Mayur Suitings stitches plan to buy Indus

RAJASTHAN Spinning & Weaving Mills (RSWM), owner of Mayur Suitings, may buy a controlling stake in Indus Clothing, the erstwhile franchisee of Lee Cooper and the current franchisee of Disney, for around Rs 45-50 crore. Industry analysts see this as the beginning of a series of joint ventures and mergers between fabric makers and brand retailers. Several manufacturers and exporters nurturing retail ambitions are in talks with retailers for similar arrangements. It’s a win-win situation for both parties. While the manufacturer gets a distribution network at one go, the retailer gets a dedicated manufacturing capacity, feel industry sources. For instance, RSWM, the flagship company of the LNJ Bhilwara Group, has been making yarns and fabrics for years. It plans to enter the consumer retail business and the only way it can expedite its new business is by forging alliances with retailers. When contacted, RSWM joint MD Riju Jhunjhunwala declined to comment while the owner of Indus Clothing HP Singh said: “At the moment, there’s no tie-up with RSWM.’’ Asked if there was any possibility of a tie-up in future, he said, “I am not sure.’’ If the RSWM-Indus deal goes through, RSWM would get access to a distribution network which includes standalone shops as well as multi-brand outlets. The duo could introduce other foreign brands in the country as well. At present, Indus Clothing has a licensing agreement with Walt Disney to make and market Disney jeans targeted at the 4-14 age group. It has a similar arrangment with Italy’s Rifle jeans for India. But Indus is best known for its licensing alliance with UK’s Lee Cooper brand (Indus marketed it in India for more than a decade) which later went on to forge a joint venture with the Pantaloon Group after government allowed 51% foreign investment in single brand retail. By entering into a venture with the Rs 953-crore RSWM, Indus would get access to its manufacturing capacity in Gulabpura, Banswara, Mandpam, Rishabhdev and Ringas located in Rajasthan. RSWM’s met profit during FY06 was Rs 27.08 crore.

Courtesy: EconomicTimes

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Pyramid inks JV with realty co

PYRAMID Saimira Theatres (PSTL), the Chennai-based movie theatre chain, has formed a joint venture with Delhi-based real estate firm Baderwals Infraprojects to set up a chain of 200 integrated leisure and shopping destinations with an estimated investment of Rs 12,000 crore. PSTL will hold 49% stake in the newly-formed company called Baderwals Pyramid Development, while Baderwals will hold the remaining equity. According to PSTL managing director PS Saminathan, Baderwals Pyramid, besides being the largest chain of its kind in the country, would also develop an array of single largest chain of multiplexes, budget hotels, hypermarkets and shopping malls. “Out of these 200 destinations, big cities and smaller cities would have 100 each. Approximate construction cost per destination would be Rs 80 crore for big cities and Rs 40 crore for the smaller ones,” said Mr Saminathan. PTSL has recently formed a special purpose vehicle (SPV) with Shriram Mall Infrastructure, a south India-based firm to set up 100 malls-cum-multiplexes. In the SPV, Shriram holds 70% equity while PTSL holds the remaining. PSTL, a worldwide theatre chain company, with presence in all categories of theatres including mall, multiplexes, cineplexes and stand-alone theatres, now comes to India with world-class technology, aiming to revolutionise the theatre experience in the country. Pyramid has lined plans to set up 4,000 multiplexes in the US, another 250 in China and 1,500 in Europe. The Indian entertainment industry has undergone a sea-change in the last few years. The industry is projected to grow at 18% annually and is expected to be around $3.4 billion by 2010. The major driving factor in this growth would be technological advancement in production, exhibition and marketing. PTSL has tied up with Asian Integrated Industries to set up a theatre chain in Malaysia with 150 multiplexes and single screen theatres spread all over Malaysia.

Courtesy: EconomicTimes
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Heritage Foods to open 30 retail stores in Bangalore

Hyderabad-based dairy products firm, Heritage Foods, (Q, N,C,F)* announed plans to set up at least 30 retail stories under the brand - `Fresh@` - by the end of 2007 in Bangalore, a part of it Rs 1.5 billion plan to invest in retail operations in South India, reports Business Standard. On Thursday, the firm announced, opening of retail stores in Indiranagar, Jayanagar and Basaveshwaranagar localities of the city. Nearly 40% of the space dedicated to fresh fruits and vegetables, rest will go towards daily home needs. It is also launching stores in Chennai. The company, intends to have 100 stores equally distributed in Hyderabad, Bangalore and Chennai by the end of 2007, holding considerations expanding to tier two cities.The firm launched free home delivery service through its Heritage milk agents. A dedicated call centre and an e-portal will be launched to bring the convenience of shopping to the customers` doorstep.Heritage Retail, procures vegetables and fruits from farmers in Chittoor district (Andhra Pradesh), Karnataka and Tamil Nadu. Shares of the company ended at Rs 265.70, down by Rs 11.45 or 4.50% at the BSE. Total volume of shares traded was 184.

Courtesy: EconomicTimes
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European retail sales rise in March

EUROPEAN retail sales rose for the first time in three months in March as German consumer spending recovered from a tax increase at the beginning of the year. A gauge of retail sales in the 13-nation euro economy rose to a seasonally adjusted 53.4 after February’s 49.8, a survey of more than 1,000 retail e x e c u t i v e s showed Thursday. A reading above 50 indicates an increase. Faster economic growth has spurred hiring and spending. German unemployment dropped to a six-year low in March, the government said Thursday, and KarstadtQuelle, the country’s largest retailer, reported its first annual profit since 2003. “Thursday’s indicator suggests that the economies of Germany and the euro region will clearly regain strength in the second quarter after a slowdown’’ following the January 1 increase in Germany’s value-added tax, a sales levy, said Joerg Kraemer, chief economist at Commerzbank in Frankfurt. Retail sales “will probably continue to show an expansion.” Germany, Europe’s largest economy, led the increase in retail sales with an index reading of 52.8 after last month’s 45, Thursday’s report showed. German sales plummeted in the first two months of the year after the government raised VAT by three percentage points to 19%. The euro rose to $1.3349 at 1:04 pm in Frankfurt from $1.3322 before the report. European government bonds fell, pushing the yield on the 10-year bund up 3 basis points to 4.06%, as signs of sustained economic growth underpinned the case for higher interest rates. The EC last month raised its 2007 growth forecast for the euro-region economy to 2.4% from 2.1%. The economy expanded 2.6% last year, the most since the start of the decade. In France, the retail sales PMI rose to an eight-month high of 56.8 from 54.7 in February.

Courtesy: EconomicTimes

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March Mania - a unique consumer scheme by Futurebazar

futurebazaar.com, owned and operated by FutureBazaar India Ltd., a subsidiary of India’s largest retail chain, Pantaloon Retail (India) Limited, launched a unique scheme for consumers ‘March Mania Cash Back Week’ from March 23rd – March 31st, whereby all those shopping online on futurebazaar site will get cash back during this entire week. Cash back will be given to customers in the form of futurebazaar gift vouchers (GVs), which will be sent to them by email and will be redeemable on further purchases on futurebazaar site. This offer is valid only for one week. Future Group is positioned to cater to the entire Indian consumption space. It operates through six verticals: FutureRetail (encompassing all lines of retail business), Future Capital (financial products and services), Future Brands (all brands owned or managed by group companies), Future Space (management of retail real estate), Future Logistics (management of supply chain and distribution) and Future Media (development and management of retail media spaces). The group's flagship enterprise, Pantaloon Retail, is India's leading retail company with presence in food, fashion and footwear, home solutions and consumer electronics, books and music, health, wellness and beauty, general merchandise, communication products, E-tailing and leisure and entertainment. The company owns and manages multiple retail formats catering to a wide cross-section of the Indian society. Headquartered in Mumbai, the company operates through 3.5 million square feet of retail space, has over 100 stores across 30 cities in India and employs over 14,000 people. Future Group's vision is to, “deliver Everything, Everywhere, Every time to Every Indian Consumer in the most profitable manner.” One of the core values at Future Group is, ‘Indianess' and its corporate credo is – Rewrite rules, Retain values.

Courtesy: EconomicTimes
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Titan enters prescriptive eyewear

EVRYTHING from mobile phones to diets may be getting lighter. But when it comes to spectacle lenses, the Indian market is still skewed towards the good old heavy glass lenses rather than the lighter, sleeker plastic ones. With only a handful of branded players, plastic lenses hold less than 15% of the market, growing at 30-40% annually. India is still way behind other countries in the usage of the more progressive plastic lenses. It is likely that as more players enter this market, this trend could reverse. Joining companies like Essilor and Carl Zeiss, Titan has also now entered the fray. “India is one of the few countries where a majority are still using glass lenses. In most other countries, the shift has already been made to plastic and other lighter lenses like the polycarbonate lenses. Here, the transition has only begun,” says B Jayanth, managing director, Essilor India, leading plastic and progressive lenses manufacturer. Though there is no organised statistical data available on the usage of ophthalmic lenses, an estimated 35-50 million pieces are sold per annum in India. To make the most of this Rs 1,800-crore industry, Titan Industries today launched its prescription eye wear store called Titan Eye+. The company is offering lenses under its own brand name Titan, in the Rs 145-Rs 21,000 range and other reputed brands like Essilor and Nikon in the Rs 350-Rs 15,000 range. Titan is expected to have a range in both plastic and glass lenses. They have a collaboration with Essilor for the manufacture of their plastic lenses and with GKB for the manufacture of their glass lenses. “Today nearly 85% of the consumers in India use glass lenses. While more people are shifting their usage to plastic lenses, it is still not a significant portion. For example, in Europe, the usage of plastic lenses is really high,” said Ronnie Talati, associate vice president and business head, Fastrack and New Brands, Titan Industries. Carl Zeiss, which entered the Indian market in 2005, has both glass and plastic lenses but 90% of their sales currently is plastic lenses, says Manish Soni, general manager, Carl Zeiss India. “The problem in India is that only 30% of those who need primary eye care can actually access it. Carl Zeiss exists in the super-niche segment. But in India, we have positioned ourselves at a more accessible level,” he says.

Courtesy: EconomicTimes

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Business class sits well on airlines

FINDING a seat in the expensive front end of planes is turning out to be tougher than getting much cheaper economy class tickets these days. Airlines, especially those operating on the European and South East Asian routes say business class seats are being snapped up way ahead of flight departures and they have much higher loads here than the economy. The trend has prompted airlines like Lufthansa to rip off economy seats on their flights to increase the size of the high-yield business class. Fares on business class are typically three to four times that of economy tickets. Some airlines like US carrier Delta have done away with the first class to increase the more popular business class. “Indian business travellers are willing to spend much more than before on their international trips. The spend is much higher on the travel as well as the choice of hotels, which is invariably five-star instead of the lodges or three-star accommodation in the past,’’ says Rupen Vikamsey, managing director of the Mumbai-based Orbitz Travel. While the return economy class fares between India and Europe cost between Rs 17,000 to Rs 35,000, the fare for a business class round-trip ticket is in the range or Rs 75,000 to Rs 1.5 lakh, depending on the airline. Business and first class fares also attract a 12.5% service tax, which is not levied on economy class tickets. Yet, most airlines are strengthening their business class products. Singapore Airlines general manager (India) Foo Chai Woo said that seats on business class were full almost through the year.

First class no longer as busy as business class

BUSINESS class is the way to travel these days. Airlines are finding seats in this category being snapped up way ahead of flight departures, and are working to strengthen business class products. Singapore Airlines has recently introduced a new business class product with a 1-2-1 seating layout on its Boeing 777 aircraft. Incidentally, for many airlines, the first class is not as busy as business class. The first class, usually 8 to 16 seats, is often built on acres of prime space in an aircraft. “Very often, the presence of a first class is for the ‘halo effect’ that slots an airline as a premium carrier,” says an airline source. The yields do not justify the amount of real estate used up for first class. Carriers like Singapore Airlines, for instance, do not have a first class on flights operating out of Amritsar, Ahmedabad and Chennai. The space is used to put in more business and economy class seats. Internationally, new standards are set every year with airlines trying to better each other with more space for their premium cabins. A flat bed is now de riguer in most carriers and airlines are moving on to improve their offering with live television and other bells and whistles.

Courtesy: EconomicTimes
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THE iPOD RADIO

LOCAL innovators love popular devices. Tinker with the gadgetry and you could convert a nifty device into a different tool. Take for instance Apple’s iPod. A San Francisco teenager, Kristyn Heath, has invented a gadget that turns iPods into miniature radio stations, broadcasting songs to nearby devices. The system, called NoStringsAttached (NSA), uses FM radio waves to transmit music from a portable music player to any other specially equipped player within 15 feet. The NSA system comprises two identical units. Each one plugs into the standard headphone jack found on most MP3 and CD players. A user selects radio frequencies and then opts to transmit or receive music by flicking a switch. Listeners don’t even need a music player if they just want to tune in to someone else’s music. All they need is a pair of headphones plugged into a NSA unit. The 16-year-old made the gadget so that she could share her favourite songs with her friends. She has already submitted a patent for her idea of broadcasting to small spaces. A NSA kit, which includes two transmitter/receiver units and a set of headphones, costs about $60. Powered by a single AAA battery, each unit can transmit tunes for up to nine hours or act as a receiver for approximately 20 hours. Wireless music sharing among friends could be the next big thing.

Courtesy: EconomicTimes

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Citicorp gets go-ahead for 15% stake in Flemingo Duty Free

THE government has approved Citicorp Venture Capital International’s proposal to pick up 15% stake in Flemingo Duty Free Shops Pvt Ltd (FDSPL) which runs duty-free shops at various airports and seaports. The deal is valued at more than Rs 100 crore. The Foreign Investment Promotion Board (FIPB) cleared Citicorp’s proposal recently and the finance minister has also approved it. The application for the foreign investment was pending with the Board. FDPSL would initially issue convertible preference shares to the Citicorp for about Rs 100 crore, official sources said. These preference shares would be converted into equity at a later date for a premium, Flemingo has told FIPB. The Citicorp’s shareholding in FDSPL would be up to a maximum of 15% of the paid-up equity of the company. Currently, Flemingo International, a company based in British Virgin Islands, holds 51.22% equity stake in FDSPL while various NRIs hold 24.87% stake. After conversion of Citicorp’s preference shares; Flemingo International, NRIs and Citicorp would respectively hold 43.54%, 21.14% and 15% in FDSPL, taking the total FDI to 79.68%. FDSPL had sought FIPB approval to issue 10 lakh convertible preference shares for Rs 1,000 each to the Citicorp. FIPB earlier deferred the FDSPL’s proposal for comments from various ministries including finance. The department of economic affairs (DEA) and the department for industrial promotion & policy (DIPP) had raised no objection. DEA had conveyed no objection to the proposal subject to issue of preference shares being in conformity to SEBI, RBI and other statutory guidelines, the sources said. FIPB has now finally approved Citicorp investment in Flemingo. Flemingo runs dutyfree shops at Delhi and a number of other airports. The company is also planning to set up duty-paid shops in downtown areas to tap potential for top international brands in metro cities.

Damas allowed 51% in FDSPL venture

THE government has cleared a proposal from Dubai-based Damas for investing 51% in a joint venture with Flemingo International’s Indian arm to set up duty-free jewellery outlets at Indian airports. Damas Jewellery LLC has set up a JV firm with the Flemingo Duty Free Shop Pvt Ltd (FDSPL) to set up duty-free shops at airports for selling jewellery products and luxury watches. The new JV company, which has been registered under the Indian Companies Act, 1956, is called Flemingo Jewellery India Pvt Ltd. The Foreign Investment Proposal Board (FIPB) has cleared the Damas-Flemingo joint ventrue, according to official sources. Damas will be selling its gold jewellery brands like harmony and legacy and its diamond brands at major airports. Damas has already been allowed to set up shops at Chennai, Trivandrum and Jaipur international airports. Operations at these airports are expected to begin within a month. While Damas is holding a 51% equity stake in the JV firm, the remaining stake will be with Flemingo, official sources said. The Damas-Flemingo venture has inked deals with stateowned Airports Authority of India (AAI) to set shops at three airports. The proposed shops shall use the brand name Damas. The JV company is also keen on starting operations at other major airports, government sources said. Being a foreign investor, Damas has sought approval from the FIPB to set up a JV firm. The sources said FIPB’s clearance to Damas allows the company to pick up 51% equity shares of Flemingo Jewellery India. The JV firm will issue 22,95,000 shares at Rs 10 face value to Damas. While Flemingo will look after the day-to-day management, Damas will depute its personnel and specify other requirement to run the business. Damas LLC, established in 1993, is engaged in the business of gold jewellery, diamonds and watches. Damas has operations in six countries, 127 retail locations and it has one manufacturing & selling division. It also jointly controls companies in India, Dubai, Kuwait, Maldives and UAE. Its annual revenue in 2005 was more than Rs 3,200 crore. Damas operates in India through D’damas India which functions in partnership with diamond house Gitanjali Digico Group. D’damas India has granted a no-objection certificate to Damas to enter into a JV with Flemingo, as per the requirements of Press Note 1 (2005).

Courtesy: EconomicTimes
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Car majors ramp up IT, finance ops in India

GLOBAL car manufacturers are ramping up their IT and finance operations in the country to support their global operations. While India has emerged as the low-cost manufacturing base for many car manufacturers, it is also now serving as a significant low-cost centre for their finance, IT and engineering services, sources said. Companies like Ford, Volvo, General Motors among others have outsourced some of their global operations to India. It is no longer surprising, that a global CEO based out of Detroit would have his promotions, salaries and bonuses handled out of India by a Bangalore-based accountant. And it is a trend that is on the rise. Ford India, for instance, is significantly ramping up its finance and IT units in the country. Ford Information Technology services (FITSI) the wholly-owned subsidiary of Ford Motor handles critical IT and engineering services to support Ford operations worldwide. This unit has expanded rapidly with a captive employee base of 150 people and a third party headcount of about 530 people. Also, according to company officials, Ford Business Service Centre (FBSC) that handles the accounting services along with other functions such as banking, reconciliations, taxation, marketing & sales and purchasing support, internal control and audits now gives support to all Ford businesses in Europe, North America, South America, Asia Pacific and Africa. FBSC unit has just crossed the 1,000-employee mark this December. General Motors India has also seen a consistent increase in the outsourcing of finance and IT work into India in the last two years. Volvo India, the Swedish bus manufacturer, is also looking at making India the sourcing hub for its worldwide operations. The company plans to increase its R&D, engineering design activities and IT services sourcing from India. The company plans to increase the headcount at its engineering design office in India. “We currently employ 80 engineers at our engineering design office. We plan to employ another 100 engineers soon,” said Eric Leblanc, managing director, Volvo India. Daimler Chrysler R&D unit in India also handles a significant portion of the its global engineering services. According to industry sources, the growing outsourcing of work in the non-manufacturing sectors for global car manufacturers is on the rise due to the low costs and available pool of talent in the IT and accounting departments that India offers.

Courtesy: EconomicTimes
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FIPB defers decision on Hutch Essar deal, seeks more info

THE Foreign Investment Promotion Board (FIPB) on Thursday deferred clearance for Vodafone’s acquisition of Hutch Essar (HEL) and sought additional information from all stakeholders on the shareholding of the company. “I have sought more comments from the companies,” finance secretary Ashok Jha — who chairs the Board — told reporters after the FIPB meeting. This is the second time FIPB has deferred its decision on Vodafone’s application. The Board had taken up Vodafone’s application last week, but the deliberations were inconclusive as the RBI had not submitted its report on the shareholding pattern and the alleged violation of sectoral FDI cap. Last month, Hong-Kong Hutchison Telecommunications International (HTIL) had sold majority stake in Hutchison Essar (HEL) to Britain’s Vodafone Group Plc for $11.1 billion. The FIPB did not come to a conclusion even after hearing representatives from HTIL, HEL and Vodafone who made presentations to officials, explaining the equity structure of HEL. It seems the Board would wait for reports from various government arms before coming to a conclusion. In a related development, HTIL chief Dennis Liu told reporters in Jakarta that the company was in full compliance with FDI norms of India and it would not take much time for the sale to Vodafone to be concluded. Sources said that the FIPB could not take a call on Vodafone’s application as it was yet to receive conclusive replies from both the finance ministry and the law ministry on the extent of foreign holding in Hutch-Essar. The RBI, in its reply to the finance ministry’s query on this issue, had said that the 12.26% shareholding of HEL MD Asim Ghosh and Max India chairman Analjit Singh in HEL amounted to violations of the Foreign Exchange Management Act and the country’s FDI norms. Following this, the finance ministry has sought the law ministry’s opinion on the stake held by Mr Ghosh’s and Mr Singh. “The FIPB will take up the Vodafone application for consideration only after receiving the law ministry’s opinion, and this was unavailable for Thursday’s meet. Additionally, other agencies such as the enforcement directorate and the department of income tax have also not submitted their reports. It is also believed that the PMO after receiving complaints from many MPs has asked the department of telecom to examine the changes in HEL’s shareholdings over the last 10 years,” a source told ET. Vodafone CEO Arun Sarin on Monday told ET that the company was not concerned over the delay in getting FIPB clearance as the deal was barely a month old. "Maybe, if this question was asked six months from now, I would say that it is disappointing. The FIPB has to be given time, and I am fine with it. At the end of the day, I want FIPB, the finance ministry, the telecommunications ministry, the industry ministry and the Prime Minister to say that you are welcome here (in India). The last thing we want to do is show up one fine day and then people ask, ‘Hey, hang on, which door did you come from, was it the front door, back door or side door,” Mr Sarin had said.

