Daily News Digest- 13th Jan'15

Thought of the Day:

Today in History:

Following made the Headlines:

India:

• VC Funds Plan $2-b Engine for Indian Startups: Venture capital investors are on the road to raise nearly $2 billion, or about ₹12,400 crore, in new funds this year to power the next generation of emerging businesses in India's booming startup sector. Top-rung investors such as Accel Partners, Kalaari Capital and SAIF Partners -who recently scored rich returns on consumer Internet ventures such as Flipkart and Justdial -are leading the fund-raising momentum that continues from 2014 when venture funds raised over $1 billion for Indian startups. The uptrend in fund-raising levels indicates a return of confidence in Indian startups among overseas investors, typically pension trusts, corporate endowments and financial institutions who in vest in such funds. “We're seeing a rekindling of interest in the Indian market in the past 6-8 months,“ said Karthik Reddy , managing partner at Blume Ventures, a Mumbai-based seed stage investor. “Exits remain a concern among limited partners (investors in venture capital funds),“ he said. “But they seem optimistic that the path to these exits is being built,“ he added.

• Sellers on Amazon, Flipkart Scaling up to Grab Top Slots: Sellers registered with Amazon India and Flipkart, two of the country’s largest etailers, are aggressively scaling up to become dominant players as the battle for e-commerce heats up amid restrictions on majority foreign ownership in multi-brand retail that keep the two companies from selling directly to consumers. Cloudtail, a 49:51 joint venture between Amazon Asia and Infosys founder NR Narayana Murthy’s personal investment vehicle Catamaran forged last summer, is fast becoming a large seller on Amazon India, accounting for a little over 8% of products sold on the portal since it became operational in August last year.

• Hyundai Sets Sights on 5-Lakh Mark, to Unveil New Models: South Korean carmaker Hyundai Motor has lined up a slew of new models, especially in the utility vehicle segment, for the Indian market this year as it seeks to cross the half-a-million sales mark in the country by 2016. To achieve the target, the Indian unit of the carmaker is aiming to grow its sales this year at 14% to 4.65 lakh units, or double the predicted growth rate of the market. To outpace the market, the company will be launching the new Verna in February, followed by the i20 crossover in April and a compact sport-utility vehicle (SUV), codenamed GCi, in the festival season of 2015. Bo Shin Seo, CEO and MD at Hyundai Motor India, told ET in an exclusive interview that the company has set an aggressive target for itself as it expects the Indian automobile market to do better in 2015 compared with the previous year. “We increased our market share in 2014, but we are not satisfied as yet. With the new Verna and a compact SUV coming in, we will look at increasing the market share further. The improving sentiment and probable cut in interest rate on the anvil, we are hoping for an even better year in 2015,“ said Seo.

• Zomato Acquires US Food Portal: Online restaurant guide Zomato has stepped into the lion's den in the United States with a $60-million (₹ 370crore) acquisition of Seattlebased food portal Urbanspoon, a deal which will bring it into direct confrontation with Yelp. The purchase demonstrates a large appetite by Zomato for a significant slice of the vast American market for online food listings, dominated by Yelp, a public listed company and the world's largest. This latest deal -the sixth and biggest acquisition so far by Zomato -will be an all-cash transaction powered by the Gurgaonbased company's most recent round of funding that closed in November. Deepinder Goyal, CEO of Zomato, finalised the acquisition with digital media company InterActive Corp which owns Urbanspoon, last week. “Zomato's traffic will more than double to more than 80 million visitors, probably making us the largest restaurant (only) search company in the world,“ said Pankaj Chaddah, co-founder of Zomato. The startup, launched six years ago by Goyal and Chaddah, former consultants at Bain & Co, now does business in 22 countries.

• Maruti Expects 20% Exports Growth in FY15: India's largest carmaker Maruti Suzuki India is eyeing 20% growth in vehicle exports this fiscal at 1.2 lakh units, riding on increased sales in non-European markets like Africa, Latin America and the Middle East. In the current fiscal till date, the company has exported over 92,000 units in over 100 countries, a growth of over 23% over previous year and would soon launch its latest model Ciaz in Mexico to add to its export basket. “We are likely to close the financial year with around 1.2 lakh units, a growth of around 20%,“ a Maruti Suzuki India spokesperson told PTI. This growth is on account of multiple factors such as focused efforts on markets such as Africa, Latin America and Middle East, the spokesperson added.“This is in line with the Suzuki mandate to drive exports to these markets from India,“ the spokesperson said. In December, the company's total exports nearly surged three-fold to 11,682 units, as compared to 4,311 units in December 2013.

