Air Sahara to reincarnate as JetLite

To Offer Cheaper Fares, New Network Being Planned, Aircraft Leases To Be Renegotiated To Cut Costs

JET Airways will operate Air Sahara as a separate airline under a new brand, Jet Lite. The airline will be positioned as a value carrier, which is ``not fully low-cost but positioning fares lower than full service airlines’’, Jet Airways chairman Naresh Goyal said. In his first major media interaction in over a year, Mr Goyal and his A team, chalked out the broad contours of the way forward for the two airlines, after the longdrawn acquisition of Air Sahara. Jet Lite, will be a 100% subsidiary of Jet Airways though the operations of the two companies will be completely separate. Unlike other classical low-cost airlines operating in India, Jet Lite will have basic food and beverage service onboard. It is still not clear how the Jet will balance the network of the two airlines to ensure that its existing network is not cannibalised by the new airline. Mr Goyal said the new network was being worked out by route planners and that the two carriers will fly to common destinations. Despite preparing to launch a ``less than full service’’ carrier, Mr Goyal emphasised that he did not think there is such a thing as a low-cost airline in India. They are actually low-fare, he said. Unlike airlines like Ryanair and EasyJet or Southwest, the Indian LCCs do not have the advantage of cheaper secondary airports. To cut costs on Jet Lite, the airline will now review all the aircraft leases signed by Sahara and will try to renegotiate some of them. Expensive leases like those of the CRJ jets may be terminated, even if there are penalty clauses Mr Goyal said. Other synergies are expected from cutting engineering costs and increasing productivity because of the larger and more efficient Jet Airways operations, he said. The Jet Lite fleet will ultimately be a combination of owned and leased aircraft. Commenting on Jet Airways’ own expansion plans, director on the Jet board Vic Dungca said the airline will induct 20 long-haul aircraft, a mix of Boeing 777s and Airbus A330s in the next 18 months. The airline has planned to open a second hub in Brussels for its US flights and will also launch operations to China and the middle east. These flights will however, take a few years to turn profitable and analysts say the Jet management will have to be ready for a huge cash burn in the interim. On the domestic front, the airline plans to add capacity at the rate of about 15% per annum, even though the market is growing much faster at roughly 40%, Mr Goyal said. Jet plans to raise about $400m by diluting equity later this year. The airline will also gradually upgrade its domestic product with new seating and inflight entertainment over the next three years. Mr Goyal said he did not believe that marketshare was an efficient barometer to measure the health of an airline. Jet Airways has 20 to 30% higher yields than rival airlines, he said.

Courtesy: EconomicTimes

Ericsson, Nokia set to clinch $5-b deal

Motorola Withdraws Petition; Decks Cleared For BSNL’s GSM Plan

US-BASED telecom major Motorola has withdrawn a petition challenging its disqualification in the 45.5 million lines GSM tender issued by stateowned Bharat Sanchar Nigam (BSNL), thus paving the way for implementation of one of world’s largest telecom equipment contract. Ericsson and Nokia, which had emerged as the lowest bidders, are now set to clinch the $5 billion contract from BSNL. The Delhi High Court on Monday dismissed Motorola’s application as withdrawn. “In view of the tremendous growth taking place in the telecom sector in the country and BSNL’s petition of capacity constraints to have its share in this expansion, Motorola has decided to withdraw the case filed in the Delhi High Court,” Motorola said in a statement. It may be recalled that Motorola had filed a petition in Delhi High Court on October 9, 2006, challenging its disqualification in the 45.5 million lines tender. Following this, BSNL was unable to place any order during the pendency of the petition. The award, which had gone to Ericsson and Nokia would now be implemented with the withdrawal of this petition. Ericsson, which was the lowest bidder, would get 60% of the 45.5 million lines while the second lowest bidder — Nokia— would get the remaining share of the northeast and west zone. Motorola had earlier challenged the award of the contract to Ericsson saying it was the lowest bidder and BSNL had wrongfully disqualified it on the technical evaluation ground. When contacted, BSNL director (finance) SD Saxena said that the order would be placed in the next 15-20 days. “We will try to make up for the lost time by giving more connectivity as soon as possible,” Mr Saxena said. Ericsson India V-P (marketing & strategy) P Balaji told ET, “This is good for BSNL’s growth and India’s telecom sector. We cherish our association with BSNL since the launch of their GSM services and look forward to further strengthening our relationship.” BSNL’s subscriber addition had taken a hit, as the operator had exhausted its capacity in certain circles. Considering that it takes around three months for the first batch of equipment to arrive after an order is placed, BSNL’s plans should be back on track in the next 3-4 months. In its statement issued on Monday, Motorola, however, pointed out that the withdrawal did not reflect any change from its original stand on the tender award. “Withdrawal of case by Motorola in no way reflects any change in the company’s original position that its bid was in compliance with the tender condition,” it said. “BSNL is a valued customer and the company looks forward to its continued partnership with BSNL and other customers to connect the unconnected,” Motorola said. Motorola was disqualified on technical grounds on October 7, just two days before the opening of financial bids. The equipment supplier later challenged the decision in the Delhi High Court.

INDIA TALKY

BSNL, formed in October, 2000, is world's seventh largest telecommunications company Services provided by it include wireline, CDMA mobile, GSM mobile, Internet, broadband, carrier service, MPLS-VPN, VSAT, VoIP services, IN services It connects 602 districts, 7,330 cities/towns and 5.5 lakh villages BSNL cellular service, CellOne, has more than 17.8 million customers, ie 24% of all mobile users. It has 35.1 million basic phone subscribers ie 85% share of the subscriber base and 92% share in revenue terms Its infrastructure asset on telephone alone is worth about Rs 63,000 crore ($14.37 billion). BSNL plans to expand its customer base from present 47 million lines to 125 million lines by December 2007 and infrastructure investment plan to Rs 733 crore ($16.67 million) in the next three years.

Courtesy: EconomicTimes

Gold sales shine on rising rupee

While Gold Rose Globally By $5 Over Weekend, In India Parity Price Fell By Rs 100

THE appreciation of the rupee has stemmed the gold price rise for domestic buyers. As the rupee steadily moved up against the dollar, from Rs 44 to Rs 42 in the last month, the gain in the net rupee value of gold has been buffered to an extent. "Gold price has steadily been climbing in the international market, but with the rupee rising against the dollar by over Rs 2 in the last month, the net gain in gold price is about 2% against what would have been 7-10%," said Mehul Choksi, chairman, Gitanjali Group. As a result, the demand for gold is slowly picking up, although it is much lower compared to the same period last year. With the wedding season on, and Akshaya Tritiya, considered an auspicious day to purchase gold approaching, the rupee appreciation is seen as a saving grace. Offtake of wholesale gold has been much lower this year, at about 400-500 kg per day in the Mumbai market, almost half of the previous year's business due to the high gold price. "If gold falls in the international market, then the demand would definitely pick up. A good price would be between Rs 9,100- Rs 9,200 per 10 gm," said Suresh Hundia of Bombay Bullion Association. On Monday, rupee closed at 41.85 to a dollar, the highest in nine years. Even as gold appreciated internationally by more than $5 over the weekend, from $684 per ounce on Friday to $689 levels on Monday, in India parity price fell to Rs 9,424 per 10 gm from Rs 9,502. The rupee gained by over 60 paise from Friday. International gold touched nine-week highs on Monday, on the back of a weak dollar and anticipation of demand for the metal as a hedge against inflation.

