HUL's Hemant Bakshi underlines marketing challenge

Watch Hemant Bakshi of Hindustan Unilever underlining today's marketing challenge.

HUL stock price

On April 01, 2014, Hindustan Unilever closed at Rs 601.60, down Rs 2.05, or 0.34 percent. The 52-week high of the share was Rs 725.00 and the 52-week low was Rs 457.90.

The company's trailing 12-month (TTM) EPS was at Rs 17.49 per share as per the quarter ended December 2013. The stock's price-to-earnings (P/E) ratio was 34.4. The latest book value of the company is Rs 12.36 per share. At current value, the price-to-book value of the company is 48.67.

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Indian marketers must look at China for inspiration

Michael Karg, CEO of Razorfish tells us why Indian marketers should look at China and not the West for inspiration.

Michael Karg, CEO of Razorfish tells us why Indian marketers should look at China and not the West for inspiration.

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GM all set to improvise its operations in India

After being hit with the country's biggest "corporate fraud" in the automotive sector, General Motors is now trying to turn a new leaf. The India subsidiary of the Detroit-based carmaker is working overtime for an image makeover and is also looking to fix emission related issues on engines in 114,000 units of the multi-purpose vehicle Tavera that was manufactured between 2005 and 2013 recalled by the company last year. The unenviable task to fix the mess has now squarely fallen on the shoulders of an industry veteran and a former Maruti Suzuki executive Arvind Saxena, the first local Indian at the helm of affairs at GM since 2007.

"My mandate is very clear. I have to improve the operations for GM in India which would mean internal and network efficiency," Saxena said in his first formal interview since taking charge as president and CEO of GM India last month.

Also read:  Labour tensions return to haunt Indian auto sector

In October last year a government appointed panel headed by Nitin Gokarn, CEO of the NATRIP accused GM of committing a "corporate fraud" and alleged that the company's top management from 2005-2012 were complicit in manipulating the conformity of production testing norms for its MPV Tavera. This was a huge setback for the company. GM is now currently awaiting Special Investigating Reports from the governments of Gujarat and Maharashtra.

Saxena insists that "corrective action" has been taken to ensure that "re-occurrence of such issues is not repeated." He however acknowledges the need for creating the right perception in the market for brand GM. "We need to improve the perception in the market and be seen as a very customer friendly organization," Saxena says. He further adds, "GM has been very transparent in bringing this up and frankly it is behind us and we should look forward how do we get the confidence and that's why I say we should be seen to be more customer friendly organization."

Last year to fix accountability, GM fired over 20 executives from the company including their CFO Anil Mehrotra and Vice-President for global engine engineering Sam Winegarden. It has also overhauled its manufacturing process following an audit carried out by Ernst & Young. According to P Balendran, Vice-President (Corporate Affairs) at GM, the company has replaced engines in 20,000 out of the 114,000 Taveras it recalled. He claims Tavera sales have not been impacted due to the recall and cites the monthly sales data for the MPV as a case in point. Last month GM sold over 1,000 units of Tavera.

Once the storm settles down, Saxena would also have to work towards enhancing the company's product portfolio from the current 8 cars it offers and increase market share, which at the end of last fiscal stood at a little over 3% even though GM has been in India for 16 years. However, it won't be an easy task. Saxena says the slowdown in the car market is currently so acute that he does not see any major turnaround till the end of this calendar year.

One strategy that is quietly being put in place is to start exports out of its two manufacturing plants at Halol and Talegaon. According to GM insiders, the export plan is yet to be finalized fully as the company is mulling the products to be shipped overseas. This, they say, will also turn GM profitable in India. Saxena refused to divulge much when asked but added, "Domestic market is priority for us and exports could be a possibility in the future but I can't say much about that right now."

At a time when GM is facing a lot of heat in its home market in the US for faulty ignition switches including a US congressional probe, its India subsidiary too is awaiting an SIT report from the governments of Gujarat and Maharashtra that could see the US automaker shell out a tidy sum as compensation for manipulating COP testing norms in Tavera.

