How dire is the future prospect of the Indian economy with S&P's recent downgrade of the country outlook from ‘stable' to ‘negative'? According to many self styled economists from investment to World Bank, the future is gloomier than ever. As a reader of Businessworld will know, S&P's pronouncements were transpired by a combination of negative factors like shrinkage of GDP (from 8.4 per cent to 6.9 per cent) as well as the inability of the Central Government to cut down budget deficit (5.6 per cent of the GDP as opposed to 4 per cent promised earlier). The soaring trade deficit of $156 billion and failure to reach consensus on reforms in a dysfunctional Parliament were major contributors to S&P's pessimistic estimation about Indian economy as well.So, given these negative opinions regarding the extent of political gridlock, how concerned should one be for the future of the Indian economy? Relatively speaking, one should not give too much weight on these views, especially if the benchmark of comparison is western economies. The US is still struggling with jobless recovery as well as political infighting of the worst kind related to the stimulus programme and cutting of budget deficit. UK just slipped into a recession mode with a negative growth rate of 0.2 per cent in the first quarter and recent elections across Europe show how unstable the whole zone is, both on economic and political terms. In this global atmosphere, India's growth rate of 6.9 per cent is certainly not abysmal and the figure could easily inch upwards with a good monsoon or from an unexpected growth rate from a set of states (like 11 per cent growth rate in Bihar or 12 per cent growth in UP) or from an improved performance in export due to a falling rupee.But of course, there is no room for complacency either. India can still do much better even with her dysfunctional Parliament. Much hype about the debate on the stalling of reforms stemming from political gridlock is much exaggerated and misplaced. Any functioning democracy always makes pauses on decisions due to heterogeneity of views. A diverse country such as India is expected to encounter even more dissenting attitude towards new policies with uncertain outcome. The main problem rather lies on the faulty design, inexact implementation and erroneous sequencing of economic reforms and not just on the nature of coalitional politics. There is always a way out too!. The blame lies squarely with the Government which most of the times fails to take into account the set of constraints — emerging spontaneously in a democratic setup — that forces delays or halts the process of reforms. Take the example of the recently botched-up attempt by the government to open India's £450-billion retail sector to foreign investors. The reforms meant allowing the foreign companies to buy 51 per cent stake in the country's supermarkets and owning single brand retailers outright. In return, these retailers were asked to commit an investment of £50 million in infrastructure and in buying 30 per cent of the stock from local suppliers. Furthermore, they could do business in cities with more than 1 million population. The plan looks so perfect on paper and was meant to achieve multiple objectives at one shot: ensure a huge inflow of foreign capital, revive the ailing infrastructure, help poorer framers (via contract farming), benefit consumers with more choice of consumables within a reasonable price range and promise more tax revenue to the cash-strapped Government. Yet the whole plan failed miserably and blame was put on the inertia of coalitional politics and individual politicians were singled out for the paralyzing logjam. The irony is that no one bothered to delve into the deeper reasons that gave rise to the current state of policy inaction. Any reform that replaces a current system with a more efficient one (like this case) is bound to increase economic growth, relax the budget constraint of the Government via higher tax receipts and make consumers happy through greater choice of products. But such reforms will always create constituencies who stand to lose as a consequence. Take this example again in little detail. Since every day a huge volume of goods and services are traded in different parts of the country, India has a huge network of intermediaries who function from the pre production (advancing loans to farmers and buying the crop later) and collection of information about total supplies in the market stage to storing and releasing these products sequentially over time to the retail level. The market structure of these large chain of activities is segmented regionally and most likely consists of a very few monopoly traders in each region joined by countless number of smaller players. Since much of the activities related to trading at different stages do not require much skill (after a network is established), this sector absorbs a huge number of surplus labour. What is going to happen to them after opening up of the sector to the foreign retailers when most of the people in the current system do not have any safety net or social security? How many of such small players are there in the network? How this network system (from pricing of products to their deliveries) would be affected by the introduction of a new system? Not a single research paper exists by economists of any repute that address these important questions because the Government chose not to bother about them and did not commission any studies from any reputable quarter. The people who are at the bottom of the trading spectrum tend to form the vote banks of