Daily News Digest- 25th Aug'14

Thought of the Day:

Today in History:

Following made the Headlines:

India:

• Cos Plan Mother of all Ad Fireworks: Achhe din are almost upon us -this festival season will see India Inc spending over `. 2,000 crore on advertising, marketing and promotions, which will be a five-year record, and a sharp contrast to the pessimism of past few years. ET spoke to scores of companies, media planners and advertising agencies, and they were unanimous in predicting a record spike in advertising spends. The heaviest ad spending will be concentrated in the Onam to Diwali (September-October) period. Ecommerce companies such as Flipkart and Amazon will be major spenders. So will be big companies selling everything from smartphones and smart clothes, flat screen TVs and feature-rich refrigerators, and cars and cosmetics. The big spenders, apart from Amazon and Flipkart, will be Sony, Samsung, LG, Amazon, Reliance Retail and auto majors. Companies and media buyers told ET ad spends will be 20-50% higher than last year. They attribute the sharp hike to change in sentiments following the change in government, an uptick in macroeconomic data and a general sense among business that things are going to get better.

• Amul to pump in Rs550 crore to meet rising cheese demand: India’s largest milk cooperative, Gujarat Co-operative Milk Marketing Federation Ltd (GCMMF), which manages the Amul brand, plans to spend Rs. 550 crore to triple its processed cheese production capacity over the next two years to meet growing demand for the dairy product. “We will be setting up a greenfield project in Palanpur in Gujarat and double the capacity of the existing plant at Amul dairy in Anand,” said R.S Sodhi, managing director of GCMMF, in an interview at the federation’s headquarters in Anand, 60 kms from Ahmedabad in Gujarat. GCMMF, which earned Rs.18,143.46 crore of revenue in the year ended March, has a separate unit for production of cheese 40km from Anand in Khatraj, where the capacity will be extended.

• Billion $ startups offer Rs.1cr salaries: Flush with investor money and valuations topping a billion dollars, a small but fast-growing group of Indian startup superstars is fuelling a new wave of wage inflation in the Indian technology sector. The likes of e-commerce leader Flipkart, which raised $1 billion recently, and mobile advertising network InMobi are attracting mid-level executives and technology professionals with annual salaries of over a crore of rupees, something unheard of a cou ple of years ago. An angel investor says a startup with good funding is willing to pay a Rs 1crore-plus package to its senior talent. Bash Gaming, Fusion Charts, Eka Software, Capillary, Indix, Freshdesk and Knowlarity are said to be paying senior management executives an overall compensation that is close to or more than Rs 1 crore. TOI could not independently confirm these figures. The elite billion-dollar valuation club of privately held companies includes ecommerce major Snapdeal and data analytics firm Mu Sigma, besides Flipkart and InMobi.

• Hero ropes in top BMW tech honcho as R&D head: As it charts out a so lo journey afterthe split fromlong-time part ner Honda, theMunjal-familyrun two-wheel er company He roMotoCorp has appointed a top automobile designer from Germany's BMW as the head of its R&D division.Markus Braunsperger has been associated with the German auto major for a long time, heading the R&D function for BMW's Motorcycle division for several years. A bikingenthusiast, Braunsperger has worked at senior positions across BMW's R&D, production and strategy divisions. He has also been associated with the company's car division, being responsible for project management for BMW's key product lines such as the 5/6/7 series as well as X3, X5 and X7 models. Braunsperger will report to Hero vice-chairman Pawan Munjal as the company works on developing new models for the Indian as well as international markets. Munjal has been making efforts to beef up the R&D capability of Hero Moto as the company builds the crucial function from scratch.Last year, he had hired Markus Feichtner from the globally-renowned engine specialists, Austrian firm AVL to lead the “Engine Design & Development“ division within Hero's R&D function.

• Air India tightens personnel rules: Government- owned and loss- making Air India (AI) has terminated from service 194 cabin crew and 11 pilots over the past year, primarily for unauthorised absence. It now has 3,400 cabin crew, including 800 hired on contract. A senior executive said, “ Improving the performance parameters is priority. It is important to instil asense of discipline. The airline and its passengers should not suffer due to delays or absenteeism on the part of cockpit and cabin crew.” Additionally, 11 pilots were removed. “ There have been five- six instances where pilots resigned and moved on to work for another airline without serving the mandatory six months notice period. Earlier, chargesheets were not issued against such employees and they often returned to the company. We have now taken strict action against these pilots,” added the executive. Under the revised norms, pilots who do not serve the specified notice period or breach the bond liabilities will be terminated from service. If they wish to return, they would have to join at the bottom of the outlined seniority structure and bear the expense of re- training.

