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T.E. Raja Simhan

Chennai, Nov. 2 Zylog Systems Ltd, the Chennai-based software company, will spend $17.5 million (around Rs 85 crore) in acquiring three overseas companies. It has acquired Ducont FZ LLC in Dubai, and will acquire two US-based companies — Teq Consulting and Fairfax Consulting — according to the company’s finance controller, Mr S.P. Srihari.

The acquisition of Ducont was completed a couple of weeks ago for $7.5 million. It provides mobile and wireless solutions for clients. Zylog will acquire 100 per cent of Fairfax for $7.5 million and 80 per cent stake in Teq Consulting for $2.5 million, he told Business Line.

Based out of Ohio, US, Teq Consulting provides ‘managed services’ in the areas of networking, maintenance of systems and servers. On the other hand, Fairfax, which is based out of Virginia, is a business content management company specialising in the pharma and healthcare sectors, he said.

Mr Srihari said Zylog would invest $10 million from its internal accruals, and raise the rest from ICICI. The three acquisitions will add over $16 million to Zylog’s topline, he said.

“While the company has been growing organically, we are also leveraging the present situation to find good companies at reasonable valuations for inorganic growth opportunities,” said Mr Sudarshan Venkataraman, Chairman and CEO, Zylog.

Zylog posted a 24 per cent increase in net profit to Rs 26 crore for the quarter ended September 30, 2008 compared with Rs 21 crore for the corresponding quarter last year. Revenue increased by 18 per cent to Rs 180 crore (Rs 152 crore). Software development expense was Rs 119 crore (Rs 98 crore).

For the fiscal ended March 31, 2008, Zylog reported a net profit of Rs 82 crore on revenues of Rs 605 crore, says a company press release.

More Stories on : Mergers & Acquisitions | Overseas Investments | Software

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