At a time when domestic software companies are acquiring overseas software units, Dr. N Thondavadi, chief executive officer (CEO) of the Chennai-based Mascon Global India has decided to be different. He has acquired another city-based company, Maars Software International.

In a 1:9 share swap deal (1 share of Mascon Global for every 9 shares of Maars Software), Rs. 342 crore Mascon Global will merge with itself a Rs.86.80 crore turnover Maars Software. Post-merger Mascon Global's equity base will go up to Rs. 22.3 crore from the current level of Rs. 20.88 crore.

Not that Dr. Thondavadi is dormant in overseas acquisitions. Since January last year, he has acquired seven companies overseas for $40 million. He is now targeting two US-based companies, one a listed telecom software company with a turnover of $60 million and another a financial services outfit. Son of a temple priest, Dr. Thondavadi is unwilling to discuss more on the issue. "Acquisitions is one way of accelerated growth", is all that he volunteers.

According to him, Mascon Information Technologies, the closely held holding company made the overseas acquisitions. The company is now in the process of transferring all its contracts, assets and employees to Mascon Global.

"It is a sort of restructuring whereby Mascon Information Technologies will remain just the group's investment arm," he adds. As the transfers are pass-through, no consideration needs to be paid by the Indian company, he explains.

For quite sometime, market rumours speculated about Maars Software being up for grabs. Admitting the company was in fact looking out for a strategic partner, Mr. T. Varadharajan, managing director of Maars Software, says there was no desperation in that direction. And finally, Mascon Global turned out to be the successful suitor.

It is interesting to note the billing rates of both the companies. While Mascon Global, operating in the fields of retail, telecom, consultancy services, bills its clients anything ranging between $125 per hour to $1,800 per day, Maars Software, mainly in the field of ERP solutions, charges $25 per hour and $75 per hour for its onshore and offshore services. Dr. Thondavadi claims to charge $10,000 per day for his consulting.

Isn't Mascon Global, with a net profit of Rs.71.60 crore, getting into a low value area by acquiring Maars Software and compromising its brand equity? What is the merger game plan?

Explains Dr. Thondavadi, "We would like to be present in the entire spectrum and Maars Software fits our bill."

According to officials, the merger is a result of perceiving synergies between both the companies. Mascon Global, having a major presence in North American markets with its enterprise solution product `AIMS', plans to create a platform for `MAARSMAN', an enterprise resource planning (ERP) product of Maars Software.

The merger would also provide considerable cross-selling opportunities as Maars Software is well entrenched in European markets and Mascon Global in North American markets and in the process enhance the value proposition of the service offering, adds Dr. Thondavadi.

Post-merger Maars Software's' 500 software professionals will be a part of Mascon Global, thereby taking its total staff strength to 1,700 and the target will be small and medium enterprises in Europe and North America.

Maars Software also offers Mascon Global an order book position of Rs. 50 crore and its total liabilities of Rs. 33 crore.

The merger gives Mascon Global a presence in the UK as Maars Software had earlier acquired a telecom billing software company, clocking a turnover of $ 8 million, says Mr. Varadharajan.

On its own, Mascon Global has an order book position of $ 465 million (short-term contracts valid for six months $ 65 million and $ 400 million long-term contracts spanning a period of three years).

Of its 200 clients, ten are very large, like MasterCard, Wal-Mart, Sears, Cigna Insurance, General Electric, CitiBank, etc. The company's horizontal solutions span consulting, e-business, embedded systems, enterprise systems, enterprise integration, production support – the maximum revenue coming from consulting, enterprise systems, e-business and production support/enhancement.

Vertical solutions are provided for engineering, finance/banking, healthcare, insurance, manufacturing, retail, telecommunication, transportation, distribution and other services While manufacturing, banking, healthcare contribute the maximum towards revenue, it is expected that telecom revenues will soon shoot up

With the group's internal restructuring in the process, Mascon Global has lined up new investment plans. The company is building a campus-style development centre in Chennai at an outlay of Rs. 75 crore, and another in Delhi. In order to fund its expansion and acquisition programmes, Mascon Global is holding road shows for its $ 100 million ADR issue. "The first round of road shows are over," remarks Dr. Thondavadi. According to him, the timing of the issue is yet to be fixed.