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Monday, March 21, 2016

Marriott Intn'l ups Starwood merger offer to $13.6 billion

Marriott International president and CEO Arne Sorenson said in a Linkedin post that Marriott has revised the agreement to merge with Starwood. Under the revised deal, signed with the Starwood Board of Directors, shareholders will receive 0.80 shares of Marriott stock plus $21.00 in cash for every share of Starwood common stock. This increases the total amount to be paid to a Starwood shareholder from $69.31 to $79.53 per share, based on the $73.16 closing price of Marriott stock on March 18, which represents a total value of $13.6 billion.  This revised agreement offers superior value for Starwood’s shareholders, the ability to close quickly, and provides value creation potential that will allow both sets of shareholders to benefit from improved financial performance.

"We remain confident that, together, we can create value and stay competitive in a quickly-evolving marketplace. The combination of Marriott and Starwood will create a premier lodging company with 5,700 hotels and over 1.1 million rooms that will benefit guests, associates, owners, franchisees and shareholders," said Sorenson in his Linkedin post.

Pasted below are extracts from his Linkedin post:

In my previous LinkedIn posts about the merger, I talked about the business rationale for the merger and what it means for the people involved, including our associates, our guests and our communities. I now think it is important to reiterate the value of this transaction. Beyond the math, the strategic story behind this combination has not changed.

Since we announced the merger in November 2015, our integration teams have met on average multiple times a week across disciplines. As a result of our extensive due diligence and joint integration planning, we are now even more confident in the potential of cost savings of this transaction.  We now expect to achieve $250 million in annual cost synergies within two years after closing, up from the $200 million estimated in November 2015 when we announced the original merger agreement.

Together, our enhanced loyalty programs will increase access to consumers in the lifestyle segment, open opportunities for new partnerships, and have greater effectiveness versus digital competition.

Our sales integration will result in our portfolio benefiting from exposure to Starwood’s brand-loyal, affluent consumers. Starwood’s portfolio will benefit from Marriott’s expertise in corporate, group and mid-market segments. This combination is also an opportunity to introduce key brands to underrepresented markets.

Finally, our strong free cash flow will reinforce the value of our asset-light business model.

With such meaningful cost efficiencies and new opportunities, we will be ideally positioned to offer guests unique experiences that will drive guest loyalty.  This in turn drives higher revenue opportunities and the addition of new hotels to our combined system should drive greater preference for our brands with owners and franchisees. 

Together, we will offer broader choices to our guests across the world and provide greater opportunities for our associates. With our scale, we will be able to better respond to technology disruptions. Starwood shareholders will also benefit from Marriott’s multi-year industry leading unit growth and consistent return of capital.

As I’ve said before, this combination brings together two of the most talented and experienced teams in the industry. Guests, associates, owners and franchisees can look forward to a combination that promotes innovative ideas and service commitment, along with unprecedented choice, value and access to 30 leading brands across more than 100 countries.

Tuesday, February 9, 2016

'We are working towards launching 15 models by 2020,' Kenichi Ayukawa, MD & CEO, Maruti Suzuki India Ltd

Kenichi Ayukawa, MD & CEO, Maruti Suzuki India Ltd (MSIL) shares his views on the company, industry and challenges ahead. Edited excerpts...

We are seeing quite a few products from India now. What in your view will be the role of R&D going forward?
Our research and development (R&D) centre was set up in order to develop products while also be close to the market and have faster product development cycles. We've got a testing track as well at the new R&D centre at Rohtak, which now leads to a lot of savings on time. That is why Rohtak will contribute to product development in India. We are one team. There will be lot of collaborative R&D between Suzuki and Maruti. Together we will strengthen our presence in the Mini, compact and sedan segment and SUV segment.

Suzuki has outlined 20 models in 5 years under Suzuki NEXT100 plan. How many of these will be developed in India?

