Kolkata: In a rare break from its tradition of building brands on its own, ITC Ltd said on Friday that it had agreed to buy Johnson and Johnson’s Savlon antiseptic and Shower to Shower body talc brands, as the company seeks to reinforce its range of personal care products.
In a statement, ITC said it had entered into agreements with Johnson and Johnson Ltd and Johnson and Johnson Pte Ltd for buying the Savlon and Shower to Shower trademarks and related intellectual property for use primarily in India, subject to regulatory approvals.
ITC, India’s biggest cigarette maker, is seeking to expand its personal and home care products range by using its vast distribution reach and to reduce its dependence on its tobacco business. These are its first acquisitions in the personal care products range.
“It takes several years to develop brands in a fiercely competitive personal care segment, and by buying existing brands ITC is now trying to simplify its task at least in some categories,” said Aashish Upganlawar, an analyst at the Indian arm of Elara Capital Plc, a financial services firm.
Investors welcomed the acquisitions. ITC shares rose 2% to end at Rs.378.05 apiece on BSE on a day the benchmark Sensex gained 1% to 29,094.93 points.
The company didn’t disclose the value of the brand purchases, but experts estimated that it may have paid up to four-five times the two brands’ combined annual revenue of nearly Rs.100 crore.
The two brands together clocked revenue of Rs.90 crore in 2013-14, according to an estimate by brokerage firm Religare Capital Markets Ltd. Of this, Savlon with its products including antiseptic soaps and handwash, earned Rs.65 crore, while the balance came from Shower to Shower prickly heat powders.
The two brands made up a mere 1% of ITC’s sales from non-cigarette consumer goods in 2013-14 at Rs.8,099.21 crore.
“We have maintained that we would take every road possible to reach our goal of achieving Rs.1 trillion sales in the new consumer goods segment in the next 15 years (ending 2030) and today’s announcement is in line with that strategy,” said a spokesperson for ITC.
Cigarettes contributed 85% to the company’s profit and 41% to its sales in the first nine months of the year to March. ITC also has a presence in hotels.
While ITC has seen success in categories like foods, its personal care brands like Vivel and Fiama Di Wills have lagged behind more established rivals.
“The deal is expected to increase ITC’s focus and presence in personal care, where it has been facing growth issues,” said Abneesh Roy, associate director (institutional equities research) at Edelweiss Securities Ltd, another brokerage firm.
Still, it will face tough competition from Reckitt Benckiser (India) Ltd’s Dettol, which dominates the antiseptic category and is also among the top five soap brands in the country. Savlon is a distant second to Dettol, which clocked sales of Rs.700-800 crore in 2013-14, according to industry estimates.
Savlon and Shower to Shower were not central to Johnson and Johnson’s portfolio that focuses on baby care and skin care products, oral care and over-the-counter products, such as cough syrup Benadryl, in India, said Roy of Edelweiss.
“While the deal looks relatively cheap and the two brands are largely undersold in India so far, ITC can make money from them if it invests wisely and boosts their sales in the next two years,” said Upganlawar of Elara Capital.
ITC’s move of buying consumer brands is in contrast with its strategy so far of building its own brands. Company chairman Y.C. Deveshwar said in several recent public speeches that ITC would take on competitors by launching more and more new brands.
Friday’s deal with Johnson and Johnson will be ITC’s first purchase in the personal care segment. Last year, it had bought Bengaluru-based Balan Natural Food Pvt. Ltd’s B Natural brand to enter the beverages market. It had also purchased confectionery brand mint-o from Delhi based Candico in 2002.
ITC’s non-cigarette business has been expanding rapidly.
In the first nine months of the current fiscal year, revenue from other consumer goods at Rs.6,444.74 crore was 21% of its total revenue. The category is yet to make a net profit on a regular basis and often slips into the red, depending on cyclical investments.
ITC’s acquisitions in the consumer goods segment comes at a time when its cigarette sales are sliding because of higher taxes and consequent price hikes.
The company’s fiscal third quarter results were dragged down by falling cigarette sales and disappointed many analysts. According to their estimates, cigarette sales contracted 13% by volume year-on-year in the December quarter due to steep hikes in value-added taxes in several states.
ITC’s net profit grew by an annual rate of 10.4% in the December quarter to Rs.2,635 crore and it looks impossible, at least for now, for the company to return to its earlier net profit growth rate of 18-20%, analysts said.
Success in my Habit
Monday, February 16, 2015
India remains FIIs’ top pick, $2.87 billion pumped in Jan
Mumbai: India continues to be a preferred market for foreign investors. Listed India-focused funds saw record inflows of $1.7 billion in January this year, while most other emerging markets (EMs) saw redemptions to the tune of $3 billion. Foreign institutional investors (FIIs) pumped in $2.87 billion into Indian equities in January, most of this coming from listed funds.
In February so far, FIIs have remained net sellers to the tune of $348 million. Kotak Institutional Equities has a foreign fund tracker, which gives comprehensive view on fund flows of listed funds (passive exchange traded funds, or ETFs, and active non-ETFs) into India and other emerging markets. The tracker intends to monitor both passive and active fund flows to get a sense of intent and direction of foreign investors.
Listed funds account for a large part of FII activity in India, claim experts. According to Kotak, net inflows into India amounted to $1.3 billion with active and passive channels attracting capital in January. India-focused active funds saw inflows worth $800 million while their passive counterparts roped in 880 million during the period. India continues to be an outlier as most other emerging markets have seen outflows during the month. Funds benchmarked against the MSCI EM Index pulled out $2.5 billion in January. Equity strategists believe India and China are benefiting at the expense of other markets such as Brazil and Russia.
Fund flows into ETFs have remained strong in 2014. nearly $150 billion went into US equity ETFs in 2014. Deutsche Bank Research says: “Fund flows to developed country equity and bond funds did much better than those to emerging markets in 2014; the trend seems to have extended into 2015. Importantly, the increase in the stock of global financial assets has not helped the volume of turnover in equity and bond markets, which remain below the 2011 peak.”
