Industry Insights

The Probe Newsletter November 2020

Universe of Registered Companies

  • Till Oct-20, there are 21,89,385 companies incorporated out of which 12,80,520 companies are active.
  • As of Oct-20, 70,809 companies were active in Telangana state.
  • 42.6% of total active companies were registered after CY2015.
  • The chart does not include LLPs.

Company Classification

  • Currently, there are 60,574 public ltd companies in India.
  • As of Oct-20, there are 32,857 OPCs in India.
  • There are 11,010 foreign companies in India.

Probe New Company and LLP Incorporations Index

  • The Probe New Company and LLP Incorporations (PNCLI) Index was constructed using Dec-00 as the base year.
  • In Oct-20, index value stood at 548 with 1,36,938 companies and 35,638 LLP incorporated in the last 12 months.
  • 82,100 LLPs were incorporated in the last 6 months.

New Company Incorporations

  • During the month of Oct-20, there are 16,707 company registration out of which 16,323 were private and 384 were public.
  • 3,739 companies were incorporated under the manufacturing business in the month.
  • In Oct-20, 795 companies incorporated in RoC Chennai.

Company Incorporations – State-wise data

  • During the month of Oct-20, Karnataka stood at the 4th position with 1,262 companies registered in the state.
  • In the month of Oct-20, 536 companies registered in the education business.
  • 13,323 companies were incorporated with the paid up capital of up to Rs 1 lac.

LLP Incorporations State-wise data

  • In Oct-20, there are 4,895 LLPs registration in India.
  • There are 215 LLP registration in the state of Tamil Nadu in Oct-20.
  • During the month of Oct-20, 466 LLP registered in Gujarat state which constituted 9.5% of total LLP registered in the month.

Nationwide Spread

  • Uttar Pradesh stood at the 4th position with 88,634 active companies which accounted 6.9% of total active companies.
  • As of Oct-20, 41,064 active companies incorporat ed in the Rajasthan state out of which 20,752 companies are registered in Jaipur.
  • Till Oct-20, there are 8,764 active companies in the Assam state.

Statewide Spread – Maharashtra

  • Till Oct-20, there are 2,49,304 active companies in the state.
  • In Maharashtra capital – Mumbai there are 1,31,984 active companies which constituted 52.9 % of total companies in the state.
  • There are 1,848 listed companies in Maharashtra.

Paid Up Capital

  • As of Nov-20, there are 1,79,779 active
    companies between Rs 1 – 5 lac.
  • Delhi has 1,15,609 active companies with paid up capital of up to Rs 1 lac.
  • Currently, there are 22,561 companies with more than Rs 10 cr paid up capital.

Directorship Overview

  • Presently, there are 22,12,988 active directors in India.
  • As of Oct 20, there are 61,351 active foreign directors.
  • In Gujarat there are 1,44,765 active director which constituted 6.5% of total active director.
Understanding Neo Banking In India – 2

We keep hearing about Neo Banks these days. Here is a small write on what they do and their current landscape.

Neo Bank is a new type of digital bank that exists without any branches. They are primarily fintech firms providing digital and mobile-first financial solutions services to modern tech-savvy customers. These include payments and money transfers as well as lending through online platforms and apps. Neo banks are reinventing the practices and processes associated with traditional banking.

This new-age banking emerged about 5 years ago, namely in the UK through FinTech players such as Monzo and Atom Bank.

Neo Banking in India

Neo Banking in India is of 2 types – consumer facing and business facing. The Neobanking journey in India started out with Open in 2016 for small businesses to go digital. Now, even YouTubers and freelancers are registering on its platform as businesses. On the consumer side, Bengaluru-based Niyo started operations in the same year, but targeting blue-collar workers, taking the B2B2C route. Some Neo banks in India are in the beta stage or just about to launch operations.

Difference between Digital Bank vs Neo Banks

Digital banking usually refers to a bigger player in the banking industry providing financial services in a traditional way. Neo banks are 100% digital and do not relate to any traditional banking names, big or small.

