E-Commerce: The New Robinhood


       The most significantly visible, most strategically placed and most thought of when a customer visits a product page on an e-commerce website, he momentarily steps on, is the PRICE. Customer was, is and always will be price sensitive and what has changed in today’s offerings is that they have less to do and more to achieve. You can just do a google search for your product with a search query “blah blah blah best price online” and you will be blown away by the variety of websites doing nothing but a search of their own to rank the websites offering same product at price from low to high. Websites like PriceDekho.com, CompareRaja.com and many such funny named are doing nothing but providing hyperlinks to websites like Flipkart.com, Amazon.in, SnapDeal.com, etc. so that you can get the cheapest price (obtained via coupons, cashbacks and credit/debit card schemes). Now, the only way to attract customers is by offering lowest price possible for which they need to have best possible relation with the sellers, sell private labels, sell counterfeit products (and loose customers) or do what everyone seems to be doing nowadays- fool a futuristic Venture Capitalist.

       None of the e-commerce website or business models like that of OLA, UBER or TaxiForSure (a past now) have never seen profits and neither are they looking at any profits in near future. At the best, we have Myntra claiming to achieve profits by the end of 2016 (again a futuristic talk).mum I came across an article a day before I wrote this piece, saying that the only reason TFS (TaxiForSure) failed was that Ola cabs got a venture capital which allowed them to offer heavy discounts to customers and incentives to drivers and the same day when TFS had meeting with its own set of venture capitalist, an Uber driver raped a woman in Delhi and Indian Govt. planned to ban these taxi services, so TFS was at loss of confidence by its funds sources and had to sell off to competitor Ola. Now what interesting here is that both of them- OLA and TFS, were following the same business model but the one which acquired funds from Softbank 1st and continued to offer more discounts won. Ola was losing Rs. 200 on every ride while TFS was losing Rs 150.

       Flipkart, Amazon and cashback kings like Paytm are luring customers by offering discounts thinking that they are building a loyal customer base and are investing in future by spending the money of Venture Capitalists and Private Equity Funds to offer discounts. While the only thing they are doing in this process is balancing the money in the economy- taking out money from the rich and offering to customers, which is the reason I gave the name ‘Robinhood’ to e-commerce websites. Everyday we come across news like ‘amazon to invest $2 billion in India’, ‘Flipkart is on the verge of closing a funding round of $550 million’, ‘After snapping up $50 million, Myntra’s now in talks to raise $40 million more’, and ‘Paytm plans to raise funds of value $375 million’. We should infer from these news stories is ‘Amazon, Flipkart, Myntra and Paytm raised sums of $50 million, $40 million $550 Million and $375 million respectively which will be given away in the form of discounts and cashback schemes’. Their business is such that too much of infrastructure or manpower investments are not required, so they simply transfer the money to the customers while incurring more losses in the process than they can actually recover.

       Many might contradict that loyalty is actually there in the picture and customers will still remain loyal to their favourite website (which changes every time they come to shop online), therefore idea of investing in the future by these players is justified. I don’t really object to their idea and doing an empirical study too on ‘Customer Loyalty in E-Commerce’ to test their hypothesis but I can’t really imagine that why will a person buy from his so called favourite website if he can get it from the competitor website at less price while it offers the same product, take almost same time for delivery and has same credibility. Business models just can’t work if they keep on fightinIndependence-day---sub-bannerg on only one factor- Price. We have ‘Diwali deals’, ‘Onam Deals’, ‘Eid celebration deals’ and now ‘Independence day deals’ are also on their way for which the players are heavily investing in marketing and trying sellers to reduce their prices and sometime forcing them too (SnapDeal actually told its sellers to reduce their price or they will be barred in the next sale).

       Now, Venture Capitalist groups, private partners and Foreign banks like Soft Bank may believe in the business models they are being presented and continue to invest millions of dollars everyday into these businesses whose mission is just to offer discounts and vision to obtain profits in some far-fetched future to come, they should not raise their hopes high for at the end they might just get some customers who are shopping at their website for a 50% cashback or using their car service just because they were offering a ‘Rs 600 off on your first ride’ discount.



