Daily News Digest- 3rd Feb'15

Thought of the Day:

Today in History:

Following made the Headlines:

India:

• McDonald's No Match for Haldiram Here: Bhelpuri beats burgers just as comprehensively as farsan beats fries. Haldiram's revenues, at ₹3,500 crore, is more than the com` bined revenue of Domino's (₹1,733 crore) and McDonald's (₹1,390 crore; adding toplines of the two separate operations in India). Or take that popular two-minute snack, Maggi, which netted a revenue of ₹1,200 crore; Haldiram is almost three times bigger. These figures -for 2013-14; the latest available in official records -when combined with the fact that Haldiram's commands 40% of the ₹5,500-crore traditional snacks business, conclusively demonstrates one thing. Whether in fast food or munchies, and despite the profusion of MNC brands with high cool quotient in both categories, good old-fashioned Indian offerings from Haldiram's still dominate the market. Equally interestingly , Haldiram's, present both through its ubiquitous casual dining eateries and its packaged snacks, is a success story with some unusual twists.

• Online Grocers Offering Heavy Discounts Now, See Sales Boost: Indians are increasingly buying daily consumption products such as food and personal care items, with retailers such as Meragrocer.com, Bigbasket.com, LocalBanya.com, Aaramshop.com, ShopClues.com and MyGrahak.com offering heavy discounts, attractive offers and same-day deliveries. Meragrocer.com sells Coke Zero cans, Oreo biscuits and Maggi noodles at ₹1 each on a minimum basket value, while ShopClues.com recently sold Nivea skin care products at a 48% discount over its retail price. “We sold ₹15 lakh worth of Nivea products within nine hours. This breaks the assumption that ecommerce doesn't have scope to be an evolving market for grocery,“ said Radhika Aggarwal, cofounder at ShopClues. The platform sold bundled packs of skin-care brand Nivea at ₹299.

• Digital Startups to Fuel Google's India Ambitions: After testing its start-up mentor programme in Israel, search giant Google is now turning its focus on Indian startups. The company has picked India to kick-start its start-up mentorship programme Launchpad this year, signalling its growing interest in Indian start-ups. On Monday , it launched the first of four such week-long programmes, during which a set of mentors from Google and other companies will coach startups looking to grow. “This is one of our large scale new programme offering,“ said Sunil Rao, who heads the start-up initiative for Google India. While Google has an interest in growing India's digital economy, the startup programme could also turn into a pipeline for Google's investment arm. The company's venture capital arm had recently picked up a stake in real estate portal Commonfloor and Freshdesk, a Chennai-based customer support tool.

• Flipkart Eyes Logistics Park in Andhra: India's largest online retailer, Flipkart, has shown interest in acquiring at least one million square feet of space in an upcoming logistics park in Andhra Pradesh, said the chairman of port firm Visakhapatnam Port Trust, which would build the facility at an investment of about ₹600 crore. The move comes at a time when e-commerce companies are hit by tax disputes in neighbouring Telangana and Karnataka, where local authorities have slapped notices on them under value-added tax rules. Krishna Babu said the Andhra Pradesh government has given the responsibility of building the logistics park at Anakapally, close to the port city Visakhapatnam, to the port trust. The facility, similar to the logistics park at Bhiwandi in Maharashtra, will be built over 500 acres. The logistics park on India's east coast is part of Andhra's endeavor to emerge as a gateway to Southeast economies by taking advantage of the state's vast coastline and scope for building 13 seaports.

• Mylan Acquires Famy Care's Biz for $750 Million: Mylan, the world's second biggest generic drugs maker, will pay $750 million or about Rs 4,944 crore to buy the women's health business of Mumbai-based Famy Care and expand its presence in the market for women's contraceptives. Mylan will pay $50 million more to promoters of Famy Care and private equity partner AIF Capital if certain milestones are achieved. The acquisition is expected to give Mylan a significant presence in the women's healthcare market, particularly in contraceptive products. A statement released by the firm said that the transaction will build on existing partnership with Famy Care in North America, Europe and Australia. “The acquisition of the Famy Care businesses will make Mylan a hormonal contraceptives leader in high-growth emerging markets around the world,“ Mylan said in its release. “This transaction especially complements Mylan's pending acquisition of Abbott's non-US developed markets specialty and branded generics business, which also includes a women's health care portfolio and sales and marketing capabilities,“ it added.

