Daily News Digest- 5th Nov'14

Thought of the Day:

Today in History:

Following made the Headlines:

India:

• Unhappy New Year! Car Makers Plan Price Hike: The Hyundai i20 Elite and Maruti Ciaz that you are looking to purchase may soon become pricier. After a gap of nine months, automakers are contemplating increasing prices to offset higher raw material and logistics costs.But they are cautious too, after the pickup in sales that they witnessed earlier this year fizzled out in the all-important festival season. Sharper hikes are likely to be limited to popular models, and some manufacturers may stay away from changing prices, say industry executives. The Indian unit of Hyundai Motor said it would increase prices, and an announcement is likely over next few days. Maruti Suzuki and BMW are contemplating increasing prices, and decisions are expected as early as this month. In the two-wheeler segment, which had a bumper festival season unlike car makers, market No. 1 Hero MotoCorp and closest rival Honda Motorcycle & Scooter India have already increased prices of motorcycles and scooters. Others are expected to follow the leaders. Automakers have evaded acrossthe-board price hikes since February, when the government cut excise duty by 4-6% to stimulate demand and help put the industry back on track after two years of falling sales.Companies passed on the benefit to customers and that, along with an improvement in consumer sentiment following signs of a pickup in the economy, heavy discounts and an array of new models, helped auto sales return to the positive territory in May. Though the festival months of September and October turned out to be disappointing, overall car sales since the fiscal year began in April have increased about 4.5% from a year earlier. Manufacturers say there is some room to increase prices now, especially for the in-demand models, to recover huge investments on new cars and improve profitability.

• Starbucks Expects India to be Among its Top 5 Markets: Starbucks Coffee, the world's largest coffeehouse chain, expects India to be among its top five markets as it looks to continue expanding its operations in the country. “India is a strategic market and one day it will be among our top five markets,“ said John Culver, group president, Starbucks China and Asia Pacific, who was in India to mark the Seattle-based company's two years in operations in the country. “We are very optimistic about the market in India where the response has been tremendous for the last two years,“ Culver told ET. Besides expanding its presence in the country, Starbucks also plans to export locally sourced coffee to select stores in other Asian countries and sell it online in the United States. The coffee, known as the `Indian Estates Blend' coffee, was launched last year on the completion of the brand's one year in the country. Tata Starbucks Ltd, a 50:50 joint venture between Starbucks and Tata Global Bever ages, currently operate 59 stores in six cities including Delhi NCR, Mumbai, Pune, Bengaluru, Chennai and Hyderabad. It has 1,000 employees. In 2012, the joint venture said it will earmark $80 million initial investment to open 50 stores in the country. Culver declined to comment on future investment and the number of stores it plans to open, but said India is a longterm market for Starbucks.

• Walmart renames Scott Price as President & CEO for Asia: US retail giant Walmart today said Scott Price has been renamed President and Chief Executive Officer of Walmart Asia with immediate effect, six months after he was promoted to take up an international role. Price will continue to lead important functions in Walmart home office that span its entire international portfolio, the company said. "Scott Price, who is currently Executive Vice President, Strategy and International Development, Walmart Stores Inc, will take on the additional responsibility as President and Chief Executive Officer - Walmart Asia, effective immediately," Walmart spokesperson told.

• Property Search Site Grabhouse Raises $2 M: Grabhouse, the property search and listings site owned by Mumbai based Cryptopy Technologies, is raising $2 million in a Series A round of funding led by Kalaari Capital.Seed stage investor India Quotient, which had invested in Grabhouse in January, will participate in the round. Founded in 2013 by IIT Kanpur alumnus Prateek Shukla and Teach for India fellow Pankhuri Shrivastava, Grabhouse had raised an undisclosed amount in its January seed round. The round was led by India Quotient and co-investors included Chetan Bohra and Navin Ranka, partners at Mumbai based boutique investment firm RB & Partners, and Deutsche Bank executive MV Krishnan. It is not known whether the angel investors will sell their shares in the Series A round. Shukla, who is the company's CEO, did not respond to specific questions on the deal. “We will let you know regarding any updates whenever we are ready to comment,“ he said in an email.However, a source with direct knowledge of the deal said that it was in its final stages. Kalaari Capital did not respond to emailed queries. The Grabhouse deal comes on the back of two other notable deals in the online property search space this year. In June, Housing, owned by Mumbai based Locon Solutions, raised . 115 crore ($18.7 million) in a Se` ries C round from Nexus Venture Partners, Qualcomm Ventures and Helion Venture Partners. It is now reportedly in talks to raise a fresh $30-40 million. In September, Bangalore based maxHeap Technologies, which own Commonfloor, raised $30 million in a growth round of funding from existing investor Tiger Global.

