Acer, which will set up a 100 per cent subsidiary in the country, will also appoint other channel partners to `complement' Wipro's operations.

In a move described as `delayering of operations', Acer's 45 per cent stake in the Rs 15-crore equity Wipro Acer Ltd will be picked up by Wipro which will merge the joint venture company into Wipro Infotech Systems and Services Group.

The consideration for the stake has not been finalised, Wipro Acer chief executive officer Suresh Vaswani told media persons in Bangalore. Acer Computer managing director York Chen was non-committal when asked about whether his company was looking for a premium on its share of the equity.

Wipro vicechairman Arun Thiagarajan said the move was aimed at delayering operations since Wipro Acer was a principal to Wipro Infotech and an added layer (between customer and brand) that translated into increased cost. The move would result in substantial cost benefits to the end customer, he said.

From a loss of Rs 3 crore the year before, Wipro Acer is expected to print its bottomline in black for fiscal 1998-99 on a projected turnover of Rs 280 crore as they close the books.

In 1998-99, Wipro Acer posted a 50 per cent growth against the 30 per cent overall market growth selling 55,000 units including Acer desktop PCs, servers and notebooks as also Wipro SuperGenius PCs. Of these, Wipro SuperGenius accounted for 24,000 units. Acer servers beat the market growth rate of 31 per cent with a growth of 66 per cent.

The marketing, manufacturing and logistics arm of Wipro Infotech, Wipro Acer will be merged with the group following a valuation of Acer's stake and a due diligence study currently under way.

WhileChen admitted that although Wipro would be one of its competitors, he said, "competition and cooperation can exist together". On entering the market on its own, he said all of Acer's overseas operations were through local channel partners in tandem with its subsidiaries.

Thiagarajan ruled out spinning off of the Wipro Infotech Group as a separate company and said the consultants appointed to draw up a restructuring game plan had made no such recommendations. He said they were in the process of suggesting ways of better reorganising the business operations of Wipro Ltd.

Ace move on brand-building

Acer has firmed up plans to set up a 100 per cent subsidiary to establish a "direct market presence" in the country for its operations that will cover brand building, technical support and logistics management. The company will shortly submit its proposal to the Foreign Investment Promotion Board, Acer deputy managing director Bharath Gopalakrishnan said.

Acer India will initially import completesystems from Singapore which will be reconfigured for the Indian market. Assembly and manufacturing will be taken up in phases after a 3 to 6 month time frame to stabilise operations. The subsidiary of the $6.5 b Singapore company will be headquartered in Bangalore with its manufacturing base proposed to be in either Chennai or Bangalore, Chen said. According to Vaswani, Acer has grown to occupy the No 2 slot among MNC desktops in the country.

While Acer will appoint other distributors to expand its base, Wipro too will be free to play footsie with other MNC computer brands, Gopalakrishnan said.