E-commerce in India - A Reality Check

The Global Analyst - Sanjeev LambaOur Director Mr. Sanjeev Lamba has shared his view point on ‘E-commerce in India – a reality check’ in The Global Analyst magazine’s May 2016 edition. You can read here as well –

From high GMV’s to lowering of valuation, from emphasis on efficiency and even profitability, and a new policy regime—this was the Indian e-commerce market in the first three months of 2016. With over $5 billion worth investment in 2015 and three to four startups emerging every day, India has paved its way to secure the third position in the world in terms of the number of startups, 4200 and counting, a growth of 40%, by the end of 2015. This will further be supported by the new economic regimes set up for encouraging startups in India.

The development of e-commerce has brought a revolution in the way business operates. The rapidly booming e-commerce sector can highly contribute to economic growth of the country, by enhancing citizen’s life, and by building innovative solutions.

The main reasons for e-commerce unable to unleash its true potential are lack of clarity and uniform procedures.

Since there were many loop holes and not a defined guidelines for ecommerce the Department of Industrial Policy and Promotion (DIPP) released guidelines on 29 March 2016, which clarified the position for foreign direct investment (FDI) in the industry which was one of the major news to Indian ecommerce industry.

The Guidelines, which were given immediate effect, set out the following basic rules (some of which were already there in the Consolidated FDI Policy Circular 2015):

  1. For entities who operate in business to business e-commerce, 100% FDI is permitted;
  2. For entities who operate in business to consumer e-commerce:1. No FDI is permitted for entities which own inventories of goods and services and seek to sell these goods and services directly to consumers (Inventory Model);

    2. Subject to a number of conditions, 100% FDI is permitted for entities which provide a technology based platform, acting as facilitator between buyers and sellers (Marketplace Model).

No vendor can account for more than 25% of his total sales through a single vendor in a marketplace.

These rules doesn’t allow the marketplaces to allow discounts directly as they have to come from vendors.

The new policy also mandates such e-commerce companies to display contact details of the sellers online. The warranty/guarantee of products or services sold online will also be borne by the sellers, not the e-commerce company.

All in all, it gives a level playing field with offline stores, which have witnessed a slump in footfalls corresponding to the increase in e-commerce.

One of the major challenges ecommerce is facing in India is Profitability. The second challenge is access to funds and FDI norms limiting the flow of funds and lastly Marketplace providers are prohibited from directly and indirectly influencing the sales price of goods and services. Organizations right now working under the Marketplace Model and investors hoping to enter the e-commerce sector are prone to be most influenced by the restriction against more than 25% of a marketplace’s deals being made by a single seller. It appears that this limitation was set up to keep marketplace’s suppliers from setting up seller entities for selling in the marketplace, therefore permitting the supplier to utilize an Inventory Model. Suppliers will likewise need to guarantee that by reducing, they don’t impact the cost of products and administrations.

There are others who are waiting certain setps which can help the E-commerce industry in a big way like-

  1. The allocation of taxing rights must be based on mutually agreed principles. Implementation of GST will provide uniform tax laws in the country, thus contributing to a hassle free environment for e-commerce business.
  2. The Indian Government should also provide clarity on how it is planning to use the Rs.10, 000 crore fund it had proposed for the program “Start-up India, Standup India”.
  3. In the UK, investors receive tax credits for investing in startups. The Indian Government can also plan similar incentives.
  4. The economic policy has received opposing reactions. On one hand, some believe that the heavy conditions which accompany the marketplace model make it virtually unviable. Others believe that the opening up of the e-commerce sector itself poses a threat to domestic brick and mortar businesses.

While some of the existing players may now have to reorient their affairs to meet with this conditional regime, it may open up the space for other players and investors who have been waiting for a while for a more clear regulatory regime.

But, certainly future holds the key and time will tell how it will shift and settled. However in short term ecommerce companies who deploy a mix of marketplace and inventory model are the most vulnerable as they may be forced to restructure their businesses to abide by the law.

