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Business

RIL to now focus on monetization with ‘commerce layer’

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Reliance Industries Limite

In the next four years, Reliance Industries Limited (RIL)’s focus would be to add a third “layer of commerce” and monetize the existing investments across different formats.

According to a research report by BofA Securities, in the last 4 years, with Jio, RIL has been able to build a “digital layer” on top of the existing “physical layer” of retail shops across electronics, grocery and apparels.

“We believe the next four years, RIL’s focus would be to add a third ‘layer of commerce’ and monetize the existing investments across different formats,” the report said.

The company continues to invest in technology and is partnering with world’s best (Google, Facebook, Microsoft) as well as India’s best (invested in 20 plus startups). “We believe RIL is uniquely positioned with a sustainable competitive advantage to monetize this,” it added.

“In our view, the biggest takeaway from Jio’s last 4 year journey was that – ‘India is a supply-constrained market and not a demand-constrained market’,” the report noted.

So, as long as any company could efficiently provide goods and services at affordable prices, this market would consume.

“Jio proved the hypothesis and with potentially tariffs moving up in the future, we could see profitability also improving in cellular space,” the report said.

“Over the next 3-4 years we believe RIL will offer ‘value for money’ proposition across fiber broadband, SME & enterprise market, offline/online retail market and areas like Education, Healthcare, Agriculture and media/Gaming markets,” the report added.

The company may be successful in a few domains and potentially look to acquire start-ups in spaces where it is struggling. Indeed, it has acquired 20 plus start-ups already, in process looking to improve its value proposition to consumers.

One of the reasons why companies like Amazon, Alibaba, Tencent etc. have been able to create “shareholder value” is because they owned their customers. Due to their value proposition customers come back again and again to them.

“We believe RIL also has potential to do this. Infact RIL’s approach appears to owning the ‘pipe’ as well as the ‘services’ offered on the pipe,” it said.

“Over the next 3-5 years, we expect RIL to have 500 million mobile users, offer broadband services to 20-25 million households & cater to 12-15 million SMEs. The connectivity part of the Jio business focuses on offering these consumers the connections. The services part would focus on monetizing these,” it added.

For instance, entertainment offerings would help RIL improve stickiness. Jio may not fully monetize this but would keep users captive to cross-sell other offerings. RIL is also focusing on leveraging tech to offer Ed-tech, Health-tech, Agri-tech services.

“We also believe gaming will pick-up in India as the country has young population mix with world’s largest Gen Z workforce,” the report said.

An omni channel approach on commerce would help RIL sell its grocery, apparel and electronics items to a wider audience base. By working with the Kiranas, RIL would likely increase its B2B sales as well.

The catalyst could be a potential stake sale at retail business. As per reports, Reliance Retail may follow the Jio Platforms model, onboarding multiple investors by selling stakes in the firm. RIL has offered all 13 investors of Jio Platforms (including Facebook, Google etc.) the option to invest in its Retail unit.

Business

India’s forex reserves rise by over $3 bn

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Reserve-Bank-of-India

India’s foreign exchange reserves rose by $3.074 billion during the week ended June 11.

According to the Reserve Bank of India’s (RBI) weekly statistical supplement, the reserves increased to $608.081 billion from $605.008 billion reported for the week ended June 4.

India’s forex reserves comprise foreign currency assets (FCAs), gold reserves, special drawing rights (SDRs), and the country’s reserve position with the International Monetary Fund (IMF).

On a weekly basis, FCAs, the largest component of the forex reserves, edged higher by $2.567 billion to $563.457 billion.

Similarly, the value of the country’s gold reserves rose by $496 million to $38.101 billion.

However, the SDR value slipped by $1 million at $1.512 billion.

But, the country’s reserve position with the IMF inched higher by $11 million to $5.011 billion.

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Business

BharatPe in talks to raise $250M led by Tiger Capital: Report

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BharatPe

Fintech major BharatPe, that hit a new high with 106 million monthly transactions in UPI in March this year, is reportedly raising nearly $250 million in its next funding round led by Tiger Global.

