Cisco steps up India investments

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Global networking major Cisco, which has set aside a corpus of $280 million for funding early stage start-ups in India, has invested in Kolkata-based Videonetics Technology Pvt Ltd, a video surveillance firm that designs, develops and provides ultra-modern surveillance products integrated with video analytics software.

While the amount invested remains undisclosed, Cisco typically acquires an 18-20 per cent stake in every start-up that it invests in. In an earlier interaction with BusinessLine, Joydeep Bose, Managing Director of Cisco Investments – Asia Pacific Japan (APJ), had said the company typically makes investments ranging from $800,000 to $15 million in a start-up.

Confirming the investment in Videonetics, Alok Bardiya, Country Head (Investments and M&A), Cisco Systems India , told BusinessLine that a second investment has also been closed in a start-up that works on IoT (Internet of Things) solutions for Smart Cities, an area that Cisco is heavily focused on to grow its India revenues.

Revenue milestone

Last year, the company crossed the $1-billion milestone in India revenue and is aiming to achieve $2 billion by FY 2018.

Without disclosing the name of the start-up, Bardiya said: “There are two more investments in the pipeline that we should close soon.” This takes Cisco’s investments in Indian start-ups to a total of six over the last 18 months, and with two more in the pipeline, it will take the total tally of investments to eight by the end of the year.

The $49-billion networking giant has already invested in four Indian start-ups over the last two years, namely, Covacsis, Mobstac, Ineda and MobiKwik.

The company’s innovation strategy in India revolves around four pillars – Invest; Acquire; Co-create with start-ups; Co-develop with partners.

While Cisco made its first India acquisition of Bengaluru-headquartered IT security firm Pawaa for an undisclosed amount last October, it has invested in a total of 25 Indian start-ups, some of which are registered abroad, over the last 10 years.

The company’s first attempt at co-creating with start-ups took wings on Thursday, with the announcement of Cisco LaunchPad, an accelerator programme to co-innovate with early to growth stage start-ups.

Partnerships have been forged with companies like Tech Mahindra, Saankhya Labs and industry body Nasscom to co-develop solutions for Utilities, Internet users and Farmers.

Asked if Cisco had identified any start-up to acquire after Pawaa, Bardiya said: “We continue to look for start-ups that are building disruptive solutions that align with Cisco’s business interests.”

Source: https://www.google.co.in/search?q=Cisco+steps+up+India+investments&client=firefox-b&source=lnms&tbm=isch&sa=X&ved=0ahUKEwjrz66q-dTNAhXDro8KHemgArIQ_AUICigD&biw=1280&bih=676

Startups get much awaited tax exemptions

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In a major incentive, startups can now issue shares to investors at higher than fair value without worrying about tax consequences.

The Central Board of Direct Taxes (CBDT) has notified the much awaited tax exemption on investments above fair market rate for startups.
“The exemption provided to startups from the ‘rigour’ of section 56(2)(viib) of Income Tax Act has been long awaited,” Amit Maheshwari, Partner Ashok Maheshwary and Associates LLP, said.

The effect of the CBDT’s notification is that in case a startup gets investment from resident angel investors, family offices or funds which were not registered as venture capital funds, it will not be taxed even if the investment is made in excess to the fair value.

“It has been a long standing industry demand to abolish this Angel tax,” Maheshwari said.

A startup is a company in which the public are not “substantially interested” and conforms to certain conditions as prescribed by the Department of Industrial Policy and Promotion (DIPP) in February this year.

Under Indian tax law, if an Indian company receives share subscription amount from an Indian resident which exceeds the fair value of shares, then the excess amount is taxed as income of the Indian company, said Rajesh H Gandhi, Partner, Deloitte Haskins and Sells LLP.

“The notification now exempts startups from this rigorous provision. This is a welcome relaxation and would ensure that startups can issue shares to investors at higher than fair value without worrying about any tax consequences,” Gandhi said.

A similar exemption already exists for Venture Capital Funds (VCFs).

Maheshwari said this Angel tax still poses threat to earlier investments which could be perceived as being overvalued in light of the declining valuations globally and in India.

Last week, the DIPP has launched a portal and mobile app through which startups can gather all latest updates on various notifications, circulars issued by various departments and different funding agencies.