Out of the 20 models planned, 15 will come to India. Already our engineers are doing some work. Brezza has been created in India and CV Raman is the chief engineer for the product. Development cycle is 4-5 years long usually. We are currently sending 50-100 engineers to Japan to study with the team there, to train and learn. While total responsibility is difficult, we are developing capabilities of people and working towards having more Indian inputs into product development. I expect them to develop at least 2-3 models in future.

Suzuki has outlined 2.2 million units from Asia by fiscal 2019. Comment. Hopefully 2 million of this will be from India, this is if the industry size will be 4.8-4.9 million.
There is a shift in the Indian car market. What is the impact for Maruti Suzuki?

We will continue to meet customer requirements. Our main product has been the 800 cc model, and we are now moving to 1000 cc, 1.2 litre, 1.3 litre, engine sizes. Cars are getting bigger, engines are getting bigger. Customer demand is also changing – customers are directly buying the Swift as their first car. We are at approximately 45% market share and we are working towards the remaining 55% customers that are not buying Maruti Suzuki. That has been the reason behind Nexa, which will contribute 15-20% to the total volume. For this new channel, we need new products and new models, and we are working towards that with 15 models to be launched by 2020 we target to bring models in new segments. It is not size alone, we have to overall improve the product, make it more fuel efficient, low on emissions, enhance safety.

You have stated your product focus to be in the mini to C segment. Does this mean that you will stay away from D, E segments entirely?

Suzuki’s home-ground is the A, B, C segment products. The first point is whether we have fully covered that segment yet or not. If the customer is interested in D, then we need to think of how to satisfy him. Currently, there is limited demand in the D segment. As it gets bigger, we will see. Right now, we would like to focus on A, B and C segments, improve them in all aspects, fuel efficiency, features, safety etc.

Any apprehension that you may have run out of capacity in near future?

We are at 1.5 million in Haryana and we have some room in increasing productivity and capacity expansion. Regarding Gujarat, the plant will be completed by end-March. By 2017 spring, we can start production. Phase one will add 250,000 units annually. Overall, I think we can manage.
What's you take on the Diesel ban? Are you worried?

Yes we are worried. Pollution is severe, we have to understand and recognize that. Whether banning is a good solution or not, needs to be assessed. Banning does not help. In fact, old vehicles on roads pollute much more.

India is an automotive hub and the largest market for SMC. Will exports increase in the near future?

Yes India as a market is poised to grow and with the Gujarat plant, we will need more capacities. Our focus in our domestic market and we will have to increase product portfolio. We aim for 3 million capacity right now and more products are in the way. We are exporting too and markets such as Middle East and Africa are growing.

After main-streaming of the Auto Gear Shift technology, what is next?

We have to continue to develop AGS and after WagonR, Alto, Celerio and Dzire, we want to keep expanding the AGS in our other products too.

What is your take on implementation of BS VI norms by 2020?

The technology to implement and use BS VI exists but OEMs need lead time. India needs to still get rid of models that are running on BS I, BS II and BS III.

What's your outlook for the industry for 2016 and for Maruti?

We are looking forward to good products and have been preparing for a few years now. We have a good production capacity with a total of 1.5 million. Increasing demand can be met sales wise and via new channels. For the sector, the demand for products is improving gradually with new products for the customers being launched. Also good products will succeed and trend will continue and the total volume will increase. Industry has outlined growth of 10-12 %, MSIL will grow by double digit in FY 16-17.

Nokia and Indian Institute of Technology-Madras partner for broadband connectivity in rural India

The Indian Institute of Technology-Madras (IIT-M) has entered a three-year partnership with Nokia to create technology solutions that will enhance broadband connectivity in rural India. The project will evaluate the option of using unlicensed spectrum to deliver cost-efficient, last-mile broadband connectivity to remote rural communities in India, complementing the government’s National Optical Fibre Network (NOFN) initiative. As part of the deal, Nokia will fund and provide technological expertise for research at IIT-M’s Center of Excellence for Wireless Technology (CEWiT).

