Finly December 2021 by FINLY

FINLY

DECEMBER 2021 | Issue No. 106

The Changing Wealth of Nations Intriguing Indeed

Sector Analysis

Buy Now, Pay Later: A new wave in payments

Telecom Sector

Eco Section Impact of COP26 commitments on Indian Business

CONTENTS 01

EDITO R IAL

TEAM F INL Y

C O VER ST O R Y

EC O SEC TIO N

The Changing Wealth of Nations

Impact of COP26 commitments on Indian Business

SEC TO R ANAL YSIS

C O MPAN Y AN ALYSIS

Telecom Sector

Reliance Jio

INTR IG UIN G IND EED

ENTR EPR EN EU R SHIP INN O VATIO N

Buy Now, Pay Later : A new wave in payments

Meesho

29 P ER SO N I N F O C U S

Jack Dorsey

C ALL F O R AR TIC LES WINNER

Priyanshu Kumar

ISSUE NO. 106, DECEMBER 2021

Dear Readers,

Editor's Note

“Historically, pandemics have forced humans to break with the past and imagine their world anew. This one is no different. It is a portal, a gateway between one world and the next. We can choose to walk through it, dragging the carcasses of our prejudice and hatred, our avarice, our data banks and dead ideas, our dead rivers and smoky skies behind us. Or we can walk through lightly, with little luggage, ready to imagine another world. And ready to fight for it.” - Arundhati Roy This pandemic is an opportunity to expand our knowledge by finding new ways to circumvent the circumstances, invest in the most intuitive ideas that come to our mind and surpass this havoc. As Ben Franklin rightly said, “An investment in knowledge always pays the best interest,” we at Finstreet are back with the next edition of our monthly magazine “Finly” for the academic year 2021-22. Team FINLY has always been a dedicated group of people who put in a lot of time and effort to put this magazine together, and we can't thank them enough for their unwavering support and initiative. The December edition’s cover story tries to understand the changing wealth of nations. The intriguing indeed article goes through the interesting topic of Buy Now, Pay Later. We are thankful to Prof. (Dr.) Pankaj Trivedi (Course Coordinator, PGDM Core and Faculty Coordinator, Finstreet) for providing the much-required mentoring, support and backing to the Finly team. We thank all our readers and faculty members for their valuable reviews and feedback. HAPPY READING!!! STAY HOME STAY SAFE!!! Anusha Nair |Editor-in-Chief| MBA FS

Riya Agarwal |Editor-Finly| MBA FS

ISSUE NO. 106, DECEMBER 2021

TEAM FINLY Faculty in-charge

Dr. (Prof) Pankaj Trivedi

Editing Team Editor-in-Chief

Anusha Nair

Editor - FINLY

Riya Agarwal

Coordination and Designing Team

Sudeshna Sur

Arohi Pandey

Content Team

Aditya Shukla

Aman Pathak

Yash Duggal

Uday Sardana

Rishika Jain

Vinay Kumar

Kamlesh Jain

Gaurav Bavkar

Joy Parekh

Paras Lodaya

Anubhav Sood

Natania Mahipal

| COVER STORY

THE CHANGING WEALTH OF NATIONS

INTRODUCTION

Aditya Shukla | MBA-FS| 2021-23 Aman Pathak | MBA-IB | 2021-23 Growth of Total Global Wealth

The Changing Wealth of Nations Report, 2021, provides a set of global wealth accounts from 1995 to 2018 that illustrate whether growth will be sustainable in the long term. It does so by evaluating whether the investments made in produced capital, natural capital and human capital will keep pace with economic development or not.

The total global wealth has grown over 90%, from $603.49 to $1152 from 1995 to 2018.

GLOBAL AND REGIONAL TRENDS IN WEALTH Changes in Per-Capita Wealth The upper middle income countries recorded the highest growth in per-capita wealth, accelerated by China, followed by the lower-middle-income countries. The convergence in their GDP growth rate has been consistent with their per-capita wealth. For most lower-income countries, the GDP growth rate has exceeded their per-capita wealth mainly due to the degradation of assets instead of a boost in investments.

Source: World Bank Staff Calculations Composition of Wealth Wealth comprises three different asset groups: produced capital, natural capital, and human capital. Over the years, human capital has remained an essential component of wealth for global economies, with its share in total wealth increasing from 62% in 1995 to 64% in 2018. However, the share of produced capital has reduced

| COVER STORY revenue over cost is termed as ‘rent’. If managed sustainably, fishing activities can generate substantial rent without any subsidies acting as a financial load. Human Capital This part provides estimates of human capital to understand its role in economic development and factors that drive human capital growth. It begins with estimating human capital, followed by regional trends from 1995 to 2018. It concludes by giving a brief on the impact of the COVID-19 pandemic on wage growth rates. Estimating Human Capital: To estimate human capital, The World Bank follows the lifetime income approach under which calculation is made of the total present value of the expected future labor income that could be generated over the entire life of the current working population. Human capital is considered an asset that can generate multiple streams of future revenue. The benefits that this approach can generate are bringing together the demographics that shape human capital and considering human capital as investments in the form of education to which there can be changes like depreciation in the form of death or revaluation in the form of changes in wage rates. The approach, however, excludes household services such as preparation of food, repairs, etc.

Regional Trends in Human Capital: The share of human capital increased in all regions except the Middle East, where it decreased from 36% to 30%, and East Asia and Pacific, where it remained the same. In 2018, the highest human capital per capita was in North America at $6,12,452, whereas the lowest was in the Sub-Saharan African region at $12,278. Impact of COVID-19 on Wage Growth Rates: It is estimated that the COVID-19 pandemic will hurt jobs in terms of wage growth rates, which will remain below the pre-covid levels for at least three years after the pandemic. Sub-Saharan Africa and South Asia will dominate the reduction in wage growth rates at 0.9% and 0.4%, respectively. However, upper-middle-income countries in East Asia and the Pacific might not witness any change in their wage growth rates. The most severely affected countries will be lower-income and lower-middle-income countries. It is estimated that globally, the decline in human capital due to COVID-19 was $14 Trillion (in 2018 terms), and per capita, human capital declined by $1959 (in 2018 terms). Social Capital Individuals' social capital can be defined as their personal relationships and social networks whereby people look for any kind of support and opportunities. On the other hand, businesses can be entrusted with stakeholders who could significantly

