India Strategic Market Entry       WWW.ALCORFUND.COM
• Background about ALCOR• Eric Cohen      –     Growth Strategy – Why India      –     Opportunities      –     Attractive...
• Education: MBA Harvard Business School, B.S. Eng.  Univ. of Wisconsin• India & China Lead Trader, GE: Tech transfers, JV...
Indian 8% GDP growth & 8th largest economy in the worldDemographics: one of youngest countries in the world, average age 2...
U.S. companies : low costs labor, high growth marketsIndian companies: technology, brands, access to $16T U.S. market.Wind...
• Telecom- 4G network build out to serve high data expectations• Infrastructure- High transaction costs arise from inadequ...
Advantage of India vs. others is rule            of law. Ex. Office of The Controller                        But rule #1, ...
Funding Type               Cost Indian Partner             Little to no capital if you bring value Cash flow              ...
5/11/2011   ALCOR - Strategic India Market Entry   9
•   Education: MBA, PLDA, PEVC : Cardiff University and Harvard    Business School.•   Fellow : Ashoka Innovators for the ...
By deploying a global growth strategy through Joint Ventures and Acquisitions, thesales revenues, the share price and the ...
• Grow the top-line                                    FOLLOW YOUR CUSTOMERS GLOBALLY                         CUSTOMER    ...
The number of middle class population with high spending capacity is more than thepopulation of America. Coupled with the ...
 Grow the bottom-line                                       Selling in Emerging                                       Hig...
• Grow the global revenues : top-line 5/11/2011               ALCOR - Strategic India Market Entry   15
Fund : Invested Company Strategy IMost American companies do nothave:a) Low cost manufacturing baseb) Sales presence in hi...
Local                    Management                    Manufacturing                     Capacities            Cultural Mi...
5/11/2011   ALCOR - Strategic India Market Entry   18
Pricing Index                                               Currently                                     American        ...
Systems Architect                                               Level 4-Level 5              Design                       ...
Systems Architect                                              Level 4-Level 5             Design                         ...
A marketing team will visit these     potential targets pitch for the     Joint Venture  • MNC customers in India         ...
• Worldwide sales /                               Global Customer Base          American           • Multi Geographical   ...
5/11/2011   ALCOR - Strategic India Market Entry   24
US Company                                  East Asian Company            Design                                          ...
Risk Mitigation   • If sourcing : You must have equity partnership for the intangible value of     knowhow being transferr...
5/11/2011   ALCOR - Strategic India Market Entry   27
5/11/2011   ALCOR - Strategic India Market Entry   28
Intangibles                    • Technology and Process                    • Business Commitment in India                 ...
5/11/2011   ALCOR - Strategic India Market Entry   30
Equity Swap              Model                                      Direct Buy in with Tangible & Intangible  1           ...
Important step            in deal creation                Partner             identification5/11/2011             ALCOR - ...
Details on ALCOR5/11/2011   ALCOR - Strategic India Market Entry   33
Cross Border                                                                    Joint Ventures                            ...
5/11/2011   ALCOR - Strategic India Market Entry   35
India Head Office in Pune                                           Metro offices through Associates                      ...
Automotive                        Power                       Telecom                     Electronics                     ...
George Molakal MBA, PLDA, PEVC – CEO Studied with honors at Cardiff University and Harvard Business School 30+ cross bor...
Team Biographies                Art Holbrook MBA - Board                       Graduate of Harvard Business School. Has o...
Jim Ward - Board   25 years experience in the manufacturing space from Aerospace to    Automotive, and has   led teams f...
Effective Knowledge management :                                    ALCOR Global Team                 America/ Europe     ...
Engagement            Ongoing 5 year                                          Letter of Intent               support      ...
We are local, and we know the market            conditions, the players and the            opportunities.            We ha...
Assist the Company to leverage globally                          Deploy Private Capital through Finance                   ...
Primary visit potential Indian companies            • Identify and set target parameters and then visit.            • Lett...
