Indepth: India Inc on operating in a post-demonetised ecosystem

It’s one year today since the Modi Government introduced its demonetisation drive in India. The policy decision taken to curb black money in the society and also fasttrack the country’s move to digital payments is most remembered for the haunting images of people standing in long queues outside banks and ATMs in search of elusive cash. Overnight, 86 per cent of the country’s currency, especially 500 and 1,000 denomination notes was rendered invalid. 

We at Adgully have been following up with industry stalwarts on the impact of the demonetisation drive across media, marketing and advertising. Print players, broadcast experts and radio majors have reminisced about how the initial days after demonetisation were, analysed the short term and long term impact, how they coped with the challenges that cropped up and what the industry did to tide over the impact of demonetisation. 

On the first anniversary of demonetisation, a cross-section of industry leaders share their insights, experiences, advice, analyses and much more… 

Naresh Gupta
Naresh Gupta
Naresh Gupta, CSO, Managing Partner at Bang in the Middle, remarked that while there was not much impact in the short term, in the long term there was pressure on the margins. He said, “Fees stared to get delayed, our largest clients wanted discounts as high as 50 per cent on the fee and we did see a substantial revenue dip. A year later, we are still not at the same level as the pre-demonetisation level.” 

He further added, “The initial impact was of a big squeeze. Faced with cash shortage, consumers put a halt to a lot of discretionary spending and markets saw dwindling activity. We saw a big dip in execution with all our brands.” 

Ankur Dhawan
Ankur Dhawan
Remaining positive, Ankur Dhawan, Chief Investment Officer, PropTiger.com, remarked, “Despite the slowdown in the initial phase, demonetisation has had a major positive impact on the real estate sector and turned out to be a blessing in disguise in the medium-to-long term, especially for buyers of mid income and affordable apartments. Although it had a huge impact on both primary and resale real estate transactions in November and December 2016, with sales dropping by 40 per cent, one of the key benefits of demonetisation was a reduction in base rates by 1 per cent for almost all banks. Post January 2017, the overall sentiment of the industry took an uptake, which is visible in the number of units sold in the January-March ’17 quarter at ~51,000 units against ~54,000 units sold in the July-September ’16 quarter. These facts and figures clearly indicate that in the near future the sector will be propitious and will fetch the best of the results in all times.” 

Kamal Nandi
Kamal Nandi
Kamal Nandi, EVP & Business Head, Godrej Appliances, too, said that the aftermath of demonetisation lasted till the first quarter of 2017. He added, “The consumer durables industry de-grew by 40 per cent in November and 15 per cent in December 2016 and by 3 per cent in January 2017. There was no growth recorded for the months of February and March, but sales picked up in of April 2017. However, the recovery of the demand for consumer durables from the effects of demonetisation must to be discussed in conjunction with the impact of GST, which started to trickle in since May 2017. We saw a boom in sales pre-GST implementation, riding on the offers levied by retailers, followed by a lull post the implementation. The industry has since recovered, witnessing marginal growth during the festive season, though short of our expectations.” 

Shubh Bansal
Shubh Bansal
Commenting on the growth story, Shubh Bansal, Co-founder and Marketing Head, Truebil, said, “The impact of the demonetisation drive was short-lived for Truebil as we started converting the latent demand for used cars on our platform quite quickly. While consumers were spending cautiously for a few months after November, they were agile in moving back to trusted platforms such as ours to undertake car purchases once things had settled down. In fact, the passenger vehicle sales in India crossed the 3-million mark for the first time in 2016-17 and the demand is constantly rising. In retrospect, one can safely say that demonetisation has, in fact, created a huge positive impact in the auto industry. It has helped organised players like us by streamlining processes further – such as making PAN number mandatory for big-ticket purchases. However, the unorganised sector has witnessed a drop in cash-based sales, which will prove to be beneficial for the eco-system as a whole in the long run.” 

Adhil Shetty
Adhil Shetty
Adhil Shetty, CEO, BankBazaar, too, said that post-demonetisation, consumers have become aware of all the alternatives they had to cash. At the same time, businesses recognised these digital payment modes as an important channel. This adoption on both sides made it easier to transact using digital means, compared to earlier. Alternatives such as eWallets and UPI gained prominence, while cards – both debit and credit – saw an upsurge in adoption. The number and scope of online transactions such as NEFT and RTGS, as well as mobile-based transactions such as IMPS saw a lot of traction. 

“Digital payments were the first step to digital finance for many people. As people made their foray into digital transactions, they became more aware of the benefits – simplicity, speed, transparency – of not just cash transactions, but digital finance in general. Today, this has led to more customers opting for the online route with a great deal more confidence. Be it credit products such as loans or credit cards, insurance products, or investments such as mutual funds, we at BankBazaar are seeing a sustained and growing interest and preference for the paperless model, especially for products that are supported by instant, paperless verification and documentation processes,” Shetty added. 

Partha Pratim Sengupta
Partha Pratim Sengupta
Partha Pratim Sengupta, Chief General Manager, SBI, Kolkata Circle, noted that during demonetisation, there was a huge deposit of cash, so obviously the liquidity of the inter banking system went down and again the people who were not coming to the bank were forced to come for depositing their money. 

According to him, “Post demonetisation, the challenge for the banking system was primarily to create the proper system of liquidity and availability of cash. Secondly, we have been promoting digital banking with machine, apps (Bheem app) and other digital initiatives. Because of that, the footfalls have come down and more people are doing banking transaction digitally.” 

Vineet Sodhani
Vineet Sodhani
While pointing out that the demonetisation drive was announced post Diwali last year, Vineet Sodhani, CEO, Spatial Access, said, “We wanted to see if there were still some aftereffects or had the market recovered. For this, we analysed inventory positions of Hindi and English Genres for 4 weeks preceding Diwali last year and this year. As it turns out, absolute inventory sales were down 2 per cent. News and GECs were hit the most in both English and Hindi.” 

However, demonetisation has had little or no effect on digital. “Since Jio added millions of new users to the digital ecosystem, the medium became relatively cheaper (CPM basis) this year, thus attracting more advertising and continuing to grow at a fast clip,” Sodhani noted.

Marketing
@adgully

News in the domain of Advertising, Marketing, Media and Business of Entertainment

More in Marketing

 
Get daily Newletter from
Stay updated with the latest News in Advertising, Media, Marketing and Entertainment.
CAPTCHA ImageRefresh Image