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Tag: sebi

  • Due to Disclosure Violations, Sebi Fines EbixCash and Ebix of INR 6 lakh

    EbixCash Ltd and its promoter business, Ebix Inc., were fined INR 6 lakh by capital markets regulator Sebi on 19 December for violating disclosure requirements pertaining to the company’s planned initial public offering (IPO). The financial services firm EbixCash withdrew its draft red herring prospectus (DRHP) from the regulator in December of last year, after having submitted it in March 2022. Following the regulator’s examination into alleged violations of the Sebi’s ICDR (Issue of Capital and Disclosure Requirements) rules, the fines were imposed.

    In issuing its remarks on the DRHP dated March 2022, which was connected to the planned IPO of EbixCash filed with Sebi by the lead manager to the issue, Sebi allegedly discovered instances of non-compliances against EbixCash, Ebix Singapore, and Ebix Inc. This led to the order.

    78 Pages Detailed Report

    Sebi concluded in a 78-page verdict that EbixCash and Ebix Inc. had not sufficiently disclosed important information, such as Reserve Bank of India (RBI) regulatory actions, arbitration decisions, and modifications to the DRHP’s IPO funds use.

    The RBI issued a “Letter of Displeasure” in March 2023 about EbixCash subsidiary Ebix Payment Services’ gift card operation, which the regulator pointed out was not fully disclosed. Because the regulatory action affected the company’s financial reporting, this omission was considered important.

    Sebi also pointed out significant discrepancies in Ebix Inc.’s press releases, including claims regarding arbitration decisions and revenue recognition modifications. The market’s watchdog said that these claims were in conflict with or left out information from the DRHP that was submitted to the regulator.

    Response from EbixCash

    EbixCash stated in its defence that the company had quickly filed an updated DRHP with the required information and that the disclosures were compliant with regulatory standards. Furthermore, given that it is a foreign business, Ebix Inc. argued that Sebi lacked jurisdiction over the transaction.

    The regulator, however, rejected these claims, highlighting the necessity of regular and open disclosures to protect the interests of investors. In addition to fining both organisations, Sebi emphasised that issuers and their promoters must make sure that public statements are consistent with the offer documentation. As a result, the regulator fined EbixCash Ltd and Ebix Inc INR 3 lakh each for failing to adhere to the disclosure standards.

    In March 2022, EbixCash submitted its DRHP to SEBI in order to raise INR 6,000 Cr through a new share offering. The public issue, however, never came to pass. Yet, in recent years, the company’s US-based parent has been on a downward spiral due to alleged corporate governance violations. After failing on a $617 million loan and other covenants related to this debt, its parent company, Ebix Inc., which is listed on the Nasdaq, filed for bankruptcy in the US in December 2023. In the end, Ebix Inc. and its subsidiary EbixCash were purchased by BSE-listed Eraaya LifeSpaces for $151.577 million in August 2024.

    SEBI Tightens Rules for SME IPOs to Protect Investors
    SEBI introduces stricter rules for SME IPOs, aiming to enhance investor protection and ensure higher transparency in small and medium enterprise listings.
    StartupTalkyNitin Konde

  • SEBI Makes the Rules for SME IPOs Rigorous

    The Securities and Exchange Board of India (Sebi) has, as anticipated, strengthened the rules pertaining to IPOs for small and medium-sized businesses. The capital market regulator set a cap on shares that could be sold through the offer for sale (OFS) route and implemented profitability standards during its Board meeting on 18 December.

    Before submitting their DRHP, SMEs must now demonstrate an operational profit of at least around INR 1 crore for two of the previous three fiscal years. Furthermore, the OFS size shouldn’t exceed 20% of the issue size overall. In addition, through the IPO, these stockholders are not permitted to sell more than 50% of their whole holdings.

    Tightening the Lock-In Period

    Promoters who hold more than the minimum promoter contribution (MPC) are subject to longer lock-in periods. One year will be the lock-in period for half of such excess holdings, and two years for the other half. In terms of allocation, the main board IPO process and the NII allocation technique for SME IPOs are identical. 15% of the entire issue size, or INR 10 crore, whichever is less, is the maximum amount allotted for general corporate purpose (GCP) in SME IPOs.