In February so far, FIIs have remained net sellers to the tune of $348 million. Kotak Institutional Equities has a foreign fund tracker, which gives comprehensive view on fund flows of listed funds (passive exchange traded funds, or ETFs, and active non-ETFs) into India and other emerging markets. The tracker intends to monitor both passive and active fund flows to get a sense of intent and direction of foreign investors.
Listed funds account for a large part of FII activity in India, claim experts. According to Kotak, net inflows into India amounted to $1.3 billion with active and passive channels attracting capital in January. India-focused active funds saw inflows worth $800 million while their passive counterparts roped in 880 million during the period. India continues to be an outlier as most other emerging markets have seen outflows during the month. Funds benchmarked against the MSCI EM Index pulled out $2.5 billion in January. Equity strategists believe India and China are benefiting at the expense of other markets such as Brazil and Russia.
Fund flows into ETFs have remained strong in 2014. nearly $150 billion went into US equity ETFs in 2014. Deutsche Bank Research says: “Fund flows to developed country equity and bond funds did much better than those to emerging markets in 2014; the trend seems to have extended into 2015. Importantly, the increase in the stock of global financial assets has not helped the volume of turnover in equity and bond markets, which remain below the 2011 peak.”
India offers Cutting Edge it Technologies at Frugal cost- Says it Secretary
New Delhi: Secretary, Department of IT & Electronics, Government of India Shri RS Sharma said that India offered a wide variety of sophisticated IT technologies at frugal cost to the technology acquirers and solution providers. He was Addressing the inaugural of the 15th edition of Indiasoft (India IT Show) which began in Delhi today. The international IT event and conferences are attended by over 400 delegates from abroad. Billed as the one of the largest IT shows focused on small and medium enterprises and organized by Electronics and Computer Software Export Promotion Council (ESC), the show was participated by 150 exhibitors form India.
Sketching the dramatic transformations taking place in the digital eco-system of India, Shri Sharma said that digital India program would be a game changer in India's march towards development. All social welfare and governance programs would be working on digital platform. For instance the unique identification program launched by the Government has so far enlisted 750 million people and it would be covering the entire population. The cost of enlisting an individual in the scheme might work out to be cheapest in the world. While similar ID card program in the UK cost Pound 150 per individual, in India it entailed only Rs 100 only. It could even work out to be cheaper, when the project gets completed. Shri Sharma invited the foreign delegates to adapt the Indian technologies, which combine innovation with frugality, speed and scale. That suited the need and affordability of countries, which are passing through various stages of development. Also, a variety of newer technologies are developed such as digital lockers, digital certificates etc. which would enable a person to store digitally all records and forward them as and when they are required by relevant organizations . Enhanced digitization would also help eliminate the last mile leakages in some of the social welfare programs like employment guarantee, subsidy transfer programs etc. Referring to the financial inclusion programs being launched by the government, Mr. Sharma mentioned that the high mobile phone penetration would be used to reach out the target group. India has over 950 million mobile phones. Since the PC and broadband penetration are not very high, mobile texting would be used for reaching out the target group to inform them about their bank balances and other facilities like direct subsidy transfer etc,. At the same time, every effort will be taken to increase the quality broadband penetration. India would have 250,000 touch points connected with optical fiber , wherein every person would have access to the net.
Shri Nalin Kohli, Chairman, Organizing Committee, Indiasoft Referred to the steady growth in India's software and services exports, which is estimated to touch US 86 billion this year. Shri J K Jadoo, Joint Secretary, Department of Commerce, Ministry of Commerce and Industry, Government of India said that the IT sector would emerge as a one trillion dollar worth segment by 2025 and India would be home to over 1000 cutting edge technologies. Shri D K Sareen, Executive Director, ESC referred to the innovative approaches of ESC to enhance the presence of Indian IT companies across the global digital eco-system. Later addressing a press conference along with a high-powered delegation from Russia on the potential of the Indo-Russian cooperation in IT, he said that areas like R&D, development of complex products and solutions should merit the attention of both countries not only for each other’s requirements but for third country exports. Importantly, ESC has signed a number of MOUs with important business organizations from various parts of the world and its statistical year book was released.
Sketching the dramatic transformations taking place in the digital eco-system of India, Shri Sharma said that digital India program would be a game changer in India's march towards development. All social welfare and governance programs would be working on digital platform. For instance the unique identification program launched by the Government has so far enlisted 750 million people and it would be covering the entire population. The cost of enlisting an individual in the scheme might work out to be cheapest in the world. While similar ID card program in the UK cost Pound 150 per individual, in India it entailed only Rs 100 only. It could even work out to be cheaper, when the project gets completed. Shri Sharma invited the foreign delegates to adapt the Indian technologies, which combine innovation with frugality, speed and scale. That suited the need and affordability of countries, which are passing through various stages of development. Also, a variety of newer technologies are developed such as digital lockers, digital certificates etc. which would enable a person to store digitally all records and forward them as and when they are required by relevant organizations . Enhanced digitization would also help eliminate the last mile leakages in some of the social welfare programs like employment guarantee, subsidy transfer programs etc. Referring to the financial inclusion programs being launched by the government, Mr. Sharma mentioned that the high mobile phone penetration would be used to reach out the target group. India has over 950 million mobile phones. Since the PC and broadband penetration are not very high, mobile texting would be used for reaching out the target group to inform them about their bank balances and other facilities like direct subsidy transfer etc,. At the same time, every effort will be taken to increase the quality broadband penetration. India would have 250,000 touch points connected with optical fiber , wherein every person would have access to the net.
