MindTree on a spree

One could argue that India is regarded globally as a one-stop shop for cost effective off-shoring and outsourcing of software development and information technology (IT) processes.

A number of Indian IT companies have since evolved from being mere software development outfits to solution design shops for global corporations with Indian IT companies' competence and global footprint being well-respected.

In such a scenario, it takes a lot to rise above the clutter, and chart a unique path of growth for a young company while surviving the Internet bust. MindTree Consulting, the case in point, has evolved into a consulting and innovative research-led business which provides end-to-end solutions to design and implement IT strategy to Fortune 2000 corporations.

MindTree has grown from a start-up to $100 million plus in revenues in seven years' time, at a compound annual growth rate of 46.9 per cent. The company has forays in providing IT consulting services and R&D services to its clients. It has three development centres in Bangalore, one in Chennai and one in New Jersey, and plans to develop a new facility in Bhubaneswar by FY08.

The industry verticals catered by its IT services division include manufacturing, travel and transportation, banking, financial services and insurance and technology.

The R&D services business, which is organised into engineering and research divisions provide end-to-end product architecture, design and development and intellectual property solutions to the clients.

MindTree conducts research in the domains of storage systems, industrial automation, automotive and avionic products, consumer appliances, communication infrastructure and computing systems. It has also started offering services in software testing and IT infrastructure management.

"With our consulting and intellectual property-led approach, we build CIO or CTO-level relationships with our clients, building applications which are central to the clients' businesses. Further, this relationship helps us mine every avenue of providing a well-shaped solution to the entire business, all over the world," claims Subroto Bagchi, chief operating officer, MindTree.

Its clients include ABB, AIG, Franklin Templeton, Samsung, Symantec and Unilever.

In 2004 and 2005, MindTree acquired the software division of ASAP Solutions and Linc Software Services respectively, adding to the skill set, expertise in enterprise solutions software.

"We are looking to make more acquisitions in order to add to our service offerings, by adding to our capabilities in newer domains," says Ashok Soota, chairman and managing director, MindTree.

In an industry where high attrition is a cause of concern for all the IT companies, MindTree figures among the most admired employers ranked by various surveys.

Of course like other software companies, MindTree too is vulnerable to appreciating rupee. "A 100 basis point change in the value of rupee against the dollar impacts our revenues by 50 basis points," responds Rostow Ravanan, chief financial officer and company secretary, MindTree Consulting.

The IPO price will be fixed between Rs 365 and Rs 425. At the upper end of the band, the issue is valued at 15.5 times while at the lower end it is valued at 13.3 times the company's estimated FY08 earnings.

In comparison to other similar players, the issue is fairly priced, and worth subscribing.