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Rs 100 cr in debt, Silverline seeks a breather

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CIOL Bureau
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BANGALORE: Mumbai-based software services and outsourcing firm, Silverline Technologies, is in debt of over Rs 100 crore and is currently serving notices with Punjab National Bank in India and HSBC, its primary bankers in the United States, among others.



Its debt in the US had raised up to $40 million with HSBC, 18 months back, and is currently in the range of $four to five million, after paying up the dues in a phased manner. A miss in between to honor one of the dues, six months back, triggered HSBC to get aggressive and issue notice.



The company tried making amends and become debt free and also invest on business expansion by listing its GDR issue in the Luxemburg Stock Exchange for about $35 million. However market conditions allowed the company to rake in only about $17 million, putting their plans to pay-off debts on shelf.



"We do have some money and are planning to pay off a portion of our liability. We are also holding talks with our creditors, submitting our plans and asking them to reschedule the loan dates. We have given the suggestions but it is up to the banks to accept this," said a senior member of the company on condition of anonymity.



For a company that jumped 18 places in the DQ Top 20 to #18 from #36 in 2002 kick started its woes with the acquisition of Intelligroup’s SeraNova for about $40 million, whose valuation dropped from an initial $99 million-thanks to the market conditions. "Silverline was debt free until SeraNova happened," remarked the official. "e-business was a hot topic during the acquisition and the market hype projected the buy a good gamble. However this was a wrong move as the hidden liabilities started surfacing. Revenue projection also fell short, taking along Silverline down."



Market acceptance also took a beating as clients started pressurizing and questioning its capabilities to deliver and started to change hands to the company’s competitors in the market. This resulted in reduction of the employee strength to less than 400 now, from 1,800 in March 2002. The official cleared allegations about the employees not being paid salary and PF not being credited for the last year, commenting, "Yes, the employees were not paid their dues since May, but a section of them have their dues cleared until November. This section is basically who are on the rolls of the company. For the people who have exited the company, paying off their dues will be addressed shortly. The PF for everybody who worked in the company is paid."



After a tough year scrambling and crawling through big mistakes, Silverline hopes to revive by realigning its business focus to IT enabled services and BPO, as it has an infrastructure and resources for about 400 seats. "We have past our worst, our new business plans should help us revive over the next 24 months, we are keeping our fingers crossed."

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