India Strategic Market Entry W W W . A L C O R F U ND .C O M - PowerPoint PPT Presentation

India Strategic Market Entry W W W . A L C O R F U ND .C O M

• 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 Steps 5/11/2011 ALCOR - Strategic India Market Entry 2

• 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

Indian 8% GDP growth & 8 th largest economy in the world Demographics: one of youngest countries in the world, average age 25 Consumer driven (not government demand). Additional 40 mm wealthy consumers ($1m+ earners) within 10 years. IT infrastructure with the U.S. Indian Judiciary, British law based English language Low cost labor & large labor pool (domestic, L1 transfers) Trend China -> India: Physical infrastructure, IT infrastructure, FDI, costs 5/11/2011 ALCOR - Strategic India Market Entry 4

U.S. companies : low costs labor, high growth markets Indian 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 Easier 5/11/2011 ALCOR - Strategic India Market Entry 5

• 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. universities 5/11/2011 ALCOR - Strategic India Market Entry 6

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 3 rd party example company, multiple suppliers coming into final package. 5/11/2011 ALCOR - Strategic India Market Entry 7

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 High 5/11/2011 ALCOR - Strategic India Market Entry 8

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• 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

By deploying a global growth strategy through Joint Ventures and Acquisitions, the sales revenues, the share price and the global brand value of American Company would grow higher, permitting American Company to serve more customers, hire more people, and maximize wealth for its shareholder and stakeholders 5/11/2011 ALCOR - Strategic India Market Entry 11

• 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 China India Emerging Market with High Growth & High Demand 5/11/2011 ALCOR - Strategic India Market Entry 12

The number of middle class population with high spending capacity is more than the population of America. Coupled with the low cost manufacturing ability, the market is out there in India. All the global big names in industry are setting up presence in India Global Automotive Players Global Electronics Players Global Automation Players If your customers are in India, it is only prudent that you follow them as well. 5/11/2011 ALCOR - Strategic India Market Entry 13

 Grow the bottom-line Selling in Emerging High growth Markets Competitive pricing to Increase sales revenues defend the core & grow- By 70%-80% 30%-50% growth Low-cost Manufacturing base 5/11/2011 ALCOR - Strategic India Market Entry 14

• Grow the global revenues : top-line 5/11/2011 ALCOR - Strategic India Market Entry 15

Fund : Invested Company Strategy I Most American companies do not have: a) Low cost manufacturing base b) Sales presence in high growth markets Technology & Low Cost Processes manufacturing base c) High value chain integration 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 High growth market building a globally sustainable company’ integration capability through the four fundamental pillars of growing a global company. 5/11/2011 ALCOR - Strategic India Market Entry 16

Local Management Manufacturing Capacities Cultural Mix More Newer product verticals & Industry Industry Verticals Verticals Revenue More Enhancement Product 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 Company 5/11/2011 ALCOR - Strategic India Market Entry 17

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Pricing Index American Currently companies target catering to Current High Price markets that the small market Market afford higher pricing ( red) because of its technical Sometimes Medium Price gets awarded, strengths and its May be sometimes lost capabilities of producing high quality critical parts. Easy parts Lost are low priced and Low Price are picked up by Business Lost to low cost others, but do add Market manufacturers a lot of value for sales revenues 5/11/2011 ALCOR - Strategic India Market Entry 19

Systems Architect Level 4-Level 5 Design Integration Mechanical Basic System Design Test Sheet Plastics Metal Mechanical End-User Drives and Fans EMI Software Peripherals Assembly Configuration Power Supplies Electromechanical Cables Final Systems Test Integration Backplanes * Margin stacking is a problem; it's 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

Systems Architect Level 4-Level 5 Design Integration Mechanical Basic System Design Test Sheet Plastics Metal Mechanical End-User Drives and Software Fans EMI Peripherals Assembly Configuration Power Supplies Electromechanical Cables 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

A marketing team will visit these potential targets pitch for the Joint Venture • MNC customers in India I P O Customers MNC Indian Customers • Various Product Verticals Manufacturers Technology • Branding US Domestic International Procurement Offices IPO’s US- India • Captive Exports – American JV Customized Indian Prices Company as platform to NA Solution • Global markets through JV Captive Exports – NA Platform vide- American Company American Company ALCOR - Strategic India Market Entry 5/11/2011 22