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Showing posts from 2007

Rejuvenating hydel power

Businessworld has an article on the challenges facing hydelpower projects in India.
While India is reeling under a huge power shortage, hydro accounts for just a fourth of the total installed capacity of around 100,000 mega watts (MW). India’s progress on the hydro front has, after the initial spurt, been tepid. Till now, only 21 per cent of the potential hydro capacity is developed.

...three-fourths of the projects still remain in the public sector, with central PSUs such as National Hydroelectricity Power Corporation (NHPC) and North Eastern Electric Power Corporation accounting for the bulk. Only 4 per cent of the installed hydropower capacity has been commissioned by the private sector till September, according to the CEA.

...Manoj Gaur, chairman of Delhi-based infrastructure group Jaiprakash Industries, says that land acquisition and government clearances pose the biggest hurdles. Jaiprakash has the largest share (58 per cent) in private hydropower in India. Uncertainty in the tim…

Deal Alert: IDG Ventures India invests $3-M in Perfint

From the press release:

IDG Ventures India, a $150 Million early-stage technology venture capital fund has announced an investment of $3 million in Perfint, a healthcare devices start-up.

Perfint is headquartered in Chennai with its product development labs in Mysore. It has been co-founded by Mr. S Nandakumar, Mr. B D Vijaya and a team of healthcare device professionals that were closely associated with building GE Healthcare's Design, Manufacturing and Sourcing hub in India.

Perfint will focus on developing Niche Healthcare Products and Solutions, that address Clinical Productivity needs globally with a special focus on Emerging Markets like India, China , amongst others and subsequently developed markets like USA, Europe etc. Their first product called PIGA, is a Tool Positioner for Image Guided Minimally Invasive (IG-MI) procedures. Some of the clinical applications that PIGA supports would be, Fine needle aspiration (FN A), Biopsy and RF Ablation (RFA) of small tumors in the l…

Interview with Kreeda Games' Quentin Staes-Polet

Kamla Bhatt has a twopart audio interview with Quentin Staes-Polet, the Belgian CEO of Kreeda Games, the Bombay-based online multiplayer gaming start-up funded by IDG Ventures India and SoftBank.

Quentin has some interesting points on why the firm chose not to disclose the amount of funding it raised, interplay between social networking and gaming, experience of an "foreigner" starting a business in India, etc.

Arun Natarajan is the Founder & CEO of Venture Intelligence, the leading provider of information and networking services to the Private Equity and Venture Capital ecosystem in India. View sample issues of Venture Intelligence India newsletters and reports.

Lassi Making Machines

Businessworld has a profile of a Delhi-based company that makes Lassi making machines.
...an enterprising young man called Sultan did the next best thing. He perfected a lassi-churning device. He sold his first machines to the numerous lassi shops and restaurants in the crowded lanes around Delhi’s Jama Masjid area. The devices ran on electricity, worked for hours on end, needed little maintenance and almost never broke down. That was the 1950s.

Fifteen years after starting out, Sultan passed away. His son Mohammed Usman, barely 20 then, took over. Usman decided to name the devices ‘Sultan’ in memory of his father. He moved the workshop to Daryaganj in 1992 and also set up a factory in Wazirabad, which employs 25 workers and engineers, to meet the growing demand for his father’s machines. He called the business Raja & Co. — a nickname given to him by friends and loyal customers.

Usman’s sons have helped add a modern touch to the 50-year-old family business. Orders from outside Delh…

Deal Alert: IDFC PE invests $63-M in Goodearth Maritime

Edited extracts from the press release:

IDFC Private Equity (IDFC PE) has invested Rs.260 crores in Goodearth Maritime Limited (GML), a leading Chennai-based dry bulk shipping company. o3 Capital was the sole advisor to GML for this transaction.

The company intends to use these funds to fund its growth plans for the green-field ship building yard in Tamil Nadu, as well as for its foray into the on-shore and off-shore oil drilling sector. The shipyard is expected to require a total investment of around $500 million in the first phase, with a capacity to build about 25 to 30 ships a year, including VLCCs.

Mr. P.B. Anandam, Chairman, GML, speaking on the occasion, said “We are in the process of making Goodearth Maritime a global shipping company, with a strong shipbuilding base in India. The potential of Indian shipbuilding economics will fully unfold in our yard near Cuddalore with third generation international standards of ship construction. It would give our ship owning a competitive ed…

Deal Alert: IDG invests in IISc incubated co.

Extracts from IDG Ventures' press release:

IDG Ventures India, a $150 Million early-stage technology venture capital fund, has announced its investment in 3D Solid Compression (3DSoC), a startup incubated by Stanford University and Indian Institute of Science (IISc).

