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Enterprise
Friday, January 24, 2020
Mphasis says No Changes in Contract with DXC till 2027

Software services provider Mphasis has said the terms of its contract with top revenue contributor DXC Technology is intact and that there were “no changes from a contractual perspective” until 2027.

This comes amid a move by some brokerages to scale down the stock’s target price and lower expectations following its second quarter results, citing risks around the dependency on DXC, which accounts for up to 28% of Mphasis’ revenue.

“I can say there are no changes from a contractual perspective. There are some mechanisms that governs over or under-achievement of contract,” Nitin Rakesh, CEO of Mphasis said.

Rakesh, who did not disclose particulars of the deal with DXC, said there were mechanisms to govern what would happen in the case of over-achievement of the contract. “There are annual thresholds (in the contract). We predicted that this could be the case when we did the contract; what if you are running ahead of consumption or what if you are running below consumption,” he said.

When private equity firm Blackstone acquired majority stake in Mphasis from HP Enterprise in 2016, HPE agreed to provide a minimum revenue commitment of $990 million to Mphasis for five years.

Mphasis had said in a recent note to the stock exchanges that the $990 million Minimum Revenue Commitment with DXC, which began September 2016, was not a cumulative calculation.

Any revenue in excess of the MRC for a particular year “cannot be reckoned against the MRC for subsequent years,” it had said. (Source: Economic Times)

Battered by Competition, Intex Plans to Make Products for Chinese Firms

This may be a classic case of ‘if you can’t beat them, join them’. Bowing down to the Chinese handset brands which has almost wiped away the domestic mobile phone industry, the second largest home-grown maker Intex Technologies is now planning to contract manufacture for the Chinese to make a turnaround.

Intex promoter and director Keshav Bansal said in the light of tariff war between the US and China, few Chinese companies are in final talks with Intex for manufacturing and export of products to USA from India. This, he expects, will be one of the key strategy to revive the company. Intex has been badly hit by Chinese brigade of Xiaomi, Oppo, Vivo, Itel and Realme.

In 2018-19, Intex Technologies has become a third of what it was in FY17 as per its latest filings with Registrar of Companies sourced from Veratech Intelligence. Revenue from operations plunged by 52% to ₹1,387.3 crore in FY19 as compared to the previous fiscal.

Intex sales has been declining yearon-year after touching a peak of ₹6,233 crore in FY16 due to the entry of Chinese brands. The company, which was profitable all this while, also plunged into losses last fiscal posting net loss of ₹281.3 crore as compared to a net profit of ₹13.8 crore in 2017-18.

The senior executive of another erstwhile leading Indian brand, who requested anonymity, said the company is also working with a Chinese contract manufacturer. He said Chinese companies are only looking at partnership with Indian firms who have their own manufacturing plant to utilise it.

“It is difficult to match China in scale and speed. We cannot compete with the Chinese in the cost of assembling which goes to a low of Rs 30-35 per unit for feature phones and Rs 100-Rs 250 per unit for smartphones without SMT assembling,” he said.

Veratech’s founder Mohit Yadav said one-third of Intex’s turnover comes from cellphones where it is facing stiff competition from Chinese brands. “This has led to a sharp decline in the company’s revenue and net profit. Company’s USP is value for money where Chinese have an upper hand, and it will need a completely new strategy to revitalize growth,” he said.

Bansal said the entry of Jio, Chinese players and predatory pricing by ecommerce players have triggered this decline of revenues of all Indian handset companies. He said Intex has planned new products for launch in 2020 such as those with artificial intelligence, smart home and office solutions, security surveillance products, personal care, smart watches and fitness bands.

As per market trackers, Indian handset brands share in the smartphone market has come down to less than 3% in July to September as compared to 8% same period last year with five brands – Xiaomi, Samsung, Vivo, Realme and Oppo – together controlling over 87% of the market.

The Indian brands have less than 1% share in smartphones, while in feature phones Lava and Karbonn have managed to stay in the league of top five.

Future’s Amazon Deal Set to Close Soon, says Biyani

Future Group founder Kishore Biyani said his deal to sell minority stake to Amazon has moved a step forward even as the Competition Commission of India (CCI) sought more information from the US ecommerce firm.

