HCL should remain Indian

"Our global objective is to make Lenovo as globally recognized a brand as a Coca Cola or a Nike in markets where we are not that big as yet," said Roderick Lappin, president Lenovo Group and execu­tive chairman for Lenovo NEC Holdings following Lenovo's acquisition of Bra­zil based electronics major CCE for $148 mn.

In 2011, it entered into a 49:51 JV with NEC in Japan and also bought Germany's electronics maker Medion. Lappin and Lenovo seems to be walking the talk and Lenovo's next destination seems to be India. And if the strong speculations in the bourses and media are to be believed, the target looks like India's largest domestic PC maker HCL Infosystems.

Quite expectedly, HCL Info, going through a turbulent phase in the bourses, saw its stocks rally significantly follow­ing the speculation.

And as analysts were gloat­ing over the benefits that would accrue to both sides if the speculation turns out to be true, I was getting a very mixed feeling myself. Looking dispassionately at the numbers, I cannot deny the benefits for both Lenovo and HCL.

Lenovo, after 2 terrible years, had staged a dra­matic comeback in India in the last 2 years, when it displaced Dell in the last quarter to become the #1 PC vendor in India. Num­bers confirm this dramatic comeback. It grew by 49% and 16% in the last 2 years and closed FY12 with `4,152 crore. HCL Info, on the other hand, has been beleaguered by topline pangs in the same time period. While in FY11, it barely managed a 2% growth, revenues declined by 11% in FY12 ending at `10,754 crore. That too, the distribution business that accounts for nearly half its revenues, did fairly well. It's the PC business accounting for 10% of its revenues that is the sick child. HCL Info has, no wonder, decided to spin it off as a separate company called HCL Computing.

Now if Lenovo acquires whole of HCL Info, it straightaway becomes a nearly `15,000 crore en­tity. And even if only HCL Computing comes into the Lenovo kitty, it still is a `5,000 crore plus compa­ny; both numbers compare favorably with HP and Dell's PC businesses of around `8,000 crore. Or a worthy competitor also for Acer with `3,500 crore plus. While this would help reduce much of the current woes and problems at HCL, in turn it ensures the emergence of a strong PC vendor in India.

But where my desi heart bleeds is this would be a tacit acknowledgment of the failure of an Indian PC vendor to finally make it big. And worse, it is a sad statement of fact that one of Indian IT's original, iconic and pioneering poster boys is signing its own death certificate (at least for the entity how it all started). It's true what started in a South Delhi barsaati in the mid-70s by a group of enthusiastic youngsters has now come a long way and HCL today is more a global brand name as an IT services major.

The original PC business (that's how it made its name and cre­ated a large number of today's IT leaders) is also no more its core area of business. Perhaps Shiv Nadar and the other senior HCL management might acknowledge it as a strate­gic business move.

But the eternal roman­tic in me somehow cannot reconcile with the demise of HCL's PC business. After all, this was the com­pany which not only taught computing to India, it honed generations of great and tough salespersons across various sectors. Even today a sales person with ‘HCL experience' is virtually guaranteed a position in any company. While the overall deal, if it happens, will perhaps ben­efit Indian IT, I will strike a discordant note here and prey that the speculation turns out to be just rumors. Hindusthan Computers should remain India's pride, not an MNC's jewel in the crown.