Daily News Digest- 13th Aug'14

Thought of the Day:

Today in History:

Following made the Headlines:

India:

• Started Off 10 Years Ago. Now He's Worth Rs 15,000 cr: Top Dollar Show After Flipkart, Mu Sigma may be the next to hit $7-billion valuation. And there is no stopping the startups, which are tanking up on grads at campuses Mu Sigma's Rajaram is Latest to Enter India's Startup Lore Data cruncher Mu Sigma is in talks with multiple in vestors for a fresh round of fund-raising that could catapult the company into the rarefied league of India-based star tup firms with multi-billion-dollar valuations, according to two people with knowledge of the developments. “The company could raise up to $500 million and may be valued at $6-7 billion (₹36,000-₹42,000 crore),“ said one person who asked not to be named. The deal, when complete, will illustrate a rapid maturing of India's entrepreneurial ecosystem where only last month Bangalore-based online retailer Flipkart received $1 billion (about ₹ 6,000 crore) from investors who ` valued the company at $7 billion. Companies such as Mu Sigma and Flipkart have become pinup symbols of India's entrepreneurial activity, their galloping valuations on the back of strong investor interest serving as an inspiration for hordes of wannabe entrepreneurs. Mu Sigma, founded by former Booz Allen Hamilton consultant Dhiraj Rajaram, is talking to both financial and strategic investors for the latest round of fund-raising aimed at helping it enter a coveted group of global data crunching companies with multi-billion-dollar valuations. Last December, Palantir, a US-based data analytics peer that like Mu Sigma was also born in 2004, raised a little over $100 million, valuing it at around $9 billion.

• Startups the New Hiring Blockbuster: Flush with funds and hungry for growth, a bunch of startups is gearing up to stake claim on talent at India's top campuses. As placements unfold over the next few months at the IITs, IIMs and other institutes, these startups look on track to give traditional heavyweights a run for their money in the battle for talent. Ten startups that ET spoke to are collectively look ing to hire more than 850 graduates across leading business schools, engineering colleges and graduate schools this fiscal. From established names such as Flipkart, TaxiForSure and Olacabs to campus newbies like Vizury and CodeNation, almost all are hiring in greater numbers than before, armed with attractive pay packages and the promise of greater responsibilities and faster growth for potential hires. Barely six months after being registered as a company, enterprise software developer CodeNation is already one of the most coveted recruiters at engineering campuses such as National Institutes of Technology (NITs), offering salaries of ₹ 24 lakh. One of the last to go to the campuses last season, it hired 12 engineering graduates in March 2014. This time, it plans to net the best early on from the IITs, NITs, IIITs (Indian Institutes of Information Technology), DTU (Delhi Technological University) and PESIT (PES Institute of Technology).

• Bharti Retail Appoints Craig Wimsatt as COO: Bharti Retail has named Craig Wimsatt as the new chief operating officer of the company, reports Rasul Bailay. Wimsatt, who worked with the American supermarket giant Walmart for years and has also been part of the team that set up Best Price wholesale chain in India, was hired as an advisor by Bharti Retail earlier this year. Now, as he officially assumes charge as the COO of Bharti Retail, Wimsatt will report to chief executive Raj Jain. With Wimsatt on board, the top three executives of Bharti Retail, including Jain and chief financial officer Pankaj Madan , are former Bharti-Walmart joint venture officials. Bharti and Walmart ran a 50:50 wholesale retailing joint venture in India until differences cropped up between the partners, leading to a split in the six-year-old alliance in October last year. While Bharti is currently focusing on its own Easyday chain of supermarkets, Walmart runs the Best Price chain.

