Sonata Software Limited · NSE:SONATSOFTW
Sonata Software — Investor Presentation (December 2006)
67 slides from Sonata Software's investor presentation, Dec 7, 2006
Slide 1: Sonata Software Limited Analyst Meet
Sonata Software Limited Analyst Meet 07 December 2006
Slide 2: Agenda
Agenda Section I : A Snapshot Performance Business Model Strategy Section II : Scalable Organization Capabilities People Infrastructure Alliances Section III : Financials Section IV : The Strategy – Going Forward Q&A
Slide 3: Sonata – A Snapshot
SONATA – A SNAPSHOT
Slide 4: Total Income - Sonata Software Ltd.
Total Income - Sonata Software Ltd. Rs. Crores 6% 152.08 160 : 4 AGR C 140 101.32 120 100 71.41 80 50% 60 40 42% 20 0 FY 04 FY 05 FY 06
Slide 5: EBITD – Sonata Software Ltd.
EBITD – Sonata Software Ltd. Rs. Crores e com % tal In : 58 To 35.92 40 G R than CA aster 35 th f grow BITD 30 21.71 E 25 20 14.34 65% 15 51% 10 5 0 FY 04 FY 05 FY 06
Slide 6: PAT – Sonata Software Ltd.
PAT – Sonata Software Ltd. Rs. Crores 52% 30 R : G 26.16* CA 25 20 16.40 15 11.39 60% 10 44% 5 0 FY 04 FY 05 FY 06 * Before Exceptional items of Rs. 18.38 Cr
Slide 7: Total Income – Sonata Consolidated
Total Income – Sonata Consolidated Rs. Crores 51% : 600 AGR C 510.90 500 400 333.73 300 224.16 53% 200 49% 100 0 FY 04 FY 05 FY 06
Slide 8: EBITD - Sonata Consolidated
EBITD - Sonata Consolidated Rs. Crores e com 5 6% an In 44.08 45 : th G R ter CA h fas 40 wt gro D IT35 EB 27.00 30 25 18.18 20 63% 15 10 48% 5 0 FY 04 FY 05 FY 06
Slide 9: PAT – Sonata Consolidated
PAT – Sonata Consolidated Rs. Crores 6% : 6 27.54* 30AGR C 25 20 16.09 15 71% 10.05 10 60% 5 0 FY 04 FY 05 FY 06 * Before Exceptional items of Rs. 16.18 Cr
Slide 10: Business Model
Business Model • Distinct, synergistic businesses – Domestic – International • Domestic : SITL – Standalone; Profitable – Build competencies – Leverage alliances • International – Strategic Relationships - ODCs – Repeat business – Visibility
Slide 11: Group Structure
Group Structure Sonata Software Ltd (Software Services, IT Infrastructure Management for Overseas clients) 100% 100% 100% 100% Sonata Information Offshore Digital Sonata Europe Sonata Software Technology Ltd Services Inc, USA Limited, London GmbH, Frankfurt (Software Product (Sales & Marketing arm i
Slide 12: Our Strategy
Our Strategy • Market Segments – ISVs – Enterprise Clients • Broad set of offerings • Sales & Marketing • Geographical dispersion • Scalable delivery organisation • Alliances
Slide 13: Operations
OPERATIONS
Slide 14: Client Centric Model
Client Centric Model CRG HR CLIENT Account ODC E&T Mgmt QA A/c Mgmt INFR
Slide 15: Scalable Organization
Scalable Organization • Services Portfolio • New practice development • Quality Systems & Processes • Infrastructure • Human Resources • Training and skill building
Slide 16: New Practice Development
New Practice Development CRG Customer led e.g. BI e.g. Legacy Mgmt Strategic e.g. Infr. Mgmt
Slide 17: Services Portfolio
Services Portfolio Application Managed Business Packaged Infrastructure Maintenance Development Testing Intelligence Applications Management New Incidents Consulting DW Modeling Data Centre Implementation development Services Enhancements Test Appln Hosting & Re-engineering ETL Planning Global Rollo
Slide 18: Case study – Enterprise Account
