Monday, November 05, 2001
NEW DELHI
Hughes Software Systems (HSS) is likely to ask for more time
from the Securities and Exchange Board of India (Sebi) to
reply to a notice asking why an open offer should not be made
after its US-based parent, Hughes Electronics, announced a
merger with EchoStar Communications.
According to sources, the company may seek more time to reply
to the Sebi notice, issued late last week, on the ground that
HSS itself was seeking more clarifications from the US.
Sebi had given HSS till Monday to reply to the notice.
Immediately after the deal between Hughes Electronics and
the US media company EchoStar was announced on October 29
by General Motors, HSS had informed the stock exchanges that
the question of open offer did not arise.
However, the company will soon convene an extraordinary general
meeting for approving a possible change in control pursuant
to the merger.
"Since there is no agreement or intention to acquire
Indian shares of Hughes Software Systems (by EchoStar) and
since the amalgamation is not an indirect acquisition of Hughes
and since there is no change in control or agreement to change
control; no minimum public offer is likely to be made,"
HSS had then explained to the stock exchange.
In its notice to the stock exchanges, HSS had also said that
the company was unlikely to see any management change in India.
According to Sebi's takeover code, any takeover that leads
to a change in management control must necessarily be followed
by an open offer to buy at least an additional 20 per cent
of the voting capital of the company from its existing shareholders.
This has been done to give the domestic shareholders a chance
to exit the company in case there is a change in management
or ownership.
General Motors (GM), which owns a majority stake in the $7.8-billion
Hughes Electronics, last month announced that it had agreed
to sell its satellite television unit Hughes Electronics for
$25.8 billion in cash and stock to EchoStar.
In India, Hughes operates through four business entities,
Hughes Software Systems a leading communications software
company, Hughes Escorts Communications a provider of shared
hub satellite communication services, HughesTele.com, India
a telecom operator in Maharashtra and Goa, and Hughes Network
Systems India.
Meanwhile, HSS reported a 52 per cent fall in its net profits
to Rs 6.3 crore for the quarter ended September 30. The company
attributed this fallduring the second quarter to the 45 per
cent decline in its products business during the quarter.
For the half-year ended September 30, the total income of
the company grew by 44 per cent to Rs 124 crore from Rs 86
crore during the same period last year. In the same period,
profit after tax grew by 12 per cent to Rs 25 crore from Rs
22.4 crore in the corresponding period last year.
The second quarter net profit was 66.3 per cent lower than
Rs 18.7 crore profit after tax in the first quarter. The company
also added three new customers for its products and two new
customers for its services in the past quarter.
Last updated : February 2, 2004
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