HCL Perot to grow through acquisitions

NEW DELHI: HCL Perot Systems (HPS), the 50:50 joint venture between HCL

Technologies and Perot Systems, will take the path of acquisition to expand its

customer base. In April 2000, it had already acquired US-based Kay Software for

an undisclosed sum. HPS CEO Vineet Nayyar says that cash will not be a problem

since HPS has got "very rich parents". Since its acquisition strategy

is mostly driven by its need to expand its customer base, the targeted companies

are likely to be overseas companies although Indian firms that fulfill the

criterion will not be ruled out.

HPS has also rolled out a massive expansion exercise within the country. It

has already set up a development center in Bangalore and plans to set up more

centers in Noida, Hyderabad and Chandigarh. The geographic dispersion of the

centers has been deliberately planned with the aim of tapping local talent. HPS

has invested Rs 60 crore so far in the Bangalore facility, with the total

investment expected to reach Rs 130 crore. It has already acquired 25 acres of

land for the new center at Noida, which will see an investment of Rs 100 crore

and house 2,000 developers.

HPS focuses on three business segments: Finance, banking and

telecommunications with the major chunk of the business coming from the finance

sector. With 50 per cent of its revenues coming from the European market, HPS

has consolidated its presence in the region. Revenues from the US account for 45

per cent of the total with the Far East bringing in the rest.

The company plans an IPO sometime at the end of next year or the beginning of

the year after. According to Shiv Nader, president and CEO of HCL Technologies

and chairman of HPS, "The most likely route will be a listing on the Indian

bourses followed by an overseas listing. The company, which is currently

registered in the Netherlands, will need to change its registered office in that

scenario."

HPS which was founded in July 1996 has a current turnover of Rs 360 crore.

This is expected to increase to Rs 600 crore in the next fiscal ending December

2001. The phenomenal growth of the company has been attributed to the synergies

between the two business houses. While Perot Systems is established player in

the Western market, HCL Technologies has technical expertise and access to a

large pool of development talent.

Speaking about HPS’ performance, Ross Perot Jr., President & CEO of

Perot Systems, said, "HPS is a jewel in the Perot Systems crown. We can

take HPS anywhere and they perform better, faster and are more adaptable than

any of their competitors and our customer referrals for HPS are fantastic."