Daily News Digest- 31st July'14

Thought of the Day:

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Following made the Headlines:

India:

• Bezos Upstages Bansals, to Bring $2 B into India: Jeff Bezos said he will spend $2 (₹ 12,000 crore) to grow billion. Amazon's online retail business in India in what amounted to a dare to Indian market leader Flipkart which only on Tuesday announced raising $1 billion in funding from a bevy of global investors. This is the strongest indication by the Seattle-based Internet entrepreneur of his intent to battle for top honours in the Indian online retail market where Amazon is on track to record sales of over ₹ 6,000 crore in just over a year of operations. “We've never seen anything like this,“ said Bezos, the founder and chief executive officer of Amazon. “After our first year in business, the year in business, the response from customers and small and medium-sized businesses in India has far surpassed our expectations,“ he said in a statement on Wednesday . By making this announcement within a week of Amazon declaring a loss of $126 million on revenue of $19.34 billion in second quarter of 2014, Bezos is seen to be signalling in no uncertain terms his commitment to grow his business in India after having failed to make inroads in the Chinese online retail industry dominated by Jack Ma's Alibaba Group.

• Online biggies may wipe out small players: E-commerce biggies are sounding a death knell for the small and mid-sized players threatening to eventually wipe them out of India's burgeoning etailing landscape. With Flipkart raising $1 billion in fresh funds and Amazon pouring $2 billion into the India market, many existing players could fall off the investors' radar paving the way for a two or three-way race between Amazon, Flipkart and Snapdeal in India. In a fiercely competitive e-commerce market, investor appetite to pour money into smaller horizontal players like Tradus, Infibeam and ShopClues would come down substantially forcing some of them to hit the exit button. “The game is over for sometime now as far as horizontal retailers (which sell various catego ries) concerned. Amazon is unleashing a price war signaling its serious intent towards the India market,“ said Deepak Srinath, director, digital practice at Bangalore-based Allegro Capital Advisors. Some players like Infi beam have already pivoted their strategy to focus on the SMB space, he said. Srinath said that specialized online retailers such as Urban Ladder and HealthKart may hold on to their turfs despite the onslaught from the big e-commerce players. So far, Flipkart has raised close to about $1.7 billion from a clutch of investors as it fights out Amazon and domestic rival Snapdeal in a fast-growing e-commerce market, projected to touch $8 billion by 2016. India has 243 million internet users, and this number continues to grow rapidly due to increased smartphone penetration.

• Inox to Buy Satyam Cineplexes: Multiplex operator Inox Leisure on Wednesday said that it will acquire Gurgaon-based rival Satyam Cineplexes in a ₹ 182-crore deal, which would strengthen its presence in North India. The Mumbai-based exhibitor will acquire 100% equity share capital of Satyam from its promoters, Inox said in a statement. The company's board at its meeting held on Wednesday “approved the acquisition of 100 % equity shares of Satyam Cineplexes for a total consideration of ₹ 182 crore“, Inox said in a filing to the BSE. Post acquisition, Inox would be present in 50 cities with 91 multiplexes and 358 screens, it added. “The proposed acquisition of one of the industry's prime assets, is a part of Inox's strategy to expand its footprint across the country and gives INOX a significant foothold in the North Indian region,“ the company said. This is the third acquisition of Inox in last seven years. In May 2013, Inox had merged Fame India, a multiplex cinema theater firm, with the company after acquiring controlling stake in 2011.

• The Premium Store now has a Mile-Long Queue: Consumer goods firms may be finding it hard to get budget-conscious buyers to part with their money for basic and affordable household products amid the slump but the story seems different higher up the price scale. Not just that, many of these items are not only being picked up from supermarket shelves but they're popular at traditional retailers too, according to findings by Nielsen. Besides, such products are also finding favour in rural homes. The share of premium consumer products has risen to 28%, or nearly Rs 60,000 crore, in the country's fastmoving consumer goods (FMCG) market, which was worth a total Rs 2.2 lakh crore in the year ended March. The share has risen sharply from single digits just a few years ago and this is despite these pricier or discretionary categories having been hit the most in FY14, Nielsen said. Nielsen divides the category into two segments--premium, or 20-70 % higher than the average, and super premium, costlier by twice or more.

• Caterer sues SpiceJet over Rs 8-crore bill: A Mumbai-based chain of hotels –– Narang International Hotels –– has moved the Madras high court, seeking to wind up the Kalanithi Maran-owned low-cost carrier SpiceJet for non-payment of accumulated in-flight service charges amounting to about Rs 8 crore. Justice M Duraiswamy, before whom the Narang International Hotels (having registered office at The Ambassador Hotel in Mumbai) case came up for admission on Tuesday, has sent notices to the SpiceJet airline’s management, directing it to furnish a reply within the next four weeks.

