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Sudipto Dey
New Delhi, Mar 5: HCL Technologies will buy out the entire 40 per cent equity stake held by James Martin & Co in its joint venture HCL-James Martin Inc.
HCL-James Martin Inc is a 60-40 joint venture between HCL Technologies and James Martin which was set up in 1996 to tap Year 2000 projects in United States and also give strategic systems redevelopment solutions worldwide.
The sell off, which was agreed upon in the last week of February at the company headquarter in Fairfax, Virginia, is part of a strategic move by the US-based $150 million James Martin to re-align itself as a global corporation, says sources close to the company. Under its present company policy, James Martin will no longer share its brand name in any joint venture.
Though the companies were not ready to come out with financial details of the sell off, it is reliably learnt that James Martin will be paid around $10 million which has been arrived at by the internal auditors.
HCL-James Martin is a privately held company, headquarteredat Fairfax, Virginia. Under the sell off agreement signed recently, HCL will be using James Martin's brandname and methodology till the end of the year.
Apprehension however remains as to how the companies will deal with any litigation that may arise out of the Y2K projects.
The joint venture did fairly well in the four years of its existence, raking in revenue in the range of $30 million in 1998, say sources. However, as per their initial joint projections, the joint venture company targeted a $100 million revenue by Year 2000.
Under the joint venture agreement entered in 1996, HCL was to bring in investment worth $9 million in return for using the James Martin & Company's brandname, its Y2K methodology and goodwill.
In 1996, Ashok Jain, former president and CEO of HCL Corporation became the CEO of the new joint venture while Mike De Vito of James Martin became its president and COO.
According to sources in the industry, the joint venture worked well till Arjun Malhotra, one of the key promoter inHCL was around. "Arjun acted as the glue," was how sources close to the company put it.
When contacted, spokesperson from both HCL Technologies and James Martin did not deny that dissolution of the joint venture was in the pipeline. "We will be issuing a worldwide press release on the subject early next week," said a cryptic Satish Jha, managing director, James Martin India.
James Martin & Co, a information management company, has 28 offices worldwide and presence in 18 countries. HCL Technologies manages all the joint ventures that HCL has entered into.
Copyright © 1999 Indian Express Newspapers (Bombay) Ltd.
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