Tata Global Beverages (TGBL) today said it will sell its business in Russia for an undisclosed amount to a local firm as part of restructuring operations in the country. TGBL has entered into an agreement to transfer ownership and operational responsibility of its Russian business unit to Skodnya Grand, the company said in statement. The agreement also includes grant of a 5-year renewable license agreement for its Russian brands to Tea Trade LLC, after completion of the transaction, it added. The deal is expected to be complete in 3-4 months and will be subject to regulatory approvals, TGBL said in a regulatory filing.
As part of the agreement, TGBL said it will “transfer ownership and operational responsibility of the Russian business unit” and grant a five year license agreement for all its Russian brands to Tea Trade LLC after completion of the transaction. The new owner will takeover all the existing assets and operating liabilities, including employees, and supplier contracts, besides, continuing “to manufacture and sell our exisiting brands and products”, TGBL added. Without disclosing the value of the deal, the company said its subsidiary will receive “a consideration for transferring the assets and operating liabilities and license fee for the use of the brand”. Explaining the rationale behind the development, the company said: “Given the sustained macro-economic and other challenges in the market place and the performance in recent years post currency devaluation, the company believes that a change in the operating model is warranted”. TGBL said its Russian business had a sales turnover of Rs 226 crore in FY 2016-17 and had a loss after tax of Rs 29 crore. KRH RKL BAL
Inflation in the eurozone returned to zero in October from September’s -0.1%. Price growth in food, alcohol and tobacco increased slightly, while energy prices were still considerably lower than last year, according to Eurostat estimates. The statistics agency also estimated the unemployment rate in the 19 countries that use the euro was 10.8% in September, down from August’s 10.9%. The rate for the 28 EU members was 9.3%, down from 9.4% the month before. The eurozone rate is the lowest since January 2012 while the rate for the whole EU is the lowest since September 2009.
Greece had the highest rate at 21.6% (Greece is expected to be higher but has yet to report September figures), while Germany had the lowest at 4.5%. The inflation figures are an early, flash estimate from Eurostat and so are not broken down by member state. It does give broad indications of which groups of products have gone up or down.
Food, alcohol and tobacco prices were estimated to be rising 1.5% in October, compared with 1.4% in September.
Energy prices were falling an annual 8.7%, compared with 8.9% a month earlier. And the price of services were up 1.3% compared with 1.2% the month before. Mario Draghi, president of the European Central Bank, suggested this month that he might be prepared to extend the bank’s programme of quantitative easing given the low levels of eurozone inflation. “Although today’s inflation and unemployment data for the eurozone revealed small improvements, they are still very weak by past standards, suggesting that the ECB cannot afford to delay increasing its policy support much longer,” said Jessica Hinds, European economist at Capital Economics.
For the duration of the six-week Rugby World Cup, and perhaps the four years that preceded it, the rest of the world tried to convince itself that the New Zealand All Blacks could be beaten. On Saturday afternoon, New Zealand proved the rest of the rugby world wrong. The All Blacks dismantled their neighbor Australia, 34-17, at Twickenham Stadium in London to win a third Rugby World Cup and their second in a row. No other nation had retained the trophy before. As the dominant team of its generation, the All Blacks lost just three matches between the time captain Richie McCaw lifted the Webb Ellis Cup on home soil in 2011 and here on Saturday afternoon. “We set out four years ago to try and do something special,” New Zealand head coach Steve Hansen said. “We had to put a full stop very quickly on what happened in 2011 to get started in 2012.” While evening settled over 80,125 fans here, it became clear that Australia wouldn’t be the side to stop the Kiwi steamroller, despite a brief second-half rally. The All Blacks, representing a country of 4.5 million where rugby is religion, took over the match with their trademark brand of powerful, running rugby. And the team sealed it with the left boot of Dan Carter, the leading points scorer in international rugby history.
