News As We Read -30th Aug'13

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India:

• There’s Nothing Official About Gmail, Anymore : The government will soon ask all its employees to stop using Google’s Gmail for official communication, a move intended to increase security of confidential government information after revelations of widespread cyber-spying by the US. A senior official in the ministry of communications and information technology said the government plans to send a formal notification to nearly 5 lakh employees barring them from email service providers such as Gmail that have their servers in the US, and instead asking them to stick to the official email service provided by India’s National Informatics Centre. “Gmail data of Indian users resides in other countries as the servers are located outside. Currently, we are looking to address this in the government domain, where there are large amounts of critical data,” said J Satyanarayana, secretary in the department of electronics and information technology.

• Mars Brings in Raghav Rekhi as India Marketing Head : Mars International India, world’s leading chocolate manufacturer, has appointed Raghav Rekhi to lead the marketing operations for the chocolate bin India effective August 2013. In his new role as marketing director, Raghav will develop and implement marketing strategies for the brand to achieve company’s growth and promotional objectives. Raghav has 14 years of experience with Mars and has held a number of marketing and sales management roles in various parts of the world during his tenure with the company.

• Mercedes to Hike Car Prices by up to 4.5% from Sept 1 : German luxury car maker Mercedes- Benz said it will hike prices of its entire model range in India by up to 4.5% from September 1 to partly offset impact of rupee depreciation and higher import duties. The quantum of price revision will be in the range of 2.5% to 4.5% across the models that the company sells in India. With the latest price revision, the company’s new AClass 180 CDI luxury compact car will now be priced at . 22.05 lakh, an increase of 4%, Mercedes- Benz India said. The B-Class 180 CDI model will now be pricier by 4% at . 23.50 lakh while the C-Class 200 CGI sedan will now cost . 32.25 lakh, an increase of 2.5%, it added.

• Used-car Sales Enter Fast Lane : As the Indian economy continues to slide, increasing number of car buyers are considering used vehicles as an option. The Indian car buyer is increasingly considering the option of used cars. According to the study done by JD Power Asia Pacific 2013 India Sales Satisfaction Index, 13% of the new vehicle buyers considered a used vehicle during their shopping process, which is a 10% increase over the past three years.

• Business Will Remain as Usual-BlackBerry : BlackBerry has sought to assure its jittery corporate users in India that business will remain “as usual” despite the Canadian handset maker’s announcement of a plan to sell global operations earlier this month. “I wouldn’t deny that (impact of the sellout announcement on operations in India). It did have a little bit effect on sentiments in the market because people started assuming that we are up for sale,” managing director Sunil Lalvani told ET on Thursday. “I will categorically say that we’re not up for sale, but we’re up for evaluating strategic alternatives which could include a possible sale,” he clarified, adding that the company will continue to roll out products and services aimed at business growth – globally and in India.

• PVT FIRMS TO GET 100% CONTROL OF 6 AIRPORTS : The government will begin the process for bringing in private partners to run six airports, including those in Chennai and Kolkata, as early as next week and is open to giving 100% control to the private investors to manage these airports. The civil aviation ministry is likely to issue a Request for Qualification (RFQ) document for Chennai and Lucknow airports next week, aviation secretary KN Srivastava said. “The RFQ for the other four airports Kolkata, Ahmedabad, Jodhpur and Guwahati would be issued in the coming weeks,” he added. The six airports are owned and managed by state-owned Airports Authority of India (AAI) currently.

• Phablets push smartphones : The smartphone market in India almost tripled to 9.3 million units in April-June period compared with the year-ago period, driven by the brisk sale of ‘phablets’ or extra-large phones that grew 17-fold during the same time, said International Data Corporation (IDC), the market research, analysis and advisory firm specialising on technology. According to IDC’s quarterly mobile phone tracker, phablets which are 5-inch-6.99-inch screen-size smartphones now account for 30% of the smartphone market.

