The Hindu Business Line : Zylog Systems eyes global acquisitions

Chennai, Sept.11 Zylog Systems Ltd will spend $10 million (Rs 41 crore) from the recent IPO to acquire two or three small companies in the US or Europe, the Chairman and CEO, Mr Sudarshan Venkatraman, said.

The company had raised over Rs 575 crore through the IPO, issuing over 1.64 crore equity shares at Rs 350 each.

The Chennai-based IT company is looking at companies that specialise in providing software for the BFSI (banking, financial services and insurance) vertical, he told Business Line.

In the past, Zylog acquired five companies that contributed nearly 30 per cent of the Rs 270 crore revenue for fiscal ended March 2006. The company is targeting a net profit of around Rs 85 crore (Rs 55 crore) on revenue of around Rs 570 crore (Rs 400 crore) for the current fiscal, he said.

Mr Venkatraman said the acquisitions should be completed before December. Zylog is looking at companies to enhance the domain competence in areas like BFSI and telecom; expand service lines; obtain access to new markets/verticals and enhance technology footprints.

Zylog has over 250 clients including Barclays Capital, MCI Communications, United American of Tennesses, Admin Server, FTI Consulting, Pfizer, Volt Telecom, Fieldpower, Ahold USA and First USA Bank.

To these clients, the company provides software services inWeb application, mobile computing, enterprise management, testing, business intelligence, data warehousing and BPO (business process outsourcing).

Hiking headcount

Zylog plans to add over 2,000 employees in the next three years. As on March 31, 2007, the company had 968 employees compared with 719 a year ago.

The company will invest Rs 66 crore from the IPO proceeds to develop two offshore development centres with a capacity to seat 800 and 1,250 employees at Sholinganallur and Siruseri, respectively, he said.

On Tuesday, the company’s stock price closed at Rs 432.19, down by 1.22 per cent, on the BSE.

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