Case study – 1 Enterprise Account Business Imperatives Changing business model Increased competition Global business climate Site Visits Selection Process Outsourcing – Key strategy Pilot Projects – Oracle Apps, Web, MI S/w dev / BPO / IT Infrastructure RFP Long term partnership Contract Risk minimi
Slide 19: Case study – Enterprise Account (contd)
Case study 1 – Enterprise Account (contd) Phases Scope of work Client Team Web Applications Knowledge acquisition Business Intelligence Onsite Parallel Testing Offshore Pilot Packaged Applications Steady State Sonata – Offshore team Legacy Migration FTE’s Sonata – Onsite team Time Highlights Product
Slide 20: Case study – Telecom ISV
Case study – 2 Telecom ISV Client Relationship Summary Business Imperatives Product Implementation Augment technology capability Flexible engineering processes POC Build scale to address Telco needs Maintenance QA /Support Customization Expand implementation bandwidth Regression First level Upgradat
Slide 21: Case study – Infrastructure Services
Case study – 3 Infrastructure Services Services Snapshot Business Imperatives Onsite Offshore Improve service levels Application Hosting Centralized Helpdesk Reduce costs of IT support Vendor Monitoring, Management Support & Admin Partner to handle the entire IT management Desk-side support & Asset
Slide 22: Quality Systems & Processes
Quality Systems & Processes • ISO 9000 since 1994 & SEI CMM Level 5 since 2001 • Processes for New Services • New Methodologies • Metrics and SLA driven • Customer Satisfaction Surveys
Slide 23: Infrastructure
Infrastructure Multi city; Multi site Modular ODC Oriented Sonata Nandi Sonata South End DR and BCP Secure Infrastructure Tools Hyderabad Campus Sonata Richmond Sonata Hyderabad
Slide 24: The Sonata Edge
The Sonata Edge Financially sound and growing company Challenging assignments; broad range of technologies Growth opportunities Make a difference and be noticed! Caring and value based organization Stability in top management
Slide 25: A Direction for Growth
A Direction for Growth KEYUR RAJUMOHAN ARVIND PANCHAL R M.S. Education: BE (Mech.) Education: BE, MBA (TAPMI) Education: B.E & MMS Sonatian in 1998 Sonatian in 1998, left in 2001, Sonatian in 2003 Started as a Sr. Functional rejoined in 2002 Consultant in the ERP practice Started as Client Champion
Slide 26: Management Team at Sonata
Management Team at Sonata Mr. B Ramaswamy Mr. P Srikar Reddy Mr. V. A. Ramakrishna President & Managing COO & Director VP, Marketing Director Handles Delivery, Quality, - Handles Corporate - Has been in Sonata for 20 HR Marketing, years - Internal Communications - Masters degree in Science - Has bee
Slide 27: Management Team at Sonata
Management Team at Sonata Mr. C.V. Narayanan Mr. DVSSR Murthy Mr. D. Gnaneshwar AVP, Projects AVP, Infrastructure Services Business AVP, Projects - Heads one delivery - 25 years in the industry - Group head for projects in group - Rich experience in Hyderabad - Has been with Sonata for Service Suppo
Slide 28: Management Team at Sonata .. contd
Management Team at Sonata .. contd Mr. Partho Mukherjee Mr. Vivek Desai Mr. R. Sathyanarayana Mr. Ganesh Subramanian AVP (US – East Coast) AVP & Head of Sales (UK) AVP Finance & Accounts AVP & Head – HRD - Responsible for Sonata’s - 17 years in Sonata - Heads Finance & - Heads human resources busine
Slide 29: Training
