Mar 31, 2018
Dear Shareholders,
The Board of Directors has pleasure in presenting their Thirty Second (32nd) Annual Report on the Business and Operations of the Company, together with the Audited Accounts for the financial year ended 31st March, 2018.
Financial Highlights
The summary of the financial performance of the Company for the Financial Year ended 31st March, 2018 as compared to the previous year is as below:
(Rs. in Crores)
Particulars |
Consolidated |
Standalone |
||
2017-18 |
2016-17 |
2017-18 |
2016-17 |
|
Continuing operations |
||||
Net sales and other income |
3,742.03 |
3,371.19 |
3,003.02 |
2,313.42 |
Profit before exceptional items interest, depreciation and tax |
(3.26) |
61.58 |
40.24 |
52.83 |
Finance charges |
139.47 |
152.50 |
112.69 |
104.60 |
Depreciation and amortization |
27.48 |
31.08 |
4.44 |
4.80 |
Exceptional items |
(31.42) |
(11.00) |
(553.62) |
(320.19) |
Loss before tax |
(201.63) |
(133.00) |
(630.50) |
(376.76) |
Provision for taxation: current |
2.44 |
11.31 |
- |
6.31 |
Deferred tax expenses / (credit) |
3.13 |
(20.63) |
1.07 |
(20.68) |
Net loss after tax |
(207.20) |
(123.68) |
(631.57) |
(362.39) |
Discontinued operations |
||||
Loss before tax |
(507.21) |
(159.67) |
||
Tax expense / (credit) |
99.35 |
(35.68) |
||
Net loss after tax |
(606.56) |
(123.99) |
||
Net loss after tax |
(813.76) |
(247.67) |
(631.57) |
(362.39) |
Performance
The consolidated net revenue (from continuing operations) of the Company for the year ended 31st March 2018 was Rs. 3,742.03 Crores as against Rs. 3,371.19 Crores during the previous year ended 31st March, 2017. The consolidated loss before tax (from continuing operations) for the year ended, 31st March, 2018 was Rs. 201.63 Crores as against a loss of Rs. 133.00 Crores during the previous year ended 31st March, 2017.
The net revenue on standalone basis for the year ended, 31st March, 2018 was Rs. 3,003.02 Crores as against Rs. 2,313.42 Crores during the previous year ended 31st March, 2017. The loss before tax for the year ended, 31st March, 2018 was Rs. 630.50 Crores as against a loss of Rs. 376.76 Crores during the previous year ended 31st March, 2017.
Rights Issue
During the financial year under review, the Company had allotted 106,190,299 Equity Shares with a face value of Rs. 2/- each at a premium of Rs. 45/- per Equity Share for an amount aggregating to Rs. 499,09,44,053/- on a rights basis on December 8, 2017. The said fully paid up equity shares were admitted to dealings on the BSE Limited and National Stock Exchange of India Limited with effect from December 14, 2017, pursuant to their trading approvals, vide their respective circulars dated December 13, 2017.
As per Regulation 16 of SEBI ICDR Regulations and Regulation 32 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Listing Regulations), the Monitoring Agency i.e. Axis Bank, has confirmed in its report dated January 30, 2018 that the proceeds of the Rights Issue has been utilized as per the objects stated in the Letter of Offer dated October 31, 2017 and there has been no deviation in the utilization of proceeds from the objects stated in the offer letter of Rights Issue.
Recommendation of Dividend
Your Board of Directors do not recommend any dividend for the financial year 2017-18.
Operations
A detailed analysis and insight into the financial performance and operations of your Company for the year ended 31st March, 2018 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.
Transfer to reserves
No amount is proposed to be transferred to the general reserve of the Company.
Employee Stock Option Plan
Employee Stock Option Scheme 2000 Pursuant to the approval of the Shareholders at an ExtraOrdinary 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, no shares were allotted under ESOP 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 1,00,000 Equity Shares of Rs. 2/- each under ESOP Plan 2005. Credit Rating
The credit rating by ICRA continued at âA1â, indicating the very strong degree of safety regarding timely payment of financial obligations to the companyâs Commercial Paper program of Rs. 300 crores.
The current long term rating assigned by India Rating to the company is âA-â, indicating adequate degree of safety regarding timely servicing of financial obligations.
Fixed Deposits
Your 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 your Company are listed at The BSE Limited, Mumbai (BSE) and National Stock Exchange of India Limited, Mumbai (NSE).
Stock Exchange where HCL Infosystems |
Scrip Symbol / |
Ltd. shares are listed |
Code |
National Stock Exchange of India Ltd. (NSE) |
HCL-INSYS |
BSE Ltd. (BSE) |
500179 |
The Company has paid the listing fee for the year 2018-2019 to BSE and NSE.