• Trump may Buy Stake in Lodha's Worli Tower: American real estate tycoon Donald Trump said he is drawing up plans to invest in India, enthused by the election of Narendra Modi as prime minister. “Money will pour into India,“ he said during a visit to Mumbai on Tuesday. “The perception about India has changed. The optimism is returning.“ Trump, whose business interests span real estate, hospitality, golf courses and casinos, has not invested in India so far. But he said he was close to buying a shareholding in Mumbai builder Lodha Group's upcoming sea-facing luxury development branded Trump Tower. “We are looking to make substantial investment,“ Trump told ET. He didn't say when or how much this would be. “It's private,“ he said. Lodha is constructing Trump Tower Mumbai at The Park project in Worli as part of a 17.5-acre development under a brand licence agreement from Trump. Both Lodha and Trump said around 100 apartments have already been sold even before the official launch on Tuesday .

• Tata Motors Launches Compact Sedan Zest: Tata Motors on Tuesday launched the compact sedan Zest, its first new product in four years, in a bid to recoup its depleting market share and losses in the domestic market. The petrol version of the sub-4 metre sedan is priced at ₹ 4.64 lakh and the diesel version at ₹ 5.64 lakh at showrooms in Delhi. At the price, the model competes with Hyundai Accent, starting at ₹ 4.66 lakh, Maruti Suzuki's Swift Dzire, which starts at ₹ 4.85 lakh and Honda's Amaze, starting at ₹ 4.99 lakh. The model has features like multi-media touch controlled speakers, steering wheel mounted controls, voice recognition, image viewer and smart phone integration for the first time in Tata Motors cars. The company has in recent times has ceded enormous market share to competitors in the passenger vehicle segment, although it still leads rivals in trucks and buses.

• Uninor Plays Pricing Card to Lure Customers: Norwegian Telenor ASA is somewhat a fringe player in India's telecommuni cations market, operating in just six of the nation's 22 telecom service areas, offering pre-paid-only services under the Uninor brand and having 4% of the market share. In terms of customer additions, however, it is currently one of the leaders. Uninor added the second most number of subscribers in May and June, competing with Bharti Airtel, Vodafone India, Idea Cellular and Reliance Communications which have pan-India networks. It was among the top three in April and February. July numbers aren't available yet. The company, which has relaunched services after a painful separation with local joint-venture partner Unitech, has attracted subscribers by offering some of the cheapest phone-call prices. Rivals dub the approach unsustainable, but Uninor says it would continue to offer affordable services to the mass market, underscoring its strategy aimed at capturing subscribers.

• AI chief gets three-month extension: The Centre is set to begin the hunt for a new Air India chairman after the aviation ministry's proposal to give a two-year extension to Rohit Nandan, the current chief, was turned down. Instead, Nandan has been given a three-month extension at the loss-making national carrier. The stance on an extension for Nandan is seen as an indication of the NDA's aversion to granting extensions to people in key positions. Cabinet secretary Ajit Seth was given a six-month extension till this December, while S Ramanujam, secretary in PMO, got three extra months, post-retirement.

• Budget airports may transport you to an era long lost: Body scans, x- rayed baggage, before a flight, check in your own luggage, and walk on to the tarmac to board a turboprop. The Airports Authority of Central Industrial Security Force. And, no food kiosks. “Traffic is unlikely to be heavy at these airports. The purpose is to create the minimum facilities for aircraft to operate without compromising on safety and security,” said an official, confirming the plans had been frozen. Air- conditioning- hungry steel- andglass structures are out. The terminals will be lean so that passengers can directly step out of the airport on arrival. Clean drinking water and toilets figure in the plans, though. All these bring down costs by 50 per cent. A terminal can be built for as little as ₹ 50 crore. Its modular framework can be added to, if traffic grows. Amber Dubey, partner and India head of aerospace and defence at KPMG, says: “The no- frills airport should be on a ‘ railway station plus’ model, without compromising on safety and security. The focus should shift from security of the airport to security of the aircraft. The approach has to change from visible security to smart security, using CCTV and a small quick- reaction security team. There is no need for costly air- navigation equipment; that can be provided remotely by larger airports.” “We have to take inspiration from the US, where only 5,000 of the 15,000 airports have paved runways. It manages to keep the costs low without compromising on safety and security. The district authorities in the US use the airport as a facilitator of local business and not as business itself,” Dubey adds.

