RPG Group keen to raise stake in Zensar

MUMBAI (Reuters) - Diversified RPG Group is keen to raise its holding in software services firm Zensar Technologies Ltd., its Chairman Harsh Goenka said on Friday.

"Zensar is one of our core businesses and we would not like to sell our stake in it," Goenka told Reuters on the sidelines of a conference called by Zensar.

In answer to a specific question he said, "Yes, we would like to increase our stake in Zensar." He, however, declined to give details of what stake the company was looking at.

The Economic Times newspaper had reported on Friday that Fujitsu Consulting, which holds 29 percent stake in Zensar, was "believed to have sold" its stake to the RPG group, which holds around 30 percent stake in the software firm.

"The RPG Group and Fujitsu have had a cordial relationship. We have been in talks for a long time and discussions are still going on. However, no conclusion has been reached on whether RPG is prepared to take over Fujitsu's stake," he said.

On being asked whether the valuation and the pricing was the issue, he replied, "In any discussions of this nature, isn't price always a major factor?"

"Under the terms of the agreement, we have the right of first refusal," he said when asked whether Fujitsu could sell its stake to a third party.

Zensar Technologies derived around 5 percent of its revenues from Fujitsu, which is one of its clients, he said.

Separately, Zensar announced its acquisition of U.S.-based ThoughtDigital LLC for $24.9 million, in an all-cash deal. This acquisition would give Zensar access to the eastern coast of the U.S., managing director Ganesh Natrajan said.

The acquisition is expected to impact the revenues of Zensar in the month of March 2007, he added.

Zensar also expects to end 2006/07 with a net profit between 530-560 million rupees and revenues of 5.75-5.8 billion rupees, Natrajan said. Its original guidance was a net profit of 500 million rupees on revenues of 5 billion rupees.

"We have already exceeded our guidance in early February, he said.

Shares of Zensar closed down 5.5 percent at 227.95 rupees in the Mumbai market, after hitting an intra-day high of 252 rupees.