Nexxoft plans 2 acquisitions in US

Nexxoft Infotel Limited, a Hyderabad-based company engaged in 3D technologies, games, radio frequency identification (RFID) and people tracking solutions, is in the process of acquiring two companies based out of the US by the end of the current financial year.

“We are already in talks with four companies in the US, and are planning to acquire two of them. We want to take a customer-centric approach with these acquisitions to solidify our presence in the US market. While one of the target companies will come into our fold by December, we expect to close the other deal by March 2011,” Rakesh Joshi, chief financial officer of Nexxoft, told Business Standard.

The company’s board of directors would freeze on the total consideration of the proposed acquisitions shortly, Joshi said, adding Nexxoft was expecting the two buyouts to contribute close to 25 per cent to its revenues starting next financial year. “The company has enough cash reserves to fund the acquisitions.”

“Our board had recently decided to open a subsidiary in the US to fortify our customer servicing, besides appointing value-added resellers. Similar plans are on the anvil in Europe and will be finalised by the board this month end,” Joshi said.

Stating that the serious gaming market is projected to touch $49 billion by 2011 globally, from $11 billion in 2007 according to a PwC study, he said, the company wanted to leverage this next wave with its full suite of 3D gaming solutions.

“We have developed a new 3D platform, similar to that of Microsoft Design Studio. We are gearing up to launch this product on August 15, 2010, and are basically targeting the US animation and advertising sectors,” Joshi said, adding the company had developed its own game – Black Marsh – with an investment of over Rs 1 crore for XBox 360 that would will be released by this December.

Stating that the company currently had an orderbook of Rs 90 crore, which is expected to touch Rs 100 crore this financial year, he said the company was targeting to garner revenues of Rs 35 crore from its 3D simulation business this year, as against Rs 19 crore last year, with the rest coming in from its ERP and supply chain management solutions.

“Of this, 70 per cent is expected from the US and UK markets, and the rest from India,” he said.

Nexxoft, which reported revenues of Rs 70.54 crore last fiscal, expects a 40 per cent growth this fiscal. Its scrip ended the trade at Rs 112.05 on the BSE on Wednesday, up 4.96 per cent over the previous close of Rs 106.75.