 It is a fine balancing act, you know I was at Expo 86 in Vancouver and this is something I do not know whether you have seen this, it was a huge pavilion, I think it was bigger than this building, this is huge pavilion which says innovations that failed, it was mind boggling, it was mind boggling and it was not only models, they were micro films and videos and all that of innovations that have failed. So a successful start up by itself I would say is innovation and the success of a successful start up is that fine balancing act which he is done, 3 years you said, no your business 3 years business, if a business you know this is a thumb rule, it is not necessary, if a business crosses the 3 years more or less you are okay on track. But from 0 to 3 you really do not know what is happening, you really do not know what is happening. So to answer your question across the board is very difficult, very difficult, yeah. See if you are an enterprise company you should look back, you know there is wonderful videos done and internet 2.0, there is this video on National Geographic special about how companies like yours and others actually made it through, their success stories what did they do, how did Microsoft beat everybody else when it was actually going down, how did Google come up, you know and Microsoft was so dominant player, how did Google come up, what methods it used. In fact Microsoft went to each dealer, he did not have the cash reserves the company had, it was beating the competition was beating it, Microsoft had to go to each dealer and sell it to the people and embed into their things, if it is an enterprise application you should look at dealerships and all, how companies have done in the past if you can see and take that because most companies including Microsoft did not have cash, today they are having lots of cash but their product is same, even now the product is more or less the same 20 years down the line still. So those kind of things if you can look at, they did not spend money but yet they achieved their first 10 things in terms of dealerships and all, it is a very good way to go about, that is my recommendation but apart from that. Good, good, good, take a look, so this is one way we just discussed or which is I would say the way most of us have followed, that we have tried to piggyback ride somebody else because anything else normally does not work out, you must understand that how you need quite a bit of acumen to have good marketing people and in 99% of the cases you cannot start with a team of 5, 10 people, you start with a team of 2 or 3 and if out of the 2, 3, 1 is good, he is out of your company in the next 3, 4 months, marketing people are one of the most elusive characters I have ever met and they are glib talkers, absolutely glib talkers. In these 38 years I can tell you, oh boy, marketing fellow will sell you also, good marketing, yeah, the only thing is that it is worthwhile, it is not easy but it is worthwhile, it is the people who do marketing for you and it is worthwhile to go and talk to them for a limited period arrangement, they are also agreeable to that, a limited period arrangement because the marketing agency works on the system of volumes. So whatever you know they have a structure in place, so whatever is added adds to their bottom line and there are some very good agencies, you have to select and work with them and similarly a separate support service group. As a matter of fact, you know when I started and I built up, I used to handle the entire eastern region for about 14, I mean I was constituted Tony in 14 companies, I am like a partner, so my arrangement with the companies was that I will be looking after the entire eastern region. So most of the companies that I was handling was in office automation, instrumentation, business office. So what I did was, I set up a separate support service group in Calcutta and I had some 12 people, technical people in the industry which was a separate company, it was not part of my company but it took time, it took me nearly 3 years to do that. One question regarding the support service, what my experience actually, I am speaking out of my current problem, when I have a marketing team and couple of them actually handle it, it is working like a feedback loop and only the technical team which needs to modify the product gets involved after that. The support actually by the same people who did the appointment and all, if they are little bit trained, it is helping me but would it help to have a separate support, how would I integrate my feedback system into the product development? There are two aspects to this, one is this question you raised, how do you integrate the feedback system, that is not difficult. You will see that I will be going and talking about what is called a bread and butter line. If you have a separate support system, it does not necessarily, the expertise of that group of people is not necessarily limited to what you are dealing in. So it becomes a source of revenue, it could become, I mean that all depends on what decision you take and it is an excellent source of revenue. So this thing was pricing, what is price and I have written here price is equal to cost plus goodwill, okay, very, very simple. Anybody wants to comment on this? Yes. For a startup company, what will be the goodwill? For a startup company, if there is no goodwill, then there is no profit. Survive. How can they survive? Without having goodwill. How can they survive? Without having sufficient cash flow, without having any marketing strategy. So our friend from Pune, he has the goodwill of the Pune police. So he will get the police people for you. Yeah, tell me, you tell us. Where did you get the goodwill? Basically, it is actually a long story, but somehow we came in contact with the Pune police because we had some case going against some other people. So anyways, so when they ran into this problem, so this person he contacted us and he asked me how can I speed up this process and because he knew me from before. So he contacted me and we told him that we will find a solution