Hyderabad: Beverage can maker Rexam Plc will build two plants in Andhra Pradesh and Rajasthan at an investment of about £100 million, adding 1.6 billion cans to its annual production capacity.
London-based Rexam already operates a plant in Mumbai.
The new plants, which will initially entail an investment close to £50 million each, will come up at Sri City in Chittoor district (about 50km from Chennai), and at Mahindra World City in Jaipur, the company said in a statement on Thursday. The company has secured land for the two projects.
“These investments will support and enable us to take advantage of the continued exciting growth of the beverage can in India. Having plants in different locations across the country will ensure we have a better footprint and position to meet the needs of our customers in the region over the long term,” Craig Jones, sector director of Rexam’s Africa, Middle East and Asia (AMEA) regions said.
The Sri City plant will be operational first—by the second half of 2016, followed by the Jaipur plant. The two plants will generate 150 jobs locally, the company said. Rexam’s Sri City plant will be located in the vicinity of PepsiCo Inc.’s largest beverage manufacturing plant in the country. The beverages and snack maker is investing Rs.1,200 crore in its Sri City plant.
Rexam operates 55 plants in 20 countries, providing employment to 8,000 people.
Success in my Habit
Monday, February 16, 2015
Tata Steel to acquire three service centres of SSAB in Nordic region
Mumbai: Tata Steel Europe on Thursday announced the acquisition of three service centres from SSAB, a Swedish steel manufacturer of strip, plate and tubular products, to strengthen its offering to manufacturers in the region.
Tata Steel has acquired the company’s facilities in Sweden, Finland and Norway for an undisclosed amount, it said in a notification to stock exchanges.
“These acquisitions will strengthen our strip products offering to manufacturers in this region. Improving our local processing capability will significantly enhance our product offering and service levels to customers,” said Karl Koehler, chief executive officer of Tata Steel Europe in a press release.
“There is a sophisticated and demanding customer base in the Nordic region which increasingly requires advanced steel products,” Koehler added.
The three centres process strip products offering services such as cutting-to-length, slitting and recoiling. They supply steel to manufacturers in the automotive, construction and electrical supplies industries and heavy and light engineering companies.
The European Commission has approved the sale of these service centres. SSAB was required to sell them as a condition of its takeover by another company. The transactions remain subject to approval from competition authorities in Norway, Sweden and Finland, and their implementation will follow these approvals.
Tata Steel Europe announced a pre-tax operational profit of £74.7 million for the first nine months of 2014-15, compared to a loss of £13.9 million for the same period in 2013-14.
Tata Steel has acquired the company’s facilities in Sweden, Finland and Norway for an undisclosed amount, it said in a notification to stock exchanges.
“These acquisitions will strengthen our strip products offering to manufacturers in this region. Improving our local processing capability will significantly enhance our product offering and service levels to customers,” said Karl Koehler, chief executive officer of Tata Steel Europe in a press release.
“There is a sophisticated and demanding customer base in the Nordic region which increasingly requires advanced steel products,” Koehler added.
The three centres process strip products offering services such as cutting-to-length, slitting and recoiling. They supply steel to manufacturers in the automotive, construction and electrical supplies industries and heavy and light engineering companies.
The European Commission has approved the sale of these service centres. SSAB was required to sell them as a condition of its takeover by another company. The transactions remain subject to approval from competition authorities in Norway, Sweden and Finland, and their implementation will follow these approvals.
Tata Steel Europe announced a pre-tax operational profit of £74.7 million for the first nine months of 2014-15, compared to a loss of £13.9 million for the same period in 2013-14.
EMC to set up 100 centres of academic excellence in India
Chennai: IT storage solutions company EMC Corporation plans to establish 100 centres of academic excellence in India this year.
These centres of academic excellence will be set up in leading IT institutes across the country to give students an opportunity to learn and practise key skills in the areas of cloud, data science, analytics, IT infrastructure and other leading technologies, a statement from the company has said.
Through its Academic Alliance initiative, EMC will offer the technical expertise, resources and study materials required for setting up the centres.
Fast-paced increase in demand has resulted in a massive shortfall of skilled industry-ready professionals.
The private cloud industry alone is expected to create 100,000 jobs in India by 2015 from 10,000 in 2011 and the demand is unlikely to be met.
The EMC Academic Alliance initiative aims at bridging the skill-gap in a rapidly changing IT environment and prepare students for better employability. As a part of the initiative, EMC will invite leading IT institutes from across the country to collaborate and establish these academic centres of excellence.
EMC will be providing training to the faculty of these institutions on a 'no cost' basis and access to the 'open courses' from the EMC Education Services.
The centre of academic excellence will provide students with hands on sessions exposing them to real life work environments. In addition, the access to white papers, study material and other resources along with regular sessions by subject matter experts will provide a holistic development to the students and prepare them for the new roles emerging in the IT industry.
This initiative plans to target about 50,000 students in 2015.
These centres of academic excellence will be set up in leading IT institutes across the country to give students an opportunity to learn and practise key skills in the areas of cloud, data science, analytics, IT infrastructure and other leading technologies, a statement from the company has said.
Through its Academic Alliance initiative, EMC will offer the technical expertise, resources and study materials required for setting up the centres.