• Maroo replaces Nayyar as Essar Energy CEO : London-listed and India-focussed Essar Energy on Thursday announced the appointment of Sushil Maroo as chief executive officer in place of Naresh Nayyar, who was largely instrumental in shaping of the company. Nayyar, who decided to step down after more than three years at the helm, had led Essar Energy’s much-talked about $350-million acquisition of UK’s Stanlow refinery. He will, however, be appointed as a member of the Essar Corporate Centre, an oversight advisory committee. Nayyar will, however, be appointed as a member of the Essar Corporate Centre, an oversight advisory committee. Maroo most recently served as a deputy managing director and was earlier on the board of Jindal Steel and Power Ltd.

• E- commerce ripe for FDI : It’s not the international online retailers alone such as Amazon and eBay which are pitching for foreign investment in the ecommerce sector. The largest brick- and- mortar retail chain of the world, Walmart, with $ 466 billion sales last year and more than 10,000 stores worldwide, has joined in to tell India that e- commerce is ready for foreign investment. Walmart Asia President and Chief Executive Scott Price is learnt to have written to Finance Minister PChidambaram that “ several other sectors stand poised for exponential growth and are ripe for foreign investment, and foremost among them is e- commerce”. Currently, foreign direct investment (FDI) is not permitted in ecommerce, though up to 51 per cent FDI is allowed in multi- brand retail and 100 per cent in single brand. So, e- commerce or online retail players are either routing foreign money through complex corporate structures or by having a marketplace model, which does not restrict FDI. Internationally, Walmart is trying to aggressively expand its online business, competing with the likes of Amazon. Replying to a Business Standard query on the company’s stand on e- commerce in the country and its communication with the government on the matter, a Walmart India spokesperson said: “ We would like to serve our customers in ways that can help them save money and live better.” She added Walmart’s experiences worldwide supported the fact that e- commerce was an important and growing area that met customers’ shopping needs. “Toward this, we encourage the government of India to consider opening e- commerce for FDI.” Recently, the government had appointed a probe committee, headed by retired justice Mukul Mudgal, to inquire if Walmart lobbied in India for gaining wider access. The Mudgal committee report was inconclusive due to inadequacy of data, and is currently awaiting inter- ministerial inputs.

• Airlines cautiously increase fares as inputs become expensive : With the depreciation of the rupee and a rise in crude oil prices beginning to pinch them, airlines in India have begun raising fares. Since Thursday, Jet Airways has started levying a surcharge of $50 on the economy class fare on its Gulf flights. SpiceJet, is planning to increase the surcharge on its domestic flights. Domestic airlines have so far been shy of revising fares, fearing it would hit passenger traffic. Air fares are about 20 per cent lower year- on- year despite the rising costs. From Thursday, Jet Airways began levying the additional surcharge on its flights to Dubai, Kuwait, Doha and other destinations in the Gulf. The $ 50- dollar surcharge is being levied only on higherlevel economy class fares and till September 10. There are two reason for the surcharge increase the demand for travel to Gulf is higher after the Eid holidays and the rise in operating costs. Jet Airways did not respond to an email questionnaire.

• India shows Hidesign how to bag buyers : As foreign luxury brands made a beeline for the recession- proof buyer in India, a made- in- India brand charted the opposite course. The Puducherry- based, luxury leather goods brand Hidesign, which began its journey in 1978, entered India only in 2000. Dilip Kapur, the owner and president, had preferred to stay out of India, expanding to other shores. But now, Hidesign is taking a page out of its Indian business to improve its prospects abroad. Once Hidesign entered India, it knew why the rest were rushing to cater to the luxury clientele which had moved on from just comprising the maharajahs. “ Our growth in India was so rapid that our international markets felt the lack of attention,” says Kapur, admitting that it was a mistake to be so late to the party. While Kapur was selling products through distributors in multi- brand stores in international markets, he established standalone and shop- inshop Hidesign stores in India. “ There has always been a gap between us, the brand owner, and the consumers in all the markets we operate, except in India. This is, undoubtedly, a cause of concern in the long run,” Kapur says.

