For Indian IT companies, the government’s billion-rupee
projects are much needed as they are looking at ways to make
good for sagging overseas revnue. These projects hold the key to
retaining their profitability.

“The bigger issue is manning the change,” says Arvind
Thakur, chief executive at NIIT Technologies Ltd ,
which had recently executed an e-procurement tool for the Indian
Ordnance Factory Board that buys defence hardware and equipment
for the country’s armed forces.

NIIT gets about 7-8 percent of its revenue from government
contracts.

“In such a change, you need the involvement of the decision
makers and the line managers, who are not necessarily very
tech-savvy,” Thakur said.

NIIT is not alone. Tata Consultancy Services (TCS) ,
India’s top software services exporter, also believes boosting
the technology literacy of the government staff is key to better
execution of government projects.

“Unlike enterprise services, government projects tend to
have wide disparities in the infrastructure-base and resources
distribution,” said Tanmoy Chakrabarty, vice-president & head of
government industry solutions unit of TCS.

“Also, the impact of public services has a longer gestation
period as compared to a corporate environment. This tends to be
an integral challenge in project execution,” Chakrabarty said in
an emailed response.

Farid Kazani, chief financial officer at Mastek Ltd
, said the Indian government is rigid about commercial
terms of contracts, unclear about the requirements of the
project and needs to improve its planning.

Databases are incomplete and employees are not sufficiently
trained in handling technology, Kazani added.

“It is quite different from where the other developed
nations are,” he said. Mastek gets 23 percent of its revenue
from the government vertical, most of it from the U.K.

“So most of the times, either we end up with a time over-run
or a cost overrun on India projects,” he said. “We generally
don’t face these kinds of problems in the U.K.”

Another bigger risk is getting dragged into corruption
scandals. A case in point being HCL Infosystems’
contract with MTNL .

The Central Bureau of Investigation alleged the contract,
part of the corruption-ladden Delhi Commonwealth Games, was
awarded at an “exorbitant price” and had probed some officials
of the companies.

In a newsletter in May, the National Association of Software
& Services Companies (NASSCOM) had flagged several challenges
threatening the robust pace of growth in government contracts
for IT firms.

“Some projects have failed or been shelved because of flaws
at different stages: their conceptualisation, scope definition,
vendor selection and poor execution due to shortcomings both on
the government and the implementing vendor’s side,” the industry
body said.

HUGE GROWTH POTENTIAL

Initiatives such as the Unique Identification programme,
aimed at building a biometric database of the entire country’s
population, and the Restructured Accelerated Power Development &
Reforms Programme, which encourages adoption of IT in energy
accounting, are increasing the government revenue pie for IT
companies.

NASSCOM expects IT companies’ revenue from the domestic
market, which was 787 billion rupees in FY11, to grow 15-17
percent this fiscal.

“It’s just mind boggling, the amount of government projects
coming up,” NIIT Tech’s Thakur said.

“If you look at the power projects, each project is worth
4-5 billion rupees, and treasury, every state has to automate
the treasury, that’s worth 20 billion rupees, then look at the
homeland security, there is a crime and criminal networking
system, I would say that would be another 20-30 billion rupees.”

This is precisely the reason why IT companies overlook the
hurdles or learn to live with them.

In May, outsourcer Spanco Ltd took over the assets
of the Nagpur circle of the Maharashtra State Electricity
Distribution Co as a designated distribution franchise.

Although the firm faced a few hiccups during the first month
as it took over a system where the maintenance was poor and
technology threadbare, Spanco has its eyes set on more such
contracts.

“Revamping entire systems is a very significant opportunity
because it gives us a chance to do an entire process
reengineering and make it more effective and efficient,” said
Kaustubh Dhavse, senior vice-president – strategy, Spanco.

About seven years ago, NASSCOM had said in a report that the
government IT initiatives were small, there was an overall
apathy and this was constraining the Indian domestic market,
which was a little more than $8 billion then.

