Even as the traditional boundaries of the IT market get knocked down, equipment vendor HCL Infosystems said it will soon launch its own branded software in areas which are traditional domains of companies like SAP and Microsoft.
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The company, which has found its margins hemmed in more and more in the commoditised world of selling computers and mobile phones, now plans to compete by bundling hardware, software and services in a package.
“We are looking for acquisitions, mostly small, but also bigger ones like $100 million range to round out our software portfolio,” said Ajai Chowdhry, chairman and CEO of India’s largest domestic market focused IT player. Chowdhry, who announced a 6% year on year decline in the firm’s revenues and flat profits, said he expects the UID project to announce its final specifications in the coming days or weeks, freeing up a market opportunity valued at “thousands of crores” over the next 3-4 years.
The March quarter numbers were particularly hit by cut-throat pricing in computer markets and an “inventory squeeze” by Nokia, the distribution of whose phones contributes around two thirds of the company’s revenues. “Nokia cut down on the stocks it supplied to distributors in March as it was planning to introduce new phone models in April,” Chowdhry said.
Even the other hardware business — computer sales that contribute nearly all of the remaining revenues — fared no better and reported a small 10% topline increase to Rs 960 crore. In comparison, Dell India’s revenues are higher by more than 100% during the March quarter. He said companies like number three Acer, were engaging in “very irrational pricing” to gain market share. HCL is also getting hit due to the industry transition from desktops, where it is strong, to laptops, where it has a 6-month old brand.
As a result, the company reported a razor thin, pre-interest, pre-tax profit of Rs 98.5 crore, or just 3.5% of its quarterly revenues of Rs 2,842 crore. Net profit was at Rs 60 crore for the quarter, a notch higher than the Rs 58.2 crore for the same period last year.
Chowdhry is largely banking on the UID project, under which more than a billion smart cards will be issued.
The company has already developed more than 30 software applications to push its way into the market. “We are the only ones who can offer the hardware, the software and the services needed to roll out such a project,” Chowdhry said, ruling out the possibility of tying up with other partners to provide software.
Under the UID project, Chowdhry said there are likely to be state-wide contracts to re-verify credentials, issue cards and run the smart card system. “There will also be a contract for managing the central database, which should be at least a couple of hundred crores in our opinion,” he said. HCL Info will also use the UID incentive to offer a full stream of services. “Cloud will be a large focus area for us as it will allow us to reduce costs and bring software to smaller businesses,” Chowdhry said.
Source:http://www.dnaindia.com/money/report_hcl-info-eyes-branded-software-play_1377449