Fast-paced increase in demand has resulted in a massive shortfall of skilled industry-ready professionals.
The private cloud industry alone is expected to create 100,000 jobs in India by 2015 from 10,000 in 2011 and the demand is unlikely to be met.
The EMC Academic Alliance initiative aims at bridging the skill-gap in a rapidly changing IT environment and prepare students for better employability. As a part of the initiative, EMC will invite leading IT institutes from across the country to collaborate and establish these academic centres of excellence.
EMC will be providing training to the faculty of these institutions on a 'no cost' basis and access to the 'open courses' from the EMC Education Services.
The centre of academic excellence will provide students with hands on sessions exposing them to real life work environments. In addition, the access to white papers, study material and other resources along with regular sessions by subject matter experts will provide a holistic development to the students and prepare them for the new roles emerging in the IT industry.
This initiative plans to target about 50,000 students in 2015.
Monday, February 9, 2015
‘US to source technology from Indian cities’
New Delhi: The US on Thursday said that US companies will make Bengaluru and Hyderabad “important sources” for cutting-edge technology as co-development and co-production of defence articles was the new course for collaborative partnership between the two countries.
The US also said that talks between President Barack Obama and Prime Minister Narendra Modi last month have sowed the seeds that have the potential to make US-India partnership the “defining counter-terrorism relationship for the region in the 21st century”.
Talking about the way forward in India-US ties, US ambassador to India Richard Verma said that perhaps the truest test of a friendship between countries is the degree to which their armed forces trust and collaborate with each other.
“Ties between the US and Indian defence establishments took immense strides forward during President (Obama)’s visit,” he said at a seminar at the Vivekananda International Foundation in New Delhi.
Verma wondered if anyone could have imagined a few years back that the US and India would have agreed to establish a joint working group on aircraft carrier technology.
“No example better illustrates the new course of our collaborative relationship than the decision by the US and Indian defence establishments and private sectors to pursue co-development and co-production of defence articles,” he said, adding that such type of defence collaboration was only done with the closest partners.
“The US defence industry will now make Bengaluru and Hyderabad important sources for cutting-edge technology,” he said.
Talking to reporters, Verma said that identifying four “pathfinder projects” under Defence Trade and Technology Initiative (DTTI) during Obama’s visit, besides agreeing on a working group on aircraft carrier technology is a very significant and exciting moment in ties between the two militaries.
“So let’s get these going. I think to the extent we can address other agreements that are still out there, we will continue to keep those on the agenda,” he told reporters when asked if India will have to rethink its policy of not signing the three “foundational agreements” if it wants high-end technology transfer from the US and their joint production.
Terming the India-US Defence Framework Agreement and the DTTI as very important development in defence ties, he said, “We are going to be focussed on that in the coming weeks and months”.
During Obama’s visit, the two countries had agreed on four “pathfinder projects”. However, India is seeking more than just these. What India wants is co-development and co-production of high-end technology and both sides had during Obama’s visit agreed on a joint working group to explore aircraft carrier technology besides designing and development of jet engine technology.
However, India and US are still not on the same page when it comes to three key pacts, often referred to as “foundational agreements” for greater defence technology cooperation. The three agreements have been pending for over five years and the US has been pushing for bringing them into force.
Of the three, two agreements—the Communications Interoperability and Security Memorandum of Agreement (CISMOA) and Basic Exchange and Cooperation Agreement for Geospatial Cooperation (BECA)—enhances the capacity of military equipment already bought from the US. The third agreement, the Logistics Support Agreement (LSA), would enable cashless supplies to each other’s armed forces on credit.
The US also said that talks between President Barack Obama and Prime Minister Narendra Modi last month have sowed the seeds that have the potential to make US-India partnership the “defining counter-terrorism relationship for the region in the 21st century”.
Talking about the way forward in India-US ties, US ambassador to India Richard Verma said that perhaps the truest test of a friendship between countries is the degree to which their armed forces trust and collaborate with each other.
“Ties between the US and Indian defence establishments took immense strides forward during President (Obama)’s visit,” he said at a seminar at the Vivekananda International Foundation in New Delhi.
Verma wondered if anyone could have imagined a few years back that the US and India would have agreed to establish a joint working group on aircraft carrier technology.
“No example better illustrates the new course of our collaborative relationship than the decision by the US and Indian defence establishments and private sectors to pursue co-development and co-production of defence articles,” he said, adding that such type of defence collaboration was only done with the closest partners.
“The US defence industry will now make Bengaluru and Hyderabad important sources for cutting-edge technology,” he said.
Talking to reporters, Verma said that identifying four “pathfinder projects” under Defence Trade and Technology Initiative (DTTI) during Obama’s visit, besides agreeing on a working group on aircraft carrier technology is a very significant and exciting moment in ties between the two militaries.
“So let’s get these going. I think to the extent we can address other agreements that are still out there, we will continue to keep those on the agenda,” he told reporters when asked if India will have to rethink its policy of not signing the three “foundational agreements” if it wants high-end technology transfer from the US and their joint production.
Terming the India-US Defence Framework Agreement and the DTTI as very important development in defence ties, he said, “We are going to be focussed on that in the coming weeks and months”.