Training • Dedicated training facility and faculty – Train 120 people simultaneously • Boot camp training for fresh Engineers • Project based training • Knowledge repository • Working closely with Alliance Partners • Certifications • Continuous Learning
Slide 30: Our Alliances – The Power of Partnership
Our Alliances – The Power of Partnership Key Drivers Early Technology Adoption Differentiated Positioning with Customers Endorsement as Preferred Partner Help achieve their business objectives for the Indian market
Slide 31: Case Study - Microsoft
Case Study - Microsoft Current Engagement LAR in India Global SI Managed Partner across Geographies Gold Certified Partner Product Life Cycle: Partner Alignment Partner Advisory Board/Council Early Adoption Partners Ascend Partners Industry Solutions Partners Pre-Beta Beta Launch and GTM Awards “Win
Slide 32: Competencies
Competencies Communication, Business Applications Collaboration & eBusiness Dynamics AX Dynamics CRM Share Point Portal Server Dynamics NAV Commerce Server Content Management Server Database & Business Exchange Server Office 2007/ InfoPath Intelligence SQL Server 2005, AS and RS Microsoft Performanc
Slide 33: Focussed Go-To-Markets
Focussed Go-To-Markets Dynamics Business Intelligence Industry Frameworks Functional Analyzers: KPIs out-of-box CPG, Construction, ITES, ISV Sonnets: Manufacturing, Hospitality Analytics and Dashboards SonnetBI and SonnetBSM for AX and CRM Services Joint initiatives IP Creation Marketing MTC/Pre-Sal
Slide 34: Financial Highlights
FINANCIAL HIGHLIGHTS
Slide 35: Financial Reporting
Financial Reporting • Quarterly audited financials • Reporting; – Standalone – SSL, SITL, ODSI, Sonata Gmbh, Sonata Europe*, TUI InfoTec* – Consolidated – (SSL+SITL+ODSI+Sonata Gmbh+Sonata Europe*+TUI InfoTec*) – Consolidated International Services – (SSL+ODSI+Sonata Gmbh+Sonata Europe*+TUI InfoTec*
Slide 36: Key Financial Policies
Key Financial Policies • Revenue recognition Revenue from technical Service Contracts/Software Development recognized based on milestones or proportionate completion method as applicable. (AS9) • Fixed asset and depreciation Fixed assets at cost less depreciation. Depreciation on Building & Plant &
Slide 37: Key Financial Policies
Key Financial Policies • Inventories Software products capitalized amortized equally over a period of three years. • Foreign Currency Transaction Revenue & expenditure at the monthly standard rate. Current Assets/Liabilities restated at the year-end closing rate/forward contract rate. • Dividend Dis
Slide 38: Risk Management
Risk Management • Standard contracts - Software Development, IT Consulting, ODC, Non-disclosure, etc. containing necessary protection clauses for use in various jurisdictions. • International Insurance for the whole group comprising of Assets, errors and omissions, employee liabilities, D&O liabilit
Slide 39: Corporate Governance
Corporate Governance •Corporate Governance Policy in place. •Board of directors - 3 promoter directors, 2 executive directors and 3 independent directors. •Board committees Audit Committee – Financial reporting process & internal control. Investor grievance committee – Prompt and effective redressal
Slide 40: Total Income - Sonata Software Ltd
Total Income - Sonata Software Ltd Rs. Crores FY07 160 152.08 100 92.74 140 80 120 101.32 100 60 80 71.41 40 60 40 42% 38% 50% 20 20 0 0 FY04 FY05 FY06 HY1 YoY %
