Andhranews

Chennai, Sept. 14: Dell Inc., the largest computer manufacturer in the world, on Thursday said that it would be setting up a computer manufacturing facility at Sriperumbudur Hi-Tech Park, near Chennai, with an investment of $30 million. With this move, Hyderabad has lost another manufacturing unit. The Andhra Pradesh government had made a pitch to Kevin B. Rollins, CEO of Dell, Inc., during his visit to the Hyderabad centre of Dell International Services in January.

C.S. Rao, an advisor on IT to the government and CEO of APInvest, the nodal agency tasked with attracting investments into Andhra Pradesh, had made a presentation on the tax sops and other benefits being offered to computer hardware companies in Hyderabad. Dell has over 4,000 workers at its support centre in Hyderabad. The $57.4-billion company signed an MoU with Tamil Nadu government officials in the presence of Chief Minister M. Karunanidhi. The Indian facility would be Dell’s sixth manufacturing location globally.

Addressing a press conference, Mr Rajan Anandan, vice-president and general manager, Dell India, said, “The project will be completed by June 2007 and will initially manufacture desk-top computers.” The project, coming up at a 50-acre land in a special economic zone, according to him, will provide 1,000 skilled jobs directly and another 4,000 jobs indirectly. Mr Paul-Henri Ferrand, vice-president, Dell (South Asia), said, “Dell will be investing $30 million in the initial five years and double the amount in the next five years. We will then be building an entire ecosystem with suppliers around the factory.”

He said the company would be heavily investing in technology and people. Mr Ferrand said the company would start the production with a capacity of 300,000-400,000 desktop PCs a year and would eventually scale up the capacity. Mr Shaktikanta Das, industry secretary, said that with every part of Dell’s investment, 7 times more investment comes into the country in way of investment of suppliers and component manufactures. “This investment will make a major impact on the hardware manufacturing ecosystem in the State,” he added.

Mr Das said the government has earmarked 130 acres of land for an electronic component park near Dell’s facility. If required, the government would allocate more land to the component manufacturers, he added. Mr Anandan said Dell is the largest player of desktop PCs in the Indian corporate segment and with the new facility, the company would penetrate the SME and mass segment.

Dell expects to bring down the prices of PCs owing to them being manufactured in India. The company would initially “focus on the domestic market” and later on will start exporting from India. The company also has plans to manufacture laptops and servers at a later stage.

Mumbai, Sept. 14: The long wait finally came to an end for the bulls when the Sensex crossed the much-elusive 12,000 mark on Thursday in intra-day trade after failing to do so for the past several sessions. The index, which had last seen this level on May 18, touched an intra-day high of 12,003.68. At 2.40 pm, the Sensex was quoting at 11,967, up 74 points from the previous close. Earlier, it touched a intra-day high of 12,003.

The NSE Nifty, meanwhile, was up 0.5 per cent at 3,472. The BSE Sensex closed at 11,973.02, up 79.23 points and NSE Nifty closed at 3,472, up 17 points. Out of 2,569 stocks, 1,137 advanced, 1,367 declined and 65 stocks remained unchanged on the BSE.

Hyderabad, Sept. 14: The promoters of Satyam Computer Services Ltd, led by chairman B. Ramalinga Raju, have decided to corporatise their 8.5 per cent shareholding in the company. While Mr Raju holds 92,25,000 shares, or a 2.83 per cent stake, in the company, it is his younger brother, Mr B. Rama Raju, chief executive officer of Satyam, who has the largest individual stakeholding among the promoters. Mr Rama Raju owns

1,07,19,000 shares, or a 3.28 per cent stake, in the company as of 30 June, according to a Satyam filing with the National Stock Exchange. Ms B. Nandini Raju, wife of B. Ramalinga Raju, owns 40,47,000, or a 1.24 per cent stake, while Ms B. Radha Raju, wife of B. Rama Raju, owns 38,74,000 shares, or a 1.19 per cent stake. Mr C. Srinivasa Raju, chairman of iLabs Group, a private equity group, holds a 0.27 per cent stake, making him the largest shareholder after the promoters.

According to a Satyam press release, “This structuring has been undertaken in an effort to corporatise existing shareholding of the core promoters.” “In this structuring, the entire 8.5 per cent shareholding held by Mr B. Rama Raju, Mr B. Ramalinga Raju, Ms B. Nandini Raju, Ms B. Radha Raju, in their individual capacities, has been transferred to a holding company controlled by them. This transfer was executed through a block trade over the stock exchanges,” the release said.

While it is not clear what prompted the core promoters to corporatise their shareholding in Satyam, there has been persistent media speculation that Mr Ramalinga Raju would be selling the promoters stake, and exiting the company he co-founded in 1987, and had listed on the New York Stock Exchange in 2001.