Shri Nalin Kohli, Chairman, Organizing Committee, Indiasoft Referred to the steady growth in India's software and services exports, which is estimated to touch US 86 billion this year. Shri J K Jadoo, Joint Secretary, Department of Commerce, Ministry of Commerce and Industry, Government of India said that the IT sector would emerge as a one trillion dollar worth segment by 2025 and India would be home to over 1000 cutting edge technologies. Shri D K Sareen, Executive Director, ESC referred to the innovative approaches of ESC to enhance the presence of Indian IT companies across the global digital eco-system. Later addressing a press conference along with a high-powered delegation from Russia on the potential of the Indo-Russian cooperation in IT, he said that areas like R&D, development of complex products and solutions should merit the attention of both countries not only for each other’s requirements but for third country exports. Importantly, ESC has signed a number of MOUs with important business organizations from various parts of the world and its statistical year book was released.
UK’s Rexam to set up plants in Andhra, Rajasthan with £100 mn investment
Hyderabad: Beverage can maker Rexam Plc will build two plants in Andhra Pradesh and Rajasthan at an investment of about £100 million, adding 1.6 billion cans to its annual production capacity.
London-based Rexam already operates a plant in Mumbai.
The new plants, which will initially entail an investment close to £50 million each, will come up at Sri City in Chittoor district (about 50km from Chennai), and at Mahindra World City in Jaipur, the company said in a statement on Thursday. The company has secured land for the two projects.
“These investments will support and enable us to take advantage of the continued exciting growth of the beverage can in India. Having plants in different locations across the country will ensure we have a better footprint and position to meet the needs of our customers in the region over the long term,” Craig Jones, sector director of Rexam’s Africa, Middle East and Asia (AMEA) regions said.
The Sri City plant will be operational first—by the second half of 2016, followed by the Jaipur plant. The two plants will generate 150 jobs locally, the company said. Rexam’s Sri City plant will be located in the vicinity of PepsiCo Inc.’s largest beverage manufacturing plant in the country. The beverages and snack maker is investing Rs.1,200 crore in its Sri City plant.
Rexam operates 55 plants in 20 countries, providing employment to 8,000 people.
London-based Rexam already operates a plant in Mumbai.
The new plants, which will initially entail an investment close to £50 million each, will come up at Sri City in Chittoor district (about 50km from Chennai), and at Mahindra World City in Jaipur, the company said in a statement on Thursday. The company has secured land for the two projects.
“These investments will support and enable us to take advantage of the continued exciting growth of the beverage can in India. Having plants in different locations across the country will ensure we have a better footprint and position to meet the needs of our customers in the region over the long term,” Craig Jones, sector director of Rexam’s Africa, Middle East and Asia (AMEA) regions said.
The Sri City plant will be operational first—by the second half of 2016, followed by the Jaipur plant. The two plants will generate 150 jobs locally, the company said. Rexam’s Sri City plant will be located in the vicinity of PepsiCo Inc.’s largest beverage manufacturing plant in the country. The beverages and snack maker is investing Rs.1,200 crore in its Sri City plant.
Rexam operates 55 plants in 20 countries, providing employment to 8,000 people.
Tata Steel to acquire three service centres of SSAB in Nordic region
Mumbai: Tata Steel Europe on Thursday announced the acquisition of three service centres from SSAB, a Swedish steel manufacturer of strip, plate and tubular products, to strengthen its offering to manufacturers in the region.
Tata Steel has acquired the company’s facilities in Sweden, Finland and Norway for an undisclosed amount, it said in a notification to stock exchanges.
“These acquisitions will strengthen our strip products offering to manufacturers in this region. Improving our local processing capability will significantly enhance our product offering and service levels to customers,” said Karl Koehler, chief executive officer of Tata Steel Europe in a press release.
“There is a sophisticated and demanding customer base in the Nordic region which increasingly requires advanced steel products,” Koehler added.
The three centres process strip products offering services such as cutting-to-length, slitting and recoiling. They supply steel to manufacturers in the automotive, construction and electrical supplies industries and heavy and light engineering companies.
The European Commission has approved the sale of these service centres. SSAB was required to sell them as a condition of its takeover by another company. The transactions remain subject to approval from competition authorities in Norway, Sweden and Finland, and their implementation will follow these approvals.
Tata Steel Europe announced a pre-tax operational profit of £74.7 million for the first nine months of 2014-15, compared to a loss of £13.9 million for the same period in 2013-14.
Tata Steel has acquired the company’s facilities in Sweden, Finland and Norway for an undisclosed amount, it said in a notification to stock exchanges.
“These acquisitions will strengthen our strip products offering to manufacturers in this region. Improving our local processing capability will significantly enhance our product offering and service levels to customers,” said Karl Koehler, chief executive officer of Tata Steel Europe in a press release.
“There is a sophisticated and demanding customer base in the Nordic region which increasingly requires advanced steel products,” Koehler added.
The three centres process strip products offering services such as cutting-to-length, slitting and recoiling. They supply steel to manufacturers in the automotive, construction and electrical supplies industries and heavy and light engineering companies.
The European Commission has approved the sale of these service centres. SSAB was required to sell them as a condition of its takeover by another company. The transactions remain subject to approval from competition authorities in Norway, Sweden and Finland, and their implementation will follow these approvals.
Tata Steel Europe announced a pre-tax operational profit of £74.7 million for the first nine months of 2014-15, compared to a loss of £13.9 million for the same period in 2013-14.
EMC to set up 100 centres of academic excellence in India
Chennai: IT storage solutions company EMC Corporation plans to establish 100 centres of academic excellence in India this year.
These centres of academic excellence will be set up in leading IT institutes across the country to give students an opportunity to learn and practise key skills in the areas of cloud, data science, analytics, IT infrastructure and other leading technologies, a statement from the company has said.
Through its Academic Alliance initiative, EMC will offer the technical expertise, resources and study materials required for setting up the centres.
Fast-paced increase in demand has resulted in a massive shortfall of skilled industry-ready professionals.
The private cloud industry alone is expected to create 100,000 jobs in India by 2015 from 10,000 in 2011 and the demand is unlikely to be met.