for you and we tried but we couldn't find any existing solution. So then he said, why don't you guys write it for me? So that's what we did then eventually. So it was just because we knew him from the past. No, that is one time, but now when you are in business, I hope you're still in business. So how did you generate the goodwill? I mean, I'm sure that you couldn't have gone to every customer and said, you know, I work for the police. That fellow will throw you out if you say that. We sort of like, suppose this fellow called me back, you know, for some changes or for some more additional features. Can you tell us what is goodwill? Goodwill is... The customer's confidence. Yeah. He knows that you want to run away tomorrow. Anybody wants to change that definition? How about you? Why don't you try? So it's basically commitment towards customer. So whatever you commit, there's a common thing like over-commit and under-deliver. It's very important. That is the most important part, to build that trust. Once the trust is there, the customer will never go anywhere else unless and until you are not on... You see, the matter of price is, I very simply put it, it is of course not going to be this simple, but ungeneric terms is your cost plus how you interact with your customer. Now, say look at an area where my friend is working in, which is services. He may be for a short time, there is short duration of time, may be giving the product at a price, now mark my words, at a price, which is less than his cost price, is it possible? Is it possible? Yes, it is possible because that he feels will generate the goodwill he is looking for. So you see the goodwill is the most critical yet the biggest unknown entity in your price factor. You see what happens in most startup companies, we tend to go by a pricing tab, which we see in stores. So you see lux so much, you know wrangler jeans so much, this so much, that so much. You know, this is very interesting, pre liberalization, pre liberalization days, there were no freebies. Even soaps were in short supply. That fellow will say, there will be some rubbish there, post liberalization, you find you go to a store, everybody is giving a freebie, buy two shirts get one free and they are branded. So obviously now with the present scenario, this matter of goodwill is something which is across the board. So do not go by what you see of a MNC fixed price, there is nothing called a fixed price. Sir, regarding this I want to speak, 10 years back we were a manufacturer for shoes for Bata. So we were number one manufacturers for PVC shoes in Delhi. So the cost at which we provided them shoes, let's say it was around between 40 to 45 rupees and the MRP of that shoe, particular shoe in the market was 130 rupees. So that is the goodwill which they are running. They are doing nothing in it, but the goodwill is what they are earning in it. But tell me something, is Bata in the same position today in the market? That is the point. That is the point. See what he says is right, this definition is not sacrosanct, I mean this definition is a pointer. See they did not generate that goodwill. If they had because I do the best of my knowledge they are the oldest shoe manufacturing company in the world, if they had they would have still be number one. And looking at the sort of market networks they have across the country, because what I know is most of their outlets are either owned by them or in long term lease. Who has this? Nobody has this. In spite of that they have not. Yes please. Maybe we can say that goodwill depends upon other factors as well. Bata's products were not that much innovative as compared to the market trains were there. So that is why youngsters, Reebok and Nike conquered them after that because of the innovative products which they bought. Partly you are right. The other part. The competition. The other part is that if you notice since you are there for 10 years that earlier on Bata's will sell their shoes through two types of outlet, their own and through an outlet called BSC, the Bata's shoe company. Today, Bata's shoes are available in every shoe shop. It is not only in Bata's shoe, they are available at every shoe shop. The reason being at a point of time when you have a regulated market and the business being done in a regulated market, Bata was supreme. So they had a fantastic overhead. So the cost, that is what I said that they could not generate that goodwill. There are people who have generated that goodwill even over the years, even today. One and I do not know if you will agree with me, one is this Park Avenue, this Raymond's clothing. I mean they were pre liberalization for a long time, years actually, very old mill. And even post liberalization, now you see all foreign brands and everybody but still they hold their own. The reason they could not generate that goodwill is because they did not try for the goodwill. You know what you said at the very beginning of definition of goodwill, your own definition if you go back to that, Bata did not do what you said they should do for goodwill. So let us understand that goodwill is something which will help you generate revenues. So this is what I was trying to come to. You have to have goodwill. It is nothing to, you know, there are questions like how can a new company have goodwill. Yes, a new company can have a goodwill. This is what you generate, you generate goodwill. You as I, one of the ways is that as I said but you need not go that way. You can still have cost plus and generate goodwill. You went to this man and he had this problem and you could sort out this problem in five days. You have generated a goodwill but suppose you had not been able to sort out this problem then what? Then what? And in majority cases what we find especially in the support service area in this country even today we are way behind. I bought a multi-license antivirus software. So I bought it from my office and I told that fellow load it, he loaded it. So after some time my office fellow said this is not working. So I said it is not a pirated version, it is an official