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As India struggles with scale-defying air pollution, are purifiers the answer?


But here’s the thing: when we talk of worsening air quality, we allude to outdoor or ambient air. Air purifiers, by scope and function, are meant to filter indoor air. Never mind the government’s Chaplinesque move to install Wayu (Wind Augmentation PurifYing Unit) devices across some Delhi intersections. Its capacity to purify air within a 500 square-metre radius means the megapolis would need as many Wayus as termites to a mound.

So, how bad is indoor or household pollution? Terrible, claim air purifier brands. And they’re not wrong. There’s no dearth of studies on indoor air, but since WHO is the gold standard, let’s focus there.

3.8 million people across the world die each year from diseases related to indoor pollution. India suffers an 11% proportional mortality rate from chronic respiratory diseases, with 70-89 deaths per 100,000 being attributed to household pollution. 59% of our population is primarily reliant on polluting fuels, or biomass.

“When indoors, there’s the danger of volatile organic compounds (VOCs), formaldehyde, and carcinogenic agents from cleaners and sprays. Indoor air is typically 5-10 times worse than ambient air pollution,” says Sudhir Pillai, GM of Honeywell India’s Homes division. Pillai is echoed by Philips India’s marketing director and business head Gulbahar Taurani, and BlueAir country head Arvind Chabra. The clarion call of indoor air pollution being worse than ambient pollution is a tie that binds competitors.

But here’s why fine print matters. WHO data for India points to an indoor air crisis in rural centres or among the urban poor – both of which aren’t target groups for an industry whose unit prices range from roughly Rs 8,000 to Rs 1,00,000-plus ($110 to $1371-plus).

The naysayers

“First, there are no guidelines for indoor air pollution. Which means there’s no quantification of acceptable levels of certain household pollutants,” says Dr Chirashree Ghosh, an aerobiologist and associate professor with the department of environmental studies, Delhi University.

What India has is the National Ambient Air Quality Standards (NAAQS), which lists acceptable concentrations and measurement methods for 12 pollutants (PM 2.5, PM 10, sulphur dioxide, nitrogen dioxide, ozone, lead, carbon monoxide, ammonia, benzene, benzo-pyrene, arsenic, and nickel). There are no parameters for measuring pollutants other than these, leave alone doing so in enclosed spaces.

Dr Ghosh’s 2014 pilot study on indoor air quality across Delhi’s economic zones does reveal, however, that questionable structural materials and increasing tendency to leave windows closed could be bigger contributors to urban indoor pollution than, say, a dusty carpet. This also explains sick building syndrome.

“There’s also no understanding of the implications of poor urban planning, least of all when it comes to respiratory issues,” she outlines. “In the macro picture, HEPA filters are temporary solutions at best.”

In March this year, news trickled in about the government spending Rs 36 lakh ($49,327) to install 140 air purifiers across seven agencies, including the PMO.

The Central Pollution Control Board (CPCB) wasn’t one of them.

“But you can’t say indoor pollution is worse than ambient pollution. Context matters. In the industrial belt from Dhanbad to Durgapur, for example, which do you think would be worse?”

Meanwhile Dr Virendra Singh, editor of the peer-reviewed medical journal Lung India, underlines the need for double-blind, placebo-controlled studies in the National Physical Laboratory to substantiate air purifier claims. Now, since India has no indoor air pollution parameters, there’s no regulatory body akin to the Bureau of Indian Standards (BIS), which other consumer goods adhere to. Multinational companies (MNCs) therefore brandish international certifications like the European Centre for Allergy Research Foundation (ECARF) or the Association of Home Appliance Manufacturers (AHAM) from the US. There’s no sure shot way to prove whether products tested abroad would be as effective in Indian conditions.

Number crunching

But none of this matters. Here’s why.

In December 2016 – when Honeywell India officially started selling air purifiers – 95% of its business came from Delhi-NCR. In under two years, this figure is now down to 75%, with Mumbai being an emerging driver alongside Bengaluru. And while Honeywell GM Sudhir Pillai doesn’t divulge unit sales figures, he points to as much as a threefold increase (year-on-year) in overall sales.

“The scientists there aren’t using air purifiers. Neither am I,” chuckles Dr SK Tyagi, a former CPCB member who serves on the board of the Indian Association for Air Pollution Control. Yes, he concedes, VOCs are a concern because air fresheners, deodorants, and cleaners that were once luxury items are no longer so, meaning respiratory tract irritants and the count of carcinogenic compounds may have spiked in urban homes.

Are air purifiers the new water purifiers?


On a spectrum ranging from green to maroon, New Delhi achieved Vantablack status in the early hours of 8 November 2018.

Different countries may have different parameters for measuring air quality index (AQI), but the colour codes are standard: green is good. Yellow, moderate. Maroon straddles anything from ‘hazardous’ to ’emergency’. But what colour do you associate with an AQI of 2000 (so off the charts, one can only liken it to a forest fire) when the hazardous limit in India is 500?