During Obama’s visit, the two countries had agreed on four “pathfinder projects”. However, India is seeking more than just these. What India wants is co-development and co-production of high-end technology and both sides had during Obama’s visit agreed on a joint working group to explore aircraft carrier technology besides designing and development of jet engine technology.
However, India and US are still not on the same page when it comes to three key pacts, often referred to as “foundational agreements” for greater defence technology cooperation. The three agreements have been pending for over five years and the US has been pushing for bringing them into force.
Of the three, two agreements—the Communications Interoperability and Security Memorandum of Agreement (CISMOA) and Basic Exchange and Cooperation Agreement for Geospatial Cooperation (BECA)—enhances the capacity of military equipment already bought from the US. The third agreement, the Logistics Support Agreement (LSA), would enable cashless supplies to each other’s armed forces on credit.
Alibaba to pick up 25% in Paytm for $500 mn
New Delhi: The world’s biggest e-commerce company, Alibaba, will acquire 25% stake in One97 Communications for $500 million (Rs 3,050 crore), as the Chinese company forays into the rapidly-expanding Indian mCommerce market.
One97 Communications runs Paytm —India’s largest mobile payment and commerce platform.
Alibaba’s arm Ant Financial Services will pick up the stake.
“Paytm will use the funds to grow its mobile payment ecosystem and boost commerce user base. The deal represents Ant Financial’s first-ever investment in an Indian company,” the company said in a statement.
The deal will give Paytm the much-needed fillip to scale up operations. “I believe that together, we will change the landscape of mobile payments and commerce in our country,” One97 Communications founder and CEO Vijay Shekhar Sharma said.
Along with funding, Ant Financial will bring in technical and operational expertise, and the experience of working in a global market like China, providing Paytm with an international exposure.
Ant Financial and Paytm will also build on synergies in the mobile wallet front to offer Indian consumers comprehensive product and services, and tap the significant potential of the India mobile payment market.
The Indian e-commerce market is expected to grow 37% to $20 billion (Rs 122,000 crore) by next year (from the current $11 billion or Rs 67,100 crore) on the back of growing internet population and increasing number of online shoppers.
“With over 1 billion people, India’s payments market has vast untapped potential,” Ant Financial vice-president Cyril Han said.
Citi and Goldman Sachs served as financial advisers on the deal.
One97 Communications runs Paytm —India’s largest mobile payment and commerce platform.
Alibaba’s arm Ant Financial Services will pick up the stake.
“Paytm will use the funds to grow its mobile payment ecosystem and boost commerce user base. The deal represents Ant Financial’s first-ever investment in an Indian company,” the company said in a statement.
The deal will give Paytm the much-needed fillip to scale up operations. “I believe that together, we will change the landscape of mobile payments and commerce in our country,” One97 Communications founder and CEO Vijay Shekhar Sharma said.
Along with funding, Ant Financial will bring in technical and operational expertise, and the experience of working in a global market like China, providing Paytm with an international exposure.
Ant Financial and Paytm will also build on synergies in the mobile wallet front to offer Indian consumers comprehensive product and services, and tap the significant potential of the India mobile payment market.
The Indian e-commerce market is expected to grow 37% to $20 billion (Rs 122,000 crore) by next year (from the current $11 billion or Rs 67,100 crore) on the back of growing internet population and increasing number of online shoppers.
“With over 1 billion people, India’s payments market has vast untapped potential,” Ant Financial vice-president Cyril Han said.
Citi and Goldman Sachs served as financial advisers on the deal.
IBM signs nine year IT outsourcing deal with Birla Sun Life Insurance
IBM has announced that Birla Sun Life Insurance (BSLI), the life insurance arm of the Aditya Birla Financial Services Group, signed a nine year IT outsourcing deal with IBM to consolidate, redesign in-scope applications and use analytics to provide client insights that build competitive advantage. BSLI will leverage mobility and cloud solutions developed by IBM Research and the IBM India Software Lab to achieve increased revenues, reduce costs and enhanced profitability.
BSLI in this partnership with IBM will adopt a first-of-a-kind technology solution to the insurance sector that will radically transform the business technology model. BSLI will leverage IBM's business consulting, application development and maintenance services to drive process efficiencies and transform the business towards better outcomes for customers and employees. Tailor-made solutions from IBM will bring process maturity best practices, IT portfolio consolidation and introduce innovative tools.
This deal could help BSLI realize a cost reduction advantage from consolidation of IT vendors. IBM's flexible pricing model will enable dynamic ramp up/down and consumption based operational spending along with a roadmap to modernize, consolidate and rationalize the application portfolio, bringing in speed and reduced time to market.
Speaking on the occasion, Mayank Bathwal, Dy. CEO, Birla Sun Life Insurance said, "We at Birla Sun Life Insurance are committed to offering an enhanced experience to our customers while improving on efficiencies and profitability of the business. We believe that this winning partnership with IBM will help us excel and stay ahead of the curve in this fast evolving life insurance industry, while addressing all business needs. IBM's vast experience and technology capabilities will add tremendous value to our business."
