HCL Infosystems

1.  Estimated value of contracts on capital account, excluding capital
 advances, remaining to be executed and not provided for amount to Rs
 1.46 Crores (2008-Rs.5.81 Crores).
 
 2.  Contingent Liabilities:
 
 a) Claims against the Company not acknowledged as debts:
 
                                            2009            2008
                                        Rs./Crores       Rs./Crores
 
 Sales Tax*                                21.19            8.64
 
 Excise*                                   10.86           14.87
 
 Income Tax*                                2.94            1.41
 
 Industrial Disputes, Civil Suits and 
 Consumer Disputes                          8.40            8.37
 
 * Includes sum of Rs. 5.21 Crores (2008 - Rs. 2.88 Crores) deposited by
 the Company against the above.
 
 The amounts shown in the item (a) represents the best possible
 estimates arrived at on the basis of available information.  The
 uncertainties and possible reimbursements are dependent on the out come
 of the different legal processes which have been initiated by the
 company or the claimants as the case may be and therefore cannot be
 predicted accurately.
 
 b) (i) Corporate Guarantee of Rs. 6.50 Crores (2008-Rs. 6.50 Crores)
 was given to a Bank for working capital facilities and Rs. 6.07 Crores
 (2008- Rs. Nil) was given to a non-banking finance company for
 operating lease sanctioned to a 100% subsidiary, HCL Infinet Limited
 (Formerly Microcomp Limited) against which the total amount utilised as
 at June 30, 2009 is Rs. 4.25 Crores and Rs. 6.07 Crores (2008- Rs. 2.25
 Crores) respectively.
 
 (ii) Corporate Guarantee of Rs. 5.00 Crores has been given to a Bank
 for working capital facilities sanctioned to a 100% subsidiary, HCL
 Security Limited against which the total amount utilised as at June 30,
 2009 is Rs. 0.99 Crores (2008 Rs. Nil).
 
 c) The Company has transferred Financial Assets (Lease Rental
 Recoverable) to a bank under a financing arrangement for which the
 balance outstanding with the bank as on June 30, 2009 is Rs. 21.12
 Crores (2008 – Rs. 30.55 Crores). The transfer of these Financial
 Assets is with recourse to the Company.
 
 3.  Taxation:
 
 a) Provision for taxation has been computed by applying the Income Tax
 Act, 1961 to the profit for the financial year ended June 30, 2009,
 although the actual tax liability of the Company has to be computed
 each year by reference to the taxable profit for each fiscal year ended
 March 31.
 
 4. Unaccrued forward exchange cover as on June 30, 2009 of Rs. 2.91
 Crores (2008- Rs.1.81 Crores) has been included under amounts
 recoverable in cash or in kind or for value to be received.
 
 5. Employee Stock Option Plan (ESOP)
 
 The Company has established Employee Stock Option Scheme 2000 and
 Employee Stock Based Compensation Plan 2005, for a total grant of
 31,90,200 and 33,35,487 options respectively to the employees of the
 Company and its subsidiaries. These options vest over a period of 42
 and 60 months respectively from the date of grant and are to be
 exercised with in a maximum period of 5 years from the date of vesting.
 
 The Board of Directors/Committee approves the grant of options,
 including the grant of options that lapse out of each grant.
 
 Each option of Rs.10/- confers on the employee a right to five equity
 shares of Rs.2/- each.
 
 Exercise Price is market price as specified in the Employee Stock
 Option Scheme and Employee Stock Purchase Scheme Guidelines, 1999
 issued by the Securities and Exchange Board of India (“SEBI”).
 
 6. Segment Reporting
 
 The Group recognises the following segments as its primary segments.
 
 a) The operations of Product and Related Services consists of sale of
 Computer Hardware and System Integration products and providing a
 comprehensive range of IT services including System Maintenance and
 Facility Management in different industries.
 
 b) The businesses of Telecom products, Office Automation and services
 consist of sale of telecommunication products, office equipment
 products and related services.
 
 Secondary segmental reporting is based on the geographical location of
 the customers. Details of secondary segments are not disclosed as more
 than 90% of the Company’s revenues results and assets relate to the
 domestic market.
 
 7. The Company has calculated the various benefits provided to
 employees as under:
 
 (a) Defined Contribution Plans
 
 (i) Provident Fund
 
 (ii) Superannuation Fund
 
 8. (a) The Scheme of Amalgamation (“Scheme”) for merging the wholly
 owned subsidiary Natural Technologies Private Limited (NTPL) with the
 Company under sections 391 to 394 of the Companies Act, 1956 sanctioned
 by Hon’ble High Courts of Delhi and Rajasthan vide their respective
 orders dated August 11, 2008 and May 29, 2009 has come into effect on
 July 6, 2009 from the appointed date of July 1, 2008. On the scheme
 becoming effective NTPL stands dissolved without winding up.
 
