New Delhi: Noida-based IT hardware firm HCL Infosystems on Thursday expanded its distribution business in Middle East by acquiring a 20% stake in Dubai-based Techmart Telecom Distribution FZCO, the Nokia distributor for Gulf and Africa.
The buyout is expected to add 20% of Techmart Telecom’s profits to HCL Infosystem’s bottoml ine next year. Techmart Telecom generates sales of about $40-50 million per month.
Post the deal announcement, HCL Infosystems stock moved up marginally by 0.8% to Rs 115 on the Bombay Stock Exchange
“We are consulting our advisors (PricewaterhouseCoopers) on how to consolidate revenues and profits of the new minority subsidiary to our financials. The buyout will give us a presence in almost 50 countries spread across Africa and Middle East,” HCL Infosystems CEO Harsh Chitale told ET.
The agreement provides an option to the Company to increase the equity stake in Techmart Telecom upto 51%. There is no deadline to the execution of the agreement to buy rest of the stake in Techmart Telecom. HCL Infosystems will also provide consultancy and operational services to the Dubai-based firm.
Chris Braam, VP-Sales Nokia Middle East and Asia said that HCL Infosystems is a key partner of Nokia globally. “We look forward to work with HCL Infosytems and Techmart Telecom, to expand our smartphone business in Middle East and Africa.”
The amount spent on the share purchase, executed through a special purpose vehicle set up in Singapore was not disclosed. The share purchase was funded through the cash reserves HCL Infosystems generated via a Rs 500 crore share issue to qualified institutional buyers, last year.
HCL Infosystems’ generated just Rs 242 crore of net profit on sales of Rs 12,159 crore, for the year ended June 30, 2010. About Rs 8,000 crore was earned from the IT distribution business, of which Nokia phone sales in north and east India accounted for maximum contribution. The company also distributes Apple, Nintendo and HP products in India.
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