Indian Stock Market

HCL Corporation sells 2.5% in HCL Technologies

First this news seems like a bad one. But if u look closer you would feel its ok.

HCL Corporation, promoted by Shiv Nadar and family, today sold a stake of about 2.5 per cent stake in one its holding firms, HCL Technologies, through block deals for an estimated Rs 580 crore.

“HCL Corporation has sold 16.75 million of shares in HCL Technologies. The sale proceeds will be donated to Shiv Nadar Foundation to be used for philanthropic initiatives,” HCL Corp said in a statement.

HCL Corporation, headed by Shiv Nadar’s daughter Roshni, holds a 50.27 per cent stake in HCL Technologies.

Though the company did not specify how much money was raised through the stake sale, the proceeds would be over Rs 580 crore going by today’s share price of Rs 347 per share.

Shares of HCL Technologies plunged 7 per cent to a low of Rs 347 a piece on the Bombay Stock Exchange (BSE) in morning trade. The scrip, however, was able to partially recover its losses in afternoon trade and was being trading at Rs 359.50, still down 3.72 per cent.

The sales proceeds will be donated to the Shiv Nadar Foundation, to be used for education initiatives, making him one of the largest philanthropists in the country, the statement said.

IT major Tata Consultancy Services (TCS) on Wednesday said it has inked a multi-year outsourcing contract with Telenor Norway.

Contract details:

The contract comprises IT application maintenance and development services and will involve modernisation of Telenor Norway’s application portfolio across its fixed, mobile, data warehouse and accounting system domains, a release said here.

Through the initiative Telenor Norway will improve its operational efficiency, refresh its IT stack and will become more agile to respond to its customers’ changing needs, it said.

About Telenor:

Telenor is a leading mobile communications services provider to customers in 13 markets across Asia and Europe.

“This contract underscores TCS’s ability to help global corporations optimise its ‘run the business’ cost and channel those savings to undertake modernisation projects that are delivered with reduced risk and increased certainty,” said TCS Vice President and Head of Europe A.S. Lakshminarayanan.

“Our selection by Telenor to drive this modernisation demonstrates the headway we have been making in the Nordic market and highlights our strong telecom domain expertise,” he said.

HCL Technologies  has signed a 5 Year $500 million Strategic Agreement With Merck .

HCL Technologies , a leading global IT services provider, today announced it has signed a five-year, $500 million strategic engagement with MSD (also known as Merck & Co., Inc. with headquarters in Whitehouse Station, NJ, USA), a global research-driven pharmaceutical company.

HCL will extend its existing relationship with MSD, dating back to 2004, to become an integral business & technology services partner and provide a multitude of services including software-led IT solutions, remote infrastructure management, engineering and business and knowledge process services.

“”For five years, MSD has leveraged HCL’s extensive expertise in life sciences and healthcare to streamline operational efficiencies and consolidate its IT portfolio,” said Richard G. Branton, Vice President of Application Services, MSD. “As we continue to leverage global delivery services to meet our business imperatives, we have chosen HCL as our strategic partner for its depth of technology and pharmaceutical domain experience, coupled with its flexibility to engage and a commitment to deliver.”

“This is a landmark win for HCL, and we are proud that our growing leadership in pharmaceutical and healthcare, coupled with our previous delivery for MSD has positioned HCL as a strategic partner for MSD,” said Shami Khorana, president HCL Americas. “We are committed to creating transformational value for MSD in this engagement and we look forward to playing a key role in the organization’s growth across global markets.”

“MSD will leverage HCL’s near-shore delivery network in the U.S. comprised of its operations center in Raleigh, North Carolina and its global data center delivery ecosystem, powered by its partner footprints across the globe. As a result of this engagement, HCL will expand its U.S. team in North Carolina, relying on local hires to staff projects, thus creating jobs for the local community. In total, HCL will deliver services out of 20 worldwide locations including USA, Poland, China and Brazil.

