Tech Mahindra announces $159.5 Mn Capex plan

Tech Mahindra announces $159.5 Mn Capex plan

By SiliconIndia   |   Wednesday, 23 July 2008, 07:00 Hrs
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Mumbai: With the market witnessing a 66 percent surge in the capital expenditure plans during the Jan-March quarter, there are more joining the line like Tech Mahindra, a telecom solution firm, who have outlined $159.5 Mn (638 crore) for the same. The plan expects to spend 60 percent of it as investments in physical infrastructure and 40 percent of it for technological expansion.

C.P. Gurnani, President (International Operations) of Tech Mahindra, has made the capital expenditure plan for the next three years and he justifies it as, "Traditionally, the Indian IT industry has grown through time and material based contracts with duration of less than a year. Signing long-term deals ensures revenue commitment which in term gives the company levers for productivity improvement measures and to plan from a longer-term horizon."

The company, with an upfront payment of 440 crore, signs a $700 deal with the BT group for five years. It looks at it as an assured means of revenue streaming thus bringing stability to its earnings.

The findings of ASSOCHAM Investment Meter (AIM) revealed that Indian companies’ capital expenditure soared by 66 percent during Jan-Mar 2008 to a whopping $174 billion as compared to $105 billion lined up in Oct-Dec 2007.

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