Chambal Fertiliser to acquire U.S. software co.

NEW DELHI, NOV. 18. Chambal Fertiliser and Chemicals, a K. K. Birla group company, has initiated the process to acquire a U.S.- based software company Novasoft with its valuation linked to performance over the next 18 months.

``We will be investing $6 million in Novasoft while the company has been given certain sales, growth and profitability targets to achieve during the next 18 months with that investment. If they achieve the targets, then the valuation of the company goes up and vice-versa'', vice chairman, CFCL, Mr. H. S. Bawa told reporters here.

``In a way the deal would be fructified after 18 months whatever percentage of stake we get in Novasoft", he said. ``In any case, by 2003 we will acquire 51 per cent of the company by purchasing the common stock of existing shareholders adding to our stake through the $6 million structured arrangement'', he said.

Ernst and Young represented CFCL as advisor to the deal.

CFCL will be immediately investing $2 million in Novasoft while the remaining four $4 million would be give as and when required.

CFCL will be funding the acquisition partly from internal accruals as well as from debt, Mr. Bawa said adding the acquisition would be a forward integration for its software services division - India Software Group (ISG).

Novasoft with its 250 people has five offices-cum-development centres in the U.S. Singapore, London and Chennai. It had an annual revenue of $35 million last year. The company operates in the CRM and ERP space.

- PTI

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Section  : Business
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