Daily News Digest- 9th July'14

Thought of the Day:

Did you know?

Following made the Headlines:

India:

• ‘Apple of China’ Makes its India Debut with Mi3: Chinese smartphone maker Xiaomi has launched its first device in India — Mi3 — which will be available for sale from July 15 onwards for Rs. 14,999, hotting up competition in India’s already-crowded but fast growing smartphone market. Xiaomi, however, didn’t specify where its flagship product would be available for sale. The company is learnt to have tied up with ecommerce website Flipkart for sale of its devices, but its officials couldn’t be reached for a comment. Flipkart didn’t respond to an emailed request for comment. The smartphone, Mi3, runs on a version of Android called MIUI. While the price pits it in direct competition with mid-segment devices such as Motorola's Moto G and Blackberry's latest Z3, its specifications compare with premium range devices offered by the likes of Samsung, Sony and local brands such as Micromax and Karbonn.

• Reliance Retail set to shut 100 Fresh stores: Reliance Retail, a subsidiary of Mukesh Ambani-led Reliance Industries, is planning to shut down over 100 Reliance Fresh stores that largely sell fresh produce and groceries, as it increases its focus on India's $450 billion wholesale cash-and-carry business. At present, Reliance Retail operates around 550 Reliance Fresh stores -a typical store is spread over around 3,500 square feet and caters to a catchment area of 2-3 km. The Mumbai-based firm has intimated its vendors about its impending move. “Reliance has given us headsup and we have started realigning our businesses from these stores,“ a senior executive at one of the world's largest beverage firms told TOI.

• Finnish firm buys Indian packaging co for Rs 2k cr: Finland's packaging giant Huhtamaki, known for making paper cups for McDonald's, is buying Positive Packaging for $336 million (about Rs 2,014 crore) to meet growing demand from customers in emerging markets. The deal will give the Nasdaq-listed company access to 12 manufacturing facilities in India, including three in the UAE, as well as significant business interest in Africa. Moreover, through Positive, it gains leadership positions in key fast-growing emerging markets. Positive Packaging makes products ranging from food and cosmetics packaging to medicine packing covers. “Many of our global customers are investing heavily to grow in these (emerging) markets, and now (with this acquisition) we are even better resourced to help them grow,“ said Huhtamaki CEO Jukka Moisio.

• It's raining discounts as car makers push sales: Planning to buy a car? Now may be a good time. It's been raining discounts in Motown as car companies step on the gas to push retail sales. In the best-selling and high volume small car segment, the discounts currently on offer hover between Rs 25,000 and Rs 78,000 depending on the model and the make. Most of these discounts are on offer till the last week of this month and some of them are actually higher than the schemes on offer in April and May 2014. Take the Maruti Alto 800. Including cash benefits, corporate offers and exchange offers, the total savings available to potential customers in some dealerships is around Rs 60,000. That's lower than the April schemes when the savings hit around Rs 64,000 but higher than May when they averaged around Rs 50,000. The Alto K10 on the other hand attracts around Rs 45,000 in total savings, a little higher than June's Rs 40,000 and April's Rs 34,000 total package. In the case of the Hyundai Eon (1.0 dual VTVT Kappa engine variant), for instance, the savings work out to around Rs 34,000, unchanged from June and a tad higher than the April tally of around Rs 28,000. The i10 commands exchange and corporate offers worth around Rs 29,000 in select markets, down by nearly half from the June offer of Rs 50,000 and lower than May's offer of Rs 35,000.

• Carrefour Found No Takers for Its Stores: Carrefour, which on late Monday announced its much-anticipated exit from India, has decided to shut its five wholesale stores here after the French retailer failed to find any buyers for them, sources with knowledge of the matter said. The closure will affect more than 800 employees of the company which opened its first cash-and-carry outlet in Delhi’s Seelampur area about four years ago. Carrefour has been looking to sell the stores after it failed to forge an alliance with Bharti Enterprises in May. It had hired KPMG to scout for buyers. “We are stopping the operations of the stores. We are not selling them right now, but closing them,” said one of the sources. But selling the assets is still an option,” this person said. “If something comes up in the course of time, we will definitely keep that in mind as well. So nothing is a closed option.” Other sources and potential buyers who surveyed the five stores for a possible purchase said the company has not been able to find a concrete buyer due to its valuation expectations. Al so, some of its stores were in close proximity to those of the poten tial buyers, which made them un attractive as the buyer can't cover new markets with the purchase.

• Samsung launches Galaxy K zoom in India: South Korean handset maker Samsung Electronics today launched in India a new smartphone, featuring a specialised camera with 10X zoom, for Rs 29,999. Galaxy K zoom, which will be available from tomorrow, offers an advanced technical camera system designed to offer the control and functionality of a professional camera. Featuring a 4.8-inch screen, the handset has a hexacore processor (1.3 GHz quad core + 1.7 GHz dual core processor) and is based on the latest Android Kitkat operating system.

