In spite of a credit crunch and slowdown in the US, both Indian and global IT services companies have seen strong business growth in 2007. Worldwide IT services revenue totalled $748 billion in 2007, 10.5 per cent higher than $677 billion reported in 2006, according to research from Gartner Inc. In the same period, the top six Indian IT companies TCS, Infosys, Wipro, Satyam, HCL and Cognizant increased their collective market share in the global IT service arena to 2.4 per cent against 1.9 per cent in the previous fiscal.
Even though Indian IT companies have collectively improved their revenues in 2007, they are still laggards when compared with US-based vendors, who dominated the IT services pie with 55.4 per cent market share. Indian IT companies account only for 4.1 per cent of the global IT services revenue tracked. On the global front, IBM and Accenture delivered strong growth rates of 12.2 per cent and 19.7 per cent, respectively.
However, domestic IT services business in the country also seems to have come of age. The Indian domestic IT services market has been outpacing the overall Asia Pacific growth, as it grew by 18 per cent in 2007. While cost remains a key consideration for users in the outsourcing services market in India, operational efficiency and business agility are driving most of the IT services engagements.
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Freight rate for iron ore is set to come down further with the Railways deciding to remove the 30% port congestion surcharge levied on the mineral meant for domestic use. The move is set to benefit steel companies such as Essar Steel, Ispat Industries and Vikram Ispat which do not have captive mines. These companies depend mainly on rail transport for moving raw material to their steel plants. A fortnight ago, the Railways had shifted iron ore from class 180 to 170. The reclassification had resulted in freight cut of ore by 4-5%. However, the port congestion surcharge on iron ore meant for exports would continue to remain at 100%.
The proposed changes follow a series of high-level government meetings over finalising a steel package to contain inflation. Iron ore constitutes an important cost element in the entire process of steel making. With iron ore prices rising 100% in a year and expected to rise further, the Railways’ initiative is expected to reduce cost pressure on the steel sector.
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Bharti Airtel is set to partner IT and telecoms hardware major Cisco for enhancing its managed services portfolio. With falling tariffs and reduced average revenue per user (ARPUs), all major telcos, are now looking at managed services which combines IT services with telecom offerings. According to a recent report by Gartner, network IT services is set to become a $7 billion market by 2011. Telcos are, therefore, looking to bundle end-to-end managed servicesinstallation of the hardware at the customer premises, providing customised software solutions, managing and maintaining both IT and hardware platform.
Airtel is collaborating with Cisco to launch managed Multi Protocol Label Switching (MPLS) services. With Cisco’s Tier I certification for the CISCO Managed Serviced Channel Partnership programme, Airtel will now be able to offer Indian enterprises end to end Managed VPN Services including last mile and Customer premise equipment (CPE) management, network design, installation, configuration, and 24X7 monitoring and maintenance support. Bharti Airtel expects to grow their MPLS business by 50-60 % in this financial year. The company, which has more than 400 customers on its MPLS network, intends to increase its customer base by at least 30% in the next one year. Bharti-Cisco combine would look at partnering other service providers and IT players from time-to-time depending on the specific requirements of their customers.
The Bharti move has come within a day of French-US equipment firm Alcatel-Lucent forming a JV with Reliance Communications (RCOM) to offer managed network services to domestic as well as international telecom operators. Managed services helps telcos move up the value chain and increase revenues as Indian telcos extend their footprint both within the country and globally.
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Patni Computer, the Mumbai-based IT services provider, is about to close an over $50 million deal with a top telecom carrier in India to provide a proprietary service delivery framework. It is learnt that Patni will provide Telecom-in-a-box (TIAB), a service framework that will ease the process of delivery of various services such as multimedia content, IPTV by telecom carriers to their customers.
Meanwhile, Patni is also in talks with some IT service providers and telecom carriers to provide niche technology driven telecom services. For Patni the focus on India is part of its effort to bolster its Asia-Pacific revenue from 5% of its total revenues to 9% in the next financial year. Moreover, it is also looking at the second largest market for IT services i.e Japan. Business from Europe contributes about 13% of Patni’s revenue while the rest comes from the US.
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''The said news item is purely of speculative nature,'' company said in a statement. The media has reported that M&M is in talks to acquire Kinetic Motors. The Pune-based company Kinetic said it is exploring various alternatives to raise funds for its two wheeler business.
However, no definitive agreement has been entered with any investor or Mahindra & Mahindra Ltd, it added.
