Mastek, the Mumbai-based information technology solutions and services company, will continue to look at acquisitions in the American and British markets. The company will however, focus on acquiring intellectual property (IP), rather than eyeing firms to increase it’s top line growth.
“For us, size is not critical. For instance, the SEG acquisition takes us ahead in the US market by at least two-three years. They not only come with a product that suits the US regulatory requirements but also allow us to launch our integrated insurance product suite, Elixir, in the US market by 2011,” said Sudhakar Ram, chairman and managing director.
Mastek had announced the acquisition of assets of US-based SEG Software, provider of policy administration systems covering individual and group life, health & annuity insurance products.
Acquisition will also be key as the company has set itself an ambitious target, over the next five years, to be among the top three insurance solutions providers. “We also want to achieve a revenue target of $200-250 million (Rs 910-1,130 crore) and should have presence in emerging verticals like healthcare, etc,” he added. Mastek revenue for its financial year 2010 (it follows the June-ending year) was Rs 722 crore ($158 million).
Ram is also targeting to change the ratio of Mastek’s revenue from the US and UK. The former is 44 per cent, the UK 50-51 per cent and the rest comes from the Asia-Pacific region. “The US is ideally a larger market than the UK. We have got a good start in the US this year. We want the US contribution to be 50 per cent and UK 30 per cent in the next three years,” said Ram.
Mastek’s US expansion had received a boost when earlier this year, it signed up to become the technology partner to US-based Foresters, a life insurance provider.
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Plans
Meanwhile, the company also plans to work actively with BT (former British Telecommunications) to target the healthcare segment in the UK. Mastek has bagged a £35 million contract as part of a National Programme for IT within UKs National Health Service (NHS). The contract came to an end last year. The impact was evident on its third quarter numbers, ended March 31, 2009. The net profit of the firm was down 54.2 per cent y-o-y and revenue slipped 26 per cent.
“Our approach in the UK has been through partner network and we will continue to look at it. Especially for the government vertical, where the deals are large and we might be constrained to participate on our own. We do plan to start talking with BT again,” Ram said.
Mastek’s quarter numbers have been under pressure for the past two to three quarters due to issues like the ramp-down of the BT/NHS deal, currency volatility and slower than expected ramp-ups in some deals. For the first quarter of the company, ended September 30, 2009, Mastek reported a net loss of Rs 13.46 crore from a net profit of Rs 26.4 crore in the same quarter last year.
“We have been pulled down by one reason or the other for the last few quarters. But the year 2011 is going to be important for us,” he added.