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NIIT to acquire company in US

NIIT is all set to cement its disparate presence in the US markets. And what better way to do it but to acquire a medium sized company in the US itself.

NIIT has international revenue of nearly Rs 3.12 billion in fiscal 1997-98 of

T O D A Y

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which the US contributed Rs 1.35 billion.

It is now on the lookout for a medium sized software company with around 400 odd employees and nearly $50 million in terms of revenues that would give the company access to US markets.

NIIT President and CEO Vijay K Thadani revealed "Our choice is limited to companies handling projects with fixed prices. We would like the companies to be involved in technology areas like e-commerce and Net centric applications."

"We have a short list of 15 companies. But it is not a closed list. We have people from the banking sector always recommending other companies," he said.

NIIT is ready to part with $70-75 million with an upper limit of $100 million for a company with a profile that fits their needs.

The money for the acquisition would be raised through long-term loans and cash reserves of NIIT would be utilised.

Thadani did not completely discount the possibility of going for American depository receipts and global depository receipts to raise money for the acquisition.

"We have decided that ADR does not make sense. If you raise money because you want to go in for an acquisition then it gets discounted badly. You have to pay for the ADR by stock or mezzanine capital," he said.

The NIIT slogan for fiscal 1998-99 is 'worldwide wealth'. "Wealth in the physical theme is rupees or dollars. But being in the business of knowledge wealth is not depicted just through our balance sheet. Our wealth is a variety of wealth like idea wealth, human wealth, trust wealth, knowledge wealth, technology wealth and emotional wealth. So we cheated with the term World Wide Web to coin our theme for this year," Thadani told reporters today.

These wealths cannot be destroyed like money wealth and are the real wealths of NIIT, he added.

Thadani presented the audited results of NIIT for October 1997-September 1998.

He boasted that the education model they have chosen has been successful and has been recession proof. "Our education model is similar to that of a medical college and a hospital where the students and hospital coexist with the students getting the benefit of practical experience in the hospital and the hospital getting professional trainers like interns, residents and doctors," he elaborated.

Thadani said that NIIT's worldwide revenue has increased to 48 per cent, which a few years back was 0 per cent. The software business recorded revenues of Rs 2.71 billion representing a growth of 52 per cent. Training business grew by 40 per cent to touch Rs 2.56 billion and multimedia business grew at 77 per cent to touch Rs 1.19 billion.

He explained that this was not due to a slowdown in the domestic market but a lot more opportunity being present in the world.

Thadani claimed that "Despite the recession in the Asia-Pacific region, the fact that NIIT could do well tells of a success story and proves that the model which we have implemented is recession proof."

NIIT global revenues were up by 51 per cent to Rs 6.48 billion from last year's Rs 43.07 billion, while net profits were up by 60 per cent.

NIIT Managing Director Rajendra S Pawar said that "Given the current economic scenario, we will have to work much harder and become more innovative to maintain our record."

On plans for the next five years, Pawar refused to get into the details. "We have not fixed any number on revenue beyond a certain time. We want to grow first in terms of quality before getting into numbers."

NIIT projects a growth rate of 35 per cent per annum for the forthcoming year.

To another question on how the company would project itself by 2005, Pawar replied that the company would definitely have a different shape but what the shape would be he cannot tell at the present juncture.

There would be a lot more projects and the main content would be education, he added.

When asked about the biggest challenge to the company, Pawar replied that it would be managing people from different cultures since the company has presence in 25 countries round the world.

"NIIT has 18 wholly owned subsidiaries round the world. This is to ensure that we have a local face while having a global presence. So our training institute in Shanghai or say in Indonesia is completely staffed by native Chinese or Indonesians," Thadani emphasised.

The other challenge for the company would be managing the process of growth and people and handling the next stage of recession.

Earlier, the audited accounts for the year 1997-98 were presented to the reporters.

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