The Directors have pleasure in presenting this Twentieth Annual Report
together with the Audited Accounts for the year ended June 30, 2012.
The highlights of the financial results of your Company prepared for
the financial year 2011-12 are tabulated below:
(Rs. in crores)
2011-12 2010-11 2011-12 2010-11
Total Revenue 21,037.05 16,030.08 9,208.08 6,960.75
Total Expenditure 17,827.25 13,894.97 6,847.34 5,670.87
Profit before tax 3,209.80 2,135.11 2,360.74 1,289.88
Provision for tax (782.72) (488.48) (410.32) (91.60)
Share of minority
interest (0.07) (0.12) - -
Share of loss of
associates (4.31) - - -
Profit after tax 2,422.70 1,646.51 1,950.42 1,198.28
Balance in Profit
and Loss Account
brought forward 4,167.94 3,535.14 2,435.71 2,260.95
Loss acquired under
the scheme of
amalgamation - - - (9.81)
reserve due to
debenture 170.00 - 170.00 -
for appropriation 6,760.64 5,181.65 4,556.13 3,449.42
crores 277.60 138.09 277.60 138.09
(previous year Rs.0.35
crores) paid for
Interim dividend 552.98 376.40 552.98 376.40
tax [including Rs.0.05
crores 134.74 84.39 134.74 84.39
(previous year Rs.0.06
crores) paid for
Transfer to general
reserve 195.04 119.83 195.04 119.83
Transfer to debenture
redemption reserve 210.00 295.00 210.00 295.00
forward to the
balance sheet 5,390.28 4,167.94 3,185.77 2,435.71
TRANSFER TO RESERVES
During the financial year 2011-12, your Company has transferred Rs.195.04
crores to the General Reserve Account. An amount of Rs.210 crores has
been transferred to the Debenture Redemption Reserve Account and Rs.170
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, 2012, the balance available in the debenture
redemption reserve account is Rs.630 crores. An amount of Rs.3,185.77
crores is proposed to be carried forward in the Profit & Loss Account.
During the financial year 2011-12, on a consolidated basis, the
Company''s revenues for the year 2011-12 stood at Rs.20,830.55 crores
registering a growth of 32.42% 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.
Your Directors are pleased to recommend a final dividend of Rs.4/- per
equity share of par value of Rs.2/- each for the financial year ended
June 30, 2012, 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:
paid during Rate of
dividend Amount of Dividend
the year ended
June 30, 2012 per share dividend
paid tax paid by the
1 1st Interim
Dividend Rs. 4/-* 276.06 44.78 320.84
2 2nd Interim
Dividend Rs. 2/- 138.39 22.45 160.84
3 3rd Interim
Dividend Rs. 2/- 138.53 22.47 161.00
* Including onetime special Milestone dividend of Rs.2/- per equity
The total amount of dividends (including interim dividends paid) for
the year ended June 30, 2012 shall be Rs.830.58 crores. Dividend
distribution tax paid / payable by the Company for the year would
amount to Rs.134.74 crores.
SUBSIDIARIES / JOINT VENTURES
Joint Venture with State Street Corporation, USA
During the year the Company entered into a joint venture with State
Street Corporation, a company incorporated in USA in which your Company
holds 49% stake in the joint venture company through its step down
subsidiary in U.K. The operations of the said joint venture are being
carried out in State street HCL Services (India) Pvt. Ltd., a company
incorporated under the Companies Act, 1956.
Joint Venture with Great American Insurance Company
During the year the Company has entered into a joint venture with Great
American Insurance Company (GAIC).The Joint Venture Company has been
incorporated in India titled HCL Eagle Limited in which 92% stake is
held by the Company and balance stake is held by GAIC.