After the final whistle, the All Blacks’ traveling party of around 50 poured onto the field, accounting for approximately 0.001% of the country’s population. The rest, some 8,000 miles away, celebrated over Sunday breakfast back home. “Twelve months ago, the focus really came onto what we wanted to do here in the last six weeks.” McCaw said. And that was to “add to the legacy of the All Blacks.” Carter, like McCaw, will now withdraw from the international scene, after 112 appearances in the All Black jersey. McCaw, meanwhile, bows out as the most capped player in rugby history, with 148 Test matches to his name, a remarkable feat for a flanker, one of the more physically demanding positions in the sport. “We knew that we had to send the skipper out a winner,” New Zealand’s Sonny Bill Williams said. By a quirk of rugby World Cups, these two sides had never met in a final since the quadrennial tournament began in 1987. And yet one or the other had appeared in six of the previous seven finals.
Most of the scoreboard damage was inflicted by Carter in his last ever match for the All Blacks. As a fly-half responsible for kicking penalties in the game’s most high-powered offense, it’s no surprise that he stretches the international record with nearly every swing of his left leg. But of his 1598 career points, few will be more memorable than the 19 he racked up on Sunday. His three penalties and a tricky conversion from near the touchline helped the All Blacks to a 16-3 halftime lead. The other score was a slick passing try, carried over the line by Nehe Milner-Skudder just before the break.
“A player who has played 100 test matches like Dan doesn’t have his career defined by one game,” Hansen said before the game. “That’s already been defined in the history books. Dan has enhanced the jersey. When you start out as an All Black, that’s one of the greatest things you can do.” The All Blacks added another try in the 42nd minute with a brilliant run by the veteran Ma’a Nonu. Though Carter missed the conversion, New Zealand’s lead was 18 points. It was then, after the All Blacks were temporarily reduced to 14 men by a yellow card, that Australia rumbled to life. David Pocock and Tevita Kuridrani each broke through the All Blacks’ defense for tries, which were both converted by Bernard Foley. The Wallabies, despite their No. 2 world ranking before the tournament, had already defied expectations by reaching the final. Just over a year ago, the whole program was listing after three straight defeats to Southern hemisphere powers and the sudden exit of their coach. So they brought in Michael Cheika to turn things around. For most of the tournament, his work paid off. There were impressive victories for Australia over England and Wales. The Wallabies survived Scotland in the quarterfinals—courtesy of a late refereeing error that awarded them a penalty kick—and they outmuscled Argentina in the semis.
The Wallabies’ efforts in the second half made this the first Rugby World Cup final to see both teams score at least two tries. But trivia aside, they also forced the All Blacks to find an extra gear in the closing 15 minutes. So Carter, who missed the final in 2011, took it upon himself to relieve the pressure. In the 70th minute, he kicked a superb drop goal, just as he did in the semifinal against South Africa, to stretch the lead to seven points. Five minutes later, he sealed the match with his longest kick of the night: a penalty from 50 meters. The 79th-minute try by Beauden Barrett was the icing on New Zealand’s cake for an unprecedented third World Cup triumph. “We try and do things that no other team has done before,” Carter said.
State-owned Japan Post Holdings received approval Thursday for an initial public offering that could raise ¥1.4 trillion ($11.6 billion), which would make it the country’s biggest IPO in nearly two decades. The Tokyo Stock Exchange said Japan Post Holdings and units Japan Post Bank Co. and Japan Post Insurance Co. are all scheduled to list Nov. 4. Japan Post Holdings aims to raise about ¥1.4 trillion from the simultaneous listings, based on the indicative prices. That would be the biggest IPO since telecommunications provider NTT Docomo Inc. went public in 1998, raising ¥2.1 trillion, and the largest sale of a government-owned company since Nippon Telegraph & Telephone Corp. raised ¥2.4 billion in 1987.
