The Venture Intelligence Blog

Businessworld has a cover story on the strategies adopted by Citibank, HSBC and StanChart in the run up 2009. India has traditionally been a bit of a sideshow for the world’s banking giants, thanks largely to the severe restrictions placed on them here. That is likely to change over the next few years in accordance with the February 2005 Reserve Bank of India (RBI) roadmap. About a thousand days from now, foreign banks will be given the same freedom to open branches, acquire competitors and plan for growth that their domestic counterparts now have. The contours of the Indian banking landscape are expected to change dramatically after 1 April 2009. It’s no surprise that the three biggest foreign banks in India — Citibank, HSBC and Standard Chartered — are now getting ready to play a bigger role in the Indian economy. Interestingly, none of the executives quoted in the article have talked specifically about April 2009. Makes me wonder why? Do these CEOs beleive that this date is not as ...

Businessworld has an article on the "heat and eat" segment of the Food & Beverages industry. According to estimates, the market for ‘heat and eat’ meals has grown by over 20 per cent in 2005, albeit on a small base of Rs 70 crore-100 crore. It’s the fastest growing and, by far, the smallest part of the Rs 8,290-crore (2004-05) food and beverage market. So, every food firm worth its palak paneer is jumping in. Ten years ago, there were only specialised players like Tasty Bite and MTR. Today, there are at least 30 companies with ready-to-eat brands, of which about half sell locally. These include ITC, HLL, Godrej as well as exporters like the Chatha Group, Satnam Overseas and Britte. Cavinkare, too, is eyeing this segment and is scouting for an acquisition. Click Here for a table listing the various players in this segment. Arun Natarajan is the Founder of Venture Intelligence, which tracks private equity and venture capital in India and Indian-founded companies worldwide...

Businessworld has an article on the revival of the manufacturing industry in Coimbatore. Also in 2002, the city’s auto-component industry, realising that being local doesn’t help, went in for exports in a big way. Pricol, for instance, has seen exports grow from Rs 22 crore in 2000 to around Rs 60 crore in 2006. Says G. Ranganathan, CEO, Rover Components, an auto ancillary firm: “For many companies, the share of exports (in total revenues) has gone up from 10 per cent to 25 per cent.” In fact, for SACL, another auto-component maker, exports already account for a third of its turnover of Rs 130 crore. The company expects that to grow to around half of the topline by the end of this year and, ultimately, to about 60 per cent of revenues. Says M. Manickam, managing director, SACL: “Though the risks are higher, the margins are better in exports.” Last year, exports accounted for Rs 350 crore of the Rs 2,500 crore revenues of Coimbatore’s auto-component industry. And for the current fiscal...

Businessworld has a detailed cover story on the boom in the Indian engineering & construction industry triggered by rising infrastructure spending. Together these 10 companies (see ‘Billions In The Bag’) have combined sales of over Rs 18,500 crore from the infrastructure construction business, which could easily double to Rs 40,000 crore in two to three years. What’s more, they have a combined order book of a staggering Rs 69,624 crore. At this very moment, they are building many strategic blocks of the country’s infrastructure. These include the Bangalore, Hyderabad and Delhi airports; big parts of the ambitious metro programmes in four cities; the Bandra-Worli Sea Link and hundreds of kilometres of roads; the Kakinada port and gateway terminals at JNPT (Jawarhalal Nehru Port Trust) in Mumbai; the Kudankulam Nuclear Power Project in Tamil Nadu; the GSLV Mark-III space launch complex in Sriharikota (and even a cricket stadium for the World Cup in the West Indies!). ...Most of thes...

Among the blogs that I read - typically those penned by VCs and entrepreneurs - I found the following two remarkable posts about the most recent terrorist attacks in Bombay. From Basab Pradhan's blog : If Bombay were a boxer, he may or may not be the champion. But you could never knock him out. He would go down to the mat once in a while, but would pick himself up every time, not by the count of 10, but immediately. I was in Bombay during the 1993 bombing. And I was in the US during 9/11. Granted 9/11 was a much bigger act of terrorism - both in death toll as well as how telling the blow was, which is how a terrorist would look at it. 9/11 caused the American psyche a trauma from which it will not recover for a generation. Bombay moved on in a matter of months. And the same will happen this time. The question is why? Why does Bombay (or maybe this is an India thing) have such a short memory for great tragedies? Is it because people don't have choices so they have to settle with...

