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The Telecom Regulatory Authority of India (TRAI) has issued recommendations to streamline the licensing framework under the new Telecom Act. The rules promote "One Nation One Authorisation" approach. 

The proposal doesn't mention OTT services, while satellite services and infrastructure sharing are encouraged. 

The announcement holds significance because telecommunications companies have been urging for a "same service, same rules" approach that would subject OTT platforms to similar regulations as traditional telecom services.

Read more: <a href="https://www.storyboard18.com/television/trai-to-soon-release-recommendations-on-regulating-ott-apps-under-telecom-act-exclusive-40734.htm">TRAI to soon release recommendations on regulating OTT apps under Telecom Act: Exclusive</a>

Storyboard18 recently reported how the debate around regulating OTT communication apps like WhatsApp, Telegram, and Google Meet in India has heated up —with telecom companies, including Jio, Airtel, and Vodafone, arguing that OTT apps should be regulated under the Telecommunications Act, 2023, as they rely on telecom infrastructure.

TRAI released Consultation Paper on the framework for service authorisations to be granted under the Telecom Act, in July, and was actively discussing the regulation of OTT communication services and held an open house discussion on August 21, amid the ongoing debate.

The likes of Broadband India Forum (BIF), National Association of Software and Services Companies (NASSCOM) and the Internet and Mobile Association of India (IAMAI) have argued that OTTs are already governed by the Information Technology Act 2000. Last year, the then telecom Minister Ashwini Vaishnaw also clarified that OTT apps are governed by the IT Act and not the Telecom Act.

Despite that, telecos pushed for OTT services to be regulated on par with themselves to ensure a ‘level playing field’— subjecting OTTs to a similar licensing regime and taxation as telcos.

Read more: <a href="https://www.storyboard18.com/digital/coai-asserts-ott-apps-like-whatsapp-fall-under-telecom-act-citing-national-security-reasons-40648.htm">COAI asserts OTT apps like WhatsApp fall under Telecom Act citing 'national security' reasons</a>

On September 18, TRAI released recommendations on the 'Framework for Service Authorisations to be Granted Under the Telecommunications Act, 2023’. 

TRAI's recommendations suggest allowing satellite-based services to provide calling and messaging capabilities, expanding the scope of service offerings in the telecom sector. It further encourages the sharing of both active and passive infrastructure among service providers, which could lead to enhanced efficiency and reduced operational costs.

TRAI recommended significant reduction in entry fee while categorising services into three broad segments: main service authorisations, auxiliary service authorisations, and captive service authorisations. 

The authority called for the central government to issue service authorisations, based on predefined criteria, instead of entering into any entity specific agreement.

TRAI excludes likes of Google, Telegram, WhatsApp from new licensing rules

The Union Cabinet has approved the establishment of the National Centre of Excellence (NCoE) for animation, visual effects, gaming, comics and extended reality (AVGC-XR) as a Section 8 Company under the Companies Act, 2013 in India with Federation of Indian Chambers of Commerce & Industry and Confederation of Indian Industry representing the industry bodies as partners with the Government of India.

The NCoE will be set up in Mumbai, Maharashtra and is in pursuance to the Union Minister for Finance and Corporate Affairs’ budget announcement for 2022-23 for setting up of an AVGC Task Force in the country.

It is to be noted that AVGC-XR sector plays an important role in the realm of media and entertainment including filmmaking, OTT platforms, gaming, advertisements and several other areas including health, education and other social sectors. With rapidly evolving technology and increasing internet penetration all across the country, coupled with one of the cheapest data rates, the usage of AVGC-XR globally is poised to grow at an exponential pace.

To keep up with this, the NCoE is being established to act as the pinnacle institution to anchor the AVGC-XR ecosystem in the country. 

Along with offering specialised training-cum-learning programs to equip both amateurs and professionals with the latest skill sets in cutting-edge AVGC-XR technologies, this NCoE will also foster research and development and will bring together experts from various fields like computer science, engineering, design and art that can lead to major breakthroughs in the field of AVGC-XR. 