• Ezetap Ready to Tap Enterprise Sector: To leverage on the pervasive presence of Microsoft-powered terminals across small enterprises, payments solution provider Ezetap said its credit card reader devices will now be compatible with Windows platform. This move will allow Ezetap, which was until now focused largely on retail, to tap into the enterprise sector as well. “The enterprise segment is now looking at payments seriously . This is the right time for this ,“ said Ezetap's cofounder Sanjay Swamy , declining to comment on its impact on company's revenue. Ezetap said it expects to sign a few large deals in the near future. Small businesses, hospitals, kirana stores, field sales officers in insurance are a few sectors in the radar, he said. The new add on will allow all Windows-powered PC terminals and mobile devices to carry out transactions, something that was only available on Android till date. Founded in 2011 by Abhijit Bose, Bhaktha Kesavachar, and Sanjay Swamy , the Bangalorebased company has offices Mumbai and Delhi and recently started operations in Kenya. It raised $8 million (₹49 crore) from Helion Advisors, Social+Capital and Berggruen Hold ings earlier this year. Till recently, the company had sold 20,000 devices, on a subscription model.

• Flipkart Partners Payment Solutions Provider Euronet: Flipkart on Tuesday announced a strategic partnership with Euronet India, secure electronic transaction processing and payment solutions provider, to distribute e-commerce major's `digital gift codes' across the country.These digital gift codes act as payment instruments for making e-commerce purchases and an effective alternative to other conventional means of payment, Flipkart said in a statement. The customer will not just be able to gift these codes, but also use them for self-consumption on Flipkart.com, the company added.

• Cairn India CEO Ashar to Get $1.15 Million in Salary: Cairn India will pay Mayank Ashar, its first full-time CEO in two years, a salary of $1.15 million plus perquisites and allowances.Cairn will pay Ashar a base salary of $1 million per annum plus $1.5 lakh in a special allowance Foreign Service premium. On top of this, he will also be entitled to other benefits, perquisites and allowances like housing, car, insurance etc, the company said in a notice to shareholders.Besides retirement benefits and bonus of a maximum of 200% of basic salary, Cairn will pay Ashar a one-time joining bonus of $1.5 lakh. 

• Videocon Telecom Q2 Gross Revenue Up 60%: Videocon Telecom on Tuesday reported a jump of 60% in its gross revenue for the July-September quarter at ₹182 crore. The company registered a gross revenue of ₹113 crore in the same period a year ago. The company, however, did not share its profit and loss figures. The company stated a subscriber base of 83 lakh across its four operating circles in the quarter ended September 30.

