The retailerEY’s publication in consumerproducts and retail sector

July - September 2016

ForewordDear reader,

We are delighted to present to you the July—September 2016 edition of The Retailer, our quarterly publication in the consumer products and retail sector.

E-commerce is a growing giant that makes headlines almost every second day. The proliferation of the internet across the country is leading to a new dawn in buyer behavior.

In this edition, we discuss the ways to sustain e-commerce growth from a consumer’s point of view. EY surveyed online shoppers to understand their demands, challenges faced when shopping and factors influencing their buying decision. Based on these insights, we have outlined the key actions that can be evaluated by players to drive growth in this attractive yet competitive space.

We also touch on the regulations impacting the e-commerce sector, as well as the risks associated with this sector and how companies can potentially address these risks.

Finally, we continue our featured section the “Innovation Board,” where we present snapshots of recent innovations in the Indian and global retail/consumer goods space.

We hope you enjoy reading this issue of The Retailer and we look forward to your valuable comments and feedback.

Pinakiranjan Mishra

Partner and National leader, Consumer Products and Retail

EY, India

Celebrating eight years of The retailer

Contents

Involve yourself:

We look forward to hearing your feedback and suggestions.To contribute to editorial content, please contact Riddhi BhimaniT: +91 22 61921618E: riddhi.bhimani@in.ey.com

1. What will it take to sustain e-commerce growth?

2. E-commerce and the tax implications

3. How are consumer products and retail companies responding to the digital disruption and the associated risks?

4. Innovation Board

04

16

20

28

4 | The retailer

What will it take to sustain e-commerce growth?In India, the e-commerce revolution is no longer a myth; it is a reality. E-commerce is all over the news with attractive sales and eye-popping discounts. More and more consumers are flocking to this channel following its growing popularity. Traditional offline retailers are also going online to capture a share of the digital consumers. Although at a nascent stage, the e-commerce market is evolving rapidly, and so are the consumers.

The new digital consumers are smarter, better informed, more demanding and less tolerant. Hence, it is vital for e-commerce companies to understand their buying behavior and gain superior insights to make better business decisions and ensure long-term success. To peep into the minds of online consumers, EY polled about 700 online shoppers in six cities in India. The objective of the study was to know:

1

4 | The retailer

► Why consumers shop online?

► What is the demographic profile of online shoppers?

► How product baskets vary for different consumer segments?

► What are the typical characteristics of the categories sold online?

► What factors influence online buying decisions?

► What are the challenges faced by consumers?

Insights from the survey could help understand what e-commerce companies can do to drive the next wave of growth.

key points to sustain e-commerce growth7Targeted medium only way for effective communication

6Assisted buying to drive volumes 4

Middle aged consumers – the cream of the pie, not just the youth

3

CoD – a necessary evil; cashless transactions crucial for sustainable growth

5It’s not about discounting alone, quality and efficiency matter equally

7

It’s all about consumers1

Fickle consumers – delivering on promise key to retention

2

5The retailer |

The first wave of growth came on the back of heavy discounting. However, the discounting strategy has its pitfalls. On the one hand, it has dented the profitability of the companies; on the other, it has created disloyal consumers who tend to switch to the highest discount provider. Clearly, the discounting strategy will not be sustainable over the long run, and companies will have to be nimble enough to address the fast-changing market conditions and the needs of tomorrow to sustain the momentum

Source: EY Analysis2

Source: EY publication3

Note: *Digital consumers are ones who either regularly or occasionally use digital for all or part of their purchasing journey.

It is all about consumers

Till a decade ago, a popular belief was that online retail will not work in India because of challenges such as low internet and credit card penetration, and limited payments infrastructure. Despite these challenges, online retail or e-tail grew at a breakneck speed of 50%–55% CAGR over the five years till 2014 to reach around US$4.5 billion1. The sector is expected to see similar growth going ahead, driven by factors such as favorable demographics, increasing penetration of the internet and smart phones, and changing consumer preferences.

According to EY’s Consumers on Board research , Indian consumers are among the most digitally savvy worldwide. These “digital consumers” are able to shop anytime, anywhere, thereby driving e-commerce growth. Given the considerable potential of e-commerce, even traditional retailers are launching online platforms to grab the share of digital consumers, necessitating the creation of an omni-channel strategy.

To succeed over the long term, companies must fully embed omni-channel in their overall corporate strategy and organizational culture . Pure-play online portals will also have to be nimble enough to reinvent themselves to keep pace with fast-changing consumer preferences. Companies will have to develop sustainable business models keeping consumers at the center.

50%

62%

63%

64%

70%

75%

US

Brazil

UK

Russia

China

India

India in 2020: E-commerce potential

Digital consumers’* share in online population

Large population ~ 1.4 billion; 75% less than 50 years

Internet users toincrease 3x to ~600 million

E-commerce toreach ~US$35

billion

Smartphone usage to grow 5Xto 600-700 millions

Smartphone penetration isexpected to bemore than 50%

Household incomesto grow 3X to ~US$18,000

Over 200 millionnuclear households

~50% of populationin middle class

Demographics Enablers

1 E-commerce – fast and furious,” November 2014, Motilal Oswal, via ThomsonOne Banker 2 “India needs more banks before more bank account,” http://www.livemint.com/Opinion/RjQNPKizMmeyKq261l4waJ/India-needs-more-banks-before-more-bank-accounts.html?utm_source=copy, accessed 04 November 2015; “Indian Online Market Set to Explode: Google Study,” http://www.newindianexpress.com/lifestyle/tech/Indian-Online-Market-Set-to-Explode-Google-Study/2014/08/21/article2391122.ece, 04 November 2015; “India Internet Sector,” Credit Suisse, September 2014, via ThomsonOne Banker; “Internet Access Drives Revenue Growth in Booming Markets,” http://www.mobilitytechzone.com/topics/4g-wirelessevolution/articles/2014/06/04/380394-internet-access-drives-revenue-growth-booming-markets.htm, accessed 04 November 2015; “India: Total population from 2010 to 2020 (in millions),” Statista website, http://www.statista.com/statistics/263766/total-population-of-india/, accessed 23 November 2015 3“Consumers on board – how to co-pilot the multichannel journey,” EY publication, http://www.ey.com/GL/en/Services/Advisory/EY-consumers-on-board, accessed 04 November 2015

6 | The retailer

Fickle consumers: delivering on promise is the key to retention Indian consumers are increasingly adopting e-commerce because it addresses some commonplace challenges, such as the need for increased convenience, modes to fulfil aspirations, and access to an expanded basket of goods. Additionally, innovations such as cash on delivery (CoD) and improved delivery (“same day” and “one-day” delivery) have helped address many initial consumer inhibitions.6

According to EY’s Consumers on Board research4 , Indian consumers are among the most digitally savvy worldwide. These “digital consumers” are able to shop anytime, anywhere, thereby driving e-commerce growth. Given the considerable potential of e-commerce, even traditional retailers are launching online platforms to grab the share of digital consumers, necessitating the creation of an omni-channel strategy.

