News As We Read 6 Sep'13

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India:

• IBL Gets Smashing Blow of 25 Crore : When Saina Nehwal-led Hyderabad Hotshots defeated Awadhe Warriors to win the inaugural season of the recently-concluded Indian Badminton League, the losers included the organiser, Sporty Solutionz, which finished the tournament with a loss of . 25 crore. “The total expenditure on the event was . 85 crore and we have been able to generate about 65-70% of that as revenues and the rest is loss,” says Ashish Chadha, the owner of Sporty Solutionz. The revenues include sponsorship fees from Vodafone, media rights, merchandise sales, gate collections and a fee of . 3.5 crore each from the six franchisees. Over the past year, Chadha tried to sell the concept to about 600 investors but ended up with just a half dozen of them willing to spare just a few crores. 

• Tata to launch diesel Nano by March 2014 : Homegrown auto major Tata Motors has said it will launch the diesel version of world’s cheapest car Nano by March next year. The company hopes that a diesel engine, which would automatically make the car the most fuel efficient in India, would help revive the fortunes of a brand that never lived up to the hype that preceded its 2009 launch. “The launch of the diesel version of the Nano is ahead of us.... in this financial year,” said Karl Slym, MD, Tata Motors. The Nano is currently available in the petrol option, priced between R1.45 lakh and R2.20 lakh (ex-showroom, Delhi). A diesel version costs roughly R70,000- 90,000 more than a petrol variant, which would put the Nano diesel at R2.2- 3 lakh — making it India’s cheapest diesel car. A CNG variant is slated for launch by next month.

• Fare rise won’t tide over ₹ depreciation impact : During July- September last year, air travellers had to fork out over ₹ 9,000 a ticket to fly between Delhi and Mumbai. But after Jet Airways offered limited tickets of ₹ 3,777 on the route in August this year, other airlines were forced to follow suit.The offer was not limited to these two metros. Jet offered over 700,000 seats, starting from ₹ 1,777 across sectors. As a result, the average fares on the DelhiMumbai route were ₹ 5,800 to 6,000 in August, nearly 30 per lower than last year’s. And the average network fares went down by 18 per cent from ₹ 5,500 in July- September last year to ₹ 4,500 this year across sectors.Yet with the depreciation of the rupee increasing costs of aviation turbine fuel ( ATF) and lease rentals, airlines faced financial pressure. Experts expects their margins and profits will be hammered in the September quarter. To redeem some of it, airlines have decided to increase their fares by 20- 25 per cent across the board.But the move will not create any magic on their profitability. It will only bring the fares back to this years early July levels. Or more or less in sync with what it was last year during the same time. It will not take care of the over 10 per cent escalation in their costs, mainly due to the rupee depreciation.

• Everstone eyes stake in designerwear brand Ritu Kumar : Everstone Capital has started early stages of discussions for acquiring 25- 30 per cent stake in leading designer, Ritu Kumar’s business, according to people in the know. A query sent to Ritu Kumar did not elicit any response, while Everstone’s spokesperson said the company could not comment on market speculations. Ritu Kumar, who has been awarded the Padma Shri in 2013, runs franchises and retail outlets under the label RITU KUMAR across the country. Her promoters are looking for a valuation of ₹ 300 crore for the company. The fast- growing designer wear market in India gives an attractive investment opportunity for private equity investors. Moet Hennessy Louis Vuitton or LVMH’s private equity arm, ‘ L Capital’, owns 40 per cent stake in Genesis, which sells leading designer brand, Satya Paul. L Capital was also reportedly in talks with top Indian designers, Rohit Bal and Sabyasachi Mukherjee to set up Indian luxury houses. L Capital had bought eight per cent stake in Indian ethnic wear chain Fabindia last year.

• Mexican theatre chain’s India foray derails as Indian MDs move court : The 15-screen multiplex at Pune’s Seasons Mall at Magarpatta City was supposed to be the launch of Mexican theatre chain Cinepolis’ entry into the megaplex or mega multiplex business in India.It was to be followed by the second megaplex in Thane’s Viva City (now called Viviana Mall) with 14 screens. These would have been the biggest such theatres in the country with ability to have 75 shows a day with a new movie being run every 10 minutes. But the dispute between the Mexican shareholders of Cinepolis and top leadership team, that set up Cinepolis India, has put a question mark on the future of these megaplexes.The ongoing dispute is between the Cinepolis India MD Milan Saini and joint MD Deepak Marda against the Cinepolis Mexican shareholders Alejandro Ramirez Magana and other shareholders as well as their management team of Javier Sotomayor, Miguel Mier.The Cinepolis brand was brought to India by Stanford University batchmates, Marda and Saini, in 2007 and they staked claim to be the co-founders of Cinepolis India. They were promised equity in Cinepolis India after five years of incorporating the business and this would have amounted to a 36% share in equity in Cinepolis India.The Mexican company changed their stance in March 2013 and questioned the applicability of the agreement. The Mexican company failed to allot this equity commitment and instead sacked Saini and Marda. The duo had gone to court and got the courts order to maintain status quo.

