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NIIT drops buyback plans, eyes US acquisitions

BS ICE Bureau

NIIT has decided not to go for buyback of shares and rather use its cash reserves for strategic equity investments, acquisitions and expansion.

"The company board has been considering buyback of shares from the market for some time now, but has come to the conclusion that in the current market scenario the company should use its cash reserves for other purposes like acquisition and expansion," NIIT chairman Rajendra Pawar said.

NIIT is also going ahead with its plans to acquire companies in the US. "We are very close to acquisitions," Pawar said.

Pawar also said that the recent attacks on the US, the largest market for the company, would have a negative impact on the company's performances.

"At present, we are not looking at any new clients in the US, instead, plan to concentrate on the existing accounts," he said adding that the company, however, has not calculated the actual impact yet.

"It is very early to make a guess about the impact. We are evaluating the situation," he added.

As part of its strategy to negate the impact, NIIT is looking at expanding to other markets and widen the education product portfolio.

"We are strengthening our operations in countries like Japan, China and the South East Asian countries. Besides, we are also expanding the education products," he said.

The company had earlier forecasted that its operating profits for the year was likely to drop more than 40 per cent. Its third quarter net profits had suffered a 93 per cent fall, which the company attributed to the impact of the US economic slowdown on the company's education business.

Referring to the equity investments that the company has made so far in about six companies, Pawar said that all the investments that the company has made is doing well and the company sticks to its predictions that the non-organic growth would contribute to about 15 per cent of the company revenues over the next 2 years.

According to Pawar, to achieve this target the company has put in a two-pronged strategy, which includes a rigorous portfolio management at the corporate level and implementing structures that will enhance focus and concentration in the new business it acquires.

Some of the strategic investments by NIIT include companies like classteachers.com, Medvarsity, Oneweb Systems and Relativity Technologies amongst others.

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