Computers Today, June 1-15, 2000; Country Buzz pg1

June 1-15, 2000 COUNTRY BUZZ

COMPUTER BUSINESS
IT Majors Take Acquisitions Route to go Global

Going global via purchases seems to be the new formula for Indian IT firms. In the recent past, at least three IT majors have announced acquisitions abroad. Leading the pack is Chennai-based Polaris Software Lab Ltd, which has decided to acquire DATA Inc, a US-based software services firm focusing on banking, finance and insurance industries.

According to Polaris Software managing director Arun Jain, "The acquisition will be for a consideration of $21 million. The valuation has been arrived at by UBS Warburg, and is subject to a due diligence by KPMG. The take-over will be funded by the proceeds from the issue of American Depository Receipts (ADRs), which the firm is contemplating, or thro- ugh private placement of equity." The memorandum of understanding (MOU) to this effect was signed between Arun Jain and Arun Verma, president, DATA Inc. The deal would be a mix of both stock and cash. The details are still being worked out, Jain said. "We are also considering the induction of Arun Verma on the board of directors," he said, adding, "the alliance will play a crucial role in increasing our client-base to include Fortune 500 firms."

Another infotech major, Aptech Ltd, has decided to take equity in four overseas companies for imparting a strategic thrust to its business in Europe and the United States of America. According to Aptech managing director Ganesh Natarajan, the company has also formed strategic alliance with Venture Tech Inc., a listed US company, to provide technology backup and support for launching five Internet community Web sites and portals for gaming, pharmacy, youth, entertainment and business. It has also acquired a majority 80 per cent stake in Isearchcenter.com, wherein the company would be managed and run by Aptech from India. Aptech is also negotiating with a US company for a minority stake, the name of which has not been declared so far. Systems America (India) announced the 100 per cent acquisition of a Canadian company engaged in providing high-end IT solutions in an all-cash deal. The name of the firm has not been made public. This is part of the global restructuring of the Systems America group and this acquisition would give the company a fast entry into the growing Canadian markets, the firm said.

Infotech Bill to Provide Fillip to E-commerce

The Information Technology Bill 1999 has finally seen the light of the day, with both houses of Parliament passing it by voice-vote during the Budget session last fortnight. The bill brings E-commerce in the periphery of law, and accords heavy punishments to the cyber-criminals. With this, India joins a select band of 12 nations that have cyber laws. With the passage of the bill, India will have a legal framework for the authentication and origin of electronic records/communications through digital signatures. The resultant IT Act will eliminate barriers resulting from uncertainties over writing and signature requirements, and promote legal and business infrastructure necessary to implement E-commerce in the country. The Union Minister for Information Technology, Pramod Mahajan, said that special task forces will be created to tackle cyber crimes, as per the recommendations of the parliamentary standing committee. He said clauses dealing with the monitoring of cyber cafes and the registration of portals have not been included in the bill.

The industry was upbeat at the development. NASSCOM said the passage would result in E-commerce transactions excee- ding Rs 25,00 crore, a jump of more than 500 per cent from previous year's figures. However, caution came from a Manufacturers' Association of Information Technology (MAIT) official. He said there should have been provisions to make the bill flexible, as there was no time-tested E-commerce model in the country.

Germany Rolls out Red Carpet for Indian IT Industry

Buoyed by the 'green card' scheme launched by the visiting German foreign minister, Joschka Fischer, and the slogan "kinder sttat inder" (children, not Indians) having subsided in Germany, IT professionals in India are suddenly considering Germany as the new El Dorado. Following the decision, the German embassy in Delhi has been inundated by queries .The green card scheme allows 20,000 IT professionals in Germany to work for the next five years. The country, though, has the capacity to absorb as many as 75,000 professionals, but the ceiling of 20,000 has been put due to "domestic political compulsions".

Samsung Electronics Opens Subsidiary in India

The Korean infotech giant, Samsung Electronics Co. Ltd, has set up its wholly-owned subsidiary in India. Called Samsung Electronics India (P) Ltd (SEIP) and based in Delhi, the company will undertake sales and marketing operations for Samsung's products in areas of display, storage, printing and mobile phones. Samsung Electronics was earlier managing its India operations through a liaison office in Delhi, set up in 1994. Commenting on the necessity of a subsidiary, K.S. Kim, managing director of SEIP, told Computers Today, "The setting up of the subsidiary is a reflection of Samsung's commitment to our IT and telecom business in the country. It would now be an integrated marketing that would reduce dependence on overseas logistics. Enhanced control over market contingencies would enable improved supply chain and customer relationship management." Samsung would invest an additional $10 million in its subsidiary.

In 1999-2000, Samsung Electronics earned a revenue of Rs 500 crore, Kim said. He expects this amount to reach Rs 800 crore this year and go up to Rs 2,500 crore by 2003. "Last year, we captured 41 per cent share of the colour monitor market in India. In hard disk and optical disk drives, we had a share of 22 and 20 per cent, respectively," Kim claimed. "India accounts for about 1 per cent of the firm's total export turnover. This will go up to 2 per cent in 2003," he said.

IIMB to Use Baan's Logistics Management Tool

The Indian Institute of Management, Bangalore (IIMB), has signed a memorandum of understanding with Baan India to utilise the latter's logistics management product from Caps Logistics. The solution will be used by the institute for academic research within the management programme offered by the it. It will also use the product to offer consultancy services to organisations by working with them on their data and helping them in optimising their logistics management. According to D. Bharath, CEO, Baan India, "With this tie-up, Baan will be able to simulate complex business models for logistics management and optimisation, which will provide better educational environment for faculty and students alike."

Satyam, CA Tie up for Net-enabling SMEs

Satyam Computer Services Ltd and Computer Associates International Inc. have formed a 50:50 joint venture to provide online access to advanced E-business applications for the small and medium enterprises (SMEs) on a cost-effective basis. Essentially an application service provider (ASP), the joint venture will have an initial investment of $3 million, said B. Ramalinga Raju, chairman, Satyam Computers. The name of the new venture has not yet been finalised. "The partnership will benefit our customers who will not only have access to leading edge technologies which Computer Associates is renowned for but also enjoy high levels of response and accountability based on Satyam's global standard of infrastructure and delivery capability," Raju said. Charles B. Wang, chairman and CEO, Computer Associates, expressed satisfaction over "our first ASP joint-venture in India", and dubbed it as an "an exciting step forward in our plans to help smaller Indian firms take advantage of the explosion in E-business". The offerings would include 'Jasmineii' technology, an independent platform for building, testing and deploying intelligent E-business solutions, and 'Neugents', a self-learning software that identifies business opportunities from transaction histories and predicts customer needs. The offerings will be made online, according to the specific requirements of an individual enterprise.

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