Polaris Financial Technology Ltd on Tuesday announced the demerger of its loss-making products (Intellect) business into an independent unit.

Following the demerger, the independent entity will be called Intellect Design Arena.  It will be comprised of four different businesses - global universal banking, risk & treasury management, global transaction banking and insurance.

The Chennai-based IT firm will keep on running the services business with a robust vertical and solution focus.

Arun Jain, executive chairman of Polaris Financial Technology, said, "From a customer perspective, this new structure aligns investments, competencies, decision making and processes to drive the next level of value creation."

In terms of investments, sales and distribution, the company's product business is considerably different from the services business.  Every shareholder of Polaris will get one share of Intellect Design Arena..

According to existing regulations, the company will soon file the scheme of demerging the loss-making products business with the stock exchanges, market regulator SEBI and high court as per existing regulations.

Following the announcement of the demerger scheme, Polaris shares gained up to 17.26 per cent to Rs 160.60 apiece.  The stock ended the day with a gain of 11.57 per cent at Rs 152.80 apiece on the Bombay Stock Exchange.