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Bajaj FinServ's bet on consumer finance

Business Standard has an article on the topic.
Where Bajaj Finance hopes to make the real difference is in service: It wants to disburse loans faster than its peers, allow customers to pre-pay loans from their desktops and return documents on loans against property in less than five days — an industry record. Of course, customers have round-the-clock access to its call centres.

The plan seems to be working. “The company is now stimulating demand for 8 to 10 per cent of LCD televisions sold in the country every month, a reflection of the strategy to pursue affluent customers,” says Jain. The loan book grew to Rs 3,500 crore at the end of September 2009 from Rs 2,500 crore a year ago. While it’s hard to look too far ahead, Jain is hoping to grow the book by 30 to 40 per cent over the next 18 to 24 months. Though provisions might depress profits in the current year, the business should become more profitable from next year onwards as costs come off their peak and spreads improve in a bette…

Gujarati snack maker who cocks a snook at Pepsi

The Economic Times has a profile of Gujarat-based snack maker Balaji Wafers which controls 70-90% of the state's Rs.600 crore market for wafers and namkeen leaving Pepsi-Frito Lays and North Indian snack giant Haldirams far behind.
Indeed, Balaji products like Chataka Pataka, Ratlami Sev and Sing Bhujiya, among others, suit the tastes of a specific market. The company offers masala wafers to cater to the Gujarati palate, chaat masala for the Maharashtra market and a range of spicy snacks for Rajasthan. Here, it scores over Haldiram’s, which too has flavours to cater to the North Indian palate, by a better understanding of the Gujarati consumer. Balaji’s pampers the Gujarati’s sweet tooth by keeping its khatta-meetha less spicy.

...Balaji MD Chandu Virani says volumes help him offer such prices. The pricing plan drove PepsiCo’s Kurkure down the same path, he says, adding that his rivals had to offer similar schemes to retain consumers. This strategy of marrying price, flavour and di…

Forbes India profile of security services company Topsgrup

Extract from the profile
“We want to become the Shah Rukh Khan and Narayana Murthy of the security industry — humble, accessible and down to earth. And our aim is also to do $10 billion in revenue by the year 2020,” says (Diwan Rahul Nanda, Chairman of Topsgrup).

...Acquisitions are the standard operating procedure for most large security companies going global. Because security is a very local, relationship-led business, customers are loathe to entrust their security to a new entrant. Acquiring a local security provider is often the only way to expand into other countries.

Secondly, large multinational corporations prefer to give consolidated contracts spread across multiple countries. This helps them standardise vendor and contract management as well as drive down costs by dangling the volumes carrot before vendors. Therefore an India-only Topsgrup was unable to even bid for large security contracts of MNCs in India.
Arun Natarajan is the Founder & CEO of Venture Intelligence, the l…

Debt-and-equity structure to encourage angel investments

Entrepreneur turned angel-cum-venture investor Alok Mittal has proposed a new funding structure that will help catalyze more angel investments. The framework aims to ensure that the angel investor receives an equity upside if the venture becomes highly scalable; if, however, it turns out to be "only" a "lifestyle" business (i.e., not scalable enough to generate an great exit for the equity investors, but nevertheless generates good cashflows), the investor would receive a good rate of interest for his risk.

You can view Alok's proposed framework and the discussions around the various likely scenarios as part of his post on the VentureWoods blog.

Arun Natarajan is the Founder & CEO of Venture Intelligence, the leading provider of data and analysis on private equity, venture capital and M&A deals in India. View free samples of Venture Intelligence newsletters and reports. Email the author at arun@ventureintelligence.in

Forbes India profile of Opto Circuits

Forbes India has a profile of Opto Circuits, probably the only pure play listed medical devices company in the country. The company's stock incidentally has appreciated 10 times since January 2005.
Until now, Ramnani has made his living, mostly by selling “non-invasive” medical devices like electronic patient monitors and medical sensors. But it is Opto’s “invasive” product line, stuff like stents and balloons that go into patient’s bodies, which holds significant promise.

...The second reason Ramnani is where he is, is because he made some smart acquisitions. Apart from EuroCor in the invasive medical devices category, Opto acquired Bangalore-based companies Devon and Ormed. In the non-invasive category, which is where Opto started, Ramnani acquired Hindustan Lever’s digital thermometer division, the patient monitoring business at US-based Palco Labs in 2002 and Bangalore-based Altron Industries. In 2008 he acquired US-based maker and distributor of patient monitoring devices, Crit…

Will Metahelix Bt Cotton plan succeed?

Forbes India has an article on how the VC-backed agri-biotech company is taking on the big daddy of the Bt Cotton space (Monsanto).
Sometimes in the midst of all these technologies we forget that farmers don’t grow cotton to kill pests, but to get a better yield,” says Narayanan. If Metahelix can engineer a hybrid that can grow faster, utilise nutrient-s more effectively or produce a better yield, that might be its differentiator. This opinion is shared by Suman Sahai, convener of rural advocacy group Gene Campaign. “The success of Bt. cotton in India owes as much to the hybrids developed by Rasi and Nuziveedu, as to Monsanto’s technology. In fact, Mahyco Monsanto Biotech (MMB)’s initial seeds which were the first to get government approval were spectacular failures,” she says.

