The Hindu Business Line : Panex-KPIT to focus on R&D

WHILE clearances are awaited from the Securities Exchange Board of India for its merger with the Pune-based KPIT Cummins, the Houston-based Panex Consulting has already started its work in India.

The company is currently designing a pre-built solution to test market in India before going in for a global launch.

Mr Nitin Tarte, President, Panex Consulting, and Mr Ravi Pandit, Chairman, KPIT Cummins, spoke to Business Line about the strategy and merger of the two companies.

After the formalities are over, what is the strategy being adopted by the company for the Indian market?

Mr Tarte: We are in the process of developing a pre-built solution for the Indian market for SAP. We expect to launch the product by the second quarter of 2004 (April-June). As a merged entity, we are looking at the Indian market as a research and development centre where we can produce a product that would be world-class - a distinct image.

What prompted you to be acquired by a relatively lesser-known company in the global market?

Mr Tarte: . We have been working with KPIT Cummins for the past one and half years and have found that the chemistry was working out well.

Would you continue to market your SAP products under the logo of Panex or would KPIT also be included in the logo?

Mr Tarte: What we propose to do is to continue selling our SAP products under the Panex logo, as it is a well-known brand outside of India. Customers know us only as Panex and the usage of KPIT logo might bring in "confusion" among our existing customers. The KPIT logo would also be included at a later stage.

What is the rationale for the acquisition by KPIT?

Mr Pandit: Our key focus areas are manufacturing and banking/finance. Our current implementation services are restricted to Oracle applications. Since SAP is one of the major ERP solutions in both manufacturing and banking/finance, the acquisition fills a strategic gap in our service offerings.

Over the past few months KPIT and Panex have successfully bid for and gained projects from HP (HP is one of the key customers of both the companies.)

Post-merger, KPIT would also share key relationships with customers such as Accenture, Hercules and HP. This would enable us to reduce the time-to-market in the SAP segment. We could also offer outsourcing services to major customers in the areas of manufacturing and banking/finance. The marketing expertise of Panex team would be an additional asset. KPIT Cummins would also gain a presence in the South Midwest US.

Can you spell out the financials of the deal?

Mr Pandit: KPIT Cummins proposes to buy 100 per cent stock of Panex Consulting. This would be a mix of both cash and stock options. The valuation of Panex has been agreed at $17,00,000 (approx. Rs 7.65 crore).