The EMC Academic Alliance initiative aims at bridging the skill-gap in a rapidly changing IT environment and prepare students for better employability. As a part of the initiative, EMC will invite leading IT institutes from across the country to collaborate and establish these academic centres of excellence.
EMC will be providing training to the faculty of these institutions on a 'no cost' basis and access to the 'open courses' from the EMC Education Services.
The centre of academic excellence will provide students with hands on sessions exposing them to real life work environments. In addition, the access to white papers, study material and other resources along with regular sessions by subject matter experts will provide a holistic development to the students and prepare them for the new roles emerging in the IT industry.
This initiative plans to target about 50,000 students in 2015.
These centres of academic excellence will be set up in leading IT institutes across the country to give students an opportunity to learn and practise key skills in the areas of cloud, data science, analytics, IT infrastructure and other leading technologies, a statement from the company has said.
Through its Academic Alliance initiative, EMC will offer the technical expertise, resources and study materials required for setting up the centres.
Fast-paced increase in demand has resulted in a massive shortfall of skilled industry-ready professionals.
The private cloud industry alone is expected to create 100,000 jobs in India by 2015 from 10,000 in 2011 and the demand is unlikely to be met.
The EMC Academic Alliance initiative aims at bridging the skill-gap in a rapidly changing IT environment and prepare students for better employability. As a part of the initiative, EMC will invite leading IT institutes from across the country to collaborate and establish these academic centres of excellence.
EMC will be providing training to the faculty of these institutions on a 'no cost' basis and access to the 'open courses' from the EMC Education Services.
The centre of academic excellence will provide students with hands on sessions exposing them to real life work environments. In addition, the access to white papers, study material and other resources along with regular sessions by subject matter experts will provide a holistic development to the students and prepare them for the new roles emerging in the IT industry.
This initiative plans to target about 50,000 students in 2015.
Monday, February 9, 2015
‘US to source technology from Indian cities’
New Delhi: The US on Thursday said that US companies will make Bengaluru and Hyderabad “important sources” for cutting-edge technology as co-development and co-production of defence articles was the new course for collaborative partnership between the two countries.
The US also said that talks between President Barack Obama and Prime Minister Narendra Modi last month have sowed the seeds that have the potential to make US-India partnership the “defining counter-terrorism relationship for the region in the 21st century”.
Talking about the way forward in India-US ties, US ambassador to India Richard Verma said that perhaps the truest test of a friendship between countries is the degree to which their armed forces trust and collaborate with each other.
“Ties between the US and Indian defence establishments took immense strides forward during President (Obama)’s visit,” he said at a seminar at the Vivekananda International Foundation in New Delhi.
Verma wondered if anyone could have imagined a few years back that the US and India would have agreed to establish a joint working group on aircraft carrier technology.
“No example better illustrates the new course of our collaborative relationship than the decision by the US and Indian defence establishments and private sectors to pursue co-development and co-production of defence articles,” he said, adding that such type of defence collaboration was only done with the closest partners.
“The US defence industry will now make Bengaluru and Hyderabad important sources for cutting-edge technology,” he said.
Talking to reporters, Verma said that identifying four “pathfinder projects” under Defence Trade and Technology Initiative (DTTI) during Obama’s visit, besides agreeing on a working group on aircraft carrier technology is a very significant and exciting moment in ties between the two militaries.
“So let’s get these going. I think to the extent we can address other agreements that are still out there, we will continue to keep those on the agenda,” he told reporters when asked if India will have to rethink its policy of not signing the three “foundational agreements” if it wants high-end technology transfer from the US and their joint production.
Terming the India-US Defence Framework Agreement and the DTTI as very important development in defence ties, he said, “We are going to be focussed on that in the coming weeks and months”.
During Obama’s visit, the two countries had agreed on four “pathfinder projects”. However, India is seeking more than just these. What India wants is co-development and co-production of high-end technology and both sides had during Obama’s visit agreed on a joint working group to explore aircraft carrier technology besides designing and development of jet engine technology.
However, India and US are still not on the same page when it comes to three key pacts, often referred to as “foundational agreements” for greater defence technology cooperation. The three agreements have been pending for over five years and the US has been pushing for bringing them into force.
Of the three, two agreements—the Communications Interoperability and Security Memorandum of Agreement (CISMOA) and Basic Exchange and Cooperation Agreement for Geospatial Cooperation (BECA)—enhances the capacity of military equipment already bought from the US. The third agreement, the Logistics Support Agreement (LSA), would enable cashless supplies to each other’s armed forces on credit.
The US also said that talks between President Barack Obama and Prime Minister Narendra Modi last month have sowed the seeds that have the potential to make US-India partnership the “defining counter-terrorism relationship for the region in the 21st century”.
Talking about the way forward in India-US ties, US ambassador to India Richard Verma said that perhaps the truest test of a friendship between countries is the degree to which their armed forces trust and collaborate with each other.
“Ties between the US and Indian defence establishments took immense strides forward during President (Obama)’s visit,” he said at a seminar at the Vivekananda International Foundation in New Delhi.
Verma wondered if anyone could have imagined a few years back that the US and India would have agreed to establish a joint working group on aircraft carrier technology.
“No example better illustrates the new course of our collaborative relationship than the decision by the US and Indian defence establishments and private sectors to pursue co-development and co-production of defence articles,” he said, adding that such type of defence collaboration was only done with the closest partners.
“The US defence industry will now make Bengaluru and Hyderabad important sources for cutting-edge technology,” he said.
Talking to reporters, Verma said that identifying four “pathfinder projects” under Defence Trade and Technology Initiative (DTTI) during Obama’s visit, besides agreeing on a working group on aircraft carrier technology is a very significant and exciting moment in ties between the two militaries.
