Nokia launches new E-series models

Mr Vineet Taneja, Director, Marketing, Nokia India, launching the new E72 in the Capital. - Kamal Narang

Nokia today unveiled the new addition to its E-series range, Nokia E72, a device tailor-made for business and personal messaging.

Nokia's latest smart phone comes with push consumer email service, messaging and onboard clients for Mail for Exchange and IBM Lotus Notes Traveller. The Nokia E72 will be available in the market from December 1 in two colours — Zodium Black and Topaz Brown at a price of Rs 22,989.

Mr Vineet Taneja, Marketing Director, Nokia India said, “Today consumers are looking for solutions that give them flexibility to manage time in a way that they can juggle and balance both work and life. They are looking for ways to connect with their friends and peers while on the go which has led to proliferation of email on mobile.”

Tatas may launch electric Indica by early 2011

Current talk: Mr P.M. Telang, Managing Director, India operations, Tata Motors

New Delhi, Nov. 24 With many automakers planning to launch eco-friendly vehicles for the domestic market, Tata Motors said on Tuesday that it may launch the electric version of the small car Indica in early 2011.

The company has been developing the car with Norway-based Miljøbil Grenland/Innovasjon, in which it has a 50.3 per cent stake. It plans to start a feasibility study for this in the next year and may launch the car simultaneously with the European launch.

“It will be available for India at around the same time as the global launch. It will be launched in Norway, Denmark and the UK in 12-14 months. We’re evaluating the option of an Indian launch, but are still not sure if the electric vehicles (EVs) are the best option for the country,” said Mr Prakash M Telang, Managing Director, India Operations, Tata Motors.

He further added that the main problem is the high cost attached to EVs, which is mainly because of the expensive batteries. “It will be 70-150 per cent more expensive depending on batteries. While lead acid batteries are not good enough, lithium-ion is too expensive. We have to look into the cost equation,” he said.

Responding to sales outlook for the remaining half of the fiscal, Mr Telang said that the shift from Bharat Stage III emission norms to Bharat Stage IV in April, may lead to good sales in the fourth quarter.

“There is optimism – I see good sales in the fourth quarter. In commercial vehicles (CVs), there may be pre-buying because of the change in emission norms. Even passenger cars may see better volumes, but not as much as CVs since price escalation will not be as much in them. This has been the experience in most countries across the globe,” he said.

Automakers and especially commercial vehicle manufacturers are expected to raise prices from April, because of the newer engines that companies will have to deploy on their vehicles in order to meet the new emission norms.

When asked about the status of the Nano’s Sanand plant, Mr Telang said that the company is producing around 3,000-4,000 units of the low-cast car a month at the Pantnagar facility and it will start the trial production at Sanand by the fourth quarter of the fiscal. The Sanand plant will have an initial annual capacity of 2.5 lakh units a year, which will later be increased to 3.5 lakh units. The Pantnagar plant mainly produces the light commercial vehicle (LCV) Ace.

“We’re striving between the Ace requirement and the Nano. The plant has a capacity to produce 1.5 lakh Ace LCVs a year,” he said.

Tata Teleservices launches 3G-enabled TV services

Television on the move: Mr Anil Sardana (left), Managing Director, Tata Teleservices, and Mr Lloyd Mathias, Chief Marketing Officer, at the launch of Photon TV in the Capital on Wednesday. — Ramesh Sharma

New Delhi, Dec. 2Now you can watch television on your laptop while moving in your car. Tata Teleservices has launched Photon TV, a service that allows its high speed Internet subscribers to watch live television channels on their laptops or PCs. Existing subscribers who have the Photon Plus USB card from Tata Teleservices can avail themselves of the service by downloading an application.

The pricing is based on a subscription model. It is currently available in three different subscription options – Rs 4 a channel per month; Rs 29 a month for My Combo (a bouquet of 10 channels); and Rs 75 a month for all 40 channels on offer. In addition, the subscriber will have to pay for usage as per the subscriber's data plan. Viewing TV consumes about 1.2 MB per each minute.

For example, if a subscriber has taken the Photon Super Surf plan for Rs 1,500 a month, they can watch TV for up to 15 GB (enough for about 160 hours of TV viewing a month) without any additional fee. But usage beyond 15 GB will cost 50 paise per MB. Tata Teleservices is deploying third generation technology to offer the service on its existing spectrum. Tata Photon Plus users get live TV feed from various sports, news, entertainment and regional channels, and to watch recorded TV shows from the library (viz Coffee with Karan, Zoom, Pogo, etc), movies, music and videos on demand.

“We have moved mobility another few giant steps along the evolutionary path, with the launch of Photon TV today. This innovative product underlines the technological superiority of the Photon technology, which has become the rage amongst Internet-users,” Mr Anil Sardana, Managing Director of Tata Teleservices Ltd, said.

Ties up with Apalya

The company has partnered with Apalya Technologies for putting together the platform including dealing with content providers.

“Today, with the technological innovation and breakthrough in mobile broadband services space, we have again taken the first-mover advantage by launching Photon TV, an innovative application and service that will appeal to a wide cross-section of our user base,” Mr Lloyd Mathias, Chief Marketing Officer of Tata Teleservices, said.

Bhimas enters kitchen spices market

The Minister for Roads and Buildings, Ms Galla Arunakumari, and the TTD Trust Board Chairman, Mr D.K. Audikesavulu (left), at the launch of kitchen masala range of products by the Tirupati Bhimas Spice and Foods in Tirupati on Sunday. The Bhimas group head, Mr K.V. Ranganathan, is also seen. - K.V. Poornachandra Kumar

The Tirupati-based Bhimas Group of hotels has launched a range of kitchen spices with brand name ‘Tirupathi Bhimas'.

“The brand has already been popularised in the southern States and the product is ready for launch in the four southern States, Pondicherry and the Andamans,” Mr K.R. Hariharan, Director (Operations), Tirupati Bhimas Spice and Foods said here on Sunday.

With the tagline ‘Every kitchen will now be a Bhimas Kitchen', the products come in the sizes of 100g standy pouches, 50g cartons and 15/20g single-use mini packs.

The South Indian dishes comprise Sambar powder, Rasam powder, Kara pulusu, Bisibelabath mix, Dal powder, Idli chilli powder and Andhra curry, while the ‘Chaat' masala delicacies include Chana masala, Pav bhaji masala, Tandoori masala. Rose milk and Badam milk form part of the ‘hot and cold flavoured drinks' segment.

The Roads and Buildings Minister, Ms Galla Aruna Kumari, formally launched the products into the market.

The Tirumala Tirupati Devasthanams (TTD) board Chairman, Mr D.K. Audikesavulu said the board would consider use of the spices for preparation of meals in the ‘Annadanam' canteen at Tirumala, where tens of thousands of pilgrims are fed everyday.

The Group Head, Mr K.V. Ranganathan, said that the range of products would keep its promise of tickling the taste buds of Bhimas' die-hard customers.

Coca-Cola India unveils ‘Burn' car

Close on the heels of its energy drink's launch in India, Coca-Cola India on Monday announced the promotional campaign to accompany the launch. As part of the campaign, Coca-Cola India has tied up with car designer Dilip Chhabria, to bring out exclusively designed cars which would ply on the roads of Delhi, Mumbai and Bangalore to connect with the target audience.

Coca-Cola's energy drink ‘Burn' was launched last week and the car has been designed to capture the essence of the brand. Mr Ricardo Fort, Vice-President, Marketing, Coca-Cola India, said, “Innovation has always been the hallmark of Coca-Cola's business strategy in India. The styling of the car confirms to the brand imagery and association that is targeted at socially active and adventurous young adults. This is the first country where we are using a specially designed car for promotion of the brand.” He added that the promotional campaign is a long-term campaign. The car has been designed by Mr Dilip Chhabria's design studio team and built on the Matiz platform. Mr Fort said, “In other countries, we took an existing car and enhanced it further. This is the first time we have built it from scratch.”

