On investor sentiment about demonetisation, Kunal, cofounder of Snapdeal, said, “A few days after demonetisation, I met with some investors who between them handle trillions of dollars in funds. What I witnessed was homogenous positivity about the policy change. Investors will always take the long term view and in their assessment this policy change is right for the long term play of companies. Even investors are moving away from analysing metrics like GMV to decide the health of a company and focusing on how their unit economics are doing. And moving into a cashless digital economy is good for improving unit economics.”
Arvind Gupta, BJP IT head, in his capacity as founder of Digital India Foundation moderated a discussion which saw some of the biggest ecomm and ewallet players in the country gather to share their opinions on demonetisation, what it means for ecommerce players, how investors feel about it and how it will shape the future of transactions across the country.
Pranay Jivrajka, VP of operations, Olacabs, added, “I believe that the stickiness of the cashless economy will remain after this demonetisation move and will help digitize the entire income pyramid of India.”
Sanjay Sethi, cofounder, ShopClues which deals with small merchants, deals a lot in cash and carries out what is called “rural ecommerce”, said “We have been watching this digitalisation on the macro level for some time and what we can say is that demonetisation is a build-up of many things. At one point our population was our problem now it has become our biggest strength with the common man also been financially included, and that is just ground breaking. We are very well set to let the middle tier of India, those who earn between 6 lakhs and 10 lakhs a year, also be a part of the digital economy.”
He added about the surge in business, “Our business has seen a fifteen percent increase in the last seven to eight days. The opportunity is huge. There are hiccups like supply chain issues and low liquidity [cash volume] but we are moving in a good direction.”
On how investors feel about the demonetisation move he said, “The bottom line is more important than the top line which may be affected in the short term perhaps for about sixty days by demonetisation. When I met with some Morgan Stanley bankers recently their overall sentiment was positivity, they see it as a step forward for India.”
On how demonetisation may affect valuation of the company he said, “There is valuation of a company which will keep fluctuating [more of a top line] while value of a company will not fluctuate as much. The latter is far more important.”
Sanjay Swamy, managing partner at Prime Venture Partners and volunteer iSpirt, said “Many things have led to this inflection point where India is actually becoming a cashless, digital economy. We have a one of a kind infrastructure platform called the India Stack which includes Aadhar and KYC digitalisation culminating in the Unified Payment Interface (UPI). This is a global first, nowhere in the world has such steps being taken to ensure that ‘unfakeable’ information is linked to financial transactions carried out and for making transactions in real time.”
On how investors view demonetisation, Swamy said, “There are investors who have stayed away from investing in India who are now beginning to consider investing in India. I have invested in three to four payment companies, they have good growth with customers who were just waiting on the side lines now becoming active. So there’s less risk in scaling, investing in digital payment infrastructure.”
Prashant Tandon, founder, 1mg, said, “Demonetisation move was great for the digital health industry. There are many parallels to be drawn between fake notes and fake pharmaceutical products. We would love to see both removed. In a digital economy where buyers and sellers of pharmaceutical products are traceable the simple act of creating a receipt of payment will transform the pharma industry in many ways that we cannot even understand at the moment.”
To which Kunal of Snapdeal added that the biggest surge in purchases were from doctors and chemists.
Vishwas Patel, chief executive officer of CCAvenue, said, “Over the last two years the paradigms of economy have changed. Our cars are becoming cabs, our homes are replaced by hotels, and more and more people are coming online and paying by cards.
However there is a lot more for banks to do. There are 66 crore debit cards in India [and about 2.4 crore credit cards in circulation according to reports from the Financial Express] but there are only 1.5 million point of sale (POS) terminals in the country. This is because the POS acquirers aren’t making enough money from it.” He said this signalling a need to strengthen and add to the network of physical infrastructure that will increase the use of cards and further drive the cashless economy.
About the transaction volumes due to demonetisation he said, “On Saturday and Sunday after demonetisation there was a 30 percent drop in transactions but from Monday there has been a 30 percent increase in volumes.”
BW Reporters
Regina is a reporter for BW Businessworld. In her previous assignments, she has worked with Independent television Network as a news anchor and reporter in Sri Lanka
