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The Economic Times - Mumbai, 11/22/2018 Cropped page Page: 5
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5�THE ECONOMIC TIMES | MUMBAI | THURSDAY | 22 NOVEMBER 2018 | WWW.ECONOMICTIMES.COM
Brands: Creating DesireTODAY ON
Regulating AuditThe Institute of Chartered Accountants of India is all set to cede ground to the National Financial Reporting Authority on regulatory matters of the audit profession.
Another SUV RaceAmid the globally declining popularity of sedans, two Japanese carmakers vying for the fifth spot are looking at SUVs for deliverance.
The Missed IPO TrainThe IPOs that hit the market between April and October, raising `13,627 crore, took the last train home. For others, it might be a long wait at the platform.
Mumbai: While SubhashChandra, promoter of Zee Enter-tainment Enterprises (ZEE), ison a hunt for a global strategic in-vestor for half of the promoters’stake in the company, his son Pu-nit Goenka, CEO of ZEE, said hisfirst preference would be for in-ternational players not yet pre-sent in India.
“My first preference is a playerwho is not yet present in India,preferably from tech/internetbackground. We don’t need anymoney for the South Asian busi-ness. We need somebody to takeus to the global markets,” Goen-ka told ET.
Last week, ZEE’s promoters an-nounced their decision to sell50% of their stake (promotersown 41.6% shareholding) in ZEE,the country’s biggest entertain-ment business by market cap, ina bid to secure large-scale finan-cial backing and compete in amarket prone to major technolo-gical disruptions.
While the sudden announce-ment surprised the industry, Go-enka told ET that he believesnow is the time when he will getthe “best value” for ZEE.
“If we were to delay this deci-sion for another 18-24 months, itwould not be the best from valua-tion point of view. This is theright time from my perspectivefor us to get the best value for ZEEand the right partner because ofthe opportunity it represents toanybody who is not present in
this market,” Goenka said.Goenka refused to share the na-
mes of potential players but saidcurrently, global players presentin India are Disney, Star (whichDisney is in the process of acqui-ring), Viacom (via JV withTV18), Turner, and Amazon.
there is an interest at the parentlevel, even as a minority sharehol-der, we should open it up to as ma-ny players,” Goenka stated.
He confirmed that at ZEE5, thepromoters are open to sell a lar-ger stake, but at the parent level,they won’t sell more than 50%.
“Twenty percent is not a smallstake for a large business likethis,” Goenka said. “Why wouldthey want to come with only20% and not ask for more is be-cause they will value our exper-tise. We are the ones who bro-ught the business to this level to-day. Being an equal partner withme should be good enough forthem to come.”
The genesis of ZEE promoterscarrying out the exercise is theiraspiration to be a global contentcompany. Both Chandra and Go-enka feel that ZEE understandscontent and are confident thatthey can create content for anymarket, but what they lack is ac-cess to those markets and there-fore the monetisation of that con-tent for those markets.
“I can easily make that con-tent for Netflix or Amazon andjust sell it to them. But, is thatwhat my company’s aspirationis to be? No. In true sense, I wo-uld want to go to those marketsand give competition to localplayers rather than being a ven-dor,” Goenka said. “I believethat the time has come that so-mebody needs to come from theemerging markets also, justlike the Chinese have started.There’s no reason why Indianscan’t. That’s the why part ofour decision.”
ZEE would Prefer a Global Coas Strategic Investor: CEO
“Anybody outside of these is apotential partner for us. I am notclosing the doors to anyone and Iwill be stupid to say to anyonethat I don’t want you.”
Industry sources said Chinesemultinational company Tencent,American telecom giant Com-cast and Apple are among the pla-yers who have been approachedby Goldman Sachs, investmentbanker for the promoters.
While Apple and Comcast spo-kespersons declined to commenton the story, an email query sentto Tencent did not elicit responsetill press time Wednesday.
Incidentally, Tencent is loo-king at India with great inter-est. It has invested in Indianfantasy gaming company Dre-am11and globally it has interestin internet and related servicesand products.
Comcast has also been on a loo-kout for opportunities in Indiaand had made a failed bid to ac-quire 21st Century Fox from Ru-pert Murdoch. Apple, meanwhi-le, is not into OTT or linear TVspace and industry experts feelmay not be interested in acqui-ring ZEE stake.
Goenka said that talks were ini-tiated when one internationalplayer showed interest in ZEE5,the OTT business of ZEE.
