Information technology hardware and system integration company HCL Infosystems said it will spin off three businesses — hardware, learning and services — into separate units. This is to create a leaner structure and to have greater control over the operational and financial performance of each unit.
After a meeting yesterday, the board approved the alignment of these businesses with three subsidiaries, the Noida-based company said.
The board has approved the transfer of hardware solutions business to wholly-owned subsidiary, HCL System Integration. The hardware solutions vertical includes personal computers, tablets and system integration business.
After the company saw profit erosion in the computing business in Q1 and Q2 of FY 2012 on foreign currency fluctuation and Thailand floods, there was buzz that HCL Info might exit the hardware business. However, the company had time and again denied this.
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The company said the learning business will be transferred to HCL Learning, its subsidiary, while the services unit will go to HCL Care, another subsidiary.
The learning subsidiary will encompass HCL's offerings on DigiSchool, learning content, vocational training and test preparation, while the services one will focus on services business, including support, managed and office automation services. The board has also approved the merger of HCL Infocom, a wholly-owned subsidiary, with HCL Infosystems.
"Different businesses of the company are at various stages of business lifecycle maturity. Some of the new growth businesses are at stages of infancy, requiring investments and capabilities acquisition, while the more mature businesses need re-tooling, to be prepared for the changing business environment," the company said.
The company is to announce the heads for these subsidiaries.
HCL Infosystems said it had appointed consultants to advise on restructuring. Besides, a committee has also been appointed to take action for obtaining approvals.
In the July-September 2012 quarter, the company's standalone net profit had dipped over 84 per cent to Rs 2.5 crore, compared with the year-ago period. Net sales in the quarter were Rs 2,342 crore, down 13 per cent y-o-y.
Computer system and other related products and services vertical accounted for 28 per cent of its overall revenues in the quarter while communications and office automation business contributed the rest.
The shares of the company closed at Rs 41.00, an increase of 4.86 per cent over Monday's close on the Bombay Stock Exchange.