To succeed over the long term, companies must fully embed omni-channel in their overall corporate strategy and organizational culture5. Pure-play online portals will also have to be nimble enough to reinvent themselves to keep pace with fast-changing consumer preferences. Companies will have to develop sustainable business models keeping consumers at the center.

4Consumers on board – how to co-pilot the multichannel journey,” EY publication, http://www.ey.com/GL/en/Services/Advisory/EY-consumers-on-board, accessed 04 November 2015

5“Re-engineering the supply chain for the omni-channel of tomorrow”, EY publication, http://www.ey.com/GL/en/Industries/Consumer-Products/ey-omni-channel, accessed 30 November 2015

6“E-commerce – fast and furious,” November 2014, Motilal Oswal, via ThomsonOne Banker; “Omni-channel option in India,” The Retailer, December 2014, EY publication, http://www.ey.com/Publication/vwLUAssets/ey-publication-cover-the-retailer-october-december-2014/$FILE/ey-the-retailer-october-december-2014.pdf, accessed 4 November 15

7The retailer |

Discounts have become ubiquitous on all e-commerce sites, and buyers have become used to them. However, most online buyers are disloyal and will choose the online portal offering the best discount. Going ahead, e-commerce players will have to find innovative ways to retain consumers and stop

• 40% of respondents chose e-tailing for convenience as the topmost reason

• Particularly popular in small electronics and younger (<30 years) and women buyers

• 61% of the respondents will stop buying if there are no discounts

• Easy access to wider basket of goods (across varied price points) at one place

• Consumers < 30 and 55+ years prefer cash payments; consumers aged 31–54 years prefer cashless transactions

• Attracts buyers from tier-II/III and smaller towns where retail presence is limited

• 30% the respondents said that this is a crucial differentiator in choosing an online player

• 30% of the respondents said that this is a crucial differentiator in choosing an online player

Reasons why people buy online in order of preference

Convenience

Discounts and cheaper prices

Multiple product options

Multiple payment modes

Good return policy

Preferred brand availability

Timely delivery

1234

65

7

Influ

ence

rsD

iffer

enti

ator

s

Convenience and discounts - attractors, timely delivery and return policy - Differentiators

Source: EY Analysis

them from switching to a competitor. Going an extra mile in terms of enhancing consumer satisfaction, beating consumer expectations and providing additional value for their money will help companies retain consumers over the long run.

8 | The retailer

Middle-aged consumers: the cream of the pie, not just the youth With growing competition, e-commerce players will have to fight harder to attract new consumers. E-commerce still remains limited to a section of the population despite its rising popularity. A considerable proportion of high-earning and high-spending (aged 35+ years) women and small-town consumers are still not spending significant time online.

Capture the older consumers and retain the younger ones The internet user base in India is tilted toward the younger population. However, consumers above 35 years, who are more financially independent and have high spending power, are emerging to be as important. According to our study, buyers in the age group of 31—54 years are the highest spenders, while consumers below 30 years buy more frequently. Companies need to evaluate the drivers for the 31—54 year age group and position offerings targeted to them.

Attract small-town shoppers Although the internet user base still largely comprises the urban population, the proportion of the rural user base is growing with the increasing penetration of the internet and smartphones. Moreover, as the aspirations of consumers from tier II/III and beyond cities converge with those of consumers in tier I cities, factors such as limited retail penetration and inadequate product offerings are creating a “sweet spot” for the online channel. In fact, consumers in these regions seeking value and premium purchases alike are already accounting for a significant portion of sales/traffic for select e-tailers.8

Data for 2014

Internet user base under age 35 (%)

Urban rural split

Share of women in internet user base (%)

Demographics of internet users7

Source: EY Analysis

India

75

63:37

39

China

59

72:28

45

Brazil

60

81:19

49

Russia

56

60:40

52

7 “India vs. BRICs: a comparison of the e-commerce ecosystem - An EY white paper,” EY publication, http://www.ey.com/IN/en/Industries/Technology/EY-india-vs-brics-the-better-ecosystem, accessed 04 November 2015

8“Indian e-commerce market to touch $200-bn GMV by 2025:, BofA-ML, http://retail.economictimes.indiatimes.com/news/industry/indian-e-commerce-market-to-touch-200-bn-gmv-by-2025-bofa-ml/4973527,accessed 18 November 15

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1.5 - 1.6

12 - 13

16 - 17

16 - 17

1.6 - 1.7

17 - 18

1.2 - 1.3 1.2 - 1.3 1.2 - 1.3

8

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

30 40 50 60 70 80 90

Freq

uenc

y of

buy

ing

(onc

e in

##

mon

ths)

Popularity (% of respondents buying online)

Lifestyle(apparels/shoes/accessories)

Size of the bubble indicates average transaction size in INR ## thousand

Electronics(mobiles/tablets/accessories)

FMCGFood/Groceries Babyproducts/Toys

Sports goods

Furniture/furnishings/home decor)

Computesoft/hardware

Electronicappliances

Jewellery/watches

Women power Online shopping has so far been skewed toward male buyers, but the statistic is changing fast owing to factors such as changing lifestyles and the rising number of working women. Our survey has highlighted that women who shop online tend to buy almost as frequently as men. Moreover, women also tend to influence more online purchase decisions for their spouse.

Companies will have to move fast to capture the share of the next wave of consumers and stay ahead of the competition. Achieving sizeable mass will be crucial to take benefits of economies of scale and move toward a profitable business for long-term success.

Source: EY Analysis

Assisted buying to drive volumes Although different consumer segments converge on an e-commerce platform, inherent differences in their buying behaviors continue to persist. Similarly, various product categories exhibit different characteristics, such as frequency of product purchase, ease of purchasing and average ticket size. Product baskets also tend to vary by gender as well as age group. E-commerce players will have to consider these differences while devising specific strategies for different consumer segments and product offerings.

10 | The retailer

Electronics (especially mobiles, tablets and accessories) and lifestyle products (such as apparels, shoes and accessories) are among the most popular categories online. On the other hand, categories such as furniture and food/groceries are challenging to be sold online because consumers still prefer to buy them in person. E-commerce is uniquely positioned to track the buying journey of online consumers and devise consumer-specific strategies.