“Earlier, we were looking onlyfor a partner in ZEE5, but the kindof covenants being imposed onthe parent company were very, ve-ry, limiting. That’s when the ban-kers also advised us it’s better tobring somebody at the parent le-vel and this party also agreed.That is when we decided that if
TIMING IT RIGHT
If we were to delaythis decision foranother 18-24months, it wouldnot be the best fromvaluation point ofview. This is theright timePUNIT GOENKACEO, Zee Entertainment Enterprises
New Delhi: In a departure fromits large warehouse-size store for-mats, Ikea is experimenting with30 smaller outlets across the worldin a bid to address changing con-sumer patterns globally, even asthe Swedish retail giant has deci-ded to increase investments in e-commerce offerings.
“This is for the first time that weare experimenting with smallerformat stores,” said Peter Betzel,CEO for Ikea India.
The new formats will be as smallas 15,000 sq ft digital-heavy “plan-ning points” and others formatsin the range of 50,000 to 100,000 sqft within city centres around theworld. At present, Ikea only openslarge outlets ranging from 400,000sq ft which are mostly located onthe outskirts of a city.
“We need to step faster into the di-gital innovations where we can me-et our customers digitally, on theirsmartphones as well as experiencecentres in city centres, closer towhere many people live,” Betzel sa-id in a telephonic interview onWednesday, adding that Ikea’s ma-in focus globally will continue to beon its flagship bigger stores.
Betzel said the first such smallstore has opened in Paris and thesecond one is being rolled out inShanghai. He said Ikea plans tohave some small format outlets inIndia as well and the first trunca-ted version is expected to come upin Mumbai where the world’s lar-gest single brand retailer is alsohoping to open a large 400,000 sq ftstore in Navi Mumbai next year.Ikea made its India debut with a400,000 sq ft store spread on 13acres in Hyderabad in August.
“We recognise that the retaillandscape is transforming at a sca-le and pace we’ve never seen befo-re. As customer behaviour chang-es rapidly, we are investing and de-veloping our business to meet the-ir needs in better and newer ways,”Jesper Brodin, chief executive ofIngka Group, that owns Ikea retailchain, said in a statement.
“We will put greater emphasis onmaking our existing stores evenbetter and taking the opportunityto renew and reinvent our businessin a way that is inspired by our his-tory, culture and values,” he said.
Ikea’s new “retail direction” willresult in 7,500 jobs becoming re-dundant at the company in thenext two years even as the retail gi-ant plans to hire 11,500 employeesin those “touchpoint” outlets.
EXPERIMENTING WITH TOUCH POINTS
Ikea Goes Smallerfor 1st Time to Fitinto Digital World
GLOBAL IMPACT
Ikea’s new “retail direc-tion” will result in 7,500jobs becoming redun-dant at the company in the next two years
FILE PHOTO
Our Bureau
Mumbai: Sanjay Kumar, an avia-tion industry veteran who playedkey roles in shaping the opera-tions at low-fare carriers IndiGoand SpiceJet from ground up, willjoin AirAsia India as its chiefoperating officer.
Kumar, who resigned from Indi-Go in July, will take up his new as-signment on December 3.
AirAsia India is a 51:49 jointventure between Tata Sons andMalaysian low-cost carrier Ai-rAsia Berhad. Kumar will be re-sponsible for overseeing the ope-rations as well as the commercialfunctions at the airline, it said ina news release on Wednesday.
He is joining the company at a ti-me when the Tata Group, alongwith Singapore Airlines withwhich it operates full service car-rier Vistara, is stepping up effortsto acquire a stake in Jet Airwaysto form a large aviation entity andwean from the partnership withAirAsia Berhad.
Kumar’s mee-tings were prima-rily with executi-ves at Tata Sonsduring the hiringprocess, said peo-ple in the know.There was justone video confe-rence with Tony
Fernandes, the AirAsia Berhadgroup CEO, who had practicallybeen running the Indian airlineuntil recently. Fernandes and hiscolleagues have been named in anFIR by the Central Bureau of In-vestigation for allegedly bribinggovernment officials to change ru-les for operating overseas flights.
Kumar joined IndiGo as its chiefcommercial officer in 2007, whenthe airline was the smallest low-cost carrier (LCC) in the countrywith a fleet of just six planes. He,
along with the thenIndiGo presidentAditya Ghosh, stee-red its aggressiveexpansion, takingcontrol of India’smost profitablemetro routes, kee-ping costs the lo-west in the industryand toppling JetAirways to becomeIndia’s No 1 carrierby controlling more
than 40% of the Indian domesticpassenger market.
