Namaste, Sat Sri Akaal, and Salaam. 🫡

Happy morning folks. Today we’re diving into -
- Modi’s courtship of big foreign brands,
- Lucid’s billion-dollar Saudi fundraise,
- and Veeba’s race to 1500cr.

Our read time today is 3 minutes and 47 seconds - faster than Arshdeep threw it all away yesterday. 🙈

Let's dive in. 👇

Market Vibe Check

Modi courts brands for India’s nascent manufacturing scene. 🏭

TLDR -
- India is offering the red pill and the blue pill at the same time: low taxes and easy Asia access.
- They’re shoveling tons of incentives on foreign firms in the hope that their smaller counterparts will flock to Indian manufacturing too.
- It’s a ballsy move, but it seems to be paying off so far.

India is betting big in the transformative potential of a few large investors - evident by their courtship of high-flying tech companies across the world.

Government agencies are starting to market foreign companies a once-in-a-lifetime opportunity to participate in India’s growth story, because with most emerging economies, if you’re not with ‘em on the way up, there’s a strong chance you’ll be forgotten about in the good times.

The carrot of insane consumer demand being offered alongside the stick of slightly higher tariffs seems to be something that most foreign investors are happily able to stomach, especially given how well India has managed to create ecosystems around manufacturing.

Take Foxconn for example. Indian government officials spent years and millions of dollars wooing execs from both Apple and Foxconn into setting up a plant in India. Today, there’s a whole smartphone manufacturing hub around Foxconn’s Tamil Nadu plant.

Think of it this way - the government wants to grab a few massive names and shower them in subsidies and get them to put solid roots down. And if a big shark like Tesla or Apple comes to India, there’ll be a hundred more small companies willing to have a look too - because if giants are putting hundreds of millions behind the India story, it is something of a statement about the country’s business environment.

A few names being shown extra love of late:

Tesla: An 85% cut in taxes and over $500mn in subsidies contingent on a few investment criteria

Apple: $2 billion of cash incentives and a ‘bonus’ between 4-6% of the finished products’ prices

Intel: $1.5bn of cash subsidies contingent on the setup of a semiconductor factory and hiring targets

Lucid Motors grabs first-class seats to Saudi Arabia for $1 billion in fundi

ng. 💸

TLDR -
- Lucid Motors is tapping into Saudi Arabia’s treasure chest again with a $1 billion fundraise to cushion the high-octane expenses of running a luxury EV venture.
- PIF now owns a ~60% stake in Lucid after this, becoming their biggest investor.
- Lucid’s road has been anything but smooth, with production projections modest and new models flopping in the market.

For a company named Lucid, you’d expect a lot less ambiguity surrounding financial performance - but it looks like Saudi Arabia’s PIF still believes in the growth story. And they believe in it enough to hand over a $1 billion cash investment in exchange for a stake increase to almost 60%.

This comes just a week after Lucid shared production targets for their newest sedan - a mere 9,000 units. In addition, the $2.8 billion loss in their books doesn’t give anyone a lot of comfort.

Their CFO acknowledged this one-sided relationship too: “If I adopt a mindset that there is bottomless wealth from PIF, that is very dangerous, that is something I will never do, I respect them far too much for that.”

Lucid has struggled to find buyers for its expensive Air sedan (starting at $75k base model!), and has cut prices multiple times in recent months in an effort to boost sales.

I guess time will tell if this one pays off… 🤔

Veeba smashes the 1500 Cr/year run rate. 🫙

TLDR -
- Veeba is closing in on $180mn 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 1,500 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.

In other news… ☕

Fisker gets told by the NYSE to F’ off (TC)

Donald Trump gets his criminal bond reduced to $175mn (FT)

Boeing CEO says bye-bye (BBG)

Adani Ports picks up majority stake in a SP-owned port for 1500 Cr (Mint)

EU places a target on Alphabet, Apple, and Meta again (NYT)

And that’s the tea the chai for today.

Thanks for reading, and we hope you enjoyed it.

Lots of ❤️,

Team CC