A Japan Post IPO has been a goal of the Japanese government since then-Prime Minister Junichiro Koizumi first called for it nearly a decade ago. The listing took on additional importance after the government decided to use ¥4 trillion raised from Japan Post share sales—the November listings along with future planned sales of Japan Post Holdings shares—to help pay for reconstruction of areas hit by the March 2011 earthquake and tsunami. In November, Japan Post Holdings will offer about 11% of its outstanding shares, which would raise ¥668 billion at the indicative price. Japan Post Bank and Japan Post Insurance also will each offer 11% of their outstanding shares, raising about ¥577 billion and ¥142 billion, respectively. The government plans to sell as much as two-thirds of Japan Post Holdings in phases beginning with the IPO. It also has plans to sell as much as 50% of Japan Post Bank and Japan Post Insurance in multiple tranches, and it eventually expects to sell the full 100%. Japan Post Holdings has set an indicative price of ¥1,350 a share, while Japan Post Bank has a price of ¥1,400 a share and Japan Post Insurance ¥2,150 a share. Based on these prices, Japan Post Holdings could be valued at around ¥6.1 trillion ($50.6 billion), Japan Post Bank at ¥5.2 trillion and Japan Post Insurance at ¥1.3 trillion. Final share prices will be set in late October after meetings with investors.
Japan has privatized several former state-owned monopolies in recent decades, including a state railway, telephone company and cigarette maker. The publicly listed descendants of those monopolies generally have held their own, giving the government the confidence to move ahead with a listing of Japan Post Holdings. The long-awaited offerings received approval at a time of global market volatility following a stock-market collapse and currency devaluation in China that have raised fears of a deepening economic slowdown there. The Japan Post deal could test Prime Minister Shinzo Abe’s push for households to invest more of their savings in risk assets. The Ministry of Finance, which currently owns Japan Post Holdings, said it plans to sell around 80% of the shares to domestic investors and the remaining 20% to overseas institutional investors. About 95% of the shares sold domestically would go to individuals.
“Everyone in Japan knows the name of Japan Post so that familiarity might have reflected such an allocation of shares,” a government official said. The three companies’ business operations are mostly limited to domestic markets, where they face limited growth prospects. This might deter experienced investors, but many Japanese retail investors may take comfort in the familiarity of the companies’ names, said Tomoichiro Kubota, a senior market analyst at Matsui Securities. “Shares of Japan Post Holdings and its two financial units will likely be more popular among beginner investors than experienced ones,” he said.
Japan Post Holdings has been seeking growth outside Japan. Earlier this year it bought Australia’s leading logistics company, Toll Holdings, for 6.49 billion Australian dollars ($4.56 billion). To attract investors, it is also considering offering a bigger-than-average dividend. Japan Post Bank, which oversees roughly ¥200 trillion in deposits collected through 24,000 post offices across the nation, recently started taking a more aggressive investment stance, shifting more to foreign bonds from Japanese government bonds. Nearly a dozen underwriters, including Nomura Securities, will start surveying investors and holding information sessions across Japan. Tentative offering prices will be proposed in early October, with final prices set later in the month.
China ended one of the most ambitious demographic experiments in human history, abandoning the limit of one child for most families to foster the population growth required by the world’s second-biggest economy. Introduced by Deng Xiaoping in 1979 to husband a then-impoverished nation’s scarce resources, the baby limit now threatens to undermine growth: the working-age population shrank last year for the first time in two decades and the cohort of senior citizens is projected to grow rapidly. The Communist Party’s Central Committee’s decision to allow all couples to have two children was disclosed by the Xinhua news agency, citing a communique released at the end of a four-day party policy meeting in Beijing. A previous effort to relax the policy fell well short of the goal of boosting births by 2 million a year. “It shows the party wants to take action as soon as possible, and shows there is no time to delay for China to modify its population policy,” said Wang Yukai, a professor at the Beijing-based Chinese Academy of Governance. “They couldn’t wait for the legislation to pass next year. The leaders want the new policy now.”