Banks which entered Digital Banking:-

  1. Yono by SBI
    YONO (You Only Need One) is State Bank of India’s digital banking platform which was launched in November 2017.  Apart from banking services, the platform also provides lifestyle services like cab booking and online shopping.
    The country’s largest lender is looking to acquire a customer base of up to 250 million using this platform in the next two years
  2. ICICIStack by ICICI Bank
    ICICI Bank launched ICICIStack digital service ahead of the coronavirus outbreak in the country. ICICIStack is another digital platform allowing users to open saving accounts, instant PPF, and a list of about 500 services covering all the banking requirements. The ICICIStack is available on the internet banking platform or mobile phone app.
  3. 811 by Kotak
    The product was launched in March 2017 and is named after the day demonetisation was announced in India – November 8, 2016. It is a zero-maintenance bank account, along with a virtual card and one can also earn a 6 per cent interest per annum on their savings. Within two years of the launch, the bank claims to have doubled its customer base to 16 million users.

Fintechs vs Neo Banks

There are apps like Google Pay, Paytm and Phone Pe in India which provide payment and investment solutions. “Some solutions that Neo-banks address could be similar to the current offerings of other fintechs. But they are also addressing problems in banking that others fintechs don’t. Also, with better insights on the funds of customer, they are in a position of offer better solutions”. For example, if the customer has ₹10,000 lying in the account for some weeks, the AI can suggest that the money be kept in a liquid fund or a sweep-in fixed deposit that can earn better returns. This can be done in a few clicks. In the case of other apps offering solutions, the customer needs to be proactive to do this.

In other words, Neo Bank is a traditional bank with the better features to offer. They provide customisable services to the customer, better customer service, money management etc.

Advantages of Neobank:-

  1. Easy account creation
  2. Seamless international payments
  3. Customer friendly interface
  4. Value added services like bookkeeping, financial management etc

Challenges faced by the Neobank:-

  1. Targeting customer segments
  2. Arriving at best market-fit product for the customer segment
  3. Partnership with traditional bank
  4. Technology challenges – core banking systems used by most banks do not meet some of the expectations for modern digital services

Are Neo Banks in India secure?

When somebody opens Neo bank a/c they have a traditional bank a/c in the backend. Neo-banks are mandated to follow the same set of regulatory requirements such as data localisation norms or 2-factor authentication for card-based transactions. Additionally, Neo-banks are among the first to adopt more advanced transaction security enhancing models such as MCC block, single-use virtual cards, and token online transactions.

Regulatory norms for Neobank: –

In India, RBI is still not granting Banking licenses to virtual banks. Currently, Neo Banks are outsourcing their banking responsibilities to those with licencesiecreating strategic partnerships with traditional banks.

Focus Business Segment for Neo Banks in India: –

Neo Banks main focus are especially young generation who are digitally savvy consumers and who don’t want to deal with traditional banks due to lack of flexibility. This generation wants to compare online loans, submit their application with a few clicks, and receive approval in a matter of minutes. And this is exactly what neo-banks offer them: speed, friendly customer support, and relevant services. Neo-banks are all about convenience and respect for the customer’s time. Some of the players are available in both B2B and B2C segments.  In terms of customer base Niyo – one of the leading Neo bank has ~ 1 Million customers and B2B leading player Open has ~ 0.4 Million customers. Below are the details of some B2B and B2C players.

B2B companies Product feature offering

Retail companies Product Feature Offering

Funding Details of Indian Neo Banks: –

During the period of Q1’20, India fintech companies has raised $421 M. New-born Neo Bank – Jupiter which is founded by Citrus pay co-founder raised $ 2 M on Apr-20. Below are the more details of Neo Banks funding: –

