Floats 3 subsidiaries with focus on services and distribution

HCL Infosystems has decided to exit the PC manufacturing business and focus more on IT services and hardware distribution.

The company has hived off its businesses into three subsidiaries in a bid to unlock value in profitable businesses and isolate loss-making ones. The move is part of the company’s turnaround strategy.

Speaking to Business Line, Harsh Chitale, CEO and whole-time Director of HCL Infosystems, said, “Manufacturing of PC is becoming less and less a part of our business. It is not our focus for future at all.”

“The hardware manufacturing story has definitely struggled and there is no cost and competitive advantage today in manufacturing hardware in our country. Rather, we will do what we are good at. We are definitely going to continue to be a dominant distributor of PCs,” he added.

Under the restructured organisation, products distribution business would be with the parent entity HCL Infosystems. The company is a distributor for PC and mobile phone brands including Dell, Lenovo and Nokia. It gets more than 50 per cent of the overall revenues from this business.

System integration and solutions business has been brought under a wholly owned subsidiary HCL Infotech Ltd and IT services, including infrastructure management has been brought under another subsidiary called HCL Services Ltd. In addition, there is HCL Learning Ltd, which is in the education space.

“We will be able to decide which of these would be our growth engines of future and which of these are going to be less and less of focus going forward. In the near to mid term, I can see distribution and services becoming the two pillars of growth,” Chitale said.

When asked if the company would be open to having a strategic investor in any of the subsidiaries, he said, “As a listed company, we are always open to any good offer that will come. We have created platform where there could be some strategic partnerships.”

HCL Infosystems has reported a 41.7 per cent decline in its standalone net profit at Rs 1.48 crore for the quarter ended September 30, 2013. The company had posted a net profit of Rs 2.54 crore in the corresponding quarter last year.

(This article was published on November 15, 2013)
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