NCoE will also extensively focus on the creation of India’s IP for both domestic consumption and global outreach, overall leading to creation of content based on India’s rich historical and cultural heritage. Further, the NCoE will function as an incubation centre by providing resources for nurturing startups and early-stage companies in the AVGC-XR field.

By positioning this NCoE as the driving force for the growth of the AVGC-XR industry it will serve as one of the biggest sources of employment for the youth from all parts of the country. This will give an enormous push to the creative arts and design sector and make India the hub for AVGC-XR activities.

The NCoE for AVGC-XR will also position India as a content hub for providing state-of-the-art content thereby enhancing India’s soft power globally and attracting foreign investment into the media and entertainment sector.

Cabinet clears establishment of national centre of excellence for AVGC-XR

Criteo, the commerce media company on Wednesday announced a partnership with Swiggy to power its offsite retail media campaigns, across the open internet and OTT platforms. 

According to Criteo, the collaboration has already delivered successful outcomes for brands such as Kellogg’s. Criteo created commerce audiences to meet the brand objectives which include behaviors focused on convenience and nutrition. The campaign achieved a return on ad spend (ROAS) of 1.9, a new-to-brand rate of 25%. It reached over 50% of the target audience, with further improvements anticipated as the attribution window matures.

Commenting on the partnership, Amitkumar Banka, Head of Growth Marketing at Swiggy, says “Quick commerce is growing rapidly in India, with a 77% YoY growth, and is expected to continue growing at a rate of 40-45%. Our partnership with Criteo will allow our partner brands and non-endemic brands to reach and engage with quick commerce shoppers across the open internet". 

	
<a href="https://www.storyboard18.com/how-it-works/swiggy-launches-project-next-to-empower-delivery-partners-with-career-growth-42560.htm">Swiggy launches ‘Project Next’ to empower delivery partners with career growth</a>

Kashish Vasandani, Director of Growth, Swiggy, added, “The success stories with Kellogg's and other CPG brands showcase the effectiveness of Criteo's retail media capabilities that can unlock value for all players in the advertising ecosystem".

	
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Medhavi Singh, Country Head, of India, added, “Criteo has a leading market footprint in retail media, including 65% of the top 30 retailers in the Americas and 50% of the top 30 in EMEA, and we are broadening our retail media presence in India and APAC.​ We are proud to partner with Swiggy, one of the leaders in the quick commerce space, to power their offsite retail media campaigns to further scale in the industry. As the needs for retail media in India grow rapidly, Criteo’s retail media solutions powered by its advanced AI and commerce data enable businesses to make informed decisions and optimize media planning for better results in one unified platform".

Criteo and Swiggy collaborate to boost quick commerce advertising

The independent homegrown advertising agency— Schbang— has acquired Amsterdam-based design agency— Addikt— to become AddiktSchbang and offer fully integrated marketing solutions. 

Securing a strong agreement, Schbang has acquired 50% of the shares with a combination of call-and-put options and aims to work together for the next 10 years. 

Founded in 2015, Schbang closed the FY24 at Rs 225 crore in terms of revenue— up from Rs 175 crore in FY23 on a consolidated basis and is close to achieving Rs 275 crore. Addikt, on the other hand, is currently running at about 2 million euros annually (around Rs 20 crore) and aims to grow to 4 million euros within two years, with the expansion into the Indian market.

“We see Addikt adding a reasonable top line to Schbang— about 8%. We also see an India hub for the Netherlands team being built over the next few months,” Harshil Karia, MD and Founder of Schbang told Storyboard18, in an exclusive conversation.

Additionally, the agency is expecting its UK set up to be on a 750,000 pounds-a-year run-rate, soon. 

“AddiktSchbang will also be able to help build more business in the UK because of the depth of the portfolio and the credibility and the experience,” Karia shared. 

Going forward, in terms of its global ambitions, the creative, media and technology transformation agency expects to grow into Africa and the Middle East.

Addikt, which claims to have over 20 years of experience in the European market, has worked with brands like AkzoNobel, Rabobank, Prada X Armani, StarSports IPL and Booking.com. For its part, Schbang has already contributed to brand identities for the likes of PhonePe, Tata Motors, and Maruti Suzuki.

