Daily News Digest- 17th Dec'13

Thought of the Day:

Did you know?

Following made the Headlines:

India:

• GSK to increase stake in its Indian pharma entity: GlaxoSmithKline Plc announced on Monday a voluntary open offer to increase its stake in its publicly-listed pharma entity, GSK India from 50.7% to up to 75%, by investing nearly Rs 6,400 crore (£629 million). The offer at Rs 3,100 per share represents a premium of approximately 26% to the company's closing share price on December 13. The company's scrip rallied by nearly 19% to close at Rs 2927, after hitting its 52-week high of Rs 2,952 on the Bombay Stock Exchange. Coming close on the heels of its plans to invest Rs 864 crore at a fresh manufacturing facility, and its increased stake in the consumer business (GSK Consumer Healthcare) earlier this year, the development is a further demonstration of its ``long-term commitment'' to the country. Securities regulations in India require a minimum public shareholding of 25% for a company to maintain a public listing in the country. GSK intends to keep the company publicly-listed.

• Titan opens its 1000th store in the country: With the opening of its Watches and Eyewear store in Bangalore, Titan Company today said it has 1,000 stores across the country now. Titan has become the first Indian company with 1000 stores in seven varied formats under watches, jewellery and eyewear categories, the company said in a release. With a retail footprint across 177 cities, 26 states, 3 Union Territories, Titan said it has stores for Watches under World of Titan, Helios and Fastrack; Jewellery under retail brands Tanishq, Zoya, GoldPlus and Eye Plus for multibrand eyewear. Company Managing Director Bhaskar Bhat said, "With consumers and their buying habits at the core of Titan's strategy, the name of the game has been delivery of a differentiated experience. And that is what Titan's retail thrust is expected to do - make shopping of our brands enjoyable."

• Walmart gets CCI's approval to buy Bharti's stake in Indian JV: Global retail giant Walmart has got fair trade regulator CCI's green signal for purchase of Bharti group's almost 50 per cent stake in their Indian joint venture for wholesale stores business. The JV, Bharti Wal-Mart Private Ltd, was set up to operate wholesale stores under the Best Price Modern Wholesale brand and it presently owns 19 such wholesale cash and carry stores across India. It was not catering directly to retail consumers in the country. In an order released today, the Competition Commission of India (CCI) said the proposed buyout of Bharti group's stake in the JV by Walmart "is not likely to have appreciable adverse effect on competition in India and therefore, the Commission hereby approves the proposed" deal. After deciding to part ways in October, Bharti group and Walmart approached the CCI last month seeking approval for the deal wherein the US-based global retail giant would acquire the stake held by the Sunil Mittal-led business conglomerate in the venture. Earlier this month, the CCI had asked Walmart and Bharti Ventures Limited (BVL) to "remove certain defects and provide" certain additional details for the approval. The split between the two groups involves two inter-connected and inter-dependent transactions with respect to their businesses. The first is the acquisition of 50 per cent minus 515 equity shares of Bharti Wal-Mart Private from BVL and Cedar Support Services Ltd. The remaining shares are already held by Walmart and the purchase of additional shares would take its total holding in Bharti Wal-Mart Private to 100 per cent. The second transaction involves the acquisition of 45.58 crore compulsorily convertible debentures (CCDs) of Cedar by BVL from Wal-Mart Mauritius Holdings. BVL presently holds 100 per cent of Cedar's equity and after the transaction, the Bharti group would own a 100 per cent stake in Cedar without any CCD holding by Walmart. After looking into various aspects of the deal, the CCI said, "Presently, the parties to the proposed combination are not competing with each other in the markets for wholesale, retail or real estate services."

• Hershey India launches sweet brand 'Jolly Rancher' in India: Aiming to tap the growing Indian confectionery market, Hershey India, a wholly-owned subsidiary of The Hershey Company, will bring the iconic North American sweets brand 'Jolly Rancher' to the country. India is the first international market for the Jolly Rancher brand outside of North America in the brand's 65-year history, a press release said. The international expansion of Jolly Rancher in India and other iconic Hershey brands around the world is an integral part of Hershey's global growth vision to achieve $10 billion in annual revenue by 2017. The brand is known for a unique combination of sweet and tart fruity flavours. Jolly Rancher Lollipops will be the first Jolly Rancher candy introduced in India, the release said. It will come in three flavours: Green Apple, Watermelon and Mango. Mango was developed specifically for the Indian market. The three flavours have been tested with Indian consumers who gave them high scores for appeal and delivering uniquely bold, fruity flavours. "The Jolly Rancher brand is a perfect line of products for sweets-loving consumers in India," said Atul Razdan, General Manager, Marketing, Sweets and Refreshments, for Hershey India. Jolly Rancher Lollipops would immediately available in select outlets in metropolitan cities. The company is manufacturing the product in its Chittoor plant in India. The launch of Jolly Rancher brand in India will contribute to The Hershey Company's focus on global growth. The Indian confectionery market is one of the fastest-growing markets in the world with a strong double-digit annual compound growth rate of about 18 per cent.

