Indian media, entertainment to see 27% revenue growth in FY22: Crisil

Source: Business Standard, Feb 23, 2021

New Delhi: Indian media and entertainment (M&E) sector is expected to witness a strong 27 per cent growth in revenue to around Rs 1.37 lakh crore in 2021-22, after contracting 26 per cent this fiscal, according to ratings agency Crisil.

Segments such as digital and television (TV) will have relatively shorter time to bounce-back to pre-pandemic levels while print, films, outdoor, and radio would take longer.

Crisil Ratings Ltd Director Nitesh Jain said advertisement and subscription revenues contribute nearly equally to the overall M&E sector’s topline, but since the former correlates strongly with economic growth, the pandemic has had a bigger impact on it.

“Next fiscal, with strong economic rebound on the cards, ad revenue should grow 31 per cent on-year and subscription revenue around 24 per cent,” Jain added.

The TV segment contributing around half of the sector’s topline has recovered fully and will report healthy growth next fiscal. Ad revenue saw a sharp contraction initially, but recovered swiftly thereafter, aided by airing of new content, sports events such as the Indian Premier League and a buoyant festive season, Crisil Ratings Ltd said in a statement.

“As for subscriptions, TV was resilient even during the peak of pandemic as people remained indoors,” it added.

The print segment, which contributes a fifth of the M&E sector topline, is recovering, though at a much slower pace, and should be able to rebound fully only by the end of next fiscal, it added.

“Print is losing share in ad revenue mainly to the digital segment. Circulation too, especially for English language, could see a loss of 8-10 per cent, because of increased preference for e-papers in metros. However, print companies are rebooting their cost structure and accelerating digital adoption to stay relevant,” the ratings agency added.

Stating that digital has emerged as the medium of choice, Crisil Ratings Ltd Associate Director Rakshit Kachhal said the pandemic accelerated adoption of over-the-top (OTT) platforms, online gaming, e-commerce, e-learning, e-papers and online news platforms.

“This has meant the focus of advertisers has shifted from traditional to digital media. We expect the digital segment revenue to grow 14-16 per cent annually over the medium term. Its share of M&E sector revenue is expected to double to around 20 per cent by fiscal 2024 compared with last fiscal,” Kachhal added.

Credit profiles of large media companies would be unaffected due to strong balance sheets, liquidity and the revenue rebound, while mid-sized and small ones could see stress, Crisil Ratings citing an analysis of over 80 of them rated by the agency.

Accordng to Crisil Ratings, films segment that contributes a sixth to the sector topline, is one of the most impacted segment but occupancies in theatres should improve with the vaccination rollout and a strong pipeline of content.

“However, this segment is likely to remain impacted even next fiscal due to social distancing norms and fear of closed spaces,” it said, adding that other traditional media such has radio and outdoor, are seeing persisting pain, and will likely take much longer to recover.

This is because commuting as well as ad budgets for micro, small and medium enterprises the key drivers for these segments will remain restricted even in fiscal 2022, it said.

The ratings agency said credit profiles of small and and mid-sized media companies have weakened and liquidity pressure may intensify for them if recovery in ad revenue is delayed.

However, Crisil said M&E companies have adopted aggressive cost rationalisation initiatives.

Besides, the pandemic-led change in consumer behaviour has accelerated monetisation opportunities forthese players through integration of digital media into their traditional businesses. “Some of these aspects can lead to structural changes in business models of the M&E sector over the longer term,” it said.

India, World Bank sign $68 mn project for improving education in Nagaland

Source: Business Standard, Feb 23, 2021

New Delhi: Indian government, Government of Nagaland and the World Bank on Tuesday signed a $68 million project to enhance the governance of schools across Nagaland as well as to improve teaching practices and learning environments in select schools.

The “Nagaland: Enhancing Classroom Teaching and Resources Project” will improve classroom instruction; create opportunities for the professional development of teachers; and build technology systems to provide students and teachers with more access to blended and online learning as well as allow better monitoring of policies and programs, a Finance Ministry statement said.

Such an integrated approach will complement conventional delivery models and help mitigate the challenges posed by Covid-19.

About 150,000 students and 20,000 teachers in the government education system in Nagaland will benefit from the statewide reforms in schools.