Schbang currently has over 150 brands on retainer and looking to add 12 more brands by the end of the current fiscal. 

Karia further noted that the acquisition will enable the agency to offer the best of global design to Indian corporates looking to scale internationally.

"The Dutch design influence from Addikt elevates our capabilities, empowering us to create culturally immersive experiences, such as the visual takeover for Pride Amsterdam or Fabrique Lumiere’s "Girl with a Pearl Earring" exhibit. We foresee similar innovation in Indian contexts, like Diwali or Ganesh pandals- where we can blend tradition with global creative excellence,” he highlighted.

Barry Schwarz, Co-founder of Addikt, shared that he is hoping for retainer relationships to expand significantly with the partnership, which will further enhance the base of its international clients.

“For our international clients, we see that we often have to turn down work with international clients in areas such as retainerships because talent in the Dutch market is pretty hard to come by. So, we definitely see those retainer relationships expanding significantly with our ability to deliver more. Apart from Amsterdam combined with the London office, we want to be working more for the entire European market or even global clients; and then from India, we can target Asian accounts,” he added. 

Addikt's current client base is mainly Dutch and Indian-based with some US clients, at present.

With the entry to the Indian market, Schwarz expects Addikt’s revenue to grow 100% in the next two years and subsequently to get stabilised at 20%. 

The agency offers services mostly around branding, content creation, storytelling, and experiential design and events. With Schbang now, it is hoping to add a layer of technology.

Upon being asked if Schbang would continue to be on the lookout for another acquisition, Karia shared that the agency remains in an 'exploratory phase'. 

“While we explore potential avenues- whether through an acquisition or another model- we remain proudly independent and homegrown. Acquisition is not a strategy unless it makes sense for us. We’re not the largest player in this market, but we have a clear vision of building a global Indian company. As a small business with big ambitions, the agency is focused on achieving this vision without taking external investments for now,” he shared.

At present, the agency employs more than 1,300 professionals and has seven agencies including Django Digital, SchbangQ, 88GB and Spek Digital, as network partners.


Schbang acquires Dutch design agency Addikt to form combined entity with turnover Rs 300 cr

The family-friendly OTT platform by Prasar Bharati which was first announced in 2023 is likely to be launched on October 3, according to the sources close to the development. The reason, however, remains undisclosed at the moment.

It was earlier scheduled for an August 15 launch, which then got pushed to September 15. 

Read more: <a href="https://www.storyboard18.com/how-it-works/prasar-bharati-ott-likely-to-be-launched-on-september-15-exclusive-41501.htm">Prasar Bharati OTT likely to be launched on September 15: EXCLUSIVE</a>


The postponement comes at a time when challenges are mounting for the pubcaster with cable TV operators and a handful of private broadcasters raising red flags and pushing for more clarity in the existing guidelines for its OTT platform. 

Reportedly Prasar Bharati has received applications from 106 channels, out of which 44 were selected and 40 agreed to join the platform- leaving four major television networks choosing not to stream their linear channels on the pubcaster's upcoming OTT.

Prasar Bharati's move into the OTT space not only is poised to stir up competition for the other OTT players but is also distressing linear TV channels in the market. For top broadcasters, it is the conflict of interests as they already run their own subscription-based or ad-based OTT platforms. Additionally, some seek holistic regulatory review because of the pubcaster’s ability to integrate its OTT with traditional TV offerings, potentially leading to market distortions.

As per a source close to the development, handful of broadcasters are expected to actively lobby for regulatory changes over the next few weeks.

Read more: <a href="https://www.storyboard18.com/how-it-works/broadcasters-prep-legal-arsenals-to-challenge-prasar-bharatis-ott-plans-41670.htm">Broadcasters prep legal arsenals to challenge Prasar Bharati's OTT plans</a>

In its letter to the Ministry of Information and Broadcasting, dated September 2, All India Digital Cable Federation (AIDCF) has in fact urged the Ministry to withdraw Prasar Bharati's notice inviting TV broadcasters for its soon-to-be-launched OTT platform, as it believes the same disrupts uplinking and downlinking guidelines, and also disrupts the traditional TV distribution.