Today, the domestic market has more than doubled in size and
apathy from the government is waning, but companies believe the
segment could yield much more if the implementation glitches are
mutually fixed.

(Editing by Rajesh Pandathil)

The June quarter is typically stable for software services
firms after a seasonally weak Jan-March, when clients finalise
budgets for the next fiscal year, leading to a spurt in spending
in the next two quarters.

“Tier-two IT companies are expected to report 2-6 percent
volume growth,” brokerage Prabhudas Lilladher said in a report.
“We expect margin of tier-two Indian IT services companies to
witness sharp erosion.”

Companies could see margins slipping sequentially as most
raised wages by an average of 12 percent for offshore employees
and about 2.5-3 percent for onshore employees.

Margins would drop 50-200 basis points on a sequential
basis, said Angel Broking analyst Srishti Anand.

“For mid-tier companies across the board, we are seeing
selling, general and administrative costs as a huge margin
lever, so year-on-year if you go to see, margin movement for
mid-tier companies would be upward.”

A spurt in tax rates due to expiry of the Software
Technology Parks of India (STPI) scheme will also hurt margins
and crimp profits compared with a year ago.

Small and mid-cap IT firms would especially see a dent as
many are yet to migrate to special economic zones to continue
enjoying some sort of tax benefits.

Tax rates would rise to 25-27 percent from 12-16 percent
earlier and the impact on profit margins would be huge, said
Vimal Gohil, analyst, Asit C. Mehta Investment Intermediates.

“The increase in tax rates would have an additional 6-7
percent dent on profits,” said Gohil.

STPI scheme was started in 1991 to boost software exports.
Among other benefits, it provided a 10-year income tax exemption
for units situated in software technology parks.

A Reuters poll of 16 brokerages estimates profits of Patni
Computer Systems , MphasiS and Infotech
Enterprises to continue to decline in double digits,
while Mastek would stay in the red. For poll, click on
.

HCL Technologies and MindTree’s profits
are likely to rise in double digits, while profits at KPIT
Cummins and Rolta India would inch up
slightly.

Hexaware Technologies will, once again, see a more
than three-fold rise, helped by strong enterprise resource
planning business growth.

“Amongst mid-tier companies, we expect Hexaware to continue
its good show as we build in flat margins quarter-on-quarter at
14.3 percent despite impact from salary revisions during the
quarter,” Emkay Global said in a report.

Hexaware’s stock has shot up 25.3 percent so far this year,
while the IT index has fallen 15.6 percent
year-to-date.

Earlier this week, India’s No. 2 software services exporter
Infosys Ltd reported a lower-than-expected profit of
17.22 billion rupees, and warned it faces a volatile global
economy.

The country’s top IT services provier Tata Consultance
Services , however, dispelled fears of a growth slowdown
with its 28 percent increase in net profit.

“The inherent strength reflected in TCS’ first-quarter
earnings suggest that the weaker numbers reported by Infosys
could be company-specific and related to the ongoing
restructuring,” UBS said in a report.

The National Association of Software & Services Companies
(NASSCOM) has forecast software and services exports to increase
16-18 percent in FY12 due to robust demand for outsourcing from
Western clients.

(Reporting by Manasi Phadke; Editing by Rajesh Pandathil)

MUMBAI (Reuters Life!) – Don’t look for an Indian “Avatar” anytime soon, but Bollywood, inspired by the success of blockbusters such as “Transformers,” is starting to take special effects seriously.

Up until five years ago, producers were unwilling to embrace technology, preferring instead to spend millions on expensive outdoor shoots and sets.

That changed when India became a viable back-end destination for Hollywood films like “Tron” and “Avatar” amid a growing wave of outsourcing post-production special effects due to cost. The number of studios handling VFX — visual effects that include mixes of live-action footage and computer-generated images — mushroomed.

“Earlier, Bollywood looked at technology like VFX as a cost-saving mechanism, but now it is also about the experience of watching a film with that kind of technology,” said Kamal Jain, chief financial officer at Eros International.

