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Mr Jeya Kumar

Our Bureau

Chennai, Nov. 6 Patni Computer Systems Ltd plans to spend $200-400 million in acquiring an IT company that is into EAI (Enterprise Application Integration) space and specialising in the insurance industry. “We plan to close a deal in the next three months,” said its Chief Executive Officer, Mr Jeya Kumar. “There are a couple of assets we are looking at. For one we have issued term sheets,” he told newspersons on the sidelines of a symposium.

“We are in active discussions with the two companies, but the size of acquisitions is big and it is not something that you go shopping for. It will be a cash deal and the target company will have around 10,000 employees. It is stuff that you work through, work your due diligence through and we are working on them right now,” he said at LIBA Insight 09, a national management symposium on ‘Riding the New Wave: Emergence of New Business Models’.

The Mumbai-based software company will look at acquiring standalone companies and not at captives. “We are looking at a target company that is non-US or non-UK. It is quite broad-based. Not buying anything that we do not have, but stuff that we can scale our business (with),” he said.

As of third quarter ending September 2009, Patni’s overall cash and cash equivalents, including short-term investments (post-revaluation) were at $379.9 million compared with $347.6 million at the close of second quarter. Revenue for the quarter was Rs 804 crore against Rs 852 crore in the corresponding previous period.

On reports of General Atlantic exiting the company, Mr Kumar said, “They are a private investment company and will exit through the open market at the right time and for the right value. It is their choice and you need to check with them.” General Atlantic, which owns 16 per cent in Patni, has been with the company for more than six years, he said.

“I think de-growth has stopped and a lot of us are seeing the growth coming back. But the growth is pretty much shallow. Last two quarters we have done 3.5 per cent and 3.3 per cent. That is about what we are seeing. But I think growth is coming back much slower.”

Mr Kumar said the biggest challenge that the IT industry will face next year would be talent management. While the industry has shed around 2.10 lakh engineering graduates, next year about 4.20 lakh engineering graduates will pass out of colleges. This leaves the industry with a talent pool of nearly 6.30 lakh graduates who would be available for absorption.

“There is going to be a major supply situation. The absorption (by the industry) will be much slower than what it used to be. It will be a function of growth and one of those things that we have got to work through,” he said.

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