Only 44% of rural India willing to pay for COVID-19 vaccine doses

As the country waits anxiously for the official launch of the coronavirus vaccine including those from Indian pharmaceutical companies, a survey of Rural India by Gaon Connection (GC) reveals that 44% of the respondent households were willing to pay for the vaccine. While 36% said they wouldn’t and 20% said they were not sure.

Of those willing to pay for the vaccine in rural India, two-third were open to shelling out less than Rs 500 for two doses and just 8% were comfortable paying Rs 1,000 more. Also, over than 33% respondents said their elderly parents would be the first to get vaccinated.

The findings are a part GC’s third rural survey titled the ‘COVID-19 Vaccine and Rural India’. Conducted across 60 districts in 16 states and one union territory, the face-to-face rapid survey comprised a sample size of 6,040 households and was conducted between December 1 and December 10, 2020.

The survey also asked rural citizens if the government had to prioritise vaccination, who should be given the top priority to which 43.5% respondents said it should be the doctors and nurses.

The GC survey also showed that over 51% respondents believe the COVID-19 disease was a “conspiracy by China”, 22% said it was due to failure of people to take precautions and 18% felt the government failed to contain the spread.

While jobs and incomes were impacted, half of the survey respondents said spend on buying / consuming packaged immunity boosting products viz. Chyawanprash, Giloy, Kaadah, Vitamin tablets, etc. has increased during the pandemic. That’s not all, the coronavirus outbreak altered the food habits of rural citizens. Almost 70% stopped eating outside food, over 33% were consuming more vegetables and 30% were having more fruits in their daily diet.

Around one-fourth of the total respondent households reported that samples from at least one member of their household was taken for the testing of COVID-19. The proportion of such households was the highest (42.6%) in the east-and-northeast zone, whereas it was the lowest in the north zone (10.9%).

Of the 25.9% respondent households who reported their family member(s) getting tested for COVID-19, more than half, that is 59%, said at least one person in their household had tested positive for the coronavirus. Overall, 15% of the total 6,040 respondent households reported at least one person in their household/friend circle testing positive for COVID 19.

Overall, some 15% rural households reported at least one person in their household / friend circle testing positive for COVID 19.

Those keen for more details on the survey can download the full report published under the title ‘The Rural Report 3: COVID-19 Vaccine and Rural India’ from www.ruraldata.in.

(The writer is a Mumbai-based independent business journalist and has extensively covered diversified consumer businesses over the last two decades. He can be reached at hello@ashishktiwari.com)

Our focus will be to make people feel and experience 'The Mantis': Ranjita Ravi, Orxa Energies

The Mantis, India's first EV performance bike

A version of this interview first appeared in The Free Press Journal edition on Friday, December 06, 2019.

After operating in stealth mode since a couple of years now, Bengaluru-based start-up Orxa Energies has unveiled the first look of India’s first electric performance bike, ‘The Mantis’ that can do 200 kilometers in a single charge, can attain a top speed of 140 kilometers per hour (kmph) and boasts of a battery swapping feature. Ranjita Ravi, co-founder, Orxa Energies, in conversation with Ashish K Tiwari, speaks about the business of the company bootstrapped in 2015, experience at Airbus BizLab, electric vehicle (EV) segment, lithium ion battery technology and more. Edited excerpts...

The bike being unveiled is a finished product or you plan to refine it further for the commercial launch later next year?
This is a product unveil, something that’s very close to what’s it going to be in the final production version. There could be some refinements closer to the commercial launch. Small technical things like maybe increase the battery capacity a bit more. We’ll have to see how that happens.

Your company has been working on some developments for Airbus. What exactly are you doing for them?
We were a part of the Airbus BizLab, an accelerator programme by the European multinational aerospace corporation. They have four Airbus BizLab locations worldwide and Bengaluru is one of them. Essentially, what we wanted to work with them was in the battery space. So aspects like development, electronics and things like that around the whole battery technology. This was back in back in 2017-18. There are a few ongoing projects we are still working on for them but I’m not at liberty to discuss about these projects.

This idea about a performance bike in the electronic vehicle (EV) segment happened before the Airbus BizLab development or after?
Actually the company was started keeping the EV performance motorcycle in mind. I think there are quite a lot of synergies that our team has with aerospace majors like Airbus. That’s what led to us teaming up and firming this alignment. If you think of a performance motorcycle and aerospace application, their exigencies are very similar.
There is very less space available, it has to be of a very high performance and be very light-weight. So volume availability is less, there are strict weight restrictions and it has to deliver a great performance. That’s how we began working with Airbus BizLab.
We have other aerospace clients as well and are working with them on a very research and development (R&D) stage on a few pilots. Basically, our battery technology is very light despite being rugged and gives a very good performance. So there is a strong alignment between our product and the demand scenario in this segment.

