GSS America Board okays acquisition spree

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GSS America Board okays acquisition spree

The GSS America board approved the acquisition of a company with revenue of USD 110 million. Bhargav Marepelly, CEO, GSS America Infotech said, “Assuming we are able to close this acquisition successfully, we will be raking in revenues of about Rs 1,000 crore depending on the timing.“

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Excerpts from Midcap Radar on CNBC-TV18 Watch the full show » ALSO READ See latest News about GSS Infotech See previous management interviews See what other Experts & Brokerages are saying about GSS Infotech GSS Infotech BSE | NSE 10/02/12 Are Mutual Funds betting on GSS Infotech?

The GSS America board approved the acquisition of a company with revenue of USD 110 million. The company will raise upto USD 75 million via ADR (American Depositary Receipt), GDR (Global Depositary Receipt), FCCB (Foreign Currency Convertible Bond) and QIP (Qualified Institutional Buyer) issues. It has deferred the issue of shares warrants to promoters. 

GSS is setting up an offshore development center in Hyderabad and will invest Rs 66 crore for the offshore development center. The center will be operational by Q3 FY09

Bhargav Marepelly , CEO and MD, GSS America Infotech said that the company clocked in revenues of Rs 500 crore with a PAT of about Rs 90-92 crore for FY08-09. "Assuming we are able to close this acquisition successfully, we will be raking in revenues of about Rs 1,000 crore depending on the timing."

 Excerpts from CNBC-TV18's exclusive interview with Bhargav Marepelly:

Q: Is USD 75 million the amount that you have decided upon and how close would you be to making this acquisition?

A: The resolution that got cleared through the Board is mostly for further acquisitions. The company that we are presently looking at has more than USD 100 million of annualised revenue. We have adequate funds that we raised in the primary markets in March to acquire that company. We see great opportunities for further acquisitions. The USD 75 million would enable us to basically cross that Rs 1,000 crore barrier and get to Rs 2,000-3,000 crore over a short period of time. For the second acquisition, we already have internal accruals and IPO funds will be close to about Rs 1,000 crore.

We are very close to making the first acquisition. An accounting firm is doing the due diligence. We are waiting for the observations from them. As soon as that comes we will be in a position to finalise that deal.

Q: This USD 75 million is for yet another acquisition besides this USD 110 million revenue generating company?

A: That is quite right. To acquire this USD 110 million revenue generating company that is based out of the US and a couple of other countries, we already have IPO proceeds and internal accruals to support the acquisition. This acquisition once completed will be our third acquisition in the last three years. We are extremely pleased with the last two acquisitions we did. The first acquisition was in April 2006, which had annualised revenues of close to USD 12 million. The second acquisition was in January 2008. We are very happy with that acquisition.

Q: What is the ballpark time that you are giving yourself; by when you will have bought this company? What does this do to revenues? What kind of revenue growth are you looking at in FY09 and FY10 when perhaps your synergies will be complete?

A: I will not be in a position to comment on the timeline because we are basically waiting for the accounting financial and customer due diligence recommendations to come from various firms. As soon as that comes, we will be in a position to take this to the next level.