The MultiBagger Stocks Man : Ayush Mittal

Ayush Mittal is one of the best micro cap value investor of India . We can learn a lot from him . When I discussed BLUE CHIP TEX INDUSTRIES LTD ( http://value2wealth.blogspot.in/2016/07/micro-cap-value-pick-blue-chip-tex.html ) , I requested volunteers to calculate  portfolio/recommendation return of Ayush Mittal . I am very disappointed no one came forward . I was under the illusion that some blog follwers will come forward and give their valuable time to complete this easy but little time-consuming exercise for me. 
No one came forward.So, I did this exercise . But , fortunately, I got a lot of ready made information from dalal-street.in  website http://performance.dalal-street.in/ . However , It was 2 years 3 months old .

Note: Click on company link to see detail analysis .

S.No.	Post Date	Company	Price Then	High Price	Current Price	Gain	Status
1	2 years, 3 months ago	Anuh Pharma	215	365	360	67.44%	Hold
2	2 years, 6 months ago	Freshtrop Fruits	26	66	52	100.00%	Hold
3	2 years, 6 months ago	Technocraft Ind	90	213	195	116.67%	Hold
4	2 years, 6 months ago	PTC India Finance	14.75	44	43.5	194.92%	Hold
5	2 years, 9 months ago	Selan Exploration	300	675	650	116.67%	Exited
6	2 years, 10 months ago	APM Industries	25.5	33	30	17.65%	Hold
7	2 years, 10 months ago	Kitex Garments	77	345	330	328.57%	Buy on declines
8	2 years, 10 months ago	Muthoot Capital	80	177	158	97.50%	Hold
9	2 years, 11 months ago	Alembic Pharma	191	408	385	101.57%	Hold
10	2 years, 12 months ago	Dynemic Products	14.5	51	45	210.34%	Hold
11	2 years, 12 months ago	Premco Global	33	125	98	196.97%	Buy on declines
12	2 years, 12 months ago	Shree Ajit Pulp & Paper	38	67	46	21.05%	Hold
13	2 years, 12 months ago	Gulshan Poly	62	140	140	125.81%	Exited
14	2 years, 12 months ago	Bharat Agri	82	150	117	42.68%	Buy on declines
15	2 years, 12 months ago	Acrysil	122	240	200	63.93%	Exited
16	2 years, 12 months ago	Alicon Castaloy	58	163	150	158.62%	Exited
17	3 years, 1 month ago	Shilpa	170	565	515	202.94%	Hold
18	3 years, 3 months ago	Noida Toll Bridge	22	22	22	0%	Exited
19	3 years, 3 months ago	NMDC	100	112	110	10.00%	Exited
20	3 years, 5 months ago	VST Tillers	338	1990	1850	447.34%	Exited
21	3 years, 5 months ago	Astra Zeneca	835	920	865	3.59%	Exited
22	3 years, 5 months ago	Can Fin Homes	153	485	380	148.37%	Hold
23	3 years, 6 months ago	Kovai Medical	166	340	330	98.80%	Hold
24	3 years, 6 months ago	Wimplast	320	409	380	18.75%	Exited
25	3 years, 6 months ago	K G Denim	15	18.5	14.5	-3.33%	Exited
26	3 years, 7 months ago	Acceleya Kale Solutions	365	825	650	78.08%	Buy on declines
27	3 years, 8 months ago	Orbit Exports	72	249	245	240.28%	Hold
28	3 years, 9 months ago	Poddar Pigments	51	132	128	150.98%	Hold
29	3 years, 9 months ago	Lumax Auto Tech	156	200	185	18.59%	Hold
30	3 years, 9 months ago	Caplin Point	70	98	70	0%	Exited
31	3 years, 10 months ago	Ajanta Pharma	257	1795	1600	522.57%	Hold
32	3 years, 10 months ago	MPS Ltd	111	545	515	363.96%	Hold
33	4 years ago	Muthoot Capital (old)	82	139	110	34.15%	Exited
34	4 years, 1 month ago	Sahyadri	66	87	61	-7.58%	Exited
35	4 years, 1 month ago	Wim Plast	262	394	380	45.04%	Exited
36	4 years, 1 month ago	Kaveri Seeds	840	1720	1700	102.38%	Exited
37	4 years, 2 months ago	Narmada Gelatine	133	323	298	124.06%	Hold
38	4 years, 4 months ago	Technofab Eng	130	155	130	0%	Exited
