2001

New VC Numbers Reflect Growing Clout of Indo-Americans

In July 2001, the IndUS Business Journal published its first annual survey of venture capital raised by U.S.-based, South Asian-run companies, finding that such companies raised $2.85 billion in venture funding from the beginning of 2000 to the second quarter of 2001.

The $2.85 billion figure, which newspaper researchers said is almost certainly a conservative number, amounts to 2.5 percent of the $114.7 billion in venture capital raised by all companies during that time period, according to the National Venture Capital Association.

Business executives and economic officials said the ability of Indus-American companies to raise billions of dollars in venture capital reflects the growing strength of the immigrant community and its movement in the United State’s entrepreneurial mainstream.

In the 2001 survey, California led the way with 53 deals for $1.69 billion; Massachusetts was second with 23 deals for $511 million; Texas was a distant third with 5 deals for $207 million.

After the Attack: A Special Report

In the wake of the September 11 terrorist attack on the United States in 2001, the IndUS Business Journal dedicated a whole issue to the  tales of South Asian American survivors and the impact on business and the economy and the community as a whole.

One story reported: Indus business leaders and economists say the travel, tourism and transportation industries will clearly suffer the most from the aftershocks of the attacks. But there seems to be a consensus among leaders and experts that the economy remains fundamentally sound and should recover by 2002 because of increased government spending and other factors.

Another lead story spoke with World Trade Center survivors: Pratik Patel, who worked for the Fiduciary Trust Company, a subsidiary of Franklin Templeton Group, on the 94th floor of Tower One; Gursharanjit Sant and Vikas Chawla, workers at World Trade Center company Marsh & Mclellan; Naveen Narula, who lived in Atlanta and worked for IBM, but was staying at the Marriott Hotel in the World Trade Center and left the complex for a meeting 30 minutes before the first plane hitting Tower One; and Vijay Pillapa and Balaji Muniratnam of Wipro Ltd., the only two survivors of a six-person consulting team working at the World Trade Center.

The coverage also featured the ordeal of 28-year-old Sikh businessman Sher J.B. Singh who was arrested on a train in Providence, R.I., on September 12 and detained while rumors swirled he was part of the terrorist plot leading to the attacks the day before. He became a national spokesman for his religion’s traditions of wearing a turban and carrying a ceremonial knife after he was released with no charges.

Amar Bose Builds a Powerhouse

Bose

In December 2001, the IndUS Business Journal scored a big scoop with an in depth interview with interview-shy Bose Corp. founder Amar Bose. Bose’s sales in 2000 were $1.2 billion. Products included home and professional music systems, entertainment systems and speakers, including highly popular Bose Wave Radio. Bose also had contracts with American Airlines for headphones and 10 automakers for music systems in their cars.

The company had about 7,000 employees and operations throughout the United States, India, Europe, Canada, Australia, Japan and China. Over 2,000 of those employees worked in Framingham, Mass., as the company headquarters.

2002

H-1B Critics Grow, Say Foreigners Holding American Jobs

In 2002, it wasn’t long ago that the technology industry was flourishing and expanding so rapidly that U.S. companies could not find qualified employees fast enough.

Employees took their search for high-skilled workers overseas, and the government accommodated, raising the annual cap on H-1B visas from 65,000 in 1999 to 115,000 in 2000 to 195,000 in 2001.

The H-1B program – which allows companies to hire foreign workers with at least a bachelor’s degree in a specialized field – has never been without controversy. But by the summer of 2002, with the technology boom over, critics of the program were louder than ever, saying that foreign workers were holding positions that laid-off Americans could fill.

Some called for a reduction in the annual cap on the visas and even the elimination of the program. The Institute of Electrical and Electronics Engineers, based in Washington, called on Congress to examine the H-1B program in relation to the recession at that time.

From 2002 on a continual battle over the H-1B program raged leading to the eventually lowering of the cap.

Lucent’s $900 Million Gamble with Nexabit Fails

Telecom giant Lucent Technologies purchased Nexabit Networks for $900 million in stock in 1999, but failed to turn that investment into a competitive product.

