Also in this letter:
BigBasketplans return of express deliveries
- ED notice raises concerns about crypto in India
- UPI, RuPay may soon go global
Lenskart closes $220 million from Temasek, Falcon Edge
Lenskart founder Peyush Bansal
Lenskart has closed a $220 million funding round led by Singapore’s sovereign wealth fund Temasek and Falcon Edge Capital, the company’s founder and chief executive Peyush Bansal told us.
With this, the company has raised a total of $315 million in this round. In mid-May, private equity major KKR & Co. invested $95 million in Lenskart through a secondary transaction.
The funding was equal parts primary infusion and secondary share sale. Lenskart’s existing investors, TPG and IFC, sold parts of their holdings in this round. In a secondary share sale, new investors buy shares from existing investors so the money does not go to the company.
Global ambitions: Lenskart, now valued at $2.5 billion, will use most of the fresh funds to expand into Southeast Asia and the Middle East, Bansal said.
Temasek and Falcon Edge Capital are crucial to the company’s ambitions in these markets, he added. “Temasek is a strong fund with very good knowledge of the Southeast Asia market and Falcon has good knowledge of the Middle East market,” he said.
Bansal said Lenskart is among the top three eyewear retailers in Singapore and aims to be number one in the next 12-18 months. He said the company has almost 25 stores there, making it the second largest retail eyewear chain in the country.
- Lenskart is looking to expand beyond Singapore into markets such as Vietnam, Thailand, Indonesia, Malaysia and the Philippines, he added.
- In the Middle East, the company has hired a team and set up its online platform, and will start setting up offline stores as well.
IPO plans: Lenskart plans to go public in India the next two to three years, Bansal said, and may consider raising another round of funding before doing so.
BigBasket plans major push for under-an-hour deliveries
Explain? BigBasket had acquired a small express delivery startup called Delyver in 2015 but was unable to scale its under-and-hour deliveries. Over the next 2-3 months, the company will give it another go.
Menon said, “We have learned from the past [how] to build this vertical… and will now launch it under the Tata umbrella.”
Speaking on our weekly audio chat show The Rundown by ETtech on Twitter Spaces, Menon said, “We have gone deep into three-four hour deliveries. In fact in most cases it’s 2-3 hours. Now, [under-an-hour delivery] is what we are going to do next.”
“The focus is on setting up dark stores, bringing inventory and warehouse closer to the customer, and making sure the cold chain works efficiently,” he added.
Why? To keep pace with companies such as SoftBank-backed Swiggy, which is investing heavily in this space.
Tata Digital and BigBasket have also held talks to buy out a company in this category, sources indicated.
The two co-founders said these new initiatives would play out over the next few months as Tata Digital prepares to launch its ‘super app’ later this year.
Also Read: Tata Digital’s plan to launch a super app
Medicines, too: Last month, we reported that online pharmacy 1mg, in which Tata Digital recently picked up a majority stake, was working to launch under-an-hour deliveries of medicines starting with the National Capital Region.
On the competition: Tata’s bet on BigBasket comes amid heightened interest not only from specialised e-commerce players such as Amazon and Flipkart but also conglomerates such as Reliance Industries.
Parekh said, “This has always been a competitive place. With Reliance Jio coming in, they said we would be in trouble. So? We have been in trouble for a long time—for our entire existence. Yet we continue to lead (in terms of market share).”
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ED’s notice to WazirX raises wider questions about crypto in India
WazirX CEO Nischal Shetty
The Enforcement Directorate, in a recent notice to WazirX, asked the crypto exchange to explain why withdrawal from crypto wallets is not a violation of the Foreign Exchange Management Act (FEMA), a source told us.
Catch up quick: In mid-June the ED had issued a notice to WazirX, which is India’s largest cryptocurrency exchange, asking it to explain transactions worth Rs 2,790.74 crore.
- The notice, sent to the company and its directors Nischal Shetty and Hanuman Mhatre, was in relation to an ongoing ED probe into money laundering by illegal online betting apps, many of which are Chinese-owned.
Larger threat: The ED notice raises questions about the very existence of cryptocurrencies in India. That’s because the underlying ledger—or blockchain—on which these digital assets live, allows them to be transferred to anyone, anywhere in the world. This is fundamental to the nature of cryptocurrencies.
For instance: A trader who buys bitcoin on WazirX can “store” it on the wallet provided by the exchange. What’s actually being stored is the address of the bitcoin on the blockchain, not the actual asset. Since cryptocurrencies are designed for peer-to-peer transfers, she can easily “move” her bitcoin to:
- the wallet of another crypto exchange in India or abroad
- a private wallet (not linked to any exchange)
- the wallet of any bitcoin user, anywhere in the world
Money laundering? The ED’s notice asks WazirX to explain transactions worth Rs 2,790.74 crore by illegal betting apps that were allegedly in violation of forex rules.