Rationalisation of subsidiaries
During the year, as a part of the process of restructuring, one company
in U.S. titled Capital Stream Inc. has been merged with HCL America
Inc.; one company in Canada viz. HCL Technologies Canada Inc. has been
merged with Axon Solutions (Canada) Inc. and the holding structure of
some of the step down subsidiaries was changed. Further the business of
one company in Malaysia has been transferred to the other subsidiary in
Malaysia and also changed the investment company in Austria to the
Closure of subsidiaries
- As a rationalization process your Company has undertaken the strike
off of its step down subsidiary in Singapore viz. DSI Financial
Solutions Pte. Limited w.e.f. April 11, 2012.
SUBSIDIARIES - FINANCIALS
The Company has 57 subsidiaries as on June 30, 2012. 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 of the Company for the year
ended June 30, 2012.
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, 2012 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.
CHANGES IN CAPITAL STRUCTURE
Issue of shares under Employees Stock Option Plans
During the year ended June 30, 2012, the Company allotted 45,94,952
equity shares of Rs.2/- each fully paid up under its Employees Stock
Option Plans. This constitutes 0.66% of the total paid up share capital
of the Company as on June 30, 2012.
Issued and Paid-up Share Capital
As on June 30, 2012, the issued and paid-up share capital of the
Company was Rs.138,65,66,952/- (previous year: Rs.137,73,77,048/-)
comprising 69,32,83,476 (previous year: 68,86,88,524) 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, 2012,
99.93% shares were held in demat form.
During the financial year ended June 30, 2010, the Company had issued
rated, secured, taxable, redeemable non-convertible debenture(s) as per
details given hereunder:
Issue Amount Coupon Rate Maturity Redeemed
crores) (Payable Date on
2009 170 7.55% p.a. August 25,
2009 330 8.20% p.a. August 25,
10, 2009 500 8.80% p.a. September
10, 2014 -
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
The Company has a dedicated Internal Audit team which is commensurate
with the size, nature & complexity of operations of the Company.
Internal Audit reports functionally to the Audit Committee of Board
which reviews and approves risk based annual internal audit plan. Audit
Committee periodically reviews the performance of internal audit
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 Company''s 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.
The report of the Board of Directors of the Company on Corporate
Governance is given as a separate section titled ''Corporate Governance
Report 2011-12'', 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.
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.
In accordance with the provision of the Companies Act, 1956 and
Articles of Association of the Company, Mr. Shiv Nadar and Ms. Robin
Abrams shall retire by rotation as Directors of the Company at the
ensuing Annual General Meeting and being eligible, they have offered
themselves for the reappointment as the Directors of the Company.
Mr. Sudhindar Krishan Khanna was appointed as an Additional Director of
the Company w.e.f. November 03, 2011. Pursuant to the provisions of
section 260 of the Companies Act, 1956, Mr. Sudhindar Krishan Khanna
holds the office till the ensuing Annual General Meeting and is
eligible for appointment as the Director of the Company. A brief
profile of Mr. Sudhindar Krishan Khanna who is proposed to be appointed
as Director of the Company is given in the corporate governance section
of the annual report.
Mr. Sosale Shankara Sastry and Mr. Srikant Madhav Datar were appointed
as Additional Directors of the Company w.e.f. July 24, 2012. Pursuant
to the provisions of section 260 of the Companies Act, 1956, Mr. Sosale
Shankara Sastry and Mr. Srikant Madhav Datar holds the office till the
ensuing Annual General Meeting and are eligible for appointment as the
Directors of the Company. A brief profile of Mr. Sosale Shankara Sastry
and Mr. Srikant Madhav Datar who are proposed to be appointed as the
Directors of the Company is given in the corporate governance section
of the annual report.
The statutory 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.
The Audit Committee and the Board of Directors recommend the
reappointment as statutory auditors of M/s. S.R. Batliboi & Co.,
Chartered Accountants for the financial year 2012-13 for shareholders''
TRANSFER OF UNPAID AND UNCLAIMED AMOUNTS TO IEPF
Pursuant to the provisions of section 205A (5) of the Companies Act,
1956, the dividend declared and paid by the Company and 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
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 ranked in Forbes Asia''s prestigious annual
listing of the 50 best publicly traded companies in ''Asia Pacific
called Asia Fab 50 companies''. The Company made it to this list for
the second consecutive year.