• Rishad-Led Investments Bring Big Bucks to Wipro: Wipro’s investments in new technologies and platforms have generated more than ten times returns since Rishad Premji has taken over as head of strategy at the nation’s third largest software exporter. Rishad, son of chairman Azim Premji, has led the company to also invest in two startups, the valuation of one of them has more than tripled in just 12 months. “These investments have helped different business units keep up with growth numbers and helped drive growth and we believe we have generated over 10x returns over the last three years (considering if we had to buy these technologies now),” said an executive from Wipro’s strategy division.

• SAIF, Aditya Birla PE Invest Rs 80 cr in Manpasand Beverages: South Asia-focused private equity firm SAIF Partners is increasing its stake in Gujaratbased Manpasand Beverages ahead of the company’s planned initial public offering (IPO), three people with direct knowledge of the development said. SAIF Partners, along with Aditya Birla Private Equity, is investing ₹ 70-80 crore in a pre-IPO round of fund raising by the company in a transaction that values Manpasand Beverages at ₹ 1,000 crore. “The company has raised ₹ 80 crore ahead of its proposed IPO. The company will come out with the issue by next financial year,” an investment banker with knowledge of the development said. Vishal Sood, managing director of SAIF, confirmed the investment. “We have invested just over ₹ 70 crore along with Aditya Birla PE. Post the investment, SAIF holds just under 30% stake in the company.” Manpasand Beverages manufactures the Sip brand of fruit juices in mango, apple and other flavours. SAIF Partners, which manages more than $3 billion in the South Asian markets, had invested $10 million in Manpasand in 2011 for a significant minority stake.

• Jet to Meet Icra on Downgrade: Jet Airways executives will meet credit ratings agency ICRA on Monday, following Saturday's downgrade of its debt rating to `D' from `BB' after the airline failed to meet loan repayment schedule. According to ICRA's rating scales, “instruments with `D' rating are in default or are expected to be in default soon.“ “Indeed Jet has been downgraded to `D' rating because of cases of defaults. We have been informed of the same by financial institutions and the airline's auditors,“ said Naresh Takkar, managing director and chief executive officer of the agency. He didn't elaborate on the amount Jet had defaulted on. The rating may make it difficult for the cash-strapped airline to raise additional loans. It recently raised $150 million worth of soft loans with help from its strategic partner Etihad Airways.

• Textile Min to ink Deal With Flipkart: The government has also got onto the Flipkart bandwagon. The ministry of textiles will on Monday sign an agreement with the online retailer that has been in the news for its recent capital raising. The retailer is set to breach in $3 billion in sales this year and is currently valued at over $7 billion. The company will provide an online platform to handloom weavers for selling their products. The agreement will be inked by the office of the Development Commissioner for Handlooms under the Ministry of Textiles.

• Hero Cycles Buys Germany's Mifa: Hero Cycles, the world’s largest bicycle maker by volume, has acquired Mitteldeutsche Fahrradwerke AG (Mifa), Germany’s largest manufacturer of the machines, in the company’s first ever overseas purchase as it looks to emerge as a leader in the global market. The Indian company has already made its first investment of 19 million euros (around ₹ 160 crore) in the company through its unit OPM Global, giving it a majority stake. Some of the funds would go toward meeting working capital requirements. It’s not clear how much the deal will cost in total. “It’s a strategic buy that would lead to huge amount of synergies in the global cycle business,” Pankaj Munjal, Hero Cycles co-chair and managing director, told ET. “The new combination of technology and cost leadership would help Hero to become one of the largest cycle companies in the world, both in value and volume.” The bicycle market is worth $49 billion globally.

