Hfcl, Kerry Packer End E-Comm Venture

Media mogul Kerry Packer and Himachal Futuristic Communications Ltd (HFCL) have called off their agreement for their e-commerce joint venture, Exel Netcommerce.

While HFCL had a majority stake of 51 per cent in the company, Packer had 31 per cent stake. The remaining equity was to be split between a strategic investor, with 10 per cent, and the staff. However, with the crumbling global software market, the joint venture failed to rope in a strategic investor.

C K Goushal, advisor (finance) of HFCL said, "As we are not keen to enter the business, the venture will not take off and the agreement does not exist now. Though the firm had prepared a detailed business plan after hiring one or two employees, we never invested in the venture."

After signing a much-hyped memorandum of understanding in early last year, the group has now found that e-commerce ventures have lost confidence of investors across the globe. Exel Netcommerce was to cater an entire gamut of e-commerce services including business-to-business services, Intenet security, net verification, etc.

In December 2000, the board of HFCL had approved an equity capital of Rs 100 crore in Exel Netcommerce. The board had also given green signal for investments of Rs 100 crore each in its software and media subsidiaries. HFCL had also decided to undertake acquisitions and investments in the software and media segments through these subsidiaries rather than via the parent company.

Though it is calling off the e-commerce venture, both HFCL and Kerry Packer will continue in the software joint venture, Consolidated Futuristic Solutions. Goushal, however, added that there will be no fresh investments in the software business. Consolidated Futuristic will mainly develop telecom and other software for its parent company.

Recently, HFCL, under its restructuring plan has announced that it would prune its workforce by two-thirds. This came in the wake of the group identifying telecom equipment making and turnkey-solution businesses as its core areas.

The company is also conducting research and development to come out with new telecom products in the country.