The Hindu Business Line : MphasiS plans to buy Chinese software firm

MphasiS will be the first Indian IT services company to buy-out a code-writing facility in China. "Necessary approvals for the proposed buy-out are likely to be put in before the regulatory authorities within a week and details on the deal size and its structure are likely to be announced post-approval," the Chief Financial Officer, Mr Ravi Ramu, told Business Line.

The buy-out was likely to strengthen MphasiS' position in the banking, finance and insurance vertical through deepening of domain expertise, analysts said. The financial services practice of MphasiS accounted for 54 per cent to its July-September quarter revenue in the current financial year.

There could be business commitment from Capital One itself, which could assure a healthy top-line flow, they added. However, the company declined to comment on future relationships with Capital One through Navion, citing non-disclosure agreement with Capital One.

Close to 85 Chinese engineers would come on MphasiS board, post-acquisition. "This gives us a gateway to the far-east,'' Mr Ramu said. The Navion development centre in Shanghai would be treated as an alternative offshore development centre as any of MphasiS' existing similar facilities in Bangalore, Pune and Mumbai.

The Chairman and Chief Executive Officer, Mr Jerry Rao, said in a statement that the new centre would additionally offer customers the option of choosing their offshore development location.

However, the Chinese centre is likely to primarily cater to the Japanese market, as there is a "comfort factor" of proximity to write codes for Japanese clients.

MphasiS derived 12 per cent of its revenues for the July-September quarter of the current fiscal from the Japanese market. The company currently develops software for a Chinese firm at one of its development centres in Bangalore.

The acquisition is likely to "save" MphasiS "one year plus" in its endeavour to set up operations in China. The company maintained that the Chinese local market would be "very important" and effective usage of "local resources and good pool of Chinese engineers" would help the firm grow business in that region.

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