many smaller regional parties and they just exercise their voice of concern through their local leaders. The bill thus went nowhere. The point of this example is that if a plan of reform is the product of bureaucratic effort exclusively, it loses the sense of ground reality and fails at the stage of implementation because of its inability to allay fears of losers. Of course, the existence of losers does not mean at all that the Government should eschew the path of reforms. However, it certainly ought to minimize frictions and gather more information about the possible effects and the process itself before giving a shape to a new policy that affects a wide range of people. For the sake of concreteness, a policy prescribing "starting small and then expanding in a phased manner'' could easily resolve many tensions that create obstacles. That is, first start opening up the retail sectors to the states where the opposition is at a minimum and then spread to other places when gains from foreign investment is visibly seen to have exceeded the costs of displacements as part of the old trading network inevitably gets assimilated into the new system over a course of time. The road to least resistant paths of reform is not singular and it can be followed in many other areas. The introduction of GST which will increase the revenue of the states via unification of the tax code is a good candidate for reforms. If conducted cleverly, this reform could succeed even if it requires amendment of the constitution. Another least contested area of reform is the financial market. The government can give a fillip to developing a market for public debt and tie the process with the development of infrastructure investment via PPP (Private public partnership). One of the biggest obstacles to maintaining a high growth rate is the current state of infrastructure. Both its creation and maintenances require huge amount of funds. However, creation of institutional architecture and reforms to open market for public debt together with proper structuring of a deal with private enterprises would literally remove the roadblock and enhance the future growth not only through building up connectivity and network, but the new source of financing would help many medium industries who are too big for bank loans but small enough to go to the equity markets. Moreover, such growth enhancing and employment generating reforms are also politically feasible because few would contest them as there are not many immediate losers. For a smooth passage of reforms, they must be properly designed and sequenced in such a way that would propel growth via increased efficiency and investment without creating major economic tensions. The Government may benefit a lot if it takes some (but not all) lessons from the Chinese experience. For the first twenty years, China concentrated only on the export, agricultural and infrastructure. The reforms in retail, banking and other problematic areas have not been touched. At the same time, huge expenditure by the Government on the social sector lifted some 500 million people from poverty. Only afterwards, it aimed at opening banking, insurance and retail sectors. It took twenty five years of sustained growth of 10 per cent to make such transition from one type of reforms to another. Unless the policy makers in the Government realize this and make an effort to unleash reforms that generate less resistance, the future will remain uncertain. Such reforms are plenty and they possibly include, among others, simplification of tax rules, boosting up of infrastructure via PPP and alleviation of finance constraints for medium enterprises by creating newer channels of funding. Reforms, if not carried out with a proper sequence, will deprive India of realizing her true potential for no good reason.(The writer is a Professor of Finance at Nottingham University and can be reached at Sanjay dot Banerji at nottingham dot ac dot UK)
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As the online jewelry industry hits Rs 150 crore in India, more and more players are eyeing the space so much so that Assocham expects the industry to grow nearly five-fold to Rs 700 crore within the next three years.According to sources, online lifestyle store Yebhi.com recently closed the acquisition of the 10-month old fashion and accessories portal stylishyou.in for about $1-1.5 million. The amount includes the cost of stylishyou.in's data base, the cost of taking over the website's team of 10-15 people, their compensation as well as joining bonuses.stylishyou.in, founded by Shraddha Danani in August 2011, mostly deals with leading brands across all categories of jewelry and style accessories. The company also carries designer labels of bags, branded perfumes, watches etc.Sources within the company reveal that Danani has joined Yebhi.com as the Head of jewelry segment for the portal.Sources close to the deal reveal that the transaction took place in April end and since then the website www.stylishyou.in was taken off. Trying to put the domain name in the internet tool bar will only give you the following message "Site under maintenance, please try after sometime."Before the site went off line, it used to receive about 1,395 unique visitors and 13,955 page views a day, according to hypestat.com.In a conversation with Businessworld in April, Yebhi.com's founder Manmohan Agarwal had shown interest in inorganically expanding its presence in the fashion and lifestyle categories. The company, which was earlier known as Bigshoebazaar.com had been looking to acquire smaller players especially in the home and lifestyle and fashion space. Yebhi's nearly one-third of the revenues still come from footwear category and it is aggressively ramping up its presence in other fashion categories.Yebhi currently holds about 30,000 SKUs and gets about 119,538 unique visitors to its website every day.The company so far has received funding of close to $11 million from Nexus ventures partners and Catamaran in two rounds.(With inputs from Vishal Krishna)
