HCL to power computer sales in India

Thursday, August 25, 2005

HCL Infosystems Ltd., an Indian personal-computer maker and distributor of Nokia Oyj phones,expects sales of computers in the South Asian country to accelerate as falling prices make them more affordable.

“PCs are starting to become more affordable, broad band is making its appearance in a big way and multilingual software is also coming in reasonable numbers, especially with Microsoft Corp. launching its operating system in multiple languages,’’ said Ajai Chowdhry, chairman and chief executive officer, in a television interview today.

Indian companies such as HCL Infosystems are seeking to expand the market and sell more computers, with units priced as low as $225. The number of computer owners in India, the world’s second-most populous nation, is relatively low, Chowdhry said. “PC penetration in India is still very low, just 14 out of 1,000 people,’’ own computers, Chowdhry said. India’s population is about 1.07 billion people, according to data compiled by Bloomberg, putting it behind China’s 1.3 billion.The company has also entered into agreements with financial companies to sell computers at installments as low as $10 a month and plans machines branded jointly with India’s largest state-owned phone company Bharat Sanchar Nigam Ltd.“With these new initiatives, we will actually get to the bottom of the pyramid, which is really where the big market lies in India,’’ the executive said.

`Grey Market’

The pricing moves are forcing changes in the Indian market,with branded machines taking away share from the so-called “grey market,’’ or unbranded computers, benefiting local manufacturers such as HCL Infosystems and the units of companies such as Dell Inc. and Hewlett-Packard Co.

The share of unbranded PCs has dropped by about 15 per centage points from as much as 60 per cent earlier, Chowdhry said. HCL Infosystems’ share of the consumer PC market rose to 13 per cent at the end of December last year from 3.7 per cent in January, he said.

The company expects growth to outstrip the minimum 30 per cent a year PC expansion in India estimated by research groups such as IDC, Chowdhry said. A committee led by the HCL Infosystems chief executive has also presented a report to the government on widening computer access in the country. HCL Infosystems said yesterday that fourth-quarter profit, including units, rose by 29 per cent.

Net Income

Net income rose to 590.4 million rupees ($14 million), or 3.33 rupees a share, in the three months ended June 30 from 458.5 million rupees, or 2.62 rupees, a year ago. Sales rose by 70 per cent to 22.04 billion rupees.

HCL Infosystems will pay 2 rupees a share dividend for the year ended June 30, the company, based in Noida near New Delhi, said in the statement.The group’s other income or income earned from sources other than its main business rose about 16 times to 121.2 million rupees in the quarter. It didn’t give a reason for the surge.

HCL Infosystems shares rose 7.4 rupees, or 2.9 per cent, to 263.55 rupees on the Mumbai stock exchange yesterday.The company has no plans for any acquisitions at the moment,Chowdhry said today.

Source: The Financial Express (link opens in a new window)