Slide 41: EBITD - Sonata Software Ltd
EBITD - Sonata Software Ltd Rs. Crores FY07 40 35.92 25 24.04 35 20 30 25 21.71 15 20 14.34 24% 10 15 65% 26% 61% 51% 10 21% 20% 5 5 0 0 FY04 FY05 FY06 HY1 EBITD % YoY %
Slide 42: PAT - Sonata Software Ltd
PAT - Sonata Software Ltd Rs. Crores FY07 40 25 35 18.02 26.16 * 20 30 25 15 20 16.40 17% 10 15 11.39 19% 10 16% 5 5 16% 44% 60% 0 0 FY04 FY05 FY06 HY1 * Before Exceptional items of Rs. 18.38 Cr PAT % YoY %
Slide 43: Cash from Operations - SSL
Cash from Operations - SSL Rs. Crores FY07 40 34.93* 25 35 21.76 20 30 25 15 19.48 20 10 15 10 6.00 5 5 0 0 FY04 FY05 FY06 HY1 * Before Exceptional items of Rs 6.84 Crores
Slide 44: ROCE % - SSL
ROCE % - SSL Percentage FY07 20.19%* 20 20 16.46% 15 15 10.47% 10 10 7.61% 5 5 0 0 FY04 FY05 FY06 HY1 * Annualised
Slide 45: Dividend Payout - SSL
Dividend Payout - SSL Rs. Crores FY07 15 5.26 6 10.52 10 4 6.84 100% 5.26 50% 2 5 65% 50% 0 0 FY04 FY05 FY06 HY1 DIVIDEND %
Slide 46: Total Income - Consolidated
Total Income - Consolidated Rs. Crores FY07 600 300 261.41 510.90 250 500 200 400 333.73 150 300 224.16 53% 200 100 30% 49% 100 50 0 0 FY04 FY05 FY06 HY1 YoY %
Slide 47: EBITD - Consolidated
EBITD - Consolidated Rs. Crores 44.08 45 FY07 40 30 29.23 35 25 30 27.00 20 25 9% 20 18.18 63% 10 11% 62% 15 8% 48% 10 5 8% 5 0 0 FY04 FY05 FY06 HY1 EBIDT % YoY %
Slide 48: PAT - Consolidated
PAT - Consolidated Rs. Crores FY07 30 27.54* 20 19.49 25 15 20 16.09 15 10 5% 10.05 73% 10 71% 8% 5% 5 60% 5 4% 0 0 FY04 FY05 FY06 HY1 * Before Exceptional items of Rs. 16.18 Cr PAT % YoY %
Slide 49: ROCE % - Consolidated
ROCE % - Consolidated Percentage FY07 21.66%* 20 20 18.19% 15 15 10.80% 10 10 7.04% 5 5 0 0 FY04 FY05 FY06 HY1 * Annualised
Slide 50: Balance Sheet Analysis 30th Sept 06 – SSL
Balance Sheet Analysis 30th Sept 06 – SSL Rs. Crores OTHER CURRENT ASSETS INVENTORY 3.9 5 Adv Tax 12.2 ODSI 15.6 Deposits & Adv 10.8 SITL 6.0 DEFFERED TAX ASSET SONATA GMBH 0.3 5.1 LOANS & ADVANCES 23 INVESTMENTS Gr.Block 58.2 21.9 Dep. 30.8 DEBTORS 41.4 FIXED ASSETS No.of Days 79 32.5 CASH & CASH E
Slide 51: Balance Sheet Analysis 30th Sept 06 - Consolidated
Balance Sheet Analysis 30th Sept 06 - Consolidated Rs. Crores OTHER CURRENT ASSETS 9.0 INVENTORY Adv Tax 14.3 6.4 Deposits & Adv 13.4 Gr.Block 77.80 DEFFERED TAX ASSET Dep. 47.90 11.0 LOANS & ADVANCES FIXED ASSETS 27.7 35.0 CASH & CASH EQUIVALENT No.of Days 92 74.7 DEBTORS 130.7 Gr.Block 778 Dep. 47
Slide 52: Shareholding Pattern
Shareholding Pattern 31% P ro m o te rs 2% T ru s t & E m p lo ye e s 5% F ra n klin T e m p le to n B o d ie s C o rp o ra te 5% 45% F IIs / N R Is 12% P u b lic
Slide 53: Analysis
Analysis Onsite Offshore Mix % Geography Mix % te 26 26 50 45 si 38 31 41 49 On US re ho 62 74 74 59 50 55 69 51 pe fs ro Of Eu FY 04 FY 05 FY 06 FY 07 HY1 FY 04 FY 05 FY 06 FY 07 HY1 53 54 60 62 ve Fi 1761 p To 13 15 e 1606 v 16 15 932 1251 Fi rs xt be 34 31 24 23 Ne m e Nu nc la Client Concentrati
Slide 54: Strategy – Going Forward
. STRATEGY – GOING FORWARD
Slide 55: Growth Drivers
Growth Drivers Organic - Strengthen Sales & Marketing - Alliances . - Strengthen offerings - Cross sell services Inorganic - New offerings - New geographies - Domain expertise - Client base
Slide 56: TUI InfoTec Acquisition
THINK CUSTOMER TUIINFOTEC ACQUISITION
Slide 57: TUI AG - Snapshot
