Board of Quess Corp approves acquisition of 49% stake in Trimax Smart Infraprojects

At meeting held on 27 September 2019

The Board of Quess Corp at its meeting held on 27 September 2019 has approved acquisition of remaining 49% stake in Trimax Smart Infraprojects (TSIPL), a subsidiary of Quess. Post completion of acquisition, TSIPL will become wholly owned subsidiary of the company.

Background and objective of the Acquisition:

The Company had entered into a Joint Venture with Trimax IT Infrastructure and Services (Trimax IT), thereby acquiring 51% in the equity share capital of Trimax Smart Infraprojects , for implementing smart city projects in Ahmedabad and the same was informed to the Stock exchanges vide our letter dated 15 December, 2017.

 

The Company 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 (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 (Project).

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

On 21 February 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 NP A on 31 March 2018. At 30 June 2019, Quess has outstanding trade receivables of Rs 4,9.47 crore, advance receivable of Rs. 12.28 crore and loan and interest receivable of Rs. 117.30 crore recoverable from TSIPL which was reported as a note to the Unaudited Financial Results for the quarter ended 30 June 2019.

Now, the Company agreed to enter into a settlement agreement covering the following:

- Acquisition of 49% stake in TSIPL for a consideration of Rs. 13 crore
- Relinquishment of rights in escrow by Trimax IT and TSIPL becoming 100% 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 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.

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