• Merchandise Sellers Catch Investors' Eye: Fan merchandise and collectibles sellers are on the radar of risk capital investors, as they look to bet on online ventures that are increasingly becoming the platform of choice for brands looking to launch their products in India. Online ventures, such as New Delhi-based Bluegape.com and Bangalore-based Collectabillia are amongst the early movers in the country's nascent merchandise selling space, as global consumer brands, along with celebrities, look to reach out to larger audiences and untapped markets. “India's never really had a reason for merchandising till now. As a category , fan merchandise should do really well, given the benefits of exclusivity ,“ said Rohan Bhargava, co-founder of CashKaro, a leading online coupons site. Collectabillia recently tied up with Argentina and Barcelona footballing icon Lionel Messi, and obtained the exclusive rights to globally manufacture, retail and distribute a range of mobile, tab let and laptop covers under his MESSI brand. Separately, Bluegape has licensing agreements with a number of major film studios, such as Warner Bros, Yash Raj Films and producer-director Rakesh Roshan's Filmkraft. It had also tied up with the Aam Aadmi Party to sell its merchandise. According to industry experts, the global fan merchandise market is estimated at about $184 bil `11.1 lakh crore). Compared lion (.to that, the Indian market is at just $125 million (.`769 crore). “We're seeing the evolution of fan merchandising in India take place,“ said Sahil Baghla, co-founder and chief executive of Bluegape.com, in an earlier conversation with ET. The growth in interest comes at a time when consumer electronic and apparel brands are increasingly looking to leverage the country's burgeoning e-commerce sector, as they look to create an alternative distribution channel, offer more competitive pricing and reach out to a growing consumer class.

• Idea Opposes Extension of Permits in New Delhi: In a rare instance of disagreement between GSM telecom companies, Idea Cellular has opposed the extension of permits for Bharti Airtel and Vodafone India in Delhi beyond November, saying it violates auction rules and would hurt business and market share for India's No. 3 operator. Airtel and Vodafone have asked the department of telecom for permission to operate in Delhi for at least six months after November, saying they need more time to reconfigure their networks to new spectrum won in the February auction. They said the allocation of airwaves was delayed and without the additional time, services to 20 million subscribers in Delhi may get disrupted. However, if the permits are extended, it would affect the allocation of airwaves won by Idea in the same auction because they include portions in the 900 MHz band that are currently held and used by Airtel and Vodafone. “Any delay in spectrum allocation beyond 30.11.2014, would result in delay in the launch of Idea services on the said 900 MHz spectrum by an equivalent period, and is totally unacceptable,“ Idea Cellular Chief Financial Officer Akshaya Moondra wrote in a letter to the telecom department, in response to the request for extension by its two larger rivals. The Aditya Birla Group company said it should soon be allocated the airwaves in Delhi, for which it has paid ₹ 926 crore and provided a bank guarantee of ₹ 547.16 crore. “Any delay would make us incur loss on account of interest cost for each day of delay without corresponding revenue,“ Idea said, adding that the interest cost on its investment was ₹ 1.02 crore a day.

• FMCG cos eye close to Rs 3k cr buyouts: Indian FMCG biggies and private equity funds are eying two large regional buyouts, revving up action in the personal care market. Emami and Marico, among others, are in talks to acquire ayurvedic hair oil brand Kesh King, owned by Punjab-based SBS Biotech. The brand, with one of the heftiest profit margins in the industry, is seeking valuation of over Rs 2,000 crore, in a process advised by global consulting firm Deloitte, said multiple sources directly familiar with the matter. FMCG majors including Wipro, and a few private equity funds, are also chasing a buyout of Indulekha, another ayurvedic hair oil and soap brand, which belongs to Kerala-based Mosons Extractions. The company has mandated investment bank Anand Rathi to advise on a sale with an asking valuation of more than Rs 600 crore. Kesh King has annualized sales of more than Rs 350 crore with operating profit of Rs 180 crore, while Indulekha’s sales are estimated at Rs 150 crore annually. “I agree with you that there is keen interest by the top-notch FMCG companies to acquire this brand but we would like to retain Kesh King brand with us and build hair care segment further with introduction of hair colour and other SKUs in oil and shampoos,” Sunil Mutreja, executive director, SBS Biotech, said in an email response to TOI. Deloitte declined to comment.

International:

• Outdoor clothing brand Jack Wolfskin appoints new CEO: German outdoor clothing brand Jack Wolfskin has appointed Melody Harris-Jensbach, formerly chief product officer at both fashion retailer Esprit and sportswear firm Puma, as its new chief executive. Jack Wolfskin said in a statement that Harris-Jensbach would replace Michael Rupp with immediate effect, adding that Rupp had decided not to extend his contract for personal reasons. Rupp took over as CEO in 2012, replacing co-founder Manfred Hell, who had run the brand for nearly 25 years. Hell stepped down when U.S. private equity investor Blackstone bought the firm in 2011 for about 700 million euros ($877 million). Under Blackstone, Wolfskin, which sells jackets, rucksacks, tents and shoes for mountaineers and trekkers but is also a popular urban brand in Germany, has been focusing on expanding in Scandinavia and Eastern Europe.

