News As We Read- 17th June'13

Thought of the Day:

Did you know?

Following made the Headlines:

India:

• Etihad’s Say to Equal Jet in Airline Post-Deal: The shareholders agreement between Abu Dhabi-based Etihad Airways and Jet Airways has been structured in such a way as to create a substantial role for the Middle-Eastern carrier in decision-making at the Mumbai-based airline, an ET study of the shareholders documents shows. The pact does not confer obvious rights or veto powers to Etihad but its concurrence will have to be taken for most decisions, including routine ones, lending credence to the belief the Mideast carrier will be some kind of a joint manager of the airline along with Naresh Goyal, who owns 51%. This is significant as any indication of joint control or management by Etihad could increase regulatory scrutiny and force the two partners to possibly rework parts of the deal. The Securities & Exchange Board of India (Sebi) has queried the two airlines on ownership and control and asked them to share details of the shareholders agreement. Last week, the Foreign Investment and Promotion Board (FIPB) deferred clearance for the transaction.

• For MNCs, 49% Equity to Get 100% Freedom: Foreign companies may not need government approval to hold up to 49% equity in Indian arms in most sectors, with the Manmohan Singh administration planning an overhaul of the foreign investment regime to attract overseas capital. A senior official said the government was considering raising the minimum foreign investment cap to 49% for all sectors, including defence production, except pension and insurance sectors, which will require legislative amendments. It also plans to do away with the requirement of mandatory approval from the Foreign Investment Promotion Board if foreign holding does not exceed 49%. Theoretically, this could mean a Jet-Etihad type transaction, which is currently pending before the FIPB, might not need such a permission. But the official said the government could retain sensitive sectors within the purview of the FIPB if it felt issues of national security or other strategic considerations were involved. In addition to raising the minimum foreign investment cap to 49%, the government is also planning to liberalise the ceilings for other sectors that are currently at 51% and 74%. The telecom department has said it supports 100% foreign investments in the sector. FDI is banned in some sectors such as lottery and casinos. The government is reviewing these sectors, but no decision has been taken.

• Hyatt to Bring All 7 Global Brands to India in 3 Years: International hospitality chain Hyatt Hotel Corporation will bring all of its seven brands to India in the next three years to increase the footprint here. The chain that had entered India with Hyatt Regency in Delhi 30 years ago, will open three new hotels in India this year that will take its total room capacity to 5,300. It is targeting not only the metros but also “high growth tier II and II cities and upcoming resort and leisure destinations” for its growth in the country. “India is one of the focus markets for Hyatt globally, along with the US and China. We plan to introduce all our brands in India in the next three years and are looking for opportunities to increase our footprint through organic growth and conversions,” Hyatt Hotel Corporation vice-president (development) Dhruva Rathore said. The hospitality chain runs hotels and resorts under Hyatt, Park Hyatt, Andaz, Grand Hyatt, Hyatt Regency, Hyatt Place and Hyatt House brands.

• Organised Retail to Treble in Next Seven Years : BCG: With consumption remaining strong in the country despite the recent dips, the organised retail trade is set to treble over the next seven years, says a report by Boston Consulting Group. “With consumption set to more than triple in size over the next decade, sales through organised retail are expected to reach between 14% and 21% by 2020 from 6% in 2010. As organised retail takes shape, it could attain the status of the markets in the developed world and be more efficient,” says the report titled 'Winning with Uncertainty' by BCG and industry body CII. “The domestic organised retail has been growing at a healthy compounded annual growth rate of 25% over the past five years,” says the report.

• Ratan Tata to be the Chief Advisor to AirAsia India: Using his persuasive skills to the hilt, Tony Fernandes, founder and chief executive officer of AirAsia, on Sunday, said Ratan Tata, chairman emeritus of Tata Sons, will be the chief advisor to AirAsia India, a new venture that Malaysian airline is setting up with the Tatas as investors. Tata Sons has a 30% stake in AirAsia India, with Arun Bhatia of Telestra Tradeplace owning 21%.  “I am pleased to announce @ratantata as the chief advisor to the board of AirAsia India. A legend in every sense. Building a powerful team,” Fernandes posted on the microblogging site Twitter. On May 15, AirAsia announced the name of its new CEO Mittu Chandilya, but is still to announce the names of the top management line-up to steer its new venture. What Fernandes did not say, however, was that his efforts to persuade Tata to become the chairman of the Indian venture failed. Tata, a certified pilot, has been very keen on the Tata group entering civil aviation. An earlier initiative with Singapore Airlines, about a decade ago, failed to go through after being infamously stymied by corporate lobbies. Fernandes had publicly proclaimed that he is keen to have Tata as the chairman of the airline. Fernandes, however, alluded to another announcement in the making on Monday, when he plans to name the chairman. Giving little away, Fernandes told his over 3.34 lakh followers on Twitter: “Our chairman is someone who has redefined many parts of India. A towering man, who brings unbelievable experience to the AirAsia India board.” AirAsia has submitted papers for government approval to fly, but its preparation for a September date seems unlikely, as approvals from the government are likely to take longer than anticipated. 

