Good morning! Aero chocolate bars might sound fancy (frankly, reminds us of sneakers), but hidden in the bubbles is a nifty trick that has got nothing to do with the sin quotient but everything to do with cost. Cocoa prices are at stratospheric levels, but chocolate makers cannot raise prices so much that customers stop buying them. The only other way then is to skimp on chocolate itself and fill bars with anything else—nuts, fruits, caramel, or in the case of Nestle’s Aero, just air. Bloomberg reports that 40% of all moulded chocolates sold in the US have fillings that are not chocolate. With cocoa prices expected to rise even more, we’ll willy-nilly be eating healthy bars.

🎧 Reliance steps into Disney World. Also in today’s edition: The TikTok-Universal Music battle gets uglier. Tune in to The Signal Daily on Spotify, Apple Podcasts, Amazon Music, Google Podcasts, or wherever you get your podcasts.

Jessica Jani also contributed to today’s edition.

The Market Signal 

Stocks & Economy: The National Statistics Office has estimated that India’s output grew 8.4% in the third quarter of FY24, leaving the RBI’s forecast of 6.5% for the period in the shade. While manufacturing grew by 11.6% and construction expanded by 9.5%, a steep rise in tax inflows contributed more to the bump in GDP than the rise in value addition (which truly represents economic activity). 

The agriculture ministry estimates that food production in 2023-24, including wheat, rice, pulses and oilseeds, will be marginally higher than in the previous year. 

The US reported that not only did inflation ease to 2.4% in January from 2.6% in December, but inflation-adjusted personal consumption fell too. Stocks rose with the Nasdaq hitting record highs. The sentiment touched Japanese shares too this morning, although the rest of Asia was subdued. 

The GIFT Nifty indicates Indian equities gaining at the open.

PHARMACEUTICALS

Weight And See

Indians clamouring for weight loss drugs will have another option if all goes according to Eli Lilly’s plan. The US drugmaker, which competes with Danish peer Novo Nordisk (NN), maker of Ozempic (prescribed for Type-2 diabetes patients), WeGovy (higher-dose Ozempic variant prescribed for weight loss), and Rybelsus (oral diabetes medication), may launch Mounjaro in 2025.

From the NN stable, only Rybelsus is officially available in India. But the pharma major wants to bring WeGovy to the country in 2026. The active ingredient in its drugs, semaglutide, already has a 66% share in India’s obesity drug market, The Core reported.

India has the second-highest population of diabetics and a high prevalence of obesity among women. That makes it a ripe market for Eli Lilly and NN, especially since off-label variants of their drugs are wildly popular. Generic drugmakers like Dr Reddy’s, Sun Pharma, and Cipla too have been developing versions of WeGovy.

E-COMMERCE

Rollup Rolls Down

The following is a roster—by no means exhaustive—of the Indian copycats Thrasio inspired: The Good Glamm Group (TGGG), IDAM Natural Wellness, Mensa Brands, GlobalBees, and GOAT Brand Labs.

Rollup commerce, the business model of aggregating direct-to-consumer brands or third-party Amazon sellers, was the rage during the Covid-19 pandemic, thanks to a boom in online retail. And US-based Thrasio was its poster child.

Now, the company once valued at $10 billion has filed for bankruptcy and signed debt restructuring agreements with lenders.

It was a development waiting to happen. Not just because of post-pandemic downturns in late-stage fundraising, special purpose acquisitions, and IPO activity, but also because of the auditing challenges and steep operating costs of aggregating disparate businesses.

The good times didn’t continue for Indian rollup firms either. We’d summed up TGGG’s struggles in 2023. No doubt the others would be watching Thrasio’s goings-on with a wary eye.

ELECTRIC VEHICLES

JVs For EVs

Volkswagen Group is set to enter a 50-50 joint venture with India’s JSW Group to make electric cars in India. The company already announced a deal to supply components and battery cells to Mahindra & Mahindra earlier this month. Not just that, Volkswagen Group’s local subsidiary, Skoda Auto, is also exploring partnerships with Indian companies to enter the EV market, one of the company’s board members recently said. 

Additionally, Ford, which exited India’s shores two years ago, might be making a comeback. According to a Hindu Businessline report, it is likely to focus on hybrids and EVs, and a possible joint venture with Tata Group could be on the cards. 

Yellow light: Amid a global EV slowdown (and a brutal price war in the world’s largest EV market), the Indian market seems to be inviting for global players, with a catch. Companies appear to be keen to leverage partnerships with domestic players and not shoulder the risks alone. 

The Signal

While global automakers seem to have their sights set on cars, that’s not what’s driving the e-mobility wave in India. Penetration of electric cars in the country is still about 1.5% as opposed to three-wheelers, where more than half the vehicles sold last year were battery-operated.

And now, local players like Tata, Ashok Leyland and Mahindra & Mahindra are focused on cracking the biggest fuel-guzzlers in the country: trucks. India is predicted to be the world’s largest driver of oil demand by 2030. This bottom-up electrification might undo that.

AVIATION

The Contentious Hour

What difference does an hour make? Life and death. Loss and labour. That is the crux of the ongoing dispute with airlines on one side and pilots and the aviation regulator on the other. 

