Daily News Digest- 24th July'14

Thought of the Day:

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Following made the Headlines:

India:

• TCS first Indian co to top Rs 5 lakh cr: Outsourcing giant Tata Consultancy Services (TCS) became the first Indian company to cross the Rs 5 lakh crore mark in market capitalization on Wednesday . In the process, TCS also became the second most valuable IT services company in the world, ahead of Accenture but behind IBM. TCS's market valuation rose to about Rs 5.1 lakh crore (about $84 billion), the highest since its listing l0 years ago, well ahead of Accentu re's $51 billion, but way behind IBM's $193.7 billion. TCS's market cap is bigger than the combined market cap of the other four do mestic IT players in the pecking order, Infosys ($31.7 billion), Wipro ($23.3 billion), HCL Technologies ($17.9 billion) and Tech Mahindra ($8.5 billion). The software services firm's market cap is also bigger than the combined market cap of the other 31 listed Tata group companies ($57.2 billion).

• Flipkart eyes 1.5m sq ft office space: E-commerce juggernaut Flipkart has approached real estate developers for 1.5 million sq ft office space to consolidate its rapidly expanding operations in Bangalore. Flipkart needs 4 lakh sq ft soon and would opt for staggered occupation of the rest to become one of the top office space absorbers in the tech city turned startup capital in recent years, said people directly aware of the matter. This will be the biggest office deal involving an internet company , and possibly the largest by a single occupant after Goldman Sachs mopped up 1.6 million sqft in Bangalore two years ago. The e-tailer's office leasing plans are aggressive but also reflect investor confidence in a seven-year-old company with breakneck growth plans, despite a running battle with Amazon. Flipkart, with a rocketing valuation of over $6 billion currently , could raise $3 billion in the next three years to lead India's internet consumerism. Flipkart currently runs 12,000-staff operations from seven office buildings spread across the Koramangala suburb, from where Infosys started three-decades ago. The Sachin and Binny Bansal co-founded company is in discussions with southern real estate giant Embassy Group for an office space deal.

• E-commerce companies eye education market: India’s leading e-commerce companies such as Flipkart.com, Snapdeal.com and Groupon.co.in are offering online courses and coaching materials, and are even facilitating long duration certificate or business education degrees. With an eye on capturing a pie of the growing education market in India — estimated to be worth Rs.5.9 trillion in 2014-15 by India Ratings and Research Pvt. Ltd, a part of the Fitch Group — these e-commerce companies are trying to provide a marketplace for education. While Flipkart launched its education offerings on Wednesday, Snapdeal and Groupon entered the space in the past few months.

• A Home Delivery, Across the Border: When computer engineer M Saad Jangda sent a casual email to friends with pictures of digital diaries eight years ago, he had little inkling that it would trigger the launch of the online retail industry in Pakistan. Besieged by friends who were anxious to lay their hands on the product, the then 22-year-old techie who was building websites for electronic importers in Karachi procured a few diaries, packaged and delivered them within a few hours, collecting cash-on-delivery. In the following days, as the email went viral, queries poured in from other Pakistani cities — Islamabad and Lahore. Sensing that he was onto something big, Jangda pooled in seed capital of ₹ 25,000 and set up Symbios, an online electronics store, that would become the first ecommerce business in Pakistan. “The country has broken roads but the digital highway (Internet) reaches remote areas from where people are ordering the latest mobile phones and laptops,“ said Jangda, whose company now sells 1,000 products daily at an average selling price of ₹ 8,000.

• Honda drives in Mobilio to take on Ertiga, Innova: Competition in the multi-purpose vehicle segment is intensifying with Honda on Wednesday driving in Mobilio, pricing the entry petrol variant at Rs 6.5 lakh (ex-showroom Delhi). The Mobilio, a 7-seater, will compete with models like Maruti Suzuki's Ertiga and Toyota's Innova. It is part of new series of models being launched by the Japanese carmaker after it drove in Brio compact and Amaze entry sedan. Innova and Ertiga account for sales of around 5,000 units each on a monthly basis and Honda is looking to give a stiff competition to these models. The Mobilio comes with 1,500cc petrol and diesel engine options. While the petrol engine model costs between Rs 6.5 lakh and Rs 8.76 lakh, the diesel engine variant comes for Rs 7.89 lakh to Rs 10.86 lakh. The models, however, are priced at a premium to the Ertiga and analysts said it may not be easy for Honda to immediately have a go at the rival from Maruti Suzuki.

