XTGlobal Infotech Limited, a prominent player in the IT services and solutions industry, has made a significant strategic move by acquiring a 7% stake in Network Objects Inc., a well-established USA-based IT and ITES company. This acquisition increases XTGlobal Infotech's total shareholding in Network Objects Inc. from 44.33% to 51.33%, thus making Network Objects Inc. a subsidiary of XTGlobal. This acquisition, which was completed on January 6, 2025, is seen as a critical step to enhance the company’s global presence and drive future business growth.

Network Objects Inc., known for its strong technology team and deep expertise in IT services, primarily serves US clients and offers a wide range of IT and IT-enabled services. The acquisition aligns well with XTGlobal Infotech's core business objectives, as both companies operate in the IT/ITES industry. With the acquisition finalized, XTGlobal Infotech expects to add approximately USD 20 million to its topline revenues, thereby enhancing its market share and profitability in the coming years. This strategic acquisition also increases XTGlobal’s share of profit from Network Objects Inc. by 7%, which will contribute positively to its consolidated financials.

Key Points on the Acquisition Process

Acquisition Details: The acquisition involved a cash consideration of USD 700,000, which will be paid in multiple tranches. The payment structure includes eight tranches with payments scheduled through 2026, ensuring the acquisition is completed in a phased manner. These payments are spread across multiple years, which gives XTGlobal the flexibility to manage its cash flow while completing the transaction.

Regulatory Compliance: The acquisition is in line with the provisions of Regulation 30 of SEBI's (Listing Obligations and Disclosure Requirements) Regulations, 2015 (LODR), ensuring that XTGlobal meets all necessary compliance requirements for related party transactions. It is noteworthy that the transaction involves a related party, Mr. Srinivasa Raju Kosuri, a shareholder in Network Objects Inc., who also holds a position as a non-executive director in XTGlobal Infotech Limited. However, the transaction has been conducted at arm’s length, based on valuation reports, ensuring transparency and compliance with regulatory standards.

Market Impact and Strategic Goals: With this acquisition, XTGlobal Infotech solidifies its position as a significant player in the global IT services market. The company aims to increase its revenue base and expand its customer reach, particularly within the US market. The move also highlights XTGlobal’s strategy to enhance its global footprint and provide more comprehensive services to its growing clientele.

The long-term goals for XTGlobal Infotech include not only growing its shareholding in Network Objects Inc., but also integrating new technologies and capabilities that will benefit both companies. This acquisition will allow XTGlobal to leverage Network Objects Inc.'s technology infrastructure and industry knowledge, enabling them to offer more innovative IT solutions to customers globally.

Final Thoughts

This acquisition marks an important milestone for XTGlobal Infotech, which continues to build its presence in the competitive IT sector. It reflects a well-thought-out strategy for expanding the company’s global reach and enhancing its business capabilities. As Network Objects Inc. becomes a subsidiary, XTGlobal Infotech is set to strengthen its market position and improve its financial performance, thereby creating more value for its shareholders and stakeholders.

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