Point: Earlier, night was from 12 midnight to 5 am for pilots. The Director General of Civil Aviation (DGCA) changed it to 12 midnight-6 am. The extra hour has a cascading effect on airline rosters. To reduce pilot fatigue and enhance safety, the regulator also mandated a 10-hour workday and fewer landings. Airlines argue that these norms will shrink their workforce availability by a quarter. 

Counterpoint: Captain Sam Thomas, president of the Airline Pilots' Association of India, tells The Core that it means they are overworked by 25%. DGCA’s June 1 deadline, airlines say, is too short to hire and train new pilots, and they will have to cancel a fifth of the flights. 

GAMING

In The Name Of All That Is Holy

India’s gaming industry—perhaps looking for a reprieve after the government cracked down on real money and online betting platforms—is reportedly gung-ho about “religion and spiritual-focused content” after the inauguration of the Ayodhya Ram Mandir. Emphasis on ‘reportedly’, because app downloads are one thing and engagement is another.

One-third of downloads for Shree Ram Temple, which has been around since 2019, have taken place over the last month. Casual gaming studio FunStop claims 65% of the traffic for its app, Shri Ram Mandir, comes from Madhya Pradesh, Chhattisgarh, Uttar Pradesh, and Gujarat since late January. It’s launching three more apps on similar themes.

Despite their appeal across age groups, there’s not much to do in these games except listen to Vedic lectures, roleplay as a temple manager helping devotees, or visit gaushalas. There are better mythology-inspired titles out there like Raji: An Ancient Epic and Indus Battle Royale. Jussayin’.

FYI

Heavy fuel: The Tata Group will pour $120 billion into new pursuits such as semiconductors and expansion of existing businesses with high growth potential such as aviation in the next few years. 

All clear: The Union Cabinet has approved three semiconductor units, including two by the Tata Group, with a total investment of ₹1.26 lakh crore (~$15.2 billion). 

No, can’t do: Billionaire Anil Agarwal-owned Vedanta’s hope of reopening its copper smelter in Tamil Nadu’s Tuticorin has been dashed by the Supreme Court, which pointed out multiple compliance violations.

Annihilation assured: Russian President Vladimir Putin has warned that he would not hesitate to use nuclear weapons, well knowing that it could end all civilisation, if western countries increase their support to Ukraine. 

Regulatory trouble?: The US FDA has found issues with quality controls for animal experiments and recordkeeping at Neuralink, less than a month after Elon Musk’s brain implant startup claimed to have been cleared for human trials, Reuters reports. The Wall Street Journal reports that the US SEC is investigating whether OpenAI investors were misled after last year’s dramatic ouster and reinstatement of CEO Sam Altman.

Teflon Don(‘t): Shares of US chemicals giant Chemours, the maker of Teflon, are down over 35% following an accounting scandal and the company putting its top executives, including its CEO, on leave.

Inferno: A fire that began at a restaurant gutted the six-storey building that housed it, killing 43 and injuring several others in Dhaka, Bangladesh.

THE DAILY DIGIT

₹1.2 lakh crore

Or ~$14.5 billion is the amount of private philanthropy money that was available in India in 2023. That is a rise of 10% from the previous year, according to a report by Bain & Company and Dasra. (The Economic Times) 

FWIW

Taking the leap: How’d you spend your Leap Day? We spent ours explaining why February 29 comes once every four years :’). It's simple: one year has 365.242190 days, and whatever comes after that decimal point takes about four years to morph (if we can call it that) into a whole number, aka an additional day. Before the Gregorian calendar, the one we use today, ancient calendars accounted for such “imperfections” by having entire leap months. But the Romans added an extra day in February because they considered it an unlucky month. And that stuck. Not everyone’s a fan though; two astrophysicists have proposed a new calendar with a leap week.

Market penetration: Sex should be an easy sell, especially in a country which until recently was the world’s most populous. Yet, it turns out sexual wellness is difficult to market in China because the line between tasteful marketing and vulgar hustling is a thin one, and a misstep can land you before frowning conservative regulators. British FMCG major Reckitt intends to rise to the occasion though for its condom brand Durex. The route it’s taking—livestreamed commerce—is tricky but has proved to be effective for the company’s other products, such as Dettol sprays and Strepsils throat lozenges. And unlike in the West, influencer-driven Instagram is a turn off. Reckitt prefers to feature studio-created, employee-led informative content on Douyin, the Chinese version of TikTok. It’s up against Chinese government policy incentivising citizens to procreate more to counter an ageing population too. 

No paparazzi please: Kyoto’s historic quarter of Gion is famous for its geishas and maiko (apprentices who train to become geishas). It’s also famous for rowdy tourists who have no respect for local customs. The area is grappling with a “geisha paparazzi” menace despite Gion prohibiting such photography. The situation was particularly terrible in 2019, when visitors went as far as to grab the women’s kimonos and throw cigarette butts at them. Disgusting. Fortunately, locals are stepping up to throw the rulebook at badly-behaved tourists. Be a good guest wherever you go, y’all.