The research project aims to bridge the connectivity divide in India by broadening the reach of broadband in rural areas. As part of this research,  CEWiT at IIT-M will undertake the following measures:

- Verify the feasibility of using unlicensed spectrum radio access technologies for cost-efficient, last-mile broadband connectivity

- Complement the Indian government’s ambitious plans of providing fiber optic connectivity to 230,000 gram panchayats* by providing last-mile connectivity from gram panchayats to their respective villages

- Create effective low cost rural access solutions based on Wi-Fi technology

Commenting on the association, Sandeep Girotra, vice president and head of India region, Nokia, said, "India is on the cusp of a digital revolution. We are really excited about this research collaboration with IIT-Madras, which will leverage its talent and innovation to drive the Indian government’s vision of empowering rural communities through broadband connectivity – an initiative that will revolutionize access to government services and the Internet.The successful implementation of this project is a key social development objective for Nokia in India.”

Prof. Bhaskar Ramamurthi, Director, Indian Institute of Technology-Madras, said that together with Nokia, IIT-Madras, through its Centre of Excellence in Wireless Technology, will explore new avenues for getting affordable wireless broadband technology to rural India in an effort to bridge the digital divide. "Our research will focus on leveraging the power of the Internet to accelerate the development of India's rural communities, home to the vast majority of India's population,” he said.

The Indian Institute of Technology-Madras is one among the foremost institutes of national importance in higher technological education, basic and applied research. It s a residential institute with nearly 550 faculty, 8000 students and 1250 administrative & supporting staff and is a self-contained campus located in a beautiful wooded land of about 250 hectares. The Institute has sixteen academic departments and a few advanced research centres in various disciplines of engineering and pure sciences, with nearly 100 laboratories organized in a unique pattern of functioning. It has established itself as a premier centre for teaching, research and industrial consultancy in India.

Wednesday, December 23, 2015

The Leela Group scion Amruda Nair's Aiana Hotels partners Ferns Estates for four resorts in Karnataka

Amruda Nair, The Leela Group's scion who went solo with her own company Aiana Hotels & Resorts earlier this year, has partnered Bengaluru-based Ferns Estates & Developers to manage and operate four new resorts in Karnataka. The Doha–based hotel management company (Aiana Hotels & Resorts) was launched in collaboration with Qatari entrepreneur HE Sheikh Faisal Bin Qassim Al Thani (also chairman and CEO of Al Faisal Holding) in March 2015 and the first property under Aiana was to come up in Doha.

Amruda Nair, JMD & CEO
According to Amruda Nair, joint managing director and chief executive officer, Aiana Hotels & Resorts LLC, the association with Ferns Estates & Developers is to develop a portfolio of hotels located in leisure destinations around Karnataka that will feature signature resorts with a distinct sense of tranquillity and a relaxed atmosphere. "We believe there is immense potential in destinations that are driving distance from key cities and are looking forward to expanding our presence in South India with this partnership," said Nair.

Scheduled to open in 2019, the first resort is set in 45 acres of verdant, hilly coffee plantation land in the district of Sakleshpur, approximately three hours away from Bengaluru. While preserving the the natural flora, fauna and topography, the resort will feature 100 villas in the Phase I, set around 5 acres of lake front, uniquely designed using locally sourced material and ethnic architecture. In addition to a full service resort development with recreational, spa and banqueting facilities, holiday home villas will also be sold under a fractional ownership model.

Targeting weekend retreats, other destinations identified by the partners for expansion of the portfolio in Karnataka include a 30 acres site with direct frontage on the river Hemavathi and other hill stations and wildlife sanctuaries within a four hour driving distance from Bengaluru.