| COVER STORY from 32% in 1995 to 31% in 2018. In some countries, mainly China and high-income non-OECD countries, the share of human capital has reduced due to an aging population and slow wage growth. In 2018, the share of natural capital, which was earlier dominated by renewable natural capital, was equally divided (i.e., approximately 3%) among renewable and nonrenewable. In 2018, renewable natural capital was valued at about $35 trillion. TYPES OF CAPITAL Natural Capital: Land Assets This part provides the trends in land assets, i.e., agricultural lands, forests, and protected areas, from 1995 to 2018. Global and Regional Trends in Land Assets: The global wealth in land assets has increased by 43%, from $24 trillion to $35 trillion. The agricultural land wealth, which increased from $11 trillion to $15 trillion, was the main contributor, followed by forest ecosystems wealth which increased from $5 trillion to $7.5 trillion. The Sub-Sahara African region has witnessed a decrease in per-capita wealth across all land assets. Moreover, the Latin American region saw the highest growth in protected assets. The East Asian region witnessed the highest increase in agricultural land assets. Impact of Climate Change on Agricultural Land Wealth: The temperature increase due

to high emissions has harmed crop yields. The effect was more severe in tropical areas than in middle or high altitudes. In the Middle East and North Africa, the negative impact was the highest. Losses due to high emissions have occurred primarily in middleincome and low-income countries, mainly in Asia. Forest Ecosystem Trends and the Impacts of Degradation: It is essential to conserve ecosystems as forest degradation can have far-reaching negative impacts on the flow of forest benefits. The highest share in forest ecosystem wealth is in Europe, East Asia, the Americas. On the other hand, the lowest concentration is in the Middle East and North Africa. Blue Natural Capital This part provides a valuation of the blue natural capital assets, their global and regional trends from 1995 to 2018, and a focus on their future. Mangroves, providing coastal protection, have increased as a percentage of blue natural capital from 15% to 73%. Even though the share of mangroves has grown as a percentage of blue natural capital, its size has declined globally, fueled by aquaculture and oil palm plantations. In terms of value generated, the annual benefit per hectare has increased from $643 to $1689, mainly in South Eastern economies. Fisheries mean revenue from fishing activities. Here, excess

| COVER STORY improve the performance of the business during crises. As a result of the above, social capital is mainly referred to as the glue that holds all of society together. Through social capital, prosperity throughout the society can be achieved with collective action. Measurement of Social Capital: Social surveys are the most sought-after ways to gather information regarding social capital. The framework set by the UK office of National Statistics, along with the state-level social capital index developed by the US Congress, is being considered to create the metrics. Researchers, however, have suggested evaluating social capital based on revealed measures such as blood donations, voter turnout, conflict, crime, violence, and trust in the police to overcome these problems.

POLICY PRIORITIES RECOMMENDED Measure wealth to boost sustainability and prosperity Governments of different countries should, apart from GDP, also measure the wealth of the nation. Wealth can be integrated into the national balance sheets with the help of the System of National Accounts (SNA) and the System of Environmental-Economic Accounting (SEEA). Other actors like financial markets can use wealth accounting to track ESG indicators.

Invest in sustainable wealth

Governments should actively take steps to create conditions that enable balanced investments in all the components of wealth. Assets such as public goods, which include public health and education and the wealth provided by nature, will need an intervention from the Government to prevent their unsustainable transformation. Create policy incentives to increase the value of wealth Governments should streamline their policies towards future well-being by supporting socially beneficial assets; however, policies that focus on short-term benefits come at the expense of the future. The capital produced in an environmentally harmful manner with fossil fuels is often over-rewarded by markets, whereas renewable assets are often undervalued. Diversify and rebalance the asset portfolio to make growth resilient to external shocks The intensity and the vulnerability towards growth are exacerbated by the multiple

| COVER STORY environmental crises, difficult to predict.

which

are

getting

The policy suggests that the standard economic recipes of production of assets that countries rely on to generate income are no longer sufficient. A comprehensive portfolio that includes purchases apart from oil and gas is more sustainable.

Source: World Bank Staff Calculations

Solar and wind energy assets are also set to produce wealth in the coming years. The negative asset value of wind and solar is increasing quickly due to the surge in electricity production. CONCLUSION Through this report, nations will now be able to value natural and human capital assets and make investments in these sectors. The report committee promises to work on a framework to have social capital also in the national accounts. It looks forward to including renewable energy into the accounts based on the working model of fifteen countries. It also suggests that sustainability in the 21st century will rely on developing diversified asset bases, which would require new data and tools and its integration in economics.

NOTE: Trial calculation in 15 countries during 1990-2017 has shown positive results that hydropower assets already match the value of fossil fuels. RENEWABLE ENERGY The report includes renewable energy sources as part of the national balance sheets. It states that just like the power produced by traditional power plants, the potential of renewable sources should be included so that a great deal of emerging wealth is not missed out.

| ECO SECTION

IMPACT OF COP26 COMMITMENTS ON INDIAN BUSINESSES The United Kingdom, in partnership with Italy, hosted the twenty-sixth session of the Conference of the Parties (COP 26). The conference brought together parties to accelerate progress toward the Paris Agreement and the UN Framework Convention on Climate Change's goals. For twelve days of talks, more than 190 world leaders joined tens of thousands of negotiators, government representatives, corporations, and individuals. It was the 26th time countries gathered under the convention — hence, COP26. The meeting is conducted every year, but this year was important since scientists argue that nations must undertake an urgent, abrupt shift away from fossil fuels to prevent the most devastating effects of climate change. GOALS OF COP26 Secure global net-zero by 2050 and keep 1.5 degrees within reach Countries were requested to aggressive 2030 emissions reduction

submit

Yash Duggal| MBA - FS | 2021-23 Uday Sardana | MBA - C | 2021-23 objectives (NDCs) to lead to net-zero emissions by the middle of the century. Governments will need to speed coal phaseout, increase renewable energy investment, cut deforestation, and accelerate the transition to electric vehicles to fulfill these ambitious goals. Adapt to protect communities and natural habitats The climate is changing and will continue to change, with terrible effects, even as we keep reducing emissions. Countries that gathered at COP26 will enable and urge countries affected by climate change to conserve and restore ecosystems, construct defenses, install warning systems, and strengthen infrastructure and agriculture to prevent losing homes, livelihoods, and lives. Mobilize finance Developed countries must keep their promise to raise at least a hundred billion

| ECO SECTION dollars in climate finance each year to achieve their first two objectives. Work together to deliver Only by working together can the world overcome the difficulties of climate change. The Paris Rulebook (the rules needed to implement the Paris Agreement) was finalized at COP26. And their plans will be put to action by boosting collaboration between governments, industry, and civil society to meet their climate targets more quickly.