AT&T gets 8% stake in Tech Mahindra due to its previous agreements. Re-Entry for the Telecom Giant in IT Space.

AT&T Inc, the largest telecom services provider in the US, has acquired an 8.07 per cent stake in Pune-headquartered Tech Mahindra for $34.5 million (around Rs 160 crore) by exercising a 2005 option agreement to buy a stake in the company. Its stake at today’s prices on the Bombay Stock Exchange (BSE), however, is worth around Rs 900 crore.

AT&T bought 9.87 million Tech Mahindra shares, according to its filing to the National Stock Exchange (NSE) today.

Tech Mahindra had signed an agreement with SBC Services, Inc on December 28, 2004 to provide services to SBC Services and its group companies. In 2005, SBC Communications acquired AT&T, and the combined company was renamed AT&T Inc.

A May 10, 2005 agreement granted an AT&T company options over 9.98 million Tech Mahindra’s shares, which are held by Mahindra-BT Investment Company (Mauritius) Limited. These options vested over a period ending April 30, 2010, if the company achieved targeted revenues from AT&T companies.

Following the agreement, SBC was granted options over Tech Mahindra’s shares, representing 8 per cent of the company’s fully diluted share capital as at the date of the agreement which amounts to 9,931,638 shares of Rs 2 each.

The share prices of Tech Mahindra — the Mahindra & Mahindra group IT company which acquired troubled IT services provider Satyam Computers last year — fell a marginal 0.2 per cent on the Bombay Stock Exchange (BSE) to close at Rs 910.20. However, the company had not made any announcement on this exchange till the close of trading. Tech Mahindra is estimated to get around 11 per cent of its revenues from AT&T. Its contract with AT&T was extended on December 28, 2009.

Analysts are unsure whether the deal will result in increasing business from AT&T. “AT&T has got a good deal because Tech Mahindra’s shares has shot up over the years. But my understanding is that AT&T has finished most of the major work with Tech Mahindra. Henceforth, the business will be stable or perhaps, even show a decline,” said an analyst requesting anonymity.

A Tech Mahindra insider countered that by saying “AT&T remains a very important client to us. However, it will not have any board representation. But the deal will surely mean increased business for us. Besides, it will also help us to reach out to other US telcos to provide services like infrastructure management services (IMS) and device testing.”

Tech Mahindra is a joint venture between Mahindra & Mahindra, and UK telecommunications company BT Group. As on December 31, 2009, M&M held around 44 per cent stake in Tech Mahindra while BT owned 30.85 per cent. MBTM held 8.13 per cent stake. BT is the largest customer of Tech Mahindra, accounting for around 40 per cent of its revenue.

The Tech Mahindra stock has declined 8.2 per cent this calendar year. The company’s net profit for the third quarter ended December 31, 2009 dropped 22.4 per cent at Rs 172.8 crore from Rs 222.8 crore in the corresponding quarter last financial year. The numbers were impacted due to the interest cost on debt taken for the acquisition of Satyam Computer Services rebranded as Mahindra Satyam.

Revenue for the quarter at Rs 1,127.3 crore was up 4.8 per cent from Rs 1,132.2 crore in the same quarter last year. Sequentially (as compared to the quarter ended September 30, 2009) the company’s net profit rose 2.2 per cent from Rs 169 crore — and revenue grew 3.9 per cent from Rs 1,141.8 crore.

Tech Mahindra received Rs 968.2 crore from BT (British Telecom) as contract restructuring fees on certain long term contracts. Around Rs 450 crore has been used to repay the company’s debt it raised to acquire majority stake in Mahindra Satyam. By the end of December the company’s debt position was Rs 1,700 crore, which it expects to come further down to Rs 1,400 crore in January. Interest expense for the quarter was Rs 45.9 crore.

NTT and Patni Computers in Deal

NTT and Patni computers are in talks for a deal for a Buyout.

