ESPN & Nimbus face graded ad rates

Advertisers Press For Differential Pricing, Initiate Talks For Protection Clause

INDIA’S disastrous World Cup showing has begun spilling over to ESPN and Nimbus — both of whom have cricket broadcast rights for the next eight years between them. Advertisers have initiated discussions with the two broadcasters, seeking differential pricing and factoring in protection clauses for buying on tournaments, on grounds of inconsistent performances by the Indian cricket team. That’s in complete departure from Sony Entertainment Television (SET), which sold airtime of over Rs 500 crore through bulk deals and combined Champions Trophy and World Cup. “It’s a case of once bitten, twice shy. Advertisers now want conditionality and protection, especially in case of big tournaments which involve several teams,” said Madison Communications CMD Sam Balsara. “The general bearishness towards cricket is prodding advertisers to move towards rationalisation of contracts. We are definitely talking on those terms, but it’s at a very nascent stage. In principle, every advertiser is looking at adding a safety clause, which includes differential rates. Besides, the mad rush over cricket has dissipated as advertisers are getting more cautious with their investments,” said Mindshare Fulcrum managing director R Gowthaman. Broadcasters say the issue of differential pricing will come with its share of benefits and drawbacks. Said ESPN Star India MD RC Venkateish: “We don’t have a problem if advertisers want to negotiate rates and play it safe, so long as we get our revenues. If they are looking for downside protection, they will also have to pay a premium for the upside as well.” While admitting that the Caribbean debacle has put off smaller advertisers and fringe buyers, Venkateish pointed out that ESPN hasn’t witnessed attrition of rates. “We’ve signed up four advertisers for the upcoming India-England series at the same rates we were negotiating before the World Cup began,” he said. Nimbus maintains that differential pricing is barely of any consequence to the channel since it has rights for the home series’, and India’s winning or losing would not matter since the team would play all matches. Said Nimbus CMD Harish Thawani, “The issue is being over-hyped on the back of just one loss, and the intention is just to depress cricket prices. From a domain point of view, cricket is still the best converter for intention to purchase, and is the only programme on air that has the highest break ratings.” Meanwhile, the incumbent ICC rights holder, SET India’s EVP (sales), Rohit Gupta said, “No broadcaster will agree to differential pricing to be included in contracts. The broadcaster’s fortunes is not dependent on India’s performance and they have to factor in acquisitions costs. Unless the ICC is willing to give some rebate to broadcasters, such a concept is unworkable and any broadcaster who agrees to this, is asking for serious trouble.”

Courtesy: EconomicTimes

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Broadcasters Should Be Accountable For Audience Delivery

Advertisers pay for audience when they buy ad time on television. But with TRPs varying widely, not just for live events such as cricket matches, but even for daily bread-andbutter programmes in soap operas, the cacophony of advertisers complaining about channels over-selling is rising. ET opens the debate on whether it’s time television channels started closely tying ad rates to their actual audience size and composition?

Red-herring coming from customers

Paritosh Joshi

WHERE DO audiences come from? Broadly, this question has a three-part response. First, audiences come from distribution. If a viewer cannot even access a channel on her cable network, the content might as well not exist for all the difference it makes to her life. Second, audiences come from marketing. Even if a channel is available in the great mashup that is the current analog cable bouquet, it is liable to get lost in a clutter of anywhere up to a hundred channels. No marketing, no trial. Third, and most importantly over the long haul, audiences come from content. Distribution gets it there. Marketing induces trial. Only great content creates the loyal viewer who sets appointments with it days, weeks, months, even years on end. Here then is the rhetorical question: Which of these three are NOT driven by broadcasters? In its brief decade-and-a-half existence, cable TV in India has already reached nearly a third of all homes. Television, by nature, is completely egalitarian and appeals as readily to the toddler in his crib as to his grandmother in her arm chair. It is no accident that India’s period of consumption driven GDP growth corresponds so closely to the cable & satellite TV revolution. With a track record of such success, how could any reasonable person raise any questions about the sustained responsibility that the broadcaster community has taken for audience delivery? The solitary question that remains is one that can only be posed by the tremendously myopic or the tremendously obtuse: demanding predictable audience behaviour at the granularity of an individual show or season or channel. And even that is trivial. As soon as the customer community believes that a show/channel/network is ‘not performing’ the release -orders (for placing ads) dry up anyway. How much can a typical broadcaster do under the circumstances? Demand performance of the customer’s contractual obligations? The accountability question is a red herring introduced by the customer community in an environment where broadcasters are finally waking up to their chronically under-monetised, underpriced real estate and contemplating a long overdue re-rating of prices. The writer is president (advertising sales & distribution), Star India .

Accountability exists, bring in transparency

Shashi Sinha

UNFORTUNATELY the debate on accountability is happening against the backdrop of (India’s) recent World Cup loss. Itmay be worthwhile to look at accountability in media buying and media deliveries from a larger perspective and divorced from the World Cup debacle. First a quick look at the evolving media scene – with more than 400 TV channels (and counting) the volume of advertising time available is comparable to the most developed countries in the world, yet the magnetisation of this advertising time remains low compared to the rest of the world, for a variety of reasons, the primary one being supply and demand. This has led to the advertising and media industry’s focus being on rates, so much so that in spite of cable & satellite homes going up from 40-million to 60-million in the last two years, most channels have not been able to exploit this increased delivery of audiences proportionately to their revenues.. Now addressing the issue of accountability in media buying, I strongly believe accountability just like in real life and in any relationship and transaction already exists though it may not be overtly stated. The real issue is bringing in a transparency and real time value to accountability. For this to happen we must resolve a couple of issues, the first being the measurement system. While we have a robust TV measurement system in place, a real time accountability matrix will require a conviction of all parties- broadcasters, agencies and clients on the measurement data as being the final word, which may require to be upgraded leading to big investments. However, the bigger hurdle is mindset of all parties involved – will a advertiser and a agency pay more if a programmed delivers an upside, conversely will the channel cover a downside. I personally believe accountability will be good for the industry as TV channels will focus more on programming that delivers while ad agencies will have to move away from rate negotiations and focus on delivering audiences, while clients will focus on delivering marketing propositions to these audiences instead of every member worried about the best rates. If wishes were horses…… The writer is CEO, Lodestar Universal

Courtesy: EconomicTimes
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Honda Siel raises car prices by up to Rs 5,000

Honda Siel Cars India has increased its prices across its models by up to Rs 5,000. HSCI has hiked prices as the period of tax holiday extended by the Uttar Pradesh government has ended. Post the price hike, the company’s popular midsized sedan City will be costlier by Rs 2,000 while the other model Civic will be dearer by Rs 3,000. The company’s premium luxury car Accord will see the highest hike of Rs 5,000.

Courtesy: EconomicTimes
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Shopper’s Stop, Nuance JV bag Hyderabad duty-free contract

Swiss duty-free major Nuance and Indian retail giant Shopper’s Stop have been jointly awarded the retail duty-free concession for the Hyderabad International Airport being constructed by GMR Infrastructure Ltd (GHIAL). The dutyfree shops at the airport will be set up by the joint venture between the Swiss-Indo consortium and will be valid for a period of seven years commencing March 2008.

Courtesy: EconomicTimes
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Fiat launches Palio Stile with two engine variants

Fiat India on Wednesday announced launch of its new Fiat Palio Stile in two engine variants. The Fiat Palio Stile 1.1 litre which is available in three variants has been priced in the range of Rs 3.49 - 3.90 lakh (ex-showroom Delhi). The 1.6-litre Palio Stile is priced at Rs 4.31 lakh.

Courtesy: EconomicTimes
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Chennai animation co in tie-up with US co

Accel Animation Studios, a division of Accel Transmatic, has tied up with US based LongTale International, a movie distribution house to develop, coproduce and distribute animation movies for global market. LongTale, which calls itself a digital media and intellectual property management company, also plans to customise Indian movies for non-Indian audience abroad. This would include cutting songs, reducing movie duration, dubbing into foreign languages or adding subtitles. Omar Kaczmarczyk, founder and MD, LongTale said Indian movies had the traditional distribution network for the domestic market. In recent years, channels targeting NRIs abroad have strengthened.

