News As We Read- 14th Aug'13

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India:

• With Import Duty at 10%, Gold may Turn Rare Metal in India : India, the world’s biggest consumer of gold, raised import duties for the third time in 2013 to curtail the current account deficit and stem volatility in the rupee. The government has increased the customs duty to 10% from 8% on the yellow metal, a move that helped the rupee edge up against the dollar but will make the commodity costlier by about 600 per gram. Customs duty on platinum has been raised to 10% from 8%, and on silver to 10% from 6%. The government also raised the excise duty on gold and silver bars. These appeared, at least for the moment, to assuage traders in the foreign exchange market. The rupee erased its morning losses to end at 61.19/20 against the dollar, a gain of eight paise from Monday. The Indian currency has lost nearly 12% since May. “The basic purpose of enhancing the duty was to curb the import of gold,” Revenue Secretary Sumit Bose told reporters. The higher taxes on precious metals would fetch the exchequer an additional 4,830 crore. The increase in import duties on precious metals is part of a series of steps announced by Finance Minister P Chidambaram on Monday to restrict the current account deficit to 3.7% of GDP and ensure its “full and safe financing”. Chidambaram on Monday said the government’s plan is to restrict gold imports to 850 tonnes in the current financial year, compared with 950 tonnes in 2012-13. Gold imports stood at about 335 tonnes in the April-June quarter. “This is as much a red line as the fiscal deficit. We will do all to ensure that it is not breached. The current account deficit will be contained and fully and safely financed,” he had said, unveiling his plan to contain CAD. On Tuesday, Bose said the government was still working on the plan to hike import duties on non-essential goods. However, some analysts were not impressed.

• Now, Private Labels Eat Into the Foods Biz of Big Brands : Brands owned by big retailers such as Future Group and Reliance Retail account for more than three-fourths of food products sold in modern trade in the country as consumers increasingly prefer lower-priced products to national brands. According to market researcher Nielsen, if all private labels of Indian retailers are put under one roof then it would be the third-largest FMCG supplier in modern trade. “Private labels offer a good way of economising without compromising quality,” Adrian Terron, executive director at Nielsen, says. “However, this also means that shoppers are moving away from the traditional list of loyal brands, and are willing to experiment with different brands in certain categories. This signals a new competitive force for manufacturer brands,” he adds.This trend could spell trouble for packaged food makers such as Hindustan Unilever, Britannia, Nestle and ITC in the long run as they are increasingly betting on modern retail to drive their future growth, especially that of premium products. Nielsen estimates that private labels have gained traction particularly in categories where shoppers perceive minimal tangible difference between private label and manufacturer brands.

• Mother Dairy Bets Big on a Frozen Veggie Menu : As zooming prices of onion make consumers cry, Mother Dairy is eyeing the market for frozen onion rings, spinach as well as guava and mango as it seeks to consolidate its leadership in the organised retail market for frozen vegetables. Increased price volatility of fresh vegetables and demand for premium, pre-cut vegetables even after the season ends is boosting demand, helping the organised retail market grow 15-20% a year, industry executives say. “We are looking to come up with frozen onion rings and even frozen spinach blocks for the foodservice segment and consumers. It will be a win-win situation for consumers to get a product at one price all year round,” said Pradipta Kumar Sahoo, business head for horticulture at Mother Dairy Fruit& Vegetable. He added that frozen mango and guava were the other products that were in pipeline. Starting August 15, the company would launch a new rangeof frozen vegetables such as english carrots, cauliflower florets and french beans under the Safal brand. Currently, it is selling over 6,000 tonnes of frozen peas, sweet cornand mixed vegetables annually.“It has taken us 18 years to reach this level, but I am confident that we will grow at a much faster pace as consumers look for convenience in getting precut vegetables and all year round availability,” he said. Safal brand has a market share of over 25-30% in the frozen vegetable category in the country. All major retailers including Reliance, Big Bazaar, Easy Day and More sell peas or corn in their own private labels. The industry pegs annual sales of frozen peas alone at over 50,000 tonnes. Regional players like Pagro Foodsin the north Indian market and ice-cream major Vadilal Industries in the west have strong market presence in their respective territories and are gearing up for countrywide operations. Apart from convenience and natural taste, frozen vegetables also provide value for money. In the case of frozen cauliflower florets, consumers would have to pay only for florets with 100% yield, which is ready to cook. “The prices of these frozen vegetables are free from market volatility and inflation,” Sahoo said.