    According to the new regulations, debts to promoters, promoter groups, or associated parties cannot be repaid with the proceeds of an SME IPO. In addition, the public will now have 21 days to examine and comment on SME IPO DRHPs. The DRHPs will be made available by stock exchanges via QR codes and public notifications.

    New Rules Will Change the Business Dynamics

    A new set of guidelines for post-IPO compliance has been developed. If SME businesses follow the rules for main board listing, they can still raise money without moving to the main board. SME-listed companies would be subject to the same related party transaction regulations as main board-listed companies, with a lower threshold of 10% of yearly consolidated turnover, or INR 50 crore.

    New rules have also been agreed upon by the Sebi board to guarantee that funds raised by mutual funds through New Fund Offers (NFOs) be deployed on schedule. The goal of the new structure is to incentivise AMCs to only collect as much money in NFOs as may be used within an acceptable time limit, typically 30 days.

    Reforms to improve the ease of doing business for Debenture Trustees, ESG rating agencies, InvITs, REITs, and SM REITs are among the other improvements that the board has adopted. Sebi chooses to change the rules governing investment banking. On December 18, the Sebi board decided to limit the scope of activity for investment banks and merchant bankers. Under the new regulations, merchant bankers will only engage in activities that the Sebi has approved. Within two years, any activities that are not allowed should be divided into a different legal organisation with a different brand name.

    InCred Aims for a Diwali 2025 INR 5,000 Crore IPO Launch
    InCred Financial Services announces plans to launch a massive INR 5,000 crore IPO by Diwali 2025, targeting growth and expansion in the financial sector.
    StartupTalkyNitin Konde

  • Smartworks and Ecom Express Receive SEBI Approval for IPO

    SEBI has approved the initial public offerings (IPOs) of coworking space provider Smartworks and logistics business Ecom Express. According to the information on SEBI’s website, the regulator made the remark against Ecom Express on November 29.

    A prior, on November 28, Smartworks received the observation. The public offering is approved by SEBI when an observation is issued. In August, Ecom Express submitted its draft red herring prospectus (DRHP) for an initial public offering (IPO) for INR 2,600 Cr. This includes an offer for sale (OFS) for INR 1,315.5 Cr and a new issue of equity shares up to INR 1,284.5 Cr. In the same month, Smartworks submitted its draft IPO documents. The company’s initial public offering (IPO) will include an offer for sale (OFS) of up to 67.49 lakh equity shares and a new issue of equity shares valued at INR 550 Cr. Before submitting its Red Herring Prospectus (RHP), the coworking company also intends to raise INR 110 Cr through a pre-IPO placement.

    Operations and Financial Dynamics of Both the Firms

    The late TA Krishnan, Manju Dhawan, K Satyanarayana, and Sanjeev Saxena founded Ecom Express in 2012 as a pure-play provider of B2C ecommerce logistics solutions. It makes money by providing services to consumers in the Indian e-commerce sector, which includes D2C, vertical, horizontal, and fast commerce platforms. In the fiscal year 2023–2024 (FY24), the company reported a net loss of INR 255.8 Cr on operational sales of INR 2,609 Cr. Conversely, Smartworks, a shared workspace service that provides businesses with customised coworking solutions, was established in 2016 by Neetish Sarda and Harsh Binani.

     With more than 40 locations in 14 cities, including Bengaluru, Kolkata, Delhi NCR, and Mumbai, it boasts more than 8 million square feet of office space. It says it serves over 600 businesses, such as Moglix, DHL, Starbucks Coffee, and Honeywell.  It faces competition from companies like IndiQube, WeWork India, and Awfis. According to its DRHP, Smartworks’ operating revenue increased to INR 1,039.4 Cr in FY24, while its net loss decreased to INR 49.8 Cr. 

    IPOs are Becoming More Common Among Startups

    With initial public offerings (IPOs) emerging as a crucial means of obtaining funding, the Indian startup scene is undergoing a significant transformation. For the second time in history, mainboard initial public offerings (IPOs) have raised more than INR 1 lakh crore in 2024. Over INR 1.03 lakh billion has been raised through 70 initial public offerings (IPOs) this year, the most since 2007. In contrast, 63 firms raised more than INR 1.19 lakh crore through IPOs in 2021, compared to 100 IPOs that were launched in 2007 and raised INR 34,179 crore.

