What was the deal between Jaypee & UltraTech Cements? 

The deal was worth a whopping 3800 Cr

UltraTech Cement Pvt Ltd. took over the debt of Jaypee Cement worth Rs. 3650 Cr and issued fresh equity worth 150 Cr. The deal transferred all the cement operations of JCCL in Gujarat which consisted of units at Kutch, Sevagram, Wanakbori and other western regions to UltraTech Cement. The Gujarat Plant of Jaypee Cement had a 57 MW coal-based power plant and 30 MW diesel generator. The valuation of the plant would be approximately Rs. 7936 a tonne. 

Impact on Jaypee Cements 

Jaypee carried a debt of Rs. 56000 Cr on its books. The banks under pressure from RBI to get rid of bad loans insisted on selling off assets to pay the debt. The deal reduced the debt by Rs. 3650 Cr and helped to maintain the liquidity and reliability of the company. However, it lost a unit which was generating substantial cash flow. 

The shares of the company were valued at just Rs. 6.73 and were getting traded as stocks. After the transaction the price of the shares rose to Rs 43.40 

The deal reduced the capacity of Jaypee Cements to 33 Million Tonnes but it still continued to operate as the third largest producer of cement in the country. 

Impact on UltraTech Cement

Ultra Tech greatly benefitted from the deal. Acquiring Jaypee’s units gave UltraTech a presence in the central and western regions where it lacked presence. Gujarat was strategically well-positioned too from an export point of view for UltraTech to explore new markets. 

The deal helped UltraTech to establish itself as a market leader again. Its capacity, with the addition of 4. MTPA, to 59 MTPA. The market share of UltraTech increased from 17% to 21% as it was able to create synergies between its existing plant in Saurashtra and Jaypee ‘ s plant which was embedded with latest technology and could generate immediate cash flows. 

What will Big Basket gain through the deal with Tata? 

Big Basket has the largest market share in the Indian Online Grocery Shopping Business. It saw a tremendous rise in its number of customer in the Covid period. 

With the entry of Jio Mart, the market has turned hyper competitive due to the strong backing of Reliance following the strategy of deep discounts. Jio Mart started catching upto Big Basket within a few months of its launch. 

Big Basket in an effort to maintain its position of the market leader and to backfire at Reliance Industries Pvt Ltd. has sought this deal with Tata.

The deal will bring Big Basket the deep pockets of the Tata’s, experience in scaling up business and the industry name.

What’ s in it for Tata? 

Tata’s will gain a majority share in India’s online grocery business thereby increasing their digital presence as the conglomerate is sensing a high growth in the e-commerce industry post Covid scenario. 

The deal will help the launch of their “Super-app” which will give the consumers a single point of access for all services such as online fashion, groceries, medicines etc and bring all their consumer businesses under one roof for which the company is also planning to acquire stakes in the online pharmacy business 1mg. 

Tata will be acquiring existing shares. This will lead to an exit of Alibaba which has backed the start-up through many rounds of funding and Abiraaj Group, both of which are the major stakeholders along with partail exit of some small stakeholders. 

What is a Soonicorn?

Soonicorns are start-ups which have a potential to reach the $1Billion Club or the Unicorn Club. In most cases, they’ve receivedfunding either from a Venture Capitalist or an Angel Investor.

Soon to be a Unicorn

• Start-ups are rapidly rising to become Unicorns andSoonicorns due to the boom in consumerism and increasedadaption of digital services and products.
• A majority of these Soonicorns belong to the FintechIndustry credited to the deep penetration of digitization anddidgital payments.
• These Soonicorns are mainly based out of Bengaluru- Theestart-up hub, Delhi and Mumbai.
• Venture Capital firms like Accel Partners, Sequoia Capital &Tiger Global have backed a majority of the Soonicorns.

