New Delhi: According to the estimates by the Ministry of Statistics and Programme Implementation, the Indian economy has registered a growth of 7.4 per cent in 2009-10, with 8.6 per cent year-on-year (y-o-y) growth in its fourth quarter. The growth is driven by robust performance of the manufacturing sector on the back of government and consumer spending. GDP growth rate of 7.4 per cent in 2009-10 has exceeded the government forecast of 7.2 per cent for the full year.
According to government data, the manufacturing sector witnessed a growth of 16.3 per cent in January-March 2010, from a year earlier. The farm output rose at an annual rate of 0.7 per cent during the quarter on the back of a good winter harvest. The expansion in the March quarter was driven by government spending, manufacturing and services.
The government estimates the economy to grow at a rate of 8.5 per cent in 2010-11 driven by better farm output and a global recovery. The Finance Minister, Mr Pranab Mukherjee said that growth would exceed the government's estimate for the current fiscal. The farm sector, which constitutes nearly 17 per cent of the economy, is expected to perform well on the prediction of normal monsoon this year
Success in my Habit
Monday, May 31, 2010
Neeraj Patil elected Mayor of London Borough of Lambeth
New Delhi: Neeraj Patil, a leading NRI doctor, currently working as a consultant with A&E and a governor of Guys and St Thomas Hospital in central London, has been elected Mayor of the Borough of Lambeth.
Dr Patil, born and brought up in Kamalapur in Gulbarga district in Karnataka, completed his MBBS from M R Medical College, Gulbarga in 1992. He served in the Osmania Medical College for some time before he came to the UK for higher studies.
He has worked as an Accident and Emergency Consultant and a doctor for 14 years in over 25 National Health Services hospitals across UK.
Dr Patil, born and brought up in Kamalapur in Gulbarga district in Karnataka, completed his MBBS from M R Medical College, Gulbarga in 1992. He served in the Osmania Medical College for some time before he came to the UK for higher studies.
He has worked as an Accident and Emergency Consultant and a doctor for 14 years in over 25 National Health Services hospitals across UK.
Neeraj Patil elected Mayor of London Borough of Lambeth
New Delhi: Neeraj Patil, a leading NRI doctor, currently working as a consultant with A&E and a governor of Guys and St Thomas Hospital in central London, has been elected Mayor of the Borough of Lambeth.
Dr Patil, born and brought up in Kamalapur in Gulbarga district in Karnataka, completed his MBBS from M R Medical College, Gulbarga in 1992. He served in the Osmania Medical College for some time before he came to the UK for higher studies.
He has worked as an Accident and Emergency Consultant and a doctor for 14 years in over 25 National Health Services hospitals across UK.
Dr Patil, born and brought up in Kamalapur in Gulbarga district in Karnataka, completed his MBBS from M R Medical College, Gulbarga in 1992. He served in the Osmania Medical College for some time before he came to the UK for higher studies.
He has worked as an Accident and Emergency Consultant and a doctor for 14 years in over 25 National Health Services hospitals across UK.
Reinsurance
Reinsurance
Reinsurance is a contract between the insurance company (insurer) and a third party (re-insurer), wherein the latter will protect the former by paying losses sustained by it under the original contract of insurance.
Re-insurers from London, as well as other parts of Europe, see significant potential in the re-insurance market in India. Top four global re-insurers, Lloyds, Swiss Re, Munich Re and Berkshire Hathaway are amongst those eyeing India.
Bancasssurance
Private insurers have adopted bancassurance in a much bigger way than the state-owned Life Insurance Corporation (LIC) in the recent years. Bancassurance is distribution of insurance products through a bank's network.
In 2008-09, private insurers forked out US$ 44.4 million as commission for banassurance, while the payout by LIC for this distribution model was US$ 25,948.
Investment Policy
The FDI limit in the insurance space for foreign players is capped at 26 per cent—permissible under the automatic route subject to a licence from the official regulator, IRDA—but the government is planning to raise it to 49 per cent and a bill to give effect to the proposal is pending in the Rajya Sabha.
IRDA has stipulated that the mandatory ceding by every general insurer in the country to the national reinsurer – General Insurance Corporation (GIC), would continue to remain at 10 per cent as under current regulations.
IRDA has also allowed insurance companies to offer 'Health plus Life Combi Product', a policy that would provide life cover along with health insurance to subscribers.
Pension Fund Regulatory and Development Authority (PFRDA) would launch a low-cost pension scheme on April 1, 2010, to provide social security cover to economically weaker sections like rickshaw pullers, barbers and daily-wage labourers.
The Road Ahead
Saturation of insurance markets in many developed economies has made the Indian market more attractive for international insurance players, according to 'Booming Insurance Market in India (2008-2011)”. Further, according to the report,
Total life insurance premium in India is projected to grow US$ 266 billion by 2010-11
Total non-life insurance premium is expected to increase at a compound annual growth rate (CAGR) of 25 per cent for the period spanning from 2008-09 to 2010-11
The home insurance segment is set to achieve a 100 per cent growth as financial institutions have made home insurance obligatory for housing loan approvals
In the next three years, health insurance is poised to become the second largest business for non-life insurers after motor insurance
Reinsurance is a contract between the insurance company (insurer) and a third party (re-insurer), wherein the latter will protect the former by paying losses sustained by it under the original contract of insurance.
Re-insurers from London, as well as other parts of Europe, see significant potential in the re-insurance market in India. Top four global re-insurers, Lloyds, Swiss Re, Munich Re and Berkshire Hathaway are amongst those eyeing India.
Bancasssurance
Private insurers have adopted bancassurance in a much bigger way than the state-owned Life Insurance Corporation (LIC) in the recent years. Bancassurance is distribution of insurance products through a bank's network.
In 2008-09, private insurers forked out US$ 44.4 million as commission for banassurance, while the payout by LIC for this distribution model was US$ 25,948.
Investment Policy
The FDI limit in the insurance space for foreign players is capped at 26 per cent—permissible under the automatic route subject to a licence from the official regulator, IRDA—but the government is planning to raise it to 49 per cent and a bill to give effect to the proposal is pending in the Rajya Sabha.
IRDA has stipulated that the mandatory ceding by every general insurer in the country to the national reinsurer – General Insurance Corporation (GIC), would continue to remain at 10 per cent as under current regulations.
IRDA has also allowed insurance companies to offer 'Health plus Life Combi Product', a policy that would provide life cover along with health insurance to subscribers.
Pension Fund Regulatory and Development Authority (PFRDA) would launch a low-cost pension scheme on April 1, 2010, to provide social security cover to economically weaker sections like rickshaw pullers, barbers and daily-wage labourers.
The Road Ahead
Saturation of insurance markets in many developed economies has made the Indian market more attractive for international insurance players, according to 'Booming Insurance Market in India (2008-2011)”. Further, according to the report,
Total life insurance premium in India is projected to grow US$ 266 billion by 2010-11
Total non-life insurance premium is expected to increase at a compound annual growth rate (CAGR) of 25 per cent for the period spanning from 2008-09 to 2010-11
The home insurance segment is set to achieve a 100 per cent growth as financial institutions have made home insurance obligatory for housing loan approvals
In the next three years, health insurance is poised to become the second largest business for non-life insurers after motor insurance
Health Insurance
Health Insurance
The health insurance market stood at around US$ 1.5 billion in 2008-09 and is expected to grow to US$ 9 billion by 2016-17. While health insurance policies are mostly provided by general insurance companies, life insurers contribute about five per cent to the overall health insurance business.
Apollo DKV Health Insurance has renamed itself Apollo Munich Health Insurance as a part of its five-year strategic plan to gain a five per cent market share. Apollo Munich is a joint venture between Asia’s largest integrated healthcare provider, The Apollo Hospitals Group, and Germany-based Munich Re's segment, Munich Health.
Max India is planning to invest US$ 43.25 million in its health insurance joint venture (Max Bupa) and will launch a product over the January–June 2010 period.
Star Health and Allied Insurance expects to invest US$ 38.9 million during the current financial year to grow its health insurance business, taking the total invested capital to US$ 67 million.
US-based health insurer CIGNA is looking at entering the Indian market.
The health insurance market stood at around US$ 1.5 billion in 2008-09 and is expected to grow to US$ 9 billion by 2016-17. While health insurance policies are mostly provided by general insurance companies, life insurers contribute about five per cent to the overall health insurance business.
Apollo DKV Health Insurance has renamed itself Apollo Munich Health Insurance as a part of its five-year strategic plan to gain a five per cent market share. Apollo Munich is a joint venture between Asia’s largest integrated healthcare provider, The Apollo Hospitals Group, and Germany-based Munich Re's segment, Munich Health.
Max India is planning to invest US$ 43.25 million in its health insurance joint venture (Max Bupa) and will launch a product over the January–June 2010 period.
Star Health and Allied Insurance expects to invest US$ 38.9 million during the current financial year to grow its health insurance business, taking the total invested capital to US$ 67 million.
US-based health insurer CIGNA is looking at entering the Indian market.
Project Insurance
Project Insurance
Insurance companies are also witnessing increasing demand for project insurance in the last few months. Corporates are beginning to demand project insurance across sectors such as power generation with the cover beginning right from the start of the project till it is declared ready for commercial use. Some of the big projects also take cover for financial loss arising out of delay in completion.
Industry players estimate that premiums collected from project insurance will be around US$ 216.2 million for the industry as a whole and is expected to increase significantly.
Oriental Insurance Company Ltd will be offering comprehensive project insurance for the Tata Power Project at Mundra in Gujarat.
Insurance companies are also witnessing increasing demand for project insurance in the last few months. Corporates are beginning to demand project insurance across sectors such as power generation with the cover beginning right from the start of the project till it is declared ready for commercial use. Some of the big projects also take cover for financial loss arising out of delay in completion.
Industry players estimate that premiums collected from project insurance will be around US$ 216.2 million for the industry as a whole and is expected to increase significantly.
Oriental Insurance Company Ltd will be offering comprehensive project insurance for the Tata Power Project at Mundra in Gujarat.
General Insurance
General Insurance
The total number of general insurers registered with IRDA has gone up to 22, with the registration of SBI General Insurance Company Limited, a joint venture general insurance company promoted by State Bank of India and Insurance Australia Group, Australia, as a general insurer in December 2009. Moreover, L&T General Insurance is readying to launch its operations in the next three to five months.
The Gross Premium underwritten by public sector non-life insurers for the April-December 2009 period posted year-on-year growth of 11.37 per cent as compared to the year-on-year growth of 7.93 per cent posted by private sector non-life insurers. Overall, the non-life insurance sector grew 9.95 per cent in April-December 2009, compared to the corresponding period last year. According to IRDA data, out of the US$ 5.46 billion premium underwritten by the industry during the April-December 2009 period, US$ 3.24 billion came from the four public sector companies as compared to US$ 2.91 billion during the same period in 2008.
Moreover, in the 2010-11 budget, Finance Minister, Mr Pranab Mukherjee, has decided to roll back the government’s decision to tax the unrealised gains of non-life insurance companies. “The appreciation in the value of investments, being in the nature of unrealized gain is not taken into account for determining profit or loss of non-life insurance business as per the IRDA regulations. It is, therefore, proposed that the unrealized gains due to appreciation in the value of investments will not be included in the total income,” according to the budget documents.
According to data from the IRDA (Summary Reports of Motor Data of Public and Private Sector Insurers - 2008-09), in 2008-09, nearly 30 million vehicles were registered and a total premium worth US$ 2.03 billion was collected.
The total number of general insurers registered with IRDA has gone up to 22, with the registration of SBI General Insurance Company Limited, a joint venture general insurance company promoted by State Bank of India and Insurance Australia Group, Australia, as a general insurer in December 2009. Moreover, L&T General Insurance is readying to launch its operations in the next three to five months.
