NOT FOR PROFIT
Much has already been said about Diwali shopping, supposed to be a clear indicator of sentiments of the people and businesses. Whether it is a mood of gay abandon or one of cautious spending has been a debate the past few days. While the jury is out till number crunchers give a real sense of the Diwali buying, activity in the corporate world is sending out a signal that things may not be too bad.
In fact, the divide is glaring in the run up to Diwali. The sunny side first. India Inc majors as well as new economy biggies are either striking deals or raising funds every other day. Sunil Mittalled Bharti group acquired Tatas’ wireless business earlier this month. Although it was a cash-free and debt-free deal, Bharti Airtel decided to pick up a portion of the spectrum cost, estimated at around ~1,500 crore. It is also going to absorb a part of the Tata Teleservices team. All this at a time when the telecom industry is stressed. Around the same time, taxi aggregator Ola raised $1.1 billion (around ~7,150 crore) in a funding round led by China’s Tencent. Another $1 billion (around ~6,500 crore) is coming soon as part of the same round. In another deal last weekend, IndusInd acquired Bharat Financial in a ~15,000-crore transaction.
Then there are talks of upcoming deals. Flipkart is reported to be in discussion with Kishore Biyani for a stake in Future Lifestyle. Amazon recently bought a stake in Shoppers Stop. Adani group is reported to have teamed up with Nebras Power to bid for Singaporebased Equis Energy’s assets. There are many more.
Some other companies such as Flipkart are in news for record festival sales claiming to topple powerful rivals (read Amazon). Jeff Bezos-led Amazon meanwhile is in news regularly for either pumping in more money into the India market or expanding its office space in the country, other than Harvey Weinstein in a different context altogether. Also, the advertising blitz in housing and consumer durables will make one wonder if there’s any such thing as slowdown in the economy.
Then there’s the other side. Traders, small and mid-scale, have been hit like never before. Reports suggest this could be among the worst Diwali for them in a long time. They are reeling under the impact of the recently introduced goods and services tax (GST) even as the demonetisation pain is still not over. While earlier traders used to engage their entire families in business ahead of Diwali — peak sale season in large parts of the country—now just one man is enough to handle a shop as the crowds have disappeared. This is the typical trader’s pain story all across. Not surprising Prime Minister Narendra Modi had to address traders in Gujarat recently to cool their angst.
Not just that. Early estimates suggest that gold buying was down on Dhanteras day (considered auspicious for metal shopping). And the news is that sale of cashew, a bestseller in Diwali gifting, too has seen a drop.
On the whole, Diwali shopping and gifting mood has been mixed. Malls in big cities saw high footfalls over the weekend, picking up from a lacklustre show till recently. But those in business say shoppers are not going for big buys unlike other years. Physical stores in several high streets across big cities have been mostly good just for window-shopping this season.
But the real piece of action has been online with e-commerce companies such as Amazon, Flipkart, Snapdeal, Shopclues, MakeMyTrip and Urban Ladder announcing back to back sales and discounts. A lot of lesser known online companies, including Zobello, Indiarush, yaantra, freekamaal, happydiwali.sale, too showed up without fail on every Google search for Diwali discount. Most airline companies as well as hotels, including luxury properties, joined in too. So did automobile companies.
However, an important Diwali takeaway from mega online sales is in a number given by Flipkart. It said 65 per cent of its festival shoppers were from tier 2 towns. Which means people in smaller towns are out there shopping, at least on their computers and smartphones. If that is not heartening enough, turn to two global majors for their verdict: IMF Managing Director Christine Lagarde said a few days ago that India is on “a very solid track’’. And, WPP Chief Executive Martin Sorrell told media, ‘’I remain an India bull’’.