Weekly Indian Economic Review

1. Top Headlines
 IDG Ventures, SAIF Partners Invest $14M In Owner of
FirstCry.com
 Warburg Pincus to Invest $50M in AU Financiers.
 France’s Legrand Acquires Numeric’s UPS Biz for Rs
837Cr.
 Gati Hives Off Bulk Of Logistics Biz Sells 30% To
Kintetsu For $53M.
 Face book enemy Divya Narendra sets new 'mark' as
IPO looms.
 Helion Venture Partners’ Third Fund Reaches $219M.
 Marico buys Paras personal care brands.
 Manthan Systems Raises $15M from Norwest Venture
Partners.
 MCX Eyes over $1B Valuation in IPO.
 Jacob Ballas Invests $20M In DBM Geotechnics &
Constructions.
 Unitech rejects Telenor claims, to contest charges
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2. Weekly Economic Review
High demand for loans helped State Bank of India post healthy profits for
the third quarter. But bad loans have also shot up, raising concerns about
the bank’s performance. Profit rose 15% to Rs3, 263crore compared to the
same period the previous year. That was on a 26.7% increase in net
interest income to Rs11, 470crore. On the downside, non-performing
loans are now at a record high up Rs40, 098crore compared to Rs23,
438crore in the year-ago period. That in turn means, gross NPAs are now
at 4.61% on loans.
Switching to the Economy, there’s finally a glimmer of hope for India’s
struggling Economy. Inflation has eased to its lowest in more than two
years. The wholesale price index rose 6.55% in January. In December it
stood at 7.47%. Finance minister Pranab Mukherjee said he was now
confident inflation would drop to around 6% by March-end.
But not everyone is so confident inflation will ease. Some economists have
argued that the low figure is largely because of the base effect—since
inflation stood at 9.46% last January. Others point out seasonal factors
have cut down food inflation in December and January, bringing down
overall inflation as well.
State-run Indian Oil Corporation is considering a hike in petrol prices if
crude oil continues to remain at around $115per barrel. Growth in petrol
consumption so far this fiscal is just 5.2% compared the usual 10%.
And finally, the great Indian demand for gold seems to have waned. A
report from the World Gold Council says demand fell some 42% in the
October to December quarter. It says the main culprits were volatile prices
and a weak rupee. The fall in demand came despite the festivel
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3. Inside The Story
IDG Ventures, SAIF Partners Invest $14M in Owner of
FirstCry.com
IDG Ventures India led a $14 million Series B investment into Brain
bees Solutions Pvt Ltd., which owns the FirstCry.com and
GoodLife.com brands. SAIF Partners, the first institutional investor
in Brainbees participated equally in the round; having earlier
invested $4 million in the company in May 2011.IDG Ventures'
Manik Arora joins Ravi Adusumalli & Mukul Arora from SAIF
Partners on the board of the company. IDG Ventures' US arm has
been an investor in BabyCenter.com in the late 1990s and the
company was acquired by eToys in a stock deal. The investment will
be utilized for marketing, adding new business categories and
brands, and expanding warehousing space. In addition, Brain bees
will accelerate its growth in existing categories, recruit employees
for expanding the supply chain and overall customer experience.
Warburg Pincus to Invest $50M in AU Financiers
Private equity major Warburg Pincus is picking up a stake in Jaipur-
based AU Financiers (India) Private Limited for $50 million (Rs 250
crore), said a source familiar with the development. The privately
held non-banking finance company (NBFC) is involved primarily in
commercial vehicles and SME loans. The firm has earlier risen
funding from Motilal Oswal's private equity fund and World Bank
arm International Finance Corporation (IFC). AU Financiers is
promoted by first generation entrepreneur Sanjay Agarwal. It also
provides vehicle loans, business loans against property and small
loans to customers mainly in semi-urban and rural areas. As of June
2011, the company had a loan portfolio of Rs 1,508 crore.
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4. France’s Legrand Acquires Numeric’s UPS Biz for Rs
837Cr
French electrical and digital building infrastructure major Legrand
Group has acquired the UPS business of Numeric Power Systems Ltd
for Rs 837.08 crore ($171 million). It is also the second major
acquisition by Legrand in India, after it agreed to buy the switchgear
division of Indo Asian Fusegear Ltd for Rs 600 crore in 2010.The
transaction has been done in the form of an asset sale where
Bombay Stock Exchange-listed Numeric Power Systems has sold the
UPS business to Legrand’s wholly owned subsidiary Indo Asian
Electric Pvt Ltd and the two parties have entered into a business
transfer agreement.
Gati Hives off Bulk of Logistics Biz, Sells 30% To
Kintetsu For $53M
Gati Ltd’s stock price crashed 10 per cent to hit the lower circuit of
the day after it announced a deal with Japanese logistics firm
Kintetsu World Express (KWE) to sell 30 per cent stake in its
Express distribution & supply chain (EDSC) business for Rs 267
crore ($53 million).For the 12 months ended June 30, 2011, Gati
Drew three-fourth of its total consolidated revenues of over Rs
1,200 crore from the EDSC business. More importantly, over 95 per
cent of the segment profits came from the EDSC business, which is
now hived off into a separate venture. Other businesses of Gati
include what it calls ‘coast-to-coast’ (shipping) besides fuel sales.
