HCL Infosystems said its deal to sell its Middle East and Africa unit for about Rs 7.34 cr has been canceled after the buyer failed to make payment.
“The closure of transaction was subject to certain conditions precedent as specified in the Share Purchase Agreement (SPA),” it said. “Since the Buyer has failed to pay the consideration, which is a breach of warranty, HCL Insys has decided to terminate the SPA,” it said.
The Middle East and Africa business accounts for close to 3% of the company’s total turnover, or about Rs 67 cr per year. It has a net worth of Rs negative 1 cr.
About seven weeks ago, HCL Infosystems announced that a group of entrepreneurs had agreed to buy the Middle East business. They were backed by a Dubai-based investor group and a leading Indian IT major, it added.
The attempted sale was part of HCL Infosystem’s strategy to emerge out of a financial turmoil that it finds itself in, having never really recovered from the loss of its lucrative Nokia distribution business almost ten years ago.
The India-focused IT hardware and services arm of the HCL Group reported losses of Rs 62 cr for the December quarter, up from Rs 50 cr a year earlier.
However, it has been able to arrest revenue decline in recent quarters after shifting its focus more and more towards the services business, and away from hardware.
The company, originally called Hindustan Computers Ltd, was among the first manufacturers of PCs in India, and was a well known brand in the laptop segment till about 5 years ago.