(PTI) NRI business leader Gopichand Hinduja has said scandals such as the one in Satyam Computer will continue to haunt developed and developing countries, although this particular scam may have happened because the IT firm's founder Ramalinga Raju managed to outsmart the regulators.
The Hinduja Group Chairman, who was here to participate in the World Economic Forum, however, noted that the incident might not have much impact on the reputation of India Inc in the eyes of foreigners, who are more used to such scams.
Speaking to PTI about India's post-Satyam image before the rest of the world, Hinduja said, "India Inc enjoys a good reputation. These types of things... What have happened to Satyam, no doubt one has to admit that it is a scandal, but whether it is a developed country or developing country or emerging markets, these types of things will happen...".
He further pointed out that the Satyam crisis was largely because the founder of the company outsmarted the regulatory framework of the country. "One has to understand that possibly he (Ramalinga Raju) was more genius than regulators."
The Satyam scandal came to light on January 7, with a confession from the company's founder B Ramalinga Raju that he had been cooking the firm's books for several years. Raju's confession not only shocked India Inc, but investors all over the world.
Such type of wrongdoings are more prevalent in the western world and foreigners are used to this kind of happenings, Hinduja said. "I don't think that this has any effect or impact on foreigners. They are used (to such things). These are found much more in the western world".
Monday, February 2, 2009
Subhiksha on virtual collapse, needs Rs 300 cr
Stating that its operations are "near standstill", retail chain Subhiksha Trading Services on Friday said it needs liquidity injection of up to Rs 300 crore to get the company back on track as it had run out of cash in October last year.
"(The company is at) a stage where operations are at near standstill. We are working with the financial stakeholders - lenders and investors - to inject liquidity and get company back on track," a company spokesperson said.
"We need a liquidity injection of up to Rs 300 crore, while we argue on whether it is debt or equity that really does not matter, the business can get back to near peak levels once this cash is available," he added.
The company's lenders, while supportive, were also unable to extend further lines unless the equity was raised. Net net it became a chicken and egg story with the company running out of cash by October, he said.
"We never took serious credit from suppliers, most purchases were on limited or nil credit. When we could not pay for fresh buying, the trade cycle collapsed in October and that is what brought us to a standstill," the spokesperson added.
He, however, insisted that the company was not closing shop. "No, we are in pain but we are not shutting down." Despite the issues of large employment at risk and a sound business model it is taking time to get the pieces closed as all stakeholders have to come to agreement and it is stressed time for many of them as well, he said.
The company is now engaging in getting the restart plan approved by the financial stakeholders and then get the liquidity so that it can continue from where it left, he said.
"(The company is at) a stage where operations are at near standstill. We are working with the financial stakeholders - lenders and investors - to inject liquidity and get company back on track," a company spokesperson said.
"We need a liquidity injection of up to Rs 300 crore, while we argue on whether it is debt or equity that really does not matter, the business can get back to near peak levels once this cash is available," he added.
The company's lenders, while supportive, were also unable to extend further lines unless the equity was raised. Net net it became a chicken and egg story with the company running out of cash by October, he said.
"We never took serious credit from suppliers, most purchases were on limited or nil credit. When we could not pay for fresh buying, the trade cycle collapsed in October and that is what brought us to a standstill," the spokesperson added.
He, however, insisted that the company was not closing shop. "No, we are in pain but we are not shutting down." Despite the issues of large employment at risk and a sound business model it is taking time to get the pieces closed as all stakeholders have to come to agreement and it is stressed time for many of them as well, he said.
The company is now engaging in getting the restart plan approved by the financial stakeholders and then get the liquidity so that it can continue from where it left, he said.
Retail majors' sales decline
Same-store sales at some of India’s biggest retail groups have slipped into negative territory for the first time in six years, forcing the fledgling organised retail sector used to heady growth rates of 35-40% to re-orient strategies to ride out the economic slowdown that is pinching customers’ wallets.
Future Group, the country’s largest retailer and the company behind brands such as Big Bazaar and Food Bazaar, reported a 9% year-on-year decline in its same-store sales for last quarter of 2008 against a 9% growth in the year-earlier period. Shopper’s Stop has reported a 3% decline for the October-December quarter against a 7% rise in the preceding quarter.
Similarly Vishal Retail, one of India’s top five retail groups, reported a decline in its sales growth for the quarter to December 08, which accompanied a decline in customers visiting its stores. This is alarming as the last quarter of the year is a festive season and traditionally a very busy period for retailers.
“The coming four quarters will be quite challenging for retailers and some recovery can only be seen in the next festive season,” said B S Nagesh, CEO and customer care associate of Shoppers Stop.
Same-store or like-for-like sales are sales generated by stores that have been open for a year and provide a more accurate picture of performance trends in the retail sector, unlike total sales which can be flattered by new store openings. Same-store sales are crucial since older stores bring in most of the business until the newer stores consolidate their position in new markets.
With the economic slowdown forcing customers to tighten their belts as the growth euphoria of the past five years fades, industry experts say retailers face increasing cannibalisation risks as several players vie to attract the same customer.
Future Group, the country’s largest retailer and the company behind brands such as Big Bazaar and Food Bazaar, reported a 9% year-on-year decline in its same-store sales for last quarter of 2008 against a 9% growth in the year-earlier period. Shopper’s Stop has reported a 3% decline for the October-December quarter against a 7% rise in the preceding quarter.
Similarly Vishal Retail, one of India’s top five retail groups, reported a decline in its sales growth for the quarter to December 08, which accompanied a decline in customers visiting its stores. This is alarming as the last quarter of the year is a festive season and traditionally a very busy period for retailers.
“The coming four quarters will be quite challenging for retailers and some recovery can only be seen in the next festive season,” said B S Nagesh, CEO and customer care associate of Shoppers Stop.
Same-store or like-for-like sales are sales generated by stores that have been open for a year and provide a more accurate picture of performance trends in the retail sector, unlike total sales which can be flattered by new store openings. Same-store sales are crucial since older stores bring in most of the business until the newer stores consolidate their position in new markets.
With the economic slowdown forcing customers to tighten their belts as the growth euphoria of the past five years fades, industry experts say retailers face increasing cannibalisation risks as several players vie to attract the same customer.
Retail chain Subhiksha in money, land trouble
Hanumant Rao, a senior official of retail chain Subhiksha was arrested in Nagpur on the basis of complaints from employees for alleged non-payment of salaries and creating fictitious PF accounts.
Police say that Rao was booked under Section 409 for criminal breach of trust and Section 420 for cheating under the Indian Penal Code
“Subhiksha employees complained that they were not paid salaries for the last four to five months. They allege that money was not credited in their PF accounts,” Madhav Giri, Inspector - Panchpoli Thana, Nagpur
However, the retail chain has denied the allegations. A Subhisha spokesperson said, "The allegations in the complaint are completely false. There are no fictitious pf accounts etc as alleged. Mr Rao was granted bail by the courts on consideration of the facts on the case. This was a coercive attempt to harm our employee on false grounds - it is unfortunate that the process of law can be so manipulated".
However, a team will soon be sent to Pune where Subhiksha's head office for Maharashtra is located.
But this not where the controversy ends.
The Subhiksha head office in Pune is locked with a notice from the landlord marked to the vice president of the company pasted on the door.
The landlord has urged the firm to vacate the premises at the earliest. It also states that after three emailed notices, this is the final warning. But company, in its response, claims that the owner has illegally attempted to prevent access using goondas and rowdy elements.
"As we believe in strictly complying with the law, we are not reacting to this by show of force and are only moving appropriate legal process including police complaint to handle this,” it said.
Police say that Rao was booked under Section 409 for criminal breach of trust and Section 420 for cheating under the Indian Penal Code
“Subhiksha employees complained that they were not paid salaries for the last four to five months. They allege that money was not credited in their PF accounts,” Madhav Giri, Inspector - Panchpoli Thana, Nagpur
However, the retail chain has denied the allegations. A Subhisha spokesperson said, "The allegations in the complaint are completely false. There are no fictitious pf accounts etc as alleged. Mr Rao was granted bail by the courts on consideration of the facts on the case. This was a coercive attempt to harm our employee on false grounds - it is unfortunate that the process of law can be so manipulated".
However, a team will soon be sent to Pune where Subhiksha's head office for Maharashtra is located.
But this not where the controversy ends.
The Subhiksha head office in Pune is locked with a notice from the landlord marked to the vice president of the company pasted on the door.
The landlord has urged the firm to vacate the premises at the earliest. It also states that after three emailed notices, this is the final warning. But company, in its response, claims that the owner has illegally attempted to prevent access using goondas and rowdy elements.
"As we believe in strictly complying with the law, we are not reacting to this by show of force and are only moving appropriate legal process including police complaint to handle this,” it said.
Sunday, February 1, 2009
Vishal Retail seeks rent re-negotiation, to relocate stores
Diversified retail player Vishal Retail today said the group is undertaking re-negotiation of rent agreements with property owners for a 25-50 per cent reduction in rentals and also plans to close down, relocate and resize stores to achieve economic viability.
