Soota quits bruised MindTree

Ashok Soota has quit MindTree. The co-founder and executive chairman of the information technology and research & development services firm cited “personal reasons” for his decision. “I will finalise and announce my plans for a new business venture, shortly after my departure from MindTree,” Soota said in a statement.

In his resignation submitted to the board of directors on Friday, Soota has requested that he be relieved by March 31. At the time of going to press, there was no word from the board, which met tonight, on a successor.

Soota’s exit comes at a difficult time for MindTree, which aspires to become a $1-billion entity by 2014. It is reliably learnt that Soota was disappointed by the company’s less-than-expected performance in the last few quarters and its failure to capitalise on the acquisition of the captive R&D unit of mobile technology provider Kyocera Wireless in India.

MindTree scrapped the post-acquisition smartphone diversification owing to changes in the business environment after making substantial investments. “Soota was asked many questions by employees, investors and other stakeholders,” said a source within the company, who requested anonymity.

Soota was vice-chairman when he left Wipro in July 1999 to launch MindTree (then known as MindTree Consulting) the following month. He took with him colleague Subroto Bagchi and eight others, including Krishnakumar Natarajan, S Janakiraman, N S Parthasarathy, Kalyan Banerjee and Rostow Ravanan as co-founders. Soota is the first of the original ten to leave MindTree.

MindTree is considered one of the most promising companies in the midcap segment. When the company went public in December 2006, the issue was oversubscribed by more than 100 times. It acquired Aztecsoft in May 2008 to expand into niche areas like product development outsourcing and strengthen its position in the testing services market.

However, like most other midcap IT services firms, MindTree did not bounce back from the global downturn as quickly as large Indian IT firms. In the just-ended quarter, the company posted a 43.3 per cent dip in net profit at Rs 30.50 crore. This, it said, was largely due to a one-time adjustment of around Rs 17 crore as a part of its restructuring of MindTree Wireless.

“(MindTree) had a choppy performance and its profitability has taken a hit because of a couple of wrong decisions. It is time for the company to rebuild. The real challenge now is to manage the transition,” said Sudin Apte, principal analyst & CEO of technology consultancy firm Offshore Insight.

The onus of managing that transition now lies with the other co-founders, including Bagchi, who is vice-chairman and ‘gardener’, and Natarajan, the CEO and MD.

MindTree shares closed 3.47 per cent down at Rs 515.45 on the Bombay Stock Exchange on Friday.