Olatech Solutions coming with an IPO to raise Rs 1.89 crore

Olatech Solutions

• Olatech Solutions is coming out with an initial public offering (IPO) of 700000 equity shares of face value of Rs 10 each for cash at a fixed price of Rs 27 per equity share.
  
• The issue will open on August 12, 2022 and will close on August 19, 2022.
  
• The shares will be listed on SME Platform of BSE.
  
• The share is priced 2.70 times higher to its face value of Rs 10.
  
• Book running lead managers to the issue is Shreni Shares.
  
• Compliance Officer for the issue is Nitin Patidar. 
  

Profile of the company

The company is engaged in the business of Data Centre, Enterprise, Telecom and IT Software solutions in the OSS – BSS (Operations Support System and Business Support System) segment. It provides software solutions and transformation services (System Integration) to its clients and has deployed its software solutions at various institutions in India and other regions also. Through its wide range of offerings across its verticals, it possesses capabilities spanning the lifecycle of services ranging from consultation, architecture, solution design, and implementation to monitoring and providing managed services. Its software solutions are offered under its registered trademark ‘Epiphany’. Key offerings include software solutions such as NOC tools, Network monitoring, management & analytics, secured authentication and accounting of users & devices, Data Centre Infrastructure Management etc. It has gained experience by collaborating with its clients across verticals such as Telcos, ISPs, Enterprises, Data Centre Service Providers, Public Sector to create a foundation for the evolution of offerings across the verticals. The company is an ISO 9001:2015 certified company for software development, hardware deployment services, telecom services of installation & commissioning, telecom projects, software training, government & non-government IT projects.

Proceed is being used for:

• Funding working capital requirements.
  
• General corporate purposes.
  

Industry overview

The global sourcing market in India continues to grow at a higher pace compared to the IT-BPM industry. India is the leading sourcing destination across the world, accounting for approximately 55% market share of the $200-250 billion global services sourcing business in 2019-20. India’s rankings improved four places to 46th position in the 2021 edition of the Global Innovation Index (GII). The IT industry accounted for 8% of India's GDP in 2020. According to STPI (Software Technology Park of India), software exports by the IT companies connected to it, stood at Rs 1.20 lakh crore ($16.29 billion) in the first quarter of FY22. The computer software and hardware sector in India attracted cumulative foreign direct investment (FDI) inflows worth $81.31 billion between April 2000 - December 2021. The sector ranked 2nd in FDI inflows as per the data released by Department for Promotion of Industry and Internal Trade (DPIIT). Computer software and hardware make up 14.19% of the cumulative FDI inflows. Software Technology Parks of India (STPI) has set up 57 centres across the country to provide single window clearance and infrastructure facilities. STPI units can avail excise duty exemptions on procurement of indigenously manufactured goods.

The IT hardware market includes all physical components integral to computing. The total market values include client computing hardware (desktop PCs, notebook PCs, fixed phones and adaptors, scanners and imaging devices standalone printers, thin-clients and workstations), networking hardware (Ethernet hubs and switches, Ethernet routers, WAN CPE and termination equipment, WAN multi-service switches, WLAN access points, WLAN cards and WLAN switches and appliances), security hardware (content-filtering and anti-spam appliances, encryption/SSL accelerators, firewall and VPN gateways, smart card readers and smart cards), servers hardware (high-end servers, low-end servers and mid-range servers) and storage hardware (hard-disk drives, NAS filers and arrays, NAS gateways, SAN adaptors and connectors and SAN disk arrays). All market data and forecasts are represented in nominal terms (i.e. without adjustment for inflation) and all currency conversions used in the creation of this report have been calculated using constant 2020 annual average exchange rates.

Pros and strengths

Cost advantage: The company provides carrier grade products/software solutions with availability of 99.99% which is required by any organisation. It is very competitive in cost as it has competitors like CISCO, Nokia, HPE, IBM, Oracle, Sterlite, etc. As it intends to move to SAAS based deals, its competitiveness will increase significantly. Similarly, for SI business as it has been into this business ourselves for many years, so it know the nitty gritties of the business and also the price points & hence it can offer the solution which is cost effective & provide 100 % customer satisfaction.

