We about 5 of us together started a company to develop a software product back in 1999. It was very difficult to hire a person for development then because everybody was trying to go to US by body shopping companies. We managed to get people to develop the software product ground up and start going by investing our own money.
During the initial planning stages we knew tat VC%u2019s are going to invest. Unfortunately during the tech bust in 2000 VC%u2019s pulled back. One VC came forwarded and put 1/3rd of the total money invested by all of US. He took 40% of the company. There was no choice. If we do not do it the company had to be closed. We invested all our saving we had after working in US for few years. We had no more our money to invest,
The company did not have money and went bankrupt in 2002. In the mean time we approached several big Indian tech companies to show the product we developed and none of them wanted to look at it because they said we are not into product development (Even now they are not doing anything).
Since we had no money left we came back to US. And then the unimaginable thing happens in 2004. The VC%u2019s who has political connections (we came to know after the fact & case) puts a criminal case in the court. Saying we cheated them of money. Here is the few things they did.
Send registered letters in our name to wrong address and produced to show that we are absconding. Claimed that we started the company to defraud them. (Remember they put X and we put 3X) Filed the case with Magistrate court with section IPC 20 (This means, judge will not read the case but accept it and send it to police to investigate).
Then the police started harassing us. It has been 2 years we are getting harassed and we do not know when this is going to end.
I am sure we will be exonerated form this. But we never thought we will go through this ordeal we are going through for starting a company, giving employment to people, having our own product.
Even though the company failed ( If you look at statistic only 98% startup go bankrupt in US. In India risk is much more and risk increases if it is a product company.) at least I learned some new things. That is about the judicial law in India
With few thousand rupees you can sue and make somebody%u2019s life miserable. It is unbelievable. Sometime I wonder is there law? Frame us by sending a registered letter to wrong address and saying he is absconding with money? Court is accepting the case for stealing X amount of money while we invested 3X. (Every year we filed tax with the authorities and we have document.) This is unbelievable guys.
I am posting this because I see interesting comments on this post. Since the case is still going on I can not give the web link for the company or the case number
Good luck to you guys..
PS: When you try to do something you always learn something new. In our case it happened to be Law and Police in INDIA which was really was an unexpected area!!.
RE:What happened to us when we started a product company in INDIA
by Raghavendran Badrinath on Mar 03, 2007 11:58 AM Permalink
Can you give more details about your product? (As much non-confidential) What is the staus of the prodcut?
We are very good at IT, but please concentrate on Infrastructure also!!! Business is like cycle of chances. When others catching up, we have to be competitive in other fields too. So, When we develop SEZ or industry, please stop telling the word like these: "Industry is pollution, Industry is not good in waste land, Agreeing Agri with old traditional style with bullock cart, when everybody going in cars". These are the mantra for next generation: Support industralization!!!, Support reform in agri with better methods!!!, train poor farmers to take job in other fields/industries based on their ability, improve agri by better production methods, so, same land will produce more & needs less people depend on seasonal fluctations, reduce poverty by bringing more wealth instead of telling stupidity or emotional thoughts once again from becoming poor."
I know good job, salary, technology and all the latest gadgets are important in life and for country. But we also need clean air, water, lakes, rivers, big urban parks, civilized society, good garbage and sanity disposal system, clean public transport, good social security, public services and public health care. We need place for walking, running, hiking, river rafting, cycling, skiing, boating and all sorts of sports activities for public.
Yeah we always restrict ourselves to lowest prices and how can we expect ourselves to grow? When wil that time come when we can develop our own OS or any techniques? Are we so low? Already we hav huge IT power and why cant we be on r own?
RE:Hmm
by Jay Krishnan on Mar 03, 2007 01:06 AM Permalink
We about 5 of us together started a company to develop a software product back in 1999. It was very difficult to hire a person for development then because everybody was trying to go to US by body shopping companies. We managed to get people to develop the software product ground up and start going by investing our own money.
During the initial planning stages we knew tat VC%u2019s are going to invest. Unfortunately during the tech bust in 2000 VC%u2019s pulled back. One VC came forwarded and put 1/3rd of the total money invested by all of US. He took 40% of the company. There was no choice. If we do not do it the company had to be closed. We invested all our saving we had after working in US for few years. We had no more our money to invest,
The company did not have money and went bankrupt in 2002. In the mean time we approached several big Indian tech companies to show the product we developed and none of them wanted to look at it because they said we are not into product development (Even now they are not doing anything).