39	4 years, 4 months ago	Kakatiya Cement	80	96	86	7.50%	Exited
40	4 years, 4 months ago	Sree Rayalseema Hypo	45	66	45	0%	Buy on declines
41	4 years, 4 months ago	Mazda	92	168	160	73.91%	Exited
42	4 years, 4 months ago	Ashiana Housing	34	187	151	344.12%	Buy on declines
43	4 years, 5 months ago	Manali Petro	11.5	14	10	-13.04%	Exited
44	4 years, 6 months ago	Ansal Properties	32	43	35	9.38%	Hold
45	4 years, 7 months ago	Liberty Phosphate	64	160	150	134.38%	Exited
46	4 years, 8 months ago	Mayur Uniquoters	52	485	420	707.69%	Hold
47	4 years, 11 months ago	Nesco	560	1350	1280	128.57%	Hold
48	4 years, 11 months ago	Atul Auto	71	740	692	874.65%	Hold
49	4 years, 11 months ago	GIPCL	82	86	77	-6.10%	Exited
50	5 years ago	Oriental Carbon	120	300	275	129.17%	Buy on declines
51	5 years ago	Apcotex	163	300	260	59.51%	Exited
52	5 years, 2 months ago	Indag Rubber	110	375	350	218.18%	Exited
53	5 years, 2 months ago	IFB Agro	105	237	205	95.24%	Exited
54	5 years, 3 months ago	Everest Ind	165	175	157	-4.85%	Exited
55	5 years, 4 months ago	Piccadily Agro	46	55	36	-21.74%	Buy on declines
56	5 years, 6 months ago	Smruthi Organics	135	274	65	-51.85%	Hold
57	5 years, 6 months ago	Astral Poly	49	830	825	1583.67%	Hold
58	5 years, 7 months ago	Nitin Spinners	11.5	13	7.2	-37.39%	Exited
59	5 years, 7 months ago	Avanti Feeds	33	1298	1245	3672.73%	Hold
60	5 years, 7 months ago	Pratibha Ind	54	70	55	1.85%	Exited
61	5 years, 7 months ago	Ispat Ind - Arbitrage	0	0	0	0%	Exited
62	5 years, 9 months ago	Sree Sakthi Paper	25.5	34	21.5	-15.69%	Exited
63	5 years, 9 months ago	Mangalore Chemicals	37	43	35	-5.41%	Exited
64	5 years, 11 months ago	Facor Alloys	7	8.7	3.25	-53.57%	Exited
65	5 years, 11 months ago	Balaji Amines	48	57.6	36	-25.00%	Exited
66	6 years, 1 month ago	ABC Bearing	155	180.7	150	-3.23%	Exited
67	6 years, 1 month ago	Pondy Oxide	30	72.4	25	-16.67%	Exited
68	6 years, 2 months ago	Harrison Malayalam	90	120.48	62	-31.11%	Hold
69	6 years, 2 months ago	Riddhi Siddhi	285	518.2	360	26.32%	Exited
70	6 years, 3 months ago	Camphor Allied	101	274	210	107.92%	Exited
71	6 years, 4 months ago	Shakti Met Dor	215	304.75	215	0%	Exited
72	6 years, 4 months ago	Welspun Syntex	15	27	18	20.00%	Exited
73	6 years, 5 months ago	GRP	875	2020	1275	45.71%	Hold
74	6 years, 6 months ago	Jocil	265	435	285	7.55%	Exited
75	6 years, 6 months ago	Sunflag Iron	31	34.5	29	-6.45%	Exited
76	6 years, 7 months ago	Poly Medicure	50	515	475	850.00%	Hold
77	6 years, 7 months ago	BNK Capital	33.6	61.6	26	-22.62%	Buy on declines
78	6 years, 8 months ago	Balkrishna Ind	118	310	300	154.24%	Exited
79	6 years, 10 months ago	Asian Hotels	420	600	600	42.86%	Exited
80	6 years, 10 months ago	Manjushree Technopack	32.5	109.8	80	146.15%	Exited
81	6 years, 11 months ago	IST Ltd	100	280	260	160.00%	Exited
82	6 years, 11 months ago	Suprajit Eng	8.5	26.5	23	170.59%	Exited
83	6 years, 11 months ago	Majestic Auto	66	165	140	112.12%	Exited
84	7 years ago	Freseniuous Kabi	78	193.75	145	85.90%	Exited
85	7 years ago	Ahlcon Parentals	37	132.95	94	154.05%	Exited
86	7 years ago	Siemens Healthcare	1050	1799	1325	26.19%	Exited
87	7 years, 1 month ago	Albert David	75	177	132	76.00%	Exited
88	7 years, 2 months ago	Jaihind Projects	95	315	200	110.53%	Exited
89	7 years, 2 months ago	Shilpa Medicare	93	379	220	136.56%	Exited
90	7 years, 5 months ago	CHI Investments	27	68	50	85.19%	Exited