Answer: Vantablack. The darkest colour, one that absorbs 99.9% light – which also sums up the visibility over Delhi University’s North Campus a day after Diwali.

What is the situation?

The situation may not be as apocalyptic in Mumbai. Yet. But in the fourth aisle of a suburban Croma outlet, in a space once occupied by digital cameras (RIP), a gleaming, champagne-coloured device stands as a portent to our grotty times. The Honeywell Air Touch i8 and its neighbours – five Philips and a Blueair – attract a gaggle of customers who’ve wandered into the air purifier territory.

Two sales executives in the consumer electronics store hurry over, using buzzwords brands pay big bucks to market: ‘VitaShield IPS’. ‘HiSiv’. ‘HEPASilent’. This one has a thicker HEPA (High Efficiency Particulate Air) filter. That one has more ACH (air changes per hour). This one is better for a larger area.

“But if you ask me ma’am, these are the best,” says one, pointing to the Philips models. “Because they have a Clean Air Delivery Rate (CADR) of 0.02. Other brands have a 0.2 CADR.”

Wait. If CADR is the volume of air filtered in a minute, 0.02 is laughable in a market where higher CADRs are collar-popping material. Is it really CADR you’re talking about?

One executive flips through the company brochure, then replies: “Sorry, I meant EFS (effective filtration size). HEPA filters usually keep out particles measuring 0.2 microns and above. This means Philips can filter smaller particles. There’s also a three-year extended warranty offer…”

A similar scenario plays out in Vijay Sales, another electronics retail chain. Except here, a Philips sales assistant in a crisp blue shirt and khaki trousers talks about the brand’s AeraSense display – a “PM 2.5 reading in real-time, which others don’t have”…

“…are you offering an extended warranty?” the imp in me interjects.

“The product comes with a default two-year warranty ma’am,” the executive smiles.

“But Croma is offering a three-year extended warranty as a Diwali offer.”

“Oh… please give me few minutes. I’ll call the company and ask if we can make a similar offer.”

Three minutes later: “Ok ma’am, I’ve confirmed. We can also offer a three-year extended warranty. So, may I have your number if you’ve decided?”

And just like that, Philips has mastered the art of the lure in a country obsessed with warranties.

Outdoor vs indoor pollution

This isn’t about Philips or extended warranties. What this is about, is an increasingly-crowded market where any differentiation flies. If that means five-year warranties, or jargon, or claims about patented technology, so be it.

The Indian air purifier industry is on the cusp of breathing easy amidst a national air pollution crisis. You’ve probably been inundated with news about the alarming surge in particulate matter (PM) count, so we won’t hammer an already-nailed coffin. Let’s jump to (a) the data that carries this market on its shoulders, and (b) the business of air purifiers.

It took a 2015 visit to India by former US president Barack Obama (and the subsequent purchase of 1800 BlueAir purifiers by the US embassy) to kick this market into action. Considering this is still a nascent industry, official reports are hard to come by. But regardless of the in-house estimates or independent data you come across, annual unit sales are doubling (at the very least).

According to US-based market research firm TechSci Research (which has a Noida outpost), the Indian air purifier market is expected to be worth $209 million by 2021. Then there’s the outlook report by market research firm BlueWeave Consulting, which estimates unit sales to jump 5.7 times from 754,000 units in 2017 to 4,339,000 units in 2024, with a CAGR of 24% in terms of volume.

When MFIs stop being startup banks’ golden goose


In Chennai, during Dussehra a 10-day festival, there is a tradition of inviting people for Golu, where people display dolls and serve a lentil snack called sundal. This Dussehra, a bank used Golu to reach out to customers. Bank employees placed a stack of dolls in a mini-truck and took it door to door to neighbourhoods giving the residents sundal along with a pamphlet. The pamphlet spoke of a bank called Equitas Small Finance Bank that offered fixed deposit rates of 8.5% and savings account rate of 6.5%. Higher than most banks. It seemed too good to be true. The large banks offered no more than 3.5-4% on savings account. So how could this rookie bank promise so much? Besides, most used the pamphlet to wrap the snack and tossed it.

Who or what is Equitas anyway?

Equitas, its peers Ujjivan, AU Small Finance, Suryoday and Jana Small Finance all belong to a class of banks called Small Finance Banks created by the financial regulator Reserve Bank of India in 2014. Along with their infamous cousin, payments banks. Unlike payments banks, that have a shaky business model to start with as they can’t lend, small finance banks don’t suffer structurally. They can lend and accept deposits, with the caveat that 50% of the loans should be upto Rs 25 lakh ($34,680).

