The losses were primarily as a result of delayed receipts on certain system integration contracts, certain historically low margin contracts, slow-down of distribution businesses, and finance costs, HCL Infosystems said in a regulatory filing
IT firm HCL Infosystems on Friday reported widening of its loss to Rs 83.71 crore for the quarter ended September.
The company had posted a loss of Rs 39.92 crore in the year-ago period, HCL Infosystems said in a regulatory filing.
Consolidated revenue from operations for the quarter under review decreased to Rs 131.57 crore from Rs 581.77 crore in the year-ago period, it added.
The losses were primarily as a result of delayed receipts on certain system integration contracts, certain historically low margin contracts, slow-down of distribution businesses, and finance costs, the filing said.
In a statement, HCL Infosystems said its Systems Integration and Solutions business reported a revenue of Rs 24 crore in the second quarter of FY21, while that from the distribution business was at Rs 109 crore.
“The company has recognised an upfront loss of Rs 24.4 crore during the quarter on UIDAI MSP contract in Systems Integration business,” it said.
“No revenue has been considered against this cost, although the company is entitled to its current market value as per the award passed by the Arbitration Tribunal,” it added.
“Therefore, this may lead to recognition of revenue in subsequent periods based on the finalisation of current market value through arbitration proceedings,” the statement noted.
The company said the business continued to face delays in realisation of certain customer receivables, particularly from customers in the power sector.
The company said it has been constantly focusing on expediting the resolution of such issues through continuous engagement with customers for the acceptance of project completions, but progress has been very slow.
“In order to reach a resolution to the long pending issues, the company has invoked arbitration proceedings against three discoms. It should be noted that such delays have been the main reason for the high debt obligation and finance cost of the company,” it added.
HCL Infosystems has roped in Vinod Pulyani as manager, and his appointment was made by the board of directors at its meeting on September 29, 2020.
“In this quarter we continued with our initiatives to meet the company’s objective of reducing operational losses and debt. Accordingly, we continued to scale down our Enterprise and Consumer Distribution businesses,” Nikhil Sinha, Chairman of Board of Directors at HCL Infosystems Ltd, said.
The company continued to focus on deliverables of existing projects and collection of receivables from customers in its system integration and solution business, he added.