Courtesy: EconomicTimes

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Hasta la Vista baby, say PC makers

AFTER all the hype surrounding its January launch, Microsoft’s new Vista operating system has yet to brighten the outlook for PC makers and could even lead to oversupplies for those who had built up inventory. Top PC makers, such as Dell, Hewlett-Packard and Lenovo may now have to resort to sales of lower-margin computers in emerging markets such as China, Eastern Europe and Latin America for their growth this year. Featuring high-definition video and audio functions and three-dimensional graphics, Vista is being billed as a major upgrade of its predecessor, Windows XP. But the software, which runs on more memory and superior graphic cards, has not taken off as fast as some had hoped, leading to concerns of potential inventory woes for makers of those products, analysts and industry players said. “Vista has had no big help,” said Acer’s president Gianfranco Lanci, adding that PC makers are really not counting on Vista to drive high demands for the industry. Samsung Electronics, the world’s top memory chip maker, also said that demand for DRAM computer memory chips from Vista hasn’t materialised as fast as it had predicted. “We had expected the ‘Vista impact’ on DRAM around April, but now we see it being delayed into the second half,” said Hwang Chang-gyu, semiconductor business president of Samsung Electronics. But many PC vendors were already sceptical on fresh demand from Vista even before the product’s launch in January, better preparing them for a potential disappointment, said JP Morgan analyst Charles Guo. Major PC players like Asustek Computer, also the world’s top motherboard maker, said Vista might have warmed up the market but significant results have not been seen. “We aren’t seeing any effects yet and compatibility issues will take at least six months to resolve,” said an executive at Asustek, who declined to be identified. He added that many corporate customers — who tend to buy in much larger volumes than individual consumers and therefore can make a bigger impact — were staying on the sidelines for now as individuals accounted for new buying. “We’ve carried out numerous surveys recently with IT managers and they’ve all said they are not planning to migrate to Vista, and we are not expecting a major influx anytime soon,” said Bryan Ma, an analyst at IDC, expressing a similar view. Different forms of Microsoft’s various Windows operating systems now run more than 90% of the world’s PCs. Computer makers are now looking to strong buying from emerging markets such as China, Eastern Europe and Latin America to boost business. Dell announced earlier this week a super cheap computer costing as little as 2,599 yuan ($336) specifically for China, now the world’s second largest PC market by unit sales. “Emerging markets are still a key driver for growth in the PC sector. Global PC shipments this year should grow by low double digits, in the 10% range,” said Mr Lanci. The comment by Acer, which is trying to overtake China’s Lenovo as the world’s No 3 PC maker, was in line with the outlook for the broader industry. IDC expects worldwide PC shipments to reach about 253 million units this year, up 11% from 228 million in 2006. That 2007 growth rate is up from the 9.6% posted last year. Vista’s newness aside, analysts also say the right computing platform, which is needed to run the operating system smoothly, is a main factor that will determine whether the software will be accepted in the near term. “Intel’s main Santa Rosa platform needed to support Vista features won’t be launched until May 10, and in the last five to 10 years, the biggest PC driver is still price,” said JP Morgan analyst Alvin Kwock. Microsoft founder Bill Gates said last month that Vista has been well received and that PC vendors have seen a nice lift in their sales. A week before his comments, chief executive Steve Ballmer had said that Vista would only create a ‘small surge’ in PC sales for its fiscal year starting in July, and would not spur a big increase in normal growth rates. “Vista was very popular in the first couple of weeks, but let’s not just focus on that. Dell and Hewlett-Packard don’t even advertise much on PCs with Vista,” said JP Morgan’s Kwock.

Courtesy: EconomicTimes
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Diageo favours buying brands, may bid for Absolute

DIAGEO, the world’s largest liquor maker, would rather buy drink brands than make a “transformational” acquisition, and is considering bidding for Absolut vodka, CEO Paul Walsh said. Walsh wouldn’t rule out buying Remy Cointreau SA, the maker of Mount Gay rum, which is one-tenth of Diageo’s size and whose shares have risen on speculation Diageo may bid. Absolut, made by Vin & Sprit AB, may be sold by Sweden’s government. Buying “quite large brands could be a possibility,” Walsh said in a March 27 interview at the company’s London headquarters. “It’s still an amazingly fragmented industry. It’s hard to conceive any transformational deal.” The company’s last major brand acquisition was in August 2005, when it purchased Bushmills whiskey from Pernod Ricard. Buying Absolut would give Diageo, the London-based owner of Smirnoff, the two top-selling premium vodka labels in the world. The biggest liquor takeover in the past 10 years was Pernod’s $13 billion takeover of Allied Domecq in 2005. A broader range of brands would help Diageo’s push into developing markets. The company increased its profit forecast last month after increasing sales of Johnnie Walker Scotch whisky and Smirnoff in China, Brazil and Mexico, and created an Asia-Pacific unit in January. Walsh said he will look “very closely” at Absolut. Sweden’s government hasn’t yet set a method or timetable for the sale of state assets. Stakes may be sold in initial public offerings, or by direct sales to other companies. A sale of all of Vin & Sprit may fetch 4.6 billion euros ($6 billion) in a sale, according to JPMorgan Chase & Co research, and may trigger further combinations in the industry. Pernod and Bacardi are considering buying the Swedish distiller. Vin & Sprit also makes Plymouth gin and Cruzan rums. When asked if he would consider buying Paris-based Remy, Walsh said he “looks at everything.” The French company’s market value is 2.3 billion euros. Diageo declined to comment on Remy in January, when bid speculation sent Remy’s shares surging. Remy is leaving its Maxxium joint venture in Asia to gain more control over distribution, a step analysts have said may lead Diageo to scrap its own pact with LVMH Moet Hennessy Louis Vuitton SA in the region and make a bid for Remy. “We have a fantastic relationship with Moet Hennessy,” Walsh said. “It’s hard to conceive we would do anything to disrupt that. If you believe something with Remy would disrupt that, you can draw your own conclusions.” Shares of Diageo slipped 1.5 pence, or 0.2%, to 1010.5 pence at 9.30 am in London. Remy shares added 1 cent to 50.90 euros in Paris. “He could have said ‘no, we are not interested in Remy because it would disrupt our relationship with LVMH’, but he didn’t say that — he is leaving the back door open,” said Laetitia Delaye, an analyst at Kepler Equities in Paris. “It could mean he found a way to keep both LVMH and Remy, though I don’t see how that’s possible.” Walsh, 51, took over as chief executive in 2000 from John McGrath after being chief operating officer for eight months. He headed Diageo’s Pillsbury Co baked goods unit for 10 years before that. Pillsbury was sold to General Mills Inc in 2000. Shares of Diageo added 19% last year, the fourth straight annual gain, compared with an 18% gain by Pernod stock. Diageo’s market value is about 27 billion pounds ($53 billion), more than double Pernod’s 16.2 billion euros. Diageo’s most recent purchase was a 43% stake in China’s Sichuan Chengdu Quanxing Co in a bet that rising incomes in the world’s most populous nation will boost demand. China won’t add to Diageo’s earnings for the next couple of years, Walsh said in the interview. The country is likely to have a “meaningful impact” on profit in five years if demand grows at the same pace as this year, he said. Diageo, which doesn’t break out sales by specific country, said first-half revenue excluding acquisitions advanced 16% at its “international” division, which comprises Asia, Africa and Latin America. The company plans a new distillery in Scotland to meet rising demand for Scotch in emerging markets. Like Pernod, the distiller has sought expansion outside Europe as demand for Guinness stout and premixed Smirnoff drinks slows in the region. “Europe is tough, but we do see it getting better,” Walsh said. He expects sales to return to growth in the region. Spirit brands including Johnny Walker and Bushmills Irish whiskey are “poised for growth” as Guinness demand in the British Isles shrinks, he said. Diageo paid 200 million pounds for Bushmills.

Courtesy: EconomicTimes

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Tur prices soar on supply woes

SUPPLY constraints and firm trend in international markets have pushed up prices of tur (pigeon peas) in the domestic market. Prices have jumped by about 20% in the past 15 days. Despite a ban on futures trade in this commodity since mid-January — a move attributed to rein in inflation, the strong fundamentals are back in action. Prices of lemon tur (FAQ) that were at Rs 1,930 per quintal a fortnight ago have soared to Rs 2,300 per quintal. According to market watchers, prices are expected to rise further in the coming days. The firmness in the prices is on account of low estimated domestic production for the Indian crop along with a crop failure in Myanmar, a major producer of tur. As per the average estimates, taking into account estimates by the trade and the government, the country is expected to produce around 22 lakh tonnes of tur this year as against last year’s 25 lakh tonnes. There may be overall shortage in pulses this year with the Economic Survey projecting output at 14.5 million tonnes as against a target of 15.1 million tonnes. When contacted, KC Bhartiya, president of the Pulses Importers Association, agreed that there is a pressure on prices. He said the “government needs to further scale up its efforts to import the commodity”. Mr Bhartiya expects the government to import nearly five lakh tonnes of pulses this year and 25 lakh tonnes by private importers. Meanwhile, the international price of the commodity has also scaled up from $450-$480 per metric tonne a month ago to $550. This has also impacted the prices in the domestic market. A Jalgaon-based trader and miller Satish Mittal said that the domestic price has increased by Rs 200 to Rs 300 per quintal and may further rise due to a severe shortage. “The tur production that was hovering around 25 lakh tonnes is expected to come down to 15 lakh tonnes this year and even the crop production in Myanmar was not good,” he said. Mr Mittal said the production may further dip as farmers are shifting towards growing two crops in a season as against tur which is a nine-month crop.

PRICE WATCH

Despite a ban on futures trade in this commodity since mid-Jan, strong fundamentals are keeping prices firm

Prices of lemon tur, which was quoting at Rs 1,930/quintal 15 days ago, gone up to Rs 2,300/quintal now

Lower domestic production and a crop failure in Mayanmar are also aiding the sentiment

Courtesy: EconomicTimes

For more detal on Retail India visit: http://www.retailindia.tv/

The demand of Watermelon is high across India

THE COUNTDOWN BEGINS: The demand for watermelon is soaring across the country along with every rise in mercury. Here, two vendors in Ahmadabad arrange their produce on Thursday, ahead of this year’s peak season.

Courtesy: EconomicTimes
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China’s young & trendy add a dash of gold

MURPHY Ma should be a gold miner’s dream — she’s young, trendy and has enough income to spend a few thousand yuan a year on jewellery. But this Chinese fashionista, like many others in their 20s and 30s, prefers white metal jewellery to gold — something promoters of the yellow metal are keen to change. As China’s economy booms, sales of gold sales have taken off. Rural women and workers in the cities have bought thicker, larger yellow gold earrings, and gold shop windows glitter with Buddha statues, Olympic memorabilia and cute pigs in solid gold. But it’s been a harder battle to reach young professionals like Ma, who prefer the cool glamour of platinum and a touch of individuality. “Before I thought gold was pretty pokey, something for grannies to wear. But now there’s K-gold and it’s becoming a little younger,” she said at a gold promotion soiree in a chic Beijing art warehouse on Wednesday, referring to a brand of gold aimed at the young and fashionable. In the drive to reach young Chinese, gold promoters have to combat a cultural preference for gold as a means to hoard wealth for hard times. China was one of the few countries in the world last year where gold demand was barely dented by a 25-year peak in prices. Gold jewellery demand fell by only 1% in 2006, compared with a 16% fall world-wide. Gold is often sold by weight in China’s department stores, and can be sold back for a small fee if prices rise or if the buyer needs some cash. The purity demanded by consumers who plan to re-sell the metal means pieces are often too soft to retain an intricate design. The focus on weight also means jewellers’ margins are too thin to justify spending on raftsmanship. But marketers have been making inroads with K-gold, which has a lower purity to support better designs and fatter margins for jewellers. K-gold accounted for 18% of jewellery sales in greater China in 2006, up from 15% in 2005. “K-gold has grown phenomenally, from 4 tonnes in 2004 to 44 tonnes in 2006,” said Thero Setiloane, executive director of marketing for AngloGold Ashanti, the world’s third-largest gold miner. One of the few miners to actively promote gold jewellery, AngloGold Ashanti has picked China as a focus area along with India, the Middle East, South Africa, and Brazil. Designers are also getting into the act, with glossy jewellery magazines and fashion shows. Designers like Zou Ningxin are trying to craft a look that will appeal to modern Chinese.

Courtesy: EconomicTimes

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Govt rules out ban on private traders in wheat market

THE government has denied imposing any restrictions on private traders for buying wheat from farmers, but said it will monitor the stock positions of these companies to check hoarding. “The government has not put restrictions on any company, including MNCs, to buy wheat from anywhere in the country. The farmers are free to sell wheat to whosoever they like,” food and agriculture minister Sharad Pawar told reporters here on Thursday. The minister dismissed suggestions that private companies were being restricted to enable staterun Food Corporation of India (FCI) meet its procurement target of 151 lakh tonnes for this year. Private traders should, however, need to furnish details about their stock position if they purchase more than 50,000 tonnes of wheat in a year, Mr Pawar said. “The nodal procurement agency, FCI, does not hide its stock position and a similar policy should be followed by the private traders,” he said, adding FCI had a system of disclosing its stock position on the website. According to industry officials, the government had urged upon the private traders not to enter the wheat market for a few weeks till its procurement gains momentum. “As agriculture minister, I want farmer to get better price. Simultaneously, there should be no hoarding and consumers should not be exploited,” the agriculture minister said.

Courtesy: EconomicTimes
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Edible oil prices hit upper curcuit

Edible oil prices continued to rule firm on the local oils and oilseeds market on Thursday. Groundnut oil rose by Rs 5 to Rs 645 per 10 kg, while refined plamolein inched up by a rupee to Rs 444. Among industrial section, castor oil commercial improved up by Rs 5 to Rs 454, while castorseeds bold rose by Rs 25 to Rs 2,120. Linseed oil also moved up by Rs 5 to Rs 465.

Courtesy: EconomicTimes
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Sugar prices show a mixed trend

Vashi wholesale sugar market recorded alternate bouts of buying and selling pattern on Thursday. Prices of medium sugar edged up on renewed enquiries from retailers, while small sugar prices eased back slightly. Medium sugar (M-30) rose by Rs 5 to Rs 1,510/1,555 per quintal. Small sugar (S-30), on the other hand, lost Rs 10 per quintal to Rs 1,490/1,515.

Courtesy: EconomicTimes
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Copper stays firm despite growth pangs

Copper prices on the London Metal Exchange traded sideways on global growth worries and tin extended the previous session’s losses ahead of the second quarter, analysts said on Thursday. Copper for delivery in three months was up $44.5 at $6,699.5/6,700 a tonne in the second official open outcry session. On Wednesday it closed at $6,655. Tin was down 3.3% at $13,350/13,400 from $13,800 on Wednesday, when it dropped over 5% on profit-taking on long positions built up in recent months. Falling nickel stocks underpinned prices, down by 204 tonnes to 5,292, with just 3,270 available to the market — less than one day of global consumption. Three-month nickel gained 1% to $43,845/43,850 in thin volumes against Wednesday’s $43,400. Lead stood at $1,904.5/1,905, up $4.5, aluminium was up $5.5 at $2,755.5 and zinc was flat at $3,200.

Courtesy: EconomicTimes
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Blackstone plans counter-bid for drugs retailer Alliance Boots

Private equity firm Blackstone Group is planning a possible counter-bid for British drugs retailer and distributor Alliance Boots, the Daily Telegraph reported on Thursday, citing sources familiar with the matter. Such a move would frustrate bid efforts by Stefano Pessina, deputy chairman of Alliance Boots, the newspaper said. Pessina, backed by buyout firm Kohlberg Kravis Roberts, was expected to propose a new offer for the firm within weeks, it added. The Times, however, quoted sources close to Pessina as saying he would not be rush-ing back with a new offer for Alliance Boots and was waiting for some encouragement. The company, created from the merger of health and beauty retailer Boots and drugs wholesaler Alliance Unichem last year, rejected a £9.7 billion ($19.06 billion) bid proposal earlier this month from Pessina and KKR.

Courtesy: EconomicTimes
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Sail Salem plant launches Odyssey dinner set

SAIL's Salem Steel plant has launched Odyssey, a newly de-signed fortypiece stainless steel dinner set, made out of stainless steel. The 12-kg collection of kitchenware is designed for a family of six.

Courtesy: EconomicTimes
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Finnair to fly to Mumbai, increase frequency to Delhi

As part of its expansion plans in India, Finnish carrier Finnair is all set to add Mumbai as the second destination and increase frequency to New Delhi to every day of the week. Finnair, which currently operates three flights from here, will begin its daily flights from mid May. From Mumbai, it will operate five times a week .

Courtesy: EconomicTimes
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Doordarshan to launch two channels in Britain

After years of uncertainty, Doordarshan will begin broadcasting two free-to-air channels here with the idea of bringing ‘the essence of India to Great Britain’ from April 16. According to the Rayat Group, the private company in charge of the channels’ distribution here, the two channels, DD India and DD News, will start broadcasting 24 hours a day from April 16. The content will be mostly in Hindi. The launch of the channels is expected to provide a base for further expansion into Europe.

Courtesy: EconomicTimes
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Gitanjali to invest Rs 100 cr in luxury retail space

Gitanjali Group will invest Rs 100 crore over the next 2-3 years to set up luxury malls and stores across the country, besides tying up with international brands to facilitate their entry in the Indian luxury market. The group’s foray in the luxury retail market would be through ‘Luxury Malls’ and ‘Luxury Connexions’, which would act as consultants to global brands on how to enter the domestic market. The first store would open in Hyderabad, followed by Mumbai, Bangalore, Delhi, Kolkata, Ludhiana, Chandigarh and Chennai.

Courtesy: EconomicTimes
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Chanel plans to expand presence in India

Bullish on India, luxury goods major Chanel will expand its presence in the country through shop-inshops, while hoping to grow its business 50% annually. The luxury brand has been in the country for the past two years and offers its complete range of products like watches, fragrances, beauty, eye care and fashion accessories.

Courtesy: EconomicTimes
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GM launches Chevrolet Optra Platinum for Rs 8.24 lakh

General Motors India has launched the Chevrolet Optra Platinum, a special edition of its premium mid-size sedan. Kitted out with a range of exterior and interior features it will be available in two new colours — icy blue and shimmering black. Among other features, Optra Platinum sports a platinum badge on the trunk lid, a chrome kit for the front lower bumper, outer rear view mirror and taillamps, a sporty gear knob and a 1 DIN MP3 music system and a rear spoiler. A total of 250 units of the Platinum will be available at a price of Rs 8.24 lakh ex-showroom Delhi. GM is offering a 3-year/100,000-km warranty on the new variant.

Courtesy: EconomicTimes
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BMW starts plant, rolls out ‘3 Series’ sedan

BMW on Thursday opened its first plant in the country and rolled out the ‘3 Series’ sedan, priced at Rs 26.95 lakh (exshowroom) onwards. The company will also roll out its other luxury sedan ‘5 Series’ by May-June, which is expected to be priced between Rs 37 lakh to Rs 42 lakh across all variants from this greenfield plant located at Chengelpet, 55 km from here. The company has invested euros 20 million in setting up the plant, which has a capacity of 1,700 units per annum on a single shift.

Courtesy: EconomicTimes
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Big Retail Has Started Bleeding Mom-n-Pop Stores

Though currently accounting for just 3-4 % of the Rs 12L crore retail market, big organised retail has already raised the hackles of 12-million plus standalone mom-and-pop stores across the country. Is the threat of the big fish gobbling up the small one real after all ?