Both payments banks and small finance banks were created with one intention in mind. Financial inclusion. While payments banks are mired in regulatory tangles, small finance banks are looking to ride the micro, small and medium enterprises (MSME) wave that the government is keen on driving. The banks have started well. In fact, they’ve even taken analysts by surprise. In the last two years alone, the top three banks—AU Finance, Equitas and Ujjivan—have deposits worth over Rs 15,000 crore ($2 billion). And they’ve lent over Rs 25,000 crore ($3.4 billion) in two years. In comparison, payments banks only had deposits worth Rs 540 crore ($74.9 million) in these two years. And AU Finance has already become the world’s most expensive banking stock, as of October.

One of the biggest reasons for this early success has been the interest rates on the deposits they offer. Small banks’ savings account interest rates are a good three percentage points above other banks. The reason they are able to do this is because of their golden goose—the microfinance portfolio (MFI). What’s not to love about giving small ticket-sized loans to low-income households that earns the banks upto 24% interest rates?

But just a few months after demonetisation came unannounced, the small banks gave their MFI portfolio the short shrift. As 86% of the notes became invalid overnight in November 2016, the MFI segment felt severe pain as most of the repayments and loan disbursals are made through cash. Equitas, in 2017, struck down its MFI exposure from 50% to 27%. Ujjivan is now focused on reducing its exposure from 80% to 50% over the next few years. Suryoday has a 90% exposure to MFIs and wants to bring it down to 60% in three years.

What this eventually boils down to is the banks’ continued ability to give high interest rates on deposits. As it is, even with high deposit interest rates, only few open an account. “If we reach out to a 200, only one or two may finally open an account,” said PN Vasudevan, founder of Equitas, without batting an eyelid.

So how will the small banks fill that MFI-sized hole?

The MFI yo-yo

Of the nine Non-Banking Financial Companies (NBFCs) that were given licenses to be small finance banks, eight were microfinance institutions. The idea was since they already have experience lending to those who find it tough to access banks for credit, they would be in a position to drive financial inclusivity. So Equitas, Ujjivan, Suryoday, Jana were all NBFCs that lent to MFIs and gave loans worth Rs 25,000-Rs 50,000 ($347-$695) at a 24% interest rate and collecting it back in 1-2 years. They perfected the art of giving risky loans at efficient operating costs, a skill fintech lenders such as Capital Float, Lendingkart will kill for. The only thing holding them back, as NBFCs lending to MFI, was the cost of funding. Since they borrowed from banks to lend to MFIs, their cost of funds was at 11-12%. But now as a bank themselves, this was down to 8%, and that made MFIs a highly profitable product.


India’s TV entertainment industry to enter subscriptions era kicking and screaming


On the face of it, India’s television industry is one of the most vibrant, competitive and innovative ones in the world. With close to 200 million TV households served by 866 private TV channels, six direct-to-home (DTH) platforms and tens of thousands of independent cable TV operators, it’s quite breathtaking in size. In terms of revenue too, it brought in Rs 66,000 crore ($9.1 billion) in 2017, which is expected to hit Rs 86,200 crore ($12 billion) in 2018.

But scratch the surface, and you realise much of it is just a veneer painted over an outdated, opaque and shady structure. Consumers still don’t have any real and meaningful choice about what channels they want to subscribe to. TV channels need to pay cable and satellite operators extortionate fees (called carriage fees) in order to get carried by them. And every now and then there’s a who-blinks-first standoff between different sides around the pricing of channels, often ending in channel blackouts.

Almost all of these ills can be traced back to a dark void that exists at the centre of the industry—subscribers don’t have a real say.

Meanwhile the “subscription era”—a direct relationship between producers and customers—has dawned over other entertainment platforms, both globally and in India. Such as Netflix, Spotify, Hotstar, and Gaana.

India’s TV broadcasting industry, however, has been running on its hamster wheel with the same age-old rules of TV channel pricing, packaging and distribution.

But someone has finally had enough. India’s telecom and broadcasting regulator, Trai, which has spent the last two years trying to drag the industry into the present, kicking and screaming. And after years of being stymied in courts, it will finally have its way.

The Tariff Order 

Last month, India’s Supreme Court finally paved the way for the implementation of far-reaching Trai regulations that are couched in their typical soporific fashion as “tariff and interconnection orders.” The Supreme Court came into the picture due to a plea brought against Trai by leading TV broadcaster Star India. Star has been fighting Trai’s regulation tooth-and-nail since 2016.

