Daily News Digest- 27th Oct'14

Thought of the Day:

Today in History:

Following made the Headlines:

India:

• A Cracker of a Diwali for E-tailers: This Diwali, Indian online retail industry joined the mainstream with the top three players Flipkart, Amazon and Snapdeal hogging the limelight throughout the festive month of October, helped by massive sales and high-octane marketing. However, the heavy-duty sales with discounts of over 75% also exposed the industry's weakest link -last mile delivery. Logistics infrastructure of online retailers struggled to deal with the sudden rise in the flow of shipments, leading to pile-ups at airports and packages failing to reach customers on time. “Online retailing has become mainstream this festival season,“ said Mukesh Bansal, board member at Flipkart. “A large number of customers have come online. This has been a record month for us with the highest sales ever,” said Mukesh Bansal of Flipkart. He declined to reveal the exact number of orders the Bangalore-based company had received. Bansal, who heads fashion at the company, admitted that there were problems too. “We all found out that the capacity of the logistics network is not enough for the industry,” he said. However, with top companies exceeding their targets, experts said the positives far outweighed all the negatives. “The online retail industry is the winner this season with all companies beating their own internal targets,” said Saurabh Srivastava, director at advisory firm PwC India.

• Fiat Plans to Flag off Luxury SUV from India: Days after Prime Minister Narendra Modi exhorted global manufacturers to `Make in India', Fiat Chrysler Automobiles has put in motion plans to manufacture a premium sports utility vehicle under the Jeep . 1,500-2,500 crore inbrand as part of a ` vestment in the country and export it to key markets including the UK, Austra lia and South Africa in the next two years. The development work for the first premium SUV to be made in India has begun under the project codenamed M6 or 556 and production of the C-segment vehicle will begin by the end of 2016, four people close to the development told ET, adding that the strategy to use India as an exports hub will help the company reduce its losses in the country. Experts say that Fiat Chrysler's move will further enhance the brand image of India. The country is gradually transforming itself from a manufacturing hub for small cars into a base for the entire range of vehicles as companies including Renault-Nissan and Volkswagen have exported mid-sized sedans and compact SUVs to global markets from the country.

• Future Supply Chains to Buy Brattle Foods: The country's largest supply chain company Future Supply Chains is buying food logistics startup Brattle Foods in a cash, stock and debt deal aimed at strengthening back-end processes for its nearly ₹1,000-crore food business, a top company executive said. “This acquisition and merger will complement the existing modern technology and automation-based supply chain capability of Future Supply Chains (FSC) in the food and FMCG domain,“ said Anshuman Singh, managing director at Future Supply Chains, which is part of Kishore Biyani-owned Future Group. “It will enable FSC to address the frozen, chilled and cold warehousing requirements, coupled with the refrigerated container transportation requirements across the country.“ Both companies declined to give the financial details of the deal but people aware of the matter said Brattle Foods, along with its subsidiary Laxman Logistics, will be merged into FSC for a total consideration of about ₹125 crore. Brattle's shareholders GTI Capital and Epiphany Ventures will get some shareholding in FSC after the deal is signed in the next few days, they added.

• Marriott International to Add 49 Hotels by 2018: Hospitality major Mar riott International plans to further expand its footprint in the country with an additional 49 hotels, which will take the total operational properties to around 70 by 2018, a senior company executive said. “We are in India since last 15 years and currently have 25 operating hotels under our various brands. We have another 49 properties in pipeline that are under various stages of construction. “Every year, we sign new contracts and are expecting 60-70 operating hotels in India by 2017-2018,“ Marriott International Area vice-president, South Asia, Rajeev Menon said.

• Fare Wars Hit the Road as Uber, Ola Woo Customers: Taxi service marketplaces are giving auto-rickshaw drivers a run for their money, offering almost matching fares in the rough and tumble of the country's vast but unorganised urban commuting sector. Companies including Uber, Olacabs and Taxiforsure, most of which are flush with venture capital funds, are aggressively dropping rates, catalysing a low-fare revolution in the taxi market. This strategy had started with the entry of San Francisco-based Uber in 2013. Uber, which had lowered fares in Bangalore by a quarter in August, last week reduced it by another 20% in the city . Close to Diwali, it had slashed fares in Delhi by a fourth.The company attributed the move to increased efficiency in their marketplace, but clarified that the offer is only for a limited period. “The more people ride with Uber, the longer we will be able to sustain low prices,“ said Bhavik Rathod, general manager of Uber Bangalore. Uber is backed by Google Ventures and Fidelity Investments, among others. Olacabs, which last week received a $210-million infusion from Japan's Softbank, has cut the rate for its low-cost segment to ₹10km.

