News As We Read - 26th Aug'13

Thought of the Day:

Did you know?

India:

• Cheaper Local Mobiles Beat Apple, Samsung in India, China Markets : The rising demand for affordable smartphones in the major emerging markets of India and China has helped local mobile manufacturers surpass shipments by established global brands like Samsung and Apple in the April-June quarter this year, says research firm IDC. According to IDC data for the Asia-Pacific region excluding Japan, homegrown vendors shipped 46 million units, compared with 35 million units for Samsung and Apple together. Other global brands like HTC, BlackBerry, Nokia, Sony, LG and Motorola shipped a combined 10 million units, whereas local vendors from China, like Huawei, ZTE and Lenovo shipped a total of 27 million units during April-June. IDC identified Micromax, Karbonn, Lava, Maxx and Intex as the rising players in India and brands like Coolpad, K-Touch, Xiaomi, Gionee and OPPO in China. The research firm said local brands in the world's two most populous countries have aggressively scaled up their operations and are competitive on both price and hardware specifications. “Besides the top-tier international brands or Chinese brands that also ship globally like Huawei and ZTE, there is also a rising segment of homegrown brands, which as a group have been steadily rising in shipments and prominence,” IDC said in its latest report.

• Daikin India to Invest . 330 cr This Fiscal : Daikin India will invest Rs 330 crore in the current financial year to double its production capacity for room air conditioners in the country, notwithstanding the current slowdown in the market. At present, the company has a manufacturing capacity of half a million units per annum of room air conditioners at its plant in Neemrana in Rajasthan. When asked about the rationale behind expanding capacity at a time when the country is going through demand slump, Daikin Airconditioning India managing director Kanwal Jeet Jawa said, “We have a long term focus about growth in India.”

• ‘Dhoni Keen to be a Partner in Sports Retail Chain FitSoul’ : Indian cricket team captain MS Dhoni is keen to pick up a stake in Light Speed Sports, which will operate a multi-brand sports retail chain called FitSoul, one of the promoters of the firm said. Sajid Shamim, former marketing head of sports shoes and apparel maker Reebok, has teamed up with Rhiti Sports, which manages Dhoni’s endorsement deals, and entrepreneur-banker Parvinder Singh to start the retail venture. Dhoni is already the brand ambassador of FitSoul, which will sell sports apparel, footwear and equipment. In an interview with ET’s Ratna Bhushan, Shamim said Light Speed Sports has been set up on a low-cost model to ensure profits. It plans to open stores in small towns like Sirsa, Guntur and Hubli besides metros, and leverage Dhoni’s gym business Sports-Fit, he added.

• 5 Airlines Owe AAI 357 Cr : Five private airlines, including those which have closed down, have nearly . 357 crore as dues pending towards Airport Authority of India. Jet Airlines, Jetlite Airlines, SpiceJet, Kingfisher Airlines and defunct Paramount Airways have pending dues of . 357.39 crore, says data provided by the AAI in response to an RTI application. The figures available as on March 31 show that the largest sum of dues were pending against Kingfisher Airlines which owes . 175.30 crore towards the authority which is followed by Jet Airlines with . 80.38 crore, SpiceJet with . 80.17 crore, Jetlite Airlines with . 19.76 crore and Paramount Airways with . 1.75 crore. The authority said it is taking legal action against Kingfisher Airlines and Paramount Airways for realising its pending dues. In the cases of Jet Airlines, Jetlite Airlines and SpiceJet, the authority said it is pursuing the cases with respective airlines through “continuous correspondence being pursued at airport/region/CHQ level for realisation of dues.”

• Free messaging apps unsafe, claim hackers : The free text messaging app on your phone can be used to steal your personal information. Sounding this warning, hackers and cyber security professionals have claimed that internet companies can access a mobile user’s chat logs and phone data, including location, contacts, mail and much more, through some of these free texting apps. To prove their point, a team of young hackers demonstrated on Sunday how text messages sent through a Chinese free texting app can be decrypted. They said foreign governments could also be using this method to access data for surveillance or spying. The vulnerability of free messaging users was one of several privacy issues that hacking enthusiasts discussed at The Hackers Conference in the capital on Sunday.

• Ranbaxy may exit small global markets : Indicating a shift in its business strategy, drugmaker Ranbaxy could withdraw from some global markets in the near future, while consolidating in others. According to sources, the company has identified smaller markets such as Peru, which do not contribute significantly to profits, where it might shut shop in the near term. Besides, there are also directions from top management to avoid participating in domestic as well as international tenders with less than five per cent margin. A source in the know of the developments told  “ This is part of the ongoing cost rationalisation process within the company. There is pressure to minimise cost and increase profitability. So, it does not make sense for the company to deploy staff or bear a cost in a region where it does not see relative future growth.” Ranbaxy confirmed it had identified select therapeutic areas and regions, which would drive its future growth. However, it did not respond to questions related to withdrawing from smaller markets such as Peru. A company spokesperson said in response.

