The Directors have pleasure in presenting this Eighteenth Annual
Report together with the Audited Accounts for the year ended June
30,2010.
FINANCIAL RESULTS
The highlights of the consolidated financial results of your Company
and its subsidiaries prepared under Indian GAAP are as follows:
(Rs. in crores)
Year ended Year ended
June 30, 2010 June 30,2009
Income
Revenues 12,136.29 10,229.41
Other income 154.12 262.20
12,290.41 10,491.61
Expenditure
Cost of goods sold 443.55 205.47
Personnel Expenses 6,253.70 5,194.38
Operating and other expenses 3,498.48 3000.06
Finance costs 204.14 112.44
Depreciation and amortization 418.11 375.47
10,817.98 8,887.82
Profit before tax and minority
interests 1,472.43 1,603.79
Provision for tax (213.43) (284.34)
Profit before minority interests 1259.00 1,319.45
Share of minority shareholders 0.19 0.18
Net Profit 1,259.19 1,319.63
The highlights of financial results of your Company as a stand-alone
entity prepared under Indian GAAP are as follows:
(Rs. in crores)
Year ended Year ended
June 30,2010 June 30,2009
Income
Revenues 5,078.76 4,675.09
Other income 171.77 265.81
5,250.53 4,940.90
Expenditure
Cost of goods sold 85.47 -
Personnel Expenses 2,187.66 1,930.22
Operating and other expenses 1,449.19 1,539.00
Finance Charges 101.36 28.09
Depreciation and amortization 274.03 251.89
4,097.71 3,749.20
Prof it before tax 1152.82 1,191.70
Provision for tax (96.24) (194.39)
Profit after tax 1,056.58 997.31
Balance in Profit and Loss Account
brought forward 1,920.97 1,572.73
Amount available for appropriation 2,977.55 2,570.04
Appropriations
Proposed final dividend [including
Rs. 0.29 crores (previous year Rs.0.87
crores) 68.16 67.90
paid for previous year]
Corporate dividend tax on proposed
final dividend [including Rs.0.05
crores 11.32 11.54
(previous year
Rs.0.15 crores) paid for previous
year]
Interim dividend 202.33 401.71
Corporate dividend tax on interim
dividend 34.13 68.19
Transfer to general reserve 105.66 99.73
Transfer to debenture redemption reserve295.00 --
Balance carried forward to the
balance sheet 2260.95 1,920.97
Total 2,977.55 2,570.04
TRANSFER TO RESERVES
Your Company has transferred Rs. 105.66 crores to the General Reserve
Account and Rs. 295 crores to the Debenture Redemption Reserve Account
as at June 30, 2010. An amount of Rs. 2,260.95 crores is proposed to be
carried forward in the Profit & Loss Account.
OVERVIEW
During the financial year 2009-10, on a standalone basis, your
Companys revenues stood at Rs. 5,078.76 crores registering a growth of
8.63% over the previous year and on a consolidated basis, the Companys
revenues for the year 2009-10 stood at Rs. 12,136.29 crores registering
a growth of 18.64% over the previous year.
A detailed analysis on the Companys performance is included in the
Managements Discussion and Analysis Report titled as Managements
Discussion and Analysis, which forms part of this Annual Report.
DIVIDENDS
Your directors are pleased to recommend a final dividend of Re.1 per
equity share for the financial year ended June 30, 2010, subject to the
approval of the shareholders at the ensuing Annual General Meeting of
the Company. During the year under review, your directors had declared
and paid three interim dividends as per the details given hereunder:
S.No. Interim dividend paid during Rate of dividend Amount of
the year ended June 30, 2010 (Per Share) dividend paid
1. 1st Interim Dividend Re. 1/- 67.19
2. 2nd Interim Dividend Re. 1/- 67.45
3. 3rd Interim Dividend Re. 1/- 67.69
Interim dividend paid during Dividend Distribution
the year ended June 30, 2010 tax Total Outflow
paid by the Company
(Rs. in crores)
1st Interim Dividend 11.42 78.61
2nd Interim Dividend 11.46 78.91
3rd Interim Dividend 11.25 78.94
The total amount of dividends (including interim dividends paid) for
the year ended June 30, 2010 shall be Rs. 270.20 crores. Dividend
distribution tax paid / payable by the Company for the year would
amount to Rs. 45.40 crores.
SCHEME OF AMALGAMATION
During the year under review, the Board of Directors of the Company,
subject to requisite approvals, had approved the Scheme of Amalgamation
(Scheme) under section 391 to 394 of the Companies Act, 1956 for
amalgamation of HCL Technoparks Limited, wholly owned subsidiary of the
Company with the Company.
The Company has filed the petition before the Honble High Court of
Delhi for approval of the Scheme of Amalgamation. The Scheme, if
approved, shall be effective from April 1, 2009.
