Subscribe
About

Faritec aims for R1bn

Paul Vecchiatto
By Paul Vecchiatto, ITWeb Cape Town correspondent
Cape Town, 04 Aug 2006

JSE-listed IT group Faritec believes its recent acquisitions of Enterprise Connection and Lechabile Storage Solutions puts it on track to hit R1 billion in turnover in the 2007 financial year.

This is according to deputy CEO Hasmukh Gajjar, speaking during the Faritec "relaunch" in Cape Town last night, marking the end of the absorption of Enterprise Connection - a R54 million deal that began in June.

"This year revenue for the group looks set to be around R540 million. The purchase of Enterprise Connection will have the effect of doubling our size," Gajjar said.

The new Faritec revenue split will see 54% coming from hardware, software will account for 23%, services 16% and off-balance sheet finance rentals will be 7%.

Gajjar said the hardware business was experiencing a margin squeeze, as is common with the rest of the sector; however, there were still good margins to be made in the high-end server arena.

He also expected good margins to be made in the off-balance sheet rental division, which finances companies` technology deals, allowing them to do a technology refresh during the rental period without having to pay a penalty.

"We expect to see good margins from all our businesses. Our real intellectual property rests in putting together a suite of good products and services that are good for our customers and help our growth," he said.

Shareholding

Gajjar said there may be continued changes in Faritec shareholding structure with investment firm Jay & Jay (headed by former communications minister Jay Naidoo) holding 30% and Canal Square (the black economic empowerment investor in Enterprise Connection) holding 14%.

"We want to see BEE shareholders eventually holding 51% of Faritec. However, we have not figured out yet how this will happen," he said.

Faritec has a working relationship with Indian industrial conglomerate Tata, and in particular with its Tata Infotech subsidiary, which has now been absorbed into Tata Consulting that, in turn, has a joint venture with Dimension Data.

"No announcement has been made by Tata of what they want to do with our relationship. However, I believe we have to develop a business relationship with India and not just one group," Gajjar said.

In mid-morning trade the Faritec share price was little changed at 88c.

Share