Tech Mahindra lines up Rs 350 cr expansion

Telecom service provider Tech Mahindra "� a joint venture between Mahindra & Mahindra and British Telecommunications "� has firmed up an expansion plan at a cost of over Rs 350 crore, which includes hiring of 7,000 engineers to expand its operations at Kolkata and Chandigarh.

The company expects to raise a significant portion of the funds from its proposed IPO, which is expected to hit the market in the second quarter of the current financial year. Tech Mahindra will offer 1.2 crore shares in its maiden public offer.

Part of the funds raised from the IPO will be used for its two units located at the special economic zone in Chandigarh and another at Bantala SEZ in Kolkata.

"The company will invest Rs 250 crore to develop our Tech Mahindra Technology Centre East at Kolkata. We intend to hire 5,000 software engineers for this centre and are in talks with 32 engineering colleges for the purpose," Tech Mahindra Vice-Chairman and CEO Vineet Nayyar said.

Nayyar said the company, which filed its red herring prospectus to the Securities and Exchange Board of India (Sebi) on June 21, was expecting to get the Sebi clearance by the third week of next month.

"The second centre will come up at Rajiv Gandhi Technology Park in Chandigarh with a capacity of 2,000 seats. The company will invest Rs 100 crore and employ 500 engineers in the first phase," he added.

Nayyar said the company was gradually reducing its reliance on British Telecom for clients and was expanding client base on its own in diverse markets such as Egypt, Qatar, Singapore and China.

In the last three years, the company's revenue has grown at around 30 per cent from Rs 742 crore in 2004 to Rs 1,245 crore in 2006. Its net profit has also increased from Rs 64 crore to Rs 235 crores during the period.