Polaris ties up with HK firm for foray into CHINA, MACAU

Shyamala Seetharamanan, Chennai
Financial Chronicle The Times of India The Hindu
Polaris Software Lab announced its tie up with PCCW Solutions on Monday to jointly market the former’s banking and insurance solutions in Hong Kong, Macau and mainland China. The move is part of Polaris’ strategy to explore new markets in Asia, Africa and Latin America.

PCCW Solutions is a subsidiary of Hong-Kong-based telecommunications company PCCW. The two companies will leverage Polaris’ flagship product Intellect Universal Global Banking (GUB) 10.0. The partnership will integrate presales and sales operations and solution architects of the two companies to cater to the Chinese market.

Polaris has identified China, Russia, Latin America, Africa and Eastern Europe as the growth markets for the Intellect suite of products, said Arun Jain, chairman and CEO of Polaris. The company entered Vietnam, Chile and Egypt last year. The roadmap for this fiscal includes entry into new markets and setting up of sales forces to aggressively market all of the group’s products such as banking, HR and insurance solutions, he said in a recent interview.

“We will keep looking for newer markets in South and West Asia and Africa and the minimum criterion for choosing a country would be whether it can contribute at least $10 million revenue over three years. We will be spending between Rs 15 crore and Rs 20 crore to enter the new countries this year,” he added.

The strategy is an extension of Polaris’ three-point growth engine, which includes expansion of services offered to tier I organisations; tapping tier II and tier III banks and financial institutions in developed markets, and entering new markets to gain leadership position in the respective countries.

Polaris reported about 79-per-cent increase in net profit to Rs 130.71 crore for the year ended March 31, 2009.

Elitecore eyes RS 100 crore acquisition in network security

Vinay Umarji, Mumbai/Ahmedabad
Business Standard
In a bid to become a $ 50 million within two years, Elitecore Technologies is mulling to take the inorganic route. The Ahmedabad-based company is looking at Rs 100 crore acquisition in the US or European markets in the network security segment. As an option, the company is also open to technology acquisition from innovators in the country.

"We face a tough competition in the network security segment. Yet, recently we became the only Indian company in network security to feature in Gartner's report titled 'Magic Quadrant for SMB Multifunction Firewalls', along with the likes of CISCO, McAfee and Symantec. However, we would want to grow as quickly as possible and are looking at the inorganic route to do so," said Hemal Patel, chief executive officer of Elitecore Technologies Ltd.

While the company is pushing for revenue of $ 15 million (Rs 72 crore approx.) for the financial year 2009-10, by 2011-12, Elitecore intends to peg a turnover of $ 50 million in the network security segment. "We are primarily looking at a $ 20 million (Rs 100 crore approx.) acquisition of competition in the US or European markets since players there carry a larger footprints and will help us to grow large in a very short time. The good thing is that big companies don't see us as competition, which may help us in future acquisitions. We are also looking at technology acquisition from innovators in network security across the country," said Patel.

Talking further about the technology acquisition, Patel added, "We will create a platform for innovators to showcase their products and if we find a product suitable for our channel, we will either offer the innovator to be our OEM and earn royalties or allow to be acquired and be part of the company."

Meanwhile, the company will be simultaneously investing about $ 2 million (Rs 10 crore approx.) per annum on R&D to boost its network security offering and reach its $ 50 million turnover target earlier. Of the $ 15 million (Rs 72 crore approx.) revenue that Elitecore is targeting for financial year 2009-10, it expects to earn around $ 10 million of it from SMBs and the rest from large enterprises.

Travelocity global acquires travelguru

Mumbai
Business Standard Mint
Travelocity Global, one of the world’s largest online travel companies, today announced the acquisition of Travelguru, India’s largest hotel distribution network, for an undisclosed sum.

The addition of Travelguru will build on Travelocity’s existing businesses, teams and relationships in India, which include Travelocity India, its online travel agency site, various supplier and redistribution relationships, as well as global support teams in the country. Travelguru distributes a portfolio of more than 4,000 hotels in India, most of which are independent properties, with a strong domestic customer-base.

