The Venture Intelligence Blog

In an interview on the global auto industry to Knowledge@Wharton, Wharton management professors John Paul MacDuffie and Mauro Guillen, have struck quite a pessimistic note on how "big big" Tata Motors' Nano could become. John Paul MacDuffie: People have been watching the Tatas' $2,500 car with interest for a long time. Tata has done a great job of building up a lot of very high expectations. It's not a new quest to build products at the low cost end of the market and sell into these rapidly growing developing markets. This just seems bolder in its ambition. The design is clever in a lot of ways, but some major questions still exist about how well the product will hold up over time. Even if the Nano now meets Indian emission and safety standards, will that continue to be true after two or three years of hard use on rough Indian roads? Certainly, these products will not be coming to the U.S. or other developed markets because they are a very long distance from mee

Businessworld has featured an article by Rashesh Shah, CEO of investment bank Edelweiss Capital on his predictions for 2008. A tale of two currencies: the dollar and the rupee. From the Indian perspective, we expect some good times for the travel trade and international aviation, and reduction in duties on various luxury goods by way of the appreciating rupee. Lifestyle related consumption can only increase as larger number of luxury brands team up with real estate majors to foray into the market. I also expect international education majors to build a base here and take advantage of the expected drop in the cost of studying abroad. India's domestic growth story will outshine the export story. In 2007, we saw a major change where the domestic growth story started becoming more prominent than the export-led growth story (export growth has been the dominant theme in India for a long time). 2008 will see export slowdown and investors will focus more on local growth plays such as infr

The following companies are seeking capital for starting-up / expanding their operations: 08-01-09-1: Chennai-based start-up seeks <$1 M for producing algae-based bio-fuels. 08-01-09-2: Bangalore-based company seeks $1-5 M for expanding specialized value-added services for the food retail and hospitality sector. The company serves as the exclusive Indian representative, importer and distributor of top food and beverage brands for a range of imported foods sector. The capital will be used to create a pan-India distribution infrastructure including cold chain and for working capital for increased stock holding in India. 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 us

Business Today has an article on the opportunities in distribution of financial products. 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.

We are delighted to announce the addition of the following exciting speakers to the already stellar list of speakers for APEX '08, the Indian Private Equity Summit scheduled for January 31 at Mumbai , that brings together the cream of the Indian Private Equity/Venture Capital-Entrepreneur Ecosystem to introspect, brainstorm on the way forward and reward its best. New Speakers include: VARUN SOOD, Capvent JAN POERSCHMANN, Proventis ROHAN AJILA, Capvent GOPALA KRISHNAN, mobile2win SARATH NARU, Ventureast Other confirmed speakers at the Summit include: Leading PE/VC-backed Entrepreneurs NIKHIL GANDHI, SKIL Infrastructure KRISHNAKUMAR NATARAJAN, MindTree Leading Venture Capitalists SUDHIR SETHI, IDG Ventures India VAN

Bloomberg has an article comparing SPACs or "blank check companies" and LBO firms. ``It seems as if everybody is raising a SPAC,'' David Rubenstein, co-founder of the Washington-based private-equity firm Carlyle Group, said last month at an industry conference in Dubai. ``The jury is still out as to whether these are good things other than for the investment bankers who raise them.'' Thomas Hicks, the leveraged buyout pioneer and owner of the Texas Rangers of Major League Baseball, raised $552 million for Hicks Acquisition Co. I in September. ``I plan to use the vehicle to try to build three or four or five significant companies over the next five to 10 years because it's permanent capital,'' Hicks, 61, said in an interview from his office at Hicks Holdings LLC in Dallas. ``Once you make an acquisition, that entity has the ability to continue growing both internally and by acquisitions because it will be very lightly leveraged compared to levera

Bloomberg has a background article on a string of foreign leaders visiting India with business as their main agenda. Gordon Brown's plane will have barely departed New Delhi's Indira Gandhi International Airport this month before Nicolas Sarkozy's arrives with another contingent of executives seeking opportunities in India's rapidly opening markets. The British prime minister and the French president, separately visiting the week of Jan. 20, are bringing along commercial delegations including retailers Tesco Plc and Carrefour SA, attracted by a burgeoning middle class and loosening curbs on foreign ownership in the nation of 1.1 billion people. ...Brown and Sarkozy are joining a parade of world leaders coming to India with agendas that include closer commercial ties. U.S. Treasury Secretary Henry Paulson, visiting in October, said U.S. companies will participate in India's $500 billion program to modernize roads, ports, power and other infrastructure by 2012. The U

Business Today has an profile of Hyderabad-based MTAR Technologies which makes parts for nuclear power, aerospace and defense applications and recently raised $65 million from The Blackstone Group in return for a 26% stake. “We need this for our growth plans. Not only will it help us scale up our operations in terms of management expertise, global best practices and technology, the partnership will also give us access to Blackstone’s global network,” says P. Ravindra Reddy, chairman, MTAR. The privately-held company, which hopes to triple its revenues of around Rs 100 crore (for 2006-07) by 2010, is now sensing new opportunities emerging with the entry of MNCs and big players into the aviation and oilfields businesses (the company now has plans to enter the oil fields equipment sector, too). Currently, around 65 per cent of MTAR’s revenues come from nuclear projects, about 25 per cent from space and the remaining 10 per cent from defence. Its major customers include the Nuclear Power

