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Investment

Opportunities
A study of investment opportunities in various sectors/industries

Submitted by:

Javed Ahmed Taj


Investment opportunity – Electric vehicles
The government’s ambitious plans for a mass scale shift to electric vehicles (EVs) by 2030 so that all
vehicles on Indian roads by then—personal and commercial—will be powered by electricity, has
caught the imagination of the industry and policy makers. While the transformative push for electric
vehicles has become a cause célèbre for India and the world, it presents challenges along with
opportunities.

Investment Trends and Investors


Tata Power, ABB, ACME Cleantech, and few Dutch firms are actively considering setting up vehicle
charging stations, while Exide Industries, Amron Batteries and Microtek have held discussions with
officials about supplying batteries and setting up bulk shops for motorists to swap drained out
batteries with charged ones.

Ola and several local taxi aggregators are also considering bulk purchases of electric three-wheelers
and e-rickshaws and lease them.

State-run NTPC and Power Grid Corp are also in talks with Delhi Metro Rail Corp (DMRC) and other
entities in over half a dozen cities for space to set up battery charging and rapid vehicle charging
stations.

The government is planning to float bulk supply tenders for electric three-wheelers and electric-
rickshaws followed by contracts for electric buses. It expects to get bids from manufacturers such as
Bajaj Auto, Mahindra & Mahindra, TVS and Piaggio Ape for the tenders for three wheelers.

The Mahindra Group announced a fresh investment of Rs 900 crore in electric vehicles (EVs) over the
next four years, which should ramp up its first installed capacity to 5,000 units a month. They have
already invested Rs 600 crore in EVs over the past five-six years and have announced to invest Rs 400
crore in Karnataka and Rs 500 crore in Maharashtra over the next four-five years. This will be used for
capacity, technology and products.

Ways to gain exposure


Investors keen to take advantage of potential opportunities arising from increased production of
electric cars must remember that investing in new technology carries particular risks. It is impossible
to predict with absolute certainty which of any new developments will be successful and deliver
returns for investors.

Investors can invest directly by buying shares in the companies which manufacture electric vehicles,
but remember there are particular risks involved in investing in single companies. Individual share
performance relies on the particular company concerned. Investors would ideally need to undertake
analysis of the company, their balance sheets and management, and even then there would be no
guarantees that you would profit from your research. One way to help spread risk and diversify your
holdings is to choose collective investments.

Another option is Exchange-Traded Funds (ETFs) which track the price of a particular resource, such
as copper. These are passive investments which can be traded in ‘real time’ just like shares, and their
value will fall and rise in line with the commodity or market they are tracking. As is the case with all
investments the value of commodities can go down as well as up, so you could lose money. This asset
class can be highly volatile.

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M&A
Sajjan Jindal-led JSW Energy acquired JSW Electric Vehicles Private Ltd. JSW Electric Vehicles is part of
diversification strategy of JSW Energy Ltd to foray into electric vehicles, energy storage systems and
charging infrastructure.

Mahindra & Mahindra Ltd., acquired a majority stake in Bangalore-based REVA Electric Car Co Ltd.
Following this, REVA Electric Car Co Ltd. will be renamed Mahindra REVA Electric Vehicle Co Ltd.
Mahindra REVA’s EV technology will be adapted for M&M vehicles. Access to strong EV technology
will strengthen Mahindra’s other current sustainability initiatives

Exits
Ford Motor Co. has vetoed an earlier decision of its Indian unit to participate in a consortium that was
to create a supplier base for critical hybrid and electric vehicle parts, dealing a blow to India’s plans to
boost electric vehicle production. Ford India will now have to withdraw from the programme.

GE, Eaton, and Schneider Electric pulled their hat from the EV-charging ring over the last few months,
deciding the pot wasn’t big enough just yet.