version. So why is it not working? So he called up that job, he said that after you, what do you call that after you register. So they sent an email and that email has been sent and you have to tell us the code from there. So I said I do not see any email and even if it has come it may have come as spam. How do I know what has happened? So that fellow says no unless you get that email nothing can be done. And so it is everything is lying like that. So I have a brand new antivirus software, the vendor says nothing can be done. End of story. What do you do? In my case of course I have not paid him but if you have paid him what do you do? So let us understand this goodwill very well. I do not think that as a new company, as a startup you do not have a goodwill. Can anybody, one, two, three year company, anybody say how you can generate a goodwill? Basically first it will be on your personality and your contacts. First two sales or first two points is your own contacts or your own network of people you will approach and you will take a testimonial or something there. Then you say you work like as if it is your own baby and you take it forward from there and saying that this is the cost I am going to sell it at and you stick to that. It will be difficult in the first two, three times people will say you are expensive, you are a startup, you are not going to get this price and all that. Yet if you stick to your system and you follow your methods, I have a customer who said no to me because of the price. After we interacted with another client and I gave him a testimonial, this is the client and he had another product, competing product. He moved back from them to us because of the experience he had with me even though he is paying almost one and half times to my nearest competition. The only thing is because of the relationship marketing happened because of recommendation that was there because of the reliability of all that and not only that he can call us and we are reachable. As a startup that is the best advantage we have. We can be the first people who will be reachable. We will be the decision maker compared to any big product, big company. That is a great strength for a startup. What worked me for was rather than on the other side of the table, I aligned with him rather than selling the product, I tried to be a advisor. So get the solution to the problem, don't worry about buying my product. If I solve your problem whichever way, next time the guy is going to refer back to me, what do I do in this situation? That has worked for me. This is what the mobile platform is. It could be anything. So for a very new startup, we can use the goodwill of others who are involved in development of a product. For example, if we are manufacturing this type of bottle water and we have to compete with Bislary, then we can say that we can encourage the goodwill of the machinery, machinery suppliers or the name of them. We are using the best machineries which are available in the market or we can compare them that it is being used by Bislary and we are using it. Also, many people are associated with us in the development or upcoming of that product. Say the core team who is involved in designing this product or manufacturing this product, that can be also an plus point. You see, let us again understand the business part of it. What is the business part of it that a startup company would look for a client who is established, who can use his product, who can pay. So there are, let us say who can pay, obviously is established, assuming he is established, not one of the sort of big signboard and no money. I am not saying that, but a person who can pay is established and he is the startup. What is his plus point? You see, one of the biggest advantages that we have today in this country is that across the board industry realizes that we are living in the knowledge driven economy. So a person, a startup today is more than not a qualified person as against what it was 10 years ago that you are talking of, he is a qualified person and he is fairly well qualified. He when he is speaking, like he said, his entire skill of communication, he is speaking. The other fellow sort of in comparison to him has seen it all, he has seen it all. When I speak to a startup company in 5, 7 minutes I know whether he is up to the mark, what concerns me is his delivery schedules, that is the only concern. I am quite sure he is capable, I am quite sure that he will be able to do what he is saying he will do. The only concern is if he says I will do it in one month, I am not very certain about that because you know his setup is not, I mean I have been proved more right than wrong in this. That is the goodwill you have today. You must build on that. When you go to a customer as a new startup, you must carry your CV with you and maybe give it to him. Let him see who you are. It is important. In business is not about buying a product of the shelf. Please understand that. I do not know how many of you know this. Business is more about knowing your background. I want to know the background of this guy who is coming and trying to sell me this. Always, not today always. The advantage today is that your background is your qualification. There is a huge plus today and it is an accepted thing not only in this country across the world. It is an accepted thing that startups are extremely versatile and adapt to change both in terms of technology and in terms of structures which a large company cannot. So, you will create or have to create a goodwill on that to begin with. Subsequently, what will be your goodwill, you are the best judge. That totally depends on how you handle it. You have seen how people spoil goodwill just a few days ago. If you take a axe and chop your own feet, no matter what I say is not going to help. But the initial part as of today, as of now, right here, you are your goodwill. You are your grand ambassador. Please remember that. That is what I said. You know, when he started this discussion, we said that are you the Raja? You have to ask yourself. You must go to the basic. If