E-commerce companies see business growth in smaller cities

Logistics in non-metro cities and towns is an area of challenge for e-commerce companies and a major differentiating factor vis-a-vis the metro cities

With rising Internet penetration and adoption of mobile devices across the country, companies selling products and services through websites are looking at smaller cities for expanding business.

“Non-metros play a vital role in the growth of e-commerce segment in the country primarily due to ease of purchase... The convenience of shopping online and access to best international brands is driving this growth among non-metro markets,” says Mukesh Bansal, founder and CEO, Myntra.com, an online shopping portal.

According to eBay Census 2011, a study on the Indian e-commerce landscape released last year, as many as 3,311 Indian cities shopped online between 1 July 2010 and 30 June 2011. Of this, over 1,267 were non-metro cities.

“Metros have a dominant share of purchases, with Tier 2 and 3 cities catching up fast. Metros contributed 51% of all e-commerce transactions while Tier 2 and 3 cities contributed about 40% and rural India 9%,” the survey said.

While consumers in the metros buy products and services mainly because of convenience, those in the non-metros buy due to non-availability of products.
Big brands don’t find it viable to open shop in small towns and e-commerce is the perfect route to deliver their products to those whose can afford from non-metros, it said.

Echoing a similar view, Siddharth Puri, senior marketing manager, Fetise.com, an online shopping community for men said, “Fetise get 500-700 orders a day on an average of which about 150-220 are from the non-metros.”

Online shopping portals expect the number of orders coming in from these areas to go up further helped by rising Internet penetration, growing purchasing power and adoption of mobile devices.

“Use of mobile Internet and smart phones has definitely given a push to this sector as the access is available to the consumers on their fingertips,” Mr Puri said.

According to a Google report, over 70% of search happened in non-metros and over all 50 million people logged on to the Internet from mobile phones in 2011.
Valyoo Technologies, which runs three e-commerce site—Lenskart.com, Bagskart.com and Watchkart.com, online shoe store Fashos.com and consumer durables selling website Greendust.com—gets around 50%, 70% and 28% of its business from non-metro cities respectively and have plans to scale their business in these area.

However, logistics in non-metro cities and towns is an area of challenge for these companies and a major differentiating factor vis-a-vis the metro cities.

“The market size of online stores in India is about over Rs2,000 crore and is expected to grow to about Rs7,000 crore by 2015. The only challenge for an e-commerce organisation is logistics; last-mile-delivery and consumers still being hesitant to use debit or credit cards online” Mr Puri said.

E-commerce firms expect their business to boom once broadband connectivity across country as planned under National Broadband Plan is delivered and ecosystem for broadband on mobile is developed.

“Broadband connectivity is still a major hurdle for adoption of e-commerce. Once we figure out foolproof mobile shopping and payment system, I believe more people will use it for shopping than laptops or desktops.” Tradus.in MD Krishna Motukuri said.

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More trouble for Dhanlaxmi Bank, says trade union

The DBOO has appealed to the new management to undo the damage done in the past three years by the previous team. This apart, the All India Bank Employees Association has appealed for merging Dhanlaxmi Bank with another public sector bank

Dhanlaxmi Bank Officers Organisation (DBOO), the trade union of the bank has hit out hard on the recently resigned managing director (MD) and chief executive officer (CEO) Amitabh Chaturvedi and its management for the poor plight of the bank and meticulously hiding all the facts from the public.

In a circular issued, DBOO said that the bank which booked profit of Rs57 crore in 2009, is about to show dismal result for the December 2011 quarter. The union has also refuted all stories published in the media crediting Mr Chaturvedi for the growth of the bank.

According to DBOO, “The leading business daily Economic Times dated 6th
 February reported the plight of the ex-MD who had increased the total business from Rs6,500 crore to Rs24,000 crore, who raised the pay  and  performance  linked bonus,  resigning from the bank  embittered  by the actions of notorious trade unions!  Shed your crocodile tears for the MD. What a brilliant show management.”

It adds that, “The former MD, Amitabh Chaturvedi was even claiming the credit for 100% core banking  implementation which in fact happened years before he took  charge of the bank. How cleverly the management hid the continually dwindling profit of the bank from public view.”

The circular states that the MD’s decision to resign ahead of its quarterly results announcement is a sign of more trouble for the bank. In fact, the DBOO also accused the media management team for projecting a growth story when the bank was in dire straits.  