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Investment opportunity – Fitness and wellness
The wellness industry is transforming at a rapid pace. With many changes happening in it, the market
is getting stronger. Investments in the industry are helping it to grow further and experiment in order
to innovate new ways to improve the lifestyles of the people. Today, the Indian population is moving
towards fitness and overall well-being as a means to de-stress themselves from hectic work pressure,
and combat unhealthy eating habits and sedentary lifestyles. With the profound changes in the
lifestyle and income levels of people, the wellness industry in India has become a sunrise sector, and
is set to grow by 20-30 per cent year on year.

Investment Trends and Investors


A pool of start-ups have emerged in the last couple of years, to bridge this gap, and address the
requirements of fitness enthusiasts. With these embarking on journeys into the wellness space, the
space is expected to hit an inflection point of growth. The industry is currently dominated by weight
loss and beauty treatment services.

Artha Ventures has invested in Actofit Wearables- A one stop wearable tech Company for fitness
professionals & enthusiasts, creating a range of products around the science-backed fitness and sports
analytics ecosystem using its patentable technologies and making them accessible to the everyday
Joe.

A Deloitte-IHRSA report indicated that there are 4.8 million fitness seekers across Mumbai, Delhi and
Bangalore.

Bangalore-based Gympik raised $135k in seed funding from a group of angel investors. Fiticket has
tied up with over 450 gyms and fitness studios across Mumbai alone.

The Fiticket app is currently available on the iOS platform and for Android. The app witnessed 500
bookings per month in its beta version. Currently, it has over 1500 users each month, and its monthly
subscription package is priced at Rs 2499.

Mumbai-based Fitternity operates in 16 categories in Mumbai, Pune and Bangalore. Their website and
app are hyper-local search engines that provide detailed information, such as photos, videos, rate
cards and user reviews, on all fitness related services, like gyms, yoga, Zumba, Pilates, CrossFit,
marathon training, personal trainers, and healthy tiffin, among others.

Hrithik Roshan has inked a Rs. 100 crore deal with Cure.fit.

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M&A
Gympik Health Solutions Pvt. Ltd., which owns and runs Gympik.com, an online marketplace for fitness
service providers, has announced the completion of its acquisition of FitnessPapa. As part of the deal,
the FitnessPapa team will join the Gympik team and Sourabh Kumar, founder of FitnessPapa, will also
join the Gympik core team.

True North has invested US$ 200 million in Kerala Institute of Medical Sciences (KIMS) and bought
40% stake.

Syngene, a daughter concern of Biocon Limited, is all set to develop supplements and other nutritional
products for HerbaLife. Syngene will deploy its R&D and manufacturing resources to come up with
supplements and nutritional products for the Indian palate in collaboration with HerbaLife

Kristy’s Kitchen, an online health-food company has been acquired by Bangalore-based fitness and
healthcare startup CureFit. Kristy’s Kitchen served more than 250 orders of delectable national and
international cuisines every day. The acquisition will be following a long term goal of spreading the
venture across various metro cities.

Merck is a German healthcare firm. It has collaborated with STEER engineering for the research and
creation of new technology for producing special effect pigments. The pigments will be used in the
plastic industry.

The New Delhi based healthcare institute is all set to invest and open a cancer hospital in Saket, New
Delhi. The whopping budget sums up to INR 320 Crore.

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Investment opportunity – Subscription commerce
As the name suggests, subscription business is a business model where customers pay for goods or
services on a subscription basis. Subscription price is usually based on value consumed by the users
and is charged on a regular schedule (mostly monthly, quarterly or annually).

Investment Trends and Investors


Though fairly popular in the West, the Indian market is yet to completely explore this space. However
there are few players such as:

Flintobox which features monthly toy box for kids keeping in mind child development.

Bakebox delivers a box of baked goodies every month in Delhi and NCR

Mumbai based, The Gourmet Box allows you to subscribe for world cuisine inspired gourmet food &
ingredients box.

Fab Bag brings to you beauty and grooming products for men & women monthly.

Artha Ventures has invested in Inc42 that allows to subscribe to its content of rich media for a defined
period.