These two businesses generated around Rs 220 crore in revenues,
with segment profit of Rs 2.5 crore.The new joint venture will
support the large customer base of Kintetsu which has operations in
India – simultaneously strengthening its distribution capabilities for
the Indian market. The JV will also invest in high-end 3PL facilities,
including temperature-controlled warehouses.
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5. Face book enemy Divya Narendra sets new 'mark' as
IPO looms
Divya Narendra is named as an 'enemy' on whoownsfacebook.com, a
website that lists the shareholders of Facebook. This enemy is now
looking to count his spoils of war. If the social networking site gets a
valuation of $100 billion in its upcoming initial public offer,
Narendra will be richer by about $20 million. The Harvard-educated
Indian-American has held a 0.022% stake in Facebook since 2008 as
part of his settlement with founder.
Helion Venture Partners’ Third Fund Reaches $219M
Helion Venture Partners, an early-to-mid-stage venture capital firm,
has raised over $219 million for its third India-focused fund a few
Weeks ago, according to sources with direct knowledge of the
development. With the current fund, the firm’s assets under
management will reach over $570 million across its three India-
focused funds. According to sources, Helion Venture Partners III,
LLC has raised the amount from 31 investors. While it was earlier
indicated that Helion would raise $200-250 million for its third
Fund, one source said that $219 million might not be the final close
of the fund. E-mail queries sent to Helion’s senior managing
directors Kanwaljit Singh and Ashish Gupta did not elicit any
response at the time of filing this article
Marico buys Paras personal care brands
Consumer goods maker Marico will acquire the personal care
brands of Paras Pharmaceuticals from Reckitt Benckiser for an
undisclosed sum. The portfolio includes hair gel brand Set Wet, age-
defying cream Recova, lip balm Dr Lips, hair serum Livon and
deodorant brand Zatak.Marico refused to share the transaction
details, but said the deal will go through in the next few months. The
acquisition would be funded through a “judicious mix” of internal
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6. Accruals, equity and debt, it said.Dabur India and Emami were
among the players in the race to acquire the Paras brands, which are
expected to generate a turnover of Rs150 crore this fiscal. As per the
scheme of arrangement, Reckitt will transfer the personal care
division to a separate company, called Halite Personal Care India Pvt
Ltd, in which Marico will acquire 100% equity stake.
Manthan Systems Raises $15M from Norwest Venture
Partners.
Manthan Systems, a business intelligence and analytics solutions
provider for the retail and consumer packaged goods industries, has
raised $15 million (Rs 75 crore) in series C funding from Norwest
Venture Partners. The funds raised will be used to expand product
offerings besides inorganic expansion. Manthan is also on the
lookout for companies in similar domain, with similar customer
base, which it can acquire.Atul Jalan, founder and CEO of Manthan
Systems, told that The next step would be a public issue as a natural
corollary after 3-4 rounds of funding. However, he did not give a
timeframe for the proposed public issue. “Our deep focus on retail
analytics, business intelligence and customers is what has helped us
create some of the most innovative products in the business
intelligence and analytics space. In addition, we have always been
heedful of the fact that the sophisticated analytics we create need to
be easy to adopt, deploy and use,” he said.
MCX Eyes over $1B Valuation in IPO
Private equity-backed commodity bourse company Multi
Commodity Exchange of India (MCX) has set the price band for its
maiden issue that will see half a dozen financial investors in the
company part-exit, with some generating superlative returns of over
100 x and some might just recover their original investment value.
The public issue is being eagerly watched as it is one of the biggest
issues to hit the Indian bourses in a while and the first this year. It is
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7. Also important as MCX is the largest commodity bourse by turnover
and the issue will make it the first bourse to list in India. Analysts
say that this issue will test the market for more primary issues.MCX
has set a price band of Rs 860-Rs 1,032 a share for its initial public
offer under which its existing investors, including its main promoter
Financial Technologies India Ltd, are offering 6.4 million shares for
sale. The issue will be worth Rs 550-660 crore. However, the
company will not get any money from the issue.
Jacob Ballas Invests $20M In DBM Geotechnics &
Constructions.
Private equity firm Jacob Ballas has invested Rs 100 crore ($20
million) in privately held DBM Geotechnics and Constructions Pvt
Ltd through NYLIM Jacob Ballas India Fund III to buy an undisclosed
minority stake in the Mumbai-based company.DBM is into
geotechnical services and is also engaged in EPC services, mainly in
the areas of foundation engineering and marine infrastructure
construction.DB Mahajan, chairman and managing director of DBM,
said, “We believe NYLIM-JB’s understanding of the Indian
infrastructure sector and global best practices will help DBM to
expand business to new heights and create value for all
stakeholders.”
Unitech rejects Telenor claims, to contest charges
Unitech on Thursday said it would refuse demands for
compensation from Norwegian operator Telenor and contest the
charge that it had broken agreements in acquiring 2G airwaves for
their joint venture, Uninor.“At best, Telenor group can invoke the
provisions between the governments for protection of their
investment in India, but they shall have no valid claim on Unitech
and any demand from Unitech shall be contested,” the Indian
company said in a release.Unitech said the Supreme Court’s
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8. Cancellation of all 22 of Uninor’s licences did not leave the
infrastructure company liable for damages.
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