HERO MOTOR CORP SOURCING AGREEMENT WITH ERIK BUELL RACING

Hero MotoCorp Ltd, a two-wheeler manufacturer, has forayed into a technology sourcing agreement with US-based Erik Buell Racing as it eyes to boost its presence in the high-end bike industry. The development is part of the Indian company's strategy to strengthen its technological prowess, post the break up of the joint venture with Honda-Hero Honda. The collaboration is not a joint venture (JV) but rather a long-term arrangement. EBR is more into the high end and it is possible that the US company's technology can be used for the smaller engine bikes. The firm will not straightaway unveil a 1,000 cc or a 1,200 cc bike using EBR technology but would be moving in a gradual way. The product will be meeting the demand of the international markets and the the partners have not yet finalised. The idea behind foraying into collaboration with EBR is part of HMCLs overall strategy to have multiple technology sources for the various segments and also to boost its own Research and Development (R&D) capability.

HERO MOTOR CORP SOURCING AGREEMENT WITH ITALYs ENGINES ENGINEERING

Hero MotoCorp has announced that Italys Engines Engineering will be its third technology partner for its future model portfolio.This comes close on the heels of its tie-ups with the USbased EBR and Austrias AVL for engine and bike development earlier this year. Industry sources said that given Engines Engineerings end-to-end product development capability, Hero is likely to pick up a significant stake in the firm soon. The design company, boasts of clients such as Honda, Yamaha and Ducati. The Bologna-based firm will impart technological know-how in terms of superior designing for the future products, a Hero statement said.The two-wheeler market leaders new tie-up is interesting given the fact that another homegrown automaker, Mahindra & Mahindra, had a controlling 70 per cent stake in Engines Engineering till recently. Mahindra, which had bought the stake in 2008, sold it back to the promoter, Alberto Strazzari, this February.

HINDALCO NOVELIS TECHNOLOGY SOURCING

Hindalco's acquisition of US-based Novelis for $6 billion in February this year is set to pay off, with its subsidiary's fusion technology finding many takers in the auto and rail wagon sector. Fusion technology is a new process that simultaneously casts multiple alloy layers into a single aluminium rolling ingot. This makes automobile parts very strong, less corrosive but lighter in weight compared to steel. "European carmakers Audi and BMW had used Novelis' fusion technology to make lighter cars. Given the low weight, the technology will also contribute to huge savings on fuel and lesser green house gas emissions," Shashi K Maudgal, executive president, marketing, Hindalco Industries, said, "Thanks to the technology, there is a remarkable difference in weight which comes in handy for bigger cars like Audi." While big cars like Audi weigh about 750 kg, small cars like Maruti weighs 850 kg. Though the cost of the aluminium alloy used in fusion technology is higher, it can be offset by the weight advantage. So is the case for railway wagons. The wagons in India are made of steel which is heavy and consumes more fuel. The fusion technology will have distinct advantages here as well. Novelis, which was on Hindalco's (Aditya Birla group) radar for some time, is the world's largest flat rolled aluminium maker. It had been a loss-making company with no captive source of bauxite, which forced it to buy alumina from the spot markets. Novelis had reported a loss of $170 million in the first nine months of 2006 calendar year because it was locked into fixed-price contracts with many customers that run up to 2011. Hindalco will have to bear the losses till that period. HOW HAS THE MOVE TURNED OUT SO FAR?

Not too badly, considering that Novelis had come with a debt of about $3.5 billion and there was little overlap between Hindalco and Novelis in terms of product mix. Hindalco was producing the low-end stuff and Novelis had to process them into value-added products. Hindalco also had to manage new products and a much larger scale of operations because Novelis consumes roughly 5-6 times the amount of aluminium produced by Hindalco. Novelis was also locked into risky long-term contracts with key customers. The contracts left Novelis footing the bill for higher aluminium prices when they soared, thus pushing it into losses. Hindalco's consolidated debt has dropped from Rs 32,350 crore in FY08 to Rs 27,700 crore in FY11. Expansions are underway to increase alumina and aluminium metal production capacity by four and three fold, respectively. With these additions, Hindalco hopes to boost consolidated margins given the integrated Indian operations. The additions also provide Novelis an effective hedge against raw material price rise.