Contrary to the media stories stating that Mr Chaturvedi’s decided to quit due to his difference with the management, DBOO says that, “…the apex bank, RBI (Reserve Bank of India), showed its displeasure on the MD after getting  the memorandum  from the AIBOC regarding the health of the bank. It is common man’s guess that the MD has put in his papers due to the intervention of RBI because of his non-performance.  However, he is still using his clout with the media to project himself as a martyr. A post mortem is needed to uncover the full dealings of the MD and his associates, right from October 2008 onwards.”

Moneylife was the first one to report the bruising battle between Dhanlaxmi Bank and its union. The All-India Bank Officers Confederation (AIBOC) alleged that the bank has manipulated accounts and provisioning, has a mismatch in asset-liability resources, maintains poor capital adequacy ratio and has huge dependence on call money borrowing. It has also accused the bank for ignoring social banking and financial inclusion. Subsequently, last year in November, the RBI conducted an inspection and issued a 15-point Monitorable Action Plan (MAP) to Dhanlaxmi Bank.

The trade union has also questioned the RBI for its inaction. “How could the banking regulator ignore the “early warning signals” and let the mismanagement continue for this long? Why this sudden reversal of fortunes:  The bank that was making a profit till the last quarter, report a dismal performance, all of a sudden?” the DBOO said in a statement.

The DBOO has appealed to the new management to undo the damage done in the past three years by the previous team. This apart, the All India Bank Employees Association (AIBEA) has appealed for merging Dhanlaxmi Bank with another public sector bank.

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COMMENTS

K B Patil

5 years ago

Truly, CEOs all over the world are given special treatment by the media. While the actions of politicians are scrutinised minutely, even when corporate honchos resign after making a mess of things and rendering several people jobless, their actions do not come under the scanner. They bail out with a golden parachute! For instance, Essar Steel's promoters made a mess of the steel business (when the industry was booming) and booted out minority shareholders by a farcical process of delisting. Yet, you have the business magazines sympathising with them over their recent problems.

Jagadees

5 years ago

Why AIBEA appeal for merger with other public sector bank? why not a private sector bank?? May be they will make them to work more!!!

S Prabhu

5 years ago

No staff accountability. MD and the top management made crores of rupees on salary, bonus and esops. How long this will continue? Why RBI wants to issue more licenses instead of consolidations? Why it takes long years for Regulatory Authorities to understand the internal situations of the bank. Its time now for the RBI to appoint its nominee director on each banks board and make them accountable. Dhanlaxmi is not the exception, there are other private banks who adopted the mass malpractices in accounting under the able guidance of foreign consulting firms and their NPA levels are coming down and down on the paper, but the actual situation GOD and the consulting firm knows.

Custodian lays a trap for Ketan Parekh?

A decade after the Ketan Parekh scam, the custodian appointed under the Special Courts Act has moved a petition seeking custody of all the money paid by him to Bank of India and Madhavpura Mercantile Cooperative Bank (Ahmedabad)

How did Ketan Parekh, the primary accused in the securities scam of 2000 according to the Joint Parliamentary Committee (JPC) report, manage to pay several hundred crore rupees to two banks, when he, as a notified party under the Special Courts Act of 1992, had declared negligible assets to the custodian? We may finally get an answer to this question.

On 1 February 2012— a good 11 years after the Ketan Parekh-led securities scam rocked the stock markets—the custodian filed an application (No 166 of 2011) against 19 companies of the Ketan Parekh group asking that all payments made by him to Madhavpura Mercantile Cooperative Bank (MMCB) of Ahmedabad and Bank of India, should be deposited with the custodian.

This surprise action, long overdue, for the first time will probably answer a key question that we at Moneylife have frequently asked: How did Mr Parekh make payments running into several hundred crores without a source of income and when he has been banned from the capital market by the Securities & Exchange Board of India (SEBI) for 14 years? How could these payments be a condition to let him out on bail?

The custodian lists 19 entities as being part of the Ketan Parekh group and includes some entities with whom Mr Parekh has frequent denied any association. It may be recalled that the MCCB had gone bust when it was discovered that Ketan Parekh, in cahoots with the bank’s former chairman and his son, had illegally obtained over Rs800 crore from the bank to fund his last ditch efforts to pull himself out of financial trouble.

