Yash Birla moves into IT sector

The Rs 3,000-crore (Rs 30 billion) Yash Birla Group marked its foray into the IT sector with the acquisition of Mumbai-based Melstar Information Technologies. Listed on the Bombay Stock Exchange and National Stock Exchange, Melstar is a service provider of professional consulting and project services and solutions.

"The Melstar acquisition fits into the Group's ongoing thrust on growth and exploring new-age sectors like education, healthcare and IT. We see a strategic fit between the Yash Birla Group and Melstar vis-à-vis the directions that the Group has set for itself," said Yash Birla, chairman.

The group has interests in auto, textiles, engineering, chemical and power sectors, among others. "We think this is a good time to enter the IT sector. Melstar also has a US subsidiary, which gives us entry into this market as well," said PVR Murthy, CFO of YBG. The group is looking at further growth through acquisition, with the current focus on West Asian and South East Asian firms.

Subsequent to this acquisition, the board of directors of Melstar has been reconstituted with Yash Birla as chairman, Murthy and Anoj Menon as directors and SM Arora as managing director. Richard D'Souza has been appointed as the chief executive officer.

"We are in the process of making a detailed business plan. At this moment, I cannot comment on the details. But we are looking into areas like ERP, enterprise content, building practice in the telecom space and creating a position in the legal process outsourcing segment," said CEO D'Souza.

For the December quarter, Melstar's revenue was Rs 5.3 crore (Rs 53 million) and net profit was Rs 11 lakhs (Rs 1.1 million). For the year ended March 31, 2008, the company's revenue was Rs 15.8 crore (Rs 158 million), but had a net loss of Rs 1.3 crore (Rs 13 million). Melstar has about 400 people in India and 20 customers.

Aditya Birla Nuvo, headed by Yash's cousin, Kumar Mangalam Birla, entered IT in 2001 with the acquisition of PSI Data Systems. Later, the group's BPO arm, TransWorks -- now known as Aditya Birla Minacs -- acquired Canadian BPO firm Minacs in 2006.