5/11/2011   ALCOR - Strategic India Market Entry   46
Alcor Fundwww.alcorfund.com 5/11/2011          ALCOR - Strategic India Market Entry   47
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India forum-alcor-presentation

  1. 1. India Strategic Market Entry WWW.ALCORFUND.COM
  2. 2. • Background about ALCOR• Eric Cohen – Growth Strategy – Why India – Opportunities – Attractive markets – IP Protection – Funding growth• George Molakal – Strategies and Rationale for India market entry – Benefits of cross border JV/Alliances – India Focus – Government Controls - India – Indian Legal Framework – ALCOR and Processes, Deliverables, Milestones – Case studies – Next Steps5/11/2011 ALCOR - Strategic India Market Entry 2
  3. 3. • Education: MBA Harvard Business School, B.S. Eng. Univ. of Wisconsin• India & China Lead Trader, GE: Tech transfers, JV, suppliers dev., acquisitions ERIC COHEN• CEO, Ampere: established multiple JVs in Asia• GM, MAT: largest Chinese PEG. Acquired companies India & worldwide• Managing Partner, WHI: PEG acquired 21 companies. Asia Greenfields• President, PPS: Indian Co. (Chicago) ops in India and U.S.5/11/2011 ALCOR - Strategic India Market Entry 3
  4. 4. Indian 8% GDP growth & 8th largest economy in the worldDemographics: one of youngest countries in the world, average age 25Consumer driven (not government demand). Additional 40 mmwealthy consumers ($1m+ earners) within 10 years.IT infrastructure with the U.S.Indian Judiciary, British law basedEnglish languageLow cost labor & large labor pool (domestic, L1 transfers)Trend China -> India: Physical infrastructure, IT infrastructure, FDI,costs5/11/2011 ALCOR - Strategic India Market Entry 4
  5. 5. U.S. companies : low costs labor, high growth marketsIndian companies: technology, brands, access to $16T U.S. market.Window of opportunity for value creation before equalization Value Creation Greenfield Acquisitions Joint Ventures Sales Office partnerships More Value Less Value Creation/ Creation/ Harder Easier5/11/2011 ALCOR - Strategic India Market Entry 5
  6. 6. • Telecom- 4G network build out to serve high data expectations• Infrastructure- High transaction costs arise from inadequate and inefficient infrastructure. Will be GDP bottleneck.• Power- demand going up exponentially. Currently 2/3 coal based.• Water- wastewater, agriculture, commercial purity• Agriculture- food inflation faster than lower class wages, social issues• Food processing- middle class growth• Precision machining- turbine, close tolerance• Private education- problem with cost & quality. 90% Univ grads unprepared. Soln: WIPRO, private, online, U.S. universities5/11/2011 ALCOR - Strategic India Market Entry 6
  7. 7. Advantage of India vs. others is rule of law. Ex. Office of The Controller But rule #1, don’t rely on the law General of Patents, Designs and for IP protection Trade Marks. Trusted advisor or partner Local partner with skin in the game Creative business structure (advisor can assist). Ex., supply controls/ Deep diligence- private eye electronics, ship to 3rd party example company, multiple suppliers coming into final package.5/11/2011 ALCOR - Strategic India Market Entry 7
  8. 8. Funding Type Cost Indian Partner Little to no capital if you bring value Cash flow Low U.S. Senior debt Low (L+300) but usually not available Indian Senior debt Med (L+1000) Mezz debt Med- high Equity High5/11/2011 ALCOR - Strategic India Market Entry 8
  9. 9. 5/11/2011 ALCOR - Strategic India Market Entry 9
  10. 10. • Education: MBA, PLDA, PEVC : Cardiff University and Harvard Business School.• Fellow : Ashoka Innovators for the Public, and actively set up the National Organization for Tobacco Eradication(NOTE) in SAARC Region (7 Countries).• CEO : ICAN Healthcare Ltd – Built ICAN to a national organization spanning 20 cities in India pioneering managed care. GEORGE MOLAKAL• International Director M&A: WORBUS Global Group of Companies. Completed 30 plus cross border transactions and worked in England, Kuwait, Toronto, Shanghai and Mumbai setting up cross border M&A deals globally.• Directorship : In several companies globally such as – KASA Anlagen, Emdet Neff, MDI India etc.• Principal and CEO . ALCOR Fund – US & India Operations, executing more than 15 global M&A transactions, and Investments above $250 million USD.5/11/2011 ALCOR - Strategic India Market Entry 10
