News As We Read- 25th June'13

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Following made the Headlines:

India:

• MTS, Tata Tele Deal Talks in Final Lap: Merger talks between Tata Teleservices and Russia’s Sistema have advanced substantially, with negotiations centered on a deal that transfers NTT DoCoMo’s stake as well as part of the Tata Group’s holding to Sistema, giving it a substantial shareholding, said two people familiar with negotiations. The two companies have appointed bankers — Rothschild for Sistema, which operates under the MTS brand, and Standard Chartered Bank for the Tata Group — said one of the two people. However, the transaction will be held up till a new merger and acquisition policy is announced for the telecom sector. A senior official in the department of telecommunications, asking not to be named, said the policy is likely to be announced in three months. Current M&A norms are not conducive for the deal as they may require MTS to either surrender or pay the market price to retain the airwaves held by Tata Tele. In an emailed response, MTS said, “The immediate focus of the company is to efficiently run its 9 circle operations and turn OIBDA (operating earnings before depreciation and amortisation) positive by end of 2014.” A questionnaire sent to the Tata Group went unanswered. The two people quoted earlier said the Tata Group plans to reduce exposure to the telecom sector to a minority stake. As a result of the deal that is in the works, MTS would take a majority stake in the company. Valuations had not yet been decided, the people said.

• Tech Startups Marrying Profits with Social Good: Creating technology that can improve quality of life for the differently-abled is becoming a focus for a number of entrepreneurs who see this as an opportunity to build scalable businesses. These ventures are developing a range of products — from smart watches that monitor the emotions of the autistic to devices that improve vision and help the paralysed access the Internet — that combine profits with social good. “Innovations remain a one-time news story unless they find a marketplace,” said Shilpi Kapoor, founder, BarrierBreak, a Mumbai-based company that develops and markets assistive devices for a range of disabilities. Kapoor, 40, a former consultant for a US-based technology company, was spurred to set up the firm when she became aware of the everyday struggles of her supervisor at work, who was paralysed. Among the products from BarrierBreak, which has raised seed capital from early-stage investor Aavishkaar Venture, is ListenorPro that helps adjust decibel levels for people with auditory impairment. Other devices include a colour-coded keyboard for the dyslexic as well as battery-operated toys for children with cerebral palsy. This year, the company expects to clock revenues of 4.5 crore. Experts are of the view that with nearly 21 million people categorised as differently-abled in India, the opportunity is huge for businesses that make technology affordable for them. “Computing technology can hugely improve lives of people with disabilities,” said Ashutosh Chadha, director of corporate affairs for South Asia at Intel.

• Carlsberg India Launches Fruit-flavoured Strong Beer: Carlsberg India on Monday launched a fruit-flavored strong beer in its Tuborg Strong brand that is positioned for younger consumers. “Tuborg Booster Strong is priced at 105 for a 500ml can and 135 for 650ml bottle and enriched with natural fruit flavour that reduces bitterness and gives a smooth after taste,” Carlsberg India said in a statement.

• 47% Graduates In India Unemployable: Report: India churns out tens of thousands of graduates each year but less than half of them are “employable” or possess the basic skills needed for any industry role, says a report. According to a Aspiring Minds report, around 47% graduates In India are unemployable for any job. The report, which is claimed to be the first ever national audit of employability of 3-year Bachelor's degree graduates, drew inferences from data of over 60,000 graduates, based on Aspiring Minds Computer Adaptive Test. “The alarming statistics of half of the graduates not being employable in the knowledge economy needs great attention with interventions at both the school and higher levels,” Aspiring Minds co-founder Varun Aggarwal said.