TUI AG - Snapshot Part of the DAX30 Index Tourism • 3200+ Travel agencies Tourism Shipping • 122 aircrafts • 279 hotels in 30 countries • 75 tour operators in 17 European source markets ~ € 14 bn turnover ~ € 7 bn turnover ~ 9,000 employees ~ 50,000 employees Shipping Number 1 in Europe Number 5 wor
Slide 58: TUI Infotec – Profile
TUI Infotec – Profile • Headquartered at Hanover, Germany • IT service provider to the TUI Group since 1997. • FY05 – Key financials – Revenue : € mill 130 – # of Employees : 400+ • Two service divisions - Software Services & IT Infrastructure Management • Two subsidiaries – Travel BA.Sys (79%) & AC
Slide 59: Transaction Highlights
Transaction Highlights • 50.1% shares acquired by SPV - Sonata Europe Limited • Purchase price : 18mn Euro • Includes all operations of TUI Info Tec, Travel BA.Sys & ACCON • Territories – IT Services : Germany, Austria, Poland, Switzerland – IT Operations : European markets • Revenue commitments fro
Slide 60: Harnessing Synergies
Harnessing Synergies TUI InfoTec SONATA Strengths Strengths • Domain expertise • Depth and breadth of software services • IT Infrastructure Mgmt • Technology alliances • Supporting complex, mission-critical • Presence in UK environments • Sales & Marketing • Capability for managing offshore Low-risk
Slide 61: Software Services
Software Services • Travel domain expertise – Airlines, Hotels, Shipping, Tour Operators, Mainframes Business Travel agencies Intelligence – Experience ¾ Inventory / Reservation Systems Web Oracle E- Development Business Suite ¾ Yield Management Systems ¾ Web-based travel platforms Travel Retail ¾ D
Slide 62: Intellectual Property
Intellectual Property • IP for several travel-related applications – Touristic planning & analysis system – Integrated Reservation & Information System – Web-based sales platform – Hotel Contracting System – Travel Data warehouse – Travel documents – Flight planning system
Slide 63: Infrastructure Management
Infrastructure Management Infrastructure Desktop Key Metrics Services Directory Desktops • ~ 160 different Applications hosted Services Mail Notebooks • ~ 630 Servers (UNIX, Linux, Windows) Data Center Printers • ~ 4000 MIPS Mainframe supporting 8 Security Mobile 24 x 7 devices Million transactions
Slide 64: German market overview
German market overview • Largest untapped IT Services market in Europe • Tough to penetrate • Critical Success Factor - Understanding of German Language and Culture • Drivers for Outsourcing – Cost Reduction and Labour Flexibility • Key Growth Areas – Packaged application implementations, web servic
Slide 65: Remote Infrastructure Management
Remote Infrastructure Management • Offshore infrastructure management - A strong emerging trend • Potential - Bulk of Infrastructure Management Services can be offshored • Growing at 50% CAGR • Deals are becoming more modular • Selective outsourcing (help desk, email, security / network) growing
Slide 66: Key Benefits to Sonata
Key Benefits to Sonata • Access to a new geography • Broader service capabilities – New service offering – Infrastructure Management – Complementary skills – SAP, Mainframes • Domain – Travel, Airlines, Shipping – Travel BA.Sys & ACCON – Technology & shared back-office services for travel agencies •
Slide 67: Thank You
5 SONATA » TOC SONATA SOFTWARE Thank You
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