• Flipkart, Myntra Rope in Ace Turtle to Bring in More Global Brands: Flipkart and its associate Myntra have mandated Bangalore-based e-commerce consultancy firm Ace Turtle to bring a host of global fashion brands as the two online retailers are ramping up their global fashion and accessories line to tap growing demands for such products in India. As part of the deal, Ace Turtle will bring a raft of global labels to sell on Myntra as well as Flipkart while Ace Turtle itself will manage the standalone India e-commerce sites of those foreign brands that come on board through this alliance. Ganesh Subramanian, chief operating officer of Myntra, said his company will refrain from operating the single-brand online stores as its focus is to create a robust multi-brand e-commerce company. “We at Myntra and Flipkart are looking at bringing a good number of international brands that are currently not available in the country,“ he said. “The global brands get multi-brand platforms on Myntra and Flipkart and Ace Turtle gives opportunities for these brands to go online on their own that is equivalent of their exclusive online brand outlets. It is win-win for all of us.“ Top fashion portals such as Myntra and Jabong have been trying to get more and more foreign brands and have signed exclusive arrangements with various brands. Jabong has signed exclusive deals with brands including Dorothy Perkins, River Island and Mango among others, while Myntra has signed up labels including Guess, Desigual and Scotch & Soda.

• Long Summer Brings Relief to Soft Drink Cos: After six quarters of back-toback single-digit volume growth, top soft drinks makers Coca-Cola and PepsiCo have returned to double-digit volume growth in the July-September quarter, riding mainly on continued warm weather conditions in several parts of India. Industry officials, however, remain cautious in their outlook for the next couple of quarters, with the impact of the 5% excise duty increase on new bottles announced in the Union budget kicking in from mid-September. “The third quarter was supported primarily by an extended summer and lesser rains. But we are not yet seeing it as a longterm revival of the industry. The excise duty impact on new stock has kicked in, and besides, the fourth quarter is lean season,“ a top bottling partner of one of the cola firms said. Summer months have a huge direct influence on industry sales, contributing more than half of annual volumes. “Among key markets, India delivered volume and value share gains with double-digit volume growth,“ Coca-Cola chairman and CEO Muhtar Kent said in an earnings call late last week. “Although weather was a benefit in India, it negatively impacted the company's performance in China and Japan as both countries experienced an unseasonably cool summer,“ he added.

• India Aims to Create $15B IoT Industry by 2020: The government is working on an ambitious plan to create $15 billion 'Internet of Things' industry in the next six years. Internet of Things, or IoT, can be loosely described as a network of inter-connected devices that can be accessed through the Internet. For instance, with IoT, street lights will automatically go off when they sense no traffic on the roads and consequently save power. Another application could be a smart band that will automatically alert physician when body vitals go to abnormal levels.“Among other things, IoT can help automate solutions to problems faced by various industries like agriculture, health services, energy, security, disaster management etc. through remotely connected devices,“ the draft IoT policy document says.

• Apple’s India revenue jumps 10- fold in just four years: Apple Inc — maker of the iconic iPhone, iPad, iMac and MacBook — seems to have begun to crack the Indian market. The Cupertino, USbased company’s revenue from India jumped about 10 times in the financial year ended March 2014 to ₹ 4,500 crore from ₹ 446 crore in FY10, according to its filings to the registrar of companies. While buyback offers and operator bundling pushed sales, its profit increased three times to ₹ 119.5 crore in FY14 from ₹ 38 crore in FY10, with expenditure rising 11 times as the company went on aggressive campaigns to promote its products. In FY14, Apple’s India unit has spent ₹ 4,318 crore, which includes all operational expenses, in the country, from ₹ 387 crore in FY10. The company recorded a profit of ₹ 312 crore in FY12, which shrunk to ₹ 113 crore in the next year. In FY12, Apple India’s revenues rose 223 per cent to ₹ 2,004 crore and net profit soared 431 per cent to ₹ 312 crore. While the company does not reveal its India sales numbers, industry estimates indicate it sold 1.02 million iPhones between October 2013 and August 2014. In the smartphone market, Apple had a mere 1.5 per cent share ( volume) in India, at the end of the JulySeptember quarter, down from 2.4 per cent in the previous one, according to estimates by independent research agencies. In value terms, its share was estimated at 5.5 per cent in the JulySeptember quarter in the estimated ₹ 40,000- crore smartphone market in India, down from 9.2 per cent in the previous quarter. The market is dominated by South Korea’s major Samsung Electronics, followed by domestic firms Micromax and Karbonn.

• Berggruen Hotels India MD and CEO Sanjay Sethi resigns: Sanjay Sethi, managing director and chief executive officer (CEO) of Berggruen Hotels India Pvt. Ltd, which runs hotels under the Keys brand, has quit after an eight-year stint with the company, he said in an interview with Mint. Sethi will, however, continue to be a shareholder and is currently working with the company to find a successor. “I strongly believe in the business model of Keys and hence will remain invested as a passive share holder in the company,” said Sethi. Sethi also categorically denied recent media reports that Berggruen was looking to sell its India operations to UK-based hospitality company Whitbread Group Plc. Sethi’s resignation comes at a time when the company is looking to expand its portfolio of hotels in India.

