Geometric Software has acquired engineering division of Modern Engineering for $32 million.

Manu Parpia, vice chairman and executive director, Geometric Software says that Geometric intends to complete the acquisition around the end of this month. Parpia hopes that once the acquisition comes through it will help reach $100-million turnover. CNBC-TV18 shares with domain-b its interview with Parpia:

This integration by when is it going to be complete and would it help you to attain a turnover of about $100 million by 2007?
The acquisition we target to complete around the end of this month approximately. That is the target date and it will help us. There were a couple of hiccups on the way so it did get a little delayed.

Certainly in the last quarter the run rate will be in excess of $25 million, provided the acquisition comes through. So it will help us to reach $100 million. But for the year as a total it remains to be seen.

Is this division profitable?
It is profitable and we have given the information, its EBITDA is about Rs3 million in this.

How do the margins compare? Will you be able to improve your margins because of this acquisition?
Margins clearly are not in line with Geometric otherwise the pricing would have been in line with Geometric. It represents the base on which we can now do several things. First of all build a solid engineering services practice, we have delivery centres now across the globe. So we are uniquely positioned.

Therefore, to cross sell between engineering services and PLM (Product Life cycle Management), we believe that this makes us the only company in the world, which has the capability to deliver to customers.

Would you be looking for more such acquisitions in other geographies?
At this stage the focus is to make sure that we integrate this acquisition; it is a very major change because Geometric in one stroke will no longer be a PLM company with some engineering services but be a company with PLM and engineering services.

Will you be taking any debt or liabilities on as a result of this acquisition and what would be the payback period for this acquisition?
The liabilities that we will be taking on will be debt to the tune of about $10 or $12 million. In addition to that we will have a working capital, which is how the figure of $32 million came up.

So we will have debt on our books to finance the engineering services part. The operations will be having working capital.

What is this property likely to fetch?
I do not want to get into the figures because we obviously would like to get it to fetch as high as we can.

Would you be looking for domestic clients now that you have Modern Engineering services?
We are already in the domestic space and are anyways servicing domestic clients both in terms of domestic in Indian companies as well the Indian arms of foreign companies.