Is the battery technology your primary business or EV performance bike?
The motorcycle is primary business. We started doing our own battery packs because there were no battery packs that could meet our requirements for the EV performance bike. In the initial stages, we thought off-the-shelf battery packs could be used to power our performance bikes but that was not the case. That’s when we started work on developing our own battery technology. The requirements for the two industries are similar and my co-founder and chief technology officer had extensive experience in this industry we saw the application immediately. That’s how developing the battery technology came into play for us. It’s already a separate business vertical for us.

The lithium battery space is getting very crowded with too many players homegrown and international joint ventures (JVs) claiming all sorts of things.
Competition is good and we think good technology will stay while bad technology will die a natural death. It’s also very important because the level of technology and R&D is newly developed. Right now, I think India has that once in a generation opportunity in this space. People keep talking about how we lost out on a whole lot of things in the past.
If you look at the entire EV ecosystem though, I think we have a great chance to the take lead. The EV space in India is not going to develop the way it did in Europe or for that matter any other nation where EV related developments have already progressed to a certain level. We need India-specific technology and there are a lot of people working on it at present and that’s very good. NITI Aayog estimates the battery pack industry to be about $9 billion by 2025 and that’s just for automobile category. So, the market potential is huge and a lot of people in India need to make a lot of noise about their achievements in the EV technology space.
People in India should be working on various EV technologies because it’s too early for standardisation. There should be different lithium ion and related chemistries, people working on various types of battery packs whether it is charging, swapping and so on. I think a lot of noise needs to be made until 2025 post which efforts will have to be made to figure out a business model around what works best for India. Thereafter it will be a completely new phase of growth for India in the EV technology space.

Do you have intellectual property (IP) rights on the battery technology?
We have multiple proprietary IPs in each of our battery packs. The battery management systems and controller systems are our own. The engineering and design for the battery pack is all in-house. The product is rugged, strong and does not require active cooling and still delivers in terms of performance. Some of the IPs have been filed already and others in the filing stage.

Tell us about the unique aspects about the bike and the battery pack.
Everything from the wheel to the handle bars for the bike has done by our team of engineers and designers. A lot of work has been done around its frame. Electric vehicles have to be lighter, faster and stronger. We are working on a frame architecture that’s very unique to us in such a way that it’s not only a design functional element but is also very different from what some of the other people are attempting to do in the market. The design helps in a big way to facilitate battery swapping while giving the bike attractive look and making it strong. Our battery pack has a capacity of nine kilowatt hours (kwh) and there are six modules giving the bike a 200 km range in a single charge.

A lot of engineering has gone into how the battery swap works and how we are going to fit a 9kwh battery in it. The very fact that we have such a large capacity battery pack gives us the advantage that these will last longer compared to the 3-4kwh options available in the market at present. The battery capacity not only gives a huge range per ride but the life cycle as well. We are still doing a lot of aggressive life-cycle testing in-house, a lot of R&D using multiple cells is on, extensive data collection and mining is underway.
All this exercise will be useful once we get into the commercial launch and offer customers products that are backed by qualitative and quantitative data points.
We started customer pilots of our battery packs mid-2018 and the response has been phenomenal. One customer put the battery pack in a plastic basket under his commercial vehicle and did a 50-60 km run without any issues. Another customer in north India used the battery pack in his passenger two-wheeler driving in 50 degree Celsius weather conditions.
Our battery packs are on passive cooling which is another unique feature in addition to the rugged ‘Made for India’ design. The customer pilots were done across two- and three-wheelers, commercial vehicles, aerospace systems. So 2018-19 has been a year of testing and pilots and 2020 is when EVs will actually pick up and run.

Have you also used aerospace materials for the structural design of the bike and the battery packs?
Yes, the entire chassis has been made using aerospace grade material. Some of the aerodynamics is also based on aerospace learnings that we got while at Airbus BizLab. Also, my CTO and co-founder, both have extensive simulation and R&D experience. So all of that have been put to good use in putting together the bike and the battery packs.