DTH operators too, reportedly are planning to write a similar letter to the information and broadcasting ministry on the placement of linear TV channels on Prasar Bharati's OTT platform.

Storyboard18 earlier reported how the main issue lies in the ambiguity around whether the current guidelines, which are designed for satellite TV apply to digital platforms like OTT. There’s a lack of clarity on this, and Prasar Bharati’s OTT venture might push the boundaries of these regulations, necessitating a need for updated guidelines.

Prasar Bharati's plan to foray into the OTT space, despite the presence of several international private OTT platforms like Amazon Prime Video, Disney+ Hotstar, and Netflix in the country, stemmed from the need to showcase clear and family content. One of the government officials was reported saying, "Currently, some of the content on OTT platforms are bordering on vulgar, abusive language. It becomes embarrassing to watch it with your family. We want to offer a platform which is decent and promotes India’s culture and nationalist values," last year.

It is to be noted that the BJP manifesto also promised a plan to launch an OTT platform as part of its 100-day agenda if it returns to power for the third term.

Prasar Bharati's OTT launch date pushed to October 3: Exclusive

Meta has banned Russian state media outlets such as RT, Rossiya Segodnya, and others on Facebook, WhatsApp, Threads, and Instagram, according to several media reports.


The social media giant mentioned, "After careful consideration, we expanded our ongoing enforcement against Russian state media outlets-Rossiya Segodnya, RT and other related entities are now banned from our apps globally for foreign interference activity".

Meta alleged that the Russian media outlets used deceptive tactics to carry out influence operations while evading detection on its social media platforms.

<a href="https://stgwww.storyboard18.com/digital/exclusive-metas-global-business-head-says-too-early-to-look-at-returns-on-ai-spends-41838.htm">Meta’s global business head says ‘too early’ to look at returns on AI spends</a>


The ban would roll out over the coming days.

Earlier Meta had blocked the outlets from running ads and reducing the reach of their posts. However, the ban on the Russian media outlet marks the sharpest action by the social media company.

Meta's ban has come after the US filed a money laundering case against two RT employees for launching a scheme to influence the 2024 presidential election, according to The Guardian report.

US Secretary of State Antony Blinen announced new sanctions against the Russian state-backed media company after it was revealed that it was functioning like a de facto arm of Russia's intelligence apparatus.

	
<a href="https://www.storyboard18.com/digital/australian-parliament-grills-top-meta-executives-over-digital-news-policy-41439.htm">Australian Parliament grills top Meta executives over digital news policy</a>
"Russian weaponization of disinformation to subvert and polarize free and open societies extends to every part of the world," Blinken said.

The US secretary claimed that the Russian government established a new unit in RT in 2023 with "cyber operational capabilities and ties to Russian Intelligence" to spread Russian influence in countries around the world through information operations, covert influence, and military procurement.

Blinken accused RT of crowdfunding weapons for Russian soldiers in Ukraine. He said RT had funneled nearly $10 million to conservative US influencers through a local company to produce videos meant to influence the outcome of the US presidential polls.

Meta bans Russian state media outlets for foreign interference activity

The European Union has set a probe into Google’s artificial intelligence (AI) model, Pathways Language Model 2 (PaLM2). 

Commenced by Ireland’s Data Protection Commission (DPC), the investigation aims to determine if Google has adhered to the requirements of the General Data Protection Regulation (GDPR). 

"DPC has commenced a Cross-Border statutory inquiry into Google Ireland Limited (Google) under Section 110 of the Data Protection Act 2018. The statutory inquiry concerns the question of whether Google has complied with any obligations that it may have had to undertake an assessment, pursuant to Article 35[2] of the GDPR (Data Protection Impact Assessment), prior to engaging in the processing of the personal data of EU/EEA data subjects associated with the development of its foundational AI model, Pathways Language Model 2 (PaLM 2)," DPC said. 

"This statutory inquiry forms part of the wider efforts of the DPC, working in conjunction with its EU/EEA (European Economic Area) peer regulators, in regulating the processing of the personal data of EU/EEA data subjects in the development of AI models and systems," the statement added.

The investigation led by DPC against Google was initiated on September 12.

