Mumbai, November 4, 2004: Patni Computer Systems Ltd., India's 6th largest IT Services company*, today announced its successful entry into the US $60 billion Telecommunications vertical for IT services. In keeping with its inorganic growth strategy for market and domain expansion, Patni has successfully completed the acquisition of US based Cymbal Corporation, a Telecom Service Provider focused IT services company, for US $68 million. Cymbal provides Patni with a services capability that integrates deep domain expertise, consulting skills and global delivery that are in demand with telecom operators looking to establish strategic partnerships.
As per the terms of agreement, US $35 million has been paid on the date of acquisition. The balance of US $33 million would be paid over three years based on meeting projected revenue and profit targets. Cymbal will be integrated into Patni and function as a business unit headed by Neeraj Gupta, former Chief Executive of Cymbal Corporation.
Through this transaction, Patni acquires all assets of Cymbal Corporation including its employee and consultant base of over 500 personnel. The acquisition also provides Patni access to 14 key strategic communication service provider accounts including Virgin Mobile, Hutchison Telecom and Comcast. In addition, Patni gains an advanced entry into the large Telecommunications professional and support services segment, which is expected to grow to over US $65 billion globally by 2007 according to Gartner Group estimates in a 2004 report on the industry. The acquisition would be EBIDTA positive and would help in reducing Patni's concentration of revenues from its top customers while increasing its number of million dollar accounts. The acquisition of Cymbal on November 3r d is expected to add over 8% sequential revenue growth for Patni in the quarter ending December 31st, 2004.
Commenting on the acquisition, Mr. Narendra K. Patni, Chairman and CEO of Patni said, "This acquisition is in keeping with our vision to be the preferred IT services provider in chosen verticals. Patni's foray into the Telecom segment comes at a strategic time when communication service providers are looking to optimize investments to become more customer centric, leverage broadband networks and provide integrated services. Cymbal, with its ability to provide strong relationship management and deep focus on the needs of communication service providers is the optimal launch pad into this vertical."
In marking the closing of the acquisition, Neeraj Gupta, former CEO of Cymbal Corporation said, "Cymbal's merger with Patni will allow us to serve our existing and prospective customers with an enhanced value proposition. We will be able to leverage the combined advantages of Cymbal's telecom capabilities and Patni's scale of global delivery capabilities."
About Patni
Patni Computer Systems Limited (BSE: PATNI COMPUT, NSE: PATNI) is a global IT Services provider servicing Global 2000 clients in the Manufacturing, Insurance, Banking & Financial Services, Retail, and Energy & Utilities industries. With a skilled employee strength of over 8,000; multiple offshore development facilities across seven cities; and 22 international offices across the Americas, Europe and Asia-Pacific; Patni has registered revenues in excess of US $250 million for the year 2003.
Patni's technology focus spans e-business solutions, enterprise applications, embedded technology solutions and enterprise systems management. Its service offerings include application development and reengineering, application management and business process outsourcing.
Committed to quality, Patni adds value to its client's businesses through well-established and structured methodologies, tools and techniques. Patni is an ISO 9001:2000 certified and SEICMMi Level 5 organization, assessed enterprise wide at P-CMM Level 3. In keeping with its focus on continuous process improvements, Patni adopts Six Sigma practices as an integral part of its quality and process frameworks.
For more information on Patni please visit www.patni.com
*Source: NASSCOM's "Strategic Review 2003, The IT Industry in India"
About Cymbal
Cymbal is a global IT Services company providing consulting, systems integration, and outsourcing solutions to clients in the Telecommunications industry. The company registered revenues of $32 million in June 2004 and has an employee and consultant base of over 500 professionals in seven global offices, including established offshore delivery centers in Hyderabad and Pune.
Cymbal's customer list includes 14 of the world's largest Communication Service Providers (CSPs) with successful businesses across the wireline, wireless, cable, broadband, VoIP and MVNO markets. Cymbal integrates its industry expertise in OSS/BSS (Operations Support Systems/Business Support Systems) and corresponding process & technology frameworks to offer total domain solutions in several critical CSP business processes and a variety of nextgeneration Telecom services like VOIP, 3G, MVNO/MVNE and Complex Order Management.
Safe Harbor:
Certain statements in this release concerning our future growth prospects are forward-looking statements, which involve a number of risks, and uncertainties that could cause actual results to differ materially from those in such forward-looking statements. The risks and uncertainties relating to these statements include, but are not limited to, risks and uncertainties regarding fluctuations in earnings, our ability to manage growth, intense competition in IT services including those factors which may affect our cost advantage, wage increases in India, our ability to attract and retain highly skilled professionals, time and cost overruns on fixed-price, fixed-time frame contracts, client concentration, restrictions on immigration, our ability to manage our international operations, reduced demand for technology in our key focus areas, disruptions in telecommunication networks, liability for damages on our service contracts, the success of the companies in which Patni has made strategic investments, withdrawal of governmental fiscal incentives, political instability, legal restrictions on raising capital or acquiring companies outside India, and unauthorized use of our intellectual property and general economic conditions affecting our industry. Additional risks that could affect our future operating results are more fully described in our Red herring filing. The company does not undertake to update any forward-looking statement that may be made from time to time by or on behalf of the Company.
For further information please contact:
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Aru Adil Sayed (+91 9820052444)
Vivek Padiyar (+91 9892306446)