DC* Updates

Vol.5 July 2011

• PE VC Scenario ……………………………………….. 3

• Monthly Updates

– SEBI………………………………….………………..9

– Tax

• Service tax………………….………...............9

• Income tax………………..…………………...9

• Customs and excise………..……………….10

– RBI…………………………………..………….…....10

– MCA…………………………………..……..............10

– IFRS………………………………….………………10

• Deal Watch……………….…………………………………11

• International…………………………………………………12

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Editorial Team of Dandeker Capital Consulting Pvt. Ltd.

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Contents

DC Updates Vol. 5 July 2011

PE VC Scenario

PE VC deals in India for the year 2010 was a staggering $ 7.1

Billion(over 100 deals) and as on date in 2011 $ 4 Billion (in 156 deals)

The PE – VC activity in India has been picking up in India with new

sectors and avenues for investing being discovered

Workshops and conferences conducted across India state the above

and also the various intricate aspects a PE or a VC firm look at before

placing the funds

Globally the PE outlook is to invest in upcoming and emerging markets

such as the BRIC countries, Indonesia, Vietnam amongst others.

In India many ex head honchos are setting up PE / VCs to invest in

India and emerging markets such as Narayan Murthy of Infosys and

Renuka Ramnath of ICICI

While valuations play an important role in both PE and VC investments

the innovative ideas , core team capability , scalability of the business

are some key areas that a VC or PE look at before they bell the cat!

DC Updates Vol. 5 July 2011

South India – PE / VC Outlook

“South India in general involves Chennai, Bangalore and

Hyderabad. The PE / VC players have also traditionally stuck to

the above mentioned cities. However of late there is PE/VC

interest in cities like Trivandrum and Tier II cities like

Coimbatore, Cochin, Madurai etc.,”

Few Pointers:

• Traditionally considered to be conservative. Family run

businesses hold sway and are apprehensive on PEs and VCs

•More inclination towards DEBT rather than EQUITY

• PE’s and VC’s are of the opinion that there are many un

discovered jewels amongst South Indian companies

• South India to attract 40% and more of PE / VC investments

• Capital Inflows set to increase in South India as there is a lull in

PE VC activity in the remaining parts of the country

• Traditional sectors such as manufacturing, trading, financial

services are set to have adequate PE / VC investments

DC Updates Vol. 5 July 2011

South India – PE / VC Outlook….

City wise outlook on nature of entrepreneurs and business style from a PE/VC’s perspective

Hyderabad:

• Risk Taking entrepreneurs

• Excellent Management

Values

• Open to professional

managers from PE/VCs

• Focus is always on

growth

Bangalore:

• Open to dilution

• Innovative managers

• Inclined to technology

• Draw effective business

plans

Chennai:

• Conservative

• Not too open to dilution

• Excellent Value and

Ethics

• Strong sense of business

and research

DC Updates Vol. 5 July 2011

South India – PE / VC Outlook….

Green Light Sectors South India

Logistics

Infrastructu

re – PPP

Projects

Internet

Healthcare

Defence

Electronics

Engineering

Waste

Management

Wind Energy

Biotechnology

DC Updates Vol. 5 July 2011

Attention Attractors – South Indian Cos ?Companies in South India attract PE/VC attention on the

basis of the following:

• Attractive Business Models

• Good Track record and team strength

• Attractive overall scalability

• Ability to attract good talent

• Openness to dilution

• Openness to professional help

• Inclination to Fair play, Ethics and moral values

• Clean records and compliance

DC Updates Vol. 5 July 2011

Attention Attractors – South Indian Cos ?

Get Growth Capital – What Entry level VC’s look for…

What do VCs Look for?

• Clarity of thought on product or service

offered

• The Core team

• Recommendations from known sources

• Market Opportunity for the product or

service offered

• Scalability of project

• Well defined and structured business plan

• Scope for adding value to existing

operations

• Clearly charted exit route

• Preferably boot strapped

Sectors VC’s are eager to invest in

• E-Commerce

• Cloud computing based services and solutions

• Sectors catering mainly to Indian markets

• Healthcare

• Education startups

VCs Number crunching – Stake ,Valuation etc.,

• Do not look for majority stake

• Prefer minority stake

• Capital absorption capacity

• Minimum 10X return

• Convincing revenue potential

• Achievable projections

DC Updates Vol. 5 July 2011

Updates – SEBI, Income tax, Service taxSEBI Updates

Clarification regarding admission of Limited Liability

Partnerships as members of Stock Exchanges

SEBI has amended its regulations on July 10th for the following

– Bankers to an issue

– Underwriters

– Credit rating agencies

– Debenture trustees

– Registrars and share transfer agents

– Merchant Bankers

– Depositories and Participants

Review of Internet Based Trading (IBT) and Securities trading

using Wireless Technology (STWT)

