Left Menu
Development News Edition

New e-comm rules may help boost topline for offline retailers by Rs 10,000-12,000 cr: CRISIL


New e-comm rules may help boost topline for offline retailers by Rs 10,000-12,000 cr: CRISIL

Tighter norms for e-commerce players could help boost revenues of brick and mortar (B&M) retail stores by 150-200 basis points (bps) or Rs 10,000-12,000 crore in the 2020 fiscal, according to ratings agency CRISIL.

"Revenue growth of B&M retailers could increase 150-200 bps in fiscal 2020, as e-retailers re-engineer business models to conform to the revised – and more stringent – regulations, which would slow down their revenue growth," CRISIL said in a statement.

In December, the government introduced new regulations that would bar online marketplaces with foreign investments from selling products of the companies where they hold stakes, and ban exclusive marketing arrangements.

These norms, which are effective February 1, would hit Amazon and Walmart-backed Flipkart the hardest. These two ecommerce platforms are also the largest in the country.

"Nearly 35-40 per cent of e-retail industry sales, amounting to Rs 35,000-40,000 crore, could be impacted due to the tightened policy," CRISIL Ratings Senior Director Anuj Sethi said.

Sethi added that the impact on e-retailers would be largely in the electronics and apparel segments, which account for a bulk of their revenues.

CRISIL, in its statement, estimated that if B&M retailers lap up even a fourth of the impacted sales of e-retailers, it would lead to topline gains of Rs 10,000-12,000 crore.

"That, in turn, would mean revenue growth would be 150-200 bps higher at about 19 per cent, compared with CRISIL's earlier expectation of 17 per cent for fiscal 2020," it added.

CRISIL noted that following the restriction on equity ownership in sellers, e-retailers will need to make changes in their supply chain. They may alter business model in several ways, including adoption of franchisee model, thereby leading to increase in the cost of compliance as they strive to adhere to revised guidelines in less than 40 days.

Between fiscals 2014 and 2018, e-retail in India grew at 40 per cent a year to reach Rs 1 lakh crore, way faster than B&M's growth at 13 per cent to Rs 3.2 lakh crore during the same period, it added.

"The strong growth in e-retail was driven by deeper market penetration and attractive pricing compared with B&M retailers. Robust FDI inflows of over Rs 95,000 crore in the past four fiscals have made this possible," CRISIL Ratings Director Gautam Shahi said.

However, long-term growth potential for Indian e-retail continues to remain strong driven by increasing internet penetration, growing household private final consumption expenditure (PFCE) and convenience offered by online shopping, CRISIL said.

In the near term, B&M retailers would see improving revenues, profitability and better cash flows, thus benefitting their overall credit profiles, it added.

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)


TRENDING

OPINION/BLOG/INTERVIEW

Hyderabad Encounter: Time to review modern judiciary and restore people’s confidence

Its probably for the first time in the history of independent India, the parliamentarians, chief ministers and ministers in the Union and State governments are openly supporting an encounter. This indicates the people from top to bottom hav...

What happens to your outstanding loans if the bank falls?

... ...

Time for a change! Innovations to stop the growing plastic pollution

As the planet is drowning in plastic pollution, many new innovative approaches and solutions have emerged to effectively deal with the menace....

How to avoid fake universities and fishing bait like Farmington

As education sharks are roaming around to prey, we present a guide on how to mitigate hunters and reach to a genuine universityinstitute. In this era of commercialization of education, the fake universities and economic frauds in educationa...

Videos

Latest News

Premier League: Everton trounces Chelsea 3-1

Everton trounced Chelsea 3-0 in the Premier League home game at Goodison Park here on Saturday. Richarlison opened the scoring for Everton while Dominic Calvert-Lewin scored a brace in the match. The only goal for the visitors came from Mat...

US resumes talks with Taliban in Doha

Eds Adding Taliban reaction Doha, Dec 7 AFP Washington resumed talks with the Taliban in Qatar Saturday, both sides said, three months after President Donald Trump abruptly halted diplomatic efforts that could end Americas longest war.In Se...

HIGHLIGHTS

Following are the top stories at 2130 hrs DEL51 LDALL UNNAO Unnao victims family demands accused be chased and killed Oppn attacks Adityanath govtNew DelhiUnnao The tragic death of the Unnao gangrape victim led to nationwide outrage with pr...

Chhattisgarh: Woman attacked with sharp weapon in Korba

A woman was injured after she was allegedly attacked by a man at her residence in Korba on Friday. The police said that the woman knew the accused and there was some dispute between them.The woman was attacked with a sharp weapon. She has s...

Give Feedback