News As We Read- 26th June'13

Thought of the Day:

Did you know?

Following made the Headlines:

India:

• Sumo Duo Add Muscle to Anil Ambani’s Bank Bid: Reliance Capital has roped in Japanese financial behemoths Sumitomo Mitsui Trust Bank and Nippon Life Insurance as minority partners to boost its quest for a banking licence. The Anil Ambani Group company will spin off its consumer lending business into a new entity in which the Japanese giants will buy just under 5% stake each at a substantial premium, two people familiar with the development told ET. Reliance Capital and its two Japanese partners, who have signed an MoU, will apply for a licence by July 1, the deadline set by the RBI. “After roping in the two (Japanese) firms, the consortium will submit the business plan to the RBI — stating its loan book size, net worth and the ability to fund the business in line with the new norms. In case the central bank issues a letter of intent for the banking licence, its structure would be finalised,” said one of the officials. “The broad contours of the deal between Reliance Capital and the two potential investors have almost been finalised, and an announcement is expected shortly,” said one of the officials. He spoke on condition of anonymity since the deal was yet to be announced. The proposal to rope in the two Japanese powerhouses is aimed at making a strong pitch for a banking licence. “The Japanese firms will buy 4.99% each, which is the maximum permissible for foreign banks in an Indian commercial bank,” said one of the persons quoted above. The proposed deal is subject to regulatory approvals, he said. Though the two Japanese firms are picking up minority stakes, they would be treated as strategic investors in the business with board-level nominees in the proposed entity, said the second official. A Reliance Capital spokesperson declined comment. Sumitomo Mitsui Trust Bank and Nippon Life did not reply to ET’s queries.

• Divorced from Reality, Online Unions in Trouble: Online matrimony portals are adopting innovative measures to coach the young on living a happy married life, concerned that the rising tide of divorces across urban India could threaten their businesses. From counselling services and free books on the dos and don’ts of a happy marriage to mailers and links to social media and blogs, they are making concerted efforts to ensure lasting unions for couples who meet online. “Youngsters should not take online matrimony as a means to instant gratification as they do in other forms of e-commerce,” said Gourav Rakshit, COO at Shaadi.com that has launched a series of online campaigns and counselling services at over 100 contact centres. “We advise couples to take at least 6-9 months before they decide to tie the knot with someone they have met online,” said Rakshit, who estimates about 20 million people use the portal. Chennai-based Consim Info Pvt Ltd, which owns BharatMatrimony.com, is distributing 50,000 copies of a book that lays down the principles for a successful marriage and ways to sustain it. These moves come in the wake of estimates by divorce lawyers that nearly half of marital break-ups involve partners who met online. “About seven cases out of every 10 that I handle are of marriages arranged through matrimonial websites,” said Ujwala Mandgi, a partner at Bangalore-based law firm Mandgi Associates. Experts said misrepresentation of facts by people during online interactions is one of the primary reasons for the breakdown of such unions. “Five out of 10 cases that I handle are of this nature,” said Ganesh Iyer, an advocate in the Bombay High Court. “Online matrimonial companies are not guaranteeing that everything will be hunky dory,” he said. As traditional family networks become weaker and young professionals migrate to cities, online marriage portals are becoming the prime source of matchmaking.

• Overload of Foreigners May Ground Jet-Etihad: The civil aviation ministry has objected to the large presence of foreign nationals or nominees of Etihad on the key boards and committees of Jet Airways, adding another bit of complication to the largest foreign investment by an airline in India. The ministry headed by Ajit Singh, which had lobbied hard for foreign direct investment for Indian carriers, has objected to the structure of the revised shareholders agreement submitted by Jet and Etihad recently and fears that Etihad will have control of operations, which is not in keeping with the country’s civil aviation rules and regulations. The objections could end up complicating matters for Jet-Etihad as the ministry has been one of the few vocal supporters of the $379-million (2,190-crore) deal announced in April this year. Singh and ministry officials had praised the deal when it was announced, in complete contrast to the frosty reception accorded to Malaysian low-cost carrier AirAsia’s tie-up with the Tata Group. Etihad announced its intention in April to purchase 24% stake in Jet Airways for $379 million, valuing the Naresh Goyal-promoted carrier at about $1,579 million, or 9,150 crore. The deal ran into controversy from the beginning with capital markets regulator Securities & Exchange Board of India (Sebi) objecting to the shareholders agreement on the grounds that there is lack of clarity about control. Sebi officials pointed out that Etihad has the powers to manage, veto and control Jet’s operations even with a 24% stake, which is just below the 25% needed to make an open offer. Jet and Etihad have been forced to submit a revised shareholders agreement diluting some of the powers given to Etihad, and a meeting of the Foreign Investment Promotion Board (FIPB) scheduled for June 14 to approve the deal had to be deferred.

