Thomas Cook, Sterling merge to create India's biggest holiday firm

Mumbai: Thomas Cook (India), a travel and holiday services company backed by billionaire investor Prem Watsa and vacation-ownership major Sterling Holiday Resorts (India) on Saturday announced a part-cash part-equity merger deal to create India's largest holiday company.

"The merger aims at building a holiday behemoth which will take holidays to a larger population," said Ramesh Ramanathan, MD, Sterling Holidays.

ET reported on February 4 that Thomas Cook was in advanced talks to take over Sterling. The merger deal, which values Chennai-based Sterling at Rs 870 crore, will be completed through a multi-stage process. Under the merger terms, for every 100 shares that they hold in Sterling, shareholders of Sterling will receive 120 shares of Thomas Cook.

The merger process will start with Thomas Cook India Ltd (TCIL) making a preferential allotment to Sterling for Rs 187 crore. TCIL will, then, buy shares from other shareholders, including Bay Capital and ace investors Rakesh Jhunjhunwala, Radhakrishna Damani, for Rs 176 crore. The company will, then, make a mandatory open offer for Rs 230 crore. Sterling will be merged into a wholly-owned arm of Thomas Cook.

The total value of the merged entity will be equivalent to Rs 3000 crore. "Sterling will have an independent management team led by Mr Ramanathan. We will operate at arm's length, but we will certainly explore synergies which can bring in savings," said Madhavan Menon, MD, Thomas Cook.

"We anticipate M&As in travel and interest would be in clean platforms with strong travel teams and also those having invested in technology to enhance client retention and service," said Ajoy Lodha, partner, investment bank, Singhi Advisors.

Everest Spices plans to set up processing units in Zanzibar

at an investment of about Rs. 100 crore, said Sanjeev Shah, Executive Director of the company.

He was addressing the media on the occasion of the visit of President of Zanzibar, AM Shein, to the company headquarters.

Zanzibar is an archipelago in the Indian Ocean and a semi-autonomous region of Tanzania.

Spices such as cloves, nutmeg and cinnamon produced on the islands are traded globally.

Exports
Using Zanzibar as a base, Everest will export its products to the African market.

Shah said his company has entered into a memorandum of understanding with the Zanzibar Government for setting up the production units. It could take three years to get the production online, as the site and viability studies are still underway.

Products from the units would be made for African cuisine but some Indian spices such as chillies could also be added to the final product for enhanced flavour, he said.

Port
He said Zanzibar being close to Tanzanian ports will also help in reaching the market across the continent.

Shein said Zanzibar is making additional efforts to increase production of agriculture products such as rice and spices, which will help companies such as Everest.

Modern technology in agriculture is also a top priority for the Government and therefore talks are also underway with automobile companies such as Mahindra and Mahindra.

Using Zanzibar as a base, Everest will export its products to the African market

New Zealand announces new education initiatives

Mumbai: New Zealand has announced a string of new initiatives to further deepen its education relationship with India.

A joint call for research proposals for Indian and New Zealand academics has been made to increase research collaboration across a range of areas including food security and agriculture, community development and innovation, health, environment and sustainability, India-New Zealand trade relations, information security and urban planning and development.

Announced on the occasion of Waitangi Day, New Zealand’s national day, by Education New Zealand’s (ENZ) Regional Director South Asia Ziena Jalil, the programme acknowledges the multi-faceted education relationship between India and New Zealand.

In 2012, there were 11,349 Indian students studying in New Zealand, an increase of 194 per cent from 2007. Hindi is the fourth most widely spoken language in New Zealand.

“This call for proposals has been jointly facilitated by ENZ and India’s University Grants Commission (UGC) and would form part of the activity we undertake in India as part of the India New Zealand Education Council (INZEC) initiative which was announced by both our Prime Ministers,” Jalil said.

Stating that all New Zealand universities feature in the top 500 globally, she added that the call for research proposals is a deliberate attempt at sharing experiences with Indian partners.

