Daily News Digest- 1st Sept'14

Thought of the Day:

Today in History:

Following made the Headlines:

India:

• RIL, Microsoft to Bankroll & Guide Start-ups: Reliance Industries will partner technology giant Microsoft to incubate startups with seed capital, mentorship and technology “on a scale never attempted before“, according to a person with direct knowledge of the developments. According to him, RIL chairman Mukesh Ambani is keen that the company refresh its entrepreneurial spirit and engage fully with the country's fast-evolving startup ecosystem. India's largest private company with interests in petroleum, retail and telecom is keen to focus on startups and technology that are spawning billion dollar businesses in India. Reliance will operate through Gennext Ventures, an early stage venture capital firm it set up in 2010. The corporate VC arm has disclosed investments in two firms so far -Covascis Technologies Pvt. Ltd and Video Ltd and Videonetics Technology Pvt. Ltd. The exact nature of the tie-up is not known but the person cited above was certain that the startups, once identified, will be funded through RIL and there will be no limit on investments as at the seed stage, such companies. 50 lakh-.require only Rs 2 crore. The Reliance-Microsoft start-up model is based on Y Combinator in the US, an American seed accelerator that provides capital to kickstart ventures, advice and connections in exchange for 7% equity. Y Combinator invests in the range of $120,000 (about Rs 75 lakh) and at the end of 2013 had funded 500 companies in 30 different markets, the most prominent being Dropbox, a free service that lets users store photos, documents, and videos and share them easily.

• AirAsia India Safety Head Resigns; Replacement Found: AirAsia India's head of safety Sumant Mishra has resigned, three months after the domestic arm of the Malaysian budget airline AirAsia got off the ground, sources said. The airline, however, has found the replacement, who will soon be taking over the position left vacant by Mishra, a source close to the development said. “Sumant Mishra has resigned from the top job and he is now serving the mandatory six-month notice,“ the source said. Mishra, who had earlier been with the now grounded Kingfisher Airlines as chief of flight operations, joined AirAsia India last year, when it was in the process of launching operations. Both Mishra and AirAsia India spokesperson were unavailable for comments. “The airline with just three months into operations, is in transition phase where a number of people are joining it and some may leave it as well. It has already found a replacement for Mishra and he will be joining as the head of safety very shortly,“ the source said. Mishra, meanwhile, will remain with the airline till early next year and his services will be utilised as a flying commander, the source added.

• Culture Machine Raises $4 M from Zodius Capital: Building the next generation of entertainment channels on the internet is becoming a serious business that is attracting top investor dollars. Culture Machine, a 15-month-old digital video entertainment startup cofounded by former Disney executive Sameer Pitalwalla and YouTube executive Venkat Prasad, has raised series-A funding from Zodius Capital.While the amount has not been disclosed, the Singapore-based venture is believed to have Rs 24 crore). “The market is ripe for creating great digital video programming which is backed by data and technology,“ said 29-year-old Pitalwalla, adding that his firm uses data analytics to decide what kind of programming to create. This has also clicked with the investors. “The probability of success on content is not where we can make a bet on. What we saw in Culture Machine team was not only content but also technology analytics,“ said Gautam Patel, MD at Zodius Capital. It has already got hits like `Every Delhi Girl in the World', `India's Facebook Timeline' and `She called my Bhaiyya' besides parodies like `Baby Deol' and `Sonam Kapoor's Selfie Song', among others. Culture Machine generates revenues from ads, brand solutions and content syndication, which is also evoking interest in TV channels. “Our target demographic is 13-35 year-olds who consume disproportionate amount of programming online,“ said Pitalwalla. The funding will be used by Culture Machine for investments in engineering and expansion internationally. Across its channels, Culture Machine currently gets 40 million views a month now with 80 million minutes of content consumed.

