Leadership and succession are two of the more important management issues in any organisation, and in many ways they are intertwined. Finding the right leader to head a company can make or break it. When Lou Gerstner was picked up to rescue IBM, there were many eyebrows raised. After all, nothing in Gerstner's background gave any clue as to why he would do well as the chief of a computer behemoth that had got into deep trouble and was on the brink of bankruptcy. Gerstner had a sterling record but he had primarily had experience in consulting (McKinsey), financial services (American Express) and Fast Moving Consumer Goods (RJR Nabisco). He had never worked in the technology industry, which was then going through a major upheaval.Meanwhile, there was a lot of hype about how Carleton Fiorina would revive the sleepy Hewlett-Packard. Carly had an impressive track record in telecom (AT&T and its spinoff, Lucent) and, more importantly, seemed to have just the right profile to take the fabled but troubled HP into a new era. Unfortunately, while Fiorina raised the public profile of the company, her misses and mistakes were far more apparent than the things she did right. Indeed, her successor, a low key Mark Hurd, proved to be better for HP.Even if you find the right leader once, the bigger problem that often crops up is finding the right successor to a great leader. Often the leaders who are about to retire attain legendary status because of their achievements. Finding someone to fill those shoes is a hugely complex job. It is not helped by the fact that the new person being chosen is often compared with his predecessor from day one - and people tend to forget that even the original leader made mistakes in the early years.When Ratan Tata took over, there were plenty of people who expected him to fail. After all, Ratan was succeeding the legendary J.R.D. Tata, and many of the things he did immediately after taking over seemed rather odd. For one, he took on the old guard — Rusi Mody, Darbari Seth, Ajit Kerkar — all of whom had built legendary mini empires within the Tata group. More importantly, at the time of taking over the conglomerate, Ratan Tata didn't have the most impressive of track records.Today, as he prepares to hand over the reins of the group to a successor, there are few who would doubt his business acumen, vision or legacy. Many consider him to be the greatest businessman of this era. He proved a worthy successor to JRD in every way. The big problem everyone foresees is that he has set the bar so high that it might be almost impossible for any successor to do half as well as he has done.At the moment, corporate India is facing quite a succession crisis. A number of exceptional leaders who have carved out impressive empires are about to step down. In Infosys, N. R. Narayana Murthy will retire as the chairman. With co-founder Nandan Nilekani already out of the company to pursue the UID project, there is a lot of worry that the next chairman of Infosys will lack the charisma and overall vision of Narayana Murthy. Especially since, most of the other founders of Infosys are also fast approaching the retirement age.In Larsen & Toubro, A. M. Naik is preparing to retire finally after a long innings full of achievement and glory. And there is no successor in immediate sight. There are talks that Naik will restructure L&T so that independent businesses are handled by different leaders, and no one presides over the multidimensional company as a whole. Also, other larger than life leaders who are expected to retire over the next four or five years include P.R.S. Oberoi, Shiv Nadar, Y. C. Deveshwar among others. Each of them have built their businesses over several decades and scorched a path that is hard to follow for anyone. Of course, the hunt for Ratan Tata's successor is already on.What prevents companies and leaders from creating proper processes to find a successor well in time? Why don't organisations develop clear strategies to identify, groom and train successors from within the company?The answer is that there are plenty of companies that do have processes to identify and train successors — GE and Unilever are two global companies that have developed rigorous processes to groom successors from within. But in many cases, these processes still end up failing. The Unilever system for example worked for many years and then started sputtering when the business environment changed. Similarly, in GE, despite Jeff Immelt's obvious achievements in the past decade, there are many who think that he is not doing anywhere as well as his predecessor Jack Welch. There are several reasons for that. First, the internal succession candidates often are in the same mould as the outgoing leader. More importantly, these people have worked too deeply within the organisation to be able to questions systems and processes — something that every leader needs to do after taking over. Equally importantly, there might be better candidates outside and by restricting the search to internal candidates; the search committee might be doing the organisation a disservice. Also, there are very few companies that span a broad array of industries and geographies (GE is one of the very few and the Tata conglomerate in India is another) — which means few internal candidates ever have the full training that the next generation of leader inevitably needs.Meanwhile, there are also dangers in parachuting people from outside to take over as a successor to the outgoing chief. For one, a regular practice of choosing people from outside the company reduces the incentive for the best brains in the company to stick around for the long term. Equally, no matter how well the outside candidate is researched and vetted, whether he or she will work out is always a matter of hit and miss. Lou Gerstner worked