"IBM remains committed in the transformation of the BFSI industry catalyzing growth and inclusion. We are pleased to partner with BSLI to help leverage leading technology solutions like cloud and analytics to make critical strides in achieving business transformation, improving service delivery and increasing customer satisfaction,"said Vanitha Narayanan, Managing Director, IBM India. "We will bring our local and global expertise and capabilities to fuel BSLI' expansion and growth in this dynamic Insurance industry in India." she further added.
BSLI in this partnership with IBM will adopt a first-of-a-kind technology solution to the insurance sector that will radically transform the business technology model. BSLI will leverage IBM's business consulting, application development and maintenance services to drive process efficiencies and transform the business towards better outcomes for customers and employees. Tailor-made solutions from IBM will bring process maturity best practices, IT portfolio consolidation and introduce innovative tools.
This deal could help BSLI realize a cost reduction advantage from consolidation of IT vendors. IBM's flexible pricing model will enable dynamic ramp up/down and consumption based operational spending along with a roadmap to modernize, consolidate and rationalize the application portfolio, bringing in speed and reduced time to market.
Speaking on the occasion, Mayank Bathwal, Dy. CEO, Birla Sun Life Insurance said, "We at Birla Sun Life Insurance are committed to offering an enhanced experience to our customers while improving on efficiencies and profitability of the business. We believe that this winning partnership with IBM will help us excel and stay ahead of the curve in this fast evolving life insurance industry, while addressing all business needs. IBM's vast experience and technology capabilities will add tremendous value to our business."
"IBM remains committed in the transformation of the BFSI industry catalyzing growth and inclusion. We are pleased to partner with BSLI to help leverage leading technology solutions like cloud and analytics to make critical strides in achieving business transformation, improving service delivery and increasing customer satisfaction,"said Vanitha Narayanan, Managing Director, IBM India. "We will bring our local and global expertise and capabilities to fuel BSLI' expansion and growth in this dynamic Insurance industry in India." she further added.
Zomato: India’s first global app
New Delhi: It was June 2014. It had been 11 months since Zomato Media Pvt. Ltd, which owns the eponymous online restaurant search service, had launched the New Zealand version of the website and founders Deepinder Goyal and Pankaj Chaddah were running somewhat low on gas.
Goyal, who is now 32, and Chaddah, three years younger, had then been hoping to overtake MenuMania, the New Zealand market leader in online restaurant search and discovery service, but it looked like they had to wait a couple of more years before they could pull it off.
The two men had already spent close to four exhausting years in emerging as the leaders in their own home market—India—by taking the lead over Burrp and TimesCity and were impatient for faster growth.
They finally decided to call MenuMania. The discussion was straightforward. Was MenuMania ready to be acquired? After a 15-minute call, the two companies agreed on the basics, including a price. After a month of paperwork, the deal was done and an announcement made, in July 2014. The value of the deal wasn’t disclosed.
“That was the first deal and it really worked for us. We merged the two entities and we got a lot of leverage with the user base. The New Zealand business suddenly jumped about three times,” said Goyal.
“This gave us the idea that there must be a lot of large local dominant players in different countries which had not got funded and were running on their own money for a long time. We started to identify companies that might have been looking to exit businesses which they had run for a long time on their own boot-strapping capital.
Gurgaon-based Zomato, which has acquired seven companies in a six-month binge, is currently present in 22 countries. In January, the company, in one of the biggest overseas deals by an Indian start-up, acquired larger rival Urbanspoon, the Seattle-based bar and restaurant guide.
The deal, estimated to be close to $50 million, gave Zomato a toehold in the competitive US market and put the company in direct competition with market leader Yelp Inc., which crowd-sources menus, contact details and pictures. The deal also established Zomato’s presence in Australia and Canada and enhanced its position in the UK and New Zealand, countries where Urbanspoon has a presence.
It helped Zomato expand its presence to 500-plus cities in 22 countries and increased its restaurant coverage from about 300,000 to more than 1 million. According to Zomato, its traffic will more than double—from nearly 35 million visits per month to more than 80 million visits per month—as a result of the acquisition, making it the largest restaurant search company in the world, reinforcing its position as India’s first truly global app, with a valuation of $660 million.
Rapid moves
To be sure, Zomato isn’t sitting back. It plans to invest $50 million more in the US to stay in the game and expects to overtake Yelp within 12 months. The company expects its biggest differentiator to be content.
“We have much better and relevant content and we will continue to follow the model of collecting and publishing the content ourselves rather than crowd-sourcing it,” said Chaddah.
Within weeks of the Urbanspoon acquisition, Zomato bought Turkish rival Mekanist for an undisclosed sum, continuing its acquisition spree in international markets. Most of these deals were outbound transactions where Zomato approached competitors in new markets. The company’s strategy here is to move rapidly, without allowing the acquisition target to go out and shop for a better buyer.
The acquisition of Urbanspoon was different. “We would have never reached out to Urbanspoon. They are three times our size in terms of traffic. They reached out to us saying they wanted to sell the business and then there was a bidding process where a lot of companies bid but finally we got the deal,” adds Goyal.
In 2015, the company expects to go slow in expanding into newer markets. “The focus in 2015 will be to grow in the markets we are present in. All our bandwidth will go into consolidation and to ramp up our revenue,” said Chaddah.
Chaddah’s goal for 2015 is to triple the company’s revenue. “He has done that for last three years and he is hoping to do that for the next three years,” explains Goyal.
