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PCS goes in for new look ahead of IPO

Netscribes/Abhijit Basu

Six employees of PCS Limited walked out in 1981 and set up a company, which currently enjoys the highest market capitalisation in India. But PCS - the 'cradle of Infosys' - is still struggling to find its feet on the ground. It is finally planning an IPO, for which it has chalked out an extensive restructuring plan.

Although details of the IPO could not be ascertained, the company has realised that it was time it brushed off the cobwebs and transformed itself into a dynamic, focused company.

A dipping topline growth rate - 23 per cent in 1999-2000, compared with 32 per cent in 1998-99 - seems to have sounded the alarm bells for the company management. A turnover of around Rs 3 billion in 1999-2000 slots the company way behind its rivals, who are at least twice its size and clock growth rates of at least 50 per cent.

To help it get around this bend, PCS appointed McKinsey to evaluate its business and suggest a restructuring plan. The McKinsey mandate is clear -- split the company into five independent business units to address areas like practices, horizontals, verticals, customers, and geographies. The PCS management is still bending over the drawing board to realise the implications of the split and chalk out an implementation plan.

Analysts say that the company has traditionally been a body shopper and till now has not made any significant changes to its business plan. They expect the move to transform PCS into a domain knowledge-intensive and customer-centric company, as opposed to the skill-centric mode it is currently locked in.

Interestingly, the company seems to be uncomfortable with its current identity, which is quite often mixed up with PCS Industries, the company's not-so-active hardware business. As company insiders point out, the management is currently scouring through various options for the new identity.

PCS Industries, the hardware and system integration arm, is already listed on the Bombay Stock Exchange and clocked net sales of Rs 901.7 million in 1999-2000, up from Rs 708.22 million in 1998-99. On Friday, the scrip closed at Rs 32.45, down Rs 2.80 (7.9 per cent) from the day's open.

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