The Hindu Business Line : Virinchi Technologies acquires KSoft for $2.6 m

VIRINCHI Technologies Ltd, a Hyderabad-based IT products and services company, has acquired KSoft Systems Inc in a cash-cum-stock deal valued at $2.6 million (Rs 11.4 crore.)

The acquisition of KSoft is likely to be concluded by the third quarter of 2005. While the deal has got the approval of the company's board, it is subject to closing conditions.

The Chief Executive Officer of Virinchi Technologies, Mr Viswanath Kompella, said Virinchi's acquisition of KSoft brings together companies with complimentary strengths that will deliver greater value to customers. While enabling KSoft to enhance its services and add more clients, the acquisition also provides a US base to Virinchi and an offshore centre for KSoft.

Addressing a press conference here on Saturday after the boardmeeting, Mr Kompella said this would be managed through a preferential offer of shares and a 12 per cent dilution of the company's total equity of Rs 12 crore. However, the value addition will be in the form of revenues, which would nearly double.

"Last fiscal, while Virinchi recorded total revenues of Rs 18.3 crore, KSoft had revenues of Rs 18 crore. Together, we will be able to register total revenues of Rs 33 crore this year (with Ksoft's revenue contribution for six months)," he explained.

KSoft, headquartered in New Jersey, the US, has Nestle, HP, Gartner, Barclays and Fresh Direct among its clients and focuses on packaged solution implementation. The acquisition allows Virinchi to expand into SAP implementation, business intelligence and custom application development along with enterprise integration and software maintenance.

Mr Kompella said the company plans to expand operations both organically and inorganically.

The organic growth is being supported by a technology campus, which would come up in a 3.75-acre site. Canara Bank is funding this Rs 5.5-crore project.

As part of this deal, the company proposes to issue 1.25 crore preferential shares to part fund the deal and also allot shares to some strategic partners.

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Virinchi Technologies acquires KSoft for $2.6 m