For the year ended 31 March 2014, Zomato posted a loss of Rs.37.2 crore on revenue of Rs.36.11 crore. For the previous year, the company posted a loss of Rs.10 crore on revenue of Rs.12.30 crore.
Zomato, whose 100% revenues comes from restaurant ads, now plans to experiment with other revenue generation models as well. The company last week introduced a payment option in its mobile app in Dubai. Every time a consumer pays via Zomato, the merchant will pay the company a percentage cut on the overall transaction amount.
The beginnings
Goyal and Chaddah started Zomato, then known as Foodiebay, in 2008. The idea originated when they saw their colleagues at consultancy firm Bain & Co. queuing at the cafeteria every day to go through a file of restaurant menu cards to order food.
“We had a rule that no one will take these menu cards at their desk because if you lose them no one will be able to order food. So it was always crowded around the menu cards,” recalls Goyal.
One day he decided to scan them and put them online. “It started from there essentially and a lot of people at Bain started using the service and then we eventually expanded it to Delhi NCR (national capital region). It was a very slow growth curve in early years,” adds Goyal.
Foodiebay was re-branded to Zomato in November 2010 because of a conflict with e-commerce marketplace eBay Inc. over use of the word ebay in its name.
“We were also unsure if we would just stick to food at that time so we wanted a more neutral name,” said Chaddah. A year ago, Zomato tried to sell event tickets too. The idea did not click and was rolled back.
During the first year, Goyal and Chaddah ran the business alongside their jobs and it was in late 2009 when they quit Bain to make Foodiebay a full-time calling. Families were worried and even Goyal and Chaddah were unsure if the risk they were taking was worth it. “Our parents did not want us to quit Bain. It was a stable job…many people aspired to work at Bain,” said Chaddah.
For the initial few months after quitting Bain, the duo got monetary help from their brothers and a couple of friends at Bain. In mid-2010, the company was struggling to convince investors to write them their first cheque.
“It was a time when e-commerce was taking the entire mind share so nobody had the time to look at us. It is only now that food tech is hotter than anything else,” smiles Goyal.
Soon after they received an email from one of their customers, Sanjeev Bikhchandani, who was also the founder of Info Edge (India) Ltd, an online classifieds company that runs job portal Naukri.
“The day we went to meet him, he asked if we were looking for money. We told him yes and within 15 minutes he promised a $1 million cheque for a 33% stake in the company,” said Goyal.
Since then Info Edge has done most follow-up rounds of funding and currently holds a more than 50% stake in Zomato.
According to Bikhchandani of Info Edge, it was the team and the business idea that made him bet on Zomato in its early days. “We wrote them a small cheque to see how they would grow the company further and they kept taking the business further which was impressive,” he adds.
India is yet to produce a global consumer Internet business and Zomato could well be the first big global consumer Internet company out of India, said Bikhchandani.
“When it comes to US market, I think they will proceed cautiously and slowly,” he said.
Vy Capital and Sequoia Capital are some of the other investors who have backed the company. Zomato, which has thus far raised $113 million, might need to raise fresh capital as the company spent close to $50 million on the Urbanspoon acquisition out of the $60 million it raised in its last round.
The future
But, according to Goyal, the company is in no hurry to raise more capital. “The next round will give us fuel to grow faster but there is no timeline…it could happen tomorrow, it could take six months. Right now the focus is on integration.
The company is also looking to double its headcount in the next 12 months. It employs more than 1,000 people across the globe. The firm this year will focus on growing its sales team in markets such as Australia, Canada, Turkey and the US.
“I think the next year will go into building the organization and really building the foundation of the scale that we have taken up. The most difficult task here is integrating the teams in other geographies while maintaining its culture,” said Goyal.
Though for the founders the goals of the company change almost every day, there is a long-term vision of Zomato becoming a full-fledged communications platform between restaurants and consumers.
“You should be able to search and discover platforms, you should be able to interact with restaurants for placing an order, to book a table or even to communicate with the waiter when you are sitting at a table,” said Goyal. “But it is going to take us a lot of years to get there. So achieving this in this particular vertical is not easy.”
The company already provides table booking services in markets such as the UK where it has partnered with online restaurant real-time reservation service OpenTable and Book a Table.
In India and other markets, the company is taking a wait-and-watch approach. “There are no acquisitions to make in India at this moment. There are no strong players so either we will have to wait for someone to do this or we will have to do it on our own,” said Goyal.
According to Goyal, Zomato in seven years has grown from a plain vanilla pile of menu cards in blue HTML links, the JPEG files, to a restaurant discovery portal and app which rates and reviews restaurants.
“Back then we did not even have a search option on Zomato. One had to use the browser search option for it. Today as a product Zomato is very very different… it was only 1% of what it is right now. And the focus of what we are trying to do actually changes every day.”
Goyal, who is now 32, and Chaddah, three years younger, had then been hoping to overtake MenuMania, the New Zealand market leader in online restaurant search and discovery service, but it looked like they had to wait a couple of more years before they could pull it off.
The two men had already spent close to four exhausting years in emerging as the leaders in their own home market—India—by taking the lead over Burrp and TimesCity and were impatient for faster growth.