Commenting on the partnership, Errol Fernandes, chairman and managing director, The Ferns Group, said the partnership with Aiana Hotels & Resorts will focus on bringing a dynamic, new-offering to the resort market. "This is the first time we are introducing a hybrid business model and believe that Sakleshpur is the perfect destination to announce our first resort. With our combined expertise in service and development and our commitment to innovation, we are confident that our fresh take on resort development will create lasting memories for our guests," said Fernandes.

While Ferns Estates & Developers is a pioneer in the development of gated communities, Aiana Hotels & Resorts is currently working on a number of hotels, resorts and serviced apartments under development. According to company, the properties will be established in the Middle East, Indian Sub-Continent and South East Asia.

Saturday, December 19, 2015

Sun Pharma receives warning letter for Halol facility

Dilip Shanghvi, managing director, Sun Pharma
Sun Pharmaceutical said it has received a Warning Letter from the US FDA as a result of the September 2014 inspection, for its facility located at Halol, Gujarat in India. The company management has responded to the US FDA inspection observations with a robust remediation process that is still on-going, with significant investments in automation and training to enhance its quality systems. Sun Pharma has been working with external consultants to ensure its remediation activities have been completed in an appropriate manner.

 Commenting on the development, Dilip Shanghvi, managing director, Sun Pharma, said, “While our team is working hard to ensure that the commitments made to the US FDA in September 2014 are fully completed, we will continue to cooperate with the US FDA and undertake any additional steps necessary to ensure that the US Agency is completely satisfied with our remediation of the Halol facility. Sun Pharma has always ensured that its products are safe and effective and there is no doubt on the safety of our products in the market. We are pledged to being cGMP compliant and are committed to continuing to supply our customers and patients across the world with quality products that meet all specifications.”

Since the inspection in September 2014, Sun Pharma has communicated regularly with the US FDA on the progress of its remediation and on issues of product supply. It has provided periodic updates to the US FDA on its commitments. Post the September 2014 inspection, the US FDA has withheld future product approvals from the Halol facility. This situation may continue until all issues are resolved. Sun Pharma expects to request a re-inspection by US FDA upon completion of its remediation commitments.

Sun Pharma and the Halol facility will continue to supply important drug products to meet its obligations to its customers and the patients who use its drugs in the United States and around the world.

Sun Pharma will respond to this Warning Letter with a detailed plan within the stipulated time frame.

Monday, May 18, 2015

Hilton's India development head quits to tread the entrepreneurial path

An edited version of this new story first appeared in dna of money edition on Friday, 15 May 2015.

A shake-up of sorts is being witnessed in the development team at global hospitality major Hilton Worldwide's development operations in India. It's learnt that the international hotel chain's head of development for India has already put in his papers and that the said development could possibly trigger more exits going forward.

Industry sources privy to the development said that Rajesh Punjabi, vice president of development for Hilton Worldwide's Indian operation has quit the organisation and is serving notice period in the company. "Having associated with Hilton for almost a decade now, Punjabi has put in his papers over a week ago and will be with the hotel company till September this year," sources said.

Rajesh Punjabi
Details of Punjabi's new endeavours are not known yet but industry sources indicated that he is set to hit the entrepreneurial road with his own venture. Punjabi did not respond to calls and text message seeking a confirmation on the same.   

While Hilton Worldwide is yet to issue an official statement about Punjabi's decision to move on, a senior company executive confirmed the development saying they were communicated about his decision a week ago. "We still do not know who will replace Punjabi as the head of development. I guess the company will start looking for a suitable candidate (internally or externally) for the vacant position now," said the executive requesting anonymity.

The development team operating out of Mumbai includes two more executives in addition to Punjabi. Earlier operating out of a separate office at Bandra, Mumbai, the development team was relocated into Hilton Mumbai International Airport premises as part of cost cutting exercise in 2013.

In terms of hotel developments, while Hilton opened five hotels last year and there are plans to launch over a couple of hotels including the debut of their Conrad brand in Pune this year. The 310-room hotel is owned by Sandeep Raheja promoted Palm Grove Beach Hotels Pvt Ltd, a wholly owned subsidiary of the K Raheja Constructions Group.