• India Brings in Growth for Apple via iPad: India is now playing a key role in Apple Inc's global sales of iPad tablets and Mac computers too in a clear sign that the Cupertino giant's market growth strategy has started to unfold in India in line with CEO Tim Cook's plan to grow sales of all products after creating a dedicated base for one product -the iPhone. For the third quarter results ended June, Apple reported 45% growth in year-on-year sales of iPads in India. Apple's top management acknowledged in the earnings call that strong demand in India for iPads, along with 51% growth in China and the 64% in Middle-East, played a vital role to overcome the muted demand in US and Europe to post 4.8% growth in overall iPad sales. Apple's senior vice-president and chief financial officer Luca Maes tri said the strong growth of iPads in developing markets “was more than offset by lower sales in more mature markets.“ The strong sales of iPads in the BRIC countries is in contrast to poor sales in developed markets as CEO Cook too pointed out. As per market tracker IDC, the tablet market dropped by 5% in the US and declined in the Western Europe market during June quarter.

• Mobile Startups Hit Million Dollar Revenue in a Year: Indian entrepreneurs have worked out that innovative mobile-based technologies race the fastest to the one-million dollar revenue mark with little capital. These entrepreneurs develop the products--including mobile applications--within a month's time and then push for international acceptance. Once validated globally, the products lead to soaring revenues in quick time. Take the case of Nischal Shetty, for instance. It took just four weeks for the 29 year old to build JustUnfollow. Through this, enterprises (and others) can find out their inac their inactive followers on Twitter and also how many have unfollowed them. This allows companies to give their undivided attention on potential customers. The Mumbai-based company has already crossed Rs 6 crore in revenue by providing this technology to eight million users worldwide.

• Ballapuram to Steer Wipro's Digital Biz Unit: Wipro has tasked Bhanumurthy Ballapuram to steer a newly-created business unit, Wipro Digital, as it looks to target chief marketing officers of enterprises who are increasingly becoming decision-makers on IT spending by organisations. Ballapuram, a MBA from IIM-Ahmedabad and a two-decade veteran at the country's third-largest software exporter, will continue to report to CEO TK Kurien. An announcement will be made in the coming weeks, people familiar with the development told ET. Earlier this year, both TCS, country's largest software exporter and Wipro carved out new business verticals named Digital as the outsourcers aim to win more deals in cloud computing and mobile applications as the commoditised outsourcing business comes under pricing pressure. Revenue from the new business unit has already started flowing in even though it remains minuscule for now.

• Jet Sets 3-Year Target to Turn Profitable: With a new management in place, Jet Airways has started working on a three-year strategy to return to profitability. “We will be focusing on reducing losses in 2015 and consolidation in the next year and aim at turning profitable in 2017 fiscal. The airline needs to change and we are working towards that,“ said Chief Executive Officer Designate Cramer Ball. The airline needs to change with time, he said. The timeline given on Wednesday is different from a previous plan announced in May, when the carrier said it would turn profitable in 18 months. Abu Dhabi's Etihad owns a 24% stake in Jet Airways.

• G-Star Raw to Enter India: Dutch brand G-Star Raw has signed a license with Genesis Luxury to enter India. The distribution and marketing agreement is expected to see the first store open by the end of this year. More than 30 stores are expected to open across India in the next five years, according to a spokesperson. “G-Star is a true pioneer in the denim industry. Their wide expertise, from distinct styles to superior fits, is something yet to be seen in the Indian market,” said Sanjay Kapoor, managing director of Genesis Luxury. Genesis markets and distributes a number of international luxury brands, including Giorgio Armani, Emporio Armani, Burberry, Paul Smith and Bottega Veneta.

International:

• Pepsico shares surge on results: Shares in snacks and drinks giant Pepsico rose sharply after the company released a positive set of results. Pepsico raised its earnings forecast for the year and said sales had been boosted by the launch of new products. The company has been able to charge higher prices for its new offerings which included new flavours of Lay's crisps and a new Mountain Dew drink. The company has been under pressure from investor Nelson Peltz, who would like the company to be split up. He believes investors would be better off if the successful snack division was separate from the slower-growth drinks operation.