out beautifully, but Carly Fiorina did not.In family owned and run companies, where scions are expected to take over the next generation, other problems crop up. For one, there would be different people with different visions and capabilities in the next generation. So should the patriarch hand over the bulk of the business to the eldest son or daughter - or divide it equally between his sons and daughters? Or should he give the running of the business to the most talented person in the next generation even if that causes some heartburn?It would seem that it is a no-win situation as far as succession planning goes. But this need not always be the case. Sure, there will always be an element of risk while searching for a successor. And sure, it will always cause some degree of heartburn. There are a few things that all leaders and their search committees should follow. These are:Start early enough. Ideally the leadership search should start seven years before retirement and the most promising candidates identified and in place at least five years before the actual takeover. Make sure that both internal and external candidates are considered. There should be a process in place to identify bright young performers within the company and then groom them to handle the widest possible spectrum of jobs, and monitor their progress over the years. Have repeated meetings to figure out what the company would need for the next four or five years after the leader retires. Is the next successor's job going to be about consolidating businesses that were entered into by his predecessor? Identifying and getting into new business areas? Restructuring the business altogether? Expanding into new markets? Each of these tasks requires different skills and often different leadership qualities. Having a clear idea about what the task will be before the successor will help in choosing the right one. * And finally, after a successor has been put in place, give him enough rope to learn and do things his own way. Quite often, a successor is judged on his performance from day one, which is unfair. He should be given at least a couple of years before people start worrying about whether he is doing the right thing or the wrong ones.There are plenty of cases where successors have proved as good, if not better, than their predecessors. In the US, Jack Welch comes to mind. He succeeded the legendary Reginald Jones but carved out his own path. In India, TCS has had great success with successors - first Ramadorai proved a worthy follower to the great F.C. Kohli. And then, Chandrasekharan is taking TCS to a new trajectory after taking over from Ramadorai. In ITC, Deveshwar had gone far beyond his illustrious predecessors, and in ICICI, K V Kamath lived up and exceeded every expectation and has now handed over the baton to Chanda Kochhar, who is also doing rather well.The author is the editor of Businessworld
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After the 2G scandal, the telecom sector is all set for an image makeover. The Planning Commission has set up five committees to cleanse the telecom sector of the scam taint.The preliminary work on the draft the 12th plan (2012-2017) proposals for the telecom sector expects to enhance the image of the sector in India. The five committees have been asked to submit their reports by August 30, 2011.During the plan period, the main thrust will be on attracting investments in the rural sector, streamlining spectrum allocations, establishing a single-window clearance to promote manufacturing of telecom equipment in India including semiconductors and also creating service standards for operators to follow.Department of Telecommunications Secretary R. Chandrashekhar and the Planning commission team held discussions on Monday and decided to set up these committees to examine in detail each aspect of the sector. "It is needed to keep the growth in this sector and to make it robust for future," said a senior official who attended the meeting.Chandra Prakash, member (Technology) in DoT, will head the licensing and spectrum committee. He will examine the spectrum allocation and evaluation during the next plan period. It will be the responsibility of this committee to assess the revenue potential and spectrum availability during the Plan period.Ashok Jhunjhunwala, Professor, IIT Chennai, will lead another committee to examine special incentives that could be offered to improve manufacturing, research and development in telecom. It will also examine options to promote entrepreneurs in equipment manufacturing. Professor K Bhaskar of Indian Institute of Science (IISC) will lead a committee that will examine the security and strategic issues, products and services.Another committee under S.C Misra member (Services) is expected to suggest ways to determine the quality of service parameters, which the service providers will have to offer. This committee will also suggest methods to penalize those operators failing to offer service quality as per the norms prescribed. The suggestions would not be in conflict with the recommendations of the Telecom Regulatory Authority of India (Trai) but complement them, the official present in the meeting said.Sadhna Dikshit, advisor Finance, who is officiating as the member finance will head the committee to formulate policy suggestions that will have direct impact on the finances in this sector.The five committees are expected to meet soon with the members of the industry and other ministries. Sources in the Communications Ministry said the suggestions by these committees will also provide direction to the National Telecom Policy 2011.The telecom industry has been major revenue generator for the exchequer. The 3G spectrum and broadband wireless access spectrum auctioned last year generated more than One lakh crore.
