Delisting of mid-tier IT firm Hexaware Technologies by promoter Baring Asia PE will have no impact on its operations or employees and clients, R Srikrishna, CEO, Hexaware, told Moneycontrol on July 28.
In an interaction with Moneycontrol, Srikrishna said that clients have so far raised no concerns over the move, and there are no issues on retaining employees either. “The whole idea is to continue as it is,” he added.
In an earnings call on July 28, he said that if the delisting goes through, employees with company stocks would be adequately compensated. This could be through ownership plans similar to restricted stock units (RSU), he said. RSU is a compensation issued to employees in the form of company shares.
The results of the shareholder voting to consider delisting will be out on August 10, post which the timeline for the same, if it happens, would emerge, he said.
Baring Asia PE had announced its intent to delist in early June. The board authorised the delisting move on June 20, and now it is up to the shareholders. The board approved the delisting, saying that if the promoter group gets complete control, it would increase operational flexibility to support the company’s business.
Delisting will also help in cost savings and allow the management to dedicate more time to focus on the business.
Baring PE Asia holds a 62.4 percent stake in Hexaware, which it acquired in 2013. The company has a market cap of Rs 11,212 crore. The company's stock increased close to 10 percent after the announcement and has increased to 20 percent at Rs 374.
According to a CNBC-TV18 report, the promoters believe that delisting would give them better value for their stake. The report added that delisting will help the company scale Hexaware faster and in selling the company to a strategic investor.
Q2 results
The company’s revenue rose 10.4 percent year-on-year to $208.1 million, for its second quarter ending June 30, 2020. Profits dipped 7.2 percent y-o-y to $20.2 million for the same period. The company won new deals worth $46 million in the quarter. Hexaware follows the calendar year for its fiscal.
The revenue growth, Srikrishna said, was driven by the new digital service lines the company created for the post-COVID-19 world. This includes automation, cloud, customer experience and touchless technology that have seen a huge uptick. This is what is going to drive growth in the coming quarters, he added.
But the company is cautious about recovery. While Srikrishna said that they have bottomed out, he does not expect growth to go back to pre-COVID-19 levels right away. “We are in the worst, don’t think this is going to get any worse from here. But it is too difficult to predict a recovery,” he added.
He said that while investments are taking place in newer areas, clients are still cutting down discretionary spends.
This is visible in the company’s drop in headcount by 1,173 people. The company employs about 18,825 people. Srikrishna explained that a majority of attrition occurred in the business process services. “The number has primarily come down in areas where demand is unlikely to come back.” This includes travel and education. The IT sector saw performance-related attrition in the last quarter also.
The company did not on-board freshers due to the pandemic. "We will start on-boarding from the July-September quarter onwards and will recruit more freshers this year for FY21 like usual," he added.
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