Hector Beverages - sells paper boat, drinks and memories

Zorabian - the finest quality chicken from Mumbai

Mapro - not just strawberries anymore

Chaayos - Boss! ek cutting dena

Nappa Dori - luxury leather products from India

iD Fresh - supplies everyday batter for the Indian palate

Sarjena Foods - the company behind Baker Street

Prem Watsa and his India innings

Canada-based Prem Watsa's India (which also happens to be his home turf) innings started in 2010, when he acquired a small 10% stake in India Infoline Limited (now IIFL Holdings Limited) spending a little less than INR 300 crore. Today, the man in question has made an open offer to buy an additional 26% stake in IIFL Holdings for INR 1,621 crore.

In fact going by the spate of announcements so far this year, Mr Watsa and his team have truly been keeping busy targeting inorganic growth opportunities.

Few days back, two of his group companies in India announced two separate acquisitions. In August 2015, Mr Watsa took a majority ownership in National Collateral Management Services Limited (NCMSL), a leading private-sector agriculture storage company in India, for INR 800 crore. During the same month, Mr Watsa (through Thomas Cook India Limited) also took over the India and Hong Kong businesses of Kuoni for INR 535 crore.

Its worthwhile to take note of the manner in which Mr Watsa has transformed Thomas Cook India, which he acquired in 2012. Mr Watsa acquired 87% in Thomas Cook India for INR 963 crore in 2012. The very next year, Thomas Cook India signed an agreement to buy 74% stake in IKYA Human Capital Solutions Private Limited (now Quess Corp Limited) for INR 256 crore, making a foray into staffing services. At the time of acquisition IKYA was amongst the top three temporary staffing companies in India. In the following years, IKYA went on to acquire a host of companies including Hofincons Infotech and Industrial Services Private Limited (an industrial asset management firm), Aramark India Private Limited (a facility management company) and a few others outside India, including Brainhunter Systems Canada, Transfield Services Qatar and Randstand Lanka. Mr Watsa also entered into time share vacations after acquiring Sterling Holiday Resorts India Limited in 2014, and then merging it with Thomas Cook India. The deal valued Sterling Holiday at about INR 870 crore. The inorganic growth account of Sterling Holiday was opened this month after the company signed an agreement to acquire Nature Trails Resorts Private Limited, marking a foray into adventure tourism.

Taking a cue from the manner in which Mr Watsa has transformed Thomas Cook India, it may be easy to assume that he may have chosen similar growth paths for IIFL Holdings and NCMSL.

McNROE Consumer - wild stone deodorant... it happens

Gangar Eyenation - enhancing the vision of India

Girnar - a regional tea champion

Baggit - making affordable and trendy handbags

SAJ Food Products - the company behind Bisk Farm

India loses ten foreign AMC’s since 2010

With today’s announcement, Goldman Sachs has joined the growing brigade of foreign asset management companies (AMC's) which chose to completely exit their mutual fund businesses in India. Since 2010, a total of ten foreign AMC's including those of Shinsei, AIG, Fidelity, Daiwa, Morgan Stanley, ING Group, PineBridge, Deutsche Bank, KBC, and Goldman Sachs, have logged out of India.

Year	Foreign AMC
2010	Shinsei Asset Management
2010	AIG Global Asset Management
2012	Fidelity Fund Management
2013	Daiwa Asset Management India
2013	Morgan Stanley Investment Management
2014	ING Investment Management
2014	PineBridge Investments Asset Management
2015	Deutsche Asset Management
2015	KBC Asset Management (exits JV with Union Bank of India)
2015	Goldman Sachs Asset Management

Various articles seem to suggest that the stringent norms from SEBI (Securities and Exchange Board of India) in the form of higher net worth, investing of seed capital in open-ended schemes, quarterly disclosures on voting pattern in portfolio company resolutions, ban on entry loads, and rationalization of commissions to mutual fund distributors, have been the culprits. Nonetheless, the decision for the above rests with SEBI along with AMFI (Association of Mutual Funds in India), through which the mutual fund houses usually voice their opinion. After all, the exits of renowned foreign asset management companies' certainly do reflect poorly on the state of affairs in the Indian mutual fund business.