HCL to put Rs 1,000 cr into health care

New Delhi: The HCL group on Thursday announced that it would foray into the health care segment, the first diversification outside its core business of information technology. Through the next five years, the group plans to invest Rs 1,000 crore in the venture, to operate through a countrywide network of out-patient multi-speciality clinics called HCL Avitas.

HCL Healthcare, the group’s health care arm, is in talks with hospital chains to partner it in tertiary care.

Funded through HCL Corporation, the holding company of HCL Technologies and HCL Infosystems Ltd, the venture has started operations by acquiring two Bharat Family Clinic branches in the National Capital Region.

HCL Avitas clinics will offer value-added services such as personalised relationship managers and electronic medical records to patients. They will also provide in-house services such as diagnostics, pharmacies and radiology. The venture is primarily targeted at the urban middle-class population of corporate employees, small and medium enterprises and small businessmen.

HCL Healthcare Vice-Chairman Shikhar Malhotra told Business Standard collaboration with Johns Hopkins Medicine International in the US would help in implementing the concept in India. “Here, a patient beyond doctor’s care will be handled by a team of specialists, which will include a health care coordinator, essentially a relationship manager. This is a unique patient-centric approach.”

The company would initially focus on expanding these clinics, but in the long run, might also foray into secondary and tertiary care and build its own hospitals.

Initially, the group plans to expand its health care division in northern India. So far, the venture has 125 people on board, clinical and non-clinical staff. “We intend to provide a continuum of care to our patients. Right now, we will partner some of the best hospital networks in India. There is a referral mechanism going into these hospitals. Discussions are on around this,” Malhotra said.

While HCL founder-chairman Shiv Nadar is on the board of the health care company, his daughter, Roshni Nadar Malhotra, will not be involved with the new venture.

The company’s promoters are also involved in the education sector, through Shiv Nadar University and Shiv Nadar School. These are not-for-profit institutions run by the Shiv Nadar Foundation.

Of late, health care has attracted many corporate groups, including B K Modi’s Spice Global, who view this segment as a de-risking strategy. According to industry estimates, the domestic health care sector is poised to touch $100 billion by 2015 and $275.6 billion by 2020. In 2010, the sector was estimated at $40 billion.

In November 2013, Nadar had committed Rs 3,000 crore through the next five years to expand the Shiv Nadar Foundation’s education ventures, which are oversee

Infosys plans centre in Brazil

Bangalore: Infosys plans to open a new delivery centre in Brazil to increase their Latin American presence. This centre will come up in Araraquara and will be a 100-seater and will come up in 550 square metres. Further, it will employ 25 employees and provide SAP-related services to Citrusuco, a leading orange juice producer, amongst other clients, the company said in a statement. Brazil’s workforce, a growing domestic market and a positive environment fostered by the government make this country an attractive destination for us, according to Claudio Elsas, Country Head, Infosys Brazil.Our Bureau

Volvo, Eicher JV to invest over Rs 600-1,000 crore in India

New Delhi: At a time when truckmakers are cutting production and laying off people, VE Commercial Vehicles (VECV) - a joint venture company of Volvo and Eicher Motors - is investing over Rs 600-1,000 crore to add a second manufacturing line at its Bangalore plant, double the bus plant capacity in Pithampur in Madhya Pradesh.

Volvo Group will be investing in the expansion of capacity at its Bangalore plant for a second manufacturing

line, where the new Pro 8000 trucks will be manufactured. VECV, the JV company, will be investing another Rs 600 crore to bring the 'Pro' series into the market.
Vinod Aggarwal, CEO, VE Commercial Vehicles, told ET, "These two years have been the most difficult period and we have sustained these two years with glory. Even in this difficult period, we have executed our strategy on time and in the most efficient manner. The next one year is going to be exciting, as we would be launching a new range of trucks over the next 12-18 months (5-49 tonnes)."

Most part of the new Pro Series range starting with Pro 1000 light duty trucks will be launched this month, followed by the 3000 series medium-duty trucks in March, then 6000 and 8000 heavy-duty trucks in the second half of this year.

