Posts Tagged ‘HCL’

IT stocks gain after positive US economic data

August 28th, 2014

Firmness continued on the bourses in mid-morning trade. The barometer index, the S&P BSE Sensex, was currently up 115.76 points or 0.5% at 26,573.79. The market breadth indicating the overall health of the market was positive. The market sentiment was booutsourcing26osted by provisional data showing that foreign funds were net buyers of Indian during the previous trading session. ONGC gained on hopes of announcement of reforms by the government on subsidies and gas prices ahead of its share sale. IT stocks rose on positive economic data in US, the biggest outsourcing market for the Indian IT firms. HCL Technologies hit record high.

Key indices have remained in green after a strong opening triggered by higher Asian stocks and a first closing for S&P 500 in the US above 2,000 overnight.

Asian stocks rose after US data on durable goods and consumer confidence boosted optimism in the strength of the world’s largest economy. Meanwhile, there are expectations for quantitative easing and other steps by the European Central Bank. Crude oil prices rose ahead of the weekly US oil inventory data from the US government.

At 11:16 IST, the S&P BSE Sensex was up 115.76 points or 0.5% at 26,573.79. The index jumped 156.31 points at the day’s high of 26,599.12 in early trade, its highest level since 25 August 2014. The index rose 101.63 points at the day’s low of 26,544.44 in mid-morning trade.

The CNX Nifty was up 29.85 points or 0.38% to 7,934.60. The index hit a high of 7,946.85 in intraday trade, its highest level since 25 August 2014. The index hit a low of 7,929.50 in intraday trade.

The market breadth indicating the overall health of the market was positive. On BSE, 1,404 shares gained and 946 shares fell. A total of 78 shares were unchanged.

The BSE Mid-Cap index was up 43.05 points or 0.46% at 9,301.87, underperforming the Sensex. The BSE Small-Cap index was up 83.45 points or 0.82% at 10,256.83, outperforming the Sensex.

ONGC gained 1.99% on hopes of announcement of reforms by the government on subsidies and gas prices ahead of its share sale. The government plans to sell a stake in ONGC later this year. State run upstream companies share a part of the under recoveries of state-run oil marketing companies (PSU OMCs) by allowing discount in the prices of crude oil, PDS kerosene, and domestic LPG based on the rates of discount communicated by the Ministry of Petroleum and Natural Gas and the Petroleum Planning and Analysis Cell.

Oil India gained 2.08%.

GAIL (India) fell 1.27% as the stock turned ex-dividend today, 27 August 2014, for final dividend of Rs 5.90 per share for the year ended 31 March 2014.

IT stocks rose on positive economic data in US, the biggest outsourcing market for the Indian IT firms. Wipro (up 0.65%), and TCS (up 0.43%) edged higher. Tech Mahindra fell 0.01%.

HCL Technologies rose 3.21% to Rs 1,648.60 after hitting record high of Rs 1,649 in intraday trade.

Infosys rose 0.09%. At an investor conference yesterday, 26 August 2014, Infosys’ chief operating officer UB Pravin Rao reportedly reiterated the company’s 7% to 9% US dollar revenue growth guidance for the current financial year. Rao also reportedly said that Infosys would look to maintain operating profit margins at 24-25% for the current year.

Hindustan Media Ventures advanced 3.32% to Rs 165 after 0.47% equity changed hands in a bulk deal on BSE today, 27 August 2014. A bulk deal of 3.50 lakh shares was executed on the Hindustan Media Ventures counter at Rs 163 per share in opening trade on BSE today, 27 August 2014.

The market sentiment was boosted by provisional data showing that foreign funds were net buyers of Indian during the previous trading session. Foreign portfolio investors (FPIs) bought shares worth a net Rs 364.72 crore on Tuesday, 26 August 2014, as per provisional data from the stock exchanges.

The market may remain volatile in the near future as traders roll over positions in the futures & options (F&O) segment from the near month August 2014 series to September 2014 series. The near-month August 2014 F&O contracts expire tomorrow, 28 August 2014.

In the foreign exchange market, the rupee edged lower against the dollar. The partially convertible rupee was hovering at 60.49, compared with its close of 60.44 on Tuesday, 26 August 2014.

Source:http://www.business-standard.com/article/news-cm/it-stocks-gain-after-positive-us-economic-data-114082700252_1.html
Crude oil prices rose ahead of the weekly US oil inventory data from the US government. Brent for October settlement was up 22 cents at $102.72 a barrel. The contract fell 15 cents to settle at $102.50 a barrel yesterday, 26 August 2014, after reaching $103.40 during the session. The US is the world’s biggest oil consumer.

At a meeting yesterday, 26 August 2014, the Central Board of Trustees (CBT) of the Employees’ Provident Fund Organization (EPFO) decided against investing in equities and Exchange Traded Funds (ETFs). The finance ministry had suggested EPFO to invest in equities to enhance returns for subscribers.

Asian stocks rose today, 27 August 2014, after data signaled a stronger US economy and Russia’s president hailed as “positive” talks over Ukraine. Key benchmark indices in Indonesia, Hong Kong, Japan, China, Taiwan, Singapore and South Korea were up 0.06% to 0.78%.

Trading in US index futures indicated that the Dow could gain 11 points at the opening bell on Wednesday, 27 August 2014. US stocks edged higher on Tuesday, 26 August 2014, to lift the S&P 500 index just a hair above the 2,000 mark, its first close above that milestone, after data that pointed to a brighter future for the US economy.