The use of big data and advanced analytics can help companies understand the needs of individual consumers, track their buying journey, offer improved products as the consumer matures, provide targeted discounts, offer differentiated pricing etc. Doing so can help companies improve consumers’ buying experience, loyalty and stickiness over the long run.

CoD — a necessary evil; cashless transactions — crucial for sustainable growth Another important factor for consumers is the availability of multiple payment modes. CoD was instrumental in making online shopping popular in India. CoD transactions account for around 60% of overall sales in the Indian e-commerce market, which is much higher than in China (40%), Indonesia (28%), Brazil (24%) and the US (2%).9 However, as e-commerce evolves in a market, shoppers move toward cashless transactions.

Our study has highlighted that middle-aged shoppers (31—54 years) prefer cashless transactions (using credit/debit cards or net banking). These consumers are more financially independent, have improved spending ability and are comfortable with cashless transactions. CoD is more popular among the young (<30 years) and old (55+ years) consumers because the majority of consumers below 30 typically do not own a credit card, while the older consumers are wary of using credit/debit cards for online transactions because of security-related concerns.

CoD has become a necessary evil because while it is essential to attract young and old consumers, as well as consumers from small towns, it has its own challenges. Players have to provide additional working capital, incur logistics costs in case of returns and also deal with the possibility of cash pilferage. Although e-commerce players cannot afford to abolish it, for sustainable and profitable growth they will have to encourage buyers to move to cashless transactions.

Incentivizing buyers to move toward cashless transactions by offering discounts, cash-backs etc.; addressing the security concerns related to card payments; and encouraging mobile/online wallets will help companies reduce their cost burden and improve profitability over the long run

Middle-aged prefer cashless transactions; CoD attracts younger and older consumers

51%

29%

18%16%

40%

13%

28%

47% 46%

10%

<21 21-30 31-40 41-54 55+

Cash on Delivery (CoD) Credit CardSource: EY Analysis

11The retailer |

Targeted medium only way for effective communication As the buying behavior of consumers varies across segments, it is crucial for e-commerce players to devise a strategy for the right communication channel mix based on the targeted consumer segment to have the most meaningful impact. Different modes of communication influence different consumer segments.

Despite the growing proliferation of social media, TV continues to be the most influencing factor for Indian consumers because of its reach across the breadth and depth of the country. India’s top 50 e-commerce players spent close to INR12 billion during the June—September 2015 quarter. E-commerce start-ups tend to spend more on TV advertising vis-à-vis established e-commerce players in a bid to lure consumers.10 Newspaper is also another medium that reaches the masses and is cost-effective.

9“Omni-channel option in India,” The Retailer, December 2014, EY publication, http://www.ey.com/Publication/vwLUAssets/ey-publication-cover-the-retailer-october-december-2014/$FILE/ey-the-retailer-october-december-2014.pdf, accessed 04 November 15; “Snapdeal to cut cash-on-delivery by 20% in 6 months,” Business Standard website, http://www.business-standard.com/article/companies/snapdeal-to-cut-cash-on-delivery-by-20-in-6-months-115042800902_1.html, accessed 30 November 2015

10“Top e-commerce start-ups spend Rs1,200 crore on TV ads in Sep quarter,” Mint website, http://www.livemint.com/Companies/Fd0HHkYFqQRNcqdMLVeMtK/Top-ecommerce-startups-spend-Rs1200-crore-on-TV-ads-in-Se.html, accessed 23 November 2015

• 60% of the respondents said that TV ads influence buying decision• Most influential for masses; older people tend to watch more TV

• Women and older consumers (40+ years) tend to get more influenced• 60% of the women said that family and friends influence buying decision

• Particularly popular among younger consumers (age <30 years)

• Most influential in consumers <21 years; 74% of the youngsters (<21 years) said that it is influential

• 40% of the older consumers (55+ years) said that these influence buying decision

Most influential mode of communication in order of preference

Television

Family and friends

Promotions and offers

Social Media

Others (Emails, SMS etc.)

12345

Television reaches masses; social media taps youngsters

Source: EY Survey

12 | The retailer

It is not about discounting alone; quality and efficiency matter equally Being at a nascent stage, the e-commerce market has grown due to the low prices on offer. Heavy discounts, free home delivery and attractive offers have been used as a marketing strategy by a majority of e-commerce portals to attract consumers. According to our study, 96% of women consumers below 21 years of age buy online only because of lower prices; 85% look regularly for discounts; and 55% do not want to pay for home delivery. Although e-commerce players have managed to gain momentum on the back of discounts, it has dented their profitability. As a result, a large number of e-commerce players are posting losses.

Clearly, the discount-based model is effective only in the early stages to attract consumers; players will also have to move toward a more sustainable business model in the long run. Going ahead, with competition intensifying, e-commerce players will have to craft a differentiated strategy to gradually reduce discounts and devise new ways to provide value to consumers by addressing the operational issues faced by them.

The e-commerce landscape in India is constantly evolving. The new digital consumers not only shop online, but also research products, compare their prices, locate stores, avail discounts and coupons, and read user reviews. For them, “window shopping” has become a passé and “showrooming” (research offline, buy online [ROBO] — the practice of visiting physical outlets to get the touch and feel of products and then buying them online at the lowest available price) has become a norm. These consumers, spoilt for choice, have high expectations and low tolerance when it comes to the quality of service. E-commerce players will have to be extremely careful while addressing the challenges faced by consumers and delivering on the inherent expectations of timely and free delivery, cheap products and discounts.12

Companies will have to be agile enough to adapt to the fast-changing trends and be prepared to address the needs of tomorrow to sustain in this hyper growth, hyper competitive market. The jury is still out on which strategy will ensure profitable sustainable growth.

Additionally, players are also using local languages to attract non-English speaking buyers from small towns. A leading e-commerce player11 is in the process of offering product descriptions on its site in regional languages such as Kannada, Telugu, Marathi and Bengali; the company already offers descriptions in Hindi and Tamil.

Companies will have to use the right channel for communication based on the targeted consumer segment to achieve the most meaningful impact. Additionally, using local languages will help companies reach an expanded section of the society to drive future growth.

11“E-com firms turn to local languages for better sales,” Business Standard website, http://www.business-standard.com/article/companies/e-com-firms-turn-to-local-languages-for-better-sales-115033100575_1.html, accessed 30 November 2015

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Source: EY Survey

About the survey EY conducted an online survey of about 700 online shoppers across six cities in India to understand their buying behavior, challenges faced by them, factors influencing buying decision etc. The distribution of the respondents is shown below.

