AFTER EFFECTS OF NOTE BAN

The After Effects of Currency Demonetization has resulted in the BSE downfall.  Let us see more.

1. BSE Indices

1. The Fast moving consumer goods and consumer durables indices which cover major consumer goods firms, is 9.8 per cent and 18.4 per cent lower, compared to their pre demonetisation levels.
2. These FMCG have lost around 1.25 lakh cores or 10.6 per cent of their market capitalization which comes to Rs. 10.05 lakh crore.
3. The other sector which has majorly lost significant shareholder value are the BSE Realty index which is down by 13.4 per cent and BSE Auto Index which is down by 10.3 per cent.  Also, property and automobiles areas have got a jolt.
4. The most impacted sectors are ITC’s cigarettes and hotel industries.  Hindustan Unilever which is the second largest consumer goods firm after ITC has managed to stand up, however, others viz Nestle, Dabur, Emami and Titan have lost between 10 and 18 per cent of their market value.

Estimates reveal that cash crunch will hit the October-December 2016 and the pain is likely to percolate to the coming two quarters.  Liquidity crunch is likely to affect the quarterly sales performance of the companies, which ultimately would result in fall in stock prices and m-cap.

2. New Vehicles and Demonetization

The decision of Government to demonetize currency notes was a day after the Japanese Automobile major Toyota launched its new Fortuner in India on November 7^th this year.

It indeed created great concern in the minds of the company, since it had priced it at Rs. 29 lakh on an average and cash crunch was expected to hit its sales.  However, Toyota managed to book 6,000 vehicles, and delivered successfully 1924 units, at a value of Rs. 550 crores in November 2016.  Also, there is a waiting period of two months on this new car.

However, the company adds that if there was a right sentiment in the people’s mind, another 2000 units could have been booked, and buyers are using cheques and online payments and that normally is slowly being restored.  Another 4000 are likely to be delivered during December and January periods.

3. SNAPDEAL to deliver cash at doorstep

Online market giant Snapdeal, has plans to launch Cash@Home service, which would permit the users to order cash and have it delivered at their doorstep.  However, the legality is being questioned.

Snapdeal adds, that this proposal for allowing users to easily access cash without having to queue at their bank or at ATMs and the cash it uses will be through its Cash on Delivery.  This service is already in vogue at Gurugram (Gurgaon), which will be extended at other cities in the near future.  This again would depend on availability of cash and the users’ feedback.  Here is the modus operandi.

1. When the cash is delivered, the consumer should swipe their ATM card on the PoS machines which Snapdeal courier partners will carry for all such deliveries.
2. On confirmation that the transaction is successful, the courier person will hand over Rs. 2000 cash in cash
3. A user is permitted to request for Rs. 2,000 per booking and any bank’s ATM card can be used to pay for the cash.
4. Also, the customer would not be under obligation to order any other item from Snapdeal, in consideration thereof.

However, experts add that including the logistics cost, delivery of Rs. 2000 woul;d cost around Rs. 200 at least.  Who would bear this cost?  Snapdeal adds, that it is using cash that they have from delivery orders and can do so without any regulatory issues and would be deducting only a nominal fee of Re. 1 as convenience fee to be paid through Free Charge or through a debit card art the time of booking the order.   Others in the market like Amazon, Mobikwik add that they have no plans to start such a service  which they feel would be against the idea of being a digital wallet company.

4. Paytm faces hiccups

PAYTM is still facing issues related to transactions due to complaints from many that money was deducted from their bank accounts but did not reach the e-wallet.  Also,

1. Users inform that they were not abler to see the existing balance in their Paytm wallet and the efforts to transfer back the amounts to bank account fails.  These issues are occurring since some time now.
2. Also, it is learnt that customer care was not helpful in resolving such issues, since no transaction IDs were being generated for tracking the details.
3. Also, many customers were complaining that they were not able to access their accounts and pay through it.
4. Also, complaints from some corners add that they were still waiting to get their transferred money back, in spite of raising the issue with Paytm customer care.