• Donald Trump to Play his `Trump Card', Plans 30 Hotels by 2020: Trump Hotel Collection, the wholly-owned hotel management company of the US real estate billionaire Donald Trump, plans to have 30 hotels globally by 2020 and India will be a major contributor towards this tally. “Post the recent elections, we are seeing a return of investors looking particularly towards luxury hotel projects,” Shafi Syed, vice-president of development and acquisitions, Trump Hotel Collection, told ET. In India, the luxury hotel brand will target gateway cities like Mumbai, Delhi, Bangalore and Goa and is having discussions with builders who are looking to develop mixed-use projects that have a luxury hotel as well as branded real estate for sale. “There’s no hospitality brand that has the strength to deliver success in both real estate and hospitality like Trump,” said Syed. The Trump Hotel Collection owns some of its hotel properties globally. However, the luxury brand will focus on management contracts as a route to expand in the country.

• IndiGo Loses Senior Pilots; 40 Commanders Quit in a Year: Low-cost carrier IndiGo, which lost its market share by a% in July to 30.7%, has also lost as many as 40 commanders or senior pilots mainly to Gulf carriers in the last one year.While most of these commanders quit the airline for better prospects, some of them also parted ways due to the work culture, sources in the Gurgaon-based airline told PTI. “Around 40 commanders have parted ways with the airline over the past one year as most of them got lucrative offers from Gulf carriers,“ a source said.

International:

• Christopher Bailey Sells $8.6 Million in Burberry Shares: Christopher Bailey, chief executive and chief creative officer at Burberry, sold 5.2 million pounds, or $8.6 million, worth of his shares in Burberry, according to filings on the London Stock Exchange. The filing stated that Bailey exercised options to sell 211,904 of the 288,120 shares that were awarded to him in 2011, as part of the Burberry Group plc co-investment plan, and 73,547 of the 100,000 shares that were awarded as part of the Burberry senior executive restricted share plan 2004, granted to Bailey in 2009. The executive also sold 68,667 Burberry shares that he already owned last Wednesday, which will be subject to capital gains tax. All the shares were sold at a price of 14.67 pounds, or $24.33 a share, amounting to 5.2 million pounds, or $8.6 million.

• Dillard's CFO James Freeman to Retire: James Freeman, senior vice president and chief financial officer of Dillard’s Inc., will retire from those posts at the end of the current fiscal year. He will remain a director of the Little Rock, Ark.-based department-store group, which he joined 26 years ago. Freeman, 65, became a member of the board in 1991 and serves on its executive committee. Dillard’s said it will consider both external and internal candidates in its search for a successor to Freeman as cfo.

• Ann Inc. Net Falls 8.1%: There’s an industry-wide problem and Kay Krill gets to the crux of it. “We do not have a fashion must-have out there right now,” Krill, Ann Inc.’s president and chief executive officer, told WWD on Friday, just after Ann reported an 8.1 percent net income drop for the second quarter. “Since the colored-bottom trend, there has not been a got-to-have-it kind of item.” Discussing the mind-set of the missy shopper, Krill observed, “She is definitely only buying something that excites her or is not in her closet, something that says ‘fashion.’ She is very price-conscious, and as far as something that’s more basic, it’s got to be at an excellent price.” Women, she added, are “value-oriented, fashion-oriented and not replenishing. This is truly [happening] across the entire industry.”

• Fred Segal to Unveil Vegas Lifestyle Store: In a city where one-upmanship has become second nature, Fred Segal is preparing to take retail to the next level. The 53-year-old Southern California retailer on Saturday night will open the doors to a 10,000-square-foot “retail experience” at the new SLS Las Vegas hotel here. Not only is this the company’s first move outside its home state, it also marks the first time a single brand will occupy the entire retail space in a major resort hotel. “The stores are all mixed in and intertwined with the hotel,” said Paul Blum, chief executive officer of Fred Segal. “You can walk from a restaurant to the casino to the pool and then to a store. The way the shops are positioned architecturally puts us into the flow of the hotel. It’s a unique experience.”

• Tanzania: Nakumatt Opens 50th Branch in Arusha: EAST African regional retailer, Nakumatt Holdings, on Saturday scored a jubilee feat with the formal opening of its 50th branch in East African in Arusha Region. "Having opened our first branch 22 years ago in Nairobi, I'm excited by this success. It is no mean achievement opening the 50 branches by a homegrown retailer in East Africa," said Mr Atul Shah, the Nakumatt holdings Managing Director at the event. The opening of Nakumatt Arusha, at the Tanganyika Farmers Association shopping complex, now sets the pace for retailer's renewed growth plans in EA region and beyond. Mr Shah said that he wants to ensure that Nakumatt double the formal retail penetration in East African from the current less than 14 percent to at least 30 per cent in the next ten years.

