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Wipro is reported to buy Citi's India tech arm for USD 127 million for cash. Citi Tech Services is an India-based captive provider of IT services and solutions and its revenues were approximately USD 80 million in CY08. Wipro, Citi will sign a master service agreement for six years. The agreement provides for delivery of at least USD 500 millon in service revenue over the period of the contract. The transaction is expected to be closed by March 2009.
Citi has 1,650 employees and Wipro will absorb all 1,650 employees of Citi Tech Services.
Jagdish Rao, Citi Tech Head said Citi Tech Services has close to 2000 people with revenues close to USD 80 million this year. According to him, integration with Wipro will provide a larger suite of services and help drive productivity and scale.
Girish Paranjpe, Joint CEO, Member of the Board, Wipro said, "This captive unit in India, they have set it up with a huge amount of thought process and created a world class facility. When Citi was looking to scale up this facility, they figured that it made more sense for somebody like Wipro to help them do this, which is why they asked us to take this unit over, and then help them scale this both in terms of the range of services that get provided and also the sophistication and the productivity that we can give by leveraging our processes and our experience elsewhere. So, it is a great opportunity for both – Citi to get the benefit of Wipro’s scale and flexibility as well as capacity, and for Wipro to get the benefit of deep banking expertise that comes out of this unit, and experience of managing risk and compliance, which is very key in the banking situation."
Soumitro Ghosh, Senior VP- Finance Solutions, Wipro said that the company is trying to see how it can bring in synergy between the BPO business as well as the application business. This will give a huge amount of synergistic play because Wipro would be Citi’s strategic partner practically on the infrastructure side, application side as well as on the BPO side, he added.
Here is a verbatim transcript of Soumitro Ghosh’s comments in a press briefing.
From a Citibank perspective, it is important from three-four perspective. It is important from a cost perspective where huge amount of cost will get taken out because even though Citi had really been outsourcing this piece of work to a captive, typically the captive has its own challenges. So we will be able to execute the infrastructure management business on a third party basis which is supposed to be far more productive. Plus all the new business which Citi’s is going to outsource – that is going to be done on a far more productive fashion.
Second is variablising the cost, so today there is a ramp up, ramp down situation, we can obviously help in variablising that entire cost. Third is that we can offer this with perhaps a different set of facilities managed services basis. Fourth is that we recently also acquired from Citi a fairly large amount of BPO business. So we are trying to see how we can bring in synergy between the BPO business as well as the application business. This will give a huge amount of synergistic play because we would be Citi’s strategic partners practically on the infrastructure side, application side as well as on the BPO side.
Here is a verbatim transcript of Soumitro Ghosh’s comments in a press briefing.
From a Citibank perspective, it is important from three-four perspective. It is important from a cost perspective where huge amount of cost will get taken out because even though Citi had really been outsourcing this piece of work to a captive, typically the captive has its own challenges. So we will be able to execute the infrastructure management business on a third party basis which is supposed to be far more productive. Plus all the new business which Citi’s is going to outsource – that is going to be done on a far more productive fashion.
Second is variablising the cost, so today there is a ramp up, ramp down situation, we can obviously help in variablising that entire cost. Third is that we can offer this with perhaps a different set of facilities managed services basis. Fourth is that we recently also acquired from Citi a fairly large amount of BPO business. So we are trying to see how we can bring in synergy between the BPO business as well as the application business. This will give a huge amount of synergistic play because we would be Citi’s strategic partners practically on the infrastructure side, application side as well as on the BPO side.
Source : MoneyControl.com
Earning Updates for quarter II for Financial Year 2008-2009 .
Wipro : This Software major, on consolidated basis, announced a 18.76% rise in profit for the quarter ended September 2008. During the quarter, the profit of the company rose to Rs 9,782 million as compared to Rs 8,237 million for the quarter ended September 2007. Total Income rose 36.47% from Rs 48,836 million for the quarter ended September 2007 to Rs 66,647 million for the quarter ended September 2008.
Bank of India : a leading public sector lender reported a phenomenal rise in its standalone net profit for the quarter ended September 2008. During the quarter, the profit of the company surged 79.38% to Rs 7,628.60 million from Rs 4,252.70 million in the same quarter, last year. Interest earned for the quarter climbed 33.19% to Rs 39,627.70 million, while total income for the quarter rose 31.64% to Rs 46,122.70 million, when compared with the prior year period.
Tata Consultancy Services (TCS) : A leading software company, announced a marginal rise in its standalone net profit for the second quarter ended September 2008. During the quarter, the profit of the company rose 2.26% to Rs 11,730.40 million from Rs 11,471.10 million in the same quarter, previous year. Net sales for the quarter rose 24.54% to Rs 56,999.60 million, while total income for the quarter rose 17.93% to Rs 55,207.90 million, when compared with the prior year period. The company posted earnings of Rs 11.99 a share during the quarter, registering 2.30% growth over previous year period.
Infrastructure Development Finance Company (IDFC) : Reported a steady growth in its standalone net profit for the second quarter ended September 2008. During the quarter, the profit of the company rose 17.27% to Rs 2,104.32 million from Rs 1,794.40 million in the same quarter, last year. The operating income for the quarter rose 39.69% to Rs 8,419.97 million, while total income for the quarter climbed 40.43% to Rs 8,487.80 million, when compared with the prior year period. The company posted earnings of Rs 1.63 a share during the quarter, as against Rs 1.40 a share a year ago, registering 16.43% growth.
Neyveli Lignite Corporation : Announced an 18.46% drop in its standalone net profit for the quarter ended September 2008. During the quarter, the profit of the company declined to Rs 1,883.90 million from Rs 2,310.40 million in the same quarter, last year. Net sales declined marginally 8.19% to Rs 6,682 million, while total income for the quarter fell 7.23% to Rs 8,183.10 million, when compared with the prior year period. The company posted earnings of Rs 1.12 a share during the quarter, registering 19.42% decline over previous year period. During the quarter, the operating margin of the company dropped by 342 basis points to 32.14% compared with the previous year period. Interest cost increased 15.53% to Rs 11.90 million while depreciation cost rose 2.48% to Rs 1,023.50 million over previous year period.
CIPLA : Cipla reported a 20.56% drop in its standalone net profit for the quarter ended September 2008. During the quarter, the profit of the company declined to Rs 1,514.30 million from Rs 1,906.20 million in the same quarter, last year. Net sales for the quarter rose 23.33% to Rs 13,546.90 million, while total income for the quarter rose 20.29% to Rs 13,715.60 million, when compared with the prior year period. The company reported earnings of Rs 1.95 a share during the quarter, registering 20.41% decline over previous year period. During the quarter, the operating margin of the company fell by 481.90 basis points to 15.58% compared with 20.39% in the previous year period. Interest cost increased 2.36 times to Rs 55.90 million while depreciation cost rose 24.00% to Rs 406.10 million over previous year period.
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