• A Dry Season Ahead for Liquor Importers: Want to buy or gift that imported bottle of Johnnie Walker, Chivas Regal, Glenlivet or Ciroc this festival season? It may not be possible after all, unless the food regulator makes some concessions. With the Food Safety and Standards Authority of India (FSSAI) stalling all imports of liquor which have failed to comply with the regulator's labelling rules, consignments worth 65-70 crore are stuck for clearance at ports. “This is the biggest short-term issue facing the industry,“ David Frost, chief executive of the UK-based Scotch Whisky Association, told ET. The association represents more than 15 alcoholic-beverage giants including Chivas Brothers, Diageo, William Grant & Sons and Pernod Ricard. This has happened just ahead of the peak festival and gifting season -September to March -when the industry usually sees a 60% spurt in sales. So far, the regulator hasn't agreed to the industry's request for a waiver to comply with the rules. The regulator's enforcement and surveillance director Sanjay Dave said these firms haven't yet complied with the rules. “No one has the authority to violate the law. The consumer has a right to know ingredients of food and beverage products they buy,“ he said. The clamp down has rattled liquor firms, and the world's two biggest liquor firms, Diageo and Pernod Ricard, have suspended shipments to India. “Our imported brands such as Johnnie Walker, Singleton, Talisker, Ciroc and Ketel One are already facing severe shortage,“ Diageo India Managing Director Abanti Sankaranarayanan said. “With the festive gifting season coming up, our consumers have begun facing a real crunch.“ The regulator's decision has also affected firms including Bacardi, William Grant & Sons and Brown Forman. “Our plans for the festive season are in disarray ... that this has happened on the eve of peak season can have a huge impact on our annual outlays,“ said the India managing director of another leading multinational alcoholic-beverages firm. The regulator hasn't cleared imports since February 2014, because the products don't comply with labelling requirements under India's food safety regulations.

• DLF asks independent directors for ways to grow Rs 2K crore rental business: India's largest realty firm DLF has asked the company's independent directors to suggest ways to push the growth of its rental business. DLF's rental income from commercial properties, including offices and shopping malls, was Rs 1,950 crore last fiscal. It is targeting 8 per cent growth in the rental business this fiscal to Rs 2,100 crore. DLF said the Board of Directors, in its meeting on August 29, "requested the independent directors of the company who are members of the Audit Committee, chaired by K N Memani to comprehensively evaluate, review and recommend various strategic options available for the Company to drive sustainable and long term growth and development of the rental business". The independent directors have also been asked to recommend the optimum structure for the rental business in order to improve efficiency and to reduce conflicts of interest, if any, inter-se affiliated persons/entities in keeping with the best corporate governance practices, DLF said in a filing to the BSE. In a separate filing, DLF said the board has appointed Lt Gen Aditya Singh (Retd) as a non-executive independent director. "With this appointment, the company is fully compliant with clause 49 of the listing agreement." The company now has seven independent directors. DLF has about 28 million sq ft of operational commercial area, of which about 2.5 million sq ft is retail. It has three operational malls in the national capital. Rental income could reach Rs 2,500 crore during 2015-16 on the back of normal 8-10 per cent growth plus additional Rs 200 crore coming from Noida mall, sources had said earlier this month.

• Hamilton Beach forays into India; eyes 12% market share in 4-5 years: US-based kitchen appliance brand Hamilton Beach has forayed into the Indian market through a distribution tie-up with IT firm HCL and is looking at up to 12 per cent of premium appliances categories market in the next 4-5 years. "We have been studying the Indian market for two years. We wanted a local partner with expertise that is focused on establishing Hamilton Beach in India. HCL is that partner for us," Hamilton Beach Brands director, International Business Development Brian Schwartz told PTI. "We are targeting at 10 to 12 per cent of market share of premium appliances category in the next four to five years," HCL Infosystems executive vice president and head (distribution business) Sutikshan Naithani said, adding, the size of premium appliances category at present is estimated at Rs 300 crore. Hamilton Beach will plan its expansion in India in two phases. In the first phase, the company will import all its products from China and will distribute them in 25 cities, mainly metros and mini-metros. In the second phase, which will begin from second half of 2015, the company will look at local production of some of its products and expanding its distribution reach to 35 cities, Schwartz said. Under the tie-up, HCL will market and distribute the products while Hamilton will take care of branding and promotions in India. Hamilton plans to bring 22 different kitchen appliances to India, and will expand its product offerings going forward. Products are positioned in the premium segment and priced between Rs 3,000 and Rs 12,000, it said.

