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Directors Report of HCL Infosystems Ltd.

Jun 30, 2015

Dear Members,

The Directors have pleasure in presenting their Twenty Ninth Annual Report together with the Audited Accounts for the financial year ended 30th June, 2015.

Financial Highlights

(Rs. in Crores)

Particulars Consolidated

2014-15 2013-14

Net Sales and other income 6,284.40 7,955.32

Profit before exceptional items Interest, Depreciation and Tax (7.85) 8.35

Finance Charges 142.78 156.04

Depreciation and Amortization 51.90 52.50

Exceptional Items 28.94 14.37

Profit before Tax (173.59) (185.81)

Provision for Taxation: Current 5.50 3.18

Deferred Tax Expenses / (Credit) 5.62 25.52

Net Profit after Tax (Before Minority Interest) (184.71) (214.51)

Net Profit after Tax (After Minority Interest) (184.71) (214.51)

Profit available for appropriation 263.23 447.94

Appropriations

Debenture Redemption Reserve - -

Interim Dividend - -

Proposed Dividend - -

Tax on Dividend (including Interim Dividend) - -

Transfer to General Reserve - -

Balance of Profit carried forward to next year 263.23 447.94

Standalone Particulars 2014-15 2013-14

4,456.73 5,797.01 Net Sales and other income

Profit before exceptional items 176.74 85.06 Interest, Depreciation and Tax 96.74 74.95 Finance Charges 6.87 8.44 Depreciation and Amortization (139.34) (178.75) Exceptional Items (66.21) (177.08) Profit before Tax 4.68 1.03 Provision for Taxation: Current - 13.58 Deferred Tax Expenses / (Credit)

Net Profit after Tax (Before (70.89) (191.69) Minority Interest)

Net Profit after Tax (After - - Minority Interest) 456.61 527.50 Profit available for appropriation

Appropriations - - Debenture Redemption Reserve - - Interim Dividend - - Proposed Dividend

Tax on Dividend (including - - Interim Dividend) - - Transfer to General Reserve

Balance of Profit carried 456.61 527.50 forward to next year

Performance

The consolidated net revenue of the Company was Rs. 6,284.40 Crores as against Rs. 7,955.32 Crores in the previous year. The consolidated loss before tax was Rs. 173.59 Crores as against Rs. 185.81 Crores in the previous year. The net revenue on standalone basis was Rs. 4,456.73 Crores as against Rs. 5,797.01 Crores in the previous year. The consolidated loss before tax was Rs. 66.21 Crores as against Rs. 177.08 Crores in the previous year.

Your Board of Directors do not recommend any dividend for the year under review.

Operations

A detailed analysis and insight into the financial performance and operations of your Company for the year ended 30th June, 2015, is appearing in the Management Discussion and Analysis, forming part of the Annual Report.

There is no change in the authorized share capital of the Company.

Awards & Recognition

Your Company won the Banking & Financial Services Award for its contribution in the field of Financial Inclusion at the Elets-BFSI Leadership Summit and Awards, 2015.

HCL Services Limited, a subsidiary of your Company bagged following awards this year:

* The "IT Service Provider of the Year" award at the 2015 Frost & Sullivan India ICT Awards. This prestigious award recognizes the relentless efforts of HCL Services in delivering exceptional business performance in the year 2014.

* The Consumer Services business division of HCL Services won the Best Retailer of the Year Award in the field of Mobile & Telecom Services at the Asia Retail Congress (ARC), 2015.

* The DQ LIVE Business Technology Award 2015 for 'Excellence in the Implementation' and 'Use of Technology for Business Benefits in the Enterprise Applications and Cloud' category.

HCL Infotech Limited, another subsidiary of your Company bagged two Skoch Order-of-Merit Awards in the 'Solution Development' and 'Access to Banking & Financial Services' categories for enabling nationalized and regional rural banks to offer financial services at an affordable cost to the unbanked and under-banked population through its technology infrastructure and service solutions.

Employee Stock Option Plan

Employee Stock Option Scheme 2000

Pursuant to the approval of the Shareholders at an Extra- Ordinary General Meeting held on 25th February, 2000 for grant of options to the employees of the Company and its subsidiaries (the Scheme 2000), the Board of Directors had approved the grant of 31,90,200 options including the options that had lapsed out of each grant. Each option confers on the employee a right for five equity shares of Rs. 2/- each.

During the year under review, the Company had allotted 10.000 equity shares of Rs. 2/- each under the Scheme 2000. Employee Stock Based Compensation Plan 2005

Pursuant to the approval of Shareholders of the Company through a Postal Ballot, the result whereof was declared on 13th June, 2005, the Board of Directors had granted 33,35,487 options including the options that had lapsed out of each grant under the Employee Stock Based Compensation Plan 2005 (the Plan 2005). Each option confers on the employee a right for five equity shares of Rs. 2/- each at the market price as specified in the SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines 1999, on the date of grant.

During the year under review, the Company had allotted 15.000 equity shares of Rs. 2/- each under the Plan 2005.

Fixed Deposits

The Company has not accepted/renewed any deposits from the public during the year and there were no fixed deposits outstanding either at the beginning or at the end of the year.

Listing

The equity shares of the Company are listed at The BSE Limited, Mumbai (BSE) and National Stock Exchange of India Limited, Mumbai (NSE).

The Company has paid the listing fee for the year 2015-2016 to BSE and NSE.

Directors and Key Managerial Personnel

Mr. Harshavardhan Madhav Chitale stepped down as Managing Director & CEO and the Director of the Company w.e.f. close of the business hours on 31st December, 2014. Mr. Ajay Vohra ceased to be director of the Company w.e.f. 1st April, 2015 under the provisions of section 167 (1)(b) of Companies Act, 2013. The Board places on record its appreciation for the contributions made by them during their tenure with the Company. Mr. Premkumar Seshadri, the Director, was designated as Executive Vice Chairman effective from 10th September, 2014. He was also appointed as 'Managing Director' of the Company for a period of 3 (three) years w.e.f. 1st January, 2015.

