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Tech Mahindra plans IPO to fund growth

Pune, March 19: Tech Mahindra, the IT arm of the M&M group, plans to come out with an initial public offering (IPO) in the third quarter of 2006-07 to raise cash to fund acquisitions in the US, the UK, Australia and Ireland in the areas of business process outsourcing and embedded systems.

The company has identified five to six potential targets and has already begun talks with them.

“The board has cleared spending of up to $300 million on overseas acquisitions. The company has exciting plans, but the board will soon have to take a call,” C.P. Gurnani, Tech Mahindra’s president for international operations, told The Telegraph.

The Pune-headquartered Tech Mahindra also has expansion plans in the domestic market, including a Rs 50-crore initial investment in a facility to be established at Calcutta’s special economic zone.

Tech Mahindra already has a facility at Salt Lake that employs 400 people. The SEZ facility will come up in the next 15 months and will raise the employee base in Bengal to 2000. The new facility will focus on the creation of business support systems and billing and customer care services.

The company plans to ramp up its overall headcount to 15000 from the current level of 10000 across its facilities in Bangalore, Chennai, Calcutta, Mumbai, Pune and its overseas development centres.

Sources said the company is also looking at establishing an IT development centre in Noida’s special economic zone. Discussions on this are at a preliminary stage.

Last month, Tech Mahindra had sewn up a Rs 100-crore deal with London-based Servista to provide value-added IT solutions and BPO operations for billing and customer care.

Gurnani said the company was now looking to wrap up Servista-type deals in Australia and China. “We are preparing to widen our product and service offerings to other regions,” he added.

Tech Mahindra is also gearing up to exploit the opportunities that will be thrown up by the number portability regime that the telecom regulator intends to launch from April 2007.

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