News As We Read- 23rd April'13

Thought of the Day:

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Following made the Headlines:

India:

• Maruti to Put More Women at The Wheel: Sheetal Dhiman, 32, had more than a passing role to play in how Maruti Suzuki’s new Alto responds when you step on the throttle. She and the team of male engineers she leads have a clear mandate — test vehicles and calibrate the engine management system. Sheetal was the only female employee in her department when she joined Maruti Suzuki five years ago. She started leading her team two years ago. Mugdha Swarnkar, 27, a deputy manager in vehicle integration, has also been leading an all-male team for a year now. She has worked on the Ritz and was involved in body part designing for the new Alto CNG. “Women do need to put in extra effort to outshine and prove that they are equally capable,” she says, quickly adding that she has never felt discriminated. Sheetal and Mugdha’s rise to team leads in hardcore auto engineering is inspiration for several young women who want to join the profession. Their kind, though, is only a sprinkling yet in an otherwise male bastion. “It takes 10 years to get to a senior managerial position, and we already have 10 women in such roles,” says SY Siddiqui, chief operating officer (administration), Maruti Suzuki. “Several women engineers have entered the company in recent years; many more will join this list of senior managers,” he adds. At Maruti Suzuki, it is no longer uncommon to find women in roles such as engine and transmission design, development and testing, brakes and suspension design, engine and body electricals and styling, modelling and designing of the final product.

• Happy with Surprise Toy, Kinder Joy for Ferrero: In a small factory on the outskirts of Pune, a handful of employees spends most of its time thrashing out innovative tiny toys. They send the toys to school kids for approval before these are mass-produced. That’s still only half the job done. The toys are then sent to Baramati, a rural area some 100 kilometres from Pune, where the company in question, chocolate maker Ferrero India, packs them as a surprise toy inside its Kinder Joy chocolate egg. This surprise factor and other differentiation strategy in packaging and distribution seem to have paid off as Kinder, the German word for children, has helped the Italian chocolate maker beat Swiss giant Nestle’s chocolate division in incremental sales growth last year. Ferrero India — which also sells Nutella spread, Ferrero Rocher chocolate and Tic Tac breath mint in the country — added 80 crore year-on-year to its revenues of nearly 341 crore in the year ended August 2012, according to its recent filing with the Registrar of Companies. Nestle India’s chocolate division added 69 crore in its kitty last year despite being three times bigger than Ferrero with sales of 1,169 crore in the year ended December. Experts attribute this largely to the firm’s differentiation strategy. “Tic Tac has made its way into stationery shops, while the premium Rocher chocolate packs are available at small kirana stores as well,” says an industry source. The ladoo-shaped Ferrero Rocher can be found on the shelves of even traditional mithai shops, which are otherwise considered direct rivals. A Ferrero India spokesperson says, “Innovation and close attention to customer requirements have led to the creation of unique products.”

• WagonR Stingray to Make Its India Debut Soon: In the middle of a slowdown, Maruti Suzuki, India’s largest carmaker, is debuting an all new premium WagonR Stingray in the small car segment. It would position this all-new car higher than the WagonR. The new Stingray variant hit the Japanese market last year and carries several improvements that would also be updated in the Indian variant. By complementing the existing WagonR series, which has been a success for Maruti Suzuki with consistent average monthly sales of around 12,000 units, this tall-boy car is expected to bring back the brand to top three models sold in India. WagonR was the second-largest sold car brand in the domestic market till few years back, but slipped to fourth position in FY13. First seen in February 2007, Stingray is a sportier version of the WagonR with a more aggressive frontal styling and masculine cues in the rear. While the overall shape is expected to be on the lines of a standard WagonR, Stingray would have thinner and deeper headlamps with sleeker and sportier chrome strip on the grille that runs between these horizontal front lights. The interiors would be also be reworked with different colour contrasts and an integrated gear stick on the dashboard rather than the floor. According to two people having direct knowledge of this probable launch, it is one of the major products for Maruti to gain volumes in 2013 and should debut during the lead monsoon season. “It’s a new upscale variant of the WagonR that would be sold along with the existing car. While the trial production is on its way, the launch should happen in the next few months. It would help the company to space out a new premium position for this car, along with its other offering to break away from the immensely crowded Indian small car market,” the person said, who did not want to be named.