Mr Fort added that along with the on-road promotional campaign, Coca-Cola India is developing digital activities for the brand Burn. “Our media communication plan for the brand entails the digital medium, out-of-home activities and the Burn car promotional campaign.

“We believe that the time is right now to enter the market for energy drinks and there is a critical mass of customers for our product. We will be targeting the young generation who have an active night life and need energy to go on throughout the night.”

Keki Mistry to head HDFC

Mr Keki Mistry

Housing finance major HDFC Ltd has announced changes in the top management.

A company press release today said Mr Deepak Parekh, Chairman and Chief Executive Officer, would step down from his executive position from December 31.

Mr Keki Mistry, now Vice-Chairman and Managing Director, will take over as CEO. Mr Parekh will, however, continue as Chairman. He has also been appointed Additional Director with effect from January 1, 2010 till the date of the next Annual General Meeting.

Court allows farmers to reclaim Reliance Power's Dadri project land

In what could be a major setback for the Anil Ambani group, the Allahabad High Court on Friday in effect cancelled the acquisition of 2,500 acres of agricultural land for the group's Rs 25,000-crore gas-based Dadri power plant.

The court quashed a notification issued by the Mulayam Singh Government in 2004 that used certain “urgency” powers to acquire the land for the proposed 7,480 MW project. The court said the notification was issued bypassing a provision that was meant to invite objections from farmers.

A Division Bench of Mr Justice Ashok Bhushan and Mr Justice Sudhir Agarwal passed the order acting on a group of writ petitions, filed by “illiterate” farmers and the former Prime Minister, the late Mr V. P. Singh, which claimed the petitioners were “forced to sign on certain documents (regarding land acquisition) and accept the meagre compensation offered by the Collector.”

The Court observed that though the State Government issued a particular notification claiming that the acquisition was carried out for ‘public purpose', the acquisition was instead done for a company.

The Court said though it is mandatory for a company to comply with the provisions of Land Acquisition (Companies) Rules, 1963, it “was not at all done in the present case”. According to the Rules, acquisition of agricultural land should be avoided as it is scarce and therefore cannot be diverted for non-agricultural purposes.

The court said farmers can now refund the compensation received. However, it gave the option to those farmers who have no objections to the acquisition to indicate it and seek exemption from the Collector on refund of the compensation.

Mr K.T.S. Tulsi, senior advocate and counsel for the petitioners, told Business Line that “the High Court has avoided a Singur-like situation. Farmers were determined not to part with their land and they were even willing to die for their land.”

This order would mean that if the Government wants the power project, it will have to acquire non-agricultural land in accordance with the land acquisition laws and by giving adequate compensation, he said. The court said the notification was a “colourable exercise of power by the State Government with an object to by-pass the provisions of” the laws concerned (the Land Acquisition Act, 1894 and the Land Acquisition Rules). On the use of emergency provisions by the State Government, the Court said such powers are used only in extraordinary situations, adding that the State cannot invoke urgency powers as a substitute for lack of care.

Made in India, shipped to China, Thailand

“Trial production of parts has begun for the global platform cars scheduled to debut in China and Thailand next year. The tests have been very successful so far,” Mr Kiminobu Tokuyama, Managing Director and CEO, Nissan Motor India, told Business Line.

It is from the same platform that India will see the rollout of a hatchback, the revamped Micra whose production will be shifted from the UK, in mid-2010.

This will coincide with the launch of cars from the same platform in China and Thailand.

Global platform

The common global platform strategy is part of Nissan’s endeavour to produce a host of cars, be it hatchbacks or sedans, across five countries. Thus far, India, China and Thailand have been identified as key manufacturing locations. “We still have not taken a decision on the other two countries,” Mr Tokuyama said.

Experts, however, believe that there is a good chance of Russia and Brazil qualifying, keeping in line the positive outlook for BRIC (Brazil, Russia, India and China) economies in the coming years.

For instance, Toyota and Honda have, like Nissan, drawn similar big plans for a global platform in the BRIC nations with India tipped to be the launch pad when their cars debut in two to three years.

From Nissan’s point of view, India is a favoured destination for sourcing given the high quality of the vendor base coupled with an effective costing structure.

There are 94 suppliers associated with the Nissan project and more could join the list as the levels of localisation grow in the coming years.

The Japanese automaker has targeted production of one million cars across these five countries, though no specific timeframe has been finalised yet. “India is an important part of the overall strategy and this can be borne by the fact that it has seen the single largest investment from Nissan in 2009, of the overall $3.5 billion earmarked by the company globally,” Mr Tokuyama said.

“We are very proud of our manufacturing plant in Chennai and do believe that India has lots to offer in terms of its quality and efficient manpower. From Nissan’s perspective, it is a win-win business model,” he added.

Vehicle strategy

The vehicle strategy for the country will involve a mix of direct imports and locally produced cars. Following the launch of the new-look Micra in mid-2010, a sedan will follow a year later to be succeeded by “yet another model.”

Nissan has also planned a second car platform for India though work is largely at an exploratory stage right now. “We are carrying out preliminary market research and there is still some way to go. For the moment, we are completely focused on the Micra and building our market share,” Mr Tokuyama said.

While sourcing of parts will be a key part of its strategy, Nissan will also export fully built-up cars from India. These could well head out to Europe (where fuel-efficient cars are now sought after), West Asia and even South Africa which is gradually emerging a favourite for Indian automakers.

However, Mr Tokuyama declined to get into the specifics and confined himself to the fact that numbers would go up from 110,000 units to 180,000 units within two-three years of production ramping up in Chennai.

Nissan’s global ally, Renault had also planned a separate production line in the plant but froze investments following the global slowdown. The French automaker is now likely to use the Nissan platform and produce its own models though no decision has been taken on the matter.

Kiri Dyes MAy acquire DYSTAR

Ahmedabad-based Kiri Dyes and Chemicals (KDCL) is in advanced stages of negotiation for acquiring the Germany-based DyStar Group, the global market leader for dyes and textile solutions that filed for insolvency a couple of months earlier for some of its subsidiaries.

The insolvency filing included DyStar’s sites in Frankfurt, Leverkusen, Brunsbuttel, Geretsried, and Ludwigshafen, according to reports.

“The deal size is estimated to be about ¤100-125 million (Rs 698-873 crore), including the liabilities,” said sources privy to the development. Kiri Dyes has got in a consortium of State Bank of India, Bank of India, Exim Bank and Corporation Bank for evaluation of the deal and has given them the acquisition financing proposal. The deal is expected to be complete by the end of this year.

The BSE-listed company has already raised Rs 150 crore through qualified institutional placements. The company plans to raise the balance amount required for acquisition through a mix of equity and funding through a special purpose vehicle, said sources.

DyStar clocked sales of ¤800 million (Rs 5,440 crore) in the 2008 calendar year. Currently owned by Platinum Equity LLP, DyStar has the parentage of global chemical majors such as Bayer, Mitsubishi Kasei, BASF, Mitsui and Zeneca.

Platinum is exploring strategic alternatives for DyStar, including total sell-off due to growing liabilities, sources said.

Kiri Dyes expressed its intent to acquire Dystar and has signed a memorandum of understanding with Platinum Equity Advisors to this effect in September, sources further said.

Kiri Dyes has also drawn up a restructuring plan for Dystar Group which includes shifting some operations from Germany to the low-cost production base in India. Also, the company has proposed to relocate the headquarters of DyStar from Germany to Singapore.

A top official of Kiri Dyes refused to talk on the matter.

The acquisition, if it materialises, will put Kiri Dyes in the league of integrated textile chemical majors in the world, with over $1 billion turnover, industry sources said. In July this year, Kiri Dyes and China’s Zhejiang Lonsen Group set up India’s largest dye and dyestuff manufacturing facility at Padra near Vadodara. Both players floated a 60:40 joint venture company called Lonsen-Kiri Chemical Industries Ltd to put up a 50,000 tonnes per annum unit, which became operational this year.