• Global CEOs, top bankers queue up to meet Modi: Global chief executives and top bankers of iconic Wall Street companies are queuing up to meet Prime Minister Narendra Modi, in a clear sign that India’s economy has never mattered more than now. Indian-born Deutsche Bank co-CEO Anshu Jain called on Modi recently while Goldman Sachs CEO Lloyd Blankfein and Bank of America CEO Brian T Moynihan are expected to meet the PM during his visit to the US in September, top government sources told HT. The top brass of General Motors (GM), the world’s second-largest carmaker by sales volumes, including its global CEO Mary Barra, chairman Tim Solso and head of International operations Stefan Jacoby are expected to meet Modi next month, sources said. The Prime Minister is learnt to have also recently met Mark Fields, CEO of Ford, which has a manufacturing plant in Sanand in Modi’s home state of Gujarat. The string of meetings is being seen as a major turnaround for India’s image as an investment destination. In the last two years, global credit rating agencies and investment banks had been unsparing in their criticism about the Indian economy’s management, which had been marred by policy logjams, project delays and a string of corruption scandals sending Asia’s third-largest economy into its sharpest deceleration in 25 years. Analysts said the meetings with global CEOs and influential bankers are clear signs that the investors view the Modi government’s commitment on reforms and easing business environment as serious intent. “So far the governments have taken a piecemeal approach – but there now appears to be serious effort by the central government and some of the state governments to revive the manufacturing sector,” Chetan Ahya, of Morgan Stanley, said in a recent research report. Finance minister Arun Jaitley Saturday said better days were ahead amid signs that companies were investing and hiring more and prices were moderating, buoyed by the measures that the Modi-led government has taken to aid the India economy claw out of its deepest slump in a quarter of a century.

International:

• Beijing rules out `full democracy' for Hong Kong: The Chinese parliament on Sunday rejected the demand for “full democracy“ by activists in Hong Kong while approving a system of limited elections in 2017. Pro-democracy activists in Hong Kong responded by saying that they were preparing for a showdown with the Chinese government on the issue. The standing committee of the National People's Congress (NPC), the Chinese parliament, put its seal on a framework that allows only two or three candidates to run in the 2017 leadership vote in Hong Kong. Candidates can run only if they obtain majority backing from a nominating committee, which is expected to be filled with Beijing loyalists. Observers said the decision by the Beijing-based parliamentary committee makes it extremely difficult for opposition democrats to get to vote. The move comes after pro-democracy protesters insisted on rule changes to enable Hong Kong to freely choose its leader without interference from Beijing. The committee granted universal suffrage for Hong Kong recognizing the principal of one-person-one-vote in the election of the city's chief executive but imposed controls on the selection of candidates. “The nominating committee shall nominate two to three candidates for the office of chief executive in accordance with democratic procedure,“ the panel said. “Each candidate must have the endorsement of more than half of all the members of the nominating committee,“ it said. “This is a legal, fair and reasonable decision. It is a dignified, prudent decision, and its legal effect is beyond doubt,“ Li Fei, the deputy secretary general of the NPC standing committee, told reporters after the decision. The issue of fair elections has been a cause of friction in Hong Kong for the past 17 years since it merged with the mainland.

• Dubai Mall developer Emaar Properties to list on stock market: Emaar Properties, the developer behind one of the world's largest shopping malls and the world's tallest tower, said Sunday it will launch an initial public offering for its retail business in Dubai next month. The Dubai-based developer said in a statement that it expects to sell at least 15 percent of the company known as Emaar Malls Group in the offering. Like Emaar properties, the new company will trade on the Dubai Financial Market. Emaar's retail business includes the vast Dubai Mall, the Mideast's biggest shopping center. It is making 30 percent of the offering available to individual investors and the rest to institutional investors. Hussam al Husseiny, a chartered market technician, said the news will sway investors who were concerned about liquidity in the market against selling their shares in Emaar. "These little details that Emaar gave will validate the share for people," he said. The company's retail and malls arm recorded $340 million in revenue in the first six months of 2014. The Dubai government owns around a third of Emaar Properties, which has total assets of nearly $19 billion. Emaar Properties shares closed Sunday at 11.15 dirhmas, or roughly $3.03.

