News As We Read- 26th April'13

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Following made the Headlines:

India:

• After Jet Equity, Etihad Now Wants Its Pound of Flesh: Sebi and Jet-Etihad will have to sort out issues regarding control and special powers that may have been granted to the Middle-East airline as it emerges that Etihad will influence key management changes following Wednesday’s over- 2,000-crore deal. As per the agreement, Jet will sell 2.72 crore shares through a preferential offer at 754.74 apiece, giving the Abu Dhabi carrier a 24% stake in the company. Even though FDI rules allow a foreign airline to invest up to 49% in a domestic carrier, Etihad has capped its holding at 24%. The reason, according to people from financial circles, is to comply with both aviation sector norms as well as Sebi guidelines. Aviation sector rules require ‘control’ to be in the hands of Indian companies, and as per Sebi norms control gets triggered when a firm buys 25% stake in a listed entity. In other words, with a 25% stake, an acquirer is capable of exercising de facto control. The reason this becomes important is because of mounting speculation about imminent board-level changes at Jet following the deal with Etihad. Naresh Goyal’s Jet is likely to allow some key functions to be led by Etihad nominees, a person close to the deal said. The foreign airline will also play a key role in jointly managing the entity to get greater value for its investment. Etihad is expected to decide the selection of top management officials once the transaction is complete, the person said.

• Samsung Connects with More Indians than Nokia: Samsung has overtaken Nokia to become the largest seller of mobile phones in the country’s major markets, as consumers lap up its new feature phones and its smartphones continue to do brisk business. According to market tracker GfK-Nielsen’s data, Samsung’s volume market share in urban areas in March rose to 31.4%, surpassing Nokia’s 30.1%. GfK-Nielsen urban panel tracks sales in 793 cities and towns with a population of over 50,000, which account for more than 70% of India’s total handset sales. This is the first time the Korean company’s volume market share has crossed that of Nokia’s in the GfK-Nielsen survey. The all-India figures, which will include rural sales, will be released shortly.  Some months ago, Samsung’s market share, measured in value terms, had exceeded that of Nokia’s, and there is now a considerable gap between the two due to growing demand for the Korean firm’s smartphones.

• Sexual harassment at workplace: Bill becomes law: President Pranab Mukherjee has given his assent to a bill under which cases of sexual harassment at workplace, including against domestic help, will have to be disposed of by in-house committees within 90 days failing which a penalty will be imposed. Repeated non-compliance of the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) law, can lead to higher penalties and even cancellation of licence or registration to conduct business. The bill was cleared by Parliament in February this year. The new law brings in its ambit even domestic workers and agriculture labour, both organised and unorganised sectors. As per the act, sexual harassment includes any one or more of unwelcome acts or behaviour like physical contact and advances, a demand or request for sexual favours or making sexually coloured remarks or showing pornography. Non-compliance with the provisions of the act shall be punishable with a fine of up to Rs 50,000. It has also provisions for safeguard against false or malicious charges. A Parliamentary Standing Committee, which had examined the bill, had held the firm view that preventive aspects reflected in it has to be strictly in line with the Supreme Court guidelines in the 1997 Vishaka case. The apex court's judgement in the case not only defines sexual harassment at workplace but also lays down guidelines for its prevention and disciplinary action.

• Vadilal goes premium with slew of high-end ice cream brands: India's second largest ice cream player, Ahmedabad-headquartered Vadilal Industries Ltd, is going full throttle on expanding its market share in the premium segment by aggressively launching new high-end products for the third year in a row. After badabite, flingo, gourmet in 2011 and the ice trooper range for the kids' segment in 2012, Vadilal is ready to serve a new course of mouth-watering premium products for this summer. Vadilal's premium products portfolio is expected to generate revenues of Rs 50 crore this year from being negligible a few years back. This summer, the Company is launching Artisan range of products under which it will offer ice cream log, ice cream pastry, ice cream sandwich, cookie pie sandwich, ice cream bar (called as Sneak-a-Bar) and kewara mataka kulfi. Capitalizing on the increasing demand for fruit based products in India; the company is also launching new range of ice candies made with real fruit pulp in exotic flavours like cranberry, kiwi and mixed fruit under the 'Falala' brand name. New variants of badabite, flingo and ice yrooper brands have also been put in the market along with smaller 140 ml packs of its hugely successful Gourmet brand for 'on the go' consumer. Elaborating on the company's premium-focused strategy, Rajesh Gandhi, MD,Vadilal Industries Ltd said, "Till recently Vadilal was known for its mass-based mid-end and low-end ice creams. While we continue to be a market leader in this segment, we formulated a strategy to focus on higher-end products a few years back and started with the badabite, flingo and gourmet launches in 2011 and followed it up with the ice trooper kids range last year. This year we have come up with another dozen odd new products and variants in the premium category.