IndiGo became one of the fastestgrowing carriers in the world andits fourth largest LCC as well. Ku-mar was responsible for planning,revenue management, e-commer-ce and distribution, sales, marke-ting, advertising and customer re-lations at IndiGo.
AirAsia Hires AviationVeteran Kumar as COOSanjay Kumar, whoplayed key roles atSpiceJet and IndiGo,will take charge in Dec
prices for farm output, helped rai-se farm incomes and boost ruraldemand for consumer durable go-ods such as cars, appliances, andentertainment devices.
Maruti Suzuki’s domestic salesincreased 9.9% to 1.1million unitsuntil October this year.
“It is not that they are decliningbut rural markets are outpacinggrowth in urban markets…Iftraffic management improvesand customers enjoy driving on
which are priced between `̀9.5lakh and ̀̀ 13.9 lakh.
Maruti Suzuki, which set a tar-get to expand volumes by double-digits this fiscal, said festival-sea-son demand has not met expecta-tions. Sales during the festive pe-riod grew by 6%. Given the chal-lenges stemming from anincrease in interest rates, fuel pri-ces and insurance costs, MarutiSuzuki said the second half of theyear ‘looks difficult’.
“It all depends on how the ma-cro-economic factors shape up.Our effort will be to try and meetour target…Interest rates havehardened, and insurance costshave increased at about ̀̀ 9,000 pervehicle. In some areas, monsoonshave been deficient and at otherssurplus, doing damage at bothplaces. Stock markets are not do-ing so well,” Kalsi said.
On the positive side, fuel priceshave started declining, he said.
the road, certainly that will leadto a better situation…create bet-ter market (demand),” added Kal-si, who heads the sales function atIndia’s biggest carmaker.
He was speaking on the sidelinesof the launch of the new Ertiga,which has been priced aggressi-vely between `̀7.4 lakh and `̀10.9lakh (ex-showroom, Delhi). Therefurbished Ertiga utility vehiclewill take on the likes of HondaBR-V and Mahindra Marazzo,
Maruti Caught in Traffic, Shared Mobility Co says second half of the year will be tough due to costlier oil, rising rates & insurance costs
2-3% sales growth post-ed by Maruti Suzuki Indiain urban areas this fi scal
Due to rise in interest
rates, fuel prices and insurance costs, Maruti Suzuki said the second half of the year ‘looks diffi cult’
Sales Lose Lustre If traffi c manage-
ment improves and customers enjoy driving on the road, cer-tainly that will lead to a better situation…R S KALSIsenior executive director (sales & marketing), Maruti Suzuki India
12% sales registered in the rural markets
Sales during the festive period grewby around
6%
Mumbai: Crisil Research on Wed-nesday revised the passengersvehicles (PV) volume growthforecast downward to 7-9%, fromits earlier estimate of 9-11% for thefiscal, owing to sluggish demandand higher inventory even duringthe festive season.
Domestic PV sales grew 1.6% to284,224 units in October, against279,877 units in the year-agomonth, snapping three months ofconsecutive decline, although lowmarket sentiments affected festiveseason demand.
Of this, the car sales volumesaw a flat growth, while theutility vehicles segment registe-red a 4% growth.
“Dusshera and Diwali period(September and October/Novem-ber), which typically contributesa fifth of annual sales, haven’t
exactly sparkled for automobilemakers or original equipmentmanufacturers (OEMs),” Crisilsaid in a note.
Also, over the first 10 days ofOctober, sales were affected dueto shraadh (traditionally conside-red an inauspicious period), duringwhich people in north India don’tbuy new cars, it added.
According to data by the Societyfor Automobile Manufacturing(SIAM), the PV sales in July, Augustand September declined by 2.7%,2.5% and 5.6%, respectively.
