Daily News Digest- 19th Jan'15

Thought of the Day:

Today in History:

Following made the Headlines:

India

• A Narrow Fare Gap With Peers May Help Vistara Sales Take off: India’s latest airline Vistara may have to reduce its price gap with rivals, market itself more aggressively and scale up fast before it can expect healthy sales on its flights, said travel company executives and experts. “From what we have seen so far, Vistara’s sales could have been much better, given the formidable product,” said Manoj Samuel, ED at Riya Travels, one of India’s biggest brick-and-mortar travel agents. Vistara — a joint venture airline between Tata Sons and Singapore Airlines — currently has 10 operations in the country, from Delhi to Ahmedabad and Mumbai counted with return legs. It operates 148-seater planes which make for a daily total inventory of 1,480 seats on sale. Data collated from the top five on line and brick-and-mortar travel agents showed their daily sales do not exceed 300 seats. A chunk of Vistara’s sales comes from its own website whose data ET didn’t have access to. “Customers, especially corporate travellers, aren’t yet very excited with Vistara,” said Manoj Chacko, CEO at Kuoni Business Travel, while acknowledging that “the Singapore Airlines and Tata group pedigree gives it a high degree of credibility among corporate customers”.

• Fashion Designers Now Take the Online Ramp: Fashion designer Suneet Varma is launching a new ready-to-wear line nine years after he had to shut down a store he opened in Delhi for the same purpose, because authorities brought down the shopping complex that housed it as it was illegally constructed. This time he doesn't have to fear bulldozers because his new readyto-wear, or RTW, line is being launched online. And the label will be affordable, he said. Varma is not an exception. A large number of top fashion designers in the country , including Raghavendra Rathore, Rohit Bal, JJ Valaya, Abu Jani & Sandeep Khosla, Vikram Phadnis, Manish Arora, Ritu Kumar and Gaurav Gupta, are looking to make the most of the country's online shopping boom by pushing affordable RTW lines to buyers all over the country . Most of them are creating new lines to be sold in partnership with portals like Amazon, Snapdeal, Jabong and Myntra-Flipkart. These RTW lines are way more affordable compared to their core offerings being bought by the affluent class.

• IRCTC Invites Obama & Family for a Maharajas' Treat: US President Barack Obama is likely to get a taste of Indian Railway hospitality during his visit to the country. The Indian Railway Catering & Tourism Corporation has formally invited the US President to travel on the ultra-luxury Maharajas' Express along with his family. Though the invite, sent through the Ministry of External Affairs, doesn't mention a destination, the railways hope Obama will accept and travel to Agra on the $3,000-a-night Presidential Suite of the train. IRCTC Chairman and MD AK Manocha told ET that the invitation had been sent to Obama through the proper channels after taking clearance from the Prime Minister's Office. Obama's visit to Agra to see the Taj Mahal is almost certain, with officials of the US secret service and Indian security personnel busy sanitising the Uttar Pradesh city and also the Expressway that links it to Noida, near Delhi. “We sent the invite over a week ago. Though we haven't heard from the US authorities, we still have hopes. The invite has not been rejected. He is expected to travel to Agra on January 27 and the ideal thing would be to travel royalty style on the Maharajas' Express. If there is a time con straint, he is welcome to take a short ride around Delhi or even come aboard for a meal,“ said Manocha.

• ShopClues Gets $100-M Funding: Mass market online retailer ShopClues has received funding of $100 million led by Tiger Global, after turning down offers from the likes of Alibaba, Flipkart and Snapdeal, all of whom have been aggressively courting the three-year-old company. The deal which closed in early January, values ShopClues at $350 million, and includes participation from existing investors Helion Venture Partners and Nexus Venture Partners. Apart from the recent funding, ShopClues has so far raised over $115 million. “We will be investing money in technology, marketing and everything else that will enable more sellers to come on our platform,” said Radhika Aggarwal, co-founder and chief marketing officer at ShopClues. “Our focus is to be the largest platform for unstructured, mass market, high-margin product categories.” ShopClues plans to close this fiscal with ₹2,000 crore in gross merchandise volume (GMV) and break even in mid 2016. ShopClues, which enables small and medium-size merchants to transact online, positions itself as a marketplace for the smaller cities buyers and sellers. Unlike the top three marketplaces — Amazon, Flipkart and Snapdeal — ShopClues sells lesser known or unbranded items online, while the other top three focus more on branded stuff.