• Facebook Users in India Increase 5% in April-June to 82 million : New Delhi The number of monthly active users of Facebook in India has shot up by 5% to 82 million for the April-June period of this year. The California-based social networking giant had 78 million users in India in the January-March period. “MAUs (monthly active users) by the end of second quarter stood at 82 million against 78 million at the end of January-March 2013,” Facebook India country growth manager Kevin D'Souza said. A majority of active users in India access Facebook through mobiles, he added.

• JLR Posts 21% Sales Increase in July : New Delhi Tata Motorsowned Jaguar Land Rover on Tuesday reported global sales of 31,611 units for July, a 21% increase from the same month last year. The company sold 6,157 Jaguars in July, up 65% from a year earlier, JLR said in a statement. “Jaguar has delivered a very strong performance with solid growth in China and North America, thanks to the refreshed XJ and XF models,” it added. Land Rover sales rose 14% to 25,454 units in July from a year earlier. “Solid performances were seen across the new and refreshed line up, with a strong month from Discovery 4,” is said.

• Harvard’s Ashish Nanda to Join as IIM-A Director : The Indian Institute of Management, Ahmedabad (IIM-A) on Tuesday appointed Ashish Nanda, a Harvard Law School professor, as its new director nearly ten months after former director Samir Barua's five-year term ended in November 2012. The institute, eyeing a spot among world's top B-schools, had for the first time advertised the post in an international publication seeking a candidate with global exposure. The quest has ended with appointment of Nanda, a Robert Braucher Professor of Practice at Harvard Law School, and an IIM-A 1983 batch alumnus. The IIM-A board was keen on an academician who had international experience and a connection with IIM-A. The institute's board constituted a search committee to find the new director in June last year. It sought applications from India and abroad and finally in March, a list of three candidates that included Nanda apart from two IIM-A faculty members, G Raghuram and Rakesh Basant, was sent to the HRD ministry for approval. “Nanda is perhaps the first director of the institute who has been selected in an open and competitive process. Anybody was free to apply for the post and the search committee met all the candidates from within the campus and invited candidates from global level,” said a senior faculty. A gold medalist from both, IIT -Delhi and IIM - Ahmedabad, Mr Nanda is a PhD from Harvard University and has been teaching courses in Harvard Business School. Before joining Harvard Law School, Nanda was a Harvard Business School faculty member for 13 years, where he taught professional services in the MBA program.

• DLF Says Debt may Fall Below 15,500 Crore by Fiscal-end : DLF, the largest real estate developer in India, said it will cut debt by about a quarter to . 15,500 crore over the next nine months, mainly on the back of receipts from the sale of its luxury hotel chain Aman Resorts and some land divestitures. “If both transactions happen, our net debt will come down to below . 15,500 crore,” Tyagi said. Delhi-based DLF had in December last year announced the sale of Aman Resorts to its original founder, Indonesian hotelier Adrian Zecha, for . 1,650 crore. The transaction, part of the company’s non-core asset sale strategy, was supposed to close in February this year. The due date was extended to June 30, but the buyer was still unable to close the deal. Ending the exclusivity clause with Zecha, DLF opened talks with other players. “As we speak, there are 5-6 new bidders apart from Zecha. We are confident of closure of the transaction in a short time at targeted valuations,” Saurabh Chawla, executive director for finance at DLF, said in a conference call with analysts on Tuesday. The real estate developer had on Monday reported a 38% drop in first quarter net profit to . 181.19 crore.

