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Notes to Accounts of HCL Technologies Ltd.

Mar 31, 2016

1. Leases

i) Operating lease

The Company leases office space and accommodation for its employees under operating lease agreements. The lease rental expense recognized in the statement of profit and loss for the year (nine months) is '' 112.84 crores [Previous year (twelve months) Rs. 211.99 crores]. The lease equalization reserve amount for non-cancellable operating lease payable in future years and accounted for by the Company is Rs. 85.49 crores (previous year Rs. 115.20 crores). Future minimum lease payments and the payment profile of non-cancellable operating leases are as follows:

2. Segment Reporting

Identification of segments

The Company''s operating businesses are organized and managed according to the nature of products and services provided, with each segment representing a strategic business unit that offers different products and services and is subject to risks and returns that are different from other strategic business units.

(i) Business segments

The Company''s operations predominantly relate to providing a range of IT and Business process outsourcing (BPO) services targeted at Global 2000 companies spread across USA, Europe and the Rest of the World. IT Services include software services and IT infrastructure management services. Within software services, the Company provides application development and maintenance, enterprise application, next generation SAAS (Software As A Service) application services and engineering and research and development (R&D) services to several global customers. Infrastructure management services involve managing customers'' IT assets effectively. Business process outsourcing services include the traditional contact centre and help desk services and next generation services around platform BPO and BPAAS (Business Process As A Service) delivered through a global delivery model.

The Chairman of the Company, who is the Chief Strategy Officer, evaluates the Company''s performance and allocates resources based on an analysis of various performance indicators by types of services provided by the Company and geographic segmentation of customers. Accordingly, revenue from service segments comprises the primary basis of segmental information set out in these financial statements.

Accordingly, revenue from service segments comprises the primary basis of segmental information set out in these financial statements. Secondary segmental reporting is performed on the basis of the geographical location of customers and assets.

(ii) Geographic segments

Segment revenue from customers by geographical areas is stated based on the geographical location of the customer and segment assets by the geographical location of the assets.

The principal geographical segments are classified as America, Europe, India and Others. Europe comprises business operations conducted by the Company in the United Kingdom, Sweden, Germany, Italy, Belgium, Netherlands, Northern Ireland, Finland, Poland and Switzerland. Since services provided by the Company within these European entities are subject to similar risks and returns, their operating results have been reported as one segment, namely Europe. India has been identified as a separate segment. All other customers, mainly in Japan, Australia, New Zealand, Singapore, Malaysia, Israel, South Korea, China, Czech Republic, Macau, UAE, Portugal, Russia and Hong Kong are included in Others.

(iii) Segment accounting policies

The accounting principles consistently used in the preparation of the financial statements and consistently applied to record revenue and expenditure in individual segments are as set out in note 1 to the financial statements on significant accounting policies. The accounting policies in relation to segment accounting are as under:

a) Segment revenue and expenses

Segment revenue is directly attributable to the segment and segment expenses have been allocated to various segments on the basis of specific identification. However, segment revenue does not include other income. Segment expenses do not include, premium amortized on bonds, diminution allowance in respect of current and trade investments, other than temporary diminution in the value of long term investments, and finance cost.

b) Segment assets and liabilities

Assets and liabilities are not identified to any reportable segments, since these are increasingly used interchangeably across segments and consequently, the management believes that it is not practicable or meaningful to provide segment disclosures relating to total assets and liabilities.

3. Derivative Financial Instruments

The Company is exposed to foreign currency fluctuations on foreign currency assets / liabilities and forecast cash flows denominated in foreign currency. The use of derivatives to hedge foreign currency forecast cash flows is governed by the Company''s strategy, which provides principles on the use of such forward contracts and currency options consistent with the Company''s Risk Management Policy. The counter parties in these derivative instruments are banks and the Company considers the risks of non-performance by the counterparty as insignificant. The Company has entered into a series of foreign exchange forward contracts that are designated as cash flow hedges and the related forecasted transactions extend through April 2018. The Company does not use forward contracts and currency options for speculative purposes.

4. Employee Benefit Plans

The Company has calculated the various benefits provided to employees as shown below:

A. Defined Contribution Plans and State Plans

Superannuation Fund

Employer''s contribution to Employees State Insurance Employer''s contribution to Employee Pension Scheme

5. Corporate social responsibility

As required by the Companies Act, 2013, the gross amount required to be spent by the Company on CSR activities is Rs. 122.13 crores (Previous year Rs. 89.99 crores) and the amount spent during the year is Rs. 13.04 crores (Previous year Rs. 6.22 crores).

6. Subsequent event

On 1st April 2016, the Company has entered into an agreement for acquisition of the IT enabled engineering services, PLM (''Product Lifecycle Management'') services and engineering design productivity software tools business of Geometric Limited by way of demerger through a Court approved scheme of arrangement under Sections 391 to 394 and other relevant provisions of the Companies Act, 1956 (including those of the Companies Act, 2013) to be effective from 31st March 2016.

The acquisition will be accounted for in the books of the Company on approval of the scheme by the Court and simultaneously with the acquisition of the demerged business, the Company will issue 10 equity shares of Rs. 2 each for every 43 fully paid equity shares of Rs. 2 each held by equity shareholders of Geometric Limited

7. Previous year comparatives

The current financial year of the Company is for a nine months period from 1 July 2015 to 31 March 2016. The figures for the current financial year are therefore not comparable with those of the previous year. Previous year figures have been rearranged to conform to the current year''s classification.


Jun 30, 2015

1. Segment Reporting

Identification of segments

The Company's operating businesses are organized and managed according to the nature of products and services provided, with each segment representing a strategic business unit that offers different products and services.

(i) Business segments

The operations of the Company predominately relate to providing a range of IT and Business Process Outsourcing (BPO) services targeted at Global 2000 companies spread across USA, Europe and the Rest of the World. IT Services include software services and IT infrastructure management services. Within software services, the Company provides application development and maintenance, enterprise application, next generation SAAS (Software As A Service) application services and engineering and research and development services to several global customers. IT Infrastructure management services involve managing customers' IT assets effectively. The Company's 'Enterprise of the Future' (EOF) framework helps customers not just run IT effectively but also migrate to next generation IT. EOF involves services around cloud, next generation data centres, business productivity services, integrated service management layer and an integrated application development & operations services. Business process outsourcing services include the traditional contact centre and help desk services and next generation services around platform BPO and BPAAS (Business Process As A Service) delivered through a strong global delivery model. The Company's trademarked EFAAS ( Enterprise Function As A Service) helps customers reduce business cost rather than just the process cost as was the case in traditional BPO.

The Chairman of the Company, who is the Chief Strategy Officer, evaluates the Company's performance and allocates resources based on an analysis of various performance indicators by types of services provided by the Company and geographic segmentation of customers.

Accordingly, revenue from service segments comprises the primary basis of segmental information set out in these financial statements. Secondary segmental reporting is performed on the basis of the geographical location of customers and assets.

(ii) Geographic segments

Segment revenue from customers by geographical areas is stated based on the geographical location of the customer and segment assets by the geographical location of the assets.

