Videocon to reorganize businesses
Videocon, an electronics-to-energy conglomerate, has decided to undertake reorganization to facilitate greater focus on each of its businesses. Videocon has been increasing the number of verticals it operates in, all under the Videocon umbrella.
The consumer electronics business of Videocon, which contributes approximately half of the company’s revenue, is likely to continue under the Videocon brand whereas the other business will likely be spun off. Videocon while most likely appoint a consulting firm to assist them in figuring out the best way to reorganize in order to benefit the company and its shareholders.
Harley to assemble bikes in India
In a move that will most likely reduce the prices of high-end bikes in India, Harley Davidson, the well-known manufacturer of luxury bikes, will start assembling bikes at Bawal in Haryana.
The Harley Davidson recognized the potential in India for such bikes in India and said that the growing economy, rising middle class and better road infrastructure makes leisure bikes a good proposition. India is currently the 2nd-highest bike market in the world but most of the bikes are used for commuting purposes. However, the rising number of millionaires in the country has increased the demand for high-end leisure bikes.
Tata DoCoMo prices 3G services aggressively
In a bid to convert many of its 2G customers, Tata DoCoMo has announced an aggressive tariff policy for its 3G services. In the process, Tata DoCoMo has also become the first private operator, and 3nd overall after BSNL and MTNL, to introduce 3G services.
Most of its plans do not differentiate between its 2G and 3G customers as 3G customers will pay 0.66-1.1 paise per call, which is approximate the same as 1 paisa a second paid by the current 2G customers of Tata DoCoMo. Also, for its 2G customers wanting to experience 3G services, they can do so at a nominal cost. Of course, it remains to be seen how the other private players price their services, and these set of prices introduced by Tata DoCoMo could only be transient prices till the competitors set theirs.
Can Nokia regain ground?
In recent times, the smart phones and high-end touchscreen phones have dominated the market and much of the market-share has been taken away from Nokia by players such as Apple and Samsung.
However, Nokia is ready to launch new phones which touchscreen facilities, high of design, overhauled current operating system and a new operating system. The new operating system, called the MeeGo, will be launched later this year and promises to be competitive with the rest. Nokia also plans to price its new products aggressively to regain the lost market share.
An example of such a phone is the N8 which is banking on its overhauled operating system, Symbian 3, which is more memory-efficient and can also run more applications simultaneously. It has a 12-megapixel camera and will be priced at approximately Rs. 26,000 competing with the Samsungs and LGs. Nokia wants to build its brand and increase sales through improving user experience and giving them more value for money phones.
Oracle to buy software firm
Oracle Corp. announced that it would be acquiring the Art Technology Group (ATG) for $1 billion. This would strengthen its e-commerce software applications. This acquisition will increase Oracle’s retail software portfolio, which also includes Retek, a company it acquired in 2005. This acquisition is another example of a major technology company acquiring other firms in order to diversify its product portfolio.
This deal is considered to be a safe and sound acquisition for Oracle which was reflected in its share price increasing after the acquisition announcement.
SpiceJet plans for expansion
SpiceJet, the low-cost Indian airline, is planning for a huge expansion and intends to spend upto $ 900 million to buy new aircrafts. SpiceJet will buy 30 NextGens from Bombardier Inc. and plans to double its fleet size from the current 22 by 2013.
SpiceJet is looking at taking advantage of the growing aviation sector in India and the growth opportunities available by connecting tier 2 and tier 3 cities. Also, it is looking at entering the international markets where there are few low-cost airlines.
However, the source of funding for this expansion plan is unclear. It might resort to the share plan that it had planned to raise $ 75 million before Kalanithi Maran, the Sun TV founder, came forward and bought a stake in the firm.
BHP Billiton still forced to wait
BHP Billiton, the resources major, is still awaiting a green signal for its offer for Potash Corp, the world’s largest supplier of fertilizers, an all-cash $ 39 billion deal.
The Canadian government is still unwilling to let the deal go through although there have been rumours that the government is being advised by bureaucrats to pass the deal.
BHP has currently bid for Potash Corp at $130 per share and analysts expect the offer to go higher before the deal goes through. The deal is expected to help BHP gain access to high-quality resources at a reasonable rate.
Kellogg enters hot breakfast market
With Indians striving for hot breakfasts in the mornings, Kellogg has decided to enter the hot breakfasts market with the launch of Heart to Heart Oats. Kellogg claims that these oats can be prepared in three minutes and should be consumed with hot milk.
This will give Kellogg access to more Indian families where hot breakfast is a tradition. This product will potentially not only increase the sales of Kellogg in India but also reinforce their positioning of a healthy product since oats is considered to be good for the heart.
Maggi becomes healthier
In a move to strengthen its brand image and market leadership position, Nestle has launched another variant of Maggi. The variant is called Maggi Multigrainz, which has healthy ingredients like corn, wheat and millets.
This comes on the back of Maggi Atta noodles which was launched a few years back. Research has showed that consumers today are more aware of health food and this move by Maggi is an effort to attract such customers. Maggi currently has an 85 % market share in the instant noodles market and this should fortify their market position. Also, with competitors like HUL, Knorr and ITC trying to enter the market, Maggi is trying to innovate to fend off competition.
Pfizer acquires King Pharma
In yet another deal in the pharmaceutical industry, the world’s largest drugmaker has decided to acquire Kind Pharmaceuticals, a pharma company focusing on pain medications.
Pfizer would be paying $3.6 billion for the deal. The deal is an all-cash deal. After acquiring Wyeth for a massive $68 billion last year, this will be Pfizer’s biggest deal.
The deal will help Pfizer expand its product portfolio. Currently, its two primary products for pain remedy are Celebrex for arthritis and Lyrica for nerve pain. Moreover, this acquisition should increase its profits since many of its existing products now have generic counterparts.