The company's comments came close in the wake of its announcement last week to close down two of its stores in Mumbai and Jodhpur, respectively.
"We are in the process of re-negotiating rentals with many of our property owners and are looking at achieving 25-50 per cent reduction in rentals, in line with the downslide in realty prices," Vishal Retail Group President Ambheek Khemka told PTI.
"We are also planning to relocate stores, which are economically not viable or whose rentals are more than market rates and resize others to make them more profitable," he said.
He said the company is undertaking a study to look at economic viability and rental state of all its stores.
"We are identifying stores to find out where we need to resize them, close down or relocate to some other location. The process will take some time to complete," he said.
Vishal Retail's latest stand comes a few months after the retail giant cut down its turnover target to Rs 1,500 crore for the current fiscal, down from Rs 1,800 initially planned.
The company, which has currently around 185 stores, including hypermarkets and small-format stores across India, had clocked a turnover of just over Rs 1,000 crore in 2007-08.
When asked about plans to close down any more stores, Khemka said: "Not immediately. We will first finish the viability study and then look into the matter."
He admitted that the company's stores, specially the ones in metros and Tier I cities, have witnessed reduction in footfalls and sales.
The company's comments came close in the wake of its announcement last week to close down two of its stores in Mumbai and Jodhpur, respectively.
"We are in the process of re-negotiating rentals with many of our property owners and are looking at achieving 25-50 per cent reduction in rentals, in line with the downslide in realty prices," Vishal Retail Group President Ambheek Khemka told PTI.
"We are also planning to relocate stores, which are economically not viable or whose rentals are more than market rates and resize others to make them more profitable," he said.
He said the company is undertaking a study to look at economic viability and rental state of all its stores.
"We are identifying stores to find out where we need to resize them, close down or relocate to some other location. The process will take some time to complete," he said.
Vishal Retail's latest stand comes a few months after the retail giant cut down its turnover target to Rs 1,500 crore for the current fiscal, down from Rs 1,800 initially planned.
The company, which has currently around 185 stores, including hypermarkets and small-format stores across India, had clocked a turnover of just over Rs 1,000 crore in 2007-08.
When asked about plans to close down any more stores, Khemka said: "Not immediately. We will first finish the viability study and then look into the matter."
He admitted that the company's stores, specially the ones in metros and Tier I cities, have witnessed reduction in footfalls and sales.
‘Expansion of chains only in 2010’
Faced by a declining ‘same store’ sales across all formats, retailers would now look at operational efficiencies to take them through the first half of 2009, say retail analysts.
Mr Gibson Vedamani, CEO, Retailers’ Association of India, says that retailers would resort to shutting down some ‘unviable’ outlets, while at the same time cautiously opening new stores. “In my opinion, expansion of chains would only happen in 2010. Though some amount of new sales could come from newer categories and regions, the projections for the year are more or less stagnant.”
“Retailers would move to more sensible customer acquisition models,” says Mr Vijay Bobba, Founding CEO and Managing Director, i-mint. The target would be the spending consumer rather than footfalls or walk-ins.
Mr Arvind Singhal, Chairman, Technopak, foresees retailers spending more on promotions to retain existing customers.
The immediate strategy for Hindware Home Retail to beat the downturn is consolidation of different categories. “The market is witnessing a downturn and it will take a couple of quarters before it springs into normalcy. This means that large and hyper formats will pave way for smaller specialty categories,” says Mr D.K. Jairath, Vice-President and Business Head, Hindware Home Retail.
On increasing efficiencies in stores, Mr Bobba says retailers would integrate their supply chain and systems across all formats. Rental renegotiations are also high on the agendas of retailers. “There is an opportunity during slowdown as rentals can be negotiated. Unlike retailers in the food and grocery business, categories such as lifestyle and luxury stand to benefit as they can get good deals. In lifestyle retailing, ambience achieves significance,” said Mr Thorsten Allenstein, Managing Director, Triumph International (India and Sri Lanka).
But for the recession, the rural retail concept could have added value to the bottomlines of these retailers, feel retail experts. “But it will be a while before retail achieves what telecom has done,” according to Mr Bobba.
Mr Gibson Vedamani, CEO, Retailers’ Association of India, says that retailers would resort to shutting down some ‘unviable’ outlets, while at the same time cautiously opening new stores. “In my opinion, expansion of chains would only happen in 2010. Though some amount of new sales could come from newer categories and regions, the projections for the year are more or less stagnant.”
“Retailers would move to more sensible customer acquisition models,” says Mr Vijay Bobba, Founding CEO and Managing Director, i-mint. The target would be the spending consumer rather than footfalls or walk-ins.
Mr Arvind Singhal, Chairman, Technopak, foresees retailers spending more on promotions to retain existing customers.
The immediate strategy for Hindware Home Retail to beat the downturn is consolidation of different categories. “The market is witnessing a downturn and it will take a couple of quarters before it springs into normalcy. This means that large and hyper formats will pave way for smaller specialty categories,” says Mr D.K. Jairath, Vice-President and Business Head, Hindware Home Retail.
On increasing efficiencies in stores, Mr Bobba says retailers would integrate their supply chain and systems across all formats. Rental renegotiations are also high on the agendas of retailers. “There is an opportunity during slowdown as rentals can be negotiated. Unlike retailers in the food and grocery business, categories such as lifestyle and luxury stand to benefit as they can get good deals. In lifestyle retailing, ambience achieves significance,” said Mr Thorsten Allenstein, Managing Director, Triumph International (India and Sri Lanka).
But for the recession, the rural retail concept could have added value to the bottomlines of these retailers, feel retail experts. “But it will be a while before retail achieves what telecom has done,” according to Mr Bobba.
Spice (Hotspots Retails) buys Cellucom's India arm in share-swap deal
NEW DELHI: BK Modi-promoted Spice Group on Sunday bought 100% stake in the Indian arm of Cellucom, a Dubai-based mobile retail chain. According to the share-swap deal, Cellucom will take 26% stake in Spice Group’s mobile retail venture HotSpot while Spice Corp will buy 100% shares in Cellucom.
“It’s a cash-less deal in which we will swap shares. We are buying 100% stake in Cellucom. The CEO and CFO of HotSpot will retain the positions in the new entity. Spice Corp will invest Rs 100 crore in the retail chain this year,” BK Modi, chairman, Spice Group, said.
The new entity is expected to gross about Rs 1,000 crore in revenue by fiscal year 2009. Cellucom has about 120 mobile and IT product stores in the country. HotSpot has about 500 mobile retail stores, the second largest after Essar-promoted The Mobile Store that has 1,400 outlets.
For the time being, Cellucom stores may be renamed as HotSpot Cellucom. The Spice Group is expected to announce a new brand for the merged entity, which has over 2,200 employees. Commenting on the buyout, Mr Modi said: “It is a part of Spice Corp’s global acquisition strategy.
Last year, we saw a lot of M&A activity in the telecom sector in India. With this acquisition, we are the first company to begin a buyout spree in the retail space, which has been struggling under the pressure for margins for quite sometime now.”
The Indian mobile handset market is estimated to be worth about Rs 30,000 crore with most handsets being sold in the unorganised market. India has about 380 million mobile subscribers and figure is expected to reach the 500-million mark by 2010.
“It’s a cash-less deal in which we will swap shares. We are buying 100% stake in Cellucom. The CEO and CFO of HotSpot will retain the positions in the new entity. Spice Corp will invest Rs 100 crore in the retail chain this year,” BK Modi, chairman, Spice Group, said.
The new entity is expected to gross about Rs 1,000 crore in revenue by fiscal year 2009. Cellucom has about 120 mobile and IT product stores in the country. HotSpot has about 500 mobile retail stores, the second largest after Essar-promoted The Mobile Store that has 1,400 outlets.
For the time being, Cellucom stores may be renamed as HotSpot Cellucom. The Spice Group is expected to announce a new brand for the merged entity, which has over 2,200 employees. Commenting on the buyout, Mr Modi said: “It is a part of Spice Corp’s global acquisition strategy.
Last year, we saw a lot of M&A activity in the telecom sector in India. With this acquisition, we are the first company to begin a buyout spree in the retail space, which has been struggling under the pressure for margins for quite sometime now.”
The Indian mobile handset market is estimated to be worth about Rs 30,000 crore with most handsets being sold in the unorganised market. India has about 380 million mobile subscribers and figure is expected to reach the 500-million mark by 2010.
Monday, January 26, 2009
Indian lifestyle brand need of the hour
At the recently concluded Global Business Barons meet at FICCI International Brand Conclave, the bigwigs from the jewellery, fashion and lifestyle industry of India agreed on the need to develop an Indian brand name in lifestyle segment.
