MBT to float IPO in Jan. 2001

PUNE: Mahindra British Telecom (MBT), a joint venture between Mahindra and

Mahindra (M&M) and British Telecom (BT) will enter the equity market with

its initial public offering in January 2001.

The software house has already set into motion the process of filing its

documents regarding its IPO with the Securities and Exchange Board of India (SEBI)

before October 15 since the issue is slated to open early next year.

It will offer 10 per cent of its equity via the public offer, 90 per cent of

which will be through the book building route while the balance 10 per cent will

be a retail offer, said its CEO Kiran Deshpande, adding that Kotak Mahindra will

be the lead book runner for the IPO.

The proceeds of the IPO will be utilized for the acquisition of software

companies both in the domestic and overseas markets and some portion will be

utilized to expand MBT's overseas activities. "The IPO will be used to fund

our inorganic growth. The issue will also help in creating currency for the

stock, as post-IPO five per cent of the stock will be held by the employees,

through ESOPs," Deshpande said.

While the two promoters will hold 85 per cent, the exact proportion is to be

decided after working out the primary and secondary holdings. The public will

hold 10 per cent. The company will be listing its shares on the Bombay Stock

Exchange and the National Stock Exchange.

Meanwhile, MBT is actively exploring the possibility of obtaining new

customers from new regions in order to reduce its dependence on British Telecom.

Although 75 per cent of its business now comes from British Telecom projects,

there are plans to reduce this to the level of 55 to 60 per cent in the next few

years.

MBT has already opened an office in Sydney in a bid to tap the Asia Pacific

market. Another office is planned at Singapore shortly. Deshpande was upbeat

about the possibilities of the Asia Pacific market and predicted that the

information technology services business is expected to grow fastest in this

region at around 25 per cent per annum as compared to the US market which grows

at 16 per cent per annum.

The company reported a total income of Rs 240.32 crore for the year ended

March 31, 2000, as compared to Rs 175.18 crore for the previous year. Profit

after tax rose to Rs 63.03 crore for March 2000 from Rs 55.25 crore in the

previous year. Deshpande said that the company's income was likely to grow by 45

per cent for the year ending March 31, 2001.