Daily News Digest- 3rd Nov'14

Thought of the Day:

Today in History:

Following made the Headlines:

India:

• Brick and Martyr: E-Tailers Race Ahead: Online retail seems to be rapidly coming of age in India — in the financial year ended March, Flipkart’s sales challenged those of its nearest brick-and-mortar rivals, according to filings with the Registrar of Companies, although the segments that they operate in aren’t strictly comparable. Meanwhile, the marketplaces operated by both Flipkart and Amazon posted losses. Amazon, which entered India a year ago, logged a net loss of Rs 321 crore while Flipkart saw this more than double to Rs 400 crore, according to October 31 filings. Due to curbs on foreign investment in selling directly to consumers, Flipkart and Amazon run their websites as marketplaces. Hence, the figures relate to commissions from sellers and revenue from advertisements on ecommerce sites. In this respect, Amazon Seller Services posted revenue (commissions) of Rs 169 crore while Flipkart Internet, which manages the portal, had a total income of Rs 179 crore. However, Flipkart India Pvt Ltd, the website's wholesale arm, said sales amounted to Rs 2,846 crore in the year ended March, more than double the Rs 1,180 crore a year ago.Rival Shoppers Stop posted revenues of Rs 2,713 crore through its 73 department chain stores that mostly sell apparel and lifestyle products. On a consolidated basis though, including electronics chain HyperCity, sales amounted to Rs 3,771 crore. The Kishore Biyani` run Future Lifestyle Fashion posted total income of Rs 2,743 crore from its department store formats Central and Brand Factory besides its own labels such as Indigo Nation and John Miller.

• Last-minute Flights Costlier Amid a Flurry of Discounts: Discount offers from airlines have their set of gainers as well as losers. While passengers booking in advance benefit from discounts, those who take tickets in the last seven days to travel need to shell out more compared with last year, indicate an analysis of airline fares. Local airlines have announced more than 20 discount offers since January -SpiceJet started it and others followed -and these have led to an increase in the number of people flying. For instance, the number of passengers rose nearly 28% in September compared with the same month last year. “While discount offers are on, the airlines are offering an up to 10% higher last-minute fares. This strategy adds to the revenues of the airlines and helps them recover the money they might have foregone in selling tickets on discounts,“ said Sharad Dhall, president at Yatra.com, India's second largest travel portal. Airlines say that the benefits are twopronged: average fares go up, while load factor or capacity utilisation improves. “The key metric to judge the increase is not loads, yields, or average fares alone, it is the revenue available per seat kilometre, which is strongly up.I can only point to the first quarter (since the company has not yet announced the second-quar ter results), where our RASK was up by 10%,“ SpiceJet COO Sanjiv Kapoor told ET.

• Amazon says it faces unique risks in India: Amazon feels India's laws and regulations are a risk for the company . The online retailer thinks the laws and regulations may be interpreted in a way that will make business in India more difficult than it is and, in a recent filing to the US Securities and Exchange Commission (SEC), even present the possibility that it could be forced to shut down its operations. India as a risk factor is emerging for the first time in Amazon's mandatory quarterly reports to the SEC. The report in June mentioned only China. But the latest September report adds India to the section titled `We may not be successful in our efforts to expand into international market segments'. The report says, “For http:www.amazon.in, we provide certain marketing tools and logistics services to third-party sellers to enable them to sell online and deliver to customers. Although we believe these structures and activities comply with existing laws, they involve unique risks. There are substantial uncertainties regarding the interpretation of PRC (People's Republic of China) and Indian laws and regulations, and it is possible that the government will ultimately take a view contrary to ours.“ The filing goes on to say , “If our international activities were found to be in violation of any existing or future PRC, Indian or other laws or regulations or if interpretations of those laws and regulations were to change, our businesses in those countries could be subject to fines and other financial penalties, have licences revoked, or be forced to shut down entirely .“

• Godrej Consumer Q2 stand-alone profit rises 21%: Godrej Consumer Products Ltd, the maker of Cinthol soap and Good Knight mosquito repellent, said fiscal second quarter stand-alone profit rose 21.7%, in line with analyst estimates. Net profit increased to Rs.174 crore for the September quarter from Rs.143 crore a year earlier, the company said on Saturday. Total stand-alone income increased 6.5% to Rs.1,091 crore from Rs.1,024 crore. “Consumer demand remained subdued in the second quarter of fiscal year 2014-2015, making this one of the slowest years of growth for the Indian FMCG industry in over a decade. We have however, continued to outperform the market and our brands have further strengthened their leadership positions,” said Adi Godrej, chairman, Godrej Group in a press statement. Shares of Godrej Consumer closed marginally down by 0.13% at Rs.967.75 on Friday. The benchmark Sensex gained 1.90% to close at 27,865.83 points.