Since we had no money left we came back to US. And then the unimaginable thing happens in 2004. The VC%u2019s who has political connections (we came to know after the fact & case) puts a criminal case in the court. Saying we cheated them of money. Here is the few things they did.
Send registered letters in our name to wrong address and produced to show that we are absconding. Claimed that we started the company to defraud them. (Remember they put X and we put 3X) Filed the case with Magistrate court with section IPC 20 (This means, judge will not read the case but accept it and send it to police to investigate).
Then the police started harassing us. It has been 2 years we are getting harassed and we do not know when this is going to end.
I am sure we will be exonerated form this. But we never thought we will go through this ordeal we are going through for starting a company, giving employment to people, having our own product.
Even though the company failed ( If you look at statistic only 98% startup go bankrupt in US. In India risk is much more and risk increases if it is a product company.) at least I learned some new things. That is about the judicial law in India
With few thousand rupees you can sue and make somebody%u2019s life miserable. It is unbelievable. Sometime I wonder is there law? Frame us by sending a registered letter to wrong address and saying he is absconding with money? Court is accepting the case for stealing X amount of money while we invested 3X. (Every year we filed tax with the authorities and we have document.) This is unbelievable guys.
I am posting this because I see interesting comments on this post. Since the case is still going on I can not give the web link for the company or the case number
Good luck to you guys..
PS: When you try to do something you always learn something new. In our case it happened to be Law and Police in INDIA which was really was an unexpected area!!.
RE:RE:Hmm
by Yogesh Sundaram on Mar 03, 2007 01:21 AM Permalink
as a Chartered Accountant, I want to know wthether the company was shut down(wound up) in accordance with the Companies Act. Technocrats like you may not be aware of the legal documentation. If the proper proceedure of winding up has not been followed, like giving advertisements in newspapers, informing all the shareholders, liquidation proceedings etc, I as a shareholder holding 40%(Your VC) have every right to file a case and accuse the promoters of siphoning out money. Pls clarify on the liquidation proceedings, was the companies act followed in the right spirit.
RE:RE:RE:Hmm
by Jay Krishnan on Mar 03, 2007 01:56 AM Permalink
Yes. The company was in the process of winding. We could not proceed becuase there is a case pending. We had a company lawyer and a very good accountant firm who were doing the right things from the begining. We have all the papers and how the money is spent. The VC's director was also on the board.
Unfortunately I can not share the case number. If you read this I can assure you that your jaw will drop. I was in a state of shock for several week after reading the case. My friends argued with me saying that this can not happen until I showed them the real case paper.
I am fine if they put a civil case. I have no problem with it.
The way they did is like this. They send 5 registered letters to old office address. Naturally it went back. They put a case saying that we are absconding with money. There are also other thing they added (it will be funny if read it). They also said we did fraud.
This is how they made it criminal.
The VC or shareholer has right to sue. But not by framing us like they did. That is the problem.
RE:Hmm
by sachin w on Mar 02, 2007 02:41 PM Permalink
our IT power is highly ovverrated ..please tell me one indian company which has developed any operating system..most of time so called IT does is only maintainace and not innovation..please wake up from dreams and face the reality
RE:RE:Hmm
by sachin kumar on Mar 02, 2007 02:50 PM Permalink
sir why dont u develop something then...what r u waiting for....blaming others is damn easy...pls do something on ur own and then speak...
RE:RE:RE:Hmm
by itsmelav on Mar 02, 2007 03:07 PM Permalink
Yes boss u r right.. I dont own a company of my own.. If so i wud hav set an example.. I definetly hav an aim to start a company of my own and surely one day i wud have my own 'Indian' product. One should first aim sir. Indians lack that zeal. So its easy to make us slaves and USA is buying us so cheap
RE:RE:RE:Hmm
by Yogesh Sundaram on Mar 03, 2007 01:13 AM Permalink
Let us look at it from economist's perspective, China is today an economic super power(GDP of $2.7 trillion) because of manufacturing outsourcing from high cost westerm countries. They have built massive economies of scale in manufacturing. The govt developed a robust infrastructure to support and provide the fuel for a burgeoning manufacturing driven growth.
India's strength lies in services, IT services has created more than 10 million jobs in the last 2 decades and $20 billion (annualized) of exports. Thanks to IT, India's foreign exchange reserves have crossed 150 BN and India today has the 5th largest dollar reserves in the world.
