Yamaha may shut shop if numbers don’t improve

Motorcycle Major Running Into Losses & Sales South-bound; Jan Sales Dip To 9,904 Units JAPANESE motorcycle major Yamaha may be lookingto shutting operations in India if its turnaround indicators do not work out as planned. According to an internal circular, dated February 12, 2007, and signed by Yamaha Motor India MD T Ishikawa—a copy of which is with ET—”the top management is closely monitoring” its new “marketing strategy and productivity of manufacturing” indicators. “If either does not go as intended the management is ready to shut down the operation here,” the notice says. When contacted on email, Yamaha Motor India director, sales and marketing Takahiro Maeda refused to comment on the issue. Sources in the auto industry say in the past three-four months, Yamaha has lost several senior managers including VP finance Sunil Vadhera, marketing head Atul Gupta, and head of manufacturing Rajiv Agrawal. Part of the reason for the attrition, say sources, is the company’s south-bound sales graph and uncertainty over its future. A Yamaha official confirmed the exits and said that it was a “personal choice” on the part of these executives. In January, 2007, Yamaha’s sales were 9,904 units, which officials say is among the lowest it has ever hit in India. Last January, its sales were 15,105 units. The January 2007 sales are a sharp 50% drop from the December 2006 tally of 18,136 units. According to Yamaha officials, the company is in an uncomfortable situation financially although its parent continues to do very well globally. “The company has gone into losses and sales have been hit very badly,” said a Yamaha India official. “But the management is trying out new products and marketing strategies to revive its sales.” The circular also refers to the company’s financial health, saying: “It is a matter of great distress that the financial condition of the company is further deteriorating and accumulated losses are continuously increasing.” The company has accumulated losses worth Rs 1,000 crore since 2001. It has around 2,000 staff on its rolls. Yamaha India officials have indicated that the company is planning to invest nearly Rs 1,600 crore over the next five years. The Japanese company bought over partner Escort’s stake in the two-wheeler maker in 2001 and turned its Indian operations into a 100% subsidiary. It’s not clear how Yamaha’s dipping fortunes will affect its joint venture talks with Bajaj Auto which, sources say, are proceeding as planned. Although, there is no confirmation on this, sources say that the JV, if it works out, will be a separate venture from both Bajaj Auto and Yamaha Motor India. courtesy:economictimes For more on Retail India visit www.retailindia.tv

Tourism industry is booming

India needs further improvements in aviation and tourism infrastructure, if it wants to sustain the stellar growth in the country’s tourism industry in recent years, says a study by Pacific Asia Travel Association (PATA).The study, Total Tourism India, points to the need for expanding airport capacity, further liberalise the airline policy, increase the hotel accomodation inventory with focus on mid-market and economy segments, reduce and simplify taxation, cut-out bureaucratic red tape, boost availability of skilled manpower and streamline visa processing.While complementing the low cost carriers for giving a fillip to domestic tourism in the country, the report points out that the LCC model in India remains vulnerable due to the costly operating environment, high airport charges and low level of internet penetration. The airport infrastructure too needs to be upgraded with more private sector participation.The study finds that number of domestic trips reached an all time high of 430 million in 2006, up 13% over the last one year, riding on the boom in low cost air travel.International outbound travel by Indians touched 8.3 million in 2006, as against 7.2million in 2005. Close to 3 million Indians went to Asia Pacific destinations, making India the fourth largest source market behind China, Japan and Korea. This is expected to touch 4.3 million by 2009, the study said. Foreign tourist arrivals into the country was pegged at around 4.2 million in 2006, as against 3.9 million in 2005.Though there has been rapid increase in airline seat capacity over the last one year, PATA report pointed out that the current policy of not allowing Indian carriers to operate internationally before five years of domestic operations is constraining the expansion of international air capacity operating in and out of the country.On the issue of expansion of hotel room inventory, the report said that the country needs to focus on developing broader range of three and four-star accomodation. According to WTTC Tourism Satellite Accounts, the country needs to identify an additional 2.7 million skilled tourism related staff to support the projected growth in the travel industry.The report forecasts that visitor exports - or amount of money spend by foreign travellers in India - is expected to come down from 3.3% of total tourism income in 2006 to 1.3% in 2016.
courtesy:economictimes
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Shoppers' Stop, HyperCITY sign MoU with UK's Home Retail

Shoppers’ Stop and HyperCITY Retail, the two retail ventures of K Raheja group on Friday signed a memorandum of understanding with UK’s leading retail chain Home Retail group to develop the Argos retail format stores in India. Argos is among the leading general merchandise retailers in the UK and Ireland which operates a unique format of catalogue stores, along with home shopping and online retail. ET on January 23 had reported that K Raheja group was close to signing the deal with Argos. The stores and the catalogue shall be branded HyperCITY-Argos and shall be operated by an SPV jointly owned by Shoppers’ Stop and HyperCITY Retail. The business would be initially launched in the Mumbai region and will be rolled out nationally in the long term. Shoppers Stop MD BS Nagesh said, “This unique retail format of Argos is particularly suited to the urban, densely populated areas, where retail space is expensive and limited in supply. Home Retail Group has developed the capability to manage this unique and highly successful retail format very efficiently and through the franchise arrangement we shall jointly adapt this capability to the Indian environment.” Home Retail Group CEO Terry Duddy said, “We are always looking for opportunities that allow us to leverage our skills, sourcing scale and capabilities. We are therefore delighted to announce this tie-up that will enable us to evaluate the appeal of the Argos proposition to consumers in the emerging market of India.” Argos is a catalogue retailer and sells general merchandise and products for the home from over 670 stores throughout the UK and Republic of Ireland, online and over the telephone. In the last financial year, Argos sales topped £3.8 billion. Argos serves over 130 million customers a year through its stores and takes 4 million orders either online or over the phone.
Argos, which is owned by the Home Retail Group, is one among the many retailers in the UK who are eyeing the fast-growing Indian retail market. Currently, dominated by small chains and family-run stores, the retail market in India is estimated to be worth more than $300 billion.
The catalogue is a popular non-store format, which offers the convenience of studying the contents and then placing orders. Currently, UK’s largest retailer, Tesco is scouting for a partner after talks with Bharti broke down late last year. Bharti signed a deal with Wal-Mart last month.
courtesy:economictimes
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AS Watson not to enter India until 51% retail FDI allowed

Hong Kong-based retailer AS Watson, part of Hutchison Whampoa, has said it won’t enter India unless the government allows 51% FDI in retail. The Li Ka shing-owned multi-brand retailer operates across segments, including health & beauty, food & grocery, electronics and airport retail. “We are waiting for FDI in retail to be allowed in India as we would like to hold at least 51% equity in our India operations. The franchisee route is not for us,” Watsons Personal Care MD Krish Iyer, who is on a India visit currently, told ET.
Mr Iyer, who joined AS Watson Group almost a year ago after quitting Piramyd Retail where he was the MD, was recruited to spearhead the India foray for the retailer which operates over 7,000 stores in 36 markets worldwide. He is currently heading Watsons, the personal care stores of AS Watson, and is based in Philippines.
The retail chain has been making plans for its India foray for about two years now. Current regulations in India allow 51% FDI in single-brand retail and 100% FDI in cash-and-carry retail format. It is expected that the government will soon allow 51% FDI in select multi-brand speciality segments like consumer electronics and sports goods.
The AS Watson Group has in its portfolio formats like Watsons Your Personal Store health & beauty stores, PARKnSHOP supermarket, TASTE food galleria, Great Food Hall, Gourmet boutique style fine food hall, Fortress electrical appliance stores, Watson’s Wine Cellar and Nuance-Watson airport duty free shops. ASW is also a major producer and distributor of water products and beverages in the region under the brand Watsons Water.
courtesy:economictimes
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Academic institution to study aspects of big retail

