Mindteck India currently provides services in embedded software, Internet and Java technologies to clients in the areas of industrial automation, medical electronics and telecommunications. It focuses on the high–value, high-growth areas of embedded technology and e-solutions to position itself high up on the value chain. In the e-solutions sector, the company has core competencies in technologies such as XML, Enterprise Java, Beans, Servlets and Java Server Pages.

The company has three software development centers located in Mumbai, Bangalore and Calcutta. It achieved revenues of Rs 5.43 crore and reported a net loss of Rs 2.51 crore in the first year, ended on June 2000, after restructuring. As a result of the acquisition by TAIB and restructuring its operations by focusing on the high-end software services, the company saw a turnaround in the first quarter of the current year. In that quarter ended September 2000, Mindteck achieved a turnover of Rs 2.45 crore and made profits of Rs 85 lakh.

Mindteck India provides services to clients in the UK, Europe and Japan. At present, it has 120 software professionals with almost 90% of them in offshore development and the balance providing onsite services.

The company’s Calcutta center is focused on providing services in e-commerce whereas the centers in Bangalore and Mumbai provide services in both e-solutions and embedded technologies. The company has two facilities in Calcutta, each about 3,000 sq. ft. The facility in Bangalore measures about 12,000 sq. ft and that in Mumbai is about 3,000 sq. ft.

Mindteck India also has a 100% subsidiary in the US called Mindteck Systems Inc. The company’s marketing activities are carried out through seven offices in the US and through Mindteck UK, Mindteck Japan and Mindteck Singapore. Interestingly, baring the subsidiary, the rest of the offices and companies are owned by TAIB Bank. Mindteck only has a marketing arrangement with these companies.

Future plans: Acquisitions

Mindteck India’s current size of operations is moderate when compared to software majors, and the company has realized the need to grow and expand at a much higher pace. In terms of services, Mindteck India would continue to focus on its core competency in embedded technology—a niche sector characterized by very high growths and margins. The company has planned out its future course of action, which includes acquisition, tapping new clients and concentrating on core areas of embedded technologies and e-commerce. To meet the working capital requirement in the short term, the company recently came out with a rights issue to raise Rs 12.50 crore. The rights were offered in the ratio of 1:4 at a premium of Rs 90 per share. Notably, the share price of Mindteck during the rights offer was below the offer price of Rs 100. Out of the total amount proposed to be raised through the rights issue, the company earmarked Rs 8 crore as the working capital and the balance for hardware and building infrastructure.

The promoters of the company, while subscribing to the rights issue, decided to renounce a part of their rights entitlement in favor of the Employees Welfare Trust. The trust intends to implement a share incentive scheme for the company’s employees, which would help the company attract and retain the best talent and improve its performance in future.

Among its other plans, Mindteck India and the Calcutta-based Nicco Infotech are expected to merge, once the approval from the respective courts is received. The merger ratio has been fixed at one share of Mindteck for 12 shares of Nicco Infotech. Nicco Infotech is a part of the Nicco Group, USA, with offices in India and New Jersey. Nicco provides training and implementation skills on the Oracle ERP package and offshore development facilities. Nicco closed the year ended June 2000 with revenues of Rs 97 lakhs and a loss of Rs 19 lakh.

Mindteck also plans to acquire the US-based Mindteck Consulting, a part of Infotech Holdings, subject to the approval of the RBI and other statutory authorities. Mindteck Consulting provides software services to the US companies and the acquisition will enable Mindteck India to acquire new clients and business.