The global dyes and intermediates market is estimated at $23 billion and is expected to grow at two per cent per annum. China ranks sixth globally in terms of exports, while India is 16th. The recent withdrawal of tax incentive to dye/dyestuff exporters in China has impacted dyestuff exports from China and created an opportunity for India, industry watchers feel.

L&T looks to outsource power equipment manufacture

With orders for boilers and turbines worth over Rs 25,000 crore on hand, L&T-MHI is scouting for opportunities to outsource.

Officials of L&T have been visiting facilities of domestic boiler manufacturing companies to ascertain if some parts of the equipment can be made there.

Last week, they were in Tiruchi, a fabrication hub where a number of BHEL's ancillaries have surplus capacity. Sources told Business Line that L&T's officials visited six units – Cethar Vessels, GB Engineering, Veesons, Jayram Engineering, Athreya and Emperor Engineering.

“Yes, they came to us,” Mr K. Subburaj, Chairman and Managing Director, Cethar Vessels, said on Monday. “We told them that we are in a position to manufacture boilers up to 2,000 MW of capacity a year.”

The Rs 175-crore Veesons has told L&T it would be able to supply pressure parts (headers, coils and piping) up to 200 tonnes a month.

“Larger units such as Cethar, GB and Veesons have surplus capacity that could be used to service customers like L&T,” Mr B. Pattabhiraman, Managing Director, GB Engineering, said. In 2007, Larsen & Toubro Ltd joined hands with Mitsubishi Heavy Industry of Japan to form two joint ventures – one for producing boilers and the other for turbines. The production facilities are coming up at Hazira, Gujarat. It is learnt that the factories will be production-ready in 2011.

L&T-MHI has secured several orders, which, at a conservative estimate, are worth at least Rs 25,000 crore. The latest order L&T bagged is for a 2x660 MW supercritical unit at Rajpura in Punjab. L&T will form a company to put up the project, which will operate as an independent power producer.

While L&T is yet to announce the order public, a senior official of Punjab State Electricity Board confirmed to Business Line that L&T quoted the least – Rs 2.93 a unit – in the tariff-based bidding project. The boiler and turbine-generator will be supplied by L&T-MHI.

With this, L&T has won orders for the supply of eight sets of supercritical boilers and turbines of 660 MW, across three projects (see table). In addition, it has orders for two turbines of 800 MW, which incidentally, was the first order bagged by L&T-MHI.

It is learnt that L&T-MHI is close to securing another order in Uttar Pradesh for two BTG sets of 660 MW.

With all this, L&T-MHI has the most number of orders for supercritical boilers and turbines – all secured in the last three years.

A spokesman of L&T told Business Line that the lack of manufacturing capacity is of no consequence because the equipment “can come from anywhere”, including Japan.

Japanese car makers to source more components locally

A view of an auto component unit

Japanese car makers such as Maruti, Toyota and Honda are working to help their suppliers increase the localisation content in components to mitigate the increasing cost of imports. Apart from engine and safety related components such as air bags, many of these companies also import a significant amount of steel.

Some of them are also changing their export currency so as to suffer lower foreign exchange losses.

Maruti Suzuki has said that it will buy more components locally to offset any adverse impact of foreign currency fluctuations. “Of the 22 per cent components that we import as a value of our net sales, 12 per cent is imported by us and the remaining by our suppliers. So, we will work with our vendors in localising those components imported by them,” explained Mr Ajay Seth, Chief Financial Officer, Maruti Suzuki India. However, the company does not foresee any major shift in its sourcing pattern for steel as certain grades of steel for cars are not available in quantity and quality in the domestic market.

While till now, the company incurred losses on account of the dollar-rupee fluctuation, from this year, with its exports mainly to Europe, it will have an advantage. “Exports will now be in euro. So, we would have a better position moving forward,” he told Business Line.

Toyota Kirloskar Motor’s Deputy Managing Director, Mr Hiroshi Nakagawa, said, “Currently, Indian currency is weak. Japanese yen is strong. Our counter measure is very clear. We would like to increase the localisation in our cars this year.” Both Honda and Toyota have 50-75 per cent of parts sourced locally while the balance is imported.

A spokesperson for Honda said its import costs had risen by 30 per cent in the past eight months with the rupee depreciating vis-À-vis dollar by 16 per cent and the yen strengthening against the dollar by 10.5 per cent. European car companies seem to be less impacted as the volatility in the rupee against the euro has not been sharp.

“While we do have a strong localisation plan for our models, we are less impacted due to our hedging policy and a relatively lesser fluctuation in rupee vis-a-vis the euro,” said Mr Ashutosh Dixit, GM, Sales, Skoda India.

‘We are looking at categories where we can make a difference’

Vinita Bali, Britannia Industries Ltd’s Managing Director, is on a whirlwind trip to Chennai. She’s in the city to participate in the Foodpro as well as launch Britannia’s new milk drink for children, ActiMind. Bali is gung-ho on the growth of the dairy business and says Actimind is the first in a pipeline of products planned in dairy. Post launch, Bali, a former worldwide marketing director of the Coca-Cola Co, who joined Britannia a little over four years ago, spoke to Brand Line on a variety of issues: the company’s strategy for biscuits to maintain its one-third share of the organised biscuits market, consumer trends and insights driving the company, spiralling commodity prices and its small pack strategy. Excerpts:

You’ve just launched a new brand, ActiMind, a milk drink for kids. Does this new product launch signal that you’re getting aggressive in the milk market?

Dairy is a business that in the last three years has doubled for us. We are looking at a 20-22 per cent growth; it’s tracking to be a Rs 200-crore-plus business. So far, dairy was dominated by our presence in cheese, where we have a 47 per cent share of the market. We made a lot of innovations — we brought in cheese spreads and flavoured cheese cubes apart from low-fat cheese. What we have done with this portfolio is to look at how to differentiate or add more value.

You had a presence in the liquid milk market as well earlier?

We as a company are in the business of brands. We buy a lot of wheat but don’t sell wheat flour, we sell biscuits. We don’t want to be in the business of selling just liquid milk, which is something the company had done earlier, because there is no value addition. There is nothing that we bring to milk that anybody else can’t. So, when we looked at value-added products, we brought in branded dahi. I would say there’s a time in the evolution of categories when consumers make the switch from having to make it at home to going out and buying it. The analogy I would use is that 15-20 years ago, people wouldn’t want to pay for water but today we buy branded water! Consumers today are saying they don’t need to do all that their mothers or grandmothers did at home.

Four-and-a-half years ago when I joined Britannia we made it clear that we were in the business of creating brands that offer an attractive value proposition to the consumer. So we are not about selling a commodity.

As we build our portfolio, we are looking at different categories where we can make a difference. If you look at cheese, for instance, we have low-fat cheese under the Slimz range which has 33 per cent less fat. We are creating this whole proposition called Slimz which takes into account the fact that eating healthy is about eating less fat. In biscuits, for example, we have added micro-nutrients and today, 50 per cent of everything we sell in bakery is fortified.

Is ActiMind the first of many such products in the pipeline for you?

We are looking at several products; this is the first to come to market. The quantity of essential nutrition in macro nutrients is not enough, so nutrient fortification is what a lot of developing economies have done to improve the overall wholesomeness and value of food. We developed ActiMind keeping in mind micro nutrients that are known to improve mental agility. For example, Vitamin B is essential for the brain to utilise the energy of glucose. Vegetarian food has very little choline and iodine. So, the need for micro nutrients is higher in a country like ours. We wanted ActiMind to be literally a one shot drink. The other big advantage is that it has no preservatives, it has a shelf life of six months, and is an ambient beverage so it could be put in kids’ lunch boxes (though it tastes better when cold – but that is a personal preference).