Businessworld has an article on the opportunity and challenges facing bio-fuels industry in India. India is the fourth largest ethanol producer in the world, after Brazil, the United States and China. A recent assessment by the United Nations Conference of Trade and Development (UNCTAD) shows that for the 5 per cent blend mandated in India, the ethanol required would be 640 million litres in 2006-2007, rising to 810 million litres in 2011-2012. “Current capacity can potentially satisfy this demand,” the report says. ...Biodiesel, which is produced from jatropha, edible oils (soy, palm and rapeseed) and other fats, is seen as one alternative to ethanol. Already, at 11 million hectares, jatropha has the largest area under cultivation. At a seminar in Mumbai last month, organised by consultants Frost & Sullivan, Indian Oil Corporation’s chief of research and development, Dr Rakesh Sarin, said that the company has invested in 200 acres of jatropha plantations and is looking at a varie

Businessworld has an article on the state of the Direct to Home (DTH) satellite TV market. Within a few months, at least four more players will launch brand new DTH services. Until recently, state broadcaster Doordarshan was the only other player in the DTH market. New entrants such as Bharti Airtel, Reliance Communications (RCOM), Sun TV and Videocon are expected to spark off price and content battles, and new marketing and distribution strategies. The grand prize is a market worth $5 billion (Rs 20,000 crore), and an estimated 40 million DTH subscribers by 2017. ... By far the biggest challenge facing DTH players will be short- and medium- term profits. The industry complains that it already pays higher taxes than other sectors. The heavy taxes, according to Tata Sky’s Kaushik are ‘almost punitive’. There is an annual licence fees (10 per cent of gross annual revenue), a service tax (12.5 per cent) and entertainment tax (between 15 to 20 per cent, varying according to states). Dish

Businessworld has an article on the challenges facing pharma retail. The Subhiksha experience is a reflection of the power wielded by the All India Organisation of Chemists and Druggists (AIOCD), the Mumbai-headquartered association of pharma wholesalers, stockists, distributors and retailers that decides who can be a part of the pharmaceutical supply chain in India. It issues discretionary no objection certificates (NOCs), creating, in the process, one of the toughest pharma retail markets in the world. ...The pharma supply chain in India has multiple layers of suppliers, middlemen and retailers. Apart from distribution, costs are another important element in this price-sensitive market. Pharma companies appoint carrying and forwarding (C&F) agents for every state, sometimes more than one for large states such as Maharashtra and UP. They move products to at least one stockist or wholesaler in smaller cities, who then pass them on to neighbourhood medical shops, many of which are

Businessworld has an article on how auto component companies are seeking to differentiate themselves by building design capabilities. Medium-sized ancillaries have also been spending more on R&D over the past three years when compared to large component makers. “The engineering capability in our country is the reason behind such growth figures,” says Navin Mata, research analyst at Dolat Capital, a brokerage firm in the Indian derivatives market. “Importantly, foreign majors such as Toyota are noticing the rise in defect rate among their vendors. So they find Indian ancillaries a viable source.” Clearly, design teams add a lot of value. For starters, they give the ancillary company freedom from the OEMs. RSB’s ‘i-Design’ team, for instance, is a separate entity working with OEMs on component quality, weight, design and pricing. Secondly, the ancillary’s value increases in the form of patents. Moreover, competent design teams give Indian component companies a level playing field al

We are delighted to announce a stellar list of speakers for APEX '08, the Indian Private Equity Summit, scheduled for January 31 at Mumbai . The Annual Summit brings together the cream of the Indian Private Equity/Venture Capital-Entrepreneur Ecosystem to introspect, brainstorm on the way forward and reward its best. Confirmed Speakers at the Summit include: Leading PE/VC-backed Entrepreneurs NIKHIL GANDHI, SKIL Infrastructure KRISHNAKUMAR NATARAJAN, MindTree Leading Venture Capitalists SUDHIR SETHI, IDG Ventures India VANI KOLA, NEA-IndoUS Venture SUMIR CHADHA, Sequoia Capital India Leading Private Equity investors LUIS MIRANDA, IDFC PE SHAILESH PATHAK, ICICI Venture P.R. SRINIVASAN, CVC International MAHESH KRISHNAMURTHY, India Value Fund

Business Today has an article on a Bangalore-based entrepreneur who is creating a sugar cane juice brand and a chain of parlours that will serve them. Cane juice is emerging as an alternative to colas in India’s Silicon Valley. Cane-O-La, the country’s first branded sugarcane juice, was launched recently and has met with an encouraging response. “We want to wean people away from artificial beverages to natural drinks such as sugarcane,” says Gopadi Srinivasa Rao, Chairman, Cane-O-La. Spurred by the huge success of the two parlours he has already opened, he has plans to unveil 100 outlets in Bangalore over the next two years. Two more are ready for launch. ...Each juice outlet requires at least 20 people, and can help those at the bottom of the pyramid. Indians have always loved cane juice, but earlier, it was available only with roadside vendors, with dubious hygiene standards. Cane-O-La’s mechanised process addresses that issue. Arun Natarajan is the Founder & CEO of Venture Int