Ms. Ritu Arora was appointed as an additional director of the Company w.e.f. 6th April, 2015 and designated as Independent Director and holds office up to the date of the ensuring Annual General Meeting of the Company.

The Company has received declarations from all the Independent directors confirming that they meet with the criteria of independence as prescribed under Section 149(6) of the Companies Act, 2013 and Clause 49 of the Listing Agreement. In terms of the provision of Section 149, 152(6) and other applicable provisions of the Companies Act, 2013,

Ms. Ritu Arora, on approval of her appointment as Director in the forthcoming AGM, shall hold office up to a term of five consecutive years on the Board of the Company upto 5th April, 2020 and shall not be liable to retire by rotation.

On induction of Independent Director on the Board of the Company, a familiarization program is conducted to familiarize him/her with the Company, its businesses, financial performance, budget and control processes etc. Company's Managing Director, CFO and Business Heads attend the meeting and necessary documents/brochures, reports and internal policies are provided to enable him/her to familiarize with the Company's policies. The details of such familiarization program are posted on the website of the Company and can be accessed at http://www.hclinfosystems.in/sites/default/files.

In accordance with the provisions of the Companies Act, 2013 and the Articles of Association of the Company, Dr. Nikhil Sinha, retires from office by rotation at the ensuing Annual General Meeting and being eligible, has offered himself for re-appointment. A brief resume, details of expertise and other directorships/committee memberships held by the above Directors, form part of the Notice convening the Twenty Ninth Annual General Meeting.

Mr. Sandeep Kanwar stepped down from the position of Chief Financial Officer (CFO) of the Company w.e.f. 1st April, 2015 and Mr. S. G. Murali was appointed to act as Group Chief Financial Officer (CFO) of the Company w.e.f. 1st April, 2015.

Committees of Board

Currently, the Board has 6 (Six) Committees: Accounts and Audit Committee, Nomination & Remuneration Committee, Stakeholders Relationship Committee, Corporate Social Responsibility (CSR) Committee, Finance Committee and Technology Committee. A detailed note on Committees is provided in the Corporate Governance Report.

Board and Committees Evaluation

The Board of Directors has carried out an annual evaluation of its own performance, Board Committees and individual Directors pursuant to the provisions of the Companies Act, 2013 and the corporate governance requirements as prescribed by Securities and Exchange Board of India ("SEBI") under Clause 49 of the Listing Agreements ("Clause 49").

The performance of the Board was evaluated by the Board after seeking inputs from all the directors on the basis of the criteria such as the Board composition and structure, effectiveness of Board processes, information and functioning, etc.

The performance of the Committees was evaluated by the board after seeking inputs from the committee members on the basis of the criteria such as the composition of committees, effectiveness of committee meetings, etc.

The Board and the Nomination & Remuneration Committee ("NRC") reviewed the role, functions, duties and performance of the individual Directors on the basis of the criteria such as the contribution of the individual Director to the Board and committee meetings like preparedness on the issues to be discussed, meaningful and constructive contribution and inputs in meetings, etc. In addition, the Chairman was also evaluated on the key aspects of his role.

In a separate meeting of independent Directors, performance of non-independent Directors, performance of the Board as a whole and performance of the Chairman was evaluated, taking into account the views of executive Directors and non-executive Directors. The same was discussed in the Board meeting that followed the meeting of the independent Directors, at which the performance of the Board, its committees and individual Directors was also discussed.

Criteria/Policy on Appointment and Remuneration

The Board has, on the recommendation of the Nomination & Remuneration Committee (NRC) framed a criteria for appointment of Directors, Key Managerial Personnel/Senior Management. The Board has also adopted a remuneration policy for Directors, Key Managerial Personnel/ Senior Management and other employees. The criteria/policy on appointment and remuneration Policy are stated in the Corporate Governance Report.

Board Meetings

During the financial year 2014-15, Nine Board Meetings were held and the gap between two meetings did not exceed one hundred and twenty days. The details of Board Meetings held are stated in the Corporate Governance Report.

Corporate Social Responsibility (CSR)

A report on Corporate Social Responsibility (CSR) is attached as Annexure to this Report. The policy is available on the website of the Company.

Corporate Governance Report and Management Discussion and Analysis Statement

The Corporate Governance Report and the Management Discussion and Analysis Statement are attached and are to be read with the Directors' Report.

Insider Trading Regulations

As per the requirements under the SEBI (Prohibition of Insider Trading) Regulations, 2015, the 'Code of Conduct for Internal Procedures and to Regulate, Monitor and Report Trading By Insiders' and the 'Code of Fair Disclosure' were adopted w.e.f. 15th May, 2015. These codes replaced the earlier codes which were adopted under the SEBI (Prohibition of Inside Trading) Regulation 1992.

Directors' Responsibility Statement

Pursuant to the requirement of Section 134(3)(c) of the Companies Act, 2013, and based on the representations received from the operating management, the Directors hereby confirm that:

(a) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

(b) the directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit and loss of the company for that period;

(c) the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safe guarding the assets of the company and for preventing and detecting fraud and other irregularities;

(d) the directors had prepared the annual accounts on a going concern basis;

(e) the directors had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively.

(f) the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

Particulars of Employees and related disclosures

The information required under Section 197 of the Act read with rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are given below:.