Courtesy: EconomicTimes
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TN brands gearing up to fight poaching

Invest Heavily In Manpower Training To Retain The Edge

ON THE manpower front, regional retail brands are upping their ante. They have been investing significantly in people management, lest their growth plans lose the desired momentum. As Tamil Nadu’s retail fortress is getting ready to get dented with the impending entry of Reliance, Bharti and Walmart, top-of-the-mind retail brands like Naidu Hall, NaiHaa, GRT, RmKV, Pothys and Nallis are investing in personnel training quite substantially. Estimates peg Tamil Nadu’s retail requirement in the next two years to cross one lakh trained manpower. Fearing that their trained personnel would be poached by the big brands, regional retailers are strategising to minimise the blow. If customer service executives are paid a monthly compensation of Rs 6,000 by regional brands, Reliance and other biggies are luring them by offering to double and triple the wage packages. Consider this: India, rated as the world’s fifth-most attractive emerging retail market, is perceived as a potential goldmine for global and domestic players. Tamil Nadu, being a front-runner for jewellery and saree retailing, is facing an acute crunch of trained retail specialists. According to Retail Association of India CEO Gibson G Vedmani, the total retail market in the southern states is worth around $ 94 billion, of which organised retail is estimated to be $ 8.5 billion. The share of organised retail is around 9% of total retailing in South India. “Though Chennai has always been home to speciality retailing, the momentum is picking up. About 12% of Chennai’s retail market is estimated to be organised, compared to 7% in Hyderabad and 3-4 % in Kerala,” he added. HR is the focus for regional brands. A decade ago, jewellery retail major GRT, employing about 1,000 people, did not have a HR department in place. But the boom in retail and the growth prospects, has led the retail chain to professionalise and set up a full-fledged one about three years ago. “We take it very seriously and our practices are based on the lessons obtained from other industries,” its managing director G R Ananthapadmanabhan told ET. “The entry of retail giants gives us yet another opportunity to enhance our staff welfare measures,” he said adding GRT has brought in professionals to impart speciality training to its middle level and supervisory staff, who provide on the job training to other workers. Chennai-based textile specialist Pothys has engaged the Academy of Retail Management to conduct workshops to improve the productivity of its 1,500 strong workforce. Academy of Retail Management executive director, D Sugan Chinna Maran told ET that Pothys has spent close to Rs 12 lakh on its workforce for a total makeover.

Courtesy: EconomicTimes
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Pepsi to double China workforce over 5 years

PepsiCo, the world’s No 2 soft drink company, plans to double its workforce in China over the next half decade as it fights for a larger slice of the growing market, chief executive Indra Nooyi said on Tuesday. “We work hard to ensure a deep and continuous supply of talent to meet our growing needs in China, where we expect to double our workforce over the next five years,” Nooyi told a seminar in the Chinese capital. She gave no details of the expansion, apart from saying it would include 600 new graduates, but had earlier said the company’s joint ventures have thousands on their payroll.

Courtesy: EconomicTimes
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Cricket bowls a wide ball for ads

Burden Of Brands: Marketers Pulling Off Campaigns Associated With Sport

ADVERTISING is about relevance and Indian cricketers, fresh from their ignominious exit from the World Cup in Caribbeans, are no longer relevant to marketers. After durable maker Videocon, foods-to-hotel major ITC, and brand Pepsi’s Blue Billion campaign, a host of other jilted marketers are pulling their much-touted cricketers and World Cup-related ads off-air. In another brand rescue act, Pepico India has yanked-off Mahendra S Dhoni-starrer ad for its clear lime drink 7 Up. Lifestyle and sports brand, Puma, had canned its ad with newly-appointed brand ambassador, Saurav Ganguly, even before it saw media light. Such is the disappointment of putting all their eggs in the cricket basket that many a marketer is preparing for all eventualities now, including key players being dropped from the Indian team, and even the unthinkable just a month ago — Sachin Tendulkar, who has over 12 brands riding on him, calling it a day sooner than later. Why, marketers across categories are even preparing their brand blueprints, sans cricket and cricketers. To be sure, no one will say it in so many words, not as yet, but the writing is all up there on the wall for anyone to read. “Our association with cricket is tangential through Saurav Ganguly, therefore, we are not hit as badly as some other brands which had their entire communication around cricket and cricketers, planned much in advance of the World Cup,” says Puma India MD Rajiv Mehra. Global ICC sponsor, Pepsico is learnt to be working on a new campaign for brand Pepsi, sans any cricketers, to break around the April 15. Even for 7 Up, the company is believed to be shooting a new ad sans’ Dhoni or cricket. Another big ICC sponsor for the last eight years, LG, has decided not to even run for ICC global rights, 2007-15. In fact, ICC is finding it difficult to garner the $60-million price tag apiece it had put on four of these rights. “LG is not going to associate with cricket on a long-term basis. We’re through with establishing our brand salience and therefore cricket doesn’t fetch us the same value it used to,” says LG India VP sales & marketing Girish Rao. “No contracts can be cancelled. Only World Cup related advertising which has been rendered useless has been pulled out. Dhoni’s ads for Orient and Sonata are still on air,” says Jeet Banerjee, MD, Gameplan Sports, which manages Dhoni, Robin Uthappa and Munaf Patel. Be that as it may, but clearly sports management agencies are all too aware that endorsement rates for cricketers, post the World Cup fiasco, will go down by 20-25% and the worst hit, some say, may be younger, upcoming brand ambassadors such as Dhoni and Yuvraj Singh. Harish Krishnamachar, managing director, ICONIX (Saatchi & Saatchi’s talent management agency, which handles Sachin Tendulkar’s brand portfolio), accepts a likely cut in endorsement rates to take place. “There would be a medium-to-short term correction which would be a drop of around 25%.” When asked about the concerns over Sachin’s retirement and how it would impact his on-going contracts, this is all Krishnamachar had to say: “It is not possible to give details on the terms and conditions of the various contracts .” Though it is well known that ICONIX roped in Tendulkar with a Rs 80-crore, five-year deal, industry insiders say that no performance clause was inked. “Essentially, Sachin has everything to gain in the deal with a minimum of Rs 30-crore ensured annually and ICONIX stands to lose if Sachin fails to perform. Obviously Sachin will not be out of the team till he retires but his non-performance will be a burden for ICONIX,” says a senior executive. Incidentally, the only non-performance clause that brands can enforce are if a player is not selected in the national side for three months. The contract does not cover on-the-field performance, something that actually affects viewer sentiments and therefore (brand) purchasing intent. “Our involvement with Sachin runs much deeper than mere World Cup-led ads. Even if he retires today, his iconic image stays,” says one marketer who uses Sachin as its brand ambassador.

Courtesy: EconomicTimes

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Wal-Mart takes a few local lessons, Ropes In Consultant To Study Successful Indian Models

THE world’s biggest retailer, Wal-Mart, may be looking to learn some lessons from a small Indian retail chain. According to sources, the alliance between Bharti and Wal-Mart has mandated a well-known international research firm to study south Indian retail outfit Subhiksha’s neighbourhood store business model. Sources say Wal-Mart may look at something identical to start with in India: a major departure from the retailer’s global policy where the emphasis is on hypermarkets. Though both Bharti and Wal-Mart have all along maintained that the front-end retail will be an exclusive Bharti operation with no interference from Wal-Mart, industry sources say the retail behemoth is keenly following the development. “Its just that Wal-Mart does not hold an equity in the retail project, thanks to the FDI regulation. On the operations front, it is an equally-active participant, and is ensuring that its global best practices are properly implemented,” a source said. When contacted, a Wal-Mart spokesperson denied having appointed any agency for conducting a survey. Studying the Subhiksha model is part of a macro consumer survey, on which the companies will base their exact retail roadmap in India. Apart from studying viable formats, the study will, mostimportantly, delve into the brand name for these stores.

