Daily News Digest- 20th Dec'13

Thought of the Day:

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Following made the Headlines:

India:

• Kejriwal Bites the Bullet, to Form Govt: Aam Aadmi Party, which has created a nationwide stir by winning 28 of the 70 seats in Delhi in a stunning debut, is likely to form the government next week. AAP, which is carrying out a referendum to get “a sense of what the people want”, is expected to announce its decision on Monday. Its assertive founder Arvind Kejriwal, credited with changing the political discourse in the country, told ET that “the people want us to deliver” and providing “effective governance is no rocket science”. The decision to form a minority government backed by Congress, which has eight MLAs, is driven by the overwhelming response from people who want AAP to assume power in Delhi and deliver effective governance. Kejriwal said more than 75% of people in the Capital want AAP to assume office. “Forming the government and delivering on our promises will reap huge benefits for AAP in Lok Sabha polls.” Asked if his party would form the government in Delhi now that Congress has extended unconditional support, Kejriwal said: “We will take a final call after our ward meetings through the weekend, but there is an overwhelming support and pressure from people.”

• Diplomacy to Finally Win in Diplomat Row with US: India and the United States may reach an arrangement that will allow both sides to manage a face-saving exit from the seemingly inflexible positions they have been forced to adopt over the arrest of diplomat Devyani Khobragade on visa rule violations in New York. The first signs of easing tension came from US Secretary of State John Kerry, who called National Security Advisor Shivshankar Menon on Wednesday to express regret over the episode that threatens to undermine years of careful diplomatic efforts to build up the relationship between the two countries. With Kerry set to speak with External Affairs Minister Salman Khurshid on Thursday night, the effort to smooth things over can be expected to continue. Khurshid sounded conciliatory when he spoke to reporters on Thursday, stopping short of demanding an apology from Washington over the incident. “I will have a word with Kerry on Thursday evening. It is unfair to presume the motive. This should not affect Indo-US relations. Let me first talk to John Kerry about the case, let’s not create unprecedented scenarios… This is not the US position, this is the position taken up by somebody there,” he said. “Why don’t we give a chance to conversation? Why are we thinking that the entire relationship which we built up over the past so many years will be destroyed because of just one incident?” Khurshid said. Parliamentary Affairs Minister Kamal Nath still sounded implacable. “An apology from America, acceptance of their fault is what we will be satisfied with,” he said.

• PepsiCo’s New Boss Shivakumar Serves it Piping Hot to Employees: PepsiCo’s new India head D Shivakumar told employees that the company “cannot afford to lose a day” and called for “relentless execution”, drumming up enthusiasm among staff in the battle for market share with Coca-Cola and other rivals as he takes over the local unit of the beverage and snacks maker that has been without a chief executive for about half the year. “We are a daily market share business much like newspapers, milk, cigarettes and airline seats. These industries cannot afford to lose a day. Hence, the key is relentless execution,” Shivakumar said in a letter to employees that ET has seen. 2014 is a “must-win” year for the company, he added. “We need to give it all we have.” The note tries to send out a positive signal, said two midlevel employees who didn’t want to be named.

• Samsung Revamps Top Deck, Fills it with Korean Execs: The country’s largest consumer electronics and mobile phone maker Samsung India has revamped its top management with Korean executives taking complete control of the top deck. The Korean firm has appointed SK Kim as the new managing director of Samsung India, with a single mandate to grow sales of televisions, home appliances and mobile phones. With this, Samsung India integrates the sales function of its television, home appliances and mobile phone business. Kim was earlier the senior VP of Samsung India, jointly leading the consumer electronics business with Atul Jain. Jain has now been made the head of business innovation for Samsung South-West Asia operations, covering markets like India, Bangladesh, Nepal and Sri Lanka. In his current role, Jain will be responsible for innovation in sales and channel strategy and will not have a direct responsibility for sales or marketing. Jain and Kim’s erstwhile role is now taken by over by JS Ham, who will single handedly head the consumer electronics and home appliances business. The only Indian in the top deck, Vineet Taneja, who heads the mobile phone and digital imaging business of Samsung India, will now report to Kim. Taneja used to earlier report to Samsung India and South West Asia president & CEO BD Park, who was also the de facto managing director.