The principal geographical segments are classified as America, Europe, India and Others. Europe comprises business operations conducted by the Company in the United Kingdom, Sweden, Germany, Italy, Belgium, Netherlands, Northern Ireland, Finland, Poland and Switzerland. Since services provided by the Company within these European entities are subject to similar risks and returns, their operating results have been reported as one segment, namely Europe. India has been identified as a separate segment. All other customers, mainly in Japan, Australia, New Zealand, Singapore, Malaysia, Israel, South Korea, China, Czech Republic, Macau, UAE, Portugal, Russia and Hong Kong are included in Others.

(iii) Segment accounting policies

The accounting principles consistently used in the preparation of the financial statements and consistently applied to record revenue and expenditure in individual segments are as set out in note 1 to the financial statements on significant accounting policies. The accounting policies in relation to segment accounting are as under:

a) Segment revenue and expenses

Segment revenue is directly attributable to the segment and segment expenses have been allocated to various segments on the basis of specific identification. However, segment revenue does not include other income. Segment expenses do not include, premium amortized on bonds, diminution allowance in respect of current and trade investments, other than temporary diminution in the value of long term investments, and finance cost.

b) Segment assets and liabilities

Assets and liabilities are not identified to any reportable segments, since these are increasingly used interchangeably across segments and consequently, the management believes that it is not practicable or meaningful to provide segment disclosures relating to total assets and liabilities.


Jun 30, 2013

Company Overview

HCL Technologies Limited (hereinafter referred to as ''HCL'' or the ''Company'') is primarily engaged in providing a range of software services, business process outsourcing and infrastructure services. The Company was incorporated in India in November 1991. The Company leverages an extensive offshore infrastructure and its global network of offices in various countries and professionals to deliver solutions across select verticals including Financial Services, Manufacturing (Automotive, Aerospace, Hi-tech and Semi conductor), Telecom, Retail and Consumer packaged goods services , Media publishing and entertainment, Public services, Energy and utility, Healthcare, Travel, Transport and Logistics.

1.1 Related party transactions

a) Related parties where control exists

Direct Subsidiaries

HCL Comnet Systems & Services Limited

HCL Comnet Limited

HCL Bermuda Limited

HCL Technologies (Shanghai) Limited

HCL Eagle Limited

Step down Subsidiaries

HCL Great Britain Limited

HCL (Netherlands) BV

HCL Belgium NV

HCL GmbH

HCL Singapore Pte. Limited

HCL Sweden AB

HCL Italy SLR

HCL Australia Services Pty. Limited

HCL (New Zealand) Limited

HCL Hong Kong SAR Limited

HCL Japan Limited

HCL America Inc.

HCL Holdings GmbH

HCL Global Processing Services Limited

HCL BPO Services (NI) Limited

HCL (Malaysia) Sdn. Bhd.

HCL Technologies Solutions Limited (formerly known as HCL EAI Services Limited)

HCL Poland sp. z o.o

HCL EAS Limited

HCL Insurance BPO Services Limited

HCL Expense Management Services Inc.

Axon Group Limited

Bywater Limited

Axon Solutions Schweiz Gmbh

Axon Solutions Pty. Limited

Axon Solutions Inc.

Axon Acquisition Company, Inc.

Axon Solutions Limited

Axon Solutions Sdn. Bhd.

Axon Solutions Singapore Pte. Limited

Axon Solutions (Shanghai) Co. Limited

HCL Axon (Proprietary) Limited

JSPC- I Solutions Sdn. Bhd.

JSP Consulting Sdn. Bhd.

Axon Solution (Canada) Inc.*

HCL Argentina s.a.

HCL Mexico S. de R.L.

HCL Technologies Romania s.r.l.

HCL Hungary Limited

HCL Latin America Holding LLC

HCL (Brazil) Technologia da informacao Ltda.

HCL Technologies Denmark Apps

HCL Technologies Norway AS

PT. HCL Technologies Indonesia Limited

HCL Technologies Philippines Inc.

HCL Technologies South Africa (Proprietary) Limited

HCL Arabia LLC

HCL Technologies France

Filial Espanola De HCL Technologies S.L. (Spain)

Anzospan Investments Pty Limited

HCL Investments (UK) Limited

HCL America Solutions Inc. (Formerly known as HCL

Technologies Product Design Services inc.)

* HCL Technologies Canada Inc. and Axon Solution

(Canada) Inc. amalgamated w.e.f. 1 July 2012 and formed a new entity Axon Solutions (Canada) Inc.

Employee benefit trusts

HCL Technologies Limited Employees Trust Axon Group Plc Employee Benefit Trust No. 3 Axon Group Plc Employee Benefit Trust No. 4 HCL South Africa Share Ownership Trust (incorporated w.e.f 22 February 2013)

b) Related parties with whom transactions have taken place during the year

Direct Subsidiaries

HCL Comnet Systems & Services Limited

HCL Comnet Limited

HCL Bermuda Limited

HCL Technologies (Shanghai) Limited

HCL Eagle Limited

Step down subsidiaries HCL Great Britain Limited HCL (Netherlands) BV HCL Belgium NV HCL GmbH

HCL Singapore Pte. Limited HCL Sweden AB HCL Italy SLR

HCL Australia Services Pty. Limited

HCL (New Zealand) Limited

HCL Hong Kong SAR Limited

HCL Japan Limited

HCL America Inc.

HCL (Malaysia) Sdn. Bhd.

HCL Technologies Solutions Limited (formerly known as HCL EAI Services Limited)

HCL Poland sp. z o.o

HCL EAS Limited

HCL Insurance BPO Services Limited

Axon Solutions (Canada) Inc.

Axon Solutions Pty. Limited

Axon Solutions Inc.

Axon Solutions Limited

Axon Solutions Sdn. Bhd.

Axon Solutions (Shanghai) Co. Limited

HCL Axon (Proprietary) Limited

HCL Argentina s.a.

HCL Mexico S. de R.L.

HCL Hungary Limited

HCL (Brazil) Technologia da informacao Ltda.

HCL Technologies Denmark Apps

HCL Technologies Norway AS

PT. HCL Technologies Indonesia Limited

HCL Technologies Philippines Inc.

HCL Technologies South Africa (Proprietary) Limited

HCL Arabia LLC

HCL Technologies France

Filial Espanola De HCL Technologies S.L. (Spain)

HCL Holdings Gmbh

HCL Technologies Romania s.r.l.

HCL America Solutions Inc. (Formerly known as HCL

Technologies Product Design Services inc.)

Jointly controlled entities

NEC HCL System Technologies Limited, India (up to 26 April, 2013)

Associates

Statestreet HCL Services (India) Private Limited

Significant influence

Vama Sundari Investments (Delhi) Private Limited

(Slocum investments (Delhi) Private Limited merged with Vama Sundari Investments (Delhi) Private Limited w.e.f 22 March 2013)

HCL Corporation Private Limited

HCL Infosystems Limited

HCL Holding Private Limited

HCL Insys Pte Ltd., Singapore

Digilife Distribution and Marketing Services Limited

c) Key Management Personnel

Shiv Nadar, Chairman and Chief Strategy Officer Vineet Nayar, Vice-Chairman and Joint Managing Director

1.2 Commitments and Contingent liabilities

a)

i) Capital and other commitments

Capital commitments

Estimated amount of unexecuted capital contracts (net of advances) 1,139.47 528.43

ii) Contingent Liabilities

Others 5.29 4.29

Total 1,144.76 532.72

The amounts shown in the items above represent best possible estimates arrived at on the basis of available information. The uncertainties and possible reimbursements are dependent on the outcome of the different legal processes which have been invoked by the Company or the claimants as the case may be and therefore cannot be predicted accurately. The Company engages reputed professional advisors to protect its interest and has been advised that it has strong legal positions against such disputes.

b) Guarantees have been given by the Company on behalf of various subsidiaries against credit facilities, financial assistance and office premises taken on lease amounting to Rs. 1,852.21 crores (Previous year Rs. 3,087.56 crores). These guarantees have been given in the normal course of the Company''s operations and are not expected to result in any loss to the Company on the basis of the beneficiaries fulfilling their ordinary commercial obligations.

c) Bank guarantees of Rs. 45.94 crores (Previous year Rs. 14.25 crores). These guarantees have been given in the normal course of the Company''s operations and are not expected to result in any loss to the Company, on the basis of the Company fulfilling its ordinary commercial obligations.

d) During the year ended 30 June 2013, the Company has negotiated extended interest bearing credit terms with certain vendors and issued Rs. 430.33 crores of letters of credit in this respect for extended payment terms up to 360 days. The interest rate on these arrangements ranges from 1.2% to 10.0%.

