Axis IT&T to acquire Cades Digitech

Axis IT&T, a publicly held engineering software services firm owned by Rajya Sabha MP Rajeev Chandrasekhar, has finalised and approved the acquisition of 51 per cent in Bangalore-based Cades Digitech, a niche product design and engineering software services firm.

Industry sources close to Cades detail that the transaction is valued at close to Rs 75 crore. Axis is understood to be acquiring a 51 per cent control initially and will subsequently increase its stake to 100 per cent based on certain milestones.

Cades provides product design, engineering and R&D services to aerospace, defense, automotive, transportation & energy sectors and has Infosys co-founder N S Raghavan’s private equity fund as one of its major investors. Cades has more than 60 customers including the global clients like EADS / Airbus, Boeing, Fokker, Nissan, Volvo and Mercedes Benz.

The Cades team has product design and development expertise that includes design, analysis, simulation, multi-body dynamics, virtual prototyping and testing, manufacturing engineering, product data management and technical documentation. Industry estimates indicate that Cades has a topline close to Rs 50 crore and has projected to grow by around 20 per cent during 2009-10.

Cades is part of the Airbus’ preferred partner in India along with HCL, Infosys, TCS, Tata Technologies and Wipro, all of whom provide Airbus with engineering and/or IT services to design and support its aircraft.

AXIS-IT&T is an engineering design service provider, with over twenty years experience in delivering product design, 3D modelling, detailing and assembly, finite element analysis, reverse engineering and conversion of legacy drawings. With the move to acquire Cades, Axis gets niche expertise in aviation product design lifecycle.

Axis IT&T is part of Rajeev Chandrasekhar’s Jupiter Aviation which is working on building the entire value chain for aviation industry. Right from designing software for the aviation industry, Jupiter Aviation is putting through the links for aircraft maintenance, repair and overhaul, training and also building a aviation SEZ and an airport at Hassan district of Karnataka. Axis IT&T was acquired by Chandrasekhar nearly two ago ago.

In the recent past, the aviation software services industry has been attracting a lot of interest. The interest stems from offset obligations of aerospace suppliers in both the defence and civil aviation sectors.

According to a Nasscom and Booz Allen Hamilton report, offshoring of engineering services is expected to create opportunities of $40 billion for the Indian IT industry by 2020. The study said that India is well-positioned to increase its market share of engineering offshoring from the present about 12 per cent to 30 per cent by 2020.

The Indian engineering services, however, is dominated by the top IT players. According to a report, the top 15 Indian IT firms account for 93 per cent of the engineering services exported by the India-based engineering services firms. India’s top IT services firm, TCS, leads the list, followed by HCL.

Other than the broad-based IT services firm, specialised players like Infotech Enterprise, Quest, Geometric and Neilsoft; and the design arms of Indian engineering companies like Tata Technologies, Mahindra Engineering Services and L&T Infotech also contribute significantly to engineering services exports.