Good morning. Angry, bearded men of South India will not save Bollywood’s blushes. According to Business Standard, two South Indian dubbed movies—RRR and KGF2—raked in ₹683 crore at the Hindi domestic box office. Bollywood collected a mere ₹230 crore from four movies starring Akshay Kumar, Ajay Devgn, Alia Bhatt and Amitabh Bachchan. Reminds us of another epoch when Tamil studios and heroines ruled the roost in Bombay. But unlike now, the heroes could never really cross over. Form factor, perhaps.  

The Market Signal*

Stocks: Benchmark indices bounced back on Monday after a six-day losing streak. Ambuja Cements and ACC shares rallied up to 8% after Adani sealed a $10.5 billion deal with Holcim. It remains to be seen if muted market sentiments will impact LIC shares, which will list on the stock exchange tomorrow.

Early Asia: The Nifty was trading in the green in Singapore at 7:47 am India time. The Nikkei 225 and Hang Seng were also up.

RETAIL

Reliance Wants To Be @Unilever

Reliance is reportedly building Reliance Retail Consumer Brands, a new shelf for its FMCG portfolio spanning personal care, groceries, and home care.  

Details: India’s largest retailer already has 11 private labels, but those don’t generate significant revenue. So Reliance wants to buy or partner with 30 smaller brands. Competing with Unilever, Nestle, PepsiCo, etc. won’t be easy though. The conglomerates have unparalleled distribution networks and memorable brands.

Private label x10: High margins make private labels the retail darlings. BigBasket gets up to 38% of its revenue from them. Amazon has house brands in virtually every category, and Flipkart has SmartBuy and MarQ. Both are in the cross-hairs of an e-commerce policy that has been long in the making. Reliance wants to sidestep that.

How? By platforming over 1,000 independent sellers who will have the same terms as Reliance entities. It also has the backing of the powerful Confederation of All India Traders.

WEATHER

Climate Change Flips India’s Mercury Switch

The heatwave enveloping north India caused temperatures in parts of Delhi to breach 49°C over the weekend. This could be the highest temperature ever recorded by IMD stations in the city.

Kashmir turns cauldron: Srinagar recorded its hottest day of the season at 33.5°C. Just two months ago, it recorded its hottest March since 1892.

Rained off: As north India boiled, Kerala suffered torrential rains to the point of the IMD issuing a red alert. National disaster response teams have been deployed for flood control.

Large scale disruptions: Weather experts are pointing to disruptions in weather phenomena. The Western Disturbance—which helps form cyclonic patterns that create rain—is getting weaker. Conversely, anticyclones that circulate warm winds are intensifying. India may need to prepare multiple plans and build specialist resources to fight different kinds of calamities in various parts of the country at the same time. 

M&A

Adani Pips Pedigreed Rivals To Bag Cement Deal

India’s richest man, who made his fortune in cooking oil, energy and infrastructure, is now also a cement baron. Gautam Adani has snapped up Swiss Holcim Group’s Indian assets, including Ambuja Cements and ACC, to become the second-largest cement maker in the country with production capacity of 66 million tonnes per year and a market share of about 13%. That is second only to AV Birla Group’s UltraTech Cement.

At over $10 billion, it is one of India’s biggest acquisitions and will likely change the dynamics of the cement market in which regional players zealously guard their turf.

The deal could also make Gautam Adani richer than Bill Gates, number 4 on the Forbes list of richest individuals on the planet. 

The Signal

For Adani, cement is a new business but one with many synergies with the operations of the conglomerate. The process of cement making has not changed much in decades and there is hardly any technological obsolescence. The unit needs to be close to deposits of limestone, the basic raw material which is ground, mixed with additives and treated with extreme heat to form the fine grey-green powder we know as cement. 

The innovation is in the distribution and marketing. Ambuja and ACC have one of the most efficient plants and innovative distribution. Ambuja, for instance, owns ships and ports to transport cement in bulk along the coast. Cement also needs warehousing. Logistics and storage are businesses Adani knows too well. 

