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India Strategic Market Entry

WWW.ALCORFUND.COM

Background about ALCOR Eric Cohen



5/11/2011

Growth Strategy Why India Opportunities Attractive markets IP Protection Funding growth 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
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George Molakal

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.

ERIC COHEN

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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
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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 Ventures

Greenfield partnerships

Sales Office

More Value Creation/ Harder

Less Value Creation/ Easier

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

But rule #1, dont 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.
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Funding Type
Indian Partner Cash flow U.S. Senior debt

Cost
Little to no capital if you bring value Low Low (L+300) but usually not available

Indian Senior debt Mezz debt Equity

Med (L+1000) Med- high High

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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 GEORGE MOLAKAL 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.
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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
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Grow the top-line


FOLLOW YOUR CUSTOMERS GLOBALLY
CUSTOMER CUSTOMER CUSTOMER

American Company Acquired

INDIAN Merge

CHINESE Merge/ Acquire

India

China

Emerging Market with High Growth & High Demand

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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

Global Automotive Players

Global Electronics Players

Global Automation Players

If your customers are in India, it is only prudent that you follow them as well.
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Grow the bottom-line

Selling in Emerging High growth Markets

Competitive pricing to defend the core & grow30%-50% growth

Increase sales revenues By 70%-80%

Low-cost Manufacturing base

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Grow the global revenues : top-line

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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

Low Cost manufacturing base

High growth market

High Value chain integration capability

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Local Management

Manufacturing

Capacities

Cultural Mix

More Industry Verticals More Product Verticals JV Partners

Newer product verticals & Industry Verticals Revenue Enhancement Varied range of products

Commercial Excellence

Cross Border Marketing Team 100% Asset Utilization

Global American Company

Low Cost
Manufacturing

Domestic Customer Base

Building Company Globally

Build American Company brand locally MNC Local Customer Base

Current Strengths of American Company

American Company

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Pricing Index Currently catering to markets that afford higher pricing Sometimes gets awarded, sometimes lost

High Price

Current Market

Medium Price

May be

Low Price

Lost Market

Business Lost to low cost manufacturers

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

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Systems Architect Design

Level 4-Level 5 Integration

Sheet Metal

Mechanical Design

Plastics

Basic System Test

Fans

Mechanical Assembly

EMI

Drives and Peripherals

End-User Configuration

Software

Cables

Electromechanical Integration

Power Supplies

Final Systems Test


Backplanes * 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

Sub-Assembly Test

* Up to Sixteen Opportunities for Margin Stacking


Innovators
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Makers

Integrators

Component Manufacturers
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ALCOR - Strategic India Market Entry

Systems Architect Design

Level 4-Level 5 Integration

Sheet Metal
Fans

Mechanical Design

Plastics
Drives and Peripherals

Basic System Test

Mechanical Assembly

EMI

End-User Configuration

Software

Cables

Electromechanical Integration

Power Supplies Final Systems Test Backplanes * Up to three Opportunities for Margin Stacking
* 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

Sub-Assembly Test

Innovators
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US/ India;
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Component Manufacturers
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In d

A marketing team will visit these potential targets pitch for the Joint Venture MNC customers in India Various Product Verticals International Procurement Offices IPOs Captive Exports American Company as platform to NA Global markets through JV

I P O Customers
ers stom

estic Dom cturers ufa Ma n

an Br

n Cu

U hn S ol og

di ng

India

Te c

MN C

US- India JV
d i ze om on st luti C u So Pr i ce ia s

N Am A P er latf i ca o r nC mv om ide pa ny

ts or any xp m p e E Co tiv n ap rica C e Am

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American Company would get an added multiple arbitrage increase 3X +

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

Sales revenues shoots upwards Boost Profits EBITDA

Business Risks mitigated

American Companies can choose whether to unlock this added value

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US Company
Design
Core parts manufacture Manufacturing of parts

East Asian Company


Design
Core parts manufacture Manufacturing of parts

7%
8% 7%

Assembly of components
Integration and Tests Packing and logistics

Assembly of components
Integration and Tests Packing and logistics

6%
6% 5%

Customer Service
Did you create a competitor ?
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Customer Service
YES !! YOU DID
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5%

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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.

ALCOR has a right sourcing team, that handles

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.

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Intangibles Technology and Process Business Commitment in India Global and Captive Business Commitment

Cash Investment

Machinery / Old Equipment

Typical JV Contribution

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Equity Swap Model Direct Buy in with Tangible & Intangible

1
India Co

50 US/EU Co

SWITCH

51%

Mbi Model Minority Buy In Intangible + some cash 26% Year 1 Bc/ C India Co Bc/ C 49% Year 3 Year 4 Bc/ C
Contract TBi Customers U1 U2 U3 U4

35%

Year 2 US/EU Co

50%

3
India Co

Global Sales Team

Sales $XX Million Threshold Buy In

US/EU Co

Pre determined Price

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Important step in deal creation Partner identification

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Details on ALCOR

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Cross Border Joint Ventures S1 T1 M&A Acquisitions

ECB S2 Global Board S3 T3 Equity Capital T2 Corporate Finance Complex Debt Project Finance

Venture Capital Private Equity

S4

T4

SME Fund SME PE SME - Debt

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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.

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Automotive

Power
Telecom Electronics Software Real Estate

Education
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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), Indias first and largest credit rating agency Prior to founding CRISIL, Mr. Shah assisted in founding Housing Development Finance Corporation (HDFC), Indias 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.
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Team Biographies
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)

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.

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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
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Effective Knowledge management : ALCOR Global Team

America/ Europe Market


ALCOR is engaged for 5 years.

India/China Market
ALCOR receives commitment and co-engaged for 5 years. Research Team identifies companies who can partner with agreed American/Europe-an companies.

Research team identifies companies who can use ALCOR Growth Strategies.

M&A Process commences.

Global Staff approach and present growth strategies.

M&A Process commences

India Staff approach and present growth strategies.

End to End Solution


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One Stop Solution


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Engagement Letter of Intent Term sheet

Ongoing 5 year support

Success : & Share transfer


JV Agreement (draft) & structuring

Business Plan Modeling Agreement+ Financial Model

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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

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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.

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Primary visit potential Indian companies


Identify and set target parameters and then visit. Letter of Intent (post visit to Indian companies) Visit by Indian Company

Business Plan and Financial Model Term Sheet Acquisition/ JV Structure/Contracts


Acquisition/ JV Agreement Shareholders Agreement

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Alcor Fund
www.alcorfund.com

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