Sushil Jiwarajka, Chairman, Federation of Indian Chambers of Commerce & Industry -Western Regional Council (FICCI-WRC) made a passionate plea to the branded jewellery industry to move up the value chain from manufacturing and wholesale distribution into product brands and retain operations. He believed that innovation in design, newer markets, and new technology would help sustain growth.
In his inaugural address, Ashwini Kumar, Minister of State for Commerce and Industry said, “Jewellery and lifestyle products fire people’s aspirations to achieve a higher status in life. Higher standards of living increase the demand for branded products fuelling growth and employment generation. In spite of the global recession one section of India is flying and the other is looking at it with hope.”
Highlighting the point Mehul Choksi, chairman, Gitanjali Group and FICCI National Gems & Jewellery Committee said, “We have more than 300,000 jewellery retailers. We, however, do not have even a single jewellery brand name of international standard which is known throughout the world.”
“The need of the hour is to establish such brand names to carve out a niche for our gems, jewellery, time wear and accessories internationally,” Choksi added.
Arvind Singhji Mewar, from HRH Group of Hotels while talking about India’s creativity, love for style and luxury, and the capability of craftsman to make intricate and rich traditional jewellery stressed on the need to produce value added products and brand it for capturing international markets.
Vasant Mehta, chairman, Gems and Jewellery Export Promotion Council (GJEPC) hoped that the industry would be able to overcome the challenges posed due to the global meltdown effectively through integrated efforts of all the luxury, fashion wear and gem and jewellery players.
Vijay Mallya, chairman, United Breweries Group and Kingfisher Airline urged everyone to not to despair due to global melt down and fall in GDP but to look at the positive side that India is still amongst the top GDP growth economies of the world, and has 12 million millionaires who can spur the demand of high-end luxury, fashion and lifestyle products, and create avenues for prosperity.
He also stressed on the need for nurturing and building strong brand names for the products of luxury, fashion and lifestyle segments of the industry in India.
The day long sessions deliberated on global perspective of Indian gems and jewellery, timewear and accessories. They discussed the prospects for branded jewellery, infrastructure for growth of Indian Luxury market, opportunities and areas of growth for branded jewellery and accessories market, government policy direction and finance options for the industry, market for luxury watches and the possible brands and ambassadors.
Sushil Jiwarajka, Chairman, Federation of Indian Chambers of Commerce & Industry -Western Regional Council (FICCI-WRC) made a passionate plea to the branded jewellery industry to move up the value chain from manufacturing and wholesale distribution into product brands and retain operations. He believed that innovation in design, newer markets, and new technology would help sustain growth.
In his inaugural address, Ashwini Kumar, Minister of State for Commerce and Industry said, “Jewellery and lifestyle products fire people’s aspirations to achieve a higher status in life. Higher standards of living increase the demand for branded products fuelling growth and employment generation. In spite of the global recession one section of India is flying and the other is looking at it with hope.”
Highlighting the point Mehul Choksi, chairman, Gitanjali Group and FICCI National Gems & Jewellery Committee said, “We have more than 300,000 jewellery retailers. We, however, do not have even a single jewellery brand name of international standard which is known throughout the world.”
“The need of the hour is to establish such brand names to carve out a niche for our gems, jewellery, time wear and accessories internationally,” Choksi added.
Arvind Singhji Mewar, from HRH Group of Hotels while talking about India’s creativity, love for style and luxury, and the capability of craftsman to make intricate and rich traditional jewellery stressed on the need to produce value added products and brand it for capturing international markets.
Vasant Mehta, chairman, Gems and Jewellery Export Promotion Council (GJEPC) hoped that the industry would be able to overcome the challenges posed due to the global meltdown effectively through integrated efforts of all the luxury, fashion wear and gem and jewellery players.
Vijay Mallya, chairman, United Breweries Group and Kingfisher Airline urged everyone to not to despair due to global melt down and fall in GDP but to look at the positive side that India is still amongst the top GDP growth economies of the world, and has 12 million millionaires who can spur the demand of high-end luxury, fashion and lifestyle products, and create avenues for prosperity.
He also stressed on the need for nurturing and building strong brand names for the products of luxury, fashion and lifestyle segments of the industry in India.
The day long sessions deliberated on global perspective of Indian gems and jewellery, timewear and accessories. They discussed the prospects for branded jewellery, infrastructure for growth of Indian Luxury market, opportunities and areas of growth for branded jewellery and accessories market, government policy direction and finance options for the industry, market for luxury watches and the possible brands and ambassadors.
Gowealthy opens India Business Unit to address needs of NRI property investors
Gowealthy.com, the region's premier global property and real estate lifestyle brand, recently launched a dedicated India Business Unit in order to deliver a comprehensive platform of property related services to the Indian community in the Gulf. In order to facilitate the promotion of Indian properties in the Middle East, the unit has also launched an India specific web portal www.gowealthy.in to address the needs and queries of Indian investors.
"The demand for housing remains constant as does the interest from Non-Resident Indians from this region. In India, property ownership is considered a long term investment, besides being a sentimental purchase. The need to invest back home is seen to be greater in these unsettling times. Even as Indians residing in the region continue to buy properties, there was niche in the market for a property services and management entity dedicated to the common interests of buyers, regardless of the property that was being purchased, which led to creation of the Gowealthy India Business Unit in Dubai. Our research and sample marketing underlined the need to offer a focused marketing opportunity throughout the Gulf and international markets to India's developers as well as be a one-stop shop for consultations, sales and follow-ups," said Dr. Mukund Raj, Vice President of Sales, India Business Unit.
The India Business Unit will offer varied opportunities and services to all its stakeholders - developer clients, investors and retail customers. As part of its activities, Gowealthy.com will also premiere Indian property launches in the Middle East. Gowealthy's India developer clients span across all the major Indian cities. Gowealthy has already forged relationships with the DLF group, Brigade Group, Tata Housing, Alliance Group and L & T. Other prominent names that will be part of the portfolio soon include Hiranandani, Raheja Builders, Ansal Holding, Purvankara, Mantru Developers, Unitech, Parsvnath and the Confident Group.
"Non Resident Indians across the world are in a way responsible for a sea of change in the Indian realty sector. Unlike those in the West, the Gulf NRIs always aspire to have a home of their own back in India. They look for a modern and well-equipped place like the homes available in the many housing complexes developed exclusively for them across the country. Being accustomed to quality and amenities, NRIs prefer investments that fulfill these criteria while making their decision. Market conditions have also resulted in NRIs being keen on investing in existing or fully-leased assets of reputed developers and DLF is invariably on their list. Our ongoing working relationship with a premier global property and real estate lifestyle brand such as Gowealthy will help us draw on the synergy of their knowledge and easy accessibility to NRIs residing in the Gulf countries. The setting up of Gowealthy's India Business Unit will help companies such as ours facilitate better interaction with our existing and potential clients in the Gulf region," says Lt. Gen. Girish, DLF Executive Vice President, Kerala.
The India Business Unit will also draw on the strengths of the region's leading real estate portal, Gowealthy.com. Developer clients will enjoy and benefit from exclusive access to Gowealthy's global databases, institutional investors, special property funds and cash buyers. Experts will provide also investors with investment solutions and services, while retail clients can benefit from Gowealthy's consultancy, sales and services.
"The prevailing competitive exchange rates and the option for NRIs to choose from a wide range of medium and premium level properties will be a major draw for our operations. We aim to be an effective medium for both clients and developers. While the former will have the advantage of understanding and protecting their investments back home, the later will be ably aided in consolidating and promoting their projects in this market. Our tailor-made property options and financing modules in coordination with leading housing finance companies both here and in India ensures a comprehensive property consultancy and service structure for potential clients," Raj concluded.
"The demand for housing remains constant as does the interest from Non-Resident Indians from this region. In India, property ownership is considered a long term investment, besides being a sentimental purchase. The need to invest back home is seen to be greater in these unsettling times. Even as Indians residing in the region continue to buy properties, there was niche in the market for a property services and management entity dedicated to the common interests of buyers, regardless of the property that was being purchased, which led to creation of the Gowealthy India Business Unit in Dubai. Our research and sample marketing underlined the need to offer a focused marketing opportunity throughout the Gulf and international markets to India's developers as well as be a one-stop shop for consultations, sales and follow-ups," said Dr. Mukund Raj, Vice President of Sales, India Business Unit.
The India Business Unit will offer varied opportunities and services to all its stakeholders - developer clients, investors and retail customers. As part of its activities, Gowealthy.com will also premiere Indian property launches in the Middle East. Gowealthy's India developer clients span across all the major Indian cities. Gowealthy has already forged relationships with the DLF group, Brigade Group, Tata Housing, Alliance Group and L & T. Other prominent names that will be part of the portfolio soon include Hiranandani, Raheja Builders, Ansal Holding, Purvankara, Mantru Developers, Unitech, Parsvnath and the Confident Group.