“Both Travelocity India and Travelguru businesses will aim to work together to bring significant benefits to Indian hotel suppliers, with increased distribution and greater demand, redistribution partners with greater breadth and depth of Indian supplier content, and to Indian travellers with the broadest of choice of travel deals across all products in India”, stated a company release.

Globallogic in pact with movius

Bangalore
The Hindu Business Line The Financial Express
GlobalLogic, software products company, said on Monday, that it has signed a master service agreement with Movius Interactive Corporation, provider of messaging and interactive mobile media solutions. As part of this agreement, GlobalLogic has acquired Movius' captive development centre here, a GlobalLogic release said. ''Through this relationship, Movius will be able to accelerate product innovation and shorten time to market, by leveraging GlobalLogic's product development expertise, velocity platform and distributed agile method'', it said.

Web spiders picks 51% stake in netwings info

Kolkata
Business Standard
Web Spiders (India) Pvt Ltd, a Kolkata-based software consulting firm, has acquired 51 percent stake in Netwings Infotech Pvt Ltd (NIPL), which is engaged in delivering fibre optic networking and GIS solutions.

The development marks the company’s entry into systems integration, which was earlier only into manufacturing and software development. Another company, Supreme & Co Pvt Ltd, manufacturer of fibre optic, telecom and power equipment, has a 50 percent shareholding in Web Spiders.

Siddharth Jhunjhunwala, CEO, Web Spiders, explained, “With this acquisition, we have created a synergistic end-to-end platform from manufacturing to software and systems integration for our customers”. He, however, declined to give the value of the 51 percent stake. Jhunjhunwala added that the Rs250 crore Group is now bullish on the engineering, procurement and construction (EPC) contracts in the power sector, together with e-Governance and large activity projects in Geographic Information System (GIS) and weather services and fibre optic backbone for industrial automation.

Netwings, for example, has already worked with Reliance Big FM's Mumbai station for weather updates and forecasts, D Mallick, CEO of the company informed. The group targets to grow by 45-50 percent in terms of revenue this fiscal. The Group is also looking at overseas acquisitions in areas of web-based software development and has set aside around $ 5 million for the same.

SAP to acquire SWISS CO SAF for $100 million

New Delhi
Business Standard Financial Chronicle Mint The Statesman The Tribune The Hindu Business Line Deccan Herald
Global IT firm SAP today said it was looking to acquire Switzerland-based software developer SAF AG for around $100 million.

“We are in the process of acquiring SAF AG. We are in talks and have gone for public bidding. The size of the acquisition is around $100 million,” SAP Indian Subcontinent Managing Director Ranjan Das said here on the sidelines of an event. Das, however, declined to give further details and the time-frame by which the acquisition would take place.

SAF is a Swiss forecasting and replenishment software developer in the field of retail and wholesale industries. The company today launched a software, SAP BusinessObject Explorer, here and said the Indian retail sector had a lot of potential considering its size and opportunities.

“Now the retail sector has extended beyond the traditional stores. It is more organised and companies are coming forward for a better way of management and supply chain organisation. This is where our solutions can help,” SAP Asia Pacific Japan vice-president (Service Industries, Industries and Solutions Group) Sandeep Shirodkar said.

Talking about its new product, the company said the new software would help them go beyond just being a Business Intelligence provider. The software will also help organisations take decisions at the managerial level as well.

Metricstream announces partnership with Sigmaquest

Bangalore
Business Standard
Bangalore-based MetricStream has inked a pact with SigmaQuest, for delivery of end-to-end product quality management and compliance solutions.

Announcing the partnership here today, Nader Fathi, CEO of SigmaQuest in a statement said "military and aerospace, electronic manufacturers and FDS-regulated industries, that utilise both companies' software solutions, can get instant feedback on quality throughout their products' lifecycles with this alliance".

SigmaQuest, the on-demand leader in scalable solutions for product quality management, helps brand owners and manufacturers worldwide build top quality, electronics-based products for medical device, telecom, military & aerospace, consumer electronics and other industries.

MetricStream is a global governance, risk, compliance and quality management solutions provider.

