HCL Infosystems, an information technology (IT) hardware and services company, is selling its 100% subsidiary HCL Infinet to Tikona Digital Networks. HCL Infinet is an enterprise telecom service provider, with revenues of Rs 77 crore in the year ended June 2010.
HCL Infinet offers internet access services, virtual private networks and other connectivity services to its customers. Its sales growth was healthy, rising by 67% in 2009-10, but it made losses of Rs 12 crore during the year. HCL Infinet’s customers are from the sectors of aviation, manufacturing, banking and financial institutions, FMCG and education.
Tikona, on the other hand, is a relatively new venture founded in 2008, by telecom sector professionals. It offers broadband and internet services related products and solutions to individuals, enterprises, as well as service providers. Its services are available in major areas, some of the prominent cities being Mumbai, Delhi-NCR, Chennai, Bangalore, Pune, Hyderabad, Kolkata, Indore, Ahmedabad and Surat.
Tikona will gain by adding HCL Infinet’s revenues to its own and acquiring a new customer base. Better economies of scale and focus on the business would enable it to turn around HCL Infinet’s operations. The deal size has not been disclosed. For HCL Infosystems, this deal will mean it can focus on its core IT-related business and let go of a business, which is making losses, and would have required further investments and management attention. The sale will not affect HCL Infosystems’ financials materially, as it earned revenues of about Rs 12,000 crore and a net profit of Rs 242 crore in 2009-10.
Read the statement from HCL Infosystems on the sale.