you are not the Raja, I do not think this is for you, really speak. And then you create your goodwill. And that is what will be the essential price of your product, your cost and then the goodwill. Now, what I have done is that I have combined two slides into this. So it also talks about where you get the commodity goodwill. Yeah. One point about the goodwill, see, we have to understand this in a lot of dimensions. One dimension is when, as a startup, I am selling myself, apart from my company also. I am also going and showing my resume and all that. So we came here, IIT, I have done courses in IIT, I have done courses in IIC, I have done courses from Stanford also. So that particular thing really adds a lot of credibility to the product you are giving compared to anybody else. And you know, it is a really good brand association you can take from doing multiple courses and taking that as a CV of yours and selling that as a startup will really adding a lot of value. True. That's true. Now, what I would request the participants to do is I would like them to do a recap from this slide. I will go back slide by slide and I want you to do a recap and let us see are we connecting things. You know, whatever we spoke, like we stopped at goodwill, our things before that is logically connected to where we have come. I mean, so we do a short recap, so I will request anybody, why don't you start. So we were talking about goodwill for a young startup, how he can leverage on his goodwill. For a big brand, there will be a goodwill, but we are looking at a young startup, how he can have goodwill, like his personality, his CV and his contacts, his personal contacts. This is what one of the things where we left off, I am starting from that. Is there anything else you want to say? No, we go back to this slide previous to that. So why did we come to the word goodwill? We came to the word goodwill because we were talking of the pricing of your product or services. So the goodwill became very important when we thought of accessing the market at a certain price. So that is why we were speaking about goodwill. Would anybody want to add to this? Would anybody would like to add to whether this really connects to goodwill or not or anything else which is pertinent to this slide? If we go back to the one previous to that, what would be the market strategy? So we have the entire option, one is that have your own marketing team, have your own market support or you piggyback ride at least for a period of time with some people. Now if you see this, you have to understand that you have to strategize before you come to a price. You see why price, the slide which says price is after market strategy because you cannot strategize once you have fixed a price. Everything will depend on how do you access the market? What sort of market are you really looking at? Then we were talking of the keyword user friendly. So then that is before we come to whether you strategize, how to strategize? We are talking of your product which you still do not know which product because as many of you said that there is always a confusion about which product to take to the market. So much your view of the product is important vis-a-vis the customer, we came to the conclusion that it has to be user friendly product and who says it is user friendly, obviously the customer. So you need to bridge the gap between your technology and the customer and make the customer feel that he is using something which he can use, let us just put it this way that he can use. So we are calling it user friendly, nomenclature which is very common. In addition to this, whenever we are talking about a startup company and obviously we are talking here about technology startup, the technology startup companies tend to promote technology. We have to all understand and for that matter, the entire discussion features various innovation in technology. So when we are talking of other features, the person will be talking of multiple features irrespective of the fact whether the prime use of the product needs all these features. So what does it tell us? It tells us one thing that let us not clutter up the thing with features, let us also understand that the market is the business, technology will enable that business. So this is one word I have not used but please understand that technology is the enabler. So let us keep that in mind. Then we spoke about, again we spoke about user friendly, then we spoke about how do you really access the market, I mean what do you think is the market and how do you know this is the market. So if you look at the scheme of things, as of now when we have finally come to the word price, before that all this has to be in place. You must know who are the people or which is the domain that you are trying to target and whether that domain is the domain your technology can support. And of course, how do you test the product or service that you have been talking about. Now right here before I continue, is there anything else that you would like to say or point out, yeah. Just to add on the point about Goodwill, I think one mechanism by which at least these technology companies can build a lot of Goodwill in the market is by starting out as product come services companies where they offer consulting or provide some kind of services to their potential customers. That develops a bond of trust because the customer gets to work with you, over multiple interactions they get an understanding of the company both in terms of personal Goodwill one on one, as well as Goodwill as a company in terms of your adherence to deadlines, your product delivery quality, your billing, etc. I think that is one very rather easy but important way to gain Goodwill for companies without spending a lot of money. In fact, you can earn some money out of it. Yeah. When it comes to the pricing, as a start-up, there is also a part which goes on right, which says that what is the price that customer is willing to pay, that is the price, you have to work back your cost accordingly. How do we superimpose these things with the start-ups and