Directors and Key Managerial Personnel (KMP)
The Board of Directors of the Company has optimum combination of executive and non-executive directors including independent directors and woman directors in compliance with the provisions of the Companies Act, 2013 (âthe Actâ) and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. During the year under review, Mr. Pradeep Kumar Khosla, Independent Director, had resigned from the Directorship of the Company w.e.f 12th June, 2017. Further, Mr. Premkumar Seshadri ceased to be Managing Director of the Company w.e.f. close ofbusiness hours of 31st March, 2018 and Mr. Raghavan Rangarajan was appointed as Managing Director of the Company w.e.f. 1st April, 2018. The Board places on record their appreciation for the contributions made by them during their tenure with the Company.
Mr. V N Koura, the Non-executive and Non Independent Director liable to retire from office by rotation at the ensuing Annual General Meeting has vide his letter dated 25th May, 2018 expressed his unwillingness to be reappointed as Director of the Company due to his other professional commitments and hence will not be reappointed at the forthcoming AGM.
The Company has received declarations from all the Independent directors confirming that they meet the criteria of independence as prescribed under Section 149(6) of the Companies Act, 2013.
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 up to a term of five consecutive years on the Board of the Company and shall not be liable to retire by rotation.
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
Pursuant to the provisions of the Companies Act, 2013 and Securities and Exchange Board of India (Listing Obligation and Disclosure Requirements) Regulations, 2015, a formal annual performance evaluation has been done by the Board of its own performance, the Directors individually as well as the evaluation of its Committees.
The Company had appointed an external agency to assist NRC in drafting the questionnaires for the purpose of evaluation of the Board & the Individual directors and the Board Committees. The structured questionnaires were circulated to all the Directors, requesting them to fill and return the duly filled questionnaires to the Company giving their views for evaluation of the self & the peers.
The feedback of the evaluation was shared by the Board Chairman with each Board members, the entire Board and the Board Committees and a roadmap was framed for taking the corrective actions.
Independent Directors of the Company in their separate meeting held on 29th March, 2018 reviewed the performance of the non-independent directors and the Board as a whole. They also reviewed the performance of the Chairperson of the Company.
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 2017-18, 13 (Thirteen) 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.
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 Board Report.
Insider Trading Regulations
As per the requirements under the SEBI (Prohibition of Insider Trading) Regulations, 2015, the Company had adopted the âCode of Conduct for Internal Procedures and to Regulate, Monitor and Report Trading by Insidersâ and the âCode of Fair Disclosureâ w.e.f. 15th May, 2015.
Directorsâ 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.
Statement on Declaration given by Independent Directors
All independent directors have given declarations to the effect that they meet the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013. 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 median remuneration |
Remuneration (Rs.) |
Dr. Nikhil Sinha* |
7,50,000 |
|
Mr. V.N. Koura |
- |
- |
Dr. Pradeep Kumar Khosla** |
75,000 |
|
Ms. Sangeeta Talwar |
23,25,000 |
|
Mr. Kaushik Dutta |
21,75,000 |
|
Mr. Dhirendra Singh |
22,50,000 |
|
Mr. Pawan Kumar Danwar |
- |
- |
Mr. Dilip Kumar Srivastava |
- |
- |
Ms. Ritu Arora |
9,75,000 |
Executive Directors |
Ratio to median remuneration |
Remuneration |
Mr. Premkumar Seshadri*** |
- |
- |
Note:
1. No sitting fees is paid to Executive Director and NonIndependent Director, other than Dr. Nikhil Sinha.
2. * Dr. Nikhil Sinha was paid sitting fees for Board/ Committees meetings held on and after 26th July, 2017
3. ** Dr. Pradeep Kumar Khosla resigned from Directorship of the Company w.e.f. 12th June, 2017
4. *** Mr. Premkumar Seshadri resigned from the position of Managing Director of the Company w.e.f the closing hours of 31st March, 2018.
(b) The percentage increase in remuneration of each Director, Chief Executive Officer, Chief Financial Officer, Company Secretary in the financial year:
Mr. Premkumar Seshadri, Executive Vice Chairman & Managing Director was not paid any remuneration by the Company.
No remuneration, other than the sitting fees were paid to Non-Executive and Independent Directors, which continued to be paid @ Rs. 75,000/- per Board / Committee meeting, as was paid during the year 2016-17.
(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 4.0%
(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 2277.
(e) 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 4.0%
- Not Applicable for managerial remuneration, as no remuneration is paid by the Company to the Managing Director by the Company
(f) 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 the related party transactions were in the ordinary course of business and at armâs length. The Audit Committee has approved all related party transactions under the provisions of Section 188 of the Companies Act, 2013 and other applicable sections of the Companies Act, 2013 read with relevant rules for the financial year 2017-18. 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.
Policy on dealing with related party transactions is available on the website of the Company. https://www.hclinfosystems. com/investors/
Internal Control Systems
Your 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.