"Non Resident Indians across the world are in a way responsible for a sea of change in the Indian realty sector. Unlike those in the West, the Gulf NRIs always aspire to have a home of their own back in India. They look for a modern and well-equipped place like the homes available in the many housing complexes developed exclusively for them across the country. Being accustomed to quality and amenities, NRIs prefer investments that fulfill these criteria while making their decision. Market conditions have also resulted in NRIs being keen on investing in existing or fully-leased assets of reputed developers and DLF is invariably on their list. Our ongoing working relationship with a premier global property and real estate lifestyle brand such as Gowealthy will help us draw on the synergy of their knowledge and easy accessibility to NRIs residing in the Gulf countries. The setting up of Gowealthy's India Business Unit will help companies such as ours facilitate better interaction with our existing and potential clients in the Gulf region," says Lt. Gen. Girish, DLF Executive Vice President, Kerala.
The India Business Unit will also draw on the strengths of the region's leading real estate portal, Gowealthy.com. Developer clients will enjoy and benefit from exclusive access to Gowealthy's global databases, institutional investors, special property funds and cash buyers. Experts will provide also investors with investment solutions and services, while retail clients can benefit from Gowealthy's consultancy, sales and services.
"The prevailing competitive exchange rates and the option for NRIs to choose from a wide range of medium and premium level properties will be a major draw for our operations. We aim to be an effective medium for both clients and developers. While the former will have the advantage of understanding and protecting their investments back home, the later will be ably aided in consolidating and promoting their projects in this market. Our tailor-made property options and financing modules in coordination with leading housing finance companies both here and in India ensures a comprehensive property consultancy and service structure for potential clients," Raj concluded.
RCom merges GSM, CDMA services
Reliance Communications (RCom) has integrated its GSM and CDMA mobile services in its Orissa circle. The twin services will now be offered to the subscribers of the state under a single platform called Reliance Mobile.
The operational merger of the two services will enable the telecom service provider to achieve effective utilisation of its resources, leverage the strengths of the two services and also result in better coordination among its retail channel partners.
“To provide easy and better services to its subscribers in Orissa, Reliance Communications has integrated its GSM and CDMA mobile services in the state. The integration will enable us to have a better coordination among our retail channel partners and also help bring commendable growth in the company’s business”, Aman Roychowdhury, business head (CDMA and GSM services), Reliance Communications (Orissa circle) said in a signed letter to the company’s retail channel partners. Following the integration, all the employees as well as the retail channel partners will come under a single fold called Reliance Mobile and there will be a single marketing department to cater to GSM and CDMA services.
It may be noted that Reliance Communications offers its GSM services under “Smart” brand. In its Orissa circle, Reliance Communications has a subscriber base of over 19 lakh (as on December 31, 2008) which includes 7,29,612 CDMA customers and around 12 lakh GSM customers.
The operational merger of the two services will enable the telecom service provider to achieve effective utilisation of its resources, leverage the strengths of the two services and also result in better coordination among its retail channel partners.
“To provide easy and better services to its subscribers in Orissa, Reliance Communications has integrated its GSM and CDMA mobile services in the state. The integration will enable us to have a better coordination among our retail channel partners and also help bring commendable growth in the company’s business”, Aman Roychowdhury, business head (CDMA and GSM services), Reliance Communications (Orissa circle) said in a signed letter to the company’s retail channel partners. Following the integration, all the employees as well as the retail channel partners will come under a single fold called Reliance Mobile and there will be a single marketing department to cater to GSM and CDMA services.
It may be noted that Reliance Communications offers its GSM services under “Smart” brand. In its Orissa circle, Reliance Communications has a subscriber base of over 19 lakh (as on December 31, 2008) which includes 7,29,612 CDMA customers and around 12 lakh GSM customers.
Big Bazaar’s new campaign
Big Bazaar, hypermarket chain and a part of the Future Group, is conducting its biggest shopping event, ‘Sabse saste 3 din’ (lowest price for three days).
The offer would be available across 106 Big Bazaar stores from January 24 to 26. Apart from the flagship Big Bazaar and Food Bazaar stores, other future group retail formats such as Furniture Bazaar, Electronic Bazaar, Depot and Home Bazaar would also be part of the campaign, according to Noor Alam Ansari, Area Manager, Operations, Pantaloon Retail (India) Ltd.
For the net savvy consumers, the company would extend the campaign on to its e-retailing website www.futurebazaar.com .
For those who are not net savvy and also did not want to wait in queues, Futurebazaar.com would set up exclusive kiosks outside Bigbazaar stores in important cities such as Chennai, Delhi, Lucknow, Mumbai and Thiruvananthapuram, where consumers can select what they want from the catalogue, pay there and get it all delivered at home.
The offer would be available across 106 Big Bazaar stores from January 24 to 26. Apart from the flagship Big Bazaar and Food Bazaar stores, other future group retail formats such as Furniture Bazaar, Electronic Bazaar, Depot and Home Bazaar would also be part of the campaign, according to Noor Alam Ansari, Area Manager, Operations, Pantaloon Retail (India) Ltd.
For the net savvy consumers, the company would extend the campaign on to its e-retailing website www.futurebazaar.com .
For those who are not net savvy and also did not want to wait in queues, Futurebazaar.com would set up exclusive kiosks outside Bigbazaar stores in important cities such as Chennai, Delhi, Lucknow, Mumbai and Thiruvananthapuram, where consumers can select what they want from the catalogue, pay there and get it all delivered at home.
Bank of India net rises 70% on higher income
Bank of India recorded a 70-per cent growth in net profit at Rs 872 crore, for the quarter ended December 31, 2008, against Rs 512 crore in the corresponding quarter last year. The growth came from higher interest income and non-interest income.
In the third quarter, the bank consciously adopted a policy of not growing the balance sheet by huge amounts in order to contain the cost of funds, said Mr T.S. Narayanasami, Chairman and Managing Director.
Analysts had predicted a net profit growth of 30-40 per cent for the bank.
Although the cost of funds moved up to 5.59 per cent (5.24 per cent), the bank was able to maintain net interest margin at 3.4 per cent (3.14 per cent).
“Going ahead, I will be happy to maintain the net interest margin at 3 per cent. It will be difficult to go beyond that,” Mr Narayanasami said.
The huge rise in other income was due to the higher trading profit at Rs 400 crore (Rs 116 crore).
The credit growth in the retail segment has been flat at 1.08 per cent, as the bank had consciously decided to slow down in the retail segment, said Mr B.A. Prabhakar, Executive Director.
For the current fiscal, the credit target has been revised upwards from 20 per cent to 24 per cent and there will be greater commitment to the SME, auto and housing sectors, he added.
In the third quarter, the bank consciously adopted a policy of not growing the balance sheet by huge amounts in order to contain the cost of funds, said Mr T.S. Narayanasami, Chairman and Managing Director.
Analysts had predicted a net profit growth of 30-40 per cent for the bank.
Although the cost of funds moved up to 5.59 per cent (5.24 per cent), the bank was able to maintain net interest margin at 3.4 per cent (3.14 per cent).
“Going ahead, I will be happy to maintain the net interest margin at 3 per cent. It will be difficult to go beyond that,” Mr Narayanasami said.
The huge rise in other income was due to the higher trading profit at Rs 400 crore (Rs 116 crore).
The credit growth in the retail segment has been flat at 1.08 per cent, as the bank had consciously decided to slow down in the retail segment, said Mr B.A. Prabhakar, Executive Director.
For the current fiscal, the credit target has been revised upwards from 20 per cent to 24 per cent and there will be greater commitment to the SME, auto and housing sectors, he added.
Pantaloon Retail net up 5.97 pc to Rs 33.54 cr in Q2
Future Group&aposs retail arm Pantaloon Retail India Ltd today announced a net profit of Rs 33.54 crore for the second quarter ended December 31, 2008, up 5.97 per cent over the corresponding period a year ago.
The company had a net profit of Rs 31.65 crore in the same quarter last fiscal, Pantaloon Retail India said in a filing with the Bombay Stock Exchange.
Total income increased to to Rs 1,527.20 crore for the quarter under review from Rs 1,228.07 crore in the same period previous fiscal.
For the half-year period ended December 31, 2008, the company&aposs net profit rose to Rs 69.72 crore from Rs 6134 crore in the same period last year.
While, the total income of the company jumped up to Rs 3039.57 crore during the six-month period under review from Rs 2315.24 crore in the same period last fiscal.
Pantaloon Retail operates multiple retail formats in both the value and lifestyle segment of the Indian consumer marker. It operates over 1000 stores across 61 cities in India.
Its principal formats include Pantaloons, a chain of fashion outlets; Big Bazaar, an Indian hypermarket chain and Food Bazaar, a supermarket chain.
The company had a net profit of Rs 31.65 crore in the same quarter last fiscal, Pantaloon Retail India said in a filing with the Bombay Stock Exchange.
Total income increased to to Rs 1,527.20 crore for the quarter under review from Rs 1,228.07 crore in the same period previous fiscal.
For the half-year period ended December 31, 2008, the company&aposs net profit rose to Rs 69.72 crore from Rs 6134 crore in the same period last year.
