ALCOR Presentation

W W W . A L C O R F U N D . C O M

India Strategic Market Entry

• Background about ALCOR

• Eric Cohen – Growth Strategy – Why India

– Opportunities

– Attractive markets

– IP Protection

– Funding growth

• George Molakal – Strategies and Rationale for India market entry

– Benefits of cross border JV/Alliances – India Focus

– Government Controls - India

– Indian Legal Framework

– ALCOR and Processes, Deliverables, Milestones

– Case studies

– Next Steps

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

• Education: MBA Harvard Business School, B.S. Eng. Univ. of Wisconsin

• India & China Lead Trader, GE: Tech transfers, JV, suppliers dev., acquisitions

• CEO, Ampere: established multiple JVs in Asia

• GM, MAT: largest Chinese PEG. Acquired companies India & worldwide

• Managing Partner, WHI: PEG acquired 21 companies. Asia Greenfields

• President, PPS: Indian Co. (Chicago) ops in India and U.S.

5/11/2011 ALCOR - Strategic India Market Entry

ERIC COHEN

3

Indian 8% GDP growth & 8th largest economy in the world

Demographics: one of youngest countries in the world, average age 25

Consumer driven (not government demand). Additional 40 mm wealthy consumers ($1m+ earners) within 10 years.

IT infrastructure with the U.S.

Indian Judiciary, British law based

English language

Low cost labor & large labor pool (domestic, L1 transfers)

Trend China -> India: Physical infrastructure, IT infrastructure, FDI, costs 5/11/2011 ALCOR - Strategic India Market Entry 4

U.S. companies : low costs labor, high growth markets

Indian companies: technology, brands, access to $16T U.S. market.

Window of opportunity for value creation before equalization


Value

Creation

Acquisitions Joint VenturesGreenfield

partnershipsSales Office

More Value

Creation/

Harder

Less Value

Creation/

Easier

5

• Telecom- 4G network build out to serve high data expectations

• Infrastructure- High transaction costs arise from inadequate and inefficient infrastructure. Will be GDP bottleneck.

• Power- demand going up exponentially. Currently 2/3 coal based.

• Water- wastewater, agriculture, commercial purity

• Agriculture- food inflation faster than lower class wages, social issues

• Food processing- middle class growth

• Precision machining- turbine, close tolerance

• Private education- problem with cost & quality. 90% Univ grads unprepared. Soln: WIPRO, private, online, U.S. universities


Advantage of India vs. others is rule of law. Ex. Office of The Controller General of Patents, Designs and Trade Marks.

But rule #1, don’t rely on the law for IP protection

Trusted advisor or partner Local partner with skin in the game

Deep diligence- private eye example

Creative business structure (advisor can assist). Ex., supply controls/ electronics, ship to 3rd party company, multiple suppliers coming into final package.


Funding Type Cost Indian Partner Little to no capital if you bring value

Cash flow Low

U.S. Senior debt Low (L+300) but usually not available

Indian Senior debt Med (L+1000)

Mezz debt Med- high

Equity High



• Education: MBA, PLDA, PEVC : Cardiff University and Harvard Business School.

• Fellow : Ashoka Innovators for the Public, and actively set up the National Organization for Tobacco Eradication(NOTE) in SAARC Region (7 Countries).

• CEO : ICAN Healthcare Ltd – Built ICAN to a national organization spanning 20 cities in India pioneering managed care.

• International Director M&A: WORBUS Global Group of Companies. Completed 30 plus cross border transactions and worked in England, Kuwait, Toronto, Shanghai and Mumbai setting up cross border M&A deals globally.

• Directorship : In several companies globally such as – KASA Anlagen, Emdet Neff, MDI India etc.

• Principal and CEO . ALCOR Fund – US & India Operations, executing more than 15 global M&A transactions, and Investments above $250 million USD.


GEORGE MOLAKAL

10

By deploying a global growth strategy through Joint Ventures and Acquisitions, the sales revenues, the share price and the global brand value of American Company would grow higher, permitting American Company to serve more customers, hire more people, and maximize wealth for its shareholder and stakeholders



• Grow the top-line

CUSTOMER

ACUSTOMER

BCUSTOMER

C

American

Company

Acquired

Emerging Market with High Growth & High Demand

India China

A B C A B C

INDIAN

Merge

CHINESE

Merge/

Acquire

FOLLOW YOUR CUSTOMERS GLOBALLY

12

Global Automotive Players

Global Automation Players Global Electronics Players

The number of middle class population with high spending capacity is more than the population of America. Coupled with the low cost manufacturing ability, the market is out there in India. All the global big names in industry are setting up presence in India

If your customers are in India, it is only prudent that you follow them as well.



Grow the bottom-line

Increase sales revenues By 70%-80%

Selling in Emerging High growth Markets

Low-cost Manufacturing base

Competitive pricing to defend the core & grow- 30%-50% growth

14


• Grow the global revenues : top-line

15

5/11/2011

Fund : Invested Company Strategy I

Most American companies do not have:

a) Low cost manufacturing base

b) Sales presence in high growth markets

c) High value chain integration capability.