Soonicorns in India

Introduction to the Segment 

• A cloud kitchen is a delivery-only restaurant that has no physical space for dine-in. 
• One of the most lucrative part of the segment is the need for low capital investment, which leads to better management of funds and the ability to launch more than one brand using the same kitchen infra.
• Cloud kitchens are benefited mostly because they do not incur high overhead costs which general restaurants usually do and can have an option to build digital brand awareness with that extra funds.
• Since lockdown, cloud kitchens in multiple countries have had the opportunity to grow their customer base and business and help customers embrace social distancing norms.
• The challenges this segment faces is high competition, since rivals tend to provide better offers and discounts to achieve customer loyalty, which leads torequiring steady amount of funds to attract the market.

Cloud Kitchen Market 

• Currently there are more than 317 cloud kitchens in India which run over 2000 internet restaurant in 35 cities
• An individual looking to venture into the cloud kitchen market usually would have to invest approximately 1/3rd the setup cost of a regular restaurant setup. The profit margin in such setups varies in the range of 10-15% 

Market Advantages in the Cloud Kitchen Segment

• Millennials these days are more fitness conscious and tend to follow the trend of ordering ‘healthy’ food due to various reasons. Companies take advantage of such niche markets and change their strategies accordingly.
• With increasing number of food lovers in across the globe, people try experimenting with different cuisines, which in turn has led to the increase in exotic and specialty-based restaurants.

Industry Analysis

• The cloud kitchen segment is expected to reach $71.4 billion by 2027.
• With a rapid growing CAGR of 12% (2021-2027), this segment focuses to deliver and serve food with emphasis on quality of food and hygiene.
• Food discovery apps are the biggest boon for the industry since they provide a teaser of the dining experience.
• Contact less services has become one of the most focused upon feature a user/customer looks at before they make their decision to order online. Integration of mobile payment platforms and other technology advancements make it easy to achieve these services.
• There are more than 3000 startups in the food service industry, out of which more than 146 startups have collectively received $268 million of funding.

 Zomato’s Journey 

Zomato is an on-demand food delivery platform launched in 2008 with the name Foodiebay and is currently spread across 23 countries allowing individuals to order food or view various details such as ratings and reviews, ambience and their menu cards. 

• 2012: Zomato expanded overseas and began offering its services in countries such as Sri Lanka, UAE, Qatar, South Africa, UK, Philippines and New Zealand, Turkey, and Brazil in 2013
• 2014: Zomato acquired Gastronauci, Poland’s restaurant search service, and Cibando, an Italian restaurant finder
• In 2015 Zomato made its biggest acquisition and acquired NexTable and Urbanspoon 

Covid Impact

• Amid lockdown, Zomato laid off 520 employees (13%) and implemented salary cuts for remaining employees. By July their burn rate had sunk to $1-2 mn per month and delivery sales fell by 80%. This is just when global investors came knowing at their door with big cheques. Zomato and Swiggy were at their lowest while DoorDash and Uber Eats were at their peak during COVID, but Zomato played its cards right and acquired UberEats.
• On New Year’s Eve 2020, Zomato recorded the highest sales with a GMV of INR 75 crore and OPM of 4254.
• Two months after, DoorDash went public on NYSE in December, with a market capitalization over $60 bn, the same set of investors participated in Zomato’s fundraising round in February.

 Expected IPO Details 

As of February 2021, Zomato is valued at $5.4 bn

• As of March 2021, Zomato is expected to file for IPO this year. The IPO advisers for Zomato are Morgan Stanley, KotakMahindra Capital, Goldman Sachs and Credit Suisse
• Estimated to raise about $700-800 mm from its IPO, with IPO valuation pegged at $7-10 bn.
• Zomato’s IPO would mark a milestone in the Indian startup ecosystem,making it the first unicorn form India to get publicly listed. This might set the playbook for other venture backed internet companies in India planning to get listed in the domestic market.
• After the IPO, Zomato will be the most-valued company in the food service industry to be ever listed, surpassing Jubilant Foodworks($5.56 bn) and Westlife($1.06 bn). 
• Over the past year, Zomato has roped in half a dozen new investors including Fidelity, D1 Capital, KoraManagement, MiraeAsset, SteadviewCapital, and Luxor Group. These firms have collectively bought close to a 20% stake in Zomato.

