Daily News Digest- 12th January'15

Thought of the Day:

Today in History:

Following made the Headlines:

India:

• Coming Soon: Rs 24kcr Shot for Divestment: The Narendra Modi government plans to flood the markets with a massive, one-shot divestment to raise about 24,000 crore within the next month as it looks to take a record leap to meet its asset-sale target before the fiscal year runs out by selling a 10% stake in Coal India. This will mark a late revenue-raising surge, which includes the auction of telecom spectrum, as the administration strains to stick to its stringent fiscal deficit goal. A key constituency -the trade unions -have been convinced about the merits of a share sale, said an official aware of the deliberations. It's also looking increasingly likely that the government will make the divestment in a single effort rather than follow suggestions advising two blocks of 5% each. That would make it India's biggest-ever share sale, beating the record set by the same company's October 2010 initial public offer, when it raised 15,000 crore from the sale of a 10% stake. FM Arun Jaitley had said last week that the last quarter of the fiscal will see a big disinvestment push. The Coal India stocksale plan had been held sale plan had been held up because of lack of policy clarity on mine auctions, following the cancellation of blocks by the Supreme Court in September, and opposition by unions. Both issues — policy clarity on mine auctions and opposition by unions — have been resolved: the first through an ordinance and the second through negotiations. A five-day strike called by 5.5 lakh Coal India workers last week was called off in two days after Coal, Power and Renewable Energy Minister Piyush Goyal met unions to explain the government’s position and addressed their concerns. “The road shows for Coal India have already been held,” said the official cited above, requesting anonymity. “If required, we may do some road shows for domestic investors nearer to the date of offering.” Coal India, a state-owned monopoly, closed 0.7% down on the BSE on Friday at 375.75 a share, giving it a market value of 2.35 lakh crore. Based on that, a 10% stake sale in the state-owned monopoly may fetch the government — which holds 89.65% — around 23,500 crore.

• PVR Set to Screen a Mega Hit Deal: The Ajay Bijli-led PVR group seems set to acquire Chennai's premier movie exhibition company SPI Cinemas, popularly known as Sathyam Cinemas, in what would be the biggest deal in India's multiplex sector. Multiple sources aware of the on-going discussions said save last-minute developments, the deal may close for a rather steep valuation of approximately RS 750-1,000 crore for just 40 odd screens, located predominantly in the Southern metro. To put this in perspective, last month Carnival Cinemas paid a little over RS 700 crore to buy out Anil Ambani's Big Cinemas that has 242 screens across the country. The talks between PVR and Sathyam underscores the consolidation wave that has gripped the multiplex industry in recent times -with 5 deals in 12 months, valued at over RS 1,600 crore -as theatre operators ` seek to improve their bargaining power with film studios and distribution companies to gain a bigger share of box office receipts. Additionally, with a prolonged slowdown in commercial real estate (notably malls in which these multiplexes are the anchor tenants), dominant players feel inorganic growth is faster than the greenfield route. The SPI Group currently runs a cinema exhibition, distribution and production business but are best-known for their portfolio of cinema destinations across South India. According to the company's website, it currently operate close to 40 screens under 5 categories -Sathyam, Escape, thecinema, Luxe, a premium offering and S2 Cinemas. It plans to increase the number of screens to over 50 by early this year. PVR, the potential acquirer, is the largest cinema exhibitor in the country today with 454 screens in 102 locations across 43 cities.

• Verico Aims to Sell 1 L Smartphones in India this Quarter: Taiwan-based Verico is targeting to sell one lakh smartphones this quarter through mainly online channels in India. It entered the country with the launch of a sub-Rs 10,000 device. The products the company has lined up to launch here include both affordable and higher-end smartphones, priced from Rs 25,000, Verico In Rs 7,000 to dia chief executive Kuldip Sengar told ET. It expects sales to exceed one lakh units from the next quarter. According to Sengar, this is the right time to enter India as the market is growing fast. “There's huge opportunity for everyone in India,“ he said. The company has entered into an exclusive tie up with online marketplace Snapdeal to sell Uni SHAPE 5V3, the first smartphone it launched in India on Thursday. While Verico is optimistic about its prospects, the journey won't be easy, considering stiff competition from market leader Samsung, and other strong players like Microsoft Devices and homebred Micromax and Lava. But despite the market remaining crowded, Xiaomi and Motorola have found strong demand for their products which they launched exclusively through online marketplaces, as Verico is doing now. As per research firm IDC, Samsung led the Indian smartphone market in the July-September quarter with a 24% share, followed by Micromax (20%) and Lava (8%). It had predicted 2014 shipments to top 80 million units. Verico is also working on its own customised operating system ¬ based on Google's Android and similar to Xiaomi's MIUI and Lava's HIVE UI. Sengar said its future smartphones will have the new operating system along with features such as back-panel touch.