• The “technology and processes” of American companies should be leveraged with similar low-cost base companies in emerging, high growth economies. This powerful combination will result in building a globally sustainable company’ through the four fundamental pillars of growing a global company.

Technology &

Processes

High growth market

Low Cost

manufacturing base

High Value chain

integration capability

ALCOR - Strategic India Market Entry 16

JVPartners

American Company

Local Management

Manufacturing

Capacities

More Industry Verticals

More ProductVerticals

Commercial Excellence

Low CostManufacturing

DomesticCustomer

Base

MNC Local Customer

Base

Global

American

Company

Current Strengths of

American Company

Build American Company brand locally

Cultural Mix

Newer product verticals &Industry Verticals

Revenue Enhancement

Varied range of products

Cross BorderMarketing Team

Building Company Globally

100% AssetUtilization



Current

Market

May be

Lost Market

Pricing Index

Business Lost to low cost manufacturers

Sometimes gets awarded, sometimes lost

Currently catering to markets that afford higher pricing

High Price

Medium Price

Low Price

American companies target the small market ( red) because of its technical strengths and its capabilities of producing high quality critical parts. Easy parts are low priced and are picked up by others, but do add a lot of value for sales revenues


Innovators Makers Component Manufacturers Integrators

Mechanical Design

Mechanical Assembly

Systems Architect Design

Level 4-Level 5 Integration

Electromechanical Integration

Drives and Peripherals

EMI

Plastics Sheet Metal

Fans

Cables

Basic System Test

End-User Configuration

Power Supplies

Final Systems Test

Software

Sub-Assembly Test

Backplanes

* Up to Sixteen Opportunities for Margin Stacking

* Margin stacking is a problem; it's not clear how all the links

in the supply chain can make money, or how much savings

could be offered if they were consolidated

5/11/2011 20 ALCOR - Strategic India Market Entry

Innovators US/ India;

Mechanical Design

Mechanical Assembly

Systems Architect Design

Level 4-Level 5 Integration

Electromechanical Integration

Drives and Peripherals

EMI

Plastics Sheet Metal

Fans

Cables

Basic System Test

End-User Configuration

Power Supplies

Final Systems Test

Software

Sub-Assembly Test

Backplanes

Component Manufacturers

* By consolidating the supply chain into a single source for

all parts and services, a majority of the margin stacking is

eliminated, resulting in significant cost savings

* Up to three Opportunities for Margin Stacking


A marketing team will visit these potential targets pitch for the Joint Venture

• MNC customers in India

• Various Product Verticals

• International Procurement Offices IPO’s

• Captive Exports – American Company as platform to NA

• Global markets through JV

I P O Customers

MN

C India

n C

usto

mers

NA Platform vide-

American Com

pany

Indian

Pric

es

Captive E

xports

–

Americ

an Com

pany

Branding

Dom

estic

Manufa

ctu

rers

US

Techn

olog

y

Custom

ized

Solution

US- India

JV


American Companies can choose whether to unlock this added value

• Worldwide sales / Global Customer Base

• Multi Geographical presence

• Ability to manufacture low cost and high complex products.

• Benefit from the higher multiples applicable in India

American Company

would get an added multiple

arbitrage increase – 3X +

Sales revenues shoots upwards

Boost Profits - EBITDA

Business Risks mitigated



Design

Manufacturing of parts

Assembly of components

Packing and logistics

Customer Service

Core parts manufacture

Integration and Tests

Design

Manufacturing of parts

Assembly of components

Packing and logistics

Customer Service

Core parts manufacture

Integration and Tests

7%

7%

6%

5%

5%

8%

6%

US Company East Asian Company


Did you create a competitor ? YES !! – YOU DID

Risk Mitigation

• If sourcing : You must have equity partnership for the intangible value of knowhow being transferred, unless it is very simple part (commodity)

• Joint Venture for captive sourcing mitigates these risks.

• Finding the right factory

• Negotiating prices & intangible equity with convertible options to JV or Strategic Alliance.

• Oversees the tooling

• Monitors the factory production

• Conducts quality inspections, financing, insurance, customs clearance

• Executes delivery right to your warehouse.

