The Venture Intelligence Blog

Businessworld has a cover story that profiles the shortlisted five high-potential entrepreneurs (selected by a 4-member jury consisting of executives from GE, Philips, Intel and HCL Tech): 1. Shashin Mishra, Masplantiz (Remote monitoring tech) 2. N.N. Sreejith, ROPE (Sourcing products from rural areas) 3. Phanindra Sama, redBus (online bus tickets) 4. Sandeep Maheshwari, Mash Audio Visuals/imagesbazaar (online photo mart) 5. Lekh Joshi, Mango Technologies (tech for mobile phones) 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. Email the author at arun@ventureintelligence.in

Business Today has a cover story on how marketers are hoping to tap the relatively buoyant rural economy for their companies' growth. It’s probably this resilience that’s prompting companies such as Airtel, facing slower urban sales following the global financial meltdown, to make a dash for the hinterland despite the lack of basic infrastructure. “We started focussing on the rural markets about a year-and-a-half ago, and today 60 per cent of all our new consumers are from the rural areas,” says Sanjay Kapoor, Deputy CEO, Bharti Airtel. That means 1.68 million new rural customers a month. Airtel has been adding some 2.8 million subscribers every month since the past one year. ...“Earlier, we had a lot of decentralised rural marketing efforts, which were largely dealer-driven. Now, they are more centralised. This includes a 500-strong sales force on the full-time rolls of our dealers to target rural sales specifically,” points out Anil Dua, Senior Vice President, Marketing, Sales a

In an article for Economic Times, Srivatsa Krishna makes a fervent case for freeing up hurdles in the way of Private Equity investments in India's infrastructure sectors. The one possible way ahead is for PE funds focused on infrastructure, of which there are now at least 20 large ones globally with combined funds under management of almost $130 billion, to invest in Indian infrastructure in a big way. India, at the highest levels of government, needs to dedicate a small core group to woo these funds into India. PE is one of the few asset classes, which does not face redemption pressures and though there is a shortage of capital around the world, yet there still are a fair amount of PE funds focused on infrastructure looking for good deals. ...However a number of strategic, regulatory and operational reasons are forcing these funds to keep away from Indian infrastructure projects, especially when many of them get an assured 12-14% post-tax return in mature brownfield projects suc

Investors in hedge funds believe the industry will see even bigger withdrawals this year than 2008, according to new survey by Deutsche Bank. As if last year's carnage wasn't enough, the LPs believe 1 in 5 hedge funds will go out of business this year. From a Bloomberg report based on the survey: “If 2008 was a story about performance of hedge funds, 2009 is very much going to be a story about restructuring,” said Sean Capstick, Deutsche Bank’s London-based global head of capital introduction. “Our survey indicates redemptions will continue as a phenomenon for the foreseeable future.” ...Investors worldwide pulled $155 billion out of hedge funds in 2008, marking only the second full-year of net outflow since Chicago-based Hedge Fund Research Inc. started tracking the data in 1990. The withdrawals helped pare hedge-fund assets 27 percent from a mid-2008 peak, HFR said. Because many funds only allow redemptions once a quarter, “there is a lag time consistently in outflows in th

At Venture Intelligence's Annual Private Equity conference in February, a leading PE fund manager remarked how investors were now forced to pay more heed to currency movements than their portfolio companies' operational performance. The US dollar's dramatic appreciation in recent months has indeed astounded many. In an article for the Economic Times, Sunil Kewalramani, provides some reasons why the currency of the country in the middle of the global financial mess - and, according to several predictions, in the midst of a multi-year slowdown - is actually appreciating. A number of analysts had predicted the continued demise of the US dollar, thanks to the financial-sector bailout and weakening economy but its sharp upside has surprised many. The dollar’s recent climb is part of a massive reversal of long-standing investing trends (due to the global economic slowdown) such as buying emerging-market stocks or wagering on rising commodity prices. ...Aside from the actions of

Business Standard has profiles of new entrants in its latest BS 1000 listing of companies. The new entrants include OnMobile Global, Page Industries, Indage Vintners, Educomp, Shriram EPC, Temptation Foods and Cairn India. Vinit Kumar though doesn’t worry too much that he’s not shedding the extra pounds. A self-confessed foodie, the chairman and managing director of Temptation Foods quit Reliance Industries in 1996 to pick up a stake in the ailing company. He bought out the owners for about Rs 1 crore – the company’s losses at the time were in the region of Rs 5 crore—and restructured it. Working in Reliance, he says, inspired him to become an entrepreneur and armed with a 13 per cent stake, he’s now in the midst of a takeover battle with the Arora family for control of Kohinoor Foods. Kumar, who enjoys Italian and Japanese food, as much as the ‘thali’ at Golden Star on Mumbai’s Charni road, wants to sell processed and ready-to-eat foods and create brands for spices, snacks, frozen ve

