On Monday, Megasoft’s share price slid 0.63% on BSE to close at Rs 15.76. The company has put all its acquisition plans on hold. The company had planned to buy a telecom company in Europe before this fiscal, and had set a price range of $25 million. But the plan has been shelved due to the liquidity crunch and the economic downturn.

The company has been barred for four years in December 2007 for participating in a joint venture with World Bank staff. Megasoft provides telecom software products to wireless operators and offshoring services. Its clients include IBM, Liberty Mutual and Sun Chemicals.

“The logic that we applied then was that the World Bank was no more our customer, and we were also shifting our focus from the onsite staffing services that we used to provide to the Bank. So, the ban was not going to have any impact on our financials,” GV Kumar, managing director & CEO, Megasoft, told FE. He added that the company presumed that the World Bank would not make it public, as it would not be of any material importance to it, either.

The company started providing IT staffing services to the World Bank in 1996, and decided to discontinue the service in 2004. Its total revenue from the Bank was $6-7 million. Kumar elaborated that the 50:50 joint venture, Megasoft China, was set up in 2003 between Megasoft and Ben Hu, a former World Bank employee. “Hu had left the Bank in 2001 and had joined Megasoft’s board in 2003. We had made his appointment public and found nothing wrong in appointing him, as it is an industry practice to appoint former World Bank or IMF servicemen on company boards,” said Kumar.

Hu remained on Megasoft’s board until 2007. However, the China operations were shut in 2006 as “it was not successful”, Kumar said. He added that the World Bank approached the company in 2007 while investigating its procurement policies. “Since we were no longer their vendor, we agreed to it and gave all details of our venture,” said Kumar.