(a) The ratio of the remuneration of each director to the median remuneration of the employees of the Company for the financial year:

Non-Executive Directors Ratio to Remuneration median (Rs.) remuneration

Dr. Nikhil Sinha - -

Mr. V.N. Koura 0.38 75,000

Dr. Pradeep Kumar Khosla 1.53 3,00,000

Ms. Sangeeta Talwar 8.81 17,25,000

Mr. Kaushik Dutta 9.96 19,50,000

Mr. Dhirendra Singh 10.73 21,00,000

Mr. Pawan Kumar Danwar - -

Mr. Dilip Kumar Srivastava - -

Mr. Sanjeev Sharma 2.30 4,50,000

Ms. Ritu Arora - -

Executive Directors Ratio to Remuneration median (Rs.) remuneration

*Mr. Harshavardhan 117.00 2,29,07,126 Madhav Chitale

Mr. Premkumar Seshadri - - ( Managing Director w.e.f 1st January, 2015)

*Mr. Harshavardhan Madhav Chitale ceased to be Managing Director & CEO w.e.f. close of the business hours on 31st December, 2014. The ratio of his remuneration to the median remuneration has been worked out based on his remuneration received till 31st December, 2014 annualized for the full year.

(b) The percentage increase in remuneration of each Director, Chief Executive Officer, Chief Financial Officer, Company Secretary in the financial year:

Directors, Chief Executive % increase in Officer, Chief Financial Officer remuneration in and Company Secretary the financial year

Dr. Nikhil Sinha -100

Mr. Harshavardhan Madhav Nil Chitale

Mr. Premkumar Seshadri -

Mr. V.N. Koura 25

Dr. Pradeep Kumar Khosla -7.7

*Ms. Sangeeta Talwar -

*Mr. Kaushik Dutta -

Mr. Dhirendra Singh 127

Mr. Pawan Kumar Danwar -

Mr. Dilip Kumar Srivastava -

*Mr. Sanjeev Sharma (w.e.f. 3rd - October, 2014)

**Ms. Ritu Arora (w.e.f. 6th April, - 2015)

*Mr. Sandeep Kanwar (Up to - 1 stApril, 2015)

*Mr. S. G. Murali (w.e.f. 1st April, - 2015)

Mr. Sushil Kumar Jain 4.9

Note: Sitting fee was increased from Rs. 20,000 per Board/ Board Committee meeting to Rs. 75,000 per Board/ Board Committee meeting w.e.f. 1st April, 2014 and paid to non executive and independent directors only.

*Since the details are only for a part of the year, the same are not comparable.

**No sitting fee was paid to Ms. Ritu Arora during the year under review.

(c) The percentage increase in the median remuneration of employees in the financial year:

The percentage increase in the median remuneration of the employees in the financial year was 5%.

(d) The number of permanent employees on the rolls of Company:

The number of permanent employees on rolls of the Company at the end of the financial year were 5257.

(e) The explanation on the relationship between average increase in remuneration and Company performance:

On an average, employees received an annual increase of 6% in India. The individual increments varied from 3% to 12%, based on individual performance.

Employees outside India received wage increase varying from 3% to 4%. The increase in remuneration is in line with the market trends. In order to ensure that remuneration reflects Company performance, the performance pay is also linked to organization performance, apart from an individual's performance.

(f) Comparison of the remuneration of the key managerial personnel against the performance of the Company:

Aggregate remuneration of key 3.31 managerial personnel (KMP) in FY15 (Rs. crores)

Revenue (Rs. crores) 4,456.73

Remuneration of KMPs (as % of 0.074 revenue)

Profit before Tax (PBT) (Rs. crores) (66.21)

Remuneration of KMP (as % of PBT) NA (in view of losses)

(g) Variations in the market capitalisation of the Company, price earnings ratio as at the closing date of the current financial year and previous financial year:

Market Capitalisation (in crores)

% Change

30th June, 30th June, 2015 2014

NSE 757.88 1,676.24 (54.8%)

BSE 758.99 1,674.01 (54.7%)

Price NA, as the Company incurred losses Earnings during the year ended 30th June, 2015 Ratio

(h) Percentage increase over decrease in the market quotations of the shares of the Company in comparison to the rate at which the Company came out with the last public offer:

NA, The Company has not made any public offer

(i) Average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration:

The average annual increase was around 6%.

Increase in the managerial remuneration for the year was 3.27%.

(j) Comparison of each remuneration of the Key Managerial Personnel against the performance of the Company:

Mr. Harshavardhan Mr. Premkumar Madhav Chitale (till Seshadri 31.12.2014)

Remuneration in FY15 1.15 - (Rs. crores)

Revenue (Rs. crores)

Remuneration as % of 0.026 - revenue

Profit before Tax (PBT) (Rs. crores)

Mr. Sandeep Mr. S.G. Murali Mr. Sushil Kanwar (till (w.e.f 1st April, Kumar Jain 31.03.2015) 2015)

Remuneration in FY15 1.24 0.47 0.45 (Rs. crores)

Revenue (Rs. crores) 4456.73

Remuneration as % of 0.028 0.01 0.01 revenue

Profit before Tax (PBT) (66.21) (Rs. crores)

Remuneration NA, as the Company incurred losses during (as % of PBT) the year ended 30th June, 2015

(k) The key parameters for any variable component of remuneration availed by the Directors:

The Company has not paid any Commission to its Non-Executive Directors during the year under review.

(l) The ratio of the remuneration of the highest paid Director to that of the employees who are not Directors but receive remuneration in excess of the highest paid director during the year:

None

(j) Affirmation that the remuneration is as per the remuneration policy of the Company:

The Company affirms remuneration is as per the remuneration policy of the Company.

Annual Report is being sent to the members of the Company excluding the information under Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. Any member interested in obtaining the said information may write to the Company Secretary at the registered office of the Company.

Particulars of Loans, Guarantees or Investments

Details of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in the notes to the Financial Statements.

Related Party Transactions

All contracts / arrangements / transactions entered by the Company during the financial year with related parties were in the ordinary course of business and on an arm's length under the provisions of Section 188 and other applicable sections of the Companies Act, 2013 read with the relevant Rules. During the year, the Company had not entered into any contract / arrangement / transaction with related parties which could be considered material in accordance with the policy of the Company on materiality of related party transactions.

