Aptech to create two listed cos. for sharper business focus

By Our Staff Correspondent

MUMBAI, JUNE 8. Aptech has decided to create two separate listed companies for its software and training businesses to allow the company that strategic flexibility to build a much sharper focus on each business for better performance.

After the restructure, the shareholders of Aptech will get 60 shares of Aptech Training and 40 shares of Aptech Software in lieu of 100 shares of Aptech when the two businesses are listed separately. The appointed date will be April 1, 2001.

As part of its restructuring, Hexaware will be merged into Aptech software business. Hexaware operates in high technology areas with depth in focussed verticals such as insurance, finance, airlines and a large web of alliances. It is renowned for large project management expertise with clients such as Alliance Capital, Transamerica and Air Canada. The training company will retain the Aptech brand.

Mr. Atul Nishar, chairman, Aptech, said, ``We hope to leverage the benefit of scale of operations for software business and create a sharper focus and flexibility for acquisitions for both the businesses.''

Earlier, the company had appointed a committee headed by Mr. P. G. Kakodkar (former chairman, State Bank of India), Mr. L. S. Sarma (expert in international trade), Mr. Pramod Khera (CEO, Aptech training business) and Mr. Harshad Shah (CFO, Aptech) to review the various options for restructuring.

The committee had recommended restructuring whereby a new listed entity for training and education business would be created. Also the committee recommended keeping the software business in the parent company for maximising tax benefits and retaining the Aptech brand with the training and education business.

Post-restructuring, the committee recommended merger of Hexaware Technologies into Aptech software business to create a dominant software company with significant scale of operations. The merger presents good fit due to the focus on different technology areas of both companies, a similar geographic focus, that is, the U.S. and Europe, resultant broader vertical focus and similar organisational culture and management approach.

The committee had recommended the leveraging of the software and consultancy business strengths along with its employee strength, infrastructure, flexible delivery approach, current client base and expertise to augment organic growth through mergers and acquisitions. Also recommended was the enhancing of the value for training and education business with focus on future expansion through alliances, partnerships, strategic investments and joint ventures including acquisitions.

Deloitte Haskins & Sells and N. M. Raiji & Co. were appointed for recommending valuations, statutory compliance and indication of various models of structuring of the scheme for the merger of Hexaware. The joint valuation report had recommended that a holder of three shares of Hexaware (Rs. 5 face value) will get one share of Aptech Software (Rs. 10 face value), the appointed date being April 1, 2001.

The restructuring is expected to take 4-6 months and JM Morgan Stanley is acting as investment bankers for the restructuring.

In future, the strategy of the training and education businesses will address the global market with a three-pronged strategy pertaining to retail education, multimedia business and corporate training solutions. The main growth drivers for the global expansion are going to be international expansion of Aptech and Arena brands and acquisitions in certain territories.

Mr. Pramod Khera, CEO, Aptech Training, said, ``We are confident that as a focused entity we will be able to achieve our vision of becoming a global corporation in the next three years. We will be able to build strategic relations with large organisations which will help achieve this faster.''

The strategy for the software and consultancy business emphasises on building a stronger offshore infrastructure based on SEI Level 5 of quality and project execution processes. The growth strategy will be focused on the organic growth and acquisition for customers access and market reach.

The company will be positioned as a technology service vendor with focus on EAI, wireless solutions and embedded softwares.

Mr. Rusi Brij, CEO, Aptech Software, said, ``The merger brings about great synergy in terms of technology competence and customer access. It will provide distinct identity to the software business, very important in attracting top talent and Global 2000 customers.''

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