The Gross Premium underwritten by public sector non-life insurers for the April-December 2009 period posted year-on-year growth of 11.37 per cent as compared to the year-on-year growth of 7.93 per cent posted by private sector non-life insurers. Overall, the non-life insurance sector grew 9.95 per cent in April-December 2009, compared to the corresponding period last year. According to IRDA data, out of the US$ 5.46 billion premium underwritten by the industry during the April-December 2009 period, US$ 3.24 billion came from the four public sector companies as compared to US$ 2.91 billion during the same period in 2008.
Moreover, in the 2010-11 budget, Finance Minister, Mr Pranab Mukherjee, has decided to roll back the government’s decision to tax the unrealised gains of non-life insurance companies. “The appreciation in the value of investments, being in the nature of unrealized gain is not taken into account for determining profit or loss of non-life insurance business as per the IRDA regulations. It is, therefore, proposed that the unrealized gains due to appreciation in the value of investments will not be included in the total income,” according to the budget documents.
According to data from the IRDA (Summary Reports of Motor Data of Public and Private Sector Insurers - 2008-09), in 2008-09, nearly 30 million vehicles were registered and a total premium worth US$ 2.03 billion was collected.
Life Insurance
Life Insurance - FEB 2010
The US$ 41-billion Indian life insurance industry is considered the fifth largest life insurance market, and growing at a rapid pace of 32-34 per cent annually, according to the Life Insurance Council. Since the opening up of the insurance sector in India, the industry has received FDI to the tune of US$ 525.6 million. The government is likely to reintroduce the Insurance Bill which proposes to increase the FDI cap in private sector insurance companies from 26 per cent to 49 per cent.
The total number of life insurers registered with the Insurance Regulatory Development Authority (IRDA) has gone up to 23, with registration of the India First Life Insurance Company Limited, a joint venture life insurance company promoted by Bank of Baroda and Andhra Bank, India and Legal & General Middle East Limited, UK. The Life Insurance Corporation (LIC) posted a 50 per cent growth in new premium collection in the first nine months of the 2010 fiscal, increasing its market share to 65 per cent from 56 per cent a year ago.
LIC’s new premium collection touched US$ 9.58 billion in the April-December 2009 period while the combined business of the 22 private insurers grew to US$ 5.07 billion from the previous year, as per data collated by the Insurance Regulatory and Development Authority (IRDA). Overall the industry grew at 29 per cent in the April-December period of the fiscal year 2010.
The life insurance industry had earlier been expected to grow by 15 per cent in the 2010 fiscal year and cross the US$ 54.1 billion mark in total premium income by the end of March 2010, according to industry body, Life Insurance Council.
However, industry experts now believe that India's life insurance industry is likely to grow by around 10 per cent in 2010 over the previous year, mainly due to increased efficiency but also due to expansion in small towns and villages.
In order to support the aggressive growth in premium income in the current financial year, Future Generali India Life Insurance (a joint venture between the Future Group and the Italy-based Generali Group) has proposed to infuse an additional equity of US$ 32.55 million before the end of March 2010.
The US$ 41-billion Indian life insurance industry is considered the fifth largest life insurance market, and growing at a rapid pace of 32-34 per cent annually, according to the Life Insurance Council. Since the opening up of the insurance sector in India, the industry has received FDI to the tune of US$ 525.6 million. The government is likely to reintroduce the Insurance Bill which proposes to increase the FDI cap in private sector insurance companies from 26 per cent to 49 per cent.
The total number of life insurers registered with the Insurance Regulatory Development Authority (IRDA) has gone up to 23, with registration of the India First Life Insurance Company Limited, a joint venture life insurance company promoted by Bank of Baroda and Andhra Bank, India and Legal & General Middle East Limited, UK. The Life Insurance Corporation (LIC) posted a 50 per cent growth in new premium collection in the first nine months of the 2010 fiscal, increasing its market share to 65 per cent from 56 per cent a year ago.
LIC’s new premium collection touched US$ 9.58 billion in the April-December 2009 period while the combined business of the 22 private insurers grew to US$ 5.07 billion from the previous year, as per data collated by the Insurance Regulatory and Development Authority (IRDA). Overall the industry grew at 29 per cent in the April-December period of the fiscal year 2010.