Eros will release “Ra One”, an ambitious superhero film with star Shah Rukh Khan, later this year. The company is also making “Rana,” a tri-lingual epic with another superstar, Rajnikanth.

Rajnikanth’s last film, “Robot,” had the flashiest Bollywood special effects to date, including a Matrix-like sequence, and such superstar backing of the trend means others are sure to follow.

“Zindagi Na Milegi Dobaara”, which releases next week, has used VFX to recreate a sky-diving scene and a race between a car and a horse.

Another film, “Urumi”, which depicts the arrival of explorer Vasco Da Gama in Kerala, used special effects to re-create Portugal in the 14th century.

Both films were processed at Reliance MediaWorks, part of the Anil Ambani ADAG group, which has a sprawling studio in a distant suburb of Mumbai. The studio, which earlier worked on back-end VFX for Hollywood, added a separate team to cater to the growing demands from Bollywood.

Starting from eleven in 2008, the studio has now grown to 51 and is constantly on the lookout for more talent.

“Revenue from VFX for Bollywood has doubled every year and we continue to see it growing,” Neil Cunningham, Creative Head at the RMW digital lab, told Reuters.

BOOMING BUSINESS BUT NO BUDGET

The Indian animation and VFX industry is expected to grow at a compound annual rate of 19 per cent, reaching 55.9 billion rupees by 2015, said consultancy KPMG.

But that business isn’t translating into Indian “X-Men”, because budgets aren’t on a par with those in the West.

“The kind of budgets that a movie like “Avatar” needed were justified because the appetite for that kind of a film is huge. But Indian producers can’t spend as much, because the audience isn’t as huge,” said Rajiv Raghunathan, RMW production head.

In addition, Indian audiences — brought up on film staples of family dramas and corny romances — have only recently started adapting their palates to VFX-heavy films.

Rajnikanth’s “Robot” was India’s most expensive film to date, with an estimated cost of $33.3 million. It earned more than $83 million, making it one of the biggest hits ever.

“Indian producers don’t need to spend as much on special effects, because we have studios here who will give you the same quality for a lesser price,” says Jain at Eros, whose company was one of the first to set up a VFX studio in India.

That studio, EyeQube, has handled special effects for Hollywood and also for in-house productions in Eros, and recently opened a London office.

“It wasn’t always this easy. When we set out to make a VFX heavy film in 2005, the technology wasn’t accessible, and people were very suspicious of it,” says Bollywood producer Harry Baweja, whose futuristic film “Love Story 2050″ was one of the first films to use special effects.

The film bombed in 2008, and Baweja says he knows of producers who were planning similar films, but shelved them.

But he said things were poised to change.

“Bollywood is well-known for its herd mentality. If one film like Ra One does well, you can be sure there will be producers lining up outside VFX studios, hoping to replicate its success.”

(Reporting by Shilpa Jamkhandikar and Manasi Phadke)

Coal India, the world’s largest coal miner, plunged 8 percent, after a government source said a panel of ministers had approved a new bill calling for coal miners to share up to 26 percent of their profits with local communities.

Shares in steelmakers Jindal Steel & Power and Tata Steel fell 1.91 percent and 1.94 percent respectively on the draft bill, while metal makers Sterlite Industries and Hindalco shed more than 3 percent each. These firms operate captive coal mines.

Iron ore exporter Sesa Goa tumbled 4.4 percent.

The proposed profit-sharing formula is a bid to smooth land acquisition. While industry bodies are reconciled to sharing some profits, they have baulked at 26 percent, saying that will sharply raise business costs and deter investors.

“Prima facie, the costs may go up and the profits may come down, but it’s a very prima facie opinion,” said Jayesh Shroff, fund manager at SBI Mutual Fund.

“We need to see the fine print of the bill,” Shroff said, adding, he expects the market to remain volatile in the near term.

The 30-share BSE Sensex shed 1.15 percent at 18,858.04 points, with 22 of its components declining.

The index has lost 8 percent of its value year-to-date, but has gained 0.6 percent over the past one week.

