India's NIIT Ltd. (500304.BY) is planning to invest between INR250 million and INR400 million on expanding its infrastructure over the next two years ending March 31, 2009, the company's chief executive officer said.
"This year we invested about INR600 million on new infrastructure. But this year was a major renewal year with new partnerships requiring massive investments in infrastructure," Vijay K. Thadani told Dow Jones Newswires in a recent interview.
Part of this year's revenue will come from NIIT's acquisition of Element K, a U.S.-based provider of learning software, in August, 2006, said Thadani.
The acquisition has already added to the earnings per share in the very first quarter from October to December, he said. " We will have only seven months of their revenues (for the current fiscal year)."
He expects Element K to contribute about $57 million-$58 million to NIIT's total revenue in the current fiscal year.
The company's total revenue grew 20% on year to INR3.47 billion for the fiscal year ended March 31, 2006, from INR2.89 billion in fiscal 2005, according to data on the Bombay Stock Exchange website.
Thadani expects NIIT's operating profit to "expand faster than the growth in revenue, maybe a couple of percentage points" in the current fiscal year.
He expects the main growth drivers to be the expanding knowledge economy in India and the rise in the outsourcing of training courses by developed economies.
"The growth of the knowledge economy is causing other new service sectors to come up, apart from IT," he said.
He added that the growth in the outsourcing of training courses is "beginning to gain a momentum which is akin to that of the software services and the BPO industry that we saw earlier."
In the coming fiscal year starting April 1, NIIT will look to expand in three areas - banking and financial services, retail and in general, the services industry, Thadani said.
"We will also look to grow inorganically as well if we don't have the competence in one area," he said, without elaborating.
(By Romit Guha | Of DOW JONES NEWSWIRES)