• SpiceJet Unveils Another `Sale': Low fare carrier SpiceJet on Tuesday launched its latest spate of low air fares, even as the latest Railway Budget left recent hikes in railway tariffs untouched. The budget carrier will, between July 8 and 10, sell a million seats at base fare of . `999 for travel between January 6 and October 24, 2015. “Fly our domestic network at fare starting . `999, lower than train fares,” the airline said in its promotion. Earlier in the day, India's railway minister DV Sadananda Gowda announced a slew of measures for passenger-friendly train travel, but didn't roll back the 14.3% increase in fares which was announced on June 20. SpiceJet has been leading price wars throughout the year, forcing other low fare carriers to follow suit, often at the cost of their margins. The Kalanithi Maran-controlled airline in January slashed fares by 50% and later followed with a Re 1 fare. The DGCA cracked down on the offer and called it “predatory” pricing. On June 10, SpiceJet announced an offer for Rs. 1,999, but only for south Indian cities such as Bengaluru, Chennai and Coimbatore. A few weeks later it repeated the offer for the entire network. The fare wars are set to intensify with the recent entry of Malaysian carrier AirAsia’s local venture into the market.

• Marks & Spencer India sales up 36.2 per cent in the first quarter: British retailer Marks & Spencer (M&S) today reported 36.2 per cent increase in sales in India in the first quarter of this fiscal on the back of strong performance across its linen, beachwear, lingerie and beauty segments. "We continued to see a good performance with strong double digit growth from our stores in India during the first quarter of the year," Marks & Spencer Reliance India Managing Director Venu Nair said in a statement. During the first quarter ended June, 2014, M&S' lingerie and beauty sales increased by 33 per cent and 38 per cent respectively compared with the sales in the previous year, the company said. 

• Travel Startups Clone Global Biz Models to Woo Yearning Tourists: Suzaan Chad from Colombia has criss-crossed the world, but when visiting India last December the 22-year-old realised that international websites she relied so heavily on for travel plans were inadequate. “In India, I wanted a more localised experience to understand the pulse of the country,” said Chad, who also wanted a safe place to stay that would fit into a student’s budget. “International travel sites could not capture that essence.” It is business from discerning clients like Chad that a host of Indian travel startups are seeking to corner. These startups are cloning business models of successful international travel ventures like AirBnB, Generator Hostels, Expedia and TripAdvisor and tweaking it to suit the business conditions in India. For instance, Zostel, India’s first backpacker hostel chain for young travellers, offers a comfortable stay with laundry service, TV, internet, library and board games at just Rs 500 a night in Jaipur. IIM Calcutta graduate Paavan Nanda founded Zostel in August last year along with six other friends after being inspired by international hostel chains Generator Hostels and Plus Hostels. Zostel was set up with an initial capital of Rs 20 lakh.

• Fashion E-tailers Stitch JV Deals with Apparel Brands: India's top fashion portals have sewn up nearly half a dozen partnerships with global and local apparel brands in the past month, as they battle to attract and retain fickle consumers. In the latest such deal, ITC's Wills Lifestyle brand said it will offer its designer collection on Myntra, which was recently bought by the country's largest online retailer Flipkart. Myntra also aims to introduce Harvard University Ivy League Clothing on its site in the next few weeks. Since May, Myntra has inked deals with Dutch youth fashion brand Scotch & Soda, designer Rajesh Pratap Singh's Mario Miranda and Music T-Shirt Collection. Rival Jabong signed up with London-based high street brand River Island in June, following up on earlier deals with UK brand Dorothy Perkins as well as designer Rohit Bal. “You will see double-digit growth of exclusive partnerships between now and Diwali,“ said Ganesh Subramanian, chief operating officer, Myntra. Flipkart, which plans to invest about Rs 600 crore in the fashion business over the next 18 months, has also entered the fray with a tie-up last month with Japan-inspired UK clothing brand Superdry.

• Finland's Huhtamaki to Buy Positive Packaging for Rs. 2k cr: Finnish packaging major Huhtamaki has entered into an agreement to acquire Positive Packaging, known for producing packaging materials for brands like Bingo and Surf Excel, for a transaction valued at $336 million (Rs 2,000 crore). The deal would provide the Espoo-headquartered company a major toehold in India where the rising middle class population with their disposable income will drive growth for packaging products. Positive Packaging, promoted by Enpee group, has nine manufacturing facilities In India. “The transaction enhances our position in India and provides us with much improved access to the fast growing markets of Africa and Middle East. Many of our global customers are investing heavily to grow in g heavily to grow in these markets, and now we are even better re sourced to help them grow,“ said Jukka Moisio, CEO of Huhtamäki Oyj, in a re lease. The deal is expected to be finalised in the finalised in the autumn, Huhtamaki said. The annual net sales of the business to be acquired are ap proximately ¤220 million and it employs approximately 2,500 people in India and the UAE as well as in the sales offices in seven countries, said a release. The business will become part of Huhtamaki's Flexible Packaging business segment.

