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Mr V. Ramachandiran (right), Chairman, Helios & Matheson, and Mr G. K. Muralikrishnan, Managing Director, at a press conference in Chennai on Tuesday. - - Bijoy Ghosh

Chennai , April 12

CHENNAI-based software firm Helios & Matheson will acquire vMoksha, a Bangalore-based software company, in a $19-million (Rs 85.5 crore) deal, according to Mr V. Ramachandiran, Chairman, Helios & Matheson.

The purchase includes $17 million in cash and $2 million earn-out for achieving targeted financial milestones over a two-year period, in the deal for which PricewaterhouseCoopers acted as advisors, Mr Ramachandiran told reporters.

Helios & Matheson will acquire vMoksha's three profit making entities in Bangalore, Singapore and the US.

Mr Pawan Kumar, vMoksha's founder, will continue to be the company's CEO, and the 510 employees of vMoksha will be part of Helios & Matheson, said Mr Ramachandiran.

vMoksha reported a net profit of $1.7 million on revenues of $15 million last year, and expects a profit of $3.25 million on revenues of $22 million this year. It brings with it 25 clients, including IBM, PeopleSoft, AIG and American Express, he said.

vMoksha has a strong presence in healthcare, which fits well with Helios & Matheson's focus. Healthcare contributes about 35 per cent of Helios & Matheson's revenue, which was Rs 85.86 crore for the nine months ended December 31, 2004, and is likely to be Rs 120 crore for the fiscal ending March 31, 2005, he said.

vMoksha has a strong client relationship with European majors. Europe is an important market for Helios & Matheson. For the next two years, vMoksha would retain its brand, operate as a stand-alone entity, but could be integrated with Helios & Matheson at a later date, said Mr Ramachandiran.

According to Mr G. K. Muralikrishnan, Managing Director, Helios & Matheson, the company hopes to achieve revenues of $100 million in the next 24-36 months through a combination of organic growth and acquisitions. The company plans to have about 2,000 employees by 2006-end, from 728 now, he said.

A press release by Helios & Matheson quoting Mr Pawan Kumar, the former President of IBM Global Services in India, said the merger was a perfect fit. Size is critical for IT services companies and with this marriage, "we can rapidly expand our client base and access bigger opportunities, resulting in a win-win situation for all stakeholders."

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