The Company also has letters of credit amounting to Rs. 0.29 crores outstanding for year ended 30 June 2013 in other normal course of business.

e) The Company has a comprehensive system of maintenance of information and documents as required by the transfer pricing legislation under sections 92-92F of the Income Tax Act, 1961. Since the law requires existence of such information and documentation to be contemporaneous in nature, the Company appoints independent consultants for conducting a Transfer Pricing Study to determine whether the transactions with associated enterprises are undertaken, during the financial year, on an "arms length basis". Adjustments, if any, arising from the transfer pricing study in the respective jurisdictions are accounted for as and when the study is completed for the current financial year. However the management is of the opinion that its international transactions are at arms'' length so that the aforesaid legislation will not have any impact on the financial statements.

1.3 Derivative Financial Instruments

The Company is exposed to foreign currency fluctuations on foreign currency assets / liabilities, forecast cash flows denominated in foreign currency. The use of derivatives to hedge foreign currency forecast cash flows is governed by the Company''s strategy, which provide principles on the use of such forward contracts and currency options consistent with the Company''s Risk Management Policy. The counter parties in these derivative instruments are banks and the Company considers the risks of non-performance by the counterparty as non-material. A majority of the forward foreign exchange/option contracts mature within one to twelve months and the forecast transactions are expected to occur during the same period. The Company does not use forward contracts and currency options for speculative purposes.

1.4 Joint Venture

The Company has an interest in the following jointly controlled entities:

NEC HCL System Technologies Ltd.

In June, 2005 ,the Company entered into a Joint Venture Agreement with NEC Corporation ,Japan ("NEC") and NEC System Technologies limited ("NECST"), Japan, a subsidiary of NEC, whereby the Company holds a 49% stake in established joint venture entity, NEC HCL System Technologies Limited("NECH") and NEC and NECST holds a 51% stake.

In March, 2013 Company entered into an agreement with NEC for the sale of its 49% stake in equity affiliate NECH at gross consideration of Rs. 66.32 crores (USD 12 million).The sale was completed during the year on 26 April, 2013. The Company has recorded a gain of Rs. 55.54 crores in the statement of profit and loss during the year.

1.5 In accordance with the terms of a Scheme of arrangement under Sections 391 to 394 of the Companies Act, 1956, approved by the Hon''ble High Court of Delhi vide its order dated 12 April 2013, the IT enabled services division of HCL Comnet Systems & Services Limited, a subsidiary, has been demerged and transferred to the Company on going concern basis with effect from 1 April 2012, the appointed date.

The consideration for transfer as per the above mentioned scheme has been settled by issue of 10,125 equity shares of Rs. 2 each in the ratio of 227 equity shares of the Company of Rs. 2 each for every 100 equity shares of Rs. 10/- each held by outside shareholders of HCL Comnet Systems & Services Limited.

In view of the above, the net profit of the transferred division for the period 1 April 2012 to 30 June 2012 have been reflected in the statement of profit of loss of the Company after profit after tax and a sum of Rs. 119.54 crores being the excess of net assets of the transferred division over the consideration paid, has been included in the balance sheet of the Company as on 30 June 2013 as Capital Reserve and the results of the operation of the transferred division for the current year have been included in the statement of profit and loss for the year ended on that date.

1.6 The current year''s figures in statement of profit and loss includes results of operations of transferred division for the period from 1 July, 2012 to 30 June, 2013 and the net profit of the transferred division for the period 1 April 2012 to 30 June 2012 have been reflected in the statement of profit of loss of the Company after profit after tax (refer note 2.36 above). Therefore, corresponding figures of previous year are not comparable with those of current year.

1.7 Previous year figures have been rearranged to conform to the current year''s classification.


Jun 30, 2012

Company Overview

HCL Technologies Limited (hereinafter referred to as 'HCL' or the 'Company') is primarily engaged in providing a range of software services, business process outsourcing and infrastructure services. The Company was incorporated in India in November 1991. The Company leverages an extensive offshore infrastructure and its global network of offices in various countries and professionals to deliver solutions across select verticals including Financial Services, Manufacturing (Automotive, Aerospace, Hi-tech and Semi conductor), Telecom, Retail & CPG , Media publishing & entertainment, Public services, Energy & utility, Healthcare, Travel, Transport and Logistics.

1. Segment Reporting

Identification of Segments

The Company's operating businesses are organized and managed according to the nature of products and services provided, with each segment representing a strategic business unit that offers different products and serves different markets. The analysis of geographical segments is based on the areas in which major divisions of the Company operate.

(i) Business Segments

The operations of the Company predominately relate to providing software services, infrastructure services including sale of networking equipment and business processing outsourcing services, which are in the nature of customer contact centres and technical help desks. The Chairman of the Company, who is the Chief Strategy Officer, evaluates the Company's performance and allocates resources based on an analysis of various performance indicators by types of service provided by the Company and geographic segmentation of customers.

Accordingly, revenue from service segments comprises the primary basis of segmental information set out in these financial statements. Secondary segmental reporting is performed on the basis of the geographical location of customers.

Revenue in relation to service segments is categorized based on items that are individually identifiable to that segment, while expenditure is categorized in relation to the associated turnover of the segment. Assets and liabilities are also identified to service segments.

(ii) Geographic Segments

Segment revenue from customers by geographical area based on geographical location of the customer and segment assets are by geographical location of the assets .

The principal geographical segments are classified as America, Europe, India and others. Europe comprises business operations conducted by the Company in the United Kingdom, Sweden, Germany, Italy, Belgium, Netherlands, Northern Ireland, Finland, Poland and Switzerland. Since services provided by the Company within these European entities are subject to similar risks and returns, their operating results have been reported as one segment, namely Europe. India has been identified as a separate segment. All other customers, mainly in Japan, Australia, New Zealand, Singapore, Malaysia, Israel, South Korea, China, Czech Republic, Macau, UAE, Portugal, Russia and Hong Kong are included in others.

(iii) Segment accounting policies

The accounting principles consistently used in the preparation of the financial statements and consistently applied to record revenue and expenditure in individual segments are as set out in note 1 to the financial statements on significant accounting policies. The accounting policies in relation to segment accounting are as under:

a) Segment assets and liabilities

All segment assets and liabilities have been allocated to the various segments on the basis of specific identification.

