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July 31, 2007

VC Market

The following companies are seeking capital for starting-up / expanding their operations:

07-07-25-1: Mumbai-based entrepreneur seek <$1 M for marketing award-winning Hindi feature film to be released in September at selected metros across India.

07-07-25-2: Kangra, HP-based company which has won 3 mini hydro power projects in Himachal Pradesh seeks $1-5 M.

07-07-25-3: Mathura, UP-based company seeks $5-M for expanding play school chain.

07-07-25-4: Noida, UP-based software company specializing in Web & Multimedia development seeks <$1000,000

07-07-25-5: Chennai-based provider of cereal and milk vending machines to IT companies seeks $1-5 M. Has already installed 80 machines with daily cuppage of 12,000.

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

July 30, 2007

Profile of CVC India

Economic Times has a profile of Citigroup PE's India head Ajay Relan and the firm's recent investments.
A majority of the 25 companies in its portfolio are small cap firms that are not based in the Mumbai, Delhi or other large industrial clusters. Last December, in a PE variant of the bottom-of-the-pyramid strategy, Relan invested $25 million investment in KS Oils, a mustard and rapeseed oil manufacturer based out of Morena in Madhya Pradesh.

...Having worked alongside the likes of Bill Comfort, the former chairman of CVCI and a Citigroup legend, Relan says he benefitted from watching the best in action. “The most important lessons of the PE business that I learnt from watching him was to be patient, and keep a relentless focus on good management,” he says.

Despite CVCI’s successes, Relan laments the fact that he missed the telecom bus in India. “In the late 1990s and early 2000s you needed something like $300 million to play alongside the Sunil Mittals. We never had that kind of money. It was an opportunity we failed to take advantage of,” he rues. But his hidden gems have more than made up for the miss.
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.

Valuation Expectations in VC rounds – Unwilling Seller, Unwilling Buyer

In this exclusive article that appeared in the July issue of the US-IVCA/Venture Intelligence India VC report, Rahul Chandra and Ashish Gupta of Helion Ventures, reflect on the valuation-related conundrums challenging VC investments in India.

Valuation! One single metric that both Founders and VCs try to optimize yet whose derivation remains more art than science. While the importance of valuation cannot be discounted (ask a VC after he is invested and a founder anytime) a market driven approach to seek valuation level can ensure a faster track to fund raising, a holistic setting of investment terms and greater discipline in business execution.

VC investments are on the rise since early 2006. In the absence of complete and accurate data, it is hard to conclusively say how valuations have trended with this increase in number of deals done. Let’s look at the four key approaches to valuation: valuing present value of cash flows, accounting value of business, using real options and the last and most commonly used: applying valuations of comparable businesses. For early stage companies with innovative business models, no cash flows and negligible assets, none of these approaches can yield rational results. So there is no avoiding a gap in valuation expectation between Founders and VCs. Having long accepted this fact, Silicon Valley tends to value companies on the basis of adequate ownership to make the risk and efforts worthwhile. By basing valuation for Series A deals around a market-mean, Silicon Valley VCs have minimized this gap.

We, at Helion have seen more than 500 business plans over the last 12 months – based on this first hand experience and through our conversations with other VCs, we can safely say that the gap in valuation expectation between founders and VCs is wide and is tending to widen further as a result of speculation. Speculation (or hard to justify pricing) is a scary beast which appears when the potent cocktail of excess funds, heady economic growth and information inefficiency is mixed. Each of these is in abundance in our current environment.

Let us consider the three downsides of trying to raise capital at unrealistic valuations.

First, deals where the market was entrusted with setting valuation or where the expectation was in the ‘rational’ zone tend to move faster to closure. Deals which came to the market with pre-set pricing in the ‘irrational zone’ are generally knocked around more. Founders spend more time pitching to multiple VCs to find that elusive price and are finally back in the market with a lowered expectation. If valuation was not the key factor for optimization, the founders can go back to building their business sooner with perhaps optimal investment terms and best fit of investor.

Second, valuation inefficiencies tend to catch up over the financing life-cycle. High valuation is a relative term and hard to argue against if there is a willing buyer. As long as the confidence in company’s growth is high enough to justify an up round before capital runs out, we are in safe territory. High valuation can cause good pressure for growth but only leaves room for disappointment if targets slip. As late as Q2 2005, a third of all deals in Silicon Valley were suffering down or flat rounds. This fact should not be lost on Indian VCs and entrepreneurs.

