Valuemart Info acquires 51% stake in HVO Technologies

17th October 2005: Valuemart Info Technologies Ltd has announced that the Company has acquired a 51% stake in HVO Technologies Ltd (HVO). Post acquisition, HVO will be a subsidiary of the Company. HVO (High Value Outsourcing) has its offices in Bangalore, Hyderabad and Silicon Valley, US, with Mumbai to be added shortly. HVO's focus is to provide high value software outsourcing services on the VP Engg/CTO side, which has an estimated market size of US$ 12 Billion by 2008 as per industry research reports.

HVO Technologies Ltd is headed by an IT industry veteran, Mr. Vinay M Aggarwal, (former Sr. VP, TCS) who has more than 28 years of industry experience in software services and consulting; Mr. J K Saroop (former Sr. GM of TCS), who has more than 20 years industry experience including 12 years with TCS is the Global CFO of HVO.

The VP Engg/CTO market includes opportunities across software R&D Outsourcing, Independent Solutions Vendors and OEM software product development that constitute the high end of the IT outsourcing chain. The CTO space has traditionally been occupied by captive R&D centers of MNCs in India.

"With this acquisition, Valuemart has entered the niche high end IT outsourcing space. HVO will help Valuemart extend its sales reach in the Global markets," said Mr. C K Vasudevan, Company's Director for Finance and Business Development.

Cross-border mergers set to be allowed

14th October 2005: The government is set to allow mergers of Indian companies with foreign companies. The company affairs ministry has endorsed the JJ Irani committee view that the domestic law should recognise cross-border mergers. At present, section 390 (a) of the Companies Act proscribes merger of an Indian company into a foreign company. 

The revised concept paper for the new company bill drafted by the ministry has suggested measures to reduce the overlap of regulatory jurisdiction for such cross-country deals. The ministry discussed the matter with the members of the now-dissolved Irani panel last week, to remove any problems that might arise while formulating a conducive legal regime for such mergers. 

According to sources, the government reckons that India’s greatly relaxed currency control norms would not impede such mergers in any substantial way. “If at all there are problems, they should be in the form of overlap of regulations,” said an official source. 

The revised concept paper has, however, repudiated the demand made by a section of minority shareholders that the government should appoint the valuer for companies planning to merge. Instead, the paper has said, it would be mandatory on both the merging and the transferee company to get their shares/ assets valued by independent valuers appointed by their respective boards. The boards would ratify the “formal valuation” and the merger negotiations would be on the basis of value fixed by the valuers.

ONSOLIDATION TIME

• Investor will get IDRs or foreign securities in lieu of his shareholding • Boards of companies planning to merge would appoint independent valuers • Merger formula would be based on such mandatory valuation • Merged entity to get stamp duty set-off on original duty paid independently

Further, the modified concept paper provides for set-off of the stamp duty on registration of the merged entity against the duty paid by the two companies when they had independent registrations. Stamp duty is paid as a percentage of the authorised capital of the company. 

When an Indian company is merged into a foreign company, the former loses its identity and its shareholders obtain automatic right to the foreign company’s shares. The idea is that every Indian shareholder would receive Indian Depository Receipts or foreign securities in lieu of his shares. In the former case, the Indian shareholder becomes a member of the foreign company. As for the latter, he becomes a holder of security with a trading right in India.

Tatas to buy Good Earth for $32 mn

14th October 2005: Tata Tea is set to acquire Good Earth, a speciality tea brand in the US, for $ 32 million (nearly Rs 144 crore). The company today announced that for the buyout, its subsidiary Tetley US Holdings has signed an agreement with Good Earth Corporation and FMALI Herb Inc, which has the licence to use the brand.

The acquisition is in step with Tata Tea's global expansion plan that can cost up to $1 billion. It is estimated that Tata Tea has paid half of the acquisition amount for the value of the brand as the turnover of Good Earth is around $ 16 million.

Tata Tea said it would fund the acquisition through borrowings. The Good Earth brand that sells green, white, red, herbal, vanilla and medicinal teas, has a 3.7% share in the US speciality tea market. Good Earth is one of the fastest growing specialist tea brands in the US.