 Gaming Industry Hype

• The gaming industry in India is growing at a rapid pace. The gaming market in India is approximately 3.5 times more since 2016 and is expected reach the $1 billion mark this year, with a userbase of more than 628 Mngamers as of early 2021.
• India being a budget friendly market stands among the top five mobile gaming markets in the world. According to the All India Gaming Federation, online gaming grew by 12% during the lockdown period in 2020.
• More than 120 game development organizations have started operations in India giving a boost to the industry.
• Factors such as high young population, availability of quality smartphones at low costs, relatively cheap data plans, large number if games tailored to cater Indian market and widespread adoption of digital payment methods are some of the key drivers for the market boom.
• India is all set to become the industry leader of the modern world due to the increase in general interest and investment in the gaming culture. With proper nurturing and infrastructure, India has the potential to become the most advanced casual gaming development factory in the world.

 Key Drivers for Market Growth

• Users tend to purchase games and in-game content when they are tailor made to cater to the Indian market. 
• Excessive production and usage of low cost smartphones amongst urban and rural population has led to increase in consumer interest in gaming. Almost 75% of the market was dominated by entry-level or high end budget smartphones in 2015. 
• The internet penetration is expected to reach ~53% of population by late 2021. 
• The surge in the production of smart phones is accompanied by five times rise in internet data consumption. 
• Moving ahead with such a background, the industry is expected to gain momentum.

Investments in the Industry 

• Investment in the gaming industry grew by 78% to $173 Mn in 2020 compared to $97.1 Mn in 2019. The industry attracted $350 Mn venture capital investments between 2014-2020. With a growing CAGR of 22%, the industry is currently valued at $930 Mn and is expected to grow at 41% each year.
• Reliance Jioannounced its support for “console-like” gaming with its setup box. Bharti Airtel and NODWIN Gaming, South Asia’s esportscompany, has announced a partnership in 2020 to further grow esports in India.
• American game publisher RockstarGames acquired DhruvaInteractive; an Indian video game development company headquartered in Bengaluru in 2019. Later merged into RockstarIndia Studio and has around 500 employees in India.
• Kolkata-headquartered online games platform Baazi Games (card-based games) plans to invest $5 Mnin India’s gaming market in 2020. Investment would focus on gaming start-ups to nurture the latest gaming technology. 
• Noida-headquartered ecommerce and payments firm PayTM and AlibabaGroup’s Hong Kong based AGTechHoldings formed a joint venture in 2018 to launch Gamepind – a localized platform hosting popular casual and sports games. PayTMinvested $8.8 Mn for 55% holding while AGTechHoldings invested $7.2 Mn for the remaining 45% shares.
• In 2017, Vietnam-based game developer StomStudio has partnered with Indian game distributor and publisher, Gamesbond, to develop casual arcade games.

Metamorphosis of Fintech 

• With dynamic and transitioning ecosystem acting as a catalyst, FinTechstart-ups have grown into billion dollar unicorns in the last decade. Global market value of FinTechtransactions is expected to reach USD 7 trillion by 2021.
• India holds the highest rank globally in terms of FinTechadoption rate. Overall Indian market transaction value are projected to hit USD 140 billion by 2023.
• As per NASSCOM projections, Indian software fintech market is set to touch USD 2.4 billion mark with transaction value of sector reaching USD 73 billion in 2020.
• India acquired the position of Asia’s top FinTechMarket with total funding/investments of USD 647.5 million across 33 deals during Q2 2020.

Investments Wave in India 

• Razorpayjoined the coveted Unicorn club after a fresh funding round of USD 100 million in 2020. The platform is know to ease operations for MSMEs through accepting, processing and disbursing online payments.
• PineLabs, one of the prominent pay later platforms raised USD 75 – 100 million at USD 2 billion valuation at the end of 2020.
• Paytm’s parent company, One97 Communications raised USD 1.66 billion through two distinct transactions.
• PhonePe, leading digital wallet company and one of the first UPI (Unified Payments Interface), has managed to tap investment worth USD 210 million.
• PolicyBazaarmanaged to raise USD 282 million through two deals and USD 120 million through leading credit card payment services company, CRED.

