Daily News Digest- 12th Aug'14

Thought of the Day:

Today in History:

Following made the Headlines:

India:

• Jet to scrap low- cost service by year- end: Jet Airways has decided to scrap its low- cost brand, Jet Konnect, launched five years ago, to focus on its full- service operation, as it faces competition from established airlines and start- ups like AirAsia and Vistara. The airline, which reported its sixth straight quarter of losses on Monday ( though it managed to reduce the figure), will reconfigure all its Boeing planes and offer a standard configuration of 12 business class and 156 economy seats. Jet Airways hopes to switch to the single model by the end of the year. Jet Konnect was started to compete with low- cost airlines but the airline has been unable to improve its loads and the twin brand strategy has led to confusion among passengers. Announcing the decision to operate a single brand, Jet Airways Chairman Naresh Goyal said: “ We as an airline confused customers (with multiple brands)... The main aim in the tie- up ( with Etihad) will be to increase market share.” Jet Airways operates a full service and no- frills brand with its two operating permits. Under Jet Airways permit, it offers full service and Konnect service. Under JetLite permit, it only offers Konnect service. Under the Jet Airways permit, it operates about 270 domestic flights and nearly 60 per cent of these offer no- frills service. Subsidiary JetLite has 12 aircraft.

• Vistara unveiled, to start flying by Oct: Tata Sons and Singapore Airlines will launch their airline, named Vistara on Monday, by October. Vistara has leased 20 Airbus A- 320s, including seven A- 320 Neos, to be inducted over five years. The airline will take delivery of its first aircraft in September and have a fleet of five by the end of the year. The fuel- efficient A- 320 Neos will arrive in 2017, much later than AirAsia and IndiGo will deploy theirs. Vistara’s application for an air operator’s permit is being examined by the Directorate General of Civil Aviation. Phee Teik Yeoh, chief executive of Tata- SIA, said: “ We are in the last lap. There is a series of approvals to get. We expect to receive the first aircraft in September and we will have five aircraft this year.” Prasad Menon, chairman of Tata- SIA, said: “ Everyone knows the parentage of the airline, but a new identity is needed to communicate what the brand stands for.” Vistara, the Sanskrit for limitless expanse, is in line with Singapore Airlines’ strategy to provide new brand names to the airlines it controls: Regional carrier SilkAir and budget carrier Scoot. The airline also unveiled on Monday the uniforms for pilots and cabin crew, designed by David Abraham and Rakesh Thakore.

• Carnation Acquires Barista for Rs 100 Cr: New Delhi-based Carnation Hospitality has acquired Barista Coffee for ₹ 100 crore from Lavazza Spa, becoming the fourth owner of India’s pioneer, yet struggling, coffee chain. Lavazza has been looking to sell Barista for almost a year as the Italian group wanted to exit the business after it failed to turn around the lossmaking coffee chain. Carnation, a unit of Haryanabased packaging company Rollatainers, earlier this year entered the food segment when it acquired restaurant chains Kylin and Sartoria. It is also bringing Jamie's Italian Restaurants to India through a franchise arrangement. “We have recently expanded our food business and this is truly an exciting development for us. As part of our portfolio we are adding India's secondlargest coffee chain,” Carnation director Sanjay Chhabra said. Lavazza wasn’t available for comment.

• With Discover 150, Bajaj eyes bigger market share: Bajaj Auto, India’s third- largest motorcycle maker, on Monday launched a 150cc bike under the Discover brand, in an attempt to claw back market share, which has come under intense pressure over the past couple of years. At ₹ 53,074 ( ex- showroom Mumbai), the Discover is the cheapest 150cc motorcycle in the market. The Pune- based company has taken brand Discover to the premium segment ( 150cc and above) for the first time, which is otherwise catered to by Pulsar. The shares of Bajaj Auto in the motorcycle segment dipped to 17.7 per cent by the end of the June quarter with sales of 490,841 units, a drop of 14 per cent compared to the same quarter last year. Its share in the bike segment in FY12 was 25.48 per cent, according to data shared by the Society of Indian Automobile Manufacturers. Aggressive promotion by Honda in the entry category ( 100- 110cc) and continued domination by market leader Hero MotoCorp pushed Bajaj to the third spot in the ranking. While Bajaj is still the second- largest bike producer in the domestic market, its position is challenged by Honda, which narrowed the gap significantly.