• Alibaba to hold IPO in second week of September: Wall Street Journal: Chinese e-commerce giant Alibaba plans to hold its initial public offering on the US stock market the week of September 8, the Wall Street Journal reported, citing a person familiar with the matter. The shares would then start trading as early as September 18 or 19, the source told the business daily. Alibaba will list its shares on the New York Stock Exchange under the trading symbol "BABA," the company has said in filings with the US Security and Exchange Commission. The initial filing indicated $1 billion will be raised in the public offering, but that amount is expected to be greatly boosted with later amendments. But the company did not give details on the timeline for the IPO in its June filing with the SEC, saying only "the launch would be "soon as practicable." Analysts say the listing is expected to raise somewhere around $15 billion, which would make it the technology industry's largest IPO since Facebook's in 2012. The IPO is part of efforts by Alibaba to expand globally. In choosing the NYSE, the company dealt a blow to the rival Nasdaq, which has been a preferred option for many tech companies but experienced a number of trading problems in the Facebook market debut.

• Barclays sells Spanish businesses: Barclays Bank has agreed to sell part of its Spanish business for £633m to the country's third largest lender CaixaBank. The sale includes Barclays' retail, wealth management and corporate banking business in Spain. In a statement, Caixa said the deal involved 270 branches and approximately 555,000 new clients. Barclays is reorganising its business by cutting jobs and selling off parts of its European operations. In May, it announced plans to cut 19,000 jobs by 2016, of which 9,000 will be in the UK, as well as to create a "bad bank", which included its retail banking operations in Spain, Portugal, Italy and France. The idea behind the "bad bank" was to group together businesses no longer considered central to Barclays, with a view to selling them off or listing them on the stock market. "We were clear [in our update in May] that this business, while not central to Barclays' strategy, could be attractive to another owner - and today's announcement reflects that perspective," said Antony Jenkins, chief executive of Barclays. "Under the ownership of CaixaBank, a leader in retail banking in Spain, these businesses will have a greater opportunity to grow and thrive," he continued. The deal does not include Barclays' Spanish credit card operations or its investment banking business. "This acquisition will enable us to enhance our personal and private banking businesses in Spain, strengthening our counselling offer to our customers," said the chief executive of CaixaBank Gonzalo Gortazar.

• Brazil Economy Enters Recession in Blow to Rousseff: Brazil's economy suffered a recession in the first half of the year, government data showed on Friday, dealing a major blow to President Dilma Rousseff's already diminishing hopes for reelection in October. Latin America's largest economy has suffered slow growth for more than three years under Rousseff's left-leaning policies, which have diminished consumer and business confidence and caused heavy losses for financial investors. The economy took an even bigger downturn in the second quarter, contracting 0.6 percent from the first quarter, according to government statistics agency IBGE. The agency also revised down its estimate for first quarter activity to a 0.2 percent contraction, meaning the economy entered a recession. Civil construction and manufacturing especially suffered during the second quarter, data showed. Brazil hosted the World Cup in June and July, which caused a slowdown at many factories and retailers as cities declared public holidays on game days to prevent logistical problems such as heavy traffic. The second-quarter contraction was worse than expectations of a 0.4 percent contraction, according to the median forecast of 47 analysts polled by Reuters. Brazil's most recent recession ran from late 2008 through early 2009, during the global financial crisis.

• Hermès Net Gains 8.1% in First Half: Hermès International, set to open a four-story Maison in Shanghai on Sept. 12, sounded a sanguine note about the Chinese market amid growing worries the Asian luxury juggernaut is losing steam. “The fundamentals in China remain strong,” Hermès chief executive officer Axel Dumas told a press conference Friday morning as the luxury firm reported an 8.1 percent bump in first-half net profits. While reluctant to give figures, he cited “no significant change” in recent trading and asserted that, “over the long term, the appetite for luxury goods is very strong in China.” He allowed that Chinese purchasing habits are shifting geographically — slightly stronger on the Mainland than in Hong Kong — but that they remain a chief clientele at the Paris flagship on the Faubourg Saint-Honoré. Hermès is plotting new boutiques in Shin Kong Place in Beijing and in the Chinese city of Chengdu in the second half. Dumas also downplayed concerns that Russian clients, faced with a weak ruble and geopolitical turmoil, are turning their backs on luxury, while allowing that they are probably spending more at home as they rein in travel. The company reiterated its mid-term objective of 10 percent revenue growth at constant currency, citing “dynamism” in Asia and “excellent” sales momentum in America.