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In 2005, when China completed building the world's highest railways in the Tibetan plateau at a height of over 5,000 metres, many believed the sole purpose of the railways would be to open up Tibetan resources for feeding the Chinese economy. In fact, only four years ago, in 2001, China had discovered massive oil and gas reserves in Tibet which could be compared favorably with the biggest oil reserves in the world. In 2006, PetroChina invited global bids for participation in the exploration of oil blocks in Qiantang. The block in Qiantang alone held 10 billion tonnes of oil and gas, reported The Guardian. With its massive efforts at building roads and railways connecting Tibet to the mainland, the Chinese intention of placing Tibet as an important piece in the Chinese energy supply was clear.However, to do that, it is transmission lines and not railways that need to be built. It is not the oil but the abundance of clean energy resources in Tibet that holds more promise and a one cleaner too. Tibet is blessed with good solar, wind, hydro and geothermal energy resources. To develop these resources, transmission lines connected to the demand centres are required, as there is not enough demand in Tibet itself to realise this clean energy promise. Building transmission lines are far easier and cheaper to build than high speed railway tracks. Obviously enough clean energy generation will also do a lot more global good and cause no local environmental degradation. After the Sahara desert, Tibet has the world's best solar energy potential. The high quality of solar radiation available in Tibet along with the low temperatures mean that the cost of producing the solar energy on Tibetan plateau would be a third lower than the cost of producing the solar energy even at the best of sites in Rajasthan, India. This great quality of solar radiation when coupled with the Tibetan plateau spread over 1.2 million square kilometres explains the near limitless potential for solar power generation in Tibet. As the cost of solar panels continue to reduce - also due to lower manufacturing costs in China- coupled with the Tibet's natural cost advantage, it is easy to see why financing of solar power in Tibet would be easier.Tibet has the potential to become the solar energy capital of the world. In spite of the fact that Sahara desert has better radiation available than Tibet, the latter has some unique features that works in its favour. Solar panels not only require more solar radiation but also lower ambient temperatures to function at high efficiency. Tibet being situated in the lap of the Himalayas enjoys low temperature as compared to the high temperatures in the Sahara desert. This aids in more energy generation. But beyond that it is also the location that matters. While Tibet is still located nearer to the energy hungry areas in China, the Sahara is located in a region where there is little appetite for the solar energy. Most adjoining African regions being rich in oil have access to cheaper although more unsustainable energy from oil. Also the political and technical conditions of the nations in the vicinity of the Saharan desert will impede the development of the Saharan solar resources. In fact, an ambitious idea of developing solar farms in Sahara desert and then transmit ting the electricity to Europe across the Mediterranean is yet to find much traction. The various components required for completing this vision- of which laying underground transmission cables across the Mediterranean sea is only one - are facing financing troubles. In contrast, laying a transmission line between the Tibetan plateau and the Chinese mainland will be both easier and cheaper. Investments worth $300 million aimed at installing 100 MW of solar power is slated for this year, reports The China Daily.But there is more to the 'forbidden empire' than just solar power. Tibet is the water tower of South Asia. Many rivers on which China already have and continue to build massive hydroelectric power stations also originate in Tibet. All provinces in Tibet already have small scale hydro power plants. However, hydro power also continues to be afflicted by other environmental and social concerns and therefore we might shift our attention to the other renewable energy resources in Tibet.Being a Himalayan plateau, Tibet also has good wind resources pegged at more than 93 billion Kwh annually along with more than a thousand prospective geothermal energy generation sites as per china information centre. Another report by climate connect pegs this potential at around 300 GW. That is an enormous number considering the fact that the total electricity generation in 2010 in India was only half this number.In fact, only if the Tibetans could buy reprieve from the Chinese ambitions for the Tibetan resources in lieu of clean energy generation then the roof of the world could be saved from much of the unwanted environmental degradation. In a land that believes in Buddhism, a religion that has environmental virtues deeply built into it, that would be a much welcome reprieve. The Dalai Lama, the spiritual leader of Tibet has often expressed his concern over climate change