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November 07, 2006

Sonata Software eyeing buy in U.S., Europe

By Janaki Krishnan
MUMBAI (Reuters) - Software services firm Sonata Software Ltd. is looking at an acquisition in U.S. or Europe with revenues of around $50 million to sustain growth, a top official said.
"So far our growth has been organic. But in order to sustain our current level of growth we need to look at acquisitions," President and Managing Director B Ramaswamy told Reuters in an interview on Monday.
The acquisition is likely to be made in the next fiscal year, he said.
"For the last four quarters the company has been maintaining an average growth rate of 65 percent year on-year on a standalone basis," he said. For the quarter to Sept. 2006, Sonata's standalone net profit rose 65 percent to 92.6 million rupees.
"The acquisition has to add to our geographical reach, add to our capabilities and lead to more clients in certain verticals."
Fifty percent of Sonata's revenues are from the US and other 50 percent mainly from the English-speaking Western Europe.
"Now we want to get into the non-English speaking areas," he said. So the company's acquisition would either have its operations in Europe or U.S., where it is still seeking to consolidate its position.
A recent 50-percent acquisition of Germany's TUI InfoTec would result in 65 percent of revenues coming from Europe and the impact on revenues is expected from the current quarter.
"The acquisition has put us in the $250 million-plus revenue category which considerably increases our ability to bid for larger deals," he said.
"Now we can easily go for $30-40 million deal sizes," he added.
"The U.S. is a large market and we need to strengthen our presence there," Ramaswamy said.
Sonata has a 2500-seater facility coming up in Hyderabad, which will start at the end of a year and is looking at a leased facility in Bangalore with capacity for 1000-plus people, he said.
In the last 3 months the stock has gained 18 percent while the BSE 500 index has gained 24 percent.
Source : Reuters

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