Remember in school, when your class-teacher asked you to bring pieces of chalk from another classroom; you would make sure you took the longest path and return after having a leisure stroll in every corridor of the school.
How fearless you were when another teacher caught you while strolling around; because you knew you complied with the task assigned to you.
From children to CEOs; same goes with all !
You can bend the laws by finding that little peephole which the lawmaker forgot to fill Or do the lawmakers deliberately plant these peepholes?
The biggest problem of a democracy is that it has to listen to people of all types and frame laws which have to be written somewhere for the people to follow. These written laws, obviously, cannot carry emotions with them. They cannot be changed overnight if misused, as it is a democracy.
The big private companies have a team of law geeks who work primarily to identify these peepholes to “Test the boundaries of what the law allows” as pointed out in one of the slides of a presentation by an Amazon top management employee in 2014.(Source: India Today)
This sowed the seeds for the recent story of Amazon leaks, which is a stigma on India.
Keep reading to know how dark days loom ahead for India if stories like this duplicate; and what needs to be done to stop it.
Amazing “Hide and Seek” with facts by Amazon
India is a strategic market for e-commerce companies around the world. At the same time, India is not so stringent as far as allowing foreign companies to run in India. Hence, a few alterations in FDI (foreign direct investment) regulations did not go well with Amazon.
In 2019, a senior Amazon Inc management executive, Jay Carney, was supposed to meet India’s ambassador to the United States. The meeting was planned to discuss the losses to Amazon because of the recent changes in FDI regulations in India.
Jay Carney was the former press secretary to the then president of the US, Barack Obama. He was briefed before the meeting as to what to tell and what not to tell; rather, what to hide from the Indian ambassador.
A draft note was handed over to Carney by the Amazon employees to prepare for the meeting. This note, as reviewed by Reuters, contained information which was not to be disclosed to the Indian ambassador and was sensitive.
As per this note, Carney should highlight that Amazon has a plan to invest USD 5.5 billion in India and it has an association with 4 lakh plus Indian sellers who were beneficiaries of Amazon’s business in India. But he was advised not to reveal that only 33 sellers out of these 4 lakh sellers accounted for 33% sales of Amazon. This information was tagged as “sensitive/not for disclosure” in the note.
Apart from this, 33% share in sales, another 33% is contributed by two companies which are owned by a couple of India’s biggest names in the tech industry. So just 35 sellers out of the 4 lakh sellers, contributed a mammoth, two-thirds of the total sales revenue of Amazon in 2019. (Source: India Today)
The “non intellectual” and “non academic” India
I can understand for a moment that Amazon, a private company, does not want to reveal certain data to the government. But the government being totally unaware of it is what fascinates me in the first place!
“The media needs to expose the swindle before the government acts on it”- is what can be sadly understood by this situation in our nation.
Hence, it can be said that the note, given to Jay Carney, aptly described the Indian set up when it quoted: “PM Modi is not an intellectual or an academic.”(Source : India Today)
“He is known to be simple, logical, and straight-forward in thinking without excessive academic jargon” is what the note described further.
“Academic jargon” – Loophole in the law
The Competition Commission of India (CCI) maintains a fair playfield for all the companies in the market – be it small or big. It ensures that no company curbs the other by-monopolistic policies and maintains a healthy competition in the market.
A few anti-competitive practices are not allowed for the e-commerce websites by the CCI. These include promoting selective sellers, launching mobile phones on e-commerce websites, heavy discounting during festive seasons, and prioritizing few sellers to be added to the sellers list.
You can decide for yourselves whether the above practices are commonly witnessed by you, if you are a regular e-commerce customer. A traders’ union in India has already lodged a complaint against Amazon and Flipkart on the above grounds. The CCI is currently probing it too; but the above practices are still on.
These e-commerce companies, just like other companies, make use of the “academic jargon” to find loopholes in the law and counter them using such lawful jargon in the court too.
The Enforcement Directorate, a financial fraud-fighting central agency, is probing Amazon too, for allegedly violating the rules of FDI set up by the government. But unfortunately, these investigations are not made public and have to be proved in the court which takes years.
By hook or by crook
Amazon is restricted to carry out direct sales in India and is allowed to just provide a platform to the buyers and sellers and earn a commission; unlike in the US where it can participate in direct selling too.
But then; Amazon found an indirect way of carrying out direct sales. They partnered with a few sellers and got them listed on Amazon. So, if not by the hook, then by the crook!
