RBI is not a fan of crypto

Good morning! Slow and steady wins the race. Just ask Karthik Sarma, whose 11-year-old investment in vehicle rental company Avis Budget Group paid off last year—and how. The managing partner of hedge fund SRS Investments, who owns a 43% stake in Avis, made $2 billion as the company’s stock soared in 2021. Little is known about Sarma, except that he had a previous stint in Tiger Global and is bare bones compared to his flashy hedge fund counterparts.

We are all about startups today. The Indian startup ecosystem is making big changes by introducing unlimited leaves, monthly incentives, quarterly promotions and even mental health breaks. For our deep dive, we look at why Mamaearth acquired BBlunt, a premium salon company. All this and more on The Signal Daily. 

The Market Signal*

Stocks: Benchmark indices ended on a positive note as reports of Russian troops retreating from the Ukraine border soothed investor nerves. SpiceJet shares zoomed as it posted a net profit in Q3 FY2022. Bajaj Finance and SBI were among the top Sensex gainers.

iPhone Maker Bets on Made In India Chips

Anil Agarwal-led Vedanta and Foxconn have formed a joint venture to manufacture semiconductors in India. So, what does this mean for India?

More on it: This comes at a time when the Centre cleared a Production Linked Incentive (PLI) scheme for semiconductor production in the country with a ₹76,000 crore budget over the next five to six years. A semiconductor mission was also announced recently with the aim to attract large investments amid a global chip shortage.

In the US: Intel is buying Israeli company Tower Semiconductor for $5.4 billion. It had tried to acquire Tower rival GlobalFoundries last year, but the latter ducked at the last minute and filed for IPO instead. Tower’s expertise in making chips and circuits for large electronics, automobiles, and industrial equipment will give Intel the expansion it needs, particularly in context of its $20 billion Ohio facility.

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RBI Says “No Thanks” To Crypto

India’s central bank quashed hopes of legitimising cryptocurrency just a fortnight after the 2022-2023 Union Budget’s 30% crypto tax led to chatter about cryptocurrency regulation (and by extension, legalisation).

RBI deputy governor T Rabi Shankar* went so far as to equate cryptocurrencies with Ponzi schemes and called for an outright ban. He added that it’s not possible to regulate “something that one cannot define”. Neighbouring Pakistan seems to agree.

Elsewhere: Crypto company BlockFi is paying the US Securities and Exchange Commission and other federal regulators in the country a record $100 million penalty for flouting registration rules. As for all those crypto trading ads during the Super Bowl finals–the attention didn’t translate to new users for the platforms.

What's Behind Mamaearth’s Phygital Play?

Honasa Consumer, the parent company of D2C unicorn Mamaearth, acquired salon and hair products brand BBlunt. As per the deal, Godrej Consumer Products Ltd (GCPL)—which picked up a 30% stake in BBlunt back in 2013—will receive ₹84.5 crore, while other shareholders get the rest.

The Godrej years: It was under GCPL’s aegis that BBlunt evolved from a salon chain into a ‘mass premium’ haircare brand. BBlunt products competed with international salon brands such as Kerastase, Schwarzkopf, and Wella.

Interestingly, Anirban Banerjee, GCPL’s head of global innovation, had once rubbished Mamaearth. “BBlunt’s strength lies in its decades of experience styling Bollywood celebrities and transferring that into bottles, which the Kamas and Mamas cannot replicate,” he’d said. Well, it’s this very experience that Honasa just acquired.

The Signal

Mamaearth was worth $300 million in early 2021. Its quadrupled valuation today is thanks to its ‘house of brands’ approach, which includes offline expansion. Apart from its personal care range, Mamaearth owns skinceuticals label The Derma Co. And inspired by The Good Glamm Group’s D2C consolidations, it acquired influencer platform Mompresso in December 2021.

But Mamaearth has competition: there’s The Moms Co, WOW Skin Science, St. Botanica, Plum, and Dot & Key in the ‘mass premium’ personal care segment, and BeMinimalist, Re’equil, Suganda, Chemist At Play, etc. in skinceuticals. While Mamaearth’s aggressive influencer marketing strategy reaped rewards, questions abound over product quality; visit the 29,400-member r/IndianSkincareAddicts for a dekko.