...when it goes to the market next year, its strategy will be two-pronged: Convince farmers using Bollgard-1 cotton (the first generation of Bt. seeds) to upgrade to Metahelix’s seed which offers added protection…

HomeShop18's deal with Korean firm

TV18 Group's television and online retailing venture HomeShop18 recently sold a 15% stake to GS Home Shopping, a Korean retailer. In this context, Businessworld has an interview with Tae Soo Huh, president, GS Home Shopping (earlier called LG home shopping), Raghav Bahl, founding-promoter and MD of Network18 and Sundeep Malhotra, CEO of HomeShop18.
You launched in April 2008 with a bang, but the business does not seem to have gained much traction...
Sundeep Malhotra: We started when there was a lot of scepticism because of the poor response to teleshopping. But HomeShop18 is not teleshopping. Initially, we had little domain knowledge about the market, and we did not know whether to focus on the metros, or the tier-II and III cities. Today, we are doing a sale every eight seconds with sales of Rs 1 crore a day. We are serving 2,750 towns and cities with 20,000 products and 600 employees.

Raghav Bahl: In the first year, with a commission-on-sales of 23.5 per cent, we made a net income…

"Capvent keen to seed mid-market PE teams in India"

Varun Sood of Capvent

At a time when the fund-raising environment for Private Equity and Venture Capital funds is difficult across the world even for established groups, Europe- and India-headquartered investment house Capvent is actively scouting for opportunities to invest into India-dedicated PE/VC funds. In an interview to Venture Intelligence, Capvent Co-founder & Managing Partner Varun Sood said the firm was even keen to make seed investments into first-time funds. "We like to be contrarian in our approach," Sood said. "As a house, we are very focused on first- and second-time funds."

Founded in 2000, Capvent invests in the private equity asset class globally with a special focus on Europe, USA, India and China. It has 19 investment professionals in India across its offices in Bangalore and Mumbai, which are headed by Sood and fellow Managing Partner Rohan Ajila. Outside of India, Capvent has offices in Zurich and New York. The firm currently has investment…

Deal Alert: HSBC PE, existing investors invest Rs.70-Cr in FINO

Edited extracts from the Press Release:

HSBC Private Equity and existing shareholders Intel Capital and IFC have invested Rs. 70 crores into Financial Information Network and Operations (FINO), a company that provides technology solutions to financial services firms operating in rural areas. As part of the deal, HSBC PE and Intel Capital have purchased the entire stake held by existing investor Legatum Ventures. Avendus Capital was the exclusive financial advisor for the transaction.

James Savage, Investment Director of HPEA in Hong Kong said, “FINO is a market leader and pioneer in providing technology solutions to financial institutions for reaching out to the under-served and unbanked sector in India. With more than 135 million households unbanked, the market has potential for exponential growth. We believe that FINO is well positioned to benefit from this opportunity.”

Alok Gupta, Investment Director of HSBC Private Equity Advisors (India) Limited in Mumbai said, “Financial Inclusi…

Securitization Enters Microfinance

Nachiket Mor of ICICI Foundation has triggered an interesting discussion via a blog post (on Ajay Shah's blog) on the importance of securitization for microfinance companies.
Over the years, the demand for funds in the microfinance industry has outpaced the growth in investment by banks. In addition, banks are not the ideal place for these assets, given the nature of cashflows and maturity of micro loans. Hence, even though MFI assets are part of priority sector lending, the excessive focus on bank capital has effectively raised the cost of capital for MFIs. The upstream funding for microfinance needs to be diversified to harness a diverse array of borrowers, so as to avoid the constraints and unique compulsions of any one source. However, at present in India, MFIs are not permitted to mobilise deposits, or borrow from international lenders, or from MIVs (Microfinance Investment Vehicles).

The ideal financing channel for them, in this environment, is securitization. Through securiti…

"Sushil ji or Hi Sushil?"

In an article for The Economic Times, Jaspal Singh Sabharwal of Future Capital, provides some interesting views on how Private Equity firms can deal better with promoters of Indian SMEs.

On why SMEs?
In India, if you want to invest in a cricketer, go to the Ranji trophy venue (equivalent of junior league in football). Stop chasing the established international players because they are just too expensive and you won’t be able to influence the outcome. Imagine if you had put in your money on Sachin 20 years ago.
On PE-SME AlliancesA successful PE-SME alliance calls for very high degree of caution and due-diligence. First thing first - companies should get into PE alliances only when they need to, when going it alone will take too long or cost too much or when one is seeking very specific capabilities. Too many PE alliances are built on the assumption that a good business case will compensate for differences in values, style or culture. A good business case is not really good until the sof…

What went wrong at Champagne Indage?

A Forbes India article on the big troubles at listed wine maker Champagne Indage pins the blame on foreign acquisitions made by the company.
In June, Chougule admitted that sales volumes had fallen 60 percent since September 2008. Its stock price has crashed from Rs. 853 in November 2007 to Rs. 55 now. The company has stopped supplying to hotels. Salaries at the company have been delayed and on September 1 this year, 250 of the company’s 450 employees resigned en masse, underlining their disgust for a company that had not paid them since November 2008.

