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Good morning. In today's edition — will Amazon’s late entry into quick commerce work?; a development in the Punjab National Bank (PNB) fraud case involving Mehul Choksi; and farmers plan to march to Delhi.

DECODE THE NEWS

Will Amazon Have An Edge Over Rivals In Quick Commerce Space? 

What?

Amazon is set to join the quick commerce race in India, aiming to offer 15-minute deliveries. The company plans to pilot the service in select areas of Bengaluru, with a focus on essential items and groceries. This sector is estimated to reach $5 billion by 2025 and is currently dominated by Zomato-owned Blinkit, which holds a 45% market share, followed by Instamart at 27%, Zepto at 21%, and Bigbaset at 7%, as reported by India Briefing.

Why Now?

Amazon already has a strong presence in the grocery delivery market with Amazon Fresh, its grocery service offering same-day and next-day delivery in over 130 cities currently. Working with over 11,000 farmers and supported by a vast fulfilment network spread across more than 10 million square feet of floor space, Amazon has a significant advantage in terms of logistics and infrastructure. 

This existing infrastructure gives Amazon an edge over competitors like Zepto, Instamart, and others who have already burned a lot of capital in identifying relevant geographies and building dark stores and last-mile logistics. 

What Next?

The success of Amazon's quick commerce venture, however, hinges on several factors including effective curation of diverse stock-keeping units (SKUs), including Fast Moving Consumer Goods, fresh produce, electronics, apparel, and personal care items. Additionally, Amazon's robust reverse logistics infrastructure will be another key advantage for the company since it can handle returns and exchanges for electronics and large appliances. Currently, existing quick commerce players are yet to venture into delivering larger home appliances due to the high cost of onward and reverse logistics.

Furthermore, the quick commerce segment is known for its thin margins and other operational complexities, with none of the existing players having yet shown net positive profits. It remains unclear how Amazon might find the right mix of logistics capacity and technological capability to achieve profitability in this challenging market.

PODCAST

Markets Are Flat As Flat Goes

On Episode 455 of The Core Report, financial journalist Govindraj Ethiraj talks to Ashok K Bhattacharya, Editorial Director and columnist at Business Standard as well as Santosh Katariya, President of the Clothing Manufacturers Association Of India (CMAI).

• Markets are flat as flat goes.

• Rupee hits fresh low on expectation of interest rate cuts.

• What does the new RBI Governor bring to the table and what has he left behind?

• Why are clothing manufacturers protesting a hike?

• IATA projects record $1 trillion revenues for aviation industry with over 5 billion passengers and 40 million flights.

• Amazon dives into 15 minute delivery too.

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CORE NUMBER

Rs 35,943 Crore

This figure represents the total value of mutual fund inflows into equity-oriented schemes as of November 2024. It is down 14% month-on-month compared to October's inflows of Rs 41,886.69 crore, according to data from the Association of Mutual Funds in India (AMFI). Experts attribute this decline to heightened volatility driven by various macroeconomic factors, geopolitical events, and US election results. However, on a year-on-year basis, equity-based mutual fund inflows increased by 131% compared to November 2023. Overall, the mutual fund industry witnessed an inflow of Rs 60,295 crore in November, compared to Rs 2.4 trillion in October. Despite the decline in inflows, the industry's net assets under management rose to Rs 68.08 trillion last month from Rs 67.25 trillion in October.

FROM THE PERIPHERY

—⚡Xiaomi's Chief Marketing Officer, Anuj Sharma, has indicated a cautious approach to entering the Indian electric vehicle (EV) market with its SU7, also known as the Speed Ultra. The base model of SU7 is priced under $30,000 (~Rs25 lakh). Despite the strong growth of EVs in India, with sales crossing the 1.8 million mark in the first 11 months of 2024, Xiaomi plans to initially focus on the Chinese market. Sharma made a curious claim about the challenges of launching an EV business in India, stating that the company needs to conduct thorough research before committing to India. This hesitant stance comes despite the recent reinstatement of subsidies for cargo three-wheeler EVs by the Ministry of Heavy Industries, which could potentially boost EV adoption. 

—🧑‍⚖️ In a significant development in the PNB fraud case, a Mumbai court has allowed the monetisation of properties worth Rs 2,565.90 crore attached or seized by the Enforcement Directorate (ED) in connection with Mehul Choksi. Choksi and his nephew, Nirav Modi, are wanted by the ED and CBI for allegedly defrauding PNB of Rs 13,400 crore in collusion with bank employees. The properties in question were seized by the ED in 2018 as part of its investigation into the case. The court's decision came after the ED, along with PNB and ICICI Bank (victims of the fraud), filed a plea seeking restitution of the assets. The move is expected to enable the banks to recover a portion of their losses. 

—🪧 Farmers from several states have said that they will make a third attempt to march to Delhi on December 14, The Indian Express reported. The farmers have a list of 13 demands including legal guarantee for minimum support prices for crops and compensation for the families of farmers who died during protests in 2020 and 2021. This is their third attempt to march to Delhi this month after being stopped by the Haryana police on December 6 and 8 when several farmers were injured. Now 101 farmers from the Kisan Mazdoor Morcha and Samyukt Kisan Morcha (non-political) plan to march to Delhi from Shambhu from the Punjab-Haryana border. Farmers have been protesting in Shambhu and Khanauri since February 13.  Samyukt Kisan Morcha (non-political) coordinator Jagjit Singh Dallewal, has been on a hunger strike for 15 days and has lost 11 kilos of weight.  

—🏦 The gross non-performing assets (NPAs) of public sector banks (PSBs) stood at Rs 3.16 lakh crore as of September 30, 2024, representing 3.09% of the outstanding loans. In a response to a question in the Rajya Sabha, Minister of State for Finance, Pankaj Chaudhary, said that the gross NPAs of PSBs and private sector banks were Rs 3,16,331 crore and Rs 1,34,339 crore, respectively. The total amount recovered from NPA loans during FY 2023-24 by Scheduled Commercial Banks (SCBs), excluding regional rural banks and payment banks, was Rs 1,23,299 crore. This figure also included recovery from written-off loans.

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