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1. Govt plans road shows to woo tourists as foreign arrivals slip – February 16

Foreign tourist inflows to the country fell for the third consecutive month in January this year, owing mainly to the global economic slowdown. According to the government data, the number of foreign tourists visiting India stood at 4.87 lakh, down 17.6% compared with 5.91 lakh in the corresponding month last year. Foreign exchange earning from tourists during the same period witnessed a sharp fall of 31.9% to $941 million. Beginning this month, the tourism ministry plans to launch road shows in various source countries such as the US, the UK, Canada and Australia to win back foreign visitors.
"Foreign tourist footfalls have taken a hit in the past few months, mainly because of the global recession. But we have worked out various promotional schemes to get increased number of tourists. All the industry stakeholders, including hoteliers, tour operators and airlines, have shown greater interest in launching promotional offers," tourism secretary Sujit Banerjee told ET.

"All the three major domestic airlines — Air India, Kingfisher and Jet Airways — have confirmed their participation for the proposed scheme. We have now been told that Singapore Airlines is also keen to join the ministry’s campaign," he added.

To check the negative trend arising mainly out of the global economic slowdown and also to some extent because of the Mumbai terror attacks late last year, the tourism ministry has proposed various incentives for foreign tourists visiting the country.

Declaring the year as Visit India 2009, the ministry has launched a scheme under which companion of a foreign tourist would get free air passage. The promotional tour package readied by the government, along with tour operators, hoteliers and airlines, will also include complimentary sight seeing tours in any one destination city and a rural-eco holiday package in the countryside.

The bookings under the proposed scheme would begin in April this year and would continue till the end of the year.

2. India Nears Decision on Easing Foreign Holdings in Airlines – February 12

The Indian government may decide within days whether to ease rules on foreign investment in the country's aviation sector, with Indian carriers seeking more leeway to raise capital in the economic downturn.
Getty Images
Ground crew stand next to a newly-inducted Air India Airbus A319 aircraft at Begumpet Airport in Hyderabad.
"The government will decide very soon on allowing foreign airlines to buys stakes in domestic carriers," Arun Mishra, joint secretary in the Ministry of Civil Aviation, said Wednesday at an aviation conference in Singapore.
Indian law permits foreign companies to own as much as 49% of domestic airlines. But overseas airlines are barred from investing in Indian carriers, either directly or indirectly.
Indian airlines for months have been lobbying the government to ease foreign investment in a sector suffering from a sharp drop in passengers and fluctuating jet-fuel prices. Civil Aviation Minister Praful Patel has indicated that the ministry is deliberating whether to open up foreign investment and to what degree.

"It is in active consideration right now at the highest levels of the Indian government," Mr. Mishra said. "I don't know what kind of percentage will be allowed to be invested." He said a number of domestic airlines have approached the government to open up the sector. "We are not closed to these requests," he said.
A decision by the ministry, wouldn't necessarily entail an immediate change in regulations. A decision also would be subject to approval by a larger body of cabinet-level ministers. Observers said such a move is unlikely to happen before the country holds national elections in late April or early May.
The Indian airline industry is on track to lose $1.5 billion to $2 billion in the fiscal year that ends March 31, analysts said.
Also Wednesday, carriers including Kingfisher Airlines Ltd. and state-owned Air India raised their base fares, nearly doubling them to stanch growing losses.
 

 
3. Airlines bring back Apex fartes – February 12

Bowing to pressure from the civil aviation ministry, Jet Airways, JetLite and GoAir on Wednesday rolled back fare hikes and restored the
apex fares and promotional offers, within hours of scrapping them. Jet’s fares are now 40% less than its peers’.

The Naresh Goyal-promoted Jet, which is also the country’s largest private carrier, has reintroduced the Rs 300 base fare and the Re 1 promotional fare, with immediate effect. These fares are not inclusive of taxes, though. The actual fares are higher, as it would include fuel surcharge, congestion fee and airport taxes.

Earlier in the day, civil aviation minister Praful Patel warned airlines not to cartelise, after all major carriers on Tuesday hiked fares and withdrew promotional offers. “We will keep watch and take strict action in any such case,” Mr Patel said. He added that the national carrier, Air India, would never be part of any cartel, and would ensure that passengers get better deals.

The Jet Airways Mumbai-Delhi fare for Sunday (February 15), typically the highest in the week, is Rs 3,050, including taxes. This is 40% cheaper compared to other airlines. Fares of other airlines, such as Kingfisher, SpiceJet and IndiGo, on the same route, are in the Rs 5,000-5,500 range.

Wadia Group’s GoAir, too, restored apex fares on Wednesday. CEO Edgardo Badiali said: “The airline industry has been experiencing combative fares, and GoAir is no exception. We have decided to revert to the ‘buy early and pay less’ option. It will be accepted well, and customers will use the offer to their advantage.”

A Jet Airways spokesperson, however, denied there was pressure from any quarter. The company had earlier cited “market conditions and competitive actions” for withdrawing its promotional offers.

Jet’s new Rs 300 base fare is available on the Mumbai-Ahmedabad, Mumbai-Goa, Delhi-Jaipur and Delhi-Srinagar sectors and on feeder routes from Kolkata (such as Kolkata-Bagdogra), Chennai and Hyderabad.

Its subsidiary, JetLite, is offering the Re 1 base fare across the country, including the Delhi-Mumbai, Kolkata-Delhi and Chennai-Hyderabad routes.

Over the past two months, airlines had cut fares after prices of aviation turbine fuel, which accounts for more than 45% of an airline’s costs, had declined by about 60% to Rs 30,457 per kilolitre. ATF is now ruling at near-July 2005 levels. The sector is expected to post a combined loss of $2 billion for fiscal 2009.

 4. Travel and tourism industry go for online ads

Online advertisement is fast becoming an option for the travel and tourism industry which has been hit hard by the ongoing economic recession.
"More and more travel companies are preferring to put their online advertisements for their target customers so that they are easily accessible to the customer and Google is one such platform," Narasimha Jayakumar, Business Head, Travel and local business, Google India, said.
Online advertisements are cheaper and returns on the investments could be easily made out, he said, adding "we can make out how many people hit the advertisement and how many people have converted as customer".
"With penetration of internet increasing everyday to the Indian household, it provides not only an opportunity to the companies but also to customers to find the service of their choice like hotel and flight bookings," Jayakumar said.
According to an estimate, online rail ticket booking has witnessed 97 per cent growth, while hotel booking about 67 per cent and about 10-15 per cent tickets of full fare air carriers like Jet Airways, Kingfisher and others are booked through Internet.
The total value of domestic air travel, railway and hotel bookings market is about $5.6 billion and only 5 to 6 per cent hotel booking sales is done online. "This gives the companies a big opportunity to expand their business and next year it is expected to grow to $400 million," he said.
Google advertisement network is the largest organised system to globally target and distribute online ads.
With the AdWords programme, Google is able to provide Indian businesses with a wide range of marketing opportunities, Jayakumar said, adding it helps both small and big businesses in achieving their marketing goals like brand building, customer acquisitions, running online campaigns to support offline activities etc.
Speaking about the online advertisement and booking facilities, Jayakumar said, "first of all it is free to use, easy to find places and products of your choice and the biggest benefit is that people can compare the price of the two to suit their budget.
According to a survey, it has been found that about 66 per cent travel products, like ticket and hotel booking is researched and purchased online, while only 18 per cent is being researched online and bought offline, that means, by contacting the companies directly, he added.
Also the other advantage of purchasing online is that the customer gets the reviews by any trusted third party, he said.

5. Indian launches Apex 21 slashing basic fare on economy class to Rs 99

To counter the recession blues, the airline industry is giving various promotional offers to attract customers. They are introducing special fares during special occasions and festivals to expand their customer base. Indian has launched a new scheme to increase their customer numbers. The scheme is called Apex 21' under which the airline has slashed the basic fare on economic class to Rs 99 on all sectors.
That means a traveller can book a ticket to destinations like Delhi, Mumbai and Kolkata by paying Rs 99 excluding taxes on economy class. "This scheme would help in expanding our base from high-class customers to middle-class customers," said an Indian official.
In Rajasthan, Indian has already captured two premier tourist destinations - Jaipur and Udaipur. Now, the national carrier proposes to provide services from Kota too. "If we get the convenient time from the airport authority, the Jaipur-Kota flight would be a big success keeping in view the large education industry which attracts thousands of students across India," said Kapoor Chand, duty manager of Indian, Jaipur.

The private airlines too, are not leaving any chance to woo customers by introducing special fares. The recently introduced low-fare spree by all airlines including Spice Jet, Indigo, Kingfisher, Red and Jetlite, have brought back smiles in the industry.