“So let’s get these going. I think to the extent we can address other agreements that are still out there, we will continue to keep those on the agenda,” he told reporters when asked if India will have to rethink its policy of not signing the three “foundational agreements” if it wants high-end technology transfer from the US and their joint production.
Terming the India-US Defence Framework Agreement and the DTTI as very important development in defence ties, he said, “We are going to be focussed on that in the coming weeks and months”.
During Obama’s visit, the two countries had agreed on four “pathfinder projects”. However, India is seeking more than just these. What India wants is co-development and co-production of high-end technology and both sides had during Obama’s visit agreed on a joint working group to explore aircraft carrier technology besides designing and development of jet engine technology.
However, India and US are still not on the same page when it comes to three key pacts, often referred to as “foundational agreements” for greater defence technology cooperation. The three agreements have been pending for over five years and the US has been pushing for bringing them into force.
Of the three, two agreements—the Communications Interoperability and Security Memorandum of Agreement (CISMOA) and Basic Exchange and Cooperation Agreement for Geospatial Cooperation (BECA)—enhances the capacity of military equipment already bought from the US. The third agreement, the Logistics Support Agreement (LSA), would enable cashless supplies to each other’s armed forces on credit.
Alibaba to pick up 25% in Paytm for $500 mn
New Delhi: The world’s biggest e-commerce company, Alibaba, will acquire 25% stake in One97 Communications for $500 million (Rs 3,050 crore), as the Chinese company forays into the rapidly-expanding Indian mCommerce market.
One97 Communications runs Paytm —India’s largest mobile payment and commerce platform.
Alibaba’s arm Ant Financial Services will pick up the stake.
“Paytm will use the funds to grow its mobile payment ecosystem and boost commerce user base. The deal represents Ant Financial’s first-ever investment in an Indian company,” the company said in a statement.
The deal will give Paytm the much-needed fillip to scale up operations. “I believe that together, we will change the landscape of mobile payments and commerce in our country,” One97 Communications founder and CEO Vijay Shekhar Sharma said.
Along with funding, Ant Financial will bring in technical and operational expertise, and the experience of working in a global market like China, providing Paytm with an international exposure.
Ant Financial and Paytm will also build on synergies in the mobile wallet front to offer Indian consumers comprehensive product and services, and tap the significant potential of the India mobile payment market.
The Indian e-commerce market is expected to grow 37% to $20 billion (Rs 122,000 crore) by next year (from the current $11 billion or Rs 67,100 crore) on the back of growing internet population and increasing number of online shoppers.
“With over 1 billion people, India’s payments market has vast untapped potential,” Ant Financial vice-president Cyril Han said.
Citi and Goldman Sachs served as financial advisers on the deal.
One97 Communications runs Paytm —India’s largest mobile payment and commerce platform.
Alibaba’s arm Ant Financial Services will pick up the stake.
“Paytm will use the funds to grow its mobile payment ecosystem and boost commerce user base. The deal represents Ant Financial’s first-ever investment in an Indian company,” the company said in a statement.
The deal will give Paytm the much-needed fillip to scale up operations. “I believe that together, we will change the landscape of mobile payments and commerce in our country,” One97 Communications founder and CEO Vijay Shekhar Sharma said.
Along with funding, Ant Financial will bring in technical and operational expertise, and the experience of working in a global market like China, providing Paytm with an international exposure.
Ant Financial and Paytm will also build on synergies in the mobile wallet front to offer Indian consumers comprehensive product and services, and tap the significant potential of the India mobile payment market.
The Indian e-commerce market is expected to grow 37% to $20 billion (Rs 122,000 crore) by next year (from the current $11 billion or Rs 67,100 crore) on the back of growing internet population and increasing number of online shoppers.
“With over 1 billion people, India’s payments market has vast untapped potential,” Ant Financial vice-president Cyril Han said.
Citi and Goldman Sachs served as financial advisers on the deal.
IBM signs nine year IT outsourcing deal with Birla Sun Life Insurance
IBM has announced that Birla Sun Life Insurance (BSLI), the life insurance arm of the Aditya Birla Financial Services Group, signed a nine year IT outsourcing deal with IBM to consolidate, redesign in-scope applications and use analytics to provide client insights that build competitive advantage. BSLI will leverage mobility and cloud solutions developed by IBM Research and the IBM India Software Lab to achieve increased revenues, reduce costs and enhanced profitability.
BSLI in this partnership with IBM will adopt a first-of-a-kind technology solution to the insurance sector that will radically transform the business technology model. BSLI will leverage IBM's business consulting, application development and maintenance services to drive process efficiencies and transform the business towards better outcomes for customers and employees. Tailor-made solutions from IBM will bring process maturity best practices, IT portfolio consolidation and introduce innovative tools.
This deal could help BSLI realize a cost reduction advantage from consolidation of IT vendors. IBM's flexible pricing model will enable dynamic ramp up/down and consumption based operational spending along with a roadmap to modernize, consolidate and rationalize the application portfolio, bringing in speed and reduced time to market.
Speaking on the occasion, Mayank Bathwal, Dy. CEO, Birla Sun Life Insurance said, "We at Birla Sun Life Insurance are committed to offering an enhanced experience to our customers while improving on efficiencies and profitability of the business. We believe that this winning partnership with IBM will help us excel and stay ahead of the curve in this fast evolving life insurance industry, while addressing all business needs. IBM's vast experience and technology capabilities will add tremendous value to our business."
"IBM remains committed in the transformation of the BFSI industry catalyzing growth and inclusion. We are pleased to partner with BSLI to help leverage leading technology solutions like cloud and analytics to make critical strides in achieving business transformation, improving service delivery and increasing customer satisfaction,"said Vanitha Narayanan, Managing Director, IBM India. "We will bring our local and global expertise and capabilities to fuel BSLI' expansion and growth in this dynamic Insurance industry in India." she further added.
