Cranes Software's acquisitions to augment its competency

Cranes Software International Ltd has announces acquisitions that will help the Company augment its competency and revenues in enterprise data analytics and engineering simulations business spaces.

With these two acquisitions the Company has renewed it singular thrust in developing expertise in these businesses, and leveraging them to more contemporary business needs.

1. Dunn Solutions Group (DSG), US-based technology consultancy with proven expertise in Intellectual Properties (IPs) / products in Enterprise Analytics, focussing on business intelligence (BI), and enterprise level knowledge management.

2. Tilak AutoTech (TAT), Pune-based focused on automotive embedded products and solutions around this for development of embedded engine control modules.

Dunn will enhance the product suite and customer reach for the scientific data analytics and enterprise analytics business spaces. While Dunn is currently working on a proportion of revenue streams from the solutions space, they have a suite of methodologies that can be upgraded as wrap around modules to the products like Systat and Sigma suite. For instance in the healthcare space, the synergy between the Company and Dunn can help upgrade the Analytics products of the Company into healthcare related analytics engines. With such approaches Cranes aspires to leverage growth and a high proportion of sales from product modules.

The latter acquisition of Tilak will provide more depth in the design and development of embedded electronics, not only in the auto industry but also in re-engineered dated chip designs, to more contemporary performance expectations and specification.

In the past, the Company has leveraged upon some strategic acquisitions to create its product portfolio in the enterprise, scientific and engineering analytics and thereby deliver strong growth across its businesses. The Company's 'Acquire - Enhance - Expand' strategy has been the key to its success in creating a niche position for itself in the scientific and engineering software space.

The Company has gained significant experience and expertise in its product Enhancement capability over the recent years. While scouting for acquisitions it looks for products or technology expertises that have robust latent value. The Company's team of math modelers and scientists reverse engineer, reengineer the core algorithms of the Intellectual Properties (IPs) and provide enhanced functionalities and features and productize the solutions frameworks. This singular focus on how to leverage IP suites and look at expanded market reach for the product variants is at the core of the Company growth path. Crucial to this strategy is that the erstwhile owners, authors of the IPs join the Company's team and are part of the product upgrade efforts, post the acquisitions.

The Company owns a suite of statistical software products that include SYSTAT, Sigma product line which, by virtue of their depth and versatility, provide a wide range of analytics-enabled solutions and services to global businesses.

In the recent past the Company has embarked on a two pronged approach for growth.

The first route is to develop vertical variants of its base analytics products. These variants are intended for verticals in Financial Services, Healthcare / Life Sciences, Market Research, etc. Specialised IP variants and products that will be targeted at specific users in the respective vertical segments.

The second path is towards productizing solutions. In this route of productizing solutions, acquisitions like TAT, for example, provide a significant impetus. TAT has developed an algorithm called Model based Load sharing for Optimal Power generation. With this embedded decision support mechanism, one can optimize load sharing among a battery of DG sets, based on the fuel consumption capacity of each of the DG sets. This has immense application potential in India and abroad. Another significant example is the Company's IP on identifying hardness of metals using an image processing technique coupled with math models. The Company is well positioned to enhance both these productisable solutions into a suite of analytics powered products. In the engineering analytics business the Company has enhanced the NISA suite of products it had acquired two years ago, and has released two version upgrades. The foray into this area will get further strengthened with the TAT acquisition which will enable the Company to gain more footholds in the automotive vertical in emerging, cutting edge technology like design and simulation testing of automotive engine performance monitoring modules. The idea behind investments in TAT is to leverage the capabilities and knowledge repositories, latent in these organizations, and aspire for quality revenue streams from large MNCs / institutions and automotive clients. The Company has a long standing exclusive distribution relationship in India for one of the most popular, hi-end engineering design products for the automotive and aerospace sectors, called dSpace, and TAT can help realize significant synergies with dSpace.

Elaborating on the Company's value proposition and acquisition benefits, Asif Khader, Managing Director of the Company said, "These acquisitions demonstrate our commitment to emerge as a key player in the specific areas of Scientific, Engineering and Enterprise Analytics. We believe that these acquisitions will help us create an end-to-end analytics solution for our clients. Today, it is imperative for product and solution providers like us to offer a full-fledged solution base, such that we can command a premium over our peers. Dunn solutions will help us gain significant client penetration in BFS, Insurance, Healthcare, Education and Government sectors. Industry domains where Cranes has already marked its presence with its current product range. We will be able to enhance our revenue predictability and earnings growth in our enterprise analytics business and develop domain specific analytics product variants. A significant development would be that an average engagement value could be upwards of US $ 500K.

DSG's proven expertise in the areas of BI and knowledge management will be instrumental in capturing consumer mindshare. They have the strategic experience and execution skills that we expect to build our expertise around this domain.

Our purchase of TAT significantly advances our presence in the area of embedded Software and Controls solutions. Coupled with the market reach that dSpace provides us with its customers like Daimler Chrysler, Ford, GM, TAT will help us leverage our value added consulting expertise to include embedded systems designs."

Source : Equity Bulls

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