Kathleen Hughes, a manager of money market funds at JPMorgan Asset Management, has an interesting description for the change in risk appetite of investors: "Risk appetite leaves on a horse but comes back on foot," she said at a Reuters funds summit. The report from the conference points to data from fund trackers EPFR Global (for the second week of March) to indicate signs of growing risk appetite. Commodities, technology and energy sector funds as well as global emerging market equity and non-Japan Asia funds all saw net inflows. Perhaps most noteworthy, money market funds, the bellwether for investor risk aversion, had net outflows of $381 billion in the week. Hughes says she has seen something of the same. The size of the safest-of-safe segment of her money markets funds — the short-dated U.S. Treasury paper bit — has halved since the fourth quarter of 2008. So there is some walking going on even if the horse remains in the stable. Arun Natarajan is the Founder & CEO

Business Today's has come out with the latest update to its annual listing of "Hottest Startups in India". The list includes VC-backed companies like Inbiopro (backed by Accel India), Carnation Auto (Premji Invest), AskLaila.com (Matrix Partners), Ayurvaid (Acumen Fund) and Orange Cross (Lumis Partners). 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. Email the author at arun@ventureintelligence.in

Business Today has an article on how healthcare firms are planning to accelerate their growth plans - never mind the recession. “A slowdown is the best time for health care to consider growth,” avers G.S. Rao, Executive Director at Yashoda Hospital in Hyderabad. Rao is doing just that. He has set up an integrated and advanced cancer treatment center involving investments to the tune of Rs 100 crore; this includes over Rs 17 crore on installation of, what he calls, Asia’s first Rapid Arc Linear Accelerator, which is used for radiotherapy. Rao also plans to invest Rs 250-300 crore on super-speciality services by 2010. His growth plans are driven by the fact that there is constant demand and it is only during a slowdown or recession that input costs come down. Funding isn’t an issue either, with Rao claiming that banks are vying with each other to offer good rates. Yashoda is not the only hospital that’s using the headwinds of a downturn to take off. Industry major Apollo Hospitals is eq

Contentsutra has an interesting package on the salary cuts at Bennett, Coleman & Co. Ltd (BCCL), India’s richest media company that publishes The Times of India and The Economic Times. It includes a copy of the letter sent by BCCL CEO Ravi Dhariwal to employees announcing salary cuts, an interview with him and an analysis of what went wrong. From the letter: Starting May-June last year, the first road bump in the form of newsprint prices hit us. We started paying between 60-70% more for newsprint than we had been paying previously. This depleted our profitability to less than half of what we had enjoyed previously. We saw some of it coming, and took necessary steps to mitigate it as much as possible. Small cover price increase, rationalization of pages, strictly incurring only necessary costs were our focus then. By doing these, we were able to keep ourselves profitable though at a reduced level during the first three months of August, September and October. Actually Octob

Business Today has a cover story profiling publicly-listed companies that are doing fine despite the economic recession. The listing includes some large cap companies like Bharti Airtel, Hero Honda and L&T as well as smaller companies like Everest Kanto Cylinders Opto Circuits and AIA Engineering. Other companies in the list include Sun Pharma, Allcargo Logistcis, Simplex Infrastructure and Mundra Port. So, what sets these winners apart from the rest of the pack? Plenty, actually. Let’s begin with the sheer benefits of size and pedigree. Corporations like Bharti Airtel, Larsen & Toubro and Hero Honda are all leaders in their sectors. They’re also the only companies in their sectors that have been notching smart growth even as their rivals flounder. They also prove that being an early bird helps in getting the worm—even during a downturn. Then, there’s a company like Sun Pharma that has countered the downtrend in the pharma sector by perfecting, over the years, a four-pronged

