Infotech to buy European aerospace firm for $20 mn

Infotech Enterprises Limited, which provides engineering and geographic information services, is in advanced stages of acquiring an aerospace services company in Europe for a consideration of approximately $20 million (Rs 91 crore).

Sitting on a Rs 280-crore cash pile, the Hyderabad-based company proposes to go in for this acquisition to bring high-end competencies to its recently-integrated global aerospace practice.

"We are constantly evaluating acquisitions and are currently in talks with three-four companies with a transaction value of between $10 million and $20 million. What we want this acquisition to do is to bring domain expertise and proximity to customer and customer knowledge. We expect it (buyout) to happen anytime this quarter," Krishna Bodanapu, president (engineering), Infotech, told mediapersons here on Monday.

Infotech, around nine months ago, had established an integrated global aerospace practice to take advantage of the growth in the aerospace and defence engineering sectors across the globe.

"We are focused on expanding our breadth of services to maintenance, repair and overhaul (MRO) engineering support, manufacturing transition support among others along the value chain," said Rajendra Velagapudi, senior vice-president and global delivery head (aerospace operation unit).

The global aerospace engineering services spend is expected to double up to $14 billion in 2020 from the existing $7 billion in 2009-10. The rising engineering costs and decline in resource availability have forced engineering entities across the world to turn to India and China.

By 2020, India's share in the global engineering services offshoring is projected to be around $45 billion, according to a Booz report on engineering services outsourcing.

Bodanapu said the company last year derived around $37 million (Rs 168.72 crore) from its aerospace business, which translates to 40 per cent of its total revenues, and expected this to touch $100 million (Rs 456 crore) this financial year.

The company also plans to add 300 freshers to its existing 2,500-strong aerospace practice in the next couple of months.

Infotech, which has 30-odd customers in aerospace, including 10 major clientele like Airbus, Diehl Air Cabin, Boeing and Pratt and Whitney, is participating in the Aero India 2011, being held in Bangalore from February 9. "We have lined up meetings with 65 prospective customers, both commercial and defence, during the five-day aerospace expo," Velagapudi said.

On the status of Infotech's special economic zones and other centres, Bodanapu said the company had 400 people in Kakinada and should start generating revenues from there in the next 12 months, while the Visakhapatnam SEZ would grow from the current 50 people to 200 in the next two months or so. "The Noida SEZ is yet to be operational and will probably take some more time to take off," he added.