HCL Tech does it again: Q3 numbers beat the street

Naysayers to India’s fourth largest software giant must be eating a humble pie as HCL Tech’s latest quarterly figures beat analysts’ estimates, once again.

In yet another sign that its highly proclaimed and much wondered about philosophy of ‘employees first, customers second’ is no fad, the New Delhi-headquartered HCL Technology has delivered its third quarter numbers that once again outperform the street’s expectations by significant margins. HCL Tech’s latest result, however, vindicate market analysts’ view that ‘Infosys is no more a benchmark for the Indian IT sector.’

During the third quarter ended March 2011 (the company follows July 1 - June 30 financial year), HCL Tech’s revenue grew 32% YoY to Rs. 4,138 crore; the revenue growth was up 6.4% on a sequential or Q-o-Q basis. The company’s operating profit (EBIT) jumped 17.3% y-o-y to Rs. 597 crore. The biggest surprise, however, was the growth in net income, which crossed $ 100 mn/quarter milestone to reach Rs. 468 crore, which is a jump of 33% y-o-y and 17.1% q-o-q. The street-beating performance comes despite the fact that Jan-March is a seasonally weak quarter as clients remain busy with finalizing budgets for the next financial year. The company also added 1,153 (net additions) to take its total headcount to 73,420. 

The robust performance was led by the buoyant IT Services business segment which grew by 6.2% sequentially. HCL Tech also signed 11 transformational deals across service lines, verticals and geographies, during the said quarter. Top 10 clients accounted for a fourth of the firm’s consolidated revenue, while repeat business too remained stable at 94.5%, during the quarter. 

In terms of revenues by vertical, Financial Services and Manufacturing accounted for over half (54%) of the total revenues during the quarter while in terms of Geography mix, the company successfully trimmed exposure to the US and Europe while the share of the Rest of the World jumped. 

Revenues from onsite software services stood at 27.1% while the rest was accounted for by offshore services, though utilization rate (offshore, including trainees) was lower at 71.9% during the March’11 quarter vs. 76.2% in the same quarter a year ago. In another negative, in the IT Services, the attrition rate too jumped to 17% against about 14% in the same quarter of the previous financial year.  However, in the BPO business segment, attrition rate (offshore) nearly halved to 11% from 20.3%, during the same period.

“We continue to expand market share backed by a second sequential quarter of revenue growth of 30%+ YoY along with expansion in margins. HCL’s focus on forward investment in key markets and transformation services is paying rich dividends,” said Vineet Nayar, Vice Chairman and CEO, HCL Technologies. The company’s operating margins expanded by 130 basis points (bps) to 14.4%, during the January-March quarter of FY 2011.

So, is HCL Tech going to be the new poster boy of Indian IT? Lets wait for the results of the two biggies, TCS and Wipro, and the challenger, Cognizant.

Source: Company

Looks like it’s going to be a summer of battles for supremacy at India’s $60bn technology sector.

Amy, Chief Editor

Hyundai Motors India gifts new Verna RB to Indian Cricket Team

As India celebrates its ICC Cricket World Cup win, Hyundai Motor India Limited (HMIL), the largest exporter and second largest car manufacturer in India, which was the official ‘Car Partner’ for the recently concluding ICC Cricket World Cup 2011, where India clinched the World Cup after 28 long years under the stewardship of Mahendra Singh Dhoni will be receiving a brand new Verna 2011 [which is also named as Hyundai RB for US Market] to all the members of the Indian Cricket Team.

Scroll down to see the all new Hyundai Verna 2011, which is expected to release in May second week in India.

“As the official car partner for the ICC Cricket World Cup 2011, we will be extremely delighted to felicitate the Indian cricket team with All-New Verna much ahead of its market launch in the country. This is a part of our continuous effort to bring passion to the game of cricket and we have taken many such initiatives like the Hyundai Fan Park, First and Last ball tour amongst others during the entire world cup campaign.” said the elated H W Park, MD & CEO, HMIL.

Watch out this space as we bring you more news and updates from the auto world.

Venky, Signing Off!

Infy's Leadership Woes:Time for a Checkup!