Mr. Premkumar Seshadri, Executive Vice Chairman also appointed as Managing Director of the Company for a period of 3 (three) years w.e.f 1st January, 2015. M/s HCL Corporation Private Limited, the Promoter Company pays the remuneration to Mr. Seshadri as per the agreement.

Policy on dealing with related party transactions is available on the website of the Company.http://www.hclinfosystems.in/ sites/default/files/Policy on Related party transactions.pdf

Internal Control Systems

The Company has in place adequate internal financial controls with reference to financial statements. During the year, such controls were tested and no reportable material weakness in the design or operation were observed.

Vigil Mechanism/Whistle Blower Policy

Pursuant to the provisions of section 177(9) & (10) of the Companies Act, 2013 and Clause 49 of the Listing Agreement, a Vigil Mechanism/ Whistle Blower Policy for Directors and employee to report concerns about unethical behavior, actual or suspected fraud or violation of the Company's code of conduct or ethics policy. The said Policy is posted on the website of the Company and can be assessed at http://www.hclinfosystems.in/ sites/default/files/Whistleblower Policy 0.pdf

Auditors & Auditors' Report

Statutory Auditors

M/s Price Waterhouse, Chartered Accountants, who are the statutory auditors of the Company, hold office until the conclusion of forthcoming Annual General Meeting. It is proposed to re-appoint M/s Price Waterhouse, Chartered Accountants as statutory auditors of the Company from the conclusion of forthcoming Annual General Meeting till the conclusion of thirtieth (30th) AGM to be held in the year 2016. They have confirmed their eligibility to the effect that their re-appointment, if made, would be within the prescribed limits under the Act and that they are not disqualified for re- appointment. It is also proposed to authorize the Board of Directors to fix their remuneration.

The Auditors' Report does not contain any qualification, reservation or adverse remark.

Secretarial Audit

Pursuant to the requirements of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company had appointed M/s Navneet K. Arora & Co., Practicing Company Secretaries (CoP 3005) as the Secretarial Auditor for the year ended on 30th June, 2015. The Secretarial Audit report issued by M/s Navneet K. Arora & Co., Practicing Company Secretaries is attached separately to this report. The report does not contain any qualification, reservation or adverse remark. Additional information relating to Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo

The information on conservation of energy, technology absorption and foreign exchange earnings and outgo stipulated under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of The Companies (Accounts) Rules, 2014, is attached as Annexure to this Report.

Consolidated Financial Statement

In accordance with the Companies Act, 2013 ("the Act") and Accounting Standard (AS) - 21 on Consolidated Financial Statements read with AS - 23 on Accounting for Investments in Subsidiaries/Associates/JVs and AS - 27 on Financial Reporting of Interests in Joint Ventures, the audited consolidated financial statement is provided in the Annual Report.

Subsidiaries, Joint Ventures and Associate Companies

The Company divested its entire investment in the equity shares of RMA Software Park Private Limited on 24th September, 2014.

A list of Subsidiaries/Associates/JVs is given in the Extract of Annual Return attached to this report.

Policy for determining material subsidiaries of the Company is available on the website of the Company at http://www. hclinfosystems.in/sites/default/files/Policy on Subsidiaries.pdf

Extract of Annual Return

The details forming part of the extract of the Annual Return in form MGT 9 is attached herewith as "Annexure to this Report". Significant and Material Orders Passed by the Regulators or Courts

There are no significant material orders passed by the Regulators / Courts which would impact the going concern status of the Company and its future operations. Acknowledgements

The Directors place on record their appreciation for the continued co-operation extended by all stakeholders including various departments of the Central and State Government, Shareholders, Investors, Bankers, Financial Institutions, Customers, Dealers and Suppliers.

The Board also places on record its gratitude and appreciation of the committed services of the executives and employees of the Company.

On behalf of the Board of Directors

Sd/-

Place : Noida Nikhil Sinha Date : August 20, 2015 (Chairman)




Jun 30, 2014

Dear members,

The Directors have pleasure in presenting their Twenty Eighth Annual Report together with the Audited Accounts for the financial year ended 30th June, 2014.

Financial Highlights

(Rs. in Crores)

Particulars Consolidated Standalone

2013-14 2012-13 2013-141 2012-13

Net Sales and other income 7,955.32 9,360.30 5,797.01 8,752.95

Profit before exceptional items, Interest, Depreciation and Tax 8.35 59.02 85.06 52.71

Finance Charges 156.04 137.08 74.95 134.98

Depreciation and Amortisation 52.50 51.89 8.44 48.98

Exceptional Items 14.37 4.38 (178.75) 4.38

Profit before Tax (185.82) (125.57) (177.08) (126.87)

Provision for Taxation: Current 3.18 0.12 1.03 -

Deferred 25.52 (45.71) 13.58 (45.54)

Net Profit after Tax (Before Minority Interest) (214.52) (79.98) (191.69 (81.33)

Net Profit after Tax (214.52) (79.98) (191.69) (81.33)

Profit available for appropriation 447.94 666.39 527.50 679.42

Appropriations

Debenture Redemption Reserve - - - -

Interim Dividend - - - -

Proposed Dividend - - - -

Tax on Dividend (including Interim Dividend) - - - -

Transfer to General Reserve - - - - Balance of Profit carried forward to next year 447.94 666.39 527.50 679.42

Performance

The consolidated net revenue of the Company was Rs. 7,955.32 Crores as against Rs. 9,360.30 Crores in the previous year. The consolidated profit/(loss) before tax was Rs. (185.82) Crores as against Rs. (125.57) Crores in the previous year. However, the Company''s profit before exceptional items, interest, Depreciation and tax in FY14 stood at Rs. 8.35 Crores.