All the above listed players are catering to niche market and offer curated products with an element
of surprise attached. Customers love the suspense and thrill of finding something new each month. It
offers a new experience to shoppers who don’t mind to get a pre-assembled hamper instead of
selecting on their own and getting overwhelmed by the available options. And so far they have hit the
nail on the head

Exits
Even as subscription commerce start-ups offer an increasingly diverse array of products and services,
from apparel to pet care to leisure activities, investor interest in the space has wavered over the past
few years. Subscription commerce deals are on pace to decline this year, following two consecutive
years of growth. As of 2017 YTD, subscription commerce start-ups have seen 46 deals, putting deals
on track to hit 66 for the full-year, down 18% from 78 in 2016.

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Investment opportunity – Enterprise security
Enterprise security governance activities involve the development, institutionalization, assessment
and improvement of an organization's enterprise risk management (ERM) and security policies.

Investment Trends and Investors


Enterprise security spending (hardware, software and services) in India is on pace to reach $1.4 billion
in 2018

With most Indian enterprises adopting cloud, analytics and social technologies, IBM believes that
security will be paramount for Indian enterprises.

Microsoft increases cybersecurity investments in India. After a successful year-long pilot, Microsoft
India launched its first full-scale Cybersecurity Engagement Center (CSEC) in the country.

Artha Ventures have invested in CapLinked, InstaSafe that provides enterprise security and enbales
to come together and share sensitive information easily and securely.

An increasing number of organisations are now adopting cloud-based security models to manage
cyber threats. Over 71% respondents use some form of cloud based security tools, such as, analytics,
advanced authentication and identity & access management.

M&A
The changing face of the enterprise security is largely driving the trend of M&A. In a much talked about
deal, Symantec acquired Blue Coat for approximately $4.651 billion.

Another major vendor in cyber security, Avast Software acquired its rival AVG Technologies for
approximately $1.3 billion.

A long time security player, Cisco made its powerful comeback with a slew of acquisitions. The
company recently completed acquisition of CloudLock for $293 million to enhance its cloud security
portfolio. Technology major Cisco has made its first acquisition in India by taking over Bengaluru-based
IT security company Pawaa for an undisclosed amount.

IBM is also silently building its security business through various acquisitions. The company has bought
a number of security specific vendors, including CrossIdeas, Lighthouse Security Group and Trusteer
in the last three years. IBM’s recent acquisition includes Resilient, which is a part of its expansion in
the incident response marketplace. Last year, Digital Guardian bought Code Green Networks, part of
a series of acquisitions in data protection.

M&A clearly indicates an ambition among cyber security companies to build a complete platform of
solutions. Experts say that the industry continue to see consolidation of business, since players such
as IBM, Accenture, HPE etc. are keen to expand their security wings.

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Investment opportunity – Online travel
‘Convenience’ is the single most important factor responsible for achieving a whopping 88% growth
in the Indian online travel segment which accounts for more than 70% of the transactions in the
industry.

Investment Trends and Investors


Key online travel agencies in India are:

Make My Trip with 47% market share.

Clear Trip with 20% market share.

Yatra.com with 20% market share.

Remaining 13% is with other online travel agents like RedBus, Tripadvisor etc.

Less than a year after entering the travel vertical, digital wallet company Paytm has sold 10 million
tickets on bus, train and air and has signalled its intention of getting a larger share of the pie by signing
a partnership with Booking.com.

Meanwhile, review site TripAdvisor has been investing heavily in its instant booking platform, which
allows users to stay on the site and finish a transaction, posing competition to OTAs (online travel
agents) such as MMT.

Artha Ventures has invested in ConfirmTkt and another innovative idea of Seeksherpa.