BSLI in this partnership with IBM will adopt a first-of-a-kind technology solution to the insurance sector that will radically transform the business technology model. BSLI will leverage IBM's business consulting, application development and maintenance services to drive process efficiencies and transform the business towards better outcomes for customers and employees. Tailor-made solutions from IBM will bring process maturity best practices, IT portfolio consolidation and introduce innovative tools.
This deal could help BSLI realize a cost reduction advantage from consolidation of IT vendors. IBM's flexible pricing model will enable dynamic ramp up/down and consumption based operational spending along with a roadmap to modernize, consolidate and rationalize the application portfolio, bringing in speed and reduced time to market.
Speaking on the occasion, Mayank Bathwal, Dy. CEO, Birla Sun Life Insurance said, "We at Birla Sun Life Insurance are committed to offering an enhanced experience to our customers while improving on efficiencies and profitability of the business. We believe that this winning partnership with IBM will help us excel and stay ahead of the curve in this fast evolving life insurance industry, while addressing all business needs. IBM's vast experience and technology capabilities will add tremendous value to our business."
"IBM remains committed in the transformation of the BFSI industry catalyzing growth and inclusion. We are pleased to partner with BSLI to help leverage leading technology solutions like cloud and analytics to make critical strides in achieving business transformation, improving service delivery and increasing customer satisfaction,"said Vanitha Narayanan, Managing Director, IBM India. "We will bring our local and global expertise and capabilities to fuel BSLI' expansion and growth in this dynamic Insurance industry in India." she further added.
Zomato: India’s first global app
New Delhi: It was June 2014. It had been 11 months since Zomato Media Pvt. Ltd, which owns the eponymous online restaurant search service, had launched the New Zealand version of the website and founders Deepinder Goyal and Pankaj Chaddah were running somewhat low on gas.
Goyal, who is now 32, and Chaddah, three years younger, had then been hoping to overtake MenuMania, the New Zealand market leader in online restaurant search and discovery service, but it looked like they had to wait a couple of more years before they could pull it off.
The two men had already spent close to four exhausting years in emerging as the leaders in their own home market—India—by taking the lead over Burrp and TimesCity and were impatient for faster growth.
They finally decided to call MenuMania. The discussion was straightforward. Was MenuMania ready to be acquired? After a 15-minute call, the two companies agreed on the basics, including a price. After a month of paperwork, the deal was done and an announcement made, in July 2014. The value of the deal wasn’t disclosed.
“That was the first deal and it really worked for us. We merged the two entities and we got a lot of leverage with the user base. The New Zealand business suddenly jumped about three times,” said Goyal.
“This gave us the idea that there must be a lot of large local dominant players in different countries which had not got funded and were running on their own money for a long time. We started to identify companies that might have been looking to exit businesses which they had run for a long time on their own boot-strapping capital.
Gurgaon-based Zomato, which has acquired seven companies in a six-month binge, is currently present in 22 countries. In January, the company, in one of the biggest overseas deals by an Indian start-up, acquired larger rival Urbanspoon, the Seattle-based bar and restaurant guide.
The deal, estimated to be close to $50 million, gave Zomato a toehold in the competitive US market and put the company in direct competition with market leader Yelp Inc., which crowd-sources menus, contact details and pictures. The deal also established Zomato’s presence in Australia and Canada and enhanced its position in the UK and New Zealand, countries where Urbanspoon has a presence.
It helped Zomato expand its presence to 500-plus cities in 22 countries and increased its restaurant coverage from about 300,000 to more than 1 million. According to Zomato, its traffic will more than double—from nearly 35 million visits per month to more than 80 million visits per month—as a result of the acquisition, making it the largest restaurant search company in the world, reinforcing its position as India’s first truly global app, with a valuation of $660 million.
Rapid moves
To be sure, Zomato isn’t sitting back. It plans to invest $50 million more in the US to stay in the game and expects to overtake Yelp within 12 months. The company expects its biggest differentiator to be content.
“We have much better and relevant content and we will continue to follow the model of collecting and publishing the content ourselves rather than crowd-sourcing it,” said Chaddah.
Within weeks of the Urbanspoon acquisition, Zomato bought Turkish rival Mekanist for an undisclosed sum, continuing its acquisition spree in international markets. Most of these deals were outbound transactions where Zomato approached competitors in new markets. The company’s strategy here is to move rapidly, without allowing the acquisition target to go out and shop for a better buyer.
The acquisition of Urbanspoon was different. “We would have never reached out to Urbanspoon. They are three times our size in terms of traffic. They reached out to us saying they wanted to sell the business and then there was a bidding process where a lot of companies bid but finally we got the deal,” adds Goyal.
In 2015, the company expects to go slow in expanding into newer markets. “The focus in 2015 will be to grow in the markets we are present in. All our bandwidth will go into consolidation and to ramp up our revenue,” said Chaddah.
Chaddah’s goal for 2015 is to triple the company’s revenue. “He has done that for last three years and he is hoping to do that for the next three years,” explains Goyal.
For the year ended 31 March 2014, Zomato posted a loss of Rs.37.2 crore on revenue of Rs.36.11 crore. For the previous year, the company posted a loss of Rs.10 crore on revenue of Rs.12.30 crore.
Zomato, whose 100% revenues comes from restaurant ads, now plans to experiment with other revenue generation models as well. The company last week introduced a payment option in its mobile app in Dubai. Every time a consumer pays via Zomato, the merchant will pay the company a percentage cut on the overall transaction amount.
The beginnings
Goyal and Chaddah started Zomato, then known as Foodiebay, in 2008. The idea originated when they saw their colleagues at consultancy firm Bain & Co. queuing at the cafeteria every day to go through a file of restaurant menu cards to order food.
“We had a rule that no one will take these menu cards at their desk because if you lose them no one will be able to order food. So it was always crowded around the menu cards,” recalls Goyal.
One day he decided to scan them and put them online. “It started from there essentially and a lot of people at Bain started using the service and then we eventually expanded it to Delhi NCR (national capital region). It was a very slow growth curve in early years,” adds Goyal.
