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June 30, 2009

Will Blackstone succeed with Gokaldas and Intelenet?

Forbes India has an article on the Blackstone Group's investments in India, especially its big bets on textiles firm Gokaldas Exports and BPO firm Intelenet.
Blackstone investments in India have been battered by the economic and markets meltdown. Its cumulative investments of $730 million are now worth only 30 percent of the original value. Gokaldas has lost 71 percent of its value since Blackstone’s $165-million deal. Intelenet is unlisted but if WNS and Genpact’s valuation declines are anything to go by, the investment has lost two-thirds of its value.

...Of the seven investments Gupta has made, his fate would rest most firmly on what he achieves at Gokaldas and Intelenet. One, both have brought management control and that means Blackstone must ensure entrepreneurial energy keeps flowing through the companies. Two, taken together, both investments account for half the total money that Blackstone has invested.

...“In the first six months, investors in a PE fund are willing to listen to your talk about long term vision, strategy, After 12 or 18 months, they look at the prices you have invested and the current price of those investments and then they ask ‘What’s your exit strategy?’ Gupta will have to explain this as his two big investments are that old,” says the India head of a $1.6 billion US-based PE fund.

...Despite all the challenges, Gupta insists Blackstone will achieve its goal, even if not in exactly five years. “We may perhaps achieve it in seven, considering the slow pace of India’s infrastructure development and labour regulations.” Industry peers and Blackstone’s investors are impatient to see results. Garment maker Premal Udani says the Blackstone experiment could help erase old fissures in Indian business. “In the current scenario, if Gokaldas can make large buyers to source from them, the industry could learn a much needed lesson or two.”


Arun Natarajan is the Founder & CEO of Venture Intelligence, the leading provider of data and analysis on private equity, venture capital and M&A deals in India. View free samples of Venture Intelligence newsletters and reports. Email the author at arun@ventureintelligence.in

Fund Raising Alert: Carlyle raises $1-B Asia Fund



Edited extracts from the Press Release:

Global private equity firm The Carlyle Group has successfully closed its fourth Asian growth capital fund, Carlyle Asia Growth Partners IV (CAGP IV), a sector-agnostic growth capital fund which invests in China, India, Korea and other key Asian markets. The fund raised $1.04 billion in 14 months from a broad geographical range of investors.

CAGP IV is more than 50% larger than its predecessor CAGP III by capital commitment and has already made its first investment in a leading Chinese high-end women’s fashion company. CAGP III has made 22 investments in 2.5 years, 80% of which were made in China or India.

"The strong entrepreneurial culture in India has created many potential investment opportunities for Carlyle. India’s emerging middle class is fuelling strong domestic consumption, while the outsourcing and re-engineering of various products and services from all over the world to India continues to grow at a lively pace. India’s growth story is sustained by its vibrant capital markets, a resilient banking system and a pro-business stable government," said Shankar Narayanan, a Carlyle Managing Director responsible for CAGP’s investments in India.

David M. Rubenstein, Carlyle Co-founder and Managing Director, said, "The Carlyle Group raised $19.9 billion in new capital last year, and this fund close builds on that momentum. Asia remains a core focus of our global business, and Carlyle continues to devote more resources to China and India. CAGP is one of the largest growth capital platforms in Asia and has consistently provided investors with exposure to the very best of the region’s opportunities."

Carlyle Asia Growth Partners IV is the fourth fund managed by the Carlyle Asia Growth Capital group, which has an aggregate committed capital of approximately US$2 billion. The group invests through a team of local professionals in six offices - Beijing, Hong Kong, Mumbai, Shanghai, Seoul and Tokyo.

