HCL Technologies

The Directors have pleasure in presenting this Sixteenth Annual Report
 together with the Audited Accounts for the year ended June 30, 2008.
 
 FINANCIAL RESULTS
 
 The highlights of 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, 2008    June 30, 2007
 
 Income
 
 Revenues                                    7,562.78      6,068.74
 
 Other income                                  192.72        455.85
 
                                             7,755.50      6,524.59
 
 Expenditure
 
 Cost of revenues                            4,190.54      3,357.46
 
 Administration and other expenses           2,065.56      1,477.29
 
 Finance costs                                  17.70          8.03
 
 Depreciation and amortization                 298.84        253.86
 
                                             6,572.64      5,096.64
 
 Profit before tax and minority interests    1,182.86      1,427.95
 
 Provision for tax                            (129.03)      (104.08)
 
 Profit before minority interests            1,053.83      1,323.87
 
 Share of minority shareholders                 (2.42)        (5.56)
 
 Net Profit                                  1,051.41      1,318.31
 
 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, 2008     June 30, 2007
 
 Income
 
 Revenues                                    4,615.39          3,768.62
 
 Other income                                  170.40            439.42
 
                                             4,785.79          4,208.04
 
 Expenditure
 
 Cost of revenues                            2,448.18          2,005.91
 
 Administration and other expenses           1,225.42            833.26
 
 Finance charges                                19.07             12.97
 
 Depreciation                                  217.87            178.21
 
                                             3,910.54          3,030.35
 
 Profit before tax                             875.25          1,177.69
 
 Provision for tax                             (94.60)           (75.87)
 
 Profit after tax                              780.65          1,101.82
 
 Balance in Profit and Loss Account 
 brought forward                             1,570.44          1,185.99
 
 Amount available for appropriation          2,351.09          2,287.81
 
 Appropriations
 
 Proposed final dividend 
 [including Rs. 0.03 crores 
 (previous year Rs. 0.45 crores)              199.94             133.19
 
 paid for previous year]
 
 Corporate dividend tax on proposed 
 final dividend [including Rs. 0.01 crores     33.97              22.62
 (previous year Rs. 0.06 crores) 
 paid for previous year]
 
 Interim dividend                             398.64             392.40
 
 Corporate dividend tax on interim dividend    67.75              58.98
 
 Transfer to general reserve                   78.06             110.18
 
 Balance carried forward to the 
 balance sheet                              1,572.73           1,570.44
 
 Total                                      2,351.09           2,287.81
 
 TRANSFER TO RESERVES
 
 Your Company proposes to transfer Rs. 78.06 crores to the General
 Reserve. An amount of Rs. 1,572.73 crores is proposed to be carried
 forward in the Profit & Loss Account.
 
 OVERVIEW
 
 During the financial year 2007-08, on a stand-alone basis, your
 Companys revenues stood at Rs. 4,615.39 crores registering a growth of
 22.47% over the previous year and on a consolidated basis, the
 Companys revenues for the year 2007-08 stood at Rs. 7,562.78 crores
 registering a growth of 24.62 % 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.
 
 DIVIDEND
 
 Your directors are pleased to recommend a final dividend of Rs. 3 per
 share for the financial year ended June 30, 2008, subject to approval
 of the shareholders at the ensuing Annual General Meeting. 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          Rate of dividend
        during the year ended
        June 30, 2008
 
 1      1st Interim Dividend              Rs. 21- per share
 
 2      2nd Interim Dividend              Rs. 21- per share
 
 3      3rd Interim Dividend              Rs. 21- per share
 
 Amount of dividend       Distribution tax paid     Total Outflow
 paid                     by the Company            Rs./crores
 Rs./crores               Rs./ crores
 
 132.76                      22.56                         155.32
 
 132.86                      22.58                         155.44
 
 133.03                      22.61                         155.64
 
 The total amount of dividend (including interim dividends) paid /
 payable for the year ended June 30, 2008 shall be Rs. 598.55 crores as
 against Rs. 525.17 crores paid for the previous year. Dividend
 distribution tax paid / payable by the Company for the year ended June
 30, 2008 would amount to Rs. 101.71 crores.
 
 SUBSIDIARIES FORMED DURING THE YEAR
 
 HCL Technologies (Shanghai) Limited
 
 During the year under review, the Company has incorporated its wholly
 owned subsidiary viz. HCL Technologies (Shanghai) Limited. Through this
 entity the Company established its first sales and delivery center in
 Shanghai with an initial investment of Rs. 2.77 crores (USD 0.7
 million).
 
 Capital Stream Inc.
 
 During the year under review, the Company acquired all of the
 outstanding capital stock of Capital Stream Inc., a company
 incorporated in USA for a cash consideration of Rs. 160 crores (USD
 39.03 million). Capital Stream Inc. is engaged in providing
 comprehensive end to end solutions for the automation of front office
 functions of commercial lending institutions. This transaction was
 structured as reverse merger.
 
 EXISTING SUBSIDIARIES/ JOINT VENTURES - FURTHER INVESTMENT/
 AMALGAMATION/ CLOSURE DURING THE YEAR
 
 HCL EAI Services Inc.
 
