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Rahul Mathur

@Rahul_J_Mathur

Aug 16

After more than a decade, India is getting a new bank - AU Bank - this is a HUGE moment for our banking sector.

It comes at a time when legacy banks are switching focus to premium customers - ICICI Bank has raised its minimum balance requirement to ₹15,000 and HDFC has raised it to ₹25,000

For the 1st time, a Small Finance Bank (SFB) is set to become a Universal Bank

Sanjay Agarwal, the founder of Jaipur based AU SFB has been on a 29 year journey from a loan distributor to NBFC to SFB to (soon) Universal Bank

Here’s how they created history ⤵️

Firstly, let us get this out of the way: SFB means Small Finance Bank, but AU SFB is NOT small!

AU SFB has a MCap of ₹55,000 crore - which puts it ahead of several legacy banks e.g. Federal Bank (₹48,000 crore MCap) and Bank of India (₹50,000 MCap)

It is valued almost 9X its closest SFB peer - Ujjivan SFB (around ₹9000cr MCap)

Sanjay Agarwal, founder of AU SFB rightly said: ”Coming from a humble background in Jaipur, if someone had told me that we would build the largest small finance bank in India, I would have found it hard to believe. Yet here we are—because I dared to dream and followed my passion.”

Sanjay’s journey is inspiring:

At the age of 26 , Sanjay Agarwal, a CA Gold Medalist from Jaipur realised it was not his forte to continue as CA so, he chose to get into the lending business - which was a common career option in Rajasthan.

(i) Being a 1st generation entrepreneur with zero capital - he convinced five people including his uncle to invest ₹10 Lakhs to start “AU Financiers” - A distributor of loans for second-hand vehicles & for small businesses which were primarily ignored by large banks in 1996.

(ii) In 2002, HDFC Bank appointed ‘AU’ as their channel partner in Rajasthan. That 5 year partnership was the turning point in his life

(iii) In 2007, despite being turned down once before, Sanjay got a ₹20 crore cheque from Motilal Oswal’s 1st PE fund (500cr).

Motilal bent their rules here: Their mandate was to invest only in companies with a minimum trailing profit of ₹10 crore; AU barely had ₹2 crore of profit.

The 10 yr investment fetched a 13X return when MO PE I cashed out before AU SFB went for an IPO in 2017.

Which bring us to WTH is a ‘Small Finance Bank’?

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Rahul Mathur

@Rahul_J_Mathur

Aug 15

YouTube has 49 crore active users in India who consume an average of 29 hours of content per month.

If you’re not watching YouTube - you’re probably scrolling Reels (32 crore Indians are active there) or binge watching Netflix (300 crore hours of Indian content were consumed last year!)

The last time I visited a cinema was ~2.5 years ago; as a child - I would be going twice per week & wait in a long line at the counter to buy a good seat for a Sunday show

Here’s how OTT is silently killing India’s ₹12,000 crore cinema industry ⤵️

(1) Start with revenue - Box Office collections are flat

In 10 years, collections have grown at 3.5% CAGR - slower than inflation.

The best data source is the annual Box Office report from Ormax Media

You can see how pre-2018 (i.e. pre OTT going mainstream) - Cinema had a steady growth rate.

Then came the COVID slump

Now, has come the realization: Why go to the cinema when the same movie is coming on OTT in less than 60 days?

(2) Next: We should understand where/how Cinema makes revenue (hint: not from movies)

Ajay Bijli, CEO of PVR Inox, said: “I have seen customers come only for food, leave without watching the movie”

Data:
Avg ticket price at PVR = ₹259 (versus ₹180 in 2015)

F&B spend per head at PVR = ₹134 (versus ₹70 in 2015)

But, here’s the kicker - F&B has a 75% gross margin i.e. it is a real money maker

Let us look at PVR’s FY 25 financials:
Total rev from Ops = ₹5780 crore
Ticket sales = ₹3530 crore
F&B sales @ 75% GM = ₹1800 crore
Advertising @ 90% GM = ₹450 crore

F&B + Ads = ₹1750 crore of margin - which is the same as tickets sales @ 50% margin 🤯

Takeaway: On a margin basis - F&B & Ads contributes as much as ticket sales. Hence, the old joke that cinemas are expensive restaurants which play movies and have bad service. 😂

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Rahul Mathur

@Rahul_J_Mathur

Aug 8

We’ve officially opened our 1st office in GIFT City 🥳

Last week, our team drove for 4 hours from Udaipur to GIFT City - in many ways, it reminded me of Dubai in the early 2000s (when I used to visit my father)

It was incredible to see the pace of construction and how crowded some of the other offices were on a Saturday afternoon!

Sharing a few insights on GIFT City ⤵️

Let us start with some facts & figures:

(1) $5.7bn of AUM has been raised by funds (AIFs) operating out of GITY City

(2) ~700 entities have set up office

(3) Famous investment firms like Abu Dhabi Investment Authority (ADIA), Bandhan Asset Management Company (AMC), Unifi Capital, 360 WAM etc have set-up offices

Btw, 360ONE WAM and Alchemy Capital are located on the same floor as our office in GIFT City

So, what is GIFT City?

GIFT City is an area located between Ahmedabad and Gandhinagar in the state of Gujarat

As you drive from Ahmedabad airport towards GIFT City - you will see a cluster of office towers, residential complexes & construction sites which is the “physical” location.

You can think of it as a SEZ (Special Economic Zone) to promote international investments in & outside of India.

GIFT City has an IFSC (International Financial Services Centre) which allows Indian and foreign entities to transact in foreign currency-denominated financial products and services.