Courtesy: EconomicTimes

NIIT scouting for overseas buys in retail & fin services

LESS than a year after it acquired UK-based insurance solutions company Room Solutions, software services exporter NIIT Technologies on Monday said it is scouting for overseas buys in domains including retail and financial services. “We would like to do an acquisition in FY08. We are looking at companies both in the US and Europe,” said NIIT Technologies CEO Arvind Thakur, adding that the acquisition could range anywhere between $5 million to $80 million. Mr Thakur said the company was also looking at acquisition opportunities in its existing verticals of travel and transportation, besides retail and financial services. “The acquisitions will be focused on closing gaps in the front-end. The acquisition strategy is being driven by domain knowledge, in certain cases country-specific domain expertise within a specified vertical,” he said. For instance, within the retail vertical, NIIT could look at companies specialising on specific solutions in merchandising, warehousing and logistics while and in case of airline (transportation) it may be loyalty solutions, cargo solutions, amongst others. The company would fund its future acquisitions through a mix of debt and internal accruals, he pointed out. NIIT Technologies — which was hived-off from NIIT in 2004 — has four acquisitions tucked in its belt, including a German IT company AD Solutions and US-based Data Executives International. In May 2006, NIIT Technologies acquired a controlling interest in $25-million Room Solutions, in an attempt to strengthen its presence in insurance segment. Room Solutions is focused on the commercial insurance market including IT solutions to the customers of Lloyd’s, the largest reinsurance market in the UK.

Courtesy: EconomicTimes

Isuzu, Munjals talk 4-wheeler foray

JAPANESE truck and sports utility vehicle-maker Isuzu is understood to be talking to the Munjal family of Hero group for a possible foray in the Indian market. The company — which currently supplies engines to several Indian players and Tavera kits to General Motors India — has a technical tie up with Sumitomo in commercial vehicle company Swaraj Mazda. According to sources in the auto industry, although the talks are on, it’s still not clear whether the Hero four-wheeler venture will focus on SUVs and cars or commercial vehicles. When contacted by ET, Isuzu ASEAN operations group leader Kenji Matsuoka said: “I cannot disclose anything on this subject. I don’t say yes and I don’t say no.” For his part, Hero Corporate Services chairman Sunil Kant Munjal said: “We look at several new businesses from time to time. At any given time there are 10-15 opportunities that we are looking at. So we can neither confirm nor renounce this issue. All we can say is that on the four-wheeler project we are nowhere near taking a decision.” The $3-billion Hero group recently announced its intention to get into the four-wheeler business. It’s current partnership with Japanese major Honda is restricted to two and three-wheelers only. Auto industry sources say if the talks to Isuzu take off, it would put an interesting spin to the Hero group’s relationship with long-time partner Honda. Indeed, Honda’s comfort level with Hero’s four-wheeler partner could also determine the Munjal family’s final choice. Isuzu has been sniffing around for opportunities in India, say sources. One of the rumours doing the rounds is that it may also take some stake in Sumitomo-controlled Swaraj Mazda where it currently just has a technical collaboration. However, there has been no confirmation of this news so far. Isuzu already has a brand presence in the country thanks to its engines gracing products like the M&M Invader, the HM Ambassador and more recently the Rhino SUV from Sonalika. The Hero group isn’t the only two-wheeler major to be talking four-wheelers. Already arch rival Bajaj Auto has announced it will crank out a range of ‘lite’ goods carriers and will showcase a lite concept car at the Auto Expo next year. With the competition in the motorcycle market getting cut throat and the rate of growth slowing down, players are looking at expanding their product portfolio. That’s where the interest in four-wheelers comes in.

Courtesy: EconomicTimes

Bajaj will not get off 100cc

MONTHS after Bajaj Auto shocked the industry with news that it was exiting the 100cc segment, the company does not seem to be in any hurry to let go of the big volume segment. According to Bajaj Auto GM marketing Amit Nandi: “We are not getting out of the 100cc segment. Rajiv Bajaj’s statement has been misinterpreted. We will continue to sell 100cc bikes till there is demand.” Late last year, the junior Bajaj announced that the company would move out of the bread and butter 100cc four-stroke bike segment and upgrade customer to something more contemporary. “What Rajiv meant was in the long-term we will upgrade customers to something better than what is currently being offered in the 100cc segment. It will be a better offering possibly with a more powerful engine,” explained Nandi. Sources in the know say Bajaj might take up to three years to exit the segment which constitutes nearly 65% of the Indian motorcycle market. Bajaj kickstarted production in its Pantnagar facility with its 100cc Platina, also lowered the price of the bike by Rs 3,000 to pass on the tax-benefit accrued in Uttranchal. The move is expected to hit arch rival Hero Honda where it hurts, since its mainstay the 100cc market is likely to be impacted by Paltina’s lowered prices. According to industry insiders, Bajaj Auto seems prepared to take the price game further, “ Since Bajaj has decided that these products (CT 100 & Platina) do not determine the future of the company in the entry segment, they will squeeze them for all they’ve got. It may not come as a big surprise if Bajaj Auto decides to take a hit in its margin on the 100cc bikes to keep competition in the segment going,” said an analyst with a Mumbai-based brokerage. Bajaj is looking at launching a new motorcycle platform later this year targeted at the entry segment of the market, but this launch is unlikely to spell the end for Bajaj Auto 100cc portfolio in the short term. Bajaj Auto expects demand in the motorcycle market to snap out of its sluggish mode in the first quarter of FY 07. The marriage season that traditionally begins in April often brings with it high sales for automakers, but with interest rates on a climb prospective customers seem to be stalling purchase decisions. Two-wheeler makers have been coping with high stock piles at the dealer end and high delinquency amongst loan takers for the past few months. Motorcycle sales grew around 13% last year ending the year with a whimper as sales volumes in March failed to impress.

Courtesy: EconomicTimes

Cos bullish on ACs & fridges, TV sales may stay sluggish

WITH consumer durables production growth rate plummeting to a meager 1.6% during February 2007, an ominous sign of an impending slowdown, one would expect marketers to be a worried lot, right? Not really, for the tone and tenor of leading marketers in the Rs 25,000-crore industry does not betray any nervousness on either demand slowdown or major revamping of their summer sales strategies. Holding the price line, despite input costs going up, most big durable makers such as LG, Samsung, Mirc Electronics and Haier expect no major downfall in sales during the next three months. Apart form colour televisions, which are already witnessing growth tardiness for the past month or so, air-conditioners and refrigerators are expected to grow handsomely, 45% and 15% respectively over last year, according to general consensus in the industry. “We are not revising our sales targets despite all the concerns, as no slowdown in terms of sales is expected. The buoyancy in the economy would have had a stronger impact on the sales and growth of the industry had it not been for the pressure of interest costs,” says Samsung India deputy MD Ravinder Zutshi. The Korean chaebol is expecting its ACs and refrigerator range to grow at 50% and 18%, respectively, in 2007 over last year. “If the interest rates are hiked further by consumer finance companies, we would need to subsidise the interest costs to a greater extent so that the consumer does not have to take the full brunt of the hike,” adds Mr Zutshi. With just 15% of all durable purchase financed, there is only a marginal impact on demand due to rising interest rates. LG India too seems bullish about sales in the current quarter (April-June) with expectations of an over 20% growth in ACs and 10-15% growth for refrigerators. “We are not getting back to any (freekind) promotion. Our sales will come in from the pull created by new products along with a robust supply and distribution chain,” says LG India VP, sales & marketing Girish Rao. The company, though is re-launching its exchange programme, LG First — launched with much fanfare around January and discontinued shortly — for the summer months with a renewed tie-up with its dealers. “There has been a slowdown in CTV sales but both ACs and refrigerators are expected to grow. The marriage season in the North will also help push the sales,” says Mirc Electronics VP, marketing & sales Vivek Sharma.