Basically, the entry of big players in the retail market is provoking a lot of uncertainty in the retail sector. We’ve been opposing the entry of foreign direct investment (FDI) in the retail sector based on a detailed analysis of the sector in the country. Essentially, only 2%- 3% of the unorganised retail market is organised. The retail sector today is the second highest income generator, after agriculture. The employment in the retail sector is also representing disguised unemployment as well as underemployment because unorganised retail does not entail a high level of investment in our country. Therefore, a lot of people, not only the young but also the old, do run their own retail outfits from a portion of their own or rented residential premises, which have come to be called mom-n-pop shops. A concrete analysis of the unorganised retail sector also reveals that the own account enterprises, both in the urban and rural areas, mainly comprise the retail sector. An extrapolation from the total volume of turnover of the retail trade per such own account enterprises in the retail sector shows that the turnover is far less than the turnover per employee of giant retail multinational chains. The Left parties’ note on the retail sector explaining the reasons for opposition to FDI in retail has brought out this calculation basing itself on the annual per employee turnover of Wal-Mart International. Therefore, the entry of entities like Wal-Mart will have a similar effect in our country as well. Since the space for retail trade is finite, so the per employee turnover of major corporate retail chains cannot but happen without displacing some of these unorganised retail outfits. The other problem is that such big retail players do not only endanger employment in the retail sector alone. Today, the business model of the retail sector involves a complete cycle starting from influencing production to point of sale traversing its journey through procurement, transportation, storage and distribution. The entire chain involves major capital intensive investment with significant control over supply chain management. This, therefore, gives the big retailer a disproportionate leverage vis-à-vis the primary producer both in the agriculture sector as well as in the small and medium enterprises. It is obviously fashionable to shed tears for the ‘bleeding’ small retailer – but the truth lies elsewhere. First, the fact is that small retail has never been in such great health that they have now started bleeding – it has always been a subsistence livelihood for 99.9% of small retail and that has not been because of big retail but because the monopolistic/oligopolistic nature of the FMCG companies who have squeezed them to extreme low margins (in contrast to their own high margins and ROCE and PE’s). Of course, small retail has added to its own problems by not having the scale to harness efficiency or the ability to invest and modernise and provide better value to the consumer. Indian consumers spend more share of their income on food and daily necessities than counterparts elsewhere and while part of this is because of lower incomes, a large part of this stems from the inability of small retail to deliver value to consumers. The reality is that the Indian consumer is paying the price for the inefficiency of the small retailer and for the dominance of the FMCG marketer - and both are interlinked. As larger retailers emerge, two things will change – there will be far greater ability to harness scale efficiencies – be it in buying or store operations or backend logistics or whatever – and also gain bargaining power in dealing with the FMCG companies: both these will ensure that big retail is able to become significantly more efficient than the small retailer. No one needs to be told that cutting 5-6 layers of intermediaries by direct sourcing or putting in IT systems to monitor fresh produce movement across the chain will not cut down costs - and of course the fact of intense competition that the organised retail sector is seeing coming up means that these efficiencies cannot be the profits of the retailer but really the savings of the consumer. The emergence of big retail will really mean sharply lower prices for the billion – blue or red whichever – and the ones to shed tears really if at all would only be the intermediaries who were profiting out of the inefficiencies. After all, we do not stop expansion of mobile phones because the STD/PCO owner will go out of business – and surely there can be no case to hold that whatever little additional pain is caused to small retail is not more than substantially offset by the benefit to the billion consumers. Since the space for retail trade is finite, so the per employee turnover of major corporate retail chains cannot but happen without displacing some of these unorganised retail outfits. Besides, aggressive marketing driven by huge expenditure on advertisements allows the big retailers to draw consumers away from the mom-n-pop shops .Small retail has never been in such great health that they have now started bleeding – it has always been a subsistence livelihood for 99.9% of small retail and that has not been because of big retail but because monopolistic nature of the FMCG companies who have squeezed them to extreme low margins.

Courtesy: EconomicTimes
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Bajaj open to lite car ride with Tatas

Co Also Working On A Concept For Showcasing At 2008 Auto Expo

THE SEARCH for a people’s small car may bring together two of the biggest local players in the Indian auto industry. Bajaj Auto is working on a “nontraditional lite car concept” for which it is open to partnering with Tata Motors which is working on a Rs 1 lakh car. Speaking to ET, Mr Rajiv Bajaj, MD, Bajaj Auto said: “We are newcomers to this game and a traditional car is out of our league. But we are doing something different and if there are synergies with what Tata Motors is doing we would be more than open to talking to them.” ET had reported Bajaj Auto’s foray into light goods and passenger carriers in the issue dated January 29. Bajaj Auto, which is foraying into four-wheelers with a light goods carrier, is also developing a car concept to be showcased at the 2008 Auto Expo. “The concept is a car as in not a onebox passenger carrier but a two-box vehicle like the M800 or Alto,” Mr Bajaj said. “But it is very much a concept unlike the goods carrier which is for commercial production. We are trying an entirely new technology and we are not sure if it will work.” The Bajaj concept car will look and feel like a car but will boast an engine that’s as powerful as the M800 engine but as cheap as an auto rickshaw engine.

Different tech angle

Because the technology is entirely new, Bajaj is not interested in talking to any of the traditional leaders of the compact car market. “Our concept will look and feel entirely like a car but I am approaching it from a technology angle that is totally different and the established players will not be able to help us with that,” he said. But if Tata Motors is interested, “I would be open to teaming up with them... “If we are able to prove a new technology and the Tatas are interested in using that to take their project ahead, I would be open to talk to them.” “If the two companies can compliment each other in creating something as revolutionary as this, why not?” The search for a small car that meets individual mobility needs, is a global phenomenon, he said, with car makers looking at two ends of the spectrum. At one end there will be niche and pricey small cars like the Smart and at other end, affordable small cars like the ones on Indian roads. But to close the cost of ownership gap between a 100 cc motorcycle and the M800, the new range of ‘lite’ cars will have to be substantially lower priced, meet functional needs like design, performance and reliability, meet all regulatory requirements expected of cars (which are non-existing for two and three wheelers) and be profitable as well. Is Bajaj Auto working on something like that? “As far as actual development work goes, we are working on a lite goods carrier which will also meet all the abovementioned requirements,” Mr Bajaj said. “As far as a passenger version goes, we are not in the process of actually developing one but it is a project around which we are currently thinking.” But it can’t be done with traditional technology, he said. “We have some ideas and we are trying to put together a concept vehicle which will also satisfy all the criteria along with the goods carrier.”

Courtesy: EconomicTimes

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Govt may ask Reliance to halve Maha Mumbai SEZ

THE government may ask Reliance Industries to scale down the size of its proposed multi-product Maha Mumbai SEZ from 10,000 hectares to 5,000 to avoid dislodging farmers and villagers unwilling to relocate. The decision is expected to be taken at the next meeting of the empowered group of ministers (eGoM) on SEZs. With rising protests from farmer groups, political parties and small businesses intensifying in the state, the government’s proposal could be seen as an attempt to prevent a repeat of the violence in West Bengal’s Nandigram. “If Reliance scales down its operations by half in Maha Mumbai, the sensitive areas could be excluded from the zone and peace restored,” the official said. The Board of Approval for SEZs, in an earlier meeting in August last year, had observed that land planned for building the Maha Mumbai SEZ was much more than required. With the situation hotting up, the eGoM headed by foreign minister Pranab Mukherjee is expected to ask Reliance to reduce the size of the SEZ, sources said. The date for the eGoM, which will also decide on the future course of the SEZ policy, has not yet been firmed up. It is being widely speculated that the meeting will take place only after the UP assembly elections are over. There seem to be two compelling reasons for the Centre to revisit the issue. The Board of Approvals had earlier washed its hands off the issue. The board categorically stated that it had indicated to the Maharashtra government about the need to review the size of RIL’s SEZ after it received a number of representations. “However, the Maharashtra government has approved acquisition of over 10,000 hectares and that land being a state subject, it is the prerogative of the state government concerned,” the board had noted in its meeting squarely blaming the Congress-led Maharashtra government. Politically, it was suicidal for Congress as it gave an impression that though the board was against RIL’s mega-SEZ, the Vilasrao Deshmukh government had facilitated the project. Ever since the state government began facing flak for its SEZfriendly image, the Congress had, on sensing public mood, dispatched a factfinding committee on Wednesday to meet the SEZ-affected people in Raigad district.

Opposition to co in some places

Another reason, according to highly placed sources, is the opposition to the company in some of the villages. Of the 45 villages from the three talukas of Pen, Uran and Panvel to be acquired, the company was finding it particularly difficult to deal with 20 from Uran taluka. These politically-active villages have been leading the campaign against the SEZ. It was here that the Congress faced humiliating defeat in the recent zilla parishad elections. The volatile political situation and violent protests had forced the company to think of redrawing its SEZ plan. “The company may delete 20 villages from Uran from its SEZ,” a high-level political functionary had recently told ET. Last week, when hundreds of agitators, mostly farmers, blocked roads in Raigad district in protest against the Maha Mumbai SEZ, chief minister Vilasrao Desmukh promised that the government would not interfere in the land acquisition process in Maharashtra. The protesters, however, are continuing to keep up the pressure on the state for withdrawing land acquisition notices issued to people in 45 villages falling in the Maha Mumbai SEZ. Apart from farmers, there are businesses located in the zone, many servicing the JNPT port, who have refused to be relocated. The protesters have planned another march on April 5 in Mumbai. Reliance has received an in-principle approval for the Maha Mumbai SEZ. A formal approval is given by the BoA only when all land-related controversies are put to rest and the developer is in possession of the entire land. Meanwhile, the Reliance group has come up with its own relief and rehabilitation package for those to be displaced by the Maha Mumbai SEZ.

Courtesy: EconomicTimes
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Have your fill & some diamonds too, Spectrum Jewellery Sees Robust Diamond Sales At HPCL Retail Outlets

IF Indian marketers were rushing to petrol pumps to vend pizzas, this is clearly one notch higher. Using petrol pumps to sell a woman’s best friend — diamonds. Bringing in this new revolution is Sangini, a brand popularised earlier by the DTC and under the care of Spectrum Jewellery, a joint venture between Gitanjali group and associates. The petrol pumps are courtesy Hindustan Petroleum. Although India’s jewellery market is estimated to be over $15 billion (Rs 60,000 crore), the organised sector forms a miniscule portion of the same. Speaking to ET, Gitanjali group chairman Mehul Choksi said the group was looking at expanding into 40 places over the next one year. “Our studies indicate that petrol pumps have large number of footfalls on a daily basis. It is but natural that we target these pumps for marketing our products,” he said. As part of the marketing programme, Sangini would provide training to the franchisee (the owner of the petrol pump). Typically, products ranging from a lowly Rs 1,000 to upwards of Rs two lakh would be available at the petrol pumps, Mr Choksi added. HPCL, which has a turnover in excess of Rs 60,000 crore, has a pan-India presence with petrol pumps across the length and breadth of the country. Incidentally, HPCL which is a participant in one of the biggest rewards programme in the country-i mint is betting on pulling in more customers through this association. Already, Spectrum has presence in HPCL pumps in Pune and Kolkata and Bangalore is next in the line. Mr Choksi says that other cities where this model would find favour with include Chennai, Hyderabad and Bhubaneswar. He, however, refused to comment on the monthly sales merely stating that sales were robust.

Courtesy: EconomicTimes

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Kirby eyes retail foray via building arm

Plan Opposed As Some Officials Fear Other Foreign Cos Too May Route Retail Plans Through Indian Subsidiaries

KIRBY, a subsidiary of one of West Asia’s largest business houses Alghanim Industries, plans to enter the Indian retail sector through its existing Indian subsidiary, Kirby Building Systems, a manufacturer of pre-engineered steel buildings. According to sources, the company wants to be a multi-brand consumer durable retailer, an area where FDI is not allowed. Kirby India CEO Srikant Gokhle told ET: “Our retail plans are still very preliminary. We are exploring ways to enter Indian retail in tandem with existing policy regulations.” A source, however, said the company has already made a road map that has been shared with relevant government departments. “The company has also zeroed in on a brand name for its retail venture called Excite,” said the source. Mr Gokhle, however, denied having named its retail venture. Certain sections in the government have reservations about Kirby’s plans as it would set a precedent and encourage many such foreign companies to route their retail plans through Indian subsidiaries. Some policy makers in the UPA government have been sceptical over issues concerning foreign retailers ever since the Congress President Sonia Gandhi wrote to the Prime Minister, asking him to conduct a comprehensive study on the “impact of transnational retailers on local kirana stores.” Following this, the commerce ministry had mandated research firm ICRIER to do the study and recommendations are expected early next month. Of late, consumer durable specialty retailing has evinced interest from some leading corporate houses. Last year, the Tatas floated Croma, their consumer durable retail venture in an agreement with the Australian chain Woolworth. Mukesh Ambani’s Reliance Retail and Kishore Biyani’s Future Group are also aggressively sprucing up their presence on this front. Apart from Kirby, some other international players who are looking at a share of the India consumer durable retail pie include the British chain Best Buy and US’ Radio Shack. To incentivise entry of foreign players in the sector, the commerce ministry had said last November that it was planning to allow 51% FDI in multi-brand consumer durable retail. However, this has not yet fructified as a policy. At present, Kirby’s promoting company, Alghanim Industries, has a presence in the trading and distribution of consumer electronics, food and consumables, automotive vehicles and products, industrial manufacturing, engineering, technology, travel, shipping and transportation services, advertising, insurance and contracting.

VERY EXCITED

West Asian Co has reportedly named it retail venture Excite

Of late, consumer durable specialty retailing has evinced interest from leading corporate houses, including Tatas & Reliance

Many international players, including the British chain Best Buy and US’ Radio Shack, are looking at a share of the Indian consumer durable retail pie

Courtesy: EconomicTimes
For more detail on Retail India visit: http://www.retailindia.tv/

‘Elite’Xbox 360 to hit market by April-end

MICROSOFT said on Tuesday that it will begin selling a new version of its Xbox 360 console that transmits highdefinition video and comes with a larger hard drive in its latest effort to position the video game machine as a digital media hub. Microsoft’s new Xbox 360 Elite, with a 120-gigabyte hard drive and high definition multimedia interface (HDMI) port, will be available on April 29 in the US and Canada for $479.99. The hard drive on the new machine is six times bigger than the current high-end Xbox 360 model, which retails for $399. Microsoft said the Elite hard drive has space to hold a library of arcade games and thousands of songs, as well as high-definition TV shows and movies downloaded from the company’s Xbox Live online service. “Today’s games and entertainment enthusiast has an insatiable appetite for digital high-definition content,” said Peter Moore, corporate vice-president for the interactive entertainment business at Microsoft. Microsoft said that it will sell the Elite alongside existing Xbox 360 systems and it will offer the detachable 120 gigabyte hard drive for $179.99. Microsoft released the Xbox 360 a full year ahead of Sony’s new PlayStation 3 and Nintendo’s Wii, grabbing an early lead in the new, three-way video game console war. The Xbox 360 and PS3 are also battling on the home entertainment front with each shooting to take control of the digital living room. Wedbush Morgan analyst Michael Pachter said Microsoft is making a play for a niche market. “Very few consumers will care,” he said, noting that most gamers can probably get by with a 20-gigabyte hard drive while owners of pricey high-definition televisions are still a small percentage of the overall audience. Sony’s PS3 includes a next-generation, high-definition, Blu-ray DVD player that is slowly gaining popularity with movie buffs. The Xbox 360 Elite, which has a 120 gigabyte hard drive and other features including a high-definition multimedia interface port and a high-definition cable. The new model will be available on April 29 in Canada and the US.

Courtesy: EconomicTimes

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PepsiCo takes a liking to nimbu paani, milk drinks

THE good old Nimbu Paani and milk beverages are generating soft murmurs within PepsiCo India. If the new PepsiCo, CEO, Sanjeev Chadha, is to be believed, the cola major could soon hit the retail shelves near you with new localised product offerings. So PepsiCo is keenly looking at the traditional Indian options to expand its product basket in the Indian market. The company has recently activated its Gurgaon-based R&D lab, one of the only two outside of the US, to work over time and lead the Indian subsidiary to such localised products. “We are looking at all the needs that a beverage can fulfill,” Mr Chadha told ET in his first ever interaction with the media since he took over the reins of the company in January this year. “Considering that the non-cola market in India is till under-developed due to lack of choice, we want to step up the process,” he said. That’s the big shift, partly fuelled by market and cultural dynamics. Part of this shift includes the recent setting up of a nutrition advisory board on the lines of the red ribbon board that Pepsico has globally. The cola giant is also aggressively exploring new categories such as functional waters and healthy whites to expand its non CSD beverage portfolio in India. The company is in fact, going back to the drawing board to find that ‘sweet spot’ that combines the fun and ‘good for you’ proposition for the consumers to create a whole new range what is internally being referred to as ‘treat for you’. This is in line with ‘performance with purpose’ strategy laid down by the new Pepsi Worldwide Chairman, Indra Nooyi. The target is to align the company’s cola and non-cola on equal footing. While globally, Pepsi’s cola portfolio contributes 70% of the company’s business, it does 60-65% in India. Pepsi India hopes to expand its non-cola porfolio to bring the ratio to 50:50 in 3-5 years time frame. Elaborating on the company’s expansion plans, Mr Chadha said, “There are three major opportunities which have immense growth prospects in India viz, juice and juice-based drinks, functional water and healthy whites such as soya-milk, that have been recently introduced in countries like China and Vietnam.” Besides, the company plans to strengthen its Mangobased drink brand Slice, and introduce value-added or what it calls ‘advantage’ water under Aquafina. Chadha, through all these efforts expects to double PepsiCo’s business in three years time. He however, emphsised that innovation will not be confined to the non-cola portfolio, but spans CSDs as well. “Similarly, innovation would not be restricted to the beverage category, we are attempting the same across product, packaging and equipment,” added Chadha. For instance, the company wants to introduce its water brand, Aquafina’s in various pack sizes in the retail market. Inorganic growth apart, the company is eyeing acquisition targets across categories after a long hiatus. “Mergers and acquistions would be significant for us going forward. Barring water where we already have a strong brand in Acquafina, we are open to acusitions in any other category,” Chadha said. PepsiCo is currently looking to offer smaller single packs for Acquafina besides looking at flavoured water as a growth opportunity although the low profitabilty in this category would be a challenge, Chadha pointed out.

Courtesy: EconomicTimes
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Shoppers’ Stop to Build-A-Bear in their stores

K RAHEJA Group-promoted retail chain Shoppers’ Stop is launching US-based interactive kids brand, Build-A-Bear in their stores soon through the shop-in-shop format. “We will initially launch the brand through the shop-in-shop format and look at the prospects of standalone stores later,” Shoppers’ Stop CEO Govind Shrikhande said. Shoppers’ Stop will have a three-year non-exclusive agreement with the Murjani Group, which is bringing the brand into India, he added. Founded in 1997, Build-A-Bear is a mall-based retailer that allows children to design their own stuffed animals. The retailer had 271 companyowned retail stores in the US, Canada, the UK, and Ireland as on December 30. Of those stores, 232 are Build-A-Bear Workshop stores located in the US and Canada and 38 are located in the UK and Ireland. Revenues for the company during the 2006 fiscal stood at $437.10 million. It has about 30 styles of stuffed animals, plus clothing and accessories for bears. It also has e-cards and a book club, plus tie-in at Kids Apparel retailer too. The retailer had, in April 2006, acquired The Bear Factory and its UK franchisee, Amsbra. Shoppers’ Stop is also looking at reintroducing some of the foreign brands in the luxury category. “We had brought a luxury brand to India by the name of Eaton, but it failed to succeed as the range was through the import route and the customer in India was not ready for it. However, the customer is now getting ready for it and so we will be bringing in international brands in the segment, including Tommy Hilfiger, Calvin Klein, Espirit and others in the price range of Rs 2,500-3,000 in the next three months,” Mr Shrikhande said.

Courtesy: EconomicTimes
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Choice plans budget hotels in India

IN A bid to ramp up its presence in India, US-based hospitality chain Choice International is set to introduce its budget brand, Sleep Inn, to the country at Tirupati, Hyderabad and Vizag by 2008. Plans are to roll out 20 such Sleep Inn hotels over the next five years, Vilas Pawar, CEO, Choice Hotels India, told ET. “We are looking at large-format roll out of the Sleep Inn brand in the country,” he said. Among others, talks are currently on for alliances with fuel marketing companies and retail outlets for locations along major highways. “Sleep Inn is a highway product that can be located at the outskirts of the city and where mixed land use is allowed,” he added. Hotel room rates in the Sleep Inn brand are likely to start from Rs 1,800-2,000 level, depending on the city. The other budget brands in Choice’s portfolio include Comfort and Quality, with room rates ranging between Rs 2,000 and Rs 4,000. By 2008, the group plans to have Comfort hotels at Delhi, Rajkot, Haldwani and Amritsar, while the Quality brand would have presence in Jaipur, Ludhiana, Chennai, Pune and Hyderabad. Choice Hotels India is part of Choice Hotels International, one of the largest franchisers of budget and mid-market brands, with over 5,000 hotels across the world.

Courtesy: EconomicTimes
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Hospitality sector in India marks Rs 4,500 cr for ramp-up

HOSPITALITY majors are ramping up investments in new projects and expansion, which are expected to be Rs 4,500 crore over the next two years on the back of a massive growth in leisure travel. Indian hotel companies like Indian Hotels (owners of the Taj brand), Leela Venture, EIH (member of the Oberoi group), Kamat Hotels, and Royal Orchid are likely to see room inventory go up by around 6,500 rooms given the burgeoning hospitality sector in the country. Global hospitality majors such as Intercontinental, Starwood, Hilton, Accor, Carlson are all stepping up their global offerings in the Indian market given the upbeat demand. While Leela Ventures is investing around Rs 1,265 crore, Indian Hotels is expected to invest around Rs 1,250 crore. EIH, Kamat and Royal Orchid are likely to pump in Rs 1,150 crore, Rs 365 crore and Rs 500 crore, respectively. A total of 60 new properties across categories are likely to come up in the Indian market, sources said. India is witnessing a spurt in hotel expansion as it is facing a severe shortage of hotel rooms because of increased business activity and leisure travel by the middle class and by international tourists, said Chender Baljee, CMD, Royal Orchid. The demand-supply mismatch is likely to last for another two years. A buoyant economy, growth in aviation and real estate, improved infrastructure and the easing of restrictions on foreign investments is expected to fuel demand across star categories in a majority of markets across India. “Hotels on an expansion phase will be in a better position to absorb the decline in occupancies and rates over the long term, as any additional supply can offset the pressure on room rates,” said Nitesh Shetty, MD, Nitesh Estates.

