HCL Technologies Directors Report, HCL Tech Reports by Directors
HCL Technologies
BSE: 532281|NSE: HCLTECH|ISIN: INE860A01027|SECTOR: Computers - Software
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Directors Report Year End : Jun '14    « Jun 13
Dear Shareholders,
 The Directors have immense pleasure in presenting this Twenty Second
 Annual Report together with the Audited Accounts for the year ended
 June 30, 2014.
 The financial results of your Company prepared for the financial year
 ended June 30, 2014 are summarized as under:
                                                        (Rs. in crores)
                                                    2014           2013
 Total Income                                  32,821.06      25,932.17
 Total Expenditure                             24,903.73      20,662.28
 Profit before tax                              7,917.33       5,269.89
 Provision for tax                            (1,409.57)     (1,225.31)
 Share of profit (loss) of associates              20.06         (0.21)
 Share of profit of minority interest            (18.31)         (4.28)
 Impact of scheme of amalgamation relating 
 to earlier period                                     -              - 
 Profit for the period                          6,509.51       4,040.09
 Balance in Statement of Profit and Loss 
 brought forward                                8,305.19       5,390.28
 Transfer from debenture redemption 
 reserve due to redemption of debentures               -         330.00
 Surplus acquired under the scheme of 
 amalgamation                                          -              -
 Amount available for appropriation            14,814.70       9,760.37
 Dividend and Corporate dividend tax              813.66         975.18
 Transfer to general reserve                      600.00         380.00
 Transfer to debenture redemption reserve         100.00         100.00
 Balance carried forward to the 
 balance sheet                                 13,301.04       8,305.19
                                                        (Rs. in crores)
                                                    2014           2013
 Total Income                                  17,156.49      12,896.66
 Total Expenditure                              9,758.83       8,445.46
 Profit before tax                              7,397.66       4,451.20
 Provision for tax                            (1,413.04)       (840.02)
 Share of profit (loss) of associates                  -              -
 Share of profit of minority interest                  -              -
 Impact of scheme of amalgamation relating 
 to earlier period                                     -          93.54
 Profit for the period                          5,984.62       3,704.72
 Balance in Statement of Profit and Loss 
 brought forward                                6,597.12       3,185.77
 Transfer from debenture redemption 
 reserve due to redemption of debentures               -         330.00
 Surplus acquired under the scheme of 
 amalgamation                                          -         831.81
 Amount available for appropriation            12,581.74       8,052.30
 Dividend and Corporate dividend tax              813.66         975.18
 Transfer to general reserve                      600.00         380.00
 Transfer to debenture redemption reserve         100.00         100.00
 Balance carried forward to the 
 balance sheet                                 11,068.08       6,597.12
 On a standalone basis, the Company achieved revenue of Rs. 17,156.49
 crores in the financial year 2013-14 as compared to Rs. 12,896.66
 crores in the financial year 2012-13 registering a growth of 33.03% and
 the profit for the financial year 2013-14 is Rs. 5,984.62 crores in
 comparison to Rs. 3,704.72 crores in financial year 2012-13 registering
 a growth of 61.54%.
 On a consolidated basis, the Company achieved revenue of Rs. 32,821.06
 crores in the financial year 2013-14 as compared to Rs. 25,932.17
 crores in the financial year 2012-13 registering a growth of 26.57% and
 the profit for the financial year 2013-14 is Rs. 6,509.51 crores in
 comparison to Rs. 4,040.09 crores in financial year 2012-13 registering
 a growth of 61.12%.
 During the year under review, your directors had declared and paid
 three interim dividends as per the details given hereunder:
 Sl.   Interim dividend paid during   Rate of dividend     Amount of  
 No.   the year ended June 30, 2014   per share          dividend paid 
                                      (face value of
                                      Rs. 2 each)                   
 1.       1st Interim Dividend          Rs. 2                139.66
 2.       2nd Interim Dividend          Rs. 4                279.63
 3.       3rd Interim Dividend          Rs. 4                279.79
 Sl.   Interim dividend paid during   Dividend Distribution      Total 
 No.   the year ended June 30, 2014     tax paid by the         Outflow
                                         (Rs. in crores)
 1.       1st Interim Dividend                23.73              163.39
 2.       2nd Interim Dividend                41.92              321.55
 3.       3rd Interim Dividend                47.55              327.34
 The total amount of dividend paid for the year ended June 30, 2014 was
 Rs. 699.08 crores. Dividend distribution tax paid by the Company for
 the year amounted to Rs. 113.2 crores.