Last week, the Luxembourg-based Court of Justice of the European Union smashed Google's appeal against a 2.42 billion euro fine levied seven years for various anti-competitive practices.

Apart from Google, other tech giants including X and Meta have also been probed by DPC. 

Earlier this month, DPC ordered X (previously Twitter) to stop using user data to train its AI chatbot- Grok, until it could verify GDPR compliance. Meta was asked to halt plans to use European users’ content to train its current language model. 

In 2022, Italy’s data privacy regulator also temporarily banned ChatGPT due to privacy violations.

Google's AI model under scrutiny from EU regulators

In a special chat, Storyboard18 caught up with the top women leaders at Dentsu. Amanda Morrissey, global president, iProspect, and chief growth officer, media, Dentsu and Shenda Loughnane, global brand president, dentsu X, the arm of the Japan-headquartered agency that delivers customised marketing services, were on their India visit and were joined by Prerna Mehrotra, chief client officer and CEO, media, Asia Pacific, and Anita Kotwani, CEO, media, South Asia, at a special all-women Dentsu roundtable.


Morrissey outlined the pillars that have shaped the agency’s growth trajectory this year: a focus on clients, talent development, growth and capability building.


She said that Dentsu has made commendable progress in each of these areas, enhancing its operational structures to better serve clients in a fast-changing environment.


Morrissey explained that in 2024, Dentsu concentrated on realigning its teams and structures to adapt to ongoing geopolitical shifts, post-pandemic recovery and a rapidly evolving media landscape. This reorganisation, coupled with integrating client leadership at the highest decision-making levels, has strengthened the agency’s client partnerships.


On her part, Loughnane highlighted that the company has successfully transitioned from the broadcast era to the precision era and now into the algorithmic era, where AI controls much of the digital experience.


Kotwani underlined India’s role in the company’s growth strategy. As one of the fastest-growing markets for global media agencies, Dentsu’s approach in India focuses on deepening client relationships and expanding service offerings in areas like commerce, retail, content and data analytics.


"We have added 80 new clients so far this year, and this growth has been supported by a dedicated squad focused on driving new business," Kotwani shared.


Below are the excerpts of the discussion.


What are the plans set out for Dentsu for 2024 and how much of that has been achieved so far?


Morrissey: The real focus areas for us as we have come into 2024 were number one, clients. We always put clients at the centre of our business. As we have come into 2024, there's a lot of insecurity. Obviously, because we've come out of COVID, there's a lot of geopolitical change within the environment. There's a lot of media landscape shifting.


So how do we really make sure that we are creating the right team structures, the right operational structures for our clients? We spend a lot of time doing that to give them the flexibility and resources that they need. We have been very successful at that. We have reorganised our top clients globally and how they fall in regions and markets.


We have also put client leadership on the board within Dentsu as well, making sure they are part of the decision making, that their point of view and conversation is important for us as an organisation. So that's been a really big strategic priority for us and one that has really helped us drive growth for Dentsu and for our clients and build that business partnership because that's really what is at the heart of our business. 


Our second one was around talent. I am relatively new to Dentsu, I was amazed by how long people have actually been here. And one of the things that's really surprised me when I first arrived was just the generosity of spirit and the quality of the talent here. 


People are having to upskill all the time, the geopolitical landscape and the way people are having to work is having to change. So how do we set our talent up for success, make sure we train and develop them and make sure we've got the right talent capabilities within our business to move forward?


The third part for us with Dentsu has been growth. We need to grow our business and so we've been really focused on growth and we've achieved fairly significant growth this year. We've seen really good growth as we've come into the first eight months of the year. 


You asked about the industry trends, we've really focused this year on capability building. When we thought about capability building, it's very much been around our clients and what's going to drive growth for them and for us as well. And so we've been looking at those really fast currents for growth. And obviously, a lot of that is in retail because everything is commerce. So retail, media and commerce have been big focus areas.


Effectiveness is a really big thing that clients are asking us for. Media's actually got onto the boardroom table. And so what a lot of our clients are asking for is business intelligence. How are my media dollars really driving my business impact so they can take it to the board?


