Daily News Digest- 24th Nov'14

Thought of the Day:

Today in History:

Following made the Headlines:

India:

• Prem Watsa-led Group to Invest $1 B in India: Prem Watsa, known as the Warren Buffet of Canada, plans to invest at least $1 billion in India as part of a consortium, enthused by the economic opportunities he sees in the country under the leadership of Prime Minister Narendra Modi. In a first for the 64-year-old Indian-origin businessman, Watsa is setting up a company specifically focused on a country to raise the funds and will make the investments, which may be announced in a week's time. “We will have a very strong focus on India. At least a billion dollars is what we are targeting to start with, led by Fairfax.This will be more permanent capital, which means invested in India for the long term,“ Watsa told ET in an interview. Fairfax Financial Holdings Ltd., short for fair, friendly acquisitions, is a Canada-based insurance-cuminvestment company that Watsa founded in 1985. The company has invested around $27 billion worldwide, including in Indian entities such as ICICI Lombard, Thomas Cook (India), IKYA and Sterling Resorts, through its wholly-owned local unit, Fairbridge. The new Indiafocused company is independent of Fairbridge. The IIT Madras alumnus however didn't specify the sectors that he could be putting his money in as part of the latest investments, but said that he will stay out of e-commerce ­ a fast-growing sector in India that has attracted millions of dollars in recent times--and commodities.

• Fund-raise values Flipkart at $10bn: India's largest ecommerce player Flipkart has closed a $500-600 million fresh financing round led by its existing large investors at a massive pre-money valuation of $10 billion, giving it further ammunition to fight out rivals Amazon and Snapdeal. Tiger Global, South Africa's Naspers and Yuri Milner's DST Global, along with others, have pumped in $50-100 million each in the new round with a new investor chipping in a nominal amount, sources familiar with the matter told TOI. At the company's board meet in Singapore recently , the fund-raise was formalized and an announcement could be made shortly. The latest fund-raise saw the participation of only one new investor, sources said. TOI had reported in its November 10 edition that Flipkart was in the midst of raising fresh capital just three months after it closed a $1-billion raise, valuing it at $7 billion then. Sources said the latest move was part of Flipkart's regular fund-raising plans till it readies itself to go public on the US bourses in the next 36 months. As reported by this newspaper, the company could raise anywhere between $2 billion and $3 billion within this time frame.

• Now, Bank on Your Simple Phone to do Smart Banking: Banking will have a new look with some of the jigsaw pieces slowly falling into place. Almost all dealings between a customer and her bank will be possible with a basic handset and without accessing the Internet. The telecom regulator will soon ask telcos -many of which have been resisting for years -to enable bank-authorised mobile payment companies to offer such service. Telecom companies are expected to fall in line with local and international payment companies, including an associate company of Visa, lobbying with the regulator and the government for permitting them to tap the Unstructured Supplementary Service Data (USSD) channel of telcos. Local and international payment companies are lobbying with the regulator and the government for permitting them to tap USSD channel of telcos The USSD channel is a simple interactive text messaging system that can be used by a mobile phone subscriber to reach out to the bank. The USSD channel is a simple interactive text messaging system that can be used by a mobile phone subscriber to reach out to her bank for anything -transfer funds, check balance amount, pay bills, cancel a cheque, request for a cheque book, obtain an account statement, and even buy books and music using debt or credit cards. Customers ­ without 2G or 3G connectivity or a smartphone -have to simply key in something like *67# -or any other number a telco provides ­ to `talk' to her bank.

• New Rules may Let Domestic Carriers Fly abroad Sans Curbs: The civil aviation ministry is looking to scrap restrictions on Indian carriers that want to start overseas services, a move that will benefit new entrants such as TataSIA joint venture Vistara but may displease existing airlines IndiGo, Jet Airways and others. “You have limited them by laws like 520,“ civil aviation minister Ashok Gajapathi Raju Pusapati said in an interview, referring to the rule that Indian carriers should have been fly should have been flying for five years and have 20 planes to be eligible for starting overseas operations. “Allow them. Indians are capable people and they have proved this off and on.“ He likened the norm to a “reservation kind of a system“ that keeps small players out and said the ministry was developing a formula to replace the eligibility rule. Under the formula, international flying rights have to be earned by providing connectivity in underserved airports in the country. “Any airline can fly international from the first day itself if they develop these available seat kilometres (ASKs) by connecting smaller cities,” he said. “These ASKs can also be bought from airlines plying in smaller cities. We are developing a transparent and understandable formula, which should not land into a scandal. A regional operator connecting destinations where there is no connectivity can sell ASKs earned to these big aircraft operators.” While newcomers such as Vistara and AirAsia India are pushing for the rule’s abolition, IndiGo, Jet Airways and Air India want it to continue. The minister said the utilisation of bilateral entitlements from the Indian side is about 23% and that can only be increased by allowing more carriers to fly overseas.

