Daily News Digest- 3rd July'14

Thought of the Day:

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Following made the Headlines:

India:

• Facebook looks to tap India’s online ad market: Sheryl Sandberg: Facebook, the world’s largest social networking site, plans to tap India’s online advertising market by signing more partnerships and making heavy investments in the country, as part of a global strategy to focus on emerging Internet markets such as India to offset user saturation in mature markets such as the US. In her first visit to India as a Facebook executive, chief operating officer Sheryl Sandberg also said that the Menlo Park, California-based company is in the process of monetizing its business in India, having brought at least 900,000 small and medium businesses online. “Globally one of the best ways we take people and get them to be paying customers is (that) they start using pages and then up-sell into advertising. We’re already seeing that happen in India,” Sandberg said in a discussion with reporters. Even as Facebook attempts to convince more companies such as Hindustan Unilever, Coca-Cola and PepsiCo to spend more advertising dollars, the social network is also making “serious investments” in drones and satellites that will deliver Internet services to third-world countries.

• Apollo Tyres to invest $340 mn to upgrade facilities: Apollo Tyres on Wednesday said its board has approved a proposal to invest $340 million (around Rs.2,025 crore) to upgrade its manufacturing facilities at Chennai and Kalamassery (Kerala). Besides, the company’s board which met on Wednesday, also gave its nod to seek shareholders’ approval to raise $200 million (around Rs.1,191 crore) via issue of securities to pursue organic growth opportunities and for other corporate purposes, Apollo Tyres said in a statement. The board approved expansion of the truck and bus radial tyre capacity at the company’s Chennai plant from the present 6,000 tyres per day to 8,900 tyres per day. “The board noted the improved demand outlook and the fact that the current Chennai project is generating returns ahead of projections,” it added. The board also approved conversion of the company’s leased operations at Kalamassery plant from bias truck tyres to speciality, industrial tyres. “The company estimates a capex of $340 million (Rs.2,050 crore) for these projects,” Apollo Tyres said.

• Diageo buys fresh 26% in United Spirits for Rs 11,449 crore, gains control: Succeeding in its second attempt to gain controlling stake in United Spirits, world's largest liquor maker Diageo Plc has acquired an additional 26 per cent shares in India's largest alcoholic beverages company for Rs 11,448.91 crore. UK-based Diageo paid Rs 3,030 for a share of United Spirits Ltd (USL), more than double of Rs 1,440 it offered in the previous bid last year. Shares of USL, the flagship company of Vijay Mallya-led UB group, today closed at Rs 2,486.55 a share, up 2.93 per cent from its previous close on BSE. Diageo through its wholly-owned subsidiary Relay BV has accepted the tender of 37,785,214 shares in United Spirits Ltd (USL) at a price of Rs 3,030 per share under the tender offer announced on April 15, Diageo Plc said in a statement.

• Panasonic launches new range of top load washing machine: Consumer durable major Panasonic today introduced new range of fully-automated top load washing machine equipped with the aquawave pulsator. The Osaka-headquartered company is aiming to acquire 10 per cent market share in top load washing machines segment with a 150 per cent growth. The company today launched twelve models under three sub categories Eco Plus, Eco Super and Econavi with capacity ranging from 6.2 kg to 14 Kg pricing betwen Rs 17,250 to Rs 44,990.

• HP India cautions against buying from unauthorised e-commerce channels: After Asus and Lenovo, Hewlett Packard India has now joined the band of technology firms advising customers to be cautious while purchasing devices from unauthorised e-commerce platforms and online shopping sites. The US-based computer maker has advised consumers to purchase PCs, laptops and tablets through its authorised channel partners and its own online store. The firm said the "predatory pricing" is hurting the industry and it is working with industry bodies like MAIT and Nasscom to ensure a right framework of policies. "We have already issued an advisory on what we can do and what we can't do with these partners (channel partners). We advised people to work through our officially registered channel partners. That's a very strong advisory we have issued to the market," HP India VP and General Manager Printing and Personal Systems Group Rajiv Srivastava told PTI.