• Retail vertical may weigh on IT services firms in near term: While a broad- based improvement in several economies has led to most business segments coming out of the woods, the retail sector has emerged as a concern for several large Indian information technology ( IT) services companies through the past two quarters. For three IT services heavyweights — Infosys, Cognizant and Wipro — earnings for the quarter ended June were pulled down by aslump in the retail segment. While these companies said this was due to “client- specific” and “ companyspecific” issues, experts believe several challenges surrounding the retail sector could continue to weigh on the performance of Indian IT services companies in the near term. “Retail businesses are going through transformational changes due to the picking up of e- commerce. Now, these companies are struggling to retain their profit margins due to the new- found competition. A few companies have been impacted more than others. These disruptive changes might have impacted the revenue outlook for Indian IT selectively, depending on client- exposure,” said Shashi Bhusan, senior research analyst (institutional equities) at brokerage firm Prabhudas Lilladher.

• Bangalore Brains to Fire up Mercedes Engines: Daimler, owner of MercedesBenz, is betting on a firstof-its-kind initiative of relying on data scientists at its Bangalore research unit to improve quality of its marquee cars. Mercedes-Benz India research and development facility will have a team of 50 data scientists by the end of 2014 who will make predictive analysis based on the data collected and share it with workers in Germany, thereby leading to fewer component failures, said a senior executive. “This (Bangalore) is the Silicon Valley for us,” said Manu Saale, CEO, Mercedes-Benz Research and Development India (MBRDI). “Right now the maximum action in terms of ideas, startups, crunching new technology and digesting it is happening here. Here in Bangalore,” Saale explained why the Stuttgartbased carmaker chose India.

• FoodPanda Raises $60 Million: FoodPanda has raised $60 million in a new round of financing from a group of investors, including existing backers Falcon Edge Capital and Rocket Internet AG.

• HUL to Split Home and Personal Care Business: Hindustan Unilever is splitting its home and personal care (HPC) business into two separate divisions for a sharper marketing focus, translating into a shake-up of its top management that also sees India's biggest consumer goods-maker appointing a woman as head of a business division. Priya Nair, 42, now vice-president, laundry, will manage home care at Unilever's India unit. Samir Singh, 41, in charge of Lifebuoy globally and personal care lead for the South Asia cluster, will head personal care. The revamp will also see Hemant Bakshi, who oversaw the undivided HPC segment at HUL, moving to Unilever Indonesia as executive vice-president. Both Nair and Singh will also be part of the HUL management committee and their appointments are effective October 1. 

• AirAsia Launches Premium Services for Businessmen: AirAsia has announced the launch of Premium Flex services across all its operating regions, targeting small businessmen and entrepreneurs. AirAsia CEO Tony Fernandes told ET that this launch will provide airline guests with flexibility to change their flights up to two times with no change in fee, complimentary 20-kg baggage allowance and Express boarding, where the guests get priority check-in. Reiterating that these facilities do not mark a shift in AirAsia's product placement, Tony Fernandes said: “This is not a business class product. We are still a low-cost airline and have not changed anything.“ On the sidelines of the launch in Kuala Lumpur, Fernandes said India is a complicated market and that the past few months have been a good learning experience.

• Hyundai Cuts Exports, to Focus More on India Biz: Hyundai Motor India, the country's biggest car exporter, has decided to shift focus from exports to the domestic market, which is showing signs of recovery after nearly two years of falling sales. The local unit of Seoulbased Hyundai Motor Company has stopped shipments from its Chennai plant to Europe, which will now be catered by the parent's plants in Turkey and the Czech Republic. Hyundai Motor India contributed 45% of the 5.50 lakh cars shipped from India in 2013-14.

• Marketing Co Synup Raises Rs Rs.3 Cr: Synup, a year-old-company that helps small businesses manage their online presence, has raised (₹ 3 crore) in a round led by $500,000. Bangalore-based startup incubator AngelPrime to boost marketing and strengthen its technology. When 23-year-old cofounder Ashwin Ramesh was running his first online advertising company OrganicApex, he felt the need for digital marketing services that could work for local businesses. And so, Synup was born last August in Bangalore, and now, within three months of having launched services, it has roped in a few hundred paying customers in Canada and United States, its primary market.

• Coca-Cola Plans Bottling Plants in Andhra & Telangana: Coca-Cola has shown interest in setting up mega-bottling plants in Andhra Pradesh and Telangana, involving ₹ 1,000 crore of investments in each plant. A team led by the Coca Cola global executive vice-president Irial Finan met the chief ministers of Andhra Pradesh and Telangana -N Chandrababu Naidu and K Chandrasekhar Rao, respectively -in Hyderabad on Monday . Pointing out that Telangana was one of their largest markets, the Coca-Cola representatives told Rao that they were interested in setting up a mega plant involving an investment of ₹ 1,000 crore and sought government's support. Andhra Pradesh CMO said CocaCola team also evinced interest to participate in backward integration projects in agriculture for fruits like oranges and mangoes.