Courtesy: EconomicTimes

Production growth dips for durables

HIGH interest rates coupled with the Free Trade Agreement (FTA) with Thailand have claimed the first casualty. In the first signs of a slowdown, manufacturing growth in the Rs 25,000-crore consumer durables industry dropped radically to 1.6% in February in contrast to over 20% growth last February. Imports of colour television, an important segment of the white goods industry, have gone up from $0.06 million in 2004-05 to $83 million in 2005-06. It is projected to hit $150 million in 2007-08. The Index of Industrial Production with base 1993-94 for the month of February 2007, released by the Central Statistical Organisation of the Ministry of Statistics and Programme Implementation, points to continued loss of growth momentum in consumer durable production. January last, the growth rate was only 6.8% over 15.9% in the year-ago period. December 2006, too, showed a similar slowdown, 3.3% over 12% for December 2005. “The compression of demand could be responsible for the low IIP in the latter months of the fiscal. And this comes from the tight monetary policies of the RBI, which resulted in hikes in interest rates,” says Prime Minister’s Economic Advisory Council member Saumitra Chaudhuri. Among consumer durables, apart from the 0% duty under the FTA with Thailand, a hardening of interest rates, high levies and the rapid march of CPI over the last few months seem to have contributed significantly to the slowdown. “On an average, duties in the durables sector sit at 30%, whereas computers and mobile phones have been given preferential treatment. Moreover, we don’t have any incentive to manufacture in India as the FTA with Thailand allows many durable products, including TVs, at 0% basic custom duty since Sept 2006,” complains CEAMA president Anoop Kumar. Under FTA with Thailand, the basic custom duty on consumer durables stood at 12.5% in September 2004, and came down to 6.25% in September 2005, which was further lowered to 0% in September 2006. That explains why Sony is importing its TVs from Thailand. The cost of capital has not worked for manufacturers who’ve had to stock inventories. “The offtake has slowed down since the CPI has increased over the last few months making durables out of reach of the middle class consumers. Besides, in January and February sales of durables in general take a dip,” says Godrej & Boyce VP, retailing Shyam Motwani. Says Whirlpool of India VPmarketing Shantanu Das Gupta: “We have not yet seen a slowdown (in demand). What is growing on consumer durables market are imports from China,” he points out.

Courtesy: EconomicTimes

In race for eyeballs, marketers losing sight of their consumers

NOW that cricket has caused such anguish among millions of Indian fans, and painful post-mortems are underway regarding the Indian team’s miserable performance, it may be the opportune moment to raise the question: why advertisers behave so un-sportingly. Why must the price they extract for allowing me to indulge in my passion for the game by watching it on TV be so high as to destroy the pleasure of doing so to a substantial extent? I appreciate that the advertisers spend all that money in the hope of selling their brands to me. But why do they think that the best way of doing that is to drive me crazy by playing intrusively, the usually unintelligent and unaesthetic ad over and over again, anything between 20 and 30 times during the course of a single day’s play? What is the assumption they are making about how the human mind works? Who has told them that the more they repeat the message the more likely I am to remember it, like their brand and buy it? Don’t they realise that I am not an inert, passive involuntary receiver of advertising message? That my brain is a clever machine, which shuts off to protect itself from unwanted nagging? That after having processed some message, it pays no further attention to it in subsequent repeated exposures, so that it can keep itself awake and alert only for new stimuli in the environment? That, is its survival mechanism. And not only do the advertisers repeat their message ad nauseam, they do it so rudely and intrusively. Before the action connected with the last ball of an over gets completed, the commentator’s voice is rudely cut off in mid-sentence and the unending sequence of ads intrude. By the time we go back to the game, the first ball of the next over is often bowled, thereby reducing the over to a 4-ball affair for the viewer. We are never allowed to soak in the emotions on the field when a wicket falls, or see “live” the drama connected with the event, because at that very instant we must be rudely interrupted, and instructed, for the millionth time, about the soft drink that will make me a super hero, or the magical car that will go round the world on a drop of petrol or the mobile phone that acts like the pied piper’s flute for all the pretty girls around. I will have to wait for the replay to catch what I missed “live”. Can anything be more irritating than the intrusion of a silly brand slogan in the radio commentary every time a boundary is hit? When I am immersed in the exaltation or frustration of the passage of play of the moment, that is not the time to talk to me about soft drinks or two-wheelers or mobile phones or whatever. Why do they disturb me when I least want them to? Why do they spend all that money to win my friendship and end up, instead, by generating an enormous pool of irritation in me? What lies behind this maddening state of affairs? It is a witches’ brew of greed and myth, each feeding on the other. The greed is that of the media and channel owners. In order to squeeze the last drop of advertising revenue, they exploit the naiveté of the advertising community and perpetuate the myth that the large viewership of cricket matches means a large captive horde of zombielike consumers inertly waiting to be “reached’ and mesmerised into buying a whole range of products and services through the simple technique of repeated advertising “hits”. The media and channel owners tempt the advertisers with estimates of the large number of “eyeballs” staring at the TV screen during a match, and the media buyers in the advertising companies promptly get to work with their new numerology to translate the number of ad repetitions they will buy into the number of advertising punches they will score. TRPs, GRPs and OTSs make up the currency of transaction in this mythological world. Not realising that the ability of these magic-like numbers, to reflect the real effectiveness of advertising expenditure in the real world populated by real people like you and me is no better than that of Monopoly money in reflecting the real wealth of the players, the advertisers fall over themselves to pay substantial sums of real money to the media owners to buy a slice of advertising slots. Now, the channel owners must try to nurture this ideal state of affairs. This they do by creating as much hype about cricket as possible. Exploiting the chronic inferiority complex of Indians and the history of one or two rare successes of its cricket team in the international arena, they burden the game into becoming something more than a mere game, — the nation’s icon of national prestige. The more the hype, the more the jingoism, the more the TRPs, GRPs, OTSs, the more the scramble among advertisers to buy ad time, and less the cricket that viewers get to see. What a virtuous cycle! After the debacle in the Caribbean, everybody is undertaking a reality check about the real skills of the Indian team. I earnestly request the advertising community to do a similar reality check about the real effectiveness of their advertising expenditures linked to cricket. To do that, they need to understand how the human mind works, how we process information. They need to be humble and borrow from the enormous wisdom about this lying within the academia of psychology, cognitive sciences and neurosciences. They will find there nothing that justifies their profligate advertising behaviour. They will realise that those eyeballs they are chasing are blind to their ads. At the very least, they should introspect and examine their own reactions as normal human beings when bombarded with unwanted messages. But reality checks can be dangerous. If the advertisers realise that all the money that they have spent on cricket has mostly flown down the drain, they will stop doing so. At the end of it all, I may not be able to see any cricket on TV, not even the 4-balls-per-over version. Is that a blessing in disguise? Perhaps. (The author runs a marketing strategy consultancy, Market Modellers in Singapore)

Courtesy: EconomicTimes

Timex to open 200 retail stores

Timex Watches on Monday said it plans to increase its share in the domestic market by setting up around 200 retail stores in India in next 30 months, reports PTI from Bangalore. "At the end of this month, we will have at least 45 stores and open four more," Timex GM marketing Vikram Arora said. The company is aiming to set up over 200 retail stores, mainly in metros, by the end of 2009 or in next two-and-a-half years, Arora said. "We will expand pan-India, across all geographies. But largely concentrate on the metros," he said.

