News Network, December 29, 2006
Stock prices of emerging sector companies are creating
new peaks in the Indian stock market. But the real
action in the emerging sector is in privately-held
companies or companies which are now gearing towards
the next round of growth.
ET brings you a list of 10 ET hot companies in the
emerging sector. These companies are being watched
closely by venture capital and private equity funds
as they are ‘industry disrupters’.
Investors, private equity funds and merchant bankers
will be chasing these companies in 2007. Most of these
companies have reached a critical size for take-off.
The common thread among all these companies is their
unique business model and the enormous drive of the
entrepreneur team that feels it can change the way
the world works.
Avnish Bajaj, a former entrepreneur and now with VC
fund Matrix Partners, says: “While the ecosystem
is not perfect for start-ups, the really smart and
hardy entrepreneurs have already created scale and
size. They will be the cheerleaders for the next generation
Therefore, our list has reached a critical size. It
spans emerging industries across medical equipment,
manufacturing, retail, mobile & Internet, IT and
BPO companies. The companies are not ranked in any
particular order as we feel that all of them are too
different to be compared or ranked against each other.
Kanwaljit Singh of Helion Venture Partners, says:
“Domain specific and high value outsourcing
businesses will be a major hot sector for investment.”
Chennai-based BPO company SlashSupport, started by
Shiva Ramani and Shiv Kumar is one such company. The
company started with providing tech support to open
source software companies, a rich and virgin territory
untouched by global BPO companies, even Indian IT
SlashSupport has raised two rounds of funding, and
its first investor Baring Private Equity divested
profitably in favour Softbank Asia Infrastructure
fund (SAIF). SlashSupport is the only BPO company
from India, which is offering tech support directly
It’s created a brand in the US called SupportMinds,
which provides tech support for a fixed fee to consumers.
While most BPO companies offering tech-support are
working at the backend of hardware companies, SlashSupport
has a new business model. Competitors and investors
are closely watching the company as it has reached
a critical size.
Our next company, OnMobile, is a value-added mobile
product company. The company was given seed funding
by Infosys. OnMobile has raised three rounds of funding
in the past six years. In October 2006, it secured
strategic financing of $27.8 million from Deutsche
Bank, Goldman Sachs & Polygon Investment Partners.
The company has reached a critical size, touching
around 120 million telecom subscribers across the
world and around 1.4 billion mobile calls that are
routed through its system. In 2007, there are chances
that the company might hit the public markets. Mobile
value-added services is becoming a hot sector for
VC investment and OnMobile is one of the leaders to
watch out for in this space.
In the much-talked about BPO sector, Mumbai-based
Hurix Systems is an e-learning company with 450 people
that is expecting to double its headcount in two years.
The company is poised for growth, it raised its first
round from Kotak Private Equity fund in 2000, and
will be raising its next round of funding in 2007.
Retail is hot and will remain so, though the focus
will shift to regional and specialised retailers players.
This is where Provogue and Vishal Mega Mart, two of
our hot companies in this sector, come to play. Provogue
has all the edginess of a first generation entrepreneur.
VMM started as a humble one-store enterprise in 1986
in Kolkata and has today grown to be a 46-outlet chain
across 34 cities. VMM is the first hypermarket chain
in India and also claims to retail the largest collection
of goods and commodities sold under one roof in the
The company is now poised for capital expansion and
growth in 2007. We have two companies, riding the
wave of domestic IT growth, the domestic market is
the fastest growing IT market in the world.
CMS Computers and Allied Digital are two such companies,
which are well placed to capture this growth. Started
by Ramesh D Grover, an ex-IBM professional, CMS Computers
is the second largest domestic IT services company
in India, with revenues in excess of Rs 500 crore.
When the economy grows at such a rapid pace, there
is bound to be consumption across sectors. The flip
side of this growth is the rising demand for better
healthcare. We have two companies in this sector -
Thyrocare and Relisys.
Relisys is likely to hit the public markets in 2007.
The company is the only domestic manufacturer of medical
stents. Thyrocare is the world’s largest thyroid
testing laboratory, with a network of franchisee labs
across the country.
Mr Singh says: “Companies focusing on the Indian
consumer is a hot sector for VCs. Apart from the generic
mobile and Internet businesses, models targeting specific
consumer needs, for example, local information (yellow
pages), education, transaction-based mobile services
like movie ticketing; m-commerce, etc., will be the
focus.” Now this is why we selected JiGrahak.
We found it having an interesting business model.