🧑‍🏫 What’s happening with Byju’s?

Good morning. John Mulaney delivered a scathing roast to a room full of tech bros during his corporate stand-up gig at Dreamforce 2024, Salesforce's flagship event, which claims to be the largest AI conference in the world.

You’d think Salesforce would have learned from last year’s roasting by Seth Meyers, but apparently not 😅

An uncomfortable set for the audience, but 10/10 entertainment for us. Here are a few of our favourite quotes from this year’s set:

• "You look like a group who looked at the self-checkout counters at CVS and thought, ‘This is the future.’"

• “You’re a VP of customer success?” he asked one attendee. “Congratulations on your position that did not exist five years ago!”

• "Some of the vaguest language ever devised has been used here in the last three days. The fact that there are 45,000 ‘trailblazers’ here couldn’t devalue the title any more."

Amazon, time to hire a comedian for your re:Invent conference.

- Ruchirr Sharma & Shatakshi Sharmaa  

TABLE OF CONTENTS

• 🧑‍🏫 What’s happening with Byju’s?

• 🧑‍💻 No more Made in China

• 🗞️ Bite-sized summaries

  • 🇨🇳 Reviving China’s economy

  • 📈 Swiggy is one step closer to the IPO

• 🧑‍🍳 What else is cookin’?

• 🍿 Entertainment, Entertainment, Entertainment

MARKETS

🇮🇳 India

• India's stock market closed mixed on Tuesday. Metal stocks led gains after China announced economic stimulus measures. Market experts expect a potential cool-off after reaching the 26,000 milestone. Broader markets ended mixed, with the BSE Midcap up 0.21% and BSE Smallcap down 0.04%.

🌍️ International

• The S&P 500 reached a new record high, closing up 0.25% at 5,732.93, while the Dow Jones and Nasdaq also posted gains. Despite a significant decline in consumer confidence, driven by geopolitical concerns, stocks like Nvidia surged nearly 4%. Chinese stocks saw notable increases following government stimulus measures, with Alibaba and JD.com rising significantly as well.

LITIGATION

🧑‍🏫 What’s happening with Byju’s?

The recent ruling by the Delaware Supreme Court declaring Byju’s in default on a $1.5 billion loan has significant implications for the Indian edtech giant, which has been facing mounting financial and legal challenges. 

What’s happening:

• Byju’s is accused of not making any payments on the loan for over 17 months, and there are concerns about $533 million in missing loan proceeds. 

• The company, however, maintains that the original debt repayment is not due until November 2026 and has already paid $140 million in interest. 

• They argue that lenders improperly tried to accelerate payments without court approval.

Implications of the ruling: 

• Control and Repayment: The ruling empowers lenders to take control of Byju’s Alpha Inc., which was pledged as collateral for the loan. This means they can potentially liquidate assets or restructure operations to recover their funds. The lenders have expressed confidence in their position, stating that Byju's acknowledgment of default is clear from the signed amendments to the credit agreement[2][3].

• Legal and financial ramifications: Byju's is currently embroiled in various legal battles both in the U.S. and India. The Delaware ruling complicates its ongoing insolvency proceedings in India, as it raises questions about the company's financial viability and management practices. The lenders have accused Byju's of misrepresenting its financial situation and failing to account for $533 million in missing loan proceeds, further straining relations[1][4].

The ruling marks a significant blow to Byju's reputation, which has already been tarnished by allegations of financial mismanagement and corporate governance issues. As a once-celebrated unicorn valued at $22 billion, Byju's now faces an uncertain future, with its ability to attract further investment or maintain operational stability in jeopardy.

So what’s next? 

In response to the ruling, Byju's has adopted a defiant stance, asserting that the Delaware decision does not affect ongoing legal proceedings in India. The company claims that it is not solely responsible for its financial difficulties and has attempted to shift some blame onto aggressive lender actions. However, this approach may not be sufficient to sway court opinions or reassure investors.

Moving forward, Byju's will need to navigate a complex web of legal challenges while attempting to stabilize its operations. This could involve restructuring its debt obligations, addressing lender concerns transparently, and potentially seeking new funding sources to regain control over its financial destiny.