    This remarkable expansion coincides with a slowdown in the global IPO markets, which has seen a 16% drop in capital raised and a 12% drop in listings. India has distinguished itself on the international scene with its distinct blend of economic stability, a flourishing digital economy, and a developing private equity (PE) and venture capital (VC) ecosystem.

    UPI Value Drops 8% in November, Volume Down 7%
    UPI transactions saw a decline in November, with an 8% drop in value and a 7% decrease in volume, reflecting a slowdown in digital payments activity.
    StartupTalkyNitin Konde

  • Sebi Wants to Raise the Minimum Subscription for SME IPOs in Order to Safeguard Investors

    Since more and more individual investors are participating in small and medium-sized business IPOs, the market regulator has suggested at least doubling the minimum subscription amount.

    In a consultation document published on 19 November by the Securities and Exchange Board of India (Sebi), the regulator suggested raising the minimum application size for SME IPOs from INR 1 lakh to INR 2 lakh. Sebi even proposed raising the sum to INR 4 lakh in one of the other recommendations.

    Over the past few years, there has been a growth in retail individual participation in SME IPOs. Therefore, it is suggested to increase the application size in order to protect the interests of smaller retail investors, given that SME IPOs tend to have a higher element of risk and that investors may become stuck if sentiments change after listing. This is because a larger application size will limit participation by smaller investors and attract investors who are willing to take on more risk, which will increase the SME segment’s overall credibility, as per the paper.

    Listing Process and Corporate Governance Norms for SMEs

    Sebi said that the action is a component of its larger examination of corporate governance standards and the listing procedure for SMEs, which have seen a sharp increase in IPOs, particularly since 2022. With 196 initial public offerings (IPOs) that raised over INR 6,000 crore, FY24 saw the most SME capital raising and public issues since the creation of SME platforms. Additionally, as of October 15, 159 SME IPOs had raised over INR 5700 crore in FY25, the regulator noted.

    It comes as the regulator has repeatedly warned investors about dubious activities in the nation’s SME market and about some SMEs’ exaggerated projections. A notable change in the market supports Sebi’s plan to double the minimum subscription amount. The Sensex and Nifty indices have increased by about 4.5 times since Sebi’s initial structure was implemented more than 14 years ago.

    Further Suggestions Made by Sebi

    Additionally, Sebi recommended that the “draw of lot” allocation method, which is employed for retail investors in mainboard IPOs, be applied to SME IPOs as well. In order to give smaller investors a greater chance of receiving allocations in the event of oversubscription, it was also suggested to divide the non-institutional investor group into two subcategories according to application size.

    The introduction of an obligatory monitoring agency for initial public offerings (IPOs) if the issue exceeds INR 20 crore is one of the paper’s main recommendations. By certifying the use of revenues, these organisations would make sure that money is spent for the reasons specified in the offer contract. A statutory auditor’s certificate would be necessary to verify the use of the proceeds for smaller initial public offerings (IPOs) that fall below this threshold.

    In an effort to tighten qualifying requirements, Sebi suggested that businesses looking to list must have made at least INR 3 crore in operating profit (profits before interest and taxes) in two of the previous three fiscal years. For its issued capital and proposed new shares, it also recommended requiring that shares issued in the IPO have a face value of INR 10 each.

    Additionally, the capital market regulator suggested that SME-listed businesses be subject to the related-party transaction (RPT) standards found in Sebi’s Listing Obligations and Disclosure Requirements Regulations (LODR). Companies with less than INR 10 crore in paid-up capital and less than INR 25 crore in net worth are an exception.

    RBI to Act Against Banks Failing KYC and Customer Care Standards
    The RBI plans to take action against banks that fail to meet KYC and customer care standards, ensuring better compliance and customer service.
    StartupTalkyNitin Konde

  • Three Bankers Join boAT for $300–500 Million IPO

    According to reports, boAt, a manufacturer of smartwatches and audio goods, has selected a number of bankers for an IPO that will cost between $300 and $500 million next year.

     According to media sources, ICICI Securities, Goldman Sachs, and Nomura have joined the business as IPO bankers. The report also stated that although final numbers may change closer to the IPO filing, boAt may aim for a valuation of more than $1.5 billion. Regarding the development, boAt has refrained from commenting. 