- The Company has been recognized as a leader in Gartner''s Magic
Quadrant for Data Center Outsourcing and Infrastructure Utility
Services, North America.
- The Company bagged 4 awards at the Top Ranking Performers Awards
2011, APAC hosted by Contact Center World- the Global Association for
Contact Center Best Practices & Networking. The Company won 2 Gold
Medals for Best Customer Services and Best Incentive Scheme, a Silver
Medal for Best Recruitment Campaign and a Bronze Medal for Best Large
Contact Centre. The Company won Contact Center World''s Top Ranking
Performers Awards for the second consecutive year.
- The Company was felicitated with 3 prestigious recognitions at the
Asia''s Best Employer Brand Awards 2011, hosted jointly by World HRD
Congress, Employer Branding Institute and Stars of the Industry Group.
The Company won the awards under 3 categories namely ''HR Professional
of the Year'', ''Innovation in Recruitment'' and ''Managing Health at
- The Company has been awarded the ''Excellence in Education Award'' for
2011 by the Life Office Management Association, a premier Educational
Institution in US, providing training and certification in Life &
Annuity. This is the 7th time HCL has been bestowed with this Award - a
unique feat achieved by any Indian IT Company.
- The Institute of Company Secretaries of India awarded ''Certificate of
Recognition'' to the Company for adopting excellent practices in
Corporate Governance in the year 2011.
- The Company has been felicitated with the prestigious Nasscom
Innovation Award 2012 for ''Market Facing Innovation''. The award was
given in recognition of HCL''s distinctive external facing business
models and processes that make an effective impact on clients.
- The Company has been conferred with the prestigious Asian Human
Capital Summit 2011 award by the Ministry of Manpower Singapore and
INSEAD for its innovative and impactful people practices centered on it
Employees First, Customer Second Philosophy.
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, Trust through transparency and Employees First and
employees are taking the lead in driving innovation. The initiative
taken by the Company on sustainability are given in detail in the
sustainability report for the year 2011-12 which is being hosted on the
website of the Company.
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 (OE) 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 would
translate into improved margins, productivity and resource utilization
apart from creating robust talent processes & systems.
OE has made a significant impact through rolling out role & competency
framework and has integrated it with the HR and
Business processes. The function has made significant achievements in
bringing sharper focus to management performance and created a pool of
leaders through identification and grooming of High-Potential
The role and competency framework is currently being used by about 80%
of the organization in designing the right delivery structures, 100% of
the organization for deployment, hiring and leadership capability
building. The redesigned performance appraisal system has covered more
than 35,000 employees in the organization and in the subsequent phases
over the next few months all employees would be touched. OE rolled out
a high potential identification and progression program at the bottom
of the pyramid (Developer, Leads etc.) for 6000 employees and provides
discontinuous growth opportunities to them in their careers.
There are two unique people practices that touched new highs during the
year- 360 degree feedback - 360 degree feedback aims to build an
organization culture that fosters the spirit of collaboration and
partnership. Manager can receive feedback from everyone who falls under
his/her span of influence rather than the span of control. It touched
more and more employees and more managers and leaders got specific and
action-able feedback for development.
EPIC (Employee Passion Indicative Count) - EPIC is a year- long
initiative which begins with identifying the Top Passion Drivers of an
individual through a self assessment. It also touched new highs in
participation and post feedback actions. More than 70% employees and
their managers participated in EPIC. The initiative epitomizes
different strokes for different folks by recognizing the uniqueness of
every individual. This ensures that as we scale, we do not treat
employees as employee numbers and even as we scale, we remain small and
familiar to every employee of the Company.