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A poor performance by mining, manufacturing and electricity sectors resulted in a dismal industrial production growth of 3 per cent during March 2008, as against 14.8 per cent in the same month of the previous year. Data released by Central Statistical Organization revealed that the production in manufacturing sector, which has an 80 per cent share in the Index of Industrial Production, grew by 2.9 per cent as against a robust 16 per cent in the same month of the previous year.
In the month under consideration, electricity production grew by 3.7 per cent as against 7.9 per cent in March 2007. Mining production growth also slumped to 3.8 per cent in March 2008 as against 8 per cent in the corresponding month of the previous year. Consumer durables production in March dipped by 2.1 per cent as against a growth of 3.8 per cent in March 2007. Capital goods production in March grew by 8.6 per cent as against 18.1 per cent in the same month of the previous year.
There is a silver lining, though. Part of the drop appears to be because of the base effect of the industrial growth in March 2007, the base for calculating growth in March 2008, which was unusually high. If we look at the numbers month-on-month (M-o-M) and look at March over February, we will notice a 23-point increase in the general index, which will translate to a growth of nearly 8.5%. Basically, in March 2007, growth had been 37 points over a base of 250, so that was a huge increase.
Thus considering the base effect and the M-o-M figures, there is really no signs of slowing down yet. The higher sequential growth (March over February), which had turned negative in February 2008, does underscore the point. However IIP figures for the coming months would be keenly watched to see whether there are actual signs of slowing down on account of prevailing higher interest rates and rising input costs.
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Ratan Jindal-led Jindal Stainless has entered into an agreement with Indonesian mining and metals firm PT Antam to form a $700-million joint venture to develop a nickel smelting and stainless steel facility in North Konawe, Southeast Sulawesi (Indonesia). While PT Antam will have a 55% stake in the JV, Jindal Stainless will hold the balance 45%.
The new venture would entail an investment of $700 million (Rs 2,900 crore approx), of which 30% would be raised through equity and the balance would be in the form of debt. The new plant will have a capacity of close to 20,000 tonne per annum (tpa) of contained nickel in the form of ferro-nickel and 2.5 lakh tpa of stainless steel. The facility will also have its own coal-based captive power plant and water-treatment plant, besides residential facilities for its employees.
While the construction work would begin from early next year, the plant would be commissioned by mid-2011. Under the terms of the agreement, while PT Antam will share its expertise in mining and nickel processing, Jindal Stainless will provide expertise in stainless steel processing and marketing. With Jindal Stainless already having a stainless steel plant in Indonesia, the new venture would strengthen its presence in the global stainless steel industry.
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Ranbaxy Laboratories has signed a strategic product development agreement with German pharma major Merck for drug discovery and clinical development collaboration in the anti-infectives field. As per the deal, the two partners will work together to develop clinically validated anti-bacterial and anti-fungal drug candidates. The agreement is in line with Ranbaxy’s recent overtures for collaborative research in various segments with other pharma companies both in India and abroad.
Under the terms of the agreement, Ranbaxy will receive an undisclosed upfront payment, in addition to potential payments totalling more than $100 million associated with the achievement of various research, development and regulatory approval milestones for each target included in the collaboration. This apart, Ranbaxy will also be eligible to receive significant royalties on worldwide net sales of any products commercialised under the agreement.
Ranbaxy will carry out drug discovery and clinical development through Phase II of clinical trials. Merck will then develop and commercialise the drug candidates. The collaboration, beginning this year, will have an initial term of five years and can be extended mutually. This deal could be similar in nature to Ranbaxy’s existing relationship with GlaxoSmithKline. The two had struck an alliance in 2003 under which Ranbaxy conducted the optimisation chemistry required to progress drug leads to the stage of candidate selection.
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Reliance Communications (RCom) has entered into a joint venture pact with global infrastructure provider Alcatel-Lucent to provide managed network services (MNS) to telecom service providers in the country. This is the first time two major firms have come together to jointly tap the emerging potential of MNS, a nascent sector in the country. The companies will float a new entity, which will kick off operations by providing services to RCom's CDMA and GSM networks. The new entity will initially focus on providing services to 12 circles in northern and western India. The JV firm will also help RCom's expansion plans outside the country and provide services to other firms across the world.
An MNS provider installs the infrastructure and equipment and manages it for the telecom service provider. Though data pertaining to the size of the MNS industry is not available, industry experts expect the sector to grow to about Rs 100 crore in the next couple of years. The JV will help RCom concentrate on its core competencies i.e. telecom services, while Alcatel-Lucent takes care of the infrastructure. After hiving off its passive infrastructure business of telecom towers this is a second move by Reliance Communications Ltd to outsource a core activity.
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