• PayPal targets UK small businesses for cash advances: Online payments firm PayPal is to start advancing cash to UK small businesses, the company has announced. The PayPal Working Capital fund is due to launch later this year, the firm said. The eBay-owned company said it would only recoup money when firms sell through PayPal services. However, earlier this month there were complaints from US customers about unauthorised repayments taken from accounts. The payments were taken in error, and would be credited back to customers, PayPal said at the time.

• Microsoft Expects Nokia to Break Even in 2 Years: Microsoft said it aims to get its loss-making Nokia phone unit to break even within two years, helping its stock rise in afterhours trade. The company reported a 7% dip in quarterly profit on Tuesday, chiefly due to incorporating the struggling handset business of the Finnish mobile pioneer. Microsoft's chief financial officer said in a call with analysts that the company plans to take $1 billion in costs out of the Nokia operation.

• GM Sales Likely to Surge Amid Vehicle Recalls: General Motors' Mary Barra is projected to report her sec ond straight quarter of rising sales, adding to evidence that the chief executive officer is weathering the biggest wave of recalls in US automotive history. Second-quarter revenue may rise 2.7%, the average of estimates compiled by Bloomberg. While recall headlines have dominated in the US, sales have increased, rising 2.5% through June. The total US market rose 4.3% during the same period. GM's results have been helped by new SUVs such as the Cadillac Escalade, which rose 18% in the first half, and GMC Yukon, which gained 54%

• Prada Leads Fashion Shares: Prada SpA picked up steam with investors just as the brand’s ready-to-wear made its return to Barneys New York on New York's Madison Avenue. Shares of the luxe company led the WWD Global Stock Tracker higher today, rising 3.6 percent to 56.40 Hong Kong dollars, or $7.28. The stock has stabilized some recently, but is still down 7.6 percent over the past six months. The closely watched brand just opened men’s and women’s shops in the Madison Avenue Barney’s flagship, which celebrated the launch with a high-minded window instillation.

• American Apparel Has Four New Board Members: American Apparel has its new board members in place. The four new members are: David Glazek; Thomas J. Sullivan; Colleen B. Brown and Joseph Magnacca. New York-based hedge fund Standard General has the ability to designate a fifth member, but has not done so yet. Glazek and Sullivan are Standard General designees, while Brown and Magnacca each are mutually agreed upon by the hedge fund and American Apparel. Co-chairmen Allan Mayer and David Danziger will remain as independent directors, and continue in their co-chairmanship roles.

• Donna Karan's Madison Avenue Flagship to Close: Donna Karan’s three-story Manhattan flagship at 819 Madison Avenue (between 68th and 69th Streets) will close when the lease expires Aug. 31. The 11,000-square-foot boutique, which opened in August 2001, features a Zen-like setting. It showcases a private garden with 50-foot stone walls, an imported bamboo forest and a black granite “river” of water that cut through the space from the inside. The windows flood each floor with natural light, and almost every space has a view of the garden below. The shop was appointed with a dramatic staircase, tall mirrors and flat screens. The building has nearly 30 feet of glass frontage and double-height ceilings on the ground floor, along with a mezzanine and outdoor garden.

• Hudson Jeans' New Image: Keeping It Real: As the maturing premium denim industry moves to revive consumers’ interest amid competition from sectors like activewear, Hudson Jeans is moving from the branding formula that has worked in its favor for 12 years. After three years of flaunting rock-and-fashion progeny Georgia May Jagger in ads, Hudson is vowing to exclude models from its creative campaign and stop the Photoshopping of images. Using “real, crafted and optimistic” as its new brand pillars to replace “sexy, mysterious and cool,” Hudson is embracing the democratic and authentic spirit enabled by social media, blogs and vlogs, in which anyone can do their own thing.

• Daisy Fuentes for Kohl’s Marks 10th Anniversary: The Daisy Fuentes for Kohl’s Collection is 10 years old so what better way to celebrate the anniversary than with another collection — a 10-piece capsule version calling out Daisy Fuentes’ signature favorites over the years with fresh takes. Prints with a playful spin on traditional patterns, fit and flared dresses, flounce skirts, geometric printed T-shirts, hi-lo tunics, tech leggings and luxe open cardigans, along with neutral grays, onyx and cream, and bold pops of cobalt and black cherry, are the focus.