<21, 6%

21-30, 44%31-40, 40%

41-54, 9%55+, 1%

Age group wise (in years)

37%

63%

Female

Male

Gender wise

39%

61%

Unmarried

Married

Marital status wise

<2, 5%

2-5, 23%

6-10, 36%

11-15, 21%

16-20, 9%

20+, 6%

Number of survey respondents: 690

Annual household income group wise (in Lacs)

12“Omni-channel option in India,” The Retailer December 2014, EY publication, http://www.ey.com/Publication/vwLUAssets/ey-publication-cover-the-retailer-october-december-2014/$FILE/ey-the-retailer-october-december-2014.pdf, accessed 4 November 15

14 | The retailer

Amit Manna, Director, Retail and Ecommerce Amit has worked with e-commerce companies on their strategy and implementation. He has extensive experience in retail and across a diverse set of verticals. T : +912261920000 E : Amit.manna@in.ey.com

Vivette Dcruz, Senior Manager, Consumer Products and Retail Vivette has over 10 years of experience in the Consumer Products and Retail space. She has worked with a diverse set of clients across apparel and lifestyle, consumer durables, consumer products. She has helped clients in their strategy formulation, consumer studies and implementation assistance. T : +912261921530 E : Vivette.Dcruz@in.ey.com

Nivedita Ukidwe, Manager, EY Knowledge Nivedita has more than seven years of experience across research and analysis, analytics, credit risk, project management and consulting. She has worked on a range of projects for leading global and Indian consumer products and retail companies. Nivedita specializes in the global home and personal care sub-sector and leads the consumer products and retail (CPR) initiatives for India by driving the thought leadership agenda. T : +91 22 6192 2367 E : nivedita.ukidwe@in.ey.com

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16 | The retailer

The Indian e-commerce sector has grown multifold and is expected to reach US$100 billion by 2020 according to a Goldman Sachs report.

The Indian Government’s Digital India project aims to take the internet to the remote corners of the country. This increased penetration is likely to give a boost to the e-commerce market by increasing the potential market for online sales.

This article provides an overview of the extant regulations governing the e-commerce industry and the key challenges from a tax and regulatory front, while also highlighting the recent developments on the regulatory front.

16 | The retailer

A) FDI regulations in e-commerce

FDI into India is regulated under the Foreign Exchange Management Act, 1999 (FEMA). There are specific regulations13 under FEMA covering investments by non-residents into India, and the policy changes on FDI are notified by the Reserve Bank of India (RBI) as amendments to these regulations through press notes and press releases.

Typically, investments into India can be made under the following routes14 :

1. Automatic route, wherein no prior government approval is required before investing in India

2. Approval/Government route, which mandates an approval from the Government through the Foreign Investment Promotion Board (FIPB) and the Department of Industrial Policy and Promotion (DIPP)

Investments into India are also subject to certain conditions depending on the sector for investment. These conditions are prescribed in the consolidated FDI policy.

The DIPP, vide its press note no. 3 of 2016, has provided the much-awaited guidelines for the e-commerce industry. These guidelines are discussed in the ensuing paragraphs.

(1) What is e-commerce?

In common parlance, e-commerce can be inferred to mean any commercial transaction conducted electronically on the internet.

The World Trade Organization defines e-commerce as the “sale or purchase of goods or services conducted over computer networks by methods specifically designed for the purpose of receiving or placing of orders. An e-commerce transaction can be between enterprises, households, individuals, governments and other public or private organizations. Included in these electronic transactions are orders made over the web, extranet or electronic data interchange.”

Under the extant regulations15 , e-commerce means buying and selling of goods and services, including digital products, over digital and electronic networks.

Further, an e-commerce entity refers to a company incorporated under the Companies Act 1956 or the Companies Act 2013; a foreign company covered under section 2(42) of the Companies Act, 2013; or an officer, branch or agency in India as provided in section 2(v) (iii) of FEMA, engaged in e-commerce and owned or controlled by a person resident outside India.

As evident from this discussion, the definition of e-commerce is wide enough to cover any purchase or sale of goods or services online.

E-commerce and the tax implications

2

13Foreign Exchange Management (Transfer or Issue of Security by Persons Resident Outside India) Regulations, 2000 14Refer Para 3.4.1 of the Consolidated FDI Policy 2016

15 Refer para 5.2.15.2 of the Consolidated Foreign Direct Investment Policy 2016

17The retailer |

(2) Broad regulations for e-commerce

B2B e-commerceFor business-to-business (B2B) e-commerce, guidelines as applicable to cash and carry wholesale trading as specified in the FDI policy shall apply. Therefore, 100% FDI is allowed through the automatic route in wholesale cash and carry and thus 100% FDI is permitted in B2B e-commerce. However, the major restriction on B2B e-commerce is that sale to group companies taken together cannot exceed 25% of the total turnover of the wholesale venture.16

B2C e-commerceFDI in business-to-consumer (B2C) e-commerce is permitted in the following circumstances17 :

► A manufacturer is permitted to sell its products manufactured in India through e-commerce retail.

► An Indian manufacturer is permitted to sell its own single-brand products through e-commerce retail. The Indian manufacturer would be the investee company, which is the owner of the Indian brand and which manufactures in India, in terms of value, at least 70% of its products in house and sources at most 30% from Indian manufacturers.

► A single brand retail trading entity operating through brick and mortar stores is permitted to undertake retail trading through e-commerce.

However, it is to be noted that FDI is still not permitted for companies engaged in multi-brand retail trading (MBRT) by means of e-commerce.

(3) Broad operating models in e-commerce

The majority of the e-tailers in India operate on the following two models:

1. Marketplace model, wherein the FDI investee company provides a trading platform for Indian buyers and sellers and functions purely as on online marketplace facilitating sales between buyers and sellers

2. Inventory model, wherein ownership of the inventory vests with the enterprises that advertise their products on the website and which are the ultimate sellers of goods or services

FDI regulations on operating models in e-commerceThe extant regulations18 permit 100% FDI under the automatic route in the marketplace model subject to riders, while FDI is not permitted in the inventory-based model.

Some of the key riders subject to which 100% FDI is permitted in the marketplace model are as under:

► The e-commerce entity will not permit more than 25% of the sales affected through its marketplace from one vendor or its group companies.

► The e-commerce entity providing the marketplace will not directly or indirectly influence the sale price of goods and services

► The e-commerce entity providing the marketplace will not exercise ownership over the inventory. An ownership over the inventory will render the business into an inventory-based model.