3D Solid compression has been co-founded by Prof. Fritz Prinz (Stanford) Prof. B. Gurumoorthy (IISC), Dr. Krishnan Ramaswami and Mr. K K Venkatraman around the vision of ‘3D for All’. 3DSoC is positioned to be a key player in the 3D content creation and visualization space with VIS (Virtual Interactive Solid), its novel 3D representation format. The ability to interact with the concise representation enables 3DSoC to straddle markets as diverse as 3D Publishing and Visualization and Rich Internet Applications. Today, 3DSoC’s customers in India include major players in the Automotive and Engineering verticals who see significant benefits in leveraging 3D product data in both marketing and the MRO side of the business, …

VC Market

The following companies are seeking capital for starting-up / expanding their operations:

07-11-28-2: Yanam, AP based developer seeks around $5 M for acquiring land for the development of Industrial Estates, SEZs and tourism-related projects.

07-11-28-3: Hyderabad based ERP focused IT Services firm seeks above $5 M – ideally from an investor with strong network in Europe - for funding acquisitions.

07-11-28-4: Bangalore based group seeks <$1 M for setting up restaurants business.

07-11-28-5: Nagpur based Project Engineering company engaged in HVAC Projects, Marine AC & R Projects, Industrial Chilling Systems etc. seeks <$1 Million for expansion of operations.

07-12-12-1: Delhi based woman entrepreneur seeks $1-5 M for launching day care services for working women

07-12-12-2: Ranchi based award-winning anti-hacking services organization seeks <$100 K for expansion

For more information about any of these companies, investors - who are subscribers to the Venture Intelligence ser…

Interview with Symphony Cap's Sunil Chandiramani

The Mint has an interview with Sunil Chandiramani, Partner at Symphony Capital. The team behind Symphony, which was earlier investing as Schroders Capital Asia, is one of the most experienced "India hands" with successful investments in companies like Apollo Hospitals, Blue Dart and Orchid Pharma. In the interview, Sunil talks about the firms pan-Asia focus, why it decided to raise money from the public capital markets (instead of the LP route) and, of course, valuation concerns.
One of the things we constantly face with entrepreneurs is that they don’t want to sell their businesses but an IPO (initial public offering) can cause them to be locked in longer than they may want. So now we can give a third option for exits. We can give them stock in our diversified investment company. As long as we are comfortable that there is a succession plan in place, we can swap stock in his company for stock in our company.

...Our 1994-1995 vintage fund saw rough times with the Asian crisis …

The Restaurateur from Chennai

While I was reading a profile of M. Mahadevan of Oriental Cuisines in The Hindu, I realized that he seemed to own almost every restaurant that I'd enjoyed eating at in Chennai. (And, I had always associated his name mainly with "Hot Breads" - which I don't frequent at all!)

The gentleman indeed seems to be a very fascinating entrepreneur - one that is sure to be besieged by offers from Private Equity firms.

Along the way, Mahadevan, the restless man that he is, launched a whole slew of fast food and restaurant brands for every segment of consumers – Benjarong, the Thai restaurant, Wang’s Kitchen and Noodle House for Chinese, Don Pepe for Mexican, Zara, the Spanish Tavern and the byword in food courts – PlanetYumm.

Not being content with India operations, Mahadevan ventured into foreign shores – he took Hot Breads to France and Italy, tied up with Saravana Bhavan to take the brand to US and opened a string of bakeries in the Gulf region. “But India is still my exploring…

McHospitals

Business Today has an interesting article on how healthcare firms are responding to newer consumer needs with innovative formats.
The Cradle is a high-end model where people come and pay for the experience. Just like Gayathri, 28, who recently delivered her child at The Cradle in Bangalore. She and her husband, R. Venkateshan, an engineer with Accenture, chose The Cradle because, as he says: “We opted for this place mainly to undergo the experience. It’s very homely here and of international standards.” His corporate insurance took care of the bills.

Typically, a Cesarean section delivery costs about Rs 80,000 at The Cradle. That’s not too much if you consider the facilities. The place hardly looks like a hospital with its bright colours, no visiting hours, a cake shop, private birthing suites, and all-in-one labour, delivery and recovery room equipped with imported Hill-Rom beds that cost around Rs 10 lakh and can perform many tasks—for instance, it has drawers fitted with infant monit…

Deal Alert: IDG Ventures invests $2.5 million in security product co. iViZ,

Edited extracts from IDG Ventures's press release:

IDG Ventures India, a $150 Million early-stage technology venture capital fund, has announced its investment of $2.5 million in iViZ, a network security startup in the Security and Vulnerability Management market. Kolkata-based iViZ has come up with the world’s first "Automated and On Demand Penetration Testing product".