THOUGH Bharti has emphasised that the joint venture was on and it was in line with government policy, the role of Wal-Mart is not being played up, leading to speculation that the US multinational’s brand name may not be adopted by the JV. The February 12 communication to the DIPP mentions that Mr Singh wants the study to cover other aspects like impact on economic growth, prices, farmers, consumers and manufacturers. “Accordingly, the prime minister has desired that the DIPP may commission a study of the possible impact of large-scale retail operations, either by transnational supermarkets or major Indian business houses, on small-scale retailers and vendors,” says the PMO letter, a copy of which is available with ET. The PMO wants the study to be carried out by a reputed academic institution. “The time-frame for the completion of the study should be reasonable so that it can feed into policy making in the near future,” says the letter. The PMO move may mean that the suspense over Wal-Mart’s collaboration with Bharti may linger for some more time though the current joint venture plan is permitted under the FDI policy. The impact of the study ordered by the PMO on the plans of large domestic retailers is not clear. According to current government policy, nothing prevents domestic players from setting up a retail chain while 100% FDI is allowed in wholesale trade—cash and carry trade. No FDI is allowed in retail stores which sell to the end consumer. The DIPP had sought details from Bharti on the proposed tie-up with Wal-Mart and reported that the plan does not violate current policy. The DIPP letter mainly recounts existing policy on retail. The PMO letter points out that the DIPP’s explanation does not address the question posed by Sonia Gandhi. “After perusal of the comments sent by the DIPP, the prime minister has observed that the AICC president had raised a specific issue in her letter, referring to the need for a careful study of the likely impact of the entry into retail trade of transnational supermarkets on the livelihood security of small-scale retailers and vendors, and that the DIPP has not responded to the issue in its comments,” says the PMO communication. “The terms of reference for the study should include an impact assessment with the possible effects on economic growth, prices, small-scale retailers and vendors, farmers, consumers and manufacturers,” the PMO letter says. Studies in the past had favoured FDI in retail though a section of small retailers has been opposing policy liberalisation. A study by ICRIER, submitted to the Department of Consumer Affairs in 2005, supported gradual opening up of FDI in retail. The benefits to consumers and employment generation for semiskilled population will favour retail FDI, the study had said. Last year, PricewaterhouseCoopers had come out with a study that emphasised on the need for encouraging organised retail. Wal-Mart currently sources $625 million from India while it sources around $9 billion from China, where FDI in retail is permitted and where Wal-Mart has over 50 stores. The current move by the PMO holds tremendous political significance since the Left has also expressed concerns over the fate of small retailers. The impending Assembly elections in Uttar Pradesh are yet another factor. courtesy:economictimes For more on Retail India visit www.retailindia.tv

Big retail now comes under PMO lens

In a new twist to the controversy over retail FDI affecting mom & pop stores, the Prime Minister’s Office (PMO) has called for a study to assess the impact of large retailers—both domestic players and multinational giants like Wal-Mart—on small retailers. A number of Indian companies, including Reliance Retail, Bharti, Aditya Birla Group, Tata Group, Future Group and Subhiksha, have announced plans or are already in the process of rolling out a nation-wide retail network. The study should be completed quickly so that inputs are available for “policy-making in the near future”, says a communication from the PMO to the Department of Industrial Policy & Promotion (DIPP). The PMO has also commented that DIPP’s view that the proposed Wal-Mart tie-up with Bharti is within the existing policy framework does not address Congress president Sonia Gandhi’s concern over the possibility of small retailers getting trampled by giant retail formats. The debate thus seems to be veering towards ‘big retail Vs small retail’ rather than being restricted to FDI in retail. Speaking to reporters after his interaction with Wal-Mart vice-chairman Michael Duke on Friday, commerce minister Kamal Nath said there is no policy review on the anvil. “We have to see if the existing retail sector can deal with the demand from the 25-million-strong middle class. Whatever is in conformity with the existing FDI policy will be allowed. The impact on small stores has always been our concern,” he said. “I don’t think I am affected as Wal-Mart is in the back end. We will proceed with our plans unless the government specifically asks us to stop,” said Bharti Group chairman Sunil Mittal who accompanied Mr Duke. The communication from the PMO was sent on February 12 and is signed by Jawed Usmani, joint secretary in the PMO. It is in response to a letter from the DIPP, dated February 7, which says the Bharti Group’s proposed tie-up with Wal-Mart is allowed by existing policy. The two partners have preferred to maintain a low profile following Sonia Gandhi’s letter to Prime Minister Manmohan Singh, seeking ‘examination’ of the impact of ‘transnational supermarkets’ on livelihood security of small retailers, especially vendors hawking items like fruit and vegetables.
courtesy:economictimes
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Wal-Mart, Bharti close to signing deal

Bharti Enterprises is close to signing the cash & carry (wholesale) joint-venture agreement with Wal-Mart. “We are working at the legal agreement. We hope the deal will happen in the next few weeks,” Bharti chairman Sunil Mittal told mediapersons. It is learnt that the Wal-Mart board will give approval to the Bharti deal on March 7. This could, however, not be confirmed. Mr Mittal, his brother Rajan Mittal and Wal-Mart head of international business Michael Duke met Montek Singh Ahluwalia, Deputy Chairman of the Planning Commission to apprise him of the US retailer’s India plans. Asked if the Bharti-Wal-Mart cash & carry would sell products at a preferential rate to Bharti’s front-end retail business, Mr Mittal said, “There are no such plans. Cash & carry and retail are different businesses. Our wholesale venture would sell at par to all interested retailers.” Asked about the agenda of Mr Duke’s meeting with Mr Ahluwalia, Mr Mittal said, “He was here just to apprise the Planning Commission of Wal-Mart’s plans in the country.” Responding to media queries on whether Wal-Mart’s proposed plans for an entry into India had met any regulatory hurdles, Mr Mittal said, “All plans fall into the existing regulatory framework. There’s no question of a hurdle.” Meanwhile, the two companies are also in preliminary stages of discussions for technical tie-up for front-end retail. “It’s too early to comment on detailed modalities of the arrangement. We will leverage the Wal-Mart technology and best practices in our retail business.” Asked if Bharti would use the Wal-Mart name for its retail stores, Mr Mittal said, “Such a decision will be based on consumer research which we are currently conducting,” Mr Mittal said.Commerce and industry minister Kamal Nath has asked Wal-Mart to increase its procurement from India by at least 25%. Speaking to mediapersons after his meeting with Wal-Mart vice-chairman Michael Duke, Mr Nath said, “I have urged Wal-Mart to increase sourcing from India. At present, the US retailer buys $600 million worth of goods from India annually. We want it to grow by at least 25%.” Pointing out to the fact that there was a huge scope of growth in India’s sup-plies to the retail chain, the minister said that Wal-Mart’s annual procurement from China was $9 billion.
courtesy:economictimes
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On-board entertainment & fast food in the offing

Railway Minister Lalu Prasad is likely to roll out innovative measures in the rail budget on February 26. That may include on-board entertainment and fast food facilities along with other amenities as also strategies for energy conservation and safety steps in the wake of the Samjhauta train blasts recently. On the lines of entertainment provided by Airlines, Prasad may announce launching of this scheme begining with Shatabdi Trains, Rail Bhawan sources said.
The Ministry, they said, had already received bids from a number of companies for this, including Reliance Infocomm and Adlabs, Tatas and Sahara TV. The bids are yet to be finalised.
Facing a daunting task of providing safe journey to its passengers in the wake of recent Delhi-Atari train link blasts near Panipat, the Railway Minister may come out with a new comprehensive plan to deal with situation taking also into account the growing threats from naxals and militants in several parts of the country. Prasad may also outline srategies for greater coordination between states and Railways to deal with the situation. Travelling could be made pleasant with Railways deciding to rope in fast food chains and install vending machines for beverages and food items.
courtesy:economictimes.com
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Bharti, Wal-Mart JV on track, says Sunil Mittal

Despite the retail controversy, Bharti Enterprises announced that its proposed joint venture with Wal-Mart was on track and well within the country’s regulatory framework.
“The JV on retail has been finalised and legal agreements are being worked out...We expect to sign an agreement in the coming weeks,’’ Bharti Enterprises chairman Sunil Bharti Mittal told reporters here after meeting Planning Commission deputy chairman Montek Singh Ahluwalia, along with visiting Wal-Mart vice chairman Mike Duke. Commerce minister Kamal Nath said after meeting Duke that there was no plan to allow foreign direct investment in multi-brand retailing. There would be no review of the existing FDI policy regarding wholesale cash-and-carry sectors, he added. The development comes close on the heels of UPA chairperson Sonia Gandhi writing to the prime minister expressing concern about “the Wal-Mart effect’’ on domestic retailers, and the need to study the impact of transnational supermarkets on the “livelihood security’’ of small-store owners. FDI in multi-brand retail is not allowed as per government policy, but 100% overseas investment is allowed in cash-and-carry (wholesale) business. Mittal said Bharti’s JV with Wal-Mart would be for cashand-carry and back-end linkages and asserted that it was within policy guidelines. TNN
courtesy:economictimes
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Nath braves PMO's caution on retail

