Tech Mahindra to invest $300m

AHMEDABAD: Tech Mahindra, formerly known as Mahindra-British Telecom, is planning to invest an additional $300m (Rs 1,400 crore) over the next couple of years in setting up new software development centres.

“Simultaneously, the company will focus on adding more clients globally so as to reduce its dependence on British Telecom whose share in total revenues has already been brought down to 65% in 2005-06 from 90% two years back,” Sujit Baksi, president-corporate affairs, told ET. The company is also moving into areas such as IT security, gaming and entertainment, which also require networking and telecom-based solutions.

Mr Baksi said that a new development centre is coming up at Pune on a million square feet of land at an investment of Rs 300 crore. “The first block at Pune will become operational in 18 months time,” said Mr Baksi. A new centre, which will house 2,000 seats, is coming up at Noida.

The company has acquired 10 acres of land for setting up a special economic zone (SEZ) at Chandigarh. Another SEZ is being planned at Bangalore where it will add a further 1,000 seats to its existing 1,250. In Kolkata, where it already has a 650-seat facility, Tech Mahindra has acquired 15 acres of land for another SEZ. The company is also planning 10-25 acres SEZs in Hyderabad and Chennai.

“The business from British Telecom is continuing to grow every year and we have the single largest contract in India even as it gives some part of its software development work to other companies,” said Mr Baksi. But, as business from other global clients increases, British Telecom’s share to total revenues which has now come down to 65% could even drop to 50% or less in future. In 2005-06, Tech Mahindra reported revenues of $279m and profits of $53m. “We will come out with an initial public offer (IPO) in future to part fund our expansion projects,” said Mr Baksi.

But, he refused to divulge any timeframe. Currently, the Mahindra & Mahindra group has a 56% stake in the company, while British Telecom has a 44% holding. The company was the 8th largest software exporter from India in 2005. While the global telecom software market is huge, Tech Mahindra is also moving into related areas of security, gaming and entertainment.

“All these segments are also network-based. In telecom a lot of non-voice based business is coming up in addition to the regular voice-based,” said Mr Baksi.