• Hampshire adds apparel brand Gramicci to portfolio: Hampshire Group, Limited announced that it entered into a license agreement with Gramicci, a California-based hiking and climbing-inspired brand owned by Hampshire Group's Chief Executive Officer, Paul Buxbaum. The three-year agreement provides Hampshire with licensing rights to design, develop and produce Gramicci brand men's and women's apparel, which is sold in retailers, as well as through its ecommerce website. "Gramicci is an excellent new addition to Hampshire's portfolio,, commented David Price, Hampshire's Chief Operating Officer. "The brand is well known among outdoor enthusiasts and advances our strategy of diversifying our product offering, distribution channels and customer base. We expect both gross and operating margins generated by the Gramicci business to exceed the brand's historical levels as its profitability benefits from operating leverage on Hampshire's infrastructure and sourcing expertise.,

• Kraft jacks up price of premium Gevalia coffee: Kraft Foods Group Inc will push up the price of its premium Gevalia brand coffee by approximately 7 percent, effective July 28, due to sustained increases in the green coffee market, a spokesman said on Tuesday. While the retail price of the Gevalia 12 oz retail bagged coffee will be much higher, Gevalia single-serve cups, Gevalia e-commerce SKUs and Tassimo Gevalia T Discs are not included in the price increase, Russ Dyer said in an email. New York arabica futures have gained more than half this year on uncertainty over drought damage to crops in main coffee producer Brazil.

• With $5.08 mn salary, Infosys’ Vishal Sikka is highest paid CEO in Indian IT: Infosys Ltd, India’s second-largest software services provider, will pay its new chief executive officer (CEO) Vishal Sikka as much as $5.08 million (around Rs.30.48 crore) in annual salary and stock options worth $2 million, the company said in a circular, even as it called for an extraordinary general meeting of company shareholders on 30 July at Bangalore to approve the appointment of Sikka as the new CEO. Sikka, 47, will take charge on 1 August, replacing S.D. Shibulal. According to the circular, Sikka will be paid an annual base salary of $900,000 and annual variable pay of $4.18 million, besides being eligible to receive an annual stock option equal to $2 million in value. Sikka’s total compensation package of $7.08 million, including stock options, is much lower than the $18 million that Microsoft Corp. pays to its chief executive, Satya Nadella, $16.2 million that IBM Corp. CEO gets and $14.4 million paid to the Citibank CEO.

• Facebook happy with app, rules out developing a phone: Facebook chief operating officer (COO) Sheryl Sandberg on Wednesday said the company was not looking to enter the phone market and would continue to compete in the smartphone industry by using its ubiquitous app. “We are the number one thing that people do on their phones in almost every country in the world and I don't think we need to make hardware for phones,“ said Sandberg. “We are doing very good with the software-based products.“ Sandberg said in terms of engagement, people in the US spend more time on Facebook app on their smartphones compared to any other app. Sandberg, however, admitted that Facebook missed the smartphone revolution in the beginning. “Mobile transition was difficult one for Facebook. We started as a desktop company but now we are fully mobile company... (Facebook) is the number one mobile application in almost every market in the world,“ she said.

• DoCoMo Yet to Hang Up on Tata Tele: NTT DoCoMo is yet to sell its 26.5% stake in its telecom joint venture with Tata Group, the Japanese company said, two days after the expiry of a June-end deadline that Japan's No. 1 carrier had set for exercising its option to exit Tata Teleservices. “We have not yet exercised our option for sale of Tata stake. We will make an announcement after the transaction is concluded,“ Hiroko Shimoyama, a spokesperson for NTT DoCoMo, said in response to queries from ET.NTT DoCoMo0 had said in April that it has decided to “exercise option for the sale of the company's entire stake in Tata Teleservices Limited as soon as the conditions for such exercise are met.“ If Tata Teleservices fails to achieve performance targets by March 31, 2014, “DoCoMo plans to exercise the above-mentioned right in or before June 2014“, the Japanese company had then said. DoCoMo's spokesperson did not elaborate further, and it's not yet known if the deadline is being extended. In a sign that NTT DoCoMo may be preparing to exit, Koji Ono, a non-executive non-independent director at Tata Teleservices (Maharashtra) Ltd, resigned on June 30, as per a stock exchange notice.

• HP Plans to Double Retail Presence to 1,200 Cities: When the Uttar Pradesh government announced a plan to distribute to laptops to students in the state last year, it was a shot in the arm for HP, the company that won the nearly ` . 2,800 crore contract to provide the laptops. The contract helped HP grab the largest share of the computer market in India -more than 32% in the second and third quarter last year, according to research firm IDC. HP, which originated the founded-ingarage creation story beloved by Silicon Valley startups, has had a tumultuous few years. The company, which is planning to cut as many as 50,000 jobs globally , is now on its third chief executive in four years. But in India, HP has a different story to tell. The hardware-to-services player is the largest technology company in India based on its revenue from the country . According to Dataquest Top 20, the company had revenue of about . 32,000 crore, or roughly over $5 bil` lion, in FY13, a jump of about 12% from the previous year.

