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Aptech plans separate software entity

Our Bureau

MUMBAI, Feb. 21

AS part of a restructuring exercise, Aptech Limited proposes to demerge its software business and amalgamate it with Hexaware Technologies Ltd, a company promoted by Atul Nishar, Chairman, Aptech Ltd.

The company's board of directors will meet on February 27 to take a decision on the matter, said Mr Atul Nishar, Chairman, Aptech Ltd.

``The driving force behind this proposal is a need to create a large-sized software company and be one of the top ten software exporters in the country,'' Mr Nishar said.

A large, pure software company is preferred by investors and enjoys better valuations compared to a mid-sized mixed company, he said. `` Also, the merger will give us access to a larger and better customer base as most Fortune 500 companies too prefer l arge software companies.''

Aptech which is a known brand in the IT training industry started software operations three years back focusing on knowledge management, e-commerce and education software. The company has two development centres - one in Mumbai and the other in Bangalore .

For the nine-month period ended September 2000, revenues from training and software businesses stood at Rs 304 crore and Rs 121 crore respectively.

Hexaware, which has been in the software business for 10 years, has grossed a turnover of around Rs 150 crore for 1999-2000, said Mr Nishar. The company has development centres in Mumbai, Chennai and Princeton (US) and has domain expertise in Enterprise Application Integration (EAI), Enterprise system Management (ESM) and e-commerce among others.

The merged entity would have revenues of US $ 100 million for the current year and 1,350 employees. `` The new entity will leverage the domain expertise of both software businesses in creating a vertical structure offering services to particular industry verticals,'' he added. These verticals will include the insurance, financial services and airline industries. # Aptech will appoint a consultant shortly to chart out a plan for the proposed merger.

`` The valuation process will take around four to six weeks after which we will submit the proposal to the High Court for approval. The merged entity should start operation within four to six months of obtaining approval,'' Mr Nishar said.

The new company, which will have its registered office in Mumbai, would either carry the Hexaware name or an alternative name. `` We will not use the Aptech brand name as it has always been associated with training,'' said Mr Nishar.