Mahindra Satyam and Gen-i Announce Strategic Alliance for Windows 7 Migration Service.

Mahindra Satyam is cutting costs aggressively and  has decided to give up on its unviable units in software technology parks across the country.

The company is learnt to have decided it is time to get out of unviable leased IT buildings in the country. Sources say the company has given up on close to 10 lakh square feet of IT space in Chennai and Hyderabad alone—both cities which housed Satyam’s biggest campuses.

“Infrastructure consolidation continues to be a key area of focus, wherein we have identified cost optimisation opportunities. We continue to take steps to rationalise our current capacity to keep it in line with current and anticipated needs,” Mahindra Satyam told CNBC-TV18.

Satyam was one of the largest occupiers of IT space in Chennai and Hyderabad. Analysts say this move will result in a sudden flood of available units.

In Chennai alone, 90 lakh square feet of IT property is already available. And, Mahindra Satyam’s move comes at a time when developers are desperately trying to find takers for the existing space. And with this extra space becoming available, developers will have to redouble efforts to find new takers.

Wipro has struck again

Wipro, which has already bagged two large IT outsourcing contracts from telcos, is among the shortlisted contenders for another large Top Indian outsourcing deal, this time from Swan Telecom. The other vendors that have made it to the shortlist include IBM and Tech Mahindra. UAE-based operator Etisalat owns 45% stake in Swan Telecom.

If Wipro wins this deal, the IT major would have won as many large outsourcing deals from telcos as IBM. Earlier this week, Wipro announced a nine-year deal with Unitech Wireless estimated at Rs 2,500 crore. In January 2008, it bagged a $600-million deal from Aircel Cellular. This deal is expected to be as large as the Unitech Wireless contract, said industry sources.

IBM has large outsourcing contracts from Bharti Airtel, Vodafone and Idea Cellular. Till the Aircel deal, it had a dream run, bagging all the large deals from telecos.

Close to seven vendors had bid for the Swan Telecom contract, but about four of them could be in the final shortlist, said an industry expert, who did not wish to be named.

He said operators may prefer outsourcing to a player other than IBM for competitive reasons.

“Wipro could be a favourite to win because IBM already has three large operators with it. So, new operators may prefer not to go with it. Tech Mahindra’s niche focus may work against it in such contracts because the operators want vendors with a broad area of expertise,” the expert said. Compared to Wipro, Tech Mahindra is also a relatively new entrant into the domestic market.

Swan and other new operators are negotiating their IT contracts ahead of their equipment orders. In a response to a query on the company’s IT outsourcing plans, a Swan Telecom spokesperson said: “We are currently in the preparatory stages and will announce our plans for the Indian market at the appropriate time.”

In a response to an e-mail from ET, Wipro said: “Wipro does not comment on speculations and as a policy, we do not comment on specific clients or business.” New entrants like Unitech, Swan, Datacom and Loop are liable to pay penalty if they don’t launch services even after 52 weeks of spectrum allotment. Beyond 52 weeks, there is a grace period of three weeks.

“We evaluated Wipro on all parameters — financial and commercial — and found the company extremely competitive. Also, being new in the (telecom) vertical, they brought a lot of freshness in approach and innovative ideas. We went about it objectively and Wipro had the team and infrastructure to support the project,” Aircel COO Gurdeep Singh had told ET about why the company decided to outsource to Wipro.

Uflex Ltd has informed  that in view of the long term strategic plans and strategy and the need to canalize its energy and resources to the core business, the Company has decided to sell and transfer 100% of shareholding of its Distillery unit under Wholly Owned Subsidiary – M/s. UBIO Chemicals Ltd.

Accordingly the Company has sold and transferred 51% of the holding of UBIO Chemicals Unit to the third party in terms of Share Purchase Agreement dated March 30, 2009.

Further, balance 49% of the shareholding of UBIO Chemicals Ltd will also be transferred in due course of time in terms of the said Share Purchase Agreement or any amendment thereof.

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