...Indage relied heavily on foreign currency loans for foreign acquisitions. A former employee in senior management at Indage said that 40 percent of its current debt is in foreign currency.

...Can Indage come back? The Chougule family recently pledged almost 98 percent of its 25.42 percent stake in the firm, proving it doesn’t think the show is over. On June 10, Indage announced its board had approved a plan to raise Rs. 2 billion ($42 m…

Deal Alert: Motilal Oswal PE to invest Rs.40-Cr in Power Mech Projects

Edited extracts from the Press Release:

Motilal Oswal Private Equity (MOPE), via its India Business Excellence Fund, is to invest Rs. 40 crores in Power Mech Projects. Religare Capital Markets acted as the exclusive financial advisors to Power Mech for the deal.

Started in 1999, Power Mech is a leading player in the erection, testing and commissioning of Boilers, Turbines and Generators (“BTG”) for thermal and gas based power plants and has been making strong foothold in the overhauling and maintenance of these power plants. Its revenues and profits have grown by 80% and 133% CAGR respectively over the last four years marked by strong unexecuted order book of Rs.15000 mn.

According to S.Kishore Babu, Chairman & Managing Director of Power Mech, the company would be investing around Rs 40 Crores over the next 1-2 years towards building own equipment bank for increased mechanization in the process of erection & commissioning and flexibility in the system to fast track the mobilizati…

Why is NDTV exiting its entertainment channels?

Businessworld has an article on NDTV which recently sold a majority stake in NDTV GoodTimes to Scripps Networks and sold a 76% stake in NDTV Imagine to Turner Broadcasting.
Two years ago, NDTV decided to go beyond news and launch a slew of entertainment and luxury channels. The aim was to bring in higher revenues, and help the company turn the corner. But now, NDTV is set to exit entertainment to save what it knows best — news operations.

...While the split with Star helped NDTV ramp up to a multi-channel broadcaster, its financial performance dived. Except for FY2005, when NDTV made a profit after tax of Rs 29.2 crore on a turnover of Rs 152.9 crore, it has been steady downhill since. For FY2006, the company’s net loss was Rs 6.25 crore, Rs 14.5 crore in FY2007 and Rs 189 crore in FY2008 (see ‘Burning Cash’). In FY2009, it booked a net profit of almost Rs 120 crore on the basis of the Rs 643-crore stake sale to NBC Universal. In fact, the operating loss was a humongous Rs 520 crore on…

Will the latest attempt at "Stock Exchange for SMEs" take off?

Economic Times has a feature on the prospects and challenges of SEBI's recent decision to create a separate stock exchange platform for Small- and Medium-sized Enterprises (SMEs).
Ashish Gokhale, VP, capital markets at Edelweiss Capital believes that merchant bankers will come in depending on the company and its credentials.Edelweiss usually considers an issue size over the Rs 20 crore mark. But he does not completely rule out smaller issues. “The effort will surely be lesser in this case. And unlike large issues, since one issue can be managed by a single merchant banker, we might be able to work out the economics,” says Gokhale.

Bang adds that a number of new investment bankers are getting into merchant banking and will be setting up separate divisions for handling SMEs. “The need for adhering to Clause 49 (appointment of independent directors) could be a big impediment too as most SMEs businesses are family-owned or proprietor owned with old processes and systems,” he says...But …

The changing face of Nadathur Investments

Forbes India has a profile of Nadathur Investments, the decade-old investment firm started by Infosys co-founder N.S.Raghavan.
Raghavan’s two sons – Sriram Nadathur, 37, and Anand Nadathur, 35 – both left their careers in the US (Sriram in 2003, Anand in 2000) at their father’s calling, to join Nadathur Investments. Their plans include creating new entities and reshaping older ones. They are changing the way Nadathur Investments works. They have formed a separate entity Ojas Ventures that will invest in pure information technology investments and will work as a professional venture capital firm.

...Further, the new Nadathur Investments that will become a creator of synergistic ecosystems. Such firms used to be called incubators in the past. Nadathur will have mostly lifesciences and healthcare investments. “Anand and Sriram are literally becoming owners instead of investors. They are building physical assets for the group much like what Tatas did a 100 years back,” says Nitin Deshmukh, …

Publishing industry on an upswing

Businessworld has an article on how the Indian English-language publishing industry is on an upswing.
The Indian publishing industry was once a midget on the global stage. Most authors were considered lucky if they racked up sales of 3,000, and a book was declared a bestseller if it hit 10,000. But a new page is being turned. The industry is turning into a force to be reckoned with. The four or five biggest players are bringing out larger numbers of books, and even novice authors are selling in bigger numbers.

...Fuelling the growth of publishing are the chain stores such as Crossword, Odyssey and Landmark, and even Reliance’s new chain, Time Out. They are all on expansion drives, defying even the economic slowdown that gripped the industry between September 2008 and this July.

...Nandan Nilekani’s Imagining India sold about 50,000 copies, and was the star performer of 2008 for Penguin India. This year, the Infosys tag has again proved a winner, with the company’s chief mentor N.R. Naray…

Why LinkedIn's founder joined Greylock

The Deal has an interview with Reid Hoffman on why he signed up as a partner with the Silicon Valley VC firm, rather .