Global Market 

●In 2019, the global market size of plant based meat was valued at $11.1 billion with an expected CAGR of 15.8% by 2027

●With an estimated revenue of $23.2 billion by 2024, plant based meat is expected to register a steep uptick based on its CAGR from 2020-2027

●Beyond Meat Inc., a plant based food tech startup , generated ~ 600% return since it’s IPO in May 2019. The startup had increased its revenue by 230% in 2019 within a year and associated it’s products with some major brands such KFC , Taco Bell and Pepsi. The company has grown its market share from 2.3% in 2016 to more than 22 % in 2020.

●In Europe, another domain which has been gaining popularity amongst investors is Lab Grown Meat. They recently raised $ 78 million through Global Private Equity Investors to launch their industrial 3D printed meat substitutes across Switzerland, Germany, followed by North America and Asia.

The Indian Flexitarians 

●While Indian vegetarianism culture is no binary concept, their practice of distinct food practices led them to be coined as Flexitarians. Despite of being a small market currently, mock meat has popularised rapidly amongst Indian consumers. 

●As per The Good Food Institute estimates, approximately 63% Indians prefer purchasing plant based meat than regular meat. 

●The market has seen an uptrend in the PBM startups – I.E. VegetaGold, GoodDotEnterprises, Ahimsa Food, Vezlay and EVO etc. are some of the upcoming ones. 

●As per latest findings, India’s PBM Market accounts upto 10% of APAC market which is likely to hit $565 million mark by 2024.

Startup Spotlight – EVO Foods 

●This mumbai-based food-tech startup aims to bridge the gap between clean protein products and plant based alternatives for animal products. As the startupvouches for nation’s first 100% (plant based) vegan liquid egg, it also claims to mimic the same texture, protein content and taste of the conventional one.

●The foodtechrecently raised $330,000 through Big Idea Ventures and VegInvest in their pre-seed funding. Another undisclosed funding through ShiokMeat’s CEO Mr. Sandhya Sriram was made in July 2019.

●Despite of being a promising market and year to date sale of 40 million vegan liquid eggs, the startupfaces competition threats from Industry Giants such US based Impossible Foods and many more. 

●The startupplans to gear up operations in the US market by the end of 2021,as well as South East Asia and Australia in the near future.

 Is it the Rise of Meatless Meat? 

●The rise of meat alternatives has been driven by one main factor: that the meatless meat doesn’t necessarily have to be an alternative just for vegans or vegetarians. All the consumers, and not only vegetarians and vegans, are the target of the next generation of meat alternatives.

●Given the effect that meat has on the environment, the consumer consumption has shifted toward a the interest in meat alternatives.With an increasing awareness of healthy eating and healthy living, consumers are more of the products that they buy. This has in turn increased the demand for meatless meat or call it the great-tasting meat alternatives.

●However, with the global meat industry worth over $2 trillion and increasing at a CAGR of 15.7% in the next 5 – 7 years, will the plant – based- meat industry overcome hurdles, such as cultural barriers, objections from incumbent meat companies and the risk of any incident that affects consumer confidence?

Flipkart, an e-commerce giant headquartered in Bangalore and registered in Singapore, was originally an online book sales platform before diversifying into product categories like fashion, home essentials, and lifestyle products. Flipkart’s competition primarily is with Amazon and Snapdeal. As of October 2020, Flipkart holds a 31.9% market share, making it the largest online retailer in India. 

Flipkart’s Acquisition Timeline

Key Acquisitions

2012 

Flipkart had acquired Letsbuy for $25 million. Letsbuy.com was founded by Hitesh Dhingra and Amanpreet Bajaj in 2009. It was an online retailer of branded computer technology and digital lifestyle products from top international and domestic brands. 

The acquisition fitted with Flipkart’s strategy to have market dominance. The synergy from the deal would allow them to accelerate growth. 

2014

Flipkart acquired Myntra for $280 million. Myntra was founded by Mukesh Bansal, Ashutosh Lawania, and Vineet Saxena in 2007. The company has been performing well since its inception. Myntra continues to operate alongside Flipkart as a standalone subsidiary focusing on separate market segments.