They finally decided to call MenuMania. The discussion was straightforward. Was MenuMania ready to be acquired? After a 15-minute call, the two companies agreed on the basics, including a price. After a month of paperwork, the deal was done and an announcement made, in July 2014. The value of the deal wasn’t disclosed.
“That was the first deal and it really worked for us. We merged the two entities and we got a lot of leverage with the user base. The New Zealand business suddenly jumped about three times,” said Goyal.
“This gave us the idea that there must be a lot of large local dominant players in different countries which had not got funded and were running on their own money for a long time. We started to identify companies that might have been looking to exit businesses which they had run for a long time on their own boot-strapping capital.
Gurgaon-based Zomato, which has acquired seven companies in a six-month binge, is currently present in 22 countries. In January, the company, in one of the biggest overseas deals by an Indian start-up, acquired larger rival Urbanspoon, the Seattle-based bar and restaurant guide.
The deal, estimated to be close to $50 million, gave Zomato a toehold in the competitive US market and put the company in direct competition with market leader Yelp Inc., which crowd-sources menus, contact details and pictures. The deal also established Zomato’s presence in Australia and Canada and enhanced its position in the UK and New Zealand, countries where Urbanspoon has a presence.
It helped Zomato expand its presence to 500-plus cities in 22 countries and increased its restaurant coverage from about 300,000 to more than 1 million. According to Zomato, its traffic will more than double—from nearly 35 million visits per month to more than 80 million visits per month—as a result of the acquisition, making it the largest restaurant search company in the world, reinforcing its position as India’s first truly global app, with a valuation of $660 million.
Rapid moves
To be sure, Zomato isn’t sitting back. It plans to invest $50 million more in the US to stay in the game and expects to overtake Yelp within 12 months. The company expects its biggest differentiator to be content.
“We have much better and relevant content and we will continue to follow the model of collecting and publishing the content ourselves rather than crowd-sourcing it,” said Chaddah.
Within weeks of the Urbanspoon acquisition, Zomato bought Turkish rival Mekanist for an undisclosed sum, continuing its acquisition spree in international markets. Most of these deals were outbound transactions where Zomato approached competitors in new markets. The company’s strategy here is to move rapidly, without allowing the acquisition target to go out and shop for a better buyer.
The acquisition of Urbanspoon was different. “We would have never reached out to Urbanspoon. They are three times our size in terms of traffic. They reached out to us saying they wanted to sell the business and then there was a bidding process where a lot of companies bid but finally we got the deal,” adds Goyal.
In 2015, the company expects to go slow in expanding into newer markets. “The focus in 2015 will be to grow in the markets we are present in. All our bandwidth will go into consolidation and to ramp up our revenue,” said Chaddah.
Chaddah’s goal for 2015 is to triple the company’s revenue. “He has done that for last three years and he is hoping to do that for the next three years,” explains Goyal.
For the year ended 31 March 2014, Zomato posted a loss of Rs.37.2 crore on revenue of Rs.36.11 crore. For the previous year, the company posted a loss of Rs.10 crore on revenue of Rs.12.30 crore.
Zomato, whose 100% revenues comes from restaurant ads, now plans to experiment with other revenue generation models as well. The company last week introduced a payment option in its mobile app in Dubai. Every time a consumer pays via Zomato, the merchant will pay the company a percentage cut on the overall transaction amount.
The beginnings
Goyal and Chaddah started Zomato, then known as Foodiebay, in 2008. The idea originated when they saw their colleagues at consultancy firm Bain & Co. queuing at the cafeteria every day to go through a file of restaurant menu cards to order food.
“We had a rule that no one will take these menu cards at their desk because if you lose them no one will be able to order food. So it was always crowded around the menu cards,” recalls Goyal.
One day he decided to scan them and put them online. “It started from there essentially and a lot of people at Bain started using the service and then we eventually expanded it to Delhi NCR (national capital region). It was a very slow growth curve in early years,” adds Goyal.
Foodiebay was re-branded to Zomato in November 2010 because of a conflict with e-commerce marketplace eBay Inc. over use of the word ebay in its name.
“We were also unsure if we would just stick to food at that time so we wanted a more neutral name,” said Chaddah. A year ago, Zomato tried to sell event tickets too. The idea did not click and was rolled back.
During the first year, Goyal and Chaddah ran the business alongside their jobs and it was in late 2009 when they quit Bain to make Foodiebay a full-time calling. Families were worried and even Goyal and Chaddah were unsure if the risk they were taking was worth it. “Our parents did not want us to quit Bain. It was a stable job…many people aspired to work at Bain,” said Chaddah.
For the initial few months after quitting Bain, the duo got monetary help from their brothers and a couple of friends at Bain. In mid-2010, the company was struggling to convince investors to write them their first cheque.
“It was a time when e-commerce was taking the entire mind share so nobody had the time to look at us. It is only now that food tech is hotter than anything else,” smiles Goyal.
Soon after they received an email from one of their customers, Sanjeev Bikhchandani, who was also the founder of Info Edge (India) Ltd, an online classifieds company that runs job portal Naukri.
“The day we went to meet him, he asked if we were looking for money. We told him yes and within 15 minutes he promised a $1 million cheque for a 33% stake in the company,” said Goyal.
