Indian Rayon to buy Groupe Bull's stake in PSI Data

By Our Staff Correspondent

MUMBAI, JUNE 25. Indian Rayon and Industries Ltd. (IRIL), the flagship company of the Aditya Birla group, has signed a definitive agreement to acquire the 50.35 per cent controlling stake from Groupe Bull, France, in PSI Data Systems. The cash deal was at a price of Rs. 186.80 per share aggregating Rs. 71 crores.

In line with the Securities and Exchange Board of India takeover code, Indian Rayon will make an open offer to acquire a further 20 per cent shareholding from the public at a price of Rs. 186.80 per share that may take the total shareholding of the company in PSI to 70.35 per cent for a final consideration of Rs. 99.20 crores. The open offer price will be the negotiated price, as it is higher than the average price during the 26 weeks preceding toady. This would translate into an offer for acquisition of 1.51 million equity shares aggregating Rs. 28.20 crores. The acquisition follows Bull's decision to exit from some of its businesses as part of a global restructuring process.

The acquisition will be financed through internal accruals, said Mr. Adesh Gupta, president and CFO, Indian Rayon. In view of this development, Indian Rayon intends to defer its share buy-back plans for some time.

Mr. Kumar Manglam Birla, chairman, IRIL, said, ``This strategic foray into the technology sector is part of a well-crafted plan to enhance the value for Indian Rayon's shareholders through a significant rise in growth and earnings. The technology sector, which is a knowledge-based industry, offers enormous growth potential over the long term.''

Further, Mr. Birla said, ``Our aspiration is to attain a leadership position in this sector as well in the foreseeable future. The acquisition of PSI is a forward step in this direction, providing as it does a platform for growing into a position of dominance.''

Mr. Birla said IRIL's three businesses - viscose staple fibre (VSF), carbon black and insulators - are not promising.'' Indian Rayon is a cash rich company. As its traditional businesses have limited growth opportunities in the immediate future, we have made a conscious decision to invest in knowledge-based high growth sectors. We need to have businesses that take care of the future. For us, garments, insurance and software are the new growth avenues.''

Mr. Birla said although there was an existing subsidiary of Grasim, Birla Technologies Ltd. (BTL) in similar line of business as PSI, there were no immediate plans of a merger. ``We plan to grow BTL and PSI independently and then decided on how to bring them together,'' he said.

PSI is a listed IT services company headquartered in Bangalore and offers software development, systems integration and software maintenance services. For the year ended December 2000, it registered revenues of Rs. 83 crores and a net profit of Rs. 18.20 crores.

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