We both believe that the key thing is the entrepreneur. The entrepreneur is the person who is massively driving the business. The venture firm's role is to be a really good partner -- not a softie that's asleep in the back seat, but someone who is fundamentally collaborating on the business, asking the hard questions and working with you on solving problems. The expectation is that the relationship will last for the next 20 years, and so you have to be up-front and transparent. When there are conflicts, you have to work through them to provide a basis for a decades-long relationship. When we tackle problems, David will clearly identify where Greylock's interests are and where the startup's are. He puts it on the table and doesn't try to persuade you that Greylock's interest is necessarily the same as the company's.

Arun Natarajan is the Found…

Indian Medical Devices Cos making a mark

Economic Times has an article on how Indian medical devices companies have started to make a mark on the global market.
The US produces half of the world's medical devices and consumes approximately 40 % of the world's output. Indian manufacturers have leveraged their cost advantage to offer world-class quality at affordable prices. Opto, for instance, makes most of its monitors and sensors at its Indian facilities in Bangalore, Vizag, Chennai and Himachal Pradesh where production costs are lower. It also pays zero taxes due to its EOU status.

Imports of medical equipment and supplies by India were valued at around $12 billion in 2007. “This can be significantly reduced when domestic products are used,” says Puri, whose company plans to make Rs 150 crore by next year.

However, at present, most of them are looking to capture the lucrative markets in western Europe and the US...Here, Indian companies took the inorganic route. Opto acquired EuroCor, a company with proprietary tech…

Business Today profile of Financial Technologies

Business Today has a profile of Financial Technologies, which has recently set up a stock exchange, after making a mark with its commodities exchange MCX.
(Jignesh) Shah’s vision—as he sees it, arguably a bit grandiosely—is to become the Toyota or Sony or Microsoft of the financial ecosystem. Shah wants to make FT an international name by doing what Toyota, Sony and Microsoft have done: Provide the best products at attractive prices.

...Even through its stock exchange venture, FT plans to reach out to farflung areas. The plan is to take the battle to the leader, National Stock Exchange (NSE). The NSE had operating profit margins of almost 75 per cent and a net profit margin of 50 per cent for the year ended March 2008 (which is the latest data available).

Analysts say if the MCX Stock Exchange is able to cut charges by half, it will still make money even as it eats into the NSE’s share. Another plan for the equity exchange is to have an exchange for the SME segment. “Our plan is to add b…

Rising Opportunities thrown up by Online Testing

Businessworld has an article on the topic:
To overcome this (question paper leakages), many organisations are switching over from pen and paper to computer-based testing (CBT). According to a CLSA Asia Pacific Markets 2008 report on the education sector, the market for CBT, valued at $150 million (Rs 735 crore), is expected to grow to $750 million (Rs 3,675 crore) by 2012 in India.

As awareness levels grow, a rising number of service providers are entering the field — from established players such as Bangalore-based firm Eduquity, Aptech’s Attest and MeritTrac to new giants such as Pearson Vue and Prometric. “Keeping everything tamper-proof and safe is the most important component of testing,” says Uday Kulkarni, executive vice-president of Aptech and national head of the company’s testing arm, Attest.

At present, only a small percentage of combined entrance tests after senior secondary are computer-based, but the numbers are set to go up massively with the government’s increased focus …

Shakeout in Indian PE imminent?

As part of his newly launched blog, PE industry professional Varadharajan has a post on the reasons why:

Lack of focus/segmentation: I am yet to see more than 6-8 funds that pridethemselves on their focus - geography, verticals or deal types (venture, growth, buy-out, restructuring). Everyone's favourite sector seems education, healthcare and all else where India's per capita consumption is woeful. Where are the proprietary deal flows, where is the ability to construct a deal (and not study an IM for its pros and cons), where is the network of relationships ?

Impending battle for exits: This is going to be fun to watch. All the excesses from 2007 and 2008 have resulted in PE invested companies being valued at astronomical valuations (favourite whipping boys being retail, education, aviation where there is no evident route to a profitable scale-up with the exception of a honourable few). Case in point, a company that was invested into by a PE fund was valued at Rs. X in Jan '…

IIM-A announces Business Plan Showcase

IIMA is organizing a Business Plan Showcase as part of its Finance Conclave 2010.

Entrepreneurs from following sectors are invited to submit their entries:
Clean Tech & Renewable Energy Telecommunications and Mobile Services E-commerce & Web Portals Electronics IT/ITES Services IT Software PowerRegistrations for the Showcase
Registrations start on the 10th November 2009. To register your team, please send a mail to leverage@iimahd.ernet.in with the following details: Name of Team Members Contact Details Category of the Business PlanPlease use the following as the subject line: "Showcase 2010: Registration for ". On registration, you would receive a mail confirming your registration within 24 hours.

