HCL Infosystems registers Rs. 27.61 Crore revenue with operating loss of Rs. 21.45 Crore in Q1' FY22

HCL Infosystems today announced its financial results for the quarter ended June 30th, 2021.

Q1' FY22 Business Highlights:

- Q1' FY22 revenue was Rs. 27.61 Crore
- Systems Integration and Solutions business reported revenue of Rs. 24.61 Crore
- Loss Before Tax and exceptional items was Rs. 21.45 Crore
- Exceptional non-recurring gain during this quarter on account of:
- Profit on sale of properties was Rs. 62.03 Crore.
- Profit Before Tax after considering exceptional items Rs. 40.58 Crore

Mr. Raj Sachdeva, Manager of HCL Infosystems Ltd, commenting on the results' said, "During the quarter, the company continued to focus on reduction of debt and losses. The Company took initiatives such as sale of properties and along with realization of tax refunds during the quarter helped meet these objectives."

As recommended by the Board, our Consumer and Enterprise Distribution businesses have been scaled down, resulting in the decline in revenues during the current financial year.

In the System Integration and Solution business, we continued to focus on deliverables of existing projects and collection of receivables from customers.

Company Update

Divestment of HCL Infotech Ltd.

The Board of Directors of HCL Infosystems Limited in its meeting held on February 10, 2021 had approved to sell the entire shareholding held by HCL Infosystems Limited in HCL Infotech Limited at "Net Asset Value" as on closing date, after acquiring the undertaking which shall comprise of the business relating to specific projects through a business transfer agreement, certain other assets and liabilities through assignment deed and HCL Investments Pte., Singapore & it's step down subsidiary through a share purchase agreement. The sale will be made to Novezo Consulting Pvt. Ltd based on the terms and conditions as specified in share purchase agreement dated February 10, 2021.

One of the customers of our key defense project which is forming part of the deal has asked us to maintain status quo and further explore alternative options. We are in discussion with the investor and the customer, and this transaction is likely to take longer than expected with change in terms, which will require ratification from shareholders.

MSP Contract with Unique Identification Authority of India (UIDAI)

One of the large projects of the Company, as Managed Service Provider ("MSP") with the Unique Identification Authority of India ('UIDAI') and ad hoc arrangements with UIDAI thereafter, ended on 6 April 2021. The Company will only provide annual maintenance contracts ("AMC") and software licences to UIDAI during the period from 7 April 2021 to 6 August 2021.

Restructuring of the Company

The Board of Directors of HCL Infosystems Limited in its meeting held on August 6th, 2020 had approved the merger. The Company had filed a petition with the National Company Law Tribunal on September 21st, 2020 for approval of the proposed merger of HCL Learning Limited and Digilife Distribution and Marketing Services Limited (DDMS) with HCL Infosystems Limited. HCL Learning and DDMS are wholly owned subsidiaries of the Company.

In the light of the ongoing COVID-19 situation, the matter is moving slowly.

Divestment of Property

In order to reduce Company's debt obligations, the Company has decided to monetize Company owned properties in a phased manner. Several of Company's properties are not being fully utilized due to changes in the business of the Company. The Company has sold 3 properties during the quarter for a total consideration of Rs 76.10 Crs. The Company is actively looking for buyers to monetize other properties.

Human Resource Development

As on June 30, 2021, the employee strength of the Company stood at 304, while on March 31, 2021, it was 788. Reduction in headcount was due to the scaling down of the Distribution Business, closure of UIDAI MSP contract and organization right sizing.

Other Updates

From time to time, the Company had been making adequate and fair disclosures with respect to its performance and any material actions/ events.

As stated in all our earlier press releases, due to losses during the last few years, high debt obligation and challenging market conditions, the Company's focus has been on reduction of operational losses and debt and finance costs, by scaling down certain businesses and selling off select businesses and assets (including identified immovable properties).

Shares of HCL Infosystems Ltd was last trading in BSE at Rs. 14.15 as compared to the previous close of Rs. 14.4. The total number of shares traded during the day was 110166 in over 697 trades.

The stock hit an intraday high of Rs. 14.6 and intraday low of 14. The net turnover during the day was Rs. 1561738.

Source : Equity Bulls

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