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SoftBank pulls a one-eighty
Also in today’s edition: Climate change comes for dal-chawal; Hospitality is flying high; Walmart hops on the streaming bandwagon; Microsoft to join ONDC
Good morning! The curtains may finally be up on the century-old British India Corporation (BICL), which manufactured woollen products under the Dhariwal and Lal-imli brands. BICL was nationalised in 1981, but it couldn’t keep its head above water. NITI Aayog suggested its closure after several unsuccessful revival schemes.
The Market Signal
Stocks: Domestic benchmark indices ended flat on Wednesday ahead of the latest US inflation data report. Metal stocks gained. Delhivery shares slumped 6% after its Q1 loss widened.
Early Asia: The SGX Nifty climbed 1.15% at 7.30 am India time. The Hang Seng Index (1.18%) was also trading in the positive territory.
FARM & FOOD
Idli-Sambar, Dal-Chawal Will Be Tough To Chew
Staple foods across India have become more expensive as prices of pulses have risen by 15% in less than half a year.
The prices are likely to go up even more as fewer farmers are cultivating them in the current season. Government sowing data shows land growing tur dal has shrunk by 4.6% compared to the previous year, and that under rice has shrunk by 13%.
Climate change: Blame it on the weather.
The largest rice-growing areas of eastern India have not had enough rainfall. While rice-growers were hit by drought, pulses crop in thousands of farms in central and western India were submerged by excess rain.
Low rice production in India will also push up international prices as it has a 40% global market share.
Redmond Hops Aboard ONDC
Microsoft has become the first global tech major to join the Open Network for Digital Commerce (ONDC), which will unify digital commerce platforms and logistics providers. The company will also launch an ecommerce app in India by late 2022.
Details: …are scant. All Microsoft has revealed is that its app will “introduce a new consumer app experience in the social commerce space”. This space is currently dominated by Meesho, Flipkart’s Shopsy, and DealShare, and a glut of shortform video apps vying to compete in the world’s fastest-growing social commerce market (even Google-owned YouTube acquired SimSim last year).
With ONDC, however, Microsoft may focus on growing Dynamics 365 Commerce, its Shopify-inspired business suite for retailers. It runs on the Azure cloud computing platform, which has long competed with Amazon Web Services for US and UK retail clients.
Son Takes A U-turn
SoftBank’s disastrous quarterly loss of $23.4 billion is pushing Masayoshi Son to consider taking the company private—something the founder had always rejected.
Brakes: The group’s flagship Vision Fund alone lost more than $17 billion due to a global tech rout, pushing the company towards layoffs. SoftBank also lost $6 billion in foreign exchange due to a weaker yen. The situation didn’t improve even after $10 billion worth of buybacks.
Selloffs: SoftBank is cutting stakes in FirstCry, SoFi Technologies, Alibaba and Uber in an attempt to scale back investments. It also plans to sell units such as Fortress Investment Group to pay more attention to the Vision Fund.
Masayoshi Son, who shepherded a once-untouchable company, is being forced towards a U-turn by delisting SoftBank. Such about-turns are not uncommon: Netflix CEO Reed Hastings considered an ad-supported model after years of saying he’d never do so. Legendary investor Warren Buffet famously admitted his mistake of ignoring Google and Amazon.
In his post-earnings speech, Son said that SoftBank would continue grappling with a funding “winter”. Startups backed by the company also fear bearing the brunt of SoftBank scaling down or pulling out of its investments altogether. What Son chooses to do next will have significant bearing on the ecosystem that once boomed because of his foresight.
Wanderlust Boosts Industry Growth
The travel bug has returned in a big way, much to the relief of the hospitality sector. Indian hotels and restaurants are counting their greens as folks can’t wait to GTFO. Literally.
Check-in: Tata Group-backed Indian Hotels Company (IHCL) had the “best fiscal first quarter” in its history. Oberoi's flagship company EIH Limited and Lemon Tree Hotels also saw a rise in revenues. Anjan Chatterjee's Speciality Restaurants—which runs Mainland China, Asia Kitchen by Mainland China, Oh! Calcutta and Sigree-Global Grill—posted a profit of about ₹15 crore.
Overseas, Hyatt Hotels, Marriott, and Hilton posted strong earnings. Airbnb had also witnessed record bookings in the last quarter.
Hear hear: Business travel, corporate off-sites, and summer holidays spurred demand. The best is yet to come, with long weekends and festivals expected to drive revenues ahead.
Elsewhere: OYO has snapped up Danish holiday home operator Bornholmske Feriehuse.
Walmart’s Streaming Hustle
Walmart is taking steps to draw more customers to its membership programme. The retail giant is in discussions with Paramount, Disney and Comcast about bundling their streaming content in Walmart+.
Rationale: A $12.95 monthly Walmart+ membership comes with free delivery, fuel discounts and a six-month subscription to Spotify Premium. By adding video streaming, it’s now competing harder for value against Amazon’s Prime membership programme.
Precedents: In 2010, Walmart had acquired on-demand video platform Vudu, which it sold two years ago to prioritise retail. Flipkart also took the streaming plunge in 2019 with Flipkart Video. Japanese retailer Rakuten runs the streaming app, Viki.
Flipside: HBO Max is deferring its India launch until 2024. Would-be head of content Saugata Mukherjee has already left, leaving the local team in a lurch.
Meanwhile, Disney+ added 14 million subscribers globally to reach 152.1 million. But it has lowered its long-term subscriber forecast for 2024.
🎧 Walmart has streaming ambitions to take on Amazon Prime.
Newer frontiers: TikTok-parent ByteDance has acquired one of China’s largest private hospital chains, Amcare Healthcare, for about $1.5 billion. It also rebranded its Chinese unit to Beijing Douyin Information Services.
Cap off: The Indian government will remove pandemic-era fare caps on domestic airline prices from August 31 as the aviation sector heads towards recovery.
Relief: The worm wriggling up the US inflation graph slowed down in July as fuel prices eased. But the average rate of price rise remains near its 40-year high.
Fallout: Trading volumes on WazirX, India’s largest crypto exchange, tanked 54% after an ED crackdown and ownership spat with Binance.
Wall of fame: Breaking Bad's Heisenberg is a Nobel prize-winning physicist. So believes a school in Punjab, which showcased protagonist Bryan Cranston instead of scientist Werner Heisenberg, who co-pioneered the theory of quantum mechanics. The actor shared space with scientists such as Albert Einstein and Isaac Newton. We wonder what the makers think of this.
Ciao, Domino’s: Italians still prefer their traditional pizza over the American variant. Domino’s, which had plans for 880 stores in the country, was forced to shut down its existing 29 branches. The home-delivery tactic didn't work either as traditional pizza makers partnered with third-party services for delivery.
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