Third, high valuation rounds are generally accompanied by large capital raises. We have often heard the refrain that the environment is good for fund raising so why shouldn’t we raise our next three years of capital need in one round if we get a suitable valuation. This argument holds as long as there is high degree of fiscal discipline in the organization. Bad organizational habits tend to creep in when cash needs are over met.

Valuations are important but some fund raisings make it a sole focus. An ideal fund raise allows market to establish its own willingness to pay and keeps in mind the lifecycle needs for capital. Companies should as far as possible use fundamental measures to establish valuation – which means that the ideal time to focus on valuation is after the company has predictable, measurable cash flows. Until then a large part of the valuation exercise is driven by speculation. In matters of taking emerging companies to success there are no absolute rights or wrongs – but more often than not, widening gaps in valuation would hurt everyone. VCs and founders should work within a narrow gap even at the cost of leaving some money at the table.

Why serviced apartments aren't finding takers

Business Today's article on serviced apartments posits that their costs need to come down significantly in order to compete with hotels.
Consider the Taj Wellington Mews in Mumbai where a two-bedroom unit could cost between Rs 6,50,000 and Rs 7,25,000 per month, a three-bedroom between Rs 7,85,000-8,25,000 per month and a four-bedroom, Rs 25,00,000 per month-all rates exclusive of the 10 per cent applicable tax. Things at the Lakeside Chalet Marriott Executive Apartments in Powai are no better-depending on the length of stay and the type of apartment, you could end up coughing up $220-420 (Rs 9,020-17,220) per night. And that, of course, does not include any captive services you might avail of-laundry, telephone and restaurants. So then, if you are paying the price of a five-star deluxe hotel, why not stay in a full-service hotel? Especially when, as Chidara says, you cannot make the slightest change in the d├ęcor of the apartment, which in any case intimidates his friends and relatives for its hotel-like ambience. "You certainly don't get the feeling that it's your home," he observes.

...serviced apartments need to rationalise their tariffs-currently, they are 10-12 per cent cheaper than hotels but need to be 25-40 per cent cheaper to attract clients who might be drawn to discounted hotel rates. In fact, that is one of the main reasons why serviced apartments have not been able to garner a major share of long-staying guests. If they try to move far too down the price range by limiting services, they find themselves pitted against operators of conventional limited-service hotels. Move up with more bells and whistles, then they go head-to-head with all-suite hotels or the high-end category of rooms in luxury hotels. And given a choice between limited and full service at comparative prices, it's a no-brainer as to where a guest would rather be.


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.

"Room With A Queue"

Business Today has an article on the boom - and the associated risks - in the hotel industry. It includes a box on the rising number of PE investments in the industry.
The demand-supply mismatch of hotel rooms is so acute that even the stand-alone, mom-n-pop hotels are quoting room tariffs that are 40 to 50 per cent of five star rates. That probably explains the announcements of $10 billion in investments over the next five to 10 years, with $3 billion expected to materialise over the next four years. The capacity addition: 70,000 rooms across all categories. That's an incredible number compared to the scenario even two years ago. Back in 2005, the foreign direct investment (FDI) in hospitality was 1 per cent of the $10.3 billion that flowed in. However, the hardening of interest rates since the time most of these announcements were made may prompt a rethink on the size of investment.

The segments that most of the investors seem to be interested in are budget and mid-market. The reason is pretty straightforward. The five stars in India are overpriced, with an ordinary room costing $400 a night or upwards, excluding taxes. Compare that with a destination like Singapore, where you can get a five-star room for $200 a night. That leaves a huge chasm in the economy segment, which may or may not be shoestring but is certainly not lavish. And it's a chasm that players like Lemon Tree, Roots Corporation, Sarovar Hotels, Royal Orchid Hotels, Uniglobe and others hope to fill.

Hope is the operative word here. "In India, the embedded cost of a hotel project is 60 per cent, which is the cost of the land. Compare that with the US, where only 15 per cent is the land cost and 85 per cent is the construction cost of a hotel project," explains Patu Keswani, Chairman and Managing Director, The Lemon Tree Hotel Company. That, Keswani says, makes it extremely tough for a budget or economy segment hotel to sustain its low prices for long. Case in point: Roots Corporation's Ginger Hotels, which created a flutter with its sub-Rs 1,000 room rates, but ultimately had to revise them upwards. Besides, given that the hotel industry sustains itself on domestic tourists, who are largely price conscious, the budget and economy segment is a natural driver for growth.