• Britannia profit jumps 27% on lower advertising expenses: Biscuit maker Britannia Industries Ltd reported a 27% jump in net profit to Rs.113.66 crore for the June quarter, as lower advertising expenses broadened margins. Total income from operations in the quarter ended June increased 15.2% to Rs.1,786.9 crore. Advertisement expenses fell nearly 6% to Rs.138.43 crore. Results have improved significantly at Britannia for more than a year now, as stabilizing costs of ingredients such as sugar and wheat as well as cost-cutting have boosted operating margins. Sales growth has also improved despite weak demand, helped partly by price increases and wider distribution. Under new managing director Varun Berry, Britannia has slashed its stock-keeping units (SKUs), or the number of products across various pack sizes, by as much as 30% to around 220 and relaunched several brands such as Tiger with new packaging backed by marketing campaigns.

• Auchan, Max Hypermarket part ways over FDI compliance issues: Max Hypermarket India Pvt. Ltd , a part of the Dubai-based Landmark Group , and French retailer Auchan group, have ended their partnership, which is the latest casualty of India’s foreign investment rules. The split was on account of the difficulty in complying with India’s foreign investment rules and strategic differences between the partners. Max and Auchan entered a licensing agreement in August 2012 under which Max Hypermarket would operate the Auchan Hypermarket chain in India. Auchan now has 13 hypermarkets spread over 6,39,000 sq. ft in Bangalore, Coimbatore, Gurgaon, Mangalore, Hyderabad, Delhi and Pune, the Max website said. Following changes in foreign investment norms in supermarkets and hypermarkets, the two companies looked at creating a joint venture, but failed because some of the existing stores would have had to be excluded from the joint venture, said the company statement .

• Haryana Fixes Minimum Wages of Industrial Workers at Rs. 7,400: Wooing industrial workers ahead of assembly elections, the Haryana government on Tuesday announced to fix minimum wages of industrial workers at Rs. 7,400 per month with a provision of five per cent annual hike. A notification to this effect would be issued on Wednesday and objections would be invited, Chief Minister Bhupinder Singh Hooda told reporters after holding a meeting of his cabinet this evening. Mr Hooda also said Chief Secretary Shakuntla Jakhu has been asked to ensure that minimum wages of Rs. 8,100 are paid to all contractual employees in state government departments. In another decision, the state government also announced to allow mixed land use of industrial plots/sheds situated in the Industrial Estates, which have been in existence in the State from the time state came into being on November 1,1966. In addition, the Industrial Estates which were set up even before Haryana was carved out as a separate State in 1966, would be additionally covered, including at Hisar (1964), Gurgaon (1964), Pinjore (1964).

• Norway’s Crayon group buys 80% in Chennai-based Kryptos: Norwegian software licensing firm Crayon Group on Tuesday said it has bought 80% in Kryptos Network Pvt. Ltd, a licensing and cloud advisory company for Rs.24 crore in an all-cash transaction. Crayon Group is a Software Asset Management (SAM) firm that offers licenses from Microsoft Corp., Adobe Systems Inc., Symantec Corp., Citrix, VMware Inc., Oracle Corp., International Business Machines Corp. (IBM) and others. The Chennai-based Kryptos Network was founded by Prasanna Ram, who is also its chief executive officer (CEO). Kryptos will function as Crayon’s back office in India and handle back-end processes for Crayon’s global clients. With this acquisition, Crayon Group will expand to seven cities in India from the current four. It plans to double its headcount to 100 consultants by March.

