Shiv Nadar and his lieutenants never seem to tire when it comes to restructuring and JVs. However, this year the change was aimed at the audience-analysts and stake holders-who have been complaining that the company's structure, with growing number of JVs and cross holdings, was increasingly becoming difficult to comprehend.

While HCL Technologies (HCLT) had made strategic investments in 11 companies and signed three JVs during the last four years, FY 2004-05 saw it increasing its stake to 100% in six such companies.

The high point of these acquisitions was HCLT's "carve out" strategy that enabled it to acquire a sizeable stake, and increase it to 100% over a period. This not only ensured continuation of the core team in acquired companies, it also helped HCLT buy them out at a much lower cost. HCLT started the integration of the various companies into common entities for similar businesses, which helped ensure better operational efficiencies and increased client-mining opportunities. The strategy worked well. Consolidated revenues grew at more than 8% q-o-q for the past five quarters, while EBITDA margins stabilized at around 23%.

HIGHLIGHTS First round inorganic expansion near completion with 100% acquisition of six key JV companies Performance improved as the company integrated investments in JVs Ability and experience of acquiring skill base and execution experience through unique JV and alliance strategy Experience and presence in remote infrastructure management services Muted growth in technology R&D and software services space could impact growth in mid-term High dependence on a few customers l Start-up Year: 1991 l Products & Services: Technology development, networking services, software product engineering services, applications services l Branches: 26 l Address: A-10/11, Sector 3, Noida-201301 l Tel: 22520917 l Fax: 2538961 l Website: www.hcltech.com

The inorganic growth strategy-particularly in the BPO-also helped HCLT ensure steady growth, even as software and infrastructure services and its core technology R&D business showed sluggish growth. Remove the BPO numbers, as we have done, and the company's overall revenues drop from Rs 3,194 crore to Rs 2,772 crore. But, the company managed to up its topline by 32% as compared to 24% growth in 2003-04, thanks to some of the multi-year contracts and growing business from top 20 clients.

The company also saw decline in the growth of $1 mn clients, which went up by 21% as compared to 55% in the previous year. While a lot of this would be taken care of with the integration of its diverse service-centric acquisitions, it nevertheless brings to forth the over dependence on the top 5 and top 10 accounts-39% and 51%, respectively, of the overall revenue. A matter of concern because this restricts the company's ability to negotiate price rises. Overall, the company ended FY 2004-05 with 489 active clients.

The JFM quarter saw Vineet Nayar taking over as president of the company's software and infrastructure business from S Raman, HCL's co-founder.