The Telegraph
Since 1st March, 1999
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Software exports folded into HCL Technologies

New Delhi, Dec. 18 (PTI): HCL Technologies today announced a major restructuring of its business, as part of which HCL Infosystems’ software export business, Softex, would be demerged under a scheme of recontruction and merged with HCL Tech.

The consideration of the transaction would be settled through the issuance of 7.09 million equity shares of HCL Tech to the shareholders of HCL Infosystems (HCLI) based on an independent valuation exercise carried out by PriceWaterhouseCoopers and Bansi Mehta and Company, a release said here.

The merger, which is subject to receipt of all regulatory approvals, would help HCL Technologies consolidate its practices in the area of end-user applications and further widen its suite of offerings in the fast growing enterprise solutions space.

Softex had reported revenues of Rs 170 crore and a net income of Rs 17.7 crore for its financial year ended June 30, 2002, with a resource base aggregating 883 employees including 776 technical professionals and development centres at Chennai, Kolkata and Noida.

Commenting on the development, Shiv Nadar, chairman, president and CEO of HCL Tech 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.”

In a separate transaction, the technical help desk business of HCL Infinet, a subsidiary of HCLI, would also be acquired by HCL Technologies and/or its subsidiary company for a sum not exceeding Rs 2 crore.

The valuation of this transaction is also being worked out by PWC and Bansi Mehta and Company.

The technical help-desk business has 168 employees operating in a 128-seat facility.

“In a market where most deals announced lately address a growing need for full outsourcing of the entire in-house IT organisation and strong end-user capabilities are becoming almost a pre-requisite, the proposed merger would significantly enhance the competitive positioning of HCL Technologies,” a company release said.

“HCLI brings significant experience in packaged software implementation and support, projected as one of the highest growing segments by McKinsey. HCLI’s suite of offerings in this domain encompasses enterprise resource planning, and customer relationship management (CRM) amongst others and it and has been delivering composite solutions in these areas to organisations across the globe,” the release said.

Its proven experience across the banking and government sectors also would enable HCL Technologies to strengthen its own significant expertise in these critical areas, it added.

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