  • All broadcasters will now need to declare “maximum retail price” (MRP) for their channels, whether sold individually or as part of bundles, the way products sold in the real world need to. Distributors cannot charge customers a higher MRP than what is offered by broadcasters.
  • Bundles cannot contain both standard and high-definition versions of the same channels; premium channels or free-to-air channels cannot be part of the bundle. Also, TV channels priced above Rs 19 ($0.26) are out.
  • Broadcasters must provide all channels on an a-la-carte basis to distributors i.e. cable and satellite TV operators—who, in turn, must offer them to consumers. Distributors can neither refuse to offer any bundle nor slice and dice existing ones to form new ones.
  • All distribution platforms also need to provide a basic pack of 100 free-to-air channels including government-mandated channels.
  • And finally, the rate of carriage fee that is charged by distributors to broadcasters has been capped at a maximum of 20 paise ($0.0028) and 40 paise ($.0056) per subscriber per month for standard and high definition channels, respectively. This rate is supposed to decrease with the increase in the number of subscribers to the channel as a percentage of total subscribers.
  • To the industry, this is the equivalent of a stun grenade.

Trai’s rationale behind a new framework has been to bring down monthly cable bills and to give consumers the power and choice to watch what they want, without channels being shoved down their throats. In particular, Trai is cracking down on what it calls the “bouquet phenomenon.”

The Reality

If you’re an Indian TV subscriber, you probably know this reality better than anyone else; how many times have you subscribed to a bundle of channels just to be able to watch one? The answer is always, or well, mostly. According to Trai, the uptake of channels on an a-la-carte basis is negligible when compared to the bouquet subscriptions. Why? Because the bouquets are much cheaper, sometimes as cheap as 10% of the total cost of all the channels in that package.

You know why that is so? Because advertising accounts for about 70% of a broadcaster’s overall revenue, which is dependent on the “reach” of the channel. Bundling unwanted channels thus helps broadcasters fake the reach of the lesser-watched or unpopular channels when clubbed with the flagship ones. “By promoting bundles, not only can they maximise ad revenue of niche channels but the subscription revenue of distributors also goes up, and that is when consumer interest goes for a toss,” said a Trai official requesting anonymity.


Bad Apple: Inside the tech giant’s smartphone struggles in India


Amidst a cluster of stores at Delhi’s popular IT and computer peripherals market in Nehru Place is eWorld, an Apple-authorised reseller. The store is desolate. A resigned silence combines with the white interiors to create an eerie, sterile emptiness. Even as one enters, the staff show no enthusiasm to push products. Their inertia is the result of how few takers there are for these high-end phones today. The response to the new iPhone models has been extremely disappointing, says a salesperson. However, he continues, the older models—iPhone 8 and 7—are seeing some traction.

The scene at eWorld is symptomatic of Apple’s struggles in India, where the world’s most profitable smartphone brand is going through an awful time. While its revenues grew 12% to Rs 13,097 crore ($1.87 billion) in 2017-18 and net profits doubled from Rs 373 crore ($53.46 million) to Rs 896 crore ($128.42 million) during the same period, volume growth leaves a lot to be desired. Smartphone research firm Counterpoint Research feels that Apple’s India sales could drop by as much as 25%, from an estimated three million units in 2017-18 to just two million in 2018-19. This would represent the first such slump in four years.

The Climax

The bleak outlook, however, ends the moment you step out of eWorld. Its neighbours—multi-brand stores hawking the likes of Oppo and Vivo—are bursting with activity. Accordingly, Apple has seen its market share erode. From 2.5% of the overall market in the fourth quarter of 2017, its share has diminished to just 1% in the third quarter of 2018. Even in the premium smartphone segment (>Rs 30,000 ($429.9))—Apple’s traditional stomping ground—the company is now in the third position.

Whichever way you slice it, Apple is floundering in the world’s most attractive smartphone market. Enough so that even CEO Tim Cook took cognisance of the situation during Apple’s Q4 earnings call. At the time, he put the blame squarely on currency weakness. During the call, Tim Cook said that emerging markets—India, Turkey, Russia, Brazil—are where Apple is under pressure. “These are markets where currencies have weakened over the recent period. In some cases, that resulted in us raising prices, and those markets are not growing the way we would like to see.”

But given that other brands continue to move from strength to strength, the rot for Apple clearly runs deeper than just currency weakness. Increased competition, a lack of focus, government regulations, and Apple’s confused approach to marketing and sales have left it on the ropes.

With its second country head in the last three years on his way out, Apple is hoping that Nokia veteran Ashish Chowdhary can revive its flagging fortunes. Chowdhary will take the reins of Apple India once 2018 draws to a close, but with its fortunes in a nosedive, he faces an uphill task to turn things around.

Pricing problems

The most obvious reason for Apple’s woes in India is the influx of competition. Chinese competition, in particular. Even as Apple tries to halt its slide, its Chinese rivals have taken the Indian market by storm. According to Counterpoint’s third-quarter smartphone market report, Xiaomi is firmly in control of the overall market. It has a 27.3% market share compared to Apple’s 1%. OnePlus has even wrested control of the premium market which Apple had dominated scarcely a year ago. OnePlus currently controls 30% of the premium market, followed by Samsung at 28% and Apple at just 25%.