  1. http://www.livemint.com/Companies/t7TozTlZCAmvtSxog3OQ7L/Behind-TaxiForSures-sellout.html
  2. http://articles.economictimes.indiatimes.com/2015-05-14/news/62165851_1_mukesh-bansal-flipkart-and-snapdeal-sachin-bansal
  3. http://articles.economictimes.indiatimes.com/2014-02-06/news/47089574_1_myntra-flipkart-idg-ventures-india
  4. http://www.livemint.com/Companies/hprvbtdPxxdiYQ3J447j7I/Paytm-plans-to-raise-funds-valuing-it-at-183-billion.html
  5. http://www.livemint.com/Industry/boWA7iCWJ2sa6eDrNh4YdL/How-Flipkart-Amazon-and-Snapdeal-fund-discounts.html

GST Unravelled

vd-GST-take-2 (1)With too much of waiting (already implemented in 150 countries) and more than too much of debate (both between our own intellectual ministers and among highly intellectual news readers), GST Bill is finally around the corner waiting for its approval and its time we get our hold on what it means for us. As the name suggests it’s a tax on both goods and services and is expected to cut short on the confusion among Indians as to when and how much they should pay for what kind of consumables. GST plans to bring unification in Indian market and replacing most (of-course nothing can be fool proof) indirect taxes with one tax-GST.

Let me explain with an illustration as to how it will effect pockets at every level of a supply and distribution channel.

Level in supply chain Cost of procurement (A) Premium Charged (B) Selling Price (C=A+B) GST Rate (D) GST on output (E) Input Tax Credit (F) Net GST (G=E-F)
Producer 100 40 140 10% 14 10 4
Whole Seller 140 20 160 10% 16 14 2
Retailer 160 10 170 10% 17 16 1


Now the above was explained for a small channel, but same would hold for large industries too where the number of players are more. GST is required because although we had a Central VAT (CENVAT) and a State Level VAT, they are not covering all the aspects like capturing the chain of value addition in a supply chain below the stage of production as explained above and it also didn’t incorporate many taxes like excise duty, customs duty, surcharges, etc. which is the key difference between GST and already implemented VAT. After its implementation traders can gain credit on the taxes they paid on both goods purchased and services availed and deduct it from the tax they will gain in passing on the product to next level in chain.

The real problem in its coming to action is that so called tax unification scheme namely GST is itself divided into 2 components- Central GST and State GST and each of them are fighting for the percentage they get to keep of the taxes they procure from the approximately 3% Indian tax payers. The Central GST and the State GST would be applicable to all transactions of goods and services except the exempted goods and services, goods which are outside the coverage of GST and the transactions which are below the approved limits and they will be paid to the account of Central and State separately. Now this does not really decrease confusion in our complex tax system, for e.g.

“Suppose, the rate of CGST and SGST is 10% and 5% respectively. When an advertising company located in Mumbai supplies advertising services to a company within the State of Maharashtra for, let us say Rs. 100, the ad company would charge CGST of Rs. 10 as well as SGST of Rs. 5 to the basic value of the service. He would be required to deposit the CGST component into a Central Government account while the SGST portion into the account of the concerned State Government. Of course, he need not again actually pay Rs. 15 (Rs. 10+Rs. 5) in cash as it would be entitled to set-off this liability against the CGST or SGST paid on his purchase (say, of inputs such as stationery, office equipment, services of an artist etc.). But (here comes the funny thing) for paying CGST he would be allowed to use only the credit of CGST paid (Rs. 10) on its purchase while for SGST he can utilise the credit of SGST (Rs. 5) alone. In other words, CGST credit cannot, in general, be used for payment of SGST. Nor can SGST credit be used for payment of CGST.” – So much for a unified system.

The respective rates (SGST for each individual state) are not yet decided as for that to happen finance ministry has to individually sit with every state’s CM and come up with individual package for everyone so that GST is launched country wise, because for the bill to be passed by a two-third majority in all 29 states’ Legislative Assembly in not at all an easy task. Still, with so much criticism and valuations it would bring a lot of added benefits like more coverage, less confusion, price reductions which will lead to more consumption that require more production which in turn will increase the ‘C- Consumption by consumer’ component of GDP equation and help in GDP growth.