Price war likely in small car segment
With the festive season kicking in, companies are aggressively cutting prices to promote their product. Skoda recently reduced the prices of its Fabia hatchback by Rs. 67,000 for the petrol variant and Rs. 1.1 lakh for the diesel variant. This comes on the back of Hyundai reducing prices of i20 by Rs. 40,000 earlier this year and recently launching a new version of i10 with minimal price increase.
Fabia, which was launched in 2008, has not managed to make an impact in India with other competing cars such as Ritz, WagonR, Hyundai i20 etc. having a higher market-share. Even Volkswagen, the parent company of Skoda, priced Polo below Fabia. This decision to reduce prices is expected to increase the market-share of Fabia in the small car segment, which has the highest volumes.
Indian Hotels Company does a Tata Motors
The Indian Hotels Company recently announced the launch of Vivanta by Taj, hotels in the upper upscale segment.
Taj has thus positioned itself in the hospitality space similar to what Tata Motors has done in the automotive space. Taj is positioned in the luxury space, Vivanta by Taj in the upper upscale segment, Gateway in upscale and Ginger in the economy segment. Tata Motors, on the other hand, has positioned The Nano at the entry level, Indigo at the upscale segment, Safari and Jaguar or Land Rover at the upper upscale and luxury segments.
The reason for this segmentation is not to dilute the Taj brand by operating every kind of hotel under the same brand. Also, it is an effort towards retaining their market share in the face of many new hotel brands entering India.
Homegrown mobile phone companies sign big stars
While we may not realize, homegrown mobile phone companies have captured more than 20 percent of the market share. And they are definitely hungry for more!
Companies like Zen, Micromax, Spice etc. are displaying their ambitions by signing big stars to promote their products, especially in the tier-II and tier-III towns of India. Micromax has Akshay Kumar as its brand ambassador while Spice Mobile has signed on Sonam Kapoor.
The latest to join the bandwagon is Zen Mobile which has signed on the biggest superstar Amitabh Bacchan as its brand ambassador. It is to be seen whether these companies will be successful in penetrating the urban markets as well.
Fortis to buy key subsidiaries of Quality Healthcare Asia
Fortis Healthcare will buy key subsidiaries of quality Healthcare Asia (QHA) for about Rs. 882 crore. The firms to be acquired by Fortis Healthcare include Quality Healthcare Medical Services, Quality Healthcare Services, Quality HealthCare, Quality HealthCare Medical Holdings, and Portex.
QHA is the largest private healthcare provider in Hong Kong and this acquisition would provide Fortis with a footprint in Hong Kong.
Fortis has been keen to have a presence in South-East Asia for some time now as was evident when it tried to acquire the Singapore-based hospital chain Parkway Holdings.
Microsoft launches smartphones
Smartphones are touted to be the next big thing in tomorrow’s world. Microsoft clearly does not want to let go of this opportunity considering there are firms which have already this market.
The smartphone by Microsoft is supposed to look like the iPhone but with a more interactive interface and superior functionalities. It’s also got the Xbox which should appeal to the younger generation.
This is probably Microsoft’s last and only attempt at gaining a hold in the smartphone industry since many players have launched their smartphones before Microsoft did.
M&M enters bike market
The competitive and high-volume bike industry recently saw another new entrant in the form of the conglomerate Mahindra & Mahindra. Mahindra & Mahindra has vehicles in the MUV, LCV, tractor and the two-wheeler car segments. The market currently is dominated primarily by Hero Honda and Bajaj Auto. They have been market leaders for some time now and it will be difficult to penetrate the motorcycle market.
However, Mahindra & Mahindra is relying on its branding and distribution networks to make it big in the bike segment. They intend to appeal to the cost-sensitive customers by launching the 110cc Stallio and to the more affluent customers by launching the 300cc Mojo.
Marlboro enters regular cigarette market
Marlboro, which entered the Indian markets with the king-size cigarette, has finally decided to enter the regular cigarette market. The regular cigarette market has high volumes and the company, Godfrey Philips, wants to get pie of this share. It will soon launch a campaign regarding this new foray.
The market leader in this segment is ITC. The Marlboro Gold Advance Impact, as the new brand launched by Marlboro will be known, will be priced at rs. 3.50 per stick. In response, ITC is launching a new product in the regular market segment called the Players Gold Leaf which will cost Rs. per stick. This reaction clearly suggests that it recognizes the dangers posed by this move by Marlboro.
Back to its roots
We observe that most commodity companies desire to move up the value chain and build itself a brand name. In this context, the decision of Tata Coffee to transfer its brands to Tata Global Beverages and focus instead on excelling in the coffee commodity business comes as a surprise.
This move has been undertaken by the management of Tata Coffee to focus on B2B business by consolidating their commodity business ranging from plantation to packaging. This is in stark contrast to what most coffee-making companies are doing. They are looking at taking advantage of the fact that a lot of unbranded coffee is sold to consumers.
Tata Coffee is expanding its coffee plantations not only in India but also in African countries. Along with this, Tata Coffee will need to strengthen its distribution network and enter into agreements with coffee brands and retailers.
Reliance Retail banks on toys
After Hamly’s, Reliance Retail is now poised to enter into a joint venture with the US-based toy retailer Toys “R” Us. Toys “R” Us has over a 1000 stores across the world and owns brands such as Babies “R” Us and KB Toys. Hamly’s and Toys “R” Us, however, operate in different operate in different price segments, with Hamly’s catering to the upper class segments while Toys “R” Us caters to the middle and upper-middle class segments.
Reliance Retail wants to be in a position to take advantage of increasing consumer demand and clearly believes that there is huge potential in the Rs. 6,000 crore Indian toy market where over 60% of the market still belongs to the unorganized players.