IT Services and Solutions Company, HCL Infosystems have recently announced its financial results for the third quarter ended March 31st, 2014.
Commenting on the result, Harsh Chitale, MD and CEO, HCL Infosystems Limited, said: “Our transformation story is progressing well and is now taking roots. Distribution and Services, our focused growth areas have registered healthy traction. Our portfolio diversification strategy in Distribution continues to yield results as our non-telecom distribution business achieved a 12 per centQ-o-Q and 25 per centY-o-Y growth. Though our Telecom Distribution business did register a decline in topline, the gross margin expanded on account of increase in scope of engagement. As part of a new initiative, the Telecom Distribution business enrolled 88 new rural distributors in JFM Quarter that will further strengthen its footprint in the country.”
He further added: “Our Enterprise Services also grew by 8 per centQ-o-Q and 9 per cent Y-o-Y on account of growth in our order book across India, MEA and South-East Asia. While our Break fix Services gained positive traction as a provider of multi-vendor technology support services, our Managed Services expanded its overseas foothold with a large contract in South East Asia. Our hardware-solutions businesses which we had decided to reduce focus on, are transitioning as per plan. However, business model transitions for these businesses led to repositioning charges in the current quarter and may impact next quarter as well.”
Key Updates and Quarter Snapshot
Distribution Business
According to the company the Telecom Distribution remained flat on a Y-o-Y basis while registering a decline on a Q-o-Q basis. However, their widened scope of engagement with the Principal and delayering of our distribution channel to shorten the time-to-market resulted in significant increase in gross margin percentage for the business. The business also expanded its coverage footprint and strengthened its rural presence by adding 88 RRDs (Regional Rural Distributors) and as part of the new initiative enrolled 2345 ‘champion’ outlets in this quarter.
Non-Telecom Distribution continued its growth trajectory with new Principal sign-ups and volume expansion with existing Principals in IT Hardware, Office Automation, Software Products and Consumer Electronics. This business segment achieved a 12 per cent Q-o-Q growth and signed many important partnerships in this quarter such as Philips and HP. Office Automation and Software Product categories registered impressive quarterly growth with healthy margins.
Services Business
The Enterprise Services registered an 8 per cent Q-o-Q and 9 per cent Y-o-Y growth. Their Services contract bank across India and Overseas geographies continues to expand and showed a sequential growth in ACV from Rs. 400 Crore as on December 31st, 2013 to Rs. 487 Crore as on March 31st, 2014
Infrastructure Managed Services business registered a 20per cent Q-o-Q growth. In India, the business signed many new deals with many prestigious clients across automotive, defense, steel and industrial equipments sectors. In Singapore, the IMS business continued to register robust growth with a large win (from an existing account) of US$ 9 mn ACV.
The MVTS (Multi Vendor Technology Support) service offerings of the IT and Office Automation Break Fix business has received an encouraging response from various OEMs. Concurrently, the Field Force Automation initiative has gone live which is designed to yield higher productivity and better customer service levels.
HCL CareHCL Care, which provides after-sales and support services to end consumers and OEMs in Telecom, consumer electronics and appliances space, continued its expansion with near doubling of revenues of a Y-o-Y basis and 13 per centQ-o-Q growth. The business, with one of the most extensive service networks across the country, has expanded scope of OEM relationships with Delonghi, Lenovo and Lava. It also added 14 Walk-in-Centers under the “TOUCH” brand taking the total number of TOUCH walk-in centers to 268 across India.
HCL Learning
The Jan-Mar Quarter is a lean season for Learning business and hence it registered modest class-room additions in this quarter. An important development in this quarter was international breakthrough in winning more than 200 classrooms from DPS Ghana, Ullens School Nepal and Indian School Al Wadi. MyEduWorld, HCL Learning’s interactive self-learning plug and play tool for students was also introduced into Nepal in this quarter.