I would now my so far the most boring blog by listing out the bottlenecks in the GST implementation-

  • Understanding the preparation needed for implementation at the Central and State level
  • If the government machinery is efficient enough for the enormous change
  • Whether the tax payers are ready for the change ?
  • What impact will it have on Government revenue ?
  • Effect on small and large manufacturers, traders and end consumers
  • Will it really unify the tax system?


Story of a budding Trader


 An Indian citizen is prone to all kind of risk and when he happens to be a part of the 20 million DEMAT account holder’s community he got to have a strong heart and lots of patience. Being an MBA student and fascinated by the money market I opened a DEMAT account this March with a fantasy of gaining returns unlike anyone with small saving from my work life (I used to have). The next thing I know, I invested ***k on the 1st day I got my login details. I bought stocks from all kind of sectors some of which are still sucking my returns.

       Being new to the fast moving, heart throbbing numbers on the ICICI trade terminal, the stocks buying and selling and volumes of them changing hand every second feels just too fascinating and kept me glued to my laptop from 0915 in the morning to 0330 in the afternoon unless the market closes keeping me either preparing for a party or dangling with a ray of hope to get revenge from today’s market gainers some other day. Based on your risk aversion you buy stock of all kind of companies and hope to get returns on all of them but the fact remains that all you can do is be happy of selling stocks which give some returns and for others, tell yourself that some stocks are worth keeping for a long run (indubitably self-fooling never ends).

       The thing about Indian stock market is that it’s completely vulnerable to any economy breakdown, country getting bankrupt, Greece referendum results, China halting its trade market and sometimes just some random news of quantitative easing by US is enough to turn your good looking portfolio into a bunch of stocks dreaming to go green. As a trader you think that you got all the news to make the right decision, the annual reports will help you make the right decisions, expert opinions on news channels like ‘CNBC’ or ‘NDTV Profit’ or ‘ET Now’ will tell you the right intraday pointers but I guess everyone learns the hard way that all it takes is for some global news or some company going for a merger or some trader with deep pockets trying to play around to help a stock go up or down at any point of time.

      Now, what I have experienced in the last couple of my trading months is not all bad as it might seem from the shit above, trading actually is the most thrilling thing you can experience. I made money and exchanged it for some luxuries and sometime reinvested it to stocks that gave me only bad memories but I guess the thing is that if you think that expectations are premeditated resentments then you really aren’t built to be a trader because if you are planning to make some earnings just sitting on your laptop for the work done by others, you got to meet reality sometimes. The funny fact remains about stock market that every time a person buys, another sells, and both think they are astute.

So ‘keep trading, keep losing’ for your losses might be mine returns 😀 ………….


Union Budget 2015-16 summarized


With all eyes on the budget, at 10:28 am Arun Jaitely came carrying a brown suitcase, close to his heart, and flashing it in front of the camera as if carrying some high priced traded commodity

Jokes apart…..every person had some expectations though he be a BJP supporter, dangling congress supporter or others who are left with AAP to support, for they got to support something, right?

Some of them being Increased investments, Tax rates reduced, Jobs creation, Infrastructure, manufacturing, R&D, Promoting startup, Innovate in India along with make in India, Fiscal consolidation, For every 1 law brought – 10 must be removed, 1st April, 2016 rollout of GST, Clarity on public investment, No retrospective taxes forever, etc. and many others depending upon their social and intellectual status and understanding of an emerging nation’s requirements

What was laid down by our Finance Minister were as follows though not in the same order-