The changes are part of President Xi Jinping’s blueprint to manage the economy’s shift to slower, more balanced growth. The new five-year plan represents Xi’s best chance to implement social and economic reforms outlined since he took power in 2012 and avoid falling into the “middle-income trap” of stagnation. China is trying to complete its transition from a investment-and-export-dependent developing nation to a “moderately prosperous society” with an economy powered by services, consumers and innovation. Xi has said the China needs to accept a “new normal” of slower expansion after three decades when growth averaged about 10 percent. The five-year plan “is the decisive phase for achieving a moderately well-off society,” the Central Committee said. Demonstrating Xi’s interest in the plan, the president personally presented its details to the committee. Xi has defined the phrase to mean a doubling of GDP and per capita income over the decade through 2020. Shares of France’s Danone SA, one of the world’s biggest producers of baby formula, rose as much as 3 percent to the highest since April after the changes in family-planning policies were announced. Procter & Gamble Co., maker of Pampers, added as much as 0.4 percent. The “one-child” policy, which limited couples to one or two children depending on ethnic background and where they live, was a cornerstone of late leader Deng’s effort to build an economy ruined by decades of war and the ideology-fueled reign of Communist Party founder Mao Zedong. When the policy was adopted, the thinking was that the birth rate of almost 3 children per woman was a drag on growth.
Since then, China’s population has grown to about 1.36 billion, almost 20 percent of the world’s total, up from about 930 million in 1976. India, with about 1.3 billion people, is projected to pass China within the next decade, according to World Bank forecasts. After decades of discouraging people from having children, the challenge is changing the mindset of potential parents worried about the costs of expanding their families. Only 1.1 million of the 11 million couples eligible to have second child under a previous policy relaxation in December 2013 applied for permission, according to Xinhua. Allowing all couples to have two children could add 3 million to 8 million births annually, according to Huang Wenzheng, a demographer at Johns Hopkins University in Baltimore. The communique said the government would continue to manage family planning decisions, despite the relaxation. The Central Committee’s communique marks the first step in the official roll-out of the 2016-20 blueprint. More details are expected in coming days with the release of the draft plan, which won’t be completed until the national legislature approves it next year.
The plan — a Soviet-style holdover of the centrally planned economy — guides China’s policies on everything from health care and family-planning to steel production and technology research. It also gives the leadership an opportunity to reassert its commitment to market-based reform after rescuing indebted local governments and a plunging stock market earlier in the year. Among other things, the party is seeking to eradicate poverty as defined under current standards, lifting the country’s remaining 70 million poor people above the poverty line by the end of the decade, according to the communique. It wants to boost social programs, reduce price controls and institutionalize Xi’s anti-corruption campaign.
The plan would call for making China an Internet powerhouse and carrying out what it described as a nationwide “big-data strategy.” It emphasizes green growth and promoting Xi’s “One Belt , One Road” infrastructure and trade initiative.
A meeting between the leaders of Japan and India in mid-November is set to build on security and economic cooperation to help counter China’s increasing sway in the Asian region. Indian Prime Minister Manmohan Singh will meet his Japanese counterpart, Yoshihiko Noda, in Tokyo in the middle of the month (Update: Indian Prime Minister, Manmohan Singh’s trip to Tokyo has been cancelled as of now as the Japanese Prime Minister Yoshihiko Noda has dissolved the government and called for elections). The two leaders will discuss strengthening security cooperation after a flurry of meetings this year between the countries’ top defense and foreign affairs officials and the first India-Japan joint naval operations in June, according to a Japanese foreign ministry official.
Both countries have committed to start regular meetings on maritime security in the region’s waters and hope to begin such discussions as soon as possible, the official said. A spokesman for Mr. Singh’s office declined to comment. The heightened spotlight on defense, especially maritime security, is a product of unease in Tokyo and New Delhi over Beijing’s territorial claims in the seas around China and its development of ports in the Indian Ocean. In September, angry crowds across China attacked Japanese businesses in protest of Japan’s claims to a chain of disputed islands in the East China Sea. The islands – claimed by both countries – are known as Senkaku in Japan and Diaoyu in China.
Tensions also have risen in the South China Sea between China and a number of countries, including India, which is prospecting for gas in the area. New Delhi says it’s also concerned about China’s funding of ports in the Indian Ocean – India’s sphere of influence – including in Pakistan and Sri Lanka. Expanding trading ties between Japan and India are also likely to feature in the upcoming talks. Japan’s difficult relationship with China, a major trading partner, has pushed its companies to look elsewhere to expand business. India, with a young population and growing economy, has been a major beneficiary.
