Sonata Software - Inching Its Way Up

Its stated goal is to get to Rs 300 crore by the year 2000-Rs 150 crore from products
and an additional Rs 150 crore from exports. Well, there is less than two years for Sonata
to do this. And in order to get there, Sonata has to grow at 88 percent for two

alt="https://img-cdn.thepublive.com/filters:format(webp)/dq/media/post_attachments/ed8455e353d895d495b374c2f1f5bc1cf552e67f688f7502cf6b86a1637aaa7f.jpg (19654 bytes)" border="0" hspace="2" vspace="2"> PRESIDENT AND MD: B Ramaswamy * PRODUCTS AND SERVICES: Software Development, Packaged Software, Consultancy * size="1"> TECHNICAL COLLABORATION: Microsoft, Oracle, OMG color="#FF0000">* AGENCY OPERATIONS: Microsoft, Oracle, IBM, SCO, Symantec, Lotus, Logic Works * START-UP YEAR: 1986 * EMPLOYEES: 617 * DEALER OUTLETS: 1537 * QUALITY CERTIFICATION: ISO 9001 Tick-IT * size="1"> ADDRESS: 1/4, APS Trust Bldg, Bull Temple Road, Bangalore 560019 size="1" color="#FF0000">* TEL: 6610330, 6610862, 6613224, 6619153/154 * FAX: 6610972 size="1" color="#FF0000">* WEB SITE: href="http://www.sonata-software.com">www.sonata-software.com PERFORMANCE HIGHLIGHTS Revenue from exports jumped up by 113 percent, earning Rs 34.29 crore. Added 20 new customers for its international operations. Debuted in IT consulting business. hspace="2" vspace="2">

consecutive years. But there are some indications that Sonata could pull it off,
provided it keeps to the line taken last year. Sonata performed rather well with a growth
of 56 percent over the previous year at Rs 83.22 crore, moving to # 42 from rank 47 in
1996-97. Of this, nearly Rs 34.29 crore, that is 43 percent of the turnover, came from
software exports.

It also took a strategic decision to position itself as a solution provider in key
technology areas-for instance, datawarehousing, Internet, and groupware. It also invested
Rs 4.15 crore in a new development center, which was funded through internal accruals and
debt. It added 20 customers from countries such as the US, Canada, Belgium, Germany, Hong
Kong, Singapore, Japan, and the UK to its list.

Its decision to sign technology agreements with Microsoft, Lotus, and Object Management
Group, in order to move up the value chain, resulted in Sonata making a debut in the IT
consulting market last year. Confined to the domestic market, it fetched a meager Rs 60
lakh. Similarly, Sonata's business solutions group progressed further into the ERP market
by adding 22 installations to its existing 18 Scala ERP installations, thus becoming one
of the leading players in the mid-range ERP market. It fetched Sonata Rs 1.55 crore last
year.

Though as a percentage, revenue from ERP installations and IT consulting is small, they
are expected to contribute substantially in the coming years. Interestingly, a
significantly large portion of its export revenue has come from Europe-nearly 22 percent,
which is double that of the previous year. This was brought about by opening up of its UK
office.

With the opening up of an office in Germany, this figure is expected to go up further.
Last year, it broke into the Japanese market, which contributed 5 percent to the kitty. As
a result of developing new markets, Sonata's dependence on the US markets has dropped by
16 percent, to 58 percent last year. Sonata further consolidated its product business.
Last year, it earned Rs 46.83 crore, as against the previous year's

Rs 37 crore. Sonata increased its headcount substantially-from 394 to 617-last year,
and is expected to reach 1,000 in this financial year. Going by the productivity per
person of the previous two years-Rs 13.45 lakh in 1996-97 and Rs 13.73 lakh in
1997-98-Sonata's revenue for the current year is unlikely to exceed Rs 140 crore, which is
approximately a growth of 63 percent over 1997-98. Sonata needs to do much more if it
wants to get to the promised Rs 300 crore by the year 2000.