"The recent offers have made it possible for my family to travel to Srinagar at a nominal fare of Rs 1,800 one way per ticket. These promotional offers are limited in number but they make it possible for us to get an access to this luxury," said Dinesh Yadav, a teacher in a private school. Another low-cost airline has introduced an offer in which a couple can fly on one ticket provided availability of seats.

Different airlines have been introducing these promotional offers for several reasons: some of the airlines have to achieve their annual targets, others are passing on the benefits of an all time low air fuel to its customers.

Gunjan Singhal, travel agent said, "The declining fares have boosted the travel industry. Many tourists who have kept away from Jaipur are coming back to the city." However, in the low season it has become important for the airlines to introduce promotional offers. These airlines are planning promotional offers to maintain their occupancy level
 

6. Govt launches “Visit India” scheme

Despite recession impacting the country's tourism sector, the Government today dispelled fears of tourists' shortage saying the "Visit India" scheme will rejuvenate the sector and promised enough hotel rooms for visitors to New Delhi during the Commonwealth Games.
Tourism Secretary Sujit Banerjee expressed confidence that the growth momentum achieved during the period leading up to the meltdown will once again pick up when the "Visit India" scheme is launched from April.

He said during the period of the scheme, which will remain in vogue for nine months, inbound tourists will get one free airline ticket on purchase of one ticket along with one night complementary stay in the hotel booked by the visitor.

"Further, one city sight-seeing on visit to two cities and one complimentary rural eco-holiday will be offered free," he said talking to reporters after visiting the 'travel and tourism fair and outbound travel mart' which began here today.

"Visit India" scheme comes when the dual impact of the global meltdown and the Mumbai attacks hit the sector hard, with the tourist inflow dipping by 17.5 per cent in January.

Banerjee also said several alternatives have been put in place to tide over the anticipated shortage of rooms during the Commonwealth Games.

About one lakh tourists are expected to visit Delhi to witness the sporting extravaganza.

7. India tops Diageo’s growth markets in H2 – February 14

India topped global liquor giant Diageo’s growth markets in revenues stakes, the company’s financial numbers for the second half of 2008 show. Diageo India recorded a 42% rise in net sales and 18% growth in unit volumes for the six-month period.


On Thursday, Diageo unveiled India-specific numbers for the first time even though it was limited to suggesting the broad contours of the growth story. The LSE-listed company’s robust India numbers come at a time when it is locked in discussions to buy substantial stake in Vijay Mallya-led United Spirits, possibly leading to a merger of operations with the latter.

Smirnoff, especially the flavoured variants, led the domestic growth surge with net sales moving up by over 18%. An estimated 7-lakh Smirnoff cases — Diageo’s largest selling brand in India — were sold during 2007, capturing 90% of the premium vodka market in the country.

However, the highlight of the half-yearly performance was the company’s focus on premium branding that led to significantly higher net sales per case. This reflected in 42% net sales growth, exceeding unit growth of 18% during the period. The data suggests that growth in India was ahead of other markets, including Korea (31%) and Nigeria (37%). On a consolidated basis, Diageo reported organic net sales growth of 3% with North America recording a 4% rise and Europe down 3%.

“India’s 42% increase in net sales was probably the highest, but the real story is about building lifestyle liquor assets in an emerging market in a downturn,” Diageo India MD Asif Adil told ET. “The investments we have made in the shopping experience (especially in travel and mainstream retail with Johnnie Walker Select stores) and marketing are showing results,” he added.

The emphasis on super-premium and deluxe brands resulted in Diageo’s reserve range — including Johnnie Walker Gold and Blue, Ciroc Vodka and the single malts — recording a jump of nearly 200% in net sales. Johnnie Walker Black Label and Red Label reported a 45% rise each, while the portfolio of locally-bottled Scotch whiskies, such as VAT 69 and Black & White, grew by 35-45%.

Diageo has made significant noise in India during the past two years in a bid to boost presence across trade channels for lifestyle drinks. That move may gather momentum if talks with United Spirits fructify. Some analysts, however, have expressed doubts whether Diageo’s focus on super-premium brands would benefit much from United Spirits’ distribution muscle that is focused on the mainstream market.

8. Bacardi scouting for brands to tap growth in tier II, III markets – February 16

The world’s largest privately held liquor maker, Bacardi Ltd, is scouting for potential brand acquisitions in India and expanding its sales and marketing team to tap anticipated growth in the local spirits market.
“We have already set up a good distribution network in the country, and the next thing that we are keen (on) is to expand the brand portfolio here,” said Mahesh Madhavan, president and chief executive of Bacardi-Martini India Ltd.
Establishing presence: Mahesh Madhavan, president and CEO of Bacardi-Martini India, says the firm has already set up a good distribution network in the country and the next thing is to expand the brand portfolio. Abhijit Bhatlekar / Mint
“For this, the company will launch most of its global products in the next one or two years, and we will acquire brands, especially in the whisky segment that will fit into our premium market strategy,” he added.
Currently, almost two-thirds of the 140 people employed by Bacardi-Martini India are in the sales and marketing team, which the company plans to double in size over the next one or two years.
The company, which entered the local drinks market with a solitary premium brand, Carta Blanca white rum, a decade ago and has one distillery in Nanjangode near Mysore and a co-packing unit in Goa, also plans to establish new bottling plants in north and North-East India, said Madhavan.
Bacardi-Martini India is looking to establish a presence in small cities that he estimates contribute 70% of liquor sales in the country.
“We will now heavily invest in marketing and promotion of existing brands to establish them in the tier II and III cities as well,” said Madhavan. “Our promotional activities and advertisements will now focus mainly in these cities targeting the youth.”
The Indian entity, a 74:26 joint venture between Bermuda-based Bacardi and Karnataka-based Gemini Distilleries Pvt. Ltd, is aiming to break into the top three spots in the imported spirits market, Madhavan said. Diageo Plc., Pernod Ricard SA and Beam Global Spirits and Wine Inc. now dominate this segment.
The firm currently sells Bacardi rum—the only white rum in the country—as well asEristoff vodka, Bacardi Breezer flavoured rum and Grey Goose vodka. It also sells imported brands such as 42Belowvodka, Martini wines, and Dewar’s whisky in the premium segment.
“Currently our sales across these brands are growing 12-13% a year, and we hope this growth will continue as the potential in the domestic market is huge,” Madhavan said. “The company’s priority segments will be the existing white spirits and scotch whisky in the niche, as well as semi-premium space, as these segments hold high market potential in the long term.”
Still, there are obstacles to the expansion plans, primarily in the form of high import duties and state taxes. Over time, however, said Madhavan, the tariff barriers may be lowered, increasing the size of the market for imported premium spirits.
“The Indian spirits market would see a key transformation in drinking culture and there will be a major shift of Indian consumers to the imported premium brands,” he said. This segment, which sells about 2.4 million cases a year, makes up less than 2% of India’s 144 million cases a year liquor market. One case is 12 bottles of 750ml each.
India’s spirits market is currently estimated to be worth $6 billion, or Rs28,000 crore, led by Vijay Mallya’s United Spirits Ltd and United Breweries Ltd, Delhi-based Radico Khaitan Ltd and the local units of Diageo and Pernod Ricard
 

10. Beam Global launches premium single malt whisky Ardmore

Beam Global Spirits and Wine on Monday launched its single-malt whisky Ardmore Scotch in the Indian market.
Ardmore will be available at general liquor shops in Delhi, Mumbai, Bangalore and Chennai to begin with and will be priced between Rs 2,800 and Rs 3,500, the company said in a statement.
"The introduction of Ardmore in India not just strengthens our single malt portfolio but also provides Beam Global an opportunity to bring a world class product for its consumers," Beam Global Chief Executive Officer and Managing Director (India and Indian Sub-Continent) Harish Moolchandani said.
Initially, Ardmore will be available at duty paid shops in major metros but with enhanced distribution, we are well positioned to further expand our market share in the single malt space, Moolchandani said.
Ardmore Traditional Cask was released in the United Kingdom and duty free markets in 2007 and entered the US in 2008 as the first ever widely available single malt whisky from the Ardmore distillery.

