The Weekly Stack 3rd to 9th June

09 Jun, 20233 mins read
The Weekly Stack 3rd to 9th June

📚 Byju’s in debt, facing lawsuits - more layoffs on the way?

🥘 Cooking with tur daal? It’s going to cost you!

🏦 RBI keeps rates unchanged, will inflation rise?

Read Time: 2 mins

1. Byju’s Crisis Continues

Byju’s Crisis Continues
Byju’s Crisis Continues

Byju's refuses to repay its $1.2 billion loan

Byjus has previously raised $1.2 billion in debt financing from a consortium of banks, including Goldman Sachs, Morgan Stanley, and Citigroup.
Byju's has elected not to make further payments on the loan after a dispute with lenders, while filing a complaint concerning the loan to the New York Supreme Court.

More layoffs on the way

Byju's plans to lay off 1,000 employees as part of a cost-cutting measure. The layoffs will affect employees across all levels and functions, and will be implemented over the next few months. Byju's has not yet released a statement regarding the layoffs.

Our Opinion: “It’s only when the tide goes out you get to see who’s swimming naked”. This quote from Warren Buffet is more apt than ever in the case of Unicorn startups. The spate of multiple bad decisions by founders who have come under fire in the past few years will act as a reminder for VCs that its not only about TAMs or unit economics, but also the quality of founders and how they act in times of distress, that will ultimately determine how successful a startup will really be in the long run.

2. Daal mein kuch kaala

Daal mein kuch kaala
Daal mein kuch kaala

Tur Dal Prices Soar in India

Tur dal prices have been rising sharply in India, with the cost of a 1kg packet at Rs 100, increasing by more than 50% in the past year. This has been attributed to a number of factors, including a decline in production, increased demand, and hoarding by traders. Many households are struggling to afford the cost of tur dal, which is a staple food.

The Government's Response

The government has imposed stock limits on traders and has imported pulses from other countries in order to increase supply and bring down prices.

Our Opinion: It is unclear what the future holds for tur dal prices. The government is under pressure to take further steps to address the issue, but it is unclear what these measures will be. If the government does not take action, the rising prices of tur dal could lead to social unrest and political instability.

3. RBI takes inflation head on

RBI takes inflation head on
RBI takes inflation head on

RBI maintains the status quo

RBI on Wednesday kept the key policy repo rate unchanged at 6.5% for the fourth consecutive time. However, the central bank turned "hawkish" on inflation, signalling that it is likely to raise rates in the near future.

Need to prevent slow business growth

Higher interest rates will make it more expensive for businesses to borrow money, which could lead to slower investment and job creation.

Possible alternatives to reduce inflation

RBI could also take other measures to control inflation, such as selling government bonds to soak up excess liquidity in the market. The RBI could also tighten monetary policy by raising the cash reserve ratio (CRR) and statutory liquidity ratio (SLR).

Our Opinion: While RBI decided to keep rates unchanged for the second consecutive meeting, they are concerned about risks to headline inflation from sharp rise in global crude oil prices and El Nino impacting this year’s monsoon. Further, US CPI reading over the next few months may have a larger bearing on future interest rate cycles going into the rest of 2023 as US Fed may decide to resume tightening further particularly if economic data continues to exhibit further strength.

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