• Titan readies own brand in premiumisation bid : Titan Industries plans to launch its Swiss watch brand Favre Leuba this fiscal ( 201314). Even though the company refused to put a date to it, Titan will re- launch the acquired brand to drive its premiumisation of its portfolio. India’s largest organised watch retailer bought Favre Leuba for ¤ 2 million in 2011 ( approx. ₹ 13.8 crore then). “The work is in progress. We are planning to launch it sometime this year,” says Ronnie Talati, vicepresident &chief marketing officer, watches & accessories, Titan Industries. Favre Leuba, created in 1737, was one of the first watchmaking companies in Switzerland and will become the first Swiss brand under Titan. It currently sells Xylys, which is made in Switzerland. Titan Industries, which controls 55 per cent of the ₹ 5,000- crore organised watch market, is targetting agrowth of 20- 25 per cent in value in the current fiscal. The company also plans to expand its product offering under its other premium brands such as Edge, Raga, Octane and HTSE to coincide with the imminent festive season. The company achieved a turnover of ₹ 300 crore from premium watch brands in 2012- 13, accounting for 18 per cent of its yearly revenue. In its premiumisation drive, Titan will be up against the likes of DKNY, Espirit, Tissot and Armani. HG Raghunath, CEO of the company’s watches and accessories division, says the company is focusing on watches in the range of ₹ 8,000 to about ₹ 15,000 ( premium watches in India can cost upto ₹ 25,000), in a premium segment that has grown at 65 per cent for the last five years. Along with moving up the consumption ladder with its own brands, it has also initiated a concerted play with its licensed watch brands. With fashionable premium brands such as Tommy Hilfiger, Hugo Boss, French Connection, and the recently- added Timberland and Police, it is poised to tap the upper end of the watch market like no other Indian watch player. Its multibrand watch retailing chain, Helios, will further stock brands such as Guess, Fossil, Esprit, DKNY, Gucci, Versace, Emporio Armani, Tag Heuer and Raymond Weil.

• Samsung’s phones, tabs to get an Indian touch : In an attempt to lure customers from semi- urban and rural India to its high- end devices, Samsung Electronics on Tuesday announced that its Galaxy range of smartphones and tablets would now support content and user interface in nine Indian languages. Samsung, which leads the Indian smartphone market with 49 per cent share ( June figures, according to an independent market research agency study), becomes the first multinational handset maker in India to offer smart devices supporting this many Indian languages in the user interface (which is popularly known as phone language). Smartphones account for more than 40 per cent of Samsung’s overall handset sales in India. Samsung’s announcement on Tuesday hints that the sale of highend handsets in smaller markets is taking off. Every handset has two kinds of language phones language for the user interface and applications, and keyboard language that is used to type messages and emails. Integration of Indian regional languages in handsets is not new. Handset makers have started this more than a year ago. But most of them had focussed on integrating Indian regional languages in lowerend (sub10,000) handsets, as sales of handsets above ₹ 10,000 was mainly a metro phenomena. At the higher end, handset makers, including Apple, have only integrated Hindi as the Indian language. Even Finnish handset maker Nokia, which is the leader in the overall handset market in India, included Hindi as Indian language. Samsung said it had partnered with Reverie Language Technologies to support Hindi, Punjabi, Bengali, Tamil, Gujarati, Marathi, Telugu, Kannada and Malayalam. Interestingly, these languages are spoken by about 80 per cent of Indian population of content combined with easy access is the key driver for usage of any language. We clearly sense a need and demand amongst users to communicate in local languages using their mobile devices,” said Vineet Taneja, Samsung India country head (mobile and information technology). Samsung Galaxy S4 and Galaxy Grand, along with the Galaxy Tab 3 series will support the nine languages. Samsung said its entry- level Android model Galaxy Star would begin supporting the same from this month, while the rest of the devices in the portfolio would be able to provide content and interface in the next two months.

International:

• Korean products have still got a ‘cheap and nasty’ image in Japan : Brandishing a new Sony Xperia as she left a mobile phone shop in a trendy part of Tokyo, Nisako Hanawa, a 17-year-old student, explained that she had chosen that brand “because of its cool design and its good reputation”. Asked about another leading smartphone maker, Samsung Electronics of South Korea, she and a friend exchanged quizzical looks. “Samsung?” Hanawa asked. “I haven’t heard of it.” Samsung Electronics may be the largest consumer electronics company in the world, selling 1 out of every 3 smartphones and 1 in 5 televisions. LG, the other giant electronics maker in Korea, has a significant share of television and washing machine markets in Europe and the United States. But here in trend-obsessed Japan, consumers have not caught on that elsewhere in the world some Korean products are knocking Japanese rivals off the shelves. Many Japanese explain away the absence of Korean brands by claiming the quality is inferior. “South Korean products are still affected by a 'cheap and nasty’ image, which remains prevalent among Japanese above a certain age,” wrote Hidehiko Mukoyama, an economist at the Japan Research Institute, in a research paper about Japan-South Korea trade relations. The evidence says otherwise. Korean-made TVs, phones, washers and cars rate higher than many Japanese brands in independent tests by Consumer Reports, CNET and others. LG TVs have been getting favorable reviews in Japan. A local magazine, HiVi, recently rated a 32-inch, high-definition, 3-D-capable LG set-top ahead of televisions in its category from Mitsubishi and Sharp.

