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Showing posts from July, 2007

VC Market

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

07-07-25-1: Mumbai-based entrepreneur seek <$1 M for marketing award-winning Hindi feature film to be released in September at selected metros across India.

07-07-25-2: Kangra, HP-based company which has won 3 mini hydro power projects in Himachal Pradesh seeks $1-5 M.

07-07-25-3: Mathura, UP-based company seeks $5-M for expanding play school chain.

07-07-25-4: Noida, UP-based software company specializing in Web & Multimedia development seeks <$1000,000

07-07-25-5: Chennai-based provider of cereal and milk vending machines to IT companies seeks $1-5 M. Has already installed 80 machines with daily cuppage of 12,000.

For more information about any of these companies, investors - who are subscribers to the Venture Intelligence service - can email the company code to vcmarket@ventureintelligence.in. To learn about our subscription services for investors, please visit our web site.

Are you an e…

Profile of CVC India

Economic Times has a profile of Citigroup PE's India head Ajay Relan and the firm's recent investments.
A majority of the 25 companies in its portfolio are small cap firms that are not based in the Mumbai, Delhi or other large industrial clusters. Last December, in a PE variant of the bottom-of-the-pyramid strategy, Relan invested $25 million investment in KS Oils, a mustard and rapeseed oil manufacturer based out of Morena in Madhya Pradesh.

...Having worked alongside the likes of Bill Comfort, the former chairman of CVCI and a Citigroup legend, Relan says he benefitted from watching the best in action. “The most important lessons of the PE business that I learnt from watching him was to be patient, and keep a relentless focus on good management,” he says.

Despite CVCI’s successes, Relan laments the fact that he missed the telecom bus in India. “In the late 1990s and early 2000s you needed something like $300 million to play alongside the Sunil Mittals. We never had that kind …

Valuation Expectations in VC rounds – Unwilling Seller, Unwilling Buyer

In this exclusive article that appeared in the July issue of the US-IVCA/Venture Intelligence India VC report, Rahul Chandra and Ashish Gupta of Helion Ventures, reflect on the valuation-related conundrums challenging VC investments in India.

Valuation! One single metric that both Founders and VCs try to optimize yet whose derivation remains more art than science. While the importance of valuation cannot be discounted (ask a VC after he is invested and a founder anytime) a market driven approach to seek valuation level can ensure a faster track to fund raising, a holistic setting of investment terms and greater discipline in business execution.

VC investments are on the rise since early 2006. In the absence of complete and accurate data, it is hard to conclusively say how valuations have trended with this increase in number of deals done. Let’s look at the four key approaches to valuation: valuing present value of cash flows, accounting value of business, using real options and the la…

Why serviced apartments aren't finding takers

Business Today's article on serviced apartments posits that their costs need to come down significantly in order to compete with hotels.
Consider the Taj Wellington Mews in Mumbai where a two-bedroom unit could cost between Rs 6,50,000 and Rs 7,25,000 per month, a three-bedroom between Rs 7,85,000-8,25,000 per month and a four-bedroom, Rs 25,00,000 per month-all rates exclusive of the 10 per cent applicable tax. Things at the Lakeside Chalet Marriott Executive Apartments in Powai are no better-depending on the length of stay and the type of apartment, you could end up coughing up $220-420 (Rs 9,020-17,220) per night. And that, of course, does not include any captive services you might avail of-laundry, telephone and restaurants. So then, if you are paying the price of a five-star deluxe hotel, why not stay in a full-service hotel? Especially when, as Chidara says, you cannot make the slightest change in the décor of the apartment, which in any case intimidates his friends and relat…

"Room With A Queue"

Business Today has an article on the boom - and the associated risks - in the hotel industry. It includes a box on the rising number of PE investments in the industry.
The demand-supply mismatch of hotel rooms is so acute that even the stand-alone, mom-n-pop hotels are quoting room tariffs that are 40 to 50 per cent of five star rates. That probably explains the announcements of $10 billion in investments over the next five to 10 years, with $3 billion expected to materialise over the next four years. The capacity addition: 70,000 rooms across all categories. That's an incredible number compared to the scenario even two years ago. Back in 2005, the foreign direct investment (FDI) in hospitality was 1 per cent of the $10.3 billion that flowed in. However, the hardening of interest rates since the time most of these announcements were made may prompt a rethink on the size of investment.