Bookings for goods meant to last at least three years climbed by a record 22.6% in July after a 2.7% gain in June that was bigger than previously reported, data from the Commerce Department in Washington showed. The Conference Board’s US consumer confidence index rose to 92.4 in August, the highest since October 2007, the New York-based private research group said.

Russian President Vladimir Putin yesterday, 26 August 2014, said talks with his Ukrainian counterpart over separatist fighting that’s killed more than 2,000 people were “positive.”

Meanwhile, there are expectations for quantitative easing and other steps by the European Central Bank. Ever since ECB President Mario Draghi’s comments at US Federal Reserve’s annual symposium in the United States on 22 August 2014, there have been expectations of quantitative easing and other steps by the ECB. Draghi said expectations of future inflation in Europe exhibited significant declines at all horizons this month.

Sensex, Nifty hit record closing high

August 28th, 2014

Key benchmark indices edged higher amid expectations that further monetary stimulus in the euro zone could trigger more foreigoutsourcing25n fund flows to emerging markets. The barometer index, the S&P BSE Sensex, and the 50-unit CNX Nifty, both, attained record closing high. High volatility was witnessed in late trade as key indices recovered from lower level soon after trimming intraday gains. The Sensex gained 117.34 points or 0.44% to settle at 26,560.15. The market breadth indicating the overall health of the market was positive. The market sentiment was boosted by provisional data showing that foreign funds were net buyers of Indian during the previous trading session.

Shares of defence equipment makers rose after the government notified increase in foreign direct investment limit to 49% from 26% in the defence sector. Most bank stocks advanced. FMCG stocks gained. Shares of companies with significant sales to Europe gained as expectations grew for further monetary stimulus measures from the European Central Bank. Shares of PSU OMCs and state-run upstream oil and gas stocks companied edged higher on hopes of announcement of reforms by the government on subsidies. IT stocks rose on positive economic data in US, the biggest outsourcing market for the Indian IT firms. HCL Technologies hit record high. Auto stocks were mixed. Maruti Suzuki India fell as the stock turned ex-dividend. Shares of two-wheeler makers gained.

Key indices remained in green throughout the trading session after a firm opening triggered by higher Asian stocks and a first closing for S&P 500 index in the US above 2,000 on Tuesday, 26 August 2014.

European shares edged lower after worse-than-projected German confidence data. Asian stocks rose after US data on durable goods and consumer confidence boosted optimism in the strength of the world’s largest economy. Crude oil prices rose ahead of the weekly US oil inventory data from the US government.

The Sensex garnered 117.34 points or 1.44% to settle at 26,560.15, a record closing high. The index jumped 156.31 points at the day’s high of 26,599.12 in early trade. The index rose 49.69 points at the day’s low of 26,492.50 in late trade.

The CNX Nifty advanced 31.30 points or 0.4% to settle at 7,936.05, a record closing high. The index hit a high of 7,946.85 in intraday trade. The index hit a low of 7,916.55 in intraday trade.

The market breadth indicating the overall health of the market was positive. On BSE, 1,606 shares gained and 1,379 shares fell. A total of 122 shares were unchanged.

The BSE Mid-Cap index advanced 67.77 points or 0.73% to settle at 9,326.59. The BSE Small-Cap index gained 80.49 points or 0.79% to settle at 10,253.87. Both these indices outperformed the Sensex.

Among the Sensex pack, 21 stocks advanced while remaining shares declined.

IT stocks rose on positive economic data in US, the biggest outsourcing market for the Indian IT firms. Wipro (up 1.19%), MphasiS (up 4.1%), MindTree (up 4.72%), and TCS (up 0.47%) gained. But, Tech Mahindra fell 0.83%.

HCL Technologies rose 3.02% to Rs 1,645.45 after hitting record high of Rs 1,651.50 in intraday trade.

Infosys rose 0.34%. At an investor conference yesterday, 26 August 2014, Infosys’ chief operating officer UB Pravin Rao reportedly reiterated the company’s 7% to 9% dollar revenue growth guidance for the current financial year. Rao also reportedly said that Infosys would look to maintain operating profit margins at 24-25% for the current year.

Shares of defence equipment makers rose after the government notified increase in foreign direct investment limit to 49% from 26% in the defence sector. Astra Microwave Products (up 8.55%), Bharat Forge (up 1.17%), Tata Power Company (up 0.91%), Dynamatic Technologies (up 3.31%), Walchandnagar Industries (up 9.91%) and Pipavav Defence & Offshore Engineering Company (up 0.99%) edged higher. Shares of L&T lost 0.1%.

Bharat Electronics rose by the maximum permissible level of the day of 20%. BEML rose by the maximum permissible level of the day of 5%.

The Department of Industrial Policy and Promotion (DIPP) yesterday, 26 August 2014, notified increase in foreign direct investment (FDI) limit to 49% from 26% in the defence sector. The FDI limit of 49% is a composite ceiling. It includes all kinds of foreign investments such as FDI, Foreign Institutional Investors (FIIs), Foreign Portfolio Investors (FPIs), Non-Resident Indians (NRIs), Foreign Venture Capital Investors (FVCI) and Qualified Foreign Investors (QFIs). Portfolio investment by FPIs, FIIs, NRIs, QFIs and investments by FVCIs has been capped at 24% of the total equity of the investee or joint venture company.

The applicant company seeking permission of the government for FDI up to 49% in defence sector should be an Indian company owned and controlled by resident Indian citizens. The management of the applicant company should be in Indian hands.

