Even as it is strategically expanding into new geographies, Sonata Software Ltd is considering the inorganic expansion mode to further fuel growth. The company is looking at cash flow positive companies with revenues in the range of $50 million and a mature business model which can afford scope for cross-selling of services, said B Ramaswamy, president and managing director, Sonata Software.
Companies specialising in niche markets and areas like infrastructure management and managed desk services would make good strategic fits, Ramaswamy said. The company currently has cash reserves of Rs 90 crore on a consolidated basis to fund its acquisition plans.
Sonata has seen its profit after tax growing at 48 per cent in the past five years, and going ahead, the company expects similar growth patterns. The Bangalore-based company has adopted a judicious mix of organic and inorganic growth to expand into new geographies. In 2006, it formed a joint venture with TUI AG, Europe’s largest tourism group, where it holds a majority 50.1 per cent stake in TUI’s technology services arm TUI InfoTec.
TUI InfoTec employs around 400 IT professionals in Germany. Its basket of IT operations include infrastructure management, helpdesk and hosting services, while it offers IT services such as application development, application management, business intelligence and managed testing.
Ramaswamy said that Sonata is currently in the process of moving more work from TUI InfoTec in Germany to the Hyderabad operations of the company. “Our Hyderabad datacentre currently executes remote infrastructure management of the TUI group’s Oracle database, e-business platforms and SAP HR applications. We are presently offshoring more work from Germany to India for the TUI group,” he said.
Sonata Software operates offices in the US, Europe, West Asia and Asia Pacific. In March this year, it opened a 100 per cent subsidiary in Dubai to cater to growing demand from the Middle East market. The company currently has a 60:40 mix of business coming from the international and domestic market, and is not totally dependent on international clients for its growth, according to analysts. The travel industry continues to be a key segment fetching 45 per cent of Sonata’s topline, while outsourced product development contributes 25 per cent.
The company provides an entire portfolio of services ranging from IT consulting, product engineering services, travel solutions, application development, application management, managed testing, business intelligence, infrastructure management and packaged applications. Key segments addressed include travel, logistics, construction, BFSI, telecom and manufacturing.
Consolidated revenues of the company in fiscal 2009 were Rs 1,591 crore, growing 11.4 per cent over the previous year. EBITDA margins which were 10.2 per cent, improved by 20 basis points year-on-year. Profit after tax was at Rs 76.6 crore, increasing 30.8 per cent year-on-year.