Could you share insights on the connectivity features in the bike?
The Mantis will have a coloured dashboard, a companion mobile application to see ride analytics and things like that. The app network will also be able to tell you about the battery swap station network that will come up eventually. In fact, just the battery pack will give the rider approximately 150 data points. So one can do a lot of data analytics, over the air updates and a host of other things. Having said that, we are against over the gadgetisation practice that’s happening in the market.
I think motorcycles should stay true to its spirit. Motorcycling is about the freedom and pleasure of riding, and the vehicle should not be restricting the rider from getting that performance on the road. If you are going to be distracted because your app is telling you one thing and the network is telling you something else, it will be very distracting for the rider. The bike will have all the essential features that’s just right for the motorcycle and the rider.
While we can do a whole lot of things and we will do it when the time is right but that’s not what The Mantis is primarily about. Anybody who is an amateur or a professional rider can just pick up The Mantis and drive. The Mantis has been designed by a team of bikers and it should be as natural for you to ride as any other motorcycle.

What’s your pricing strategy for The Mantis? And who are the target buyers?
The final price will be decided closer to the commercial launch. Some market studies have been done wherein 150 people rode The Mantis in mid-November. Prior to that, we’d done a ride with about 200 people. A lot of consumer studies have been done in between as well. These covered aspects like who will want to ride The Mantis, why would they ride it, how much would they be comfortable paying for it and things like that.
In this category, we are estimating the pricing to be anywhere between Rs 3 Lakh & Rs 4 lakh and we’d like to keep it within that range. The consumers will largely be those looking to own a performance bike. It’s not a mass market vehicle hence the positioning will be premium as well. We will largely use the online channel and other customer experience programmes reach the target audience. Digital is a very good tool for start-ups to scale up. Videos really work well for the automotive segment and help build a lot of excitement for various on the ground activities being planned. Over the next six months there will be a lot of customer engagement activities that will be done to get The Mantis into people’s hands and let them feel and experience the bike.

This pricing will require financing tie-ups as well. Have you already got vehicle financing companies on board?
Yes, we are working on the financing options. Getting the product in the customer’s hands is very important. As per our market study, riders in the performance bikes category are willing to pay between Rs 12 lakh and Rs 15 lakh for a motorcycle. And they spend over Rs 5 lakh more on accessorising the vehicle. For them having The Mantis as a city option is not very inconvenient.

How big is your team at Orxa Energies?
We are just a 15-member team and most of our engineers and designers are in the 23 to 30 year age bracket. Me and my co-founder are the oldest in the 30 plus age group. One of our designers builds custom motorcycles. We have a mechanical engineer who builds go karts. Our electronics engineer is a semi-professional biker and does robotics on the side. The team is our strongest asset and having such a lean team gives them the opportunity to do a lot of work. Our designers are thinking about engineering work and manufacturability of the design, something that’s quite unique in the value chain and it’s very hard to find designers who can actually do that. This is also the reason we able to do a lot of things in-house. The team also work s very closely with vendor partners to ensure the casting and related things are done to specifications and in the best manner possible.

Have you got any external funding for the bike and battery pack business?
We have raised money from an angel investor and an institutional investor in the last couple of years. We don’t make our investment numbers public as it tends to distract from the actual work that’s happening and the value the company is adding.

The commercial launch happens sometime in mid-2020. How are you going about producing the bikes?
We are already working with quite a few vendor partners for the components for the bike and the structure for the battery packs. However, the final assembly, quality check, etc. will be done by us. In fact, we are already doing the battery assembly in-house. We have a fair idea of the ecosystem, how and where will everything get manufactured as well as partners who will work with us in the process. Currently, we have a small assembly facility because we were only doing pilots however we will now set up a large one wherein the bikes as well as the battery packs can be assembled.

Will you have variants of the bike or will it be just different colour options?
We are still exploring that and will see how it pans out. The idea is to have a few variants of The Mantis post the commercial launch. What’s on display currently is one variant in different colours. But the idea is to have different variants eventually followed by other models from the Orxa stable. The new bike models will be more based on the performance and styling aspects.

Are you considering setting up own distribution and after-sales infrastructure?
Initially, we will pursue the online and below the line (BTL) approach. However, for our other products we may consider having a sales and distribution set up at a later stage. We are working on preventive maintenance and things like that. However, electric vehicles have very low maintenance as the belt and the wheels are the only moving parts. There is no engine, you don’t need coolant, oil, you’d probably need to get breaks and electronics checked once in a while. So we are working on an after-sales model. It’s in the works and details will be shared at the time of the commercial launch.

Could you also give us a sense of the market size for this product?
We are very ambitious and bullish about how the EV segment will operate overall. The category of performance motorcycles market in India that we are looking at, has been growing 30% year-on-year since the last four years. These comprise bikes with engine capacity of 200cc and above. It’s a very aspirational product and falls in the discretionary spending category. That’s also the reason there is very little impact of slowdown in this category.

