Daily News Digest- 2nd Dec'13

Thought of the Day:

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Following made the Headlines:

India:

• Five Long Years After HSBC List, India Still Waits: Five years after a Frenchman walked out with 11 floppies containing information on secret Swiss bank accounts, the matter has turned into a battle of nerves between Indian tax authorities and Indian accountholders with HSBC Geneva. The income-tax department, which even last week sent a grim reminder to an individual in Mumbai that he was the beneficiary of an offshore discretionary trust, has taken a hard stand on the matter: it will not stop chasing the accountholders even if they admit the money lying in HSBC Geneva is theirs and offer to pay tax on it; the department will carry out assessment, slap penalties and initiate prosecution, a senior tax official told ET. But in taking the case to what the official and his bosses call its “logical conclusion”, tax officials will need more than tip-off from foreign sources and a list of accountholders names on a piece of paper — all that they have now. They have to get their hands on hard documents from HSBC that prove the 600-odd Indians in the list are indeed behind the numbered accounts. “The department is thinking of ways to obtain it…like, obtaining some confirmation from the British bank that documents have been shipped to clients. Once the department gets such a confirmation, it can direct individuals to hand over the documents. Some clients have indeed received boxes of bank documents from an address in Switzerland. But neither HSBC nor its clients have told the department about it, let alone sharing copies (of the documents),” a source familiar with the matter told ET. On the other hand, the accountholders, unsure how the story would unfold, are trying to figure out what could weaken the taxman’s case. They have fished out a 2011 ruling by a French court, which said a stolen document was an unlawful and inadequate evidence for conducting raids. The court in France had cancelled the search operation by tax authorities, but lawyers in India are divided on whether this could pose a hurdle for the Indian tax department.

• Asha Gupta is First Woman to Head Tupperware in Asia-Pac: Tupperware Brands Corporation has elevated its India MD Asha Gupta as group president of the Asia-Pacific region to oversee the American direct selling multinational’s operations in 15 countries, including India, China, Japan and Australia. “Asha will be responsible for driving growth and expansion of the entire Asia-Pacific region,” a Tupperware spokeswoman told ET. She will move to Singapore to take up her new responsibility with effect from January 1. Puneet Narula, deputy MD and CFO at Tupperware India, will succeed her as India MD of the Florida-based food storage container and beauty products firm. Gupta, the first woman and first Indian to lead Tupperware in Asia-Pacific, joins a growing league of India-born executives holding plum global roles in multinationals. Last week, top beverages maker Coca-Cola had named Atul Singh as group president of Asia overseeing operations of 21 markets, and earlier this year, top liquor firm Diageo had named Ivan Menezes as its CEO. Gupta joined Tupperware in 1997 to head sales in south India, when it was still a start-up, and steel, not plastic, was the sacrosanct storage option in Indian kitchens. Gupta started her career with textiles firm Coats Viyella (Madura Coats) in the threads division in the sales management function and has also worked with beverage maker Coca-Cola Middle East, where she was involved in launches of juices and energy drinks. Gupta spent three years at Tupperware Nordic, where she headed marketing of eight European countries, before returning to India in 2005 as the MD. She is Tupperware vice-president for Asia-Pacific. Tupperware is the second-largest direct selling company in India after Amway, with an all-woman sales force of over a lakh and 115 distributors. India is among Tupperware’s top 10 markets and its fastest growing, having increased its sales 38% last year against just 6% in the US.

