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HCL Technologies
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Directors Report Year End : Jun '13    « Jun 12
Dear Shareholders,
 
 The Directors have pleasure in presenting this Twenty First Annual
 Report together with the Audited Accounts for the year ended June 30,
 2013.
 
 FINANCIAL RESULTS
 
 The highlights of the financial results of your Company prepared for
 the financial year 2012-13 are tabulated below:
 
                                        (Rs.in crores)
                                  Consolidated      Standalone
                           2012-13     2011-12     2012-13    2011-12
 
 Total Income            25,932.17   21,037.05   12,896.66   9,208.08
 
 Total Expenditure       20,662.28   17,827.25    8,445.46   6,847.34
 
 Profit before tax        5,269.89    3,209.80    4,451.20   2,360.74
 
 Provision for tax       (1,225.31)    (782.72)    (840.02)   (410.32)
 
 Share of minority
  interest                   (4.28)      (4.31) 
 
 Share of loss of associates (0.21)      (0.07)  
 
 Profit after tax         4,040.09    2,422.70    3,611.18   1,950.42
 
 Impact of scheme of
 amalgamation relating 
 to earlier period                                   93.54 
 
 Profit for the year      4,040.09    2,422.70    3,704.72   1,950.42
 
 Balance in Profit and
 Loss Account brought
 forward                  5,390.28    4,167.94    3,185.77   2,435.71
 
 Transfer from debenture 
 redemption reserve due
 to redemption of
 debenture                  330.00      170.00      330.00     170.00
  
 Surplus acquired
 under the scheme of 
 amalgamation               831.81 
 
 Amount available for 
 appropriation            9,760.37    6,760.64    8,052.30   4,556.13
 
 Appropriations
 
 Proposed final dividend 
 [including Rs.0.30 crores    418.42      277.60      418.42     277.60
 
 (previous year Rs.0.29
 crores) paid for
 previous year]
 
 Interim dividend           416.94      552.98      416.94     552.98
 
 Corporate dividend 
 tax [including Rs.0.05 
 crores                     139.82      134.74      139.82     134.74
 
 (previous year Rs.0.05 
 crores) paid for
 previous year]
 
 Transfer to general 
 reserve                    380.00      195.04      380.00     195.04
 
 Transfer to debenture 
 redemption reserve         100.00      210.00      100.00     210.00
 
 Balance carried forward 
 to the balance sheet     8,305.19    5,390.28    6,597.12   3,185.77
 
 TRANSFER TO RESERVES
 
 For the year ended June 30, 2013, on a standalone basis, your Company
 has transferred Rs.380 crores to the General Reserve Account. An amount
 of Rs.100 crores has been transferred to the Debenture Redemption Reserve
 Account and Rs.330 crores has been transferred back to the Profit & Loss
 Account from the Debenture Redemption Reserve Account on account of
 redemption of debentures.  As on June 30, 2013, the balance available
 in the Debenture Redemption Reserve Account is Rs.400 crores. An amount
 of Rs.6,597.12 crores is proposed to be carried forward in the Profit &
 Loss Account.
 
 OVERVIEW
 
 During the financial year 2012-13, on a consolidated basis, your
 Company''s revenues stood at Rs.25,581.06 crores registering a growth of
 22.80% over the previous year.
 
 A detailed analysis on the Company''s performance is included in the
 Management''s Discussion and Analysis Report titled as Management''s
 Discussion and Analysis, which forms part of this Annual Report.
 
 DIVIDENDS
 
 Your Directors are pleased to recommend a final dividend of Rs.6/-per
 equity share of par value of Rs.2/- each for the financial year ended
 June 30, 2013, 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:
 
 The total amount of dividends (including interim dividends paid) for
 the year ended June 30, 2013 shall be Rs.835.36 crores. Dividend
 distribution tax paid / payable by the Company for the year would
 amount to Rs.139.82 crores.
 
 SCHEME OF AMALGAMATION
 
 During the year under review, the Hon''ble High Court of Delhi vide its
 order dated April 12, 2013 has approved the Scheme of Arrangement
 between HCL Technologies Limited, HCL Comnet Systems & Services Limited
 and their respective shareholders and creditors under section 391 to
 394 of the Companies Act, 1956 for amalgamation of the demerged
 undertaking of HCL Comnet Systems & Services Limited, a subsidiary of
 the Company into the Company. The said Order became effective w.e.f.
 May 17, 2013 being the date of filing of the said order with the Office
 of Registrar of Companies, NCT of Delhi & Haryana.
 
 SUBSIDIARIES
 
 HCL Technologies Chile SpA
 
 In view of the new business prospects, the Company during the year has
 incorporated a step down subsidiary in Chile viz. HCL Technologies
 Chile SpA.
 
 SUBSIDIARIES - FINANCIALS
 
 The Company has 57 subsidiaries as on June 30, 2013. Pursuant to the
 circular 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,
 2013.
 
 The 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, 2013 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
 requests made to it in this regard by the shareholders.
 