To make the most of the new range of trucks, in order to focus on sales, VECV is restructuring its sales and marketing functions, by creating separate verticals for light and medium-duty trucks, heavy-duty trucks and buses and the same will be replicated in the showrooms as well.

Declining to comment on the exact quantum of investment in the second manufacturing line in Bangalore, Philippe Divry, senior VP, Trucks Joint Venture India said, "It is part of our overall investment plan in Bangalore; we are still in the investment phase. The PRO 8000 series will be built there. The second line will be ready by the middle of year."

VECV posted 15.5% decline in volumes in 2013 better than the overall market decline of 24.7% in 2013 in the 5 tonne-49 tonne category. The overall market came down to 297,316 units from almost 4 lakh units sold in 2012. The likes of Tata Motors and Ashok Leyland announced VRS schemes in their plants while Volvo Eicher is likely to hire more people to meet the demand of its new products.

The company posted its highest ever market share of 13.8% in 2013. Eicher's light and medium-duty market share declined marginally to 30.4% in 2013 as compared to 31.4% in CY 2012. It marginally improved the market share to 4.4% in the heavy-duty truck space and increased market share in buses to 13.5% jumping 150 basis points.

The sales of the company have doubled since setting up a joint venture with Volvo. In an era of discount war when other truckmakers are bleeding, Eicher Motors had the highest margin by a truckmaker in India of 6-6.5% for the first nine months of 2013.

"We have a very strong game plan to reach 15% market share in medium- and heavy-duty trucks," said Siddhartha Lal, MD and CEO Eicher Motors.

Australia seeks to export SolarGen technology to India

Hyderabad: Australia is exploring the opportunities of exporting SolarGen technology which it feels has potential applications in Indian industry. Some of the sectors identified are petrochemicals, fertilisers and transportation.

Developed by Australian scientists the technology can provide a sustainable and cost effective alternative for the production of hydrogen, which in turn will help these industries, says Jim Hinkley, of the Commonwealth Scientific and Industrial Research Organisation (CSIRO).

In India recently, Hinkley told Business Line that, “There is a particularly strong potential to roll out the technology in Gujarat and Rajasthan because both states have excellent solar resources and natural gas infrastructure, as well as being major industrial users of hydrogen”.

The technology facilitates concentrating the sun's rays to drive a reaction between water and natural gas which stores solar energy in the form of chemical bonds. The resulting fuel has a higher energy yield than natural gas. The SolarGas can then be used to produce high-efficiency electricity in a gas engine or turbine, he explained.

According to CSIRO by using Sun’s rays for heat, in combination with new catalysts, SolarGas uses upto 50 per cent less fossil fuel and higher percentage of water as well.

A study has also found that the technology developed by the CSIRO could help India’s efforts towards achieving energy security. Some of the benefits include improved energy and food security by reducing natural gas consumption; new jobs created through local manufacturing and operation of the technology; the potential to produce solar liquid fuels for transport.

The study was funded by the Australian Government and undertaken by CSIRO in collaboration with the Solar Energy Corporation of India. It has also developed a concept design for a pilot scale SolarGas facility and identified numerous potential host sites suitable for such a pilot project.

Energy and energy security are critical issues for Australia and India, and we have much to offer each other by sharing our renewable technology expertise and technology, said Australia’s High Commissioner to India Patrick Suckling while launching the study recently.

Mytrah Energy adds 150 MW wind power capacity

Hyderabad: Mytrah Energy Ltd has added wind power generation capacity of about 150 MW in the three southern States of Andhra Pradesh, Karnataka and Tamil Nadu. This has increased its installed wind power generation capacity from 309.9 MW to 459.9 MW.

The wind power generation company, based in Hyderabad and listed on the Alternative Investment Market of (AIM) of the London Stock Exchange, is implementing wind farms with total capacity of 238.2 MW at three locations — Burugula (37.4 MW) in Andhra Pradesh, Savalsang (100.3 MW) in Karnataka and Vagrarai (100.5 MW) in Tamil Nadu.