“It is a process to comply with information sought by the commission and to satisfy them in all aspects of the transaction which is being done and we expect a closure of the transaction soon,” said Biyani.

Amazon had sought CCI approval last month for its proposed ₹1,500 crore deal to acquire 49% of Future Coupons through its investment arm, Amazon.com NV Investment Holdings LLC, which in turn will give them 3.5% stake in Future Retail, Biyani’s flagship company. In its CCI filing, it said it would acquire “voting and non-voting equity shares” of FCL in the proposed deal.

Amazon has the option to become the largest shareholder in Future Retail and can exercise this call option anytime between the third and the 10th year. However, details haven’t yet been announced or notified in the CCI filing. “It is submitted that each of the constituent steps of the proposed combination, including the acquisition of shares of FCL by the investor, on a standalone basis, are exempt transactions, and need not be notified to the Hon’ble commission,” Amazon said in its application.

Last week, Reuters reported that CCI had approached Amazon to explain the contours of the deal as well as questioned the US retailer on its procedure to seek approval, which in turn could delay the clearance.

“They wanted general information on Future Group's operations including products and store locations which was submitted a fortnight ago. There was also a personal hearing last week and the transaction should be cleared by December,” said an official involved in the deal.

This is similar to CCI’s earlier stance when they sought details from Samara Capital last year on the role of Amazon and how the proposed deal by them to buy the More chain of supermarkets from Aditya Birla Retail was in line with the government’s revised FDI policy in ecommerce issued in December last year.

The competition watchdog's queries to Samara Capital-owned Witzig Advisory Services was also specific to whether Amazon will be involved in day-to-day operations of More, its representation on the board and whether More will be integrated into the Amazon India marketplace. The deal was subsequently cleared by CCI in January this year. (Source: Economic Times)

Ericsson Acquires Niche AI Workforce for India Centre

Swedish telecom gear maker Ericsson has acquired workforce of Niche AI for its Bengaluru-based artificial intelligence centre, and looking for more buyouts to build a team of 150 high-tech engineers for India operations this year, a senior company official said. The company started India wing of Global Artificial Intelligence Accelerator (GAIA) last year to develop open source solution to modernise telecom network, using AI and machine learning.

“We are looking at both organic hiring, one by one through recruitment off the market, as well as what you might call as inorganic, which is more through acquisitions and acquihires (acquiring only talents). One such company that we have acquired is Niche AI,” Sanjeev Tyagi, Head of Ericsson R&D Bengaluru told PTI.

Ericsson has plans to have a team of around 300 highly qualified engineers in GAIA by end of 2019 of which half are expected to be located in India.

“We continue to be on our target and towards our objective we have hired more than 75 engineers between Bangalore and Chennai and with a couple of dozen more expected to join in the coming months and we continue to recruit actively,” Tyagi said.

The company is acquiring talents from companies for GAIA and not their assets like patents, clients etc.

Tyagi said that as 5G technology will start spreading, there will be huge proliferation of internet of things devices and large number of different elements in the network, which can be efficiently managed only through AI and ML like technologies and for which GAIA is developing solutions.

“The exponential growth in IoT devices will mean that the traditional methods of managing networks are no longer going to scale and that is an area where we are going to need self-organizing, self-healing, self-governing networks using AI and ML,” Tyagi said.(Source: Economic Times) “We are looking at both organic hiring, one by one through recruitment off the market, as well as what you might call as inorganic, which is more through acquisitions and acquihires (acquiring only talents). One such company that we have acquired is Niche AI,” Sanjeev Tyagi, Head of Ericsson R&D Bengaluru told PTI.

Ericsson has plans to have a team of around 300 highly qualified engineers in GAIA by end of 2019 of which half are expected to be located in India.

“We continue to be on our target and towards our objective we have hired more than 75 engineers between Bangalore and Chennai and with a couple of dozen more expected to join in the coming months and we continue to recruit actively,” Tyagi said.

The company is acquiring talents from companies for GAIA and not their assets like patents, clients etc.