• Amway India aims to log Rs 5,000 cr turnover by 2020: Amway India, the leading direct selling FMCG Company, is targetting to achieve Rs 5,000-crore turnover by 2020, a senior official said today. The company achieved a turnover of Rs 2,288 crore for calendar year 2012. "The company also registered a CAGR of over 20 per cent for the past five years and is aiming to achieve the turnover of Rs 5,000 crore by year 2020", Amway India Vice President (western region) Sandeep Prakash told reporters today. He attributed the robust growth in CAGR (Compounded Annual Growth Rate) to introduction of new products. "The double digit growth is achieved by the launch of world-class superior quality products in categories of health and beauty, experimental marketing and brand awareness, penetration of products in semi-urban and rural markets of the State and proper distribution", Prakash said. Madhya Pradesh alone clocked a turnover of Rs 67 crore in 2012 against Rs 61 crore in 2011, he said. "Amway wants to grow in Madhya Pradesh by 9-12 per cent in the current year", Prakash said, adding, Amway India in western region recorded 14.54 per cent growth in turnover at Rs 526.80 crore in 2012 as compared to Rs 452.52 crore the previous year.

• PepsiCo India expands cola portfolio; launches Pepsi Atom: Beverages and snacks major PepsiCo India on Thursday expanded its cola portfolio with the launch of 'Pepsi Atom' and has roped in Bollywood actor Sushant Singh Rajput as its brand ambassador. Pepsi Atom is the second mainstream cola from PepsiCo India portfolio, after the company's flagship brand, Pepsi, PepsiCo India said in a statement. "Created for the Indian market, in collaboration with PepsiCo's global innovation team, it is a result of extensive flavour development and consumer testing in the country," it added.  Commenting on the development, PepsiCo India CEO, (Beverages) Gautham Mukkavilli said that it is of great significance that a second mainstream cola from the PepsiCo portfolio has been developed for the Indian consumer. "India centric innovation or 'indovation' is a key growth driver for our business. It is our biggest launch in the recent years and we are committed to invest behind the brand and make it a key player in the carbonated beverage segment," he added. Pepsi Atom is available across the country in various packaging including a 250 ml can at an introductory price of Rs 15 and a 500 ml PET bottle at Rs 25, the company said. 200 ml returnable glass bottles (RGB) are also available in select markets at Rs 10, it added. PepsiCo India Vice President-Beverage Marketing Deepika Warrier said Pepsi Atom addresses the consumer need for a stronger, fizzier cola with a sharp taste hit. "From robust distribution to large-scale sampling; high-visibility launch at Pepsi IPL to an insightful and relatable campaign, we have aggressive plans," she added. The company said it is leveraging the on-going Pepsi IPL tournament, giving unprecedented launch visibility to the brand, both in-stadia and on television. This will be followed by a massive sampling and engagement exercise with over 1 million consumers across key centres, it added.

• AirAsia India files application to launch operations: The newly-formed AirAsia India, the Indian arm of Malaysia's low-cost carrier AirAsia, has filed an application with the Civil Aviation Ministry seeking permission to launch its operations, official sources said here on Thursday. The airline had filed its application with the ministry on April 23. It has plans to launch operations with a few aircraft and proposes to bring in 37 planes in five years, they said. The joint venture company is likely to have at least six members on its board, comprising two nominees each from AirAsia and Tata Sons and one representative from Telestra Tradeplace. There would be an independent director on the board who would also be the non-executive chairman. Tata Sons has nominated R Venkatraman, former executive assistant to Ratan Tata and Bharat Vasani, the chief legal counsel of the Tata Group, on the Board. AirAsia would be represented by Tony Fernandes and Kamarudin Bin Meranun.

International:

• Beauty comes to department store via Chanel vending machines: London department store Selfridges has added a vending machine selling Chanel beauty products. The machine is the latest in a growing trend that includes one at rival Harvey Nichols that sells 32 different curated "beauty bags" from a machine that lets users scroll through the product lists for each on a touchscreen before making a purchase.

• J.C. Penney looks to Young & Rubicam for creative turnaround: J.C. Penney has hired Young & Rubicam as its new creative agency, as the retailer attempts a turnaround after the ouster of CEO Ron Johnson. The new agency selection might be attributable to past work with the brand by Y&R global chief creative Tony Granger, who oversaw J.C. Penney advertising at Saatchi & Saatchi and worked with former CEO Mike Ullman, who has returned to the role.