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It had been a point of debate for the last few weeks. Today, the suspense ended when an extension was denied to current Telecom Regulatory Authority of India (Trai) chairman, JS Sarma. Till date no Trai chairman has been given an extension. To do that would have meant amending the Trai Act.Till quite recently it was believed that Sarma would get an extension for anything between two to six months since he had just announced the reserve price for the auction of spectrum. But, the furore over the recommendations on spectrum pricing has apparently been so great that the government decided not to extend his term.As things stand, Sarma, who took over as chairman on 14 May 2009, will now sign off on Friday 11 May.There are two prominent names doing the rounds as possible candidates to replace Sarma as Trai chairman. This includes current commerce secretary Rahul Khullar and former secretary (defence finance) Indu Liberhan. The name is expected to be announced on Friday.Ever since the Telecom Regulatory Authority of India (Trai) came up with its recommendations on spectrum pricing, the industry has gone into battle mode. CEOs of four GSM-based mobile telecom service companies including Sunil Mittal, CMD of Bharti Airtel; Kumar Mangalam Birla, chairman, Idea Cellular; Vittorio Colao, CEO, Vodafone; and Jon Fredrik Baksaas, CEO, Telenor group, met five ministers of the Empowered Group of Ministers (EGoM) on telecom in one day. Trai had suggested that spectrum in the 1800 MHz band be auctioned at a base price of Rs 3,622 crore/MHz. Besides, while the Supreme Court cancelled eight licences, Trai has put up only 5 MHz of the 1800 MHz band spectrum in each circle for bidding initially. It plans to have another auction later based on the discovered price in the first auction. J.S. Sarma, had said then: "During this year itself, they would be in a position to have another auction of 1800 MHz band. So, new operators can come in there too."That remains to be seen as Trai has talked of only one auction. The moot point is that there is an average of 26 MHz of spectrum in each of the 22 circles across the country in the 1800 MHz band. Telecom operators argue that by creating an artificial scarcity of spectrum, it would mean that at best only one new operator would be able to get spectrum in a circle. Meanwhile, former telecom secretary Siddhartha Behura was granted bail by the Supreme Court on Wednesday, more than a year after he was arrested for his alleged involvement in improper allotment of telecom license and bandwidth in 2008. Post that, then communications minister Andimuthu Raja moved a bail application in a special CBI court. He has sought bail on grounds of parity. His bail plea will be heard on Friday.
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The two steadily-sinking airlines of India continued to make news on Wednesday as the government moved court against the striking Air India pilots and also initiated legal action against Kingfisher Airlines "towards dishonour of the cheques submitted" by the carrier. Jet Airways and Spicejet have also been served notices on overdues, said Civil Aviation Minister Ajit Singh.All but two major airlines in India have defaulted on paying airport charges, said the civil aviation minister. IndiGo, the only profitable airline in the country, and privately-held Go Air have not defaulted on airport payments, Singh told lawmakers in a written reply.The Air India management on Wednesday moved the Delhi High Court seeking an order restraining the pilots from going on strike. The court on its part restrained over 200 agitating Air India pilots from continuing their "illegal strike", reporting sick and staging demonstrations, a day after the airlines management sacked 10 pilots and derecognised their unionThe judge also said allowing such a strike to continue will cause irreparable loss to the company as well as huge inconvenience to the passengers travelling by the national carrier.Admitting that pilots are most important group in any airlines and could even shut down carriers if they want, Singh said pilots should understand their responsibilites as well."Air India is almost bankrupt. (It) is not able to pay salaries for months, not paid to airport authority and oil marketing companies," he said, adding the government is trying to revive Air India by infusing Rs 30,000 crore of "public money" over a period of time, but there are strings attached.The minister also said the government has "a back-up plan (to deal with strike)...We can downsize...If employees are not interested that Air India should expand, then government is not going to provide money to it." "If you keep striking on such issues every three months, then we are not ready to invest public money in Air India," said the minister.Section of Air India pilots owing allegiance to Indian Pilots Guild went on strike on Wednesday following failure of talks with the Air India management. The IPG pilots have been agitating over the rescheduling of Boeing 787 Dreamliner training and matters relating to their career progression."Four flights