• As GDP Nos Slip Hotels too Feel the Pain: The hospitality industry is becoming another high-profile casualty of the slowing economy, with nearly 75 big hotels putting up the ‘for sale’ boards and several others raising the red flag amid falling check-ins and wilting room rates. Most hotels in the country are running half empty, as the GDP growth slips to 5% levels this fiscal year, says the Federation of Hotel and Restaurant Associations of India (FHRAI). In a preliminary report, the hoteliers’ body has found that average hotel occupancy in 2012-13 dropped to the lowest in a decade at 58.3% and average room rates fell to 6,214, the lowest in six years. Hotel occupancies had reached a high of 71.5% in 2005-06 growing from 64.8% in 2003-04. Average room rates peaked at 7,989 in 2007-08. It was 3,569 in 2003-04. The scary turn of events has sent hoteliers scurrying for cover, with disinvestments or restructuring becoming the buzzwords for an industry, which only five-six years ago was charting a decade of boom. “With literally no room for growth, close to 75 branded hotels across the country, of a total of 550, are on the block,” says Kaushik Varadharajan, managing director at HVS India, a hotel consultancy. Another source, who asked not to be identified, said among the hotels on the block include the 386-room Shangri La in Mumbai, the 114-room Hilton Garden Inn at Saket in Delhi, the 171-keys Hilton Mumbai, the 305-room Novotel Hyderabad airport hotel and the 320-room Grand Hyatt in Pune. Other properties sporting ‘For Sale’ signs include the Novotel in Ahmedabad, the Best Western in Delhi’s Shahdara area, the Sheraton in Chandigarh and the entire portfolio of Royal Orchid Hotels, officials and hospitality industry experts say.

• Titan adds ‘Skin’ to boost lifestyle portfolio: Titan Industries, the $2-billion jewellery-to-watch retailer of the Tatas, is readying a big push into the small but high-growth Indian fragrance market under the brand Skin, a move that possibly signals a broader interest in the personal care industry. Bangalore-based Titan, best known for eponymous watches and Tanishq jewels, will employ a new trademark, Skin, to launch fragrances priced at Rs 995 and Rs 1,995 as part of a business diversification, said people briefed on the matter. The company has explored multiple new business forays to reduce dependence on jewellery retailing, which accounts for 80% of the revenue currently. Titan has been under pressure after RBI mandated upfront cash payment for gold imports replacing a 6 month credit period jewellers had until now. Brokerages downgraded the stock citing the company would borrow to fund higher working capital requirements. The stock lost about 33% market value in recent weeks of mayhem. The high volatility in the bullion market, and growing political sensitivity around it, may hasten new business plans. Titan in the past has talked about expanding the lifestyle product basket to offset cyclical threats to jewellery retailing. The roll-out of optical stores under Titan Eye Plus was one such move. On Monday, Titan’s board of directors decided (subject to shareholder approval) to change the company name to Titan Company Ltd to reflect the changing focus on lifestyle products. Titan declined to offer comments on TOI queries about its entry into fragrances and new brand introduction. The entry into the Rs 1,200-crore fragrances market will see Titan battling ITC (which tapped this segment under Essenza Di Wills) and global heavyweights such as P&G (Old Spice, Hugo Boss), Coty Inc (Calvin Klein, Davidoff) and Puig SL (Nina Ricci). But significantly, Trademarkia, a visual search engine for more than 6 million trademarks, shows registration called Skin by Titan, with a listing of cosmetic preparations, toiletries, perfumes, aromatic body care products such as body lotions, shower gels, shampoos, conditioners and soaps.

• CNG prices in Delhi hiked by Rs 2 per kg due to weak rupee: CNG price in national capital was today hiked by Rs 2 per kg, the second increase in rates since January, due to rupee depreciation. Also, piped cooking gas (called PNG or piped natural gas) rates were also increased by Re one with effect from midnight tonight. CNG sold to automobiles in Delhi will cost Rs 41.90 per kg from midnight as compared to Rs 39.90 currently. The rates of CNG in neighbouring Noida, Greater Noida and Ghaziabad have been hiked by Rs 2.25 to Rs 47.35 per kg. "The consumer price of PNG to the households in Delhi is also being revised from Rs 23.50 per standard cubic metre to Rs 24.50 per scm for consumption of up to 30 scm in two months," Indraprastha Gas Ltd (IGL) said in a statement. For consumption of more than 30 scm in two months, the applicable rate in Delhi would be Rs 40.50 per scm. Due to higher taxes in Uttar Pradesh, PNG in Noida, Greater Noida and Ghaziabad would cost Rs 26 per scm, up from Rs 25 per scm for consumption of up to 30 scm in two months. Price for consumption beyond that level will be Rs 43. CNG price was last hiked on January 5 when rates went up by Rs 1.55 per kg.

