Finance Article

Insurance becomes more transparent, consumer-friendly!

If the Insurance Regulatory Development Authority’s (IRDA) guidelines, that came into effect from January 1, 2014, are anything to go by, then policyholders will soon be seen enjoying more benefits than before. The changes notified by IRDA give a makeover to the existing products and aim at bringing more transparency between insurance companies and customers.

These steps taken by the insurance regulator are consumer-driven and assure benefits in the form of more bonuses and better surrender values.

Let’s see how these steps prove beneficial to the consumer:

Capital guarantee: Insurance Plans now fall broadly under three categories – Traditional Insurance Plans, Variable Insurance Plans (VIPs) and Unit Linked Insurance Plans (ULIPs).

When a customer chooses Variable plans, he is assured of capital guarantee and in some cases, bonuses too.

Long-term focus: Minimum premium paying term of non-linked variable insurance products has been set at five years. This is to make sure that insurance products are of longer duration and customers look at them from a long-term perspective.

News

Lodestar UM bags IndusInd Bank's media duties

The appointment of Lodestar UM is a part of the bank's broad strategy to strengthen its brand visibility and recall across geographies.

IndusInd Bank has appointed IPG Media brands' Lodestar UM as its media agency. The incumbent agency on the account is RK Swamy Media Group. The appointment of Lodestar UM is a part of the bank's broad strategy to strengthen its brand visibility and recall across all geographies.

In its endeavour to emerge as a high-street brand, IndusInd Bank has made 'Responsive Innovation' as a central theme of its brand building program. It has combined responsiveness with innovation to launch a wide range of banking products and services.

In the recent past, IndusInd Bank has worked with Bollywood actors such as Sharman Joshi, Jimmy Shergill, Neetu Singh Kapoor and Ranvir Shorey to promote media campaigns around the innovative services like Choice Money ATMs, Check-on-Cheque, Cash-on-Mobile, Direct Connect, Quick Redeem Service and My Account My Number.

Thought of the day

Article

Basking In the Success of the Indian PM’s Visit to Japan

The brouhaha over the visit of the Indian PM to Japan is not without any reason. After all the news that FDI worth 35 billion US dollars will flow into India from Japan is very much an indicator of the upbeat mood and optimism that the global community shares about the Indian economy. The visit to Japan comes on the heels of the completion of 100 days of the new government in power.

What is this 100 day report card?

First it is a standard thumb rule in American corporate sector to assess the performance of an individual business leader or an organization after every 100 days.This translates the assessment of success or failure into a rough percentage figure and proves handy for strategic planning for the next 100 days. 

 Creating brand “India”

As regards the finalization of FDI deals worth 35 billion US dollars, the Indian PM has begun to make the correct noises to regain investor confidence in the Indian economy.The Indian PM is known to possess exceptional communication skills. His playing of the traditional Japanese drum at the TCS Cultural Center is a great advertisement for statesmanship of the highest standards in trying to sell the image of Indian economy as a viable destination for low cost and high quality manufacturing.

Finance Article 

Burger King set to acquire Tim Hortons for $11.4 billion

Burger King Worldwide agreed Tuesday to buy the Canadian restaurant chain Tim Hortons for about $11.4 billion, creating one of the biggest fast-food operations in the world - with a little help from Warren E. Buffett. As part of the transaction, however, the US burger giant will move its home to Canada, where the combined company's biggest market will be. 

Under the terms of the deal, Burger King will pay 65.50 Canadian dollars in cash and 0.8025 of one of its shares for each Burger King will pay 65.50 Canadian dollars in cash and 0.8025 of one of its shares for each Tim Hortons share. That amounts to about 94.05 Canadian dollars a share, or $85.78 a share, based on Burger King's closing price Monday. The combined company will have 18,000 restaurants in 100 countries, and $23 billion in annual revenue.

 But while Burger King will relocate north of the border, raising concerns about yet another company moving abroad to reduce its tax bill, the switch in corporate nationality appears more aimed at appeasing Canadian regulators wary of a foreign company buying a national icon like Tim Hortons.In fact, Burger King is expected to save a little bit on taxes through the so-called corporate inversion, rather than enjoy a huge reduction, according to people involved in the transaction. 

The two companies emphasized that each would continue to be run from its current home base, with Tim Hortons operated out of Oakville, Ontario, and and Burger King from Miami. Neither is altering their franchisee agreements or business models. 

News 

NIKE TO OPEN FULLY-OWNED STORES IN INDIA

Nike has been present in India since 1996 US-based sports shoes and apparel supplier and manufacturer Nike has made a proposal to the Department of Industrial Policy & Promotion (DIPP) under the commerce and industry ministry to set up fully-owned stores in India. Single-brand retail policy allows 100 per cent foreign direct investment (FDI).

Nike is listed on the New York Stock Exchange is one of the world's largest suppliers of athletic shoes and apparel in the world with a market capitalisation of $68 billion.The company has been present in India since 1996 and currently operates through a network of local distributors and retail partners. Nike's entry into India was through a seven-year licence agreement with Sierra Industrial Enterprises, which was later done away with to become a 100 per cent-owned subsidiary of the US parent company.

"Nike welcomes the government's decision on foreign direct investment in single-brand retail in India. Nike currently operates its business here through local distributors and retail partners. This model works well for us and we may consider exploring opening Nike-owned stores in the future," the company said in an email response to Business Standard.

Thought of the Day

The Brouhaha over Indian PM’s visit to Japan

Business leaders in both Japan and India have a deep anxiety about the proposed trip of the Indian Pm Shri Narendra Modi to Japan. While this visit does have a political significance form the perspective of foreign policy, there are few items on the economic agenda that can boost economic ties between both the countries. 