Courtesy: EconomicTimes

Home Solutions to scale up retail

Home Solutions Retail is looking to scale up its home improvement and consumer electronics retail formats aggressively. Part of Kishore Biyani’s Future Group, the company is planning to expand its format stores across India with an eye to clock a turnover of Rs 5,000 crore by 2009-10, reports Our Bureau from Kolkata. The company’s outlets cover some 4 lakh sq ft of retail space. Home Solutions has four formats under its fold — Collection-i (furniture and furnishing store), eZone (consumer electronics and gizmos), Home Town (an integrated format of furniture, home improvement and consumer electronics) and Furniture Bazaar (a speciality furniture store). Outlining future growth plans, Home Solutions Retail (India) head (operations) Kush Medhora, told ET: “As part of our strategy, we plan to scale up our operations rapidly and clock a turnover of Rs 5,000 crore by June 2010. We intend to have 60 Collection-i format stores from 8 now, about 100 eZone outlets against 13 and some 28 Home Town outlets from the sole Noida store.”

Courtesy: EconomicTimes

Cholayil to regroup ops

AT THE Cholayil group, it is time to regroup business and strategy. With ayurveda going global, the FMCG major is restrategising its core activities to bring in greater degree of autonomy into its businesses, namely the wellness and personal care brands, reports Bindu D Menon & V Hemamalini from Chennai. The group, founded by Dr V P Sidhan, has flagship brands Medimix soap and Cuticura talcum powder, besides wellness and restaurant chain Sanjeevanam. In the new dispensation, his son and managing director V S Pradeep would continue to steer the operations of Medimix and Cuticura. Cholayil director A V Anoop would take charge of the south operations of the Medimix brand, besides spearheading the Sanjeevanam brand.

Courtesy: EconomicTimes

Kingfisher snaps ground-handling deal with Indian

KINGFISHER Airlines is terminating the ground handling agreement with Indian, which it struck at the time of inception two years back. The Vijay Mallya-led airline is ending the contract, which heralded a large outsourcing deal worth Rs 120 crore annually with Indian, as it is opting for self-ground handling, a company official said. The development comes at a time when Kingfisher Airline was looking at re-negotiating the contract, which was perceived to be an expensive affair for the airline, sources added. Mr Mallya had earlier hinted at the re-negotiating the deal. “The ground-handling deal with Indian estimated approximately at Rs 120 crore annually would result in significant savings besides improving efficiencies,” Rajesh Verma, executive V-P, Kingfisher Airlines, told ET. Sources said Kingfisher could save up to 50% having opted for self ground-handling that comprises passenger handling at the city side of the airport and aircraft handling. It also includes loading and unloading of aircraft, fuelling, cleaning and push-back facilities. Currently full service carriers like Jet Airways, Sahara and Indian have self-ground handling operations. However Kingfisher Airline’s existing aircraft engineering and maintenance agreement that was part of the outsourcing deal with Indian will continue. And the private airline would also continue to share Indian’s terminal in Mumbai and Delhi. GoAir is another private carrier using the same terminals. With self-ground handling operations Kingfisher Airlines will have its own equipment like baggage coaches, tractors, belt loader and trolleys. The airline will also have its own loaders and ramp agents. Mr Verma says, “Ground handling constitutes 6% of our total operational cost.” Kingfisher with around 10% share of the passenger market by volume operates over 153 flights daily across 27 destinations. The airline has a fleet of over 25 aircraft from the Airbus family and ATR. Kingfisher Airlines is the first Indian carrier to have placed an order for five Airbus A380s, five A350s, five A340s and five A330s. The deliveries of A330s are expected to begin in 2007, of A340s in 2008 while the A380s and A350s arrive in 2010 and 2012 respectively.

Courtesy: EconomicTimes

Lehman Brothers to ink deal with Future Capital LEHMAN Brothers Holdings, the investment arm of the US investment banking group Lehman, is close to in

LEHMAN Brothers Holdings, the investment arm of the US investment banking group Lehman, is close to inking a partnership deal to invest over $100 million in a hospitality venture with Future Capital, the financial services arm of Kishore Biyani’s Future Group. The group has set up a separate subsidiary, Future Hotels, to build 50 hotels in the three- and four-star category involving an investment of $300 million. It is also in talks with a hospitality group that can step in as a partner to run the business. The hospitality venture will be led by KK Malhotra, a former president of ITC Hotels, and Rahul Nair, vice-president (merger & acquisitions) of the Taj Group). A steady growth in the travel business and decent return on investments have triggered a slew of private equity and foreign investment deals in the local domestic hospitality industry. Raj Sundaram, head of the real estate arm of Lehman Brothers India, refrained from commenting on the deal. “We are looking at investments in the hospitality sector. But I will not be able to comment on specific deals,” he said. The hospitality project has been conceived by Samir Sain, managing director of Future Capital, and Shishir Baijal, CEO and managing director of Kshitij Investment Advisory, the real estate arm of Future Capital. “We are building hotels in India. But at this stage, I cannot comment on who we are partnering with for investments in the business,” he said. The hospitality venture will target middle management business professionals who are also value-conscious, sources said. Lehman Brothers Holdings, which owns a large portfolio of hotels outside India, was founded in 1850 and is a diversified, global financial services firm. Headquartered in New York, the firm has regional headquarters in London and Tokyo and offices in various markets. Future Capital currently incubates new lines of businesses and offers shared services and capital to all ventures under it. Spiralling land prices and rising interest rates in India are forcing many hoteliers to upgrade their two and three-star hotel projects to four- and five-star levels. Out of the 300 hotel projects recently approved by the government, 55% of its development is understood to be four- and five-star hotels, accounting for about $1.6-billion investment. The key reasons for this are the higher profitability and revenues that accrue from a four-star hotel room as compared with a two- or a three-star one. “Real estate firms with enhanced financial capabilities are jumping in to get land parcels at unheard of prices and the high land cost component is limiting their focus to luxury hotels,” sources in the hotel sector said. Some of the new hotel properties are expected to add an additional 12,332 rooms in the luxury segment and 15,924 rooms in the five-star category out of a total 53,333 rooms in various metros planned across the next three to four years. A huge demand-supply gap saw the room rates for premium hotels go up by over 20% the last few years. While premium hotel (four- and fivestar deluxe) room growth has been around 6% over the last five years, the two- and three-star categories have seen a negative growth rate of 7% and 10%, respectively.

IT’S A DEAL

The boom in business travel industry has triggered PE & foreign investments in the hospitality sector A huge demand-supply gap has pushed up the premium hotel (3 & 4 star) room rates by over 20% the last few years Spiralling land prices & rising interest rates are forcing hoteliers to upgrade their 2-star or 3-star hotel projects to 4- & 5-star levels Future Capital incubates new lines of businesses & offers shared services & capital

Courtesy: EconomicTimes

Future to lay off Frito products, Biyani Plans To Push Own As Well As ITC’s Brands

INDIAN retailers are seemingly ready to do a Wal-Mart — flex muscles and squeeze margins out of the Indian consumer product companies. The Future Group has taken on Pepsi’s Frito-Lay, and boycotted all Frito-Lay snacking products — Lays, Kurkure, Cheetos, Uncle Chipps and Lehar Namkeen to push own brand Tasty Treat and ITC Food’s newly-launched Bingo. Speaking to ET, Future group CEO Kishore Biyani said: “We will not be stocking Frito-Lay products in any of our stores. We have not taken on any new stock from the company.” When contacted, Frito Lay India MD Manu Anand said: “There are a few commercial issues that we have to resolve with Big Bazaar and Food Bazaar.” Mr Anand indicated that Frito-Lay had a team working to sort out issues with the retailer. Less than 5% of Frito-Lay’s total revenues comes from organised retail, though this figure grew by nearly 50% in the last year. The market for namkeens and snacks is estimated to be close to Rs 1,800 crore, and Frito-Lay brands have a total share of close to 40% in that space. According to sources close to the development, the two companies have been negotiating for a long time over margins, but couldn’t agree over them. While the retailer’s private label Tasty Treat will get a leg up, the biggest beneficiary will be Bingo. In line with the proposed tie-up with ITC for fresh vegetables, the Future Group will replace Frito-Lay with Bingo, which has recently hit the market with 16 variants. ITC Foods CEO Ravi Naware couldn’t be reached for comment. “We’ve chosen to work with ITC and make sure we build their brands. We have to increase choice for the consumer,” says a senior Future Group official. All of Bingo’s 16 variants are competing directly against Lays and Kurkure, and at the same price point of Rs 10 for 35 gm. On the back of ITC’s strong distribution channel, Bingo has been pushed aggressively in the traditional retail market, roping in a number of retailers and paying nearly Rs 3,000 to every retailer for setting up display stands.