The sale of services online will fall under the automatic route, subject to the conditions of the FDI policy on the service sector and the applicable laws/regulations, security and other conditionalities.19

16 Refer para 6.2.15.1.2 of the Consolidated Foreign Direct Investment Policy 2016 17 Refer para 5.2.5 read with Notes to para 5.2.15.3 of the Consolidated Foreign Direct Investment Policy 2016 18 Refer para 5.2.15.2.3 of the Consolidated Foreign Direct Investment Policy 2016 19 Refer para 5.2.15.2.4 of the Consolidated Foreign Direct Investment Policy 2016

18 | The retailer

B) Key challenges in e-commerce from a tax perspective

The sector, with its ever increasing number of transactions in goods and services, is being seen as an increasing contributor to the indirect tax kitty. While it is fair for the Government to expect tax revenues to grow as the sector grows, the tax laws should also encourage clarity on taxation matters and ease of doing business. Unfortunately, for the e-commerce sector, the indirect tax laws in India have been more of a snag than a driver for growth.

Some of the key indirect tax issues plaguing the sector are as follows:

► The service tax paid on listing fees by vendors to portal owners is non creditable against the VAT payable on sales made by vendors. This results in tax leakages.

► The classic sale vs. service controversy is afflicting e-tailers, who end up with VAT/ CST demands in various states involved in the supply chain. The VAT departments of some states have argued that it is the web-portal owner who should be considered as the seller and discharge tax.

► States are amending their respective VAT laws to provide for taxing e-commerce transactions. For instance, Karnataka Value Added Tax (KVAT) authorities are contemplating charging local VAT on e-commerce transactions by treating them as “dealers” according to the provisions of the Karnataka Value Added Tax Act, 2003 (KVAT Act).

► There is also increased focused on tax compliance and reporting, with some states mandating e-tailers to disclose sale transactions and report them to the state VAT authorities.

► Broad-basing of tax positions is difficult considering the unique and varied business models in this sector — for example, the implications on pre-paid sale could be different from those on COD sale.

► E-tailers are also seeing increasing litigation on account of entry tax and octroi being demanded/collected on the movement of goods.

C) Conclusion

Given that the lack of clarity on the regulatory front has been addressed by the guidelines recently issued by DIPP, it is almost certain that many global e-commerce players will now be finalizing their India entry plans. This may also lead to increased competition in this sector, which will eventually lead to long-term consolidation in this space where only the toughest players with deep pockets would survive and grow. However, the challenges from a tax front may still require to be addressed so as to not hinder the growth of the sector.

Goods and Services Tax (GST), which will replace the current indirect tax regime and is expected to be implemented in India soon, could hold the key to resolving the issues faced by the sector. In the GST regime, the state of consumption will get the tax, doing away with all issues raised by origination states. Of course, it will be a loss of revenue for the state that was demanding or getting the full tax will earlier.

Further, on the direct tax front, effective June 2016 an equalization levy of 6% has been introduced on payments exceeding INR1 lakh a year to foreign e-commerce companies as consideration for certain specified services (primarily online advertisement). This is with a view to tap the income accruing to foreign e-commerce companies in India.

19The retailer |

Rahul Kakkad, Director, IIC - Tax and Regulatory Services, Ernst & Young. Rahul is a chartered accountant working in Ernst & Young for the past 10 years and has advised large retail and consumer products clients in strategizing their business operations/models and implementation assistance, among others. T : +91 22 6192 0000 E : rahul.kakkad@in.ey.com

Raghavendra Vinayakvitthal, Manager, IIC - Tax and Regulatory Services, Ernst & Young. Raghavendra is a chartered accountant working in Ernst & Young for the past 2 years and has experience of catering to various retail and consumer products clients. T : +9122 619 21967 E : Raghavendra.V@in.ey.com

20 | The retailer

How are consumer products and retail companies responding to the digital disruption and the associated risks?

3

Digital is the defining megatrend of our time, but the explosive growth has barely begun.

According to our survey, 91% of the consumer product companies say that they can no longer rely on traditional sales channels to drive growth.

This digital disruption is transforming business models (including revenue models), customer relationships, sales, marketing and supply chains. Although perhaps more gradual than in other sectors such as automotive and banking, digital disruption is still causing significant changes in the CPR sector.

New technologies and unprecedented levels of access to information have created a new empowered consumer.

But omni-channel is where the growth is market size forecast CAGR 2014-19%

Store based Internet

2

127

18

11

40

UK Russia India Nigeria

18

79

6X

93%of revenues are via motorstores today

Stores still dominate sales

81%in fiveyears

Source: EY Omni-channel supply chain survey

21The retailer |

Therefore, it is imperative for companies to have a business strategy in this digital age. To truly become digital, consumer product companies need to re-think their entire business model.

So, what does digital mean for an organization?

Customers

How do we utilise

digital to createand increase

customer value?

Improve customerexperience

Increase marketing, salesand service effectiveness

Develop multi-channelstrategy

Improve transactionspeeds, lower costs

Optimise end -to-end digital supply chainprocesses

Improve supplierrelationship management

Optimise sales & operationsplanning process

How do we digital toengage better withour suppliers and

partners?

How do we embed digital in our

company’s cultureand optimise

costs?

How do we directour business

effectively to adapt to the

digital shift?

How do we use digital to manage the relationship with

our investors and the public?

Suppliers &Partners

LeadershipTeam

Employees

Investors &General Public

Manage investorrelations andcommunications

Optimise communicationstrategy

Develop digital strategy

Assess market andcompetition

Design operatingmodel and organisational structure

Manage organisational change

Develop social policies &governanceDevelop digital skills andcapabilities

Manage recruitment,retention and talent

22 | The retailer

The following is a snapshot of how the value chain of consumer products companies has been evolving:

Digital risks

Digital has exposed all aspects of business enterprises to the escalating threats of cyber risks. Based on EY insights, cybercrime globally costs more than US$445 billion, equal to 0.5% of the world’s total GDP.

► Hard-to-anticipate challenges will often appear, such as the still-unanswered questions around revenue recognition, taxation and customer privacy resulting from digital distribution of goods and services.

► Companies need to develop the ability to make sense of the rapidly expanding volume and variety of customer data.

► Virtual communities are bigger than any country; the ripple effects of mobility, data analytics, social media and the internet have a worldwide impact.