It is a huge list of 90 stocks in around 7.5 years . So , I removed stocks which he had already exited . The website had already corporate action adjusted price (bonus , split) . But , If any action taken placed in last 27 months were not considered in adjusted price since that calculation is 27 months old . I kept few original columns and added few more columns . Ignored Dividend .

S.No.	Company	Months	Price Then	Status(27 months ago)	Adjusted Buy Price	Comments on Adjusted Price	Oct 2016 Price	Return	CAGR
1	Anuh Pharma	27	215	Hold	143.00	Bonus:2:1	238	66.43	25.41
2	Freshtrop Fruits	30	26	Hold	17.33	Bonus:2:1	88	407.69	91.53
3	Technocraft Ind	30	90	Hold	90.00		385	327.78	78.85
4	PTC India Finance	30	14.75	Hold	14.75		39	164.41	47.54
6	APM Industries	34	25.5	Hold	25.50		68	166.67	41.37
7	Kitex Garments	34	77	Buy on declines	77.00		492.5	539.61	92.50
8	Muthoot Capital	34	80	Hold	80.00		232	190.00	45.61
9	Alembic Pharma	35	191	Hold	191.00		675	253.40	54.16
10	Dynemic Products	36	14.5	Hold	14.50		80	451.72	76.70
11	Premco Global	36	33	Buy on declines	33.00		561	1,600.00	157.13
12	Shree Ajit Pulp & Paper	36	38	Hold	38.00		228	500.00	81.71
14	Bharat Agri	36	82	Buy on declines	82.00		82	0.00	0.00
17	Shilpa	37	170	Hold	113.33	split 2:1	576	408.24	69.43
22	Can Fin Homes	41	153	Hold	153.00	Ignored Rights issues	1830	1,096.08	106.75
23	Kovai Medical	42	166	Hold	166.00		820	393.98	57.83
26	Acceleya Kale Solutions	43	365	Buy on declines	365.00		1382	278.63	45.00
27	Orbit Exports	44	72	Hold	72.00	Ignored Bonus 9 July 2012	268	272.22	43.11
28	Poddar Pigments	45	51	Hold	51.00		232	354.90	49.78
29	Lumax Auto Tech	45	156	Hold	156.00		508	225.64	37.00
31	Ajanta Pharma	46	257	Hold	102.80	20/03/2015 Stock Split From Rs.5/- to Rs.2/-	1956	1,802.72	115.65
32	MPS Ltd	46	111	Hold	111.00		678	510.81	60.33
37	Narmada Gelatine	50	133	Hold	87.33	Bonus 1:2	137	56.87	11.41
40	Sree Rayalseema Hypo	52	45	Buy on declines	45.00		132	193.33	28.19
42	Ashiana Housing	52	34	Buy on declines	34.00	Spilt was already considered (oct 2013)	147	332.35	40.19
44	Ansal Properties	54	32	Hold	32.00		19.35	-39.53	-10.58
46	Mayur Uniquoters	56	52	Hold	52.00	Ignored Bonus March 2014	436	738.46	57.72
47	Nesco	59	560	Hold	560.00		1916	242.14	28.43
48	Atul Auto	59	71	Hold	35.50	Split Sep 14	482	1,257.75	69.98
50	Oriental Carbon	60	120	Buy on declines	120.00		716	496.67	42.94
55	Piccadily Agro	64	46	Buy on declines	11.50	Twice 1:1 Bonus	12	4.35	0.80
56	Smruthi Organics	66	135	Hold	135.00		125	-7.41	-1.39
57	Astral Poly	66	49	Hold	24.50	25/09/2014 Split 2 to 1	438	1,687.76	68.92
59	Avanti Feeds	67	33	Hold	6.60	26/11/2015 Stock Split From Rs.10/- to Rs.2/-	603	9,036.36	124.48
68	Harrison Malayalam	74	90	Hold	90.00		75	-16.67	-2.91
73	GRP	77	875	Hold	875.00		1515	73.14	8.93
76	Poly Medicure	79	50	Hold	25.00	02/02/2015 Stock Split From Rs.10/- to Rs.5/-	383	1,432.00	51.37
77	BNK Capital	79	33.6	Buy on declines	33.60		38	13.10	1.89
						Avg X times return			6.90
						Avg CAGR			51.29

