Daily News Digest- 4th Aug'14

Thought of the Day:

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Following made the Headlines:

India:

• Snapdeal’s Bahl says Flipkart Over-valued: Kunal Bahl, the founder of India's second-largest e-tailer Snapdeal, is suggesting that Flipkart may be over-valued and said investors are besieging him with offers to accept money . Bahl, 32, is being watched closely after Flipkart last week raised $1 billion in funding and Amazon said it will invest double the amount in India. “There is a company whose val uation is ridicu lously high and there are a bunch of investors there already who have put in a lot of money,“ he said in an obvious reference to Flipkart. Bahl, who spoke to ET from the US where he was holidaying, remarked that he has never followed the “herd mentality“. Most observers are of the view that Snapdeal will be under pressure as Amazon and Flipkart compete against each other for top honours in India. Measured by sales, Bahl's company is thought to be in second place behind Flipkart, but Amazon is not far behind.

• Vipul Prakash to be Pepsi Marketing Head in India: Vipul Prakash, a former PepsiCo India marketing director, is set to replace Deepika Warrier as the American snacks and beverages major's marketing head in India in October. Warrier will move to Dubai in an Asia-Middle East region role. PepsiCo chief people officer Samik Basu confirmed the moves to ET and said, “These moves are meant to provide the next level of critical leadership experiences for both.“Prakash, 46, moves in from PepsiCo Dubai where he was vice-president for innovations. As a PepsiCo India marketing director in mid-2000s, he was in charge of brand Pepsi in India and part of the marketing team that had created the high-recall `Oye Bubbly' and `Blue Billion' campaigns, a PepsiCo spokesman said. As marketing head, Prakash will be in-charge of 22 brands including Pepsi, Mountain Dew, Kurkure and Lays. Eight of these brands estimated retail sales of over ₹ 1,000 crore. Prakash will report to PepsiCo India chairman D Shivakumar. Prakash will have his hands full in India. 

• DLF Eyes Rs 200 cr Annual Rent from Noida Mall: India's biggest realty firm DLF is expecting ₹ 200 crore rental income per year from its large luxury shopping mall in Noida to be launched early next year. 'DLF Mall of India' with 2 million sq ft of leasable area is being developed in Noida at an investment of ₹ 1,100 crore and touted as one of the biggest in the country. DLF has leased about 90% of the area and the mall is expected to be launched in February-March 2015, sources said, adding that more than 200 brands have signed so far. The company is expecting an annual rental income of ₹ 200 crore from Mall of India in Noida, sources said. DLF's annual rental income from commercial properties, stood at ₹ 1,950 crore last fiscal. It is targeting 8% growth this financial year to ₹ 2,100 crore, according to analyst presentation. Rental income could reach ₹ 2,500 crore during 201516 fiscal on the back of normal 8-10% growth plus additional ₹ 200 crore coming from Noida ` mall, sources said.

• Decoding Flipkart: The other people & numbers: Representatives of private equity firms outnumber the founders of e- commerce poster boy Flipkart. com on the board of its Singapore- based parent, Flipkart Private Ltd ( FPL). FPL is the ultimate holding company of several legal entities based in Singapore and India that work seamlessly to convert an online shopper’s click or touch into a neatly wrapped bestseller or the latest smartphone delivered at his doorstep. FPL is also the primary recipient of the millions of dollars private equity money that has been flooding the company of late. As many as 40 global entities own preference shares worth a billion dollars in the company. While FPL, which is described as an investment holdings firm in official filings, is said to be worth several billion dollars, its main operational arms in India have recently received funds from the parent valuing these at a fraction. Flipkart India ( FIPL), the Indian entity that runs its cash- and- carry and wholesale businesses was valued at ₹ 2,246.45 crore whereas Flipkart Internet, the marketplace arm, was valued at ₹ 1,426.65 crore. That barely adds up to half a billion dollars. Where are the other billions? Business Standard studied the business profiles and corporate filings of 10 legal entities with the ‘Flipkart’ name in India and Singapore to bring to you the first ever look into the board composition, capital structure and earnings numbers of the group, which according to its cheerleaders are worth several billion dollars.

• Justdial to launch services in UK, UAE: Justdial is looking to expand internationally even as the local search firm goes deeper into the Indian market with its "Search Plus" services. Justdial will launch in United Kingdom next month and then by October in the United Arab Emirates, after which it will look to expand into South East Asia. "The idea is that die-hard users of Justdial should be able to use it wherever they go. And in countries where they don't have a product like Justdial, they will be addicted once they discover it," said founder & CEO VSS Mani.

• Brands Need a Handle on Their Tweets; Goof-ups can Hurt Badly: On June 29, soon after the Netherlands knocked Mexico out of the football World Cup in a close encounter, Dutch airline KLM tweeted ` Adios Amigos!' accompanied by a picture of an airport departure sign with the drawing of mustachioed man in sombrero. It drew hundreds of angry responses and popular Mexican actor Gael Garcia Bernal vowed never to fly KLM again, before the airline deleted the tweet. Brands around the world, from Europe to America to India, have made several faux pas on social media in recent times, and in many cases they pay a big price by losing customers. Experts say many brands take social media too casually.