The persons and entities named in the custodian’s application before the Special court are—Ketan Vinaychandra Parekh, Navinchandra Narbeheram Parekh, Mamta K Parekh, Panther Financial Capital Management Services, Luminant Investment Services Pvt Ltd, KNP Securities, Triumph Securities, V N Parekh Securities Pvt Ltd, Saimangal Investrade, NH Securities, Nakshatra Software Pvt Ltd, Goldfish Computers Pvt Ltd, Chitrakoot Computers Pvt Ltd, Manmandir Estate Developers Pvt Ltd, Panther Industrial Products, Triumph International Finance, Panther Investrade, Classic Credit, Classic Shares & Stock Broking. The list includes his wife, his father and all the companies that were considered to be a part of his trading empire during the late 1990s, when he dominated the market.

For those who have forgotten, the custodian was appointed after the securities scam of 1992 under the provisions Special Court (Trial of Offences relating to transactions in securities) Act, 1992. The statute was enacted, ostensibly to ensure a speedy trail of scam related offences, but nearly 20 years later, many of the cases filed in the early 1990s are still dragging in various courts. In the process, many of the guilty have not been punished, while some innocents are also condemned to a grinding litigation.

The custodian’s application says, “that it is beyond comprehension or even understanding that” that Mr Parekh could make such substantial payments subsequent to notification whereas the assets disclosed on 19 September 2003 were a negligible (Rs1.55 crore interest in shares). Mr Parekh had paid approximately “Rs72.2 crore to Madhavpura” between 28 August 2001 and 31 January 2005—most of it was after he had been notified. The custodian states that these payments were made without seeking the sanction of the Special Court.

The Custodian obtained this information while “going through various proceedings filed against” Ketan Parekh by Bank of India and MCCB had found “affidavits and pleadings” by Ketan Parekh, showing that he had “deposited various amounts” with these banks, subsequent to the date of his ‘notification’ under the Special Courts Act.

The custodian says that all the companies which made payments on behalf of Ketan Parekh “were front companies” as were the funds that were at their disposal. It asks how companies with a tiny shareholding could make payments that ran into crores of rupees. It also quotes a letter written by Ketan Parekh on 29 March 2001 to the chairman & managing director (CMD) of Bank of India which declares: “In any event, the business of all these entities were run by me only acting as a decision maker and the other family members though acting as signatories were not in the know of things.

The custodian has sought direction of the Special Court for disclosure of the bank accounts opened by these entities post notification and their audit by the chartered accountant on an affidavit. It also wants the court to direct Mr Parekh to disclose “the source of funds in respect of the shares of the companies arrayed as respondents” in the list above.

The custodian’s action is making waves in the Special Court and most lawyers and others associated with the trial and investigations believe that it may lead to significant disclosures when the hearings begin.

(Sucheta Dalal is the managing editor of Moneylife. She has co-authored the best-selling books “The Scam: From Harshad Mehta to Ketan Parekh”; “AD Shroff: A Titan of Finance” and “Pathbreakers 1&2”. Based on her outstanding investigative journalism spanning over two decades, she was awarded the Padma Shri in 2006.)

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COMMENTS

Rajkumar Singh

4 years ago

Thanks for this informative article.

How do we keep a track of the court hearings in the above case?

Is there any progress thereafter?

Rajkumar Singh

4 years ago

Thanks for this informative article.

How do we keep a track of the court hearings in the above case?

Is there any progress thereafter?

dayananda kamath k

5 years ago

receiving and making payments in ahmedabad co operative banks is very easy. there was a good case of goldtrading in ahmedabad where a chariman of the co operative bank used to carry pay order of the bank with hime and used to buy gold against the strenght of the payorder take deliveryof gold sell in the market and hounour the pay order when it is presented in clearing after normal transit period. it was detected but no action was taken but concerned people who facilitated this transactionwere promoted in the nationalised bank involved for doing good gold business.

K B Patil

5 years ago

Atlast we seem to have a proactive chairman in SEBI. I remember reading earlier that Ms. Dalal had sent a query to the PMO's office regarding this very matter and that no info was received for what seems to be another mega scam.

P M Ravindran

5 years ago

Special courts? Now what's that? As much as a rose by any other name will smell as sweet, a court by any name will remain just that - a court, where justice is denied just by the delays themselves! I, for one, have no doubt that more crimes are being committed by our judges than by all the criminals they have tried, put together!

Anil Agashe

5 years ago

Your efforts seem to be bearing fruit. Congratulations, you have written about this for many years and hope that we will know the real facts soon.

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