M&M SSANGYONG JOINT VENTURE FOR DEVELOPING MODERN TECHNOLOGY

Auto major Mahindra & Mahindra today said it is developing three new engine platforms, along with its Korean subsidiary SsangYong Motor, which are likely to hit the roads in the next twothree years in markets across the world. "We are looking at joint product development. Currently we are working together to develop three new engine platforms for both Mahindra & Mahindra (M&M) and SsangYong," M&M Chief Executive (Automotive Division) Pravin Shah told reporters here. Both companies are developing the engines keeping in mind India, South Korea and other markets around the world, he added."It will take us 24-36 months to develop these engines," Shah said. He, however, declined to share details such as capacities of the engines or whether these will be fitted in small cars, sedans or sports utility vehicles. "M&M and SsangYong are working on to synergies strength of both the firms. Apart from product development, we are also working on joint global sourcing and utilising global network for products," Shah said. Talking about the investments, Shah said M&M will put in Rs 4,000 crore in the next three years, while SsangYong will make an investment of Rs 1,500 crore. SsangYong Motor today launched SUV Rexton in Delhi, priced between Rs 17.75 lakh and Rs 19.75 lakh (ex-showroom). When asked if separate showrooms would be considered in India for products of the Korean firm to establish the brand, SsangYong Motor Company Executive Vice President (Sales and Marketing HQ) Johng-Sik Choi said: "It may help in having separate showrooms for the brand. "However, we are selling Rexton in M&M outlets as a pilot project. After one year, we will review the sales performance and then we will take a decision accordingly. At present, there is no plan to open separate outlets." The Rexton is being produced at M&M's Chakan plant in Maharashtra. The third generation Rexton is available in over 70 markets across the world. The company has planned to produce initially 5,000 units a year.

NEW REPORT
Designed and developed by SsangYong in Korea, the sports utility vehicle (SUV) is the third generation Rexton. The SUV is priced at Rs 17.67 lakh (ex-showroom Mumbai) for manual transmission (RX5 version) and Rs 19.67 lakh for automatic transmission (RX7). The Rexton is manufactured and assembled at Mahindras Chakan plant near Pune by sourcing components from SsangYong Korea and from India.

TATA STEEL CORUS JOINT SOURCING

Tata Steel and Corus have started joint sourcing and purchase of materials, including ore, coal and refractories. Both the companies have also decided to jointly explore new iron-ore sources in Africa, Australia and Brazil, a senior Corus official said. Philippe Varin, CEO, said that the integration process aimed at achieving the $450-million synergy was already on from April and 20 separate groups with representatives from both sides are working on it to identify 'best' practices from both the companies. Talking to a group of visiting journalists from India, Varin said the integration process is currently focused on areas such as manufacturing, purchasing, performance and finances. "We are already in the market as one large buyer," he said. Varin pointed out that integration would be a gradual process and he would not be able to set a time frame now. However, later an official said the target is to achieve the $450-million synergy by 2009.In purchase alone a saving of $70 million is estimated. One of the objectives is to achieve self-sufficiency in raw materials for Corus. Tata Steel is 80 per cent self-sufficient in raw materials. The integration group is also examining how to leverage the strength of the other Tata group companies in UK such as Brunner Mond and TCS, the officials said. When asked about the ranking of Tata Steel-Corus combine as global player, Varin said size is not an important issue. He pointed that it was important to become a more profitable steel manufacturer. "I am not saying we are going to remain in sixth position. But I don't have any numbers now." Tata Steel is implementing two projects in India that would significantly expand its capacity. Varin said the integration is mostly being done internally but international consultant Accenture has been appointed to look at the performance issues. Tata Steel, which was ranked 56th in the global steel league till last year, paid $13 billion to acquire Anglo-Dutch steelmaker Corus. The move is in sync with group chairman Ratan Tata's vision of a "light-touch" integration strategy, which would allow Tata Steel and Corus to function independently, but at the same time tap synergies wherever possible in a time-bound manner. "Unlike other global mergers, the strategic rationale for this merger was very different. It wasn't about cutting costs, especially manpower costs, but (it has) more to do with strategic growth and expanding the global footprint," said a senior Tata official.