While, the total income of the company jumped up to Rs 3039.57 crore during the six-month period under review from Rs 2315.24 crore in the same period last fiscal.
Pantaloon Retail operates multiple retail formats in both the value and lifestyle segment of the Indian consumer marker. It operates over 1000 stores across 61 cities in India.
Its principal formats include Pantaloons, a chain of fashion outlets; Big Bazaar, an Indian hypermarket chain and Food Bazaar, a supermarket chain.
Saturday, January 24, 2009
Nokia profit drops 69 percent in fourth quarter
Nokia Corp., the world's top mobile phone maker, said Thursday its profits fell 69 percent in the fourth quarter as the world economic downturn slowed handset sales.
Net profit was euro576 million ($743.62 million), down from euro1.84 billion in the same period in 2007.
Sales dropped 19.5 percent to euro12.7 billion ($16.4 billion), from euro15.8 billion.
The results came in below expectations, sending Nokia shares down 4 percent in Helsinki to euro9.82 ($12.68).
The Finnish company gave a bleak outlook for the industry, saying it expects global mobile device volumes to drop 10 percent in 2009 compared to last year. Last month, it predicted a 5-percent decrease.
Chief Executive Olli-Pekka Kallasvuo said the industry has been hit by "weaker consumer confidence, unprecedented currency volatility and credit tightness."
"We are taking action to reduce overall costs and to preserve our strong capital structure. This is clearly our top priority in the current economic environment," Kallasvuo said.
The company said it would slash costs at its handset unit by euro700 million annually, but didn't give any details.
Nokia shipped 113 million handsets in last three months of 2008, down 15 percent from the same period a year earlier. As a result, its share of the global handset market fell to 37 percent, down from 38 percent in the previous quarter and 40 percent in the fourth quarter of 2007.
The company said it expects to maintain its current market share in the first three months of 2009, and maintains its target of increasing market share in the full year.
"From an operational and structural perspective Nokia is still in a very good position," said Neil Mawston, a telecom analyst at Strategy Analytics in London. "It has a very efficient very effective supply chain."
He added, however, that Nokia's product portfolio is "looking relatively weak," especially in smart phones, where it is losing ground to Apple Inc.
A higher proportion of lower-end phones continued to push down the closely watched average selling price of Nokia handsets. It was euro71 in the quarter, down 14 percent from euro83 in same period a year earlier, but only 1 percent lower than in the third quarter of 2008.
Nokia said it sold less handsets in all regions, including China where sales dropped the most in the quarter — by 36 percent compared to the same period in 2007.
Earlier Thursday, South Korea's LG Electronics Inc. — one of Nokia's main rivals — said its mobile phone shipments grew 8 percent in the fourth quarter, though the company swung to a net loss because of other units.
One bright spot in Nokia's report was Nokia Siemens Networks, which supplies equipment for fixed and mobile networks. The joint venture with Germany's Siemens AG, saw operating profit grow 15.4 percent to euro225 million in the quarter. By contrast, Nokia's key mobile device unit reported a 61-percent drop in operating profit
Net profit was euro576 million ($743.62 million), down from euro1.84 billion in the same period in 2007.
Sales dropped 19.5 percent to euro12.7 billion ($16.4 billion), from euro15.8 billion.
The results came in below expectations, sending Nokia shares down 4 percent in Helsinki to euro9.82 ($12.68).
The Finnish company gave a bleak outlook for the industry, saying it expects global mobile device volumes to drop 10 percent in 2009 compared to last year. Last month, it predicted a 5-percent decrease.
Chief Executive Olli-Pekka Kallasvuo said the industry has been hit by "weaker consumer confidence, unprecedented currency volatility and credit tightness."
"We are taking action to reduce overall costs and to preserve our strong capital structure. This is clearly our top priority in the current economic environment," Kallasvuo said.
The company said it would slash costs at its handset unit by euro700 million annually, but didn't give any details.
Nokia shipped 113 million handsets in last three months of 2008, down 15 percent from the same period a year earlier. As a result, its share of the global handset market fell to 37 percent, down from 38 percent in the previous quarter and 40 percent in the fourth quarter of 2007.
The company said it expects to maintain its current market share in the first three months of 2009, and maintains its target of increasing market share in the full year.
"From an operational and structural perspective Nokia is still in a very good position," said Neil Mawston, a telecom analyst at Strategy Analytics in London. "It has a very efficient very effective supply chain."
He added, however, that Nokia's product portfolio is "looking relatively weak," especially in smart phones, where it is losing ground to Apple Inc.
A higher proportion of lower-end phones continued to push down the closely watched average selling price of Nokia handsets. It was euro71 in the quarter, down 14 percent from euro83 in same period a year earlier, but only 1 percent lower than in the third quarter of 2008.
Nokia said it sold less handsets in all regions, including China where sales dropped the most in the quarter — by 36 percent compared to the same period in 2007.
Earlier Thursday, South Korea's LG Electronics Inc. — one of Nokia's main rivals — said its mobile phone shipments grew 8 percent in the fourth quarter, though the company swung to a net loss because of other units.
One bright spot in Nokia's report was Nokia Siemens Networks, which supplies equipment for fixed and mobile networks. The joint venture with Germany's Siemens AG, saw operating profit grow 15.4 percent to euro225 million in the quarter. By contrast, Nokia's key mobile device unit reported a 61-percent drop in operating profit
Kiranas unfazed by big retail -- that's ironic
A couple of years ago, as modern retail was booming mindlessly, there was much concern about the future of mom-and-pop stores in the country, better known as kirana stores.
Big retailers and consultants espoused the cause of modern retail and said it posed no threat to these stores and that there was space for all.
They stand vindicated.
The irony is not to be missed. Modern retail is still not making profits, shutting down stores all around and finding trouble filling shelf space. Kiranas, on the other hand, are seeing business as usual, notwithstanding the economic slowdown.
Analysts Aniruddha Dutta and Shrinivas Radhakrishnan of CLSA India said in their report dated January 19, 2009, "The organised grocery retail stores are facing stiff competition from the mom-and-pop stores. We observed the customers' preferences tilting towards the kiranas for daily purchases due to convenience, better stocking and easier access."
In the long term, the scale will work better for organised retail. But in the near term, big retail lacks the imagination and firepower to innovate and sustain its initial euphoria, the report states.
Spencer's, Big Bazaar, Subhiksha and Reliance Fresh have shut down several stores, which were running in losses. They are all struggling with property costs and wafer thin margins. In fact, Subhiksha has exited the fruits and vegetable business in several areas.
In contrast, kirana stores are stacking as many product varieties as possible, sometimes even going beyond the realms of food and grocery.
Most kirana shop owners are taking home delivery orders on their mobile phones and delivering goods to the customer's doorsteps, even if the order is as small as a loaf of bread.
For Monica Khatri (23), a Mumbai Central resident, it is the comfort of quick and easy buy at kirana store that works. She said, "I have a Reliance Fresh outlet right opposite my house where I go once a month to buy certain utilities, but by and large I go to the kirana store downstairs. The benefits of going to a kirana store are many -- I do not have to keep my bag aside, there is not too much variety to confuse, and you buy what you originally intended to, within minutes."
Samar Singh Shekhawat, vice-president, marketing, Spencer's Retail, said, "Given the current slowdown, there is definitely a downturn in sales revenue. Our same-store metrics is pretty flat but this is more because of the economic scenario than a shift of preference from organised to traditional retailing."
Spencer's shut 55 stores last year and opened 20 new ones.
Future Group's retail brands, Big Bazaar and Food Bazaar have also seen sales slump.
"Though we are facing some challenges in terms of consumer reluctance to enter our stores, this is only a
Tier-I phenomenon. Our business in the Tier-II market has not been affected since the market there is not exposed to the financial wreck as much as Tier-I market is," Atul Takle, head -- corporate communications, Pantaloon Retail India, said.
Availability of products on credit and location close to home sure gives kirana stores an edge over big retail stores, which offer home delivery only on stipulation of a minimum order.
Competing with small retail stores and kirana stores, however, is Future Group's new chain of retail stores -- KB's Fair Price -- which are non-air conditioned and need an investment of Rs 250 per sq ft as compared with the usual Rs 2,000 per sq ft.
An analyst with a leading brokerage who did not wish to be named said, "Modern retail in India is always going to be a luxury and feel-good domain and traditional kirana stores are clearly at no risk from it. Consumers, who earlier purchased family-pack products, are now satiating their purchases with smaller packs and for this they go to local kirana stores."
Big retailers and consultants espoused the cause of modern retail and said it posed no threat to these stores and that there was space for all.
They stand vindicated.
The irony is not to be missed. Modern retail is still not making profits, shutting down stores all around and finding trouble filling shelf space. Kiranas, on the other hand, are seeing business as usual, notwithstanding the economic slowdown.