Real estate cost may be too high for Wal-Mart

ON the face of it, this may appear to be an attempt at Indianising its operations. But, what could have led the retail behemoth evincing interest in Subhiksha's model is the latter's backward integration of a traditional front-end and a modern back-end as a means to bridge the gap between unorganised and organised retail. “They particularly seem to be interested in replicating the Subhiksha neighbourhood store model, of course on a larger scale. The fact that the company has created a significant presence at a time when organised retail was not the hottest selling news, is also why it has attracted Wal-Mart’s interest,” the source said. Real estate considerations could also not be ignored. Commercial real estate costs have shot through the roof in the last couple of years, and creating the requisite land bank has become a major hassle. This cost is particularly high for areas close to existing habitations. Worldwide, Wal-Mart does not invest more than 3-4% of its topline as real estate costs. However, agencies like Cushman & Wakefield and Tachnopak estimate this to be to the tune of 8-9% in case of 50,000 sq ft plus formats in India, as per present costs. This will lead to severe pressure on margin, something which the retailer would obviously like to avoid.

Courtesy: EconomicTimes

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Logan in, parks next to Indigo

THE much-awaited Logan is finally here. Positioned as a value for money sedan, the Mahindra Renault JV has priced the base version fitted with 1.4-litre engine at Rs 4.28 lakh, ex-showroom Mumbai, while the diesel variant will be available for Rs 5.57 lakh. Logan is the first Renault product to hit the Indian market and the first right-hand drive car from the French car-maker. The Mahindra-Renault joint venture will be rolling out 50,000 units of Logan this year from Mahindra’s Nashik facility set up at a cost of nearly Rs 700 crore. M&M holds 51% equity in the joint venture with Renault holding the remaining. Speaking at the launch ceremony, Renault president and CEO Carlos Ghosn claimed that the total project investment has been 15% lower than forecast and has helped in pricing it lower. He expects Indian car market to grow to 2 million units by 2010 from around 1.1 million in FY06. “It is truly a world car which offers compelling value proposition to a typical Indian car buyer. It will open-up a new opportunities for both the partners in the Indian automobile market,” M&M vicechairman and managing director Anand Mahindra said. Initially, Logan will hit the roads in the top 10 cities of the country, followed by a national launch by November this year. By that times, JV hopes to have a national network of 120 showrooms and dealerships across the country. Logan has been launched with 50% localisation, with engines and drive trains imported from Renault factories in Romania and Spain. It will gradually rise around 70% by the end of FY08. Targeted at upper end B-segment and lower end C-segment car buyers, Logan is expected to fuel another round of price war in the car industry as existing players try to protect their turf against the new entrant. In terms of price and positioning, Logan is likely to compete head-on with Tata Indigo, which is priced equally aggressively and offers diesel variant. The company however, refused to divulge its sales target for Logan for FY08. Though, Logan offers an interesting package with the widest rear seat which can comfortably seat three people, it has to be seen how it succeeds in building brand equity in a segment dominated by Honda, Maruti-Suzuki and Hyundai. Some analyst fear that Logan offers such a strong value-formoney that it may end-up being used as a fleet taxi like Tata Indica/Indigo. This will hurt its brand equity among individual buyers and may hurt its long-term prospects. Specially developed for emerging markets, Logan was developed by Renault and its Romanian affiliate Dacia. It has sold almost 450,000 units worldwide since its launch in 2004.

Courtesy: EconomicTimes

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Retail Essentials

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

Tata Coffee to launch first brand in Russia by July

INDIA’S leading coffee conglomerate Tata Coffee, which is both into the growing of beans and their manufacture into powder, is all set to launch its first brand for Russia, the fastest-growing instant-coffee market in the world. Tata Coffee managing director MH Ashraff told ET here today that the brand of instant coffee to be launched in the Russian market would be manufactured in the company’s state-of-the-art freeze-dried plant at Theni in Tamil Nadu. The plant had been commissioned on February 27, this year. Mr Ashraff added that the company had not as yet taken a decision whether to launch its first brand in Russia under the brand-name of Eight O’Clock (EOC) or a new nomenclature. Tata Coffee had acquired EOC, an American heritage brand, for $220 million some nine months ago. One certainty, however, is that the instant coffee brand to be launched by Tata Coffee in Russia will be manufactured under what Mr Ashraff says is a superior process. As Mr Ashraff puts it, “The advantages of the freeze-dried technology is that the manufacturing process is done in a vacuum at minus-50 degrees Centigrade and the instant coffee retains its essential characteristics for a much longer time. We will also be using the latest technology for packaging our first instant-coffee brand for Russia by using glass jars or polypack.” Not that Tata Coffee is a stranger to the Russian market. It is already shipping out instant coffee to Russia but for an existing private label. In terms of volumes, Tata Coffee shipped out in the previous fiscal some 5,000 tonnes of instant coffee (12,500 tonnes of GBE or green-bean equivalent, bagging the award for being India’s leading instant-coffee exporter to Russia in 05-06, with the earlier numero-uno Nestle setting up an instant-coffee manufacturing facility in Russia itself). With its latest plant at Theni having a capacity of 2,000 tonnes per annum (tpa), Tata Coffee is, says Mr Ashraff, looking at shipping out the bulk of its freeze-dried instant coffee to Russia and the CIS states. “We will also,” he adds, “be looking at supplying a leading existing private label in Europe.”

Courtesy: EconomicTimes
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Int’l bandwidth reselling may not lead to price cuts

TRAI’S 6% REVENUE SHARE PLAN FOR RESELLERS IS DOUBLE TAXATION: STAKEHOLDERS

TELECOM regulator Trai’s move to allow the entry of resellers in the international bandwidth segment is unlikely to lead to price cuts. This comes as many stakeholders have pointed out that Trai’s recommendation to impose a revenue share of 6% for resellers amounts to double taxation as the international long-distance operators (from whom resellers buy bandwidth) have already been subjected to the same tax. Currently, only International Long Distance Operators (ILDOs) such as Bharti Airtel, Reliance Communications, BSNL and VSNL are permitted to sell international bandwidth, also known as International Private Leased Circuits. Explains Orange Business Service’s (France Telecom) Country Manager, Avnish Datt: “Overall the proposal to allow resellers is progressive in spirit and theme, but the double taxation factor is regressive. It appears that the objective of the move is to maximise taxation rather than maximise progression, innovation and enable these services to reach a larger base.” Reach (in which Australian telecom major Telstra has a 50% stake), in its communication to Trai’s on the issue has pointed out the importance of low annual fees to the success of the resale market: “In Singapore it is less than US$3,000 (annual), Hong Kong less than US$100 (annual) and Philippines less than US$1,000 (one time),” Reach said. The company has also added that a high licence fee regime will create barriers to market entry in the resale segment, and consequently defeat the fundamental goal of resale, which is to promote competition and service innovation to the benefit of end users. Endorsing the same line, AT&T, replying to Trai’s consultation process on the entry of resellers had said that the authority should establish a consistent methodology to ensure that the 6% AGR licence fee is charged only once, by the final licensee selling a service to an end-user. According to the Asia Pacific Carriers’ Coalition, the entry of IPLC resellers can substantially increase competition in the marketplace, ‘but only if it is not burdened so as to disadvantage the reseller in comparison to the facilities-based entities. “APCC respectfully suggests that double taxation must be avoided and that the Indian marketplace will be best served by avoiding a large annual licence fee on Resellers. Either condition will substantially discourage would-be market entrants,” it said.

