India Inc will remember 2014 as the year when the threat and the opportunity of the digital world became real, says Sailesh Dobhal.
It was a year when foreign airlines finally invested in Indian carriers, old and new — Emirates in Jet and AirAsia and Singapore Airlines in AirAsia India and Vistara respectively.
And another one, SpiceJet, came close to going kaput. It was also a year of big-bang acquisitions as Sun Pharma gobbled up Ranbaxy and Kotak Mahindra Bank proposed a merger of ING Vysya Bank with itself. In all, $43 billion was spent on mergers and acquisitions involving Indian firms this year.
Satya Nadella, took the corner room at the world’s biggest tech firm, Microsoft, and Vishal Sikka, an expat Indian, took the reins at Infosys as the promoters finally bid adieu.
Two corporate biggies were sent to jail, Subrata Roy and Jignesh Shah, and one stayed there as the year drew to a close.
And many a firm faced the regulator/judicial/shareholder whiplash — realtor DLF found its appeal against the competition regulator turned down by the Supreme Court and Maruti and Tata Motors faced the ire of institutional investors over new investments and executive pay respectively. And as many as 230 coal blocks awarded by the previous government were cancelled by the Supreme Court.
But perhaps the most life-changing trend was the advent of the digital age on the Indian business firmament.
It disrupted neatly built business models, changed staffing patterns in people-driven industries, and even forced policy to take cognisance of new ways in which people and businesses were interacting.
Digital touched every business — apparel, consumer durables, electronics, property development and broking, retailing, even taxi services!
It was a year when digital attracted money, talent and consumers by the hordes.
Much has been written on the fund raising by e-commerce firms such as Flipkart, Snapdeal, Housing dot in and so on, but just to reiterate, the sector raised over Rs 25,000 crore of private money, higher than what all new public issues managed to raise on the stock market this year.
Japanese technology investor SoftBank alone invested $1 billion in Indian firms, and Flipkart alone raised around $2 billion in 2014.
Flush with funds, e-commerce firms made a beeline for premier engineering campuses, becoming perhaps the biggest recruiters at the IITs.
By one estimate, apparel e-tailers Jabong and Myntra will, in a year or two, overtake traditional ones such as Trent and Shoppers Stop in sales.
And Flipkart has already pipped the Daburs, Godrej Consumers and Maricos of the world in valuation.
The response from traditional businesses was varied, depending on the level of unease the online brigade has put them through.
There was much protest against the deep discounts offered by the new kid on the block — mostly from consumer durable firms that saw these upstarts undermining their brands. They threatened to deny warranties on products sold through the online platform.
Why, even big businesses-led traditional retail complained, believe it not, about level playing field e-commerce!
Reminds one of the Bombay Club, the famous protectionist group of leading Indian industrialists in the 90s that tried, unsuccessfully, to halt the march of global competition that started crowding our shores post liberalisation in 1991.
Others, like the mobile retailers in the south, closed ranks and tried to build on the elusive economies of scale through common sourcing.
The consumer, however, continued to flock to online sales unperturbed.
Indians across metros and small cities took to online shopping like duck to water.
According to an eBay survey, e-commerce has already touched people in over 3,000-odd cities and hold your breath, over 1,200 villages!
No wonder, the chief of the country’s biggest conglomerate, the salt-to-software Tata group, asked its firms to delve deep on how the digital ecosystem is changing consumer behaviour in their respective sectors.
The going though was not all smooth for e-businesses. When business models have run ahead of rules, as they invariably would with an intrinsically innovative ecosystem like digital, scraps with regulators and government are inevitable.
So taxi hailing service Uber was first made to change its payment model to comply with the banking regulator’s two-step authentication, and then hauled over the coals and banned nationally when it came to light after an unfortunate rape incident in the national capital that it was not registered with transport departments across states.
The world’s largest e-tailer Amazon found itself in the tax department’s crosshairs over stocking supplier products in warehouses.
And there was much heartburn during Flipkart’s Big Billion Day sale, when its IT systems were overwhelmed by consumer traffic.
The site’s owner managers promptly apologised to all visitors, perhaps a first for an otherwise thick-skinned India Inc, proving that the challengers are not just innovative, but quick learners too.