June 29, 2009

Winners & Losers in US Bailout & Bankruptcy Deals

TheDeal.com has an interesting listing starting with the Warren Buffet-Goldman Sachs deal (winner) to Citigroup-Wachovia non-deal (loser, of course). Here are some selections from the Lehman Brothers bankruptcy-related listings:

Winners: Nomura

Japan's Nomura Holdings Inc. paid only $225 million for Lehman Brothers' Asia-Pacific operations a week after the investment bank declared bankruptcy. It would then go on to scoop up Lehman's European assets for $2 -- not per share, literally two bucks.

Losers: Lehman's creditors, KfW Bankengruppe

With $639 billion in assets and $613 billion in liabilities, Lehman dwarfed Enron to become the largest Chapter 11 filing in history. In the aftermath of the bank's fall, bidders have been able to buy the Wall Street bank's operations at flea market sale prices. KfW Bankengruppe was left looking foolish as it transferred €300 million ($426 million) to Lehman on the day that it filed for bankruptcy. The fallout included ridicule by German newspapers, a government inquiry and having to getting in line with other creditors to get a fraction of its money back.

Winner ("Close calls" category): Korea Development Bank

Lehman Brothers reportedly missed a chance to stop its slide into bankruptcy when it turned down a $44 billion ($6.40 a share) offer from Korea Development Bank in the weeks before its Chapter 11 filing. Who knows what would have happened had Lehman's management and board accepted the offer, which they considered shockingly low at the time?

Arun Natarajan is the Founder & CEO of Venture Intelligence, the leading provider of data and analysis on private equity, venture capital and M&A deals in India. View free samples of Venture Intelligence newsletters and reports. Email the author at arun@ventureintelligence.in

The latest hot Emerging Market for Real Estate investors is...

The USA!

That's according to Tom Shapiro, Founder & President of global real estate investment firm, GoldenTree InSite Partners. Speaking at the Reuters Global Real Estate Summit, Shapiro said that while his firm had not made any investment in the US for two years, he was now seeing some of the best opportunities to make money on RE deals in the US (in the last 20 years) thanks to the attractive entry points. And that his firm was now more focused on deals in its home country.

Could the re-emergence of the US on the radars of global investors like GoldenTree mean less money for the "original" emerging markets (aka BRICs)?

Arun Natarajan is the Founder & CEO of Venture Intelligence, the leading provider of data and analysis on private equity, venture capital and M&A deals in India. View free samples of Venture Intelligence newsletters and reports. Email the author at arun@ventureintelligence.in

June 25, 2009

MNC Pharma firms step on the gas

Following the buyout of India's largest pharma firm Ranbaxy by Japan's Daiichi and RFCL's animal healthcare business by Pfizer, Businessworld has a cover story on how and why the big MNC pharma firms are now taking the Indian market more seriously.

In recent months, two other large western pharma companies — UK’s GlaxoSmithKline (GSK) and France’s Sanofi-Aventis — have made news with their acquisition plans. Others such as US’s Merck & Co., are exploring differential drug pricing, and government partnerships to tap market potential. Still others — such as Novartis India, the local arm of the Swiss drug giant — are pushing into rural markets.

..a drier blockbuster pipeline has led MNCs to place a global thrust on generics. India is one of the few remaining generics markets driven by doctor prescriptions and not just trade-push. In the US, prices collapse when a drug loses patent protection. But in India, a market leader commands a sustainable ‘brand’ premium, without any patent protection.

...Organic growth, however, will only take MNCs this far. If they want to transform into market-leading positions quickly, then acquisitions are the way forward. Besides, “they need access to the right range of products and distribution networks”, to tap the branded generics market, says Ranjit Kapadia, vice-president (institutional research) at HDFC Securities in Mumbai.

Arun Natarajan is the Founder & CEO of Venture Intelligence, the leading provider of data and analysis on private equity, venture capital and M&A deals in India. View free samples of Venture Intelligence newsletters and reports. Email the author at arun@ventureintelligence.in

June 24, 2009

Cutting banks to size

In an article for the Economic Times, Arun Duggal, the former Indian CEO of Bank of America and a board member of several Indian financial services companies, has a set of drastic recommendations for disciplining global banks to ensure that they don't trigger another financial crisis of this magnitude.
One, the size of the banks should be restricted, so that some of them do not become so big as to endanger the entire financial system. Their activities should be restricted too. They should not be allowed in the investment banking or securities business.