In November 2002, Lucent canceled the development of the telecom product related to the former Nexabit. Some employees where laid off in the process.

Lucent’s move came against the backdrop of the recession and the bust in the telecom industry. Prior to the decision to cancel products related to Nexabit, Lucent had moved most employees out of its Marlborough, Mass., building. The building, which had housed Nexabit, was sold in July 2002.

Nexabit was founded by Ray Stata and Mukesh Chatter.

What made Nexabit a hot property was its research into ways to send data faster along the fiber-optic transmission lines that carry telephone and Internet traffic. Nexabit developed a high-speed router.

2003

Lawsuit Slams Sun’s ‘Bias’ for Indian H-1B Workers

A lawsuit filed in California against Sun Microsystems Inc. in early 2003 claimed the company laid off over 2,500 U.S. employees as part of a “scheme” to replace them with cheaper H-1B workers from India.

The class action lawsuit was brought by Walter Kruz, an employee at Sun from May 2000 until late 2001, and filed in state Superior Court in Santa Clara, Calif.

According to the lawsuit, Sun undertook a “reductions in force” strategy in 2001 leading to the termination of 2,500 employees. At the same time, the lawsuit claims, Sun applied for and used H-1B and F-1 visas in order to replace experienced, higher-paid and older U.S. workers with India natives, which the lawsuits calls “East Indians.”

The lawsuit states that, as a result, Indians are “largely over represented in Sun’s work force. In some departments operating in Santa Clara County – where Sun is headquartered – East Indians represent 30 percent or more of the employees – a figure shockingly disparate from the general population of Santa Clara County, which is only 4 percent East India.”

The lawsuit represented Kruz and approximately 1,000 former Sun employees and sought compensation in the form of lost wages.

IndUS Business Journal Publishes First Franchise & Hospitality Supplement

In April 2003, the IndUS Business Journal publishes its first Franchise & Hospitality Supplement. The supplement would become an annual feature of the newspaper over subsequent years and draw much interest, as well as spark a Franchise & Hospitality section in every issue of the newspaper.

Initially, the supplement was published in response to the growing clout of the South Asian community – and Indian American community in particular – in the franchising industry from hotels to restaurants to a variety of franchise concepts.

The 2003 Franchise & Hospitality Supplement covered topics such as hot brands and franchise trends, building your own franchise, investing in the U.S. hotel and franchise market, Asian-American hoteliers on the move and contained a list of the top-25 Indus hotel management companies.

Impath Reels with Delisting, Investigations

By late 2003, Impath Inc. was in a downward spiral that began publicly in earlier in the year with the resignation of Anu Saad from her position as company chairman and CEO and hit bottom when the company filed for bankruptcy.

In between, the descent continued with the delisting of the company stock from the Nasdaq stock exchange and an investigation by the U.S. Securities and Exchange Commission.

The New York-based Impath provides information to physicians, cancer specialists and drug-development companies so they can make decisions regarding treatment and new cancer-therapy discoveries. In 2003, it had 1,000 employees and $189 million in annual revenue.

Saad resigned from her post after a review of expenses submitted by her covering 2000, 2001 and 2002. She joined Impath in 1990 as scientific director and became CEO in 1993. At the time of her resignation, Saad agreed to reimburse the company $250,000.

The company never publicly commented on the reasons for this reimbursement, but the action led to an internal investigation and claims of possibly accounting irregularities and overstatement of financial reports. Four additional high-level executives resigned from their positions at the company in 2003 and the SEC eventually came knocking.

2004

Senate Forms First-of-kind India Caucus

In April 2004, 32 members of the U.S. Senate have formed the first country-focused caucus in the Senate, called “Friends of India.”

The caucus, headed by Sen. John Cornyn, R-Texas, and Sen. Hillary Clinton, D- N.Y., is a bipartisan coalition dedicated to expanding areas of agreement and discussing issues of concern between the United States and India, Cornyn said in a statement.

The group is similar to the 10-year-old Congressional caucus on India and Indian Americans in the U.S. House of Representatives.

Cornyn was the driving force behind the move. He pushed for the creation of the caucus after his recent visit to India.

