The Hindu Business Line : Infotech Enterprises set for next phase of growth

Hyderabad, March 23 With the conclusion of the restructuring process, Infotech Enterprises Ltd has become a nimble and aggressive entity with focus on two broader areas--geographical information Systems (GIS)-based business and engineering design services.

The restructure has meant sub-verticalisation of the engineering services into five major areas of aircraft and aerospace mechanical and electronics (avionics), rail systems, automotives, marine and hitech including consumer electronics.

The Chairman and Managing Director of Infotech Enterprises, Mr B.V.R. Mohan Reddy, explained how the company transformation has led to consolidation phase.

It is on course to a Rs 1,000-crore revenue company, possibly by next year with a much diversified range of services.

Excerpts from interaction.

What is the strategy to take Infotech to the next level?

The company has been growing at about 40 per cent per annum over the last three years, all of it organically. This growth was achieved by a business-focussed distributed entity that has changed from a horizontal services delivery to a verticalised practice-led growth.

Of the two distinctly different areas of GIS and engineering Services, GIS has grown at a robust pace contrary to the general perception that the business would come down; business is coming from new geographies.

By getting closer to customers, we have strengthened our relationships and are farming out more business from them.

The Tele Atlas deal is an example which contributes $17 million worth business per year for three years valued at $51 million. More such deals are in pipeline.

Where do you see yourself headed?

Clearly, aerospace design and rail systems are leading the charge. The focus is on adding domain capabilities in areas such as automotive and marine. These could be complemented with some strategic acquisitions.

We have added one of the IBM veterans, Mr Don Kinkley. Leaders like him could make a big difference in helping us scale up.

What is the nature of your engagement with aerospace companies and engine manufacturers?

One of the large engine manufacturers is in the process of designing a new generation aircraft engine. They expect to deploy about 650 people over the next 24 months. About 150 Infotech designers are embedded in that team. This only reflects the nature of work we do with them.

Likewise, we are working with one of the world’s largest rail equipment company on design-critical components and are also exploring the possibility of offering them design and we could possibly even link up with product manufacturers.

Isn’t finding engineering talent with these skills a tough task?

It certainly is, but we have created good leadership with the capability to also groom the next line. We are also recruiting people and partnering with engineering colleges to build talent. We now have about 7,000 people and added about 2,000 of them last year.

On acquisitions

The company raised about $70 million cash during the first quarter of 2007-2008 and is now in pursuit of a couple of large acquisitions in the engineering design areas aimed at bridging some design capabilities, Mr. Reddy said.

“We were dormant for three years, but now feel it is time to make acquisitions to add new capabilities and also customers,” he said.

The Mergers and Acquisition Council within the company is actively in pursuit of some targets and could possibly close them by the second quarter of 2008-2009. These could be in the areas of automotive engineering services.

On expansion

The company has strengthened the corporate infrastructure by adding campuses in Hyderabad, Bangalore and Noida. “`After initial success with centres in the tier II city at Kakinada, we are also looking at more centres; Vizag could be the next one,” he said.