• Mexican, Indian Firms Interested in Videocon's Telecom Arm: Videocon Telecom, the telecom arm of Videocon Group, has received interests from a Mexican company and an Indian telecom player to buy a 49% stake, Group Chairman Venugopal Dhoot said. But any deal would happen only after the auction of telecom frequencies in February and the government offers more clarity on merger and acquisition rules, he told ET. Without naming the potential investors, Dhoot said: “There are companies wanting to come to India to take advantage of the rapidly growing telecom market in India.“ His brother and group's co-promoter Rajkumar Dhoot told reporters in Gujarat on Monday that Videocon was willing to “give away a 49% in the mobile operating business“. He said the group was even ready to offer the management control to a new investor.

• Move over Resumes, Hackathons are New Hiring Tool: It may be time to move away from cumbersome resumes as the primary resource when it comes to hiring tech candidates. The future of recruitment may lie in hackathons, which are sessions with specifically designed job-related challenges to test candidates and fill in crucial tech positions on a company's roster.The process is faster and, of course, they'll eventually look at the CV. Cab aggregator service Ola and real-estate portal Stayzilla had their product management teams put in place by Venturesity, a startup that creates challenges specific to a job description provided by the company. The company plans to introduce an auction-meets-hackathon model, where multiple companies can offer a job to a candidate with a good profile. “For start-ups and product com panies, hiring is yesterday's problem,“ says Subhendu Panigrahi, co-founder of Venturesity, incorporated in 2013. “We provide the employers a platform to create challenges on par with the actual job role. This brings down the time to hire a candidate to one-third.“ The startup charges recruiters based on the number of successful hires as well as a subscription fee.

• L Capital Asia to Invest in Indian Ecomm Biz: L Capital Asia, the private equity fund sponsored by the LVMH Group, will make a couple of investments of as much as $50 million each in India this year, eyeing e-commerce businesses with a “differentiated“ model and old, family-run enterprises that have lost direction in the current scenario. “Online retail is a very attractive proposition, given the scope of growth in an emerging consumer market like India,“ said Bijou Kurien, member of the strategic advisory board of L Capital. There's a lot of excitement in the online retail space and growth is exceeding offline retail, he said. Prompted by the change in government and signs of economic recovery, L Capital has held talks and considered a few options and may make at least twothree investments this year. The minimum value of each investment will be $30 million to $50 million.

• Hotel Biz to Stay Sluggish in 2015: Hoteliers in India are bracing up for a slightly better but tough year as they expect only a slight improvement in room demand from sub-60% occupancy levels across major cities in 2014. “The industry is seeing a 10% improvement in demand for hotel rooms and that obviously doesn't really look as positive as the pre-2009 time for hospitality ,“ said Patu Keswani, chairman and managing director at mid-market chain Lemon Tree Hotels. “Rates will improve this year, but growth will be subdued till October 2017. That is when the hospitality industry will be buoyant again.“ Hotel owners and operators said the demand-supply mismatch across most gateway cities, which contributed to a major slump in hotel occupancies as well as room rates, will continue this year despite a small pickup in demand.

• Flipkart pays Rs 23.51 crore as penalty for fudging papers: Investors of the e-tailer giant Flipkart may not be happy to read this story. But sadly, the company has started on a wrong foot with the IT department in the new-year. The IT department has imposed a penalty of Rs 23.51 crore on the online retailer for irregularities in its operations. According to an official with Ghaziabad tax department, the company used to collect taxes from its end customers but did not deposit the same with the department. "The said irregularity in the taxes was found after the books of the firm were seized. The company had earlier paid Rs 29 lakhs as penalty," said the official. The official further added that during the investigation, many of the company's listed trade partners were bogus firms and did not exist in reality.

• Ramdev expands empire beyond yoga to FMCG, business poised to touch Rs 2,000cr this fiscal: It may be an unlikely combination -- yoga for inner peace and FMCG for external beauty -- but Baba Ramdev appears to have struck the right pose in both. The guru whose 'easy yoga' has won him a mass following is also cornering the FMCG market with daily use products ranging from soaps and mustard oil to cornflakes. Baba Ramdev's brands seem to have scaled up quite rapidly. For fiscal 2014, Patanjali Ayurved, the company that manufactures the products, clocked a turnover of about Rs 1,200 crore, up from about Rs 850 crore a year earlier and Rs 450 crore in fiscal 2012, company filings and industry sources said. And in the current fiscal, Patanjali is expected to clock a turnover of Rs 2,000 crore, according to Aditya Pittie, CEO, Pittie Group. This marks a 67% jump from the previous fiscal.

