Mascon Global on a money hunt

The domestic bourses don't reflect the true value of the company," complains Mr. Sandy Chandra, chairman of the board and managing director, Mascon Global, a Chennai-based Rs.341-crore software company. Even the take over and imminent merger of another Chennai-based ERP player, Maars Software International Ltd., didn't perk up the stock price.

Compounding the problem is the software meltdown and investors are now shying away from IT scrips. The changed market scenario in turn has affected Mascon Global's fund raising programme.

For the past six months or so, the company has been looking at the prospects of raising at least $150 million via ADR/GDR issue. Says Dr. Nandu Thondavadi, chief executive officer, "The ADR issue got slightly delayed due to some regulatory procedures. In fact, several investors are chasing us to put their money in our company. Compared to ADR, the GDR issue is cheaper."

According to him, the issue will be at a premium to the market price but discount to Sebi's preferential offer price of Rs.300 per share.

The equity dilution is expected to be in the region of 10-12 per cent. Presently, the Rs. 20.8-crore equity is shared amongst Mascon Information Technologies (40 per cent), promoters and associates (11 per cent), 49 per cent by individuals - foreign as well as Indians and brokers.

Funds for Mascon Global are important not only for its planned acquisitions - now put on hold - but also to have a comfortable existence. According to Mr. Chandra, Mascon Global needs at least Rs.150 crore for its infrastructure development and working capital needs.

Last year, the company acquired three US-based companies, Ponderosa Technologies Inc., SynergySoft Solutions Inc. and International Software Consulting.

According to Dr Thondavadi, Mascon Global has fully integrated the operations of International Software Consulting with itself. The Indian company will pay $6 million out of $24 million in stock and the rest in cash. As regards the merger of Maars Software with the company, Dr. Thondavadi remarks that the process is on.

Meanwhile, Mascon Global has revised its business plan in the wake of a software downslide. "Our earlier talk of Rs.1,000-crore turnover depends on our fund raising," adds Mr. Chandra. The company hopes to achieve a turnover of Rs. 550-600 crore this fiscal. Remarks Dr. Thondavadi, "Though we could not sustain the current growth rate, we will nevertheless post growth that is higher than the industry average."

Mascon Global has recently floated a 51:49 joint venture with MasterCard International for development of financial and banking software. Currently, Mascon Global's MasterCard division chips in around $3 million to the total turnover. Now with a separate joint venture outfit, the revenue is excepted to go up to $10 million.

Despite the sector's bad time, Mascon Global's billing rates remain stable at $26-27 per hour off shore and $70 on shore. The manpower utilisation levels stand at 70 per cent off shore and 90 per cent onsite.