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Research firm Khandwala Securities has recommended accumulate rating on Satyam Computer Services.

Khandwala Securities report on Satyam Computers:

Result Highlights

Consolidated Results for the quarter ended June 30, 2007

Revenue was Rs 18,302 million; a Y-o-Y increase of 26.8% and a sequential increase of 2.9%.
Net Profit after Tax was Rs 3,783 million; a Y-o-Y increase of 6.9% and a sequential decrease of 3.9%.
EPS was Rs 5.7, a Y-o-Y increase of 4.4% and a sequential decrease of 3.9%.
Growth across the service offerings:

Engineering services, Consulting and Enterprise business solution and Infrastructure management services grew by 14%, 15% and 36.4% respectively.

Billing Rate:

Offshore billing rates were up by 1.46% and onsite rates increased by 1.31% in this quarter, resulted into 1.1% improvement in blended rates. Management expects positive pricing momentum to continue in FY2008 also.

Margin:

During the quarter margin is declined by ~64 basis point sequentially. The management has guided 125 bps decline in the operating margins for FY08 from FY07 levels. The management indicated positive margin levers would be better price realization, improving offshore-onsite mix, improved subsidiary performance, operational efficiency, SG&A leverage and employee pyramid. Company had net forex loss of Rs 60 million - hedging gains of Rs 900 million and translation losses of Rs 960 million. The company has USD 750 million hedging position at the end of quarter.

Wage Hike:

16% offshore salary hike & 5% Onsite salary hike is expected in Q2 FY2008

Employee Details:

The number of associates including the subsidiaries and joint ventures increased by 2,795 to 42,347. The management is targeting to add 15,000 – 16,000 employees (gross) in FY2008, upgraded from the earlier guidance of 14,000-15,000 employees.

Attrition:

Attrition on a trailing twelve months basis fell to 14.9% from 15.7% in Q4 FY2007. Annualized quarterly attrition stood at 13.6% (marginally up from last quarter’s 13.21%) compared to 21.9% at the beginning of FY 2007.

CAPEX:

Satyam will invest about USD 80-100 million in FY2008.

Nipuna Performance:

Nipuna recorded revenue of USD 11.93 million and a net loss of USD 2.02 million in Q1 FY2008. The company guided revenue of USD 61 million for FY 2008, a growth of 60% over last year. The management expects Nipuna to report positive EBIDTA for FY08, however it is expected to report loss at net level.

Valuation:

We observe a greater portion of discretionary spending on technology being directed towards GDM approach. The management has indicated robust demand environment, which is also visible from upgrade in USD revenue guidance to 34-35.5%. The company announced couple of large engagements in past few months and suggested they are looking actively for few more engagements, which would improve business growth visibility. The company has announced salary hike from 1st July which would impact margin by ~350bps in Q2FY2008. The rising rupee, wage hike in Q2 and lower EPS guidance for the FY2008 (Indian GAAP) could have dragging effect on the stock in short term. We expect 2HFY08 to be better than H1FY08 in terms of growth in revenues and profitability. The stock is

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2 Income Picks for 2008 : Free Report: "Backdoor" Commodity Plays to Gain 20% Per Year

Accumulate Satyam Computer: Khandwala Securities
oney control front page.......................

-Guard lists at 10% premium
13 Mar, 2008, 1024 hrs..............

MUMBAI: Shares of V-Guard Industries listed Thursday at Rs 90, premium of Rs 8 or 9.75 per cent, against issue price of Rs 82 on the NSE.

At 9.55 am, the stock was trading at Rs 93.70, up Rs 11.70 or 14.27 per cent. It touched a high of Rs 96.65 and low of Rs 82 in trade so far on volume of 1,41,587 shares

One of my friends wife works with CTS as web designer/programmer. She said almost 80% of the contracts from US financial institution have been put on hold by the clients.

And this is what was published on ET

What to make all of this.

Slave trading nations cannot succeed on slave trading alone - local infrastructure and technology is the real answer. Just imagine the Canadians - they are 1/10th the economy of US and depend almost entirely on US for trade. Still they are more self sufficient than Indians.

