News As We Read- 11th June'13

Thought of the Day:

Did you know?

Following made the Headlines:

India:

• Cadbury India Top Brass Got a Pay Cut in 2012: Cadbury India has cut the pay of its managing director and some other senior executives in 2012, when the country’s largest chocolate maker saw its slowest growth in profit and sales in over six years. Annual remuneration of Anand Kripalu, India head of Cadbury India’s parent Mondelez International, was down 35% at 7.14 crore in 2012 compared with what he took home the previous year, according to Cadbury’s latest annual report sent to minority shareholders, who have been disputing its delisting plans for a decade. Kripalu, who joined the maker of Dairy Milk and Bournvita seven years ago, was heading India and South East Asia until last year before being redesignated as India MD in 2013. Some other senior executives, including R&D head Atul Bhatia, HR head Rajesh Ramanathan and Narayan Sundararaman, head of powdered beverages, gums and candy, too, took salary cuts, though not as stark as their boss. A Cadbury India spokesperson did not respond to specific queries on whether the cut in remunerations was influenced by or linked with lower profits and sales growth. The spokesperson said the company does not discuss remuneration of any individual as a matter of policy. “Our reward philosophy emphasizes a total remuneration approach, which includes multiple components for senior management like fixed pay, perquisites, retirement benefits, global performance linked pay and global equity programmes,” the spokesperson said. “Structure and payout of some of these are globally governed and may influence the total remuneration in a particular year. For example, the date of vesting of global stock may have no relationship to the performance, but may impact total remuneration for a particular year.”

• Reebok Makes a Comeback as a Premium Fitness Brand: German sports goods maker Adidas is repositioning Reebok as a premium fitness brand in India as part of a major revival drive for the brand after shutting down hundreds of outlets last year following a financial scandal. The company plans to open 100 premium stores, called Reebok Fit Hubs, by March next to sell premium products such as shoes priced at 12,000, and provide fitness consultation to customers. “Our new stores will have certified fitness trainers in these stores who will advice the customers on matters related to fitness,” Erick Haskell, India MD of Adidas AG, said. “Apparels will be delineated under categories such as yoga, dance and others. It will be an entirely new experience for the customers, something that they have not seen anywhere.” The first two fit hubs will come up in Faridabad and Gurgaon, and the firm plans to open five such stores this week. Last year, a Rs 870-crore accounting scam was uncovered in Reebok India and parent Adidas AG fired then managing director Subhinder Singh Prem and chief operating officer Vishnu Bhagat after accusing them of siphoning off merchandise by creating secret warehouses. After this, the company adopted a new business model in the country and shut down several of its stores. Under the new model, the company spends on development of new concepts in marketing and brand building while franchisees take care of setting up stores, rents and other fixtures. The company offer franchisees a margin on the overall sales. This is the same model that the company has adopted for its operations in China. The Fit Hubs will follow this business model. Out of the 100 Fit Hubs planned by March, 50 will be absolutely new stores while the other half will be old stores renovated to match the new brand positioning. The fit hub concept is already being replicated globally and the brand has about 80 such stores including one at the Fifth Avenue in New York City, one of the best known shopping streets in the world. With the repositioning of the brand, Reebok’s logo has also been altered slightly with an additional element, the sign of a delta, added to the old logo.

• Ajay Bakshi Elevated as MD of Max Healthcare: Max Healthcare, a part of business conglomerate Max India, has promoted its chief executive officer Ajay Bakshi as managing director. Bakshi will now hold the responsibilities of both managing director and CEO, Max Healthcare said in a statement on Monday. He had joined Max Healthcare as chief executive officer on November 1, 2011, and led to significant improvements in the clinical, operational, service and financial performance of the company, it added. “Under Ajay Bakshi's able leadership, the company launched four new hospitals and doubled bed capacity... and achieved significant turnaround in financial performance,” the statement said. Max Healthcare currently has 12 facilities in North India with a total capacity of over 1,900 beds. Out of these, nine facilities are located in Delhi & NCR and the other three in Mohali, Bathinda and Dehradun.