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.

Does the "green label" sell in India?

Businessworld has an article on the rising trend of marketing products using "eco-friendly" tags.
The perception that green makes business sense is gaining ground even in India. Energy-saving lights, organic foods, recycled bags and accessories, eco-tourism and environment-friendly residential complexes — consumers are being nudged into buying a diverse array of products that are good for them and for the environment.

Companies are being helped along by two factors. First: rising levels of disposable income in urban centres. And second, a greater understanding of the Indian green consumer. It is clear to most that the green Indian takes time to evolve into the green consumer. Transition depends on the three Cs: convenience, cost and concern for the environment. Companies are drawing up innovative marketing and awareness strategies around these major influencers to hasten the makeover.

...The truth is that cost and convenience do play a large role in the decision-making process. But concern does, too. In a survey by A.C. Nielsen on environmental concerns, 42 per cent of Indian respondents said that they actively try to buy organic products as compared to 26 per cent in Europe, 28 per cent in North America and 47 per cent in Latin America.


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.

July 22, 2007

Who is BharatStudent.com?

Who is behind BharatStudent, the latest social networking company on the scene that is rivaling some of the online travel sites in ad spending? According to the site, BharatStudent is owned by "Axill Europe Ltd, a 400 million dollar company focused on Internet, the media transcending the digital boundaries of the Globe". Impressive collections of words indeed; but what exactly is Axill Europe? Well, a bit more web searching reveals that this company is a part of Hyderabad-based, publicly-listed Northgate Technologies. (Stock details here.)

Northgate, which had raised funding from a group of FIIs including Merrill Lynch in 2005, also runs other Internet-linked businesses like Globe7 (a video ads-supported Internet telephony services), Axill (an Online Advertising Exchange) and a "server farm".

So, the next time you see another Internet-property springing up with an orange ribbon as part of the logo, you need not mistake it - like I did - for being a part of the Bharatmatrimony group!

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.

July 21, 2007

Profile of Sun Pharma CMD Dilip Shanghvi

Economic Times has a profile of Dilip Shanghvi, Chairman and MD of Sun Pharmaceuticals, which is close to acquiring majority control of Israel-based Taro Pharmaceuticals.
At 37% of net sales, Dr. Reddy’s Lab’s operating margin in 2006-07 comes closest to Sun’s 44%. Cipla is at about third of that, and Ranbaxy’s is even lower. Ranbaxy, Cipla and Dr Reddy’s are often mentioned in the same breath as pioneers of India’s pharma revolution and while they deserve the accolades, Sun Pharma’s performance has been equally praiseworthy.

...In acquisitions, a very similar philosophy has been played out. Ranbaxy, Dr Reddy’s are often perceived to be aggressive in buyouts. Sun has also been active though it has managed to maintain a low profile. In the past 10 years, it has bought out several domestic and overseas companies. But the purchases have also been carefully calibrated and designed to secure the maximum possible at the lowest possible price.

“We wait for the right buy at the right price,” says Mr Shanghvi, who has likened his strategy to his colleagues to that of a `bottom-hunting fish’. For instance, the Taro Pharma acquisition is only about 1.5 times sales compared with the Betapharm purchase where Dr Reddy paid three times sales and the Terapia buyout where Ranbaxy paid more than four times sales. “We go in for complex products which are difficult to make and where competition is limited,” Mr Shanghvi 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.

Audio interview with Avnish Bajaj of Matrix Partners India

Indicast has an interesting podcast interview with Avnish Bajaj of Matrix Partners India where he talks about his career, the Baazee.com story and current VC scene in India.

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.

July 17, 2007

VC Market

The following companies are seeking capital for starting-up / expanding their operations:

07-07-18-1: Chennai-based doctor seeks $1-5 M for a patent pending treatment for heart disease.

07-07-18-2: Bangalore-based consulting company offering Building Automation, Energy Management and related services requires <$100,000

07-07-18-3: Secunderabad-based entrepreneur seeks $1-5 M to launch niche Pay TV channel targeting global South Indian viewers.

07-07-18-4: Pathankot-based chemical firm - which extracts therapeutic phytochemicals from herbs - seeks <$1-M.

07-07-18-5: New Delhi-based entrepreneur seeks $1-5 M for developing retail supply chain management software.