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New govt should focus on job creation: CII's Ajay Shriram

According to Ajay Shriram, the new CII President one would definitely want a stable government and a government that moves rapidly on economic agenda.

FDI in multi-brand retail is a win-win across the board.

Ajay Shriram

President

CII

It is impossible to predict the outcome elections said Ajay Shriram, the new CII President but all political parties surely want economic growth and development. However, the new government's key area of focus must be jobs because large percentage of population is under 35 years of age.

According to him one would definitely want a stable government and a government that moves rapidly on economic agenda. 

In an interview to CNBC-TV18's Ronojoy Banerjee talking about the uncertainty of fate of foreign direct investment (FDI) he said, we want to highlight to the government why FDI in multi-brand retail is positive and a good thing. 

Also read: CII unveils 100-day agenda for new govt; stresses on GST

"I think FDI is important not for the money point of view, it is important for the knowledge, it is important for the know-how, it is important for logistic management," he said. 

FDI in multi-brand retail could be a win-win for the farmer. It is an employment opportunity for the entire logistics, supply chain sector and the customer gains. Therefore it is a win-win across the board, he said. 

For the entire interview watch video

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Doha Bank opens 1st branch in May; eyes $5 bn biz in 3 yrs

The second largest Qatari lender Doha Bank will be opening its first branch in India next month and has set a target of USD 5-billion balance-sheet by the third year of operations.

The Qatari lender is the third Arab lender to have operations in the country after Bank of Bahrain & Kuwait and Abu Dhabi Bank.

"We got the permission from the Reserve Bank to open the branch last December, and we will be launching the operations as early as next month as a full-fledged bank," Doha Bank Group Chief Executive R Sitharaman said.

Also read:  Here's why RBI is banking on Bandhan

Doha Bank already runs a brokerage in the country (Doha Brokerage) with 41 percent stake, the rest of the holding being held by local brokers of Kochi. Sitharaman said the bank has no plan to scale it up, nor does it have any exit plans.

When asked about whether the bank is ready for incorporation as a local subsidiary once operations reach a critical scale, he said, "We have no issues with RBI norms of becoming a wholly-owned subsidiary".

On what could be the differentiation for his bank, as there are close to 50 foreign banks in the country, Sitharaman said differentiated pricing and focused corporate banking will be the focus.

When asked how much he will be investing in the branch, he said capital won't be any constraint and whatever is the minimum required amount (which is USD 25 million) will be brought in as the parent bank has deep pockets and high tier I capital (16 percent).

Also read:  Why 'IDFC Bank' is still a distant dream

Sitharaman said he would finalise the location for the branch in the tony south Mumbai CBD Nariman Point and it will be a 50-people branch to begin with, offering retail and corporate banking solutions with emphasis on off-branch banking.

Stating that his objective is to be profitable by the end of first year of operations, he said, already the bank has an asset of over USD 1 billion to domestic corporates by way trade finance and the target is to have a USD 5-billion balance-sheet by the end of the third year.

Doha Bank nets 17 percent of its business from overseas operations and is a major player in the remittances market to the country with Rs 8,000 crore in volume last year.

About expansion plan, he said, "Our next branch will be Kerala, considering our long association with that market," but added that since foreign bank licences come as bilateral reciprocity, it depends on when the RBI allows it to open the next branch.

Qatari government holds 16 percent stake in the bank and the bank has a market capitalisation of USD 5 billion and an asset of USD18.4 billion as of December 2013 (loan book of USD 11.3 billion and deposits of USD 11.7 billion).

Doha Bank has branches in Kuwait, Dubai and Abu Dhabi and representative offices in Singapore, Turkey, Japan, China, Britain, Canada, Germany, Australia, Hong Kong, South Korea and Sharjah.