• Nike Bets on Concept-based Stores to Tap More Market: Nike India is setting up concept-based stores in India to garner more share in the sportswear industry valued at 3,500 crore, Nike India Marketing Director Avinash Pant said. The company, which has about 3,000 touchpoints across the country, inaugurated a concept-based store — Nike House of Cricket on Thursday. This was the third in the country; Nike India has opened similar concept stores with PlanetSports in New Delhi and Mumbai.

• Call Quality Falls as Telcos Shut Cell Sites: Consumers are experiencing an increase in failed and dropped calls as telcos shut cell sites to cut costs and slash capital expenditure on upgrading networks while the government’s stiff radiation norms impose restrictions on the network coverage of these companies. Analysts add that operators are spending most of their capex to beef up their 3G network, which is mainly used for premium data services, rather than on 2G, which is primarily used for voice. “India is a spectrum starved country with these strict (emission) norms coming in. So, one way to beat the odds is to invest more in the cell sites but companies have typically begun to invest lesser and lesser on their networks since the investments don’t yield adequate returns,” said Prashant Singhal of consultancy firm EY. “The tariffs have hit rock bottom and it typically pays off more to invest on a 3G cell site for better data transmission than on 2G for voice transmission,” he added. A cell site sends and receives radio signals from a mobile phone. A large number of them put together form a cellular network, be it 2G, mainly used for voice, and 3G, mainly used for high speed data. Increasing or decreasing the number or power of these sites affects the strength of the cellular signal, thus affecting service quality. A top executive at Bharti Airtel, India’s No. 1 operator, said that the company’s focus had shifted towards expanding the 3G network instead of the 2G network would become a legacy network in the next four to five years. Jaideep Ghosh of KPMG added that the rate of growth of the BTS sites, especially those supporting the 2G network, had slowed down considerably in the last few years. Telecom operators, hit by years of competition which forced call rates to drop to levels among the lowest in the world, are betting on data services in a bid to regain some financial health. With intense competition driving down call rates and hitting profits, capex spending has taken a hit too. Telecom tower operators have faced the brunt, slowing expansion, and even taking down some towers where tenancy ratios are low.

• SBI, HDFC reduce home loan rates: Two of the country’s largest lenders, State Bank of India and HDFC, have cut home loan rates in a surprise bonanza for borrowers who earlier this month saw interest rates inch up. SBI, for the first time, has offered better loan deals to women borrowers. This move, the bank says, will empower women by increasing their share in home ownership. A day after RBI governor Raghuram Rajan decided to hold rates, SBI said that its home loan rates for up to Rs 75 lakh have been reduced from a high of 10.5% to 10.1% if there is a woman borrower involved. Home loans where a male is the sole borrower will incur 10.15%. HDFC, meanwhile, said that it has launched a “Winter Bonanza” for home loan customers effective Friday under which loans up to Rs 75 lakh will be available at 10.25% as against 10.75%. The mortgage company said that the new rates are valid for all new applications submitted before January 31, 2014. The lower rates will be available only to new borrowers since there has been no change in the benchmark rates. In the case of SBI, new borrowers will see their rates change when the bank revises is base rate. In the case of HDFC, the benchmark is the prime lending rate or PLR. SBI had hiked its base rate to 10% from 9.8% in November. HDFC had hiked its prime lending rate by 10 basis points to 16.75% on December 1 this year. In a statement, SBI said that under the revised rate its EMI per Rs 1 lakh for a tenure of 30 years will be Rs 885 for women borrowers and Rs 889 for others against the prevailing EMI of Rs 900. “We had scheduled a meeting of our asset-liability management committee on Thursday to take a view on rates after the RBI policy. Since there was no change in rates, we have launched this special scheme which we usually launch in the second half,” said Keki Mistry, CEO and vice-charirman, HDFC. He said that the corporation had his week reduced interest rates on 15-month deposits. SBI’s discounts for women are available on both individual and joint loans where the woman is the first borrower. Another change common to both lenders is the offering of a flat rate for loans up to Rs 75 lakhs. Earlier both offered differential rates for loans above Rs 30 lakh. Until Thursday’s revision, SBI offered home loans up to Rs 30 lakh at 10.3% and higher amounts at 10.5%, while HDFC offered loans up to Rs 30 lakh at 10.5% and higher loans at Rs 10.75%. Bankers said that one reason for the merger of the maturity baskets was that RBI had revised the risk weightage on home loans.

