VXL to rope in strategic investor soon

The Rs 31 crore VXL Instruments Ltd will be shortly roping in a strategic equity investor into the company in an effort to augment the fast emerging thin client market.

Thin clients are computers with no hard drives, floppy drives, CD-ROM drives and are connected to a server which does the computing.

Speaking to Business Standard, VXL Instrument CEO Tim Goldring said: "We intend to finalise the deal with a global channel player in the next two months for infusion of equity into our business. We are poised for exponential growth over the next couple of years, and this investment and expertise by a global channel player will help us both in expanding our reach in global markets and also help us stabilise our balance sheet."

It is learnt that the company is looking at raising around Rs 15 crore during this infusion of funds.

Detailing the need to go in for funding, Goldring said: "It is imperative we manage our debts in a better way and this infusion will aid in that. We intend to halve our debt, which is around Rs 21 crore, in three quarters with this and also by the prospect of increasing sales of our Thin Clients. This sector has tremendous potential and we need to tap into it and leverage the inherent strengths. We are sure that the acceptance of TCs is bound to increase in the near future and we are ready to ride the crest of it."

"We should be seeing a desktop liberation shortly which will fuel this sector's growth. Customer reluctance to relinquish the user-controlled desktop is beginning to wane, given the huge benefits thin clients offer, particularly in today's difficult economic times. The extent of thin client penetration into the business desktop market as a whole is becoming significant, and if current trends continue, in two years time the market will be characterised as 'beyond early adopter' and 'beginning mainstream'," added Goldring.

Added an industry analyst: "The case for thin client alternatives to PCs is becoming stronger, and there is evidence for greater demand driven by customers with less push required by vendors. The products and the infrastructure are now mature, and a commoditisation is taking place in the industry, with, for example, more microchip manufacturers entering the market."

Added Goldring: "During 2003-04 we should be delivering in excess of 70,000 units compared with 18,000 last year. During the next fiscal (2004-05), we plan to deliver around 200,000 units. We have enquires form large and very large organizations world wide for roll out projects of 20,000, 40,000 and 60,000 units. This could be exceeded. It should also be understood that by redesigned the products, reducing the supply chain and simplifying manufacturing, our capacity has gone from 100,000 units p.a. to almost 600,000 units with little or no increase in cost."

The company during FY03 reported a net loss of close to Rs 4 crore and it has managed to turn around to post a marginal profit of Rs 14 lakh for the third quarter ended December 31, 2004.