• Large Truck Makers Roll Out Big Money Ad Blitz: Truck makers are increasingly loosening the purse strings for branding and mass media advertising. The staid B2B segment is tapping B2C channels of TV advertising and print campaigns to grab the eyeballs. If Tata Motors is sponsoring an IPL team and organising truck, its nearest competitor Ashok Leyland has Mahendra Singh Dhoni as its brand ambassador, trying to improve its pan-India presence. ET learns that the spending on mass media has jumped almost 10 times in the past five years to Rs 200 crore at end of FY14 and it is going up in the double digits. For Tata Motors, the share of mass media advertising in its overall marketing mix has gone up from 15% to almost 50% in recent years, whereas for Ashok Leyland it is about 20%. The advent of mass media advertising began with the creation of small commercial vehicle category by Tata Motors in 2005 with Ace, as the product catered to a completely new customer base in form of small traders. With the entry of global majors like Daimler and Volvo, the focus on bigger trucks has become imminent for the top two.

• Home Delivery a Big Biz Opportunity: Home delivery of products and services is proving a big business opportunity in Indian cities with several doubleincome households and increasing usage of mobile phones and messaging apps such as WhatsApp, prompting several startups to enter the field. The Home Salon, Delyver and Bite Club are among a clutch of startups offering services ranging from salon facilities to chef-prepared meals at one's doorstep. Mumbai-based The Home Salon, for example, has tied up with 12 beauty therapists to offer salon services at home for women in the city. Rishika Chandan, founder and CEO at the one-year-old firm, said about one-third of bookings are for the same day and its therapists reach a customer in 1-1.5 hours. “On weekends, we suggest clients book a day prior. All services are a function of availability ,“ she said. The Home Salon, which services 400-450 customers a month with repeat ratio of 70%, is one of the two startups accelerator VentureNursery supports.

• Babycare Segment Grows Up with More Funding, Increasing Acquisitions: Recent funding and acquisition activity in the retailing space for kids and baby care products have spurred competition and brought the sector back into focus. With few go-to brands available offline, online retailers are set to woo parents by bringing international apparel names and products that are hard to find in brick-and-mortar stores. FirstCry , the online baby and kids store with its omni-channel strategy that includes more than 100 brick-and-mortar shops, has introduced international apparel brands as well as a feeding range.It recently announced partnerships with five new international kidswear brands, including Pinehill and Ed Hardy, following a tieup with FisherPrice in December to bring its diapers and feeding 156 range to India. It also raised ` crore from investors led by hedge fund Valiant Capital earlier . “There is a growing demand for products from middle-class households for in-house safety equipment, sterilisation for bottles, car seats for babies among other things. We source them from the international markets to cater to the aspiration of young parents,“ says Supam Maheshwari, founder and CEO of FirstCry. The compa ny plans to add categories to its inhouse brand BabyHug, which sells only clothes at present and ac counts for a quarter of the sales.

• UST to Invest $100 M, Hire 25,000 in India: US-based IT services company UST Global plans to invest $100 million (about ₹610 crore) in India and hire over 25,000 people, mostly telecom professionals, over the next two to three years as it seeks to build capacity in anticipation of strong growth in the country's telecom sector. Sajan Pillai, chief executive at UST Global, told ET that India's telecom sector is set to see the largest growth over the next five years, from a services perspective, as millions of customers will begin using smartphones, leading to massive increase in data usage.This, in turn, will require back-end support for customer management, operating and business systems (OSS, BSS) on data networks. “We're building an overall aggregated capacity of over 25,000 people in the next two and half years,“ Pillai said.“Just on the telecom area and the capacity we want to build, we will have to invest $100 million.“ He added that the company will double capital and investments into Internet Protocol in India.

• TCS BPO Head Neemuchwala Quits:Tata Consultancy Services' business process outsourcing unit head Abid Ali Neemuchwala has quit the company. Confirming the development in a statement to ET, a TCS spokesperson said, “Neemuchwala has decided to pursue his career interest outside TCS. We wish him well for the future.“ TCS did not specify who is expected to replace him. With degrees from the Indian Institute of Technology, Bombay and the National Institute of Technology in Raipur, Neemuchwala, 47, has spent about 23 years at India's largest software company and was appointed to the head of the BPO unit in 2009. He is still serving the notice period.

• Foxconn may Shut Down its Chennai Unit Permanently: Contract manufacturer Foxconn is seen sending out signals that it is preparing for a permanent shutdown of its Chennai factory where work has been suspended for more than a month. At meetings with labour unions, the company is urging workers -who are now on a paid holiday -that they must accept a severance package, those aware of the discussions have told ET. Company representatives say finances required for factory upkeep has dried up. Communication with Foxconn headquarters in New Taipei, has become frequent to cover for expenses that were locally decided upon. The average salary for technical labour at the facility located inside the Nokia Telecom SEZ ₹14,500 a month. With more is than 1,300 such employees, Foxconn's monthly outgo salaries is about towards ₹1.9 crore. It also spends on power and water supply, and other mandatory licences required to run a factory inside the state's special economic zone. Foxconn's global spokespeople didn't respond to emails seeking comment.