It has commissioned additional capacity at these sites. All the three projects are being commissioned on a rolling basis with the stabilisation process conducted throughout the first quarter of 2014.

Burugula and Savalsang are Mytrah’s first two self-development projects constructed on the company’s land with Gamesa. This provides the company with diversification when combined with its turnkey agreement with Suzlon.

India Cements gets Centre’s nod for capacity expansion

The company is setting up a 40 MW power plant at one of its facility in Tamil Nadu at a cost of Rs 810 cr
Chennai: An expert appraisal committee under the ministry of environment has given its nod to India Cements to double its capacity and set up a 40-Mw power plant at one of its facilities in Tamil Nadu. The proposed expansion project will come up at Dalavoi in Ariyalur district. According to a senior official of the company, the capacity addition would cater to Tamil Nadu and Kerala markets. "It will be a significant expansion in the two markets, where not much of the capacity additions expected in the future,” said the official.

It is expected to take about two years to complete the work. Current capacity for clinker production in this facility is 1.24 million tonnes per annum and the company plans to add 1.53 million tonnes taking total clinker production capacity to 2.77 million tonnes per annum. Cement (OPC/PPC) production capacity is 2.16 million tonnes and the company plans to add 2.55 million tonnes taking the total cement production capacity to 4.71 million tonnes.

The proposed expansion will be carried out in an area of 25.09 hectares. The estimated cost of the project is Rs 810 crore, including Rs 39.6 crore and Rs 5.71 crore earmarked for the capital cost and recurring cost per annum towards the environmental pollution control measures. India Cements, country's one of the largest cement manufacturers, currently has a total capacity of 15.5 million tonnes. It has seven plants in Tamil Nadu and Andhra Pradesh and one in Rajasthan. The company is also planning to add 2X20 Mw power plant in the facility.

The captive power plant will use coal/pet coke as fuel. The power requirement for the facility would be 41.4 Mw, which will be met from the captive power plant and the Tamil Nadu Electricity Board, according to the company's disclosure to the ministry.

SDF to shift some tractor engine lines from Italy to India

New Delhi: Farm equipment maker Same Deutz Fahr (SDF), which recently unveiled its Lamborghini tractors in India, proposes to shift some engine production lines from Italy to its plant at Ranipet, near Chennai.

The company plans to invest Rs 300 crore over the next one year in expanding the tractor engine production capacity, said Bhanu Sharma, Managing Director and CEO of SDF India Pvt Ltd.

Two new lines
“We are planning to shift production of tractor engines with three and four cylinders, that will have a horse power range of 80-110,” Sharma said. Two new tractor engine production lines will be added at its existing facility in Ranipet.

Shifting of production lines will help the company introduce newer range of tractors with higher horsepower in the Indian market by 2015, where the demand for higher capacity tractors is seen going up, Sharma said.

key factors
The shortage of manpower, rising labour costs and consolidation of land holdings are the key factors that are driving the tractor sales, he added.

Currently, SDF manufactures about 8-9 tractor models in the mid-segment with a horse power range of 40-80 hp, bulk of which are exported to about 54 countries across Asia, Africa, Latin America and Australia.

The company sold about 2,000 Deutz Fahr tractors in the Indian market this year and is planning to double it in 2014.

SDF is eyeing a production to 25,000 tractor engines during 2014, up from the current year’s output of 15,000 engines, Sharma added.

Lamborghini tractors
SDF unveiled its Lamborghini range of tractors in India at an agri-fair in Pune, recently.

The company is in the process of finalising the specifications for the Indian market, based on the customer requirement, and expects to start rolling out Lamborghini tractors in the second half of 2014, he added.

SDF is targeting rich farmers and high profile individuals with farming interests, besides golf courses, cricket stadiums and luxury resorts.

RBI allows foreign retail investments in tax-free rupee bond

Mumbai: The Reserve Bank of India on Tuesday allowed foreign retail investors, including non-resident Indians, to invest in rupee-denominated tax-free non-convertible bonds.

