News As We Read- 30th July'13

Thought of the Day:

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Following made the Headlines:

India:

• All ‘Concerns’ Put to Rest, Govt Clears Runway for Jet-Etihad: The Foreign Investment Promotion Board (FIPB) on Monday cleared the 2,058-crore Jet Airways-Etihad deal with some riders, sending out a strong signal that the government was determined to be flexible in order to encourage foreign investment. Jet Airways had submitted a modified shareholder agreement on July 25 that appeared to address all concerns raised by various ministries and stock market watchdog Sebi. The Indian authorities were concerned that the original agreement signed in April this year would result in the Abu Dhabi-based carrier acquiring effective control of India’s largest airline by revenues, though it formally had only a 24% equity stake. “The proposal has been cleared with some conditions,” said Arvind Mayaram, secretary, department of economic affairs, and chairman of the inter-ministerial body that vets foreign direct investment proposals. The proposed investment by Etihad is the largest foreign investment in 2013. “There are some minor changes to be made in the language, but otherwise they (FIPB) have cleared it,” Civil Aviation Minister Ajit Singh told reporters, adding that the revised proposal had addressed the concerns of Sebi and his ministry. The riders stipulated by FIPB relate to applicability of Indian law to shareholder disputes. All disputes between shareholders or on interpretation of the shareholder’s agreement, FIPB has said, will have to be adjudicated under Indian law as opposed to English law proposed in the revised agreement. But arbitration on any other issue can be carried out under English law. Also, the 9% stake owned by Tailwinds, a holding company, in Jet will have to be directly owned by Jet Chairman Naresh Goyal. After the deal is ratified, Goyal will hold 51% in the airline, Etihad will have 24% while the balance 25% will be held by the public.

• For India & Pak, Fabric of Peace no More a Luxury: Pakistan is emerging as a big market for Indian designers, with a growing appetite for India-made Sherwanis and Salwars among the country’s rich. Top Indian fashion designers, including JJ Valaya, Rohit Bal, Rocky S and Rina Dhaka, among others, are flocking to Pakistani cities and other designers and luxury brands are exploring opportunities, with demand picking up across the border. “Fashion does not understand political boundaries,” said Valaya, who has done a few standalone shows in Pakistan. The designer, who used to get a significant number of footfalls from Pakistani clients at his store in Dubai, has a tie-up with a cloth mill there for premium designer fabric under his own label. Mumbai-based Kimaya Fashions, which has investments from private equity firm Franklin Templeton, has struck a master franchise deal with Lahore-based fashion retailer Arshadsons to open multibrand stores in Pakistan. As part of the deal, Arshadsons plans to open at least six ‘Karmik’ stores in cities such as Lahore, Karachi and Islamabad over the next three years, followed by smaller towns. Karmik is an affordable designer wear format of Kimaya Fashions. Pakistanis are sophisticated customers and their choices and sensibilities are similar to that of Indians, said designer Raghvendra Rathore. “If you take the politics away, there are a lot of cultural and social similarities.” Known for his ‘bandgala’ suits, Rathore gets a lot of private clients from Pakistan at his stores in India. “There has been a lot of exchange between the two nations in the fields of music and art, and fashion is a natural progression in this direction,” he said. Rathore’s bandgalas and Valaya’s creations have similarities with the Pakistani national dress, the Sherwani — a long coat, which was developed during the British Raj as a fusion of the Salwar Kameez and the British frock coat. A traditional dress of the Muslim aristocracy, it also found takers among Rajput leaders and over the years has become a ‘must wear’ at Indian weddings.

• Post-Recall Fiasco, GM Drives Out Top Execs: Just a week after the Indian subsidiary of General Motors announced the recall of its workhorse Tavera multi-utility vehicle, the automobile giant has expelled top officials, including its chief financial officer and R&D executives, for “violating company policies”. The dragnet may expand further as many others are under the scanner. The recall in India created ripples at GM’s Detroit headquarters, with 20-25 senior officials reportedly handed out pink slips. ET has learnt that Chief Financial Officer Anil Mehrotra and head of global engine development Sam Winegarden have been asked to leave while the likes of Lavern Sula, Sheila Sarver and Ravi Desai, who were part of the GM India Technical Centre, are under the scanner for failing to comply with regulations. Greg Martin, spokesperson of GM at the Detroit headquarters, declined to comment on internal personnel matters but told ET: “General Motors’ investigation into our recall of the Chevrolet Tavera, which is built and sold exclusively in India, identified violations of company policy. GM subsequently dismissed several employees. We take these matters very seriously and hold our leaders and employees to high standards.”

