HCL Infosystems posts Rs 5 crore profit in Q2 on exceptional gain

HCL Infosystems on Tuesday reported a net profit of Rs 4.84 crore for September quarter 2023-24, helped by exceptional items gain.

In the year-ago period, the company incurred a loss of Rs 10 crore.

Total income in the quarter was Rs 14.5 crore. In the year-ago period, it was Rs 13.68 crore, according to a BSE filing by the company.

Revenue from operations in the quarter under review stood at Rs 5.99 crore. In the year-ago period, it was Rs 6.93 crore.

"HCL Infosystems registers Rs 5.99 crore revenue with operating loss of Rs 7.12 crore in Q2FY24," the company said.

Systems integration and solutions business reported revenue of Rs 4.91 crore.

The profit before tax after considering exceptional items was Rs 4.84 crore. The exceptional item gain was at Rs 11.9 crore in Q2FY24.

"As stated in our earlier releases, the company has initiated arbitration proceedings against certain customers where acceptance, sign-offs and payments are held up for a long time," the company said.

It added that the arbitration proceedings are progressing and that the stakeholders will be kept informed about the outcome, as and when the proceedings conclude.

Due to multiple legal arbitration proceedings and legacy issues, significant effort and cost are being incurred.

The company said it transferred the leasehold rights of certain immovable properties to various parties between 2019-2022.

"The consideration received to transfer the same didn't include GST, considering these arrangements as transfer of immovable properties. During the quarter, the company evaluated these transactions basis the legal advice to assess the applicability of GST considering that the matter is under judicial consideration at various levels with respect to applicability of GST on such transactions," the filing said.

Since the evaluation is ongoing, the company said it would consider appropriate steps to deal with the matter once the evaluation is completed.

In order to reduce the company's debt obligations, it had decided to monetise certain company-owned properties in a phased manner. Several of the company's properties are not being fully utilised due to changes in the business of the company, it said.

During the quarter, HCL Infosystems concluded sale of one of its properties for a total consideration of Rs 15 crore.

"In Q2'24, the management of the company remained committed to actions and initiatives that can help reduce future operational losses and expedite deliverables of existing projects to help realise our long outstanding receivables," Raj Sachdeva, Manager of HCL Infosystems Ltd said commenting on the results.