Reliance Industries' over $1 bn Q2 profit may not impress investors

Reliance Industries once again posted over $1 billion net profit in a single quarter in July-September '12 after a gap of three consecutive quarters. However, this is unlikely to impress investors as its petrochemical business dropped to a new low, while a large chunk of the profits came from higher other income.

If the global economic weakness results in a weakness in refining margins as well, the company could find it difficult to repeat its performance in next couple of quarters.

"Maintaining similar profitability in coming quarters appears challenging for Reliance IndustriesBSE -1.21 % given the macro economic trends that would put pressure on margins of refining as well as petrochemical segments," said Sandeep Randery, head of research with BRICS Securities.

A Morgan Stanley report on Reliance Industries last week cited expectations of a weaker margin environment in refining and a subdued outlook on petrochemicals as key factors before turning cautious on the company and downgrading it from 'Equal-weight' to 'Underweight'.

Petroleum refining was the sole driver of profitability in this quarter. The segment reported gross refining margin (GRM) - the differential between the cost of a barrel of crude oil and realisation from sale of refined products produced from it - at $9.5 per barrel.

This was the best number in last four quarters, but lower compared with $10.1 it had reported in the September 2011 quarter. This coupled with high operating rates boosted the profits from this segment to highest ever.

On the other hand, the petrochemicals segment that has been under pressure for a prolonged time witnessed its profit margins dip to historically lowest level of 7.9%.

The segment's profit at Rs 1,740 crore was lowest in last three years. The sector's woes are unlikely to get over in a while.

The third key segment of oil & gas production continued to drift lower with dwindling gas production from the KG basin. Its profits for the Sept '12 quarter, too, were lowest in three years, and unless the company goes ahead with further capex in this field they are expected to continue declining.

In this scenario, the company's growing cash balances have come to its rescue, as the other income contributed 31% of its pre-tax profits.

This maybe a good thing for maintaining profits at decent levels and reflects the debt-free, cash-rich balance sheet, but a drag when it comes to its capital efficiency.

The abovementioned Morgan Stanley report had also pointed 'increased risk of investments into the low-ROE businesses,' as one of the reasons behind downgrading it.

It is, therefore, more likely that the street would treat RIL's results as a non-event. The scrip will continue to take cues from developments in the global economics and Indian regulatory environment-issues like KG basin capex and natural gas price revisions post 2014.

Cuba scraps exit visa requirement

The Cuban government announced on Tuesday that it will no longer require islanders to apply for an exit visa, eliminating a much-loathed bureaucratic procedure that has been a major impediment for many seeking to travel overseas. 

A notice published in Communist Party newspaper Granma said Cubans will also not have to present a letter of invitation to travel abroad when the rule change takes effect January 13, and beginning on that date islanders will only have to show their passport and avisa from the country they are traveling to. 



``As part of the work under way to update the current migratory policy and adjust it to the conditions of the present and the foreseeable future, the Cuban government, in exercise of its sovereignty, has decided to eliminate the procedure of the exit visa for travel to the exterior,'' read the notice. 

The measure also extends to 24 months the amount of time Cubans can remain abroad, and they can request an extension when that runs out. Currently, Cubans lose residency and other rights including social security and free health care and education after 11 months. 

Still, the notice said Cuba plans to put limits on travel within unspecified sectors. Doctors, scientists, members of the military and others considered valuable parts of society currently face restrictions on travel to combat brain drain. 

``The update to the migratory policy takes into account the right of the revolutionary State to defend itself from the interventionist and subversive plans of the US government and its allies,'' the note said. ``Therefore, measures will remain to preserve the human capital created by the Revolution in the face of the theft of talent applied by the powerful.'' 

Migration is a highly politicized issue in Cuba and beyond its borders. Under the ``wet foot, dry foot'' policy, the United States allows nearly all Cubans who reach its territory to remain. 

Along with the announcement on migration, Granma published an editorial explaining the political significance of the measure, attributing it to the need to address the needs of the Cuban diaspora. 

More than 1 million people of Cuban origin live in the United States, and thousands more are in Europe.

All about Michael Corbat, Citigroup's new Chief Executive Officer

Michael L. Corbat the new Chief Executive Officer ofCitigroup with approximately 200 million customer accounts and activities in more than 160 countries and jurisdictions has been at Citi and its predecessor companies since his graduation from Harvard Universitywith a bachelor's degree in economics in 1983. 



In his latest role as Citi's CEO of Europe, Middle East and Africa since the start of the year, he oversaw all of Citi's business operations in the region, including consumer banking, corporate and investment banking, securities and trading and private banking services. 

Previously, Corbat served as the CEO of Citi Holdings, Citi's portfolio of non-core businesses and assets. In this role, he oversaw the divestiture of more than 40 businesses, including the IPO and sale of Citi's remaining stake in Primerica. Corbat also restructured Citi's consumer finance and retail partner cards businesses and divested more than $500 billion assets, reducing risk on the company's balance sheet and freeing up capital to invest in Citi's core banking business. 