Analysts Aniruddha Dutta and Shrinivas Radhakrishnan of CLSA India said in their report dated January 19, 2009, "The organised grocery retail stores are facing stiff competition from the mom-and-pop stores. We observed the customers' preferences tilting towards the kiranas for daily purchases due to convenience, better stocking and easier access."
In the long term, the scale will work better for organised retail. But in the near term, big retail lacks the imagination and firepower to innovate and sustain its initial euphoria, the report states.
Spencer's, Big Bazaar, Subhiksha and Reliance Fresh have shut down several stores, which were running in losses. They are all struggling with property costs and wafer thin margins. In fact, Subhiksha has exited the fruits and vegetable business in several areas.
In contrast, kirana stores are stacking as many product varieties as possible, sometimes even going beyond the realms of food and grocery.
Most kirana shop owners are taking home delivery orders on their mobile phones and delivering goods to the customer's doorsteps, even if the order is as small as a loaf of bread.
For Monica Khatri (23), a Mumbai Central resident, it is the comfort of quick and easy buy at kirana store that works. She said, "I have a Reliance Fresh outlet right opposite my house where I go once a month to buy certain utilities, but by and large I go to the kirana store downstairs. The benefits of going to a kirana store are many -- I do not have to keep my bag aside, there is not too much variety to confuse, and you buy what you originally intended to, within minutes."
Samar Singh Shekhawat, vice-president, marketing, Spencer's Retail, said, "Given the current slowdown, there is definitely a downturn in sales revenue. Our same-store metrics is pretty flat but this is more because of the economic scenario than a shift of preference from organised to traditional retailing."
Spencer's shut 55 stores last year and opened 20 new ones.
Future Group's retail brands, Big Bazaar and Food Bazaar have also seen sales slump.
"Though we are facing some challenges in terms of consumer reluctance to enter our stores, this is only a
Tier-I phenomenon. Our business in the Tier-II market has not been affected since the market there is not exposed to the financial wreck as much as Tier-I market is," Atul Takle, head -- corporate communications, Pantaloon Retail India, said.
Availability of products on credit and location close to home sure gives kirana stores an edge over big retail stores, which offer home delivery only on stipulation of a minimum order.
Competing with small retail stores and kirana stores, however, is Future Group's new chain of retail stores -- KB's Fair Price -- which are non-air conditioned and need an investment of Rs 250 per sq ft as compared with the usual Rs 2,000 per sq ft.
An analyst with a leading brokerage who did not wish to be named said, "Modern retail in India is always going to be a luxury and feel-good domain and traditional kirana stores are clearly at no risk from it. Consumers, who earlier purchased family-pack products, are now satiating their purchases with smaller packs and for this they go to local kirana stores."
Fuel price may be cut in Feb, post-deregulation
Further cuts in petrol and diesel prices may happen only in February with the government planning to link those with an imminent prices, said people familiar with the matter.
The finance ministry and the Planning Commission have opposed the petroleum ministry’s plan to cut retail fuel prices further, arguing that this is the right time for the government to end its control over retail sale prices of petrol and diesel, a government official, who asked not to be named, told ET.
Earlier this month, petroleum minister Murli Deora had said that the retail price of petrol would soon be reduced by Rs 5 a litre, diesel by Rs 2 a litre, and cooking gas by Rs 25 per cylinder. If the prices of petrol and diesel are freed from government control and linked with market, petrol price could be reduced by about Rs 7 a litre, and diesel by about Rs 2.5 a litre, provided duties on the two products do not change, the official said.
“The fuel price cut is expected to be a result of proposed deregulation of petrol and diesel prices. It (deregulation) was proposed in the last Cabinet meeting held on December 10, 2008.
But, it would depend on devising a formula to compensate public sector oil companies for their underrecoveries (losses for selling fuels below the cost) for selling kerosene and cooking gas at subsidised rates,” another government official, who requested anonymity, said.
The government has made it clear that it will continue to control the retail prices of cooking gas and kerosene.
A finance ministry official, who didn’t want to be identified, told ET that deregulation and consequent cuts in prices of petrol and diesel is expected in the second week of February. “It may happen before the ensuing Parliamentary session or after it,” he said. The session is expected from February 12-26.
An official in Indian Oil Corp (IOC), who didn’t want to be named, told ET that his firm was currently making a profit of Rs 7.40 per litre of petrol. For diesel, the figure stood at Rs 2.50. But the company was losing Rs 12.20 on the sale of every litre of kerosene and Rs 33 on the sale of a 14.2 kg cooking gas cylinder, he said.
The finance ministry official also told ET that his department was in favour of reimposing Re 1-a-litre excise duty on unbranded petrol and diesel as international crude oil prices have dropped significantly to around $40 a barrel.
The finance ministry and the Planning Commission have opposed the petroleum ministry’s plan to cut retail fuel prices further, arguing that this is the right time for the government to end its control over retail sale prices of petrol and diesel, a government official, who asked not to be named, told ET.
Earlier this month, petroleum minister Murli Deora had said that the retail price of petrol would soon be reduced by Rs 5 a litre, diesel by Rs 2 a litre, and cooking gas by Rs 25 per cylinder. If the prices of petrol and diesel are freed from government control and linked with market, petrol price could be reduced by about Rs 7 a litre, and diesel by about Rs 2.5 a litre, provided duties on the two products do not change, the official said.
“The fuel price cut is expected to be a result of proposed deregulation of petrol and diesel prices. It (deregulation) was proposed in the last Cabinet meeting held on December 10, 2008.
But, it would depend on devising a formula to compensate public sector oil companies for their underrecoveries (losses for selling fuels below the cost) for selling kerosene and cooking gas at subsidised rates,” another government official, who requested anonymity, said.
The government has made it clear that it will continue to control the retail prices of cooking gas and kerosene.
A finance ministry official, who didn’t want to be identified, told ET that deregulation and consequent cuts in prices of petrol and diesel is expected in the second week of February. “It may happen before the ensuing Parliamentary session or after it,” he said. The session is expected from February 12-26.
An official in Indian Oil Corp (IOC), who didn’t want to be named, told ET that his firm was currently making a profit of Rs 7.40 per litre of petrol. For diesel, the figure stood at Rs 2.50. But the company was losing Rs 12.20 on the sale of every litre of kerosene and Rs 33 on the sale of a 14.2 kg cooking gas cylinder, he said.
The finance ministry official also told ET that his department was in favour of reimposing Re 1-a-litre excise duty on unbranded petrol and diesel as international crude oil prices have dropped significantly to around $40 a barrel.
Subhiksha staff awaits Oct '08 salaries
Troubled times do not seem to end for Subhiksha, a discount retailer. CNBC-TV18 learns that employees have been waiting for their salaries for the past three months.
Here is a transcript of Priyal Guliani’s comments on CNBC-TV18. Also watch the accompanying video.
CNBC-TV18 has a copy of the "new year mail" sent by Subhiksha's Managing Director R Subramanian to its top management. The mail, which describes year 2008 as a year of pain, comes with a reassurance that the salaries of its employees for the month of October will be paid very soon. The mail dated January 1, 2009 also mentions that the last two days of the year were "madly action packed" and they had to ensure that bank facilities of Rs 125 crore is not endangered. It further sets the timeframe in which the money due for salaries and rent will be released, giving a total time frame of 3–4–5 days, not more. However, CNBC-TV18 learns from sources that salaries have not yet been paid so far.
However, in response to a query sent by CNBC-TV18 to R Subramanian an spokesperson said, "no such mail has been sent by the managing director."
A company spokesperson denied the very existence of the e-mail sent by the MD to the top management. On the non-payment of salaries, the spokesperson said, "We do not comment on internal staff issues and all contractual obligations of the organization are met."
Sources tell us that employees of Subhiksha have knocked on the doors of the labour court in Gurgaon and in Pune as even now they claim the salaries have not been paid. But the management claims that they are unaware of any such case.
Here is a transcript of Priyal Guliani’s comments on CNBC-TV18. Also watch the accompanying video.
CNBC-TV18 has a copy of the "new year mail" sent by Subhiksha's Managing Director R Subramanian to its top management. The mail, which describes year 2008 as a year of pain, comes with a reassurance that the salaries of its employees for the month of October will be paid very soon. The mail dated January 1, 2009 also mentions that the last two days of the year were "madly action packed" and they had to ensure that bank facilities of Rs 125 crore is not endangered. It further sets the timeframe in which the money due for salaries and rent will be released, giving a total time frame of 3–4–5 days, not more. However, CNBC-TV18 learns from sources that salaries have not yet been paid so far.
However, in response to a query sent by CNBC-TV18 to R Subramanian an spokesperson said, "no such mail has been sent by the managing director."
A company spokesperson denied the very existence of the e-mail sent by the MD to the top management. On the non-payment of salaries, the spokesperson said, "We do not comment on internal staff issues and all contractual obligations of the organization are met."
Sources tell us that employees of Subhiksha have knocked on the doors of the labour court in Gurgaon and in Pune as even now they claim the salaries have not been paid. But the management claims that they are unaware of any such case.
