Bartronics Acquires Stake In Systems America

Bartronics Asia Pte. Ltd. (BAPL) wholly owned subsidiary of Bartronics India Ltd. had acquired 51 per cent stake in Systems America Inc. (SYAI), is headquartered in Pleasanton, California, US and listed in the OTC Equities category in the USA. SYAI was founded in 1994. SYAI is the leader in Enterprise Solutions Cloud Services Mobile Applications, Strategic Staffing and Custom Application Development and 12 years partner in saleforth.com. it is ranked 13th fastest growing company by Entrepreneur magazine.

Bartronics was incorporated in the 1990s at Hyderabad and it started its business with providing bar code solutions in India. Bartronics is the leader in IT services Systems Integration, Financial services and G2C (Government to Citizen) services. It is engaged in design and delivery of technology-enabled business solutions that span technology consulting, hardware and RFID tag manufacturing, automatic identification and data capture (AIDC) solutions, custom software development, product engineering, Systems Integration, business process outsourcing on an outsourced, BOT and BOO models. Bartronics Smart Cards unit is India’s First Smart Card Manufacturer established in 1999 and leader in the market. First Indian Card manufacturing Company to be certified as SCOSTA compliant with ISO. It aims at Making Client Businesses work by Maximizing Profitability through Technology and IT Enablement The Company has four major wholly owned subsidiary companies.

Bartronics has a global footprint with offices worldwide and development and training centers in USA, India, UK, UAE, Malaysia, Singapore and Hong Kong.

Bartronics Asia Pte. Ltd, which is a wholly owned subsidiary of Bartronics India Ltd, had acquired 51 per cent stake in Systems America Inc to expand its global footprint

Bartronics deals mainly with the production of following Products

• Manufacturing hardware and RFID tag, ADIC Solutions.
• Development of custom software,
• Technology Consulting and Outsourcing.

The company’s revenue is related to only one business of providing Automatic Identification & Data Capture (AIDC) solutions.

Details of Subsidiary

Bartronics was having four wholly owned subsidiaries till 2011 and after reorganization on 30th Sept 2012 it has 2 wholly owned subsidiaries and 5 step down subsidiary

1. Bartronics Asia Pte. Limited
   On 14th June 2007, in the Republic of Singapore the company incorporated as a wholly owned subsidiary of a Share Capital of US $769500.On 21st December 2007, the Bartronics Asia Pte. Limited (BAPL) acquired the only issued share of Cason Limited and name of the Company was change to Bartronics Hong Kong Limited with effect from 15th October 2008.BAI became the subsidiary of BAPL w.e.f. April 1, 2011. On April 12, 2011, BAPL acquired the share of Veneta Holdings Limited, Mauritius making it its wholly owned subsidiary. BAPL had during the financial period incorporated another subsidiary in Mauritius named Burbank Holding Limited, the operations of which are yet to commence.

2. Bartronics Middle East FZE
   On June 22, 2010, Bartronics Middle East FZE, Sharjah, UAE was incorporated as a wholly owned subsidiary of Bartronics India Limited with a share capital of AED 1, 50,000 Shares

3. Bartronics America Inc (BAI)
   Bartronics America Inc, which was earlier a wholly owned subsidiary of the Company, has become a subsidiary of BAPL w.e.f April 1, 2011. Bartronics America Inc has two subsidiaries namely Quality E People and Performica Software Private Limited. After the purchasing 51% stake in Systems America Inc. BAI will become wholly owned subsidiary of SYAI and BAPL will hold 51% stake in SYAI.

4. ROI Public Relation Pvt Ltd (ROI)
   ROI wholly owned subsidiary of Bartronics India has been closed down under the Easy Exit scheme of the MCA.

Acquisition

In consideration for the acquisition, Bartronics America is now owned by SYAI. Prior to the merger, Bartronics America underwent a name change to mClould Inc. to reflect its diversification into Mobile and Cloud Computing businesses. As mentioned above the company had taken the cross swap.

Bartronics America has strategically built practices that deliver end-to-end solutions in the areas of Business Analysis, Software Development, Project Analysis & Management, Data Warehousing, and Enterprise Software Implementation and Support with a strategic Global Presence in the US, Singapore, and India, with 6 offices and 2 Global Cloud Delivery Centers. Bartronics America’s global workforce has 450 employees with the majority of employees in the United States and India.

Opportunities

Bartronics will now also address the growing Cloud Computing and Mobility Services such as providing services around Salesforce.com, SAP, Workday and other Cloud Application Services market in various industries with the existing verticals. Bartronics America is now able to leverage Systems America’s global presence and effectively scale in regions such as Canada, Europe, and India.

This transaction will result in greater efficiencies and increased market shares.

With this acquisition as a combined entity, SYAI’s business model is further strengthened to focus on select industries and achieve market leadership by creating best in class practices/offerings that help customers achieve their operational and strategic objectives

The market price of Bartronics shows the decreasing trend in the situation where it has a huge build market for their products to distribute still the company is making losses and their market price of shares is drastically fallen down in last 6 years of span. Though the company is having huge capital base the shareholders of the company are not getting the expected return on investment their investments. The products which are manufactured and distributed are having huge market demand not only in India but all over the world.

Growth Strategy

This transaction will help Bartronics India to recover their losses and stabilize in the market. After the acquisition, the resultant Entity will have huge positive impact on the turnover of the company. As a part of growth strategy, the resultant company will acquire the closely held company to increase its market share. SYAI is targeting one company is engaged in Business intelligence and Application service space with revenues excess of US $24 million and another target company engaged in Mobile Application and Social analytics services generating revenues in excess of US $25 million. The company will close this transaction by the financial year 2013.

Conclusion

The company though started with a good vision and clear focus could not create any value for its shareholders. It seems that company is not able to address issues relating to risks involved in multiple acquisitions and as a result , each acquisition destroyed value and required a serious relook at the strategy and execution capabilities for integration post-acquisition. It needs to be more transparent in terms of quality and type of revenues and losses incurred and giving justification for the same.