Reliance’s Missed Mark In Dunzo

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Good morning. In today’s edition — Dunzo is just one of the examples of Reliance Retail’s failed new economy bets; Indian oil refiners in a rush; and a slight narrowing in India’s trade deficit.

DECODE THE NEWS

How Reliance Failed To Resurrect Dunzo

The issues at Dunzo mirror larger challenges faced by Reliance Retail across its portfolio. Despite its dominance in physical retail, Reliance has struggled to make significant headway in key areas. The faltering of Dunzo, seen in the light of these broader struggles, is a perfect example of the limitations of how Reliance’s control-heavy approach pushed portfolio companies into the dark. 

Dunzo, once a key name in India’s quick-commerce sector, has gone offline after the departure of cofounder and CEO Kabeer Biswas, who has now joined Flipkart. The app’s services had been on pause for a few months now. 

The collapse of the hyperlocal delivery app also symbolises the growing toll of hyper-competition and unsustainable business models in the consumer Internet economy. Once hailed as a disruptor for its hyperlocal delivery of groceries, medicines, and essentials, the app has joined the ranks of casualties from the consumer Internet dominance wars — a pattern evident across edtech, ride-hailing, food delivery, and now quick-commerce.

PODCAST

On Episode 482 of The Core Report, financial journalist Govindraj Ethiraj talks to Uday Ved, Partner-Tax Services at KNAV CPA India.

• Markets hold a recovery.

• Gold prices are inching up.

• The rupee’s best performance in 7 months.

• Oil markets are still on the edge following Russian sanctions and BP steps up in Iraq.

• Indian promoters may not get the salary hikes they do if small shareholders had greater say.

• How a liberal tax policy can help boost manufacturing.

CORE NUMBER

$21.94 billion

—📉 This is India's trade deficit in December, down from $32.84 billion in November as exports rose and imports dropped. Merchandise exports increased to $38.01 billion from November’s $32.11 billion, while imports fell to $59.95 billion from $64.95 billion. Economists had forecast a $27.33 billion deficit, but it widened year-on-year from $18.76 billion in December 2023. Experts say deficits aren’t always bad if they support manufacturing and exports. While the rupee may weaken further, it is expected to outperform other Asian currencies in 2025.

FROM THE PERIPHERY

—🛢️ The world is already coming to terms with the realities of Donald Trump’s presidency in the US, and the far-reaching economic effects that will come with him. In India, refiners are rushing through payments for Russian crude oil before Trump takes office. Bloomberg reported that refiners were settling payments for discounted barrels within two days instead of five. Trump will formally take over as the 47th US president on January 20. 

—❌ An antitrust directive on Meta could force it to pause or roll back some features in India, Reuters reported on Wednesday. According to the report, a Competition Commission of India's (CCI) directive in November banned WhatsApp from sharing user data with Meta for advertising. The news agency learnt of this development from court documents filed in the US. The CCI has also imposed a fine of $24.5 million and a five-year ban on the practice. Meta has disagreed with CCI’s findings. India has the largest number of users of Facebook and WhatsApp in the world. 

—🏨 ITC plans on expanding its hotel business internationally, starting with West Asia and neighbouring countries. The newly demerged ITC Hotels Ltd will list on the stock market soon, with shareholders owning 60% of the new entity. Currently operating 140 hotels, ITC aims to grow its portfolio to over 200 properties, focusing on an asset-light model. Known for its green credentials, ITC Hotels stands out with net-zero carbon and water hotels. Overseas expansion will follow a management and franchise model.

—🚩 The Federation of Hotel & Restaurant Associations of India (FHRAI) has written to India’s commerce ministry over quick commerce food aggregators Zomato and Swiggy running their own private-label food apps such as Bistro and Snacc. Business Standard reported that the hospitality industry body wants an urgent meeting alleging that the quick commerce giants are misusing user and restaurant data for their own benefit. FHRAI claimed that the launch of such food delivery apps were in violation of India’s “ e-commerce regulations, principles of marketplace neutrality and fair competition”.

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