• Customers Preferred Flipkart, Ebay for Diwali Online Shopping: Survey: Customers preferred to purchase new products on the internet from e-commerce giant Flipkart, followed by eBay India, HomeShop 18, Amazon India, Snapdeal and Shopclues, according to a survey by brand and customer management firm Akosha. "When it came to Diwali shopping, 39 per cent respondents said that Flipkart was one of their top choices followed by eBay India (23 per cent) and Amazon India (12.21 per cent) among others," Akosha said in a release. Less than 10 per cent named Snapdeal and Shopclues for shopping online during Diwali, as per findings of the survey. When it comes to regular online purchases, around 45 per cent respondents said they shopped from Flipkart, followed by Snapdeal (17 per cent), eBay India (15.89 per cent) and Homeshop18 (9.8 per cent), among others. These findings were compiled from the survey conducted with a sample size of 2,000 respondents and insights from Akosha's own internal database, the report said. "Our constant endeavour is to ensure happy customers by providing them with innovative products, some of which are specially created and developed for them. We offer unbeatable deals and gamut of products across our various categories," HomeShop18 founder and CEO Sundeep Malhotra said in response to the findings.

• Green tea market to touch Rs 400 crore in FY'15: Tata Global: The green tea market in India is growing at about 50 per cent annually and is likely to be around Rs 400 crore by the end of 2014-15, according to Tata Global Beverages Ltd. To tap the market, TGBL recently launched a new variant, Tata Tea Acti Green, with focus on smaller cities and towns. "As of now, the total tea market is around Rs 18,000- 20,000 crore, whereas green tea is around 1.5 per cent of the market which comes around Rs 250 crore," TGBL Vice President, Head Marketing - India & South Asia, Vikram Grover told PTI. Tata tea, he added, is a leading player with about 20 per cent market share. "With the launch of these new green tea variants, we are confident that the company will further consolidate its grip on the market." He said the new product is priced and offered in smaller packaged quantities, targeting the first time, experimental consumers.

• Sales rise but loss widens as Amazon India chases buyers: Amazon Seller Services Pvt. Ltd, the Indian unit of the world’s largest online retailer, reported a 50.2% jump in sales to Rs.168.9 crore for the year ended 31 March, as the company quickly expanded its India marketplace platform to emerge as the biggest threat to local rivals Flipkart and Snapdeal. Amazon India’s loss for last fiscal, however, widened to Rs.321.3 crore from Rs.24.6 crore in the previous year, reflecting the heavy investment in marketing, discounts and supply chain that has enabled the fast revenue growth at the company, documents with the Registrar of Companies (ROC) show. Amazon did not respond to an email seeking comment about its results. Amazon India’s business comprises its marketplace platform Amazon.in, sales of its e-book reader Kindle and other products, and revenue from providing marketing services to its fellow group companies. India is one of the last of the potentially large e-commerce markets in the world. It’s important for Amazon to establish a large business in the country after having lost out to Alibaba in China, which overtook the US last year to become the largest e-commerce market in the world. Accordingly, Amazon, which launched its India platform in June 2013, increased its capital commitment in its India business to as much as Rs.1,500 crore last fiscal from just Rs.200 crore earlier. In July, Amazon chief executive Jeff Bezos promised the company would invest as much as $2 billion in India over the next few years. Bezos even visited India for five days in October to encourage Amazon India executives to build on their impressive launch and meet with business partners and politicians, including Prime Minister Narendra Modi.

• Air India exit leaves lobby FIA in jeopardy: State-owned Air India Ltd has decided to pull out of the industry lobby Federation of Indian Airlines (FIA) that it helped found, leaving the group in trouble and reflecting differences over the re-organization of the country’s aviation space. Formed in 2006 to push for reforms as more private sector airlines were granted airline licences, FIA counted Air India, Jet Airways (India) Ltd, IndiGo, SpiceJet Ltd and GoAir among its members. Now, Air India chairman and managing director Rohit Nandan has written to FIA associate director Ujjwal Dey saying the airline wishes to withdraw. “We have been a member of FIA since its inception,” said an Air India official aware of the matter who declined to be named. “But why do we need to take the platform of FIA to convey our views to the government? We can just walk up to them. We have resigned with immediate effect.” A second official aware of the situation confirmed the development. The FIA has taken the Centre to court over many of its policies, including allowing foreign airlines to invest in new Indian airlines and ground handling of flights. The second official, also seeking anonymity, said Air India was pulling out not because it thought the FIA was turning into a cartel—as former Air Deccan chief G.R. Gopinath has alleged—but because the national carrier did not want to participate in anti-government moves. Air India has, in legal parlance, recused itself from these cases. “There have been several occasions when we have not agreed with their approach. We were not party to any of those FIA decisions,” the second official said.