 The Board of Directors in its meeting held on July 29-31, 2014 has
 declared an interim dividend of Rs. 12 per equity share of face value
 of Rs. 2 each for the financial year 2014-15.The Directors did not
 recommend final dividend for the year ended June 30, 2014.
 For the year ended June 30, 2014, on a standalone basis, your Company
 has transferred Rs. 600 crores to the General Reserve Account. An
 amount of Rs. 100 crores have been transferred to the Debenture
 Redemption Reserve Account. As on June 30, 2014, the balance available
 in the Debenture Redemption Reserve Account was Rs. 500 crores for
 redemption of the outstanding debentures repayable on September 10,
 During the year under review, the Company has incorporated the
 following step down subsidiaries:-
 Sl.   Name of the Subsidiary                    Place of Incorporation
 1.    HCL Technologies UK Limited                  United Kingdom
 2.    HCL Technologies B.V.                        Netherlands
 3.    HCL Technologies Germany GmbH                Germany
 4.    HCL (Ireland) Information Systems 
       Limited                                      Ireland
 5.    HCL Technologies Belgium BVBA                Belgium
 6.    HCL Technologies Sweden AB                   Sweden
 7.    HCL Technologies Finland Oy.                 Finland
 The Company has a Joint Venture namely State Street HCL Holdings (UK)
 Limited with State Street International Holdings, USA in which the
 Company holds 49%. The JV entity has formed a subsidiary named Street
 HCL Services (Philippines) Inc. in Philippines during the year.
 The Company has 62 subsidiaries as on June 30, 2014. There has been no
 material change in the nature of the business of the subsidiaries.
 Pursuant to the circular no. 2/2011 dated February 8, 2011 issued by
 the Ministry of Corporate Affairs, a general exemption has been granted
 to the companies from annexing the individual accounts of all the
 subsidiaries along with the audited financial statements of the Company
 while publishing the Annual Report subject to certain conditions as
 mentioned in the said circular.  Your Company meets all the conditions
 stated in the aforesaid circular and therefore the standalone financial
 statements of each subsidiary are not annexed with the Annual Report
 for the year ended June 30, 2014.
 The audited consolidated financial statements of the Company and its
 subsidiaries are attached in the Annual Report. A statement containing
 brief financial details of all the subsidiaries of the Company for the
 year ended June 30, 2014 forms part of the Annual Report.
 The Company would provide the annual accounts of the subsidiaries and
 the related detailed information to the shareholders of the Company on
 specific request made to it in this regard by the shareholders.
 Issue of shares under Employees Stock Option Plans
 During the year ended June 30, 2014, the Company allotted 31,06,524
 equity shares of Rs. 2 each fully paid up under its Employees Stock
 Option Plans. This constitutes 0.44% of the total paid up share capital
 of the Company as on June 30, 2014. As a result of this, the issued,
 subscribed and paid-up share capital of the Company has increased from
 Rs. 139,37,39,714 to Rs. 139,99,52,762 during the year ended June 30,
 During the financial year ended June 30, 2014, the Company has not
 redeemed any debentures.The details of the debentures issued, redeemed
 and outstanding are given hereunder:
 Date of         Amount         Coupon Rate      Maturity      Redeemed
 Issue      (Rs. in crores)     (Payable           Date           on
 August                                          August         August
 25, 2009         170             7.55%         25, 2011       25, 2011
 August                                          August         August
 25, 2009         330             8.20%         25, 2012       25, 2012
 September                                      September
 10, 2009         500             8.80%         10, 2014           -
 A debenture trust deed in favor of IDBI Trusteeship Services Limited
 for the aforesaid issues was executed. The debentures are secured by
 way of mortgage(s) and / or charges on the specific movable / immovable
 properties of the Company whether existing / future. The said
 debentures have been listed on Wholesale Debt Segment of the National
 Stock Exchange of India Limited. The Company has paid the interest due
 on the aforesaid debentures on time and nothing is payable as on date.
 As per clause 49 of the Listing Agreement entered into with the Stock
 Exchanges, Corporate Governance Report titled ''Corporate Governance
 Report 2013-14'' alongwith the Statutory Auditor''s certificate thereon
 and Management''s Discussion and Analysis are attached and form part of
 this Report.