While e-commerce giants will have to find new sellers to reduce their dependence on large sellers, also it will be interesting to see how marketplaces will comply with the law by clearly providing seller name and details since several e-commerce companies initially started their operations with inventory-led models. However, since FDI wasn’t allowed in direct online retail, these companies had to be restructured to accommodate foreign money.

Learn more about finance and accounting outsourcing , payroll services , virtual cfo at Aristotle Consultancy.

Business service providers betting big on startups with great deals

ETnew_2811“Deepak Dhamija talking about recently launched Startup booster plan designed for Startups – published in newspaper The Economic Times – Business service providers betting big on Startups with great deals. Complete article given below”

After investors and incubators, now business service providers too are betting big on the ongoing startup boom, offering new entrepreneurs all kinds of back-end support from patent protection to e-commerce infrastructure either free or at minimal charges. The idea is to build a strong client base for the future, say officials at consultancies and professional service providers in areas such as legal support, patent or trademark, management or HR, accounting or finance, e-commerce infrastructure and other ancillary services.

“Many of them are chasing startups to ‘catch them young’ as it’s an established fact (norms) in business world that entrepreneurs do not usually change their old associations when it comes to accountants, lawyers, consultants or any other business associates,” said Preet Deep Singh, founding partner at Ahmedabad-based Aperio Management LLP, which provides management advisory to several startups including babysteps, Wockito,, Konnectz and LawToons.

Many startup entrepreneurs while possessing a high potential idea have no clue on how to implement it or the nitty-gritties of starting a business. Take the case of Arthi Ramalingam, who recently passed out of the Indian Institute of Management, Ahmedabad. She opted out of campus placement to start her own fashion startup – Neons Fashion LLP. Now, she didn’t have enough funds to start her own e-commerce and bring it to potential customers’ notice. So she approached Ahmedabad-based e-8commerce player, which provides its Buildabazaar marketplace free for a year for select startups under its entrepreneurial programme.

Under this initiative, Infibeam provides end-to-end e-commerce infrastructure and other support services for successful operation for select 10 business ideas. And what does it get in return? “The proposed program will help Infibeam to acquire merchants at early stage and build sustainable competitive advantage by driving deep user engagement, personalisation and loyalty,” said Vishal Mehta, chairman and managing director at In other words, a successful entrepreneur on its platform would bring more business to Infibeam and will retain with it for long run.

Similarly, a leading chartered accountancy firm in Delhi NCR started a separate entity, Startup Buddy, to provide an entire gamut of back-end support functions like accounting, taxation, secretarial compliance, reporting, legal knowhow, project advisory and other services to startups only. In just one year of its existence, Startup Buddy has about 80 startup clients including Scoopwhoop Mockbank, Innerchef, Burger Singh, Zo Rooms and Localoye.
“At initial stage, our support helps them in channelising their energies in their business and to grow at rapid pace,” said Manu Somani, chartered accountant and associate at Startup Buddy. He said many of its clients are already well-known companies and growing at a rapid pace.
Startup Buddy has customised its product to suit the startup culture. For example, it provides startups a facility to check their accounting on real time basis on mobile application anytime and anywhere, Somani said ..
Manasvi Thapar, who runs law firm Candour Legal in Ahmedabad, provides intellectual property right (IPR) services to around 28 startups and some incubators as well. He said his firm has provided a dedicated 24X7 hotline number for startups.

Delhi-based intellectual property right (IPR) firm Sagacious IP has an ‘Idea to Market’ initiative to help startup innovators take their ideas to consumers.

“We start working with entrepreneurs’ right when they get the idea. On the age front, we work with innovators of all age but majority of our current portfolio is between 20-26 years olds,” said Tarun Bansal, co-founder and director at Sagacious, which currently has 65 projects under ‘Idea to Market’.

Aristotle Consultancy, an end-to-end accounting outsourcing, financial and advisory services provider to SMEs and MNCs, has started servicing startups as well.

