Quess Corp acquires remaining stake in TSIPL

The Board of Directors of Quess Corp has approved the acquisition of remaining 49 per cent stake in Trimax Smart Infraprojects Private Limited (TSIPL), which is its subsidiary. Post completion of acquisition, TSIPL will become wholly owned subsidiary of the company.

In December 2017, Quess Corp had entered into a joint venture with TSIPL, thereby acquiring 51 per cent in the equity share capital of TSIPL, for implementing smart city projects in Ahmedabad.

Quess Corp through a sub-contracting arrangement with TSIPL provides hardware, software, maintenance and technical support to Trimax IT Infrastructure & Services Limited. Trimax IT had executed an agreement with Smart City Ahmedabad Development Limited (SCADL) a government undertaking, in 2017 for supply, installation, commissioning and operation and maintenance for a Pan CIT infrastructure and intelligent command and control center for the Ahmedabad Smart City.

As per the tripartite agreement between TSIPL, Trimax IT and Axis Bank, amounts recoverable from SCADL were required to be deposited into an escrow account and 99 per cent of the money received to be paid to TSIPL and 1 per cent to Trimax IT.

On February 21, 2019, the Hon'ble National Company Law Tribunal (NCLT), Mumbai Bench ordered the commencement of Corporate Insolvency Resolution Process for Trimax IT based on a petition filed by Corporation Bank which had declared Trimax IT as an NPA on March 31, 2018. At June 30, 2019, Quess has outstanding trade receivables of Rs. 4,947.97 lakhs, advance receivable of Rs. 1,228.20 lakhs and loan and interest receivable of Rs. 11,730.40 lakhs recoverable from TSIPL which was reported as a note to the Unaudited Financial Results for the quarter ended June 30, 2019.

Now, Quess Corp has agreed to enter into a settlement agreement covering the following:

- Acquisition of 49 per cent stake in TSIPL for a consideration of Rs. 13 crores.

- Relinquishment of rights in escrow by Trimax IT and TSIPL becoming 100 per cent owner of rights in the escrow account thereby securing the entire receivable from SCADL.

- Resolution Professional to work with SCADL & TSIPL for transfer of Smart City projects contract from Trimax IT in favour of TSIPL.

The company stated that the aforesaid proposal has been approved by the Committee of Creditors and the Resolution Professional appointed by the NCLT in Trimax IT matter. After completion of aforesaid activities, TSIPL shall have all the rights over all the monies deposited in the escrow account currently and in future and Trimax IT will no longer be a beneficiary or owner of the sums in the escrow account.

On Friday, stock of Quess Corp opened at Rs. 461 in BSE. In the morning trading session, it was up by 3.2 per cent to Rs. 470.50 from previous close of Rs. 455.95.