Policy on Directorsâ Appointment and Remuneration
In terms of Section 178(3) of the Companies Act, 2013, upon recommendation of the Nomination and Remuneration Committee, the Board has adopted the Nomination and Remuneration Policy of the Company. Directorsâ appointment and remuneration including criteria for determining qualifications, positive attributes, independence of a director and other prescribed matters, are governed by such policy. In terms of Section 178(4) of the Act, such policy is attached hereto as Annexure - 1 which forms part of this report. Annual Evaluation of Performance of the Board, its Committees and Individual Directors The evaluation of performance of the Board, its Committees and individual directors for the financial year 2017-18 was carried out in accordance with the policy for evaluation of the performance of the Board of Directors of the Company. The Company had appointed an external agency to conduct the online board evaluation of the Board, Committees and individual Directors including Independent Directors, as per the assessment from designed inhouse by the Company. The report content and quality was reviewed by Independent HR consultant and shared the results with the Board Chairman Dr. Nikhil Sinha. Independent Directors in their separate meeting have reviewed the performance of Non-Independent Directors and the Board as a whole. They also reviewed the performance of chairperson of the Company. The Board was satisfied with the evaluation results.
Vigil Mechanism/Whistle Blower Policy
Pursuant to the provisions of section 177(9) & (10) of the Companies Act, 2013 and Regulation 22 of the Securities and Exchange Board of India (Listing Obligation and Disclosure Requirements) Regulations, 2015, a Vigil Mechanism/ Whistle Blower Policy for Directors and employee to report concerns about unethical behavior, actual or suspected fraud or violation of the Companyâs code of conduct or ethics policy. The said Policy is posted on the website of the Company and can be assessed at https://www.hclinfosystems.com/ investors/
Policy against Sexual Harassment
The organization endeavors to ensure a safe, protected and congenial work environment where employees shall deliver their best without any inhibition, threat or fear. Hence the prevention of sexual harassment at workplace policy has been evolved.
The Company has put in place a âPolicy on Prevention and Redressal of Sexual Harassment at Workplace under the name of âWith Youâ. As per the policy, any employee may report his/her complaint to the supervisor or HR representative or member of the Committee or to the With You email id â[email protected]â, in writing as mentioned.
The Ethics Committee [Committee constituted under the prevention of Sexual Harassment at the workplace (Prevention, Prohibition and Redressal) Act, 2013 (âPOSH Actâ)] would then investigate and submit its report within 45 working days. We affirm that adequate access was provided to any complainant who wished to register a complaint under the policy, during the year.
Risk Management Policy
The Board of the Company has adopted a risk management policy for reviewing the risk management plan and ensuring its effectiveness. The audit committee has additional oversight in the area of financial risks and controls. Major risks identified by the businesses and functions are systematically addressed through mitigating actions on a continuing basis.
The development and implementation of risk management policy has been covered in the management discussion and analysis, which forms part of this report.
Auditors & Auditorsâ Report
Statutory Auditors
As per Section 139 of the Act read with the Companies (Audit and Auditors) Rules, 2014, the Members of the Company in its 31st Annual General Meeting held on 14th September, 2017 approved the appointment of M/s BSR & Associates LLP, Chartered Accountants (FRN - 116231W/W-100024), as the Statutory Auditors of the Company for an initial term of 5 years i.e. from the conclusion of 31st Annual General Meeting till the conclusion of 36th Annual General Meeting of the Company.
The Report given by M/s BSR & Associates LLP, Chartered Accountants on the financial statements of the Company for the financial year 2017-18 is part of the Annual Report. There has been no qualification, reservation or adverse remark or disclaimer in their Report. During the year under review, the Auditors had not reported any matter under Section 143 (12) of the Act, therefore no detail is required to be disclosed under Section 134 (3) of the Act.
Secretarial Audit
The Secretarial Audit was carried out by M/s. V K C & Associates, Practicing Company Secretaries for the financial year 2017-18. The Report given by the Secretarial Auditors is annexed and forms an integral part of this Boardâs Report. There has been no qualification, reservation or adverse remark or disclaimer in their Report. During the year under review, the Secretarial Auditors had not reported any matter under Section 143 (12) of the Act, therefore no detail is required to be disclosed under Section 134 (3) of the Act. In terms of Section 204 of the Act, read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Audit Committee recommended and the Board of Directors appointed M/s. V K C & Associates, Practicing Company Secretaries as the Secretarial Auditors of the Company in relation to the financial year 2018-19. The Company has received their written consent that the appointment is in accordance with the applicable provisions of the Act and rules framed thereunder.
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 (âthe Actâ) 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
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 https://www. hclinfosystems.com/investors/ HCL Touch Inc., US, the erstwhile step down wholly owned subsidiary of your Company ceased to be the step down subsidiary on its winding up w.e.f 4th April, 2018. Also, QDigi Services Limited (formerly known as HCL Computing Products Limited), a wholly owned subsidiary has ceased to be the subsidiary of your Company w.e.f 11th April, 2018 on its sale to an Independent buyer.
