#10: A bit on Paint wars, a bit on SAAS; and a lot about cars

Apple: Hypocrisy behind Privacy

Millions of small businesses shut their shops last year. The reason: not pandemic or wars or looming recession. But Apple.

Targeted advertising is an essential ingredient in a new Internet economy to small businesses serving niche audiences.

Platforms like Facebook let small businesses have the same tools to advertise as the biggest companies.

Apps that leverage Facebook advertising include a Facebook SDK file in their software so that FB knows about their activity in the app and shows relevant ads on Facebook.

Apple last year stopped this practice in the name of privacy and third party data usage.

Apple mandates in-app purchases and uses payment data to show ads while FB can’t. Bcos its first party data for Apple.

Paint wars:

Paints business has no brand identity. So moats can be built around supply side.

Organized market size ~45000 crore which is 75%

Expected to grow at 11%.

Total CE ~25000 crore

Building material co's entering adjacent businesses to protect revenue.

Astral - Adhesives & paints,

Pidilite - waterproofing and Paints, Asian paints - Adhesives

Grasim capex plans ~10000 crore and JSW capex incremental ~1000 crores

Asian paints plans to spend ~8750 crores for backward integration which will help protect margins and tackle pricing wars. AP has rapidly increased its retail touch points in the last 3 years.

Other players are in for a run for their share of revenues. ROCE's may drop rapidly and might result in corrections in multiple too.

E-Commerce Logistics-on growth path

-E-commerce logistics to grow from 3B parcels in FY23 to 10B parcels in FY28.

-Growth driven by d2c brands and Tier II and III towns.

-Delhivery; largest player in this space.

-D2C brands to generate $33B of GMV by FY27;massive oppty for logistics players.

-E-commerce logistics to grow by 10% CAGR till FY27.

-Total shipment for e-comm;$4B-in-house&3rd party logistics having equal share.

-Overall logistics accounts for 14.4% of our GDP.

-Logistics to be a $380B industry by 2025.

Transmission System (Heart) in a Passenger Vehicle

Total Passenger vehicle sales in FY 2023 – *3.89 mn* (~20% sales would be Automatic)

Total Electric car sales in FY 2023 – *47,029*

Before understanding the transmission system, lets first understand two key terms:

1) RPM (Heartbeats) - RPM stands for revolutions per minute and in cars, RPM measures how many times the engine's crankshaft makes one full rotation every minute.

2) Torque (Ejection Fraction) - Torque is a measurement of your car's ability to do work. So, the more torque, the greater amount of power an engine can produce.

Transmission System- The function of any transmission is transferring engine power to the driveshaft and rear wheels.

Manual IC engine (Petrol/Diesel) Cars – These require multiple gears with different gear ratios calculated and set by manufacturers in accordance with engine output to maximize efficient power at each gear. RPM range of most ICE is around 6,000 RPM.

Automatic IC Engine (Petrol/Diesel) Cars - The torque converter connects the engine to the transmission and uses pressurized fluid (hydraulic power) to transfer power to the gears. This apparatus replaces a manual friction clutch.

Electric Cars - An E-motor produce a consistent amount of torque at any given RPM within a specific range. Most electric motors can operate beyond 10,000RPM with ease.

Road Transport is a critical infrastructure for the economic development of a country.

It impacts the pace, structure, and pattern of development.

India has the second largest road network in the world of about 63.32 lakh km comprising :

1. National Highways (1.44 lakh km, ~2.3%)

2. State Highways and (1.67 lakh km, ~2.6%)

3. Other roads (60.2 lakh km, ~95%)

The development of National Highways is the responsibility of the Government of India. GoI has launched various initiatives such as Bharatmala Pariyojana, National Highways Development Project, etc.

Bharatmala Pariyojana is a major initiative and was launched in 2017, with a target to build 65,000 km of national and economic corridors, border and coastal roads, and expressways.

First Indian SAAS unicorn to be listed on NASDAQ

_Took 13 years to turn profitable at Non-GAAP level_

- Revenue in Q1-23 grew by 20% over Q1-22 at ~$138 Mn. Largely led by growth in ACVs.

->50K customers grew by 30% y-o-y versus 18% for >5K customers in Q1-23

- NRR was slightly lower at 107% in Q1-23 from 115% in Q1-22 largely due to some churn on the SMB side

- Minimal seat addition being the primary driver for revenue expansion has been under pressure

- Profitable growth continues to be the key focus post achieving operational profitability at Non-GAAP level

- Re-look at operating expenses leading to vendor consolidation

- Looking to breakeven in Q3-23 and operational profitable at NON-GAAP level again in Q4-23

Retail Pharmacies: The Distribution Game

•Traditional Pharmacies: Brick and mortar stores. Further classified into independent (local) / chain (CVS / Walgreens) / hospital / department pharmacies (Walmart).

•Online Pharmacies: Operate online and deliver prescription and other pharmaceutical products. Offer lower prices than traditional ones but under strict Govt radar for violating medical distribution laws.

•Omnichannel Pharmacies: The new disruptive trend in pharmacy market - Players like 1MG (Tata), Pharmeasy (PE backed) and Netmeds (Reliance) operate across online + offline channel to capture market share by tapping a larger customer base. Paves the way for possible future growth by foray into diagnostics and consultations like Apollo (present in omni-model pharmacy as well as diagnostics).

Compiled by Hanu Bansal & Tushar Khandelwal

Contributions by Arnim Dhakad, Amay Solanki, Ashish Purohit, Anand Vadia, Mukund Maheshwari, Parin Detroja, Prachi Malpani, Tanay Lohia, Shlok Sanghi, Harshil Shah.

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