The policy spat in the government over allowing large players in the retailing arena has escalated, with the commerce and industry ministry digging in its heels over the move even in the face of a fresh caution sign hoisted by PMO. "There is no review of cash-and-carry (wholesale) business," commerce minister Kamal Nath said after meeting Wal-Mart Stores Inc vice-chairman Mike Duke and its Indian partner, Bharti Group chairman Sunil Mittal. Nath was responding to a flurry of queries after a fortuitous leak of a PMO letter to the department of industrial policy and promotion (DIPP), reiterating concerns about the repercussions of the entry into retail of transnational supermarkets and large Indian corporate houses on small-scale retailers, vendors, farmers, consumers and on prices. The letter stressed that the February 7 response from the industry department had failed to address the issues raised by Congress chief Sonia Gandhi. Importantly, concerns about the proposed Wal-Mart-Bharti tie-up have been widely seen as the trigger for the sudden resistance to a policy measure which has been in place for years. Sonia, in her letter in early January, had expressly mentioned Wal-Mart’s plans for India.
courtesy:economictimes
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Get ready to pay more for rice, pulses

Your VAT (value-added tax) burden is set to rise over with the states and Centre on Thursday agreeing to raise the basic duty rate from 4% to 6% by April 2009. The proposal, which has been cleared both by the Centre, and was discussed by the Union cabinet on Thursday, will see VAT on a host of products ranging from branded bread, paddy, wheat, rice, pulses, edible oils and inputs like bulk drugs, ores and minerals rise to 5% from From April 1 2008, will go up again 6% from April 2009. An increase in the tax incidence on intermediates and raw materials is also expected to result in higher cost of the final product since manufacturers are likely to pass the burden to consumers. But smokers may start feeling the pinch from this year itself, with states starting to levy 12.5% VAT on tobacco products from April 1 this year. A similar tax treatment awaits textiles products though a large number of items like hosiery, cotton and silk fabrics facing 4% VAT. There will also be a higher tax burden for the central government as all inter-state purchases by it will now attract the applicable VAT rate instead of the concessional 4% tax that it pays at present. The move is expected to help states generate an additional Rs 1,500 crore revenue. While the move was originally aimed at enabling states to do away with entry tax and octroi - which generate around Rs 10,000 crore for the states - it is not clear if the original intent will be followed or the hike in Vat rates will turn into another revenue raising exercise. In a bid to maintain a simple Vat structure, the Centre is against any move to introduce a new tax rate and had instead suggested that the items attracting 4% rate be moved to 6% in a phased manner.
The increase in the basic Vat rate had also been proposed as a means to reduce the Centre's compensation burden for the phase out of the 4% central sales tax (CST) by states, which is set to kick in from April. While CST is levied by the Centre, the entire revenue is passed on to states. A removal of CST was part of the scheme for full implementation of Vat, a precursor to a common goods and service tax by both the Centre and states.
While the states were claiming large compensation for phasing out of CST - which generated Rs 18,000 crore in 2005-06 and is projected to grow 18% this fiscal - finance minister P Chidambaram is expected to provide for a compensation package of Rs 2,500 crore for 2007-08. But the more progressive states, which have already started the reduction of CST will not be entitled to any compensation. The key element of the compensation package - the power to allow states to levy taxes on 77 services - is proving to be the most contentious issue with no agreement on the list of services. As an interim measures, which will continue between April 2007 and March 2009, the Centre will pass on the revenue realised from tax on 33 existing services to states. But given the difference in the consumption pattern across states, there is agreement on the list of services. In any case, states are not willing to accept the list of 44 new services, which they will be able to tax once the necessary amendments have been carried out. The list of new services includes those like legal, education and health.
courtesy:economictimes
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FM may slash import duty on edible oils, metals

The government appears set to slash import duty on base metals, soya oil and palm oil in the budget in a bid to tame inflation, which dipped marginally to 6.63% during the week-ended February 10. With pulses, wheat and onions raising political uproar, the government is also likely to extend the ban on wheat and pulses export till March 2008, besides allowing zero duty import of the commodities as part of the strategy to augment domestic supply and check further price rise. Sources said the move to extend the ban on export of pulses and allowing zero duty import of wheat was discussed by the cabinet committee on prices, while a reduction in the import duty on soya oil by 10% and that on crude and refined palm oil by 5% each has been endorsed by a committee of secretaries (CoS) earlier this month. The government is also likely to import 2 lakh tonnes of pulses to augment supplies. Between April and December 2006, India, which is a net importer of pulses, has already imported 16.6 lakh tonnes of pulses estimated to be worth Rs 2,600 crore, 19% higher than the 14.05 lakh tonnes imported during the corresponding period last year.
courtesy:economictimes
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Bharti, Wal-Mart finalise retail JV

Despite the controversy on retail, Bharti Enterprises announced that its proposed joint venture with Wal-Mart was on track and well within the country's regulatory framework. "The JV on retail has been finalised and legal agreements are being worked out... We expect to sign an agreement in the coming weeks," Bharti Enterprises chairman Sunil Bharti Mittal said after meeting planning commission deputy chairman Montek Singh Ahluwalia, along with visiting Wal-Mart vice chairman Mike Duke. Significantly, minister of commerce and industry Kamal Nath said after meeting Duke on Friday that there was no plan to allow foreign direct investment in multi-brand retailing. He added there would no review of existing FDI policy regarding wholesale cash-and-carry sectors. The development comes close on the heels of UPA chairperson Sonia Gandhi writing to the PM expressing concern about "the Wal-Mart effect" on domestic retailers, and the need to study the impact of transnational supermarkets on the "livelihood security" of small-store owners. Foreign direct investment (FDI) in multi-brand retail is not allowed as per government policy, but 100% overseas investment is allowed in cash-and-carry (wholesale) business. Mittal added Bharti's JV agreement with Wal-Mart would be for cash-and-carry and back-end linkages and asserted that it was within policy guidelines. "Wal-Mart is going to apply for a joint venture, only in the area where policy exists," he said. Bharti, which recently announced an investment of $2.5 billion in the front-end of retail operations, announced that it would partner the small store-owners through a franchise route. He said: "Bharti Retail will not get a preferential treatment from the JV, as it will supply to the kirana stores". Moreover, after meeting Wal-mart executives, Union agriculture minister, Sharad Pawar said the expertise of Wal-Mart in the area of supply chain will definitely be useful for Bharti to set up their own network. Pawar said, on the face of it, it looked like that under the contract with Bharti, farmers would be able to sell their produce at a better remunerative price. Replying to a query, Pawar made it clear that differences among political parties were limited to permitting FDI in the retail sector and not in outsourcing of agricultural produce.
courtesy:economictimes
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McDonald’s to adopt franchise models

With a view to penetrate deeper into India’s growing food and beverages segment, fast food chain McDonald’s is considering adopting franchise model in its North India operations by 2008. “We are studying the franchising sector in India to identify the right kind of people and opportunities suitable for a business model like McDonald’s and hope to launch franchise programme by 2008,” Connaught Plaza Restaurants MD Vikram Bakshi said. Currently, in its North India operations McDonald’s has 61 outlets, which are all company owned, run by a 50:50 joint venture between McDonald’s International and Connaught Plaza Restaurants. The company plans to open another 25 joints in this year and invest Rs 400 crore over the next three years. “We would invest Rs 400 crore in next three years to increase presence in the smaller towns and cities and are looking at doubling our sales every three years,” Bakshi said.

courtesy:economictimes

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Nokia to launch N 95F music phone next month

Nokia on Thursday said it will launch its much-awaited N series music phone 'N 95F' within next month for its high-end customers in India. Besides, it will also unveil three models of E series phones within next two to three months. "We are soon coming out with our 'N 95' phone within a month. In addition to it, we would also introduce Enterprise Series phone such as 'E 61', 'E 65' and 'E 90' during next couple of months in India," Nokia, director (sales), Sunil Dutt said.