Courtesy: EconomicTimes
For more detail on Retail India visit: http://www.retailindia.tv/

Feature-rich PCs drive sales as prices take a back seat

THE Indian PC market is seeing more of value buying rather than purchases based on the cheapest price point as more buyers look for featurerich machines. On an average, the highest selling desktops today are largely in the Rs 22,000-26,000 range and top-selling notebooks in the Rs 30,000-40,000 bracket. “The Indian consumer is very value driven and any buying is a combination of price and value,” says Nitin Chaudhry, head - strategy and business innovation, PSG, HP India. The availability of machines in the price range of Rs 10,000-15,000 has not really made a dent in other price segments and in fact has aided the growth of the market. Typically, the consumer would come into this price point and ultimately a buy a better value machine with a higher price point. As Acer India GM - sales & marketing S Rajendran says, “The larger cities, the modern upmarket consumer driven by global influences and aspirational values is looking at ‘value for money’ rather price. This means that he wants more features packed into the machines and is willing to pay that extra premium to avail these benefits. The India PC market crossed 5 million units in shipments terms in 2006, recording a 25% y-o-y growth. According to Gartner, the PC market is expected to maintain a growth of around 20% in the current year. Princy Bhatnagar, GM, Transaction Brand Lenovo India, says “While prices certainly play a part in the PC market – what with PCs moving up high on the consumer’s priority list – growth does not necessarily come with falling prices.” Chaudhry says that customers enter into the market looking at a price point, but brand value helps in making the final decision. For HP, which has a low-cost PC priced at Rs 17,000, its highest selling machines are those in the range of Rs 21,000-24,000. However, there seems to be certain subtle difference in the top metro markets and B, C and D towns. Rajendran says, “The rural market even today is driven to a large extent on the price factor. This is primarily due to the fact that PC adoption is still small and its still a big ticket purchase decision.” The Indian PC market is still dominated by the major metros, but industry players are expecting future growth from tier-2 and -3 towns. According to Bhatnagar, “In the last one year, a significant amount of PC market growth is coming from the nonmetro market.” The notebooks volumes from non-metro cities in the last four years are close to what metros have touched in the last 15 years.”

Courtesy: EconomicTimes
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Rasna brews ‘complete food drinks’ plan

RASNA is brewing plans to launch a ‘complete food drink’, which will take care of nutritive requirement of children. This powdered drink will mark the company’s entry into the fortified food products market, which has been hitherto limited to soft drink concentrates and ready-to-eat food products, reports Kamran Sulaimani from Ahmedabad. Piruz Khambhata, chairman and managing director Rasna India says the product will come in different flavours with a combination of proteins, fats, carbohytrades, minerals, vitamins and other vital nutrients. The company wants to supply this complete food drink as a supplement to mid-day meal scheme to serve the nutritive requirement of rural children.“We have submitted a proposal to the mid-day meal scheme department of the state government. This can be replicated in other states where the scheme is going on,” says Khambhata

Courtesy: EconomicTimes
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Kuoni Travel, UAE firm Dnata in tie-up

UAE travel management service company Dnata on Wednesday tied up with Kuoni Travel Group to sell its Marhaba’ services to Indian travellers. Marhaba (which means welcome in Arabic), a part of the Emirates Group, would provide services such as meet-andgreet, assistance with immigration and customs clearance, Citystop packages for passengers, and auxiliary services.

Courtesy: EconomicTimes
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Domino’s to invest Rs 80 cr in ‘07-08; to open 50 stores

Pizza chain Domino’s will invest Rs 80 crore in 2007-08 to set up new stores, as it eyes a 45% share of the organised pizza retail market in the country. Domino’s currently has 132 stores and would be setting up 50 more outlets in the next one year. Having registered a 50% growth over last year, Domino’s is looking to increase its market share to 45% in the next six months.

Courtesy: EconomicTimes
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Toshiba launches new LCD TV range in India

Toshiba on Wednesday launched its new range of LCD television, Regza, in India priced between Rs 48,300 and Rs 2,24,990. The company is targeting 10% of the television market in its first year of operations, Toshiba said. The complete range of LCD TVs would be imported by Toshiba and distributed through various dealers and retailers. The company has initially launched the TVs in select markets of Mumbai, Delhi, Gujarat and Pune and would soon extend its products across the country.

Courtesy: EconomicTimes
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Reliance to sell electronic goods

Mukesh Ambani’s retail venture will soon start selling electronics goods like refrigerators, TVs and computers, even as it prepares to open its 100th fresh food and vegetables outlet in the country. Reliance Retail, which has spent about Rs 2,000 crore on real estate acquisitions in the national capital, is likely to open its 100th Reliance Fresh store in the city this week. Separately, the company also plans to open its first Digital Electronics Store, possibly in the national capital region, for selling TVs, refrigerators and other goods. The outlet would be spread over an area of 50,000 sq ft.

Courtesy: EconomicTimes
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Why Wal-Mart entry can disrupt India

Sorry, but I've never been a big fan of Wal-Mart's business practices. I love the stores--they're the first place I go when I run out of glue and kitty litter--and I even owned the stock some years ago. But Wal-Mart's aggressive attitude toward suppliers and its impact on small business give me an uneasy feeling in the pit of my stomach. It's a bit how I feel when I see a Rottweiler sniff a kitten. Is it going to lick the kitty, or turn it into lunch? Wal-Mart's plans to invade India give me just that kind of lump-in-the-gut feeling. Sure, it makes a great deal of economic sense, and I'm sure it fits squarely into the whole concept of "globalization," "free markets," and other mom-and-apple-pie platitudes. The company has signed a memorandum of understanding with an Indian company, Bharti Enterprises, to explore business opportunities in the country. That's about as specific as it gets, but I can see them now: big boxes dotting the Indian landscape. Think of it: morning at the Taj Mahal, afternoon buying glue! What's wrong with that picture? Plenty, in my view. As a business decision, it is a terrific one from Wal-Mart and Bharti's perspective. The statistics are, as they usually are for India, massively intimidating. Network Magazine, an Indian business publication, observes in its current issue that retailing is India's largest industry, accounting for over 10% of the country's gross domestic product and around 8% of employment. "The Indian retail industry is valued at about $300 billion and is expected to grow to $427 billion in 2010 and $637 billion in 2015," says the magazine. Only 2% to 3% of that is "organized." That is, actual stores instead of open-air markets, roadside stands and other beneficiaries of India's relaxed attitude toward urban planning. That sound you hear is retail executives drooling. There's no question that Wal-Mart's fabled "efficiencies of scale" and modern distribution methods would be a breath of fresh air (so to speak) in India, with its rampant inefficiency and corruption. Indeed, Wal-Mart is not the only major retailer sniffing around India. India's own Reliance Group plans to expand its chain of supermarkets in India, though they are far more limited in scope than Wal-Mart's big-box business model. What troubles me about Wal-Mart's India move concerns the potential for social disruption. There are 12 million people working in retail in India, ranging from operators of boutiques to the fellows who sell "cold water" on the streets of Delhi. I think the water guy and the kid selling fresh coconut juice in Mumbai don't have much to worry about (avoid the water, but try the coconut juice, by the way). What troubles me are the "organized retail" shops, which are often run by the same family for generations. What happens to their businesses and what happens to the markets--or bazaars as they are known in Farsi-derived Hindi? In India, "Main Street" is not a street, but a bazaar. Delhi alone has dozens, ranging from Old Delhi's Chandni Chowk--a real bazaar in the Middle Eastern sense of the word--to roadside hovels to upscale markets like the two in Greater Kailash. In Central Market, a sprawling shopping district in South Delhi, you can get a suit made, order world-class opticals, buy dates from Saudi Arabia or, for that matter, buy pretty much anything else you could want. The merchants are competitive with each other, usually, and Delhi shoppers will go from shop to shop, bargaining for a better deal. In other words, the bazaar is an institution, a way of life. And, in the view of a growing number of people in India, it is endangered by Wal-Mart. The opposition comes from quarters that are, I suppose, predictable: some elements of the ruling Congress Party, trade unions, the Communist Party and, of course, the merchants themselves. The rhetoric has been remarkably similar to what you usually hear when a big-box store comes to a small town. "We believe Wal-Mart is going to ruin this country and millions of people will lose their jobs," one anti-Wal-Mart organizer told Reuters. The difference is that when people lose their jobs in India, they sometimes starve. I think the opponents to Wal-Mart in India have a point. It's easy to view such opposition as politically motivated or the griping of people opposed to progress. But then I think about a family friend, now in his 40s, who as a boy used to work in his father's parchun store, selling dried beans, rice and spices along the train tracks leading south out of Delhi. His father ran the store before him. Today he is one of the leading real estate developers on the outskirts of Delhi.I tend to doubt that he would be in that position if he had spent his youth mopping up aisle 9 at the Greater Kailash Wal-Mart. Admittedly, I am tilting at windmills here. The Indian government, responding to the protests, is launching an inquiry into the social and economic effects of big-box retailers moving into the country. But I am sure Wal-Mart is inevitable. The march of progress cannot be impeded. The small merchants of India will have to compete, or be crushed. Globalization must, ultimately, triumph. After all, as one supporter of the deal once pointed out to me--what about outsourcing to India depriving Americans of jobs? Don't get all sentimental about a few million Indians losing their jobs, he told me. He's right, I guess. But somehow the thought of that comeuppance, or all that economic efficiency, can't make that knot in the pit of my stomach go away.

Courtesy: http://in.rediff.com
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eVoda to invest $400 m for NLD, ILD backbone

Spreading The Net:There’s Big Money Calling All Along The Business Course

EVEN as Hutch Essar (soon to be rechristened Vodafone-Essar) has an infrastructure-sharing pact with Bharti Airtel, the company has lined up close to $400 million (Rs 1,500-1,600 crore) for setting up a national fibre optic cable network for routing its own mobile STD traffic. Project details will, however, be finalised only after Vodafone acquires control in Hutchison Essar, post-FIPB clearance. The objective is to transform Hutch Essar from a pure mobility player to a full-services national telecom player along the lines of a Bharti Airtel, BSNL or Reliance Communications, company sources said. “Hutch Essar, under Vodafone control, will be positioned as an integrated telecom player with a national footprint. In such a scenario it will no longer have to lease capacity from existing NLDOs to route its mobile STD traffic,” said sources close to Hutch Essar. Incidentally, Bharti Airtel’s role in Hutch Essar’s NLD strategy, especially in the backdrop of the super-sensitive Vodafone-Bharti infrastructure-sharing pact could throw up interesting possibilities. A larger alliance with both companies pooling in their resources together cannot also be ruled out. In fact, Bharti group chairman Sunil Mittal told ET that both companies may move towards a common infrastructure over the next few years. “We can also build the common infrastructure together. Complete sharing of our existing networks cannot be ruled out.” The Hutch Essar top-brass, it is learnt, is weighing the pros and cons of laying its own groundlevel fibre optic NLD network which will connect all 23 circles (including the recently acquired Essar Spacetel licences). “Initial investment in laying fibre on the ground could be $250 million and go all the way up to $400 million. The investment size will hinge on a host of cost parameters. The average cost of laying optical fibre on the ground nationally could be Rs 4-to-5 lakh per route km. Key determinants would be cable cost, duct cost, the right of way (RoW) cost coupled with trenching and road-restoration charges. There are no decisions yet on whether the cable will be imported or procured locally,” sources said. A key issue that remains undecided is Essar’s eventual role in Hutch Essar’s NLD gameplan. According to Essar executives, its independently held NLD and ILD licences will not be part of the deal with Vodafone. “As with our infrastructure company — Essar Telecom Tower and Infrastructure, our ILD and NLD arms will also compete independently, and on rolling out services will offer them to all service providers. It will not get any preferential treatment from HEL,” Essar sources added. On HEL’s proposed NLD plans, Essar executives said: “All operational issues will be decided by the new board as and when it gets constituted.” Hutch Essar’s decision to hit the NLD turf was to rein in hefty carriage charges that it paid existing NLD operators for routing its mobile STD traffic. With an NLD licence, Hutch Essar can lease fibre capacity at a fraction of carrier charges and beef up tariff margins on long-distance calls. Earlier, in absence of an NLD licence, Hutch-Essar had to rely on NLDOs and its variable payout to route mobile STD calls was huge, including access deficit charges (ADC) payable to BSNL, carrier charges payable to the rival NLD carrier and terminating charges payable to the network into which the mobile STD call terminates.

CALL CENTRE

L O N G D I S TA N C E R U N

WHAT NOW

Hutch Essar could see Rs 1,500-1,600 cr investment in long distance segment Hutch currently has an understanding with Bharti for infrastructure sharing and for routing long distance calls

WHAT VODAFONE HAS IN MIND

Plan aimed at making Hutch Essar a national integrated telecom player Once aim is achieved, Hutch Essar will not have to lease capacity from outside

GREY AREA

Essar’s eventual role in Hutch Essar’s NLD gameplan is still not clear

Courtesy: EconomicTimes
For more detail on Retail india visit: http://www.retailindia.tv/

Kishore Biyani plans cash-n-carry battle now

THE country’s largest retailer Kishore Biyani is now looking at a presence in the cash-and-carry (wholesale) business to take on Reliance and Wal-Mart on all fronts, The venture, to be called KB’s Wholesale, will be rolled out early next month. Analysts close to Mr Biyani’s Future Group say it’s not without reason that India’s largest retailer has taken the decision. Competition is hotting up with Reliance Retail and Bharti-Wal-Mart putting up their own backend ventures, something that will make their front-end retail ventures competitive on the price front. At present, Pantaloon Retail sources from multiple vendors. Experts say if Mr Biyani continues with his current sourcing model, he would lose out on the price war in the long run. When contacted by ET, Mr Biyani confirmed plans of entering the cash-&-carry business. He said, “we are looking at about 15 wholesale stores in 18 months.” The first KB’s Wholesale store will come up in Burdwan in West Bengal and the second in Mathura, sometime next month. Retailers such as Reliance and Bharti have ambitious plans in the hypermarket and hard discount formats, and are likely to roll out dedicated cash-and-carry operations (wholesale stores that would supply to their retail stores) for catering to front-end retail. In fact, Bharti has already signed up with the world’s largest retailer, Wal-Mart, for cash-and-carry business. Though Bharti chairman Sunil Mittal maintains that cash-and-carry would be an entirely separate business from retail, sources say both would be linked. “Wal-Mart cash & carry will obviously sell at a preferential rate to Bharti’s retail business than to say a Pantaloon,” said a source in the retail consultancy business. In the coming times, cash & carry is likely to see a lot of action, with many international retailers, including Carrefour, Tesco and K-Mart firming up plans in this direction. It’s particularly seen as an interesting business for the global retail community as FDI is not allowed in retail. According to Euromonitor, a London-based market intelligence firm, “when the restrictions on retail in India are lifted, international retailers will be in prime position to easily convert their cash-and-carry stores into highly profitable supermarkets and hypermarkets.” At present, the Indian cash-and-carry business is dominated by two global players, the German chain Metro and South Africa’s Shoprite.

Courtesy: EconomicTimes
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Coke targets teens with web currency scheme

SOFT-DRINKS giant Coca-Cola is gearing up for the launch of a highprofile loyalty scheme aimed at the teenage market in Europe. The company will target teens primarily online, with the strategy involving the creation of a special currency collected from its cans and bottles. Consumers will be able to use the currency to make purchases with affiliated firms via a special website. Coca-Cola has hired loyalty specialist Carlson Marketing to handle the brief following a competitive pitch against undisclosed direct agencies. One of the company’s highest-profile UK loyalty schemes is its annual ‘Win a player’ promotion. Created by BD-NTWK, the activity offers consumers the chance to win sums from 50p to £100,000 for their chosen Coca-Cola Championship football club to use for transfers. This season it has renamed the scheme ‘Buy a player’ and allocated a transfer fund of £10m. The teen web strategy is a similar concept to that used by lager brand Budweiser, which has put virtual currency at the heart of its marketing this year. Consumers can spend their ‘Bud Bucks’ in eBay-style auctions on a campaign microsite. Calls to Coca-Cola were not returned; Carlson Marketing declined to comment on the appointment

Courtesy: EconomicTimes
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Cup debacle slows down TV sales

INDIA’Signominous exit from the World Cup appears to be having a ripple effect on the offtake of TV sets. Leading consumer electronics makers like LG, Sony, Onida and Haier have just indicated a sizeable 15-30% shortfall in their World Cup TV sales targets. CETMA, the apex consumer electronics industry body, had set an ambitious target of 9 lakh CTV sales during March ‘07 alone, when the World Cup spirit was slated to peak. “The industry will not be able to achieve this target following India’s debacle. Huge inventories have already piled up which will take some time to clear,” said Suresh Khanna, secretary general of CETMA told ET. Accordingly, TV makers are reworking their sales strategy to ensure a steady offtake in April. Most hope that the ensuing marriage season in the Hindi heartland will supplement the loss in sales and help tide over the lean period. Most companies are also cutting down on the production cycle due to huge inventory pile-up. Incidentally, till the crucial India-Sri Lanka match, the TV sales of all these companies were as per expectations. For example, Onida had registered a 20% growth in its sales till India’s exit from the World Cup. Sony India’ division head (display) Yoshiki Yamanokuchi said: “March saw rapid sales, both in LCD and CRT categories. However, the early exit of the Indian team has ended the hope of achieving over 100 % growth.” LG, a mega World Cup sponsor, had targeted 70% growth in TV sales for the March-April period. “But sales started limping after India lost to Bangladesh. We are going to change our sales and marketing strategy to ensure at least 50% growth in sales,” LG Electronics India’s national head (consumer electronics) Amitabh Tiwari said.

Courtesy: EconomicTimes
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Kahani World ties up with Shekhar Kapur, Chopra

Kahani World (KW), a Canada-based animation company has tied up with Shekhar Kapur and Virgin Comics’ chairman Deepak Chopra to produce a $7m, fully-animated film, Secrets of the Seven Sounds, reports Chhavi Dang from Mumbai. “This is the first Indian animation movie for Hollywood and is fully funded by KW,” said KW CEO Biren Ghose.

Courtesy: EconomicTimes
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Kingfisher to put up plea for US airline

Kingfisher Airlines would put in an application in the US in the next 6-8 weeks for launching an airline in America which would enable it to operate flights into India. “Our detailed application is being compiled by our attorneys and will be submitted in the next six to eight weeks,” Kingfisher Airlines chief Vijay Mallya said on Tuesday. He said it generally takes around six months for the necessary clearances to come through. Kingfisher has ordered an Airbus A340-500 aircraft among others, with which it plans to launch direct flights between San Francisco and Bangalore by middle of next year.

Courtesy: EconomicTimes
For more detail in Retail India visit: www.retailindia.tv

Seiko planning brand launch a month from now

The luxury watch segment is ticking its time for the mega launches. SEIKO, the Japanese watch brand, is planning to hit the markets soon. Coming to India through its fully-owned Indian subsidiary, Seiko is likely to be available in a month from now. Although the company has refused to divulge its India plans, sources have said that the company plans to enter the market through its own retail outlets as well as through shop-in-shop formats. A e-mail query to SEIKO remained unanswered. Retailers across the country are in talks with the watch major to retail its products. “We know that Seiko is coming to India. Seiko is a well-known brand and we are in talks with them to retail their products,” said Yashovardhan Saboo, CEO, Ethos, a luxury watch retail chain.

Courtesy: EconomicTimes
For more detail in Retail India visit: www.retailindia.tv

Swarovski to design new products with Asian touch

Austria-based Swarovski, a leading luxury brand, is looking at creating new crystal designs with an Asian’ touch. “It is an effort to marry the elegance of our design style with the spirit of Asian traditions including that of India,” said Swarovski Design Centre, Wattens, director Martin Zendron. The company’s leading designers are currently in the process of building a network with local artisans and jewellery workers in different countries, especially emerging markets, to understand the different style and designs for creating a product line, which will be globally appealing yet culturally close to Asia. “We follow a global strategy and we don’t design products for any particular market. However, it is possible to come out with global designs reflecting certain cultural characteristics and aesthetic sense. Asia, for example, has a rich culture,” he said.

Courtesy: EconomicTimes
For more detail in Retail India visit: www.retailindia.tv

Omega unveils jewellery collection

Premium watch brand Omega on Tuesday launched its fine jewellery collection in the country, marking its foray in the segment. The Omega fine jewellery collection is priced in the Rs 24,000-6 lakh range and would be retailed initially through Omega boutiques. Omega, which has five exclusive outlets or boutiques currently in Delhi, Mumbai, Bangalore and Chennai, plans to add three more this year. The new boutiques could come up in Delhi, Kolkata and Hyderabad. Meanwhile, the brand which made its global foray into fine jewellery in 2002, is also looking at brand extensions into new categories. “It is likely that we would extend brand Omega to categories like perfumes and handbags,” said Omega Fine Jewellery head Annette Buess. Omega, part of the Swiss group Swatch, is also considering tieups with retail chains to distribute its watches and jewellery. Currently, Omega watches are present in 50 multi-brand watch outlets in the country.

Courtesy: EconomicTimes
For more detail in Retail India visit: www.retailindia.tv

Marketers are losing brands control to consumers

HIS website describes him as a Brand Futurist. And not for nothing is this 36-year old, who founded his own advertising agency at the age of 12, touted as one of the world’s most respected branding guru by the Chartered Institute of Marketing. ET catches up with Martin Lindstorm, international branding expert and author of books Brand Child and Brand Sense. Excerpts:

Please tell us about your latest book Brand Sense and the learning therein for marketers.
Over the last two years, I’ve spent time preaching the concept of using our senses in brand-building. For years, we have used hand-shakes, eye contact, smell and the other senses to evaluate each other. Similarly, brand-building is also about creating and conveying emotions in a strategic way through senses; funnily enough, we have never used all our senses while building brands. My book Brand Sense is about using these in an optimum way to create a relation with the consumer. It’s a new philosophy, created just about four to five years back and currently being used by only 35% of the world’s largest brands like McDonalds, Coca-Cola, Microsoft, Nokia and Nestle.