As part of restructuring, due to inverted duty structure and lack of economies of scale against global competitors in the Computing Products business, we took the decision to restructure that business. As a result of which in FY14 we took provisions, write-offs and impairment of Rs. 13.5 Crores for Computing Products business. We might have some additional impairment charges in the first half of FY15 as we complete the restructuring of Computing Products business. Our Enterprise Solutions business has high exposure to foreign exchange fluctuation, as a result of which we are transforming this business to a new Project services centric asset light business model which will reduce our exposure to forex fluctuations. In FY14, as we are in the process of transforming this business, our Enterprise Solutions business had a loss of Rs. 45.4 Crores due to exchange fluctuations, provisions, write-offs and impairment.

The total loss (profit before interest & tax) for Computing Products and Enterprise Solutions in FY14 are Rs. 161.2 Crores and Rs. 21.0 Crores respectively.

Your Board of Directors do not recommend any dividend for the year under review.

Operations

A detailed analysis and insight into the financial performance and operations of your Company for the year ended 30th June, 2014, is appearing in the Management Discussion and Analysis, forming part of the Annual Report.

Scheme of Arrangement

During the year under review, a composite Scheme of Arrangement (the Scheme) under the provisions of Section 391 and 394 of the Companies Act, 1956 between HCL Infosystems Limited (the Company), HCL Infotech Limited (formerly known as HCL System Integration Limited), HCL Services Limited (formerly known as HCL Care Limited), HCL Learning Limited and HCL Infocom Limited and their respective shareholders and creditors was approved by Hon''ble Delhi High Court vide its order dated 18th September, 2013. The Scheme became effective from 151 November, 2013 on filing a certified copy of the High Court order with the office of the Registrar of the Companies, NCT of Delhi & Haryana, with effect from 1st January, 2013, as the Appointed Date.

On Scheme becoming effective, the Hardware Solutions Business, the Services Business and the Learning Business of the Company stand transferred and vested into separate wholly owned subsidiaries namely HCL Infotech Limited, HCL Services Limited and HCL Learning Limited, respectively. Further, HCL Infocom Limited, a wholly owned subsidiary of the Company stands dissolved without winding up, pursuant to the Scheme.

Accordingly, the results of the Company on standalone basis (in Parent Company) for the year ended 30th June, 2014 do not include the results of the Hardware Solutions Business, the Services business and the Learning Business and hence are not comparable with those of the previous year. Please also refer to note 57 on the Scheme of Arrangement given in Notes to Accounts in this report.

Changes in Capital Structure

During the year under review, the authorised share capital of the Company was increased to Rs. 115,50,00,000/- comprising of 55,25,00,000 equity shares of face value of Rs. 2/- each and 5,00,000 preference shares of face value of Rs. 100/- each. The aforesaid increase was due to merger of HCL Infocom Limited into the Company, pursuant to the Scheme of Arrangement.

During the year under review, no equity shares were allotted under the Employee Stock Option Scheme 2000 and the Employee Stock Based Compensation Plan 2005.

Awards & Recognition

* Bagged eINDIA Public Sector Enterprise Award 2013 for the project eProcurement by Indian Railways. Your

Company was honoured for automating the tendering process of Indian Railways which introduced an instant material procurement process as opposed to the earlier procurement cycle time of 23 days.

* Our Financial Inclusion Project of Bank of Baroda was awarded PC Quest IT Implementations of the Year 2013 under the category Project with Maximum Social Impact. The project aims at providing easy access to affordable financial services to those who are deprived thereby bringing the unbanked and under banked village into the formal financial stream.

* Our eNBA (National Board of Accreditation) project was awarded PC Quest Best IT Implementations of the Year 2013 under the category Best Education Project (Silver). The project has brought complete transparency and reduced the accreditation process time from 1.5 years to 4 months for higher educational institutions seeking accreditation.

* Bagged the prestigious Golden Peacock Eco Innovation Award 2013 for eNBA (National Board of Accreditation) project at the 15th World Congress on Environment Management. Your Company was honoured for providing, IT Solutions to NBA which resulted in eco innovation, cost saving and transparency in the accreditation process.

EMPLOYEE STOCK OPTION PLAN Employee Stock Option Scheme 2000

Pursuant to the approval of the Shareholders at an Extra Ordinary General Meeting held on 25th February, 2000 for grant of options to the employees of the Company and its subsidiaries (the ESOP 2000), the Board of Directors have so far approved the grant of 30,18,000 options including the options that had lapsed out of each grant. Each option confers on the employee a right for five equity shares of Rs. 2/- each.

Employee Stock Based Compensation Plan 2005 The Shareholders of the Company have approved the Employee Stock Based Compensation Plan 2005 through a Postal Ballot for grant of 33,35,487 options to the employees of the Company and its subsidiaries. The Board of Directors have so far granted 31,96,840 options including the options that had lapsed out of each grant. Each option confers on the employee a right for five equity shares of Rs. 2/- each at the market price as specified in the SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines 1999, on the date of grant.

Fixed Deposits

The Company has not accepted/renewed any deposits from the public during the year and there were no fixed deposits outstanding either at the beginning or at the end of the year.

Listing

The equity shares of the Company are listed at BSE Limited, Mumbai (BSE) and National Stock Exchange of India Limited, Mumbai (NSE).

The Company has paid the listing fee for the year 2014-2015 to BSE and NSE.

Directors

After long association with the Company, Ms. Anita Ramachandran resigned from the position of Director of the Company w.e.f. 8th July, 2013 and Mr. J. V. Ramamurthy, Mr. D.S. Puri and Mr. E.A. Kshirsagar resigned from the position of Director of the Company w.e.f. 21st March, 2014. The Board places on record its appreciation for the contributions made by them during their tenure with the Company.