Marketing ROI (return on investment) has been another area that we've really focused on. Not just media ROI, but marketing ROI. 


And I guess the final piece for us has been around content, and the emergence and proliferation of content around social influencer and live commerce as well. So we've been building those capabilities as well. So I think we've done a lot.


I have actually been here in India this week and seeing what the team have done and achieved here across those strategic priorities, it's just blown my mind.


Dentsu has been through quite a shapeshift, a turmoil, so to speak, over the past couple of years. Now, finally, we see some sort of stability. Over the past few months, how much of client trust have you regained? And how successful have you been in attracting talent?


Loughnane: The industry has changed quite fundamentally. We're seeing some really interesting developments, of course, in AI. Everybody's talking about AI. We say that we've come from an era that was very much the broadcast era, which was all about brand building, into the precision era, which was all about sort of performance marketing. And we're now in what we call the algorithmic era, which is all where AI is the gatekeeper and is controlling aspects of our lives and also deciding what content is displayed and what brands are displayed. That's required some changes.


So what we've done over the last, I guess a number of years, is to really look at how we reorganise our business to be ready for that change in the industry. We've done all of that work over the last number of years. We've done work to rationalise our brands. We went from 150 brands down to five key brands that we focus on. That's all been in the service of delivering for our clients and really thinking about how we drive growth for our clients.


So to your question about driving growth for our clients, that organisation is about facilitating how we build brands for our clients across media, creative, data and technology, and bringing those skills together really holistically to be able to drive that growth for our clients. So that's the journey we've been on. We're really starting to see the fruits of that. The growth that we've delivered over this year, I think, is really a testament to that, not just at a global level but also in India as well.


I think that is really what is now driving growth at a global and at a local and regional level as well.


What are the strategies you're focusing on to drive growth for Dentsu in India? Because we all know, whoever I speak to, everyone's focus is on India. They speak about how India is going to be the next big market for the holding company. So what are some of the things that you're focusing on to drive growth?


Kotwani: One of the most important parts that we've pulled in in our growth agenda is really saying, how do you define growth? For us, it's the depth that we get into with a client. How do we immerse ourselves into our clients' businesses? So the sheer depth gives us the expansion of services. The new-age ones that Amanda talked about are very much prevalent in our country.


Whether it's total commerce, retail, content, influencer marketing, data and analytics—these are all specialisations that we have very much in India as well. So that's one level of saying, I have a client, how do I expand my services to that client?


The other one is really around the new logos. How do I bring in the additional new logos that are going to give us the badge value that Dentsu really, really needs? We've added 80 so far in the year. So we're pretty happy with the momentum in growth that we are seeing.


There is a dedicated growth squad within the organisation that has helped us deliver a lot better momentum compared to, let's say, what probably other agencies are, where you have your client leaders striving to drive the new logo. But we've created a special team that's really helping us accelerate growth. So that's how we're looking at it from an India standpoint.


What are some of the things that clients are speaking about? How has the year been for Dentsu? What is the sentiment like for 2024? From conversations I've had with CMOs and CEOs, they are saying they are cautiously optimistic. Are you also hearing that?


Mehrotra: It's fair to say that it is cautiously optimistic because clients are moving in with a lot of caution when even dollars are being channelled to us, as agencies.


But what has happened in the last few years, I would say, is that there is a lot more accountability expected from agencies than ever before. So whether it's a review process or an existing brief, there is a demand that clients have where, as Amanda mentioned, media takes the front seat. But media also takes full accountability of how and where that money is being spent. So we need to ensure that the money being spent by these clients is in the right places to target the right consumers. Hence, a lot of the conversations have been around ROI and how media could become the growth driver for their business. I think there's a lot of linkages that we are seeing in that space.


But clearly, money's flowing when you're able to show value. So it's all about value creation. What clients are expecting from us is to show value through the full funnel experience that the consumer goes through in ensuring that from start to finish you're able to deliver the KPIs (key performance indicators). But eventually, deliver business results. So the expectation is you become a growth partner for them.


And if you are the growth partner, in my view, money flows.