Amazon entered into a joint venture with Mr.Narayan Murthy, founder of the tech giant Infosys Ltd. They created a new seller in the name of Cloudtail in August 2014 and became Amazon’s bulk seller since then.
Another such joint venture with another owner of a tech giant company of India, Mr Ashok Patni was set up in 2017. A new special merchant named Appario was created which joined Cloudtail in the list of Amazon’s preferred bulk sellers. (Source: India Today)
These seller companies got access to various platforms and services of Amazon to carry out their day to day operations along with heavy discounts in price.
A series of allegations have been put on Amazon for these steps, but both these sellers are still functional.
And finally, Amazon had to leak a few internal documents to make it sensational. What an irony!
“Do the wrong which is legal” – Amazon’s success mantra
The government has taken a few actions to ensure an equal playfield for all small and big retail sellers. In 2016, it amended the FDI rules to allow a single seller of any e-commerce platform to account for not more than 25% of the total sales of that platform.
Cloudtail, the biggest planted seller of Amazon, had a total market share of sales of 47% before this amendment was made. This had to be reduced to 25% as per the new FDI rules. (Source: India Today)
This put the Amazon’s law manipulators to work. And here is what they did.
Amazon moved the mobile phone inventory held with Cloudtail to an entity called ‘Amazon Wholesale’. Amazon Wholesale is a B2B (business to business) operation which does not fall under the purview of the FDI regulations. Only B2C (business to consumer) operations are regulated by the FDI.
Later on, this additional inventory of Cloudtail; now with Amazon Wholesale was shifted to “certain” sellers. These selective sellers then in turn sold it on the Amazon platform to its consumers.
By this lawful move, Cloudtail kept its sales below 25% to charm the FDI regulators; but created another Cloudtail like preferred seller to sell the entire 47% as before.
A good-boy justification of this maneuver came from Amazon as – “As government policies have continued to evolve, we have consistently made the necessary changes to ensure compliance at all times.”
By the time any further amendment to the law is made, to curb the shortcomings of the previous one, these private companies have already become richer.
“Non-compliance” and not “non-ethical” is the biggest worry for these corporate giants.
Also read: The Story of Indian Banking Failure
Marketing gimmicks to fool the masses
Amazon ran a front page ad in newspapers in October 2020 that read, “Celebrating India’s small businesses and entrepreneurs.”
This ad was run just before Diwali when all these e-commerce websites have their annual sale which is marketed as if being a festival in itself.
The customers get lured by these emotional connections and the ongoing probes and investigations never make the news and hence remain unnoticed.
Amazon says in one of its marketing ads, that it is “transforming lives, one click at a time.”
Public awareness needed
It is all up to the people of India and media houses to wage a war against the miss-happenings in the e-commerce sector. Public awareness will raise issues which will pressurize the lawmakers to take stringent action against the misuse of law.
With a centralized medium of business – the internet, spreading its roots worldwide, it will be very difficult to stop monopoly.
We as customers should decide!
Private Company vs Public Company
The difference is more than literal
Do you know why you cannot buy shares of a private company?
So, can you only buy shares of a public company like ONGC, IRCTC, Indian Oil, etc.?
Then why are the shares of private companies like Infosys and Wipro listed on the stock exchange? Are these private companies to begin with?
Do you know a private company cannot have more than 200 members?
OMG! Somebody please answer all these questions.
Yes, the difference is more than literal.
Let us have a cut and dried distinction between a private and a public company.
Definition of Company
Let us take the bull by its horns and get the definitions out from the textbooks.
Companies Act 2013
A company is a legal entity that is formed by different individuals to generate profits through their commercial activities.
Majorly, a company can be classified into two strands- public company and private company.
Before knowing the difference between a public company and a private company, it is of utmost importance to check on the definitions of a public company and a private company as per the Companies Act 2013.
According to the Companies Act, 2013, a “public company” is a company which—
(a) is not a private company
(b) has a minimum paid-up share capital of five lakh rupees
According to Section 2(68) of the Companies Act, 2013, private companies are those companies whose articles of association restrict the transferability of shares and prevent the public at large from subscribing to them.
According to the Companies Act 2013, a public company has to mandate all legal proceedings which are not mentioned in the definition under Section 2(68) of the Companies Act, 2013, which pertain to a private company.
Difference Between a Public And Private Company
Let’s look at all the major pointers which differentiate a public Company and a private company.
Minimum Number of Members
In a public company, a minimum of 7 members is required to form a company; whereas a private company requires at least 2 members to form a company.