The Following Directors were inducted as additional directors on the board of the Company:

(a) Ms. Sangeeta Talwar w.e.f. 11th February , 2014

(b) Mr. Kaushik Dutta w.e.f. 11th February, 2014

(c) Mr. Premkumar Seshadri w.e.f. 21st March, 2014

(d) Mr. Dilip Kumar Srivastava w.e.f. 21st March, 2014

(e) Mr. Pawan Kumar Danwar w.e.f. 21st March, 2014

Ms. Sangeeta Talwar and Mr. Kaushik Dutta are designated as Independent Directors.

Pursuant to the provisions of Section 161(1) of the Companies Act, 2013, Additional Directors shall hold office up to the date of the ensuing Annual General Meeting of the Company.

In terms of the provision of Section 149, 152(6) and other applicable provisions of the Companies Act, 2013, an Independent director shall hold office upto a term of five consecutive years on the Board of the Company and shall not be liable to retire by rotation.

The Company has received declarations from all the Independent directors confirming that they meet with the criteria of independence as prescribed under Section 149(6) of the Companies Act, 2013 and Clause 49 of the Listing Agreement. In accordance with the provisions of the Companies Act, 2013 and the Articles of Association of the Company, Mr. V. N. Koura, Director, retires from office by rotation at the ensuing Annual General Meeting and being eligible, has offered himself for re-appointment. A brief resume, details of expertise and other directorships/committee memberships held by the above Directors, form part of the Notice convening the Twenty Eighth Annual General Meeting.

Corporate Governance Report and Management Discussion and Analysis Statement

The Corporate Governance Report and the Management Discussion and Analysis Statement are attached and are to be read with the Directors'' Report.

Insider Trading Regulations

As per the requirements under the 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 of corporate disclosures practices for prevention of Insider Trading'' are in force.

Cost Auditor

The Cost Audit Report of the Company for the financial year 2012-13, issued by M/s S. Mahadevan & Co., Cost Accountants, was filed with the Ministry of Corporate Affairs on 28th November, 2013.

Directors'' Responsibility Statement

Pursuant to the requirement of Section 217(2AA) of the Companies Act, 1956, and based on the representations received from the operating management, the Directors hereby confirm that:

a. in the preparation of the annual accounts, the applicable accounting standards have been followed and there has been no material departure;

b. appropriate accounting policies have been selected and applied consistently, and that the judgments and estimates made are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 30th June, 2014 and of the profit of the Company for the said period;

c. proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d. the annual accounts have been prepared on a going concern basis.

Auditors & Auditors'' Report

M/s Price Waterhouse, Chartered Accountants, who are the statutory auditors of the Company, hold office until the conclusion of forthcoming Annual General Meeting and being eligible offer themselves for re-appointment. M/s Price Waterhouse, Chartered Accountants has, under Section 141 of the Companies Act, 2013 furnished a certificate of its eligibility for re-appointment.

Personnel

Industrial Relations during the year under review continued to be peaceful and cordial. No man-days were lost due to industrial disputes. Your company continues to invest in enhancing skills and competencies of employees with a focus on Role Based Trainings. Your company promotes internal career opportunities to enable career choice & growth opportunities for employees. We pride ourselves on this culture where people are empowered to Learn, Grow & Own. The culture of reward and recognition is aided by our online recognition platform"applause", with employees receiving on the spot appreciations and applause for going the extra mile. The information as required to be provided in terms of section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 has been set out in the annexure to the Directors'' report. However, in terms of the provisions of section 219(1)(b)(iv) of the said Act, the Annual Report is being sent to the members of the Company excluding the said information. Any member interested in obtaining the said information may write to the Company Secretary at the registered office of the Company.

Additional information relating to Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo

The additional information required in accordance with sub section (1)(e) of Section 217 of the Companies Act, 1956, read with the Company (Disclosure of Particulars in the Report of the Board of Directors) Rules,1988, is appended to and forms part of this report.

Particulars of subsidiaries The following developments took place in respect of the subsidiaries of the Company:

The name of HCL System Integration Limited was changed to HCL Infotech Limited effective from 28th October, 2013 and the name of HCL Care Limited was changed to HCL Services Limited effective from 31st October, 2013.

Financial Statements of the Subsidiary Companies

The Ministry of Corporate Affairs (MCA), Government of India, vide General Circular No. 2/2011 dated February 8, 2011, has granted general exemption under Section 212 of the Companies Act, 1956, waiving the requirement to publish individual balance sheets, profit & loss accounts, directors'' reports and auditors'' reports of the subsidiaries and other documents otherwise required to be attached to the Company''s accounts.

In terms of the above exemption, the accounts of the following subsidiaries have not been enclosed with the results:

- Digilife Distribution and Marketing Services Limited (formerly known as HCL Security Limited);

- RMA Software Park Private Limited;

- Pimpri Chinchwad eServices Limited;

- HCL Computing Products Limited

- HCL Infotech Limited (formerly known as HCL System Integration Limited)

- HCL Learning Limited

- HCL Services Limited (formerly known as HCL Care Limited)

- HCL Insys Pte Limited, Singapore;

- HCL Investments Pte Limited, Singapore;

- HCL Infosystems MEA FZE, Dubai;

- HCL Infosystems LLC, Dubai;

- HCL Infosystems MEA LLC Abu Dhabi;

- HCL Infosystems Qatar WLL, Qatar;

- HCL Infosystems South Africa Pty Limited, South Africa; and

- HCL Touch Inc., US

However, the annual accounts of the subsidiary companies and the related detailed information shall be made available to the members of the holding and subsidiary companies seeking such information. The annual accounts of the subsidiary companies shall be kept open for inspection on all working days at the registered office of the Company and the respective subsidiary companies. The Company shall furnish a hard copy of details of accounts of subsidiary companies, upon receipt of a requisition from any shareholder. A summary of financials of the subsidiaries has been included in the Annual Report. The Consolidated Financial Statements presented by the Company include the financial results of its subsidiary companies.

Acknowledgements

The Directors place on record their appreciation for the continued co-operation extended by all stakeholders including various departments of the Central and State Government, Shareholders, Investors, Bankers, Financial Institutions, Customers, Dealers and Suppliers.