Tyagi said that as 5G technology will start spreading, there will be huge proliferation of internet of things devices and large number of different elements in the network, which can be efficiently managed only through AI and ML like technologies and for which GAIA is developing solutions.

“The exponential growth in IoT devices will mean that the traditional methods of managing networks are no longer going to scale and that is an area where we are going to need self-organizing, self-healing, self-governing networks using AI and ML,” Tyagi said. (Source: Economic Times)


Sony India’s Revenue Falls for Fourth Year in a Row

Sony Corp’s revenue from Indian operations fell for the fourth consecutive year in the fiscal ending March 2019 and net profit took a beating for the first time with the Japanese major struggling in entry-level televisions from Chinese brands and those selling exclusively online.

Responding to ET’s questions, Sony India managing director Sunil Nayyar attributed the fall in revenue to global restructuring of the mobile phone business (this led to its exit from the segment in India this fiscal), exit from laptop a few years ago, and more specifically, a dip in the 32-inch television where, he said, performance couldn’t match the expectation. Currency volatility and change in basic custom duty, too, impacted the business, he said.

Nayyar said Sony is now focused only on the premium-end in India and is the largest brand in OLED and 4K HDR televisions, high-end headphones such as those with noise-cancelling features, party speakers, full-frame mirrorless cameras and lens segments. “We are going strong in our premium product portfolio and are bullish about it,” he said.

Analysts, however, predicted a tough year ahead for the company in India with Chinese brands like OnePlus and Xiaomi ready to enter the premium television segment. These brands are 30-40% cheaper than Sony, Samsung and LG.

According to Sony India’s latest filings to the Registrar of Companies (RoC), revenue from operations in 2018-19 fell by 8.3% from a year ago to ₹6,417.52 crore. Sony’s sales peaked to ₹11,010 crore in 2014-15 but revenues started falling since FY16.Net profit from Indian markets dipped 5.9% last fiscal to ₹101.15 crore.

“Sony needs a new strategy in India to make a strong comeback and especially one that focuses on increasing revenue and not just reducing expenses. In the last few years, it had grown net profit by reducing expenses,” said Mohit Yadav, founder of business intelligence platform Veratech Intelligence. (Source: Economic Times)

'Lenovo Could Make India a Mobile Manufacturing Hub'

Lenovo, the world’s largest personal computer maker, said India could become one of its global manufacturing hubs at a time when it is in the cross fire of tariff increases, direct fallout of the US-China trade fight.

Last month, US President Donald Trump announced a plan to impose a 10% import tariff on Chinese goods while new duty on certain consumer items from China, such as cell phones and laptops, will be decided by December.

“For the time being, the picture is so unstable to decide what to do. But mobile (in India) is one possibility,” said Gianfranco Lanci, chief operating officer at Lenovo.

“We are considering India as a big hub to make mobiles that will serve other countries or nearby markets right from Middle East, Africa and parts of Europe.”

The company that makes one in every four PCs sold world over has about 37 manufacturing centres globally, including Mexico and India. However, it said higher import duty and lack of vendors and supporting infrastructure in India is still a big challenge to scale up PC manufacturing for its global requirement.

Despite being a price sensitive market, the company said it has seen an increasing consumer shift towards premium products such as ultrathin laptops and gaming PCs in India. At a time when the country is seeing people cutting down on discretionary spends especially on large ticket items, Lenovo still expects better growth due to upgrades to business computers and Reliance’s JioFiber launch, which offers low-priced and faster internet service.

“If you bring internet at affordable cost, it will change the dynamics of the number of devices you can sell and the entire industry will benefit. Our industry will become a little bit more competitive but it will also enlarge the market,” said Lanci, adding that India is already among the top ten markets in terms of priority and investment.

In India, Lenovo controls nearly a third of personal computer market while it remains a fringe player in mobile phones segment dominated by Xiaomi and Samsung. Research firm IDC said Lenovo’s share rose to 46% compared to HP’s 22% in April-June quarter, largely due to a large order by the Tamil Nadu government for its plan to distribute 1.5 million laptops to students. (Source: Economic Times)


Apple may Unveil New Phones and Other Devices on Sept 10

The most-anticipated event in the world of technology is right around the corner and Apple fans worldwide on Tuesday would witness the next generation of iPhones, top-of-the line Watch models and ramped up services like Apple TV+.