SUBSIDIARIES/ BRANCHES FORMED DURING THE YEAR
HCL Technologies Denmark ApS and HCL Technologies Norway AS
In view of the new business prospects of the Company, the Company has
set up its step down subsidiaries in Denmark viz. HCL Technologies
Denmark ApS and in Norway viz. HCL Technologies Norway AS.
During the year, your Company has also set up its branch office in
U.S.A.
EXISTING SUBSIDIARIES-CLOSURE DURING THE YEAR
Your Company had acquired Axon Group Ltd. (Axon) in 2008- 09 which is
a leading U.K. based SAP consulting Company. Axon had set up
subsidiaries in various countries. As a rationalization process, the
applications for winding up were filed with the appropriate authorities
for the two dormant entities viz. Aspire Solutions Sdn. Bhd., a company
incorporated in Malaysia and Axon EBT Trustees Limited, a company
incorporated in U.K. as their businesses were integrated with other
entities in these countries.
SUBSIDIARIES - FINANCIALS
The Company has 56 subsidiaries as on June 30, 2010. 3 subsidiaries of
the Company are not required to prepare the financials as on June 30,
2010 as they have been incorporated during the current year and the
first financial year of these companies shall close subsequent to June
30, 2010.
The Company has been granted exemption under section 212 of the
Companies Act, 1956 by the Ministry of Corporate Affairs from annexing
the accounts and other information for its subsidiaries along with the
accounts of the Company for the year ended June 30, 2010. As per the
terms of the exemption letter, a statement containing brief financial
details of the Companys subsidiaries for the year ended June 30, 2010
shall form part of the Annual Report.
As required under the Listing Agreement with the Stock Exchanges,
consolidated financial statements of the Company and its subsidiaries
are attached.
CHANGES IN CAPITAL STRUCTURE
Issue of shares under Employee Stock Option Plans
During the year ended June 30, 2010, the Company allotted 85,27,212
equity shares of Rs. 21- each fully paid up under its Employees Stock
Option Plans.
Issued and Paid-up Share Capital
As on June 30, 2010, the issued and paid-up share capital of the
Company was Rs. 135,75,67,624/- (previous year: Rs. 134,05,13,200/-)
comprising 67,87,83,812 (previous year: 67,02,56,600) equity shares of
Rs. 21- each fully paid-up.
SHARES UNDER COMPULSORY DEMATERIALIZATION
The equity shares of your Company are included in the list of specified
scrips where delivery of shares in dematerialized (demat) form is
compulsory effective from July 24, 2000, if the same are traded on a
stock exchange , which is linked to a depository. As of June 30, 2010,
99.93% shares were held in demat form.
DEBENTURES
During the year, the Company has issued rated, secured, taxable,
redeemable non-convertible debenture(s) as per details given hereunder:
Amount Coupon Rate
Date of Issue (Rs. in (Payable Maturity
Period
crores) quarterly)
August 25, 2009 170 7.55% p.a. 2 years
August 25, 2009 330 8.20% p.a. 3 years
September 10,2009 500 8.80% p.a. 5 years
A debenture trust deed in favour of IDBI Trusteeship Services Limited
for the aforesaid issues has been executed. The Debentures are secured
by way of mortgage(s) and/ or charges on the 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.
INTERNAL CONTROL SYSTEM
The Company has in place adequate internal control systems commensurate
with its size and nature of business. These systems provide a
reasonable assurance in respect of providing financial and operational
information, compliance with applicable statutes and safeguarding of
assets of the Company. These systems ensure that transactions are
executed in accordance with specified policies and resources are
deployed as per the business plans and policies.
The Company has an in-house internal audit division and the head of
internal audit function reports directly to the Audit Committee to
ensure independence of this function.
CORPORATE GOVERNANCE
The report of the Board of Directors of the Company on Corporate
Governance is given as a separate section titled Corporate Governance
Report 2009-10, which forms part of this Annual Report.
Certificate of the Statutory Auditors of the Company regarding
compliance with the Corporate Governance requirements as stipulated in
clause 49 of the Listing Agreement with the stock exchanges is annexed
with the Corporate Governance Report.
MANAGEMENTS DISCUSSION AND ANALYSIS
The Managements Discussion and Analysis is given separately and forms
part of this Annual Report.
INSIDERTRADING REGULATIONS
Based on the requirements under SEBI (Prohibition of Insider Trading)
Regulations, 1992, as amended from time to time, the Code of Conduct
for prevention of insider trading and the Code for corporate
disclosures are in force.
DIRECTORS
In accordance with the Articles of Association of the Company, Mr.
Subroto Bhattacharya, Mr. Vineet Nayar and Mr. Amal Ganguli, shall
retire by rotation as Directors at the ensuing Annual General Meeting
and being eligible, they have offered themselves for re-appointment.