“The market has risen so much…, obviously it will look for some kind of a corrective phase,” said Nilesh Doshi, president of equity research at Techno Shares & Stocks Ltd.

“Some profit-booking is taking place,” Doshi said.

Foreign funds bought Indian shares worth $2.26 billion over 10 sessions to Wednesday, data from the market regulator showed.

Reliance Industries fell 1.8 percent after Morgan Stanley downgraded the energy giant’s stock to “equal weight” from “overweight” and slashed its price target to 956 rupees from 1,206 rupees.

The stock is cheap, but there are no short-term positive triggers, the brokerage said in a research report. It also cited lack of clarity on cash flow deployment in the short term and concerns surrounding the production ramp-up as reasons for the downgrade.

ICICI Bank fell 2.7 percent, while top lender State Bank of India regained some lost ground to close 0.2 percent lower , after falling as much as 1 percent earlier.

State Bank of India raised its benchmark prime lending rate by 25 basis points on Thursday, joining rival ICICI Bank, which had raised its base rate last week.

The Reserve Bank of India raised interest rates by 25 basis points in June, the 10th increase since March 2010, to combat stubbornly high inflation and putting pressure on banks to hike their lending rates.

The 50-share NSE index was down 1.19 percent at 5,660.65 points.

A total of 983 losers outpaced 437 gainers in a total volume of 649.8 million on the NSE.

The MSCI’s measure of Asian markets other than Japan was up 0.61 percent, while Japan’s Nikkei was up 0.66 percent.

STOCKS THAT MOVED

* Dhanalaxmi Bank fell 5 percent, after its chief financial officer said the lender called off a plan to raise 2.9 billion rupees by selling a 19.6 percent stake at a premium to a group of investors after one of them backed out.

* Man Infraconstruction Ltd rose 5.3 percent, after the company said it has bagged orders worth 950 million rupees.

TOP 3 MAIN STOCKS BY VOLUME ON NSE

* Unitech on 50.5 million shares

* Rushil Decor on 26.6 million shares

* Coal India on 19.4 million shares

(Editing by Malini Menon)

Coal India , the world’s largest coal miner,
plunged 8 percent , after a government source said a
panel of ministers had approved a new bill calling for coal
miners to share up to 26 percent of their profits with local
communities.

Shares in steelmakers Jindal Steel & Power
and Tata Steel fell 1.91 percent and 1.94
percent respectively on the draft bill, while metal makers
Sterlite Industries and Hindalco shed more
than 3 percent each. These firms operate captive coal mines.

Iron ore exporter Sesa Goa tumbled 4.4 percent.

The proposed profit-sharing formula is a bid to smooth land
acquisition. While industry bodies are reconciled to sharing
some profits, they have baulked at 26 percent, saying that will
sharply raise business costs and deter investors.

“Prima facie, the costs may go up and the profits may come
down, but it’s a very prima facie opinion,” said Jayesh Shroff,
fund manager at SBI Mutual Fund.

“We need to see the fine print of the bill,” Shroff said,
adding, he expects the market to remain volatile in the near
term.

The 30-share BSE Sensex shed 1.15 percent at
18,858.04 points, with 22 of its components declining.

The index has lost 8 percent of its value year-to-date, but
has gained 0.6 percent over the past one week.

“The market has risen so much…, obviously it will look for
some kind of a corrective phase,” said Nilesh Doshi, president
of equity research at Techno Shares & Stocks Ltd.

“Some profit-booking is taking place,” Doshi said.

Foreign funds bought Indian shares worth $2.26 billion over
10 sessions to Wednesday, data from the market regulator showed.

Reliance Industries fell 1.8 percent after Morgan
Stanley downgraded the energy giant’s stock to “equal weight”
from “overweight” and slashed its price target to 956 rupees
from 1,206 rupees.

The stock is cheap, but there are no short-term positive
triggers, the brokerage said in a research report. It also cited
lack of clarity on cash flow deployment in the short term and
concerns surrounding the production ramp-up as reasons for the
downgrade.