International:

• Nestle to Open Factories in China on Rising Demand: Nestle, the world’s biggest food maker, said it will open two factories in China next month to tap growth in the world's most populous nation even as the economy slows. The Swiss food maker will open a coffee plant in the eastern province of Shandong, and another food factory with Chinese partner Yinlu Foods Group, Roland Decorvet, the company's Greater China chairman and chief executive officer, said in a June 21 interview in Beijing. The company didn't disclose the investment amount. The Vevey, Switzerland-based firm, maker of Nescafe coffee and Maggi food seasonings, is relying on the world’s second- largest economy to boost sales as demand in other emerging markets slows. Nestle reported in April its slowest first- quarter revenue growth since 2009 as sales for its products in the Asia, Oceania and Africa region decelerate, and government austerity programs weigh on growth in Europe. China’s economic growth unexpectedly slowed in the first quarter. Still, the weaker economy hasn't hurt business in the Asian nation, Decorvet said. The Chinese government is trying to boost domestic consumption for growth while reducing reliance on exports and investments. “We are quite confident for the market,” he said. “People still need to eat. The government clearly wants to focus on the growth of the domestic economy. The wages keep increasing; the urbanization keeps increasing as well.”

• Vodafone agrees 7.7bn-euro deal to buy Kabel Deutschland: UK telecoms group Vodafone has agreed with the board of German cable operator Kabel Deutschland to buy the business for 7.7bn euros (£6.6bn; $10bn). Vodafone is offering shareholders 87 euros per share in cash, a bid the Kabel board said it would now recommend to shareholders. Vodadone had faced a potential bidding war with John Malone's Liberty Global after it made a rival offer. Liberty had proposed an offer thought to be worth about 85 euros per share. Vodafone's offer included the purchase price of 84.50 euros per share plus the 2.50-euro dividend announced by Kabel in February - a bid Kabel's management considered "attractive for shareholders." It "adequately reflects both the strategic value of Kabel Deutschland to Vodafone and the company's growth prospects," Kabel said in a statement. Vodafone will also take on Kabel's debt of £2bn. The acquisition would mark a change in strategy for Vodafone, which has largely focused on mobile phone services in Europe.

• Blanco Pro Cycling team to be sponsored by Belkin: US consumer technology firm Belkin has become the title sponsor of the Blanco Pro men's cycling team, which was formerly sponsored by Rabobank. The 30-month deal will see them renamed as the Belkin Pro Cycling Team. The new team will make its debut at this year's Tour De France, which begins in Corsica this weekend. Rabobank pulled out at the end of 2012, saying it was unconvinced the world of international professional cycling "can make this a clean and fair sport". The Dutch financial organisation had continued to fund the men's team this year, despite the squad not carrying its name. The monetary value of the new sponsorship deal has not been revealed.

• Nordstrom Takes Stake in Gifting Site Wantful: Nordstrom Inc. has taken a minority stake in Wantful, a fast-growing, two-year-old online gift retailer. It’s a move consistent with Nordstrom investments in other Web sites the last couple of years, including HauteLook, Bonobos and Sole Society, as well as in multichannel retailers Jeffrey and Peek. Though Nordstrom is already considered to be among the most advanced retailers online, the investment strategy enhances the Nordstrom experience by sharing technologies and online tools for customers and supplementing the merchandising. The Seattle-based Nordstrom would not disclose the amount of its investment in Wantful. Ken Worzel, Nordstrom’s executive vice president for strategy and development, has been named to the Wantful board. On Monday, the partnership launched with the Nordstrom Gift Collection by Wantful, which can be found at nordstrom.com/giftcollection. “Making it simple for customers to give the right gift has always been important to the service experience we hope to offer,” said Kirk Beardsley, vice president of e-commerce at Nordstrom. “The experience that Wantful is helping us deliver is an intuitive blend of traditional and digital media that offers customers another way to solve an age-old challenge — choosing that perfect gift for someone.” “Nordstrom’s investment gives us the ability to bring what we do to a very large audience,” said John Poisson, founder and chief executive officer of Wantful. Poisson said his company was looking at other possible investors to accelerate growth but chose Nordstrom because of its reputation for customer service and for being a well-run company. “In our view, there is a lot of affinity between what our customers want and the products that their customers are interested in.” Poisson said Wantful offers more than 4,500 products in personal care, accessories, jewelry, specialty food and wine, home decor, kitchen and outdoor products. Nordstrom will be carrying some of those products for the first time, but it was primarily an opportunity to give customers a fresh way of shopping for gifts that appealed to the company. Nordstrom does sell products from Bonobos and Sole Society online and in its stores, so it’s possible that at some point Nordstrom will advance the Wantful assortment from its current availability online to also being sold in the stores. 