Extract of Annual Return
The details forming part of the extract of the Annual Return in form MGT 9 is attached herewith as âAnnexure to this Reportâ.
Investor Education and Protection Fund (IEPF)
Pursuant to the applicable provisions of the Companies Act, 2013, read with the IEPF Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 (âthe Rulesâ), all unpaid or unclaimed dividends are required to be transferred by the Company to the IEPF established by the Central Government, after the completion of seven years. Further, according to the Rules, the shares in respect of which dividend has not been paid or claimed by the shareholders for seven consecutive years or more have also been transferred to the demat account created by the IEPF Authority. Accordingly, the Company has transferred the unclaimed and unpaid dividends along with the corresponding Shares that become due to transfer during the FY 2017-18.
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 : 29th May, 2018 (Chairman)
Mar 31, 2017
To the Members,
The Directors have pleasure in presenting their Thirty First Annual Report, together with the Audited Accounts for the financial year ended 31st March, 2017.
Financial Highlights
_ (RS, in Crores)
Particulars |
Consolidated |
Standalone |
||
2016-17 |
2015-16 (9 Months) |
2016-17 |
2015-16 (9 Months) |
|
Net Sales and other income |
3,883.21 |
3,792.38 |
2,312.97 |
2,572.43 |
Profit before exceptional items Interest, Depreciation and Tax |
(2.19) |
5.81 |
52.83 |
62.55 |
Finance Charges |
190.29 |
125.69 |
104.60 |
81.49 |
Depreciation and Amortization |
39.19 |
31.98 |
4.80 |
4.12 |
Exceptional Items |
(61.00) |
(67.22) |
(320.19) |
(159.01) |
Profit before Tax |
(292.67) |
(219.08) |
(376.76) |
(182.07) |
Provision for Taxation: Current |
11.31 |
8.89 |
6.31 |
8.41 |
Deferred Tax Expenses / (Credit) |
(56.31) |
(13.67) |
(20.68) |
(3.17) |
Net Profit after Tax (Before Minority Interest) |
(247.67) |
(214.30) |
(362.39) |
(187.31) |
Net Profit after Tax (After Minority Interest) |
(247.67) |
(214.30) |
(362.39) |
(187.31) |
Performance
In pursuance to the requirement of Section 2(41) of the Companies Act, 2013, the Company last year had changed its previous financial year to end on 31st March, 2016 i.e. from 1st July, 2015 to 31st March, 2016 (9 months). Hence, the figures for the current financial year (12 months) are not comparable with the figures of the previous year (9 months).
The consolidated net revenue of the Company for the year ended 31st March 2017 was Rs, 3,883.21 Crores as against Rs, 3,792.38 Crores during the previous year (9 months) ended 31st March, 2016. The consolidated loss before tax for the year ended, 31st March, 2017 was Rs, 292.67 Crores as against Rs, 219.08 Crores during the previous year (9 months) ended 31st March, 2016. The net revenue on standalone basis for the year ended, 31st March, 2017 was Rs, 2,312.97 Crores as against Rs, 2,572.43 Crores during the previous year (9 months) ended 31st March, 2016. The loss before tax for the year ended, 31st March, 2017 was Rs, 376.76 Crores as against Rs, 182.07 during the previous year (9 months) ended 31st March, 2016.
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 31st March, 2017 is appearing in the Management Discussion and Analysis, forming part of the Annual Report. There has been no changes in the nature of business of the Company.
After closure of the financial year, the Board of Directors has given its approval for sale of DigiSchool Business undertaking of HCL Learning Limited, a wholly owned subsidiary, on a going concern basis.
Transfer to reserves
In view of losses, no amount is transferred to the general reserve.
Awards & Recognition
Your Company was felicitated with the CMO Asia Award for Brand Excellence in the ''Telecom Service Category'' for the second consecutive year. Your company was recognized for providing excellent end-to-end support services for various product categories across locations in India.
HCL Services won "Best Use of Lean Six Sigma: Field Services in IT" award at World Quality Congress Conference for significantly improving Customer Experience for a leading multi-national OEM. The lean Six Sigma project undertaken by HCL Services helped augment client relationship and loyalty, leading to increased business & profitability for the OEM. The Customer Experience compliance (CE) improved from 89% in Q4 FY16 to 92% in Q1 FY17, with Enterprise CE achieving a remarkable 100% CE in the same period.
Employee Stock Option Plan
Employee Stock Option Scheme 2000
Pursuant to the approval of the Shareholders at an Extraordinary 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 ''2/- each.
During the year under review, no shares were allotted under ESOP 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 '' 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, no shares were allotted under ESOP Plan 2005.
Credit Rating
The credit rating by ICRA continued at ''A1'', indicating the very strong degree of safety regarding timely payment of financial obligations to the Company''s Commercial Paper program of Rs, 300 crores.
