Systango Technologies
Systango Technologies is coming out with a 100% book building; initial public offering (IPO) of 38,68,800 shares of Rs 10 each in a price band Rs 85-90 per equity share.
The issue will open for subscription on March 2, 2023 and will close on March 6, 2023.
The shares will be listed on NSE Emerge Platform.
The face value of the share is Rs 10 and is priced 8.50 times of its face value on the lower side and 9.00 times on the higher side.
Book running lead manager to the issue is Hem Securites.
Compliance Officer for the issue is Apurva Mishra.
Profile of the company
The company is engaged in the business of providing software solutions that enables companies to design, implement and manage their own customized digital platforms including Web2, Web3 and mobile applications with strong emphasis on data and analytics. It provides range of software solution services including like: website development, mobile app development (both for iOS and Android applications), web3 development, DeFi (Decentralized finance), data engineering, implementation of blockchain, cloud computing, digital marketing etc for companies across sectors such as Financial Services (FinTech), Hospitality, Fantasy Sports, Property Tech etc. Through its software solutions the company combines the functionality, flexibility and customer software development for its customers with the Cost effective, speed of implementation and other operational benefits of outsourcing.
Over the years the company has evolved as professional and technical service provider by offering end-to-end technology solutions and support. Its clients range from entrepreneurs and start-up enterprises to established companies, engaged in business of Fantasy Sports, transportation and logistics, Financial Services (FinTech) and various other industries including clients like Sila Inc, Urbansoft Sa(Pty)Ltd, Youtility Ltd, Ulster University, Ireland and others.
The company’s revenue is primarily generated from exports sales and it is providing its services along with its subsidiaries to various clients spread across 10 countries. The company is headquartered in Special Economic Zone (SEZs) of Indore that allows it to avail tax benefits as per SEZ norms. Its operations are further facilitated through its wholly owned subsidiary Companies i.e. Isystango Ltd. in UK and Systango LLC in USA.
Proceed is being used for:
Strategic Investment and Acquisitions.
Investment in Subsidiaries.
Meeting Working Capital Requirements.
General Corporate Purposes.
Industry overview
In the Industry of Information Technology, a variety of software has been changing the way it looks at things from the dawn of its era. It sees that almost every other process it has been doing manually is now done and monitored by systems. Software Development is an industry that comes under this parent and is a general term used in developing and deploying software that is in the category of websites and standalone applications. While creating these applications, the minimum hardware requirements given were typically a personal computer with adequate specifications. In the age of software, people who could afford and own a computer were only able to use or utilize it. Till a particular time, people accessed websites only through Cyber Cafes. Now even though many have access to laptops and PC's, the count remained significantly low compared to the population. After mobile phones were introduced, which were typically a hand-held computer, the number of people who started buying mobile phones is significantly higher and the number of people who can get an idea of applications started getting multiplied.
India’s IT sector is one of the fastest growing industry, while global economy and multiple industries struggle to stay afloat, India’s technology industry has seen tremendous growth of 15.5% (YoY) growth, from $196 billion in FY21 to $227 billion in FY22. IT sector contributes 51% of relative share in services exports. India has now become largest tech start-up hub in the world with more than 2500+ start-ups and 42 new unicorns. The government of India has taken some major initiatives to promote the IT/ ITeS sector in India. Both central and state governments in India have taken steps toward developing technology bsolutions to enable citizen services. The government continues to focus on areas such as cybersecurity, hyper-scale computing, artificial intelligence and blockchain.
Pros and strengths
Qualified and Experienced Promoters and Employee base: The company’s sustainable growth in business has been achieved through its founder-led management team with relevant experience and complementary skill sets. Its experienced Promoters have significantly contributed to the growth of its business operations. Its Promoters Nilesh Rathi and Vinita Rathi, have more than 15 years of experiences individually in the associated industry and with their innovative business ideas, customer relationship, in-depth knowledge and excellent management skills, it has served its customers proficiently. Their comprehensive exposure has enabled the company to expand its business across the globe in the countries like: USA, UK, Canada, Australia, Hongkong, Netherlands, Switzerland, South Africa, Qatar etc. Experience of its Promoters enables it to respond to changing market conditions and evolving preferences of its customers and is essential to its overall success and its future growth.
End-to-end solutions and support: The company provides end to end IT services to its customers that support their software development and applications starting from Entrepreneurial Discovery Process, planning & creating the architecture of software, designing, software development, quality Assurance and testing, DevOps-CI/CD and finally providing support and maintenance services. It focuses on updating its service offerings to meet the evolving needs of its clients. These offerings are suitable for companies of all sizes. Its wide range of offerings enable newly incorporated companies to scale up their business with minimize internal resource consumption. Its end-to-end IT services and solutions enables it to grow its client relationships and scope of engagements, as well as instill its clients with confidence in its ability to address their diverse and dynamic business needs.
