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Team Connect26 March 2010
Vinay Mudgil
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UB Group to Offload Stake in Aventis
Vijay Mallya-led UB Group will divest its 10.27% equity in drugmaker Aventis Pharma Ltd, the Indian subsidiary of Frenchmultinational drug maker Sanofi-Aventis SA, for around Rs414 crore.
The move is part of the groups plan to exit from non-core operationsfollowing pressure due to heavy debt it raised for new business
ventures such as Kingfisher Airlines Ltd and a few other overseasacquisitions within the spiri t business
As on 31 December, it had a debt of around Rs14,600 crore. Amonggroup companies, Kingfisher Airlines has the largest debt on itsbooksRs7,415 crore.
The group has been a significant minority stakeholder and one of the
key Indian promoters of Aventis Pharma, formerly Hoechst FedcoPharma Pvt. Ltd, since 1956 and Mallya has been its chairman since1983.
Hoechst GmbH plans to raise its stake in the company to 60.37% byacquiring 10.27% stake held jointly by fourUB Group companiesMallya Pvt. Ltd, United Breweries Holdings, McDowell Holdings Ltdand Kingfisher Finvest India Ltd
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J Sainsbury records lowest sales growth in 5 years
Britains third-largest supermarket reported its lowest sales growth in five years
Like-for-like sales growth, which excludes takings from new stores, slumped to 1.7 per cent, comparedwith 6.2 per cent this time last year.
As per the company, rising fuel prices and taxes put pressure on household budgets, which resulted inthis trend.
In a move to counter this trend, Sainsburys plans to increase its coupon at till offers, which use loyaltycard data to tailor deals for particular customers, rather than respond through ramping-up conventionalpromotions.
Industry figures suggest that the big four supermarkets Tesco, Asda, Sainsburys and Wm Morrison have all suffered a decline in sales growth, because food prices are rising less sharply.
But analysts, citing industry figures for the past month, have suggested that Sainsburys has been hithardest and faces a squeeze from Tesco, which has caught up with its rivals sales growth in recentmonths, and a resurgent Asda, which has responded to a dismal Christmas performance with aggressiveoffers.
After a poor Christmas trading performance, Asda hit back with 5 and 10 money-off vouchers innewspapers. Chief Executive : Justin King
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Bisleri to phase out Mountain Water, to launch Vedica
Parle Bisleri is slowly phasing out its premium brand Natural Mountain Water and will launch anew product Bisleri Vedica, which will have medicinal properties.
The company plans to promote Bisleri's new launch Vedica in the next two months.
The company decided to discontinue the brand Natural Mountain Water, made in Himachal
Pradesh, due to quality issues, which the company found not up to the mark, as quoted by BisleriInternationals chairman, Ramesh Chauhan.
Priced at Rs 20 for 500 ml pack, Vedica would be positioned as a premium brand with medicalvalues. Two years ago Bisleri had forayed into the premium water segment with the launch ofBisleri Natural Mountain Water.
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Bisleri to phase out Mountain Water, to launch Vedica
Vedica is priced at Rs 30 per litre (higher than Bisleri's flagship, eponymous packaged water), thesame as Himalayan but lower than imported natural mineral water brands such as Evian andPerrier (both marketed in India by the Narang Group).
Vedica will take on Himalayan in a category, which targets high-end consumers in poshneighbourhoods, in hypermarkets, and in five-star hotels.
There are other players lining up to enter the natural mineral water market such as MulshiSprings.
The company is putting 35 new plants all over India, with five to six coming up this month inplaces such as Rajkot, North Bengal and Silvassa, to service the rural and semi-urban regionsaround these plants.
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BoosterJuice launches strawberry and watermelon drink,Sweet Sin
BoosterJuice, Canada's leading smoothiechain, has introduced a new combination ofstrawberry and watermelon drink known as"Sweet Sin.
This drink contains high antioxidant and is
rich in both vitamin B and C. It is available atall its outlets and is priced at Rs 59.
BoosterJuice has been brought to India byBrand Calculus, a QSR franchise companyand the master franchisee for the brand inthe country.
It has outlets at five locations in Delhi six inBangalore and two in Chennai.
BoosterJuice is a North AmericanSmoothies and Juices chain that has over300 stores in Canada, the US, theNetherlands, UAE and Saudi Arabia.
