Cognizant Technology Solutions Corporation (CTSC) plans to deploy a substantial part of the proceeds of its $ 22 million initial public offering (IPO) in the United States in India.
According to Lakshmi Narayan, president, CTSC, India,"After repaying loans taken from its parent company, CTSC will invest 50 per cent of the remaining IPO proceeds in expanding its software development facilities here."
"A total investment of about Rs 20 crore is likely to be made in the Indian operations before the end of 1999," he added.
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Cognizant Technology Solutions Corporation operates in India through a 100 per cent subsidiary - Cognizant Technology Solutions India Ltd (CTSI)
CTSI had started off as a 76:24 joint venture between Cognizant and Satyam Computer.
Cognizant had recently brought out Satyam's minority stake in the joint venture for $3.5 million.
CTSI plans to expand operations in Chennai, Calcutta and Pune where it already has some facilities. Proceeds from the IPO made by its parent will also be used to upgrade technology, hardware and communication facilities in CTSI.
The company is confident of recording a 100 per cent growth in revenues over the next two years. "We expect a growth of atleast 50 per cent per year even after 1999," Narayan said. CTSC had recorded revenues of $22.9 million during the first six months of 1998.
Cognizant Technology Solutions Corporation's initial public offering comprised 29.17 lakh class A common stock priced at $10 per share. The stock is now quoting at $18 per share. "CTSC made its IPO along with 375 other companies in June this year. About 50 per cent of these companies are quoting below par. Only five per cent have recorded gains of over 50 per cent over the offer price and CTSC is one of them," Narayan said.
CTSC has also issued dollar-denominated stock options of its parent company to its employees in India. "We were one of the first companies to have approached the Reserve Bank ofIndia for permission to issue dollar-denominated stock options to our employees in India," Narayan said.
CTSC also plans to leverage the funds raised via the IPO to fund acquisitions. "The IPO has given us the money and the capability to look at acquisitions, partnerships and alignments with like-minded companies," Narayan said.
"We are talking to a few companies for possible acquisitions or alliances," he added. Narayan, however, said that there were no acquisition plans in India.