• Hoteliers Say Biz Looking Up, 10% Rise in Bookings Expected: Hoteliers say corporate business in looking up on the back of reforms initiated by the government in recent months and bookings are expected to be up 7-10% in the summer months. “We expect an improvement in occupancy rates across major business segments,” says Dilip Puri, managing director, India at Starwood Asia Pacific Hotels and Resorts, which runs brands such as Le Meridien and Sheraton. “Even at a conservative estimate, businesses will grow at least 5%, and you can peg this on improving business sentiment,” says Kaushik Varadharajan, India managing director at hotel consultancy HVS, which works with large hotel groups worldwide. Hotel chains like Leela group, Marriott, Oberoi and Lemon Tree all say bookings for summer months — between May and September — when business usually drops at least 15% over the winter months, has seen an improvement this year as government initiatives start to bear fruit. In Delhi, hotels are seeing improved bookings with a number of large events planned like the Asian Development Bank meeting next month and an Italian leather expo later. Le Meridien hotel in Delhi has got bookings for corporate events and conferences as well as training programmes, incentives and company dealership programmes. “This points to improved corporate sentiments in the last few months,” says Meena Bhatia, vice president, operations at the central Delhi hotel. She expects business this summer to be up 5-7% for the hotel.

• ‘IKEA Won’t be Allowed to Sell Food Items in India’: Swedish furniture chain IKEA will be allowed to run cafés and restaurants within its single brand stores but will not be allowed to sell food items in its stores, commerce and industry minister Anand Sharma said in a written reply to a question in Parliament. The company had sought permission for single brand retail trading of ‘IKEA’ products, including setting up of IKEA restaurants and cafe and IKEA Swedish food market (to sell only single brand IKEA products), minister said in his reply to a question. “The proposal has been recommended by Foreign Investment Promotion Board (FIPB) to the extent that IKEA can have a restaurant/cafe in accordance with their global model but cannot engage in retailing of food items,” Sharma said. “Accordingly, the following condition has been proposed: Food and beverages to be sold within IKEA restaurant/cafe located in the IKEA retail store. No food items shall be retailed off the shelf in any other part of the retail store,” he said. Though the world’s largest furniture maker had received the approval of FIPB for its 10,500-crore proposal, Cabinet Committee on Economic Affairs has yet to approve it. Sharma cited the example of Marks & Spencer, which had sought approval to sell Marks & Spencer branded long life processed foods such as chocolates, confectionery etc. “The proposal was rejected on January 9, 2009, as retailing of food items is not permitted in the policy on FDI in single brand retail,” he added.

• Blackstone in talks to acquire JetPrivilege: Private equity biggie Blackstone has held preliminary talks with Jet Airways to buy a stake in the carrier’s frequent flier unit, JetPrivilege, said multiple people briefed on the matter. Senior Jet executives met with Blackstone in Mumbai. Jet could offer up to 50% stake in JetPrivilege. But a source cited earlier said discussions were in early stages and it was premature to comment on specifics, and whether deal talks would progress. The talks follow the country’s second largest airline’s move to demerge JetPrivilege into a separate entity in order to run the business from a retail standpoint that would see its customer base grow with increased programme partners. Jet Airways, in its annual report, had stated that initially the new loyalty programme firm will be a 100% arm of the company and that as and when negotiations with potential partners fructify it will sell some percentage of the company to them. Ragini Chopra, a spokeswoman at Jet, said she could not offer immediate comments. Blackstone declined to comment, when contacted. Earlier it was reported that the Naresh Goyal-owned Jet Airways was looking to strike a deal with Etihad Airways for JetPrivilege as part of a broader arrangement between the two carriers. The Gulf carrier has been in negotiations to buy a sizable stake in Jet Airways in a deal which is likely soon. Recently Jet tied-up with the two of India’s leading private sector banks, HDFC and ICICI, to bring out co-branded credit cards wherein customers get to enjoy privileges ranging from free tickets to discount coupons. Jet also has a co-branded card with American Express, besides having various marketing tie-ups with hotels and retail brands.  Typically, cash flows in such a loyalty programme are generated when a programme partner buys loyalty points upfront and the redemption takes place later. The net earnings come from the arbitrage got between the time of issuance and redemption.

