Mindtree has made two acquisitions, clocked record revenues in the April-June ended quarter and believes that it has momentum on its side to beat Nasscom’s growth estimates for financial year 2016.

The mid-size IT services company, at its April-June quarter results announcement, said that it will acquire 100 per cent equity interest in Bluefin Solutions, a UK-based IT company that specialises in SAP HANA technology, in an all-cash transaction for £42.3 million (₹419 crore). The deal includes an upfront payment of £34 million (₹336 crore) and earn out of £8.3 million (₹83 crore) payable over the next three years.

Further, Mindtree will acquire Relational Solutions, a US-based IT solutions provider that specialises in providing technology to the consumer goods industry for $10 million (₹63.5 crore). This will include an upfront payment of $7 million and earn out of $3 million payable over the next two years, the company said. Mindtree will absorb a total of 183 employees from both these companies as part of the deal.

Salary hike

The Bengaluru-based company also announced salary hikes of 9 per cent for offshore and 3 per cent for onsite staff, which is higher than some of its peers.

Both these buyouts will be funded through internal accruals. The cash position of the company stands at $130 million as of June 30 and does not include the acquisition costs, CEO and Managing Director KK Natarajan said.

Mindtree posted a 6.8 per cent jump in net profit to ₹138.2 crore in the first quarter ended April-June 2015 against ₹129.4 crore in the year-ago quarter. Revenues grew 17.4 per cent to ₹998.8 crore in the quarter under review against ₹850.8 crore in the year-ago quarter.

Natarajan also pointed to revenues of $150 million in the April-June quarter, a first in the company's decade-and-a-half history. “This momentum will help us to have a strong second quarter and beat the Nasscom guidance (12-14 per cent) for the IT sector.” While overall the company reported volume growth of 6 per cent, a deal pipeline totalling $208 million, growth of around 10 per cent in BFSI, there were some concerns. EBITDA margins went down to 17.6 per cent in reported currency, or 2.3 percentage points, mainly due to visa costs and cross currency volatility and Europe saw a decline.

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