CUTS TWICE
International long-distance operators are already in the tax net
Only Bharti Airtel, Reliance Communications, BSNL, VSNL can sell international bandwidth Players view the double taxation factor as being regressive
Their refrain is that the move is aimed at maximising taxation

Courtesy: EconomicTimes
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Madura drops SF Jeans in portfolio rejig

AV Birla Group-led Madura Garments is withdrawing its denim brand SF Jeans from the market. The move came in a portfolio rejig unveiled on late Tuesday with the company deciding to stay focused on brands like Louis Philippe, Van Heusen , Allen Solly and Peter England that carries significant scaling up potential. When contacted, AV Birla Nuvo director Vikram Rao confirmed the move. “We want to focus on brands and retail formats like Planet Fashion and Trouser Town that are being scaled up in a big way. The resources that backed SF Jeans till date will be realigned across other brands to develop a jeans proposition under each of them,” he added. The company decision was internally communicated on Tuesday evening. Mr Rao said each of Madura’s big brands — Louis Philippe, Van Huesen, Allen Solly and Peter England — would cross Rs 200 crore at wholesale trade level in FY’08. AVB has been talking about making Madura Garments into a Rs 100 crore company after it acquired the Rs 236-crore entity from Coats Plc in 1999. Madura, a formidable player in the formal wear space, was already a late mover in the youth casual wear market when it launched SF Jeans four-five years back. The plan at that stage was to develop a homegrown aspirational jeans brand straddling the mid-priced to premium price bracket. The launch supported by an edgy campaign was aimed at making Madura Garments a complete branded apparel company with presence in both formal and casual wear. However, according to sources, SF Jeans made a sedate impact even in a growing domestic denim market and mopped up an annualised turnover of around Rs 20 crore. Further, it had to reckon with renewed energy of the global giants like Levi’s Lee and Wrangler as they turned on heat in a market growing at about 15-18% annually. In context, it must be mentioned that VF Corp, which owns Lee and Wrangler, came in through an equity JV with Arvind Brands replacing a decade old licencing arrangement.

Courtesy: EconomicTimes
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Big Bazaar decides to retain sacked staff

THE Future group-promoted retail chain, Big Bazaar, has decided to retain over 100 employees it had recently fired citing surplus manpower, following an uproar created by labour unions and employees. “They are additional employees but we have to retain them though it is difficult for us. The employees will be deployed in our outlets in and around Mumbai and Gujarat within the next five to six working days,” Pantaloon Retail Head — operations (West) Sadashiv Naik said. The announcement follows days after employees and Shiv Sena-controlled labour union, Bhartiya Kamgar Sena (BKS) held protest against sacking of those employees. The move led to closure of Big Bazaar outlets in Mulund, and Lower Parel from morning till 5 in the evening while Kandivili store was closed for an hour in between. When contacted, company officials declined to comment on the financial losses that it suffered as a result of the protests. It’s perceived that losses could be close to 40-50% of the daily turnover of these stores. Big Bazaar, the hypermarket format of Pantaloon Retail, employs close to 17,000 people in its stores across the country. The company plans to open six stores in the coming year in and around Mumbai, including two at Santacruz, two in Navi Mumbai, one each in Malad and Bhayander. Asked where these employees are going to be reinstated, Naik said, “We will be recruiting them in the stores in and around Mumbai and Gujarat as soon as possible,” adding that problems stem from mall developers’ inability to hand over possession to Biz Bazaar at the promised time.

Courtesy: EconomicTimes
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US Chocolate Maker Kept Milk Marketing Federation In The Dark Over Alliance With Godrej

US chocolate maker Hershey happens to be wooing Amul, India’s premier milk co-operative, for a possible distribution alliance even as it was seeking government permission to strike a final joint venture with Godrej Beverages & Foods. What has outraged a section in Amul is the fact that when its senior official met the Hershey team on February 28, (the day ET reported details of Hershey’s application dated February 19 to the Foreign Investment Promotion Board seeking permission for the JV with Godrej) and asked if the report was true, Hershey officials rubbished it saying, “Don’t trust media reports.” This prompted Amul to consider Hershey’s proposal for a possible distribution alliance so seriously that a team of senior executives was even planning a visit to Hershey’s manufacturing facility in the US sometime in May. Last weekend, senior Amul executives told ET that discussions between the two were on track and refused to believe that the US company had decided to go with Godrej. When contacted Hershey’s president and CEO Richard H Lenny refused to comment on the issue terming it as “confidential information”. A detailed questionnaire sent last Friday to Hershey on the possibility of an alliance with Amul did not elicit a denial. “As a matter of policy, we don’t comment on speculation,” replied the company spokesperson. However the MD of Amul, Mr BM Vyas said, “Hershey approached us with the proposal because it needed us more than we did. It is certainly not our loss. Whatever has happened, has happened for the good.” A senior Amul official who did not wish to be quoted was more blunt: “Hershey’s value system appears to be flawed.”

Courtesy: EconomicTimes
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Broadcasters plan 10-30% hike in ad rates

ADVERTISERS may have to brace themselves for an across-the-board rate hike in TV advertising very soon. Major broadcasters like Star, Zee and Sony say they are banking on the growth in satellite TV audiences to justify a 10-30% hike in rates. But advertisers and media planners aren’t quite willing to buy the logic as it means changing over from industry-wide practice of relying on rates based on specific programme viewership. According to NRS 2006 data published in September last year, average weekly viewership of satellite TV across the country grew from 207 million individuals in 2005 to 230 million individuals in 2006. The number of cable and satellite (C&S) homes showed an increase of 12% from 61 million to 68 million in 2006, even as total TV penetration touched 112 million, a growth of 3.2 % over last year. Broadcasters reckon that this growth in the C&S market effectively translates into an increase in reach, and have begun reworking rates for all contracts that are up for renewal with advertisers. “Star will definitely be going in for a revision of rates. We are looking at a 15-20% hike, considering the audience size has grown, and the fact that there is more headroom for growth for Hindi speaking markets,’’ said Paritosh Joshi, president, advertising sales and distribution, Star India. Rohit Gupta, executive VP (sales and revenue management), Sony Entertainment Television, said, “We are already in the process of correction of rates. It has been long pending, and now there is a clear justification for a rate increase, which cannot be termed as unfair.” Joy Chakraborty, network sales head, Zee Network, said that a 10-30% rate hike has already been effected from all deals, depending on client spending patterns, effective April 1. There’s an another reason why broadcasters are confident of pulling off a rate hike: India’s World Cup debacle has sent cricket ratings plummeting and suddenly made other genres of entertainment a lot more attractive. Besides, early this year, Television Audience Measurement (TAM) expanded its panel from 4,800 peoplemeters to 7,000. With credible viewership data now available for 77 more towns, broadcasters believe they are justified in demanding a rate hike. But media planners, who work on the basis of cost per rating point (CPRP) method, instead of cost per thousand (CPT) currency, clearly have other ideas. “If we followed CPT, affecting a rate hike on the increased TV household would have been no problem at all, but given the fact that the CPRP system still continues, it will not be a very easy task,” said a media planner. “The Indian Broadcasting Federation (IBF) and the Advertising Agency Association of India (AAAI) are having continuous meetings on how to take the CPT currency forward, and once it is officially stipulated, we will see the transition into the CPT mode,’’ said Mr Chakraborty. However, by all accounts, this will be fought tooth and nail by media agencies and advertisers.

Courtesy: EconomicTimes

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Hyundai joins Maruti in casting doubts over Rs 1-lakh car

Echoing scepticism of market leader Maruti over Ratan Tata’s ambitious Rs one-lakh car, Korean car maker Hyundai on Tuesday said it had doubts about the success of the project. “I want to wish the proposed players (who are making Rs one lakh car) the best of luck...(but) I have a lot of doubt,” Hyundai Motor India MD HS Lheem said. Lheem was responding to a query whether HMIL had any ambitions for such an ambitious venture. “We don’t have any plan to enter into the Rs one lakh car segment,” Lheem added.

Courtesy: EconomicTimes
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Reebok sues Nike for patent infringement

Reebok International said on Tuesday that had sued rival Nike, which it claimed had infringed on a patent for its collapsible shoe technology. Reebok, which is owned by German company Adidas, said 11 of Nike’s styles for men and women infringed on the technology that allows shoes to collapse for travel or packaging purposes. Those shoes are marketed under the ‘Free,’ ‘Free Flex,’ ‘Free Zen & Now,’ ‘Free Trainer’ and ‘Free Trail’ product names. The lawsuit was filed in US District Court for the Eastern District of Texas.

