HCL Technologies has acquired external IT business of Volvo Group

HCL Technologies India's fourth largest software services company informed stock exchanges that it has acquired the external IT (information technology) business of Sweden’s Volvo Group which is one of the world’s leading manufacturers of commercial vehicles, along with the customers of its external IT business. It has also signed a significant IT outsourcing deal with the Volvo Group. The deal amounts to a total cash pertaining to Swedish Krona (SEK) 1130 million (approximately Rs 904 crores).

The acquisition will add 40 new customers from the Nordics and France to HCL’s portfolio, further enhancing its market leading position in these regions. The deal is one of the largest IT deals signed by any Indian IT company, and a first in the industry to use principles of Vested Sourcing as the basis of the relationship for an IT outsourcing engagement of this size and magnitude. 

About 2500 highly skilled people are engaged in serving both the internal IT needs and the external customers. The revenue pertaining to the external IT business being acquired has been SEK 1,537 M in FY13; SEK 1,558 M in FY14; and SEK 1,687 M in FY15 (FY ending December).

The relationship is significant and enables HCL to create a market leading mainframe and iSeries capability; while Volvo is already delivering excellent services to IT customers in the Nordics based on these capabilities, HCL will now make further investments in these offerings and present them to its global client base. 

With this engagement, HCL will become the largest IT services provider of Indian origin in the Nordics. It will build on this exceptional position and accelerate through cutting edge initiatives, such as the Centre of Excellence in Gothenburg, to deepen its relationships and further integrate with clients, helping them to achieve their IT transformation ambitions and vision in the region. 

On financial front the consolidated net revenue from operations of HCL reached Rs 10341 crores in Q3FY16 compared to Rs 10097 crores in Q2FY16, an increase of 2.04 per cent quarter on quarter (QoQ). The EBITDA stands at Rs 2225 crores this quarter compared to Rs 2092 crores in Q2FY16, an increase of 6.4 per cent QoQ. The EBITDA margin stands at 21.51 per cent this quarter compared to the margin of 20.71 per cent in Q2FY16. The substantial increase in EBITDA is attributed to slow growth in direct expenses of company. The direct expenses increased by just 0.38 per cent QoQ. The net profit stands at Rs 1920 crores in Q3FY16 compared to Rs 1726 crores in Q2FY16, an increase of 11.2 per cent QoQ. After the announcement the stock surged today to Rs 827.75, an increase of 0.73 per cent from the previous close.