hcl info annual report

Contents

Who we are

What we offer

Our manufacturing facilities

08

10

Our vision, mission and quality assurance

Our service support network

Our geographic network

Milestones

Integrating systems for the future

Integrating the future through people power

Integrating ourselves with a greener tomorrow

Awards and accolades

Financial highlights

Our management team

Chairman's message

Management Discussion and Analysis

Report on Corporate Social Responsibility

Director's Report

Report on Corporate Governance

Annual Accounts Parent

Consolidated Accounts

Financials of Subsidiaries

12

13

14

14

16

18

30

32

34

35

36

38

40

55

61

71

84

124

151

System

integration

Information &

communication

technology

Digital

lifestyle

HCL Infosystems Annual Report 2008-09 | 01

The future lies in the

seamless integration of

systems and technologies

with business processes…

An integration that facilitates

operations, simplifies

complexities, improves

productivity and enhances the

value delivered to your

customers


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The World Bank has projected 8% growth for India in 2010,

which will make it the fastest-growing economy and overtaking

China’s expected 7.7% growth.*Source:World Bank 2009


Indianservicesector 53%

53%growth

Indianeconomy 9%

9%growth

India in2010 : 8%

8%growth

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India’s economy has grown by more than 9% for three

consecutive years,and has seen a decade of 7%+ growth,thereby

enabling the reduction of poverty by 10%.

During this period of stable growth, the performance of the

Indian service sector has been particularly significant.The growth

rate of the service sector was 11.18% in 2007 and now

contributes 53% of GDP.

According to IMF Outlook 2009, global growth is expected to

rebound to 3% in 2010, led by the twin propellers of China and

India,with 8% and 6.5% projected growth respectively.

*Source:Indian Economy Overview,EconomyWatch January 2009


*Source:IMF Outlook 2009

The Indian economy is one of the fastest growing

economies in the world:


Indianservicesector 53%

53%growth

Indianeconomy 9%

9%growth

India in2010 : 8%

8%growth

In theWorld’s Fastest Growing ICT Market

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Indian IT CAGR – 16.4% (IDC/Gartner) ~ 50%

growth expected in next 3 years

Steep Growth Sectors:

Telecom – Fastest growing market

Security

Growth In Core Sectors

Education Sector

45% growth in Broad Band Penetration, the second fastest growing

market in the world. Mobile tele-density of 42.25% & over a billion

population.

- Indian security market is estimated to be at around

US$ 1Bn for 2009 and the major sectors will be airports, mass

transports and maritime.The market is estimated to be US$ 9.7Bn

by 2016

- Power, Infrastructure, Health &

Education

- Prime Minister has termed 11th five year plan

as “India's educational plan” Govt. to put 31K Cr in National Skill

Development

*Source:TRAI

*Source:Frost & Sullivan

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India’s economy has grown by more than 9% for three

consecutive years,and has seen a decade of 7%+ growth,thereby

enabling the reduction of poverty by 10%.

During this period of stable growth, the performance of the

Indian service sector has been particularly significant.The growth

rate of the service sector was 11.18% in 2007 and now

contributes 53% of GDP.

According to IMF Outlook 2009, global growth is expected to

rebound to 3% in 2010, led by the twin propellers of China and

India,with 8% and 6.5% projected growth respectively.



*Source:IMF Outlook 2009

The Indian economy is one of the fastest growing

economies in the world:

Integrated ICT Systems that

seamlessly bridge business

process with customers and

citizen requirements are among

the key drivers for sustaining

these growth plans and HCL is

among the best positioned

Indian companies to address the

growing demand for SI in the

ICT infrastructure development

sector.


HCL’s core strengths make it a leader in the ICT

market...

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HCL is among the largest ICT companies in India

with an India Facing focus and over three decades of

trusted relationship with our customers

Stands for quality and innovation,

A pioneer who has played a leading role in

of India as we see it today

A range of technology solutions, domain expertise and

products catering to business needs across the sectors

of

and Retail over the last 3 years

HCL has executed many large SI rollout projects in India

including the single largest rollout of

a specialist ICT

technology player

moulding

the IT industry

Telecom, BFSI, Power, e-Governance

Infrastructure, Health, Education, Media &

Entertainment,

ERP licences in

the enterprise segment, one of the largestVOIP

networks for the defence sector and the

National Internet Backbone Infrastructure for

Broadband Services

“Best Assured”

HCL ecoSafe

IT & Digital Lifestyle products

93,000 retail outlets

over 11,000 plus towns

No. 1

Company in IT services as per DQ CSA 2009

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The HCL’s stamp of Quality that

ensures that the best is delivered to our customers

Sustainable Growth through an integrated

environmentally friendly program –

One of India's largest distribution and retail network, to

market a range of

A network that reaches out to

An unmatched service and support infrastructure that

reaches out to all corners of India

World Class Support Services. Ranked


Who we are


Incorporated in 1976, HCL

Infosystems Ltd is among the

largest India facing ICT

companies and the pioneers of

modern computing in India

today. HCL is engaged in

developing and implementing

solutions for diverse market

segments across a range of

technologies.

Whowe are

08

Whatwe offer

10

Ourmanufacturingfacilities 12

Our vision, missionand quality

assurance 13

Our servicesupport

network 14

Ourgeographicnetwork 14

Milestones16

Integratingsystems for

the future 18

Integrating thefuture through

people power 30

Integrating ourselveswith a greenertomorrow 32

Awards andaccolades

34

Ourmanagement

team 36

Chairman'smessage

38

Report onCorporate SocialResponsibility 55

Financialhighlights

35

ManagementDiscussion and

Analysis 40

Part of the $5 billion HCL Enterprise,

HCL Infosystems Ltd. is a leading ICT

Hardware and System Integration

Company,operating in the diverse areas

of ICT Products & Solutions, Systems

Integration, Office Automation, Digital

Lifestyle Products,Managed ISP Services,

Homeland Security and Managed

Network Solutions.

With a clear vision to bring technology

solutions that make a difference to the

lives of the people, HCL has evolved

f ro m b e i n g a n I T p ro d u c t s

manufacturing company in India to

becoming a leading multi-faceted

technology ICT Products, services and

System Integration Company.

Endorsed with ISO 9001-2000

certification for ICT Services & System

Integration and ISO 14001 for

manufacturing, HCL is fast emerging as

the preferred next generation partner

for companies looking to build the

intelligent infrastructure of tomorrow.


Whatwe offer

10



assurance 13

Our servicesupport

network 14


Milestones16


the future 18

Whowe are

08


What we offer

HCL provides a wide range of product and services for a diverse spectrum ofcustomers. HCL’s portfolio of products and services encompasses the following:

Our SI practice drives the technology-enabled businesstransformation programs of our clients, primarily public & privatesector corporations in various sectors and central, state ormunicipal government agencies and entities.We offer turnkey SIservices that integrate best-in-class products and solutions tomeet the business needs of enterprise across diverse sectorsincluding:Telecom, e-Governance, BFSI & BFSI Co-Op, Power,Railways, Health, Security, Media & Entertainment,Airports/Ports,Defence, Education, and Retail.

We design, roll out and implement large & complex corporate ITinfrastructures. We offer a range of flexible services to Operate& Manage the complete ICT & Automation Infrastructure of ourclients leveraging our unmatched service network

We assist customers in evaluating processes and technology tosecure their infrastructure, security and risk minimizing to meettheir requirements.

In the Enterprise Segment

We offer an entire range of IT products which include PCs,Notebooks, Servers, Imaging, Printing, Voice & video solutions,Networking Products,TV and FM Radio Broadcasting solutions,Communication & Security solutions

We offer a wide range of IT products which include Desktops, ,Laptops, Computer Peripherals & accessories and , Digital lifestyleproducts.

We distribute a broad range of digital lifestyle products, thatinclude Nokia GSM cellular phones and accessories, iPods,memory devices, digital cameras, and provide the related customersupport services.

Computing and Lifestyle Products

We distribute a broad range of digital lifestyle products thatinclude Nokia GSM cellular phones and its accessories, iPods,memory devices, digital cameras, and provide the related customersupport services.

In the Consumer and Retail Segment

1

2

System Integration

ICT Products

ICT and Networking,Infrastructure Consultancy &Facilities Management Service

IT Audit, Security Compliance& Risk Management

Digital lifestyle products


people power 30


Awards andaccolades

34

Ourmanagement

team 36

Chairman'smessage

38


Financialhighlights

35


Analysis 40


We offer a one stop shop for strategic outsourcing of informationsystems leading to an overall advantage for the customer inreduction of deployment time, access to a pool of technicalexpertise and a lowering the cost of total ownership.

Through strategic associations with Oracle, SAP, Microsoft andother Software & ERP companies, we offer state-of-the-art ITconsulting services to align the IT strategy to the business strategy.

ERP Consulting & Services

We are a licensed Class "A" ISP, ITSP and NLD service provider.Our ISP/NLD operations are carried out through a state-of-artIP/MPLS network infrastructure that reaches out, across thecountry.We provide Data,Voice andVideo services, Internetbandwidth services, and offer a complete range of managednetwork services to Enterprises across India.

HCL Security Ltd, a subsidiary of HCL Infosystems Ltd offers endto end solutions in the Security & Surveillance domain leveragingon World Class technology alliances.The company has high levelexpertise in providing seamlessly integrated Global technologysolutions to ensure the safety & security of your infrastructure.

We offer a range of technology solutions for the Digital class room & the Digital campus.We are proactively engaged in developing state ofart customised solutions including content for institutions and schools through our Digicampus & Digischool suite of products.

We have a significant distribution and retail network in India for digital lifestyle, office automation and other ICT products. Our distributionnetwork includes more than 700 re-distribution stockists, 750 micro-distribution partners and 93,000 dealers. Our distribution and retailoperations cover customers in more than 11,000 towns in India.We also have significant warehousing capacity with facilities in 28 cities inIndia.We manage our distribution and retail network by implementing a three-tier distribution model for enhanced reach: (i) we use ourextensive network of re-distributors and dealers to reach towns and villages in India with a population of over 5,000 (ii) we sell productsthrough organised retailers in larger towns and (iii) we sell products through 65 HCL Digilife stores located in large cities across India.Webelieve that our various distribution channels enable us to comprehensively cover the various segments of the Indian market, includingmarkets that are comparatively under-penetrated.

HCL Career Development Centres is the training arm of HCLInfosystems.We bring with us a legacy of excellence that spansmore than three decades.We seek to address the increasingdemand for skilled professionals in the ICT arena by offering areal world practical training to students on enterprise-wide ICTdeployment and integration assignments, transforming them intoindustry-ready professionals.

In the Education Segment3

Strategic Outsourcing Services

VPN & Managed Network Services

Security Products and Solutions

HCL CDC

Education Institutions

Our distribution and retail network

Our vision

Together we create the enterprises

of tomorrow.

Our mission

Our quality assurance

We shall deliver defect-freeproducts, services and solutions tomeet the requirements of ourexternal and internal customers, thefirst time, every time.


To provide world-class information

technology solutions and services to

enable our customers to serve their

customers better.


people power 30


Awards andaccolades

34

Ourmanagement

team 36

Chairman'smessage

38


Financialhighlights

35


Analysis 40


Whatwe offer

10



assurance 13

Our servicesupport

network 14


Milestones16


the future 18

Whowe are

08

Our geographic network

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Service locations catering to 4,000 towns and cities

505 HCL Touch points owned and manned by HCL

Network of Regional Response centres & contact centers

3600+ direct service engineers on field

33+Years of experience in delivering ICT services

Network of Test & Repair centres backed by logistics chain that reaches to all corners of India

Certified Test & Repair centres with component level repair capability

200 seat training centre with state-of-the-art labs

Support base of over 3 million assets in 75000+ sites

Established Escalation & Management Process

ISO 9001-2008 for ICT Services & System Integration delivery

Our service support network

Focusing on the Indian market through505 service locations reaching out to4000 towns, HCL offers a widespectrum of services through a DirectSupport Service infrastructure – thewidest in the country.

With a state of art Network Operations Centers, for delivery of

managed network services and the setting up of the Remote

Infrastructure Management center, HCL offers a range of high

availability software & hardware services including operations &

facility management.

We provide 24/7 customer care support for our personal

computer customers through our 'HCL Touch' service.These

services are accessible over, phone, mail, chat & SMS for the

convenience of our customers.



people power 30


Awards andaccolades

34

Ourmanagement

team 36

Chairman'smessage

38


Financialhighlights

35


Analysis 40

Whatwe offer

10



assurance 13

Our servicesupport

network 14


Milestones16


the future 18

Whowe are

08


Milestones

2004

1976 1978 1983

2005�

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HCL Infosystems ties up with Apple for

iPod distribution

HCL completes 30 years in India

HCL Infosystems maintains its

commercial Desktop PC leadership for

the fifth consecutive year

HCL Infosystems showcases computer

solutions for the rural markets in India

HCL unveils India’s first segment

specific range of notebooks branded –

‘HCL Leaptops’

HCL commences production in its ISO

14001 & ISO 9001:2000 certified

manufacturing facility in Rudrapur,

Uttarakhand

HCL becomes the market leader in

India for Thin Clients

2006

1985

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HCL Infinet managed Nokia Care

Centres to receive ISO 9001: 2000

certification

HCL Infosystems maintains No. 1

position in the Desktop PC segment

for year 2003

IDC India – Dataquest Customer

Satisfaction Audit 2004 rates HCL

Infosystems as number one in the

desktop PC categoryHCL Labs brings out HPC solutions forIndian market

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IDC rates HCL Infosystems as a

number one Desktop PC company in

India

HCL Infosystems announces landmark

initiative to increase PC penetration

and creating computing for masses in

India by launching sub 10K PC

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Hindustan Computers

Limited is born

First 4-bit microprocessor

based scientific computer

made by HCL Labs

� HCL successfully ships

in–house designed Micro –

Computer at the same

time as Apple

� Indigenously develops an

RDBMS, a networking OS

and client server

architecture in the same

period as global IT peers

� HCL launched country’s first

Desktop Enterprise PC

brand - BusyBee


people power 30


Awards andaccolades

34

Ourmanagement

team 36

Chairman'smessage

38


Financialhighlights

35


Analysis 40


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HCL awarded as one of the best 3

companies to work for in India by

Business Today

HCL unveils the future of personal

computing – unveils next generation,

ultra portable, sub Rs.14000/- laptops

for the first time in India

HCL Digilife chain becomes the most

awarded retail chain in 2007-08

HCL Security Ltd. a 100% subsidiary

to provide System Integration solutions

for security & surveillance

Launch of HCL Touch - a pioneering

initiative in the Indian ICT sector for

customer care services.

2000

2008�

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HCL Infosystems wins CNBC Awaaz

consumer award for personal

computers

HCL announces ‘HCL ecoSafe’

program to spearhead its environment

protection initiatives, launches a new

range of eco-friendly Desktop &

Laptops

HCL launches Best Assured Campaign

HCL Launches its innovative offering –

Data Center in a Box and wins Intel

innovation excellence award for the

same

2007

1993 1995 2003

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Largest selling enterprise desktop

brand for the seventh consecutive year

Recognized as best employer in Indian

IT industry 2009 by DQ-IDC survey

2009

HCL ranks No.1 Company in IT

services as per DQ CSA 2009

HCL wins prestigious Dun and

Bradstreet Rolta Corporate Award for

being leaders in the Computer

Hardware and Peripherals category

2009

� HCL Infinet launched with

the announcement of

the national ISP/NLD

policy

� HCL Front Line division

setup to address the

emerging market for home

computers

� HCL launches HCL

BeanStalk - India’s first

Multi-Media Home

computer

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HCL Infosystems becomes

the first company to cross

the 100k unit milestone in

the Indian Desktop PC

market

HCL launches India’s first

Window XP enabled

Beanstalk Media Centre

PC


Telecom

Defense

Retail

Media &Entertainment

Power

Airports /Ports

E-Gov

BFSI

BFSICoop

Security

Railways

Education

Health

Presence


The fast-pace of growth in the Indian economy has transformed the way systems and

technologies are deployed. It is seen across verticals and sectors, that organisations are

looking for efficiencies of operations through the use of technology.The more complex

systems and technologies become, the more urgent is the need to ensure their flawless

integration to deliver exceptional value to the users.

To address this growing demand HCL has reoriented its operations to focus increasingly on

system integration solutions to our customers. Our System Integration capabilities span

across a diverse range of services ranging from Consultancy, Solution Design, Selection of

technology components,Project roll outs and Operation & Maintenance services.

We have also developed a range of Hardware & Software products, Processes & Project

management methodologies for various customer verticals including Banking, Financial

Services and Insurance (BFSI) to e-Governance,Power,Telecom,Railways,Defence,Security,

Education,Infrastructure,Healthcare,Retail,and Media & Entertainment.

We have built a model that leverages our strengths with that of leading technology partners

including - Microsoft,Oracle,SAP,IBM,HP,Symantec,Cisco,Sun,CA and Hitachi - to roll out

solutions that incorporate the best of breed technology to meet the requirement of the

customers' business.

Whatwe offer

10



assurance 13

Our servicesupport

network 14


Milestones16


the future 18

Whowe are

08


A glance at the complete range of HCL's SI solutions across verticals:

1. Telecom

TheTelecom industry is today laying the backbone of a ubiquitous network with the

potential of connecting every device on the planet. It requires diverse technologies

to be brought together, interconnected on one network, offering an anytime

anywhere services that is changing the way the world lives.

At HCL the solutions we provide to our clients include: operation support services ("OSS"); business support systems ("BSS"); next

generation networks ("NGN"); security;embedded solutions; switching, signaling, transmission and access solutions;network design and

mobility solutions.HCL'sTelecom SI practice works on the cutting edge of the technology,we have deployed projects based onWiMax,

3G,IPTV,MPLS ,and broadband services technology.

The solutions we have deployed have enabled high speed wireless access to urban and rural customers,MPLS backbone for the defence

sector and convergent billing solution for telecom service providers.

Unified Billing Solution for

transparent accounting

Sector:Telecom

Customer: One of the leading telecom service

providers in India.

Business Situation

HCL’s solution

The customer provided a comprehensive range of telecomservices including Wireline, CDMA Mobile, GSM Mobile,Internet, Broadband, Carrier service, MPLS-VPN,VSAT &VoIPservices. In the existing system interconnect calls weremonitored by the Points of Interconnect (POI), it also wasused to detect call violations, and for claiming the prescribedhigher rates from the operators.This system was not efficient,resulting in delayed revenue realisation & leakage of revenue.

HCL implemented Inter Operator Billing and AccountingSystem (IOBAS), which is a Call Data Record (CDR) basedcomputerised billing platform that transformed its MCU basedbilling to a CDR based billing system.

From an infrastructure perspective it connected SSAs andexchanges across the country with four data centers.All ofthese were clustered on a network to achieve a high availabilityconfiguration. From an application perspective it is an end toend integrated system providing order booking, customerhandling, provisioning, installation, billing, payment collection &IVRS services. From an Infrastructure maintenance perspectivethe hardware, software and network was monitored andmaintained to deliver the defined SLA's.

System consolidation resulting in reduction of O&M cost

Online mediation of CDR's eliminating the need for billdata transportation and fraud on this account

Proper accounting of payments & receivables for betterfinancial management

Supports different tariffs, different billing cycles anddifferent discounting schemes for different category ofsubscribers

Enabled Pre-paid and Post Paid billing integration

Host of online services, online query and prompt customerresponse

Key Benefits

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people power 30


Awards andaccolades

34

Ourmanagement

team 36

Chairman'smessage

38


Financialhighlights

35


Analysis 40



The Regional rural Banks and Coop Banks in India have contributed in a major way to the rural

development of the country.Turnkey solutions help a Coop Bank to lower the total cost of

operations and deliver prompt & efficient services to their customers. The Cooperative Banking

vertical is a focus area for HCL within its BFSI practice.We have a a host of offerings including:

HCL BancMate Core Banking Solutions (CBS) Bilingual software application

HO records collaboration Inter-bank Reconciliation

Documentation Solutions Retail Lending Solutions

Audit & Credit trail solutions MIS reporting solutions

Financial Inclusion

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2. BFSIOur portfolio of solutions to the Banking, Financial Services and Insurance ("BFSI") sector

includes infrastructure components software products and professional services.