What is the kind of business opportunity you are looking at for this?

It’s a new market we are pioneering. I don’t know the size of the market, it’s not milk but in consumption terms, will compete with milk, it’s not juice but will compete with juice, it’s not a malted food drink, but it could compete with them. It’s a completely new concept, nothing like it exists in the market. We’re calling it a milk-based health drink. To describe it … how do you describe a Coke, it’s unique to itself and it’s a beverage. I would call this a health beverage. The investment has been significant … in crores (of rupees).

Do you see the contribution of non-biscuit brands increasing share?

Of course, that business is growing even faster than biscuits. Four years ago, the non-biscuit portfolio was hardly Rs 250 crore. Today, non-biscuit portfolio is Rs 600-plus crore.

You’ve also squeezed out a huge amount of costs from the system?

In the last four years, we’ve taken Rs 180 crore out of the system. There’s been a lot of wastage reduction, a new manufacturing footprint … there’s not one magic elixir, but a whole host of things that we did. On the revenue side, all the new packs we have launched have different margins by channel and geography. We therefore manage a portfolio that includes a diversity of brands, packs, channels and geographies. We don’t make the same money on our brands everywhere.

What about the competition that is hurtling at you from all sides, not just the biscuit brands?

Just like we are encroaching on their territories they are encroaching on ours. That categories are morphing is not a new phenomenon at all. As consumers move from fried to healthy products, biscuits present a good option as they are more healthy, are baked and not fried. Also, on the other hand, the fact that we have removed trans fats works in our favour. We have created a Rs 300-crore opportunity in personal consumption packs by converting those to an impulse purchase format.

What about Britannia’s Daily Bread business, it’s still making losses?

We have consolidated the business in Bangalore and it’s breaking even. We will go slow and steady in growing the business. We have about eight company-owned outlets, 3-4 franchises and we are also present in some modern trade outlets. In Hyderabad, we are working on a franchisee option.

You have withstood cost pressures and maintained your margins. How?

To put it differently, in a very tough environment, we have maintained operating margins and generated Rs 250 crore of operating cash flow in the first half. On the flip side, I wish we didn’t have to deal with the spiralling cost of commodities. Take sugar, last year it was about Rs 14.50 per kg, now it is Rs 32 per kg.

You are importing raw sugar yourselves now?

The government allowed imports only six weeks ago, so we are importing now. There is no sugar available. India produces 21-22 million tonnes of sugar; this year (expected) 16 million tonnes and we have eaten into our opening stock. The government realised that the only way to restore sanity was to allow import of sugar.

What’s new in your core business of biscuits?

The focus that we brought to what I would call the functional aspects of our business: removing what’s not good for you and adding what is! And, we have not done that on the basis of some regulation, we decided that we were going to remove trans fats and ours are the only biscuits that have no trans fats; we removed 10,000 tonnes of trans fats; we have also fortified our brands with micro-nutrients — iron in the case of Tiger. We are also looking at new opportunities. If you look at Nutri Choice 5 Grain, it has complex carbs such as oats and ragi, a dash of honey as well. We just launched a cracker with ajwain and jeera, which is good for digestion.

The other thing in biscuits is that we are looking at consumption opportunities out of home. We asked ourselves the question: if I am a teenager would I eat something that my mother buys as a grocery item … what would we have to do if we wanted to make biscuits an impulse purchase, like chocolate … and that insight led us to some very interesting things. We launched the four-biscuit pack of Bourbon, for Rs 5; it looks like chocolate, has a chocolatey taste as that’s what Bourbon is all about, and that’s what we call a personal consumption pack, which you can carry along with you. That’s tracking to be a Rs 250-300 crore opportunity for us.

‘Easy to be a good agency, harder to be a great one'

Chris Thomas, Chairman & CEO, BBDO Asia

Chris Thomas, Chairman & CEO, BBDO Asia, was in Mumbai recently to share the findings of a global study carried out by BBDO and its digital arm, Proximity, in 15 markets across the world to assess global attitudes to the recession and the recovery of the global economy. According to him, Indians have coped better with the economic challenges posed by the recession compared with the rest of the world . “This offers opportunities for brands to engage in a more meaningful way and also highlights the increasing importance of community, causes and word of mouth, which are particularly relevant in the Indian market.''

On his third visit to India, Thomas outlined through the global study on ‘what goes up and goes down' the prevailing economic scenario. In a freewheeling interview with BrandLine, apart from discussing the global study he also speaks on what BBDO India has been doing in India since it set up shop in the midst of the recession and what lies ahead for the youngest Omnicom agency in the country.

It has been 22 months since BBDO India came into existence. Considering the agency went through the pangs of the recession, how difficult was it to set up the Indian operations and bag clients?

Some of the best agencies in the world have been set up in the grip of recession. We didn't plan for it - but it hasn't slowed our commitment or progress. When clients are trying to do more for less then creativity is at a premium. And that is always BBDO's focus.

Has global alignment of clients helped the Indian agency gain accounts in the Indian market? What about Pepsi and its brands like 7 Up and Nimbooz? Is it part of a global realignment or are they India-specific businesses?

Global relationships help open doors. But if you can't deliver great work and the resources required the doors slam shut. The ideas that we have developed for 7 Up - Mood Ko Do Lemon Ka Lift - and Nimbooz - Ekdum Asli Indian - are uniquely Indian ideas. The benefit of the network is cross-pollination of ideas on the brand across the world.

With the other joint venture with RK Swamy existing, how have you differentiated the two BBDO agencies in the Indian market? Will it get difficult to pitch for new accounts when there already is an RK Swamy BBDO existing?

The Indian market is growing rapidly. Having two flavours of BBDO in India will allow us to grow share. The two agencies are defined by their people, their clients and their work. On occasion we will compete, on occasion we will collaborate.

Being the youngest agency in the Omnicom group, what are the challenges BBDO India has faced in the Indian market so far? With recession retreating and ad spends going up, how is the Indian advertising industry looking up for new agencies like yourself?

The market is dynamic and growing. There are talented people and a belief in creativity. Our task is to make sure we have an unfair share of that talent and that our work is setting the industry agenda. How we engage with consumers is rapidly changing all over the world - and that is just as true here. I believe we need simple, powerful brand building ideas. Then those ideas must become the content engines that drive conversations with and participation from consumers. Our idea for Quaker, to “make India heart-healthy”, is changing the dialogue for the brand. Aviva's “Education is insurance” is an incredibly powerful platform that will touch people not just in advertising but in all kinds of new and innovative ways. Just go this weekend to Ansal Plaza to see Aviva's Great Wall of Education and you will see how. (Just make sure you bring along a book to donate!)

There is a new digital initiative through the launch of Proximity. Could you elaborate on its functioning in the Indian market? What are the kind of existing digital outfits it is expected to compete with?

Digital is like oxygen … it is everywhere. So it is not a separate outfit. Digital expertise is embedded in the agency. Proximity allows us to bring in specialist skills and global tools - particularly in the areas of CRM, ECRM and data analytics. But it will always be a single P&L. We won't create separate silos that we have to then sell to our clients. We will understand our clients' needs and then organise our resources to provide a Total Work solution.

In your presentation during the global study on the effect of the slowdown on consumers across markets, you said 62 per cent of Indians would be willing to buy fewer items of better quality, even if it meant spending more. So are you saying that Indians did not downgrade during the recession?

Relative to other markets the data shows that Indians were less likely to downgrade but to cut out individual items from their budgets. By comparison, in the Chinese markets consumers are more likely to maintain the items that they buy - but just do so at a lower price.

How would BBDO India gain from this research while creating its future advertising campaigns? Can you give some examples?

