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Zylog Systems Ltd, which currently possesses
two global development centres, one located in Chennai and the
other in New Jersey, US, is in the process of putting up two
more development centres near Chennai - at Sholinganallur and
Siruseri, increasing the offshore infrastructure.
It has purchased 1.06 acre of land in the IT
Expressway in Sholinganallur, Chennai. The company has started
the construction of around 80,000 sq ft fully equipped ODC with
state-of-the-art infrastructure to cater to offshore projects at
an estimated cost of Rs 242.19 mn. It will have seating capacity
of about 800 software professionals.
The company has also been allotted two acres
of land by SIPCOT at the Siruseri IT Park, where it plans to
build second ODC of 1,250 seating capacity at an estimated cost
of Rs 424.99 mn. The company has made firm arrangements of
finance through verifiable means towards 75 per cent of the
stated means of finance, excluding the amount to be raised
through an IPO.
It has done a preferential allotment of equity shares to Unit
Trust of India Investment Advisory Services Ltd Alc Assent India
Fund and Argonaut Ventures in March 2007 and has received Rs
438.75 million towards this allotment.
The term loan of Rs 131.50 million has been sanctioned by Union
Bank of India out of which Rs 76.19 million has been already
utilised for the Sholinganallur Offshore Development Centre till
June 15, 2007.
The overseas operations are taken care of by the branch offices
set up across US with the US headquarters located at New Jersey.
Also subsidiaries have been set up in Singapore and the United
Kingdom to take care of the operations pertaining to the
respective regions.
The company has technology management practices specialising in
Mobile/Wireless Computing, Enterprise Reporting, Business
Intelligence and Enterprise Application Integration. The
company's ISO certified quality practices ensure consistent
quality standards without compromising on project-scheduled
timelines. It also has long-standing relationships with large
multi-national corporations built on successful prior
engagements with them. It has a history of client retention and
derives a significant proportion of revenues from repeat
clients. Credible endorsements translated into repeat business
from existing customers to the extent of 88.6 per cent of the
company's revenue during the last fiscal.
The company intends to selectively pursue acquisitions that
augment its existing skill sets, industry expertise, client base
or geographical presence. A couple of acquisitions has been
targeted for 2007-08. The strategy is to acquire IT service
companies that provide industry-specific technology solutions
predominantly onsite based in US and European markets. This
gives the company scope for increasing the offshore component.
About 88 per cent of the present revenue is derived from the
company's top 100 clients.
It also intends to selectively expand global presence by
establishing new sales and marketing offices, representative
offices and GDCs to expand geographical reach. It proposes to
increase presence in Asia Pacific through Zylog Systems Asia
Pacific Limited, in Europe directly through Zylog Systems UK
Limited and in South & East Asia through Zylog Systems India
Limited.
he company intends to continue to develop alliances that
complement its core competencies. Its alliance strategy is
targeted at partnering with leading technology providers, which
allows it to take advantage of emerging technologies in a
mutually beneficial and cost-competitive manner. It has clinched
orders from two large foreign banks for Cheque Truncation
product and Front-End Cheque Truncation System (FeCTS).
The company would be customising and implementing FeCTS to these
banks and will be rolling out for the whole country. FeCTS
consists of a data and image capturing application that allows
the banks to capture, process and transmit the cheque data and
images, to the clearinghouse via a secured communication
network.
The IPO opened on July 20. The price band has been fixed at Rs
330 to Rs 350. The company proposes to enter the capital markets
with a public issue of 3,600,000 equity shares of Rs 1O each
through 100 per cent book building process.
The Bid I Issue opened on July 20, 2007 and closed on July 25,
2007 and the price band was fixed at Rs 330 to Rs 350 per equity
share of Rs 10 each. The issue would constitute 21.89 per cent
of the fully diluted post issue paid up equity capital of the
company. Motilal Oswal lnvestment Advisors Private Limited is
the BRLM for the issue and Karvy Computershare Private Limited
is the Registrar to the issue.
The company intends to utilise the net proceeds of the issue to
set up two state-of-the-art ODCs to fund acquisitions and
strategic investments and to meet the increasing working capital
requirement.
R Rangaraj
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