HCL Infosystems edged up on Monday after the Exim policy announced on Monday offered 100% depreciation on IT hardware for 3 years.
The scrip of the hardware major climbed 1.5% to Rs 81.80 on BSE in post-noon trades. Around 3,400 HCL Infosystems shares were traded on BSE so far. The stock was among the few gainers today, as the overall market proved weak. The Sensex was down 48.42 points to 3,067 at 12:20 IST.
In contrast, HCL Infosystems has been languishing on the bourses of late, with the scrip moving in a band of Rs 75-95 over the past few months.
But the firm trend today comes following reports that the government has allowed 100% tax benefits on IT hardware for a period of three years in its Exim policy for 2003-04. On Monday, commerce and industry minister Arun Jaitley announced the Exim policy for FY 2003-2004. The government's latest decision to allow 100% tax benefit for IT hardware appears to be aimed at providing sops to the IT sector.
PC sales have been witnessing strong growth in the current year. For FY 2002-03, PC sales are expected to surge nearly 20% to 2 million units. Last fiscal, PC sales registered a negative growth of 7% over fiscal year ended 31 March 2001.
However, a cause for concern for organised and branded PC makers like HCL Infosystems, is that unorganised PC makers and grey markets are steadily eating into the market share of the organised sector, given their low pricing. An excise component of 16% on branded PCs increases the competitiveness of these PCs against the grey market PCs, it is reckoned.
The unorganised sector's market share has increased to 63% in the third quarter of this fiscal, from an already high share of 50% during the first quarter of the fiscal.
HCL Infosystems is in the process of de-merging its software export business to HCL Technologies and transferring its office automation division to HCL Infinet. With this re-engineering, HCL Infosys will concentrate on the IT hardware sector.
Recently, HCL Infosystems confirmed media reports that it received an order to automate value added tax services from the Andhra Pradesh government. The project, codenamed AP Value Added Sales Tax Information System, would be funded by DFID of the UK (a UK government-owned funding agency for governance projects) and the AP government, for the integration of various tax collection offices across the state with the main office in Hyderabad. The project was estimated at Rs 16 crore and would run for three years involving complete automation of VAT services across all the 21 circles in the state, replacing the old AP GST system, with the interconnectivity facility to the main commercial tax department in Hyderabad.
For the quarter ended 31 December 2002, HCL Infosystems posted a massive fall of 81% in net profit to Rs 2.83 crore. The company's net sales during the quarter, however, increased to Rs 597.43 crore (Rs 5.97 billion) against Rs 271.85 crore in the same period a year ago.
BSE code: 500179
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