    Second Attempt by the Startups to Launch IPO

    It’s important to remember that this is the startup’s second attempt at an initial public offering. The company submitted its draft red herring prospectus (DRHP) for a public offering of INR 2,000 crore to the Securities and Exchange Board of India (SEBI) in 2022. Cofounder Aman Gupta stated last year that boAt was not in a hurry to pursue an IPO for the “next couple of years,” but eventually scrapped the plans. Rather than moving forward, boAt chose to raise $60 million in private funding from new investor Malabar Investments and current investor Warburg Pincus through convertible preferred shares, with a valuation cap of about $1.2 billion.

    Roadmap to Launch its IPO

    With plans to file for the upcoming fiscal year, the reports also stated that ICICI Securities would serve as the issue’s lead banker. The business has chosen four bankers in all. The news coincides with a severe slump in boAt’s wearables category, which saw its consolidated operating revenue drop by more than 7% to INR 3,117.7 Cr in the financial year 2023-24 (FY24) from INR 3,376.8 Cr in the previous fiscal year. The wearables segment saw a roughly 40% decline in sales, from INR 910.6 Cr in FY23 to INR 550.3 Cr in the reviewed year. However, revenue for boAt’s audio products segment, which makes up the majority of its total sales, increased by just 5% from INR 2,350.8 Cr in FY23 to INR 2,459.2 Cr in FY23.

    Nevertheless, boAt was able to reduce its loss in FY24 in spite of the drop in its income. During the year, the net loss of the Aman Gupta-led venture decreased by more than 38% to INR 79.7 Cr, a decrease from INR 129.4 Cr in FY23. Gupta and Sameer Mehta founded boAt in 2015, and it sells speakers, smart watches, headphones, and other items in the broader wearables and audio sectors. It has raised over $177 million in capital to date and is supported by companies including Qualcomm Ventures, Ranveer Singh, and Warburg Pincus, among others. One of the leading brands of audio devices in India, boAt faces competition from industry titans like JBL, Sony, Samsung, OnePlus, Noise, and a number of up-and-coming new-age businesses.

    Prosus Considers 2025 IPO for Fintech Firm PayU
    Prosus considers a 2025 IPO for its fintech company PayU, aiming to bring the digital payments leader to the public market.
    StartupTalkyNitin Konde

  • SEBI Issues Warning Regarding Virtual Stock Games Utilising Real-Time Data

    Investors are being cautioned by the Securities and Exchange Board of India (SEBI) about unapproved virtual trading and gaming platforms that provide services and advice based on stock prices. SEBI underlined that these platforms breach important investor protection regulations and function without regulatory license.

    “The Securities and Exchange Board of India has discovered that certain apps, web applications, and platforms are providing the public with virtual trading services, paper trading, or fantasy games based on stock price data of listed companies,” stated SEBI in a circular released on 5 November 2024. 

    According to SEBI, these actions are against the Securities Contract (Regulation) Act of 1956 and the SEBI Act of 1992, which are legislation designed to safeguard investors. The warning is in connection to an earlier advice from SEBI on August 30, 2016, which warned against securities market leagues, schemes, and tournaments, some of which gave out prize money.

    SEBI reaffirmed that only registered intermediaries should be used by investors to trade and make investments. SEBI has no jurisdiction over unapproved platforms. Furthermore, SEBI’s procedures are unlikely to provide protection or grievance redress for any problems resulting from such unregistered schemes or platforms. 

    The circular further emphasised that investors who use unapproved platforms have no alternative. They would not have access to investor grievance procedures run by exchanges or the online dispute resolution tool, Smart ODR, and they will not be eligible for safeguards under SEBI’s authority, such as SEBI’s Complaints Redress System (SCORES).

    Why SEBI is so Concerned?

    The markets watchdog is worried that these operations resemble “dabba trading,” an unlawful practice that uses unapproved channels, even though SEBI’s most recent warning does not name specific organisations, according to a media report. The regulator limited the access for virtual stock games in May of this year by ordering depositories and stock exchanges to cease supplying real-time pricing data to third-party apps. This regulation, which specifically targeted apps that offer cash prizes or gamify real-time stock movements, attempted to prevent users from forming irrational expectations about the equities market or taking risks based on virtual accomplishments. According to the same media report, stock exchanges have also warned organisations that use information that was scraped from their websites or brokers’ websites.

    What is a Fantasy Stock Game Like?