Foreign direct investment proposals in the defence sector above 49% will have to seek the approval of the Cabinet Committee on Security on case to case basis, wherever it is likely to result in access to modern and state of the art technology in the country, according to the press note of DIPP.

Auto stocks were mixed. Mahindra & Mahindra (M&M) fell 0.26%, with the stock reversing gains after hitting record high of Rs 1,413.90. M&M proposes to appeal against the Competition Commission of India’s recent order before the appropriate forum. The Competition Commission of India (CCI) on 25 August 2014 levied a total penalty of Rs 2544.64 crore on 14 car makers at the rate of 2% of the average turnover after it found them to be in contravention of the provisions of the Competition Act, 2002. The amount of penalty imposed on M&M is Rs 292.25 crore.

Tata Motors gained 1.7%. The company after market hours on Tuesday, 26 August 2014, said that it would be filing an appeal against the CCI order before the appropriate authorities. The penalty levied on Tata Motors is Rs 1346.46 crore.

Maruti Suzuki India fell 0.21% as the stock turned ex-dividend today, 27 August 2014, for final dividend of Rs 12 per share for the year ended 31 March 2014. The CCI’s penalty on Maruti is Rs 471.14 crore.

The CCI said it found that the conduct of the car companies was in violation of the provisions of section 3(4) of the Competition Act, 2002 with respect to its agreements with local Original Equipment Suppliers (OESs) and agreements with authorized dealers whereby it imposed absolute restrictive covenants and completely foreclosed the aftermarket for supply of spare parts and other diagnostic tools.

Ashok Leyland gained 2.08% at Rs 36.75.

Shares of two wheeler makers gained. Hero MotoCorp (up 1.61%), TVS Motor Company (up 1.19%) and Bajaj Auto (up 1.49%) advanced.

DLF tumbled 4.44% on reports the Supreme Court today, 27 August 2014, penalised the company Rs 630 crore for exploiting its dominant position to the disadvantage of its customers in three projects in Gurgaon. The court said that DLF will deposit Rs.50 crore of the Rs 630 crore within three weeks and the balance of Rs 580 crore within three months from today. The court directed the registry to put this amount in a fixed deposit in a nationalised bank.

MCX jumped 5.08% after the company during market hours said that the commodities market regulator Forward Market Commission (FMC) has approved Kotak Mahindra Bank’s (KMBL) proposed acquisition of upto 15% of equity share capital of MCX. In July 2014, Financial Technologies (India) (FTIL) entered into a share purchase agreement (SPA) to sell 15% stake in MCX to Kotak Mahindra Bank for a total consideration of Rs 459 crore.

Shares of KMBL were down 1.59% at Rs 1,039.90 on reports that a foreign brokerage has downgraded the stock to “neutral” from “outperform. The brokerage has cited the stock’s massive outperformance and stiff valuation for the downgrade.

FMCG stocks advanced. Dabur India (up 2.31%), Godrej Consumer Products (up 2.63%), Nestle India (up 0.58%), Colgate-Palmolive (India) (up 1.76%), and Hindustan Unilever (up 1.02%) gained. Shares of Marico shed 0.3%.

Most bank stocks gained. Federal Bank (up 3.4%), IndusInd Bank (up 2.59%), ICICI Bank (up 2.05), Punjab National Bank (up 1.56%), Yes Bank (up 1.08%), State Bank of India (up 0.4%), Axis Bank (up 0.23%), Bank of India (up 0.09%) gained. Bank of Baroda (down 0.35%), HDFC Bank (down 0.7%), and Canara Bank (down 1.12%) declined.

Deepak Nitrite rose 2.73% at Rs 77.05 after the company during market hours said that the commercial paper of Rs 20 crore issued on 28 May 2014 has been repaid on 26 August 2014.

Cox & Kings jumped 4.2% at Rs 304.85 after the company during market hours in a clarification with regard to news item titled Cox & Kings to operate Deccan Odyssey” said that the Maharashtra Tourism Development Corporation (MTDC) appointed the company as its outsourced partner to operate the luxury train, Deccan Odyssey from October 2014. This partnership will cover full management of on-board and off-board services, sales, marketing and operational activities. The agreement is for a period of 5 years with scope for extension for another 5 years, Cox & Kings said.

Venus Remedies surged 14.77% after the company said it has entered into a collaborative agreement with Israel-based generic drug maker Teva Pharmaceutical Industries for selling an anti-cancer drug in the Canadian market. The announcement was made after market hours on Tuesday, 26 August 2014.

GVK Power & Infrastructure was locked at 5% upper circuit at Rs 13.02 on BSE after the company led consortium leased a land parcel in Mumbai for commercial development to Oasis Realty for Rs 580 crore.

Shares of PSU OMCs and state-run upstream oil and gas companies advanced on hopes of announcement of reforms by the government on subsidies. BPCL (up 2.59%), HPCL (up 1.6%), Indian Oil Corporation (up 0.77%) and Oil India (up 2.73%) edged higher.

ONGC gained 2.31% at Rs 427.75 on hopes of announcement of reforms by the government on subsidies and gas prices ahead of its share sale. The government plans to sell a stake in ONGC later this year.

Public sector oil marketing companies (PSU OMCs) suffer under-recoveries on domestic sale of diesel, LPG and kerosene at a controlled price. The government has adopted the policy of gradually increasing diesel prices to eliminate under recovery and deregulate the diesel prices. The government has already freed pricing of petrol.

State run upstream companies share a part of the under recoveries of state-run oil marketing companies (PSU OMCs) by allowing discount in the prices of crude oil, PDS kerosene, and domestic LPG based on the rates of discount communicated by the Ministry of Petroleum and Natural Gas and the Petroleum Planning and Analysis Cell.