Courtesy: EconomicTimes
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'Golden handcuff' awaits retail execs

Upsurge in poaching of senior managerial talent in the retail segment has propelled leading retail chains to churn out attractive retention packages for star performers. Leading retailers like Future Group, Reliance Retail, Ebony and even RPG Retail have either worked out or are in the process of evolving innovative ‘golden handcuff’ schemes to reduce frequent top level churns. Simply put, ‘golden handcuff’ in HR parlance means rolling out special employee retention or loyalty packages that bind employees emotionally and/or monetarily to the company. For starters, Kishore Biyani’s Future Group has worked out such an innovative scheme for providing ‘security’ to the top three levels and their family members. The group’s flagship Pantaloon Retail India has tied up with insurance companies - MetLife India and Bajaj Allianz General Insurance - to insure their employees’ cost-to-company (CTC) in case of an untimely demise. This means, in case of an employee’s untimely demise, the family will continue to receive his monthly CTC for the balance years of service till his retirement age. While the scheme has been doled out for Pantaloon Retail India’s top three management levels, the group plans to roll out similar packages to all the employees across the board. Incidentally, the group has on its payroll some 17,000-odd employees till date. Company officials declined to divulge how much Pantaloon Retail would need to provision for such an ambitious mass employee retention exercise. Confirming the development, Mr Biyani told ET: “With this package, we are trying to secure the future of our employees.” Elaborating, Future Group HR-head Sanjay Jog said: “We propose to extend similar packages to other group companies as well and are in discussion with 2-3 insurance companies for the same. Apart from this, we are also trying to understand our employees’ aspirations and fulfil these pro-actively.” Interestingly, all this comes at a time when most of the retail players are rocked by an all-time high attrition rate of nearly 28%. Exit of top management employees on a weekly basis to new retail biggies like Aditya Birla Group and Bharti-Wal-Mart is a regular feature these days. Therefore, the emphasis is on offering retention packages with a mix of monetary and emotional benefits. Ebony has appointed consultants to draw up relative compensation packages in sync with those offered by competitors. “Apart from compensation, we are also trying to create an emotional bonding with employees. The top performers have been given independent responsibilities in the company’s growth plans as well as cross-functional roles,” Ebony Retail Holding CEO Lalit Kumar said. This apart, retailers are also speeding up appraisal cycles. “Monetary benefits like half-yearly incentive schemes are becoming more popular. Some have also offered ‘retention bonus’ whereby an employee receives a lumpsum amount of Rs 40-50 lakh after 2-3 years of service,” said Mr E Balaji, COO at Ma Foi Management Consultants, an employee recruitment firm. Reliance Retail is also believed to be working out an employee-retention package. A senior company official said the package, being worked out by the company’s talent design team, is likely to be ready in a week’s time.

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

Retail biggies dangle carrots to retain talent

AN UPSURGE in poaching of senior managerial talent in the retail segment has propelled leading retail chains to churn out attractive retention packages for star performers. Leading retailers like Future Group, Reliance Retail, Ebony and even RPG Retail have either worked out or are in the process of evolving innovative ‘golden handcuff’ schemes to reduce frequent top-level churns. Simply put, ‘golden handcuff’ in HR parlance means rolling out special employee retention or loyalty packages that bind employees emotionally and/or monetarily to the company. For starters, Kishore Biyani’s Future Group has worked out such an innovative scheme for providing ‘security’ to the top three levels and their family members. The group’s flagship Pantaloon Retail India has tied up with insurance companies MetLife India and Bajaj Allianz General Insurance to insure their employees’ costto-company (CTC) in case of an untimely demise. This means, in case of an employee’s untimely demise, the family will continue to receive his monthly CTC for the balance years of service till his retirement age. While the scheme has been doled out for Pantaloon Retail India’s top three management levels, the group plans to roll out similar packages to all the employees across the board. Incidentally, the group has on its pay roll some 17,000-odd employees till date. Confirming the development, Mr Biyani told ET: “With this package, we are trying to secure the future of our employees.” Elaborating, Future Group HR-head Sanjay Jog said: “We propose to extend similar packages to other group companies as well and are in discussion with two to three insurance companies for the same.” Interestingly, all this comes at a time when most of the retail players are rocked by an all-time-high attrition rate of nearly 28%. Therefore, the emphasis is on offering retention packages with a mix of monetary and emotional benefits. Ebony has appointed consultants to draw up relative compensation packages in sync with those offered by competitors. “Apart from compensation, we are also trying to create an emotional bonding with employees. The top performers have been given independent responsibilities in the company’s growth plans as well as cross-functional roles,” Ebony Retail Holding CEO Lalit Kumar said. This apart, retailers are also speeding up appraisal cycles. “Monetary benefits like half-yearly incentive schemes are becoming more popular. Some have also offered ‘retention bonus’ whereby an employee receives a lump sum amount of Rs 40-50 lakh after 2-3 years of service,” said Mr E Balaji, COO at Ma Foi Management Consultants, an employee recruitment firm. Reliance Retail is also believed to be working out an employee retention package. A senior company official said the package, being worked out by the company’s talent design team, is likely to be ready in a week’s time.

GOLDEN HANDCUFF

• Pantaloon Retail has tied up with insurance companies to insure their employees’ CTC in case of an untimely demise

• Ebony is trying to create an emotional bond with employees and is giving top performers independent responsibilities

• Reliance Retail’s talent design team is working out a retention package and it is likely to be ready in a week’s time

Courtesy: EconomicTimes

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

Cup of woes? But, Neo plays on for more anchor sponsors

FOR all the hoopla about brand-wariness with cricket, Neo Sports begs to differ. The cricket broadcaster, which roped in Hero Honda and Perfetti earlier, is looking at more anchor sponsors in the telecom and retail banking category to garner up to Rs 1,000 crore from all its anchor sponsors. The company has already raised about Rs 300 crore from Hero Honda and Perfetti. Neo Sports CEO Shashi Kalathil told ET, “We are looking at signing at least two more anchor sponsors. At least one of them would be from the telecom sector, while the other would be retail banking segment.” These sponsors would have access to about 20-25% of the channel’s total inventory. According to market sources, Hutch and Barclays may join the anchor sponsor bandwagon. However Mr Kalathil declined to comment. Meanwhile, Neo’s parent company Nimbus has paid Rs 400 crore as the first instalment of bank guarantee to BCCI. The sports broadcaster has also appointed KPMG as its independent auditor to quantify the loss it will incur due to nonencryption of cricket feed by Prasar Bharati. Nimbus Communications executive chairman Harish Thawani said, “ The independent auditors appointed by BCCI and Nimbus will quantify the fee reduction we should be given. The independent auditor will quantify a current compensation component and would also calculate compensation component for future years.” Talking about the speculation that broadcasters like Sony are looking at buying stake in Neo, Mr Thawani said, “In the first quarter meeting of Neo Sports’ board, the members felt that the channel has enough funding for immediate needs and will decide future course of action by the second or third quarter.” In January, 3i, Cisco and Oman Investment Fund (OIF) pumped in Rs 552 crore in Nimbus Communications which would be largely deployed to fund sports acquisitions and develop global sport events. In September last year, Nimbus Communications launched cricket centric sports channel Neo Sports and noncricket sports cahnnel Neo Sports Plus. It made Star India its distribution partners and is now pushing for better connectivity for the India- Bangladesh cricket series in May. For Neo Sports Plus, the company is looking at leveraging sports like soccer, badminton and cycling.

