Monthly Archives: January 2017

Piramal Enterprises buys drug portfolio from UK firm for Rs1,160 crore

Livemint 31-January-2017

Mumbai: Piramal Enterprises Ltd (PEL) on Monday announced that it had bought a portfolio of drugs for spasticity, a muscle control disorder, and pain management from UK-based Mallinckrodt Llc for $171 million (around Rs1,160 crore) in an all-cash deal.

The acquisition, by the company’s UK subsidiary Piramal Critical Care, is a prelude to Piramal Enterprises’s plans to spin off and list its financial services unit and pharmaceuticals business, said chairman Ajay Piramal.

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“In the medium term we will do that. All our acquisitions, and in some ways moving up in value chains and getting more critical mass, are steps towards that,” Piramal said.

Earlier this month, in a second and more conclusive restructuring of its financial services business, Piramal Enterprises moved all assets and liabilities related to lending to real estate and non-real estate projects to its unit Piramal Finance Pvt. Ltd.

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In the pharmaceuticals space, the latest acquisition takes the number of Piramal buys over the last two years to seven, involving Rs3,000 crore of investment. In October, the firm, through Piramal Critical Care, acquired five anaesthesia and pain management drugs from Belgian drugmaker Janssen Pharmaceutica NV for $155 million in an all-cash deal.

“Size in terms of both top line and bottom line, in terms of management…” are critical ingredients to getting listed, Piramal said in an interview earlier this month. Whenever Piramal lists a unit, it wants to ensure that “it is of a critical size, it is relevant in the market, it is not small player”, he added.

“Any plan to create a distinct healthcare entity of the group would be welcomed by the markets as it leads to value unlocking and a focused organization for future growth, “ said Gautam Kothari, associate director at Equirus Capital Pvt.Ltd.

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The acquisition is being funded through a combination of internal accruals and debt, the company said.

The drug portfolio acquired from Mallinckrodt includes Gablofen, a severe spasticity management drug, and two other products which are under development. The deal also includes additional payment of $32 million depending on the financial performance of these drugs over the next three years.

While Gablofen is currently marketed in the US, the company said it has also got approval to launch the drug in eight European markets. For the 12 months ended September, the acquired portfolio had revenue of $44.6 million (Rs303 crore). In comparison, PEL’s health care division reported revenue of Rs1,725 crore for the half year ended September. INT

“We are moving up the value chain by acquiring global businesses in niche capabilities and expanding manufacturing capacities in niche areas,” said Piramal. He added that the new products would boost PEL’s operating profits and margins besides helping to diversify its offerings in the US, which accounts for about 40% of the pharma division revenue.

The acquisition would help in strengthening its presence in the US, which currently contributes around 35-40% to the company’s overall pharma business. INT

“This would also give us an opportunity to play in the European markets. We are present in Europe through anaesthesia products,” Piramal said, adding that the transaction would boost its presence in the global generic hospital drug market, which is worth over $20 billion in sales.

H&M looks to set up its first warehousing hub in Bhiwandi

Livemint 27-January-2017

Hennes & Mauritz (H&M) is in advanced discussions with Mumbai-based Prakhhyat Infraprojects, which operates the 150-acre K. Square Industrial Park at Bhiwandi

At present, H&M operates a warehouse in Delhi through third-party logistics firm Geodis.

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IFC plans to invest US$ 10 mn in Zinka Logistics

Source : Business Standard 27-Jan-2017

Chennai: International Finance Corporation (IFC) is planning to invest around $10 million as equity in Bengaluru-based Zinka Logistics Pvt Ltd (Blackbuck), a technology platform for long-haul trucking. The company’s existing investors include Accel Partners, Tiger Global, Apoletto and Flipkart Logistics.

IFC’s proposed investment will be in the form of equity for a minority stake to support the expansion of the company’s service offerings and further technology development. The company will use IFC’s funding to expand it’s service offerings and further technology development, said IFC.

The company was founded by Rajesh Yabaji, Chanakya Hridaya and Bala Ramasubramania in April 2015 and launched in July 2016. Blackbuck is a leading technology platform in India for long-haul trucking.Blackbuck connects large and small shippers with small truck owner/operators to book full-truck-load (FTL) freight for inter-city transportation through its mobile app interface.

IFC said Blackbuck is helping to bring transparency and efficiency to this market through its technology platform.

This allows transporters, truck owners, and enterprise clients to more efficiently locate, price, transport freight and reduce greenhouse gas emissions.

The Company is asset-light and by matching truckers with shippers through its online platform, it is able to minimise downtime for trucks and maximise utility of the asset for the truck owners/operators.