One can observe that he has also evolved over the time like other great investors.He also has a mixed portfolio . Some of the stocks have very high quality while some are avg quality stocks and even some mediocre companies( to just prove , he is also human being :) ) . That is all indication of evaluation as good investor over the time .Notably  , he hadn't stocks from the following list . When , the whole world was crazy for buying the following stocks , he might be busy in buying Avanti Feed (90 bagger ) and Astral Poly .



Source : https://kiraninvestsandlearns.wordpress.com/2015/10/11/learnings-from-recent-history/  (Image used without permission :) , I regularly visit this page to be just on my toes )

If one has followed him from last 7.5 years then one might have converted Rs 100 into 700 (6.9x ). It doesn't look extraordinary for the man of his caliber . But this ratio is again deceptive .  It doesn't cover sequential multibagger which is less talked term and as per me It is 1 st wonder of investing world . Let me explain you . If he made 5x from 1 stock in 3 years and reinvested that 5x into another stock for 3 years and it also gives 5x return then the whole amount at portfolio become 25x in 6 years but our calculation will indicate avg 5x (both entries avg). The churning of the portfolio is good if you are able to find sequential multibaggers .While ,big single stock return catches the eye , sequential multibaggers don't catch one's eye but they have very good impact on the overall portfolio and wealth creation .

Ayush's overall average CAGR comes around 51.29 , which is a true indication of stock picking skill . I like to evaluate an individual stock based on cycles, if brought on mid phase of bull/bear phase then return should be calculated on mid phase of next bull/bear phase if it is really long term stock .But , since the portfolio is built on the regular basis we can evaluate based on CAGR of holding period .Even if we give discount considering an all time high small and mid-cap indices , still , it is very much impressive . 


Must Read : https://microcapclub.com/2016/10/the-maturation-of-an-investor/
Must Watch : http://stalwartvalue.com/video-talk-delivered-at-fil-alumni-meet-pune/ 

Share on Twitter If you liked my above article .

Share on Twitter

click here for blog subscription. It is absolutely free and easy.

1. Provide your email ID.
2. Check your email inbox(sometime junk folder/promotions tab) for confirmation email and click on confirmation link.

Alternatively ,

If you are interested in reading multiple blogs  from bloggers then please open your free account on http://www.feedly.com/ which I find good to read and track all the blogs .

Decoding eCommerce Market in India from Seller Perspective

I have written earlier post at Part1 , this is second part .

India has 3 big e-commerce marketplaces Amazon , Flipkart, and Snapdeal . Apart from these, there are some major marketplaces are like eBay , Paytm , Infibeam .
Amazon and Flipkart have some conflict of interest due to their direct or indirect stake in their top vendor(seller). This is good for buyers and marketplaces because these marketplaces can control quality and prices . But still, faces a lot of issues :) . However , It becomes a disadvantage to other sellers due to this conflict of interest.

Life of sellers is very difficult if they are doing it for living and not having another source of income . They are a candidate for depression pills. So far you might have seen lots of good stories about e-commerce changing the life of some , that is a bright side . But there is a dark side as well . It is not buyers a headache but still want to know about their pain then you must read https://inc42.com/buzz/open-letter-seller/ . However , I don't agree with all data and fact given.


Amazon generally doesn't give discount coupons but it gives sellers volume. So due to high volumes , the seller can pass on reduce cost . Generally , I observed fast moving products are cheaper on Amazon but slow moving products other marketplaces can compete with Amazon on prices .