Corbat has previously served as the CEO of Citi's Global Wealth Management unit. Prior to this, he was Head of the Global Corporate Bank and GlobalCommercial Bank at Citi, a role in which he led the firm's efforts to provide financial services to top-tier multi-national corporations and financial institutions around the world. In his various advisory and structuring roles, Corbat has guided retail and institutional clients across the spectrum of financial services, from the bankruptcy of Orange County, California, to sovereign debt restructurings in Latin America and business restructurings in North America and Europe. 

In addition, Corbat was the Head of Global Emerging Markets Debt, responsible for the origination, trading and sales of emerging markets fixed income debt. He also held a number of positions at Salomon Brothers, one of Citi's predecessor companies, including Managing Director roles in Emerging Markets, High Yield and Derivatives. 

HTC has launched its new smartphone Desire X in India at Rs 19,799. The phone has a 4-inch super LCD display with a resolution of 800 x 480 pixels. Weighing 114g with battery, the phone comes armed with a 1 GHz dual-core processor.

The phone runs Android 4.0 with HTC Sense 4.0a, and has an internal storage of 4GB. The expansion card slot supports micro SD memory card for additional storage. The phone has 768 MB RAM. or storage, HTC has integrated Dropbox in the Desire X with 25GB of free online storage for two years.

The HTC Desire X sports a 5 megapixel camera with auto focus, LED flash. It comes packed with a 1650 mAh battery. HTC unveiled this phone at the IFA 2012 event held in August in Berlin.

Robert Vadra shuts Facebook account after row over 'mango men in banana republic' post

 In his latest response to charges of corruption levelled against him by anti-corruption activists, Robert Vadra kicked up some more dust by writing on his Facebook: "Mango people (aam admi) in banana republic." 

The activists hit back, saying Vadra - a small-town boy from Moradabad, whose middle-class family was in the business of artificial jewellery and brassware - owed people of the country an apology and an explanation for describing India as a banana republic. India Against Corruption member Kumar Vishwas demanded an apology from the son-in-law of Congress president, and National Advisory Council chairperson, Sonia Gandhi, over his 'mango people' remark. 

As regards the 'banana republic' mention, Vishwas says Vadra owed people an explanation. "Vadra's mother-in-law has been ruling the country so he should explain why India is being called a banana republic ," Vishwas said. 

A day after IAC's Arvind Kejriwal accused Vadra of receiving an interest free loan from DLFBSE -0.02 %and purchasing real estate property at throw away prices, Vadra had used his Facebook page to break his silence on the allegations made against him by Kejriwal. He had posted a message on the social networking site: "Thanks so much for your concern. I am fine and can handle all the negativity." 

He further said, "( I have) lost people I loved, what can be worse" . Following Monday's ruckus over his latest postings on the 'aam admi' - the constituency made famous by Sonia Gandhi and the UPA government - Vadra shut down his account. For long, name-calling has been a lethal weapon in the country's political combat. 

While political leaders in Congress, who defend the party president's son-in-law have been using labels - 'conspiracy hatched by Kejriwal's saffron friends' - Vadra opted for an urban slang, 'mango people.' This isn't the first time Vadra has embarrassed himself and the Gandhi family. During last year's Uttar Pradesh assembly polls, Vadra put his foot in his mouth, saying his wife Priyanka Vadra's "time would soon come." 

"Abhi Rahul ka time chal raha hai, phir Priyanka ka time aayega, phir parivar ke doosre..." (This is Rahul Gandhi's (his brother-in-law ) time. After that will come Priyanka Gandhi's time - and also of other family members," he had said. Vadra had also claimed that he was under pressure to contest from Sultanpur. 

According to him, he had to say a big no to party leaders because he was more interested in his business , workout regimen and his two children than politics. During the UP election, he had led motorcycle rallies and an IAS officer who dared stop him found himself coincidentally transferred out of Amethi.

Colgate hits its highest market share of 54.5% in 15 years

In a hyper-competitive consumption-driven market like India, most virtual monopolies, from MarutiSuzuki to Nokia, have had to contend with steady erosion in market share over the years. Whilst the share of India's No 1 carmaker is today well below 50 per cent, the Finish handset manufacturer's leadership position is under constant threat from Samsung.

Against such a backdrop, one long-standing consumer brand has been not just holding on to its pole position but actually inching further head in its core category of oral care. In the first half of calendar year 2012, Colgate Palmolive India's market share in the toothpaste marketstood at 54.5 per cent, its highest since 1998, a rare instance of a market leader gaining new ground.

Aggressive marketing and a huge 32 per cent jump in advertising spend in the first quarter of fiscal year 2013 over a year ago coupled with a launch of new variants across consumer segments has helped the largely single-product company drive growth.