Tech:

• Flipkart to sell another 20,000 Xiaomi Mi3 units tomorrow: Flipkart and Xiaomi are continuing their Tuesday mania, choosing that day in the week to release a limited number of devices into the market – 20,000 units at a time. So the next Mi 3 flash sale will go live on August 26 at 2 pm with another 20,000 units of the Mi 3 to go on sale exclusively on Flipkart, yet again. The company claims to have already received over 1,00,000 registrations. However, the registrations window is still open until Monday midnight.

• Google’s Project Ara to get custom-made SoC from Rockchip: Google has announced that the third iteration of Project Ara will get a custom system-on-chip which is being worked on in collaboration with Rockchip. The best part about this SoC is that it will take into account the modular form factor of the smartphone and one would not require any bridge circuit to make it work. The Rockchip SoC will come with a native, general-purpose UniPro interface. This will help the SoC function as an application processor in the Ara module, without requiring a bridge chip. This will enable you to switch processors on your Ara phone with ease. According to the Google ATAP page, “We view this Rockchip processor as a trailblazer for our vision of a modular architecture where the processor is a node on a network with a single, universal interface–free from also serving as the network hub for all of the mobile device’s peripherals.”

• China working on its own operating system to take on Microsoft Windows, Apple OS X and Google’s Android: China could have a new homegrown operating system by October to take on imported rivals such as Microsoft Corp, Google Inc and Apple Inc, Xinhua news agency said on Sunday. Computer technology became an area of tension between China and the United States after a number of run-ins over cyber security. China is now looking to help its domestic industry catch up with imported systems such as Microsoft’s Windows and Google’s mobile operating system Android. The operating system would first appear on desktop devices and later extend to smartphone and other mobile devices, Xinhua said, citing Ni Guangnan who heads an official OS development alliance established in March.

• Amazon developing own online advertising software: report: Amazon Inc is planning to develop its own software for placing advertisements online, The Wall Street Journal reported, citing people with knowledge of the matter. While the in-house platform is initially planned to replace ads supplied by Google Inc on Amazon’s own website, the new system could challenge Google and Microsoft Corp’s advertising business in the future, the newspaper cited the people as saying. Amazon’s system would resemble Google’s AdWords, and is planned to make it easier for marketers to reach the company’s users, the newspaper reported the people as saying. The retailer is also building a tool that would help advertising agencies buy in bulk for thousands of advertisers, the Journal said, citing the people. Amazon is known as a sleeping giant in the ad industry because it has rich consumer data but has been tentative about using it for a lot of advertising. The company already has an advertising service it employs chiefly on its own website.

• Content Marketers: Start Giving a Damn About Your Content: The internet is ballooning with fluff, and bad content marketing is to blame. In our obsession with “engaging” our “audience” in “real-time” with “targeted content” that goes “viral,” we are driving people insane. The deep feeling of disappointment and nausea that comes when you fall for click-bait and regret your decision? Let’s call it “click-flu.” Marketers create content because they want people to care about their brand, but giving people click-flu does the opposite. Failing to meet someone’s expectation is a terrible first impression. The Web is being diluted by crappy content because marketers don’t yet see themselves as publishers. The vaccine for click-flu is high quality publishing. Although word on the street is that people want short, “snackable” content, the data says otherwise. As BuzzSumo founder Noah Kagan explained in The Huffington Post, long-form articles (3,000 to 10,000 words) actually rack up far more average social media shares than all short-form. There’s also 16 times more content under 1,000 words than there is content over 2,000 words – because you can only spread fluff so thin.

• WhatsApp reaches 600 million active users: WhatsApp leads the rest of the mobile messaging field when it comes to popularity, and now the Facebook-owned service has passed 600 million monthly active users, according to CEO and founder Jan Koum. The app crossed the significant half a billion user milestone in April this year. Tencent’s WeChat app is closest behind with 438 million active users, most of whom are likely in China, while Tango (70 million active users) and Viber (100 million active users) are among a clutch of other apps further back. Koum’s tweet includes a sly dig at companies like Line and Kik, which only reveal registered user numbers rather than how many of that number are actually using their service.