He is also betting that the government’s infrastructure push, including building mobility hubs, will keep cement demand high for several years. India’s per capita cement consumption is less than half the global average of 525 kg.

🎧 Why did Gautam Adani pay top dollar for a company which makes cement, a business he has never been in? Listen in to know.

TECHNOLOGY

China Is Building A State Blockchain

In what could become a national enterprise services platform in a few years, China is building Blockchain-based Service Network or BSN. It is similar to India’s payments platform UPI and e-commerce venture ONDC in principle. 

One for all: Aimed at companies operating cloud computing infrastructure, BSN expects to be a one-stop-shop and solve the crucial problem of interoperability. 

Limited by geopolitics: Although BSN has ambitions to foray outside China it is likely to be limited by the fact that it is backed by Chinese government entities. Companies with Chinese origins are having a tough time in the West. Surveillance camera maker Hikvision, for instance, is facing US sanctions for China’s policy towards Uyghurs. The possibility of a company being sanctioned by the US makes its products unattractive.

Meanwhile, Covid-19 lockdowns brought down China’s industrial output 2.9% and retail sales 11.1% in April compared to April 2021. It is also chasing away citizens.

INVESTING

VCs Cast Net In Big Pond

Fish farming is spawning a success story. In a not-so-surprising move, venture capital firms are taking note and pumping money.

Tell me why: There aren't many fish in the sea, thanks to unsustainable fishing methods and climate change. According to the World Bank, about 90% of marine fish stocks globally are overfished. That's where aquaculture aims to fill the gap. US-based Forever Oceans, which raises fish in the deep ocean, has bagged about $120 million through funds. Fish farming could find favour, going by the recent food crisis spurred by the Russia-Ukraine war. 

Not a bed of roses: These progressive reforms could seem like a fancy marketing strategy at the moment. Sea lice and pathogens straying past the fish farms threaten to infect the marine ecology. Did we mention? Feed for farmed fish majorly comes from wild-caught fish. Yikes.

🎧 Retired financiers often buy yachts to go deep sea fishing. But these VCs are fishing to fund their retirement. Dive in.

FYI

Sale: Sri Lanka is selling family silver to pay bills. PM Ranil Wickeremasinghe said the government will sell its loss-making flag carrier. 

Ban impact: International prices of wheat jumped 6% after India imposed a ban on exports. The curbs also caught traders off guard and staring at massive losses. 

McRexit: McDonald's is pulling out of Russia after 32 years. The US fast-food chain will seek a local buyer for its 850 restaurants in the country. Automaker Renault too is saying dasvidaniya.

Rethink: Pune-based e-commerce company FirstCry will delay its initial public offer by a few months, owing to market volatility and slowdown in the IPO market. 

Done deal: D2C brand Mamaearth’s parent company has acquired a majority stake in Dr Sheths, a premium skincare brand at a ₹28 crore valuation.

Pivot: Paytm Mall, the e-commerce unit of Paytm, will now plug into the Open Network for Digital Commerce or ONDC. Paytm’s two-year long agreement to acquire Raheja QBE General Insurance has been terminated.

Build baby build: Apollo Global Management will lend up to $1 billion to Indian real estate developers this year. The proposed bet has one eye on recovery of the property market to pre-Covid levels.

FWIW

Spreadsheets the word: Influencers on TikTok are making the headache-inducing Microsoft Excel fun for Gen-Z. They teach followers all the boring stuff through song and music: turns out there is an audience. The content is racking up billions of views as they scrub away Excel's bad rep. 

Yes to life? In a landmark move, Switzerland has voted for implicit consent for organ donation. What does this mean? Every citizen is a potential donor upon death unless expressed otherwise. Even as the consent model will come into force only by 2024, the government intends to create a national register for people to opt out of the plan.

Extinct: A wild herb silphium was once coveted for its aphrodisiac properties. First grown along the plains of modern-day Libya, it was exported to Rome (even Julius Caesar was known to be a fan). It is now a victim of climate change. Interestingly, asafoetida which belongs to the group of the fennel-like plant could meet the same fate.

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