Namaste, Sat Sri Akaal, and Salaam. 🫡

Happy morning folks.

Today we’re diving into -
- Airpods’ lucrative manufacturing plans,
- Zerodha’s bet on passive products,
- And Tata Steel’s UK plant troubles.

Our read time today is 4 minutes and 48 seconds - faster than Ranveer needs to run away from this mess. 🙈

Let's dive in. 👇

Market Vibe Check

Foxconn gets set to kick off Airpods manufacturing in Hyderabad. 🎧

TLDR -
- Apple will start shipping out Airpods from their Hyderabad plant soon.
- They’ve spent $400mn building it out and will be formally launching in December.
- Last year, Apple saw over $12bn in Airpod sales. It’s one of their highest-margin products and is a criminally underrated business.

After iPhones, Apple is now gonna be making Airpods in India too.

They’re gonna start production in a month at Foxconn’s $400mn plant in Hyderabad.

Seems pretty insignificant, but the earphone opportunity is MASSIVE.

Airpods’ last year revenue alone was $12.1 billion. That’s more than Twitter, Shopify, and Snapchat combined.

Not to mention the 1000s of jobs generated for workers on this line.

Apple’s manufacturing strategy seems to be to try making 5% of their total planned production in a new market, and then lever up if the margins are better.

India is slowly getting more and more affluent and Apple demand is ROCKETING - which is precisely why Tim Cook keeps flying in for vada pav.

Zerodha pushes on to become the Vanguard of the East. 💸

TLDR -
- Zerodha’s 2 Nifty Mid-Cap funds just went live.
- They’re targeting a LOT of passive products - think SIPs, index funds, ETFs, etc
- Their dream: collect a 0.5% management fee across millions of uncles’ retirement accounts.

Every broking house made big bucks on trading - but they want PASSIVE investment now.

In other words, they’re specifically targeting dadajis/uncles who have 1-2Cr+ in their accounts, who just want a simple and no jhanjhat way to compound their wealth and earn a live-able retirement income.

Earlier this year, Zerodha tied up in a 70/30 JV with Smallcase to build Zerodha Fund House.

They just launched their maiden funds - two different Nifty Mid-cap offerings.

There’s gonna be a boom in these low-stress investment products that “autopilot your retirement”.

India currently has the world’s youngest population, but that simply means we’ll have an army of grey-haired people in 40 years, all of whom will love their portfolios on autopilot =)

Tata’s Port Talbot uncertainty continues. 🤔

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 500mn GBP, but Tata is gonna need anywhere up to 2bn to keep it alive.
- Almost 3,000+ are set to come (but Tata mysteriously pulled that communication at the last minute)

Tata Steel owns Britain’s biggest steelworks plant - Port Talbot.

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, and got them to agree on on 500mn GBP.

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

As a result, almost 3,000 people are set to lose their jobs…

Sticky stuff.

In other news… ☕

Vanguard dismantles it’s China team (BBG)

Disney offers $8.5bn to buy out Hulu (FT)

Ford buys a secretive EV startup (TC)

L&T margins start to dull (Mint)

Freshworks sets a $1 billion revenue target (Arc)

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