"It is our privilege to support iViZ founded by Mr. Bikash Barai and Mr. Nilanjan De. This investment is based on our thrust of investing in disruptive software product firms out of India with a potential to scale globally,” said Mr. Sudhir Sethi, Chairman and Managing Director, IDG Ventures India.

iViZ plans to utilize the investment to build its sales team in North America, Europe, Middle East/APAC and India and to significantly enhance its product development initiatives.

“Our vision is to be a global leader in the Security and Vulnerability Management market with Automated Penetration Testing and …

Metamorphosis at Manipal

Business Today has an article of the changing face of the education- and healthcare- focused Manipal Group.
Gradually, he has ceded close control of his businesses to professional managers. “We want each business unit to be run individually and we will take a minimal supervisory role,” says Ramdas Pai. On the education front, Sudarshan has been given a broad mandate to not only expand its global footprint (with institutes in Antigua in the Caribbean and possibly in Curacao, a Dutch principality off the coast of Miami), but also look to inorganically grow the company’s businesses.

“We want to model ourselves on Tata Sons, especially when it comes to nurturing new companies and providing seed funding,” says Ranjan Pai. Manipal Cure and Care, in fact, was begun with Rs 5 crore in seed funding from MEMG. It then leant on MEMG’s chain of doctors and other medical staff to get people for these centres. Now, it wants to replicate the model for Stemputics, its stem cell research initiative. “Th…

Profile of Godrej Properties

Business Today has an article on the Godrej Group's property business, which is to launch an IPO shortly.
As of September, GPL had projects—in progress and signed—on close to 200 acres of land. Some of them are joint developments, involving other developers, whilst a few are wholly-owned by GPL. Going by the property prices prevailing in the various locations where these projects are being executed—in areas in Mumbai, Pune, Bangalore, Kolkata and Hyderabad—Godrej’s share is estimated to be worth a little under Rs 4,000 crore.

...It’s the sheer scale of the potential that’s locked within the group that has investors licking their chops in anticipation of GPL’s public offering (which is slated for March 2008; GPL is expected to raise a little under Rs 1,000 crore by issuing 10 per cent of fresh equity). Analysts currently value the company at 3,500-4,000 crore, based on current operations. But that is the proverbial tip of the iceberg that is GPL. As Korde points out: “Today, we don…

Rupee Rise Begins to Hit Manufacturing

Business Today has an article on how millions of jobs in the manufacturing industry "could vanish" due to the rupee's seemingly inexorable rise.
The weakening dollar has now started taking its toll on manufacturing in India. The worst hit are export-intensive sectors like textiles, leather, handicrafts and engineering. Faced with contracting margins, companies in these industries are now resorting to drastic measures, like retrenchment drives, to stay competitive. And the estimated job losses run into several millions. According to the Federation of Indian Export Organisations (FIEO), the apex export body, almost 8 million jobs are likely to be lost this financial year. And it reckons that the problem will get worse if the rupee continues to appreciate rapidly.

...Exporters, then, are struggling to cope with the onslaught of the rising rupee. If the rupee continues to appreciate, then it could force many small exporters to fold up operations or slash production, resulting …

DFJ's Sateesh Andra on mGinger investment

ContentSutra has an interview with DFJ's Sateesh Andra on the firm's investment in mobile advertising services firm mGinger.
How much have you invested in mGinger?
We’ve invested $1.5 million, while NEA-IndoUS has invested $500,000.

Why mGinger, what was the company’s valuation, and how did you value the company?
There are three things - first is a good marketing opportunity. Mobile is a great medium, as is opt-in permission based advertising in that segment. The second factor is that the mGinger team is a great team. The third factor is the traction - there are close to 1 million subscribers. Also, the change in market dynamics: when I turn on a spam filter, I don’t receive advertsing. That’s what the Do Not Call registry is doing. As a marketer, I can sign up with a network like mGinger, and I get advertisements that interest me. mGinger is building a directory of consumers. I can’t comment on the valuation.

There other advertising models like 160by2 for free messaging and even (…

Co. that makes "water out of thin air"

The Mint has a profile of Chennai-based economist-turned-entrepreneur S.S.Sivakumar whose Akash Ganga International is seeking to help solve the city's chronic water problems through its unique device.
The scientific basis behind Sivakumar’s air-to-water conversion is the heat exchange process: In this case, it involves sucking in air from the atmosphere and blowing it over cold gas resulting in the creation of water (in much the same way, condensate, or water, forms on the outside of the windows of a heated room in winter or an air-conditioned room in summer).