Read More: <a href="https://www.storyboard18.com/advertising/dentsu-group-india-biz-showing-encouraging-signs-after-long-period-underperformance-39680.htm">Dentsu Group: India biz showing "encouraging signs" after long period underperformance</a>

Dentsu’s Focus: Clients, talent, growth, and capability building

To scale up the business of the recently set up FMCG entity Reliance Consumer Products Ltd (RCPL), Reliance Retail is reportedly planning to transfer most of its fast-moving consumer goods (FMCG) brands to the former.

The brands under Reliance Retail include Campa, Sosyo, Snactac, Puric, Glimmer, Enzo, Get R, and Independence brand which has a presence in the packaged food, edible oil, and staples segment.

To scale up the business further, RCPL has also decided to set up up to five bottling plants for Campa, according to an ET report.

The report also claimed that some smaller private brands sold by Reliance Retail will continue under it since those will not be distributed to general trade.

On July 24, the board of RCPL unanimously approved special resolutions to raise capital for business operations during a general meeting.

Last month, Mukesh Ambani-owned Reliance Industries announced investing up to Rs 3,900 crore into its FMCG division to strengthen its position against major players such as Hindustan Unilever, ITC, Coca-Cola, and Adani Wilmar.

Reliance Retail Ventures, a wholly-owned subsidiary of Reliance Industries, is the holding company for all the conglomerate retail businesses, including RCPL.

During an annual general meeting held last month, Isha Ambani, Director of Reliance Retail Ventures shared that in the FMCG business, the company’s focus is on creating high-quality products at affordable prices to drive greater consumption across India. She added that the company had relaunched several popular brands including Campa Cola, Lotus Chocolates and Sosyo with early success.

Reliance Retail to transfer FMCG brands to RCPL to boost market share

Despite the dominance of decades-old brands from Emami, Marico, and Hindustan Unilever — Mamaearth has it written down in history to be considered one of the biggest disruptors of the traditional personal care space in India with its focus on natural, toxin-free products and a digital-first approach.


When launched in 2016, it came as a saviour to consumers looking for toxin-free products made with natural ingredients and a focus on sustainability. It is in fact known to be the fastest digital-first brand to attain a revenue of Rs 1,000 crore.


However, the brand now finds itself under scrutiny for all the wrong reasons- growing negative consumer feedback online, social media backlash, and concerns from distributors about large amounts of unsold inventory, have raised alarm bells.


Read more: <a href="https://www.storyboard18.com/advertising/repeated-ad-violations-by-honasa-consumer-may-adversely-impact-brand-trust-32954.htm">Repeated ad violations by Mamaearth parent may adversely impact brand trust</a>


The negative limelight has the brand slowly losing consumer trust, according to experts and consumers themselves. 


Read more: <a href="https://www.storyboard18.com/brand-marketing/dark-side-of-dark-stores-q-comm-brands-like-blinkit-zepto-are-quickly-losing-consumer-trust-34430.htm">Dark side of dark stores: Q-comm brands like Blinkit, Zepto are quickly losing consumer trust</a>

The latest financial results of the brand, however, paint no less than a positive picture. 


Mamaearth's profits grew 33.3% to Rs 40 crore in Q1 FY25 from Rs 30 crore in Q4 FY24; revenue from operations increased to Rs 554 crore in Q1 FY25 from Rs 471 crore in Q4 FY24.


Ramkishen Y, Professor in Marketing, K J Somaiya Institute of Management, points out that the rise in net profit will provide Mamaearth with a financial cushion to tackle the current challenges that the company is facing. It might reinvest these profits into improving its inventory management, enhancing product quality, and addressing consumer concerns to sustain its growth trajectory in the near future. 


Interestingly, its investors including Peak XV (formerly Sequoia India) sold 1.23 crore shares worth Rs 610.98 crore, and Sequoia Capital Global offloaded 28.71 lakh shares worth Rs 142.12 crore in bulk deals, last week.

Anil Joshi, Managing Partner at Unicorn India Ventures, shared that given that the overall D2C space is looking good and will witness positive trends, so will Honasa, being a category leader they will continue to grow. "The company has been consistently performing well with both revenue and profits growing. It has found the right mix of product lines that resonates with the consumer and being the first mover in D2C brands they have mastered the business front as well."