M&M enters retailing with Mom & Me stores
At a time when most retailers are holding back expansion plans, auto company Mahindra & Mahindra (M&M) has made a quiet foray the soft launch of its specialty format Mom & Me to sell infantcare and maternity products.
The company, which had announced its plans to enter the retail space more than a year ago, has launched two outlets in Ludhiana and Ahmedabad.
The company has invested close to Rs 100 crore in the venture. An email query to the company seeking details on business plans went unanswered.
Interestingly, Mahindra has been looking at hiring young mothers, as advisors in the stores for a better connect with target customers.
In this segment, Mahindra is likely to have little competition with the only other major player being British brand Mothercare, which entered India in partnership with Shoppers Stop three years ago. Most of the other stores in this segment are part of the unorganised sector.
Mahindra Retail is a part of Mahindra Intertrade, a fully-owned subsidiary of Mahindra and Mahindra.
While announcing its retail foray, the company had said it was a logical extension of its current business, as Mahindra Intertrade had tie ups with Walt Disney, Aqua, Mattel and Lego to market and distribute kids' toys, apparels, accessories in India. Some of the other diversified groups that have entered the retail space, include Bharti, Reliance and the Aditya Birla Group.
The company, which had announced its plans to enter the retail space more than a year ago, has launched two outlets in Ludhiana and Ahmedabad.
The company has invested close to Rs 100 crore in the venture. An email query to the company seeking details on business plans went unanswered.
Interestingly, Mahindra has been looking at hiring young mothers, as advisors in the stores for a better connect with target customers.
In this segment, Mahindra is likely to have little competition with the only other major player being British brand Mothercare, which entered India in partnership with Shoppers Stop three years ago. Most of the other stores in this segment are part of the unorganised sector.
Mahindra Retail is a part of Mahindra Intertrade, a fully-owned subsidiary of Mahindra and Mahindra.
While announcing its retail foray, the company had said it was a logical extension of its current business, as Mahindra Intertrade had tie ups with Walt Disney, Aqua, Mattel and Lego to market and distribute kids' toys, apparels, accessories in India. Some of the other diversified groups that have entered the retail space, include Bharti, Reliance and the Aditya Birla Group.
UniverCell to retail low-cost feature-rich mobile sets
The retailer plans to bring features like colour display, FM and camera, which usually available in mobile phones upwards of Rs 3,000 in established brands, in better-priced mass market handsets. It also plans to bring in dual SIM-card phones, currently available only in very high-end phones, at the same price points .
"Once we are through testing these products for quality, we will start test-marketing them. If customer response to these products is good, we may even consider selling them under the UniverCell brand name," UniverCell managing director D Sathish Babu told ET. Now, 60% of the mobile market is dominated by phones priced below Rs 2,000. Phones costing upwards of Rs 10,000 contribute just 1%, he added.
The Chennai-based retailer is also eyeing the eastern markets, especially Calcutta, where it will set foot in the first quarter of the coming fiscal. "We are planning 25 stores in the city in the first phase. Apart from West Bengal, we will open outlets in Orissa and Chattisgarh. In the second quarter we may also look at the west," Mr Sathish said.
UniverCell has 199 stores across the south, 80% of which are in tier-II towns. It is getting ready 25 stores and they will be up and running in a couple of weeks. Babu, who had pioneered the multi brand mobile retail store concept said his venture has been on an expansion spree in the last couple of years and is now stabilising operations. He is waiting for prices to rentals to fall further before signing up more stores.
The retail chain expects to close this fiscal with a turnover of Rs 500 crore and plans to double it in FY10. It stood at Rs 350 crore at the end of March 2008.
UniverCell also has tie-ups with Nokia, Motorola and LG to sell some of their international models exclusively at its stores. Most of these are variants of existing models and come with some value addition. "Usually accessory bundling is done by the brands themselves. Sometimes we bundle these models with connection. With such products we are able to deliver value to our customers as we can negotiate with the manufacturers over price," Mr Sathish said.
"Once we are through testing these products for quality, we will start test-marketing them. If customer response to these products is good, we may even consider selling them under the UniverCell brand name," UniverCell managing director D Sathish Babu told ET. Now, 60% of the mobile market is dominated by phones priced below Rs 2,000. Phones costing upwards of Rs 10,000 contribute just 1%, he added.
The Chennai-based retailer is also eyeing the eastern markets, especially Calcutta, where it will set foot in the first quarter of the coming fiscal. "We are planning 25 stores in the city in the first phase. Apart from West Bengal, we will open outlets in Orissa and Chattisgarh. In the second quarter we may also look at the west," Mr Sathish said.
UniverCell has 199 stores across the south, 80% of which are in tier-II towns. It is getting ready 25 stores and they will be up and running in a couple of weeks. Babu, who had pioneered the multi brand mobile retail store concept said his venture has been on an expansion spree in the last couple of years and is now stabilising operations. He is waiting for prices to rentals to fall further before signing up more stores.
The retail chain expects to close this fiscal with a turnover of Rs 500 crore and plans to double it in FY10. It stood at Rs 350 crore at the end of March 2008.
UniverCell also has tie-ups with Nokia, Motorola and LG to sell some of their international models exclusively at its stores. Most of these are variants of existing models and come with some value addition. "Usually accessory bundling is done by the brands themselves. Sometimes we bundle these models with connection. With such products we are able to deliver value to our customers as we can negotiate with the manufacturers over price," Mr Sathish said.
Retail food industry to grow by 400 per cent
The Indian food retail industry is expected to grow by over 400 per cent in the next five years and share of global trade in the sector has been projected to double by 2015, a government official said.
"Food in grocery sector is about $ 154 billion, which is 77 per cent of total retail sales... two-third of the food is in retail grocery, and the organised Indian food retail is just three per cent at $ 7 billion, which is expected to grow by 400 per cent in next five years," Ministry of Food Processing Joint Secretary Ajit Kumar said.
Highlighting the estimated growth projection targets set by the Government, Kumar said the retail food industry is going to be at $ 20 billion by 2010 against the $ 7 billion now.
"We will have tremendous growth in the food processing sector by 2015, increasing the level of processing of perishable from 6 per cent to 20 per cent, value addition, which is only 20 per cent now, to 35 per cent and share of our global food trade of 1.5 per cent to double by 3 per cent by 2015," Kumar said.
According to Kumar, the government has taken several steps for promotion of food processing industry, including tax holidays and permission for repatriation of profits.
"The 100 per cent EOUs in SEZ can retain 50 per cent of the foreign exchange reciepts in foreign currency accounts, these are huge incentives for them," Kumar said.
"Food in grocery sector is about $ 154 billion, which is 77 per cent of total retail sales... two-third of the food is in retail grocery, and the organised Indian food retail is just three per cent at $ 7 billion, which is expected to grow by 400 per cent in next five years," Ministry of Food Processing Joint Secretary Ajit Kumar said.
Highlighting the estimated growth projection targets set by the Government, Kumar said the retail food industry is going to be at $ 20 billion by 2010 against the $ 7 billion now.
"We will have tremendous growth in the food processing sector by 2015, increasing the level of processing of perishable from 6 per cent to 20 per cent, value addition, which is only 20 per cent now, to 35 per cent and share of our global food trade of 1.5 per cent to double by 3 per cent by 2015," Kumar said.
According to Kumar, the government has taken several steps for promotion of food processing industry, including tax holidays and permission for repatriation of profits.
"The 100 per cent EOUs in SEZ can retain 50 per cent of the foreign exchange reciepts in foreign currency accounts, these are huge incentives for them," Kumar said.
Monday, January 5, 2009
Vishal Retail likely to miss FY09 revenue target on slowing sales
Vishal Retail, a value retailer, said it may miss its Rs 1,800 crore revenue target set for the year ending March 31, as consumers cut down on purchases anticipating job cuts and grim job outlook.
The Delhi-based retailer’s announcement of missing the target comes on the heels of the company saying that lack of cash and slower than expected store growth had forced it to put on hold expansion plans for the next quarter.
“Since we have frozen our expansion plans for the rest of the financial year, it is unlikely that we would be able to meet our revenue target,” said Ram Chandra Agarwal, chairman and managing director, Vishal Retail. He declined to give a revised target for the company as the company was in the process of analysing the performance of different stores across India. Vishal Retail, currently has 181 stores with nearly 29,80,900 sq ft of retail space across India. At the beginning of FY09, the company had set a target of opening 200 stores.
The company has about Rs 800 crore of debt sanctioned from lenders, of which it has already borrowed Rs 725 crore, said Agarwal.
Commenting on the reports that the company is mulling to sell stake, Agarwal said, “We do not need to sell our stake to any retailer as we will not expand this fiscal and, we have enough working capital to run our daily business." A section of the media had reported that the company was looking to raise money for its expansion by selling its stake to Reliance Retail or Future Group at Rs 150-200 per share.
