IBIS contributed to revenues in Q3: Sonata Software

Prasanna Oke, CFO of Sonata Software in an interview to CNBC-TV18 spoke about third quarter earnings, IBIS acquisition and future outlook.
It was a mixed third quarter for Sonata Software, the revenues were up 31 percent at Rs 521.9 crore versus Rs 398.4 crore for the same quarter last fiscal. EBITDA was up 10.6 percent versus 12.8 percent quarter on quarter (QoQ) at Rs 55.65 crore versus Rs 50.91 crore QoQ. Profit after tax was up a bit at Rs 40.2 crore versus Rs 39.3 crore and margins were impacted by forex loss.

The company in October, 2015 acquired US based supply chain software and service provider IBIS for USD 14 million.

Below is the verbatim transcript of Prasanna Oke's interview with Reema Tendulkar & Mangalam Maloo on CNBC-TV18.Mangalam: While your margins did see a negative impact on account of forex loss. Even if we do account for that the margins have dipped sequentially. So, what is the new normal for margins going forward?A: With our results we are fairly happy. They were in line with our expectations. When we look at our margins again there are two parts of the business that we have. So, there is an international component of the business and there is a domestic component of the business. The domestic component is largely driven by huge amount of which are call the revenues where the margin is lower. So, one needs to look at these two businesses separately.On the international side of the business we had a sequential growth of about two percent and earnings before interest, taxes, depreciation and amortisation (EBITDA) still looks at about close to 26 percent or so. So, that business continues to grow both in terms of margins and the revenues on a sequential basis. The domestic part of the business is largely huge amount of revenue where we have a margin in the range of about 3-5 percent. So, these two businesses should be kept separate and then we will get a better look at the margins.Reema: But on a consolidated basis your revenue went up 31 quarter-on-quarter (Q-o-Q). There was an acquisition of IBIS that you did in the October of 2015. Did that in any way contribute to your December quarter earnings and how much will it contribute in the coming quarters?A: Yes, we had the acquisition of IBIS which closed in the middle of November. We just got about six weeks of revenues from that and revenues were not as high as we expected because on account of the holiday season in the US. But if you look at the kind of growth that we have had about six percent Q-o-Q I would attribute about close to four percent on account of the acquisition from IBIS.