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NEW DELH, Dec. 18

SOFTWARE major HCL Technologies is acquiring the software export business of India's largest PC maker, HCL Infosystems, in a stock-swap deal as both the companies decided to restructure their operations.

Shareholders of HCL Infosystems, for every nine shares (Rs 10 face value) of the company will get two shares of HCL Tech each of Rs 2 face value. as per the swap ratio. A total of 7.09 million equity shares of HCL Tech will be issued, on the basis of an independent valuation done by PricewaterhouseCoopers and Bansi Mehta and Company.

The scheme of reconstruction is to be filed with the Delhi High Court and the de-merger and the subsequent acquisition would be subjected to receipt of all regulatory approvals.

HCL Infosystems' software exports business earned revenues of Rs 170 crore and a net income of Rs 17.78 crore for the fiscal ended June 30, 2002. The division has 883 employees, including 776 technical people, who will now move to the fold of HCL Tech, a company statement said here.

``I see this merger as a strategic initiative in business consolidation, leveraging mutual strengths and synergies to greater advantage. The merged entity will be much better equipped to address a wider spectrum of customer requirements as well as capture opportunities in emerging service lines,'' said Mr Shiv Nadar, Chairman and CEO of HCL Tech.

In a separate transaction, HCL Tech and/or its subsidiary company would also acquire the technical help desk business of HCL Infinet Ltd, a subsidiary of HCL Infosystems, for a sum not exceeding Rs 2 crore.

The technical help desk business has 168 employees operating in a 128-seat facility. The current client base in this segment includes several US organisations including a large Telecom company, an ISP and a clutch of software product companies.

In the last fiscal, this business had revenues of Rs 2.63 crore with a profit before tax of Rs 8 lakh . This business is intended to seamlessly integrate in due course with the existing BPO operations of HCL Tech.

HCL Tech said the merger would help it consolidate its practices in the area of end-user applications and further widen its suite of offerings in the fast growing enterprise solutions space.

HCL Infosytems said it will now strategically focus its attention on the domestic IT, communications and imaging products, solutions and related services business. The company has also decided to transfer its Office Automation division to HCL InfiNet, the Internet service-providing subsidiary.

Mr Ajai Chowdhry, Chairman and CEO of HCL Infosystems, said: "The last one year has seen the global market for software services change significantly and today for any Indian software company to compete globally in this space it has to have a certain scalability to retain its profitability and competitiveness."

"We have realised that for this unit to achieve its potential, it is best to give it the operational scalability of a company like HCL Technologies. We, going forward, would like to focus on the domestic hardware products, solutions and related services market, wherein lie or core strength."

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