Geometric Software Solutions  is looking at a salary hike between 14-17% for its employees.

Meanwhile, the company will also be doing an acquisition, which it has been mulling for the past 12-14 months. MD at Geometric Software Solutions Manu Parpia says that the acquisition will be funded through preferential allotment, upto USD15 million debt.

He adds that they would be seperating their engineering division into a subsidiary.

Excerpts from CNBC-TV18’s exclusive interview with Manu Parpia:

Q: Is this allotment for a purchase and could you give us any details on what is on your mind?

A: It is for a purchase; otherwise it makes no sense to dilute the equity. We are really thinking of an acquisition in engineering services. For the past 12-14 months we have been looking for that acquisition. We have identified a good target; unfortunately we can’t get into any details because at this stage it is rather sensitive. We have signed the term sheet and I hope in the next 90 days we should be able to complete it.

Q: Could you give us some sense of how large this deal could be?  Does the money that you raised fit the size of the deal exactly, and how much do you have to pay for this deal?

A: I hope it shouldn’t be too much. The idea is that we have already indicated that we are going to raise about USD 10 million through equity and upto USD 15 million from debt.

Q: What is the plan for your engineering division of the business?

A: We want to get all the engineering services under one roof. If we start with a situation where we have engineering services as part of Geometric main, then we have another subsidiary, which is driving engineering services, it would create too much confusion.

So the idea is to actually separate the engineering services unit and then put it under the management of the new subsidiary, which we acquire. So that makes for a clean management, a set of consolidated accounts, which will be dedicated to engineering services. To me the most critical factor is the management. If it runs as a division of Geometric, it is not as clean. It is not so easy to run.  

Q: Will the USD 10 million acquisition be the only inorganic move by Geometric? Can we expect something else within this financial year?

A: If I could see into the future I could say that. But we need to make sure that we cover the space. Our vision is to be the best at whatever we do.  Whatever it takes to achieve that we should follow through. So I don’t see this acquisition being a limiting factor. Whatever we did in the previous acquisition has paid-off and has given us confidence, though one must not have overconfidence to take acquisitions forward.

Q: Last time you went couple of quarters back when you hit a bit of an air pocket, and you said you won't give guidance, still you actually delivered and now you are coming out with an organic guidance of 35%. Is that tough patch over? Have margins stabilized and do you have better visibility of your business?

A: Yes, I feel so. But I don't think that tough patches are over. Business is not easy, so it is not the kind of flow. I know that now we have better visibility. Based on that visibility we don’t want to make the same mistake again and give guidance and then revise it. So we are clear. We have the confidence in what we can deliver until this guidance and that is why we are giving it.

Stock	Open: 24 April 06	Close: 24 March 06	% Change
Geometric Software Solutions	Rs 128	Rs 102.50	24 % UP

Q: Can you tell us about the salary increases that you are factoring this time round for Geometric? We have heard about some fairly large hikes about 18-19% within the industry?

A: There will be people who will get 18-19% hike, but there will be people who will get less. It would match the industry, which is between 14-17% on an average. That is where we will be, if we want to stay in the game that is what we have to give.