52% of fortune 500,

since 2000 demolished

due to digital disruption

90% of the globe will have high speed

internet by 2020

85% Business

relationships without human interaction by

2020

20 years to catch up

with cyber-security skills shortage

New productdevelopment

Human capital Logistics Partnerships/collaborations

Digitally-enabledproducts evolvinginto services

Convergence ofsupplier/manufacturer/retailer

Cloud platforms tocollaborate withtrading partners

PoS information fordemand forecasting

Social media to trackend-user demand

In-house digital labs and consumerinsights via digital

Crowdsourcing

Sourcing andprocurment

Manufacturing Marketing Sales and distribution

Consumer/shopperrelationship

Digital savvy workflow Anticipatory shipping Open source innovation: collaborationswith/acquisitions of digital start-ups/firms,co-creation platform

Digital product trackingCommercial fleet telematics

Analytics capabilities/functions-big dataanalytics, digital/social media teams

New methods ofmanufacturinge.g. 3D printingfor low volumeand high value applications, allowing rapidprototyping

Location basedpromotions

Virtual stores Digital loyalty programsMobile apps/digitalplatformsSentiment analysisE-couponsMobile wallets

Cashless solutionsfor distributorsProduct drivendisintermediationSocial commerceOmnichannelSelf check outReal-time price

Retail experientialmarketingPersonalized/hypertargatedadvertisingSecond-screenphenomenon

23The retailer |

Major areas in risk and regulation landscape

EY market research indicates that 60% of organizations see increased risk from using social networking, cloud computing and personal mobile devices at work. 87% of organizations believe that damage to reputation and brand is the most significant issue related to data loss.

New productdevelopment

Human capital Logistics Partnerships/collaborations

Digitally-enabledproducts evolvinginto services

Convergence ofsupplier/manufacturer/retailer

Cloud platforms tocollaborate withtrading partners

PoS information fordemand forecasting

Social media to trackend-user demand

In-house digital labs and consumerinsights via digital

Crowdsourcing

Sourcing andprocurment

Manufacturing Marketing Sales and distribution

Consumer/shopperrelationship

Digital savvy workflow Anticipatory shipping Open source innovation: collaborationswith/acquisitions of digital start-ups/firms,co-creation platform

Digital product trackingCommercial fleet telematics

Analytics capabilities/functions-big dataanalytics, digital/social media teams

New methods ofmanufacturinge.g. 3D printingfor low volumeand high value applications, allowing rapidprototyping

Location basedpromotions

Virtual stores Digital loyalty programsMobile apps/digitalplatformsSentiment analysisE-couponsMobile wallets

Cashless solutionsfor distributorsProduct drivendisintermediationSocial commerceOmnichannelSelf check outReal-time price

Retail experientialmarketingPersonalized/hypertargatedadvertisingSecond-screenphenomenon

However, only 52% of organizations indicate data leakage as a top “new” increased risk. Coping with this digital future requires organizations to develop new digital risk management skill sets.

The core risk and regulation issues drive the need for digital law, data privacy and cyber security.

Digitally transformedCPG companies

Cyber attack

Talent attraction & retention

Businesspartnerships

Sustainabilityreporting pressures

Increasinginvestorinvolvement

Increased taxregulations onBEPS

Manipulated taxevasion

Country bycountry reporting

Data sharing,retention anderasurepolicies

Social media privacypolicies

Data Privacy & Cybersecurity

CompetitionLandscape

Corporate Profile and Investor Relations

TaxCompliance

Prices / marginstransparency

Innovative startups/e-Commerce

High digital influence

Low digital influence

Competitors fromadjacent industries

24 | The retailer

So, what does digital mean for an organization?

Social media is the transformative force of the present

The use of social media among adults has risen dramatically over the past few years, driven by the increasing penetration of smartphones and tablets. And thanks to the rapid increase in the number of social media sites, the audience as well as the time spent on social media have skyrocketed.

The speed, spontaneity and pervasive influence of social media have transformed the relationship between companies and their customers, employees, suppliers and regulators.

Social media has grown to be much more than a marketing activity. Along with the increased reach come increased responsibility, complexity and risk for companies.

Social outreach has multiple targets — now including investor relations — each with its unique value and challenges.

The social media challenge has expanded to each area of the organization, on any occasion, on any platform, and includes both consumer- and company-generated conversations. Consumers and employees can comment anywhere and at any time in the social ecosystem.

Physicalenviorment

Governanceand strategy

Cybersecurityrisk

Logicalaccess

Technicalsecurity

IncidentManagement

Outsourcing

Physicala access to critical infrastructure is

provided to unauthorized personnel.

Company assets are notproperly safegauardedagainst environmental

disruptions (natural disasters,

man-madecatastrophies and accidental damage)

M

Users are provided withinappropriate access to

systems and data.M

Attacks and malicious activity may not be detected. M

The extent of damage from an attack may notbe identified, contained or remediated. M

Unauthorized softwareproducts are used to process

business data.M

Attackers may find or connect tounauthorized and unprotected

systems.H

Attackers exploit flaws in systemconfigurations to access or alter

senstive information.H

H

H

Systems have not beenconfigured to provide anadequate level of logical

securty to prevent unauthorized access to

programs and data.

M

M

Strategy is not aligned to businessrequirements.

Policy lacks cybersecurityrobustness to protect againstcurrent and upcoming threatsto production availability,integrity and informationconfidentiality.

Tangible benefits are notdefined, resulting innon-proftable or non-strategicsecurity projects being delivered.

M

Vendors do not supportsecurity policies, leading tocompromise of securitycontrols orpoor service levels.

M

Service levels are not defined ornot aligned to business requirements.M

High risk M Moderate riskH

25The retailer |

Key dimensions for social media

Strate

gy, p

olicie

s and

gove

rnan

ce

Strateg

y and o

pera

tions

align

ment,

gove

rnan

ce s

tructu

re

and c

ontrols,

workf

orce co

mplian

ceMonito

ring a

nd tra

cking

capa

bilitie

s, da

ta pr

ivacy

and d

ata

secu

rity,

custo

mer da

ta integ

rity

Branding compliance,

sentiment and

influncer enables

Regulatory risk

assessment, licensing

and royalties compliance

Data,

analy

tics a

nd

metric

s

Marketing, branding

and reputation

Legal and

regulatory

ConsumerExperience

What are your social media strategy,governance and policies?

What are the internallyand externally generated risks or threats that yourorganization faces?How are they identified?

How are the brandand reputation beingmanaged?

How do you know ifthat management iseffective?

On what informationdoes your organizationmake its social mediadecisions?

26 | The retailer

Within seconds, anything can be blown out of proportion and taken out of context in social media. Negative consumer sentiment can be deadly and these days, social media is often the weapon that delivers the fatal blow.

Companies are under constant surveillance from multiple stakeholders such as consumers, investors, business partners, employees and the general public. The traditional competition landscape has changed completely, due to which new business models are imperative.

This paradigm shift favors organizations that are able to adapt and evolve, embedding digital into everything they do. The time for change is now and the pace has been set by the worldwide web.