The current long term rating assigned by India Rating to the Company is ''A-'', indicating adequate degree of safety regarding timely servicing of financial obligations.
Fixed Deposits
Your 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 your Company are listed at the BSE Limited, Mumbai (BSE) and National Stock Exchange of India Limited, Mumbai (NSE).
Stock Exchange where HCL Infosystems Ltd.'' shares are listed |
Scrip Symbol / Code |
National Stock Exchange of India Ltd. (NSE) |
HCL-INSYS |
BSE Ltd. (BSE) |
500179 |
The Company has paid the listing fee for the year 2017-2018 to BSE and NSE.
Directors and Key Managerial Personnel (KMP)
During the period under review, Mr. Sanjeev Sharma, the Independent Director, has resigned from the directorship of the Company w.e.f. 13th March, 2017. Dr. Pradeep Kumar Khosla, the another Independent Director, resigned from the directorship of the Company after closure of the financial year. The Board places on record its appreciation for the contributions made by the above Directors during their respective tenure as director with the Company.
In accordance with the provisions of the Companies Act, 2013 and the Articles of Association of the Company, Mr. Dilip Kumar Srivastava, 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 Mr. Srivastava, form part of the Notice convening the Thirty First Annual General Meeting.
The Company has received declarations from all the Independent Directors confirming that they meet the criteria of independence as prescribed under Section 149(6) of the Companies Act, 2013.
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 up to a term of five consecutive years on the Board of the Company and shall not be liable to retire by rotation.
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
Pursuant to the provisions of the Companies Act, 2013 and Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, a formal annual performance evaluation has been done by the Board of its own performance, the Directors individually as well as the evaluation of its Committees.
The Company had appointed an external agency to assist Nomination & Remuneration Committee (NRC) in drafting the questionnaires for the purpose of evaluation of the Board & the Individual Directors and the Board Committees. The structured questionnaires were circulated to all the Directors, requesting them to fill and return the duly filled questionnaires to the Company giving their views for evaluation of the self & the peers.
The feedback of the evaluation was shared by the Board Chairman with each Board members, the entire Board and the Board Committees and a roadmap was framed for taking the corrective actions on.
Independent Directors of the Company in their separate meeting held on 24th March, 2017 reviewed the performance of the Non-Independent Directors and the Board as a whole. They also reviewed the performance of the Chairperson of the Company.
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 are stated in the Corporate Governance Report.
Board Meetings
During the financial year 2016-17, 8 (Eight) 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 on CSR had been revised by the Board in its meeting held on 24th March, 2017 which can be accessed 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 Company had adopted the ''Code of Conduct for Internal Procedures and to Regulate, Monitor and Report Trading By Insiders'' and the ''Code of Fair Disclosure'' w.e.f. 15th May, 2015.
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 safeguarding 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 median remuneration |
Remuneration (?) |
Dr. Nikhil Sinha |
- |
- |
Mr. V.N. Koura |
- |
- |
Dr. Pradeep Kumar Khosla |
0.95 |
2,25,000 |
Ms. Sangeeta Talwar |
8.26 |
19,50,000 |
Mr. Kaushik Dutta |
6.35 |
15,00,000 |
Mr. Dhirendra Singh |
7.63 |
18,00,000 |
Mr. Pawan Kumar Danwar |
- |
- |
Mr. Dilip Kumar Srivastava |
- |
- |
Mr. Sanjeev Sharma* |
1.59 |
3,75,000 |
Ms. Ritu Arora** |
0.95 |
2,25,000 |
Executive Directors |
Ratio to median remuneration |
Remuneration |
Mr. Premkumar Seshadri |
- |
- |
Note:
1. No sitting fees is paid to Executive Director and Non Independent Director.
(b) The percentage increase in remuneration of each Director, Chief Executive Officer, Chief Financial Officer, Company Secretary in the financial year:
Mr. Premkumar Seshadri, Executive Vice Chairman & Managing Director is not paid any remuneration by the Company.
No remuneration, other than the sitting fees was paid to Non-Executive and Independent Directors, which continued to be paid @ ? 75,000/- per Board/ Board Committee meeting, as was paid during the year 2015-16.
*Mr. Sanjeev Sharma resigned from Directorship of the Company w.e.f. 13th March, 2017.
**Ms. Ritu Arora started getting the sitting fees for the Board/ Committee meeting held on and after 31st January, 2017.
The percentage increase in the remuneration of the Chief Financial Officer and Company Secretary were
30.13 % and 16.90 % respectively.
(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 4.1%.
(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 3413.
(e) 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 4.1%
- Not Applicable for managerial remuneration, as no remuneration is paid by the Company to the Managing Director by the Company
(f) 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 the related party transactions were in the ordinary course of business and at arm''s length. The Audit Committee has approved all related party transactions under the provisions of Section 188 and other applicable sections of the Companies Act, 2013 read with relevant rules for the financial year 2016-17. 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.