GAIL (India) rose 0.35% at Rs 435.25. The stock was volatile. The stock hit a high of Rs 437.45 and a low of Rs 426.30. The stock turned ex-dividend today, 27 August 2014, for final dividend of Rs 5.90 per share for the year ended 31 March 2014.

Mangalore Refinery and Petrochemicals (MRPL) rose 0.16% at Rs 60.85 after the company said that Petro Fluidized Catalytie Cracking unit has been successfully commissioned today, 27 August 2014 in Phase-III project of the company and products are being routed to respective destinations. This will increase LPG, light distillates and production of Propylene which is a feed for Polypropylene unit, MRPL said.

Shares of companies with significant sales to Europe gained as expectations grew for further monetary stimulus measures from the European Central Bank. Havells India surged 8.27% at Rs 295.30. Motherson Sumi Systems rose 4.37% at Rs 372.40. Dr. Reddy’s Laboratories rose 1.26% at Rs 2,927.

The market sentiment was boosted by provisional data showing that foreign funds were net buyers of Indian during the previous trading session. Foreign portfolio investors (FPIs) bought shares worth a net Rs 364.72 crore on Tuesday, 26 August 2014, as per provisional data from the stock exchanges.

The market may remain volatile tomorrow, 28 August 2014, as traders roll over positions in the futures & options (F&O) segment from the near month August 2014 series to September 2014 series. The near-month August 2014 F&O contracts expire tomorrow, 28 August 2014.

The Sensex edged higher for the fifth day in a row today, 27 August 2014. The barometer index has risen 245.86 points or 0.93% in five trading sessions from a recent low of 26,314.29 on 20 August 2014. The Sensex has gained 665.18 points or 2.56% in this month so far (till 27 August 2014). The Sensex has gained 5,389.47 points or 25.45% in calendar year 2014 so far (till 27 August 2014). From a 52-week low of 17,448.71 on 28 August 2013, the Sensex has risen 9,111.44 points or 52.21%.

In the foreign exchange market, the rupee edged lower against the dollar. The partially convertible rupee was hovering at 60.46, compared with its close of 60.44 on Tuesday, 26 August 2014.

Crude oil prices rose ahead of the weekly US oil inventory data from the US government. Brent for October settlement was up 19 cents at $102.69 a barrel. The contract fell 15 cents to settle at $102.50 a barrel yesterday, 26 August 2014, after reaching $103.40 during the session. The US is the world’s biggest oil consumer.

Geopolitical developments were in focus. Talks between the Russian and Ukrainian presidents yesterday, 26 August 2014, were inconclusive, and the conflict in eastern Ukraine continued with Kiev releasing videos of captured Russian soldiers.

At a meeting yesterday, 26 August 2014, the Central Board of Trustees (CBT) of the Employees’ Provident Fund Organization (EPFO) decided against investing in equities and Exchange Traded Funds (ETFs). The finance ministry had suggested EPFO to invest in equities to enhance returns for subscribers.

The government yesterday, 26 August 2014, notified increase in foreign direct investment limit to 49% from 26% in the defence sector. The hike in FDI ceiling could encourage domestic manufacture of defence goods which are imported.

European shares edged lower after worse-than-projected German confidence data. Key indices in Germany and France were off 0.1% to 0.12%. In UK, the FTSE 100 index was up 0.1%.

A consumer confidence index in Germany will fall to 8.6 in September from a revised 8.9 in August, GfK AG forecast in a report today, 27 August 2014.

There are expectations of quantitative easing and other steps by the European Central Bank (ECB) to bolster growth and counter downward pressures on prices in the euro zone. At US Federal Reserve’s annual symposium in the United States on 22 August 2014, ECB President Mario Draghi said that expectations of future inflation in Europe exhibited significant declines at all horizons this month.

Asian stocks rose today, 27 August 2014, after data signaled a stronger US economy and Russia’s president hailed as “positive” talks over Ukraine. Key benchmark indices in Indonesia, Japan, China, Taiwan, Singapore and South Korea were up 0.11% to 0.98%. Hong Kong’s Hang Seng fell 0.62%.

Trading in US index futures indicated that the Dow could gain 14 points at the opening bell on Wednesday, 27 August 2014. US stocks edged higher on Tuesday, 26 August 2014, to lift the S&P 500 index just a hair above the 2,000 mark, its first close above that milestone, after data that pointed to a brighter future for the US economy.

Bookings for goods meant to last at least three years climbed by a record 22.6% in July after a 2.7% gain in June that was bigger than previously reported, data from the Commerce Department in Washington showed. The Conference Board’s US consumer confidence index rose to 92.4 in August, the highest since October 2007, the New York-based private research group said.

Source:http://www.business-standard.com/article/news-cm/sensex-nifty-hit-record-closing-high-114082700807_1.html

HCL Tech awarded life sciences outsourcing leader

August 22nd, 2014

HCL Technologies has been recognised as a life sciences IT outsourcing leader and a star performer by advisory and research firm Everest Group in its 2014 report on “IT Outsourcing in Life Sciences Industry.”Outsourcing1

The report measures market success by the number, scale and growth of large life sciences’ ITO contracts, and ranks delivery capabilities by scale of operations, scope, enabling domain investments, and delivery footprint, according to a company statement.

“We’ve seen an uptick in the adoption of next-generation IT as companies struggle to combat multi-faceted challenges such as stifling research and design inefficiencies,” said Jimit Arora, Vice President, Everest Group.