Funds raised through these bonds can be invested in infrastructure projects and in fixed deposits with banks. "It has been decided to permit resident entities, companies in India, authorized by the government of India, to issue taxfree, secured, redeemable, non-convertible bonds in rupees to persons resident outside India to use such borrowed funds for on lending, re-lending to the infrastructure sector and keeping in fixed deposits with banks in India pending utilization by them for permissible end-uses," RBI said in a statement.

It said the move will widen the investor base, help in internationalizing the currency and open another window for foreign investors.

At present, foreign institutional investors are not allowed to invest in tax-free infrastructure bonds issued by companies such as Power Finance Corporation, NAHAI, IIFL and Rural Electrification Corporation. Every year, the government allows some public sector companies to issue tax-free bonds.

Global investors have shown interest in rupee-denominated bonds. Recently, International Finance Corporation, the private finance arm of World Bank, had raised Rs 1,000 crore in the US by issuing rupee-linked bonds to global investors. IFC plans to raise a total of $1 billion. In such currency bond, the foreign investor will get proceeds in rupee.

"This will help in increasing the market base by including small and wide ticket size into Indian debt market," said Ashutosh Khajuria, president (treasury) at Federal Bank. "It is one step towards internationalisation of the currency." Since the bonds are rupee-denominated, volatility in the currency will not have an impact on the issuer. To that extent, external debt will be taken care of.

NSIC inks tech transfer pact with Mauritius counterpart

New Delhi: The National Small Industries Corporation (NSIC) on Monday signed a pact with Mauritius-based Small and Medium Enterprise Development Authority for technology transfer, marketing and finance and training exchange programmes.

The pact, aimed at modernising small and medium industries in both the countries is for a period of three years, the Minister of State (Independent Charge) for Micro, Small and Medium Enterprises (MSME), K.H. Muniyappa, told reporters here.

“The pact will also include technology transfers from India to Mauritius, implementation of strategy for development of incubation centres in Mauritius, exchange of business missions, facilitate fairs and to carry out industrial surveys between,” MSME Secretary, Madhav Lal, said.

The MSME sector in India, which provides employment to about 8 crore people, contributes 8 per cent to gross domestic product and its share in total exports is 36 per cent.

VW sets up unit to export parts of Vento, Polo

Pune: Volkswagen India Pvt Ltd has set up a unit to manufacture and package parts of the Vento and Polo for export at its Pune plant.

Announcing the inauguration of the parts and components Business Unit, the company said it has invested around Rs 56 crore to develop it.

The company added that it will begin with export to Malaysia.

The Indian export parts will contribute to approximately 70 per cent of the car which will then be assembled for the local market at the DRB Hicom Plant.

Volkswagen India has been exporting cars from Pune since last year as fully built units to markets such as South Africa, Sri Lanka, Nepal, Bangladesh, Malaysia and the left-hand drive version of the VW Vento to West Asia.

About 215 new jobs will be created in the parts and components BU at Volkswagen and its suppliers.

“Apart from the Malaysian market, if there is a demand from any other region for parts and components, we are on the pole position to support,” said Andreas Lauenroth, Executive Director Technical, Volkswagen India.

Localisation
Currently, Volkswagen cars in India are localised to the extent of 70 per cent, and the company has plans to localise further by building engines and gear boxes, if the volumes support this.

“It will be the next logical step if the numbers grow,” said Alexander Skibbe, spokesperson for VW India.

D Purandeswari inaugurates India Show in Panama

New Delhi: The Minister of State in the Ministry of Commerce & Industry, Dr. D Purandeswari today inaugurated the India Show in Panama. Speaking during the inauguration, the Indian Minister emphasised on enhanced cooperation and engagements between India and Panama. She exhorted the business leaders of both the sides to increase the trade and investments to next level.

She also emphasised that the visa regime between two countries should be liberalised besides a general Memorandum of Understanding (MoU) for trade and economic cooperation between both the countries may be signed.

Mr. Ricardo Antonio Quijano Jimenez, Commerce and Industry Minister of Panama, Mr. Irvin A. Halman, President of Panama Chambers of Commerce, and Indian Ambassador to Panama Mr. Yogeshwar Varma, were also present during the inauguration of India Show.