• For Paytm Founder, Mega Fund-raising is a Major Vijay: Inside a four-storey office in Noida's Sector 5, Vijay Shekhar Sharma, the founder of One97 Communications, pointed to a sign on the glass wall of a conference room -“Go big, or go home,“ it said, adding, “One million orders a day will happen here first. That's our vow.That's our game.“ In the reception below, a dozen-odd job aspirants were waiting to be interviewed. That was in mid-September. On Sunday, ET reported that Chinese ecommerce giant Alibaba is set to invest $575 million in One97 Communications-owned Paytm at a valuation of over $1.9 billion. A deal could be announced in the first week of February. In the weeks leading up to September, Sharma, 38, had doubled down on hiring for Paytm, ploughing in profits from One97 Communications, a mobile value-added services firm, to build up its unit into an online marketplace. “We've bet the whole company on it. Every rupee we had was being used to grow Paytm,“ Sharma said. To compete with the likes of Amazon, Sharma needed more money and a strong strategic investor. That's exactly what seems to have happened over the past few days, making it the fastest Indian startup to cross billion-dollar valuation. Paytm, which began as a mobile recharge and utility bill payment service in late 2010, quickly morphed into a fullblown ecommerce marketplace similar to Amazon and Flipkart, only focused on mobile right from the start. In October, Sharma set in motion a massive fund-raising exercise that was to last several months and culminate in a deal that would give Paytm the money and the muscle. Around the same time, he inducted veteran Silicon Valley investor Mike Levinthal onto the board, a US-based partner at a venture capital firm told ET. By the end of January, Chinese entrepreneur Jack Ma, who built the world’s most valuable ecommerce company Alibaba, is likely to make the deal official. Sharma declined comment but at least two sources said that in October, he met top executives from Japan’s SoftBank, Singapore government’s Temasek Holdings and Chinese ecommerce firm Alibaba. The companies couldn’t be immediately reached for comment. Alibaba and Alipay will have one member each on the company’s board, besides two founder directors, one of which will be Sharma, said a source close to the developments. Of the current 2,000-strong team, about half hold equity in the company. About 100 executives in the senior management and tech teams have shares worth at least Rs 1 crore, said another person. ET could not immediately verify these claims. The company is learnt to be issuing new shares so all current shareholders dilute their stakes, after which Alibaba and Alipay are likely to get an equal split of equity following the infusion of $575 million. As a company, Paytm has evolved from when it was first launched in December 2010.

• Aircraft Lessors Seek Quick Equity Deal for SpiceJet: Some aircraft lessors of SpiceJet want the troubled budget airline and its prospective investors led by former promoter Ajay Singh to finalise an equity infusion deal as early as possible. “I had a meeting with the Spicejet management and Ajay Singh.... They do not have months with them now and they should finalise the deal within weeks,“ said Robert J Martin, managing director and CEO of Singapore-based BOC Aviation, which has leased three Boeing 737s to SpiceJet. He was quick to clarify that it was a suggestion to the airline and not an ultimatum. “We are satisfied with the airline, as they are up to date with payments to us,“ he said. Martin, however, said BOC Aviation took pre-emptive action and did not deliver three other aircraft to SpiceJet. “Now, SpiceJet has three aircraft and they are current on payments for these aircraft till the end of December 2014,“ he said.

• Will make India easiest place to do biz: Modi: PM Narendra Modi on Sunday made a strong pitch to global investors, promising to make India the “easiest“ place to do business while showcasing a combination of “democracy , demography and demand“ as the country's unique attractions. Spelling out the attraction of the 3Ds in selling Brand India, he took on critics who have accused him of tall talk, saying hype has its use. “It is often said that I have a penchant for hyping things. But this compels the government also to move faster. They challenge us to do away with red tape and become proactive,“ he said. “My government is committed to create a policy environment that is predictable, transparent and fair,“ Modi added. Strong democratic traditions and an independent judiciary made India a “level playing field“ for business, said Modi, adding he was willing to back words with action. He cited promotion of manufacturing and initiation of labour reforms to encourage enterprise. Hardselling Brand India to global investors, PM Narendra Modi on Sunday said, “India offers you the potential of low cost manufacturing. India has low cost and high quality manpower — 65% of our population is below 35 years of age.” Asserting India will adopt the “cleaner and greener way”, Modi said the process of development will not be incremental but will comprise a quantum leap. He pointed to industrial regions planned along dedicated freight corridors and said the government was working towards single a window clearance at federal and state levels. Brand Gujarat took a backseat in the seventh edition of the Vibrant Gujarat business blitzkrieg that kicked off on Sunday, as it provided the backdrop for Modi’s ‘Make in India’ pitch. Even as references extolling Gujarat flowed freely, Modi chose the 5,000-capacity Mahatma Mandir to sell Brand India to the world. In the winter chill, Vibrant Gujarat Global Investor’s Summit (VGGIS) saw a galaxy of top world leaders – from UN secretary general Ban Ki-moon to US secretary of state John Kerry and World Bank president Jim Yong Kim — warming up to the idea of ‘Make in India’.