Courtesy: EconomicTimes

Big Bazaar Supercentres

Big Bazaar is now getting bigger. Future Group has plans to launch Big Bazaar Supercentres, which will provide postal services, health and beauty zones and entertainment sections to the existing services. The group would launch six such centres in next two months at an investment of Rs 96 crore. "We will come up with six Big Bazaar Supercentres by June. Each Supercentre involves an investment of Rs 15-16 crore," Big Bazaar CEO Rajan Malhotra said. "We will postal services and health and beauty zones," he said. One Supercentre each would come up in Hyderabad, Baroda, Surat, Nagpur and two in Bangalore, he said.

Courtesy: EconomicTimes

Heavyweight bikes queuing up as Indian roads get wider

GET ready for Rs 9 lakh-plus motorcycles. With the government allowing the import of bigger bikes with engine specifications of 800-cc and above last week, the big bike segment is all set to hot up. Bike-makers Yamaha, Honda, and Suzuki have already lined up plans to give competition to Harley Davidson, which will soon import its super-bikes in the country. According to sources, Japanese auto major Suzuki’s motorcycle division is likely to import two of its sports bikes by year end. One of them is likely to be the 4-cylinder, liquid-cooled 16-valve GSX-R1000, which comes strapped with a 999-cc engine. The other Suzuki sports bike could be the 749-cc GSX-R750. When contacted, Suzuki Motorcycle & Scooter India marketing VP Atul Gupta refused to comment. Yamaha Motors, on the other hand, is expected to get in the completely-built units (CBUs) of 998-cc YZF-R1 and the 600-cc YZF-R6 by year-end. Japanese auto maker Honda Motorcycles & Scooters India is also expected to import 800-cc bikes. When contacted, Honda Motorcycles & Scooters India head sales NK Rattan said: ”We plan to get into the big bike segment. These would be bikes with engine capacity above 500-cc and would be completely-built units (CBUs).” However, industry sources believe luxury and super bike-maker BMW will still not be tempted to re-enter the Indian bike market. BMW entered India about 10 years back in a joint venture with the Hero Group. The plan was to locally assemble and sell high-end bikes. However, the venture failed to take off and the company made an early exit from the two-wheeler market. Even though BMW has entered the car business in India, it is not likely to bring its high-end bikes in the immediate future. On an average, any of these sports bikes, if imported, cost about Rs 9 lakh and upwards. When these motorcycle makers will import these bikes, they are likely to charge a higher price and these bikes could cost in Rs 10-11 lakh range. The government on Friday allowed imports of bikes with engine specifications of 800-cc and above, which includes Harley Davidson bikes. The bike-maker will be required to adhere to Euro-III emission norms.

Courtesy: EconomicTimes

BK Modi’s convergence to Spice up Hot Spot

THE Rs 2,000-crore BK Modi Group is on the threshold of a major brand convergence exercise for its new mobile retail venture, Hot Spot Retail Pvt Ltd and its cellular arm, Spice Telecom. Moves are afoot to bring the mobile retail venture under the group’s mother brand Spice. The BK Modi Group, which has been in the mobile telephony business for over a decade, markets its cellular services under the Spice brand. And now, it proposes to leverage on the strengths of the mother brand and market its ICE (information, communications & entertainment) products retail chain under the Spice Hot Spot banner. To spice up the brand convergence exercise, the group has roped in noted Delhi-based design consultancy firm Incubis. Confirming the developments, M-Corp Global’s (BK Modi Group’s flagship company) vice-chairman Dilip Modi told ET: “We’ve just roped in design consultancy firm Incubis to assist in transitioning our Hot Spot mobile chain to the Spice umbrella brand. The objective is to gently bring the personality of our Hot Spot mobile stores within the ambit of our existing Spice mother brand and evolve a definite congruence in their values. There’s already an obvious synergy with our Spice mobile brand, in that, our new ICE retail venture, Hot Spot Retail, is into telecom retailing.” The M-Corp Global vice-chairman, however, declined to share details of the Incubis contract. Be that as it may, it’s no secret that Hot Spot Retail happens to be one of Dilip Modi’s pet projects, given that it is promoted by his own investment firm, India TeleVentures. The decision to rope in Incubis, which Mr Modi terms as “one of the smartest design consultants in the scene” is noteworthy. After all, it’s well known that Incubis hit big time when it designed the trendy Barista Coffee outlets, the Kaya Skin Clinics for Marico Industries, and more recently, the Ginger brand of budget hotels for the Tatas. It also designed the swanky `Mobile Store’ for Essar-Virgin recently but, had an early taste of telecom retail through client Bharti-Siemens, nearly a decade ago. Incubis’ director (retail design) Amit Gulati told ET: “Our role is to express the convergence of IT and mobile telephony through the physicality of the stores. The idea is to re-invent the brand and streamline implementation through the rollout of the stores. We will be ready with the concept of the retail identity within the next 6-8 weeks and crystallise the DNA of the brand.” Elaborating, he said “the stores will have a duality in that the entity will amalgamate the service aspect of telecom with handset components”. Commenting on the emerging telecoms retail trend, brand consultant Harish Bijoor told ET: “With 6 to 7 million additional mobile phone connections per month, the market is at an amorphous growth phase. But our first-gen telecom movement has few examples in common with other global markets. Telecom retail players need to realise the need for amoebic branding, combine the penetration of modern retail and yet retain grassroots’ contact through daily customer interaction.” The latest brand convergence comes at a time when Hot Spot Retail decided to pump in a cool $100 million (Rs 450 crore) to set up nearly 500-odd Spice Hot Spot retail outlets in the first flush.

Courtesy: EconomicTimes

Josef Seibel to enter India with Landmark

The Dubai-based Landmark Group’s lifestyle brands business, LMG Brands, has entered into a licensing agreement with Josef Seibel Schuhfabrik GmbH, a leading German comfort shoe manufacturer, to market the company’s footwear brand Josef Seibel in India. The Josef Seibel brand, known worldwide as ‘the European comfort shoe’, comprises a wide range of both men’s & women’s shoes, clogs, sandals and boots, and are known for their unique construction and comfort. The exercise marks the Landmark Group’s foray into footwear retailing. LMG Brands India president Fazle Naqvi told ET that LMG Brands would roll out Josef Seibel in the domestic market from May onwards. The brand would be available across department stores, high-end multibrand outlets as well as at 10 Josef Seibel brand stores. After Floreshiem, Josef Seibel would perhaps be the only premium offering in the men’s segment in the country. The brand would be priced Rs 3,000 and upwards.

