Also in this letter:
■ Apple taps suppliers in India, South Korea, Japan
■ Online gaming firms seek new regulatory model
■ ETtech Done Deals
Byju Raveendran says will tide over liquidity crisis in 45-60 days
Byju Raveendran, founder, Byju’s
Byju Raveendran told a group of senior executives on Tuesday that he is aiming to close the company’s liquidity crisis over the next 45-60 days over a two-hour long call, sources told ET. Byju’s is facing a series of crises and is looking at multiple options for a fresh cash infusion to keep itself going.
Call details: Raveendran also addressed concerns about changes in its business plans and optimisation of cost – both on people and business fronts – to stave off the current crisis. He also took this opportunity to rally his troops, calling for the team’s support to tide over the multiple crises that the company faces.
Quote, unquote: “Despite everything that’s going on, investors like Ranjan Pai (Manipal Group chairman) and other unnamed investors (founders) have helped us with capital in critical hours. Issues like term loan B and others have been big hurdles this year and this is no less than war time,” Raveendran said during the call.
Pai has invested at least Rs 1,400 crore across Byju’s test prep subsidiary Aakash to clear Davidson Kempner’s debt, and also extended funding to Raveendran which has been used for Byju’s operations.
Tell me more: Raveendran also faced questions from senior managers about reducing the notice period for staffers from 15-60 days to about 15-30 days. Byju’s India CEO Arjun Mohan, who was also on the call, spoke about these decisions and overall business plans going forward, while cautioning that availability of cash will be critical for all the plans.
‘Last man standing’: “I have invested a majority of my capital back in the company and yet I have had to go and ask for Rs 5 crore in capital also to clear salaries, but we will be the last man standing,” Raveendran said.
Byju’s had to delay the salaries of about 1,000 employees citing a ‘technical glitch’ on the weekend, but they were cleared on Monday. Raveendran has also pledged personal assets such as his houses to borrow capital.
Vacating offices: Byju’s has relinquished about 620,000 square feet of office space in Bengaluru’s Kalyani Tech Park and IBC Knowledge Park. The terminated office assets include 550,000 sq ft in Kalyani Tech Park in Whitefield and 70,000 sq ft in IBC Knowledge Park, sources told ET.
Epic sale proceeds: ET reported on December 5 that Byju’s may have to chip away at the amount it receives from the sale of subsidiary Epic. At least $80-100 million may be invested in parent Think & Learn. The sale proceeds had, so far, been earmarked exclusively for paying off its $1.2-billion term loan B (TLB) lenders.
Also read | Byju’s valuation below $3 billion; company facing challenges: Prosus interim CEO
ZestMoney to shut ops, lays off 150 employees
Mandar Satpute, chief banking officer, ZestMoney
Lending startup ZestMoney is shutting down by the end of this month and will lay off most of its remaining employees in the process.
What went down? Two major non-banking finance companies which were supporting ZestMoney through credit lines withdrew them last week citing regulatory restrictions on unsecured lending, one person in the know told us.
“This afternoon, the new leadership had informed the tech team that they should start looking for jobs. They said the company will be able to pay salaries only till December 31,” said the person quoted above.
Also read | ZestMoney founders leaving troubled fintech firm post PhonePe deal collapse
Amid mounting pressure: Earlier this month, the Reserve Bank of India (RBI) increased the risk weightage by 25% against unsecured lending, which is set to push up the cost of capital for NBFCs and fintechs going forward.
Therefore, many NBFCs who were bullish on fintechs have become cautious. ZestMoney is understood to have suffered a similar situation.
Also read | ETtech Exclusive: PhonePe calls off deal to acquire ZestMoney amid due diligence concerns
Firesale mulled: “The management might try to have a firesale of the product and the customer base going forward, but Zest is left with no business as such,” he added.
While no major fintech might show any interest in ZestMoney right now, some traditional NBFCs might be interested in the product and may try to buy its technology in a firesale.
Also read | Fintech lenders may face the brunt of RBI’s tightening of capital norms for unsecured lending
Apple taps companies in India, Taiwan, South Korea, Japan for critical parts
Apple is branching out for new suppliers of key components in India, Japan, Taiwan and South Korea for its contract manufacturers in India, people aware of the matter told ET, as its existing suppliers hang in the balance due to India’s border tensions with China.
What’s driving this? Apple is diversifying its suppliers on the back of delayed government approvals for imports from existing suppliers — primarily of Chinese origin — of batteries, camera lens, chargers and other equipment required to make its flagship iPhones and iPads in India, sources said.
Red tape: About 17 Chinese companies that supply components for Apple’s devices in January applied for government clearances to set up manufacturing facilities in India. Fourteen were granted initial approval. Among them, four applications have been indefinitely delayed, while six companies have indicated to the government that they are no longer interested in making in India.