• Sweden’s H& M ready to roll, but no word from FIPB yet : At a time when multi- brand foreign retail chains such as Walmart, Carrefour and Tesco are not willing to invest in India, leading Swedish fashion group Hennes & Mauritz ( H& M) is believed to be ready to set up stores in India. But H& M’s proposal, made four months ago to the Department of Industrial Policy and Promotion ( DIPP) to invest over 700 crore in the country as 100 per cent foreign direct investment ( FDI), is yet to be cleared. Once the DIPP approves the application, it will be taken up by the Foreign Investment Promotion Board ( FIPB), the key unit in the finance ministry for vetting FDI proposals. H& M is the second largest single- brand FDI proposal after the 10,500- crore application made by yet another Swedish chain IKEA. While IKEA is scouting for real estate, mostly around the outskirts of metros, and has said it could take two to three years to set up its initial stores in India, industry sources said H& M would take less than half of that time to begin its operations in the country. “H& M is awaiting a nod from the FIPB,” said Diljeet Titus, founder and managing partner, Titus & Co Advocates, the law firm advising companies such as IKEA and H& M for India entry. Once approval is granted, H& M will immediately execute its plans to set up stores, Titus told Business Standard. While he refused to elaborate on where the stores could open, market sources said the group was in advanced talks to take up space in many metros and tier one cities. H& M, which competes with the likes of fashion brands such as Spain’s Zara, wants to open 50 stores in India over a period of time. While Zara already operates in India through a tie- up with the Tatas, aproposal from the group’s Massimo Dutti brand is expected to be taken up by the FIPB this week. Around the world, H& M has over 2,500 stores across 49 markets. 

• Nomarks The spot beyond hair oils : Sumit Malhotra, the managing director of Bajaj Corp, makes his reason for its latest acquisition clear. “ It is our prelim before we can play the final,” he says. He means that as a single- category ( hair oils) fast- moving consumer goods company with no history of acquisition, Bajaj, listed in 2010, wants to learn from mistakes before going for alarger target. But go it will. Nomarks, the anti- blemish skincare brand it has acquired from the New Delhi- based pharmaceutical company Ozone Ayurvedics, has a range of offerings but it still can’t be considered a huge buy for the company, part of the Shishir Bajaj Group. The gross revenue was 651 crore in 2012- 13 ( growing at 25 per cent annually), and earned 167 crore in net profit ( margin of 28 per cent).

• India a huge opportunity, says Zuckerberg : Facebook founder Mark Zuckerberg (29) wants to connect five billion people on the internet. Of course, most of them will be on Facebook too. In his first interview to an Indian publication, Zuckerberg told (HT’s sister publication) Mint: “One of the things I think is really unfair about the world is that the richest 500 million people have more money than the next six billion combined.” Zuckerberg hopes to change that over the coming decades by giving everybody access to the internet “so that everyone has access to the same information and same opportunities”. And India, he said, “is a really big opportunity if we can achieve something like this”. The Facebook founder, who is seeking out partnerships with other companies to fulfil his dream, wants to work in India with mobile operators as well as phone makers like Nokia and Samsung to provide Net access to people who can’t afford it now.

International:

• Microsoft, Motorola set for second round of trial over patents : The jury trial, starting Monday in federal court in Seattle, is set to resolve whether Motorola breached its contract with Microsoft to license on reasonable terms its so-called standard essential patents, covering wireless and video technology used in the Xbox game console. The proceeding comes days after Microsoft Chief Executive Steve Ballmer unexpectedly announced his retirement. It also follows a complex trial last November that decided what the appropriate fee for Microsoft's use of Motorola-patented technology should be. After five months of deliberation, U.S. District Judge James Robart came down heavily in Microsoft's favor, saying it owed only a fraction of the royalties Motorola had claimed, suggesting the appropriate rate was about $1.8 million, above Microsoft's estimate of $1 million, but well below Motorola's demand for as much as $4 billion a year. Motorola cannot appeal Robart's April ruling until after the jury decides the second phase of the case. In a court filing, Microsoft said it had offered to pay Motorola $6.8 million in past royalties, based on its application of Robart's order. However, Motorola rejected the money, the filing said.

• Ebay users hit by site problems : Ebay users are reporting issues using the auction website following scheduled maintenance carried out earlier today. Some users are complaining of log-in failures or problems using the service once they have accessed their accounts. A spokesperson for the site told the BBC issues had been occurring since around 08:00 BST but added that they were "intermittent". Site users had been warned in advance that the maintenance would cause disruption, he added. However the work had taken longer than anticipated, eBay said in a statement. "We are sorry that intermittent problems with eBay have continued for longer than planned. We are working hard to resolve the issue, and will provide a further update soon," the firm said. Hundreds of individuals and businesses have been tweeting about the service disruption.