Infosys of today is no longer the same small, nimble-footed competitor which it used to be a decade ago or earlier and whom rivals would fear. Or, to be fair to Infosys, it might just be a temporary blip in an organization which has been hailed for its impeccable credibility, transparency and global standards of corporate governance not just in India but globally.

Things have changed so dramatically at Infosys, India’s second largest software exporter that even its staunch rivals would find it hard to believe. Till a quarter ago, even though its results fell short of the street’s expectations, most market analysts maintained positive stance on the technology bellwether’s stock, hoping for a turnaround in the forthcoming quarter. However, that was not to be as the fourth quarter result of FY 2010-11 shows. But what is more disturbing is the exodus of two top-level executives: Mohandas Pai, a veteran of 17 years who was touted as its chief firefighter and speculated to be the first non-founder to take the reins of the Bangalore-headquartered firm anytime soon and K Dinesh, one of the co-founders of the company. 

Though later in a statement the IT biggie clarified that Dinesh, who will retire by rotation at the company's annual general meeting (AGM) to be held sometime in the coming June, chose not to seek re-appointment, this does not veil the vexed issue of ongoing attrition at the tech giant, attributed largely to the lingering management reorganization (perhaps the former is the fallout of the latter), which led many senior executives to seek better opportunities outside after failing to get larger role in the big organization. Though Wipro, Infy’s cross-town neighbor, too is not better off on this front, as it too has been struggling with similar issues for some time and recently effected an ambitious management overhaul which saw the ouster of its joint CEOs and replaced that with a new CEO structure besides engineering other changes.  

Both these firms are now finding it hard to compete with smaller rivals like HCL Tech (which has just declared its March’11 quarter results that comfortably beat analysts’ expectations) and Cognizant, as well as the grand daddy of Indian IT, TCS (you may find the following story interesting: http://businessviewsreviews.blogspot.com/2011/01/stories-abound-about-how-cognizant-is.html). 

Expectedly, brokerages, particularly foreign ones, have been quick to downgrade Infosys stock. CLSA, which has downgraded the IT major’s stock to outperform from buy citing concern that the ‘protracted exercise (organizational overhaul) could weigh on company performance for another quarter or two.’ Credit Suisse, another leading brokerages, has downgraded Infosys stock to neutral from outperform, on the concerns over a weak fourth-quarter revenue growth and lower-than-expected margins.

Notwithstanding a slew of downgrades, no one is bearish on Infy for the moment. But then the fact is that it is ageing. But then you ask, so is TCS. That leads us to another issue: TCS is still run by the group patriarch, the maverick Ratan Tata, where as in case of Infosys, it looks like all the co-founders are in a hurry to call it a day, deserting the company at a crucial juncture when it needs their services more than ever. Even in case of Wipro, despite the recent CEO shake-out, the company has not elicited strong reactions from the street as the patriarch Azim Premji remains at the helm of the country’s third largest IT exporter. Also, the Indian IT giants are smaller compared to global peers like IBM and Microsoft. So, all the concerns over ageing and thus decline in growth appear unfounded.

What Infosys needs are entrepreneurs. Though organizational restructuring would take time to fructify, there is a need for the co-founders to be around, acting like a beckon, as they have been for all these years, for the new generation of managers at the helm of the company’s affairs. 

Maybe it sounds like we’re a bit more demanding on the co-founders. Probably these are the challenging times Infosys has to go through before the young guns start delivering. 

Maybe Infosys can take a leaf or two out of the Team India’s book: Dhoni & Co. achieved through sheer focus and team work minus the earlier flaw of overdependence on individual brilliance.

Down but not out!

Infosys’ stock price

Source: Company

Am, Chief Editor

You can contact the author at businessbanter@gmail.com

NATCON Covention: Singapore, April 28-29, 2011

The Confederation of Real Estate Developers’ Associations of India (CREDAI), the apex body of private real estate developers in India, is organizing an international conference in Singapore on 28 and 29 April 2011. The convention theme is: “Igniting change in Indian Realty.”

