Infotech readies itself for offset opportunities

Hyderabad-based Infotech Enterprises, a provider of engineering design services, is readying itself to tap the opportunities both in the civilian and defence sector, the company's chairman and managing director B V R Mohan Reddy said here on Wednesday.

The company, which recently formed a 50:50 joint venture (with a combined investment of Rs 28 crore) with Bangalore-based aerospace supplier HAL, is positioning the JV "� Infotech HAL Limited "� to address the offset opportunities.

The JV, which aims to earn revenues of around $70 million and employ about 2,000 people by 2010, has already started looking for projects in engineering designing, technical publication and offset sectors.

In the first year of its operations, Infotech HAL Limited will grow to about 200 people, said Reddy.

"We are giving the final shape to our plans, and very soon we will be having a CEO to handle the JV. It would be operational by the end of the present fiscal," he added.

For the civil aviation procurements, Infotech is already in the list of offset vendors for the Airbus-Air India and Boeing-Indian Airlines deals expected to be in the range of $3 billion. Infotech Enterprises is a key supplier to both Boeing and Airbus. "They have shown us in their offset credit, based on their past engagements with us," said Reddy.

However, in the defence sector, since the procurements are yet to happen, the company is anticipating good orders to start flowing in, in the next 18 months. Industry sources say that defence procurements to the tune of about $15-$18 billion are expected to happen in the next few years.

Infotech, which reported a revenue of Rs 542.54 crore during the previous fiscal, recently diluted about 13 per cent stake to General Atlantic Partners for $75 million.

The company now has a cash reserve of about $100 million to which it aims to invest in making acquisitions in automotive and hi-tech, consumer and medical electronics (HCM) space.

The acquisition, which will be of the size of over $10 million, might happen by the end of the present quarter, either in the US or in the UK. At present, 29 per cent of Infotech Enterprises' stake is held by the promoters group, followed by 14 per cent by Pratt & Whitney and about 13 per cent by General Atlantic.

Meanwhile, Infotech Enterprises has consolidated its operations in Bangalore at a new facility in Electronic City. Built with an investment of Rs 40 crore, the new centre will enable the company to integrate its three development centres in the city.