Policy on dealing with related party transactions is available on the website of the Company. https://www.hclinfosystems. com/investors/
Internal Control Systems
Your 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 Regulation 22 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, 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 accessed at https://www.hclinfosystems.com/ investors/
Policy against Sexual Harassment
The organization endeavors to ensure a safe, protected and congenial work environment where employees shall deliver their best without any inhibition, threat or fear. Hence, the prevention of sexual harassment at workplace policy has been evolved.
The Company has put in place a ''Policy on Prevention and Redressal of Sexual Harassment at Workplace'' under the name of "With You". As per the policy, any employee may report his/her complaint to the supervisor or HR representative or member of the Committee or to the With You email-id "[email protected]", in writing as mentioned.
The Committee would then investigate and submit its report within 45 working days. We affirm that adequate access was provided to any complainant who wished to register a complaint under the policy, during the year.
Risk Management Policy
The Board of the Company has adopted a risk management policy for reviewing the risk management plan and ensuring its effectiveness. The audit committee has additional oversight in the area of financial risks and controls. Major risks identified by the businesses and functions are systematically addressed through mitigating actions on a continuing basis.
The development and implementation of risk management policy has been covered in the management discussion and analysis, which forms part of this report.
Auditors & Auditors'' Report
Statutory Auditors
Pursuant to the provisions of section 139 of the Companies Act, 2013, an audit firm can act as auditors for a maximum tenure of two terms of 5 consecutive years. For the purpose of reckoning this limit, existing tenure of the auditors needs to be counted. However, companies have been given a transition period of 3 years from April 1, 2014 to comply with this provision. M/s Price Waterhouse, Chartered Accountants, existing auditor''s firm has completed two terms of five consecutive years with the Company.
M/s Price Waterhouse, Chartered Accountants, who are the statutory auditors of the Company, hold office until the conclusion of forthcoming Thirty First (31st) Annual General Meeting. It is proposed to appoint M/s BSR & Associates LLP, Chartered Accountants (FRN - 116231W/W-100024) as statutory auditors of the Company from the conclusion of forthcoming Thirty First (31st) Annual General Meeting till the conclusion of Thirty Sixth (36th) AGM to be held in the year 2022. They have confirmed their eligibility to the effect that their appointment, if made, would be within the prescribed limits under the Act and that they are not disqualified for 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 VKC & Associates, Practicing Company Secretaries Registration no. P2017UP060600 as the Secretarial Auditor for the year ended on 31st March, 2017. The Secretarial Audit report issued by VKC & Associates, 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
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 https://www. hclinfosystems.com/investors/
On sale of the entire stake held by the Company in Nokia HCL Mobile Internet Services Limited, the JV with Nokia, stands cancelled during the year.
HCL Info systems South Africa Pty Limited, a step down wholly owned subsidiary of your Company has been deregistered during the year.
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/- Sd/-
Premkumar Seshadri Dhirendra Singh
(Executive Vice Chairman & (Director) Managing Director)
Place: Noida
Date: 30th May, 2017
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, 2011
To the Members,
The Directors have pleasure in presenting their Twenty Fifth Annual
Report together with the Audited Accounts for the financial year ended
30th June, 2011.
Financial Highlights
(? in Crores)
Particulars Consolidated Parent Company
2010-11 2009-10 2010-11 2009-10
Net Sales and other income 11520.83 12114.44 11024.14 12011.91
Profit before Interest,
Depreciation and Tax 347.18 411.18 344.27 427.82
Finance Charges 79.38 39.21 73.97 37.44
Depreciation and Amortisation 38.36 25.51 33.20 21.73
Profit before Tax 229.44 346.46 237.10 368.65
Provision for Taxation: Current66.19 111.95 65.94 111.96
For earlier years 1.79 - 1.79 -
Deferred (7.87) (7.87) (7.86) (4.86)
Net Profit after Tax (Before
Minority interest) 169.33 242.38 177.23 261.55
Minority interest 1.14 - - -
Net Profit after Tax (After
Minority interest) 168.19 242.38 177.23 261.55
Profit available for
appropriation 971.95 1033.33 1010.55 1062.89
Appropriations
Debenture Redemption Reserve 4.00 4.00 4.00 4.00
Interim Dividend 131.72 127.08 131.72 127.08
Proposed Dividend 44.58 43.65 44.58 43.65
Tax on Dividend (including
Interim Dividend) 29.11 28.68 29.11 28.68
Transfer to General Reserve 17.72 26.16 17.72 26.16
Balance of Profit carried
forward to next year 744.82 803.76 783.42 833.32
Performance
The consolidated net revenue of the Company was Rs. 11520.83 Crores as
against Rs. 12114.44 Crores in the previous year. The consolidated profit
before tax was Rs. 229.44 Crores as against Rs. 346.46 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, 2011. During the first nine months,
three interim (quarterly) dividends aggregating to Rs. 6 per share (300%)
were declared, taking the total dividend for the year 2010-11 to Rs. 8
per share of Rs. 2/- (400%).