• Tata Motors' profits boosted by Jaguar Land Rover: Tata Motors has reported a big jump in profits thanks to strong sales at its Jaguar Land Rover business. Net profits at India's biggest carmaker tripled to 53.98bn rupees ($882m; £525m) in the three months to the end of June, far more than analysts had expected. Revenue grew by almost 40%. Retail sales at Jaguar Land Rover rose by 22% over the period. The strong sales growth of these luxury brands helped mask a 28% fall in domestic vehicle sales.

International:

• Alibaba Strikes Deal to Boost Windfall From Potential Alipay IPO: Alibaba Group, the monstrous Chinese internet company, has inked a deal that gives it more options for profiting from the future success of China’s Alipay payments company, according to a regulatory filing. Under one scenario that still needs Chinese government approval, Alibaba can acquire a 33 percent stake in Alipay’s parent company, Small and Micro Financial Services Company. In the event that the government does not approve a stake or Alibaba chooses not to acquire one, Alibaba will be due a minimum $9.375 billion payout if Alipay or its parent company go public, according to the filing. Under a previous agreement, the IPO payout due Alibaba would have fallen somewhere between $2 billion and $6 billion, but no higher.

• Kate Spade Soars As Revenue Surges: A week after luxury brand and growing handbag powerhouse Michael Kors reported a 43% pop in quarterly revenue, competitor Kate Spade has fired back with a revenue surge of its own: the preppy handbag and accessory maker reported a near-50% surge in second quarter revenue Tuesday morning, and as a result, shares of the company have hit a new 52-week high. Kate Spade reported $266 million in second quarter revenue, a 48.7% increase over the year-ago period and a figure that easily cleared the $243 million analyst consensus. The company’s net loss for the period was just $14 million, or 11 cents per share, an improvement over the $24 million, 20-cent per-share loss reported this time in 2013. Excluding special items, Kate Spade’s profit came in at 5 cents per share, up from the 8-cent per-share loss reported this time last year and beating the Street consensus, which had forecast a break-even quarter.

• Phillip Morris prepared to sue UK over plain cigarette packaging: Tobacco giant Phillip Morris has said it is prepared to sue the UK government should it implement a law mandating plain packaging for cigarettes. The law proposes that cigarettes be sold with graphic health warnings and no branding. The Marlboro-maker said it was prepared to "seek fair compensation" through the courts should its branding be affected. Philip Morris is in the process of suing the Australian government over plain cigarette package rules. "PMI [Phillip Morris International] is prepared to protect its rights in the courts and to seek fair compensation for the value of its property," the company said in response to a government consultation on the proposed law. The law aims to improve public health by discouraging people from smoking.

• Alexandra Wilkis Wilson Named Glamsquad CEO: Alexandra Wilkis Wilson, cofounder and strategic adviser of Gilt Groupe, has been named president and chief executive officer of Glamsquad, an on-demand beauty service app, a new post. Glamsquad delivers high-quality and affordable at-home beauty services by experienced stylists. Wilson’s role will be to lead the expansion into new service lines, geographies and revenue streams. In a related move, former ceo and cofounder Victoria Eisner will assume the role of executive vice president and chief creative officer. Both Wilson and Eisner begin their new roles on Sept. 1.

• Australia's City Chic Opens in California: Phil Ryan isn’t under any illusions. “Australian retailers haven’t been successful in America,” said the president of City Chic, a plus-size retailer, which is nonetheless having a go at the U.S. market. On Aug. 1, the retailer opened six stores in California, in Culver City, Brea, Tyler, Northridge, Mission Valley and Glendale. City Chic, with 100 stores in Australia, New Zealand and South Africa, is part of the Specialty Fashion Group, which operates 1,000 stores across its portfolio. “We started trading in the U.S. four years ago online,” said Ryan. “We’ve had our ups and downs. In the last two years, it’s really picked up and we’ve gotten the confidence to open our own stores. We have spent a lot of time here. Our operations and design teams have all been over. We have a high comfort level with this market. Our focus is on making it work.” City Chic is sold at 50 Nordstrom doors in the plus-size Encore department and on nordstrom.com.