TechCrunch on Friday reported, citing sources, that the fresh funding will take the company’s valuation to about $2.5 billion.

When reached, the company declined to comment at the moment.

The financial services company last month raised Rs 50 crore in debt from Northern Arc Capital, one of the leading digital debt finance platforms. This was the sixth round of debt financing in 2021.

In January, the company had raised Rs 200 crore from three top debt companies in the country — Alteria Capital, InnoVen Capital and Trifecta Capital, having later raised additional capital from ICICI Bank and Axis Bank.

“We have considerably ramped up our lending business in the last year and have set an ambitious target of facilitating disbursals to the tune of $1 billion to more than 10 lakh merchants by the end of current fiscal (FY22),” Suhail Sameer, Group President, BharatPe, had said.

The fintech company has already facilitated disbursals of over Rs 1,600 crore to more than 2 lakh merchants since the launch of the lending vertical.

As per a recent report by ACI Worldwide and Global Data, India has outpaced the US and China to become the world’s biggest real-time digital payments market, driven by P2P as well as merchant payments.

BharatPe said it is committed to help small merchants and kirana store owners grow their business with a range of fintech products for them.

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Finance Ministry refutes reports of alleged black money held by Indians in Switzerland

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Finance-Ministry

The Union Finance Ministry on Saturday said that increase in deposits of Indians in Swiss Banks could be on account of increase in business of Swiss bank branches located in India and raised Inter-bank transactions, rather than due to an increase in alleged black money held by Indians in Switzerland.

It, however said that Swiss Authorities have been requested to provide the relevant facts along with their view on possible reasons for increase or decrease in deposits so that facts could be presented in correct perspective.

Certain reports suggested that that funds of Indians in Swiss Banks have risen to over Rs 20,700 crore (CHF 2.55 billion) at the end of 2020 from Rs 6,625 crore (CHF 899 million) at the end of 2019, reversing a 2 year declining trend. It has also been stated that this is also the highest figure of deposits in the last 13 years.

“Reports allude to the fact that the figures reported are official figures reported by banks to Swiss National Bank (SNB) and do not indicate the quantum of much debated alleged black money held by Indians in Switzerland. Further, these statistics do not include the money that Indians, NRIs or others might have in Swiss banks in the names of third-country entities,” the Ministry statement said.

The statement added that the customer deposits have actually fallen from the end of 2019 in a Swiss Banks. The funds held through fiduciaries has also more than halved from end of 2019. The biggest increase is in “Other amounts due from customers”. These are in form of bonds, securities and various other financial instruments, the finance min statement said.

The ministry also ascribed various other reasons for increase in deposits and not possibly on account of the increase of deposits in the Swiss banks out of undeclared incomes of Indian residents. It said that that increase in deposits may be on account if increase in deposits owing to the business of Swiss Bank branches located in India or Increase in Inter- bank transactions between Swiss and Indian Banks. Also, it could be due to capital increase for a subsidiary of a Swiss Company in India or increase in the liabilities connected with the outstanding derivative financial instruments.

The government has issued clarifications in wake of widely held position that it has curbed generation of black money in the economy or unaccounted funds of Indians stashed abroad. The fresh tax agreements reached between India and certain perceived tax havens has introduced certain instruments to prevent round tripping of funds and generation of black money.

It is pertinent to point out that India and Switzerland are signatories to the Multilateral Convention on Mutual Administrative Assistance in Tax Matters (MAAC) and both countries have also signed the Multilateral Competent Authority Agreement (MCAA) pursuant to which, the Automatic Exchange of Information (AEOI) is activated between the two countries for sharing of financial account information annually for calendar year 2018 onwards.

Exchanges of Financial Account information in respect of residents of each country have taken place between both countries in 2019 as well as 2020. In view of the existing legal arrangement for exchange of information of financial accounts (which has a significant deterrent effect on tax evasion through undisclosed assets abroad), there does not appear to be any significant possibility of the increase of deposits in the Swiss banks which is out of undeclared incomes of Indian residents, the finance ministry said.

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