Before the India Show, Dr. D Purandeswari also participated in the Expocomer Fair 2013 of Panama. Expocomer fair was inaugurated by Mr. Ricardo Martinelli, President of Panama. Others present included Governor of Pueto Rico, various ministers of government of Panama and representatives of Panama Chambers of Commerce and CII.

Dr. D Purandeswari also expressed that Panama should conduct a road show in India shortly and exchange of business delegations between both the countries should also take place.

L&T to acquire Komatsu stake in joint venture

Mumbai: Larsen and Toubro will acquire the 50 per cent stake held by Komatsu Asia & Pacific in L&T-Komatsu Ltd (LTK).

Komatsu Asia & Pacific is a wholly-owned subsidiary of Komatsu Ltd, Japan.

L&T declined to furnish details of the transaction and said the value was insignificant. L&T holds the balance stake.

Komatsu is the largest manufacturer of hydraulic excavators and has manufacturing and marketing facilities worldwide.

With this buy-out, LTK will become a wholly owned subsidiary of L&T.

L&T Komatsu will continue to manufacture construction equipment and hydraulic components. Komatsu will be responsible for the production of Komatsu equipment including hydraulic excavators, L&T said.

L&T will continue to extend marketing, sales and product support in India for the Komatsu range of products.

L&T started the Bangalore unit to make hydraulic excavators in 1975. It inked the joint venture in 1998.

The Bangalore facility comprises machinery and hydraulic works. The products manufactured at L&T-Komatsu are supplied to domestic and overseas customers.

Yamaha opens fifth global R&D centre in India

New Delhi: Japanese two-wheeler major Yamaha Motor Company (YMC), which on Tuesday announced the establishment of Yamaha Motor Research & Development India (YMRI) at its Greater Noida facility, is looking at leveraging India as a procurement hub to source components for its two-wheeler operations globally. India would be the fourth regional procurement hub for Yamaha worldwide after China, Japan and the Asean.

Yuh Motoyama, senior general manager, engineering section (motorcycle business operations), said, “The research and development (R&D) unit is an integrated development centre, the second such for Yamaha globally. The vendor base in India is strong and cost-competitive and the potential to source parts from here for our operations globally is very promising.” YMC had inaugurated its first integrated development centre in Asean in Thailand last year.

Besides purchasing, YMRI would work closely with engineers at the Yamaha headquarters in Japan to develop low-cost models.

“YMRI is the fifth foreign R&D facility for Yamaha. Every centre has a mandate. While the unit in Taiwan concentrates on developing products in the 150-cc category, the centre in Italy focuses on developing two-wheelers for the European market. While platforms would continue to be made in Japan, YMRI will modify them to create low-cost products for the domestic market”, added Motoyama. The ‘root model’ can then be altered for exports to markets in Africa and Latin America.

Toshikazu Kobayashi, managing director, YMRI, said, “Our aim is to develop the lowest-cost model and parts in the world. Our aim is to develop a low-cost bike at around $ 500 for both the domestic as well as exports markets.”

He, however, declined to specify a timeline for launching the product in the Indian market. Yamaha’s move is a part of its strategy to expand its footprint in the mass commuter segment in the country.

Yamaha, at present, has marginal share in the low-cost commuter segment with the YBR110 and Crux which together sells around 4300 odd units every month. The segment accounts for over 65 per cent of motorcycle sales in India.

Additionally, to enhance its presence in the domestic two-wheeler industry India Yamaha Motor (IYM) will launch a new scooter every year till 2016. Hiroyuki Suzuki, chief executive officer and managing director, IYM said, “We intend to sell one million units by 2016 and grab 10 per cent of the domestic two-wheeler industry. In the scooter segment, we will launch one new product every year to attain market share of 20 per cent in the same period.”

In the current financial year the company is eyeing sales of 710,000 units, which is an increase of around 45 per cent over the 490,000 units sold last fiscal. While 500,000 units will be sold in the domestic market, the remaining numbers would come in from exports.