• Travellers Ditch Goa, Eye Other Destinations: Shivangi Bose, a communications executive at a software consultancy in Mumbai recently dropped plans of celebrating Christmas in Goa, when she realised that a one-way airfare was going to cost her more than last year’s round trip ticket. Sreemoyee and Anindya Banerjee, both copywriters in an advertising agency in Delhi had been planning a trip to the city to celebrate their first wedding anniversary on December 27 and bring in the new year thereafter. They have now decided to spend a week in Meghalaya and Sikkim instead as the entire trip would cost them just a little over what a round trip airfare to Goa would. Sulakshana Ray, a marketing executive with Viacomm 18 doesn’t have that option. She had to attend a friend's wedding in January and has booked train tickets for one way, to save costs. These aren't isolated examples. Travel companies too are looking at a steep decline in bookings as people ditch the option of an expensive holiday at the coastal state and look at other destinations to enjoy their year-end holidays. Makemytrip for instance has seen a 44% drop in bookings on the Delhi-Goa route, the biggest fall in its list of key city pairs. In Mumbai-Goa too it has seen a fall of 16%. Among all sectors "Delhi-Goa has seen the steepest increase (in fares) at 27%, followed by Delhi-Bangalore at 12%. Not surprisingly, these are the two sectors with steepest drop in bookings too," said Rajesh Magow cofounder and CEO of the portal. A Delhi-Goa one-way ticket booked now for end December costs 10,415, up 27%. A Mumbai-Goa ticket, however, has only risen 6% to 5,668. For Riya Travels, one of the biggest offline travel agents in the country, the slump is much more prominent. In October and November, the agent sold only 244 tickets between Delhi and Goa for December, down 54% on year. On the Mumbai-Goa route, for the same period it sold 541 tickets, down 48% on year. The fall in bookings for Goa is obviously much higher than the overall slump.

• Pin numbers cut off card swipes on IndiGo: The central bank’s recent move to safeguard your debit and credit card usage by making a pin number mandatory for validating a transaction now threatens to leave flyers high and dry in the air. India’s largest airline IndiGo has stopped accepting credit cards for onboard payment as there is no technology to validate pin numbers in an offline mode. The change came after RBI asked banks to issue cards with chips that need a four-digit pin number to be punched in for validating a transaction. This has been done to make card usage safer. Bankers say they are trying to work out a mechanism for re-introducing swipe machines in the air. “An aircraft in air cannot verify pin numbers and hence cannot be used for transactions. We are seeing how this issue can be worked out,” said a bank official. Sources say IndiGo, the only Indian airline to offer card swiping, has even offered to accept the risk of any mistake for in-flight swiping. The no-swiping on Indian carriers comes at a time when internationally air travelers are being allowed to use more services on board. Many foreign airlines, which offer onboard telephone and wi-fi for passengers, complain that India is among the countries where they have to switch off these services while flying. Till about two years back, Indian carriers allowed passengers to switch on their mobiles only after a plane landed and its doors were open. The aviation safety regulator then allowed mobiles to be switched on when aircraft got off active runway post landing. This is in complete variance to the “opening of skies” in other parts of the world. The US recently allowed passengers to keep their electronic devices, except cell phones, switched on for most stages of a flight.  “The only modern thing allowed for flyers here is that people can show their e-tickets on their smart phones to check in. But baggage tags still need to be put on handbags and stamped after security checks at Indian airports,” said an airline official.

• FMCG firms tap the pot of gold in Bharat: It was an eye- opener for former Hindustan Unilever (HUL) managing director, Nitin Paranjpe, who has now moved on to a global role. At a village home in Tamil Nadu, Paranjpe found a sachet of Comfort fabric conditioner and thought the lady of the home might have mistaken it for a shampoo sachet and bought it to use it on her hair. “What do you use this for,” Paranjpe asked; the answer from the lady, “for my clothes”, came to him as a welcome surprise, demolishing the popular myth that rural consumers bought only low- end products. Paranjpe’s favourite story is now being played out in many more village homes across India. A host of other FMCG companies, including Coca- Cola, Dabur, Godrej, Marico and Emami, are facing a new reality: Rural consumers, armed with higher incomes, are now uptrading to more premium products, and into categories they rarely consumed earlier. The new push is being driven primarily by over 170,000 villages where household income is over ₹ 1 lakh a year. And, many FMCG companies are reaching out to them by creating a direct- distribution mechanism (instead of wholesalers only) for close to a third of these villages with population of more than 3,000. These account for 43 per cent of the rural FMCG potential, marketers say. Dabur India, for instance, is pushing products like Real range of juices (priced at ₹ 25) and Fem bleaching products (₹ 35) that were earlier sold only in urban markets. To deepen the market for packaged juices further, Dabur has now introduced a ₹ 10 pack of 125 ml Real juice. The strategy seems to have worked: As much as 5.5 per cent of Real’s total sales comes from rural markets.

