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The last time Ace Market company Kronologi Asia Bhd appeared in the news, the stories revolved around major shareholder and co-founder Piti Pramotedham seeking to make some board changes.

But Pramotedham, who was its executive chairman then and who still owns 53% of the company, decided not to proceed with his requisition after further deliberation. Pramotedham subsequently resigned from Kronologi’s board last September, citing health reasons. He could not be reached for this article. Philip Teo Chong Meng (pic), a key member of the founding management team and now acting CEO, explains that Kronologi is running ahead on full steam after going through that difficult period.

He points in particular to a recent announcement for the proposed acquisition of a remaining 80% stake in Quantum Storage (India) Pte Ltd for RM26mil which is awaiting regulatory approval. The Indian market holds a lot of promise for Kronologi, said Teo.

Nevertheless, indications are that Kronologi’s board and management have the support of Pramotedham for now. For example, at the company’s last AGM on May 25, all shareholder resolutions were duly passed.

Teo said the new changes put in place including at the board – where two new board members were voted in late last year – and management level, are helping Kronologi back on its footing to achieve what it originally set out to do when it listed in 2014. That is to tap on the burgeoning data storage and management business in Asia.

Kronologi lays claim to being a long-term partner of US-based Quantum Corp which in turn is a global player in data protection and data management – promoting Quantum products, solutions and branding in South Asia. Teo explains that Kronologi’s partnership with Quantum extends beyond regular distribution of equipment as it manages the entire value chain with its clients in the region.

“In this era of ‘big data’ growth the world over, Kronologi sees significant opportunities,” says Teo.

One example relates to the increased use of CCTVs in commercial areas such as shopping malls for security and analytics in shoppers’ behaviour. “CCTV footage isn’t of much use unless it is stored properly over a long period of time and yet easily retrieved when the need arises. We are specialists in helping clients preserve and utilise their digital assets over the entire data lifecycle,” explains Teo.

Kronologi, however, suffered a decline in its bottom line in its financial year ended 2015, which Teo puts down to a difficult year. Its profits halved to RM3mil from RM6mil previously although revenue rose to RM61.3mil from RM54.6mil the year before.

In the company’s 2015 annual report, the lower performance was attributed to a change in sales mix, with a higher proportion of lower margin projects implemented during the year.

But things could be looking up. For its first quarter ended March 31, 2016, the company posted a net profit of RM1.4mil versus a loss of RM1.1mil in the previous corresponding period. Teo said the proposed Indian acquisition puts the company on a new growth trajectory.

To recap, on July 22, Kronologi proposed to buy the remaining 80% in Quantum Storage for RM26mil, to be satisfied by new shares and RM15.2mil in cash on a staggered payment basis.

So why this acquisition? Teo explained that India has been experiencing strong growth and Kronologi is in a good position to tap that. “Just to cite one example, India’s sizable movie industry is moving into ‘4K Ultra HD’. This evolution involves managing data files that can be four to five times larger than current HD files. And this is where we and Quantum are specialists in,” he says. Another growth potential is India’s expansion on its satellite footprint which requires highly complex data management and storage capabilities.

In its proposal for this transaction, Kronologi cited research house Smith Zander as predicting India’s enterprise data management industry to grow from an estimated US$336.3mil (RM1.3bil) in 2016 to US$401.4mil (RM1.6bil) in 2018. This is to come from government initiatives, particularly through “Digital India” and “Smart Cities”, to boost IT usage in businesses and organisations, it said.

The acquisition comes with a profit after tax guarantee of US$1mil (RM4mil) each year of financial years 2016 and 2017. The RM15.2mil cash portion of the acquisition is being funded from RM6mil of IPO proceeds and a further RM9.2mil from internally generated cash. The company had RM14mil in cash as at March 31, 2016 with a negligible debt position. Kronologi was listed on Bursa Malaysia in December 2014 at a price of 29 sen per share, raising RM17.2mil. Kronologi’s shares closed at 21.5 sen last Friday, giving the company a market capitalisation of RM51mil.

 This article was originally published on www.thestar.com.my and can be viewed in full

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