Maximum Number of Members
In a private company, a maximum of 200 members can be present to form a company; whereas in a public company there is no such restriction on the maximum number of members to form a public company.
Invitation To Public
A public company can freely invite the public for subscription, which implies it can issue a prospectus. On the other hand, a public company is prohibited from inviting the public for its share capital, which means a private company cannot issue a prospectus.
Number Of Directors
In a private company, a minimum of 2 directors is required; whereas in a public company, a minimum of 3 directors is required.
Transferability Of Shares
There is no restriction on transferability of shares in a public company; whereas in a private company there are complete restrictions on transferability of shares, through its article of association.
A public company must disclose the annual financial report; whereas for a private company, there is no such obligation to disclose their annual report to the public.
Index Of Members
In a public company, it is mandatory to maintain an index of all members in the company, whereas in a private company, it is not needed to maintain the index of its members.
The minimum paid-up capital for a private company is Rs. 1 lakhs; whereas the minimum paid-up capital for a public company is greater than that of a private company. It is Rs. 5 lakhs for a public company.
In case of a public company, it is defined that total managerial remuneration cannot exceed 11% of net profits and in the case of inadequate profit, the maximum amount to be paid is Rs. 87,500. Whereas in a private company there is no such restriction on the maximum cap for directors’ remuneration.
Quorum For Meetings
In the case of a public company, it is mandatory to have a personal presence of five members in a meeting to constitute quorum, whereas in a private company, it requires a minimum of two members to maintain a quorum for meetings.
Below is an array with a list of pointers that differentiates a public company and a private company.
|S.NO||BASIS||PUBLIC COMPANY||PRIVATE COMPANY|
|1||MINIMUM MEMBERS||AT LEAST 7 MEMBERS||AT LEAST 2MEMBERS|
|2||MAXIMUM MEMBERS||NO MAXIMUM LIMIT||CAN’T EXCEED 200 MEMBERS|
|3||INVITATION TO PUBLIC FOR SHARE CAPITAL||POSSIBLE WITH THE HELP OF PROSPECTUS||CAN’T INVITE PUBLIC FOR ITS SHARE|
|4||NUMBER OF DIRECTORS||MINIMUM OF 3 DIRECTORS||MINIMUM OF 2 DIRECTORS|
|5||TRANSFERABILITY OF SHARES||FREELY TRANSFERABLE||RESTRICTIONS ON TRANSFERABILITY|
|6||ANNUAL REPORT||COMPULSORY TO SUBMIT ANNUAL REPORT TO ROC||NOT A MANDATE TO SUBMIT ANNUAL REPORT TO ROC|
|7||INDEX OF MEMBERS||MAINTAINING INDEX OF MEMBERS IS MANDATE||NO NEED TO MAINTAIN INDEX OF MEMBERS|
|9||DIRECTORS/MANAGERIAL REMUNERATION||CANNOT EXCEED 11% OF NET PROFIT||NO LIMIT / NO RESTRICTIONS|
|10||QUORUM FOR MEETINGS||5||2|
“The best investment is in the tools of one’s own trade.”- Benjamin Franklin
It is always better to be well versed with the tools of one’s own trade and the management of the inflows and outflows.
An avid tradesman associates their trade to generate profits and simplify the trade complexities by forming a company. These differences stated above lay down the basics of companies and form a guided path for a better approach to start with a company.
Here Is Why Entrepreneurs Should Go Out and Start Networking
Don’t hide behind. Face your circles. It’s high time you start networking.
We have often watched Hindi films where protagonists aspire to be a rich men as a kid. And hence they start thinking of different business ideas to be successful.
Well, this happens in reality as well. Who doesn’t dream of starting their own business one day, right?
However, business is not as easy as eating a piece of cake. And no, you don’t need to have a Ph.D. or an MBA degree to start a business.
You just need to have clarity of thoughts; about the business idea, sales and marketing, and most importantly, NETWORKING.
Today, everyone needs everything. The circle of needs and demands has become wider. Everything in entrepreneurship is becoming more interconnected. Just like the Past, Present, and Future in the web series “Dark”.
Networking is the one and only way to get to know what’s around you. From having conversations with your parents to your fruit vendors or even your house helps, you never know what brings you to the peak of your business.
We will share our two cents to convince you enough to go out and start networking if you are a budding entrepreneur. Pardon us if these two cents become 4 or more, but you will definitely not regret reading this till the end.
