The scrip of Ajay Bijli promoted PVR Cinema shot up 2 per cent in the early trade on Wednesday (20 May) after media reports of its plans to acquire rival DT Cinemas of the DLF Ltd came out. At the time of filing this report, PVR stock price was up at Rs 657. According to reports, the deal is pegged at Rs 500 crore. Last year in December,Carnival Films had bought Reliance ADA Group’s Big Cinemas in a deal reported at Rs 700 crore. While both BSE-listed companies, PVR Ltd and DLF Ltd, have denied the media reports, if true, it will be the second attempt made by PVR, the market leader in the multiplex business, on DT Cinemas. In 2009, PVR had plans of acquiring the DT Cinemas, a multiplex operator in Delhi NCR and Chandigarh. DT Cinemas currently operates 29 screens compared to 471 by the PVR. It is one of the significant players in the Delhi and NCR with 18 screens in Delhi, eight in Gurgaon and another three in Chandigarh. The deal will increase the screen count of PVR to 500 and much ahead of its nearest rival Inox whose screen presence is reported at 361. According to experts, if the deal is through, it will give PVR a stronger foothold in the real estate market of the Delhi NCR. For DLF, it will be a strategic exit from the non-core business areas. “The rentals in malls are always shooting upwards. PVR will not only get an entry in to the DLF Malls where DT Cinemas currently operate, the commercial arrangements will be favourable too,” said a senior analyst who did not want to be identified. Another analyst pointed that the deal could see the average ticket prices across Delhi NCR stabilise. “Currently, DT Cinemas have a variable ticket pricing ranging from around Rs 100-120 to Rs 275 across its properties which are within few kilometres from each other in Gurgaon. PVR, however, has a more comparable ticket pricing for its Gurgaon properties, which is higher than DT Cinemas for sure. Post acquisition, the ticket prices at DT Cinemas may upwardly align to PVR ticket prices,” the analyst said. However, there are many legal clearances required before the deal can be announced, sources said. As per the new regulations on combinations, the companies will need to vet the deal by the Competition Commission of India, which can take anywhere from 30 to 60 days or more depending on the submissions made by the parties and any additional queries or information sought by the CCI, sources said. (Ashish Sinha)
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There are no free lunches. This logic works in the online marketplaces as well. French luxury brand Gucci’s decision to sue world’s largest online retailer Alibaba for selling counterfeit products on its website, is a pointer to the real story behind the online retail boom, which sometimes is unreal. The fact is people buy online to get super discounts and it is here that they get duped. There are hundreds of complaints registered with online retailers all over the world for selling counterfeit products to customers. While the Alibaba case is making headlines in the international market, the Indian market itself is full of such cases. Take for example the case of Gizmobaba, an online retailer of electronic gadgets. In 2014, the company found that at Snapdeal.com some seller were selling inferior quality goods, under the Gizmobaba brand. The company’s founder and chief executive officer Alok Chawla kept on raising the issue with Snapdeal’s seller’s support desk for three to four months but nobody listened. It was only when Chawla reached out to the top management with the help of his contacts that the problem was resolved. Chawla feels that only people with contacts are able to get their problems addressed. Small dealers have no platform to be heard. Companies like Chumbak and Sahil International have also spoken in the past about the issue of counterfeit products being sold by Indian online retailers. Be it Flipkart, Ebay or Amazon, almost all of them have been accused of allowing counterfeit products to be traded on their market platform. Online retailers get away because of the loopholes in the laws that deal with online retailing. Online retailers like Alibaba, Flipkart and Snapdeal are recognised as the marketplaces for selling stuff online by manufacturers. This definition gives them immunity from facing criminal charges most of the times. However, cases like Alibaba bring out the fact that products sold online at dirt cheap prices have the risk of being counterfeit. It is impossible to sell the original product at 20-30 per cent discount throughout the year. While it is understandable that the e-tailers save the operational cost of running brick and mortar stores, but those savings are not enough to allow a company to have sale season throughout the year. There is hardly a week when you would not find a sale on products at an online platform. Compare this with the offline retailers who just have end of season sales. While the party for the e-tailers will last for some more time, but as the customers become more aware about the counterfeit products, they will start preferring the brick and mortar stores over the virtual market places. And this is where the brick and mortar retailers will have a chance to make a comeback. My personal experience with online apparel retailers has not been very good, as every time I have ordered a product, on delivery the quality and colour of the product has been inferior to the one displayed online. This is why I have stopped shopping apparels online and am rather happy visiting the high streets or the malls of Delhi to touch and feel the texture of the cloth that I want to wear. My experience of buying mobile phones has also taught me that in an apple to apple comparison, offline gadget retailers like HOT or Croma manage to give competitive prices for all the products. While it will take some time before other customers realize this, but in the age of information e-tailers do not seem to have much time if they want to survive in the business. In 2005, nobody thought that brick and mortar retailers will enter a dark tunnel within three years of glory. The e-tailers should make no mistake and focus on cleaning their system before losing the customers that they earned by burning the cash of investors in monthly flash sales.