Between the bike and battery packs, which one will be a larger business vertical for the company?
Both are equally important as one cannot exist without the other. In fact, if you consider any EV, batteries are 60% of the entire cost of the vehicle. So battery is very critical and more so for us to have it in-house. Generally speaking, battery packs is a problem that needs to be solved for a lot of people. Our battery packs are small, modular and can be swapped; it’s a solution that’s interesting for many people. Our battery pack can be charged at home in three-and-a-half hours and that gives the bike rider a 200 km range per ride. Also, the battery pack has huge capacity at 9kwh so it will not have to be charged very often and that’s a huge advantage.  We are collecting usage data from our customers and will be able to freeze on what sort of warranties can be offered. Generally, lithium ion batteries for automotive use can last for five to eight years, depending on the usage.

What are your plans on taking the performance bikes to international markets?
India is a very tough market to crack and companies like General Electric (GE) have said this multiple times. They had a baby warmer unit used in neonatal care. GE had to rebuild the unit in India at one-tenth of what it was priced globally. Like I said earlier for our battery packs, we couldn't just pick a battery pack off-the-shelf from any of the large global makers as well as those in India. It doesn't work that way. And that's why we had to design a battery pack that’ll run in 50 degree Celsius. Our aerospace battery packs have been tested at 65 degrees Celsius.
We do drop test for our battery packs in our office to see what study the impact after it falls from a one meter height. So there are many other things that we do to ensure the product quality and performance in extreme conditions. The product has been built to cater to the Indian conditions at a price point that suitable for the Indian market. Having achieved all this, I think we will be better equipped to take these products to a lot of international markets. We aren’t exporting the battery packs yet but that’s is part of the plan eventually.

(The writer is a Mumbai-based independent business journalist and has extensively covered diversified consumer businesses over the last two decades. He can be reached at hello@ashishktiwari.com)

Pro racers testing The Mantis on racing tracks in November 2019.

FMCG sales from eCommerce in India to touch $4 billion by 2022: Nielsen E-Trak Index

Sales of fast moving consumer goods (FMCG) from the eCommerce channel, which presently contributes 2% to the current FMCG market, is set to grow at a compounded annual growth rate (CAGR) of 44% to $4 billion by 2022, says an E-Trak Index launched recently by Nielsen India. The new introduced index has been created using aggregated ePOS (electronic point of sale) data from cooperating eCommerce players and data science backed estimation for non-cooperating eCommerce players in India.

Prasun Basu, South Asia Zone President, Nielsen Global Connect, said, “In this rapidly evolving world of commerce, India’s FMCG industry is now making its presence felt in the eComm channel - appealing to consumers’ need for convenience, and in sync with increasing smartphone and internet penetration. The E-Trak index is aimed at giving a truly complete picture of the changing marketplace. The index will measure FMCG consumer offtake in the eComm space while marrying this with trends seen in modern and traditional trade to get a read on omni-channel in the country,” he said.

Courtesy: Nielsen E-Trak Index

The E-Trak Index is a unique measurement solution that tracks the FMCG eComm industry in India. As per a company statement, the index adds a crucial element to the retail measurement services that Nielsen provides by adding a view of the FMCG eComm space for all India metros. The data comprises monthly read for total FMCG, super-categories, category level for about 20 categories and for 11 categories at a top manufacturer level. Manufacturers and marketers get data, information and insights that can be further used to hone their eComm channel sales strategy to help shape a smarter market.

“While the foundation is taking shape, eComm’s dynamic nature has made it a disruptor in the marketplace,” said Sharang Pant, head-retail measurement services and retailer vertical - South Asia, Nielsen Global Connect. eComm has seen a transformative journey and is now a $1.2 billion industry growing from 0.5% contribution in 2016 to a 2% contribution in 2019. It is now slated to be 5% in 2022.

According to Pant, this is in half the time that brick and mortar retail took to evolve. “That said, these channels are not cannibalising each other and all continue to grow with eComm outpacing modern trade and traditional trade. The view that Nielsen presents on understanding channel, category and consumer trends will directly help players understand the right strategy in terms of assortment, pricing and positioning to win with the evolving consumer,” he said.

Given the significance of the channel from both a current as well as future perspective, Nielsen has built a unique state of the art hybrid model for estimating this dynamic and growing channel. “The methodology involves leveraging data from key collaborating etailers in the FMCG space. We then use crowd sourced data coupled with machine learning techniques from a panel of 200K+ consumers to estimate the eCcommerce sales for FMCG products,” said Nitya Bhalla, head - data science - South Asia, Nielsen Global Connect.

