SSI, Scandent to demerge IT services units, form new firm

The Chennai-based software company SSI and the Scandent Group have proposed to demerge their information technology service business and amalgamate the two demerged businesses to form a new entity.

The new company is projected to have a revenue of $60 million and 1100 employees. There was no monetary consideration involved in the transaction.

Addressing a joint press conference, officials from the companies the said the shareholders of SSI Ltd would be given one share for every share held in the company.

The new company, which is yet to be named, will have an equity base of Rs 27 crore shared equally by the shareholders SSI Ltd and Scandent Group. The new company will be headed by Christopher A Sinclair, founder and non-executive chairman of Scandent Group.

Ramesh Vangal, founder and CEO of Scandent Group will be the new company's founder and CEO.

Kalpathi S Suresh, chairman and CEO of SSI Ltd will be a non-executive board member in the new company.

While 35 per cent of SSI Ltd stock is held by the public, Scandent, according to Vangal would bring in less than 10 shareholders into the new company.

Suresh said decision is yet to be taken on whether SSI Ltd would continue to exist as a holding company of the new company or opt for liquidation. The entire demerger and formation of the new company is expected to completed in the next six months to one year.

Vangal said, "The proposed new entity will have significant domain expertise in the government, BFSI, and logistics verticals. Scandent Group's offering in the IT and the enterprise solutions sectors will complement SSI's skills while Scandent's engineering services will broaden the range of services offered to customers."

For the July to September 2003 quarter, Scandent Group reported consolidated revenues of $5.64 million and an operating profit of $486,000. Scandent has 580 employees and over 50 global customers.