• US manufacturing growth 'at five-month high' : Markit's purchasing managers' index (PMI) rose to 53.9, up from 53.7 in July and its best showing since March. A reading above 50 indicates growth. The index for new orders rose to 56.5, a seven-month high, from 55.5 in July. Analysts said the figures pointed to stronger US economic growth for the rest of the year. "Hopefully the faster growth of new orders seen during August will translate into increasingly strong production gains in coming months, and also boost hiring," said Markit's chief economist, Chris Williamson. The Markit survey is a preliminary report, based on replies from about 85% of the US manufacturers surveyed. A final reading will be released on 3 September. The positive news comes as economists and investors speculate as to when the US Federal Reserve might begin winding down its huge monetary stimulus programme.

• Destination XL Makes Progress Despite Q2 Loss : Investments to build the Destination XL brand dropped its parent company to a second-quarter loss but paid big dividends in several critical areas for the big and tall retailer. Among the metrics showing improvement for Destination XL Group Inc. in the quarter were same-store sales, gross margin, sales per square foot and average ticket. Investors looked past the loss and a reduction in earnings and sales guidance for the year and sent shares up 38 cents, or 6.5 percent, to $6.19 on Friday.

• Robert McDonald's Pay $15.9M for Final Year at P&G : Robert McDonald might have had a rocky exit from The Procter & Gamble Co., where he was pressured by activist investor William Ackman, but he left with compensation of $15.9 million for his final year of service. That marked a 4.8 percent pay raise for the former chairman, president and chief executive officer, who stepped down at the end of the fiscal year on June 30. His pay package included $1.6 million in salary, a $3.3 million bonus and stock and option awards valued at $10.7 million. He might not ultimately realize the stock compensation given fluctuations in share price and vesting schedules.  A.G. Lafley, who handed the reins over to McDonald in 2009 and retook the helm in June, received compensation of $2 million, most of which came in the form of a $1.6 million bonus.

• Badgley Mischka Opens First N.Y. Store : After nearly 25 years in business, and at least two spent scouting potential Manhattan store locations, Mark Badgley and James Mischka have found their retail dream space. It’s been a long time coming, but Badgley Mischka’s first New York store is opening today. Located in a landmarked building at 24 East 64th Street, the 3,500-square-foot town house is a study in relaxed elegance with room for all of their collections ready-to-wear, couture, bridal, costume jewelry, fine jewelry, sunglasses, shoes and handbags spread out over three floors. The designers, who have been partners for 28 years and married earlier this year, said they wanted the store to have a residential feel. “Funny enough, this is kind of what our two homes look like,” said Badgley. “No matter what we try to do, everything always looks the same. But we like that.”

• Opening Ceremony Sets Plans for First New York Fashion Week : Never satisfied with staging a low-key event, Opening Ceremony is using their first fashion week runway show (not to be confused with the Chloë Sevigny for Opening Ceremony shows of past seasons), to splash out.  For the week of New York Fashion Week, the brand is staging a pop-up market at the historic Pier 57, aka the SuperPier, on Hudson River Park. Dubbed Opening Ceremony BTW (by the water), the pop-ups will be staged in shipping containers. Vendors, all of whom will be powered by Square, include DKNY Exclusively for Opening Ceremony, Rihanna for River Island, as well as specialty food vendors like Asia Dog, Café Habana, Spur Tree and the Dominique Ansel Bakery. There will also be an Estée Lauder pop-up salon with nail artist Naomi Yasuda. Opening Ceremony BTW will launch Coca-Cola Designer Drinkware products, plus Tenga products with packaging inspired by Opening Ceremony’s spring collection. In addition to the Opening Ceremony market, SuperPier will have its own enclave of vendors, including North Brooklyn Collective bikes and food from Takumi Tacos, Better Being Underground, Cold Process Coffee, and La Sonrisa Empanadas. The markets will be open Sept. 5 to 12 from 11 a.m. to 7 p.m.

• Buyers in Vegas Focus on Fall and Holiday : Uncertainty about retail prospects for the rest of the year hung over the apparel trade shows here as questions about consumer spending mounted, but retail buyers and apparel vendors aimed to entice shoppers with strong color statements and new silhouettes. Avoiding making risky investments, the majority of retailers scouting brands at WWDMAGIC, ENK Vegas, Capsule, Stitch, Pool, Liberty and the other expos weren’t thinking beyond holiday. Tess Labeth, owner of the boutique Savoir-Faire in Fayetteville, Ark., concentrated on September, October and November deliveries. “We are in fall mode,” she said, adding that her customers “buy for now.” Neal Click, international sales manager for Laundry by Shelli Segal, said, “Right now, people are looking for immediates. They did go ahead and pick up resort. They are not ready for spring yet. People are buying closer to season and chasing the business.”

Currency: