Quality Engineering & Software Technologies Ltd or QuEST Global, a provider of diversified engineering services and manufacturing, is seeking to acquire companies in the $10-20 million range to enter new geographies. It will focus on entering low-cost locations for its engineering services vertical.
The engineering services company aims to raise $40-50 million, and is taking the help of Merrill Lynch to raise the required funds. The money will go into retiring its debts, and to ensure it has enough liquidity to fund its targeted growth.
The company had to pull back its investment plans last year when it had planned to invest $2-3 million as the market turned unfavourable. Meanwhile, this year the company is set to invest about $8 million on expanding its sales and operations.
The company aims to widen its footprint in Europe, especially Eastern Europe, South America, East Asia, India and South East Asia. Having gone through a bad phase in 2003 when it saw its revenues fall because of its excess dependence on a single client, GE, it decided to derisk its business to make itself “recession-proof” to put it in the words of Ajit Prabhu, CEO, QuEST. It has also been “focussing on long term contracts lately with an outlook of at least five years,” added Prabhu.
The $100 million company, which sees about 90 per cent of its revenues coming from engineering services, has about 1,800 people spread across India, the US, Italy, Spain, UK, Japan and France. The vertical had seen revenues of $78 million the previous year. Next fiscal the company aims to earn revenues of $120 million.
The company has now been focussing on contracts that have projects with long lead time. As part of its diversification strategy, it also aims to get into automotive sector in a big way. The company is expected see a margin of 15 per cent for year-ending March 2010.