In an announcement on the Bombay Stock Exchange (BSE), Wipro Limited said it has acquired majority stake in Brazil’s R.K.M. Equipmentos Hidraulicos LTDA, a hydraulic cylinder manufacturer. Post the acquisition; the Brazilian business will become a part of Wipro Infrastructure Engineering.
With this deal, R.K.M will have a wider customer access and expansion opportunities into new end equipment segments. Wipro Infrastructure Engineering, a division of Wipro Ltd, manufactures precision-engineered hydraulic cylinders and truck hydraulic solutions for the infrastructure and related industries.
It is a Tier-1 supplier to global OEMs of construction and earth moving machinery, material handling equipment, forestry equipment, heavy and medium commercial vehicles among other industries, across Asia and Europe. The company has manufacturing facilities in India, Sweden and Finland.
Wipro is also evaluating the options to sell off its water business and sharpen its focus on the existing revenue streams.
According to Deal Curry, Wipro entered the water business in 2008 through the acquisition of water treatment firm Aquatech and executes water treatment projects for large industrial customers, including United Breweries, PepsiCo and Coca Cola.
Deal Curry further indicated that recently, Wipro Technologies, the IT business of Wipro has acquired US-based Science Applications International Corporation’s oil and gas IT business, for $150 million in cash. In past, Wipro acquired Citi Technology Services for $127 million, Infocrossing Inc for $ 598.4 million, Enabler for $ 52.58 million among others.
The Brazilian investment is part of Wipro’s larger plan to regain lost market share in the IT outsourcing industry by strengthening links with high-end high-tech manufacturers. According to the Financial Times, the move is not a diversification strategy.
Rather, Wipro is gaining access to technology that would help gauge how the Company can platform to high-tech industries. By buying access to these companies they increase exposure to these companies’ and develop platform suitable for them, reported the Financial Times.
According to FT, Wipro’s Brazilian acquisition comes two weeks after its $150m acquisition of the energy technology business of US-based Science Applications International Corporation (SAIC), which was driven by similar imperatives. Since the depths of the financial crisis, Wipro’s software revenues have been under strain.
Wipro IT Business, a division of Wipro Limited, is amongst the largest global IT services, BPO and Product Engineering companies. In addition to the IT business, Wipro also has leadership position in niche market segments of consumer products and lighting solutions. Wipro generates US$6 billion (India GAAP figure 2009-10) of annual revenues.