• Handicraft Sector Gets Online Push: Handicraft e-commerce in India has been growing steadily in recent years, with numerous startups, and some established players, capitalising on the appeal of traditional Indian arts while making a difference to artisans' lives. “We believe that the local artisans and entrepreneurs deserve a much larger platform than what is available to them today. We are working towards creating a marketplace ecosystem that makes it conducive for them to grow and develop -going from local to national players in their categories,“ said Ankit Nagori, senior vice president, marketplaces, at Flipkart. Flipkart has tied up with multiple government ministries to help artisans shift towards online sales. It has created an exclusive store for Banarasi weaved sarees, as has Snapdeal partnered with India Post to enable Varanasi artisans to sell their work on the online platform.Running closely along these catchall platforms, a clutch of startups have set up innovative business models to help rural artisans reach wider audiences. “Artisans' stories needed to be told,“ said Aishwarya Suresh, 36, an engineer who founded Banna Creations in 2011. “The sector is largely unorganised, so we are trying to streamline the online business process for them.“

• Quikr to push new product commerce: Online classifieds major Quikr is gearing up to take on e-commerce biggies as it plans to launch a service which will let consumers sell their old wares and subsequently buy new products on the site. The Craigslist-like portal, which started off as a listings and used products marketplace, is partnering with a payments firm to build a platform similar to PayPal to facilitate transactions between buyers and small merchants, a senior executive from the company said. New product commerce is becoming a significant part of Quikr's revenues on the back of smaller merchants listing their goods (in categories like mobiles phones) on the site.Quikr's annual gross merchandize value (sales executed through the site) is likely to be in the range of $3 billion and about half of it comes from the sale of new products. The service will directly compete with online retailers, including Snapdeal, Flipkart and Amazon. Earlier, Quikr's closest rival OLX had tied up with Flipkart in a one-off campaign, wherein consumers could sell on OLX and then buy new products on the e-tailer’s site.

• HDFC Bank uses e-clout to launch digital wallet: HDFC Bank is drawing on its clout as a banker to most of the e-retailers to launch a digital wallet and an electronic marketplace for various online merchants. Once an accountholder or cardholder (even non-HDFC Bank debit and credit cardholder) registers for a digital wallet, he can transact on most websites using only wallet credentials. HDFC Bank's entry is significant considering that it is the market leader both as a card issuer and in processing card payments for merchants, and accounts 40% of e-commerce transactions. Also, the digital wallet -which can be accessed from a mobile app or online -will be enabled for contactless payment using Near Field Communication (NFC) by flashing the phone in front of readers that can accept NFC payments. The bank is betting big on the wallet because it is now seeing a shift in e-commerce from desktop to mobile phone.Whether it is tickets or consumer goods, mobiles account for half of purchases in terms of number of transactions.But the complexity of entering card details onto a phone screen also leads to high level of failed transactions. A wallet meets RBI's requirement of two-factor authentication but does away with the hassle of filling card details every time.

International:

• China e-commerce competition intensifies as JD.com, Alibaba go niche: China's JD.com Inc has ratcheted up competition with Alibaba Group Holding Ltd through a $1.55 billion deal with an online car sales portal, as the e-commerce giants gun for high-value markets like cars, tourism and homes. Following over a year of fervent investment activity in China's tech sector, niche e-commerce markets are now in vogue as targets, analysts say. Taking stakes in specialists like Bitauto Holdings Ltd offers an avenue into big-ticket purchases which fall outside major e-commerce companies' traditional focus of day-to-day goods. Such tie-ups also lend smaller firms some of their bigger peers' clout, directing potential customers their way from websites like those of JD.com and Alibaba. "JD.com is trying to position itself as the go-to e-commerce platform, and this could be an important category expansion for them," said John Choi, a Hong Kong-based Internet analyst at Daiwa Capital Markets.

• Gertrude Michelson, Former Macy's Executive, Dies: Gertrude G. Michelson, a retired senior vice president and board member at Macy’s, whose influence extended well beyond the walls of Macy’s to other corporations as well as academic institutions, died Saturday morning, after a long illness, at her home in Greenwich Village. She was 89. Born in 1925, Michelson, known as “G.G.,” first graduated Columbia Law School — she was one of six women in the class of 1947 — before joining the executive training squad at Macy’s. In 1948, she became assistant to the labor-relations manager, and 15 years later rose to vice president of employee personnel, becoming the first woman to hold that slot.

• Kering Replaces Gucci CEO, Creative Chief to Quit: The top two executives at luxury goods brand Gucci will leave the company early next year, as parent Kering SA moves to stem falling sales and the perception of a creative drift in a business known for its shoes, handbags and scarves. Chief Executive Patrizio di Marco will be replaced Jan. 1 by Marco Bizzarri, currently the head of Kering’s luxury division. Designer Frida Giannini, Mr. di Marco’s partner, will leave after showing the next autumn/winter collection in late February. No replacement for her has been announced yet. The abrupt management change comes as the pair have stumbled in efforts to revitalize the storied fashion house’s appeal amid increasingly harsh competition. “Clearly, they haven’t been able to excite consumers enough,” said Exane BNP Paribas analyst Luca Solca, noting the brand’s recent sales declines. “But it’s good news for the company. The firm needs a new start to remain competitive.”