Businessworld has an article on the two new Hindi-language entertainment channels launched by two former Star TV bosses - both of whose parent companies have raised PE financing. Entertainment television can be like a soap opera: dreams, drama and declarations in a bid for the audience’s heart. Two men who headed the largest TV network as CEOs of Star Entertainment and Star India, and who left earlier this year to start their own outfits, have made their plans public. On 12 November, Peter Mukerjea launched his flagship channel 9X. Around the same time, Sameer Nair, now CEO of NDTV Imagine, announced that his Hindi entertainment channel would be on air next January. ... Nair says the market is ever-expanding, with no need to take away audiences from competitors. “The audiences will come in when they find there is something special on offer,” he says. He may have a point. Four years ago, all-India television viewership ratings (TVRs) of Kyunki Saas… were as high as 11 or 12. Last week,

Businessworld has an short article on how Aegis, the BPO arm of the Essar Group, is ramping up its focus on the domestic outsourcing business. Last week, Aegis, the ITES arm of the group, acquired Teletech Services, a BPO company jointly promoted by Bharti Group and Teletech of the US, for Rs 55 crore. The deal has catapulted Aegis to the market leader’s position, with a 35 per cent share in the telecom BPO space of customer lifecycle management, says Aparup Sen Gupta, MD and CEO of Aegis. Its rivals First Source and IBM-Daksh have 15-20 per cent share. The deal added India’s largest cellular player Airtel as a client to the $180-million company, which is in a hurry to achieve a business size of $500 million in the next 24 months. The company executes back-end work for three of the top 10 global telecom companies, five of the top 10 Indian telecom players and a host of financial service and healthcare companies. With five million subscribers being connected a month, Aegis expects the

Businessworld has an article on how mid-tier Indian IT Services are attempting to cope with the "great squeeze" by differentiating themselves. Mumbai-based software firm Hexaware shares more than a few similarities with its peer iGate. Hexaware, like iGate, has established a presence in a number of verticals in order to maximise its competitive advantage. It initially started with a focus in the BFSI verticals, but over a period of time it has unveiled what it calls a multi-niche strategy and has entered into transportation, hospitality and logistics verticals too. Like the bigger companies, Hexaware’s strategy is to expand as quickly as possible through low cost centres globally. Adds Atul Nishar, chairman of Hexaware, “We are working on a $1-billion (Rs 4,000-crore) roadmap, where we envision a larger global footprint with a headcount in excess of 35,000 and we will have delivery centres in South Asia, eastern Europe and North America. We will also launch new verticals or

Dealmaker has a profile of Dayton Carr, the founder of New York-based VCFA Group, who is considered the "father of PE secondaries". (Secondary funds provide liquidity to limited partners by buying out their interests in PE/VC funds prior to the expiration of the funds' life terms.) Carr, who started out in the 1960s by managing a VC fund for IBM's Thomas J. Watson Jr., founded VCFA Group in 1982. Calling the $2 million operation — essentially a fund of public and private placements owned by Watson — Carr Management Company, the young dealmaker navigated his way to solid returns. At the end of 1979, Carr bought out his boss after President Carter appointed Watson ambassador to the Soviet Union, then sold a majority of the remaining holdings. “I saw firsthand that by coming in at a later stage, when some of the rough patches had started to smooth out, and at a discount, I achieved around a 60 percent return.” ...VCFA has since taken stakes in some 200 funds both large

The following companies are seeking capital for starting-up / expanding their operations: 08-01-02-1: Calicut-based Construction Company focusing on high end public construction works including dams, roads, bridges, canals, seawalls, etc. seeks >5M for procuring new contracts and investment into existing projects. 07-12-26-1: Delhi-based Electronic Retailer of Mobile Recharge cards and other services seeks <$100 K for working capital. 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

Founded in 1998, this Chennai-based company has created products for Internet marketing like Email campaign management software, Multilevel marketing software, and Affiliate management software which is being used by companies like Infosys, Citibank, etc. It has considerable expertise on web applications domain and worked with companies like Ford, AMD, etc. and has been assessed for SEI-CMM level 2. Interested buyers can email vcmarket@ventureintelligence.in for more information.

Recently, I have come across quite a few VC (and in some cases even PE ) firms in India taking on board Entrepreneurs in Residence (EIRs). Simultaneously, I have begun to hear entrepreneurs pitching to these firms express concerns on the potential conflicts of interest in the EIRs sitting through their presentations and doing diligence on their companies. What exactly in an EIR? Here is an extract from the Wikipedia entry : The role of an EIR varies from fund to fund (and entrepreneur to entrepreneur), but typically it involves an individual that wants to start a company. The entrepreneur may enter the position with an idea at various stages of development. Sometimes an entrepreneur has already spent a great deal of time on the idea and is leveraging the EIR position for office space and mindshare with VCs. Another EIR role is to act as a “partner” and help VCs evaluate potential deals where the entrepreneur has a particular expertise. An EIR might also spend some time with an existin