HCL Infosystems

The Company has its website namely www.hclinfosystems.in. This provides
 detailed information about the Company, its products and services
 offered, locations of its corporate office and various sales offices
 etc. It also contains updated information of the financial performance
 of the Company and procedures involved in completing various investors’
 related transactions expeditiously. The quarterly results, annual
 reports and shareholding distributions etc. are updated on the website
 of the company from time to time.
 
 1.  Wehave audited the attached Balance Sheet of HCL Infosystems
 Limited, as at June 30, 2009, and the related Profit and Loss Account
 and Cash Flow Statement for the year ended on that date annexed
 thereto, which we have signed under reference to this report. These
 financial statements are the responsibility of the company’s
 management. Our responsibility is to express an opinion on these
 financial statements based on our audit.
 
 2.  We conducted our audit in accordance with the auditing standards
 generally accepted in India. Those Standards require that we plan and
 perform the audit to obtain reasonable assurance about whether the
 financial statements are free of material misstatement. An audit
 includes examining, on a test basis, evidence supporting the amounts
 and disclosures in the financial statements. An audit also includes
 assessing the accounting principles used and significant estimates made
 by management, as well as evaluating the overall financial statement
 presentation. We believe that our audit provides a reasonable basis for
 our opinion.
 
 3.  As required by the Companies (Auditor’s Report) Order, 2003, as
 amended by the Companies (Auditor’s Report) (Amendment) Order, 2004,
 issued by the Central Government of India in terms of sub-section (4A)
 of Section 227 of ‘The Companies Act, 1956’ of India (the ‘Act’) and on
 the basis of such checks of the books and records of the company as we
 considered appropriate and according to the information and
 explanations given to us, we give in the Annexure a statement on the
 matters specified in paragraphs 4 and 5 of the said Order.
 
 4.  Further to our comments in the Annexure referred to in paragraph 3
 above, we report that:
 
 (a) We have obtained all the information and explanations, which to the
 best of our knowledge and belief were necessary for the purposes of our
 audit;
 
 (b) In our opinion, proper books of account as required by law have
 been kept by the company so far as appears from our examination of
 those books;
 
 (c) The Balance Sheet, Profit and Loss Account and Cash Flow Statement
 dealt with by this report are in agreement with the books of account;
 
 (d) In our opinion, the Balance Sheet, Profit and Loss Account and Cash
 Flow Statement dealt with by this report comply with the accounting
 standards referred to in sub-section (3C) of Section 211 of the Act;
 
 (e) On the basis of written representations received from the
 directors, as on June 30, 2009 and taken on record by the Board of
 Directors, none of the directors is disqualified as on June 30, 2009
 from being appointed as a director in terms of clause (g) of
 sub-section (1) of Section 274 of the Act;
 
 (f) In our opinion and to the best of our information and according to
 the explanations given to us, the said financial statements together
 with the notes thereon and attached thereto give in the prescribed
 manner the information required by the Act and give a true and fair
 view in conformity with the accounting principles generally accepted in
 India:
 
 (i) in the case of the Balance Sheet, of the state of affairs of the
 company as at June 30, 2009;
 
 (ii) in the case of the Profit and Loss Account, of the profit for the
 year ended on that date; and
 
 (iii) in the case of the Cash Flow Statement, of the cash flows for the
 year ended on that date.
 
 ANNEXURE TO AUDITORS’ REPORT
 
 [Referred to in paragraph 3 of the Auditors’ Report of even date to the
 members of HCL Infosystems Limited on the financial statements for the
 year ended June 30, 2009]
 
 1.  (a) The company is maintaining proper records showing full
 particulars including quantitative details and situation of fixed
 assets.
 
 (b) The fixed assets are physically verified by the management
 according to a phased programme designed to cover all the items over a
 period of three years, which in our opinion, is reasonable having
 regard to the size of the company and the nature of its assets.
 Pursuant to the programme, a portion of the fixed assets has been
 physically verified by the management during the year and no material
 discrepancies between the book records and the physical inventory have
 been noticed.
 
