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Customers moving to solutions as against services
Customers are moving to solutions as against services. Solutions has two parts to it the ability to create and deliver them and access to the right level of customers.
Manu Parpia served as MD of Geometric from 1994-2006 and took over the mantle again in 2011. He's not sold the engineering services company to HCL Technologies for $188 million in a share-swap deal. In an exclusive interaction with TOI, Parpia said the two companies have complementary strengths in engineering services -- HCL in medical, telecom, and high-tech, and Geometric in automotive and industrial.
Excerpts:
It looks to be becoming difficult for the smaller IT players to survive on their own...
Customers are moving to solutions as against services. Solutions has two parts to it the ability to create and deliver them and access to the right level of customers. At Geometric, we have the capability to create and deliver but we lack customer reach Companies like HCL have large sales forces and they can be better positioned to put the two together conversation with the customer and the ability to create and deliver. Larger vendors also often have a better access to the top (leadership in customer organizations.)
Is a change in management imminent?
If you look at 3DPLM (joint venture with Dassault Systemes), I doubt there is going to be any change. In the case of Geometric's business, there will be change in the management structure because businesses need to align to HCL's structure. I know HCL has a number of openings they are looking to fill with people with skillsets that Geometric can bring.
The deal valuation was not very much higher than the current valuation. Were you disappointed?
HCL Tech, will issue 10 equity shares of Rs 2 each to Geometric shareholders for every 43 equity shares of Geometric of Rs 2 each held by them. The deal is valued at about Rs 190 per share. If you look at the redeemable preference share -- for every share of Geometric you hold, you get a preference share of Rs 68. So the return to the shareholder is Rs 255-Rs 260. It's much higher than the price it was trading at. I would say it was trading at unnatural prices due to rumours in the press that drove volumes.
Was there resistance from Dassault Systemes for the JV to be acquired?
I think it was a natural evolution. Today it's 58% owned by Geometric, it will become a wholly-owned subsidiary of Dassault Systemes. We have been doing important work through the joint-venture, but at some stage growth kind of stagnated. Our ability to do more without being part of the core was becoming a question. We have been partners for fourteen years and have seen good value. It was a good time to part amicably.
Source: techgig.com
