In FY13-14 HCL decided to restructure itself with a focus on the growth businesses of distribution and services, while exiting its loss making computing products and hardware solutions businesses. The company also changed its focus in its Systems Integration (SI) business from growth to disciplined execution of existing projects, and revamped the business model of its learning business from a hardware driven asset-heavy model to a content driven asset-light model.
This restructuring necessitated certain actions in the realignment of businesses which impacted the profitability of the company in the past several quarters and which also impacted profitability in the JAS FY14-15 quarter. The remaining quarters of FY 14-15 are also expected to be impacted.
This restructuring exercise enabled the growth engines of the company-distribution and services, to grow aggressively in the previous financial year. In this quarter also, these two businesses registered significant traction. In distribution business, Non-Telecom Distribution (i.e. Consumer Electronics and Enterprise and IT Products) continued their robust growth. The Consumer Electronics and Home Appliances division registered sequential growth in revenues through signing new partnerships for national distribution. The transition from a direct go-to-market model for Enterprise Hardware Solutions to a Distribution oriented channel sales model has now been completed and the business is expected to create significant partnerships and business traction in the coming quarters.
In JAS 14-15, services business, consisting of Enterprise and Consumer Services together achieved healthy y-o-y growth due to consistent business traction in India and in the overseas market. Within the business, IMS (Infrastructure Managed Services) and Care (consumer break-fix services) businesses registered healthy sequential growth of 20% and 66% respectively.
Most actions regarding the discontinuance of the computing products business were completed in the last financial year. Presently the company has arrived at the tail-end of this exercise and it is expected that the process would be completed by the end of H1 FY15.
During the quarter, HCL Learning remained selective in pursuing new business. As per the new strategy of focusing on an asset light and content-based services and solutions, the Learning business won many noteworthy content deals from Bombay College, Aditya Academy, CARACAL Solutions and D-Square Solutions.
Harsh Chitale, MD and CEO, HCL Infosystems, commenting on the results said, “The first quarter performance of our new Financial Year is in line with the direction that has been set by the previous financial year (FY14) with both our focused businesses – Services and Distribution registering good traction. HCL Care, our Consumer Services business has emerged as a fast growing business for the company with a 178% Y-o-Y and 66% Q-o-Q growth. Today, HCL Care has become a leading organized player to offer reliable after-sales support and services for multiple products and brands under one-roof. The Enterprise Services growth story has also reflected in our overseas business with the Middle East region achieving a 85% Y-o-Y and 40% Q-o-Q growth in revenues in this business.
In distribution the various businesses, Telecom, Consumer and Home Appliances, Enterprise and IT products distribution achieved good growth with the addition of many leading brands in this various business segments.”