0:00

Hello and welcome to Daybreak. I'm Rahil

0:02

and in this episode, we dive into

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three big stories from the world of business

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and tech this week. First,

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what ITC's acquisition of 24 Mantra

0:11

means for the organic food

0:13

market in India. Next, Musk's

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latest attempt to save Tesla.

0:17

And finally, why blue smarts

0:19

unraveling was an eventuality we

0:21

all chose to ignore. When

0:50

the Tata Group acquired FabIndia -owned

0:52

Organic India last year, a

0:54

lot of people were a little surprised by the

0:56

deal. Yes, Organic

0:58

India is among the oldest organic food

1:00

companies in the country, but despite

1:02

being in the business nearly three decades,

1:05

it was barely profitable. And

1:08

yet, Tata Consumer Products Limited

1:10

was willing to pay close to

1:12

2 ,000 crore rupees to acquire

1:14

it. That's nearly six times

1:16

the brand's sales in FY24. Now,

1:19

if you asked an analyst at the

1:21

time, they would likely tell you that despite

1:23

all of that, Tata's decision was an

1:25

absolute master stroke, because it would give

1:27

it a head start in a business that

1:29

was on the verge of a massive

1:32

breakthrough. So, why

1:34

then, almost exactly a year

1:36

later, was ITC able to acquire

1:38

Sreshta Natural Bioproducts, which is

1:40

the owner of 24 Mantra Organic,

1:43

another one of India's oldest

1:45

and best known organic food brands?

1:47

for a mere 470 crore

1:49

rupees. For context, that's just about

1:51

1 .6 times the brand sales.

1:54

It seems like a steal compared to the Tata

1:56

Organic India deal, don't you think? And

1:59

you're probably wondering now, how did they

2:01

manage to pull that off? Has the

2:03

organic food industry taken a turn for the

2:05

worse in recent months? Or

2:07

was Tata's assessment last year completely

2:09

wrong? Well, no.

2:11

In fact, anything but. When

2:13

the Ken's deputy editor, Sita Ramanji, spoke

2:15

to Srishtha's founder, Rajyakar Reddy Silam,

2:18

he said, now is as good a

2:20

time as any for the likes

2:22

of 24 Mantra. He largely credited quick

2:24

commerce for that. You see, through

2:26

instant grocery delivery, these

2:28

brands have finally found

2:30

a distribution channel that is

2:32

in price -sensitive supermarkets or

2:34

fatigue -inducing e -commerce marketplaces. But

2:37

despite his optimism, the

2:40

numbers tell a different story.

2:42

After a sharp rise in FY21,

2:44

when consumers cooped up at home wanted

2:46

to eat better, 24 Mantra's

2:49

annual sales have been largely

2:51

flat ever since. They stand at

2:53

around 300 to 320 crore

2:55

rupees. Now one reason for

2:57

that is that a lot of buyers

2:59

have gone back to purchasing conventional

3:01

grains, pulses, oils, things like that. But

3:03

the other reason is that the

3:05

state -run apex body for farm exports

3:08

decided to suspend half a dozen

3:10

certification agencies out of a total

3:12

of 20. The move,

3:14

along with the export bans

3:16

on wheat and sugar and

3:18

the US's anti -dumping policy on

3:20

soymeal, halved India's annual organic

3:22

exports to under $500 million

3:24

in the three years ending

3:26

FY24. What could have

3:28

also worked to ITC's advantage is

3:31

that 24 mantras investors must have

3:33

been quite eager for an exit

3:35

after its listing plans fell through.

3:38

Venture East and People Capital,

3:40

which control three quarters of the

3:42

company, have been 24 mantras

3:44

backers since 2007 and 2011 respectively.