The success of Chinese smartphones in India is, at its heart, a simple matter of cost. Take Apple, for instance. Karn Chauhan, an analyst at Counterpoint says that older iPhones account for a majority of Apple’s 25% share. “The new iPhones would barely be 5-10% because they were launched pretty late in September… For the fourth quarter also, we do not expect new iPhones to be a big percentage because of their price point,” he says.

For a country where ‘premium’ is a recent phenomenon—premium phones account for just 3% of the market—Apple’s latest lineup of iPhones are out of place. The iPhone XS, XS Max and XR all fall into the premium plus category, a segment that does not even exist in India. Both the iPhone XS and XS Max cost Rs 1 lakh ($1,433.30) and above, while the XR costs Rs 76,900 ($1,102.21).

Convergence is here, and DTH operators are feeling the heat


Noida-based Dish TV no longer looks like Dish TV.

Dish TV was India’s first-ever private direct-to-home (DTH) operator, launching in 2003—almost seven years after the first DTH proposal was floated (and turned down). The idea then was simple: offer better quality, better pricing and better television services to subscribers via satellite, bypassing local cable operators altogether. And the company did it well—it had more than 23 million subscribers, Rs 1,594 crore ($226 million) in revenue and Rs 19.7 crore ($2.7 million) in profit in the quarter ended September 2018.

Changing World

But things are changing. It’s now about more than just satellite for Dish TV. Here is the company’s plan for the next three months: a new video streaming service with some live TV channels, catch-up television, and original programming; a smart stick that converts your regular set-top-box into a smart one so you can access online content in addition to the satellite TV; an Android set-top box that allows you to switch between online and offline content without the aforementioned device; and a mechanism to offer broadband along with the satellite and online content access. In short, a whole lot.

Almost all leading DTH companies are going down a similar route. What has been a global technological phenomenon for at least the last five years, is finally here in India—convergence, increasingly blurring the lines between telecommunications and media. And DTH providers want to be at the forefront of this to remain relevant.

It makes sense for DTH companies; the pressure has been high with urban consumers increasingly switching to video streaming platforms. Capex is high, average revenues per user (ARPUs) flat, and balance sheets debt-laden. So much so, that the last 24 months have seen the merger of two big players—Dish TV and Videocon d2h—to form the largest DTH company in India, a partial stake stale by Airtel Digital TV, and Reliance Communications offloading its DTH arm. “DTH will have to up their game. The companies can’t wait for other technologies to come and conquer while they turn archaic. It is a survival game,” says a Mumbai-based media executive, asking not to be named.

It may not be easy, though. With Reliance Jio entering the TV channel distribution space with its high-speed wired broadband proposition Jio Gigafiber, competition is heating up. Earlier in October, Reliance Industries acquired a majority stake in two cable broadband companies—Den Networks and Hathway—to kickstart the Gigafiber story. Going by Jio’s history in telecom, the current pricing propositions will be overhauled.

In a soup

DTH has been plagued with problems for as long as it has survived, the biggest one being regulatory challenges. Sample this: the DTH licensing guidelines that came into existence in 2001 had no provision for the renewal of licenses. They still don’t. Since the ten-year licences started expiring in 2013, all five of India’s private DTH companies have been running on interim licences.

Time and again, the industry has made recommendations to the government to revise the guidelines as well as lower the licence fee DTH companies have to pay. The latest effort is a letter by Jawahar Goel, chairman and managing director of Dish TV India, to the Telecom Regulatory Authority of India (Trai). Goel requested the regulator to rationalise the taxes and costs.

According to the current DTH licensing guidelines, the companies have to pay an annual fee equivalent to 10% of gross revenue (as reflected in their audited accounts). “DTH uses the same resources which are used by HITS (headend-in-the-sky) operators or broadcasters, that is, satellite capacity, however, in exclusion to other similarly placed platforms, only DTH operators are charged a licence fee,” read Goel’s letter.

In a set of recommendations submitted by Trai in 2014 on the issues regarding DTH, even the regulator had proposed, among other things, cutting the annual fee to 8% of adjusted gross revenue (AGR) because gross revenue also includes the service tax and entertainment tax paid to the government. However, these demands have been ignored so far.

While the information and broadcasting ministry is taking this into consideration and planning to come up with a new policy in a few months, it seems like the government will not budge on key recommendations, say multiple industry executives in the know.


Takes two to Dunzo: Kabeer Biswas trusts popularity to drive profitability


Kabeer Biswas, co-founder and CEO of Bengaluru-based hyperlocal startup Dunzo, is staring at an uncomfortable reality. For a company that started out on the WhatsApp chat service to an app that delivers over 2 million orders per month, the last financial year really stung. Dunzo, which has raised $81 million since inception with a $200 million valuation, has seen its cash burn go up to $3 million a month in the past year—a whole million over the last year.

