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Aug 18, 2011, 05.06 PM IST
Datamatics Global Services has acquired stake in Cignex Global Holding Corporation, which has a top-line of USD 22 million. In an interview to CNBC-TV18, Rahul Kanodia, vice chairman and CEO of Datamatics says, "With this deal we expect this year to be up at about somewhere in the range of Rs 420 to Rs 450 crore."
Kanodia says Cignex is a profit making company with 10% EBITDA and also has corporate blue-chip companies as their clients. "With this deal we expect this year to be up at about somewhere in the range of Rs 420 to Rs 450 crore and the bottom-line should be at 10%, approximately," he adds.
Below is an edited transcript of Rahul Kanodia’s interview to CNBC-TV18. Also watch the accompanying video.
Q: How much have you paid for the acquisition? What is the deal size, what is the cash outflow on account of this and what is the timeline of payment?
A: The deal is over and the company’s revenue target for this year is about USD 22 million. The cash payout would be over a period of two years and would be about that of about USD 17 million.
Q: Apart from the cash payout is their any kind of equities or anything else that is incorporated? Are you taking a debt?
A: It was an all cash deal and has been funded through internal accruals, we are not leveraging. We acquired this company to focus on the enterprise counter management and document management. Datamatics has a strong footprint in that segment and it contributes significantly to that space in the open source market. We see good traction in the open source business globally and because of the slowdowns, meltdowns, cost pressures it dovetails into our strategy extremely well.
Q: Just take us through the financials of Cignex and what sort of clients are you going to see?
A: The clients are all corporate blue-chip companies like Toyota, Deutsche Bank, Ford and SISCO. These large corporate companies provide huge opportunity to cross sell all our services into these companies. On the financials, the company is debt free, the working capital debt is normal and we have acquired this entirely through our internal accruals so we have not leveraged our books.
Q: Is Cignex profit making and would it be EPS recruiter for you all from this year onwards?
A: Yes, it is profit making and they have about 10% EBITDA.
Q: This is the second acquisition that you are doing. Is there anymore cash on the books or any more acquisitions?
A: We have cash on the books and are looking at some other acquisitions. However, it is too premature to talk about them because they are not anywhere close to maturity.
Q: You have finished FY11 with Rs 275 crore. What is your top-line and bottom line going to look like once the acquisition starts contributing?
A: We expect this year to be up at about somewhere in the range of Rs 420 to Rs 450 crore and the bottom-line should be at 10% approximately.
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