HCL is the preferred partner to many of the major banks and insurance companiesWe provide

a range of solutions including MIS BI & Data Warehousing, Compliance Solutions, Mobile

Banking, ATM & Self-Service Solutions, MICR and Cheque Transaction, Core Insurance

Applications Payment hub & Financial Inclusion Solutions.These solutions are based on a

flexible component based architecture.

Whatwe offer

10



assurance 13

Our servicesupport

network 14


Milestones16


the future 18

Whowe are

08

3. BFSI Coop


Banking made easy

Sector: Banking (BFSI)

Organization: A leading State Cooperative Bank which is

amongst the fastest growing banks in India having more than

INR 2400 Crores of deposits; it has 173 branches and

extension counters spread throughout the state.

Business Situation:

The bank was faced with the prospect of increased

competition from new private and public sector banks.It also

faced the challenge of linking all of its branch operations into

a cohesive entity to better serve its customers.

HCL’s solution:

The bank chose BancMate CBS from HCL to run its

branch banking operations on the Microsoft Windows

Server 2003 and Microsoft SQL Server 2005 database.

HCL “BancMate” CBS is an innovative solution focused on

the Indian Banking Industry. It is a web based bi-lingual

Core Banking Solution that communicates with users and

account holders in their local language and meets all

requirements of the mandatory Official Language Act.

It incorporates security features with access rights defined

for every user. BancMate CBS is platform and database

independent, and is built on 3 tier web architecture with

scalable technology and robust functionality.

Key Benefits:

Easy to Implement

User Friendly

Easy toTroubleshoot

BilingualApplication Software

1.The implementation process is simple,fast and user friendly.This made it one of the fastest software roll outs for the bank.

2.The entire retail banking process is covered in just two screens in BancMate.This made it very easy for the bank employees to adopt anduse the new technology.

3.The ease at which configuration could be done meant that the bank was able to get the infrastructure up and running very fast,even in itsfar flung remote branches.

4.BancMate gave the bank the ability to maintain the database in Hindi and English,as required.The multilingual solution has helped the bankmaintain better relationships with its retail and rural customers.By providing bank statements in the local language,the bank was able tocommunicate with customers in their preffered language thus removing communication gaps.


people power 30


Awards andaccolades

34

Ourmanagement

team 36

Chairman'smessage

38


Financialhighlights

35


Analysis 40



Empowering the nation: e-effort

to empower the common man

Sector: e-Governance

Customer:A District in Uttar Pradesh

NREGA challenges:

Solution that HCL provided:

1. No method to stop/check multiple enrollment of same

person in the system

2. Difficult to monitor employment levels

3. Impossible to keep check on proxy workers

4. Ensure that payment reaches to rightful beneficiaries

5. Authentic manual maintenance of muster roll at each

jobsite

6. Coordination between poorly connected jobsites,

Gram Panchayat and block offices by the programming

officer

To overcome these challenges HCL Infosystems offered acomplete solution including e-Job card (smart card) to theworkers at worksite & the financial inclusion solution

framework to ensure that payment reaches the rightbeneficiaries. HCL has also developed a special kit called “HCLFinmate” for deployment in rural environments.

HCL's e-Job card contains:-

Demographic & Biometric details of all the family memberswilling to do unskilled work

Attendance record of the worker

Online tracker for number of days worked

Records of wages - Accrued and Disbursed

The solution captures the attendance of each worker throughhandheld terminals (HHT) at the worksite only. Linked via GSMor internet connectivity, the data is transferred to the gramPanchayat or Block office.The HHT can be further used fordispersal of wages through financial inclusion solution.

The implementation of the e-Job card reduced the multiple &duplicate enrollments significantly.With the help of HHT's itbecame easy to capture regular attendance at the worksiteand helped in monitoring of proxy workers.Through theautomated financial inclusion solution, it was ensured that themoney reached its intended beneficiaries.

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Result:

HCL's e-Governance practise provides technology solutions to government departments across the country.The HCL e-Governance's

vertical is working in accordance with the National e-Governance Plan's (NeGP) vision to make all Government services accessible to

the common man in his locality.

HCL offerings in e-Governance projects spans across State and Central Government MMPs (Mission Mode Projects) and include:

Municipal CorporationAutomation Electronic District Solutions

Property Registration State Data Centers

State-WideArea Networks. Electronic Procurement.

Police ForceAutomation Solutions. Smart Card Projects like NREGA,RSBY,UID program etc

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4. e-Governance

Whatwe offer

10



assurance 13

Our servicesupport

network 14


Milestones16


the future 18

Whowe are

08


Going ahead with HCL's tradition of bringing global best practicesand customized technology solutions for Indian market. OurTechnology solution include Security & Surveillance, emergencyresponse systems, baggage screening, explosives detection, firesafety, command & control centers, vehicle tracking systems andmore.Our solutions offer :

A proactive approach for ensuring Public Safety and Security inthe State

Enablement of intelligent surveillance systems thatcontinuously monitor sensitive zones & high footfall areas

Connectivity and communication between authorities,districts/zones and command & control centres

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Realizing the growing importance and need for SI solutions in thedefence sector of the country, HCL has ventured into this vitalsegment with some key offerings.HCL's solution offerings include :

Fully integrated Command & Control Centers

Security and Surveillance

Defence offsets manufacturing

End to End Data Centre Operations

Data,Voice,Video IP Network

Development and integration of battlefield management andtactical communication networks

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5. Defence

6. Homeland Security


people power 30


Awards andaccolades

34

Ourmanagement

team 36

Chairman'smessage

38


Financialhighlights

35


Analysis 40



Powered to grow

Sector: Power

Customer: Large State Electricity Board.

Business Challenge:


1. To automate all the processes at Sub Division level2. To reduce the technical & commercial losses3. To provide better consumer management services4. To bring transactional effectiveness & transparency in

the overall system5. To develop authentic MIS for top management for

strategic decisions

HCL implemented the complete IT package for the stateelectricity board including computerised billing & energyaccounting which involved computerisation of Sub Divisionoffices at the circle level, along with setting up of the DataCentre & customer care centres.The IT package consisted ofnine different modules:-

1. Pre Billing 2. Billing3. Post Billing 4. Legal & vigilance Activities5. Store Management 6. Web based MIS7. Customer care cum 8. Energy Accounting/Auditing

call centre 9. Electrical Network Management

Billing requirements of the client were handled by the BillingModule, the Electrical Network Management & EnergyAccounting through the ENMS (Electrical NetworkManagement Module) Package and all other modules by theSubdivision automation system software. ENMS packagerunning at the Sub Division Servers, have been integrated withthe GIS software at a data base level.

Web based MIS application was developed for Division, Circle,CE Offices and Head Office for integrated MIS generation &monitoring purposes. HCL has also provided the infrastructurewith respect to the IT hardware and system software asrequired. HCL also provided the user training to the clientemployees.

The solution improved processes, reduced T&D losses,provided better consumer satisfaction through the centralisedcall centre that handled the various complaints and grievancesof consumers. Consumer facilities were provided on the clientswebsite to view his/her bill accounts, make payments or lodgea complaint. Further, the top management of the electricityboard can now generate & view relevant operational & MISreports.

Result:

7. Power

Integrated Energy Management is the need of the hour if India is to

meet its energy demands in the growth trajectory that it has laid

for itself. HCL's focus in this sector encompasses specialised

solutions in the areas of:

Field Automation

ERP Solution

Advanced Metering Infrastructure

Integrated Energy management

Substation setup/Distribution automation

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World class infrastructure is the key to a globally competitive economy.We offer a range of technology solutions for automatinginfrastructure projects for Airports, Highways, Ports and MRTS (Mass Rapid Transport System).

Airport segment

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FIDS/EPOS

CUTE/CUSS solutions

Baggage Handling andScreening

Cargo management solutionsATC/ATM solutions

ATS Automation systems

Energy ManagementSolutions

Highway segment

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Toll Collection System

Highway Traffic ManagementSystems

Intelligent Traffic System(ITS)

Integrated check-postsolutions

MRTS segment

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Automatic Fare Collection

Automatic TicketVendingMachines

Communication System ofMetro Rail with focus onfollowing sub system

CCTV Surveillance

Clock System

EPABX

Data Transmission Systems

Passenger InformationSystem

IT and Network Integration

Automated car parking andparking management

Ports segment

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Vessel traffic managementsystem

Port managementinformation system

Cargo/Container scanner

Integrated port securitysystem

8. Infrastructure


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Analysis 40



9. Railways

The Indian Railways, the world's largest railway network, hasentered an era of modernisation by adopting the latest intechnology. HCL has been associated with Indian railways forover three decades and has developed a range of customisedproducts & solutions for this sector.HCL offerings include:

e-Procurement solutions

Security & Surveillance solutions

Networking connectivity solutions

Digital Signage – LED displays

IT Infrastructure – data centres,thin clients

AutomaticTicketVending Machines (ATVMs)

Energy management solutions

HCL pioneers the implementation of the automatic ticketvending machines (ATVM) across the country, making ticketseasily available to the passengers without the need to wait inlong queues.

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Media Asset Management &

Archiving

Sector: Media & Entertainment

Customer: National Broadcaster in India with Pan

India presence.

Business Challenge:


1. Managing media assets on magnetic tapes2. To enable easy retrieval of content by authorised team

members3. To search, restore, and browse archived assets from a

single interface

HCL integrated & implemented an enterprise-class turnkeyMedia Asset Management (MAM) solution. First-of-its-kindproject in India, the media assets are collected and stored in adigital format with the highest resolution and fidelityrepresentation, enabling broadcaster to incorporate multipleformats, metadata models and workflows including – news,

sports, programs,VOD, archives in SD and HD – under oneunified corporate system.This powerful solution empoweredusers to search and browse from a web-based interface, andthen instantly view the rich media whether it is video, audio orstills & use it for broadcasting. Our solution frameworksupports a wide variety of formats and wrappers, and its back-office engine makes media management (trascoding, multisiteexchanges, transfers to different storage devices, including tapelibraries) seamless & easy.

Drastically optimised the way assets are shared and used

Gain time on media exchange between production systems

Real contextual metadata available for a better assetreferencing

Improved interoperability with broadcast, production andbusiness systems

Prevented loss of metadata due to subsysteminteroperability

Result:

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HCL caters to all aspects of Media & Entertainment segment with itsinnovative technology solutions. HCL has deployed several end toend solutions including:

TV Broadcasting & TV Channel infrastructure including thecomplete work flow, from acquisition, post - productionautomation to archiving and transmission solutions

FM Radio Broadcasting

Commercial FM Radio Stations and Community Radio Stations

SatelliteTV systems

Digital Head-ends systems for MSOs for the implementation ofConditionalAccess Systems

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Analysis 40



Towards a healthy nation

Sector: Healthcare

Customer:A prominent hospital

Business Challenge:


1. Challenge of linking different departments (core

services, support services & back office) into a cohesive

entity

2. Need of streamlining all operations to single interface

3. Integrating new medical services into the system

4. Need of Decision Support System for hospital staff

HCL provided a turnkey end-to-end solution that includedimplementation of HMIS (Hospital Management InformationSystem); Supply, Installation & Configuration of Servers, StorageBack-up Solutions and Networking Solutions.The workflow

enabled solution from HCL was platform-independent, whichmade the entire integration process very simple.

ASTM - Interfaces for Lab Equipments

DICOM -Viewer for DICOM images

HL7 - Capable of messaging and communication with HL7compliant systems

ICD - 10 - Smart Controls for ICD coding of diagnosisdetails in Clinical Informatics

BCH - Smart Controls for BCH coding of diagnosis details

This browser-based, scalable & modular technology solution,with its GUI based interface, enabled the hospital to meet therequirement of connectivity and also ensured effectivemanagement of the hospital's operations through centralmanagement of business rules. It helps the hospital to reducethe costs of administrative and clinical transactions, and at thesame time, provide better healthcare service to their patients.

The HCL HMIS Stack includes:

Result:

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11. HealthcareA reliable, swift, real time health data collection system backed by properinfrastructure is the key to address quality healthcare delivery systems. Facilitatinghospital modernization is a major thrust area of HCL SI business,which focuses on:

Hospital Management Information Systems

PictureArchival and Communication System (PACS)

Laboratory Information Systems (LIS)

Radiology Information System (RIS)

Medical Records Maintenance Solution

Telemedicine Solutions

Remote ICU monitoring system

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Outsourcing

HCL deploys its integrated e-Gov solution built on the SOA platform in a hosted model in one of the leading progressive MunicipalCorporations.This will integrate all the Citizen Centric services to be delivered from one window across a spread of 200 Sq Km.Transaction based model for an urban local body, automating their complete citizen interactions while managing costs.

HCL built the complete infrastructure including Datacenters, deployed applications and staffed the Citizen Services Counters for thenext 10 years.

12. EducationHCL Infosystems is a leading System Integrator providing end to

end turnkey advanced education solutions to the schools,

institutions and universities across the country in the Govt and

the private sector.As part of HCL E (Education Everywhere)

initiative, we have designed HCL DigiSchool and HCL

DigiCampus for schools and colleges. HCL's DigiSchool

solutions are designed and customised as per Indian school

curriculum including all K12 boards.

HCL's DigiSchool will offer students an opportunity to learn

according to the curriculum and improve their IT competency.

The key feature that this solution offers is the digital multimedia

2

asset library, covering all major

aspects in K12 category. HCL's

DigiSchool also offers the school management software

that fits the unique needs of the departments of the school

thus improving the overall functioning and efficiency of the

system.

HCL DigiCampus offers a wide range of solutions keeping

in mind the requirements of large campus and universities.

Key offerings include campus infrastructure solution,

university resource planning, online distance learning/

e-learning programme andTele education.

13. Retail

HCL Retail Infrastructure and point of sale (POS) Solutionsprovide end-to-end business IT enablement in a completecustomised form.We believe each business has unique needsand thus we consult, plan and design the Retail IT solution withour customers before we manufacture it at our state of the art,ISO 9001 and ISO14001 certified plant at Pondicherry.

Retail Stores Frond End SolutionRetail Store Back end solutionWare HouseAutomation Solution

Key SolutionAreas of our SI retail are:-

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LogisticsAutomation SolutionConnectivity SolutionCRM SolutionCall Centre and Process Outsourcing SolutionAutomatic Milk Co-operativeAutomation SolutionMobility SolutionRural Products and Solution


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Analysis 40

Integrating the future through people power

At HCL, Human Resource is considered amongst the Company’s most

precious asset, which is why we have laid special emphasis on every

aspect that helps in constant growth of our 5921 employees…


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HCL’s HR is directly aligned to its organizational and business

strategy. Innovative practices, policies, systems and processes enable

us to engage our people at all times and ensure their empowerment

through a wide range of internal People Development Processes.

Performance-linked incentives and regular training programmes

ensure a low attrition rate among our employees, the majority of

whom are spread across the length and breadth of the country

including those based in remote locations.

An intellectually-stimulating environment, with Fun@Work as its

nucleus and designed to enable our people to `Grow, Learn and

Own’ at every step of their evolution is a key driver of the Company’s

growth.

As pioneers for ESOPs since 1980s, HCL has evolved a system of

profit-sharing with the employees that act as one of the biggest

incentives to their performance, which is also regularly recognised

and rewarded.

A learning organisation that encourages entrepreneurship and

demands performance management of the highest level, sums up the

HR philosophy of HCL which continuously strives to innovate new

principles and programmes to improve its HR culture.

HCL’s People Power is driven by a variety of stimulating factors,which include:

Opportunity to work on different technologies with multilocation exposure & latest technology

80% of the top Management have joined straight from thecampus

Opportunities to move from technical to functional to generalmanagement roles

Housing & asset building schemes for employees

Involvement of employees in all decision-making concerningtheir welfare

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The Company introduced several new programmes aimed at HR

development:

New process of with weights for

KRA and also separate measurement of enablers

- Stepping Stones

- whereby individuals undergo one-year intensive development

program followed by impartial assessment for key positions

- A pioneering and unique

concept in the industry where HR follows the model of

relationship management for internal customers

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performance management

New Career Development Programme

HR Relationship Managers

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Ajai-Ke-Saath

Applause

Alumni Connect

- Coffee Connects, where employees meetthe Chairman & Co-Founder for coffee and new ideas arebrewed over hot coffee

- From post-its to team dinners, everyday personalrecognitions provide a surge in enthusiasm through peerrecognition

- An Internet platform where alumni canregister themselves and participate in events to stayconnected with HCL

Going ahead, the Company plans to strive continuously to furtherstrengthen its HR systems to align them even more intricately withthe ever-changing needs of the customers.



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Integrating ourselves with a greener tomorrow

A tomorrow that is safe for our childrenand the generations to follow. Atomorrow that is free of all hazardouswastes.That is the tomorrow with whichwe, at HCL, are always aspiring tointegrate through a variety ofprogrammes and initiatives.‘Go Green’


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At HCL, we are committed to continually improve the conservationof natural resources, ensure minimisation of waste & pollutants andcomply with applicable legal, regulatory and other requirementsrelevant to our products,processes and environment.

is one of our biggest initiatives as part of our drive fora greener tomorrow and an endeavour to protect the environment,health and safety of all our stakeholders. Under HCL ecoSafe policy,energy conservation has been a key area of work to reduce powerconsumption in products,while employing measures in manufacturingof products to minimise energy consumption. All HCL productshave been incorporated with Green PC features and ACPI mode forpower saving.

HCL ecoSafe

In line with our focus on environment protection, HCL’smanufacturing facilities practice various measures to reduce powerconsumption by using natural light during daytime, installing differentcapacity DG sets that consume optimum amount of diesel as perrequired load.

We shall remain committed in our focus towards environmentprotection and sustainability,moving ahead.

is an initiative taken by the company todispose of any e-waste in a 100% environment friendly manner. Inorder to facilitate this we have engaged all our HCLTouch centres tocollect any e-waste the customer wishes to dispose off.

HCL Green Bag Campaign

HCL’s Go Green initiatives include:

1

2

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Drive for energy conservationIntegration of environment managementprocesses in manufacturing facilitiesBest Assured CampaignGreen belt creationHCL’s Green Bag Campaign



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Awards & accolades


Strongly vindicating the strengths of ourbusiness model and the successful focusof our strategy, HCL has been the proudrecipient of some of the industry’s topawards and recognitions through theyears.

Among the major awards and accolades that came HCL’s way during

2008-09 were:

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Ranked No 1 in the DQ-IDC Best Employer Survey 2009,

among the IT companies in India

GoldAward in“IT &Automation Hardware” category by Frost &

Sullivan in India Manufacturing ExcellenceAward (IMEA 2008)

Awarded the “Gold Star” rating for customer satisfaction

excellence in the CISCO PAL Survey

Ranked No1 company in IT services as per DQ CSA 2009

Best Desktop PC Category award by ComputerActive

EmeraldAward for best all round performance from Infocus

Platinum Certificate of Excellence award from HDFC Standard

Life Insurance Co. Ltd in appreciation of its contribution &

efforts towards the continued success of HDFC SLI

Dun & Bradstreet Rolta corporateAward 2008 for being leader

in Computer Hardware & Peripherals category

Other top-level recognitions awarded to the Company included:

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Upgradation of Quality Management System ISO 9001:2000 to

ISO 9001:2008 standards

Ranked among the top three Best Companies to Work, across

industry segments by BusinessToday - January,2009

In a strong endorsement of his visionary strengths, the

Company’s Founder Chairman & CEO, Mr.Ajai Chowdhry

was felicitated by Times Ascent Asia Pacific HR Congress

with the Award during the

Global HR ExcellenceAwards 2008-09.He was also ranked

third in the Power List of 75 Most Powerful Brand Builders

of India and has been adjudged among ‘India Inc’s Most

Powerful CEOs’ byThe EconomicTimes.