Ideacts joins hands with Google

Mumbai
The Hindu Business Line
Ideacts Innovations has joined hands with Google to improve the Web search experience for its cybercafé users.

Ideacts uses its proprietary software ‘CLINCK’ to advertise user-targeted material to cybercafé users across India, the company said in a press statement.

Rudrajeet Desai, Co-Founder and CEO, Ideacts Innovations, said “Together with Google, we are working on making search more accessible to give our cybercafé users a better experience.”

The company was founded in March 2007 and has received early stage investments from Sequoia Capital and SVB Financial Group.

Avaya to buy Nortel’s enterprise segment

New Delhi
The Hindu Business Line The Economic Times (Bangalore edition)
Avaya in India will benefit from the global move by Avaya Inc to acquire Nortel Networks Corporation’s enterprise solutions business for $475 million.

The global deal was announced late on Monday from Toronto as part of Nortel’s plans to hive off its various businesses globally.

While Avaya is already the market leader in the enterprise communications segment, the acquisition of Nortel’s business solutions will give it more teeth in India. Nortel India has provided total call centre solutions and data networking equipment to a broad range of Indian enterprise customers across multiple vertical markets and diverse geographical areas.

In the call centre and BPO market, Nortel has more than 16,000 agent positions deployed for companies such as Bharti Airtel, Tata Consultancy Services, Hinduja Technology Media Telecom, iSeva, Office Tiger and ICICI OneSource among others. Nortel has contracts with four airports undertaking modernisation activities and also has a deal with TCS for the passport project.

Nortel also has traction in the data networking space with clients such as Centre for Artificial Intelligence and Robotics, Indian Institute of Science, Sungard Automated Securities, Apollo Health Street, Logica and Cognizant Technology Solutions. All these clients could now move to Avaya’s portfolio.

Commenting on the announcement, the Nortel President and Chief Executive Officer, Mike Zafirovski, said: “We continue to be fully focused on running our operations and continuing to serve our customers while actively engaged in the sale of our businesses. We have determined that the sale of our businesses maximises value while preserving innovation platforms, customer relationships and jobs to the greatest extent possible.”

3I infotech buys out stake in China JV

Mumbai
Business Standard The Hindu Business Line DNA (Mumbai edition) The Times of India (Bangalore edition) Financial Chronicle
Mumbai-based mid-cap IT firm 3i Infotech will buy the entire 49 percent stake of Elegon Infotech from Yucheng Technologies, its joint venture partner in China. Elegon Infotech will then become a wholly owned subsidiary of 3i Infotech.

3i Infotech had announced the formation of the JV earlier this year, which marked its foray into the Chinese market. The company had entered into a MoU with Yucheng Technologies for establishing a 51:49 JV.

“Yucheng wanted to concentrate on their core business. So, we have bought the 49 percent stake of the company. But they will continue to be our partners in China. Besides, some of the senior executives will continue to be with us,” said Amar Chintopanth, ED and CFO, 3i Infotech.

For 3i Infotech, its China operations are at a nascent stage, with about 80 people. “We have invested about $4-4.5 million (around Rs 195-210 crore) in the region. In the product business, we have been able to get a couple of small deals in the China market and we have a target to breakeven in this region by the end of this financial year,” added Chintopanth.

Weidong Hong, CEO, Yucheng Technologies, said: “Yucheng has been overextended and unable to allocate the resources necessary to promote each of our growth initiatives. By refocusing on our core competency in software & solutionn for the banking industry, we have a clear mandate from which to drive our business and financial growth.”

A Nasscom-McKinsey report ‘Perspective 2020’, said BRIC countries will open up additional opportunity of $380-420 billion by 2020. Almost 50 percent of this market will come from China.

Vayana acquires solutionnet

Chennai
The Hindu Business Line
Vayana, a Chennai-based start up, has acquired SolutionNET, also a city-based company, which has over 25 banks as customers, for an undisclosed sum. Vayana, which started operations in January, has a team of experts from banking and financial services (BFS) industry and received funding from the HDFC Group, while SolutionNET has products and customers in the BFS sector, said H. Srikrishnan, Co-Founder and Director, Vayana.