• Honda to Set up Largest Scooter Plant in Gujarat: Honda Motors, which is swearing by scooters in India, is setting up the world's largest scooter plant in Gujarat to roll out 12 lakh units annually and achieve leadership position in the Indian two-wheeler market, especially with a growing number of customers shifting to this unisex multi-utility mode that has caught the fancy of many and outpaced almost every other segment. Scooter sales have jumped by 29% in the ongoing fiscal, and now form 27% of the total two-wheeler market from just 8% a decade back. The ever-rising demand for scooters that has far outstripped supply has prompted Honda to set up its first dedicated scooter plant in Ahmedabad. “Even as we have more than doubled our scooter capacity in India, we have not been able to match up with the demand. After 13 years of its launch, Activa continues to be on `waiting' even as competition has multiplied ten times,“ said YS Guleria, Honda VP for marketing and sales in India.

• Air India Plans to Hire 225 Cabin Crew Members: Air India's management has mooted a plan to hire 225 cabin crew members, a first in five years, even as the carrier continues to battle heavy losses one of the key reasons for which is an inflated wage bill. Three senior executives at the airline confirmed the plans. One of them said the hiring is for additional flights planned by the carrier. ET had on June 30 reported on the state-run carrier renewing discussions on hiring additional cabin crew. The reason, according to a source in the know was more “an improvement in service standards“, after it joined global airline group Star Alliance. This meant the airline planned to have more cabin crew on board some international flights to better attend to passengers.

• E- commerce ad spends to beat HUL’s in a year: A handful of e- commerce players will likely upset the pecking order of the country’s largest advertisers in a year. Thanks to the media blitzkrieg by players such as Jabong, Myntra, Snapdeal, Flipkart, Amazon, OLX and Quikr, e- commerce as acategory has seen an over three to fourfold jump in ad spends in a year. From ₹ 200- 300 crore last year, spends by e- commerce players have now touched ₹ 1,000 crore, according to Anupriya Acharya, Group CEO, ZenithOptimedia, India. Her assessment is based on the frenetic pace at which these companies have been placing television, digital and outdoor ads in the past few months.

International:

• British Airways to continue flying over Iraq: British Airways flights will continue to fly over Iraq despite concerns over the threat of Islamic militants on the ground, its chief executive has said. Willie Walsh told the Financial Times: "We fly over Iraq because we consider it safe. If we thought Iraq was unsafe we would not fly over Iraq." Qantas has become the latest airline to say it will divert planes to avoid flying through Iraqi airspace. BA said it would be reviewing its decision on a daily basis. The airline said flights from the UK to destinations including Dubai and Doha would normally cross Iraqi airspace.

• McDonald's CEO Don Thompson 'under siege' at home and abroad: The head of the world's biggest restaurant chain, who for much of his two years at the helm has been battling to spark sales growth in the United States and Europe, got battered by headline-grabbing bad news in late July. In the final days of the month, its China business was hit with a food-safety scare involving a key supplier; the chain got ensnared in the West's sanctions standoff with Russia; burger flippers at US restaurants claimed an incremental win from the National Labor Relations Board in their fight to hold McDonald's responsible for the actions of franchisees; and, a Texas jury slapped the company with a $27 million verdict. Add to all that its results showed second-quarter profit dropped more than expected.

• Linda Lee Exits Macy's: Linda Lee, who at Macy’s Inc. expanded the personal shopping service from the province of the privileged to the general population, concludes her 35-year career at the department store today. “My customer is really everybody who walks through Macy’s doors,” said Lee, group vice president in charge of Macy’s By Appointment personal shopping, corporate sales and business to business services, in an interview. Though retailers are not generally associated with superior service, according to Lee, the personal shopping side to Macy’s is alive and well. “We are still building wardrobes for customers,” she said.

• E-tailer Not Just A Label Relaunches: Not Just A Label, the London-based online showcase, retailer and scouting platform for emerging designers, has relaunched with a new look. Founder Stefan Siegel said his ambition is that the platform’s new design and more discoverable content will drive the retailer’s sales of emerging designers’ creations. On its previous platform, which launched in 2008, Siegel wasn’t able to tag content to optimize it for online searches and it lacked a smooth e-commerce process. Now, the site has a responsive design that adapts to smartphone, tablet and desktop screens, and its content is tagged so it’s more visible online. “What we really want to do is be as good as an Asos [or] Net-a-porter, but sell the emerging designers, sell the artisans,” said Siegel. The new site has been built on Drupal, an open-source platform, which Siegel said plays into NJAL’s collaborative ethos, as other developers in the open-source community could now use their new site as a template. The site spotlights the work of designers drawn from established fashion cities such as London and New York through to more unexpected locales such as Slovenia, Poland, Morocco and Ukraine.

• Hong Kong Retail Hinges on Welcoming Mainlanders, Hang Lung Says: Hang Lung Properties Ltd., which earns more than half of its rental profit from its China malls and offices, said a recovery in Hong Kong retail sales depends a change in negative attitude toward mainland visitors. “Retail sales definitely haven’t peaked,” Ronnie Chan, chairman of the Hong Kong-based company, said in an interview today. “There are still a lot of mainland customers coming here. The problem is whether you welcome them or not. It’s definitely a big factor.”

• Permira Said to Seek Buyer For $5.5 Billion Hugo Boss Stake: Permira Advisers LLP is in talks with advisers about a potential sale of its remaining stake in German fashion house Hugo Boss AG seven years after taking control, according to three people with knowledge of the matter. The private-equity firm, which owns 56 percent of Hugo Boss, is in discussions to find a buyer for the stake, which is valued at about 4.2 billion euros ($5.5 billion).