The Hindu Business Line : Mixed signals on CapGemini takeover

Wipro may have clarified earlier this week to the stock exchanges that it is not in talks to ‘merge or take over’ CapGemini, French IT services major. But, it is still not clear if it is in talks to acquire a part of CapGemini’s business.

Asked if Wipro was actually considering the acquisition of any portion of CapGemini, Mr Suresh Senapaty, Chief Financial Officer of Wipro Ltd, would not comment on the issue beyond what was already said to the stock exchanges but added, “We are always on the look-out for acquisitions opportunities.”

It may be recalled that CapGemini had sold its unprofitable North American healthcare consulting and technology practice with 600-odd people to Accenture for $175 million in June 2005. This was part of the non-core asset disposal programme that CapGemini had set in motion in September 2004.

Chasing acquisitions

However, in a press gathering on Friday morning, the Wipro Chairman, Mr Azim Premji, said that most of its acquisitions were those that Wipro chased and not those that were put on the block.

This was in reference to the CapGemini acquisition reports.

Interestingly, Wipro is also open to raising funds. Though there is no particular sum that the top management has in mind at the moment, Mr Senapaty said, “We are considering raising funds through debt. It may not be a big sum.”

Future buys

Wipro has been active on the acquisitions front in the last two years. It has also upped its dividend payout. In the context of both these events, Wipro would consider debt to partly fund its future buys. Significantly, Wipro has had debt in its books earlier. It was only after 2000 that it became debt-free.

Mr Premji said that the company has now decided to set up a team, which would focus on inorganic growth. It has also asked its field force to look out on three fronts: areas that need to be filled; to identify companies working in that space; and to identify companies to which Wipro has lost its business.

US Scenario

Commenting on the scenario in the US, Mr Premji had said, “Despite the challenges there is no impact on business. There is good demand. Asia and the Middle East are expanding at a healthy pace. But we are watching the environment carefully.”

In a conference call with analysts, Mr Girish Paranjpe, President of the Finance Solutions, said that in most cases, “IT budgets are flattish or growing marginally. With a couple of clients, IT budgets have been curtailed. That might actually accelerate offshoring.”

He added that such clients would soon prioritise spends for the rest of the year and that a clearer picture would emerge in March this year.

The top management also commented that the current pipeline in segments such as retail, energy and manufacturing was healthy.

Asked pointedly if the pipeline in the banking and financial segment was weak, Mr Paranjpe said, “There is no visible impact on the pipeline. We have been signing deals.”

Focus areas...

The Chairman of Wipro, Mr Azim Premji, said the company will focus on some key areas to drive its growth, during the presentation of the third quarter results.

The key focus areas are:

*Driving growth through mega and gama deals (i.e. deals that have the potential to exceed $100 million and $50 million in annual business, respectively)

*Goal-chasing initiatives

*Creation of large deal global programmes

*Supply (or manpower) capabilities

*A 360-degree partnership with large telecom service providers

*Accelerated investment in West Asia, Germany and Canada

*Inorganic initiatives/acquisitions and takeovers in the next 15 months.

More Stories on : Software | Mergers & Acquisitions | Wipro Ltd

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page