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

July 15, 2007

VC Market

The following companies are seeking capital for starting-up / expanding their operations:
07-07-11-1: UK-headquartered travel agency focused with back offices and sales offices in India seeks expansion capital of $1-5 M. Revenues of $ 2-M, GP 13%. Markets: Middle East, India, North America. Products: Hotels, Apartments, City Tours, Airport Transfers.

07-07-11-2: Israel-based company with seeks about $1 M in seed funding for India-focused Youth Portal with Web 2.0 features.

07-07-11-3: Chennai-based entrepreneurs seeks $1-5 M for a BFSI-focused competitive intelligence product.

07-07-11-4: Amritsar-based exporter of houseware products seeks <$100,000 to launch fusion series of stainless steel and Bone China in the European and Indian markets.

07-07-11-5: Mumbai-based online retailer of mobile phones seeks <$100,000 including via M&A option.


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

K@W's audio interview with Remi Hinduja and Sashi Reddi

Knowledge@Wharton has an
audio interview with Ramkrishan (Remi) Hinduja, Chairman of BPO firm HTMT Global Solutions, together with Sashi P. Reddi, CEO of software testing firm Applabs Technologies. I especially liked the point where Hinduja explains why and how HTMT uses centers in multiple countries to service its clients.

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.

Losing money on radio

Business Standard Weekend has an article on how the challenges of making money in the FM radio business.

The estimates of how much a radio company pays PPL (Phonographic Performance Limited), the body that represents the interests of the music companies, vary from 20 per cent to 40 per cent share of its revenue. Complains Rahul Gupta, director, Radio Mantra, owned by Dainik Jagran’s Shri Puran Multimedia, “Content for radio is limited to music and the music industry’s demands are astonishingly high, not even remotely in line with global standards.” The international benchmark on revenue share between music owners and radio stations is between 2 per cent and 4 per cent, he claims. That is not all. Even as radio stations crop up in class C and D towns, PPL is not offering differential pricing for the music.

...After royalties (T-Series and Yash Raj Music negotiate separately since they are not part of PPL), the next major cost is human resource, marketing and branding. “The number of stations has grown from 20 to 200 leading to a talent crunch and resulting in spiralling manpower costs,” says Manajit Ghoshal, CFO at Mid-Day Multimedia that operates Radio One in Mumbai, Delhi, Bangalore and Chennai.

Add to these the one-time licence fee the operators have paid to the government, the investment in studios and the payments to Prasar Bharti to use its transmission towers. “Collectively, we have paid Rs 1,300 crore as one-time entry fee to the government and invested another Rs 1,000 crore as capital expenditure. The industry will take years to generate the kind of money we have given away as entry fee,” says Radio Mirchi’s Panday.


UPDATE: Businessworld has a similar two-part article - here and here - on the business of FM radio.
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.

July 09, 2007

Profile of "world's first live action video gaming" venture

Businessworld has a profile of US-based Pranay Chulet and his soon-to-be-released interactive video-based software game.
Everything in Latent Lava — the protagonists, actions, locations, accessories — is real, and not computer-generated graphical images. Except, of course, the bullets and the blood. It’s like a movie whose story flow is in your hands, and in which you play the invisible supercop. If you’re still wondering how you can control the actions of real actors, here’s how.

Let’s say you come upon a terrorist and think of five things that you (or the vigilante in the game) could do. Chances are Chulet has foreseen those five possibilities and shot each of those actions with his actors. What if he has thought of only four? Simple. You only get four choices. So, each scene and stage of the game has been shot with several different actions that its originator thinks you could take, and the story line moves based on your decisions.

...Zobyx, the Madison Avenue, New York City-based company, owned by Chulet casts 60 actors from 12 countries to give the game a global feel. He shoots multiple variations of each scene for multiple-choice play and gets game play programmed simultaneously. Most of the shooting is done in New York City and India. Sequences are shot in India in Old Delhi using Indian actors for Indian and Pakistani characters.

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.

Do Indian pharma cos. suffer from overseas shopping addiction?

Economic Times' Corporate Dossier supplement has a two-part article - here and here - on the voracious appetite Indian pharmaceutical companies have developed for buying overseas assets.
In an industry where size and wide geographic presence is critical, Indian companies are going for bigger targets using their expanded operating cashflow. Just to give you an idea of what they are up against in the generics business , Teva, the largest generic drug company with revenues of $8.4 billion, is nearly six times the size of the India’s biggest pharma company Ranbaxy. “An acquisition-led strategy always comes with the risk of overpaying for assets, and the challenge of integrating the two merging entities,” says a pharma analyst with an international broking house.