C.S. Mohapatra, Additional Secretary, Department of Economic Affairs, Ministry of Finance, said that the education project in Nagaland will address the critical gaps faced by students and teachers and play an important role in the development of the state.

Nagaland currently faces challenges of weak school infrastructure, lack of opportunities for the professional development of teachers and limited capacity on the part of communities to partner effectively with the school system. The Covid-19 pandemic has further accentuated these challenges and created additional stress and disruptions to the state’s school education system. Junaid Ahmad, World Bank Country Director in India said that even as the number of children attending school in India has increased over the last few years, there is a growing need to significantly improve learning outcomes to meet the demands of the labour market and fuel future growth. This project is designed to support the Government of Nagaland’s ongoing efforts to improve and develop a more resilient education system in the state.

China back as India’s top trade partner even as relations sour

Source: The Economic Times, Feb 23, 2021

China regained its position as India’s top trade partner in 2020, as New Delhi’s reliance on imported machines outweighed its efforts to curb commerce with Beijing after a bloody border conflict.

Two-way trade between the longstanding economic and strategic rivals stood at $77.7 billion last year, according to provisional data from India’s commerce ministry. Although that was lower than the previous year’s $85.5 billion total, it was enough to make China the largest commercial partner displacing the U.S. — bilateral trade with whom came in at $75.9 billion amid muted demand for goods in the middle of a pandemic.

While Prime Minister Narendra Modi banned hundreds of Chinese apps, slowed approvals for investments from the neighbor and called for self-reliance after a deadly clash along their disputed Himalayan border, India continues to rely heavily on Chinese-made heavy machinery, telecom equipment and home appliances. As a result, the bilateral trade gap with China was at almost $40 billion in 2020, making it India’s largest.

Total imports from China at $58.7 billion were more than India’s combined purchases from the U.S. and the U.A.E, which are its second- and third-largest trade partners, respectively. Heavy machinery imports accounted for 51% of India’s purchases from its neighbor.

That said, India did manage to lower imports from its Asian neighbor amid demand disruptions caused by the coronavirus pandemic. The South Asian nation also managed to increase its exports to China by about 11% from a year ago to $19 billion last year, which makes any further worsening of ties with Beijing a threat to New Delhi’s export revenue.

The tense relations are already weighing on India’s ambitions to bolster its manufacturing capabilities. New Delhi has been slow to issue visas to Chinese engineers needed to help Taiwanese companies set up factories under a so-called production-linked incentive program, or PLI, to promote local manufacturing.

“Still a very long way to go” is how Amitendu Palit, an economist specializing in international trade and investment at the National University of Singapore, described New Delhi’s efforts to wean itself away from Beijing. “The PLI schemes will take at least four-five years to create fresh capacities in specific sectors. Till then reliance on China would continue.”

India set to manufacture containers to boost exports

Source: The Economic Times, Feb 23, 2021

As India aims to boost its exports, the government is looking at manufacturing containers in a big way while developing a shipping line under the Atmanirbhar Bharat programme.

Containers are required to ship goods. At present, India is solely dependent on the public sector Shipping Corporation of India.

While the Ministry of Ports, Shipping and Waterways has already set up a committee to study the feasibility of manufacturing containers at Bhavnagar in Gujarat, sources said that other such hubs are also being looked at.

Until now, most exporters have been relying primarily on Chinese containers. But with geopolitical contours changing rapidly, shortage of containers has hit exporters, who have had bear the additional burden of freight cost hike. India has reduced its imports from China amid rising political tension.

“We need to address the issue of containers at the earliest especially as we focus on boosting exports on one hand and reducing imports on the other,” Ajay Sahai, director general, Federation of Indian Export Organisation told India Narrative.

Traffic at India’s major ports touched 704.82 million tonnes in 2019-20, a report by India Brand Equity Foundation (IBEF) said.

Amid the Coronavirus pandemic, India has turned into a major supplier of rice grain, meat and other agriculture produce globally.

Shortage of containers, especially in the post Covid 19 era, has been causing delays in shipment of various goods.