Search algorithms of marketplaces are more or less are same . But , I believe eBay algorithm is far mature and suitable for pure marketplace model . Amazon most of the times shows listing search based on prices while eBay considers lot parameters and give more weightage to sellers reputation . Generally , more than 90% of time buyer purchases from top 3 searches. Amazon will have to modify their search algorithm because in other countries they can hold inventory and sell it . India has a restriction for this model , so it make sense give more weightage to seller reputation/feedback but India is also very price sensitive market . They will have to balance it else reputation of Amazon India will suffer in long run .    

SnapDeal Pay Out for Rs 250 product.

Amazon India Charges 

If a seller sells a apparel item of weight 1.6 kg at 1000 then his charges will be ,
Referral fee 17% of 1000 = 170
Shipping Charges for 1.6 kg will be charged at 2 Kg = 65+45+45+45 = 200
Services Tax = at around 15% at (170 + 200) = 15% of 370 = 55.5
VAT/CST around 5% = 50
Packing and handling = 10

Total cost will = 170 + 200 + 55.5 + 50 + 10 = 485.5 + If any fulfilment charges .
So if is one unit price is 450 then he can make only Rs 50 if he sells at 1000 and top of that again sellers need to pay income tax(direct tax) on whatever profit he made .
This Rs 50 profit is also not guaranteed because if items are returned by buyers then applicable charges under return policy will eat this tiny profit . However , if cash on the delivery item is not accepted by buyers then most of the marketplaces don't charge anything to the seller but It is returned then they charge mostly. Sometimes marketplaces offer discount coupon of 5% , 10% etc from their  Referral fee . This Referral fee varies on the category of item . It is also around 5% on electronic storage devices and FNFG products like grocery .  If interested you can check the rate at  https://services.amazon.in/services/sell-on-amazon/pricing.html
or you can get approximate figures of all major marketplaces at http://browntape.com/ecommerce-seller-fees-calculator/ . Some rates are old and shipping charges are considered at local(lower) instead of national level. More than 90% times shipping turn out to be national level .


On another hand, offline sellers can sell it at rs 750 and make the handsome return and avoid all headache of return ,while he will have to spend charges for shop rent and employee and other associated expenditures.



E-Commerce is not only making happy customers but also increasing Govt revenue. But , so far I have not seen anything special Govt is doing for Online sellers .
So , one cannot sell all the products on e-commerce and make the profit . The thumb rule is to sell products which are light weight but this category is very crowded . Marketplaces earn the commission but either they pass on as discount coupons or spend on acquiring new customers , or invest for future . Not making any profit for now.
There is another challenge to manage annoying buyers which give negative feedback without sellers fault.Some sellers make a small and unpredictable profit but there might be some smart sellers are making the regular good profit .
My point is it very easy to become a seller on marketplaces but very difficult to do business. To become successful seller one need to choose the category ,product, weight etc. wisely .Most of the small sellers don't even last 1 year . There is very high attrition rate among Online sellers .


My Blog reader Satya has asked "When people buy products then do they think about who the seller! They think more of Amazon, Flipkart, etc.
So, without brand visibility, anyone can come with cheaper service and replace it. Amazon may see if he is going to benefit or not above thinking about sellers profitability."

I had answered it
"You will surprise but answer for brand visibility is up to some extend "yes" , and it going to improve from current status . I am going to cover this aspect in next article . But , let me brief you on the current scenario .
The buyer first chooses product brand and then MarkePlace depend on pricing . If the prices are similar at two marketplaces , then buyer choose his preferred one marketplace , that is the brand value of that marketplace . Almost 100% buyers will do this .
Now , if buyers preferred marketplace price is little more than other then still 30-40% buyers will choose preferred marketplace.
If the difference is much more than comfort level then almost all 95-98% will ditch even preferred marketplace .

The third level brand is a seller , which 85% of Indians buyer right not even aware .They think MarketPlaces is itself seller . Don't check the track record of the seller , and most of the fraud (like duplicate items, late delivery ) happens . But there are already 15-20% buyers who check track records of sellers and take a decision , and ready to pay a little premium to reputed seller.But slowly this awareness among buyers is increasing .Most of this buyers , once satisfied gives repeat order for frequently consumable items . They don't easily change even seller if there is some price difference .
One of my friends recently bought HP laptop around 25000 thousand from eBay .He reviewed the track record of the eBay sellers and paid around Rs 500 extra to top rated "Top-rated seller" seller on eBay with around 99% positive feedback . Hope most of us will do the same thing ."

