HCL deal is a win-win situation for both shareholders and employees: Manu Parpia

Interview with founder and CEO, Geometric

Mumbai-headquartered Geometric that got acquired by HCL Technologies was set up as a division of Godrej & Boyce in 1984-85. For Manu Parpia, founder and CEO of the company, the journey of over three decades comes to an end with the company getting acquired. In an interview with Shivani Shinde Nadhe, he talks about why this deal is fair, how it benefits both the employees and shareholders and way ahead fore the company. Edited excerpts…

What made you sign the deal with HCL Tech? Was it just the valuation?

The deal is good value for shareholders. I believe it’s a logical conclusion and brings value to both customers and employees too and it is the best way forward. 

If you look at both the deals — the business that HCL Tech acquires and what Dassault Systèmes pays — the total value comes at $260-270 million. Will that be correct assumption?

We should not look at deal from just the valuations perspective. For every 43 shares of Geometrics shareholders will get 10 HCL Technologies shares. Similarly in case of the JV, every one equity share of Geometric will get one redeemable share of Rs 68 each in the 3DPLM unit. 

There is a section of analysts who feel that the deal is not fair to shareholders?

We are getting a very reasonable and fair deal. Funds will come straight into the hands of the shareholders. In both cases they get listed stock. That is for a share that three months ago was trading at around Rs 140-150. I think it’s a pretty decent valuation. Even as promoter we do not get premium.

How much time will it take for the deal to close?

It will take six to nine months for the deal to close. We have to wait for approvals from both the Delhi and Bombay High Courts. 

Why the need to fold the 3DPLM Software Solutions business into Dassault?

The JV had sole client, which was Dassault Systemes. Having a single customer is not viewed as value accretive. But from an employee point this is good. We have about 2,000 people in 3DPLM unit. The business model under the JV had hit a plateau. 3DPLM not a growth story as it was a few years back. Moreover for employees there was always a semi-glass ceiling as they were part of the JV and not with the parent company. I think the model was great for the last 12-13 years. 

You think HCL Tech is a good bet for Geometric, since you were a specialised engineering services firm?

We have around 80 clients and there is some overlap in terms of clients but not the services that they offer or what we do. I think this gives both the teams a huge cross-selling opportunity. Customers can now get a wider scope of services from a single vendor. It is truly a win-win situation that we could offer to shareholders, and employees.