International:

• Jaguar to create 1,300 UK jobs as firm launches SUV model: Jaguar Land Rover will create 1,300 new jobs in the UK to build Jaguar's first sports utility vehicle (SUV) model. The jobs will be based at its Solihull plant in the West Midlands. The luxury car firm, owned by India's Tata Motors, said it had chosen the UK because it was committed to building cars "crafted with that special British flair". Business secretary Vince Cable hailed the decision as a "ringing endorsement" of the UK's car industry. Mr Cable said Jaguar Land Rover's decision showed the UK's car manufacturing sector was in good health. "The UK's automotive industry is thriving with a new car rolling off the production line every 20 seconds, and increasing levels of investment that's helping to secure local jobs," he said. The car, called the Jaguar F-PACE, will be based on its C-X17 concept car which was first showcased at the Frankfurt motor show in 2013, and will go on sale in 2016. Jaguar Land Rover chief executive Dr Ralf Speth said the announcement demonstrated its "commitment to the UK and the advancement of a high-tech, high-skilled, manufacturing-led economy". The firm has already invested £1.5bn in the Solihull plant to enable it to increase production, and it said its workforce there had almost doubled over the past three years to 9,450. In total, it employs 30,500 people in the UK.

• Cyprus Airways shuts down after order to repay state aid: Cyprus' national carrier has ceased operations after an EU decision it must repay over 65m euros (£50m) in illegal state aid. The EU Commission said the Cypriot government had breached rules on support for struggling companies. Cyprus Airways has repeatedly received aid between 2007 and 2013. The government, which owns 93% of Cyprus Airways, had searched unsuccessfully for outside investors. "The company has ceased being a viable entity, and cannot continue to operate," said finance minister Harris Georgiades. He said there would be alternative arrangements covering Cyprus Airways flights from Saturday.

• Coca-Cola to cut up to 1,800 jobs worldwide: Drinks giant Coca-Cola is set to cut up to 1,800 jobs worldwide as it continues cost-cutting efforts. Coca-Cola reported a 14% fall in earnings for the July to September quarter last year and sluggish revenue growth. The job cuts will affect the firm's Atlanta headquarters, as well as its international operations. The firm said it had already started to inform those workers who will be affected by the cuts. "[We have begun] the process of informing associates in the United States and in some international locations about the impacts to their departments," a spokesperson from Coca-Cola said in an emailed statement to the BBC. The firm said further cuts would be made by different departments at various times. "We have identified 1,600 to 1,800 positions in Corporate, Coca-Cola North America and Coca-Cola International that will be eliminated in the coming months," the spokesperson said. Coca-Cola has a global workforce of about 130,000.

• JC Penney and Macy's to cut thousands of US jobs: Two major US department store chains, JC Penney and Macy's, have announced plans to close stores and cut thousands of jobs. JC Penney said it would close about 40 of its 1,060 stores by 4 April, with the loss of some 2,250 jobs. Macy's said it would shut 14 of its 790 stores in the next few months, cutting more than 1,300 posts, although it also plans to open two new stores. Both chains have been hit by the growth in online shopping. JC Penney's latest closure plans come almost exactly a year after the announcement of its previous restructuring, in which it closed 33 stores and cut about 2,000 jobs. Its chief executive at the time, Mike Ullman, is to step down in August and will be replaced by former Home Depot boss Marvin Ellison. Earlier this week, JC Penney said its same-store sales for the last two months of 2014 were up 3.7% on the same period a year earlier, causing its shares to rise sharply. For its part, Macy's said it expected to save $140m (£93m) a year thanks to its restructuring plan. Its two new stores would be in California, the company said. It added that its November-December same-store sales were up 2.1% year-on-year. Macy's also announced its previous closure programme a year ago. In 2014, it cut 2,500 jobs and shut five stores.

