ThreeSixty deal to boost co's performance manifold: Saksoft

Ekta: Can you tell us what ThreeSixty Logica Testing Services Pvt Ltd is and what is the rational behind this?

A: ThreeSixty is a company focused on the quality assurance (QA) and testing space. We already have a testing business in Saksoft and we felt the acquisition of ThreeSixty would greatly help us strengthen our testing offerings especially in the independent software vendors (ISVs) and product company space. ThreeSixty also focuses on the same markets that are of focus for us that is the US and the UK. As you know these are big markets and we are very confident that, you know with this acquisition we will be able to grow tremendously faster in these two markets.

Anuj: If you could give some more details in the terms of the target company ThreeSixty the kind of revenues it has if it's a profit making company and how much did you pay for this acquisition?

A: We haven't shared the commercial details of the transaction. All I want to say here is that the company is very profitable, it has got very healthy EBITDA margins much more profitable than Saksoft. So, from a value perspective and from earnings per share perspective it would be very positively accretive for the merged entities.

Anuj: How are you financing this deal is it cash acquisition and how will you be financing this particular deal then?

A: It is a 100 percent cash deal. It is financed through internal accruals and a little bit of debt but it is all internal funding, there is no plans to dilute share capital at this point.

Ekta: How much cash do you all generate as a company and what is your debt level at this point?

A: So we don't have a very high debt level. Our debt to equity would be in the range of about 0.6 for the combined entity even after the acquisition.

So fairly comfortable and in terms of the company ThreeSixty Logica, their EBITDA margins are in excess of 40 percent so very healthy and overall very positive for the combined entity. We are very excited about it not only will it strengthen our offerings, it will strengthen our business model, it will strengthen our profit and loss (P&L) model and the future looks very good.

Anuj: You said that this is a company, which is actually larger than Saksoft and has healthy profitable margins. Your own EBITDA margins are somewhere around 10 percent if you could tell us if this is higher than 10 percent or below 10 percent?

A: ThreeSixty is not larger in terms of revenues than Saksoft, it is lower but in terms of EBITDA margins it is much higher, our EBITDA margins are in the range 12 percent for Saksoft and the EBITDA margins for ThreeSixty would be in the range of 40 percent. So, considerably more than Saksoft and like I said very positive for the combined entity.