HCL, Oracle Fin Serv final bidders for Sonata: Sources

About Sonata Software Limited
Sonata  Software  (www.sonata-software.com),  headquartered  in  Bangalore,  India,  is  a  leading  IT  consulting  and
services company. Sonata' s customers are  located across  the US, Europe, Middle East and  the Asia-Pacific region.
Its key business segments include Product Engineering (ISV), Enterprise IT and Travel, Transportation and Logistics.
As per  the  industry rankings released by NASSCOM  for FY 2009-10, Sonata Software  figured among  the Top 20  IT
Software Services Exporters  in  India  for  the  third  consecutive  year. Sonata  has  been  ranked  among Top  10 R&D
Services players globally by Zinnov Management Consulting Pvt. Ltd. Zinnov has  rated Sonata 6th  in  the Software
Products segment.
Sonata’ s subsidiaries include (1) TUI  InfoTec –  Sonata’ s J oint Venture with TUI, Europe’ s largest tourism group, (2) 
Sonata  North  America  Inc  (formerly  Offshore  Digital  Services  Inc)  –   Sonata’ s  arm  in  the  US,  which  provides
development and consulting services to clients, using an Onsite-Offshore Delivery Model, (3) Sonata Software FZ LLC
–   Sonata’ s  fully-owned  subsidiary  that  provides  value-based  IT  solutions  to  customers  in  the Middle East  and  (4)
Sonata  Information Technology Limited, which  is a premier software services and product distribution company with
India-focused business operation

Has anyone heard of renewed talk regarding the Sonata sale?

Some relevant numbers:

Mcap - Rs.440crs
Average closing price of last 6 months = Rs.40 (yahoo fin)
Debt free
Cash reserves of Rs. 281crs

Year     2007     2008     2009     2010     2011
Sales     185.83     198.82     243.58     236.09     262
EPS     3.34     3.49     5.07     5.72     5.88

Promoters Shareholding - 45.41%
No. of employees - 2883

Recent precedent is the Igate-Patni deal.

Is this the taxation related litigation that you are referring to?

Conference Call      
          Sonata Software
New/start up projects are getting delayed, no pressure seen on pricing


Sonata Software held a conference call on September 26, 2011 to discuss corporate strategy and growth road map and introduce Mr. Sanjay Vishwanathan, CEO and MD of the Company. Mr. Snajay and Mr. Srikar Reddy, Deputy MD and COO addressed the call along with other members of senior management.
Sanjay¡¯s core expertise is to create enduring value in Tech and Outsourcing across IT / BPO. He brings deep insight in IT / BPO sector on a platform of global operations and sales. In his earlier roles, he has served as officer and group executive both client side and service provider©\side that includes Reed Elsevier Plc (Chief Outsourcing and Offshoring Officer), GE (Vice President ©\ Genpact), Infosys (Head ¨C Global Strategic Relationships and Public Sector), and 3M (Brand Manager, S & M Manager).
The main priorities under Sanjay are to grow and transform Joint venture with TUI Infotec, build sales engine in Europe and North America and grow India business.
Euro zone debt crisis and currency are major headwinds.
India and China are the two markets of growth and management is evaluating China plans but is careful being a late entrant.
International business is said to continue to witness flatness and HR compensation will impact margins. India business will take few quarters to see impact of transformation initiatives.
44% of revenues which come from existing business has good pipeline.
In the wake of recent global crisis, new/start up projects are getting delayed.
On the forex front, the company remains hedged for 18 months and the current realization is Rs 47.5/$.
There is no pressure seen on pricing.
TUI Infotec Joint Venture, India business and some service verticals like Remote Infra, ADM and Testing are growth catalysts.
Clients continue to adopt wait and watch policy but focus remains on growth rather than cost, being cash rich and introducing new products and services.
The management would like EBITDA margins of 20-22% in International business and back to 10% in TUI Infotec.
Cash of Rs 160 crore includes Rs 40-45 crore of investment by TUI Infotec JV.