AUDITORS
The auditors, M/s. S.R. Batliboi & Co. Chartered Accountants, retire at
the conclusion of the ensuing Annual General Meeting and they have
confirmed their eligibility and willingness to be re-appointed.
GROUP
As per the intimation received from the Promoter(s), for the purposes
of availing exemption from applicability of the provisions of
Regulations 10 to 12 of the Securities and Exchange Board of India
(Substantial Acquisition of Shares and Takeovers) Regulations, 1997,
pursuant to Regulation 3(1) (e)(i) thereof, persons constituting
Group as defined in the (Monopolies and Restrictive Trade Practices
Act, 1969) include the following:
Name of the Companies/Trust
HCL Corporation Ltd.
HCL Holdings Pvt. Ltd.
Guddu Investments (Pondi) Pvt. Ltd.
Varna Sundari Investments (Pondi) Pvt. Ltd.
Shiv Nadar Investments (Pondi) Pvt. Ltd.
SSN Investments (Pondi) Pvt. Ltd.
Shiv Nadar Investments (Chennai) Pvt. Ltd.
Shivkiran Investments (Chennai) Pvt. Ltd.
Vamasundari Investments (Delhi) Pvt. Ltd.
SSN Investments (Delhi) Pvt. Ltd.
SSN Trust
Shiv Nadar Foundation
Vamasundari Scholarship Trust
FIXED DEPOSITS
Your Company has not accepted any fixed deposits.
AWARDS AND RECOGNITIONS
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:
- Ranked No. 1 among the top 50 best managed global outsourcing vendors
of 2009 by Brown & Wilsons Black Book of Outsourcing.
- Chosen from among more than 188 corporate entries, your Company won
the prestigious Golden Peacock Innovation award for its MTaaSTM (a
Business Service Management centric service delivery platform) offering
in the IT Sector category.
Ranked No.1 amongst the 2009 Top Cross-Industry BPO Vendors by the
Black Book of Outsourcing.
- Ranked No.1 in the traditional IT Outsourcing space by Datamonitors,
Black Book of Outsourcing 2009-10.
- Ranked No. 1 in the RIMO (Remote Infrastructure Management
Outsourcing) space and scores highest in 18 significant ITO criteria
and 13 significant RIMO criteria surveyed.
HCL AXON rated a leader in the Forrester Wave for SAP Implementation
Providers making it a serious contender across all phases of the SAP
implementation life cycle.
QUALITY
Quality policy of your Company is to satisfy the customers by
delivering quality products and services that meet their requirements
on time, every time.
To operate the quality system in your Company, we have developed a
system called Organizational Management System (OMS) which conforms
to the ISO 9001:2000 standard, CMM Ver1.1 and CMMI version 1.2, IEEE
(referenced) for the design and development of software and hardware
products and related services. The OMS is designed to achieve the
Companys quality policy and objectives.
The OMS has been developed to keep in mind the following objectives:
Standardize engineering and management practices across all level of
businesses of the Company.
To enhance productivity and effectiveness of the Companys operations
and reduce the learning curve.
- Unified approach to our business acquisition and delivery methods.
Align with other common corporate initiatives like SAP, KROSS, PM Smart
etc.
Quality Initiatives taken during the year:
- Six Sigma
- Earned Value Management Next Generation OMS Beyond CMMI L5
Quality Journey of HCL Technologies Ltd.:
First company to get assessed for CMMI Level 5 in Investment banking
IT services provider group.
First software company to get certified for AS 9100 in India.
Organizational Management System of your Company is compliant to
multiple industry and domain specific standards. It has also been
enhanced for domain standards like TL 9000 and ISO 16949 and models
like CMMI (Dev) V1.2 L5 and CMMI for services.
EMPLOYEES FIRST
Around five years ago, your Company initiated a unique employees
focused program that places the needs of employees before that of
customers. Your Company believes that employees bring strategic value
to an organization and are critical to its success in the global
marketplace. The future growth and competitiveness of any organization
depends more than ever before on attracting the best talent and
engaging and empowering them to achieve their own, and the
organizations goals. Your Company always believes that happy and
passionate employees offer better value in engagements and directly
impact customer satisfaction.
Towards this, your Company practices Employees First - the first of its
kind of articulation, which is at the core of our efforts to
provide our employees a work environment and culture that they can take
pride in. Employees First is our means of getting into the very core of
the individual and decoding their individuality and diversity,
unleashing their potential and equipping them with the necessary tools
to enhance the value zone.