The caucus goal is to work on strengthening trade relations between India and the United States and help cooperation on the war against terrorism and deepening the defense relationship.

Initially, there were 32 members in the caucus, including majority leader Sen. Bill Frist, R- Tenn., minority leader Sen. Tom Daschle, D-S.D., and Sen. Kay Bailey Hutchison, R-Texas.

Computer Associate's Kumar Indicted

Kumar

In September 2004, former Computer Associates International Inc. chairman and chief executive officer Sanjay Kumar was charged with securities fraud and obstruction of justice in connection with a billion-dollar accounting scandal at the software company.

Kumar was indicted after Computer Associates agreed to a settlement with the Department of Justice and the Securities and Exchange Commission that will allow the company to defer criminal prosecution.

A grand jury returned 10 counts against Kumar and also indicted Computer Associates' former head of sales, Stephen Richards. Richards faces charges of securities-fraud conspiracy, obstruction of justice, conspiracy to obstruct justice and perjury.

Kumar stepped down from his post as chairman and CEO of Computer Associates in April under heat from the company's board. At that time, the board was concerned Kumar would be indicted as the company came under investigation.

The trouble for Computer Associates started when company auditor Sullivan & Cromwell LLP determined, in an independent investigation, that it had prematurely recognized revenue in fiscal 2000 on the basis of contracts that were signed in a later quarter. These findings attracted the Securities and Exchange Commission and the United States Attorney's Office for the Eastern District of New York.

Kumar would eventually be sentenced to 12 years in prison in 2006.

2005

U.S. Doctors on Call for Tsunami; Step Up to Help Katrina Victims

In early 2005, when Dr. Sudhir Parikh, an asthma specialist from New Jersey, walked through dead villages in Tamil Nadu he witnessed the horrible sights of devastation caused by the killer tsunami waves that struck the region in late 2004.  The New Jersey doctor was the president of the Federation of Indian Associations and one of many Indian American doctors to rush to help. He visited three tsunami-affected villages in South India, in the wake of the disaster. He interacted with the families of fishermen and other victims and said that the real task would be the rehabilitation and renovation work in the region.

Once back in the United States, Parikh lead efforts to raise funds for the rehabilitation of tsunami victims. He is working alongside Art of Living Foundation and American Association of Physicians of Indian Origin to organize more relief projects.

Later that year, many of the same doctors and AAPI in particular were quick to step up once again to help in the wake of Hurricane Katrina.

During the harrowing days following Hurricane Katrina, Indian doctors in the Houston area rose to the occasion to help those who left a flooding New Orleans and came to their hometown.

Doctors like Dr. Jagadeesh Kalavar, who was in charge of receiving sick New Orleans patients and getting them to the Michael E. DeBakey Veterans Affairs Hospital in Houston. In four days, Kalavar and his team received about 700 patients from 21 flights.

Kalavar and about 200 other doctors of Indian origin in the Houston area were essential to their city's response in sheltering 30,000 Hurricane Katrina victims.

Whether they were leaders in medical operations, like Kalavar, or volunteers that assisted displaced victims inside their temporary home of the Astrodome — a stadium that the major league baseball team, the Houston Astros, once called home — Indian doctors helped prevent what could have been a public health disaster in their city.

Dr. Rakesh Mangal, an obstetrician and gynecologist at Texas Woman's Hospital in Houston and the president of the Indian Doctors Association of Houston, and fellow member Dr. K.T. Shah, formed a task force to get Indian doctors to volunteer their time to Hurricane Katrina victims in the Astrodome.

Oracle’s Deal for i-flex Hits $900 million

In August 2005, Oracle Corp. announced plans to buy a majority interest in one of India's largest applications software companies in a deal that could be worth more than $900 million. It was Oracle's first acquisition of an Indian company.

Oracle agreed to pay $593 million to Citigroup Venture Capital International, an arm of Citigroup Inc., for its 41 percent ownership stake of i-flex Solutions Inc. The Mumbai-based i-flex is traded on the Bombay Stock Exchange and the National Stock Exchange of India. Due to this, Oracle is also required by Indian securities law to make a public offer for another 20 percent of the company's shares. It is estimated that Oracle will spend about $316 million — if the full 20 percent is bought — bringing its total ownership of i-flex to 61 percent and boosting the deal to $909 million.