Courtesy: EconomicTimes
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Consumer behaviour in healthcare witnesses sea change

THERE is anold saying, “Health is better than wealth” and I think more and more people are making it their mantra. It is quite evident today that people are more conscious of their health than ever before. Board ante’room conversation often borders on the ubiquitous topic of the growing incidence of ‘Lifestyle Diseases’ and how to manage them. Much of this awareness has been brought about by the changing lifestyle, work patterns and food habits that have led to an alarming increase in common ailments like hypertension, diabetes, high cholesterol et al. Like in many other countries, India’s healthcare sector is primarily driven by prescription drugs followed by other categories such as over-the-counter (OTC) medicines, self-diagnosis products and general wellness products. Doctors are our soul mates when we fall sick. They prescribe a pill and we have it. How often do we question? Till some years ago, patients chose to remain oblivious of what was being prescribed to them. Some had, in fact, very little knowledge about their health situation and available options of management. As a result, the physician’s prescription was respected beyond doubt. But what happens today is somewhat different. For a moment just recall your last visit to a doctor. Did you ask why the particular medicine was being prescribed? Is there an alternative that can be taken only once a day and not thrice? What if there are any side effects? And so on. Today’s consumer is much more educated and informed, thanks to the information age and easy web access. Although consumers cannot be cavalier about medicating themselves in serious conditions and should heed the advice of their doctors, they are beginning to have a larger share of voice and increasingly enunciate their opinions about drug efficacy, safety, compliance and management. Like in automobiles, FMCG and other industries, word-ofmouth is becoming extremely important as consumers don’t shy away from talking openly about their ailments and even have a peer or support group to voice their concerns and discuss their problems. The privatisation of healthcare is also acting as another change agent. Another emerging trend is that, selftreatment of recurring minor ailments is becoming common practice across the urban/rural terrain. Busy consumers want to reduce the cost and inconvenience of consulting doctors, and this has led to a growing demand for OTC products. This is a result of increasing consumer confidence boosted by the comfort that a host of large reliable pharma companies have ventured into this segment. In fact, some of the best-known brands — Revital, Becosules, Digene and Calcium Sandoz — fall under this category. There is also a burgeoning interest in the preventive/wellness segment. A large segment of the population follows the ‘prevention is better than cure’ philosophy and use health supplements. They don’t mind exploring ayurvedic and natural options. An interesting aspect of changing consumer behaviour is that with greater patient involvement, a number of new medical treatment areas have evolved. These areas offer ‘feel good options’ like aesthetic dermatology, obesity management, figure enhancement et al. There is a growing segment of population which doesn’t mind paying for something like a laser treatment or anti-scar therapy. That’s not all. On the pharmaceuticals side, there are drugs available that help in improving the quality of life of patients. In this category, the most common products are for osteoporosis, Alzheimer’s disease, osteoarthritis etc. Increasingly, prevention as a strategy of healthcare management is being equally accepted alongside fast developing segments such as vaccines. With the dawn of the new empowered patient reality, companies are preparing themselves to meet the growing demands of consumers. This change has lead to sharper focus on doctors with various activities aimed at clinical trials to ensure experience of the medicine for efficacy and safety. The changes occurring on the consumer landscape have transformed the outlook of the pharma companies as they now own therapy areas such as hypertension, diabetes, depression, cholesterol management and cancer management among others. With all these catalytic changes, one thing is certain, that the health of our nation will definitely improve as proclaimed by an American writer famous for his pithy and homespun humour: “The health of nations is more important than the wealth of nations.”

(The writer is CEO & MD, Ranbaxy Laboratories Limited)

Courtesy: EconomicTimes
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Cars, bikes sales on double digit lane

BIG auto, including both car and bike makers, ended the fiscal year with double digit growth figures. However the stats weren’t as heady for motorcycle makers as they were for car companies. Market leader Maruti Udyog sold 6.32 lakh units in the domestic market for the fiscal 2006-07, clocking a growth of 21%. Exports for the fiscal year stood at 39,295 units. The car biggie’s cumulative sales for the fiscal ending March 2007, were up 20% and stood at 6.74 lakh units as against 5.61 lakh units. Fellow Japanese major Honda Siel grew its fiscal year sales tally by a little more than 43%. The company sold 61,327 units in the fiscal year 2006-07 as compared to 42,727 units in the fiscal year 2005-06. The company’s monthly sales grew by a little less than 39%. Czech auto maker Skoda Auto’s March sales were up 10% while General Motors’ sales for the month were up 12% as it sold 4,542 units. Arch rival Ford’s monthly sales were however, down 9% and stood at 5,382 units. The auto-maker’s sales for the fiscal year ended March 2007 grew by 45%. Ford sold 41,797 units in 2006-07 as compared to 28,840 units in the fiscal year 2005-06. Two-wheeler manufacturer Hero Honda’s total sales grew by 11.2% and stood at 33.36 lakh units for the fiscal year ended March 2007. The company sold 2.77 lakh units in March as against 2.72 lakh units in March 2006. Rival Bajaj Auto’s cumulative sales for two-wheelers were up 18%. The company sold 23.9 lakh two-wheelers in the fiscal year ended March 2007. The company’s motorcycle sales for the fiscal year grew by 24% and stood at 23.76 lakh units.However Bajaj Auto’s March sales were down by 10% and it sold 1.68 lakh units of two-wheelers. Chennai-based TVS Motors closed the financial year 2006-07 with 15% growth in the sale of motorcycles selling 9.24 lakh units.

Record sales by Toyota Kirloskar

Toyota Kirloskar Motor (TKM) has posted record sales of 51,346 vehicles in FY 2006-07, reports Our Bureau from Bangalore. The company has registered a growth of 26% in Jan-Mar 2007 compared to same period last year. In March 2007, the company sold the highest number of cars in a month, crossing sales of 6,600 units. “This is an indication that customers are definitely seeing value in ride comfort and long term reliability of the Corolla,” said TKM managing director A Toyoshima.

Hyundai India launches Getz Prime

In a bid to make the most of the excise sops, Hyundai India on Monday launched its second generation hatchback Getz Prime, reports Our Bureau from Mumbai. The new Getz also joins the 1.2 litre Chevy U-VA in using the excise benefits, taking the Maruti Swift head-on.

Courtesy: EconomicTimes

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Spencer’s retail likely to unveil wholesale format

RPG GROUP led Spencer’s Retail could look at foraying into wholesale trading business in the near future. The retail chain is likely to unveil a business-to-business wholesale trading model once its sourcing operations attain maturity on the back of rapid store expansion. Speaking to ET, president of Spencer’s Retail JH Mehta said: “We are focused on scaling up our operations to 2,000 stores over the next two years. With this, we will be well placed to launch wholesale trading format as it gives our sourcing capabilities the necessary strength.” Interestingly, the B2B model of Spencer’s is expected to focus on overseas retail chains catering to Indian diaspora and dealing in Indian staples. It would also look at tapping the growing sectors like hotels and hospitality for supplying fresh fruits and vegetables, for instance. Spencer’s plans to invest over Rs 1,200 crore till 2009 to develop its store footprint. Out of this, about 70-odd would be hyper stores with upwards of 25,000 sq ft area. The company currently has 125 stores with eight hyper outlets included. The retail chain’s revenue is expected to progress from Rs 600 crore to Rs 2,000 crore by 2009. To support this expansion, Spencer’s is in the midst of setting up a robust supply chain with sourcing hubs for fresh fruits and vegetables and staples across the country. Currently, it has one sourcing hub in Hoskote (Karnataka) and one in Tamil Nadu for fruits and vegetables. For staple it has established a sourcing hub in Andhra Pradesh and Lattur (Maharashtra). To cater to the northern market Spencer’s plans to launch a sourcing hub in Nasik and also somewhere near Panipat or Haridwar. Each of this sourcing hub in turn is linked to the distribution centre in each cluster. “Basically, we have adopted a cluster model under which each cluster in the state will have 50-60 stores and some states like Andhra Pradesh could have more than 2 clusters. Overall Spencer’s will have about 30 such clusters,” said Mr Mehta.