“WazirX’s platform allowed clients to transfer cryptocurrencies without proper documentation, making it a route for laundering”, said an official. “Since money has crossed borders, the law of the land applies and one needs to be sure that this money isn’t cheap (low-interest) money or dirty money,” the official added.
The problem for exchanges: An industry insider, who wished to remain anonymous, said, “WazirX, like other exchanges, does know-your-customer checks of its users. If one of these users withdraws a few bitcoins from their WazirX wallet, the company will also know the address of the wallet to which they were sent. But it can never know the identity (or location) of the person or the entity that owns this wallet. Knowing the address of the wallet is not the same as knowing the people behind the wallet. This is the very nature of cryptos.”
NPCI in talks to take UPI, RuPay global
India is set to export its best fintech innovation to the world.
What’s happening: The National Payments Corporation of India (NPCI) is in talks with several global agencies to expand the global footprint of indigenous payment networks RuPay and Unified Payments Interface (UPI).
Agencies in? Saudi Arabia, the United Arab Emirates, Bahrain, Mauritius, Singapore, and certain countries in Europe and North America.
Likely tie-ups: NPCI may look to ally with regulatory authorities, large banks, fintechs, or even umbrella payment organisations in these countries. “US-based Zelle or The Clearing House could well be partners,” a senior industry executive told us.
- Zelle Network is a payments platform in the US that deals with banks, credit unions.
- The Clearing House operates core payments system infrastructure in the US.
In one quote: “We are aiming to expand RuPay and UPI acceptance across world destinations, where Indians travel for holidays, study or profession or even stay,” said Ritesh Shukla, chief executive of NPCI International Payments, a wholly owned subsidiary of NPCI for international business.
MNCs and the Indian tax question
As multinational companies and social media firms undertake a global overhaul of their tax structures, Indian tax laws are set to create complications for them, say experts.
New World Order: Several countries are joining hands together to come up with a global tax structure under OECD’s Base Erosion and Profit Shifting (BEPS) framework to counter tax evasion by global companies.
- Countries all over the world have realised that multinationals—including Google, Facebook, Amazon, Microsoft and Adobe—have created structures specifically created to escape taxes.
- Some companies are looking to split their data centres, IP-holding companies and other such companies as a hedge against the tax uncertainty—some of it may have to be housed in India due to domestic laws.
- While the global tax deal—BEPS—is a couple of years away, the multinationals are looking to create a “fact pattern” so that they don’t fall on the wrong side of the law.
A fact pattern is a set of relationships or transactions that have been established regarding a situation which could lead to a legal conclusion.
The Indian headache: Under India’s revised IT rules, the government has already asked Twitter, Facebook and Google to appoint liaison officers in India.
- They may have to pay significantly more tax in India as a result of the government’s new social media guidelines, ET first wrote on March 11.
- Complying with India’s social media guidelines would mean hiring Indian residents to head compliance, as well as nodal and grievance officers.
- This would mean companies will have to set up an office for these functions which might be interpreted as creating a Permanent Establishment in India.
A Permanent Establishment is a concept in taxation that determines which country has the right to tax a multinational’s income and to what extent.
Swaminomics: Why Zomato’s IPO is reason for cheer
Indians celebrating 30 years of economic reforms must cheer the Zomato IPO, writes Swaminathan S Anklesaria Aiyar.
It heralds a new class of businesses with no great inherited wealth, connections to the political and social elite, dubious links with the mafia and corrupt politicians, or dependence on loans from public sector banks based on telephone calls from the Finance Ministry or the Prime Minister’s Office.
These are the children of liberalisation, not of the wealthy. (read more)
Other Top Stories We Are Covering
Veg, Non Veg funding: Otipy, a social commerce platform for fresh produce, has raised $10.2 million (Rs 76 crore) in a Series A funding round led by SIG, which has backed Inshorts and Mobile Premier League in India.
- The funds will be used to enter additional categories for perishable items, such as milk and bread, as well as expansion into other cities, founder Varun Khurana says.
Captain Fresh, a tech-enabled business-to-business seafood marketplace, has raised $12 million in a Series A funding round led by venture capital firm Accel.
- The company will use the money to beef up its supply-side tech, expand distribution globally and grow its team, founder Utham Gowda says.
Flipkart, not same as Amazon? Flipkart should not be treated the same as rival Amazon in an Indian antitrust probe as the evidence against the two firms was “qualitatively different”, the Walmart-owned e-commerce firm argued in a court filing seen by Reuters.
NxT opportunities for Mindtree: Mindtree Ltd. expects to see significant growth in the NxT Digital business, acquired from parent company Larsen & Toubro Ltd., with the potential to extend the offerings to other industries as well, according to its chief executive.
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