There is a nice debate at Fred Wilson's blog on the logic behind VCs funding journalists who operate popular blogs like Om Malik and Rafat Ali. Wilson says he knows of several more similar deals that are going to be announced soon. "I suspect its because Om, Rafat, and the others who are raising VC money intend to turn their blogs into media companies, doing conferences, and developing value added services on top of or in compliment to their blogs." "But the irony is that these bloggers all intend to use the capital to diversify away from blogs into traditional media company revenue streams like conferences and research," comments Will Smith in response. "What this says to me is not that blogs are standalone revenue-generators. Rather, blogs seem to be a way for their proprietors to build credibility, experience, scoop flow, contacts, and audience that can then be parlayed into a more traditional media company. So blogs may be a way to bootstrap an upstart...

Businessworld has an article on how Siva Prasad, after having failed four times to start up a waste-to-energy venture in India, is now executing his plans in Malaysia. Prasad does not have happy memories of his attempts at implementing his WTE process in India during the mid 1990s. His first attempt in India was backed by the Technology Development & Information Corporation of India (TDICI), now known as ICICI Venture, and Indian Renewable Energy Development Agency (IREDA). But the Bangalore municipality refused to allot land on a dumpsite due to air pollution concerns. Thereafter, Prasad found a sponsor who persuaded the Chennai municipality to allot land in the Perugudi dumpsite and Tamil Nadu Industrial Development Corporation (TIDCO) to part-fund the project. But the sponsor himself backed out at the last minute. Next, a lottery company in Delhi decided to gamble on this idea and even got land allotment at dumpsite and finalised a power purchase agreement with the Delhi Electr...

For a snapshot of the entrepreneurial zeitgeist in India, you might be interested in checking out the following blog posts (especially the comments section): http://sramanamitra.com/blog/311 and http://www.venturewoods.org/index.php/2006/07/20/40-turns-50-in-4/"> http://www.venturewoods.org/index.php/2006/07/20/40-turns-50-in-4/ Arun Natarajan is the Founder of Venture Intelligence India, which tracks venture capital activity in India and Indian-founded companies worldwide. View sample issues of Venture Intelligence India newsletters and reports.

Knowledge@Wharton has an article based on a panel discussion titled "Financial Perspectives on Managing Risks" at a recent Wharton conference. The panelists discussed how VCs determine which new technologies are good investments, and what strategies they employ to manage and mitigate risk. Spencer Hoffman, a principal at Safeguard Scientifics, presented another take on venture investing and risk from the viewpoint of his company, a publicly traded investment firm specializing in information technology and healthcare. ...Safeguard's model is to mitigate risk and create above-average returns by selecting the right companies in areas where the firm has expertise. Then, using Safeguard partners or networks, the company uses its own entrepreneurial experience to help build or improve the businesses. "What we try to do is bring a little bit of the buyout model to the growth equity space and look for opportunities venture capitalists won't touch because management isn...

Businessworld has an article on how financing options for Real Estate developers in India have changed dramatically in the recent past. Says Anshuman Magazine, managing director, CB Richard Ellis: “India has come a long way from having no real estate financing options, where a developer entered into a join venture with a landowner to pre-sell property. From there, our markets have matured to a stage where foreign investors are queuing up to bring in equity into our markets. With FDI opening up, the real estate market will witness many structured finance products on the equity side for retail investors, like in the more mature markets.” Arun Natarajan is the Founder of Venture Intelligence India, which tracks venture capital activity in India and Indian-founded companies worldwide. View sample issues of Venture Intelligence India newsletters and reports.

Businessworld has a detailed cover story on how a clutch of Indian pharmaceutical firms are venturing forth to discover new drugs. If it does clear phase III, (Dr. Reddy's diabetes drug) DRF 2593 could well become the first ‘new’ drug developed by an Indian company. So far, every drug that has been created by the Indian pharmaceutical industry has been a reverse engineered generic — a copy of a drug that was already discovered by a multinational. Of course, there is a chance that DRF 2593 will fall at this final hurdle. There is also a chance that one of the three other Indian companies — Ranbaxy, Glenmark and Wockhardt — that have compounds in advanced stages of clinical testing, will pip Dr. Reddy’s to the goal post. Ranbaxy is testing its anti-malarial, Glenmark has a potential new asthma cure and Wockhardt has a new generation broad-spectrum antibiotic in the works. Arun Natarajan is the Founder of Venture Intelligence India, which tracks venture capital activity in India an...