  11. 11. By deploying a global growth strategy through Joint Ventures and Acquisitions, thesales revenues, the share price and the global brand value of American Companywould grow higher, permitting American Company to serve more customers, hiremore people, and maximize wealth for its shareholder and stakeholders5/11/2011 ALCOR - Strategic India Market Entry 11
  12. 12. • Grow the top-line FOLLOW YOUR CUSTOMERS GLOBALLY CUSTOMER CUSTOMER CUSTOMER A B C American Company Acquired CHINESE INDIAN Merge/ Merge Acquire A B C A B C India China Emerging Market with High Growth & High Demand 5/11/2011 ALCOR - Strategic India Market Entry 12
  13. 13. The number of middle class population with high spending capacity is more than thepopulation of America. Coupled with the low cost manufacturing ability, the market isout there in India.All the global big names in industry are setting up presence in IndiaGlobal Automotive Players Global Electronics Players Global Automation PlayersIf your customers are in India, it is only prudent that you follow them as well.5/11/2011 ALCOR - Strategic India Market Entry 13
  14. 14.  Grow the bottom-line Selling in Emerging High growth Markets Competitive pricing to defend the core & grow- Increase sales revenues 30%-50% growth By 70%-80% Low-cost Manufacturing base 5/11/2011 ALCOR - Strategic India Market Entry 14
  15. 15. • Grow the global revenues : top-line 5/11/2011 ALCOR - Strategic India Market Entry 15
  16. 16. Fund : Invested Company Strategy IMost American companies do nothave:a) Low cost manufacturing baseb) Sales presence in high growth markets Technology & Low Costc) High value chain integration Processes manufacturing base capability.• The “technology and processes” of American companies should be leveraged with similar low-cost base companies in emerging, high growth economies. This powerful combination will result in High Value chain building a globally sustainable company’ High growth market integration capability through the four fundamental pillars of growing a global company. 5/11/2011 ALCOR - Strategic India Market Entry 16
  17. 17. Local Management Manufacturing Capacities Cultural Mix More Industry Newer product verticals & Verticals Industry Verticals More Revenue Product Enhancement Verticals Varied range of JV products Partners Commercial Cross Border Excellence Marketing Team Global American 100% Asset Low Cost Utilization Company Manufacturing Building Company Globally Domestic Customer Base Build American Company brand locally MNC Local Customer Current Strengths of Base American Company American Company5/11/2011 ALCOR - Strategic India Market Entry 17
  18. 18. 5/11/2011 ALCOR - Strategic India Market Entry 18
  19. 19. Pricing Index Currently American High Price Current catering to companies target markets that Market afford higher the small market pricing ( red) because of Sometimes its technical Medium Price gets awarded, May be sometimes strengths and its lost capabilities of producing high quality critical parts. Easy parts Low Price Lost Business Lost to low cost are low priced and are picked up by others, but do add Market manufacturers a lot of value for sales revenues 5/11/2011 ALCOR - Strategic India Market Entry 19
  20. 20. Systems Architect Level 4-Level 5 Design Integration Mechanical Basic SystemSheet Design Test PlasticsMetalFans Mechanical EMI Drives and End-User Software Assembly Peripherals Configuration Power SuppliesCables Electromechanical Integration Final Systems Test Backplanes * Margin stacking is a problem; its not clear how all the links Sub-Assembly in the supply chain can make money, or how much savings Test could be offered if they were consolidated * Up to Sixteen Opportunities for Margin Stacking Innovators Makers Integrators Component Manufacturers ALCOR - Strategic India Market Entry 5/11/2011 20
  21. 21. Systems Architect Level 4-Level 5 Design Integration Mechanical Basic SystemSheet Design Test PlasticsMetalFans Mechanical EMI Drives and End-User Software Assembly Peripherals Configuration Power Electromechanical SuppliesCables Final Systems Test Integration Backplanes * Up to three Opportunities for Margin Stacking Sub-Assembly Test * By consolidating the supply chain into a single source for all parts and services, a majority of the margin stacking is eliminated, resulting in significant cost savings Innovators US/ India; Component Manufacturers 21 5/11/2011 ALCOR - Strategic India Market Entry