Focusing back to the deal between Goldman Sachs and Reliance Capital; as per the terms, Goldman Sachs Asset Management India would be receiving INR 243 crore in cash from Reliance Capital Asset Management for parting with its 100% stake in the business. The amount is approximately INR 100 crore more than what Goldman Sachs had paid to acquire the business from the original promoters of Benchmark Asset Management Company in 2011. Considering the cumulative losses of an equivalent amount reported by Goldman Sachs Asset Management India over the last four years, it seems the parent Goldman Sachs Group, Inc. was happy to exit at par.

Zephyr - combining education and entertainment in toys

Ramdev Food Products - tadke ki dibiya...

Desai Brothers - the company behind Mother's Recipe

Pelican Farm - All that's Good Mex Nachos

Moshe's - he brought us the taste of the Mediterranean

Bagrrys - our homegrown oats and muesli company

Enrich - runs a large chain of unisex salons in India

Deutsche AMC India was probably valued at over 1,000 crores

With more than a decade of existence in the Indian mutual fund industry and INR 25,000 crore in assets under management (AUM), the Deutsche AMC India easily found a match in the form of DHFL Pramerica Asset Managers to take over its mutual fund business. Though no formal communication of this deal seems to be available anywhere, various media reports have indicated that an agreement was signed sometime early August 2015 for a purchase consideration of INR 400 crore.

Established in 2003, Deutsche AMC India has a reasonably strong track record and deep relationships with institutional clients and distribution partners. On the other hand, DHFL Pramerica, which initiated its mutual fund innings in India sometime 2008 with the real estate major DLF, has not been able to scale up in the manner it had wished to. At the end of September 2015, DHFL Pramerica had an AUM of just INR 2,366 crore or ~0.2% of the total industry AUM. DHFL (the new JV partner) had swapped places with DLF at Pramerica India’s mutual fund arm last year.

Given its chequered history in India, Pramerica couldn’t let go off this one golden opportunity to bag Deutsche AMC’s India business and muscle its AUM size by 10x. DHFL’s business links with Deutsche seems to have worked in favor of the deal.

Coming to the probable valuations, it would be prudent to compare Deutsche-DHFL Pramerica deal with likes of those where the AUM under consideration was above INR 5,000 crore and the acquisition was for a complete 100% stake. Two deals – Standard Chartered and IDFC; and Fidelity and L&T perfectly fit the bill:

• In 2008, Standard Chartered Mutual Fund was scooped up by IDFC for INR 820 crore, valuing the latter at 5.8% of its total AUM of INR 14,000 crore. Standard Chartered AMC had nearly 80% of its AUM in debt.
•  In 2012, Fidelity sold its Indian mutual fund business to L&T Finance for an estimated INR 550 crore, valuing the latter at 6.2% of its total AUM of INR 8,800 crore. Fidelity AMC had 30% of its AUM in debt.

Considering the above and the fact that a debt heavy portfolio generally fetches a lower valuation, Deutsche AMC India could’ve probably asked for a minimum INR 1,000 crore, approximately 4.5% value of its average AUM of INR 22,800 crore (normalized for four quarters).

Steelbird - among the largest helmet makers in India

Hygiene Research Institute - coloring the greys

Shangri-La learns to live with project delays in India

In September 2015, Hong Kong based luxury hotel chain Shangri-La Hotel and Resorts announced the opening of its first hotel in Bengaluru, the second Shangri-La hotel in India. Built by Adarsh Developers for INR 780 crore, the 19 story Shangri-La Bengaluru on the Palace Road has 397 guest rooms and suites – the largest inventory of accommodation in Bengaluru; eight food and beverage venues; a Health Club; salon; spa; a 739 sq m ballroom with six function rooms; and a business centre.

Unfortunately, just like the Mumbai project, the completion of the Bengaluru hotel project faced enormous delays. Yet, Shangri-La Hotel and Resorts held its patience. In 2013, Shangri-La Hotel and Resorts had moved out of a similar sized hotel project in Mumbai (established at a cost of over INR 1100 crores by a large real estate company based in Mumbai), citing delays in project completion. Though, it seems it was largely due to differences with the property owners.

