Speaker Lineup for APEX '10 Summit

We are delighted to announce a stellar list of speakers for APEX '10, the annual conclave of the Indian Private Equity / Venture Capital industry, scheduled for February 4 at Mumbai. This edition of APEX will have a special focus on Education, Healthcare & Life Sciences, Telecom and Financial Services (especially financial inclusion).

Speakers at the Summit include:

Varun Sood, Capvent
Ashish Dhawan, ChrysCapital*
Raja Kumar, UTI Ventures*
Vani Kola, NEA-IndoUS Ventures
Manik Arora, IDG Ventures India
Anand Sudarshan, Manipal Education
K. Ganaesh, TutorVista
Rajesh Bhatia, Tree House Education
Sunil Kanoria, Quippo Telecom
Mahesh Choudhary, Microqual Techno
Dr. Bala Manian, ReaMetrix
Swapan Bhattacharya, TCG Lifesciences
Chetan Tamhankar, SIRO Clinpharm
S. Nandakumar, Perfint Healthcare
Padmaja Reddy, Spandana India
V.P Nandakumar, Manappuram General Finance
Madhusudan Menon, Micro Housing Finance

For Participation details, email info@ventureintelligence.in or call +91-44-45534303

Forbes India profile of Ess Dee

Forbes India has a colorful profile of Ess Dee Aluminium founder Sudip Dutta with a special focus on how he is turning around India Foils, which Ess Dee had acquired from the Vedanta Group in November 2008.

The entrepreneur got that one thing right that had made his first acquisition successful – he knew his prey inside out. Since 1999, as he nurtured his company, Dutta had kept an eye on what was happening at rival India Foils. By 2004, Dutta had set up his first foil rolling mill in Daman and had crossed Rs. 100 crore in revenues. He had created a niche for himself among pharmaceuticals companies like Pfizer, GlaxoSmithline and Novartis. His rise was acknowledged by the competition. Indal, then a unit of Hindalco Industries, stopped supplying him with the basic raw material as the A.V. Birla company itself was in the packaging business. Dutta quickly started sourcing the material from an overseas company.

...With more than 20 other former India Foils senior managers with him, Dutta exactly knew the problems. And he had also found the solution by the time India Foils came under the BIFR (Board for Industrial and Financial Reconstruction) fold in 2005. To make things easier, Dutta made sure that Ess Dee didn’t get the burden of the Rs. 230 crore debt that was on India Foils’ books. Instead, Vedanta Resources agreed to “assume” the debt. “On hindsight, the asking price of Rs. 130 crore came cheap for Ess Dee Aluminium,” says Vijay Dave, analyst at Mumbai-based Sunidi Securities & Finance. Not only that, Ess Dee’s integrated business model suited India Foils, he adds.

...The self-made millionaire is unconcerned about the financial burden, comforted by Ess Dee’s market capitalisation of about Rs. 950 crore. India Foils has a market capitalisation of nearly Rs. 250 crore. And it is not surprising that Dutta is flooded with offers from financial institutions who want to participate in the Rs. 500 crore fund raising exercise. It is a far change from those early days when he had to face “bad language and attitude” from bankers when he had gone for his first loan, of Rs. 40,000, in the early 1990s. “The bee will only come where the honey is. Then I didn’t have honey, now I have,” says Dutta.

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

Multiplex Economics

Business Today has an article outlining the improving economics of multiplex theatre chains.

Apart from new movie releases, most of the multiplex companies have reported sharp improvements in their bottom line during the second quarter by cutting costs. The biggest overheads for operators are rentals, electricity, staff salaries and marketing. Following the slowdown in consumer spending and a weak movie pipeline last year, many cineplexes renegotiated their rentals.

..Typically, the box office fetches 65 per cent of an exhibitor’s revenues, food and beverages (F&B) 20 per cent, and advertisements 15 per cent. Of the ticket sales, after deducting entertainment tax, the distributor takes away 48 per cent in the first week and less later.

A multiplex makes its money from high-margin areas like advertising and the F&B business. “Currently, the average per head spending on F&B is at around Rs 30 (Rs 20 in non-metros and Rs 40 in metros). With right marketing initiatives, we expect this to go up to Rs 38 in the next six months,” says Sampat.

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

Deal Alert: Zephyr Peacock invests in telecom firm Metro Wireless Engg.

PE firm Zephyr Peacock India has invested in Metro Wireless Engineering India (Metrotel), an Ahmedabad-based provider of network performance management and optimization services to leading mobile operators and network equipment providers. Apart from India, Metrotel also operates in S.E. Asia and the Middle East.

Kartik Parija of Zephyr Peacock has joined the board of the company.

Bajaj FinServ's bet on consumer finance

Business Standard has an article on the topic.

Where Bajaj Finance hopes to make the real difference is in service: It wants to disburse loans faster than its peers, allow customers to pre-pay loans from their desktops and return documents on loans against property in less than five days — an industry record. Of course, customers have round-the-clock access to its call centres.

The plan seems to be working. “The company is now stimulating demand for 8 to 10 per cent of LCD televisions sold in the country every month, a reflection of the strategy to pursue affluent customers,” says Jain. The loan book grew to Rs 3,500 crore at the end of September 2009 from Rs 2,500 crore a year ago. While it’s hard to look too far ahead, Jain is hoping to grow the book by 30 to 40 per cent over the next 18 to 24 months. Though provisions might depress profits in the current year, the business should become more profitable from next year onwards as costs come off their peak and spreads improve in a better macroeconomic environment.

Bajaj believes unsecured loans can fetch rates of 22 to 24 per cent, while loans against property can bring in 13 to 14 per cent. So given the cost of funds at 8.5 to 9 per cent, the spreads could be as high as 1,000 basis points for some products.