and its effects. Generating clean energy will go a long way in contributing to that vision. Perhaps only if it were a choice left to the Tibetan people, I'm sure it would have been exercised. But even for economic reasons alone it makes a good case to tap the clean energy potential at the roof of the World. If Tibet does becomes the solar capital of the world, it would also bring much global attention to this part of the world and the uncomfortable history of Lhasa, something that the Chinese government wants to keep out of global debate. It is very likely that the political consideration will supersede economic one in this case.Yash Saxena is a sustainability consultant with Emergent Ventures, a climate change mitigating consultancy. He also works on innovation evangelism with Techpediayash (dot) saxena (at) emergent-ventures (dot)com
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Last month Pepsi unveiled a 'green' bottle that is entirely made up of plant based material. It is a 100 per cent renewable bottle, made up of plant based materials like switch grass, pine barks and corn husk. Pepsi further aims to develop the technology to also use orange peels, potato peels, oat hulls and other agricultural byproducts from within its agriculture supply chain to produce bottles.Interestingly In mid 2009, Coca-Cola had also unveiled its 'green' bottle which was made up of 30 per cent plant material, using cane and molasses as its constituents. Coca-Cola named its green bottle 'PlantBottle' and registered the term as a trademark, possibly with an aim of using the term strategically in future. Coca-Cola has plans to take the renewable component up from 30 per cent to 100 per cent.In what looks like a race for producing the greenest bottle, Pepsi has reached the goal of 100 per cent renewable bottle first. However in terms of bringing this technology to market, Coca-cola seems to have outsmarted Pepsi. Dasani, a mineral water brand has been using Coca-Cola's 'PlantBottles' for its mineral water bottles since 2009. Coca-Cola had planned to produce 2 billion such 'PlantBottles' by the end of 2010. In contrast Pepsi has no plans to mass produce its green bottle before 2012.Yet in this seemingly, war to go green, it is the underlying potential to improve profitability and revenues that is leading the cola giants to keep pushing on sustainability. Using renewable and environmental friendly bottle will allow Pepsi to achieve greater environmental sustainability and create more synergies in its supply chain. There is a growing trend of consumer preference for environmentally sustainable products around the world. A 2009 GMA-Deloitte study found that 54 per cent of the shoppers consider sustainability as a key decision factor while buying. Another TNS survey found that as many as 53 per cent of Americans and 83 per cent Brazilians would be willing to pay more for more environmentally sustainable products. Sustainability is emerging as a very important component of the brand architecture and it will play a key role in retaining the customers going forward. Given the central role that 'brand' plays in the FMCG sector, the sustainability agenda of cola giants seems a natural progression.Pepsi's internal goals on environmental sustainability also reflect the same which includes 'absolute carbon reduction' goals, elimination of solid waste from Pepsi's manufacturing and reduction of packaging weight by 350 million pounds by 2012. The introduction of green bottles seems to be a part of the continuum to reduce waste.However another strategic advantage of using waste (agricultural wastes) within your supply chain as an input for your bottles is the creation of greater value within the supply chain. By using the wastes generated within their supply chain, Pepsi would be able to provide more business to stakeholders within its own agricultural supply chain rather than providing that business to PET bottle manufacturers (petroleum based supply chain). This will allow Pepsi to share more value in the supply chains more strategic to their business - which in this case will be the agricultural produce supply chain. This would improve Pepsi's relationship with its most strategic suppliers which happen to be farmers and plantation owners. Infact sharing the value with agricultural producers will also make it socially more beneficial. It will contribute towards creating more wealth in the agricultural sector.Additionally reducing the dependence on petroleum supply chain for its PET bottles, Pepsi can reduce the price volatility and rising costs associated with the petroleum products. This should give Pepsi a steadier pricing for its inputs.The benefits of retaining consumer preference, improvements in supply chain and de-risking of input prices from volatile crude prices- represent some strong business reasons that are expected to keep this race for 'going green', red hot in the times to come.The author is a sustainability consultant with Emergent Ventures, a climate change mitigating consultancy. He also works on innovation evangelism with Techpedia