While sales increased by only1.6% in October, for Septemberand October combined, theyde-grew by around 2%, Crisil said,adding, “Consequently, fiscal-to-date (April-October) growth isjust 6%, which is a major worryfor OEMs.” – PTI
Crisil Cuts Passenger VehicleSales Growth Forecast
CAR SALES GROWTH IN BIG CITIES SLOWING
A TECH OR INTERNET FIRM not yet present in India will be ideal for ZEE as it does notneed money here but a partner to take it to global markets, says Punit Goenka
� Hero Cycles Signs StrategicAlliance for Electric Bicycles
NEW DELHI Hero Cycles on Wed-nesday said it has entered into astrategic alliance with Japan’sYamaha Motor and Mitsui & Co for
technology, manufacturing and marketing ofelectric bicycles. The first product for India toroll out from this alliance would be a high-endelectric-mountain bike (E-MTB) under the Herobrand, the company said in a statement. HeroCycles, the flagship company of the HMCgroup, had recently announced its ‘CycleValley’ project proposed to be set up in Lud-hiana and serve as a hub for end-to-end supplychain of the bicycle industry.
� Panasonic Eyes ̀̀ 140-crSales from Trackers Biz
NEW DELHI Panasonic on Wednes-day said it expects to clock sales tothe tune of ̀̀ 140 crore in the next oneyear from its bluetooth-based
trackers that have been conceptualised anddesigned by its team in India. The company,which launched two versions of its tracker‘Seekit’ priced ̀̀ 1,299 onwards will start sellingthe devices online from December.
Pitch Report
Mumbai: Florida, USA-basedAmerican Monster Truck Asso-ciation (AMTA), which produ-ces monster truck entertain-ment events across the US, Eu-rope and Latin America, is rea-dy to bring the experience to theIndian audiences in Octobernext year.
AMTA has picked up minoritystake in Mumbai-based Star-light 108 Media and the two com-panies have worked out a plan tobring the event to four Indian ci-ties — Mumbai, Delhi, Bengalu-ru and Hyderabad.
“We have been working withAMPA since 14-15 months andhave finally reached an agree-ment over creating a long termIP. Everyone is quite excitedabout the Indian market,
racing is a rage in the US, whereclose to 300 shows are organi-sed every year. AMTA, whichwas established in 1996, aloneorganises 100-120 shows per ye-ar in the US.
“We have been in 20 countriesbut never to India. From what Ihear of the Indian consumers,they are ready for this kind ofevent. Monster Truck event islike a big circus with hugetrucks and other activities andis good entertainment for theentire family. We will be bring-ing all American Trucks alongwith backup bodies and casesand jet-powered vehicles,” Da-le Rev Prochnow, president,AMTA, said.
which is welcoming and loo-king for bigger and larger thanlife shows,” Lalit Bhatnagar,partner at Starlight 108 Media,told ET.
Incidentally, Monster Trucks
Monster Trucks to Enter India Next Year
COMPANY PHOTO
AMTA ties up with Starlight 108 Media to bring the event to four cities in October 2019
Kumar willoversee theoperations aswell as thecommercialfunctions atthe airline
Mumbai: The Yogi Adityanath-led Ut-tar Pradesh state cabinet approved anew reimbursement policy for multi-plex players who invested in the stateunder a five-year tax exemption schemeoffered by the previous government.
While the fine print of the policy is yetto be put out, it is learned that the stategovernment has decided to refund partof state goods and services tax (SGST) tothe multiplexes under different slabs.
As part of the five-year scheme of ex-emption, multiplex companies were al-lowed to charge and retain entertain-ment tax under different slabs. Howe-
ver, with the implemen-tation of GST from Julylast year, entertainmenttax was subsumed andthere was no clarity onthe refund.Attempts were made by
some multiplexes to getrefund from the state go-vernment and multiplewrit petitions were filedin the high court seekinga refund mechanism.While the case is still onin the Allahabad High Co-urt, the state government
announced the new policy on Tuesday.“Pursuant to plethora of writs filed by
us for different multiplex players, thedecision of the state Cabinet is verywelcome and will certainly boost in-dustry confidence. The details of thepolicy will have to be looked into as onlythe state portion of the GST will be re-imbursed,” said Abhishek A Rastogi,partner at Khaitan & Co, who is arguingthe petitions for various multiplexes.
Multiplex players like PVR, Inox Leisu-re and GNG Enterprises will be the directbeneficiaries of the new policy. However,the promised benefit, Rastogi said, maynot be sufficient.
UP Govt Likely toRefund a Part ofGST to MultiplexCos that Lost Sops
As part of theexemptionscheme,multiplex coswere allowedto charge andretain taxunderdifferentslabs
Get a daily mail with the mostimportant news on theautomotive industry from allmedia outlets. Send a blank mailto [email protected] to sign up.