“The issue of non-availability of containers has been brought to the notice of the government. As exports of rice has surged, the shortage of containers has proved to be a bid handicap. Going ahead, we expect global demand for rice from India to remain high and in order increase supply, it is critical to resolve this issue,” Vinod Kaul, executive director, All India Rice Exporters’ Association said.

In 2020, India’s farm exports rose by about 10 per cent.

The IBEF report highlighted that Indian agricultural, horticultural and processed foods are currently exported to more than 100 countries, chief among them being the Middle East, Southeast Asia, SAARC countries, the EU, and the US.

India, which already supplies over 32 per cent of the global rice needs, witnessed an 80.4 per cent increase in exports of rice – both basmati and non basmati during the April-December period of the current financial year touching 11.58 million tonnes. Exports of non Basmati rice alone accounted for an increase of 129 per cent.

Besides, India has been exporting meat, sugar, dairy products, honey, pulses.

44 startup unicorns created $106 billion in value

Source:, Feb 23, 2021

New Delhi: Forty-four Indian tech unicorns have generated huge value for founders, employees, investors and the economy by creating $106 billion in value, resulting in direct and indirect employment of 1.4 million plus jobs annually.

Over the last decade, these unicorns with a valuation of over a billion dollars include MakeMyTrip, InMobi, Paytm, Byjus, Cars24, Ola and others have cumulatively created $106 billion value for the startup ecosystem, according to Indian Tech Unicorn Report 2020 by Orios Venture Partners, an early-stage venture capital fund.

While the financial payments sector saw the maximum number of unicorns, retail and SaaS (software as a service) were a close second, the report said. Other verticals include logistics, data analytics, travel, food and gaming.

In 2020, 12 startups including Razorpay, PineLabs, Zerodha and Postman, joined the coveted unicorn club, the highest ever in a year.

At $16 billion, Paytm continues to be the most valuable unicorn, followed by edtech startup Byju’s.

“…The Indian startup ecosystem has generated tremendous value for founders, employees, investors and the economy. Most of these are backed by technology and that is the key differentiating factor between unicorns of the 21st century versus the prior era,” said Rehan Yar Khan, managing partner, Orios Venture Partners.

Orios has invested in unicorns like Ola, Druva and Pharmeasy since their early days and look forward to being part of another 3-5 unicorns over the next few years, added Khan.

Interestingly, 41% of unicorns are from India’s startup capital Bengaluru, followed by Delhi at 34% and Mumbai at 14%.

“In fact, many former executives who have exited from these successful startups have continued onto their second ventures and have become angel investors of some repute bringing their experience and cheques to help grow the burgeoning ecosystem to help create the next unicorn,” said Ankur Pahwa, partner and national leader, e-commerce and consumer Internet, EY India.

The technology startup ecosystem continues to see a significant growth trajectory on the back of rapid digitalization and tech adoption.

“Startups are at the forefront of this widescale digital disruption. Segments such as edtech, healthtech, agritech, B2C (business-to-consumer) channels, social commerce, gaming and enterprise tech companies that are spurring the growth, are just few of the sub-segments witnessing double-digit growth and adoption and are expected to bring in the next wave of unicorns,” Pahwa said.

Startups in the country are also likely to see a rush of initial public offerings (IPOs) this year, aided by improving profitability and scale in various verticals.

While MakeMyTrip, JustDial and are the only unicorns to have been listed so far, multiple firms such as food delivery startup Zomato, logistics firm Delhivery, Walmart-owned Flipkart and e-tailer Nykaa are expected to enter the public market this year.

“E-commerce companies are also looking to go in for public listing (either India or overseas) to help tap into the interest and growth that they are generating, expect more news and traction regarding companies tapping into this funding channel in the next 12-24 months,” added Pahwa.

The average time period of eight years for a startup to become a unicorn is now reducing as availability of global investment and capital becomes more accessible, among other things, the report said.

Startups such, MakeMyTrip which were founded pre-2005, took over 14 years to achieve unicorn status, while Zomato, Flipkart and Policy Bazaar took around 8.7 years. Nykaa and Oyo have taken even less time at 5.8 years while Udaan and Ola Electric have taken only three years to achieve a valuation of over a billion dollars. Industry body Nasscom in January had said that at least 12 unicorns will be created in 2021.

