Edserv Softsystems eyes 60% topline growth this year

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Edserv Softsystems eyes 60% topline growth this year

Edserv Softsystems will raise up to USD 35 million through a GDR. S Giridharan, Edserv Softsystems said, the company had initially given a 50% top-line growth guidance. “But now that the GDR has been finalised, we would like to increase that by 10%. So, 60% growth could be expected compared to the last financial year,” he added.

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Edserv Softsystems will raise up to USD 35 million (nearly Rs 155 crore) through a global depositary receipt (GDR) issue to fund expansion plans.

In an interview with CNBC-TV18, S Giridharan, chief executive officer of Edserv Softsystems said, the fund raising is going to dilute around 40-43%.

He further said, the company had initially given a 50% top-line growth guidance. "But now that the GDR has been finalised, we would like to increase that by 10%. So, 60% growth could be expected compared to the last financial year," he added.

Also read: Edserv to raise up to USD 35m from overseas through GDRs

Below is the transcript of his interview with CNBC-TV18's Latha Venkatesh and Gautam Broker. Also watch the accompanying video.

Q: Can you take us through the resolution to raise USD 35 million through GDR issue? What will this money used for? Why this choice of an instrument?

A: The board has approved the company to raise up to USD 35 million. The proceeds of this fund will be to fuel the revenue to grow to the next level. The strategy is also to focus on global reach. This is the time for us to move out, having got the pan India presence as well as to grow in pan India. So, the investments are more on infrastructure, services systems and school wherein everywhere, with our own business drivers, we are going to grow much better.

Q: At today's price, how much will your equity dilute, if you were to issue fresh GDRs for USD 35 million?

A: It is going to dilute around 40-43%.

Q: Will you buy another company, that's a substantial dilution?

A: Not really. In fact the pricing and the market conditions have probably given us kind of this dilution. But nevertheless the kind of fund that we are getting will be utilised for the company expansion.

Q: Once the organic expansion kicks in, what kind of a top-line growth are you assuming? I believe you are guidance is 60%. Would you like to up that?

A: We had given 50%. But now that the GDR has been finalised, we would like to increase that by 10%. So, 60% growth could be expected compared to the last financial year. Going forward, with the full impact of this funding and expansion, you could even expect better growth in the subsequent year.