DSQ Software plans preferential allotment

CHENNAI: DSQ Software Ltd. said on Wednesday it received shareholder approval

for a preferential issue of up to 10 million shares to be used to acquire

software companies in the United States and India.

Managing director Dinesh Dalmia told reporters after a shareholders meeting

that the company planned to use the new equity - to be allotted at a price of

about Rs 500 per share - in a series of cash-cum-stock acquisition deals.

Dalmia said DSQ Software planned to spend a total of up to Rs 15 billion

($322.3 million) this year to acquire a clutch of software firms to become one

of the five largest Indian software companies by revenue.

"Our aim is to push our company among the top five Indian software firms

from its current position among the top 10. We cannot achieve that only by

organic growth and so we got our shareholders' nod for the acquisitions,"

Dalmia said. He said the firm hoped to finalize deals to acquire two to three

US-based software services companies in the next seven to 10 days.

"These firms are typically of $30 million to $100 million in size and

serving niche areas for Fortune 100 clients, making profits and having no debts

and our aim is to buy them through cash-cum-stock deals, increase the engagement

size and move the projects offshore."

Dalmia said the acquisitions would help DSQ achieve sales of Rs10 billion

($214.87 million) in calendar 2001. "We have now benchmarked ourselves

against some of the top Indian software firms such as Infosys, Wipro and Satyam

and this strategy of ours will help boost our margins also significantly."

San Vision still in focus



Dalmia said that e-commerce solutions provider San Vision Technology Inc was
still the firm's most preferred choice among the four to five US firms that it

was eyeing for acquisition. In December, DSQ said it was renegotiating the price

for buying San Vision, from the $30 million in stock it had said it would spend

when it originally announced the deal in July.

"San Vision is still our most preferred choice today and we are still

finalizing the valuations for the purchases, where we are looking at firms in

places like San Jose or New York where we already have a base," he added.

(C) Reuters Limited 2001.