So far this year, Japan is the largest foreign direct investor in India, with investments of $1.5 billion in 34 deals through Oct. 11, according to Dealogic. Two-way trade between the two nations, who signed a free-trade deal in 2011, is expected to touch $25 billion by 2014, up from $18 billion in 2011. Companies like Toyota Motor Corp and Suzuki Motor Corp have invested in India for decades. More recently, Japanese firms have begun to buy stakes in India’s insurance and information technology sectors.
There have also been hiccups in the commercial relationship. Suzuki’s local production joint venture had to suspend operations at a plant this summer after workers rioted over a dispute between a worker and a supervisor. Japan has pledged $4. 5 billion in financial guarantees for an Indian project to build an industrial corridor between New Delhi, the capital, and Mumbai, the country’s financial center. But the project has been beset by delays, many of the relating to the difficulties of acquiring land.
Indian Railways subsidiary Ircon International, Chhattisgarh Government, and South-Eastern Coalfields (SECL), have signed an agreement to develop two rail corridors at a cost of about Rs 4,000 crore. The preliminary work on the corridors with a combined length of 4,000 km, will start before the end of this calendar year, said an official statement. It will facilitate movement of passengers and freight, primarily coal.
The projects will be implemented by two joint venture companies in which Ircon will hold 26 per cent equity and the balance will be held by the State Government and SECL. Corridor-I or the East Corridor will be about 180 km in length from Bhupdevpur-Gharghoda-Dharamjaygarh up to Korba.
Corridor-III or East West Corridor will be of about 122 km from Gevra Road to Pendra Road through Dipka, Katghora, Sindurgarh and Pasan. The names of the JVCs have been proposed as Chhattisgarh East Rail Ltd for Corridor-I and Chhattisgarh East West Rail Ltd for Corridor-III.
Insecticides India Limited (IIL), an agro chemicals manufacturer, has partnered with Oatsuka Agritech of Japan. The idea was to set up a R&D centre to invent new agro chemical molecules for global markets in the country. Under the JV, both the companies have agreed to establish a 4000 sqm research centre in Bhiwadi, Rajasthan. The state-of-the-art research centre will be first of its kind, employing both Japanese and Indian researchers under the same roof.
Apart from it, IIL also launched Japanese products Hakama and Pulsor early this year, got very good response among the farming community in Madhya Pradesh, a major producer of soybean, groundnut and cotton. Hakama is used to control narrow weeds in the crops of soybean, groundnut and cotton crops. Company aggressively launched the product amid of 500 product demonstrations and 750 farmer meetings. Company also launched Nuvan, an insecticide, used nearly in all the crops, in technical collaboration with US-based American Vanguard Corporation (AMVAC) under which the product is now manufactured and marketed by Insecticides (India) Limited.
Commenting on the development, Rajesh Aggarwal, managing director, IIL, said, “The JV reflects our commitment in that direction. The new products invented in the research centre will help farmers to increase their crop yield multi-fold.”
Diageo has agreed to buy a majority stake in United Spirits Ltd, controlled by Vijay Mallya, for $2.1 billion, or Rs 11,000 crore, fuelling a push by the world’s biggest spirits group into fast-growing markets. However, the fate of his Kingfisher Airlines was not clear as Mallya chose to delink the United Spirits sale with the United Spirits deal. He adopted a guarded approach on the issue of using the money received from Diageo to bail out the Kingfisher Airlines, which has been grounded since September 30.
“Each individual company is a public entity. Kingfisher Airlines’ issues will be resolved by Kingfisher Airlines and UB Holdings. It would be unfortunate if you try to link this transaction with the airline. Lets not cross contaminate everything and interrelate everything,” Mallya said in a conference call after announcing the deal to sell United Spirits stake. Diageo, which first tried to buy United Spirits in 2008, said on Friday it would end up with 53.4 percent of India’s largest spirits company in a two-part deal. The Johnnie Walker and Guinness owner has been focusing on emerging markets where a growing middle class is developing a taste for more expensive drinks. Diageo has also been in talks to buy leading tequila maker Jose Cuervo.
