Infotech buys US company Vargis for $2.65 m

By siliconindia staff writer   |   Friday, 23 January 2004, 08:00 Hrs
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HYDERABAD : Infotech Software Solutions, Inc., the US subsidiary of Infotech Enterprises, has acquired a Virginia-based GIS firm, Vargis LLC for $2.65 million (working out to approximately Rs 12 crore). The two companies signed a merger agreement last week and completed the formalities today.

While the $2.65-million would be payable in cash on acquisition an additional $0.45 million (around Rs 2 crore) would be payable at the end of current calendar year based on pre-agreed performance criteria. Vargis is a provider of geospatial and mapping services and products.

The acquisition completely funded through Infotech’s internal accruals is in line with its plan for strengthening its position in the global GIS market. Before the acquisition, Infotech Enterprises had cash reserves of Rs 43 crore and with the acquisition, the company is now left with Rs 31 crore in cash, according to Infotech’s CMD, B V R Mohan Reddy.

A profit-making company, Vargis has an unaudited revenue of $7.2 million for the financial year ended December 2003 and has 30 employees in sales, project management and delivery support. While the current management team would be retained, Vargis will operate as an independent entity under Infotech ownership and lead all GIS initiatives of Infotech into the North American markets, except for strategic relationships.

The acquisition gives Infotech Enterprises an established platform to address the geospatial needs of the government, utility, telecom and transportation clients in US.

The combined entity will leverage Vargis’ strong industry presence and Infotech’s large base of photogrammetry, data conversion and software engineering resources to deliver geospatial solutions to clients, the company added.

The GIS revenue of Infotech Enterprises for the 12-month period ended December 31, 2003 , was Rs 54.8 crore ($12 million), while Vargis had its revenue for the same period at Rs 32.7 crore ($7.2 million).

(Source: ET)

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