The presentation illustrates six consumer responses that have emerged over the last 18 months. The brand frameworks are very helpful in our planning processes. One of the most interesting things to emerge is the increasing importance of causes and the community. There has been a marked rise in philanthropy and we are seeing consumers seeking greater meaning in their lives. This is a rapidly emerging opportunity for brands — but it must be central to the brand promise and true of the organisation. The Starbucks campaign in the US that encouraged community service, Versace's link with the One Foundation in China and Aviva's support of education initiatives in India are good examples.

With stalwarts such as Josy Paul and Ajai Jhala leading the Indian operations, how would you be leveraging their experience in making BBDO India a top-league agency, especially with WPP dominating the ad industry in India?

The way we will compete is by worrying about how good we are and not how big we are. Scale is not a competitive advantage — big ideas that builds brands are what clients need. And generally those ideas come from small teams of senior, talented practitioners working in close collaboration with their clients.

What are the total billings and growth projected by BBDO India and the future of the agency in the country?

We don't reveal billings figures but we are happy with progress. However, successful agencies have to have a sense of positive dissatisfaction.

We have to constantly challenge ourselves. It is easy to be a good agency. It is much harder to be a great agency.

Clear sight

Bausch & Lomb has launched PureVision Toric Lenses. These lenses come with patented Advanced Lo-Torque design that claims to provide consistent and sharp vision, even in low light conditions. The silicone hydrogel material reportedly provides up to five times more oxygen to the eye than traditional lenses, enabling the consumers to wear these lenses for extended hours. These lenses are available at all the major optical outlets in the country. A pack of three lenses cost Rs 1,110.

‘India growing into fashion destination’

The International Apparel Federation has said that India could soon evolve beyond being a sourcing hub, into a fashion destination for global retailers.

The association, which has 25 member countries under its aegis, also said smaller and medium retailers globally are looking to forge alliances with their Indian counterparts to develop products for the domestic market.

“Over the last five years, we have seen India grow from a sourcing hub for textiles into a fashion destination. Lots of our members are looking at India as the domestic market here is growing exponentially,” Mr Vassilis Masselos, President, International Apparel Federation, told Business Line

IAF, in association with Clothing Manufacturers Association India, is holding a convention in India to share insights on trade, policy and business for its various stakeholders.

Stating that IAF is looking to fill the gap between the small and medium retailers in expanding its footage in India, he said, “Currently, only large retailers are here (in India). For smaller retailers, sourcing is still a challenge. We are looking to address the gap so that the system is harmonised”.

He also said that the growth in organised retail is a key driver for the growth in the apparel segment. The domestic apparel market stands at $30 billion and is likely to touch $50 billion by 2014.

‘No plans to enter into four-wheeler segment’: Venu Srinivasan

Country's second largest two-wheeler manufacturer TVS Motor Company on Wednesday said the company had “no intention” of entering into the four-wheeler segment.

The company currently operates in moped, motorcycle and in the three wheeler segment. The company has no plans to enter into the four-wheeler category, TVS Motor Company Chairman. Mr Venu Srinivasan said here.

“Absolutely, there is no intention (for us) to enter into the four-wheel segment. We have no plan to make a four-wheeler”, he said.

Mr Venu Srinivasan was here to officially unveil the company's first “clutchless” motorcycle “TVS Jive” and automatic scooterette “TVS Wego”.

Pantaloon’s fund raising could help it cut massive debt

The latest in a series of moves, Pantaloon Retail (PRIL) concluded its qualified institutional placement on Monday, raising Rs 500 crore in the process. This comes after the company raised Rs 276.3 crore through issues to private parties besides the potential Rs 91.50 crore that could come through warrant conversions. Equity raised could trim the company’s massive debt of Rs 2,850 crore taken on for expansion, and help distance PRIL from the problems plaguing smaller retailers such as Vishal Retail. It could also help bring down interest costs. It needs mention that interest costs cut operating margins by half to 5 per cent in FY-09.

Besides retiring debt, funds could also be used for store expansion; PRIL is targeting 25 million sq ft by 2013, from the current figure of about 9.7 million. It hopes to close FY10 with about 12.7 million sq ft.

Besides the QIP, PRIL also has restructuring plans, which may establish its presence as a retail player and help raise funds to support retail activities. Retail formats Big Bazaar, Pantaloon, Central and others, accounting for the bulk of revenues and profits, will be grouped under a single vertical as wholly-owned subsidiaries.

PRIL could find it easier to raise funds for its pure retail businesses, since investor returns will not suffer from losses stemming from unrelated businesses such as Future Media and Future Knowledge. Its value retail business, which includes Big Bazaar and Food Bazaar, contributes about 72 per cent to revenues and has seen robust growth. Value retail will be transferred to wholly-owned subsidiary; the entity could be listed separately besides raising funds raised directly in this subsidiary.

Unrelated businesses such as Future Knowledge Services, Future Learning and Development and so on have been transferred to a promoter group company for Rs 190 crore, further positives for PRIL shareholders. These entities were a drag on profits, with PRIL ending FY09 with an adjusted consolidated net profit of Rs 15 crore against the Rs 143 crore standalone figures.

Financial services interests Future Capital and insurance businesses will together form a vertical. PRIL may reduce holding in Future Capital, and create a new entity with the insurance business and thus unlock value in the financial services division. However, PRIL is not yet clear on how its shareholders will be compensated for the transfers and dilution of stakes in the financial services entities, potential transfers in the retail entities.

Netting the tourists

By banking on a marketing strategythat relies on information technologyand the Internet, Kerala Tourism canhope to remain ahead of the pack inthe global travel trade.

Kerala's success in carving out a niche in the highly competitive global travel and tourism industry is by now the stuff of business school lectures.

The key element in its triumph has been sustained and consistent marketing and, more importantly, the ability to innovate its travel offerings by plugging into contemporary trends.

Last week saw another of these initiatives - the launch of `login.kerala', a new move to lure visitors to the State through information technology (IT), specifically by way of the Internet. The new digital move involves creating a cluster of user-friendly interfaces, databases and payment gateways which would transform the Kerala Tourism Web site from an information- led one to a transactionbased one.

This will not only re-establish Kerala's premier position in the tourism world but will also revitalise the online presence of the State's tourism and travel-related products, so that it can stand out in the clutter of hospitality products on the Internet.

`CRUCIAL STEP'

At the launch of login.kerala, the State Minister for Home and Tourism Kodiyeri Balakrishnan said that the new digital initiative was a crucial step in marketing Kerala's tourism sector, which had been able to withstand the general recessionary trends in the sector brought on by the global economic and financial crisis.

A year ago, Kerala Tourism entered into an agreement with Google to start its own branded channel on You- Tube, the popular video sharing Web site (www.youtube.com/keralatourism. org).

And recently, Kerala Tourism organised the Travel Video Festival on YouTube. Video films depicting the lifestyle, culture, heritage or any other aspect of Kerala were invited for the Festival's award. The branded channel also features promotional movies and documentaries produced by Kerala Tourism.

All these moves are bound to attract the "alert independent traveller" who these days increasingly relies on the Internet to source information and opinions on "real, green, responsible" destinations. This is a far cry from the past days of the more common conventional `sun, sand and surf traveller'.

Today's alert independent traveller moves around for experience and has a mind of her own. For such a person, Kerala offers a smorgasbord of authentic social, cultural and political experiences, not to mention the geographical wonders of a land characterised by lush greenery, undulating hills, quiet beaches and the unique backwaters.

Even when the State is lashed by torrential rains, as now during the southwest monsoon, Kerala has much to offer the inquisitive traveller via "monsoon tourism." The natural synergy between the monsoon and ayurveda, for instance, has managed to stretch the traditional tourism season in Kerala, so much so that today the State's hoteliers can boast that there is no off-season in Kerala, just a peak season and the green season

Shoppers don’t stop here anymore

Mumbai, Nov. 21 The shops on Colaba Causeway in South Mumbai are bustling with foreigners, seemingly indifferent to the gun-totting cops, barricades and armoured police vehicles that now punctuate the lanes following the 26/11 attacks.