• John Worthington Joins New York & Co.: John Worthington, a former top executive at Kohl’s, has joined New York & Company Inc. as president and chief operating officer. Worthington spent 20 years with Kohl’s, most recently serving as chief administrative officer and senior executive vice president. Earlier, he was director of stores. Before that, Worthington worked at the former May Department Stores, in stores and buying jobs. According to the filing with the Securities and Exchange Commission, at Kohl’s, Worthington will receive an annual base salary of $750,000. He will also participate in the company’s cash incentive compensation plan with a target bonus of 75 percent of his base salary, and in its equity incentive plan and receive other employee benefits.

• Karl Lagerfeld Sets Up Shop in Copenhagen's Illum Department Store: Karl Lagerfeld has gone to Denmark, opening its first sales point in Copenhagen-based department store Illum on Oct. 30. The 195-square-foot shop-in-shop, located on Illum’s newly renovated ground floor, has a black-and-white color scheme with sleek furnishings and walls made of light. The location carries accessories including handbags, small leather goods, watches, fragrance, jewelry, candles, eyewear, limited-edition dolls and books published by the designer. There is no ready-to-wear.

• StyleSaint Sets Goal to Make Eco-Impact: Two-year-old digital company StyleSaint, which launched its first apparel collection a year ago, is raising its voice — and its profile — in a crowded marketplace, with two new lines and a conscious commerce initiative called Project Impact. “The goal was always to start a next-generation women’s apparel brand built hand-in-hand with our customers [and] meant to reduce waste in a lot of ways,” said StyleSaint chief executive officer and cofounder Allison Beal, 32. “Waste is inherently built into the fashion industry: water waste, fabric waste, synthetic materials…and there’s also the treatment of laborers, how things are made.” Beal and her business partner, Brian Garrett, the entrepreneur behind The Row and ShoeDazzle, created an interactive community from Day One and launched SaintSociety, a worldwide members-only forum to create shareable stylebooks. The StyleSaint clothing collection was first available to members of SaintSociety, and feedback and customer transparency were key in its development. Hero styles were honed into bestsellers through customer feedback, such as e-mailed requests for adjustable waistbands or a more flattering front panel. With locally sourced and produced pieces, Beal is able to deliver the refined product in two weeks.

• Slowing Economies Expected to Hit South America's Falabella: Falabella, South America’s largest department-store network, is expected to suffer from a retail slump in its key markets of Chile and Peru that could derail its expansion, analysts said. Their views came as the company issued a $400 million bond last month to help refinance its $4.4 billion in debt. The 10-year notes were six times oversubscribed, “showing investors’ confidence in the group and its responsible growth strategy…at a time of market volatility,” corporate finance manager Alejandro Gonzalez said. But analysts are not overly confident about the firm’s near-term prospects. Santiago, Chile-based Falabella, which operates 94 department stores in Chile, Peru, Colombia and Argentina, could close 2014 with a 32 percent decline in operating profits at earnings before interest and taxes level, according to a senior analyst, who requested anonymity. Revenues are seen rising 14 percent from $11.3 billion last year. However, that’s below a 15 percent average increase since 2009, he said.

• Carol Koh Evans Named Tradesy CFO: Carol Koh Evans has been named chief financial officer and chief operating officer at Tradesy, the designer fashion online resale platform. Evans was formerly chief operating officer at XO Group Inc., the parent of bridal brand The Knot. Tracy DiNunzio, Tradesy’s founder and chief executive, said the new posts were created at the startup, which began business operations in 2012, to grow the company to the next level. Tradesy’s venture capital investors include Kleiner Perkins Caufield & Byer, Sir Richard Branson, Rincon Venture Partners and Northgate Capital, among others.