“We will not be able to reveal any number s. I can only say that SolutionNET was a cash positive company when we acquired it in May. The integration is now over,” he added.

While Vayana will be the new brand of the merged entity, SolutionNET will be for product and service for BFS.

SolutionNET has around 120 employees and provides services to customers such as HDFC Bank, Corporation Bank, Shamil Bank and Sharjah Islamic Bank. The Al Omania Bank runs its entire business on SolutionNET’s loan management system. The integrated team will create a business-to-business network of financial services that can be accessed by users through mobile phones and the Internet, he told newspersons.

9.9 Mediaworx acquires igovernment.in

New Delhi
The Financial Express
iGovernment.in, India’s first government-focused comprehensive online portal has announced its strategic acquisition by 9.9 Mediaworx.

iGovernment.in is India's first interactive web platform and info-portal for knowledge sharing by all stakeholders that takes an integrated approach towards good governance.

Set up by New Delhi-based technology journalists, Shubhendu Parth and Pravin Prashant, the portal was incubated by Goosefish Media Ventures (a subsidiary of WebChutney) in March 2008.

“The acquisition of iGovernment adds significant value to our diverse portfolio,” says Pramath Raj Sinha, Managing Director and co-founder of 9.9 Media.

“The team has created a very successful business of generating relevant content for dissemination through interactive digital publishing which complements our expertise in shaping the new-media industry. There was a natural partnership brewing here, and we are thrilled to take a step in the right direction,” adds Sinha.

With this acquisition, 9.9 Media has also acquired the important domain expertise in Shubhendu Parth and Pravin Prashant—founders of iGovernment.in, who will be responsible for developing products in the government sector community, as well as new publications in other verticals.

Software AG

The Times of India (Bangalore edition)
Software AG, Germany’s second-largest software maker, offered to buy technology-services company IDS Scheer AG for 477 million ($667.3 million), the biggest acquisition in its 40-year history.

INFOCOMM and ARABCAL sign MOU

Kochi
Business Standard

Smart Infocomm and ARABCAL have signed an MoU as a major strategic initiative to enter into the UAE and rest of Middle East market and for promotion of their products in IT and Communication segment with the brand name 'SMART'.

The products that are targeted for promotion in UAE and Middle East market includes webcam, headsets, bluetooth headset and speakers, R M Usman, Chairman, Smart Inforcomm said here today.

Smart Infocomm-Arabcal initiative in UAE and rest of the Middle East market seeks to establish and maintain the required infrastructure and logistic framework for the wide range of Smart Infocomm products, he said.

Arabcal Group of Companies is an 18-year old group promoted by Keralite NRIs and established in the United Arab Emirates. It has emerged as a total technical solution provider in the field of industrial, medical, marine, power, oil and gas and aviation sectors, Izzuddin, Director of Arabcal said.

INKAL Ventures Pvt Limited, the 100 percent wholly owned subsidiary of Arabcal Group, has ambitious plans to enter into the emerging Indian market in the environmental and medical segments, he said.

Smart Infocomm Ventures Pvt Ltd is a $25 million turnover group company, engaged in the manufacture and marketing of hi-tech IT related products and electronic goods in India, Middle East and Europe.

YAHOO! partners with nazara

The Financial Express

Nazara Technologies on Thursday has signed an agreement with Yahoo to exclusively power Yahoo! oneSearch, the search designed just for mobile users. According to the pact, oneSearch will be powered by Nazara Technologies to make it possible for users to search and download contents on their device.

Zylog looks to the US, Europe for acquisitions

Mithun Roy, Chennai
The Economic Times

Zylog Systems is believed to be in talks with three companies in the US and Europe for acquisitions. According to people familiar with the development, the deal is in the range of $20-40 million and likely to be concluded over the next three months.

It was learnt that Zylog, which provides technology solutions to Wi-Fi businesses, had formed an mergers & acquisition team, which has identified these companies.

The company’s MD & COO, Ram Sesharathnam, confirmed that Zylog is looking at the possibility of acquiring companies, but declined to divulge further details citing non-disclosure agreements with these prospective targets. On Wednesday, Zylog shares ended 0.5 percent higher at Rs 196.10.

