Tech Pacific to buy out Godrej Pacific Technology

NEW DELHI, August 27 : Godrej Pacific Technology Ltd. (GPTL),

the Rs 728 crore IT distribution major, is reportedly heading for a major

shake up. According to sources within and outside the company, Godrej is

deliberating selling off its stake to the joint venture partner Tech

Pacific. Sources further stated that GPTL has already asked for clearance

from FIPB.

In the business tie up, Godrej and Tech Pacific hold

equal stake. Although the market is rife with speculation,

GPTL Managing Director Shailendra Gupta denied the change in ownership.

"There is no reason to speculate about the ongoing discussion between

Godrej and Tech Pacific," said he. "We are in the primary stages

of discussing issues of making our business more competitive through

certain well defined steps. It's time to move into web commerce and for

that you need investment. That may mean Godrej buying out Tech or vice

versa. All options are open," he added. Around ten years back, Godrej

entered the distribution business in the name of Godrej & Boyce

Trading Co. and about three years back, it entered into a joint venture

with Tech Pacific--the $3 billion dollar Australian distribution major.

Godrej invested approximately Rs 10 crore in the JV. According to market

sources, it is looking at Rs 130 crore to sell off its stake in the

business.

The move follows the entry of the $24 billion American

distribution behemoth--Ingram Micro--into the Indian market by buying out

its partner Electronic Resources India Ltd. ERIL is expected to change its

name to Ingram Asia within the next two months. Tech Pacific has a major

presence in the Asia Pacific region.

"If one sees the business horizon of Godrej, beside

the distribution business, the group has no interest in IT. Unlike Wipro

or TATA, its involvement in the IT business is minimal and plays little

role in the expansion of the group's business. So, there is little emotion

or business strategy attached to the group against any such steps. What

Godrej as a group is doing is perfectly rational," argued a top brass

of a major distribution company. From the reseller point of view, shifting

of ownership means more investment and more products in the country.

"In terms of relationship between the principal and the dealer, may

be there will be no change but certainly in terms of products availability

and more application of technology in the trading process, there will be

changes. One will see more use of the Internet. To put it simply, more

money will be pumped in the distribution business," said a GPTL

dealer Softmart Solutions CEO Alok Gupta.