the cost plus Goodwill thing? You see, I think this is very pertinent. We have been discussing the issue of price on very simplistic two words, cost and Goodwill. Some of us here who already run business for quite a few years, we understand that our costing in the beginning were not correct. I think it has happened to all of us. So that is one of the areas where obviously we have lost out in the price part also. In the sense that we have sourced our raw materials at prices which are far higher than what available, normally that is what has happened to many of us. The second thing that we have simplified in our assumption here is that the other part of the price component is Goodwill. Now what we have also discussed is that at a point of time, it can happen that you are giving a particular service for a specific period of time at below cost to create a certain level of Goodwill. It is not desirable but sometimes you have no other alternate but to do that. And in many cases, it has paid dividend, many cases. As a matter of fact, when I started my career in business, one of the areas, my friend there said that about giving consultancy, I was a very good sound recordist also. So I used to get a lot of enquiries from large schools, groups, normally the convened groups to set up auditoriums. The first such contract I got was from Don Bosco. And they had some German aid which in 1975 was something in tune of 6 lakhs which was a princely sum. And I had no clue about what German equipment to get and neither was I in a position to support that. I mean I could install it, I knew that but suppose something goes wrong with it, then I did not know how to service that. So after quite a few months of negotiation, I convinced them to go in for an Indian equipment. But I think what happened in that process was that they were little upset that they did not get the German equipment because they had the German aid and all that. And so they were saying that no this price, you see when you set up an auditorium with a soundproof room and then there is a monitoring console and things like that. There are areas which are strictly not technology, I mean it is technology but not electronics. There you have to have soundproof room that is carpentry. You have to have special acoustic ties which have to be fitted by a carpenter. I am not going to fit it. Then there has to be special electrical cables laid down which again is not my job. The electrician has to do all that. So they started bargaining with me on that and I was too new to really know what should be the rates of an electrician or a carpenter and it was a very large setup. It was a very very large setup. So what happened was I landed up really doing it at cost. It took me a month and no surplus out of that. But you know what happened was therefore this was 76 even today I have a relation with that group even today but that time I had made no money out of it. So we come to the next part. The next part I say have you got one of the following tie up with a known company support from marketing groups. So this is ideal actually I mean nothing in marketing is ideal. This is something one would really love to have if you are an OEM supplier and it takes off a lot of your headache. So is it easy to become an OEM supplier? Not difficult really. Anybody here is an OEM supplier? But it is not difficult. Now with lot of products in the market people are also looking around for these sort of technologies from small groups and we have this wonderful case study of these Maruti vendors. They are all small timers at one time. So isn't it? And so I think this is an area which should be explored and explored critically and see that whether the other thing is that I mean I am generalizing here. So I can also give you very good case studies there if there is time. The other thing is I was just talking to my friend Anil here. And what the IT and ITS company in India is the start-ups that is essentially looking for and looking at cutting edge technology in ICT. We really do not have that in India. I mean I have not heard we do not have cutting edge technology in ICT in India. We are very well known for IT services and we I mean we have a name worldwide on that. Now if you look at the sort of business opportunities that is there in the agriculture field where you can enable the entire area which is huge with IT. So if the IT enabled services in agriculture as in sky is the limit. Now in that case it is really not a very big job because now you are probably aware that most of these village panchayat get money directly. So you have to make an effort to get in touch with them and they are good people. You have to show them working models. You cannot give them a papa in presentation. That is true. But many of the panchayats are also very educated. So but if you look at what are the areas where an IT company can go into and there is mind boggling. You can go into bioinformatics in plant biotechnology area. You can go into logistics of the movement of agricultural produce which is perishable. You can look at storage both in terms of the various parameters for storage as also for packaging and storing. Then I mean you can go for what we called the base level of processing. You know there are processes which are very simple because yet this not been done. So these are certain areas which you should be looking into. I have excellent case studies in this. Excellent. I mean you know there are people who have gone into integrated farming. Integrated farming as I understood it I am not from agriculture area. So as I understood it was that you do multi cropping. It is not multi cropping. The fellow is having this is actual case that fellow started with poultry now he has poultry, he has PC culture, pigory, goatory and he is using the you know the droppings of these birds and all that as fertilizer in organic farm and this fellow was doing in 2005 when he came to me he was doing something like 40 lakhs or something. Now he is about 1.75 crores. So he can be and I have spoken to him. He says that I would be grateful if somebody does it but he has