Cambridge Technology plans more buyouts

Cambridge Technology Enterprises Limited (CTE), a Hyderabad-based provider of service-oriented architecture-based solutions, is looking at acquiring more companies that are engaged in the infrastructure management and customer application development space.

The company is currently in talks with 12 firms "� a couple of them in India and the rest in the US and Europe "� for acquisitions. It is looking at companies with competency in Oracle technologies and capabilities to de-risk business in the wake of the rapid fall of dollar.

The negotiations are at different stages, Bhaskar Panigrahi, chairman and chief executive of CTE, told Business Standard.

CTE, which raised Rs 24 crore through an initial public offer in early 2007, had recently acquired Q-Soft Systems and Solutions, a Bangalore-based managed services provider, for about Rs 13 crore. This is the third consecutive acquisition in this year for CTE. It acquired Bangalore-based ComCreation for Rs 14 crore and US-based Reilly and Associates for Rs 8.5 crore early this year.

"We have been applying a balanced 60:40 combination of organic growth and a synergistic acquisition strategy, and will continue to do so in the coming year too," he said.

Stating that the company had so far acquired companies in the range of Rs 10 crore to Rs 15 crore, he said they were now looking at deal sizes of up to Rs 40 crore, funds for which would be raised through debt instruments like FCCBs.

Also on the cards are listing of GDRs and ADRs on the London Stock Exchange and Nasdaq, he added.

"As part of our efforts to create a good balance of de-risking, we are looking at increasing our local presence in the European market and are scouting for the best target to acquire. US has been contributing 80 per cent to our total revenues with Asia Pacific accounting for the rest. Our idea is to reach an optimal revenue break up "� 50 per cent from US, 25 per cent from Europe and 25 per cent from the Asia Pacific," Panigrahi said.

On a consolidated basis, Cambridge Technology posted a net profit of Rs 3.36 crore for the third quarter ended December 31, 2007, as compared with Rs 1.39 crore during the same period a year ago, an increase of 142 per cent. Its total revenues grew 288 per cent to Rs 22.31 crore, as against Rs 5.75 crore in the corresponding quarter last year.

The company added 17 new customers during the quarter. Its customer base now stands at 100.