| Under the agreement, Locuz shares will be converted into Choice shares at a fixed exchange ratio of 2 shares of Choice for each share of Locuz. The new entity will operate under the name Locuz-Choice Solutions Limited. |
| "The merger plan is yet to receive the approval of the regulatory authorities. Once this trajectory is completed, which is likely to take a couple of months, the combined entity is expected to have an equity base of between Rs 12 crore and Rs 14 crore on its balance sheet by the end of this fiscal," Vijay Kumar Wadhi, chief executive officer of Locuz, told mediapersons here on Thursday. |
| While Locuz has been a specialist in IT infrastructure solutions since inception in 2000, the 16-year-old Choice Solutions is an end-to-end solutions provider. Last year, Locuz registered a turnover of Rs 42 crore and Choice Rs 53 crore. |
| According to Wadhi, this synergy is expected to increase the financial strength of the combined entity to compete in large value deals, besides enabling it to increase its borrowing power in the market to fund its growth plans. |
| "The aggregate revenue of the combined company is expected to be between Rs 150 crore and Rs 170 crore by FY08 and it is expected that 75 per cent revenues will come from the enterprise solutions business and the remaining from IT services," he said, adding the combined employee strength will touch 600 by the end of the 2008 financial year. Currently, Locus employs 200 while Choice's headcount is 350. |
| Stating that the company plans to set up a global delivery centre in Hyderabad to cater to the international markets, which envisages an investment of around $4 million (Rs 16.4 crore), Wadhi said the company would rely on borrowings and internal accruals to fund the same. |
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