• Carrefour opens its cash & carry store in Bangalore: The Carrefour Group today announced the opening of its first cash and carry store in the southern region in Bangalore. The store under the name 'Carrefour Wholesale Cash and Carry', will offer more than 10,000 SKUs in food and non-food to business and professional customers, institutions, restaurants and local retailers and traders. The store has created employment opportunities for the local residents in the city itself by hiring more than 170 employees, Carrefour said in a statement. With the Bangalore opening, Carrefour WC&C India Pvt. Ltd. has five stores including those in New Delhi, Jaipur, Meerut and Agra.

• Game4u ties up with Hamleys to open SIS formats in Delhi and Bangalore: Game4u, the retail arm of Milestone Interactive Group, and multi-channel retailer of PC and video games, game consoles and related accessories, has expanded its retail footprint to Delhi and Bangalore. The Shop-in-shop within Hamleys known retailers of toys, will offer the latest and the widest range of PlayStation, PC and Xbox 360 Games and related accessories. The stores will start operations in DLF Place, Saket New Delhi and at Phoenix Market City, Bangalore in December 16 and 19, 2013 respectively. Commenting on the launch of the new stores, Jayont R Sharma, Chairman and CEO, Milestone Interactive Group, stated "Our decision to enter the Delhi and Bangalore market is backed by the increasing consumer demand of our target group in these markets. With Game4u's entry into Delhi and Bangalore, we extend our association with Hamleys and continue providing best-in-class products and services to our customers in these cities. Currently, Game4u has presence in 11 retail stores (8 standalone and 3 shop-in-shop) in India with presence across 5 cities. 

International:

• US Retailer Target says Data from 40 Million Cards Stolen: Target Corp said data from about 40 million credit and debit cards might have been stolen from shoppers at its stores during the first three weeks of the holiday season, in the second largest card breach at a US retailer. The data theft, unprecedented in its ferocity, took place over a 19-day period that began the day before Thanksgiving. Target said on Thursday that it identified and resolved the issue on December 15. Though smaller than the breach disclosed in March 2007 by TJX Companies Inc, parent of apparel chains TJ Maxx and Marshalls, the data theft took place over a much shorter period and hit shoppers at the beginning of the US holiday season. Target said the breach might have compromised accounts between November 27 and December 15, a period of nearly three weeks. The data theft revealed by TJX took place over 18 months, affecting 45.7-million payment cards, according to the company. Banks later said in court documents that the hackers could have obtained more than 94 million account numbers in the TJX case. On Thursday, Target told customers in an alert on its website that the criminals had stolen customer names, payment card numbers, expiration dates and their CVV security codes. “On December 15, we were able to identify an unauthorised access and we were able at that time to resolve the issue,” Target spokeswoman Molly Snyder said by telephone. Krebs on Security, a closely watched security industry blog that broke the news on Wednesday, said the breach involved nearly all of Target’s 1,797 stores in the United States and investigators believed the data was obtained via software installed on point-of-sales terminals used to swipe magnetic strips on payment cards. It is not yet clear how the attackers were able to compromise point-ofsales terminals at so many Target stores. "It is very clear it is a sophisticated crime," Snyder said. The US Secret Service is working on the investigation, according to an agency spokeswoman. A Federal Bureau of Investigation spokeswoman declined to comment.

• McDonald’s Japan Shuts 74 Outlets, Cuts Profit Outlook: McDonald’s Japan business plans to close 74 outlets in the country as the fast-food operator cut its full-year profit forecast by more than half in its second-largest market. Net income will probably be 5 billion yen ($48 million) in the year ending December, 57% lower than its previous forecast, McDonald’s Holdings Co Japan said in a statement to Tokyo’s stock exchange on Thursday. That compares with an average estimate of 9.53 billion yen from three analysts compiled by Bloomberg. The company had 3,170 outlets in Japan as of the end of October. The earnings shortfall came after sales fell for five straight months through November in the world’s third-largest economy, said McDonald’s Japan, about 50% owned by Illinois-based McDonald’s. “The number of customers during the first quarter was ‘‘well below the company’s expectations”, McDonald’s Japan said.