..."The market is getting crowded, but show me an asset that comes cheap today . I see no point in hanging on to numbers like valuation and letting them dictate business. It all boils down to how you build value with the acquisition," says GV Prasad, vice chairman and CEO, Dr Reddy's . The Hyderabad-based major's appetite for acquisitions is very strong and Prasad says raising finances is not a big issue. He, however, concedes that quality assets are few and far between these days. "Merck would have been a great fit at the company level, but unfortunately we could not close the deal," he says.

...Another problem both Ranbaxy and Dr Reddy's have to contend with after their big ticket buys (Terapia and Betapharm respectively) is that both of them are extremely profitable, with marginal scope for improvement in operations and production . Not surprisingly, both Terapia and Betapharm were under the scalpel of private equity investors, who had turned them around quite smartly. In fact, Betapharm is the fourth largest generics player in Germany with a 3.5% share of the market. Despite a 10-15 % price cut effected by all players in the market last year, its margins were at a healthy 55%. For Ranbaxy, Terapia delivers strategic Romanian and pan-European synergies, especially after the country entered the EU starting this year.


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.

Bartronics ventures into smart cards

Business Today has an article on how and why the erstwhile barcoding specialist, Hyderabad-based Bartronics, is now venturing into smart card manufacturing.

The idea of smart cards originated 18 months ago, courtesy Frost & Sullivan, which Bartronics commissioned to survey the market. Rao quotes a study by the consultants, which pegs the demand for smart cards at over 150 million units (in India) in 2007, and describes it as a space that is growing at a cumulative average rate of around 45 per cent. In India, much of this demand is coming from the telecom and banking sectors. "We intend to first break into the Indian SIM card market and dominate there as currently there is no domestic player here; this market itself is today valued at around Rs 100 crore annually," says Rao. He adds that in the next couple of years demand from the banking sector would pick up as banks begin to switch from the current magnetic tape cards to smart cards given the approaching Visa/Mastercard deadline on this (which is 2008 as of today, but which could be extended by a couple of years).

But if Bartronics decided to take the plunge into smart cards, it's not just because of the growth expected from the banking sector. The biggest trigger for the foray is a project that could well take it to the next level in terms of visibility and profile.

This is the Multipurpose National Identity Card (MNIC) project, which is proposed to be implemented by the Centre over the next five to 10 years. Early this year, the National Informatics Centre (NIC) approved its technology (for a scosta-based card-scosta standing for Smart Card Operating System for Transport Applications) which can be used for all government projects, including the MNIC project. "We feel we have a good chance for getting a share of the project as we are aware of what is required (the company has been part of a technical committee appointed by the ministry of commerce under NIC to define the standards and operating systems). We are an Indian company crucial for the project from a security point of view and, most important: By the time the project roll-out begins (expected in the next two years) we would be making over 50 million cards on an annualised basis. That's significant enough for the government to look at us as a serious player." Surely, even a small share of this business could prove to be a game changer for the company!


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.

Serial Entrepreneurs-in-the-making

Business Today has a cover story on how Indian entrepreneurs who have cashed in on their first ventures - often by selling out to MNCs - are taking the plunge again. The list includes Rajeev Chandrasekhar (who earlier founded and sold BPL Mobile), Tushar Jani (Blue Dart Express), Atul Shah (Anchor Electricals), Yunus Bilakhia (Micro Inks), Narottam Sekhsaria (Gujarat Ambuja Cement), etc.
So what exactly are these opportunities that India's new breed of "Alterpreneurs" has sniffed out? They're indeed diverse, although transforming into a private equity pasha seeking out investment-worthy targets clearly appears the favourite avatar. A few prefer the hurly-burly, high-returns universe of financial services, which includes non-banking finance companies and mutual funds. Of course, there are those who quite simply prefer to pump the loot directly into the equity markets, into stocks with promise. Real estate, and allied ventures like special economic zones and infotech parks, is another prospect these swashbucklers have found difficult to ignore. A few second-life promoters are also eyeing either exotic or esoteric sectors like renewable energy and biotech. And there are those who prefer to hover around the industry they know best.

