Sheryl has left
Also in today’s edition: It's getting late for BNPL; Meesho's worry; Crude one upmanship; Birla’s new paint
Good morning! There’s no escape like the escape into the depths of the cinema hall. Two years of dread and isolation later, people are thronging the movies. K.G.F: Chapter 2, RRR, Gangubai Kathiawadi and Valimai have set the box office on fire, raking in ₹4,002 crore between January and April. As Paul Simon crooned rather darkly: That’s why God made the movies.
Coming tomorrow: A profile of India’s only pro-gun lobby, which enjoys political patronage despite its controversial—and unscientific—claims.
The Market Signal*
Stocks: Benchmark indices snapped out of their two-day losing streak to close in the green. Reliance Industries advanced by 3.6% after it signed a deal with Italian toymaker Plastic Legno SPA. Shares of logistics delivery giant Delhivery surged 6% on Thursday, the highest since it made its market debut last Tuesday.
Early Asia: The SGX Nifty was trading 0.15% up at 7.35 am India time today. The Nikkei 225 had risen by 0.96%. The Hang Seng index was sagging.
SOCIAL MEDIA
The Sandberg Era Comes To An End
Meta COO Sheryl Sandberg is leaving the building. She announced her fall departure, where else, on Facebook. Meta CEO Mark Zuckerberg called it “the end of an era”. Meta’s head of growth Javier Olivan will replace Sandberg.
Timing: It was inevitable. Sandberg was responsible for Meta’s advertising business, communications, and public policy among others. She was sidelined even before the company pivoted to the Metaverse. Some of her roles were given to Nick Clegg (President of Global Affairs), while others such as Andrew Bosworth (CTO) and OIivan assumed more prominence in the Zuckworld.
Mixed legacy: Sandberg has been rightly credited for turning Facebook (and pre-2008 Google) into a personalised-advertisement juggernaut (until Apple’s privacy changes kicked in). But that came at a cost as Meta’s platforms evolved into hubs of rampant disinformation, hate speech, and toxicity. Sandberg cannot shrug that off from her 14-year old legacy.
🎧 Your Nike and Uniqlo merchandise may soon have the Made in Sri Lanka tag. Facebook's Sheryl Sandberg, who turned the platform into a digital empire has stepped down. She leaves behind a complicated legacy. Dive in.
FINANCE
BNPL Hits A Speed Bump
Unlike the old-school credit card, the buy now, pay later (BNPL) service came with no strings attached: zero late fees, and flexible repayment plans. It had its moment in the sun when the world was shut indoors but now cracks are showing.
Sliced: US BNPL companies, Affirm Holdings, Afterpay and Zip are dealing with late payments. Investors are wimping out. Klarna has laid off 10% of its workforce and tightened lending norms.
Mirror, mirror: Symptoms are showing up back home too. Fintech unicorn Slice has restricted 'Pay in 3' feature to select customers. It also raised $50 million in funding to boost its UPI offering. Regulators, abroad and in India, are cracking down. Who will carry the can if there are defaults—banks or the BNPL companies? the RBI asks.
E-COMMERCE
Is Meesho Going The Snapdeal Way?
Meesho began the year with an ambitious plan: take on Amazon, Flipkart and other e-commerce gladiators. According to The Economic Times, it is licking its wounds.
Burn, baby, burn: Despite being valued at $5 billion in the last raise, new money has dried up. Worried of an investor backlash, it is slashing Its monthly burn from $40 million-$45 million to at least $25 million. It had let go 150 employees in April.
Going low-cost: The upcoming festival season would be crucial. It’s going low-cost in “Project Unbundle” where discounted products cannot be returned unless they are defective.
The Signal
E-commerce companies spend the most on marketing, discounting and shipping. Meesho will find it hard to ship faster but cheaper while protecting margins when customers are being pampered by ultra-fast deliveries (hello, 10 minutes!). Skeletons of past wayfarers are scattered on that path. Softbank-backed Snapdeal, for instance.
Softbank, which is fighting its own demons, is an investor in Meesho too. Snapdeal fell selling to low-end value shoppers in small town India. Meesho, which began as a social commerce platform and slowly transformed into a vanilla e-commerce company, is trying but will need the economy to revive to give it a lift.
ENERGY
Oil’s Well That Makes Money
Two days ago we had pointed out how Russian oil flowing through India was enriching refiners.
The Wall Street Journal reported that Indian importers are concealing Russian shipments to avoid sanctions from the West. Petrol and diesel refined from Russian crude are even ending up in the US, the report suggested. The refiners are not amused.
Look who's talking: Someone else has been making a killing, quietly. Average US crude oil exports touched 3.13 million barrels per day in January-May, an all-time high for the period in any year. US diesel and petrol exports rose to a three-year high of 2.32 million barrels per day despite a hue and cry over rising domestic prices. All that fuel, some even from the US strategic reserves, are flowing to energy-starved Europe.
Meanwhile, the oil cartel Opec has bowed to US pressure and agreed to pump more oil in July and August to cool prices.
COMMODITIES
Birla Prepares To Paint The Industry Red
This promises to be a colourful battle. The Aditya Birla Group flagship Grasim will spend ₹10,000 crore over the next five years to foray into high-end paints. It is in line with chairman Kumar Mangalam Birla’s stated plan to reduce the group’s overseas investments to focus on the domestic market.
Sharp ends: It’s a bold bet on an industry that grows 1.5-2 times the GDP growth rate but is dominated by well-entrenched players such as Berger Paints, Nippon India, Shalimar and the big daddy with nearly 40% market share, Asian Paints.
The B2C paints business, however, is a game of distribution muscle. The Birla group already makes construction materials such as cement, white cement and putty. It is the distribution network of these products that the group hopes to leverage.
FYI
It’s not over: Time to mask up again? India is seeing a spike in COVID-19 cases with 3,712 being reported in the last 24 hours. Mumbai is taking the lead with around 700.
Pulling out: VPN provider ExpressVPN will remove its India-based servers, citing what it called “the Indian government’s attempts to limit internet freedom”. Amazon will shut down its Kindle e-store in China, come 2023.
Seeing red: Household budgets might get squeezed even further. The retail price of tomatoes skyrocketed to ₹77 per kg from ₹66 last month in most metros, except Delhi.
Out of the bag: China’s ByteDance has sold its 9.8% stake in Dailyhunt parent VerSe and exited the company.
Fresh dough: Diagnostic lab service startup Orange Health and cloud kitchen company Curefoods closed their respective funding rounds. Greaves Cotton's EV arm is close to securing up to $220 million from Abdul Latif Jameel.
Act, or else: YouTube and other digital platforms might have to shell out damages over unauthorised uploads if dished out by a third party or slow to act, as per a German court.
FWIW
High and dry: The most sought-after real estate market, the Hamptons, is no more hot property. In fact, rentals are slumping. We are talking about a 30% slash. Why? New Yorkers are vacationing in Europe. International travellers haven't started arriving in droves as yet. Hampton owners made a windfall in the past two years after travel was restricted.
A sari sight: The UK is gearing up to celebrate Queen Elizabeth II's 70 years on the throne. As part of the celebrations, UK South Asian performance company Nutkhut will feature a saree created with sustainable recycled plastic. This will be part of a themed Bollywood party. It will travel through London and finally land outside Buckingham Palace.
Shanghai shenanigans: Shanghai may have just stepped out of a two-month lockdown but the authorities want to call it anything but. Instead, they've decided to term it "static management-style suppression and suspensions". As part of the directives issued to the media, it was also stressed that the measures were "conditional".
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