Courtesy: EconomicTimes

Caleffi in JV pact with Technopak promoters

ITALIAN home linen brand Caleffi is all set to enter Indian homes. Caleffi SpA, the Viadana, Italy-based maker of bed linen and towels, has forged a joint venture — Caleffi Bed & Bath India Pvt Ltd — with Arvind Singhal and Harminder Sahni, the promoters of consultancy Technopak Advisors, for distributing its products in India. The $80-million company holds a 51% stake in the JV company. Caleffi SpA makes comforters, cushions, duvet covers and bathroom towel sets, apart from Disney licensed nightwear for kids in the 4-14 age group. “It is a distribution joint venture which would bring together Caleffi’s capabilities and experience and Technopak’s understanding of the Indian retail market,” said Caleffi sales and marketing director Valerio Pizzi. Caleffi Bed & Bath would initially launch its bed sheets and comforters, followed by bathroom towels, duvet covers and other products in winter. The products are imported from Italy and are priced on the higher side — a double bed sheet costing about Rs 1,795. These would be retailed at home textile stores and department stores like Lifetsyle and Shoppers’ Stop.

Courtesy: EconomicTimes

Rural to royal, ITC’s on fire without smoke

FOR SIX years there have been no fullstops in ITC. Now, fresh from upgrading a 30-year relationship with Starwood Hotels & Resorts from the Sheraton badge to the top-of-the-line Luxury Collection tag for his seven biggest metro hotels, ITC Chairman YC Deveshwar can add another line to his three mantras “From seed to stomach”, “From fibre to fashion” and “From tree to text”. Dare we suggest, “From rural to royal?” or “ From livelihood to luxury”? Why not, since Mr Deveshwar is way down the road to transforming the tobacco-to-hotels major ITC into the country’s largest FMCG company. From the cane-field to the catwalk, Mr Deveshwar’s strategy is to capture value across the entire spectrum of ITC’s businesses — tobacco, food, apparel, retail, hospitality, and perhaps even personal care in the future — and play across the income pyramid. “We want to be the champions of rural India. The future of the Indian markets is in its villages,” says Mr Deveshwar. So, even as ITC becomes a major player in the food business, it is following a strategy which is different from its competitors. “We want to have a potato chain, a wheat chain, and a corn chain. And we want to capture value throughout the chain,” he says. While these are early days yet, the ITC chairman fresh into another 5-year term, appears satisfied with the progress that the company has made in the food business. “If we annualise last month’s sales of Sunfeast and Aashirvaad, each has already become a Rs 500-crore brand in a three-year period. The c o n f e c - tionary business, with Candyman and Minto, is also worth around Rs 200 crore, on this basis.” And then there’s the Rs 5,000 crore that ITC plans to pour into hotels, from budget Fortune Lodges in mofussil areas to the last word in luxury for its top metro properties. Notwithstanding his enthusiasm for the non-cigarette FMCG business, when it comes to plans about entering the personal care segment, which ITC is said to be eyeing, Mr Deveshwar chooses to remain silent. “I am not saying that we are entering the personal care segment, in addition to the premium range that we already have,” he says, but agrees that ITC’s goal of becoming India’s top FMCG company would probably not be realised until it enters this segment. Of course, it’s important not to be carried away with all the excitement around the non-cigarette FMCG business. While it’s true that the share of cigarettes in ITC’s total revenue has declined to less than 50%, cigarettes still account for 75-80% of the company’s pre-tax profits. Though it is not easily apparent, Mr Deveshwar says most of ITC’s different divisions sew up nicely to actualise his grand vision for the company: “What’s good for India is good for ITC”. So while 6,400 eChoupals, across 40,000 villages, provide the “digital, physical and human” trading infrastructure to deal with everything from buying farm produce to hawking seeds, tractors, consumer goods et al, its benefit also accrues across a host of other ITC businesses. “We wouldn’t have been market leaders in atta (with Aashirvaad) had it not been for our capability to source and blend 18 different varieties of grain. In that sense, eChoupals are already paying for their investment,” he avers. Mr Deveshwar now hopes to treble eChoupal’s coverage to over one lakh villages. “In this country, people who need modern retailing the most are farmers, as they don’t have any choice over where (and from whom) they sell or buy.” In that sense eChoupal, with a readymade farmer audience, is also the glue that binds ITC’s rural retail foray with Choupal Sagars, currently 28 across nine states. Acutely aware that sociopolitically, tobacco can’t be ‘good for India’, Mr Deveshwar sees a million possibilities with the T in ITC. From merely tobacco, he’s imbued the central pillar (read, letter) of his company with several newer avatars — total transformation, trusteeship & trust, transnational, trade, tourism, technology and even trademark (for the FMCG business). Predicated on Innovation and geared towards Consumers, little wonder that Mr Deveshwar’s ITC is without fullstops.

• Share of cigarettes in revenue now under 50%, accounts for 75-80% of pre-tax profits

• Plan is to capture value across its business spectrum, tobacco, food, apparel, retail, hospitality, and personal care in the future

• ITC to pour Rs 5,000 crore into hotels, from budget to top-end luxury

• Group’s 6,400 eChoupals deal with everything from buying farm produce to hawking seeds, tractors and consumer goods

• Both Sunfeast and Aashirvaad have become Rs 500-crore brands within three years

Courtesy: EconomicTimes

Terrain Check is planning to enter womenswear market

The Chennai-based garment brand, Indian Terrain from Celebrity Fashions, is planning to enter the womenswear market. Recently, Arvind Mills has also announced the extension of its mid-priced formal wear brand Excalibur to the womenswear category. The western womenswear market in India is expected to touch the Rs 1,000-crore mark within three years. Celebrity Fashion supplies garments to brands such as Timberland, Diesel, Marlboro Classics and Kenzo, and have been focussed on the menswear section till now. In the domestic market, the company has tied up with Reliance Retail, to develop an exclusive brand of apparel called Spirit, which will retail only through Reliance’s outlets.

Courtesy: EconomicTimes

Ocean Croc will soon launch its retail brand in India

US-based footwear maker Crocs Inc., famous for its beach-going shoes worldwide, will roll out its Ocean Minded brand soon in India. The Rs 1,600-crore footwear brand, Croc, acquired Ocean Minded for Rs 8 crore. Ocean Minded is a leading designer and manufacturer of leather-based sandals, primarily for the beach, adventure and action sports markets. The company utilises recycled and recyclable materials. Crocs Inc has recently launched its brand in India introducing six models of footwear style and will be available in 40 retail stores.

Courtesy: EconomicTimes

LG India will launch new radio campaign to make the listeners more participative.

White goods giant LG India will soon launch its new radio campaign, Green Gyani. The company is spending Rs 15 lakh on the campaign, which will commence in all major metros. The male ‘Gyani’ character will be giving households tips and solving problems related to energy efficiency queries in home appliances. The household and food-related tips would keep changing every third week and would try to make the listeners more participative.

Courtesy: EconomicTimes

Moser Baer decided to dent piracy market

Last month, Moser Baer, one of the world’s largest optical storage manufacturers, decided to dent the piracy market by acquiring the rights to sell 7,000 movie titles across regions at Rs 28 for VCDs and Rs 34 for DVDs. Last heard, T-Series was also planning a similar foray and will hawk movie DVDs for Rs 45 a pop. The company will release video content on DVD and Video CD formats using technology which enhances quality and significantly reduces cost. Like Moser Baer, this will enable T-Series to revolutionise the quality-price parity and offer value to consumers.

Courtesy: EconomicTimes

Jet set to fly Sahara in debt-free skies

JET Airways is planning to run Air Sahara operations as a separate debt-free company without integrating the two balance sheets. The Lucknowbased Air Sahara will, however, be rebranded and operated most likely as a low-cost airline within a few months. The Jet management is currently working on plans to invest about Rs 100 crore as capital or loan to Air Sahara, once the acquisition is completed on April 20. An additional amount of about $100 million will be raised eventually, most likely through a private placement of equity for the new company, sources close to the airline said. An official e-mail sent to Jet Airways on the issue remained unanswered. It makes sense to run Air Sahara as a separate operation because the company will have no major cost head except operating spends like salaries, the sources said. Senior management from Jet Airways will help run the airline operations. The airline already has a debt-equity ratio of over two and has plans to raise money for an Rs 8,000-crore aircraft acquisition programme. Route planners with Jet Airways are already reworking the airline’s entire domestic schedule to plan a completely new integrated operation, so as to optimise the induction of new capacity through Air Sahara’s 24 planes that will be added to Jet’s fleet by this month-end.