• Snapdeal to hire Valley’s tech guns: Ratan Tata and Azim Premji-backed e-commerce player Snapdeal is looking to poach technology talent from Silicon Valley to build a formidable product and engineering leadership team that would oversee over 1,500 engineers. The e-tailer is looking to get senior executives from top consumer internet and technology companies in the Valley such as Google, Facebook, Twitter and Salesforce. The company says it wants talent from companies that have demonstrated the ability to scale and grow at a rapid pace. And it expects that this talent will come at pay packages — including stock options — of about $1 million each. Speaking to TOI, Rohit Bansal, co-founder and COO of Snapdeal, said, “We are at a point where we are running out of experienced talent in India. We have seen scale with respect to consumer internet products, but those products didn’t get built in India.” Bansal said the talent he is looking for are those who have seen companies at an early stage and have scaled them by 30x or 50x in two years. “That’s the kind of growth we are looking at,” he said.

• New Year begins car sales in fast lane: Domestic car sales in January is estimated to have risen seven over a year ago, despite a price increase due to higher input costs and a four- six per cent rise in excise duty. This signals improving consumer sentiment, even as lower fuel prices lead to a drop in ownership costs, and the confidence in India’s macroeconomic potential returns. The rates of interest on auto loans, expected to come down as the Reserve Bank of India further lowers its key policy rate over the next few months, are likely to give an additional boost to demand for cars. Launch of new models and higher demand for petrol vehicles remained key drivers for car companies during the month, with market leader Maruti Suzuki reporting a nine per cent jump in domestic sales to 105,559 units. Hyundai, the second- largest player, saw a four per cent sales jump to 34,780 units. Honda’s sales volumes grew 17 per cent to 15,714 units, while Toyota Kirloskar’s rose 16 per cent to 12,650 units. 

• Google launches incubation programme in India: Following the footsteps of several peers, internet major Google is eying active participation in Indias fast- growing start- up ecosystem. Just weeks after the companys venture capital arm, Google Capital, announced investment in CommonFloors. com, the company on Monday launched its Startup launchpad programme for the first time in the country. The start- up incubation programme, which was globally launched two years ago, is being held in India for the first time and is also globally the first such event for Google this year. The one- week start- up incubation programme for earlystage start- ups focuses on mentoring companies around topics like product strategy, user experience and user interface, engineering, digital marketing and presentation skills. After one week of incubation at a premises, the programme allows startups to remain actively engaged with mentors and have one- onone meetings with them to seek further help.

• Tata International to set up outlets for footwear brands: Tata International, the global trading and distribution company of the Tata group, is planning to set up exclusive branded outlets for four new footwear brands. The company will launch these for the domestic market by September this year. NMohan, Tata International’s business head (footwear- global business), told Business Standard that in the past eight months, the company had tested one of the four brands, Aerosoles ( a women’s footwear brand) in western parts of India, adding an average 100 pairs were sold. The company plans to sell the brand through 120 outlets, including multi- brand retail outlets such as Metro Shoes, Regal Shoes, Rocia, Inc. 5, Westside and Lifestyle, across the country. It also plans to set up four- five Aerosoles experience stores across the country through the next two years. Aerosoles, for which Tata International owns the licence in Europe, is also available across the US, China, Hong Kong, the Philippines, Thailand and Israel, among other countries. The brand will serve as a launch pad for the company in the domestic footwear market, estimated at about ₹ 25,000 crore. Three other brands, Aristos, S C T and Arin, as well as a children’s footwear collection, would also be launched, Mohan said. The company would primarily target the ₹ 1,800- 2,500 a pair segment, though some products would cost as high as ₹ 5,000, he added.

International:

• RadioShack suspended from NYSE as bankruptcy looms: RadioShack shares have been suspended from trading on the New York Stock Exchange (NYSE) even as it continues to seek a rescue from possible bankruptcy. The NYSE said the US electronics firm had failed to comply with its listing standards, and that it was "taking action" to delist the shares. RadioShack has shed about 90% of its market value over the past year as its financial woes deepened. The firm will have to shut down all of its stores unless a bidder emerges. RadioShack shares have traded below $1 since November and tumbled a further 13% on Monday to close at $0.24. The NYSE said it was forced to act because the "company does not intend to submit a business plan to address its non compliance" with its listing standards of a $50m (£33m) average market over 30 consecutive days. The 92-year-old firm has struggled to maintain sales and customer loyalty in the face of competition from Walmart and online retailers such as Amazon.

