Banking, financial services and insurance software major Polaris Financial Technology Ltd. (Polaris) is exploring options to restructure its services and software products segments to deliver higher shareholder value, said a senior company official.
Speaking to IANS, company's chief financial officer Natarajan Narayanasamy said: "The company board today (Tuesday) authorised the management to explore options, including restructuring, for the company's next phase of growth and to maximize shareholder value."
Citing the company's two major business streams - services and products, Narayanasamy said the market could not appreciate the co-existence of the both segments while valuing the business.
"Our existing shareholders could not leverage their holdings value. The two lines of business have different DNA and both have to be reported separately," he said.
Polaris had hired management consultancy firm BCC Consulting to study its business and suggest what the company should do.
"BCC gave its report and the board considered the same in detail and authorised the management to explore various options. We have to go back to the Board next quarter with our suggestions," Narayanasamy said.
He said BCC in its report had suggested that both the business should not be mixed.
Asked whether the company would hive off its product's business (last quarter revenue Rs.128 crore) into a separate entity or have a dedicated management team for that, business he said: "Those things have to be looked into in detail."
About Polaris finding a buyer for its 85 percent stake in the US based digital identity authentication services provider IdenTrust, he said around 38 likely buyers have been identified.
"The company paid Rs.88 crore for the stake when the US dollar exchange rate was at Rs.44. Even if we get the same price (Rs.88 crore) we will not incur any loss," Narayanasamy said.
The US government has classified the business of IdenTrust as critical to its security infrastructure and ordered that the company has to be owned only by American entities.
The US company incurred a loss of Rs.11.89 crore last quarter.
According to Narayanasamy, the company's revenue was impacted to the tune of $800,000 due to Hurricane Sandy that hit the US impacting the operations of some its New York based clients.
Meanwhile, Polaris closed the quarter ending Dec 31, 2012 with a revenue of Rs.573 crore and an after tax profit of Rs.41 crore as against Rs.55 crore in the same period last fiscal.