THE IMPACT India is a developing nation and is still developing capabilities that will support its economy in the long run. The climate commitments made by India at the recent COP26 event will not be easy to achieve considering the domestic demand, which is projected to increase multi-folds in future.

COMMITMENTS MADE BY INDIA India's non-fossil energy capacity will reach 500 GW by 2030. By 2030, India will have met 50% of its energy needs with renewable energy. From now until 2030, India will lower overall estimated carbon emissions by one billion tonnes. By 2070, India will have achieved its netzero goal. India's economy will have a carbon intensity of less than 45%.

Source: Bloomberg

Source: Bloomberg The industries that have to be looked upon first are heavy industries such as metals, energy, and transportation, as they contribute the most significant chunk of emissions. It will call for a new policy framework, stricter pollution permits, and heavy investment into renewable sources and decarbonization technology. The transition will be easier for the companies in the services sector as most of the emissions are from indirect sources. The only thing that needs to be done by these companies is to change their energy source to renewables. The main challenge is with the heavy industries which contribute to the emissions from both the direct and indirect sources.

| ECO SECTION There is a possibility that businesses will be forced to use cleaner energy sources and invest in decarbonization plants over the next few years. And few business giants have already started making efforts towards reducing the carbon footprint like Tata Steel has commissioned a 5 tonnes per day (TPD) carbon capture plant at its Jamshedpur plant; the Indian railway system has set a target of making itself Net-Zero by 2030; Reliance industries has set a target of 2035 to become carbon neutral.

Secondly, India is still largely dependent on fossil fuels like oil and coal for power, and it needs to shift towards cleaner sources of energy like solar and wind hydrogen. For India to meet its goal, it needs to have solar energy installed capacity of 280GWand wind energy installed capacity of 140GW by 2030. Further, solar and wind electricity generation will have to go up to 5,630GW and 1,792GW, respectively, by 2070. IMPLICATIONS OF CARBON ZERO

Besides, socially responsible investing is rising, and investor money is increasingly coming with explicit climate-related goals. Investments with ESG commitments have now crossed $40 trillion globally, according to ESG Risk. In India, 7% of the assets under management are ESG investments. That number is likely to rise to 30% by 2030. Other business houses will have to make similar investment initiatives. The figure shows the fossil fuels percent breakup in India. The highest breakup was 65% of coal, followed by 14% hydropower and 11% renewables. Gas and nuclear energy constitute 4% and 3% each respectively.

According to energy experts, India’s dependence on coal will have to be cut drastically in the next 10-15 years to achieve its net-zero target. But phasing out coal will also have financial implications for poor states such as Chhattisgarh, Odisha, Jharkhand, Bengal, Madhya Pradesh, and Uttar Pradesh as a significant portion of these states’ revenues come directly and indirectly from the mining sector. At the same time, these states will lose out on employment as new employment opportunities in the renewable energy sector will be created in western and southern India, which have better solar and wind resources. There may be some negative implications in the short run, but these will be offset by financial and social benefits to be received in the long run. According to the Carbon Disclosure Project, if Indian corporations do nothing to address the

Source: Bloomberg

| ECO SECTION climate risks in the next five years, they will lose approximately Rs 7.14 lakh crore. Physical events like floods, developing legislation, emission limitations, changing customer behavior and preferences, and even future legal challenges are all sources of risk. And according to Standard Chartered, Indian suppliers of global corporations face losing $274 billion in annual exports if they do not reduce carbon emissions. However, if done correctly, opportunities worth billions may arise. India carries a huge potential to exploit solar, wind, and hydrogen power. Investment in these sources will generate cleaner energy and new employment opportunities.

| SECTOR ANALYSIS

TELECOM SECTOR

OVERVIEW India is currently the world's secondlargest telecommunications market, with over 1.2 billion subscribers (active and inactive) as of 31st August 2021, including 813.47 million broadband subscribers. Affordable prices, expanded availability, the roll-out of Mobile Number Portability (MNP), expanding 3G and 4G coverage, changing subscriber consumption patterns, and a favorable regulatory environment have all contributed to the industry's exponential expansion in recent years and is expected to contribute 8 percent of India's GDP by 2022, up from 6.5 percent now. The rural market's Teledensity (the number of telephones per 100 people) has climbed to 60.27 percent, while India's overall Teledensity is 88.45 percent. By the end of June 2021, internet subscribers had risen from 687.62 million in 2019 to 833.71 million.

Rishika Jain | MBA - D| 2021 - 23 Vinay Kumar | MBA- IB| 2021-23 There are 23.58 million Wired Internet customers and 810.13 million Wireless Internet subscribers out of 833.71 million internet subscribers. There are 499 Internet service providers (ISPs) with key players as Jio, Airtel & Vi. The key mobile telecom operators in the market in terms of subscribers are Jio (37.4% subscribers), Airtel (29.85% subscribers), and Vi (22.84% subscribers). The Indian telecom sector also contains four major Direct-to-home (DTH) service providers (excluding DD Free Dish, which has over 40 million subscribers), consisting of a total of 69.86 million active subscribers, with Tata sky (33.37% subscribers) leading the market. Apart from that, there are Wireline operators with a subscriber base of around 22.86 million.

| SECTOR ANALYSIS Each area has 6 to 7 participants, resulting in a fierce rivalry. The Threat of New Entrants Regulations by the government are strict. The setup cost of infrastructure, including towers, is extremely high. There are barriers economies of scale.

achieving

Substitute Products There is no threat of alternative products since there are few in the market. Bargaining Power of Suppliers

Source: IBEF PORTER'S FIVE FORCES ANALYSIS Competitive Rivalry The price sensitivity of customers and low switching costs are driving competition among companies. High exit barriers add to increasing competition. This is because of the huge investment cost of the Telecom sector.

