HCL Infosystems Q1 net plunges 74%

Information technology hardware maker HCL Infosystems on Friday posted a 74.39 per cent decline in consolidated net profit at Rs 12.15 crore for the quarter ended September 30. It had recorded a consolidated net profit of Rs 47.5 crore in the corresponding period last year.

The company attributed the fall in first-quarter net profit to high forex losses and lacklustre performance by its system integration business. Profit after tax included a foreign exchange loss of Rs 22 crore. On a sequential basis, net profit was up 5.8 per cent from Rs 11.5 crore in the June quarter. The company’s financial year runs from July to June.

“Overall, the systems integration business continued to be severely impacted by the slowdown in projects and customer decision cycles. The B2B computing & office automation business did have significant declines year-on-year due to a reduction in spending by the government sector,” chief executive officer Harsh Chitale said. Shares of HCL Info closed 4.2 per cent down at Rs 62.75 on the Bombay Stock Exchange.

Chitale said the company-wide ‘Aspire’ business excellence programme, implemented over the last two quarters, would show positive results in terms of bottom line and cash flows over the next few quarters. The programme aims to realign the organisation for cost and working capital efficiencies and reposition it to tap future growth opportunities, according to him.

Consolidated net sales dipped by 6.16 per cent to Rs 2,787.57 crore, from Rs 2,959.37 crore in the corresponding previous quarter. Revenue from the telecommunications and office automation business also declined to Rs 2,073 crore, from Rs 2,077.13 crore in the corresponding period last year.

The company continued to generate strong free cash flow (FCF) from operations and had Rs 44 crore of FCF in the quarter. Its board declared a 50 per cent quarterly interim dividend of Rs 1 on shares of Rs 2 face value.