According to the CREDAI website, the real estate and construction industry contributes nearly 20% to India’s GDP, driven largely by the rapid increase in urban population, which is likely to go up from 30% currently to 41.2% by year 2030. The Apex realty body citing a McKinsey Global Institute 2010 report says that by 2030, 590 million people will live in Indian cities, which is almost twice the population of the US today. And an investment of $1.2 trillion will be required to meet the projected demand in these cities, and about 700-900 million sq meter of land space will need to be built, or a new Chicago every year! This process of urbanization is set to make large demands on the ability of the industry to provide mass housing, buildings and other infrastructure at a rapid pace which has not been witnessed before.

The magnitude and complexity of projects under development today necessitates ‘change’ to be embraced, whereby traditional approaches must be replaced with sophisticated ones, taking inspirations from the developed markets. To cope up with the never before execution challenge, there is a need for new ideas, out of box thinking, innovation and foresight.

To serve as a breeding ground for these ideas, this conference is titled at “Igniting Change in Indian Realty.” 

Given this background, the NATCON Convention in Singapore will try to achieve the following objectives, by identifying and discussing the key catalysts of change.

 

Source: Confederation of Real Estate Developers’ Associations of India (CREDAI)

Amy

People’s Choice: Tata Steel is India’s No.1 reputed firm

Tata Steel emerges as the most reputed firm in India while Infosys slips to 9th rank in the Nielsen India’s Corporate Image Monitor survey 2010.

Tata Steel has emerged as the most reputed firm in India, according to the latest Corporate Image Monitor survey (2010) by Nielsen India. Tata Steel is India’s second largest and world’s sixth largest steel maker.  Tata Motors, along with Aditya Birla Nuvo, Wipro and Bharti Airtel are the other companies which figure in the list of top five reputed companies in the study which measures the reputation of leading corporates on a variety of parameters. The other two Tata group firms which find place among the top ten list are India’s largest software exporter, TCS (Tata Consultancy Services), and Tata Power. 

Surprisingly, Infosys, which had ranked second in the 2008 survey (there was no survey in 2009), slips to ninth rank in the 2010 list while Bajaj Auto, HDFC and L&T, which featured among 2008’s top ten reputed firms, are conspicuous by their absence in 2010’ top ten list. Aditya Birla Nuvo, Tata Motors and RIL have emerged as the top 3 most innovative companies in the product category, while Wipro, Bharti Airtel and TCS are the top 3 innovators in the service sector.

The Corporate Image Monitor, which is conducted by Nielsen, a global information and measurement company, measures people’s perceptions of the image and reputation of India’s leading companies, across sectors and serves as an important indicator of the strength of the corporate brand. The survey’s participants include policy makers, influence groups, the financial community, investors, corporate executives, the corporate elite and the general public.

Service levels and product quality have major influence on people’s perception of a firm’s reputation. Besides, other parameters like financial performance, talent pool, innovation, pace of growth, and the extent of media visibility too play a part in shaping up stakeholders’ perceptions of a firm’s reputation. While these are not directly cited by stakeholders to influence reputation, deeper analysis reveals that firms which perform well on these aspects in general, tend to have stronger reputations, the study said. It also highlighted that stakeholders expect leading organizations to be strong on parameters such as vision and leadership.

But the major suggestion was regarding the Corporate Social Responsibility (CSR) as the respondents felt that corporates should give priority to issues pertaining to public health and the environment as part of their CSR agenda.

“Corporate reputation is a very critical factor that drives stakeholder’s perception about a company and thereby its sustained growth. It is evident from the Nielsen survey that most leading companies in India have a strategy in place aligned to their business needs to nurture and enhance their corporate image to boost stakeholders confidence,” said Surekha Poddar, Executive Director, The Nielsen Company.

Top 10 Corporates- Nielsen Corporate Reputation Index

2008	2010
Tata Motors	Tata Steel
Infosys	Tata Motors
Reliance Industries	Aditya Birla Nuvo
Wipro	Wipro
Tata Steel	Bharti Airtel
HUL	TCS
L&T	Tata Power
HDFC	Reliance Industries
TCS	Infosys
Bajaj Auto	HUL

Source: Nielsen Corporate Image Monitor

Amy

Virtual Economy: Real Income Opportunities

Virtual online currencies and digital work now provide real income opportunities to poor and unskilled workers in developing countries, suggests a latest study by the World Bank. 