Courtesy: Nielsen E-Trak Index

Insights from the E-Trak Index reveal that metros are leading the eComm FMCG race with a 6% contribution from the channel to total FMCG sales. Amongst these, foods is the biggest contributor with 44% followed byt personal care (40%) and household care (13%). Narrowing in on the value contribution of eComm to metro sales categories with the channel, diapers contribute 26% to the sales; followed by skin creams (12%) and shampoo (10%).
(The writer is a Mumbai-based independent business journalist and has extensively covered diversified consumer businesses over the last two decades. He can be reached at hello@ashishktiwari.com)

Titan cuts H2 FY’20 growth guidance to 11-13% from over 20% earlier

A version of this story first appeared in The Free Press Journal on Wednesday, November 6, 2019.

Stressed consumer sentiments coupled with growing tendency for conserving cash in hand is likely to impact growth targets for consumer companies in the remaining quarters of the current fiscal. And as demand environment continues to be sluggish, consumer companies could be looking to revise their growth guidance for the second half (H2) of fiscal 2019-20 (FY’20).

Taking a lead in this direction is Tata Group’s jewellery, watches, eyewear and fashion accessories business vertical, Titan Company Ltd (TCL). The company management said in an earnings call on Tuesday evening that it has revised jewellery business growth guidance for the period between October 2019 to March 2020. Taking a cautious approach Titan Co. management had in August 2019, said that it was targeting over 20% revenue growth keeping the wedding and festive season in mind.

C K Venkataraman, managing director, Titan, said, “The guidance has been revised to between 11% and 13% now from the earlier over 20% growth levels.” The downward revision has been done after taking into account that overall market situation and consumer buying behaviour, said the top company executive.

Analysts tracking Titan are of the view that the premise of over 20% growth talked about earlier was based on company’s execution of business and not necessarily relying on overall macro market conditions. However, the change in the guidance now is an indication of concerns in this industry as a result of which Titan management has made a significant correction in its growth numbers going forward.

Abneesh Roy, executive vice president - institutional equities (research), Edelweiss Securities, said that the brokerage has been pointing that achieving 20% guidance in H2FY20 is very difficult in jewellery business given weak sentiments, high base of 36% in Q3FY20 and 21% in Q4FY20. “For FY21, the company is yet to change guidance from current 20%. By next quarter, Titan said they will have more clarity,” said Roy.

 
While Edelweiss expects Titan to correct 5-6% in near term, from longer term perspective, the brokerage maintains a BUY on dips given huge retail expansion, struggling competitors and increasing formalisation of jewellery sector.

Elucidating the reasons that led to revising the guidance, Venkataraman said, the company had set out a growth table for five years based on positive sentiments in the business environment. Growth may have been sluggish, in single-digits or flat during the fiscals 2018 and 2019 owing to certain migration that started happening as a result of a lot of structural changes, demonetisation, Nirav Modi scam and so on.

”The trust factor started kicking in, in favour of Tanishq and we were able to deliver a 20% plus growth rate with a certain set of initiatives and certain level of excellence in our execution. Our internal research with consumers done earlier in January and February 2019, indicated positive sentiments. However, what’s appearing now after six - seven months, is that the sentiment is actually worse than what we had measured then.

“As a result, the overall industry has witnessed 70% decline in imports, every single jeweller that we are aware of, is talking about a decline, vendors are talking about big drop in supplies. Regional jewellers are talking about a 12% and 22% decline in business during the festive period as opposed to 10% positive growth that has been achieved by Tanishq. So, obviously the strategies and standards of excellence in our execution are happening in a circumstance that’s less in our favour than a year ago,” he said.

Taking into account the market conditions, the company had to go back to the drawing board, expand the number of weapons that required (to deal the market conditions) or create fresh ones. That, as per Venkataraman, will take a little more than a few months and hence the change in guidance for October 2019 to March 2020 period.

“It is our intent to keep gunning for the over 20% growth number for fiscal 2021. For the moment though, it can only be about tweaking of the arsenal that we already have. And we are going by the more recent growth performance over the last three to four months,” he said.

While companies like Hindustan Unilever Ltd (HUL) operating in the fast moving consumer goods (FMCG) sector are optimistic about overall business, the company management had earlier said that near-term demand outlook, especially in the rural markets, remains challenging.

Among India's leading Ayurvedic and natural health care companies, Dabur said that it is working on achieving its annual growth target of mid to high single digits for the full year.

On the possibilities of revising the guidance for the second half of current fiscal, Mohit Malhotra, chief executive officer, Dabur Ltd, said, there was no need to do it. “We will work to achieve the targeted growth rates for the fiscal 2020,” he said in the earnings call on Tuesday.

(The writer is an independent business journalist and can be reached at ashishktiwari.1976@gmail.com)