 (c) In our opinion and according to the information and explanations
 given to us, a substantial part of fixed assets has not been disposed
 of by the company during the year.
 
 2.  (a) The inventory (excluding stocks with third parties) has been
 physically verified by the management during the year. In respect of
 inventory lying with third parties, these have substantially been
 confirmed by them. In our opinion, the frequency of verification is
 reasonable.
 
 (b) In our opinion, the procedures of physical verification of
 inventory followed by the management are reasonable and adequate in
 relation to the size of the company and the nature of its business.
 
 (c) On the basis of our examination of the inventory records, in our
 opinion, the company is maintaining proper records of inventory. The
 discrepancies noticed on physical verification of inventory as compared
 to book records were not material.
 
 3.  The company has not taken or granted any loans, secured or
 unsecured, from / to companies, firms or other parties covered in the
 register maintained under Section 301 of the Act.
 
 4.  In our opinion and according to the information and explanations
 given to us, having regard to the explanation that certain items
 purchased are of special nature for which suitable alternative sources
 do not exist for obtaining comparative quotations, there is an adequate
 internal control system commensurate with the size of the company and
 the nature of its business for the purchase of inventory, fixed assets
 and for the sale of goods and services. Further, on the basis of our
 examination of the books and records of the company, and according to
 the information and explanations given to us, we have neither come
 across nor have been informed of any continuing failure to correct
 major weaknesses in the aforesaid internal control system.
 
 5.  (a) In our opinion and according to the information and
 explanations given to us, the particulars of contracts or arrangements
 referred to in Section 301 of the Act have been entered in the register
 required to be maintained under that section.
 
 (b) In our opinion and according to the information and explanations
 given to us, the transactions made in pursuance of such contracts or
 arrangements and exceeding the value of Rupees Five Lakhs in respect of
 any party during the year have been made at prices which are reasonable
 having regard to the prevailing market prices at the relevant time.
 
 6.  In our opinion and according to the information and explanations
 given to us, the company has complied with the provisions of Sections
 58A and 58AA or any other relevant provisions of the Act and the
 Companies (Acceptance of Deposits) Rules, 1975 with regard to the
 deposits accepted from the public. According to the information and
 explanations given to us, no Order has been passed by the Company Law
 Board or National Company Law Tribunal or Reserve Bank of India or any
 Court or any other Tribunal on the company in respect of the aforesaid
 deposits.
 
 7.  In our opinion, the company has an internal audit system
 commensurate with its size and nature of its business.
 
 8.  We have broadly reviewed the books of account maintained by the
 company in respect of products where, pursuant to the Rules made by the
 Central Government of India, the maintenance of cost records has been
 prescribed under clause
 
 (d) of sub-section (1) of Section 209 of the Act and are of the opinion
 that prima facie, the prescribed accounts and records have been made
 and maintained. We have not, however, made a detailed examination of
 the records with a view to determine whether they are accurate or
 complete.
 
 9.  (a) According to the information and explanations given to us and
 the records of the company examined by us, in our
 
 opinion, the company is generally regular in depositing the undisputed
 statutory dues including provident fund, investor education and
 protection fund, employees’ state insurance, income-tax, sales-tax,
 wealth tax, service tax, customs duty, excise duty, cess and other
 material statutory dues as applicable with the appropriate authorities.
 
 (b) According to the information and explanations given to us and the
 records of the company examined by us, there are no dues of wealth tax,
 service tax and custom duty and cess as at June 30, 2009 which have not
 been deposited on account of dispute except for sales tax, income tax
 and excise duty as mentioned below :
 
 Name of the statute      Amount          Amount       Period to
 (Nature of Dues)     (Rs./ Crores)      deposited     which the
                                      under protest   amount relates
                                      (Rs./ Crores)
 
 U.P. Trade Tax 
 Act, 1948             13.07              3.50         1998 to 2008
 (Sales Tax including 
 Penalty)
 
 U.P. Value Added Tax 
 Act, 2008              0.14              0.13         2008 to 2009
 (Commercial Tax 
 including Penalty)
 