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Why 'IDFC Bank' is still a distant dream

As per the rules set by the RBI, IDFC will have to go through at least two stages of restructuring before it can open the doors of its first bank branch.

After bagging the banking licence , the management of the infrastructure lending firm are optimistic and justifiably excited about the road ahead. Meanwhile, CNBC-TV18's Ekta Batra and Davina Munro report that IDFC  will have to go through a detailed restructuring before it can throw open the doors of it's first bank branch.

'We already have 21% tier-I capital and since we will be executing a transition from NBFC to a bank, we will be the best capitalised start up bank in India", says Rajiv Lall, Executive Chairman, IDFC.

Also read:  Here's why RBI is banking on Bandhan

But it maybe easier said than done. As per the rules set by the RBI, IDFC will have to go through at least two stages of restructuring before it can open the doors of its first bank branch.

In the first stage, IDFC is expected to first establish an NBFC or a non operating financial holding company. Wholly owned by the promoter, this NBFC will in turn hold stake in the bank. Hence, we can expect IDFC to undergo a demerger process over the next 8-10 months where in a bank will be established and the existing lending business will be transferred to the bank.

Shareholders will continue holding their existing stake in IDFC while the NBFC will hold only 50% stake in the bank implying that the shareholder indirectly holds 50% stake in the bank.

The second leg of restructuring involves listing the new bank within 3 years of starting operations.

And the NBFC 's stake should fall to 40% after the third year. But that's on the holding structure. What about the operations as a bank itself?

One of the biggest fears for analysts is the return ratios dipping due to transition pain with IDFC having to adhere to set CRR, SLR and PSL requirements. But then again, the return on equity is expected to come back to 11-14% by FY20-21, after dipping to single digits in the first 3-4 years of starting operations as a bank.

In fact, most of the analyst have concerns such as asset quality risks and IDFC's limited experience in running any retail franchise that are mostly for the medium term; the consensus is that a banking licence is very much a long term positive for IDFC.

IDFC stock price

On April 03, 2014, IDFC closed at Rs 124.95, down Rs 3.05, or 2.38 percent. The 52-week high of the share was Rs 165.45 and the 52-week low was Rs 76.25.

The company's trailing 12-month (TTM) EPS was at Rs 12.79 per share as per the quarter ended December 2013. The stock's price-to-earnings (P/E) ratio was 9.77. The latest book value of the company is Rs 88.76 per share. At current value, the price-to-book value of the company is 1.41.

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Tata-SIA Airlines venture gets aviation ministry approval

Next, the airline needs a permit from the Directorate General of Civil Aviation (DGCA), the industry regulator, to start operations.

The Ministry of Civil Aviation has given its go-ahead to Tata SIA Airlines, the joint venture between Tata Sons and Singapore Airlines, taking it a step closer to kick starting India operations.

Next, the airline needs a permit from the Directorate General of Civil Aviation (DGCA), the industry regulator, to start operations. In November 2013, Singapore Airlines said it had received formal clearance to invest in the joint venture from India's Foreign Investment Promotion Board (FIPB).

In their new venture, Tata SIA Airlines, Tata Sons would hold 51 per cent stake and Singapore Airlines (SIA) 49 percent. The two partners will make an initial investment of USD 100 million to launch the airline.

(Also Read: SpiceJet withdraws Re 1 ticket offer after DGCA reprimand)

Tatas and Singapore Airlines have assured the government that control of their proposed venture would always remain in Indian hands, while seeking approval to offer full-service passenger airways on both domestic and international routes.

This is the third attempt by Tatas and SIA to enter the Indian civil aviation sector.

Tatas have a long history of association with civil aviation in India.

JRD Tata had started Tata Airlines in 1932, which was later in 1946 renamed as Air India and was subsequently nationalised in 1953.

The JV would also provide air transport carriers for both passengers and freights as well as supporting services to air transport, like operation or airport flying facilities, radio beacons, flying control centres and radar stations.