11. Tata Motors ties up with Central Bank for car financing – February 17

Auto major Tata Motors on Wednesday tied up with public sector lender Central Bank of India for providing retail finance facilities to its passenger vehicle customers. “In order to provide an added facility of car finance to its customers, Tat a Motors has entered into an understanding with Central Bank of India for financing its range of passenger vehicles,” the company said in a statement.
Under this association between the two firms, financing facilities would be available at all the 3,500 branches of the lender as well as the 329 sales touch points of the auto maker, it added. “This tie-up will provide a single window for both cars as well as car loans and will make car buying easier for customers,” the auto firm said.
Central Bank of India currently offers car loans up to 85 per cent of the on-road price of the vehicle, for a tenure ranging up to seven years, at a rate of 10.5 per cent for a 36-month tenure and at 11.5 per cent for a period over 36 months, the stateme nt added.
Last week, Tata Motors had joined hands with another public sector lender Corporation Bank to provide financing facilities for its passenger vehicles.

12. Car exports from India rise 12.49 per cent in January – February 9

Export of passenger cars from the country rose 12.49 per cent in January even as car sales within the country fell 3.23 per cent during the month. Car exports from India stood at 21,530 units in January 2009 against 19,140 units in the same month last year.
Overall automobile sales - including two-wheelers, passenger cars and commercial vehicles - within the country saw a 7.4 per cent fall in January this year, at 1,10,212 units compared with 1,13,894 units in the year-ago period, the Society of Indian Automobile Manufacturers (SIAM) said in a release.
Car exports from the country have risen 63.01 per cent for the 10-month period April-January 2008-09 with several global auto majors making India an export hub.
The number of passenger cars exported from the country during the 10-month period stood at 2,71,999 units against 1,66,859 units in the year-ago period, according to SIAM.
Hyundai Motor India led the export thrust, followed by Maruti Suzuki India, Mahindra Renault, Fiat India Automobiles, General Motors India and Honda Siel Cars India in that order.
Hyundai Motor India's exports increased 91.13 per cent in the current fiscal to 2,14,900 units against 1,12,439 units in the corresponding period of last fiscal.
Total vehicle sales in the country stood at 768,622 units against 830,469 units. Motorcycle sales in the country during the month was down 5.8 per cent at 452,822 units, against 480,727 units in the year-ago period. Total two-wheeler sales in January also declined by 3.9 per cent at 581,742 units compared with 605,670 units in the same month last year.
The biggest drag came from the commercial vehicles segment, which recorded 50.96 per cent drop during the month to 23,157 units, from 47,225 units in the year-ago period.

13. India January Car Sales Fall in Fourth Straight Decline – February 9

India's domestic car sales fell for the fourth straight month in January as high borrowing costs and fear of job losses in a slowing economy hurt sales at the local units of General Motors Corp., Honda Motor Co. and Hyundai Motor Co.
Sales fell 3.2% in the past month to 110,212 cars from 113,894 cars a year earlier, data issued Monday by the Society of Indian Automobile Manufacturers showed. It was the sixth fall in monthly car sales in seven months.
Car sales fell 7% from a year earlier in December, following a 19% drop in November. Sales also fell 6.6% in October, 4.4% in August and 1.7% in July.
"A challenging macro environment coupled with weakening consumer sentiment would impact demand in the short term," Jinesh Gandhi, an analyst at Mumbai-based Motilal Oswal Securities, said in a recent note.
Five-year high loan rates and stringent lending norms of financial institutions have hurt sales of cars, commercial vehicles and motorcycles in Asia's third-biggest automobile market. This has led several auto makers to prune production in line with slowing demand.
Sales at GM's local unit fell 21% from a year earlier in January to 3,196 cars, while those of Honda's Indian unit slid 24% to 5,661 cars.
Hyundai, the second-biggest car maker in India by sales volume, sold 21,015 cars in January, a 13.5% decline from the year-earlier period. Market leader Maruti Suzuki India Ltd., however, bucked the trend, posting a 8.6% rise to 59,060 cars. Tata Motors Ltd. recorded a 1% rise to 15,406 cars.

14. Hyundai trails in Sedan category – February 16

Despite being a strong player in the small car market, Hyundai is losing its grip on the sedan segment, while its big rival Maruti and other companies are gaining ground.

Hyundai sells sedans like Accent, Verna, Elantra and Sonata. However, it is struggling as models like Elantra are being virtually wiped out with no sales since August last year, according to numbers provided by the Society of Indian Automobile Manufacturers (SIAM). Luxury sedan Sonata has been running through a rough patch also over the last few months with low double-digit sales. Hyundai has come out with an all-new Sonata to regain the market share.

On the other hand, market leader Maruti has gained considerably in the sedan segment, mainly riding the success of its DZire model. Maruti is recording good numbers primarily in the sub-Rs 10 lakh segment, where the volumes are the most.

An analysis of the SIAM data shows, after reporting a 10% growth in the sedan category in October 2008 (year-on-year), demand for Hyundai's sedans started taking a beating. In November, its sales shrank 37% at 1,716 units, in December sales dipped 13% to finish at only 880 units. In January 2009, the sales dropped by 45%. Alarmingly for the company, its numbers went down when Maruti was consolidating presence with Dzire, the sedan version of Swift.

While Maruti's sedan numbers grew 30% at 5,412 units in October 2008, the growth was 40% in November at 5,975 units. In December, its sedan sales rose 98% to 6,524 units, followed by 124% at 6,590 units in January, 2009.

A worrying factor for Hyundai is the fact that Tata Motors, the country's third-biggest carmaker, is also ahead of it in the sedan segment. Sales of Tata Indigo were 96% up in October 2008, 73% in November, 21% in December and 37% in January this year. Hyundai didn't answer to a questionnaire sent to it by TOI, though a spokesperson said the company has decided to phase out the Elantra model.

The sedan segment in India that at present contributes around 25% to total car sales has been gaining in numbers over the last few years, riding the rising aspirations of people and increasing purchasing power. And despite the slowdown, the segment has managed a growth of 3%, which can be considered significant considering the overall big-volume small car market degrew by 2%.

Analysts said the worrying factor for Hyundai is while the low-price sedan segment (till around Rs 8 lakh) is dominated by Maruti and Tata, the higher price cars are dominated by companies like Honda and Toyota, while the ultra expensive have players like BMW and Mercedes Benz.

15. Suneil Shetty is Endeavour's ambassador – January 29

Ford India has roped in Bollywood's macho man Suneil Shetty as the brand ambassador for its sports utility vehicle (SUV) Ford Endeavour.
Talking about the tie-up, Nigel Wark, executive director, marketing, sales & service, Ford India, said, "The Endeavour has been the largest selling SUV in 2008. Suneil Shetty is not only a proud Ford customer but embodies these key attributes of the Endeavour perfectly.''

As per the Society of India Automobile Manufacturers (SIAM), Ford Endeavour is the market leader in terms of cumulative sales of SUVs in 2008, with total sales of 3,328 units sold from January-December 2008, significantly more than any other manufacturer in the segment, Ford officials said. The Endeavour also had market share of 28% in the year just gone by.

"Cars have always ranked high on my priority list and the Ford Endeavour is a dream come true for any car buff looking for a true blue SUV,'' said Suneil Shetty.

Ford Endeavour is assembled is powered by a 3.0 litre turbo-diesel common rail injection (TDCi) power train and offers 4X4 driving for that adventurous spirit. The SUV is available in three different variants the 3.0 Litre 4x4 Thunder+, 2.5 Litre 4x2 Limited Edition and 2.5 Litre 4x2 XLT.

16. Coming soon: GM's mini-CV Wuling

The fourth largest car manufacturer by sales, General Motors, is planning to launch its mini commercial vehicles (MCV) sold in China under the brand name Wuling in India in the near future. The Wuling (MCV) is made up of a 1.2-litre petrol engine and could be classified, according to SIAM’s vehicle description, under the MPV segment consisting of Maruti’s Omni and Versa.
“The brand is well-suited for the Indian market. It’s definitely an opportunity for us to launch these MCVs in the country with product adjustments. Entering the CV market is the most logical step to strengthen our portfolio,” says Jonathan Browning, VP, global sales & marketing, GM, on the sidelines of the launch of the company’s limited-edition Spark Muzic today. Jonathan declined to specify a time line for the launch of the MCVs in India.
General Motors that manufactures Wuling MCVs in a joint venture between China’s SAIC and Wuling sold around 75,000 units of these MCVs in China in January 2009, and commands a 43 per cent market share in the MCV segment.
Earlier, GM revealed its plans to launch its third small car, priced higher than its compact UVA cars, at the end of 2009. In addition, mid-2009 will see the launch of its premium car, the Chevy Cruz.
GM increased its domestic market share from 2.9 per cent in 2007 to 3.9 per cent in 2008 by selling around 65,000 units of passenger vehicles. In the small car segment, with its Spark and UVA brands, it sold around 33,000 units in the April 2008 – January 2009 period, with Spark contributing about 84 per cent to its overall small car pie. GM has plans to launch two new cars in India this year, that includes an all-new mini car and a premium sedan `Cruze'.