Segment assets consist principally of allocable fixed assets, trade receivables, loans and advances and unbilled receivables. Segment assets do not include unallocated corporate assets, treasury assets, net deferred tax assets, advance taxes and Minimum Alternate Tax.

Segment liabilities include trade payable, other liabilities. Segment liabilities do not include share capital, reserves, borrowings and provision for taxes.

b) Segment revenue and expenses

Segment revenue is directly attributable to the segment and segment expenses have been allocated to various segments on the basis of specific identification. However, segment revenue does not include other income. Segment expenses do not include premium amortized on bonds, diminution allowance in respect of current and trade investments, other than temporary diminution in the value of long term investments, charge taken for stock options issued to employees, corporate expenses and finance cost.

2. Related party transactions

a) Related parties where control exists

Subsidiaries

HCL Comnet Systems & Services Limited

HCL Bermuda Limited

HCL Technologies (Shanghai) Limited

HCL GmbH

HCL Eagle Limited (Incorporated w.e.f 14 September 2011)

HCL Great Britain Limited

HCL (Netherlands) BV

HCL Belgium NV

HCL Sweden AB

HCL Italy SLR

HCL Australia Services Pty. Limited

HCL Singapore Pte. Limited

HCL (New Zealand) Limited

HCL Hong Kong SAR Limited

HCL Japan Limited

HCL Comnet Limited

HCL America Inc.

HCL Holdings GmbH

HCL Global Processing Services Limited

HCL BPO Services (NI) Limited

HCL (Malaysia) Sdn. Bhd.

HCL EAI Services Limited

HCL Poland sp. z o.o

HCL EAS Limited

HCL Insurance BPO Services Limited

HCL Expense Management Services Inc.

Axon Group Limited

Axon Solutions (Canada) Inc.

Bywater Limited

Axon Solutions Schweiz Gmbh

Axon Solutions Pty. Limited

Axon Solutions Inc.

Axon Acquisition Company, Inc.

Axon Solutions Limited

Axon Solutions Sdn. Bhd.

Axon Solutions Singapore Pte. Limited

Axon Solutions (Shanghai) Co. Limited

HCL Axon (Proprietary) Limited

JSPC- I Solutions Sdn. Bhd.

JSP Consulting Sdn. Bhd.

HCL Technologies Canada Inc.

HCL Argentina s.a.

HCL Mexico S. de R.L.

HCL Technologies Romania s.r.l.

HCL Hungary Limited

HCL Latin America Holding LLC

HCL (Brazil) Technologia da informacao Ltda.

HCL Technologies Denmark Apps

HCL Technologies Norway AS

PT. HCL Technologies Indonesia Limited

HCL Technologies Philippines Inc.

HCL Technologies South Africa (Proprietary) Limited

HCL Arabia LLC

HCL Technologies France (Incorporated w.e.f 7 March 2011)

Filial Espanola De HCL Technologies S.L. (Spain)

Anzospan Investments Pty Limited

HCL Investments (UK) Limited (Incorporated w.e.f 9 November 2011)

Employee benefit trusts

HCL Technologies Limited Employees Trust Axon Group Plc Employee Benefit Trust No. 3 Axon Group Plc Employee Benefit Trust No. 4

Jointly controlled entities

NEC HCL System Technologies Limited, India Axon Puerto Rico Inc. - through subsidiary

Associates

State street Holding UK Limited-through subsidiary Statestreet Services (India) Private Limited- through subsidiary

b) Related parties with whom transactions have taken place during the year

Subsidiaries

HCL Comnet Systems & Services Limited

HCL Bermuda Limited

HCL Technologies (Shanghai) Limited

HCL GmbH

HCL Eagle Limited

HCL Great Britain Limited

HCL (Netherlands) BV

HCL Belgium NV

HCL Sweden AB

HCL Italy SLR

HCL Australia Services Pty. Limited

DSI Financial Solutions Pte. Limited (Ceased to exist w.e.f. 11 April 2012)

HCL Singapore Pte. Limited

HCL (New Zealand) Limited

HCL Hong Kong SAR Limited

HCL Japan Limited

HCL Comnet Limited

HCL America Inc.

HCL Global Processing Services Limited

HCL BPO Services (NI) Limited

HCL (Malaysia) Sdn. Bhd.

HCL EAI Services Limited

HCL Poland sp. z o.o

Capital Stream, Inc. (Merged with HCL America w.e.f. 1 January 2012)

HCL EAS Limited

HCL Insurance BPO Services Limited

HCL Jones Technologies LLC (Liquidated w.e.f 29 June 2012)

HCL Expense Management Services Inc.

Axon Solutions (Canada) Inc.

Axon Solutions Schweiz Gmbh

Axon Solutions Pty. Limited

Axon Solutions Inc.

Axon Solutions Limited

Axon Solutions Sdn. Bhd.

Axon Solutions Singapore Pte. Limited

Axon Solutions (Shanghai) Co. Limited

HCL Axon (Proprietary) Limited

HCL Technologies Canada Inc.

HCL Argentina s.a.

HCL Mexico S. de R.L.

HCL Hungary Limited

HCL (Brazil) Technologia da informacao Ltda.

HCL Technologies Denmark Apps

HCL Technologies Norway AS

PT. HCL Technologies Indonesia Limited

HCL Technologies Philippines Inc.

HCL Technologies South Africa (Proprietary) Limited

HCL Arabia LLC

HCL Technologies France

Filial Espanola De HCL Technologies S.L. (Spain)

Jointly controlled entities

NEC HCL System Technologies Limited, India

Associates

Statestreet HCL Services (India) Private Limited (incorporated w.e.f 6 January 2012)

Others (Significant influence)

Slocum investments (Delhi) Private Limited

HCL Corporation Private Limited [Formerly Guddu

Investments (Pondi) Private Limited]

HCL Infosystems Limited

HCL Infinet Limited (Ceased to be related party w.e.f.

10 November 2011)

HCL Holding Private Limited

HCL Insys Pte Ltd., Singapore

Digilife Distribution and Marketing Services Limited.

(Formerly HCL Security Limited)

c) Key Management Personnel

Shiv Nadar, Chairman and Chief Strategy Officer Vineet Nayar, Vice Chairman and CEO

3. Commitments and Contingent liabilities

As at As at 30 June 2012 30 June 2011

i) Capital and other commitments

a) Capital commitments

Estimated amount of unexecuted capital contracts (net of advances) 528.43 391.33

b) Outstanding letter of credit 9.83 -

538.26 391.33

ii) Contingent Liabilities

a) Others 4.29 2.30

4.29 2.30

b) Guarantees have been given by the Company on behalf of various subsidiaries against credit facilities, financial assistance and office premises taken on lease amounting to Rs. 3,087.56 crores (Previous year Rs. 2,283.36 crores). These guarantees have been given in the normal course of the Company's operations and are not expected to result in any loss to the Company on the basis of the beneficiaries fulfilling their ordinary commercial obligations.

c) Bank guarantees of Rs. 14.25 crores (Previous year Rs. 24.39 crores). These guarantees have been given in the normal course of the Company's operations and are not expected to result in any loss to the Company, on the basis of the Company fulfilling its ordinary commercial obligations.

