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Our Bureau

New Delhi, Oct. 22 HCL Technologies — which is eyeing acquisition of UK-based Axon Group – has announced that it has received shareholders’ approval to borrow up to Rs 4,000 crore outstanding at any time, over and above the aggregate of the paid-up capital and free reserves of the company.

The company had convened an annual general meeting (AGM) on Wednesday to seek a shareholders’ nod for the same.

The HCL Technologies CEO, Mr Vineet Nayar, told Business Line that the company was seeking shareholders’ nod on the issue to create flexibility within the board to execute “attractive opportunities as and when they come up.

“We have said that we will be interested in three kinds of acquisition opportunities – tuck-in acquisitions, geographic acquisitions and transformational acquisitions. Also, we had stated that 2008 will be a year when we do acquisitions…What we are seeking from the shareholders is in line with the ongoing strategic thinking in HCL,” Mr Nayar had said.

A notice circulated to shareholders earlier this month, had pointed out that the company had grown substantially over the last three years “both organically and inorganically”.

“The company has been entering into joint ventures, setting up of subsidiaries and acquiring companies overseas. In order to achieve greater financial flexibility and optimal financial structure, the company may be required to borrow funds, which exceed the paid up capital and free reserves of the company,” it had said.

The move comes at a time when HCL Technologies has announced a cash offer of 650 pence a share for Axon, trumping an earlier 600 pence a share offer by its Bangalore-based rival Infosys. HCL Technologies’ bid values the SAP consulting company at about £441.1 million (about Rs 3,800 crore).

HCL Technologies has already stated that the proposed acquisition would be funded largely through loans (HCL Technologies has tied up £400 million from Standard Chartered), while the rest would come from internal accruals.

More Stories on : Software | HCL Technologies Ltd

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