Hinduja Global Solutions (HGS), the BPM arm of the Hinduja Group completed the sale of its healthcare services business to Baring Private Equity Asia for $1.2 billion on Thursday. Partha DeSarkar, Global CEO of HGS, spoke to BusinessLine on the intricacies of the deal and the inflow of funds.

Why this parsimony in sharing wealth with your existing shareholders?

The total deal value is about $1.2 billion, which less of some accounting adjustments come to about $1.088 billion. At current exchange rates, it is about ₹8,089 crore. Then there are some assets that are being transferred, some transaction fees for investment bankers, lawyers and all of that leaves about ₹6,650 crore in our hands. The tax on that works out to approximately 10 per cent, which is around ₹822 crore.

So, this amount is divided between the assets that we hold and our global assets. There is business in the Philippines, in the US, the UK and Jamaica. So, the money that comes in gets distributed amongst these localities. So, what comes to India is approximately ₹3,200 crore.

How did ₹6,500 crore become ₹3,200 crore?

The balances is in our overseas subsidiaries because all business was not in India, right? So, one of the advantages of this structure is also, it is quite tax efficient because if you bring in all that money from the subsidiaries to India, there is a fairly high tax incidence.

The taxes which you mentioned on the top line of ₹8,089 crore. What are these additional taxes which you're talking of?

Actually, I’m giving you a breakup of the taxes. So, the money that is ₹3,200 crore is coming in. On that 23 per cent capital gains tax. So, then we have got a transaction expense for all the lawyers that we have employed. The investment bankers that we have employed.

So the ₹3,200 crore basically comes down to ₹2,500 crore, net of all these expenses, and then you take tax out, it will come to about ₹1,900 core.

You offered a special dividend of ₹150 a share. But that would only amount to some ₹300-350 crore outflow. So, what is the thought process for the rest of the money?

Yeah, the thought process with the rest of the money is that look, we know this is a special interim dividend. Ok, where have we said that this is the end of it all? So I think people have to be a little bit more patient rather than jump to conclusions.

Has HGS given out loans to promoters?

No. There are zero loans to promoters. There are investments that we have made to group companies. So, we do park liquid funds with Hinduja owned companies.And that’s nothing new, we have always disclosed that. And that is perfectly legal, and it's within the law. We have disclosed in our books (of such investments) to the extent of ₹500 crore.

So are you looking at additional ‘investments’ in group companies?

The liquidity available will be put to best use. Some of it will be going into investments in, you know, mutual funds. It could go in to debentures. It could also go into group companies. Wherever we feel our money is safe and secure, we will put the money there because we don't want to be exposed to market fluctuations. As you know, the market has been very, very volatile.

And would it also be used to make any kind of inorganic moves?

Yes. We are trying to build our technology capabilities. With some of the monies that we've got out of this transaction will be used to acquire technology capabilities in the areas of artificial intelligence, automation, analytics, cloud and even for geographical expansion.

So why the market reaction?

So, I was talking to somebody. I believe people were expecting some crazy amount of dividend which doesn't make sense. That will leave no money in the company. They want the entire money to be returned to shareholders. That doesn't make any sense.

So there are no governance or any other concerns at all?

Zero. market behaves in ways that are inexplicable right? The market did not really think that this business was worth $1.2 billion, right? I don't look at the stock price on an everyday basis. I have to focus on the business to grow it profitably.

(with inputs from BL Intern Isha Rautela)