Strengthen human capital: The company’s employees and management team is its most valuable asset. Investing in human capital by training, and retaining its key people has been and will remain critical to its success. To achieve this, it intends to remain committed to provide its personnel with opportunities to expand its business within their areas of expertise. It will also continue to provide its personnel with personal and professional growth opportunities, including training and performance-based incentives.

Software solutions are robust, trusted & industry proven: The company’s business offerings provide a comprehensive range of solutions for Data Centres, Enterprises, Telecoms & IT industry segments wherein it provides the complete solution starting from Hardware, Software, Services & support. It maintains the SLA as per its commitment & try to provide the service excellence as per the customer requirements. This provides it new customers & also repeat business from its old customers.

Risks and concerns

Faces competition: Growing competition may result in a decline in its market share and may affect its margins which may adversely affect its business operations and its financial condition. It operates in an industry, which faces intense competition from established as well as unorganized players. Its competition depends on several factors, which include quality, price and its pace in keeping up with the changing trends. Competition emerges from both organized as well as unorganized sector. If it is unable to effectively compete its revenues and reputation may be adversely affected and it not be able to achieve its long-term strategies.

Require working capital: The company’s business demands working capital requirements. In case there are insufficient cash flows to meet its working capital requirement or it is unable to arrange the same from other sources or there are delays in disbursement of arranged funds, or it is unable to procure funds on favourable terms, it may result into its inability to finance its working capital needs on a timely basis which may have an adverse effect on its operations, profitability and growth prospects.

Dependent on number of key managerial personnel: The company’s performance depends largely on the efforts and abilities of its senior management and other key managerial personnel, including its present officers who have specialized technical know-how. The inputs and experience of its senior management and key managerial personnel are valuable for the development of its business and operations strategy. It cannot assure that it will be able to retain these employees or find adequate replacements in a timely manner, or at all. The company does not maintain any director’s and officer’s insurance policy. The loss of the services of such persons could have an adverse effect on its business, results of operations, cash flows and financial condition.

Outlook

Olatech Solutions is engaged in the business of Data Centre, Enterprise, Telecom and IT Software solutions in the OSS - BSS (Operations Support System and Business Support System) segment. The company's software solutions are offered under the registered trademark ‘Epiphany’. The company offers software solutions such as NOC tools, Network Monitoring, Management & Analytics, System Integration Services, Telecom Tower Installation, Network Deployment, Server Virtualization Services, IT Equipment Installation and Management Services, Data Centre Infrastructure Management Solutions, etc. The company has clients across different verticals such as Telcos, ISPs, Enterprises, Data Centre Service Providers and Public Sector. On the concern side, If the company is unable to enhance its platform to keep pace with these rapidly evolving customer requirements, or if new technologies emerge that are able to deliver competitive products at lower prices, more efficiently, more conveniently, or more securely than its platform, its business, financial condition, and results of operations could be adversely affected. The company will be required to renew permits and approvals in relation to its existing operations and obtain new permits and approvals for any proposed operations as may be required under the applicable laws of the sector or region that it is operating in. There can be no surety that it will be able to obtain all the permits or approvals in the time-frame anticipated by it or at all.

The company is coming out with a maiden IPO of 700000 equity shares of Rs 10 each at a fixed price of Rs 27 per share to mobilize around Rs 1.89 crore. On performance front, the company’s total revenue decreased by 52.27% to Rs 262.15 lakh for the FY 2022 from Rs 549.23 lakh for the FY 2021. After accounting for taxes at applicable rates, the company’s Profit after Tax increased by 184.08% to Rs 35.00 lakh in FY 2022 from Rs 12.32 lakh in FY 2021. Meanwhile, the company intends to adopt an industry-wise focus which is also planned and aligned to the geography to further develop its business. It is in the process of implementing several initiatives, including structuring its organization by way of industry verticals to accumulate relevant industry experience. It also plans to increase the breadth of its software services by offering additional services through software maintenance and staffing facilities for the new product range, as this will expand its scope of business and further enhance the reputation of brand.