“We believe that the business grows only when the clients’ business grow. Therefore, Aristotle delivery and billing model is very flexible for startups,” said Deepak Dhamija, co-founder of the consultancy that recently launched a startup booster plan especially for non-funded startups.

Under this, it offers complete payroll, legal, regulatory, taxation, accounting and reporting services at a nominal charge.

In the long run, as the client’s business grows the corresponding team structure and billing change. Today, Aristotle has a clientele of around 40 startups including Jabong, FabFurnish, FoodPanda, Tolexo (IndiaMart), Zimply, GoJavas and Printvenue.

How can your startup manage complex financial regulatory issues? Ask Aristotle

oie_276419kgcC5vUMIn the contemporary startup ecosystem, it is not unusual for entrepreneurs to focus more on the products and services they offer. Limited budgets often lead them to outsource matters like finance and accounts to professionals, as setting up in-house teams for financial solutions can be expensive. Also, a lot of time, which could be better spent focusing on their core competencies, is wasted in understanding complex regulatory issues.

Incorporated in 2010, Aristotle Consultancy is a SSAE 16 Type II verified organisation that provides end-to-end accounting, financial, and advisory services, and often functions as an outsourced finance department for startups. Currently operating out of Delhi/NCR, Bengaluru and Chennai, Aristotle Consultancy offers services such as AccountsOutsourcing, Virtual CFO, Payroll Services, Advisory Services, and Services for MNCs across several verticals to startups, SMEs, MNCs entering India, and Equity Investors.

The Genesis

When Deepak Dhamija, an IIM Calcutta graduate, was working as an Investment Manager for VenturEast Tenet Fund II (VET), he interacted with many startup founders, most of whom were looking for someone to manage their company’s finances and accounts. Deepak, who has also completed the the venture capital development programme at ISB, Hyderabad, noticed that there was a huge gap with the kind of services CA firms provided and the support the startups were seeking.  He saw an opportunity to fill this gap.

Deepak, who previously led a team at Infosys, offering business solutions to Daimler Chrysler, says, “During my interactions with various founders, I found that startups faced a lot of problems when it came to basic financial and legal matters. At the same time, startups can’t afford costly services, at least in the initial stages.”

Sanjeev Lamba, who is the co-founder of Aristotle Consultancy, heads the accounting and finance services at the firm.

Started with a seed capital of Rs.3 lakh, Aristotle Consultancy has been bootstrapped so far. The initial capital has been utilised to set up a delivery office in Delhi and hire manpower. Deepak says that they have been cash positive since their inception, and are therefore not looking to participate in the fundraising race.

Highlighting the challenges they faced in the initial days, Deepak says, “Companies are not very sure when it comes to sharing financials and outsourcing bookkeeping. So building trust with the client is quite important. Also, companies often face issues related to bad bookkeeping through ad hoc accounting practices. So it’s challenging to clean the backlog and historical data, not only from a statutory perspective, but also from the point of view of getting visibility on internal business performances.

21-day Mobilisation Process

Startups need experienced people and correct advisory, but these services are either not available or are very costly. The founders of most startups generally end up wasting a lot of their valuable time managing such services and fire-fighting regulatory, taxation, and compliance issues.

Deepak says, “Aristotle brings to the table its vast experience in handling and nurturing startups. The ’21-day mobilisation process’ is a special activity carried out by Aristotle during client on-boarding, where an expert team rigorously studies the client’s existing processes.”

Packages for Startups

Aristotle offers a comprehensive package named Virtual CFO, which takes care of finance and accounting needs of a company.

Hiring a full-time professional CFO and maintaining an in-house finance team may not be in the budget of a small enterprise. Deepak points out that startups and SMEs often don’t even need a full-time finance team, but they do need quality service. Today, there is no dearth of demand for such services, but there is a dearth of talent.