High supplier negotiating power due to the sector's small range of providers and high demand in the market. Suppliers are Switch Suppliers, Tower Service providers, and the Handset providers. The cost pertaining suppliers is high.

switching

Bargaining Power of Customers Low switching cost and mobile number portability lead to customers getting high bargaining power. Mobile number portability has made it important for companies to charge less tariff along

| SECTOR ANALYSIS with better services to retain customers. Customers are sensitive to price. Price is a major factor because services provided are similar across all the operators. CURRENT SCENARIO – THE AGR DUES In 1999, telecom operators were required to pay a certain cost to obtain a telecom license. Most people, however, couldn't gather the financial strength to make the initial deposit because it was so large. As a result, the government changed its strategy and began taking a modest cut from the revenues. The revenue amount used to calculate this revenue share is the adjusted gross revenue or AGR. Later, it came to light that the government is asking for a cut from the revenues collected from their telecom and non-telecom businesses, which resulted in revenues too high for operators to pay. And operators like Vi were already on the brink of bankruptcy. The government recently announced a relief package for the telecom sector, which contains a four-year moratorium on the AGR dues and dues on spectrum purchased in past auctions. As of today, Vi and Airtel both have opted for the moratorium. According to ICRA, the moratorium on AGR dues offers the industry with yearly cash flow relief of roughly Rs 14,000 crore, while the moratorium on spectrum dues provides the industry with additional Rs 32,000 crore in annual cash flow relief.

However, this postponement may only be a momentary reprieve. At the end of the moratorium period, the government will provide the telecom player with the choice of paying the interest deriving from the delay of payment in equity or converting the entire due into equity at the government's discretion. The Ministry of Finance will finalize the guidelines for this. The government has indicated that nontelecom earnings will be excluded from the definition of AGR, resulting in a significant reduction in AGR dues.

Source: IBEF FUTURE OPPORTUNITIES AND GROWTH The Next-Generation Network, 5G As the globe moves toward ITeS, more incredible internet data speeds are becoming increasingly necessary. The demand for 5G will undoubtedly rise in this scenario. This is due to 5G's ability to revolutionize existing industries, establish new ones, and influence societies faster, with less latency and larger capacity. 5G Technology will have a considerable impact in the future on industries such as safer

| SECTOR ANALYSIS

transportation, banking systems, traffic control, remote healthcare, agribusiness, digitized logistics, and more. Due to Covid and various other factors, 5G got delayed in India. The government permitted the 5G trials to start six months ago in June, but according to recent news, it seems that the telcos are not there yet as they seek a one-year extension in concluding the trials. This would push the much-awaited 5G auctions to the second half of 2022. However, experts say that the delay would allow telecom service providers, technology companies, and equipment manufacturers to better prepare for the launch of mature technologies, resulting in a smoother transition and improved subscriber experience. Satellite Broadband Services Satellite Broadband is a type of internet service that sends data through radio waves from an ISP hub to a satellite receiver dish connected to a modem to give internet access. SpaceX, for example, transmits data using lasers rather than radio waves. Geosynchronous low-Earth orbit (LEO) satellites at a fixed position in the sky reflect the radio waves into the receiver. Companies would just need to set up the satellite receiver and modem once a fleet of satellites is in orbit to enable internet connection from practically anywhere on the planet. At the customer's access points, no cables or other

ground-based infrastructure would be required. Like satellite direct-to-home (DTH) broadcasting services revolutionized television access in India, it would change Satellite internet is an easy approach to provide an internet connection to rural areas in countries like India, where providers would otherwise need to cover extensive areas with ground-based infrastructure. Major satellite broadband firms, notably Airtel (OneWeb) and Tata (Nelco), as well as SpaceX (Starlink), Amazon (Project Kuiper), and Hughes have already invested about $40 billion in India. CONCLUSION The sector has grown tremendously over the last decade and has far more potential in the coming years. Pandemic and AGR dues may have temporarily dragged the telcos down, but as the market improves, they are quickly getting back on track. With an increase in users and internet consumption, the sector is also upgrading to meet future needs. However, we may have to wait a little longer to gain access to 5G services. Aside from that, satellite broadband is the next big thing, and it has the potential to solve the country's internet coverage issues in underserved rural areas. Both are bringing significant investments to the country.

| COMPANY ANALYSIS

RELIANCE JIO OVERVIEW When Anil and Mukesh Ambani split in 2005, it was one of the most significant de-mergers in the industry. Mukesh Ambani's dream project, Reliance Infocomm, became a part of the Anil Ambani Group. Mukesh Ambani acquired Infotel Broadband Services Limited, the sole bidder for India's 4G network. Mukesh Ambani's Reliance Limited began laying the groundwork for a high-speed optical fiber 4G network that is significantly more capable than 4G after the split. The company was dubbed Reliance Jio Infocomm Limited, commonly known as Jio. Jio was the first mobile network in the country to offer 4G LTE and VoLTE services. Jio released these services for all consumers on the 5th of September, 2016 and also introduced its LYF smartphone line. Reliance Jio Infocomm Limited (RJIL) has prioritized high-speed data service over phone and SMS services. When the company was launched, it

Kamlesh Jain | MBA - A | 2021-23 Gaurav Bavkar | MBA - B | 2021-23 offered data plans with 1GB of 4G data per day in a market where the most popular telecom providers provided 1GB of data per month.

Top Management of the Company

Source : www.jio.com OVERALL STATUS OF THE COMPANY Jio became the first non-Chinese operator in a single country market to reach 400 million subscribers. The company continues to revolutionize India's digitalization with

| COMPANY ANALYSIS strong customer engagement in mobility and FTTH. Jio acquired the right to use the spectrum in all 22 counties across India as part of the recently signed spectrum auction by the Government of India. The strategic initiatives with Facebook and Google will further improve the customer service and enable better digital integration within the country.

Jio will leverage the world's best engineering skills to provide an integrated, world-class landline and wireless connectivity network complemented by disruptive digital technology platforms for entertainment, finance, commerce, telecommunications, education, and health.

Vision With the vision of connecting everyone, everywhere at a low price and premium quality, Jio is working towards building a technology-enabled product platform for the digital world while simultaneously leveraging India's technical expertise to serve the global enterprise market. Mission

Source: www.jio.com

Equity Stake of JIO Platforms by Major Shareholders:

Connectivity for every Indian Superior customer experience Affordable data Best-in-class platforms

digital

solutions

and

MAJOR BUSINESS SEGMENTS Together with the investors of Jio Platforms Limited, the promising Indian start-ups, and the partners of world-renowned technology companies, Jio will be able to drive the next phase of digital retail and hyper enterprise growth across industries.

