European Commission drops anti-dumping and anti-subsidy investigation
Tieup with Imation to bring in $100 mn annually
Launched its own brand of optical media in the domestic market
Feasibility studies for a plant in East Germany under way
Amongst the lowest-cost manufacturers worldwide
Strong R&D team helps it stay ahead with
indigenous technology
Still an OEM—getting an entry into the branded league is the current challenge
Beating industry growth rates, Patni continued its onward climb with revenues
jumping 30% to Rs 966 crore. Clearly, the company has been preparing to scale up
into the bigger league for the past two years. Two developments took place
during the year in this direction—General Atlantic Partners injected $100
million in the form of private equity, and Patni, on its part, gave a firmer
indication about going for an IPO later this year.
Virtually a debt-free company with rich cash reserves (not being a listed
company, exact figures are not available), Patni is looking to grow the
inorganic way—through acquisitions. The ball has been set rolling—with the
acquisition of The Reference Inc, an unlisted boutique company, in an all-cash
deal worth $7.5
million. Patni continues to explore other domain-driven specialist companies
that provide market access to new technologies and geographies. Retail,
healthcare, hospitality, and utilities are the new focus verticals.
Continuing on its global expansion strategy to add both software development
and BPO capabilities outside of India, Patni created a near-shore facility at
Canada to serve the US market, which brought in 87% of overall revenues. During
the year, Patni launched its BPO operation, based out of Noida and Pune, along
with a business continuity center at Woburn, US. The investment in BPO alone
would be to the tune of $40 million. Expanding in the APAC market, including
exploring the potential in China and a special focus on Australia and Japan, is
part of this expansion plan. A near 50% ramp-up in employee strength has been
projected for the current year.
Patni’s relationship with major customers like GE and Guardian Life has
helped it contain the impact of billing rate pressure. Adding 30 new clients in
Calendar 2002, the company saw revenues from fixed-price projects double.
Software and application maintenance remained the dominant offering, accounting
for half of overall revenues, with GE being the largest customer—worth over
$75 million. While many of these dependencies have turned into vulnerabilities
in Patni’s model, the growth story looks set to continue.
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