• E-tailers look to advertise in local languages: Online retailers which are seeing 45-50% of their overall sales coming from non-metros are increasingly turning to advertising in regional languages, company executives and industry experts said. E-tailers such as Flipkart, Snapdeal, Shopclues, Jabong and Amazon are looking to reach out to potential customers through vernacular newspapers, radio and outdoor media. Fashion e-tailer Myntra.com already directs 25-30% of its overall marketing expenditure towards vernacular media. The company, which was acquired by India’s largest e-commerce firm, Flipkart, in May, runs advertising campaigns on regional television channels in Tamil Nadu, Andhra Pradesh, Kerala and Karnataka. It covers the Hindi-speaking states of Rajasthan, Madhya Pradesh and Chhattisgarh via newspapers. Shopclues, an online marketplace, intends to spend 20-30% of its total marketing budget on regional branding and advertising. The company has set aside Rs.75 crore for all branding activities in 2014-15.

International:

• Sears Taps Alasdair James for Kmart: Sears Holdings Corp. is bringing in some global talent from Tesco plc for its Kmart business. The company hired Alasdair James as president and chief member officer of Kmart, making him responsible for the chain’s format strategy and profit and loss. He is also charged with “aligning merchandise, marketing, pricing and selling with the needs and wants of Shop Your Way members.” Edward Lampert, chairman and chief executive officer of Sears Holdings, has pinned much of the retail group’s reinvention on the member program, while also spinning off various operations, such as Lands’ End, and subleasing space to other retailers and taking other steps. The Kmart division has been adding new offerings, for instance, bringing in goods tied to Adam Levine and Nicki Minaj.

• Dairy Farm to Pay $925 Million for Stake in Yonghui Superstores: Dairy Farm International Holdings Ltd., an operator of supermarkets and retail stores, is paying 5.69 billion yuan, or $925 million, to buy 20 percent of Yonghui Superstores Co. as it seeks to tap China’s growing consumer market. “Dairy Farm has for some time been looking for opportunities to participate in the large and high growth Chinese market,” Graham Allan, chief executive officer of Dairy Farm, said in a statement to the London Stock Exchange. “This strategic partnership with Yonghui provides an attractive way to do that.”

• Diesel Opening Pop-up in Brooklyn: Diesel is about to take the wraps off its first pop-up shop, set to open Friday in Brooklyn’s Williamsburg section. The 1,000-square-foot store will be located at 101 Bedford Avenue in the New York borough and bear its street number, 101, as its name. The shop is among the “reboot” actions initiated by Nicola Formichetti since becoming the brand’s artistic director in April 2013 and will serve as a home — and sale point — for elements of the fall collection, his first for Diesel, introduced in Venice four months ago. In addition to his aggressive approach to the line, he’s made substantive changes to Diesel’s advertising and, as with his many fashion projects predating his appointment at Diesel, worked to greatly enhance its presence on social media. “We have unique pieces used only in the Diesel fashion show in Venice, exclusive denim and leather items all designed by me,” Formichetti said. “Also, you’ll find additional special touches like a Polaroid portrait gallery of our favorite people.”

• Retail Titans Take to Air: No one is raving about the retail business, only parts of it. Luxury, off-price and online are the best sectors, while regular stores, moderate and lower-priced merchandise are generally flat, according to a group of retail chief executive officers speaking separately on Bloomberg Radio’s “Titans of Retail” show Friday, making for a sobering synopsis. “In the U.S., the best category is luxury. The highest demographic customers are really shopping in full force,” said Richard Baker, chairman and ceo of Hudson’s Bay Co. The moderate sector is “rather flat, not negative,” he added, in his conversation with show hosts Kathleen Hays and Vonnie Quinn and guest host Kenneth C. Natori, vice president of The Natori Co.

• Tony Spring Outlines Bloomingdale's Future: There's a new face in the front row: Tony Spring, chairman and chief executive officer of Bloomingdale’s. Since taking the reins in February, he’s been conspicuous on the fashion scene, attending New York and Paris fashion weeks, visiting showrooms to learn what’s new and dining with designers in Flip, the gourmet hamburger joint on Bloomingdale’s lower level. “It has to start with the merchandise. If you don’t start with great product, we are not going to succeed,” Spring told WWD.

• Anthony Romano Named CEO of Destination Maternity: Anthony Romano, former chief executive officer of Charming Shoppes, has been appointed ceo and a director of Philadelphia-based Destination Maternity Corp. He succeeds Ed Krell, who is stepping down after 12 years with the firm. He joined as chief financial officer in 2002 and has served as ceo since 2008. Romano, a veteran of Ann Inc., stayed on as president and ceo of Charming Shoppes after its sales to Ascena Retail Group in May 2012 and remained with Ascena until March 2013. A certified public accountant, he began his career with Ernst & Young and rose to the post of of executive vice president and chief supply chain officer at Ann Inc., then Ann Taylor Inc. Arnaud Ajdler, chairman of Destination Maternity, commented that, under Krell’s stewardship, the company “made important progress, strengthening management, enhancing operations, improving financial performance and increasing shareholder value.”