• Target to Open 15 Stores in 2015: Target Corp. will open 15 stores in 2015. The new stores will include eight TargetExpress locations, one CityTarget site and six general merchandise stores. Tina Tyler, Target’s executive vice president and chief stores officer, said, “Our store growth looks different today than it did five years ago, driven by guests’ expectations for ease and personalization in their shopping experience. Smaller formats like TargetExpress and CityTarget offer customized assortments and services to meet the needs of guests who are increasingly moving into urban centers. “In our general merchandise stores, we’re embracing a test-and-learn philosophy, innovating with layouts and experiences and bringing digital and brick-and-mortar together like never before,” she said.

• Chip Wilson Leaves Lululemon's Board: Lululemon Athletica founder Chip Wilson has resigned from the company’s board, but will retain his stake in the yoga apparel firm. Wilson, who founded the company in 1998, left his position as its chief innovation and branding officer in January 2012. He went on a sabbatical to Australia and returned to the company in 2013 to assist in positioning Lululemon’s longer-term objectives. Since then, there’s been a transition in senior management at the company, with Laurent Potdevin taking on the role of chief executive officer in January 2014. He succeeded Christine Day, who revealed her plan to resign in June 2013, but stayed on until her successor was named. In August 2014, Wilson reached an agreement to sell half his stake in the company to private equity firm Advent International in a deal worth about $845 million. The transaction gave Advent 20.1 million shares, or a 13.9 percent stake, and two board seats. Those seats went to Advent managing partner David Mussafer and managing director Steve Collins, and expanded the board to 12 members. In connection with the transaction, Wilson and Advent agreed to certain standstill provisions for the firm’s 2015 and 2016 annual meetings.

• Sacai Opens Store in Hong Kong: Japanese designer Chitose Abe's label Sacai has just opened a store in Hong Kong, its first standalone boutique outside of Japan. Located in Central district on On Lan Street, the 1,600-square-foot store opened Friday. Contemporary Japanese artist Ryota Morikawa designed the key furnishings, like a concrete and wood chair. The brand will also be opening a store in Beijing later this year. The China stores are being opened with help from retail partner Joyce, part of the Lane Crawford Joyce Group. Abe, who was in Hong Kong for two days to prepare for the opening, said Hong Kong and Beijing stores make sense because "the consumers here have a good understanding of the brand."

• Castanea Partners Take Stake in Thymes: Castanea Partners has taken a stake in Thymes. The investment is for an undisclosed amount, although the middle-market private equity firm typically invests between $15 million to $75 million of equity in businesses where it has investing and operating expertise. Robert Smith, managing partner at Castanea, said, "The company is at a stage in its development where our sector expertise and operating experience will add value as Thymes pursues its growth potential." Thymes is a a beauty brand sold in over 5,000 specialty locations. It offers consumers body and hand lotions, fragrance bar soaps, candles and potpourris in the personal care space.

• Federica Marchionni Named Lands' End CEO: In a surprising pairing, Lands’ End, a casual brand with an Americana appeal, has tapped Federica Marchionni, a European luxury executive who dresses to the nines, as its next chief executive officer. The announcement Monday raised eyebrows across the industry, given Marchionni’s image and her experience. It’s her first ceo role, and a leap from her current job as president of Dolce & Gabbana USA. That business is estimated at between $100 million and $200 million in sales, whereas Lands’ End generates more than $1.5 billion in revenues. Marchionni will succeed Edgar Huber as Lands’ End ceo on Feb. 17. Huber is expected to soon take a new job, in the retail and digital sector, possibly linked to a private equity firm. He was not available for comment.

Tech:

• Semiconductor sector wants to chip in with Make in India: With the government pushing local manufacturing with initiatives like ‘ Make in India’, smart cities and ‘ Digital India’, the industry expects the country to reduce its dependence on electronics imports by almost 15 percentage points to around 50 per cent by fiscal 2016- 17. In 2014- 15, electronics system design and manufacturing (ESDM) market in India was estimated to be around $ 90 billion of which around 65- 70 per cent of the demand was met through imports. “By 2016, we expect to bring it ( exports) down to 50 per cent,” said Ashok Chandak, chairman of industry body India Electronics and Semiconductor Association ( IESA). “ This is an achievable goal.” Presently, there are around 250 companies working in the electronics system design and manufacturing ( ESDM) in India almost 40 per cent of which are global companies. The sector employs around 2 million employees. The industry body expects that over the next five years, the sector would create around 27 million job opportunities and by that time the country is expected to be selfreliant in electronics goods demand.

