While HCL's distribution entity focused on opening up more revenue streams for the company, the financial year 2004-05 can very well be termed as the year of consolidation of domestic business across segments like - digital home, desktop, server and security solutions.

Building upon its status of a firmly entrenched distribution player in this region, it has ventured into distribution partnerships with companies like Infocus and Konika Minolta. With an eye on segments like small offices, personal users as well as institutional customers in the region, HCL Infinet entered into an agreement to distribute Konica Minolta's laser color printers in India.

With players like Canon and HP already trying hard to entrench firmly in this space, it's a long road ahead for a new entrant like Konica Minolta, but HCL's strong distribution strength can add to the overall value that Konika Minolta wants to deliver to the end consumer.

The company entered into a distribution agreement with US-based InFocus Corp to introduce its new line of multi-use mobile projectors in the Indian region. Again, the company adopted a focused approach to target specific verticals of business, government and education for distributing these products.

In addition to extracting business value from the growing domestic IT and telecom market, HCL Infosystems also cashed in on the convergence wave. It introduced new products to plug into various gaps and price points, launched new range of servers, introduced PC financing and showed its aggressiveness to gain market share.

Overall, revenues from computer systems and other related products showed strong y-o-y growth of 27% during the JFM 2005 quarter, as compared to 10% growth previous fiscal. The segment now contributes 26.7% of the company's total revenues. Internet and related business grew at a lower pace, chipping in 0.5%. The year also saw its Frontline business grow stronger, bringing in close to 25% of the total revenues.

With Toshiba refusing to launch any product for the lower end of the notebook market, the year saw HCLI plugging this gap with its own brand, which accounted for 13% of its total notebook sales of 23,000.

The company had its share of problems as well. Despite a fall in excise duty from 2% in Q1 '04 to 0.5% in Q1 '05, a jump in the total cost of sales dented the company's margins. Besides, the company has been facing pressure on realizations due to stiff competition from unorganized and MNC players.

Interestingly, India's largest PC manufacturer has, over the years, emerged as more of a telecom distribution company with its IT-to-handsets ratio shifting from 62:38 in 2002-03 to 32:68 in 2004-05. This makes it more of a telecom distribution company than a PC vendor.

The 92% growth in the office automation and telecom (OAT) business-from Rs 2,468 crore in 2003-04 to Rs 4,733 crore during the current fiscal has once again been the major revenue driver for company. Minus the OAT business, this growth drops to 41% or Rs 2,203 crore in revenue terms.

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