In January, Prime Minister Narendra Modi had unveiled a slew of incentives to boost startup businesses, offering them a tax holiday and inspector raj-free regime for three years, capital gains tax exemption and Rs 10,000 crore corpus to fund them.

Source: http://www.businesstoday.in/current/corporate/startups-get-much-awaited-tax-exemptions/story/233953.html

Paragon Partners launches $200M India-focused mid-market PE fund

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Indian private equity investor Siddharth Parekh and entrepreneur Sumeet Nindrajog are launching a $200 million India focused fund. The duo announced today that they have raised $50 million in commitments, marking the first close of their $200 million private equity fund, Paragon Partners Growth Fund I (PPGF-I). Established in August 2015, PPGF is an Alternative Investment Fund(AIF)-Category II Private Equity fund looking to invest in high growth mid-market private companies in India.

 

The fund will focus on five core sectors, including consumer discretionary, financial services, infrastructure services (capex light), industrials and healthcare services. The fund claims to have an advanced pipeline of investment opportunities across these sectors and plan to invest in 10-15 mid-market companies in India, with an average deal size of $10-20 million.

 

In line with this, Paragon Partners plans to pursue an active investment approach, contributing to the advancement of its portfolio companies in three core areas: business development, organizational development, and operational efficiency.

 

Paragon Partners’ Advisory Board will also work hand-in-hand with its investment and operations professionals to drive value in its portfolio companies. The board includes Deepak Parekh (Chairman, HDFC Ltd.), Harsh Mariwala (Chairman, Marico Ltd. & Founder Member), Sunil Mehta, (Chairman, SPM Capital Advisors Pvt Ltd) and Jeff Serota (ex Sr. Partner at Ares Private Equity) amongst others. Siddharth, Co-Founder, Paragon Partners, commenting on the first close, said,

 

We believe the next decade in India will see a strong resurgence of growth in key sectors such as manufacturing, financial services and infrastructure.

 

With its first close, PPGF-I has invested $10 million as growth capital in Capacite Infraprojects Limited, a Mumbai based firm which is engaged in the construction of buildings (including super high rise structures) and factories, for large real estate developers, corporates and institutions  across the Mumbai, NCR and Bengaluru regions.

 

Established in August 2012, Capacite is promoted by Rahul Katyal, Rohit Katyal, and Subir Malhotra. It will look to grow and expand to more locations on a selective basis moving forward. Commenting on the investment, Rohit, Director at Capacite said,

 

Within a span of three years, Capacite has achieved significant scale with an expected top line of ~Rs 1,000 cr for the current financial year, backed by a gross order book of  Rs 5,400 cr. We are delighted to partner with Paragon Partners, as Capacite embarks on its next wave of growth.

 

PPGF-I claims to have seen interest from onshore and offshore institutions, family offices and HNI’s. Domestic investors include India Infoline, Edelweiss Group and Infina Finance Private Limited (an associate of Kotak Mahindra Bank Limited).  The fund also claims to have received a significant commitment from the Fairfax group based in Canada. With additional discussions in progress, the fund expects to close on further commitments in coming months.

 

The Indian startup ecosystem has seen an uprising in the past few years and there is now both internal and external interest in investing in early and mid-stage companies. In September 2015, Kalaari Capital had raised a $290 million India focused fund. In December 2015, Blume Ventures had raised $30 million for its Fund II to invest in 35-45 startups. In February 2016, early stage investor, Kae Capital too raised $30 million for its second fund, with an aim to allocate 10% of the fund to cater to non-tech start-ups.

 

Reports also suggest that Sequoia Capital had closed a $920 million India focussed fund in February 2016, though Sequoia is yet to confirm the same. Other marquee investors like SAIF Partners, Accel Partners, and Lightspeed India, have racked up fresh funds in the recent past.

Source:

Make in India: DIPP looks to include micro, small and medium industries in startup definition

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A clear definition is imperative for the government to decide which companies can draw the benefits of any scheme for startups.

The government is considering a proposal to include micro, small and medium enterprises (MSMEs) in its definition of startups to help boost the Make in India campaign. Various government departments have held a series of brainstorming sessions to discuss the definition so that the policy can be formalised. A clear definition is imperative for the government to decide which companies can draw the benefits of any scheme for startups.

