Mumbai: Exiting from its Indian subsidiary AGC Networks Ltd will enable the Indian arm of US-based enterprise communications firm Avaya Inc. to work with multiple partners to better tap local growth opportunities, said Jangoo Dalal, Avaya’s India managing director.
Avaya on Sunday announced the sale of its entire 59% stake in the Indian unit at a discount to to its last traded share price to the Essar Group’s business process outsourcing arm, Aegis Ltd, for Rs206 crore.
New tactics: Avaya India’s managing director Jangoo Dalal says working with one system integration partner was a limiting factor.
“Working with just one system integration partner, in which we had a majority stake, was turning out to be a limiting factor when it came to tapping available growth opportunities,” Dalal said. “We are consciously moving towards a multi-partner strategy.”
On Monday, the first trading session after the deal was announced, shares of AGC fell 7.72% to close at Rs256.95. The Bombay Stock Exchange’s (BSE) benchmark Sensex gained 0.48% to close at 16,944 points.
To work with multiple partners while having a majority stake in a subsidiary would have meant AGC competing with third-party system integration firms for business from Avaya. After the stake sale, Avaya India plans to work more closely with system integrators such as Wipro Ltd and HCL Technologies Ltd.
Avaya specializes in software solutions and technology that go into contact centre operations and enabling unified communication solutions for large enterprises with multiple campuses in different locations. While it provides the software solutions and technology, the company depends on system integration firms for implementing the solutions.
Multiple partners mean that Avaya will benefit from not just its own sales force, but the sales efforts of its partners as well. “The hit ratio in terms of sales efforts is higher in the indirect sales model,” said Sanish K.B., a research analyst at the Indian arm of technology researcher Gartner Inc.
According to research firm Frost & Sullivan, the India market opportunity in unified communications and contact centre technology is estimated to be $610 million (Rs2,836 crore) now and projected to grow to $923 million by 2014.
“The market is expected to grow at between 10% and 15%, but we will grow above the market growth rate,” Dalal said.
Essar bought Avaya’s stake in AGC at Rs245 a share, about a 12% discount to its last traded price of Rs278.45 on Friday. In May, until the deal was announced, the stock gained around 14.5%.
About the discounted price at which it agreed to sell the AGC stake, Dalal said it was more a function of the stock having risen in the recent past.
“We shook hands and agreed to the price prevailing at the time we concluded the talks with Essar,” Dalal said.