Noida-based IT company FCS Software Solutions has charted an ambitious expansion plan and is scouting for strategic investors with whom it can do a private placement of shares and raise funds needed for acquisitions.
The privately-held company is already in talks with a few venture capitalists (VCs) and expects to finalise an agreement with more than one VC by October this year. The company is also considering an initial public offer (IPO) to raise funds when the market conditions are more conducive.
"The company is open to fresh equity infusion or dilution of promoter's stake in favour of the strategic investors to raise additional funds", said FCS Software managing director Dalip Kumar.
Kumar holds over 99 per cent equity stake in the company. He said he was not dis-inclined towards diluting even majority stake in favour of the strategic investors as long as the funds could be finally deployed in the company.
"We are looking for people who not only bring the funds but also their management experience and expertise in similar IT ventures on board", said Kumar. The company is more inclined towards raising strategic investment than launch an IPO, he added.
The debt-free company, which has reserves to the tune of Rs 21 crore, faced valuation problems when it made an attempt to acquire a small IT firm in the US. FCS Software did not succeed in acquiring the company with $6 million turnover due to paucity of funds.
Post-strategic investment, it expects to finalise acquisition of at least one small US company which has a good local client portfolio but is not profitable due to huge over-heads. "We intend to buy such a company and shift the development center to India to cut costs by half", said Kumar, adding that such companies are being identified in which the business models can be successfully run from India.
FCS Software posted over 45 per cent growth in turnover during 2003-04 to Rs 64.15 crore as against Rs 43.86 crore in 2002-03. Its net profit jumped substantially to Rs 7.19 crore during 2003-04 from Rs 1.1 crore in the previous fiscal.
The company expects to end the current fiscal with almost the same growth rate. "We hope to do a turnover of Rs 90-95 crore", said Kumar.
However, the company's turnover may go up substantially if it manages to grow inorganically through the proposed acquisitions. The company plans to set up a 400-seater software development centre in Noida by 2004-end.
FCS Software, which provides services in business applications, e-learning, digital content and product engineering, has recently ventured into a somewhat uncharted territory for Indian IT companies: reverse engineering. It expects to raise revenue from this area substantially in the near future.