Source: www.jio.com

| COMPANY ANALYSIS Jio Telecommunications

Online Grocery (JioMart)

Jio has revolutionized India's digital landscape, accelerated digital life's adoption, and promoted the vision of Digital India among 1.3 billion Indians. In order to expand the ecosystem required to make India one of the world's leading digital societies and economies, Jio will have to work on improving the experience of its existing 426 million customers and the subsequent 300 million mobility users. Jio is looking forward to accelerating the transition to digitize 50 million households and thousands of small and medium-sized enterprises. Jio's impact on the Internet in India is known as the "Jio Effect''.

JioMart is India's online grocery delivery service launched in May 2020 across 200 municipalities. The customers can access JioMart from a fully integrated website with MyJio and native apps for Android and iOS. The platform has been extended to include the sale of apparel and electronics in some parts of the country. JioMart is expanding rapidly; with increased traffic, active users, and orders. Kirana partnerships will be extended to reach more than 33 cities by the end of March 2021.

Jio Fiber JioFiber is the number one FTTH provider in the country with over 4 million connected premises with continued improvement in customer connections every month despite the pandemic. Jio’s optical-fiber network is now physically present outside 16 million premises, which will further help address the strong demand. It has achieved industry-leading customer engagements across the consumer base, which is evident in the consumption of 300 GB of data per month with over 5 hours per day usage on Jio STB. This customer engagement is further going to increase with new offerings in the pipeline.

Jio Digital Solutions Jio has been a pioneer in bringing media and entertainment applications to the country. Its extensive suite of applications and tools, including popular entertainment, movies, music, and news, is available to all subscribers on the Jio network. MyJio, the industry's first self-care application, has evolved into a gateway for all digital solutions under Jio. JioMart is India's online grocery delivery service launched in May 2020 across 200 municipalities. JioMeet is an Indian-made multimedia collaboration tool that supports end-to-end encryption (login information, signaling, voice, video, and content flow).

| COMPANY ANALYSIS Haptik is an AI assistant platform that uses natural language processing technology. Haptik allowed MyGov Corona Helpdesk, India's official WhatsApp chatbot helpline, to answer FAQs about COVID 19. More than 30 million citizens used it during the blockade. Other products are EasyGov, Jio UPI, JioPOS, and JioSTB.

FINANCIAL ANALYSIS

Operating Performance of latest 6 Quarters

Source: IBEF

Source: IBEF Strong growth in gross additions is somewhat offset by discontinued customers due to Covid's second wave, and the net customer count declined by 11.1 million in Q2 (2021-22), but Jio has seen a good addition of customers in the last five quarters.

Data consumption has increased QoQ by 56.57% from Q1 (2020-21) to the latest quarter. Per capita data and phone usage are pretty high, with 17.6 GB and 840 minutes per month, respectively, in the latest quarter, increasing QoQ. From Q1 (2020-2021) to Q2 (2021-2022), Operating Profit Margin has remained constant, barring the one quarter where it slightly dropped to 84.4%. Net Profit Margin improved from 12.4% to 16.1%. EBITDA Margin increased from 36.2% to 40%, with constant improvements over the period.

Average Revenue per User is considered good and is increasing, which is an excellent operating indicator. Source: IBEF

| COMPANY ANALYSIS RATIO ANALYSIS

Source – RIL website

The interest coverage ratio improved from 4% to 6% on account of stable interest payments and increasing profits.

FUTURE OUTLOOK Jio provides world-class networks, devices, applications, content, service experiences, and affordable next-generation pricing to all citizens in the country. It is a significant catalyst for broadband data diffusion. It is ranked as a major mobile operator in the country in terms of Adjusted Gross Revenue (AGR) and subscribers. Brand Finance is recognized as the 5th strongest brand in the world. Also, Jio, being launched recently, has lower AGR dues to pay than its rivals and does not require any moratorium period. These factors give Jio a strong position in the next generation of wireless networks, i.e., 5G. Jio 5G field trials have started at various locations with competitive functions and capabilities comparable to global Tier 1 vendors. Additionally, Jio’s strategic partnerships with Qualcomm, Facebook, and Google will enable it to utilize 5G capabilities to the fullest.

Source – IBEF

Source – IBEF After raising an amount of 1.15 Lakh Crore Rupees from mostly external investors, there are reports that Reliance Jio might be listed in the coming future, with Nasdaq being touted as one of the most soughtafter options. It is an opportunity for the company to reduce its debt further and gain enough equity to venture into AI and digital solutions, JioPhone Next and Jio Glass, as mentioned by Mr Mukesh Ambani in Reliance AGM.

| INTRIGUING INDEED

BUY NOW PAY LATER (BNPL) LITIGATION FINANCING INTRODUCTION Buy Now Pay Later (BNPL) is a payment option that allows an individual to purchase without paying the entire amount for the goods purchased or services availed, out of pocket. In most cases, an individual must sign up with a firm that provides this service, and these firms allow the customer to pay in Equated monthly instalments (EMIs). This option is aimed at young, cashstrapped millennials who are new to the formal economy and don't have the means to credit. It allows them to obtain credit quickly for small-ticket transactions. The offerings appear to be the flavour of the season, with several e-commerce sites, banks, and merchants offering them for the ongoing festival season. Many individuals had to tighten their purse strings due to the COVID-19 outbreak, making BNPL programs even more appealing. The number of BNPL programs offered by various companies and start-ups has increased dramatically in recent years, with an incredibly rapid increase in the last eighteen months.

Joy Parekh | MBA-A | 2021-2023 Paras Lodaya | MBA-A | 2021-2023 The economic fallout from the pandemic has hit both consumers (borrowers) and financial institutions (lenders). Consumers are looking for affordable solutions to make payments as job losses, and income reduction impact their cash flow. On the other hand, large financial institutions have become risk-averse due to significant degradation in asset quality. While the concept of BNPL is not new, the recent emergence of fintech start-ups has had a fresh and profound impact on payments and lending in India. Some of today's end-users criteria and expectations include speed, convenience, seamlessness, and affordability. Millennials, the digital native population with their intent and spending power, are becoming increasingly wary of physical credit cards worldwide. The BNPL (Buy Now Pay Later) option is one of the most inventive methods for these clients are now being served.

| INTRIGUING INDEED Buy now, pay later; finance may not be available for all purchases. Also, the amount one can finance through this payment means could be limited. However, when buying online, BNPL might be an appealing option to pay for inexpensive goods.