In this evolving industry scenario, HCL’s mix of technology, domain and client servicing capabilities are translating well into significant market success and industry recognition, he added.

Source:http://www.thehindubusinessline.com/features/smartbuy/hcl-tech-accorded-life-sciences-outsourcing-leader/article6338967.ece

HCL Technologies: How company beat slowdown

August 14th, 2014

When 46-year-old Anant Gupta took over as CEO of HCL Technologies from Vineet Nayar, he inherited a high-flying company. Eighteen months on, Gupta has built on that momentum. Operating margin has improved from 22.1% since he took over in January 2013 to 26.3% for the year ended June 2014.

Together, Gupta and Nayar have presided over a margin gain of 9 percentage points since 2008. This is a period that saw IT industry association Nasscom lower annual growth projections for the IT services business from around 16% to 12%.

In this period, Indian leader TCS improved this metric from 25.8% to 30.7%, while the number two player, Infosys, fell from 33.2% to 27.2%. HCL is narrowing the gap, leveraging its improving capabilities and bigger customers.

Back in 2010, HCL had only one $100-million customer; now it has six. In the same period, its count of $50-million clients has gone up from six to 15. “Old contracts started maturing (HCL was able to bag more business from a client) and that led to higher profitability,” says Dipen Shah, senior vice president & IT analyst, Kotak Securities.

At the worst of the 2008 slowdown, HCL paid $658 million to beat Infosys and buy Axon, a UK-based business software consulting major. This buyout helped HCL grow its business consulting practice (services that use IT for specific business outcomes). Says Anant Gupta, “Strong focus on IT transformation deals over the past several years helped the company grow faster than the competition as growth in traditional application development and maintenance contracts withered due to pressure on client IT budgets.”

Even as HCL entered new domains with Axon, it kept an eye on its cash cow: The infrastructure management services (IMS) business. As part of this, HCL provides computer support, software upgrades, anti-virus protection, and manages data centres and networks.

For Freescale Semiconductor, for example, it does this in 20 countries. IMS has grown from a $196-million business in 2007 to a powerful $1 billion revenue engine now, accounting for 30% of HCL’s revenues and growing at the same rate.

An increase in sales and marketing spends, from $386 million in 2010 to $662 million in 2012, helped HCL win deals in the tough period. In 2011, HCL replaced IBM as British pharma major AstraZeneca’s outsourcing partner for data centre services in 60 locations globally.

As the partnership matured, HCL was able to bag additional services.

HCL is also using its employees more. Employee utilisation has averaged 84.5% in the last four quarters, against 75% three years ago. “Productivity improvements helped margins expand,” says Sarabjit Kour Nangra, VP research, Angel Broking.

HCL tackled its lagging BPO business as well. It reduced voice work from a peak of 45% in 2009 to below 30% now; it exited low-end services like customer care. After three years of losses, the BPO business, which accounts for around 8% of the company’s $5 billion revenues, turned profitable in 2012-13.

To sustain performance, HCL will have to accelerate its lagging software services business, which accounts for less than 5% of revenues. “Sustaining margins will be a challenge as there’s not much room to extract more juice from initiatives like employee utilisation,” says Shah. Adds Ankita Somani, IT analyst at MSFL, a brokerage, “While HCL has done well in the past, there’s too much dependence on IMS. It will need to broadbase its growth.”

Source:http://timesofindia.indiatimes.com/articleshow/40196190.cms

Sydney Trains signs $35m outsourcing deal with HCL

August 14th, 2014

Sydney Trains has awarded Indian IT outsourcer HCL Technologies a five-year, $34.9 million deal to maintain and support 107 of the agency’s legacy applications.

Late last year the rail operator went to market for offers to replace a network of 11 different external suppliers which had been supporting and maintaining the suite of customised and bespoke business applications inside the freshly re-branded agency (formerly CityRail).

“These contracts had been in place for varying periods of time and so there was an opportunity to go back to the market and consolidate our approach and vendors,” a Sydney Trains spokesperson told iTnews.

It marks the first time HCL has partnered with Sydney Trains on this specific program of work.

The spokesperson said while the work would be performed offshore under the new contract, a number of the previous 11 vendors had also been located offshore and used offshore models to support the applications in scope.

The agency said no Sydney Trains staff would be impacted by the change.

The spokesperson would not comment on the privacy and security implications of offshore workers accessing the data residing in the business-critical applications, saying only that “appropriate data and security controls are in place”.

The partnership follows a recommendation from the 2012 NSW Commission Audit, which found 130 corporate systems in use across the transport cluster, and suggested that amount be reduced to between 8 and 24 in order to reap annual savings of $100 million.

Source:http://www.itnews.com.au/News/391019,sydney-trains-signs-35m-outsourcing-deal-with-hcl.aspx

How HCL, Firstsource, Maruti & Britannia emerged stronger from slowdown

August 13th, 2014

A slowdown can mean different things to different companies.

There are companies that take a step back, or two. There are companies that press pause. But if there’s one thing that runs through the four companies featured on this page, it’s this: they became bolder in the slowdown, demonstrated greater urgency to move forward, and made calculated choices that entailed a risk they felt confident of managing.

HCL pushed ahead with a pricey buy, one that Infosys declined, and added more range to its IT business. Maruti drove down patchwork roads to find a whole new market, one whose bottom it does not know yet. Staring at a currency crisis, and needing to shore up its bottom line, Firstsource dared to refuse business for a good reason. Britannia made many small decisions that added up to a substantial whole.