...Six, the whole system of creation and distribution of structured products needs overhaul. Banks should be asked to keep at least half of the assets created by them on their books so that the bank managements are well aware of the risks they are accumulating and distributing.

Similarly the rating agency system needs major correction. Perhaps they should have their skin in the game and not only earn fees and then wash their hands off. Let them also keep 10% of the paper they rate on their books until it matures. It will concentrate their minds to understand and evaluate long-term risks appropriately.

Seven, and perhaps the most important, the compensation of bankers and the risk management in banks require a thorough revision. Bankers’ compensation must come down and be in line with what other professionals earn. The bonuses should be downsized and linked to various performance parameters. Private equity offers a good model of long-term incentives: they make money (carry) only if and after their investors have made money. The risk management systems in the banks should be strengthened. While this should be the primarily job of board of directors of banks, the regulators should monitor compensation practices in banks.

Arun Natarajan is the Founder & CEO of Venture Intelligence, the leading provider of data and analysis on private equity, venture capital and M&A deals in India. View free samples of Venture Intelligence newsletters and reports. Email the author at arun@ventureintelligence.in

June 18, 2009

Business Today's "Cool Companies" List for 2009

Extract from the profile of Kolkata-based branded menswear firm Turtle Limited:
Turtle has just reported a turnover of Rs 62 crore, its highest ever, in 2008-09, up from Rs 46 crore the previous year. “We did better in the second-half…this year, we plan to grow by another 30 per cent,” he says, explaining why: “People will stop buying Louis Philippe and buy Turtle”. Turtle shirts end at Rs 900, way below its rivals. It has implemented Oracle e-biz to connect its 32 stores to its head office in grimy Howrah. “Our nature is not rampant growth,” says (Amit Ladsaria, Director), adding that Turtle stands for turtles: slow and steady…long life…tough exterior, soft interior… When it comes to shirts, Turtle is fussy: it creates its own fabric designs and gets the fabrics made to order. Today, it also makes suits, trousers and denims as well. Last year, it created a sub-brand, London Bridge, for shirts made of blends, leaving the pure cotton shirts for Turtle.

Extract from the profile of Mumbai-based post production firm Prime Focus (Revenues: Rs 266 crore for 9 months ended Dec.08):
Considering that they knew nothing about the business of television post-production and visual effects when they launched Prime Focus in 1996, Namit Malhotra and four of his friends have done pretty well: 60 per cent of the Indian market. Prime Focus offers end-to-end services in every aspect of production and post-production, for film as well as advertising. “Imagine, a decade ago, when I started along with four of my friends, we knew nothing about this business. We did not have big qualifications and had never worked in big multinationals. But we are today the only Indian multinational in post-production and visual effects,” says Malhotra. He takes pride in employing many freshers who do not have any qualifications but are great creatives.

Malhotra has another skill: taking over distressed assets abroad and turning them around, as Prime Focus has done with VTR in the UK and Frantic Films in the US. The acquisitions have given Prime Focus a chance to be associated with films such Spiderman 3, Fantastic Four and Superman Returns. A third of Prime is international talent. “… A significant amount of work can be carried out by facilities across time zones in a cost-efficient manner,” says Malhotra.

Arun Natarajan is the Founder & CEO of Venture Intelligence, the leading provider of data and analysis on private equity, venture capital and M&A deals in India. View free samples of Venture Intelligence newsletters and reports. Email the author at arun@ventureintelligence.in

June 17, 2009

Same (leftist) baggage in a new package?