Operations
A review of operations of the businesses of your Company for the year
ended 30th June, 2011 is provided in the Management Discussion and
Analysis Report forming part of the Annual Report.
Acquisitions
HCL Infosystems MEA FZCO, Dubai (Formerly known as NTS FZCO)
The Company 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.
Techmart Telecom Distribution FZCO, Dubai
The Company on 3rd February, 2011 acquired 20% equity stake in Techmart
Telecom Distribution FZCO (Techmart), a Dubai based company, engaged in
distribution of Nokia Smartphones in Middle East and Africa.
Reorganization of business
The Company has transferred its Digital Entertainment business as a
going concern on slump sale basis, to Digilife Distribution and
Marketing Services Limited (formerly known as HCL Security Limited),
the wholly owned subsidiary, for a consideration of Rs. 35 Crores. The
Transfer was approved by the Shareholders by way of Postal Ballot.
The Company has acquired the Security and Surveillance business of
Digilife Distribution and Marketing Services Limited as a going concern
on slump sale basis for a consideration of Rs. 6 Crores.
The above transactions became effective from 1st August, 2011.
Issue of Shares
During the year under review, the Company allotted 4,620,667 equity
shares of Rs. 2/- each at a price of Rs. 152.90 per equity share including
a premium of Rs. 150.90 per equity share to a Promoter, on exercise of
option of conversion of equal number of warrants (which were allotted
in October 2009, on payment of 25% subscription money amounting to Rs.
17.66 Crores) on receipt of balance 75% subscription money amounting to
Rs. 52.99 Crores. After allotment of the aforesaid shares, there are no
outstanding warrants.
During the year under review, 460 equity shares of Rs. 2/- each were
allotted under Employee Stock Option Scheme 2000.
Awards & Recognition
The year that went by witnessed numerous recognitions for your Company
as we bagged several awards and accolades as under:
1) Ranked 2nd in the latest Greenpeace Green Electronics Ranking.
2) HCL Green Data Center was awarded 1st Ever LEED Platinum
Certification in India by US Green Building Council.
3) Bagged VARIndia 2010 award for Top Distributor of the Year & Best
Projector à DLP (In-Focus)
4) Awarded CXO Award 2010-The IT Chapter in the category of ÃIndian
Hardware Brand of the Yearà by Bloomberg UTV.
5) Topped Employee Satisfaction Chart for the 6th Consecutive Year as
per DQ Survey, 2010
6) DQ - IDC ranks your Company #2 Domestic ICT Company. The Company
was also rated among Top 10 ICT Companies in India.
7) Awarded Dun & Bradstreet Rolta Corporate Award under Computer
Hardware and Peripherals Category
8) DQ-IDC rates your Company as #1 in IT Services 2010
9) This year the scope of management systems certification
(ISO9001:2008, ISO14001:2004 and OHSAS18001:2007) increased to include
Hardware products like Hand Held Terminal, Turbo Terminal, Sharps
blaster etc at Puducherry Manufacturing Organisation, Uttaranchal
Manufacturing Organisation and Noida Manufacturing Organization.
10) Globally HCL Notebook stood in 8th position with 4.04 points in
Green Electronic Survey of Greenpeace released in January 2011.
11) HCL Infosystems bags 5th position in IndiaÃs Best Companies to Work
for Survey, 2011 (IT Category): Study by Economic Times Great Place to
Work!
12) HCL Desktops rated No. 1 in the Dataquest Channels - CyberMedia
Research Channel Satisfaction Survey
13) HCL Infosystems awarded Best Telecom Support Service Company at the
5th National Telecom Award by CMAI Association of India
14) HCL Infosystems awarded ÃMost Promising New Technology for Urban
Applicationsà at the Municipalika 2011
15) HCL Infosystems awarded as a ÃPowerbrandà of India in the IT &
Office Automation Category
16) Your Company was selected as Business Superbrands of India.
17) Mr. Ajai Chowdhry, Chairman of your Company was felicitated with
many prestigious awards as under:
- The prestigious Padma Bhushan awarded by Doctor Pratibha Patil, the
Honourable President of India.
- ÃHonoris Causa Doctorateà of Science for his contribution to the
Indian IT Industry by IIT Roorkee
- ÃElectronics Man of the Yearà by the ELCINA-EFY Awards Committee
- The CNBC Asia Business Leader Award 2010 for Viewers Choice category.
- ÃIndia Innovator of the Year Awardà at the 6th edition of the CNBC
TV18 India Business Leader Awards 2010
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 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 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 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 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.
Credit Ratings
The credit rating by ICRA continued at ÃA1 Ã rating indicating highest
safety to the CompanyÃs Commercial Paper program of Rs. 500 Crores.