have been cancelled today, two each from Delhi and Mumbai," Air India spokesperson said in New Delhi.Around 200 Air India pilots owing allegiance to Indian Pilots Guild (IPG) had reported sick on Tuesday resulting in cancellation of at least 13 international flights. The pilots have been protesting against rescheduling of Boeing 787 Dreamliner training.Kingfisher To Start Paying Jan Salaries Earlier, Kingfisher Airlines Chairman Vijay Mallya wrote in a letter to employees that it will start paying January salaries starting from Wednesday, as the debt-laden carrier struggles to retain staff.Last month, on April 19, Kingfisher Airlines began the process of importing aviation fuel, in a move that could help the cash-strapped carrier bring down its fuel bill but present substantial and costly logistical challenges.High fuel prices are just one of the issues plaguing India's ailing airline industry, but a recent decision allowing direct import of jet fuel by airlines is no panacea due to the large costs of setting up storage and supply infrastructure."Kingfisher Airlines has received authorisation from the Director General of Foreign Trade for the import of aviation turbine fuel ... and we are taking active steps to initiate the process of ATF import," the company said in a statement.SpiceJet Ltd, another airline, said on Wednesday it had approval to begin direct ATF imports, which account for around half of Indian carriers' operating costs.Debt-laden Kingfisher, which has slashed its services as banks refuse to extend loans to the carrier, has become a byword for the troubled industry which is expected to have lost up to $3 billion in the fiscal year that ended in March, according to the Centre for Asia Pacific Aviation.Direct imports could bring down fuel costs by 15 to 20 per cent, according to industry analysts, but setting up the infrastructure to import, store and deliver the fuel to their aircraft would require large upfront costs.Oil and gas major Reliance Industries said in February it was in talks with a number of airlines to provide jet fuel infrastructure and transport services.India's airlines were previously required to buy fuel from marketing companies including state run Indian Oil Corp, Hindustan Petroleum Corp and Bharat Petroleum Corp, which are mandated to levy various federal and state taxes.(With Agencies)
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As work environments become more challenging, data is growing exponentially. Such changes create a need for maximum use of technologies and solutions to expedite the work flow.One such technology is cloud computing which is gaining significant traction as a new IT delivery model with significant business and financial benefits. It is one of the most transformative and hottest technologies available for any enterprise today.A number of conversations around moving to the cloud and the benefits it is expected to bring to enterprises across verticals. The economic downturn facing the world today has further compounded the need for such technologies.The cloud computing market holds tremendous potential. A recent study by Nasscom and Deloitte predicts the Indian cloud computing market will reach $16 billion by 2020. Management Consulting firm Zinnov, pegs the market size at $4.5 billion in 2015. A recent IDC study says that cloud computing will generate over 2 million jobs in India by 2015.Indian organizations are also considering cloud in a serious way. According to the India findings of the Symantec 2011 Virtualization and Evolution to the Cloud Survey, one-third of those surveyed, are in the discussing/planning stage for private and hybrid cloud deployments.Data intensive sectors like BFSI, telecom etc. will experience higher adoption rates .However, huge potential is also seen in sectors like education, healthcare and government as being major adopters of cloud in the future.This model provides visible benefits to businesses by enabling them dynamically scale their computing without having to invest in costly infrastructure. The recent economic downturn has further put pressure on enterprises to tighten their IT spending. Technologies like cloud computing look very appealing since they require less financial investment. According to an IDC study, the fact that this technology enables conversion of large, upfront capital investments in IT into smaller, manageable ‘Pay-per-use' annuity payments is what makes it so attractive.However, this rising interest in cloud based services and their benefit is accompanied by a cautious approach towards its deployment.According to the Symantec 2011 State of Cloud Survey, over 80 per cent of Indian organizations are discussing cloud adoption, less than 20 per cent have completed implementation-which is a significant gap. While it does hold tremendous potential to provide significant cost savings and efficiencies to enterprises.Barriers to adoption include security, control, and compliance.We live in an information driven world where information is the most valued asset for any company. Hence, whether it is information on-premise or on the cloud, it is very important that it be safeguarded. In fact, concerns include fear about data being transmitted and stored by a cloud services provider, keeping it safe, and preventing it from being lost or stolen are on the rise. Users often wonder about unproven cloud vendor security practices and the virtual separation between infrastructure and clients.Another concern is losing control and risking more downtime once data and applications move to the cloud. This is corroborated by the India findings of the sixth annual Symantec Disaster Recovery Study which shows that while Indian enterprises are adopting new technologies such as virtualization and the cloud to reduce costs, they are currently adding more complexity to their environments and leaving mission critical applications and data unprotected.Gap between expectation and reality is another impediment. According to the 2011 Symantec State of Cloud Survey, 85 per cent expected cloud to improve their IT agility, but only 57 per cent said that it actually did. Results also fell short in the areas of disaster recovery, efficiency, lower operational expenses and improved security.While this technology is expected to mature as more organizations adopt it. Deployment if best practices can go a long way in removing barriers.