Retail Chronicles_Issue 7

in The City:
New
One Mall
Center
Biopic: Jack Ma
News at a
Retail
Glance!
J Somaiya Institute Of Management Studies & Research,Mumbai
K
9158256641 | 9769886091
Contact:
RETAIL
CHRONICLES
Fortnightly Newsletter | Volume-2 Issue-7 | 1-15 NOVEMBER 2017
02
Pg 03
reopens
03
Merger Basics
05
Acquisitions
Pg 02
06 Pg 07
07
09
Pg 05
Pg 09
Retail Lab SIMSR
retaillab.simsr@somaiya.edu

"The cost of being wrong
is less than cost of doing
nothing"
Seth Godin

NEW IN THE CITY
By Vikas Khetan
Centre one which was navi Mumbai's oldest
mall located in Vashi and which was closed
down in 2015 due to tough competition from
other malls nearby, was re-opened again by
future group this Diwali. It was after a major
business deal with future group that the mall
was given a new life. Centre one is of Nandu
Group and companies.
Centre one closed down its business in
March 31, 2015. As it was Navi Mumbai's
oldest mall, a lot of nostalgia was attached
with it and old timers still recall it. So
naturally reopening it will bring back a lot of
memories. It was closed down because of the
loss it was making. The area already had 3
big multiplexes cum malls and compared to
them, Centre one was not competitive but
also very old fashioned. Despite that the
brand was still very famous and well known
and still popular among old timers. From
start the group was saying that they will
return after 2 years and indeed they
reopened it this Diwali.
A lot of hectic work was done inside the
premises and the whole of it was leased out
to future group which will market its leading
brand inside the mall. The mall was totally
revamped for the successful launch bringing
in with it both modernity and change.
Central store also vacated from Raghuleela
mall and will shift to Centre one soon. For
others who are watching this move, it is very
interesting development for them. The land
Centre one
prices will surely increase in the area as
three big malls will be competing neck to
neck in the same area. The mall is being
leased to future group for a period of 9
years and considering the success they had
in their past ventures, experts are saying
that they will be able to change the fortune
of Centre one. It will also boost local reality
and retail economy. Citizens are also
positive about the latest development.
When the mall opened for the first time,
even people from far off places used to
come. Now citizens are hoping that the
mall regains its original status which will
increase trade in the area. As far as future
group is concerned, it is one of India's
biggest retailer. Over 400 million footfalls
have been recorded in future group stores
every year across 200 plus cities.
02

Merger
Basics
What is a Merger?
In a merger, the boards of directors for two
companies seek shareholders' approval for
combining the company. After the merger, the
acquired company ceases to exist and becomes
part of the acquiring company. For example,
mergers deal between Digital Computers and
Compaq where Compaq was absorbed by
Digital Computers.
Acquisition: In a simple acquisition, the
acquiring company obtains the majority stake
in the acquired firm, which does not change its
name or legal structure. An example is of
Manulife Financial Corporation's 2004
acquisition of John Hancock Financial Services.
• Congeneric mergers - Two businesses which
serve the same consumer base in different ways,
such as a TV manufacturer and a cable company.
• Market-extension merger - Two companies
which sell the same products in different markets.
• Product-extension merger - Two companies
selling different but related products in the same
market.
• Conglomeration - Two companies which have no
common business areas.
By Aditi and Raveena
Most common types of mergers are listed as
follows:
• Horizontal merger - Two companies which
are in direct competition and share the same
product lines and markets.
• Vertical merger - Merger of a customer and
company or a supplier and company.
03

Scenario in Retail Industry
The retail sector is highly cyclical in nature.
General economic conditions maintain a high
level of influence on performance of retail
companies. When times are good, consumers
shop more, and firms do well. But during hard
times, retail suffers as people limit their
spending to necessities. In the retail sector,
much of the merger and acquisition activity
takes place during these downturns.
Companies able to maintain good cash flow
when the economy dips find themselves in a
position to acquire competitors unable to stay
afloat amid reduced revenues.
Another example is of Flipkart which has
acquired eBay India operations. Flipkart and
eBay have agreed for cross-border trade, as a
result of which customers of Flipkart will have
access to a wider array of global inventory on
eBay.
One of the biggest mergers this year is of Airtel
and Telenor where both parties signed the
agreement for merger under which Airtel has
acquired Telenor India’s running operations in
seven most populated circles.
Rumored Mergers
04

