HCL Tech to acquire HCL Info software div

BANGALORE: The HCL group has decided to demerge the Software Export business (SOFTEX) of HCL Infosystems, under a scheme of reconstruction to be filed with the Delhi High Court, and merge with HCL Technologies, subject to the receipt of all regulatory approvals. The acquisition will follow a swap ratio of two HCL Technologies shares each of Rs 2 face-value, for every nine of 10 rupees par value HCL Infosystems.

As of financial year ended June 30 2002, SOFTEX reported revenues of Rs. 170 crore and a net income of Rs. 17.78 crore, with a resource base aggregating 883 employees including 776 technical professionals and development centers at Chennai, Kolkata and Noida.

According to a media statement, the consideration for the transaction would be settled through the issuance of 7.09 million equity shares of HCL Tech to the shareholders of HCLInfosystems, based on an independent valuation exercise carried out by PriceWaterhouse Coopers and Bansi Mehta and Company. The merger would help HCL Tech consolidate its practices in the area of end-user applications and further widen its suite of offerings in the fast growing enterprise solutions space.

In a separate transaction, the technical help desk business of HCL Infinet Limited, a subsidiary of HCL infosystems, would also be acquired by HCL Tech and (or) its subsidiary company for a sum not exceeding Rs 2 crore.

PriceWaterhouse Coopers and Bansi Mehta and Company are working out the valuation for this transaction. The technical help desk business has 168 employees operating in a 128-seat facility. The current client base in this segment includes several US organizations including a large Telecom company, an ISP and a clutch of software product companies.

For the latest financial year ended 30th June 2002, this business had revenues of Rs. 2.63 crore with a Profit before tax of Rs 8 lakh. This business is intended to seamlessly integrate in due course with the existing BPO operations of HCL Tech.

HCL Tech, Chairman, President and CEO, Shiv Nadar, said, "I see this merger as a strategic initiative in business consolidation, leveraging mutual strengths and synergies to greater advantage. The merged entity will be much better equipped to address a wider spectrum of customer requirements as well as capture opportunities in emerging service lines."

HCL Infosystems, Chairman and CEO, Ajai Chowdhry, added "The entire initiative is based on the premise of delivering and increasing value for all our stakeholders, including our employees, shareholders and customers. The restructuring, falls in line with our strategy of leveraging on our core competencies and enhancing our focus on the domestic IT hardware and related services business and the communication and imaging services businesses."