Kyocera Wireless is selling off its Indian development subsidiary to an Indian services company, MindTree, which will take over development and design work for Kyocera.
Under the agreement announced Tuesday, MindTree will offer research and development (R&D) services to Kyocera in the areas of mobile handset design and back-end mobile infrastructure, Janakiraman S, president and group CEO for product engineering services at MindTree, said on Tuesday.
A number of multinational technology companies have turned over their R&D facilities to Indian service providers to save on costs, and avoid the trouble of hiring and managing the operations in India.
Other companies such as Intel and Texas Instruments, however, continue to run their own R&D operations at their Indian subsidiaries.
Set up in 2003, Kyocera Wireless (India) does wireless product development, software engineering, and product testing for Kyocera Wireless' global product portfolio, besides developing custom wireless handsets for Indian service providers.
The center in Bangalore has about 600 staff, and after the MindTree acquisition will continue to provide engineering services to Kyocera Wireless and other Kyocera entities on a contract basis after the sale.
"There is a commitment of business to us from Kyocera," Janakiraman said.
Under the agreement with Kyocera, MindTree will make an upfront payment of about US$6 million, and further payments linked to revenues in the financial years ended March 2011, and March 2012.
MindTree said it expects the acquisition to contribute about $9 million in revenues for the period October 2009 to March 2010, with profits expected to be in the range of 13 to 15 percent.
The acquisition fits well into MindTree's focus on product engineering and services, particularly for the wireless market, Janakiraman said.
The company has built a portfolio of intellectual property to be licensed in the areas of Bluetooth and other wireless technologies.
The acquisition is subject to legal and statutory requirements, as well as certain closing conditions, MindTree said.