The life insurance industry had earlier been expected to grow by 15 per cent in the 2010 fiscal year and cross the US$ 54.1 billion mark in total premium income by the end of March 2010, according to industry body, Life Insurance Council.
However, industry experts now believe that India's life insurance industry is likely to grow by around 10 per cent in 2010 over the previous year, mainly due to increased efficiency but also due to expansion in small towns and villages.
In order to support the aggressive growth in premium income in the current financial year, Future Generali India Life Insurance (a joint venture between the Future Group and the Italy-based Generali Group) has proposed to infuse an additional equity of US$ 32.55 million before the end of March 2010.
Life insurance industry gains 68% in new biz
Mumbai: The life insurance industry recorded 68 per cent increase to Rs 25,399 crore in new business premium collected in March 2010 compared to Rs15,090 crore in the corresponding month in 2009.
Insurers witnessed a spurt in business during the last month of the financial year — with contributions over 23 per cent of the total collection in 2009-10 — as individuals opted to purchase covers to avail tax benefits.
Private players registered a whopping 47 per cent growth in the new business premium while state-owned Life Insurance Corporation of India (LIC) posted 83 per cent increase in new business income in March.
“Last quarter contribute to 40 per cent of sales. But March experienced the maximum inflow,” said a senior executive of a life insurance company.
No More Gloomy
Insurers Apr-Mar 2009 Apr-Mar 2010 % Chg
LIC 52,954 70,891 33.87
SBI Life 5,386 7,041 30.73
ICICI Prudential 6,813 6,334 -7.03
Bajaj Allianz Life 4,492 4,451 -0.91
Reliance Life 3,514 3,921 11.58
HDFC Standard Life 2,644 3,261 23.34
Birla Sun Life 2,824 2,958 4.75
Max New York Life 1,844 1,848 0.22
Private total 34,154 38,399 12.43
Total 87,108 109,290 25.46
Figures in Rs cr
Source: Irda
SBI Life has pipped ICICI Prudential to become the largest private sector insurer in terms of new business premium. SBI Life recorded 71 per cent increase in new business premium collection to Rs 1,775 crore as against Rs 1,038 crore March 2009. ICICI Prudential recorded 53 per cent increase to Rs 1,362 crore in March 2010 against Rs 887 crore in the corresponding month a year ago.
In 2009-10, SBI collected premium of Rs 7,041 crore from the sale of new policies, while ICICI Prudential recorded 7 per cent decline in new business collections to Rs 6,334 crore. Insurers sold 10.55 million new policies with LIC bagging 8.52 million and private companies 2.03 million. Group premium contributed 51 per cent for the month with SBI and ICICI Prudential making large contributions. LIC increased its market share by 4 per cent in total premium collection from 2009. At the end of March 2010, LIC holds 65 per cent market share in terms of new business income collection with the private sector contributing the remaining 35 per cent share last fiscal
Insurers witnessed a spurt in business during the last month of the financial year — with contributions over 23 per cent of the total collection in 2009-10 — as individuals opted to purchase covers to avail tax benefits.
Private players registered a whopping 47 per cent growth in the new business premium while state-owned Life Insurance Corporation of India (LIC) posted 83 per cent increase in new business income in March.
“Last quarter contribute to 40 per cent of sales. But March experienced the maximum inflow,” said a senior executive of a life insurance company.
No More Gloomy
Insurers Apr-Mar 2009 Apr-Mar 2010 % Chg
LIC 52,954 70,891 33.87
SBI Life 5,386 7,041 30.73
ICICI Prudential 6,813 6,334 -7.03
Bajaj Allianz Life 4,492 4,451 -0.91
Reliance Life 3,514 3,921 11.58
HDFC Standard Life 2,644 3,261 23.34
Birla Sun Life 2,824 2,958 4.75
Max New York Life 1,844 1,848 0.22
Private total 34,154 38,399 12.43
Total 87,108 109,290 25.46
Figures in Rs cr
Source: Irda
SBI Life has pipped ICICI Prudential to become the largest private sector insurer in terms of new business premium. SBI Life recorded 71 per cent increase in new business premium collection to Rs 1,775 crore as against Rs 1,038 crore March 2009. ICICI Prudential recorded 53 per cent increase to Rs 1,362 crore in March 2010 against Rs 887 crore in the corresponding month a year ago.