• Pirritt Joins Amita Nathani as Senior VP: Karen Pirritt has joined Amita Naithani, a resortwear company that launched earlier this year, as senior vice president. Most recently, Pirritt was vice president of Chico’s, before which she was president of Samara, a division of Haskell Jewels. Earlier in her career, she was president of JH Collectibles, Emma James and Tapemeasure at Li & Fung. Amita Naithani presented her collection of swimsuit cover-ups and resortwear in July at the 2015 International Swimwear Show in Miami. A native of India, Naithani has incorporated such techniques as hand embroidery and crochet, delicate cut work, intricate beadwork and hand-dipped dyes into her designs. Her line, which includes cover-ups, tunics, dresses, skirts, pants, as well as caftans in silks, linens and cottons, wholesales from $48 to $98.

• Mobile Growth Lifts Alibaba Results: Large investments in mobile commerce took a bite out of Alibaba Group Holding Ltd.’s second-quarter bottom line while producing large gains in its mobile penetration. In its first filing of financial results since its historic $25 billion initial public offering last month, the Hangzhou, China-based e-commerce giant said mobile commerce volume for the past 12 months reached $95 billion. The number of monthly active users of its mobile apps, led by Taobao, expanded to 217 million from 91 million in the comparable period during 2013, a 138.5 percent increase, while mobile as a share of total volume moved up to 35.8 percent from 14.7 percent in last year’s quarter and 19 percent in the first quarter. “With more than one-third of our China retail business on mobile, Alibaba is very much a mobile company,” said Joseph Tsai, executive vice chairman, on a conference call with Wall Street analysts.

• Rolls-Royce to cut 2,600 jobs: Engineering group Rolls-Royce has said it is planning to cut 2,600 jobs over the next 18 months. It said most of the jobs would go in its aerospace division, with most of the posts being shed in 2015. It is not clear where the cuts will be made from Rolls-Royce's global workforce of 55,000, 24,000 of whom are in the UK. However, the Unite union told the BBC there would be 800-1200 engineering jobs cut in Derby and Bristol. Rolls-Royce also said Finance Director Mark Morris leaves after 27 years with the firm and would be replaced by David Smith, who is promoted from finance director of the Aerospace division. The company's chief executive John Rishton said: "The measures announced today will not be the last, however they will contribute towards Rolls-Royce becoming a stronger and more profitable company." Last month, Rolls warned that its underlying revenues for 2014 would be 3.5-to-4% lower than expected.

Tech:

• Smarter Samsung Widens Lead at Top: Samsung Electronics expanded its lead over Micromax in India's smartphone market in September while Nokia retained its third spot, significantly ahead of Lava and Karbonn, data from research firm Gfk showed. Gfk data for July, August and September showed South Korea's Samsung had achieved a 33% market share at the end of the period after gaining over a percentage point from August. Home-bred Micromax came in second with more than 18% share, adding a tad over the previous month while Finnish handset maker Nokia, now owned by Microsoft, managed to keep itself going at No. 3 with 12% share. ET has reviewed the research firm's data. In the wider market that includes feature phones, Samsung led with about a fourth of the market share while Nokia continued to be No. 2 at about 21%.Micromax, however, came in a distant third at 13.5%, data showed. The smartphone market in India is surging, as a drop in prices tempts more people to switch from feature phones to smartphones. The trend revealed in these Gfk figures -which are based on actual sales -contrasts those brought out in the April-June data published by Counterpoint Research, Cybermedia Research and International Data Corporation (IDC), which suggested narrowing of gap between market leader and its closest challenger.

• Airtel Africa Launches Thuraya Satellite Services: Airtel Africa, a subsidiary of Indian telecommunications company Airtel, has partnered with Dubai based mobile satellite services provider Thuraya to launch its products and services in 12 African countries and tap the growing demand for communication services. Thuraya's satellite phones and IP+ broadband terminals can now be purchased by Airtel's customers through the company's Africa subsidiaries in the Congo-Brazzaville, the Democratic Republic of Congo, Gabon, Ghana, Kenya and Zambia.