“CEO with HR orientation”

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Our management team


A futuristic management team with in-depth experience and high level of expertise,successfully translating the Company’s vision into a game-changing strategy, is at thecore of HCL’s business model.

A look at our ManagementTeam:

JV RAMAMURTHYChief Operating Officer

The Chief Operating Officer of HCL Infosystems, JV Ramamurthy brings to the table over three decades of exceptional expertise anddiverse industry experience. A technocrat and a man of broad vision, he has led the Company to scale new parameters of growth byspearheading its entry into a number of new verticals and partnerships.

SANDEEP KANWARCFO & EVP

Associated with the Company since 1988, Sandeep Kanwar has the distinction of progressing to the position of Chief Financial Officer, in aspan of just eight years, at the young age of 35.A respected name among his colleagues and customers, he is known for his financial acumenand management skills.

AJAI CHOWDHRYChairman & CEO

A visionary par excellence,Ajai Chowdhry is one of the six founder members of HCL.An engineering graduate by training, he took over thereins of HCL Infosystems, the flagship company of the enterprise, as President and CEO in 1994. Instrumental in steering the Company intoan internationally recognised corporate in the niche areas of its business, he was appointed the Chairman of HCL Infosystems in November1999. He has received various prestigious honours and accolades endorsing his outstanding capabilities, including the DATAQUEST 'IT Manof theYear 2007' Award, among others.

HARI BASKARANEVP

A BE graduate and alumni of IIM - Bangalore, Hari has been instrumental in building the largest retail network for digital lifestyle products inthe country. As head of the Distribution and Marketing Services and Retail business division for HCL, he has given a new meaning to thesuccess of these operations.

RAJEEV ASIJAEVP

Rajeev, an engineering graduate, joined HCL in 1983.With two decades of industry experience, he heads the Enterprise Solutions &Services business of the Company.

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M CHANDRASEKARANSr.VP

M Chandrasekaran joined HCL in 1984.With over two decades of industry experience in sales, support and marketing, he heads the officeautomation products, HCL Infinet and CDC business for HCL.

GEORGE PAULEVP

As head of the Marketing function along with HCL R&D, George Paul has been pivotal in steering the Company's growth trajectory toexceptional levels of success.A graduate in Electronics & Telecommunications, he joined HCL in 1983 and is now a core member of HCLleaders.

RAJENDER KUMAREVP

With over three decades of industry experience in procurement, manufacturing & channel development, Rajendra Kumar heads theCorporate Initiatives, including Quest for Excellence Program. He has been associated with the Company since 1976 and has, over theyears, become an integral member of its leadership team.

ROTHIN BHATTACHARYYACEO (HCL Security Ltd.)

Rothin Bhattacharyya is the Chief Executive Officer (CEO) of HCL Security, headquartered in NOIDA India. A senior business leader, withover 24 years of business management experience, Rothin is considered a thought leader in technology & services sector. His primaryresponsibility in HCL is to expand company’s capability to lead large, complex, global businesses.

VIVEK PUNEKARVP HR

An engineer by profession with over two decades of industry experience in various functions,Vivek heads the HR function for the company.Vivek, who joined HCL in 1986, is credited with innovative HR initiatives that have made HCL among the best companies to work for.


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Chairman's message


“HCL continues its relentless pursuit to bring to its customers,products and solutionson the cutting edge ICT technology. It is our endeavour to leverage our knowledge,experience and best practises to touch lives through technology in all spheres of lifeand make a difference to the citizens of our country.”

- Ajai Chowdhry, Founder, Chairman & CEO, HCL Infosystems Ltd.


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Dear Stakeholders,

The year gone by has witnessed a major turmoil in the global

economic and political scenario, which has had an impact on the ICT

industry in India as well. However, history testifies that every crisis

presents opportunities and opens new avenues for development and

resurgence. I believe India is witnessing a resurgence of its economy

and stands at an inflection point, of growth. It is projected that within

this,the Indian ICT market is among the fastest growing in the world.

Your company HCL Infosystems, is one of the leading India facing ICT

companies, with diverse business portfolio's including Products &

Services, System Integration, Distribution & Marketing, Education &

Training & Security,each with its specific growth trajectory.

In these exciting times, your company is poised at the right place to

address the opportunities that are being thrown up in different

sectors.

This growth requires setting up of a core ICT infrastructure that is

critical to the functioning of businesses and delivery of governance.An

ICT infrastructure that is the backbone to keep all parts of the system

connected, to increase productivity levels, and provide information

and intelligence“on tap”.

We are witnessing the convergence of “adjacent technologies” into

the core with emergence of concepts like integrated security &

surveillance solutions, mobile workforce automation solutions,

electronic payment gateways, integrated command and control

systems,and integration of the shop floor with central MIS etc.We are

witnessing the emergence of an era of the

. In this period of immense possibilities, your

company, HCL Infosystems, with over three decades of expertise in

various core technology fields, is building up vertical domain System

Integration practices to address the various emerging and growing

opportunities.

Product innovations & service expansion continue to engage our

attention as we establish new relationships across the country.We are

in the midst of a change where technology is enabling a mobile lifestyle

that demands service on the go, anytime, anywhere. It is this

understanding that has inspired us to conceptualise and launch HCL

Touch, a 24x7 service support system spread across 4,000 towns in

the country.

“Intelligent

Infrastructure”

Touching lives

Your company continues to be the torchbearer, being the first to

bring products based on the power of new technology to Indian

consumers. As we venture into new categories of products we

believe that we will continue to tap into our prowess to touch lives

every day,in different spheres of life.

I am proud to state that your Company has also taken a leadership

position in adopting a policy of sustainable growth. Under the HCL

ecoSafe program we are bringing out products that are

environmentally friendly, programs that enable safe disposal of

e-waste, reduction of carbon dioxide footprint, reducing energy

consumption in products & internal operations, etc among various

steps initiated.

I would like to mention that the growth and success of any

organization rests on the strong foundation of its people. Your

company has built one of the largest multi-technology talent pools in

the ICT industry, and has nurtured a mature home-grown

management team to enable it to scale new heights.

With warm regards,

Sustainable Growth

People power

Ajai Chowdhry

GoingAhead

On a concluding note

With all these initiatives, I am confident that as your company moves

forward on its growth trajectory with a focused strategy, it is geared

towards making the most of the unfolding opportunities across the

verticals of our presence, be it Telecom, Power, BFSI, e-Governance,

Infrastructure or,Railways,Education and Healthcare.

In conclusion, I would like to thank you, fellow stakeholders, for your

interest and constant support in HCL's progress and the faith you

have reposed in the future of your Company.



Overview

All trends indicate that the economic slowdown is behind us andwe,as a country, are poised to grow.With the government clearlyspelling out its focus on taking development to the masses, todaythere is demand and opportunity to extend the ICT revolutionbeyond the metropolises of India into the real “Bharat”. Despitethe global slowdown, the Indian economy is estimated to havegrown at close to 6.7 per cent in 2008-09.The Confederation ofIndian Industry (CII) pegs the GDP growth at 6.1 per cent in2009-10.This scenario factors in sectoral growth rates of 2.8-3per cent,5-5.5 per cent and 7.5-8 per cent for agriculture,industryand services respectively.

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transforming itself into a multi-facetedtechnology company addressing theEnterprise, Small & Medium & theConsumer spectrum of the Indian Market.

The multi-faceted HCL of today hasspecialized verticals addressing differentsegments of the technology spectrum.Under one roof, it’s built a comprehensiverange of capabilities, giving it a uniqueadvantage to leverage the new paradigmsthat are emerging from a converging world.

At this point it is worth mentioning thatHCL has the distinction of being one of theunique Indian ICT technology companies ofits scale, which has an India centriccustomer focus.

This has been at the core ofwhat your Company has been working on,over the last several years. Innovating newproducts & services for the Indian Marketand building technology frameworks, HCLis transforming itself into a Services andInfrastructure Design & System Integrationcompany.Concurrently, it continues to be aleader in the core products business in thefield of computing, office automation, ICTinfrastructure for small, medium & largeenterprises,ICT education,and ICT retail.

The year gone by has seen your Company

Innovation, Transformation &

Momentum:


see the emergence of new technologyusage paradigm, leading to a rapidlychanging strategy and continuous marketrealignment on the path of ICT marketparticipants.

The year 2009 is expected to herald thebeginning of a new business cycle. Theissues in the short run will be productivity,cost savings and customer retention. Thiswould eventually pave the way forinnovative services (for both the consumerand enterprises) by leveraging the existinginfrastructure so as to align it withemerging opportunities. Players who areuniquely positioned to take advantage ofsuch opportunities will benefit.

We are today in a world where ICTtechnology is all-pervasive, touching everyaspect of life. It is transforming the way wework and live, and driving the global humancommunity towards a flatter world,in turnopening up new opportunities.

As pioneers of modern computing in India;having created ICT hardware, software &training business the, HCL is driven by avision to bring technology solutions thatmake a difference to the lives of peoplein this country. This customer-focusedstrategy has paid rich dividends,with HCL

The HCL of today

Business outlook

The annual IT/ITeS market forecast by IDCsuggests that important changes are takingplace in the Indian market on the back ofglobal economic meltdown. This will inturnl propel a new ‘market order’ in theIT/ITeS industry. According to IDC, inGrowth Phase I (2003-08), the domesticmarket witnessed an unprecedentedgrowth, nearly tripling in market size fromRs. 34,000 Crore in 2003 to Rs.1,01,031Crore in 2008; a CAGR of over 24%. IDC’s“India Domestic IT/ITeS Market - Top 10Predictions for 2009” states that GrowthPhase II will leverage the IT infrastructurebuilt and consolidated during the firstphase.

Growth Phase II is expected to commencefrom 2009 onwards. This new ‘marketorder’ will be quite different from theearlier phase and will be built on the back ofnew and innovative services sought byconsumers and enterprises alike. Thetechnology behind these services, such asi n f r a s t ruc ture , app l i c a t ions andconnectivity would need to be completelyorchestrated and re-oriented in order tosupport their mass adoption.

Indian domestic IT/ITeS market growth rateis expected to be 16.4% over the comingfive years till 2013.The Growth Phase II will


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mobile value-added services andentertainment content directly toconsumers in India.

With an objective to meet the increasingdemand for skilled professionals in the ICTarena, HCL has established high-end ICTEducation & Training, with HCL CareerDevelopment Centres across India. HCLCDCs impart to students real-worldpractical training on enterprise-wide ICTdeployment and integration assignments totransform them into industry-readyprofessionals.

HCL has seen a very encouraging responseto this initiative and today, there are HCL

invest for the future through variouslandmark initiatives. Your Company’sstrategy of focusing on core defensivesectors has enabled it to address newbusiness opportunities in growth sectors,and initiatives taken to expand thespectrum of business have enabled HCL tode-risk its business strategy.

HCL has built India’s largest distributionand retail chain to address digital lifestyledemands of today’s customers. With anetwork of HCL Digilife stores across thecountry, more than 93,000 retail outletsacross more than 11,000 towns and citiesof India, HCL has by far the largest value-added distribution network in the country.

It has also partnerships with leading brands,such as Nokia, Apple, Kodak, Toshiba,Microsoft,Konica Minolta,among others.

HCL Digilife stores,a unique concept in ourcountry, offer a single window for ICTconsumers to experience a comprehensiverange of digital lifestyle products, includingNotebooks, PCs, digital cameras, MP3players, mobile phones, LCD’s, Plasma TVsand related accessories.

During the year under review, yourcompany, along with Nokia, announced theestablishment of a joint venture to sellmobile entertainment and value-addedservices. This joint venture aims to sell


System Integration Roll Out & Infrastructure Management

Telecom E-Gov Power Railway Health Security Media & Ent Airport / Ports Defence Education BFSI+Co-op Retail

Complete ICT Solutions from HCL

omputer Systems :

Imaging Products :

Telecom Produ ts :

VPN and MPLS :

HCL Accutracker :

India’s largest Service Support Network

C PC’s, laptops,Workstations,Thin Client, Peripherals, Racks,

Kiosks, Software, Servers, Storage, Backup Solutions, Networking Products,

Security Solutions, EnterpriseVPN, Hosting,ASP Servers

Digital Copier, Multimedia Projects, Plasma / LCD Display

Panels,AudioVisual System Integration, laser Printers (Mono / Colour), MFD’s

IP Phones,TDM / IP PBX,Video Conferencing, call Centre

Solutions,TV Broadcasting, FM Broadcasting, GPS Solutions

Broadband,VPN, Co-Location Services

HCLVehicle Tracking Services

Multi-location Project Services, network Security & management Services, FM

Services, MultiVendor & System Integration Support, IT / BPO Outsourcing Services,

Copy & Printing Services, Spot maintenance Services, Document management

Services, Branch Rollout Solutions,& Data Centre Hosting Services, CDC,

infrastructure Support and HCL Touch 24x7 Services

c

B2B

India’s largest

Direct Sales

Organization

Solutions :

Computing &

Storage,

Networking,

Security, telecom,

Imaging, Printing &

Copying,Voice &

Data CommVideo,

Conferencing, Digital

Signage, Enterprise

Services, managed

Networks, POS

Retail

B2C

India’s largest

Distribution &

Retail Network

(65 DLS, 93k

retail outlets)

Products :

Desktops, Laptops,

Imaging, mobile

handsets, iPods,

Digital camera,

Accessories,

Wireless headsets,

Memory products,

Solar chargers

ICTTraining & EducationManufacturing ISO-14001, 9001: ISO-13485-2003:TS 16949-2002:TUV - Accredited

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Neutron PC, respectively. The HCL

Neutron PC has been widely acclaimed for

its eco-friendly features and economy in

space and power consumption.

On the consumer front, HCL has

undertaken several initiatives to value-add

to the consumers’ digital lifestyle

experience. HCL Leaptops and Desktops,

along with accessories,were made available

online on www.hclstore.in alongside the

retail presence. Targeting the youth, HCL

launched a special MTV edition ‘HCL

Leaptop’ with the latest NVIDIA Geforce

graphics engine for improved gaming and

multimedia applications. HCL special

promotion offers, such as ‘HCL Ghar Lao,

Winner Ban Jao’ contest during the festive

season and ‘Affordable Technology’ during

Republic Day, have been extremely

successful in promoting HCL Leaptops to

upcountry markets across the length and

breadth of the country.

HCL is undoubtedly the leader in the

desktop business in India and its existing

range of products for the enterprise

segment and the consumer segment

continues to grow. This year, HCL

strengthened this category with two

unique products - The Green PC, and the

Infiniti Challenger Series Workstations

based on Intel’s Quad CoreTechnology for

the Gaming andAnimation Industry.

The Green PC is a fully functional PC that is

aptly suited for home, SOHO, SMB and

enterprise environment and saves 33%

more power than a standard desktop.The

HCL Green PC and HCL Neutron PC

replicate HCL’s ecoSafe initiative and is a

mark of the Company’s commitment to

support the cause of a green and healthy

environment.

HCL’s quest for saving power and providing

a greener earth has found its footprint in

the server business as well. Answering

customer need to save power, and the

demand for greater efficiency from their

data-centers, HCL forayed in the space of

power-conscious server range, based on

policy-based power management It thus

launched innovative server systems

powered with Intel Intelligent power

management technology, Intel turbo-boost

techno log y, Hyper- thread ing for

performance-driven and optimized TCO

requirements.HCL also launched a range of

servers based on Nehalem processors

platform from Intel.

During the year under review, HCL hasfurther consolidated its position in thedistribution of Nokia Cellular phones andDigital Lifestyle products. India continuesto show growth in the mobile subscriberbase with 125 million new subscribersadded during the year ended March 2009.The total mobile subscriber base was 392million subscribers at the end of March2009, with strong growth coming in fromtier-2 and tier-3 markets. Nokia continuesto dominate the market share in the GSMcellular phone market with its aggressiveproduct line-up and strong distribution.3Glicensing and Mobile Number Portabilityare expected to hit the market within thenext 6-9 months.

HCL continues to grow the Digital Lifestylebusiness by adding new products to itsportfolio of Consumer Electronics andMobile Accessories. Further additions areplanned in the coming months.

This year, your Company continued tobuild a robust Office Automation (OA)channel to address the sale of Imaging andPrinting products.The Company added newproducts in the area of 3D virtual realitysolution digital publishing, photo printingand transaction printing segment.

HCL, over the years, has successfullytransformed itself into a leading Services

Te lecommun ica t ions &

Office Automation Products

System Integration Services


CDCs across the country offering speciallydesigned courses in high-end infrastructurehardware, software, and middleware andnetworking integration.

Over the years, HCL has been foreseeing

the trends in the Indian ICT industry and

understanding needs of varied customers.

Through these years, the adoption of a

digital lifestyle by consumers has evolved

and it is more mobile than it has ever been.

To meet the demands of this emerging

“always on-the-go” consumer, your

company formulated a never before service

in ICT for the Indian consumer called ‘HCL

Touch’. This unique 24X7 service covers

4,000 towns across the country and

provides customer service in 11 regional

languages of India. Today, HCL Touch is a

landmark in ICT services in the country and

is a benchmark in the IT business.

In line with HCL’s‘Design for India’ strategy,

and in keeping with its commitment to

develop & deliver world-class products for

Indian consumers, your Company

developed the ‘HCL Leaptop Series 39’

designed for the harsh weather conditions

in India. HCL’s R&D labs developed the

Advanced Thermal Engineering (ATE)

Technology for the HCL Leaptop Series 39.

The HCL Leaptop Series 39 is a powerful

machine and can work at a stretch for long

hours without getting heated on its surface.

HCL created a niche in CY 2008 by being

the first in the country to launch the“Ultra-

portable Computing” as a new product

category. This year too, HCL was among

the frontrunners to launch products based

on the ‘Intel Atom’ for the ultra-small form

factor. HCL was among the global firsts to

launch the Netbook and the Nettop, based

on the Intel Atom processor technology

called HCL Mileap Series 04 and the HCL

Computer Systems & Related

Services


people power 30


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and System Integration company in thecountry. HCL brought about thistransformation by leveraging its strength incore technologies and its direct servicecapabilities.This process of transformationhas built up momentum with the set-up ofvarious “Centre of Excellence (COE)” andproduct development centres at Jaipur andother places.

HCL has designed,developed and delivered

cost-ef fect ive , technology-enabled

solutions that have enabled businesses to

achieve a competitive advantage in their

respective verticals. HCL System

Integration capabilities span the entire

gamut of services - from consulting, to

des i gn , ro l l -out imp lementat ion ,

management and support.

HCL partners with leading technology

vendors - CA, Cisco, EMC, Hitachi, HP,IBM, Intel, Microsoft, Oracle, SAP, Sun &Symantec - to roll out solutions that arecustomized as per the requirement of eachbusiness vertical.

Certified under ISO 9001-2000 BVQI;HCL has mature project management andimplementation processes that enable it todeliver consistent and timely solutions toits customers. HCL System Integrationservices have been growing at anexceptional pace in over 13 industryverticals, viz. Telecom, e-Governance,BFSI, Power,Media & Entertainment,Retail,Healthcare, Infrastructure, Railways,Educat ion , Home land secur i ty,Cooperative banks & Defence.