Source – Bloomberg HOW DO BNPL SERVICES WORK? Buy now, pay later apps to allow an individual to purchase online and pay for them weekly, biweekly, monthly or quarterly instalments as per the customer's convenience. These apps, like credit cards, may charge interest, but they may also provide "interest-free" periods. The customer can avoid paying interest entirely if they pay off their balance before the period finishes. If they miss a payment, they will be charged a late fee, and the BNPL product will begin to become more expensive to use if the repayments are not made on time. BNPL interest rates could become very expensive if the repayments are not made within the stipulated time period. For approval, most Buy now, pay later companies to conduct a light credit check, which has no impact on the borrower's credit score. On the other hand, some may perform a hard pull on the borrower's credit, which may temporarily lower your score.

The incentives for both customers and merchants have contributed to the success of BNPL services thus far. Below are the benefits that consumers, as well as merchants, get while availing of these services. CUSTOMERS Customers can pay for goods and spread the cost over several installments, often without the need to pay for goods or services in full right away. The ability to immediately take stuff home and pay later. If payments are made on schedule, or the entire credit amount is paid off before the loan period finishes, there is the possibility of paying no interest. This is a fantastic alternative for lastminute or emergency purchases MERCHANTS These services can attract customers and drive purchase decisions that

| INTRIGUING INDEED

might not have been made otherwise, mainly when the offered payment plans do not carry interest. The three critical value-adds that BNPL providers often give merchants are better average basket sizes, improved online conversion rates, and exposure to a broader consumer base. DISADVANTAGES OF BNPL BNPL may encourage impulse spending: The biggest issue with BNPL platforms is that they could be regarded as encouraging impulse spending. With BNPL arrangements, individuals can take their purchase home without even putting a rupee towards it. That can be tempting, but many people may buy things and later realize they didn't want and need them, and now have to pay for them. Late payment fees One of the significant sources of revenue of BNPL platforms apart from the interest component is the extraneous late payment fees charged on delayed payments or EMI's. If one does not have enough money in their account to cover the automatic installment payment and if the payment declines, there are usually twenty-four hours to log into the account and pay the amount due, otherwise late fees would be charged.

The credit rating of an individual can be affected While credit checks for availing BNPL loans are usually not as strict, defaulting on payments would harm the borrower's credit rating and CIBIL score, thereby affecting their ability to avail credit later. WHAT POSSIBLY COULD GO WRONG WITH BNPL? Before giving credit, the lender must follow proper procedures, including gathering client information, examining bank statements, KYC, and obtaining the customer's PAN number and identification. This allows businesses to verify that customers are whom they say they are, assess their credit risk, and lend them the proper amount. Overleverage/ overburdening can occur if fintech players do not comply. Furthermore, when a consumer stops paying, the RBI's prudent collection norms must be adhered to. Companies who do not regard BNPL as a credit product may not comply with this code of conduct, resulting in consumer harassment and the participation of thirdparty collection agents who may overstep their bounds due to a lack of an effective monitoring framework. BNPL PLAYERS IN THE INDIAN MARKET Some of the BNPL players available in the

| INTRIGUING INDEED Indian Market are Bajaj Finance, Amazon Pay Later, Capital Float, MobiKwik, BharatPe, etc. Bajaj Finance is the largest pure player in the consumer finance industry with a loan book of more than 1,50,000 crores, and it is expanding rapidly along with the entire industry. However, the competition in the industry is becoming increasingly stiff due to the emergence of new-age start-ups which have received liberal fundings from venture capital and private equity players. THE PATH TO FINANCIAL INCLUSION India has a sizeable underpenetrated population with little or no credit history, owing to low credit card use and traditionally rigorous eligibility rules for formal funding. This problem maintains a cycle in which those seeking credit or loans are often turned down due to credit scores that are either unavailable or insufficient. New-to-credit consumers are integrated into the country's formal financial ecosystem because of BNPL's alternative underwriting mechanisms.

Source – ET Research As the industry evolves, a few areas will become more noticeable: responsible usage of BNPL, assuaging consumer concern, and learning more about the needs and expectations of merchants wishing to use them. Throughout this decade, the shift to digital solutions is likely to accelerate. And, as cell phones and internet access become more widely available in India, BNPL payment companies' reach will only expand.

Buy Now, Pay Later can be an effective way to plan out for a large purchase. However, before one signs on the dotted line, one must understand all the associated charges and risks. Also, one must make sure to repay the entire loan amount on time to avoid paying interest and late fees.

| ENTREPRENEURSHIP INNOVATION

MEESHO INTRODUCTION Meesho is an Indian social e-commerce company headquartered in Bangalore, India. In 2015, Meesho founder and CEO Vidit Aatrey decided to leave InMobi and set up his own company. He and his partner, Meesho's founder, and CTO, Sanjeev Barnwal, came up with the idea of building a platform that would help micro and small businesses go online and harness the power of digital technology. When social commerce struggled in India, Meesho took the lead and revolutionized the industry. With most women entrepreneurs, the social commerce platform claims to have over 13 million entrepreneurs on the platform. It has helped them start their online businesses with zero investment, bringing the benefits of e-commerce to over 45 million customers across the country. The platform helps small businesses and individuals to launch online stores through social channels such as WhatsApp, Facebook, and Instagram.

Anubhav Sood | MBA B | 2021-2023 Meesho was one of the three Indian companies named Y Combinator in 2016. It was also part of the first batch of the Google Launchpad Solve for India program. In June 2019, Meesho became the first startup in India to receive an investment from Facebook. BUSINESS MODEL Meesho stands for `merishop` or apnidukaan. Nearly 9 out of 10 people in India dream of starting a small business. With the increasing number of selfemployed small business owners and gig workers in India, it's not surprising that Indians have an enterprising spirit. However, it takes a lot of capital to start a business. India is not a very rich country, with the majority of people lacking access to capital.

| ENTREPRENEURSHIP INNOVATION These people, who didn't have the opportunity to open a store, came to our platform and became entrepreneurs for the first time. You can go here, withdraw the shop on WhatsApp, access everything from the supplier marketplace, and shop in the market according to consumer orders. Meesho connects sellers and customers through social media platforms such as Instagram and Facebook.