A new study by the World Bank’s infoDev program suggests that the Virtual Economy or Online Enterprises are offering real income opportunities to the poor and unskilled workers in developing nations like China and India. Titled, “Knowledge Map of the Virtual Economy,” the latest World Bank report highlights that more than 100,000 people earn a living by performing such digital jobs as playing online games on behalf of wealthy clients/players (who are too busy to tend to their characters themselves), categorizing products in online shops and moderating contents posted to social media sites etc.

The study forecasts emerging virtual economy to continue creating newer employment opportunities for such people in these nations, riding high on very low entry barriers, which, in turn, are fueling new layer of entrepreneurial opportunities. The gaming-for-hire services market size was estimated to be worth $3 billion in 2009, according to the estimates by the said study. And it is expected to grow exponentially in the days to come fueled by the rapid growth in mass-market smartphones and increasing penetration of mobile phones. 

“…there are real earning opportunities in the virtual economy that will become accessible as mobile technology develops. This could significantly boost local economies and support further development of digital infrastructure in regions such as Africa and Southeast Asia,” said Tim Kelly, infoDev’s Lead ICT Policy Specialist. However, Dr. Vili Lehdonvirta, the main author of the study, cautions, “Entrepreneurs should focus on digital micro-work that benefits society.” He expects digital works such as transcribing books, translating documents, and improving search-engine results to create more job opportunities in the future in these economies.

(image courtesy: vel-tech.org)

Amy

Infosys: Is the magic waning?

The lackluster fourth quarter result gives rise to the concern that Infosys magic might be on the wane. 

The earnings season, which kick-started today with the IT bellwether Infosys announcing its fourth quarter result, however, has begun on a rather disappointing note. The Nasdaq- and NSE-listed Infy has reported net profit of Rs 1,818 crore during the fourth quarter of 2010-11, which was up 17% year-on-year but lower than analysts’ estimate of Rs. 1,856 crore. The March quarter revenue, which grew 22% to Rs. 7,250 crore, too fell well short of the Street’s expectation of Rs. 7,447 crore. Worse, even the EPS guidance of Rs. 126-128 for the FY 2012 is much below than Rs. 145-150, analysts had projected in a poll by CNBC TV-18.

The Bangalore-headquartered Infosys, founded by legendary N. R. Narayana Murthy along with six other entrepreneurs in July 1981, has had a knack for under-promising but outperforming market’s expectations successfully. However, since the last few quarters, the nation’s second largest technology outsourcer has been failing to repeat the same, causing a sense of resentment across the market participants. “A downgrade is most likely to happen,” warned a visibly disappointed Abhishek Shindadkar, analyst at ICICI Securities in Mumbai, in an interview to CNBC TV18. He added, “An EPS of Rs 150 is out of the way now. We will be surprised if Infosys even manages Rs 140 a share.” Several market analysts have expressed similar views which suggest how Infy disappointed a larger section of the market players.  

Another big news that has taken market by surprise is the sudden exit of Mohan Das Pai, the former CFO and a member of the Board of Directors.

Some experts say that Infosys’ tepid performance might signal trouble for the sector. “Based on what Infosys has reported and forecast, people will taper down their earnings estimates for the top players in the sector,” the Economic Times quoted Tejas Doshi of Sushil Finance as saying.

But now a section of analysts say that Infosys is no longer a benchmark for the nearly $60 billion Indian IT sector as they pin hope on behemoth TCS, India’s largest software exporter, and the new IT sensation, Cognizant. Both of these firms had reported better-than-expected results in the preceding quarter.

So let’s wait and watch whether the two can come triumph this time as well or not. Meanwhile, there remain a plethora of challenges before Indian IT sector that includes slow recovery in US and Europe, political unrest in the Middle East, rising wage costs, and above all the currency risks.

Surely, the risks have increased and Indian IT needs to fine-tune its strategies to sustain their growth in a challenging global business environment.

