Polaris at 2000 low as US buy called off

MUMBAI: Shares of Indian software firm Polaris Software Lab Ltd tumbled to a

year low on Tuesday, reacting to the company's decision to call off a proposed

acquisition of US-based Data Inc, dealers said.

At 12:03 noon (0633 GMT), the share was down 9.0 per cent, or Rs 53.55, at Rs

539.75 on the Bombay exchange, after hitting a 2000 low of Rs 519.80 in early

trade. In contrast the benchmark Bombay index was up 0.52 per cent at 4,111.72

points.

Polaris shares are off 66.5 per cent from its high of Rs 1,612.50 on February

23. "In the short-run, it is certainly negative for the company and in the

long run it depends how it makes alternative marketing arrangement," said

Inquire India Equities research analyst C Govindarajan.

Chennai -based Polaris said in a statement on Saturday that it had called off

the $21 million cash-and-stock purchase after its audit committee recommended

that the acquisition would not be in the best interest of Polaris' shareholders.

Data Inc, based in Montvale, New Jersey, said in a statement on Sunday that

it had filed a suit in a US court against Polaris and its chairman and majority

shareholder Arun Jain, seeking compliance with the original deal and

compensation for expenses connected with the deal.

Polaris said the decision to scrap the planned acquisition would have no

adverse impact on its growth plans for the year. Analysts said that growth is

not an issue for the company during the next two years, but going forward it

would need to expand business to sustain over 70 per cent sales growth.

"The company is expected to announce sales of Rs 600 million for the

second quarter (ended September), up 75.6 per cent from the same period last

year," Govindarajan said.

(C) Reuters Limited 2000.