  22. 22. A marketing team will visit these potential targets pitch for the Joint Venture • MNC customers in India I P O Customers • Various Product Verticals ers stom Ma n • International Procurement y Dom cturers Br og hn S n Cu an U ol ufa di estic Offices IPO’s ng c India Te US- India • Captive Exports – American MN C JV C u So Company as platform to NA s i ce st luti om on Pr • Global markets through JV i ze n ia N – d Am A P d ts In er latf or any i ca o r xp m p nC mv e E Co om ide tiv n pa - ap rica C e ny Am5/11/2011 ALCOR - Strategic India Market Entry 22
  23. 23. • Worldwide sales / Global Customer Base American • Multi Geographical Sales revenues Company presence shoots upwards would get an • Ability to manufacture Boost Profits - added multiple low cost and high EBITDA arbitrage complex products. Business Risks increase – 3X + • Benefit from the mitigated higher multiples applicable in India American Companies can choose whether to unlock this added value5/11/2011 ALCOR - Strategic India Market Entry 23
  24. 24. 5/11/2011 ALCOR - Strategic India Market Entry 24
  25. 25. US Company East Asian Company Design Design 7% Core parts manufacture Core parts manufacture 8%Manufacturing of parts Manufacturing of parts 7%Assembly of components Assembly of components 6% Integration and Tests Integration and Tests 6% Packing and logistics Packing and logistics 5% Customer Service Customer Service 5% Did you create a competitor ? YES !! – YOU DID5/11/2011 ALCOR - Strategic India Market Entry 25
  26. 26. Risk Mitigation • If sourcing : You must have equity partnership for the intangible value of knowhow being transferred, unless it is very simple part (commodity) • Joint Venture for captive sourcing mitigates these risks. • Finding the right factory ALCOR has • Negotiating prices & intangible equity with convertible a “right options to JV or Strategic Alliance. • Oversees the tooling sourcing” • Monitors the factory production team, that • Conducts quality inspections, financing, insurance, customs clearance handles • Executes delivery right to your warehouse.5/11/2011 ALCOR - Strategic India Market Entry 26
  27. 27. 5/11/2011 ALCOR - Strategic India Market Entry 27
  28. 28. 5/11/2011 ALCOR - Strategic India Market Entry 28
  29. 29. Intangibles • Technology and Process • Business Commitment in India • Global and Captive Business Commitment Machinery / Old Cash Investment Equipment Typical JV Contribution5/11/2011 ALCOR - Strategic India Market Entry 29
  30. 30. 5/11/2011 ALCOR - Strategic India Market Entry 30
  31. 31. Equity Swap Model Direct Buy in with Tangible & Intangible 1 50 India Co US/EU Co SWITCH 51% Mbi Model Minority Buy In Intangible + some cash 26% Year 1 2 Bc/ C 35% Year 2 India Co US/EU Co Bc/ C Year 3 49% Year 4 Bc/ C 50% Contract TBi Customers U1 U2 U3 U4 3 Global Sales Sales $XX Million India Co US/EU Co Team Threshold Buy In Pre determined Price5/11/2011 ALCOR - Strategic India Market Entry 31
  32. 32. Important step in deal creation Partner identification5/11/2011 ALCOR - Strategic India Market Entry 32
  33. 33. Details on ALCOR5/11/2011 ALCOR - Strategic India Market Entry 33
  34. 34. Cross Border Joint Ventures Acquisitions S1 T1 M&A ECB S2 T2 Corporate Finance Complex Debt Global Board Project Finance S3 T3 Equity Capital Venture Capital Private Equity S4 T4 SME Fund SME – PE SME - Debt5/11/2011 ALCOR - Strategic India Market Entry 34
  35. 35. 5/11/2011 ALCOR - Strategic India Market Entry 35
  36. 36. India Head Office in Pune Metro offices through Associates -Delhi (North ) -Mumbai (West & Financial Capital) -Chennai (South) -Kolkata (East) Direct Employees : 30 Associate offices (Business Development : Chartered Accountants private offices ) 48 Locations across India : Spanning A, B and C Class cities.5/11/2011 ALCOR - Strategic India Market Entry 36
  37. 37. Automotive Power Telecom Electronics Software Real Estate Education5/11/2011 ALCOR - Strategic India Market Entry 37