 Delhi Sales Tax 
 Act, 1975              1.02              0.03         1999 to 2005
 Delhi Value Added 
 Tax Act,               0.17               -           2005-2006
 2004 (Trade Tax)
 
 Tamil Nadu General 
 Sales Tax              0.68              0.14         1998 to 2005
 Act, 1959 (Sales 
 Tax)
 
 West Bengal Sales      0.02                -          2000 to 2006
 Tax Act, 1994 
 (Sales Tax)
 
 Assam General 
 Sales Tax, 1993        0.05              0.01         2001 to 2004
 (Sales Tax)
 
 Rajasthan Sales 
 Tax Act, 1994          0.06              0.01         1998 to 2004
 (Sales Tax)
 
 Rajasthan Value 
 Added Tax              0.17               -           2006 to 2008
 Act, 2003 
 (Commercial Tax)
 
 Kerala General Sales 
 Tax Act,               0.39              0.15         2000 to 2002
 1963 (Sales Tax)
 
 Maharashtra Sales 
 Tax Act,               0.01              0.01         2003-2004
 1969 (Sales Tax)
 
 Himachal Pradesh 
 Value Added            0.08              0.08         2006-2007
 Tax Act, 2005
 (Sales Tax including 
 Penalty)
 
 Karnataka Value Added  0.47                -          2006-2007
 
 Tax Act, 2003 
 (Sales Tax)
 
 Andhra Pradesh Value 
 Added                  0.91                -          2006 to 2008
 Tax Act, 2005 
 (Sales Tax)
 
 Punjab General 
 Sales Tax              0.06                -          2004-2005
 Act, 1948
 (Sales Tax including 
 Penalty)
 
 Punjab Value Added     0.44               0.11        2007-2008
 Tax Act, 2005
 (Sales Tax including 
 Penalty)
 
 Jammu and Kashmir 
 Value                  2.75               0.08        2007 to 2009
 Added tax Act, 2005
 (Sales Tax including Penalty)
 
 Uttarakhand Value 
 Added Tax              0.70               1.00        2007 to 2009
 Act, 2005
 (Sales Tax including 
 Penalty)
 
 Sub Total (a)         21.19               5.25
 
 
 
 
 
 Name of the statute 
 (Nature of Dues)                   Forum where the
                                    dispute is pending
 
 U.P. Trade Tax Act, 1948         Joint Commissioner (Appeals)
 (Sales Tax including Penalty)    of Commercial Tax/
                                  Commercial Tax Tribunal/
                                  High Court/Additional
                                  Commissioner (Appeals) of
                                  Commercial Tax
 
 U.P. Value Added Tax Act, 2008   Joint Commissioner (Appeals)
 (Commercial Tax including 
 Penalty)                         of Commercial Tax
 
 Delhi Sales Tax Act, 1975        Additional Commissioner of Sales
                                    Tax/
                                  Deputy Commissioner (Appeals) of
                                  Sales Tax
 
 Delhi Value Added Tax Act,       Deputy Commissioner (Appeals)
 2004 (Trade Tax)                 of Sales Tax
 
 Tamil Nadu General Sales Tax     Tribunal Commercial Tax/
 Act, 1959 (Sales Tax)            Commercial Tax Officer/ 
 
                                  Assistant Appellate Commissioner/
                                  Commercial Tax Officer
 
 West Bengal Sales                Joint Commissionner (Appeals)
 Tax Act, 1994 (Sales Tax)        of Sales Tax
 
 Assam General Sales Tax, 1993    Superintendent, Sales Tax
 (Sales Tax)                      
 
 Rajasthan Sales Tax Act, 1994    Deputy Commissioner (Appeals)
 (Sales Tax)                      of Commercial Tax
 
 Rajasthan Value Added Tax        Deputy Commissioner of
 Act, 2003 (Commercial Tax)       Commercial Tax
 
 Kerala General Sales Tax Act,    Deputy Commissioner (Appeals)
                                  of Sales Tax
 1963 (Sales Tax)                 
 
 Maharashtra Sales Tax Act,       Deputy Commissioner (Appeals)
 1969 (Sales Tax)                 of Sales Tax
 