Neo Banks and their Banking Partners



Transaction / New Entrants in Indian Neo Banking Industry: –

  1. Niyo acquired Goalwise
    Niyo has acquired mutual fund investment startup Goalwise for an undisclosed sum in a cash-and-stock deal on July 2020
  2. Singapore fintech company Atlantis enters India
    Atlantis, a Singapore-headquartered fintech company has announced the launch of Neo-Bank for Gen Z and millennial
  3. Cashaa plans to enter India
    London-based crypto-friendly banking platform Cashaa plans to enter India, US, and Africa
  4. Sokin enters India with Razorpay partnership
    Sokin – London based company has entered into partnership with RazorpayX, to provide its clients with a fully operational business banking service including current accounts which can be seamlessly integrated with Sokin’s simple app, or online-based platform, which allows multiple international transfers with no hidden costs, all for a fixed monthly fee

Covid-19 impact in Neo Banking: –

COVID-19 has given birth to fears pertaining to the contamination of coins and notes with this transmissible virus. Consumers are also worried about the possibility of banking professionals being infected with the contagion and thereby, becoming vectors of this disease in the process. Thus, the need to embrace digital transactions has become more urgent and pertinent than it was four years ago. Neobanking is one solution to facilitate this shift.

There is a long lasting impact of pandemic in digital mode of payment The pandemic has changed how people think about their choice of payment options. According to a recent study from Forrester Research, retailers reported a 69% increase in contactless transactions since January.

According to a yStats report released in June, nearly 50% of global shoppers were using digital payments more than before the pandemic, and the majority plan to continue doing so after the virus is contained. In future, many of fintech companies may also enter Neo Banking.

Neo-Banking Future Prospects: –

Credit to GDP Ratio in India is 50% where as it is north of 100% for developed countries. Credit reach definitely needs to improve in India. More bank licenses is surely one way but a thought on giving a systematic push towards digital channels of fulfilling the credit need of the country may go a long way. Moreover, the recent Covid situation has underscored the imperative of quickly scaling banking and credit services to consumers and small businesses.

According to a report published by Allied Market Research, the global neo bank market is growing at a CAGR of 50.6% during the period 2017-2020. Thus, e can confidently say that they are here to stay and grow the pie of the borrowing customers.

The Probe Newsletter August 2020

Universe of Registered Companies

  • As of Jul-20, there are 12,33,767 active companies in India.
  • 3,08,312 active companies were incorporated in India between Jan-18 to Jul-20.
  • Presently, there are 52,087 active companies in Hyderabad city.
  • The chart does not include LLPs.

Company Classification

  • As of Jul-20, there are 19,396 Not for Profit Co.in India.
  • Currently, there are 1,992 Govt Co.in the country.
  • 90.0% of the companies were registered as a Private Limited Co.

Probe New Company and LLP Incorporations Index

  • The Probe New Company and LLP Incorporations (PNCLI) Index was constructed using Dec-00 as the base year.
  • In Jul-20, index value stood at 466 with 1,16,309 companies and LLPs incorporated in the last 1 year.
  • In the last 12 months 30,504 LLPs were incorporated in India.

New Company Incorporations

  • During the month of Jul-20, 16,487 companies were incorporated in India of which 16,170 were private and 317 were public.
  • New company incorporation witnessed a growth by 50.5% when compared to Jun-20.
  • 14.1% of new incorporated companies were registered under trading business.

Company Incorporations – State-wise data

  • In Uttar Pradesh 1,806 companies were incorporated in Jul-20.
  • 7.8% new companies were incorporated in the Karnataka state.
  • In Jul-20, 69 companies were incorporated with the paid up capital of more than Rs 1 cr.

LLP Incorporations State-wise data

  • During the month of Jul-20, 4,319 LLPs were incorporated.
  • 256 LLPs were incorporated in Telangana which constituted 5.9% of total LLP incorporation.
  • 133 LLPs were incorporated under the agriculture business.

Nationwide Spread

  • Presently, there are 12,33,767 active companies in India.
  • West Bengal with 1,27,076 stood at the 3rd position in terms of active companies which constituted 10.3% of the total active companies.
  • 18,826 companies in Kolkata had paid up capital between Rs 1 – 5 lac.

Statewide Spread – Bihar

  • 42.7% of the active companies in Bihar were registered in the state capital – Patna.
  • 12,458 companies in Bihar had paid up capital of upto Rs 1 lac.
  • In Muzaffarpur, 1,192 companies were registered which accounted 4.3% of total active companies in the state.