 The Securities and Exchange Board of India (SEBI) vide its circular
 dated August 13, 2012 has mandated inclusion of Business Responsibility
 Report (BRR) as part of the Annual Report for top 100 listed
 companies. Pursuant to these provisions if a listed Company publishes
 the sustainability report based on internationally accepted reporting
 framework along with a mapping of the BRR as stated in the SEBI
 Circular, it would be treated as sufficient compliance of the aforesaid
 For the financial year 2013-14, as the Company has prepared its
 sustainability report based on the internationally accepted reporting
 framework and the principles stated under the aforesaid SEBI circular
 have been mapped with the sustainability report, no separate report has
 been prepared by the Company. The Sustainability Report as well as
 mapping as stated above is available on our website at http:/
 Based on the requirements under SEBI (Prohibition of Insider Trading)
 Regulations, 2011, as amended from time to time, the code of conduct
 for prevention of insider trading and the code for corporate
 disclosures are in force.
 Mr. Vineet Nayar (DIN 02007846) and Mr. Subroto Bhattacharya (DIN
 00009524), Directors of the Company who were liable to retire by
 rotation in the 21st Annual General Meeting of the Company held on
 December 27, 2013 had expressed their unwillingness to seek
 re-appointment as Directors of the Company. Accordingly, Mr. Nayar and
 Mr. Bhattacharya were not re-appointed as Directors and it was resolved
 not to fill the vacancies so caused.
 As per the provisions of Section 152 (6) of the Companies Act, 2013 one
 third of such of the directors for the time being as are liable to
 retire by rotation, shall retire by rotation at the ensuing Annual Gen-
 eral Meeting and shall be considered for re-appointment.
 The Statutory Auditors, M/s. S.R. Batliboi & Co. LLP, Chartered
 Accountants, hold office till the conclusion of the ensuing Annual
 General Meeting and they have confirmed their eligibility and
 willingness to be re-appointed. The Company has received a certificate
 from the Statutory Auditors to the effect that their appointment, if
 made, would be within the limits prescribed under section 141 of the
 Companies Act, 2013 and that they are not disqualified for such
 appointment within the meaning of the said section. Pursuant to the
 provisions of section 139 of the Companies Act, 2013 and the rules
 framed thereunder, it is proposed to appoint M/s. S.R. Batliboi & Co.
 LLP, Chartered Accountants as the Statutory Auditors for a period of
 five years subject to ratification of their appointment by members at
 every Annual General Meeting.
 Pursuant to the provisions of section 205A(5) of the Companies Act,
 1956, the dividend amounts which have remain unpaid or unclaimed for a
 period of seven years from the date of declaration have been
 transferred by the Company to the Investor Education and Protection
 Fund (IEPF) established by the Central Government pursuant to section
 205C of the said Act. The details of unpaid/unclaimed dividend that
 will be transferred to IEPF A/c in subsequent years are given in the
 corporate governance section of the Annual Report.
 Your Company has not accepted any fixed deposits.
 As your Company pursues excellence relentlessly, your Company is
 delighted to receive phenomenal share of recognitions and awards this
 year, not just from the media, but also from analysts, governing
 bodies, academic institutions, partners and even customers. Some of the
 key accolades received during the year include:
 * Prestigious CNBC-TV 18''s India Business Leader Award for ''Outstanding
 Company of the Year - Penultimate award in corporate excellence''.
 * PHD Chamber Good Corporate Citizen Award 2013 by PHD Chamber of
 Commerce and Industry.
 * Mr. Anant Gupta, President & CEO, HCL Technologies has received the
 ''2014 Women''s Empowerment Principles (WEPs) Leadership Award - 7
 Principles'' for developing and implementing a comprehensive internal
 and external strategy based on the WEPs'' seven principles for advancing
 and empowering women in the workplace, marketplace and community.
 * ''Best Governed Company Award'' by Asian Centre for Corporate
 Governance and Sustainability at the Asia Business Responsibility
 Summit 2014. This award is an acclaimed recognition for corporate
 practicing best corporate governance norms in both letter and spirit.
 * ''Diamond and Gold Awards for marketing excellence'' in November 2013
 by IT Services Marketing Association (ITSMA), the leading marketing
 association for technology, communications and professional service
 * ''CRY Best Employee Engagement Award'' for the most impactful employee
 engagement program to address Child Rights issue for its Power of One
 * Recognition as one of Britain''s Top Employer for the eighth
 consecutive year for its employee friendly HR policies and practices.
 * Named as a leader in innovation in the Nordic region. This accolade
 comes as part of a 2013 Nordic IT Outsourcing Service Provider
 Satisfaction and Performance Survey by KPMG.