HCL SI e-Governance has designed &

SI e-Governance

developed solution frameworks for theNational e-Governance Program and havebeen working in association with severalcentral & state government departmentstowards development, empowerment andbetterment of services for the citizens ofIndia. HCL has been working on severale-Governance projects, like NREGA(National Rural Employment GuaranteeAct), PDS (Public Distribution System),RSBY (Rashtriya Swasthya BimaYojna) andSSP (Social Security Pension).

All e-Governance projects are dependent

on the setting up of a robust infrastructure

reaching out to every village. There is an

urgent need to develop the core and

support infrastructure for e-Governance,

such as Data Centres,WideArea Networks

and the physical access points for delivery

of government services. These would be


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common to all departments and where

services could be delivered at the

doorsteps of the citizens in an integrated

manner.

NREGA goal is to enhance livelihood

security in rural areas by providing at least

100 days of guaranteed wage employment

to every household in a financial year.

HCL Infosystems implemented a complete

solution for NREGA, including e-Job card

to workers at worksites & financial

inclusion solutions to ensure t payments

reach the correct beneficiaries. HCL has

also developed special kit for rural

environment which is sleek and handy even

for field work called‘HCL Finmate’.

Furthermore, HCL provided complete

automation Solution for urban local bodies

to integrate all departments of ULBs.

SITelecom

The convergence of applications, networks

or content like voice,video and data on this

new age information super highway has

become the next path breaking move in

core mass market technology, providing

seamless connectivity and integrated user

experience.

HCL, with its multi-product and multi-

service approach, is able understand and

address the challenges and opportunities

brought by convergence. Our SI Telecom

projects encompass the following:

�

�

Complete infrastructure rollout for

WIMAX implementation for a leading

Telecom player

Roll out of Broad Band Multiplay Project

& developed single window billing

solution to manage all the services of a

leadingTelecom operator

�

�

Provided VPN Backbone Solution tomanage VPN network of a leading PSUin India

Integrated solutions for complete ICTCore, Billing, Datacenter & disasterrecovery

SI Power

The thrust of the Indian Power sector is onincreasing power generation transmission& distribution. HCL SI Power is workingclosely with the power distribution sectorto address AT & C loss reduction, bringtransparency, improve customersatisfaction and increase employeeproductivity through convergence of IT &Automation. Customer service & reducingdistribution losses are two main HCL focusareas.

HCL's Power practice broadly caters to the

needs of Electric Utilities by offering



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Financialhighlights

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Analysis 40


customized solutions in areas like

Enterprise IT, Customer Services,

Advanced Metering Infrastructure, AMRs,

Revenue Management.

HCL implemented complete IT package in

HPSEB for computerized billing & energy

a c c o u n t i n g w h i c h i n v o l v e d

computerization of Sub Division offices of

Shimla circle along with setting up of Data

Centre & customer care centres also.

HCL also implemented Sub Division

Automation Project including Centralized

Billing Engine, Windows based Electrical

Network Management System,Web Based

CRM Application for one of the state

electricity boards.

SI BFSI & Cooperative

HCL SI BFSI is focused on Retail &

Corporate Banking, Insurance and Capital

Markets. HCL has been working with

several nationalized, MNC, private, rural

and cooperative banks across the country.

HCL, at its R & D center, has developed a

Core Banking Solution - HCL BancMate.

The Company this year also launched

state-of-the-art co-brandedATM solutions

for India. HCL is the preferred partner for

many BFSI customers and its clientele

includes all major banks and insurance

companies.

HCL implemented our own product called

HCL BancMate in some of the leading

cooperative banks.

HCL Implemented a web based

Management Information System (MIS) &

BI solution for one of the India's largest

state-run banks.

HCL implemented complete mobile

banking solution to one of the leading

nationalized banks of India to extend its full

fledged mobile banking technology services

to its customers across the globe.

- Education

Everywhere, Enable Education & e-

Education.

HCL SI Education has developed a wide

range of customizable content-enabling

solutions.The Company is providing world

class library management solutions (LMS)

for the market. Our LMS is designed on all

international standards like MARC-21,

UNICODE,SIP/SIP2,etc.LMS is completely

user-friendly, menu-driven interface,

providing online help, complete and

elaborative help documentation, online

downloading of bibliographic details,

sharing of database or bibliographic details

with international or national libraries

based on international standards like ISO

2709,Z39.50,etc.

During the year, HCL Home Land Security

(HLS) developed solutions for:

Command and Control Center

Dial 100 IP-Multimedia contact

center &Voice Logger

GPS based Vehicle Tracking &

management

Digital Map & Display Solutions

City Surveillance

Traffic Enforcement

Prison Solutions

SI Education

HCL E2 Initiative:

SI Home Land Security

�

�

�

�

�

�

�

HCL Infinet is an Internet Infrastructure


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initiative of the HCL group. HCL Infinet

offers state-of-the-art Managed Network

Services to enterprises across the country,

and provides complete range of

networking services & solutions like:

Internet Bandwidth Services, Virtual

Private Network Services, Internet

Telephony, Managed Data Centre,

Co-location Services, MPLS Networking

Services, Corporate Messaging Solution,

Wireless Broadband Services and Value

Added Services like Enterprise Mailing

Solutions.

HCL Infinet has increased its direct

presence to almost 160 locations. HCL

Infinet has also set up eight Tier-III Data

Centres to cater to its customers.

Offerings and past Contract-ServiceDelivery experience have been ratedhighest amongst all IT Service providers inthe country.

On the Technology Certification front,HCL achieved the highest partnershipstatus with each of 10 core partners in S4Nbusiness area (Server, Storage, Security,Software and Network), that forms a keycomponent of our high growth SystemIntegration and Services Business.

Consolidating on the COEs (Centre ofExcellence) and Enterprise ResponseCentres, we have improved capability indesigning and implementing EmergingTechnology Solutions like UnifiedCommunications etc. The Company alsostarted innovative solution labs in the area ofDairyAutomation,Cloud Computing etc.


Quality initiatives

During the year, there have been several

initiatives undertaken by the Company on

the Business Excellence and Quality front.

The Chairman formally launched

Company-wide QFE (Quest for

Excellence) journey, which combines the

Best Business Practices under the EFQM

(European Foundation for Quality

Management), ISO and QIPM (Quality

Improvement Process Model).

Customer Satisfaction initiatives in2008-09 have propelled HCL Infosystemsto the top position in CSA 2009 (CustomerSatisfaction Audit) conducted by IDC-DQduring Oct-Dec ’08.This Audit also foundthat the Company’s range of Service


people power 30


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34

Ourmanagement

team 36

Chairman'smessage

38


Financialhighlights

35


Analysis 40


On the Manufacturing front, the

Puducherry Manufacturing Operations and

Uttarakhand Manufacturing Operations

have undergone regular external audits and

successfully migrated to the new ISO (IS0

9001-2008) standard for Quality

Management Systems and Environment

Management Systems (EMS 14001-2004).

As part of quality journey, the newly

acquired Jaipur Software centre has been

certified as CMMI level- 3.

This year, HCL has won the IMEA (India

Manufacturing Excellence Award) for

Manufacturing Excellence.) The Company

also won the prestigious GoldAward for IT

automation from Foster and Sullivan.

Further, the HCL Nokia Repair Facility has

been certified as ISO 9001:2008 this year.

HCL has developed a well-defined Risk

Management Framework to track and

Risks & concerns and risk

mitigation

evaluate all business risks and process gaps.

The top management of the Company

takes periodic review of the business

processes and environment risk analysis

reports by the respective business heads.

In order to further enhance its business in

System Integration, the Company has

entered into Security Business through the

establishment of ‘HCL Security Ltd.’ as a

new venture. The Company has further

strengthened its focus on cost reduction

and overhead control including current

assets.

In view of the high potential in adoption of

mobile computing in India, including in non-

Metro towns, the Company has launched

‘HCLTouch’ – 24X7 support its customers.

Attrition is one of the major risks which

organizations are facing today. With the

increasing demand and limited availability of

specialised and adroit workforce for the

ICT domain, identifying, recruiting and

retaining this talent is vital. HCL has strong

HR policies that attract and retain best of

industry talent and also imparts training

through knowledge portals to enhance the

skill-set of the employees.

The Company has in place adequatesystems for internal control that arecommensurate with its size and the natureof its operations. These have been designedto provide reasonable assurance withregard to recording and providing reliablefinancial and operational information,complying with applicable statutes,safeguarding assets from unauthorized useor losses, executing transactions withproper authorization and ensuringcompliance of corporate polices.

The Company has a well-defined delegation

of power with authority limits for

approving revenue as well as capital

expenditure. Processes for formulating

and reviewing annual and long-term

business plans have been laid down.

The InternalAudit is based on anAudit Plan,

Internal control systems andtheir adequacy


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The financial statements have been prepared in compliance with the requirements of the Companies Act, 1956, andGenerally Accepted Accounting Principles (GAAP) in India.

The Group’s consolidated financial statements have been prepared in compliance with the standard AS 21 on Consolidationof Accounts and presented in a separate section of the Annual Report.

The Management Discussion and Analysis on Financial performance relates to Consolidated Financial statements of theCompany and its subsidiaries. This should be read in conjunction with the financial statements and related notes to theconsolidated accounts for the year ended June 30, 2009.

FINANCIAL COMMENTS ON CONSOLIDATED OPERATIONS FOR THE YEAR ENDED JUNE 30, 2009

Consolidated ParentParticulars FY 2009 FY 2008 FY 2009 FY 2008Gross Business Revenue 12,378 12,403 12,337 12,367Net Business Revenue 12,252 12,245 12,211 12,209

Cost of Sales 11,163 11,191 111,29 11,167

Gross Margin 1,089 1,054 1,082 1,042Operating Expenses 683 607 654 592

Depreciation 21 19 17 16

Operating Profit 385 428 411 434Other Income 37 48 34 46

Exchange Fluctuation -26 2 -26 2

Finance Cost 45 48 45 48

Profit Before Tax 351 430 374 434

Tax Expense 111 130 114 129

Profit After Tax 240 300 260 305Basic EPS (in Rupees) 14.0 17.6 15.2 17.9

CONSOLIDATED FINANCIAL PERFORMANCE

Gross Business Income

Consolidated Revenue for the year is Rs. 12378 crores asagainst Rs. 12403 crores in the previous year.

Services revenue grew by 43% from Rs. 458 crores toRs. 654 crores in the current year.

7787

11455

11855

12403

12378

Rs. crores

Revenue

FY 05

FY 06

FY 07

FY 08

FY 09

Services Revenue

Rs. 654 crores+43% Y on Y

2008: Rs. 458 crores

Gross Margins

Rs. 1089 crores

2008: Rs. 1054 crores

Rs. crores

Gross Margins

Gross margins for the current year grew by 30 basis points from 8.5% to 8.8% inFY 2009. In absolute value, gross margins are Rs. 1089 crores as againstRs. 1054 crores in the previous year.

1 HCL 50-54.p65 10/1/2009, 1:58 PM50


Manpower

38794323

5082

5753 5921

FY 05 FY 06 FY 07 FY 08 FY 09


Operating expenses

a). Personnel Costs

Personnel costs increased from Rs. 301 crores in FY 2008 toRs. 338 crores in FY 2009. The Company strengthened it’stechnical and support employee base from 5753 to 5921 inthe year and also increased the flexible manpower to cater tothe increased services business and new initiatives.

Employee costs as a percentage of sales increased from 2.4%to 2.7% in current year, consequent to a higher service revenuecomponent.

b). Administration, Selling, Distribution and Other Expenses

Administration, Selling & other operating expenses (including provisions) increased from Rs. 306 crores in FY 2008 toRs. 345 crores in FY 2009. Costs as a % to sales are at 2.8% in FY 2009 as against 2.5% in FY 2008.

Operating Profit

Operating profit for FY 2009 is Rs. 385 crores as against Rs. 428 crores in FY 2008.

Other Income

Other income in FY 2009 is Rs. 37 crores as against Rs. 48 crores in FY 2008, primarily due to lower average level ofinvestments made from surplus funds.

Exchange Fluctuation

During FY 2009, rupee steeply declined from the opening levels of Rs. 43.1/ USD to a high of Rs. 52.1/ USD before endingthe year at Rs. 47.9/ USD.

Exchange difference on account of difference in rate on payments and collections made during the year and also onrestatement of debtor and vendor balances as on June 30, 2009 total to Rs. (26) crores as against positive ofRs. 2 crores for the last financial year.

Finance Costs

Finance costs in FY 2009 are Rs. 45 crores, lower from Rs. 48 crores in FY 2008. Finance costs mainly represent intereston borrowings for working capital, and usance interest onacceptances.

Profit Before Tax (PBT)

Profit before tax for Parent Standalone in FY 2009 is Rs. 374crores as against Rs. 434 crores in the previous year. Excludingexchange fluctuations, PBT for Parent Standalone is Rs. 400crores as against Rs. 432 crores in the previous year.

Loss in subsidiaries in FY 2009 is Rs. 23 crores as againstloss of Rs. 4 crores in the previous year.

296

385

429

430

351

Rs. crores

Profit Before Tax

FY 05

FY 06

FY 07

FY 08

FY 09

1 HCL 50-54.p65 10/1/2009, 1:58 PM51


Tax Expense

The provision for current tax, deferred tax and fringe benefit tax for the year is Rs. 111 crores.

The Company provided Fringe benefit Tax (FBT) during the nine months ended March 31, 2009. FBT has been discontinuedfrom April’09 vide Finance (No 2) Act, 2009. Accordingly, Company has not provided for FBT in the last quarter ended June30, 2009.

Effective Tax rate for the year is 31% as against 29% in the previous year.

Profit After Tax

Profit after Tax for FY 2009 is Rs. 240 crores as againstRs. 300 crores in FY 2008. Basic EPS for FY 2009 is Rs. 14.0.

Dividend

The Board recommends a final dividend of Rs. 1.50 per share (75% per fullypaid up equity share) to shareholders. This will be paid, subject to shareholderapproval on October 23, 2009.

The total dividend proposed and paid for FY 2009 (including interim dividendof Rs. 5.00 per share) is Rs. 6.50 per share (325% per fully paid up equityshare), amounting to Rs. 130 crores including dividend distribution tax.


228

280

316

300

240

Rs. crores

Profit After Tax

FY 05

FY 06

FY 07

FY 08

FY 09

310%

400%

400%

400%

325%

Dividend %

FY 05

FY 06

FY 07

FY 08

FY 09

33

41

51

59

66

Book Value - Rs. / share

FY 05

FY 06

FY 07

FY 08

FY 09

Dividend Declared

Rs. 6.50 per share,Payout ratio 54%

2008: Rs. 8.00 per share,Pay out ratio: 53%

The dividend for the year is 54% of the net profits of thecompany.

FINANCIAL CONDITIONS

Net Worth / Shareholders Fund

Net Worth grew to Rs. 1122 crores as at June 30, 2009 fromRs. 1016 crores as at the close of the previous year.

Paid up capital as at June 30, 2009 is Rs. 34.2 crores,comprising 17.1 crores equity shares of Rs. 2/- each

Reserves & Surplus are Rs. 1088 crores at year-end afterappropriating Rs. 130 crores for dividend and dividenddistribution tax.

1 HCL 50-54.p65 10/1/2009, 1:58 PM52


Borrowings

During the year, the Company raised Rs. 80 crores by issue of800 Redeemable, Non-Convertible Debentures (NCDs) ofRs. 10 lacs each to LIC of India on private placement basis.Fitch has assigned ‘stable’ outlook rating for the NCDprogramme. These NCDs are listed on the National StockExchange of India Limited.

The company also repaid borrowings to the extent of Rs. 208crores during the year.

Loan Funds, therefore, decreased to Rs. 227 crores as at June30, 2009 from Rs. 355 crores as on June 30, 2008. TheDebt/ (Debt + equity) ratio reduced to 17%.

Fixed Assets

Net block grew from Rs. 170 crores as at June 30, 2008 toRs. 185 crores as at June 30, 2009. The capital expenditure during the year is mainly on Office premises, Infrastructureand Technology upgrades.

Inventories

Inventories as at June 30, 2009 are Rs. 889 crores as against Rs. 899 crores as on June 30, 2008.

Inventory turnover on sales in financial year ended 2009 is 14 times, as in the previous year.

Debtors

Debtors as at June 30, 2009 are Rs. 1506 crores as against Rs. 1248 crores as at June 30, 2008.

Debtors as number of days of sales in FY 2009 are at 44 days as against 37 days in the FY 2008. Increase in debtor levelsis mainly due to change in revenue composition with higher System Integration business.

Liquid Assets (Investments and Cash Bank)

Investments in Mutual Funds and Term Deposits with Banks increased from Rs. 216 crores as at June 30, 2008 toRs. 269 crores as at June 30, 2009.

Cash in Hand & Balances with Bank in collection/ disbursement accounts are Rs. 201 crores as at June 30, 2009 as againstRs. 319 crores as at June 30, 2008.

Other Current Assets

Other current assets increased from Rs. 239 crores as at June 30, 2008 to Rs. 306 crores as at June 30, 2009. Theincrease is primarily in accrued revenue to be billed, and other recoverable.

Current Liabilities & Provisions

The Company had current liabilities and provisions of Rs. 2014 crores as at June 30, 2009 as against Rs. 1713 crores asat June 30, 2008. The increase is primarily in vendor liability and deferred revenue.

Working Capital

The Company’s working capital base reduced from Rs. 992 crores as at June 30, 2008 to Rs. 898 crores as at June 30,2009. The Company balanced inventory, receivables and vendor terms effectively resulting in lower working capital base.Current ratio as at the year end stands at 1.4.

11%

22%

26%

17%

13%

Debt - Equity Ratio

FY 05

FY 06

FY 07

FY 08

FY 09


424

400

685

992

898

Rs. crores

Working Capital

FY 05

FY 06

FY 07

FY 08

FY 09

Current Ratio

1.4

1.4

1.5

1.3

1.6

FY 05

FY 06

FY 07

FY 08

FY 09

1 HCL 50-54.p65 10/1/2009, 1:58 PM53



Segment Performance

The company has identified three primary segments namely Computer Systems and related products & services,Telecommunication & Office Automation and Internet & related services.

Computer Systems and Related Products & Services

The segment operations comprise of sale of Computer hardware, providing System Integration, Roll Out and InfrastructureManagement solutions in different industry verticals and providing IT services including maintenance, facilities management etc.

Segment revenue increased by 4% in FY 2009 to Rs. 3540 crores from Rs. 3389 crores in FY 2008.

Segment PBIT in FY 2009 is Rs. 177 crores as against Rs. 200 crores in FY 2008. Excluding exchange fluctuations, PBITas a % to sales is 5.7%, same as in the previous year.

Capital employed in the segment as at June 30, 2009 is Rs. 876 crores as against Rs. 953 crores as at June 30, 2008.

Telecommunication & Office Automation

The segment operations comprise of distribution of telecommunication and other digital lifestyle products, office automationproducts and related comprehensive maintenance and allied services.

Segment revenue in FY 2009 is Rs. 8874 crores as against Rs. 9020 crores in the previous year.

Segment PBIT in FY2009 is Rs. 246 crores as against Rs. 285 crores in the previous year. PBIT as % to sales is 2.8% in

FY 2009 as against 3.2% in FY 2008.

Capital employed in the segment as at June 30, 2009 is Rs. 187 crores as against Rs. 178 crores as at June 30, 2008.

Internet and Related Services

The segment provides Virtual Private Network, Internet Access services and other connectivity services.