Foodiebay was re-branded to Zomato in November 2010 because of a conflict with e-commerce marketplace eBay Inc. over use of the word ebay in its name.
“We were also unsure if we would just stick to food at that time so we wanted a more neutral name,” said Chaddah. A year ago, Zomato tried to sell event tickets too. The idea did not click and was rolled back.
During the first year, Goyal and Chaddah ran the business alongside their jobs and it was in late 2009 when they quit Bain to make Foodiebay a full-time calling. Families were worried and even Goyal and Chaddah were unsure if the risk they were taking was worth it. “Our parents did not want us to quit Bain. It was a stable job…many people aspired to work at Bain,” said Chaddah.
For the initial few months after quitting Bain, the duo got monetary help from their brothers and a couple of friends at Bain. In mid-2010, the company was struggling to convince investors to write them their first cheque.
“It was a time when e-commerce was taking the entire mind share so nobody had the time to look at us. It is only now that food tech is hotter than anything else,” smiles Goyal.
Soon after they received an email from one of their customers, Sanjeev Bikhchandani, who was also the founder of Info Edge (India) Ltd, an online classifieds company that runs job portal Naukri.
“The day we went to meet him, he asked if we were looking for money. We told him yes and within 15 minutes he promised a $1 million cheque for a 33% stake in the company,” said Goyal.
Since then Info Edge has done most follow-up rounds of funding and currently holds a more than 50% stake in Zomato.
According to Bikhchandani of Info Edge, it was the team and the business idea that made him bet on Zomato in its early days. “We wrote them a small cheque to see how they would grow the company further and they kept taking the business further which was impressive,” he adds.
India is yet to produce a global consumer Internet business and Zomato could well be the first big global consumer Internet company out of India, said Bikhchandani.
“When it comes to US market, I think they will proceed cautiously and slowly,” he said.
Vy Capital and Sequoia Capital are some of the other investors who have backed the company. Zomato, which has thus far raised $113 million, might need to raise fresh capital as the company spent close to $50 million on the Urbanspoon acquisition out of the $60 million it raised in its last round.
The future
But, according to Goyal, the company is in no hurry to raise more capital. “The next round will give us fuel to grow faster but there is no timeline…it could happen tomorrow, it could take six months. Right now the focus is on integration.
The company is also looking to double its headcount in the next 12 months. It employs more than 1,000 people across the globe. The firm this year will focus on growing its sales team in markets such as Australia, Canada, Turkey and the US.
“I think the next year will go into building the organization and really building the foundation of the scale that we have taken up. The most difficult task here is integrating the teams in other geographies while maintaining its culture,” said Goyal.
Though for the founders the goals of the company change almost every day, there is a long-term vision of Zomato becoming a full-fledged communications platform between restaurants and consumers.
“You should be able to search and discover platforms, you should be able to interact with restaurants for placing an order, to book a table or even to communicate with the waiter when you are sitting at a table,” said Goyal. “But it is going to take us a lot of years to get there. So achieving this in this particular vertical is not easy.”
The company already provides table booking services in markets such as the UK where it has partnered with online restaurant real-time reservation service OpenTable and Book a Table.
In India and other markets, the company is taking a wait-and-watch approach. “There are no acquisitions to make in India at this moment. There are no strong players so either we will have to wait for someone to do this or we will have to do it on our own,” said Goyal.
According to Goyal, Zomato in seven years has grown from a plain vanilla pile of menu cards in blue HTML links, the JPEG files, to a restaurant discovery portal and app which rates and reviews restaurants.
“Back then we did not even have a search option on Zomato. One had to use the browser search option for it. Today as a product Zomato is very very different… it was only 1% of what it is right now. And the focus of what we are trying to do actually changes every day.”
Goyal, who is now 32, and Chaddah, three years younger, had then been hoping to overtake MenuMania, the New Zealand market leader in online restaurant search and discovery service, but it looked like they had to wait a couple of more years before they could pull it off.
The two men had already spent close to four exhausting years in emerging as the leaders in their own home market—India—by taking the lead over Burrp and TimesCity and were impatient for faster growth.
They finally decided to call MenuMania. The discussion was straightforward. Was MenuMania ready to be acquired? After a 15-minute call, the two companies agreed on the basics, including a price. After a month of paperwork, the deal was done and an announcement made, in July 2014. The value of the deal wasn’t disclosed.
“That was the first deal and it really worked for us. We merged the two entities and we got a lot of leverage with the user base. The New Zealand business suddenly jumped about three times,” said Goyal.
“This gave us the idea that there must be a lot of large local dominant players in different countries which had not got funded and were running on their own money for a long time. We started to identify companies that might have been looking to exit businesses which they had run for a long time on their own boot-strapping capital.
Gurgaon-based Zomato, which has acquired seven companies in a six-month binge, is currently present in 22 countries. In January, the company, in one of the biggest overseas deals by an Indian start-up, acquired larger rival Urbanspoon, the Seattle-based bar and restaurant guide.
The deal, estimated to be close to $50 million, gave Zomato a toehold in the competitive US market and put the company in direct competition with market leader Yelp Inc., which crowd-sources menus, contact details and pictures. The deal also established Zomato’s presence in Australia and Canada and enhanced its position in the UK and New Zealand, countries where Urbanspoon has a presence.
It helped Zomato expand its presence to 500-plus cities in 22 countries and increased its restaurant coverage from about 300,000 to more than 1 million. According to Zomato, its traffic will more than double—from nearly 35 million visits per month to more than 80 million visits per month—as a result of the acquisition, making it the largest restaurant search company in the world, reinforcing its position as India’s first truly global app, with a valuation of $660 million.
Rapid moves
To be sure, Zomato isn’t sitting back. It plans to invest $50 million more in the US to stay in the game and expects to overtake Yelp within 12 months. The company expects its biggest differentiator to be content.