• Videocon d2h first to launch ultra HD channel in India: Videocon d2h has launched India’s first ultra high- definition cable television channel. The channel went on air on January 26 and airs movies, video on demand, and travel and sports programmes. Highdefinition programmes will be provided by international broadcasters and independent content providers. Videocon d2h will stream the ICC World Cup matches in 4K UHD on its direct- tohome platform. “While there are other service providers that have set- top boxes, we are the first to launch aplatform for content in 4K UHD. The World Cup will have some matches in 4K UHD, and the channel will air the India matches and the semi- final and final,” said Anil Khera, chief executive officer of Videocon d2h, the Videocon group’s DTH arm.

• Google is reportedly planning to use its driverless cars to compete with Uber: We now have an idea of what Google wants to do with its self-driving cars: compete against Uber, according to a report by Bloomberg. The publication learned from someone close to the Uber board that Google plans to offer its own ride-hailing service, probably powered by its self-driving cars. Uber’s board was informed by Google’s own Chief Legal Officer David Drummond, who joined the board in 2013. Google Ventures is one of Uber’s largest benefactors, having invested $258 million in the company in August of 2013 – today’s report would certainly place the companies at odds.The news comes soon after a report by TechCrunch that Uber is working on its own self-driving vehicles in a new research facility based in Pittsburgh. Uber CEO Travis Kalanick has previously said that he expects drivers to be replaced by automated vehicles in the future.

• LinkedIn's Connected Contacts App Arrives on Android: Back in July, LinkedIn created Connected to replace its Contacts app on iOS. Today, the app finally arrives on Android. LinkedIns Connected contacts app arrives on AndroidConnected is meant to be smarter than your average phonebook app, letting you know about shared interests and other details you have in common with the people in your network, in addition to functionality you’d expect from LinkedIn such as news on work promotions or job changes. As with the iOS iteration, the app uses a card interface to let you look through contacts and notifications. The app will also sync with your calendar to keep you up to date on birthdays and activities. Android users have the additional benefit of being able to view insights right from their home page thanks to a widget. You can grab Connected for Android on the Play Store right now.

• Apple To Take Over Former GT Advanced Factory in Arizona: Following Apple’s legal battles with GT Advanced, CNBC reports today that Apple is taking over the company’s former site in Mesa, Arizona. According to the report, the new facility will hire 150 full-time Apple employees and 300 to 500 construction and trade jobs. Apple has pledged to power the facility with renewable energy and will spend $2 billion on upgrading it. We wrote late last year of Apple’s woes with GT Advanced failing to deliver adequate amounts of sapphire, resulting in the iPhone 6 not receiving the upgraded glass. The location in Mesa, Arizona is the same factory that GT Advanced was using previously to work on sapphire for the company, which was leased to GT by Apple. Apple is calling the site a new “global command center” in a press release, which will house a new data center for the company.

• Paid Tinder Plus Service Arriving in the US in March: Tinder has quietly been working on a paid version of its service, Tinder Plus, which adds an undo button and the ability to search outside your location. It looks like it’s close to launching, with Techcrunch reporting today that the company released app updates for the service touting the new features, but those aren’t available for users to use just yet in the US. Tinder Plus has been in testing in some markets, like the UK, Brazil and Germany where pricing can be anywhere from $0.99 to $19.99. In the US, however, it will reportedly be available for $6.99 a month. The report today says the features are still being tested but will be switched on for those in the US next month. When we contacted Tinder for comment it simply said “The US is not one of the test markets” for Tinder Plus and “Mid-March is still our launch goal.”

• Sony Sells Sony Online Entertainment, Renames Company: Sony Online Entertainment, developer of popular games like Everquest and H1Z1, today announced that it has been acquired by Columbus Nova, an investment management firm. According to a forum post by a community manager at the company, the change is “effective immediately” and Sony Online Entertainment will operate as a independent company with a new name: Daybreak Game Company. Sony Online Entertainment was formed in 1995 as an internal game development studio at sony and went on to develop many popular MMORPG games including Everquest, Star Wars Galaxies and more. The company says this won’t change its games roadmap. The forum post also curiously says that the acquisition means “new exciting developments” as the company can now fully “embrace the multi-platform world” which means it will develop for PlayStation, Xbox and mobile in the future.