• Denmark-based fashion house Bestseller to snap four-year ties with Indian partner Prashant Aggarwal: Denmark-based fashion house Bestseller — the owners of Jack & Jones and Vero Moda — is in the process of snapping its four-year old franchisee ties with its Indian partner businessman Prashant Aggarwal amid differences over the way the Indian partner handled businesses of its marquee brands in the country. Bestseller, owned by Danish billionaire Anders Povlsen and family, is in talks with other Indian companies for a tie-up for all three of its brands, two people familiar with the situation said. They said Povlsen was in India last week to formally initiate the process. Povlsen separately owns around 37 per cent stake in Bombay Rayon, a textile firm also promoted by Aggarwal. "Bestseller officials were upset with a few real estate deals that went wrong and impacted its bottomline severely," said one of the persons. Jesper Stubkier, a spokesperson for Bestseller in Denmark declined to comment saying the company does not comment on "market speculation." Aggarwal did not reply to an e-mail questionnaire sent to him. Povlsen also owns Bestseller Fashion India that supplies merchandise to Aggarwal-owned franchisee company Bestseller Retail India, which runs the nationwide network of Jack & Jones, Vero Moda and Only branded stores. "There is some degree of falling out and the general belief is that Prashant is moving out," said the chief executive of a rival company who said the business between Bestseller and Aggarwal is structured in a very complex manner. "Bestseller owns stake in Bombay Rayon and no one knows how the linkages are built," he said. While sales at Bestseller Retail India almost doubled to Rs 235 crore during FY13 against Rs 124 crore a year ago, the company posted a net loss of Rs 34 crore and hasn't achieved break-even yet. In comparison, Inditex Trent — the joint venture between Zara brand owner Inditex and Tata Group's retail arm Trent — clocked 56 per cent jump in sales at Rs 405 crore during the same period and is highly profitable. India's retail market, especially for western wear, has, over the past few years, attracted several brands from around the world that are banking on the country's young consumers to spur business. Consumption expenditure on apparel in the country is expected to increase 3.8 times to $225 billion over the next seven-eight years, according to a 2012 report by Boston Consulting Group. Experts, however, feel that performance of leading apparel retailers in the last five years have been marred by a high number of failures. "Players representing over 30 per cent of the total apparel retail space in 2008 have either closed down or sold their business. Retailers representing a further 22 per cent are currently struggling and are reducing the size of their business or actively looking to sell," said Deepak Sharma, co-founder at consulting firm Kanvic.

International:

• PMI surveys raise fears that France may be back in recession: The eurozone's recovery is continuing, a survey of businesses has suggested, but it has also revealed a widening divergence in economic performance between France and Germany. The latest purchasing managers' index (PMI) from Market rose to 52.1 in December from 51.7 last month. A figure above 50 indicates expansion. The eurozone as a whole has started to grow again after a long recession. But Markit's Chris Williamson said the recovery was "lopsided". These monthly surveys of business managers give an early indication of countries' economic performance. Germany's solid PMI reading of 55.2 underlines the country's central role in driving the improvement across the region. The country's manufacturing industry continued to gain new orders after a rather weak start to the year. The services sector also continued to expand.

• Amazon workers strike in Germany over pay: Employees of the internet giant Amazon are taking strike action in Germany in a long-running pay dispute. The Verdi union said workers were on strike at Amazon's logistic centres in Bad Hersfeld and Leipzig and also in Graben. The action coincides with the busy Christmas shopping period. Amazon employs more than 9,000 workers in Germany. Later on Monday, a delegation of German workers will also protest at Amazon's headquarters in Seattle. The union is planning further action on Tuesday in Germany in the town of Werne. Amazon said 640 workers expected on the early shift had failed to turn up for work and that the industrial action would have little or no impact on orders: "Our customers can continue to rely on us for the prompt delivery of their Christmas presents," said a spokeswoman told Reuters. The union said up to 700 workers joined the strike in Bad Hersfeld and another 200 had taken action in Leipzig. The Verdi union added that action at the Graben site - the first strike at that plant - had been well supported.