International:

• Japan consumer price rises pick up pace on energy costs : Consumer prices, excluding food, rose by 0.7% from a year earlier. However, the faster inflation was mainly stoked by the rising cost of fuel imports due to a weak yen, rather than by an increase in domestic demand. Japan has been trying to end years of deflation, or falling prices, seen as a major drag on its economic growth. While falling prices may sound good, they hurt the economy as consumers and businesses tend to put off purchases in the hope of getting a cheaper deal later on. Stagnant wages and revenues also make it harder for borrowers to pay off their debts. Policymakers have unveiled a series of measures in recent months to try reverse the trend of falling prices something that Japan has been grappling with for the best part of the past two decades.

• Google executive Hugo Barra poached by China's Xiaomi : Hugo Barra was vice president of product management for Google's mobile platform Android, and had been at the company since 2008. Google confirmed his departure from the company, stating that it wished him well. "We'll miss him at Google and we're excited that he is staying within the Android ecosystem," a spokesman said.

• Amazon to alter pricing policy for traders : It will drop a clause banning traders signed up to its Marketplace platform from offering products elsewhere for cheaper. The change will come into force across the EU from Friday. As a result, the inquiries in the UK into whether the policy was anti-competitive are expected to be closed.

• Qantas back to profit as international losses shrink : It made a net profit of A$6m ($5.4m; £3.5m) in the year ending 30 June, reversing a loss of A$244m a year ago. Qantas' earnings were also lifted by the A$125m settlement it received from Boeing after it cancelled 787 orders. The airline said that losses at its international division, which has been a key area of concern in recent years, halved from a year earlier. Alan Joyce, chief executive of the airline, said the alliance with Emirates, which was announced in September last year, had helped it boost bookings to key markets.

• L'Oréal Posts $2.25B First-Half Profit : L’Oréal thinks it can keep outperforming the market. The world’s largest beauty company said Thursday that first-half profits rose 5.2 percent to 1.71 billion euros, or $2.25 billion at average exchange, with operating profits hitting an all-time high. L’Oréal sees no signs of a slowdown either. Jean-Paul Agon, the firm’s chairman and chief executive officer, confirmed the targets L’Oréal had set for this year, reiterating it should outperform the market and achieve growth in sales and profitability. In July, during a conference call with financial analysts, he had said the worldwide beauty market has decelerated slightly, advancing by 3.5 to 4 percent. Operating income at the French beauty giant in the six months ended June 30 increased 7.7 percent to 2.04 billion euros, or $2.68 billion. Operating profit was 17.4 percent of sales a company record for a half.

• Specialty Retailers Post Losses : Specialty retailers Bebe Stores Inc. and Pacific Sunwear of California Inc. posted earnings results after the markets closed on Thursday, with each one posting a loss. At Bebe, which posted fourth-quarter results for the period ended July 6, the net loss was $20.8 million, or 26 cents a diluted share, against net income of $3 million, or 4 cents, a year ago. Net sales fell 9.4 percent to $119.2 million from $131.5 million, while comparable-store sales fell 7.1 percent in the quarter. For the year, the net loss was $77.4 million, or 95 cents a diluted share, against net income of $11.7 million, or 14 cents, a year ago. Net sales declined 8.7 percent to $484.7 million from $530.8 million.

• Avon Names New Senior Vice President : Avon Products Inc. has recruited McKinsey & Co. executive Brian Salsberg as senior vice president, global strategy, effective Sept. 23. He will report to Sheri McCoy, Avon’s chief executive officer, and will be a member of the company’s executive committee. In this newly created role,  Salsberg will develop the company’s global growth plan, working closely with McCoy and the senior leadership team on “strategy, market stabilization, innovation and growth.” He will also work with the executive committee on developing the “business model of the future and optimal geographic footprint.”Salsberg joins Avon from McKinsey, where he was a partner and most recently served as a coleader of the firm’s consumer and retail practice in Asia. Prior to McKinsey, he was an associate at the New York-based law firm Cravath, Swaine & Moore.

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