The startup’s losses jumped eight-fold to Rs 168.9 crore (~$23.5 million) on a total revenue of Rs 3.5 crore ($490,120) in the year ended March 2019. In December, there was news of Dunzo pulling out of certain pincodes in five out of the nine cities it is in—Bengaluru, Mumbai, Delhi-NCR, Pune, and most recently, Jaipur. Biswas acknowledges that the total number of pincodes has gone down by 50.

All Is Well?

While many major late-stage startups like Zomato, Swiggy and Flipkart have also seen their losses ballooning; Dunzo acknowledges that VCs were “scared” to invest in the company owing to the capital-intensive nature of the business. As Biswas says, “We are always raising.”

And yet, Biswas couldn’t be more sure of his company’s future. “I think in another three years’ time, we would like to be able to stop taking external capital.” Dunzo became a customer delight for its simple premise. Order what you like, and it’ll reach you faster than regular food delivery. Groceries, medicines, spare car keys from your house when you lock yours in the vehicle.

It has been easy for Dunzo to be well-loved. It’s also easy to see why. The company’s core product is convenience itself, wrapped in a hyperlocal delivery format. That ‘Dunzoing’ became a verb bears testimony to this.

What’s not easy, though, is the larger hyperlocal space in India. Last-mile delivery startup Shadowfax’s CEO called it a “very dirty problem, day in and day out, it’s just a pure mess.” Hyperlocal often translates to low order values. Purchases are often cheaper—orders ranging from Rs 100-200—than the cost of running the orders.

Dunzo is no different. Its loss per order fluctuates between Rs 18-22 ($0.25-0.31) across the nine cities, Biswas admits candidly.

Today, Dunzo is in the unenviable position of being the first hyperlocal startup of its scale in India. Four years in, Biswas now needs to prove its viability—by hitting city-level profitability in one city by the next quarter and profitability in three cities this year.

It’s a goal he’s set by himself, he says, and not driven by investor pressure.

Dunzo is an oddball hyperlocal player. It went horizontal in a space populated with vertical players focussed on their specific categories—Swiggy and Zomato fought over food discounts, BigBasket and Grofers were busy trying to figure out faster delivery for groceries, Flipkart and Amazon could bring you a smartphone earliest in one day.

Dunzo was the only one connecting customers to all the right stores and delivering faster than the incumbents, almost disrupting all their businesses. Until Swiggy caught on.

Swiggy isn’t the only one sniffing around either. For all the aforementioned deep-pocketed players, profitability has been a recurring refrain since last year. And they’ve also had the benefit of time to try and reach that goal: something Dunzo is attempting in four short years. And that, too, despite serious cash burn. Biswas spoke to The Ken about what makes profitability Dunzo’s next big goal.

I dream of profits

Q: You hadn’t focussed on profitability thus far?

KB: We actually turned profitable in Bengaluru, the entire city of Bengaluru, 35 areas, in September 2017. Then we got the large amount of capital [$12.6 million in December 2017, with Google participating], and then we started scaling the business. What happens when you start scaling is, of course, your unit economics takes a hit.

So maybe at that time, we were growing 5% month on month, but our goal since then has been to try and grow at about 15% month on month. What we’ve done in terms of CAGR (compound annual growth rate), is about 12% month on month. After taking two years of external capital, which is large, I think we owe it as an intellectual respect to our investors to ourselves and to the ecosystem to make sure that we actually know what profitability is.

Introducing Ben, Ranju and Sharath


One of the luxuries young, early-stage startups cannot afford is specialisation. Everyone – founders to interns – just “roll up their sleeves” and do whatever it takes. Everyone is a generalist, not because they want to. But because they must be.

The Ken was one such startup till not so long ago. A lean, talented, and hungry team focused on just one product and one geography – India.

But as we expand into new geographies and formats, we must invest in newer specialists too. Our newest hires are specialists. In mentoring, guiding and managing. And in design.

Handling the business

Ranju Sarkar joins us in Delhi as newsroom editor. Ranju joins us from Business Standard, where he spent the last 12 years, most recently handling pages on startups and investors for the business daily. He has 26 years of experience in business journalism.

I’ll let Seema, our Editor, explain why we brought Ranju on board.

The Ken is a modern digital publication, distributing journalism as a product, but at the core it does good, ol’ (magazine) journalism. So, it wasn’t surprising when we gravitated towards Ranju.

While he may like to look at himself as someone “who started journalism in the pre-internet age when writers maintained a docket for each company or business group they covered”, his role at The Ken is only a shade different. To ensure that writers are on top of their beats; maintain a virtual docket, as it were.

In his various roles in these years, Ranju has done it all—edited, reported, written, hustled, produced pages with a distributed team. Once his editor wanted him to travel to Bangladesh to report on how its garment industry was sending Indian companies running for cover. “The editor was pleasantly surprised when I was able to pull off a page-one story by just speaking to four top garment makers in India. ‘You did the story sitting here’, he said,” recalls Ranju.

