There has been no cancellation of orders.However, given the current challenging environment, some of the customers are delaying their investment decisions
Mascon Global, one of the fast-growing infotech companies, operates in communication, retail, banking & finance and healthcare industry space.
Merger and acquisition activity has been hectic at Mascon resulting in exponential growth during the fiscal ended December 2000. Net sales grew by 478 per cent to Rs 342 crore while net profit vaulted by 559 per cent to Rs 69.6 crore.
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The biggest area of activity contributing to the company's organic growth has been its "Broadvision practice". Broadvision is a software platform used to develop business-to-business (B2B) sites.
The company is also active in the enterprise resource planning (ERP) space. Nandu Thondavadi, managing partner and chief executive officer, Mascon Global, spoke to Gaurav Dua about the recent developments and future prospects of the company.
What has been the impact of the US slowdown on the billing rate and margins of the company? Has there been any cases of order cancellation?
The technology meltdown and consolidation has strained IT businesses in general. But our well-planned diversified portfolio has cushioned the impact to a great extent.
However, the market scenario cannot be ignored and Mascon too will tighten its belt in line with the leading global corporations.
As of date, we have not experienced any pressure on billing rates or margins. We have healthy average onsite billing rate of about $75 per hour while the offshore rate are at about $28 per hour.
We are confident of maintaining our EBIT (earnings before interest and tax) margins at around 20 per cent this year also. There has been no cancellation of orders.
However, given the current challenging environment, some of the customers are delaying their investment decisions.
What is the status of Mascon's merger with Maars Software? How is it beneficial for you?
The merger process will soon be taken up by the Madras High Court and is expected to be completed in next couple of months. The merger is beneficial to Mascon as it will provide major presence in Europe, especially the UK.
Moreover, Maars has created a prime niche for itself in the global ERP market with strengths in SAP, Oracle applications and its own product MAARSMAN.
Maarsman and Maarsman Compact will give Mascon a significant presence in the small-and-medium-sized enterprise (SME) market in India. It also has a telephone call billing product and an accounting package quite popular in the UK market.
Maars' huge software development facility in Chennai, which can house 1,000 professionals, is an added advantage. The merged entity will be one of the world's largest ERP solution provider with expertise in SAP, PeopleSoft, Oracle Applications and our own proprietary products.
Maars has about 350 professionals trained in SAP and other ERP packages. We expect Maars to generate revenues to the tune of $ 25 million in this fiscal.
What were your revenues from the Mastercard division in the fiscal ended December 2000? Any plans for expansion?
Our revenues from the Mastercard division were in the range of $2.8 million (Rs 13 crore) last year. The dedicated software development facility provides focus, required secure environment and access to MasterCard systems in the US.
Now, we are looking at further expanding our relations. In fact, we will be forming a joint venture with Mastercard shortly. The joint venture company will handle software development work in financial and banking industry. We are expecting revenues in excess of $10 million (Rs 47 crore) per year from the joint venture.
Are you looking at setting up offshore development centres in China or Eastern European countries? If yes, why?
We have already set up a facility in Monterrey, Mexico. Latin America is our current focus and appears to be an attractive destination to set up an offshore development centre.
Some of the countries in East Europe are very advanced in communications technologies which makes them attractive, and they will be our next target. There is lot of talent in mainframe computing also available in these countries.
We are also looking at China but our plans are not fully developed yet. Though there is the problem of the language barrier, China has abundant talent, especially in mainframe technologies, and superior telecommunications infrastructure.
What is the nature of your joint venture with Gemrusa Technologies, Malaysia? How will it benefit the company?
Gemrusa is a "'Bhumiputra" (founded by the local citizen) company and will provide us access to the Malaysian markets. The joint venture, to be known as Gemrusa-Mascon Sdn.
Bhd., will develop and market localised versions of its products like AIMS, CustomerFirst, Maarsman, I-track and e-Tab amongst others as well as developing new products and services for the Malaysian market.
Gemrusa-Mascon will target public sector verticals like academia, insurance, banking, etc. and the business generated by the Malaysian government initiatives to create a knowledge-based economy.
It will also serve as a platform for subsequent development in other Asian markets with an expansion into Thailand expected within a year.
What is the projected topline and bottomline growth for the current year?
We will keep on growing both organically and inorganically. For the current year, we expect revenues to be around $130 million (Rs 615 crore) and maintain the EBIT margins to well over 20 per cent.
What were the revenues from the Telecom business division in the last fiscal? In the light of the meltdown in telecom business globally, will you be able to meet the projected growth in the division?
Our Communication Technologies group is a start-up which started its operations only in September last year. In the first four months, the division generated revenues worth $800,000 (Rs 3.75 crore) approximately.
Despite the slowdown, the specialised nature of work in speech, communications, protocols and wireless applications will enable the division to achieve the targeted revenues of $ 10 million (Rs 47 crore) during the current year.
Development centres for this unit are operational in Chennai and Bangalore. In all, 600 developers would be employed by this unit over the next three years.
Upgradation of existing telecom network and software for IT-enabled services such as call centres, medical transcription and others offer vast business potential in this industry vertical.
How do you plan to use the proceeds from the forthcoming Global Depository Receipt(GDR) issue announced by the company?
Major portion of the $ 40 million GDR issue will be used for completing the previous acquisitions. While, part will be used for working capital requirements and the rest for developing physical facilities in India.