to show me obviously. I mean you as I said you cannot go and give him a PowerPoint presentation. That would not work. Support from marketing groups again it depends on what sort of product you have. If you are basically into services then really speaking you do not need support from marketing groups. You should build up your own client. If you are into products it is better you go for a marketing group. The investments otherwise are quite big and you do not have a cushion. If something goes wrong you do not have cushion. If the answer is no you do not have all this then what do you do? This is the basic thing you should do. You know identify the area that you can service. You know I have a saying to this like you are invited to a feast and there is a huge table laden from that door to here. You cannot eat everything that is on the table it will die. So you try to identify what you want to eat and at what frequency. Given that you gobble up then you get bloated. Market is very similar especially in a country like India it is a huge market. It is true it is a huge market. It is unlike countries in Europe and all that. Our markets are phenomenal absolutely. We have a phenomenal market. You know I was again talking to Anil and exchanging notes about his background and all. You know Anil one of the guys I have brought him into capacity building program a chap called Drupad Raja. Drupad Raja is a B.Com chap and he came to me he says sir I will grow mushrooms. It is a very common thing you know these fellow you cannot sell mushrooms. I do not know that you cannot. Mushroom is sold by different technique altogether. So I said okay you want to sell mushrooms sell mushrooms. So after sometime he came back to me and he said as I told him it is difficult he came back to me he said it is very difficult. You can give the mushrooms but you will not get the money. So I told him do not do all this. Let me do one thing why do not you take training in vermicomposting. So I sent him to an R and D lab of the government of India to get a training on vermicomposting. He has become so good he has become a consultant in vermicomposting. Can you beat it? He is just a B.Com. So our markets are huge. You have a product you have a service I mean we have discussed the flow of the market. Now we are coming down to individual basics. We have a product and you think this product will want it by people. You know how many what is the population in this country is about 1.10 billion. You think you can reach even half 5 percent 4 percent. So what is it you want to reach? Now just think what we are talking here about. You select a geographical area that is accessible to you and work out these simple three things cost of your travel, delivery and cost of support services. That is it. You are done. You are done. I am telling you you will succeed. This is a sure shot formula. But you make a mistake here that is you have chosen an area which you know what happens is it has happened in the past it is happening now is that there are people the distributors as we call them. They will have a distribution say in a city like Asansol. Asansol borders with a town called Barakar is a Karathi Damodar river Barakar is in Bihar Asansol is in Bengal there is a sales tax check post but you can walk across the bridge. So they will be sales tax differential. So that fellow will sell in Barakar. He thinks he is making money. He is not he is not making money. He thinks he is making money because he is selling some volume of goods there. But after some time the Barakar distributor he will take his revenge he will do some naughty things. It is very common. It happens in every product line. We must understand that if you want to handle both Barakar and Asansol you take distribution of Barakar also. What I am saying is that in this particular case you are not the distributor you are not the marketing group but when you I am assuming that since you will be doing it yourself the marketing part yourself. So you are like a distributor you have to have a distribution wing. So when you have the distribution wing you must be very clear where you are giving products to whom and at what price and do not try to just extend it locally. Because if you do that the summation of the entire area that you have extended will probably double the geographical area we are initially trying to access and the whole thing will tumble down. Anybody wants to say anything here? If yes if you have that sort of tie up the question is that you do have these sort of tie up we were talking about with OEM and marketing group is a great load of your shoulder no doubt I mean you are far better placed. But you must also understand the market is a dog eat dog policy. Market is tough there are no quarters given and no quarters asked if you if I can sell an undercut to you I will sell an undercut to you as simple as that. Any tie up especially in OEM supplies lasts only to the extent it is not revoked he is your big brother tomorrow you say I do not like your face finished. Then you know what we are educated people we will say you know you have written in clause 14 A sub paragraph 2 is a I do not remember whatever I have written I will take you to court then you are again finished you take a big company to a court you finished absolutely I mean in Hindi there is a saying that the cat fell into the water so the other chap saying may I was going to tie up he was going to show it to you so that you know so one is that your tie up is gone cut your losses and get back and the other thing is that forget about filing any case or anything it does not work with large companies it does not work I would also agree that large companies would not do it but large companies what they do is they use a part of your money to run their business so there is also a problem of payments and that is also cyclic it keeps happening and really speaking if you are a startup company and you want to go in for an OEM contract you have to have a good kitty you cannot do it on something like 25 30 lakhs outlay you need a good size funding and a better part of that funding