• Toonz Retail to add 20 stores this fiscal focusing on non-metro markets: Toonz Retail, which specialises in retailing kids-wear and toys, is expanding its network focusing on non-metro markets and has plans to add 20 stores by the end of this fiscal. "We are expanding our footprint across the country. We are planning to take our network to 75 stores by financial year 2014-15," Toonz Retail India MD & CEO Sharad Venkta told PTI. The company, which has earmarked Rs 20 crore for its expansion from its promoters, presently has a network of 55 stores in 44 cities. "We would continue to consolidate our presence in South, we have put in major thrust of expansion in north and east," Venkta, he added. Toonz Retail is growing 50 per cent annually and is aiming to cross Rs 100 crore turnover in next three financial years from Rs 40 crore, expected turnover in 2014-15, he added. "The company is growing more than 50 per cent annually and looking at a turnover of Rs 100 crore annually in the next three years," Venkta said.

International:

• Argentina suspends P&G over tax claims: Argentina has banned the consumer products giant Procter & Gamble (P&G) from doing business in the country, accusing the firm of tax fraud. A statement on the presidential website, published on Sunday, said P&G had inflated the price of imports by $138m (£87m) in an effort to get money out of the South American country. It also accused the firm of attempting to avoid taxes. The alleged fraud involves shipments of razors and other hygiene products. P&G, which is based in the US, could not be reached for comment, due to the time difference. The statement, published on behalf of Argentina's Federal Administration of Public Revenue (Afip), added that details of the alleged fraud have been sent to its counterpart in the US - the Securities and Exchange Commission.

• Sony reports a quarterly loss of $1.2bn: Japanese consumer electronics giant Sony has reported a net loss for the three months to September of 136bn yen ($1.2bn; £762m). The loss, which was attributed to its struggling mobile phone business, was not as great as analysts had expected. In September the firm warned its annual loss might be more than four times bigger than initially forecast. The firm said it now expects a full-year loss of 230bn yen, compared with a previous estimate of 50bn yen. On Friday, Sony also reported an operating loss of 85.6bn yen for the September quarter, despite an increase in sales of 7.2% to 1.9tn yen for the period, compared with a year ago. Sony said the rise in overall sales numbers was mostly due to a "significant increase" in its games and network services sales, "reflecting the contribution of the PlayStation 4."

• Harrods Revenues Climb 10.8% to $1.24 Billion: London department store Harrods saw its turnover climb 10.8 percent to 794 million pounds, or $1.24 billion, in the year to Feb. 1, 2014, according to accounts Harrods Limited recently filed at London’s Companies House. The store also reported a gross transaction value – a figure that includes sales at concessions and VAT – of 1.62 billion pounds, or $2.5 billion, up 13.6 percent on the year. The figures filed for Harrods Limited concern Harrods’ Knightsbridge store, while Harrods Group includes businesses such as Harrods’ aviation and banking activities. Turnover for Harrods Group Holdings rose 10.1 percent to 843 million pounds, or $1.32 billion during the year. All dollar figures have been calculated at average exchange rates for the period to which they refer.

• American Eagle Spreads Its Wings in Mexico: “We see room for 50 stores in Mexico,” said Miguel Flores, vice president and country manager at American Eagle Outfitters, which is about to open its 18th store in the country after arriving in early 2013. While the bulk of the teen retailer’s presence is concentrated in Mexico City, Guadalajara, Querétaro and other large cities, the firm intends to grow in Mexico’s booming secondary cities in which a plethora of fledgling mall projects and refurbishments offer opportunities. “Everyone knows Mexico City concentrates the highest percentage of population and GDP in Mexico, so we will continue to strategically grow there,” Flores said. “However, secondary cities are growing in many ways. New malls are being built in cities that didn’t have any before or upgraded in others, so there are a lot of opportunities coming from new commercial real estate.”

• Anthony Ledru to Head Louis Vuitton Americas: Louis Vuitton named Anthony Ledru president and chief executive officer of the Americas, effective Jan. 1. Ledru was most recently senior vice president, North America, at Tiffany & Co. Prior to that, he served as global vice president of sales for Harry Winston International and was at Cartier in Latin America and then in the U.S., where he held the role of vice president of retail at the house’s North American business. At Vuitton, he is succeeding Valérie Chapoulaud-Floquet, who left the luxury leather-goods house in August to join French alcoholic-beverage company Rémy Cointreau Group as ceo.

Tech:

• WhatsApp user base crosses 7 crore in India: Mobile messenger service WhatsApp's user base in India has grown to 7 crore active-users, which is over a 10th of its global users, its business head Neeraj Arora said on Sunday, a PTI report stated. "We have 70 million active-users here who use the application at least once a month," Arora, a vice-president with WhatsApp, said at the fifth annual INK Conference. He said the total user-base for the company, which was bought by Facebook in a blockbuster USD 19-billion deal earlier this year, is 600 million. With over a 10th of the users from the country, India is one of the biggest markets for WhatsApp, he said, adding connecting billions of people in markets like India and Brazil is the aim of the company. Arora, an alumnus of IIT-Delhi and ISB Hyderabad, said WhatsApp will continue to hold a distinct identity even after the takeover by Facebook and will not get merged with the social networking giant. He said WhatsApp, which has only 80 employees, will benefit through learnings from the social networking giant.