Segment Revenue in FY 2009 is Rs. 46 crores and Profit before Interest, Depreciation and Tax is Rs. (14) crores.

Computer Systems - Revenue

3540

2785

1971

2381

3389

Rs. croresFY 05

FY 06

FY 07

FY 08

FY 09

Computer Systems - PBIT

177

174

138

126

200

Rs. croresFY 05

FY 06

FY 07

FY 08

FY 09

Telecom & OA - Revenue

5779

9050

9049

9020

8874

FY 05

FY 06

FY 07

FY 08

FY 09

Rs. crores

Telecom & OA - PBIT

147

244

267

285

246

FY 05

FY 06

FY 07

FY 08

FY 09

Rs. crores


Financial Highlights

(Rs. in Crores)

Particulars Consolidated Parent Company2008-09 2007-08 2008-09 2007-08

Net Sales and other income 12289.54 12294.56 12244.33 12256.52

Profit before Interest, Depreciation and Tax 417.22 496.35 435.79 498.39

Finance Charges 44.66 47.60 44.66 47.57

Depreciation 21.25 18.62 17.27 16.35

Profit before Tax 351.31 430.13 373.86 434.47

Provision for Taxation : Current 122.17 131.51 122.77 131.50

Fringe Benefit 1.55 4.11 1.45 3.85

Deferred (-)12.36 (-)5.63 (-)10.80 (-)5.63

Net Profit after Tax 239.95 300.15 260.44 304.75

Profit available for appropriation 951.18 903.72 961.57 893.38

AppropriationsDebenture Redemption Reserve 4.00 - 4.00 -

Interim Dividend 85.59 102.61 85.59 102.61

Proposed Dividend 25.68 34.23 25.68 34.23

Tax on Dividend (including Interim Dividend) 18.91 23.26 18.91 23.26

Transfer to General Reserve 26.05 30.47 26.05 30.47

Balance of Profit carried forward to next year 790.95 713.14 801.34 702.81

Scheme of Amalgamation

During the year under review, a Scheme of Amalgamation u/s 391/394 of the Companies Act 1956, (the Scheme) foramalgamation of Natural Technologies Private Limited (NTPL), the wholly owned subsidiary with the Company was approvedby the Hon’ble High Courts of Delhi and Rajasthan vide their respective orders dated August 11, 2008 and May 29, 2009,which came into effect from July 6, 2009 from the appointed date i.e. July 1, 2008.

Accordingly, the results of Company on standalone basis for the year ended June 30, 2009 include the results of NTPL forthe 12 months period from July 1, 2008 to June 30, 2009. Please also refer to ‘Note 23(a)’ on Scheme of Amalgamationgiven in Notes to Accounts in this report.

Raising of Funds

Pursuant to the Board approval and subject to the approval of shareholders at the Extra-ordinary General Meeting scheduledto be held on September 23, 2009, the Company proposes to raise funds by:

(a) Issuance of Convertible Warrants not exceeding Rs. 322 Crores including premium to Promoters of the Company.

(b) Issuance in the form of Equity Shares or Equity linked securities including, but not limited to Foreign Currency ConvertibleBonds, Optionally Convertible Debentures, Bonds with Share Warrants attached, Global Depositary Receipts, AmericanDepositary Receipts or any other equity related instrument or a combination thereof in the domestic and/or internationalofferings and/or Qualified Institutions Placements for a value not exceeding Rs. 500 Crores including premium.

The funds so raised shall be utilised for investing in expansion of existing business, development of infrastructure for futuregrowth, meeting working capital requirements and for acquisitions.

Performance

The consolidated net revenue of the Company was Rs. 12289.54 crores as against Rs. 12294.56 crores in the previousyear. The consolidated profit before tax was Rs. 351.31 crores as against Rs. 430.13 crores in the previous year.

Your Directors are pleased to recommend final Dividend of Rs. 1.50 (75%) per share on the fully paid-up equity shares ofRs. 2/- each for the financial year ended on 30th June, 2009. During the first nine months, three interim (quarterly)dividends aggregating to Rs. 5/- (250%) per share were declared, taking the total dividend for the year 2008-09 to Rs. 6.50(325%) per share of Rs. 2/-.

DIRECTORS’ REPORT

To the Members,

Your Directors have pleasure in presenting their Twenty Third Annual Report together with the Audited Accounts for thefinancial year ended 30th June, 2009.


OperationsA review of operations of the businesses of your Company for the year ended June 30, 2009 is provided in the ManagementDiscussion and Analysis Report forming part of the Annual Report.

Awards & RecognitionHCL bagged several awards and accolades. Your Company this year was honoured with the Gold Certification Merit Award forIndia Manufacturing Excellence 2008 from Frost and Sullivan.

HCL Ranked Third among the Best Companies to Work For by Business Today Issue - Jan 25, 2009, HCL Infosystemsranked top 3 for the fourth consecutive year in the best employer study by IDC -DQ 2008. The year that went by witnessednumerous recognitions for your company; HCL won the prestigious Dun & Bradstreet Rolta Corporate Award 2008 for beingleader in Computer Hardware & Peripherals category, HCL also won the Best Desktop PC Category award by Computer Activeand was ranked No. 1 company in IT services, No. 3 in Desktops and No. 4 in servers as per DQ CSA 2009.

The company won top market share award for the highest market share amongst the countries and also bagged Gold partneraward for achieving sizable business revenue. Infocus recognized HCL as its strategic partner and HCL received EmeraldAward for best all round performance over the year.

HCL received the Platinum Certificate of Excellence award in August 2008 for HDFC Standard Life Insurance Co. Ltd. inappreciation of its contribution & efforts towards the continued success of HDFC SLI.

HCL Manufacturing facility have been awarded GOLD AWARD in “IT & Automation Hardware” category by Frost & Sullivanin India Manufacturing Excellence Award (IMEA 2008) and Quality management system ISO 9001: 2000 is upgraded toISO 9001: 2008 standards.

This year your Company’s Founder Chairman & CEO, Mr. Ajai Chowdhry was felicitated by Times Ascent Asia Pacific HRCongress with the “CEO with HR orientation” Award during the Global HR Excellence Awards 2008-09. He was also rankedthird in the Power List of 75 Most Powerful Brand Builders of India and has been adjudged among ‘India Inc’s MostPowerful CEOs’ by The Economic Times.

Employee Stock Option PlanEmployee Stock Option Scheme 2000

Pursuant to the approval of the shareholders at the Extra-Ordinary General Meeting held on February 25, 2000 for grant ofoptions to the employees of the Company and its subsidiaries, the Board of Directors had approved the grant of 30,18,000options including the options that had lapsed out of each grant. Each option confers on the employee a right for five equityshares 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 PostalBallot for grant of 33,35,487 options to the employees of the Company and its subsidiaries. The Board of Directors hasgranted 31,96,840 options including the options that had lapsed out of each grant. Each option confers on the employeea right for five equity shares of Rs. 2/- each at the market price as specified in the SEBI (Employee Stock Option Schemeand Employee Stock Purchase Scheme) Guidelines 1999, on the date of grant.

Credit RatingsThe credit rating by ICRA continued at ‘A1+’ rating indicating highest safety to the Company’s Commercial Paper programof Rs. 325 crores.

The long term credit rating assigned by Fitch to the Company continued at ‘AA-(ind)’ indicating stable outlook. Fitch alsoassigned stable rating ‘AA-(ind)’ for Rs. 80 Crores of Non-Convertible Debenture programme issued during the year.

Fixed DepositsAs on June 30, 2009, no deposits were due for repayment. During the year, fixed deposits amounting to Rs.0.70 Lacs,including interest of Rs. 0.17 Lacs, have been repaid to the depositors. Deposits amounting to Rs. 0.60 Lacs, includinginterest of Rs. 0.12 Lacs, have been transferred to Investor Education and Protection Fund pursuant to the provisions ofSection 205A of the Companies Act, 1956.

ListingThe shares of the Company are listed at The Bombay Stock Exchange Limited, Mumbai and National Stock Exchange ofIndia Limited, Mumbai. During the year under review, the Company has issued Non-Convertible Debentures (NCDs) amountingto Rupees 80 Crores which are listed on National Stock Exchange of India Limited, Mumbai.

DirectorsMr. Nikhil Sinha has been appointed as Additional Director with effect from July 29, 2009. The Company has received anotice from a member of the Company, under section 257 of the Companies Act, 1956, proposing his appointment asDirector of the Company, along with the requisite deposit.

During the year, Mr. Narasimhan Jegadeesh resigned from the Directorship of the Company. The Board places on record itsappreciation for the services rendered by him during his tenure with the Company.

In accordance with the Articles of Association of the Company, Mr. Ajai Chowdhry, Mr. S. Bhattacharya and Ms. AnitaRamachandran, Directors retire by rotation and being eligible, offer themselves for re-appointment.

DIRECTORS’ REPORT


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

Directors’ Responsibility StatementPursuant to the requirement of Section 217(2AA) of the Companies Act, 1956, and based on the representations receivedfrom 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 properexplanation relating to material departures, if any;

b. appropriate accounting policies have been selected and applied consistently, and that the judgments and estimatesmade are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at June 30,2009 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 theprovisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detectingfraud and other irregularities;

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

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

PersonnelIndustrial Relations during the period under review continued to be peaceful and harmonious. No man-day was lost due toany Industrial Dispute. HCL bagged best honors for its HR management. Your company was ranked among top three for thefourth consecutive year in the Best Employer Study 2008 conducted by IDC – Dataquest and was also ranked among topthree in the ‘Best Companies to Work for’ Study 2008, conducted by BT, Mercer & TNS.

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

Additional information relating to Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and OutgoThe additional information required in accordance with sub-section (1)(e) of Section 217 of the Companies Act, 1956, readwith the Company (Disclosure of Particulars in the Report of the Board of Directors) Rules,1988, is appended to and formspart of this report.

Particulars of subsidiariesOn the Scheme of Amalgamation for merger of Natural Technologies Private Limited (NTPL), the wholly owned subsidiary ofthe Company, becoming effective, NTPL has been dissolved without winding up.

A wholly owned subsidiary in the name and style of HCL Infocom Limited was incorporated on December 17, 2008. HCLInfocom Limited holds 49% share capital in Scout Mobile Internet Services Limited, a joint venture with Nokia Corporation,Finland to engage in the business of sale of products and providing services meant for cellular phones in India under singlebrand of Nokia.

The Company has obtained permission from Ministry of Corporate Affairs, Government of India vide its letter number47/104/2009-CL-III, dated 13.04.2009 for not annexing the accounts of the wholly owned subsidiaries, namely HCLInfinet Limited, HCL Security Limited, NTPL and HCL Infocom Limited.

The detailed annual accounts of the subsidiaries of the Company are available on any working day at the Registered Officeof the Company to the shareholders of the Company requiring such information.

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

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

On behalf of the Board of Directors

Sd/-

AJAI CHOWDHRYSeptember 8, 2009 Chairman and Chief Executive Officer

DIRECTORS’ REPORT


ANNEXURE TO DIRECTORS’ REPORT

INFORMATION RELATING TO CONSERVATION OF ENERGY, R&D, TECHNOLOGY ABSORPTION AND INNOVATION, ANDFOREIGN EXCHANGE EARNINGS/ OUTGO FORMING PART OF THE DIRECTORS’ REPORT IN TERMS OF SECTION 217(1)(e)OF THE COMPANIES ACT, 1956.

A. Conservation of Energy

Under HCL ecoSafe policy, energy conservation has been a key area of work to reduce power and minimise consumptionin products & product manufacturing.

HCL ecoSafe Policy clearly recognizes the importance of products that are energy efficient and helps customers cutcosts of ownership and attain broader goals of protecting the environment. All our products have been incorporatedwith Green PC features and ACPI mode for power saving.

All our manufacturing facilities practice various measures to reduce power consumption by using natural light duringdaytime, installing different capacity DG sets that consume optimum amount of diesel as per required load.

1. Made S3 as the default sleep state in all the products shipped with Microsoft Windows OS, so that the productautomatically enters into standby state after specified amount of system in activity.

2. Compliance for MPR-II certification for CRT monitors.

3. Compliance for TCO’03 certification for LCD monitors.

4. Organization has gone for Energy star 4.0 certification for all it ES series of desktops and all laptop products arereleased with Energy Star 4.0 certification.

5. Initiated actions for moving to SMPS with active or passive power factor correction as option.

6. Actions implemented for using 80plus high efficiency SMPS as option in desktop products.

7. New desktop & laptop products released with support to system management technologies for effective powermanagement and off hour remote maintenance.

8. Display devices shipments shifted from cathode ray tube (CRT) monitors to flat panel displays significantlyleading to less material use per unit. Flat panel display typically uses 40 to 50% less (by weight) materials whencompared to conventional CRT screen and requires approximately 60% less energy in use.

9. The new HCL products are being replaced by mercury-free light-emitting diode (LED) displays instead of conventionalCCFL-backlit displays which are more power efficient and have long life than conventional CCFL. This therebyreduces the emission of radiations affecting the health of the customer.

10. Optimal Power management settings are configured in all products.

11. Low power consuming notebooks which uses Atom CPU (just 2.5W) were released.

12. Working towards launching CULV (Consumer ULV) category Product with lower power consumption Chipset &CPU.

13. In MiLeap Series netbook, Mechanical HDD is replaced by SSD which conserves power.

14. Desktop product with Green Power Hard Disks from Western Digital released which consumes less power of 8Wwhereas normal HDD consumes 15W.

15. HCL 4 in 1 PC & HCL 6 in 1 PC: normally 1 PC consumes 150W per user, but using this multi user X box a singleuser (Xbox) consumes only 1W.

16. Desktop product with specially designed mother board with DES (Dynamic Energy Saver) technology releasedwhich are 20% efficient than normal mother board based products.

17. The new generation Intel Core 2 Duo CPU in HCL products has hafnium metal in its silicon chip giving moreenergy efficiency.

18. Sourcing cabinets in SKD form and assembling in house, allowed us to increase the number of units per pallet,which translated into less energy required to ship each cabinet.

19. Periodic energy audit for optimum utilization of power consumption in plants.

20. Use of pull cord switch for lights for individual control.

21. We are in the process of converting the HCL manufacturing plant lighting with CFL. As of now 80% of the plantlighting uses CFL.


22. Nearly 100 nos. of 250 watts MV lamp fittings were replaced with 125 Watts MV lamp fittings by increasing theheight from the roof to increases illumination and reduce power consumption.

23. We now practice switching off power consuming equipment when not required including UPS resulting in savingof 110,000 units per annum.

24. Rain water harvesting facility at HCL plants with a capacity of 3,000 kilo litres.

25. Daily monitoring of power consumption at HCL plants to detect abnormal consumption.

26. Daily monitoring of water consumption at HCL plants to detect abnormal consumption.

27. Regular maintenance of office and manufacturing equipments on a monthly basis to ensure that it does notconsume higher power than normal.

B. Research & Development:

1. Product Innovation and Engineering:

During the year under review, your company has laid special emphasis on innovative solutions specially suitablefor the Indian Market. HCL developed Operation Support System (OSS) – which allow telecom service providersto manage and monitor their entire network in the area of performance, fault, configuration, security andaccountability from a single desktop.

Developed as per international standard TMF specification, HCL OSS supports a sophisticated event correlationengine for better fault alarm correlation as more that a Hundred Thousand events flow into OSS system everyhour. It also provides, various kinds of network performance reports for both IP and Non IP telecom devices,element availability status reports & has intelligent and standard user authentication systems.

HCL OSS has its own notification engine to notify any action to end user or Service providers in timely manner.The notification is being provided by email and SMS. It provides 2D topology Network Monitoring System forgraphical system monitoring. It supports multiple database, has in-built software redundancy for full time onlinesupport.

HCL has released Automatic Ticket Vending machine which utilizes contact less smart card for transactions. HCLalso released the Management Console, a customized Linux based terminal to issue / top up the value of smartcards which are being used by passengers as a transaction card with the Automatic Ticket Vending Machine.

HCL R&D also developed ‘Thin client’ models to address the requirement of local Indian Languages in thee-Governance projects.

HCL also introduced new version of HDMS (HCL Desktop Management Software ) based on CIM. The new HDMSuses minimum system resources to boost efficiency. Also more features were added to HDMS like simultaneousremote Bios update of multiple client machines, AMC 5.0 ( Active Management Console ) - an improved versionof AMC 3.0 which enabled management of the Client machines in out of band state not only on an intranet butalso via the internet.

Apart from this HCL also developed an application for Telecom Networks for Monitoring & managing IP and NonIP telecom devices by providing five major Operations (fault, performance, configuration, security & accountability).HCL delivered efficient & competitive product on network management system for managing & Monitoring IP &MPLS based network.

HCL has undertaken the design and development of Hand Held terminal for Banking, Public Distribution System,NREGA etc. The Handheld terminals will have Biometric authentication, Smart Card interface (both contact andcontactless), Thermal or Impact printer support, Voice guided transaction processing, Local language supportapart from host of other application features.

HCL has developed HCL Kiosk Content Management Application Tool. It enables users to develop informationcontents by themselves. It also has provision to use a hardware lock in the kiosk to avoid piracy of software.

HCL developed multifunction kiosk for Total Banking, which authenticates with the ATM switch for its transactions.It includes utility payment, Cheque deposit, statement printing, Passbook printing, information about accountdetails, Cheque book request, stop payment etc. HCL has also developed a cost effective Cheque depositorysolution which provides an easy way to deposit cheques /DD with an acknowledgement receipt. This solution isexclusively developed based on the RBI guidelines of self service cheque depository solutions.



2. Benefits derived as a result of R & D:

On the Thin client product range, HCL released quite a few models customized for specific customer requirementsand retained No 1 position in this segment. HCL Infosystems has once again reinstated its leadership status intechnology & quality by winning the VARIndia “Best Thin Client Technology Provider Award for the consecutiveFourth year at the VARIndia Star Nite Awards – 2008”.

The acknowledgement comes in the wake of the growing need for Thin Client due to the various benefits viz.better TCO & ROI along with the cost advantage and the robust security it brings to the organizations vital data.

HCL research provides a competitive edge to our system integration practice in Telecom. As Globally there arevery few companies that offer Operation Support System (OSS), HCL scores above the rest in terms of deliverytime, customized features etc. As the OSS is web based application, the end-user has an added advantage towork at any location at any time.

HCL Multifunction KIOSK enables Banks to serve their customers 24x7 in a better and secure way for all theirbanking needs. This particular banking application is just like as a non-cash ATM, where people can use this kioskfor their banking related transactions and queries in an efficient & user friendly manner.

HCL Cheque depository solution helps the banking segments to serve their customers more efficiently. Thesolution comes with special features like acknowledgement receipt for cheque deposits in the kiosk. The solutionalso offers an option to provide an image of the cheque along with Cheque details in the acknowledgementreceipt. It’s a low cost solution to fulfill the requirement of Cheque depository system under RBI guidelines. It canalso be used for utility payments through cheques.

3. Expenditure on R & D: Rs./Crores)Capital 0.01Revenue 4.63

Total 4.64

C. Technology Absorption, Adaptation and Innovation

Working closely with its global partners on various initiatives HCL has closely tied up with its global partners torollout & deploy global technologies for the Indian customers. In line with this HCL is gearing up to deliver MicrosoftWindows 7 certified products for upcoming Windows 7 operating system. HCL also upgraded ISMS management softwarepowered by Microsoft System Center Essentials released from 2.0 to 3.1. This year HCL was among first in India topartner with Intel and launch ‘HCL Mileap’ MH04, netbook series based on the ‘Diamondville platform’ from Intel.

