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April 30, 2007

Summer Edition of Proto.in to be held on July 21-22

The second edition of Proto.in, an event that showcases technology start-ups along the lines of the well-known DEMO conference in the US, is to be held at IIT-Madras on July 21 and 22.

Proto.in aims to help start-ups capture mindshare for their products among potential customers, investor and the media. The January edition of Proto.in witnessed 27 companies - selected from more than one hundred nominations - present their vision and demonstrate their products, according to a press release from the organizers.

The second edition has received confirmation of participation from several VC firms including Sequoia Capital, Clearstone Ventures, Canaan Partners, NEA-Indo US Ventures, Gabriel Ventures, etc.
Nominations for start-ups - which now includes companies from across Asia - end on June 5.

For more information, please visit http://www.proto.in



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.

April 23, 2007

Shantha Biotech post acquisition

Businessworld has an article on life at Shantha Biotech post the acquisition of a 60% stake by Merieux.
While Merieux is expected to make use of Shantha’s existing line of products, sources at Shantha say the revenue mix will change. “When we launched Hep B, profit margins were between 20-25 per cent. But it gradually fell,” says Shantha’s founder and managing director, K.I. Varaprasad Reddy. Given falling profit margins, he believes combination vaccines will prove to be the winners.

For instance, a dose of DPT vaccine is priced at 10 cents (Rs 4.40), while a dose of Hep B costs 27 cents (Rs 11.88). A combo vaccine including Hep B and DPT will cost 87 cents (Rs 38.28) per dose. “It’s priced higher because we put in more on R&D to bring out the product,” says Reddy. Over the next three years, he believes the company will see a revenue mix of 50:50 from combo vaccines and individual products. “Indian players are strongly into combination vaccines,” says Mahesh Sawant, programme manager (healthcare practice), Frost & Sullivan, Mumbai.

Merieux stands to gain, too. Though Shantha has an installed capacity of 200 million doses of Hep B vaccine, it utilised less than 33.58 per cent in 2006. Merieux will now try and use these facilities. “We can even make contract manufacturing a lucrative area,” says Hibon. The partners have found more synergies. While Merieux is strong in therapeutics, Shantha’s forte is prophylactic vaccines. But Shantha needs funds quickly to generate more revenues. “We hope to get around Rs 100 crore by doing R&D for group companies of Merieux over the next three years,” says Khalil Ahmed, executive director, Shantha.

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.

Pricol at the crossroads

Businessworld has an article on how leading Coimbatore-based auto component maker - known best for its speedometer products - is struggling with an uneasy relationship with its Japanese technology partner and in the face of rising competition.
At stake is India’s Rs 1,300-crore auto instruments market, growing annually at almost 14 per cent. Pricol leads for now, but Siemens VDO and smaller players, like Minda Instruments from Pune, are in hot pursuit. Minda, in particular, is a key competitor as it expects to grow from Rs 11.50 crore in turnover in 2003-04 to Rs 90 crore by FY2008.

Although it has a small base (it manufactures only 2 million instruments compared to Pricol’s 16.98 million), it is quickly eating into Pricol’s market share.

To stay dominant, Pricol’s management team needs to act fast. Having bet big on exports, they rely on Denso’s huge network to secure orders from global markets, where Denso enjoys a positive reputation. Simultaneously, they would also like to bring in advanced technologies through other partners. However, it is not clear whether there are any restrictive clauses from the Denso deal that might prevent Pricol from working with other companies. About six months ago, industry grapevine had it that Pricol was in talks with global auto instrumentation majors, which have not yet borne fruit. “No new tie-ups would be possible as long as Denso retains its stake,” says an analyst with Batlivala and Karani Securities in Mumbai.

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.

Indian media houses make big moves online

Businessworld has a cover story on the Internet businesses of leading Indian TV and print media companies.
Most old media companies know that they are investing in the Internet a little ahead of time. But unlike 10 years ago when they briefly appeared and then withdrew with the crash in 2000, this time they claim to be in it for keeps. And all of them seem to have found ways around India’s Internet problems — bad access, no metrics, etc. For now, though, it seems as if the TV and film companies are better at the game than print companies. With the honourable exception of India’s largest media company. By the end of July 2007, the Mumbai-based Bennett, Coleman & Co. (BCCL) should get about 10-15 per cent of its estimated Rs 3,000-odd-crore in revenues from its portals — indiatimes, timesjobs and the others. That would make it, arguably, one of the biggest Internet companies in India.