International:

• Force Motors to Go Ahead with . 1,000-Cr Investment : Commercial vehicle maker Force Motors on Thursday said it is going ahead with its . 1,000 crore investment which it announced last year despite the industry facing a slowdown. “We are going ahead with our . 1,000 crore investment despite challenging conditions prevailing in the industry,” Force Motors managing director Prasan Firodia told PTI. He added the company is investing the amount across its entire value chain including brand building and engineering. The company had last year announced investing . 1,000 crore in the next three years. When asked if the company is mulling increasing prices due to depreciating rupee, he said: “We are monitoring the situation. If the rupee continues to tumble like this than price increase would become inevitable.” 

• MS wins trial on Google’s patent licensing tactics :Google Inc’s Motorola Mobility didn’t act in good faith when it demanded patent royalties from Microsoft Corp ( MSFT) for use of video- compression and Wi- Fi technology, a federal jury said on Thursday. The jury in Seattle acted in its first day of deliberations.Microsoft was awarded about $ 14.5 million in damages, the Seattle Times newspaper reported in a blog post.“This is a landmark win for all who want products that are affordable and work well together,” David Howard, Microsoft deputy general counsel, said in an emailed statement. “ The jury’s verdict is the latest in a growing list of decisions by regulators and courts telling Google to stop abusing patents.” “We’re disappointed in this outcome, but look forward to an appeal of the new legal issues raised in this case,” William Moss, a Motorola Mobility spokesman, said in an emailed statement. The verdict could help the two companies resolve adispute over patent royalties for both fundamental technologies in electronic devices and features that make them easier to use. More broadly, the case is one front in a global debate on how to handle patents that relate to technology included in industry standards used by all manufacturers.

• Chinese airline fleets 'to triple in size' : China's airlines are likely to triple the size of their fleets over the next 20 years, US airline giant Boeing has forecast in its annual sales outlook.Boeing said strong economic growth and rising tourism in China would spur increased demand for aircraft.Boeing and European rival Airbus and are both looking to China for growth, with demand slowing in other areas.China's economy is growing at an annual rate of about 7.5%, according to official figures. That is slower than in previous years, but still much stronger than Europe, where economies are still emerging from recession, and the US.

• China's Anticorruption Campaign to Affect Luxury Brands : China’s anticorruption campaign, compounded by the watchful eyes of Internet users intent on exposing embarrassing cases of official excess, will push Chinese luxury-goods consumers toward more discreet brands and products. That’s according to industry analysts monitoring the impact of ongoing efforts of China’s new regime to tamp down corruption, alongside a high-level political purge of top officials, the likes of which have not been seen here for decades. The anticorruption drive has already cut into sales of some of China’s most lavish consumer items, including expensive liquor, imported luxury-brand watches and even sharks’ fins, a controversial delicacy used to make pricy soup. Going forward, the campaign is likely to change consumer behavior beyond government officials, drawing greater demand for high-quality items rather than showy labels and loudly branded products. Already many brands are toning down their offerings to the Chinese market and offering more exclusive products.

• August Retail Sales Pick Up Late : Retailers struggled to get kids into stores as students wrestled with the idea of going back to school last month, leaving most of those reporting with modest August increases.Among those releasing comparable sales on Thursday, there was general agreement that stores got much of their business late in the month, as Labor Day approached, and only after a combination of vigorous promotions and cooler temperatures established more of a sense of urgency about buying apparel. Thomson Reuters put the mean increase for the month at 3.5 percent.Among the small sample still reporting monthly results, Gap Inc. fell slightly below expectations, with a 2 percent increase that was just below the 2.2 percent increase tabulated by Thomson Reuters. The Gap and Old Navy brands, expected to grow 2.8 and 1.3 percent, respectively, registered comparable gains of 2 and 1 percent, while Banana Republic, expected to recede 0.4 percent, instead grew at a 2 percent clip.

• Old Navy to Open in Philippines : Gap Inc. said on Wednesday that it will open its first franchise-operated Old Navy stores in the Philippines in 2014.Franchising Old Navy units is a key to the brand’s international expansion strategy. Gap is partnering with Stores Specialists, which operate the Gap brand and Banana Republic stores in the Philippines market. Two Old Navy units will bow in early 2014 with plans for more stores by the end of the year. Sonia Syngal, senior vice president of Old Navy International, said the Philippines is considered a small to midsize market. “It will give us a nice sized business with 20 to 30 stores over time,” she said. “We think the  Philippines is the right place to start. We [Gap Inc.] have a proven track record there with a very strong partner we’re confident in.” Syngal called the Philippines “an important step in the brand’s international expansion.” Old Navy operates over 1,000 stores in the U.S., Canada and Japan and recently revealed plans to open stores in China in the first half of 2014.

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