Take Solutions targets 40% growth for next 2-3 years

 Take Solutions held an analyst meet to discuss the future prospects of the company. Mr Srinivasan H R, Vice-Chairman and Vision Holder alongwith other management members addressed the meet.

Highlights of the meet

• Take Solutions have products in two verticals: life sciences and supply chain management. For FY08, SCM contributed 56% of revenues and life sciences contributed 42%.

• Of the revenues, for FY08, 40% came from license fees, 13% from maintenance, 45% from services and balance 2% from others. The ratio has remained same for Q1FY09. The services revenues are FTE based.

• The order book as of June 30, 2008 was US$ 66 million executable over next 6-9 months. It is higher than US$ 40 million in the last year.

• The gross margin of life sciences vertical is higher than SCM vertical. However, at OPM level they are the same.

• The company capitalizes product development expenses and writes them off over 3 years for successful products. Product development expenses are about 5% of the revenues.

• The company has hedging position of US$ 1 million per quarter at Rs 40.70/US$.

• Geographically, for FY08, USA contributed 67% of the revenues and APAC 33%. For Q1FY09, USA contributed 66% and APAC 34%. India contributes 7.5% and balance from Malaysia & Middle East market. The company plans to enter Europe and targets to generate about 20% revenues from Europe within the next 3 years.

• The company does not follow the onsite/offshore model. The revenues are mainly generated from onsite.

• The company plans to introduce 6 more products in the next 2 years both in Life Sciences and SCM segment. The company also plans to augment products with higher services.

• The management targets 40% organic growth in the next 2-3 years.

• The company would be looking out for acquisitions in the life sciences and SCM space to fill in the gaps.

• The cash in books is at about Rs 100 crore. In the current market conditions, the company is not planning to raise any capital.

• In FY08, contribution from top 10 clients stood at 27%, which has come down to 25% in Q1FY09. In FY08, new client additions were 88 and for Q1FY09 it was 23. The active clients have increased from more than 340 clients at end FY08 to more than 375 clients at end Q1FY09.

Life Sciences

• The Life Sciences solutions suite has 6 products. The products include OneClinical and PharmaReady suite for clinical research and regulatory submissions leading to approval. It includes data management, standardization, data extraction, report generation, predictive analysis and regulatory submissions.

• Life sciences is a regulated market with high entry barriers.

• As per management, the Global bio-pharmaceutical R&D spent is estimated to be US$ 172 billion with 18% CAGR. The outsourced work amounts to US$ 30 billion while Clinical and regulatory spent could be about US$ 7 billion per year.

• The Company is one of the 10 approved members of Clinical Data Interchange Standards Consortium (CDISC).

• The revenue model for the life sciences product is license fees + services + AMC. The license fee amounts for 38-42% of the total deal size. AMC amounts to 15-20%. The balance would be services revenue, which would be under multi-year commitment. The services would include collection and analyzing of data.

• The company does have competition for the entire suite of services. However, there is competition in the regulatory submission side as well as clinical data side. Also, the number of clients using the entire suite is minimal.

Supply Chain Management (SCM)

• The SCM solution suite has 16 products. The OneSCM offering has 16 unique products with embedded IP that spans the entire gamut of execution, planning and collaboration in the supply chain network.

• The use of OneSCM starts from the place where the ERP products of SAP, Oracle and Microsoft end.

• Globally, the market size for SCM software is estimated at US$ 8.5 billion by 2010. Of this the SCM execution market is pegged at US$ 7.1 billion with CAGR of 9.7%.

• It has 4 revenue models: SaaS where it gets services revenues and per transaction revenues; On-premises: license fees + services + AMC; Software Appliances: license fees + services + AMC; Software enabled: services + per transaction revenues.

• Services revenues include data collection through own person or devices and data mining.

• Competitors include Red Prairie, Manhattan Associates and JDA Software amongst others.

• The company is in talks to acquire Four Soft, a listed Indian company, offering solutions for transportation and logistics industry. The company has presence in Europe and Japan. However, pricing is the main reason for the deal not going through.