ICICI Bank fell 2.7 percent, while top lender
State Bank of India regained some lost ground to close
0.2 percent lower , after falling as much as 1 percent
earlier.

State Bank of India raised its benchmark prime lending rate
by 25 basis points on Thursday, joining rival ICICI Bank, which
had raised its base rate last week.

India’s central bank raised interest rates by 25 basis
points in June, the 10th increase since March 2010, to combat
stubbornly high inflation and putting pressure on banks to hike
their lending rates.

The 50-share NSE index was down 1.19 percent at
5,660.65 points.

A total of 983 losers outpaced 437 gainers in a total volume
of 649.8 million on the NSE.

The MSCI’s measure of Asian markets other than Japan
was up 0.61 percent, while Japan’s Nikkei
was up 0.66 percent.

STOCKS THAT MOVED

* Dhanalaxmi Bank fell 5 percent, after its chief
financial officer said the lender called off a plan to raise 2.9
billion rupees by selling a 19.6 percent stake at a premium to a
group of investors after one of them backed out.

* Man Infraconstruction Ltd rose 5.3 percent,
after the company said it has bagged orders worth 950 million
rupees.

TOP 3 MAIN STOCKS BY VOLUME ON NSE
* Unitech on 50.5 million shares
* Rushil Decor on 26.6 million shares
* Coal India on 19.4 million shares

FACTORS TO WATCH
* For technical analysis double click on www.reutersindia.net
* Rupee at 2-mth high on strong dlr inflows, Asians peers

* Indian bond yields steady; auction results awaited

* Dollar rallies on strong U.S. jobs data bets

* Brent slips $1 ahead of payrolls

* Euro zone banking worries dent jobs cheer

* Futures little changed before payrolls report

* For closing rates of Indian ADRs

(Editing by Malini Menon)
(manasi.phadke@thomsonreuters.com; +91-22-6636 9059; Reuters
Messaging: manasi.phadke.thomsonreuters.com@reuters.net)

NEW DELHI, April 1 (Reuters) – ASIA-PACIFIC STOCK MARKETS:
Pan-Asia…….. Japan……. S.Korea…
S.E. Asia……. Hong Kong… Taiwan….
Australia/NZ…. India……. China…..

OTHER MARKETS:
Wall Street …. Gold ……. Currency..
Eurostocks….. Oil …….. JP bonds…
ADR Report ….. LME metals. US bonds..
Stocks News US.. Stocks News Europe

DIARIES & DATA:
Indian Data Watch Asia earnings diary
U.S. earnings diary European diary
Indian diary Wall Street Week Ahead
Eurostocks Week Ahead

TOP NEWS:
For top Asian company news, double click on:
U.S. company news European company news
Forex news Global Economy news
Technology news Telecoms news
Media news Banking news
Politics/General news Asia Macro data
A multimedia version of Reuters Top News is available at:
topnews.session.rservices.com

LIVE PRICES & DATA:
World Stocks <0#.INDEX> Currency rates
Dow Jones/NASDAQ Nikkei
FTSE 100 Debt <0#USBMK=>
Indian rupee LME price overview

Financials were among the top gainers, with State Bank of India (SBI) and ICICI Bank rising closing up 1.6 percent and 1.34 percent respectively.

Over the past six months, shares in SBI have fallen 12.6 percent while those of ICICI Bank have fallen 2.3 percent on worries over rising interest rates impacting loan growth.

Energy major Reliance Industries closed up 2.09 percent, after an oil ministry source said India’s cabinet may consider approval for a $7.2 billion deal between the company and BP next week.

Concerns over Reliance’s gas production have for months dampened its growth outlook and kept its shares under pressure, which have fallen 19.4 percent year-to-date.

“There is no specific reason for the market to rise. The market is rising after seeing two-three days of consolidation,” said Neeraj Dewan, director at Quantum Securities.

“FII (foreign institutional investor) buying must also be happening with the kind of momentum you are seeing.”