“We have much better and relevant content and we will continue to follow the model of collecting and publishing the content ourselves rather than crowd-sourcing it,” said Chaddah.
Within weeks of the Urbanspoon acquisition, Zomato bought Turkish rival Mekanist for an undisclosed sum, continuing its acquisition spree in international markets. Most of these deals were outbound transactions where Zomato approached competitors in new markets. The company’s strategy here is to move rapidly, without allowing the acquisition target to go out and shop for a better buyer.
The acquisition of Urbanspoon was different. “We would have never reached out to Urbanspoon. They are three times our size in terms of traffic. They reached out to us saying they wanted to sell the business and then there was a bidding process where a lot of companies bid but finally we got the deal,” adds Goyal.
In 2015, the company expects to go slow in expanding into newer markets. “The focus in 2015 will be to grow in the markets we are present in. All our bandwidth will go into consolidation and to ramp up our revenue,” said Chaddah.
Chaddah’s goal for 2015 is to triple the company’s revenue. “He has done that for last three years and he is hoping to do that for the next three years,” explains Goyal.
For the year ended 31 March 2014, Zomato posted a loss of Rs.37.2 crore on revenue of Rs.36.11 crore. For the previous year, the company posted a loss of Rs.10 crore on revenue of Rs.12.30 crore.
Zomato, whose 100% revenues comes from restaurant ads, now plans to experiment with other revenue generation models as well. The company last week introduced a payment option in its mobile app in Dubai. Every time a consumer pays via Zomato, the merchant will pay the company a percentage cut on the overall transaction amount.
The beginnings
Goyal and Chaddah started Zomato, then known as Foodiebay, in 2008. The idea originated when they saw their colleagues at consultancy firm Bain & Co. queuing at the cafeteria every day to go through a file of restaurant menu cards to order food.
“We had a rule that no one will take these menu cards at their desk because if you lose them no one will be able to order food. So it was always crowded around the menu cards,” recalls Goyal.
One day he decided to scan them and put them online. “It started from there essentially and a lot of people at Bain started using the service and then we eventually expanded it to Delhi NCR (national capital region). It was a very slow growth curve in early years,” adds Goyal.
Foodiebay was re-branded to Zomato in November 2010 because of a conflict with e-commerce marketplace eBay Inc. over use of the word ebay in its name.
“We were also unsure if we would just stick to food at that time so we wanted a more neutral name,” said Chaddah. A year ago, Zomato tried to sell event tickets too. The idea did not click and was rolled back.
During the first year, Goyal and Chaddah ran the business alongside their jobs and it was in late 2009 when they quit Bain to make Foodiebay a full-time calling. Families were worried and even Goyal and Chaddah were unsure if the risk they were taking was worth it. “Our parents did not want us to quit Bain. It was a stable job…many people aspired to work at Bain,” said Chaddah.
For the initial few months after quitting Bain, the duo got monetary help from their brothers and a couple of friends at Bain. In mid-2010, the company was struggling to convince investors to write them their first cheque.
“It was a time when e-commerce was taking the entire mind share so nobody had the time to look at us. It is only now that food tech is hotter than anything else,” smiles Goyal.
Soon after they received an email from one of their customers, Sanjeev Bikhchandani, who was also the founder of Info Edge (India) Ltd, an online classifieds company that runs job portal Naukri.
“The day we went to meet him, he asked if we were looking for money. We told him yes and within 15 minutes he promised a $1 million cheque for a 33% stake in the company,” said Goyal.
Since then Info Edge has done most follow-up rounds of funding and currently holds a more than 50% stake in Zomato.
According to Bikhchandani of Info Edge, it was the team and the business idea that made him bet on Zomato in its early days. “We wrote them a small cheque to see how they would grow the company further and they kept taking the business further which was impressive,” he adds.
India is yet to produce a global consumer Internet business and Zomato could well be the first big global consumer Internet company out of India, said Bikhchandani.
“When it comes to US market, I think they will proceed cautiously and slowly,” he said.
Vy Capital and Sequoia Capital are some of the other investors who have backed the company. Zomato, which has thus far raised $113 million, might need to raise fresh capital as the company spent close to $50 million on the Urbanspoon acquisition out of the $60 million it raised in its last round.
The future
But, according to Goyal, the company is in no hurry to raise more capital. “The next round will give us fuel to grow faster but there is no timeline…it could happen tomorrow, it could take six months. Right now the focus is on integration.
The company is also looking to double its headcount in the next 12 months. It employs more than 1,000 people across the globe. The firm this year will focus on growing its sales team in markets such as Australia, Canada, Turkey and the US.
“I think the next year will go into building the organization and really building the foundation of the scale that we have taken up. The most difficult task here is integrating the teams in other geographies while maintaining its culture,” said Goyal.
Though for the founders the goals of the company change almost every day, there is a long-term vision of Zomato becoming a full-fledged communications platform between restaurants and consumers.
“You should be able to search and discover platforms, you should be able to interact with restaurants for placing an order, to book a table or even to communicate with the waiter when you are sitting at a table,” said Goyal. “But it is going to take us a lot of years to get there. So achieving this in this particular vertical is not easy.”
The company already provides table booking services in markets such as the UK where it has partnered with online restaurant real-time reservation service OpenTable and Book a Table.
In India and other markets, the company is taking a wait-and-watch approach. “There are no acquisitions to make in India at this moment. There are no strong players so either we will have to wait for someone to do this or we will have to do it on our own,” said Goyal.
According to Goyal, Zomato in seven years has grown from a plain vanilla pile of menu cards in blue HTML links, the JPEG files, to a restaurant discovery portal and app which rates and reviews restaurants.
“Back then we did not even have a search option on Zomato. One had to use the browser search option for it. Today as a product Zomato is very very different… it was only 1% of what it is right now. And the focus of what we are trying to do actually changes every day.”
Subscribe to:
Posts (Atom)