05
ACQUISITIONS
By Tejas Rane
An acquisition is said to occur, when a
company buys most of another
company’s ownership stakes to assume
control of it. An acquisition occurs
when a buying company acquires more
than 50% ownership in a target
company.During this, the acquiring
company often purchases the target
firm’s stock and other assets. Now the
company which acquires the target
company will not need approval for
making decisions regarding that part of
assets that it owns. Acquisitions can be
paid for in cash, in the acquiring firm’s
stock or a combination of both.
Companies perform acquisitions for
many reasons. They may be seeking to
obtain economies of scale greater market
share, increased synergy, cost reductions,
or new niche offerings. If they wish to
expand their operations to another
country, buying an existing firm may be
the only viable way to enter a foreign
market, or at least the easiest way. The
purchased business will already have its
own workforce (both labor and
management), a brand name and of
intangible assets, ensuring that the
acquiring company will start off with a
good customer base.

Acquisitions are often made as part of a
company's growth strategy when it is
more beneficial to take over an existing
firm's operations than it is to expanding
on its own. Big companies eventually find
it difficult to keep growing without losing
efficiency. Whether because the company
is becoming too bureaucratic or it runs
into physical or logistical resource
constraints, eventually its marginal
productivity peaks. To find higher growth
and new profits, the big companies may
look for promising young companies to
acquire and incorporate into its revenue
system.
When an industry attracts too
many competitor firms or when the
supply from existing firms ramps up too
much, companies may look to
acquisitions as a way to reduce excess
capacity, eliminate competition, or focus
on the most productive players.If a new
technology comes up that could increase
productivity, a company may decide that
it is most cost-efficient to purchase a
competitor that already has the
technology. Research and Development
may be too difficult or time consuming,
so the company offers to buy the existing
assets of a company that has already
gone through that process.
One such example is of Axis Bank
acquiring Freecharge for Rs.385 Crore in
an all cash transaction. The reasons for
acquiring Freecharge were to get access
to its five-crore customer base to
compete with other e-wallets like Paytm
and PhonePe. Axis Bank also wanted to
leverage the strength of the brand and
integrate its high-quality team. This
allows Snapdeal to regain focus on the
ecommerce business as Axis bank takes
charge of Freecharge. Hence, it’s a winwin
deal. Another is a small deal where
Bookmyshow the online ticket booking
company acquired food recommending
platform Burrp for a meagre 6.7 lakh
rupees. Burrp was struggling as it is.
What this did was add the restaurant
partnerships of Burrp to Bookmyshow.
Also, Burrp’s couponing and offer
redemption adds value to Bookmyshow.
Zomato the food guide and delivery
company acquired Runnr the food
delivery app to add to its delivery
capacities in a deal worth 40 million $.
06

BIOPIC
JACK MA
By Kapil Gupta
Fresh off the biggest IPO in history, Alibaba founder and chairman Jack Ma is now the
third richest man in China. Ma is now worth an estimated $30 billion , which includes his
7.8% stake in Alibaba and a nearly 50% stake in payment processing service Alipay.
Ma is a true rags-to-riches story. From growing up in the communist china to failing his
college entrance exam twice, from getting rejected from dozens of jobs, including one at
KFC to finding success with his third internet company, Alibaba, every part of his story is
inspiring.
Ma's hometown became a tourist mecca after then-US President Richard Nixon visited
Hangzhou in 1972. In his teenage only Ma started waking up early to visit the city's main
hotels, he used to offer visitors tours of the city in exchange for English lessons. His
Nickname "Jack" was also given to him by a tourist he befriended.
Having no money or any connections, education was the only way for Jack ma to be
successful in life. After finishing high school, he failed twice in college entrance exam
twice. Finally after a great effort he got through college and graduated in 1988 from
Hangzhou Teacher's Institute. And that’s where the real fight started. He faced more than
a dozen rejections from the companies where he applied for a job, so he finally decided to
take a English teaching job at a local university which only paid him $12 a month.
In 1995 during a trip to the US, he encountered computer and Internet for the first time.
Though he didn’t have any knowledge about coding or even internet, he became fascinated
by it. The first keyword he searched was “beer” and to his utter surprise, he could not find
any Chinese beer in the search result. It was then he decided to make a Chinese Internet
company.
After 4 years and two failed venture attempts, he invited few of his friends to his
apartment and asked them to intvest in his idea of developing an online platform called
“Alibaba” which would allow exporters to list their products which consumers could
directly buy.
07

