Sigma Solve coming with an IPO to raise up to Rs 5 crore

Sigma Solve

• Sigma Solve is coming out with an initial public offering (IPO) of 11,01,000 Equity Shares of face value of Rs 10 each for cash at a fixed price of Rs 45 per equity share.
• The issue will open on September 29, 2020 and will close on October 09, 2020.
• The shares will be listed on Emerge Platform of NSE.
• The share is priced 4.50 times higher to its face value of Rs 10.
• Book running lead manager to the issue is Beeline Broking.
• Compliance Officer for the issue is Saurabh Balkrishna Shah.

Profile of the company

The company was incorporated as ‘Sigma Solve IT Tech Private Limited’ at Ahmedabad on April 29, 2010, under the provisions of the Companies Act, 1956 vide certificate of incorporation issued by the Assistant Registrar of Companies, Gujarat, Dadra and Nagar Haveli. Later on, the name of the company was changed from ‘Sigma Solve IT Tech Private Limited’ to ‘Presha Software Private Limited’ and certificate to that effect was issued by Assistant Registrar of Companies, Registrar of Companies, Ahmedabad on February 18, 2017. Subsequently, the name of the company was changed from ‘Presha Software Private Limited’ to ‘Sigma Solve Private Limited’ and certificate to that effect was issued by Registrar of Companies, Ahmedabad on March 7, 2019. Consequent up on the conversion of the company from Private Limited Company to Public Limited Company, the name of the company was changed to ‘Sigma Solve Limited’ and fresh Certificate of Incorporation consequent up on the conversion from Private Limited Company to Public Limited Company dated June 17, 2019 was issued by the Registrar of Companies, RoC – Ahmedabad.

The company Sigma and Sigma Solve Inc. (Erstwhile group concern and now subsidiary company with effect from October 23, 2019) having their offices at Florida (USA), Atlanta (Home Office), Australia (Home Office) jointly makes efforts for new business acquisitions. The operation of the company is controlled from its registered office situated at Ahmedabad, (Gujarat) India. The company’s 100% of the revenue is from export of services, and in order to provide hassle free payment facilities to its clients, it channelizes its payment through Sigma Solve Inc. The company does not have any identified customers being almost 100% of sales is booked by Sigma Solve Inc., and subsequently, the company Sigma is charging on monthly basis to Sigma Solve Inc. for providing the execution facilities on per man hour basis in conjunction with efficiency level achieved on monthly basis. Moreover, the company Sigma also occasionally serves directly to clients.

The company Sigma and Sigma Solve Inc. are jointly offering enterprise software development. It offers turnkey consultancy services to its customers in their business domain. It also in association with group entity ‘Sigma Solve’ provide services related to Web & E-commerce Development, Real Time Application development, Business Intelligence Analytics, CRM Development, Digital Marketing, UI & UX Design, Automation Testing and Quality Assurance. The company has been successful in augmenting its portfolio of solutions over time for computers, laptops and mobile software solutions. It takes regular feedback from its user base which enables it to understand the needs of its users better and helps it to innovate and design improved solutions. Its sales and marketing activities benefit from word-of-mouth recommendations from its user network to create a viral marketing effect, which is amplified by the speed, ease of use and quality of its solutions, and allows it to gain new customers at a low acquisition cost.

Proceed is being used for:

• Acquisitions and other strategic initiatives.
• Investment in subsidiary.
• General corporate purpose.
• Public issue expenses.

Industry Overview

The Indian Information Technology/Information Technology enabled Services (IT/ITeS) industry has contributed immensely in positioning the country as a preferred investment destination amongst global investors and creating huge job opportunities in India, as well as in the USA, Europe and other parts of the world. The industry has differentiated itself in the global competition on account of consistent service and guaranteed results and has also helped forge strong bilateral ties with nations. The Indian IT-Business Process Management (IT-BPM) industry has played a key role in India’s economic growth over the last ten years. Over the last decade, the industry has grown over five fold in revenue terms, thus contributing a substantial share to India’s GDP. More importantly, the industry has led the economic transformation of the country and altered the perception of India in the global economy.

The Government has identified Information Technology (IT) and IT enabled Services (ITeS) as one of 12 champion service sectors for realizing their full potential. Government of India has also undertaken a consultative approach with the industry associations and industry members to discuss measures to improve the overall state of the IT industry and key challenges being faced towards realizing the $1 trillion digital economy by 2022. Goods and Services Tax (GST) is one of the biggest tax reforms undertaken by the country. Other efforts include measures to streamline the tax regimes, streamlining procedures and improving the overall ease of doing business. Government initiatives, such as, Start-up India, Digital India and Smart Cities are expected to give boost to e-Governance and m-Governance related business activities. There is significant push from the Government to go digital and adoption of digital payments. Efforts are also being made to diversify and increase presence in other markets, such as, Europe (besides UK which is a mature market), Africa, South America, Israel, Australia, China and Japan.