(With inputs from PTI)

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Novartis sues Biocon for patent infringement on Galvus

In yet another patent infringement battles in India, Swiss drug maker Novartis has taken Indian biotech firm Biocon to court on anti-diabetes drug. Novartis has sued Biocon in Delhi HC on patent infringement on Galvus, chemical name Vildagliptin, and the court has ruled partly in its favour reports CNBC TV18's Archana Shukla.

In yet another patent infringement battles in India, Swiss drug maker Novartis has taken Indian biotech firm  Biocon to court on anti-diabetes drug. Novartis has sued Biocon in Delhi HC on patent infringement on Galvus, chemical name Vildagliptin, and the court has ruled partly in its favour reports CNBC TV18's Archana Shukla.

Glavus is also marketed in combination with Metformin Hydrochloride, owned by Novartis in India.

Novartis's case stems from the fact that Biocon had sought & received approval from the Indian drug regulator CDSCO for its version of Vildagliptin. Novartis argued that Glavus is a novel molecule and patent protected in India. Hence any possible launch by Biocon would infringe on Novartis' patent on that drug.  

Based on the arguments placed on March 28^th the Delhi High court ordered that Biocon cannot commercially launch Vildagliptin in India. Although the court said Biocon could manufacture Vildagliptin for in-house research purposes.

Novartis's Galvus is also under another patent battle with Wockhardt . On March 24^th the Swiss drug maker had received an injunction against Wockhardt in the Delhi High Court for this product.

Biocon stock price

On April 01, 2014, Biocon closed at Rs 431.10, up Rs 7.05, or 1.66 percent. The 52-week high of the share was Rs 497.40 and the 52-week low was Rs 264.45.

The company's trailing 12-month (TTM) EPS was at Rs 14.01 per share as per the quarter ended December 2013. The stock's price-to-earnings (P/E) ratio was 30.77. The latest book value of the company is Rs 110.34 per share. At current value, the price-to-book value of the company is 3.91.

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Hyundai sales dip 8.37% in March

Hyundai Motor India today reported 8.37 percent decline in total sales at 51,708 units for March, 2014.

It had sold 56,437 units in the same month of last year. In the domestic market, Hyundai sold 35,003 units in last month, as compared to 33,858 units in March, 2013. During the month, Hyundai's exports declined by 26 percent to 16,705 units as against 22,579 units in the same month last year.

HMIL Sr VP, Sales and Marketing, Rakesh Srivastava said: "Post the reduction of excise duty and with the strong performance in compact segment; Hyundai registered March sales of 35,003 units with a growth of 3.4 percent over corresponding month indicating a build-up of positive momentum.

"The excise duty cut is a welcome step taken by the government to revive sale."

Also read: March auto sales show mixed trend

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Ashok Leyland sales decline 27% in March

Sales of medium and heavy commercial vehicle in March declined by 20 percent, to 7,723 units from 9,694 units sold during the same month of previous year.

Hinduja Group flagship company Ashok Leyland  today reported a 27 percent decline in its total sales in March at 10,286 units.

The company had sold 14,019 units during the same month of previous year, Ashok Leyland said in filing to the BSE.

Sales of medium and heavy commercial vehicle in March declined by 20 percent, to 7,723 units from 9,694 units sold during the same month of previous year.

Sales of light commercial vehicles in March, 2014 declined to 2,563 units from 4,325 units sold in the same month of previous year.

For the fiscal ended March 31, the company reported sales of 89,342 units, compared to 1,14,611 units in 2012-13 fiscal.

Also read:  Ashok Leyland sales dip 21.2% in Feb

Ashok Leyland stock price

On April 01, 2014, Ashok Leyland closed at Rs 22.65, down Rs 1.05, or 4.43 percent. The 52-week high of the share was Rs 24.55 and the 52-week low was Rs 11.82.

The latest book value of the company is Rs 16.74 per share. At current value, the price-to-book value of the company was 1.35.

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