India, Mauritius enter into limited free trade act

Source: The Hindu Business Line, Feb 22, 2021

New Delhi: India and Mauritius have entered into a Comprehensive Economic Cooperation Partnership Agreement (CECPA) that will allow trade in select goods between the two countries on preferential terms.

The bilateral CECPA signed on Monday is the first such pact that India has entered into with an African country and is expected to provide a wider entry for Indian goods into the entire continent.

“A special day for our special relationship. Privileged to witness along with (Mauritian) PM Jugnauth Kumar the signing of Comprehensive Economic Cooperation Partnership Agreement, India’s first such agreement with an African country,” tweeted Minister for External Affairs S Jaishankar who is visiting Mauritius.

The CECPA is a limited agreement, covering 310 export items for India, including foodstuff and beverages, agricultural products, textile and textile articles, base metals and articles, electrical and electronic items, plastics and chemicals, wood etc.

Benefit from preferential market access

Mauritius will benefit from preferential market access into India for its 615 products, including frozen fish, speciality sugar, biscuits, fresh fruits, juices, mineral water, beer, alcoholic drinks, soaps, bags, medical and surgical equipment, and apparel.

Since Mauritius has free trade agreements with the rest of Africa, it could act as a gateway for Indian investments and exports to other African countries.

Under the agreement, Indian service providers will have access to around 115 sub-sectors from the 11 broad service sectors such as professional services, computer related services, research & development, other business services, telecommunication, construction, distribution, education, environmental, financial, tourism & travel related, recreational, yoga, audio-visual services, and transport services. India has offered access in 95 sub-sectors from the 11 broad services sectors, including professional services, R&D, other business services, telecommunication, financial, distribution, higher education, environmental, health, tourism and travel related services, recreational services and transport services.

Input inflation, muted demand drags on earnings growth

Source: Financial Express, Feb 23, 2021

The reasonably good results for the December 2020 earnings season and the recovery in the coming quarters notwithstanding, profit estimates for FY22 remain below pre-Covid levels. Indeed, while the economy is recovering fast, large pockets remain fragile.

While earnings for FY22 will benefit from the low base of FY21, just as the FY21 numbers have benefited from the low base of FY20, there are a couple of headwinds.

The first is the rising prices of commodities—especially crude oil—and it is not certain all businesses will be able to pass on the higher input costs. The muted sales of two-wheelers are evidence they have become unaffordable for many after the price increases.

The second concern is that the demand for a host of consumer goods could peter out once the demand from the more affluent households has been satiated; analysts point out the lockdowns necessitated purchases of homes and also a range of goods.

While the sales of affordable homes could well retain momentum, whether this holds for more expensive residential properties remains to be seen.

Large numbers of urban households—and thousands of small enterprises—have been badly impacted by the pandemic and this would affect consumption, at least in the near term. Again, profitability has been boosted by hefty cost cuts and not all of it would be a permanent saving. For instance, salaries would be restored and increments re-started as the business picks up. However, apart from IT and BFSI companies, wage bills are flat or shrinking.

The corporate results suggest the larger companies, especially market leaders and bigger brands have made strong comeback, partly on the back of market share gains from the unorganised sector. This is reflected in the robust GST collections over the past few months.

But the anaemic credit growth—with loan growth slipping to sub-6% in the fortnight to January 29 and CP issuances in January down 26% lower y-o-y —is a sign that a large swathe of companies is not stepping up production. Kotak Institutional expects net profits of the Nifty-50 Index to grow 20% in FY2021 and 25% in FY2022. The increase would be led by volume recoveries in the auto and oil& gas sectors, lower provisions in banks and higher ARPUs in telecom. Given the elevated valuations, strategists expect the markets confidence about the country’s medium term growth prospects would be crucial. “We note that India’s GDP growth had started to decelerate meaningfully even before the Covid-19 pandemic outbreak on decline in the investment component of GDP,” they observed.

Serum Institute to export Covid-19 vaccine to 25-30 countries on Tuesday

Source: Business Standard, Feb 23, 2021

Mumbai: The first shipment of AstraZeneca-Oxford vaccines by Serum Institute of India (SII) will leave for 25-30 countries under the Covax arrangement by Tuesday, said a senior World Health Organization (WHO) official.

