Namaste, Sat Sri Akaal, and Salaam. 🫡

Happy Friday, folks. 🙏

Today we’re diving into -
- Swiggy’s shady tactics at scale,
- Cold-chain issues at Licious,
- And Adani’s improving debt metrics.

Our read time today is 4 minutes and 58 seconds - faster than you can terrorize your little cousins with rang on Holi. 🌊🔫

Let's dive in. 👇

Market Vibe Check

Swiggy mints big bucks by rounding up tiny numbers. 💀

TLDR -
- Swiggy has been rounding up user’s orders to whole numbers (ie 197.3 → 200)
- This helps them earn an extra 1-2Rs per order.
- Add this up across their ~730m orders/year, and you have a business line that makes $20mn in PROFIT.

Another example of the beauty of scale…

A few Swiggy users noticed that their order totals were coming to decimal numbers, but their cards were getting charged with whole number amounts.

Basically, if your McDonalds order came to a total of 197.3Rs, you’d actually be charged 200Rs.

This seems very insignificant, because no one notices an extra 1-2Rs getting deducted.

But when you switch this extra charge “on” across Swiggy’s 100s of millions of orders per year, you have a PROFIT MACHINE.

Some back of the envelope maths - Swiggy does almost 2 million orders per day. Multiply that by an average extra charge of 2.5Rs, and then by 365 - now you suddenly have a revenue stream that does close to $20 million USD in profit per year!

And remember - there are no “costs” to earning this - so it’s literally a 99% margin business.

Some call it fraud, others call it financial genius… 😂

Licious closes the year out with a flat top-line. 🥩

TLDR -
- Licious predicted FY23 revenue of 1500 Cr, ended up with 700.
- Biggest reasons why are the fact that they need to do supply chain from SCRATCH, and that they have lots of side businesses to manage.
- Last year’s loss came to 806 Crores!

India’s first meat delivery unicorn Licious seems to be struggling with growth.

They predicted 1500 Cr of revenue but actually ended up with only 700 Cr.

Here are the 2 biggest reasons why -

1 - They have to reinvent the wheel.

Meat isn’t something that most Indians buy as part of their bi-weekly trip to the grocery waale bhaiya.

85% of all meat is bought in the unorganized sector, from wet markets and local vendors.

This forces Licious to build new distribution channels.

Doing distribution from scratch is an expensive game, and Licious’s product is highly perishable - so they have to put money toward sourcing, hygiene, quality etc - making the model extra mehenga to run.

2 - They need to manage every cookie jar that they have a hand in.

Licious is more than just a “meat delivery business”.

The nature of their model forces them to become a part agri-tech, part e-commerce, part supply chain, part cold-chain, and part fulfilment business.

They’re burning TONS of paisa to ensure their 90 minute delivery promise across most major pincodes - last year ka loss was over 800 Cr.

Adani dhamaal starts dying down. 🤔

TLDR -

- Adani said (once again) that their infrastructure business ALONE can service all debt that they’ve taken on.
- Lots of investors have started buying again after improved leverage metrics.
- 60% of their debt is owed to banks, rest are all is raised from debt to private individuals/companies.

Adani just posted record profit numbers on their infrastructure + renewable energy businesses - sitting at $2.8 billion for the last quarter. (hitting a $11.2 billion run rate!)

They also said that their infra business ALONE can service all debt maturing in the next 10 years.

Big investors like GQG partners bought the dip and made up to 80-90% over the last 6 months on Adani stock. (that’s on a $3 billion bet).

Waah bhai waah… 🙈

In other news… ☕

1000s of real estate investors LINE UP for a chance to buy $5 million plots of land on Dubai’s latest Palm Jebel Ali (BBG)

Cisco pays a mammoth $28bn to scoop up Splunk (TC)

GGV Capital splits it’s China business away after pressure from American regulators (FT)

Bespoke college consultants price their packages at $750k+/$3,000 an hour (BBG)

Meesho tries making a branded products play with Meesho Mall (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