Nonetheless, I just hope that Shangri-La Bengaluru does not face a similar fate as the Mumbai project and instead does a roaring business like Shangri-La’s – Eros Hotel in New Delhi.

Shangri-La Hotel and Resorts happily runs the Shangri-La’s – Eros Hotel, which opened doors in September 2005. The Shangri-La’s – Eros Hotel was purchased by the Eros Group (Jagdish Rai Sood) from India Tourism Development Corporation (ITDC) for INR 96 crores in 2002. Eros spent an additional INR 200 crores on refurbishing the hotel. 

Wildcraft - our home grown outdoor gear brand

Spacewood - dressing up Indian homes and offices

Prataap Snacks - the company behind Yellow Diamond

Prime Retail - the dada of luxury watches in Kolkata

Vedant Fashions - pioneer in branded ethnic wear for men

Did Carnival Group just buy a gem from L&T Realty?

Carnival Group, promoted by Shrikant Bhasi, has scooped up the ELANTE PROJECT in Chandigarh for INR 1,785 crore. With a rental income of INR 170 crore in FY 2014-15, ELANTE already presents a lucrative gross yield of 9.5% to Carnival Group. However, L&T Realty ((an L&T subsidiary), the selling entity, just about made meager gains on its eight year old investment.

ELANTE, a mixed use development project occupying a 20 acre (81,340 sq m) plot area in Chandigarh, hosts one of the most successful malls - ELANTE MALL - in Northern India. As per an ICRA report, ELANTE MALL enjoys an astonishing 100% occupancy.

Promoted by CSJ Infrastructure (an L&T subsidiary), ELANTE MALL has a retail space of 1.15 million sq ft and houses an 8-screen Multiplex of PVR Cinemas, which opened in June 2013. ELANTE PROJECT also includes office premises with a central courtyard, and an upcoming 5-star hotel. The office complex covers 400,000 sq ft of space (a large part of which has been sold), while the hotel occupies 250,000 sq ft area.

Background: In 2007, CSJ Infrastructure acquired a 20-acre plot from Pfizer for INR 278 crore. In addition, it incurred a land use conversion charge of INR 185 crore since the company wished to build a commercial project on an industrial land. CSJ Infrastructure planned for a mixed use development project over the land for an estimated project cost of INR 1,127 crore. It commenced construction of ELANTE PROJECT in Dec 2009. The ELANTE MALL (which includes the Multiplex) and office complex were completed in March 2013. The 213-room Hyatt Hotel is expected to open in December 2015. 

Nobel Hygiene - care for toddlers as well as adults

Pecopp - a regional champion in pest control services

Apollo PE exits Dish TV with unimpressive returns

Today, Apollo Global Management LLC, a US-based private equity firm, sold its remaining stake in Dish TV India Limited for INR 399 crores (US$ 60 million) via bulk deals on the Bombay Stock Exchange. Apollo Global offloaded about 38.1 million shares in the DTH operator at INR 104.64 per share, a nice 163% above its average cost price of INR 39.80 per share.

Apollo Global, which has an AUM of ~US$ 160 billion, had invested US$ 100 million (then INR 465 crore) in Dish TV through a GDR issue in November 2009.

Having held onto its investment for a little over five years, Apollo Global started to pare its stake in Dish TV from April 2015 on wards. In April this year, Apollo Global sold 27% of its stake in the company for INR 263 crores. It repeated the act in June 2015, selling another 40% of its original stake for INR 487 crores. Including the INR 399 crore proceeds from today's sale, the total money realized by Apollo Global from its entire investment in Dish TV amounts to INR 1,148 crore (US$ 179 million).

In dollar terms, Apollo Global seems to have generated a gross IRR of 11-12% on its investment in Dish TV. This is hardly impressive considering Apollo Global has delivered a 39% gross IRR and a 25% net IRR within its private equity business, since founding.