 CHANGES IN CAPITAL STRUCTURE
 
 Issue of shares under Employees Stock Option Plans
 
 During the year ended June 30, 2013, the Company allotted 35,76,256
 equity shares of Rs.2/- each fully paid up under its Employees Stock
 Option Plans. This constitutes 0.51% of the total paid up share capital
 of the Company as on June 30, 2013.
 
 Issue of shares under the Scheme of Arrangement
 
 During the year ended June 30, 2013, the Company allotted 10,125 equity
 shares of Rs.2/- each fully paid up under the Scheme of Arrangement
 between HCL Technologies Limited, HCL Comnet Systems & Services Limited
 and their respective shareholders and creditors under section 391 to
 394 of the Companies Act, 1956. This constitutes 0.001% of the total
 paid up share capital of the Company as on June 30, 2013.
 
 Issued and Paid-up Share Capital
 
 As on June 30, 2013, the issued and paid-up share capital of the
 Company was Rs.139,37,39,714/- (previous year: Rs.138,65,66,952/-)
 comprising 69,68,69,857 (previous year: 69,32,83,476) equity shares of
 Rs.2/- 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
 compulsorily effective from July 24, 2000, if the same are traded on a
 stock exchange, which is linked to a depository. As of June 30, 2013,
 99.93% shares were held in demat form.
 
 DEBENTURES
 
 During the financial year ended June 30, 2013, the Company has redeemed
 the debentures worth Rs.330 crores which was issued in the year 2010. The
 details of the debentures issued, redeemed and outstanding are given
 hereunder:
 
 A debenture trust deed in favour 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.
 
 INTERNAL CONTROL SYSTEM
 
 The Company has put in place an adequate system of internal control
 commensurate with its size and nature of business. These systems
 provide a reasonable assurance in respect of providing financial and
 operational information, complying with applicable statutes,
 safeguarding of assets of the Company and ensuring compliance with
 corporate policies.
 
 The Company has a dedicated Internal Audit team which is commensurate
 with the size, nature and complexity of operations of the Company.
 Internal Audit reports functionally to the Audit Committee of the Board
 which reviews and approves risk based annual internal audit plan. The
 Audit Committee periodically reviews the performance of internal audit
 function.
 
 The Company has a rigorous business planning system to set targets and
 parameters for operations which are reviewed with actual performance to
 ensure timely initiation of corrective action, if required.
 
 The Audit Committee reviews adherence to internal control systems,
 internal audit reports and legal compliances. This Committee reviews
 all quarterly and yearly results of the Company and recommends the same
 to Board for its approval.
 
 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 2012-13'', 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 aforesaid Corporate Governance Report.
 
 MANAGEMENT''S DISCUSSION & ANALYSIS
 
 The Management''s Discussion and Analysis is given separately and forms
 part of this Annual Report.
 
 BUSINESS RESPONSIBILITY 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
 its sustainability report under GRI framework along with a mapping of
 the BRR as stated in the SEBI Circular, it would be treated as
 sufficient compliance of the aforesaid Circular.
 
 For the financial year 2012-13, as the Company has prepared its
 sustainability report based on the GRI framework and the principals
 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://www.hcltech.com/socially-responsible-business/
 sustainability-desk.
 
 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
 
 In accordance with the provision of the Companies Act, 1956 and
 Articles of Association of the Company, Mr. Vineet Nayar, Mr. Amal
 Ganguli and Mr. Subroto Bhattacharya shall retire by rotation as
 Directors of the Company at the ensuing Annual General Meeting and
 being eligible, have offered themselves for the reappointment as the
 Directors of the Company.
 
 Mr. Subramanian Madhavan and Mr. Keki Mistry were appointed as
 Additional Directors of the Company w.e.f. January 15, 2013 and April
 15, 2013 respectively. Pursuant to the provisions of section 260 of the
 Companies Act, 1956, Mr. Subramanian Madhavan and Mr. Keki Mistry hold
 the office till the ensuing Annual General Meeting and are eligible for
 appointment as the Directors of the Company.
 
 AUDITORS
 
 The Statutory Auditors, M/s. S.R. Batliboi & Co. LLP, Chartered
 Accountants, retire at the conclusion of the ensuing Annual General
 Meeting and they have confirmed their eligibility and willingness to be
 re-appointed. The Audit Committee and the Board of Directors recommend
 the reappointment of M/s. S.R.  Batliboi & Co. LLP, Chartered
 Accountants as Statutory Auditors for the financial year 2013-14 for
 shareholders'' approval.
 
 TRANSFER OF UNPAID AND UNCLAIMED AMOUNTS TO IEPF
 
 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 the 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.
 
 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:
 
 - The Company has been conferred the prestigious ''ICSI National Award
 2012'' for Excellence in Corporate Governance from Institute of Company
 Secretaries of India. This award is an acclaimed recognition for
 corporate practicing best corporate governance norms in both letter and
 spirit.
 