Wagons IPO to open on March 24
14 Mar, 2008, 1750 hrs IST..................

MUMBAI: Private sector railway wagon manufacturer, Titagarh Wagon is entering the capital market with its initial public offering of 23,83,768 shares of Rs 10 for cash at a price to be determined through 100 per cent book building process. The issue opens on March 24 and closes March 27. The price band has been fixed between Rs 540 and Rs 610 per share.

The issue comprises fresh issue of 20,68,111 shares and an offer for sale of 3,15,657 equity shares by Rashmi Chowdhary and Strategic Ventures Fund (Mauritius). The issue consists of a net issue of 23,68,768 shares and a reservation of up to 15,000 shares for subscription by eligible employees. The net issue will constitute 12.8 per cent of the post issue capital of the company.

At least 60 per cent of the net issue will be allocated on a proportionate basis to qualified institutional buyer, 5 per cent of the QIB portion will be allocated to mutual funds, and the remaining will be allocated to the QIB bidders including mutual funds. Further, not less than 10 per cent of the net issue will be allocated on a proportionate basis to non-institutional bidders and 30 per cent to retail investors.

The company plans to utilise the proceeds for - a) Setting up an EMU manufacturing facility at Uttarpara unit, b) Modernising and expanding the existing facilities at Titagarh and Uttarpara units, c) Setting up an axle machining and wheelset assembly facility at Uttarpara unit, d) Constructing a corporate office and a design cum research and development office, e) Strategic acquisition or investments, f) Brand building exercise and g) General corporate purposes.

Titagarh Wagons operates two manufacturing facilities located at Titagarh and Uttarpara, in West Bengal. As an “Industry Partner” to the Defence Research and Development Organisation, Ministry of Defence, the company manufactures special purpose wagons, shelters and other engineering equipments.

The company also manufactures and markets special purpose wagons to suit the varying needs of its customers, such as the Merry-Go-Round wagons, special wagons for the Indian Defence establishment. The company has acquired the heavy engineering division of Hyderabad Industries which includes a manufacturing unit at Uttarpara, West Bengal with a steel foundry, fabrication cum machining facility and access to a rail siding.

The order book of the company stands at Rs 753.11 crore with the rolling stock division constituting nearly Rs 669.39 crore as on January 31, 2008. The company is structured along three broad business lines: a) wagon manufacturing division, b) special projects division (includes defence, bailey bridges and other fabricated equipment) and c) heavy earth moving and mining equipment division.

Since fiscal 2003, the company’s total income and profit before tax have grown from Rs 47.17 crore and Rs 4.71 crore respectively to Rs 284.05 crore and Rs 44.80 crore respectively in fiscal 2007, which represents a CAGR of 57 per cent and 76 per cent respectively, during this period. The wagon dispatches of the company have increased from 644 wagons in fiscal 2003 to 2,073 wagons in fiscal 2007.

The stock will be listed on the Bombay Stock Exchange and National Stock Exchange of India.

The lead manager to the issue is Kotak Mahindra Capital and the co-book running lead manager is JM Financial Consultants.

India can become major IT force: Infosys Chief
15 Mar, 2008, 2222 hrs IST, PTI

THIRUVANANTHAPURAM: India was enjoying its moment in world's attention and should use the trend to the best of its capability to become a major IT force in the global IT industry, Infosys CEO Kris Gopalakrishnan said on Saturday.

Kerala, which had a quiet beginning in the IT field, had become one of the most sought-after IT destination in the country, he said delivering an address on `IT Vision 2020' at the valedictory function of Kerala IT.Com 2008 at Technopark.

Indian IT industry worked on a few advantages like costs, demography, IT viable ecosystem and quick adoption to latest technology. The country could use these advantages for a few more years to change the dynamics of the industry.

It is imperative that India takes the right steps to use this period to plan and get ready for real action," he said.

He wanted radical changes for development of IT industry in the country by building integrated townships to improve and provide comfortable lifestyle, better planning of cities to do away with cluster.

