Markdowns For Unicorns Are A Message That Businesses Need To Become Sustainable.
Entrepreneur Media caught up with Mohandas Pai, Chairman of Aarin Capital to know more about Make In India, StartUp India initiative and what the future holds for investors. Pai was the Chief Financial Officer at Infosys from 1994 to 2006 and was an integral part of the Infosys team that enabled the first listing of an India-registered company on NASDAQ . In 2006, he voluntarily demitted the office of CFO to lead efforts in the areas of HR and Education & Research.
There’s a lot of talk about allowing valuation. As an investor what would you suggest entrepreneurs who are going to raise funds?
Valuation is a function between the buyer and the seller. The people who want to invest, suggest a price, and depending upon the supply and demand the price will be set. There will also be negotiations. My advice to everyone would be, raise money and keep the money in your bank, and don’t be deterred by cash because if you’re gaining money and losing cash, you’re going to run dry.
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Startup India will do well no doubt about that. But Make in India will be much more difficult, because of the added restrictions and regulations, the supply chain costs are very high. Make in India should start a program for reducing the cost of businesses. Supply chain cost in India is 14 per cent of their GDP, China is 6 percent and America is 5 percent. We need more initiatives in that area only then will manufacturing
become feasibly cheaper.
Have you seen any impact on the manufacturing sector post Startup India initiative?
Yes, I think the manufacturing sector is experiencing positive growth, they are looking for investment and even though they are struggling right now they will do well. I think it’s positive because of the efforts by the current government.
What do markdowns at unicorns indicate?
The markdowns for the unicorns are a message that businesses have to become sustainable. You must build loyalty not on discounts but on customer service on ease of things getting done. I think it is an important step in the maturingof the market. There is a lull because people threw a lot of cash and built up companies with huge valuations. But the valuations went ahead of the inherent value of the company. Sometimes valuations go much ahead of the market just like in the case of the stock market, then it has to catch up; it’s the same process.
Whi is a perfect investor and a perfect company for you?
The perfect investor is the one who nurtures and works with entrepreneurs and becomes their partner. He should nurture and help the founder in every possible way. A perfect company is one which is extremely focussed and pickyabout what they do. They should be fully devoted and work as one team and do great stuff 24X7. Big things like holidays and work life balance will not be there because entrepreneurship is a very difficult proposition. Only some peoplecan become entrepreneurs and they should retain this speciality.
Do you see any particular domain benefitting from this Make in India campaign?
I think the growth will be across the board to all.