Chennai-based Zylog Systems, an IT services and product company, plans to enter the capital market with a public issue to part-finance its expansion. The company has filed its draft red herring prospectus.
The company will soon enter the market with a public issue of 36,00,000 equity shares at a face value of Rs 10 each through 100 per cent book-building. The public issue will constitute 21.89 per cent of the fully diluted post-issue capital of the company and the net issue will constitute 21.28 per cent of post-issue capital.
Zylog plans to establish two offshore development centres in Chennai's IT corridor on an investment of Rs 66.71 crore (Rs 667.1 million). It also plans acquisitions to deepen its domain expertise, expand service lines, obtain access to new markets or verticals and enhance its technology footprint in addition to growing its revenues and profitability, according to a company statement.
According to the draft prospectus, the company has a 250-seat facility in Chennai and proposes to create two offshore development centres with a capacity of 800 and 1,250 seats at Sholinganallur and Siruseri respectively.
While it is in the process of constructing a 80,000-sq ft offshore centre at Sholinganallur on an estimated cost of Rs 24 crore (Rs 240 million), the company has been allotted 2.12 acres of land by SIPCOT at Siruseri IT Park to build a 125,000-sq ft facility on an investment of Rs 42 crore (Rs 420 million).
Zylog's top 100 clients contributed 88 per cent of its revenue and 92 per cent of its clients have not leveraged the offshore delivery model.
This gives the company huge scope to increase its offshored services component.
The company also has plans to acquire IT services companies, which provide industry-specific technology solutions, predominantly onsite, in the US and European markets.
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