• Facebook in talks for its first acquisition in India: Social networking giant Facebook is in talks to acquire Bangalore- based product start- up Little Eye Labs. Sources close to the development said the deal was expected to be announced in the next few weeks. It will be Facebook’s first acquisition of a product firm in India. It will also be a first for software product think- tank Indian Software Products Industry Roundtable (iSpirt), which has facilitated the deal through its M& A Connect programme, which helps Indian product companies find global buyers. Little Eye Labs builds performance analysis and monitoring tools that identify and fix performance problems for Android app developers. When contacted, Facebook said “no comments”, and an email sent to Little Eye Labs remained unanswered. Little Eye Labs is a start- up founded in May 2012 by four Bangalore- based programme analysis geeks — Giridhar Murthy, who has worked at Apple Inc earlier; Kumar Rangarajan, who has worked at IBM and HP; Satyam Kandula, an IIT Kharagpur alumnus; and Lakshman Kakkirala, who has also worked at IBM, besides Yahoo!. Rangarajan is currently the CEO of Little Eye. According to CrunchBase, a database of technology companies, Little Eye Labs has around seven employees, including Gaurav Lochan, who has earlier worked with Flipkart. The product company had earlier this year received investment between $ 100,000 and $ 200,000 from early- stage start- up incubator GSF Accelerator. GSF’s Brij Bhasin is an advisor to Little Eye Labs.

• Pakistan's Murree brand beer to add fizz to Indian market: Pakistan's known liquor company Murree Brewery has given a franchise to a Bangalore-based entrepreneur to bottle and sell its Murree brand beer in the Indian market. CEO of Murree Brewery, Isphanyar Bhandara, told TOI on Friday, "It was not permissible to export beer to India through Wagah-Attari border so we decided to offer our company's franchise to an entrepreneur in Bangalore to brew, bottle and market Murree beer in India. This will also strengthen trading ties between India and Pakistan. The product will hit the market soon." Bhandara said Murree Brewery produces beer, single malt whisky, scotch whisky, vodka and brandy. He said under the Pakistani law, Muslims are prohibited from consuming alcoholic drinks whereas non-Muslims and foreigners required consumption permits. "We sell our alcoholic products in five-star hotels only. Pakistan also prohibits export of alcoholic products. For now we are interested in finding distributors for our beer in India," said Bhandara about the company's business plans. Bhandara, a Parsi, said Murree beer will be made in India in the brewery of an Indian actor under their brand (Murree) and formulation. "Murree Brewery was established in Ghora Galli (a tourist mountain resort town in Galyat area of northern Pakistan) in 1860 in response to demand for beer by the British officers. It is the oldest running enterprise in Pakistan," he claimed proudly. "Indians may import onions and tomatoes from us but they are sceptical about buying beer from Pakistan since there is no dearth of fizzy drinks in India," said Bhandara. He said they were keen on finding distributors for Murree beer in India, especially in Punjab. 

• Khazana Group opens luxury furniture showroom in Hyderabad: Khazana Group, a leading furniture brand, Friday opened a new showroom here, bringing top global brands under one roof. Elevate, the luxury furniture and stylish kitchen showroom which has come up in the upmarket Jubliee Hills offers renowned global brands like Leather editions by Natuzzi, Alno from Germany, Italian sofas from Erba, home solutions from EGO Design and Milmueble from Spain. Bhawant Anand, chairman, Khazana Group, told reporters that they invested Rs.20 crore in 32,000 square feet showroom. The prices of the products range from Rs.1 lakh to Rs.1 crore. It is the third showroom of Khazana in the city and it plans to expand its operations to other cities. Natuzzi, the world's largest manufacturer of leather furniture, has 22 franchise stores in India with annual sales of Rs.100 crore, Nitin Behl, country manager, Natuzzi, said they plan to open another 15 stores in next one year. Natuzzi, which has retail presence in 123 countries, is a billion dollar company listed on New York Stock Exchange. Behal said the Italian company has its own forests in Romania to source the raw material. Alno is the second largest kitchen manufacturer in the world. The 85-year-old German firm, which had a turnover of 446 million Euros last year, has presence in 64 countries. Nadine Gindele, marketing coordinator, Alno, said they had nine showrooms in India and plan to open three next year. Alno, which has undertaken some projects at star hotels in India including ITC Green Tower Kolkatta, is offering a wide range of kitchens at Khazna showroom. The high-end kitchen is priced at Rs.1 crore.