During this period of economic sluggishness, from 2011-12 to 2013-14, all four companies saw their revenues grow faster than costs -and their operating margin expand. The economy is looking up, but the levers they pulled remain just as relevant as they did then.

When 46-year-old Anant Gupta took over as CEO of HCL TechnologiesBSE 2.33 % from Vineet Nayar, he inherited a high-flying company. Eighteen months on, Gupta has built on that momentum. Operating margin has improved from 22.1per cent since he took over in January 2013 to 26.3 per cent for the year ended June 2014.

Together, Gupta and Nayar have presided over a margin gain of 9 percentage points since 2008. This is a period that saw IT industry association Nasscom lower annual growth projections for the IT services business from around 16per centto 12 per cent.

In this period, Indian leader TCSBSE 1.65 % improved this metric from 25.8per centto 30.7per cent, while the number two player, Infosys, fell from 33.2per centto 27.2per cent. HCL is narrowing the gap, leveraging its improving capabilities and bigger customers.

Back in 2010, HCL had only one $100-million customer; now it has six. In the same period, its count of $50-million clients has gone up from six to 15. “Old contracts started maturing (HCL was able to bag more business from a client) and that led to higher profitability,” says Dipen Shah, senior vice-president & IT analyst, Kotak Securities.

At the worst of the 2008 slowdown, HCL paid $658 million to beat Infosys and buy Axon, a UK-based business software consulting major. This buyout helped HCL grow its business consulting practice (services that use IT for specific business outcomes). Says Anant Gupta: “Strong focus on IT transformation deals over the past several years helped the company grow faster than the competition as growth in traditional application development and maintenance contracts withered due to pressure on client IT budgets.”

Even as HCL entered new domains with Axon, it kept an eye on its cash cow: the infrastructure management services (IMS) business. As part of this, HCL provides computer support, software upgrades, anti-virus protection, and manages data centres and networks. For Freescale Semiconductor, for example, it does this in 20 countries. IMS has grown from a $196-million business in 2007 to a powerful $1 billion revenue engine now, accounting for 30per centof HCL’s revenues and growing at the same rate.

An increase in sales and marketing spends, from $386 million in 2010 to $662 million in 2012, helped HCL win deals in the tough period. In 2011, HCL replaced IBM as British pharma major AstraZeneca’s outsourcing partner for data centre services in 60 locations globally. As the partnership matured, HCL was able to bag additional services. HCL is also using its employees more. Employee utilisation has averaged 84.5per centin the last four quarters, against 75per centthree years ago. “Productivity improvements helped margins expand,” says Sarabjit Kour Nangra, VP research, Angel Broking.

HCL tackled its lagging BPO business as well. It reduced voice work from a peak of 45per centin 2009 to below 30per centnow; it exited low-end services like customer care. After three years of losses, the BPO business, which accounts for around 8per centof the company’s $5 billion revenues, turned profitable in 2012-13.

To sustain performance, HCL will have to accelerate its lagging software services business, which accounts for less than 5per centof revenues. “Sustaining margins will be a challenge as there’s not much room to extract more juice from initiatives like employee utilisation,” says Shah. Adds Ankita Somani, IT analyst at MSFL, a brokerage: “While HCL has done well in the past, there’s too much dependence on IMS. It will need to broadbase its growth.

Two years ago, on a May morning, the top management of back-office services provider Firstsource SolutionsBSE 1.05 % watched anxiously as the rupee touched a new low against the dollar. In 60 days, the rupee had lost Rs 4. With outstanding convertible bonds of $237 million (about Rs 1,400 crore), every Re 1 fall against the dollar meant an additional debt burden of $3 million for the company.

The story is familiar to many companies that issued convertible bonds before the financial meltdown, but Firstsource is among the few that managed to avert a crisis. Its stock has appreciated over 300per cent since. Firstsource had inherent strengths.

It was a Rs 2,255 crore services company with good clients and a sound delivery record, and was generating cash every quarter. These reasons prompted Sanjiv Goenka to pump in Rs 275 crore in December 2012, helping bail out the company while giving him a controlling stake in it. He didn’t stop there. “The company had a lot of low-hanging fruit, which is now manifesting itself in operations and results,” says Goenka, who took over as chairman of Firstsource. The company’s three-pronged strategy was to reduce costs, lower interest burden and exit unviable contracts.

Goenka was clear that wherever contracts could not be renegotiated at better rates, Firstsource would move out. Simultaneously, it tried to grow business with top customers, where profit margins were higher.

The outcome of these efforts is visible in its 2013-14 results. Overall revenues from India have dropped, but revenues from top customers, especially its largest customer, has increased. “Our focus is on bottom line growth, and in that sense, the top line is incidental,” says Goenka. In 2013-14, while revenue grew 10per cent, net profit grew 31 per cent.

Net profit growth was also helped by lower interest costs. The company has been repaying $11.25 million every quarter, and has thus far repaid $45 million of long-term debt. If it continues at the same pace, it will be debt-free by end of 2015-16, says Abhishek Shindadkar, analyst with ICICI Direct. “The biggest kicker continues to be the repayment of debt — it sends out the correct signal in terms of the company’s health,” he adds.

As Firstsource focused on profitability, it also took a hard look at costs. Between 2006-07 and 2008-09, the company spent about Rs100 crore to set up 14 delivery centres, says an analyst, who requested not to be named.

Under Goenka, Firstsource undertook a ‘facilities rationalisation exercise’, consolidating centres and evaluating various parameters such as space utilisation. This helped it save about $10 million. In India, the company shut down two centres as it exited unprofitable domestic contracts. In 2013-14, it posted higher profits with 4,200 fewer people on its rolls.