INFOSYS SOURCING RAILWAY SECTOR

TheClient Managing a 49,000-mile long railway track, with over 36,000 employees spread across 28 states, can be a challenging task. Our client, one of the largest railway companies in the US, plays a vital role in connecting a large number of individuals and businesses through this vast network for the last 150 years. A few years ago, the company decided to leverage outsourcing to manage the complexities of its business in a cost-effective way. It wanted to transform its business model to create the best-in-class infrastructure, combining the latest technology with efficient business processes. BusinessNeed The railroad industry, being one of the oldest industries, has not been very progressive in its usage of IT. Government regulations, lack of control over revenue management and a conservative approach of doing business all these factors have posed a hindrance. Building a scalable technology solution for a large railway company was in itself a challenge. Before it decided to revamp, the company was highly dependant on a group of contract workers for its IT needs, with limited control over cost, time schedules and alignment of business with IT. The client wanted to move from this approach to a more process-oriented model. It was looking to leverage outsourcing to manage costs and IT deployment in a more effective and efficient manner. But the organizations lack of experience in outsourcing, especially in dealing with an offshore outsourcing vendor, was delaying it from taking the plunge. OurSolution The client set out to look for an offshore IT vendor capable of delivering high quality software solutions. Infosys was selected because of its exposure to the industry, proven delivery track record in other industries and the process capability maturity. However, in the initial phase, the client's approach to sourcing was rather cautious due to the fear of losing control. In order to manage the outsourcing relationship, the company created a governance structure, where five people would constantly monitor the entire operation. Being its first experience of offshore outsourcing, it was but natural that the client had doubts. And Infosys went that extra mile to clear all doubts. Besides demonstrating its capabilities in predictability, profits maturity and project management as part of the Global Delivery Model, Infosys created a special program to bridge the cultural divide between the two countries. An 'India Day' was celebrated in the US to familiarise the team with Indian culture and way of life. This helped improve mutual understanding and respect.

After assessing the client's needs and existing structure, Infosys rolled out a series of applications tailored to meet its requirements. A number of existing business processes were automated, while some innovative applications were also created. The Track Measurement and Analysis system, for example, was a customized solution created for managing and improving tracks. This was useful in analyzing the possible causes of derailment and how derailment could be prevented. Another system was designed to help track the inventory and repair information of all cars and locos. Several other business applications were created in areas like Time Keeping, Finance and Revenue Management, Safety Systems and Reference files system, which enabled the client maintain a central repository of corporate and industry carrier data. In order to manage a 36,000-strong workforce, a number of HR applications were also developed. The Infosys team worked in sync with the HR and Payroll divisions to roll out the Mechanical Manpower Planning System, to process manpower updates, on a real-time basis. Specially customized applications for managing job bidding, crew layoffs, personnel management, compensation and rewards, etc. were also developed. Benefits The relationship that began with a number of apprehensions has transformed into a strong partnership over the past five years. All projects delivered so far have been rated above par on various quality parameters like on-time delivery, budget compliance, accuracy of estimation and quality of software. Infosys also received an award in the Best Cultural Fit category. Automation of key business applications and streamlining of operations have resulted in improving accuracy & timeliness and generated savings worth $325,000 in operating expenses. As a result, the company has been able to utilize its resources for more strategic business initiatives. In value terms, this relationship helped generate savings of more than US$20 million. The company has been able to reduce expenses by 35-40%. With increased confidence in our capabilities and delivery excellence, the client has also roped in Infosys Consulting in niche areas of IT business consulting.