Courtesy: EconomicTimes
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GM to unveil two new concept cars in China

General Motors will unveil a new pair of concept cars in its Chevrolet and Buick lines at this month’s Shanghai Auto Show, GM China said Monday. The cars will be among 40 vehicles the company and its Chinese joint venture partners plan to display as GM increasingly looks to China to offset sluggish sales and crippling legacy costs elsewhere. GM said the concept cars include the latest version of the Chevrolet Volt, the company’s extended range electric passenger vehicle which was introduced in January at the North American International Auto Show in Detroit. It said the Buick model was developed at GM’s design and engineering centre in Shanghai and would point to “possible future directions for the brand worldwide.” GM opened its first factory in China in 1998 and now operates seven joint ventures and two wholly-owned foreign enterprises in the country. Along with five vehicle factories and one engine plant, the company has also launched an auto financing venture and a chain of dealerships. Its China sales last year rose 32% to 876,747 vehicles, with joint venture Shanghai General Motors becoming China’s top-selling domestic automaker with 365,400 vehicles sold. GM said it also plans to display minivans and compact cars produced by its SAIC-GM-Wuling joint venture set up in 2005. Wuling’s vehicles have become a mainstay of the company’s China business, accounting for more than half of GM’s total sales in China last year. GM said models from the company’s German Opel brand, Buick, Cadillac, Chevrolet and Saab will also be featured at the show, which runs April 22-28.

Courtesy: EconomicTimes
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AAAI’s Goafest gets positive response from industry

Goafest, the two-day advertising festival organised by the Advertising Agencies Association of India (AAAI) has garnered 3,212 entries from all over the country. This puts it a tad ahead of the Abbys, the festival of the Ad Club of Bombay, which had 3,000 pieces of work entered into competition this year. Over 1,200 delegates have already signed up for the festival and more than 2,000 people are expected to turn up in Goa on April 20, 21.

Courtesy: EconomicTimes
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Idea reduces ISD rates by 80 paise per minute

After Airtel and Hutch, cellular operator Idea, an Aditya Birla Group company, has lowered ISD rates by 80 paise per minute. Idea consumers will now have to pay Rs 6.40 per minute for calls to the US, Canada, Europe and Hong Kong instead of the earlier Rs 7.20 and Rs 9.19 for other destinations instead of Rs 9.99 earlier, a company statement said on Monday. To rest of the world (II), consumers would have to pay Rs 49.20 per minute instead of the earlier Rs 50. Hutch and Bharti Airtel had reduced ISD rates from March 31 by 80 paise per minute, following TRAI’s decision to reduce by 37% the Access Deficit charge — a levy paid by private operators to state-run BSNL for rolling out telecom services in rural areas.

Courtesy: EconomicTimes
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Countries with Highest Beer sales

Courtesy: EconomicTimes

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Lanco bags orders worth Rs 102 crore

Lanco Infratech has bagged three projects worth Rs 102 crore, according to the company’s notification with the BSE on Mon-day. These include Rs 55-crore project for the upgradation of primary health care centres in Karnataka, Rs 41-crore construction project from the Government Medical College, Belgaum, Karnataka and Rs 6-crore project from Chennai Metropolitan Water Supply and Sewerage Board. With these, the order book of Lanco’s construction and EPC division stands at Rs 5,000 crore.

Courtesy: EconomicTimes
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Bacardi Martini hires TME for media duties

Bacardi Martini has moved its media duties from Universal McCann to TME (The Media Edge) New Delhi, the media agency from the Young and Rubicam (Y&R) stable. The total size of the account isn’t known. In a category where advertising in mass media is highly restricted, most of the marketing activities and spends for Bacardi Martini will have to be concentrated in the out-of-home space. Says TME president Anupriya Acharya: “One of the key deliverables that the client was looking for is the ability to bring alive a sharply-defined marketing and communication task in the actual lives of the consumer. Bacardi Martini India’s controller - marketing Vinay Golikeri added: “TME exhibited a strong understanding of consumer-media insights as well as ideas on new emerging media.”

Courtesy: EconomicTimes
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Gold, oil could hold clues to future stock slides

Both The Commodities Are Linked By A Ratio That Has Moved In A Narrow Range Historically

INVESTORS rattled by a burst of volatility in global stock markets this month could find clues about future stock slides by looking elsewhere: at gold and oil. The two key commodities, one traditionally a safe haven for investors at times of stress and the other an engine of global industrial growth, are linked by a ratio that has moved in a narrow range historically. In other words, the number of barrels of oil you need to sell to buy an ounce of gold remains roughly constant for long stretches of time. Gold tends to move in line with oil because high oil leads to inflation, which drives people to buy gold as a hedge, goes the argument. Analysts are wary of linking gold, oil and shares, because shares have risen in the recent past despite a rise in oil prices that should be bad for companies and hurt growth. But if one views gold as a proxy for product prices, and oil as an indicator of input costs, the gold-to-oil ratio takes on a different significance, analysts say. The link could be predictive, if the past four years are any indication: a dip in gold-to-oil has coincided with a fall in share prices, says a strategist. “In periods of risk aversion, the gold-to-oil ratio tends to go down, in line with share prices,” said Lehman Brothers strategist Fred Goodwin. “In equity corrections since 2003, gold tended to go lower with equities. When markets rallied, gold went up faster than oil; when they fell, gold went down faster.” In the period from February 27 to March 5, when global stock markets fell 6.5% — the worst of a stock slide prompted by fears of a crackdown in speculation in China — gold fell 7.5%, or $52 an ounce. Oil moved down 2.2% in that week. On February 27, the gold-to-oil ratio slid to 11.05 from 11.19, and it slipped below the 11-mark in following days, recovering to that level only on March 12, the day a stuttering share recovery peaked. The bigger trend here is that gold has started moving in line with shares, diluting its traditional image as a hedge. The traditional investor view is that gold correlates inversely with what markets are fretting about. If concerns over subprime mortgages worry equity investors, for example, then gold should rise as shares fall. Gold, seen as a refuge for equities investors at times of stress, has been moving in the same direction as shares for the past few years. This has led some analysts to conclude that a rise in the price of gold reflects pricing power, or the ability of companies to pass on raw material price increases. This, the argument goes, should lift the price of companies’ shares. “Our view of gold is counterintuitive, because it’s really less of a financial hedge and more of a reflection on pricing power,” said Goodwin. That could explain why, since the beginning of 2003, gold and shares have moved in remarkable consonance. Both gold and the Morgan Stanley index of world stock markets have risen 92%. The rise in gold could be a result of wealth generated from stocks, or in key markets like the Middle East, oil. “Gold is not just a diversifying asset — people buy it when feeling richer,” said Graham Birch, head of natural resources at investors BlackRock in London. “In the Middle East, if something makes people richer, as high oil prices tend to do, they spend more on gold.” Excluding the past two days’ spike due to tensions in Iran, oil has risen more than 90% since January 2003, in line with shares and gold. Analysts say it is too early to write off gold’s reputation as a hedge, and note that shares, which have enjoyed a multi-year bull run, are also moving for other reasons. “Gold has moved due to an indexation with base metals, and oil follows gold. Shares are rising because of good economic growth and strong earnings,” said Franz Wenzel, strategist at AXA Investment Managers.