The deal mutually benefited both parties as for Flipkart, this would facilitate entry into the online fashion industry while for Myntra, this would provide them access to Flipkart’s logistic network.  

2015

Flipkart acquired FX Mart for $6.8 million. The company, founded in 2012, engages in electronic payments, remittance, foreign exchange, and travel-related businesses.

The startup’s prepaid wallet was licensed by RBI and this allowed Flipkart to offer a digital wallet within itself and provided them with an option to cut their expenses of paying to the external wallet providers. The deal let Flipkart increase its proportion of cashless transactions.

2016

Flipkart acquired Jabong.com for $70 million. Jabong was founded by Praveen Sinha, Lakshmi Potluri, Arun Chandra Mohan, and Manu Kumar Jain in 2012. It was a fashion and lifestyle e-commerce portal. 

However, in February 2020, Flipkart formally shut it down to shift focus completely on its premium clothing platform Myntra. 

Flipkart acquired PhonePe for an amount in the rage of $10-20 million. Founded by Sameer Nigam, Rahul Chari, and Burzin Engineer in 2015, it went live in August 2016, to become the first payment app built on Unified Payments Interface.

However, in Dec 2020, PhonePe partially spun-off from Flipkart to pursue their vision to provide “financial inclusion” to a billion Indians.

2017 

Flipkart acquired eBay India in exchange for equity and eBay then invested $500 million in cash in Flipkart. However, after Walmart announced its decision to acquire a 77 per cent stake in Flipkart in May 2018, eBay sold its stake for about $1.1 billion.

eBay’s position at the global e-commerce market helped Flipkart to accelerate and maximize its opportunities and to have a strong hold in the market.

Recent Developments

On January 20, 2021, the Competition Commission of India (CCI) approved Flipkart’s proposal to acquire 7.8% equity stake in Aditya Birla Fashion and Retail – a pure-play fashion and lifestyle company with a strong bouquet of leading fashion brands and retail formats.

Aditya Birla Fashion had approved the issuance of equity shares on a preferential basis to Flipkart for Rs 1,500 crore.

However, it is rumored that The Reserve Bank of India (RBI) and Enforcement Directorate (ED) are yet to launch an investigation into the alleged FDI policy violation in this acquisition Flipkart and ABFRL.

Brief Overview

• In January 2019, Amazon picked up a 49% stake in Kishore Biyani’s Future Group’s – Future Coupons for $194 Million.
• In August 2020, Future Group’s listed entities including Future Retail, Future Lifestyle and Future Consumer merged into Future Enterprises Limited (FEL). Reliance Retail, a subsidiary of the umbrella Reliance Industries Limited (RIL) group then entered an agreement to buy Future Enterprises. As a part of the deal, Future Retail would sell its supermarket chain Big Bazaar, premium food supply unit Foodhall and fashion and clothes supermart Brand Factory retail as well as wholesale units to Reliance Retail.
• As for Future Retail, the cause of action arose when Amazon raised concern that Future Group has violated a non-compete clause and a right-of-first-refusal pact. The deal also required Future Group to inform Amazon before entering into any sale agreement with third parties.
• The outcome of the dispute embroiling Future, Reliance and Amazon is shaping India’s retail landscape, especially in deciding who will have an upper hand in the groceries market expected to be worth around $740 billion a year by 2024.

Consequences

Given that Future Retail failed to stop Amazon from presenting itself to the various government bodies and regulators, the e-commerce giant will be allowed to make its case, mainly on the basis of the arbitration award. However, it is also noteworthy that the anti-trust regulator, Competition Commission of India, approved the sale of Future Group’s wholesale, retail, warehousing and logistics business to Reliance Retail last month.

● FRL Cites Potential Risk-The solvency of over 6,000 SMEs and their employees is at stake. Approximately $408Million of public money in the form of bank loans and debentures issued by FRL and its group companies is also at risk.

● SEBI and India’s stock exchanges could still reject or take more time in approving the deal, which is critical for the survival of Future Retail, whose more than 1,700 outlets were hit hard by the COVID-19 pandemic.

● Future Retail has warned that failure to close the deal could lead to the company’s liquidation and job losses for more than 29,000 employees.