 8. (b) The Scheme of Amalgamation (“Scheme”) for merging the wholly
 owned subsidiary Stelmac Engineering Private Limited (Stelmac) with 
 the company under sections 391 to 394 of the Companies Act, 1956 
 sanctioned by Hon’ble High Court of Delhi vide order dated December 
 07, 2007 was concluded in the previous year. The amalgamation of 
 erstwhile Stelmac with the Company was accounted for under the 
 ‘pooling of interest method’ in the manner specified in the Scheme 
 and complies with the Accounting Standard notified u/s 211(3C)
 of the Companies Act,1956.The accounts of the Company for the year
 ended June 30, 2008 included the results of said business which did not
 have any material impact on the profit for that year and net assets as
 at that balance sheet date.
 
 9. Pursuant to the approval given by the Board of Directors, the
 “Committee of Directors (Securities)” at the meeting held on August 14,
 2009 approved -
 
 a) Issuance of Convertible Warrants not exceeding Rs 322 crores,
 including premium to the promoters of the Company.
 
 b) Issuance in the form of Equity shares or Equity linked securities in
 the domestic and /or international offerings and/ or Qualified
 Institutional Placements for a value not exceeding Rs 500 crores,
 including premium.
 
 c) An Extra - ordinary General Meeting is scheduled to be held on
 September 23, 2009 for taking the shareholders approval for the same.
 
 10. During the year, the Company has incorporated HCL Infocom Limited
 as a wholly owned subsidiary. HCL Infocom Limited holds 49% of the
 equity share capital of Scout Mobile Internet Services Limited, a Joint
 Venture with Nokia Corporation, Finland.
 
 11. Disclosure of related parties and related party transactions.
 
 a) Company having substantial interest:
 
 HCL Corporation Ltd due to substantial interest in the voting power
 
 b) List of Parties where control exists/existed: Wholly owned
 Subsidiaries:
 
 HCL Infinet Limited (Formerly known as Microcomp Limited)
 
 HCL Infocom Limited (Refer Note 25)
 
 HCL Security Limited
 
 Natural Technologies Private Limited (Refer Note 23)
 
 c) Other related parties with whom transactions have taken place during
 the year and/or where balances exist:
 
 HCL Technologies Limited
 
 HCL Comnet Limited
 
 HCL Comnet Systems and Services Limited
 
 HCL Peripherals Limited
 
 HCL BPO Services (NI) Limited
 
 Others (where significant influence exist):
 
 SSN College of Engineering
 
 Shri Sivasubramaniya Nadar Educational and Charitable Trust
 
 Key Management Personnel
 
 Mr. Ajai Chowdhry Mr. J. V. Ramamurthy Mr. Sandeep Kanwar Mr. C.S.
 Dwivedi Mr. George Paul Mr. Hari Baskaran Mr. Rajeev Asija Mr. Rajendra
 Kumar Mr. Rakesh Mehta1 Mr. S.R. Bisht Mr. Suman Ghose Hazra Mr. Sushil
 Kumar Jain Mr. Vivek Punekar
 
 d) Summary of Related Party disclosures
 
 Note: All transactions with related parties have been entered into in
 the normal course of business.  1Resigned w.e.f June 30, 2008
 
 12.  Pursuant to notification u/s 211(3C) of the Companies Act, 1956
 issued by the Ministry of Corporate Affairs on March 31, 2009, the
 Company has opted to accumulate the exchange difference arising on
 translation of foreign currency items having a term of 12 months or
 more and amortize such exchange difference over the useful life of the
 item.  Accordingly, the profit before tax for the year ended June 30,
 2009 is lower by Rs.0.12 Crores on account of above mentioned exchange
 difference, which will be amortised in future period(s) but not beyond
 March 31, 2011.
 
 13.  i) An amount of Rs. 0.23 Crores (2008- Rs. 0.05 Crores), being
 profit on sale of fixed assets has been adjusted against the loss on
 sale of fixed assets.
 
 ii) The Profit/ loss on account of foreign exchange fluctuations and on
 disposal of current investments are disclosed after deducting or adding
 related loss or profit, as the case may be, on similar transactions.
 
 iii) Advertisement, Publicity & Entertainment expenses, wherever on
 sharing basis, are shown at amounts borne by the company.
 
 14.  The company remits the dividends to its non resident shareholders
 in Indian Rupees.
 
 15.  Previous year’s figures have been regrouped / recasted, where
 necessary, to confirm to current year’s presentation.