WAL-MART RAISING IT SOURCING FROM INDIA

Giant Retailer Walmart, also the largest company in the world, has increased its information technology sourcing strategy from India by setting up a dedicated group here (in Gurgaon). Called Remote Services Management, the group is headed by Micky Singh who was earlier the CIO of Walmart India and responsible for setting up complete IT solution to Bharti-Walmart, covering all facets of the retail joint venture. According to highly-placed sources, Remote Services Management will be part of Walmart's Information Systems Division, the in-house IT arm of the company. This is for the first time Walmart's ISD has set up an arm outside the US. With this, the company wants to identify a number of Indian IT partners based on their areas of strength, rather than giving a huge IT contract to any single company. As part of the strategy, Walmart has also awarded contracts to two more Indian IT services firms, Wipro and Collabera (a privately-held IT services company) to develop specific tools and application, and provide services around that.The contracts are estimated to be over $200 million for multi-year periods. Walmart has already awarded IT contracts to Infosys, Cognizant and UST Global for sourcing specific services and applications for Walmart globally. With the selection of more vendors, Walmart's total IT sourcing from India is estimated to be in the range of $800 million-1 billion. Walmart said the numbers were speculative and not based on fact. The company, however, said it had relationships with a number of partners and it did not want to comment on the nature of those business relationships. "As a global company, Walmart will make investments in technology to benefit the operations here and elsewhere in the world. We will need worldwide resources, and our work with suppliers in India will help us continue to grow our business and create jobs around the world," the company spokesperson said in an email reply. A Wipro spokesperson said the company did not want to comment on market speculations. Collabera, too, echoed this.It is understood that Wipro will be responsible for application development and infrastructure outsourcing for Walmart stores globally. Besides, the company has also established a large helpdesk as part of its BPO practice. On the other hand, Collabera will develop collaborative tools for specific retail applications.According to industry sources, in his new role Micky Singh will be responsible for identifying Indian IT partners. For example, the Thiruvananthapuram-based UST Global is responsible for specific testing of its retail applications because of its inherent strengths in software testing. Walmart typically prefers to develop its retail applications in-house. However, the company gradually started buying packaged retail applications from leading software vendors like Oracle, HP and SAP only towards the end of 2007.

ITC Agri Business Division SOURCING MANGOES

Multi-business conglomerate ITC Limited has embarked upon an initiative aimed at ensuring remunerative prices to tribals and at the same time sourcing organically produced mangoes for its discerning customers spread across various countries, particularly in Europe and the US. ITCs Agri Business Division (ITC-ABD) has identified tribals in south Gujarat who own 1 to 3 mango trees each and roped in non-governmental organisations (NGOs) Vasundhara and Bharatiya Agro Industries Foundation for the promotion of tree-based farming. The NGOs are entrusted with the job of collecting and aggregating the produce while ITC purchases the mangoes by paying the market price to tribals. Thus, it procured 300-400 tonnes of mangoes last year from about 1,500 tribals, which were processed and exported in the form of pulp to Europe where baby food manufacturers want only organically produced mango products. Now, ITC wants to replicate this experiment elsewhere in the country and has already started a similar project in Srikakulam district of Andhra Pradesh. Here, the company has tied up with the Integrated Tribal Development Agency for the purpose. Quality specifications for mango products varied across geographies. For instance, European customers want high brix mango pulp that has higher sugar content. To make this variety, the fruit has to be ripened more than the normal level. Similarly, the demand for blended products is also increasing. Hence, ITC is concentrating on delivering products tailored for specific customers, including taste, texture and sweetness. In view of the above aspects, he said, there was a need for closure engagement with farmers. So, besides starting the tribal initiative, ITC has embarked upon a cluster approach. Under this, a group of farmers, who own mango orchards, functions under ITC's umbrella. The company personnel monitor their farms regularly. ITC-ABD vice president -exports, Ninad Bhosle, said each cluster had about 200 farmers. The company had 7-8 clusters spread across the mango producing belt of Gujarat, Maharashtra, Karnataka and Andhra Pradesh. Given that ITC processed 45,000 tonnes of mangoes and exported 22,000 tonnes of pulp last year, what it is procuring from the tribals today is minuscule. But with the company intending to replicate the project in other parts of the country, the contribution of the tribal produce is expected to increase progressively in the coming years.