David Wright, MBA’04 prepared this case under the guidance and with Professor Melvin
Goldman as the basis for class discussion rather than to illustrate either effective or ineffective
handling of a business situation.
Deccanet Designs Ltd. (A)
Deccanet was at a crossroads by the summer of 2001.
In March, the company had
reported a loss for FY-2001 and the finance division was expecting more losses in FY-
Globally, the telecom industry was in crisis, and Deccanet was having difficulty
collecting receivables from various clients, especially those in the U.S.
There was also
turmoil within the company, as a vigorous debate divided management over the future
strategy of the company.
Starting in April, Deccanet had entered discussions with Intel
Capital over a possible $1 million investment in the Bangalore based engineering firm.
However, the negotiations were dragging on and Deccanet’s senior management worried
that Intel, mindful of industry developments, might pull the plug at the last minute.
fact, Intel’s India team did have questions about Deccanet, mostly about its fundamental
What should the various players (Deccanet, GVFL, TDA and Intel)
The Indian Economy in the 1990’s
For several decades after gaining independence from the British in 1947, India followed a
path of state-directed economic development.
Although India did become much more
industrialized during this period, the country remained heavily dependent upon
agriculture, with some 33% of GDP coming from the farming sector as of 1990.
Furthermore, despite developing the industrial base of the country, the statist model failed
to produce the rapid growth rates needed to support India’s massive population, leading
many economists to refer to annual growth rates of 3.5% (1% growth in GDP per capita)
as the “Hindu rate of growth.”
A balance of payments crisis in 1991 led the government
to implement an IMF and World Bank supported reform package, which stabilized the
economy and set the stage for an export-led recovery.
deregulation and privatization measures over the ensuing decade led to accelerated
The authors acknowledge the complete cooperation of all parties particularly GVFL and Deccanet
“Understanding India’s Services Revolution,” Jim Gordon and Poonam Gupta, International Monetary
Fund, November 12, 2003, p. 6.