What after Brand Sense?
I am working on a book, to be published by end of January 2008. It’s based on the largest research study in the world about formats of new consumers. We have used some extraordinary research methods and spent $7-million — the result has been outstanding. The book will redefine all ground rules of how we build brands; the results will be shock many people. It talks a lot about religion and draws some interesting parallels between brands and religion. The study was done across the US, the UK, Australia, China, Japan, India and Germany.

What do you think are biggest problems that confront marketers today?
The biggest problem is marketers are losing control over brands; it is moving into the consumer’s hands. As a result, 5-10 years from now between 30-40% of communication will be done by the company and the rest manufactured by consumers. They’ll produce commercials, send them around using blogs and marketers will be reduced to editors of that information. It is already happening, but in the near future, about 60% will be done by consumers. The time spans have reduced, so if a consumer is doing a story about the brand, it will be just as quick as the brand itself — because of word of mouth, because it’s authentic and free of charge.

You talked about religion. How big a role do you think it will play in the business of brand building?
Brands will learn from the world of religion. All studies point out that religion will be an important element; you will have an enemy, branded rituals, appeal to the senses, icons for story telling —aspects that will be embedded much more in the brand. Religion has been around for 3,000-4,000 years while the oldest brand is only 120-years old. Religion has survived because of story-telling. Stories have been passed from generation to generation and if brands need to survive, they must tell fantastic stories. Peoplehaverealised they are sending emails and no longer sending letters; but letters will come back again — because they work and are tactile. If they don’t, then we better kill the book and kill other elements like, say the watch; you don’t need a watch now, because you have a digital watch on your mobile phone. But the watch now has another function and is a fashion statement. There are a whole lot of things that are not rational in this world, but when you become so incredibly rational, at some point the pendulum tends to go back and you will start realising that you actually enjoy the irrational things. The ‘letter’ is one such things.

Do you think that advertising agencies are still integral to the process of brand building? What is the future?
The concept of the agency is dying — they will not exist in the current format 10 years from now. They need to change to survive. They will be much savvier in understanding interactivity, senses and communities which they don’t today. Ask any agency how to develop a community and they will not know; ask them if they have handled any five sensory communication and they won’t have an answer; ask them if they have experience in adapting elements from religion into branding and they will be blank; ask them if they know about any branded rituals developed and they will not have an answer — they have enormous holes in their knowledge. They have been doing TVCs and hoardings for a long time and need to be touch with what is happening in the real world. Today, if I go and tell them to make a wild campaign, they will ask ‘how can we make media money on it? How much do we charge you? Where do we start, where do we end?’

Which have been the most interesting marketing books that you have read over the last few years?
Eating the Big Fish by Adam Morgan. It’s presented well and has good cases and the other one I like is called An Inconvenient Truth by Al Gore. It’s on global warming and tells you how in the future brands will also have to contribute to issues like that.

Courtesy: EconomicTimes
For more detail on Retail India visit: http://www.retailindia.tv/

Vodafone to enter India in six months

UK-BASED mobile services major Vodafone plans to step up its presence in India in about six months, chief executive Arun Sarin told a group of journalists from India. Vodafone last month bought out Hutchison Telecom’s 52% stake in Hutchison Essar (HEL) in a deal that pegged the enterprise value of the firm around $19 billion. Vodafone has not set any deadline for renaming the Hutch brand in India to Vodafone. “The Hutch brand is a very good brand in India. When people prefer Hutch over other rival brands, there is a strong reason. We want to understand what is that people like about Hutch and transport that into the Vodafone brand,” Mr Sarin said. “We are coming into India with network, low-cost handsets, services - information services, entertainment services. We will mix that all up and in six months’ time, you will get a feel that Vodafone has come to India,” Mr Sarin added. Vodafone is yet to get the final nod from the Foreign Investment Promotion Board (FIPB). But Mr Sarin is unruffled, for now. “It is not disappointing,” Mr Sarin said of the delay in getting the approval, saying that the deal was barely a month old. “Maybe if this question was asked six months from now, I would say that it is disappointing. The FIPB has to be given time, and I am fine with it. At the end of the day, I want the FIPB, the Ministry of Finance, the telecommunications ministry, the industry ministry and the prime minister to say that you are welcome here. The last thing we want to do is show up one fine day and then people ask, ‘hey hang on, which door did you come from, was it the front door, back door or side door?’ ” he said. A key element of Vodafone’s India strategy would be to introduce low cost mobile phones so as to make mobile services more affordable to the average user. “You will see some interesting low-cost handsets. Our basic thesis is that we want to make mobile telephony more affordable to more Indian consumers,” Mr Sarin said. Low-cost handsets, apart from falling tariffs, have been one of the major factors driving the telecommunications boom in India over the past few years. Mobile phones are now available for as low as Rs 1,500 and industry officials have voiced doubts if the prices could be lowered further. “At this stage, all I can say is that (mobile handset) prices have room to go lower and we will take it there,” Mr Sarin said. “We are here because we think we can do something for the Indian population.” He said he wasn’t worried about falling average realisation per user (ARPU) as the economy was growing, and hence, a growing user base would make up for any decline in margins On the issue of partnering with the Ruias, Mr Sarin said Vodafone was looking to start the relationship on a clean slate. “People have suggested that the Ruias are difficult folks to deal with. All I can say is that a company or group’s reputation is built through action. As far as we are concerned, we are new players, we have a fresh history with them, I am not going to judge them on what has happened in the past. Their relationship with Hutchison is their relationship with Hutchison. I cannot say what Hutchison did to them or what they did to Hutchison. All I can say is that our relationship is starting afresh,” Mr Sarin said.

DIALLING IN
• Vodafone bought out Hutchison Telecom’s 52% stake in HEL in a deal that pegged the enterprise value of the firm at $19 bn
• The co hasn’t set a deadline for renaming the Hutch brand in India to Vodafone and is yet to get the final nod from the FIPB
• A key element of Vodafone’s India strategy is the introduction of low-cost mobile phones to make mobile service affordable to Indian users

Courtesy: EconomicTimes
For more detail on Retail India visit: http://www.retailindia.tv/

Sugar output may cross 260 lakh tonnes

Sugar output in India, the world’s second-largest producer, may cross 260 lakh tonnes in 2006-07 with the industry hoping for better prospects as sugarcane crushing gains momentum. “The output is estimated to cross 260 lakh tonnes in 2006-07 season against 193 lakh tonnes last year as all the sugar producing states are producing more than last year,” industry sources said. Indian Sugar Mills Association and National Federation of Co-operative Sugar Factories had earlier informed the government that production may cross 250 lakh tonne, union agriculture minister Sharad Pawar had said only last week. But with sugarcane crushing gaining momentum in key states, officials feel the output could be higher.

Courtesy: EconomicTimes
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Reliance Plans Art Galleries At Its Upcoming Retail Outlets

HE’S already mastered the art of doing business. He’s now getting ready to conquer the business of art. As Mukesh Ambani’s Reliance gives finishing touches to its retail canvas, the company has drawn up plans to sell affordable artworks at its soon-to-belaunched hypermarket chain. Mr Ambani is seeking to take artworks, a preserve of the rich and the famous, to the Indian middle class by setting up art galleries at the company’s soon-to-belaunched hypermarkets. A senior Reliance executive said that space is a critical issue in setting up an art shop. “But with a booming art market the possibility of art section in the retail chain is being considered,” he said. Reliance is studying the area carefully. Art galleries are dominating the market and no retail model has been adopted yet, he said. The company is considering setting up small and big art galleries in its retail chain. “The size of the art market for current fiscal can be estimated to Rs 1,500 crore, which is likely to touch Rs 2,500 crore during this year. Buoyed by an increased interest from collectors and investors, the size of the market is growing rapidly. It is definitely attracting new players in the field,” said Ajay Seth, head of operations of Copal Art.

Courtesy: EconomicTimes
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Cess on new TVs, radios likely

YOU MAY soon have to pay more for new TVs and radios sets. The proposal to levy a cess, which was shelved last year, has quietly been revived, and the government is actively considering it as part of the financial restructuring plan for public broadcaster Prasar Bharati, an official told ET. The move, if approved by the Cabinet will help Prasar Bharati rake in about Rs 800 crore per year. A group of ministers (GoM) headed by home minister Shivraj Patil and consisting of 12 other ministers is looking into the issue. (The GoM’s primary task was to review Prasar Bharati’s performance and look into the grievances of its 45,000 employees.) According to analysts, the cess will further raise the tax structure on colour TVs and radio sets from about 30%. “The cess will only increase grey market operations,’’ said Consumer Electronics and Appliances Manufacturers Association (Ceama) general secretary Suresh Khanna. The grey market share of radio sets is 75% and that of colour TVs is 25%. While figures for the current fiscal are yet to be computed, data shows that in 2005-06, about 11.5 million colour TVs and 7 million radio sets were sold in the country. A Prasar Bharati source told ET that the public broadcaster (including the All India Radio) faced an annual revenue deficit of about Rs 900 crore. While the proposed cess may bridge the annual revenue deficit, it however, does not address the key concerns of Prasar Bharati, which include the infusion of massive capital for digitalisation and roll-out of new platforms such as mobile TV, digital radio mondiale, high definition TV and car TV.

Courtesy: EconomicTimes

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Britannia Industries wants Tiger back within 60 days

BRITANNIA Industries (BIL), through its solicitors, has shot off a letter to Groupe Danone seeking unconditional return of the Tiger trademark within 60 days. This comes even as Danone, which jointly owns Britannia along with Nusli Wadia, has indicated conditional settlement of the intellectual property rights dispute involving the brand. Backed by legal advice, Britannia’s IPR committee — which includes K K Dadiseth, Nimesh Kampani, Vijay Kelkar and Avijit Deb apart from Vinita Bali and chairman Wadia — decided to seek remedial action on the matter in a time-bound manner keeping the interests of the other stakeholders in mind, sources said. The Danone representatives on the company board are not part of the IPR committee as they are deemed to be an interested party in the dispute. It is learnt that Danone’s Asia Pacific headquarters had initially signalled unconditional return of the trademark when the issue was first raised with them. However, the settlement went into a loop with Danone deciding to shift the Singapore HQ back to Paris and its long serving Asian head Simon Israel retiring last year. Interestingly, in its letter to Danone, the committee has also enclosed a format of the deed of transfer the French partner should adhere to while returning Tiger. The Indian company appears set to walk the full distance in protecting its IPR from the hands of a multinational partner. A dispute arose when Britannia discovered that Danone had registered its indigenously developed affordable nutrition brand Tiger in many international markets without the knowledge of the Indian company. Tiger has played a key role in providing market access to Danone in developing markets in the Asia-Pacific region. The latest development should be viewed in the backdrop of the larger shareholder issues between the Wadia Group and Danone on its future partnership with the French partner unveiling solo plans to tap the dairy and water businesses in India. When contacted, Britannia MD, Vinita Bali, confirmed that IPR committee has sent a letter asking Danone to return the trademark and execute the deed of assignment unconditionally. An e-mail to Danone remained unanswered. It is learnt that Danone now wants Britannia to effect a licensing deal before returning the trademark to ensure continuing use of the trademark in many markets like Indonesia, which is touted as one of Danone’s success stories in Asia-Pacific. It is learnt that Britannia is open to a licensing deal once Danone returns the property without conditions. “We believe there has to be a sequence to resolving the dispute, and it should start with Danone returning the trademark ownership,” sources said.

Danone believes it’s in line with resolution
DANONE believes that it is using Tiger in global markets in line with a 1998 Britannia board resolution governing intellectual property rights. However, Britannia thinks that the specific resolution was a “one-way traffic” pertaining only to the Indian company using Danone’s properties in the local market and not vice versa. Hence a settlement solely within the framework of the 1998 resolution cannot arise, sources said. Sources said Britannia was surprised that a leading MNC like Danone, which had four representatives on the board including three operating mangers from Asia-Pacific, kept it in the dark about the French giant rolling out Tiger biscuits and milk drinks in the region till Britannia stumbled on it.

Courtesy: EconomicTimes
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Potentially major roadblock for HUTCH-Vodafone deal

Law Minister to take a call on Hutch. FinMin Seeks Opinion On Asim Ghosh,Analjit Holdings In Co

THE HUTCH-Vodafone deal ran into a potentially major roadblock on Monday with the finance ministry seeking the law ministry’s opinion on the 12.26% stake in Hutchison-Essar held by the company’s CEO Asim Ghosh and Max India chairman Analjit Singh. With the Reserve Bank seeing the multi-layer holding as a possible violation of the 74% foreign direct investment (FDI) ceiling for the telecom sector (as reported by ETin its edition dated March 26), the government now wants a detailed opinion from the law ministry. The development is significant since it could delay Vodafone’s takeover of Hutch-Essar. The Foreign Investment Promotion Board (FIPB) would take up the Vodafone application for consideration only after receiving the law ministry’s opinion, the sources said. Various stakeholders representing the companies concerned have been called for a meeting at the finance ministry on March 28, but the law ministry’s opinion is unlikely to be available so soon, sources said. It is expected that Hutch-Essar’s version of the equity structure would be explained to officials at the meeting on Wednesday. When FIPB considered the Vodafone-Hutch issue on March 20, a decision was deferred since RBI’s opinion was not available. Telecom Watchdog, an NGO, had sent a communication to senior government officials the previous day citing more evidence on the alleged violation of FDI cap. The law ministry will examine the allegation that Asim Ghosh and Analjit Singh were only ‘fronts’ for Hutchison Telecommunications International which was the beneficial owner bearing all economic risks and rewards of this stake, the sources said. If this was true, then aggregate FDI holding in Hutch-Esaar would be 89% since the Esaar Group holds 22% in the company through foreign entities. Mr Ghosh and Mr Singh deny this. They say that they have full voting on their equity and also receive dividend payments. Mr Singh told ET that he has to repay loans taken to purchase his equity stake from his own resources.

Govt wants facts clean before FIPB okay

THE government wants to be sure of all the facts before FIPB clears the Vodafone-Hutch deal, the sources said. It was widely expected that the clearance would come through this week, but the RBI’s seemingly negative view and the decision to seek the law ministry’s opinion have transformed the scenario. While seeking legal opinion, a copy of Press Note 5 (which allows 74% FDI in telecom) has also been referred to the law ministry. According to officials, the crux of the issue referred for legal opinion is the allegation about direct and indirect foreign holding in Hutch-Essar exceeding 74%. Following the mega deal between Vodafone and Hutch, Vodafone International Holdings, a Netherlands-based subsidiary of the UK-based telecom giant, filed an application with the FIPB on acquisition of CGP Investments (Holdings), a Cayman Islands-based company which owns a 42.34% stake in Hutch Essar. CGP Investments also has further interests of 9.62% in Hutch Esaar. The transaction would result in Vodafone acquiring a controlling stake of 51.96% in Hutch-Essar. The finance ministry had referred the issue to the RBI following allegations of benami holding by an MP. The loans to Mr Ghosh and Mr Singh to buy equity in Hutch-Essar is backed by a guarantee from Hutchison.

Courtesy: EconomicTimes

For more details in Retail India visit: www.retailindia.tv

Pantaloon Retail’s biggest outlet to come up near Kolkata

PANTALOON Retail, part of Kishore Biyani’s Future Group, is set to take up 2.8 lakh sq feet in an upcoming mall in Madhyamgram in the outskirts of Kolkata. This is likely to be the largest single-location retail outlet taken up by the company. The new destination mall — Pathapadap — will be part of a string of large format retail malls being planned along the entire stretch of National Highway 34 (NH 34) up to Siliguri. Interestingly, it also marks a deliberate strategy taken up by real estate developers to target growing consumer demand in districts. In all likelihood, Pantaloon Retail would introduce its Big Bazaar brand of hypermarket chain for the highway outlet. The malls are being developed by Bengal Shelter, a joint sector real estate company that is also building the country’s first book mall, Barnaparichay in the city. “We have tied up with Pantaloon Retail for a destination mall coming up at Madhyamgram. We are also in the process of tying up with other retail majors for the chain of malls in district towns along the highway. Apart from malls the adjoining premises will also house urban habitats like LIG and MIG flats, educational institutes and hospitals,” Bengal Shelter MD Mr Samar Nag told ET. “Barasat, Behrampore and Krishnanagar are the other places where we have lined up similar projects,” Mr Nag added. Other players including Reliance Retail are also keen to enter this space. The idea is to offer facilities similar those available to urban consumers in addition to infrastructure for an organised lifestyle. In the first phase, plans are also afoot to build such large malls in Raigunj, Coochbehar and Siliguri too. In the second phase, Bolpur, Chandanagore and Durgapur will be added. Along with the malls, the company plans to build a cold chain that will help in preservation of fruits and vegetables brought from the interiors of the districts on their way to a central storage hub being developed by Bengal Shelter at Rajarhat.

Courtesy: EconomicTimes

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Indian Entertainment Industry will soon touch Rs 1 trillion

THE Indian entertainment script is moving into IMAX size. The annual Ficci-Frames PwC reports verifies it with an 18% projected growth and Rs 1 trillion waiting at the end of five years for the E &M industry. The Indian government too is taking active interest to protect its interests, aid its global footprint and seek value-added partnerships for it too. Outlining five core focus areas at the Ficci-Frames 2007, the minister for information & broadcasting, Priyaranjan Dasmunshi promised to battle piracy, encourage Indian participation in international film festivals make amendments to the Cinematograph Act of 1952, give tax concession and fiscal benefits for digital cinema and more sign more co-production treaties with foreign countries. The common theme for Frames 2007 was the emergence of lifestyle media, and playing a big role in this was convergence aiding the growing entertainment consumer to consume content anytime and anywhere. Speaking on regulatory framework, SK Arora, secretary, I&B ministry, said, “We will streamline the regulatory framework and the government will continue to support the entertainment industry.” The ministry is aiming at providing on demand content to the users, besides encouraging investment in technology and competition to grow new delivery platforms. A memorandum of understanding (MoU) was signed between Ficci and Filas (Financial Investment Agency of the region of Lazio) covering digital technology and applications, multimedia, cinema production and post-production, animation, music and publishing. India and Ficci are the second country, Filas has signed a MoU like this, the first being with the Media Development Authority of Singapore. The total budget of Filas is 10 m euros. The two partners are looking at four coproductions between the two countries. The M&E sector went through a bad phase with investors in 2001 who lost money due to funds not being utilised well. The sector has re-merged in 2006 with the sector has received new interest among private equity players. “Yet, PE guys look for consistent growth and there is a distance to cover which will take some time,” said Mukesh Jain, associate director, Ernst &Young. Whether digital cinema is the way forward was a hotly debated topic between the players, like UFO’s Raja Kanwar and Bill Jasper of Dolby Laboratories along with exhibitors like Shravan Shroff of Fame. “For producers, the reach it gives is a boon both commercially and to fight piracy,” said Don producer Ritesh Sidhwani. Like China, where cyber cafes were the driver of the growth of the gaming industry, India too looks like going the same path according to the gaming industry.

Courtesy: EconomicTimes
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Ford India to spruce up existing models

FORD India is consolidating operations in calender 2007. Towards this, the company plans to spruce up existing models — Ikon, Endeavour, Fiesta and Fusion — to maintain 20% marketshare in the country’s mid-sized car segment this year. Talking to ET, Mr Scott McCormack, vice-president (marketing, sales & services) at Ford India said: “We’ve decided to consolidate operations in calender 2007. There are no plans to introduce new models this year. We will take action on the products front and launch new variants of existing models with added features. We expect this will help maintain 20% marketshare in the mid-sized car segment.” India sells nearly 20,000 mid sized cars (B and B+) per month. Ford India has also stopped importing CBUs (complete build-up units) of Ford Mondeo for the Indian market. The company spokesperson said: “Our parent, Ford Motor Co, has introduced the new Ford Mondeo at the recent Geneva Auto Show. Hence, there’s no point in selling the old Ford Mondeo model in India anymore.” Incidentally, the parent company has no immediate plans to launch the new Ford Mondeo in India. While unveiling the consolidation plan, Mr McCormack said: “We’ve introduced a number of new features to the Ford Ikon. More will be introduced in coming months.” The 2007 Ikon will offer customers plush beige and dark parchment interiors, matching seat fabric and trims and new instrument panel. Ford India will also offer other features like sporty alloy wheels, anti-theft alarm, chrome decklid handle and others at an additional cost of Rs 35,000. The company has also introduced new shades to the Ikon like jeans blue, paprika red, moondust silver to diamond white. “The Ford Ikon is aimed at 25-30 year old aspiring individual, typically employed in the knowledge sector. The new features will add to his personality,” Mr McCormack said. The company has also introduced a new 1.4 litre petrol ZXi version for its Ford Fiesta model. “Aggressively priced at Rs 6.30 lakh (ex-showroom New Delhi), the new 1.4 litre petrol Fiesta ZXi will strengthen Ford’s position in the growing mid-size automotive segment,” he added.

Courtesy: EconomicTimes
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Hyundai to give Santros to KBC contestants

Up to nine contestants who feature in Monday’s episode of the popular game show Kaun Banega Crorepati could drive out in Hyundai Santro cars if they manage to stay away from the ‘hot seat’. Hyundai, whose brand ambassador happens to be the show’s host Sharukh Khan, said it has tied up with entertainment channel Star Plus and Khan for an innovative in-show publicity — as part of which those who fail to make it to the hot seat will be given away the popular hatchback car. Qualifying for the hot seat, however, gives contestants a chance to win Rs 2 crore in the show that is inspired by ‘Who Wants To Be A Millionaire’. Star Plus has been promoting Monday’s episode as a surprise episode. Contestants in the teaser to the episode are shown holding gift boxes, which would carry the car keys. A Hyundai official refused to divulge any details but said there was a tie-up for inshow publicity. Actor Khan replaced superstar Amitabh Bachchan as the game show’s host this year.