 * For the fourth consecutive year, HCL has made it to the prestigious
 annual ''2013 Asia''s fab 50'' list.
 Responsible corporate citizenship has been a part of our core values
 and sustainability has been the driving factor in many of our
 initiatives. Today, the sustainability office runs a multi-layered
 corporate program to drive our sustainability vision. We partner with
 multiple stakeholders to form an inclusive working group to create
 policies, processes and other organizational measures. We believe that
 responsible investments in sustainability will generate long term value
 for all our stakeholders by improving competitiveness and reducing
 In our everyday practice as a ''Responsible Business'' we focus Value-
 centricity and Trust through transparency.The initiative taken by the
 Company on sustainability are given in detail in the sustainability
 report for the year 2013-14 which is being hosted on the website of the
 The Company sees the changing landscape and market conditions as an
 opportunity to build leadership in the information technology services
 space, through creation of robust business and people models to enhance
 its share of the customer wallet.
 The Organization Effectiveness function is currently engaged in
 creating mature people models to leverage human capabilities, thereby
 generating higher value at the customer-employee interface, which would
 propel the Company into the next phase of growth globally. It includes
 Program First, Smart Survey and Talent Management:
 Program First
 Your Company focuses constantly on reassessing, refreshing and
 reinventing the organizational and individual capabilities so that it
 continues to offer a distinctive experience to its employees as well as
 to its customers. Your Company is on an accelerated journey to enhance
 the employment experience of its people and create new benchmarks.
 In the same light Program FIRST (Future-ready Initiatives for Results
 and Smart Transformation) was initiated. Program First introduced
 practices that enable, empower and engage the Company ideapreneurs to
 drive organization to success in the future. It introduces enhancements
 to the career, performance, reward, talent, and learning management
 practices within the organization.  Successful implementation and
 follow through of Program FIRST resulted in tighter coupling of Career,
 Performance, Talent and Learning Processes around a role based
 Smart Survey
 Smart Survey is a process of collating effective, constructive and
 integrated feedback from the employees in an organization that is
 crucial to the ongoing development and growth of individuals as well as
 the organization. The tool is built around the 3 key pillars - self, my
 managers and work environment.
 Talent Management
 Your Company has always believed its people to be the source of value
 and have followed formal talent appreciation processes geared to ensure
 that it has the capability, both capacity and ability, to do what it
 has committed to do in the immediate and more medium term future. Build
 / Buy / Secure / Reward / Progress / Invest decisions were taken as a
 result of this effort. It has also used the occasion to move leaders
 from one service line to another.
 The High Potential employees identified in Talent Reviews have been
 invited to participate in a rigorous development program for 6- 18
 months internally called TOPGUN, now in its 5th edition. The program
 consists of extensive action learning, coaching and self- reflection as
 well as opportunities to build networks with peers and executives from
 across the organization. This program is already generating a healthy
 pipeline of leadership for the organization.
 Your Company instituted the CEO club to recognize individuals who had
 made significant contribution to the success of the Company in a
 financial year. 78 Middle managers across the world and across
 functions were chosen for the FY-12-13 performance contribution and
 received a luxury car as a mark of recognition of their achievements.
 The O-infinity awards, now an annual feature recognized the top
 performers from the entry to manager career levels across the world
 through various events anchored by our leadership thanking employees
 and their families for making the Company successful.
 Building the Ideapreneurship Culture Born in 2005 the Employee First
 Customer Second (EFCS) approach questioned the traditional top down
 approach and brought the spotlight back on those who created value for
 the organization - the employee as a catalyst of change. The way any
 employee creates value centricity is through the power of innovative
 thinking. EFCS brought the employees'' belief in change, transformation
 and value centricity which led them to exercise their license to ideate
 and take advantage of the freedom to decide and act. As a result of it,
 the culture of ideapreneurship emerged that supports grass-root
 programs which helps in value creation. Your Company has built programs
 and platforms that capture small but powerful ideas or grassroot
 innovations of employees. The continued business growth of your
 Company, even during the dynamic market situations, is resultant of its
 culture - ideapreneurship, that empowered its employees and gave them
 the freedom to ideate, that returned value to customers which were
 beyond what was the contractual ask.
 Reward and Recognition
 Your Company recognizes teams and individuals who have contributed to
 building value for clients through the power of simple ideas by
 ''Ideapreneur Awards''. Simultaneously, employees are co- rewarded by
 clients on their ideas which are rated by clients and implemented
 resulting in hundreds of dollars in savings for clients.
