The Hindu Business Line : Patni eyes strategic buys, expansion

POST-IPO, the Mumbai-based Patni Computer Systems plans to make strategic investments on acquisitions, infrastructure development, employee ramp-ups and reduce its exposure to GE by growing its marquee client base.

"Prior to the IPO itself, we were in a comfortable position due to internal accruals and profitability with cash reserves of $80 million. With the IPO, we mopped up close to Rs 9,500 crore and some of these would be ploughed into strategic investments," Mr Deepak Sogani, CFO, told Business Line.

The public issue was oversubscribed 22 times. It is largely due to the IPO that Patni is "not averse to a reasonable transaction (read $7-10 million) but we have no hang-ups in acquiring a company even in the $30-40 million range if it fits in with our growth strategy. We are currently evaluating companies in the Asia Pacific (includes India), US and Europe," Mr Sogani said.

According to Mr Vijay Khare, Senior Vice-President, the acquisition would be a strategic fit that complements the verticals Patni specialises in along with the domain expertise.

While its exposure to GE, Patni's largest client, has consistently reduced over the last two years, the firm is consciously increasing its non-GE customer portfolio.

Currently, GE accounts for 36 per cent (nearly $76.8 million recorded for the nine months ended September 30, 2003) of the company's business compared to 50 per cent in 2002. Earlier, Patni had aligned its strategic business units (SBUs) around geographies that the company operated in conjunction with the sales and marketing teams.

Now the SBUs are aligned around industry verticals such as insurance, manufacturing, banking and finance and some of the SBUs horizontally span across industries aligned on the domain expertise.

The verticalisation strategy had helped Patni bag clients like State Farm Insurance, Mr Sogani said. Interestingly, the IPO has enabled Patni to initiate scaling up of its infrastructure.