The Board also place on record its gratitude and appreciation of the committed services of the executives and employees of the Company.

On behalf of the Board of Directors

Sd/- Nikhil Sinha (Chairman)

Place : Noida, U.P. Date : 28th August, 2014


Jun 30, 2010

The Directors have pleasure in presenting their Twenty Fourth Annual Report together with the Audited Accounts for the financial year ended 30th June, 2010.

Financial Highlights

(Rs.in Crores)

Particulars Consolidated Parent Company 2009-10 2008-09 2009-10 2008-09

Net Sales and other income 12114.44 12289.54 12011.91 12244.33

Profit before Interest, Depreciation and Tax 411.18 417.22 427.82 435.79

Finance Charges 39.21 44.66 37.44 44.66

Depreciation 25.51 21.25 21.73 17.27

Profit before Tax 346.46 351.31 368.65 373.86

Provision for Taxation : Current 111.95 122.17 111.96 122.77

Fringe Benefit - 1.55 - 1.45

Deferred (7.87) (12.36) (4.86) (10.80)

Net Profit after Tax 242.38 239.95 261.55 260.44

Profit available for appropriation 1033.33 951.18 1062.89 961.57 Appropriations

Debenture Redemption Reserve 4.00 4.00 4.00 4.00

Interim Dividend 127.08 85.59 127.08 85.59

Proposed Dividend 43.65 25.68 43.65 25.68

Tax on Dividend (including Interim Dividend) 28.68 18.91 28.68 18.91

Transfer to General Reserve 26.16 26.05 26.16 26.05

Balance of Profit carried forward to next year 803.76 790.95 833.32 801.34

Performance

The consolidated net revenue of the Company wasRs. 12114.44 crores as against Rs. 12289.54 crores in the previous year. The consolidated profit before tax was Rs. 346.46 crores as against Rs. 351.31 crores in the previous year.

Your Directors are pleased to recommend final Dividend of Rs. 2 per share (100%) on the fully paid-up equity shares of Rs. 2/- each for the financial year ended on 30th June, 2010. During the first nine months, three interim (quarterly) dividends aggregating to Rs. 5.50 per share (275%) were declared, taking the total dividend for the year 2009-10 to Rs. 7.50 per share of Rs. 2/- (375%).

Operations

A review of operations of the businesses of your Company for the year ended 30th June, 2010 is provided in the Management Discussion and Analysis Report forming part of the Annual Report.

Acquisitions

RMA Software Park Private Limited

During the year under review, the Company has acquired the entire equity share capital of RMA Software Park Private Limited (RMAS).

Saptha Business Solutions Private Limited (SAPTHA)

During the year under review, the Company has purchased the SAP Delivery Practices and ERP Solutions business of SAPTHA, a Bangalore based Company along with its certain assets.

HCL Infosystems MEA FZCO, Dubai (Formerly known as NTS FZCO)

The Company has on 4th July, 2010 acquired a majority equity stake (60%) in HCL Infosystems MEA FZCO (formerly known as NTS FZCO), a Dubai based IT Infrastructure solutions provider.

This acquisition is through HCL Insys Pte Limited, Singapore, the wholly owned subsidiary. HCL Infosystems MEA FZCO caters to the needs of enterprise customers in Dubai, Abu Dhabi and Qatar.

Raising of funds

During the year under review, the Company allotted 2,10,59,515 warrants priced at Rs. 152.90 per warrant convertible into equal number of equity shares of Rs. 2/- each at a price of Rs. 152.90 per share including a premium of Rs. 150.90 per share to certain promoters on Preferential basis on receipt of 25% subscription money amounting to Rs. 80.50 crores. Out of which, 1,64,38,848 warrants have been subsequently converted into equal number of equity shares of Rs. 2/- each on receipt of balance 75% subscription money amounting to Rs. 188.51 crores.

During the year under review, the Company has also allotted 3,05,55,713 equity shares of Rs. 2/- each at a price of Rs. 154.69 per equity share including a premium of Rs. 152.69 per equity share amounting to Rs. 472.67 crores to Qualified Institutional Buyers on QIP basis.

During the year under review, 44,710 equity shares of Rs. 2/- each were allotted under Employee Stock Option Scheme 2000 and 7,200 equity shares of Rs. 2/- each were allotted under Employee Stock Based Compensation Plan 2005.

Awards & Recognition

The year that went by witnessed numerous recognitions for your Company as HCL Infosystems bagged several awards and accolades. This year in a customer satisfaction survey conducted by IDC Dataquest, your Company was ranked No.1 for the second consecutive year.

Your Company this year was also honoured with the Dun & Bradstreet Rolta Corporate Award for the year 2009 in computer hardware and peripherals category. Your Company was also awarded with ELCINA-Dun & Bradstreet Award for Outstanding achievement in Quality for the year 2009. Your Company was also recognised as The Electronics Company of the Year 2009 by EFY. Your Company this year also emerged amongst top five green electronic companies in the world by Greenpeaces Guide to Greener Electronics.

Your Company was ranked number one in the Best Employer Study 2009 conducted by IDC - Dataquest. HCL ME, was ranked amongst top 10 brands by a Business Standard survey Brand Durby 2009.

This year HCL Manufacturing facilities were awarded GOLD certificate of Merit by The Economic Times India Manufacturing Excellence Awards (IMEA 2009) in partnership with Frost & Sullivan. Also the manufacturing facilities were certified for Quality management system ISO 9001: 2008, environment management system ISO 14001: 2004 and received certification of 18001:2007 (OSHAS) during the period.

Employee Stock Option Plan

Employee Stock Option Scheme 2000

Pursuant to the approval of the shareholders at the Extra- Ordinary General Meeting held on 25th February, 2000 for grant of options to the employees of the Company and its subsidiaries (the ESOP 2000), the Board of Directors had approved the grant of 30,18,000 options including the options that had lapsed out of each grant. Each option confers on the employee a right for five equity shares ofRs. 2/- each.