Courtesy: EconomicTimes
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Made-in-India Hershey chocs soon

FIPB Clears US Co’s 51% Stake In Godrej Beverages For Rs 238 Crore

AMERICA’S largest chocolate and confectionery maker, Hershey, has got the green light from the foreign investment promotion board (FIPB) to acquire a 51% stake in Godrej Beverages and Food for Rs 238 crore. The deal would mark the exit of financial investor IL&FS from the venture while the holdings of the Godrej group and that of an individual investor — A Mahendran, a senior executive with the Godrej group — would come down. The FIPB approval was required since 100% FDI is permitted for manufacturing activities under the automatic route. However, in this case, the foreign company is picking up a majority stake and will become the holding company. The $5-billion Hershey group would be picking up the majority stake through a host of transactions. This would include acquiring the 40% equity held by IL&FS, Godrej Industries and Mr Mahendran as also subscription to fresh issue of capital in the company. Simultaneously, Hershey would license Godrej Beverages and Food some of its trademark rights for a lump sum payment of about $2 million, in addition to royalty payments of 5% for domestic sales and 8% for exports. Post-acquisition, Hershey would hold 51% equity while Godrej Industries would hold 43% stake with the remaining 6% will be held by Mr Mahendran. The deal would value the equity stake of Godrej Industries, a listed arm of the Godrej group, at Rs 200 crore. Godrej Beverages and Food represents the foods and beverages business of the Mumbai-based Godrej group. It was formed last year when Godrej Industries transferred its foods division to another group company, Godrej Tea. The combined entity was renamed as Godrej Beverages and Food. With a turnover of around Rs 400 crore, the company is engaged in categories such as tea, edible oils, health drinks, including soymilk, tomato puree, fruit drinks and bakery fats. Its brand portfolio includes Jumpin range of fruit drinks, Xs fruit juices, Sofit Soymilk, Sofit Ready-to-Eat Cereals, Godrej Tea, Godrej Vanaspati, Cooklite Sunflower Oil and Godrej Tomato Puree. However, the main attraction for Hershey would be the confectionery business where at one shot it would become the largest player in the domestic confectionery market. Godrej Beverages had acquired Nutrine along with its assets in June last year in a deal worth Rs 250 crore from the South-based Reddy family.

SWEET BITE
The deal would mark the exit of IL&FS from the venture while the holdings of Godrej and A Mahendran would come down

Hershey will acquire the 40% equity held by IL&FS, Godrej Industries and Mr Mahendran

Hershey group will license Godrej some of its trademark rights for $2m in addition to royalty payments of 5% for domestic sales and 8% for exports

Courtesy: EconomicTimes
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Gitanjali gets go-ahead to buy 97% in US co

MUMBAI-BASED Gitanjali Gems — the company engaged in manufacturing, retailing and exporting of diamonds and jewellery — has obtained government’s approval to acquire a 97% stake in the US-based jewellery retail major Samuels, in a deal valued at around Rs 98 crore. In a cash-plusstock transaction, Gitanjali will acquire the shares held by two US-based shareholders — B III Capital Partners, LP and B III-A Capital Partners, LP — for $12.3 million (or about Rs 52.92 crore) and by issuing shares of about Rs 45.07 crore to these two shareholders in Gitanjali Gems. Gitanjali — the Rs 3,000-crore gems and jewellery major — has already paid $9.3 million (or 84%) of the total amount of $12.3 million (or 97%) to the two US-based shareholders in December 2006. It is expected to buy the remaining $3 million or 13% stake from B III Capital Partners and B III-A Capital Partners in two transactions over a period of three years. The first transaction is likely to be completed in 12 months at a total price of $1.5 million for acquiring 6.5% stake in Samuels, and the second one would be over in another 24 months for a similar amount and stake. Apart from the cash transaction, Gitanjali Gems will be issuing about Rs 45.07 crore worth of its shares to B III Capital Partners and B III-A Capital Partners. The company has also issued $10 million (or Rs 44 crore) worth of promissory notes to the US-based shareholders as a security for the Gitanjali Shares. Since the stock purchase by these two US shareholders amounts to FDI, Gitanjali had sought approval from the Foreign Investment Promotion Board (FIPB). The Board has cleared Gitanjali’s proposal at its recent meeting, official sources said. Gitanjali will issue 2,33,107 shares of Rs 10 each at a premium of Rs 280 in favour of the B III-A Capital Partners and 1,320,943 shares to B III Capital Partners at the same price and premium. The value of these fresh shares, at the final price of Rs 290, will be about Rs 45.07 crore. The jewellery major would issue these shares to the two US-based shareholders in lieu of their entire 97% shareholding (comprising 1,900 shares) in Samuels, government sources said. The FIPB has approved Gitanjali’s proposal subject to the condition that the company will not undertake retail trading in any form, sources said. Gitanjali Gems’ current paid-up capital is Rs 58.998 crore which comprises of 5,89,98,495 shares of Rs 10 each, according to the information provided by the company to the FIPB. Gitanjali Gems, the flagship company of the group, has brands like Nakshatra, Asmi, Gili, D’Damas, Gold Expressions and Vivaha Gold.

Courtesy: EconomicTimes
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Parryware pot comes to O&M

IT IS a lock, stock and barrel movement of the Parryware brand, part of the $1.6-billion-plus Murugappa group, to ad agency Ogilvy and Mather. This means the 40-year-old association with brand-builder JWT has come a full circle. Parryware’s intention to create a noise in the market has been wowing the advertisement circles in the south. Close on the heels of its pact with the Spanish sanitary giant Roca, Parryware, attempting to address future challenges, has given the task of managing the multi-brand to Ogilvy. The dress-up of newer campaigns for the sanitaryware major will mean a top-to-bottom brand spend of Rs 25 crore to Rs 30 crore a year. Confirming the development, Parryware CEO K E Ranganathan told ET “It is all about brand integration and the need to infuse fresh thinking. With Roca as our partner, we would like to offer to our customers an integrated and wholesome package, catering to the aspirations.” On choosing O&M over other agencies, he said Ogilvy had come out with a brilliant concept, connecting the emotional and the aspirational aspects of the brand. “Basically, now our approach has got a multinational character and our challenges are different. Domestic market would be our major focus and the new marriage would provide a fresh character to the brand,” he added. The current market size of the Indian sanitaryware business is estimated to be Rs 1,300 crore, growing annually at 12%. The market size of the premium bathroom segment alone is Rs 100 crore, growing at 25% each year. Parryware as market leader commands 46% marketshare in the domestic sanitaryware market. End-December, Parryware began the process of asking agencies to pitch in and by the second half of January, the presentations were made by Ogilvy & Mather, Rediffusion, Mudra. Old brand builder JWT too was asked to pitch. “We got the unofficial confirmation sometime in February. The company felt the necessity to include a fresh perspective given its new status owing to the joint venture with Roca,” O&M president Prakash Dharmarajan told EThere on Saturday. In a competitive market, the real estate boom has created a clutter of imported brands and everyone aspires to make the most of it. “Creative is an integral part of our communication. We would be different and our challenge is to provide cutting-edge work. This would also mean adding creativity,” he added.

Courtesy: EconomicTimes
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T Malaysia, Spice to launch co-branded calling cards

SPICE Telecom and Telekom Malaysia (TM) will soon launch co-branded international calling cards in India. Spice also plans to leverage TMI’s roaming arrangements and networks across Asia to offer uniform outgoing call tariffs across the region. This concept of a common tariff rate will also apply to roaming customers, CMD Dilip Modi told ET. Currently, operators who offer calling cards have different tariff and roaming rates for different countries in Asia. (Telekom Malaysia (TM) currently has a 49% stake in Spice, but this will fall to 39.2% after the mobile company’s upcoming IPO.) “TMI has over 30 million customers in the region. We are looking at how best we can work together and leverage TMI’s vast assets in the region. Cheaper calling within this region, co-branded calling cards, uniform roaming packages across different countries are some of the immediate initiatives,” Mr Modi said. Spice Telecom, which is close to receiving both nation and international long distance (NLD/ILD) licenses, is looking at riding on Telekom Malaysia’s ILD infrastructure to tap this market. “TM is a consortium member of all submarine cable systems that land in Malaysia and has access to capacity in other submarine cable systems globally. Also, TM has co-location facilities at major data centres and tele-houses. Due to our relationship with TM, we can access these cable systems and facilities. Also, up on receiving the ILD license, we expect to be able to benefit through high volume commitments TM has in the Asia-Pacific region,” Mr Modi added. The move will also help TM tap the enterprise and managed services businesses in India. “We have huge submarine cable assets, which are among our strengths. We are keen to offer global connectivity to India,” TM’s International CEO Yusuf Annuar Yaacob had earlier told ET. “Spice, riding on our undersea cables, can be a very competitive player in the ILD business,” he had added.

Courtesy: EconomicTimes
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