We believe that the maximum value is created at the employee- customer
interface. Therefore we empower our employees to generate delight for
our customers, every step of the way. The 5 core values of Employees
First are Honesty, Transparency, Accountability, Individuality and
Collaboration. In order to strengthen these values, many initiatives
have been introduced by your Company. Some key initiatives are:
- Smart Service Desk, where employees can raise SLA- bound tickets on
any internal service provider, and only employees can close these
tickets, if satisfied. This brings in a culture of reverse
accountability.
- CEO Connect through U&l, where the CEO is personally available online
to every employee, tours every location and holds interactive
discussions complemented by a fully functional blog. This infuses a
culture of transparency and open communication between the CEO and the
employee.
- Open 360 Degree Feedback, where employees can rate their managers,
even the CEO, and the feedback/rating is made public across the
organization. This inverts the pyramid and makes the employee a part of
the development journey of the manager and also the CEO.
- Talent Transformation is designed to build behavior based
competencies in individuals.
- Employees First Academy, comprising three levels: Employees First
Lifestyle, Employees First Leadership, and Harvard Emerging Leader
Program, to initiate and nurture effective leaders.
- Directions, an annual event where the CEO and senior management
conduct a face-to-face meeting with all employees to discuss the
Companys strategy and direction. It is a mirror, mirror exercise
between the employees and senior management.
Employees First, Customers Second: Mr. Vineet Nayar, CEO and Whole-time
Director of the Company has written a book on his innovative concept of
Employees First, Customers Second (EFCS). Employees First, Customers
Second is a book published by Harvard Press. Admired by many global
thought leaders viz. Mr. Tom Peters, Mr. Tony Hsieh, Mr. Gary Hamel,
Ms. Judy McGrath, Mr. Ram Charan, and Mr. Victor K. Fung.
The Book got rave reviews from Fortune, CIO Insight, Economist,
Washington Post, Sunday Times, Hindu, FOX Business, CNBC Europe,
Bloomberg Radio Surveillance and many others.
Talent Transformation and Intrapreneurship Development (T2ID)
T2ID in your Company identifies and recognizes the need to groom and
develop employees for developing the future leaders. T2ID rolls out a
series of end to end programs that would continuously enhance the value
that an employee adds to the Company. In your Company, employees are
not just one of the assets but THE Assets. The quintessential Customer
is King has been replaced by Employees First; the bottom line being,
if the employee is satisfied, happy and skilled, then only will he/she
be able to serve his customer better so that they in turn bring
value-add to their clients.
Key Initiatives of T2ID
TOP GUN - Next generation Leadership development program— This
Leadership Program builds the leadership pipeline of the Company by
focusing on equipping the next generation of leaders with the Companys
identified leadership competencies in order to create World Class
Leaders.
HCL-HARVARD Emerging Leaders Program— To groom business leaders and
prepare them to drive strategic initiatives in a very dynamic business
environment, your Company has launched Emerging Leaders Program which
aims to create a capable and distinctive leadership culture. This is a
20-week program with the focus on five critical areas of leadership
development.
Employee Passion Indicative Count (EPIC)— EPIC is a self assessment
tool which aims to measure Top 5 Passion Indicators of an employee that
drive him to do his day to day work. During the year, 25,100 employees
participated in the EPIC assessment and found out their passion
drivers.
Good Practices Conferences— Good Practices is an initiative from
delivery excellence for systematic collation, evaluation, sharing and
adoption of good practices across the Company. Good Practices
Conference 2010 is a platform for individuals/ teams to share their
good practices as well as lessons learnt from failures.
Learn— iLearn has been launched to seamless online registration and
tracking of instructor led training sessions (technical and domain) and
quick online feedback mechanism including collection, compilation and
analysis.
HCL Scholar— It is a knowledge enhancement program aimed at providing a
structured and robust platform to assess employees of the Company on
their understanding about the Company and their respective areas of
operation. It aims at promoting a culture of continuous learning and
capabilities building within the Company.
CONSERVATION OF ENERGY, RESEARCH AND
DEVELOPMENT.TECHNOLOGYABSORPTION.FOREIGN EXCHANGE EARNINGS AND OUTGO
Disclosures of particulars as required by the Companies (Disclosure of
Particulars in the Report of Board of Directors) Rules, 1988, are set
out in the Annexure 1 included in this Report.
DIRECTORS RESPONSIBILITY STATEMENT
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 inserted by the Companies (Amendment) Act, 2000, is
annexed as Annexure 2 to this Report.
STOCK OPTIONS PLANS
1999 Stock Option Plan / 2000 Stock Option Plan / 2004 Stock Option
Plan
The details on these plans have been annexed as Annexure 3 to this
report.
DISCLOSURES UNDERSECTION2I70FTHECOMPANIES ACT, 1956
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 the Annexure 4
included in this Report.
ACKNOWLEDGEMENTS
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 Companys 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
Noida (U.P.), India SHIV NADAR
July 29, 2010 Chairman and Chief Strategy Officer
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