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Bringing home the Olympics is a matter of great pride. For a few weeks the sporting extravaganza brings the host country to the centre of the world stage. The last edition was watched by two thirds of the humanity. The favourable recognition for the hosts it brings is reflected in the boost to tourism the host city experiences for many years to come. Yet beyond this white-screen of unassailable pride the underlying economic reality of organising Olympics can be quite challenging. The organisation of the Olympics requires massive investments. The last edition of the Olympics saw China investing over $40 billion into its preparations for games. And much of that investment was the value the Chinese put to the pride the Olympics.This is what is leading host countries to employ innovative measures to improve on cost and some of these changes have the potential to reshape the economics of games. Sustainability is closely interwoven in these measures, as we see later.It is often argued that the Olympics provide economic stimulus to the host economy. In reality that is not true always. There are both upsides and the downsides. The upsides include tourism and productivity gains while the downsides include continuing public debts and maintenance costs post event. Whether the upsides outweigh the downsides is often difficult to quantify. The 1976 Montreal games was a notable example of unfavorable economics. The public debt accumulated due to Montreal Olympics in 1976 could only be paid off fully by 2005.While the massive investment during the run up to the games spruces up the economic activity, the downsides appear once the games are over. These are in form of continuing public debts, reduced investment activity and often more painfully as continuing maintenance costs of the sporting infrastructure. The sporting venues Greece built at the cost of over US$ 3.5 billion for the 2004 Olympics edition require $100 million as maintenance costs each year. Many of these sporting facilities have no use now. The Olympic stadia built in Sydney for the 2000 games require $30 million for maintenance -as the organization committee reports- or host 200 events a year to break even. They hardly reach half that target. These are examples of unbearable costs that the host countries are no longer ready to foot, spurring the host countries to look at ways in which these costs can be avoided or reduced. From the idea of building sprawling Olympic complexes with world class permanent structures in, the idea is shifting now towards building reusable/recyclable temporary structures. The cost of reusable structures is only 30-50per cent of the permanent structures. Building temporary structures will significantly reduce the cost burden of the organizers. Recyclable structures beyond slashing investments are also more environmentally sustainable due to their recycling potential. Post their use these structures are dismantled, their materials can be used for building new structures. This recycling of building material reduces the indirect carbon emissions related to the construction.The idea has been pioneered by the London 2012 Olympics Organizing Committee (OC), which the organisers claim would be the world's first truly green Olympics. Sustainability has been made a key component of the London Olympics and integrated into its core design and operational processes. The main Olympics stadium in London is a ground breaking sustainable design. The stadium for a capacity of 80000 people will be in part a temporary structure made up reusable materials. Post games, the structure will be dismantled and materials used elsewhere. There are other such temporary/reusable structures which are going to be widely used for London Olympics. Royal Horticultural Society has also expressed its desire to reuse the basketball arena. The basket ball stadium built is the largest temporary Olympic structures ever built.Some of these venues will not just be reusable but also be used for hosting multiple games. The basket ball arena will also host handball and wheelchair rugby. This is a further cost, resource saving and carbon emissions too.A number of other measures are being taken to reduce the cost and increase the sustainability of the construction process. Over 50 per cent of the material being used during construction will be moved using low carbon and low cost transport like trains and waterways. Even the tiles, bricks, granite etc collected from the demolished buildings is being reused in the construction. Bio-remediation measures are being used to clean and regenerate the soil being contaminated due to the construction and all timber being used is sourced from 100 per cent sustainable sources.London OC is also building energy and water efficient buildings. Given the innovative designs, many buildings are achieving a- 15 per cent reduction in energy, 50 per cent reduction in carbon emissions and 40per cent reduction in water consumption. These measures will lead to lower operating costs of these sporting facilities and will be help in reducing the maintenance costs of these buildings post games.Beyond that London Olympics OC has also constituted sustainability procurement policies for all suppliers. This takes the sustainability agenda beyond the operations of London Olympics, right into the operations of the numerous suppliers to the games.A mix of these temporary and cost efficient structures will lead to substantially lower economic burdens later on. This twin trend of sustainability and cost saving that has begun from London Olympics might just hold the key to holding more profitable Olympics events in future and in process change the economic equation of organising Olympics.Yash Saxena is a sustainability consultant with Emergent Ventures, a climate change mitigating consultancy. He also works on innovation evangelism with Techpedia