17. Skoda to launch new cars, variants in 2009

Skoda is planning to bring in more new cars and variants into India in 2009. It has big plans for 2010 as well.

The year 2008 ended on a high note for Skoda India with sales growing at 29%, they cornered a 55% share of India's premium segment. It’s small car, Fabia that won the "CNBC-TV18 Overdrive Car of the Year" award, despite selling only 7,000 units against the targeted 10,000. But Skoda is in no mood to slow down and 2009 will see more new cars from the Skoda stable hitting Indian roads.

Thomas Kuehl, Member Of The Board - Sales and Marketing, Skoda Auto India, “We'll bring a new Superb, new Laura and three variants of Fabia—Fabia Sportline, Greenline and Concept.”

Currently cars from Skoda and Audi are assembled at the Volkswagen Group's Aurangabad plant, which has a capacity of 40,000 units. But Skoda plans to move the Fabia assembly to its new Pune plant, increasing the localisation component in the car to 50% from the current 10 percent. So the Fabia's manufacturing costs will come down. Reason enough to add more features to the car.

Thomas Kuehl said, “We will add more features like ABS now. We do not believe in reducing the costs so much.”

Skoda is looking beyond 2009. It is developing a car smaller than the Fabia, which will be priced at around Rs 5 lakh this should roll out by 2012. It's also looking for a piece of the Sports Utility and Multipurpose Utility Vehicle market with its Roomster and Yeti both of which should be ready by 2010.

Skoda's also conducting feasibility studies to set up a power terrain facility, and wants to begin exports from India.

18. Hyundai mid-size crossover SUV Santa Fe slated for 2009 launch

According to sources, Hyundai Motor India Limited (HMIL) may launch its mid-size crossover sports utility vehicle Santa Fe in India during this calendar year. Once launched, the car will be imported from Hyundai's Korean plants as a completely built unit. It is highly likely that HMIL may bring in both the petrol and diesel versions of the car with an estimated price of the model is around Rs. 23-26 lakh. With this new model, Hyundai is planning to exploit the booming SUV market in India, which has bucked the slowdown trend.
It is to be mentioned that Santa Fe is one of the most successful SUVs in North America. Globally, it was introduced for the 2001 model year as Hyundai's first SUV, and was a milestone in the company's restructuring program of the late 1990s because, despite receiving criticism from journalists for its obscure looks, the car was a hit with the American buyers. The car was so popular that at times, Hyundai had trouble supplying the demand. The Santa Fe quickly became Hyundai's best seller and contributed to Hyundai's success in the
 

19. Indian computer sales flat: industry body - Feb 10

Sales of personal computers in India are expected to be flat this financial year as consumers hold back on purchases due to a slowing economy, an industry group said Tuesday.
Sales of laptop and desktop computers rose 12 percent to 3.7 million units in the six months ended September 30, the Manufacturer's Association for Information Technology (MAIT) said.
But the outlook was far more grim for the second half of the fiscal year to March 2009, the group said.
"Given current macroeconomic conditions and conservative buying sentiment in the market, PC sales are expected to remain at the same levels as in the last fiscal year, at 7.3 million units," MAIT Executive Director Vinnie Mehta said.
"The global economic downturn has started reflecting on the domestic information technology market," Mehta said in a statement. "We expect a flat market for PCs for fiscal 2008-09."
The association added that government and public sector spending was expected to be the mainstay of domestic IT consumption and appealed to the government to give interest-free loans to employees wishing to buy computers.
The PC industry had seen double-digit annual growth as falling prices boosted demand and companies accelerated computerisation.
Desktop computers took the biggest share of the market in the first six months of the year, totalling 2.91 million units, MAIT said in the statement.

20. Acer Rolls Out New Schemes for Partners – February 12

Acer India has announced two new schemes for its partners on key product lines all the way to the end of February 2009. These offers are valid on a range of select Acer Aspire and TravelMate notebooks.
The 'Big Bucks Offer' has been designed to offer partners with a rebate of Rs. 2,000 on the Acer TravelMate 5730 and Rs. 1,000 on the Acer Aspire 4730z. Under 'Click and Carry' partner scheme on Acer's range of AMD notebooks, partners can avail of a Sanyo digicam (7.1 MP) by picking up just 9 units of the Acer Aspire 4530. External hard disks are gifted to every partner on a pick of 4 units of the same notebook. This offer is applicable on purchases of Aspire 4530 notebook between February 18, 2009 and February 28, 2009 (both Days inclusive).
S. Rajendran, Chief Marketing Officer, Acer India, said, "Our partners have played a pivotal role in positioning Acer as a leader in the consumer, and are the key medium to reach out to the target audience. In such a scenario, it is very important to recognize the efforts of our partners continuously to keep motivation levels high. The 'Big Buck' offer and the 'Click and Carry' scheme are few of the many initiatives that we have launched of late for our partners."

21. 'Second Fiddle' No Longer: India's PC Market Opens up to Notebooks - February 12