• Myntra Seeks Bigger Discounts from Vendors: Myntra, recently acquired by Flipkart, is seeking bigger discounts from retailers and brands by virtue of its increased sway in the fashion e-commerce space, in a move that's being likened by vendors to Amazon's pressure on book publishers. Brands that were already giving higher margins to Myntra said the No.1 online fashion retailer is asking apparel makers for more. “Earlier margins varied between 28% to 32%. Now they have increased it outright to 3638% and some weaker players are even asked to give 40% margins,“ said a retail consultant who works with many brands. Several apparel, footwear, fashion and lifestyle vendors ET spoke with echoed this.Most of them say margins at brick-and-mortar franchises are generally pegged at 30-35%. Companies said online retailers are engaged in a difficult balancing act of offering deep discounts to consumers on the one hand and trying to make a profit on the other hand. In the process, vendors get squeezed further, they said. “A lot of manufacturers are hooked to the volume drug. Now, Myntra is saying give us bigger discounts otherwise we won't do volumes from you or even block your products,“ said the head of a large apparel brand asking not to be named. “For more and more companies, their businesses are dependent on them.It earlier happened to small electronic manufacturers from e-commerce companies.Now, fashion apparel companies are getting hammered.“ “We have an excellent and mutually profitable relationship with our brand partners. We enjoy a very close relationship with all major Fashion houses which has been built over years through very close collaboration and trust. We will continue to work with our partners to help drive the growth of brands and establish Flipkart and Myntra as the go to destination for all brands,“ said Mukesh Bansal, Head Fashion, Myntra.

• Royal Enfield to Set Up 3rd Plant: Revving up the throttle on its expansion plans following `huge' demand, premium motorcycle manufacturer Royal Enfield is looking at ramping up production at its two facilities besides setting up a third plant, a top official said. The Eicher Motors' company has been witnessing huge demand for its products soon after launch of various models, including the `Classic' range. To augment the expansion plans, the firm recently acquired land near here to set up another facility. Royal Enfield currently has two manufacturing facilities one each at Tiruvottiyur and Oragadam in Tamil Nadu. For the proposed third manufacturing unit at Vallam Vadagal near Chennai, over 50 acre was acquired at a cost of ₹ 57 crore. “This plot is located within 10 km of our Oragadam facility. This prepares us for future expansion to meet growing demand of our motorcycles worldwide. We will in due course inform our plans and investments on the site“, Eicher Motors MD and CEO Siddhartha Lal said. “Last year we produced just over 1.70 lakh motorcycles and this year (2014) we will be doing three lakh units. So we are talking about 70-75% increase in capacity from last year to this year,“ added Lal.

• Maruti may Drive in Compact MUV to Boost Volumes: Maruti Suzuki is planning to introduce a new compact multi-utility vehicle that would help it log volumes in the fiercely competitive compact car space, once been its forte, but now being threatened by bigger rivals like Hyundai, Honda and Toyota. This all-new compact MUV , code-named YJC, is being conceived especially for India, and will be placed under the flagship Ertiga. Maruti is trying to create a new niche segment that will bridge the gap between hatchbacks and crossover vehicles in terms of size and seating capacity. A company spokesperson, however, refused to confirm the developments. “As a company policy, we do not comment on future products.“ Currently, under development stage, YJC would be sold in India and may be shipped to South East Asia, just like the Ertiga. The Company has floated proposals to its vendors and suppliers for designing and sourcing components of the car. Maruti Suzuki, which is likely to introduce the car in the festive season of 2016, is targeting around 80,000 units in the first year, said a person close to the development. “Maruti plans to develop a new product, which is a niche area until now as there are no premium wagons in the country. It is expected to be a premium product that's likely to be placed over its popular WagonR and is expected to deliver higher volumes for the company trying to regain its turf in the compact car segment. It has also floated request for quotations from its suppliers,“ the same person added.