  1. With 34699 crores for MNREGA, it will be continued with an additional flow of 5000 crores in annual allocation- with a thought to bring more jobs in rural areas and an increase in wages
  2. Sanction of 1 lakh km of new roads and funds to clean rivers
  3. 80000 secondary schools to be upgrade
  4. 6 crores toilet targeted with 50 lakh being already built – a target to both reduce crime and improve sanitation
  5. Rationalising subsidies, stopping leakages which probably means that everyone won’t be getting free discounts – although no clear indications of the categorisation criteria
  6. 5300 crores for micro irrigation, 25000 crores for rural development fund, 45000 crores, 5 lakh crores credit to be given to famers, 34699 crores MNREGA, Mudra bank 20k crores to refinance and finance SMEs, Suraksha Bhima Yojana, offering coverage of 2 lakh rupees for just premium of just Rs 12 per year and many such schemes to help the poor and farmers grow along with the country
  7. Atal pension yojana with 50% contribution from government which will make the retirement secure
  8. Senior citizen welfare fund which will be providing physical aids to senior citizen and also Rs 30000 rebate in health expenses for them by the government on an annual basis
  9. Infrastructure-
    1. Go up by 70k crores
    2. Tax free infrastructure bonds for rail and road projects
    3. Initial sum of Rs 150 core to create world class IT hub to take advantage of our competitiveness.
    4. Proposes 5 ultra-mega power projects for 4,000 MW each
    5. Direct tax regime, internationally competitive
  10. Cash less society to be attained via financial inclusion in which all are provided insurance and RuPay Debit Card which will enhance flow of electronic money
  11. Indian gold coin with Asoka symbol with a motive of reducing the demand of foreign cons- Gold Monetization Scheme
  12. 150 countries be included in visa on arrival provision to promote tourism and Forex
  13. Employee’s contribution to EPF below an income threshold will be optional without reducing employer’s contribution.
  14. 75 crores for electric vehicles to remove curb pollution levels though the allocation of fund not so much adequate
  15. Tax proposals
    1. The whole idea began with making the tax policies predictable and remove any retrospective tax policies which can create problem for the industry like what happened in Vodafone.
    2. Many indirect transfers are proposed to be excluded from the scope of the indirect transfer tax and all that would still be in the purview would be clearly defined.
    3. Service tax increased to 14% and 2% Swachh Bharat cess on the service tax to get more revenue for clean energy initiatives like this.
    4. In India so far 30% has been the corporate tax rate which along with other surcharges added up to approximately 33% while in other Asian countries the average tax rate was 21.5% with china offering 25%, Singapore 17% and Thailand 20%, therefore a tax rate cut to 25 % over a period of 4 years might attract investments
    5. In addition to this surcharge has been increased from 10% to 12% on companies and individuals earning more than Rs 1 crore which is a counter act for removing the wealth tax. This is predicted to bring Rs 9000 crore as revenues instead of Rs 1000 crore from wealth tax
    6. Serious laws like imprisonment of 10 years and ‘benami transaction’  prohibition policies are formed to curb flow of back money both international and domestic
    7. GST- Goods and Services Tax which is meant to divide the tax burden equally between the manufacturing and services by levying a lower tax rate and increasing the tax base. It is to be implemented by April,2016 and is expected to bring $15 billion a year if properly implemented
    8. Provided clarity on whether long term capital gains on transfer of units in Real Estate Investment Funds via IPO will be exempted or not.
    9. General Anti Avoidance Ruling(GAAR) to be in action starting 1st April, 2017 and would be applied on investments post this date
    10. PAN number necessary for any transaction above Rs 100000 to tighten the reporting of cash transactions
    11. No income tax up to Rs 250000, 10% on income between Rs 250000 and Rs 500000, 20% on income between Rs 500000 and Rs 1000000 and 30% on income above Rs 1000000, and a taxpayer can save now a maximum of Rs 4,42,000 from deductions
    12. Not filing Income Tax returns or filling with wrong details may lead to 7 years imprisonment.
    13. Excise duty reduced by 6 % over Rs 1000 on footwear – Bata India share increased 3.19 % by the time I wrote this.
    14. Net gain from tax proposals seen at 150.68 billion rupees in 2015-16
    15. All contributions to Sukanya Samridhi scheme to be tax free – specially designed for girls’ higher education or marriage needs, a scheme for minor girls in which govt. pays 9.1 % interest on the savings

Well these were some points of the budget which I thought were of importance. Some points maybe missed but to rate the budget I think I would give 8.5 because overall it covered all areas of improvement but some parts were missing and some being addressed indirectly which may be to manage the fiscal deficit. Common man may be disappointed if he was expecting more tax cuts and freebies as a part of the budget. It’s time that everyone understands that budget can’t be just pro-poor or pro-rich, It has to be balanced and this is a balanced budget. Let’s see what’s in for us in future.

Fingers crossed!!!

