MphasiS to acquire Kshema Tech for $40-50 million

MphasiS BFL Ltd is close to acquiring Kshema Technologies for around $40-50 million. MphasiS is expected to take the decision in its forthcoming board meeting on February 26. Both the companies declined to comment.

Said Ravi Ramu, chief financial officer of MphasiS, "I cannot comment on this. We are having a board meeting in New Delhi on February 26 for strategic reasons."

Kshema Technologies chief executive officer Anant R Koppar declined to comment, but said as many other companies, "we are also looking to grow and gain scale."

Kshema, for the fiscal 2002-03, reported a turnover of Rs 58.63 crore with a net profit of Rs 7.8 crore and currently employs 400 professionals.

Sources close to the issue said this will be a total merger of these two companies and will be through a stock swap.

MphasiS currently employs around 6000 professionals across its software engineering services and also its BPO subsidiary MsourcE.

The company, for the third quarter ended December 31, 2003, reported revenue of Rs 148.6 crore and returned in margins of Rs 28.5 crore.

"MphasiS is acquiring Kshema for their technology strengths and expertise in healthcare, life sciences and industrial automation which involves a lot of embedded software," the sources said.

MphasiS, on the other hand, is vertically focused on financial services, retail, logistics and transportation and technology which relates to work done for IT companies, both hardware and software.

In 1998, Jerry Rao left Citicorp to start Mphasis Corporation, a California-based software company that subsequently merged with BFL Software in 2000 to form Mphasis-BFL.

The key investors in the company include ING Barings and Chrysalis Capital.

Kshema was started in 1997 with investments from Global Technology Ventures which currently holds 46.18 per cent.

During January 2003, Kshema divested 30 per cent stake to Singapore Computer System for $9.2 million.