• Tommy Hilfiger Profit Up 66% on Strong Sales: American fashion brand Tommy Hilfiger's India joint venture with Arvind has reported a 24% rise in sales and 66% jump in profits last fiscal on the back of strong retail and wholesale sales. Tommy Hilfiger Arvind Fashion posted revenues of ₹ 235 crore and ₹ 10 crore in profits for the year ended March 2014, the company said in its latest filing to the Registrar of Companies (RoC). “The company is planning to continue its efforts to grow the business rapidly in the coming financial year,“ it said. The performance of Tommy Hilfiger -one of the first global premium brands to enter the country about 10 years ago -however, pales in comparison to Spanish brand Zara, which reported revenues of ₹ 580 crore last fiscal despite entering India six years after Tommy. While revenues at Tommy Hilfiger Arvind have grown almost three times in three years from about ₹ 80 crore in 2011, it is lagging behind its own earlier projections. In an application seeking the Department of Industrial Policy and Promotion (DIPP) nod to its expansion plans submitted in June 2012, the company had projected revenues to grow to ₹ 320 crore at the end of fiscal year 2012-13 itself.

• Scrollback Raises Rs. 3 Crore in Funding: Scrollback, which brings in Whatsapp-like chat features to online com . 3 crore in a round led munities, has raised ` by Singapore-based Jungle Ventures. The company plans to use the funds to reach out to a greater number of forums. “We are quite excited about the disrup tive potential of Scrollback. Forums are probably the last frontier to get a Web 3.0 makeover and Scrollback has the right design and social elements to be a winner in the space,“ said Amit Anand, managing partner at Jungle Ventures, which has backed niche marketing companies such as Zipdial, and Mobikon Technologies. Other investors who participated in the funding round include Singapore's National Research Foundation under the Technology Incubation Scheme, Crystal Horse Investments, Singapore Angel Network and Roland Turner. Scrollback was co-founded in June 2013 by IIT Kharagpur graduates Aravind Ravi-Sulekha and Gaurav Srivastav and was incubated at the Joyful Frog Digital Incubator in Singapore.The investment comes at a time when Facebook launched a similar app, called Rooms, in October for facilitating a simpler mode of conversation between communities.

• TaxiForSure Gets Bulk Discount from Tata Motors for Nano Cabs: In a bid to undercut competitors, TaxiForSure is set to launch its lowest-cost segment using Tata Nano cars in Bengaluru this week, ahead of a plan to offer auto-rickshaw services. “Apart from being cost-effective, Nanos are also compact cars and help get around roads faster,“ said Raghunandan G, co-founder and CEO of TaxiForSure. After a soft launch in Bengaluru with about 200 cars, the company will expand the Nano service to other cities. “The price will be substantially lower than our current range,“ Raghu said, without divulging details. The Bengaluru-based company's regular fare is ₹ 49 for 4 km in all the cities it serves. Cab services such as TaxiForSure, Meru and Ola, along with taxi-hailing app Uber are cutting fares and offering innovative services as they seek to tap demand for affordable and reliable public transport in Indian cities. They're also raising funds to build and sustain their businesses in a market estimated to be worth about $9 billion, of which only 4-6% is organised.

• Super-luxury Vehicles Going Downhill Despite Smoother Road for Auto Sector: The Indian passenger vehicle market may have been doddering along for a while now, but it's the super luxury car segment that has taken a real blow. Such cars are struggling even when things have begun to look up for the auto industry , with the larger car market estimated to be breaking into a positive territory by growing in lower single digits. But the super-luxury cars -priced between ₹ 2 crore and ₹ 6 crore -is still staring at yet another year of 10-15% decline, which will halve the size of the industry to an estimated 110-115 units in 2014.This is a far cry from 2010-2011 when luxury cars -priced in the range of Rs22 lakh to Rs2 crore -had grown from 28,000 units to almost 38,000-39,000 units, led by new, entry-level models. Increase in custom duty twice in 2012 and 2013, coupled with a slowing economy, and rupee depreciation pushed prices of super cars up by over 80-100%, which pulled down the overall market. For instance, a Rolls Royce car which was available at ₹ 2.7 crore two years back, now sells for over Rs5 crore.