...By mid-2004, Sivakumar and his team worked out how to make water from air. AGL invested in a modest 3,000 sq. ft manufacturing facility and started rolling out its products. Priced between Rs9,200 (for an 8-litre version) to Rs42,500 (for a 120-litre one), the machines were powered by electricity, and sold through stores that sold consumer durables such as television sets, washing machines and refrigerators. The Akash Gang…

GPS based navigation services

Businessworld has an article on the market for GPS-enabled navigation services.
Until last year, Hyderabad-based SatNav Technologies was the only vendor of GPS devices. Since then, other companies have also entered the market with their own products. These include GPS-enabled mobile phones, personal digital assistants (PDAs) with built-in GPS receivers and other PNDs.

...MapmyIndia’s online maps are now used by several organisations such as Yahoo! India, Yatra.com and even India’s Election Commission. This September, the company introduced a PND for about Rs 22,000. It also launched several new navigation products. These include new PNDs, free-to-download navigation software and maps for mobile phones and PDAs, and a Web-based SMS service for directions.

...One company that promises to revolutionise the industry is Nokia. Two of its phones, the N95 and the E90, have built-in GPS capabilities . A third device is in the offing. “Navigation has the potential to surpass any other service, ba…

Taking banking to migrant laborers

Businessworld has an article on an interesting experiment by Axis Bank along with an NGO.
Anwar is one of the nearly 1,500 urban labourers who have joined a technology-assisted financial inclusion programme started by Basix, which describes itself as a livelihood promotion institution. The project, in collaboration with Axis Bank, provides basic, no-frills banking services to poor migrant workers. Basix and Axis Bank have also started a pilot remittance project to help migrant labourers in East Delhi transfer money quickly to dependents in Muzaffarpur in Bihar.

...Basix and Axis Bank are conducting their experiment in financial inclusion in the eastern part of Delhi, home to the capital’s largest slum. The area is populated largely with immigrant workers from remote hamlets in Bihar and Uttar Pradesh. “Most of the people who have enrolled for the pilot project are those who make a living as rag pickers, rickshaw pullers, house maids and auto rickshaw drivers,” says Preeti Sahai, who spe…

Countering hedge fund invasion

In an article appearing in AltAssets, James Kelly of US-based law firm Nixon Peabody LLP, talks about the increasing "hybrid" strategies adopted by hedge funds and how PE firms need to counter this. While the article is written based on the US context, parts of it are relevant for other rapidly maturing markets like India - where hedge funds like Galleon, DE Shaw, Passport, Quantum, etc. are becoming increasingly active in traditional PE turf - as well.
In our view, hybrid funds will likely begin to play a bigger role in the middle market. As money continues to pour into private equity funds and hedge funds alike, these funds find themselves in bidding wars as competition for deals rapidly increases. Further, as the markets have become more efficient and the role of transactional intermediaries has increased, proprietary deals are becoming rarer and auctions commonplace. Aside from the obvious intangible currencies of operating focus and expertise, timing, and track record, …

Will Dubai avoid the "skyscraper curse"?

Bloomberg columnist William Pesek has an interesting theory on the correlation between tallest-building projects and financial crises.
It happened in Kuala Lumpur in 1997, Chicago in 1974, New York in 1930 and in biblical times with the Tower of Babel. A bizarre coincidence perhaps, yet humankind's propensity for architectural overreach has been a reliable omen of meltdowns. Taiwan, which in 2004 became home to the tallest building, was arguably affected. Its economy didn't implode, so much as it's disappearing....

...The thing about record-breaking skyscrapers is that they can say as much about hubris as wealth, ambition and technology. Is Dubai a development miracle? Or is it the center of an Arabian asset bubble tied to surging oil prices?

At least for the moment, it would appear to be the former.
Arun Natarajan is the Founder & CEO of Venture Intelligence, the leading provider of information and networking services to the private equity and venture capital ecosystem i…

VC Market

The following companies are seeking capital for starting-up / expanding their operations:

07-11-21-1: Hyderabad based company seeks <$1 M in angel investment for their upcoming real estate portal.

07-11-21-2: Kolkata based Enterprise software company seeks <$1 M for marketing and promotion of ERP product targeted at Manufacturers, Exporters and Retailers.

07-11-21-3: Panchkula, HR based company providing agricultural financing and support services in the areas of land cultivation, marketing, IT applications, decision support systems, outsourcing services, capacity building etc. to farmers and lending institutions seeks <$5 M for expansion.

07-11-21-4: Bangalore based battery maker, with over 25 years of experience in the industry, seeks about $5 M to set up manufacturing of Lithium ion batteries used in electric vehicles scooters and cars.

07-11-21-5: Niligiris, TN-based floriculture and horticulture firm seeks $2.25 M for expansion and diversification.


