Mumbai: Back-office firm Datamatics Technologies Ltd expects to make an acquisition in the US or Europe in the current fiscal year.
“We are focusing aggressively on growth and we are actively looking at mergers and acquisitions,” said vice-chairman and chief executive officer Rahul Kanodia.
The acquisition, in the $10-40 million (approximately Rs41-164 crore) range, is likely to be in the finance and accounting segment. In case of an all-cash deal, it would be around $10-20 million, while a stock-and-cash acquisition could see a deal size of $30-40 million, he added.
Datamatics is in talks with three companies, one in Europe and two in the US, he said.
The company, which has maintained a relatively low profile, has made two acquisitions in the past. “But that was three years ago, and since then we have not done anything,” Kanodia said.
Datamatics Tech provides back-office services in four main segments—finance and accounting, document processing, content management and consulting.
“Finance and accounting is becoming very popular with India becoming a financial hub for financial analysis, data processing and knowledge process outsourcing,” Kanodia added.
“This is a very potent area.”
Content management is another area where the company wants to grow inorganically. “The content management bit is becoming very aggressive, as foreign publishing companies are coming to India and looking at global services,” he said.
All four segments contribute equally to revenues.
The company derives 75% of its revenues from the US and the remainder from Europe. It now plans to increase the business volume in Europe.
“I think we will push harder with the European business and try to get it more towards a 60:40 ratio or even a 50:50 ratio,” Kanodia said.
This is expected to be achieved in the current fiscal year.
“Currently, European companies are responding better than US companies. America is a saturated market as far as outsourcing is concerned and we’ve been doing it for a long time.”
“Europe is beginning to wake up,” he added.
A recent report by Gartner, which tracks the information technology sector, said Indian offshore services providers are increasingly gaining traction in the “traditionally difficult continental European market.”
In 2005-06, the company reported a net profit of Rs28.7 crore on net sales of Rs61.6 crore.
For the quarter to December 2006, net profit was Rs4.7 crore on net sales of Rs16.2 crore.
Shares of the company closed at Rs52, up 0.39%, on 15 May in the Mumbai market.