TRICOM in strategic partnership with HLDL

Tushar Pawar, Mumbai/Nashik
Business Standard

Tricom Document Management, a 100 percent subsidiary of Tricom India Ltd, has entered into a strategic partnership with Hobs Legal Docs Ltd (HLDL).

Tricom Document Management is a specialist in electronic management solutions while HLDL provides reprographics and technology services to law firms and corporations in the UK, US and mainland Europe.

“This strategic partnership with HLDL will provide Tricom a platform to reach out the law firms and corporations in UK, US and mainland Europe, particularly with regard to the outsourcing of document reviews which can represent 90 percent of the costs in dealing with electronically stored information in an investigative or litigation context,” the company sources said.

In FY 2008-09, Tricom India recorded a 66 percent increase in turnover to Rs 85.26 crore, against Rs 51.24 crore in the previous year (FY 2007-08). Its consolidated net profit stood at Rs 14.14 crore during the period.

BSNL inks MOU with NTT COM

Deccan Chronicle

India’s largest integrated telecom service provider, Bharat Sanchar Nigam Ltd. (BSNL) and NTT Communications Corporation (NTT Com), Japan has signed a memorandum of understanding (MoU) through which both organisations will jointly explore their strengths and expertise so that customised offerings and solutions can be given to their enterprise customers.

BSNL has created a separate vertical following an internal reorganisation for this enterprise. BSNL intends to provide complete end-to-end total telecom and IT solutions to enterprise customers and also bring the global best practices and products to enterprise segment customers.

Companies opt for cost Reductions & Efficiency Improvements

Rajiv Memani
The Economic Times

With the global economy in the grip of a downturn, corporate decision-makers have shifted their attention to survival in a tough market. However, in doing so, they risk forgoing those growth opportunities which often present themselves during the times of a slowdown. As organic growth in revenues is difficult to come by and profit margins are constantly under pressure, companies have been busy with much-needed cost reductions and efficiency improvements.

But is this enough to gain real competitive advantage and find the opportunities in adversity? Clearly, given the fact that most people are in business for the long-term , there must be a balance between the fight for survival and the quest for growth. A carefully identified and structured Merger & Acquisition (M&A ) transaction can accelerate growth by providing access to new markets, customer segments, technologies, human resources and economies of scale.

The current M&A activity, or the lack of it, needs to be viewed in this context. According to Bloomberg estimates , Indian M&A volumes have dropped from USD 42bn in 2007 to USD 33 bn in 2008 and just USD3.7 bn in the first three months of 2009. This is a worldwide phenomenon. Global M&A volumes are down to USD 427.4 bn in Q12009 from USD 2498 bn in 2008 and USD 4058 bn in 2007.

The reasons range from a shift in focus from growth to survival, higher risk-aversion , poor or no availability of capital for financing acquisitions, reduced private equity appetite etc. However, this really is the time for corporate strategists to consider M&A , as valuations are modest and an increasing number of companies are looking to consolidate by divesting non-core or non-performing assets and businesses.

In a recent Ernst & Young survey of 121 finance professionals in India conducted during February, 2009, a leading 78 percent of respondents thought that companies are either correctly valued or undervalued. Specifically, the metals and mining and IT and ITeS sector respondents felt that current valuations are low, while real estate and hospitality sector valuations were perceived to be still high and the consumer goods sector dominated the response on correct valuations.

Some recent M&A transactions in India where companies appear to have cashed in on low valuations include American Tower Corporation’s acquisition of Xcel Telecom; TCS buying the BPO division of Citigroup and Sodexho’s acquisition of Radhakrishna Hospitality. But generally, these have been few and far between.

A majority (63 percent) of our respondents felt that the slowdown will result in a consolidation in their sectors. Interestingly, the majority (58 percent) of our respondents in the above-mentioned survey told us that they would consider M&A as a prudent strategic decision for business growth during the slowdown. Yet, M&A volumes hardly reflect this conviction.