New Delhi: Maruti Suzuki,which revolutionized India’s per-sonal transport industry two de-cades ago and sells one in two carsrunning on the country’s roads,said that annoying traffic grid-locks and the increasing use ofshared mobility have hurt de-mand in large cities.
“Metro markets are under pres-sure. In terms of growth also, the-re are concerns,” R S Kalsi, seniorexecutive director (sales & mar-keting), Maruti Suzuki India(MSIL), said on Wednesday. “The-re are various reasons. One can betraffic congestion. Other could bethe impact of shared mobility.”
The global leader in small carshas seen the pace of sales growthslow to 2-3% in urban areas this fi-scal. Rural markets across the co-untry have fared better in compa-rison, and volumes there haveclimbed 12% in the same period.
Three consecutive years of favo-urable monsoons, coupled withan increase in minimum support
COM
PAN
Y P
HO
TO
Mumbai: In the largest real-estateinvestment platform transactionset to be concluded this year, priva-te equity major Warburg Pincus ispoised to enter into an alliancewith developer Runwal Group toinvest $1billion in retail-led mixed-use development across the count-ry, said two persons with directknowledge of the development.
The joint investment platformwill see both the entities infusingaround $250 million each as theirequity contribution, while the restwill be through leveraging.
“This ($500 million) would justbe the initial contribution as boththe entities are open to investingmore and expanding the size ofthe investment platform. Furtherinvestments and upping the plat-form size would depend on future
growth opportunities,” said oneof the persons mentioned above.
Under this venture, Warburg andRunwal are looking to build a port-folio of 15-20 retail-led properties intier-I and II Indian cities over thenext five years. Apart from buildingown properties, the platform wouldalso be looking at acquiring opera-tional and partially-completed pro-jects. A new team will be formed to
lio. Runwal’s proposed mixed-usedevelopment on 8-10 acre in Dom-bivli near Mumbai will also beco-me a part of this platform.
Nearly 1million sq ft retail projectas part of the over 20 acre develop-ment in Pune and a proposed deve-lopment on a 3-acre land parcel inMumbai’s western suburb Andhe-ri will also be shifted under theplatform. The company is develo-ping over 1 million sq ft project, in-cluding 7 lakh sq ft office space and3.5 lakh sq ft retail space, on this 3-acre Andheri land parcel.ET’s email queries to both War-
burg Pincus and Runwal Group re-mained unanswered till the time ofgoing to press.
Global private funds includingBlackstone Group, Canada Pen-sion Plan Investment Board(CPPIB), APG Asset Management,Xander Group and GIC have star-ted investing in retail sector to di-
versify their investment portfoliosin the country, and this trend is lik-ely to consolidate further.
Joint ventures and strategic in-vestment platforms have been in-creasingly in focus over the pasttwo years. CPPIB and PhoenixMills have joined hands for a stra-tegic platform to develop greenfi-eld and brownfield retail-led assetsin India. Xander Group’s VirtuousRetail and APG Asset Manage-ment have also formed a joint ven-ture Virtuous Retail South Asia.
With more than $45 billion in as-sets under management, WarburgPincus has an active portfolio ofmore than 165 companies globallyacross sectors and geographies. Ithas raised 17 private equity funds,which have invested more than $68billion in over 825 companies in mo-re than 40 countries. In India, it hasso far invested around $5 billionacross sectors.
manage the efforts of this proposedplatform that will build, own andoperate retail-driven properties.
For starters, the platform will ac-quire stake in Runwal’s few opera-tional properties and projects thatare part of the development pipeli-ne. The developer’s 0.5-million-sq-ft R Mall in Thane will be the readyand operational property to be mo-ved into the proposed joint portfo-
Warburg, Runwal Set to Tie Up for $1-b Realty Play Investment platform to see both infuse about $250m each initially and invest in retail-led mixed use projects across India
A New Venture
Warburg and Runwal aim to build a portfolio
of 15-20 retail-led properties
Platform would be looking at acquiring operational and partially-completed projects
R Mall inThane
1 million sq ft retail project in Pune
Proposed development on a 3-acre land parcel in Andheri
Runwal’s mixed-use development in Dombivli
CCI NG 3.7 Product: ETMumbaiBS PubDate: 22-11-2018 Zone: MumbaiCity Edition: 1 Page: ETMCPG5 User: kailash.korade Time: 11-21-2018 22:51 Color: CMYK
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