Courtesy: EconomicTimes
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Qatar Airways on expansion mode in India

The Qatar Airways is exploring possibilities of operating services to Doha from more destinations in India, a senior official of the airlines said on Monday. Talking to reporters here, Qatar Airways general manager (commercial) Ali Al Rais said the airlines would like to include Nagpur in its list of destinations. The airlines started its daily flights in the Chennai-Doha-Chennai sector on Sunday, making the Southern metropolis as its sixth destination in the country. It was operating services from New Delhi, Mumbai, Thiruvanathapuram, Cochin and Hyderabad.

Courtesy: EconomicTimes
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Videocon Group planning Dubai manufacturing unit

Videocon Group on Monday said it was considering setting up a new manufacturing unit for consumer durables in Dubai. “We have been invited by Prime Minister Of UAE and ruler of Dubai H H Shaikh Mohammed Bin Rashid Al Makhtoum to set up a unit in Dubai. We will be going there next week to discuss details,” Videocon chairman Venugopal Dhoot said. The proposed unit will be for making consumer durable products. The company has a unit in Oman, he said.

Courtesy: EconomicTimes
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IndianOil launches online cash customer loyalty card

In a bid to attract and retain customers, Indian Oil Corp on Monday launched a loyalty reward programme for customers paying in cash. “XtraRewards is the first reward programme for customers paying cash. Even today, about 90 per cent of the people who drive into petrol pumps pay cash,” IOC director (marketing) G C Daga said here. “With XtraRewards, such cash customers can add value to their purchases by piling up loyalty points,” he said at the launch, where the first loyalty card was handed over to former All England Badminton Champion Prakash Padukone. “These loyalty points are accrued even for customers paying through credit and debit cards,” he said.

Courtesy: EconomicTimes
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Reliance Communications ties up with Intrex for rail ticket booking

Reliance Communications on Monday said it has tied up with Essel Group company Intrex India for a service that will enable users to book railway tickets through mobile phones with the use of ItzCash cards. ItzCash is a multi-purpose pre-paid card from Essel Group and is available through a pan-India distribution network, a company press release said here. The company already has a tie up with Indian Railway Catering and Tourism Corporation for booking railway tickets through mobile phones with credit cards. “Booking the railway tickets with ItzCash cards will help travellers across the country where credit and debit cards penetration is fairly low,” RCoM president Applications (Solutions and Content Group) Mahesh Prasad said.

Courtesy: EconomicTimes
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Pantaloon Retail looks to expand in South India

PANTALOON Retail is betting big on the southern market and is expecting one third of its revenue to come from its apparel format - Pantaloon Fresh Fashion outlets, in the region. Expanding its footprint in the south the company is targetting 25 Fresh Fashion stores across Karnataka, Tamil Nadu, Andhra Pradesh and Kerala over one and a half years. Each Pantaloon Fresh Fashion store will have an investment outlay of around Rs 3 crore amounting to total investment of Rs 75 crore. With this planned expansion the retail major is expecting a tenfold jump in the contribution to its total revenue from the south. Currently eight Fresh Fashion stores in the south contribute 24% to the total revenue, which was Rs 795 crore for quarter ending December, 2006. This is expected to be over 33% within one and a half year. “South is doing very well for us. Going forward Bangalore alone should be able to crack 10 apparel outlets. Excluding Bangalore, Pantaloon Retail plans to have 10 apparel stores in Karnataka. We will soon be launching apparel outlets in the tier IIcities like Mysore and Hubli also,” Rohit Malhotra, head-operations (South Zone), Pantaloon Retail told ET. Bangalore has two Fresh Fashion stores as of now and one more will be added by this month-end. Mangalore also has one Pantaloon Fresh Fashion store. In Kerala, Tamil Nadu and Andhra Pradesh too Pantaloon is targetting tier-II cities like Coimbatore, Madurai, Salem, Calicut, Trivandrum, Vizag and Vijayawada. Each of these tier II cities will have one apparel outlet each. Pantaloon is also launching its first apparel store in Cochin (Kerala) in June, 2007. Nationally the existing number of Pantaloon Fresh Fashion outlets stands at 27.

Courtesy: EconomicTimes
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Reliance Retail reworks its HR management policy

Focus On Talent Acquisition & Transformation To Retain Mid-Management Pros

EVEN as Reliance Retail ramps up its nationwide rollout plans, the company is developing a comprehensive manpower management policy to streamline its recruitment and retention strategy. The new policy will focus on critical areas like talent acquisition, talent transformation, talent design and talent concept of the human resources (HR) function within the company. Confirming the development, a senior Reliance Retail official said: “The company’s HR team has been given the mandate to chart out the blueprint by December 2007.” The exercise is being spearheaded by Reliance Retail president and chief people officer Bijay Sahoo. The move assumes significance as Reliance Retail plans to have some 5 lakh employees on its rolls by 2010. Increasing competition and shortage of seasoned retail professionals has also taken a toll on the company with some of its top and middle management executives joining competitors like Bharti-Wal-Mart and Aditya Birla group’s retail venture. “The HR policy will not only formulate a detailed recruitment and manpower plan for the company, but will also work out a comprehensive retention strategy,” the company official told ET. Incidentally, the company runs 89 retail outlets and plans to ramp it up to 120 stores by April 2007. While the talent acquisition vertical has the mandate to recruit talent across functions, talent transformation will play a key role in providing necessary inputs for recruits from nonretail sector to gear up for hardcore retail operations. The talent concept vertical will identify the necessary skills required by the company, and the talent design team will draw specific profile for the employees. “We may have lost some seven to eight top guys in the war for talent, but the proposed HR policy will aim at stopping attrition in the senior and middle management level,” the company official said. Reliance Retail now has some 6,000 employees on its payroll. The company is also firming up plans to use the pool of some 30 senior executives recruited from Wal-Mart’s global operations to train its workforce. “These executives will provide training to fresh graduates and professionals recruited from non-retail sectors. We want to handle the entire employee training process internally,” the official said.

RELIABLE PLAN

• Increasing competition and shortage of seasoned retail professionals have led to some of its top and middle management executives joining competitors

• The proposed HR policy will aim at stopping attrition in the senior and middle management level

• The company is firming up plans to use the pool of some 30 senior executives recruited from Wal-Mart’s global operations to train its workforce

Courtesy: EconomicTimes

For more detail on Retail India visit: www.retailindia.tv

HYUNDAI Motor India (HMIL) may invest additional Rs 4,000 cr into Chennai unit

Co To Increase Capex To Rs 7,000 Cr To Avail State-Offered Benefits

HYUNDAI Motor India (HMIL) plans to pump an additional Rs 4,000 into scaling up its total capex to over Rs 7,000 crore by 2010 at its facility near Chennai. This may help the company avail incentives offered by the Tamil Nadu government under the new ‘Ultra Mega Integrated Automobile Projects’ policy. The state government unveiled the ‘Ultra Mega Automobile Policy’ after bagging the Rs 4,000-crore Mahindra-Nissan-Renault threeway joint venture’s greenfield project near Chennai. The policy is expected to extend the package to other automobile projects meeting the investment target. “We will be investing well over Rs 4,000 crore into our facility near Chennai by 2010. This will include our current and future investments,” H S Lheem, the MD of HMIL, said on Monday, after the first batch of Hyundai Getz Prime cars were flagged off for exports to Germany at the Chennai Port. “We have already invested around Rs 3,500 crore at the existing facility, including on expansion,” an HMIL official added. According to a state government order issued on February 26, 2007, Ultra Mega Integrated Automobile Projects are either new or expansion projects that have engine plant, press shop, body shop, transmission line, assembly line, paint shop and other features. They can be independent or in consortium or JV mode in the same location with an investment of not less than Rs 4,000 crore. This investment can be made in seven years from the date of signing an MoU with the government or any other date specified by the government. The sops to be extended include land allotment at concessional price, 100% exemption from stamp duty, provision of power supply through dual feeder lines by TNEB with the cost of the feeder lines being borne by the government/TNEB and exemption from electricity tax for 10 years for both TNEB and captive power. The scheme also offers a slew of tax incentives such as refund of gross output VAT and CST without any set-off for 21 years or up to 115% of eligible investment. Earlier, Mr Lheem said 4,000 Getz Prime vehicles - in 1.1, 1.3 petrol and 1.5 diesel versions - are being shipped to Germany. “We will soon introduce these same quality Getz Prime in India and will launch both the petrol and diesel versions.”

Chennai port to offer multi-level car park

Chennai Port Trust chairman K Suresh has said four of the seven car carriers, which the port had sounded on its move to establish a multi-level car parking facility, have responded positively. The port trust is likely to make an announcement soon. He said at present, 60,000 sq ft of space is required to park 6,000 cars. With a multi-level car park, a mere 10,000 sq ft is enough to park the same number of cars. Mr Suresh said the Chennai Port plans to build two more multi-level car parks, and offer passenger amenities. “It will be complete with a shopping mall and food courts and these facilities will also be thrown open to the public to make the project viable,” he said. H S Lheem at the flagging-off ceremony of 'Hyundai Getz Prime' at Chennai Port on Monday.

Courtesy: EconomicTimes
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Chocolates pep up blood flow

CHOCOHOLICS were given further reason to rejoice on Saturday when a small clinical study showed that dark chocolate improves the function of blood vessels. While the researchers cautioned against bingeing on bon bons, they said the findings of the trial were clear and called for larger such studies to confirm the results. “In this sample of healthy adults, dark chocolate ingestion over a short period of time was shown to significantly improve (blood vessel) function,” said Dr Valentine Yanchou Njike of Yale Prevention Research Centre, a co-investigator of the study. The results, presented at the annual American College of Cardiology scientific meeting in New Orleans, add to mounting evidence of the health benefits of dark chocolate. During the six-week trial, 45 people were given 8 ounces (227 grams) of cocoa without sugar, cocoa with sugar or a placebo each day. An upper arm artery’s ability to relax and expand to accommodate increased blood flow —known as flow mediated dilation (FMD) — was measured using high-frequency ultrasound before and after daily cocoa or placebo consumption. Of the 39 subjects who completed the trial, FMD improved significantly in both cocoa groups — by 2.4% among those who had it without sugar and 1.5% among those who had it with sugar. It dropped 0.8% in the placebo group. “While the findings from this study do not suggest that people should start eating more chocolate as part of their daily routine, it does suggest that we pay more attention to how dark chocolate and other flavonoid-rich foods might offer cardiovascular benefits,” Njike said.

Courtesy: EconomicTimes
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Wheat flour to get cheaper in India

Retail prices of wheat flour that have eased by Rs 2 per kilo in the last 15 days, are likely to fall further by Rs 1 per kg in next one month, with the increase in wheat supply in the domestic market, traders said. “The retail prices of atta (wheatflour) depend on wheat prices, which fluctuate on the basis of supply,” said Rakesh Jain, Rajdhani group’s director, adding that prices could come down by Rs 100 per quintal by next month. “Wheat prices, which are ruling at Rs 1,050 per quintal in Delhi on Monday could dip to Rs 950 per quintal by April, depending on supply,” he said.

Courtesy: EconomicTimes
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Retail boom to fuel stepped up farm loans by banks

CAN AGRICULTURE be the next round of interest for Indian banks? A banking report by Emkay Shares & Stocks has indicated that the growing retail revolution can support Indian banks who are looking at newer growth opportunities. Agriculture credit has tripled from Rs 40,000 crore in FY’01 to touch Rs 1.2 lakh crore and is projected to double by the end of the next fiscal.Incidentally while retail is the buzzword in Indian business, penetration in the food and grocery (F&G) segment is low. In terms of expenditure F&G accounts for 40% of the consumer’s wallet followed by personal care, a distant second with 8%. The report also notes that changing legislation in India’s agri-sector is also expected to provide the additional teeth for the growth of this sector. The first of the amendments relate to the Agriculture Produce Marketing Committee(APMC) Act, which now allows farmers sell directly to bulk buyers instead of having to route the transactions through the various APMC yards in the country. The second major change relates to the removal of Agricultural Produce Cess Act, 1940 and the Produce Cess Act, 1966 to remove cess on exports of domestic agricultural produce. Another pointer is that gross non-performing assets(NPAs) of the agri portfolio of Indian banks has dipped from a high 14.9% in FY’01 to touch 6.2% in FY’05. Commenting on the potential, the report notes that the non-agricultural sectors in the rural economy offers enormous growth opportunities. The non-agricultural sectors cover areas like housing, water supply, irrigation, health, transportation.The non-agricultural sector for instance has been growing at a compounded rate of 10% between FY’1994 and FY’2001 against the growth of 3% of the agricultural sector.

Courtesy: EconomicTimes
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ICICI Bank, Subhiksha launch prepaid food card in Delhi

ICICI Bank and supermarket chain Subhiksha have launched a prepaid food card. Customers can use this as an alternative to cash and meal vouchers. The prepaid card, which is reloadable on a monthly basis, will be accepted at all Subhiksha outlets and select restaurants. The card is first being launched in Delhi.

Courtesy: EconomicTimes
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Textile cos fail to weave a success story

Cos Have Been Unable To Sustain Valuations Claimed During IPO, And Investors Turn Cautious

THE textile sector has dominated the primary market in terms of the number of IPOs so far in CY07. But this trend may not sustain as almost all of these are trading at a substantial discount to their offer prices. These companies have been unable to sustain valuations claimed during IPOs as investors are increasingly turning cautious on the sector’s prospects. Several reasons can be cited for investor apathy towards these scrips. First, many of these players are betting on India’s outsourcing story. Thus, growth prospects of these companies are linked to India’s performance in export market. This, at least as of now, doesn’t look as bright as it was thought to be earlier. In 2006, India’s textile exports to USA, the largest export destination, grew by just 9% compared to the 21% jump seen by China, the closest competitor. Moreover, India’s realisations per unit skidded by 4%, while those of China improved by almost 9%. With growing competition from other Asian countries including Vietnam, Indonesia and Bangladesh, realisations for the Indian exporters are expected to remain subdued in future. Adding to its woes is the fact that India lacks the size and scale of operations at the present moment. This limits the economies of scales enjoyed by the domestic exporters compared to their Chinese counterparts. Further, higher raw material prices have put a lid on profit margins. All these concerns make textile scrips less attractive. In fact, in the past one year, the ET textile index has underperformed vis-à-vis BSE Sensex. During the first three months of CY07, as many as eight textile companies made public offers. Barring Tubeknit Fashions, the remaining seven could sail through successfully. Investors showed moderate interest in these IPOs, with overall 2-3 times oversubscription but response could not be sustained. For instance, the stock of House of Pearl Fashions was listed at Rs 500, nearly 10% lower than its offer price. The readymade garments company with global presence in manufacturing, sourcing and distribution, was valued at a P/E of 20.3 times the FY07 annualised earnings, at the offer price of Rs 550. It is currently quoted at Rs 370. Thus, its P/E now stands at 13.7x. Page Industries, the exclusive licence holder of Jockey brand of innerwear, commanded a P/E of 22.6x at the offer price of Rs 360 per share. At the current level of Rs 292, its valuation has declined to 18.3x. The fate was more or less same for the other recently-listed textile companies. With inputs from Haresh Soneji

Courtesy: EconomicTimes

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NRIs buy India story, pump in Rs 100 cr in just 2 months

WHILE the retail investor in India is increasingly becoming sceptical about investing in the volatile equity market at current levels, NRIs are taking a contrarian view on the same. The NRI community, which till a few months ago was pulling out money, appears to have undergone a change in mindset. NRIs have invested nearly Rs 100 crore, in less than two months of the current calendar year (CY07). Albeit a small sum, but one needs to note that in the previous calendar year, NRIs were net buyers at less than Rs 8 crore. Experts feel that corrections witnessed in the recent past have made NRIs more bullish on the Indian market and as such are looking to reinvest. “The data clearly shows that NRIs have been pulling out money earlier, which was due to reasons like high rupee-dollar rate and valuation concerns. In the past couple of months, the Indian market has corrected, forcing them to rethink,” said the head of a brokerage with a sizeable overseas presence. He added that even though the rupee has appreciated over the past 2-3 months, the corrections witnessed in the equity market has led to NRIs increasing the quantum of their investment. “This was not the case earlier, when the rupee was also appreciating and the equity market was also at an all-time high.” As per the BSE data, NRIs were net buyers at Rs 28.68 crore and Rs 70.30 crore in February and March, respectively. In January, they were sellers at Rs 2.16 crore. “Real estate is one sector that NRIs have developed a liking for,” said a research analyst with a domestic brokerage. “Most NRIs from the Gulf region seem to be eternally bullish on the infrastructure sector and ready to invest in any of the real estate companies. In addition, many of the first-time investors also prefer technology stocks,” he added. Interestingly, the increase in inflows may well be the reason for many of the brokerages new-found partiality for the Gulf region. Although, more than a couple of Indian brokerages already have a presence in the Gulf, there are many more in the pipeline. While Motilal Oswal Securities has opened a representative office in Dubai around 3-4 months back, JRG Securities received the provisional licence to form a JV in Saudi Arabia just last week. Even India Infoline and Angel Broking have chalked out expansion plans for the Gulf region.

Courtesy: EconomicTimes
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Bubble bursts, reality bites ad rates, It’s a losing bet after brickbats

INDIA’S stunning loss in the first round of World Cup 2007 will pummel ad rates for cricket, force broadcasters to temper their frenzied bidding for telecast rights and bring about a significant price correction, industry executives said. Whether it is advertising rates to sponsorship deals leading to the acquisition cost of cricket the game is going to witness a significant beating, thanks to the World Cup 2007. “It is about time realism in cricket sets it. It is no longer value for money, and is gamble that’s bound to fail,” said a top media professional. With India’s next series scheduled in May where they tour Bangladesh, followed by their tour to England in June, media professionals opine that ad rates will definitely drop by 25%-30%. If today an India match garners close to Rs 1.25 - 1.50 lakh for 10 seconds, the price is poised to plummet down to Rs 90,000 - 1,00,000. Apart from the price corrections, the general interest among the advertising community has also been hit with most of them burning their fingers on the World Cup. “It will take a lot of effort to get advertisers on board for cricket for some time. India not making it to the Super 8’s has led to 50-70% dip in viewership, which means high impact loss for advertisers,” said Mindshare Fulcrum director trading services Amol Dighe. Business plans of a lot of cricket boards will also be affected with telecast rights of close to five cricket boards coming up for renewal at the end of the year. Broadcasters will be a lot more cautious with their bids, as cricket no longer seems to be a sought after commodity. With the Rs 400 crore that is spent annually on cricket in non-world cup year, broadcasters are going to find it a mammoth task even to break even, forget making profits. Nimbus won the BCCI contract in 2006 for a whopping $612 million, and ESPN won the ICC rights for the next eight years for $1.1 billion. Going by the escalating acquisition costs of cricket, advertising prices need to grow in tandem, and hit the Rs 3.5 - 4 lakh mark for 10 sec to emerge successful. However, with the scenario reversed, broadcasters will be bleeding. For this World Cup though, advertisers are already trying everything to get some kind of relief from Sony. Negotiations have begun, and sources state that Sony will review the case depending on the size of the outlays of the client and its relationship. For Sony, the notional loss is Rs 70-100 crore, which would have accounted for 25% of the inventory that was set aside for high value spot buys.

CORRECTION PITCH

1) With Rs 400 crore being spent on cricket annually, broadcasters will find it tough to even break even

2)Rates may fall by 30% for Bangladesh tour in May and England tour in June

3)Advertisers already in talks with Sony for a review of rates

4)Industry may bring in pay-per-performance regime for cricketers

5)Broadcasters reject exit clause suggestions, saying, premium is not charged from advertisers when team's winning

Courtesy: EconomicTimes

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Coke under lens over social responsibility

COCA-Cola’s performance as an ethically-conscious global brand has come under scrutiny in a 15-nation, Europe-wide study into the soft drinks giant’s involvement in social causes and environmental responsibility. Over two-thirds of respondents questioned whether the company makes a positive contribution to society. The study, which was commissioned by Vlerick Leuven Ghent Management School in Belgium, looked at the Socially Responsible Trading performance of Coca-Cola across 15 major European markets and eight separate consumer groups. According to the report, more than 40% of respondents felt Coca-Cola was not making a positive contribution to society, with over-three quarters of those polled stating they were prepared to pay more for ethically produced goods. Additionally, 86% of people surveyed said companies should speak about their charitable work, but a proportion of respondents said “virtue is its own reward”. However, the report warned that brands must be seen to be engaging in social and environmental programmes to remain successful. The survey was critical of companies which seemed to be pay “lip service” to charity work, arguing that one-off, short term actions were “pointless” and seen as “commercial stunts by the consumer”. The report’s analysis stated: “Certainly in the case of Coca-Cola we can assume that consumers already have a strong, sound brand attitude through years of product experience and advertising messages. “But, the soft drinks giant would certainly be ill advised not to invest in social projects. In the long-term, companies would certainly have to engage in SRT in order to remain successful.” The survey polled consumers across Eastern and Western Europe, including ones in Belgium, France, Germany, the UK, Denmark, Italy, Spain Poland, Romania and Hungary.