International:

• Target to customers: No guns in our stores please: US retail giant Target has asked customers not to bring guns into its stores, after Texas gun rights activists demonstrated in a Texas shop with rifles slung over their shoulders. CEO John Mulligan said guns were at odds with its family atmosphere. Many US states allow people to carry guns in some fashion, but businesses may ban them. Gun control activists applauded the new rule, coming as many states loosen laws restricting the carrying of firearms. "[We] respectfully request that guests not bring firearms to Target - even in communities where it is permitted by law," Target CEO John Mulligan wrote in a statement on the company's corporate blog.

• Hugo Boss Takes Control of Store Network in China, Macau: Hugo Boss has taken full control of its store network in China and Macau. The company said it has acquired the remaining 40 percent equity stake in the joint venture from Rainbow Group, its long-standing franchise partner. The two companies entered an agreement in 2010, and Boss noted that thanks to Rainbow Group’s expertise and efforts, the brand’s business in China has more than tripled since 2009. China is Boss’ fourth-largest market worldwide. It now has full control of the 55 stores operated by the joint venture in mainland China and Macau. In 2013, these doors generated sales of 94 million euros, or $124.9 million. In total, Boss operated 126 freestanding stores and shops-in-shop in China in 2013, when sales there reached 211 million euros, or $280.3 million.

• Japan Retailers See Mixed June: Japanese retailers posted mixed comps for June as consumers continued to digest higher price tags after April’s sales tax hike. Fast Retailing Co. Ltd. said Wednesday that same-store sales at its Uniqlo stores in Japan rose 2.6 percent, thanks to brisk demand for summer items including a line of stay-cool innerwear called Airism. Meanwhile, sales at Isetan Mitsukoshi Holdings Ltd.’s nine main stores in Japan were down 4.6 percent in June on the year. Sales declined at every store except the Mitsukoshi branch in Tokyo’s Ginza district, which saw a sales increase of 1.4 percent. Takashimaya Co. Ltd. said sales at its 18 stores across Japan fell 4.9 percent year-over-year in June. The company attributed the drop to the consumption tax increase, as well as the fact that this June had one fewer Saturday than the same month last year. H2O Retailing Corp. reported a 4.3 percent drop in June sales at its Hankyu and Hanshin department stores in Japan.

• Dov Charney vs. American Apparel: Game of Tactics: The battle for American Apparel Inc. might be just about to boil over. While most of the recent action has come from ousted founder Dov Charney’s rush to add to his stake — late Monday he revealed he had boosted his stake; he now controls 43 percent of the company’s stock — additional details might come out of the investigation that led to his firing.

• Port Talks Seen Extending Past Deadline: Negotiations over a key labor contract covering more than 13,700 workers at 30 West Coast ports were expected to continue past their deadline Tuesday. While the six-year contract between the International Longshore and Warehouse Union and the Pacific Maritime Association expired at 8 p.m. Eastern Daylight Time, as of press time the two parties representing dockworkers and waterfront employers were seen as likely to continue talks through the middle of this month. Operations are set to continue at the ports in Washington, Oregon and California.

• La Senza's U.K. Business in Administration For Second Time: The La Senza lingerie brand in the U.K. entered into administration for the second time in the past three years Tuesday. PricewaterhouseCoopers in London said this week that it had been appointed as the administrator of Marnixheath Ltd., which trades in the U.K. as La Senza and Pinkberry. Marnixheath Ltd. was previously known as Alshaya U.K., which acquired La Senza in early 2012, after it went into administration in late 2011. Administration is broadly the U.K. equivalent of entering Chapter 11 bankruptcy protection.

• Destination Maternity Confirms Interest in Mothercare: Destination Maternity Corp. confirmed today that it is interested in merging with British firm Mothercare plc. The Philadelphia-based firm said it has made two non-binding offers that were both rejected by Mothercare's board. Destination Maternity said it was making the disclosure per a requirement under the U.K. Takeover Code. The code also requires the American firm to disclose by 5 p.m. on July 30 whether it intends to make an offer, which must be within the guidelines of the code requirements or announce that it does not intend to make an offer. The latest non-binding proposal was submitted June 1, which Destination Maternity said provides a strong basis to engage in talks. The American firm continues to evaluate its options in connection with a possible combination of the firms. The first non-binding offer was made on May 27. The total value of the latest offer would value a transaction at $453 million, and the proposal called for the two companies to be owned by a U.K. holding company that would be listed in the U.S.