Others are trying to catch up. In about two years, Mumbai-based news broadcaster Television Eighteen (TV18) has built, acquired or allied with partners to create a family of 10 websites such as poweryourtrade.com and yatra.com. Web 18 was recently spun off as a separate company with a new CEO, Surya Mantha. By end 2006-07, Mantha says that 10-20 per cent (around Rs 20 crore) of TV18’s revenues will come from its portals. “We want to be the largest consumer Internet company in India,” says Mantha, in a telephonic chat from Mumbai.

Its arch rival and India’s top news broadcaster, New Delhi Television has just set up NDTV Convergence. “We (ndtv.com) are at 200 million page views a month and among India’s top five websites. All we need to do is monetise it,” says CEO Sanjay Trehan. His revenue target is Rs 100 crore in three years. From The Hindu in Chennai to Zee and Mid-Day Multimedia in Mumbai to Living Media in Delhi, almost every company has set up either a Net division, a subsidiary or allied with an Internet firm.


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.

Prescription eye wear market

Businessworld has an article on Titan's entry into the emarket.
Every third person in India wears glasses. And that translates into a Rs 1,800-crore prescription eye wear market. While small retailers meet most of this demand, a few players have set up store chains across the country to tap the brand space. Prominent among them are Lawrence & Mayo, Colorsoft’s Ottica and Cartier.

Now the Rs 2,000-crore Titan Industries plans to do things differently. The Bangalore-based watch and jewellery maker from the Tata Group will open 10 ‘Titan Eye+’ stores by the year end nationally, and then scale up. “We plan to roll out 150 stores in about 3-5 years,” says Harish Bhatt, COO, Titan Industries. In terms of numbers, this would leave its rivals far behind: Lawrence & Mayo has 42-odd outlets, while Ottica has 30. However, the existing players are not unduly worried. With the market growing at 20 per cent, there is plenty of space, especially in the smaller cities. Says Vivek Mendonsa, marketing director, Lawrence & Mayo, in Mumbai. “The entry of new players will not affect profitability. But it might force some small players to back off.”

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.

April 16, 2007

Workshop on Private Equity/Venture Capital in India

Indian Venture Capital Association (IVCA) and the EVCA Institute (part of European Venture Capital Association) are organizing a workshop titled "Foundation Course in Private Equity & Venture Capital" on April 24-26 in New Delhi.

Presenters include:
· Mike Lawless, INSEAD
· Sanjeev Krishan, PriceWaterhouse Coopers
· Harm De Vries, InDutch Ventures (Holland)
· Siddharth Shah, Nishith Desai & Associates
· Vincent Neate KPMG (London)
· Vineet Sachdeva, IDFC Private Equity
· Pravin Anand, Anand & Anand
· Simone Cimino, CAPE Venture Capital (Italy)

For more information, visit http://indiavca.org or contact IVCA at info@indiavca.org or 98103 59243 or 98181 99661.

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.

T&I's interview with Evolvence India's Jay Jegannathan

T&I's Jerry Borrell has an interesting interview with Jay Jegannathan, Managing Director of Evolvence India Fund, the first Private Equity Fund of Funds focused exclusively on the Indian market.

Some extracts:
JJ: I had spent a year trying to understand the Indian market in 2004. And as I told you at the time, I knew that our timing was right, that India was about to bloom. Indian domestic funds and private equity funds were trying to expand beyond their traditional domestic LPs to raise funds internationally and we were there in the midst of that. I had to re-think my original concept; the idea that we would go into India to collaborate with GPs to invest in India because at the time, there were exactly 13 domestic Indian private equity firms and India is vast. Each of that small group was regional [in its investment outlook]. GPs in Bangalore focused on the Southern market. GPs based in Mumbai, were generic, whoever walked through their door, they would see. GPs in Delhi focused on the Northern Market. I saw that if we were to partner with a single firm we would not realize the concept of becoming a truly national investor in India. I saw that to be involved at a national level, a
fund of funds approach would be better.

(On Evolvence India Holdings which raised $65 million on the London AIM recently)

JJ: Three months ago we said that we wanted to create this permanent pool of capital; to create and list a structure in a public market and raise some amount of capital. We discussed how much we should raise for a private equity opportunity. We knew already, based on other PE firm public offerings that these stocks initially trade at a discount over the first year to two years because of the J curve effect of the portfolio. The money has to be deployed and then by the time it’s deployed the fees have eaten up so much of the capital base that the stock really trades at a discount.
We didn’t want the uncomfortable period in which our investors who have written checks for us are holding a discounted stock. We felt it was important to build the portfolio to a certain extent and then to raise a public vehicle. We did that and evaluated the portfolio that we had built for the Evolvence India Fund in October last year, [at which point] we knew that we’ be closing the fund by March 31st.