• MS Offers Tech for Last-mile Net Connectivity: After Facebook, Microsoft now wants to play a big role in taking the ‘last mile’ of broadband connections to remote and inaccessible parts of India and providing access to high-speed Internet. The US software giant, headed by Hyderabad-born Satya Nadella, has proposed to the telecom department the deployment of its TV WhiteSpace technology for a pilot project in Bangalore. The radio interface developed by Microsoft functions like Wi-Fi on a bigger scale. It provides wireless connectivity across a 10 km radius, a much larger area than the typical routers set up for commercial use today, and speeds of up to 16 Mbps, eight times faster than what is generally available in most parts of India. Experts say this technology has been successfully implemented in the US and in Singapore and is being tested in Kenya, Tanzania, South Africa and the Philippines, among others. Redmond, Washington-based Microsoft has discussed the matter with the Wireless Planning & Coordination wing of the telecom department to which it submitted the proposal four weeks ago. The idea is to provide cost-effective connectivity, the company’s India chairman Bhaskar Pramanik told ET.

• Cartrade. com plans to launch multiple products on mobile platform: Online auto marketplace cartrade. com, which has recently raised ₹ 185 crore funding from an affiliate of Warburg Pincus, plans to utilise the funds to launch multiple products on the mobile platform, upgrade the platform, double its sales force within the next one year as well as invest heavily in marketing initiatives. In short, the capital raised would be used to diversify as well as strengthen cartrade’s offerings to dealers and individual customers. Vinay Sanghi, the promoter of cartrade.com, explained that while the company already had an Android mobile application, it plans to further upgrade the platform as well as add multiple products. “We are planning to bring an application for iPhone as well very soon. With the advent of the smartphone, we expect nearly 75 per cent of the classifieds to come from the mobile application in the next few years,” he said. Around 1,20,000 vehicles are listed on the website at the moment. However, one of the most important investment areas would be on marketing and communication. “We are looking at mass advertising, like television commercials etc. This apart, we are targeting to double the sales force from a current 600 people in around a year’s time,” Sanghi said. Cartrade. Com is basically an online automotive market for buyers and sellers of both new and used vehicles. Car auctions take place across all major cities in the country with over 1,200 dealers participating in these auctions. The portal operates as a platform for both business- to- business (B2B) and business- to- customer (B2C) transactions. Dealers can offload their inventory here, so can banks as well as fleet owners. Individual customers can buy or sell, and so can fleet owners. The company’s sales force visits dealers, train them about the online auctions, and also try to get them on board. Hence, by doubling the sales force, cartrade is basically trying to expand its reach among dealers and fleet owners. For the individual consumer, there is the route of mass advertising through television, internet, which is why, the company now plans to focus on mass advertising in order to increase the traffic at the website. Currently, the portal and the mobile app gets around four million unique visitors per month.

• Google Play Movies & TV arrives on Roku: Good news for Roku users – the Google Play Movies & TV app has landed on its streaming devices and dongles in the US, UK, Ireland and Canada. Google Play Movies & TV is Google’s on-demand streaming service, delivering the latest movies and TV shows, as well as older titles, on a pay-per-title basis. It’s basically Blockbuster in the cloud. The new app can be found in the Roku Channel Store on the latest generation Roku players, with Roku TV support coming “soon.”

• Microsoft announces an all-new Outlook for Mac, available for Office 365 users: Microsoft has announced an all-new Outlook for Mac, available for Office 365 users. The launch brings the product into line with its versions on other platforms, including mobile and PC. Alongside its refreshed interface, Microsoft says the new Outlook for Mac app brings better performance and reliability, as well as a handful of other new features. Microsoft also revealed it’s introducing a new beta version of Office for Mac in the first half of 2015, with the final version due to hit later in the year. 

• Facebook is now available on Tor for more secure browsing: After enabling secure HTTPS browsing by default for all users in August last year, Facebook has taken another step to allow for secure browsing, and has made their social network available via the Tor network for users who want to maintain their anonymity when logging on to the Web. The Facebook onion address (accessible only in Tor-enabled browsers) connects users to Facebook’s Core WWW Infrastructure, so as to provide end-to-end communication, directly from the browser into a Facebook datacentre, allowing for private and secure browsing sessions. An SSL certificate issued by Facebook to visitors confirms to them that they’re indeed accessing the right destination. The onion address for Facebook (https://facebookcorewwwi.onion/) is currently live, and Tor users can log on with it securely starting now.