Speaking at a webinar on Monday, Soumya Swaminathan, chief scientist at WHO, said, “By tomorrow (Tuesday), the first shipments from India would go out from Serum Institute to 25-30 countries. Then, we hope that this will be followed by other vaccines that would be made in India.”

Discouraging vaccine nationalism, Swaminathan said that manufacturers need to prioritise Covax to bilateral deals. “What we see today is kind of the opposite, that there are more bilateral deals than supplies to Covax,” she said.

Adar Poonawalla, chief executive officer (CEO) of SII had tweeted on Sunday, “Dear countries & governments, as you await #COVISHIELD supplies, I humbly request you to please be patient, @SerumInstIndia has been directed to prioritise the huge needs of India and along with that balance the needs of the rest of the world. We are trying our best.”

Swaminathan also insisted that countries in the high income, middle income and low income categories need to play by the rules of the game as Covax will only succeed if countries prioritise deliveries and not take the resources away. “They should not impose export bans,” she quipped.

Meanwhile, Krishna Ella, chairman and managing director (MD) of Bharat Biotech, said he was keen to join Covax. “We are supplying a lot of vaccines like the typhoid conjugate and the rotavirus to UNICEF already. We would want to be part of the WHO Covax very soon.

The moment we come out with the phase 3 efficacy data, we would want to be part of Covax,” said Ella.

He added that Bharat Biotech is also keen to work with WHO on the intra-nasal vaccine and would like to move things faster. The vaccine will go into phase 1 clinical trials this week.

Ella felt that, at the moment, vaccine distribution is a bit disoriented and unorganised.

“Every country is trying to procure, talking to the political systems. It is a bit unorganised today, but once enough supplies are there, it will be much more organised. In the next 5-6 months, I expect vaccine distribution efforts around the globe to be more organised,” he said.

WHO-led Covax already has a funding gap of $2-3 billion for 2021 alone, Swaminathan said. As for the ACT Accelerator (or Access to COVID-19 Tools Accelerator), the funding gap is to the tune of $23 billion or so. ACT Accelerator is a G20 initiative announced in April 2020 for global collaboration to accelerate the development, production and equitable access of Covid treatment. Covax is the vaccine pillar of the ACT Accelerator.

India to clear 45 investments from China, likely to include Great Wall, SAIC

Source: The Economic Times, Feb 22, 2021

India is set to clear 45 investment proposals from China, which are likely to include those from Great Wall Motor and SAIC Motor Corp, government and industry sources told Reuters, as military tensions between the two countries ease at the disputed border.

The proposals have been held up since last year after India tightened controls on Chinese investment in the country in retaliation against alleged Chinese troop incursions in the western Himalayan region. China blamed Indian troops for the standoff.

About 150 investment proposals from China worth more than $2 billion were stuck in the pipeline. Companies from Japan and the U.S. routing investment through Hong Kong were also caught in the cross-fire as an inter-ministerial panel led by the home ministry increased scrutiny of such proposals.

Union Home Ministry spokesman did not respond to a request for comment on the proposals to be cleared.

Two government sources who have seen the list said most of the 45 proposals set for early approvals are in the manufacturing sector, which is considered non-sensitive in terms of national security.

The sources did not elaborate but two other government officials and two industry sources who are privy to the process said proposals from Great Wall and SAIC are likely to be on the list.

Great Wall and General Motors (GM) made a joint proposal last year seeking consent for the Chinese automaker to purchase the U.S. company’s car plant in India, in a deal expected to be valued at around $250-$300 million.

Great Wall, which plans to invest $1 billion in India over the next few years, said earlier that establishing operations in the country is a key part of its global strategy. It had planned to start selling cars in India from this year, and was also mulling bringing in electric vehicles.

Great Wall said it continues to seek relevant approvals and investment clearances.

“Should we be granted all relevant approvals, we will push all work forward in India, abiding by the laws and rules laid down by the Indian government,” a company spokesman said.

A GM spokesman added: “We continue to seek all relevant approvals to support the transaction.”