Most of us worried, how a seller can make sure repeat purchase ? Already out of 15% seller aware buyers there are 4-5% buyers who buy repeat from same sellers if they require same consumable product at some interval (monthly) .
There is another concept at Amazon India called "Subscribe & Save" http://www.amazon.in/b?ie=UTF8&node=5728645031 . This makes sure seller get repeat order upfront . This is helpful for sellers like Olympia which operate more in the frequently consumable category .


ECommerce Fraud : Fraudster person can sometimes wear the hat of a seller and sometimes a buyer . As Fraudster seller he can ship damaged , duplicate or something else .
But, when he wears the hat of fraudster buyer then use return policy to make fraud. If the seller delivers a faulty product, then the buyer has the right to return the product within a given time limit. One might switch a fake or stolen item to the seller, retaining the original. One might use the product and put it through wear and tear before returning it (what is basically known as free renting.) One might switch invoices, receipts or prices to defraud the seller.


One of the comments , I have mentioned Cloudtail is 12x of Olympia Industry Ltd . But , in fact, it around 25X . Because Cloudtail seller is listed on Amazon India with two names .

Cloudtail : https://www.amazon.in/gp/aag/main?ie=UTF8&asin=&isAmazonFulfilled=1&isCBA=&marketplaceID=A21TJRUUN4KGV&orderID=&protocol=current&seller=A14UQ4H17XUX90&sshmPath=

Cloudtail India : https://www.amazon.in/gp/aag/main?ie=UTF8&asin=&isAmazonFulfilled=1&isCBA=&marketplaceID=A21TJRUUN4KGV&orderID=&protocol=current&seller=AT95IG9ONZD7S&sshmPath=

It looks like due to 25% cap on a seller, they are now reducing "Cloudtail India" sales . It can be observed by reduced 3 months and 1 months feedback count of "Cloudtail India".

Currently, expert predicts Cloudtail contribution to Amazon India GMV is 40% . So , Olympia might be contributing around 40/25 = 1.6 % . If Olympia gets require finance and able to make more lightweight business model , then at even 1% share they can have sales of 1000 crores once Amazon reaches 1 lakh crores GMV in next few years . But , I believe they will do much better because of the following reason .

1) Cloudtail will have 25% cap of Amazon India sell , which not visibly implemented till last quarter.
2) Olympia is wisely choosing some products where Cloudtail doesn't have the high presence.
3) Olympia has better ratings .
4) Somewhere down the line, even Cloudtail will have to stop making losses.
5) Amazon India invested minority shares 49% in Cloudtail which a lot of people feels the violation of FDI rule . If something adverse happens on this front , then It will be an advantage to Olympia.
6) GST will help overall e-commerce industry . Easy indirect taxation and expand to some states like U.P. where e-commerce is virtually not allowed by the current nonpractical process for buyers.
7) Slowly "Amazon Prime" will get popular , Olympia Industries has all products eligible for "Amazon Prime" which will be added advantage over nonprime sellers.
8) Foreign companies were interested in inventory based e-commerce marketplaces model due to high consumption demand in India . If Olympia Industries able to scale up then who knows , FII may also like invest in it .
9) More than 85% buyers don't know the concept of the seller on the marketplace(Online website) , slowly seller brand awareness will help Olympia Industries Ltd.
10) If they are able to start the business on another marketplace websites then it will be added advantage .
11) Right now if the buyer orders 10 different FNFG items then Amazon ships them separately . That does not create good buying experience to order at one go and receive 10 different product by 10 different time or days . Sooner or later Amazon will have to address this issue by fulfilling all FNFG products in one go .

I don't expect much growth this year but in the long term, they will grow . If one's time horizon is around 1 year then it is better to avoid Olympia Industries Ltd.

As per KPMG, only 0.1% SME has Online presence , lot more to go . They have choices to go Online them self or outsource to some sellers like Olympia , Intrasoft ( once they enters in India) .

BPL Story :
        Some of you might have already bought shares of BPL Ltd in one of the high probable turnaround story . This is a pure power of e-commerce . Some of the categories like electronics there is a natural advantage toward e-commerce . Please read BPL turnaround story at https://yourstory.com/2016/03/bpl-returns-on-flipkart/  .
        When a big brand wants to go Online route then they have catch 22 situation , It will damage their off-line chain but if they don't go then they loose emerging category buyers .
        So , some of the existing big brands don't give after sales support for Online purchases and ready to sacrifice online category .
        Flipkart has very wisely chosen BPL Ltd because they were not going to lose anything by going Online while BPL brand was still strong even though they were out of this market from last so many years.
     