TCS to acquire French firm Alti for Rs 533 cr

New Delhi: Tata Consultancy Services (TCS), India’s largest IT services provider, today said it would acquire France-based Alti SA for euro 75 million (around Rs 533 crore) in an all-cash deal.

The impact of the announcement was evident on the company’s stock, which rose two per cent intra-day on BSE to Rs 1,512 a share, before closing at Rs 1,497 — up 1.1 per cent.

The acquisition, one of the largest for TCS in continental Europe and one of the first by a large Indian IT player in France, signifies how the firm wants to increase its presence in the region beyond the UK.

BNP Paribas was TCS’ sole advisor for the deal.

Alti SA is a privately-held company, owned by its management and two private equity funds — CM-CIC LBO Partners and IDI — which supported its growth from a revenue base of euro 64 million (around Rs 455 crore) in 2007 to euro 126 million (around Rs 895 crore) in 2012. The firm is considered among the five top system integrators of enterprise solutions in France. Its key customers include several top French corporations in banking, financial services, manufacturing, utilities and luxury sectors.

“This acquisition underlines our long-term, strategic commitment to France, which is the third-largest IT services market in Europe. The acquisition would help us serve our clients in France and across Europe more comprehensively, with an expanded set of services and solutions, bringing the best of TCS to French corporations,” said TCS CEO & MD N Chandrasekaran.

TCS has managed to acquire Alti for a discount to its revenue, reflecting the valuation pressure several European companies are facing. “Valuations of European firms, especially in France and Germany, are very attractive. And, the IT firms sitting on cash piles would make use of this opportunity. If you look at comparable multiples of these firms today, those are very low,” said an investment banker on the condition of anonymity.

The acquisition would give TCS a large presence in Europe — France, Belgium Switzerland and Algeria — with an employee base of 1,200.

India Inc's average IT budget to cross $12 mn

Mumbai: India is one of the fastest-growing IT services markets in the world, with three-quarters of large Indian enterprises planning to increase IT spending in 2013, with an average IT budget of $12.2 million, according to a survey by Gartner.

According to Gartner, Indian service providers have an opportunity to capitalise on planned increases in IT spending among Indian enterprises in 2013.

Between June and September of 2012, Gartner surveyed 1,523 large enterprises (those with more than 1,000 employees) to determine their IT spending plans. Within the survey, 153 respondents were in India.

“Indian companies' IT priorities in 2013 are the cloud (particularly infrastructure as a service [IaaS]), virtualisation, data center consolidation and IT modernisation,” said Arup Roy, research director at Gartner.

He further said: “Approximately 10% of spending in 2012 was allocated to external services; and 14% of this was on cloud related initiatives. Similar ratios are expected in 2013. There is a greater inclination towards private cloud contracts, more than in any other market this year.”

About 30% of large Indian companies said that control of IT budgets is shifting toward business units, including marketing, the CFO office and lines of business. As budget control shifts occur, when all budgets become IT budgets, service providers must take a multipronged approach and not target only CIOs.

In line with the trend observed in other countries, the biggest IT spending in India was in the communications industry, followed by banks and securities. As banks embark on their next phase of transformation into more competitive, customer-friendly institutions, key opportunities are likely to come up in the areas of core banking systems and upgrades/ integration with other peripheral systems. Near-term opportunities in the banking sector will be in the areas of collections, contact center services, business intelligence (BI), mobility and IT outsourcing (ITO).

Relatively poor spending in the vertical industries of insurance, government and utilities set India apart from other countries. Nevertheless, these markets are likely to offer strong opportunities for service providers. Some of the largest IT deals are starting to come from central and state government. Specifically, opportunities are emerging in state and central government bodies that relate mainly to efficiency, transparency and e-enabling projects for citizen-facing services, as well as workflow-related projects.

“In most organizations the IT department controls the budget, which is centralised, but some control is shifting. This is more or less in line with other emerging and mature markets“ said Roy.

