Home / Knowledge / News / Apparel/Garments / PE funding gets tighter for Indian e-tailers
PE funding gets tighter for Indian e-tailers
04
Jun '16
Access to private equity funds is getting tighter for India's e-commerce players. A fragile global recovery and recent amendment to the India-Mauritius tax treaty may keep international investors away from India, according to India Ratings and Research (Ind-Ra).

Till 2015, e-tailers were flush with private equity funds. But they have not been as fortunate this year, with muted deals during January-April 2016, Ind-Ra said in a report.

"The funding concerns have arisen at a time when e-tailers are undergoing a structural transition in their business model, involving considerable capital expenditure," it added.

Ind-Ra further said funding through conventional bank lending route is highly unlikely and consequently e-commerce firms will need to look for specialised institutional investors that have a high risk appetite to avail bridge finance.

"Such funding will only be available at a higher cost. These funds are generally extended on a short-term basis, until the next round of PE funding occurs," it added.

The report said funding from such investors will depend upon the ability of the e-tailers to maintain a level of PE confidence by sustaining its prominence and valuation, which seems to be heading southward.

E-tailers are attempting to move out of the deep discounting model to a more sustainable business model by offering lower discounts, improving efficiencies and focusing on improving loyalty among customers that require a considerable investment commitment.

"As a result, the existing players have large planned investments in the value chain namely logistics, payment banking, fulfillment centres and omni-channels with a primary focus on improving the active customer base, enhancing customer loyalty and value add services," Ind-Ra said.

The e-commerce companies are also undergoing structural changes in terms of their business model, especially after government's guidelines on marketplace model.

Ind-Ra further said established players will enjoy the first mover advantages and have limited operating expenses compared to the large capital expenditure that new entrants in the e-commerce space will need.

"However, the Indian industry is exposed to competition from global players with deep pocket and strong parentage and they will continue to be a challenge," the rating company said. (SH)

Fibre2Fashion News Desk – India

Must ReadView All

L-R Manish Singhai, COO, Peter England; Vinai Kumar Saxena, chairman, KVIC; Ashish Dikshit, business head, ABFRL and Anshu Sinha, CEO, KVIC while signing agreement. Courtesy: ABFRL

Textiles | On 24th May 2017

Aditya Birla & KVIC enter into a strategic partnership

Aditya Birla Fashion and Retail Ltd (ABFRL) and Khadi and Village...

Courtesy: Jabong

Apparel/Garments | On 24th May 2017

Jabong Mood Store redefines online shopping in India

Jabong, India's leading online fashion retailer, has launched the...

Textiles | On 24th May 2017

Starlinger unveils FX 8.0 circular loom for fabric making

Starlinger, a leading supplier of machinery for woven plastic...

Interviews View All

Arvind Saraf
Triveni Sarees

e-Commerce is still evolving fast with constant flux and surprises

Smita Murarka
Amanté

‘There is huge demand in the Indian lingerie market for non-wired styles.’

Vasanth Kumar
Max Fashion India

‘Traditional high-street retailers are now willing to offer franchisees to ...

Kai Poehler
Voith Paper GmbH & Co. KG

The glass mat industry is growing by five to eight per cent annually. Kai...

Eamonn Tighe
Nature Works LLC

Eamonn Tighe, Fibres and Nonwovens - Business Development Manager of...

Larry L Kinn
Suominen Corporation

Larry L Kinn, Senior Vice President - Operations Americas of Suominen...

Sonam & Paras Modi
SVA

Sonam and Paras Modi's Sva Couture is synonymous with head-turning...

Robert Brunner
Devereux

Golfwear and menswear brand Devereux is set for greener pastures. Robert...

Sanjukta Dutta
Sanjukta's Studio

<b>Sanjukta Dutta</b> creates unique garments by clubbing prints of...

Press Release

Press Release

Letter to Editor

Letter to Editor

RSS Feed

RSS Feed

Submit your press release on


editorial@fibre2fashion.com

Letter To Editor






(Max. 8000 char.)

Search Companies





SEARCH

news category


Related Categories:
May 2017

May 2017

Subscribe today and get the latest update on Textiles, Fashion, Apparel and so on.

SUBSCRIBE


Browse Our Archives

GO


E-News Insight
Subscribe Today and Get the
Latest News Update in Your Mail Box.
Advanced Search