In a recent Business Standard column, former Chief Economic Adviser Shankar Acharya has expressed unease - from the perspective of the economy - at the way the new UPA government has started off. Given the kind of expectation for reform the stock markets have built up from the new government, it might be well worth watching out for the signals that Acharya points to in the Union Budget.
Economic reforms were not a serious campaign platform for the Congress or UPA...The crucial finance portfolio went to Pranab Mukherjee, undoubtedly the most experienced cabinet minister in the current firmament (he first held a cabinet portfolio thirty years ago), but not renowned for a stellar track record in economic reforms...Does this mean we will have another five years of near stasis on economic reforms?

...With exports falling and public investment sluggish, a failure to revive private investment would make it very difficult to attain the implicit growth requirements outlined above. My suggested minimum reform package (calibrated then for a much more “unwieldy coalition” than the one delivered by the electorate) comprised the following elements: holding the centre’s fiscal deficit to Mukherjee’s Interim Budget target of 5.5 per cent of GDP (implying a combined, centre plus states, deficit of 9 per cent of GDP); implementing the UPA’s commitment to usher in an integrated Goods and Services Tax (GST) by April 2010; an early shift to market-based pricing of petrol and diesel; and a legal amendment to reduce the minimum government share in public banks to 33 per cent, so that they can raise capital in the market and thus expand their services to under-served areas and communities. For the medium term, I had suggested a strong focus on reform of education and urban development, especially infrastructure and municipal finance.

...I would certainly look for all these elements as a “minimum package” in Mukherjee’s full budget slated for July. If several of these are absent, then the prospects for a successful stimulus to private investment would be correspondingly dim. Indeed, with a relatively strong electoral mandate for the Congress and UPA and the absence of vetoes by the Left, we should expect a substantially stronger reform stimulus from the forthcoming budget. Fairly obvious additional items would include: raising of the foreign investment limit in the insurance sector from 26 to 49 percent; a liberalisation of foreign investment in retail trade; a fresh bill for denationalisation of the coal industry and resumption of the disinvestment programme.

Arun Natarajan is the Founder & CEO of Venture Intelligence, the leading provider of data and analysis on private equity, venture capital and M&A deals in India. View free samples of Venture Intelligence newsletters and reports. Email the author at arun@ventureintelligence.in

Big Government Is Back!

The new UPA government's first policy statement - the presidential address (PA) to Parliament - gives Business Standard columnist and former Chief Economic Adviser Shankar Acharya a feeling that this government is set to unleash a host of programmes (read big budget "yojanas" like the NREGS).
The last five years of UPA rule witnessed an ambivalent mixture of trends. On the one hand, the government stopped privatisations and disinvestments, halted most reforms, strengthened price controls on petroleum products, fertilisers, food grains and selected interest rates and undertook major expansions of social programmes (notably the NREGP) and caste-based quotas in education and public employment. On the other hand, a potent combination of past reforms, successful fiscal consolidation (till spring 2008) and the liquidity-fuelled global boom propelled the biggest surge in private investment that India has ever seen, spurring economic growth to 9 per cent.

Now things seem set to change. The “ten broad areas of priority” outlined in the PA (including security, communal harmony, growth, infrastructure, social uplift, governance reform, etc) are mostly unexceptional...But the principal vehicle for achieving these goals will apparently be government programmes of one kind or another. These will include existing “flagship programmes” such as NREGA, the National Rural Health Mission, Sarva Shiksha Abhiyan, Bharat Nirman and Indira Awas Yojana. Ambitious new programmes are also promised, including a Madhyamik Shiksha Abhiyan for universalising secondary education, a Rajiv Awas Yojana for slum dwellers and a significant new National Food Security Act for guaranteeing 25 kg of food grain per month for every below-poverty-line family at Rs 3 per kg. (Never mind that the public distribution system hardly exists outside the four southern states, Bengal and a couple of metropolises and that the costs of the system compare very poorly with private distribution channels). Furthermore, although disinvestments from public sector undertakings (PSUs) will be resumed, government will retain majority ownership. So the present PSUs will continue indefinitely, even if they are in hotels and tourism. Even in banking, the minimum 51 per cent government ownership of PSU banks will be retained, with their need for fresh capital (for expansion) being met from the government budget.