The Department of Industrial Policy and Promotion (DIPP) is spearheading the exercise of formulating the startup policy, along with ministries such as finance, skill development and MSME among others. The Start-Up India initiative is scheduled to be announced by Prime Minister Narendra Modi in January 2016 and the policy needs to be finalised by then. Progress on the initiative is being monitored directly by the Prime Minister’s Office. India wants to create an ecosystem that encourages entrepreneurship and is collecting suggestions from the startup community for steps that need to be taken to ensure that the Start-Up India initiative is a success.

Including MSMEs, collectively one of the biggest employers of people in India, is seen as positive for manufacturing and therefore employment generation, key aims of the Make in India programme. Officials are also discussing specific criteria that would make an MSME eligible to be called a startup. This would determine eligibility for incentives such as fewer compliance conditions, cheaper credit and tax benefits.

“Defining (startups) is the most complex issue. It involves technology companies MSMEs and so many other sectors. We should be able to finalise something soon,” a senior government official said.

To qualify as a startup, an entity would also have to meet certain financial standards besides having a level of innovation in its product or service. “It is better to have a broader definition of startups, so MSMEs and tech-based startups can both take advantage. The moment one leaves things for interpretation, corruption will seep in,” said Gaurav Kachru, founder, 5ideas Startup Superfuel. Startups are expected to create 250,000 jobs in India by 2020, up from 80,000 now, according to a Nasscom report. The Start-Up India initiative announced by Modi in his Independence Day speech assumes significance given the thrust by the government toward employment generation.

Economic Times View: Start Up On the Ease of Doing Business Front

A wider definition of startups should broad-base attention across industries. In tandem, we need to boost knowledge-creation, innovation and entrepreneurship to better coagulate resources for startups. Otherwise, we will fail to develop a thriving ecosystem, complete with conducive state policy support. In parallel, we need suitable tax treatment and attendant rules so that startups do not see the need to go abroad to do business here in India. We need ease of doing business with the startup economy in mind

 

Source:http://economictimes.indiatimes.com/articleshow/50179566.cms

 

Bandhan Bank starts disbursing loans

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Bandhan Bank Chairman and Managing Director Chandra Shekhar Ghosh has started disbursing regular loans, although at a muted pace, on steady deposit mobilisation.

The bank is offering retail, small and medium enterprises and agriculture loans. Housing loans have been capped at Rs 1,5 lakh commercial vehicle loans at Rs 1,0 lakh and loans to small and medium enterprises at Rs 2,5 lakh. All loans are linked to the base rate, which is set at 12 per cent, much higher than most banks. According to a Bandhan Bank spokesperson, it started its credit operations on a small scale about a month ago. The bank was launched on August 23, 2015.
Bandhan Bank has garnered deposits of Rs 3,700 crore, according to C S Ghosh, CEO and MD. The bank expects a fresh round of capital infusion of Rs 428 crore from International Finance Corporation and the Singapore government-backed GIC by March 2016. The two agencies have already invested Rs 1,020 crore in the bank and have committed an equity investment of Rs 1,600 crore.

The capital base of Bandhan Bank is Rs 2,570 crore, against the regulatory requirement of Rs 500 crore.

Fresh capital infusion will bolster this to Rs 3,052 crore, translating to a credit risk-weighted asset ratio of 44.54 per cent, one of the highest in the sector.

The bank is depending on aggressive deposit mobilisation to bring down cost of funds over the next year.

The plan is to be aggressive in taking deposits while going slow in lending. Thus, even as its lending rates are high, the bank is offering competitive deposit rates. Savings interest rates have been fixed at 4.25 per cent for deposits below Rs 1 lakh and five per cent for above Rs 1 lakh. For term deposits, the maximum interest rate, between three-five years maturity, has been fixed at 8.5 per cent, with an additional 0.5 per cent for senior citizens. Bandhan Bank started operations with a simultaneous launch of 501 branches, 50 ATMs, a microloan book of Rs 10,500 crore and savings accounts totalling 1.43 million. By the end of this financial year, the plan is to have 632 branches and 250 ATMs in 27 states.

Souce: http://www.business-standard.com/article/finance/bandhan-bank-starts-disbursing-loans-115112600031_1.html