New Delhi:
IT firm HCL Infosystems on Wednesday reported a loss of Rs 34.32 crore for the quarter ended December 2020.
The company’s Board of Directors has also approved the sale of its wholly-owned subsidiary HCL Infotech Ltd to Novezo Consulting at a purchase price based on the enterprise value of HCL Infotech as of the date of the share transfer.
The company had posted a consolidated net profit of Rs 14.5 crore in the year-ago period.
The consolidated revenue from operations decreased to Rs 72.03 crore for the quarter under review from Rs 428.73 crore in the same period last fiscal, HCL Infosystems said in a regulatory filing.
The losses are primarily on account of delayed receipts on certain system integration contracts, certain historical low margin contracts, slow-down of distribution businesses and finance costs, the filing said.
In a statement, HCL Infosystems said its Systems Integration and Solutions business reported a revenue of Rs 38 crore.
Distribution business revenue was at Rs 34 crore, of which Consumer Distribution accounted for Rs 29 crore and Enterprise Distribution accounted for Rs 5 crore, the statement said.
On the deal with Novezo Consulting, HCL Infosystems said the enterprise value of HCL Infotech was Rs 147 crore as of September 30, 2020, which will be adjusted based on the balance sheet position of HCL Infotech as on the closing date of the transaction.
The purchase price will be paid through a combination of cash and Optionally Convertible Debentures, it added.
The revenue and net worth of HCL Infotech Ltd was Rs 148.03 crore and Rs 523.16 crore, respectively, the filing said.
”This transaction excludes UIDAI and Rajasthan power projects; Residual Business (assets and liabilities, which consist of completed HCLI SI Projects and other discontinued and closed projects of HCL Infotech Ltd); and HCL Investments Pte and its step-down subsidiary, Nurture Technologies FZE,” according to the filing.
HCL Infosystems said over the past several quarters, the company’s management has been consistently making efforts to rationalise its businesses through actions/initiatives aimed at reducing the company’s debt as well as business losses.
The sale of HCL Infotech Ltd is consistent with these initiatives, it said.
In the past, certain loss-making businesses like PC manufacturing, financial inclusion, learning, and enterprise and consumer distribution business have been wound down. Other businesses such as Care (Consumer Services), Enterprise Services, and overseas businesses in Singapore and the Middle East have been sold off.
This was in addition to the sale of unutilised surplus properties, whose proceeds were used to reduce outstanding bank loans.
”Despite all these efforts to reduce debt and losses as well as promoter’s financial support from time to time, the company continues to face very challenging financial conditions and a very tight fund position. As a consequence, the company has no ability to invest in any new businesses or in expanding its current operations and consequently, the business of the company will continue to contract for the foreseeable future,” it said.
