Started in 2001, Take Solutions (TSL) was formed by a group of professionals, with an entrepreneurial drive, extensive knowledge and experience in the area of supply chain management (SCM). TSL has since grown both organically and through acquisitions. Its products are focused on the SCM and life sciences (LS) verticals and are complimentary to the legacy or enterprise resource planning software, which its clients currently use.
Currently, TSL has 16 active products in the SCM vertical, which are housed under the One SCM™ suite, and six products in the LS vertical under the One Clinical™ suite. The foundation of all its product offerings in both the segments is domain knowledge and the Take RTE (Real Time Enterprise) framework. End March 2007, TSL had completed more than 2,500 software installations for over 250 customers ranging from multinational enterprises to medium- and small-sized companies.
The SCM vertical contributed 48% of the revenue in the year ending March 2007 (FY 2007), down from 60% in FY 2006. The LS vertical contributed 45% of the revenue, up from 40% in FY 206. Contribution of `Others’ went up to 7% in FY 2007. Geographically, Asia Pacific contributed 52% of the revenue in FY 2007, down from 60% in FY 2006; and US 48%, up from 40%..
Among the segments, product licenses and related activities contributed 43% of the revenue in FY 2007, up from 43% in FY 2006; maintenance fees 11%, up from 10%; and services 42%, down from 47%.
The net proceeds of the issue would be utilised for further acquisition, prepayment of debt (Rs 83.50 crore), for acquisition of ClearOrbit Inc. US, product development (Rs 15 crore), enhancement of domestic infrastructure (Rs 23.20 crore), and prepayment of term loan of Rs 20 crore. TSL has already acquired ClearOrbit Inc., which extends enterprise systems with proven supply chain execution (SCE) and collaborative supply management (CSM) software solutions. The company is also in advanced stage of acquiring at least one potential target, specialising in delivering a unique combination of supply chain information services and analytic applications in the food-service industry.
Strengths
- Over the last three years, backed by acquisitions, operating revenue has grown at a CAGR of 138% and net profit at a CAGR of 310%. The product portfolio has increased from four in FY 2004 to 11 in FY 2007, with six products added in the LS vertical in FY 2006 with the acquisition of Take Inc.
- Acquisitions would allow expansion of clients and geography, enabling cross-selling of services and solutions.
Weaknesses
- Product business is associated with higher volatility in revenue and profits. This can be seen with the operating profit margin (OPM) dipping to 25.3%, from 32.6% in FY 2006.
- Majority of the revenue is earned in foreign currency. Rupee appreciation has been affecting medium- and small-scale companies more than the larger ones.
Valuation
At the price band of Rs 675 – Rs 730, FY 2007 EPS on post-issue equity of Rs 26.4 is discounted 25.5 – 27.6. Product-oriented companies such as Subex Azure, Sasken Communications and Nucleus Software are currently trading around P/E of 27-29.