(The author is vice-president, Information Management Group, Symantec)
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Despite the onslaught of camera phones - cameras are still being sold. Japan, the world's largest manufacturer, shipped nearly three times as many cameras in January as it did in the same month of 2003, when the camera phone was still in its infancy. And this trend is best demonstrated by Canon which has seen its camera business grow as the proportion of its overall sales to more than 25 per cent in the last 5 months. A falling rupee may be forcing Canon India to hike prices of non-camera products twice in six months, but that does not stop it from setting a target a 45 per cent rise in sales this year, based on its expectations from sales of compact cameras and digital SLRs. And pushing the sales are the youth of India.The market of India is the market of youth, according to Canon India Senior Vice-President Alok Bharadwaj. To expand on this youth connect, Canon India has been using cricket icon Sachin Tendulkar so long. This year, it also added Bollywood actress Anushka Sharma. The products, colour, form, marketing engagement, everything is youth centric. The company is big in social media too. It has built communities of Digital SLR users numbering 180,000!When it comes to taking serious photos, people usually go to camera makers like Canon. This leaves the compact point-and-shoot camera segment of the market vulnerable. In markets such as the United States and Japan, there's not many more people who want to buy one. On the one hand, this is eating into sales that Canon and others traditionally dominated. On the other, the ease with which photos can be taken on a phone is feeding an interest in taking better photos, expanding the middle of the market into a "pro-sumer" segment of devices which cost a bit more but offer the user options so far unavailable on the mobile phone: An optical, rather than digital, zoom, for example, better flash, and image stabilization.In India, however, the mobile camera does not yet effect the entry-level cameras. Also, they continue to be aspirational in India. Moreover, inspite of the 100 per cent growth trajectory for the digital cameras, only 5 per cent of the population is covered. With the growing affluence, Canon India plans to sell about 1.2 lakh of DSLRs, double of 60,000 sold last year. The DSLR market is estimated to be 2.5 lakh units, so thew aim is to be close to 50 per cent market share.Canon sells its products through image squares. From 65 Canon Image Squares in 42 cities, the company plans to take it to 300 squares in 150 towns by 2014. In the compact camera segment too it aims to have a bigger slice — 25 per cent — of the marketshare. Falling Rupee & Costlier ProductsCome June and Canon India will be increasing prices of its non-camera products by up to 5 per cent from June to offset the impact of the fall in rupee, the second price hike within six months.The price increase will be in the documentation products including laser printers, copier machines, inkjet printers and other IT peripherals segments which contribute half of the its turnover.It will take a decision on hiking the prices of cameras in July and if the rupee slide continues, may go for a hike in October. "We are looking at increasing our prices by 5 per cent in all products except the cameras from June 1. Since this is the peak season for cameras we don't want to create any impact on sales now," says Bharadwaj."The rupee fall has made the environment very uncertain and a big challenge," he said.Admitting that price spike will impact sales at a time when already demand is slackening in the consumer durables space, he said: "We have decided to increase prices even if it means it slows a little bit of our topline, because the fall of the rupee is so steep."But despite the price increase in non-camera products and the resultant slackening demand, Bhardwaj expects Canon India revenue will grow 45 per cent this year and for this he is betting on an increasing share of compact cameras and high growth in digital SLRs."Our total revenue should be Rs 2,200 crore this year, last year we clocked about Rs 1,525 crore, " he said. Last year, the company's sales got hit as the supply chains broke down in the wake of the tsunami in Japan and floods in Thailand.Incidentally, while 50 per cent of Canon India sales are to private consumers, 25 per cent goes to large enterprises like banks and corporates and 25 per cent to the government, both state and central. Despite the rising prices, Canon India expects an increase in the sales to governments as it gets more modernised and digitalisation takes place.Canon has great expectations from India. While the mid-term story may be disturbed, the long-term story remains intact.
