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Tuesday, November 16, 2010
Ikya’s Issac buys HR co Magna for Rs100 crore
BANGALORE: AJIT Isaac, who sold his PeopleOne Consulting to Swiss staffing giant Adecco six years ago, has acquired Hyderabad-based tech staffing firm Magna Infotech for Rs100 crore.
Company officials, who requested anonymity because an integration process is yet to begin, said a definitive agreement has already been signed.
As demand for temporary software programmers picks up, outsourcing companies are increasingly looking to avoid adding more staff on their payroll, and are instead sub-contracting projects to companies such as Magna. Already, the Indian contracted staff market is expected to become around $2.5 billion industry in five years.
Mr Isaac, the CEO of Ikya Human Capital Solutions , confirmed the transaction and said the combined entity would make Ikya a 30,000-staff strong manpower firm. He declined to share other specific details, but people familiar with the acquisition said Magna had revenues of around Rs89 crore in 2009, and aims to double that to Rs180 crore during year ending March 2011.
“We are reaching a critical mass and could potentially become the first HR services firm to be listed on an Indian stock exchange in the coming years,” said Mr Isaac. Magna has around 5,000 staff with nearly 400 different IT skills.
“This relationship will help us scale this to 10,000 people,” said Pradeep Mittal, who heads Magna’s Indian operations. “This has just started picking up in India and is gaining acceptance among companies,” he added.
With around Rs240 crore in revenues, Ikya competes with domestic rivals such as Team Lease apart from multinational staffing firms including Adecco. “We want to be a standalone major in the emerging markets and then explore other developed countries,” added Mr Isaac.
In November last year, Ikya had acquired Delhi-based recruitment firm Coachieve for an undisclosed amount. Ikya had raised around $8 million from India Equity Partners , together with Mr Isaac who holds a majority stake in the company. As demand for more temporary IT staff gains momentum, firms such as Magna will face challenges of taking it to the next level. Another driver for hiring more temporary staff is that IT firms want to arrest their linear-people-led growth. Moreover, temporary staffing helps in bringing down people costs by at least 25%.
“Because this is still not a mature industry getting working capital loans from banks is a huge challenge. You need investors backing you to scale,” said one of the officials at a temporary staffing firm.
Company officials, who requested anonymity because an integration process is yet to begin, said a definitive agreement has already been signed.
As demand for temporary software programmers picks up, outsourcing companies are increasingly looking to avoid adding more staff on their payroll, and are instead sub-contracting projects to companies such as Magna. Already, the Indian contracted staff market is expected to become around $2.5 billion industry in five years.
Mr Isaac, the CEO of Ikya Human Capital Solutions , confirmed the transaction and said the combined entity would make Ikya a 30,000-staff strong manpower firm. He declined to share other specific details, but people familiar with the acquisition said Magna had revenues of around Rs89 crore in 2009, and aims to double that to Rs180 crore during year ending March 2011.
“We are reaching a critical mass and could potentially become the first HR services firm to be listed on an Indian stock exchange in the coming years,” said Mr Isaac. Magna has around 5,000 staff with nearly 400 different IT skills.
“This relationship will help us scale this to 10,000 people,” said Pradeep Mittal, who heads Magna’s Indian operations. “This has just started picking up in India and is gaining acceptance among companies,” he added.
With around Rs240 crore in revenues, Ikya competes with domestic rivals such as Team Lease apart from multinational staffing firms including Adecco. “We want to be a standalone major in the emerging markets and then explore other developed countries,” added Mr Isaac.
In November last year, Ikya had acquired Delhi-based recruitment firm Coachieve for an undisclosed amount. Ikya had raised around $8 million from India Equity Partners , together with Mr Isaac who holds a majority stake in the company. As demand for more temporary IT staff gains momentum, firms such as Magna will face challenges of taking it to the next level. Another driver for hiring more temporary staff is that IT firms want to arrest their linear-people-led growth. Moreover, temporary staffing helps in bringing down people costs by at least 25%.
“Because this is still not a mature industry getting working capital loans from banks is a huge challenge. You need investors backing you to scale,” said one of the officials at a temporary staffing firm.
Ericsson bags contract for rolling out 3G in six circles
NEW DELHI: Telecom equipment maker Ericsson today said it has bagged a contract for rolling out 3G network infrastructure across six circles.
The company, however, did not disclose financial details of the contract.
Aircel has awarded Ericsson a contract to roll out a 3G/HSPA network across six out of its 13 circles, which currently serve more than 100 million subscribers, Ericsson said in a statement.
Ericsson will be Aircel's largest partner for 3G implementation, it added.
"We are confident that with this partnership, we will benefit from Ericsson's global expertise of 3G deployments, and will be able to offer our customers a world-class 3G experience," Aircel COO Gurdeep Singh said.
With the roll out of 3G services, Aircel customers would be able to access services like video telephony, mobile broadband , mobile TV and faster downloads on their handsets.
Under the agreement, Ericsson will provide core, radio and transmission network equipment along with network rollout, network technology and consulting and other support services.
The six Aircel circles covered are -- Tamil Nadu, Bihar, Orissa, Jammu and Kashmir, North East and Assam. The framework contract will be implemented from 2010 to 2012.
Videocon plans to split businesses
MUMBAI: Durables-to-oil and gas conglomerate Videocon Group said on Thursday it is planning to split its various businesses, a move that could help them raise capital or induct strategic partners into some businesses.
“With the help of independent external consultants, the company will look at various options available to reorganise and segregate various business segments of the company,” said Videocon in a statement to the Bombay Stock Exchange (BSE).
This move will ensure greater focus on the operation of each of the company’s diverse businesses and enhanced value for shareholders and improvement in the business prospects of the company, said the release. The company is run by three brothers, Venugopal, Rajkumar and Pradeepkumar but Venugopal has always the first among equals.
On Thursday, the company announced a 7.1% increase in its net profit at Rs 159.9 crore in the quarter ended September 30, over the same period last fiscal. The company had a net profit of Rs 149.3 crore as on September 30, 2009, Videocon Industries said in a filing to the BSE. During the quarter, the company’s income from operations stood at Rs 2,985.5 crore, a 13.9% jump from Rs 2,621.2 crore recorded in the corresponding period last fiscal.
On Thursday evening, two of the scions of the Dhoot family, Anirudh, and Saurabh, said that only Mr Venugopal, the chairman, would be able to elucidate on the logic behind the announcement. But calls to Venugopal Dhoot’s mobile remained unanswered.
The group had earlier indicated that it will separate a few of its businesses in order to have a more focused approach.
Earlier this week, Videocon had said it has appointed merchant bankers ICICI Securities and Morgan Stanley to help unlock value from its oil and gas assets, either through an initial public offering or a demerger. The company has recently discovered hydrocarbons in the Tarakan basin of Indonesia and had also announced a gas find in a second well in Mozambique in Africa.
Exactly a decade ago, Videocon group had restructured its operations by forming eight strategic business units or profit centres. Since then, the $2-billion Videocon Industries has diversified into capital-intensive businesses such as power, telecom, media, oil and gas.
Some experts feel such restructuring is an easy way to get new partners and financial options. “A company, which is diversified, will generally get lesser value compared to a single–focused company put together,” said Avinash Gupta, VP–research equity, Bonanza Portfolio. If the businesses are split, then it can help them get better valuation from each business and raise fresh resources from the market, he added.
On the day of the announcement, the company’s stock closed 0.25% up at Rs 260.50 on the BSE while the benchmark index Sensex closed 2.09% up to 20893.57.
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