• At $10.9 B, Tata is India’s Top Brand: Tata tops the list in the first edition of Interbrand’s ‘Best Indian Brands’ study, with a valuation of $10.9 billion. It is followed by Reliance at $6.24 billion and Airtel at $6.22 billion. Tata also happens to be the brand that Jez Frampton, the global chief executive of Interbrand, is most familiar with, given that Tetley is his preferred brand of tea and he drives a Range Rover. “Technically, I drive an Indian car,” he says. Frampton believes Indian firms — even those like Tata, known best overseas for global acquisitions like Jaguar Land Rover and Tetley — would do well to focus on building their master brands. This will help Indian companies when they decide to roll out other products and services, or when they choose to become global brands. “A strong master brand creates awareness that you exist, mean something and add value to a purchase,” he says. ‘Best Indian Brands’ is the first local iteration of Interbrand’s ‘Best Global Brands’ study, a highly anticipated measure of brand valuation. Frampton and Interbrand India’s MD Ashish Mishra intend to make it a benchmark to track the health and finances of India’s leading brands.

• Kiran Kumar Grandhi to Replace Rao as GMR MD: The board of Bangalore-based infrastructure developer GMR Infrastructure on Monday approved a reshuffle of the company’s top deck, including the appointment of group promoter G M Rao’s youngest son, Kiran Kumar Grandhi, as managing director. 38-year-old Grandhi replaces BVN Rao, who will continue as director on the company’s board, GMR said in a statement to the Bombay Stock Exchange. Within hours of the announcement, the company’s stock touched an all time low of 14.50 and close the day at 14.75, down 5.14% over the previous close on the BSE. “Kiran Kumar Grandhi has taken over as corporate chairman with responsibility for group finance and corporate strategic planning department functions. By virtue of this responsibility, he has now become managing director of GMR Infrastructure,” the company said in its statement to Bombay Stock Exchange. Grandhi has experience in leading projects and businesses in sectors such as airports and highways. “The board has also approved the resignation of BVN Rao as managing director with effect from July 27. He will continue as a director on the board of directors of the company,” the statement said. Both Grandhi and Rao will report to group chairman GM Rao. Rao will take over as business chairman for urban infrastructure and highways, with responsibilities for highways, EPC division, SEZ and GMR Varalakshmi Foundation. He will also be responsible for corporate affairs, legal and procurement for the company, which were handled by Grandhi.

International:

• Canada’s Hudson’s Bay to Buy Saks for $2.4 b: Hudson's Bay said on Monday it would buy Saks in a $2.4 billion deal that would add prime real estate to its portfolio and bring the luxury chain to its home market of Canada. HBC, which operates Lord & Taylor in the US and Hudson Bay in Canada, is offering $16 per share, a 30% premium over levels in May right before media reports emerged Saks had put itself up for sale. Shares of Saks rose 3.4%to $15.87 in premarket trading. HBC is paying $2.9 billion in cash, including the assumption of Saks' debt. There is a 40-day "go-shop" period when Saks can seek better bids, but the company said it did not expect to get any. It anticipates the deal will close by year-end. Saks, famous for its iconic Fifth Avenue flagship store in Manhattan, will operate separately within HBC and have its own merchandising, marketing and store operations teams. It will also keep its New York headquarters. HBC plans to bring Saks department stores and outlet stores into Canada by converting some of its own locations. HBC chief executive officer Richard Baker said on a conference call that he saw a potential for up to seven Saks department stores and 25 Off Fifth outlets in Canada, and noted the company would open them as quickly as possible. That will bring it into competition with retailers like the high-end Holt Renfrew chain as well as Nordstrom, which is opening its first Canadian stores in 2014. The combined company would have flagship stores in cities such as New York, Montreal and Toronto, and HBC said it would consider creating a real estate investment trust to benefit from that portfolio. After US department store chain Dillard’s announced plans in 2011 to form a REIT, its shares soared. Saks' Fifth Avenue flagship, in operation since 1924, generates about $600 million in sales a year, and by some estimates, the building is worth $1 billion. “The Fifth Avenue store is a gem and everything else is second to that,” said independent retail analyst Walter Loeb. “Many of the stores are not as productive.”