• J.C. Penney Opens Brooklyn Store: The private brands and price promoting are back in force, but J.C. Penney is moving forward, not in reverse, according to its chief executive officer Myron “Mike” Ullman. “We’ve got to keep evolving this company. We are not going back to 2011,” Ullman said during an interview at the grand opening of Penney’s in Brooklyn on Friday, showcasing the company’s most advanced vision on interior design and merchandise display. Ullman, back at work after some surgery, underscored that the Brooklyn store represents tests on several fronts, from merchandise presentations in accessories and footwear to LED lighting, updated and varied surface treatments, and open-sell and self-serve formats. If successful, these tests could be applied to other stores. “Despite all the turnaround issues, we are using this store as a laboratory,” Ullman said. “By far, this is the most impressive and best expression of J.C. Penney.”  The store — Penney’s first in Brooklyn and the first to be opened by the retailer in two years — is situated in the Gateway Center’s phase two in East New York. For Ullman, in his second stint as Penney’s ceo, it’s so far, so good, with the Brooklyn store a positive part of the turnaround effort. His first stint lasted from 2004 to 2011, when Ron Johnson took the reins and sent the company on a disastrous reinvention ride. Ullman returned in April 2013 to get the company back on course.

Tech:

• Lava Plans to Offload 20% to Raise Up to Rs 300 Cr: Homegrown smartphone major Lava is looking to raise up to 300 crore by selling 20% stake to private equity firms. The firm, which is the fourth-largest smartphone vendor, is now looking to expand its presence to emerging markets and meet the rising working capital requirements, fuelled by the smartphone explosion in the country. According to a source in the knowhow, the company has been valued at almost half a billion dollar and is currently in the process of shortlisting potential investors. “Around six PE firms have expressed interest in the company and it is in the process of selecting two,“ the person said, adding the deal should close within a month's time. However, the company didn't respond to an email query sent out by ET. With the move, Lava joins the rank of home-grown smartphone vendors such as Micromax and more recently, Karbonn who are looking towards private equity funds to drive their expansion across the country and abroad.

• Swatch prefers go-it-alone route in smartwatch mkt than teaming up with Apple: Swatch Group is happy to go-it- alone with a launch next year of watches with "smart" features to compete with so-called wearable gadgets from the big tech companies, a market potentially worth $93 billion. The world's biggest watchmaker, which sees the advent of smartwatches as an opportunity rather than a threat, will unveil its new Swatch Touch next summer. Swatch Chief Executive Nick Hayek said these new watches might allow the wearer to count the number of steps they take and calories they burn. And there will be a few other cool 'Swatchy' things on offer via latest Bluetooth technology, he said in an interview at the company's headquarters in Biel. "All the big technology firms want to work with us and I don't rule out that we are or could be collaborating in some areas. But we can also do many things on our own." Wearable gadgets, such as smartwatches that allow users to connect to their phone to check emails, make calls or monitor their health, are expected to be the next big thing in the tech world and a potential threat to traditional wristwatch sales. Apple Inc has just invited media to a "special event" next month, fuelling speculation it might present a much-anticipated "iWatch." The possibility of an iWatch launch is partly responsible for Swatch shares losing almost 15 per cent so far this year, lagging a 3 per cent rise in the European sector.