• Mercedes Steps up India Drive to Take on BMW, Audi: German luxury carmaker Mercedes Benz will begin assembling its latest SUV, the GL Class, at its Pune plant from August taking the total tally of locally manufactured cars to five with plans to add the latest models in the next few years. It is also eyeing smaller cities and towns to garner additional sales. “We have aggressive plans for the Indian market in 2013, which is also our year of offensive. We have the strategy to push our volume models in the Indian market and have seen some instant success with our compact luxury models like the A-Class and B-Class,” Mercedes Benz India MD & CEO Eberhard Kern said. The carmaker has doubled the annual production to 20,000 units in Pune with a cumulative investment of 850 crore to take on global rivals like BMW and Audi that dominate the Indian luxury car space. Entry-level luxury models such as the A-Class and the B-Class are currently imported from Germany and the company plans to assemble them locally with the possible availability of parts and components from next year. Mercedes Benz launched the next generation of its flagship E-Class sedan on Tuesday to take on BMW 5Series and Audi A6 in the mid-size luxury sedan segment. The sedan is priced between 41.51 lakh and 44.48 lakh (ex-showroom Delhi). So far, Mercedes has sold over 23,000 E-Class cars in India and this car will be assembled at the same Pune factory that also manufactures sedans like the C-Class and the S-Class along with the ML Class SUV. “The E-Class has been the most successful vehicle for Mercedes-Benz globally with more than 11 million units sold. In India too, the success story remains the same for the E-Class, which is the highest sold single model for the ‘Three Pointed Star’ in India. We have added more than 2,000 fresh parts and components to the new model that makes it the most efficient E-Class sold in the Indian market,” Kern added.

• TripAdvisor acquires mobile app GateGuru: The mergers and acquisition space is heating up in the travel sector. The latest is Trip Advisor acquiring GateGuru, a mobile application for flight and airport information. Last week travel portal Goibibo. Com bought online bus ticketing website Redbus.in. The size of the GateGuru deal has not been disclosed. However, with the latest acquisition, TripAdvisor will extend its services to enable the traveller on the move access user generated content and information from the airports, see detailed maps and get insights on stores, restaurants and amenities. The GateGuru team will continue to operate out of New York City, and report to Bryan Saltzburg, general manager New Initiatives and leader of the TripAdvisor Flights product. “Flying is often an essential part of a trip and we have continually developed our suite of flights products, from the pricing and availability search on TripAdvisor, to our award- winning SeatGuru.com, with seat maps and more,” said Steve Kaufer, co- founder and CEO TripAdvisor, Inc. “GateGuru nicely complements our existing flights products and we look forward to working with the GateGuru team as they continue to manage the GateGuru app and add great functionality to the TripAdvisor mobile experience.” In March Trip Advisor Inc bought Beeem Inc which developed Tiny Post, a photo captioning App. In April it went on to acquire New York based Jetsetter.com – a member only private sale site for hotel bookings.

International:

• China stocks hit by credit crunch fears: Chinese stocks touched a four-and-a-half-year low on Tuesday amid persistent concerns over the government's credit-tightening policy. The Shanghai Composite SSE index fell as much as 5.8% at one point, before a late rally meant it ended down 0.3%. The rebound came after China's central bank said that it would guide market rates down to "reasonable" levels. Last week, the bank indicated that the era of cheap credit was over, helping to trigger falls on global markets.

• Vertu Names Massimiliano Pogliani CEO: The revolving door is spinning at Vertu, with a series of high-level departures revealed today. Chief executive officer Perry Oosting, who had been with the British luxury mobile phone company for four years, is stepping down, and the Vertu board of directors has selected Massimiliano Pogliani, previously the firm’s chief marketing officer, as the new ceo. Oosting remains a Vertu investor. Sales director Steve Amstutz is also leaving the company, and a replacement has been found internally, according to a statement from Vertu. In mid-May, Vertu announced the arrival of Jonathan Sinclair as chief operating officer. Sinclair will now report to Pogliani.