The number of graduates and their quality should be increased by grooming them to become global employees. Quality and quantity of research should be improved, he said.

Asking to reduce dependency in foreign companies, he said investments should be heavily made in domestic IT industry and promote homegrown successful companies like IBS, SunTec, Nest and US Technology and build an environment suitable for entrepreneurship.

Kerala Law and Parliamentary Affairs Minister M Vijayakumar said the state

Microsoft seen buying ***** without raising price
16 Mar, 2008, 2210 hrs................................
SAN FRANCISCO: Microsoft Corp's offer to buy ***** Inc will likely succeed, but it may not be the best use of the company's ample cash reserves, according to the media reports.

The stand-off between Microsoft and ***** has stretched six weeks since the world's largest software maker went public with its proposal. The Web pioneer subsequently rejected Microsoft's offer, which currently values ***** at $41.4 billion, saying the takeover bid "substantially undervalued" the company.

The media finds Wall Street brokers who follow either company remain convinced that Microsoft will prevail in its takeover. Eight of eight Microsoft analysts surveyed and 14 of 15 ***** analysts believe Microsoft will get the deal done.

"*****'s options are becoming more limited and it makes Microsoft's offer look better," said Andy Miedler, an analyst at Edward Jones, who has a "hold" rating on Microsoft. Twenty-one brokerages responded.
Seven brokers have analysts who follow both companies and their votes were counted separately. In total, 33 financial analysts currently follow ***** and 40 analysts track Microsoft. Analysts at three firms Morgan Stanley, Goldman Sachs and Lehman Brothers are restricted by their firms from publishing research on the merger as their investment banking arms are working on behalf of either Microsoft or *****.

There is disagreement, however, over whether Microsoft must raise its half-cash, half-stock bid in order to succeed. A majority of analysts believe that Microsoft need not boost its bid beyond the current $31-per-share offer, although some argue it may need to sweeten the bid by making it an all-cash offer.

Twelve believe Microsoft will not alter its bid and succeed, while four expect it to keep the price at $31 but make it a more lucrative all-cash offer. "The change in deal terms to all cash could be the next step in this ongoing mergers and acquisition dance in our view," UBS software and Internet analysts said in a joint research note published on Friday, arguing for a $31 cash bid.

"In the interest of expediency and given the benefits of a friendly deal, we still expect Microsoft to raise its offer to consummate the transaction," UBS said. UBS argues an all-cash $31 offer may be Microsoft's next gambit. But 12 analysts, eight who follow ***** and four on Microsoft see Microsoft doing more to satisfy investors, and to keep restless ***** employees happy.

Estimates of what Microsoft should do range from $31.50 to a high of $35, half of it in stock. Every $1 Microsoft raises its current ***** offer adds $1.4 billion in the deal's overall value. The poll's finding come as little surprise since a viable alternative to Microsoft has not emerged.

***** has held talks with News Corp and Time Warner Inc's AOL unit, according to sources close to the situation, but most analysts dismissed those options' chances of success. News Corp Chief Executive Rupert Murdoch has said he would not fight Microsoft for a ***** deal.

Last Thursday, AOL said it had agreed to acquire social networking site Bebo for $850 million in a move some say is a sign that parent company Time Warner has plans that do not include *****. Senior executives from ***** and Microsoft met on Monday to discuss the vision for the merged company in the first meeting since Microsoft's February 1 offer, according to sources.

The meeting, which is considered to be a breakthrough in the stand-off between the two sides, could open the door to more in-depth negotiations and, ultimately, a friendly deal. While all the Microsoft analysts in the poll believe a deal will get done, there was some argument over whether this is the best use of Microsoft's cash reserves, which stood at $21 billion at the end of December.

Microsoft, which has predicted the transaction will break even or be accretive in the second full year after the deal's closing, is expected to dip into a good chunk of its cash and issue some debt to finance the ***** acquisition.

Analysts argue that the short-term return on an investment in ***** does not match that of money reinvested in the software maker's own operations or other, smaller acquisitions. Longer term the return may be better, but there is significant risk in combining the companies that cannot be overlooked. The ***** acquisition is "absolutely not" Microsoft's best use of cash, said Morningstar analyst Toan Tran.

