Daily News Digest- 10th July'14

Thought of the Day:

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Following made the Headlines:

India:

• Budget for this Stunner: Flipkart is Worth $5 billion: Flipkart is in negotiations to raise at least $500 million, or about ` . 3,000 crore, an investment round that will prepare the ground for a likely listing in the US next year, according to several people aware of the development. These sources, who are not directly involved in the process, said a fund founded by Russian billionaire Yuri Milner is taking the lead drawing in new investors soon after pouring money itself into the Bangalore-based company. Among those said to be interested are Singapore's sovereign wealth fund GIC and US-based investment firm T Rowe Price. Flipkart declined comment on what it called “market speculation“. GIC and T Rowe Price did not reply to questions sent by email. This round of funding, when it fructifies, could see the Bangalore-based company being valued at $5 billion (`30,000 crore) at least, a near-doubling of Flipkart's valuation over the last round of funding in May . Flipkart is the clear leader in India's online retail space but US-based Amazon has started to rapidly build scale, hotting up the competition as well as the need for cash for the Bangalore company . Flipkart spent an estimated $370 million in May to buy fashion portal Myntra, and rival Snapdeal is snapping at its heels by raising its game and a lot of money -$200 million earlier this year.

• Tata & DoCoMo to Split, But Valuation may be Sticky Point: Japan's NTT DoCoMo has decided to exit Tata Teleservices by selling its 26.5% stake in its telecom joint venture with the Tata Group through a preagreed put option, setting the stage for protracted negotiations over valuation as the Indian conglomerate is likely to renegotiate the sum it has to pay to buy back the shares. The agreement was signed between the two companies in 2008-09. Under the terms of the agreement, the Tata Group needs to ensure that its partner in the lossmaking joint venture gets the higher of either half the investment it made -which amounts to Rs 7,250 crore -or the stake's fair ` market price in case the company fails to perform at a certain level. NTT DoCoMo had issued a notice to the Tatas three days ago, exercising its option to get a refund of . 7,250 crore by returning its 26% ` in Tata Teleservices before the deadline on July 9, said a lawyer involved in the transaction. Confirming the development, Tata Sons spokesman Debasis Ray said in an email: “The formal communication has now been received from NTT DoCoMo to that effect.“

• Karbonn Mobiles in Talks to Sell Stake to Fund Global Expansion: Karbonn Mobiles, India’s third largest smartphone vendor, is planning to sell 1520% stake to private equity funds to raise money for overseas expansion. “Discussions are on with some private equity players for a stake offload. We will take a decision on it in September this year,” Karbonn Mobiles’ managing director Pradeep Jain told ET, without specifying the amount that the company wants to raise. The handset maker plans to use the funds to expand its footprint to 65 countries, by entering 25 new markets in Southeast Asia, West Asia, Africa and Eastern Europe through a mix of retail sales and bundling of handsets with telecom service providers. “We are targeting 3rd or 4th positions in these markets,” Jain said. The development comes about two years after the company made an unsuccessful bid to divest a similar stake for Rs 1,000 crore to set up a manufacturing plant and fund an acquisition.

• Genesis to Bring Dutch Denim Brand G-Star RAW to India: Genesis Luxury has signed a distribution and marketing deal with Dutch clothing brand G-Star RAW, popular for its denim-wear, for the Indian market. The brand -which specialises in making raw, or unwashed and untreated, denim, and positioned as `luxury denim for the streets' -will target young consumers looking for “catchy fashion“, said Sanjay Kapoor, managing director at Genesis Luxury , which sells a host of international fashion and lifestyle brands in the country. Genesis plans to open 30 points of sale for G-Star in the next five years. A pair of denim will be broadly priced anywhere between Rs 14,000 - Rs 6,000 and ` Founded in Amsterdam in 1989, G-Star has more than 6,500 points of sale across the world. Its models include Hollywood actress Liv Tyler, world chess champion Magnus Carlsen and singer Pharrell Williams who recently collaborated with the brand for award-winning `RAW For the Oceans' fashion collection made from recycled plastic found in the ocean.