• Alibaba co- founder Peng Lei set to join Paytm board: Peng Lei, co- founder of Jack Ma- led Chinese e- commerce giant Alibaba Group Holding, is going to join the board of mobile wallet operator Paytm, it is learnt. Alibaba and Alipay, which operates the Chinese e- tailer’s third- party online payment platform, are to invest $575 million for a cumulative 40 per cent equity in Paytm, a company owned by Noida- based One97 Communications. Peng would join Paytm’s board of directors as a member once the investment had been completed, asource said. To Business Standard’s queries on this, an Alibaba spokesperson said in an e- mailed response: “ As a matter of company policy, we do not comment on market rumours and speculation.” Paytm Chief Executive Vijay Shekhar Sharma declined to comment. Peng, also known as Lucy Peng, 43, joined Alibaba in 1999 as a member of the founding team. From January 2010 to February 2013, she was the chief executive of Alipay. In March 2013, she took over as CEO of Alibaba Small and Micro Financial Services Group. Since June 2014, Peng has been the chief people officer of Alibaba Group Holding.

• Department of Posts may set up separate entity for e-commerce by next year: The Department of Posts (DoP) may set up a separate entity for handling e-commerce services by next year to cash in on the burgeoning demand for delivery and logistics. According to sources, during a recent meeting chaired by Prime Minister Narendra Modi, DoP said it aims to conduct a financial feasibility study for setting up a separate entity for e-commerce by October this year and start the operations by next year. Sources said DoP may appoint an on-board consultant for development and operationalisation of business and marketing strategy for commerce market by July this year. Communications and IT Minister Ravi Shankar Prasad had earlier said India Post with the world's largest postal network is best suited to offer delivery services to e-commerce firms. India Post has over 1.55 lakh post offices of which around 1.40 lakh are in the rural areas. On an average, a post office serves an area of 21.21 sq. km and a population of 7,175 people.

• Airtel Co Eyes Big Slice of Video Collaboration Biz: Airtel Business, the enterprise services arm of Bharti Airtel, is targeting a major slice of the ₹400-500 crore video collaboration market through its plan to offer a telepresence room or space for high-end videoconferencing mainly to banking and financial services, IT and IT-enabled services industry, and small and medium enterprises. “Being the first to offer something like this will allow us to get the dominant position in this segment of the industry. We see ourselves getting the first-mover advantage,” Manish Prakash, director of Airtel Business told ET. Airtel, India’s leading mobile phone operator, has partnered with networking equipment maker Cisco to provide this service in the country. The company sees video collaboration services as a faster growing segment than its traditional products, Prakash said.“There’s a huge market for such solutions. This offering becomes relevant with the speeds we are starting to get in broadband,” he said.

• Air India Announces a Slew of Measures to Cut Costs: |Loss-making Air India has announced a slew of cost-cutting measures, which include plans to cut reimbursables by 10% and abolition of posts from the nonoperational areas. The national carrier has also decided to discontinue loss-making routes, among other steps, to rein in the spending and return to break-even. The use of expensive hotels or five-star hotels for stay during the travel or holding events has been restricted unless it is unavoidable and the budget for such activities has been reduced by 10% as part of the measures, Air India sources said.

• Jet Ropes in Ex-AI Official to Head Its Operations: Jet Airways has roped in former Air India official K M Unni to head its operations. Unni, who retired from the national carrier in 2013 moved to the Naresh Goyalpromoted airline last month to handle its operations, and engineering and maintenance services, sources said. Prior to his retirement, Unni was the head of the airline's special business unit for MRO besides holding the charge of its ground handling subsidiary, Air India Air Transport Services Limited. He also held the charge of chief operating officer at Air India, though for a brief period, after the government removed the then expat COO Gustav Baldauf in March 2011 from the post.

• Asian Paints to Set up Rs 1,700-Crore Plant at Vizag: Paving the way for setting up of a ₹1,700-crore manufacturing plant of Asian paints at Visakhapatnam, the Andhra Pradesh government on Sunday said it has cleared the “administrative hurdles“ for the project. Asian paints has agreed to establish the unit soon after the allotment of the land and obtaining due environmental and other clearances from the government. “The Andhra Pradesh government has cleared the administrative hurdles in the ₹1,700-crore manufacturing setting up of a .plant of paints giant Asian Paints at Visakhapatnam,“ a state government release said. AP chief secretary IYR Krishna Rao on Saturday held a review meeting with the Asian Paints' representatives and the industries department to clear bottlenecks in the project.

• Branded bhels, sattu get more shelf space: Even as consumers today are heavily influenced by modern sensibilities, the market for products rooted in tradition continues to grow strong.Retail shelves stocked with modern packaged food offerings like pasta and spreads also witness branded golgappas, aam pannas and bhels moving at an equally rapid pace. This is not restricted to food products alone. It extends to clothing and interiors as well. “Tradition and rootedness is also a vector of modernity and upgrade for the consumer, as she becomes more confident in making her choices. So we now see packaged aam panna and golgappa pani being stocked with bhel as well as pasta. And Fabindia is trendy fashion, too! We believe modern retail has to be a celebration platform that gives consumer the choice she wants to exercise. Just because you like niche products like Meswak toothpaste or palak soup, you don't have to be underserved with narrow availability compulsions of traditional trade,“ said Damodar Mall, CEO, value retail, Reliance Retail.