The segments that most of the investors seem to be interested in are budget and mid-market. The rea…

Does the "green label" sell in India?

Businessworld has an article on the rising trend of marketing products using "eco-friendly" tags.
The perception that green makes business sense is gaining ground even in India. Energy-saving lights, organic foods, recycled bags and accessories, eco-tourism and environment-friendly residential complexes — consumers are being nudged into buying a diverse array of products that are good for them and for the environment.

Companies are being helped along by two factors. First: rising levels of disposable income in urban centres. And second, a greater understanding of the Indian green consumer. It is clear to most that the green Indian takes time to evolve into the green consumer. Transition depends on the three Cs: convenience, cost and concern for the environment. Companies are drawing up innovative marketing and awareness strategies around these major influencers to hasten the makeover.

...The truth is that cost and convenience do play a large role in the decision-making process…

Who is BharatStudent.com?

Who is behind BharatStudent, the latest social networking company on the scene that is rivaling some of the online travel sites in ad spending? According to the site, BharatStudent is owned by "Axill Europe Ltd, a 400 million dollar company focused on Internet, the media transcending the digital boundaries of the Globe". Impressive collections of words indeed; but what exactly is Axill Europe? Well, a bit more web searching reveals that this company is a part of Hyderabad-based, publicly-listed Northgate Technologies. (Stock details here.)

Northgate, which had raised funding from a group of FIIs including Merrill Lynch in 2005, also runs other Internet-linked businesses like Globe7 (a video ads-supported Internet telephony services), Axill (an Online Advertising Exchange) and a "server farm".

So, the next time you see another Internet-property springing up with an orange ribbon as part of the logo, you need not mistake it - like I did - for being a part of the Bhara…

Profile of Sun Pharma CMD Dilip Shanghvi

Economic Times has a profile of Dilip Shanghvi, Chairman and MD of Sun Pharmaceuticals, which is close to acquiring majority control of Israel-based Taro Pharmaceuticals.
At 37% of net sales, Dr. Reddy’s Lab’s operating margin in 2006-07 comes closest to Sun’s 44%. Cipla is at about third of that, and Ranbaxy’s is even lower. Ranbaxy, Cipla and Dr Reddy’s are often mentioned in the same breath as pioneers of India’s pharma revolution and while they deserve the accolades, Sun Pharma’s performance has been equally praiseworthy.

...In acquisitions, a very similar philosophy has been played out. Ranbaxy, Dr Reddy’s are often perceived to be aggressive in buyouts. Sun has also been active though it has managed to maintain a low profile. In the past 10 years, it has bought out several domestic and overseas companies. But the purchases have also been carefully calibrated and designed to secure the maximum possible at the lowest possible price.

“We wait for the right buy at the right price,” sa…

Audio interview with Avnish Bajaj of Matrix Partners India

Indicast has an interesting podcast interview with Avnish Bajaj of Matrix Partners India where he talks about his career, the Baazee.com story and current VC scene in India.

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.

VC Market

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

07-07-18-1: Chennai-based doctor seeks $1-5 M for a patent pending treatment for heart disease.

07-07-18-2: Bangalore-based consulting company offering Building Automation, Energy Management and related services requires <$100,000

07-07-18-3: Secunderabad-based entrepreneur seeks $1-5 M to launch niche Pay TV channel targeting global South Indian viewers.

07-07-18-4: Pathankot-based chemical firm - which extracts therapeutic phytochemicals from herbs - seeks <$1-M.

07-07-18-5: New Delhi-based entrepreneur seeks $1-5 M for developing retail supply chain management software.

For more information about any of these companies, investors - who are subscribers to the Venture Intelligence service - can email the company code to vcmarket@ventureintelligence.in. To learn about our subscription services for investors, please visit our web site.

Are you an entrepreneur seeking capital? List your company in…

VC Market

The following companies are seeking capital for starting-up / expanding their operations:
07-07-11-1: UK-headquartered travel agency focused with back offices and sales offices in India seeks expansion capital of $1-5 M. Revenues of $ 2-M, GP 13%. Markets: Middle East, India, North America. Products: Hotels, Apartments, City Tours, Airport Transfers.

07-07-11-2: Israel-based company with seeks about $1 M in seed funding for India-focused Youth Portal with Web 2.0 features.

07-07-11-3: Chennai-based entrepreneurs seeks $1-5 M for a BFSI-focused competitive intelligence product.