A few years ago, notebook computers -- lightweight, portable PCs that can easily fit inside a bag or briefcase -- were the preserve of the elite in India, used only by corporate executives, the super rich and super geeks. They accounted for a very small fraction of total personal computer sales in the country. But the picture has been changing rapidly, and in just a few years one out of every two PCs sold in India is expected to be a notebook.
The rise of the notebook as a primary computing device may seem remarkable in a country where PC penetration is just 2% to 3% and the total installed base of PCs is estimated at only 28 million units. "The notebook, despite the advantage of offering mobility, has long played second fiddle to the much larger and more established desktop market in India," says Rajiev Grover, director of the personal systems group at Hewlett Packard (HP) India. HP is the largest player in the country's notebook market, with over 35% market share in unit terms. "It was seen as a niche factor and not meant for the burgeoning mass market. But now, it is on the threshold of a mobile-phone-like revolution in India."
According to Sumanta Mukherjee, PC market analyst at research firm IDC India: "The notebook story in India is clearly one of phenomenal growth." The numbers bear this out. According to IDC, in calendar years 2005, 2006 and 2007, notebooks grew over the previous year at respective rates of 148%, 108% and 81%. Between January and September of 2008, notebook shipments grew by 54%. As a percentage of total PC shipments (desktops and notebooks) in 2004, notebooks accounted for a mere 5.5%. In the first nine months of 2008, notebooks, at 1.87 million units, accounted for almost 30% of total PC sales of 6.42 million units.
Even as notebook sales have flourished, desktops have experienced a slowdown. According to IDC, desktop sales growth dropped from 19% in 2005 to 7% in 2007. For the January to September period of 2008, shipments fell by 5.4%. "The growth in the PC market in India is being driven by notebooks, and with notebooks continuing to show robust growth on a larger base, it is clear that their story is still strong," says Mukherjee. "We expect that by 2012 the split between notebooks and desktops will be equal."
Vinnie Mehta, executive director of the Manufacturers' Association for Information Technology, agrees that the market is transforming. In a September 2008 statement, he stressed that notebook sales had driven India's PC market during the April to June quarter. "With sales crossing 610,000 units in the first quarter of this fiscal year, notebooks account for close to a third [33%] of the total PC market in the country, up from less than 3% four years ago. With shifting consumer preference in favor of notebooks over the desktop, this proportion will only get larger with time."
Driven by Price
"The explosive growth of notebooks," says Amar Babu, managing director of Lenovo India, "is a great example of what can happen when there is the right technology that meets specific customer needs at the right price point."
Affordability is certainly a key reason that notebooks are taking off. According to IDC, over the last few years notebook prices in India have been dropping by about 10% a year, primarily because of technological advancements, changes in the customs duty structure and growing volumes. Prices have not dropped at the same rate in the more mature desktop market, so the price difference between a desktop and a notebook has been reduced substantially.
Using rough estimates, industry players point out that four to five years ago, while a notebook was priced around US$2,000, a desktop was about half that. Today, notebooks are available for around US$500, desktops for around US$400. As Sameer Garde, country general manager at Dell India, notes: "Price by itself is no longer a major deterrent for someone looking to buy a notebook."
The growth in the telecom ecosystem and recent advancements in wireless connectivity have played an equally important role in driving notebook adoption. "Increasing globalization has led to a more competitive landscape, and the norms of productivity therefore are changing rapidly," Garde says. "Both organizations as well as individuals in India are realizing that mobility and connectivity are a very potent combination when it comes to increasing productivity. A whole new usage model is being driven by this." The model taking hold in large enterprises is one of notebooks no longer being limited to top management; instead, they are percolating down the ranks to middle managers and sales teams to enable a faster information flow and improved decision-making.
Not only the corporate world has embraced the notebook: Other segments driving the market include education, small and medium businesses, and consumers. For instance, notebooks have ushered in a new way of delivering education in areas such as engineering and management, and many educational institutions factor the price of a notebook into their fee structure. For consumers, notebooks are fast becoming a lifestyle product. According to IDC, in 2006 and 2007 the consumer notebook segment grew at 261% and 248%, respectively. In 2008, it is estimated to have grown at 95% over the previous year.
"In most mature markets, because of the high penetration of PCs, most people start off with a desktop and then get a notebook as their second PC or as a replacement," Lenovo's Babu says. "In India, a lot of people are leapfrogging to buying a notebook itself as their first PC." According to IDC's Mukherjee: "India is a very price-sensitive and value-conscious market, and notebooks are satisfying both these needs for first-time buyers."
The entry of new user categories has redefined the notebook market. Vendors have introduced different products for different target segments. HP, for instance, has its HP-Compaq portfolio for commercial users and HP Pavilion and Compaq Presario for individuals. Dell has the E-series for corporate customers, Vostro for small and medium businesses, and the XPS, Studio and Inspiron for consumers. Lenovo has the Think Pad for corporate users and the Idea for consumers. Acer has the Aspire brand for consumers and the Extensa and Travelmate for the commercial segment.
Global Strategy at Work
One may argue that these target-specific products are part of the vendors' global strategies and are not specific to India. But the very fact that vendors are looking at segmentation in a market where PC penetration remains low is a clear indication of the potential they see.
There are other indicators. India was the first country outside of China where Lenovo forayed into the consumer space, introducing its products to that market in 2006. India was also the first country in the Lenovo world to get a film celebrity to endorse its consumer brand. The case is similar with Dell and its recent "Take Your Own Path" campaign targeted at small and medium businesses. When Dell launched its new Latitude E-series globally in October, New Delhi was one of three cities chosen for the launch (along with San Francisco and London). The New Delhi launch was by none other than company chairman Michael Dell.
HP's global re-launch of its Compaq brand in 2007 was held in Mumbai. HP is now introducing its "Digital Clutch" (the notebook that HP has designed in collaboration with fashion designer Vivienne Tam) and targeting it specifically to women. With consumers becoming a larger piece of the pie and the notebook becoming more of a lifestyle product, features such as better sound quality, screen size options, different colors and different finishes are coming into play.
"Earlier, all the innovation was around making the notebook more robust and more secure for the corporate customer," says HP's Grover. "Now, the innovations are around providing different benefits to the different user groups. It is very important that we fulfill both the spelled-out as well as the unspelled-out needs of the different segments. For instance, with the notebook transforming into a lifestyle product, women clearly have different expectations [in terms] of style and colors."
Meanwhile, with the universe of notebook buyers and users growing beyond the metros to the smaller cities and towns, vendors are getting closer to customers. In addition to increasing their reach through multi-brand outlets, vendors are increasing their numbers of exclusive stores across the country. HP has doubled its stores to 180 in the last three years. Acer has more than 100 exclusive stores and Lenovo has 157. Just a few months ago, Dell opened its first two exclusive retail showrooms. All have plans to add more.
Vendors are also wooing customers through large-format retail stores such as Croma, Next, e-Zone, Staples and Metro. "The buying experience of a notebook has become an important parameter in the purchase decision along with product features, brand and price," says S. Rajendran, chief marketing officer at Acer India. "The growth of organized retail in India will also give an added [stimulus] to notebook buying."
Netbooks Stake Their Claim
Rajendran also sees potential in the Indian market for netbooks -- small, lightweight notebooks suitable for accessing web-based applications. He cites figures from market research firm DisplaySearch, which show that in July-September 2008, netbooks accounted for 14% of total global notebook shipments, with Acer emerging as the leader with a share of almost 40%. "We expect netbooks to be popular in India also, especially among small and medium businesses, and also as a second computing device in upper-middle class homes." Rajendran predicts that India's netbook market will be around 300,000 units this fiscal year.
Ravi Bapna, associate professor of information systems at the University of Minnesota's Carlson School of Management and executive director of the Centre for Information Technology and the Networked Economy at the Hyderabad-based Indian School of Business, is optimistic about the role of netbooks in India. "The netbook could have a potentially larger penetration ability as it could become an aspiration device for the lower-middle class," he says. "However, a stronger ecosystem of applications and services innovation is needed for the full potential to be realized. Can it really solve the day-to-day pain points felt by this segment of society? At present, the answer would be no, but that does not mean future applications will not."
Industry players largely expect the market to grow further once 3G wireless technology is introduced in the country. "[3G] will impact every user segment, [whether] commercial or consumer, and will definitely be a trigger for further growth," says Dell India's Garde. Lenovo's Babu agrees: "Wi-Fi drove a certain level of growth in the usage of notebooks, despite not being pervasive wireless. 3G will certainly drive a fresh wave of growth in this space."
Bapna, however, sees it differently. "It depends on the competing technologies that can provide high-speed mobile Internet," he says. "I doubt 3G technology is going to have a significant acceleration effect on notebook adoption. In contrast, my prediction is that the growth will occur in high-end mobile handsets [and] iPhone-type devices. Their quality and the functionalities provided are bound to keep improving as the bandwidth constraints get eliminated."
Meanwhile, apart from concerns about the global economic slowdown's potential effect on the growth of India's notebook market, one long-term constraint may be language. "A large part of the Indian market is vernacular, but the entire ecosystem of the personal computer is very English-oriented," HP's Grover notes. "For further growth, we need to remove this language barrier. In order to do this, different players like the government, device manufacturers, Internet service providers, content providers and others who are all working currently in silos need to work together to develop the ecosystem."

22. Netbooks for the youth market – February 15

Compact and energy-efficient, Netbooks are priced between Rs. 23,000 and Rs. 25,000
Chennai: Netbooks or mini laptops have gained popularity as personal gadgets during 2009. They are light, compact, highly portable, inexpensive, and energy efficient.
The difference between Notebooks and Netbooks lie in their functionality. Notebooks are basically laptops. They have all the functions of PCs but more portable. Netbooks, however, are low-cost portable devices that have only the basic functions of computers. They usually lack the power to run complex software applications or games.
Netbooks come in handy for browsing the Internet, chatting, and playing music or video. Notebooks, on the other hand, do all the heavier tasks that PCs do.
So what makes Netbooks so attractive? Pricing and size stand out as the major factors for their growth. Today, fully functional Netbooks cost less than smart phones. They are priced between Rs. 23,000 and Rs. 25,000, while Notebooks cost about Rs. 50,000 or more. High-end Notebooks come close to Rs.1 lakh. Netbooks come with a screen size that varies between 17.5 cm and 25 cm. But the conventional Notebooks have a screen size of 25 to 42.5 cm. The added advantage is the long battery life.
Considering the value for money, the market expects Netbooks to grow, not only in metros but also in Tier-II and III cities. The targeted customers for Netbooks will be students, says L. Ramprasad, vice-president, Transactional Consumer Sales, Lenovo India.
Netbooks made their entry when the Taiwan-based multinational PC maker, ASUS, launched EeePC in 2007. For about a year, there were not enough takers for this product.
Subsequently, the U.S-based desktop manufacturer Everex launched its CloudBook in mid February last year. This was followed by MSI (Wind), Dell (Inspiron Mini), HP (HP Mini), HCL (MiLeap Series), Acer (Aspire one) and Lenovo (Ideal Pad-S series).
They are targeted at cloud computing users who rely on servers and require a less powerful application. They have a wide range of light-weight operating systems like Linux and Windows XP, which have less processing power than the traditional operating systems in laptops.
The demand for Netbooks should grow slowly, with increasing availability of Internet bandwidth and GPRS/3G mobile connectivity.
Cloud computing
It is estimated that in the future around 90 per cent of computing globally will be done through “cloud computing.” Cloud computing is an emerging computing technology that relies on central servers for the delivery and maintenance of applications. Today, Google applications, Maps, and Gmail are all based on the cloud computing.
PC makers such as HP, Acer, Asus, MSI, Lenovo, Samsung and HCL are eyeing a decent market share for their Netbooks. Though these are powered by Intel’s atom and AMD’s Puma processors, the keypads often pose a problem. The keypads are not on a par with conventional laptops.
Stanley Wu, product manager, Notebooks and Eee PC, ASUS (India), says that Netbooks from his company have an exclusive super hybrid engine for a much longer battery life. Further, they also pair a 1.3M pixel webcam with its wireless Internet connection capabilities.
Netbooks have begun to eat into the market share of laptops and also iPhone, by recording a sales figure of 9 lakh units across the world in the third quarter of 2008. The sales in 2012 are estimated to increase up to 50 million. Manufacturers expect this to emerge as one of the favourites in the market

23. HP partners with TERI to launch green programme in schools – February 16

Hewlett-Packard (HP) India, in partnership with The Energy and Resources Institute (TERI), on Monday announced the launch of Hewlett Packard-TERI Schools' future programme, an initiative it said will improve environment projects in schools.
HP India has awarded a grant of Rs 1.17 crore ($250,000) comprising cash and technology resources to TERI for the programme.
"The primary objective of this partnership is to create a motivated force of students -- leading to cleaner and greener school campuses -- and initiate ecologically beneficial initiatives in the areas of energy, e-waste management and greening of neighbourhoods," HP India said in a statement.
The programme will also help primary and secondary schools in Bangalore, Chennai and Delhi to take practical action to save energy and water while reducing their utility bills, it said.
It said the programme will support the schools directly with ideation, as well as in implementing their environmental initiatives. The initiative also involves providing HP technology to the schools, which will enable them to network with other schools and share best practices.