For more information ab…

Why Ramzan is crucial for Carrom Board exports

Business Today has an off-beat article on the business of exporting carrom boards.
This unmatched frenzy at Meerut, a sports goods manufacturing hub of India, is triggered by the preparations for the Holy month of Ramzan in the Gulf countries. Sales of carrom boards in countries such as Saudi Arabia, UAE, Kuwait, and Bahrain increase by almost 50 per cent in the month of Ramzan, the fasting period that culminates in Id-Ul-Fitr, the biggest festival for Muslims. “During this period, the timing of the offices changes in the Gulf countries. People work from 9 in the evening till 4:30 in the morning and keep their shops closed during the daytime. Since playing cards is considered haram (profane), people prefer to play carrom that is considered a great leisure activity for the entire family,” says Anil Mahajan, Director, Himco International, an export unit based in Meerut.

Anil Mahajan is one of the 300-odd manufacturers of carrom boards, bulk of whose business happens two months preceding …

Business Today's Cool Companies listing

Business Today has published its latest annual listing of "hip and happening" companies. This year's list includes a VC firm - APIDC-Ventureast. Other cool companies include two Canaan Partners back companies Cellcast (Mobile VAS) and TechTribe (online business networking).
For a fund that goes by the name of Apidc Venture Capital, its seven partners are anything but old fashioned. One is a blues guitarist who’s done gigs at blues bars in Chicago; another is an amateur bartender who can knock up deadly margaritas and mojitos; the third has an abiding passion for interior decoration, the fourth is a meditation expert, the fifth is a long-distance runner, the sixth has co-founded an art gallery, and the seventh founded a ‘Heart of a Child Foundation’ with Sylvester Stallone as one of its patrons.

But guess what? That’s not the reason why APIDCVC—managed by Sarath Naru, Chandra Shekhar Reddy Kundur, Aditya Kapil, Ramesh Alur, Raghuveer Mendu, Venkatadri Bobba and Siddhartha…

Hollywood's growing fondness for Indian films

Business Today has an article on how Hollywood studios are now aggressively tapping into the regional language market in India.
Thus far, Hollywood studios have had only a peripheral presence in India, sticking to the traditional business of distributing their own—and sometimes, independently made films— in the country. Result: Hollywood’s share of the Indian film entertainment pie is a minuscule 3-4 per cent. But the big money lies in producing and distributing local films, and that is the path that some of the big boys of Hollywood are now taking.

...Hollywood first began testing the waters in the regional language market with dubbed versions of its English hits. The trend started with Jurassic Park in 1994. This was followed by Titanic in 1998. The success of these two films—the dubbed versions contributed as much as 25 to 40 per cent of their gross collections in India—highlighted the potential of the market. These were followed by Spiderman and Spiderman 2, Godzilla and Casino Ro…

"Indian ports require a sea change"

Businessworld has an article on private participation in Indian port development.
Ever since India struck its first privatisation deal in 1996 when Nhava Sheva International Container Terminal was awarded to global port operator P&O (since bought by Dubai Ports), Indian ports have attracted Rs 7,585 crore in private investment: an average of Rs 700-plus crore a year. That’s still a trickle compared to the Rs 7,000 crore per year required in the next five years, but it has helped. The average turnaround time for Indian ports has improved from 5.23 days in 1998-99 to 3.5 days now.

Then, efficiency has taken a hit, even in Jawaharlal Nehru Port Trust (JNPT), which handles more than half the containers being shipped to India, despite two of its terminals being privatised.

Ramnath Iyer, director at Delhi-based Crisil Risk and Infrastructure Solutions, says the average time a ship has to wait before docking on to a berth at JNPT, the most efficient port, is 10 hours. In Singapore, the wait…

Online bill payment firms make a comeback

With Clearstone Ventures and SIDBI Ventures investing into BillDesk and the Battery Ventures and Greylock combine backing TechProcess (the new avatar of ICICI Venture backed BillJunction), online bill aggregation companies have made a comeback on VC radar screens. Businessworld has an article on the trends in this space and business models of these firms.
“There are only two aggregators in India, and their business models are very different,” says Shalini Mehta, executive vice-president for retail liabilities and branch banking at Kotak Mahindra Bank. “The business for aggregators has grown only over the past two years. Last year, it was estimated that only 300,000 online payments were made. But this year, the number could go to 1.8 million.”