Anand Mishra, Professor of Accounting and Finance, BITS Law School, remarks that people will continue to watch Honasa Consumer closely given the narrative of it being a “growth” company. In financial markets, the narrative has to be backed by numbers, eventually. 


He also adds that a company can show higher sales by pushing its inventory onto distributors but only for a few quarters. “If it is true that Mamaearth brand offtake is slow, numbers will catch up and the market will not like them,” he says.


The company reportedly is working double time to lower the holding period of its inventory from 90 days to 40 days. FMCG companies typically supply stocks for 20-30 days. Distributors have claimed that the company is sending too much stock to the market whilst also being slow to replace damaged, unsold, and expired stock, as per reports. 


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According to Anand Narasimha, Professor - Brand Marketing, generating positive numbers can easily be window-dressed — but if the focus isn’t on quality, there won’t be any long-term sustainable growth.


“In a large country like India generating volumes and numbers and profits is not a big deal because there are so many millions of consumers— you will always get somebody to buy the brand for the first time. Also, since the brand is starting from a very small base and acquiring new customers, so it is delivering the numbers. Retention rates could give a real picture,” he remarks.

Under the scanner

Experts tell Storyboard18 that most of the D2C brands, especially Mamaearth, are pretty savvy and aggressive with marketing online but are not putting adequate emphasis and focus on the quality of their products.

“Brand experience is always greater than brand frills. D2C brands are getting very carried away by the frills around their brand, be it all the marketing hype, the content, the influencers, and not paying adequate attention to the products and the product experience that their products deliver. They are making a lot of hyped-up promises in the media about their products and services. The result of this is consumer negative reviews,” points out Narasimha.

For its part, the company strives to inculcate feedback from its channel partners, consumers, and influencers on regular basis, and formulate, reformulate, or make amends as needed.

Narasimha adds that new-age D2C brands are getting a little carried away with marketing hype. Instead, they should be putting that kind of investment into the product development, R&D, and product testing process. 

“Also, they are outsourcing a lot of these products- unlike traditional companies that have historically invested a lot of resources and focus on developing good quality products and testing of the products,” he notes.

Read more: <a href="https://www.storyboard18.com/brand-marketing/the-cred-point-relying-on-advertising-virality-without-product-virality-35179.htm">The CRED Point: Relying on advertising virality without product virality?</a>

The Gurugram-based start-up which made its market debut in 2023 amid noise around its valuation, spent around 39% of its sales revenue in advertising and promotions spends in FY21, which increased to 41% in FY22 and then decreased to 36% in FY23 — still much higher than traditional consumer companies that spend about 12% of their expenditure on advertising. In FY24, the spends stood at around 35%. A substantial chunk of its A&P spends is inclined toward online spending, especially in influencer marketing. 

According to the Advertising Standards Council of India (ASCI)'s annual complaints report (2023), Honasa had the highest number of advertising violations.

The ad industry body found the company to be the biggest violator with 187 such ads processed with its brand DermaCo range of products leading with 14, Mamaearth range of products with 10, followed by Aqualogica with 6, among other ranges of brands and products. In defense, the company revealed that almost 94% of the cases have been around influencer content, where the dynamics have rapidly been evolving.

<a href="https://www.storyboard18.com/how-it-works/95-of-asci-ad-violation-allegations-are-influencer-posts-not-advertising-claims-varun-alagh-33091.htm">Read more: 95% of ASCI ad violation allegations are influencer posts, not advertising claims: Varun Alagh</a>

Ankur Bisen, Senior Partner at Technopak Advisors, has an interesting point to make. 

He believes that Mamaearth started its journey on a very high pedestal of customer expectations and tall claims, which further grew into a multi-channel business model with a house of brands.

“The equity that you created in the consumers' mind starts to get roughed up and get frayed once the brand extends itself into multiple businesses. Not necessarily the brand is doing something bad but customers will always have higher expectations from it. Had the brand not started as a disruptor, I don't think then the consumers would be so finicky about its brands, or near misses. However, the perception mismatch is real and it needs to look into that,” he concludes.

MEDIA