HCL Infosystems Limited , a prominent player in the IT system integration and solutions sector, has announced a significant move to bolster its financial position. The company's Board of Directors has given the green light to raise funds through the issuance of non-convertible debentures (NCDs) via private placement.

Key Details of the NCD Issuance

• Issue Size: The company plans to issue 35,50,000 NCDs
• Face Value: Each NCD will have a face value of ₹1,000
• Total Fundraising: The total amount to be raised is ₹355 crore
• Nature of NCDs: Unsecured, unlisted, and redeemable
• Tenure: Maximum of 10 years from the date of allotment
• Interest Rate: 0.001% per annum
• Early Redemption: Option available upon mutual agreement
• Redemption Source: Either from profits or fresh issue of securities

Financial Context

The decision to raise funds comes at a crucial time for HCL Infosystems. The company's financial results for the quarter ended September 30 reveal some challenging trends:

The company attributes the decrease in revenue primarily to a one-time revenue of ₹201.28 lakhs from Facility Management Services under the Jharkhand RAPDRP project in the previous quarter.

Operational Challenges

HCL Infosystems continues to face operational hurdles, including:

1. Delays in obtaining customer approvals and sign-offs for completed projects
2. Slow pace of payment collections
3. Ongoing arbitration proceedings against certain customers
4. Substantial legal expenses (₹548.57 lakhs in the current quarter)

Positive Developments

Despite the challenges, there have been some positive developments:

• Favorable arbitration awards amounting to ₹10,280.85 lakhs (including interest) in a matter involving a central government authority
• Release of ₹500 lakhs pertaining to HP RAPDRP arbitration award

Management's Perspective

Mr. Raj Sachdeva, Manager of HCL Infosystems Ltd, commented on the results, stating, "The Company continued its efforts in Q2 for the recovery of overdue receivables from system integration customers, actively pursuing arbitration proceedings to expedite resolution."

Looking Ahead

The NCD issuance appears to be a strategic move to address the company's tight liquidity position. While HCL Infosystems has been working to reduce debt and operational losses with continued financial support from its promoters, the company currently lacks adequate surplus funds or resources for new business initiatives or expansion of existing operations.

As the IT solutions landscape continues to evolve, HCL Infosystems' ability to navigate its financial challenges and leverage its core competencies will be crucial for its future performance.

HCL Infosystems Limited , a prominent player in the IT system integration and solutions sector, has reported its quarterly financial results, revealing ongoing challenges and a significant arbitration development.

Financial Performance

HCL Infosystems announced quarterly results with revenue of Rs 506.73 lakhs, down from Rs 702.71 lakhs in the previous quarter. The decline was attributed to one-time revenue of Rs 201.28 lakhs from Facility Management Services under the Jharkhand RAPDRP project in the prior quarter.

Key Financial Metrics

The Loss Before Tax increased to Rs 550.26 lakhs from Rs 449.84 lakhs previously. This increase was driven by delayed receipts on system integration contracts, low margin contracts, and litigation costs.

Arbitration Awards

In a positive development, HCL Infosystems received favorable arbitration awards totaling Rs 10,280.85 lakhs from a central government authority related to the Aadhaar program. Importantly, counterclaims of Rs 7,270.90 lakhs against the company were dismissed. Additionally, Rs 500 lakhs from the HP RAPDRP arbitration award was released.

Ongoing Challenges and Support

HCL Infosystems continues to face tight liquidity and lacks adequate resources for new business initiatives. To address these challenges, HCL Capital Private Limited has approved financial support up to Rs 1,50,000 lakhs.

Other Financial Details

• Legal expenses reached Rs 548.57 lakhs during the quarter.
• Other income increased by Rs 627.27 lakhs due to write-back of old payables and provisions.

As HCL Infosystems navigates these financial challenges, the management remains focused on realizing assets, discharging contractual obligations, and leveraging the support from its promoter companies to maintain business continuity.