Pcl Mindware Brass Jump Ship
The future of PCL Mindware, the software export division of PCL, has plunged into uncertainty following an en masse exodus on Tuesday of a group of senior executives led by Ajit Chakravarti, executive vice president, PCL Mindware, in Bangalore.
A terse statement issued by Chakravarti in Bangalore maintained that he and his group of colleagues have decided to set up an 'independent' software services organisation which, according to them, was the main reason behind the exodus.
While Chakravarti gave no details about the sudden resignation or the position of the company, sources said employees of PCL Mindware, which had to suffer heavily on account of the huge debt accumulated by PCL, had not been receiving their salaries regularly for quite some time. The morale of the division was also said to be low following an indefinite delay by PCL over either forming a joint venture or turning it into a separate company.
Although, Mindware had one of the fastest growth in software exports in the country, PCL's debt burden had virtually cut it off from receiving any funds from financial institutions. Because Mindware was only a division of PCL, it was unable to secure any loans by itself. PCL, once a successful PC company, slid into bad times following its failure to clear a huge backlog of PCs booked by customers as early as September 1996.
"I have been involved with Mindware since its inception," said Chakravarti, "so this decision is that much more painful." When contacted, a Mindware spokesperson commented, "It is a matter of regret when anyone leaves the organisation. More so, when they have played such critical roles. But Mindware is a highly resilient global operation. Consequently, the new management team is already in place."
Not wanting to let its fastest growing software exports division to be impeded by lack of capital, PCL had decided to accept a 50:50 shareholding joint venture with a foreign firm for a good consideration price. This was to help Mindware to encash on its brand equity at a global level without being tagged to PCL.
Consequently, the Mindware team had initiated talks with two foreign players for offering equal equity holding with PCL after converting Mindware into a separate company.
The new company was to have been named Mindware Global Ltd.
As a prelude to the formation of a separate company, PCL had entrusted well-known foreign auditing firm Ernst and Young with the responsibility of separating Mindware's books of accounts from PCL.
The division required around $15 million additional capital to meet both its working capital and expansion plans. PCL had so far made a substantial investment of Rs 50 crore in the 'brand equity' of Mindware.
In its very first year of operation for 1996, Mindware achieved a turnover of $13 million (over Rs 45 crore) and expects to triple this to $40 (Rs 140 crore) million during 1997.