With the growing number of internet and smartphone users, the industry has evolved, and like any
other online business is shifting its focus to mobile. Traffic and transaction from mobile is on the rise.
Mobile accounts for 20% flights, 25% of hotels and 50% of train bookings for Cleartrip

M&A
One big consolidation - MakeMyTrip and Ibibo - has already taken place. The entry barriers to be an
online travel venture has also come down. Therefore, there are a lot of ventures that are catering to
a niche audience, and could likely be acquisition targets for the bigger players going forward.

Yatra Online Inc, India’s second-largest online travel operator, acquisition of corporate travel services
provider Air Travel Bureau (ATB) in an estimated cash-and debt deal of $22.5-27.5 million. Recently,
Yatra Online bought Travelocity’s Travelguru to boost its hotel bookings portfolio in the backdrop of
poor margins in the ticketing business. For Yatra, Travelguru was its fourth acquisition in the past 18
months. The company acquired Travel Services International in October 2010, Magic Rooms in July
2011, followed by BuzzinTown in December 2011.

Recent M&A includes Balmer Lawrie acquiring specialised travel company Vacation Exotica;
MakeMyTrip acquiring Netherland-based EasyToBook.com group; and Thomas Cook India deciding to
merge Sterling Holiday Resorts with itself.

Expedia India, the Indian arm of US-based online travel company Expedia Inc, said it was also keen on
evaluating opportunities for acquisitions.

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Exits
South Africa-based Internet and media group Naspers is looking to exit a five-year old investment it
made in B2B travel platform Travel Boutique Online (TBO), people directly familiar with the matter
said. Naspers is said to have approached online travel services providers MakeMyTrip and Yatra, as
well as financial investors for its stake in the business. The media group last year orchestrated an
estimated $2 billion merger between Goibibo, a company controlled by it, and and Nasdaq-listed
MakeMyTrip, becoming the largest shareholder in the combined entity.

In the West, the death of the middleman has been predicted for some time now, but even in India,
the travel agency business – both online and offline – faces threats. For instance, take the way Yatra,
MakeMyTrip and Goibibo have reacted to budget hotel room aggregators such as Oyo Rooms and Zo,
delisting them from their platform.

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Investment opportunity – Alternative lending
Alternative lending refers to a growing industry of digitally based lending platforms for different
borrowing needs, including consumer, small and medium enterprise (S M E), student loans and
mortgages. Within the last 10 years, this industry has emerged to become the subject of much
discussion and speculation due to the technological innovations it uses to simplify and expand
consumer access to capital, its stance on regulation, and the potential threat it presents to traditional
financial institutions. Alternative lending platform s provide an end- to- end loan experience through
digital delivery, from application and origination to underwriting and servicing. Alternative lenders
perform the credit underwriting process and approve or decline a loan application based on the
borrower’ s risk score in near real time, relying heavily on proprietary algorithms and the collection of
different sources of data directly from the borrower or third parties.

Investment Trends and Investors


The alternative lending segment attracted $67.6 million in funding across 22 deals in the first six
months of 2017, propelled by a $25 million fund-raising by CapitalFloat and $32 million by LendingKart
in May and June, respectively.

Sequoia Capital (Bank Bazaar, Apnapaisa), Apsada Investments (Capital Float, Neogrowth) and Accion
(Credit Mantri, SMEcorner) are the most active investors in alternative lending in India. Loan
comparison platforms (BankBazaar, SMEcorner, Rubique), commercial loans (Capital Float,
NeoGrowth, Indifi) and consumer loans (Faircent, Quiklo, IndiaLends) are the top three business
models in India’s alternative lending start up landscape, which has seen 38 companies funded since
2011.

EarlySalary secured $4 million from IDG Ventures and Diwan Housing Finance, and PaySense recently
raised $5.3 million from Jungle Ventures. Ezcred, founded by former Zephyr Peacock India managing
director Sachin Maheshwari and Zipdial cofounder Amiya Pathak, and LoanTap are backed by wealthy
individual investors. The rush among investors to grab the opportunity dangled by these fintech
startups is explained by the fact that smallticket customer lending is a large white space in India.

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