eCapital Leading Edge: Riding The Wireless Internet Wave

When a stalwart like Suresh Rajpal quit
Hewlett-Packard to start his own
venture–eCapital Solutions–the company was bound to make waves in the industry. Rajpal has had a remarkable stint as HP’s chief, when the company won the Business Excellence Award instituted by Exim Bank and
Confederation of Indian Industries. The award has so far been awarded to only two Indian companies and Rajpal aims to win this award for his new company as well. As expected, eCapital hit the headlines with its acquisition by Leading Edge Systems for over Rs900
crore. Perhaps on its way to creating one of India’s finest software companies, the acquisition will certainly provide an edge to both the partners. Leading Edge’s forté in delivery mechanisms and technical expertise will be complemented by eCapital’s strength in management and marketing. eCapital has been trying to position itself as a business partner for its clients, rather than a low-end technology services provider. This could well be a marketing stunt, but it has the strong backing of Chase Capital Partners, which has over 600 investee companies worldwide.

ECapital has chosen the fast-growing telecom sector as a key vertical segment, with particular emphasis on wireless devices. It plans to capitalize on the boom in wireless internet access, and has developed
eVector, a platform for enabling corporate applications to be accessed through mobile devices. It has developed two applications on this platform–Now!Banking, which allows access to banking services and
Now!Shopping, which enables catalogue-based shopping through mobile devices.

The recent merger with Leading Edge immediately led to a rally on the stock market and its stock surged by about 30%. The acquisition enhanced the shareholding of Chase Capital Partners, which holds a stake of 12% in Leading Edge and 60% in eCapital. After the acquisition, its stake in Leading Edge is likely to rise further. In the first six months of fiscal year 1999-2000, the company recorded only a 10% increase in revenues while profits dropped by 6%.

ECapital’s focus on telecom ties in well with Leading Edge’s initiative in this segment, which germinated from software developed for
Omnipoint, a US-based telecom company. The merged company, which is yet to find itself a new name, now aims to find a place in the top 10% of the industry. 

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