The amounts shown in the items above represent best possible estimates arrived at on the basis of available information. The uncertainties and possible reimbursements are dependent on the outcome of the different legal processes which have been invoked by the Company or the claimants as the case may be and therefore cannot be predicted accurately. The Company engages reputed professional advisors to protect its interest and has been advised that it has strong legal positions against such disputes.

iii) The Company has a comprehensive system of maintenance of information and documents as required by the transfer pricing legislation under sections 92-92F of the Income Tax Act, 1961. Since the law requires existence of such information and documentation to be contemporaneous in nature, the Company appoints independent consultants for conducting a Transfer Pricing Study to determine whether the transactions with associated enterprises are undertaken, during the financial year, on an "arms length basis". Adjustments, if any, arising from the transfer pricing study in the respective jurisdictions are accounted for as and when the study is completed for the current financial year. However the management is of the opinion that its international transactions are at arms' length so that the aforesaid legislation will not have any impact on the financial statements.

4. Derivative Financial Instruments

The Company is exposed to foreign currency fluctuations on foreign currency assets / liabilities, forecast cash flows denominated in foreign currency. The use of derivatives to hedge foreign currency forecast cash flows is governed by the Company's strategy, which provide principles on the use of such forward contracts and currency options consistent with the Company's Risk Management Policy. The counter parties in these derivative instruments are banks and the Company considers the risks of non-performance by the counterparty as non-material. A majority of the forward foreign exchange/option contracts mature within one to twelve months and the forecast transactions are expected to occur during the same period. The Company does not use forward contracts and currency options for speculative purposes.

As of the balance sheet date, the Company's net foreign currency exposure that is not hedged is Rs. 1,758.84 crores (Previous year Rs. 1,399.20 crores).

Notes:

1. Balance as at year end is inclusive of deferred tax assets of Rs. 93.94 crores (Previous year deferred tax liability of Rs. 4.27 crores).

2. At 30 June 2012, the estimated net amount of existing loss that is expected to be reclassified into the income statement within the next twelve months is Rs. 211.86 crores (Previous year gain of Rs. 23.51 crores).

5. Employee Benefit Plans

The Company has calculated the various benefits provided to employees as under:

A. Defined Contribution Plans and State Plans

Superannuation Fund

Employer's contribution to Employees' State Insurance

Employer's contribution to Employees' Pension Scheme.

B. Defined Benefit Plans

a) Gratuity

b) Employers Contribution to Provident Fund

Gratuity

The Company has a unfunded defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn salary) for each completed year of service.

Employer's Contribution to Provident Fund

The guidance note on implementing AS-15, Employee Benefits (revised 2005) issued by Accounting Standard board (ASB) states that benefits involving employer established provident funds, which require interest shortfalls to be recompensed are to be considered as defined benefit plans. The Actuarial Society of India has issued the final guidance for measurement of provident fund liabilities during the current year. The actuary has accordingly provided a valuation and based on the assumption mentioned below there is no shortfall as at 30 June 2012.

6. During the previous year, a scheme of Amalgamation ("Scheme") under sections 391 to 394 of the Companies Act, 1956 for amalgamation without issue of shares of HCL Technopark Limited, a wholly owned subsidiary ("Transferor Company"), held directly, with the Company has been approved by the Hon'ble High Court of Delhi on 16 August 2010 and is effective from 1 April 2009. The Transferor Company was engaged in the business of a developer of facilities for the IT industry. The amalgamation is expected to channelize synergies and lead to optimum utilization of available resources and result in greater economies of scale.

The Company has accounted for the amalgamation under the 'pooling of interest method' being an amalgamation in the nature of merger, as prescribed by the Accounting standard "AS-14", "Accounting for Amalgamations" as per Accounting Standards notified by Companies (Accounting Standards) Rules, 2006, (as amended).

7. Previous year comparatives

The previous year's figures have been re-classified/re-grouped to conform to current year's classification.


Jun 30, 2011

Company Overview

HCL Technologies Limited (hereinafter referred to as 'HCL' or the 'Company') is primarily engaged in providing a range of software services, business process outsourcing and infrastructure services. The Company was incorporated in India in November 1991. The Company leverages an extensive offshore infrastructure and its global network of offices in various countries and professionals to deliver solutions across select verticals including Retail, Aerospace and defense, Automotive, Telecom, Financial Services, Government, Hi-tech, Media and Entertainment, Travel, Transportation and Logistics, Energy and utilities, Life Sciences and Healthcare.

4. Segment reporting

Identification of Segments

The Company's operating businesses are organized and managed separately according to the nature of products and services provided, with each segment representing a strategic business unit that offers different products and serves different markets. The analysis of geographical segments is based on the areas in which major operating divisions of the Company operate.

(i) Business Segments

The operations of the Company predominately relate to providing Software services, infrastructure services including sale of networking equipment and business processing outsourcing services, which are in the nature of customer contact centers and technical help desks. The Chairman of the Company, who is the Chief Strategy Officer, evaluates the Company's performance and allocates resources based on an analysis of various performance indicators by types of service provided by the Company and geographic segmentation of customers.

Accordingly, revenue from service segments comprises the primary basis of segmental information set out in these financial statements. Secondary segmental reporting is performed on the basis of the geographical location of customers.

Revenue in relation to service segments is categorised based on items that are individually identifiable to that segment, while expenditure is categorised in relation to the associated turnover of the segment. Assets and liabilities are also identified to service segments.

(ii) Geographic Segments

Geographic segmentation is based on the location of the respective client. The principal geographical segments have been classified as America, Europe and others. Europe comprises business operations conducted by the Company in the United Kingdom, Sweden, Germany, Italy, Belgium, Netherlands, Finland, Switzerland, Ireland and Poland. Since services provided by the Company within these European entities are subject to similar risks and returns, their operating results have been reported as one segment, namely Europe. All other customers, mainly in Japan, Australia, New Zealand, Singapore, Malaysia, Israel, South Korea, India, China, Hong Kong, Czech Republic, Macau, UAE, Portugal and Russia are included in others.

(iii) Segment accounting policies

The accounting principles consistently used in the preparation of the financial statements and consistently applied to record revenue and expenditure in individual segments are as set out in Note 1 to this schedule on significant accounting policies. The accounting policies in relation to segment accounting are as under:

a) Segment assets and liabilities

All segment assets and liabilities have been allocated to the various segments on the basis of specific identification.

Segment assets consist principally of fixed assets, sundry debtors, loans and advances, cash and bank balances and unbilled receivables. Segment assets do not include unallocated corporate and treasury assets, net deferred tax assets and advance taxes.

Segment liabilities include sundry creditors and other liabilities. Segment liabilities do not include share capital, reserves, secured loans, unsecured loan and provision for taxes.

b) Segment revenue and expenses

Segment revenue is directly attributable to the segment and segment expenses have been allocated to various segments on the basis of specific identification. However, segment revenue does not include miscellaneous income, income from investments and other income. Segment expenses do not include premium amortized on bonds, diminution allowance in respect of current and trade investments, other than temporary diminution in the value of long term investment, charge taken for stock options issued to employees, corporate expenses and finance cost.

5. Related party transactions

a) Related parties where control exists

Subsidiaries

HCL Comnet Systems and Services Limited

HCL Bermuda Limited

HCL Technologies (Shanghai) Limited

HCL Great Britain Limited

HCL (Netherlands) BV

HCL GmbH

HCL Belgium NV

HCL Sweden AB

HCL Italy SLR

HCL Australia Services Pty. Limited

HCL (New Zealand) Limited

HCL Hong Kong SAR Limited

HCL Japan Limited

HCL Comnet Limited

HCL America Inc.