In 2009-10, SBI collected premium of Rs 7,041 crore from the sale of new policies, while ICICI Prudential recorded 7 per cent decline in new business collections to Rs 6,334 crore. Insurers sold 10.55 million new policies with LIC bagging 8.52 million and private companies 2.03 million. Group premium contributed 51 per cent for the month with SBI and ICICI Prudential making large contributions. LIC increased its market share by 4 per cent in total premium collection from 2009. At the end of March 2010, LIC holds 65 per cent market share in terms of new business income collection with the private sector contributing the remaining 35 per cent share last fiscal
Essar to buy AGC for Rs 205 cr
Mumbai: Deal will put BPO arm, Aegis, among top five IT solution providers in India.
The Essar group today said it would acquire US-based Avaya’s entire 59.13 per cent stake in AGC Networks, a company in the area of communications solutions, for $44.5 million (Rs 205 crore) or Rs 245 a share.
Business Standard had, on May 16, reported that Aegis, the business process outsourcing (BPO) arm of the Essar group, was in advanced talks to acquire AGC Networks. This acquisition would make Aegis among the top five information technology solution providers in the country.
The acquisition would be done through Essar Services Holdings Ltd (ESHL). Essar Capital Finance Pvt Ltd, along with ESHL, will announce the mandatory open offer tomorrow for an additional 20 per cent stake at a price determined in accordance with the formula specified in the takeover regulations. Assuming all shares are tendered in the open offer, its size would be Rs 78 crore.
Avaya Inc, the US-based business communication systems provider, owns the 59.13 per cent stake in AGC through Avaya Mauritius (33.63 per cent) and Avaya International LLC (25.50 per cent). Other than the promoters, Reliance Capital Trustee Company Ltd A/c Reliance Growth Fund holds 6.6 per cent stake and SBI Mutual Fund has one per cent holding.
AGC Networks, earlier known as Avaya GlobalConnect Ltd, is a converged communications provider focused on the India and Australia market. It employs around 500 people. The current management is expected to continue and spearhead the business, post-closing. Edelweiss Capital Ltd is the sole advisor to the transaction and manager to the open offer.
Aegis was already planning an initial public offering this year. This acquisition, when complete, would also allow Aegis to strengthen the growth of its subsidiary, Aegis Tech. In June 2009, Aegis had announced its foray into infrastructure management by setting up an independent subsidiary. The company had then said it planned to invest $100 million in this venture over the next 12 months and would touch revenue of $100 million in the next 18 months.
Inorganic growth
Aegis has acquired 13 firms in the past three to four years. It had stated in the past that its target was to make four acquisitions a year. On May 19, it signed an agreement to acquire US-based Sallie Mae’s customer services centre in Texas. The company did not disclose the sum of the deal. This agreement is effective from June 4. As part of the deal, Aegis also entered into a multi-year, multi-million dollar deal with Sallie Mae. With this acquisition, Sallie Mae was to transfer 350 employees to Aegis, taking the company’s US headcount to 4,350.
AGC Networks had also undergone several changes in the past year. The company renamed itself. Till a year before, it was the sole subsidiary of Avaya Inc. It also started working with other partners like Polycom, Extreme Networks and others. AGC Networks clocked revenue of Rs 515 crore for 2008-09. For the second quarter ended March 31, it reported net profit of Rs 9.3 crore, exceeding net profit of the previous financial year in six months. Revenue of the company for the quarter touched Rs 138.5 crore.
Aparup Sengupta, managing director and Global CEO, Aegis Ltd, said: “Essar, in a short span, has become a key player in the systems integration (SI) space and would benefit immensely from the depth and width of expertise AGC Networks has. We have a definite plan to grow this business as we aim for bigger chunks of customer spends.”
“AGC Networks provides a great synergy with our SI business,” said S K Jha, president, SI business, Essar, adding the the acquisition would help them gain “deep expertise in the ‘enable’ block of experience management that Essar embarked upon through its worldwide expansion drive. Now, customers will have the ability to have unified communication and experience management under one roof”.