Entrepreneurship And Networking
The first thing that any budding entrepreneur does, while starting their own business, is to spread the word about it.
The first set of people that they talk to are their family, friends, and even banks (for financial purposes). Although these efforts may or may not materialize into something fruitful, you learn a thing or two about the ABCs of networking.
Networking is one way to get clarity of thoughts about your business. It’s like building a blueprint of your business in mind. You not only know the industry better but also get to know the loopholes and healthy shortcuts that will save time and increase efficiency.
In the ABCs of business, “A” stands for “recognizing the needs and expectations of people around you.”
Networking is the first step to recognize the gap between demand and supply. It’s similar to providing electricity to those areas with no light, and the idea and motivation behind it.
So now that you are still reading, let’s go further and discuss the importance of networking in entrepreneurship:
Builds Trust And Respect
You may or may not earn money every day from your business. But once you earn trust and respect in the market, there is no way that people will forget you easily.
It’s a fact.
Earning money is easy.
But earning trust and respect takes more effort.
Networking with your business peers or veterans will get you noticed. Initially, you won’t find them paying heed to you, but once they do, they are never going to leave you.
People believe in aggressive marketing to increase sales and business. But try aggressive networking instead, and there will be no stopping for you in the future.
Remember, making friends in schools and colleges? It’s a similar situation in entrepreneurship, too.
Going social is one way you get confidence in networking with people in the future.
Did you ever come across someone who would go to a restaurant with you and start talking to the waiters and receptionists?
Well, you may feel awkward about it, but that’s their first step to get to know the surrounding market.
Start from a party that you attend, be it a family party or a party with friends. Join a group of your choice and listen to the conversations. Once you get the grip of it, start by putting forth your views and then turn it around to your business idea. This may look boring and slow, but slow and steady will definitely win the race.
Today, there are many millennial-made apps, like Bumble, LinkedIn, etc. that encourage people to build an entrepreneurial network in any industry of their choice. Start posting. Start swiping right to the connections that interest you.
For that matter, you can even join dating apps to build professional connections. Your first conversation about your business will be a good ice-breaker (You’ll thank us later for this pro tip).
Don’t Be Selective In Your Own Circles
A very common mistake that most “choosy” or “picky” people do, is being very selective in deciding who to network with.
Today, almost all industries are interconnected. A top-class hospital will always need catering or food services for their staff and patients. A hotel will always want to have options for good clothes vendors for room and restaurant linen.
So if you limit yourself to one or two industries, and sideline others, chances are that you may lose a lot of opportunities.
Expand yourself. Even if you are not sure about it at first. Take that first call that says “our budget is low”, when you know that you have a different area of expertise to explore.
Your Shyness And Fear Will Only Put You Behind The Race
Entrepreneurship requires you to go “out-of-your-circles” more than going “out-of-the-box”.
You are likely to face uncomfortable situations all the time. You have to become an extrovert if you are a highly introverted person. You can’t hide from people who you dislike. You can’t say goodbye to those people whom you are done working with.
Your fear, your shyness will start putting you behind the race of a successful entrepreneur.
You have to be outspoken. Pave your way and lead it too. Take others along the way and build a huge business “family”.
Remember Abhishek Bachchan in the film “Guru”?
No, you need not be exactly like him, but you are expected to know why to be like him. And take your own decisions from the existing lessons.
It’s A Long Road That Will Definitely Lead You To Your Vision
Networking is a continuous process. You don’t stop after a certain level of achievement.
Starting a business is not enough, you have to keep it running. And for that purpose, you may need to explore your potential networks.
It’s often expected from budding entrepreneurs to network only with business-minded people to start and run a business successfully. What they don’t realize is that business is made by people, for people, and with people.
So start networking – whether virtually, or face-to-face. Get that business idea in place, get started with your plans, and you will surely reach a place where you can write “successful entrepreneur” in your social media bio.
2021’s India Is Atmanirbhar: 10 Desi Unicorn Startups
With 10 startups joining the unicorn club in just 4 months of 2021, is India moving towards Atmanirbhartha?
The Many Firsts of a Fantastic First Quarter of 2021!
The Indian startup ecosystem got an impressive start in the first quarter of 2021. As per Venture Intelligence, Indian startups witnessed the highest investment in two years, and the capital flow was $4.2 billion!
This is not all.
Most of the startups saw a three-fold hike in valuation in their recent funding rounds. And among these, 10 got valued at more than $1 billion.