...To end on a brighter note, there are a few green shoots of reform scattered through the PA. These include: reform of higher education along the lines recommended by the Knowledge Commission; a more investor-friendly approach to public-private partnerships in infrastructure; implementation of the roadmap for the Goods and Services Tax; “operationalising the provision of open access” in the power sector; reforms in the coal sector; a roadmap for judicial reform; and encouragement of foreign direct investment. But even if these green shoots all mature into full grown healthy plants, will it be enough to power the high levels of private investment necessary to recover and sustain rapid growth?

Arun Natarajan is the Founder & CEO of Venture Intelligence, the leading provider of data and analysis on private equity, venture capital and M&A deals in India. View free samples of Venture Intelligence newsletters and reports. Email the author at arun@ventureintelligence.in

June 10, 2009

Deal Alert: Anjan Drugs to raise Rs. 25-Cr from Evolvence India Life Sciences Fund

Evolvence India Life Sciences Fund (EILSF) has committed to invest upto Rs. 25 Crore in Anjan Drugs Pvt. Ltd., a Chennai-based pharmaceuticals company specializing in medicines to treat Central Nervous System disorders. Anjan is one of the largest US-FDA approved producers of Divalproex Sodium and various other salts of Valproic Acid.

Other companies that the $150 million EILSF has invested into include Hyderabad-based pharmaceuticals firm Gland Pharma and Bangalore-based oncology hospital firm HealthCare Global Enterprises.

June 09, 2009

Deal Alert: Shalivahana raises Rs. 90-Cr from Axis PE, IL&FS

Hyderabad-based green energy firm Shalivahana Green Energy Ltd. has raised Rs. 90 crore ($18 million) from Axis Private Equity and IL&FS Financial Services. Shalivahana is a renewable energy firm focused on biomass and small hydro power projects. While Axis PE has invested Rs. 54 crore ($11 million), IL&FS has invested Rs. 36 crore.

The deal marks Axis PE’s fifth investment, taking its total investments to Rs. 374 crore. The firm's previous investments have been spread across sectors like water supply and sanitation, laying oil and gas pipelines, railway EPC and hospitality.





“This investment further reaffirms Axis PE’s commitment to invest in infrastructure related companies in high growth segments such as renewable energy.” says Mr. Alok Gupta, MD & CEO, Axis PE. "Over 60% of India’s generation capacity is from thermal sources whereas renewable energy sources (excluding hydro projects above 25 MW) account for a mere 9%. As per Ministry of New and Renewable Energy estimates, around 15,000 MW of additional renewable energy capacity is planned to be added during the 11th five year plan. SGEL’s proven project development and execution track record provides a strong platform to capitalise on the future growth potential in the sector and we are delighted to partner the Company in its growth plans," Mr Gupta added.

About Axis Private Equity

Axis PE, a company sponsored by Axis Bank manages the Axis India Fund (AIF) with a targeted corpus of INR 2,000 Cr (USD 400 Mn). AIF will seek to invest in the equity of rapidly growing infrastructure related companies. Axis PE’s team comprises of investment professionals who have a combined experience of over 80 years and who have been investing in India for many years.

Will Lavasa deliver HCC to the big league?

Businessworld has an article on engineering & construction firm HCC's ambitious hill station project.

HCC entered real estate development in 2001 when it kicked off land acquisition for the Lavasa project. Today, it has power projects in Kargil and Ladakh, and is also executing irrigation and water supply schemes from Godavari river in Andhra Pradesh to the Vaitarna lake, near Mumbai. But it is the Lavasa project that has taken centre-stage in the company’s business plans; and it is evident that HCC’s future is dependent on the fate of Lavasa Corporation.