Businessworld has an article on a new crop of drug discovery companies - most of whom are Private Equity-backed - that are promising to represent the version 2.0 of the Indian pharma story. Today, NovaLead is at the doorstep of a destiny that India’s pharmaceutical Goliaths — Ranbaxy Laboratories, Dr. Reddy’s Laboratories and Glenmark Pharmaceuticals, among others — wandered into and faltered despite a decade of research: discovering a new drug. Deshpande has 11 molecules in the pipeline, for conditions varying from cancer to acne, and claims his first drug, a diabetic wound treatment, could hit the market in the next two years. As the great Indian generic drug success story loses steam, Deshpande and some other pure-play drug researchers could well become the next generation of Indian pharma companies to make their mark globally. Apart from Deshpande, this list includes Sundeep Dugar, who started Sphaera Pharma in Haryana last year; Sunil Bhaskaran, who set up Indus Biotech in Pune i

MediaNama has an interview with B2B Internet firm IndiaMart's CEO Dinesh Agarwal. I think the latter part of the upturn affected us more than the downturn. We were highly cashflow positive business, and towards the end of 2006-2007, there was market frenzy. Our costs were going up unnecessarily and the whole business model started to look non-feasible in the medium or the longer term. If costs were to grow at 30-40-50% growth, I didn’t see the businesses flourishing in the long run. That is when I decided to raise the money. We would never thought of raising money otherwise. ...Intel is probably going to complement it (BCCL's ads-for-equity deal) with money. BCCL has media properties, but for a larger market pull, you need to invest across various media…and you cannot do private treaty deals with 7 different media houses. ...I met different venture capital companies over the last two years. Intel matched better with us, they had a longer horizon, and are less impatient than so

In his column for the Economic Times, Ruchir Sharma argues why it would take a long time for the commodities ‘super cycle’ to revive. Expectations of ever rising oil prices are reflected in both the forward curve and in analysts’ consensus expectations. For example, oil for delivery in three years’ time is trading at close to $70 a barrel compared to the spot price of around $45 a barrel. Meanwhile, oil analysts forecast the price to be even higher at $90 a barrel in 2012. ..However, China suffers from an over-investment problem, with an investment-GDP ratio running at a very high level of more than 40% for many years. Much of the investment is directed towards the sagging export sector and therefore Chinese investment demand is highly unlikely to revive anytime soon. China needs to reorient its economic model more towards domestic consumption and reduce its reliance on exports and investment. Japan was able to successfully make that transition in the early 1970s when its per capita i

Businessworld has an article on the economics of independent tower companies. Tower companies are now discovering that higher valuations, lower rentals and poor tenancy ratios could stretch payback periods up to 15 years. In comparison, most sectors have a payback period of five-seven years. “We believe that the return generated by 1-1.5-tenant towers, at current rental rates, is not enough to drive current valuations for tower companies,” says James Taiclet, CEO of American Tower Corporation (ATC). Take, for instance, the SBA Communication-TowerCo Llc (US) deal and the Quippo-WTTI (India) deal that happened at an enterprise value of $451,163 and $151,817 per tower, respectively. When this is compared to the ballpark revenue per tower of $60,000 (Rs 30 lakhs) in the US and $10,000 (Rs 5 lakhs) in India, one would find that the payback period would be 7.5 years for the US buyer and 15 years for the Indian buyer. It costs approximately $250,000 to build a tower in the US, compared to $7

Businessworld has a cover story on the corporate battle that resulted in Kunal Dasgupta, the CEO of Multi Screen Media (formerly Sony Entertainment Television), quitting just a few months before his contract was due to end. Dasgupta’s abrupt exit was the culmination of six years of tension between majority shareholder Sony Pictures Television International (SPTI) that owns 61 per cent of MSM, on one hand, and Atlas Equifinn on the other, which is a consortium of Indian shareholders (Singapore-based Rakesh Aggarwal, World Media Group director Sudesh Iyer, Shemaroo Entertainment Managing Director Raman Maroo, MobiApps Holding’s Jayesh Parekh, B.R. Sule, Sushil Shergil and actor Jackie Shroff ) holding 32 per cent. Capital Japan and some financial institutions own the rest 7 per cent. And of course, the third protagonist is Dasgupta, who walked a tightrope and managed to keep his job for over 14 years despite the fact that neither group of shareholders was too happy with him. Very little

It was interesting to see the Reserve Bank of India's tripping up on interest rates featuring in this video of a lecture by Harvard Economics Professor Martin Feldstein on the US-triggered global economic crisis. Despite the goof up on the interest rate front, the Prof. feels quite optimistic about the prospects for the Indian economy going forward. 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. Email the author at arun@ventureintelligence.in

