Mega-FMCG merger between GSK Consumer Healthcare & HUL
Hindustan Unilever and GSK Consumer Healthcare’s India business have announce d a mega merger that values the total business at Rs 31,700 crore. This will include the entire business of GSK Healthcare in India, including its nutrition business as well as a contract to sell its OTC brands like Sensodyne, Eno and Crocin. GSK also has some powerful nutritional brands like Horlicks (which leads the malt-based beverage segment with 43% share) and Boost in its portfolio.
HUL Chairman Sanjiv Mehta said that he expected major synergies from the merger in terms of both revenue growth and costs and added, “The turnover of our food and refreshment business will exceed Rs10000 crore and we will become one of the largest F&R businesses in the country.” After the deal, HUL expects its F&R turnover to grow beyond Rs 10,000 crore. Shares of HUL rose by 4.12% on Monday to Rs 1,825 each, while those of GSK Consumer Healthcare rose by 3.75% to Rs 7,542.85 on close. GlaxoSmithkline Plc CEO Emma Walmsley had announced in March that the company would do a strategic review of Horlicks and other consumer healthcare nutrition products, and a partial or total sale of stake in Indian subsidiary GSK Consumer Healthcare could be completed by the end of 2018. In fact on the same day as the announcement of the merger, GSK also announced the acquisition of US-based cancer drugmaker Tesaro for US$ 5.1 billion.
Factory activity in November fastest for 2018
Amid worrying signals for the economy due to weaker than expected GDP growth of 7.1% in the September quarter, factory output data for November provides reason for cheer. Nikkei Manufacturing Purchasing Manager’s Index (PMI) showed a rise to 54 in November as compared to 53.1 for October, as opposed to median expectations by a Reuter’s poll of a drop to 52.6. The new orders sub-index has also increased to 55.9 in November, the highest level since December 2017. This is in fact the 16th month in a row that the index has stayed above 50, which is the benchmark separating growth from contraction. Factors that have boosted growth include rise in domestic and foreign demand, which has given firms the leeway to increase prices according to a survey. Employment growth has also been strong, even though the pace of hiring was slower than October. This is being viewed as a sign that the Indian economy could be on the recovery path, and RBI could well continue with a tighter monetary policy going forward. RBI has already raised rates twice this ye
IIT removes FIIT JEE connection, embraces BIS
IIT Delhi was involved in an interesting legal battle to protect its premier brand with coaching institute FIIT JEE, which specialises in IIT exams. The entire fracas started when the Delhi Metro Station opposite IIT JEE got FIIT JEE as a sponsor. While FIIT JEE got its branding all across the station, IIT Delhi immediately saw red when the name of the station itself was changed from IIT to FIIT JEE IIT. The issue was of course the implication that FIIT JEE and IIT were in an alliance of some sort. In fact the situation worsened when IIT started getting calls from aspiring candidates, alumni and parents, enquiring whether FIIT JEE was the official coaching partner for IIT JEE entrance. IIT then took the case to Delhi High Court, asking that DMRC revoke the branding rights given to FIIT JEE. The HC asked FIIT JEE to put a disclaimer, but IIT was not satisfied and submitted counter proposals. Finally, the verdict has been announced in IIT’s favour and FIIT JEE branding rights at the station have been taken away. Now the IIT name sits along the brand name of Bureau of Indian Standards (BIS), which V Venugopal Rao, Director, IIT Delhi, acknowledges to be a good fit with the IIT brand.
Now Jet Airways stops free meals for economy passengers
Struggling airline Jet Airways has come up with several measures to cut costs including sub-fleet simplification, reduction in sales and distribution and maintenance costs, route rationalisation and renegotiation of vendor contracts after posting three successive quarterly losses. It has also been cutting down on staff and grounding aircraft. The latest ‘masterstroke’ from the airline is a plan to discontinue complimentary meals for economy class passengers on its domestic routes under two more fare categories. Jet Airways offers five fare categories under the domestic economy class – light, deal, saver, classic and flex.With the latest announcement, complimentary meals will only be available to customers with the flex option effective from January 7 for bookings made before December 21. CEO Vinay Dube has stated that the company aims to achieve cost savings of more than Rs 2,000 crore in the coming two years, and has already achieved Rs 500 crore in savings in H1, FY 2017-18. Jet Airways stated in a release, “(The move) reflects the fast-evolving nature of Indian aviation, where an increasing number of guests want the freedom and flexibility to make their own travel choices.” In related news, Jet Airways is in negotiations with partner Etihad Airways, which owns 24% stake in it, for soft loans and additional equity.
Airtel to stay premium in battle vs Jio
Even as Reliance Jio is planning a mega launch of fibre-optic network all over India, Airtel plans to limit its focus to the premium market. An anonymous source has quoted, “Airtel’s plan is clear…to stay focused on the top 100 cities… stay focused on the high income, stay focused on high-rise buildings rather than horizontal deployment, as this business model is more economical and logical.” The company had earlier made a similar announcement on its wireless strategy, wherein it would focus only on users who spent at least Rs 35 a month on recharges. Jio GigaFiber is planned in 1,100 cities to connect 50 million households as well as merchants, SMEs and large enterprises. So far, there are around 18 million broadband subscribers in India according to TRAI. The source further added that Airtel is ready to compete tooth-and-nail to match prices in the mid-high-end segment. Considering that fibre deployment is both capital intensive and time consuming, focussing on high-end customers is considered more logical. The company is also planning to offer bundled services through the Airtel Homes Platform
OnePlus announces first Indian R&D Centre in Hyderabad
Premium smartphone company OnePlus has announced plans to set up its first R&D centre in Hyderabad, which could be its largest centre globally in another three years. OnePlus has chosen Hyderabad because of the city’s stature as a hub for an active startup ecosystem with a strong talent pool, besides also being one of the fastest growing markets for the company. Pete Lau, founder and CEO, OnePlus, stated, “We plan to re-focus our R&D efforts on a large scale and drive innovations in India for the global product, especially on the software side with special emphasis on artificial intelligence and machine learning.”The company is seeing growth of more than 100% in the Indian market, and aims to make India a hub for product innovation. It plans to rope in the best of talent from senior institutes including IIT Delhi and IIT Mumbai. OnePlus captured a market beating share of 30% in the premium category of smartphones (Rs 30,000 and above) during the quarter ending September 2018.
Hamanpreet, Mandhana, request BCCI to get Powar back
The controversy in the Indian women’s cricket team post its defeat to England in the semi finals of the World Cricket T20, refuses to die down. Questions had been raised after the defeat on why India’s ODI captain Mithali Raj was not chosen for the match, and also on unfriendly relations between her and T20 captain Harmanpreet Kaur. Matters worsened when Mithali Raj alleged that Ramesh Powar had humiliated her during the tournament, while Powar had countered that Mithali was not a team player.The result was that BCCI did not extend Powar’s term as coach and is looking for a new coach for the team.However, the latest is that Harmanpreet and senior batter Smriti Mandhana have sent a letter to the BCCI requesting them to retain Powar. Harmanpreet writes in the letter, “The decision (to not play Mithali) was entirely based on the cricketing logics and observations from the past. Keeping in mind the need of the hour, me, Smriti, selector Sudha Shah and the coach together in the presence of our manager felt that we should go ahead with the winning combination.”She has further appealed that since the next T20 World 15 months away and the New Zea’land tour comes one month later, it would be better to let Powar stay on.