This year HCL took various initiatives to develop and adapt technology that enabled development and up-gradation ofdifferent products and solutions. This year your company launched high-end desktop with next generation LGA 1366socketed Intel Core i7 which uses Intel’s latest Nehalem micro architecture.

HCL also launched series of products in its desktop range. These include the Infiniti series SL 1280/ SL 1265/SL1245/ are energy efficient and specially designed to consume very less desk space.

In the server business HCL kept the momentum going on its product range to cater to Small & Medium Businesses.HCL upgraded the popular ‘HCL – Datacenter in a Box’ (DCIB) with shared LUN enabling clustering capability, DCIBnow also includes Dual SCM, enhancing the redundancy features. HCL also upgraded HCL IGL & HCL NM servers withPCI-express based SAS solution. HCL also revamped most of the HCL IGL/NM series servers with indigenous developedfirmware which improves acoustical noise of the servers, giving a much quieter server environment.

Under display product range, new 18.5" TFT monitor series was launched with TCO’03 certification, which became acost effective main stream product.

This year, HCL Operation Support System (OSS) developed its own CORBA architecture and 3GPP library which arebeing used in all domains for data processing and data communication. HCL OSS introduces new and latest technologyin multiple database usage i.e. Hibernate. This is new form of Database access for better performance as well as DBindependent system. Since the technology is introduced by HCL OSS, other HCL products can also be adapted to thissystem.

This year, HCL OSS also introduce new system i.e. inter system/software redundancy. HCL OSS achieves the task usinglatest JAVA technology. This feature helps HCL OSS to run online 24 X 7 with any stoppage for any reason.

D. Foreign exchange earnings and outgo

During the period under review, the Company’s earnings in foreign currency were Rs. 95.45 Crores (Previous YearRs 97.79 Crores). The expenditure in foreign currency including imports during the year amounted to Rs. 2219.91Crores (Previous year Rs. 2139.67 Crores).



The details of the options granted under the HCL Infosystems Limited, Employee Stock Option Scheme 2000 (Scheme2000) and Employee Stock Based Compensation Plan 2005 (Scheme 2005) as on 30th June, 2009 are given below:-

Employee Stock Option Scheme 2000

Options Granted : 30,18,000 which confer a right to get 1 equity share of Rs.10/- each (each equity share of the facevalue of Rs. 10/- has been sub divided into five equity shares of Rs. 2/- each).

Pricing Formula : The members of the Company at the Extra Ordinary General Meeting held on February 25, 2000approved the exercise price as the price which will be not less than 85% of the fair market value ofthe shares on the date on which the Board of Directors of the Company approved the Grant of suchoptions to the employees or such price as the Board of Directors may determine in accordance withthe regulations and guidelines prescribed by the Securities and Exchange Board of India (SEBI). Themembers of the Company at the Annual General Meeting held on October 21, 2004, approved theamendment to the pricing formula that the options granted but not yet exercised by the employees oroptions that would be granted in future, would be at the market price on the date of grant. For thispurpose the market price as specified in the amended provisions of SEBI (Employee Stock OptionScheme and Employee Stock Purchase Scheme) Guidelines, 1999 and the regulations / guidelinesprescribed by SEBI or any relevant authority, from time to time to the extent applicable.

Variance of terms : The pricing formula has been amended that the options granted but not yet exercised by the employeesof option or options that would be granted in future, would be at the market price on the date of grant. For this purpose,

the market price means the market price as specified in the amended provisions of SEBI (EmployeeStock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 and the regulations/guidelines prescribed by SEBI or any relevant authority, from time to time to the extent applicable.

Options Details :

Date of Grant Options Options Options Lapsed/ Options inGrant Price (Rs.) Vested till Exercised till Forfeited during force as on

30/06/2009 30/06/2009 Y. E. 30/06/2009 30/06/200910/08/2000 289.00 Fully vested 1363708 5830 -

28/01/2004 538.15 Fully vested 836039 11176 214163

25/08/2004 603.95 Fully vested 57512 8139 50933

18/01/2005 809.85 Fully vested 39977 13227 172082

15/02/2005 809.30 Fully vested 2400 - 1600

15/03/2005 834.40 Fully vested 3794 4098 26072

15/04/2005 789.85 Fully vested 960 - 5784

14/05/2005 770.15 Fully vested 970 - 8270

15/06/2005 756.15 Fully vested 3565 1760 675

15/07/2005 978.75 Fully vested 1318 1536 10442

13/08/2005 1144.00 Fully vested - 7360 17630

15/09/2005 1271.25 Fully vested - 4480 9140

15/03/2007 648.75 90600 6700 3000 82100

23/01/2008 898.25 24093 - 15375 22316

The vesting schedule is as follows:-30%-12 months after the grant date30%- 24 months after the grant date40%- 42 months after the grant date

Employee Stock Based Compensation Plan 2005

Options Granted : 31,96,840 which confer a right to get 5 equity shares of Rs.2/- each.

Pricing Formula : As per the resolution passed by members of the Company, through postal ballot, the result whereofwas declared on June 13, 2005, the options are granted at the market price on the date of grant orsuch price as the Board of Directors may determine in accordance with the Regulations and Guidelinesprescribed by SEBI or other relevant authority from time to time. For this purpose, the market priceas specified in the amended provisions of SEBI (Employee Stock Option Scheme and EmployeeStock Purchase Scheme) Guidelines, 1999 and the regulations / guidelines prescribed by SEBI orany relevant authority from time to time to the extent applicable.

Variance of terms : No variation made.of options

INFORMATION REGARDING EMPLOYEE STOCK OPTION SCHEME


Options Details :

Date of Grant Options Options Options Lapsed/ Options inGrant Price (Rs.) Vested till Exercised till Forfeited during force as on

30/06/2009 30/06/2009 Y. E. 30/06/2009 30/06/200913/08/2005 1144.00 1494204 9074 225004 1197061

19/10/2005 1157.50 38734 - 14170 28368

15/11/2005 1267.75 14224 - 4250 10170

15/12/2005 1348.25 14840 - 6450 8790

14/01/2006 1300.00 18694 - 6740 10866

15/02/2006 1308.00 4190 - 824 3030

16/03/2006 1031.00 21316 - 14640 14740

17/04/2006 868.75 10400 - 3920 4140

15/05/2006 842.50 15770 - 3630 9420

15/06/2006 620.50 14744 430 6530 10710

17/07/2006 673.75 15802 80 5680 8812

15/03/2007 648.75 165860 6420 14860 155220

23/01/2008 898.25 43410 - 45060 42630

The vesting schedule is as follows:-20%-12 months after the grant date20%- 24 months after the grant date20%- 36 months after the grant date20%- 48 months after the grant date20%- 60 months after the grant date

Other Details

Scheme 2000 Scheme 2005

Total number of shares arising as a result 115,84,715 equity shares 80,021 equity sharesof exercise of options : of Rs.2/- each. of Rs.2/- each.

Money realized by exercise of options : Rs.92,60,81,373.05 Rs.1,48,66,574.80

Employee-wise details of options granted to –

i) Senior Management :

Name No. of Name No. ofoptions options

Mr. T.S. Purushothaman Mr. J.V. Ramamurthy 7,500(ceased to be Whole- time Mr. Sandeep Kanwar 7,500Director w.e.f. 20th July 2005) 40,000 Mr. Rajendra Kumar 7,500Mr. J.V. Ramamurthy 45,500 Mr. Hari Baskaran 7,500Mr. Sandeep Kanwar 42,000 Mr. George Paul 7,500Mr. Rajendra Kumar 41,000 Mr. Rajeev Asija 7,500Mr. Hari Baskaran 31,000 Mr. Suman Ghose Hazra 7,500Mr. George Paul 30,000 Mr. Sushil Kumar Jain 2,500Mr. Rajeev Asija 30,000Mr. Suman Ghose Hazra 18,500

ii) Employees holding 5% or more of NIL NILthe total number of optionsgranted during the year :

iii) Identified employees who were granted NIL NILoptions during any one year equal to orexceeding 1% of the issued capital(excluding outstanding warrants andconversions) of the Company at thetime of grant :



Weighted average exercise price of options 443.48 1067.66granted (Rs.) :

Weighted average fair value of options 124.64 144.43granted (Rs.) :

The fair value of each stock option granted under Employee Stock Option Plan 2000 and Employee Stock Based CompensationPlan 2005, as on the date of grant has been computed using Black-Scholes Option Pricing Formula and the model inputsare given as under:

Employee Stock Option Employee Stock BasedScheme 2000 Compensation Plan 2005

Volatility : 45% to 68% 47% to 62%Risk free rate : 4.57% to 7.99% 6.49% to 7.98%Exercise Price : Rs. 538.15 to Rs. 1271.25 Rs. 620.50 to Rs. 1348.25Time to Maturity (years) : 2.20 to 5.50 2.50 to 7.00Dividend Yield : 9% to 28% 10% to 28%Life of options : 8.5 Years 10 YearsFair Value of options as at the grant date : Rs. 35.10 to Rs. 203.14 Rs. 24.75 to Rs. 292.97

Notes:

1. Volatility: Based on historical volatility in the share price movement of the Company.2. Risk Free Rate: Being the interest rate applicable for maturity equal to the expected life of options based on yield

curve for Government Securities.3. Time to Maturity: Vesting period and volatility of the underlying equity shares have been considered for estimation.4. Dividend Yield: Based on historical dividend payouts.

Where the Company has calculatedthe employee compensation cost usingthe intrinsic value of Stock Options,the difference between the employeecompensation cost that shall havebeen recognised if it had used the fairvalue of Option

The Company has used intrinsic value method for calculating the employeecompensation cost with respect to the Stock Option

The impact on the profit of the Company for the year ended June 30, 2009 andthe basic and diluted earnings per share had the Company followed the fair valuemethod of accounting for stock options is set out below:

2009 2008Rs./Crores Rs./Crores

Profit/(Loss) after tax as per Profit and Loss Account (a) 260.44 304.75Add: Employee Stock Compensation Expense as per - -

Intrinsic Value Method

Less: Employee Stock Compensation Expense as 4.62 8.07per Fair Value Method (Net of amountattributable to employees of subsidiariesRs.0.16 Crores)

Profit/(Loss) after tax recomputed for recognition of 255.82 296.68employee stock compensation expense under fairvalue method (b)

Earning Per Share based on earnings as per (a) above:(Refer note 20)

- Basic 15.21 17.88- Diluted 15.21 17.64

Earning Per Share had fair value method been employedfor accounting of employee stock options:

- Basic 14.94 17.41- Diluted 14.94 17.18

The impact of this difference on profitand on EPS of the Company



Auditors’ CertificateWe have examined the books and records of the HCL Infosystems Limited Employee Stock Option Scheme 2000 andEmployee Stock based Compensation Plan 2005 (“The Scheme”) as produced before us and based on such books andrecords and according to the information and explanations given to us, we hereby certify that HCL Infosystems Limited(“The Company”) has implemented The Scheme in accordance with the SEBI (Employee Stock Option Scheme and EmployeeStock Purchase Scheme) Guidelines,1999 and in conformity with the resolutions passed by the shareholders in the Extra-Ordinary General Meeting of The Company held on February 25, 2000 and through postal ballot, the results whereofdeclared on June 13, 2005.

V. NijhawanPartnerMembership No: F -87228For and on behalf of

Place: New Delhi Price WaterhouseDate: September 8, 2009 Chartered Accountants



1. COMPANY’S PHILOSOPHY ON CORPORATE GOVERNANCE :

The Company firmly believes that good corporate governance practices ensure efficient conduct of the affairs of theCompany while upholding the core values of transparency, integrity, honesty and accountability and help the Companyin its goal to maximize value for all its stakeholders.

The Company adopts and adheres to the best recognized corporate governance practices and continuously strives tobetter them.

The Company is in compliance with the requirement of the guidelines on corporate governance stipulated in Clause 49of the Listing Agreement with the Stock Exchanges.

2. BOARD OF DIRECTORS :

(i) The Board of Directors of the Company comprises of Ten Directors with an Executive Chairman. Of the TenDirectors, Eight are Non-executive Directors and Five are Independent Directors. The composition of the Board isin conformity with Clause 49 of the Listing Agreement entered into with the Stock Exchanges.

(ii) None of the Directors on the Board is a member of more than 10 Committees or Chairman of more than 5Committees as specified in Clause 49 across all the Companies in which he is a Director. Necessary disclosuresregarding Committee position in other public companies as at June 30, 2009 have been made by the Directors.

(iii) The names and categories of the Directors on the Board, their attendance at Board Meetings held during the year andthe number of Directorships and Committee Chairmanship / Memberships held by them in other companies is givenbelow. Other Directorships do not include alternate directorships, directorships of private limited companies, companiesincorporated outside India and companies incorporated under section 25 of the Companies Act, 1956. Chairmanship/Membership of Board Committees include only Audit and Shareholders / Investors Grievance Committees.

Names Category No of Whether No. of Directorships No. of CommitteeBoard attended In other public positions held In

Meetings last AGM companies other publicduring held on companies

2008-09 October 24,Held Attended 2008 Chairman Member Chairman Member

Mr. Ajai Chowdhry Promoter & 6 6 Yes 4 1 - 2(Chairman & CEO) Executive

Director

Mr. J. V. Ramamurthy Executive 6 6 Yes - 4 - -(Whole Time Director Director& COO)

Mr. R. P. Khosla Independent & 6 6 No - 1 1 -Non-ExecutiveDirector

Mr. S. Bhattacharya Independent & 6 6 Yes - 6 4 2Non-ExecutiveDirector

Mr. D. S. Puri Promoter & 6 3 No - - - -Non-ExecutiveDirector

Mr. E. A. Kshirsagar Non-Independent 6 5 Yes - 5 3 3& Non-ExecutiveDirector

Ms. Anita Independent & 6 5 No - 4 1 1Ramachandran Non-Executive

Director

Mr. T.S. Independent & 6 4 Yes - - - -Purushothaman Non-Executive

Director

Mr. V.N. Koura Independent & 6 4 No - 3 - 1Non-ExecutiveDirector

Mr. Narasimhan Independent & 6 0 No - - - -Jegadeesh * Non-Executive

Director

Mr. Nikhil Sinha ** Non- 6 N.A. N.A. - - - -Independent &Non-ExecutiveDirector

REPORT ON CORPORATE GOVERNANCE



* Mr. Narasimhan Jegadeesh resigned from the post of Directorship w.e.f 7th January, 2009.** Mr. Nikhil Sinha was appointed as Additional Director of the Company w.e.f. 29th July, 2009.

(iv) Six Board Meetings were held during the year and the gap between two meetings did not exceed four months. Thedates on which the Board Meetings were held are as follows:

2nd September 2008, 23rd October 2008, 27th November 2008, 27th January 2009, 23rd April 2009 and 10th

June 2009.

(v) None of the Non-executive Directors has any material pecuniary relationship or transactions with the Company.

(vi) Necessary information as mentioned in Annexure 1A to Clause 49 of the listing agreement has been placedbefore the Board for their consideration.

Some of the items discussed at the Board meetings are listed below:

• Annual operating plans, budgets and all updates.• Capital budgets and all updates.• Quarterly Results for the Company and its operating divisions or business segments.• Minutes of meetings of audit committee and other committee of Board.• Minutes of Meetings of Board of Directors of Subsidiary Companies.• Show Cause, Demand, Prosecution notices and penalty notices if any, which are materially important.• Foreign exchange exposures and steps taken by management to limit the risks of adverse exchange rate

movement, if material.• Review of operations of subsidiary companies.• Scheme of Amalgamation of the subsidiary with the Company.• Review of related party transactions including transactions under section 297 of the Companies Act, 1956.• Review of operations.• Review of statutory compliances.• Noting risk management procedures.• Non-compliance of any regulatory, statutory nature or listing requirements and shareholders service such as

non-payment of dividend, delay in share transfer etc.• Approval of payment of enhanced remuneration to Whole Time Directors.• Noting of contribution for charitable purposes.• Acquisition of properties.• Investment in subsidiary companies and periodic updates.• Approve of issuance of Non-convertible Debentures.• Approval of investment in Joint Venture Company.• Discussion on Economic Conditions & Business Outlook.• Discussion on review of Business Operations.

3. ACCOUNTS AND AUDIT COMMITTEE :

(i) The Accounts and Audit Committee of the Company was constituted in August, 1998 in line with the provisionsof Clause 49 of the Listing Agreements with the Stock Exchanges read with Section 292A of the Companies Act,1956.

(ii) The primary objective of the Committee is to monitor and effectively supervise the Company’s financial reportingprocess with a view to provide accurate, timely and proper disclosures and ensure the integrity and quality offinancial reporting and internal controls.

(iii) The composition, powers, roles and the terms of reference of the Committee are in terms of the requirement ofSection 292A of the Companies Act, 1956 and Clause 49 of the Listing Agreement. All the committee membershave reasonable knowledge of finance and accounting and two members possess financial and accounting expertise.

(iv) The Composition of the Accounts and Audit Committee and details of meetings attended by its members are givenbelow:

Name Category No of meetingsHeld Attended

Mr. R. P. Khosla (Chairman)* Independent, Non-executive 6 6

Mr. S. Bhattacharya (Member)* Independent, Non-executive 6 6

Ms. Anita Ramachandran (Member)** Independent, Non-executive 6 4

Mr. E. A. Kshirsagar (Member) Non-independent, Non-executive 6 6

Mr. Ajai Chowdhry (Ex- Officio) Non-independent, Executive 6 6

* Mr. R.P. Khosla ceased to be Chairman w.e.f 23rd October, 2009. He was again appointed as Chairman of the



Committee w.e.f. 27th January, 2009. Mr. S. Bhattacharya acted as Chairman from 23rd October, 2008 to 26th

January, 2009.** Ms. Anita Ramachandran was appointed as Member of the Committee w.e.f. 27th January, 2009.

(v) The Audit Committee met 6 times during the financial year 2008-09 on the following dates: 1st September 2008,23rd October 2008, 27th January 2009, 25th February 2009, 23rd April 2009 and 10th June 2009.

(vi) The previous Annual General Meeting of the Company was held on 24th October, 2008 and it was attended by theChairman of the Committee.

(vii) The Company Secretary of the Company acts as Secretary to the Committee.

4. EMPLOYEES COMPENSATION AND EMPLOYEES SATISFACTION COMMITTEE :

(i) The Employees Compensation & Employees Satisfaction Committee was constituted in August 1998 to recommend/review remuneration of Executive Directors and other employees based on their performance and defined assessmentcriteria and other matters relating to employees.

(ii) The composition of the Employees Compensation & Employees Satisfaction Committee and the details of meetingsattended by its members are given below:

Name Category No of meetings

Held AttendedMs. Anita Ramachandran (Chairperson) Independent, Non-executive 5 5

Mr. Ajai Chowdhry (Member) Non-independent, Executive 5 5

Mr. S. Bhattacharya (Member) Independent, Non-executive 5 5

Mr. R. P. Khosla (Member) Independent, Non-executive 5 5

(iii) The Committee met 5 times during the financial year 2008-09 on the following dates: 1st September 2008, 23rd

October 2008, 27th January 2009, 23rd April 2009 and 10th June, 2009.

(iv) Compensation policy for Non-executive Directors (NEDs):

Within the ceiling of 1% of the net profits of the Company computed under the applicable provisions of theCompanies Act, 1956 and after obtaining the approval of the shareholders, the Non-executive Directors (otherthan Promoter Director) are paid a commission, the amount whereof is determined by the Board. The basis ofdetermining the specific amount of commission payable to these directors is related to their attendance atmeetings and contribution at meetings as perceived by the Chairman. These Directors are also paid sitting fees atthe rate of Rs. 20,000 for attending each meeting of the Board.

