Tuesday, Feb 11, 2003
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By Our Special Correspondent
The all cash deal will involve an outgo of Rs.24.54 crores for SSI. Consequently, SSI will soon come out with an open offer to raise its stake to over 50 per cent in Aptech. Suresh Kalpathi, Chairman and CEO of SSI, told The Hindu that the company had `enough liquidity' to fund the Aptech acquisition. He expected the total acquisition cost post-open offer under SEBI takeover norm would be Rs. 40-45crores. The company also announced that B. G. Menon, the CEO of SSI Education, had indicated his desire to leave, seeking greener pastures elsewhere. Consequently, Pramod Khera, CEO and Managing Director of Aptech, had been retained to head the combined entity, Mr. Suresh Kalpathi said. In the wake of the latest developments, efforts were on to place SSI's own personnel as non-executive members of the Aptech board. However, SSI had decided to continue the two existing executive members — including Mr. Khera — on the Aptech board. The takeover of operational and management control would happen as soon as the required SEBI-mandated formalities were through, Mr. Suresh Kalpathi pointed out. Though the deal was coming for quite sometime now, the announcement was delayed mainly because SSI insisted that the Aptech promoters cleaned up the books before selling their stakes. Though the lender-banks had sought to put spokes into the whole exercise by restraining the outgoing Chairman Atul Nishar from selling his stake in Aptech, the takeover could still happen because Mr. Nishar's personal holding in the Mumbai firm was insignificant to say the least. With the takeover of Aptech, the stage appeared set for SSI to put into practice its stated objective of de-merging its IT (information technology) education business. Mr. Suresh Kalpathi had indicated that SSI's IT education business would indeed be merged with Aptech. This would ensure that SSI became a pure IT services company. Appropriate steps in this regard were to be taken shortly, he said. The merger of its education business with Aptech will have twin beneficial fallouts. For one, the SSI-controlled services and education businesses will come under listed entities. SSI is already a listed outfit. So does Aptech. Post-merger, SSI will become a pure-play service company and Aptech a pure-place education outfit. The de-merger of education business and its subsequent merger with Aptech will have a significant impact on the bottom line of SSI. Sources were of the view that the merger could strengthen the SSI balance sheet by enabling it to get rid of "the baggage of past acquisitions". The consolidated revenue of SSI during 2001-02 was Rs.388 crores. SSI and Aptech have strong brands that cater to specific market segments. SSI is visible in the area of short-term courses. Aptech has three strong brands. They are: Arena is in the multi-media training, Asset in the third party certified courses and Aptech in the long-term training arena. SSI sources asserted that all these four brands would be marketed aggressively in domestic and global markets. SSI sources said that the Aptech's global presence would be leveraged to market SSI brand aggressively in the international sphere. The objective was to make SSI as the second and competing brand in all those countries where Aptech brands had emerged the number one, it was pointed out.
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