Foreign funds have bought Indian shares worth $2.2 billion over nine sessions to Tuesday, data from SEBI showed, pushing the main index higher.

The 30-share BSE Sensex closed up 1.88 percent at 19,078.30 points, with 29 of its components gaining ground.

The index has fallen 0.5 percent over the past two sessions and has shed 7.3 percent of its value year-to-date.

“The market will consolidate, correct a little bit and then keep on going up,” Dewan added.

The software services sector also gained with bellwether Infosys, which flags off first-quarter earnings on Tuesday, closing up 1.42 percent.

Bigger rival Tata Consultancy Services ended up 1.11 percent, while No. 3 software services firm Wipro closed up 1.46 percent.

“We expect good June-quarter results and commentary from large caps with TCS continuing to lead,” brokerage J.P. Morgan said in a research report this week.

“IT (information technology) spend, particularly discretionary spending, outlook is likely to remain strong despite macro concerns and weakness in consumer spending,” the brokerage added.

India’s biggest and only listed microlender, SKS Microfinance, rose as much as 20 percent to 411.80 rupees after the finance ministry issued a draft of regulation proposed for the sector.

The 50-share NSE index was up 1.84 percent at 5,728.95 points.

A total of 988 gainers led 421 losers in a volume of 593 million on the NSE, higher than the 90-day daily average volume of 529 million shares.

The MSCI world equity index was up 0.09 percent at 1044 GMT, while the Thomson Reuters global stock index rose 0.06 percent.

STOCKS THAT MOVED

* Larsen and Toubro Ltd rose 3.15 percent to 1,863.45 rupees after the company said its unit had raised $75 million in a pre-IPO share sale.

* Entertainment Network and Reliance Broadcast Network rose 5.36 percent and 7.34 percent respectively after the cabinet raised foreign direct investment limit in the FM radio sector and gave the green light to more radio spectrum auction.

* Elder Healthcare rose 19.97 percent to 141.20 rupees after CNBC-TV18 television channel reported the company was planning to launch a range of new products in the skincare and other segments.

TOP 3 MAIN STOCKS BY VOLUME ON NSE

* Rushil Decor on 49.6 million shares

* Delta Corp on 19.4 million shares

* Unitech on 17.2 million shares

(Editing by Malini Menon)

The news brought relief to media companies, many running
frequency modulated or FM radio operations in losses, and
investors cheered boosting shares of Entertainment Network India
Ltd and Reliance Broadcast Network Ltd .

Shares of Entertainment Network, which owns Radio Mirchi,
jumped as much as 8.3 percent to a 33-month high of 286 rupees,
while shares of Reliance Broadcast, which owns Big FM, soared as
much as 13.7 percent to 91.35 rupees.

“The true potential of radio is basically to reach the
masses, where newsprint (and) television hasn’t been able to
reach. So I think Phase III opens the door to that growth,”
Asheesh Chatterjee, chief financial officer at Reliance
Broadcast, told Reuters.

The Phase III auction will extend FM radio services to 227
new cities, in addition to the present 86 cities, with a total
of 839 new FM radio channels, a government statement said.

Most of new stations to be commissioned through this
auction are going to be in smaller cities and towns, which have
none or very few private players in the radio space.

Currently, most of the radio companies, including Reliance
Broadcast have very little foreign direct investment, falling
short of even the permitted 20 percent, Chatterjee said.

A local analyst, who did not wish to be named as she is not
allowed to speak with the media, said the entire radio industry
makes less than 1.5 billion rupees in profit.

“It is very small for a foreign guy to even look at it,” she
said.

“Right now the industry itself is very small because of the
Phase II policy structure, which really inhibits growth and
scalability is limited.”

The phase III auction will address scalability and boost
profits, which would then generate interest among foreign
investors, she added.

The federal government has also opened doors for radio
companies to expand in cities where they are already present,
which will encourage niche programming. Currently FM radio
companies are only allowed to operate one station in any city.

