Software firm Geometric Software Solutions is eyeing an acquisition in automotive electronic services segment, at a deal ranging between $10-25 million
Software firm Geometric Software Solutions Co Ltd is eyeing an acquisition in the automotive electronic services segment, at a deal size ranging between $10 and $25 million, a top official said on Thursday.
“I am keen to go after that space as we do not have that in our engineering portfolio. It will be time-consuming to build it out from within and companies look for institutional credibility,” managing director and chief executive officer Ravi Gopinath said. “We will have to do an acquisition.”
The target company would be “rich” in intellectual property and synergise with its current engineering services portfolio, which is focused on the automotive sector. “We are not buying headcount,” he added.
From a partner-based approach to client servicing Geometric, which offers engineering services and product lifecycle management services, has now moved to a direct-to-market strategy, which is expected to improve its margins in the second half of the year.
Geometric Software is looking at chalking up revenues of $300 million by 2010. It ended 2006/07 with consolidated revenues of $85 million, Gopinath said.
“We are already getting better price realisations with our new initiatives,” he said, adding that new business saw a 10% rise in price realisations in the April-June quarter compared with the previous quarter. The management is also putting in a Europe-strategy to improve the quality of sales there.
“We are looking at boosting up realisation on our Europe sales by 5-7% vis a vis today’s baseline,” he said.
Currently, Europe contributes 20% to its revenues and this is expected to go up to 30-35% in the next three years, he said.
Its order book in the US grew five times in the first quarter from the previous quarter and in the current quarter is expected to double, he said, without disclosing figures.
The company is in the process of increasing its fixed-price contracts as a way of combating the appreciation in the rupee and also for traction.
“We are looking at getting contracts and staffing our projects where we are able to distribute our team using an onsite-offshore model,” Gopinath said.
The company has set a target to take revenues from fixed- price contracts to 45-50% of its total by the end of 2007/08, from 18-19% in the first quarter.
In the current financial year, it plans to add 800 people to its existing headcount of 2,628 employees. This is expected to go up to 6,000 by 2010, he said.
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