HCL Infosystems to phase-off manufacturing biz

Homegrown PC maker HCL Infosystems, which competes with multinational giants like HP and Dell, will phase-off its manufacturing business in the next few years to improve margins and increase organisational efficiency.

The company will instead focus on strengthening the services and distribution verticals.

"We will be stopping manufacturing. My distribution today does lot of distribution of PCs of multiple brands... We will be in PC distribution and in after sales services but will not manufacture HCL branded products some time in the future," HCL Infosystems CEO and Managing Director Harsh Chitale told PTI.

On specific timeline, Chitale said the plan is underway but "manufacturing is not something that is keeping me awake, its not part of HCL story now".

The PC business accounts for about 8% (around Rs 1,000 crore) of HCL Infosystem's overall revenues and has been under pressure for some time now as new form factors like tablets and phablets are finding more takers.

In the last few years, most PC makers in the country have incurred losses due to the rupee's fluctuation against other currencies, especially the US dollar. This has hurt the PC business in India as it is low-margin and almost 90-95% of the components are imported.

The company has 15,000 full-time employees, of which manufacturing comprises less than 3%, Chitale added.

"Of this less than 3% are in manufacturing, while some will immediately find opening in repair services, the remaining people who could lose their jobs would be less than the natural monthly attrition rate," he said.

The move is a part of the firm's restructuring efforts to focus on growth areas like services and distribution.

HCL Infosystems has transferred its solutions, services and learning business to wholly-owned subsidiaries - HCL Infotech, HCL Services, and HCL Learning.

"The restructuring would help us focus on growth engines like distribution and services which are seeing double digit growth, while helping fix the bleeding parts," Chitale said.

This will also bring down conflicts within different business units of the company, he added.

Hindustan Computers Ltd (HCL) was formed in 1976. It was a top PC brand in the country before losing ground to foreign players like Hewlett-Packard and Dell.

The HCL Group is a $6.3 billion enterprise comprising two listed companies listed -- HCL Technologies and HCL Infosystems.