Godrej Appliances to launch 25 AC models

Godrej Appliances is planning to introduce more than 25 models in air conditioners with focus on split ACs. The split ACs will account for 65% its AC business. Product group head Sanjeev Bakshi said the company is hoping to sell 1.5 lakh ACs in the current season.
courtesy:economictimes
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SGS plans to open retail outlets in two years

Mumbai-based SGS Silk Mills Private Limited plans to open retail outlets across the country in the next two years, its managing director G D Rathi said on Thursday. He told reporters here that the company would have a single brand which would be marketed through all the retail outlets in India. With a Rs 70-crore turnover, the company has targeted mostly the middleclass customers of the country. Rathi said that SGS also supplies fabric to all the leading retail chains like Pantaloons and Shoppers’ Stop. He said that recently SGS International had been launched for manufacturing products in Thailand and Korea.
courtesy:economictimes
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Wal-Mart’s Duke gets a feel of Indian retail formats

EVEN AS its role in the joint venture with Indian telecom giant Bharti remains still unclear, a team of executives from US retail giant Wal Mart visited some stores in the commercial capital of Mumbai to get a sense of how the operations of various emerging retail formats are run in India. The team led by Wal Mart vice chairman Michael Duke also included Bharti Enterprises joint managing director Rajan Mittal. The group has visited malls as well as large format retail stores across the city including Inorbit, Big Bazaar and Food Bazaar of the Future Group. Hypercity CEO Andrew Livermore said, “It was a totally unexpected one and I went across and said ‘hello’ to him. Top retailers that ET spoke to were surprised at the hype surrounding the visit of the Wal Mart officials. “I am surprised by the hype created by the visit of the officials. Wal-Mart may be one of the largest retailers in the world but it is certainly not the best,” the CEO of a retail chain said. When contacted, Food Bazaar president Damodar Mall said: “I am unaware of his visit to our stores.” Industry sources however, said that it was a routine market visit to understand the peculiarities of the Indian market and also to understand the co-existence of traditional kirana stores and modern retail formats within the same vicinity. The joint venture of Bharti with Wal Mart had come under a cloud after Sonia Gandhi had shot a letter to the Prime Minister Manmohan Singh to take decisions on the opening up of foreign direct retail (FDI) in retail only after looking at the interest of smaller retailers who exist in the country. The local associations in Maharashtra led by the Federation of Associations of Maharashtra, an umbrella of all retailers in the state along with co-operative stores including Apna Bazaar, hawkers and trade unions are coming together to oppose the entry of Wal Mart and Indian major Reliance into the retail sector. The group feels that the government should study the social impact of multinationals and corporate giants’ entry into the retail sector.

courtesy:economictimes

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Pyramid Saimira to float Rs 200 bn SPV for malls, multiplexes

Chennai-based movie theatre chain Pyramid Saimira on Tuesday said it plans to partner in a Special Purpose Vehicle (SPV) to be formed with realty companies for establishing 200 malls with multiplexes at an outlay of about Rs 20,000 crore over the next four years.
The Board has approved investment in the form of capital into these SPVs based on the financial closure plan of the respective SPVs. According to initial estimates, these SPVs would create about 60 million square feet with an investment of Rs 20,000 crore spread over four years, Pyramid Saimira informed the Bombay Stock Exchange. The SPVs would set up about 100 malls with multiplexes in South India and another 100 malls in rest of India.
A related proposal in the form of investment of up to 50 per cent shareholding in the respective SPVs, but not below 26 per cent also found favour with the Board, it said. Pyramid would also raise $100 million through FCCBs and the Board has recommended the shareholders to approve the proposal in an EGM to be called for this purpose.
courtesy:economictimes
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Now, mom & pop align with Reliance tag

Your neighbourhood store may soon flaunt the Reliance tag. As part of its retail venture, Reliance’s new initiative aims at marrying the mom and pop stores with organised retail. If retailers are waking up to the phenomenon now, FMCG major Hindustan Lever Limited has already launched ‘Super Value’ concept wherein the mom and pop stores are rebranded as super value stores. The company is helping in revamping these stores. Reliance, which has already launched around 60 Reliance Fresh outlets in the country is now inviting small retailers as well as individuals to become a franchisee. “Reliance will revamp these outlets. But, they will be run by the small retailers on a revenue sharing model,” a senior Reliance executive told ET. The company will also encourage individuals who own land at strategic locations to opt for the franchisee. “While we are encouraging entrepreneurship, we are also open to buying out the store or taking it on lease,” he said. Reliance plans to go for the franchisee model in almost all product categories including cosmetics, jewellery, furnishing, watches, optical, luggage, books, toys, sporting goods amongst others. The first franchisee outlet in the non-food segment will be launched after two-three months. Reliance is mainly looking at outlets spread over 5000-20,000 square feet space. At a time when several big players such as Bharti-Walmart and Wadia group are set to enter retail sector, the move will give Reliance an edge-such tie-ups will provide ready infrastructure. On the other hand, it will also give small retailers an opportunity to upgrade their stores and also increase their businesses by stocking more brands. “We will invest in upgradation of these stores and also help these outlets stock newer and better brands and improve business,” he says. The franchisee outlets will house Reliance brands and also other premium brands. At present, Reliance operates Reliance Fresh outlets that sell fresh fruits and vegetables, staples, top-up grocery, dairy products in Hyderabad, Chennai, Ghaziabad, Jaipur, Faridabad, Noida and Gurgaon. These outlets also offer ‘Reliance Select’ its own brand of offering. courtesy:economictimes
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Biz discussions still on with Wal-Mart: Bharti

Bharti Enterprises, which has tied-up with Wal-Mart, on Friday said discussions are on over business arrangement with the US firm for their retail venture. "We are still discussing... We will come back to you with details at an appropriate time," Bharti Enterprises Joint Managing Director Rajan Bharti Mittal said after emerging from a meeting with Wal-Mart Vice Chairman Mike Duke this morning here. Mittal declined to comment on the details of the meeting, while Duke was whisked away from the media.
According to sources, Duke, who arrived in India on Thursday is likely meet a series of top government officials on Friday to get a clear picture of policy guidelines in the retail sector.
Duke's visit is aimed at getting a first-hand knowledge of the market and no announcement regarding specific plans would be made during this visit, a Wal-Mart spokesperson had said on Thursday. Wal-Mart said it was discussing with Bharti in the wholesale segment and exploring the possibility of investing in back-end linkages. The retail chain giant said it was looking forward to partnering with Bharti to build cash and carry back-end linkages with farmers and suppliers through a robust and efficient supply chain and was conducting business studies concerning the feasibility of investing in establishing backward linkages with suppliers and farmers.
courtesy:economictime
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Talks with Wal-Mart in final stage: Bharti

Bharti Enterprises today said it was close to finalising a deal with global retail leader Wal-Mart for its retail foray, though the US giant had described the talks between the two as "preliminary". "Talks are going on fine, its in the final stage and we are in the final position," Bharti Enterprises Joint Managing Director Rajan Bharti Mittal told reporters here. Bharti and Wal-Mart are discussing setting up a wholesale cash-and-carry business, developing supply chain and logistics. A Wal-Mart spokesperson had yesterday said: "At this stage, we are still in preliminary discussions".
courtesy:economictimes
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Bharti retail plans good for farmers: Pawar

NEW DELHI: Bharti Enterprises' retail plans, which could involve a tie up with Wal-Mart, will be useful for India's farmers, Farm Minister Sharad Pawar said on Friday.
US retail giant Wal-Mart Stores and Bharti Enterprises are very close to finalising a deal for a retail joint venture, Bharti's chief said on Friday.
"Effort of Bharti will be useful for Indian farmers as they will be able to get remunerative prices," Pawar said after a meeting with Wal-Mart Vice Chairman Mike Duke.
courtesy:economictimes
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Retail revolution begins