The company will enhance presence in the Goa hospitality market launching a Hilton branded hotel, which is not going to be a beach property but located on a hill looking down at the coast. The company, in 2012, had launched a 105-room DoubleTree by Hilton hotel at Arpora-Baga in Goa.

Hilton Worldwide currently operates the hotels and resorts under its two full-service, upscale brands viz. Hilton Hotels & Resorts and DoubleTree by Hilton and its two mid-market, focus-service brands viz. Hilton Garden Inn and Hampton by Hilton.

It currently has hotels operational in New Delhi, Gurgaon, Mumbai, Bangalore, Chennai, Trivandrum, Vadodara, Pune, Goa, Shillim and Jaipur.

Thursday, April 9, 2015

India's commercial capital Mumbai gets its 2nd JW Marriott hotel at Sahar

Continuing with its growth plans in India, JW Marriott Hotels & Resorts has opened its second luxury five-star hotel in Mumbai located a kilometre from the Chhatrapati Shivaji International Airport Mumbai – JW Marriott Mumbai Sahar. Posiioned as a sophisticated retreat within the energetic city of the Indian commercial capital, the hotel will cater to both business and leisure travellers.

With the debut of JW Marriott Mumbai Sahar, the JW Marriott brand now has seven hotels in India.  Other locations include Bangalore, Chandigarh, Mumbai, New Delhi, Pune and Mussoorie.

According to Arne M Sorenson – president and chief executive officer, Marriott International, India is an important part of Marriott International's global growth strategy. "India is a great, growing economy and as that economy grows, its need for hotel rooms grows too," said Sorenson adding that the new hotel at Sahar will be a premier luxury business hotel in India, setting a benchmark for service excellence.
Spread over 15 acres, the property features 585 intimate rooms including 163 deluxe pool view rooms, 23 deluxe suites, 23 executive balcony rooms and one presidential suite. The rooms are priced starting Rs 8,925/- for a night's stay. 

The hotel flaunts a stunning design and signature service to a compelling restaurant scene celebrating local Indian cuisine. Its stylish lobby features open spaces and natural light anchored by a striking crystal chandelier descending down into an oversized marble bowl. The hotel also boasts some of the most spacious guest rooms in its immediate vicinity.

Also housing JW Marriott’s new branded spa concept 'Spa by JW' the Sahar property is the first hotel in Asia Pacific and the second worldwide to offer the 'Spa by JW'. Featuring seven treatment rooms including one couples treatment room and one ayurvedic treatment room that offers ancient beauty rituals using fresh and natural ingredients it also offers a private couples jacuzzi, a dressing and make-up room, two steam and sauna rooms and two separate jacuzzis for men and women.

The food and beverage offerings are in the form of a chic and contemporary all-day dining multi-cuisine restaurant called JW CafĂ© that has an alfresco seating area while Romano’s bar offers authentic, home-style Italian fare. Located at the heart of the property is the JW Lounge, which serves as a cafe by day and a stylish lounge by night. The JW Baking Company offers indulgent pastries, coffee and deli favourites.

To accommodate large-format events and social gatherings, the hotel boasts of
over 56,000 sq.ft. of indoor and outdoor convention space including a pillar-less 10,000 square foot Grand Ballroom, indoor and outdoor convention spaces, and 11 well-appointed meeting rooms with state-of-the-art conferencing and business facilities. The property also has a spacious JW Lawns and Dining Theatre that can serve as an ideal venue for picturesque weddings and social gatherings.

Additional facilities include, The JW Fitness Centre open 24-hours a day with the state-of-the-art equipment, catering to the needs of the fitness conscious. Poolside cabanas also make a perfect place to unwind and soak up the sun.

Currently, there are 71 JW Marriott hotels in 27 countries and by 2020 the portfolio is expected to encompass more than 100 properties in over 30 countries.