(v) Details of remuneration paid / payable to all the Directors for the period from 1/7/2008 to 30/6/2009:

(Rs. / Lacs)

Name Salary & Perquisites Performance Commission Sitting FeesAllowances Linked Bonus

Mr. Ajai Chowdhry 120.66 24.22 190.00 - -Mr. J.V. Ramamurthy* 50.20 6.04 60.00 - -Mr. R.P. Khosla - - - 4.99 1.20Mr. Subroto Bhattacharya - - - 6.26 1.20Mr. D.S. Puri - - - - -Mr. E.A. Kshirsagar - - - 3.75 1.00Ms. Anita Ramachandran - - - 7.69 1.00Mr. T.S. Purushothaman* - - - 2.85 0.80Mr. Narasimhan Jegadeesh - - - - -Mr. V.N. Koura - - - 1.99 0.80

During the year Mr. Ajai Chowdhry and Mr. J.V. Ramamurthy were paid Performance Linked Bonus of Rs.180 lacsand Rs.50 lacs respectively pertaining to the year 2007-08.

The above remuneration excludes reimbursement of expenses on actual to Directors for attending meetings of theBoard / Committees.

* Mr. T.S. Purushothaman and Mr. J.V. Ramamurthy were granted 40000 and 45500 options respectivelyunder Employee Stock Option Plan 2000. Mr. J.V. Ramamurthy has also been granted 7500 options underEmployee Stock Based Compensation Plan 2005.


(vi) Period of contract of Executive Director

(a) Mr. Ajai Chowdhry, Chairman & C.E.O: - 5 Years from April 1, 2009.

- The contract may be terminated by either party giving the other party three months notice or theCompany paying three months salary in lieu thereof.

- There is no separate provision for payment of Severance Fees.

(b) Mr. J.V. Ramamurthy, Whole Time Director: - 5 Years from August 11, 2005

- The contract may be terminated by either party giving the other party three months notice or theCompany paying three months salary in lieu thereof.

- There is no separate provision for payment of Severance Fees.

(vii) There were no other pecuniary relationships or transactions of the Non-executive Directors of the Company.

(viii) Details of Shares of the Company held by the Non-executive Directors as on June 30, 2009 are as below:

S.I. No. Name of the Director No. of Shares1. Mr. T.S. Purushothaman 5455

2. Mr. D.S. Puri 44731

The Company has not issued any convertible instruments.

5. SHAREHOLDERS’/ INVESTORS’ GRIEVANCE COMMITTEE :

(i) The Board has constituted Shareholders’ / Investors’ Grievance Committee to oversee and review all mattersconnected with the transfer of Shares of the Company and redressal of Shareholders /Investors’ complaints.

(ii) The composition of the Shareholders’ / Investors’ Grievance Committee and the details of meeting attended by itsmembers are given below:

Name Category No of meetings

Held AttendedMr. R. P. Khosla (Chairman) Independent, Non-executive 4 4

Mr. E.A. Kshirsagar (Member) Non-independent, Non-executive 4 4

Mr. S. Bhattacharya (Member) Independent, Non-executive 4 4

Mr. Ajai Chowdhry (Ex- Officio) Non-independent, Executive 4 4

(iii) The Committee met 4 times during the financial year 2008-09 on the following dates: 1st September 2008, 23rd

October 2008, 27th January 2009 and 23rd April 2009.

(iv) Name, designation and address of:Compliance Officer : Mr. Sushil Kumar Jain

Company SecretaryHCL Infosystems LimitedE- 4,5,6, Sector 11, NoidaTel: 0120-4203107Fax: 0120-2525196

(v) During the year the Company received 14 complaints from SEBI/ stock exchanges / MCA. All complaints wereredressed to the satisfaction of the shareholder. No complaints were pending either at beginning or at the end ofthe year. There were no shares pending for transfer as on 30th June, 2009.

6. CODE OF BUSINESS CONDUCT AND ETHICS FOR DIRECTORS AND SENIOR MANAGEMENT :

The Company has adopted a comprehensive Code of Conduct for its Directors and Senior Management, which lays thestandard of business conduct, ethics and governance.

The Code has been circulated to all the members of the Board and Senior Management and they have affirmedcompliance of the same.

The declaration signed by the Chairman & CEO is given below:

“I hereby confirm that:

The Company has obtained from all the members of the Board and Senior Management affirmation that they havecomplied with the Code of Conduct for Directors and Senior Management in respect of the financial year 2008-09.”

Sd/-Ajai Chowdhry

Chairman & CEO



7. UNLISTED SUBSIDIARY COMPANIES :

The Company has four unlisted wholly owned subsidiaries as on 30th June 2009 namely HCL Infinet Limited, incorporatedon 15th September, 1975, Natural Technologies Private Limited (NTPL) incorporated on 28th July 1995, HCL SecurityLimited (HSL) incorporated on 19th March, 2008 and HCL Infocom Limited (HIL), incorporated on 17th December,2008.

Mr. S. Bhattacharya, the Independent Director and Mr. Ajai Chowdhry and Mr. J.V. Ramamurthy, the Whole-timeDirectors of the Company are also Directors of HCL Infinet Limited.

Mr. Ajai Chowdhry and Mr. J.V. Ramamurthy, the Whole-time Directors of the Company are also Directors of NTPL, HSLand HIL. The Minutes of the Board Meetings of the subsidiary companies are regularly placed before the Board.

8. GENERAL BODY MEETINGS :

(i) The last three Annual General Meetings were held as under:

Financial Year Date Time Location

2007-08 24/10/2008 10.00 A.M FICCI Auditorium, 1, TansenMarg, New Delhi-110001



(ii) During the year none of the resolutions have been passed through postal ballot.

(iii) Special Resolutions passed at last three AGMs:

(a) At the AGM held on 24rd October 2008, no special resolution was passed.

(b) At the AGM held on 23rd October 2007, no special resolution was passed.

(c) At the AGM held on 19th October 2006, special resolutions were passed for:

- Alteration in Articles of Association with regard to increase in Authorised Capital.

- To maintain register of members, the index of members and copies of annual returns at the office ofCompany’s Registrar and Share Transfer Agents, i.e. M/s Intime Spectrum Registry Limited (RTA) orany other RTA who may be appointed in their place.

9. DISCLOSURES :

(i) There are no materially significant related party transactions of the Company, which have potential conflict withthe interests of the company at large.

(ii) The Company has complied with the requirements of the Stock Exchanges / SEBI / any Statutory Authority on allmatters related to capital markets during the last three years. There are no penalties or strictures imposed on theCompany by Stock Exchanges or SEBI or any statutory authorities relating to the above.

(iii) A qualified Practicing Company Secretary carried out a secretarial audit to reconcile the total admitted capitalwith National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL) andthe total issued and listed capital. The secretarial audit report confirms that the issued / paid-up capital is inagreement with the total number of shares in physical form and the total number of dematerialized shares heldwith NSDL and CDSL.

(iv) The Company has fulfilled the following non-mandatory requirements as prescribed in Annexure 1D to Clause 49of the Listing Agreement with the Stock Exchanges:

(a) The Company has set up an Employees Compensation & Employees Satisfaction Committee. Please see para4 for further details.

(b) The statutory financial statements of the Company are unqualified.

10. MEANS OF COMMUNICATION :

(i) Quarterly/Half Yearly/Annual Results: The Quarterly, Half Yearly and Annual Results of the Company are sent tothe stock Exchanges immediately after they are approved by the Board.

(ii) News Releases: The Quarterly, Half Yearly and Annual Results of the Company are published in the prescribedproforma within 48 hours of the conclusion of the meeting of the Board in which they are considered, at least inone English newspaper circulating in the whole or substantially the whole of India and in one Vernacular newspaperof the State where the Registered Office of the Company is situated.




The quarterly financial results during the financial year 2008-09 were published as detailed below:

Quarter (FY 2008-09) Date of Board Meeting Date of Publication Name of the Newspaper1 23rd October, 2008 24th October, 2008 Business Standard & Veer Arjun

2 27th January, 2009 28th January, 2009 Business Standard & Veer Arjun

3 23rd April, 2009 24th April, 2009 Business Standard & Veer Arjun

(iii) Website: The Company’s website www.hclinfosystems.in contains a separate section ‘Investors’ where latestshareholders information is available. The Quarterly, Half Yearly and Annual Results are regularly posted on thewebsite. Press releases made by the Company from time to time and the presentation made to the institutionalinvestors and analysts are displayed on the Company’s website.

(iv) Corporate Filing and Dissemination System (CFDS) Filing: As per the requirements of Clause 52 of the ListingAgreement, all the data relating to quarterly financial results, shareholding pattern etc. have been electronicallyfiled on the Corporate Filing and Dissemination System (CFDS) portal, www.corpfiling.co.in within the time frameprescribed in this regard.

(v) Annual Report: Annual Report containing, inter alia, Audited Annual Accounts, Consolidated Financial Statements,Directors’ Report, Auditors’ Report and other important information is circulated to members and others entitledthereto. The Management Discussion and Analysis (MDA) Report forms part of the Annual Report. The AnnualReport is also available on the Company’s website.

(vi) Chairman’s Communique: The Highlights of the quarterly financial results along with a message from the Chairmanare sent to each shareholder. Printed copy of the Chairman’s Speech is distributed to all the shareholders at theAnnual General Meetings.

(vii) Reminders to Investors: Reminders for unpaid/unclaimed dividend are sent to the Shareholders as per records.

11. GENERAL SHAREHOLDERS’ INFORMATION :

(i) Annual General Meeting:

Date : Friday, October 23, 2009Time : 10.00 A.M.Venue : FICCI Auditorium, 1, Tansen Marg, New Delhi-110 001.

(ii) Financial Calendar (Tentative Calendar for the financial year 2009-10):

Adoption of Results for the quarter ending September 30, 2009 : October 22, 2009Adoption of Results for the quarter ending December 31, 2009 : January 28, 2010Adoption of Results for the quarter ending March 31, 2010 : April 29, 2010Adoption of Results for the quarter ending June 30, 2010 : September 01, 2010

(iii) Date of Book Closure : November 3 to November 4, 2009 (both days inclusive)

(iv) Dividend payment date : The Final Dividend if declared shall be paid on or beforeNovember 21, 2009.

(v) Listing on Stock Exchanges : National Stock Exchange of India LimitedBombay Stock Exchange Limited

(vi) Stock Codes/ Symbol:National Stock Exchange of India Limited : HCL-INSYS

The Bombay Stock Exchange Limited : Physical Form – 179: Electronic Form – 500179



(vii) Market price data:

Month Company’s Share Price

High Low(Rs.) (Rs.)

July, 2008 142.20 119.00

August, 2008 128.00 112.20

September, 2008 120.40 88.00

October, 2008 109.80 77.00

November, 2008 92.05 63.25

December, 2008 96.00 65.15

January, 2009 92.75 70.00

February, 2009 89.40 71.00

March, 2009 83.05 65.25

April, 2009 107.00 75.70

May, 2009 134.80 89.60

June, 2009 133.90 107.50

(source : The National Stock Exchange of India Ltd.)

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(viii) Registrar and Transfer Agents (RTA):Name & Address : M/s. Alankit Assignments Limited

Alankit House,2E/21, Jhanewalan Extension,New Delhi – 110 055

Contact Person : Mr. Mahesh Jairath, Senior Vice PresidentPhone No. : 91-11-23541234;Fax No. : 91-11-42541967E-Mail : [email protected]

(ix) Share Transfer System:

Transfer of dematerialized shares is done through the depositories with no involvement of the Company. Asregards transfer of shares held in physical form, the transfer documents can be lodged with Alankit AssignmentsLimited, the RTA of the Company, at their address mentioned above. Transfer of shares in physical form arenormally processed within 10-15 days from the date of receipt, if the documents are complete in all respects.

(x) Shareholders’ Referencer:

The shareholders’ referencer is available on the Company’s website. Any shareholder who wishes to obtain copy ofthe same can send his request to the Company Secretary.

(xi) Distribution of Shareholding as on June 30, 2009:

Shareholders Total SharesNo. of Equity Shares Number % Number %Upto 500 29055 84.80 3770435 2.20

501-1000 2672 7.80 2121983 1.24

1001-2000 1384 4.04 2026750 1.18

2001-3000 489 1.43 1226933 0.72

3001-4000 158 0.46 563468 0.33

4001-5000 114 0.33 530326 0.31

5001-10000 202 0.59 1454660 0.85

10000 and above 189 0.55 159517476 93.17

Total 34263 100.00 171212031 100.00



(xii) Shareholding pattern as on June 30, 2009:

Category No. of Percentageshares (%)

Promoters / Promoters Group 93,357,957 54.53

Mutual Funds / UTI 6,701,303 3.91

Financial Institutions / Banks 3,557,996 2.08

Foreign Institutional Investors 53,403,410 31.19

Bodies Corporate 953,847 0.56

Indian Public 12,780,487 7.46

NRI / OCBs 457,031 0.27

TOTAL 171,212,031 100.00

(xiii) Dematerialisation of shares:

The shares of the Company are compulsorily traded in dematerialised form and are available for trading on boththe depositories in India i.e. NSDL & CDSL. As on June 30, 2009, 97.92% equity shares of the Company areheld in dematerialised form.

The Company’s shares are regularly traded on the NSE and the BSE in electronic form.

Under the Depository system, the International Securities Identification Number (ISIN) allotted to the Company’sshares is INE 236A01020.

(xiv) The Company has not issued any GDRs/ADRs/Warrants or Convertible instruments.

(xv) Plant locations:

- R.S. Nos: 34/4 to 34/7 and part of 34/1, Sedarapet, Puducherry - 605 111.- R.S. Nos: 107/5, 6 & 7, Main Road, Sederapet Puducherry - 605 111.- Plot No. 78, South Phase, Ambattur Industrial Estate, Chennai - 600 058.- Plot No. SPL. A2, Thattanchavadi, Industrial Area, Puducherry - 605 009.- Plot Nos. 1, 2, 27 & 28, Sector 5, SIDCUL, Rudrapur, Distt. – Udham Singh Nagar, Uttarakhand - 263 145.- F - 214, G - 215, EPIP, Sitapura Industrial Area, Jaipur, Rajasthan – 302021.

(xvi) Address for Correspondence:

The shareholders may address their communication/ suggestions/ grievances/ queries to the Registrar and ShareTransfer Agents at the address mentioned above, or to:

The Company SecretaryHCL Infosystems LimitedE – 4, 5, 6, Sector – XI,NOIDA (U.P.) – 201 301.Tel. No.: 0120-4203107,Fax: 0120-2525196Email: [email protected]

(xvii)Shareholders Database:

In order to enable the Company to include the contact details of the shareholders in the shareholders databasemaintained by the Company, the Members are requested to provide their phone number and e-mail address alongwith their Folio No./DP ID and Client ID No. This will facilitate quick communication by the Company/RTA to itsshareholders. The details may be addressed to the Company at its Corporate Office at E-4,5,6, Sector XI, Noida(U.P) or by mailing it to [email protected].

This can also be sent by SMS. For sending SMS, please type SHDB,Client ID-DP ID, eMail ID and send it to+919911115555 eg. SHDB,IN300513-15289788,[email protected] in case the shares are held in electronicform. For shares held in physical form, please type SHDB, Folio No., eMail ID and send it to +919911115555 eg.SHDB,R000551,[email protected].

(xviii) Company Website:

The Company has its website namely www.hclinfosystems.in. This provides detailed information about the Company,its products and services offered, locations of its corporate office and various sales offices etc. It also containsupdated information of the financial performance of the Company and procedures involved in completing variousinvestors’ related transactions expeditiously. The quarterly results, annual reports and shareholding distributionsetc. are updated on the website of the company from time to time.


To the Members of HCL Infosystems Limited

We have examined the compliance of conditions of Corporate Governance by HCL Infosystems Limited, for the year endedJune 30, 2009, as stipulated in Clause 49 of the Listing Agreements of the said Company with stock exchanges in India.

The compliance of conditions of Corporate Governance is the responsibility of the Company’s management. Our examinationwas carried out in accordance with the Guidance Note on Certification of Corporate Governance (as stipulated in Clause 49of the Listing Agreement), issued by the Institute of Chartered Accountants of India and was limited to procedures andimplementation thereof, adopted by the Company for ensuring the compliance of the conditions of Corporate Governance.It is neither an audit nor an expression of opinion on the financial statements of the Company.

In our opinion and to the best of our information and according to the explanations given to us, we certify that the Companyhas complied with the conditions of Corporate Governance as stipulated in the above mentioned Listing Agreements.

We state that such compliance is neither an assurance as to the future viability of the Company nor the efficiency oreffectiveness with which the management has conducted the affairs of the Company.

V. NijhawanPartner

Membership No: F -87228 For and on behalf of


Auditors’ Certificate regarding compliance of conditions of Corporate Governance



ToThe Members of HCL Infosystems Limited

1. Wehave audited the attached Balance Sheet of HCL Infosystems Limited, as at June 30, 2009, and the related Profitand Loss Account and Cash Flow Statement for the year ended on that date annexed thereto, which we have signedunder reference to this report. These financial statements are the responsibility of the company’s management. Ourresponsibility is to express an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with the auditing standards generally accepted in India. Those Standardsrequire that we plan and perform the audit to obtain reasonable assurance about whether the financial statements arefree of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts anddisclosures in the financial statements. An audit also includes assessing the accounting principles used and significantestimates made by management, as well as evaluating the overall financial statement presentation. We believe that ouraudit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditor’s Report) Order, 2003, as amended by the Companies (Auditor’s Report)(Amendment) Order, 2004, issued by the Central Government of India in terms of sub-section (4A) of Section 227 of‘The Companies Act, 1956’ of India (the ‘Act’) and on the basis of such checks of the books and records of thecompany as we considered appropriate and according to the information and explanations given to us, we give in theAnnexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

4. Further to our comments in the Annexure referred to in paragraph 3 above, we report that:

(a) We have obtained all the information and explanations, which to the best of our knowledge and belief werenecessary for the purposes of our audit;

(b) In our opinion, proper books of account as required by law have been kept by the company so far as appears fromour examination of those books;

(c) The Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report are in agreementwith the books of account;

(d) In our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this reportcomply with the accounting standards referred to in sub-section (3C) of Section 211 of the Act;

(e) On the basis of written representations received from the directors, as on June 30, 2009 and taken on record bythe Board of Directors, none of the directors is disqualified as on June 30, 2009 from being appointed as adirector in terms of clause (g) of sub-section (1) of Section 274 of the Act;

(f) In our opinion and to the best of our information and according to the explanations given to us, the said financialstatements together with the notes thereon and attached thereto give in the prescribed manner the informationrequired by the Act and give a true and fair view in conformity with the accounting principles generally acceptedin India:

(i) in the case of the Balance Sheet, of the state of affairs of the company as at June 30, 2009;

(ii) in the case of the Profit and Loss Account, of the profit for the year ended on that date; and

(iii) in the case of the Cash Flow Statement, of the cash flows for the year ended on that date.

V.NijhawanPartnerMembership Number F - 87228For and on behalf of


AUDITORS’ REPORT


[Referred to in paragraph 3 of the Auditors’ Report of even date to the members of HCL Infosystems Limited on the financialstatements for the year ended June 30, 2009]

1. (a) The company is maintaining proper records showing full particulars including quantitative details and situation offixed assets.

(b) The fixed assets are physically verified by the management according to a phased programme designed to cover allthe items over a period of three years, which in our opinion, is reasonable having regard to the size of the companyand the nature of its assets. Pursuant to the programme, a portion of the fixed assets has been physically verifiedby the management during the year and no material discrepancies between the book records and the physicalinventory have been noticed.

(c) In our opinion and according to the information and explanations given to us, a substantial part of fixed assets hasnot been disposed of by the company during the year.