The commitment is humungous: HCC has acquired 10,000 acres, and aims to push up the resort town’s sprawl to around 13,000 acres spread over seven hills and involving the construction of 15 dams. Of the land acquired, it has mortgaged 7,694 acres to raise Rs 1,200 crore in debt so far. And now HCC is hoping to raise money through the QIP route while Lavasa Corporation itself is trying to interest new investor

...The looming cash crunch for the project is apparent. Lavasa Corporation was looking at generating Rs 1,500 crore by divesting about 10 per cent of the equity through an IPO. This has been now postponed and this door may remain closed for at least a year. Raising private equity for what is primarily a real estate project is not going to be easy, while any further debt, when the debt-equity ratio is already a high 2:1, is also a tough call.

...Kumar Gera, president of the Confederation of Real Estate Developers Association of India (CREDAI), however, judges Lavasa as “ambitious”, but well positioned. “Unlike Sahara’s Amby Valley that was marketed as a luxury project and was overpriced at Rs 8,000-10,000 per sq. ft, Lavasa is relatively more affordable.”

Arun Natarajan is the Founder & CEO of Venture Intelligence, the leading provider of data and analysis on private equity, venture capital and M&A deals in India. View free samples of Venture Intelligence newsletters and reports. Email the author at arun@ventureintelligence.in

More on the inevitable US-China slowdown

Harvard University Prof and former IMF chief economist weighs in via his Businessworld column.
US consumption, the single-biggest driver of global growth, is surely headed to a lower level, on the back of weak housing prices, rising unemployment and falling pension wealth. During the boom, US consumption rose to more than 70 per cent of GDP. In the wake of the crisis, it could fall down towards 60 per cent.

...Chinese growth is set to slow over the longer run as well. Even before the financial crisis, it was clear that China could not continue indefinitely on its growth trajectory of 10 per cent or more. Environmental and water problems were mounting. It was becoming increasingly clear that as China continued to grow faster than almost anyone else, the rest of the world’s import capacity could not keep up with China’s export machine.

...Even after the crisis, global growth is almost certain to remain lower than the pre-crisis boom years for some time to come. This change may be good for the environment, for income equality, and for stability. Governments are right to worry about the quality of growth, not just its speed. But when it comes to tax and profit estimates, investors and politicians need to reorient themselves to the ‘new normal’ — lower average growth.


Arun Natarajan is the Founder & CEO of Venture Intelligence, the leading provider of data and analysis on private equity, venture capital and M&A deals in India. View free samples of Venture Intelligence newsletters and reports. Email the author at arun@ventureintelligence.in

Why a relapse in 2010 is a given

In his column for the Economic Times, Morgan Stanley's Ruchir Sharma explains why the structural issues relating to the "over-indebted US consumer and the export-dependent Chinese manufacturer" will come back to haunt the global economy in 2010, by which time the impact of the government spending plans will wear off.
The path then for equities in the short-to medium-term is likely to be quite jagged. The current economic momentum inspired by government spending will likely keep financial markets well-bid for much of this year but the environment will be more challenging next year as the debt-impaired private sector’s contribution to economic growth continues to remain anaemic at best. Meanwhile, governments will not be in a position to provide any major fresh stimulus, given the poor state of their finances.

...Another risk to an economic upturn materialising in 2009 is a premature resurfacing of inflation . Some investors have been buying “hard assets” , or commodities, in the belief that the loose monetary policies followed by central banks across the world will do more to reignite inflation than revive economic growth. It is highly unusual for commodity prices to be rallying sharply — as they have been over the past few weeks — so early in an economic expansion. They tend to perform well at the late stages of an economic cycle when growth is overheating. The recent price action in commodities essentially reflects a loss of confidence in paper money as the demand and supply fundamentals don’t justify the recent uptrend. If the price of oil were to rise much beyond $70 a barrel in the immediate future, it would defeat all the stimulus efforts as the increase would act as a tax hike on consumers.