At the beginning of the year, all retailers were bullish on their expansion plans and revenue earning targets. However, due to slump in demand, especially in the high margin products like apparel and other non-food items, most of the retailers have revised their revenue targets.
“The company will not be able to meet its revenue target due to freeze in its expansion of stores as well as slowdown in demand, said C Ravishankar, Manager — Strategic and Commercial Intelligence (Transaction Services), KPMG.
Retailers like Vishal have been the best bet of the sector's analysts who think that value retailers will be the least affected in this downturn.
Several retailers are struggling to arrange cash for their expansion plans. Recently, Shopper’s Stop, a departmental retail chain, said it was deferring a plan to raise stake in Hypercity to 51 per cent by about 19 months because of cash crunch and slowing sales. Retailers have undertaken their expansion thorough a mix of of long and short term debt. But slower than expected growth in sales has made them rethink their fast expansion as well as revenue targets.
Earlier, Spencer’s Retail had revised its revenue target for 2008-09 from Rs 1,800 crore to Rs 1,500 crore after it was forced to shut 56 of its non-performing stores. Organised retail sector in India is valued at Rs 80,000 crore.
The sector’s growth has come down from 25 per cent in 2007 to 15 per cent in 2008.
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Indians look forward to shopping drama
When Kishore Biyani tried a "clean Italian look" of glass and minimalist lines in one of his Big Bazaar stores, he was surprised by the effect on his customers - it drove them away. The sleek section of the store remained empty while the rest of the shop bustled.
Biyani, head of the Future Group, India's largest retailer, realised the decor was intimidating and alienating the middle-class Indian consumers who were more used to crowded bazaars and shops.
"You need hustle and bustle," says Biyani. "The Indian model of shopping is theatrical. There is buzz and haggling. If you have wide aisles you have a problem."
Biyani's Big Bazaar "hypermarket" stores, which are India's closest equivalent to Wal-Mart, are clean, air-conditioned and well lit. But they have deliberately narrow aisles and overflowing display bins that simulate the feel of open-air markets common in India.
Drama and theatre are important elements in Biyani's stores, which also include the Pantaloons and Food Bazaar chains. At one store in a Mumbai shopping mall, dance music popular in Indian nightclubs blasts from loudspeakers while customers jostle to reach the best goods.
Modern retail stores are relatively new to India, so Biyani and other retailers are having to adapt to the evolving shopping habits of Indians. The biggest mistake that retailers make is thinking that "just because you have set something up people will come", says Anirudha Mukhedkar, chief executive of Restore Solutions, a retail consultancy in Bangalore.
Shopping in so-called organised stores accounts for only 4 per cent of India's $322 billion (Dh1.18 trillion) retail industry but this share is expected to grow to 22 per cent of $427 billion by 2010, according to the Federation of Indian Chambers of Commerce and Industry.
Unlike their struggling counterparts in the west, India's retailers are looking at an attractive growth market. But getting it right will be tricky, given the country's diverse population and distinct regional cultures.
Understanding India's wide diversity -- socio-economic, religious, regional and linguistic - is key to that strategy. "When you say Indian consumers, there are at least 10 Indias," says Mukhedkar.
Cultural preferences vary widely between regions. For example, types of rice and how people buy it differs in the north and south, says Harminder Sahni, managing director of Technopak, a retail consultancy based in Delhi.
In the north, rice might be sold in open sacks so consumers can inspect the goods. But in some parts of the south, rice is a common staple sold in sealed packets.
Store lay-outs will also vary according to region. In big groceries in Kolkata, eastern India, and other coastal cities, fish is a staple sold in the vegetable section, whereas it is categorised with meat in inland areas.
Because of these distinct regional tastes, retailers "don't look at India as India", says Sahni. "They pick a region or market or city ... The first two years might be in one city." He says that most do not have ambitions to open pan-Indian stores: "Many start in one part of India and just stick to that."
The Future Group has found another way of capitalising on regional variations: it has 72 annual promotions linked to local festivals. The company says the Big Bazaar store in Bhubaneswar, capital of the backwater eastern state of Orissa, took the group record for a single day's turnover after promoting a sale linked to a festival.
William Bissell, managing director of Fabindia, a chain of upscale boutiques that sells clothing and housewares, says "every store has to offer a different mix. That's why retailing in India is so complicated".
Bissell notes that Fabindia, founded in 1960, has an inventory of 200,000 items to cater to consumer tastes that vary dramatically across regions. "Any retailer will say that is crazy," says Bissell. To manage its enormous inventory, Fabindia has installed an IT system to track the flow of goods at nearly 100 stores in India.
Capacious western-style malls are also cropping up, especially for luxury goods. But when catering to the mass consumer, "it makes sense to have smaller stores with more workers", says Mukhedkar of Restore Solutions.
Sense of choice
He points out that India's cities command some of the highest real estate prices in the world but labour costs are among the lowest. Packed shelves are also preferable to give the consumer a sense of abundance and choice. "If a shelf can take 50 things, try to fit in 75," Mukhedkar advises. "Density per square foot has to be as high as possible."
For practical reasons, Bissell favours smaller stores. He dismisses the notion of a 100,000 sqft Ikea-style store in India, except where "enormous" volumes might justify high maintenance costs.
"At 40 to 44 degrees in the summer I'm going to have to air-condition the whole thing. That would be an environmental disaster." And it would be too expensive, he adds, in a country where electricity rates are high, and power cuts force many businesses to buy costly diesel-run generators.
The biggest misunderstanding about retail in India, says Bissell, is that Indians consume as copiously as westerners. Instead, Indians are more selective, value-conscious and price-sensitive. Sahni of Technopak agrees.
In a grocery store, an Indian consumer will not fill up a trolley as is common practice in the west. "Indians will shop with a basket. Below a certain income level, people won't want to spend so much with each transaction." Smaller refrigerators and limited storage space at home are also factors. "People will buy more frequently and in smaller packets," says Sahni.
But some aspects of retail in India are more abstract. To stay attuned to India's pulse, Biyani has a special unit devoted to tracking the country's social trends to incubate ideas for new store brands and strategies.
The "Future Ideas" group includes sociologists, interior designers, graphic designers and other cultural experts. One of their biggest tasks is analysing the changing tastes of Indian youth.
With more than half of India's population under the age of 25, understanding their consuming habits and aspirations is a priority for the Future Group. "India is still family-centred, and young people influence purchases," says Biyani. But by far his biggest challenge as a retailer is managing the speed of change in India.
"How do you make an organisation that is not permanent in thought, structure or design?" asks Biyani. "Retail in the next five years will be different. Nothing is permanent."
Why crowded neighbourhood shops still enjoy the upper hand?
Big, modern stores are not guaranteed victory in India's retail revolution. Tiny, crowded hole-in-the-wall neighbourhood shops do have advantages over their organised retail counterparts.
Small shopkeepers often know their customer personally, offer free home delivery, let customers order by phone and keep a tab.
"I had a grocer in Mumbai. I never saw him but the service was fabulous," says Anirudha Mukhedkar, chief executive of Restore Solutions, a retail consultancy in Bangalore. "I ordered over the phone and I would pay him at the end of the month. He didn't have to have a large store."
Indian customers traditionally favour personal service and "not a cold-blooded transaction". Retailers in India should think about "how to personalise and bring a degree of warmth to the transaction", says Mukhedkar. "If retail wants to get its act right, it needs to go back to basics."
Biyani, chief executive of Future Group, India's largest retailer, also retains some of the basics of shopping in India.
Biyani is known for creating the atmosphere of an open-air bazaar in his sprawling hypermarkets. His Big Bazaar stores have narrow aisles, overflowing bins and loud music.
"In India, theatre is always there in selling," says Biyani.
Saturday, January 3, 2009
A Room With A View --- Of A Mall
Indian mall developers who had eagerly participated in the frenzied building boom in 2007 and 2008 are now wondering what to do with the properties that have very few buyers.
Some urbanists believe that city slickers are ready to buy homes in malls.
Felix has linked to this article about the possibilities of mixed-use malls that offer housing and shopping.
"So a new style of mall has made its way to the market in the last decade or so, known as the “lifestyle center,” a smaller, more upscale grouping of stores hovering around what looks like an actual city street, with sit-down restaurants and theaters, maybe even park benches and streetlights—very much like old-fashioned downtowns, and built near residential areas. Since 2005, only three enclosed shopping malls have been built, and only one, in East Rutherford, New Jersey, is on the docket for 2009. Yet thirty open-air lifestyle centers have risen. Many of these are redeveloped properties—old, enclosed malls either torn down or added to, both for financial and environmental reasons. After all, there just aren’t that many 100,000-plus acres of virgin land in good locations to go around anymore."
America has always had clear zoning that seperated residential and commercial areas. Indian cities are anyway a jumble of places to live, work, shop and eat. There are no demarcations imposed by legal versions of barbed wire.
Will we see distressed mall owners try this out in India? Would you like to live in such a development?
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