The blueprints are ambitious and the investments huge, often larger than the proceeds raked in from the sale of the flagship.


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.

July 08, 2007

VC Market

The following companies are seeking capital for starting-up / expanding their operations:

07-07-04-1: Bangalore-based event management, stage production and artiste management company seeks $1-5 M including via M&A/Joint Venture Route.

07-07-04-2: Thane-based fruits processing firm seeks <$1 M

07-07-04-3: Coimbatore-based System Integrator seeks M&A/Joint Venture.

07-07-04-4: Bhubaneswar-based IT Services & BPO company seeks $1-5 M.

07-05-27-5: Chennai-based software services firm seeks investment expansion and developing new ERP product.

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

Update: IT Services & BPO Connect; July 12, Bangalore

Highly successful entrepreneurs and angel investors including N. S. Raghavan of Nadathur Holdings (and co-founder of Infosys), Dr. Prakash Mutalik of RelQ (which was acquired recently by EDS), Rajiv Mody of Sasken (a successful publicly-listed company) and K. Ganesh of TutorVista (who earlier co-founded BPO firm CustomerAsset and angel invested in KPO firm Marketics) share their Entrepreneurial Experiences and their Perspectives on the Future of the IT Services and BPO sectors

Other speakers include top executives from Applabs, Aspire Systems, Canaan Partners, Ernst & Young, IDG Ventures India, KPIT Cummins, KPMG, Langham Capital, Microland, MindTree, Nipuna, PharmARC, QuEST, Scope eKnowledge and Veda Corporate Advisors.

Network with successful entrepreneurs and top investors at this unique conference and get answers to key questions like:

Is scale all important?
How can SMEs survive and thrive in these sectors?
Can KPOs ever IPO?
Where are the new opportunities in IT Services?
What are investors looking for?


Click Here for more details.

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.

July 02, 2007

Blooming of tourism entrepreneurs

Business Today has an article profiling entrepreneurs who are setting up innovative tourism-related businesses.

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.

Profile of home textiles co. Sabare International

Businessworld has a profile of this Karur-based home textile firm which is backed by Kotak PE.
Things changed for Sabare in 2001 after retailers started dealing with the exporters directly. “We started exporting to the US from 1997 and it was only then I hit upon this idea of setting up bases outside India. This allowed us to think big and take bold risks,” he explains.

Direct sourcing by retailers helped Susindran come up with new strategies for the company such as setting up manufacturing centres outside India, which reduced shipping costs and helped Sabare operate closely with the retailers till the product was sold.

In fact, the new strategy has worked well for the company, improving margins by 5 per cent for retailers, prompting them to place more orders. This has also helped Sabare register in a staggering CAGR of 111.1 per cent as compared to 37.7 per cent of Gujarat-based Welspun India and 16.02 per cent of Mumbai-based Alok Industries in 2005-06.

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.

With Subex's acquisition-led growth endure?

Businessworld has an article pointing out the achievements and challenges facing Bangalore-based telecom software firm Subex which has specialized in growing through acquisitions.
After acquiring the firm, it immediately attacks costs by shifting software development and marketing operations to India, and by reducing the foreign sales force. Operational costs are slashed by as much as 40 per cent. “The whole valuation is dependent on this fact, because I know that I will make profits from the third month itself,” says Menon. According to him, Azure, which lost $10 million (Rs 41 crore) in 2005-06, was turned around in a quarter; the merged entity, Subex Azure, made profits of $15.32 million (Rs 67.5 crore) in 2006-07. Industry analysts are fairly satisfied with Azure’s integration but have cautioned a wait and watch approach on Syndesis.

...In the past, Subex used a combination of internal accruals, debt and equity to fund buy-outs. But that ran into problems with the Azure Solutions and Syndesis acquisitons. Azure took a full year of negotiations as it doubted the solidity of India’s stockmarket and Subex’s long-term stock value. For Syndesis, Subex initially planned on raising $200 million through foreign currency convertible bonds (FCCBs) and gold depository receipts. In the end, it could raise only $180 million (Rs 738 crore) in FCCBs, at a 5 per cent premium, after markets turned unfavourable.

...Locating funds at the right valuations will depend on how well Subex integrates Syndesis. Acquiring Syndesis made Subex the leader in fraud management and revenue assurance, with a 29 per cent market share, according to OSS Observer. This put it alongside heavyweights like Amdocs, IBM, Oracle and Telcordia.

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.