The retail game has barely begun, and the new players are already rewriting the rules. The chain stores are buying at the farm-gate, perhaps to ensure adequacy of supply, and in the process making it more difficult for those who depend for their supply on goods that reach wholesale markets. At the same time, the big manufacturers of branded consumer goods sense that the chain stores will leverage their promise of large volumes to squeeze them on prices, and they have decided therefore to give a helping hand to the neighbourhood stores, the idea being to shore these up as an alternative distribution channel. Some of these moves will help farmers, others will help consumers: some manufacturers who have so far exploited the lack of bargaining power on the part of the individual retailer, will have to accept lower margins; and some neighbourhood shops may cease to be independent entities and choose to leverage the advantage of their location by taking on the identity of franchisees and attaching themselves to the chain stores.Competition brings with it change and, as India's retail sector gets more organised, change will remain the order of the day. As there are winners, so will there be losers. But it is safe to say that the vast majority will be gainers out of this process—as is already evident. The entry of private companies into the wheat trade last year forced prices to go up, benefiting millions of farmers. Reliance Retail is able to sell many products at prices that are significantly lower than those charged by neighbourhood stores—benefiting consumers and helping to fight inflation. Bharti has set up a model farm outside Ludhiana and has promised farmers an assured return. These and other companies are getting organised for tapping export markets, setting up cold chains and investing in logistics. All of that should yield significant efficiency gains, which will have spread-effects in the economy as a whole. The biggest benefit will be that producers will get better price signals and therefore invest in improving yields and production—both of which should help control inflation and also deliver surpluses for export markets. An equally big benefit will flow to retail consumers. These constitute only one part of the series of changes affecting consumer goods. There is the introduction of futures trading, for more efficient price discovery—and this will certainly help farmers who usually do not know, at sowing time, what prices will prevail when their harvest becomes ready. There is also the investment in food processing that will get encouragement as companies figure out that this holds the key to evening out the ebb and flow of the food cycle—abundant supply and low prices at harvest time, and highprices amid general scarcity in the lean season. Companies that are eager to develop exportable supplies will also be encouraged to introduce new technology and work with farmers to improve yields as also varieties. However, change will cause stress in some quarters. The wholesale price index might show an unwelcome surge because this tracks prices in the wholesale markets—which may no longer be the best indicator if more supplies are being booked at the farm-gate. The government may find it difficult to source low-cost supplies for the public distribution system (as happened last year with wheat), and this could lead to higher subsidies being paid out of the exchequer. Some neighbourhood stores may also find the new level of competition unwelcome, and their owners might decide to do other things—but that should be regarded as a necessary concomitant of change as the retail system gets more organised and efficient. What policy-makers should track is the net gain or loss to the system, and leave matters well alone if the net outcome is largely positive.
courtesy:Business Standard
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Here comes the new Indian consumer...

Last week we had written an article on the significant shift taking place in the consumption pattern of the young urban Indian consumer, led by various demographic, psychological and economic factors. The growth in the number of young working people in urban India who have grown up post liberalisation, rise in their aspiration levels and increase in their spending power are be the key drivers of growth for the businesses. In this article we give a view on their spending pattern.
The rising aspiration levels, increase in spending power has led to a change in the consumption pattern. Apart from the demand of the basic goods, the convenience and luxury goods are growing fast too. In the last two to three years consumers have been spending more on lifestyle categories like eating out, movies and entertainment. Consumers today want more for their money and now actively seek quality. Consumers demand variety and sophistication to suit their needs and do not mind paying extra for it. For example, apart from demanding time saving and easy to handle goods, they are interested in diet free, environment friendly and wellness goods. Consumerism now is not only about increasing the consumption of the things that are regularly bought like groceries, shampoos, soaps or other FMCG goods but it is about consuming different things. People now prefer watching movie in a multiplex or buying from a super market instead of a local grocery store. Better living and maximizing utility from consumption is the order of the day. The shift from traditional categories is also evident from the change in the consumption pattern in the economy. Between FY73 and FY05, the share of food in total consumer expenditure has fallen from 73% to 55% in rural areas and from 64% to 42% in urban areas. The share of fuel and light in total consumer expenditure has risen from under 6% to 10% in both rural and urban areas. While the percentage of consumption expenditure on traditional items like food, groceries and footwear has reduced from 54% in 1993 to 46% in 2003, eating out as a category has grown over the last two years from 6.0% to 10.8% of a household's discretionary income. Higher incomes and growing aspirations are changing the way the consumers are spending money. With basic needs satisfied and easy credit availability for fulfilling dreams of owning a car and/or a house, spending on lifestyle goods calls for little hesitation. Organised retailing, hotel industry, ready to eat foods, branded products and multiplexes have witnessed robust growth with the change in consumerism. Going forward, these segments would be the key drivers. The companies are also introducing newer products and value added products. Dabur India's Vatika hair oil, one of the first players to milk the herbal category, registered a growth rate of 74% in 1999. HLL's Clinic Plus non-sticky hair oil (which combines coconut oil and mineral oil) has also been an unqualified success. Conventional beauty care products dominated Indian skin care market. HLL's Fair and Lovely (FAL) changed all that. This brand became the world's first and largest fairness cream brand with a presence in 40 countries and a value of around Rs 6 bn. Domestic tourism, which has grown by a 40% CAGR in the last 5 years, is set to emerge as the one of key drivers for the hotel industry over the next decade or so. The entire range of credit products (credit cards, mortgages, auto/two-wheeler loans, personal loans) have facilitated the consumption of lifestyle products to go up. This has created the large and fast growing retail banking industry in India.
Changing consumption behaviour as well as rising discretionary income levels will drive the trend towards lifestyle consumption. Although some sectors are still in the nascent stage, they are likely to emerge as significant growth drivers going forward.

cortesy:economictimes

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Subhiksha faces shortfall as expansion leads to stockout

AGGRESSIVE expansion in Mumbai has put discount retailer Subhiksha in a spot. After setting up close to 80 stores in the city and its outskirts in less than three months, the retailer is facing scalability issues in terms of severe stockouts, or nonavailability of products, in a lot of key FMCG categories like soaps, detergents and foods. Speaking to ET, Subhiksha Trading Services MD R Subramaniam confirmed, “We have been short by 20-25% of some categories in our stories in Mumbai.” Mr. Subramaniam says that this is directly attributable to Subhiksha’s growth in Mumbai. He adds, “We had underestimated the demand in Mumbai, and the products have shown they are selling faster.”
But industry sources say that Subhiksha has no more than 750-800 stock keeping units (SKUs) per store, when it should hold at least 1,500 SKUs. Scores of customers have found that products haven’t been available in key stores. In their Shivaji Park store for instance, which has a huge catchment in central Mumbai, customers have found it difficult to get detergents like Surf Excel after the 20th of the month, because they ran out of stocks. At Andheri, near the station, there’s a similar story with toothpastes and soaps. Says Chetan Sangoi, who runs a 1,500 sq ft standalone supermarket within 500 metres from Subhiksha’s Shivaji Park
Industry experts say that Subhiksha wouldn’t have encountered these stockouts if they had a different distribution system. Currently, they supply their stores in Mumbai from their distribution hub at Bhiwandi, a satellite town in Thane. Their consolidated buying process directly from manufacturers ensures that they get distributor margins of up to 5% from companies in addition to retailer margins. But this is hardly a huge cost-saver since Mumbai attracts an Octroi duty of 4% for all goods entering the city. Their aggressive pricing, on average 8-10% lower than the MRP, in addition to nearly 16-17% of overheads and operating costs, means that they’re perhaps making no more 1-2% margins on most goods.
Most other organised chains in Mumbai like DMart and Food Bazaar have opted not to go in for a centralised distribution system because of Mumbai’s linear geography — they would rather use the distribution backbone of the consumer goods companies. Explains a retailer, “In Mumbai, Subhiksha will have to start from the North and go further South to feed their stores. This will add to their costs since there’s no shorter way to do it. They also can’t do this thrice a week like the leading FMCG companies do.”
However, Mr. Subramaniam says that the distribution hub has been planned so that they can service their stores outside Mumbai as well. He says, “I have to service stores in Thane and Kalyan which are outside the Greater Mumbai area. A distribution hub within Mumbai means that we are subject to multiple octroi if we are supplying outside Mumbai city.” Also, with sales data available for two full months, Subhiksha’s executives are in a better position to predict consumer demand for March. Mr. Subramaniam says that Mumbai would be a great success. He says, “Normally we have a benchmark of annual sales of Rs 20,000 per sq ft, but I expect Mumbai to garner in Rs. 30,000 per sq ft for this year.” But perhaps the product mix, currently more in favour of FMCG products, might have to be tweaked slightly. Says Bhushan Lawande, corporate trainer and retail consultant, “The universally sold SKUs like soaps and detergents bleed a lot if you’re discounting them by 8-10%. Groceries and vegetables have to contribute substantially to the revenues for Subhiksha.” High growth in organised retail is good news for the retail industry but it is now time to get ready for the challenges.
store, “Customers come to my store saying that Subhiksha doesn’t have household essentials by the end of the month.”courtesy:economictimes
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Bharti, Wal-Mart execs to meet today