• Volkswagen U.S. Chief Targets ‘Close to 800,000 Deliveries’ by 2018: Volkswagen AG ’s namesake brand will need a little more time to double its vehicle sales in the U.S. than previously planned. The brand is expected to reach “close to 800,000 deliveries target” by 2018, Volkswagen’s U.S. Chief Michael Horn said at the North American International Auto Show in Detroit Monday. Last year, Volkswagen was confident of achieving the target in 2018. The brand will, nevertheless, sell more than 800,000 cars in the region in the medium term, Mr. Horn said without specifying a time-frame. For this year, the German car maker has modest growth plans in the U.S., with hopes to “maintain or slightly expand” growth in the region, Mr. Horn said. Sales of Volkswagen vehicles in North America were down 2% to 599,700 vehicles in 2014.

• McDonald's Is Testing Burgers That Take 7 Minutes To Make: FoodbeastHere's one of McDonald's new customized burgers. McDonald's is testing a customizable burger system that would make it more similar to a Five Guys or Shake Shack. And that includes a seven-minute average wait time, reports The Economist. That's a fairly long wait, considering that the chain's average total drive-thru wait is currently around three minutes, according to a study by QSR Magazine. The Economist visited a new McDonald's outlet near its Oak Brook, Illinois, headquarters. They observed customers building their own burgers by choosing a bun, toppings, cheese, and more from a touchscreen. Customers then waited at their tables until their orders were ready. McDonald's is planning to roll out the new system in 2,000 restaurants by the end of this year, according to The Economist.

Tech:

• Microsoft hits out at Google team over bug report: Google has been criticised by Microsoft after the search giant publicised a security flaw in Windows - which some said put users at risk. Microsoft reacted angrily when Google posted details of the bug online before a patch to fix the issue was released. The disclosure was part of Google's Project Zero initiative that seeks to pressure firms into dealing with security problems more quickly. Several security researchers disagreed with Google's actions. "I feel sorry for the users, who could be impacted by Google's schoolyard antics," tweeted expert Graham Cluley, who noted the company had been criticised for similar behaviour in the past.

• David Cameron’s plan to ban end-to-end encryption is catastrophic for Internet freedom: Earlier today, British Prime Minister David Cameron announced his plan to revive legislation that would allow the UK government to ban applications that use end-to-end encryption to ensure user security. In Cameron’s speech, he asked that “in our country, do we want to allow a means of communication between people which we cannot read?” The answer: yes, we do. If the pledge to revive the legislation were to come into effect, services like WhatsApp, iMessage, Telegram, Cyberdust and more would ultimately need to make major changes to their services to ensure they could function in the UK. Depending on the specific wording, the law could extend to almost any encrypted service that the government finds worth targeting.

• WhatsApp And Snapchat Could Face UK Ban After Election: UK Prime Minister David Cameron could push for a ban on WhatsApp and Snapchat if he wins this year’s general election. The move would be the result of new surveillance plans proposed in the wake of the terror attacks in France. Cameron, speaking in Paris – in comments quoted by The Independent – said: “In our country, do we want to allow a means of communication between people which…we cannot read?” He made it clear that he wants to stop the use of communications methods that cannot be read by the security services even with a warrant. That would include communications and social media apps like WhatsApp and Snapchat which encrypt their data. WhatsApp added end-to-end encryption to its service in late-2014. 

• Netflix Finally Arrives for UK's TalkTalk YouView Customers: Better late than never’ would be one expression that applies for TalkTalk customers today, as the company has announced that its YouView-based TalkTalk TV packages now include access to Netflix’s streaming services. Of course, you’ll still need to pay for a Netflix subscription separately, you can now just view the content straight on your TV without faffing around. BT and other YouView boxes have been able to access the service since the end of 2014.

• Shazam Now Uses Beacons to Give Location-Based Content: Just as the company teased last week during CES 2015, Shazam has officially announced it is adding context awareness SDK Gimbal to its software to provide location-based recommendations. Using beacon technology to locate the user’s proximity, the app will provide a more contextual recommendation based on when and where the user is at any given time. The move is on par with what Shazam CEO Rich Riley told us last week in the company’s effort to link Shazam closer to users in real life. Instead of being just a search-based app to figure out who sings what song, it wants to deliver content in a personalized manner. Now that its recent updates include beacons, Spotify and Rdio integration and a news feed based on songs users have Shazam-ed, it might not be long before the company unveils its wearable app.