Global Tele board okays merger with GECS

MUMBAI, JULY 18: The board of Global Tele-Systems Ltd has approved a merger with the loss-making Global Electronic Commerce Services GECS...

MUMBAI, JULY 18: The board of Global Tele-Systems Ltd has approved a merger with the loss-making Global Electronic Commerce Services GECS in order to focus on end-to-end e-commerce solutions. The company will appoint Deloitte Haskins and Sells, the leading chartered accountants and Pannell Kerr Forster as valuers to recommend the ratio for exchange of shares of GECS with GTL.

Global Tele-Systems will also appoint a committee consisting of independent directors namely TNV Ayyar and SC Sahasrabudhe to review and recommend to the board, for its final approval, the terms and conditions of amalgamation and ratio of exchange of shares based on the valuation.

The board of directors of Global Tele-systems, which met here on Tuesday, will also rope in Salomon Smith Barney as advisors to assist the board in framing the business synergies.

The merger proposal has not brought about much movement on the bourses, though marketmen expect a favourable swap ratio. Global Tele-Systems scrip on Tuesday touched a low of Rs 1128.35. The scrip was hovering around Rs 1138.40 on Monday, a lull day for the country8217;s markets.

It is learnt that GECS had posted a net loss of Rs 5 crore on a revenue of Rs 45 crore in 1999-2000. Global Tele-Systems registered a revenue of Rs 625 crore and a net profit of Rs 228 crore profit after extra-ordinary income during the last fiscal.

At present, GECS offers services for setting up business-to-business B2B vortals in areas including drugs, finance and banking, automobiles, airlines and manufacturing for operating their business processes.

The promoters 8211; Tirodkars and D8217;silvas 8211; currently hold about 27 per cent equity stake in Global Tele-Systems and about 38.5 per cent equity in Global Electronic Commerce. Post merger, the promoters8217; holding in the merged entity is expect to be about 34 per cent. The equity capital of GECS and Global Tele-Systems stand at Rs 158.50 and Rs 43.50 crore respectively.

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Recently, foreign institutional investors and domestic funds had picked up about 26 per cent stake in Global Electronic Commerce Services for Rs 800 crore. The investors included BankAm, CS First Boston Europe, Zurich Tech Group and Unit Trust of India.

GECS, an unlisted company, had pumped about Rs 170 crore in a digital data network covering 14 cities across the country to offer e-commerce services. The company is also planning to inject another Rs 100 crore over the next two years to cover major cities.