Strong User Interface / User Experience Design Capabilities and hyper-focus on customer success: The growing dependence of many businesses on web applications and mobile applications has led many companies to place increased priority on User Interface (UI)/ User Experience (UX) in an effort to improve the user's overall experience. The company consistently get recognised for its design capabilities and for the majority of its customers, it build user interfaces and user interaction capabilities which include the aesthetic appearance of the device, response time and the content that is presented to the user within the context of the user interface. It follows an agile and rapid iteration delivery model that allows it to be hyper-focused on customer success.
Risks and concerns
Dependent on few customers for major part of revenues: The substantial portion of the company’s revenue is significantly dependent on certain key customers. For instance, its top five customers for the six months period ended Sept. 22, F.Y. ended March 31, 2022 and March 31, 2021 accounted for 89.71%, 65.34% and 74.97% of the company’s revenue from operations for the respective year. Its reliance on a limited number of customers for its business exposes it to risks, that may include, but are not limited to, reductions, delays or cancellation of orders from its key customers, a failure to negotiate favourable terms with its key customers or the loss of these customers, all of which would have a material adverse effect on the business, financial condition, results of operations, cash flows and future prospects of the company. It presently does not have any long-term or exclusive arrangements with any of its customers and it cannot assure that it will be able to sell the quantities it has historically supplied to such customers.
Operates under several statutory and regulatory permits: The company requires various statutory and regulatory licenses, permits and approvals to operate its business. Many of these approvals are granted for fixed periods of time and need renewal from time to time. Non-renewal of the said permits and licenses would adversely affect the company’s operations, thereby having a material adverse effect on its business, results of operations and financial condition. There can be no assurance that the relevant authorities will issue any of such approvals or licenses, or renewals thereof in a timely manner, or at all. Further any default by the company in complying with the same may result in the cancellation of such licenses, approvals or registrations which may result in the interruption of its operations and adversely affect its business.
Fluctuations in exchange rate of foreign currencies: The company exports its services and receives sale proceeds which are denominated in foreign currencies. The exchange rate between the Indian Rupee and Foreign currencies has fluctuated in the past and its results of operations have been impacted by such fluctuations and may be impacted by such fluctuations in the future as well the exchange rate between the Rupee and Foreign currencies is variable and may continue to fluctuate in future. Its Foreign Exchange Gain/(loss) for the six months period ended Sept.’22, F.Y. ended March 31, 2022 and March 31, 2021 accounted for Rs. (127.34) lakh, Rs. 106.22 lakh and Rs. 82.46 lakh for the respective year. Fluctuations in the exchange rates may affect it to the extent of its sales. The company has entered into certain contracts to hedge exchange rate fluctuations which may or may not adequately cover the potential loss that may arise as a result of such foreign exchange transactions.
Outlook
Incorporated in 2004, Systango Technologies is engaged in the business of providing software solutions. The offerings of the company enable companies to design, implement and manage their own customized digital platforms. These platforms designed by Systango include Web2, Web3, and mobile applications with a strong emphasis on data and analytics. The range of software solutions provided by the company is wide and includes- Website development, Mobile app development (both for iOS and Android applications), Web3 development, DeFi (Decentralized finance), Data Engineering, Implementation of blockchain, Cloud computing and Digital Marketing. The company offers its services across various sectors like Hospitality, Property Tech, Financial Services (FinTech), Fantasy Sports, and many others. The company has evolved as a professional and technical service provider over the years of its operations. Their end-to-end technology solutions and support help entities and organization effectively implement innovations in their system and keep up with the new-age world. On the concern side, like any other business, the company’s business also relies on its service quality which enables it to gain customer trust. In this scenario it is very crucial for it to always maintain positive image of the company. Any unfavorable publicity regarding the company, brand, or facility it provides or any other unpredicted events could affect its reputation and its results from operations.
The company is coming out with an IPO of 38,68,800 equity shares of face value of Rs 10 each. The issue has been offered in a price band of Rs 85-90 per equity share. The aggregate size of the offer is around Rs 32.88 crore to Rs 34.82 crore based on lower and upper price band respectively. On performance front, total income for the financial year 2021-22 stood at Rs 3434.23 lakh whereas in Financial Year 2020-21 the same stood at Rs. 2421.18 lakh representing an increase of 41.84%. The main reason of increase was increase in the business operations of the company. The company reported Restated profit after tax for the financial year 2021-22 of Rs 712.09 lakh in comparison to Rs. 595.83 lakh in the financial year 2020-21. Meanwhile, the company intends to continue growing its existing technological capabilities and expanding its domain expertise by identifying sectors with growth potential and recruiting industry experts in such sectors who can add value to its products and solutions and help it gain credibility in the market and expand its business verticals. It also plans to continue to develop and invest in efficient and effective resources to further strengthen its technological capabilities including its focus on hiring and retaining strong technology talent.
