Financial Daily from THE HINDU group of publications
Sunday, Mar 31, 2002
Info-Tech - IT-enabled Services
Murugappa group plans new co for IT services
CHENNAI, March 30
LAST September, the Chennai-based Murugappa group announced its first major foray into the IT sector with its Rs 18-crore takeover of Webword Holdings Pvt Ltd, which has interests in e-publishing.
Now, buoyed with the success of the venture, the group is thinking in terms of starting another company for at least one more IT-enabled service.
At least three specific areas are being considered: legal support services such as handling the legal documentation and doing legal research in India for overseas clients, insurance-related services such as processing of claims and engineering-linked services such as cataloguing, design and drawings.
"Within the next six months, we would have zeroed in on one of these," said Mr M M. Venkatachalam, member of the Murugappa Corporate Board, who is in-charge of the group's IT-enabled business initiatives.
This time, the group intends to start a company on its own, rather than takeover an existing company.
Business development would of course be slower, but that is considered okay, given that there is already one IT-enabled services company.
Mr Venkatachalam told Business Line that since Webword Holdings was taken over by the Murugappa group, the number of people working in the company had been going up.
In the last three months, over 60 people have been added. The company now employs around 350 people, which is expected to go up to 1,000 in a year.
"We have never seen the kind of margins that this business gives," observed Mr Venkatachalam, explaining that that was why the group decided to have one of the promoter-directors to devote his full time to IT-enabled businesses.
One of the key inputs of the group to the growth of the company would be the ability to leverage on its overseas contacts.
The group is receiving a lot of references from its customers and erstwhile collaborators, he added.
The Murugappa group has a 68 per cent stake in the Webword, the rest of it would be eventually bought from the promoters of the company, after they are paid off under a performance-linked payment arrangement.
Meanwhile, the Murugappa group has announced that Mr M.V. Subbiah, Chairman, Tube Investments of India Ltd, has stepped down, and his place has been taken by Mr M.A. Alagappan.
Mr Alagappan is at present the Executive Vice-Chairman of the company. In a communication to the stock exchange, the group has announced that Mr M.M. Murugappan has also been appointed as a Director of Tube Investments.
Sources said the group had a policy of rotating the promoter-directors through all the companies of the group, so that all of them had a hands-on experience in running all the businesses of the group.
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