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Top mobile carrier Bharti Airtel has received financing commitments of up to $2.5 billion from top Chinese banks as it tries to invest in the growth of data networks across its global operations. Bharti Airtel, which operates in 20 countries across Asia and Africa, said on Saturday that China Development Bank had committed a $2 billion credit line, while Industrial and Commercial Bank of China has offered a $500 million credit line. The company signed the term sheets for the financing options in the presence of Prime Minister Narendra Modi, who is on an official visit to China. The transaction needs approvals, including from India's central bank, the Reserve Bank of India, it said in a statement. With a majority of the country still using more basic "feature phones", India's smartphone market is expected to grow at about 36 per cent a year over the next five years, according to consulting firm Zinnov, making the higher margin mobile data business a potentially lucrative bet for network operators. (Reuters)
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Honda Motor Co's local unit will recall 11,381 vehicles in India to replace potentially faulty air bags, the company said in a statement on Friday (15 May), a day after its Japanese parent said it would recall 5 million vehicles for the same reason. Honda Cars India Limited said it would replace the driver side air bag inflator of 10,805 Accord sedans made in the years from 2003 to 2007, and passenger side air bag inflator on 2004 models of 575 CR-V sports utility vehicles and one Civic sedan. The Indian company said no incident relating to this had been reported in the country so far. (Reuters)
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Russian billionaire Vladimir Yevtushenkov, owner of conglomerate group Sistema, said on Friday that he has held talks with tycoon Anil Ambani's Reliance Communications about a joint venture in India. But Yevtushenkov said he had no plans to sell his Indian telecoms unit, Sistema Shyam Teleservices. "We’ve been talking to different people regarding business expansion," he told Reuters, in response to a query on an earlier media report. "Honestly, there is nothing much to say." He said talks with several parties were ongoing, but gave no detail. Bloomberg reported earlier on Friday that Reliance Communications was in talks to acquire Sistema's Indian wireless business. Reliance Communications had no immediate comment.(Reuters)
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The Supreme Court has barred Glenmark Pharmaceuticals from making and selling copies of US drugmaker Merck's diabetes drugs Januvia and Janumet, according to a court document released on Friday. The court has, however, allowed Glenmark to continue to sell existing inventory, according to the document posted on the Supreme Court's website after a hearing.The decision against Glenmark comes two years after Switzerland's Novartis AG was denied patent protection for its cancer treatment Glivec in a landmark decision by India's Supreme Court that was widely seen as boosting the local generic drugs industry. Anti-diabetes drugs are the top-selling therapy area in India, where about 65 million people live with the disease and that number is expected to reach 100 million by 2030. Merck sued Glenmark in 2013 for infringing a patent it has on sitagliptin, the chemical compound in Januvia and Janumet, both of which the company has been selling in India since 2008. A month's dose of Merck's drugs costs about Rs 1,300 Indian and Rs 1,900 ($30), respectively. Merck has licensed the drugs to Sun Pharmaceutical Industries Ltd for sale in India. Glenmark sells the medicines under the brand names Zita and Zita-met at a nearly 30 per cent discount to Merck's price. Glenmark is barred from producing sitagliptin until the next hearing on the case, the order said. Spokespersons for Glenmark and Merck declined to comment. "This is an interim sort of measure taken by the court, and the decision on the patent of sitagliptin is subject to final orders," said Ameet Hariani, managing partner at Mumbai-based law firm Hariani & Co. (Reuters)