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The Facebook IPO has taken place and Facebook shares are now available for all and sundry – worth at the end of their second day of trading $31 per share, a far cry from the $38 per share offering price last week.On Wednesday, Chief Executive Mark Zuckerberg, and several banks led by Morgan Stanley were sued by shareholders, who claimed the defendants hid the social networking leader's weakened growth forecasts ahead of its $16 billion initial public offering (Read: What The Numbers Tell).The defendants were accused of concealing from investors during the IPO marketing process "a severe and pronounced reduction" in Facebook revenue growth forecasts, resulting from increased use of its app or website through mobile devices.The lawsuit was filed in the US. District Court in Manhattan, according to a lawyer for the plaintiff.Earlier, a Los Angeles law firm filed a lawsuit seeking class action status against Facebook and its underwriters alleging inadequate disclosure of key information.As more details about Facebook's IPO emerged, investors have been finger-pointing, complaining and speculating about what's next for the company, Morgan Stanley and the Nasdaq, which had trouble executing trades on the day of Facebook began trading publicly. In fact, on online forums were full of discussions about potential class-action lawsuits for investors who lost money because their buy, sell or cancellation orders were mishandled. Four of Facebook's major underwriters -- Morgan Stanley, Goldman Sachs, JPMorgan and Bank of America -- reduced their financial estimates for the soon-to-be-public company following the release of a revised prospectus on May 9 that noted the negative impact of mobile users on Facebook's business.Investors expressed disappointment, skepticism and even shock on Tuesday after learning that an analyst at lead underwriter Morgan Stanley cut his Facebook revenue forecasts in the days before the company's initial public offering - information that apparently did not reach small investors before the stock went public and subsequently tumbled.Two top US financial regulators said on Tuesday the issues around the initial public offering of Facebook should be reviewed, putting fresh pressure on the company, its lead underwriter, Morgan Stanley, and the Nasdaq stock exchange.Facebook shares closed 8.9 per cent lower at $31, following an 11 per cent plunge on Monday. At that price the company has shed more than $19 billion in market capitalization from its $38-per-share offering price last week.Facebook actually left very little for the common investor. The non-executive shareholders (mostly hedge funds) bought restricted Facebook stock in the pre-IPO market. Unfortunately that stock was only available for a few "sophisticated" investors: under SEC rules, only sophisticated investors (read: already wealthy) can purchase restricted stock (Read: Facebook Wants To Make An Offer You Can Refuse)Also the investment banks — in this case Morgan Stanley, JP Morgan and Goldman Sachs — If they follow the usual practice of charging 7 per cent of the IPO proceeds as a commission will get a $350 million prize for perhaps one year of work. The underwriters have also reserved the possibility of an "over allotment option." This means that, if there are too many people willing to buy a ticket to the party, they will just print out more tickets (and get the 7 per cent commission of course). The typical over allotment option gives the underwriter the possibility to increase the number of shares by 15 per cent (that is, $52.5 million in additional compensation to the banks). Facebook's guidance to analysts, and the subsequent revised estimates communicated to some investors, were delivered in telephone calls and conference calls rather than emails or written reports, the sources said. The conversations took place shortly after Facebook filed its revised prospectus.The legal subtleties, though, did little to ease the anger of some investors and brokers who say the Facebook IPO now stands as an ugly example of a system rigged against the little guy.Still Overvalued?With the stock falling on Tuesday, a debate continued over what the social networking company is really worth. Even with the company valued at about $85 billion at the market close Tuesday, compared with $104 billion at its IPO price, some experts say it is overvalued.Thomson Reuters Starmine conservatively estimates a 10.8 per cent annual growth rate - almost exactly the mean for the technology sector. On that basis, Starmine says the stock could be valued at $9.59 a share, a 72 percent discount to its IPO price.Similarly, the company's price-to-earnings ratio remains lofty, even after the selloff. The $31 price implies a P/E of 60 for expected 2012 results, compared with Google's 13.3 for a similar rate of