08
soon, the service started to attract members
from all over the world. By October 1999, the
company had raised $5 million from Goldman
Sachs and $20 million from SoftBank, a Japanese
telecom company that also invests in technology
companies. The team remained close-knit and
scrappy — "We will make it because we are
young and we never, never give up," Ma said to a
gathering of employees.
Jack Ma has always been a fun-loving person.
After his firm became profitable, he gave all the
employees a can of Silly String each to go wild
with. when he started Taobao, the eBay
competitor, he made a custom of doing
handstands during the breaks to keep the energy
charged up among the employees.
Alibaba became famous in 2005, when Yahoo
decided to invest $1 billion in it in exchange for a
40% stake. At one hand it helped Jack Ma
enormously to beat eBay in China, on the other
hand it was a big win for Yahoo too, netting it
$10 billion in Alibaba's IPO alone.
Ma stepped down from his post as CEO in 2013,
staying on as executive chairman. Alibaba went
public on Sept. 19. "Today what we got is not
money. What we got is the trust from the
people," Ma told CNBC. The company's $150-
billion IPO was the largest offering for a USlisted
company in the history of the New York
Stock Exchange.
H E N A M E " A L I B A B A "
T
A M E W H I L E S I T T I N G
C
N A S A N F R A N C I S C O
I
O F F E E S H O P . I N " A L I
C
A B A A N D T H E F O R T Y
B
T H I E V E S , " A S E C R E T
Though the IPO has made Ma an extremely
wealthy man, but he hasn't changed much. He
still has modest hobbies like reading Kung fu
fiction, poker, practicing tai chi and meditating.
P A S S W O R D U N L O C K S
A T R O V E F I L L E D W I T H
Ma has developed an interest in
environmentalism. He is the active member of
the global board of The Nature Conservancy.
He's also been an active association in funding a
27,000-acre nature reserve in China.
U N B E L I E V A B L E
R I C H E S .

09
RETAIL NEWS AT A GLANCE
• Pizza Hut switches to open
kitchen format to ‘bring
transparency in the food
preparation process’ and is all set
to revamp more than 350 stores
across the country at the cost of
Rs2 crore per outlet
• Flipkart ties up with Decathlon
to sell sports merchandise - Sports
goods from Decathlon brands, such
as Quechua, Domyos, Kipsta, Btwin
and Kalenji, will now be available
on Flipkart at same prices as
offline stores
• Flipkart eyes more acquisitions,
in talks with Swiggy, UrbanClap,
UrbanLadder
• Kishore Biyani-led Future
Consumer forms JV with EK Sons
Agro Foods to manufacture,
market, sell, source, and distribute
the company’s flour products
• PepsiCo brings energy drink
Sting to India - At Rs50, PepsiCo’s
energy drink Sting is priced much
lower than the most-selling energy
drink Red Bull, which is priced at
Rs110 for a 250ml can
• Amazon launches a lock and
camera system that users control
remotely to let delivery associates
slip goods into their houses

Our Team
Content Head
Neeti Gupta
Junior Team
Aditi Barde
Vikas Khetan
Raveena Gupta
Kapil Gupta
Tejas Rane
Design Team
Devesh Shukla
Sujay Ambure
Nivya Shah
Debashish Sarmah
Ankur Shah
/retaillabsimsr
@Retail_LAB
retail_lab
Retail Chronicles is a bi-monthly newsletter of
Retail Lab, the Retail committee of KJ
Somaiya Institute of Management Studies
& Research, Mumbai. Images used in Retail
Chronicles are subject to copyright.
K J Somaiya Institute Of
Management Studies & Research,
Mumbai
retaillab.simsr@somaiya.edu
+91 9766122888
+91 8547527273