has to be your own because if you are looking at financial institutions giving you funding that is also very critical area today because the bank loans are very clearly stated I mean which is a paper which you all of us signed that it is called loan on demand so if the bank demands that you give that loan back you do give it back very funny but it is there does the paper you sign all of us sign but then you know what what is to be done if I have a good OEM contract then do I leave it what do I do what do you say what do I do I am a startup company I am hardly one one and a half years I have a good OEM contract what do I do yeah but what about money and all that yeah then the other I do not have you can understand startup company as I said 25 even I am saying there is a larger figure 25 lakhs outlay very few startup companies have assuming they do have but then you need an OEM contract anywhere would require a 1 crore plus how do you do it huh no no no subcontract we have finished you get somebody to take some equity in your company yeah not the financial you see you can you can get somebody to take equity he can also be an working partner and if you have a good contract then you will get somebody to take in equity in your company so it is you know then the entire ball game changes you know like what we were speaking earlier up to goodwill if you are asking somebody to take an equity in your company financial what he is saying I do not agree because there are finances in the country but finances work on a separate system also very similar to our financial little more tough than the venture capital fund managers but they are they look at the fixed amount of return in their capital every year which is normally about 2 percent a month so that is very difficult sometimes to achieve yeah I have OEM it is business is confirmed you know marketing yeah you do not buy at the same time you know how OEM pricing is done OEM pricing they will break it down to absolute basic raw material cost and they will fix your overheads and say so much percent overhead and then they will say the give me so much volumes and we will do not worry we will revise the price after one year is never revised yeah so but you know the business is definitely a risk venture what he is saying is correct I mean it is a risk venture it is not is no absolutely sure sharp that this is the way and the other way is not the way but if you do get a OEM contract you must look into it well and it is definitely worth going into that but please remember the rules of engagement changes when once you have somebody as an equity partner in your business I have different take on this okay when we are looking at the equity equity we have to understand is the most expensive form of taking capital or financial needs if it is just finance that is what you are getting because of that approach I would recommend go to a finance guy you know it is better because he will charge you at least an interest and you are clear there if it is just money that is you are getting from an equity holder sometimes what happens is you get to enter venture capital relationship where you get the relationship advantage they already have a network and your sales will shoot up instead of 10 there will be 100 obviously you know in 10 crores you having 30 percent is better than in 50 lakhs having 100 percent if your sales are increasing because of the tie up and there is a financial advantage it is a very ideal tie up but sometimes it we are not in that situation we have to run the show we have to take the money we are where we have to be in that try private financing if it really doesn't work then you know I have to ask you one question the question is one point you have missed out in private financing which if you can also elaborate on that the private financer doesn't give you a finance for an extended period of time and normally these are hoondies which circulate for three months it can you can have an arrangement for six months the thing is if he calls it back and your business is on you are in big trouble so that is one point why I said that yeah that's true in that lines I mean from where you're taking the finance at all depends on you also the sale it puts a lot of pressure on you to put focus on sales and try to move the product and try to get the sales rolling apart from this my question is if we have to do it at early stage seed stage and you know takeoff stage you know I would call it seed stages where your idea is there equity at seed stage what do you think of these three no I have never spoken of equity in my previous part of the presentation the equity comes now because we are looking at phenomena today is really a phenomena where there are youngsters with some some of them excellent ideas now what we do not see is that I mean probably it is there but we don't see it so often we do not see a fair amount of those products in the market you understand what I mean so probably it is there in very narrow geographical areas so one of the reasons why we do not see them in that the market as we know it is probably because that they are unable to access that market we are looking at the sort of other issues like marketing support funding and all that which needs to be in place now if this particular group which obviously cannot happen to everybody if particular this group do get an OEM support suppose they do get an OEM support then why not as a matter of fact I was traveling the other day from Calcutta Bhuganeshwar I met a gentleman senior gentleman who in 1972 has set up a bullet proof glass manufacturing unit in Jaipur now of course long years he it was a small unit he brought technology from Germany now over the years he is one of the prime suppliers to DRDO to defense and things like that he is assured market but I haven't spoken to him but one thing I can assume that obviously he was not that size in 72 then what he is today but the fact is that in 72 he may not have had the contract also those days we never worked in that sort of system but over the years he has an assured business because his business is