• Jack Ma Calls Tencent Move 'Stupid,' Apologizes for JD Insults: Billionaire Jack Ma apologized for calling Chinese e-commerce rival JD.com Inc. a “tragedy,” saying he was sorry for causing the company trouble by “putting it all out there.” The Alibaba Group Holding Ltd. founder and chairman said on his personal Weibo account that JD.com had his blessings after criticisms of its business model were published last month in a Chinese-language book. Ma said he had a habit of making “crazy” and “stupid” boasts and didn’t expect that such private comments among friends would be made public. He made no mention of another passage in the book quoting Ma as faulting strategic moves by Tencent Holdings Ltd. The apology shows the increased scrutiny Ma is under since Alibaba’s record-breaking $25 billion initial public offering in September, which helped make him Asia’s richest man. Ma previously attracted attention with colorful comments about U.S. auction site EBay Inc. and caused “a terrible misunderstanding” with remarks about the 1989 crackdown in Beijing’s Tiananmen Square. “Ma Yun probably apologized because Alibaba is now a public company and he needs to be more careful,” You Na, an analyst at ICBC International Research Ltd., said in Hong Kong, using Ma’s Chinese name. “He’ll probably tone down and become more aware of his words going forward.”

Tech:

• Apple May Cut Retailer Margins in India: Apple India plans to halve the credit period it gives retailers to seven days and slash margins by 0.5-1 percentage point, it said in a trade advisory, seemingly taking advantage of a surge in iPhone sales to assert itself, reports Writankar Mukherjee. Phone sales doubled in India in the Oct-Dec quarter to 5 lakh from a year earlier.

• This smart mirror lets you try on different clothes without visiting the fitting room: For some people, shopping is entertainment. For others, it’s something to get through without visible or psychic damage. Those emotions, either way, are likely to be heightened with the debut of MemoMi’s new MemoryMirror, a digital mirror that rolls video, 360-degree viewing and social networking into one high-end retail package. MemoryMirror, introduced last year at the National Retail Federation expo, is now rolling out for real at the Walnut Creek California branch of Neiman Marcus, a luxury department store. MemoMi worked with Neiman Marcus to customize the product for that company’s customers.

• Emoji support is finally coming to Google Chrome for OS X: Ever noticed that emoji either show as a square or not at all on Chrome for OS X? The browser has had a bug for many years that meant that it didn’t support for Apple’s emoji. That’s going to be fixed very soon. Emoji support has landed in the latest developer builds of Chrome for OS X, meaning that emoji can be seen on websites and be entered into text fields for the first time without issues. Users on Safari on OS X could already see emoji on the Web without issue, since Apple built that in. The bug in Chrome was fixed on December 11, which went into testing on Chrome’s Canary track recently. From there, we can expect it to move to the consumer version of Chrome in coming weeks.

• Do we really want self-driving cars?: The car I drive was built 18 years ago. It's a thoroughly old-school machine with a manual transmission and physical gauges. You can call it a connected car only in the sense that its four rubber tires are connected to the pavement. The infotainment system is me gawking at other drivers. There's nothing for me to do but drive. I'm now convinced such an automotive experience will soon feel as anachronistic as penning a handwritten letter. Covering auto-tech trends at last week's Consumer Electronics Show in Las Vegas revealed two absolutes: Self-driving cars are a matter of when, not if, and the hurdles at hand are not technological but psychological and regulatory.

• Why is the PS4 being delayed in China?: After the People’s Republic of China ended its 14-year ban on gaming consoles, many hoped that this was a sign that China had turned over a new leaf. Unfortunately, console makers have hit roadblock after roadblock in the world’s most populous country. Less than a week before the PS4 was due to launch in China, Sony has been forced to slam on the brakes. Executives remain positive that the launch will resume eventually, but the timeframe remains ambiguous for now. Earlier today, Sony’s Andrew House publicly claimed that the delay comes after “a request from [the Chinese government] to make an adjustment to the business plan,” but what does that really mean? Sony is keeping mum on the specifics of these so-called “requests,” and that makes me highly suspicious of the reasoning behind the delay. After all, the Chinese government is clearly very uncomfortable with video games and electronic communication in general. If I had to venture a guess, this last-minute delay relates to China’s strict censorship policies. Whether it’s the violent content or the potential for unmonitored communication, something made the CPC (Communist Party of China) very unhappy. House wants us to believe that China’s rulers were concerned with the “go-to-market strategy,” but considering this class of product was banned for a decade-and-a-half, I find it hard to believe business strategy is the hold-up. Some conspiracy theorists have pointed to the Sony Pictures hacking incident as a potential cause of this delay, but House dismissed this theory outright. Considering that the Chinese Xbox One release saw delays as well, I’m inclined to believe him. There is most certainly some sort of political maneuvering going on, but the North Korean hacking debacle doesn’t seem to be the issue at hand. Keep in mind, Sony doesn’t want to burn bridges with China over this. As the middle class grows, the profit potential is enormous in a country with nearly 1.4 billion citizens. The Xbox One is already being sold in the PRC, and Nintendo is developing special hardware for the market.