IBM and EDS have been named as possible suitors. Satyam has consistently denied the reports. According to industry watchers, the corporatisation would make it imperative for the promoters to arrive at a unanimous decision on a possible sale. At Thursday’s closing price of Rs 810.50 of Satyam shares of Rs 2 each on the National Stock Exchange, Mr Ramalinga Raju’s stock was worth Rs 747 crores, while Mr Rama Raju’s holding was worth Rs 868 crores.

At Dr Reddy’s Laboratories Ltd, the other NYSE-listed firm from Hyderabad, the promoters, led by company founder K. Anji Reddy, owned a 27.16 per cent stake, as of June 30. While individual promoters own stakes of below one per cent, two privately-held companies own an 18.85 and a 5.39 per cent stake, respectively, in Dr Reddy’s, according to the company’s filing with the Bombay Stock Exchange.

New Delhi, Sept. 14: Union chemicals and fertilisers minister Ram Vilas Paswan is fighting a losing battle against multi-national company, Zuari Maroc Phosphates Private Ltd., over his refusal to sign on the dotted line for the final approval to hand over 74 per cent controlling shares of one-time PSU Paradeep Phosphates Limited (PPL) for a ridiculous sum of Rs 15 lakhs.

The 74-per cent PPL controlling shares of this former PSU were first sold for a sum of Rs 151.70 crores to Zuari Maroc Phosphates Private Limited, after which the company claimed Rs 151.55 crores back from the government. Zuari Maroc Private Ltd is a 51:49 JV between Zuari Industries promoted by the K.K. Birla group and Maroc Phosphore, a wholly owned subsidiary of Morocco’s OCP group.

After it ran into a dispute with the ministry of chemicals and fertilisers and the Union finance ministry, the company employed the services of international assessers to come at this startling figure of Rs 151.55 crores as claims from the government for buying a company, in which according to the Union government, it has invested over Rs 670 crores.

Zuari first employed international assessors PricewaterHouseCooper, London, which advised Zuari Maroc to demand Rs 234 crores from the government, for a company for which Zuari-Maroc paid only Rs 151.70 crores. In effect, that amounts to the government handing over along with the huge PSU on Paradeep port of Orissa, an amount of Rs 82.30 crores to Zuari.

The PPL was disinvested by the then NDA’s disinvestment minister Arun Shourie in 2002-03. According to the chemcials and fertilisers ministry, the final deal to hand over the company was clinched in February 2003. But since there was still a month-and-a-half to go for the financial year to close, the actual valuation of the company’s book losses were left to be calculated after March 31, 2003. There was a clause in the deal, called “post-closure adjustment”.

After March 31, 2003, Zuari Maroc got PricewaterhouseCooper to make a valuation of the losses and made a claim of Rs 151.55 crores on the chemicals and fertilisers ministry. But the then chemicals and fertilisers minister Sukhdev Singh Dhindsa also refused to sign on dotted line when the disinvestment ministry wanted his approval for it. The matter went upto the then Union finance minister Jaswant Singh, who too refused to support the contention of the disinvestment ministry.

New Delhi, Sept. 14: India’s Apollo Hospitals on Thursday made an exit from its joint venture in Sri Lanka by selling its entire stake in Lanka Hospitals Corporation following an open offer made by Sri Lanka Insurance Corporation (SLIC).

“The decision was taken after considerable deliberation, keeping in mind our clear objectives of increasing our own shareholder value and long term business goals,” Apollo Hospitals Enterprise executive finance director Suneeta Reddy said in a statement. Apollo, which held 33.22 per cent in the joint venture, sold its entire equity stake of 5.203 crore shares at a rate of Sri Lankan Rupee 28 per share to SLIC with a deal value worth around SLR 145.68 crore (about Rs 65 crore).

The decision to exit from the joint venture comes after Sri Lankan tycoon Harry Jayawardena-promoted SLIC increased its stake in Lankan Hospitals Corporation (LHC) from 19.86 per cent to 36.07 per cent. “With only a minority shareholding, it would have been difficult for Apollo Hospitals to operate effectively,” Ms Reddy said.

Two other minority shareholders of LHC, Sino-Lanka which held three per cent and R. Navaratnam, a key promoter of Apollo in Sri Lanka who had five per cent, also sold their stakes to the insurance company. Apollo Hospitals was engaged in a bitter row recently to retain ownership of LHC and had Indian high commissioner Nirupama Rao intervene on behalf of the company to secure their holding.

