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.

HCL Infosystems Limited , a prominent player in the Indian IT sector, has received a significant tax demand from the Haryana state authorities. The company disclosed this development in a recent regulatory filing, shedding light on the financial implications and the company's response to the situation.

Tax Demand Details

HCL Infosystems received a demand order in Form GST DRC-07A from the Excise and Taxation Officer of Haryana. The order confirms a demand of INR 1.23 crores, which the authorities claim is recoverable under Section 142 of the Central Goods and Services Tax (CGST) Act, 2017.

Nature of the Demand

The tax demand relates to alleged non-payment of dues from the pre-GST period, specifically covering April 2012 to March 2016, under the Haryana Value Added Tax (VAT) Act, 2003. This highlights the ongoing process of reconciling tax matters from the pre-GST era with the current tax regime.

Company's Response

HCL Infosystems has stated that it is currently evaluating the order and examining appropriate legal remedies in accordance with the law. The company's approach suggests a careful consideration of its options before deciding on the next course of action.

Potential Impact

The immediate financial impact is quantified at INR 1.23 crores. However, the broader implications for HCL Infosystems remain to be seen. The company has not provided specific details on how this demand might affect its financial operations or other activities.

Upcoming Board Meeting

In a separate announcement, HCL Infosystems has scheduled a board meeting. The meeting agenda includes:

1. Consideration and approval of unaudited financial results for Q2
2. Discussion on raising funds through private placement of unlisted, unsecured non-convertible debentures

This board meeting, while not directly related to the tax demand, indicates that the company is actively managing its financial strategies and obligations.

Conclusion

As HCL Infosystems navigates this tax demand, stakeholders will be keenly watching how the company addresses this issue and its potential impact on the company's financial health. The outcome of the company's evaluation and any subsequent legal actions could have implications for both HCL Infosystems and potentially other companies facing similar retrospective tax demands in the transition to the GST regime.