Often, it is arduous for startups to get a quality CA who understands their needs and matches their speed. Mentoring at a value-for -money price is something startup founders always scout for.

Aristotle works on a shared resource model, where the cost-saving benefits are passed on to clients. One can save 25-30 per cent of operational expenses incurred by clients by leveraging their services. Costs vary from Rs. 40,000 per month to Rs. 15 lakh per month depending on the volume and complexity of work.

Deepak says, “The idea behind the Aristotle model is that the large corporates should not be the only companies that benefit from experienced finance professionals. Current market offerings in the finance and accounting domain are either geared towards servicing corporates and are very expensive, or offerings are in the form of one-time solutions without any ongoing advice and support. Aristotle is here to fill that gap.”

Client Acquisition

Initially, Aristotle Consultancy started off with Royal Bank of Scotland and India Hospitality Corporation. Today, they have expanded operations to geographies like Delhi-NCR, Bangalore and Chennai, handling 40 clients including Jabong, Fabfurnish, FoodPanda, Tolexo (IndiaMart), GoJavas, Printvenue, and Xerox. It also has a couple of overseas clients, mostly in the Middle East.

Currently, Aristotle has a team of around 100 people, 20 per cent of whom are CAs. They also have in-house team for Payroll and Secretarial services , who operate from Aristotle’s office. For Finance and Accounts, based on client requirements and specifications, they build an in-house team that works from the client location.

Deepak says, “We charge the client strictly basis the resources deployed against the assignments. We have very competitive rack-rates and clients are billed accordingly. We recently introduced a “Start Up Booster” pack for non-funded startups. The purpose is to make our Services affordable to new startups so that they can focus on their core business.”

Growth Plans

According to Deepak, over the last three quarters, Aristotle Consultancy has been doubling their revenue and witnessing a sharp rise in business by bagging quite a few fresh tech startups. In the last fiscal year, the company achieved revenue of Rs. 4 crore. They are targeting revenues of Rs. 6 crore in the next fiscal.

Source –

Handling startups' finances - ET Wealth

ET Wealth

“Deepak Dhamija talking about the idea behind Aristotle Consultancy and how its helping startups manage finance and accounts, published in ET Wealth titled – Handling Startup’ Finances”

Featured – The Economic Times Wealth

Managing finance functions is one of the major pain points of startups— given shoestring budgets that do not allow for the services of a proper CFO. In addressing this problem, Deepak Dhamija found an opportunity to build his own business. In 2010, this former investment banker, along with Sanjeev Lamba, his brother-in-law, and Aniketh Kumar, Lamba’s colleague, founded Aristotle Consultancy to meet finance, accounting and compliance needs of startups and SMEs.

Dhamija, 33, who was working with a startup-focused venture capital fund, realised that entrepreneurs were constantly grappling with financial and legal issues. “It was quite expensive to create in-house teams for such solutions and the local CAs were not familiar with the processes and the problems faced by entrepreneurs,” says Dhamija. As a result, entrepreneurs, instead of focusing on the core operations of their business, were wasting a lot of their time handling financial or regulatory issues.

“There was an immediate need for process-oriented accounting service providers in the market. And we decided to become the outsourced finance department of startups,” says Dhamija. The founders, who invested `3 lakh to seed their venture, found the initial phase quite trying. Gaining entrepreneurs’ trust was among their biggest challenge. Also, a large number of the newly-founded companies, in their eagerness to grow fast—and, in some cases, to avoid tax—weren’t following the due financial processes. “It was quite difficult to convince them about the benefits of following the right process and executing the same without losing the agility in decision making,” says Dhamija. The founders spent a considerable time understanding their potential clients’ businesses and, thus, managed to gain their trust. This intricate involvement with the clients has helped the startup gain the trust of as many as 40 companies. Its client list includes some of the biggest startups including, among others, Jabong, Fab-Farnish, FoodPanda, IndiaMart and GoJavas.