Mumbai’s BillDesk and Tech Process Solutions (TPS) are the two aggregators ploughing this lonely, potentially fertile furrow. Ever since broadband took off in India two years ago, both the companies are waiting for billers, such as utilities and mo…

Inputs to farmers via SMS

Businessworld has an article on a SMS-based service for farmers.
UK-based financial information and news provider Reuters Plc and Mumbai-based Multi Commodities Exchange of India (MCX), who are already empowering farmers by providing real-time agri-related information, believe food production could be revolutionised by integrating rather than sidelining middlemen. “The middleman is a key player and need not be wiped out,” says Anjani Sinha, director of MCX, which is setting up electronic mandis (wholesale markets) across the country to help farmers garner information. “He could help the farmer get produce to mandis that offer better prices.” For now, Reuters is helping farmers in Maharashtra do that through its SMS-based service, Reuters Market Light, which provides information on cropping patterns, mandi prices, weather updates and other agri-related information. In the process, it is indirectly helping sustain the middleman by ensuring that farmers go to those offering the most compe…

Apparel shopping as family entertainment

McKinsey Quarterly has an article comparing shopping for apparel across India, China and Brazil.
Indians devote roughly the same share of their income to apparel as do Chinese and Brazilians. But the country’s lower per capita income levels mean overall spending on apparel is significantly lower, and the habits of Indian shoppers present intriguing challenges for multinationals eyeing the market.1 For starters, nearly 40 percent of the mass-market Indian shoppers2 we surveyed said that their most important shopping occasions revolved around special events, such as weddings and annual religious festivals—a figure dramatically higher than the one for shoppers in the other emerging markets we studied. Furthermore, to a greater extent than elsewhere, shopping is a family activity in India: nearly 70 percent of its shoppers always go to stores with family, and 74 percent—more than twice the average of Brazil, China, and Russia—view shopping as the best way to spend time with family. The pre…

VC Market

The following companies are seeking capital for starting-up / expanding their operations:

07-11-07-1: Mumbai based online service for MBA aspirants and students seeks <$100,000 for expansion.

07-11-07-02: Hyderabad based HR Services firm specializing in offering recruiting, payroll and time & billing solutions seeks <$1 M for expansion across India and Middle East

07-11-07-3: Vijayawada based bio-fertilizer manufacturing company seeks <$5 M for adding new products and marketing.

07-11-07-4: Bangalore based Hotel and Resort chain, focusing on the mid market segment, seeks <$5 Million to ease leverage and acquire real estate for future expansion.

07-10-03-1: Mumbai based logistics services company seeks <$100,000 for expansion.

07-10-03-2: Kakinada based real estate developer seeks <$1 M for investment into real estate projects.

07-10-03-3: Mumbai based entrepreneur seeks <$100,000 to develop an interactive matrimonial website.

07-10-03-4: Ludhiana based auto com…

Why Battery is keen on media deals

Battery Ventures' Ramneek Gupta and Mark Sherman have published an article on the Indian media landscape and themes their firm would be keen to invest in.

TV and Print are the two largest sectors in Indian Media with $4.25B and $3B in revenues respectively. Additionally, TV is expected to grow at a CAGR of 26% over the next 5 years.TV accounted for ~43% of the total media market in 2005, a share that is expected to grow to 55% by 2010.

We will be looking to leverage this mindshare with opportunities along the following key themes in India:

1. Local Advertising and infrastructure – There are very few mass media avenues available for local advertisers in India today with the exception of Print. We believe there will be tremendous equity value creation in this space in the near-term.

2. Audience measurement systems – Infrastructure and Data services companies focused on audience measurement that allow the advertisers to measure the efficacy of their advertising campaigns is anothe…

Multiplexes: The New Game in Tinsel Town

Businessworld article on the business of Bollywood points out how multiplexes, while accounting for just 4% of the 13,000 screens in India, generate 30% of the box office collections.
It is the exhibition end that is emerging as Bollywood’s most modern arena. Multiplexes, expectedly, have led the charge. Over the last 5-6 years, aided by waivers offered on entertainment tax by various state governments, multiplexes have grown as part of the new mall culture. Today, multiplexes offer 450 screens at 130 locations with 140,000 seats per show. Of the 13,000 screens in the country, the multiplexes’ share is only 4 per cent. Yet, they have transformed film entertainment by generating nearly 25-30 per cent of the Rs 3,000 crore annual box office revenue. Furthermore, by offering a high quality viewing experience with comfortable seating, and a package of food, beverages and gaming, multiplexes are a whole new show in filmed entertainment.

The multiplex business is dominated by six corporate g…

Ajay Shah on Private Equity

Extract from economist Ajay Shah's column in the Business Standard argues for removing the tax and regulatory irritants for PE investments in India:
The investments in place today might generate 1,000 exits over the next four years. On average, the PE industry will produce one company per weekday! Some of these exits would be through an IPO; the others would involve sale to an existing listed company. In either event, this would give growth of the overall market capitalisation of India and grow the modern sector of the economy.

