BharatPe CFO Nalin Negi to become interim CEO; Satya Nadella all praise for India’s digital infrastructure

Also in this letter:
■ India’s lead on digital infrastructure is amazing: Satya Nadella
■ Meesho losses surge 7.5X in FY22 as expenses rise
■ Tech giants mop up Rs 50,000 crore in India ad revenue in FY22

Payments startup BharatPe, which has been embroiled in controversies since January 2022, will see its chief executive officer Suhail Sameer transition from his current role and become a strategic advisor to the company from January 7.

Stepping in: BharatPe’s current chief financial officer Nalin Negi, who was brought in from SBI Cards last August, will assume the role of interim CEO, the company said on Tuesday.

The embattled startup’s board of directors has retained a leading executive search firm to assist with its succession planning and CEO search.

Exodus: The fintech firm has been struggling to deal with an exodus of senior executives of late. Those who have left include Bhavik Koladiya, who cofounded BharatPe. In November, Nehul Malhotra, head of its buy-now-pay-later product PostPe, called it quits, as did Vijay Aggarwal, chief technology officer, Rajat Jain, chief product officer for lending and consumer products, and Geetanshu Singla, vice president, technology.

How it all unravelled: BharatPe has been under intense scrutiny since cofounder Ashneer Grover sought damages from Kotak Mahindra Bank managing director Uday Kotak last January, alleging that the lender refused him financing for a personal investment in omnichannel beauty retailer Nykaa’s IPO.

Later that month, BharatPe’s board hired independent auditors A&M and PricewaterhouseCoopers after receiving complaints from an internal whistleblower on alleged financial malpractices and corporate misgovernance at the firm.

This led to the ouster of the company’s head of controls and Grover’s wife, Madhuri Jain. Grover resigned from the company and its board in March 2022.

India’s digital initiatives and the country’s progress on building digital public goods have been extraordinary, Microsoft chairman and CEO Satya Nadella said during a keynote address at the Microsoft Future Ready Leadership Summit in Mumbai on Tuesday.

He said Microsoft is focusing on six key aspects: security, collaborative business process, re-energising workforce, migrating to the cloud, unifying data, and applying AI models as platforms.

Quote: “One of the things that is amazing to see is that India is leading when it comes to digital public goods and digital infrastructure,” said Nadella. “One of the things that is unbelievable, amazing, great to see is India’s lead when it comes to digital public goods… There’s India and then there is daylight, when it comes to the enlightened way,” he added.

Cloud: Nadella said there was huge scope for growth in India’s cloud adoption market, and that cloud adoption was imperative for economic growth with low energy consumption.

Four-day visit: The Microsoft CEO is on a four-day official tour of India, where he will visit Mumbai, New Delhi, Bengaluru and Hyderabad.

This is Hyderabad-born Nadella’s first visit to the country since February 2020 and comes just two weeks after Alphabet Inc’s India-born chief executive Sundar Pichai’s visit.

Meesho losses surge 7.5X in FY22 as expenses rise

Ecommerce startup Meesho has reported a 4.5-fold surge in revenue to Rs 3,232 crore in FY22 from Rs 792 crore in FY21. The firm’s losses widened 7.5 times to Rs 3,247 crore, regulatory filings accessed through business intelligence platform Tofler showed.

The company’s total expenses rose five-fold to Rs 6,607 crore from Rs 1,337 crore as advertising, salaries and other expenses grew during the financial year. Employee benefit expenses grew 3.4 times to Rs 509 crore in FY22, from Rs 149 crore in FY21.

Cutting burn: We reported on June 2 that the firm was looking to cut costs and extend its cash runway as it struggled to raise funds in a tough macroeconomic environment.

It introduced new policies — such as no returns for goods sold at a reduced price, and pickup from the nearest delivery centre — to reduce last-mile and return costs.

Challenging times: The swelling losses come amid its efforts to challenge ecommerce giants such as Flipkart and Amazon India, which have both entered Meesho’s turf. Flipkart launched an app similar to Meesho’s, called Shopsy, while Amazon has invested in the reseller app Glowroad, as we reported in April 2022.

Tech giants mop up Rs 50,000 crore in India ad revenue in FY22

Google, Meta, Disney+ Hotstar, Amazon, Myntra, and Flipkart collectively swept up over Rs 49,400 crore in advertising from Indian marketers in FY2022, an increase of 75% over FY21.

Growth driver: As pandemic restrictions forced people to spend long hours online, digital platforms saw higher engagement rates, causing advertisers to spend more.

By the numbers: The combined ad revenues of the top six players in FY21 amounted to Rs 28,177 crore. By contrast, Google and Facebook alone raked in Rs 41,115 crore in FY22.

Star India-backed Novi Digital Entertainment, which houses Disney+ Hotstar, doubled its ad revenue to Rs 1684.31 crore in FY22 from Rs 829.74 crore in FY21.

Mamaearth IPO may prove a litmus test for FMCG firms

The IPO of direct-to-consumer (D2C) startup Honasa Consumer, better known by its brand name Mamaearth, may well bring a reality check for the raging trend of large fast-moving consumer goods (FMCG) companies snapping up D2C startups.

Pandemic boom: In the past two years, several large FMCG companies, such as HUL, ITC, Marico, Emami, Reckitt, Wipro Consumer and Colgate Palmolive, have picked up stakes in D2C, digital-led startups that gained popularity during the pandemic. Most FMCG companies have also been ramping up their presence online and hosting their own D2C websites.

Litmus test: Now, depending on how well Dalal Street receives it, Mamaearth’s IPO may either dash the hopes of FMCG companies or reinforce their belief that D2C is the next big idea to latch on to.

IPO details: We reported on December 29 that Honasa Consumer had filed its draft IPO papers with Sebi, looking to raise Rs 400 crore by issuing new shares. The IPO will also include an offer-for-sale (OFS) component involving 46.82 million shares.

Read the full analysis here.

Today’s ETtech Top 5 newsletter was curated by Zaheer Merchant and Megha Mishra in Mumbai. Graphics and illustrations by Rahul Awasthi.