Highlights

• Consolidated results under IFRS for the quarter ended March 31, 2011:
• Revenues were Rs. 7,250 crore for the quarter ended March 31, 2011;
• QoQ growth was 2.0%; YoY growth was 22.0%
• Net profit after tax was Rs.1,818 crore for the quarter ended March 31, 2011;
• QoQ growth was 2.1%; YoY growth was 17.1%*
• Earnings per Share (EPS) was Rs. 31.82 for the quarter ended March 31, 2011;
• QoQ growth was 2.2%; YoY growth was 17.1%*
• 34 clients were added during the quarter by Infosys and its subsidiaries
• Gross addition of 8,930 employees (net addition of 3,041) for the quarter by Infosys and its subsidiaries
• 1,30,820 employees as on March 31, 2011 for Infosys and its subsidiaries
• The Board of Directors recommended a final dividend of `20 per share for fiscal 2011.

* Excluding the income from the sale of our investment in OnMobile Systems, Inc. of `48 crore in fiscal 2010

Source: Infosys

Amy, Chief Editor

Celebrating 50th Anniversary of Manned Space Mission: Yuri Gagarin

Russian Cosmonaut Yuri Gagarin created history on this day in 1961, becoming the first man to orbit the Earth in Vostok Spacecraft. We celebrate the 50^th anniversary to commemorate the achievement of the “World Citizen” — Yuri Gagarin (March 9, 1934 - March 27, 1968).

Watch out these memorable photos during his space odyssey:

Yuri with his wife Valentina in 1957 and two daughters Galina and Yelena.

Venky, Signing Off!

Image Courtesy: Rex Features, Barcroft, Novosti / Science Photo Library,

Anna Hazare against Corruption in India!

1. Who is Anna Hazare?

An ex-army man. Fought 1965 Indo-Pak War

2. What's so special about him?

He built a village Ralegaon Siddhi in Ahamad Nagar district, Maharashtra

3. So what?

This village is a self-sustained model village. Energy is produced in the village itself from solar power, biofuel and wind mills.

In 1975, it used to be a poverty clad village. Now it is one of the richest village in India. It has become a model for self-sustained, eco-friendly & harmonic village.

This is just one deed. He has done many such good deeds for the society, created laws, etc.

 4. Ok,...?

This guy, Anna Hazare was awarded Padma Bhushan and is a known figure for his social activities.

 5. Really, what is he fighting for?

He is supporting a cause, the amendment of a law to curb corruption in India.

6. How that can be possible?

He is advocating for a Bil, The Lok Pal Bill (The Citizen Ombudsman Bill), that will form an autonomous authority who will make politicians (ministers), beurocrats (IAS/IPS) accountable for their deeds.

8. It's an entirely new thing right..?

In 1972, the bill was proposed by then Law minister Mr. Shanti Bhushan. Since then it has been neglected by the politicians and some are trying to change the bill to suit thier theft (corruption).

7. Oh.. He is going on a hunger strike for that whole thing of passing a Bill ! How can that be possible in such a short span of time?

The first thing he is asking for is: the government should come forward and announce that the bill is going to be passed.

Next, they make a joint committee to DRAFT the LOK PAL BILL. 50% goverment participation and 50% public participation. Because you cant trust the government entirely for making such a bill which does not suit them.

8. Fine, What will happen when this bill is passed?

A LokPal will be appointed at the centre. He will have an autonomous charge, say like the Election Commission of India. In each and every state, Lokayukta will be appointed. The job is to bring all alleged party to trial in case of corruptions within 1 year. Within 2 years, the guilty will be punished. Not like, Bofors scam or Bhopal Gas Tragedy case, that has been going for last 25 years without any result.

9. Is he alone? Whoelse is there in the fight with Anna Hazare?

Baba Ramdev, Ex. IPS Kiran Bedi, Social Activist Swami Agnivesh, RTI activist Arvind Kejriwal and many more.

Prominent personalities like Aamir Khan, Amitabh Bachan are supporting his cause.

10. Ok, got it. What can I do?

At least we can spread the message. How?

Putting status message, links, video, changing profile pics.

At least we can support Anna Hazare and the cause for uprooting corruption from India.

At least we can hope that his Hunger Strike does not go in vain.

At least we can pray for his good health.

Spread the word to fight corruption for a better India!

Maruti Suzuki Kizashi Video Ad during World Cup 2011

Watch out the all new Maruti Suzuki Kizashi Ad Video