SAIC, which started selling cars in India in 2019 under its British brand MG Motor, has invested around $400 million of the nearly $650 million it has committed to India and would need approval to bring more investment.

SAIC’s India unit did not respond to an email seeking comment.

The change in the Indian government’s stance follows an improvement in the border situation. Troops who were in eyeball to eyeball confrontation in territory claimed by both sides have been withdrawn, the two countries announced on Sunday.

The plan going forward is to split up over 150 proposed Chinese investments into three categories depending on the risk to national security, the sources said. Sectors such as automobiles, electronics, chemicals and textiles are seen as non-sensitive whereas those involving data and finance are deemed sensitive, consultants and lawyers have said. Proposals from non-sensitive sectors will be approved faster, while those seen as “sensitive” will be reviewed later, one of the government sources said.

Ecommerce accounts for nearly a third of several electronic categories, research shows

Source:, Feb 20, 2021

Ecommerce now accounts for nearly a third of several electronic categories, almost half of smartphones sold and about a fifth of all apparel sales in India, increasing at their highest pace in 2020 when most consumers hunkered down in their homes due to Covid related restrictions and feared shopping at brick-and-mortar stores, as per just released data by researchers GfK, Nielsen, IDC and company officials.

For daily essentials and fast moving consumer goods, sales tracker Nielsen said the e-commerce spurt is more prominent in the metroes.

E-commerce contribution to total FMCG sales touched an all-time high of 2.8% in 2020 up from 1.9% a year back. In metroes, the contribution is at 7.5%. Large manufacturers like Hindustan Unilever, ITC, Nestle and Marico have said their e-commerce contribution has more than doubled in 2020 to around 5-6% of total sales.

For television and home appliances, e-commerce contribution has surged by 3 to 5 percentage points of total sales in 2020 over the previous year.

E-commerce accounts for 31% of total television sales last year up from 27% in 2019, for microwave oven it has grown from 32% to 37% while for refrigerator and washing machine online now accounts for 12% (7% in 2019) and 18% (14%) respectively as per GfK data.

Mobile phone researcher IDC India said e-commerce sales of smartphones grew by 12% annually to account for 48% of total sales in 2020 up from 41.7% in 2019, even as the overall market declined by 1.7% last year.

Company CEOs and trackers said the shift to e-commerce last year might be permanent for most of the categories.

“With consumer preference for e everything, there are clear tailwinds for this business. As consumers get used to assortment and convenience of ecommerce, we believe this will continue to stick,” Sanjiv Mehta, chairman at Hindustan Unilever said in a recent earning call.

GfK India managing director Nikhil Mathur said the pandemic triggered a structural shift in buying behavior through increased preference of online shopping via general shopping apps, brands’ own websites and social media.

“This digitalization trend is expected to continue with evolving consumer needs and choices across big and small cities. With life coming back to normal and offline retail seeing increasing footfalls, omni-channel experience will be key for success,” he said.

However, IDC India’s research director Navkendar Singh said the contribution of e-commerce to total smartphone sales may come down in 2021 to around 43% to 46% with some consumers shifting back to brick-and-mortar stores as vaccination picks up pace and overall Covid cases are expected to decline.

Aditya Birla Fashion & Retail (ABFRL) said its lifestyle business in e-commerce channel grew 45% during last quarter, while Arvind Fashions (AFL) saw sales from online channels, both from marketplaces like Myntra as well as its own portal, more than double last quarter with omni-channel annualized sales at over Rs 1,000 crore.

“Our ecommerce business recorded 230% growth over last year and now contributes to 20% of our business, ” Shailesh Chaturvedi, chief executive of AFL told ET earlier this month.

Companies, however, said demand at brick-and-mortar sales is not affected by the exponential growth in online as price tags and discounts are now similar in both the channels.

“The e-com business is fairly independent from the exclusive brand outlet business that requires physical space. What we have ensured is that we have parity on pricing, discounts and so on, so that the consumer gets the same price experience across various channels. So to that extent, the one does not affect the other,” Vishak Kumar, chief executive officer – lifestyle business at ABFRL.

In fact, companies have started using brand outlets as fulfillment centres for online delivery and as a result, also opening more stores to reach a wider network that can service ecommerce sales as well.