Namaste, Sat Sri Akaal, and Salaam. 🫡

Today we’re diving into -
- VinFast’s decision to splash $2.5bn into India,
- Airbus’s cozy relationship with Indian manufacturers,
- and Tata’s cash-hungry super app.

Our read time today is 3 minutes and 22 seconds - faster than Haryana Police shut down the Rajat Dalal nonsense. 🙈

Let's dive in. 👇

Market Vibe Check

VinFast splashes $2bn on a mammoth India plant. ⚡

TLDR -
- VinFast is spending $2bn to invest into an India plant, giving them 150k more units of manufacturing capacity.
- They’ll be right with BMW, Tesla, Nissan, Renault, Hyundai, and others who’ve made Tamil Nadu their manufacturing hub.
- It’s a solid play on their classic ‘India +1’ strategy, cheaply make in India, cheaply sell to Asia.

There’s a good chance you don’t know about VinFast - it’s a Vietnam-HQ’ed $20 billion dollar electric car company.

Like most other EV makers, they’re adopting an ‘India +1’ strategy: base all your manufacturing out of India, and then cheaply sell your products across Asia because of lower export costs.

VinFast is earmarking around $2 billion on this exact break into India.

Most of their manufacturing masala will be centered around a facility in Tamil Nadu’s Thoothukudi, which makes VinFast neighbors with Hyundai, BMW, Renault, Nissan, Ola, and Tesla - other EV makers who’ve made Tamil Nadu their home for manufacturing.

Factory will currently have capacity to produce 150,000 units per year, with over 3,500 people being employed.

Along with this, they’ve set aside another $500mn to take advantage of the same deal that the Indian government gave Tesla. The pitch was something like: “Invest $500mn and source 25% of your parts locally, and we’ll slash taxes on your vehicles by 85%”

This is a boon for EV-makers - because in a market as price sensitive as India, you need to be cut-throat when it comes to pricing, especially when selling to the mass-market. EVs have historically been almost 1.5X-2X the price of normal ICE-powered cars, and these tax cuts will bring them almost neck-to-neck.

VinFast also gets a big currency arbitrage advantage - they’re investing in USD, which is a hell of a lot of INR when converted.

Insane stuff.

Airbus and India buyers/suppliers strike some solid bhaichara. ✈️

TLDR -
- Airbus just struck deals with Indian manufacturers Mahindra Aero, Aqeus, Dynamatic & Gardner.
- They have an order book of 900+ planes in India alone.
- Airbus wants to get into the post-sale servicing segment - super lucrative and adds up to multiple millions/year in additional revenue.

Airbus has long been the favorite supplier of planes to Indian airlines.

And as domestic air travel heats up, there’s gonna be much more demand, and many more rupees flowing into Airbus’s coffers.

Airbus is taking advantage of the “Make in India” subsidies and striking deals with trustworthy manufacturers, including Mahindra Aero, Aqeus, and a few more part makers which you haven’t heard of.

They currently have an order book of 900+ planes in India alone, and it helps to be closer to your customers.

Servicing is a BIG thing in the airline industry - almost 15-20% of costs incurred are solely due to the fact that you are legally required to check up your carrier planes after every flight.

The costs for these run anywhere from $700-2,000 for every hour spent in the air, and if you add this up over ‘000s of flights, it equals multiple millions in servicing contracts, all of which Airbus would like to be owning.

Habibi, come to Dubai Tilak Nagar...

Tata tries getting more cash into their coffers. 💰

TLDR -
- Tata is raising $1bn for it’s super-app Neu, right after a $2bn raise earlier this year.
- They did $25m of revenue against $165m of losses last year - spending almost $7 to earn $1.
- They’re making a classic flush-with-cash play: lure users in with incentives, keep them there with convenience.

Tata Group is raising $1 billion for their super-app Tata Neu.

Super-app businesses (read: Gojek, Uber, Careem) are notoriously cash-hungry, which means that they’re do or die.

Last year, to generate each dollar of revenue from the super-app, Tata had to burn $6.6. This is expensive, but here is some great stuff that comes out of it -

- Tata builds a very sticky customer base. Their repeat order rates are over 60%, which is unheard of in the business.
- A push into financial services. Tata’s created Fintech, Payments, and Stockbroking subsidiaries. They can ship a product to millions “overnight”, and can also tailor products based on customers’ transaction history.
- Commission income. Tata gets a nice slice of all the income they generate for the businesses on their app (BigBasket, 1mg, Croma, etc). Makes for a very good revenue stream that keeps coming back because of how good their ecosystem is.

Last year, while their losses went up 23%, their revenue went up 13X - growth like this is exactly what they’re spending big bucks for.

They’re enjoying a lot of growth on the parent company’s bankroll…

In other news… ☕

Bank of Japan ends a historic era of negative interest rates (BBG)

Fisker scrambles to stop production as they run out of cash (TC)

Nvidia unveils their latest Blackwell AI chip (FT)

Arts and crafts retailer Joann files for bankruptcy (NYT)

Yotta Data Services takes delivery of $200mn of Nvidia chips (Mint)

And that’s the tea the chai for today.

Thanks for reading, and we hope you enjoyed it.

Lots of ❤️,

Team CC