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India's retail sector is likely to touch $ 1.2 trillion by 2020 from the current level of $ 550 billion, helped by a rapid growth in the e-commerce market which will grow to over $ 100 billion during the period, according to industry body CII. “E-commerce is driving thoughts of customers and retailers but that does not mean brick and mortar channel is going to be killed. Retailers will have to innovate their business model to reach the customers and to meet their aspirations,” Adesh Gupta, Chairman, CII Retail 2015 and Promoter, Liberty Group said. “It is expected that India’s e-commerce market will grow from $ 2.9 billion in 2013 to over $ 100 billion by 2020...The online retail can reach smaller cities much better than offline channel, giving it a bigger advantage. Collaboration between both organised and unorganised retail companies could be the real game changer,” he added. Agreeing with Gupta, Somany Ceramics CMD Shreekant Somany said, “e-commerce is probably creating the biggest disruption in the retail industry and this trend will continue in the years to come...Partnering is the best way out.” According to a report titled ‘The Indian Retail Medley’ while organised and online retail will grow multi-fold, unorganised retail will continue to dominate the sector. (PTI)
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Generic drugmaker Ranbaxy Laboratories Ltd has been sued in a district court in the United States for allegedly manipulating U.S. Food and Drug Administration rules for years to keep rival generic drugs out of the market. Ranbaxy filed "grossly inadequate" applications seeking approval for its drugs and deceived the FDA into granting approvals and giving the company market exclusivity, the class action lawsuit asserts. It was filed by U.S. retailer Meijer Inc on Tuesday in the U.S. District Court in Massachusetts. The suit also names India's largest drugmaker Sun Pharmaceutical Industries Ltd, which completed a $3.2 billion deal to buy Ranbaxy in March and is now helping Ranbaxy fix its manufacturing problems. A Sun Pharma spokesman declined to comment. Ranbaxy did not immediately respond to a request for comment outside of regular business hours. Ranbaxy repeatedly made misstatements to the FDA about the compliance status of its manufacturing plants, the lawsuit says. The FDA has banned import of drugs from all of Ranbaxy's India-based plants under a wider scrutiny of the country's $15 billion pharmaceutical industry, which is the largest supplier of generic medicines to the United States. In 2013, Ranbaxy pleaded guilty to felony charges related to drug safety and agreed to civil and criminal fines of $500 million in a settlement with the United States to resolve claims that it sold substandard drugs and made false statements to the FDA about manufacturing practices at its plants. The lawsuit says customers overpaid for Roche's antiviral Valcyte and Novartis's hypertension drug Diovan because the release of generic versions of both drugs was delayed due to Ranbaxy having wrongfully gained market exclusivity. Drugmakers that are first to file with the FDA to make a generic version of a brand name drug are entitled to a six-month market exclusivity, a huge revenue-generating opportunity that many companies like Ranbaxy compete for. The FDA in November last year stripped Ranbaxy of a tentative approval and six-month exclusivity it gave the company in 2008 for launching a Valcyte generic. Meijer has sought damages and monetary relief on behalf of all direct purchasers of drugs for which the release of cheaper copies was delayed due to market exclusivity secured by Ranbaxy, according to the lawsuit.
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