T&I: Which puts us where?
JJ: By December last year we knew that we had a window of about three months before we would close the fund, to raise the permanent pool of capital as a listed structure to help the India funds platform have more stability and a permanent fund basis.

From the fund of funds perspective, we believe we can deploy between $100 to $120
million per year; that this level of commitments is prudent and achievable without having any problems. So last year we deployed about $120 million and I think we’ll continue at that rate, deploying that amount of capital each year, about $100 million over the next two or three years. After that we’ll stop and take stock and depending on prevailing market conditions we’ll either increase or reduce the amount of annual commitments. We’re doing that with a team of ten people, based in Delhi for the Fund of Funds and another three in Hyderabad.


You can download the entire interview transcript 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.

April 15, 2007

Will Electric Scooters click in India?

Business Today has an article on the various players who are betting that electric scooters will take off in the Indian market.

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.

The China Impact

Business Today has an article on how competition - unfair or otherwise - from China is affecting various segments of Indian industry.

Sanjay Labroo, Managing Director, Asahi India Glass, and Vice President of the Automotive Component Manufacturers Association of India (ACMA) gets uncharacteristically animated when you bring up the topic of China. "I don't understand China," he says, before holding out a chart showing how much Chinese component imports into India have increased over the past five years. In 2002-03, India was a net exporter of automotive components to China-importing a paltry Rs 47.4 crore, while exports totalled Rs 69.3 crore. ACMA predicts that by the close of 2006-07, if the current growth rate is kept up, Chinese component imports will touch a massive Rs 1,117.6 crore.

"The problem is not that we are uncompetitive," says Labroo. "In the last 10 years, the Indian component industry has developed into a quality supplier of components, but sometimes we find ourselves competing with guys who are selling below raw material cost," he says. Labroo isn't the only one complaining. "I know what steel costs, I know what it costs to produce welded sheet metal parts," says S.K. Arya, Managing Director, Jay Bharat Group. "I know what black magic they use, but when you hear quotes below the price of the steel going into the component, how can you compete?" he asks.

Labroo says that ACMA has conducted studies in China and found that the country does have some inherent advantages such as good infrastructure ranging from logistics to electricity, besides cheaper labour. But there's no way, he says, that Chinese auto-part manufacturers can sell at the prices they do. "All our calculations at ACMA have led us to conclude that, at best, China can offer an 18 per cent cost advantage. But our members are regularly outbid by 30-40 per cent. In a recent case, a supplier was outbid by 55 per cent," says Labroo in consternation.

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.

Real Estate: Deflation sets in in over-heated pockets

Business Today has a cover story on how select markets in the country are witnessing a marked correction.
Across the country there are investors, financiers and developers who've been caught off guard, as liquidity and appreciation are no longer everyday companions to cosy up with...."Prices in the real estate sector are at their peak. We have already seen a slight dip in the demand and some softening of prices in select pockets such as Whitefield, Noida and Ghaziabad. A combination of prevailing prices in the real estate sector and rising interest rates will see some investors exit the market," says Renu Sud Karnad, Executive Director, HDFC.

Many such investors would be looking for bail-out options in the North Indian cities of Ludhiana, Chandigarh and Jaipur where, real estate consultants point out, prices are in the over-valued zone. In Ludhiana, for instance, where at least 10 malls are in various stages of construction, commercial property rates have soared from around Rs 1,700 per square foot two years ago to Rs 4,000 per square foot-to put that in perspective, that's the going rate in Bangalore's bustling Koramangala and Indiranagar districts, and in Navi Mumbai's it hub! "In cities like Ludhiana and Chandigarh I expect a correction over the next three-six months, which will be to the extent of 10-15 per cent," says Anuj Puri, Managing Director, Trammell Crow Meghraj Property Consultants. Puri adds that speculation accounts for at least half the property-related transactions in that part of north India, which has resulted in prices rocketing to bizarre levels.

S. Sriniwasan, CEO, Kotak Realty Fund, points out that the appreciation in some parts of India was too quick for comfort. "Certain micro-markets have got over-heated. Among these are the satellite towns in North India and Bangalore's it parks," he says. One reason for that is that supply in such regions has inevitably raced ahead of demand. That's clearly the situation in Whitefield. "Whitefield was one of the most sought after locations a couple of years ago but an oversupply of realtors has led to a price slump," says Sushil Mantri, Managing Director, Mantri Developers. Purvankara Projects is a developer with a large exposure to Whitefield. Director Ravi Ramu anticipates a shakeout among developers in this district.


