Wednesday, August 31, 2005

TCS, Infosys may bag $1.2b outsourcing deal

The Dutch financial powerhouse ABN Amro is close to finalising a multi-year,
mega outsourcing deal with Indian software majors Tata Consultancy Services
Limited (TCS) and Infosys Technologies Ltd . The size of the multi-year
contract is expected to be around $1.2 billion of which the offshore
component is around $500 million. Traditionally, a significant chunk of
offshore components of such projects flow into India. ABN Amro is expected
to make an announcement sometime in early September.
When contacted, TCS and Infosys declined to comment. Infosys's shares closed
Rs 29.70 higher today at Rs 2,377.25. Traded volumes touched 1,14,997. TCS'
shares closed at Rs 1,405.85, up Rs 21.80 over Tuesday. Volumes touched
2,33,964. Speculation is rife that Indian vendors could get significant
chunks of the application development and maintenance operations that ABN
Amro is outsourcing. TCS and Infosys are poised to benefit by virtue of
their sheer size.
Global IT giants Accenture Ltd and IBM were among the front-runners as
primary vendors for the infrastructure part of the mega services contract.
This mega deal is said to be one of the largest in Europe from a major bank
in recent years. ABN Amro had signed up EDS for a $1.3-billion outsourcing
deal in 2002. For the present deal, ABN Amro had invited bids from global IT
firms sometime in 2004 for three areas within its IT department, i.e., IT
infrastructure, application support and enhancement and application
development outsourcing.
The IT infrastructure component of the ABN Amro deal involved the basic
network, servers and other hardware within the company, whereas the
application development and maintenance involved offshore component.

Sensex witnesses steady rise to close above 7800

The Sensex made a steady journey upward and closed above the 7800-mark today
on all round buying interest.It opened at 7746.80 points, and then, in
tandem with improving turnover late afternoon, the Sensex hit a new intra
day high of 7807.67 points.The Sensex closed in the positive, by above 60.43
points at 7,805.43. This translates into a 0.78% gain.The NSE Nifty also
ended strong, at 2,384.35 mark, gaining 16.60 points or 0.70%.The
advance-decline ratio ended positive, at close to 1.5:1 with 1,510 shares
moving higher and 1,105 shares moving lower. 49 shares remained unchanged.
Total turnover by the end of today's trading amounted to Rs 3,939 crore,
much higher than yesterday's turnover.

Among Sensex stocks, 21 ended higher and 9 fell.HDFC Bank was the biggest
loser in the Sensex, down 1.05% to Rs 640, on volumes of 15,655 shares.Tata
Power was the biggest gainer in the Sensex, adding 4.2% to Rs 449.5, on
volumes of 5.26 lakh shares.Reliance Industries topped turnover charts at Rs
168.15 crore followed by GTL, at Rs 167.2 crore, and Ambika Cotton, at Rs
159.01 crore.Sectoral indices - the BSE Small Cap index (up 1.62%), the BSE
Mid cap index (up 1.25%), the BSE Bankex (up 0.35%), the BSE PSU index (up
0.36%), the BSE IT Index (up 1.15%), the BSE tech index (up 0.97%), and the
BSE FMCG index (up 0.46%) - all moved upward. The BSE Consumer Durables
index moved down marginally by 0.02%.Side counters Aztec Software, Dewan
Housing, Eastern Silk Mills, Krone Communication, Spice System, Arrow
Coated, Indo Count, IVP, Scandent Solutions, Sangam India, Jagan Lamps,
Vadilal Enterprises, Sulzer India, Ontrack, and Spanco Tele were all trading
higher by close to 20% each.Herbertsons lost 13%, while Pratappur Sugar,
Apollo Sindhoori, Ocean Infra, SNL Bearings, Mysore Petroleum, and AK
Capital each shed close to 10%.Notable block deals included that of 1.25
lakh shares at Rs 88 per share in Rico India, of 1 lakh shares at Rs 756.05
per share in Indian Hotels, of 10.08 shares at Rs 27.75 per share in IFSL,
of 21 lakh shares at Rs 121.10 per share in GTL, and of 9.85 lakh shares at
Rs 221 per share in Eastern Silk Mills counter.

Restructuring plan brings about volatility in GE Shipping

GE Shipping was up 1.9% in mid-afternoon trade on BSE at Rs 194 after the
company approved a plan to spin off its offshore oilfield services business
into a separate company. The stock had spurted in opening trade today ahead
of the company’s board meeting to consider restructuring, and it had hit a
high of Rs 198 in early trade. The stock had pared gains later and it had
slipped to the Rs 192.50 level in afternoon trade just before the
announcement of the de-merger of the offshore business hit the market at
about 13:40 IST. Volumes were high as 17 lakh shares changed hands in the
counter on BSE. The GE Shipping scrip had risen 12.4% in the past two
trading sessions to settle at Rs 190.70 on 30 August 2005 from Rs 169.65 on
26 August 2005 after the company announced that the board will consider a
restructuring proposal.
For quite some time now, the market has been agog with talk that GE Shipping
may separate its offshore business into a separate company. The stock
spurted in the past few months driven by such rumours. From a low of Rs
132.65 on 30 June 2005, the stock rose 36% in a short while to hit a high of
Rs 180.45 on 17 August 2005. The stock came off the higher level later when
a major correction gripped the bourses.
Consequent to demerger of the offshore oilfield services business, GE
Shipping’s equity will be reduced pro rata to the extent of the value of the
division transferred, the company said. Shareholders in GE Shipping will get
shares of the de-merged company in the same proportion of their holding in
GE Shipping. Thus, the shareholding of the new company would mirror the
shareholding in GE Shipping. The de-merged company will be later listed
separately on the bourses.
The company has further informed that the board of directors (BoD) has
constituted a committee to work out the detailed modalities of the de-merger
and place before the board a draft scheme of approval.
The offshore business constituted 12% of GE Shipping’s revenue and 9% of net
profit in the financial year ended March 2005. It is expected that the
de-merged company which will have offshore oilfields services business will
attract much higher discounts on the bourses than the current discounting
that GE Shipping scrip gets.

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