As The Ken’s newsroom grows, all his resourcefulness is going to come in handy.

Our second specialist is Sharath Ravishankar, a visual designer. Sharath joins us in Bangalore. He graduated last year from the National Institute of Design in Ahmedabad, where he specialised in animation and film design.

He’s a talented and multi-faceted designer who’s written and directed animated short films on topics ranging from politics to urban isolation. His website features many of the wonderful and lively illustrations, animations, videos and visualisations he’s created.

When not working, Sharath likes to watch PC build videos, ranting on the internet and making fanart.

At The Ken, he will join our lead designer Prajakta in using visualisations to tell better business stories.

While India remains the bedrock for our reporting, storytelling and growth, we have also started expanding into Southeast Asia. I’m thrilled to add Benjamin Cher to that team in Singapore. Here’s Jon on what Ben brings to the table.

Singapore is the lynchpin of Southeast Asia. Sure, a population of just five million means its domestic market is tiny in comparison to every other country in the region. But Singapore remains the focal point for investors, multinational companies and the region’s most powerful startups.

Role of Ben

Ben joins us from The Edge Singapore, where he spent the last 2.5 years covering a range of beats including technology, startups and business. Prior to that, Ben had stints with Digital News Asia and The Drum. He graduated from the University of Melbourne, Australia with a BA in communication and media studies in 2013.

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I’m excited to add Ben in Singapore to a team that spans much of the region with Nadine (Indonesia), Kay (Malaysia) and Jum (the Philippines), while I am in Thailand. That local presence allows us to get right into the stories that matter for technology and business in Southeast Asia.

We are still keeping an eye out for potential recruits. If you’re a reporter who is passionate about telling deep stories about Southeast Asia, please get in touch with me – jon at the-ken.com.

India’s largest and oldest charity is in the midst of a crisis


Crucially, despite its claims of surrendering its tax-exempt registration in 2015, Tata Trusts has not paid taxes since. This has significantly weakened its standing in the matter.

In 2018, the Public Accounts Committee (PAC) of Indian Parliament stated that Tata Trusts spent its money in a way that not only violated the I-T Act but also the trust deed. This was because it donated money in areas that did not match with the objects of the trust. The PAC stated that the construction of the Tata Hall building—a 150,000 square-foot glass and brick building that houses residential space, classrooms, and common areas—at Harvard Business School (HBS) did not amount either to charity or international welfare. Instead, the $50 million ‘gift agreement’ with the Dean of HBS was for the promotion of personal interest of one/some of the trustees of various Tata trusts, the PAC argued.

Who is to be blamed?

Some former Tata Trusts’ employees blame Venkataramanan’s leadership for these issues. The former senior executive with Tata Trusts also said it was curious why Venkataramanan, who had been Ratan Tata’s executive assistant, became the managing trustee of Tata Trusts in the first place.

There were also a slew of instances where Venkataramanan came under scrutiny. It all started with the CBI summoning Venkataramanan in July 2018 as he was Tata Group’s nominee on the board of budget airline AirAsia India. He was accused of using illegal tactics to lobby for a change in policies. Later in December 2018, the I-T department also questioned the Rs 2.66 crore ($370,927) paid as salary to Venkataramanan by Dorabji Tata Trust for 2015-16.

Even Cyrus Mistry, the former chairperson of Tata Sons, who is fighting a legal battle against Ratan Tata over his sacking, has alleged that Tata Trusts inappropriately interfered and misgoverned Tata Sons when it was managed by Venkataramanan.

In February 2019, Venkataramanan was replaced as a trustee with Ratan Tata’s half brother, Noel. He has since joined a rival Indian conglomerate—Mukesh Ambani-helmed Reliance Industries.

Blame games

To lay the blame entirely at Venkataramanan’s feet, though, seems like a stretch. The issues with Tata Trusts begin well before he was placed in charge. For instance, in 2013, the Comptroller and Auditor General (CAG) of India noted that Jamsetji Tata Trust and Navbhai Ratan Tata Trust together earned about Rs 3,000 crore ($418.3 million) by accumulating income in 2009 and 2010. This money, CAG noted, was invested in ways that are not allowed for trusts with tax-exempt registration.

Despite all the trouble it finds itself in, however, Tata Trusts insists that it is committed to its current course. As one former senior executive with Tata Trusts said, Ratan Tata, the chairperson of the board of trustees, is committed to direct implementation over grant-making. Indeed, even in the statement it issued in November, where it argued it had voluntarily surrendered registration in 2015, Tata Trusts stated that it did not need tax exemptions to be charitable.