Aware of the controversy generated after Sonia Gandhi's letter on retail, the Wal-Mart team is planning to meet Bharti executives in Mumbai on Thursday to finalise its joint venture for retail. The foreign company's team is headed by Wal-Mart International chief executive and president, Michael Duke, who will discuss a slew of agreements with Bharti Enterprises joint MD, Rajan Mittal, heralding the world's biggest retailer's entry into India. The agreements will include cash-and-carry joint venture, technical know-how and sourcing arrangements. Sources said the companies may have decided to shift the venue to Mumbai to avoid being in the political eye. They added that though detailed discussions will be held on the retail strategy and joint venture, but the final agreement will be signed later. The team may also visit Delhi later to meet key government officials. A section which has opposed the opening up of retail, is of the view that Wal-Mart venture with Bharti was a "facade, and a back-door entry"for the foreign company. "Wal-Mart will not enter any market without having a presence in the front-end (of retail) and the agreement (with Bharti) will be cleverly documented so that it has a significant share in the front-end operations, probably at a later date", sources said. "The agreements will be such that the foreign company gets a toe-hold when the sector is finally opened up,"they added. Wal-Mart and Bharti officials were not available for comments. Even though the agreement between the two companies may be within the existing policy framework, they have decided to keep it under wraps. This may be because of the negative sentiment it has evoked within political circles. Earlier this month, Congress Party chief Sonia Gandhi had expressed concern in a letter to the prime minister about "the Wal-Mart effect"on domestic retailers, and the need to study the impact of transnational supermarkets on the "livelihood security"of small-store owners. Moreover, Bharti's hurriedly called press conference on February 19 is being perceived as an attempt to shift the focus to its retail subsidiary, with little or no mention of its agreement with Wal-Mart. Bharti decided to partner the local convenience stores through a franchise model apparently to allay political fears on the sector. In fact, when quizzed further, Mittal said the retail venture was no different from the others such as Reliance, and the company will source technology and best practices from Wal-Mart. "The details of the back-end chain and our tie-up with Wal-Mart will be announced in due course of time,"he had said.
courtesy:economictimes
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Air Deccan ties up with Travelguru

AIR Deccan has tied up with Travelguru to provide its passengers the option of a total budget travel package-flight and stay across 2, 500 hotels, including 1, 500 budget hotels in India. This partnership offers passengers the facility of making hotel reservations on the airline’s website. Close to one million passengers visit Air Deccan website daily. The travel portal plans to offer sightseeing, travel insurance and pre-paid taxi facilities soon.
Addressing a press conference here on Wednesday, Capt GR Gopinath, MD, Air Deccan said, “The Air Deccan-Travelguru tie-up will serve as the one-stop window for affordable travel solutions for the discerning traveler. This tie up will further add to our current ancillary revenue, which is around 9%. We are targeting ancillary revenue of 25-30% of the total revenue for the next three years. As this ancillary revenue goes up our basic fare will become more competitive.”
Ancillary revenue includes revenue from in-flight catering, in-flight shopping, excess baggage, aircraft branding and hotel reservations. The low-cost carrier expects to fly eight million passengers by end of this year.
courtesy:economictimes
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Now, banks will serve you at your doorstep

RBI Allows Banks To Hire Agents To Speed Up Doorstep Banking Services
BANK customers can now look forward to home delivery of banking services, with the central bank allowing banks to employ agents to extend doorstep banking services. Banks can pick up cash and cheques for individuals and corporate customers. They can also deliver cash against cheques received across the counter to corporates and government departments. Where banks do employ agents, they have to certify in writing that they are taking responsibility for their agents’ actions. In its guidelines issued on Wednesday, RBI said that where banks engage agents for delivery of services, they should have a policy approved by their boards which lays down broad principles for selection of agents and payment of commission. Banks will also have to comply with RBI directives on outsourcing services. Bankers say that doorstep banking can complement internet banking and further reduce pressure on branches. Public sector banks may, however, not be able to exploit this facility as much private and foreign banks due to union opposition to outsourcing of services. This move by RBI will give a big boost to rural banking plans of banks such as ICICI Bank which was looking at doorstep banking as one of the models to tap the rural market. Foreign banks, which cannot freely expand branch network, can also use this route to expand their business.The guidelines also prescribe service levels in terms of the time for delivery. According to RBI, cash collected from a customer should be acknowledged by issuing a receipt on behalf of the bank; and credited to the customer’s account on the same or next working day depending on the time of collection.As part of risk-management prescriptions, RBI said that the cash delivery services could be offered against receipt of cheque only at the branch and not against telephonic request. For individuals, even this facility will not be available. Also, banks can provide door delivery of demand drafts only if they have received a requisition in advance and the amount has been debited to the customer’s account. If a bank decides to charge extra for doorstep services, charges have to be first cleared by the board of the bank. RBI has also barred banks from extending this service to any address other than what is mentioned in the agreement between banks and customers.
courtesy:economictimes
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Wal-Mart Q4 net up 9.8% to $4b

WAL-MART Stores, the world’s largest retailer, said fourthquarter profit rose 9.8%, exceeding analysts’ estimates as the company discounted toys and consumer electronics to attract holiday shoppers. Net income in the three months ended January 31 rose to $3.94 billion, the Bentonville, Arkansas-based company said on Tuesday in a statement. Analysts surveyed by Bloomberg estimated 90 cents. Fourth-quarter sales at stores open at least a year gained 1.6% as Wal-Mart cut prices on items ranging from generic drugs to groceries. Chief executive officer H Lee Scott re-emphasised the company’s “lowprice” message after failing to lure consumers with exclusive lines of clothing. “If you look at Wal-Mart historically, they are known as being the low-cost retailer,” said Steven Baumgarten, an analyst at PNC Wealth Management in Philadelphia, with $54 billion in assets including Wal-Mart shares. “They have done a great job with that.” Profit a year earlier was $3.59 billion. Fourth-quarter sales increased 11% to $98.1 billion, less than the $98.5 billion on average estimated by analysts. Including membership fees and other income, revenue was $99.1 billion. Shares of Wal-Mart rose $1.03, or 2.1%, to $49.51 at 7:32 am in trading before US exchanges opened. They rose 12 cents to $48.48 February 16 in New York Stock Exchange composite trading. Last year, the stock declined 1.3%, compared with a 3.8% gain for Target , the second-largest discount chain.
courtesy:economictimes
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Bharti Retail to recruit IIM grads

BHARTI Retail has firmed up its plans of hiring for its retail operations from IIMs this year. The company plans to hire 60,000 people this year for its entire retail operations. With retail emerging as a hot new sector, Bharti Retail now joins Tesco, Target and Reliance in scouting for talent from the IIMs. “We are looking at recruiting from IIMs this year. We follow a strong competency based selection procedure. The total number of candidates recruited from IIMs will depend upon our requirements and the candidates’ fitment to our selection procedures,” said Harshvendra Soin, head HR, Bharti Retail. The company has already completed its pre-placement presentation at IIM-Bangalore, where it showcased its retail ventures. “While they were primarily looking for hiring students for their vacancies in the telecom business, they have not ruled out taking students for their retail operations as well,” said G K Nagraj, placement officer, IIM-Bangalore. Interest in retail is steadily increasing among IIM graduates. “More than 40-60% of the students have retail sector as one of their top choices among industries,” said Chandan, placement co-ordinator, IIM-Calcutta.
courtesy:economictimes
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Cafe Coffee Day equals Lara, is 400 not out

INDIA’s biggest fine coffee-cafe chain Cafe Coffee Day (CCD) will be 400 not-out on Wednesday. CCD’s 400th cafe, which director Naresh Malhotra calls the chain’s first authentic garden cafe, will be opened on the grounds of a renovated bungalow in Kolkata’s Upper Wood Street, off Theatre Road and near Chowringhee. 400 not-out was also the highest test score notched up by West Indies skipper Brian Lara, who recently expressed regret on his last tour of India that he had never played at Kolkata. Malhotra hopes that this 3,000-sqft lounge cafe, situated in an upmarket residential-cum-commercial area, will also attract office-goers and students from the nearby St Xavier’s College and La Martiniere. “Our 400th outlet will be a lounge-cafe which will serve light meals from our on-site kitchen, in both the Indian and Continental style, in addition to the best of coffees and snacks, biryani, ricefry, kheema, salads, pav bhaji, burgers, pastas, samosas and sandwiches.” CCD aims to expand briskly in eastern India by adding three cafes a month to its existing 26. “We plan to open cafes in Kharagpur (near IIT), Siliguri, Gangtok, Shantiniketan (near the Viswa Bharati University), Burdwan and Asansol. Eastern India is one of our focus areas in CCD’s plans to reach the 500-cafes mark by the middle of this calendar.” However, CCD will be returning to its base in Bangalore to set up in April what Malhotra calls its second authentic 4,000-sqft garden-cafe on Old Madras Road near Raheja’s Infiniti Complex and across the street from the city’s largest Big Bazaar. Asked whether the anticipated entry of the world’s biggest coffee-cafe chain Starbucks had anything to do with CCD’s frenetic expansion, Malhotra quipped: “We brew our plans independently of what others propose.” A few weeks ago, CCD opened via the franchise-route its first cafe in Pakistan in Karachi’s Zamzama Commercial Area, famous for its designer outlets and vibrant cafe culture. CCD plans to open 25 more cafes in Pakistan within the next few months. CCD also has two cafes in Austria, one near the Opera House in Vienna and the other on the university campus. CCD is a division of the Amalgamated Bean Coffee Trading (ABCTL), a Rs 400-crore conglomerate, which not just grows coffee, but retails it in a packaged and cafe format. To finance the ongoing expansion, ABCTL negotiated a $20-million equity investment by Sequoia Capital last July and firmed up a $20-million IFC loan a few months later.