Here is a snapshot of the economic agenda:

1. An important element in India-Japan Joint Statement following Modi-Abe Summit on September 1 will be expression of Japan's interest to fund High Speed Railways in India. Japan faces competition in this sector from China who has also shown keen interest for building this.

2. A key milestone from the visit will be MoU between EXIM Bank of India and Japan Bank of International Cooperation (JBIC). The Japanese side has been requesting JBIC be allowed to engage in swap transactions so that JBIC can projects in INR across India not limited to DMIC projects.

3. While civilian nuclear deal may not concluded in this trip owing to differences over 'no-test' clause in the agreement, Modi will reiterate India's commitment to disarmament and moratorium on nuclear tests during the banquet speech. A significant defence agreement on upgrading the dialogue mechanism and expanding the scope of cooperation to increase drills and exercises are on the cards.

Marketing Article

Vistara fireworks to light up the Indian night sky

The Tata Sons are all set to fire on all cylinders in the aviation industry come this September. In fact the Tata Sons under the dynamic leadership of their new Chairman Cyrus Palonji Mistry have been bracing up for an entry into the Indian aviation industry since the last year. To this effect the salt to steel conglomerate had also announced its entry into two strategic alliances for aviation. The name is derived from the Sanskrit word, which means limitless expanse "and draws inspiration from the brand's domain - the limitless sky". The airline by the Tata Group and Singapore International Airlines is targeting an October Launch. The commencement of operations is subject to the Directorate General of Civil Aviation's (DGCA) approval, which is examining the airline's application for an air operator's permit. The airline plans to start operations with an Airbus 320 aircraft and add 20 aircraft during the first five years of operations. This will, however, change once the government abolishes the five-year 20 aircraft minimum flying eligibility norm for international flying.

 Recently it was reported that the Directorate General of Civil Aviation (DGCA) has asked the upcoming Tata-SIA JV carrier to ensure that its operational staff is present at all regulatory meetings to avoid delay in launching operation. DGCA deputy director Ved Prakash wrote a letter to Yeoh after an internal report said that the upcoming airline's operational team did not come for some meetings. Fearing that any delay in clearing an airline as prestigious as Tata-SIA may be criticized, DGCA took the unusual step of asking the JV partners to step on the gas. "You are advised to make available key post holders in India for interaction during the ongoing documents evaluation phase in order to complete the same. Non availability of key post holders may delay the certification process," the DGCA letter to Phee Teik Yeoh said. Confirming the receipt of this letter, a Tata SIA spokesperson said: "This is part of our ongoing engagement with the DGCA and we are complying with all their requirements."

To begin with, Vistara will look at metro cities to offer its service. Tata-SIA executives are gung-ho about the prospects of a full-service airline in India, though they did not reveal the fare and network details. "We are close to finalising the network," says Phee Teik Yeoh, CEO of TSAL, adding that the number of India's airline seats per capita at 0.07 is much lower than Australia's 3.35. Mukund Rajan, Brand Custodian and Member of the Group Executive Council at Tata Sons, cites a report from consultancy Centre for Asia Pacific Aviation (CAPA) which states that India will become the third-largest aviation market in the world by 2020. He adds that India's domestic air passenger traffic is expected to grow from 60 million per annum last year to 175 million a year by 2021.

Marketing Article

The Indian e-commerce scenario: Lull before the storm?

It has been officially declared now. The Indian e-commerce industry is bracing up for some real explosive action as two of the biggest companies flex muscles in the race for e-commerce supremacy in India. The heartening thing though is that as of now the odds are stacked heavily in favor of the champion Flipkart. The challenger is a game changer that has ruled roost in markets it has entered- Amazon. Both the companies Flipkart and Amazon are in the process of readying a war chest of private equity funding.

The last week saw the commencement of the first round of funding warfare. While Flipkart announced a funding of $1 billion form a host of global investors, Amazon top boss Jeff Bezos was quick to respond to that initial fire with an announcement of a $ 2billion outlay for expansion of operations in India.

Industry insiders say that Amazon is all geared up to announce the expansion of its product range with the addition of books and electronics, two of its most important product lines. Plus, Amazon is also set to declare a new product category.

Flipkart, the brainchild of Sachin and Binny Bansal has announced its aim to increase its sales four times in the current financial year. In fact the ambitious growth drive is just a part of a well carved out strategy to deal with the global e-commerce giant, Amazon. Flipkart had been preparing to take on Amazon for quiet some time now. In the recent years Flipkart has acquired Myntra and LetsBuy. The strength of Flipkart in this battle will be its experience with Indian consumers, suppliers and partners.

On the other hand Amazon’s $2 billion funding comes on the heels of an annual report stating a 23% surge in sales relative to last year and a $126 net loss in the last quarter. Amazon has the strength of a global brand with operations across the globe and hence global sourcing can be a trump card for it.

So when these two cash rich giants are busy fighting each other what doe sit mean for other competitors? For one, price warfare in the form of heavy discounts, loyalty coupons, free samples and cash back offers are sure to light up the marketing sky. Price warfare is just one field where the two companies are expected to lock horns.

As the “big two” of e-commerce decide to indulge in a slugfest of sorts, the battle for distribution networks also promises to hotten up. Both the companies are aiming at vastly expanding their distribution and warehousing capabilities to bolster their respective supply chains. This maneuver of the two companies may be an opportunity in disguise.

More over the heat of this duel is sure to be reflected in the recruitment drives and the participation of these two companies in placement drives of top notch business and technology schools of India. With regard to talent management Flipkart perhaps has an edge with an array of marketing executives with local managerial and technical know-how.

In the final diagnosis of the entire story of war, obvious questions on victors and losers shall emerge. As for the losers one is not sure, but Indian consumers are sure to win.