Urban ladder :
        Urban ladder has also chosen to become an Online vendor at Amazon to get the large pool of Amazon India customer .
 http://www.business-standard.com/article/companies/urban-ladder-moves-away-from-stand-alone-play-to-be-on-amazon-116091600567_1.html    
Once , Intrasoft enters in India they will have existing strong competitor . Last year Urban Ladder has a gross merchandise value of around Rs 300 crore and posted losses of Rs 58.51. The company is understood to be valued at Rs 1500 to 2000 crores. Urban Ladder is backed by Ratan Tata . Aiming at a business size of at least $5 billion (Rs 32,000 crore) over the next four to five years .

E-commerce is full of opportunity for sellers, it is not suitable for all products and sellers temperaments . If one choose wisely then can make most of this opportunity .

P.S. ( 3 Oct 2016 )

What impression I am getting from reader that they don’t see anything special in Olympia Industries and they are under impression that they can start with little capital by selling no profit , no loss they can reach 200 crores in 3-4 years . Anyone with 1 crore capital will become seller on Amazon India and easily take away business from Olympia Industries Ltd in 3-4 years by reaching 200 crores GMV company . Earlier , I have explained by volume size advantage (some can call moat ) that it is hard to beat which is enjoyed by Olympia or any existing big player but now understand from capital point of view .

Now let take example person A has 50 lakhs and raised 50 lakh capital from friends and family on interest free. So, total capital is 1 crore with debt and equity ratio of 1 : 1 .
Person A puts 70 lakhs into inventory and rest 30 lakhs into non inventory expenditures like ( Computer , furniture , employee salary , transportation cost and so many other stuff needed to run business) . So , it has inventory of 70 lakhs . Olympia is having Inventory turnover ratio 6.37 7.27 5.30 from last 3 years . So , we can assume that even Person A can also have Inventory turnover ratio of 6 but it is selling on no profit and no loss then it can have even better ratio of 8 instead of 6 .
So whole year It can have GMV of 0.70 * 8 = 5.6 Crores of GMV . Great ! , it had made GMV of 5.6 from one crore initial capital . One now may say one year 5.6, second year 5.6 * 5.6 and like this . Soon , we will surpass Olympia .
Are you with me till this point ?

But reality is different from capital point of view . First year inventory was 70 lakh , second year it need to be increase then only GMV will increase provided Inventory turnover ratio remains constant at 8 .
Inventory can be increased by four ways
1. Get more inventory on credit from distributor or companies ( Tarde Payable) but It depend on Person A ‘s relationship and scale of operation . If is good at convincing skill then he may get 10-15 lakhs credit .
2. Raise Debt , but person A ‘s debt/equity ratio is already 1:1 , he will get disappointment here and even if get it then it will be very for no profit no loss company to afford interest burden .
3. Raise capital , but who will invest in person A’s business . Already investors are not putting money on Olympia which is trading at reasonably low valuation :) .Person A is not going to make any profit in next 3-4 years . person A is very small , new player and nonprofit making player , not many will put their capital.
4. By retained profit , free cash flow , internal accruals but company is not making any profit. For Person A this is not the option .

So, if person A can’t increase its inventory next year then it will again make same GMV of 5.6 crores in second year of operation. If we even assume that person A gets 10 lakhs credit from supplier / distributors then it can make 0.80 * 8 = 6.4 crores .
Growth will be slow down if person A is not able to increase inventory and choose to do operation with no profit and no loss with constant Inventory turnover ratio .

On another hand , Olympia has scaled up from 6 crores to 190 crores GMV in 2 years . It is remarkable achievement but not many acknowledge it . They don’t see anything special in it.


Now let’s assume a company B has 200-500 crores cash . They want to enter spend that on entry of new business . Will they become seller on Amazon ? Is it attractive opportunity to put cash in thin margin business with lot of headaches ?

Answer is No


I don’t see much threat from small player or new entry of players . I see threat from Cloudtail if they don’t expands to other market places because objective of Cloudtail is not to make any profit and they get continues capital inflow from their parents .
Threat of Cloudtail can be neutralized if they enters in Marketplaces like SnapDeal , Paytm , EBay India , Shopclues , infibeam etc