Key risks associated with social media

Senstivity ofinformation

Governanceand strategy

Social mediarisks

Employeemisuse

Brandloss

Virus/malwareand hacking

Intellectualproperty

Employee involved in social media mayinadvertently leak senstive company information

Disclosure of corporate assestsleading to access of senstive (privileged)

information to unauthorized parties

Criminal hackers “re-engineering” confidentialinformation - log-ins and passwords based on information posted on social media M M

More platforms create more access for viruses,malware, cross-site scripting and phishing M

Damage to a brand or company reputation from

negative, embarrassingor even incriminating

employee or customer posts

High risk

Moderate risk

H

H

H

H

H

H

Employee misuse of socialapplications while at work

due to lack of defined policiesand procedures and

ineffective process towardmonitoring of compliance by

employees

M

Strategy is not aligned to businessrequirements.

Lack of a structured and well-thought-out strategy as an organizationto engage with customers and stakeholdersusing social media

Inappropriate or unapproveduse of company intellectual property such as logos or trademark material

M

Loss of intellectual property,copyright infringements andprivacy breaches

M

27The retailer |

Nitesh is a Partner with EY’s Advisory Practice focusing on manufacturing, consumer products and retail clients.

He has 14 years of work experience advising clients on key business processes, enterprise risk management (ERM), governance risk and compliance (GRC), data analytics, GST and business transformation.

Nitesh has assisted leading companies across the CPR sector in India, South Africa, China, Russia, the UK and the US in the area of business processes and operations transformation.

Nitesh Mehrotra Partner, Advisory, Consumer Products & Retail (CPR)

T : +91 22 6192 3787 E : nitesh.mehrotra@in.ey.com

28 | The retailer

4Innovation BoardShoppers Stop’s Magic Mirror

Shoppers Stop, a leading Indian retailer, has launched an innovative augmented reality—based dressing room called Magic Mirror in its stores. It includes an advance photo booth that allows customers to select and view apparel and accessories on themselves without physically trying them on. Customers can try over 1,500 products from the retailer’s assortment without using a trial room.

Link used - http://retail.economictimes.indiatimes.com/news/apparel-fashion/apparel/shoppers-stop-launches-reality-based-dressing-room-in-mumbai/49788255 Link accessed on – 16th September, 2016

Drones for speedy distribution at Walmart

Walmart is evaluating the use of drones to handle inventory at its large distribution centers. Currently, its workers manually scan pallets of goods with the help of hand-held scanning devices. The innovative drones with custom-built cameras can capture 30 images a second to make sure the placement of items on shelves is appropriate. When a drone finds an item in the wrong niche, an employee at the air traffic control center would see a red mark on a real time computerized map of the rack and send a worker to move the misplaced item.

Drones would mimic the path of a person in a forklift who might be inspecting labels and inventory. While manual scanning of all shelves takes two employees one month, drones would complete this task in an hour. Although an employee may be required to control the drone, the technology could minimize the number of workers, time and effort taken to stock or replace missing items.

Link used - http://www.nytimes.com/2016/06/03/business/walmart-looks-to-drones-to-speed-distribution.html?_r=0 and http://www.bloomberg.com/new/articles/2016-06-02/wal-mart-s-distribution-center-drone-hints-at-automation-plans

Link accessed on – 16th September, 2016

Dash Buttons boosting Amazon’s sales

Amazon Dash Buttons are Wi-Fi—enabled small pieces of plastic embellished with the company’s logo and the name of a product. When the button is pressed, it sends a signal to Amazon to automatically reorder the product for the customer. Customers can use these Dash Buttons to order more than 100 products from famous brands such as Starbucks, Clorox and PepsiCo. Each button needs to be purchased by customers; however, the amount is refunded after the first order. Many users have found this facility convenient, and Amazon has experienced an increasing trend in orders through the use of these buttons. Dash Buttons allow Amazon a deeper understanding of consumer behavior to facilitate with more customization and services.

Link used - https://www.thestreet.com/story/13515685/1/amazon-s-innovative-dash-feature-the-latest-reason-for-investors-to-like-the-company.html

Link accessed on – 16th September, 2016

Rise of innovative delivery methods

The convenience and ease of online shopping is extremely appealing to today’s shoppers. For example, Sainsbury’s has launched an app on iTunes called Chop Chop, which allows users in London to order goods from their local store and have them delivered to their home within one hour. Shoppers within 3 km of the supermarket can order up to 20 products and have them delivered to their homes within an hour via bicycle for a minimal charge per order. Instacart, an on-demand delivery service provider, allows shoppers to order items from a wide range of grocery retailers. In Los Angeles, for example, customers can combine items from Super King Markets, Bristol Farms, Costco, Ralphs and Whole Foods Market into a single order and have these delivered in as little as one hour. Lockbox allows anyone ordering food from supermarket chains located in Vienna and Linz to have it delivered to their doors, but locked in a special box ensuring that the food is spoilt or stolen when the shopper is not at home to take the delivery.

29The retailer |

Delivery apps for smart foodies

In India, the food delivery and restaurant sector is prospering at an intense pace. Food delivery apps are trending with tech-savvy individuals across India. Foodpanda lets users create profiles, save favorite restaurants and get quick delivery with different payment options. Zomato integrates a network of food enthusiasts and reviewers. People can choose from restaurants for dining based on reviews. Swiggy allows foodies to order food from a wide range of restaurants from any locality without a minimum order value. It also offers coupons and discounts. FoodMingo enables users to order food online from and book tables at restaurants of their choice. It also offers coupons and deals from its partner restaurants in those cities. Users of the FoodMingo app can track their orders in real-time. TravelKhana enables travelers to order food from their train compartments by operating 24 hours in over 2,000 trains across India. It allows people to avoid eating of junk food on railway platforms. TinMen ties up with home chefs to deliver homemade food to office-goers across Hyderabad just like the Mumbai dabbawallas.

Link used - https://indianceo.in/apps/top-food-delivery-apps-for-smart-foodies-in-india/

Link accessed on – 19th September, 2016

E–commerce delivery innovations in India

Delivering packages within India’s cities is a challenge for e-commerce firms as roads are traffic-clogged, streets are not numbered sequentially and landmarks are ever-changing. However, innovations in this regard are simplifying deliveries and online retailers continue to experiment with radical options to reach their products to customers reliably and quickly.

Dabbawallas: In the financial hub of Mumbai, India’s largest online retailer, Flipkart, is collaborating with the famed dabbawallas. This low-tech, inexpensive and error-free system will now deliver e-commerce packages. The dabbawallas will collect the boxes from Flipkart’s distributions centers and service the same neighborhoods from where they collect lunches. All tracking will initially be paper-based.