• Despite rising revenue, PepsiCo India Holdings again in the red: The revenue of PepsiCo India Holdings, a key subsidiary of American food & beverage giant PepsiCo Inc, has risen consistently in the past five years — 121.3 per cent from ₹ 3,261.3 crore in 2009- 10 to ₹ 7,216.6 crore in 2013- 14 — but the company has reported annual losses thrice during this period. In 2013- 14, PepsiCo India Holdings incurred a net loss of ₹ 280 crore, compared with a profit of ₹ 17.6 crore the previous year, showed the company’s filings with the registrar of companies ( RoC). This was in spite of its revenue rising 3.2 per cent from ₹ 6,994.8 crore in 2012- 13. PepsiCo India Holdings, in the business of manufacturing and sale of concentrates, aerated & non- aerated beverages, potato chips and fried namkeens, is also involved in trading of various agro and nonagro products, according to the RoC filing. PepsiCo Inc earns from several entities in India but PepsiCo India Holdings remains a major revenue contributor. “ We operate under different legal entities in India for our various businesses,” said a spokesperson for PepsiCo India, declining to comment on the financials.

International:

• Kenneth Cole Marks Haiti Store Opening: Kenneth Cole has committed to Haiti in more ways than one. The chairman and chief executive officer of Kenneth Cole Productions has just returned from a trip to Haiti, where he opened a retail store in Pétionville, a suburb of Port-au-Prince. The opening was celebrated with an event that included an appearance by Cole and local Haitian community leaders. “We made a commitment to Haiti just after the [2010] earthquake,” said Cole, in New York this week. He said that, every February for the past 20 years, the company has been doing shoe drives in which customers bring in a pair of shoes for somebody who could benefit from them — the company has collected several million pairs of shoes over the years — and Cole gives the customers a discount on a new pair of shoes. After the earthquake, the company earmarked the shoes for Haiti and offered customers an opportunity to make financial contributions that Cole would match. 

• Abercrombie Sets Mexican Entry: Abercrombie & Fitch Co. will open its first stores in Mexico, and its first anywhere through a franchise agreement, next spring through an arrangement with Grupo Axo. The first Hollister store is expected to open late next spring and the first Abercrombie & Fitch unit in the late summer. A&F said the roll-out will include markets such as Mexico City, Guadalajara, Cancun and Playa Del Carmen but didn’t identify special store locations. “This partnership is an important step for our company,” said Gillian Ferguson, group vice president of strategic planning for A&F, adding that “Grupo Axo has established a great reputation for developing brands in the Mexican market.” A&F operates 834 stores in the U.S. and 166 in Canada, Europe, Asia, Australia and the Middle East.

• Amazon Plans Fashion Photography Studio in London: The European division of e-tail giant Amazon plans to open a 46,000-square-foot fashion photography studio in Shoreditch, East London next year in a bid to support its growing fashion business in the region. Amazon said the studio will be its largest in Europe and provide on-model and off-model imaging. The site is owned by Transport for London, which manages the city’s underground, train and bus services, and will be leased by Amazon. Amazon.co.uk launched its fashion offerings in 2007, and since the start of this year has taken on more than 100 fashion brands, including Hugo Boss, Gucci watches, Emporio Armani, Vivienne Westwood, Puma, Missoni and Moschino. As reported, it is selling one-off capsule collections by Osman and Solange Azagury-Partridge in the run-up to Christmas. “Fashion is one of the fastest-growing businesses for Amazon across Europe, and the creation of this new studio illustrates both our ambitions in this area and our dedication to providing a first-class customer experience,” said Sergio Bucher, vice president of Amazon Fashion EU.

• Delta swaps Boeings for Airbus planes in $14bn order: The order, worth $14bn (£8.9bn), confirmed by Delta on Thursday, is a victory for the European plane maker over its US rival's Dreamliner 787. It includes 25 Airbus A350-900 and 25 advanced Airbus A330-900neo aircraft. Rolls Royce will provide Trent engines for both types of aircraft and long term servicing in a deal worth $5bn. The order is welcome news to Rolls Royce which has seen its share price fall by around a quarter since the beginning of the year following cut backs in military spending. The company issued a profit warning in October and earlier this month announced 2,600 job losses as development work on two of its latest engines, the Trent 1000 and XWB, came to an end. Airbus is reported to have won the contract after promising to deliver its latest A330neo in 2019, ahead of Boeing's 787 Dreamliner. 

