ANNUAL REPORT 2005-2006
The Members of
Hewlett-Packard GlobalSoft Limited
The Directors are pleased to present their Annual Report on the business
and operations of Hewlett-Packard GlobalSoft Limited (hereafter referred to
as 'Company') and the Financial Accounts for The Financial Year April 1,
2005 to March 31, 2006.
1.0 FINANCIAL HIGHLIGHTS:
Financial Year ended Financial Year ended
March 31, 2006 March 31, 2005
Rs. Mn. Rs. Mn.
Income from Operations 10,295 8,140
Other Income 166 99
Total Revenue 10,461 8,239
Profit Before Depreciation
and exceptional item 1,719 1,706
Less: Depreciation 561 454
Profit before Taxation 1,158 1,252
Provision for Tax 157 150
Profit After Taxes 1,001 1,102
Profit/(Loss) Brought forward 4,802 3,700
Profit available for
Appropriation 5,803 4,802
Less: Dividends on
Equity Shares - -
Tax on Dividend - -
Transfer to General Reserve - -
Profit carried to
Balance Sheet 5,803 4,802
2.0 RESULTS OF OPERATIONS:
2.1 Business Performance:
Total revenues for the year ended March 31, 2006 amounted to Rs.10,461 Mn,
as against Rs.8,239 Mn in year ended March 31, 2005.
Profit before taxes for the Financial Year 2005-06 was Rs.1,158 Mn as
against Rs.1,252 Mn in 2004-05. The Profit after Tax for the Financial Year
2005-06 was Rs.1,001 Mn as against Rs.1,102 Mn in 2004-05.
The Company is in a growth mode and is desirous of utilising its cash
surpluses for investing in the new facilities in Chennai and also for the
expansion and upgradation of its existing campus in Bangalore. Hence, the
Board has not recommended any dividend for the financial year 2005-06.
2.1.4 Business highlights during the year:
The year 2005-06 was a successful year for the Company as we experienced
growth on multiple fronts. Company plays a significant role in Hewlett-
Packard's (HP's) global delivery initiative and today is a flagship center
for HP's Global Service Delivery organisation .The company's high quality,
cost optimised software services has helped HP win global application
services contracts and is positioning HP as a credible and cost effective
offshore application services player.
Company experienced healthy growth in its business. There were significant
wins for HP with global customers resulting in a large inflow of fresh
projects for the Company. A significant part of the business growth also
came through work extensions from existing customers, highlighting their
satisfaction in our delivery.
Overall, Company's new customers were evenly spread across the globe, and
all service towers namely Application Services, Infrastructure Services,
and Global Solutions/Foundation Services have each registered healthy
progress. The trend seems to continue as the number of customer visits to
Company has gone up nearly 40% over the previous year.
During the year, the Company experienced severe cost pressures on account
of salary increases to its employees and fringe benefit tax imposed by the
Government of India. In addition, the Company has made significant
investments in training centers as part of its overall campus hiring
program. All these measures have had an impact on the Company's
profitability during the year.
Another highlight for Company was its expansion to a new center in Chennai.
The center commenced operations in June 2005 and will soon be moving into
its new facility 'Olympia Technology Park'. The center is now 500+ strong.
Several initiatives were undertaken to improve the efficiency of internal
processes like billing and resource management through the development and
deployment of in-house solutions/tools.
Significant investments were made for modernising the Electronics City
campus infrastructure. We have added capacity for including another 2000+
people across 5 new blocks. A state-of-the-art Learning Center is under
construction. Both the campus and our Surya Park facility in Electronics
City have been equipped with control centers for security, access control
In terms of headcount Company continued to scale up and hire, train,
transition and utilise the workforce efficiently. There were several
employee focused initiatives including the launch of various activity
clubs, employee newsletters and extended education programs aimed at
ensuring an all-round satisfactory work experience for employees.
4.0 THOUGHT LEADERSHIP:
Along with growth in business, Company continues to grow as a leader within
HP on service delivery processes. Company was successfully certified at SEI
CMMI level 5 and also received the BS7799 certification, which is the
world's most widely recognised security standard.
Company's IQMS (Integrated Quality Management System) has been adopted as
the new HP Global Method for Applications and has been translated and
implemented by regional centers. We have been mentoring various Centers and
providing guidance on achieving certification standards.