No wonder then that BBlunt’s product proposition and celebrity endorsers are right up Mamaearth’s alley.

Ukrainian Prez Was Just Kidding

Former comedian and Ukrainian President Volodymyr Zelenskiy probably realised he's somewhat of an influencer, and that he needs to work on his timing. So when he predicted that the war will start on Wednesday, his tongue-in-cheek statement proved to be an expensive joke.

Jitters: As an outcome, international media picked up the remark and ran with it. Long story short, he spooked markets. Chaos was the order of the day once the news of the impending Russia-Ukraine crisis broke. The US stocks flung wild. The S&P 500 fell as low as 1.2%. Oil settled above $95, the first time since September 2014. Zelenskiy’s spokesperson later clarified that it should strictly be considered an ironic statement.

The other side: Interestingly, Russia is still considering a diplomatic solution, and even partially pulled back troops. India is requesting its citizens to come back home temporarily.

Even as Zelenskiy knocked down markets, TikTok is now providing a glimpse of the action, straight from ground zero.

Indian Startups Raise Perks

India’s startups don’t want to let go of talent. And so, they've come up with (much-needed, if we may add) plan of action to retain employees. Meesho has permanently embraced the work from anywhere policy.

Take your pick: Prospective employees are in for a treat. Perks include promotion cycles on a quarterly basis, stock option plans for employees across the board; mental health breaks, period leaves and “no downsize promise”.

Exodus of talent: Recruiters are going to be having a busy time. A LinkedIn report released last month reveals that 82% of India's workforce are looking for a job reshuffle. According to this report, as many as 6,60,000 are directly employed by startups in India, with about 70% working across e-commerce, mobility and food delivery spaces.

FYI

Filed and settled: Texas has sued Facebook-parent Meta for its long-standing practice of allegedly misusing facial recognition technology. Meta also settled a decade-old privacy lawsuit after agreeing to pay $90 million fine.

Musking it: Elon Musk donated a record $5.7 billion to charity in November 2021 by selling five million Tesla shares, according to an SEC filing. However, his space company SpaceX’s satellite plans are worrying NASA.

Betting on it: South Korea’s craze for Metaverse has resulted in eight listed Exchange Traded Funds (ETFs) drawing inflows of over $1 billion. There’s a K-Pop angle too.

Washout: Singapore-based Sea Ltd, the publisher of Garena Free Fire, a game on the Indian government’s app ban list, saw $16 billion of its value wiped out.

Sign up: Google is hiring a director of product management to kickstart its “YouTube, Web3” vision. Disney is getting serious about its metaverse strategy.

Back to office: Starting February 28, 2022, Microsoft has asked its US employees to return to their workplace as Covid-19 cases wane.

Divide and conquer: Sebi has now made it voluntary to separate Chairperson and MD/CEO roles from April 1, 2022.

Neighbourly love: Sri Lanka will receive 40,000 metric tonnes of fuel from India.

FWIW

Soap opera: UberEats had a simple plan: get the word out through its Super Bowl ad spot that it is now more than a food delivery service. So there’s Gwyneth Paltrow eating into her vagina candle, Nicholas Brawn guzzling dish soap, and Jennifer Coolidge munching into paper towels. Not everyone found the ad humorous. The US Consumer Product Safety Commission told people not to eat soap. For real.

Monkey business: Plagiarism charges are rife in the world of NFTs. And now, locals in China are accusing Wang Wendong of copying some of the most well-known NFTs in the world. His Bored Wukong collection has a striking resemblance to Yuga Labs’ Bored Apes avatars. Wendong maintains that Bored Wukongs are inspired by a classical Chinese novel, but we aren’t buying it.

Vroom goes silent: Paris wants to do away with loud motorcycles. So it is installing noise radar systems on lampposts to measure sonic levels and identify violators’ licence plates. The system will go live in a few months and if all goes well, the city will deploy a couple more radars. Fines will be issued from early 2023.

*Update: This post has been modified to reflect Mr. Rabi Shankar’s designation. He is the RBI deputy governor, not the governor as the original copy stated. The error is regretted.

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