Goenka sees margins improving and costs dropping further. Firstsource also intends to make its first investment in an analytics firm soon. Additionally, it is investing in solutions in commoditised segments like customer management and pursuing opportunities in healthcare more actively.

MedAssist, which Firstsource acquired in 2007 in the second largest deal in Indian outsourcing, had high costs because most of its people were located in the US. While this was a drag, the opportunity was potentially huge because of subsequent healthcare reforms by the Barack Obama administration.

The company decided to retain delivery staff in the US and centralise corporate functions such as human resources in India. It also integrated its payer (insurers) and provider (healthcare providers such as hospitals) businesses for greater synergy. Firstsource still has some distance to go before it catches up with peers like WNS Global and EXL Services, but it’s moving in that direction.

When it wasn’t the state of the industry outside, it was the company within. That sums up the last three years for India’s number one carmaker by market share.
Besides an economy in which urban India lost purchasing power and appetite to buy cars, the Rs 43,700 crore auto major has also had to deal with worker strife, plant shutdowns and shareholder dissent. Yet, when the dust lifted, Maruti Suzuki ended this three-year period better than where it started from, with operating margin rising from 10.1 per cent in 2010-11 to 12 per cent in 2013-14.

There was one big financial and business reengineering exercise. Maruti merged Suzuki Powertrain, a sister company supplying diesel engines to it, with itself in a share transaction. Post-merger, the profit of the engine division is now part of the combined entity.

“The biggest contributor in margin expansion in fiscal 2014 was the amalgamation of Suzuki Powertrain, which helped by 240 basis points (2.4 percentage points),” says Mahantesh Sabarad, deputy head research of SBICap Securities.

That merger was a one-time exercise. There were two other levers that Maruti pulled during this period, the benefits of which will accrue for years to come. The first was rural sales. From 4per cent of total vehicle sales in 2007-08, rural markets — defined by Maruti as places with less than 10,000 people — now accounts for over 30per cent of total vehicle sales, as the company targeted villages with purchasing power and pockets of farming prosperity.

Other car companies too fanned out, but none as aggressively as Maruti. Company officials say Maruti reached 94,000 of India’s 640,000 villages in 2013-14, and plans to double this in 2014-15. The strategy paid off as it closed the last financial year with 42.1per cent share in the overall car market (against 38per cent in 2010-11).

Its share in vans and utility vehicles — rural mainstays — was 69per cent and 12per cent, respectively. And it’s hopeful of making more inroads. “We don’t know what that number (overall rural sales) will be in the future,” Mayank Pareek, chief operating officer (marketing and sales) of Maruti, told ET in October 2013. “I think we have just scratched the surface.”

In its factories, it scratched more than the surface to squeeze out cost benefits. The company actively solicited suggestions from its employees on improving processes and reducing costs. “We have managed to save more than `350 crore through suggestions,” says Ajay Seth, CFO of Maruti.

For example, the trolleys that carried instrument panels from the JV’s factory to the Maruti assembly line were covered with polythene sheets to protect them against dust and rain. The polythene would be discarded after a few uses. An employee suggested a permanent cover on the trolleys.

This helped eliminate the polythene scrap. It also helped increase trolley capacity from 12 pieces to 15, thus reducing the number of trips. The company estimated its savings at about Rs30 lakh. Overall, the stress was on cost saving. “During the slowdown, we also saw to it that our expenses were based on business needs and not wasteful expenditure,” adds Seth.

In an environment where the rupee was weakening against other currencies, Maruti reduced its reliance on import content: from 27per cent of net sales in 2008-09 to 16per cent in 2013-14. The rupee is stronger now. And the share price of Maruti, even as it embarks on a difficult negotiation with shareholders over the ownership of a new plant, is up 122 per cent in the last two years.

Raw materials, typically, account for 40 per cent -50 per cent of revenues of FMCG companies. For Britannia, that number stood at 65% in 2011-12, a year when the biscuits, bakery and dairy company posted a slim operating margin of 4.8 per cent. Last year, the raw material metric fell to 60.5 per cent and the profit metric rose to 8.9 per cent —its highest in eight years.

This shows how much Britannia depends on the price of wheat and sugar, which account for one-third of its raw material and packaging costs. A year of runaway prices, as 2012 was, can wreck its numbers. A year of price restraint can lift them significantly.

Yet, they need a bigger lift: sector leader Hindustan Unilever earns a margin of 16 per cent, food companies Nestle and GSK Consumer Healthcare 22per cent and 23per cent, respectively.

In their latest report on Britannia, Sanjay Singh and Pratik Biyani of Standard Chartered Equity Research list some reasons that have held back the Rs6,913 crore company: limited innovation, lack of offerings in high-growth segments like mid-priced cookies and cream biscuits, entry into unrelated categories and international forays.

Yet, they have an ‘outperform’ rating on Britannia today. Part of that faith is on a new management, under Varun Berry, who took charge as managing director on April 1. Britannia did not participate in this story as it was in a silent period before its June quarter results.

But there are initiatives happening at several levels that offer a glimpse into the shape of things. Berry has reorganised reporting structures to speed up decision making, sharpen product focus, strengthen the front end and cut costs.

In a recent research report, Aashish Upganlawar of Elara Capital points out that Britannia has reduced the number of stock keeping units (SKUs) — essentially, all a company’s products and their variants — by about 30per cent to 220. “Additionally, in urban India, it has split SKUs between two sales executives serving one retail outlet, compared to one in the past,” he says.