Jet revving up for revenue on Gulf route

THE airline will also be used to operate a low-cost service on Gulf routes, currently a money-spinner for the public sector trio of Indian, Air India and Air India Express. As part of the deal to buy Air Sahara, the Jet Airways management will get a certificate of positive net worth for Air Sahara as on March 31, ‘07 from the Sahara group. This would certify that the airline’s cash and bank balances are equivalent or greater than the bank loans taken by it, the sources said. No group company loans will be on Air Sahara books. Air Sahara’s brought-forward (unabsorbed) business losses of about Rs 500 crore will be adjusted by Jet for tax benefits. The airline made a net loss of Rs 60 crore for the nine months ended December ‘06. The Jet Airways scrip closed at Rs 626 on the BSE on Friday, down almost 3%. Jet Airways and Air Sahara are the only two private airlines with permission to fly to the Gulf from January 2007. “The price-sensitive market can be easily served by an efficient airline with aggressively priced seats,” says an airline official. The government airlines currently control roughly 50% of the India-Gulf traffic, which, to a large extent subsidises their losses on other routes. The ministry of civil aviation had earlier imposed a three-year ban on private airlines flying to the lucrative Gulf routes. The idea was to give state-owned airlines a headstart so they can recover the losses from their public support services. From 2007, the market from India will thus turn into a duopoly with the merged entity Air-India-Indian-Air India Express and Jet-Sahara operating on it.

Courtesy: EconomicTimes

You Are What You Watch: A Viewer & A Consumer

In the over 300 channels, 24-hour satellite television age, you are what you watch. TV Graphics, a Lodestar Universal study, juxtaposes viewing habits and consumer segments

As a marketer do you really know your couch potato, err consumer?

Sample this: in the Hindi heartland (socio-economic-class ABC), there are as many as half-a-dozen type of television viewers each amongst men and women. Almost one in every five men here is a Star Plus loyalist, handsomely outnumbering sports loyalists. And believe it or not, almost one in every four women consumer is a regular viewer of news & sports, the stereotype of weepy saas-bahu serial watching matriarch notwithstanding. A recent Lodestar Universal study, TV Graphics, shared exclusively with ET, sketches out the contours of television viewer segments as they exist across living rooms in the Hindi-speaking areas of the country, the belly of the Indian television industry and constituting a large chuck of the Indian consumer market. 35^% Multi-Genre Viewers: Young, small business starter, spread across SECs, entering the consuming class 17^% Star Plus Loyalist: Typical Hindi heartland shop owner 13^% Sports Enthusiasts:
Metro guy, part of the great Indian consuming class 12^% Bollywood Buffs: Small town guy with SEC C skew 8^% Regional Viewers:
Low ownership of durables 7^% Niche Viewer:
Young Affluent Urban Professional, SEC A skew. 29^% Cinesoap Loyalist: Glued to serials and movies, employed, lower rung and SSC pass 24^% News & Sports Viewer:
Highly educated, working woman 15^% Weekday Afternoon Soap Viewers: Affluent housewives, trying to make a statement 14^% Afternoon Movie Buffs: Price conscious, striving to make ends meet 10^% Prime Time Soap Watcher:
Older and traditional homemakers 6^% Weekend Cine Viewer: Starry eyed
and a conformist

Courtesy: EconomicTimes

VAT’s THE WAY STATES REVENUE UP 25% IN ’06-07

Hotel stay, power, legal advisory, amusement & recreation among 44 services likely to come under states’ tax net this fiscal

LOOSEN your purse strings. YOU may have to pay more for a host of new services like hotel, motel and lodging, electricity transmission and distribution, legal advisory amusement and recreational services. States are planning to bring some of the 44 new services, given to them as a part of the Centre’s central sales tax phase-out compensation package, under the tax net this fiscal itself. The states have also decided to impose 12.5% value added tax (VAT) on tobacco items. “We will take a final decision on May 5 as to which services out of the 44 new services should be brought under tax net. These services would be brought under tax net this fiscal itself,” chairman of the empowered committee (EC) of state finance ministers, Asim Dasgupta said on Saturday. He said that the Centre, in the first year, would collect service tax on the services given to states. Within this transition period, states would set up their service tax collection machinery and then collect tax on their own on all 77 services. As a part of the compensation package, the Centre had agreed to transfer 77 services to states, allowed them to impose VAT on tobacco products and abolish form D, which allows government departments to purchase goods from other states at a lower rate of 4% CST. Mr Dasgupta said that the meeting also reviewed the phasing out of CST from April 1. “We reviewed the phasing out of CST. It was also decided that the state would levy VAT on tobacco items at 12.5%, excluding biris, tobacco leaves and tobacco leaves meant for biris,” he said. Asked if the states proposed to increase the VAT rate next fiscal, he said the states were not keen to do so and no final decision had been taken on whether it would be hiked in the fiscal after that. On the proposed unified goods and service tax regime, he said the Centre had asked the empowered committee to prepare a roadmap for consultation with it. The committee also decided to set up a joint working group which would work on it and report back to EC, he added. He said the meeting further reviewed
the growth in revenues of VAT-implementing states. Mr Dasgupta said VAT revenues of states had grown by over 25 % in 2006-07, but did not give out the figures.

Courtesy: EconomicTimes

Not Connecting To Indian Consumers,Local Websites Of Multinationals Way Behind Western Counterparts In Terms Of Content, Look

FORGET Web 2.0. When it comes to online user interface for their Indian consumers, MNCs still have a long way to go. For most leading global brands, local Indian websites are nothing compared to their websites for developed markets. Userfriendliness, interactivity and content — on all counts, Indian websites have a long way to go before catching up with their global counterparts. Want to find your nearest Motorola dealer? Click on ‘local dealers’ on Motorola India’s website and you come to: ‘Motorola’s products are distributed through the main channels and shops for (mobile) communication. We advise you to contact your local communications specialist with regards to availability and prices of Motorola products’. Huh? Motorola’s US website, on the other hand, offers a dropdown menu for a user to find the nearest dealer. LG Electronics is another example. The consumer electronics major has two websites- lgindia.com — which appears first if you google ‘LG India’ — and lgezbuy. A user visiting lgindia to find the nearest LG dealer would not find the option. Well, go to products, select a product and then you’ll find the option to locate an LG dealer- click and you’re taken to the lgezbuy dealer locator page. Phew! It is, however, much easier finding LG service centres and the online shopping option on the website. The difference also extends to the ‘look & feel’ factor . A case in point is the website of FMCG major Unilever and that of its Indian subsidiary, Hindustan Unilever. While Unilever’s site is colourful, vibrant and consumer-oriented, HLL’s website leans more towards a corporate user. So, if the Unilever homepage has tips on staying fit, healthy and beautiful, quarterly results and other corporate information share prominence with information on HLL brands on the Indian site. Similarly, the global website of Procter & Gamble (P&G) offers tips on issues ranging from nutrition to stress-busting and from beauty to baby care, the Indian website goes just beyond the basic brand information to offer ‘consumer care’ tips like how to differentiate between a cold and a flu and some tips to deal with cough, cold and flu.
While McDonald’s India does better in terms of userfriendliness than most websites, a comparison with the company’s US website shows the increased focus on projecting itself as a responsible brand. So, while the Indian website has a restaurant locator, nutrition info and some fitness tips, the American site offers suggestions on topics ranging from ‘nutrition tips while dining at McD’s’ to ‘food allergens’ and ‘sensitivity info’. It also has sections where a doctor and a personal trainer offer advice. Says marketing consultant Harish Bijoor: “The low Internet penetration in India is one reason why Indian websites lag behind their counterparts in developed markets. There is a more business-to-business focused content in case of Indian sites like more information on topline and core products. The language in a developed market site is different- more casual and friendly.” Adds Indian School of Business marketing professor Nirmal Gupta, “The lack of consumer sophistication in India is another factor why brands think they can get away without paying so much attention to their websites and hence, the low levels of interactivity and user-friendliness.” There are some brands which seem to have missed the India link altogether - denim major Levi’s for instance. Not consumer-savvy Go to Levi’s main website and point towards the Asia-Pacific link. While India is listed there, clicking on it would lead one to the Asia Pacific website of Levi’s. Countries listed on the A-Pac website are Australia, Indonesia, Korea, Malaysia, Philippines, Hong Kong, Japan, New Zealand, Singapore, South Africa (Asia Pacific?), Taiwan and Pakistan. No India, however. Want to check out Nike India? Well, you can’t, because the website doesn’t exist. Nike’s global website, which leads one to the other regional websites, doesn’t have India or Asia in its list at all. Singapore is there, and so is Middle East - but that is as close as you can get. Says Mr Bijoor, “As the market develops, the shift of focus from businessto-business to business-to-consumer will take place but that is another 3-5 years to go.”