Hyderabad, Sept. 14: The Commonwealth of Pennsylvania (CoP), one of the largest States in the United States of America, has opened its second Indian office in Hyderabad. The commonwealth opened its first office in Bangalore in 2001. “The Hyderabad office has been opened due to increasing interest in investment activities in the commonwealth by Indian companies, as well as the State seeking new foreign direct investment to secure jobs and capital,” Mr Raj Devireddy, representative director for Andhra Pradesh, said in a statement issued on Thursday.

Hyderabad, Sept. 14: TiE-ISB Connect 2006, an annual networking event for entrepreneurs, investors and business leaders will be held from September 20-22 in Hyderabad and will feature 40 venture capital firms and business leaders like Air Deccan MD Captain G.R. Gopinath and Satyam chairman B. Ramalinga Raju.

The three-day event is being organised by The Indus Entrepreneurs, a network of IT professionals aiming to promote enterpreneurship in the technology sector in India, and the Wadhwani Centre for Entrepreneurship Development at the Indian School of Business. Addressing a press conference here on Thursday, Mr J.H. Chowdary, president TiE, Hyderabad, said, “TiE-ISB Connect 2006 has generated enormous interest among aspiring entrepreneurs, investors and business leaders. This time the scope is much wider, touching 5 new industry tracks.”

TiE-ISB Connect 2006 will deliberate on entrepreneurial opportunities in sports and fitness, retail, media and entertainment, infrastructure, real estate and semiconductors. Along with these, there will be industry tracks on biotech/pharmaceuticals, Internet technologies, technology and ITeS. Professor Chandrasekhar, executive director of Wadhwani Centre for Entrepreneurship Development, the ISB, said, “Our focus is to nurture and guide the next generation of business leaders. We aspire to be the hub of all innovative entrepreneurial activity.” The VC firms, including the Carlyle Group, Sequoia Capital, ICICI Ventures and DFJ, with a combined venture fund of about $5 billion, are attending the event, eyeing strategic and profitable investment opportunities.

Hyderabad, Sept. 14: Royal Orchid Hotels Ltd, which owns a chain of budget and luxury hotels in southern India, is scouting for properties in northern and western India, even as it expects to launch its properties in Hyderabad and Jaipur, Mr Chender Baljee, chairman and managing director, of the company said on Thursday.

Mr Baljee said Royal Orchid Hotels, which went public in January this year, raising Rs 112 crores, would be using the IPO proceeds to buy property in Mumbai and Delhi. “Developing a hotel in Mumbai would entail the purchase of land, which will be expensive. We plan to use the IPO proceeds for a big-ticket project in Mumbai,” he said.

Royal Orchid currently operates four hotels in Bangalore and will be opening a heritage hotel in Mysore. As part of the expansion into other southern states, Mr Baljee said, Royal Orchid will be opening a boutique hotel in Hyderabad. The property is being developed by Mr Harmahendar Singh Bagga, a local entrepreneur, and Royal Orchid will be running the 85-room hotel.

Okay, first the good news. The outsourcing or offshoring story in India will be alive and well for the forseable future. Corporations, mostly in the United States, will continue to outsource their IT requirements, from software solutions to technical support, to India, for two reasons. Yes, cost is one of them, but, more importantly, it will be because Indian computer geeks have brains coming out of their ears, and can write sexy software. Now, for the anxiety-generating part of the outsourcing story. Sure, there will be a lot of offshoring work to go around, but it will be divvied up by the top five companies.

Essentially, it will be companies like Tata Consultancy Services, Infosys Technologies and Wipro Ltd, who will be grabbing the largest slices of the outsourcing pie. So, what happens to the thousands of smaller companies, the so-called mid-size firms. “Clearly, there will be a shakeout in the Indian IT services industry. Most the smaller firms have seen a steep drop in their profitability, and there will be marginalised,” John C. McCarthy, vice president, Asia Pacific Research, at Forrester Research, Inc., an independent technology research firm, told me on Thursday.

According to Mr McCarthy, who is based in Cambridge, Massachussetts, the biggest problem with mid-sized software service companies in India is that they “glorified captives”. “Their largest client contribute more than 50 per cent, if not more, of their revenues, and that is an obstacle which could be problematic in the future,” Mr McCarthy said. “These companies now have cash flow problems, and the marginalisation process has escalated. They are now involved in playing catch-up with the big companies like TCS, Infosys and Wipro, who have expanded their portfolios. It’s a losing battle.”

More worryingly, he says, the shareholding pattern of many mid-sized technology companies is so complicated that consolidation, in which companies can buy each other, is almost impossible. “The smaller software companies do not have the courage to change the way they do business, to differentiate themselves, so they are in a bind because the big boys can do the same thing more efficiently. They will eventually become body-shopping outfits for the large companies, unless they can bring more value to their clients with their services,” he says.