24. PC sales crash 40% in December quarter – February 11

The chips are really down for the computer industry. Leading computer chip makers — Intel and AMD — estimate that personal computer (PC) sales are down by up to 40% in the quarter ended December 31, 2008. Even industry bodies such as Manufacturers Association of Information Technology (MAIT) and IDC predict one of the steepest declines in PC sales in the past five years.

Chip makers track the market by virtue of sourcing the orders they get from their Original Equipment Manufacturers such as Dell, HP and HCL. “We estimate the market sales to be down by almost 40% this quarter, compared with the same quarter last year,” said AMD India marketing head Ramkumar Subramaniam.

Agreeing that the PC market has taken a hit due to global recession, Intel India marketing head Sandeep Aurora said: “The market is down by almost 25% because of the sentiment rather than the lack of demand or purchasing power. There was a sudden dip in PC sales post-October. However, our plans to invest in the country in R&D for new chips are on schedule.”

On the other hand, MAIT which is yet to finalise figures for the quarter-ended December 31, 2008, said that it expects a flat market for PCs for the fiscal 2008-09.

PC vendors like HP declined to comment on the future growth projections, citing silent period requirements prior to their upcoming global results.

“The global economic downturn has started reflecting on the domestic market, as it is evidenced in the recent OND (October-November-December) quarter. The industry needs to devise new ways of financing. Fast implementation and spread of technologies like WiMax and 3G for broadband penetration will boost demand and beat recessionary trend in the coming quarters,” said MAIT executive director Vinnie Mehta.

MAIT, on Tuesday, reported a growth of 12% in PC sales for the quarter ended September 30, 2008. But notebook PC sales, which were consistently growing in the previous quarters, witnessed a decline of 32% in the first-half of 2008-09.
IT research firm IDC also expects a flat growth in the sales this fiscal.

“The industry was expecting a robust sales in the festive season around October which did not occur leading to an inventory pile up. The liquidity crunch and the terror attacks also made the market confidence to go down,” said IDC India country manager Kapil Dev Singh.

The sudden dip in the last quarter suppressed the growth in the previous quarters. HP India president Ravi Swaminathan reckons that with the expected rollout of 3G and Wi-Max networks, there will be significant opportunity for diverse applications and services.

Vendors are expecting a robust growth in the last quarter of this financial year. However, the upcoming general elections may delay the government buying this quarter feel analysts, making the yearly growth in sales, flat at about 2-3%. Overall, there’s not much to cheer about for the computer makers, as new consumers delay the buying decision.

25. HP Launches Compaq Presario CQ 2000 Series Desktop PC in India

HP has launched the Compaq Presario CQ 2000 series desktop PC in India. The sleek and eco-friendly CQ 2000 is a space-saving device designed for the modern households.

The company said the CQ 2000 can easily replace one's music system and DVD player as it doubles up as a multimedia player on which users can watch movies, play games, attach it to their LCD monitors and speakers or simply enjoy online video clips on You tube. The CQ 2000 also comes with the Compaq My Bhasha software, a communication enabler providing vernacular interface.

The CQ 2000 is stylishly designed, lightweight at 3.5 kg and fits almost anywhere. HP said that with a 6-in-1 digital media reader and USB drives, all users need to do is plug-in, sit back and do what they need to effortlessly. The CQ 2000 is also energy star certified for being energy efficient and is made from fewer manufacturing materials for less wastage.

Chandrahas Panigrahi, Country Category Manager, Consumer Desktops, PSG, HP India, said, "The CQ 2000 is a completely new category of PCs that will redefine the way desktops are viewed in terms of form factor and design. The main aim of launching the CQ 2000 is to offer an affordable PC to families, young professionals and Internet savvy people who want much more out of their PCs."

"The Compaq My Bhasha software offered with the PC, for a 90 day free trial, will not only help break the language barrier for non-English speaking users, but also make computing a truly personal experience as the users get to email, chat, socialize online and do a lot more in the language they are most comfortable using," added Panigrahi

The Compaq My Bhasha software provides an intuitive and natural vernacular computing experience through the webcam "simulated hands" interface. The 10 languages covered by the interface are Hindi, Tamil, Kannada, Gujarati, Marathi, Telugu, Bengali, Malayalam, Punjabi and Urdu. Users can choose any one language from the package that can be embedded in the system or installed later from a CD.

The CQ 2000 Desktop PC with a 15" TFT screen is available all across India through HP's retail and distribution network at a starting price of Rs. 18,990/- plus taxes.

26. HP Launches iPrint Photo Service The service allows customers to print photos anytime, anywhere from their iPhones and iPod Touch.

Hewlett Packard has launched a new service -- called HP iPrint Photo. The service allows customers to print photos anytime, anywhere from their iPhones and iPod Touch. The iPrint Photo service is available for free download from Apple's App Store.
HP iPrint Photo is a photo printing application which allows for quick and easy wireless printing of 4x6-inch photos. The application is compatible with most HP inkjet printers connected to a local Wi-Fi network. It comes equipped with multi-touch user-interface for the easiest wireless iPhone or iPod touch print experience, according to the company.

According to Raj Kumar Rishi, country manager, Hewlett-Packard India Sales Pvt Ltd, said, "With the new iPrint photo service, we at HP are enabling our customers to turn special moments captured on the go into high-quality photos with outstanding image quality and precise colour."

The HP iPrint Photo is available at no charge from Apple's App Store on iPhone and iPod touch or at www.itunes.com/appstore.

27. Dell Inspiron Mini 12 Notebook Launched

Dell Inspiron Mini 12 notebook which was previously launched in Japan and America has now reached India.
At 1.24kg and only 0.92 inches thick, it is said to be an ideal companion for consumers who need to access the web, blog, video chat and send e-mails while on the run.
The Dell Inspiron 12 is powered by a 1.6GHz Intel Atom Z530 processor and includes a 12.1-inch WXGA display, 533MHz FSB, Intel US15W chipset, 1GB DDR2 533MHz, 80 GB HDD, 1.3 megapixel webcam, Wi-Fi (802.11b/g) and Bluetooth.
The small and lightweight notebook supports both Windows XP and Vista operating systems.
“The Mini 12 is designed specifically for mobile, hi-def lifestyles,” stated Girish Mehta, Director of Consumer Marketing, Dell India. “With its slim lightweight design and 12″ widescreen display, the Mini 12 is the ideal on-the-go Internet companion for today’s mobile generation.”
It works on 3-cell battery or 6-cell battery to offer about 3 hours or 6.5 hours of battery life, respectively.
It also sports Dell’s custom interface with intuitive icons that enables users to access a variety of similar applications with ease.
The Dell Inspiron Mini 12 carries a retail price of Rs. 31,000.

28. Durable cos see volumes soar in 2009 – February 13

Robust consumer spends on durables in urban and rural markets since early January 2009 seem to defy conventional logic about recessionary trends impacting discretionary purchases.

Leading industry majors and retailers are reporting an upbeat 20%-plus growth in volumes for LCDs, laptops, ACs, refrigerators, washing machines and audio systems after cutting down production in the last three months of 2008. Industry officials say rural markets are more upbeat and insulated from the impact of the global meltdown and are throwing up good volumes.