    Stock investing can be dangerous since prices might suddenly decline, resulting in possible losses as well as extra fees and taxes. On the other hand, fantasy stock game applications claim to be a safer substitute. For a nominal admission fee, users can forecast price movements by simulating stock trading using real stock data from exchanges such as the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE). Users could win cash prizes, luxury goods, or gold coins if their predictions come true. The admission fee, which is much less than the true costs of trading, is all that is lost if the user’s prediction goes wrong.

    These apps that use real-time data from regulated exchanges are disapproved by SEBI. According to SEBI, these platforms use market data to draw users, possibly leading them to mistakenly believe that virtual success is equivalent to actual trading prowess. In contrast to actual trading, these apps are unregulated and exempt from risk disclosure requirements.

    SEBI Approves NTPC Green & Avanse Financial Services IPOs for Launch
    Sebi has approved IPOs for NTPC Green Energy and Avanse Financial Services, targeting INR 10,000 crore and INR 3,500 crore, respectively, to drive growth initiatives.
    StartupTalkyNitin Konde

  • Sebi Approves NTPC Green Energy and Avanse Financial Services to List Their IPOs

    According to an update with the markets regulator on October 28, 2024, Sebi has given the go-ahead for NTPC Green Energy, the company’s renewable energy division, and Avanse Financial Services Ltd, an NBFC with an emphasis on education, to raise money through initial public offerings (IPOs).

    Through first share offerings, NTPC Green Energy and Avanse Financial Services hope to raise INR 10,000 crore and INR 3,500 crore, respectively. According to a media report, the two businesses who submitted their initial public offerings (IPO) documents to Sebi between July and September received their observations on October 22 and 23. In Sebi’s terminology, obtaining observations signifies that the public issue is now to be floated. According to the draft red herring prospectus (DRHP), NTPC Green Energy’s first share offering is a complete new issuance of equity shares without an offer-for-sale (OFS) component.

    How Companies Are Planning to Utilise the Amount?

    In addition to using a portion for general corporate purposes, INR 7,500 crore of the total revenues will be utilised to repay or retire all or a portion of the existing loans owed by its subsidiary NTPC Renewable Energy Ltd. (NREL). Spread throughout more than six states, NTPC Green Energy is a central public sector organisation known as “Maharatna” that specialises in renewable energy, including wind and solar generating assets.

    According to the DRHP, the proposed IPO by Avanse Financial Services includes a new offering of equity shares up to INR 1,000 crore and OFS up to INR 2,500 crore by the selling stockholders. The business, which is supported by Olive Vine Investment Ltd., a division of Warburg Pincus, a prominent private equity firm, plans to use the money to expand its capital base in order to meet future demands.

    Olive Vine Investment, Kedaara Capital Growth Fund III LLP, and International Finance Corporation (IFC) would all sell shares valued at INR 1,758 crore, INR 400 crore, and INR 342 crore, respectively, as part of the OFS. However, on October 23, VMS TMT withdrew its draft IPO documents. Early in October, the regulator got the company’s draft IPO paperwork.

    Avanse Financial Services

    The non-banking financial enterprise Avanse Financial Services, which focuses on education, intends to raise INR 3,500 crore to increase its capital base in order to fulfil its future capital needs. The second-biggest NBFC in India with an emphasis on education is Avanse Financial Services. Among Indian NBFCs with an emphasis on education, it also had the second-highest payouts in FY23 and the second-highest earnings in FY24.

    With products ranging from student education loans to expansion capital for educational institutions through education infrastructure loans, the organisation provides a full-stack education offering. For Indian professionals and students selected to study abroad or at domestic universities, it offers loans and other value-added services. Additionally, it offers private educational institutes in India finances backed by collateral.

    SEBI Approves IndiGo Ventures’ New Venture Capital Fund
    SEBI has approved IndiGo Ventures as an alternative investment fund, targeting pre-Series A and Series B investments in aviation transforming travel experiences.
    StartupTalkyNitin Konde

  • SEBI Approves the Opening of IndiGo Ventures’ Venture Capital Fund

    The Securities and Exchange Board of India (SEBI) has approved IndiGo Ventures, the corporate venture capital fund of India’s largest domestic airline, as an alternative investment vehicle. The announcement was made on October 15.