Elsewhere, Britannia is scaling up rural presence, by growing outlets at the rate of 6per cent-7per cent a year, as well as pushing more products through them. It is tightening back-end processes, setting up new factories in Orissa, Bihar and Gujarat to help address demand locally, which leads to better product freshness. In 2012, the company executed about 350 projects to cut costs in manufacturing and supply chain.

In a low-margin business, with limited manoeuvring room in raw material prices, Britannia needs to do more in premium categories. This is a stated objective. The company, living off its old brands, has underinvested in advertising compared to peers.

It has also never spent more than 0.1per cent of its sales on R&D in any of the past 10 years, a period that has seen the company’s market share in biscuits decline from 45per cent to 31per cent and seen it lose market leadership in cream biscuits.

At the lower end, the challenge is managing margins. At the middle and upper end, the challenge is generating growth. How Berry tackles this will determine whether Britannia can build on the margin surge of the last three years.

Source:http://economictimes.indiatimes.com/news/news-by-company/corporate-trends/how-hcl-firstsource-maruti-britannia-emerged-stronger-from-slowdown/articleshow/40073677.cms

HCL Tech is IT’s stock market star

August 13th, 2014

Among the big Indian IT companies, HCL Technologies has been the undisputed star of the stock markets in recent years. It’s the smallest of the top five, and has tended to receive the least public attention – overshadowed by TCS’ and Cognizant’s strong performances.

But the $5-billion, Shiv Nadar-promoted company’s rise has been phenomenal. Over the past three years, its share price has risen by 249%. In comparison, TCS was up 139% and Infosys, the worst performer, just 34%. The gap between HCL and the rest was equally significant over the past year. HCL rose 64%, TCS and Cognizant both grew around 35%; Infosys was once again the laggard at 15%.

There’s good reason for this. Its revenue growth has been consistently high, and above the industry average growth. But what’s been remarkable has been net profit growth, which was 42%, 50.5% and 30.9% in dollar terms in each of the past three years (Infosys’ respective figures were 1.5%, 0.5% and 14.5%).

The company’s operating margin – one of the best measures of the efficiency of a company’s operation – used to be 14% three years ago, when Infosys’ was close to 30%. In the past quarter, it was 24.2%, just a shade behind Infosys’ 25.1%. In just the past year, it improved the operating margin by nearly 4.5 percentage points.

Investors use a measure called the price-earnings (PE) ratio to evaluate the relative attractiveness of a company’s stock price. It is a valuation multiple that reflects earnings/profit growth and the predictability of this growth. Infosys and Wipro have traditionally had a much superior PE ratio, but Pramod Gubbi, director of sales in brokerage firm Ambit, says he expects HCL Technologies’ PE ratio to cross that of Infosys and Wipro over the next four quarters. In other words, investors will then be willing to pay a higher price for a dollar of HCL earnings, than for a dollar of Infosys or Wipro earnings.

Varun Vijayan, IT analyst at the brokerage firm PhillipCapital, notes that HCL Technologies has outperformed its peers, expanding its margins and improving operating cash flows in the past two years. “They have been closing $5 billion worth of deals in each of the last two financial years, and a large chunk of it is coming from new clients and expanded scope of work in some of the service lines,” he says.

HCL discovered its pot of gold in an area called infrastructure management services (IMS). It recognized – much before most of its Indian peers – that this was a space ripe for large-scale outsourcing, and also one where Indian vendors could outbid global players like IBM and HP. IMS involves the management of the entire IT infrastructure of a company, including equipment, data, related policies & processes – an area that’s not core to most companies and yet an increasingly important part.

In the past few years, IMS has grown extremely rapidly for HCL, many of the contracts being those that were previously handled by global IT majors. HCL Technologies CEO Anant Gupta recently told TOI that a big reason for this was that HCL had no vested interests in the space. “Unlike some of our global competitors (read IBM, HP, Dell), we don’t have to sell servers, storage or networks to customers, so customers have confidence we will give them the best options,” he said.

The pace of growth in the space has slowed down a bit, but it is still winning big contracts. In just the past few months, it won a $500-million contract from Pepsi, a $400-million contract from DNB Bank, Norway, and a $400-million contract from Alcatel-Lucent.

Gubbi says HCL is still several steps ahead of peers with respect to selling and delivery capabilities in IMS and that IMS still has a lot of headroom for growth. Dipen Shah, head of private client group research in Kotak Securities, however notes that HCL Tech’s growth from infra services has slowed down in the last two quarters while Wipro is showing some good momentum in terms of deal wins. “We are seeing contrasting trends with regard to these two players. Though PE valuations of Wipro and HCL are somewhat similar, we will need at least 2-3 quarters to see how the action pans out,” he says.

Gubbi is also impressed by HCL’s innovative approaches towards relatively commoditized service lines such as application support and maintenance, and says it is able to cross-sell application management services to its IMS customers. HCL’s ALT ASM offering focuses on a ruthless cut down of waste in application support and maintenance, and is said to be seeing significant traction.

The division is now headed by Ajit Kumar, an Accenture veteran who came to HCL a year ago. In 2012, HCL brought Prithvi Shergill from Accenture to head HR. These are signs that the company is trying to combine international best practices with India’s outsourcing advantage. For now, the strategy looks to be working perfectly.

Source:http://timesofindia.indiatimes.com/Tech/Tech-News/HCL-Tech-is-ITs-stock-market-star/articleshow/40133133.cms

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