"Given the projected GDP growth of 6-7%, it’s hardly surprising that demand for aspirational consumer products remains upbeat. I think there was a lot of hype about recession and job layoffs, which depressed consumer sentiments. While some businesses may have been impacted, there are new businesses that are simultaneously opening up. Consequently, after sitting on the fence for a while, consumers are back to showrooms," said Ajit Joshi CEO of Tata Group-led Croma.

Industry players say the trend indicates that the purchasing power of the average middle-class Indian consumer is still strong. One school of thought is of the opinion that the trend is supported by the strong savings culture in India that is biased towards essential purchases. Most purchases are through cash, cheques and credit cards, with most financiers almost exiting the market, except for Bajaj Finance, said Nilesh Gupta of Vijay Sales, a durables retail chain.

Consumer durables manufacturers expect a growth of 12-15% for consumer electronics and 15-20% in home appliances this year. Prices have stayed firm across categories since early January 2009 and officials rule out any drop this year.

Leading manufacturers like LG, Samsung and Onida were concerned about uncertain growth trends late last year, when volumes took a 20-30% dip amidst rising input costs. Currently, dealers are continuing to rely on exchange offers and freebies to woo consumers to showrooms.

December IIP figures released on Thursday indicate output of consumer goods, including durables declined in absolute terms. These latest trends may indicate that the January numbers could be better.

"LCDs as aspirational purchases are driving consumer electronics sales, especially given the significant drop in prices in the past several months. Also, if one looks at the demographics, there are a vast number of young consumers who are taking up jobs, buying houses and making purchases of durables which are a benchmark of lifestyle.

Also, there are other demand drivers like investments in rural economy, good agricultural growth and higher disposable incomes in the hands of consumers after the implementation of recent Sixth Pay Commission," said V Ramachandran, director of marketing, LG India.

Conventional trade and modern formats are recording robust volumes, with a significant number being cash-purchases. Modern formats like Croma, E-Zone and Next, among others, constitute roughly 10-15% of the total industry sales. Soaring input costs last year had dented profitability of most manufacturers who selectively hiked prices in an uncertain market.

"The challenge will continue to be to control operating costs and improve margins. But we do expect the pressure on input costs to ease up this year," Mr Ramachandran said.

"We are recording around 25% plus sales even in our older formats. Events like IPL and 20:20 World Cup series will further boost sales. The average ticket sizes too have not dropped. We also attracted consumers who had the money, but seemed unwilling to spend by offering discounts," said Manoj Kumar, CEO of E-Zone, a Future group entity.

29. Samsung strengthens AC portfolio – February 5

Samsung India hopes to significantly up its marketshare in the airconditioner market from 15% to 25% by December 2009. It has launched a slew of models and plans to up its distribution network by 50% to effect this change. The AC market too is expected to touch 2.4 million units this year.

"Based on the new range introduction and an aggressive sales network expansion across the top 33 cities, we expect to notch up a 50% growth in our AC volumes this year," Samsung India deputy managing director Ravinder Zutshi said.
In the overall home appliances segment, the company plans a channel expansion by 40%, while the same for ACs stands at 50%. It also aims to double its number of exclusive outlets, called Samsung Plaza, to 600 this year.

The company's overall investments (across categories) this year will be $20 million. So far, Samsung has invested $200 million in India. Actual advertisement spend, generally 4% of annual turnover, is also expected to increase by 10-15% over last year.

Mr Zutshi said split airconditioners, so long considered the luxury segment, had overtaken the window AC segment. Split ACs contributed 58% to total AC sales last year and the figure was expected to go up to 65% this year.
Apart from airconditioners, in the home appliances division, the company will come out with more models in digital cameras, refrigerators and LCD TVs through the year Samsung India's turnover for 2008 stood at $1.7 billion and it expects a 25% rise this year. A quarter of Samsung India's revenues comes from rural markets.

30. Coke announces national rollout of Fanta Apple

Beverage company Coca-Cola on Monday announced the national roll-out of Fanta Apple, the second variant in the Fanta franchise after orange. Coca-Cola India VP (marketing) Venkatesh Kini said: "The good response Fanta Apple generated in southern markets prompted us to extend it nationally."

The company has signed actor Genelia D'Souza to endorse the brand, and is being rolled out in 200-ml and 300-ml returnable glass bottles and 600 ml PET packs.

The launch will be supported by TV commercials, out-of-home media, road shows and so on. The company said brand Fanta is the largest selling fruit flavored sparkling beverage brand in the country.

Mr Kini said the company would continue to invest in marketing expenditure, new production lines, cooling infrastructure and distribution.

31. SBI offer homeloan at 8% - Feb 1

The country’s largest bank, State Bank of India (SBI), on Saturday unveiled an offer to provide loans to all new home buyers at a fixed rate of 8%, the lowest rate offered by any lender.

This rate will be applicable to all new borrowers irrespective of the loan amount. However, the fixed rate of 8% on home loans will be effective for only one year. SBI’s move is aimed at stimulating demand in the home loan market.

All customers of SBI who have already taken a loan under a special scheme, featuring an interest rate of 8.5% for a Rs 5 lakh loan and 9.25% for a Rs 20 lakh loan, will also benefit under the new offer announced on Saturday.

SBI will also charge them 8% for one year on their borrowings. After one year, these borrowers will have to pay the earlier contracted rate which in the case of special scheme borrowers will be 8.5% for loans up to Rs 5 lakh and 9.25% for loans up to Rs 20 lakh.

For those who borrow above Rs 20 lakh, SBI will charge the prevailing home loan rate. SBI has said the offer is applicable only up to April 30, 2009. Existing customers of SBI can also avail of a home loan at 8%. They can borrow up to 10% of their exposure subject to a cap of Rs 5 lakh at 8%.

With this, SBI will be offering the lowest interest rate on home loans. This also means that new borrowers who would otherwise have paid an interest rate of 10.75% for loans between Rs 30 lakh and Rs 75 lakh will now be charged only 8%, which will be on a fixed rate basis for one year.

Banking industry analysts said the move to offer a special rate of 8% comes just two days before external affairs minister Pranab Mukherjee, who also holds additional charge of the finance ministry, is due to meet the chiefs of state-owned banks to review their performance. Among other things, the finance ministry has also told banks to provide information on how borrowers have responded to the special home loan scheme introduced in December 2008.

Some senior bankers said the demand for home loans will pickup only after builders cut rates. “A borrower would first take into consideration the price of the flat and than look at the interest rates. If they feel that the property is over-priced, they will not borrow just because interest rates are low,” said an official in a state-owned bank who heads the credit portfolio.

SBI has also decided to provide an additional working capital facility of 20% of the fund based limits at 8%. This is aimed to “take care of inventories of raw materials, finished goods as also delayed payments from the buyers in the current downturn,” the banks said in a statement to media. This loan offer at 8% will be applicable for one year.

SBI will also charge 8% on term loans to SMEs for purchase fixed assets including generator sets. The rate of 8% will be fixed for one year and thereafter the applicable rate will be charged. All the above loans will be on offer till April 30, 2009 and interest will be reset after one year.

32. 'Our thrust'll be on traditional covers' - February 17

Aviva Life, a joint venture between the promoters of the Dabur group and the UK’s largest life insurer Aviva, is working out a new distribution model after its tie-up with two banks ended, resulting in a 24 per cent fall in sales from new policies. Aviva India Managing Director & CEO T R Ramachandran, who was until recently the head of retail at Citibank, spoke to Shilpy Sinha about the insurer’s plans to check the fall in sales.