• Indian Start-Up Launches Shoes That Show You The Way: "Wizard of Oz" heroine Dorothy only had to click her ruby red slippers together and they would spirit her home to Kansas. Now, an Indian high-tech start-up is promising to do the same in real life with a new, GPS-enabled smart sports shoe that vibrates to give the wearer directions. The fiery red sneakers, which will also count the number of steps taken, distance travelled and calories burned, will go on sale in September under the name LeChal, which means "take me along" in Hindi. The shoes come with a detachable Bluetooth transceiver that links to a smartphone app to direct the wearer using Google maps, sending a vibrating signal to indicate a left or right turn. They are the brainchild of 30-year-old Krispian Lawrence and Anirudh Sharma, 28, two engineering graduates who founded their tech start-up Ducere in a small apartment in 2011 with backing from angel investors and now employ 50 people.  "We got this idea and realised that it would really help visually challenged people, it would work without any audio or physical distractions," said Lawrence in an interview with AFP. "But then we were trying it out on ourselves and suddenly we were like, 'wait a minute, even I would want this,' because it felt so liberating not having to look down at your phone or being tied to anything.""The footwear works instinctively. Imagine if someone taps your right shoulder, your body naturally reacts to turn right, and that's how LeChal works.”

• Apple is reportedly partnering Visa, MasterCard and American Express for iPhone mobile wallet: The countdown to Apple’s event on September 9, where it will almost certainly announce the next iPhones, has started — and rumors are increasingly piling up. The latest is that Apple will be announcing a partnership with payment facilitators including Visa and MasterCard, as it plans to turn the new iPhone into a mobile wallet, Bloomberg reports. Re/code separately reports that Apple has also reached an agreement with American Express. The new iPhone is said to introduce an easier mobile payment process with the inclusion of a near-field communication (NFC) chip. Along with the fingerprint reader which debuted on the iPhone 5s, this could mean that users can pay for items in a store with the touch of a finger, Bloomberg says. Re/code reports that customers will simply present their phones at the checkout counters of partner retailers to pay for their purchases, though it isn’t clear yet which retailers have reached an agreement with Apple. Reports suggest the next iPhone will come in two sizes. One model will have a 4.7-inch display, while another sports a 5.5-inch version. We know it will run iOS 8, Apple’s refreshed mobile OS, and it’s likely to sport a different look.

• 500px debuts new discussion groups on its portfolio site: 500px, the photo portfolio sharing site that caters to pros, has launched a new Groups and Discussions feature to facilitate discussion and debate about specific creative topics within its photographer community. This initiative, launched today as a beta, is designed to help 500px members identify photographers with similar interests. Already there are many groups including Landscape Photography Critiques, Children’s Portraits, Wild Life Photography, 500px Newbies and more. Groups and Discussions allows photographers to join and participate in an unlimited number of groups that align with their interests. Participants can also create new discussions, and those can include uploading photos on topics of concern.

• Twitter’s new onboarding flow still ignores what makes it such a special place: This week, Twitter rolled out an overhauled onboarding experience for new users of the social network. We previously ran the old one through its paces and thought that the experience showed why the company is struggling to grow, but does this new one fare any better? We signed up for a new account to find out. The signup screen the company uses is still the same as before; it still recommends awful usernames like @6wzSZN1Cyuj6gpZ, which I chose for my shiny new account. The step after this is where the new onboarding wizard starts. On the old wizard, you were given a blank timeline and walked through how to use it. In this new version, you get a lovely new splash screen that thanks you for joining and clearly outlines the purpose of Twitter; ‘the coolest, most important news, media, sports, TV, conversations and more.’ The old version was more functional, but this sets the tone for what to expect on Twitter. The next screen asks what your interests are, which is a random assortment of interests, from which you can choose as many as you like. The first time I encountered this screen, as above, it actually had nothing that particularly piqued my interest on it. What I later discovered, when creating another account for testing, is that this list is randomly generated and shuffles when you refresh the page. Perhaps it would have been useful to have a button that says “none of these.” Once you’ve picked your interests (initially I chose TV, books and music), you’re given a faux timeline with tweets from people who match those interests. This is where it starts going wrong; around half of the accounts it chooses are ‘brand’ accounts and the other half are famous/popular people on Twitter. This screen exhibits the exact same problem I had with the last onboarding flow; if new users follow only popular accounts like Stephen Fry and Family Guy, they’re going to have a bad time. Interacting with famous people on Twitter might as well be like talking to a brick wall, which gets old very quickly. They probably won’t come back.