The Venture Intelligence Blog

Knowledge@Wharton has an article on some of the possible reasons. China may also be accumulating massive amounts of foreign reserves as a result of the Asian Economic Crisis in 1997, when it watched the IMF impose strict conditions on bailout recipients. "In my view, that's a major contributor" to China's ballooning reserve of foreign exchange, says Allen. "I think most Asian countries looked at what happened and decided that they hadn't been treated fairly. So that's why they have been accumulating trillions of dollars in reserves." China's trade surplus could swell to $325 billion this year, an ING Group economist told Bloomberg on April 23. According to Bloomberg, China's currency reserves fell $32.6 billion in January, $1.4 billion in February, then went up $41.7 billion in March. But a lot of China-watchers assert that China purchases U.S. Treasuries as a way of manipulating its currency. "The way the Chinese manage the value of th...

From a promotion for a masterclass for US PE fund managers titled "How To Keep Relationships with LPs Harmonious - Despite Recession, Credit Crunch, Mark-to-Market, Capital Calls, & Other Causes of Frustration, Anger, Mud-Slinging, & Divorce": In this post-Madoff world, there are two concepts LPs like me have gotten more and more concerned about. First is transparency. Believe it or not, I know LPs who have started to go around their GPs and contact managers of portfolio companies directly to confirm their fundamentals first-hand. Would you know if your LPs did that? And frankly, do they have a reason to? The second word? Liquidity. With capital call defaults an industry-wide problem, you need to ask yourself - are you prepared with creative remedies? Or are you likely to be caught off-guard? ...I’ve watched as fund managers try to sugarcoat bad news — which never works. Or they fail to communicate as openly as they should -- which makes tempers flare and attorney...

Venture Intelligence is happy to invite you to nominate companies you are associated with in India to The World Economic Forum's 'Technology Pioneers' Program 2010. The Program, started in 2000, with the goal of identifying new technologies that will have a dramatic and sustainable impact on business and society, has achieved the distinction of being the most prestigious recognition in the world of technology. Last year, Bangalore-based mobile payments company JiGrahak Mobility Solutions was selected as one of the 34 "Technology Pioneers" for 2009. Another tech firm that does a lot of its development out of India - Nivio - was also named. To be selected as a Technology Pioneer, a company must be involved in the development of "life-changing technology". In addition, it must demonstrate visionary leadership, show signs of being a long-standing market leader and its technology must be proven. WEF solicits nominations for the Technology Pioneers program fro...

Sumant Sinha, COO of Suzlon Energy and formerly a top executive at the Aditya Birla Group, writes in the Economic Times how Corporate India should deal with the "unprecedented times" we are passing through currently. (The large business groups) realised the good times were leaving them behind given their relatively risk averse nature, belatedly tried playing catch up, but only ended up coming to the party late. Hence, most of their large acquisitions such as Corus, JLR, or Novelis were very late in the cycle. These acquisitions suffered from the worst of all worlds — they were closed at peak valuations but their financing ran into the post-Lehman environment. Hence, these companies are saddled with huge financing issues in terrible financial markets and a very weak operating environment. ...At the same time, stresses in the system will generally increase before diminishing. To my mind, the worst is yet to come, and we will have one or two more downdrafts before we go into a ...

As part of a debate in the Economic Times, Amit Mitra of FICCI, makes the case for why corporate taxes are too high in India. The average tax rate globally stands at 25.9% in 2008 while that of India stands at 33.9%. This figure includes a 10% surcharge and a 3% education cess. In other words, corporate tax rate in India is almost eight percentage points higher than that of the global average. And this, without adding the impact of Dividend Distribution Tax (DDT) and Fringe Benefits Tax (FBT) levied on corporates. Furthermore, the global average tax rate has been coming down over the years. In 2006 it was 27.2%, down to 26.8% in 2007. Unfortunately, India has moved in the opposition direction. The DDT was raised from 12.5% to 15%, education cess from 2% to 3% and ESOPS were subjected to FBT. Even for MAT companies, the rate has gone up and its base widened. ...A look at the tax rates of other countries does reveal that Indian companies are charged higher tax rates. For instance, the c...

Business Standard has a debate on this topic. Amit Tandon, Managing Director of Fitch Ratings India, presents the optimistic view: Will a Third Front government spell economic disaster? Will steel plants shut in Jharkhand? Will companies stop making cars in Tamil Nadu? Will software no longer be written in Bangalore? Will ships not sail from Mumbai? Will doctors not operate? Will teachers not teach? Go back in time. Did FIIs not come back, after vowing to stay away from India, after we exploded a nuclear device? Did banks not shut shop in the 1990’s, only to line up on Mint Street, wanting to open branches again? The pace may vary, but a billion-plus people will always create their own forward-momentum. Nirmal Jain, Chairman and Managing Director of India Infoline, is highly concerned about a fractured outcome: We are passing through a massive global financial crisis. Under these circumstances, if the country’s financial management is in the hands of corrupt politicians who are in a h...

Businessworld has a cover story on the mounting debt levels at listed retail firm Pantaloon. With Rs 362 crore payable every year to meet long-term debt obligations for the next six years, PRIL’s 3 per cent return on capital employed may not be enough. On capital employed of Rs 5,342 crore, PRIL delivered a turnover of Rs 5,295 crore in 2007-08, representing a cash churn of only 0.98 times of capital employed. Internationally, Wal-Mart generates 2.29 times, but then the firm is a global behemoth. PRIL also has Rs 250 crore worth of inventory on its books and many believe the group’s extended discount sales are testimony to this. But Biyani rubbishes such statements and remains rooted to the Indian retail story. Investor confidence in PRIL has hit a low too. As against a 63.7 per cent drop in the Sensex from its peak, PRIL’s stock has fallen 80 per cent from a high of Rs 876 on 2 January 2008 to 169 on 6 April 2009. Its market cap has dipped from a peak of Rs 12,913 crore in January 20...