Calsoft set to clinch China deals

California Software Company Ltd (Calsoft) is all set to clinch deals from China for integrating Adobe Macromedia Flash platform components to create rich multimedia content and applications for embedded devices.

The company expects to close slightly less than $3 million in deals with personal digital assistant (PDA) manufacturers in China over the next few weeks.

Sam Santhosh, managing director and chief executive officer, Calsoft, said China was seen as huge potential market as the requirement for embedded devices and handheld devices to support rich content, applications and interfaces was booming in that country.

He added that the addressable market size was estimated between $100-200 million for integrating Flash in embedded systems and no company was offering such services in China.

Chennai-headquartered Calsoft has an agreement with Adobe Macromedia to licence, distribute and integrate the Adobe Macromedia Flash Player Software Development Kit and Adobe Macromedia Flash Lite into embedded and handheld devices in India, South Asia and US markets.

Santhosh also said that Calsoft had matured to a level of looking at acquisitions in the range of $10-$20 million. Calsoft has made six acquisitions in the last two years.

However, the number of acquisitions may come down as the company is in the process of consolidation and streamlining its processes to rope in more customers in different markets.

There was also some divergence in growth rates of company's topline and bottomline. While revenues of the company recorded higher growth, profit-after-tax growth was slower as profitability margins in some of the acquired firms were either not high or negative.

Profit after tax for the half-year ended September 30,2006 was Rs. 1.32 crore compared with Rs 1.12 crore in the corresponding period of last year.

However, with about 50 per cent contribution from the acquired companies, Calsoft's total consolidated revenue for the half-year ended September 30, 2006 was Rs. 82.39 crore, a growth of 83.5 per cent over Rs 44.89 crore in the previous year.

However, Santhosh expressed confidence that the profitability level would increase in the next couple of years as the company was gaining traction in new geographies like UK and China.

Enterprise solutions currently account for 61 per cent of its revenue, followed by 32 per cent from technology solutions and 7 per cent from commodity solutions.

Calsoft, which employs about 970 people, expects to end this fiscal with a topline of $44-$45 million ($26.18 million in 2005-06). This listed company has been recognised as one of the (ranked 21st) fastest growing technology companies in the country by Deloitte Technology Fast 50 India 2006 Program.

The ranking was down based on percentage revenue growth for last three fiscal years 2004 to 2006, ownership of proprietary technology and research and development initiatives amongst others.

The company's focus areas are commodities (procurement, supply chain management, risk management), healthcare, education, networking and communications and embedded and mobile systems, among others.