Entry of Bullet Train into “Mera Bharat Mahaan”

bullet-train22 on May 26, 18 on May 04, 37 on February 17, 9 on January 8, 26 on December [1] and the list goes on. These numbers represent the safety levels of our current railway system, with world’s largest track networking of over 65,436 km via 12671 passenger trains and 7421 freight trains [2]. The number in the starting represents the count of people who lost their lives (let alone the people who got injured) in railway accidents that happened this year. Current average speed of Indian trains varies from 59 to 90 km/h and we still generate accidents and deaths that would leave behind many of the countries possessing high speed bullet trains. When Indian politicians talk about bringing bullet trains to India telling about its safety and speed, a large chunk of population gets mesmerized by the imagination of sitting in a high speed bullet train going at a speed of over 300 km/h in the year 2022 (date proposed by rail ministry) [3], shouldn’t we think about the threat to safety and a hole in already sinking GDP rate it will cause to India.

     India has a fiscal deficit of 3% of GDP and a current account deficit of $45 billion [4], 27.5% in rural and 13.7% in urban areas are still below poverty line [5] and we also have the largest number of illiterate people compared to any country, but still we want to experience the luxury of sitting in bullet train when 60% population is in rural areas. Whom are the politicians really focussing at by bringing bullet trains, does investing 1000s of crore to decrease the time taken between Ahmedabad and Mumbai [6] by a couple of hours is justifiable. Indian middle class along with the lower and poor class comprises 99% of our population and they are already annoyed, angry and feeling cheated by the recent 14.2 % increase in the rail fare [7] , then how can they justify spending crore of money on projects that would be utilised only by the rich 1% Indians.

Recently Indian railways received two big blows from terrorist activities, one at Chennai Station and the other one in Bihar. Two blasts happened in Bangalore Express killing one person and injuring over 14 [8], [9] and New Delhi-Kolkata Rajdhani express was derailed through blasts, what was known as a Maoists attack, injuring many [10]. We are fighting on all fronts with terrorism both from outside and inside, trains are derailed every now and then, coaches are blasted killing people. If the number of causalities during a mishap in a train at a speed of 80 km/h is so much then for a bullet train it would be a catastrophe. Many might argue about the pride, bullet train will bring, critical futuristic needs it would be addressing, much smaller countries like Taiwan are having, so we should also have, travel time would decrease, would be beneficial in the long run, but the thing to focus on is , is it’s viable to spend 60,000 crore on Mumbai-Pune corridor [11] , to acquire agriculture lands on large scale, neglect the basic necessities of life like education, clothing and a healthy habitat and just focus on trying to reduce the travel time by a few hours. Development is a thing no-one can neglect today, everyone has to be ahead and be on a global front but one should try to set right what he possess, before heading into a totally new direction. So, India for sure should have a bullet train but not now, now is not the time.


  2. http://en.wikipedia.org/wiki/Indian_Railway_Catering_and_Tourism_Corporation
  3. http://articles.economictimes.indiatimes.com/2014-07-13/news/51429513_1_bullet-train-mumbai-ahmedabad-high-speed-rail-corridor-dedicated-freight-corridor
  4. http://en.wikipedia.org/wiki/Economy_of_India
  5. http://indiantake.blogspot.in/2010/01/size-of-india-middle-class.html
  6. http://businesstoday.intoday.in/story/railway-budget-2014-first-bullet-train-mumbai-ahmedabad/1/207941.html
  7. http://timesofindia.indiatimes.com/india/Govt-rethink-on-suburban-railway-fare-hike-may-be-in-phases/articleshow/37103886.cms
  8. http://www.newindianexpress.com/cities/chennai/Bomb-Blast-at-Chennai-Central-Railway-Station/2014/05/01/article2199736.ece
  9. http://articles.economictimes.indiatimes.com/2014-05-01/news/49552011_1_blasts-guwahati-bound-train-railway-police
  10. http://indiatoday.intoday.in/story/maoists-blow-up-railway-track-near-gaya-in-bihar-bhubaneswar-rajdhani/1/373666.html
  11. http://www.ndtv.com/article/cities/all-you-wanted-to-know-about-the-rs-60k-cr-mumbai-ahmedabad-bullet-train-555469
  12. http://indiantake.blogspot.in/2010/01/size-of-india-middle-class.html
  13. http://indianexpress.com/article/india/india-others/chronology-of-major-train-accidents-in-recent-years/
  14. http://www.economicshelp.org/blog/3088/economics/pros-and-cons-of-high-speed-rail-hs2/