Under the new policy, a single company can own up to 40
percent of the total number of FM channels in one city, as long
as there are at least three operators there.

The cabinet gave its nod for conducting an ascending
e-auction, like last year’s telecom spectrum auction, replacing
the manual auction during the second phase.

An e-auction enables registration of bids and data updation
almost simultaneously which had helped players to fast outbid
each other in the telecom auction, while companies physically
file papers in the manual auction leading to longer disposal
times.

(Additional reporting by Anurag Kotoky; Editing by Harish
Nambiar)

MUMBAI (Reuters Life!) – Don’t look for an Indian “Avatar” anytime soon, but Bollywood, inspired by the success of blockbusters such as “Transformers,” is starting to take special effects seriously.

Up until five years ago, producers were unwilling to embrace technology, preferring instead to spend millions on expensive outdoor shoots and sets.

That changed when India became a viable back-end destination for Hollywood films like “Tron” and “Avatar” amid a growing wave of outsourcing post-production special effects due to cost. The number of studios handling VFX — visual effects that include mixes of live-action footage and computer-generated images — mushroomed.

“Earlier, Bollywood looked at technology like VFX as a cost-saving mechanism, but now it is also about the experience of watching a film with that kind of technology,” said Kamal Jain, chief financial officer at Eros International.

Eros will release “Ra One,” an ambitious superhero film with star Shah Rukh Khan, later this year. The company is also making “Rana,” a tri-lingual epic with another superstar, Rajnikanth.

Rajnikanth’s last film, “Robot,” had the flashiest Bollywood special effects to date, including a Matrix-like sequence, and such superstar backing of the trend means others are sure to follow.

“Zindagi Na Milegi Dobaara” or You Won’t Get This Life Again, which releases next week, has used VFX to recreate a sky-diving scene and a race between a car and a horse.

Another film, “Urumi” or Curling Blade, which depicts the arrival of explorer Vasco Da Gama in Kerala, used special effects to re-create Portugal in the 14th century.

Both films were processed at Reliance MediaWorks, part of the Anil Ambani ADAG group, which has a sprawling studio in a distant suburb of Mumbai. The studio, which earlier worked on back-end VFX for Hollywood, added a separate team to cater to the growing demands from Bollywood.

Starting from eleven in 2008, the studio has now grown to 51 and is constantly on the lookout for more talent.

“Revenue from VFX for Bollywood has doubled every year and we continue to see it growing,” Neil Cunningham, Creative Head at the RMW digital lab, told Reuters.

BOOMING BUSINESS BUT NO BUDGET

The Indian animation and VFX industry is expected to grow at a compound annual rate of 19 per cent, reaching 55.9 billion rupees by 2015, said consultancy KPMG.

But that business isn’t translating into Indian “X-Men,” because budgets aren’t on a par with those in the West.

“The kind of budgets that a movie like “Avatar” needed were justified because the appetite for that kind of a film is huge. But Indian producers can’t spend as much, because the audience isn’t as huge,” said Rajiv Raghunathan, RMW production head.

In addition, Indian audiences — brought up on film staples of family dramas and corny romances — have only recently started adapting their palates to VFX-heavy films.

Rajnikanth’s “Robot” was India’s most expensive film to date, with an estimated cost of $33.3 million. It earned more than $83 million, making it one of the biggest hits ever.

“Indian producers don’t need to spend as much on special effects, because we have studios here who will give you the same quality for a lesser price,” says Jain at Eros, whose company was one of the first to set up a VFX studio in India.

That studio, EyeQube, has handled special effects for Hollywood and also for in-house productions in Eros, and recently opened a London office.

“It wasn’t always this easy. When we set out to make a VFX heavy film in 2005, the technology wasn’t accessible, and people were very suspicious of it,” says Bollywood producer Harry Baweja, whose futuristic film “Love Story 2050″ was one of the first films to use special effects.

The film bombed in 2008, and Baweja says he knows of producers who were planning similar films, but shelved them.

