Friends,
Infinite Computer Solutions India is entering the capital markets with a public issue of 11,503,000 equity
shares of Rs 10 each for cash. The price band is fixed at Rs 155-165 per equity share. At the higher end
of the band, the company will raise about Rs 189.8 crore and at the lower end of the band, it will raise
about Rs 189.8 crore. The issue will open for subscription on January 11, 2010 and will close on January
13, 2010.
The issue consists of a fresh issue of 57,33,600 equity shares by the company (amounts to around Rs 94
crore) and an offer for sale of 57,69,400 equity shares by Whiterock Investments (Mauritius) Limited,
Vaibhav Bhatnagar and Sanjay Govil (amounts to around Rs 95 crore).
The issue will constitute 26.17% of the fully diluted post issue paid-up capital of the company. Its
outstanding shares will be around 4.3957 crore post issue and the market cap will be at Rs 681–725
crore.
The fresh issue proceeds will be used for capital expenditure (Rs 25.7 crore); acquisitions (Rs 38 crore)
and repayment of debt (Rs 8.4 crore).
It is a global service provider of Infrastructure Management, Intellectual Property (IP) leveraged solutions
and IT services, focused on the Telecom, Media, Energy, Manufacturing, and Healthcare industries.
Telecom vertical accounted for 59.4% of FY09 and 54.4% of H1FY10 revenues. Top five clients
accounted for 83.80% of revenues in H1FY10.
It has integrated network of delivery facilities across India and US. It has 14 offices across globe - US,
UK, India, China, Malaysia, Singapore and Australia. It has four delivery centers in India – company
owned facility in Bangalore, and leased facilities in Hyderabad, Gurgaon and Chennai.
For the year ended March 31, 2009, it reported net profit of Rs 36.2 crore on revenues of Rs 128.7 crore
and for the six months period ended September 2009, it posted net profit of Rs 20.7 crore on revenues of
Rs 92.5 crore.
The book running lead managers to the issue are India Infoline Limited and SPA Merchant Bankers Ltd.
Bigshare Services Pvt Ltd is the registrar.
In an interview with CNBC-TV18, Upinder Zutshi, Managing Director of Infinite Computer Solutions, spoke
about the company's functioning.
Q: What is your business model? Which are the main industries you are dependent on for your
orders?
A: We are an IT services and solutions company. We have three main service lines, application
management outsourcing, infrastructure management as well as research & development (R&D) and
intellectual property leverage solutions. Those are the three major service lines that we offer to our clients
predominantly in five major industry verticals - telecom, media, healthcare, manufacturing and energy.
Q: There are two concerned points, one is primarily your focus is on the telecom IT vertical,
spending seems to be – at least that is the sense we have been getting – on a bit of a lull right
now. How do you foresee order growth from the telecom space? A lot of your growth is
concentrated amongst very few clients. Are you planning to diversify on that, are there any
concern points there?
A: Our business strategy revolves around engaging with very large corporations global 1000-fortune 500.
This is the core strategy of the company. As a result of that there are advantages and disadvantages to
that strategy. The advantages are obviously when you engage with such clients, you get very large
scalable business opportunity that is multi-year and significant in terms of revenue. You also get a very
clear visibility and order book that creates a basic platform on which you used to grow.
On the flip side, however, is a little of a concern that there is client concentration. In our case, we look at
typically top-10 clients give us 90% of the business. Each of these top 10 clients have potential to be very
large clients of us. So there is no dependence of one or two single clients in our case.
In terms of our vertical, we have very significant domain as well as technology expertise in the telecom
vertical. The kind of services that we provide, we do a lot of application management. Some part of
application development is to a large extent discretionary. A lot of the work that we do is supporting core
infrastructure, supporting applications, providing help desk support, supporting infrastructure in hardware,
software networks and also having a business model that revolves around revenue share on some of the
products that are installed in the telecom sector that we take on a long-term revenue share business
model. In terms of our numbers we have significantly grown in the last two years. This is an opportunity at
times when the market may not be doing too well.
Q: Part of your issue is a fresh offer of shares. The other part that is exactly half of it is actually a
divestment by existing shareholders in the company and one of them is a company we
understand called WhiteRock that is a British Virgin Island listed company. Can you tell us about
WhiteRock? Why are they completely selling off from the company? When did they enter? Why
are they now quitting the company entirely, if it is entirely?
A: Yes it is. They invested in us in 2003-2004. They invested USD 6 million at that time. Due to the
internal considerations and the final liabilities coming to a close they would like to exit at the time of the
initial public offering (IPO). It is a Singapore based fund and part of the holding is owned by Temasek. So
they are completely exiting at the time of the IPO.
Q: Have they given any reason why they want to leave the company?
A: They have been invested in us for the last six years. I am sure their fund has a particular life cycle.
Their IT fund is coming to a close. So they would like to exit.
Zerodha (Trading & Demat Account)
RHP