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In 2007, Sachin Bansal and Binny Bansal, both IIT grads and in their late twenties, started Flipkart with a seed capital of Rs 4 lakh. Having worked with Amazon previously, both have followed the Amazon and eBay model of selling books online. Flipkart which has revenues of Rs 25 crore now, plans to take the business beyond selling just books. BW's Suneera Tandon met Flipkart CEO Sachin Bansal to ask where will Flipkart go from here. Excerpts.What is the potential of your business model ie of retailing books online?Online book retailing is a volume-based business. Since the profit margin is as low as 10 per cent, volumes matter more. In the digital space only 1 per cent of the entire book retail business worth Rs 10,000 crore is carried out, we identify potential of Web as huge. Set-up costs are not very high, but services and logistics take about 10-15 per cent of the revenues. We broke even within 6 months of having started the business and are earning a gross profit of 10-15 per cent, thereafter.While 2008 revenues for the company were Rs 2.5 crore, 2009 saw a quantum leap to Rs 20-25 crore.In November 2009, we raised venture capital funding from Accel Partners. Rs 20 crore of this amount will be allocated towards strengthening back-end and technological operations. Advertising accounts for 5 per cent of the portals' revenue.What are the challenges you faced as a start-up in the e-commerce business?Getting people to trust the online payment mode was quite a challenge initially. Also building trust in suppliers as a start-up took us some time. Once the popularity of the portal grew, transactions increased.What is the customer base and title capacity of Flipkart?We started with 50,000 titles in our catalogue and have expanded to half a million as of now. So far 250,000 customers have purchased books from Flipkart. Our business is only restricted to the Indian territory right now.With other bigger players such as Infibeam, Rediffbooks, Indiatimes, how do you keep afloat in the market and battle competition vis-vis pricing of books?We offer free-shipping on all purchases. Although our pricing is at a premium, we are working on more volumes. The higher the sales, the lower the prices. Timely delivery is our key focus and keeps us ahead of competitors. Prices of books range between Rs 95 and Rs 20,000.How does your back end work — from putting books online to delivering? What are the logistics involved?We have about 100 people working in the back end, which comprises ordering, stocking operations, packaging, shipping, vendor management, etc. We work with 300 book distributors in 5 cities from whom we procure books as well as 4 International publishers. There is a 50:50 ratio between the books stocked by our office and those procured from vendors directly. We function from 3 offices presently in Bangalore, Mumbai and Delhi. Apart from which we have a strong technical team that looks at catalogue management, stock checks, web-updates, etc.Are you looking at expanding the product base offered by your portal?As of now, we are only focusing on retailing books, we still feel there is a lot of potential in expanding the business of books on the Web. We are looking at expanding to more local publishers, regional books as well as more international publication houses. However, in the next two years we plan to add music CDs, low-cost mobile phones, movie DVDs etc., to our portal.What category of books generate the maximum sales for the portal?Fiction and non-fiction account for 50 per cent of the total sales. Apart from which medical, technical, management books too result in high sales.What kind of marketing and advertising initiatives are carried out by Flipkart?As of now, the marketing budget is minimal; we are only focused on digital marketing. Use of social forums and blogs works well for us. We also offer pre previews of books, signed copies to our customers. Soon our website, which is presently very simple, will be revamped to a more interactive one, allowing for discussion forums, book reviews, polls, etc.How do you plan to allocate the funds for future expansion?Opening more warehouses is on the agenda, along with expanding the existing Bangalore office. We also plan to expand our supplier base from 300 to 1,000 and increase our total title strength to 4 million. We expect to touch Rs 100 crore in revenues by 2011.suneera dot tandon at abp dot in
