The Hindu Business Line : Flextronics acquires Future Software

FLEXTRONICS, the $14.5-billion Singapore headquartered electronics contract manufacturer, has acquired the Chennai-based Future Software Ltd that provides software solutions to telecom firms globally.

It has bought the entire equity of Future Software.

According to Mr K.V. Ramani, Chairman and Managing Director, Future Software, the company would become a 100 per cent subsidiary of Flextronics. There would not be any change in the management of Future Software, he said. The deal, whose value was not revealed, was signed today, and the companies would approach the Foreign Investment Promotion Board and Reserve Bank of India for their approvals, he told Business Line.

Future Software made a marginal profit on revenue of $25 million for the year ended March 31, 2004, said Mr Ramani, who holds 55 per cent stake in the company. Intel and IL&FS hold 13 per cent each in the company; employees hold a 12 per cent stake and the rest is with minority shareholders. Employees of Future Software would get cash compensation and large shareholders, including Intel and ILFS, would get Flextronics shares, he said.

Flextronics' acquisition of Future Software comes close on heels of it acquiring a 55 per cent stake in India-based telecom firm Hughes Software Systems (HSS) and a $10 million investment in inSilica, a semiconductor design firm based in Bangalore.

The acquisition would help Flextronics fill the gap in telecom software design and embedded software, said Mr Ash Bhardwaj, President, Original Design Manufacturer Products Group, Flextronics. The acquisition is not to create a back-office for the company, but to create a front end from India. It (acquisition) was part of the company's mega plan in India to create a new organisation in the embedded software space, and Flextronics planned to make India itsglobal centre for software product design and infrastructure, he said.

According to Mr Bhardwaj, there was no overlap in business between Hughes Software and Future Software. The former is in the voice communication space and the latter in telecom networking and data communication. "In future, there may be business level integration between Hughes and Future Software, but not company level integration, since the former is a listed firm," he said.

When asked why Flextronics chose Future Software, Mr Bhardwaj said, it was the only firm available in the domain (software design), and in skills it was one of the best in the domain. "Through the acquisition we want to leverage India, and spearhead the company's mission to become a leader in telecom software product and services," he said. Globally, Flextronics employs about 1,00,000 professionals, and in India has a manufacturing facility in Bangalore. Its global customers include Microsoft (for Xbox), Ericsson (wireless base stations), Cisco Systems (routers) and Sony Ericsson (mobile phones).

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