• New Retail Mecca: Lower Manhattan: Retailing in lower Manhattan is gaining promise and getting pricier. With sweeping transformation hitting the area, lower Manhattan asking rents soared 37.8 percent in the second quarter this year over the same period last year, faster than any other section of the borough, Cushman & Wakefield reported Monday. The commercial real estate services firm examined 10 Manhattan neighborhoods and concluded that lower Manhattan’s asking rents, in percent increases, stand “head and shoulders above the rest.” Average asking rents for ground-floor space in lower Manhattan averaged $346 a square foot in the second quarter of 2014, compared to $251 in the same quarter a year ago. The area’s vacancy rate stood at 6.4 percent compared to 9.1 percent in the year-ago period.

Tech:

• India to have more Internet users than US in 2014, says search engine giant: Indian Internet users will surpass the number in the US by the end of this year and around 500 million people will be online by 2018. "Even at the current growth rate, we will have 500 million Indians on the Internet by 2018. By the end of this year, India will become larger than the US in terms of number of Internet users. By 2018, India will have twice the number of Internet users as the US does. Almost half the country will be connected through the Internet," said Rajan Anandan, managing director, Google India Tuesday, while addressing "Digitizing India" organised by FICCI Ladies Organisation.

• 20,000 Xiaomi Mi 3 Get Sold in 2.4 Secs: Xiaomi, China's largest handset maker, on Tuesday sold 20,000 Mi 3 smartphones on Flipkart within 2.4 seconds. This was Xiaomi's fourth flash sale on the online retail platform. While fewer glitches were reported this time, Flipkart website went down several times due to the high traffic in the past. Hugo Barra, vice-president for international operations at Xiaomi, had apologised to frustrated customers and assured them of larger stocks going for ward. Flipkart has also improved its resources to support large number of users on the site at the same time, which is a norm during the flash sales. The next sale begins on August 19, registrations for which began 6 pm on Tuesday on Flipkart. The number of devices that will be available for purchase was not shared by the company till Tuesday evening.

• Xbox gets Tomb Raider sequel as exclusive title: Microsoft has announced that the next flagship game in its Tomb Raider series is to be an Xbox "exclusive". The previous title had also been released for Sony's PlayStation platform in addition to a version for PCs and Macs. The title's developer, Crystal Dynamics, said it believed the tie-up would help it advance the action-adventure game's brand. But the studio acknowledged some people would have "concerns". The original Tomb Raider game was closely associated with the original PlayStation, which it helped make a success. One industry watcher described the news as a "decent coup" for Microsoft.

• Sony reveals PlayStation TV launch dates in UK and US: Sony has revealed autumn launch dates for its PlayStation TV in the US, UK, and Europe. Available in Japan since last year, the micro-console is the firm's efforts to take on other streaming television consoles like AppleTV and Roku. Unlike those, Sony's offering will allow gamers access to PlayStation games. Sony said consoles will go on sale in the US on 14 October and in the UK on 14 November. They will cost $99 (£59) in the US and 99 euros (£78) in Europe, and will include three games. The UK price has not yet been announced. The console will allow users access to Sony's games library via Remote Play, and it will also offer access to third-party applications like Netflix. In the US, it will also offer access to Sony's game-streaming service, PlayStation Now, which will be coming to Europe and the UK in 2015.

• Google helps build 'Faster' cable under Pacific Ocean: Google and five other large companies are teaming up to build a cable under the Pacific Ocean that will deliver incredibly fast internet speeds. The cable, dubbed Faster, will connect the US with Japan and cost about $300m (£179m; 225m euros), the consortium said. The trans-Pacific fibre cable would deliver speeds of 60 terabytes per second - enough to send more than 2,000 uncompressed HD films a second. The cable will be operational by 2016. Google is working with a host of Asian telecoms giants - China Mobile, China Telecom, Global Transit, KDDI, and SingTel.