New York Firm Buys India’s Flextronics for $900 million

Kohlberg Kravis Roberts & Co. acquired Flextronics Software for $900 million in April 2006. The private equity firm took over Flextronics’ operations in its three facilities in India, as well as the company’s 5,000-plus Indian employees.

The deal was the New York-based Kohlberg Kravis Roberts & Co.’s first acquisition in India, and its second in Asia, according to the firm.

According to Kohlberg Kravis Roberts, the deal is believed to be one of the largest buyouts in India.

Flextronics Software’s chief executive officer, Ash Bhardwaj, and president, Arun Kumar, will remain in the same positions. Flextronics Software was later renamed Aricent Inc.

Sovereign Head Sidhu Steps Down

In October 2006, Jay S. Sidhu resigned and retired from his position as chief executive officer of Sovereign Bank, which he has held since 1989.

According to Sovereign Bancorp Inc., parent company of Sovereign Bank, Sidhu's resignation came as a result of “family health related reasons.”

Under Sidhu's leadership, Sovereign grew from a bank with less than $1 billion in assets to a major American financial institution. When Sidhu left the bank, it had over $89 billion of assets, 800 branches, 2,000 ATMs, and 12,000 employees from New Hampshire to Maryland and was the 18th largest banking institution in the United States.

Early in his tenure at Sovereign, Sidhu rarely came under fire, however, he entered the hot seat in the summer of 2005 when one of Sovereign Bancorp's largest shareholders, Relational Investors LLC, raised objections to the directors' compensation plans and complained about the bank's performance in the market. The San Diego-based Relational Investors, which owned nearly 5.5 percent of Sovereign's shares, said it would launch a proxy fight if its demands for changes at the bank were not met.

Several reports suggested that Sidhu's resignation came as a result of board pressure that first began with the objections raised by Relational Investors.
Bud has Big Beer Plans on Tap for India

This Bud's for you, India. In February 2007, Anheuser-Busch International Inc., a subsidiary of the Anheuser-Busch Cos. Inc., and Indian brewer Crown Beers Ltd. formed a joint venture to brew, market and distribute Budweiser and other beer brands on the subcontinent.

The partnership, which operates under the name Crown Beers India Ltd., features a 500,000-hectoliter brewery in the southern Indian city of Hyderabad. (A single hectoliter is 100 liters — equivalent to about 26.4 gallons.)

Both companies will have 50 percent ownership of the joint venture and will collaborate on all local management, marketing and sales decisions. The operation will employ more than 150 people, including an Anheuser-Busch brewmaster who will oversee product production.  The development was foreshadowed by rumors that began circulating in October 2006 that the St. Louis-based brewery was looking to expand in India.

Media reports at the time suggested an Anheuser-Busch/Crown joint venture would build a brewery in Hyderabad at a cost of $22 million.

Neither company disclosed financial terms of the recent announced agreement.

Cisco Buys WebEx in $3.2 Billion Cash Deal

In April 2007, Cisco Systems Inc. agreed to acquire WebEx Communications in a deal worth approximately $3.2 billion. Under the terms of the acquisition agreement, Cisco bought all outstanding shares of the Santa Clara-based WebEx for $57 per share in cash. WebEx is a provider of on-demand collaboration applications products and services. Subrah S. Iyer was chief executive officer of the company.

The deal was part of Cisco's acquisition spree at the time. In the  two-and-a-half years leading up to the WebEx deal, the networking-gear giant acquired 25 companies.

WebEx had revenues of $380 million in 2006 and had 2.2 million registered users.

2008

Dow Buys Rohm and Haas for $15.29 Billion

In July 2008, Rohm and Haas Co., which for nearly a century has developed and manufactured chemicals and synthetic materials for a variety of industrial sectors, accepted a $15 billion buyout offer from rival Dow Chemical Co. that will likely change the face of the U.S. chemical industry.