Important TimelinesRegistration Begins: 10th November, 2009 Submission of Round 1Executive Summary: 25th November, 2009 Result of Round 1: 30th November, 2009 Submission of Round 2 Business Plans: 7th December, 2009 Final Shortlistfor Presentation on Campus: 14th De…

The Mint's profile of MapmyIndia

The Mint has a profile of VC-backed MapmyIndia.
The company today has 500 enterprise customers including Hindustan Unilever Ltd, Godrej Consumer Products Ltd, Bharat Sanchar Nigam Ltd and Bharti Airtel Ltd, ensuring a steady stream of revenue as it works on improving maps for consumer applications...As India’s younger generation gets more comfortable using location-based services on cell phones and in cars, MapmyIndia believes this could account for a major chunk of revenue in a few years...Last year, four million devices were sold in Russia, and Verma believes that the market in India would grow to about 50,000 this fiscal.

...With the entry barriers in the business being high, often a map-making company’s main competition is with itself. A poor experience can turn customers off, making them reluctant to try digital maps again. That’s why the company has between 300 and 400 surveyors on its rolls at any given time. Extensive checks are done every few months and the changes recorded.

Ar…

"China is no friend of India’s"

In an article for Businessworld, Omkar Goswami provides one of the stronger opinions - by a business/economics person - on China-India relations.
Let’s have no doubt about a few things. China will always support Pakistan, come hail or high water. It will sooner or later start damming the Tsangpo (which becomes the Brahmaputra in India) and the Sutlej. My unlettered guess is that the work is about to start, or has just started — especially across the Sutlej. It will continue to make strident claims on Arunachal Pradesh. It will significantly strengthen its capabilities to move troops, artillery and other fire-power along its borders with India — both across Ladakh, Himachal and Uttaranchal in the west and Arunachal in the east. It will incessantly complain about the Dalai Lama if he visits border areas. It will never allow India a hope in hell of a permanent UN Security Council seat. And block any move that gives India a greater role in today’s league of nations.

China is no friend of I…

Audacity: China's winning edge

Arvind Singhal of Technopak has an article in the Business Standard comparing India and China.
Both got their independence around the same time, had similar scale of economies and challenges, and then both lost a few decades due to misplaced ideology. China started its reform process in 1978, while India did it in 1991. Yet, today, even the most optimistic on India would not claim that India in 2022 will be where China is in 2009.

If a single word can explain the difference between China and India.., it is “audacity” in case of China, and lack of it when it comes to India. At different stages in its history, Chinese rulers have dreamt audaciously and executed their dreams resolutely and ruthlessly. At different stages in Indian history, the rulers have chosen to negotiate, compromise, take the path of least resistance, or have left things to divinity. Post-Independence, we have even misinterpreted the Gandhian notion of austerity to justify our very “small” thinking, and have taken shel…

Deal Alert: TVS Capital invests Rs.65-Cr in retail firm Landmark

Edited Extracts from Press Release:



TVS Capital, via its TVS Shriram Growth Fund I, is taking a significant minority equity stake with an investment of Rs.65 crores in Landmark Limited, a leading book and music retail chain. Landmark, which is a subsidiary of the Tata Group retail firm Trent Limited., currently operates over 20 stores over 2 lakh square feet of retail space. For the year ending March 31, 2009, Landmark had gross revenues of Rs.196 crores.

Noel N. Tata, Managing Director of Trent Limited and Chairman of Landmark, said, “We are excited about the equity investment into Landmark, and look forward to partnering with TVS Shriram Growth Fund in our journey to scale up the Landmark’s retail business.”

Gopal Srinivasan, founder and Chairman of TVS Capital said, “Landmark is a marquee investment for us and we are excited to enable the next wave of growth at one of the leading specialty retailers in India. Under the leadership of Mr. Noel Tata, we believe Landmark is well positio…

Will Indian IT Services cos. be acquirors or targets?

In the wake of IT Product companies like Xerox and Dell buying their way into the IT Services world through multi-billion dollar deals, Reuters - quoting industry analysts - has an article that lists significantly India-based companies like Cognizant, WNS, ExlServices among the list of "attractive acquisition candidates". (Other companies on the list include Sapient, CSC and Amdocs.)
Possible acquirers could be tech giants such as IBM , Hewlett-Packard or Cisco, European players like BT or Deutsche Telekom and Asian companies like Hitachi , Fujitsu or NEC, analysts said. "There's definitely going to be some strategic acquisitions -- there's no doubt about that," Goldman Sachs analyst Julio Quinteros said. "It's just, how much are you willing to pay? And would you rather wait for the market to come back a little bit?" The recurring revenue stream that IT services firms have gives them more visibility and stability.

... One group of services firm…

The 'Beating Street Estimates' game

The Associated Press (via NY Times) has an article explaining how so many US companies regularly manage "to beat analysts' estimates":
Corporate America has a habit of low-balling the earnings forecasts used by analysts to determine their estimates. That way, the bar is lower, and companies can easily jump over when the quarter's results are announced -- even if profits and revenues have fallen off a cliff.

...Beating expectations generally gives share prices a quick lift, but the news can mislead investors about the real state of the business -- and just how far this economic recovery has to go. In fact, of the companies reporting third-quarter results so far, 60 percent have posted lower net income compared with a year ago.

...A study of stock returns from 1994-2007 concluded that analyst forecasts were the second-most influential force on price movements. Management forecasts topped the list, according to Beverly Walther, an accounting professor at Northwestern Unive…

Have women on your board? Here's the cash...