Employee Stock Based Compensation Plan 2005

The shareholders of the Company have approved the Employee Stock Based Compensation Plan 2005 through a Postal Ballot for grant of 33,35,487 options to the employees of the Company and its subsidiaries. The Board of Directors has granted 31,96,840 options including the options that had lapsed out of each grant. Each option confers on the employee a right for five equity shares ofRs. 2/- each at the market price as specified in the SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines 1999, on the date of grant.

Credit Ratings

The credit rating by ICRA continued at A1+ rating indicating highest safety to the Companys Commercial Paper program, which was enhanced from Rs. 325 Crores to Rs. 500 Crores.

The long term rating assigned by Fitch to the Company continued at AA- (ind) indicating stable outlook. The long term rating by Fitch also continued at AA- (ind) for Non-Convertible Debenture programme ofRs. 80 Crores.

Fixed Deposits

There were no fixed deposits outstanding either at the beginning or at the end of the year.

Listing

The equity shares of the Company are listed at The Bombay Stock Exchange Limited, Mumbai and National Stock Exchange of India Limited, Mumbai. The Companys Non-Convertible Debentures (NCDs) amounting to Rs. 80 Crores are listed on National Stock Exchange of India Limited, Mumbai.

Directors

In accordance with the Articles of Association of the Company, Mr. J.V. Ramamurthy, Director, is retiring by rotation and being eligible, has offered himself for re-appointment. Mr. R.P. Khosla and Mr. T.S. Purushothaman, the other Directors retiring by rotation do not seek re-appointment as Directors. The Board places on record its appreciation for the services rendered by them during their tenure with the Company.

Mr. J.V. Ramamurthy has been reappointed as the Whole-time Director of the Company for a further period of five years with effect from 11th August, 2010, subject to the approval of the shareholders of the Company in the Annual General Meeting.

Corporate Governance Report and Management Discussion and Analysis Statement

A report on Corporate Governance is attached to this Report along with the Management Discussion and Analysis statement.

Insider Trading Regulations

As per the requirements under the 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 of corporate disclosures practices for prevention of Insider Trading are in force.

Directors Responsibility Statement

Pursuant to the requirement of Section 217(2AA) of the Companies Act, 1956, and based on the representations received from the operating management, the Directors hereby confirm that:

a. in the preparation of the annual accounts, the applicable accounting standards have been followed and there has been no material departure;

b. appropriate accounting policies have been selected and applied consistently, and that the judgments and estimates made are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 30th June, 2010 and of the Profit of the Company for the said period;

c. proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d. the annual accounts have been prepared on a going concern basis.

Auditors & Auditors Report

M/s Price Waterhouse, Chartered Accountants, who are the statutory auditors of the Company hold office, in accordance with the provisions of the Companies Act, 1956, upto the conclusion of the forthcoming Annual General Meeting and are eligible for re-appointment. The proposed re-appointment, if made will be in accordance with the limits prescribed under Section 224(1B) of the Companies Act, 1956.

Personnel

Industrial Relations during the period under review continued to be peaceful and harmonious. No man-day was lost due to any Industrial Dispute. Your Company was ranked number one in the Best Employer Study 2009 conducted by IDC - Dataquest.

The information as required to be provided in terms of section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 has been set out in the annexure to the Directors report. However, in terms of the provisions of section 219(1)(b)(iv) of the said Act, the Annual Report is being sent to the members of the Company excluding the said information. Any member interested in obtaining the said information may write to the Company Secretary at the registered office of the Company.

Additional information relating to Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo

The additional information required in accordance with sub-

section (1)(e) of Section 217 of the Companies Act, 1956, read with the Company (Disclosure of Particulars in the Report of the Board of Directors) Rules,1988, is appended to and forms part of this report.

Particulars of subsidiaries

During the year under review, on acquisition by the Company of the entire equity share capital of RMA Software Park Private Limited (RMAS), RMAS has become the wholly owned subsidiary of the Company with effect from 7th July, 2009.

During the year under review, a wholly-owned subsidiary was incorporated in Singapore in the name and style of HCL Insys Pte Limited on 17th December, 2009. HCL Insys Pte Limited is engaged in the business of IT and related activities including manufacturing and trading of laptops, desktops and other related IT products.

On acquisition of majority equity stake (60%) by the Company in HCL Infosystems MEA FZCO, Dubai (Formerly known as NTS FZCO) through HCL Insys Pte Limited, Singapore, HCL Infosystems MEA FZCO has become a step down subsidiary of the Company with effect from 4th July, 2010.

A statement pursuant to section 212(3) of the Companies Act, 1956 relating to subsidiary companies is attached to the accounts. The Company has obtained permission from Ministry of Corporate Affairs, Government of India vide its letter number 47/108/2010-CL-III, dated 19th March, 2010 for not annexing the accounts of the wholly owned subsidiaries, namely HCL Infinet Limited, HCL Security Limited, HCL Infocom Limited, RMA Software Park Private Limited and HCL Insys Pte Limited. The summary of financials of the subsidiaries has been included in the Annual Report. The annual accounts of the subsidiaries of the Company are available on any working day at the Registered Office of the Company to the shareholders of the Company requiring such information. These are also available on the website of the Company at www.hclinfosystems.in.

Acknowledgement

The Directors wish to place on record their appreciation for the continued co-operation the Company received from various departments of the Central and State Government, Bankers, Financial Institutions, Dealers and Suppliers and also acknowledge the contribution made by the Employees.

The Board also wishes to place on record its gratitude to the valued Customers, Members and Investing Public for the continued support and confidence reposed in the Company.

On behalf of the Board of Directors

Sd/-

AJAI CHOWDHRY 27th August, 2010 Chairman and Chief Executive Officer



 
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