But he said things were poised to change.

“Bollywood is well-known for its herd mentality. If one film like Ra One does well, you can be sure there will be producers lining up outside VFX studios, hoping to replicate its success.”

(Reporting by Shilpa Jamkhandikar and Manasi Phadke)

Soota sold 2.2 million shares, or a 5.5 percent stake, at 428 rupees each in a block deal, a premium of 18.5 percent to the stock’s close on Wednesday.

The company confirmed the stake sale.

Soota, however, did not give a timeline on when he would sell the rest of his stake, in an interview to business news channel CNBC-TV18.

Promoters together held 31.9 percent in MindTree as of March, including Soota’s 11.1 percent, according to data from the stock exchange.

The stake was sold to one of the group entities of board member V.G. Siddhartha, the spokeswoman said. He founded Global Technology Ventures, which holds 6.11 percent in MindTree, according to Reuters data.

“With this transaction, the promoter stake has come down considerably and in any IT company if the promoters’ stake is this low, the company becomes a target for a forced buyout or a takeover,” said a local analyst, who did not wish to be named, as she is not allowed to speak to the media.

“It would make sense for the promoters to go and vie for Soota’s remaining stake.”

In January, Soota, who had co-founded MindTree in August 1999 with nine other industry professionals, resigned citing personal reasons and said he would finalise plans for a new business venture shortly after his departure.

Soota’s exit had hit investor confidence with the shares plunging to over 17-month lows on the news, as MindTree had just undergone restructuring after shelving plans to launch a 3G smartphone based on Google’s Android platform in the U.S.

At 2.52 p.m., shares of the Bangalore-based company, which the market values at $321.32 million, were up 9.16 percent at 394 rupees, after touching an intra-day high of 430 rupees after the deal. The stock has lost 34 percent of its value in the past six months.

“The block deal is positive in the sense, there is this buyer who has got into the company at a premium, which means he is looking at some value in the company,” the analyst said.

“So it would restore some confidence among investors in the short term.”

(Additional reporting by Swati Pandey and Kaustubh Kulkarni; Editing by Rajesh Pandathil)

Soota sold 2.2 million shares, or a 5.5 percent stake, at
428 rupees each in a block deal, a premium of 18.5 percent to
the stock’s close on Wednesday.

The company confirmed the stake sale.

Soota, however, did not give a timeline on when he would
sell the rest of his stake, in an interview to business news
channel CNBC-TV18.

Promoters together held 31.9 percent in MindTree as of
March, including Soota’s 11.1 percent, according to data from
the stock exchange.

The stake was sold to one of the group entities of board
member V.G. Siddhartha, the spokeswoman said. He founded Global
Technology Ventures, which holds 6.11 percent in MindTree,
according to Reuters data.

“With this transaction, the promoter stake has come down
considerably and in any IT company if the promoters’ stake is
this low, the company becomes a target for a forced buyout or a
takeover,” said a local analyst, who did not wish to be named,
as she is not allowed to speak to the media.

“It would make sense for the promoters to go and vie for
Soota’s remaining stake.”

In January, Soota, who had co-founded MindTree in August
1999 with nine other industry professionals, resigned citing
personal reasons and said he would finalise plans for a new
business venture shortly after his departure.

Soota’s exit had hit investor confidence with the shares
plunging to over 17-month lows on the news, as MindTree had just
undergone restructuring after shelving plans to launch a 3G
smartphone based on Google’s Android platform in the
U.S.

At 2.52 p.m., shares of the Bangalore-based company, which
the market values at $321.32 million, were up 9.16 percent at
394 rupees, after touching an intra-day high of 430 rupees after
the deal. The stock has lost 34 percent of its value in the past
six months.

“The block deal is positive in the sense, there is this
buyer who has got into the company at a premium, which means he
is looking at some value in the company,” the analyst said.

“So it would restore some confidence among investors in the
short term.”

(Additional reporting by Swati Pandey and Kaustubh Kulkarni;
Editing by Rajesh Pandathil)