From The New York Times:
Naissance Capital, based in Zurich, will start the Women’s Leadership Fund in January, which will invest in companies whose boards include women. It also plans to take minority stakes in companies without women on their boards and to use its ownership to encourage changes.

R. James Breiding, a co-founder of Naissance Capital and a former director of Rothschild Corporate Finance, said the fund was created after several studies showed a correlation between the number of female directors and a company’s performance.

...Naissance has lined up $200 million from institutional investors and individuals to invest in 30 to 40 companies around the world, and plans to increase the size of the fund eventually to about $2 billion. The minimum investment for the fund is $100,000. Naissance, which was founded in 1999 and specializes in what it calls “niche investment opportunities,” is one of a handful of firms that have created funds over the last three years to invest in comp…

"It's all coming together for Reva"

The New York Times has an article on electric car maker Reva.
Last month, the company won an important stamp of approval when General Motors said it would use Reva’s technology in the electric version of its Chevrolet Spark, a small car whose conventional gasoline version G.M. sells here already. The electric version of the Spark is expected to go on sale in India by the end of next year, according to G.M. officials.

...Mr. Maini said electric cars have to be small and affordable to succeed in places like India and Europe, where most car trips are short and involve stop-and-go driving, unlike in the United States where commuters can drive 50 miles or more a day, mostly on highways...In Europe, the higher-end model (of the NXR) will sell for about 15,000 euros, or $22,000, not including batteries, which the company will lease for a monthly fee.

...“I have been doing this for 15 years, and I have never seen everything come together like I have” now, said Mr. (Chetan) Maini, the 39-year-old…

Deal Alert: A2Z Maintenance acquires controlling stake in CNCS Facility Solutions

Edited excerpts from Press Release:

Gurgaon-based facilities management and EPC firm A2Z Maintenance and Engineering Services has acquired a controlling stake in CNCS Facility Solutions, a Mumbai-based facilities management services company. One World Resources acted as the sole financial advisor to CNCS in this transaction.

The investment will allow A2Z, whose investors include India Equity Partners, Beacon India Private Equity Fund and Rakesh Jhunjhunwala, to expand the presence of its facilities management services business in Western India.

ContentSutra interview with Nimbus' Harish Thawani

ContentSutra interviewed Nimbus Communications' Chairman Harish Thawani, in the context of the PE-backed firm's renewal of its contract to broadcast test and one-day cricket matches played in India.

What is the per match rate you are paying and is the case that this time there are fewer matches?

Again, it depends on the exchange rate and other factors, but it is about Rs31 crore. The number of matches are about 15% lower at this stage. The schedule is subject to change and we have left enough flexibility in the deal to work around future changes.

What does the deal mean for Nimbus? Are you looking to raise cash?

We are not looking to raise money. We had a third round of investments in 2009 by our existing investors 3I, Cisco and Oman International Fund. The focus is on growing Neo Cricket. The channel will soon be available also in Europe and North America. We already have a very strong presence across Asia. We are also planning two new channels.

Do you think that ODIs will suffer …

Forbes' profile of the Co. behind Mainland China

Forbes India has a profile of Speciality Restaurants, the company behind Mainland China and other restaurants.
(Anjan Chatterjee) has 52 restaurants (spread across eight brands including Mainland China, Sigree and Oh! Calcutta) across 11 cities including three abroad — Beijing, London and Dhaka. Now he wants to spread to tier-II towns and in some ways be a pan-Indian fine-dining restaurant chain.

Chatterjee’s company Speciality Restaurants Pvt. Ltd. (SRPL) and SAIF Partners (Softbank Asia Infrastructure Fund), an investor in SRPL, are busy scripting the new plan. They are looking at a listing on the stock market next year. It depends on the number of acquisitions. They want to expand the chain to 100 restaurants before the initial public offering.

...Apart from processes, fine-dining restaurants have to deliver an experience rather than just a meal. “If a restaurant can make Rs. 800 on an average bill, then the margins can be 20-25 percent, else they drop to 10-15 percent. Also, very few…

Deal Alert: Nutraceuticals firm Deccan Healthcare raises Rs.15-Cr from Nexus Ventures

Edited extracts from the press release:



Deccan Healthcare, an innovative products company in the Indian health and wellness market, has received a Rs 15 crore investment from Nexus Venture Partners. Sandeep Singhal of Nexus Ventures will join the Deccan Healthcare board.

Deccan Healthcare has developed, through intensive R&D, a variety of nutraceutical products which boost immunity and address chronic ailments. The key products include a flaxseed-based vegetarian Omega-3 which they sell under the OxyFlax and Nulife-ISB brand. It is useful for cardiac care, bone health, diabetes prevention, and is also anti carcinogenic and anti-inflammatory.