International:

• Online sales soar in Black Friday two-day shopping frenzy: Online US shopping for Black Friday deals soared to $3 billion during a two-day period beginning Thursday, with tablets and cell phones as top must-have items, estimates showed Saturday. Online purchases reached $1.93 billion on Friday itself, the unofficial start of the retail sector's holiday season. That marked a 39 per cent increase over 2012, according to software maker Adobe, which analyzed 400 million visits on some 2,000 American shopping websites. Holiday shopping traditionally accounts for 20 to 40 per cent of an individual retailer's annual sales, according to the National Retail Federation. Early online Black Friday sales, which began on Thursday, the US Thanksgiving holiday, reached $1.06 billion, up 18 per cent from last year, according to Adobe. Technology giant IBM also reported increased numbers in overall online sales as it looked at 800 merchant websites. IBM said Internet sales jumped 19.7 per cent over last year on Thanksgiving and 19 per cent on Black Friday, with orders averaging $135.27, a 2.2 per cent increase compared to last year. Online shoppers may have been wise to avoid stores, with reports of fistfights, a stabbing and a shooting as people elbowed their way through crowded shopping floors to snatch heavily discounted items. Purchases of smartphones, tablets and other mobile devices accounted for 24.2 per cent of online sales, according to Adobe. Tablets represented 15.6 per cent of online sales while smartphones representing 8.6 per cent. IBM also found that mobile devices accounted for 21.8 per cent of sales. According to Adobe, of the $3 billion in total online sales over the two days, $417 million was done on iPads and $126 million was done on iPhones, while Android phones were used to buy $106 million in purchases and Android tablets accounted for $42 million. IBM said tablets were used for 14.4 per cent of online sales, against 7.2 per cent on smartphones. On average, tablet users each spent $132.75 and smartphone users spent $115.63. The company also found that iPad and iPhone users spent more, shelling out an average of $127.92, compared to $105.20 for users of Google's Android system. Adobe agreed that Apple users spent more than people using Android devices. IBM also said purchases made from Apple devices accounted for 18.1 per cent of total online sales, against 3.5 per cent for Android devices. IBM and Adobe did not examine in-store purchases. According to initial estimates of in-store sales released Saturday by retail research group ShopperTrak, Americans spent $12.3 billion during shopping over the two-day period, a 2.3 per cent increase from the same timeframe in 2012. According to the firm, stores that opened on Thursday -- a new trend transforming the sacrosanct Thanksgiving holiday -- attracted more people than last year. Traffic in brick-and-mortar shops on Black Friday, however, fell 11.4 per cent, with retail sales decreasing by 13.2 per cent.

• L Capital Buys 40% of Australia's 2XU: LVMH Moët Hennessy Louis Vuitton-backed L Capital Asia has bought 40 percent of Melbourne-based technical sportswear manufacturer 2XU, making its second investment in Australia in eight months. The Australian company and its existing equity partner Lazard Australia Private Equity announced the news Monday. They did not dispose a price for the deal but sources said the stake is worth approximately 75 million Australian dollars, or $68.3 million at current exchange. “2XU signifies a winning proposition of best in class product preferred by Pros across varied sports, with design and innovation rooted in Australia, one of the world's most active countries, coupled with an extremely passionate and driven management team," said L Capital Asia managing partner Ravi Thakran. "We firmly believe that the combination of this strong proposition, with our unique approach to performance enhancement across our portfolio companies will help the brand in achieving its full potential as a strong, globally recognized performance sportswear brand." Founded in 2005 by former Australian advertising executive turned mens underwear manufacturer Clyde Davenport and two New Zealanders, Jamie Hunt and former professional triathlete Aidan Clarke, 2XU (pronounced “Two Times You”) operates 12 standalone stores within Australia, two in the US and wholesales to 50 markets. The company claims to have achieved revenue growth in excess of 40 percent per annum over the past five years. The product range was developed in partnership with the Australian Institute of Sport and RMIT university and customers include Triathlon Australia, Yachting Australia, the Melbourne Ballet Company, Tennis New Zealand and the US military, including the Navy Seals. The brand’s compression wear, which accounts for 50percent of sales, has become increasingly popular with mainstream consumers, with 2XU’s signature  "X"-emblazoned compression tights seen in gyms, yoga classes and running tracks Australia-wide. In November 2011, Lazard Australia Private Equity acquired a 30 percent stake for 26 million Australian dollars, or $27 million at exchange rates of that time, according to Lazard Private Equity Australia director Gareth Young. He said that 2XU expects to achieve sales of 65 million Australian dollars, or $59.2million, in the 2013-2014 financial year. In April this year, L Capital Asia acquired a 49.9 percent stake in Australian bush outfitter RM Williams for an estimated 50 million Australian dollars, or $52.5 million at exchange rates of that time.