It is the leading load board in India with around 80,000 verified trucks on its platform and more than 100,000 transactions year-to-date (YTD). The company does not provide services for transportation of hazardous or dangerous goods.

The company has two different models including organised contracted freight – formal contracts with shippers (a number of big companies including multi-national companies) to move freight for predetermined routes at pre-negotiated price; auctions of freight just-in-time through the app marketplace and unorganised spot market freight where shippers use app to source truckers for immediate needs.

The company is also providing support in using ancillary services (like toll cards and fuel cards) to drivers with some partners like non-banking finance company and petroleum retailers so that truck drivers do not need to carry a lot of cash.

The long-haul, full-truck-load (FTL) trucking market in India is currently estimated to be around $70 billion and is largely offline and informal. Trucks in India on average have 33% utilisation, meaning they are either sitting/travelling empty or partially filled a majority of the time.

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India 10th largest business travel market: Report

Economic Times 19-January-2017


Mumbai: India is the world’s tenth largest business travel market and is likely to clock the fastest growth in this segment in the next five years. Business travel spending is expected to treble until 2030 from $30 billion in 2015, a report by consultancy KPMG and FCM Travel Solutions said.

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“In 2015, India saw a 15% increase in business travel spending, which will grow by a compound annual growth rate (CAGR) of 12% through 2020 to 6% by 2030. This increase in all possibility will be greater than the increases in business travel growth in the next three largest countries combined, including South Korea, Italy and Brazil. Thirteen years from now (by 2030), India will likely be amongst the top five in business travel spending,” the report said.

The report attributed the growth to “political, economic and demographic factors”. It said macro-economic growth, an evolution in the regulatory environment, increased growth and expansion in industrial activity, coupled with fast digitisation of travel booking tools has and will continue to lead to the growth.

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India has in a decade climbed the ranks from one of the world’s twenty largest business travel markets to be among the top ten. In the list compiled from a World Travel and Tourism Council Report, India follows China, US, Germany, Japan, UK, France, South Korea, Italy and Brazil.

List topper China’s business travel market size is $291 billion, close to ten times that of India. India is estimated to overtake Brazil, Italy and South Korea and take seventh place by 2020.

India’s business travel spend is roughly a fourth of its total annual travel expenditure as travellers still spend the bigger chunk on leisure, an executive at KPMG told ET.

About 80% of the business travel transactions are domestic, rest international, FCM managing director Rakshit Desai told ET. Revenuewise, the split is 50:50, he added. About 77% of the total spend is on air travel, the report said.

India to be world’s 3rd assembler of iPhones

The Times of India 04-Jan-2017

Bengaluru: With the upcoming Bengaluru assembly plant of Apple, India will become only the third country to do the final assembly of iPhones -an indication of how important the country has become for the world’s most-valued company.

Apart from one assembly facility in Brazil, all of Apple’s assembly units for its bestselling product are in China.

Apple uses a global and fairly complex supply chain.The parts for the iPhone, iPad, iPod and Mac are manufactured, mostly by third parties, across 28 countries. It has 766 suppliers, of which 346 are based in China, 126 in Japan, and 69 in the US. There is one in India -in Sriperumbudur in Tamil Nadu. That’s a unit of Flextronics. But it’s not clear what the unit makes.

Some parts made by these suppliers are sub-assembled in certain locations. All the sub-assembled units and other parts are brought together for final assembly in either China or Brazil in the case of iPhones. For the Apple Mac, the final assembly happens in China, US, and Ireland -the last of these is Apple’s own facility -and for the iPod, China is the only final assembly location.

With India becoming one of the world’s biggest smart of the world’s biggest smartphone markets and one of iPhone’s fastest growing markets, Apple has decided to assemble the iPhone here.As TOI reported last week, Taiwan’s Wistron, one of Apple’s suppliers and assemblers, will set up a facility in Bengaluru’s industrial hub of Peenya for the purpose.The products from this facility are expected to be available in the domestic market towards the end of next year.

Wistron has three supply facilities for Apple and an iPhone final assembly unit in China.

“An assembly unit does not require big investments,” said Jaipal Singh, market analyst at research firm IDC. He said this has been a strategy that all Chinese handset manufacturers have followed in India over the past couple of years. “Labour in India is cheaper than in China. It makes sense to grow the Indian market by establishing a domestic plant,” he said. Analysts said the unit would also manufacture for exports over time.