Paid Up Capital

  • 14,926 companies had paid up capital between Rs 5 – 10 cr.
  • As of Jul-20, 2,281 companies in Mumbai city had paid up capital of more than Rs 25 cr.
  • 3.2% active companies had paid up capital between Rs 2 – 5 cr.
  • Currently, 30,619 companies in Kolkata had paid up capital of upto Rs 1 lac.
  • There are 39,299 companies in India with paid up capital between Rs 2 – 5 cr.
  • 10.8% of total active companies had paid capital between Rs 5 –15 lac.

Directorship Overview

  • As of Jul-20 there are 20,58,065 active directors in India.
  • Presently, there are 58,811 active foreign directors in the country.
  • Delhi has 2,29,166 active directors which constituted 11.1% of total active directors.
The Probe Newsletter July 2020
number of companies incorporated

Universe of Registered Companies

  • Currently, there are 12,17,127 active companies in India.
  • In the last 6 months 47,922 active companies were registered in India.
  • As of June-20, there are 68,404 active companies in Odisha.
  • The chart does not include LLPs.
Company Information

Company Classification

  • Currently, there are 60,458 public companies in
  • Presently, there are 29,251 OPC (One Person Company) in the country.
  • There are 737 Guarantee and Association companies in India.
probe information

Probe New Company and LLP Incorporations Index

  • The Probe New Company and LLP Incorporations (PNCLI) Index was constructed using Dec-00 as the base year.
  • Index value stood at the 445 with 1,40,113 entity registered in the last 12 months.
  • 12,610 LLPs were incorporated in the last 6 months.
New Company Incorporations

New Company Incorporations

  • In Jun-20, 10,954 companies were registered of which 10,739 were private and 215 were public.
  • 2,360 companies in Jun-20 were registered under manufacturing business.
  • In Jun-20, 932 companies were registered under ROC Bengaluru.
Number of Company Incorporations

Company Incorporations – State-wise data

  • 742 companies were registered in the state of Telangana which accounted 6.8% of total company registration in the month.
  • In Gujarat 542 companies were incorporated in Jun-20.
  • 8,827 companies registered had paid up capital up to Rs 1 lac.
Number of LLP Incorporatios

LLP Incorporations State-wise data

  • In Jun-20, 2,273 LLP were incorporated in India.
  • In Gujarat state, 220 LLPs were incorporated which constituted 9.7% of total LLP incorporation.
  • In Jun-20 497 LLP were incorporated under the trading business.
Nationwide Spread

Nationwide Spread

  • Currently, there are 12,17,277 active companies in India.
  • As of Jun-20, there are 38,728 active companies in Rajasthan of which 20,022 incorporated in Jaipur.
  • Karnataka with 80,613 stood at the 5th place in terms of total number of active companies.
Statewide Spread

Statewide Spread – Madhya Pradesh

  • 742 companies were registered in the state of Telangana which accounted 6.8% of total company registration in the month.
  • In Gujarat 542 companies were incorporated in Jun-20.
  • 8,827 companies registered had paid up capital up to Rs 1 lac.
Paid Up Capital

Paid Up Capital

  • 22,334 companies had paid capital more than Rs 10 cr.
  • In Assam state 2,243 companies had paid up capital of up to Rs 1 lac which constituted 30.5% of total companies in the state.
  • 14.2% companies had paid up capital between Rs 1 – 5 lac.
  • Currently, 30,619 companies in Kolkata had paid up capital of upto Rs 1 lac.
  • There are 39,299 companies in India with paid up capital between Rs 2 – 5 cr.
  • 10.8% of total active companies had paid capital between Rs 5 –15 lac.
Dictatorship overview

Directorship Overview

  • Presently, in India there are 20,02,590 active directors.
  • Uttar Pradesh has 1,91,345 active directors which constituted 9.6% of total directors in India.
  • Currently, there are 57,960 active foreign directors in India.
About Probe
A Note on Cement Industry – 2

India is the second-largest cement producer in the world with the installed capacity of 509 MTPA and accounts for over 8.0% of the global installed capacity. A total of 210 large cement plants together account for 410 MT of installed capacity in the country, while 350 mini cement plants make up the rest. Of the total 210 large cement plants in India, 77 are located in the states of Andhra Pradesh, Rajasthan, and Tamil Nadu. Of the total capacity, 98.0% lies with the private sector and the rest with the public sector. Cement production in India increased from 230 MT in 2011-12 to 337 MT in 2018-19.