Aristotle Consultancy 2011-12 revenue stood at Rs 1.1 crore. The company has seen a steady rise in its turnover clocking Rs 4 crore in 2014-15. Its staff strength has increased from 20 to 80 even as one of the co-founders, Kumar, is no longer with the company. The startup is now looking to accelerate growth. “We are mulling raising funds now to develop our in-house technology and to expand aggressively in other markets,” says Dhamija. The startup, which offers services to some international clients as well, recently entered Bengaluru and Chennai.

Dhamija says that even though there are others offering virtual CFO services, the extent of his company’s involvement, which goes beyond just the advisory role, sets it apart. “Our long-term vision is to provide high-quality accounting outsourcing services for startups and SMEs across the country,” says Dhamija. The company’s short-term goal is to replicate its Delhi success in the Bengaluru and Chennai markets.

Learn more about finance and accounting outsourcing , payroll services at Aristotle Consultancy.

Business with a difference


“What’s differentiating Corporate and Startup culture, Deepak Dhamija shares his insights in Economic Times titled – Business with a difference”

Here are a few things that start-ups do differently from the rest of the corporate world. Start-ups speak a different corporate parlance and it’s most evident in the way they treat their employees. Be it something as simple as the seating arrangement or something as game-changing as an open communication system, start-ups believe in breaking conventions and pushing long-defined boundaries.


Hierarchy? What’s that again? Startups believe in a flat structure where authority is no bar for innovation and growth. “We have a non-hierarchical system and open communication in terms of talking to people because a lot of our work is very dependent on collaboration in every sphere”, says Sid Taparia, founder,, an original merchandise retailer. He adds, “Because of the way large companies are structured, a lot of communication is siloed and takes time to go around. Start-ups are more flexible, nimble and react faster to changes because of open communication.“


Forget cabins, cubicles and straight backed chairs. Start-ups want you to lie back in a cushy beanbag and get cracking on your laptop. “With no cubical environment adjoined by the bean bag culture there is much transparency between all individuals sitting together on one floor. This gives a sense of being together and working together,“ explains Neeraj Jain, CEO and co-founder, Zopper, a hyperlocal marketplace.


Unlike established companies, a start-up offers lot of scope for shaping and sculpting. So they look for people who can `build’ the company. “Any company, start-up or otherwise, must always look for people who are `builders’ and must try to create an environment of `building culture’, as this helps in unlocking the hidden potential inside employees and contributes in chiselling out the organisation’s success story. One of our employees, apart from his full-time function as a marketer, has also started his own homemade food service to cater to other office employees. He is currently receiving nearly 60-70 orders from the office every day,“ says Sandeep Ghule, CFO and head HR, TranServ, a digital solutions company.


Start-ups move away from the anonymous culture in many big organisations where individuals are only known by the work they do. “I honestly think the biggest differentiator at a start-up is the relationship between employees, and between employees and their managers. We all sit together in an open floor plan which keeps communication open and ensures that issues are escalated and resolved quickly”, says Sanna Vohra, founder and CEO,, a wedding planning and shopping portal.


Start-ups believe in on-the-spot recognition for those who are result-oriented. Sounds like a dream? Amit Sinha, VP business planning and people, Paytm says, “We have quarterly performance reviews as opposed to the traditional annual ones. Our KRAs are also dynamic as opposed to annual in other cases. Our PLIs are evaluated and paid out on a quarterly basis.

And this also means that employees must work faster and harder.


Although Employee Stock Ownership Plans (ESOPs) are not restricted to start-ups, smaller companies are likelier to offer it as an incentive to balance out packages that do not match up to larger companies.“ESOP is one powerful tool, through which founders are able to retain key employees, and they are being made party to the success story,“ says Deepak Dhamija, co-founder, Aristotle Consultancy, a virtual financial advice portal.


In most companies, team outings are an employee initiative and rarely transpire. That’s not so in start-ups.

Learn more about accounting outsourcing at Aristotle Consultancy .