India Post: The country has the largest postal network in the world, with 460,000 employees working in 155,000 post offices, 90% of which are located in rural India. Now, the state-owned India Post is collaborating with e-commerce firms such as Snapdeal and ShopClues to deliver packages to shoppers in the remotest corners. In many far-flung locations, it is the only last-mile logistics handler available.

Gas stations: In pilots that Amazon India ran in Delhi and Mumbai with the state-owned oil and gas firm Bharat Petroleum, online shoppers were able to collect their packages at pick-up points at their nearest gas station. The collaboration has recently been extended three more cities.

(Accessed 16 Feb 2016, http://www.forbes.com/sites/saritharai/2015/04/15/from-dabbawallas-to-kirana-stores-five-unique-ecommerce-delivery-innovations-in-india/#38226bec2d65)

30 | The retailer

Ahmedabad2nd floor, Shivalik IshaanNear. C.N VidhyalayaAmbawadiAhmedabad-380015Tel: +91 79 6608 3800Fax: +91 79 6608 3900

Bengaluru12th & 13th floor“U B City” Canberra BlockNo.24, Vittal Mallya RoadBengaluru-560 001Tel: +91 80 4027 5000+91 80 6727 5000Fax: +91 80 2210 6000 (12th floor)Fax: +91 80 2224 0695 (13th floor)

1st Floor, Prestige EmeraldNo.4, Madras Bank RoadLavelle Road JunctionBengaluru-560 001 IndiaTel: +91 80 6727 5000Fax: +91 80 2222 4112

Chandigarh1st FloorSCO: 166-167Sector 9-C, Madhya MargChandigarh-160 009Tel: +91 172 671 7800Fax: +91 172 671 7888

ChennaiTidel Park6th & 7th FloorA Block (Module 601,701-702)No.4, Rajiv Gandhi SalaiTaramaniChennai-600113Tel: +91 44 6654 8100Fax: +91 44 2254 0120

Delhi NCRGolf View CorporateTower – BSector 42, Sector RoadGurgaon–122 002Tel: +91 124 464 4000Fax: +91 124 464 4050

3rd & 6th Floor, Worldmark-1IGI Airport Hospitality DistrictAerocity New Delhi-110037, IndiaTel: +91 11 6671 8000 Fax +91 11 6671 9999

4th & 5th Floor, Plot No 2BTower 2, Sector 126NOIDA-201 304Gautam Budh Nagar, U.P. IndiaTel: +91 120 671 7000Fax: +91 120 671 7171

HyderabadOval Office18, iLabs CentreHitech City, MadhapurHyderabad - 500081Tel: +91 40 6736 2000Fax: +91 40 6736 2200

Kochi9th Floor “ABAD Nucleus”NH-49, Maradu POKochi - 682 304Tel: +91 484 304 4000Fax: +91 484 270 5393

Kolkata22, Camac Street3rd Floor, Block C”Kolkata-700 016Tel: +91 33 6615 3400Fax: +91 33 6615 3750

Mumbai14th Floor, The Ruby29 Senapati Bapat MargDadar (west)Mumbai-400 028, IndiaTel: +91 22 6192 0000Fax: +91 22 6192 1000

5th Floor Block B-2Nirlon Knowledge ParkOff. Western Express HighwayGoregaon (E)Mumbai-400 063, IndiaTel: +91 22 6192 0000Fax: +91 22 6192 3000

PuneC—401, 4th floorPanchshil Tech ParkYerwada (Near Don Bosco School)Pune-411 006Tel: +91 20 6603 6000Fax: +91 20 6601 5900

Our Offices

31The retailer |

Ahmedabad2nd floor, Shivalik IshaanNear. C.N VidhyalayaAmbawadiAhmedabad-380015Tel: +91 79 6608 3800Fax: +91 79 6608 3900

Bengaluru12th & 13th floor“U B City” Canberra BlockNo.24, Vittal Mallya RoadBengaluru-560 001Tel: +91 80 4027 5000+91 80 6727 5000Fax: +91 80 2210 6000 (12th floor)Fax: +91 80 2224 0695 (13th floor)

1st Floor, Prestige EmeraldNo.4, Madras Bank RoadLavelle Road JunctionBengaluru-560 001 IndiaTel: +91 80 6727 5000Fax: +91 80 2222 4112

Chandigarh1st FloorSCO: 166-167Sector 9-C, Madhya MargChandigarh-160 009Tel: +91 172 671 7800Fax: +91 172 671 7888

ChennaiTidel Park6th & 7th FloorA Block (Module 601,701-702)No.4, Rajiv Gandhi SalaiTaramaniChennai-600113Tel: +91 44 6654 8100Fax: +91 44 2254 0120

Delhi NCRGolf View CorporateTower – BSector 42, Sector RoadGurgaon–122 002Tel: +91 124 464 4000Fax: +91 124 464 4050

3rd & 6th Floor, Worldmark-1IGI Airport Hospitality DistrictAerocity New Delhi-110037, IndiaTel: +91 11 6671 8000 Fax +91 11 6671 9999

4th & 5th Floor, Plot No 2BTower 2, Sector 126NOIDA-201 304Gautam Budh Nagar, U.P. IndiaTel: +91 120 671 7000Fax: +91 120 671 7171

HyderabadOval Office18, iLabs CentreHitech City, MadhapurHyderabad - 500081Tel: +91 40 6736 2000Fax: +91 40 6736 2200

Kochi9th Floor “ABAD Nucleus”NH-49, Maradu POKochi - 682 304Tel: +91 484 304 4000Fax: +91 484 270 5393

Kolkata22, Camac Street3rd Floor, Block C”Kolkata-700 016Tel: +91 33 6615 3400Fax: +91 33 6615 3750

Mumbai14th Floor, The Ruby29 Senapati Bapat MargDadar (west)Mumbai-400 028, IndiaTel: +91 22 6192 0000Fax: +91 22 6192 1000

5th Floor Block B-2Nirlon Knowledge ParkOff. Western Express HighwayGoregaon (E)Mumbai-400 063, IndiaTel: +91 22 6192 0000Fax: +91 22 6192 3000

PuneC—401, 4th floorPanchshil Tech ParkYerwada (Near Don Bosco School)Pune-411 006Tel: +91 20 6603 6000Fax: +91 20 6601 5900

Our Offices

31

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About EY

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EYIN1610-101 ED None

This publication contains information in summary form and is therefore intended for general guidance only. It is not intended to be a substitute for detailed research or the exercise of professional judgment. Neither Ernst & Young LLP nor any other member of the global Ernst & Young organization can accept any responsibility for loss occasioned to any person acting or refraining from action as a result of any material in this publication. On any specific matter, reference should be made to the appropriate advisor.

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