A key feature of PE funds is that they have a substantial shareholding in the investee company — sometimes even a majority stake. This is a sea change in the governance environment when compared with the usual Indian family run company, where the CEO has job security owing to owning over 50 per cent of the shares. PE funds, in contrast, exert substantial control, and sometimes even sack the CEO. This pressure helps to improve the performance of the company. O…

Deal Alert: IDFC PE invests Rs. 35 crores in water management co. Doshion

Edited extracts from the press release:

Water management company Doshion Limited has raised Rs. 350 million from IDFC Private Equity (via its IDFC PE Fund II). Doshion has a pan-India presence and has executed projects - in sectors like water purification, waste water and effluent treatment - in over forty countries across the world. The company was founded by its Chairman Dhirajlal Doshi in 1978 and is managed by his sons, headed by Ashit Doshi (Managing Director) and backed by a team of professionals.

The money raised from IDFC Private Equity will be used to fuel further growth, including acquiring niche companies in the areas of design and fabrication of water treatment plants and for bidding for upcoming BOT and BOOT projects in the water segment.

Arun Natarajan is the Founder & CEO of Venture Intelligence, the leading provider of information and networking services to the private equity and venture capital ecosystem in India. View free samples of Venture Intelligence newsletter…

GMR gears up for global growth

Business Today has an article on the management recast at the infrastructure focused GMR Group.
The company is looking at other segments to expand its global reach; it is eyeing coal mines in both South East Asia and South Africa to integrate its power business backwards and it is also eyeing other airport projects in West Asia and other fast growing economies. "The competition is much tougher on the global stage. There, we are up against large global infrastructure players and, possibly, some of our partners," says Rao. GMR has already experienced both of these when a consortium it was part of beat half-a-dozen others (including Frapport, its partner for the under-construction Hyderabad International Airport) to win the contract to upgrade the Sabiha Gocken Airport in Istanbul, Turkey. "We have demonstrated our capabilities in delivering projects on time in India across our businesses. Now, we want to take the next step," says G.B.S. Raju, Chairman, Corporate and I…

Searching for the true Indian VCs – A LP’s Perspective

The following article, by Anand Sunderji, originally appeared in the latest quarterly India VC Report.

Recently, a well known venture fund announced their India plans. However, further information revealed that while the fund plans to be loyal to its venture capital strategy offshore, in India they would largely concentrate on growth capital. Needless to say, something about India makes traditional venture capital funds veer off their beaten path.

Several funds that look exclusively at venture capital deals outside India, have changed track when operating in India and have been dabbling in what would be called growth capital deals or even larger ticket transactions. “Venture” firms are now entering sectors as varied as manufacturing, hospitality and auto components. This was, however, not always the case.

The late 1990s witnessed a surge in venture capital activity in India. Venture capitalists largely looked to replicate the Silicon valley success stories on the Indian subcontinent. S…

The opportunity and economics of intergrated townships

Business Today has an article on the business and economics of integrated townships.
At present, there is no one format that is being adopted by developers, although the key drivers seem to be common: It is either mass housing requirements or demand for commercial space. Therefore, the townships promise to come in all shapes and sizes. The 390-acre Kolkata West International City in West Howrah primarily offers plotted development, while the Mahindra World City in Chennai offers both commercial and residential space (although dwelling units are yet to come up). In fact, Infosys Technologies, which has built a sprawling campus in the Mahindra special economic zone (SEZ), hopes to employ 35,000 people when the facility is fully occupied. Magarpatta City in Pune is built on 400 acres of agricultural land and offers the walk-to-work concept to its residents, and the Dankuni Township near Kolkata is expected to have one of the largest planned developments involving public-private partnershi…

Are spin-outs the way to go?

The following article, by N. Sriram, originally appeared in the latest quarterly India VC Report

On May 4, 2006, when all commercial activity in Bangalore came to a standstill thanks to a general strike (“bandh”), Rajiv Mody, Chairman and CEO of Sasken Communication, and Sudhir Sethi, Managing Partner of IDG Ventures India, met to discuss an innovative idea: is it possible to spot product areas where Sasken was not adequately realizing the potential and spin them out into a separate corporate entity?

Over the next six months, after considerable research and several meetings later, five areas were identified as worthy of spinning off from the Bangalore-based provider of embedded communications technology solutions. After some more filtering, machine-to-machine (M2M) communication emerged as the top contender segment that Sasken should spin out. Between November 2006 and April 2007, the business plan was firmed up, potential customers and markets were identified. The next step was to pi…

Update on the Indiabulls phenomenon

Business Today has a cover story on the 8-year-old company, which enjoys a market cap of over Rs.29,000 crores, is rapidly expanding into territories beyond its original domain of online broking.
"The consumer finance business is 10 times the size of broking. If corporate growth is expected at 15 per cent, financial services will grow at 30 per cent. And in the next 10 years we will grow 10 times in the consumer finance business from $3 billion to $30 billion (in market cap)," says Gehlaut, who after working with petroleum and energy giant Halliburton in the us came to India to start a mining and earth moving business. In October 1999, along with Rattan and Mittal, Gehlaut started Indiabulls after acquiring a Delhi brokerage.