• Adobe India head Gupta to quit by March-end: Adobe India MD Naresh Gupta is leaving the multimedia software products company after 19 years to start a venture of his own. Adobe said that Gupta, who is also head of the company's global print and publishing business, will be leaving at the end of March. The company has not announced who will succeed Gupta in India. A company statement quoted Adobe CEO Shantanu Narayen as saying: “Naresh Gupta has played a key role in shaping Adobe's technology and global business strategy and has built a world-class R&D operation in India.“ The R&D operation in India comprises more than 3,000 employees across two sites, Bengaluru and Noida, and contributes to engineering across all of Adobe's businesses. Gupta said, “Leaving Adobe has been the toughest decision of my life; the company is growing and is going through the strongest period I've seen in my career here. However, I am excited to pursue my passion for entrepreneurship in financial markets.“

International:

• Uber taxi firm promises 50,000 jobs under 'new' Europe deal: The chief executive of the online taxi-sharing firm Uber has said he wants to make 2015 a year of rapid expansion in Europe. Travis Kalanick told a conference in Munich that Uber could create 50,000 jobs as part of a "new partnership" with European cities. Fast-expanding Uber has drawn criticism across the world from regulators and established taxi operators. Mr Kalanick's comments were seen as a bid to build bridges with critics. Uber, which helps users summon taxi-like services on their smartphones, started four years ago and now operates in 250 cities worldwide. The San Francisco start-up is valued at $40bn (£25.5bn), based on the latest fundraising from investors. But critics have accused Uber of flouting competition rules and of not carrying out sufficient safety checks on drivers and their vehicles. Uber has been hit with court injunctions in Belgium, France, Germany, the Netherlands and Spain, and has faced protests from taxi firms in major cities, including London.

• Amazon: Luxembourg tax deal probably 'state aid' EC says: The European Commission has disclosed a preliminary finding that Amazon's tax arrangements in Luxembourg probably constitute "state aid". The EC's doubts about the arrangement were detailed in a document on Friday. The EC said that its "preliminary view is that the tax ruling... by Luxembourg in favour of Amazon constitutes state aid." However, Amazon said it "has received no special tax treatment from Luxembourg". "We are subject to the same tax laws as other companies operating here [in Luxembourg]," it said. The Luxembourg finance ministry said: "Luxembourg is confident that the state aid allegations in this case are without merit and will be able to convince the Commission of the legitimacy of the anticipatory decision in question and that no competitive advantage was granted," it said.

• JINAMMI Opens First US Store: The latest edition to the Beverly Center's luxury wing comes in the way of JINAMMI. The luxury handbag line out of Seoul officially opened its first store in the U.S. Thursday. Up ahead is an East Coast store, most likely in New York, by the end of the year, according to JINAMMI Creative Director and founder Ji-Nam Lee. "Beverly Hills is very popular in Asia," Lee said of the reason to open there, adding that other luxury tenants made the shopping center a good choice for JINAMMI. The company bills itself as a "modern Korean couture brand" with designs inspired by Korean architecture and art. The line, which uses materials such as Italian water snake and embossed lizard, ranges from $89 for leather bracelets to $3,290 for satchels made of caiman. The company has a flagship store in Seoul and is also sold in Lotte department stores and duty-free shops in Asia. Lee, who received her master's in fashion design at the Marangoni Institute of Milan in 2000, began laying down roots in the U.S. for her company last year when it opened a marketing office in Glendale, Calif. that has since shifted operations to the Beverly Center. An online shop also launched last year.

• Joseph Lombardi Named Kellwood CEO: In an unexpected move, Kellwood Co. replaced its chief executive officer Lynn Shanahan with Joseph Lombardi, the company’s chief financial officer. Shanahan plans to resume her position leading strategic branding firm C2 Group. She joined Kellwood in July 2013 as ceo of Kellwood Brands and was elevated to ceo of Kellwood in December of that year. Lombardi joined Kellwood, owned by Sun Capital Partners, in 2013 and prior to that was cfo of Barnes & Noble and held management posts at the Museum Co. and Toys ‘R’ Us Inc. He began his career at Ernst & Young, where he worked with brands such as Phillips-Van Heusen, Adidas and Pony. Neither Lombardi nor Shanahan were reachable for comment. Industry sources didn’t know why Sun Capital Partners made the abrupt switch and aren’t privy to the numbers, but as one source put it, “Sun is a very mercurial company.”