• A 60ml Drink Gets a 140-Character High: On Monday, @BudweiserIndia tweeted out a cheery message to its 6,000 followers: “How are you coping with your #MondayBlues! Keep your #Buds close and watch them disappear!“ Does a tweet urging beer consumption constitute advertising? It's not quite clear. The rules banning the advertising of liquor products are at least about half a century old and predate the computer age. Social media is, naturally enough, a grey area. No matter, liquor companies have been happily making use of the platform. Diageo, the world's biggest liquor company , the UB Group's Kingfisher beer, Budweiser, Tuborg, SAB Miller, John nie Walker are all active on Facebook and Twitter, using them to spread the message about their brands, complete with visuals. Kingfisher tweeted to its 44,000 followers 44,000 followers on Wednesday from @kingfisherworld: “Okay so beerheads, here we go. Remember that 1st #KFBeer you ever had? We want to know the story! Tweet to #HowIMetMyKFBeer right away!“ Last year, Diageo's vodka brand Smirnoff, using the handle @SmirnoffIndia, had this to say: “You don't need an occasion to gift someone gold! Treat your friends to the royal taste of Smirnoff Gold today .“ Samar Singh Shekhawat, senior V-P (marketing), UB, said: “The guidelines do not clearly define ban on social media and there are no clear clauses for liquor companies by the I&B (information and broadcasting) ministry on social media and online advertising.“ However, he added that liquor companies tend to self-regulate by strictly following the age-restriction policies of the sites. “So whoever comes on to the social media platform are well within the drinking age limit.

• Panasonic to Make India its HQ for Mobiles: Panasonic Corporation will make India the global headquarters for its mobile devices business and expand operations into SAARC and Middle East countries over 2014 as it rebuilds its presence in the smartphone market worldwide after retreating last year. The Japanese consumer durables maker, which sells televisions, air-conditioners, washing machines and refrigerators, will spend 12% of its India revenue of $ 1.65 billion on brand promotion, managing director for Panasonic India Manish Sharma said. “India is a very promising market. The penetration and growth of smartphones will continue for the next five to six years,“ Sharma said.

• ShopClues to Unveil Rs 75-cr Ad Blitz in Sept: E-commerce venture ShopClues.com, which started its India operations in 2011, will launch its first ever advertising campaign in the month of September, reports Pritha Mitra Dasgupta. ShopClues has earmarked . ₹ 75 crore for the brand campaign. The company has appointed Enormous as its creative agency following a multi-agency pitch. Other agencies that made presentations were ITSA and Ogilvy & Mather. “When we started the company, our understanding of the e-commerce sector was based on what was happening internationally — online was a reflection of the offline retail. But in India it was a different story. So, we spent initial years in building and strengthening a well-balanced ecosystem and stayed away from traditional advertising,” says Radhika Ghai Agarwal, co-founder and corporate vice-president ShopClues. “The campaign taps into the Indian massmarket psyche of value shopping that will highlight the nature of this marketplace as completely differentiated from any of the other e-commerce platforms,” says Ashish Khazanchi, managing partner, Enormous.

• FB Partners GroupM for First Ad Deal in India: Facebook has signed its first deal with an advertising agency in India, inking a partnership with WPP’s media agency conglomerate GroupM that was announced during COO Sheryl Sandberg’s recent India visit, the social media network said in a statement. The collaboration will ensure better rates exclusively for GroupM clients on Facebook, better data and consumer insights. “Our partnership with GroupM will benefit clients to reach over 100 million people in India,“ said Kirthiga Reddy , head of Facebook India.

• After Low-cost Carriers, India to Embrace Low-cost Airports: The government is planning to build small airports with rudimentary facilities, in order to bring down the cost of flying. Such airports will be a world apart from the swanky ones at Delhi and Mumbai. As per a blue print being prepared by the Airports Authority of India (AAI), these airports, which will be located in small towns, will lack conveyor belts, arrival lounges and even air-conditioning. Passengers will have to be check in their luggage manually. One air traffic control (ATC) tower will cater to a number of such airports. “Our plan is to keep the cost of building and operating these airports to a minimum. This means the security will be taken care by police personnel from the respective states and harnessing solar energy to power the airports,” said a senior Authority of India official. The official added that the plan being discussed, includes remote-controlled ATCs. “We plan to have one ATC tower that will be able to guide planes for more than one such airport. Not every airport would require full-fledged ATC since there won’t be so many flights,” said the official. As part of a plan to improve regional connectivity, the government plans to develop 50 low-cost airports in smaller cities across the country. The prime ministers office (PMO), which held a meeting last week, has asked the civil aviation ministry to develop five such no-frills airports during the current fiscal year. Fliers will be asked to arrive only half an hour before the departure of their flights in order to minimise waiting. In any case, they would have nothing to do at these airports. As the airport would not have an arrival lounges passengers would be able directly exit airport from the plane.