The money it is using for ***** could be put toward several smaller Web acquisitions that carry less risk, he said. Even if the Redmond, Washington-based company depletes its cash reserves for *****, Microsoft can easily rebuild its bank account.

The company generated $17.8 billion in cash in its fiscal year that ended in June 2007. The company has spent $54 billion in the last two fiscal years on share buybacks and dividends. This comes on the heels of a one-time, $32 billion dividend to investors in 2004.

Over the last five years, Microsoft stock has risen 12 per cent versus a 55 per cent increase on the S&P 500. "Microsoft has tried buy-backs and dividends and none of that has done anything for the stock, so it might as well try a big acquisition," said Brendan Barnicle, Microsoft analyst at Pacific Crest Securities.

For Indians opportunity knocks in Uruguay
16 Mar, 2008, 1706 hrs IST.........................
MONTEVIDEO: Bhavana, a 24-year-old computer engineer, has like many Indians found opportunity overseas, but she came to out-of-the-way Uruguay, far from familiar crowds and the tastes of home.

"I like Uruguay," said the young Bangalore native, flashing a brilliant smile in the cafeteria of Tata Consultancy Services's modern facility at its Latin American regional base in Montevideo.

The culture clash between India and Uruguay might seem potentially daunting.

This smallish country sandwiched between Brazil and Argentina has a population of just 3.4 million people, most descended from immigrants from Italy and Spain.

Its open rural areas are home to ranches and cowboy culture. It is fabled for serving up beef, beef and more beef. Spanish is the language, and not too many locals speak English.

But "my husband lives here, and works in Tata, too," added Bhavana.

And it's a good thing she has someone to remind her of home.


In the 11 months she has been in South America, Bhavana acknowledged she had not tasted any local-style food. She and her compatriots have had a very tough time finding the spices they need for home cooking, she said.

Still, she says, she is happy.

Certainly her workplace is impressive: dubbed the Jamsetji Tata building in honor of the father of modern Indian industry, it is a 2,630 sq meter facility in a trade zone known as Zonamerica, just north of the capital, which was built for about three million US dollars.

Its walls are decked out with weavings and banners brought from India. Many of them bear company mottoes such as "lead in changes," "respect for the individual," "learning and sharing," and "excellence."

The company employs about 500 people at this facility and another 250 at a downtown Montevideo office; among them there are just about 60 Indians, as well as people who have moved here from Peru, Colombia and Argentina to work, said regional manager Mario Tucci.

At the downtown office, another computer engineer, Charandjit Pabla, a 28-year-old Sikh from Punjab, works with a western style suit and a sky-blue turban.

Pabla, who has been here just over a year, said the Indians at TCS seem to be the only OIP (overseas Indian person) community in Uruguay.

"Food is a real problem; there are no spices," he confessed, though he said he "enjoyed the local dishes" that did not contain beef.

In this mostly Catholic country, Pabla said his faith -- though basically unknown here -- was not a problem.

"I have my holy book; the only difference is that we don't have a temple," he said. Generally speaking, Pabla said "I feel comfortable.

"People see my turban and ask me 'where are you from?'. People like me. People are very friendly," he said, noting "I've got very good friends."

Pabla also burst out laughing as he recalled one time "I went to the (football) stadium and people watched me instead of the match."

On the down side, Pabla said communication at first can be a challenge.

"I was feeling very scared because people here don't speak English. I felt as if I were dumb and deaf," he said.

He also said that Uruguay in some ways can be very expensive.

But "people share apartments," he said, and "we can save good money."

TCS, from Uruguay, works with clients across Latin America on building new software applications and guaranteeing proper performance of existing ones. It has invested $10-12 million in the past five years, Tucci said

This is what Indian IT companies should do - branch out to unfancied locations like Uruguay where the currency, int rates and realty costs are much lower. I hear Malaysia is also offering tax holidays & infrastructure in the form of an IT corridor. Int rates are also lower but don't think has much of a currency advantage viz a viz India.