Cintel to push bottomline by 10-15% in 12-18 mths: 8K Miles

The Cintel acquisition would be complementary to cloud computing SAS platform and help 8K Miles Software Services Ltd software Services offer a complete end-to-end services to their enterprise customer said Suresh Venkatachari, chairman and chief executive officer of  the company in an interview to CNBC-TV18. 

It would also help them double their topline and improve bottomline by 10-15 percent in 12-18 months.8K miles will be acquiring Cintel Systems, a leading UI & UX, Mobile Application Development and Services Company and has entered into asset purchase agreement with Cintel Systems, Inc, which includes acquisitions of Intellectual Property (IP), client contracts and employees. The total amount of this acquisition is considered to be USD 3,750,000 combination of cash and stock.This deal would further allow the company to have access to Cintel's customer base and add around seventy people to their employee strength.Going forward too the company plans to grow both organically and inroganically, said Venkatachari.

Below is the transcript of Suresh Venkatachari’s interview with Anuj Singhal and Ekta Batra on CNBC-TV18.Anuj: Can you explain the rationale of this deal? It is a pretty small one and do you have some further acquisitions in the pipeline in the same space?A: Cintel is a specialist in UI and UX interface for mobile applications and web applications. It is a complimentary to our cloud computing fast platform, so it allows us to offer a complete end-to-end offering to the enterprise customer. This would add about 70 people to our employee strength. It would also allows us to access their customers and offer our existing customers new suite of services. Therefore, the acquisition will help us enhance our total offerings and improve our top-line and bottom-line over a period of time.Ekta: What maybe the financials would look like in terms of a trajectory for Cintel? I understand that it might just be very negligible at this point in time but eventually maybe in two years what would you forecast in terms of earnings and secondly how?A: The company currently generates sales of around USD seven million and with a decent profitability. When we combine with our cloud computing, we could able to improve the revenue and the bottom-line probably in the next 12-18 months. At least significantly improve by another 10-15 percent on the bottom-line and maybe double the top-line.Ekta: You said the sales are USD seven million, so I assume the acquisition has been at a discount for you?A: This is basically based on the profitability of the business and also they get a stock of the 8K miles or the subsidiary company. So, they also get a additional value over a period of time. Ekta: So, what is the total valuation of this particular entity?A: USD 3.75 million. Their sales are USD seven million and the net profit is around USD 600,000-700,000.Ekta: You have been quite active on the acquisitions front if I am not mistaken. You did acquire Surge Solutions. Then in March also you announced an acquisition in Canada. Can you just tell us the range in terms of the acquisitions that you are looking at and what would the pipeline look at as well, look like?A: We continue to grow both organically and inorganically. The reason for acquisition is to compliment our offerings. The SERJ Solutions acquisition is basically to enhance our healthcare domain expertise and it is playing very well for us. We could able to sell our cloud services into the healthcare hospital market providers and giving a good generation. The mind-print acquisition which is a statistical analysis system (SAS) based for CRO, we have continued to build a product right now and this could be a good offering for us over a long period of next two to three years where we could able to provide CRO analytics platform for both CROs as well as a pharma industry.

The reason behind the Cintel acquisition is our technology domain actually, to improve our end-to-end offering because as 8K Miles we started with a cloud as a base platform. We helped companies to migrate into cloud and provide managed services. Over a period we acquired our first company called Fusion Solutions in 2013 which is on a identity and security platform to help the security. We continue to improve on the technology acquisitions and also on the domain platform. We focus more healthcare and pharma which are the two verticals where our future acquisition will be aligning towards. Those are verticals which will compliment us and give us a clear leadership position in the industry.