• Apple Bets on Enterprise Apps: Sales of iPads may be falling in the US and Europe, but Apple is trying to regain its lost momentum by getting Indian corporates to adopt the tablet for their technology needs. Apple, which a saw 45% growth in iPad sales from India in the last quarter, is now working with solution providers to bundle enterprise apps along with iPads. Also, Apple's recent deal with IBM to create simple-to-use business apps and sell iPhones and iPads to Big Blue's corporate customers is expected to help. Pune-based healthcare application company Praxify has tied up with Apple to sell its iPad app to doctors and hospitals. “Apple is helping us expand our reach and offer our solutions to a larger set of customers,“ said Ram Sahasranam, co-founder and director at Praxify. Manipal Hospitals is among the hospitals using the solution. “Doctors were not comfortable typing on a keyboard but iPad on a keyboard but iPad Mini is comfortable to car ry around and the app lets them write out prescrip tions faster than on pa per,“ said Nandkumar Dhomne, CIO of Manipal Hospitals. The hospital is enabling 400 of its doctors to use iPad for daily pre scriptions and other work.

• ITC Ready to Light Up e-Cigarettes: India’s largest cigarette maker, ITC, is ready to foray into electronic cigarettes and has engaged with the government to come out with a policy framework to launch them, chairman YC Deveshwar said. ITC has already developed its e-cigarette portfolio. Deveshwar said he expects the new government would look favourably into the e-cigarette space. “We are ready with e-cigarettes. However, some people want to ban it in India,” Deveshwar said on Wednesday, adding by the time it is established that e-cigarettes are less harmful than cigarettes, foreign brands will swamp the market and Indian companies will lose out. ITC’s cigarette sales have been strained due to recurrent tax hikes by the Centre and state governments and prices have increased by 10-15% successively for the past three years.

• Nokia Networks Eyes Better Revenues as Deals Flow in: Nokia Networks bagged 12 deals with major Indian operators during the first half of 2014, against 16 signed last year, the company said on July 30, indicating better times for the telecom gear maker as it expects higher revenue from increased spend on data network expansion by carriers, reports Our Bureau. No kia has received a security solution contract from Reliance Jio and a network expansion contract from Uninor, where Nokia will provide radio-access equipment and accompanying services, a person aware of the details said.

• Snapdeal.com appoints Abhishek Kumar as head corporate to lead strategic investments: Snapdeal.com, a leading online marketplace portal has appointed Abhishek Kumar as the Head, Corporate Development. He has a vast experience in VC investments, strategic partnerships, business management and M&A in technology and media businesses. At Snapdeal.com, Abhishek will be responsible for acquisitions, investments and deep partnerships that can lead to mergers for the e-commerce giant. In this role he will look at all avenues of inorganic expansion as Snapdeal moves towards the next phase on the back of heady organic growth over the last three years.

International:

• Twitter reports a loss but growing number of users: Social networking service Twitter reported a loss of $145m (£86m) during the second-quarter period from March to June. That is more than triple the loss the company reported during the same period a year ago. Twitter said it had 271 million monthly users - up 24% from a year ago - allaying investor fears that the service is not growing fast enough. Shares in the firm soared over 35% in after-hours trading. "Our strong financial and operating results for the second quarter show the continued momentum of our business," said chief executive Dick Costolo in a statement, noting Twitter's strong user figures during the World Cup. However, in an interview with CNBC, Mr Costolo said that it was not just the World Cup that drove user growth, in an effort to allay fears that the company would not be able to keep the users it gained during the sporting event.

• Ford to Replace BlackBerrys with iPhones: Ford Motor is deploying iPhones for corporate use to employees worldwide, scoring a win for Apple as it seeks to lure more corporate customers. The US automaker will replace BlackBerry smart phones with iPhones for about 3,300 workers by the end of this year, Sara Tatchio, a Ford spokeswoman, said in an interview on Tuesday . About 6,000 more employees will receive iPhones over the next two years, re placing flip phones, she said. Ford is hiring a mobile technology analyst whose main focus will be to oversee the “global deployment of corporate iPhones,“ the company said in an online job posting.