Overall: The Delaware Supreme Court's ruling against Byju's is a pivotal moment for the company, highlighting the precarious nature of high-stakes financing within rapidly evolving industries like edtech. 

With U.S. lenders poised to exert control over its assets, Byju's faces an uphill battle to restore its operational integrity and investor confidence. 

Read more: Economic Times

SUPPLY CHAIN

🧑‍💻 No more Made in China

Due to national security concerns, the Biden administration has proposed banning Chinese vehicles and "connected car" technology from U.S. roads. 

The proposal, led by the U.S. Commerce Department, aims to prevent potential data collection, foreign surveillance, or manipulation of vehicles connected to the internet. This would apply to vehicles made by Chinese automakers and others using Chinese software and hardware.

Key points of the proposal:

1. The ban would cover software (effective 2027 model year) and hardware (effective 2030 model year or January 2029).

2. It would apply to all on-road vehicles, excluding agricultural, mining vehicles, drones, and trains.

3. The rule would also extend to vehicle components from Russia and potentially other U.S. adversaries.

4. Chinese automakers could seek exemptions through "specific authorisations."

The biggest reason for this move is the administration's concerns regarding data collection on U.S. drivers and infrastructure, as well as potential foreign manipulation of internet-connected vehicles.

Commerce Secretary Gina Raimondo emphasised the risks, noting that compromised vehicles could be controlled remotely or used for surveillance, threatening U.S. national security. Automakers may need to find alternate suppliers, but industry groups have said that there’s currently minimal Chinese-made connected vehicle hardware in the U.S. 

Overall: While there are only a few Chinese-made vehicles imported into the U.S. currently, the ban would impact major automakers like General Motors and Ford, forcing them to stop selling China-imported vehicles in the U.S.

The proposal is open for public comment for 30 days, with the administration aiming to finalise it by January 20. This move follows recent tariff hikes on Chinese imports, including a 100% duty on electric vehicles and increases on EV batteries and key minerals.

Read more: Reuters

GENERAL OVERVIEW

🗞️ Bite-sized summaries

🇨🇳 Reviving China’s economy - The People’s Bank of China (PBOC) announced several support measures to address the country's economic slowdown. Governor Pan Gongsheng revealed plans to cut the reserve requirement ratio (RRR) for banks by 50 basis points and reduce the 7-day repo rate by 0.2 percentage points. Additional cuts to loan prime rates are expected. These measures aim to stimulate lending and support the struggling property market, where mortgage interest rates will also be lowered. Despite the monetary easing, economists are calling for more fiscal stimulus to revive growth as China's real estate slump and low consumer confidence continue to impact the economy.

📈 Swiggy is one step closer to the IPO - Swiggy has received approval from the Securities and Exchange Board of India (Sebi) for its proposed $1.25 billion IPO. The company plans to raise ₹3,750 crore ($450 million) in fresh capital and ₹6,664 crore ($800 million) through an offer-for-sale, with investors like Prosus and SoftBank expected to sell part of their holdings. Swiggy will now file an updated draft red herring prospectus (UDRHP), allowing a 21-day public feedback period before launching the IPO. In FY24, Swiggy reported ₹5,476 crore in revenue and a ₹1,600 crore loss, competing with Zomato, which posted ₹12,114 crore in revenue and turned profitable.

HEADLINES

🧑‍🍳 What else is cookin’?

What’s happening in India (and around the world 🌍️)

• California sues Exxon over plastics pollution and recycling ‘Myth.’

• Boeing sweetens labour proposal in ‘best and final’ offer as strike enters the second week.

• Can Indian electric two-wheelers challenge China's dominance?

• Why the election is coming down to defining Kamala Harris.

• Caroline Ellison sentenced to two years for role in FTX crypto fraud.

CULTURE

🍿 Entertainment, Entertainment, Entertainment

• Paris Fashion Week: Sonam Kapoor dazzles in the Dior show.

• EFL Cup: Chelsea, Man City & Villa win, Foxes through on penalties.