HCL plans to take over five captive carve-outs

Asset management processes will be absorbed through joint ventures or special purpose vehicles

MUMBAI; HCL Technologies is evaluating taking over various asset management processes of five firms, most of which are in the financial  services sector in India and Asia Pacific.

This will be by forming joint ventures or special purpose vehicles, said Premkumar S, corporate vice-president (financial services), HCL Technologies.

In 2001, the company had done a similar initiative when it formed a joint venture with Deutsche Bank AG by acquiring 51% stake in the holding company of Deutsche Software, Deutsche Bank’s IT services subsidiary in India.

The process involves taking over asset management contracts of companies and bill the parent firm on the cost reduction that HCL brings to the table.

The employees associated with the specific processes will be brought on HCL payroll.
Besides, HCL is also doing some reorganising.

Vineet Nayar, CEO and member of board of directors, said, “We have set up a new process reengineering business division that will strengthen our relationship with existing clients in all verticals worldwide. This is not with any profit motive at the moment.”
The new business division is aimed at providing cost reduction to clients above the $1 billion bracket, Nayar said.

The new business division has a staff of 300. During a year-long pilot run for four clients, the company claims to have brought $580 million in savings for those clients.
Meanwhile, the company has announced that it would again witness a mark-to-market (MTM) loss for the second quarter (Jul-Aug-Sep) 2008-09 on its hedging capital largely due to depreciation of rupee.

HCL executive vice-president, finance Anil Chanana, said the exact amount would depend on the exchange rate at the end of September 2008 or the second quarter.
The company had $1.9 billion worth of hedges of which about $600 million were marked-to-market, at the end of June. Chanana expects this to go down to $300 million by the end of September.

The company had hedged its exposure at an average rate of around Rs 41.04 to a dollar, which has currently depreciated to around 46. Moreover the company also sees its dollar-denominated revenues getting impacted due to the dollar gaining against the euro and the pound.

t_amit@dnaindia.net