•  Airbus says aircraft market 'still strong' despite cancellations: Airbus has said that the market for commercial aircraft is "still very strong" despite a wave of cancelled orders. It has reported 225 cancellations since the start of the year. Last month Dubai's Emirates Airline cancelled an order for 70 of Airbus's A350 wide-bodied aircraft. Chief Executive Tom Enders said half the cancellations resulted from conversions to orders for different aircraft and 'overbooking'. He said: "We are not approaching the end of the cycle or a precipice. The commercial aircraft market is still very strong - certain regional weak spots notwithstanding, but we can deal with that." He added that with the new A320 due for delivery from 2015, Airbus is encouraging existing buyers to take the new version and cancel the old order. Of the 225 cancellations in the first half of the year, 65 happened in this way.

• BlackBerry to acquire German security solutions firm: BlackBerry Ltd is buying a privately held German firm that specializes in voice and data encryption, it said on Tuesday, in a bid to burnish its credentials with highly security-conscious clients like government agencies. The Waterloo, Ontario-based smartphone maker did not disclose the terms of its deal to acquire Secusmart GmbH, which specializes in encryption and anti-eavesdropping services for governments, companies and telecommunications service providers. The acquisition is the latest by the smartphone pioneer to build on niche areas in an attempt to reinvent itself under new Chief Executive John Chen and recover ground ceded to Apple Inc's iPhone and Samsung Electronics Co's Galaxy devices.

• Nintendo posts larger than expected loss despite Mario Kart: Nintendo has reported a bigger first-quarter loss than expected, causing its share price to tumble. The Japanese company posted a 9.9bn yen ($97m; £57m) deficit for the April-to-June months, compared with an 8.6bn yen profit for the same period a year earlier. Sales were 8% lower, despite the release of a Mario Kart game in May - one of its most popular franchises. The firm did not alter its prediction of a return to full-year profit. It sank to a loss in its last financial year. Nintendo said it expected the release of key titles over the coming months to boost demand before the critical Christmas shopping season. These include new Super Smash Bros fighting games for its Wii U and 3DS consoles, as well as the action title Hyrule Warriors for the living-room machine and two Pokemon monster-collecting remakes for the handheld device.

• Intermix Names Jyothi Rao President: Intermix, owned by Gap Inc., has named Jyothi Rao president and general manager, WWD has learned. Rao will start her new job on Sept. 2 and will report to Art Peck, president of Gap Inc.’s growth, innovation and digital division. Rao will closely work with Peck and Khajak Keledjian, founder and chief executive of Intermix, according to Gap. Athleta and Piperlime, also owned by Gap, report to Peck as well. Jyothi joins Intermix from Gilt Groupe, where, as executive vice president and general manager, she was instrumental in growing Gilt into a luxury e-commerce business worth hundreds of millions of dollars. The Intermix specialty chain offers fashions from emerging and established designers. According to Gap, Rao, Peck and Keledjian will “drive growth plans, nurture vendors and customers, and preserve the quality of client services at their favorite local stores.”

• Rue La La Seeking Investors: Flash-sale site Rue La La has hired J.P. Morgan to help find investors. According to a spokeswoman, “Rue La La has experienced tremendous growth since being purchased by Kynetic in 2011. To more fully pursue expansion opportunities, the company is working with J.P. Morgan to identify potential investors for a round of growth capital.” Over the years, since its launch in 2008, the Boston-based company has seen a number of changes in its corporate structure. The company in January 2012 said in a regulatory filing that it had issued $22 million in equity and options as part of its equity plan, contrary to some speculation at the time that it had gone through a round of fund-raising. The company doesn’t seem to have done any fund-raising in the last two years. Rue targets high-net-worth shoppers. It was launched by Retail Convergence, which also acquired SmartBargains, an off-price e-commerce shopping site, in 2008. Ben Fischman, who joined Retail Convergence in 2001, led the launch of Rue and the acquisition of SmartBargains.

• LBO for Lululemon?: Lululemon Athletica Inc. may be getting too pricy for a takeover. At least one analyst, Camilo Lyon of Canaccord Genuity, believes a leveraged buyout of Lululemon isn’t going to happen anytime soon. Following the yoga apparel firm’s first-quarter profit drop and founder Chip Wilson’s failed attempt to shake up the company’s board, both last month, there has been market speculation that Lululemon might be ripe for a takeover. Rumblings that Wilson has tested the private equity waters haven’t helped cool the speculation.