The Hindu Business Line : Three cos eyeing VisualSoft buyout

VisualSoft Technologies Ltd, a Hyderabad-based software solutions provider, is being evaluated by at least three companies, two of them Chennai-based technology companies and third, a listed entity Megasoft, for potential buyout.

Parleys with these companies are at an advanced stage and could potentially be sealed before this quarter-end, according to reliable sources.

Refraining from divulging the names of these companies, sources close to the deal said two of the evaluators were Chennai-based while Megasoft was also actively pursuing efforts for possible acquisition.

One of the most promising technology companies from Hyderabad, VisualSoft in the recent past has been slipping on performance. In fact, the trouble started after the failed merger of VisualSoft with the unlisted software testing solutions provider, Applabs.

Stock spurt

The company stock has, however, witnessed a significant spurt despite the company recording a bad quarter, with both its revenues and profitability nosediving.

Against a total revenue of Rs 188 crore during 2004-2005, it registered revenues of Rs 160 crore last fiscal (2005-2006). As opposed to a quarter revenue rate of Rs 35-40 crore, revenues dipped to Rs 17 crore for the quarter ended June 30. In fact, the merger plans between Visualsoft and Applabs did not materialise due to share swap ratio.

This delayed the merger process and both parted ways. While Applabs went on to secure additional funding through Sequoia Capital, VisualSoft was witness to significant changes in the overall shareholding pattern.

Mr Srini Raju of I-Labs in his individual capacity and acting in concert, picked up about 11 per cent stake. The SAIF Fund, an arm of SoftBank, has also picked up stake.

Strong service skills

The company has strong software services skills and has over 650 skilled resources. Of its total Rs 70 crore reserves , it has invested about Rs 50 crore in land and infrastructure for further development. It now has reserves of about Rs 20 crore and an order book of about $ 25 million.

From about Rs 120, the stock price witnessed huge volatility to reach a high of about Rs 266 and later slipped to around Rs 100.

With the Sensex dipping below the 10,000-mark and a failed merger to boot, it went down to a low of Rs 58.

Lately, the scrip has seen hectic buying and is now hovering around Rs 84.

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