• AI Expects 20% Hike in Revenue in 2013-14: Ajit: Beleaguered Air India’s fortunes seem to be shoring up with the airline estimating that its total revenue would go up 20% by the end of the current financial year. The national carrier’s total revenue is expected to go up from 16,130 crore in 2012-13 to 19,393 crore in 2013-14, civil aviation minister Ajit Singh said at a function here to celebrate completion of Air India’s 65 yeas of service on the London route. Reflecting a turnaround earlier than planned, the airline is determined to achieve the target of growing its operating revenue to by over 20%, Singh said. According to the minister, Air India also estimates that its EBITDA would increase from 19.45 crore in 2012-13 to 1,040 crore in the current fiscal. “We are restructuring Air India’s operations. Right now there are only two Indian air carriers who are doing international operations — Jet and Air India. Jet is making profit but Air India is incurring losses. So we are trying to reduce our costs through various ways and in the process the Dreamliners are playing a very important role,” he told PTI.

• BCCI suspends Kundra, on IPL clean- up drive: Stung by the Indian Premier League (IPL) spot- fixing and betting scandals, the Board of Control for Cricket in India ( BCCI) today cracked the whip by suspending Rajasthan Royals co- owner Raj Kundra on charges of gambling and unveiled a 12- point ‘ Operation Clean- up’ in bid to restore the Twenty20 League’s credibility. The BCCIs all- powerful working committee, which gathered for an emergency meeting here, discussed the scandal and took the decision to suspend Kundra pending an inquiry. Kundra becomes the second team owner, after N Srinivasan’s son- in- law and Chennai Super Kings (CSK) Team Principal Gurunath Meiyappan, to be suspended from cricketing activities. The Board also decided the twomember panel, comprising ex- judges T Jayaram Chouta and R Balasubramanian, investigating Meiyappan and CSK, would also probe Kundra and the Rajasthan Royals. "Delhi Police Commissioner Neeraj Kumar had grilled Kundra for 11 hours. He had admitted to gambling in IPL matches and IPL CEO Sundar Raman has also got a complaint from a closed source. I will not reveal the name," the interim chief, Jagmohan Dalmiya, said. “Rajasthan Royals’ role in the whole issue is being looked into but without getting hold of the facts, we dont want to frighten anybody," he added when asked why the Royals had not been suspended.

• Rupee Continues Its Downhill Yatra: The rupee hit a new low against the US dollar on heavy selling by foreign institutional investors, leading to fears that the Reserve Bank of India would go slow on cutting rates. A sustained fall in the value of the rupee would make the going even harder for Asia’s third largest economy, which is growing at its slowest pace since 2003, as it would worsen the current account deficit and endanger the fall in inflation as imports become costlier. An immediate consequence, the market fears, is that RBI might not cut rates at its mid-quarter review meeting on June 17. These fears resulted in the Sensex closing flat at 19,441 points, up 0.06%. “A weakening rupee has adverse macro and micro consequences. The former, through increased inflation via costlier imports. The latter, through stress on repayment obligations of companies with external debt. The presumed positive effect on exports might not be strong enough to offset these,” said Saugata Bhattacharya, chief economist, Axis Bank. The rupee is being battered following the dollar’s rise against emerging market currencies. The dollar has strengthened on account of expectations that the US Federal Reserve would start scaling down its massive quantitative easing programme as the economy recovers. The rupee closed at a new low of 58.15 against dollar, sliding 1.7%, or 97 paise, on Monday.

International:

• BMW Regains Top Luxury Car Seller Tag from Audi: Bayerische Motoren Werke AG's namesake brand regained the monthly sales crown from Volkswagen AG's Audi division as the small X1 sport-utility vehicle and new 3-Series sedan won customers. BMW’s global deliveries in May rose 7.8% from a year earlier to 1,39,161 cars and SUVs, the Munich-based company said in a statement. Demand at Audi in May rose 6.4% to 1,37,200 units. Thirdranked Daimler AG's Mercedes-Benz division boosted sales 7.3% to 1,21,360 cars and SUVs. Audi’s deliveries beat BMW's in April as the three German competitors pushed outside of Europe to escape the effects of their home region's sixth annual auto-market decline. In contrast to capacity cutbacks at European volume carmakers, BMW, Ingolstadt-based Audi and Stuttgart-based Mercedes are maintaining production in July and August to meet demand from abroad, rather than shutting plants for summer vacations. “Exports of the German manufacturers to the US and China are generally still going well,” said an analyst.