Ethos - largest retailer of luxury watches in India

Sara Suole - the company behind Ruosh

Barbeque Nation...live-on-the-table grill success

Netscribes India - holding the fort in business research

Creative Lifestyles - the company behind 109 F, Fusion Beats

N. Ranga Rao & Sons - cycling incense success

Sarda Farms - catering to unadulterated milk demand

Kids Clinic India - they own cloudnine

Balaji Wafers - Crunching success

The Himalaya Drug Company finds life beyond Liv.52

Wish Tina had invested in 8K Miles and not FN Souza’s 'Birth'

Today's newspaper carried an interesting piece on the cover page. The heading read 'Francis Newton Souza becomes India's most expensive artist'. As per the report, 'Birth', a monumental work by FN Souza sold for an eye-popping US$ 4.01 million (or INR 27 crore) at a Christie's auction in New York on 17^th Sep 2015. The seller was Harmony Art Foundation, an entity run by Tina Ambani, wife of businessman Anil Ambani. Tina Ambani had picked up FN Souza's artwork for US$ 2.5 million (or INR 11 crore) at a 2008 Christie's auction in London. Based on the selling price, Tina managed to double her initial investment with ease.

Tina's business acumen truly deserves applaud!

However, had she invested this entire money in a Chennai-based cloud computing company named 8K Miles Software Services Limited (8K Miles), she would surely be on cloud nine.

Yesterday, shares of 8K Miles hit an intraday high of INR 1,444.75 to close at INR 1,399/- during the day on the BSE, much above its 52-week low of INR 324/-. On 18^th Sep 2015, the stock hit a fresh 52-week high (which is also the all time high) after 8K Miles announced the acquisition of NexAge Technologies USA, Inc. for US$ 3 million. Interestingly, it was the third acquisition for 8K Miles so far this year. The company had acquired Cintel Systems, Inc., another US-based company for US$ 3.7 million in April after taking over Mindprint Inc., a clinical research software startup in Canada, for US$ 400,000 in February.

One fund manager, who spotted the opportunity early on, is sitting pretty! He acquired some shares of 8K Miles worth INR 5.3 crore through bulk deals in August 2014. As of date, assuming he has not sold-off any of these shares from the scheme, the value of his fund holdings in 8K Miles stands at INR 42.5 crore – approximately 8x his investment. Another fund manager, who followed the same course, but in September 2014, seems to have liquidated his entire holding generating a quick profit.

A few non-promoter individuals who had ploughed-in a total INR 30 crores via convertible warrants have also seen the value of their holdings rise to INR 100 crores in less than a year. In fact, one of them has neatly pocketed his gains already.

8K Miles was originally promoted by the Surana Group (Hyderabad). It was incorporated in 1985, as Rosebuds Commercials Limited, only to be renamed as PM Strips Limited in 1998. The current name 8K Miles was given only in 2010 after the current promoters (Suresh Venkatachari and RS Ramani) entered into a share-swap arrangement with the Surana Group.

It is interesting to note that at the time of open offer in 2010, the net worth of Suresh Venkatachari (CEO) was INR 10.5 crore while that of RS Ramani (CFO) was INR 1.1 crore. Today, as I write, the market value of Suresh Venkatachari's shares in 8K Miles is over INR 800 crore, while that of RS Ramani's shares is over INR 90 crore.

Kudos to the new promoter team!

Disclaimer – All information has been obtained from desktop research; the author cannot be held liable for any incorrect details

Vicco turmeric... nahin cosmetic...

KENT RO Systems - the pioneer of reverse osmosis in India

Mountain Valley Springs - the company behind Forest Essentials

Avenue Supermarts - the company behind D-Mart

Jaquar - the faucet king of India

DRUMS Food - India's cold stone champion

Indian Clothing League - dressing up our pre-teens

GreenDot Health Foods - the company behind Cornitos

India wakes up to sun-ny days, targets its solar power potential like never before

Of late, there seems to be a sudden rise in hype around the word 'Solar Power' in India. Sometime last week, Kerala (located in the southern part of India) became the proud home to what is being touted as the first airport in the world to operate completely on solar power. Cochin International Airport (in Kerala) now houses a 12 mw solar power plant, capable of generating as much as 21 million units of electricity each year, basis 20% CUF.

Naturally, most newspapers came flushed with stories about India and its new solar power dream, rechristened by the Narendra Modi government. Being an analyst, I couldn’t resist, but douse myself into some of these beautifully written pieces only to understand that India has actually been making a serious progress in its mission to make the maximum use of its sun-ny days.