Businessworld has a "blow by blow" account of how and why the $500 million Jet-Sahara fell apart and what it means for the the two airlines. Arun Natarajan is the Founder of Venture Intelligence India, which tracks venture capital activity in India and Indian-founded companies worldwide. View sample issues of Venture Intelligence India newsletters and reports.

Businessworld has an interesting interview with Gordrej Chairman Adi Godrej on the group's China stragegy. Everybody understands China’s dramatic economic success and people are very curious about it — what works, what doesn’t work... . But we go overboard in comparing ourselves to China. I think we run ourselves down a bit more than we should. There are certain things we are much better at doing. For example, though China has very good labour productivity, India has much better capital productivity. I have also met with fair-sized Chinese businesses, and I think that management processes in our private businesses are far superior. China and India complement each other rather than being competitive as they have different advantages and skills. The well-known mantra is that China is the factory of the world and India is the back office. I think this sort of compartmentalisation is incorrect. No country of India’s size can develop adequately if it embraces this compartmentalisation...

Recent months have seen quite a few IPO filings in the US markets by "blank check" or Special Purpose Acquistion Companies (SPACs) which aim to acquire a business in India with the proceeds. BusinessWeek has an article on one such company with the interesting name of East India Company Acquisition Corp. East India Company , promoted by Dr. Dipak Nandi (Chairman) and Kary Shankar (CEO), is planning to raise $36 million. It counts Saurabh Srivastava, founder of IIS Infotech (acquired by UK-based Xansa) and a prominent venture capitalist in India, among its four directors. (Srivastava is also an advisor to another blank check company, Global Services Partners Acquisition Corp. , promoted by outsourcing consulting firm Tholons), which recently raised $34 million on the US OTC exchange. The BusinessWeek article however has a negative slant on East India Company and choses to focus on the ethics of the company not revealing a prior litigation involving Dr. Nandi in the prospectus....

Sramana Mitra is bearish on Indian chip design outsourcing companies: There is a shortage of skilled resources, and the discipline is not one in which people can be trained en masse that easily. Whatever capacity exists in India today, I believe, is being absorbed by the MNCs, who are building capacity aggressively. I don’t think a startup would stand much of a chance. On outsourced software product development - which has received significant VC attention in recent months - Mitra feels that going forward, these companies would need to look at ISVs in the SME segment: While I like the way Persistent, Symphony and a few others have positioned themselves, on the next generation of opportunities for smaller Indian IT services companies, is that they need to go after SMEs in US and Europe. The IT expertise availability in SMEs is very low, but they have significant buying power, and by all means, there remains still an opportunity to build a few more companies catering to that segment. It...

Wonder why VCs - including those with super smart executives - suddenly rush and overfund sectors like online travel, online classifieds, mobile content, etc.? Paul Kedrosky , himself a VC, has concluded that the answer is the nature of the venture business itself: "The venture business is a bubble business". According to him, the performance and reputation of the top venture funds are "almost entirely driven by their ability to find and profit from bubbles, whether large or small: dot-com, networking, PC hardware, drives, Web 2.0, etc." Take away those bubbles and turn venture into a steady-state, non-cyclical business and it would be transformed from top to bottom. There would arguably be no DFJ (Internet bubble), no KP (Internet and PC bubble), no NEA (PC bubble), no Sequoia (PC and Internet bubble), no Oak (PC and Internet bubble), etc. Kedrosky also provides a definition of what constitutes a bubble: A technology bubble is any period when the enthusiasm for a p...

Investment banker Krishna Mony has a nice primer on PIPE deals and what IBs look for when they do due diligence for such deals. Some extracts: PIPE investors give the small public company capital in exchange for newly issued stock. Generally, they purchase stock at a small discount from the price that it is trading at in the public market. They may also invest in a convertible preferred or a convertible note, but the conversion price will be at a discount from the price at which the stock sells in the public market. They always receive a warrant kicker. This method of financing has basically replaced secondary offerings. For a small-cap public company, it is a great way to raise growth capital. They don’t buy shares in the open market; they buy from the company, and it’s a highly structured transaction. ...If you’re a small public company raising $10 million, no one’s going to do a secondary offering for $10 million. Maybe a company wants to make an acquisition, and they need $5 milli...