• Mary Kom is Vodafone’s global brand ambassador: Beginning next year, Indian boxing champ Mary Kom will become the global brand ambassador for British multinational telecom company Vodafone. The London Olympic bronze medallist from Manipur has not only knocked out other Asian contenders for the role, but she has also dealt a severe body blow to the widespread Indian prejudice that fails to look beyond cricket for multi-crore celebrity-endorsements. According to people familiar with the development, the diminutive Kom, a five-time World Boxing champion and mother of two, has been shortlisted from a group of at least 25 other Asian athletes for Vodafone’s new social media-led brand engagement strategy ‘Vodafone Firsts’ that will be activated across up to 30 countries. When asked about the details of the relationship, a Vodafone spokeswoman from London refused to comment. “We will share more information closer to the launch,” she said. In what may come across as a strange turn of fate, Vodafone will activate its first ‘First’ services in London early next year, the city where Kom won her first Olympic medal. “At the launch, Vodafone will help create the world’s first multi-sensory fireworks display, in partnership with the mayor of London and food scientists Bompas & Parr,” the telecom giant said in a statement. “Meanwhile, a free Vodafone augmented reality smartphone app will enable millions more to join in the experience, wherever they are.” According to Vodafone Group brand director Barbara Haase, the ‘Firsts’ concept is simple. “We know that our technology can enable and inspire people to do something amazing for the first time, from making their first call to sharing their first video. Firsts is designed to reflect that sense of empowerment by using our technology and connectivity to enable a diverse range of people to achieve their remarkable ambitions.”  “Vodafone has made a good choice. Many people, even those who don’t follow boxing, will identify with the Mary Kom story,” says Santosh Desai, brand expert and CEO & MD of Futurebrands India. “In a sport with no money, she has shown a lot of grit. Despite being a mother of two and coming from a so-called backward part of the country, she has shown class at the highest level.”

• Sycamore to Buy Jones: The Jones Group Inc. agreed to sell itself to private equity firm Sycamore Partners for $15 a share. Jones, a fashion mainstay with $3.75 billion in sales and 35 brands, has been needled by investors to boost growth. The company hired Citi over the summer to explore its options. Many would-be buyers, including G-III Apparel Group, kicked the tires at Jones during the process. The deal brings Sycamore, which was advised by Guggenheim Securities, considerable heft and a new profile in the industry. The private equity firm is run by managing director Stefan L. Kaluzny, 47, and already controls Hot Topic, Talbots and a sourcing business.

• Mark Briggs Added to Saks Exec Team: Marigay McKee doesn’t officially start as president of Saks Fifth Avenue until Jan. 6, but she’s already recruiting talent. WWD has learned that Mark Briggs is coming on board as chief marketing officer, effectively a new position at Saks that will give him broad responsibility for creative, visual merchandising and marketing. He takes over duties previously held by Denise Incandela, former cmo, and Terron Schaefer, former chief creative officer, and has additional responsibilities. Briggs and McKee are both former executives of Harrods in London, where they worked closely together for about the last 14 years. Briggs will join Saks in March and report to McKee. “He is one of the most creative people I have ever met,” McKee told WWD. “He’s exceptionally visual. He has great taste, and more importantly he is a visionary. He puts together amazing collaborations, fantastic visual schemes for the windows, scenes throughout the store, monthly plasma screen strategies, monthly mannequin strategies, promotional sites. The creative strategy, the marketing strategy; it all came from Mark. He made the fantasy happen.” Briggs has a reputation for drama. In one of his biggest productions, he closed the streets of London to celebrate the Queen’s 60th year on the throne, brought dozens of employees outside to sing a rendition of “God Save the Queen” and had world-famous jewelers including Tiffany and De Beers create versions of the regal headpiece.