New Delhi, Oct 13 (PTI) IT services major HCLTechnologies today said it has decided to discontinue itsjoint venture agreement with DXC Technology and formed a newIP partnership with the company.
HCL Technologies had partnered DXC in July 2015 and hadformed two joint venture entities -- CeleritiFinTech Ltd (CFT)and CeleritiFinTech Services (CFTS).
CFT was responsible for sales and marketing of corebanking products, while CFTS was mandated with servicedelivery.
HCL Technologies had 51 per cent stake in CFT and 49 percent share in CFTS. The remaining was held by DXC in bothentities.
"With a view to better leverage the capabilities of HCLand DXC, on September 30, 2017, HCL and DXC decided todiscontinue the joint venture arrangement and instead a newarrangement (IP Partnership) has been entered," HCLTechnologies said in a BSE filing.
It further added that under the new partnership, HCL willbe responsible for product development and modernisation,maintenance and professional services of core bankingproducts.
DXC will be responsible for sales, marketing and clientrelationship.
"For the financial year ended March 31, 2017, CFT (theresults of which entity were being consolidated with that ofthe company) had revenues of USD 57.7 million and net loss ofUSD 40,000," the filing said, adding that HCL had done equitypick up of USD 0.3 million for the year ending March 31, 2017for CFTS.
HCL had invested aggregate USD 11 million in the jointventure companies and had pending commitment of USD 46million.
With the JV arrangement being discontinued, HCL will nolonger be required to make the balance investment and allreceivable and payment of liabilities in joint ventureentities will be equally distributed between HCL and DXC.
Under the new IP partnership, HCL will acquire exclusiverights for 10 years for the core banking products (earlierwith JV companies) and pay USD 50 million.
Of this, USD 25 million is payable now, USD 12.5 millionat the end of year 3 and remaining on achievement of certainmilestones after three years.
"Further, an amount of USD 65 million is payable at theend of year 5, subject to achievement of certain milestones.
On such payment, HCL will get perpetual rights for the corebanking products and the derivative IP products," the filingsaid. PTI SRBAL.
This is unedited, unformatted feed from the Press Trust of India wire.