• December's Retail Price Decline Part of Long-Term Trend: Weakness in retail pricing power deepened in 2014 — a trend that is expected to continue in the coming months — as appreciation of the dollar, falling commodity prices, prolonged discounting and bargain-conscious consumers keep the pressure on. Consumers have generally responded well to the discounts and lower prices on apparel, but have also been held back somewhat from sluggish wage and income growth, economists said. Consumer apparel prices in December fell a seasonally adjusted 1.2 percent, marking the third straight monthly decline in the category, according to the Labor Department’s Consumer Price Index released Friday. Women’s apparel prices declined 1.9 percent last month, while men’s apparel prices declined 1.2 percent. The monthly retail price declines were part of a longer term deflationary trend and pricing weakness that retailers have experienced over the past couple of years.

Tech:

• Ola Ropes in AuthBridge for Drivers' Verification: India's largest taxi aggregator, Olacabs, has hired background-verification firm AuthBridge to vet the drivers who use its platform and said it is investing more than $20 million (₹124 crore) this year in efforts related to passenger safety. Last month, after a 25-year-old woman passenger in Delhi accused the driver of a cab she hired through Uber of raping her, taxi-hailing apps such as Ola, Uber, TaxiForSure and Meru have taken a series of steps to ensure customer safety. These include double layer of GPS security tracking and panic buttons in cabs to thirdparty background verifications and building a collaborative database of drivers. “Specifically, for background screening after the mandatory police verification check and address-proof check, we have added another layer by getting on board a third-party provider, AuthBridge, to do a criminal record check,“ said Anand Subramaniam, director for marketing communications at Olacabs. “This will help us weed out any driver who even has a small question mark on credentials.“

• Toshiba launches Android powered LED TVs: Japanese electronics giant Toshiba has introduced a new range of smart LED TVs powered by Android that will allow viewers to access a wide range of apps, games and videos. The new range of Ultra HD 4K L9450 series and HD & Full HD L5400 series has features including personalised content, visual details, stunning graphics, built-in Wi-Fi, web browser to access any website, Toshiba said in a release. L9450 UHD 4K series is available in 50, 65 and 84 inches screen size priced between Rs 1.99 lakh to 10.49 lakh. While L5400 HD & Full HD series is 32, 40, 47 and 56 inches screen size priced between Rs 38,990 to Rs 1.29 lakh. Toshiba India - DS Division Country Head Sanjay Warke said: "The Android interface has opened a world of possibilities for consumers... We are trying to bring the same limitless experience by breaking boundaries on screen sizes. Our latest range offers the customers a choice to enjoy latest Android applications on a larger screen and in a higher image quality, than that of smartphones and tablets."

• Facebook open-sources its deep-learning AI tools: Facebook is sharing some of its technology. The company’s artificial intelligence research team today announced that it is open sourcing its deep-learning AI tools. The software will be available on the Torch library, which serves as an open-source environment for machine learning development. Torch is widely used for research in academia, as well as by companies like Google, Twitter and Intel. Facebook claims its deep-learning modules are significantly quicker than the default ones available through Torch, and allow the company to work on larger neural networks in less time. Notable improvements include a 23.5x speed-up over publicly available convolutional layer codes, and the ability to parallelize neural networks training over GPU cards.

• Designers Behind Medium and Readability Join Facebook: Teehan+Lax, a Toronto-based boutique design firm, has announced that it will be shutting down after 12 years to join Facebook’s design team in California. The firm’s three partners – Jon Lax, Geoff Teehan and David Gillis – are best known for their work behind blogging platform Medium and mobile and Web reader app Readability. “The challenges that we will have at Facebook are challenges that interest us. They are primarily about making things that over a billion people will use… all over the world,” the team posted on its homepage. “Ultimately, the things we would get to do at Facebook, the people we would get to work with, the problems we get to solve were too compelling to say no to.” We know what you’re thinking. You hate it when Facebook drastically changes its design layouts. It is unclear what Lax, Teehan and Gillis will do on Facebook’s design team, but given their past experiences, there’s nowhere to go but up from Facebook’s current UI. 

• Xiaomi Buys 3% Of Chinese Games And Software Giant Kingsoft For $68M: Xiaomi became the world’s third largest smartphone company based on sales last year, but it also invested in a number of companies in 2014. Its early deals have largely been in hardware, but today it announced[PDF] plans to put money into games and software by buying 2.98 percent of Kingsoft for HK$527 million (~$68 million). Kingsoft started out developing PC games, but today the company — which is listed in Hong Kong and valued at over $2 billion — produces security, entertainment and enterprise products too. It already has strong links to Xiaomi, whose CEO and co-founder Lei Jun is also founder and chairman of Kingsoft. The investment is notable because it is a sign of Xiaomi’s intention to increase its focus on software and services. Its deals to date have circled around hardware — including a $200 million investment in appliance maker Midea, and a funding round for wearables startup Misfit — but with the Kingsoft deal, Xiaomi may well be laying the ground for a dedicated games service, security features and other mobile services for its customers.