For the uninitiated, India is currently in the midst of ramping up its solar power generation. In June 2015, the Indian government approved plans to increase the country’s solar power capacity target to a jaw-dropping 100 gw (i.e. 100,000 mw) by 2022. The erstwhile government, under Jawaharlal Nehru National Solar Mission, had set a target of 20 gw of grid connected solar power by 2022.

Considering the establishment costs of recent projects in the industry, an installation of such stature would require an investment of ~ USD100 billion or INR5-6 lac crores.

Most would agree that this is an unreasonable target. However, before we write this off. Read on…

In June 2015, SoftBank announced a partnership with Bharti Enterprises and Foxconn Technology to invest at least USD20 billion in solar energy projects in India. As per a Reuters report, Adani Group is currently in talks with both Softbank and Foxconn to secure investment in a USD3 billion project to make solar cells and panels in the country. Furthermore, SunEdison, OAO Rosneft, Reliance ADAG, NTPC and a few more are on the cusp of announcing hefty solar power investments in India.

Solar power in India has witnessed impressive growth in a short span of time – from just 35 mw as of March 2011 to over 4,000 mw as of now. As per the latest data available on MNRE, the five states of Rajasthan, Gujarat, Madhya Pradesh, Maharashtra and Andhra Pradesh, comprise more than 80% of this entire 4,000+ mw solar power capacity.

While all the above data is easy to come by, one special feature to the readers of blog are the names of top 10 solar power producers in India.

Click here to access the list of all solar power plants in India, by company, state and capacity.

PS – The above data is purely based on secondary research and may differ from actual

Making sense of KidZania business model

I am sure most of us (especially the ones based in Mumbai) have heard about KidZania or may even have visited it at the R City Mall. Well! Few days back I did some interesting piece of analysis about their business and wanted to share the same with fellow readers of my blog.

Did you know that the KidZania Mumbai center with an annual attendance of 700,000 people and an average ticket price of INR1400/- (for children) and INR500/- (for an adult) could be generating annual ticket sales of whopping INR90 crores.

That’s not all!

KidZania Mumbai center also earns money through individual or corporate partners who want to put up their brands in the mock-up city. The center has nearly 40 corporate partners, namely, Amity University, Big Bazaar, Birla Sun Life Insurance, Cadbury’s, Central, Club Mahindra, Coca-Cola, Costa Coffee, DHL, Furtados School of Music, Hardy's, Hyundai, Kellogg's, Mad Over Donuts, Nerolac, Pepperfry, Radio City, Star India, The Times of India, Yes Bank, among others. It is believed that KidZania’s franchise partners’ (in this case ImagiNation Edutainment India Private Limited) generally manage to recover a significant part of their initial project cost from such corporate partners.

Hold on! There is some more. KidZania Mumbai also earns money through sales at the souvenir shop and F&B outlets located inside the center.

KidZania has come a long way from time it opened its first center in Mexico City in 1999. Today, KidZania has grown to nearly 20 centers, mainly through franchise. KidZania is operational in countries like Brazil, Thailand, Malaysia, Indonesia, Korea, Egypt, Kuwait, Saudi Arabia, UAE, UK, among others. In India, the second KidZania at New Delhi is currently under construction and expected to open sometime next year.

• Project cost: INR100 - 130 crores 
• Average size: 80,000 sq ft 
• Target audience: 4-14 years children 
• Average ticket price: INR900 - 3000 (for children in India - Japan) and INR500 - 2000 (for adults) 
• Annual attendance: 500,000 to 800,000 people per year (or 1400 to 2200 per day) 

KidZania is an edutainment indoor theme park scaled and built specially for children from 4-14 years. KidZania offers a unique blend of role play in ultra-realistic, kid-sized city environments. Every KidZania center offers a minimum of 80 role-play adult occupations including that of pilots, doctors, healthcare professionals, police officers, reporters, photographers, engineers, fashion model, and artists, among others, in a miniature city that includes a Bank, Hospital, Police Station, Fire Station, Aviation Academy and Theatre.

The concept was developed by Xavier Lopez Ancona, a former GE employee who even had a short stint at Booz Allen and Hamilton.

Well! KidZania business sounds great, doesn’t it?

PS – The above data is purely based on secondary research and may differ from actual