But shop-owners at the Trident, Oberoi and Taj Mahal Palace, the hotels at the heart of the hostage situation during the attacks, have a different story to tell.

Merchants operating boutiques at these five-star hotels complain of non-existent shoppers and falling revenues. A fashion boutique owner at the Trident lamented: “From 200 footfalls a day it is now virtually none.” They attribute the steep fall in shoppers to the drop in guests at the attacked hotels. Security concerns and massive renovations at the Oberoi and the Taj have also led to a decline in the total number of guests staying at the hotels, they say.

Business has come down 50-60 per cent, according to a fashion boutique employee at the Trident. “Our customers are a mix of hotel residents and outsiders. While hotel occupancy has come down post the attacks, outsiders are deterred by the tight security,” she added.

Hotel Trident and Oberoi have around 200 shops between them. While Trident has 30 shops on the ground floor which are linked to the main lobby, there are 15 shops in the mezzanine area and around 80 shops on the second floor of the hotel.

Besides these, Hotel Oberoi, which has a separate main entrance and is connected to the Trident through a passageway, has around 80 shops. Though all the Trident rooms were opened soon after the attacks, hotel rooms in the Oberoi wing are yet to be opened as renovation is going on. This has also reduced clientele.

“Most of our customers were the airline staff living in the hotel. After the incident, many shifted to the Renaissance in Powai. This has impacted our business severely”, said a shop owner at the Trident selling precious gems, gold and silver jewellery, paintings and pashmina.

Last year, a few of the airline crew were at the hotel when the gunmen had attacked. Post-26/11, employees of several airlines have shifted out of the hotel, the shop-keeper said. “The airline crew loved shopping in the hotel shops as well as in the by lanes of Colaba”, the owner reminisces.

It is a similar story at the Taj as well. With the renovation work going on in the Heritage wing, the hotel occupancy is less. As a result, business has come down 30-40 per cent, the manager of a designer store said. “Most of our clients are business delegates and post the attack, their number has fallen”, he added.

After the event, the Trident and the Taj stepped-up security significantly. With X-ray scanners, barricades and a pat-down search for every guest entering the hotel, shop-keepers feel that window shoppers and occasional buyers no longer feel like dropping by their shops to check ‘what is new.’

The hotels are responsible for the security of shops in their premises and only require that the owners be responsible for the background check of the employees they hire. “We carry out detailed background checks of our employees and then apply for IDs (identity cards) from the hotel,” a shop-owner said.

The only silver lining for a few boutiques at these hotels is the loyalty of some customers who continue to place orders on the phone. “They call us and place their order. We then go and deliver it to them,” said a jewellery shop-owner.

Ministry wants to bring warehouses under FMC

The Union Ministry of Consumer Affairs has proposed to the prime minister that the Forward Markets Commission, the regulator for commodity futures, also be the regulator for all warehouses.

The move, it says, will synchronise activities related to commodities trade taking place on nationwide electronic platforms. It is a sequel to the finance ministry’s earlier proposal to place commodity futures regulations under the Securities and Exchange Board of India, the regulator of the financial markets.
The consumer affairs ministry opposed it. Warehousing regulations are its charge and it is also the parent ministry for the FMC .
Commodity futures and capital market regulations, protested the consumer ministry, are quite different, as the interests of their stakeholders are not the same. Traders and players on commodity futures exchanges use warehouse facilities to comply with norms and quality standards laid out by the FMC. A Warehousing Development & Regulation Act was passed last year and it said a separate regulator should be appointed for this segment. The government is yet to decide who should do this job.
However, Abhijit Sen, member, Planning Commission, and chairman of a committee set up to discuss the implications of commodity futures on inflation, said the Warehouse Act provides for a separate regulator and to now put it under FMC requires an amendment. But, added: “Both the activities are related and should come under a single ministry.”
The ministry feels keeping both under the same regulator will ensure proper and coordinated development and regulation of the sector.
The Warehousing Act is aimed at creating scientific grading, handling and storage of commodities and creating electronic negotiable warehouse receipts. Such receipts can be used for delivery on the exchanges falling under FMC and national spot exchanges, which ministry also wants regulated by the FMC.
FMC has so far accredited 69 warehousing agencies, having a total capacity of 1.41 million tonnes spread over 14 states. Thus, it has experience of handling scientific storage warehouses and negotiability of warehouse receipts.
Since FMC is already doing this, a separate regulator for warehouses will create dual regulations and possible regulatory conflicts, is the ministry’s argument. National spot exchanges set up by commodity futures exchanges should be brought under the FMC, it adds, as these spot exchanges would also be giving delivery through the negotiable warehouse receipt system.

Tata DoCoMo to bill roaming calls too by the second

New Delhi, Nov. 21 It’s the death of roaming charges. In yet another game-changing move, Tata DoCoMo is extending to roaming services seconds-based billing that it offers for local calls. Subscribers on Tata DoCoMo’s network moving from one circle to another will soon pay only one paise a second. Incoming calls while roaming will also be charged at the same rate.

Uniform offer

All the other operators currently charge roaming services on a per-minute basis. While these rates are higher than the tariff for local calls, they also vary depending on whether one is calling a subscriber within the same operator’s or on another’s network. The offer from Tata DoCoMo will be uniform irrespective of the location or destination of the call.

Countering Airtel

The company is expected to make an announcement on the new roaming tariff in the next few days, according to sources in the industry. When contacted, a Tata Teleservices spokesperson declined to comment.

The move is aimed at countering Bharti Airtel’s Friday decision to reduce roaming tariffs by 60 per cent. Airtel launched a Turbo plan for roaming facilities charging 60 paise a minute for all incoming calls and between 60 paise and 80 paise a minute for outgoing calls. However, Airtel has made it available only on a single plan for which users will have to pay an upfront fee of Rs 98.

The Tata DoCoMo offer will be available without any upfront cost to the user and will be applicable across all its tariff plans. On the downside, Tata GSM service is available only across 15 circles since the company is yet to roll out in other areas. Tata DoCoMo is expected to complete its roll out in 19 circles by the year-end. Airtel offer on the other hand is available across all the circles in the country.

Taking initiative

Tata DoCoMo was the first to introduce seconds-based billing on local calls. The move ensured that the company got the highest number of new users in the last 3 months. The initiative on the roaming front is expected to trigger the next wave of tariff battle in the mobile segment.

Uttar Pradesh hosiery makers adopt online marketing

Toeing the lines of their Tirupur and Surat counterparts, hundreds of small and medium hosiery makers are now trying to build up their online presence to cash in on the improving market situation. Around 30 of them have already registered their products with a leading online textile maketing portal ‘fibre2fashion.com’.

Fibre2fashion marketing executive, Amar Ashish Phanse said the portal had charged Rs 15,000 from each of the new entrants from the state. “Our portal will provide easy access to the consumers around the world, apart from crucial information about the latest design techniques, raw material rates and regular trade fairs in various parts of the country,” he added.

The portal will develop separate websites of these manufacturers and provide their links on its webpage. “We will help in the brand building exercise of these smaller players, while acting as a link between their customers and dealers, apart from providing up-to-date information on the trade, trends and technologies in apparel and textile industries,” said Phanse.

The portal has more than 2.5 crore members (including dealers, registered consumers and brokers) spread in over 200 nations all over the world, who will now have access to the local industrialists. “There is huge demand for our goods and products abroad but due to lack of relevant information on both sides, the immense market potential is largely unexploited,” said UP Hosiery Association (UPHA) president, Manoj Banka.

It will now be easier for the local manufacturers to gain access to overseas markets and analyse the demand structure in various parts of the world and shape heir marketing strategy accordingly.

The portal hosts more than 1,000 wide ranging handicraft and handlooms products with specifications, including origin and place of production, along with high-quality graphical display, with a single window gateway for procurement. “It also provides e-payment facility through major debit/credit card in a secured environment, and offers online tracking of the shipment,” added Phanse.