Overall, over 70% of orders come from cities of Level II and above. The company was entirely accepted in Level II + cities during the pandemic. Since June, we have served more than 2000 new Level 2+ cities, and the share of orders from these cities also increased from 67% to 72% between July and December 2020.

To date, the company has delivered orders from 100K+ registered suppliers to over 26,000 pin codes in more than 4,800 cities, helping generate over Rs 500 crore in income for entrepreneurs and serving customers in more than 4,500 Tier 2+ cities bringing e-commerce to Bharat.

In August 2016, VC-focused data platform Mattermark placed Meesho in 8th position out of 25 fast-growing Y Combinator startups.

India’s e-commerce is expected to grow from $24 billion in 2017 to $84 billion in 2021, as per a recent report by Deloitte. Meesho has about 9 million female entrepreneurs, and by 2025 more than 250 million women will be online in India. According to the company, it's just scratching the surface to allow women to start a business. With the past year’s growth, they want to bring their value proposition closer to many ambitious women, and they can see more value by further communicating their value proposition. Meesho claims that the company strictly tells female entrepreneurs how and how to empower them to start a home-based business.

AWARDS & RECOGNITION

In July 2017, Deccan named Chronicle Meesho one of the top five social commerce apps. In February 2018, Forbes India added Meesho founders Vidit Artley and Sanjeev Baanwal to 30 top young performers under 30. The startup was also one of the growing Indian companies introduced by Forbes Asia in the same year. Meesho was selected in Google Launchpad's "Solve For India" program for startups, developing technology solutions to India's unique challenges in April 2018. In September 2018, LinkedIn made Meesho one of India's 25 most rewarding startups based on talent acquisition, employee growth, job seeker interests, and professionalism.

| ENTREPRENEURSHIP INNOVATION

THE ROAD AHEAD India's social resale market will be valued at $67 billion (GMV) in 2020. By 2025, social commerce is estimated at $70 billion, and total e-commerce is estimated at $200 billion.. After the pandemic, Meesho also had an increased adoption rate in Bharat. In April 2021, Meesho raised $2.3 billion with a $2.1 billion valuation under the leadership of the SoftBank Vision Fund. The company also raised $570 million in a Series F round led by Fidelity Management and B Capital, which more than doubled its valuation to $4.9 billion in five months. After the recent funding round, the company aims to build a single ecosystem that will enable all small businesses to grow faster. The primary focus area as per the company would be to allow increased adoption of Meesho’s platform across multiple categories, which would be possible only when we can structurally reduce our prices for our customers.

| PERSON IN FOCUS

JACK PATRICK DORSEY

Jack Patrick Dorsey, an American billionaire, tech entrepreneur, web developer, and philanthropist, was born on November 19, 1976. He is the Co-Founder and former CEO of Twitter as well as the Co-founder and CEO of Square (A financial Payments Company). PERSONAL LIFE Tim and Marcia Dorsey brought him up in St. Louis, Missouri. He is of mixed Irish, German, and Italian ancestry. Jack became interested in Dispatch Routing when he was 14 years old. Later, in 1995, he attended the University of Missouri - Rolla before moving to New York University in 1997. Dorsey dropped out of college in his last year of graduation after developing the concept for Twitter while attending NYU. In 2000, he relocated to California and established his own company in Oakland to send couriers, cabs, and emergency services via the internet.

Natania Mahipal | MBA – IB | 2021-2023 PROFESSIONAL LIFE Jack sought to create a Web-Based Realtime Short Message Communication Service and constructed a Twitter prototype in two weeks. His concept drew the attention of many users at Odeo and financing from Evan Williams, who had left Google after selling Pyra Labs and Blogger. Williams, Stone co-founded prominent Corporation, and Noah Glass, which led to the founding of Twitter Inc. Dorsey was named CEO. He resigned soon after because of his other interests in Yoga and Fashion Designing, and in 2008, he was appointed Chairman of the Board. On October 5, 2015, he was appointed as the permanent CEO following the retirement of Dick Costolo. Dorsey also co-founded Square, a small platform for accepting debit and credit card payments on mobile devices launched in May 2010. It's a square-shaped device that connects to iPhones, iPads, and other

| PERSON IN FOCUS Android devices via the headphone jack and functions as a micro card reader. In 2011, he also served as a judge for Bloomberg's NYC BigApps competition. Dorsey was also a member of The Walt Disney Company's board of directors from 2013 to 2018. Dorsey also serves on the board of the Berggruen Institute's Governance Center.

Source: Swarajay.com

ACHIEVEMENTS AND RECOGNITIONS In 2008, MIT Technology Review TR35 named him one of the world's top 35 innovators under 35. In 2012, the Wall Street Journal called him "Innovator of the Year" in technology. Dorsey was named Founder of the Year at TechCrunch's 5th Annual Crunchies Awards in 2012. Forbes ranked him the world's most eligible bachelor in 2013.

OTHER INTERESTS & CONTROVERSIES Dorsey had an interest in meditation as well. He contributed to the campaigns of presidential candidates such as Tulsi Gabbard and Andrew Yang in 2019. He had donated and fully supported around 600 Missouri Public school projects listed on DonorsChoose. Dorsey will gift $10 million to Boston University's Center for Antiracist Research, which Ibram X. Kendi created in August 2020. In May 2021, he made a personal donation of $15 million to fund relief efforts in India's COVID-19 second wave. Care ($10 million), Aid India ($2.5 million), and Sewa International ($2.5 million) were the three NGOs. Dorsey's salary as Twitter CEO was discovered in 2019 to be an insignificant amount of $1.40. In previous years, he had refused to accept any compensation for his work. He owns $557 million worth of Twitter stock. Dorsey, in particular, is a supporter of Bitcoin, which he called "resilient" and "principled" in early 2019. In March, he told the "Tales of the Crypt" podcast that he was spending the whole $10,000 weekly spending limit on Square's Cash App on Bitcoin. In late February 2020, Bloomberg and CNBC reported that prominent Twitter investor Elliott Management, led by Paul Singer, was looking to replace Dorsey. The fact that Dorsey splits his time as CEO of both Twitter and financial software business Square and

| PERSON IN FOCUS his planned migration to Africa were cited as reasons. Last year, high-profile verified accounts belonging to Bill Gates, Kim Kardashian West, and others were hacked, with attackers tweeting out posts requesting users to submit bitcoin payments to phony cryptocurrency addresses. Twitter temporarily blocked all verified accounts – those with blue check marks on their profiles — as a solution, but the damage had been done, and Dorsey was then in Damage Control mode. Because of the site's apparent vulnerability to security breaches, Republican senator Jim Jordan invited Dorsey to testify at an antitrust hearing. On 29 November 2021, Dorsey resigned from the position of CEO because he believed that the company was ready to move on from its founders. He confirmed the Transition after posting a tweet on Twitter. He was replaced by Parag Agarwal who is an IIT Bombay Alumnus and was working as a chief technology officer at Twitter. He had worked in Microsoft, Yahoo and AT&T Labs before he joined Twitter in 2011. The board and Dorsey unanimously appointed him because he deeply understood the Functioning and needs of the Company. Dorsey was satisfied with the decision and shall remain a member of the Board until his term expires in 2022.

