically as well, the US car manufacturers, such as Ford and General Motors have faced failure in terms of setting up manufacturer units in India and have already exited the market.

Therefore, Tesla is not willing to set up its manufacturing plants yet and are looking to sell imported vehicles directly to Indian market.

In the end, we can just say that the import duty is playing a critical role and it seems very difficult for Tesla cars to enter Indian Automobile market anytime soon.

Hope you liked the blog. Please like, comment, and share!

Author: Ishant Ghai

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