The 4 year long marketing and co-branding agreement between East India Hotels and Hilton International has been terminated effective April 2008. As such 8 ‘Trident Hilton’ properties in India having 1900 rooms would be rebranded as ‘Trident’ while the ‘The Hilton Towers’ in Mumbai would be known as ‘Trident Towers’.

The existing properties were mostly situated at leisure destinations and positioned at 5-star segment. The alliance was primarily setup wherein EIH was responsible for management and marketing in India while Hilton was responsible for the sales and marketing of the hotels worldwide.

Inspite of Trident Hilton properties accounting for 45% room inventory of East India Hotels, the occupancy rate was low and there wasn’t any significant improvement after alliance with Hilton.

As such Oberois wanted to develop ‘Trident’ brand on their own and expand their reach in business destinations such as Mumbai, Bangalore, Hyderabad, Chandigarh and Calcutta.

On the other hand, Hilton is also expanding itself and has tied up with DLF for building 75 hotels across India. It is also bringing its mid-market brand such as Garden Inn to India which Oberoi felt could have diluted their brand image since it is perceived to be an up-market brand.

Fearing this equity dilution, Oberoi earlier had parted its alliance with “The Leading Hotels of The World”.

The parting of two hotel giants could pave way for better infrastructure and more room inventory catering to different markets. However, having brand such as ‘Hilton’ could have given Oberoi hotels an edge in its international expansion.

Internet giant, Google is beefing up the infrastructure to make use of rising internet usage across globe especially in Asia-Pacific regions by setting up its own under-sea cable across Pacific, under a project called Unity. This would help Google to meet its data and video transfer requirements from US to Asian countries.

Reliance Communication’s Flag Telecom is believed to have initiated a talk with Google to take a stake in its trans-Pacific cable project between United States west coast and Far East Asia on a long term lease. Flag Telecom is investing around Rs 1,400-1,500 crore for the trans-pacific cable route.

Google is believed to take 500 GB bandwidth for around Rs. 400 crore. This would also help Flag Telecom to reduce its capital expenditure by around 16% and also get a reputed partner for its communication project.

Google itself has a huge bank of “dark fiber” (unused fiber-optic cable connections), which it bought in 2001 post slump in technology business at discounted prices. Thus, Google now only needs to invest in lighting up the cable giving it a self-managed and secure network. 

If the deal materialises, it would lead to substantial cost saving for Google as it would prevent it from duplicating the network as the service areas are same. Also, Flag could buy some “dark fiber” from Google while Google could in turn buy and manage the bandwidth from Flag Telecom.
 
Trans-Pacific cable is particularly prized at the moment for two reasons: The dearth of existing undersea cable in the region and the huge swell in bandwidth demand coming out of Asia.

As Wal-Mart and Bharti gives touches to their deal and bring in modern global business practices to India, one can hope to get “everyday lower prices” as has been the motto of the American giant.

The retailers would undoubtedly be benefited by Wal-Mart’s lower cost model but even the Indian consumers may see some indirect benefit owing to Wal-Mart’s legendary supply-chain management and lower margin strategy.

The biggest problem plaguing the Indian retail business is the unorganised supply chain. There are over 30 lakhs kiranas along with countless market vendors and small sellers who contributes 96% of the retail marketplace. The costs are higher as there is lack of economies of scale with involvement of middlemen in the consumption cycle.

In India, a consumer pays five times for his food than what the farmer actually gets, while in USA, this ratio is just 2:1. Also, 60% of agricultural output gets due to processing delays, storage problem and other bottlenecks.

This is where Wal-Mart’s expertise could come in handy as they could extract better prices from suppliers, run efficient supply chain and customize offerings according to Indian consumer preferences.

But the Government also needs to flex its laws for the overall betterment of producers and consumers. There are far too many restrictions, legal procedures and taxes to be dealt with. Also the infrastructure needs to be spruced up for quicker transport and storage of goods by retailers. Source

A SEBI committee has come out with proposals for launch of Dedicated Infrastructure Funds (DIFs) by mutual funds. It has proposed additional tax exemption of Rs.1 lakh for investing in DIF but with a 7 year lock in period. Also, capital gains arising on account of the transfer of long-term capital assets may be exempted from tax if the capital gains are invested in DIF units.

DIFs largely invest in unlisted companies in the infrastructure sector, with longer gestation periods. Till now, only venture capital funds invested in such projects leaving out retail investors due to inability to meet minimum investment requirements thus missing out on company’s growth phase prior to it being listed.

It is also recommended that DIFs should operate as closed-ended schemes with a maturity of seven years, with the possible extension of the duration to a further seven years. They shall be allowed to invest up to 100% of its funds into unlisted securities while limiting its exposure to unlisted companies to 10% of NAV.

The committee has also recommended that DIFs should be listed on stock exchanges to provide liquidity to retail investors within 2 years of launch of scheme. The exit options suggested are initial public offerings, strategic sales or buybacks.

Once the recommendations are approved, it is expected that all SEBI registered AMC would launch these funds. Apart from retail investors, companies and FIs can also invest in them.

As regards tax incentives, it is recommended to given only to original investors and not subsequent buyers of the scheme. Though to make DIF a success, it is necessary to provide tax sops as without it no retail investor would be motivated to invest in them.

The inevitable has happened sooner than expected. After attracting new players catering to new routes with cheap prices, the Indian aviation sector is set for a shakeout. Just as telecom industry, India would soon have 5-6 airline companies operating on all-India routes, having deep pockets and stable pricing strategies to make airline business financially viable. After Air India-Indian, Jet Airways-Sahara and Kingfisher-Air Deccan, another merger is on the anvil. As per Business Standard, Madurai-based Paramount Airways is interested in acquiring the Mumbai-based Wadia’s GoAir.

This merger, if it materializes, between the two entities will be one of necessity, driven by market dynamics, rather than their own personal choice. With the newly created 3 merged entities garnering close to 85-90% market share turning the industry into an oligopoly, the focus is now on survival and efficiency of the smaller players. The coming days could also see Spice Jet and IndiGo forging a new alliance or joining an existing player, just as what happened during the BATATA (Birla, AT&T and Tata) alliance in telecom.

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