The long term rating assigned by Fitch to the Company continued at ÃAA-
(ind)Ã indicating stable outlook. The long term
rating by Fitch also continued at ÃAA- (ind)Ã for Non-Convertible
Debenture programme of Rs. 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 (BSE) and National Stock Exchange of India
Limited, Mumbai (NSE). The CompanyÃs Non- Convertible Debentures (NCDs)
amounting to Rs. 80 Crores are listed at National Stock Exchange of India
Limited, Mumbai.
The Company has paid the listing fee for the year 2011-2012 to BSE and
NSE.
Directors
Mr. R.P. Khosla and Mr. T.S. Purushothaman ceased to be Directors of
the Company with effect from 27th October, 2010 and Mr. Subroto
Bhattacharya ceased to be Director of the Company with effect from 10th
December, 2010. The Board places on record its appreciation for the
services rendered by them during their tenure with the Company.
Mr. Ajay Vohra was appointed as an Additional Director of the Company
with effect from 4th April, 2011 and Mr. Harsh Chitale and Mr. Pradeep
K. Khosla are appointed as Additional Directors of the Company with
effect from 17th August, 2011. Mr. Harsh Chitale is also appointed as
Whole-time Director of the Company with effect from 17th August, 2011.
The Company has received notice from member(s) of the Company, under
section 257 of the Companies Act, 1956, proposing their appointment as
Director(s) of the Company, along with the requisite deposit.
In accordance with the Articles of Association of the Company, Mr. D.S.
Puri and Mr. E.A. Kshirsagar, Directors, retire by rotation and being
eligible, offer themselves for re-appointment.
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 DirectorsÃ
Report.
Insider Trading Regulations
As per the requirements under the SEBI (Prohibition of Insider Trading)
Regulations, 1992, as amended from time to time, the ÃCode of Conduct
for prevention of Insider Tradingà and the ÃCode of corporate
disclosures practices for prevention of Insider Tradingà are in force.
Directorsà 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, 2011 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 & Auditorsà 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 year under review continued to be
peaceful and cordial. No man-days were lost due to industrial disputes.
Your Company was ranked Top 2 in the Best Employer Survey conducted by
IDC-Dataquest and Top five in IT Industry, in the Best Companies to
Work For 2011 conducted by Economic Times and Great Place to Work
Institute.
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
Directorsà 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, the following subsidiaries/step down
subsidiaries were incorporated:
(a) Pimpri Chinchwad eServices Limited: Incorporated as a wholly owned
subsidiary on 21st September, 2010, to provide e-services and other
related services within the territorial jurisdiction of the Pimpri
Chinchwad Municipal Corporation (PCMC) and to the citizens of PCMC.
(b) HCL Investments Pte. Limited, Singapore: Incorporated as a wholly
owned subsidiary on 29th November, 2010, to manage the CompanyÃs
overseas investments.
(c) HCL Infosystems South Africa Pty. Limited, South Africa:
Incorporated as a wholly owned subsidiary of HCL Investments Pte.
Limited, Singapore (another wholly owned subsidiary in Singapore) on
9th May, 2011, to engage in business operations in System Integration
(SI) and Services with particular focus on BFSI, Utilities,
e-Governance and Infrastructure Services.
The name of HCL Security Limited, the wholly owned subsidiary, was
changed to Digilife Distribution and Marketing Services Limited
(Digilife) with effect from 26th July, 2011. Digilife is engaged in
Digital Entertainment business with effect from 1st August, 2011.
The Company has signed a Share Purchase Agreement (SPA) with a Buyer in
January 2011 for the sale of its entire equity stake in HCL Infinet
Limited, the wholly owned subsidiary. The sale/transfer of the entire
equity stake shall be given effect on receipt of necessary regulatory
approvals.
In terms of the exemption granted by Ministry of Corporate Affairs
(MCA) vide General Circular No. 2/2011 dated 8th February, 2011, the
accounts of the following subsidiaries have not been enclosed with the
results:
- HCL Infinet Limited;
- Digilife Distribution and Marketing Services Limited (formerly known
as HCL Security Limited);
- HCL Infocom Limited;
- RMA Software Park Private Limited;
- Pimpri Chinchwad eServices Limited;
- HCL Insys Pte Limited, Singapore;
- HCL Investments Pte Limited, Singapore;
- HCL Infosystems MEA FZCO, Dubai;
- NTS Technology LLC, Dubai;
- HCL Infosystems MEA LLC, Abu Dhabi; and
- HCL Infosystems South Africa Pty Limited, South Africa
The annual accounts of these subsidiaries are available for inspection
on any working day at the Registered Office of the Company. The Company
shall also furnish a hard copy of details of accounts of these
subsidiaries to any Shareholder on demand. These accounts are also
available on the website of the Company at www.hclinfosystems.com. 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.
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
Date : 17th August, 2011 Chairman
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