Chennai: The city-based Rs85-crore Helios & Matheson Information Technology Limited is on a shopping binge. In a $7.5 million deal Helios & Matheson an information technology (IT) solutions company has bought two outfits Maruthi Info Tech Inc., USA and Jayamaruthi Software Systems Private Limited, Chennai.

According to Helios & Matheson's chairman V Ramachandran, "One more acquisition is in the offing. We are also looking at two other buys." He declined to dwell more on that as the non-disclosure agreements signed with the target companies prevents him from doing that.

Speaking about the two acquisitions, he said the purchase price would be paid in two parts - 70 per cent cash down and 30 per cent based on achievement of targeted financial milestones over a two-year period ending August 2006.

Explains managing director G K Muralikrishna , "If the financial targets are not achieved then the enterprise valuation would be suitably revised downwards."

The US-based Maruthi (20 employees) offers solutions to healthcare and insurance sectors. 80 per cent of its $5-million turnover is from two clients from these sectors. The company services six clients in all. The $1.2-million Jayamaruthi (55 employees), acts as the offshore development centre for Maruthi.

Queried as to the duration of contract with its two major clients Pat Krishnan, co-founder and chief technology officer, Maruthi said that the contracts are ongoing ones.

Adding to that Ramachandran said, "Maruthi's relationship with the two major clients is quite old. The risk of the two clients cancelling their agreements with Maruthi is less. Moreover, the profitability of Maruthi is as high as 40 per cent of the turnover and the cash flows are strong."

According to K Narasimha Nayak, chief financial officer, Helios & Matheson, 70 per cent of the total deal value ($5.25 million) will be for Maruthi and the balance will be for Jayamaruthi.

Speaking on the company's future plans, Ramachandran said, Helios & Matheson would increase its head count to 2,000 in two years. The company has 500 employees now. Looking forward he remarked that the company would close this fiscal with an after tax profit of Rs16 crore. The company has an equity base of Rs10 crore.