Namaste, Sat Sri Akaal, and Salaam. 🫡

Happy Monday, folks. 🙏

Today we’re diving into -
- Tata Steel’s $670mn injection from the UK government,
- Veeba’s condiment-powered 1,000 crore milestone,
- And India’s widening trade gap.

Our read time today is 4 minutes and 36 seconds - faster than Mohammed Siraj’s slot ball crashes into the middle stump. 💪

Let's dive in. 👇

Market Vibe Check

UK government readies to pay up $720mn to Tata Steel. 💸

TLDR -
- Tata Steel was gonna close it’s biggest UK plant, but the government is gonna pay them to keep it open.
- Government is offering 500-600mn GBP, but Tata is gonna need anywhere up to 2bn to keep it alive.
- Almost 3,000+ layoffs will come as a result.

Tata Steel owns Britain’s biggest steelworks plant in Wales.

Last year, they warned us that it might have to close down since it’s simply too expensive to operate.

But if Tata’s plant went bust, the UK government would have to deal with a massive blow to their steel industry - so Sunak & Co decided to offer a subsidy of 300mn GBP to decarbonize it and keep it alive.

Tata found the 300mn number too low, and they rejected it.

They’re negotiating with the government on 500mn GBP - and the final offer is probably gonna be as high as 600mn.

However, here’s the kicker - a rough estimate of the cost to decarbonize Tata’s UK plant runs in the $2-2.5 billion mark.

Tata is gonna be doing a little cash infusion of their own, but it might not be enough.

They’ll be firing almost 3,000 people as a result.

Sticky stuff. 😬

Veeba closes in on the 1000Cr mark. 🚀

TLDR -
- Veeba is closing in on $121mn of revenue/year.
- They’re an “intentionally loss-making” business and spam all their profits back into expansion.
- Quite a few golden lessons for anyone with a consumer brand.

MDH walked so that Veeba could run…

In another crazy story of a home-grown D2C brand selling to aspirational middle-class families, condiments company Veeba is otw to hit 1,000 crores in top-line.

There are 3 big takeaways here -

1 - D2C businesses thrive on scale.

Veeba intentionally makes between 0 and -0.5% EBITDA.

They’re intentionally loss-making.

Every single penny is put back into the business, so that they can have the biggest and best distribution.

More people coming across the brand = more people buying.

Once you can sustainably place your products in front of hundreds of millions of eyeballs every month, is when you’ve “won” the distribution game.

2 - Diversification is king.

You can’t put all your eggs in one basket.

The same way, most consumer brands that survive off a one “hit” product often fizzle out in a few years.

Businesses who win at D2C are the ones who take this momentum, and use it to cross-sell their other products.

3 - “West ke chochle” work surprisingly well.

Veeba’s products aren’t the cheapest in the market, but it’s fine, since they’re giving their customers as white-glove of an experience as you can get when using a ketchup packet.

Their packaging and branding very closely mimics a foreign/imported sauce, and this kinda stuff catches attention in India.

We saw this with brands like Uniqlo, Taco Bell, and Zara all smashing sales targets for their India biz.

Super cool stuff.

India’s trade gap hits a year-long high. 🤔

India’s import bill got a little inflated as the trade deficit widened to it’s highest since September last year.

Exports-imports gap stood at $24.6 billion - far higher than the $21 billion forecasted by economists.

Exports also fell 6.9% from a year earlier to $34.5 billion in August while imports stood at $59 billion, down 5.2%.

The decline in exports and imports has been slowing from July onwards.

Plus, prices are rising and oil is getting more expensive around the globe, so that has a big hand to play.

Pricey…

In other news… ☕

Arm advisors make a stunning $84mn off the IPO. (BBG)

Divvy homes goes from a $2bn valuation to third round of layoffs (TC)

Sidbi to raise $1.28bn from a rights issue (Mint)

Investors bet on more rate hikes (BBG)

Zomato leaves the Slovakian market (Inc42)

And that’s the tea the chai for today.

Thanks for reading, and we hope you enjoyed it. Have a mauj-masti filled day.

Lots of ❤️,

Team Cutting Chai