Good morning! Marriages might be made in heaven but divorces… they’re a whole different story. Just look at Raymond group chief Gautam Singhania and wife Nawaz Modi. The two have been embroiled in a very public settlement fracas and now things are getting more dramatic. As per The Economic Times, negotiations have collapsed, the custody battle for their children has gotten uglier, and Gautam’s estranged father Vijaypat Singhania has cited the Special Marriage Act (the Singhanias are Hindu, Nawaz is Parsi) to cement his support for his daughter-in-law. Raymond shareholders will be a worried lot as Gautam’s wealth is mostly tied up in the company’s shares.

🎧  What’s luring Indians to Israeli jobs? Also in today’s edition: Boston Tea Party 2.0, and the pappadum-potato chip conundrum. Tune in to The Signal Daily on Spotify, Apple Podcasts, Amazon Music, Google Podcasts, or wherever you get your podcasts. 

Programming note: We are taking the day off on account of Republic Day. There will be no edition of The Intersection on January 27.

Roshni Nair, Adarsh Singh, and Venkat Ananth also contributed to today’s edition.

The Market Signal* 

Stocks & Economy: Defying odds and providing a boost to President Joe Biden’s reelection bid, the US economy grew 3.3% in the September-December quarter and 3.1% through 2023. Remarkably, retail inflation in the fourth quarter grew only at the rate of 1.7%, far lower than the 2.6% clocked in the previous quarter. 

Equities rose on the economy’s resilience combined with tempering prices, which strengthened the hope that conditions are ripening for the Federal Reserve to cut rates.

Cooling inflation in Japan, however, puts the Bank of Japan in a dilemma as it contemplates drawing the country out of an eight-year-long negative interest rate regime. Japan stocks were lacklustre on Friday morning. 

Oil prices rose as geopolitical fires continued to rage and US crude oil stocks fell. Tanker prices have breached the $100,000 mark. 

The Indian stock markets are closed today for Republic Day.

EDTECH 

BYJU’S Gets A Lifeline

After mounting losses, missed repayments, and money laundering charges, you’d think there’s little left to salvage. But BYJU’S might still have some meat on the bones if it survives lender-forced insolvency. Manipal Education chairman Ranjan Pai is converting his $300 million investment in BYJU’S subsidiary Aakash Institute, valuing the test prep company at $700 million. 

Pai is now Aakash’s largest shareholder with 40% stake, although its valuation has fallen from $950 million as of 2021. The money will go into clearing pending debts. This week, BYJU’S overseas lenders filed an insolvency plea against the firm. 

Lost jewels: Pai will now firmly control what is probably the lone valuable asset left in BYJU’S edtech empire. Besides, Aakash founder JC Chaudhry may return as CEO. 

Meanwhile, BYJU’S former CEO Mrinal Mohit is launching a rival edtech firm. He was Byju Raveendran’s student and worked at BYJU’S for over 15 years. 

VENTURE CAPITAL

This Tiger Ain’t King Of The Jungle

2023 was terrible for one of the world’s biggest investment firms (not least because of executive churns). 2024 may not offer a huge reprieve either.

The Information (TI) reports that some Tiger Global staffers involved with raising capital for venture funds have accepted buyout offers. It’s a cost-cutting measure after Tiger suffered a paper loss of 18% in the second quarter of 2023 in a $12.7 billion venture fund—a far cry from its pandemic-era high. The FTX collapse alone accounted for said fund losing $38 million.

If there’s a bright spot, it’s Tiger’s shares in OpenAI. The current value of the stock is $161 million, but that could treble if OpenAI raises funds at the $100 billion valuation it wants.

Otoh: SoftBank is raring to go this year, especially in India. But last year’s WeWork and IRL debacles cast a shadow on whether Masa Son can truly turn things around.

STRATEGIC AFFAIRS

Dipping Toes In The Water

For the first time, India is putting its men and material at risk in an international conflict where it is not directly involved. 

The Indian Navy has deployed 10 warships to the area ranging from the Arabian Sea to the Gulf of Aden to help monitor and protect vessels—primarily Indian-flagged but not limited to them—threading through the Red Sea where Yemen-based Houthi rebels are attacking ships. 

Guided missile destroyer INS Visakhapatnam was the first to come to the rescue of US-owned bulk carrier Genco Picardy’s distress call when it came under Houthi drone attack. India is not in the team of navies cobbled together by the US to police the Red Sea, and normally participates only in United Nations’ peace-keeping missions. But it is a new member of the Bahrain-based Combined Maritime Forces Initiative, which is overseeing the Red Sea operations. 

The Signal 

India has long resisted putting boots on the ground in international conflicts that don't involve it directly. Even in Afghanistan, its help, though deep and extensive, was largely with engineering and knowledge resources to build schools, dams, power plants, and governance institutions. Its reluctance to participate actively in conflicts has been a sore point in its relations with the US. In 2018, the US downgraded an Obama-era special office set up exclusively for India in the Pentagon three years before. The naval operation is a tentative step. It ties in with India’s ambition to also become a global weapons maker and supplier.