an OEM supply that he told me he said the police and defense are his customers so that that is something which we are not seeing in the present young group that is around us and I am sure that it may so happen that some of their excellent ideas are not seeing the light of the day because of some wrong structuring yeah who wants to comment on this when you have clear cut orders from OEMs even banks are willing to help you towards say the working capital operations at least so if you have clear cut orders and the OEM to whom you are supplying are big companies so the comfort level is very high and so far as the funding is concerned you may be even able to break it up like long term what you require and say working capital what you require and even the your customer may be able to help you a little to this extent in this some of my friends here already in business what is your experience about banks giving working capital no let us share suppose if you are working for somebody else no no I am asking basic question that do you what is your experience with the bank yeah that's what I am saying working capital if you are working for OEM then it's better not going better what is your experience I am asking they provide working capital in that case yeah no no how much working capital they provide do you do you are you aware of the fact that your supplies to a company even an OEM is treated by the bank as non secured these are non secure debts so are you aware of the fact yeah yes so that you only up to the 20 to 25 percent not more than this the total balance sheet not balance sheet nothing to do with balance sheet so these are non secured debts so the banks will have a system of working your sales and they have a system of working the volume of sales these are the non secured debt and that amount which as they gave as working capital is a pittance as a matter of one of the biggest problem is that one on paper the finest lender is Sid B on paper if you look at the they have a book Sid B as a book if you look at the book you will find that that is the best place to take money and one of the reason is that they have a limited client base and they give you excellent service the fact of the matter is they do not give money yeah they do not give money and whatever money they give they give for capex and that also I think about 50 to 60 percent they give a capex so even though commercial banks are also lending the money by flushing some assets sorry commercial banks like any other SBI or Kenra Bank they are also providing working capital on the basis of by flushing assets no no you see if you mean assets means as collateral security that is to no problem you have to wanted because of land and you want one crore anybody will happily give sir one more problem is there in case of some of my friends having a lot of lands no I was more interested in knowing actually my friends here who are taking working capital from the bank and how much are they getting I just want to share that yeah if I can yeah we have a working capital loan approved OD facility it's not even a working capital it's like an overdraft we have two three banks and the over total overdraft from one bank I have is 24 lakhs and what is your if you don't mind what is your turnover and 2.2 crores so that is the ratio so even if you break it up into monthly thing he has to manage quite a bit if you look at the cash turnover I mean the wonderful cash turnover is three months that is you know very good business so how much he makes up on his own and listen he is a running business so what we are trying to understand here all of us I am also trying to be educated by you because as a startup what is your experience is something I also don't know what I am trying to understand from you is that what is the situation with your banker if you are having a banker now who has given you certain facility and how much do you think they will support you if you go ahead and sort of tie up with a OEM you see let us not go into I am sure that all of us would like to know what is actually happening on the ground because this is something this discussion is something which will also help you think about it in actually from tomorrow in your own business that yes I can do this you know this guy has done it so I should really can also go and do that I just want to share a couple of things to all before you do that I will tell you a very interesting story so we run medical centers in character so bank I know loan from any bank so the banks are after us to give money and one of the very famous banks top most bank they are giving us a letter saying that at any time you can take 5 lakhs from us without any security so I say thank you recently we approached the bank for some renovation and we wanted a small amount of 2 lakhs banks said no no money we do not have money to give now we are in bad shape yeah please we have to understand the resistance scenario here while the loan was approved and overdraft was there the banker told me that after my case was approved they were not giving because they had AGMs and DGMs telling them not to give whatever is the case sometimes you get lucky sometimes you are not but it really helps if you have an 8 to 9 month track record with one bank all your transactions are with that bank about 7th month standard chartered ICICI and 7th or 8th month you should give an unsecured working capital up to 10 lakhs most banks DCB ICICI any bank will be able to give you if you have a running current account with them for 8-9 months I mean that depends on your relationship with the manager also yeah bank actually they look into how is your your datas are behaving so they have a system of studying that no but you know coming back to our original surmise that what do we do I mean you know this is a basic question what do we do so this is something which there are no solution to very distilled very recently now the government has proposed that CIDB would give they will have a corpus of 2000 crores and very shortly CIDB will structure it and probably that would be a way out I wanted to share this with you