Despite this statement of intent, though, many agree that Venkataramanan’s departure has had an impact on Tata Trusts’ functioning. The change is not being easily accepted by everyone, said one of the senior executives who resigned from the organisation after Venkataraman and Harish Krishnaswamy, Tata Trusts’ former COO, resigned. Krishnaswamy left a week after Venkataramanan’s resignation. The senior executive said he is not clear if the board asked the two to leave, or if it was voluntary. But after they left, there was a lot of attrition in the senior management, he added.

Acting senior executives brought in from Tata Group tried, he said, to manage Tata Trusts. “But a lot of audits happened of the previous grantees and grants. A lot of emails coming to the employees. A lot of financial restrictions came, different levels of bureaucratic approval and the travel budget was restricted. The implications of the changes in leadership affected everyone,” he added.

The Tata Trusts board did not respond to The Ken’s request for an interview, nor did Venkataramanan. Questions sent to the board and Venkataramanan also went unanswered. All the interviews The Ken conducted with several people associated with Tata Trusts—which grew under the leadership of Venkataramanan from about 50 people in 2012 to 300 people in 2018—indicated he had a free hand in managing the charity.


A trust deficit at Tata Trusts


Tata Trusts—India’s largest and oldest charity—currently finds itself all at sea. In October 2019, India’s income tax (I-T) department cancelled the tax-exempt charitable trust registrations of the six trusts it houses. The taxmen argued that the organisation functioned more like a business than a charity, and should thus be taxed as such. Today, the taxman’s sword hangs ominously overhead—Tata Trusts could face a tax liability of up to Rs 12,000 crore ($1.7 billion), over 10X the grants it disbursed in the year ended March 2018.

A Big Loss

Should Tata Trusts’ protestations of innocence fall on deaf ears, the resultant fine could deal a body blow to the organisation but would stop shy of being fatal, said an Indian philanthropist, who did not want to publicly comment on the matter. Multinational conglomerate Tata Sons, in which Tata Trusts is a majority stakeholder, after all, saw annual revenues of $111 billion in the year ended March 2018.

Regardless, for a charity that predates Indian independence and has largely been at the receiving end of plaudits, the current scenario is the stuff of nightmares. Especially considering the reason for its plight—a 2014 pivot from a simple charity to an implementation-focused organisation—was supposed to carry it into the future.

Like the world’s largest charity—the Bill and Melinda Gates Foundation (BMGF)—Tata Trusts also applied the lens of business to its philanthropy. Cheque writing, said one of the former senior executives with the organisation, was not working. He added that the aim was to be more like BMGF, which rigorously measures the outcome, defines beneficiary gains, and is expertly managed as compared to traditional charities.

Here’s how Ratan Tata, chairman of Tata Trusts, described the change: “No longer are we merely the funders of initiatives; we have widened our view on the nature of our philanthropic interventions to become enablers. The redefining of our approach and our purpose — an exercise that began in 2014 — has resulted in Tata Trusts shifting from only grant-giving to also include direct implementation,” he wrote in Tata Trusts’ 2016-17 annual report.

On the face of it, a hardly surprising change of tracks. However, after Ramachandran Venkataramanan, the managing trustee of Tata Trusts during this transition, left in February 2019, the wheels seemed to come off. It was a pivotal point for the charity, claim several current and former executives with the Trusts. It set the dominoes falling. And even as Tata Trusts saw itself as being in the business of charity, tax officials cancelled its registration as a tax-exempt charitable trust for being more business than charity.

Not only is it currently in crisis, its transition to a philanthrocapitalist approach hasn’t been as smooth as it had hoped. Take its massive cancer care project. In 2017, Tata Trusts committed Rs 1,000 crore ($139.4 million)—more than the sum total of all grants given by the organisation in 2016-17 (Rs 954 crore ($133 million))—to help states set up cancer care centres. The programme has been riddled with delays and has even been scaled down.

The uncertain business of charity

What constitutes a tax-exempt charity is a legal grey area, said a lawyer specialising in income tax, who did not want to be named. “A trust can do anything. There is no restriction. They can run businesses, make investments. Many PEs and mutual funds are set up as trusts. Some are charitable and the donation should not be taxed, but when you get [tax] exemption, part of the deal is not holding shares and not doing any kind of business,” the lawyer quoted above explained.

Tata Trusts—which holds shares in Tata Sons—seems to have accepted that it falls short of this bar. In a statement issued in November 2019, a Tata Trusts spokesperson highlighted that it had voluntarily surrendered its tax-exempt registration under the I-T Act in 2015. As such, the charity argued, it was only liable to pay tax post this time period.

According to reports, however, the I-T Department has contested Tata Trusts’ statement, saying that neither was its decision voluntary nor was the registration cancelled in 2015.

While both interpretations end with Tata Trusts having to cough up a sizeable fine, the difference between Tata Trusts’ version and the I-T Department’s version is a few thousand crore rupees, said the lawyer quoted above.