07-07-11-4: Amritsar-based exporter of houseware products seeks <$100,000 to launch fusion series of stainless steel and Bone China in the European and Indian markets.

07-07-11-5: Mumbai-based online retailer of mobile phones seeks <$100,000 including via M&A option.


For more information about any of these companies, investors - who are subscribers to the Venture Intelligence service - can email the company …

K@W's audio interview with Remi Hinduja and Sashi Reddi

Knowledge@Wharton has an
audio interview with Ramkrishan (Remi) Hinduja, Chairman of BPO firm HTMT Global Solutions, together with Sashi P. Reddi, CEO of software testing firm Applabs Technologies. I especially liked the point where Hinduja explains why and how HTMT uses centers in multiple countries to service its clients.

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.

Losing money on radio

Business Standard Weekend has an article on how the challenges of making money in the FM radio business.
The estimates of how much a radio company pays PPL (Phonographic Performance Limited), the body that represents the interests of the music companies, vary from 20 per cent to 40 per cent share of its revenue. Complains Rahul Gupta, director, Radio Mantra, owned by Dainik Jagran’s Shri Puran Multimedia, “Content for radio is limited to music and the music industry’s demands are astonishingly high, not even remotely in line with global standards.” The international benchmark on revenue share between music owners and radio stations is between 2 per cent and 4 per cent, he claims. That is not all. Even as radio stations crop up in class C and D towns, PPL is not offering differential pricing for the music.

...After royalties (T-Series and Yash Raj Music negotiate separately since they are not part of PPL), the next major cost is human resource, marketing and branding. “The number of stat…

Profile of "world's first live action video gaming" venture

Businessworld has a profile of US-based Pranay Chulet and his soon-to-be-released interactive video-based software game.
Everything in Latent Lava — the protagonists, actions, locations, accessories — is real, and not computer-generated graphical images. Except, of course, the bullets and the blood. It’s like a movie whose story flow is in your hands, and in which you play the invisible supercop. If you’re still wondering how you can control the actions of real actors, here’s how.

Let’s say you come upon a terrorist and think of five things that you (or the vigilante in the game) could do. Chances are Chulet has foreseen those five possibilities and shot each of those actions with his actors. What if he has thought of only four? Simple. You only get four choices. So, each scene and stage of the game has been shot with several different actions that its originator thinks you could take, and the story line moves based on your decisions.

...Zobyx, the Madison Avenue, New York City-based com…

Do Indian pharma cos. suffer from overseas shopping addiction?

Economic Times' Corporate Dossier supplement has a two-part article - here and here - on the voracious appetite Indian pharmaceutical companies have developed for buying overseas assets.
In an industry where size and wide geographic presence is critical, Indian companies are going for bigger targets using their expanded operating cashflow. Just to give you an idea of what they are up against in the generics business , Teva, the largest generic drug company with revenues of $8.4 billion, is nearly six times the size of the India’s biggest pharma company Ranbaxy. “An acquisition-led strategy always comes with the risk of overpaying for assets, and the challenge of integrating the two merging entities,” says a pharma analyst with an international broking house.

..."The market is getting crowded, but show me an asset that comes cheap today . I see no point in hanging on to numbers like valuation and letting them dictate business. It all boils down to how you build value with the a…

Bartronics ventures into smart cards

Business Today has an article on how and why the erstwhile barcoding specialist, Hyderabad-based Bartronics, is now venturing into smart card manufacturing.
The idea of smart cards originated 18 months ago, courtesy Frost & Sullivan, which Bartronics commissioned to survey the market. Rao quotes a study by the consultants, which pegs the demand for smart cards at over 150 million units (in India) in 2007, and describes it as a space that is growing at a cumulative average rate of around 45 per cent. In India, much of this demand is coming from the telecom and banking sectors. "We intend to first break into the Indian SIM card market and dominate there as currently there is no domestic player here; this market itself is today valued at around Rs 100 crore annually," says Rao. He adds that in the next couple of years demand from the banking sector would pick up as banks begin to switch from the current magnetic tape cards to smart cards given the approaching Visa/Mastercard…