 Developing Leader Involvement
 Your Company has successfully brought together top leaders to
 contribute to the ideation process by introducing ''dollar impact of
 ideation on revenue'' as a key account performance measure. This has led
 to ideapreneurs being in focus in most internal or client reviews, thus
 creating leadership momentum and sponsorship to sustain the culture of
 Ideapreneurship has been featured as a case study in the Cambridge
 University Students'' Union (CUSU) publication titled Strategies for
 Your Company''s approach to engagement can be best described by the word
 ''Relationship''. When your Company signs a contract, it commits to much
 more than just the Statement of Work because of its belief that an
 engagement cannot be scripted in any contract to make it a truly
 worthwhile. Your Company believes in a simple thing called values. A
 contract can safeguard all that is within the span of control but in
 today''s uncertain world where business and macro environment are seeing
 new challenges and undergoing changes every day, your Company believes
 that its value of Trust, Transparency and Flexibility fuelled by its
 philosophy of ''Employees First'' will ensure a continued defense of its
 customers'' interests.
 Your Company does not use contracts to save its skin. Your Company
 believes in taking every relationship beyond the contract by putting
 its own skin in the game through collaboration, applied innovation and
 new generation partnership models that put its customers'' interests
 above all. ''Relationship Beyond the Contract'' is a spirit that is alive
 in its Ideapreneurs who are passionate about only one thing that is
 making the customers'' business more efficient through everyday
 Learning and Leadership are the most sustainable sources of competitive
 advantage in our industry, today. As the war for talent continues,
 leveraging and optimizing learning for stronger performance is the
 critical need of the time. In the knowledge based economy, creating a
 learning environment helps address talent gaps, generate ideas, and
 ultimately leads to an engaged workforce.
 Talent Development is the learning Ecosystem of the Company that
 actively supports holistic employee development through a combination
 of Technical, Behavioral, Leadership and specialized Domain training.
 These learning interventions touch the employee from day one in the
 Company and continue through the employees'' tenure to offer holistic
 learning programs. Further, the programs are designed on blended
 delivery mode, i.e., classroom, webinars, e-learning, podcasting,
 e-books and projects, to create comprehensive learning opportunities
 for a global workforce.
 There are over 25  programs for behavioral training and a long list of
 technical training programs available across these Academies engaging
 employees from freshers right up to senior leadership. These are
 designed to impact key business outcomes and supported by content that
 is, often, created in partnership with world class training
 organizations. The Company''s learning approach is unique, as it
 connects to the career road map of employees by allowing them to take
 charge of their individual learning needs and sharpen the desired
 competencies in their current and future roles.
 Talent Development is also deeply engaged directly with customers to
 understand their training needs for teams that work on the project - to
 provide in time training solutions, which has been highly applauded by
 many of your valued clients.
 Disclosures of particulars as required by the Companies (Disclosure of
 Particulars in the Report of Board of Directors) Rules, 1988 to the
 extent applicable to your Company, are set out in Annexure 1 to this
 A statement of responsibility of the Directors relating to compliance
 with the financial accounting and reporting requirements in respect of
 the financial statements, as specified under section 217 (2AA) of the
 Companies Act, 1956, is annexed as Annexure 2 to this Report.
 1999 Stock Option Plan / 2000 Stock Option Plan / 2004 Stock Option
 The details of these plans have been annexed as Annexure 3 to this
 Except, as disclosed elsewhere in the Report, there have been no
 material changes and commitments, which can affect the financial
 position of the Company between the end of the financial year and the
 date of this Report.
 As required under section 217(2A) of the Companies Act, 1956, read with
 the Companies (Particulars of Employees) Rules, 1975, as amended, the
 names and other particulars of employees are set out in Annexure 4 to
 this Report.
 The Board wishes to place on record its appreciation to the
 contribution made by the employees of the Company and its subsidiaries
 during the year under review. The Company has achieved impressive
 growth through the competence, hard work, solidarity, cooperation and
 support of employees at all levels. Your Directors thank the customers,
 clients, vendors and other business associates for their continued
 support in the Company''s growth.  The Directors also wish to thank the
 Government Authorities, Financial Institutions and Shareholders for
 their cooperation and assistance extended to the Company.
                            For and on behalf of the Board of Directors
 Place: Noida (U.P.), India                                  SHIV NADAR
 Date : July 31, 2014               Chairman and Chief Strategy Officer
Source : Dion Global Solutions Limited
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