Non-availability of capital has been the biggest challenge. While banks have been reeling under a global liquidity crunch, private equity investments have dried up. Also, the Indian M&A boom had been driven by crossborder transactions, which have become much fewer due to lack of capital and increased caution. Further, market uncertainty has resulted in a widening of the bid/ask spread, where bridging the gap between buyer and seller expectations has made deal closures difficult.

Consequently, we are beginning to see some significant changes in the way transactions are financed and executed . With lower leveraging opportunities , promoter contribution has become important and banks may require additional comfort from borrowers . This will significantly reduce highly leveraged buyouts. Maximum debt levels are likely to be between 2.5-3 X EBITDA (post acquisition) vis-à-vis levels of 4-5 X EBITDA, structured through multiple levels of senior , subordinate, quasi and unsecured debt instruments.

Some of the solutions which can be considered include cashless transactions via the share-swap and asset swap route, delayed payment schemes, “earn-out” strategies, upside sharing and minority sales. A large number of all-share mergers could happen. Also, sovereign wealth funds, who continue to be more optimistic, can be considered as an alternate source of finance. Generally, with acquisition financing a challenge, big-ticket transactions may be fewer.

The author is Country Managing Partner, Ernst & Young

Has the template for a successful jv changed?

Arati Menon Carrol
The Economic Times

A year and a half ago, against the backdrop of a thriving Indian economy and an automotive market on overdrive, the Hero group announced a Rs 4,400 crore joint venture partnership with Daimler Trucks, a division of Daimler AG, giving Hero the opportunity to enter the commercial vehicles segment in India. In April this year, however, the Munjals unexpectedly announced a pull-out. Speculation had it that financial constraints forced them to re-focus on their core business of motorcycles; Hero Corporate Services chairman Sunil Kant Munjal blamed crashing demand in the commercial vehicle segment.

News of failed JVs has been doing the rounds; Britannia-Fonterra, TVS Group-Wabco and UTI-Shinsei Bank are among those who are either reviewing or have called off partnerships. Larsen & Toubro (L&T )’s plans to enter the non-life insurance business through a JV with US-based Travelers Insurance have also reportedly fallen through and engineering and construction company Punj Lloyd is exiting its two-year real estate business JV; chairman Atul Punj has admitted that a bad real estate environment prompted this decision.

So has the global economic meltdown found its latest victim? Strangely enough, industry pundits say this is a false alarm; partners aren’t necessarily pulling the plug on JVs just so they can shore up revenues or cut costs. “If JVs are not working out it’s less a sign of the times and more a factor of partners going their separate ways over the inability of the Indian partner to match investment dollar for dollar or a mismatch in business strategy,” says Akil Hirani, managing partner at top law firm Majmudar & Co.

Ranjan Biswas, partner and national director India, transactions advisory services at Ernst&Young says a weak global economy does put pressure on JVs but not necessarily enough to break large numbers of them, but adds that for a joint venture to stand up to the event, both parties need to have thrashed out the harder parts of their partnership right at the start.

Hirani actually believes the opposite might be true. “A lot of Western multinationals are looking to beat the blues in their jurisdictions by partnering with Indian companies to leverage existing manufacturing or distribution networks in India.” He might be right—news of fresh JVs has started doing the rounds.

IT training solutions provider Aptech is betting big on the Latin American market by entering into a JV with the Falgo group to set up IT training centres in Brazil.

So global recession may not have played spoilsport on this front but what it is having a significant effect on, says experts, are the foundations upon which partnerships are built. “The global recession is actually a great leveler. Traditionally the Indian promoter has always had his eye on taking the lion’s share of profits by putting in the least amount of money.

So, has the template for a successful JV changed? Everyone agrees that the transparency factor will be key. Bajaj offers his advice: “If you have the right balance between aggression and focus on profits and follow similar corporate governance standards you’re on the right track.” Everyone agrees that there’s likely to be less tip-toeing around common irritants like management and financial control and exit strategies.

Crucial issues that were just left open in the hope that they would be solved later on will now likely be knocked around at the outset. At the end of the day though, says Biswas, every JV has a shelf life. “The average life expectancy of a US company is 32 years. Recession or not, it’s unreasonable to imagine a JV will continue in perpetuity.”