Flipkart races ahead of Amazon and Pepperfry. KKR acquires majority stake in EuroKids. Elon Musk announces Plaid powertrain as improvement over present Ludicrous mode.
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Safety Net: Securitisation volume has risen exponentially in the last two years to c. INR2tr in 2019, as per records, particularly following the severe liquidity crunch faced by NBFCs.
This suggests that NBFCs have been trimming their loan book rather than giving out loans. Under these circumstances, MSMEs, for whom NBFCs were the primary source of funds have been the most hit. In addition to this, MSMEs have been facing trouble servicing their existing loans.
Mounting Troubles: In addition to this, troubles in real estate sector and falling property values have affected loan to value ratios. Subsequently, Moody’s Investor Service expects delinquencies to increase in LAP simply because borrowers are not able to refinance.
Multiyear investment slowdown in India has decimated credit quality, and the problem is spreading. As per this report, the near-recession in the consumer economy means unsecured lending could be the next domino to fall, but going subprime isn’t the answer for India’s big banks. Read the article here to know why.
What’s New?: Global investment firm KKR has acquired a majority stake in education services provider, EuroKids from the existing investor consortium led by Gaja Capital.
KKR makes its investment from its Asian Fund III. Further terms of the transaction were not disclosed.
EuroKids is one of India’s largest education services providers in the pre-school and K-12 segments. It has more than 120,000 students from 1,115 pre-schools and 35 K-12 schools across five countries.
Pirates of the Education: Ed-Tech firms are caught in a rather difficult situation. As per this report, developers and other professionals are sharing paid content from platforms such as Coursera and Udacity sites for free. This is despite most of the content having a copyright.
Privacy is becoming a burgeoning menace, especially at a time when edtech companies have seen a dramatic increase in uptake of relevant courses from IT companies as well as startups as more and more people look to enhance their skillset.
lipping the Game: When it comes to the online furniture market in India, Flipkart is the undisputed leader. The e-commerce platform accounts for 41% of all furniture bought online, much ahead of rivals Amazon, Pepperfry, Urban Ladder and Godrej Interio. Flipkart’s share also increased from Q2 last year when it held less than 33% of the market.
The online furniture market itself is growing at a rapid rate of about 80-85% CAGR. By 2022, it is expected to be a $700mn market, according to RedSeer analysis.
Thank God for Millennials: The combination of rising internet penetration and millennial demand has proved to be a lucrative recipe for the furniture renting market. And in a startup-crazy country like India, furniture renting is not just the perfect B2C business but also a B2B one.
Double Whammy: India’s capital expenditure has dipped while revenue expenditure has risen. In the first four months of FY2019-20, the Union Government’s capital expenditure was INR1.07L crore, which is 31.8% of the total budget estimate (it was 37% for the same period last year). Meanwhile, revenue expenditure for the first four months of this fiscal climbed by over INR62,000cr.
These numbers are significant in that they make economic turnaround more difficult. High capital expenditure is good for the economy since this money goes into asset creation like construction of schools, roads, ports etc. On the other hand. High revenue expenditure is not considered useful for growth since it goes into payment of salary, subsidies and wages.
Mythology Time: Indian households are running out of savings, losing borrowing capacity, and growing increasingly uncertain about the future. As unemployment grows and wages stall, the RBI’s monetary easing has not boosted consumption and the economy. As more rate cuts are demanded, some can argue they will fail too because they are based on three myths about Indian consumer behaviour.
Tesla Talks: Elon Musk has promised a more powerful powertrain option in future Model S, Model X and Roadster sports car that will push acceleration and speed beyond Ludicrous mode, which is the current high bar. The higher-performing versions will contain a Plaid powertrain, is about a year away from production, and will have three motors. More details here.
Watch Tesla’s Model S set the record for fastest lap at Laguna Seca here. (This Model S was equipped with its Plaid powertrain.)
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