Updated: Tyroo & Anurag Gupta Acquire DGM India For Rs 3.35 Crore; Terms

Ad network Tyroo and Anurag Gupta, the Managing Director of affiliate ad network DGM India have together bought DGM India for a total consideration of Rs 3.35 crore from Asia Digital Holdings. This acquisition comes close to the heels of affiliate marketing competitor Online Media Group launching its India operations. Gupta will continue to be Managing Director of DGM, while Siddharth Puri will continue to head Tyroo’s affiliate marketing business Tyroo Direct. This means that Tyroo will have two competing affiliate marketing businesses.

Tall claims and hyperbole from Tyroo accompany this announcement – the company claims to be the largest digital media network in India following this acquisition, and says that it “is on its way to becoming India’s largest digital media company, after Google India, by next year.” Cough. Cough.

DGM India Financials

According to ADH’s filings, during the year to 31 December 2011, DGM India’s unaudited results show that the operation generated turnover of £1,977,000 (around Rs 15.99 crore), a gross profit of £660,000 (Rs 5.33 crore) and a positive EBITDA of £221,000 (Rs 1.78 crore). EBITDA was up from £21,000 (Rs 16.98 lakh) in 2010. As at 31 December 2011, the unaudited results for DGM India show that this operation had a net asset value of £224,000 (Rs 1.8 crore).

Terms Of The Deal

Asia Digital Holdings board decided that “Whilst DGM India has operated effectively in the last year and in recent months, without further investment there is little prospect of material growth and sustainable profitability.” Following the disposal, ADH will have net liabilities of £744,000 and cash resources of £ 368,000. It decided that it lacks the funding to finance the groups operations, and hence to sell its more established operations in India and Singapore. As per the terms of the agreement:

– Payouts: Asia Digital Holdings has sold DGM India for a total consideration of Rs 3.35 crore, of which Rs 2.3625 crore will be paid on or before 16 May 2012 or on the tenth day following completion of the conditions precedent to the Agreement.
– Technology acquisition: Vun Network founder Manish Vij told MediaNama that apart from acquiring DGM India, they have also acquired technology from DGM Global, as a part this acquisition.
– Anurag Gupta’s Stake: Anurag Gupta is taking on an entrepreneurial role at DGM India, and has paid Rs 81.93 lakhs for acquiring 32.79% in DGM India, via his company Inflection Digital Holdings Pvt Ltd.
– Tyroo Media’s Stake: has acquired 113,503 shares, amounting to 61.76% in DGM India, fro a total consideration of Rs 1.54 crore.
– Technology transfer: ADH to transfer Intellectual property (IP) relating to the DGM business in India to DGM India, within 30 days – all source codes, servers, databases and documentation. “Within 60 days following the execution of the IP Agreement ADH shall confirm to DGM India the successful transfer of the IP, and, within 7 days following receipt of such confirmation, DGM India will pay ADH in cash Rupees 78.75 lakh. DGM India has also agreed to pay ADH a fee in cash of Rupees 20 lakh for the provision of technical support to DGM India for a period of 60 days following the transfer by ADH of the IP to DGM India or 30 June 2012 whichever is the sooner.

*
Tyroo is owned by SVG India, a company which is a joint venture between Harish Bahl’s Smile Interactive, and Manish Vij’s Vun Network.

In November 2011, Yahoo had sold its stake in Tyroo Media to Keith Nilsson’s Xplorer Capital. Yahoo had bought a 35% stake in Tyroo in an all cash deal in 2007, to get access to Tyroo’s inventory and publisher clients in the Indian market, and vice-versa. At the time of the announcement, Tyroo founder Manish Vij had said that Tyroo intended to expand further into APAC markets.

Corrigendum: We had incorrectly mentioned that Anurag Gupta will head both DGM and Tyroo Direct. The error is regretted. These are two separate businesses, with DGM being led by Gupta, and Tyroo Direct being led by Siddharth Puri. Our apologies for the error. This story has been corrected.

Updates: This post has been updated with details of the acquisition, from Asia Digital Holdings’ regulatory updates.

Ad: Our advertising coverage is brought to you by Indiatimes.

rajan

congrats tyroo & anurag
Parag P

Congrats to Tyroo & DGM team
Shyam Somanadh

That’s good news, Tyroo should be a good home for DGM India, price looks sweet too. Good luck, Anurag and team.
Nitin Gupta

that’s a good news for sure.. but i have a doubt in mind.. Mobile Ad Network like Inmobi got a funding of $200Mn+.. Other Indian digital ad networks got a funding of $4-5 Mn and DGM got sold out for INR 3 Cr? Tyroo acquired DGM India, its advertiser base, vendor relations, publisher network & even technology for a mere 3 Cr? too good of a deal..

Anyways, congrats Tyroo / SVG.
- Nikhil Pahwa
  
  most of Inmobi’s business is global: I would assume that in terms of revenues, India is very small for them. In fact, they couldn’t make it work in India, which is why they went global. They wouldn’t have survived being India only. Look at other ad networks which were targeting India – Komli is focusing primarily on AsiaPac. If you’re India only, it’s likely to be small.
  - Nitin Gupta
    
    Agreed! but even a old world manufacturing companies gets a valuation of 0.7-1x on revenues and a new world media company with Intellectual property (DGM India ad serving tech.) gets a 0.2X revenue returns.. isn’t that weird?
    Also, is there a possibility of black money being involved? no offenses but a genuine question..
  - Nitin Gupta
    
    Agreed! but even a old world manufacturing companies gets a valuation of 0.7-1x on revenues and a new world media company with Intellectual property (DGM India ad serving tech.) gets a 0.2X revenue returns.. isn’t that weird?
    Also, is there a possibility of black money being involved? no offenses but a genuine question..
LOKIM

Did DGM-INDIA miss a trick by not going for an Auction route?
Rs 3.35 crore is LESS than 1 Million US$ which is pocket change for the big VC backed networks like Komli/Admagnet/Ozone.
In fact any senior professional could have bought it with a bank loan and made a pile of profit.
At the least, in an auction with 30% operating margin and positive EBIDTA of Rs 1.8 crores, the MINIMUM, ROCK BOTTOM FIRESALE price for DGM would have been Rs 10 crores. Rs 3.35 Crore seems unbelievable. Just doesn’t make sense to anyone in the internet business. As someone below commented, even an old textile factory gets better revenue multiples.
LOKIM

Did DGM-INDIA miss a trick by not going for an Auction route?
Rs 3.35 crore is LESS than 1 Million US$ which is pocket change for the big VC backed networks like Komli/Admagnet/Ozone.
In fact any senior professional could have bought it with a bank loan and made a pile of profit.
At the least, in an auction with 30% operating margin and positive EBIDTA of Rs 1.8 crores, the MINIMUM, ROCK BOTTOM FIRESALE price for DGM would have been Rs 10 crores. Rs 3.35 Crore seems unbelievable. Just doesn’t make sense to anyone in the internet business. As someone below commented, even an old textile factory gets better revenue multiples.
Deepak Bhakoo

tyroo is the BIGGEST scam i believe. i have been working with them for my websites, but they have paid only once in all these years. have tried to contact them by email several times but no response ever. happened the same with the people i referred. i dont know what sort of a company is this which doesnt even provides adcodes in ur account panel too? and also they have given access to me to 2 different account panels? i dont know whats wrong with them, so have left using it altogether.

same is the case with ozonemedia. nithiya… an earlier employee of the company now send spam emails like make money, get bigger ________ and so on from the company email id!!! lol. all this is funny and frustrating at the same time.
Coupons India

even i dont like tyroo affilate program

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