Here's what a venture capitalist at one of the firms that invested $35 million recently in non-revenue generating Internet & mobile app firm Twitter told The Deal . "Most people don't realize the actual scale of Twitter," IVP general partner Todd Chaffee tells The Deal. "It already has millions of users and thousands of applications that have been built upon its platform, and the company is less than three years old. It's rare to find a company with such rapid growth, and the business is starting to accelerate now that they have hit the inflection point in their growth curve." Here's what Jon Stewart of the Daily Show on Comedy Central thinks of Twitter's growing power. The Daily Show With Jon Stewart M - Th 11p / 10c Twitter Frenzy Daily Show Full Episodes Important Things With Demetri Martin Political Humor Joke of the Day Hat tip: The Deal Arun Natarajan is the Founder & CEO of Venture Intelligence, the leading provider of information

Business Today has an article on how the recession in the West is taking a toll on the Indian floriculture industry. But for the Indian floriculture exporters, the party was over—at least for this year. This is because roses account for 99 per cent of total Indian flower exports, which, according to Agriculture and Processed Food Products Export Development Agency (APEDA), aggregated to Rs 340.14 crore ($84.49 million) in 2007-08. “Traders held back the orders due to uncertainty. One of the leading traders, who normally buys six million roses for Valentine’s Day, had firmed up orders for just one million by February 6,” says Ramakrishna Karuturi, Managing Director, Karuturi Global, one of the largest players in the industry, with a presence in both India and Africa. Adds Anne Ramesh, Chairman, Suvarna Florex, and a veteran in the industry: “Every year, we used to get firm orders for 70 per cent of the export quantity by February 1. This year, even as late as February 9, we had orders

New York magazine has a longish profile of Citi CEO Virkam Pandit titled "The Most Powerless Powerful Man on Wall Street". The article traces his career including via Morgan Stanley, his hedge fund Old Lane, to the present day crisis at Citi. According to the article, when Pandit was born, an astrologer told his family that “whatever this boy touches will turn to gold.” (Robert) Rubin and Citigroup were eyeing Old Lane as an acquisition—not for high-yield returns, but for Pandit, a potential candidate to one day run Citi. In April 2007, Pandit sold Old Lane to Citi for $800 million, a price tag that boggled the minds of Wall Street observers. Pandit personally reaped a huge bounty, what amounted to $165 million in cash. With his windfall, he bought a ten-room, $17.9 million co-op apartment on Central Park West, the former home of the late actor Tony Randall. Rubin made little pretense about why Citi had spent so much money: He publicly called Pandit “a genius.” ...In Septemb

Here's the follow up to the funny video titled "Wall Street Meltdown" - set to the soundtrack borrowed from Billy Joel's “We Didn’t Start the Fire”. You could see Part 1 here 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. Email the author at arun@ventureintelligence.in

In his column for Business Standard, Akash Prakash points why the new govt's moves, post election, would be a key determinant of foreign fund flows into the Indian market. We have to recognise that India has no God-given right to receive billions in capital; we have to make our policy framework attractive to capital, and build confidence in global financial investors that the country means business. We have to be able to convince long-term investors that we can take the hard economic decisions which are needed to sustain our long-term growth. We will have to compete for the limited capital which is available with many other attractive emerging markets. Global investors have to once again get excited about our structural growth rates and ignore the macro-vulnerabilities. I sometimes think we are too complacent, we feel investors have to be in India: While partly true for FDI, there is no such compulsion for financial capital. No investor has to be in India. Investors will only go w

ADVERTISEMENT CAPVENT (www.capvent.com) , a global Fund of Funds organization and an active investor in China and India is organizing its 2nd Annual China-India Private Equity Summit in Goa from April 01-03 2009 ( http://www.capvent.com/conf-08/index.html ). Leading Fund managers from China, India and other Asian and western markets will be attending the Summit. The main topics of discussion of the Summit will be: Planning for Post Crunch Scenario: The world is a dramatically changed place since last year. While touted as the new global growth engines until 2007, today investors are seeking a high premium on investments in China and India. As growth slows down in the world’s two growth engines, what changes do PE investors anticipate in their investment horizon and how are they adapting to these changes? Business Models and Opportunities in China and India: The investment opportunities, new business models, and opportunities for synergies evolving in specific sectors in China and In