LEARNING AND DEVELOPMENT
The Company''s Learning & Development (L&D) provide integrated and
comprehensive professional learning strategy focusing on development of
employees aligned to the Employees First, Customers Second strategy,
and driving key business outcomes.
L&D is a fully integrated function that provides professional, sales,
and leadership development across Company. It offers specifically
designed learning opportunities that meet the needs for the business at
all stages of its life cycle.
L&D recognizes that grooming employee into globally competitive leaders
requires an extensive and nurturing ecosystem. The team works closely
with business leaders to develop strategies and learning solutions that
meet the performance imperatives of the employees of the Company.
L&D''s primary responsibility is to prepare a pipeline of specialists
and nurture these individuals for current and future opportunities.
L&D creates and delivers role-focused learning programs and business
aligned learning opportunities to strengthen business competencies thus
maximizing billability. With five verticals, Leadership excellence,
Performance excellence, Sales excellence, Performance consulting and
Learning Centre of Excellence, L & D is able to offer its services to
all in the organization.
Leaders and employees are encouraged to teach, share their experiences
and to mentor employees, enriching and accelerating the pace of
learning. The team uses appropriate learning methods and technologies
to deliver learning to all employees globally. L&D partners with
educational institutions, education providers and alliance partners to
augment internal learning capabilities.
EMPLOYEES FIRST, CUSTOMERS SECOND
One small idea can ignite a revolution just as a single matchstick can
start a fire. One such idea - putting Employees First and Customers
Second (EFCS) - sparked a revolution in your Company.
Conventional wisdom, of course, says that companies must always put the
customer first. However, EFCS is build on the belief that in any
services business true value is created in the interface between the
customer and the employee. So, by putting employees first, you can
bring about fundamental change in the way a company delivers value to
its customers and differentiates from its competitors. Through a
combination of engaged employees and accountable management a company
can create extraordinary value for itself and its customers.
By practicing this philosophy, our organization has changed its
business model, nearly tripled its annual revenues, doubled its market
capitalization, expanded its employee''s base five folds and has been
featured in globally renowned publications and discussed in mainstream
media. Some of the unique initiatives which we practice to make EFCS a
way of life are:-
- SSD (Smart Service Desk) makes the enabling functions accountable to
the employees and resolve any issues that they may have within a
stipulated time. The right to close or open a ticket lies with the
employee and their satisfaction on the nature of the resolution made.
With SLA attached to each issue raised, employees are empowered to
question the enabling functions and can view/monitor the movement of
their issue online.
- Directions- An annual event where the senior management along with
the CEO conduct a face-to-face meeting with all the employees to
discuss Company''s strategy, new processes and policies and what they
think should be done in the next year- i.e., together, with the
employees the senior leadership charts out the directions for the
Company for the next year. Around 25,000 employees were touched by 16
sessions across the globe and sessions were broadcasted to more than
- Value Portal- This online platform empowers the employee to think on
innovative lines and generate value- add ideas that are in-line with
the customer''s business and technical engagement. The ideas across the
Company are available in this central repository to enable best
- U&I- U&I is an online blog and discussion forum run by the CEO, each
employee gets an opportunity to raise issues, share thoughts and ideas
as well as debate directly with the CEO.
- MAD JAM (Make A Difference Jamboree) is focused on enhancing the
culture of innovation in the organization and focuses on celebrating
Transformers by recognizing them for their innovative and unique ideas.
More than 20,000 HCLites engaged, 1000 innovators sent their ideas.
Customer On-Boarding was chosen as the MAD IDEA 2011 and Mobility
Solutions was chosen as the INNOVATOR''S MAD IDEA by the other idea
teams present during the finale.
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 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
The details of these plans have been annexed as Annexure 3 to this
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
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.
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
For and on behalf of the Board of Directors
Noida (U.P.), India SHIV NADAR
July 25, 2012 Chairman and Chief Strategy Officer