...The real estate push also gives Indiabulls an opportunity to diversify into another sunrise sector, that of organised retailing. Here, the promoters are exploring formats like hypermarkets and multiplex-cum-mall, and are busy acquiring properties for…

Deal Alert: 3i invests $80 M in steel pipe co. Welspun Gujarat

Edited extracts from the 3i press release:

UK-headquartered 3i has invested US$80 million for a 6.6% stake in Welspun Gujarat Stahl Rohren Ltd (“Welspun”) through a purchase of secondary shares in the company. Welspun Gujarat is the flagship company of the Welspun Group, led by Mr. B.K. Goenka, and is listed on the Indian and Luxembourg Stock Exchanges.

The company is one of the world’s largest manufacturers of line pipes used by the oil & gas sector and is in the midst of executing an ambitious expansion plan including adding new capacity, backward integration into manufacture of plates and coils and establishing an overseas presence with a facility in the US. The company counts the world’s largest oil & gas companies, including Exxon Mobil, Chevron and Saudi Aramco, as its customers. Post completion of the Company’s expansion plans, it will have a total capacity of 1.75 million tonnes per annum, up from 1 million tonnes per annum currently.

Arun Natarajan is the Founder &…

Deal Alert: Havells to raise $110 M from Warburg Pincus

Edited extracts from the Warburg Pincus press release:

Electrical and power distribution equipment company Havells India has announced that Warburg Pincus is investing $110 million in the company. Havells will issue fresh shares and warrants to Warburg Pincus, representing approximately 11.2% of the fully diluted share capital of the company.

Earlier this year, Havells acquired Dutch-based SLI Sylvania's lighting business to enhance their global presence. Warburg Pincus’ investment will be utilised to partly retire the debt raised during the Sylvania acquisition, and in strengthening the company’s manufacturing capacity and distribution network to address the Indian market.

Arun Natarajan is the Founder & CEO of Venture Intelligence, the leading provider of information and networking services to the private equity and venture capital ecosystem in India. View free samples of Venture Intelligence newsletters and reports.

The Fabindia story

Business Today has an profile of Fabindia, a retailer of ethnic ware, which recently raised a round of Private Equity funding.
Fabindia is recasting its supply chain, setting up dozens of "supply-region companies" that will gradually take over its entire supply chain in a particular region; these companies will also offer shareholding to Fabindia's suppliers in line with the vision plan articulated by Managing Director William Bissell (40), who sees himself as a champion of free market in the NGO- and government-dominated handicrafts sector.

For a company that owns India's most successful and chic brand of handloom garments and handicrafts, that's only one of many exciting developments taking place-Fabindia has opened 37 stores in the last 18 months; sales have been growing at a CAGR of 40-50 per cent over the last three years; and margins are so attractive that investors are queuing up with their cheque books.

Bissell, who is married to an Indian, says Fabindia'…

Are REITs the right way?

A Businessworld article discusses how real estate companies like DLF and Unitech are raising money via REIT listings overseas and raises questions on whether such issues are fair to their domestic shareholders.
For instance, the promoters of DLF, India’s largest private land bank owner, have filed a prospectus for floating a REIT in Singapore. DLF Asset (DAL), their offshore entity, has already acquired assets of 5.3 million sq. ft of commercial office space from DLF, the publicly-listed Indian firm. An additional 6 million sq. ft will be sold to DAL at regular intervals over the next couple of years. It is 1.8 per cent of DLF’s total land bank of roughly 615 million sq. ft. “Singapore’s investors have a great penchant for REITs,” says Saurabh Chawla, vice-president of finance and investor relations at DLF. “In addition, Singapore is a great place for pan-Asia property deals.”

...Once its REIT gets listed on the Singapore exchange, there will be a public valuation of the 5.3 million sq…

Crush on Cross-Border Continues

Here is the full text of my article for the Economic Times-Corporate Dossier (issued dated October 19, 2007)

Despite the liquidity crunch in the US and Europe, Indian companies are stepping on the accelerator when it comes to acquiring overseas companies. Indian companies have closed over 60 outbound acquisitions worth over $4 billion during the latest quarter – i.e., amidst the “sub-prime crisis”. These included 15 deals that cost over $50 million and six that with tags of over $200 million!

Click Here for a table on top outbound acquisitions during the latest quarter.

So, why the hurry? One answer is the opportunity presented by the near absence of competition from LBO (Leveraged Buyout) firms. With lenders turning off the taps for cheap debt, LBO firms are no longer able to outbid strategic buyers with ease. This could be prompting the strategy and M&A heads at Indian companies to think what’s a few basis points here and there when the lack of alternative buyers can shave off a f…