Said Jangoo Dalal, managing director, Abaya India, “The AGC Networks relationship remains key to Avaya’s success in India and Australia, both through the period of this transaction and beyond. In India, we work together to serve some of the country’s leading organisations spanning multiple business sectors and we look forward to continuing to work with AGC Networks as a trusted and well-established business partner.”
The Essar group today said it would acquire US-based Avaya’s entire 59.13 per cent stake in AGC Networks, a company in the area of communications solutions, for $44.5 million (Rs 205 crore) or Rs 245 a share.
Business Standard had, on May 16, reported that Aegis, the business process outsourcing (BPO) arm of the Essar group, was in advanced talks to acquire AGC Networks. This acquisition would make Aegis among the top five information technology solution providers in the country.
The acquisition would be done through Essar Services Holdings Ltd (ESHL). Essar Capital Finance Pvt Ltd, along with ESHL, will announce the mandatory open offer tomorrow for an additional 20 per cent stake at a price determined in accordance with the formula specified in the takeover regulations. Assuming all shares are tendered in the open offer, its size would be Rs 78 crore.
Avaya Inc, the US-based business communication systems provider, owns the 59.13 per cent stake in AGC through Avaya Mauritius (33.63 per cent) and Avaya International LLC (25.50 per cent). Other than the promoters, Reliance Capital Trustee Company Ltd A/c Reliance Growth Fund holds 6.6 per cent stake and SBI Mutual Fund has one per cent holding.
AGC Networks, earlier known as Avaya GlobalConnect Ltd, is a converged communications provider focused on the India and Australia market. It employs around 500 people. The current management is expected to continue and spearhead the business, post-closing. Edelweiss Capital Ltd is the sole advisor to the transaction and manager to the open offer.
Aegis was already planning an initial public offering this year. This acquisition, when complete, would also allow Aegis to strengthen the growth of its subsidiary, Aegis Tech. In June 2009, Aegis had announced its foray into infrastructure management by setting up an independent subsidiary. The company had then said it planned to invest $100 million in this venture over the next 12 months and would touch revenue of $100 million in the next 18 months.
Inorganic growth
Aegis has acquired 13 firms in the past three to four years. It had stated in the past that its target was to make four acquisitions a year. On May 19, it signed an agreement to acquire US-based Sallie Mae’s customer services centre in Texas. The company did not disclose the sum of the deal. This agreement is effective from June 4. As part of the deal, Aegis also entered into a multi-year, multi-million dollar deal with Sallie Mae. With this acquisition, Sallie Mae was to transfer 350 employees to Aegis, taking the company’s US headcount to 4,350.
AGC Networks had also undergone several changes in the past year. The company renamed itself. Till a year before, it was the sole subsidiary of Avaya Inc. It also started working with other partners like Polycom, Extreme Networks and others. AGC Networks clocked revenue of Rs 515 crore for 2008-09. For the second quarter ended March 31, it reported net profit of Rs 9.3 crore, exceeding net profit of the previous financial year in six months. Revenue of the company for the quarter touched Rs 138.5 crore.
Aparup Sengupta, managing director and Global CEO, Aegis Ltd, said: “Essar, in a short span, has become a key player in the systems integration (SI) space and would benefit immensely from the depth and width of expertise AGC Networks has. We have a definite plan to grow this business as we aim for bigger chunks of customer spends.”
“AGC Networks provides a great synergy with our SI business,” said S K Jha, president, SI business, Essar, adding the the acquisition would help them gain “deep expertise in the ‘enable’ block of experience management that Essar embarked upon through its worldwide expansion drive. Now, customers will have the ability to have unified communication and experience management under one roof”.
Said Jangoo Dalal, managing director, Abaya India, “The AGC Networks relationship remains key to Avaya’s success in India and Australia, both through the period of this transaction and beyond. In India, we work together to serve some of the country’s leading organisations spanning multiple business sectors and we look forward to continuing to work with AGC Networks as a trusted and well-established business partner.”
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