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Showing posts from December, 2009

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…