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.

April 07, 2007

Profile of Galleon Group

I just read an interesting 2002 profile of US-based hedge fund Galleon Group and its Sri Lankan-born founder, Raj Rajaratnam, in the Financial Times. (Galleon has begun to invest in India with a pre-IPO investment in BPO firm FirstSource and a reported investment in financial services firm Edelweiss Capital.)

In the US hedge fund industry Raj is well known since he manages a US $ 5 billion plus Hedge fund called Galleon Group. Raj was also featured in an interesting book published last year under the title "The new investment superstars" - 13 great investors and their strategies for superior returns. The 13 managers featured were selected on the basis of a few basic criteria. Each manages atleast US $ 1 billion in assets and each has matched or outperformed the Standard and Poor for at least seven years.

Though the book hadn't, the Daily Mirror compared the individual performance of the 13 fund managers featured and Raj indeed comes on top on the basis of net performance (%) or compounded average annual return of the fund/manager concerned thereby proving his skills of fund management.

... Rajaratnam covers companies as well. He is the managing general partner and portfolio manager of the Galleon Technology and New Media funds. He describes himself as the quarterback of the team. He is involved with everything in the firm and often accompanies the analysts to their company meetings. Rajaratnam meets with two to three companies a day. One week out of every month, he visits about 25 companies in California.


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.

April 06, 2007

The Nazara Story

Economic Times has a profile of Nitish Mittersain, Founder & CEO of Mobile VAS firm Nazara Technologies.
The first area that the company forayed into was online gaming, through a gaming portal nazara.com. A natural choice given that he was and remains an avid gamer. However, that was just the beginning and Nitish was still on the look out for the big idea which could stand the test of time. He soon spotted one in the form of the wireless space. He made his move quickly and Nazara entered the wireless entertainment sector, which was on an upswing.

...His vision would soon pay off in that both the wireless sector took off and content was fast becoming king. Recalls Nitish, “Fiscal prudence paid off. We spent next three years building relationship with wireless customers while keeping our costs low.” Soon the company could boast of a respectable performance in what was a difficult space. Nazara had made modest profits for five years and simultaneously built up good relations with most of the major telecom operators. Given the boom in the wireless sector and the company’s unique position in that space investors began to want a piece of the action.

...Having logged revenues of Rs 15 crore for the year ended on March 2007, Nazara Technologies is now aiming to close the current fiscal at Rs 35 crore.


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.

Is there room for independent testing cos.?

Economic Times had an article on the future of independent software testing vendors in the wake of EDS' acquisition of RelQ.
(Ranga Reddy, CEO of Maveric Systems) says: “That is one question we have been pondering for at least two years now. We have come to the conclusion that it has more to do with the entrepreneur-driven model of standalone players, than with the industry as such.”

That’s true. Most software testing companies are still driven by entrepreneurs, and there seems to be some resistance to grow once they reach that Pound 14-18 million revenue mark. The solution is to break off that mould, as AppLabs seems to have done, he said.

The way ahead for standalone players would be to develop expertise in certain domains, create IPs around products and processes. “I don’t think we should be surprised if we see a billion dollar software testing company in the next five to seven years,” he said.


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.

April 01, 2007

Sona Group: Seeking acceleration through PE financing

Businessworld has an article on how The Sona Group is using a round of PE financing from JM Financial to accelerate its growth - which had slowed down a bit relative to the competition.
As (Sona Group Chairman Surinder Kapur) says, “One of the reasons for bringing in JM is to help us look at the M&A options.” Sona is now in talks with a forging company, which has a presence in Europe and North America, for possible acquisition. This company is estimated to be roughly the same size as the Sona Group, with a turnover of around Rs 1,100-crore ($250 million).

Meanwhile, Kapur believes that the key to future success lies in developing products from scratch. According to him, 10 products ranging from electronic steering systems, drive-by-wire mechanisms and steering columns are currently under development. And, for the first time, the group is also willing to look at opportunities outside the automotive sector. “We are developing an energy saving device, something that can find application across all sectors. For our own group, this could mean energy cost savings of 20 per cent by 2010,” he says.


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.

Podcast with IDG Ventures India's Sudhir Sethi

Kamla Bhatt has an interesting podcast with IDG Ventures India's Sudhir Sethi which has recently announced its first investment in the country. The interview covers the fund's background, focus areas and differentiators.

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.