Vishal Retail’s CDR may take shape in two months

Value retailer Vishal Retail’s proposal for corporate debt restructuring is likely to take a final shape in the next 60 days. The company is planning restructuring debt worth Rs 730 crore.

“We are looking at a loan extension from banks and hope to achieve a conclusion soon,” said Mr Ambeek Khemka, Group Vice-President, Vishal Retail. Earlier this week, the company had met with as many as six banks.

The State Bank of India is one of the main lenders to the retail chain. There about 13 odd banks involved. SBI has about Rs 170 crore of exposure to the company.

The company is also mulling to dilute its stake to tide over the cash crunch.

Bank sources informed that lenders are likely to give a four-year moratorium on the interest payment as well as the principle amount. Vishal Retail had about Rs 100 crore of interest payment annually.

Additionally, the company is looking at shutting down unviable stores and looking to reduce its inventory. Currently, Vishal Retail has 180 retail outlets in 24 cities.

Meanwhile, the board of directors of Vishal Retail has decided to merge a company by the name of Vishal Water World Pvt Ltd with Vishal Retail Ltd in accordance with the Companies Act.

The board also took note and adopted the scheme of merger, valuation report and the fairness opinion on the scheme of merger.

Airlines may get reprieve in expat pilot phase-out

Regulator may extend deadline after industry says it lacks Indian commanders
.The year-old controversy over hiring expatriate pilots is likely to intensify, with the Directorate General of Civil Aviation (DGCA) considering an extension of the deadline for their phase-out.
The airline industry regulator is considering the move in response to requests by airlines that say they lack Indian commanders and senior pilots to replace all the 600 expatriate pilots on their rosters. The phase-out deadline is July 1, 2010.
FOREIGN HANDS(Who has how many)
Air India
153
Jet Airways
200
IndiGo
25
Kingfisher
200
SpiceJet
22
Commanders require about 2,800 hours of flying time as a co-pilot, a process that takes about four years. Airlines contend that the services of at least 25 per cent of the current complement of expat pilots would be required after the July deadline.
"It is not possible to phase out all the expat pilots by the July deadline and we expect that at least 150 of them will be needed still for some period of time," a DGCA official explains.
“We are monitoring how airlines are reducing the number of expat pilots and a decision on an extension could be taken soon,” he adds.
Although an extension will be a reprieve for the airlines — mainly Air India, Jet and Kingfisher — and the expat pilots that face a global slump in demand for their services, local associations have protested strongly.
"This would be a wrong move. We already have a lot of qualified pilots in the country who need to be accommodated in senior positions," says Ravindra Kumar, president of the Indian Commercial Pilots Association, which represents the erstwhile Indian Airlines pilots (Indian Airlines was merged with Air India).
A senior committee member of the executive pilots association of Air India adds, "Co-pilots are not being trained to become commanders so that a shortage is being created. Otherwise we don't need expats even now, forget about July."
Indian pilots are also aggrieved because expats earn salaries that are at least 15 per cent higher, even when the carriers cut salaries and emoluments of local pilots owing to the slowdown.
DGCA's order of June 2008 was taken primarily to create opportunities for Indian pilots, especially at a time when around 3,000 pilots were looking for jobs and the slowdown had forced airlines to retrench hundreds of pilots .
This will not be the first time DGCA has had to postpone a phase-out deadline for expat pilots. The regulator extended the deadline in 2008 for hiring only Indians as co-pilots by two years after the airlines said fresh pilots could not start flying immediately and they would need training, which could take a few months.
State-owned Air India has 153 expat pilots and has said it will promote 50 co-pilots with sufficient hours as commanders, which leaves a deficit of over 100 pilots.
Jet Airways and Kingfisher have around 200 expats each and they are also trying various ways to phase out the expats. SpiceJet and IndiGo, the two low-cost carriers, have very few expats and say they are working to meet the DGCA directive.

Big back in fashion for retailers

Small is no longer beautiful for retailers. With customers returning to the shops, almost all retailers are now focusing on large format stores (15,000 to 20,000 sq ft or above) that allow them to sell a larger number of items and trigger higher consumer spending compared to the smaller, convenience formats where it’s becoming increasingly difficult to make money.
.RPG Group’s Spencer’s, which has 220 convenience stores, plans to set up 25 to 30 larger stores by March 2010. Aditya Birla Retail is adding six to seven hyper markets. Shoppers Stop is also expanding through Hypercity after closing its catalogue stores Argos.
Reliance Retail, which has a large number of convenience stores, is not adding new stores. Barring the odd new entrant like Bharti Easyday, retailers say none of them are adding smaller stores any more and those who are left with a large pool of smaller stores are trying best to see how they can reduce their losses and run these profitably.
Bangalore-based Max Hypermarkets, a relatively new entrant in the retail business, has three outlets and is planning to add three more, all large-format stores.
‘‘We don’t do convenience stores. Smaller stores have their own set of challenges, you have to compete with the Kirana or neighbourhood store. In a larger store, you can offer more to the customer and increase share of wallet,’’ says Vinay Singh, managing director, Max Hypermarkets.
Future Group Chairman Kishore Biyani, who always believed in larger formats, says a larger store allows a retailer higher throughput and to sell value-added products and services (like processed foods and new product categories) rather than just basic commodities (food and grocery) that one ends up selling in smaller, convenience stores.
‘‘Retailers are focusing on larger formats because they have better cost structures, productivity and efficiency. In a large format, you can sell 7,000 to 8,000 SKUs (stock keeping units) or items against 700 to 1,000 SKUs in a neighbourhood store,’’ says Biyani who has stayed away so far from setting up small stores.
Anand Raghuraman, partner and director, Boston Consulting Group, says in smaller stores, retailers can sell fast moving consumer goods (FMCG) and fresh produce that offer low margins compared to, say, categories like apparel, where margins can be as high as 30 per cent.
Smaller stores also end up competing directly with the neighbourhood that operate on much lower cost structures, have established relationships with customers, and offer a range of services like credit and home delivery. Hypermarkets can have a wider assortment, offer better prices and pull in customers.
Besides, as an industry expert says, rents are too high, margins too low and there are not enough footfalls. “The problem is we have a huge installed base of smaller stores and cannot close them overnight,’’ he says.
Servicing smaller outlets can also be a logistical challenge. ‘‘Back-end operations need to be more responsive for smaller formats if you have many stores. The ability to feed a store is a Herculean task, given traffic restrictions in many Indian cities,’’ says the sales head with an FMCG major. Hypermarkets, by contrast, have more depth as a format. Since they have central warehouses, they offer double protection for carrying inventory.
But most crucially, “Customers are walking into modern trade for assortments. They are constantly exploring, seeking new stuff. That’s what modern trade is all about. It also helps you increase the ticket-size,’’ adds a senior executive with an FMCG company.
Interestingly, even as Indian retailers go for larger formats, global retailers are getting into neighbourhood formats. WalMart is setting up 60 neighbourhood stores in Brazil, while Carrefour’s first neighbourhood store in Paris is doing roaring business.
Biyani says it depends on a market’s stage of evolution. Experts say if a retailer has a robust supply chain built on the hyper format, smaller stores can ride on it.