Since then Info Edge has done most follow-up rounds of funding and currently holds a more than 50% stake in Zomato.
According to Bikhchandani of Info Edge, it was the team and the business idea that made him bet on Zomato in its early days. “We wrote them a small cheque to see how they would grow the company further and they kept taking the business further which was impressive,” he adds.
India is yet to produce a global consumer Internet business and Zomato could well be the first big global consumer Internet company out of India, said Bikhchandani.
“When it comes to US market, I think they will proceed cautiously and slowly,” he said.
Vy Capital and Sequoia Capital are some of the other investors who have backed the company. Zomato, which has thus far raised $113 million, might need to raise fresh capital as the company spent close to $50 million on the Urbanspoon acquisition out of the $60 million it raised in its last round.
The future
But, according to Goyal, the company is in no hurry to raise more capital. “The next round will give us fuel to grow faster but there is no timeline…it could happen tomorrow, it could take six months. Right now the focus is on integration.
The company is also looking to double its headcount in the next 12 months. It employs more than 1,000 people across the globe. The firm this year will focus on growing its sales team in markets such as Australia, Canada, Turkey and the US.
“I think the next year will go into building the organization and really building the foundation of the scale that we have taken up. The most difficult task here is integrating the teams in other geographies while maintaining its culture,” said Goyal.
Though for the founders the goals of the company change almost every day, there is a long-term vision of Zomato becoming a full-fledged communications platform between restaurants and consumers.
“You should be able to search and discover platforms, you should be able to interact with restaurants for placing an order, to book a table or even to communicate with the waiter when you are sitting at a table,” said Goyal. “But it is going to take us a lot of years to get there. So achieving this in this particular vertical is not easy.”
The company already provides table booking services in markets such as the UK where it has partnered with online restaurant real-time reservation service OpenTable and Book a Table.
In India and other markets, the company is taking a wait-and-watch approach. “There are no acquisitions to make in India at this moment. There are no strong players so either we will have to wait for someone to do this or we will have to do it on our own,” said Goyal.
According to Goyal, Zomato in seven years has grown from a plain vanilla pile of menu cards in blue HTML links, the JPEG files, to a restaurant discovery portal and app which rates and reviews restaurants.
“Back then we did not even have a search option on Zomato. One had to use the browser search option for it. Today as a product Zomato is very very different… it was only 1% of what it is right now. And the focus of what we are trying to do actually changes every day.”
Huawei launches R&D centre in Bengaluru
Bengaluru: Chinese telecom gear maker Huawei on Thrusday launched a research and development (R&D) campus in Bengaluru with an investment of $170 million. The campus, being the first by any Chinese company, has a capacity to accommodate 5,000 engineers but at present 2,700 people are working here, with 98% being local workers.
“The India R&D centre will continue to focus on development and delivery of high quality software platforms, components and applications for the various product lines of the parent company,” Huawei India R&D center CEO Wilson Wang said. The company, which has completed 15 years in the Indian market, said the R&D campus will play a key role in component development and delivery center for the global markets and has ownership of almost all software platforms, components and products being developed in India.
The Bengaluru centre is also the largest R&D facility of Huawei outside China. Huawei has invested around $300 million in R&D in India in the last 15 years. “Huawei has played an important role in the evolution of telecom ecosystem in the country and its investment in new facility further showcases Huawei’s commitment to the India market,” department of industrial policy & promotion (DIPP) secretary Amitabh Kant said.
“The India R&D centre will continue to focus on development and delivery of high quality software platforms, components and applications for the various product lines of the parent company,” Huawei India R&D center CEO Wilson Wang said. The company, which has completed 15 years in the Indian market, said the R&D campus will play a key role in component development and delivery center for the global markets and has ownership of almost all software platforms, components and products being developed in India.
The Bengaluru centre is also the largest R&D facility of Huawei outside China. Huawei has invested around $300 million in R&D in India in the last 15 years. “Huawei has played an important role in the evolution of telecom ecosystem in the country and its investment in new facility further showcases Huawei’s commitment to the India market,” department of industrial policy & promotion (DIPP) secretary Amitabh Kant said.
PM announces constitution of three sub-groups within NITI Aayog; asks all states to set up two task forces under aegis of NITI Aayog
New Delhi: The Prime Minister, Shri Narendra Modi, has announced that the NITI Aayog would constitute three sub groups: of Chief Ministers on the following themes:
Sub-group to study the 66 Centrally Sponsored Schemes and recommend which to continue, which to transfer to states, and which to cut down.
Sub-group to recommend how NITI Aayog can promote skill development and creation of skilled manpower within states.
Sub-group to decide on institutional mechanisms to be evolved, and technological inputs, for ensuring that commitment to Swachh Bharat becomes a part of our life in perpetuity.
In his concluding remarks at the first meeting of the Governing Council of NITI Aayog, the Prime Minister also asked all states to create two task forces under the aegis of the NITI Aayog One task force would focus on poverty alleviation, and the other would focus on future development of agriculture in the state, and how the Centre can assist the state in this regard.
The members of the sub-groups will be decided later, after Chief Ministers indicate their preferences.