CORPORATE

Sony-Zee Lost To Prisoners’ Dilemma 

How did the Sony-Zee merger go awry? Two parties, unable to communicate, act in their respective self-interest only to choose the worst outcome. 

Hide and seek: Sony and its lawyers, already wary of the allegations against Zee’s CEO Punit Goenka, were reportedly spooked when he asked for indemnity as the deal was closing. 

Then, Sony’s executives reportedly proposed a shocker: not only would Sony India’s N.P. Singh replace Goenka as CEO, the post-merger board would have no Zee representative.

Both waited. Zee was sure this merger was Sony’s only way to grow in India, while Sony hoped bad finances and pissed-off investors would pressure Zee to cave in. 

Picking up pieces: Goenka is in trouble. Zee’s shareholders may oust him from the firm. Markets regulator Sebi may have evidence he siphoned ₹800-1,000 crore ($96-120 million), 5x more than previously alleged. The Enforcement Directorate raided parent firm Essel Group. 

ELECTRIC VEHICLES

Sticky Switchuation

Earlier this week, we wrote about Chinese major BYD—which overtook Tesla as the best-selling EV maker last year—getting into Elon Musk’s turf with a strategy to sell premium and luxury EVs. Now, Tesla wants to return the favour.

According to Reuters, the company has targeted the second-half of 2025 to finally start production of a “mass market” EV, something BYD specialises in. Codenamed Redwood, the model is likely to be a compact crossover that may run on Tesla’s next-gen architecture, referred to internally as NV9X.

Tesla is considering a slate of cheaper EVs that will allow it to compete with gasoline-powered and hybrid cars when growth is slowing for the global EV market and Musk himself has warned of lower sales volumes this year. India, where Tesla has expressed interest in building a factory, could be integral to its mass market plans.

FYI

Fresh dough: Malaysia’s sovereign wealth fund Khazanah is reportedly in talks to lead a $400 million round in IPO-bound Oyo. The owners of the Indian Premier League franchise Delhi Capitals are looking to raise $90 million to $100 million via a private credit loan. 

Pink slips: Microsoft is laying off 1,900 employees from its gaming division, including those from its Activision Blizzard and Xbox teams. Swiggy has embarked on a fresh round of layoffs that could impact 350-400 employees (~6% of its workforce). Flipkart is letting go of 1,000 staffers or 5% of its workforce.

Red signal: The Federal Aviation Administration has blocked Boeing from expanding the production of its 737 Max aircraft until its quality control concerns are resolved. It, however, allowed 737 Max 9 jets to return to service after inspections.

Delivering payments: Zomato has finally got the RBI’s approval for a payments aggregator licence. 

No dominance: The Competition Commission of India has junked a plea against Ola Electric, Hero MotoCorp, TVS Motors and Ather on the ground of a lack of stable market share.

Under the scanner: The Federal Trade Commission is inquiring into Microsoft's multi-billion-dollar investment into OpenAI and the billions Google and Amazon have invested in Anthropic.

Recognition: In a growing sign of Foxconn’s importance to India, the company’s Chairman, Young Liu, has been awarded the Padma Bhushan.

THE DAILY DIGIT

~$2 billion

The estimated annual revenue earned by illegal streaming websites from ads and subscriptions. These sites have also accrued approximate profit margins of 90%. (Bloomberg) 

FWIW

A very British scandal: Tea’s intoxicating hold over the British has landed them in another feud. Well, sort of. Michelle Francl, an American molecular scientist, had suggested adding a pinch of salt to make a perfect cup of tea. It supposedly helps reduce the bitterness of the drink. Of course, the Brits were appalled by this suggestion and matters soon reached the desks of the British Cabinet Office and the US embassy in London. Suffice to say, neither wanted a repeat of a tea-feud and for now, both seem to have agreed to disagree. Hmm… history repeats itself after all.  

What’s in a name: The age-old refrain has now reached the world of medical science. Doctors are debating whether low-grade prostate cancers that grow very slowly should be labelled as cancer or not. The reason behind this debate seems to stem from the baggage that comes from the term. Not only does it impose a heavy emotional toll on the patient and their family, it also incentivises doctors to seek more aggressive (and expensive) treatments. Moreover, low-grade prostate cancers are relatively common and can be treated by active surveillance. If they do decide to change its label, it won’t be unprecedented; milder forms of thyroid, cervical and bladder cancers have been reclassified before. Seems like a tough one. 🤔

‘Luxe’ toilet: Remember the ‘7-star’ toilet scam from Delhi Commonwealth Games? Yeah, we aren’t the only ones messing up making a toilet. In San Francisco’s Noe Valley neighbourhood, city officials have been trying to build a 150-square-foot toilet at a price of a mere $1.7 million. As if that isn’t enough, the city officials estimate a time period of 2-3 years for the completion of the project. The project has become the perfect example of San Francisco’s byzantine zoning laws which greatly prohibit any new construction. For now, the State Governor has refused allocating funds for the projects and honestly, who can blame him?