courtesy:economictimes

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M-blogging: Sharing your experience that second

ADITYA’S joy knew no bounds when he spotted a difficult-to-spot animal while holidaying at the Corbett National Park. He wanted to share his experience with his friends back home and couldn’t wait. He clicked pictures of the animal with his camera phone, put suitable captions and posted them on his blog site. Soon his friends became part to the whole experience.
Welcome to the world of mobile blogging or m-blogging. It is the latest thing on the list of Gen Y, which swears by social networking sites like MySpace, YouTube, Orkut or even SMS. With mobile phones one can have a blog on the go. All one needs to m-blog is a multimedia phone with a GPRS/internet subscription from a mobile service provider, and one can easily post his photos and videos on his blog sites.
According to Gartner, worldwide sales of camera phones reached over 460 million in 2006, three times that in 2004. So from weddings to vacations, from workplace to fashion shows, bloggers are clicking and uploading all on their web journals.
“Image, blogging is an unique feature of mblogging and gives it an edge over online blogging. You can click pictures or shoot videos wherever you are and post it on your online blog. Everything using your handphone,” says Vineet Taneja, multimedia business director, Nokia. “Mobile blogging has lot of potential. We will soon be launching new products targeted at young m-bloggers,” says an Indiatimes.com spokesperson.
There are over 156 million mobile subscribers in India. According to industry estimates, around 10% of mobile subscribers in metros use GPRS facility and 2-3% in tier II and III cities have hooked on to GPRS facility, which allows fast internet access on mobiles. Approximately 40-45% phones sold in India are GPRS enabled. According to IDC, in India the sale of camera phones is registering around 25% quarter-onquarter growth.
Globally there are 200 million bloggers. Industry estimates put 100,000 as the figure for India. (According to Blog Herald, there are 1.2 million bloggers in India). And the number is growing. “The number of m-bloggers is fast growing though the trend is just an year old,” says Nokia’s Mr Taneja. Nokia N series has m-blogging feature to capture the potential of this segment.
Photo blogging using the mobile phone is quite popular globally. “Photo wise m-blogging is quite convenient. Also, as smart phones with features like handwriting recognition and touch screen gain popularity, the trend of m-blogging will grow further,” says Rahul Saini, product design head, Speakwireless, a mobile content provider.
Blogging portals too see huge potential in mobile blogging, especially from people who don’t want to be stuck to their computers to blog, and are offering them special tips. For instance, My-Space website tells a blogger that to blog from the mobile phone, all one needs to do is to set up a site (MySpace) to receive e-mail postings and then phone in the blog entries and photos. My-Space has around 47 million bloggers.
Meanwhile, mobile majors have geared up to woo the m-bloggers. Sony Ericsson partnered with Google last year to launch a special m-blogging website. “M-blogging is still in it’s nascent stages in India but it definitely has immense potential to grow. We are looking at various contests to catch attention of mobile bloggers such as blog a picture of your valentine and the best picture wins. In international markets, we have already launched many such contests,” says Sudhin Mathur, general manager, Sony Ericsson Mobile Communications.
courtesy:economictimes
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Manikchand eyes entry into more FMCG products

Leveraging its well-entrenched retail network, the Rs 1,000-crore Manikchand group is weighing entering other FMCG products, using the contract manufacturing route. The group already has a presence in tea, tobacco, electrical switches, water and gutkha. Additionally, it is set to extend its dual pricing strategy even to its gutkha business, having already done it for its water, electrical switches and tea products. In an effort to plug price gaps for its water business, the group has recently launched Taral, a brand of bottled drinking water, which is at the same price point as all the other brands. The group’s Oxyrich is priced higher, as a premium product. “We will launch Taral in 20 litres after March 15, when the peak season begins. We have soft- launched the product in Pune about ten days ago and will soon take it to other parts of Maharashtra and Gujarat,” Manikchand Industries chairman Rasiklal Manikchand Dhariwal said.
courtesy:economictimes
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Bharti to invest $2.5 b by ‘15

BHARTI Retail plans to invest $2-2.5 billion by 2015 for opening multi-format retail outlets across the nation. The company estimates to generate over $5 billion as revenue in this time frame. At the same time, for its small store format, it’s looking at partnering with existing local kirana store owners (1,000 sq ft and above) through a franchisee model. This means that Bharti would provide its brand, technology and practices to such stores and earn a royalty in return.
Bharti Retail would be present in all Indian cities having a population in the excess of 10 lakh. The first store will come up in the first quarter of 2008. The company aims at having approximately 10 million sq ft of retail space and provide direct employment to around 60,000 people. Bharti Enterprises joint managing director Rajan Mittal said, “After revolutionising the Indian telecom sector, retail will be the next big focus area for us. Our main focus will be on offering quality products at affordable prices.”
Bharti will have stores in mainly three categories — hypermarkets, spread over 75,000-125,000 sqft each, supermarkets (30,000-50,000 sqft) and convenience stores (2,000-5,000 sqft). The company will have a presence in all food & grocery categories, fresh fruits and vegetables, meat and poultry, dairy products, staples, FMCG and processed foods, electronics & appliances, clothing & footwear, furniture & furnishing and other household articles.
The company will leverage its tie-up with global industry leader Wal-Mart for technology and best practices. However, on the issue, of whether the Wal-Mart brand name will be used in the retail venture, Mr Mittal said, “It’s too early to comment on this. Any such move would be based on a thorough consumer research.” As per the agreement between the two companies, while Bharti will manage the front-end of the retail business, Wal-Mart would be involved in the back-end, including logistics, supply chain and cash-and-carry.
The $2-2.5-billion investment figure excludes the real estate cost that Bharti will incur in its retail venture. The company’s real estate arm Bharti Realty, has already started creating land bank for the venture.
courtesy:economictimes
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Play on with novel, tech-savvy gaming consoles

SO you want to buy a new video game system, but are not sure which one to go for. While your tech buddy may suggest the Xbox 360, your brother says PlayStation is the way to go, while your grocery shop clerk says go for Gamecube. Confused? Read on.
The market for consoles is getting hotter, with the next generation consoles like Sony’s PlayStation 3 and Nintendo’s Wii expected to hit Indian stores later this year. Yes, like cars and shoes, gamers love to argue about brands, but in the end it is YOU who has to decide on what suits the best.
The market: The market for the consoles as four main players -Sony’s PlayStation, Microsoft’s Xbox and Nintendo’s GameCube and Wii. In Sony’s stable, the much awaited PlayStation 3 (PS3) is expected to be launched in India later this year. But if you want a cheaper gaming experience, there is always the PlayStation 2 (PS2). On the other hand, Microsoft’s offering, the Xbox 360, is one generation ahead of Sony’s PS2. And then there is Nintendo, which still has the capacity to come out with gems like Wii.
Handhelds or Home Playables:You must decide whether you want a system that sits in your living room or a portable one which can always be with you. Brands that fall under the home playables category are usual suspects from Sony, Microsoft and Nintendo. Brands in the handheld category include Sony’s PSP, Nintendo’s Gameboy Advance and Nokia’s Engage.
Choice of Games: Established consoles like the PS2 or Xbox tend to offer a huge range of games, while the recent launches are likely to offer you fewer choice of titles. Having said that, many consoles now offer backward compatibility. This means that you can play games designed for the earlier models of games console made by the same company on the new console.
The PS 2, for example, allows you to play PS1 games on them, and it is rumoured that you’ll be able to play both PS2 and original PlayStation games on the new PS3. Similarly, you can play Xbox games on Xbox 360, and Nintendo’s Game Boy Advance SP has been designed to allow you to play every Game Boy game ever released!
If you are thinking of upgrading to a newer consoles, then you might want to consider buying a console which lets you play your old games as well. Traditionally, the Xbox has been known for its first person shooters such as Halo or Counterstrike, while few of the biggest franchisee titles like MetalGear or Fifa series best come with the PS range. Meanwhile, the Wii is expected to bring to the table an advanced versions of good old classics like Mario, Xelda which has already caught the fancy of gamers across the US and Japan.
Price for game titles: Make sure that the cost of the games you may want to play on your console does not burn a hole in your pocket. Generally for a Xbox, a game may cost anywhere between Rs 3,000-3,500, while the same for Sony’s existing consoles will cost in the range of Rs 7,000 and Wii games could cost Rs 2,500-3,000.
courtesy:economictimes