Analysts who met up with the company said the leadership team exuded confidence about its growth plans and medium to long-term strategy. Colgate's executive management team includes three women: along with managing director Prabha Parmeswaran, there are Sarala Menon, VP, customer service & logistics, and Rekha Rao, VP, marketing.

Colgate's India top team is publicity-averse - the company was unwilling to participate in this feature - and that may not be a bad thing for the brand. "The brand is not bigger than the leadership. Its leadership is anonymous yet the brand does exceedingly well in the market," says Jagdeep Kapoor, founder Samsika Marketing Consultants.

Unlike most virtual monopolies that typically have few competitors - think Google in internet search and ESPN in sports television in the US - Colgate's rise has been in a highly competitive market. The biggest threat to Colgate in India isHindustan Unilever LtdBSE 1.46 % (HUL), which has put its might behind two brands, Close-Up and Pepsodent.

The other MNC in the game is GlaxoSmithKline Consumer Healthcare with Aquafresh and Sensodyne. Then, there are a clutch of domestic players, with Dabur leading the way with three brands on the ayurvedic platform plus the Promise label that it had acquired from Balsara in the mid-2000s. Other local brands that keep the big boys on their toes include Vicco and Anchor.

If Colgate has been able to stay convincingly ahead of the market, it's thanks to its ability to segment a category (including toothbrushes and mouthwashes) in which product differentiation is notoriously difficult to achieve.

With at least 10 extensions to the flagship Colgate Dental Cream (including a kids' toothpaste and a whitening product), one mouthwash (Plax), and a wide range of toothbrush extensions (including one with a flexible head and a cheek and tongue cleaner as well as battery toothbrush), Colgate has been able to make oral care account for over 80 per cent of its total sales.

Other categories in the Colgate portfolio include the Palmolive range of personal care products (body washes and hair gels) and dishwashing paste brand Axion.

Colgate has backed its extended product range with robust distribution clout. The essentially single-brand company has one of the widest networks, touching 4.5 million retail outlets in India."Colgate's sustained distribution strength, coupled with product innovation and creation of sub-categories such as mouthwash and sensitive oral care have helped it drive growth aggressively, explains Gautam Duggad, vice president, equity, at Motilal Oswal.

Analysts, however, warn that the HUL threat and forays like the first move by GSK in the sensitive teeth segment with Sensodyne - which forced Colgate to react with the Sensitive extension - will keep the leader on its toes. Also, if Procter & Gamble does eventually take the plunge into toothpastes by launching Crest in India, the competitive scenario could become more intense.

Cadbury India to be now known as Mondelez

On October 3, 14 employees of MondelezInternational from five continents joined their chairman & CEO Irene Rosenfeld to be part of the opening bell ceremony at the Nasdaq stock exchange in New York to mark the second day of trading under the company's new ticker symbol MDLZ. One of those 14 was Nikhila Rangaswamy, VP for people & talent at the Indian operation, which till recently was known as Cadbury India and which is now migrating to the new identity. 

In early 2010, Kraft Foods had acquired British candy maker Cadbury in a deal worth close to $19 billion. Then, on October 1, 2012, Kraft's snacks business - which includes brands such as Cadbury, Tang and Trident - was spun off into Mondelez; the flagship company will be left with the grocery portfolio, which includes such brands as Philadelphia cream cheese and Maxwell House coffee. Rangaswamy may have been part of the name-changing ceremony in the West - Rosenfeld also hosted her along with the remaining 13 for lunch the same day - but back home there's frenetic activity under way to make a seamless transition to the new platform. 

Late last week, Cadbury India had an internal employee event across its head office, factories and sales offices at which employees were introduced to the new company, its vision and focus. Employees wearing purple Mondelez T shirts attended the event and Anand Kripalu, president, India and South East Asia, addressed employees across India through a video conference. The Mondelez theme song was played with the management and employees singing along and a cake was cut to mark the occasion. Employees contributed an item that was auctioned and the money collected for an NGO as part of the Joy of Giving Week celebrations; the 'joy' theme coincides with Mondelez's endeavour to offer "delicious moments of joy," explains a spokesperson for the Indian operation of the snacks giant. 

"There will be no change whatsoever in the names of any of our products as Mondelez International is the overarching corporate identity and will ultimately appear on the back of the pack. There will be no change in branding practices for Cadbury in India," a company spokesperson said. 

What the Indian operation is trying to convey is that the overarching brand name may have changed but what haven't the values and associations embedded in it. Market strategy consultant Rama Bijapurkar explains that brands are like people and, if a person changes her name -she has to tell her friends and acquaintances that she is the same person; only the name has changed. But Cadbury has to communicate this to consumers. "Change the name and you have to make a lot of special effort to convince everybody that nothing else has changed except the name," points out Bijapurkar. 

A former head of Cadbury at a regional level who does not want to be names adds that "the monies being spent on India by Mondelez are getting bigger. I do not expect the Mondelez name change to make any difference to Cadbury's brand equity (for the worse), especially in Commonwealth countries."