Set for its unveiling at the Steve Jobs Theater at the company's headquaters in Cupertino, California, on September 10, iPhone 11 or XI is likely to be opened for pre-order on September 13 and be available in-store on September 20 globally. Apple traditionally launches the new iPhones on Tuesday, starts preorders on Friday and begins delivering the devices a week later. — IANS (Source: Economic Times)

Apple mulling 2-3 physical and an online retail store in India

Apple plans to set up up to three brick-and-mortar outlets in India besides an online store as the iPhone maker looks to further cement its position in one of the world’s largest smartphone markets.

According to sources privy to the development, Apple has conveyed to the government its plans to set up physical as well as an online store, in line with its ‘global experience’ centres for Apple-branded products.

The move comes at a time when global smartphone manufacturers have reiterated their commitment to the Indian market and are looking to significantly ramp up their manufacturing capabilities in the country.

Apple, which works with Taiwanese contract manufacturer Wistron in India, currently makes iPhone 6S and 7 here. One of the sources said Apple is looking at assembling more models in the country. Apple did not respond to a query on this issue.

FDI norm relaxation
In a major push to single-brand retail, the government last week had relaxed FDI norms, offering players more flexibility on local sourcing norms. It also did away a provision that required companies to mandatorily set up a brick-and-mortar store before getting into online retail trading.

Following the announcement, Apple had said it is keen on offering online and in-store experiences to Indian users that are at par with its global standards and aims to open its maiden retail store in India.

Possible locations
While the company has remained mum on the locations of its stores, reports suggest that Mumbai could become home to India’s maiden Apple retail store.

India is looking to galvanise smartphone manufacturing and position itself as a global hub, dishing out incentives to sweeten the deal for international brands.

Amid growing concerns around US-China trade war, India now has an opportunity to woo companies that had so far concentrated their manufacturing operations in China.

The government has been engaged in a dialogue with key players to understand their concerns and requirements.

India's mobile handset market
A recent report by industry body IAMAI had pointed out that India’s mobile manufacturing lacks scale and depth despite its ambition to become global production hub, and the country needs to “think big” by manufacturing at scale, producing high-end phones, and incentivising exports.

The Internet and Mobile Association of India (IAMAI) report had also noted that the global handsets market is worth about USD 467 billion (about Rs 32 lakh crore), and this demand is being met almost entirely by China, Vietnam, South Korea and Taiwan.

The same report stated that in 2018-19, India exported mobile handsets worth USD 1.4 billion compared to USD 2.7 billion in 2012-13.

The production of mobile handsets had reached 225 million units in 2017-18 and India has the potential to manufacture one billion handsets annually, it had said. (Source:The Hindu Businessline)


Google urges employees to not debate politics at work

Alphabet Inc’s Google has posted new internal rules that discourage employees from debating politics, a shift away from the internet giant’s famously open culture. The new community guidelines tell employees not to have disruptive conversations and warn workers that they will be held responsible for whatever they say at the office.

“While sharing information and ideas with colleagues helps build community, disrupting the workday to have a raging debate over politics or the latest news story does not,” the new policy states. “Our primary responsibility is to do the work we’ve each been hired to do.”

Google has long encouraged employees to question each other and push back against managers when they think they’re making the wrong decision. Google’s founders point to the open culture as instrumental to the success they’ve had revolutionising the tech landscape over the last two decades.

Rash of problems
But the free-wheeling culture has led to a rash of problems for Google management in recent years. Progressive employees have used internal chat boards to rally other workers against some Google projects, helping push the company to end work on a search engine for the Chinese market and an image-recognition AI system for the US military.

A handful of conservative employees have been accused of using internal systems to harass co-workers they deem too liberal. The new policy says: don’t troll, name call, or engage in ad hominem attacks. (Source: The Hindu BusinessLine)

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