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Druva Software, a Pune-based start-up that makes proprietary backup software solutions for laptops, has raised $5 million in Series A funding (funding that follows seed funding) from Sequoia Capital India and Indian Angel Network (IAN). The stake picked up by the venture capital investors was not disclosed. The money will be used to expand the three-year old company's marketing and sales footprint overseas, including in Europe and the US. So far, it has relied largely on Web-based channels to sell its products in those markets. "We will now have offices in the UK, mainland Europe, Singapore and the US," says Jaspreet Singh, co-founder and CEO of Druva. Singh teamed up with Ramani Kothandaraman, chairman and managing director, and Milind Borate, chief technology officer, in 2007 to set up the company. "We noticed that across companies, 80 per cent of data is duplicated," he says. Druva, therefore, developed a software that would allow companies to cut out this duplication and enable laptops to work faster as well as increase storage capacity. It claims 400 corporate customers across 23 countries. Globally, the laptop backup software market is estimated at $350 million annually, according to Singh. Druva had earlier raised seed funding from the Delhi-based Indian Angel Network and Hong Kong-based Accord International. With the latest round of funding, the total raised by the company so far stands at $5.2 million, says Singh. "India is traditionally an IT services country. When we saw that Druva was developing a continuous data protection product, which is the next level of back-up technology, we decided to fund them," says Rehan Yar Khan, who represents IAN on the Druva board. Sequoia could not be reached for comments. The idea for Druva was born when the founders were colleagues at the former Veritas Software (merged with Symantec in 2005) operations in Pune. There have been some hiccups along the way. Druva Replicator, the company's first product, which provides real-time server replication software, did not find any takers. But Druva inSync, which is the laptop backup product, clicked. "We found that clients were willing to experiment with a new brand for their laptops but did not want to take similar risks with their servers," says IAN's Khan. Some of the company's earliest clients include NASA and the US Marine Corps. Druva Phoenix, Khan says, is now beginning to gain traction in the market. smita dot sengupta at abp dot in
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Matrix Partners India, a Mumbai-based venture capital firm that manages a corpus of Rs 1,500 crore, has invested Rs 100 crore in Bhartiya Samruddhi Finance (BSFL), the flagship of Hyderabad-based microfinance group BASIX. Existing investors Hivos Triodos Fonds and Lok Capital have also invested Rs 18 crore in this round. Matrix India co-founder and managing director Avnish Bajaj joins the BSFL board. He spoke to BW's Snigdha Sengupta about the deal. Excerpts:Any particular reason for the investment in microfinance now? Why BSFL?The timing is incidental. I have been looking at the sector since 2006 in my personal capacity, shortly after the eBay transition (Bajaj co-founded auction site Baazee which was acquired by eBay). I have also always been positive on the sector, though I do believe that the micro-finance must go beyond just micro-credit. The other fundamental tenet is that this business model works if the end borrower is using it for income generation in such a way that he is making more money than he is paying in interest. In the quest for scale, not everybody in the microfinance business has been as disciplined in doing that as they should. What we liked about BSFL, whom we have known for about two years, is that from day one, the founder, Vijay Mahajan's focus has been on livelihood promotion.That also implies that growth will be slower. How does that sit with your investment objectives?It makes growth slower and we are okay with that. We prefer a sustainable, slower growth. Most importantly, BSFL lends to people after really closely checking the businesses of the borrowers. They are the most focused on income-generating loans and the most wary of expense loans, which are not sustainable.How do you view the founder and the management team in BSFL?The founder is always important but in a business like this, management is equally critical in order to scale the business. The founder, in this case, brought in a CEO, Sajeev Vishwanathan, about 6-8 months ago and he himself has moved into the chairman's role. Vishwanathan has been with Citi for 18 years. The company also has a strong and deep management team in place.What is the company's shareholding pattern? Is an initial public offering (IPO) on the cards?In BSFL, the employees and promoters are the largest shareholders, with 33 per cent. We own 18.3 per cent and are the second largest shareholder. IFC, with 11 per cent is the third largest shareholder. The clear objective is that as the company works its way towards an IPO, which is not on the table at present, the promoters should be the largest shareholders and they should clearly hold in excess of 20 per cent post the IPO.What is your investment horizon for this deal?We have a 4-5 year investment horizon on this company, which is similar to any other company that we have invested in.snigdha dot sengupta at abp dot in
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