• Paytm in talks to raise $100-250 mn: One97 Communications Ltd sees its flagship product, Paytm, as a mobile marketplace in the making—one that can compete with e-commerce sites like Flipkart.com, Amazon.in and Snapdeal.com. Some potential investors, though, see it as just an online mobile phone recharge, bill payments and mobile wallet company. The result: a delay in the company’s efforts to close a new round of funding, of between $100 million and $250 million. Paytm has been in talks with at least three new investors—Japan’s SoftBank Corp., Google Capital and Atlantis Capital—to raise the money over the past three months, according to two persons close to the development who asked not to be identified. Paytm even met (once) with rival Amazon India for a large strategic investment, one of the two persons said. Paytm started out in 2010 by offering mobile recharge and utility bill payments. Earlier this year, founder and chief executive officer Vijay Shekhar Sharma pushed the company into mobile commerce, betting that it could lure its large customer base of 22 million people into buying mobiles, tablets, laptops and other products on its own mobile marketplace.

• SoundCloud is launching its subscription music service with Warner Music Group in 2015: Today SoundCloud announced that the Warner Music Group is the first partner for its upcoming subscription service. The service is due to launch in the first half of 2015 and will be supported through the ‘On SoundCloud‘ ad program, which was first introduced in August to help artists make some money from their creations. As part of the deal with WMG, artists are given control over the availability of their content, and can make money from remixes and mash-ups of their music made by the site’s users. This, of course, in addition to additional revenue every time a song is played. It’s a major move by a platform that’s been primarily known as a place for indie artists and DJs to share their music and remixes for free . Neither labels nor artists made any money from SoundCloud until this summer, and its success was built largely on the engagement of fans. Now that it’s partnering with such a large music group, the company and its artists gain a significant source of potential revenue, while keeping the unique collection of underground music and remixes SoundCloud is known for.

• HTC Deal Offers Nexus 9 Tablets for $199: HTC is running a holiday promotion with limited quantities of the Nexus 9 tablet for half-price. The 16GB WiFi version will cost $199, down from the suggested retail of $399. Google unveiled the Nexus 9 last month alongside the Nexus 6 and the Nexus Player. The tablet arrived on the Google Play store yesterday following a pre-order period throughout November. The Nexus 9 features brushed-metal sides and a soft-grip back. It packs an Nvidia Tegra K1 processor, 8MP rear camera and 1.6MP front camera.

• Microsoft Office and Dropbox Join Forces with New Integration: In an announcement today, Dropbox and Microsoft’s Office team revealed they were joining forces to offer new interoperability between the two platforms. When the updates roll out, Office users will be able to directly open, edit and share their Dropbox files from within the Office apps. All the changes to your documents will be synced directly to Dropbox’s cloud, and you can invite others to collaborate with you by sharing a link to your file on Dropbox. On the other hand, you can also now directly edit Word, PowerPoint and Excel documents right from the Dropbox app, or just easily open the documents in the relevant Office app for more functionality. It’s a surprising move from Microsoft as Office already has extensive integration with its own OneDrive platform. However, Dropbox is simply more popular. Given the growing user base of cloud-based competitors like Google Docs, it’s a smart move by the company to keep users hooked.

• Vimeo Lanches New Captioning & Translation Tools: Video-sharing platform Vimeo is receiving a number of new features as the company looks to expand its international credentials. With a growing global audience, Vimeo is introducing new translation and subtitling tools, as well as more currency options. Video-creators can tap a self-service editor, powered by Amara, to create captions or subtitle files for their videos for free, or they have the option to purchase captions and subtitles using professional translators through the service. If you opt to have your videos converted by a pro, you can choose from basic audio transcriptions to full captioning and translations in up to 18 languages per video. Though Vimeo shares many similar traits to the likes of YouTube, the New York-based company has been placing a bigger focus on creators and film-makers in recent times, letting them sell original films internationally through its self-distribution platform called Vimeo On Demand.