3:46

That's an eternity in the venture

3:49

capital universe. But

3:51

if you're thinking, hey, organic India must

3:53

be thriving. Well, think

3:55

again. Its performance is just

3:57

as underwhelming. Its sales have

3:59

been falling steadily and even though its

4:01

margins are better than 24 mantras,

4:03

Tata consumer has probably realized by now

4:05

that it was a little too

4:07

generous with its offer. Here's

4:09

a worrying stat. Neither of these two

4:11

brands, despite being the oldest and most

4:13

well -known in the country, have been able

4:16

to reach 500 crore rupees in sales. Let's

4:18

try and unpack why that might be the

4:21

case. Perhaps it's because

4:23

even the elite, the money class,

4:25

don't think that these products are

4:27

worth the 60 -70 % premiums they

4:29

command over their more affordable alternatives. There's

4:32

also the fact that there isn't

4:34

full clarity on just how organic

4:36

these products really are. But

4:38

perhaps that's where the backing of

4:41

powerhouses like Tata and ITC

4:43

will help. Because on their

4:45

own, organic India and 24 Mantra

4:47

couldn't afford to decrease that premium. But

4:49

now they might, at least to some extent. It's

4:52

not just about a more efficient

4:55

shop floor and squeezing some margins

4:57

from retailers. Scaling this

4:59

business means ridding thousands of

5:01

acres of farmland of synthetic

5:03

agri -input residues. That is at

5:05

least a three -year process. This

5:07

also means persuading more cultivators to

5:09

make that switch, which would require

5:11

a growing base of shoppers to

5:13

willingly fill their carts with more

5:15

organic food. And that will definitely

5:17

take a while. Next

5:20

up, the latest on Tesla and

5:22

Elon Musk. Tesla

5:28

boss Elon Musk has been in

5:30

the dog house or should I

5:32

say the doge house for quite

5:34

a while now. You see, business

5:37

has not been looking good. Just

5:39

this week, Tesla reported a 20 %

5:41

drop in car sales for the first

5:43

three months of the year compared

5:45

with the same period last year. Meanwhile,

5:47

profits have dropped more than 70%. Investors

5:50

aren't happy because in the process, naturally,

5:52

they have lost a lot of money

5:54

too. And a big reason for

5:56

that has been Musk's extracurriculars. His

5:58

political leanings have worldwide protests

6:01

and boycotts of Tesla

6:03

cars. Just to jog your

6:05

memory, Musk, who also happens to be

6:07

the richest person in the world, contributed

6:09

more than a quarter of a billion

6:11

dollars to Trump's re -election campaign last

6:14

year. And then we all know

6:16

how he went on to lead the

6:18

freshly minted Department for Government Efficiency, or

6:20

DOGE, last year. Recently, the

6:22

company warned its investors to brace

6:24

themselves for some more losses. They

6:27

blamed the quote -unquote changing political

6:29

sentiment, saying that it will

6:31

likely hurt demand. Off

6:33

late, Musk and the Trump administration have

6:35

been at odds over the much -talked -about

6:37

tariff war between the US and China. You

6:40

see, Trump's exorbitant tariffs on China

6:42

are weighing quite heavily on Tesla.

