Saksoft Acquires Augmento Labs, Reason Behind It & Synergies? | FY25 Business View | Niraj Ganeriwal

Mary Val is now joining us, the CEO and CFO Sax Software. Of course, Sax Software going gone ahead and done an acquisition which is going to add to the business model of Sax Soft. It's almost 100 crore acquisition. Nileshia, talk to us a little bit more about the area this come the the target companies operating in what gap does it fill in, in your business model And you went for 100 crore cash deal or is it some kind of arrangement share, share swap? Sure, Ajay. So the name of the target is Augmento Labs and they are a very focused product engineering play. Product engineering is a significant component of our digital transformation story. All our acquisitions have been capability driven. In addition to the product engineering, they have very strong customers in the high tech media and utilities space and there are two customers who are $1,000,000 plus. So when we look at this acquisition, apart from the capability, we are also getting two large customers. The 100 crore is going to be an all cash deal but it's staggered over two years. There has been an upfront consideration of 35 crores which will be paid at closing and the balance will be over two years as earn out subject to the target meeting specific revenue and EBITDA targets. But Neeraj, is this steal EPS secretive from the year first itself, what kind of margin does it hold versus your versus Saxoph's average? What could it add in terms of the overall revenue profile? As I mentioned this target is doing anywhere between 6:00 to $7,000,000 of revenue. So it should you know for the current year and the years to come add at least 7 to 8% of our revenues. Our overall EBITDA has been ranging between 16 to 18% and the EBITDA of this company is between 28 to 30%. So it should definitely be EBITDA iterative for us. How how much can you build this business into and say in the next two to three years, the meaningful addition to your revenues etcetera, these capabilities which you're talking about and the big clients, how will they grow in the next two to three years? Yeah. So, you know we have a very simple strategy when it comes across acquisitions. We call it as a string of Pearl strategy wherein any company which we acquire for capability, especially when it's a product engineering play, this will be cut across a lot of our verticals and we will be able to take them across to most of our customers because product engineering in today's time is a very significant component when it comes to the overall offering. In fact, the application development which is a part of the product engineering itself contributes 45 to 50% of our overall revenues. So I do believe that in the next 2-3 years, this target alone, the contribution from the services which they provide could easily go between anywhere to 8 to 10% of the overall revenues. OK, So that's interesting. But then talk to me about that, that your overall revenue target for 20-30 was close to $500 million. How much of it will actually be fueled by these inorganic acquisitions? And how much do you think you'll be able to do organically? I think it's too early for us to comment how much would come from organic and how much would come from inorganic. But strategically as a company, we have been doing acquisitions at least one or two every year and most of them have been for capability. This is the first one which comes with capability +2 significant customers. So I think the flavour of the acquisitions which we go forward would be capability plus having some customer share and I think it's time to come which would say that how much would be organic or inorganic. But we are definitely focusing on our target of 500 million and we do believe we have a strong basis of reaching there right, 500 million by 2030. Is are you on track for that or can that target be reached ahead also one or two years before I think we would say we should be on target. Just a point to note over that is in 2020 we had mentioned when we were about $50 million of revenue saying that by 2025 will be $100 million revenues, but we were almost a year ahead. This year which is March 24, we close to about 95 million. So when we set that first target for ourselves, we probably achieved a year earlier, fingers crossed, the way things are going, we are quite positive that we will reach 500 million by 20-30 earlier or something. Unable to comment at this stage. But Neeraj, right now, if you talk about the overall weather in the IT industry, it's not, you know, very smooth, it's a bit turbulent. Given that context, what kind of growth aspirations do you hold for yourself in FY25, especially with this acquisition coming on board? And the overall margins that you talked about used to be between 16 to 18%, if I have it right. What's the trajectory which is expected there? So I think from a growth perspective for the current year, our target is 1000 crores. We are looking at almost 25 to 28% growth as compared to the previous year. We should end up anywhere between 9:50 to 1000 crores is what we believe at this stage. Now this industry definitely is having headwinds, there is no doubt about it, both in the US market and the Western market. But you know, these are cycles. The the good thing is maybe we are at the bottom of the cycles and things should only improve as we move forward. Plus for the size at which we are and the nation which we are, you know we are too small as compared to the larger players and the potential for a company for us to grow is much larger than a large player. So we do believe our management does believe that we have a strong footing as we move forward. There are opportunities, yes, for the next one or two years. The headwinds are quite strong. So it could be slower growth. But as we move forward, we are working towards a 500 million target. All right, Neeraj, we'll let you go on that one. Thanks very much for joining us on the show. Thank you. So clearly one if you like this video then like, share and subscribe to ET Now.