Pros and strengths

User experience design: Human – machine interaction and its design has been a key challenge ever since machines were born. With a comprehensive understanding of how humans interact with computer applications, Sigma provides its clients user experience design services for the mobile and web. Creating a beautiful, yet extremely functional design is a key strength of the Sigma team.

Customer focus: The company is able to understand its customers’ complex requirements and translate them into customized solutions on a sustainable basis. Business analysts with extensive software development experience help in understanding company’s clients’ business needs. This approach helps it in creating a sticky customer base.

Unique work culture: The company’s team is a critical asset for the business. Once the team is empowered to deliver with not only the right tools but also the most inspiring work culture, it will automatically deliver the best to its clients. It makes extensive efforts to create a flexible operating and employee friendly environment.

Risks and concerns

Dependent on Sigma Solve Inc: The company is dependent on Sigma Solve Inc. (Erstwhile group concern and now subsidiary company with effect from October 23, 2019). The company and Sigma Solve Inc. jointly make efforts for new business acquisition. Any loss of business to its subsidiary company, may subsequently affect its revenues and results of operations. The company may enter into such transactions in future also and it cannot assure that in such an event there would be no adverse effect on results of its operations. It cannot assure that it will generate the same quantum of business, or any business at all, and the loss of business may adversely affect its revenues and results of operations.

Depends upon strength of management team: The continued efforts of the senior members of the company’s management team and other skilled professionals are critical to its success. Its ability to execute engagements and to obtain new clients depends in large part on its ability to attract, train, motivate and retain skilled professionals, especially senior management personnel, senior technical personnel, project managers etc. If it cannot hire and retain additional qualified personnel, its ability to obtain new projects and to continue to expand its business will be impaired and its revenue could decline. Changes in government policies may also affect its ability to attract hire and retain personnel. If it is unable to offer them higher compensation, it may be unable to attract or retain them. Its business, financial condition and results of operations could be adversely affected if it is unable to manage employee hiring and attrition to achieve a stable and efficient workforce structure.

Future funds requirements: The company may require additional capital from time to time depending on its business needs. Any fresh issue of shares or convertible securities would dilute the shareholding of the existing shareholders and such issuance may be done on terms and conditions, which may not be favorable to the then existing shareholders. If such funds are raised in the form of loans or debt, then it may substantially increase its interest burden and decrease its cash flows, thus prejudicially affecting its profitability and ability to pay dividends to its shareholders.

Outlook

Incorporated in 2010, Sigma Solve is primarily engaged in offering IT and IT-enabled services to customers. Sigma Solve through association with Sigma Solve Inc. (subsidiary company) offers software development, turnkey consultancy services, and services related to Web & E-commerce development, Real Time Application development, Business Intelligence Analytics, Digital Marketing, CRM Development, UI& UX Design, Automation testing, and others. The company is adept at delivering robust and scalable eCommerce solutions for mobile and web. Its bleeding edge solutions adapt to the changing business needs. Its ongoing maintenance and support services helps clients to focus on their core business, manage unlimited products and categories, including flexible payment gateway with various shipping options. On the concern side, the company’s business will suffer if it fails to anticipate and develop new services and enhance existing services in order to keep pace with rapid changes in technology and the industries on which it focus. Besides, the company’s business requires it to obtain and renew certain registrations, licenses and permits from government and regulatory authorities and the failure to obtain and renew them in a timely manner may adversely affect its business operations.

The company is coming out with a maiden IPO of 11,01,000 equity shares of Rs 10 each at a fixed price of Rs 45 per equity share to mobilize Rs 4.95 crore. On the performance front, total consolidated income from operations for the period ended on March 31, 2020 is Rs 1044.57 lakh. Consolidated Profit after Tax of the company is Rs 194.43 lakh. Out of Rs 194.43 lakh Rs 43.34 lakh are attributable to Non-Controlling Shareholders of Subsidiary Company. The company’s goal is to build long-term sustainable business relationships with its customers in association with Sigma Solve Inc. to generate more revenues. It plans to continue in association with Sigma Solve Inc. to expand the scope and range of services provided to customers by continuing to build its expertise in major industries and extending its capabilities into new and emerging technologies. In addition, the company and Sigma Solve Inc. jointly intend to continue to develop better solutions and new products for industry sectors which are significantly untapped.