International:

• Shipping magnate Paul Soros dies at 87: Paul Soros, a successful innovator in shipping, philanthropist and the older brother of billionaire financier George Soros, has died in New York City after a long bout with a host of illnesses, said his son Peter Soros. He was 87. Soros, who died yesterday, was an engineer and businessman, founded Soros Associates, a world leader in the design and development of bulk handling and port facilities. The company operates in 91 countries. Soros also held a number of patents and wrote more than 100 articles on the transportation of materials and related shipping design issues. “His genius, which was really reflected in his work, was really a function of seeing what everyone was seeing and finding new ways to solve interesting problems,” said Peter Soros. Soros also drew upon his own immigrant biography in establishing with his wife the Paul & Daisy Soros Fellowships for New Americans in 1997. The foundations $ 75- million endowment funds graduate education for immigrants and the children of immigrants. Soros was born Paul Schwartz in Hungary in 1926. His father changed the family name to Soros a decade later, in response to growing anti- Semitism.

• China orders firms to curb pollution: The Chinese government has ordered firms in heavy-polluting industries to cut emissions by 30% by 2017. Under the new rules companies will be legally obliged to improve their pollution control equipment and will be penalised for excess emissions. Analysts said enforcement of the targets was likely to fall to local governments. The announcement did not specify which industries would be affected by the new emissions rules. However, earlier this year ministers hinted that industries such as iron, steel, petrochemicals and cement would face new targets. China has seen scores of environmental protests.

• Pringle of Scotland Opening New London Store: Pringle of Scotland will open a shop at 94 Mount Street in London’s Mayfair in September. It will showcase the men’s and women’s designs as well as its latest archive collection “Princess Grace: More Than an Image.” The new store, in the former antiques space Mount Street Galleries, will span 1,000 square feet, with additional room to house the brand’s wholesale showroom. The new space replaces Pringle’s former space on Lower Sloane Street. Other newcomers to Mount Street this year include Solange Azagury-Partridge and Linda Farrow.

• Sears Canada Sells Two Stores to Raise $191M: Sears Canada Inc. is turning to its store base to raise more than $191 million. The company, which has 181 of its corporate stores, said it reached an agreement with Oxford Properties Group and Alberta Investment Management Corp, giving the shopping center owners the right to have Sears vacate two stores by March 31. The transaction is set to close June 24 and covers stores at Yorkdale Shopping Centre in Toronto and Square One Shopping Centre in Mississauga. Sears also agreed to sell an option on a third store at the nearby Scarborough Town Centre for $1 million. That will give the shopping center firms the right to buy the propertywithin five years for $53 million. Associates at all the stores will be offered Sears jobs elsewhere in the Toronto area. "The possible release of select assets is an initiative we have previously proposed as a way to create total value for the company," said Calvin McDonald, president and chief executive officer of Sears Canada. "When transactions such as this become available, we must evaluate the trading value of a store compared to the value of the proposal, and make the appropriate decision in assessing the best long-term benefit for the company. In this case, we were presented with an opportunity that gives us a significant financial benefit without changing our plans to improve the business and make Sears more relevant to Canadians.”

• Desigual Seeks Bigger Slice of U.S. Market: Desigual, the fast-growing Barcelona-based retailer and wholesaler known for its wildly colorful and graphic apparel, sees the U.S. market as fertile ground for expansion. The company, which turns 30 in 2014, is on track to generate $1 billion in global sales this year. Its products span women’s, men’s, children’s, accessories, footwear and home and are sold in 347 Desigual stores worldwide and in 11,000 wholesale doors. The company also produces Desigual inspired by Cirque du Soleil and Desigual by Monsieur Lacroix, which are ongoing capsule collections. Desigual entered the U.S. in 2009, and that business, which became profitable last year, is expected to drum up $60 million in sales this year. The U.S. volume is equally split between its retail and wholesale operation.

• Lululemon to open 1st men's stores in 2016: Canada-based yoga wear retailer Lululemon Athletica has mapped a growth plan that calls for opening standalone men's stores beginning in 2016, CEO Christine Day said Thursday. The retailer already sells men's apparel including golf polos and underwear in its existing women's stores, and sales of menswear account for more than 10% of total sales.