The only reason you are getting revenues, not profit, because of selling based on 50 percent discount

Apr 26 2016 11:44 AM
The only reason you are getting revenues, not profit, because of selling based on 50 percent discount

RBI governor Raghuram Rajan  speaking after delivering the YB Chavan memorial lecture at state secretariat today made it clear that getting revenues through deep discounting is not a profitable business model for start-ups. "If it can't be viable in the long run," he said.

He was quick to acknowledge that many businesses are in different stages of their life-cycle with some trying to establish the viability. "All these businesses are trying to establish viability, some are still being financed in a big way," he said, adding that it is natural for some of them not to work which will lead to shutting down the business.

The remarks come amid dwindling valuations of some successful Indian start-ups, which are being partly attributed to the high stress on discounting in the business model. Many of the start-ups depend on capital injections from venture capital funds and some have also closed down. Rajan said

  He said adding - Given the competitive nature of things, it is also essential to have safety covers including health insurance,The central bank governor also welcomed the strides of Dalit entrepreneurs, underlining that none of these successful businessmen hail from reputed business or technology schools.

Making a strong case creating the enabling environment, Rajan said it is not government programmes but a favourable business environment which has helped such entrepreneurs succeed.

 

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