And hence, the Indian startup ecosystem received its new set of unicorns.
The unicorn story of 2021 is unique.
Because it is the one with many firsts.
The first health tech, social commerce, e-pharmacy, and infrastructure technology that made its way into the unicorn club.
According to the NASSCOM report, India will have 50 unicorns by the end of 2021.
But many industry experts and research firms believe that, if the current rate continues, India would easily surpass this number.
Here is the list of 10 Indian startups that gave 2021 a pleasant start.
- Digit Insurance
- Five Star Business Finance
The Beginning of Unicorn
If you know any entrepreneur personally, you may have an idea how difficult it is to raise the funds for a startup. It is definitely not a cakewalk.
The fundraising usually begins with family and friends. And as the company expands, it approaches angel investors, and then goes for the venture capitalists for the fund acquisition.
Even though it is a tough task for any startup to gain the investors’ confidence, some horses pass this race and achieve the unicorn tag.
For those who are new to the concept of unicorn, it is a startup that has a valuation of $1 billion or more in the venture capital industry. And Aileen Lee, the founder of Cowboy Ventures, coined the term ‘unicorn’ in 2013.
And since then, startups are continuously striving to attain this prestigious status.
India Didn’t Have a Great Start
When Aileen Lee coined the term ‘unicorn’ in 2013, the United States had 39 unicorns.
You may ask, what about India?
There was only one company called InMobi, the mobile-advertising services provider, that could make it to the unicorn club.
India was nowhere closer to the US in the matter of unicorns. The reasons were many:
- Limited funding
- Inadequate infrastructure
- A plethora of social and cultural challenges
- Lack of talent
- College students found entrepreneurship unappealing compared to the management jobs in large IT firms.
- The aspiring entrepreneurs often got rejected by the prospective brides and their families.
India Slowly Picked Up the Pace
Even though India’s unicorn story had a not-so-brilliant start, the current scenario looks promising.
As per Venture Intelligence data, there were only 10 unicorns until 2018, and since then, there has been the addition of 28 unicorns.
For an Indian startup, on average, it would take up to 8 years to turn into a unicorn.
India’s oldest startups, like Naukri.com, MakeMyTrip, and Justdial, which began its operation prior to 2005, took 15 years to achieve the unicorn title.
But this period has shrunk in recent times.
A recent report by Orios Venture Partners shows that the newer technology firms are hitting the billion-dollar mark in less time than their older counterparts.
The younger enterprises such as Swiggy, Rivigo, Razorpay, and Unacademy joined the unicorn club in 5 years on average. Whereas, Udaan, Ola, Electric, and Glance took just 2.4 years!
What could be the reason for this transition?
As per the Orios Venture Partners report, the reason behind the younger startups turning unicorn sooner could be:
- The prior entrepreneurship experience of the founders of these companies
- These founders know how to secure the funds more efficiently
- The growth mindset
There are two other reasons the investors from India, and all over the world, are backing the Indian startups with their funds:
- Indian startups leveraged the changing consumer behavior and quickly tweaked themselves to satisfy the needs of the customers
- These companies started functioning on the fact that “Focus on the market and the customers will ensure your growth”
Will ‘Atmanirbhar Bharat’ Soon Be a Reality?
India’s honorable Prime Minister, Narendra Modi, raised a clarion call to the country to be self-reliant, aka Atmanirbhar in all senses.
He also outlined the five pillars of Atmanirbhar Bharat:
- Demography, and
You may ask, how startups can help in making India self-reliant?
The Indian startup ecosystem had a slow and steady evolution from one sector to the other, ranging from IT/ITES to e-commerce, deep technology to hyper delivery networks.
Today, startups also have the most favorable conditions to survive and flourish, starting from the funding, development of regulatory infrastructure, global mergers and acquisitions, the influx of global investors to internationalization.
Do you know what brought this revolution to the world’s third-largest startup ecosystem?
It is the government’s mission to get as many entrepreneurial stories as possible through its programs like Startup India, Stand up India, Digital India, and Vocal for Local.
And the unicorn forms one-tenth of new industries coming into existence every year.
The increase in the number of tech unicorns is driving the investors’ interest in India’s startup ecosystem.
According to a report by NASSCOM, the startups in the technology field alone have created 60,000 direct jobs in 2019.
These data show that, if more startups come into existence, and get support from the investors and from the government, India could see a greater spike in job opportunities.
Atmanirbhar citizens make Atmanirbhar Bharat, don’t you agree?