International:

• Panasonic Transfers Sanyo TV unit in US to Funai Electric: Panasonic Corp said it is transferring its Sanyo television unit in the US, which supplies sets to Walmart Stores, to Funai Electric of Japan in return for annual royalty payments.The move allows Panasonic to exit an unprofitable business. The transfer of the unit will likely be completed before the end of March, a spokesman for Panasonic said on Sunday, after the Nihon Keizai newspaper reported it would sell the business to Funai Electric. Shedding the Sanyo business fits with Panasonic's strategy of pulling back for consumer electronics in a bid to improve profitability. The firm is focusing on household appliances, automotive devices and other industrial components.

• Procter & Gamble to Exit Duracell Battery Business: For decades, Procter & Gamble, which built an empire out of soap and diapers, has held court under America’s sinks. The maker of Tide and other cleaning and personal care products has spent years acquiring hundreds of brands it hoped could also become part of consumers’ daily routines. Now the company has begun another ambitious project: getting rid of about half of those brands. In its quarterly earnings announcement, Procter & Gamble announced that it would pursue a spinoff of the battery brand Duracell into a stand-alone company, the first step in a plan to shed up to 100 of the company’s 200 or so brands. The 177-year-old manufacturer wants to focus on 70 to 80 core products, most likely those with the household name recognition of Tide, Charmin and Crest. “If you look at their businesses that are doing well, it’s their legacy businesses,” said Ali Dibadj, an analyst with Sanford C. Bernstein & Co. When Procter & Gamble announced its plans to slim down, in August, Dibadj was one of many experts who thought Duracell would be among the first to go.

• Race Heats Up for P&G CEO Post: The race to succeed A.G. Lafley has shifted into a new gear. More names have emerged in the latest Procter & Gamble management shuffle, with some observers speculating the field of contenders is narrowing to ultimately succeed Lafley as chief executive officer. Charlie Pierce has been named president of the company’s Global Grooming and Shave Care category, succeeding Patrice Louvet, who takes the leadership of two divisions — P&G Salon Professional and Global Prestige. Pierce has been group president of Global Oral Care and New Business Creation. The elevation of Louvet follows by a month the promotion of Alex Keith from personal care to president of skin care, including the troubled Olay megabrand. Deb Henretta remains group president of Global Beauty. What touched off speculation was the disclosure that Melanie Healey will step down as group president of North America next year. She was thought to be a contender for the top job, along with Henretta and other group presidents.

• Mexico Asks H&M, Forever 21 to Source in Its Shores: A Mexican trade lobby group is proposing that global fast-fashion retailers expanding in Mexico should also source apparel from the country to help boost production and employment in its clothing industry. “We have requested that 40 percent of the clothing they [foreign apparel brands] sell in Mexico is made here,” said Rosario Mendoza, president of top trade lobby Canaive’s Jalisco State branch. “We don’t have all the textiles they need for their collections but we have quality manufacturers and labor. “They have not asked us for samples.” Canaive made the petition during its 38th annual congress last week in Guadalajara. The Economy Ministry has pledged to consider the request as it moves to launch a new textiles and apparel industry aid package by November.

• Silvia Venturini Fendi Hits Hong Kong: Silvia Venturini Fendi touched down here Thursday for the reopening of Fendi’s three-story boutique in the Landmark mall. “Hong Kong is very important for us. It’s a city that loves Fendi,” said the Roman fashion house’s creative director of accessories, men’s wear and children’s wear. “There’s a big market here and it’s growing.” Landing early in the morning, Venturini Fendi was immediately impressed with the energy of the metropolis. “I was amazed. There was so much activity I would say it’s so different from Italy.” Often gaining inspiration from her trips, she added: “You always find beautiful new buildings and you see that things move fast here. I’m looking even when travelling by car and trying to grab every little detail. I like to watch people walking on the street.”

• Topshop Topman Opening Largest U.S. Flagship in New York: Topshop Topman will go big on Nov. 5 when it unveils its largest U.S. flagship and second store in New York, on Fifth Avenue and 49th Street. The company is looking to generate buzz in advance of the opening through giveaways and a New York-centric social media campaign: #UNLOCK5th. To spearhead promotion of the hashtag, the retailer has tapped five “style leaders” from different areas of the city: Julia Restoin Roitfeld, Hailey Baldwin, Kate Foley, Adam Gallagher and Holy Ghost. Using video and photo content, each leader will tout what Topshop and New York City means to them. Launching next week, the campaign will run up until the store’s opening date, when Topshop’s chief executive officer, brand ambassadors and style leaders will officially open the doors to over 40,000 square feet of retail space.

