For Atul Nishar, the real thrill of starting a company like Hexaware in 1990 was the appeal of working with companies around the world. The concept of ‘valuation’ was alien to most IT companies. “Those were the days when Indian IT industry was very small in size, with exports of around $100 million. The concept of valuation did not exist as they were hardly any listed entities,” says the Chairman-founder of Hexaware.
Nishar surely knows a little more about valuation these days.
Hexaware has been valued at about 8.5 times EBITDA by Baring Asia Pacific, which recently agreed to acquire a controlling stake in the Mumbai-based IT company. Nishar has pocketed a cool Rs 1,000 crore from selling out of the company he headed for 23 years.
In a free-wheeling chat, Nishar responds to most questions with his characteristic calmness. The topics ranged from the features of his journey at Hexaware to the reasons behind the decision to exit at this juncture.
Hexaware today is the ninth largest IT services company while many players who started after you are ahead in the pecking order. In hindsight, do you think there are things you could have done differently to grow faster?
If I look back at 1990, many of the well-to-do companies then are not even around today. I do not want to get into rankings, as I have never claimed be the most successful Indian entrepreneur. What I am happy about is that we could create a company that bought value for clients, shareholders and employees. So success is a relative term. I have no regrets at all.
In 2007, Hexaware faced a major forex crisis when 11 unauthorised derivative transactions, made by a company official (who was later fired) were discovered. The company had taken a hit of $25 million. Would you say that that was probably the most challenging period for the company?
Yes, we did take a hit but we did not go for litigation with banks. We honoured all the forex commitments.
The most challenging year for us was 2009, when revenue declined by about 13 per cent. The company’s market capitalisation went to an all-time low of under Rs 300 crore. It was a phase of fear for the company. It was the low point of my journey with Hexaware.
Was it in 2009 that you first entertained thoughts of selling out? How did Baring come into the picture?
There was a never a question of exit out of defeat for me. Today, the purpose is mainly personal. After achieving a certain degree of success, I chose to accept an attractive offer so that I can spend quality time with my family. If, three years back, somebody had offered me an attractive price, I would not have agreed. I was open this time around. We ran a process through bankers, which lasted for less than two months and that is how Baring happened. They have a strong roadmap for the company.
Media reports have suggested that another PE investor, ChrysCapital, has sought a better price to sell its shares in Hexaware. What is your view on this?
I cannot comment on that. What I know is that the open offer price is set at Rs 135 per share. There is no compulsion for anybody to tender their shares. In my personal opinion, the price is attractive but it is left to the discretion of individual shareholders.
The timing of the deal with Baring did raise quite a few eyebrows, considering that you went on to announce the deal the same week you denied it. Is that fair?
Let me take you back to what happened last year. We were under constant media attack for almost three months and not a week passed by without speculative stories of us (Hexaware) being on sale. All sorts of names were floated. The entire episode impacted our business and employee morale suffered. Finally, no deal ever happened. Just because people are interested does not mean that a deal may happen.
Even this time around so many names did the rounds for the last two months. Any M&A lawyer will tell you that the deal is not done till it is signed. We did not want to jeopardize our chances given our experience of last year.
What’s in store next for Atul Nishar the entrepreneur?
I will always be an entrepreneur as I do not know what else to do. For the time being, the entrepreneur in me is on a break.
There is no question of retirement. I continue to be associated with Hexaware as non-executive chairman till the time Baring wants me to be around.