Expert view: Industry experts are of the view that with most of Apple’s component suppliers being China-headquartered, they are unlikely to gain immediate government approvals owing to the ongoing India-China border tensions.
Apple has also grown aggressive in its push for manufacturing in India as it looks to diversify its supply chain out of China over the years.
Also read | Apple bites big, turns largest smartphone exporter from India
Online gaming startups call for three-tier oversight mechanism
With the Centre putting on hold the process of notifying self-regulatory bodies (SRBs) for the online gaming industry, top names in the sector are seeking a fresh look at the regulatory regime.
A new mechanism: The industry is proposing a three-tier regulatory mechanism, where SRBs are brought under an oversight committee formed by the government, Dream11 cofounder and CEO Harsh Jain and Games24x7 cofounder and CEO Trivikraman Thampy told ET on Tuesday, on the sidelines of the Indian Gaming Convention in New Delhi.
Quote, unquote: “The way Sebi (Securities and Exchange Board of India) unlocked the financial potential of the country through the stock market, that’s the kind of regulation we need. The government has proposed an SRB for the gaming industry, but there can be a three-tier structure with government oversight, where it’s not just an independent SRB…this is a tried-and-tested model where you have a three-tier structure that can regulate gaming,” Jain said.
Background: On November 1, ET reported that the Centre was forming a group of ministers (GoM) headed by home minister Amit Shah to look into the regulatory framework for the online gaming industry.
Plan on the backburner: In September, ET reported that the government had deferred its plans to form SRBs, as envisaged under the amended Information Technology Rules notified in May this year. Under this mechanism, the government asked the industry to submit proposals for self-regulators led by an independent board. These SRBs would approve online games for the Indian internet.
Also read | IAMAI pulls invite to some gaming companies for meet with IT MoS Rajeev Chandrasekhar
India’s tech chops help GCCs to look within for solutions
One out of four technology functions required by global capability centres (GCCs) or captives in India has been insourced from an IT firm, as per data sourced by ET.
Details: Multinationals are making a beeline for India’s abundant technology talent for functions and are going beyond back-office support through their GCCs.
ANSR, which helps set up GCCs and handles over 110 centres and 120,000 GCC talent resources, says that over 30,000 critical jobs over the past decade have been insourced from system integrators to their own payrolls by GCCs.
By the numbers: ANSR sets up around 10 to 15 such captive centres every year. Presently, India has around 1,600 GCCs employing a 1.66-million-plus workforce.
The number of GCCs is poised to grow to 1,900, employing over 2 million people by 2025, as per a Nasscom and Zinnov report.
Catch up quick: In the first part of the Series on GCCs called Global to Local, ET reported on Tuesday that India is witnessing a revolution of sorts when it comes to new captives of global capability centres (GCCs) of multinationals being set up in India along with massive expansion of existing ones.
ETtech Done Deals
CoreEL Technologies raises $16 million from 360 One Asset: 360 One Asset Management, formerly known as IIFL Asset Management, on Tuesday said it will invest $16 million in CoreEL Technologies. The funds will be used to accelerate CoreEL’s growth plans including research and development, new product development and augmenting manufacturing capacity.
Dairy fintech startup Digivriddhi raises $6 million: Dairy fintech and marketplace platform Digivriddhi Technologies has raised $6 million as a part of its latest funding round led by Omidyar Network India, the investment fund said on Tuesday. Existing investors including Omnivore and InfoEdge Ventures also participated in the round.
Rural-focused fintech Navadhan raises $5 million: Rural-focused lending fintech Navadhan has raised $5 million (Rs 40 crore) in its pre-series A round of funding led by Prime Venture Partners. Existing investors Gemba Capital and Varanium NexGen Fintech Fund also participated in the round.
Other Top Stories By Our Reporters
‘Failure to curb deepfakes may lead to action under IPC too’: The government has warned social media and internet intermediaries that failure to act on deep fake, synthetically altered content and 11 other user harms mentioned under the Information Technology (IT) Rules of 2021 could attract action under the Indian Penal Code apart from the IT Rules, a senior official said.
Countries feeling the acute need for digital public infra: Nandan Nilekani | The need for digital public infrastructure is being increasingly felt globally by countries as they aim to achieve their economic, social and environmental goals, Infosys non-executive chairman Nandan Nilekani said at the Global Technology Summit on Tuesday.
‘Unacademy has runway of four years’: Unacademy cofounder Gaurav Munjal on Tuesday told employees that the test preparation business currently has reserves of Rs 1,800 crore in the bank, enabling it to command over four years of cash runway.
Global Picks We Are Reading
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