• Ikea expected to open first store in Hyderabad: Telangana govt: Swedish furniture retailer Ikea AB is expected to open its first outlet in India at Hyderabad and the Telangana government has promised to fast-track all necessary clearances as the new state seeks to attract investments. After a meeting with top Ikea executives, chief minister K. Chandrashekar Rao was quoted as saying all necessary clearances will be given through a single window to expedite the process of opening the store in the city. A high-level team from the company represented by Juvenico Maeztu, Ikea Indian arm chief executive officer, and Preet Dhupar, chief financial officer, met Rao at the Secretariat here on Wednesday, a state government press release said. “He (Maeztu) explained in detail the genesis and growth of the company. The CEO suggested entering into an MoU with Telangana government to serve as an umbrella for broad understanding,” it said.

• Airtel sells 3,100 towers in Africa; could fetch Rs 3k cr: Bharti Airtel said on Wednesday it would sell about 3,100 telecom towers spread across four countries in Africa to Helios Towers Africa. Bharti Airtel International (Netherlands) BV, a subsidiary of Bharti Airtel, and Helios Towers have signed an agreement for the same. While Bharti Airtel did not disclose the deal value, tower companies, who operate in Africa, said the valuation of towers ranges between ₹ 40 lakh and ₹ 50 lakh depending on the location. Out of 17 countries in Africa, where Bharti Airtel has operations, valuation is higher at ₹ 1 crore in Nigeria. The valuation of the deal could be between ₹ 1,600 crore and ₹ 3,100 crore. Bharti Airtel has not given the details on the location of the 3,100 towers. Bharti Airtel has about 15,000 towers in Africa. In the earlier deals in the tower infrastructure space in Africa - such as Tanzania’s Millicom’s deal for 1,000 towers and MTN’s deals in Ivory Coast, Uganda and Cameroon - one tower was valued at between ₹ 73 lakh and ₹ 1 crore. Bharti Airtel said in a statement that the deal would help Bharti Airtel cut its debt and will “significantly reduce” its ongoing capital expenditure on passive infrastructure.

• Asus unveils three new smartphones starting Rs 5,999: Taiwanese tech major Asus today unveiled three new handsets under its 'ZenFone' range in the fiercely competitive affordable smartphone category in India to take head-on the likes of Moto G, Lumia 630, HTC Desire and Samsung's Duos. Asus, which already sells tablets in India under Fonepad series, expects to sell 4-5 million smartphones next year as it builds its brand and focusses on increasing distribution. "This year, we should sell about half a million smartphones. The focus right now is on increasing distribution and offering a good product at a good price point in India," ASUS Corporate Vice President Eric Chen told PTI.

• Checklist for Global Retailers Unveiled: In a sign that the new government in India, led by prime minister Narendra Modi, is not as closed to global retail as his party has appeared to have been over the past few years, a revised checklist of documents for global retailers putting in applications for entry into India was unveiled earlier this week. The checklist, which has new requirements for both single and multibrand retail, was issued by the Department of Industrial Policy and Promotion. This comes on the heels of French retailer Carrefour announcing its decision to pull out from India after years of intense lobbying and a widely publicized search for an Indian partner. Carrefour said last week that its five stores in India would be shut down by September. Industry insiders believe that these are likely to be bought by Reliance Retail, which is strengthening its position in the retail space.

International:

• Google Glass hack allows brainwave control: Google Glass has been hacked so that it can be controlled by brainwaves. By combining the smart glasses with an electroencephalography (EEG) headset, the software makes it possible to take a picture without moving a muscle. London-based start-up This Place said the tech could be utilised in high-pressure hands-free situations - such as during surgery. It has released the MindRDR software for free in the hope that developers will adapt it for other uses. Google made it clear that it does not support the app. "Google Glass cannot read your mind," a spokeswoman told the BBC. "This particular application seems to work through a separate piece of kit which you attach to Glass.

• Luxury carmaker Bentley set for record sales in 2014: Luxury carmaker Bentley has said it is on course for record sales in 2014 after a 23% increase in deliveries in the first half of the year. Bentley delivered 5,254 cars in the first six months of 2014, up from 4,279 cars in the first half of 2013. The firm's new Flying Spur drove up sales by 61% in China, which saw more than a fifth of Bentley's deliveries. Bentley's sales echoed rival Rolls-Royce, which saw a 33% boost in sales in the half year to June. "There is no question that some markets will remain tough, but we are confident of a good 2014," said Bentley board member for sales Kevin Rose.