• Wal-Mart CEO, Others Again Get Many 'No' Votes: Wal-Mart Stores shareholders approved the election of all 14 director nominees at the company’s annual meeting last week, but many again voted against chief executive Michael Duke and others as the company continued to face fallout from a Mexican bribery scandal. Some 12.1% of shareholders voted against Duke, while 10.1% voted against S Robson Walton, the son of the retailer’s founder, according to results Wal-Mart made public on Monday. Christopher Williams, chairman of the audit committee, had 12.2% of votes cast against him. Other directors got more than 90% support. Duke and others were again targeted this year by pension funds and activist groups, as they were in 2012 after allegations that Wal-Mart’s Mexican arm bribed officials to expand quickly in that country.

• Lululemon's Christine Day to Leave Firm: Shares of Lululemon Athletica Inc. plummeted in after-market trading Monday after the company said the woman credited with much of its explosive growth, Christine Day, would be leaving the yoga apparel retailer. The surprising news sent the firm’s shares down 14.8 percent. Day, who has been chief executive officer for five-and-a-half years, will leave when a successor is named. The company said it has formed a search committee and “enacted its ceo succession plan.” She is leaving three months after Lululemon suffered a major black eye when its signature black Luon yoga pant had to be recalled after quality issues were discovered. The company said at the time that the recall cost it up to $67 million in lost sales. Day said, “Plans have been laid for the next five years and a vision set for the next 10.” She added that now is the “right time to bring in a ceo who will drive the next phase of Lululemon’s development and growth.” Day will “continue to actively lead the organization while the board searches for a new ceo and will work to ensure a smooth transition.”

• Harrods Names New Head of PR, Communications: Lauren Stevenson has joined Harrods as head of PR and communications, according to the store. She replaces Amber Pepper, who joined Coach in January as marketing and communications director, and will report to store director Mark Briggs. Stevenson will be responsible for raising the store’s profile. Stevenson was formerly PR director at My-Wardrobe.com for six and a half years, during which time she raised the profile of the online retailer globally, launched the Designer Incubator initiative, opened press offices in Australia, Scandinavia, the Middle East and New York, and managed the profile of the site’s founder Sarah Curran.

• Astley Clarke Names New Managing Director: As part of its push into new markets, the British jewelry e-commerce site AstleyClarke.com has appointed Scott Thomson as managing director. Thomson’s most recent role was as chief executive of Claudia Schiffer, where he created a number of collaborations. Prior to that, he was managing director at women’s lifestyle footwear brand FitFlop, where he grew the brand from a start-up to an international brand with presence in more than 40 countries. “Astley Clarke is at an important stage of growth,” a company statement said. “Scott’s wealth of experience in building iconic international brands and his strategic vision is pivotal to establishing Astley Clarke as an international multi-channel, Luxury brand,” said the company’s founder and executive chairman, Bec Astley Clarke.

• AirAsia X launches $370m share sale as it eyes expansion: AirAsia X, the long-haul arm of Asia's biggest budget carrier AirAsia, has kicked off a share sale to raise up to $370m (£238m). The airline plans to use the money to repay debt and to fund expansion plans. Asia-Pacific is one of the fastest-growing and most profitable markets and airlines are keen to expand and tap into the region's potential. Analysts said the demand for low-cost air travel in the region was likely to increase further in the coming years. "In terms of demand, there is still room for growth as the medium and long-haul sector is not as competitive as the short-haul sector,'' said Brendan Sobie of the Centre for Asia Pacific Aviation. Mr Sobie added that the share sale will help boost AirAsia X's plans to establish new hubs to strengthen its network.