• Amazon U.K. Ramps Up Fashion Offer: Amazon.com in the U.K. is staking its claim on the country’s apparel market. The Internet retailer said Sunday that in the week of Nov. 24 to 30, customers ordered more than 1 million items of apparel from amazon.co.uk, making it the site’s biggest week to date for fashion sales. The disclosure comes one year after the launch of the retailer’s premium fashion store, at amazon.co.uk/premium. Among the brands sold on that site are Seven For All Mankind, Joseph, Pringle of Scotland and Hoss Intropia, while labels such as Debenhams, American Apparel and French Connection sit on the retailer’s main fashion pages. Sergio Bucher, vice president of EU fashion at Amazon, said that the retailer has added 50 new brands over the past year, including Emporio Armani, French Connection and Hoss Intropia, and noted that fashion is one of the site’s “fastest growing businesses,” with the retailer set to add more brands in 2014.  Amazon has 35 million customers shopping for clothes globally, the firm said, and Christopher North, managing director of Amazon.co.uk Ltd. added that the retailer is “committed to working with fashion brands of all sizes to provide a high quality, virtual shop window.”

• Walk In My Closet Launches In Europe: According to Ambre Dahan, co-founder of Walk in My Closet, there is an estimated 148 billion euros, or $201 million, worth of unworn clothes languishing in closets around the world – and she wants to sell them. Dahan says that of the 212 billion euros, or $288 billion, spent on luxury goods in 2012, just 30 percent of items will be worn one year after purchase. Walkinmycloset.com, which has just launched in Europe, is packaged as a “luxury consignment destination and virtual fashion diary.” It features a luxury fashion resale service that employs a team of experts that verify each item’s authenticity and ensure that it matches the needs of a demanding customer. Unlike competitors such as Vestiaire Collective or Covetique, Walk in My Closet offers a curated lineup. It states on the site that it accepts only the “best in luxury pre-owned designer fashions” and points out that “not all selling requests can be accepted.” Items are photographed in-house and the site charges a 25 percent commission on items, which include pieces such as a pair of near-perfect Chloé Susanna studded boots for $672, which will retail at about $1,345 new. A pair of Alexander Wang sandals is available for $268. The section can be shopped according to designer, size, gender (men are occasionally invited to become “influencers”) or country. Amandine Rohmer, co-founder of the Web site, said its average basket size was increasing and that there were few returns because of its high quality-control measures. The site has other featuress. A frequent traveller – she is married to Joe’s Jeans founder Joe Dahan and is the denim brand’s design director – Dahan needed a way to catalogue her wardrobe in order to make packing and wardrobe planning easier. In a way similar to Pinterest, users can upload pictures of the items in their wardrobe, or use a button on a browser to add online pictures. A “C” (for “Clique”) button can be added to bookmark bars to facilitate this and wardrobes can be private or shared with a “Clique”.

• David Cameron promises China 'growth partnership': David Cameron has promised to create a "partnership for growth and reform" as he visits China on a trade mission with more than 100 UK business leaders. The prime minister also pledged to put his "full political weight" behind a proposed agreement to free up trading between China and the European Union. He is due to hold talks with premier Li Keqiang on a separate China-UK deal said to be worth £1.8bn a year. Some EU states fear a flood of cheap imports if a wider pact is approved. However, the European Commission is due to begin investment treaty negotiations in the New Year. Meanwhile, Labour leader Ed is to warn the government not to compete with China in a "race to the bottom" on pay, but to focus on creating a "high-skill, high-tech, high-wage" economy.