 - The Company has wonBest in Show Award for online video (branding)
 for its ''Employees First Effect'' video and ''Silver Award for Best
 Website Features'' for its corporate website www.hcltech.com at the W3
 award. The W3 Awards honor outstanding websites, web advertising, web
 videos and mobile applications.
 
 - The Company has won the ''NASSCOM HR Award in the
 ''Glocalisers''category for successfully driving an integrated global
 employer brand while balancing the need for localization.
 
 - The Company has been conferred with Asian HR Leadership Award 2012
 for ''Innovative HR Practices''.  The Company won this citation for its
 Talent Management application ''Pulse - The Organization Health Index''.
 Pulse is a one stop solution to gauge and track the health index of HCL
 employees based on 27 behavioral traits and 5 broad parameters such as
 Organization Disconnect, Compensation related, Personal Problems,
 Career related and Disciplinary issue.
 
 - The Company has won the ''2012 Optimas Award for Global Outlook'' in
 recognition of its ''Working Across Borders'', program aimed at
 incubating an inclusive work- culture.
 
 - The Company has been named as a ''Market Leader'' in the report titled
 Achieving Market Leadership in Engineering and R&D Services published
 in Oct 2012 by Frost & Sullivan. The Company emerged as the strongest
 India-centric Engineering Services Outsourcing Provider in this report
 that was attributed to its noteworthy market performance.
 
 - The Company has won the Prestigious ''Asia Pacific Enterprise
 Leadership Award (APELA) 2013'' for Corporate Social Responsibility.
 The APELA award recognizes and honors the achievements of companies in
 the areas of sustainable development, corporate responsibility, and/or
 corporate social responsibility.
 
 - The Company has been conferred the ''United Nations- Women Empowerment
 (UN-WEP) Leadership Award 2013'', for exceptional championship of gender
 equality and support for Women''s Empowerment Principles. The Company is
 the only India headquartered Company to make it to the Honor Roll for
 implementing innovative gender equality initiatives within a Company
 and Communities.
 
 SUSTAINABILITY
 
 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
 risk.
 
 In our everyday practice as a ''Responsible Business'' we focus on
 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 2012-13 which is being hosted on the
 website of the Company.
 
 ORGANIZATION EFFECTIVENESS
 
 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
 
 The Company focuses constantly on reassessing, refreshing and
 reinventing organizational and individual capabilities so that it
 continues to offer a distinctive experience to its employees as well as
 to its customers. The Company is on an accelerated journey to enhance
 the employment experience of its people and create new benchmarks. The
 commitment to this will bring new opportunities and meaning to all its
 employees. The beliefs, behaviors and programs reinforce a culture with
 an entrepreneurial history - and encourage and energize each of its
 employees to be recognized as an ''ideapreneur'' - making the Company
 world''s largest ''Ideapreneurship''!
 
 In the same light Program FIRST (Future-ready Initiatives for Results
 and Smart Transformation) has been initiated. Program First introduces
 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. The objective is to make employees
 future-ready by enhancing the Company''s employment experience so as to
 enable individual and organizational growth.
 
 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. The outcome of each pillar will act as
 decision support tool for different stakeholders involved in different
 phases of employee''s lifecycle. It is a one stop solution to launch new
 surveys, monitor existing surveys, analyze data for individual surveys,
 and process data across multiple surveys that provides action oriented
 approach to deliver on the outcomes of the survey.
 
 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. 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.
 
 LEARNING AND DEVELOPMENT
 
 The Company''s Learning & Development (L&D) Ecosystem supports
 holistic employee development through a combination of Technical,
 Behavioral and specialized Domain training. The Company''s learning
 interventions are fully woven around job roles and competencies
 required to perform these roles successfully. Further, the programs are
 designed on blended delivery mode, i.e., classroom, webinars,
 e-learning and action projects, to allow comprehensive learning
 opportunity and the ability to reach a global workforce.
 
 Behavioral learning is delivered through 3 key verticals, namely,
 Professional Excellence, Leadership Excellence and Sales Excellence.
 There are over 20  learning programs available across these verticals
 catering to a wide range of employees- from fresher right up to senior
 leadership. These are designed to impact key business outcomes and are
 developed with content in partnership with several 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 to sharpen the desired
 competencies in their current and future roles. With reporting managers
 it encourages mentoring and their development in learning plays a key
 role in shaping the Company''s leadership pipeline.
 
 L&D is also deeply engaged in a unique ''customer connect'' program which
 attempts to bring together senior leadership of our key clients and the
 Company delivery teams for greater cultural alignment, thereby
 resulting in better working relationships and stronger bonding, which
 has been highly applauded by many of our valued clients.
 
 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 1 to 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 of these plans have been annexed as Annexure 3 to this
 report.
 
 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 4
 to 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 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
 
                            Noida (U.P.), India 
 
                            SHIV NADAR
 
 July 31, 2013              Chairman and Chief Strategy Officer
Source : Dion Global Solutions Limited
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