ALCOR has a “right

sourcing” team, that

handles




Typical JV Contribution

Cash Investment Machinery / Old

Equipment

Intangibles

• Technology and Process

• Business Commitment in India

• Global and Captive Business Commitment



Pre determined Price

India Co US/EU CoGlobal Sales

Team

Sales

$XX Million

Threshold

Buy In

Customers

U1 U2 U3 U4

Contract

TBi

Direct Buy in with Tangible & Intangible

India Co US/EU CoSWITCH

50

51%

Equity Swap

Model

1

India Co US/EU Co

26%

35%

49%

50%

Year 1

Year 4

Year 3

Year 2

Mbi Model

Minority Buy In

Intangible + some cash

Bc/ C

Bc/ C

Bc/ C

2

3


Important step in deal creation

Partner identification


Details on ALCOR


Global Board

M&A

Corporate Finance

Equity Capital

SME Fund

S2

S3

S4

S1 T1

T2

T3

T4

SME – PE

SME - Debt

Cross Border

Joint Ventures

Complex Debt

Venture Capital

Private Equity

Acquisitions

Project Finance

ECB



India Head Office in Pune Metro offices through Associates -Delhi (North )

-Mumbai (West & Financial Capital)

-Chennai (South)

-Kolkata (East)

Direct Employees : 30 Associate offices (Business

Development : Chartered Accountants private offices )

48 Locations across India : Spanning A, B and C Class cities.


Automotive

Power

Telecom

Electronics

Software

Real Estate

Education


George Molakal MBA, PLDA, PEVC – CEO

Studied with honors at Cardiff University and Harvard Business School

30+ cross border Mergers & Acquisitions transactions from US to India,

MENSEA & China : 2004-2010

Wide global experience working in multi continents – Europe, Middle-east,

India, China, Canada and United States, and was CEO of ICAN a managed care

company

Fellow of Ashoka Innovators for the Public – Arlington, Virginia

http://www.linkedin.com/in/molakal

Pradip Shah MBA - Board CA First Rank holder and Graduate of Harvard Business School. Founder Managing Director of The Credit Rating Information Services of

India Limited (CRISIL), India’s first and largest credit rating agency Prior to founding CRISIL, Mr. Shah assisted in founding Housing

Development Finance Corporation (HDFC), India’s first retail housing finance company, in 1977.

Holds Directorship positions across several listed companies, charities and government boards.

Floated the first PE fund for India and has wide track experience in funding PE projects.


Team Biographies

Thomas Mathew LLB MBA MSP –Board Graduate of Symbiosis Law School , GBS – UK Successful track record intricate legal corporate structuring and

legal compliance in cross border M&A. Global work experience in Asia, Europe and Americas Has wide experience of 12 years in corporate legal structuring and

deal finalizations across geographies.

Art Holbrook MBA - Board Graduate of Harvard Business School. Has over 30 years of

entrepreneurial experience in multiple businesses serving in various capacities as President, Principal and General Manager.

Member of the Board of Directors of several private equity owned ventures.

Founded multiple private equity startups.

Led a successful acquisition of privately held investment in the Cable TV and Satellite Communication industry. (successfully operating, horizontally expanding and ultimately selling the businesses)


Jim Ward - Board 25 years experience in the manufacturing space from Aerospace to

Automotive, and has led teams for dynamic growth of companies in North America. Jim also

has varied expertise in cross border dealings set up multiple Joint Venture operations and focuses on bringing in

outstanding results

Mike Katz MBA - Board Graduate of Harvard Business School Successful track record of turning around companies into highly

profitable units. Built growth and leadership in corporations. Has worked with GE and Cummins in various senior positions

across the world.

Sunil Bedekar - Execution Team Head

Chartered Accountant and Former CFO with Deepak Fertilizers, Endurance,

Bharat Forge .

Track record of growing companies by 6X through cross border acquisitions,

business transfer and mergers.

Detailed and complex cross border financial structuring experience


End to End Solution One Stop Solution

America/ Europe Market

Research team identifies

companies who can use ALCOR

Growth Strategies.

Global Staff approach and

present growth strategies.

M&A Process commences.

ALCOR is engaged for 5

years.

India/China Market

Research Team identifies companies who can partner with

agreed American/Europe-an

companies.

India Staff approach and

present growth strategies.

M&A Process commences

ALCOR receives commitment

and co-engaged for 5 years.

Effective Knowledge management : ALCOR Global Team


Engagement

Letter of Intent Term sheet

Business Plan Modeling

Agreement+

Financial Model

JV Agreement (draft) &

structuring

Success : & Share transfer

Ongoing 5 year support


We are local, and we know the market conditions, the players and the opportunities.

We have feet on the ground in 50 plus cities, coupled with our experience and growth strategies with dynamic execution , makes ALCOR ideal choice


Assist the Company to leverage globally

Deploy Private Capital through Finance or Equity

Provide end-to-end solutions.

Develop Growth Strategies & mitigate risks.

Evaluate Opportunity and Potential.

Conduct Due-diligence.

Win-Win to build fair and mutually rewarding long term solution.


• Identify and set target parameters and then visit.

• Letter of Intent (post visit to Indian companies)

Primary visit potential Indian companies

• Business Plan and Financial Model

• Term Sheet

Visit by Indian Company

• Acquisition/ JV Agreement

• Shareholders Agreement

Acquisition/ JV Structure/Contracts



Alcor Fund

www.alcorfund.com


http://www.alcorfund.com/

http://www.alcorfund.com/

Leadership & Management

ALCOR Presentation