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Prices of popular medicines cut

POPULAR medications to treat chest pain, anxiety, allergy and diabetes have become cheaper by 2% to 39%. Five leading drug makers — Wockhardt, Nicholas Piramal, Cipla, Cadila Healthcare and Shreya Life Sciences — have reduced the prices of key products after the chemicals and fertilisers ministry recently asked them to do so in public interest.
The medicines are Nicholas Piramal’s anti-anxiety drug Stemetil 5 mg tablet, chest pain reliever Sorbitrate 10 mg, antiallergy drug Phenargan injection 25 mg 2 ml, Wockhardt’s anti-diabetic drug Mopaday tablet 15 mg and 30 mg, anti-allergy drug Practin tablet 4 mg, antidepressant Lybotryp tablet 12.5 mg, Cadila Healthcare’s anti-inflammatory drug Oxalgin DP tablet 50 mg, Cipla’s drug for worm infestation Mebex 100 mg tablet and 100 mg 30 ml suspension besides Shreya Life Sciences’ Emidoxin tablet 5 mg, according to sources in the government.
Although these were not expensive drugs, their prices had increased by more than 20%, according to the government, which studied them for 12 months on an individual basis. The price cuts are significant to a large number of patients as these are commonly used drugs to treat these conditions.
The ministry asked these companies to reduce prices as it was not satisfied with the reasons given to justify the price hike. It has, however, found that 13 other products — mostly of these companies — recommended by the price watchdog National Pharmaceutical Pricing Authority (NPPA) for appropriate action, do not require any pressurising to reduce prices as they have not become costlier by more than the allowed 20% rise in 12 months. These include products of Nicholas Piramal, Cipla, Zydus Cadila, Maneesh Pharma, Dr Reddy’s and Khandelwal Labs.
Drug makers had earlier protested at the government’s pressure to lower prices under a public interest clause in the drug pricing law saying that these products are not expensive and some of them are cheaper than the top selling brand in the class. The ministry’s intent is to make medicines affordable to a large number of poor in the country who live on less than Rs 50 a day.
So far, the chemicals ministry has been giving hearings to companies when the price regulator recommends that a drug should be brought under price control. Recently it has given a free hand to NPPA to take action on all cases of abnormal price increase.
NOW WITHIN REACH
• Drugs like Stemetil, Sorbitrate, Phenargan, Mopaday to see a reduction in prices by up to 39%
• Move follows govt’s recent appeal to make more drugs available to the poor
• Although these drugs are not expensive, prices had recently increased by more than 20%
courtesy:economictimes

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Industry status for retail will have to wait

THE retail sector’s demand for an industry status looks unlikely to be fulfilled in the near future, with the government still considering the implications of such a move. Speaking to ET¸ minister of state for commerce & industry, Ashwani Kumar, said, “Several representations on this matter have been made and we are studying the implications of granting industry status to retail as there are a host of issues involved including labour laws and other legal implications. We will not announce a policy unless we have studied the implications of the move fully.”
The absence of a retail policy delineating the country’s stand on retail is another issue which needs to be addressed before industry status is granted to retail. “There is no retail policy at the moment and we are moving gradually towards it with steps like allowing 51% FDI in single-brand retail. Until the full dimension of the retail policy is made clear, the question of industry status to retail trade may not be appropriately addressed,” he said.
The retail sector has been demanding recognition as an industry for over two years now. An industry status would not only make it eligible for fiscal benefits and concessions but also get it easier organised financing.
Mr Kumar said that the government is currently focused on opening up the sector and ensuring greater ease of functioning for retailers. “We are looking at how we can facilitate enlargement of economic activities in retail trade by ensuring greater ease of functioning,” he said. The commerce & industry ministry is considering various public-private partnership (PPP) models for encouraging investments in cold chains and warehouses to build backward linkages with farms.
On the Cabinet note floated by the department of industrial policy and promotion (DIPP) on allowing 51% FDI in consumer electronics and sports goods & accessories retail, Mr Kumar said that based on the success of liberalisation in multi-brand specialty retail in these categories, an extension into other similar categories would be considered. The opening up, however, must not be at the cost of jobs of those employed in mom-and-pop stores. “The loss of jobs is the main concern. We agree to a progressive liberalisation which yields more employment and greater investments. In consumer electronics and sports goods, there is no competition with smaller stores,” said Mr Kumar. courtesy:economictimes

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Wal-Mart may adopt new plan in India

Away from the political backlash against its entry into India, the world's largest retailer has been keeping domestic rivals guessing about the format it would adopt in this country, where grocery shopping is an industry by itself.
Wal-Mart, better known for its large stores like hypermarkets and supermarkets spread over thousands of square feet, may go in for the neighbourhood store format keeping in mind the Indian consumer's preference for this model.
"We expect Wal-Mart and Bharti to explore the neighbourhood market concept because groceries are one of the largest retail categories with the least organised retail competition in India," a former Wal-Mart adviser and US-based global retail investment firm Growth Ventures Group's Chairman and CEO Love Goel said.
Though foreign multi-brand retailers are barred from setting shop in India, Wal-Mart has tied up with Bharti Enterprises to gain a toe-hold in the country.
While the Left parties fear that entry of multinational retail players would slowly kill the estimated 13 million mom and pop stores, Congress President Sonia Gandhi too has joined the chorus of opposition against FDI in retail.
Even though fully opening up retail sector to foreign players still remains an issue, domestic petrol and petrochemical major Reliance Industries has entered the field and already boasts of over 40 neighbourhood vegetable and grocery stores across five cities.
Wal-Mart, which has a revenue of 320 billion dollars, is the largest retailer of groceries in the US. So, it could be anybody's guess what format it would choose for India. Wal-Mart has often adapted itself to the local needs, like in Brazil where there is a greater emphasis on neighbourhood stores inside cities, Goel said.
The company has already become the third largest retailer in Brazil by following the right format concept, Goel added.
However, the going might not be as easy for the company in India, where a number of retailers like Big Baazar and Vishal Megamart are expanding their presence with large-format neighbourhood stores and domestic conglomerate Reliance Group, which has also purchased land in the vicinity of residential areas in various cities for its retail stores.
Wal-Mart and Bharti are likely to use one of Wal-Mart's proven store models that range in size from 40,000 square feet for neighbourhood stores to 20,000 square feet for its super-center stores, Goel said.
The US giant might also try out membership schemes to gain the customers' loyalty in wake of intensifying competition in the retail market sector, the experts believe. "With more than nine groups from Birla and Tata and Ambani investing over one billion dollars in next few years in retail, it will be important for retailers to create loyalty with customers rather than drive profit margins down by competing on price," Goel said.
Membership clubs like Sam's Club (being operated by Wal-Mart in US) are a great way for retailers to offer lower prices while creating loyalty among its customers as well, he added.
According to experts, the relationship with Bharti could prove to be an asset if Wal-Mart decided to combine their retail concept with a direct-to-consumer approach by selling through catalogs, internet, mobile phones and television. "In that case, not only most orders are placed on phone, but the after-sales customer service is also handled through phone," Goel said, adding it could pave the way for the most optimal, capital-efficient and fastest method for organised retail to grow in India.
According to the experts, while neighbourhood stores appear to be the best format for Wal-Mart in India, it could also try out away-from-city locations. Wal-Mart's approach of buying cheap land in rural or urban locations could be successful in India as proven by a number of big malls, which have sprouted up on the outskirts of big cities like Delhi and Mumbai.
"With the explosion in the number of automobiles and vehicles, transportation is not necessarily a limiting factor," Goel said.
courtesy:economictimes

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