The Government of India led by Mr. Narendra Modi has started funding innovative Startups using Money from the Public Sector Undertakings [PSU]. PSUs are companies owned and operated by the Government of India and most of its employees are Government Employees even though the companies are formed under the Indian Companies Act.
Which is the Startup Funded by Modi Govt’s through PSU ?
The Startup we are referring to is RedRoom Technology Pvt Ltd. They are the manufacturers of Women’s hygiene products viz. menstrual cups, sanitary pads, tampons, etc under the brand name Sanfe. The company was incubated in IIT Delhi and the institute is a shareholder of the company. The Government has invested in Redroom using the Cash from PSU Hindustan Petroleum Corporation Ltd (HPCL). We are unable to fund the synergy between HPCL’s Core Business and Redroom Technologies.
Investments of HPCL in Redroom Technology Pvt Ltd
HPCL has totally invested Rs 6,289,207 in RedRoom Technologies startup by subscribing to 0.01% Compulsorily Convertible Cumulative Preference Shares. The breakup of its investments in the company are as under.
June 2019 – Rs 1,499,543 at a Premium of Rs 692.57 / Share
August 2019 – Rs 2,502,936 at a Premium of Rs 692.57 / Share
November 2019 – Rs 1,999,818 at a Premium of Rs 826.7 / Share
December 2019 – Rs 286,910 at a Premium of Rs 692.57 / Share
Does anybody understand why the Valuation of this Startup went higher in November and back again to Original Level in December ? Please enlighten us.
Is this the first such deal where the Government has used PSUs to Fund Startups ? We think so. However, if you know of any other, please do inform us. Since this investment deal is totally unpublished piece of news [at least we couldn’t get it on search engines], thought we will report it.
We do not want to draw any inference on the investments / deal. Since Mr. Narendra Modi doesn’t like to address the Press, we have not approached him for policy direction / strategy on PSUs funding the Startups. However, it would be really nice if the Central Government comes up with a comprehensive policy on Startup Funding by Government Agencies / PSUs.