Also in this letter:
■ Startup valuations fall sharply, hurting IPO plans
■ Analysts say major IT companies will post modest revenue growth in Q1
■ LazyPay discontinues buy now-pay later product based on UPI

ED Issues Notices, Summons Crypto Officials in FEMA Investigation

The Enforcement Directorate (ED) has requested more details and documents from crypto firms as part of its ongoing investigation into alleged violations of foreign exchange laws, if any, by these firms, Us said. sources.

Details: ED has sent notices to cryptocurrency exchanges requesting information under the Foreign Exchange Management Act (FEMA), they added.

• The founder of crypto trading platform CoinDCX, Sumit Gupta, joined the federal agency’s investigation at his office in Bengaluru earlier this month, the sources said.

• Executives from other crypto exchanges, including WazirX and crypto trading platform CoinSwitch Kuber, were also summoned.

• The polling firm sought information on certain transactions, two people with knowledge told us.

“Transaction history, relation to exchanges, how much money is going out of India – ED looks at every detail of offshore transactions,” an official said.

WazirX moves the court: WazirX told us that he moved the High Court of Karnataka, asking for an interim measure. The court, in an order issued last month, suspended the subpoena, subject to the company providing the documents/information sought within a fortnight.

The law: Under FEMA, payments to or receipts from any person outside India, as well as forex and foreign security transactions are restricted.

The purpose of the Act is to facilitate foreign trade and payments and to promote the orderly development and maintenance of the foreign exchange market in India.

Here a probe, there a probe: Several government agencies, including the income tax department, are probing crypto businesses.

Last June, the ED asked WazirX to explain transactions worth Rs 2,790.74 crore involving cryptocurrencies that allegedly violated FEMA rules.

And the ED, the Narcotics Control Bureau (NCB), and the IT department have all written to the government about the alleged misuse of cryptos, particularly in trade-based money laundering (TBML).

Startup valuations fall sharply, hurting IPO plans

The valuations of several new-era companies have taken a hit in the private equity market as the start-up craze wanes, possibly delaying many companies’ plans to go public.

What’s going on? PharmEasy, Oyo, Boat and Ixigo have seen sharp declines in value over the past six months, according to people trading in the unlisted stock market.

This could make developers and private investors reluctant to opt for a public share offering. The poor stock market performance of Paytm, Policybazaar after their IPO will also weigh on investors’ minds, they said.

Case by case: Unlisted shares of PharmEasy (API holdings) are trading around Rs 45 each from a high of Rs 145.

• Imagine Marketing Ltd, owner of the Boat brand, saw its share price drop to Rs 850-900 from Rs 1,250 a few months ago.

• Oyo, which peaked at Rs 130 six months ago, is now trading at Rs 90-95.

• Shares of travel portal Ixigo are changing hands at around Rs 180, from Rs 220-230 earlier.

Mirror Image: Investment bankers said those valuations reflected the reversal in fortunes of popular new-age companies in broader stock markets.

Shares of Zomato, Paytm, Nykaa and PolicyBazaar, which went public during last year’s bull run, are all trading well below their issue price. Zomato’s stock lost nearly a quarter of its value last week after news broke that it had acquired fast-trading firm Blinkit.

Analysts say major IT companies will post modest revenue growth in the first quarter

India’s leading IT service providers are expected to see modest revenue growth in the first quarter amid supply-side pressures including wage increases, on-site wage inflation and travel costs, analysts say .

Currency headwinds will also impact earnings, they said, due to fears of a looming recession in the United States, the biggest market for Indian IT firms.

Kick-off Friday: Tata Consultancy Services (TCS) will release April-June results on Friday, followed by HCL Technologies on July 12.

According to an ET survey of five analysts, revenue growth (in dollars) at Tier 1 companies is expected to hit 14% year-over-year while it is expected to grow 4% sequentially.

Analysts expect Infosys to outperform TCS, Wipro, HCL Tech and Tech Mahindra.

Although IT companies indicate that the momentum of the agreement will continue, analysts expect the macroeconomic pressure to impact companies by the second half of the current financial year.

LazyPay discontinues UPI-based buy-now-pay-later product

LazyPay, the lending arm of PayU India, has temporarily stopped supporting its LazyPlus UPI (buy now, pay later) product amid growing regulatory concerns for credit card fintech companies.

The product, launched by the company in September 2020, allowed users to pay through the Unified Payment Interface (UPI) channel from a revolving line of credit issued to the customer. LazyPay was issuing a credit line of up to Rs 1 lakh to users for online and offline transactions through UPI.

The Reserve Bank of India plunged the fintech sector last month by banning non-banks from loading prepaid payment instruments (PPIs) with lines of credit.

We reported on June 30 that LazyPay had updated its terms and conditions after the RBI directive, asking customers to agree to new terms and conditions, failing which all their transactions would be blocked on the platform.

TWEET OF THE DAY

Closed deals ETtech

• Online tax reporting service provider Clear (formerly ClearTax) has acquired business compliance automation platform CimplyFive for an undisclosed amount in a cash transaction. This is Clear’s second acquisition this year as it continues to double down on its software platform and seeks to diversify services for its 4,000 enterprise customers.

Delhi government releases final draft aggregation policy

The Delhi government has released the final draft of its aggregation scheme, which aims to regulate tech companies in food delivery, ride-sharing and e-commerce in the National Capital Region (NCR).

The draft, an updated version of the one published in January, clearly defines companies operating in the three segments.

Tell me more: Tech companies such as Ola, Amazon, Flipkart, and Swiggy were broadly defined in the previous draft. These companies will now be classified as last mile delivery aggregators, passenger transport aggregators or e-commerce entities.

The updated plan also gives aggregators two more years to fully electrify their fleets.

The Delhi government is the first to consider implementing such a policy. If successful, it could set a precedent for other states to emulate.

Other Top Stories by our journalists

UK crypto exchange Nexo gives Vauld a lifeline: London-based crypto exchange Nexo will acquire crypto lending platform Vauld, pending due diligence – marking the latest sign of consolidation in the crypto market amid falling prices. On Monday, we reported that Vauld had suspended all deposits and withdrawals due to market volatility and financial difficulties.

Smartphone makers extend production cuts: Consumer electronics and smartphone makers have decided to extend their production cuts through August and postpone plans to increase production for the holiday season by a month as demand remains subdued.

Global Choices We Read

■ Crypto’s free field may be coming to an end (Cable)
■ Amazon, Microsoft, Google strengthen their grip on the cloud (WSJ)
Fifa will track players’ bodies using AI to make offside calls at the 2022 World Cup (The edge)