Courtesy: EconomicTimes

Gold, silver shine on marriage demand

FESTIVAL and marriage season demand ahead kept both the precious metals on the rise past week. Remaining volatile throughout the week, Gold made good gains over its previous week’s close, while Silver glittered by Rs 300 a kg over its previous close. Silver which opened weak by Rs 50 at Rs 19,650 per kg in the beginning of the week rose to Rs 20,000 close following London Silver which went up from 1,375 cents to 1,400 cents and then eased to 1386 cents. Increased demand from stockists’ and jewellery fabricators also kept silver on the rise. Silver coins also maintained an upward trend with prices firming up by Rs 200 to Rs 24900 per hundred coins on upcountry support. Daily arrivals of silver stood at around 5,000-6,000 kg.
Gold standard (.999) mirrored similar trends with prices dipping from Rs 9,545 to Rs 9,500 per 10 gm as London Gold slipped to a low of US $671 on selling pressure. However, speculative support pushed up international prices to US $ 679.50 per ounce, though prices later calmed down to US $ 677.50 consequently, Gold standard here after being traded at Rs 9,570, settled Rs 45 higher at Rs 9,590 per 10 gm. Gold one kg bar closed at Rs 9,540. Gold jewellery 22 carat also showed improvement with prices moving up from Rs 8,749 to Rs 8,790 per 10 gm. Gold Sovereign was seen steady at Rs 7,350/7,850 per 8 gm amid limited enquiries.

NON-FERROUS METAL
Closely following the LME (London Metal Exchange) trends, Delhi non-ferrous metals market witnessed intense volatility past week. Copper on LME surged from $7,464 to $7,975 per tonne amid heavy speculative buying pushing up copper wire scrap here from Rs 349 to Rs 360 per kg, though prices closed lower by Rs 5 at Rs 355 on slakening of demand end week. Copper sheet cutting, Rod and Ingot also towed the line and ended lower after a brief spell of firmness. Brass scrap jumped from Rs 247 to Rs 261 per kg as arrivals stood lower at 17-18 tonne, while demand remained on the upside at 25-26 tonne. Prices, however, eased to Rs 258 on profit taking end of the week.

CHEMICAL
The Delhi wholesale chemicals market observed mixed trends past week. Citric Acid Bold went up by Rs 100 to Rs 2,700 per 50 kg amid increased offtake by consuming industries and bareek goods, however, remained steady at Rs 2,400. Increased up Zinc oxide by Rs 10 per kg to Rs 155. Copper sulphate also witnessed similar trend with prices being quoted upward by Rs 3 per kg to Rs 100/118 on soaring copper prices. Tight stocks coupled with heavy industrial demand appreciated Hexamine at Rs 92 per kg. Caustic Soda Flake moved up by Rs 40 per 50 kg to Rs 1,320 on weak supply. Boric Acid Technical was also traded upward from Rs 2,750/2,900 to Rs 2,800/3,000 per bag, while Borax settled higher by Rs 50 at Rs 1,350/1,450 per 50 kg.

Courtesy: EconomicTimes

ARCELOR MITTAL RACES AHEAD

Arcelor Mittal is believed to have raced ahead in the race to acquire Mitsui’s 51% stake in Sesa Goa. Arcelor Mittal is believed to have put in a bid of about Rs 2,200 per share ahead of Aditya Birla group who has put in a bid of about Rs 2,000 per share. Arcelor Mittal, the world’s largest steel company is pitted against global majors such as Vedanta Resources and global mining major CVRD. If Arcelor Mittal succeeds in sealing the deal, it may even go for a complete buy out.

Courtesy: EconomicTimes

RELIANCE MAY BE OUT OF DOW RACE

Reliance Industries, which was widely reported to have shown interest in picking up stake in Dow Jones, has reportedly withdrawn from the race after private equity firms and investors from Middle East evinced interest in a bid as high as $50 billion. Meanwhile, Dow Chemicals has fired two executives for holding unauthorized talks to sell the company.

Courtesy: EconomicTimes

TATA STEEL SHARE ISSUE

The board of Tata Steel will discuss various fund raising options, including preference share issue and issue of perpetual bonds, to raise money for its Corus buy when the board meets shortly. Tata Steel has raised $8.8 billion in bridge loans, including $7 billion through its special purpose vehicle Tata Steel UK and $ 1.8 billion in its Singapore SPV. The promoters, which have 30.5% stake (as on March 31) in the company, is believed to be not keen on reducing its stake in the company.

Courtesy: EconomicTimes

HERSHEY IN TALKS WITH AMUL

In what is being seen as a face saving exercise, US-based chocolate maker Hershey continues to resume talks with Gujarat based co-operative milk giant Amul to explore “business cooperations”. The move comes days after Hershey acquiring majority stake in Godrej Beverages and Foods Ltd (GBFL). Amul had accused Hershey of keeping it in the dark till the last minute about its talks with Godrej. Hershey has reiterated its invitation to Amul to visit its facilities in mid April and even offered to arrange visas for the Amul executives. While Godrej officials said if Hershey goes ahead and hold talks with Amul, there could be fireworks. Amul said the company has not taken a decision in the matter.

Courtesy: EconomicTimes

Jet-Sahara deal airborne again

IN a volte face from its earlier stand last year, Jet Airways has signed an amended agreement to buy Air Sahara at a reduced enterprise valuation of Rs 1,450 crore from the earlier figure of Rs 2,250 crore. The deal was cornered by legal wrangles as Jet Airways had walked out of the deal in June last year. However, Jet has already spent about Rs 180 crore in operating Air Sahara, Rs 1,500 crore in an escrow account, Rs 51 crore as interest on this account and another Rs 350 crore has been spent on various liabilities, putting the actual valuation to be Rs 1,950 crore. The acquisition is on a “as is where is basis” without any warranties and demnities on aircraft, assets or undisclosed liabilities except tax. The fleet size of Air Sahara is now 24 from 27 as three planes have been returned to the lessors. Jet can use the Air Sahara brand for up to six months, after which the rights revert to the Sahara Group.

Courtesy: EconomicTimes