Barring any such major setbacks, involving bond yields and oil prices spinning out control, a cyclical bull market should continue to take shape this year followed by a relapse in 2010. The implication for emerging markets such as India is that they are likely to oscillate in a broad trading range around the long-term trend line over the next couple of years. Hopefully by 2011 enough time would have lapsed for the private sector in the developed world to get its leverage ratios in more decent shape and for emerging markets to evolve their economic models to become more robust on the domestic demand front. Such structural changes would allow a meaningful global economic expansion to take hold. That in turn would herald a truly new secular bull market.

Arun Natarajan is the Founder & CEO of Venture Intelligence, the leading provider of data and analysis on private equity, venture capital and M&A deals in India. View free samples of Venture Intelligence newsletters and reports. Email the author at arun@ventureintelligence.in

June 08, 2009

Kerala's growing "NRK returnee" headache

Knowledge@Wharton has an article on the phenomenon of Non-resident Keralites (NRKs) - basically, workers from Kerla who emigrate to work in the Middle East - returning back home due to the impact of the economic crisis.
Some 200,000 to 500,000 Keralites working in the Gulf are likely to return home by midyear, state finance minister T.M. Thomas Isaac told the State Assembly recently. This is a considerable chunk of the estimated two million-plus Keralites working abroad, nearly 90% of them in the Gulf. The 2001 census put Kerala's population at 31.8 million. Non-resident Keralites (NRKs) send back close to US$8 billion in remittances annually, more than double the state's tax revenues. The impact of the reverse exodus -- both economically and socially -- could be devastating, according to experts.

...Adds Faisal Shamsudheen, a Dubai-based journalist-turned-PR manager who lost his job in the crisis: "Construction and banking are the worst hit. Mass redundancies are happening by the day in the private sector and semi-governmental organizations."

..."The main commodity which Kerala exports to the Gulf countries is manpower," says Ajay Kumar, chairman of the Kerala State IT Mission and secretary of IT. "They have been engaged in the construction, real estate and tourism sectors, which have been badly hit by the global slowdown."

...According to the CDS, the number of emigrants from Kerala in 2008 was 2.16 million, up from 1.84 million in 2003. The number of return emigrants was 1.1 million in 2008, up from 890,000 in 2003. So return emigration rose only 210,000, compared with an increase of 320,000 outward-bound. "I don't think there is a crisis," says Rajan, who is chair professor in the research unit on international migration and a fellow at CDS. "A few hundred people may have lost their jobs. But what are they among the two million [Indians] in the Gulf?" Shamsudheen also points out, however, that these figures were calculated before the economic crisis struck the region.

Arun Natarajan is the Founder & CEO of Venture Intelligence, the leading provider of data and analysis on private equity, venture capital and M&A deals in India. View free samples of Venture Intelligence newsletters and reports. Email the author at arun@ventureintelligence.in

June 07, 2009

Islands of Growth

Ok; we all know that India and China are still growing; while the economies of almost other countries are shrinking. But did you know that there are two more countries - Indonesia and Egypt - which are growing as well? Economy.com has an interesting chart showing visually what's happening to the GDP of different parts of the world.

Arun Natarajan is the Founder & CEO of Venture Intelligence, the leading provider of data and analysis on private equity, venture capital and M&A deals in India. View free samples of Venture Intelligence newsletters and reports. Email the author at arun@ventureintelligence.in

June 05, 2009

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June 02, 2009

Desi handsets anyone?

