Dismissing media speculation of a stake sale, Sonata Software is setting new targets and moving to new pastures for growth. In an interaction with Pradeesh Chandran, Sonata Software’s President & MD, B Ramaswamy talks about his visions to make the company clock revenue, of $1 billion in the next five years. Edited excerpts:
How has the recent stake sale buzz surrounding the company impacted your company’s image?
In August, one of the promoters sold about two per cent stake in the company, but that does not mean the company is up for sale. In some cases, the stake sale is related to the company’s performance, but we are a strong company, with cash reserves of Rs 156 crore. Even promoters have denied all media reports and have sent their denials to the stock exchange. If any mid-sized company sells its stake, it does not mean that all mid-size IT firms are for sale. We are a growing company with strong service offerings like IT consulting, product engineering services, application development, business intelligence and infrastructure management.
Does the reports of Oracle buying a stake in Sonata affect your partnership with SAP?
All this media speculation will definitely create panic among employees, clients and partners. We have a good partnership with SAP globally and we host their pay-per use model in Germany. When the report came out, SAP wrote to us to confirm it. They even said if Oracle was planning to buy a stake they might have to rethink the partnership deal. These speculations can only create uncertainty in the market and it is good for somebody who wants to speculate on share prices.
Did these speculations have any impact on the employees?
Our current employees were not at all affected by these uncertainties because we were open in our communication to them. Since we spoke to them, they all know what is happening in the company. However, it had an impact on new employees whom we had offered jobs. Some of them even wanted to know about the developments.
By when do you think Sonata will touch the $1-billion mark in revenues?
All mid-size companies are aspiring to cross the $1 billion mark within a few years. I think it is a good aspiration to touch this mark. It signifies the scale and size, and will also transform the kind of client you get. Our thinking is that we want to grow 50 per cent every year. Our top line grew at a compounded annual growth rate (CAGR) of 48 per cent. And bottom line grew at a CAGR of 50 per cent. We had done this for the last five years except during the recession.
The growth was muted last year due to the slowdown and we want to bring back growth organically and then relay on inorganic ways. If we grow at such a good rate, we expect to reach the magic number of $1 billion within five years or even sooner.
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Would acquisition be one way to touch the $1-billion mark?
We believe in organic growth, also for an opportunity for inorganic growth. We want to strengthen our portfolios and offerings like travel, enterprise resource planning (ERP) and infrastructure management, and acquisitions can be a step for doing it. There were reports that we had finalised a deal. It is not true and only part of the speculation. We have not finalised any company or any geography till now. We are still looking for right player.
So, which are the geographies you are looking at for acquisitions?
We have a strong presence in the US, the UK and Europe. We have a lot of work to do in all geographies where we have a presence. But we are open to entering a new geography where the acquired company has presence.
What are your plans for West Asia?
We had opened an office in Dubai in 2009. West Asia is a different market that offers huge opportunity for growth in verticals like travel, transport and trade. We are planning a small office for sales and accounts in Qatar by the end of this financial year. In future, if needed, we might open a nearshore facility in the Dubai Internet City to serve our customers.