Under the terms of the deal, Dow agreed to pay $78 per share of outstanding Rohm and Haas common stock, representing a 74-percent premium over the company's July 10 closing share price, when Dow and Rohm and Haas formally announced the acquisition agreement. Based on the agreed-upon per-share purchase price and the roughly 196 million shares of Rohm and Haas common stock that were outstanding as of July 10, the acquisition is worth approximately $15.29 billion.

The two companies said that assumed debt will boost the total value of the deal to around $18.8 billion.

The transaction included $4 billion in financing committed by Kuwaiti Investment Authority and Warren Buffett's Berkshire Hathaway Inc. Debt financing has been provided by Citigroup Inc., Merrill Lynch & Co. Inc. and Morgan Stanley & Co. Inc., which acted as financial advisors on the agreement.

Rohm and Haas, which is led by India native Raj L. Gupta, will operate as a subsidiary of Dow upon completion of the deal. However, the company will retained its corporate name and logo and continues to do business from its headquarters near Philadelphia's Independence Mall. Additionally, Dow established a specialty-chemicals business unit through Rohm and Haas.

Congress, Senate OK U.S.-India Nuke Deal

After more than three years of intense debate among U.S. and Indian lawmakers, Congress approved a landmark agreement to end a 34-year-old ban on civilian nuclear trade with the South Asian nation in the fall of 2008. The United States-India Agreement for Cooperation Concerning Peaceful Uses of Nuclear Energy cleared its final hurdle Oct. 1 when the Senate voted to ratify it by an overwhelming margin of 86 to 13.

Four days earlier, the U.S. House of Representatives passed the bill without debate by a vote of 298-117.

In doing so, Congress handed then President George W. Bush a rare foreign policy victory as he winds down his tenure in office. Bush, who signed the bill in a formal ceremony Oct. 4, has been one of its biggest supporters since he and Indian Prime Minister Manmohan Singh signed a companion piece of legislation into law in December 2005.

Bush predicted the so-called 123 Agreement “will strengthen our global nuclear nonproliferation efforts, protect the environment, create jobs and assist India in meeting its growing energy needs in a responsible manner.”

2009

Schering-Plough, Merck set $41.1 Billion Merger

Fred Hassan’s six-year reign as chairman and chief executive officer of Schering-Plough Corp. hit an explosive climax with a $41.1 billion merger deal with pharma giant Merck & Co. in May 2009.

Under the agreement, Schering-Plough and Merck combined under the name Merck. Schering-Plough shareholders will receive Merck stock and $10.50 in cash for each of their shares.

The transaction is the sixth largest pharmaceutical deal ever and is the second largest merger in 2009, according to Thomson Reuters.

Hassan joined Schering-Plough as CEO and chairman in April 2003. Under his direction, Schering-Plough began a journey of transformational change and has been able to move forward through challenging times, continuing to enhance its research and development capabilities, according to the company.

Schering-Plough was established in the late 1800s as the U.S. subsidiary of Schering AG, a German-based pharmaceutical and chemical company. It was incorporated in New York City in 1928 and in New Jersey in 1935. The company develops therapies for human prescription, animal health and consumer health-care products. Annual sales were close to $20 billion. Key products include: Vytorin, Zetia, Remicade, Nasonex and Temodar.

Norwest Raises $1.2 Billion Fund

In 2009, for those arguing that the venture capital industry was looking dire, Promod Haque and Norwest Venture Partners had a sharp response. The Silicon Valley firm and its investment guru leader raised a new $1.2 billion fund in November of that year.

The new fund, Norwest Venture Partners XI, is the firm’s first since it raised a $650 million fund in 2006. All told the Palo Alto, Calif.-based Norwest, led by managing partner Haque, has $3.7 billion in capital under management.

The 48-year-old firm has funded over 450 companies since it was started. It focuses on investment in information technology, business services, financial services, infrastructure, technology-enabled services and consumer services. The latest fund, which is the firm’s largest, will target early to late-stage venture growth and equity investments across a wide range of sectors and countries, according to Norwest.