HCL Infosystems books Rs 13.17 crore NCD interest cost

HCL Infosystems Limited booked Rs 13.17 crore of finance cost in the six months ended September 30, 2026 on Rs 355 crore of promoter-group non-convertible debentures, using an 8% effective interest rate despite their 0.001% annual coupon. The NCDs are reported as current liabilities because the holder can demand repayment early.

Why did HCL Infosystems book Rs 13.17 crore of NCD interest?

HCL Infosystems booked Rs 13.17 crore because it subsequently measures the NCDs at amortised cost through the effective interest rate, or EIR, method, rather than using only their stated 0.001% coupon. The company disclosed an 8% annual EIR on NCDs issued during the financial year ended March 31, 2026 to HCL Capital Private Limited, a promoter-group related party.

The NCD-related expense was Rs 6.62 crore in the quarter ended September 30, 2026 and Rs 6.55 crore in the preceding June 2026 quarter. This compares with no such expense in the September 2025 quarter, before the NCD issue. Standalone finance cost for the six months ended September 30, 2026 was also Rs 13.17 crore, compared with Rs 2 lakh in the corresponding prior-year period.

The accounting charge represents the amortisation of the initial fair-value discount on the borrowing. HCL Infosystems’ cash-flow statement recorded finance cost paid at less than Rs 1 lakh for the six months ended September 30, 2026, while its financing-liability reconciliation recorded Rs 13.17 crore of non-cash amortisation on the NCD fair value.

What are the terms of HCL Infosystems’ NCDs from HCL Capital?

HCL Infosystems issued 35,50,000 unlisted, unsecured and redeemable NCDs with a face value of Rs 1,000 each, aggregating Rs 355 crore, to HCL Capital. The instruments have a 10-year contractual tenure and a 0.001% annual coupon, according to the company’s September 2026 standalone-results note.

The agreement gives HCL Capital the option to demand repayment after 12 months and five days from the pay-in date. HCL Infosystems also has an option to redeem the NCDs after that point. These rights are separate from the stated 10-year maturity and determine the balance-sheet classification at September 30, 2026.

At issue, HCL Infosystems used a market-based discount rate to measure the borrowing at fair value. The Rs 26.64 crore difference between the transaction proceeds and fair value was recorded as an equity contribution in the year ended March 31, 2026 because HCL Capital is a promoter-group company. The discounted initial carrying value is then increased over time by applying the 8% EIR.

Why are HCL Infosystems’ 10-year NCDs current liabilities?

HCL Infosystems classifies the NCDs as current liabilities because HCL Capital can contractually seek repayment after 12 months and five days from the pay-in date. The company explicitly said this classification applies although the NCDs have a 10-year contractual maturity.

Standalone borrowings within current financial liabilities were Rs 346.16 crore at September 30, 2026, compared with Rs 332.99 crore at March 31, 2026. The Rs 13.17 crore increase equals the NCD fair-value amortisation reported for the six-month period, as no NCD proceeds, related-party loan proceeds or related-party loan repayments were reported in that period.

The current classification sits within a wider funding position disclosed for September 30, 2026. HCL Infosystems’ current liabilities exceeded current assets by Rs 460.16 crore, compared with Rs 455.10 crore on March 31, 2026. The statutory auditor drew attention to that deficit, continued losses and fully eroded net worth as conditions creating material uncertainty over going concern, while leaving its review conclusion unmodified.

How does promoter support affect HCL Infosystems’ going-concern plan?

HCL Infosystems’ management and board said they reasonably expect the company to realise assets and meet contractual obligations as they fall due, based on promoter-group support and expected recovery of outstanding receivables. On that basis, the September 2026 standalone results were prepared on a going-concern basis despite a Rs 31.57 crore net loss for the six months ended September 30, 2026.

HCL Corporation Private Limited, described as a significant promoter shareholder, had approved support of up to Rs 500 crore. HCL Infosystems disclosed Rs 119.60 crore as utilised at September 30, 2026, unchanged from March 31, 2026. Shareholders approved this arrangement on September 16, 2026, covering possible loans, inter-corporate deposits, advances, NCDs, guarantees, security and fixed-deposit liens.

HCL Capital had separately approved support of up to Rs 1,500 crore, of which Rs 464.01 crore was utilised at September 30, 2026, up from Rs 355 crore on March 31, 2026. The Rs 355 crore NCD issue is part of this related-party support framework. The disclosed support forms are not confined to debentures and can include guarantees, loans and other funding arrangements.

What else drove HCL Infosystems’ first-half loss?

HCL Infosystems reported a standalone net loss of Rs 31.57 crore for the six months ended September 30, 2026, against a Rs 10.49 crore loss in the corresponding 2025 period. Finance cost increased to Rs 13.17 crore from Rs 2 lakh, while exceptional losses totalled Rs 13.72 crore, including a Rs 13.71 crore provision for loss in HCL Infotech Limited.

The company attributed continuing losses to delayed receipts on certain system-integration contracts, historical low-margin contracts, litigation and associated costs. HCL Infosystems said contracts transferred to HCL Infotech in 2013 include some with remaining terms up to 2031, creating what it described as a constructive obligation to provide operational and financial support.

HCL Infosystems has initiated arbitration proceedings against several customers to recover receivables from transferred contracts. Separately, the company received a final arbitration award related to a Unique Identification Authority of India contract worth Rs 102.81 crore, including Rs 33.79 crore of interest, in the year ended March 31, 2026. It has not recognised the award because the parties have challenged it before the Delhi High Court.

Conclusion

HCL Infosystems’ Rs 13.17 crore first-half finance cost reflects fair-value accounting and the 8% EIR on a Rs 355 crore promoter-group NCD issue, rather than the 0.001% stated coupon alone. The same accounting treatment increased standalone borrowings to Rs 346.16 crore at September 30, 2026, and the repayment right held by HCL Capital places the instruments within current liabilities.

The next results should show whether EIR amortisation continues at a similar pace, whether either party exercises its repayment or redemption option, and how much of the Rs 500 crore HCL Corporation and Rs 1,500 crore HCL Capital support limits is used. Progress in customer-receivable arbitration, including the unresolved UIDAI award challenge, also remains relevant to management’s stated going-concern plan.