• Françoise Lehmann Named General Manager of Lancôme International: Françoise Lehmann has been named general manager of Lancôme International, its parent company L’Oréal said Tuesday. The former Kérastase International general manager succeeds Youcef Nabi, who, as reported, resigned from Lancôme a few weeks ago. “Considered an inspirational leader, allying an in-depth insight on brands [with] a comprehensive product understanding, Françoise Lehmann transformed the Kérastase brand by modernizing its image, accelerating product innovation, and [strengthening] the quality of service and consumer advice at the point of sale to the level of excellence of luxury brands,” L’Oréal said. Lehmann has steered Kérastase into uncharted waters. Most recently, starting in mid-May in French hair salons, the brand entered the styling segment with the introduction of its Couture Styling line inspired by skin-care formulas and textures. The collection is fronted by Kate Moss, marking the first time the professional brand had an international face. Lehmann has spent her entire career at L’Oréal, starting in 1988. 

• Rent the Runway Acquires Go Try It On: Rent the Runway, the online designer dress and accessories rental site, has acquired social retailing startup Go Try It On Inc. for an undisclosed amount. The acquisition essentially is for customer acquisition and talent, said Jennifer Hyman, cofounder and chief executive officer of Rent the Runway. Go Try It On the company, as well as it’s mobile application platform, will cease to exist. Its customer lists will be owned by Rent the Runway. The app launched in March 2010, and enabled its mobile community of users to share their outfits within their social network, where they give and receive feedback. Marissa Evans, the former ceo and founder of the social retailing startup, will join Rent the Runway as head of radical innovation, a newly created role for the rental site. Two other full-time and one part-time staffers will also join Rent the Runway. According to Hyman, Evans’ new role will be to “lead a small team within the company where she will function as a startup ceo within Rent the Runway.” Her goals will be to learn more about the customer base, how to get them to come back more often and launching different tests on the site. “We’re at a very different stage now. I can’t do some of the experimentation that we did three years ago. The ideas [from Evans] can be crazy or zany. The ideas are not the general priority. It’s the testing of diversity of projects that lead to habit formation within Rent the Runway,” Hyman said. Hyman said she and Evans know each other from the entrepreneurial community in NYC. Both are also Harvard Business School graduates and their firms took similar paths. Rent the Runway already has on its site a social shopping platform launched in October that enables renters to see outfits on other women with similar height and weight measurements. Evans’ social networking background, as well as her mobile experience, is expected to result in initiatives that will help “revolutionize our business in the years to come.” According to Rent the Runway, the site has over three million members and adds about 100,000 new members each month. The most rented categories currently are weddings, formal events and parties. The top designers in the gown category are Badgley Mischka, Nicole Miller, BCBG Max Azria and ML Monique Lhuillier. The top designers in the cocktail category are Shoshanna, Nicole Miller, Trina Turk and Badgley Mischka. Rent the Runway so far has raised an aggregate of $55.4 million in three venture capital financing rounds.

• Roots Canada Opens L.A. Store: Roots Canada has put down retail roots in Los Angeles with a new concept store that is destined to sprout elsewhere. Although the Toronto-based brand has an extensive network of 115 stores in its home country, it has yet to proliferate retail in the U.S., where the L.A. store on Abbot Kinney Boulevard in the Venice neighborhood is its fifth unit. The 700-square-foot store, which opened June 12, showcases Roots Canada in an intimate, upscale environment that may turn the perception that American shoppers have of the brand if they are familiar with it only from its past association with the Olympics. The choice of Abbot Kinney was carefully thought out. “We love the street. My brother is an artist who has a studio in Venice, so we have followed the street for a long time,” said Michael Budman, cofounder of Roots Canada. “I think Abbot Kinney is the hippest street in America right now. I ran into Russell Simmons on Friday night and he said the same thing. It represents a way of life, and you have a great demographic with a lot of young, successful people who have money to spend and who are looking for quality. They do not want disposal fashion, and we don’t want Roots to be any part of disposal fashion.” Roots Canada enlisted its design director and Budman’s wife Diane Bald, who worked in collaboration with Budman’s artist brother, Jim Budman, to hone the look of the store to suit the street. It resembles a house, which was what it was built to be in 1921. The lighting fixtures and furnishings are a combination of vintage midcentury pieces and pieces from Roots’ home assortment. An old ceiling was removed to reveal the beams underneath and give the store an airy feel, and a large folding door that serves as the entrance provides natural air-conditioning for the store.

• Western outlet malls win over Chinese shoppers: Chinese tourists make up a large and growing number of shoppers at designer outlet malls in the U.S. and Europe, according to mall operators. The number of shoppers from China at Value Retail's nine outlet malls in Europe grew by 49% in the first three months of 2013 compared to the same period last year, and U.S. developer AWE Talisman said shoppers from China spend about 50% more than visitors from other countries.