• Yahoo's Mayer apologizes for e-mail outage: Yahoo CEO Marissa Mayer has apologized for a massive e-mail outage last week, calling the days-long glitch "unacceptable" and a "massive inconvenience.""This has been a very frustrating week for our users and we are very sorry," Mayer wrote Friday on Yahoo-owned Tumblr as the company was cleaning up the last of a problem that began December 9 for some users. The problem was a hardware outage in one of Yahoo's storage centers. Mayer said it affected about 1% of Yahoo e-mail's users. While teams began working around the clock on the problem immediately, it was "a particularly rare one" in which different users were affected in different ways. That caused it to take longer to fix, she said. Service was restored to more than 99% of affected users by Saturday, although Yahoo's engineers were still working on the problem Sunday. "The engineering team has been working over the weekend and making steady progress on restoring access to messages for affected users. This includes folders as well as inbox state (like whether you've read a message or starred it)," said a post on Yahoo's help page Sunday night. Mayer took the helm at Yahoo last year and has been credited with the first steps of what may be a turnaround for the troubled Web giant. She promised improvements to Yahoo's e-mail service, which is the Web's second- or third-most popular, depending upon which analysis you believe. "Above all else, we're going to be working hard on improvements to prevent issues like this in the future," she wrote. "While our overall uptime is well above 99.9%, even accounting for this incident, we really let you down this week. "We can, and we will, do better in the future." Mayer made revamping e-mail a key part of her effort to kick-start Yahoo, but it's been a rocky process. Announced in December 2012, the first e-mail overhaul rolled out to all users (whether they wanted it or not) in June. So lukewarm was the reception that it got a largely cosmetic redesign again in October. The result? More outrage. Yahoo e-mail has suffered from other limited outages since October, although none as bad as last week's.

• Versace Narrows List of Investors: Versace has narrowed down a short list of investors that includes global private equity firm CCMP, Investcorp and Blackstone, according to market sources. “No final decision will be made before January,” said one source. The short list was cut down from a total of six offers, said another source. As reported, the Milan-based firm is looking to sell a 20 percent holding by the end of the year to finance future growth. Siblings Santo and Donatella Versace, who hold a 30 and 20 percent stake, respectively, and Donatella’s daughter, Allegra Versace Beck, who owns 50 percent, want to maintain control over the company. Versace had no comment on Monday.  Rumors about a possible sale emerged last year when Versace tapped Goldman Sachs and Banca IMI to evaluate growth opportunities. New York-based fund Blackstone emerged as an interested party in October. CCMP adviser Bob Singer sits on the Versace board and is a Gucci alum — as is Versace’s chief executive officer Gian Giacomo Ferraris. Bahrain-based Investcorp has also been rumored to be looking at the dossier. According to sources, Permira, Italian fund Clessidra, Paris-based Ardian and the IQ Made in Italy joint venture are no longer in the running.

• Carrefour to Create Shopping Mall Group: Carrefour said it had signed a memorandum of understanding with real estate investment firm Klépierre to buy 127 shopping malls in France, Spain and Italy for a total of 2 billion euros, or $2.7 billion at current exchange. The world’s second-largest retailer behind Wal-Mart Stores Inc. said it planned to create a company that will encompass a total of 172 shopping malls adjoining its hypermarkets in Europe. “With over 800,000 square meters of retail space, assets of 2.7 billion euros and a value-creating renovation and extension plan, the company will rank among the leading European shopping mall companies,” Carrefour stated. In addition to the 127 bought from Klépierre, Carrefour will contribute 45 malls in France with a value of 700 million euros, or $952 million. The 172 malls have a combined gross annual rental income of around 180 million euros, or $245 million. The company will be financed through 1.8 billion euros, or $2.45 billion, in equity, of which 42 percent will be held by Carrefour and the remainder by institutional investors, in addition to 900 million euros, or $1.2 billion, in debt. The transaction will be submitted for consultation to employee representative bodies and should close in the first half of 2014, pending final agreement between the parties and the approval of the relevant regulatory authorities.