Company's contribution was pivotal in rolling-out the Centers of Excellence
(CoEs) for HP's Application Services. The CoEs are strategic thought
leadership engines that focus on innovation in IT technology, discipline
and Industry processes and leverage the Global Delivery resources to ensure
seamless delivery to customers.
Company continues to play a leading role at both the regional and global
levels of HP's technology landscape. It hosted the 3rd chapter of 'Techcon
India' in November; the event had unprecedented levels of international
participation and attendance for paper submissions as well as senior
Company's priorities for the next Financial Year are growth across all the
towers and this growth is expected to come from repeat business orders from
existing key accounts through better servicing and also through acquisition
of new customers.
As always excellence in delivery and rigorous adherence to processes remain
top priorities. To facilitate better customer management, Company is poised
to have a more efficient 'Early Alert' system that helps identify issues
and resolve escalations speedily. Plans to develop more efficient resource
management, disaster recovery and business continuity plans are also on the
While the Company will continue to focus on sharpening skills across
technologies, processes and project management, there are several new
efforts being made under the new 'Year of Excellence' initiative.
6.0 SOCIAL RESPONSIBILITY:
During the just concluded fiscal year, your Company continued initiating
and espousing various social and environmental causes in areas that
included primary education, healthcare, day care services and community
development. Donations of computers were made to various deserving schools
7.0 OUR MODEL OF GOVERNANCE:
Your Company continues to practice its unique governance model wherein the
focus is transparency and enhanced value for all stakeholders. The Company
has institutionalised Corporate Governance as a 'Way of Life' and has
believed in going beyond statutory compliance.
8.0 RESPONSIBILITY STATEMENT OF THE BOARD OF DIRECTORS:
As required under section 217(2AA) of the Companies (Amendment) Act, 2000,
the Directors confirm that to the best of their knowledge and on the basis
of representations provided by management and according to the explanations
given to them:
1. The financial statements are in conformity with the requirements of the
Companies Act, 1956 and the Generally Accepted Accounting Principles (GAAP)
in India. There are no material departures.
2. The Board of Directors have selected and adopted appropriate accounting
policies and the same have been applied consistently. The judgements and
estimates made are reasonable and prudent, so as to give a true and fair
view of the state of affairs of the company as at March 31, 2006 and of the
profit for the year ended on that date.
3. The Board has taken proper and sufficient care for the maintenance of
adequate accounting records in accordance with the provisions of the
Companies Act, 1956 for safeguarding the assets of the company and
detecting frauds and irregularities.
4. The Board of Directors have prepared the financial statements for the
financial year ended March 31, 2006, on a going-concern basis.
9.0 FIXED DEPOSITS:
The Company has not accepted deposits from the public during the period
10.0 SECTION 217(2A):
A statement providing the particulars of employee remuneration in
accordance with Section 217(2A) of the Companies Act, 1956, is attached
with this Report.
During the period under review, the following changes in the Directors of
the Company have taken place:
Ms. Marjorie Thomas, who retired by rotation in the AGM held on September
19, 2005 was re-appointed.
The Auditors, M/s S. R. Batliboi & Co, Chartered Accountants, retire at the
ensuing Annual General Meeting. They have confirmed their willingness to
accept office, if re-appointed.
The Directors thank the Company's customers, partners, suppliers, investors
and bankers for their continued support. The Directors also thank the
employees for their valuable contribution to the Company's growth.
Directors also place on record their deep gratitude and appreciation
towards the Government of India, the Government of Karnataka and all other
Government agencies for their continued support and encouragement.
Directors look forward to their continued support in the future as well.
For and on behalf of the Board
Thomas T. Thoppil
Bangalore Ganesh Murthy
June 14, 2006 (Alternate Director to
Annexure to Directors' Report FY 2005-06
Particulars as prescribed under sub section (1)(e) of section 217 of the
Companies Act, 1956, read with Companies (Disclosure of Particulars in the
Report of Board of Directors) Rules.
A. CONSERVATION OF ENERGY AND NATURAL RESOURCES
During the Financial year, company took major steps in the direction of
energy conservation and optimizing use of other natural resources.