Band of Angels, the New Delhi-based angel investment group, has launched a pleasant looking web site . The site includes a listing of the names (and in some cases, profiles) of current band members, what the group looks for in start-ups and potential new band members. Yes, contact information is availble as well. Interestingly, the group is structured as a company, BoA Consultancy Services Pvt. Ltd. Arun Natarajan is the Founder of Venture Intelligence India, which tracks venture capital activity in India and Indian-founded companies worldwide. View sample issues of Venture Intelligence India newsletters and reports.

Businessworld has a profile of the IPTV pilot projects by major telcos in India. Sometime this July, MTNL will become the first to launch Internet protocol television (IPTV) service (See ‘How IPTV Stacks Up Against The Others’). By the end of the year, other telecom operators will follow. And early in 2007, the Andhra Pradesh and Goa governments will launch broadband projects that include IPTV. How and in what form consumers accept IPTV will decide three things in the broadcasting business. First, it will decide how convergence will play out in India. Second, it will determine how the Rs 12,000-odd crore pay TV market will get split between cable, DTH and IPTV operators. Third, it will decide whether 900,000 km of wires, laid across the country at an estimated cost of Rs 51,000 crore will fetch returns. Arun Natarajan is the Founder of Venture Intelligence India, which tracks venture capital activity in India and Indian-founded companies worldwide. View sample issues of Venture Intel...

Businessworld has a profile of Pune-based Praj Industries, a listed Ethanol technology company in which Vinod Khosla has picked up a 10% stake. Arun Natarajan is the Founder of Venture Intelligence India, which tracks venture capital activity in India and Indian-founded companies worldwide. View sample issues of Venture Intelligence India newsletters and reports.

In case you just landed back from Mars, real estate in India is booming. Businessworld has a cover story on how companies are latching on to the boom. Indian companies, funds (both Indian and overseas), and entrepreneurs are buying land as if there is no tomorrow. According to estimates, they are in the process of acquiring some 400,000 acres of land. That’s four times the size of Mumbai, double the size of Hong Kong, and slightly more than the size of the National Capital Region (NCR). The Baba Kalyani group, in a consortium, is buying around 22,000 acres and its flagship Bharat Forge wants to buy 5,000 acres for an SEZ. The Mahindra group will own 10,000 acres once its buying spree is over. Infosys will add another 845 acres to its existing land bank of 1,300 acres. The list is almost endless. Adi Godrej, who has 7 million sq. ft under development in six cities, sums up the mood: “The larger the project, the more interested we are.” Arun Natarajan is the Founder of Venture Intellige...

Business Today has a special report on the power sector. Arun Natarajan is the Founder of Venture Intelligence India, which tracks venture capital activity in India and Indian-founded companies worldwide. View sample issues of Venture Intelligence India newsletters and reports.

On the 25th anniversary of the company's founding, Business Today has an article on 25 little-known facts about Infosys. On July 2, 2006, Infosys technologies will turn 25. That's not a significant age for a company; several Indian companies are older. In these 25 years, however, Infosys has set new standards in governance and wealth creation (both for employee and shareholders) and turned an entire industry on its head (global delivery as opposed to offshoring). 15. The Infosys IPO almost devolved. Murthy claims that the issue was subscribed 1.06 times, and it was, but fact is, it almost didn't go through. Eventually Vallabh Bhansali's Enam Financial Consultants, the lead manager (along with SBI Capital Markets), had to push it through. 16. Nilekani's quiz-club members struck it rich. Well, some of them did. Nilekani was a quizzer in college and was part of an informal group that would meet and quiz in Bangalore. One member remembers that Nilekani came to a me...

Business Today has a Cover Story on how India's tech billionaires - including Azim Premji, Nandan Nilekani, Shiv Nadar and Ramalinga Raju - are investing their personal money. Arun Natarajan is the Founder of Venture Intelligence India, which tracks venture capital activity in India and Indian-founded companies worldwide. View sample issues of Venture Intelligence India newsletters and reports.