Aditya Birla Nuvo mulls delisting PSI Data Systems

Effects management changes at the top level.

Aditya Birla Nuvo, a diversified conglomerate clocking more than $3 billion in revenues, is considering delisting its information technology (IT) business arm, PSI Data Systems, from the Bombay Stock Exchange.

The shareholders have already given their approval for the same by way of postal ballot. However, the company will need to seek the market regulator’s nod also. “It’s just a resolution that has been passed. The company is yet to decide whether it will delist PSI Data Systems or not,” said Adesh Gupta, chief financial officer and director, Aditya Birla Nuvo.

PSI Data Systems’ stock price, like that of other IT firms, has taken a beating in the recent market meltdown. From a high of Rs 99 in January 2008, it has nearly halved and closed today at Rs 47.90. The IT firm, with a turnover of more than Rs 100 crore, contributes just about 1 per cent to the group’s revenue. PSI Data has 656 employees as of March 31, 2008.

In yet another development, the company has also effected some management changes. PSI Chief Executive Officer Sampath Iyengar resigned effective November 22, 2008. Before that, Dev Bhattacharya quit as the managing director, while he continues to hold the director’s post. Bhattacharya will also no longer be at the helm of the conglomerate’s BPO business Aditya Birla Minacs.

Deepak Patel will be the new CEO of Aditya Birla Minacs. In addition to heading the BPO operations spanning seven countries, Patel will also oversee the operations of PSI Data Systems. Patel was the managing director and group chief operating officer of Mphasis (an EDS company).

Industry experts note that one of the reasons the company would want to delist PSI is to synergise with its BPO business. In an earlier interview to Business Standard, Bhattacharya had said, “We see many synergies in terms of offshore product development. In the past few years, PSI has become focused in financial services and has a number of customers in trade finance and corporate services. We are now looking at getting offshore development capabilities and working with Minacs to provide an IT-blended solutions for the banking, financial services and insurance segments.”

The BPO operations form 13 per cent of the company’s revenue composition. For the quarter ended September 30, 2008, the BPO operations had posted a net loss of Rs 25.7 crore. The company did not comment on the current management shuffle, but analysts suggest that one reason is that post the acquisition of Canadian firm Minacs, the integration process has taken time.

India Rayon — now Aditya Birla Nuvo — had acquired a stake in PSI Data Systems in 2001. Eventually, in 2002 PSI Data acquired Birla Technologies that brought the group’s IT services under one umbrella. In 2003, the group acquired TransWorks Information Services. In 2006, TransWork acquired Minacs for $125 million, one of the biggest deals of that period.