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engages 12,000 farmers in contract farming
Riding on high sales of its snacks brands like Lays and Uncle Chipps, Pepsico has engaged12,000 farmers across the country for contract farming of potato, involving 16,000 acres of land
Out of the 12,000 farmers, 6,500 of them are in WestBengal working 2,600 acres
With the growing sales of its snacks brands, the company plans to adopt for more in the countryfor contract farming.
The company is also planning to follow a similar line for oats, which are presently being importedfor its Quaker Oats brand
As per the Executive Vice-president of Pepsico Holdings (agro-business), Nischint Bhatiaoatmeal,oatmeal is becoming a popular breakfast cereal in India due to health reasons.
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sells i-Pill rights to for INR 950 m
Cipla sold the marketing rights of i-Pill to Piramal Healthcare for INR 950 mn. The company is intalks with other companies to sell rights for international markets including Latin America andparts of Africa.
With annual sales of Rs 309.2 m in India alone, i-Pill, the first drug to be launched in theemergency contraceptive space, is termed as a strong brand.
Cipla had introduced the drug as an over-the-counter product in 2007.
The OTC market in India is estimated to be around US $ 1.8 billion and is growing annually at18%
Why did they divest such a strong brand?
Amar Lulla, CEO of Cipla, said, "Given our product portfolio and our focus on prescriptionproducts, it would be more appropriate if this product is marketed by a company with an extensiveOTC portfolio
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The acquisition of i-pill strengthens Piramals over the counter (OTC) portfolio which has strongconsumer brands such as Lacto Calamine skin care range, Supractiv Complete, Saridon andPolycrol antacid.
Piramals annual sales of OTC drugs stands at about Rs 100 crore and the company plans todouble its over-the-counter offerings in the next 3 years.
sells i-Pill rights to for INR 950 m
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After Godrej, Dabur eyes Africa buyout
Dabur is in talks to buy South African hair carecompany Isoplus.
Just a fortnight after Godrej picked up Tura,Dabur is also out on negotiations with Isoplus,which has sales of around Rs 100 crore.
Dabur already has manufacturing plants inEgypt and Nigeria, but South Africa is amarket where its Indian peers Marico andGodrej have made better strides.
Before acquiring Nigerian soap maker Tura,
Godrej has taken over South African basedKinky and Rapidol in the last four years.
Marico also have had three acquisitions since2006.
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Tide turns against Rin
Six to seven weeks after HUL cut prices of its washing power brand by 30per cent to match that of P&G's Tide Naturals, P&G retaliated with a pricecut of 25 per cent to gain further market share
With the latest price cut, HUL struggles with Rin brand as well as faceschallenges to save its biggest detergent brand Wheel, which is worthabout Rs 2000 crore.
P&G now seems to target Wheel with Tide's aggressive pricing, only 30per cent higher than Wheel, compared to the 50 per cent earlier.
This new aggressive stance of P&G is a part of implementation of itspreviously announced strategy of expanding in new geographies and
categories.
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Tide in short supply at retail stores after war with Rin
Shops wary of holding on to older, higher-pricedstock; P&G expects detergent to be availablesoon
As companies are making the new stockcheaper, retailers dont want to be stuck with the
old high-priced inventory and this is causing asupply lag
While Tide Naturals is key to the current conflict,the firms are fighting on several fronts, rangingfrom advertising that disparages each othersproducts, law suits at the high courts in Chennaiand Kolkata, and price wars.
P&G, for instance, has started offering 25% moreof Tide, its flagship brand, at the same price. HULhas reduced prices of Rin and Surf by 10-30%since January.
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The price war spilled over to other products
In February, HUL reduced the price of Lux soap from Rs18 to Rs15. It was accompanied by areduction in weightto 90g from 100g.
P&G has reduced the price of its shaving equipment to Rs125 from Rs199 and is expected toreduce the price of its Oral-B toothbrush by Re1 to Rs15 after a Rs2 price cut in December.
Soaps and Detergents category are said to account for 51% of overall revenue for HUL, Indiaslargest packaged consumer goods firm by sales.
In January and February, there has been 13% volume recovery for HUL. However, the valueerosion (price decline) was 8.5% during the period in the soaps and detergents category
This round of rivalry started in December when P&G launched Tide Naturals, a 30% cheaper
variant of the mother brand Tide, targeted at the mass end of the market. Within two months of thelaunch, Tide Naturals got a 0.6% share of the Rs10,000 crore Indian detergent market.
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