• Emirates and Boeing finalise order for 150 777X aircraft: US plane maker Boeing and Emirates Airline have finalised a deal for 150 new 777X mini-jumbo jets. The deal, worth $56bn (£33bn) at list prices, was agreed at the Dubai Airshow in November. The agreement includes a provision for Emirates to increase its order by a further 50 aircraft. Boeing plans to start producing 777X planes in 2017, and has set itself a target of 2020 to deliver the first aircraft. "With the order for 150 777Xs, Emirates now has 208 Boeing 777s pending delivery, creating and securing jobs across the supply chain," said Emirates president Sir Tim Clark. "The 777X will offer us operational flexibility in terms of range, more passenger capacity and fuel efficiency, and we look forward to inducting them into our fleet from 2020."

• Curtain Comes Down on Sainsbury's Justin King Era: After a decade at the helm, Justin King stepped down as chief executive officer of Sainsbury's on Wednesday, with its chairman reassuring the grocer's investors that a tough market and the rise of discounters wouldn't stop it prospering under his successor. King left the over 1,230 store British retailer at the conclusion of its annual shareholders meeting in central London and was succeeded by commercial director Mike Coupe; a promotion that was revealed in January. "I'm sure of one thing, Justin's departure doesn't mean the end of this success story," said chairman David Tyler. He paid tribute to King, calling him a "guiding light to all of us," prompting a partial standing ovation from a packed room of, mainly elderly, private investors.

• American Apparel Inks $25M Agreement With Standard General: American Apparel Inc. reached an agreement with Standard General for $25 million in financing in a move that will also reshape the firm's board and gives founder Dov Charney the title of strategic consultant. Under the terms of the "standstill and support" agreement, the New York-based hedge fund — along with Charney — agreed not to acquire any additional shares in American Apparel. The deal limits their vote to no more than one-third of the company's shares on any issue put to stockholders. The agreement remains in effect until American Apparel's 2015 annual meeting. Further, an independent board committee will be formed to oversee the continuing investigation into the alleged misconduct by Charney, who ousted last month.

• Abercrombie & Fitch Shifts Diversity Duties: Abercrombie & Fitch Co. has assigned responsibility for its diversity and inclusion efforts to Amy Zehrer, executive vice president of stores, following the departure of Todd Corley from the organization. Corley, who’s overseen the company’s D&I structure since 2004, is leaving the firm to launch the TAPO Institute, which will “focus on inclusive leadership based on principles of transparency, authenticity, persistence and optimism.” With the addition to her duties, Zehrer will be responsible for D&I initiatives for employees in the company’s headquarters in New Albany, Ohio, and its approximately 100,000 associates in stores and other facilities around the world.

• Wal-Mart Gaining Steam With Made-in-U.S. Push: Wal-Mart Stores Inc. is opening its war chest to more U.S. suppliers. Wal-Mart on Tuesday held its first open call for U.S. vendors at the company’s Bentonville, Ark., headquarters. The retail giant is armed with $250 billion to spend over 10 years on products made in the U.S. Wal-Mart’s deep pockets drew to the open call more than 500 suppliers who scheduled 800 meetings with more than 175 buyers from Wal-Mart U.S., Sam’s Club and walmart.com. “We believe we have the opportunity to make jobs in your communities,” said Bill Simon, president and chief executive officer of Wal-Mart U.S. “Changes in the cost of energy and transportation and all the variables that make up manufacturing are swinging in the direction of the U.S. It’s more efficient and effective to manufacture here now.

• Express Unveils Kate Upton Campaign: Express on Tuesday introduced the star of its fall advertising campaign, Kate Upton, to a roomful of editors at Jean-Georges in Manhattan. Wearing a black-and-white striped Portofino blouse and high-rise jeans from the collection, Upton gushed about her role for the specialty retailer, before offering a look at the new ad campaign. “I grew up in Florida and Michigan and Express was everywhere,” Upton said. “I wore it and my sisters wore it. They have amazing styles and great fabrics. It’s nice to have something in your life that you use. They have the best tank tops and jeans.” The campaign has a heavy focus on denim with new washes and styles. “We’re even on the high-waist trend,” said Liz Crystal, chief marketing officer of Express. Three ads for August revealed Upton wearing a jean jacket and fedora; a faux leather jacket, black cami and dark wash jeans, and a black cropped top and skirt. “This is the first time we’ve used a celebrity in over 30 years,” said Crystal. “We wanted a full 360-degree marketing campaign. There will be consistency in stores, on the Web site and through all the digital and print advertising.”