HCL Holdings GmbH

HCL Global Processing Services Limited (formerly Intelicent India Limited)

DSI Financial Solutions Pte. Limited

HCL BPO Services (NI) Limited

HCL Jones Technologies LLC

HCL Singapore Pte. Limited

HCL (Malaysia) Sdn. Bhd.

HCL EAI Services Limited

HCL Poland sp. z o.o

Capital Stream, Inc.

HCL EAS Limited

HCL Insurance BPO Services Limited

HCL Expense Management Services Inc.

Axon Group Limited.

Axon Solutions (Canada) Inc.

Bywater Limited

Axon Solutions Schweiz Gmbh

Axon Solutions Pty. Limited

Axon Solutions Inc.

Axon Acquisition Company, Inc.

Axon Solutions Limited

Axon Solutions Sdn. Bhd.

Axon Solutions Singapore Pte. Limited

Axon Solutions (Shanghai) Co. Limited

HCL Axon (Proprietary) Limited

JSPC- I Solutions Sdn. Bhd.

JSP Consulting Sdn. Bhd.

HCL Technologies Canada Inc.

HCL Argentina s.a.

HCL Mexico S. de R.L.

HCL Technologies Romania s.r.l.

HCL Hungary Limited

HCL Latin America Holding LLC

HCL (Brazil) Technologia da informacao Ltda.

HCL Technologies Denmark Apps

HCL Technologies Norway AS

HCL Technologies South Africa (Proprietary) Limited

PT. HCL Technologies Indonesia Limited

HCL Arabia LLC

HCL Technologies France

Anzospan Investments PTY Limited

FILIAL ESPAÑOLA DE HCL TECHNOLOGIES, S.L(Spain)

Employee benefit trusts

HCL Technologies Limited Employees Trust Axon Group Plc Employee Benefit Trust No. 3 Axon Group Plc Employee Benefit Trust No. 4

Jointly controlled entities

NEC HCL System Technologies Limited, India

Axon Puerto Rico Inc., Puerto Rico- through subsidiary

b) Related parties with whom transactions have taken place during the year

Subsidiaries

HCL America Inc., United States of America

HCL Great Britain Limited, United Kingdom

HCL (Netherlands) BV, Netherlands

HCL GmbH, Germany

HCL Belgium NV, Belgium

HCL Sweden AB, Sweden

HCL Australia Services Pty. Limited, Australia

HCL (New Zealand) Limited, New Zealand

HCL Hong Kong SAR Limited, Hong Kong

HCL Comnet Systems and Services Limited, India

HCL Comnet Limited, India

HCL Bermuda Limited, Bermuda

HCL Technologies (Shanghai) Limited, Shanghai

HCL BPO Services (NI) Limited, Northern Ireland

HCL Singapore Pte. Limited, Singapore

HCL (Malaysia) Sdn. Bhd., Malaysia

HCL EAI Services Limited, India

HCL Global Processing Services Limited(formerly Intelicent India Limited)

HCL Poland Sp.z.o.o., Poland

Capital Stream Inc., United States of America

HCL Axon (Pty) Limited

Axon Solutions Inc. , United States of America

Axon Solutions Limited, UK

Axon Solutions Singapore Pte Limited

Axon Solutions Sdn. Bhd., Malaysia

HCL Insurance BPO Services Limited, UK

Axon Solutions (Canada) Inc., Canada

HCL Technologies Canada Inc.

Axon Group Limited.

HCL France

HCL EAS Limited, UK

Jointly controlled entities

NEC HCL System Technologies Limited, India

Others (Significant influence)

HCL Corporation Limited

HCL Infosystems Limited

HCL Security Limited

HCL Infinet Limited.

HCL Holding Pvt. Limited.

HCL Insys Pte Limited., Singapore

c) Key Management Personnel

Shiv Nadar, Chairman and Chief Strategy Officer

Vineet Nayar, Chief Executive Officer and Whole-time Director

c) Guarantees have been given by the Company on behalf of various subsidiaries against credit facilities, financial assistance and office premises taken on lease amounting to Rs 2,283.86 crores (previous year Rs 2,219.44 crores). These guarantees have been given in the normal course of the Company's operations and are not expected to result in any loss to the Company on the basis of the beneficiaries fulfilling their ordinary commercial obligations.

d) Bank guarantees of Rs 24.39 crores (previous year Rs 6.39 crores). These guarantees have been given in the normal course of the Company's operations and are not expected to result in any loss to the Company, on the basis of the Company fulfilling its ordinary commercial obligations.

The amounts shown in the items above represent best possible estimates arrived at on the basis of available information. The uncertainties and possible reimbursements are dependent on the outcome of the different legal processes which have been invoked by the Company or the claimants as the case may be and therefore cannot be predicted accurately. The Company engages reputed professional advisors to protect its interest and has been advised that it has strong legal positions against such disputes.

iii) The Company has a comprehensive system of maintenance of information and documents as required by the transfer pricing legislation under sections 92-92F of the Income Tax Act, 1961. Since the law requires existence of such information and documentation to be contemporaneous in nature, the Company appoints independent consultants for conducting a Transfer Pricing Study to determine whether the transactions with associated enterprises are undertaken, during the financial year, on an "arms length basis". Adjustments, if any, arising from the transfer pricing study in the respective jurisdictions are accounted for as and when the study is completed for the current financial year. However the management is of the opinion that its international transactions are at arms' length so that the aforesaid legislation will not have any impact on the financial statements.

11. Derivative Financial Instruments

The Company is exposed to foreign currency fluctuations on foreign currency assets / liabilities, forecasted cash flows denominated in foreign currency. The use of derivatives to hedge foreign currency forecasted cash flows is governed by the Company’s strategy, which provide principles on the use of such forward contracts and currency options consistent with the Company’s Risk Management Policy. The counter party in these derivative instruments are banks and the Company considers the risks of non-performance by the counterparty as non-material. A majority of the forward foreign exchange / option contracts mature between one to twenty months and the forecasted transactions are expected to occur during the same period. The Company does not use forward contracts and currency options for speculative purposes.

As of the balance sheet date, the Company's net foreign currency exposure that is not hedged is Rs 1399.20 crores (previous year Rs 3,754.76 crores).

Notes:

1. Balance as at year end is inclusive of deferred tax liability of Rs 4.27 crores (previous year deferred tax assets of Rs 7.51 crores).

2. At 30 June 2011, the estimated net amount of existing gain that is expected to be reclassified into the income statement within the next twelve months is Rs 23.51 crores (previous year loss of Rs 99.97 crores).

14. Micro, Small and Medium Enterprises

As per information available with the management, the dues payable as at any time during the year ended 30 June 2011 and 2010 to enterprises covered under "The Micro, Small and Medium Enterprises Development Act, 2006" is Rs Nil crores.

This has been determined on the basis of responses received from vendors on specific confirmation sought by the Company in this regard.

15. Employee Benefit Plans

The Company has calculated the various benefits provided to employees as under:

A. Defined Contribution Plans and State Plans

Superannuation Fund

Employer’s contribution to Employees’ State Insurance

Employer’s contribution to Employees’ Pension Scheme.