• Amazon, Microsoft, Google Fuel Up Renewable Energy Pledges: E-commerce pioneer Amazon joined Walmart this week in pledging a 100 percent commitment to renewable energy. Like the brick-and-mortar retailer, it hasn’t said exactly when and how it will pull this off. Its announcement was issued by the Amazon Web Services division, which powers more cloud computing technology infrastructure than another other company (although Microsoft, IBM and Google are all cutting into its marketshare lead). The actually blog post spends more time talking up energy efficiency: right now, the servers that run AWS services use about one-eighth the energy that comparable data centers use, the company claims. That means the data centers bringing you your Netflix streaming movies or Airbnb rental bookings use less power than other places would. “Because AWS pools resources, customers who deploy applications in the cloud reduce their carbon footprint by default and significantly reduce the amount of environmental waste that occurs when individual datacenters don’t operate near their capacity,” AWS writes.

Tech:

• Yahoo acquires photo app developer Cooliris: Cooliris posted a notice on its site that it has been acquired by Yahoo. Cooliris is mostly known as the developer of a photo-aggregation app of the same name. It’s not too much of a leap to expect that the Cooliris team will be working with the Flickr team. Yahoo acquired Flickr in 2005.

• Motorola issues Nexus 6 recall for AT&T users because it installed the wrong firmware: Well, that’s awkward. According to a report by Droid Life, AT&T stores are being asked to return early Nexus 6 stock because of a bug that causes random reboots and renders the device inoperable without a forced restart. Motorola accepted blame for the issue earlier today, saying it delivered a small number of Nexus 6 devices to AT&T customers with faulty software. It has since corrected the issue, and all phones currently shipping should be okay – the company will provide replacements for affected users. If you’re an AT&T customer who’s experienced issues with your shiny new Nexus 6, it’s definitely worth looking into. We’ve reached out to Motorola for more information on the recall process and will update if we hear back.

• Square reveals plans to support Apple Pay in 2015: Square recently announced plans to support chip-based credit cards with new hardware as it expands globally, but it seems the company isn’t ignoring alternative payment methods, such as Apple Pay. In an interview with CNN, Square founder Jack Dorsey said his company plans to begin accepting Apple’s new transaction standard at some point in 2015. He doesn’t specify whether this will be through the upcoming chip-card readers or additional new hardware, however. Although EMV-based chip cards use similar technology to the NFC of Apple Pay, it doesn’t seem Square’s recently announced hardware directly supports the latter. There’s no word on whether Square also intends to support other NFC-based systems like Google Waller or Softcard either, but that seems like a fairly logical move. Granted, these systems have been around for a while, but none has achieved the traction that Apple Pay has in its short life.

• Sophisticated malware has been spying on computers since 2008: Highly sophisticated malware isn't limited to relatively high-profile sabotage code like Stuxnet -- sometimes, it's designed to fly well under the radar. Symantec has discovered Regin, a very complex trojan that has been spying on everyone from governments to individuals since at least 2008. The malware is highly modular, letting its users customize their attacks depending on whether they need to remote control a system, get screenshots or watch network traffic. More importantly, it's uncannily good at covering its tracks. Regin is encrypted in multiple stages, making it hard to know what's happening unless you capture every stage; it even has tools to fight forensics, and it can use alternative encryption in a pinch. Researchers at Symantec suspect that the trojan is a government-created surveillance tool, since it likely took "months, if not years" to create.

• Qualcomm: Get ready for 4K smartphones: If you think the ultra-sharp Quad HD displays on today's state-of-the-art smartphones are as good as it gets, think again. According to Qualcomm, who builds many of today's key technologies in mobile, 4K smartphones are just around the corner, and they'll take pixel counts to an — arguably absurd — new level. When Apple debuted the iPhone 4 back in 2010, it introduced the idea of "Retina" displays, which loosely means a display with a resolution so sharp that the pixels disappear to the naked eye, at least at normal viewing distances. Since then, every smartphone manufacturer has responded with ultra-high-res screens on their flagship phones, sometimes going way beyond what was once considered excessive. The standard in flagship phone displays hit 1080p (the same resolution as an HDTV) about a year ago, and the top phones rolling out of factories in Asia now sport Quad HD displays: screens with 2,560 x 1,440 — or 3.7 million pixels. Unless you're literally holding the phone right up to your face, you'll never be able to see a single one of them. That's a lot of pixels, but just you wait. Qualcomm says phones with 4K resolution — the same as today's most advanced televisions — are coming in 2015. The dawn of 4K in phones isn't just about how many pixels are on the screen. To Qualcomm in particular, it's more about supporting a world where 4K is the new standard for video, which involves everything from the chip to the compression technologies used to transmit the files.