Tech:

• IBM's First Cloud Data Centre in India to Focus on Private Services for SMEs: IBM is setting up its first cloud data centre in India to gain a bigger share of the cloud computing market in the country. The company has built a 30,000 sq ft data centre facility in Airoli, on the outskirts of Mumbai. The new Mumbai IBM Cloud Center is part of a 15 cloud center expansion, and a $1.2 billion investment by IBM Cloud to grow its cloud presence around the world. “With the new data centre, IBM will be able to tap into BFSI, telecom and government sectors, which haven’t been able to move to cloud in a big way due to regulatory requirements,” said Lingraju Sawkar, director, Integrated Technology Services, Global Technology Services at IBM IndiaSouth Asia. According to Gartner, public cloud services market in India is expected to grow from $423 million (₹2,550 crore) in 2013 to $1.3 billion (₹7,800 crore) in 2017. Gartner expects India to be the fastest growing market for cloud adoption globally.

• Lava to Soon Shift Manufacturing Base from China to India: Lava, the country's fourth-biggest smartphone maker, could become the first local mobile handset company to start domestic production as Prime Minister Narendra Modi's `Make-in-India' push helps the country to become an attractive alternative to China as a manufacturing base. The company, which sells Lava and Xolo branded phones, plans to spend ₹500 crore in local operations over three years, after which it will shift most or all of its production from China to India. Starting in April, Lava will assemble devices at its Noida plant, which is now used for repairs, with an initial investment of ₹20-30 crore. By then, it may have the capacity to make 200,000 units a month, which is projected to be ramped up to 1 million by March 2016. “We are just about to finalise six places in three states“ to accommodate the entire ecosystem around handset manufacturing, one of which will house the company's plant as well, Hari Om Rai, Chairman and Managing Director of Lava International, told ET. “The central government is giving 25% subsidy and various state governments are offering VAT-free operations, among others.“ Most handset companies have shunned India as a manufacturing base until now, citing the unavailability of components and other issues. Nokia's plant near Chennai was kept out of the sale to Microsoft last year because of a tax dispute and was subsequently closed.

• The Queen sends first tweet to launch Science Museum gallery: "It is a pleasure to open the Information Age exhibition today at the @ScienceMuseum and I hope people will enjoy visiting. Elizabeth R." That was the Queen's first tweet - sent through the @BritishMonarchy account - heralding the launch of a major new exhibition at London's Science Museum. Three years in the planning, the exhibition is one of the most ambitious projects the museum has undertaken. Alongside historic objects, visitors can enjoy interactive experiences. The Information Age gallery, opened by the Queen this morning, takes visitors on a journey through the history of modern communications from the telegraph to the smartphone.

• Xiaomi to Approach Govt on Data Security Concerns: Stressing that it does not collect any user data without permission, Chinese smartphone maker Xiaomi on Sunday said it will engage with Indian authorities to address the concerns about security of user's data. Last week, in an advisory, the Indian Air Force asked its personnel and their families to desist from using Chinese 'Xiaomi Redmi 1s' phones as these are believed to be transferring data to their servers in China and could be a security risk. “We are trying to get to the bottom of this.So far, we have not heard anything from the IAF or any other authorities and have only read media reports. We will reach out to authorities and engage with them to address any concerns that they might have,“ Xiaomi vice-president Hugo Barra said. He said the company has already started migrating data of its international users (non-Chinese) to data centres in the US and Singapore.

• Twitter acquires TwitPic's photo archive to keep it alive: TwitPic announced today that it’s archive and domain will be acquired by Twitter after “quite the roller coaster ride over the last few months.” The company will be handing over the TwitPic domain and archive to Twitter so users are able to continue accessing their old pictures, however it won’t be possible for users to upload any new photos and the mobile apps will be discontinued. For those following at home, TwitPic announced on September 4 that it would be shutting down, before announcing that it had a potential investor who could keep it going. It then announced yet again that it would be shutting down fully on October 25 due to lack of interest, before today’s news that Twitter had acquired the domain name and photo archive.

• HP Looks to Sell its China Corporate-networking Biz: Hewlett-Packard has begun sounding out private-equity firms in China to buy its corporate networking business in the country, the Wall Street Journal reported, citing people familiar with the situation. HP is expected to sell at least 51% of the business, H3C Technologies, which could be worth roughly $5 billion in a full sale, the business daily said. HP declined to comment on the report. The buyer likely needs to be based in China if the deal is to win Chinese government approval, the newspaper reported. Another Chinese technology company could also buy H3C, a major supplier of corporate data-networking gear in the country, although it is more likely to be sold to a private equity group, the Journal said, without naming any of the potential buyers.