| CALL FOR ARTICLES - WINNER

GROWING UPI MARKET IN INDIA Priyanshu Kumar MDI Murshidabad | MBA 2021-23 In India, UPI is a digital payment infrastructure that allows for quick interbank transfers. Since its introduction in 2016, UPI has grown in popularity, owing in part to the Covid-19 outbreak. UPI handled over 2 billion transactions for the first time in October 2020. Furthermore, the increase from 2 billion to 3 billion transactions per month took only ten months, indicating UPI's huge popularity among customers as a platform for retail digital payments. Customers have made UPI their favourite digital payment method. Between January 2020 and September 2020, the value of card transactions fell from INR 1,511 billion to INR 1,262 billion, according to the Reserve Bank of India (RBI). Similarly, the value of transactions using prepaid payment instruments (PPIs) fell from INR 183 billion to INR 166 billion during the same time. During the same period, however, the value of UPI transactions climbed from INR 2,162 billion to INR 3,290 billion.

In 2020-21, UPI accounted for 10% of total retail payments with a compound annual growth rate of 400% between 2016-17 and 2020-21. UPI's market share in overall retail payments was only 2% until a few years ago. Interoperability, an open-source platform, convenience of usage, and no merchant discount rates have all contributed to UPI's phenomenal success. While the majority of UPI transactions (nearly 81% by value) are peer-to-peer, implying that UPI is replacing cash in the payment ecosystem and, as a result, driving more digitization of the economy, around 19 % of transactions (nearly Rs 9.96 trillion) are peer-to-merchant, surpassing both credit and debit card point-of-sale transaction values. Third-party application providers dominate the UPI platform, including Walmart-backed PhonePe and technology behemoth Google-backed Google Pay.

| CALL FOR ARTICLES - WINNER The number of transactions processed over the UPI more than quadrupled in a year, reaching 2.73 billion in March 2021, up from 1.25 billion the previous year. March's figures are also a 20% increase over February's 2.29 billion. In March, the total value of transactions surpassed $5 trillion, up 18% from February. According to figures issued by the National Payments Corporation of India (NPCI) on Wednesday, the Unified Payments Interface processed 355 crore transactions worth Rs.6.39 lakh crore in August 2021. In July, transactions on the UPI network surpassed the six lakh crore mark, totaling 6.06 lakh crore. In August, UPI processed 3.55 billion transactions, which is a new milestone for the payment platform since its inception. In terms of value, UPI transactions totaled Rs 6.39 trillion in August, which is a new high. In August, UPI's volume of transactions increased by 9.5% month over month, while the value of transactions increased by 5.4%. Regulators are crucial in accelerating the use of UPI. They are increasing UPI acceptability in new payment regions and encouraging usage by eliminating charges and fees on UPI transactions. The NPCI has increased the daily transaction limit for verified merchants for specific UPI transactions from INR 1 lakh to INR 2 lakh. Users can now use UPI to pay credit card bills and loan installments, as well as mutual fund and brokerage payments. The modification also closes the gap between real-time gross settlement payments and UPI transactions,

which has a minimum limit of INR 2 lakh. PSP fees for person-to-merchant UPI transactions were also banned by the NPCI on January 1, 2020, therefore ending one of PSPs' key revenue streams. For transactions valued less than INR 1,000, these PSP apps charged INR 0.25, INR 1 for transactions worth up to INR 25,000, and INR 5 for transactions worth up to INR 75,000. This approach intends to increase merchant usage of UPI. The NPCI has granted a cross-platform messaging service a license to operate in India's digital payment arena. To encourage use, it has also included government, initial public offering (IPO), auto, and recurring payments to UPI. The NPCI has awarded a messaging service a license to roll out its payment services in stages, beginning with a maximum of 20 million clients. This player currently has a user base of over 400 million individuals in India. Users will be able to send and receive money from their contacts who have enabled UPI on the messaging service using this app. Users can also scan a QR code to send money to those who aren't on their contact list. The government is encouraging its agencies to use UPI. UPI can be used to pay bills in a variety of departments (electricity, water, e-tax filings, etc.). It is encouraging more departments to develop collaborations with banks and the NPCI in order to achieve seamless UPI integration in QR-based payments.

| CALL FOR ARTICLES - WINNER UPI AutoPay was launched by the NPCI as part of the UPI 2.0 revisions. Users can make regular payments such as cell bills, power bills, EMIs, OTT subscription fees, insurance, and mutual fund premiums using UPI AutoPay. UPI AutoPay will not only make recurring payments more accessible and convenient for users, but it will also aid business growth in a variety of sectors. From January 2021, the RBI has recommended raising the limit on cashless payments made through UPI AutoPay without the use of a personal identification number (PIN) from INR 2,000 to INR 5,000. The expansion of UPI into numerous sectors and the payment system's ability to process a significant number of transactions in a month are both remarkable achievements in the digital payment field. While new business fields are using UPI, the payment system must also work on constructing the necessary infrastructure to handle such large-scale expansion while minimising technological faults. The gradual introduction of new players would allow regulators and industry participants to detect any fraudulent activity on the UPI platform and enhance their infrastructure accordingly.

ISSUE NO. 106, DECEMBER 2021

About Finstreet Finstreet, the finance committee of K J Somaiya Institute of Management aims at bridging the gap between industry and academic curriculum through effective delivery of knowledge-oriented sessions and events through a network of highly motivated members and renowned industry experts. Through the FINLY magazine, we focus on covering crucial topics for each month and giving our members a platform to express their views. OUR UPCOMING EVENT