    The fund will seek pre-Series A, Series A, and Series B capital and invest in entrepreneurs that have the potential to completely transform the aviation industry and beyond. Among them are start-ups developing innovative products and technologies for the aviation industry. According to IndiGo’s press announcement, the fund will also consider investing in consumer firms that are involved in any aspect of the passenger trip, including travel, lifestyle, hospitality, and transportation.

    Pre-Investment Activities Already Started

    Pre-investment efforts have already begun, and these involve interacting with a limited number of start-ups and their founders. According to IndiGo, the website GoIndiGoVentures.com provides further information about the fund, including its investment thesis, the founders’ key valuation argument, and information on governing entities and their membership. By the end of FY25, the corporate venture capital fund is anticipated to begin making investments.

    The new venture, IndiGo Ventures, will help IndiGo fulfill its mission of supporting innovation and providing opportunities for people to achieve their dreams in the aviation industry and beyond, according to Neetan Chopra, IndiGo’s chief digital and information officer. The entrepreneurs will gain from IndiGo’s broad geographic reach and deep technical experience, which will encourage the creation of new goods and services.

    IndiGo’s Recent Challenges

    With roughly 54% of the domestic civil aviation market, InterGlobe Aviation is the biggest operator but faces several obstacles. The airline, known by the name IndiGo, has been embroiled in a number of crises in recent days, including one in which a furious client attacked personnel in Delhi and another in which travellers turned the runway of Mumbai International Airport into a restaurant. To make matters worse, the Mumbai Airport Authority and the Civil Aviation Ministry both sent it a show cause notice to the operator early this year.

    On January 14, during a thirteen-hour delay, a passenger assaulted the pilot of an IndiGo aircraft headed for Goa as it was still parked at Delhi International Airport. Although the airline has blamed the thick fog that blanketed the airport, a fellow passenger who recorded the incident and shared it on social media subsequently said that the airline employees were uncooperative and unfairly placed the responsibility on the rowdy traveller. 

    If that weren’t enough, the airline angered the civil aviation ministry when, that same day in Mumbai, travellers from one of its flights hurriedly disembarked from the plane, sat down on the tarmac, and proceeded to eat on the spot. The strange event happened when a Goa-to-Delhi flight was rerouted to Mumbai because of poor visibility in the national capital area. We are deeply sorry to our consumers and are investigating the matter at this time. The airline said in an official statement that it will take the required precautions to prevent any similar incidents in the future.

    Nithin Kamath Expects Sebi’s New F&O Standards to Impact Zerodha’s Operations
    According to Zerodha’s cofounder Nithin Kamath, recent actions taken by the Securities and Exchange Board of India (Sebi) regarding futures and options (F&O) trading are predicted to have a nearly 30% negative impact on Zerodha’s business and cut the company’s overall F&O trading volumes by 60%.
    StartupTalkyNitin Konde

  • Nithin Kamath Expects Sebi’s New F&O Standards to Impact Zerodha’s Operations

    According to Zerodha’s cofounder Nithin Kamath, recent actions taken by the Securities and Exchange Board of India (Sebi) regarding futures and options (F&O) trading are predicted to have a nearly 30% negative impact on Zerodha’s business and cut the company’s overall F&O trading volumes by 60%. Kamath further stated that the company will determine its pricing structure following the implementation of the new rules on November 20.

    As it stands, over 60% of all F&O trades and roughly 30% of all orders will be impacted, assuming that those who trade weekly don’t switch to trading monthly. Kamath posted on X. I suppose that as of November 20th, everything will become much more apparent. He continued, “We will then consider the impact on the business when deciding on our change in pricing structure.”

    Market Regulator Releasing Key Directives

    The market regulator acknowledged the speculative nature of index derivatives trading on October 1 and issued a set of instructions aimed at lowering risks for retail traders in the F&O market. One of the main instructions is that option buyers must pay the premiums beforehand; formerly, traders could pay the premium after the trading day. Traders must now pay the entire premium at the time of order placement under the new regulation.

    The market regulator has also implemented other significant steps, such as restricting weekly index expiries to a single exchange and raising the minimum contract size for index derivatives, which will make them less available to smaller retail traders.

    93% of Retail Traders Suffered Losses

    93% of retail traders in the F&O category lost money between FY22 and FY24, according to a recent Sebi report, while only 1% of them made earnings of more than INR 1 lakh yearly. 89% of retail traders in the category lost money between FY19 and FY22, according to a previous Sebi survey.

