ICSA eyes Rs 100cr from oil and gas projects

ICSA (India) Limited, a Hyderabad-based embedded software solutions and technology provider, is eyeing a bigger pie of the oil and gas-related infrastructure sector in the country and abroad.

The company is in discussions with four oil and gas companies, both in public and private sectors, in India and Malaysia, for deploying its iCAP (intelligent cathodic protection) solution for the latter's pipeline projects.

It is looking at garnering Rs 100 crore revenues from these projects during the next financial year, G Bala Reddy, chairman and managing director of ICSA, told Business Standard, while refusing to name the companies that it was in talks with.

ICSA develops technology solutions for power, water, oil and gas sectors to identify transmission and distribution losses and monitor power and oil consumption.

It had earlier formed a 50:50 joint venture with Oil India Limited to explore opportunities in the oil and gas pipeline projects globally, besides deploying iCAP solutions for its 2,000-km pipeline network spread across Assam, West Bengal and Bihar. The JV had already completed work on the latter's 50-km network in Assam.

"The agreement with Oil India is non-exclusive, and therefore, we will pitch in for some of the proposed projects, like the 50-km project that we completed recently for Gas Malaysia Sdn Bhd in Malaysia, on our own," Reddy said.

The addressable market for aggregate technical and commercial losses control (AT&C) in India is currently pegged at Rs 50,000 crore. The 13-year-old company, which has patents for three projects, employs 460, of which 130 are dedicated to R&D. It has earmarked Rs 25 crore for R&D this year, as against Rs 17 crore last year.

Stating that the company was looking at taking the inorganic route to foray into US and European markets, besides strengthening its presence in Southeast Asia, he said they were in the process of acquiring a company each in these geographies.

"We are in talks with three companies that have a strong marketing network and expect to close at least two deals by the first quarter of the next fiscal."

The company would utilise part of the $46 million (around Rs 184 crore) that it had raised from global investment bank Goldman Sachs through issuance of FCCBs in 2007, to fund acquisitions.

"We currently derive 5 per cent revenues from our overseas business including Singapore, Malaysia, West Asia and Brunei. The proposed acquisitions would see our overseas revenues grow by 20 per cent during the next fiscal," Reddy said.

ICSA, for the nine-month period ended December 31, 2007, recorded Rs 89-crore net profit on revenues of Rs 465 crore. The scrip of the company, which went public in 1999, is trading between Rs 480 and Rs 500 on the Bombay Stock Exchange and the National Stock Exchange.