Data from Hong Kongbased Counterpoint Technology Market Research showed Apple sold 2.5 million iPhones in India from October 2015 to September 2016, a rise of more than 50% over the year-ago period. Apple India clocked robust sales touching Rs 9,997 crore in the 2016 financial year, up 56% from Rs 6,472 crore in the year before. iPhones are expensive, but with a local assembly unit, some analysts believe, Apple can avoid import tariffs and cut the iPhone price by around 15%, allowing it to expand the market.

Apple CEO Tim Cook recently said India’s low percapita income would not become an impediment in growing Apple’s market share in the country . More than 50% of Apple’s sales in India are contributed by older models which become cheaper once newer models are launched, indicating the brand’s aspirational value.Apple has around 40-45% market share in India’s premium phone segment.

Kalyan Jewellers to invest over Rs 500 crore for expansion

Times of India 06-Jan-2017

CHENNAI: Kalyan Jewellers plans to invest over Rs 500 crore in 2017 to open 15 new showrooms.

 “We gradually expanded our footprint in the northern and eastern regions of the country last year. We also had tremendous success in West Asia. Kalyan Jewellers has been well received after our recent foray in Qatar. We are committed to invest in growth capital including pursuing inorganic opportunities in 2017,” its chairman and managing director T S Kalyanaraman said.

The company said it is looking to augment its reach with investment in digital foray and re-launch of its purchase advance scheme, compliant with the prevailing regulations.

Kalyan Jewellers, which operates over 100 stores, will launch new sub brands in gold, diamond and precious jewellery to cater new segments of customers.

Indian unicorns such as Flipkart, Snapdeal and Ola have spawned 700 start-ups

Livemint 04-Jan-2017

Since its inception, employees who have left Flipkart have founded 177 start-ups, though the mortality rate of these start-ups is high

Flipkart and India’s other unicorns are following the footsteps of the original glimmer twins of the Indian software services space, Infosys and Wipro, which fostered entrepreneurs who went on to found 867 and 685 companies to date.

India’s 12 unicorns, including MakeMyTrip and Naukri (both from an earlier generation), and Myntra (acquired by Flipkart), have created a mini-army of entrepreneurs that has gone on to found 700 companies, highlighting the role of these firms in shaping the start-up ecosystem.

According to data from start-up and venture capital tracker Tracxn, these firms are following the footsteps of the original glimmer twins of the Indian software services space, Infosys Ltd and Wipro Ltd, which fostered entrepreneurs who went on to found 867 and 685 companies to date.

Notable ventures formed by former employees of Flipkart, Infosys and Wipro include Urban Ladder, Zopper, Roadrunnr, Housejoy, CureFit, Udaan and Mindtree Ltd.

Since its inception, some of Flipkart’s employees have left the company to found 177 start-ups. Of these, 168 have emerged since 2010. That isn’t surprising, given the start-up wave that has surged through India over the past half-a-decade, powered by venture capital firms that put down roots around 2006-07. In Infosys’s case, the corresponding number of start-ups is 768; in Wipro’s, 574.

Not all these firms last.

The mortality rate of these start-ups is high, highlighting the broader challenges facing the Indian start-up ecosystem, where only a handful manage to scale up into sustainable ventures.

Then, there’s the lack of exits in India.

“Exits are really far and few between and hard to come by,” says a former Flipkart executive and founder of a start-up, pointing out that India is no Silicon Valley, which has hungry acquirers such as Google Inc. and Apple Inc. And large Indian conglomerates do not buy into a lot of start-ups, added this person on condition of anonymity.

“I think it’s too early to say that most of these ventures have failed. You can’t create an Infosys or Wipro overnight. Don’t forget that even Infosys took almost two decades before it really took off. And for software product start-ups, the cycles are usually even longer. They need to be given more time,” said Mohandas Pai, chairman of Manipal Global Education Services and former chief financial officer at Infosys.

Capital is a problem for some. “Less than 10% of start-ups manage to convince an institutional investor to invest capital in their companies. Less than 3% manage to reach Series B stage. So building and scaling business is exceptionally hard. So we can continue to see a fair mix of successes and failures, and potentially success after multiple failed attempts,” said Abhishek Goyal, co-founder at Tracxn.

Still, he added, it’s important to understand the important role played by companies such as Infosys and Flipkart. In some cases, this translates into the right kind of infrastructure and environment.

“The culture and workplace (of Infosys) were the benchmarks for me when I was setting up my own entity,” said Rajiv Srivatsa, co-founder and chief operating officer at Urban Ladder, who worked at Infosys for two years till 2002. “The biggest encouragement for me was to have a personal website on the Infosys intranet. That was the start of my entrepreneurial journey in a small way.”