International:

• M&S chief Bolland says results 'not good enough': Marks and Spencer's sales performance in clothing and homewares is "not good enough", its chief executive has said. Marc Bolland's comments came as he addressed shareholders at the retailer's Annual General Meeting. Some shareholders expressed frustration at the time it was taking to revive the High Street giant. Earlier on Tuesday, M&S reported its 12th consecutive drop in quarterly sales of general merchandise, with trading hit by problems at its website. Mr Bolland admitted that issues with M&S's revamped website had had "an impact on sales", with online purchases down 8.1% in the latest quarter.

• RetailNext Secures $30M in Series D Financing: RetailNext Inc. has closed a $30 million Series D round of financing, more than doubling the capital it’s raised and adding investors including publicly held firms Tyco, Qualcomm and American Express. The San Jose, Calif.-based retail metrics monitoring service, founded in 2007 as BVI Networks, intends to use the proceeds for expansion in markets outside the U.S., to bolster research and development efforts and to continue development of in-store location and predictive analytics technologies. With the additional funds, RetailNext has raised a total of $59.4 million, including $400,000 in seed financing; $6 million in subsequent Series A financing from individuals; $8 million in Series B funding in 2011, a round led by August Capital as a first-time investor; and $15 million in Series C financing in April 2013, when August was joined by StarVest Partners, Nokia Growth Partners and Commerce Ventures.

• Lou Takes Social Approach to Fashion: Lou is looking to put fashion content from Instagram, Facebook, Twitter, Pinterest and more into one sleek, shoppable package. The technology start-up launched a tablet-only app this week, which pulls the latest social media posts from what it deems to be 150 of fashion’s leading voices. The content is divided by designers, fashion insiders, magazines, muses, street-style photographers and bloggers and users can choose to look at the latest posts by category or all together via “The Latest Inspiration.” An iPhone version to set to bow in two months. Founder David Skokna, who started working on the app 18 months ago, is looking to build Lou into a destination where users spend five minutes of their time, hopefully multiple times a day. Instead of checking Instagram, Facebook, Twitter, Pinterest, or a magazine or bloggers’ Web sites to see what’s happening in fashion, Lou keeps track of social updates in one place. Users can choose who they want to follow on the app, which is updated in real time and is largely shoppable.

• Africa Emerging as Next Frontier: As sourcing executives seek out the next fertile ground, they’re starting to take a closer look at several sub-Saharan African countries as viable apparel sourcing alternatives. The renewed interest and investment in Africa comes as the U.S. reviews the African Growth & Opportunity Act. Under the trade preference program, 40 of 49 sub-Saharan African countries are eligible to receive duty benefits. President Obama’s action to reinstate AGOA benefits for Madagascar on Thursday, with final approval pending on apparel, gave importers more of an incentive to shift production to the region. Industry officials are keeping a close eye on AGOA, which expires in September 2015, because Congress must renew the program and past delays have disrupted business. AGOA contains a stipulation known as the “third country fabric provision” that helps companies producing in 27 least-developed countries that are part of the pact to use fabrics outside of the region and still receive duty-free benefits when shipping to the U.S.

• Italy's Stroili Oro Creating M&A Buzz: Stroili Oro, an Italian chain of affordable gold and silver watches, jewelry and accessories, is quietly creating a buzz on the financial circuit. A published report in Thursday’s Corriere della Sera said private equity firms Clessidra SGR SpA, Emerisque and VTB Capital are among a pool of investors interested in acquiring the jeweler, although the decision to sell rests with its current majority shareholders Investindustrial and L-Capital, which own 31 percent and 20 percent of Stroili, respectively.

• Standard's Tough Road at American Apparel: Standard General is poised to move into the driver’s seat at American Apparel Inc. — but it’s still not clear just where the colorful basics company is going. Led by managing partner Soo Kim, Standard teamed with ousted founder Dov Charney and now essentially controls 44 percent of the company’s stock, giving it the leverage it needs to negotiate changes to the Los Angeles-based firm’s board. The little-known New York investment firm might also help the company pay off the $10 million it owes to Lion Capital, which is said to have called its loan, although the company could still dispute that it has the right to do so.

• Juicy Couture's Global Push Starts With Asia: Authentic Brands Group is pushing hard to expand Juicy Couture’s presence globally. The brand management firm, which owns the rights to the intellectual property of the Juicy Couture brand, has locked up a long-term distribution agreement with the ImagineX Group to accelerate the growth of the Juicy Couture brand in Greater China and Southeast Asia. ABG expects to ink five more distribution agreements for other territories around the world over the next few weeks, and is in negotiations with potential partners to expand Juicy in five countries where the brand doesn’t yet have a presence. Some potential partners ABG is in talks with are existing distributors of the Juicy brand, while others would be new ones.