The Prime Minister urged all states to use the upcoming school vacations as an opportunity to build and upgrade toilets, so as to ensure that the target of toilets for all schools is achieved. He also suggested that a portion of the funds under the MPLAD and MLALAD schemes can be earmarked for cleanliness-related activities, until 2019.
The Prime Minister appreciated the team spirit shown by all participating Chief Ministers in the thoughts and vision expressed by them during the meeting.
Sub-group to study the 66 Centrally Sponsored Schemes and recommend which to continue, which to transfer to states, and which to cut down.
Sub-group to recommend how NITI Aayog can promote skill development and creation of skilled manpower within states.
Sub-group to decide on institutional mechanisms to be evolved, and technological inputs, for ensuring that commitment to Swachh Bharat becomes a part of our life in perpetuity.
In his concluding remarks at the first meeting of the Governing Council of NITI Aayog, the Prime Minister also asked all states to create two task forces under the aegis of the NITI Aayog One task force would focus on poverty alleviation, and the other would focus on future development of agriculture in the state, and how the Centre can assist the state in this regard.
The members of the sub-groups will be decided later, after Chief Ministers indicate their preferences.
The Prime Minister urged all states to use the upcoming school vacations as an opportunity to build and upgrade toilets, so as to ensure that the target of toilets for all schools is achieved. He also suggested that a portion of the funds under the MPLAD and MLALAD schemes can be earmarked for cleanliness-related activities, until 2019.
The Prime Minister appreciated the team spirit shown by all participating Chief Ministers in the thoughts and vision expressed by them during the meeting.
India set to become world's fastest growing e-commerce market
New Delhi: India is on route to becoming the world’s fastest growing e-commerce market, if current projections are anything to go by. This growth story is being driven by robust investment activity in the sector and the rapid increase in internet users. Internet users in India have gone up from 50 mn in 2007 to 300 million in 2014.
Last year, smart phone shipments doubled to 80 mn from a year-ago period. The prospect of connecting 1.24 billion people to the internet may be an opportunity in itself. But what analysts are excited about is the prospect of selling products and services to this digital population. Investment banks believe India is on way to becoming one of the largest internet markets in the world, with implications for consumers and investors.
Morgan Stanley expects the size of the Indian internet market to rise from $11 bn in 2013 to $137 bn by 2020 and market capitalisation of these internet businesses could touch $160-200 bn from the $4 bn at present. Currently, only three internet companies are listed in India but with the pace at which venture capital (VC) firms and private equity (PE) firms are pumping money into India, several internet companies could possibly look at listing in the next couple of years. India’s internet market was at $11 bn (gross merchandise value) in 2013, of which $11 bn was online travel and e-commerce was $3 bn.
As the market matures and more companies get listed, the market cap of internet companies will expand too. Analysts at Morgan Stanley believe that India's internet market can grow to $137 bn by 2020 (a CAGR of 43 per cent) and e-commerce will form the largest part of the internet market at $102 billion. In relatively more advanced markets like China and the US, top 30 listed internet companies account for 12 per cent and four per cent, respectively, of the total market capitalisation. Internet commerce tends to account for more than 50 per cent of the market cap among listed internet firms. Morgan Stanley expects India’s e-commerce market (revenues) to grow from $2.9 bn in 2013 to over $100 bn by 2020, making it the fastest growing e-commerce market in the world.
The basis of this argument is the kind of equity investments made by PE and VC firms in 2014. The total equity investments made in Indian internet companies is $4.5 bn. The growth in internet businesses will also give a fillip to other related businesses like logistics and payment solutions.
Last year, smart phone shipments doubled to 80 mn from a year-ago period. The prospect of connecting 1.24 billion people to the internet may be an opportunity in itself. But what analysts are excited about is the prospect of selling products and services to this digital population. Investment banks believe India is on way to becoming one of the largest internet markets in the world, with implications for consumers and investors.
Morgan Stanley expects the size of the Indian internet market to rise from $11 bn in 2013 to $137 bn by 2020 and market capitalisation of these internet businesses could touch $160-200 bn from the $4 bn at present. Currently, only three internet companies are listed in India but with the pace at which venture capital (VC) firms and private equity (PE) firms are pumping money into India, several internet companies could possibly look at listing in the next couple of years. India’s internet market was at $11 bn (gross merchandise value) in 2013, of which $11 bn was online travel and e-commerce was $3 bn.
As the market matures and more companies get listed, the market cap of internet companies will expand too. Analysts at Morgan Stanley believe that India's internet market can grow to $137 bn by 2020 (a CAGR of 43 per cent) and e-commerce will form the largest part of the internet market at $102 billion. In relatively more advanced markets like China and the US, top 30 listed internet companies account for 12 per cent and four per cent, respectively, of the total market capitalisation. Internet commerce tends to account for more than 50 per cent of the market cap among listed internet firms. Morgan Stanley expects India’s e-commerce market (revenues) to grow from $2.9 bn in 2013 to over $100 bn by 2020, making it the fastest growing e-commerce market in the world.
The basis of this argument is the kind of equity investments made by PE and VC firms in 2014. The total equity investments made in Indian internet companies is $4.5 bn. The growth in internet businesses will also give a fillip to other related businesses like logistics and payment solutions.
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