In December, the life insurance industry’s premium collections dropped for the first time since liberalisation. What are the reasons?
Although the industry’s premium collection has dropped, it has actually grown at a slow pace if you put aside LIC and some other life insurers. This is fundamentally due to the weak capital market and low capital efficiency as funds are not easily available. I believe, that 2009 will be a challenging year for the industry and it will grow at 15-20 per cent. Areas such as profitability and customer care are going to be the big concerns for the industry.
Why has your premium income fallen 24 per cent during April-December?
Aviva India lost two major bancassurance partners in Centurion Bank of Punjab (CBoP) and Canara Bank earlier in the financial year, which has had an impact on the business. However, if we exclude CBoP and Canara, we are growing in line with the other private players and faster than the market.
Going ahead, our thrust will be to develop a multi-distribution model emphasising on building ‘owned’ distribution. We will continue to leverage our existing relationships with bank partners by increasing penetration levels, while keeping a lookout for any new business opportunities.
We have tied up with distributors for bancassurance and we are working on new models of distribution such as independent financial advisors and direct selling agents. In 2009-10, we expect to grow at 30-35 per cent.
Most banks are getting into the insurance space. So, too many insurance companies are chasing very few banks. The strategic answer is open architecture, as is the case in most parts of the world.
Aviva also has some interesting models in some parts of the world, where we enter into distribution arrangements with banks and go for SPVs or take equity. But it is not allowed in India. So, one will have to take more and more complementary and supplementary distribution channels in order to substitute what is not there.
How are you trying to arrest the decline in sales?
The life insurance industry in India is akin to running a marathon and we are still in the early stages of the same. Our vision is to be amongst the country’s leading life insurers with quality business model, focused on sustainable growth.
Are insurance companies taking more time to breakeven?
First, a majority of the expenses go towards distribution. Real estate prices are one of the important contributors (to the expenses) and they were far higher than what was estimated in the original business plan.
Second, salaries account for 30-40 per cent of the operating expenses. Because of a scarcity of talent, or perhaps the need to put in talent at an accelerated pace, salaries grew very fast. Third, the margins for the industry were not as high as people had expected. Also, people did not expect low renewals.
How can renewals increase and the lapse rate be lowered?
The transparency level could have been higher, even in terms of disclosures made to customers. To raise the level of financial literacy, the onus is as much on insurance companies as it is on customers.
The regulator is looking to increase the lock-in period for Ulips from three years to five years. Will this help insurance companies?
This will discourage companies from selling Ulips as a short-term product. When you are investing with a 20-year horizon, you will not care whether it has a three-year or a five-year surrender. Those who are looking to invest for three years should rather buy mutual funds.
Almost 80-90 per cent of the products sold by private insurers are Ulips. In these times, should we expect new products to come into the market?
Traditional policies will be one of our thrust areas. Actually, Ulips are far more transparent than traditional products. You don’t know how a traditional product is managed.
You only get periodic bonuses and money back. We advise customers to look at debt funds at this point and we are certainly underweight on equity from the fund management perspective. We are just nibbling in the market. There are only four things an insurance company can work around — protection for your children, retirement as social security is not there, long-term savings and investment.
You can customise your products around these needs. Much more customisation has to be done.
Will the setting up of six standalone pension players affect your pension business?
Our business will not be affected. One of the advantages of PFRDA moving ahead in this direction is the concept of retirement planning getting embedded in the private sector and non-government sector. Once awareness for this product category goes up, all brands in the category benefit.
What are your capital infusion plans?
At the end of the financial year, we will take this plan to the boards of Dabur and Aviva who will take a call. But we will require capital infusion as we have plans to grow. The capital required will be known by May.
What about your plans to enter the mutual fund market?
We are still evaluating it. Given today’s rangebound market, nothing will happen if we do it by August this year. Whether to do it alone or through a joint venture are all questions in the air.

33. Aviva India launches Young Scholar, a child education plan, which gives an attractive returns on maturity and pays a sum assured upfront incase of the parent’s unfortunate demise/critical illness.

In order to tap huge opportunity in India, Aviva India on Thursday launched Aviva Young Scholar, a comprehensive child plan that enables one to secure their child’s future in any eventuality.

Besides attractive returns on maturity, this plan pays a sum assured upfront incase of the parent’s unfortunate demise/critical illness. In addition, all future premiums are waived off and it also provides for regular income for the child till the age of 17.

A recent survey conducted by Aviva Life Insurance across 25 countries around the world on consumer attitude to savings (CAS) shows that Indians consider investment in child education as their key priority for the future.

According to the survey, as high as 44 per cent of the Indian consumers would invest in education for their family compared to a mere 17 per cent across the world.

Speaking on the occasion, T R Ramachandran, CEO and Managing Director, Aviva Life Insurance India said, “Leveraging on this insight and India’s demographic trend wherein 70 per cent of the population is below 30 years of age (young parents), we decided to launch Aviva Young Scholar. Aviva Young Scholar is a life insurance product that will benefit the child as well as ease parents of their worries on child education
 

67. Henkel puts non-core brands on the block – February 4

Henkel India is understood to have put a handful of brands like Aramusk, one of the oldest male deodorant soaps, Moloy sandalwood soap, Maha Bhringol hair oil and Tuhina skin care cream on the block.

The move is seen as a part of the Rs 500-crore arm of German consumer products company Henkel’s strategy to focus on its flagship brands such as Henko, Mr White, Pril, Margo and Fa in a competitive market. The company is understood to have mandated Mape Advisory group to find buyers for these brands. A few firms, including Emami Group and Jyothy Laboratories, have been sounded out. Brands like Aramusk and Moloy were earlier owned by Shaw Wallace India before being acquired by Henkel in 1999.

When contacted Henkel India MD Satish Kumar said: “There are a couple of good brands in our portfolio, as a result of some old acquisitions, which are not part of our flagship brands. These brands would possibly make better business sense for other players.” Mape Advisory group director M Ramprasad declined to comment.

Henkel India had acquired the control and product distribution rights of two divisions of Shaw Wallace — Calcutta Chemicals and Detergents India — and got ready access to several established brands and distribution network. Calcutta Chemicals (Calchem) had popular brands such as Margo, Neem soap, Neem toothpaste and Tuhina range of skin care products. The acquisition enabled Henkel to enter cosmetics and soaps in the popular as well as premium segment.

Henkel India is a 51% subsidiary of Henkel, a Fortune Global 500 company which operates in three strategic business areas — home care, personal care and adhesives, sealant & surface treatment. The Henkel Group is headquartered in Düsseldorf, Germany. Emerging markets are estimated to account for 35% of the company’s turnover. Henkel India currently manufactures and markets a range of detergents, cosmetics, household cleansers, personal and hair care products. Hair care brands, include Igora, Bonacure, Glatt, from its Schwarzkopf Professional division, and Silkience and Palette from its Schwarzkopf retail range. It had also recently launched the international ‘Bref’ range of household cleaners in the South.

The FMCG industry continues to record a steady growth rates of over 13% in both urban and rural markets in an otherwise challenging economic scenario. While the bigger companies are strengthening their flagship brands, the second rung companies are scaling up though aggressive acquisitions.

68. 'Replica sale has huge potential' – February 18

In Mumbai to launch the bold-blue new cricket uniform for Team India, Tarun Puri, managing director and general manager, Nike India, tells Sapna Agarwal that the company is upbeat on the replica sales potential of cricketing merchandise and that it sees an opportunity in Indian football. Excerpts:.
How big is the replica sales market for you?
We are the official apparel sponsors for Manchester United and Arsenal teams. As such, replica sale or branded merchandise representing a sports icon or team is a very strong category for us. If you look at the retail business, replica merchandise accounts for 25-30 per cent sales.
You are the official apparel sponsor for India’s One Day International (ODI) team. What would replica sales for a cricket-crazy nation like India mean?
We see this category holding a huge potential in India. For the ODI team, we have the sky-blue uniform and related merchandise. We have also launched a new bold-blue kit today. What this means is an increase in cricket-related merchandise available with us at our stores. In the recent past, we have also launched cricket footwear like the Air Zoom Yorker for fast bowlers and the Air Zoom Opener for batsmen. Other products in the cricket range include performance apparel and accessories, Indian cricket replica jerseys, training gear, kit bags and backpacks.
What was the need for the new uniform?
The new ODI kit reflects the change in the sport as cricket has changed from Test to T20. It has technology features like our patented DRI-FIT technology and bolder colours. It is the result of extensive research done on and off the field by Nike designers.
Some of the cricketers are associated with competing brands like Reebok, Adidas and Puma. As such, can you tell us how does the team association work for you?
Besides being the official apparel sponsors for ODI Team India, we also have direct association with players such as Zahir Khan, Virat Kohli, S Sreesanth and Dinesh Karthik. However, we see cricket as a much larger platform and being the official apparel sponsors for the ODI team is a matter of pride. It goes beyond being associated with individual players. It also gives us an added advantage as we have merchandising lines and have a website called www.nikecricket.in.
Besides cricket, do you see the youth taking up any other sport?
We feel that Indian football will soon come of age. A lot more Indian youth are following the English Premier League and we see a lot more youngsters playing football now. We are also the apparel sponsors for the Indian football team. For the last four years, we have been promoting the sport along with the All-India Football Federation (AIFF) at the grass roots level through the Manchester United Premier Cup (MUPC). We are also associated with the Mumbai Schools Sports Association and the Delhi International Football Association. In fact, the growing popularity of football can be gauged from the fact that this year, for the first time after 20 years, an Indian football team will participate in the Asia Cup.
Are you noticing a slowdown in sales?
Our consumers are not price conscious, they look for quality products and hence price plays a lesser role. As such, the slowdown in the economy is actually an opportunity for retailers as there is a correction in rentals. This augurs well for our business and it will be reflected in our increased ad spends.