Speaking about the funding, Mr Minto Gupta, Founder & CEO, Deccan Healthcare said, “We at Deccan Healthcare are happy to be associated with Nexus Venture Partners. The funding will help us enhance our R&D efforts and our expansion plans. Deccan is launching a variety of nutraceuticals addressing specific life-style problems and will also…

Forbes India profile of Gitanjali Gems

From the Forbes India profile:
He is aiming to be the world’s biggest jewelry retailer, growing bigger than Tiffany, which had net sales of $2.86 billion last year and has over 200 exclusive stores; at the same time, create a group full of well known brands, something on the lines of LVMH, which owns 50 brands netting it over 17 billion euros in revenue in 2008. For Gitanjali, Choksi unabashedly talks of revenues of $5 billion from his 60-odd brands, from the current consolidated sales of $1.2 billion in the next “few years.”

...Though most of the growth in the jewelry business came in recent years, Choksi saw the writing on the wall pretty early. Choksi realized that he was in the lowest end of the value chain, whereas more than 70 percent of the additional value accrued to the companies that sold those diamonds in branded jewelry. According to the International Diamond and Jewelry Exchange, or IDEX, in 2006-07, rough diamonds of $7 billion in the mines were worth $19.8 billion after …

Deal Alert: Evolva Biotech raises $28-M in first closing of Series B financing

Evolva Biotech, a Switzerland- and India-based drug discovery firm, has raised CHF 28 million (about US$27.8 million) in the first closing of its second round ("Series B") financing round. The financing is part of Evolva’s preparations to merge with Swiss stock exchange listed company Arpida, though the funds are committed independent of the proposed merger. The Series B financing is led by current investor Aravis and new investors Auriga Partners, Vinci Capital-Renaissance PME and Wellington Partners. BioMedInvest and an undisclosed private investor participated as co-investors in the first closing, as well as Evolva's existing investors Astellas Venture, Dansk Innovation, Novartis Bioventures and Sunstone Capital.

In 2005, Hyderabad, AP-based APIDC Biotech Fund (now Ventureast) had participated in Evolva's first round investment. Other investors in the round included Novartis Ventures, Astellas Ventures, Danish Innovation Investment, Seed Capital and Sunstone Capit…

"Real ARPUs are 25% higher"

In an article for Business Standard, Unitech Wireless's Chairman Sanjay Chandra says that despite the profitability issues in the short-term, the industry's size will double in five years.
ARPU numbers as reported by players currently are understated. The historical subscriber-linked spectrum allocation methodology used by the regulator in India incentivises operators to take advantage of flexibility in reporting churn and hence overstate the number of subscribers. The real subscriber number in India is estimated to be 20-30 per cent lower than that reported. This implies that the real ARPU is 25-35 per cent higher than that reported. At a 25 per cent higher ARPU, the per subscriber and per tower economics suddenly seem much more viable.

Two, the total size of industry in terms of revenue is expected to more than double from the current $22-25 billion to over $50 billion in five years. In addition, the cost of new operations is much lower now than that of existing operations be…

MediaNama interview with CEO of Mobile TV firm Apalya Tech

MediaNama has an interview with Vamshi Reddy CEO of Hyderabad-based Apalya Technologies, which recently closed a round of venture funding.

What are your key costs? How much are you looking to invest in infrastructure?

Our key costs are primarily spread across R&D and infrastructure, and most of our expenditure will be on network, infrastructure deployment for the 3G rollout and R&D. Out investment on 3G rollout depends on when 3G takes off. We are loking to invest anywhere between 25 to 30% of the money raised in the next one year.

..how does the revenue model work in this space?

Revenue models are purely on a revenue share: there is a share between us and the operator, and we, in turn, have all the agreements with all the content providers. We have currently a partnership with almost 70 TV channels.

What do you think would be the size of the mobile TV market in India right now?

If you look at today it’s not big enough but we are expecting that to dramatically change with 3G coming …

K-12 spells big bucks

As part of its Cover Story on Education, Business Today has an article on how private ventures are now increasingly targeting the K-12 segment.
Six months ago, Manipal K-12 broke new ground by taking over Sharada School, Mysore. “We offer two choices to managements of schools that fit our business model. They can either pay us to manage their schools professionally or transfer management responsibilities,” says (CEO Meena Ganesh). The firm has also taken over four schools in Nepal recently. She plans to manage 100 K-12 schools and set up six International schools in the next five years.

...The K-12 (Kindergarten to Class 12) is estimated to be worth half the $42-billion (Rs 2,01,600 crore) private education market in India and growing fast enough to double in a decade. Analysts expect the share of average household spend on education to increase from the present seven per cent to nine per cent by 2018. Technopak, a consulting firm, sees enrollments in K-12 growing to 351 million, requi…

Key Issues in Education Ventures

At a time when Education has become the hottest sector for private investment, Raghav Gupta of Technopak Advisors highlights, in an article for Business Today, the key issues to evaluate when venturing into this field.
Market Assessment: A pragmatic assessment of the “catchment” in each segment of education is important, from the standpoint of achieving required student enrollment, before planning an investment. The catchment (in this case the travel time to and from the institute) for a pre-school student should be 30 minutes, for a K-12 day school 60 minutes, and for a residential school, this would be five hours. Demand for a vocational training institute originates from within city premises, with few students travelling across cities for enrollment. A university or a higher education institute would ideally attract students from all parts of India as well as South Asia, the Middle East and Africa and, therefore, matters would be being dictated by the quality of education on offer a…

Price of Education sans Enterprise

In an article for Business Today, Gopal Jain of PE firm Gaja Capital, makes a passionate case for encouraging private enterprise in Education.
The education sector is reserved for not-for profit (NFP) entities and this ensures adverse selection by blocking conscientious entrepreneurs who are unwilling to operate for-profit (FP) businesses under the guise of NFP as most currently do.

