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SSI to run training, services separately

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CIOL Bureau
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CHENNAI: Indian computer education and software services firm SSI Ltd. announced its decision to separate its training and services operations into independent lines of business, with separate managements and investments.



The Chennai-based company said its board had appointed a two-member committee to recommend whether to spin off education into a separate company or run it as a fully-owned subsidiary after considering the tax and legal implications of each option. The restructuring will pave the way for investments to flow into the two businesses and establish management independence, a company statement quoted SSI chairman and chief executive, Kalpathi Suresh, said.



"We are still in negotiations with two different classes of investors for the education and services businesses," said a spokesman for the company. "One who would be just financial investors looking at a rate of return over a given time horizon and the other strategic, looking at bringing in new ideas into the business. But a real issue we are facing is in arriving at the right valuation."



The spokesman said no deadline had been set to finalize the exact details of the restructuring. SSI said in April that it was mulling over its decision of spinning off its education division given the continuing decline in revenue and margins. The revenue of the education business in January-March slipped 33 percent from the preceding quarter, while the operating margin plunged to 2.5 percent from 12.2 percent.



India's computer education firms, which supply skilled manpower to feed its software services industry, faced much negative sentiment as the technology sector was re-rated in the stock and job markets following the dotcom bust, the U.S. economic slowdown and its impact on technology spending.



SSI's shares closed down 3.75 % at Rs.143.75 on the Bombay Stock Exchange, whose benchmark index shed 0.48 %.



© Reuters

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