growth.With Facebook shares not yet available for borrowing and thus all but impossible to sell short, bearish investors have sought out almost any related vehicle to bet against Facebook. Over the past three trading days, prices plunged on two closed-end funds that owned pre-IPO shares. Firsthand Technology Value Fund and GSV Capital Corp both dropped more than 25 per cent even though their Facebook holdings make up only a small fraction of assets."Until investors can actually short Facebook, they have to keep shorting other things that can give them some sort of proxy for Facebook," said Thomas Vandeventer, manager of the Tocqueville Opportunity Fund, which owns shares of both the battered closed-end funds.Brokers who over-ordered shares in the expectation that supply would be limited continued to complain they received too much stock to handle and were left in the dark about forecast changes.Some big investors, though, protected themselves well. In a securities filing on Tuesday, Microsoft disclosed that it had sold 6.5 million shares at $37.58, meaning the software giant covered the cost of its original investment of 32.8 million shares for just $240 million in 2007, while still retaining most of the stake.Future Of FacebookWill Facebook be the next Apple, Google, or Microsoft – that companies which have in some way or other driven how we experience the Web today? Is Facebook going to drive our Web experience forward in the way that those three have? Also the question that everyone has is whether "some other social network" will come along and take away Facebook's unique selling proposition. Google is certainly trying its best with its Google+ network, but there's little sign that people are engaged with it. The toughest challenge is of course the shift to mobile. Born in 2004, Facebook predates the mobile Internet, which took off in 2007. That means it remains a tough challenge and Facebook has to make a huge shift to fit into the four-inch screeen but there is no reason the Facebook cannot take it on.
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As funding starts to dry up in the e-tailing domain, small companies trying to raise Round A of funding are finding it hard to sustain their businesses. Case in point is madeinhealth.com – a body-building and fitness supplement store – which after struggling for nearly six months to raise $2.5-$3 million, decided to sell itself to larger competitor Healthkart.com in an all cash deal. Earlier this month, fashion accessories portal Stylishyou.in got snapped by Yebhi.com.The market is anticipating the Healthkart-madeinhealth deal to be in the range of Rs 20 – Rs 30 lakh.According to Healthkart.com's founder and Joint Managing Director Prashant Tandon, "this inexpensive deal" will fetch Healthkart a strong data base, online domain, minimal inventory of Rs 1-2 lakh and a Facebook community of fitness enthusiasts."Though they (madeinhealth) were unable to scale their business, they managed to build a good online community of fitness enthusiasts, and we are trying to cash on to that," says Tandon, who struck the deal in March 2012.Madeinhealth.com, co-founded by Jatin Modi and Maniraj Juneja in March 2011 is a concept based on US's bodybuilding.com.Since March 2011, the company has touched a top line of Rs 1.2 crore. Madeinhealth, which attracts about 1,053 unique visitors per day on its website, get about 20-30 orders a day with an average ticket size varying between Rs 1,500-Rs 3,000. Healthkart.com gets about 25,540 unique visitors a day, according to Hypestat.com."We wanted to expand the company and venture into entire health and nutrition category but since January, the scenario had become bleak in the e-commerce domain," says Modi. "Funding has dried up in last four five months especially for the first round of investments," he added.According to sources, the company was contemplating offers from healthkart, yebhi and firstcry before it closed the deal with healthkart.The founding team of Madeinhealth – Modi and Juneja -- will not be seen on Healthkart board. However, the remaining 6-7 members have already joined Healthkart business. Healthkart will not wipe off Madeinhealth brand and the website will continue to operate separately though back-end integration will take place.When asked why Healthkart chose to keep everything from madeinhealth apart from the founding team, Tandon replied: "We did not require any senior management at this point."However, according to Modi, they got a better offer at Yebhi.com and hence the duo decided to join the fashion and lifestyle portal Yebhi as Associate Vice Presidents. With yebhi.com, the founders have received a joining bonus and some stock of yebhi.com.Health and fitness category enjoys gross margins of about 35 to 40 per cent. Read Also: Health At A Click
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