Four Soft-Take Solutions to merge in 2 months

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Srikanth Palem Reddy , MD of Four Soft said that he see synergies between Take Solutions and Four Soft. The two companies are planning a merger and the process could take around two months, he said.

 

Excerpts from CNBC-TV18's exclusive interview with Srikanth Palem Reddy:

 

Q: Throw more colour on the kind of structure that this meager would bring about as a combined entity for Four Soft as well as Take Solutions, what will be the focus area and what are the synergies you wish to draw from both businesses?

 

A:   Four Soft has a complete vertical called transportation and logistics and we focus mostly on enterprise solutions and execution software.

 

Take Solutions has two verticals, one of which is supply chain management and that is more manufacturer-focused logistics and secondly, theirs is also planning and optimization rather than simply execution. So the synergies are definitely there because we compliment each other; we are not competitors. But what it will result in is the domain and intellectual property that completes the logistics and supply chain domain in terms of execution as well as planning in terms of verticals of transport and logistics as well as the manufacturer or the shipper side.

 

Q: How much time will this merger process take and by when can we expect the announcement of the merger ratio?

 

A: The process has just started and we are still appointing the valuers and independent financial advisors, so we should have something in our hand in the next two months.

 

Q: Just one aspect in terms of the geographical presence that both the companies have is interesting because Take Solutions has an exposure to the US market, Four Soft is predominant in Europe and Japan. Geographically where do you see the way forward particularly with your expansion or your presence building in the US economy?

 

A: Your are right - geographically also, both the companies compliment each other very nicely because Take Solutions engages almost 400 full-time employees in the US, whereas Four Soft has only 35 people and Four Soft US component of revenue is less than 25%, whereas Europe is our largest geographic area from a revenue and even profit point, almost 60% comes from there. Take Solutions has almost little or no presence in Europe. So we will leverage off their operations in the US and across; sell and push our products through their channels and our European operations will help them to launch their products because they have another additional vertical which is in a different domain in the clinical trial and research software - they can also launch that business through our operations in Europe.

Q: One aspect is on the EBDITA margins because we believe that Take Solutions has about 45% and your EBDITA margins stand at about 11%, so wouldn't that bring out some squeeze on the consolidated picture?

 

A: There are two things - our impact is largely because of the write-off we had to take last year in Europe from the acquisitions. We had to take two years back but that is behind us now. What you are looking at is the kind of an exception and that's not really representative of our financials for the period; prior to that or even the period going forward.

 

Q: So what forecast can you offer the investors of both the companies at this time in terms of the kind of margins you would be looking at or targeting and the kind of revenue growth and PAT figures you are looking at from a 1 year time horizon or maybe 2 years as well?

 

A: I am sorry, I wont be able to answer that question alone myself; that should be provided by us jointly with Take Solutions after we get some more details.

 

Q: Any acquisition plans on the annual immediately?

 

A: From Four Soft, no, we have consolidated and focused on integration of the acquisitions we have done and right now, the focus is completely on the organic growth for Four Soft.