Tech:

• Google is backing a new $300 million high-speed internet Trans-Pacific cable system between the US and Japan: Google has announced it is backing plans to build and operate a new high-speed internet Trans-Pacific cable system called “FASTER” by Q2 2016. In addition to Google, the $300 million project will be jointly managed by China Mobile International, China Telecom Global, Global Transit, KDDI, and SingTel, with NEC as the system supplier. FASTER will feature the latest high-quality 6-fiber-pair cable and optical transmission technologies. The new cable system will be landed at Chikura and Shima in Japan, but will also feature connectivity to many neighboring cable systems so as to extend the capacity beyond Japan to other Asian countries. Connections in the US will extend the system to major West Coast hubs including the Los Angeles, San Francisco, Portland and Seattle areas.

• Microsoft isn’t out of the entry-level market yet, after announcing a $25 Nokia feature phone: Fresh from a change of direction which will mean an end to Nokia X, Asha and S60 devices, Microsoft has pulled a bit of a surprise with the announcement of a €19 ($25) device aimed squarely at first-time phone buyers across the world. The company is putting all its smartphone efforts into the Windows Phone platform, but the new Nokia 130 bucks that trend since it is built on Nokia’s Series 30 software. Microsoft says the device is “the most affordable mobile phone with video and music player,” but it is certainly limited in its functions. The Nokia 130 sports an MP3 player, an FM radio and can play movies from an SD card because there’s no internet. The company claims the handset supports 46 hours of audio playback, and 16 hours of movie watching. The 1.8-inch phone also comes with a (basic) color display, a claimed 13 hours of talk time, and in single- or dual-SIM versions. 

• Microsoft shows off video stabilisation tools: Help is at hand for anyone who has shot a shaky video while cycling, climbing, kayaking or engaging in any other high-speed sport. Microsoft researchers have found a way to stabilise films and speed them up to make them more watchable. To fix the images, the software analyses footage and creates new frames to smooth out camera jumps. The team is currently working on ways to turn the research into a Windows application. First-person videos shot on wearable cameras such as the GoPro were becoming more popular, said the researchers, but could be "dead boring" to watch at normal speed and almost unwatchable when sped up, because of the exaggerated camera-shake that caused. While image-stabilisation software was already available, such programs typically did a poor job of coping with sped-up footage of any significant length, said the computer scientists in a webpage documenting their work. To solve the problem, the "hyperlapse" software, developed by Johannes Kopf, Michael Cohen and Richard Szeliski, subjects footage to a three-stage process. The first analyses a video to spot significant features in each scene and create a very approximate reconstruction of the part of the world the camera travelled through. The second stage involves working out the smoothest path the camera could take through this virtual reconstruction. The third part of the process renders a film in which the camera travels this smoother path. At this stage, extra frames are generated and added to remove jumps in the original footage and to fill in around the smooth path of the camera.

• 4K smartphones: Madness or the next big thing?: In the last few years, as smartphone design has basically settled on rectangular slabs of glass, we've seen manufacturers take the competition over who produces the best gear to a new battle ground: the specs war. Nowhere is this clearer and more easily visible than smartphone displays, the resolutions of which have been on a steadily upwards trend for the last couple of generations of flagship phones.

• Xiaomi releases software update after privacy scare: Following user privacy-related allegations by security company F-Secure, Xiaomi vice president Hugo Barra has responded with a detailed post on the issue via social networks. The company has also released a software update that tackles it. F-Secure had demonstrated how a Xiaomi Redmi 1S phone was sending data including the user's IMEI, phone number, and phone numbers of contacts added to the phone book to a remote server, even when Mi Cloud, the iCloud-like service from Xiaomi was not activated. In its defence, Xiaomi has said that user data was being transferred to allow users to benefit from Xiaomi's free iMessage-like cloud messaging service. The service, which allows Xiaomi phone owners to send free text messages to each other, is turned on by default for all users. Xiaomi routes these messages through its own servers. 

• Finland's Jolla eyeing Nokia staff laid off by Microsoft: Finnish mobile company Jolla is interested in hiring Nokia employees, who have been laid off by Microsoft which has acquired the mobile manufacturer. "What comes to the Microsoft job cuts: majority of our employees have a Nokia background, and we are always interested in new talent," Jolla Head of Communications Juhani Lassila told PTI in an email query in this regard.