• Ebay pilots fashion personalisation service in UK : The six month pilot will see Ebay integrate Dressipi’s personalisation technology into its Fashion Gallery to give shoppers instant access to retail inventory, specially selected to suit their personal style and size. The technology combines variables such as shape, size and brand preferences to develop a Fashion Fingerprint™ for shoppers which they can then use to narrow down their selection of clothing. Ebay said the integration will offer female shoppers two levels of recommendation. Customers will initially see a curated selection of clothes, shoes and accessories selected from Dressipi’s team of personal stylists. For those who choose to complete a Fashion Fingerprint ™, the technology will then personalise those recommendations by gathering information about a shopper’s shape, size, brand preference and confidence levels, before delivering tailored recommendations about which garments available on Ebay would fit and flatter them. Dressipi plans to add a further feedback mechanism to its on-site recommendation service that will provide additional insight to Ebay and its sellers, with functionality that will allow consumers to ‘like’ and ‘dislike’ individual items. Eben Sermon, Ebay director of relationship marketing and loyalty, said: “Ebay is dedicated to delivering innovations that can inspire and personalise the eBay experience to allow shoppers to connect with the items they love in new and engaging ways. From the high street brands in our Fashion Gallery through to the launch of a personalised shopping experience with Ebay Feed, we are committed to making eBay a great place to shop and excited by this latest pilot.”

• Don't Get Bent Out of Shape Over Lululemon : The news in early June that Lululemon Athletica CEO Christine Day plans to retire sent the yoga wear retailer's stock price down, but analysts say it's likely the Canada-based company is poised for a smooth transition when a new chief is named. The company is just beginning to grow in Asia and Europe and is adding new styles to expand further into menswear.

• Apple aerial map photos blocked over Oslo in Norway : Anyone wishing to fly over the capital to take pictures requires a licence from the authorities, Norway's National Security Authority said it had security concerns, but added there were other ways the tech firm could get the data it wanted. Other map brands have used flat satellite images for their services. Nokia also has 3D-images of Oslo's buildings in its Here product but only for parts of the city. News of the denial was first reported by the local newspaper Aftenposten. It said officials were worried about the public having access to detailed views of government buildings. Security measures have tightened in Norway since Anders Breivik planted a bomb outside government premises in Oslo before carrying out a killing spree at an island youth camp two years ago. "There has been a major debate in Norway about security since the shootings, including how secure government offices should be," Henning Carr Ekroll, a security reporter at national newspaper Aftenposten, told the BBC.

• US Retail Sales Rise in July : Consumers heading into the back-to-school season stepped up their purchases of apparel and accessories in July as specialty stores, department stores and discounters all posted gains, according to the monthly retail sales report released by the Commerce Department on Tuesday. Sales at apparel and accessories stores rose a seasonally adjusted 0.9 percent last month to $21 billion, while sales at general merchandise stores, a category that includes discounters and department stores, increased 0.4 percent to $55.1 billion in July. Department stores posted a 0.6 percent rise in sales to $14.5 billion. On a year-over-year basis, specialty-store sales were 4.2 percent higher than in July 2012, while sales at general merchandise stores were up 1.1 percent. Department stores showed the only sign of weakness compared with a year earlier, posting a decline of 4.8 percent in sales.

• Elon Musk Explains the Hyperloop, the Solar-Powered High-Speed Future of Inter-City Transportation : Almost a year after Elon Musk, chief executive of Tesla Motors (TSLA) and SpaceX, first floated the idea of a superfast mode of transportation, he has finally revealed the details: a solar-powered, city-to-city elevated transit system that could take passengers and cars from Los Angeles to San Francisco in 30 minutes. In typical Musk fashion, the Hyperloop, as he calls it, immediately poses a challenge to the status quo—in this case, California’s $70 billion high-speed train that has been knocked by Musk and others as too expensive, too slow, and too impractical. In Musk’s vision, the Hyperloop would transport people via aluminum pods enclosed inside of steel tubes. He describes the design as looking like a shotgun with the tubes running side by side for most of the journey and closing the loop at either end. These tubes would be mounted on columns 50 to 100 yards apart, and the pods inside would travel up to 800 miles per hour. Some of this Musk has hinted at before; he now adds that pods could ferry cars as well as people. “You just drive on, and the pod departs,” Musk told Bloomberg Businessweek in his first interview about the Hyperloop.

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