Although GIFT City was conceptualized in 2007 - the real action began in 2020 when IFSCA was created - as the single regulator for GIFT City

Let’s now understand the hype behind this:

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Rahul Mathur

@Rahul_J_Mathur

Aug 6

Mahindra Group has announced a ~₹500 crore one-time ESOP grant to 14,000+ factory & shopfloor workers.

This is the 1st time in India where a Diwali bonus is being paid in stock!

And, this is the 2nd time where a conglomerate has allocated such a generous ESOP grant to blue collar workers - JSW Group was the 1st to do so in August 2021 with a ₹1,000 crore allocation!

ESOPs were earlier restricted to management & white collar roles - but this is now changing; here’s what you need to know ⤵️

First, let us understand how ESOPs work:

(1) ESOP stands for Employee Stock Ownership Plan

(2) ESOPs are a way for a company to incentivize you to stick around for the long term - they typically are granted over a 4 year “vesting period”

(3) To create long term alignment - there is typically a “cliff” (i.e. if you leave within one year, you get no ESOPs) and there is a “vesting schedule” i.e. every month or quarter - you get some credited some ESOPs

(4) Every ESOP has an “exercise price” i.e. the amount you pay to convert your ESOPs into shares of the company

(5) The difference between the exercise price & actual share price is the upside or financial incentive for the employee

In the context of Mahindra Group’s 2025 Diwali ESOP - any worker with more than 1 year of tenure (”cliff”) is eligible.

JSW’s ESOP plan has a 4 year vesting schedule - 25% per year at the end of each year where the “exercise price” of the ESOP is ₹1 - the current share price of JSW Energy is ~₹535

To put it simply - ESOPs are stock based compensation for employees - and this has worked out spectacularly for white collar employees in India:

In 2021, when Freshworks went public in the US:

(a) 500 of its employees had ≥ ₹1 crore from exercising their ESOPs

(b) 70 of these were under 30 years of age - some even a few years out of college

Girish Mathrubootham, founder of Freshworks said: “Employee wealth creation is something that India needs to do more of. Wealth has to be shared with people who created it… It’s not just for the founders to get rich or the investors”

ESOPs in the case of listed companies like M&M and JSW Group is quite simple since the stock is freely traded.

But what about ESOPs in private companies?

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Rahul Mathur

@Rahul_J_Mathur

Aug 1

The price of Coconut oil has doubled in 2025 to ₹500 per litre

Coconut oil is now the costliest edible oil in India - despite India being the 3rd largest producer of coconuts in the world!

Thieves are forming organized gangs to steal coconuts from trees in Kerala - something has seriously gone wrong with the global commodity market.

Why has the cost of Coconut oil shot up so much?⤵️

The reason for this price shock lies on the Supply side:

(1) The world’s top producers and exporters of Coconut oil are Indonesia & Philippines

(2) They were affected by El Niño from July 2023–June 2024 which disrupted coconut flowering and fruit growth.

(3) Since coconuts trees take about a year to give fruit, the cascaded impact is now showing up w.e.f October 2024

And, the response by these nations has triggered the price shock:

The Philippines has mandated coconut oil blending in diesel (India does Ethanol blending in petrol) —starting at 3% from Oct 24, rising to 4% in 2025 and 5% by 2026.

Indonesia is planning to restrict the export of raw Coconuts to ensure the availability to local oil makers & to stabilize the price in its domestic market.

Now, let’s come back to India:

Thalath Mahmood, president of the Cochin Oil Merchants’ Association (COMA) accurately summarizes what is happening right now: “Not only are Coconut oil prices at all-time highs, I haven’t seen prices go up so much in such a short time in 50 years of trading”

And, how are brands responding? Let us take 2 examples most impacted by Coconut prices:

(1) Marico
- For Marico, maker of the iconic Parachute brand, copra (dried coconut kernel) is a key raw material that drives costs.
- Over the past year, as copra prices surged by 40–50%, it forced the company to hike Parachute’s retail price by nearly 30%

(2) Kerafed
- It is the largest producer of coconut oil in the country
- Hiked the price of coconut oil to ₹529 per litre while the price of many popular brands has crossed ₹600.

And, now let us come to the impact on the average Indian consumer:

Read 6 tweets

Rahul Mathur

@Rahul_J_Mathur

Jul 29

Shoppers Stop generates ₹4600 crore of revenue from 300 stores across India

The company is largely ignored by media today - but when it was launched in 1991, it was the first family owned retail company which was run by professional management!

How has the company survived all these years? ⤵️

First, let us go to the origin story of Shoppers Stop:

In 1991, the company introduced the concept of departmental stores in India with their first unit going live in Andheri, Mumbai; it had:

(i) 50,000 sq ft of shopping space
(ii) Central AC
(iii) Massive car parking space
(iv) Clean washrooms

They introduced the concept of Self Service where people could walk in , browse for hours and enjoy the process of selecting clothes with or without assistance.

What worked for them?

Of course, they were first to market but three things worked in their favor:

(1) Focus on supplier relationships

Suppliers were provided a 2 hour window from 10AM to 12 noon on 2 fixed days a week to come collect their payment cheques

"They felt valued, validated and respected, probably for the first time. We valued their time and effort, just as they valued ours" — BS Nagesh (Chairman of Shoppers Stop)

(2) Technology

In 1990s, vendors could simply login and check daily sales of Shoppers Stop, stock and status of cheques. Very similar approach to technology like Asian Paints

(3) Re-branded Sales to Customer Care

Early in the Shopper Stop journey, two top performing Sales Reps quit because their family was ashamed of their “Sales Boy” tag

The company changed all job titles to being with: “Customer Care” followed by the actual role!

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