Courtesy: EconomicTimes
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Advertisers take guard

IS IT time to factor in exit clauses in cricket deals? Indian’s team near-certain exit from the World Cup has brought out into the open what was till now being talked about only in hushed voices. Advertisers, who have sunk in about Rs 350-400 crore just for on-air advertising on Sony Entertainment and another Rs 160 crore on Doordarshan, are now talking tough, and issues such as ensuring returns on investments (RoI), compensations, protection clauses, pay per performance and minimising risks associated with cricket and cricketers are being debated. Media planners say ESPN Star Sports could stand to lose the most – since it has acquired ICC’s exclusive telecast rights for $1.1 billion for the 2007-015 period. “Advertising and sponsorship rates have hit the roof, but uncertainty over cricket too is multiplying. There has to be a way to soften the blow. Some form of safeguards are already being talked about, though executing it will be complex as it will involve matters such as measuring input and output,” said Future Brands head Santosh Desai. “The money invested by sponsors and advertisers has to be protected,” pointed out Percept Holdings joint MD Shailendra Singh. Percept, which handles endorsements of various cricketers, had factored in a performance clause for Yuvraj Singh when it was doing an endorsement deal with Hero Honda. Sources told ET that while Yuvraj agreed, Rahul Dravid and MS Dhoni refused to agree to the clause terms. Group M’s Maxus MD Ajit Varghese pointed out that some levels of protection are already being factored into big-ticket contracts. “It would be naïve to assume that there are no existing clauses when it comes to big contracts. But then, those deals are closely guarded,” he said. However, as Madison Media Plus CEO Basabdatta Chowdhuri pointed out, though World Cup ‘07 has brought out the importance of factoring protection clauses in contracts, it’s something broadcasters would not agree to easily. “Where does the question of exit clauses arise? If India wins, do we charge a premium over and above settled deals from advertisers? We too pay huge amounts to acquire broadcast rights and those costs have to be recovered,” said ESPN Star MD RC Venkateish. SET’s E-VP Rohit Gupta sales added: “Unlike ratings that change every week, deals can’t be changed based on every loss or win. When an advertiser buys into sport, he buys factoring in eventualities associated with the game.”

Courtesy: EconomicTimes
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Titan to bring three global brands to India

BUOYED by the success of Tommy Hilfiger brand, which it brought into India, Tata group-controlled Titan Industries plans to introduce another two to three international brands into India in the next two to three years. “Tommy Hilfiger has done well in the past year and seen a growth of more than 60% year on year. We have plans to bring in two to three more licensed brands into India in the next two to three years including at least one in the next one year,” said Titan Industries chief operating officer Harsh Bhatt. Asked whether the company was looking at any specific locations from where these products would come from, Bhatt declined to give further details. Media reports had earlier suggested that the company was in talks with Hugo Boss for a possible entry into India through the franchise route. The growing market for the company has prompted it to start a new manufacturing facility in India and outsourcing of watches from neighbouring countries as well as increasing its retail presence by around 50% in the coming fiscal. “We will be soon opening a new facility in Rourkee with a manufacturing capacity of 2-3 million watches with an investment of Rs 10 crore and will be functional by later 2007,” Bhatt said. “We have opened a sourcing office in Hong Kong for outsourcing of watches from China, Korea and other such countries and have made significant progress in that regard with nearly 20% of the production being sourced from these countries, he said. The world of Titan’s network has increased to 250 from 170 last year and we have plans to increase that to 275 by the end of this fiscal, Bhatt added. The company, which has a manufacturing facility in Hosur, Tamil Nadu and an assembly unit in Dehradun, produces about 10 million watches currently. Meanwhile, Titan has expanded its range in the sports wear category by introducing the Aviator series of watches. The new series, inspired from World War II fighter aircraft is targeted at the up-market, global Indian and has been priced between Rs 4,000 and Rs 7,000.

Courtesy: EconomicTimes
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LG chalks out strategy with focus on GSM phones

LG Electronics India has identified the GSM mobile phone business as the prime growth driver for the company in calendar 2007. It plans to launch a slew of mid to high-end handsets, including 3G phones and its blockbuster Prada range. At present, LG is at fifth spot in the highly competitive Indian GSM mobile phone market with a marketshare of about 2.5%. The company intends to leverage its market leadership in the consumer durable space to expand the GSM business. LG Electronics India managing director Moon B Shin told ET.

Courtesy: EconomicTimes
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Godrej enters into JV with Sweden’s SCA Hygiene

Aiming to make its mark in the feminine hygiene protection and baby diapers market, Godrej Consumer Products Ltd (GCPL) has entered into a 50:50 joint venture with Sweden-based SCA Hygiene Products AB to manufacture and market paper-based absorbent hygiene products. The joint venture, to be set up with an investment of Rs 20 crore, will be called Godrej SCA Hygiene Limited and sell products specifically sanitary napkins and baby diapers in India, Nepal and Bhutan, a GCPL release said. Under the joint venture, SCA, which is a global consumer goods and paper company that develops, produces and markets personal care products, tissue, packaging solutions, publication papers and solid-wood products, will bring its technology and brand to the Indian market while GCPL will sell its Snuggy brand to the JV company.

Courtesy: EconomicTimes
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IRCTC to run Shirdi darshan train

The Indian Railway Catering and Tourism Corporation is to operate a Bharat Darshan Tour Train to Shirdi from Chennai on April 4. The train was being organised for Shirdi Baba darshan, and would cover Mantralayam and Pandaripuram, an official release said here on Sunday. The six-day tour would cost Rs 3,145 per head and it includes train fare, vegetarian food, lodging and bus fare for covering the area where train service was not available.

Courtesy: EconomicTimes
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Finnair to add Mumbai route from June 17

As part of its strategy to focus on Asian countries including India, Finnish carrier Finnair on Sunday said it would launch a new service to Mumbai on June 17 and increase the frequency of flights to the national capital. Mumbai is a completely new destination to be launched, with five days a week service, Finnair said in a statement. Moreover, in mid-May the current three-weekly frequency for flights to national capital will be increased to daily. “Mumbai was chosen as a new long-haul destination because of great demand and in response to requests from Finnish and Indian customers,” Petteri Kostermaa, responsible for scheduled route strategy at Finnair, said. Noting that Mumbai was India’s centre of business and logistics, Kostermaa said there is big potential for tourist traffic to Europe as country’s most affluent people live in the area.

Courtesy: EconomicTimes
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High loan rates drive away new car buyers

IN THE last few weeks, interest rates on new car loans have scaled prohibitively high levels of 17%, last seen around 2001-02. These rates have had their impact on customer demand and car sales. “The demand has been affected in a big way. We see prospective customers walk out of showrooms without completing the sale and even those who choose to buy, decline loans from private banks and depend on loans from PSU banks or friends and family. The ratio of cash-down purchases has gone up substantially in the last two months,” said a leading car dealer in Mumbai. ICICI Bank, HDFC Bank, SBI and its associates and Kotak Mahindra are the biggest financers in the market. In the past few months, interest rate across retail segments have seen a sharp rise. Interest rates for new car loans for one year has now reached levels of 17%, for 24 months at 16% and 36 months at 15%. The net interest rate for the customer in some cases would be lower by 3-4.5% depending on manufacturer and dealer discounts (subventions).

Six rate revisions in car loans in 1 year

INTEREST rates on new car loans have scaled prohibitively high levels of 17% in the last few weeks. However, the net interest rate for the customer in some cases would be lower by 3-4.5%. This is, however, dependent on manufacturer, models and also the stock which the dealer has in the showroom. “The finance subvention on some models is as high as 4.5% and this brings down effective interest rate on the loan for customer in these models to 12.5%. Subventions normally are at around 3%,” said a dealer. This calendar year, there have already been three revisions. Interest rates for the one-year period at the beginning of the fiscal was at around 13.5%, while that for three-year and above periods were at around 11.75 to 12.5%. Incidentally, around 3 to 4 days ago, ICICI Bank cut its rate by around 50 basis point to perk up year-end demand. “Customers are hesitant to take a buying decision on a new car loan, when they realise that interest rates now are far more higher than a few months before. There have been six rate revisions in the past one year,” points Ashok Khanna of HDFC Bank. The first 20 days of the month have already seen a fall in demand. Says Sumit Bali, CEO, Kotak Mahindra Prime, “Demand in the first 20 days of March have been affected by 20-25%. This demand is much lower than expected. However, this is nothing too unusual. The demand in March normally picks up towards the end of the month as corporates and self-employed people want to avail of depreciation benefits.” According to him, as against a rise in sales of around 20% in this fiscal, the auto finance industry would have grown by 30%. However, next year, the rise in demand for the auto finance market is likely to fall to 18-20%. Adds Mr Khanna. “If the rates stabilise at the current levels for the next three to four months, then the industry will feel the pinch.” Incidentally, with rising rates, tenures also seem to be increasing. According to Ravi Narayanan, head of car and commercial vehicle loans, ICICI Bank, average tenures of car loans have been increasing. They were around 42 to 43 months ago as against 46 months now. It is likely to go up to around 54-55 months this year. He said car sales this fiscal would see a growth of around 23% to around 1.35 to 1.38 million. After 2001-02, interest rates have been going down with ICICI Bank turning aggressive. Loans rates for customer post-subventions had gone down to levels of around 7.5%. However, this time around, with ICICI Bank starting to focus more on profitability than on market share alone, rates are unlikely to tumble fast.

Courtesy: EconomicTimes

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Retail boom fuels growth in logistics sector

India's retail sector opens up on a huge scale, domestic logistics companies are planning significant investments to expand their portfolio of services. It is expected that in the next two years, the logistics sector will have undergone major changes, offering a wide spectrum of services. Consider this: Global retail giant Wal Mart announces its entry into India through a joint venture with Bharti. Reliance puts on its drawing board a mega plan of Rs 25,000-crore to create 100 million sq ft of retail space. The Aditya Birla group makes a retail foray with plans to invest Rs 15,000 crore. The Tatas plan to participate in the retail race with renewed vigour. Pantaloon plans to create a retail space of 30 million sq ft by 2009-10. Shoppers Stop may have 6 million sq ft of retail space by the same time. Global retailers from the US, European Union and Australia are all eyeing the retail revolution in India.

On the growth path
Indian players in the logistics space are keenly tracking these developments, as they suddenly find their services in big demand. Although some retailers, like Reliance, may have their own logistics subsidiaries, most of the others are working with third-party providers. "The Indian logistics sector is at the beginning of a strong growth path. Not only retail, there are other growth drivers like the manufacturing, FMCG and auto components sectors," says an Edelweiss research. Players in the segment are, indeed, ramping up their capital expenditure programme. Edelweiss estimates that the six major players in this sector — Concor, Gateway Distriparks Ltd (GDL), Allcargo, SICAL, Transport Corporation of India and Gati — will spend Rs 3,400 crore over the next three years to cash in on the growth opportunities. These companies together invested about Rs 500 crore in the last fiscal. The companies plan to expand their service portfolios. For example, Concor and SICAL's future growth area is cold chain logistics, GDL and SICAL's is container train operations, while TCI and Gati's is warehousing. Other trucking and courier companies are leveraging on their networks to offer express and supply chain distribution solutions, apart from developing expertise in 3PL (third-party logistics) services.

Absorbing investments
The different sectors within the logistics segment are also poised to absorb significant investments. Edelweiss estimates that the container train sector (thrown open to private sector recently) will see a capex of Rs 1,600 crore in the next three years, while warehousing will get Rs 200 crore, trucking/XPS Rs 380 crore and offshore logistics Rs 250 crore. Worldwide, the logistics industry is on a growth path, with the global logistics industry estimated to be of the size of $3.5 trillion in 2005 — the US market alone was estimated at $900 billion, almost 25 per cent of the global industry. In fact, about 60 per cent of the Fortune 500 companies report having at least one contract with a 3PL company. "India at present spends 13 per cent of its GDP on logistics, which is much higher than the global average. We believe that this is due to inadequate infrastructure leading to periodic bottlenecks along the routes. Another major reason is the regulatory loopholes, which raise the cost of service and cause delays," the Edelweiss research points out. However, the infrastructure will certainly see brisk development in the coming years, with the Government attaching high priority to this sector. The road sector alone will see investments of about Rs 1,52,000 crore between 2006 and 2012. Airports, which together handled a cargo of 1.4 million tonnes last fiscal, as against 0.65 million in 1995-96, will also see significant expansion and development.

The biggest challenge
The logistics companies at present provide services from transportation to warehousing and inventory management. But, in the near future, they will have to expand their products basket to include new value-added services, such as packaging, labelling and reverse logistics.
The biggest challenge that faces these companies is that they should quickly imbibe latest technologies, such as GPC/GIS tracking of consignments, and uncork new services to cater to corporates seeking to outsource their logistics needs. Also, the Government should come out with a sound policy that facilitates the operations of the logistics companies.

Courtesy: Business Standard
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Indian Retailers eye housing stock

In what could become a trend in the booming retail business, Reliance Retail, Future Group and Bharti-WalMart are among leading retail companies that are acquiring housing societies and colonies in Ahmedabad to knock down and build mega-retail stores.
Bharti-WalMart’s proposed retail venture has approached Goyal Park Row Houses, an upscale area west of river Sabarmati, at Rs 33,750 per sq yard, almost double the prevailing price of Rs 15,000 per sq yard. There are 140 houses in the row, each with an average size of 251 sq yard. The joint venture, therefore, will be paying Rs 119 crore for 35,000 sq yard of land. The society also has a parking lot and a park. Nearly 4 km away, Reliance Retail has acquired a 6,700-sq-yard plot, Paritosh Bungalow, bordering the commercial Chimanlal Girdhardas (CG) Road. The company is learnt to have paid Rs 37,000 a sq yard, or nearly Rs 25 crore, for the plot 8-10 months ago. The prevailing price along CG Road is Rs 60,000 per sq yard. Latching on to the trend, real estate developer Navratna Organisers and Developers, a leading construction group in the city, has acquired Panchavati Apartments, an apartment block, along CG Road to build a mall and lease space to retail chains. Navratna paid Rs 36.60 crore for the 6,000-sq-yard plot. “We will be constructing a 1,25,000-sq-ft mall in that space and leasing it to retailers,” said Pranav Shah, managing director, Navratna, adding that the company had applied to the Ahmedabad Municipal Corporation for a change in land use. Navratna is also developing a 12,700-sq-yard mall named Kolonnade Centre for Big Bazaar, a part of Kishore Biyani’s Future Group. Shah declined to comment on the size of the deal and the duration of the lease.
Another developer in the city, Agrawal Builders, has acquired a housing complex spread over 28,000 sq yard, about 2 km from Goyal Park, to construct a multiplex and business centre.
Explaining the trend, Gujarat Institute of Housing and Estate Developers President Jaxay Shah said, “The reason for retail companies approaching housing colonies is the scarcity of premium plots in commercial areas and also since old housing colonies would provide a larger floor space index (FSI) for construction. The buildings in these areas have also completed their life cycle.”
For residential areas, the law requires space to be kept for utilities, which reduces the size of the built-up area. Commercial buildings, on the other hand, tend to have fewer utilities and therefore more space for construction. Shah added that companies have to pay a premium of 15 to 20 per cent for commercial plots along the Sarkhej-Gandhinagar Highway on the edge of the city, where a significant level of commercial construction is taking place. Buying land in the heart of the city, therefore, was considered a more viable option.

Courtesy: Business Standard
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ICICI Bank and Subhiksha launch the Food Card

ICICI Bank, India's second largest bank, in association with Subhiksha, India's largest supermarket chain, has announced the launch of the Food Card. The Food Card will be a pre paid card, targeted as an alternate to meal allowances given to employees by companies. So now instead of cash allowances or meal vouchers, The Food Card will allow corporates to ease out administrative issues for employers and also make it convenient for employees to carry and use.
This pre-paid card will be accepted at all Subhiksha outlets in India and select restaurants. The pre-paid card is reloadable card on a monthly basis and allows transactions to be more secure and convenient. The card is first being launched in Delhi and would soon be available in Mumbai, Hyderabad, Bangalore and Gujarat. Ms. Shanta Vallury, Deputy General Manager, Corporate Payment Solutions Group, said, “The Card is truly a one-of-a-kind product, and a proud addition - to ICICI Bank’s comprehensive - bouquet of card products. ICICI Bank has always been providing innovative payments solutions to suit every customer’s need and this is another step in that direction. Today, plastic money has established itself as one of the most convenient ways to access and spend money, and we are delighted to offer a solution that helps cut down the hassle of carrying cash.” Mr. R. Subramaniam, Managing Director, Subhiksha added “ For us, this is another step forward in reaching out to diverse sets of consumers by offering additional value and making Subhiksha the preferred supermarket destination”.

About Subhiksha:

Subhiksha is India’s largest Supermarket and pharmacy chain with over 600 stores spread over Delhi, Mumbai, Bangalore, Hyderabad, Ahmedabad, Pune, Chennai and also the rest of TN, AP, Gujarat, etc. Its business verticals include a Supermarket, Pharmacy, Fruits and vegetables and mobiles. Subhiksha has been at the forefront of a massive expansion with clusters of stores opening up across several cities over the last few months. Subhiksha offers lower than market prices on all branded and unbranded items that it sells including medicines which are offered at a flat discount of 10% to consumers.

About ICICI Bank:

ICICI Bank (NYSE:IBN) is India's second largest bank and largest private sector bank with over 50 years presence in financial services and with assets of over R. 2958.32 billion as on December 31, 2006. The Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialised subsidiaries in the areas of investment banking, life and non-life insurance, private equity and asset management. ICICI Bank is a leading player in the retail banking market and services its large customer base through a network of over 705 branches and extension counters, 3129 ATMs, call centres and internet banking (http://www.icicibank.com/) to ensure that customers have access to its services at all times.

Courtesy: EconomicTimes
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Outlook on the indian retail sector for 2007

Companies are consolidating their presence in existing locations and moving into smaller Tier II and larger Tier III cities, while regional players are attempting to expand their geographic footprint

2007 will be a year of expansion and growth for the organised retail sector, from both existing and new entrants. The economic outlook for India remains strong, supporting continued growth in incomes and positive demographic shifts. In order to take advantage of this growth, retailers across categories are ramping up their store networks aggressively. With shortening investment cycles, leading retailers are set to embark on aggressive expansion plans over the next two to three years in order to maintain market dominance. Companies are consolidating their presence in existing locations and moving into smaller Tier II and larger Tier III cities, while regional players are attempting to expand their geographic footprint. Many firms are also attempting to establish a foothold in new sectors, pre-empting their competitors and stealing an advantage
2007 will also see retailers strengthening operational strategies to differentiate themselves from competition and retain customer loyalty. A key difference between this and earlier investment cycles is the increased focus on developing the supply chain, measures that will benefit the sector as a whole. While the potential tightening of consumer credit markets has been highlighted as a threat to this growth, other potentially limiting factors include the continued lack of availability of quality retail space, paucity of quality manpower and a need for greater legislative changes, such as uniformity of state-level taxes. Food and groceries to see strong competition .The three nameplate entries into organised retail - Reliance Retail, the Aditya Birla Group and Bharti Retail (through a 50:50 joint venture (JV) for supply chain and a wholly-owned front-end) with Wal-Mart Stores Inc ('AA'/Stable/'F1+') - have all chosen the food and groceries category as their debut sector. This is due to the easy scalability of network and operations and the substantial opportunity in this space. This segment has the lowest penetration of organised retail (estimated at 1%), and therefore the highest supply chain inefficiencies. It is also less susceptible to cyclical fluctuations as it follows the basic, more stable demands of consumers. These three retailers have all chosen the "small box" format for their preliminary entry into the sector, using this to establish their supply chain network.
Having established themselves in this sector, these new entrants have plans to enter the hypermarket format as well. Existing retailers, including Subhiksha (discount supermarket), Piramyd (Trumart), Godrej (Nature Fresh), RPG Retail (Spencer's Daily, based in the south), Nilgiris (supermarket, based in the south) and Pantaloon Retail (India) Ltd (Big Bazaar and Food Bazaar), have all announced large investments over the next few years. However, increased competition in this field is unlikely to have a major effect on broad-level operating metrics of existing retailers in the immediate-term, given the low penetration of organised retail.
That said, in larger cities where penetration levels are higher, losses at the store level could result from growing competition and higher operating costs. However, given the substantial opportunities available in the Tier II and Tier III cities, the full effect of competition will only be felt in the medium- to long-term. Retailers will find it necessary to have at least a limited presence in larger cities despite higher costs, primarily for strategic and brand purposes.
Over the medium term, hypermarkets will have more competition. The Indian market is large enough to support around four to five major players, though survival will depend on retailers' ability to deliver tangible value to the customer and their supply chain efficiencies. Maintaining lean operating levels will become increasingly critical, and are required to manage margins. The longer term could also see a scenario of margins shrinking as growth rates slow.

Supply chain improvements
The supply chain will see substantial investment over the short-term. Reliance has announced plans to invest up to 25% (over Rs 6,000 crore) of its retail investments in improving its supply chain while the JV between Wal-Mart and Bharti Retail is focused solely on supply chain, with the front-end being owned and managed by Bharti to ensure compliance with prevailing regulations. These investments, coupled with those of existing retailers, will result in a marked improvement in the supply chain, facilitating higher efficiency, better inventory management, and lower waste. The food and groceries category, which is one of the most fragmented, will benefit the most from these initiatives, enabling retailers to offer better prices to customers and suppliers alike. With regards to other categories such as durables and apparel, Fitch expects a greater focus on private labels for the purpose of margin enhancement. Another noticeable trend is the focus on improving store-level operations, for example, in visual merchandising and point-of-purchase. These customer-facing developments are designed to improve the retail experience, with the ultimate goal of boosting loyalty and repeat visits.