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

Gujarati snack maker who cocks a snook at Pepsi

The Economic Times has a profile of Gujarat-based snack maker Balaji Wafers which controls 70-90% of the state's Rs.600 crore market for wafers and namkeen leaving Pepsi-Frito Lays and North Indian snack giant Haldirams far behind.

Indeed, Balaji products like Chataka Pataka, Ratlami Sev and Sing Bhujiya, among others, suit the tastes of a specific market. The company offers masala wafers to cater to the Gujarati palate, chaat masala for the Maharashtra market and a range of spicy snacks for Rajasthan. Here, it scores over Haldiram’s, which too has flavours to cater to the North Indian palate, by a better understanding of the Gujarati consumer. Balaji’s pampers the Gujarati’s sweet tooth by keeping its khatta-meetha less spicy.

...Balaji MD Chandu Virani says volumes help him offer such prices. The pricing plan drove PepsiCo’s Kurkure down the same path, he says, adding that his rivals had to offer similar schemes to retain consumers. This strategy of marrying price, flavour and distribution is estimated to have catapulted the group to a 90% share of the state’s wafers market and 70% of the namkeen market. After beating local brands like Samrat & Real, Balaji has since spread to Maharashtra, Rajasthan and Madhya Pradesh, eyeing a bigger bite of the Rs 3,000-crore branded snacks market.

...PepsiCo has since been trying to convince Mr Virani for a sellout. The group is against the idea, focusing instead on an expansion overdrive. Plans are afoot to expand the snacks range and cater to the global markets.

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

Forbes India profile of security services company Topsgrup

Extract from the profile

“We want to become the Shah Rukh Khan and Narayana Murthy of the security industry — humble, accessible and down to earth. And our aim is also to do $10 billion in revenue by the year 2020,” says (Diwan Rahul Nanda, Chairman of Topsgrup).

...Acquisitions are the standard operating procedure for most large security companies going global. Because security is a very local, relationship-led business, customers are loathe to entrust their security to a new entrant. Acquiring a local security provider is often the only way to expand into other countries.

Secondly, large multinational corporations prefer to give consolidated contracts spread across multiple countries. This helps them standardise vendor and contract management as well as drive down costs by dangling the volumes carrot before vendors. Therefore an India-only Topsgrup was unable to even bid for large security contracts of MNCs in India.

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

Debt-and-equity structure to encourage angel investments

Entrepreneur turned angel-cum-venture investor Alok Mittal has proposed a new funding structure that will help catalyze more angel investments. The framework aims to ensure that the angel investor receives an equity upside if the venture becomes highly scalable; if, however, it turns out to be "only" a "lifestyle" business (i.e., not scalable enough to generate an great exit for the equity investors, but nevertheless generates good cashflows), the investor would receive a good rate of interest for his risk.

You can view Alok's proposed framework and the discussions around the various likely scenarios as part of his post on the VentureWoods blog.

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

Forbes India profile of Opto Circuits

Forbes India has a profile of Opto Circuits, probably the only pure play listed medical devices company in the country. The company's stock incidentally has appreciated 10 times since January 2005.

Until now, Ramnani has made his living, mostly by selling “non-invasive” medical devices like electronic patient monitors and medical sensors. But it is Opto’s “invasive” product line, stuff like stents and balloons that go into patient’s bodies, which holds significant promise.

...The second reason Ramnani is where he is, is because he made some smart acquisitions. Apart from EuroCor in the invasive medical devices category, Opto acquired Bangalore-based companies Devon and Ormed. In the non-invasive category, which is where Opto started, Ramnani acquired Hindustan Lever’s digital thermometer division, the patient monitoring business at US-based Palco Labs in 2002 and Bangalore-based Altron Industries. In 2008 he acquired US-based maker and distributor of patient monitoring devices, Criticare Systems, for $70 million.

...Its decision to move back manufacturing of Criticare products from Taiwan (where it was being contract-manufactured) to Bangalore has already given it a 20 percent saving in costs. It also has plans to start manufacturing stents in India, an ambitious task no doubt, but one that can help it bring down the cost of each stent below its global counterparts.

...Continued investments in R&D — 12 percent of its income in 2009 alone — are beginning to pay off. Its drug-eluting coronary balloon, DIOR, launched in January this year was the first of its kind in the world. The company says DIOR’s potential market is 40 percent of the overall stent market with 25 percent coming from patients whose existing stents start failing and 15 percent from those who develop infections around an implanted stent.

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

Will Metahelix Bt Cotton plan succeed?

Forbes India has an article on how the VC-backed agri-biotech company is taking on the big daddy of the Bt Cotton space (Monsanto).

Sometimes in the midst of all these technologies we forget that farmers don’t grow cotton to kill pests, but to get a better yield,” says Narayanan. If Metahelix can engineer a hybrid that can grow faster, utilise nutrient-s more effectively or produce a better yield, that might be its differentiator. This opinion is shared by Suman Sahai, convener of rural advocacy group Gene Campaign. “The success of Bt. cotton in India owes as much to the hybrids developed by Rasi and Nuziveedu, as to Monsanto’s technology. In fact, Mahyco Monsanto Biotech (MMB)’s initial seeds which were the first to get government approval were spectacular failures,” she says.

...when it goes to the market next year, its strategy will be two-pronged: Convince farmers using Bollgard-1 cotton (the first generation of Bt. seeds) to upgrade to Metahelix’s seed which offers added protection against pests, and demonstrate to Bollgard-2 (second generation Bt. seeds) farmers how their hybrid varieties offer better yields while offering the same level of pest protection.

In order to do this it is organising demonstrations of its cotton crops in over 250 locations around the country, where farmers will be allowed to examine Metahelix’s claims through live crops. It is also combining this with village-level meetings where company representatives will explain the benefits of their products over the competition.

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