• Absolute Radio bought by Bauer Media: The media company behind some of the UK's best-known magazines has bought Absolute Radio in a deal reported to be worth up to £25m. Bauer Media, which has publications such as Heat and Bella in its stable, already owns several other radio stations, including Kiss and Magic. Absolute Radio, which evolved out of Virgin Radio, has Frank Skinner and Christian O'Connell among its DJs. Absolute was first put on the market in 2011 by its owners, Times of India. Paul Keenan, the chief executive of Bauer Media UK said he had the "greatest respect for what it has achieved." "We are excited about welcoming this contemporary music radio business with renowned digital assets in Bauer," he added. Donnach O'Driscoll, chief executive of Absolute Radio, said: "Bauer Media UK is a business that really cares about building famous media and entertainment brands and music radio in particular." "This brand will continue to thrive as part of the Bauer group," he said. The deal is subject to regulatory approval.

• BMW launch first electric car: BMW have launched their first-ever electric production vehicle. The new model was launched simultaneously around the world with unveilings in London, New York and Beijing. The BBC's Theo Leggett had a look around the vehicle, which has been designed for easy access.

• Agent Provocateur Inks Deal With Inter Parfums: Agent Provocateur is turning up the heat on its fragrance business. The British lingerie brand has signed a ten-and-a-half year exclusive, worldwide licensing deal with Inter Parfums to create, produce and distribute perfumes and related products. The agreement starts on Aug. 1 and runs through Dec. 31, 2023. The first fragrance under the new partnership will launch in 2014, and Agent Provocateur’s chief executive Garry Hogarth said a new bottle shape is already in the works. “We know from Jimmy Choo that Inter Parfums has done a great job, and we like the fact that they are big — but not huge. We knew they would look after us,” Hogarth said in a telephone interview. “They were my first choice, and there is already a great energy between the two teams that are working together,” he added. Hogarth declined to talk about sales projections or the current size of the Agent Provocateur fragrance business, but he said the latter is “not significant. The fragrance does really well in our stores, but it needs a big push under Inter Parfums." Jean Madar, chairman and chief executive of Inter Parfums, said: “The connection between scent and sensuality is very strong, and we look forward to building on the success that Agent Provocateur has already had in leveraging this marriage. “Accordingly, we are in the process of creating a new fragrance portfolio for the brand, which we plan to launch with the introduction of a new signature scent next year."

• Monnier Frères Launching in North America: Monnier Frères, the fashion and luxury accessories Web site launched by two French brothers in 2011, plans to take on North America in September. The site carries more than 100 brands ranging from Burberry, Marni, Valextra and Vanessa Bruno to Kenneth Jay Lane, Shourouk and Ray-Ban. It’s aiming for the high-end shopper with the breadth and depth of its offering — and exclusive styles. Indeed, the only accessories categories that founders Jean and Guillaume Monnier do not sell are footwear and high-end jewelry. The site offers 24-hour shipping anywhere in Europe and 30-day returns, and plans to replicate that service in the U.S. with similar delivery times to major cities such as New York, Boston and Philadelphia. There are local Web sites in the U.K., Germany, Italy and France, and the average checkout is 600 euros, or $786.

• Judith & Charles Steps Up Expansion: The upscale career women’s label Judith & Charles is making its bid to become Canada’s next great import into the global market. Known for its understated designs and tailoring, the Montreal-based clothing line and retail company has had an impressive run over the last three years, opening nine new stores across Canada and one in New York City under the direction of husband-and-wife founders Charles Le Pierrès and Judith Richardson. Now Qatar and China are the next stops in the privately owned company’s expansion plans. A deal with Qatar retail giant Ali Bin Ali will see a Judith & Charles store open in Doha in 2014, with potential openings to follow in Dubai and the United Arab Emirates. Judith & Charles will also open its first retail store in Guangzhou, China in September, followed by nine other locations across the country over the next three years. Given China’s population of 1.35 billion, Le Pierrès expects each store to do $1 million in sales a year. “Our brand may not be recognized worldwide yet. But I believe we have the potential to become as well known as a Club Monaco or Lululemon,” said Le Pierrès, who is the brand’s president. “We want to do this right and not expand too quickly. We’ll also continue to make and ship our clothes from Canada as we move forward. But we see enormous potential for us overseas and in the U.S.,” Le Pierrès said.