The majority of the Indian cement industry constitutes domestic companies, however, the Indian cement industry has some multinational giants including Holcim and Lafarge, which have an interest in companies such as ACC, Ambuja Cement, and Lafarge Birla Cement. The top 20 companies account for around 70.0% of the total production.

Consolidation

During the period FY2016-20, a total of 60 MTPA capacity got acquired by bigger players which led to regional capacity consolidation.

  • In FY2016, Birla Corp acquired Reliance Cement’s 5.5 MTPA capacity in the central region.
  • In FY2017, Nuvoco Vistas (earlier Nirma Cement) acquired Lafarge Cements’ 10 MTPA capacity spread across east and north.
  • In FY2018, UltraTech acquired JP Associate’s 21 MTPA capacity spread across north, central, and south regions.
  • In FY2019, UltraTech further acquired 14 MTPA capacity from Century Textiles (spread across central, east, and west markets).
  • In the same year, UltraTech also acquired Binani Cement’s 6 MTPA in the north.
  • In FY2020, Dalmia acquired Murli Industries’ 3 MTPA in Maharashtra.
  • Further as per media release dated Feb 06, 2020, the Kolkata-based diversified conglomerate EMAMI Ltd announced that it has entered into a binding agreement with Nuvoco Vistas Corp, part of the Nirma group, for divesting its 100.0% equity stake in Emami Cement for an enterprise value of Rs 5,500 cr. The transaction is subject to the customary approvals including from the Competition Commission and is expected to be consummated in the next 3-4 months.

 Cement Demand:

Cement demand in the country is largely contributed by housing sector-where Urban housing segment contributes 25-26%, Rural housing contributes 28-30% and Government projects like Low-cost housing under PMAY schemes contribute another 11-12%.   infrastructure segments like roads, railways, metros, ports apart from other structure development like bridges, dams, and irrigation contribute 22-24%. Over the last few quarters, cement demand in the country has grown at a healthy rate mainly led by strong demand from government-related projects like infrastructure and low-cost housing under PMAY schemes.

cement demand breakup - India

For marketing cement, India is divided into five regions and a few companies dominate across markets:

Regional Capacity

Cement-Demand-Supply as a Whole

Cement production after touching a peak of 337.3 MT in FY2019, stood at 327 MT in FY2020.

Performance in FY2020 (Apr-Mar,2020)

After a strong FY2019 (14% volume growth), the Indian cement industry started FY2020 on a muted note. Between Jun and Oct 2019, demand declined by 2.0% YoY due to

  1. Muted government spending after the general elections in Apr-May 2019.
  2. Change of governments in demand intensive states like Madhya Pradesh, Rajasthan, Andhra Pradesh, Karnataka, and Maharashtra.
  3. Prolonged monsoon.

However, the industry was showing initial signs of recovery since Nov 2019 and reported a 6.0% YoY increase in production over the Nov 2018 to Feb 2019 period (even after higher base; 10% growth in the preceding period of 2017-18). But the nationwide lockdown in the last 10 days of Mar 2020 impacted the cement volumes. Cement production declined by 25.0% in the month of Mar 2020.

Overall, FY2020 was a weak year in terms of demand with overall cement demand contracting by 1.0%.

