The Hindu : SSI puts development centre on sale

Online edition of India's National Newspaper
Thursday, Sep 18, 2003

Business

Business

SSI puts development centre on sale

By K. T. Jagannathan

CHENNAI SEPT. 17. SSI Ltd. has put its offshore development centre (ODC) at Vadapalani on the shopping list.

The company has set a floor price of Rs. 97 crores. It is located on a six-acre land and includes 3.50 lakh sq. ft. of built up area, specifically designed to locate software development work. It is at present under lease to TCS.

A decision to this effect was taken at a board meeting here today. The company is hopeful that the entire transaction will be completed by the first week of October.

The sale is proposed purportedly to pay off bank debt and turn a debt free company.

The company reported a cash reserve of around Rs.148 crores as on June 30, 2003. Its outstanding debt is around of Rs.196 crores.

Sources said TCS had already shown interest in buying the property. Nevertheless, SSI would solicit bids through floatation of formal advertisements.

The Vadapalani property was commissioned only in the recent past though the land itself was acquired years ago. Insiders said the land was bought out when SSI signed up an alliance with Nasdaq, which had ambitious plans o expand into Europe and Japan. The Nasdaq wish, however, had remained a pipedream. So did it appear the SSI dalliance with Nasdaq. Hence, the current move to put the offshore development centre on the block.

The move to sell ODC comes at a time when there has been intense speculation in the market place about SSI exiting software development business and focus on its core business of education and training.

The theory has gained credence when SSI acquired Aptech, hived off education business and merged it with Aptech and lost many a major software client. The decision now to sell the ODC to knock off the debt is seen as a move to beef up the valuation of the software business (shorn of the education business). Analysts feel that a cleaned up balance sheet could trigger varied possibilities at the pure play software company SSI.

Should no bids come at the floor price indicated by the SSI board, insiders do not rule out the possibility of the promoters themselves buying up the property.

Incidentally, D. V. Narasingarao, one of the promoter-directors of the company, has sold 1.54 lakh shares (out of his holding of around 3.25 lakhs) to three other promoter-directors - K. S. Ganesh, Kalpathi Suresh and K. S. Aghoram. These three together are reportedly holding 24 per cent of the equity of the company.

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