The first quarter of 2010 was not good for hardware and systems integrator HCL Infosystems, due to the global economic slowdown. However, Ajai Chowdhry, chairman and CEO, HCL Infosystems, tells Kirtika Suneja the environment may improve in three to six months, as the economy has bottomed out. Excerpts:
Why did your net profit drop almost 11 per cent?
The net profit fall is proportional to a fall in the income, which in turn is a function of the systems integration business that by itself is lumpy in nature.
Though systems integration is a growing business, it didn't deliver on the revenue front as expected, due to delays with customers.
It got transferred from the last quarter to this. In fact, we have a Rs 1,800 crore (Rs 18 billion) backlog of orders in the business that will flow in the next 1-1.5 years.
So, what will you focus on?
There will be some big decisions in power and telecom in three to five months and we expect e-governance to start picking up. Systems integration is also looking good in the banking and financial services sector, and has a great potential ahead.
The other part of the business is office automation and telecom, whose product business is looking better, as telecom is an extremely competitive market. 3G will also result in more IT requirements.
How is the security division shaping up?
The business started reasonably well and we will see large contracts happening in 9-12 months. It is early days, but discreet business is happening with deal sizes of Rs 2-5 crore (Rs 20-50 million).
We expect big deals in 3-6 months in the transportation area and in one year, large deals will happen. We approach every business after creating the software products.
We are approaching security in the same way, after making the software products ready for it. Currently, the first version of the product sensors has been integrated.
You recently rebranded the laptops and Digilife stores.
Yes. This was a major effort in the last quarter, of introducing a new range of laptops. We expect it to be a longish campaign. It takes about 6-8 quarters to build a new brand.
HCL Infosystems also raised Rs 795 crore (Rs 7.95 billion) for expansion. . .
That money will be used to create more infrastructure for delivery of services. Work has already started to create a back-end for systems integration delivery practices.
The money has just flown in. We have formed a mergers and acquisition team to explore acquisitions for filling capability gaps in products and systems integration.
However, it is only the first 60-90 days of the process.
How does the future look on consumer and enterprise spending?
Companies appear to be in better shape and we expect corporate buying to come back in another quarter, while government buying is expected to get into place by the next quarter. Small and medium enterprises buying is still subdued but a lot of activity is happening in the education sector.
The global market shows that consumers are buying. However, financing is still not available for consumers. We have also won some outsourcing deals and expect the deal flow in outsourcing to get better.
Moreover, the economy seems to have bottomed out and the environment may just be positive in some months.
It all depends on the January quarter, as that is the time when there is government buying and corporate buy for depreciation reasons. We will do project-based hiring.
Image: Ajai Chowdhry