Real estate pressures to continue
The substantial increase in real estate costs has impacted margin growth for retailers across the board. However, leading players have tried to mitigate the impact by:
• Advance real estate booking at lower prices;
• Revenue sharing pricing with fixed and variable components;
• Negotiating advantageous rates from real estate providers using their "anchor tenant" status.
Retailers must also compete for quality retail space, which remains in relatively short supply.
While many large new retail real estate developments have taken place recently, many of the new malls have been ill-planned, and created with a view to quick profits through sale, rather than long-term sustained revenues through leases. As a result, some of these malls are already witnessing a decline in footfalls. With the creation of 150 million sq ft of retail space, provisionally scheduled for 2010, and with the increased contributions from reputable builders, Fitch anticipates greater availability of quality retail space in the medium-term. However, to meet the current expectations of 12-15% penetration and to support an ongoing growth rate of around 30-35%, the required real estate for the organised sector alone is estimated to be around 400-450 million sq ft. To meet this figure, the sector would need to invest between $8-10 billion, in addition to ongoing expenditure. As a result, we expect the availability of retail space to remain a constraint for retailers, continuing to impact margins in the near term due to the expectation of firm prices in the short- to medium-term.

Acquisitions and expansion
For the first time (barring the small acquisition of Fabmall by Trinethra), the Indian retail sector has also experienced M&A activity over the past six months. New entrants are finding it easier to pay a premium and acquire regional players in order to rapidly scale up their operations and establish a footprint in the sector. Examples include the recently concluded acquisition of Trinethra by the Aditya Birla group and the acquisition of Nilgiris by a private equity fund. Market sources indicate that other regional players could also be looking to exit the market in light of increased competition and the attractive valuations which currently prevail.
It is believed that this activity will intensify in the longer term, once the impact of higher penetration and slower growth rates is felt. In the interim, existing mid-sized players are expanding to gain the maximum footprint possible in the shortest time frame using routes such as the capital markets. An example can be seen in Vishal Retail which plans to raise Rs 110 crore from its proposed initial public offering (IPO), while Pantaloon Retail (India) Ltd 'F1 (ind)' has raised funds through the sale of equity in its Home Solutions Retail Ltd to private equity funds. Existing retailers are expected to also raise additional debt to finance their expansions, likely to result in higher gearing, partly offset by the higher earnings expected from these investments.

Courtesy: EconomicTimes
For more detail on Retail India visit: http://www.retailindia.tv/

Reliance Retail to expand south India ops

Reliance Retail Ltd is all set to expand its operations in South India with the opening of 11 `Reliance Fresh' pilot stores at one go across Bangalore tomorrow. Company executives said more stores would be opened in the city in the near future. The company's President & Chief Executive - Foods business, Gunender Kapur and Chief Executive - Customer Operations, Sunil K Chandran said it's looking at opening `Reliance Fresh' stores in the cities of Mysore, Hubli-Dharwad, Belgaum and Mangalore in Karnataka in the second phase later this year. "We are rolling out to all parts of the country as back-end infrastructure comes up," Kapur told reporters here. "We are planning to be in all urban parts of the country". The stores carry fresh fruits and vegetables, staples, grocery, dairy products and also offer `Reliance Select', the Reliance brand of products, officials said. Within four months of launching Reliance Fresh stores, the total square footage of the 80 Reliance Fresh stores across India is approximately 190,000 sq ft, officials said

Courtesy: EconomicTimes
For more detail on Retail India visit: http://www.retailindia.tv/

Jaya opposes entry of corporates into retail trade

AIADMK supremo Jayalalithaa has opposed the entry of corporates in retail trading, saying this would lead to loss of livelihood for small traders and vendors. Big corporates selling commodities at cheaper prices was a trade tactic to oust small traders and bring the entire trade under their control, she said in a statement here. Once the corporates establish themselves, they would fix prices as they like, she said. Small traders should not be driven out from their profession to other alternate jobs and government should not assist such an act, the former chief minister said and demanded cancellation of permission for entry of big corporates, Indian or foreign, into retail trade. The entry of corporates into retail trade in South American countries, Japan, China and Canada had destroyed the livelihood of small traders and vendors, she said, adding the there was no guarantee that such a situation would not occur in Tamil Nadu. The AIADMK would support the fast organised by traders here tomorrow against the entry of corporates in retail business, she added

Courtesy: EconomicTimes
For more detail on Retail India visit: http://www.retailindia.tv/

Indiamart to enter global B2B arena

With 3,50,000 companies actively registered with them, Indiamart plans to launch an international platform in May 2007. It also has two trade journals in the pipeline.

Started with an objective of managing online media for the benefit of businesses, Indiamart Intermesh Ltd. (IIL) has always seen Internet as a business facilitator rather than a technology phenomenon. In fact, the company, which considers itself to be a business promotion agency focussing on small and medium enterprises (SMEs), is one of the two dotcom companies in the B2B model that not only survived the dotcom bust but also is raking in the profits. The other company is other than tradeindia.com, which is half the size of Indiamart. "Our success mantra for surviving the dotcom bust is that we relied more on direct sales rather than doing milliondollar advertising campaigns. Nor did we have any investor putting in millions in our company," says Brijesh Agrawal, COO, Indiamart. In fact, what explains the company's notable presence in India is that when most of the dotcoms got carried away in the advertising frenzy Indiamart's relied more on direct marketing; its sales team went knocking on doors of traders convincing hem to put up catalogues on their portal. "What a B2B portal needs is a strong buyer-seller base and word of mouth marketing. How we've managed to so is through direct sales, through word of mouth promotion and by participating in international trade shows," Agrawal says. With 3,50,000 companies actively registered with them, Indiamart plans to launch an international platform in May 2007. "It's a big initiative to market ourselves across the world. It will be a challenge to build up a network of international traders," says Agrawal. Besides, the company also plans to launch two trade publications by August this year. "For a B2B portal it's important to educate suppliers on the benefits of E-commerce. Hence our initiative to launch trade magazines so that we can educate sellers of the benefits of E-commerce as well as keep them abreast of the latest trends in the field," says Agrawal. I n d i a m a r t started operations in 1996 primarily as a website development and designing company. Started by Dinesh and B r i j e s h Agrawal, the initial idea was to make it a website designing and hosting agency, and serve Indian businesses by designing and implementing their websites. But soon they realised that that they couldn't sustain themselves as a simple website design and development agency. To generate sales they decided to reposition their company in a way that would help their clients generate business. They thus repositioned their company as a business promotion entity which would be using the power of the Internet and Internet technology to generate more business for their customers; they would also design and implement the website for their clients. In the process the company would be offering a packaged sales generation solution. "By giving a dual advantage to our customers we created a niche which has kept us alive," comments Agrawal. Today, the company, which had a Rs 18.3-crore turnover in 2005-06 and is expecting to clock in Rs 28 crore turnover for this fiscal, provides information, services and solutions for commerce to businesses, making Internet technology work for their business. It runs an online directory, trade auction, tendernotification related services and also provides design, development and promotion services. "We work on a business model where we allow sellers from India and buyers from all over the world to business. We just provide a platform and are not an agent," says Agrawal. The company has 24 offices across India, and generates revenue through the annual fee from the supplier and other additional services offered to them.

Courtesy: EconomicTimes
For more detail on Retail India visit: http://www.retailindia.tv/

Wheat output to cross 72 mt this year: Pawar

The position of wheat crop looked “encouraging” and its reduction is expected to cross 72 million tonnes in 2006-07 Union agriculture minister Sharad Pawar on Sunday said. “The overall position of wheat crop looks encouraging,” Pawar said addressing a national seminar on 'Nutrition and Fortification' at the Nirma University here. “Last year over 68 MT of wheat was produced. We expect production to cross 72 MT this year,” he said. The minister said 2006-07 as been one of the better years for agriculture and over 250 lakh tonnes of sugar was produced, 60 lakh tonnes more than the country's requirement. “We have also exported cotton and the rice crop has been by and large good,” Pawar added. “In the last few years we have faced a shortage of pulses and oil seeds,” he said.

Courtesy: EconomicTimes
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Godrej, Swedish firm Hygiene in joint venture

Godrej Consumer Products Ltd and Swedish company SCA Hygiene Products on Saturday signed an agreement to form a joint venture company worth Rs 20 crore. The company would manufacture products such as sanitary napkins for women and diapers for children. “We believe there is opportunity in the feminine hygiene protection and baby diaper market, which is presently in a nascent stage in south Asia,” Godrej chairman A B Godrej said in a press release. The new company will set up manufacturing operations in India.

Courtesy: EconomicTimes
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Planning to buy a ACS, refrigerator? Buy it now!

WITH METAL PRICES ON THE RISE, IT’S UNLIKELY THERE WILL BE ANY COME DOWN IN THE PRICES OF FRIDGE AND ACS

DON’T LET this get you all hot under the collar — because a chill in prices of consumer durables just ain’t happening. If you’ve kept your refrigerator and AC purchases on hold till later on this year, you may have to cough up about 5% more thanks to the steady rise globally in input costs. Similarly, the wait for LCD/ plasma TV prices to plummet further may also be in vain, as the industry feels that prices have stabilised after having climbed down nearly 30% compared to last year. The 32” LCD price has dropped to about Rs 65,000 compared to Rs 1 lakh last year, while the price of the 42” plasma TV has come down to Rs 90,000 from Rs 1.3 lakh last year. “Going by international trends I don’t see such a steep fall happening shortly — prices are stabilising. But if volumes in the flat panel business grow significantly in the global market, it will push down prices and that trend will be seen in the domestic market as well,” says Girish V Rao, VP - sales & marketing, LG Electronics India. LCD/ plasma accounted for about Rs 150 crore revenues of the over Rs 8,000 crore total market opp — that’s less than one percent, but with prices crashing, there are more people who feel it’s within their reach. “As far as ACs are concerned, prices are up by about 2% on splits and 1% on window ACs — the 1.5T split AC that was costing Rs 24,000 in January, is now Rs 24,500; while a 1.5T Window AC that was costing around Rs 16,290 in January is around Rs 16,590 now,” a Samsung official told Sunday ET. Refrigerators prices too have gone up by 3-5% in the last three months, but then manufacturers are also bunging in a few more features, such as sturdier shelves and enhanced energy efficiency in the new models. “In the last one year, prices of ACs and refrigerators have gone up steadily due to the rising costs of steel and copper. Besides that there are energy labelling parameters that have been laid down by the Bureau of Energy Efficiency — there will be investments made to change these parameters,” says Kamal Nandi, VP - sales & marketing, appliances division, Godrej & Boyce. All this will see prices going up by 3-5% in the next few months. “With metal prices constantly on the rise, it’s unlikely there will be any come down in the prices of fridges & ACs,” says Mr Rao.

Courtesy: EconomicTimes

For more detail on Retail India visit: http://www.retailindia.tv/

Buy it or leave it! Try it with pleasure say Reebok,Lee,Shopper Stop,Crosswords

BRANDS LIKE REEBOK, LEE, SHOPPER STOP & CROSSWORDS BOOKSTORE ARE FINDING WAYS TO KEEP CUSTOMER’S BOREDOM AT BAY

TWENTY-four year old Natasha Sehgal wanted to buy a pair of sneakers. Strolling at the nearest mall, she noticed a cluster of identical footwear showrooms, with doormen having the same bored expressions on their faces offering shoes that were difficult to tell apart. With only her brand preference to guide her, she spent the next 15 minutes to make the purchase and return home, bored. Now, the cure for boredom is curiosity. And brands such as Reebok, Lee, Shopper Stop and Crosswords Bookstore are fast realising that to keep shoppers interested in their products, a healthy dose of instore experiential marketing is necessary. Experiential marketing gives customers an opportunity to engage and interact with brands, products, and services in sensory ways that provide the icing on the cake of providing information. Personal experiences help people connect to a brand and make intelligent and informed purchasing decisions. It’s the difference between telling people about features of a product or service and letting them experience the benefits for themselves. Harish Bijoor, CEO, Harish Bijoor Consults explains, “India has been a nation of shopkeepers with 16.9 million shops till now. We are in the first stage of retail evolution. Nowadays, a retail store is not only a point of purchase. It’s become a point of marketing, advertising, promotion and front-end market research. We are going to see a lot more of experiential marketing in the near future.” International footwear giant Reebok for instance, is going out of its way to make shoppers spend more time in its showrooms and to make that time worthwhile for both consumer and marketer. Reebok India using in-store environment as image driver has created a Retail Environment (R) evolution. Reebok organises “Rbk Weekend Slams” in their flagship stores to create a buzz, engage, entice and excite customers. The “Rbk Style Zone” has a fashion stylist to give the shoppers a make over, give styling tips according to the usage, be it for sweating it out in the gym, hanging out with friends or partying in a night club. A fashion photographer is also on standby to capture the magical moment. Even the kids are not ignored. They can have the “I Am What I Am” tattoo done on their arms. If this wasn’t enough, what keeps the whole environment charged up is the DJ spinning the latest hip-hop tracks. Sajid Shamim, marketing head, Reebok India says, “It is indeed experiential marketing that helps buyers make a better purchase decision. Buyers at our stores can also customise their own shoes by choosing each component and we can deliver the product in 21 days. If used properly this form of marketing can do wonders for brand loyalty.” Chakor Jain, Business Head, Lee India couldn’t agree more. “It is indeed a challenge to induce a trial and then create stickiness to the brand. We had been constantly creating opportunities in the stores to drive traffic. Do your own Denim - A promotion where we had young designers sit in Lee exclusive store and help people customise their own denims. Swarovski crystals, Embroidered patches, Paints, and other embellishments were provided for customisation. Get spotted - become a model - Fashion guru Prasad Bidapa, style icon Anushka were in store to spot young talent to step into the world of modelling. The youth was styled by the style gurus in Lee merchandise and were pictured then and there. We had celebrity visits, launch parties at the stores and portfolio shoots.” Aniyan Nair, head, operations and marketing, Crossword Bookstore takes the argument a bit further. “We have to listen to our customers. We have cafes as part of the bookstore, allowing customers to browse through books over coffee. We offer browsing comfort with tables and chairs and sofas, CRM programmes, Recommendations through shelf talkers, ‘Satisfaction Guaranteed or Money Back’ on books, children activities on weekends like painting, story reading, book readings, launches, and discussions every week for customers.” “Exercises like these help tremendously in understanding the customer and gain brand loyalty,” adds Nair. Sheetal Choksi, VP, marketing communications, Shoppers’ Stop understands the need to garner the trust and loyalty of customers. “We have to innovate every time to sustain consumer interest. For instance, for our Parikrama line of ethnic wear we got the artisans from various parts of the country into our store. If customers wanted they could have ordered customised apparel from them directly.” Sensory engagement with customers is the need of the hour for brands. Perhaps then, Natasha Sehgal would not only spend a lot more time in the store, she would also come back for more. And who knows next time with her friends in tow.

Courtesy: EconomicTimes
For more detail on Retail India visit: http://www.retailindia.tv/

DLF-NAKHEEL IN TOWNSHIP VENTURE

Real estate developers DLF and UAE’s Nakheel will build two integrated townships in India for an estimated investment of about $10 bn. The two companies are expected to form a 50:50 joint venture company for the same. The two proposed townships will be built over a total of 40,000 cares in Gurgaon and between Mumbai and Pune. The cost of land will comprise about 40% of the land. DLF is expected to raise the fund through debt, equity and internal accruals. The JV may also explore the possibility of creating a realty fund similar to the $1.5 billion DLFLaing O’Rourke Infrastructure Fund.

Courtesy: EconomicTimes
For more detail on Retail India visit: http://www.retailindia.tv/

Dabur India set to pick up 60% in Unza

IN yet another acquisition attempt by India Inc, domestic FMCG major Dabur India is set to acquire a controlling 60% plus stake in Unza, a $150-million Singapore-based consumers goods company. The Indian company is likely to acquire the stakes of private equity funds Actis and Standard Chartered Bank, which have 30% each in the company. If the deal gets through, it will boost Dabur’s consolidated sales by 22% and catapult it to the third largest FMCG major in the country. Dabur will also have five manufacturing units across Asia – China, Vietnam, Indonesia and Malaysia. The acquisition also means Dabur gaining overnight access to 58,000 retail outlets across Asia-Pacific and an addition of 48 brands in its portfolio.

Courtesy: EconomicTimes
For more detail on Retail India visit: http://www.retailindia.tv/

A marketer’s dream gone sour.163 crore losses

Dismal World Cup Showing by Men-In-Blue Hits Corporate Biggies With Over Rs 163 Crore Losses

THE Indian team’s loss to Sri Lanka at Trinidad Friday night, virtually throwing men-in-blue out of the reckoning for the second-stage in the ongoing ICC World Cup, has upset many a marketer’s neatly laid out business plans, big time. India’s dismal showing in the Caribbeans, a source of much heartburn and anxiety amongst advertisers has clearly turned into panic now. Marketing and media plans are being furiously reworked to salvage big spends around the World Cup, and long faces abound across some of corporate India’s marquee names — Pepsi, LG, Reebok, Visa, Nokia, Videocon, Hero Honda, Hutch, Samsung et al. According to Mindshare, a media buying agency, India Inc’s losses would tot upto over Rs 163-crore. And this just on the Rs 350-400-crore advertising monies that they had committed with the official broadcaster, Sony Entertainment Television (SET). Mindshare’s estimates are based on the premise that viewership for the rest of the World Cup matches, sans India, will drop as much as 50%. “Advertisers are now talking about the loss in profits. We are looking to strike an amicable resolution with Sony on this issue,” says Manish Porwal, managing director, Starcom India (West & South), another big media buying firm. With majority of viewers gone, and a sense of being let down amongst the few die-hard game fans who may still continue to follow the goings on, clearly this wasn’t a scenario anyone provisioned for. India’s early exit is bad news for all four ICC’s global sponsors — Pepsi, Hutch, Hero Honda and LG —all with big India businesses, and still bigger plans around the World Cup cricket in a cricket crazy country. Cola major, PepsiCo, one of World Cup’s four global sponsors, has decided to pull out its gung-ho on India ‘Ladega To Jeetega’ ad campaign. “The campaign has lost its relevance. We are taking it off and will replace it with some other Pepsi campaign,” said Rohit Ohri, managing partner, JWT, Pepsi’s ad agency. In fact, Pepsi had hinged its sales strategy for the coming summer season around World Cup Cricket and therefore tailored a lot of its forthcoming advertising around India’s progression at the tournament, all of which will now have to be replaced with product-centric, generic ads. Reebok India, another big advertiser on SET for the World Cup, on the other hand has decided to totally shift its focus away from cricket, for now. “Viewership could come down drastically. Things could bounce back with the Indian team beginning to perform once again (after the World Cup), but we will focus more on fashion-related advertising for now,” said Subhinder Singh Prem, MD, Reebok India.

Looking for other events

The durables industry, which was pinning hopes on World Cup to push sales, is already searching for other events to ride on. “Sales will be impacted for a couple of days since sentiments are down. But overall we will hope to achieve our targets from other consumer promotional activity. For example, we have a promotion planned around the festival of Baisakhi next month,” said R Zutshi, deputy MD, Samsung India. “Yes, our sales will be impacted, but we hope people will still see some matches,” says Videocon MD Venugopal Dhoot. Such is the disappointment with India’s imminent exit, that not even SET would be spared from this sudden downturn in business fortunes. Mindshare estimates that SET would have seen revenues gallop another 16%, if not more, had India made it to the Super 8. When contacted by ET, Rohit Gupta, EVP, ad sales, SET, said that only 5% inventory for the six India matches would get hit with India losing to Sri-Lanka. Nimbus Communications, the adtime seller for public broadcaster Doordarshan is more categorical. “Though there have been no cancellations as yet, we’re awaiting the result of the Bermuda-Bangaldesh match (Monday, March 26). And if it becomes clear that India is indeed out, we’ll replace the six India matches with other key ones, which will mean a clear drop of 40-50% in ad rates,” said Harish Thawani, Chairman, Nimbus. Brands such as Pepsi, Visa and Reebok, would be most impacted with India’s exit as they had to now scrap all their cricket theme ad campaigns. Infact, it could backfire to have Sachin, who is being used heavily by ITC or Dhoni, brand ambassador for Videocon, at this point in time. “Any brand which has Sachin or even Dhoni would have a negative fallout at least for the next couple of weeks considering the consumer sentiments,” says Sundar Raman, MD, Mindshare. But other global sponsors such as Korean chaebol, LG considers its 7 year long contract with ICC worth $35 million as an investment on a global level, “It is a worldwide investment for us and it’s not like the non-India matches don’t get any viewership. There is always a risk involved in cricket,” says Girish Rao, VP, sales & marketing, LG India. Such is India’s (business) hold on the game that even the cricket’s governing body will be sorry that Team India crashed out so early in the tournament. ICC’s losses are also estimated to be huge considering the significance of India in the scheme of things as far as sponsorship deals are concerned. Close to three-fourths of ICC’s revenues come from the Indian sub-continent, and with neither Pakistan nor India in the fray, it would have a negative impact on ICC’s global sponsorship deals, talks for which are currently underway. The ICC had hiked the per sponsor fee to about $60-70 million per sponsor, for the eight-year period between 2007-15. “This loss will impact future deals since sentiments on Indian cricket are very low,” said Basabdutta Chowdhury, COO, Madison Media Plus.

Courtesy: EconomicTimes
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