Big back in fashion for retailers

Small is no longer beautiful for retailers. With customers returning to the shops, almost all retailers are now focusing on large format stores (15,000 to 20,000 sq ft or above) that allow them to sell a larger number of items and trigger higher consumer spending compared to the smaller, convenience formats where it’s becoming increasingly difficult to make money.
.RPG Group’s Spencer’s, which has 220 convenience stores, plans to set up 25 to 30 larger stores by March 2010. Aditya Birla Retail is adding six to seven hyper markets. Shoppers Stop is also expanding through Hypercity after closing its catalogue stores Argos.
Reliance Retail, which has a large number of convenience stores, is not adding new stores. Barring the odd new entrant like Bharti Easyday, retailers say none of them are adding smaller stores any more and those who are left with a large pool of smaller stores are trying best to see how they can reduce their losses and run these profitably.
Bangalore-based Max Hypermarkets, a relatively new entrant in the retail business, has three outlets and is planning to add three more, all large-format stores.
‘‘We don’t do convenience stores. Smaller stores have their own set of challenges, you have to compete with the Kirana or neighbourhood store. In a larger store, you can offer more to the customer and increase share of wallet,’’ says Vinay Singh, managing director, Max Hypermarkets.
Future Group Chairman Kishore Biyani, who always believed in larger formats, says a larger store allows a retailer higher throughput and to sell value-added products and services (like processed foods and new product categories) rather than just basic commodities (food and grocery) that one ends up selling in smaller, convenience stores.
‘‘Retailers are focusing on larger formats because they have better cost structures, productivity and efficiency. In a large format, you can sell 7,000 to 8,000 SKUs (stock keeping units) or items against 700 to 1,000 SKUs in a neighbourhood store,’’ says Biyani who has stayed away so far from setting up small stores.
Anand Raghuraman, partner and director, Boston Consulting Group, says in smaller stores, retailers can sell fast moving consumer goods (FMCG) and fresh produce that offer low margins compared to, say, categories like apparel, where margins can be as high as 30 per cent.
Smaller stores also end up competing directly with the neighbourhood that operate on much lower cost structures, have established relationships with customers, and offer a range of services like credit and home delivery. Hypermarkets can have a wider assortment, offer better prices and pull in customers.
Besides, as an industry expert says, rents are too high, margins too low and there are not enough footfalls. “The problem is we have a huge installed base of smaller stores and cannot close them overnight,’’ he says.
Servicing smaller outlets can also be a logistical challenge. ‘‘Back-end operations need to be more responsive for smaller formats if you have many stores. The ability to feed a store is a Herculean task, given traffic restrictions in many Indian cities,’’ says the sales head with an FMCG major. Hypermarkets, by contrast, have more depth as a format. Since they have central warehouses, they offer double protection for carrying inventory.
But most crucially, “Customers are walking into modern trade for assortments. They are constantly exploring, seeking new stuff. That’s what modern trade is all about. It also helps you increase the ticket-size,’’ adds a senior executive with an FMCG company.
Interestingly, even as Indian retailers go for larger formats, global retailers are getting into neighbourhood formats. WalMart is setting up 60 neighbourhood stores in Brazil, while Carrefour’s first neighbourhood store in Paris is doing roaring business.
Biyani says it depends on a market’s stage of evolution. Experts say if a retailer has a robust supply chain built on the hyper format, smaller stores can ride on it.

'Don't know if Ambanis colluding or clashing'

The Centre on Tuesday asserted full ownership over gas from the KG basin and said as Mukesh Ambani's RIL was only a contractor for exploration, it was barred from having a private agreement with Anil Ambani's RNRL for supply of gas that violated the production sharing contract (PSC).

"We do not know whether the Ambani brothers have colluded or have fallen apart over the issue of supply of gas by RIL to RNRL. How can two private parties decide about allocation of gas, which is a national resource. We are concerned only about the national interest and will take every step to safeguard it," said additional solicitor general Mohan Parasaran.

Arguing before a Bench comprising Chief Justice K G Balakrishnan and Justices B Sudershan Reddy and P Sathasivam, Parasaran did not have an easy time presenting the stand of the ministry of petroleum and natural gas as RNRL's counsel Ram Jethmalani made a constant pincer attack ranging from calling the government to be in collusion with RIL to telling blatant lies before the court.

"The ministry which ran away from a cross examination before the High Court should not be allowed to argue like a party to the RIL-RNRL dispute. If it does, then the ministry should select its star witness for cross-examination," Jethmalani said promising the three judges that they would enjoy it.

But Parasaran stood his ground and said the government had a sovereign interest over national resources and was telling the court about the facts of the case -- "The PSC was signed much before the family agreement and that a private agreement could not override government policy or national interest."

Hyundai to invest Rs800 cr on small car for India

South Korean car-maker Hyundai will invest around Rs800 crore to develop a small car for the Indian market that is likely to be launched in the next two years.

The firm, which has operations in India through a wholly-owned subsidiary, Hyundai Motor India Ltd, will manufacture the car, which will be smaller than the Santro, at its plant here.

“We are developing a small car and approximately Rs800 crore will be invested at the Korean plant for development,” newly appointed managing director and CEO of Hyundai Motor India Ltd (HMIL) Han-Woo Park told reporters.

He declined to give any details, but said: “It will be smaller than the Santro and the price will also be lesser. It will take at least 24 months from now to launch the car in India. Right now, it is in the design stage.”

“Initially it will be targetted at India but gradually it will also be exported,” Han-Woo added.

“It will be manufactured at the Chennai plant once the design gets completed,” he said.

HMIL, which sells popular compact cars like Santro, i10, i20 has made India a small car hub for the Korean firm and has been exporting the cars to overseas markets.

In October, the company sold a total of 51,736 units, an 11% growth compared with same month last year. Its exports, however, dipped by 11.9% to 23,435 units during the month.

Mahindra Satyam joins Symbian Foundation

Mahindra Satyam joins Symbian Foundation
Mahindra Satyam announced today that it has joined the Symbian Foundation, which, together with its ecosystem, is creating an open and complete mobile software platform.
The platform is based on Symbian OS and software assets contributed by Nokia, NTT Docomo and Sony Ericsson, including the S60 and MOAP(S) user interfaces. Portions of the source code are already being moved to open source, under the Eclipse Public License. By mid-2010, this process will be complete, the company stated in a press release.
“The Symbian Foundation welcomes Mahindra Satyam into the community,” said Shaun Puckrin, head of community support for Symbian. “Our services members ensure that companies with great ideas for the Symbian community can reach their full potential - on time and within budget. By understanding and engaging with the Symbian platform, Mahindra Satyam will contribute to a growing, evolving mobile value chain”, he added.
As a member of the Symbian Foundation, Mahindra Satyam gains the immediate right to license the Symbian Foundation platform, royalty free and without source code fees, participate in the governance of the foundation and take part in joint marketing and branding campaigns. The company's scrip on BSE on Monday was trading at Rs 108, down 1.55 per cent over the previous trading day's close of Rs 109.70.

Govt to free tech tie-ups, trademark use

Move aimed at expediting projects undertaken in collaboration with foreign technology providers.

In a move that would help Indian companies access technology and trademarks more freely, the government has decided to free the pricing for import of technology and use of trademark.

The move, approved by the Cabinet two weeks ago, was aimed at expediting projects in collaboration with foreign technology providers, since companies would be able to enter into tie-ups without seeking prior government approval, including those for pricing. They would be able to make the required payments and merely inform the Ministry of Commerce and Industry.

Officials said it was decided in principle that all payments for royalty, lump sum fee for transfer of technology and payments for the use of trademark or brand name would now be on the automatic route.

They added that the project approval board would also be dismantled. Earlier, companies were required to seek PAB approval for fixing the price to be paid for technology, trademark, patents or royalty. “Instead, a reporting mechanism will be worked out in collaboration with the Reserve Bank of India (RBI) and the Ministry of Finance for these companies to report the transaction and maintain a database,” an official said.

The department of policy and promotion and RBI would soon issue the required orders.

At present, in case of technology transfer for an identified project, the automatic route can be used for payment of a lump-sum fee of $2 million or a royalty of 5 per cent of domestic sales and 8 per cent of exports for certain commodities. With no technology transfer involved, royalty up to 2 per cent for exports and one per cent for domestic sales is under automatic route.

The officials, however, said the freedom in pricing would be for sectors where foreign direct investment was allowed and there was no breach of the sectoral limits