 

  • Pricing trends: Strong utilization in the north/central/Gujarat markets (NCG) has kept cement prices robust vs those in the south/east/Maharashtra markets (SEM). During FY2020, prices in the NCG region rose more than 10.0% YoY. However, in the south, prices remained almost flat against a modest increase in the East. Demand contraction in the southern region in FY2020 and heightened competition in the Eastern region has been driving the sharp divergence in realization trends.
  • Operating expenditure: The cement industry benefitted from fall in pet coke and diesel prices during 2019 which has led to a reduction in input and freight cost for the cement industry. Thus, in spite of the slight rise in unitary fixed costs on account of lower utilization, unitary opex fell YoY, boosting margins.
  • Power & Fuel Cost: Average pet coke prices declined from USD 91/Ton in Q4FY19 to USD 68/ton in Q4FY20. This coupled with various cost control initiatives are undertaken by cement companies in the form of installation of WHRS (Waste Heat Recovery Systems) and other alternate sources like the use of lignite have led to a decline in power and fuel cost.
  • Freight Cost: Road transport comprises of 65-75% of the freight mix for all the major cement manufacturers in India. After a sharp decline in diesel prices recently, most of the cement companies saw a sharp decline in Freight costs in the last few quarters. Also, the applicability of higher axle load carriage capacity norms has positively impacted the freight cost for most of the cement companies. However, the crude prices have recovered from low of US$ 19.56/ per barrel in Apr 2020 to US$ 39.27/per barrel.crude price in USA
  • Margins: Higher realizations and moderation in OPEX expenditure led to firming up of operating margins of the cement industry to decade high of Rs 1,000/MT.Q4FY2020 (Jan-Mar,2020) update:
    1. Since Nov-2019, demand for cement started improving, however, in Mar-2020, due to nationwide lockdown due to Covid-19 the volumes of the cement industry declined. Cement volumes declined around 10.0% in Q4FY2020. As per a research report, the industry sells significant volumes in the last 10 days of the financial year.
    2. Net Sales Realization (NSR): During Q4FY2020, due to an increase in demand the industry increased the prices by 3.0%. Region-wise, West price was up 6.0% QoQ, South/East was up 3.0% QoQ and North/Central is up 2.0% QoQ.
    3. Cost: Variable cost including fuel and freight remained soft on account of crude witnessing sharp correction.
    4. Margins: Better realizations on account of an increase in prices coupled with a decline in variable cost led to healthy margins in Q4FY2020.

    Q1FY2021 so far:

    Cement Demand: Cement production in the month of April 2020 decreased by 86.0% YoY led by nationwide lockdown for the first 19 days of Apr 2020. Industry resumed factory operations from Apr 20, 2020 post gradual lifting of lockdown. During May, cement companies witnessed increased capacity utilization to 60-65.0% as against 35-40.0% at the start of the month. Capacity utilization further improved in the month of June 2020. The sharp increase was due to the pent-up demand before monsoon slows down the construction activity.

    Demand recovery is expected to be gradual till monsoon ends in Sep-2020. Further, from the demand side, rural housing which constitutes around 30.0% is expected to pick up faster on account of good rabi crop and labor availability. However, there is no clarity in urban housing demand due to an increase in Covid-19 cases in some of the urban cities which have led to partial shutdown of the cities once again.

    Prices: Prices on a pan India basis increased by 10.0% MoM in May-2020 with a steep rise of 16.0% MoM in the southern and eastern regions. Cement prices across other regions increased by 5-7.0%. Further, prices increased by 0.8% MoM in Jun-2020. The rise in prices is attributable to limited supply led by restrictions on labor, logistics, and factory operations.

    Margins: Low diesel and coke prices and firm realizations may boost the margins to some extent. However, higher per ton fixed cost due to lower volumes might negate the benefits of lower variable cost.

    Road Ahead

    The eastern states of India are likely to be the newer and virgin markets for cement companies and could contribute to their bottom line in the future. In the next 10 years, India could become the main exporter of clinker and grey cement to the Middle East, Africa, and other developing nations of the world. Cement plants near the ports, for instance, the plants in Gujarat and Visakhapatnam, will have an added advantage for exports and will logistically be well armed to face stiff competition from cement plants in the interior of the country. India’s cement production capacity is expected to reach 550 MT by 2025.

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