“This (India) will become Diageo’s number two market after the United States and if you look at the projections on what’s happening with the emerging middle class…it has the potential in the long term to become our largest market,” said Diageo Chief Operating Officer Ivan Menezes.
The stake sale will help Mallya with the much needed cash to pay off USL’s debt and free up funds to revive Kingfisher. Diageo said it would fund the acquisition with cash and debt and expected no damage to its single-A credit rating – or its ability to make further acquisitions. It added that the deal, which values United Spirits at 20 times EBITDA, would increase earning per share from the second year. “Clearly this is a business that can grow very fast and where profitability can double easily within four or five years, so…I don’t think this is an expensive deal at all,” said Ian Shackleton, analyst at Nomura International.
However, according to Reuters Breakingviews columnist Quentin Webb, Diageo is paying a heavy price for Indian Spirits.”Diageo has sought a piece of United Spirits for a long time. An earlier round of talks fizzled in 2009. But Mallya, who keeps a stake and remains as chairman, is now in a tighter spot. His loss-making and debt-laden Kingfisher Airlines urgently needs fresh capital. So the puzzle is why Diageo has not secured better terms,” he said. If the deal gets regulatory and shareholder approval, it will be the biggest inbound Indian M&A deal since British oil firm Cairn Energy sold a majority stake in its Indian business to Vedanta Resources last year.
The main regulation issue is around United Spirits’ Whyte and Mackay whisky, which Diageo – the world’s biggest scotch company – would likely have to sell. Diageo Chief Executive Paul Walsh said the takeover did not hinge on Whyte and Mackay.
Mallya, who styles himself as ‘King of the Good Times,’ played down any link between the United Spirits sale and problems at his Kingfisher airline, which has been grounded by debts, safety concerns and unpaid staff. “We are working towards a comprehensive rehabilitation plan including recapitalisation of the airline. It would be unfortunate if you would try to link this transaction with the airline,” he told reporters. “I have now done what I think is best for my spirits business and, of course, we will also address the needs of Kingfisher Airlines, but these will be done separately for the good of the company and its stakeholders,” he said. “I am not selling my family jewels. I am embellishing them.”
Mallya even said he was not aware of any deadline set by the bankers for recapitalising Kingfisher. The comment comes three days after SBI said the carrier would have to get capital “by the month-end”. Kingfisher was up 4.6 percent while United Breweries Holdings was 3.2 percent higher and United Breweries, which makes Kingfisher beer, was up 0.4 percent. United Spirits shares, which have nearly tripled this year on takeover hopes, were up 1.3 percent at Rs 1,360.5.
“Some of the Mallya group companies have been in turbulence for some time. This is his final opportunity to revive the fortune of the group,” said Jagannadham Thunuguntla, head of research at SMC Investments and Advisors Ltd in New Delhi.
The Centre for Asia Pacific Aviation has said a fully funded turnaround for Kingfisher would cost at least $1 billion. Mallya will stay on as chairman of United Spirits while Diageo will name the top executive team. UBHL will keep 14.9 percent of the company. Diageo will acquire 27.4 percent of United Spirits from its founders and a packet of new shares for 1,440 rupees – a premium of around 7 percent to Thursday’s close. Diageo will then launch a mandatory offer for another 26 percent on the open market. If it fails to buy outright control, UBHL would vote with Diageo on decisions for
four years. UBHL has an option to sell its remaining shares to Diageo from the end of the first full year of control for seven years. Diageo – which also owns Tanqueray gin, Baileys liquer and Smirnoff vodka – makes about 40 percent of sales in emerging markets and had aimed for 50 percent by 2015. CEO Walsh told a conference call that he would now reset that goal. Diageo said it had also agreed to a request from Mallya to form a joint venture to run a sorghum beer business in South Africa which it said would help it build its presence in another market with a growing drinking class.
The deal is part of a new wave of consumer goods M&A in Asia-Pacific after Heineken’s $6.4 billion buyout of the maker of Tiger beer and SABMiller’s $12 billion acquisition of Foster’s in December Diageo was advised by JM Financial, Bank of America Merrill Lynch and UBS. UBHL and United Spirits were advised by Citigroup and Ambit Corporate Finance.