Good morning! We’re living in the era of dirt-cheap solar panels. In fact, per the Financial Times, they’ve gotten so cheap lately that Europeans are now using them to build garden fences. This way, household customers save installation costs, though not without a trade-off. Such panels don’t capture as much sunlight as the ones laid on rooftops. Well, thrifty buyers must accept the bitter with the sweet.  

🎧 Disney’s epic boardroom battle. Also in today's episode: How fast food chains are turning to AI to enhance services. Tune in on Spotify, Apple Podcasts, Amazon Music, Google Podcasts, or wherever you get your podcasts.

Anjali Palod, Dinesh Narayanan, and Anup Semwal also contributed to today’s edition.

The Market Signal* 

Stocks & Economy: India may finally be getting what the doctor ordered: an uptick in rural consumption. FMCG companies are reporting a rise in sales volumes—6.5% each in December and January and 11.5% in February—of daily essentials. 

HSBC India Manufacturing PMI for March has been revised to 59.1, a notch lower than the earlier estimated 59.2. Yet, it is the fastest growth in factory activity since 2008. 

All that is good news but as usual, weather could be a spoiler. Weather forecasters are predicting heat waves that may damage crops. A rise in prices of essentials could put the Reserve Bank of India in a quandary. 

Asian markets were subdued as stronger-than-expected performance by major economies has left central banks rethinking the timing of rate cuts. Markets now expect high interest rates to last longer. The GIFT Nifty indicates a negative opening for Indian equities as well.

AUTO

Tata-Hyundai: Round 2 For #2 Is Beginning

We wrote yesterday how two automakers—homegrown Tata Motors and Korea’s Hyundai—have been battling it out for a quarter of a century for second place in India’s auto market. 

The numero uno, of course, is Maruti Suzuki. Tata and Hyundai are shifting gears to capture the future of mobility: electric vehicles. Maruti is not present in that market yet.

Tata and Hyundai are currently racing neck and neck in passenger vehicles. The Korean carmaker is preparing for a local listing while the Indian rival is hiving off its passenger vehicle division including EVs into a separate company. Pricing is Tata’s forte and after-sales service its bugbear. Hyundai has localised components to reduce costs and scores on marketing. 

But there could be a prolonged phase when buyers prefer hybrids to EVs. Head to The Core to read the second part of our deep dive into the Tata-Hyundai rivalry. 

PODCAST

Tune in every Monday to Friday as financial journalist and host Govindraj Ethiraj gives you the most important take on the latest in business and economy.

Today, he speaks to Teresa John, economist, Nirmal Bang Institutional Equities, about how heatwaves could hurt the Indian economy. Also in today’s episode: Bank of Baroda chief economist Madan Sabnavis on how India Inc is converting its investment intentions.

FOOD & BEVERAGE

AI Only Beyond This Point

Fast food giant Yum! Brands is looking to bring AI into all aspects of its quick service restaurants (QSRs) Taco Bell, Pizza Hut, KFC, and Habit Burger Grill. It wants to deploy AI for back-end processes such as inventory management and employee training via its “SuperApp”. AI-centric consumer-facing technologies are also in the works, The Wall Street Journal reports. Yum! Brands invested $21 million in technology last year, up from $11 million in 2022, an earnings report showed.

Hmm: Fast food chains such as White Castle have used AI bots in drive-thru services, though that’s not worked as expected.

Why AI?: QSRs in the US are contending with rising operating costs and union pressure, including a new minimum wage law in California. Customers are also shying away from discretionary spending in an inflationary environment. In this context, AI is believed to be the most cost-efficient way to drive sales. 

PRODUCTIVITY

Conscious Uncoupling

Employees who have a bone to pick with Teams (you’ll see plenty of that on social media), rejoice. Microsoft is unbundling the video conferencing/workplace collaboration platform from Office 365 and Microsoft 365 globally. The move comes six months after the company did the same in the EU to avoid a potential antitrust fine.

Background: In 2020, Teams competitor Slack filed an anti-competition suit in the EU against Microsoft for “illegally tying” Teams to Office. The European Commission launched a probe in July 2023, months after Microsoft revealed Teams had 300 million monthly active users (Q3 2023); that’s probably because Teams was bundled in its products.

Late last year, another Teams competitor, Zoom, urged the US Federal Trade Commission (FTC) to follow in the EU’s footsteps and investigate Microsoft for anti-competitive practices.

The Signal

Microsoft likely decoupled Teams from Office and Microsoft 365 as a preventive measure, considering it’s already facing FTC heat for its partnership with OpenAI. But the crux is that this is also a decision that benefits it.

The Teams unbundling in Europe hasn’t decreased its user base. It offers more features than the competition and is embedded enough in workplaces that have paid for Microsoft enterprise products, and would be willing to pay more for Teams as a standalone. The clincher is that it’s cheaper than Slack or Zoom.

In reducing the price of its productivity suites and charging separately for Teams, Microsoft may get a revenue lift while also avoiding further antitrust scrutiny. A win-win.

FYI

Temblor: An earthquake measuring 7.2 on the Richter scale off the Taiwan coast shook the island, toppling buildings and triggering tsunami warnings as far as Japan. 

Unending woes: BYJU’S has initiated layoffs that could affect up to 500 staffers, Moneycontrol reports; the employees are being let go over phone calls, and without a notice period or a performance improvement plan.

Tailspin: At least 15 senior pilots have quit Vistara and joined a domestic budget carrier, according to PTI. The airline cancelled 52 flights on Tuesday as pilots protest revised contracts post the merger with Air India.

Drop: Tesla’s quarterly deliveries have fallen for the first time in four years. The EV maker reported 386,810 deliveries in the three months to March 31, down over 20% from the previous quarter’s figure of 433,371 vehicles.

Sold: Yahoo is acquiring Artifact—founded by Instagram co-founders Kevin Systrom and Mike Krieger—for an undisclosed sum. The company will utilise the AI-powered news app’s technology for “richer content experiences and tailored personalization”.

THE DAILY DIGIT

260 

Gigawatts. The expected peak demand for power this summer in India. Coal will be the most used feedstock. (The Economic Times) 

FWIW

Boots on the ground: Blue-collar jobs are back in vogue. More young workers in the US are ditching college education for vocational training programmes. Blame it on the sky-high costs of higher education and a bleeding job market. Plus, the scarcity of plumbers, electricians, and welders has pushed up wages for skilled tradespeople. In turn, per The Wall Street Journal, enrollment in American vocational colleges hit a record high last year. Well, brace yourselves for a wave of newly-trained welders and electricians who could pull in six-figure salaries.