B. Defined Benefit Plans

a) Gratuity

b) Employers Contribution to Provident Fund

Gratuity

The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn salary) for each completed year of service.

The Company expects to contribute Rs 20.31 crores to gratuity in 2011-12.

Employer’s Contribution to Provident Fund

The Guidance on implementing AS 15, Employee Benefits (revised 2005) issued by the Accounting Standard Board (ASB) states that benefits involving employer-established provident funds, which require interest shortfall to be recompensed are to be considered as defined benefits plans. Pending the issuance of the guidance note from the Actuarial Society of India, the Company's actuary has expressed his inability to reliably measure provident fund liabilities. Accordingly the Company is unable to provide the related information.

During the year ended 30 June 2011, the Company has contributed Rs 58.77 crores (Previous year Rs 48.13 crores) towards employers’ contribution to the Provident Fund.

16. Joint Venture

The Company has an interest in the following jointly controlled entities:

17. A scheme of Amalgamation ("Scheme") under sections 391 to 394 of the Companies Act, 1956 for amalgamation without issue of shares of HCL Technopark Limited, a wholly owned subsidiary ("Transferor Company"), held directly, with the Company has been approved by the Hon'ble High Court of Delhi on August 16, 2010 and is effective from April 1, 2009. The Transferor Company was engaged in the business of a developer of facilities for the IT industry. The amalgamation is expected to channelize synergies and lead to optimum utilisation of available resources and result in greater economies of scale.

The Company has accounted for the amalgamation under the 'pooling of interest method' being an amalgamation in the nature of merger, as prescribed by the Accounting standard "AS-14", "Accounting for Amalgamations" as per Accounting Standards notified by Companies (Accounting Standards) Rules, 2006, (as amended).

19. Previous year comparatives

The previous year's figures have been re-classified/re-grouped to conform to current year's classification.

I. Registration details

Registration No. 55-46369

Balance Sheet Date 30 June 2011

State Code 55

II. Capital raised during the year

Public issue Rights issue

Nil Nil

Bonus issue Private Placement

Nil 2,162,171

Note: Capital raised during the year includes share application money.

III. Position of mobilisation and deployment of funds

Total liabilities Total assets

68,893,077 68,893,077

Sources of funds Paid-up capital 1,387,419*

Secured loans 10,298,674

*Includes Rs 10,042 in respect of share application money.

Reserves and surplus 57,204,053

Unsecured loans 2,905

Application of funds

Net fixed assets Investments

18,646,590** 26,532,707

Net current assets Misc. expenditure

22,383,246 Nil

Accumulated losses Deferred tax

Nil 1,330,605

** Includes Rs 5,687,337 thousands in respect of capital work-in-progress.

IV. Performance of Company

Turnover Total expenditure

69,607,473 56,708,697

Profit before tax Profit after tax

12,898,776 11,982,791

Earnings per share (in Rs) Dividend rate (%)

17.53 (Basic) 375% 17.18 (Diluted)

V. Generic names of Principal Products/Services of Company (as per monetary terms) Product description: Software

Item code (ITC code): 852490


Jun 30, 2010

Company Overview

HCL Technologies Limited (hereinafter referred to as HCL or the Company) is primarily engaged in providing a range of software services, business process outsourcing and infrastructure services. The Company was incorporated in India in November 1991. The Company leverages an extensive offshore infrastructure and its global network of offices in various countries and professionals to deliver solutions across select verticals including Retail, Aerospace and defense, Automotive, Telecom, Financial Services, Government, Hi-tech, Media and Entertainment, Travel, Transportation and Logistics, Energy and utilities, Life Sciences and Healthcare.

1. Segment reporting

Identification of Segments

The Companys operating businesses are organized and managed separately according to the nature of products and services provided, with each segment representing a strategic business unit that offers different products and serves different markets. The analysis of geographical segments is based on the areas in which major operating divisions of the Company operate.

i) Business Segments

The operations of the Company and its subsidiaries predominately relate to providing Software services, infrastructure services including sale of networking equipment and business processing outsourcing services, which are in the nature of customer contact centers and technical help desks. The Chairman of the Company, who is the Chief Strategy Officer, evaluates the Companys performance and allocates resources based on an analysis of various performance indicators by types of service provided by the Company and geographic segmentation of customers.

Accordingly, revenue from service segments comprises the primary basis of segmental information set out in these financial statements. Secondary segmental reporting is performed on the basis of the geographical location of customers.

Revenue in relation to service segments is categorised based on items that are individually identifiable to that segment, while expenditure is categorised in relation to the associated turnover of the segment. Assets and liabilities are also identified to service segments.

ii) Geographic Segments

Geographic segmentation is based on the location of the respective client. The principal geographical segments have been classified as America, Europe and others. Europe comprises business operations conducted by the Company in the United Kingdom, Sweden, Germany, Italy, Belgium, Netherlands, Finland, Switzerland, Ireland and Poland. Since services provided by the Company within these European entities are subject to similar risks and returns, their operating results have been reported as one segment, namely Europe. All other customers, mainly in Japan, Australia, New Zealand, Singapore, Malaysia, Israel, South Korea, India, China, Hong Kong, Czech Republic, Macau, UAE, Portugal and Russia are included in others.

iii) Segment accounting policies

The accounting principles consistently used in the preparation of the financial statements and consistently applied to record revenue and expenditure in individual segments are as set out in Note 1 to this schedule on significant accounting policies. The accounting policies in relation to segment accounting are as under:

a) Segment assets and liabilities

All segment assets and liabilities have been allocated to the various segments on the basis of specific identification.

Segment assets consist principally of fixed assets, sundry debtors, loans and advances, cash and bank balances and unbilled receivables. Segment assets do not include unallocated corporate and treasury assets, net deferred tax assets and advance taxes.

Segment liabilities include sundry creditors and other liabilities. Segment liabilities do not include share capital, reserves, secured loans, unsecured loan and provision for taxes.

b) Segment revenue and expenses

Segment revenue is directly attributable to the segment and segment expenses have been allocated to various segments on the basis of specific identification. However, segment revenue does not include miscellaneous income, income from investments and

other income. Segment expenses do not include premium amortized on bonds, diminution allowance in respect of current and trade investments, other than temporary diminution in the value of long term investment, charge taken for stock options issued to employees, corporate expenses and finance cost.

2. Related party transactions

a) Related parties where control exists

Subsidiaries

HCL Comnet Systems and Services Limited

HCL Bermuda Limited

HCL Technologies (Shanghai) Limited

HCL Technoparks Limited

HCL Great Britain Limited

HCL (Netherlands) BV

HCL GmbH

HCL Belgium NV

HCL Sweden AB

HCL Italy SLR

HCL Australia Services Pty. Limited

HCL (New Zealand) Limited

HCL Hong Kong SAR Limited

HCL Japan Limited

HCL Comnet Limited

HCL America Inc.

HCL Holdings GmbH

Intelicent India Limited

DSI Financial Solutions Pte. Limited

HCL BPO Services (Nl) Limited

HCL Jones Technologies LLC

HCL Singapore Pte. Limited

HCL (Malaysia) Sdn. Bhd.

HCL EAI Services Limited

HCL Poland sp. z o.o

Capital Stream, Inc.

HCL EAS Limited

HCL Insurance BPO Services Limited

HCL Expense Management Services Inc.

Axon Group Limited, (formerly Axon Group Pic.)

