Conference 7.286::digital

2431.0. "Digital Dealings in India" by CUPID::BRUNO (Beware the Night Writer!) Wed Mar 24 1993 13:11

Subject: Digital May Buy 50% of CMC 03/23/93
Date: 23 Mar 93 20:51:43 GMT
 
NEW DELHI, INDIA, 1993 MAR 23 (NB) -- Digital Equipment 
Corporation (DEC) of the United States is likely to acquire a 50 
percent stake in the Indian public sector corporation, CMC Ltd. 
Alternatively DEC has also suggested setting up a separate joint 
venture company with CMC in India.
 
CMC Ltd., formed as Computer Maintenance Corporation at the exit of 
IBM in 1977 to support IBM and other systems, soon gained in strength 
as a monopoly in not only maintenance but, gradually, systems 
integration, training, and consultancy and software development. 
Hence it changed its name to that abbreviation to reflect wider 
scope of its business. 
 
Being a public sector company, CMC did enjoy a monopoly in 
garnering major government projects at home and venturing 
out in export markets. Endowed with some of the best qualified 
staff in the country and well-admired work culture and office 
environment, the company is, all the same, under pressure to 
earn its own colors by the national policy of public sector 
disinvestment.
 
Commenting on the proposal, chairman and managing director of 
CMC, K. Krishnan Kutty said the offer (from DEC) was submitted 
a few months ago and CMC is likely to take a decision after 
results for financial 1992-93 are declared.
 
The proposed tie-up will provide relief to the cash-strapped 
government-owned company, which recorded meagre profits of Rs 
15.6 million (around $520,000) for the year ended March 1992, 
over a turnover of Rs 1.14 billion (around $38 million). 
Turnover this year is expected to touch Rs 1.35 billion 
(around $45 million) and net profit is expected to be Rs 20 
million (around $660,000) in 1992-93, says Dr. Kutty.
 
However, keeping DEC's poor performance in the world market in 
mind, CMC is not yet sure of going in with the US giant. CMC 
top brass are looking at other options also to raise cash. One 
of them is a planned public issue. CMC is considering both 
options and will go in with whatever gives it more leverage for 
raising funds, said Kutty.
 
The rationale behind this proposed venture, say industry sources, 
is that a majority of CMC personnel are accustomed to work on 
Digital system platforms. Thus, Digital can make use of qualified 
CMC personnel for maintenance and other software operations 
internationally.
 
DEC already has a joint venture in India with Hinditron. The 
company, called Digital Equipment India Ltd., is into software 
exports, systems hardware, and is also planning to introduce 
Cray supercomputers in India.
 
However, the CMC DEC venture will not compete with Digital as it 
will concentrate on specific areas like systems integration 
which is one of CMC's strengths, according to Kutty.
 
(C.T. Mahabharat/19930323)

Re:      <<< Note 2431.0 by CUPID::BRUNO "Beware the Night Writer!" >>>

>Subject: Digital May Buy 50% of CMC 03/23/93
>Date: 23 Mar 93 20:51:43 GMT
> 
>NEW DELHI, INDIA, 1993 MAR 23 (NB) -- Digital Equipment 
>Corporation...

What's the source of this article?

-  David

RE:       <<< Note 2431.1 by CX3PT2::CODE3::BANKS "David Banks -- N�ION" >>>

>>>What's the source of this article?

      Fortunately, I have a canned response to that question, from an earlier
reply.

<2387.2>>Newsbytes, from a CLARInet group on the Usenet. You don't want to use
<2387.2>>it outside of DEC because there are licensing concerns.  Posting it 
<2387.2>>internally should be no problem (we paid da bucks).

                                     Greg

Subject: India - Digital Scraps Investment Plans 04/06/93
Date: 6 Apr 93 19:51:46 GMT
 
BANGALORE, INDIA, 1993 APR 6 (NB) -- Digital Equipment Corporation 
(DEC) of the US has backed out of its earlier proposal to take a 
50 percent equity stake in the public sector computer company
CMC Ltd.
 
Newsbytes had earlier reported on the US giant's plans to take an
equity stake in the company. This was one among the many proposals
being considered by the CMC management to bring in much-needed cash
into the beleaguered company. CMC Chairman Krishnan Kutty had
then said the offer was submitted a few months ago and his company was
likely to take a decision after announcing the results for financial
1992-93.
 
However, senior DEC officials said though there was such a proposal
last year, it was more like an exploratory survey looking at the
possibility of a tie-up with the Indian company.
 
They claim no negotiations were conducted. "We felt that the CMC is
not too serious about the deal," they added. DEC, the officials say,
had withdrawn the proposal last year.
 
DEC, which was initially excited about the government PSU
disinvestment policy, was looking at forging a strategic alliance
with CMC to generate greater business. Moreover, it was also keen on
CMC's system integration abilities which it thought could be used for
Digital's worldwide operations.
 
Another plus for the possible deal was that a majority of CMC
personnel were accustomed to work on Digital system platforms. CMC
has been facing problems since last year. High inventories and
declining business have led to a resource crunch.
 
(C.T. Mahabharat/19930405)