Knowledge Systems Ltd, a small IT firm that provides communications and Net solutions to enterprises in the United States and Canada, has acquired Questech India Ltd, an Internet solutions company, in a cash-cum-stock swap deal to expand its presence and suite of offerings.
The 100 per cent acquisition has been made at a cost of $1.25 million, including premium for the valuation made by independent consultants.
Post-acquisition, the Bangalore-based Knowledge will have a combined techie strength of 120 and ownership of Questech's product range, including the IPRs.
"The strategic acquisition will consolidate our leadership position as technology solution provider and expand our market reach to Japan and the Asia-Pacific region, where Questech has a major presence," Knowledge co-founder and managing director H K Katti said in Bangalore on Tuesday.
With domain expertise in Internet-infrastructure, communications solutions in voice and data, application level security, and smart card solutions, the company plans to leverage the product strength of Questech, especially the latter's Ebas, which is a mini-SAP enterprise solution for companies in the SME segment.
"We will be offering the customers of Knowledge our product-led services and solutions in the verticals of manufacturing, retail and distribution, logistics, healthcare and insurance. The acquisition will also help the merged entities to leverage their strengths in customer acquisition across the geographic regions," Questech CEO A V Bhaskar stated.
Though the acquisition has taken place in the second quarter of the current fiscal year (2003-04), the company is projecting a turnover of $4 million by March 31, 2004, up by 75 per cent over the preceding fiscal year (2002-03).
The company is set to hire about 80 engineers to ramp up its total staff strength to 200 during the current fiscal.
About 80 per cent of revenues generating from its customers in the United States and Europe, with the balance from the Indian market.
The acquisition will enable it increase offshore revenues substantially.
Being a product-led service company, Knowledge officials have claimed that its margins are higher than those achieved by software service players in the SME segment on account of royalty, licence fee and annual contractual obligations.