Serial Entrepreneurs-in-the-making

Business Today has a cover story on how Indian entrepreneurs who have cashed in on their first ventures - often by selling out to MNCs - are taking the plunge again. The list includes Rajeev Chandrasekhar (who earlier founded and sold BPL Mobile), Tushar Jani (Blue Dart Express), Atul Shah (Anchor Electricals), Yunus Bilakhia (Micro Inks), Narottam Sekhsaria (Gujarat Ambuja Cement), etc.
So what exactly are these opportunities that India's new breed of "Alterpreneurs" has sniffed out? They're indeed diverse, although transforming into a private equity pasha seeking out investment-worthy targets clearly appears the favourite avatar. A few prefer the hurly-burly, high-returns universe of financial services, which includes non-banking finance companies and mutual funds. Of course, there are those who quite simply prefer to pump the loot directly into the equity markets, into stocks with promise. Real estate, and allied ventures like special economic zones and infotech pa…

VC Market

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

07-07-04-1: Bangalore-based event management, stage production and artiste management company seeks $1-5 M including via M&A/Joint Venture Route.

07-07-04-2: Thane-based fruits processing firm seeks <$1 M

07-07-04-3: Coimbatore-based System Integrator seeks M&A/Joint Venture.

07-07-04-4: Bhubaneswar-based IT Services & BPO company seeks $1-5 M.

07-05-27-5: Chennai-based software services firm seeks investment expansion and developing new ERP product.

For more information about any of these companies, investors - who are subscribers to the Venture Intelligence service - can email the company code to vcmarket@ventureintelligence.in. To learn about our subscription services for investors, please visit our web site.

Are you an entrepreneur seeking capital? List your company in the Venture Intelligence VC Market using the form here

Update: IT Services & BPO Connect; July 12, Bangalore

Highly successful entrepreneurs and angel investors including N. S. Raghavan of Nadathur Holdings (and co-founder of Infosys), Dr. Prakash Mutalik of RelQ (which was acquired recently by EDS), Rajiv Mody of Sasken (a successful publicly-listed company) and K. Ganesh of TutorVista (who earlier co-founded BPO firm CustomerAsset and angel invested in KPO firm Marketics) share their Entrepreneurial Experiences and their Perspectives on the Future of the IT Services and BPO sectors

Other speakers include top executives from Applabs, Aspire Systems, Canaan Partners, Ernst & Young, IDG Ventures India, KPIT Cummins, KPMG, Langham Capital, Microland, MindTree, Nipuna, PharmARC, QuEST, Scope eKnowledge and Veda Corporate Advisors.

Network with successful entrepreneurs and top investors at this unique conference and get answers to key questions like:

Is scale all important?
How can SMEs survive and thrive in these sectors?
Can KPOs ever IPO?
Where are the new opportunities in IT Services?

Blooming of tourism entrepreneurs

Business Today has an article profiling entrepreneurs who are setting up innovative tourism-related businesses.

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.

Profile of home textiles co. Sabare International

Businessworld has a profile of this Karur-based home textile firm which is backed by Kotak PE.
Things changed for Sabare in 2001 after retailers started dealing with the exporters directly. “We started exporting to the US from 1997 and it was only then I hit upon this idea of setting up bases outside India. This allowed us to think big and take bold risks,” he explains.

Direct sourcing by retailers helped Susindran come up with new strategies for the company such as setting up manufacturing centres outside India, which reduced shipping costs and helped Sabare operate closely with the retailers till the product was sold.

In fact, the new strategy has worked well for the company, improving margins by 5 per cent for retailers, prompting them to place more orders. This has also helped Sabare register in a staggering CAGR of 111.1 per cent as compared to 37.7 per cent of Gujarat-based Welspun India and 16.02 per cent of Mumbai-based Alok Industries in 2005-06.
Arun Natarajan is the Founder &a…

With Subex's acquisition-led growth endure?

Businessworld has an article pointing out the achievements and challenges facing Bangalore-based telecom software firm Subex which has specialized in growing through acquisitions.
After acquiring the firm, it immediately attacks costs by shifting software development and marketing operations to India, and by reducing the foreign sales force. Operational costs are slashed by as much as 40 per cent. “The whole valuation is dependent on this fact, because I know that I will make profits from the third month itself,” says Menon. According to him, Azure, which lost $10 million (Rs 41 crore) in 2005-06, was turned around in a quarter; the merged entity, Subex Azure, made profits of $15.32 million (Rs 67.5 crore) in 2006-07. Industry analysts are fairly satisfied with Azure’s integration but have cautioned a wait and watch approach on Syndesis.

...In the past, Subex used a combination of internal accruals, debt and equity to fund buy-outs. But that ran into problems with the Azure Solutions a…