As part of its recent cover story on telecom, Business Today has an article on companies which hope to tap into the Indian market for mobile handsets - but not necessarily compete with the Nokias and Samsungs.
...consider Intex Technologies, an Indian company which also sells laptops, monitors and other computing devices. Says Ramesh A. Vaswani, Vice Chairman, Intex: “We have no ambition to become either a Nokia or a Samsung. However, we certainly want to become the #1 Indian brand.” That’s not just talk: the company claims to be selling 60,000 handsets a month and hopes to double its sales in a year. And this from a company that started its handset business just two years ago. Playing in the Rs 2,000-7,000 range, the company focusses mainly on the Tier II and Tier III towns. Vaswani says the company’s brand has a recall and promises a “trouble-free product with good after-sales service.”

In fact, the rise of the Indian brands, which collectively hold around 15-17 per cent of the market, according to estimates, is a major defining trend of the Indian market in the last few years. What works for them is “proximity to the market, product quality, aftersales service capabilities and the fact that they have fire in their belly. They also introduced more simplicity in the trade,” says Pankaj Mohindroo, National President of Indian Cellular Association.

It is a competitive market in this business. Spice Mobile, which plays in the Rs 2,000-6,000 range, believes in providing the highest value in this segment. “We are not the cheapest, but we provide more value in terms of features or content,” says Payal Gaba, National Head, Marketing, Spice Mobile. The company, which entered into the handset business four years ago, believes consistency of product launches catering to the Indian customer (it averages two products a month), along with value for money and service capabilities, gives it the edge.

Arun Natarajan is the Founder & CEO of Venture Intelligence, the leading provider of data and analysis on private equity, venture capital and M&A deals in India. View free samples of Venture Intelligence newsletters and reports. Email the author at arun@ventureintelligence.in

New wave of CEO-turned-Entrepreneurs

Business Today has an article profiling top corporate executives who have turned entrepreneur in recent months. The list include former iflex Solutions CEO Deepak Ghaisas, who is now a biotech entrepreneur. Another venture profiled is a consulting firm founded by three former telecom CEOs which plans to handhold MNCs "through the Byzantine maze of regulation and intrigue".
Enter Ravi Sharma and his two partners. “Our proposition is not capital, but management services that will not only help in reducing promoters’ capital but will also trim down the time to market,” says Sharma, 47, who has named his venture Phi. “Phi is a wonderful name, easy to pronounce and has two very powerful meanings: Wisdom of God and the Golden Ratio,” he adds.

Sharma and Pramod Saxena, former Head of Motorola India, first discussed the idea of floating such a venture. Later, they roped in B.D. Khurana, former CEO, Reliance Communications. “Our new association is more like a meeting of minds at the professional level,” says Saxena. In fact, both Sharma and Saxena, who are the majority (and equal) partners in Phi, have studied engineering from IIT Roorkee in Uttarakhand. The business model is such that Phi can earn minority equity in return for strategic, regulatory and management support in the initial phase of a new MNC venture.

“That’s why we call ourselves Angel Partners,” says Sharma. Phi will nurture the new venture for 2-4 years. Since the promoters have experience in telecom, projects in this sector will be a focus area. But Phi is also in discussions with MNCs in renewable energy and green energy solutions. Phi is ready with three engagement models: One, a joint venture with an MNC; two, incubate a business with venture capital support and then bring in an MNC as a majority partner; the third is the option of finding suitable MNC partners for Indian companies. In all three models, Phi would earn a minority stake in the business.
Arun Natarajan is the Founder & CEO of Venture Intelligence, the leading provider of data and analysis on private equity, venture capital and M&A deals in India. View free samples of Venture Intelligence newsletters and reports. Email the author at arun@ventureintelligence.in

June 01, 2009

Lehman Brothers' collapse good for the environment?

Paul Kedrosky has a couple of interesting charts showing how the US credit crisis is good for the environment. The first chart shows that global electricity consumption is down - for the first time since World War II! The second one shows the change in energy consumption patterns across industries.

Arun Natarajan is the Founder & CEO of Venture Intelligence, the leading provider of data and analysis on private equity, venture capital and M&A deals in India. View free samples of Venture Intelligence newsletters and reports. Email the author at arun@ventureintelligence.in