Shareholding of promoter/promoter group to be in

dematerialized mode

Informal Guidance holds Call / Put Option in private agreement

amongst shareholders as invalid

Income Tax

Tax sops withdrawal from SEZs to impact exports – Assocham

Tax relief for Mahindra Satyam

Digital Signature Certificate made mandatory w.e.f 1st July

2011 for Firms and Individuals whose accounts are required to

be audited u/s 44AB

PAN mandatory for any purchase of jewelry worth Rs 5 lakhs or

more

Gross direct tax collections in first quarter of 2011-12 up by

23.91 percent

I .T. refunds pull down net direct tax collections by 17%

Service Tax

Service tax is leviable on Flying Training School & Aircraft

Maintenance Engineering Institutes

NIL Service Tax Return late filling penalty

Govt to come out with negative list of service tax soon

Service tax on restaurant

DC Updates Vol. 5 July 2011

Updates – Customs, RBI, MCA, IFRS RBI to regulate mFI’s

RBI circular on opening of branch subsidiary, Joint venture

representative office or undertaking investment abroad by

NBFC’s

Finance ministry has released new series of coins in

denominations of 50p and Rupees 1,2,5 and 10

Rupee symbol encoded in unicode and National standard

ISCII

MCA Updates

RoC to not accept any requests from defaulting companies

who’ve not filed their annual accounts from 06-07 to 09-10

MCA to issue 13 certificates indigital form including COI

MCA takes special drive to clear pendency of r-forms filed by

companies prior to implementation of revised regulation 17 of

Companies Regulations – 2009

EPF balance can now be accessed online

IFRS Updates

SME Implementation Group publishes its first Q&A guidance

Global IFRS convergence schedule

IFRS for Small and Medium Enterprises

Madras HC stays Registration of Lawyers For Service Tax

Tax updates – Customs and Excise

Collection of anti dumping duty beyond the validity period

Notification No :- F.No.354/150/2011-TRU

Import of hazardous waste under Hazardous Waste

Notification No :- F. No.401/130/2011-Cus III

No excise duty on school uniforms, uniforms for private security

guards, companies, hotels, airlines etc and made-ups such as

linens, towels etc bearing the name or logo of a

hotel, restaurant or airlines but not any brand name

Notification No :- No. 947/8/2011- CX

RBI Updates

RBI fixes cap on banks that invests in other companies (other

than subsidiary or financial services) at 30%

Total investment by banks in liquid/short term debt schemes of

mutual funds with weighted average maturity of portfolio of not

more than 1 year, will be subject to a prudential cap of 10 per

cent of their net worth as on March 31 of the previous year

Indian companies allowed to refinance outstanding FCCBs

through fresh ECBs / FCCBs

RBI fines 48 banks for violation of KYC, AML norms in six

months

DC Updates Vol. 5 July 2011

Deal Watch

Rolta India Acquires Security Software Firm ACLS Systems

Gravita India Acquires 80% Stake In Metal Inc

Sony Television May Buy ETV's Channels For $600 Mn

Tecpro Systems To Acquire Water Treatment Firm Ambika Projects

Hasselblad acquired by Ventizz Capital Fund

Aquatech Buys Majority Stake In Wex Technologies

Royal Vopak Acquires Liquid Storage Firm CRL Terminals

Capital International Invests Rs 330 Cr In L&T Finance Holdings

IFC Invests $2 Mn In Chennai-Based Vortex Engineering

Asia Pacific Capital Invests $15 Mn In Birla Surya

StanChart PE Buys 10% In Redington For Rs 365 Cr

Virtusa buys ALaS Consulting for $27.8m

Cholayil Buys Herbal Brand Krishna Thulasi

Karvy Computershare Acquires Majority Stake In Bahrain's BSRC

Altruist Group Buys Stake In VAS Firm Vegam Solutions

ITC Hotels Buys 26% on Espirit Hotels JV For Rs 45 Cr

*. Click on the link

Motherson Sumi

To Acquire 80%

Stake In Germany's

Peguform

Vodafone

finalises $

5.46 Billion

subsidiary

buyout

Star Deals

DC Updates Vol. 5 July 2011

International Finance

Italy and the euro - On the edge

Europe's banks - Ignoring the obvious

Greece's agony - What have we become?

Africa

South Sudan - Ready, steady, invest

The Chinese are coming

African airlines - Looking east

Middle East

Migrant workers in Saudi Arabia

Wealth-X reveals US$1 trillion opportunity in the Middle East

and Africa

Dubai’s real estate market

Saudi Arabia’s petrochemical export

Jobs and education in the Arab world

•- Some websites require registration to read articles. All the articles are owned by

the respective owners.

Asia and Oceania

Carbon tax in Australia

Chinese IPO market

Retailing in China

Gujarat’s Economy

North America and Canada

The struggle to eat – Food stamps

America's labour market - Jobless agonistes

Dicing with debt and the future

Angst in the United States - What's wrong with America's

economy?

Blackberry - Cracks in the heart of a cluster

Europe

Rebalancing Brittain’s economy - Less paper, more iron

Northern Ireland's economy - Getting back to business

DC Updates Vol. 5 July 2011

Thank you

Vignesh ShankarDirector and Principal Consultant

Hand phone : +91 94455 66386

vignesh@dandekercapital.com

K.J.DandekerExecutive Director

Phone : +91 4425220721

kjdandeker@dandekercapital.com

DC Updates Vol. 5 July 2011