  38. 38. George Molakal MBA, PLDA, PEVC – CEO Studied with honors at Cardiff University and Harvard Business School 30+ cross border Mergers & Acquisitions transactions from US to India, MENSEA & China : 2004-2010 Wide global experience working in multi continents – Europe, Middle-east, India, China, Canada and United States, and was CEO of ICAN a managed care company Fellow of Ashoka Innovators for the Public – Arlington, Virginia http://www.linkedin.com/in/molakal Pradip Shah MBA - Board  CA First Rank holder and Graduate of Harvard Business School.  Founder Managing Director of The Credit Rating Information Services of India Limited (CRISIL), India’s first and largest credit rating agency  Prior to founding CRISIL, Mr. Shah assisted in founding Housing Development Finance Corporation (HDFC), India’s first retail housing finance company, in 1977.  Holds Directorship positions across several listed companies, charities and government boards.  Floated the first PE fund for India and has wide track experience in funding PE projects. 5/11/2011 ALCOR - Strategic India Market Entry 38
  39. 39. Team Biographies Art Holbrook MBA - Board  Graduate of Harvard Business School. Has over 30 years of entrepreneurial experience in multiple businesses serving in various capacities as President, Principal and General Manager.  Member of the Board of Directors of several private equity owned ventures.  Founded multiple private equity startups.  Led a successful acquisition of privately held investment in the Cable TV and Satellite Communication industry. (successfully operating, horizontally expanding and ultimately selling the businesses) Thomas Mathew LLB MBA MSP –Board  Graduate of Symbiosis Law School , GBS – UK  Successful track record intricate legal corporate structuring and legal compliance in cross border M&A.  Global work experience in Asia, Europe and Americas  Has wide experience of 12 years in corporate legal structuring and deal finalizations across geographies.5/11/2011 ALCOR - Strategic India Market Entry 39
  40. 40. Jim Ward - Board  25 years experience in the manufacturing space from Aerospace to Automotive, and has  led teams for dynamic growth of companies in North America. Jim also has  varied expertise in cross border dealings  set up multiple Joint Venture operations and focuses on bringing in outstanding results Mike Katz MBA - Board  Graduate of Harvard Business School  Successful track record of turning around companies into highly profitable units.  Built growth and leadership in corporations.  Has worked with GE and Cummins in various senior positions across the world.Sunil Bedekar - Execution Team Head Chartered Accountant and Former CFO with Deepak Fertilizers, Endurance, Bharat Forge . Track record of growing companies by 6X through cross border acquisitions, business transfer and mergers. Detailed and complex cross border financial structuring experience5/11/2011 ALCOR - Strategic India Market Entry 40
  41. 41. Effective Knowledge management : ALCOR Global Team America/ Europe India/China Market Market Research team identifies Research Team companies who ALCOR receives identifies companies ALCOR is can use ALCOR commitment who can partner with engaged for 5 Growth and co-engaged agreed years. Strategies. for 5 years. American/Europe-an companies. M&A Process M&A Process commences India Staff commences. Global Staff approach and approach and present growth present growth strategies. strategies.End to End Solution One Stop Solution5/11/2011 ALCOR - Strategic India Market Entry 41
  42. 42. Engagement Ongoing 5 year Letter of Intent support Term sheet Business Plan Success : & Modeling Share transfer Agreement+ Financial Model JV Agreement (draft) & structuring5/11/2011 ALCOR - Strategic India Market Entry 42
  43. 43. We are local, and we know the market conditions, the players and the opportunities. We have feet on the ground in 50 plus cities, coupled with our experience and growth strategies with dynamic execution , makes ALCOR ideal choice5/11/2011 ALCOR - Strategic India Market Entry 43
  44. 44. Assist the Company to leverage globally Deploy Private Capital through Finance or Equity Provide end-to-end solutions. Develop Growth Strategies & mitigate risks. Evaluate Opportunity and Potential. Conduct Due-diligence. Win-Win to build fair and mutually rewarding long term solution.5/11/2011 ALCOR - Strategic India Market Entry 44
  45. 45. Primary visit potential Indian companies • Identify and set target parameters and then visit. • Letter of Intent (post visit to Indian companies) Visit by Indian Company • Business Plan and Financial Model • Term Sheet Acquisition/ JV Structure/Contracts • Acquisition/ JV Agreement • Shareholders Agreement5/11/2011 ALCOR - Strategic India Market Entry 45
  46. 46. 5/11/2011 ALCOR - Strategic India Market Entry 46
  47. 47. Alcor Fundwww.alcorfund.com 5/11/2011 ALCOR - Strategic India Market Entry 47

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