Question 1

What is Kern Werk Capital?

Accepted Answer

Kern Werk Capital is a private equity fund focused on acquiring and transforming mid-market manufacturing companies in India. We target $5M-$10M revenue companies in specialty chemicals, packaging materials, and pharmaceuticals, applying operational excellence and technology-first infrastructure to create long-term value.

Question 2

Where is Kern Werk Capital located?

Accepted Answer

Kern Werk Capital has two offices: New York (Investment Office) at 1460 Broadway, NY 10036, and Mumbai (Operations Office) at DBS Kanakia Wall Street, Andheri East, Mumbai 400093. Both offices operate Monday-Friday, 9AM-6PM local time.

Question 3

Why invest in India manufacturing?

Accepted Answer

India manufacturing represents a generational opportunity driven by four structural tailwinds: China+1 supply chain diversification (40% of MNCs actively diversifying), PLI incentive schemes ($30B+ committed), demographic dividend (median age 28, 500M+ working population), and infrastructure buildout ($1.3T pipeline). The fragmented landscape of family-owned manufacturers creates consolidation opportunities.

Question 4

What is the China+1 strategy?

Accepted Answer

China+1 is a supply chain diversification strategy where multinational companies reduce dependence on Chinese manufacturing by establishing alternative production in countries like India, Vietnam, and Mexico. Over 40% of global MNCs are actively implementing China+1 strategies, driving significant foreign investment into Indian manufacturing, particularly in specialty chemicals, electronics, and pharmaceuticals.

Question 5

What are PLI schemes in India?

Accepted Answer

Production Linked Incentive (PLI) schemes are Indian government programs offering financial incentives (4-6% of incremental sales) to boost domestic manufacturing. Over $30B has been committed across 14 sectors including pharmaceuticals, specialty chemicals, electronics, and textiles. PLI schemes aim to make Indian manufacturing globally competitive and reduce import dependence.

Question 6

How large is India's manufacturing sector?

Accepted Answer

India's manufacturing sector is valued at over $400B and growing 8-10% annually. The government targets $1T in manufacturing GDP by 2030. Key growth sectors include specialty chemicals ($35B, 12% CAGR), packaging ($70B, 15% CAGR), and pharmaceuticals ($50B, 10% CAGR). India is the world's third-largest pharmaceutical producer and fifth-largest chemical producer.

Question 7

What sectors does Kern Werk Capital invest in?

Accepted Answer

We focus on three sectors: Specialty Chemicals ($35B market, 12% CAGR, China+1 tailwind), Packaging Materials ($70B market, 15% CAGR, consumption growth driver), and Pharmaceuticals ($50B market, 10% CAGR, API manufacturing opportunity). These are process-intensive industries where operational improvements create sustainable competitive advantage.

Question 8

Why invest in India specialty chemicals?

Accepted Answer

India's specialty chemicals market is $35B growing at 12% CAGR, driven by China+1 supply chain shifts as global companies seek alternative suppliers. India has a strong chemistry talent pool, lower production costs, and improving regulatory standards. Key opportunities include agrochemicals, dyes & pigments, and pharmaceutical intermediates where Indian manufacturers are gaining global market share.

Question 9

What is API manufacturing in India?

Accepted Answer

API (Active Pharmaceutical Ingredient) manufacturing is the production of raw materials used in drug formulations. India produces over 60% of global vaccine supply and is the world's largest generic drug exporter. The API market in India is growing at 10% CAGR as companies reduce dependence on Chinese APIs. PLI schemes have allocated $2B+ specifically for API manufacturing.

Question 10

What is Kern Werk Capital's investment criteria?

Accepted Answer

We acquire controlling stakes in Indian manufacturers with $5M-$10M USD revenue, positive EBITDA, and latent growth potential. We prefer privately-held, family-owned businesses with basic or no existing systems (greenfield for our technology stack), existing India manufacturing operations, and defensible market positions with technical expertise or customer lock-in.

Question 11

What does Kern Werk Capital bring beyond capital?

Accepted Answer

We bring four things: (1) Operational Playbook—Lean/TPS implementation, quality systems, process optimization; (2) Technology Stack—modern ERP, analytics, automation deployed in weeks not years; (3) Patient Capital—long-term orientation aligned with sustainable value creation; (4) Hands-on Partnership—we work alongside management, not from a boardroom.

Question 12

How to sell a family business to private equity in India?

Accepted Answer

Family businesses considering PE partnership should: (1) Have clean financial records and audited statements, (2) Document key processes and customer relationships, (3) Identify growth opportunities that require capital or expertise, (4) Consider succession planning and family member roles post-transaction. Kern Werk looks for founders who want to partner for growth, not just exit.

Question 13

What is operational transformation in private equity?

Accepted Answer

Operational transformation is the systematic improvement of a company's operations to drive value creation. In manufacturing PE, this includes implementing Lean/TPS methodologies, deploying modern ERP and analytics systems, optimizing production processes, upgrading quality systems, and building professional management teams. Operational improvements typically drive 200-400 basis points of EBITDA margin expansion.

Question 14

What is Lean manufacturing?

Accepted Answer

Lean manufacturing is a systematic approach to eliminating waste and improving efficiency, derived from the Toyota Production System (TPS). Core principles include just-in-time production, continuous improvement (kaizen), visual management, and respect for people. In Indian manufacturing, Lean implementation typically yields 15-30% productivity improvements and significant quality gains.

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