    From 5.1 million retail merchants in FY22 to 9.6 million in FY24, the number of traders on Dalal Street has almost doubled. This sharp rise raised concerns that savings are shifting from safe investments to high-risk ventures in the F&O sector.

    Zerodha’s Additional Concern

    Stricter guidelines regarding the referral program are among the additional threats mentioned by Zerodha. The business announced that it has relied on word-of-mouth recommendations from customers since its inception to run sizable partner and referral programs. When customers brought in new customers, the company rewarded them with a small cut of the broking as a commission.

    These distributions must now halt because the exchanges released new criteria stating that only Authorised Persons (AP) who have registered on the exchanges may receive payouts. As a result, growth will be impacted as thousands of referrers will now be limited to a small number of registered APs.

    Nithin Kamath: Education | Family | Zerodha
    Nithin Kamath is a Co-founder of the brokerage company Zerodha and Rainmatter. Know about Nithin Kamath’s education, family, children, success story, etc. Learn more about him on Nithin Kamath Wikipedia.
    StartupTalkyMegha Rani

  • Swiggy Filed an Updated DRHP With SEBI for Its INR 3,750 crore IPO

    The draft red herring prospectus (DRHP) was submitted to SEBI, the markets regulator, by food aggregation and grocery delivery platform Swiggy on 26 September 2024. Through a new offering, the company hopes to raise INR 3,750 crore.

    The IPO combines a new issue with an existing investor’s offer to sell 185,286,265 shares. A large number of investors are liquidating some of their holdings, including Accel, Tencent, Elevation Capital, and Norwest Venture.

    Several media reports suggest that the corporation might opt to augment the fresh issue component by INR 5,000 crore, thereby increasing the total allocation for new issues to INR 11,600 crore. The firm will make this decision during an EGM, likely to occur during the first week of October.

    Prosus owns 32 percent of Swiggy, while SoftBank and Accel have separate shares of 8 and 6 percent. Other investors in the company include Singapore’s GIC, Elevation Capital, DST Global, Norwest, Tencent, and Qatar Investment Authority (QIA).

    How Company Will Be Utilizing the Investments?

    The revenues of the IPO, according to the DRHP, will be utilised to fund the company’s organic expansion, to develop its dark store network for its rapid commerce sector, to invest in technology and cloud infrastructure, and to expand its subsidiary Scootsy.

    As of June 2024, the company had achieved a significant milestone with 112.7 million transacting users.

    Consolidated operating revenue for Swiggy in FY24 was INR 11,247.4 crore, up 36% year over year. During the same time frame, losses have decreased by half. The combined gross order value (GOV) for B2C transactions in Q1 FY25 was INR 10,189.5 crore.

    Swiggy’s Updated Market Performance

    Over 150,000 restaurants in India are partners of Swiggy, an Indian startup founded in 2014. With deficits of INR 2,350 crore in FY24, Swiggy effectively reduced its losses by 43%, mostly due to the explosive development of the quick commerce and food delivery segments.

    Operating revenue increased significantly by 36%, reaching INR 11,247 crore. In one month, 14.3 million customers transacted with the company’s consumer-facing business, which includes dining services, Instamart, and food delivery, generating a gross order value (GOV) of INR 35,000 crore.

    Game On – Indian Food Delivery Market

    The food delivery market in India is a monopoly, with Swiggy and Zomato combined controlling over 90% of the market. Experts predict that it will reach a valuation of INR 2 lakh crore by 2030. Zomato went public in 2021, but Swiggy is expected to follow suit in the next few months. In January 2022, the organization conducted its most recent fundraising effort, valuing it at $10.7 billion. Nonetheless, bankers have stated in recent months that they are certain Swiggy may list with a valuation or market capitalization of between $10–13 billion.

    In November 2023, Swiggy started preparing for its highly anticipated first public offering (IPO). There has been more activity on Swiggy in the secondary market since April. HNIs and family offices have purchased the company’s shares, valued between $9 and 9.3 billion during secondary market transactions.

    “Project Next” Is Swiggy’s New Program for Delivery Partners to Enhance Their Careers
    “Project Next” is a career growth project that has been created by Swiggy, which is on its way to becoming an initial public offering (IPO).
    StartupTalkyNitin Konde