International:

• UK to sell stake in Urenco nuclear fuel firm: The UK government is preparing to sell its one-third stake in Urenco, the world's second-largest provider of nuclear fuel. The uranium enrichment company is estimated to be worth about 10bn euros ($13bn; £8.6bn). Business and Energy Minister Michael Fallon said the "time is right" for the sale, adding it made "good commercial sense". Several buyers are said to be interested in buying the stake. They include French nuclear group Areva, the Canada Pension Plan Investment Board, and reactor builder Westinghouse. The remainder of Urenco is owned by the government of the Netherlands, as well as by the German power companies E.On and RWE. "The decision to proceed towards a sale comes after the government secured agreement from its Dutch and German partners," the UK's Department for Business, Innovation and Skills said. As yet, no decisions have been taken with regards to how or when the sale will happen. "Any sale will only be concluded if the government is satisfied that the UK's security and non-proliferation interests can be protected and that value for money is achieved for the UK taxpayer," the department said. As Urenco owns top secret uranium enrichment centrifuge technology, which the authorities are eager to protect from falling into the wrong hands, all three countries would need to approve any sale of a stake.

• Philips sees booming LED lighting sales: Philips, the world's biggest lighting maker, has reported a 38% jump in first quarter LED sales from a year earlier. The pricey but long-life and energy-efficient bulbs now represent 23% of its lighting sales. The Dutch healthcare and consumer appliances group said it made 162m euros ($211m; £139m) in the first three months of the year. Appliances sales were up 10% from a year earlier, but other parts of the business were stagnant. "What we have seen in the first quarter is a slow start to of the year, with 1% sales growth in the world," chief executive Frans van Houten said. "That, of course, is not very exciting." Sales in the US and Europe remained tepid. "We can also see that China is in a slower growth situation than one or two years ago," he told BBC World Business Report. Nonetheless, Philips said in its statement that the firm was still on course to meet its targets for the year as a whole.

• Pret A Manger plans 500 new UK jobs as profits rise: Sandwich chain Pret A Manger has said it plans to create at least 500 new jobs in the UK this year, as part of a plan to add 1,000 new staff worldwide. Its announcement came as it reported a 17% rise in profits to £61.1m in 2012, with sales also up by 17% to £443m. Chief executive Clive Schlee said 2012 had been a "strong year" for the firm. He also responded to criticism that the firm was not hiring enough UK citizens, saying it had 15% more British employees this year than last year. The group - which was bought by private equity fund Bridgepoint in 2008 - has 323 stores, mainly in the UK, but with others in Hong Kong, the United States and France. The firm said average weekly sales in Paris were bigger than in any other region. Pret plans to open another 50 new shops worldwide this year, up from 36 new launches last year. Earlier this year, London Mayor Boris Johnson said that an increasing number of workers at food outlets like Pret were not "native Londoners".

• Hong Kong Dock Strike Causing Concern: Hong Kong manufacturers are growing more concerned about the ongoing dock workers’ strike and the impact it could have on small and medium enterprises. The Federation of Hong Kong Industries, which represents Hong Kong manufacturers — most of which have factories in neighboring Guangdong province — said, “We hope the employers and employees would show mutual understanding toward each other and that both sides could quickly reach a mutually acceptable agreement through dialogue.” In a meeting with senior officials from the CPC Provincial Committee and Guangdong Provincial Government last week, the federation said some shippers could have to divert cargo to other ports soon and that some may have to use ports that they never used before. That would mean that some outward-processing traders may have to add new ports to their contracts. Shippers expressed worries that the cargoes may be subject to a higher rate of inspection by Chinese Customs, the federation said. The use of new ports and new contracts may also result in some shipping delays. Hong Kong is the world’s third-largest container port after Shanghai and Singapore. In the wake of the disruption, many shipping lines have diverted their vessels to Shenzhen, China. Many of Hong Kong’s dock workers, including crane operators and stevedores, have been on strike for more than three weeks now. Workers, who are seeking a 17 to 20 percent pay raise, say they are now paid less than they were in 1997. They are also decrying working conditions, with no bathroom breaks and 24-hour shifts. Dock workers are currently paid 55 Hong Kong dollars a day, or $7 an hour, for a maximum of $167 dollars a day for 24 consecutive hours of work, according to Chan Chiu-wai, of the Hong Kong Confederation of Trade Unions. Contractors have offered a 7 percent pay raise, which was rejected by the strikers. Meanwhile, striking dock workers have taken their protests to Cheung Kong Center, an office building owned by Hong Kong’s richest man, 84-year-old Li Ka-shing, whose Huchinson Whampoa Ltd. controls Hong Kong International Terminals. Besides the ongoing strike, Hong Kong manufacturers are also concerned about rising costs in China, increasing competition for laborers and slowing orders. According to a March survey conducted by the federation, 35 percent of respondents said they were hit by a 15 percent drop in the gross value of orders compared with a year ago. Another 35 percent said orders were the same as last year, while 30 percent said orders increased by 8 percent year-on-year.