LODESTONE ACQUISITION BY INFOSYS

Presented By: Pradeep kumar Tiwari Enrol no.-1103102183

INFOSYS
Infosys Limited, formerly Infosys Technologies Limited is an Indian multinational provider of business consulting, technology, engineering and outsourcing services company. It is headquartered in Bangalore, Karnataka. Infosys' earlier acquisitions include Portland (strategic sourcing and category management services) in 2011, McAmish in 2009, Expert Info in 2003 and IQ Financial in 2002.

INFOSYS FINANCIAL STATUS

Mar'12 Mar'11 Mar'10 Mar'09 Mar'08

TOTAL INCOME

33,002.00

26,493.00

22,011.00

21,138.00

16,326.00

TOTAL EXPENDITURE

21,191.00

16,970.00

13,778.00

13,356.00

10,684.00

Profit and Loss for the Year

7,905.00

6,404.00

5,707.00

6,191.00

4,465.00

Shares in Issue (Lakhs)

5,742.30

5,741.52

5,738.25

5,728.30

5,719.96

EPS - Annualised (Rs)

147.50

112.22

101.13

101.58

78.15

LODESTONE
Lodestone is a global management consultancy committed to designing and delivering solutions that enable international companies to thrive in todays complex business environment.

They help their clients to define the measurable business benefits that they will achieve together using our teams of client-focused consultants who combine a passion for excellence with strong process and SAP skills and in-depth experience of transformational change in their industry.

LODESTONE'S UNITS AND HOW THEY DIVERSIFY INFOSYS

ACQUISITION PROCESS
Infosys,acquired Zurich-based Lodestone Holding

AG, a leading management consultancy firm, for 330 million Swiss francs ($345 million or Rs.1,925 crore), which is expected to strengthen the companys consulting capabilities. Infosys will pay two-thirds of the amount immediately while the rest is to be paid after three years. At present, consultancy businesses contribute 31 per cent of Infosys revenues.

FINANCIALS OF THE ACQUISITION

This is an area in which even the strongest

Infosys bashers must give it credit. Looking at the revenue multiples paid by service providers for some of their recent acquisitions:
HP-Autonomy: 11x HCL-Axon: 2.2x Wipro-Infocrossing: 2.6x TCS-Citi BPO: 1.9x

Infosys-Lodestone: 1.6x

MAIN REASON BEHIND ACQUISITION

The

Lodestone acquisition will significantly enhance Infosys' global presence, particularly in

continental Europe and emerging markets like Latin America and Asia Pacific.

The acquisition may take Infosys a step closer to

its goal of becoming a software-and-services giant providing clients with higher value services and consulting. The company has recently completed implementing Infosys 3.0, a strategy that it expects will take it towards this goal. To compete with the competitors.

SIX WAYS IN WHICH THE DEAL WILL HELP INFOSYS

1)Clients: Lodestone will bring in its more than 200 clients across sectors, including manufacturing, automotive, life sciences, chemicals, and consumer goods.

Its clients like BMW, Allianz, KimberlyClark,Sandoz SHAPE, Warner Chilcott, Munich Re, Roche will now be with Infosys, which has a client base of 700 firms. The acquisition is also expected to boost Infosys' SAP client base.

2)Revenues: In 2011, Lodestone reported revenues of 207 million Swiss Francs (Rs 1,200 crore), up from 181 million Swiss Francs in 2010. This will increase Infosys' annual revenue and help it maintain its lead over other rivals like Cognizant and Wipro. Post-acquisition, the consulting and package implementation revenues of Infosys are expected to be more than $1 billion, according to analysts.

3) Geography: The deal will bolster Infosys' presence in Europe, Middle East and Africa. "In the short term, the economics of EMEA will work against Infosys as Eurozone concerns amplify into 2013. Long-term, the acquisition may prove itself out as Infosys gains a greater foothold through consolidation," said Ray Wang Principal, analyst and CEO at Constellation Research, in a report. The acquisition will also enhance the presence of Infosys in new markets like Latin America and Asia Pacific.

4) Employees: Zurich-based Lodestone has about 850 employees, including 750 SAP consultants. The consultants will help Bangalore-based Infosys to ramp up expertise in SAP-based solutions.

5) Perception: The deal will go a long way in helping Infosys shake off its image as a conservative company hesitant to make bold acquisitions. While research firm Constellation Research said Lodestone's methodology and culture will transform Infosys, Mumbai-based brokerage house Prabhudas Lilladher saw it as a much-needed booster for the struggling IT bellwether.

6)Lodestone methodology and culture will transform Infosys. Lodestone brings its trademark IDEA methodology. IDEA represents insight, design, execute, and achieve. This approach aligns with Six Sigma standards and SAP ASAP to improve the quality of implementation outcomes.