• Google searches predict market moves: The volume of Google searches for finance-related terms may predict moves in markets, research suggests. As the search volume on generic terms such as "debt", "portfolio" and "stocks" fell, the Dow Jones average tended to go up - and vice versa. An investment strategy based on these search volume data between 2004 and 2011 would have made a profit of 326%. The analysis in Scientific Reports was based on publicly available data from the Google Trends service. It joins an ever-increasing array of "big data" studies in which aggregated data are beginning to give striking insights into behaviour. Web searches are increasingly integral to our decision-making, and because of its dominance among search engines, Google data have already proven their worth in big-data studies. Google's own researchers found that searches can track the spread of influenza and more recently showed that they "predict the present" with regard to economic indicators. In 2011, the Bank of England determined that searches for relevant terms could even predict house prices. The new report gives hints that straightforward analysis of interest in general finance-related terms can be a good predictor of overall market health. "We were intrigued by the idea that stock market data serves as a really large record of all the actions people take in the stock market, but don't necessarily tell us much about how people decided to take those actions," said Suzy Moat of University College London, co-author of the paper. "We wondered whether by looking at Google, we could get some insight into some early information-gathering stages of how people make decisions," she told BBC News.

• Spain's unemployment rate climbs to record high: Spain's unemployment rate rose to a record high of 27.2% in the first quarter of 2013, the Spanish National Institute of Statistics said Thursday. The figure represented an increase of 1.1 % from the previous quarter, as recession continues to take its toll on the debt-stricken nation. Francisco Carrizo, 37, a Venezuelan teacher from Madrid, told CNN that unemployment is at "preposterous levels" and Prime Minister Mariano Rajoy's center-right government is feeding the Spanish people a "bunch of lies." He said many of his students are considering emigrating for higher education to improve their job prospects, fueling fears that Spain is undergoing a "brain drain." In 2007, before the global economic crisis hit, Spain had 1.9 million people unemployed -- 8.6% of the active population. That figure has now risen to 6.2 million. Figures from Instituto Nacional de Estadística, Spain's national statistics office, showed unemployment among 16 to 24 year-olds is at 57.2%. Joblessness is higher among women than men. Carrizo -- who describes himself as a center-left supporter -- said: "I would like the government to be more honest and independent; and not submit to the markets. It seems to me that whatever Germany says, they do." Anti-austerity protesters are expected to march on the Spanish Parliament later Thursday in the capital, Madrid, as part of an organized movement to bring political change to the country. Political activist Albert Jiménez, 28, told CNN that people -- both young and old -- are increasingly turning to politics to voice their frustrations against a government "that is letting the country go to hell."

• George Soros Buys Into J.C. Penney: George Soros apparently sees opportunity at the ailing J.C. Penney Co. Inc. Soros Fund Management bought 17.4 million shares of Penney’s, giving the prominent liberal philanthropist and investor a 7.9 percent stake, according to a filing with the Securities and Exchange Commission. Soros, who famously rocked the Bank of England by shorting the pound in 1992, was greeted heartily by other Penney’s investors. Shares of the company shot up 7.2 percent to $16.33 in after-hours trading. At that price, Soros’ stake is worth $283.9 million. “[The investment] shows his confidence in the company,” said Walter Loeb, retail consultant. “It also shows that he thinks the return to a more promotional attitude will generate enough sales to return the company to profitability.” Penney’s lost nearly $1 billion last year and 25 percent of its sales as former chief executive officer Ron Johnson tried to eliminate coupons and remake the store into a series of shops-in-shop.

• S&P Cuts Li & Fung Credit Rating: Weakness in Li & Fung’s U.S. division and its distribution business led Standard & Poor’s to cut the sourcing giant’s credit rating one notch to “BBB-plus” — a still solid investment-grade ranking. “Li & Fung faced greater challenges while executing its expansion strategy than it had expected, especially amid a weak global economy in the past two years,” S&P said.  LF USA is being reworked under the leadership of president Dow Peter Famulak, who took the reins from Rick Darling late last year. “The performance of LF USA is likely to remain weak in 2013,” S&P said. “However, growth at the company’s Europe and Asia operations, fueled by acquisitions, will likely offset the soft performance of LF USA.” Li & Fung’s credit rating has a stable outlook, which S&P said reflects its believe that the company “will lower the pace of acquisitions, restore its profitability and focus on turning around its distribution business.”

• H&M Charity Gets Donation of $75.4 Million: Swedish high street giant Hennes & Mauritz AB said its founders would donate 500 million Swedish kronor, or $75.4 million at current exchange, to the H&M Conscious Foundation. The donation by the family of H&M board chairman Stefan Persson — son of H&M founder Erling Persson and father of chief executive officer Karl-Johan Persson — is earmarked in particular for initiatives promoting children’s health and right to education, among UN Millennium Development Goals. The fast-fashion retailer established its foundation in 2007 to mark its 60th anniversary. To date, it has supported such charities as Hand in Hand, which combats poverty in India through microloans and training for female entrepreneurs. In future, the foundation plans to support WaterAid, which provides the poor with access to clean water and hygiene, along with disaster relief efforts. Karl-Johan Persson said the donation would “enable the H&M Conscious Foundation to carry out more initiatives on a greater scale in order to change and improve the lives of people in countries where H&M is present.”