 In order to consolidate its position in Enterprise Application
 Integration (EAI) space, the Company has acquired the balance 49%
 stake in its Joint Venture Company viz. HCL EAI Services Inc., a
 California corporation for a consideration of Rs.13.32 crores (USD 3.49
 million) through its downstream subsidiary HCL America Inc., a company
 incorporated in USA. With this acquisition, HCL EAI Services Inc. has
 become 100% subsidiary of your Company.
 
 Further w.e.f. July 01, 2008, HCL EAI Services Inc. has been
 amalgamated with HCL America Inc.
 
 HCL Jones Technologies (Bermuda) Limited
 
 In June 2002, the Company entered into an agreement with Jones Apparel
 Group Inc. (Jones), under which two new Companies were established in
 Bermuda and Delaware. The Company held 51 % stake in the said Joint
 Venture.
 
 In December 2007, the Company and Jones had entered into an agreement
 (Termination Agreement) to terminate the Joint Venture agreement
 entered in June 2002. As a part of the termination agreement, a
 subsidiary of the Company has obtained binding commitments for the
 provision of IT services to Jones, with an aggregate contract value of
 Rs. 96.8 crores (USD 22.5 million) upto 2012.
 
 Further, pursuant to this termination, the Joint Venture Company in
 Bermuda viz. HCL Jones Technologies (Bermuda) Limited will be wound up.
 
 HCL Enterprise Solutions Limited
 
 HCL Enterprise Solutions Limited was incorporated in Mauritius in
 regard to the Joint Venture entered into by the Company with Computech
 Corporation. The Company has acquired 100% stake in the said Joint
 Venture, the last tranche acquired in February, 2005. Since the
 business pertaining to the said Joint Venture has been fully integrated
 within the Company, it was therefore decided to wind up this entity.
 Accordingly an application for winding up has been moved with the
 relevant authorities in Mauritius.
 
 BRANCHES FORMED DURING THE YEAR
 
 In order to scale the operations in new geographies, the Company has
 set up four branches at the following locations:
 
 Dublin, Ireland Zurich, Switzerland Tel- Aviv, Israel Prague, Czech
 Republic
 
 SUBSIDIARIES - FINANCIALS
 
 The Company has 30 subsidiaries as on June 30, 2008. The Company has
 been granted exemption for the year ended June 30, 2008 by the Ministry
 of Corporate Affairs from annexing the accounts and other information
 of the subsidiaries along with the accounts of the Company, as required
 under section 212 of the Company Act 1956.  brief financial details of
 the Companys subsidiaries tor the year ended June 30, 2008 is included
 in the Annual Report.
 
 As required under the Listing Agreements 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, 2008, the Company allotted 2,657,156 equity shares of Rs. 2/-
 each fully paid up under its Employees Stock Option Plans (ESOP).
 
 ISSUED AND PAID-UP SHARE CAPITAL
 
 As on June 30, 2008, the issued and paid-up share capital of the
 Company was Rs.133,26,80,544/- (previous year : Rs.132,73,66,232/-)
 comprising 66,63,40,272 (previous year: 66,36,83,116) equity shares of
 Rs. 2/- each fully paid-up.
 
 STOCK OPTIONS PLANS
 
 1999 Stock Option Plan / 2000 Stock Option Plan / 2004 Stock Option
 Plan
 
 The details on these plans have been annexed to this report.
 
 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, 2008,
 99.92% shares were held in demat form.
 
 CORPORATE GOVERNANCE
 
 The report of Board of Directors of the Company on Corporate Governance
 is given as a separate section titled Corporate Governance Report
 2007-08, 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 & ANALYSIS
 
 The Managements Discussion and Analysis is given separately and forms
 part of this Annual Report.
 
 INSIDER TRADING 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 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 to this Report.
 
 DIRECTORS
 
 In accordance with the Articles of Association of the Company, Mr. Amal
 Ganguli, Mr. T.S.R. Subramanian and Mr. Ajai Chowdhry, shall retire by
 rotation as Directors at the ensuing
 
 Mr. Vineet Nayar is appointed as an additional Director of the Company
 w.e.f. August 01, 2008. Pursuant to the Provisions of section 260 of
 the Companies Act, 1956, Mr. Vineet Nayar holds the office upto the
 date of the ensuing Annual General Meeting and is eligible for
 appointment as Director of the Company. Subject to the approval of the
 shareholders in the ensuing Annual General Meeting, he has been
 appointed as a Whole-time Director of the Company for a period of five
 years w.e.f. August 01, 2008.
 
 AUDITORS
 
 The auditors, M/s. Price Waterhouse, Chartered Accountants, retire at
 the conclusion of the ensuing Annual General Meeting and they have
 confirmed their eligibility and willingness to be re-appointed.
 
 CONSERVATION OF ENERGY, RESEARCH AND DEVELOPMENT, TECHNOLOGY
 ABSORPTION, 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 included in this Report.
 
 FIXED DEPOSITS
 
 Your Company has not accepted any fixed deposits.
 
 DISCLOSURES UNDER SECTION 217 OF THE COMPANIES 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
 included in this Report.
 
 ACKNOWLEDGEMENTS
 
 The Board wishes to place on record its appreciation to the
 contribution made by 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
 01 August 2008                 Chairman and Chief Strategy Officer