Logix in talks to acquire US firm

Bangalore-based Logix Microsystems, a software products company focused on automotive e-retailing solutions, is in talks to acquire a US-based company for $20-50 million (Rs 80-200 crore) in the automotive solutions segment. The deal will be finalised in the first or second quarter of this calendar year.

Logix recently acquired the majority stake in Add-on-Auto for Rs 6 crore. The Los Angeles-based company provides auto accessories software and has 23,000 options for its users.

Over 90 per cent of its revenues come from the US market. Despite the slowdown in the US market, the company feels that it has not affected its growth. While new car sales faces a dipped of 3 per cent in the last few months, sales of used cars have gone up.

"The slowdown in the US market has brought good business for us. In the last three-four months, we have signed deals worth $1 million a month. On an average, we sign deals in the range of $600,000-700,000 a month," said Sanjay Soni, MD, Logix Microsystems.

As the deal size has increased, the valuation of the companies have come down considerably.

Soni believes that the valuation of companies in the US have come down by at least 15 per cent due to the turmoil. Hence, a good time for acquisitions. The car accessories market in the US is a $150 billion opportunity while the car market is $650 billion segment.

Soni notes that the growth is coming despite the fact that its online portal izmocar charges at least 40 per cent more than its competitors in the US market. "The US is a very mature market. In some cases we are able to generate 800-1,000 leads a month," he adds.

As a part of its growth strategy, the company will soon be entering into Europeon market, and also plans to target Japanese and China markets by 2010.

"We will be entering into the European market by March 2008. We have found a good partner in Europe and will soon announce a joint venture. This is happening earlier than expected," said Soni.

For Logix, Germany and the UK will be two important markets. While the US will continue to be the biggest market, Soni is expecting 5-10 per cent of revenues from the European market and 10 per cent from India.

Logix under its expansion plans will also enter into the Indian market. Carazoo, the interactive car portal for the Indian market, registers 1.5 lakh visitors a day and generates 250 leads a day, within four months of its launch.

Currently, the services are available only in Bangalore, Mumbai and Delhi. The company will be launching their services in eight other cities, some of them are Chandigarh, Ludhiana and Haryana by June 2008.

"The Indian market is very slow. But we see a huge potential here. We aim to have at least 1 million visitors a day with 1,000 leads," said Soni.

Apart from growing its product offering through acquisitions, Logix is focusing on its R&D unit. The company invests around Rs 5-6 crore annually on R&D.

"We have developed a mobile applications for the auto segment. With this a user can access all the services with regards to his/her auto needs through their mobile handsets," said Soni.

The company is also in the process of developing solutions for the real-estate and the hotel industry.

For the financial year 2007-08, the company expects to achieve revenues of Rs 50-55 crore and is aiming at Rs 80-100 crore for the FY08-09.