Areas we need to focus 1) Infrastruture - massive investments needed to upgrade the infrastruture($300 BN in the next 5 years), we don't have the resources to invest so much, so we need FDI and the private sector has to pitch in.
2) Agriculture: in deep crisis, 50% of the population live on agriculture but it accounts for only 18% of the GDP. So we need a 2nd green revolution, bi=g retial chains(Reliance, Walmart) will set up the distribution and farm incomes will go up by 200% in the next 5 years.
3)Manufacturing: showing robust growth, SEZ's will be a catalyst for the accelerating growth, I am confident we can develop a robust manufacturing economy.
So we are on the right track, we need to grow our GDP by 10% for the next 10 years and that will catapult India into an economic superpower. We as Indians have to focus on execution of massive projects, inclusive economic growth, improving tax compliance, paying taxes should be a matter of pride and duty.
Hope, Everybody in the forum learn to think in a more matured fashion and speak with more maturity and let this be an intellectual forum
RE:RE:RE:Hmm
by dfsg on Mar 02, 2007 03:01 PM Permalink
No-doubt we are good in IT services, as we have talent and huge work force. And it's difficult to predict that india will face the same situation as US n UK are facing now. Because we have a massive manpower, and only China seems a threat on that part. But India has the ability to develop it's own product, but no single person can do that. Our software majors like TCS, Infy and Wipro can do that. They should realize their capability and have a broad vision.
RE:RE:RE:RE:Hmm
by True Indian on Mar 02, 2007 03:02 PM Permalink
Yes they should move up the value chain and stop being satisfied with doing piecemeal contracts. it is not just in IT, in all fields we need R&D. we need to be high-tech producers not just consumers of products like Sony etc. Especially we need an alternative fuel to petrol
RE:RE:RE:RE:Hmm
by sachin w on Mar 02, 2007 03:30 PM Permalink
you are again thinking that situation will remain same in next 15 yrs ...just think if new revelutionary techinique is discovered whwre all IT systems have artificial intelligance and can fix problem themselves by running a diagnostic...we would not need many people..just think it is possible
RE:RE:Hmm
by itsmelav on Mar 02, 2007 02:43 PM Permalink
Yeah I m telling that we shud try to stand on r own, instead of trying to depend of west for whole life. Why cant we develop r own OS eh? We r capable..but we r all busy serving USA, UK etc. Born slaves we r..
RE:RE:RE:Hmm
by True Indian on Mar 02, 2007 02:59 PM Permalink
that will happen only when poverty is reduced is Indians and indians will learn of think of other things than just food and good living. It will take another generation
This is going to happen and can't be avoided. Rightnow what US guys are facing, we may have to face it tomorrow. We are getting business not only because of hard work but also beacuse of low cost. we should understand that all thse big comapanies are not coming to India to generate employement.
Lot of countries like Brazil, philipines, Rumania and China also are working hard on basic skill advancement program among youth. Infact INFY, TCS have already started development centers in China.So these are going to create potential threats to our business and jobs in the future.
So rightnow what is important for us is that to provide our services at lowest cost possible. and be prferred location for business for these companies
I start of 90's American administration was trying to push globalization down in our throughts and we said ok fine if thats what you want we will do that. we will open our economy to your companies and their products and everybody was happy at that time. but time passed and it has been almost a decade now.
Now these americans are screaming stop outsourcsing. Sorry pal you started it first.
What are they complaining of -- the rules of the game were made by their own MNCs .Can you imagine we indians dont get to whine when companies shift base to china or MNCs remit millions of dollars out of India .A few jobs moving here should;nt be cried foul.
please remember tomorrow same thing would happen to us when cheap labour is found in other countries like bangladesh and phillipines....today we are rejoicing tommorrow u will face same music
RE:RE:beware
by sachin w on Mar 02, 2007 02:33 PM Permalink
dont be over confident 15 yrs back who could have thought that working from India for US companies..
Globalization was fine for US citizens till their companies dominated world trade and generated jobs at home but became a bad policy when things go awry and jobs get "outsourced". The fundamental fact is that Americans need to work harder for less to compete in the world economy. For long they have lived beyond their means on cheap credit and shirked work. It is high time they became responsible for their own lives, cut down their extravagant spending and work harder for their own and their company's future. No pain, no gain.
