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