In its press release, Icra said it had also reaffirmed the `LA' rating, assigned to Hindustan Construction Company Ltd's (HCC) Rs 70 crore non-convertible portion of the Rs 90 crore partially-convertible debenture programme. The rating indicates adequate safety.

HCLI has on a turnover of Rs 694 crore reported a profit after tax (PAT) of Rs 26 crore in the year 1997-98 amounting to 3.75 per cent of its sales turnover. The company has also invested operational cash surplus in closely held group/associate companies at market-driven rates of interest, which has led to an increase in the non-operating income by way of interest income.

HCLI, incorporated in 1986 as HCL Ltd, entered into a joint venture with Hewlett Packard (HP) of theUS in 1991 and was renamed as HCL-Hewlett Packard Ltd. HP holds a 26 per cent equity stake in HCL. In July 1997, HCL's promoters brought back equity held by HP and subsequently changed the name of the company to HCLI.

The company received an interest free foreign currency loan of Rs 34.28 crore from HP in 1997-98, repayable after four years, enabling the company to retire its short-term debt. The short to medium term coverage indicators are expected to be comfortable due to the low gearing at 0.71 times as on June 30, 1998. The liquidity position of the company is expected to be comfortable in the short-term on account of unutilised bank limits with reduced debtors, increased customer advances and decreasing working capital requirements on account of shift towards software services.

According to the Icra release, over the last two years, HCLI has developed software and support services business, which currently accounts for more than 15 per cent of its income. The company under its services businessoffers services like turnkey software development, systems integration, enterprise resource planning consultancy, software and services export.

"It is a relatively new player in the high margin and high growth software industry in India and overseas. The company is one of the national implementation partner for SAP, AG and authorised solution partner for Microsoft Co", the release says. It further adds that the HCLI has been involved in a number of software and systems integration projects in India for large government undertakings and multinationals. The software industry is expected to experience high growth rates in the medium term and HCLI is likely to leverage on its system integration and enterprise resource planning skills in the short term.