Datamatics eyes buyouts in US, UK

Datamatics Technologies (DTL), a business process outsourcing (BPO) firm, is eyeing acquisition of software and BPO firms in the US, UK, Australia and Canada. It also hopes to grab a chunk of the editorial services outsourcing contracts.

The company's initial public offering of 10,300,000 shares opens on April 12. The 100 per cent book built issue has a floor price of Rs 101 and a cap price of Rs 110.

"We have appointed Ernst & Young to track companies in these four English-speaking countries which can be acquired. We should be able to buyout at least a couple of companies in the current fiscal year," Lalit S Kanodia, chairman of Datamatics, said here yesterday.

"Through Ernst and Young we acquired CorPay Solutions Inc in the second half of last year. CorPay is an accounts payable processing company in the US with revenues of around $13 million. We are now stressing on acquiring companies in the receivable segment," Kanodia added.

Earlier, DTL acquired Saztec International Inc, a diversified information processing company.

"In 1996, we acquired 5 per cent of Saztec which we hiked to over 40 per cent in 2000. In 2003, the board of directors of Saztec approved the merger of Saztec with our US subsidiary. With this, our stake in Saztec was increased to 100 per cent. This acquisition helped us to create a US front-end company," said Kanodia.

He said the company will also use a network of agents in other emerging markets to tap business opportunities. "On an experimental basis, we have recently used an agent-type model in some overseas markets and it has proved to be success. We plan to take the similar model to Australia and the US in a bigger way."

The agents will work for Datamatics on a percentage commission basis. The company has already formed subsidiaries in the US, Germany and UK for marketing and account relationship management.

"Datamatics has focused on deriving maximum benefits from its existing relationships with multi-billion dollar publishing houses. We aim to provide a complete range of end-to-end services for all our clients, their subsidiaries and affiliates," Knodia said. "We will also aim to capture a significant proportion of the rapidly growing editiorial services outsourcing contracts from our clients including Thompson Press. The Company will also aim to market content management services to the large Fortune 100 clients of CorPay Solutions Inc," he added.

DTL had total revenues of Rs 60.43 crore for the year ended March, last year and Rs 72.73 crore for the nine months ended December, 2003. It posted a net profit of Rs 15.53 crore in the last fiscal and Rs 21.43 crore in the nine months of this fiscal.