Axon EBT Trustee Limited

Axon Solutions (Canada) Inc.

By water Limited

Axon Solutions Schweiz Gmbh

Axon International Limited

Axon Solutions Pty. Limited

Axon Solutions Inc.

Axon Acquisition Company, Inc.

Axon Solutions Limited

Axon Solutions Sdn. Bhd.

Axon Solutions Singapore Pte. Limited

Axon Solutions (Shanghai) Co. Limited

HCL Axon (Proprietary) Limited

JSPC-1 Solutions Sdn. Bhd.

JSP Consulting Sdn. Bhd.

Aspire Solutions Sdn. Bhd.

HCL Technologies Canada Inc.

HCL Argentina s.a.

HCL Mexico S. de R.L.

HCL Technologies Romania s.r.l.

HCL Hungary Limited

HCL Latin America Holding LLC

HCL (Brazil) Technologia da informacao Ltda.

HCL Retail Solutions Australia Pty Limited HCL Technologies Denmark Apps HCL Technologies Norway AS

Employee benefit trusts

HCL Technologies Limited Employees Trust Axon Group Pic Employee Benefit Trust No. 3 Axon Group Pic Employee Benefit Trust No. 4 jointly controlled entities

NEC HCL System Technologies Limited, India Axon Balance LLC, United States of America Axon Puerto Rico Inc., Puerto Rico

b) Related parties with whom transactions have taken place during the year

Subsidiaries

HCL America Inc., United States of America

HCL Great Britain Limited, United Kingdom

HCL (Netherlands) BV, Netherlands

HCL GmbH, Germany

HCL Belgium NV, Belgium

HCL Sweden AB, Sweden

HCL Australia Services Pty. Limited, Australia

HCL (New Zealand) Limited, New Zealand

HCL Hong Kong SAR Limited, Hong Kong

HCL Comnet Systems and Services Limited, India

HCL Comnet Limited, India

HCL Bermuda Limited, Bermuda

HCL Technologies (Shanghai) Limited, Shanghai

HCL BPO Services (Nl) Limited, Northern Ireland

HCL Singapore Pte. Limited, Singapore

HCL (Malaysia) Sdn. Bhd., Malaysia

HCL EAI Services Limited, India

HCL Technoparks Limited, India

HCL Poland Sp.z.o.o., Poland

Capital Stream Inc., United States of America

HCL Axon (Pty) Limited

Axon Solutions Inc., United States of America

Axon Solutions Limited, U K

Axon Solutions Singapore Pte Limited

Axon Solutions Sdn. Bhd., Malaysia

HCL Insurance BPO Services Limited, U K

Axon Solutions (Canada) Inc., Canada

HCL Technologies Canada Inc.

Axon Group PLC

HCL France

HCL EAS Limited, U K

Jointly controlled entities

NEC HCL System Technologies Limited, India Others (Significant influence)

HCL Corporation Limited*

HCL Infosystems Limited

HCL Security Limited

HCL Infinet Limited.

*HCL Corporation ceases to be holding company from 24 June, 2010. As on June 30,2010 HCL Corporation held 323,082,542 shares in the Company being 47.6% holding in HCL Technologies Limited

c) Key Management Personnel

Shiv Nadar, Chairman and Chief Strategy Officer

Vineet Nayar, Chief Executive Officer and Whole-time Director

3. Commitments and Contingent liabilities

As at As at 30 June 2010 30 June 2009

i) Capital and other commitments

a) Capital commitments

Estimated amount of unexecuted capital 274.15 244.09 contracts (net of advances)

b) Outstanding letter of credit 1.76 21.20

275.91 265.29

ii) Contingent Liabilities

a) Guarantees have been given by the Company on behalf of various subsidiaries against credit facilities, financial assistance and office premises taken on lease amounting to Rs. 2,219.44 crores (previous year Rs. 3,063.38 crores). These guarantees have been given in the normal course of the Companys operations and are not expected to result in any loss to the Company on the basis of the beneficiaries fulfilling their ordinary commercial obligations.

b) Bank guarantees of Rs. 6.39 crores (previous year Rs. 11.34 crores). These guarantees have been given in the normal course of the Companys operations and are not expected to result in any loss to the Company, on the basis of the Company fulfilling its ordinary commercial obligations.

c) Income Tax demands (excluding interest) of Rs. 9.99 crores (previous year Rs. 9.99 crores)

d) Indirect Tax demands of Rs 1.63 crores (previous year Rs Nil crores)

The amounts shown in the item (c) above represent best possible estimates arrived at on the basis of available information. The uncertainties and possible reimbursements are dependent on the outcome of the different legal processes which have been invoked by the Company or the claimants as the case may be and therefore cannot be predicted accurately. The Company engages reputed professional advisors to protect its interest and has been advised that it has strong legal positions against such disputes.

iii) The Company has a comprehensive system of maintenance of information and documents as required by the transfer pricing legislation under sections 92-92F of the Income Tax Act, 1961. Since the law requires existence of such information and documentation to be contemporaneous in nature, the Company appoints independent consultants for conducting a Transfer Pricing Study to determine whether the transactions with associated enterprises are undertaken, during the financial year, on an "arms length basis". Adjustments, if any, arising from the transfer pricing study in the respective jurisdictions are accounted for as and when the study is completed for the current financial year. However the management is of the opinion that its international transactions are at arms length so that the aforesaid legislation will not have any impact on the financial statements.

4. Derivative Financial Instruments

The Company is exposed to foreign currency fluctuations on foreign currency assets / liabilities, forecasted cash flows denominated in foreign currency. The use of derivatives to hedge foreign currency forecasted cash flows is governed by the Companys strategy, which provide principles on the use of such forward contracts and currency options consistent with the Companys Risk Management Policy. The counter party in these derivative instruments are banks and the Company considers the risks of non-performance by the counterparty as non-material. A majority of the forward foreign exchange/option contracts mature between one to twelve months and the forecasted transactions are expected to occur during the same period. The Company does not use forward contracts and currency options for speculative purposes.

5. Micro, Small and Medium Enterprises

As per information available with the management, the dues payable to enterprises covered under "The Micro, Small and Medium Enterprises Development Act, 2006" as at 30 June 2009 and 2010 is Rs Nil crores.

This has been determined on the basis of responses received from vendors on specific confirmation sought by the Company in this regard.

15. Employee Benefit Plans

The Company has calculated the various benefits provided to employees as under:

A. Defined Contribution Plans and State Plans

Superannuation Fund

Employers contribution to Employees State Insurance

Employers contribution to Employees Pension Scheme.

Employers Contribution to Provident Fund

The Guidance on implementing AS 15, Employee Benefits (revised 2005) issued by Accounting Standard Board (ASB) states benefits involving employer established provident funds, which requires interest shortfall to be recompensed are to be considered as defined benefits plans. Pending the issuance of the guidance note from the Actuarial Society of India, the Companys actuary has expressed an inability to reliable measure provident fund liabilities. Accordingly the company is unable to exhibit the related information. During the year ended 30 June 2010, the Company has contributed Rs. 48.13 crores (Previous year Rs. 35.78 crores) towards Employers contribution to the Provident Fund.

7. Previous year comparatives

The figures of previous year were audited by a firm of chartered accountants other than S.R. Batliboi & Co. The previous years figures have been re-classified/re-grouped to conform to current years classification.

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