TVS Motor, BMW tie up to tap technology, market access

Chennai: TVS Motor and BMW AG's motorcycle division announced a deal on Monday to jointly develop bikes that would give the Indian automaker access to BMW technology as it looks to stem its falling market share.

The long-awaited deal should help TVS revamp a dated product pipeline at the company, which has struggled to compete with a recent ramp-up in activity from Honda Motor and Yamaha Motor and could also help BMW gain a foothold in the world's second-largest bike market.

TVS Motor and BMW will develop a series of motorcycles for the 250-500 cc segment. This would mark the entry of India’s fourth-largest two-wheeler company into the above-250-cc two-wheeler space.

For the German premium two-wheeler maker, the agreement is part of its global realigning strategy, which includes a foray into the sub-500-cc segment.

The agreement involves both companies offering individual vehicle derivatives, which would be sold through their own distribution channels across the globe, said Venu Srinivasan, TVS Motor chairman and managing director.

As part of the agreement, TVS Motor would invest ^20 million in India, said Srinivasan. Initially, TVS would develop two products in India---one product for TVS and the other for BMW to sell in global markets. The first product is expected to be launched in 2015.

Srinivasan said while BMW brought technology and products to the venture, TVS would leverage its supply chain expertise and its ability to develop small products in bulk.

Yaresh Kothari, research analyst (automobile), Angel Broking, said in the long term, the tie-up would be positive for TVS Motor. About 95 per cent of India’s motorcylce market is accounted for by the 150-cc segment or segments with engine capacities lower than 150 cc. While the margins in the above-150-cc segment are high, volumes are low — in the near term, there would be no impact of the tie-up on TVS Motor’s ranking, Kothari said.

Stephan Schaller, president, BMW Motorrad, said globally, the company was realigning the two-wheeler business. The company planned to enter the sub-500-cc segment and foray into emerging markets with smaller capacity products and core offerings, he said., adding, “This is an important step towards more profitability and sustainability.”

The tie-up comes at a time when TVS has been losing market share to Honda Motor and Yamaha. For 2012-13, TVS reported a fall of six per cent in sales, compared with a four per cent rise recorded by the overall industry. Experts say it would be difficult for TVS to regain the market share lost to Honda. The Chennai-based company’s two-wheeler sales fell from 1,80,274 units in March 2012 to 1,62,507 units in March 2013.

India, location of choice for MNCs' information technology units: Zinnov

Bangalore: Multinational captive centres in India are increasing their capacity, according to consulting firm Zinnov.

In a white paper, Zinnov estimates that 50 per cent of the Fortune 500 companies will have their captive centres in India in the next few years, working on tasks related to business processes, technology, HR and others for their parent companies.

Zinnov attributes this trend to the fact that in the last two years, 10 IT and IT-enabled services (ITeS) centres of Fortune 500 companies set up operations in India. It said India is home to about 200 wholly-owned IT and ITeS centres of multinational companies, thus making it the most preferred offshore destination as compared to 120 other offshoring locations across the globe.

IT modernisation
“Reasons like IT modernisation and rethinking ways in which legacy technologies (like Mainframe computing) can be used are driving this,” said Sundararaman Viswanathan, Manager – Consulting, Zinnov. He added that other reasons such as cost advantages and presence in an emerging market are influencing these MNCs to set up centres in India.

The report added that banking and financial services companies leverage India the most for their IT and ITeS operations and there are close to about 45 such MNC centres last year. Retailers such as Walmart, Tesco and financial institutions such as Northern Trust have added to their India headcount in the recent past.

Further, healthcare and life sciences is emerging as a large category amongst the MNC centres.

Companies such as Royal DSM and Sigma Aldrich recently opened their service centres and existing players such as Novartis and Cerner have grown their India centres in the last few years. Currently India is the IT / ITeS hub for about 125 of the Fortune 500 companies.

Losing momentum?
However, industry watchers feel that despite a large share of MNC captives, the country is losing momentum.

Companies have shifted out of India due to mediocre management talent and an inability to be at the forefront of innovation, said an analyst from a multinational consulting advisory firm who did not wish to be named.