 
 Himachal Pradesh Value Added     Additional Commissioner of Sales
 Tax Act, 2005                    Tax
 (Sales Tax including Penalty)
        
 Karnataka Value Added            Assessing Officer
 Tax Act, 2003 (Sales Tax)
 
 Andhra Pradesh Value Added
 Tax Act, 2005 (Sales Tax)        Commissioner Appeals
 
 
 Punjab General Sales Tax         Deputy Commissioner Appeals
 Act, 1948
 (Sales Tax including Penalty)
 
 Punjab Value Added                Deputy Commissioner Appeals
 Tax Act, 2005
 (Sales Tax including Penalty)
 
 Jammu and Kashmir Value
 Added tax Act, 2005
 (Sales Tax including Penalty)     Deputy Commissioner Appeals
 
 Uttarakhand Value Added Tax
 Act, 2005
 (Sales Tax including Penalty)     Joint Commissioner of
                                   Commercial Tax
 Sub Total (a)
 
 Name of the statute     Amount      Amount      Period to
 (Nature of Dues)   (Rs./ Crores)  deposited     which the
                     under protest amount relates
                     (Rs./ Crores)
 
 Central Excise 
 Act, 1944              10.86         0.85      1980 to 2008
 (Excise Duty, 
 Interest including
 Penalty)
 
 Sub Total (b)          10.86         0.85
 
 Income Tax Act, 1961    2.94         0.16      1989 to 2007
 (Income Tax)
 Sub Total (c)           2.94         0.16
 
 Total (a)+(b)+(c)      34.99         6.26
 
 
 
 
 Name of the statute         
 (Nature of Dues)            Forum where the
                             dispute is pending
 
 Central Excise Act, 1944     CESTAT/
 (Excise Duty, Interest 
 including                   Commissioner (Appeals)
 Penalty)
 
 Sub Total (b)
 
 Income Tax Act, 1961        Commissioner Appeals/ High Court
 (Income Tax)
 
 Sub Total (c)
 
 Total (a)+(b)+(c)
 
 For detailed listing refer Note 26 on Schedule 21.
 
 10.  The company has no accumulated losses as at June 30, 2009 and it
 has not incurred any cash losses in the financial year ended on that
 date or in the immediately preceding financial year.
 
 11.  According to the records of the company examined by us and the
 information and explanation given to us, the company has not defaulted
 in repayment of dues to any financial institution or bank or debenture
 holders as at the balance sheet date.
 
 12.  The company has not granted any loans and advances on the basis of
 security by way of pledge of shares, debentures and other securities.
 
 13.  The provisions of any special statute applicable to chit fund /
 nidhi / mutual benefit fund/societies are not applicable to the
 company.
 
 14.  In our opinion, the company is not a dealer or trader in shares,
 securities, debentures and other investments.
 
 15.  In our opinion and according to the information and explanations
 given to us, the terms and conditions of the guarantees given by the
 company, for loans taken by others from banks or financial institutions
 during the year, are not prejudicial to the interest of the company.
 
 16.  In our opinion, and according to the information and explanations
 given to us, on an overall basis, the term loans have been applied for
 the purposes for which they were obtained.
 
 17.  On the basis of an overall examination of the balance sheet of the
 company, in our opinion and according to the information and
 explanations given to us, there are no funds raised on a short-term
 basis which have been used for long-term investment.
 
 18.  The company has not made any preferential allotment of shares to
 parties and companies covered in the register maintained under Section
 301 of the Act during the year.
 
 19.  The company has created security or charge in respect of
 debentures issued and outstanding at the year-end.
 
 20.  The company has not raised any money by public issues during the
 year.
 
 21.  During the course of our examination of the books and records of
 the company, carried out in accordance with the generally accepted
 auditing practices in India, and according to the information and
 explanations given to us, we have neither come across any instance of
 fraud on or by the company, noticed or reported during the year, nor
 have we been informed of such case by the management.
 
 V.Nijhawan 
 Partner
 
 Membership Number F - 87228
                                         For and on behalf of
 Place: New Delhi                            Price Waterhouse
 
 Date: September 8, 2009                Chartered Accountants