...The cap on revenues through price controls on fee and constant government sponsored inflation of expenses by obligating compliance with pay commission hikes, etc., are huge stumbling blocks...Institutional funding is unavailable: NFPs involve huge off-balance sheet settlements, rendering them out of bounds for institutional lenders and financiers.

...We can argue endlessly, but we don’t have 300 years to perfect a welfare state, like the western countries did. India’s poor understand that education is the mantra behind their emancipation and they are not willing to wait. Some 175 strife-riddled districts …

Profile of facilities management firm BVG

Business Today has a profile of PE-backed facilities management firm BVG India.
(Hanmant R Gaikwad) is the man who founded Bharat Vikas Group (BVG) India, one of the country’s largest facilities management companies based out of Chinchwad near Pune. BVG India provides non-core activities such as mechanised housekeeping, landscaping & gardening, and security services to private and government institutions with the help of a 16,000-strong ready-to-move and trained and pan-India workforce.

...At Tata Motors, Gaikwad would on a regular—and informal—basis supply the company with youth from Satara whenever it was looking for people. The breakthrough came when Tata Motors was on the look out for a housekeeping contractor for its mintnew Indica plant. Gaikwad proposed that the contract be given to BVP. Tata Motors agreed. That’s when BVP began operations in 1997 as a housekeeping company with just eight employees.

In three years, BVP had grown into a 200-strong outfit, with Tata Motors as it…

Interview with Rishi Navani of Matrix Partners India

Venture Intelligence recently spoke to Rishi Navani, co-founder and Managing Director at Matrix Partners India. The firm, which has a special focus on domestic consumption, has announced three investments in the past 12 months – a new Rs.100 crore investment into education firm FIITJEE and follow on investments into online classifieds firm Quikr (a spin out from eBay India) and prepaid cash card firm ItzCash (part of the Essel Group).


Venture Intelligence: In the post-financial meltdown scenario what is your reading of both the growth equity and VC space?Rishi Navani: In the growth equity segment, we are in a situation where capital has dried up - particularly from hedge fund investors and investment banks. For companies that are profitable there is definitely capital available, but there are less pockets but the pricing has certainly rationalized compared to 2007. In the VC segment, lots of people have invested in companies where they have to spend a lot to time to see if those compan…

Interview with Kranthi Vistakula, Founder of Dhama Apparels

One of the more interesting start-ups to receive VC funding this year has been Dhama Apparel Innovations which provides apparel with variable heating / cooling to people living and working in difficult climatic environments. N. Sriram of Venture Intelligence recently spoke with Kranthi Kiran Vistakula, Dhama’s Founder & CEO who is an alumnus of the Massachusetts Institute of Technology.




Venture Intelligence: You have a biotech and engineering background from MIT. Why did you switch to doing an apparel start-up?

Kranthi Vistakula: While living in Boston (USA), the weather was either cold or hot…I never felt comfortable. Since I could not find any functional apparel in the market, I started developing one for my use. That is how the whole idea started.

VI: Dhama is now targeting to sell temperature-controlled apparel to defense forces. Don’t soldiers have these kinds of apparels already?

KV: They do have. But they are very heavy. Our apparel weighs around 1 kg. The apparel soldiers wear…

Why Gold Loans are shining bright

The New York Times has an article on why Gold Loans are far from being anachronistic in India. So much so that international PE/VC firms like Sequoia Capital are invested into Gold financing companies.
Pawnbrokers and money lenders have long operated in India’s back alleys, making loans against jewelry to families in distress, at interest rates of 30 percent or more. But gold loans made by banks and finance companies are different. Rates are lower — 14 to 30 percent — and their businesses are regulated.

...Manappuram, a pioneer in the business, made $730 million in gold loans last year — up from $397 million a year earlier. Muthoot Finance, a privately held firm, says its lending is growing at 60 percent a year. By contrast, total outstanding bank loans to the private sector increased 16 percent last year, year over year, and have been essentially flat so far this year.

...Gold loans, so far at least, have very low defaults — companies say fewer than 1 percent of borrowers fail to repay.…

The Need & Opportunity for Vocational Training

In an article for Business Standard, Arvind Singhal of Technopak points out why the real transformational opportunity in Indian Education is in the vocational training segment.
Vocational training, unfortunately, does not enjoy the same glamour and, therefore, it is very likely that despite having the largest young workforce in the world, India will be faced with chronic shortages in just about every category of skill-based trade jobs. Even more tragic, from India’s perspective, would be the missed opportunity in being the number one supplier of skilled trade labour to the developed and some developing countries even as many such countries, especially those in Western Europe, are faced with rapidly aging populations and fast declining birth rates, leaving them woefully short of all kinds of labour—farm workers, electricians, plumbers, masons, fitters, healthcare givers, machinery operators, cooks/chefs and the like.

It would help to look at some hard data to put this challenge and the b…