A comprehensive Energy and Water audit was conducted by a consulting firm
at the various facilities of the Company. Company is in the process of
implementing the recommendations of the consultant and the same is
resulting in savings in energy. Lighting transformers and variable
frequency drives have been installed as a part of the initiative.
The company has worked towards putting in place an Environment Management
System and a core team working on this has made major progress during the
period. Feasibility study for rain water harvesting in the campus was
carried out and Company plans to implement rain water harvesting during the
current Financial Year.
Paper recycling and water treatment and reuse continued effectively. Over
40 tonnes of paper, wood and cardboard boxes have been recycled and reused
to make business cards, files and notepads.
B. TECHNOLOGY ABSORPTION:
1. Research and Development (R&D):
a) R&D initiatives:
To enhance its capability and customer service, the Company continues to
make significant and strategic investments in Research & Development. The
Technology Innovation and Leadership Group (TILL) continued to explore,
incubate, and market emerging technologies. There were also significant
enhancements to the archiving and EDI product lines that are engineered and
marketed out of the Company.
Besides exploring and incubating new technology areas, TILG has also been
focusing on establishing a key group of lead technologists and architects,
disseminating knowledge and facilitating thoughtful discussions in new
areas within the organisation, besides nurturing and retaining top
technology talent through evangelising technology career paths. TILG was
also instrumental in hosting the successful Technical Conference, 2005 at
Bangalore, which showcased the talents in Company.
Another development that has taken place over the past year is the ability
of the TILG to use its senior technologists to liase with the Labs of HP so
that a range of things from co-invention with the customers to consulting
on top margin assignments become possible.
b) Results of the R&D effort:
During the past financial year, some of the key areas pertaining to R&D
Microsoft .NET services - The .NET team has been developing new service
offerings in areas of enterprise custom application development and
application architectures and driving the .NET certification efforts across
the organisation. Current activities include solution development on the
team services platform of Microsoft which will be rolled out, bundled with
We also have our presence in Redmond which enables close and proactive
working with Microsoft.
Mobile Enterprise Services This team has been exploring various streams in
the context of mobile enabling an enterprise and has been concentrating on
working on top margin ideas from the Labs.
On the RFID related service initiatives the team is evaluating the scope of
leveraging Mobile Agents to form a backbone infrastructure for a loosely
coupled global supply chain integration solutions, IPv6 and its
ramifications on RFID & specific database adaptations.
Webservices/SOA - A special interest group to look at the issues and
challenges in the context of Service Oriented Architecture, has been formed
to come up concrete deliverables and recommendations. Efforts for adopting
SOA for internal enterprise agility is also on.
High performance computing - This team, having successfully delivered on an
feature-enhanced version of a simulator for an advanced graphic card along
with a live solution to pilot on top it, is now working on a few Labs
2. Plan of Action:
The Company will continue to invest in the latest technologies to suit
business needs in the marketplace and focus on training its employees in
the latest relevant technologies. We will continue to scan the environment
for emerging trends, invest in and incubate these technologies and roll
Them out as service offerings, through business units. Further, the focus
for the current year will be on nurturing new key areas in technologies
such as emergent mobility, security, massively parallel micro systems, rich
media, wireless sensors and architecture (SOA) as also a few vendor
As specific measures, technology community development and proactive
knowledge management are being given a big thrust.
Technology Career Path (TCP) as a viable career option is being promoted
extensively across the organization so that retention and grooming of young
technologists becomes a possibility.
3. EXPENDITURE ON RESEARCH AND DEVELOPMENT:
The Company invested Rs.12.4 Mn on Research and Development for the year
4. TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATION:
* The year had seen TILG and the Company at large, filing a significant
number of patents and also participation in patent disclosure vetting from
* During the year under review, the Company had significantly enhanced its
IT infrastructure and continued its focus on adoption of newer technologies
in line with the business growth experienced during the year.
* The number of white papers and knowledge briefs has also been on the
increase just our participation in a few international conferences and
* The reuse movement has been gaining momentum as also the mobilisation of
the communities of practice from across the organisation.
* All technology imported during the last five years has been absorbed in
C. FOREIGN EXCHANGE EARNINGS AND OUTGO:
Please refer to Schedule 17, Note 7 and 8 to the Balance Sheet, for details
of Expenditure and Earnings in foreign currency respectively.