6:45

While, yes, Tesla vehicles are assembled

6:47

in the US, several parts are

6:49

actually made in China. So this

6:51

rapidly evolving trade policy is going

6:53

to hurt its supply chain and

6:55

in the process increase costs quite

6:57

substantially. which explains why Musk

6:59

went ahead and made a rather

7:01

unexpected announcement at his company's earnings

7:03

call this week. So

7:28

Musk basically said he would cut back

7:30

his work for President Trump to

7:32

a day or two a week. Now,

7:34

interestingly enough, Musk has previously said

7:36

that he would not join his company's

7:38

earnings calls unless he had something

7:40

to say. And well, this time around,

7:42

he definitely had something to say. that

7:56

this year will

7:58

probably be some unexpected bumps

8:00

this year. He's been

8:02

getting a lot of criticism for his

8:04

work with Doge. Remember, this is the

8:07

body responsible for showing thousands of federal

8:09

government employees the door within the first

8:11

month of Trump's presidency. On

8:13

its website, it claims that its

8:15

cuts have led to an

8:17

estimated $160 billion in savings. Meanwhile,

8:19

over the same stretch, Tesla

8:22

has lost roughly $600 billion in

8:24

market cap. Now, the

8:26

good news for Tesla is that Musk's

8:28

little announcement seemed to have worked, at least

8:30

in the short term. The

8:32

automaker's shares rose nearly 8 %

8:34

on Wednesday. But it's

8:36

going to take a lot more than that to

8:38

undo all the damage of the past year. Next

8:41

up, the unraveling of BlueSmart. Earlier

8:45

this week, BlueSmart informed customers

8:47

that it was temporarily pausing

8:49

operations. Now, we could

8:51

talk about what SEBI discovered in

8:53

its investigation or the arcane methods

8:55

of how Blue Smart's founders orchestrated

8:57

the scheme, but frankly, that is

9:00

far less interesting. Instead, it's

9:02

the broader response to this that's much

9:04

more fun to talk about. The

9:06

response to news about the Blue

9:08

Smart collapse has been strikingly consistent. In

9:11

some ways, Indian businesses, startups

9:13

and media personalities have

9:15

built and monetised a content

9:17

economy that's ultimately conformist,

9:19

unremarkable and post -hoc. Praveen

9:22

Gopal Krishnan explores how in this

9:24

week's The Nutcraft. Check it out. Thousands

9:29

of full -time employees at companies

9:32

opened LinkedIn on one tab,

9:34

fired up chat GPT on

9:36

the other, and wrote bullet

9:38

-pointed, neatly sectioned lessons, takeaways,

9:40

and cautionary tales about what

9:42

BlueSmart's fall meant for the

9:44

rest of us. The

9:46

takes were startlingly

9:48

indisputable. Corporate governance

9:51

is important. BlueSmart

9:53

was loved by customers. Instances

9:55

like this will hurt legitimate

9:57

businesses. India is a

9:59

low trust society. This is

10:01

a reality check for the ecosystem. Systemic

10:04

issues, structural problems,

10:06

trust is everything. And

10:09

of course, there's a stupid

10:11

AI -generated image attached to the

10:13

post. There

10:15

were responses from other founders

10:17

who said equally tried things. Aman

10:19

Gupta, co -founder and CEO

10:21

of BOT, wrote his incontestable

10:23

opinion about the blue smart

10:26

saga. Build

10:28

not just fast, but right. Close

10:31

quote. Pathbreaking.

10:34

As if the alternate was what everyone

10:36

else was doing. Sabir

10:38

Bhatia, co -founder of Hotmail, wrote that

10:40

the media, quote, shouldn't

10:42

vilify all founders over one

10:44

case. Close quote. As

10:47

if India's business media has

10:49

ever preemptively vilified a single

10:51

startup founder over any case,

10:54

any time, anywhere. Who

10:57

exactly is disagreeing with any

10:59

of these opinions? Then

11:02

there are the I guessed as much

11:04

but I chose to say nothing opinions. Lesson

11:06

known CEOs came out of the

11:08

woodwork to say, I always thought

11:10

something was off about Bluesmart. VC

11:13

stopped recording their techno euphoria podcast

11:15

with their portfolio founders for a

11:17

moment to say, they came

11:19

to me for funding but I

11:21

passed. Again. Nobody

11:23

can corroborate or disagree with any

11:26

of this. In some

11:28

ways, Indian business startups and

11:30

media personalities have built and monetized

11:32

a content economy that's ultimately, conformist,

11:36

unremarkable and post -hoc. YouTube

11:38

channels talk about master strokes

11:40

and genius plans of companies only

11:42

after the event and almost

11:44

never before. VCs

11:47

and founders sit together and talk about how

11:49

the future market for their businesses are

11:51

going to be wonderful and amazing. One

11:53

random company releases a studio

11:55

Ghibli image generator and in a

11:57

few hours, everyone is in

11:59

on the trend. The discourse

12:01

on Indian startups is to be

12:04

as non -controversial as possible. When

12:06

everyone agrees that something is on

12:08

the way up, people rush

12:10

to make content about it. And

12:12

suddenly, overnight, When it

12:14

becomes apparent that the thing is on its way

12:16

down, everyone jumps on

12:18

it to make content about

12:21

it. The smart ones make money

12:23

across both sides of the curve, up

12:25

and down. All content

12:27

is created on

12:29

uncontestable things. All

12:32

monetization and status comes

12:34

from saying things

12:36

nobody can disagree with. The

12:39

unfortunate part of this is that I don't

12:41

expect any of this to change. Just

12:43

take BlueSmart. Bluesmart was an

12:45

organization that was clearly involved in some

12:47

shady stuff. And yet, think

12:49

about all the people who

12:51

probably guessed that something was off about

12:54

Bluesmart but didn't say a word

12:56

about it. I'm not

12:58

even expecting Bluesmart's co -founders, board members

13:00

or VCs to speak up. But

13:03

I'm finding it hard to

13:05

imagine why there wasn't one

13:07

YouTube content creator, one newsletter

13:09

writer, or one LinkedIn poster

13:11

who suggested in the last

13:13

year that maybe Blue Smart

13:15

isn't such a great business after

13:17

all. Daybreak

13:19

is produced from the newsroom of

13:21

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the website. Today's episode was hosted

13:42

by Raheel Philippos and edited by

13:44

Rajiv Sian.