Namaste, Sat Sri Akaal, and Salaam. 🫡

Hope you guys had a brilliant week - I’m so excited to bring Cutting Chai back after a short exams-induced hiatus… you know how it is in high school. 🙈

Today we’re diving into -
- the kick-off of Dharavi’s development,
- Indian students’ exodus to the States,
- and Reliance’s credit card launch.

Our read time today is 4 minutes and 55 seconds - faster than the U19 team preps to take revenge for what happened on 19 November. 🙈

Let's dive in. 👇

Market Vibe Check

Adani breaks ground on developing Dharavi. 🏘️

TLDR -
- Gautam Adani has started work on his Dharavi megaproject spanning 620 acres and over 1m people.
- They coughed up over 5700Cr - miles beyond their closest bidder at 2000Cr.
- The project timeline is 7 years at the very minimum, but a fair trade-off for the facelift that the entire community will get.

Inside Bombay’s beating heart lies the world’s most famous slum - Dharavi. And last year, Adani Group won a bid to give the area a makeover.

They paid over $630mn to the government, and have pledged over $3 billion of their own cash to transform the slum area into something newer and cooler.

This “bid process” is a BIG reason behind why Bombay’s urban land is a mélange of the rich and poor.

Say the government owns 100 acres of slum land, which they plan to sell to the highest bidding developers. The developers then build permanent housing for the slum-dwellers on 30 acres of it (as they are legally bound to), and then they’ll use the remaining 70 acres to build ultra-luxury shopping malls, buildings, and offices.

It’s usually a win-win, since slum residents get permanent housing, and developers get access to prime land.

But Adani’s plans with Dharavi’s development are still very vague. No public information has been released on what he wants to do, but any sane developer would turn this into a hi-fi utopia.

Dharavi lies right next to BKC and is spread over 620 acres of super-prime real estate. Locals know the value of this land, but are also concerned that Adani might shunt them into tiny apartments to save costs, while spending large on the luxury developments which he’s planning to construct.

Crazy stuff, and time will tell where Motabhai takes this.

Indian students flock to the US in record numbers. 🎓

TLDR -
- The number of Indian students studying abroad surged 50% last year.
- This is a very ripe market with very few providing quality at a very high price.
- India has cracked the hard-skills coaching side (Aakash/Allen), now they need to crack the ‘softer’ elements (which aren’t yet available at scale).

‘Indian students going abroad’ is a multi-billion dollar market which just picked up some more steam.

Last year, almost 50% more Indian students went to study in the US compared to the year before - which is a crazy number. (2022; 750k kids abroad, 2023; 1.05m kids abroad).

There are two major takeaways from this.

1 - The rise of a multibillion dollar industry

Anyone who can afford to send their kids abroad is a high-ticket-spender.

The cost of a year of undergrad studies in the US is anywhere from US$90-120k. Most families with this kind of spending money spend close to the same amount in GETTING their kids to these top unis, be it through test-prep agencies, college counselors, or ‘massaged’ ECAs/nonprofits.

This leaves a massive gap in the market for someone who can provide these quality services at scale. There are always players who do this on a small 1-to-1 student level but very few businesses who are using this inelastic demand to do this ‘consulting’ at scale.

Indian parents never cheap out on education.

2 - The relative lack of “HYPSMs” in India

India also has a serious lack of quality educational institutions in comparison to it’s population.

Out of the IITs/IIMs, you will be very hard-pressed to find colleges in India that carry the same prestige and prospects that their equivalents in the US do.

Liberal arts institutions (Ashoka, Flame, KREA) were a trend that briefly popped up, but then slowed down just as quickly.

The middle & upper classes spend an outsized amount on education, because padhai-likhai is majority of India’s passport to success, and also because brands matter.

Jio Financial brings it’s first product live. 💳

TLDR -
- Reliance & SBI are entering the co-branded card market.
- They want to use these cards as a stepping-stone to tap a growing Indian middle class, and it’s a pretty smart strategy.
- There’s no major USP to a Reliance card as of now, but time (and Ambani’s billions) will eventually tell us what explosive market domination is in store.

Reliance and SBI are teaming up to launch 2 of their own co-branded credit cards on India’s RuPay network.

There is currently no USP other than the fact that there are some “discounts” on Reliance Retail businesses - AJIO, JioMart, Reliance Trends, etc.

This new interest in credit cards is not unique to Reliance. Tata Group also partnered with HDFC to roll out its own cards, riding on the coattails of the Tata Neu credit cards' success over the past year.

These co-branded cards serve as a conduit for these firms to diversify revenue, leverage customer data, and get a grasp on the pockets of India’s growing middle class. As incomes rise and consumerism becomes “hip”, these offerings will thrive.

But the reason this credit card news is interesting - Ambani has been going for a big financial services push of late.

Jio Financial is a $20bn behemoth with a hand in all sorts of cookie jars (asset/wealth management, advisory services, banking, lending, and now, credit cards).

Time will tell how Reliance’s plans pan out - but news like this is a pretty decent win-win for both customers & companies.

In other news… ☕

Aramco ropes in Goldman for a potential $20bn follow-on sale (BBG)

Joe Biden defends his “mental acuity” 😭 (FT)

Vision Pro gets lapped up by developers (TC)

Car-sharing company Getaround axes 1/3rd of it’s workforce (TC)

Abu Dhabi in talks to develop a $22bn beach strip in Egypt (BBG)

And that’s the tea the chai for today.

Thanks for reading, and we hope you enjoyed it.

Lots of ❤️,

Team CC