• Delphine Arnault to Join Louis Vuitton: Delphine Arnault, the daughter of luxury titan Bernard Arnault and Dior’s deputy general manager since 2008, is moving to Louis Vuitton, WWD has learned. She is to start in September as deputy general manger and report to chief executive officer Michael, who started last December at the leather powerhouse, following stints as ceo at Bulgari and Fendi. Burke has initiated an upscaling drive to secure Vuitton’s brand positioning and leadership, and will no doubt leverage Arnault’s expertise in accessories and high-end leather. It is understood Arnault will take over duties previously handled by Vuitton’s executive vice president Pietro Beccari, who in February 2012 become chairman and ceo of Fendi, succeeding Burke, but her remit will be larger. Reached Monday evening, an LVMH spokesman declined to comment. That a member of the Arnault family, the controlling shareholder of LVMH, is becoming second-in-command at the luxury group’s largest company is a strong signal that Vuitton will get the resources and management attention needed to sustain its growth.

• Neiman Marcus Files for IPO: Neiman Marcus Inc.’s private equity owners have made their move and are taking the luxe chain public again. TPG and Warburg Pincus took the company private for $5.1 billion in the go-go consumer days of 2005, but the investment ran head long into a massive recession and financial crisis that saw high-end consumer tighten their purse strings. Now the investors, who have pulled some money out of the company in the form of a dividend, are ready to start making back their money in earnest. Neiman filed for its initial public offering with the Securities and Exchange Commission today. The proposed maximum to be raised in the offering is $100 million, but the details in early filings for an IPO are often provisionary. The number of shares to be sold and at what price range are yet to be determined. Any stock sale would likely be followed by a series of secondary offerings.

• Coach Taps Stuart Vevers as Creative Director: The winds of change are blowing at Coach Inc. The New York-based handbag and accessories maker has named Stuart Vevers, former creative director of Loewe, as its new executive creative director. The search was conducted by Karen Harvey Consulting. Vevers replaces executive creative director and president Reed Krakoff, who told WWD two months ago that he would not renew his employment contract with Coach, opting instead to focus on growing his namesake line. Although Krakoff’s contract expires next June, Coach was unable to provide a definitive start date for Vevers, who will report directly to Coach president and chief commercial officer Victor Luis. For Coach, Vever’s hire is an integral part of the brand’s evolution. In February, longtime chairman and chief executive officer Lew Frankfort said he would resign as ceo but remain executive chairman. The company anointed Luis as ceo, effective January 2014. The changing of the guard, so to speak, after 33 years at Coach for Frankfort, and 16 for Krakoff, closes the chapter on one of retail’s most successful duos. “Stuart is recognized as one of the world’s leading accessories designers. His passion, leadership skills and broad luxury brand experience, focused on leather goods, uniquely qualify him to lead the next chapter of Coach,” Luis said. “I am confident that his creative expertise — grounded in accessories — will enable him to draw upon Coach’s rich history to create innovative product and brand imagery, elevating the customer experience and creating a fuller expression of the brand.” Frankfort added, “The appointment of Stuart Vevers marks an important milestone in our brand transformation, currently under way. We are extremely pleased that he will be leading our strong creative team already in place, bringing his unique aesthetic and personal style to Coach. His depth and breadth of experience will be an invaluable asset to the business in general — and the design team in particular — as we continue to evolve the brand.”