2. (a) The inventory (excluding stocks with third parties) has been physically verified by the management during theyear. In respect of inventory lying with third parties, these have substantially been confirmed by them. In ouropinion, the frequency of verification is reasonable.

(b) In our opinion, the procedures of physical verification of inventory followed by the management are reasonable andadequate in relation to the size of the company and the nature of its business.

(c) On the basis of our examination of the inventory records, in our opinion, the company is maintaining properrecords of inventory. The discrepancies noticed on physical verification of inventory as compared to book recordswere not material.

3. The company has not taken or granted any loans, secured or unsecured, from / to companies, firms or other partiescovered in the register maintained under Section 301 of the Act.

4. In our opinion and according to the information and explanations given to us, having regard to the explanation thatcertain items purchased are of special nature for which suitable alternative sources do not exist for obtaining comparativequotations, there is an adequate internal control system commensurate with the size of the company and the nature ofits business for the purchase of inventory, fixed assets and for the sale of goods and services. Further, on the basis ofour examination of the books and records of the company, and according to the information and explanations given tous, we have neither come across nor have been informed of any continuing failure to correct major weaknesses in theaforesaid internal control system.

5. (a) In our opinion and according to the information and explanations given to us, the particulars of contracts orarrangements referred to in Section 301 of the Act have been entered in the register required to be maintainedunder that section.

(b) In our opinion and according to the information and explanations given to us, the transactions made in pursuanceof such contracts or arrangements and exceeding the value of Rupees Five Lakhs in respect of any party duringthe year have been made at prices which are reasonable having regard to the prevailing market prices at therelevant time.

6. In our opinion and according to the information and explanations given to us, the company has complied with theprovisions of Sections 58A and 58AA or any other relevant provisions of the Act and the Companies (Acceptance ofDeposits) Rules, 1975 with regard to the deposits accepted from the public. According to the information and explanationsgiven to us, no Order has been passed by the Company Law Board or National Company Law Tribunal or Reserve Bankof India or any Court or any other Tribunal on the company in respect of the aforesaid deposits.

7. In our opinion, the company has an internal audit system commensurate with its size and nature of its business.

8. We have broadly reviewed the books of account maintained by the company in respect of products where, pursuant tothe Rules made by the Central Government of India, the maintenance of cost records has been prescribed under clause(d) of sub-section (1) of Section 209 of the Act and are of the opinion that prima facie, the prescribed accounts andrecords have been made and maintained. We have not, however, made a detailed examination of the records with aview to determine whether they are accurate or complete.

9. (a) According to the information and explanations given to us and the records of the company examined by us, in ouropinion, the company is generally regular in depositing the undisputed statutory dues including provident fund,investor education and protection fund, employees’ state insurance, income-tax, sales-tax, wealth tax, servicetax, customs duty, excise duty, cess and other material statutory dues as applicable with the appropriate authorities.

(b) According to the information and explanations given to us and the records of the company examined by us, thereare no dues of wealth tax, service tax and custom duty and cess as at June 30, 2009 which have not beendeposited on account of dispute except for sales tax, income tax and excise duty as mentioned below :

ANNEXURE TO AUDITORS’ REPORT


Name of the statute Amount Amount Period to Forum where the (Nature of Dues) (Rs./ Crores) deposited which the dispute is pending

under protest amount relates(Rs./ Crores)

U.P. Trade Tax Act, 1948 13.07 3.50 1998 to 2008 Joint Commissioner (Appeals)(Sales Tax including Penalty) of Commercial Tax/

Commercial Tax Tribunal/High Court/AdditionalCommissioner (Appeals) ofCommercial Tax

U.P. Value Added Tax Act, 2008 0.14 0.13 2008 to 2009 Joint Commissioner (Appeals)(Commercial Tax including Penalty) of Commercial Tax

Delhi Sales Tax Act, 1975 1.02 0.03 1999 to 2005 Additional Commissioner of SalesTax/Deputy Commissioner (Appeals) ofSales Tax

Delhi Value Added Tax Act, 0.17 - 2005-2006 Deputy Commissioner (Appeals)2004 (Trade Tax) of Sales Tax

Tamil Nadu General Sales Tax 0.68 0.14 1998 to 2005 Tribunal Commercial Tax/Act, 1959 (Sales Tax) Commercial Tax Officer/

Assistant Appellate Commissioner/Commercial Tax Officer

West Bengal Sales 0.02 - 2000 to 2006 Joint Commissionner (Appeals)Tax Act, 1994 (Sales Tax) of Sales Tax

Assam General Sales Tax, 1993 0.05 0.01 2001 to 2004 Superintendent, Sales Tax(Sales Tax)

Rajasthan Sales Tax Act, 1994 0.06 0.01 1998 to 2004 Deputy Commissioner (Appeals)(Sales Tax) of Commercial Tax

Rajasthan Value Added Tax 0.17 - 2006 to 2008 Deputy Commissioner ofAct, 2003 (Commercial Tax) Commercial Tax

Kerala General Sales Tax Act, 0.39 0.15 2000 to 2002 Deputy Commissioner (Appeals)1963 (Sales Tax) of Sales Tax

Maharashtra Sales Tax Act, 0.01 0.01 2003-2004 Deputy Commissioner (Appeals)1969 (Sales Tax) of Sales Tax

Himachal Pradesh Value Added 0.08 0.08 2006-2007 Additional Commissioner of SalesTax Act, 2005 Tax(Sales Tax including Penalty)

Karnataka Value Added 0.47 - 2006-2007 Assessing OfficerTax Act, 2003 (Sales Tax)

Andhra Pradesh Value Added 0.91 - 2006 to 2008 Commissioner AppealsTax Act, 2005 (Sales Tax)

Punjab General Sales Tax 0.06 - 2004-2005 Deputy Commissioner AppealsAct, 1948(Sales Tax including Penalty)

Punjab Value Added 0.44 0.11 2007-2008 Deputy Commissioner AppealsTax Act, 2005(Sales Tax including Penalty)

Jammu and Kashmir Value 2.75 0.08 2007 to 2009 Deputy Commissioner AppealsAdded tax Act, 2005(Sales Tax including Penalty)

Uttarakhand Value Added Tax 0.70 1.00 2007 to 2009 Joint Commissioner ofAct, 2005 Commercial Tax(Sales Tax including Penalty)

Sub Total (a) 21.19 5.25



10. The company has no accumulated losses as at June 30, 2009 and it has not incurred any cash losses in the financialyear ended on that date or in the immediately preceding financial year.

11. According to the records of the company examined by us and the information and explanation given to us, the companyhas not defaulted in repayment of dues to any financial institution or bank or debenture holders as at the balance sheetdate.

12. The company has not granted any loans and advances on the basis of security by way of pledge of shares, debenturesand other securities.

13. The provisions of any special statute applicable to chit fund / nidhi / mutual benefit fund/societies are not applicableto the company.

14. In our opinion, the company is not a dealer or trader in shares, securities, debentures and other investments.

15. In our opinion and according to the information and explanations given to us, the terms and conditions of the guaranteesgiven by the company, for loans taken by others from banks or financial institutions during the year, are not prejudicialto the interest of the company.

16. In our opinion, and according to the information and explanations given to us, on an overall basis, the term loans havebeen applied for the purposes for which they were obtained.

17. On the basis of an overall examination of the balance sheet of the company, in our opinion and according to theinformation and explanations given to us, there are no funds raised on a short-term basis which have been used forlong-term investment.

18. The company has not made any preferential allotment of shares to parties and companies covered in the registermaintained under Section 301 of the Act during the year.

19. The company has created security or charge in respect of debentures issued and outstanding at the year-end.

20. The company has not raised any money by public issues during the year.

21. During the course of our examination of the books and records of the company, carried out in accordance with thegenerally accepted auditing practices in India, and according to the information and explanations given to us, we haveneither come across any instance of fraud on or by the company, noticed or reported during the year, nor have we beeninformed of such case by the management.

V.NijhawanPartnerMembership Number F - 87228For and on behalf of


Central Excise Act, 1944 10.86 0.85 1980 to 2008 CESTAT/(Excise Duty, Interest including Commissioner (Appeals)Penalty)

Sub Total (b) 10.86 0.85

Income Tax Act, 1961 2.94 0.16 1989 to 2007 Commissioner Appeals/ High Court(Income Tax)

Sub Total (c) 2.94 0.16

Total (a)+(b)+(c) 34.99 6.26

For detailed listing refer Note 26 on Schedule 21.

Name of the statute Amount Amount Period to Forum where the (Nature of Dues) (Rs./ Crores) deposited which the dispute is pending

under protest amount relates(Rs./ Crores)



As at As atSchedule 30.06.2009 30.06.2008(Note No.) Rs./Crores Rs./Crores

Sources of Funds:Shareholders’ Funds :Capital 1 34.24 34.23Reserves and Surplus 2 1098.12 972.03

Loan Funds:Secured Loans 3 101.85 -Unsecured Loans 4 125.00 352.66Deferred Tax Liabilities (Net) 21(5) - 6.85

1359.21 1365.77

Application of Funds:

Fixed Assets: 5Gross Block 234.10 216.68Less: Depreciation 83.47 78.11Net Block 150.63 138.57Capital Work-In-Progress 9.50 13.89(Including Capital Advances) 160.13 152.46

Investments 6 276.10 215.02

Deferred Tax Assets (Net) 21(5) 4.08 -Current Assets, Loans and Advances:Inventories 7 888.26 898.37Sundry Debtors 8 1498.26 1241.46Cash and Bank Balances 9 202.99 317.36Other Current Assets 10 102.35 92.26Loans and Advances 11 191.90 139.94

2883.76 2689.39

Less: Current Liabilities and Provisions 12

Current Liabilities 1882.97 1620.25Provisions 81.89 70.85

1964.86 1691.10

Net Current Assets 918.90 998.29

1359.21 1365.77

Significant Accounting Policies 20Notes to Accounts 21

This is the Balance Sheet referred to The schedules referred to above form an integral part of thein our report of even date Balance Sheet

For and on behalf of the Board of Directors

V.NIJHAWAN AJAI CHOWDHRY J.V. RAMAMURTHY SANDEEP KANWARPartner Chairman and Chief Operating Officer Chief Financial OfficerMembership Number F-87228 Chief Executive OfficerFor and on behalf ofPrice WaterhouseChartered Accountants SUSHIL KUMAR JAIN

Company SecretaryPlace : New DelhiDated : September 08, 2009

BALANCE SHEET AS AT JUNE 30, 2009


This is the Profit and Loss Account The schedules referred to above form an integral part of thereferred to in our report of even date Profit and Loss Account


V. NIJHAWAN AJAI CHOWDHRY J.V. RAMAMURTHY SANDEEP KANWARPartner Chairman and Chief Operating Officer Chief Financial OfficerMembership Number F-87228 Chief Executive OfficerFor and on behalf ofPrice WaterhouseChartered Accountants SUSHIL KUMAR JAIN


Year ended Year endedSchedule 30.06.2009 30.06.2008(Note No.) Rs./Crores Rs./Crores

IncomeBusiness Income 13 12336.81 12366.77Less : Excise Duty 126.08 12210.73 158.00 12208.77Other Income 14 33.60 47.75

12244.33 12256.52ExpenditureCost of Goods and Services Sold 15 11128.50 11166.95Personnel 16 325.98 292.96Administration, Selling, Distribution and Others 17 344.73 286.72Repairs 18 9.33 11.50Finance Charges 19 44.66 47.57Depreciation and Amortisation 5 17.31 16.40Less : Transfer from Revaluation Reserve 0.04 17.27 0.05 16.35

11870.47 11822.05

Profit before Tax 373.86 434.47

Tax expense 21 (5)- Current [ Wealth tax Rs.0.02 Crores(2008 - Rs.0.02 Crores)] 122.77 131.50

- Fringe Benefit 1.45 3.85- Deferred (10.80) 113.42 (5.63) 129.72

Profit after Tax 260.44 304.75Add: Balance in Profit and Loss Account brought forward 702.81 589.03Adjustments due to scheme of arrangement- as on April 1, 2007 and for the period April 1, 2007 toJune 30, 2007 (Loss- Rs. 0.01 Crores) 21 [23(b)] - (0.40)- as on July 1, 2008 0.55 -Adjustments as per scheme of arrangement 21 [23(a)] (2.23) -Profit available for appropriation 961.57 893.38Less: Appropriations:Debenture Redemption Reserve 3 4.00 -Proposed Dividend 25.68 34.23Corporate Dividend Tax on Proposed Dividend 4.36 5.82Interim Dividend [including Rs. 0.00 Crores(2008-Rs.0.20 Crores) paid for previous year ] 85.59 102.61Corporate Dividend Tax on Interim Dividend 14.55 17.44Transfer to General Reserve 26.05 30.47Balance Carried over 801.34 702.81

961.57 893.38Earning per equity share (in Rs.)Basic (of Rs.2/- each) 21 (20) 15.21 17.88Diluted (of Rs.2/- each) 21 (20) 15.21 17.64Significant Accounting Policies 20Notes to Accounts 21

PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED JUNE 30, 2009


CASH FLOW STATEMENT FOR THE YEAR ENDED JUNE 30, 2009

Year ended Year ended2009 2008

Rs./Crores Rs./Crores

1. Cash flow from operating activities

Net profit before tax 373.86 434.47

Adjustments for:Depreciation 17.27 16.35

Interest Expense 44.66 47.57

Interest Income (7.15) (7.81)

Dividend Income (4.38) (14.02)

Loss on Sale of Fixed Assets 0.30 0.00

Fixed Assets Written Off 0.12 -

(Profit)/Loss on sale of Investments (0.93) (1.75)

Provision for Doubtful Debts and Bad Debts written off 27.10 1.23

Provision Doubtful Loans and Advances 5.49 -

Provision for Other Current Assets 0.38 -

Provisions/Liability no longer required written back (15.59) (15.17)

Provision for Gratuity and other Employee Benefits 5.14 4.41

Provision for diminution in the value of Investments 0.04 0.21

Unrealised foreign exchange (gain) /loss 7.75 8.54

Provision for warranty liability 12.90 93.10 13.28 52.84

Operating profit before working capital changes 466.96 487.31

Adjustments for changes in working capital :

- (Increase)/Decrease in Sundry Debtors (285.17) (244.49)

- (Increase)/Decrease in Other Current Assets, Loans and Advances (69.96) (68.59)

- (Increase)/Decrease in Inventories 10.11 (106.65)

- Increase/(Decrease) in Current Liabilities and Provisions 251.52 (93.50) 235.49 (184.24)

Cash generated from operations 373.46 303.07

- Taxes (Paid) / Received (Net of Tax Deducted at Source) (105.91) (150.40)

Net cash from operating activities (A) 267.55 152.67

2. Cash flow from Investing activities:

Adjustments for changes in :Purchase of fixed assets (24.07) (37.26)

Capital Work in Progress 5.81 7.46

Proceeds from Sale of fixed assets 1.52 2.45

Proceeds from Sale of Investments 1,980.11 3,611.32

Purchase of investments (2,034.38) (3,553.34)

Interest Received 7.34 7.86

Dividend Received 4.38 14.02

Purchase of Investment in Subsidiary (14.33) (8.46)

Net cash from / (used in) investing activities (B) (73.62) 44.05


This is the Cash Flow Statementreferred to in our report of even date For and on behalf of the Board of Directors

V.NIJHAWAN AJAI CHOWDHRY J.V. RAMAMURTHY SANDEEP KANWARPartner Chairman and Chief Operating Officer Chief Financial OfficerMembership Number F-87228 Chief Executive OfficerFor and on behalf ofPrice WaterhouseChartered Accountants SUSHIL KUMAR JAIN


3. Cash Flow from Financing Activities

Share Capital issued 0.01 0.40Share Premium Received (Net) 0.26 16.12Secured Loans- Short term received/(paid) (1.52) (6.02)- Long term received 103.59 -- Long term paid (1.74) (6.00)Unsecured Loans- Short term received/(paid) (147.47) 183.00- Long term received - 67.94- Long term paid (81.45) 123.06Interest Paid (40.85) (46.40)Dividend Paid (119.55) (136.12)Dividend Tax Paid (20.36) (23.20)Net cash from / (used in) financing activities (C) (309.08) (73.34)

Net Increase/(Decrease) in Cash and Cash Equivalents (A+B+C) (115.15) 123.38

Opening Balance of Cash and Cash Equivalents 317.36 193.94Cash and Cash Equivalents Acquired of erstwhileNTPL as on June 30, 2008 (Refer Note 3 below) 0.78 -Cash and Cash Equivalents Acquired of erstwhileStelmac as on June 30, 2007 - 0.04Closing Balance of Cash and Cash Equivalents 202.99 317.36[Includes exchange rate fluctuation of Rs. 1.04 Crores

(2008-Rs. 0.14 Crores)]

Cash and cash equivalents comprise 202.99 317.36Cash,Cheques and Drafts (in hand) 52.04 100.26Balance with Scheduled Banks in Current Accounts 138.94 216.61Balance with Scheduled Banks in Deposits Accounts 4.00 0.02Balance with Non-Scheduled Banks in Current Accounts 8.01 0.47

Notes :-1. The above Cash Flow Statement has been prepared under the indirect method set out in Accounting Standard-3,

notified u/s 211(3C) of Companies Act, 1956.2. Cash and cash equivalents include the following balances with scheduled banks which are not available for use by the

company:Year ended Year ended


Deposit Accounts 3.35 -Unclaimed Dividend 3.22 2.94Margin Money for Bank Guarantee 0.32 0.433. Assets / (Liabilities) of erstwhile Natural Technologies Private Limited (NTPL) amalgamated under the scheme of

Amalgamation have not been considered as cash flows, rather their net impact has been taken as Cash and CashEquivalents of erstwhile Natural Technologies Private Limited (NTPL) as on June 30, 2008 (Refer note 23 of schedule 21).

4. Schedule 1 to 21 form integral part of Cash Flow Statement5. Figures in brackets indicate cash outgo.

Year Ended Year Ended2009 2008


CASH FLOW STATEMENT FOR THE YEAR ENDED JUNE 30, 2009


SCHEDULES TO THE BALANCE SHEET AS AT JUNE 30, 2009

Notes:-

1 Addition to the Securities Premium Account is in respect of allotment of equity shares of Rs.2 each to employees of thecompany and its subsidiaries under the Employee Stock Option Scheme 2000 and Employee Stock Based CompensationPlan 2005 is Rs. 0.36 Crores (2008 Rs. 22.66 Crores) .

2 Deduction from the Securities Premium Account is in respect of the amount paid towards Fringe benefit tax on exerciseof options granted under Employee Stock Option Scheme 2000 and Employee Stock Based Compensation plan 2005.

3 Previous year’s figures are given in brackets.

As at As at30.06.2009 30.06.2008


1- Capital[Schedule-21, Note 18 and 24]

Authorised:55,00,00,000 (2008 - 55,00,00,000) Equity Shares of Rs. 2/- each 110.00 110.005,00,000 (2008 - 5,00,000) Preference Shares of Rs. 100/- each 5.00 5.00

115.00 115.00Issued, Subscribed and Paid up:17,12,12,031 (2008 - 17,11,49,656) Equity shares of Rs.2/- each,fully paid up. 34.24 34.23Add : Shares Forfeited 0.00 0.00 [Represents Rs.1000 (2008 - Rs.1000)]

34.24 34.23

Notes:-

1. Paid up share capital includes :

a) 5,04,47,295 (2008 - 5,04,47,295) Equity Shares of Rs.2/- each issued pursuant to contract without paymentbeing received in cash.

b) 5,31,82,765 (2008 - 5,31,82,765) Equity Shares of Rs.2/- each Bonus shares issued from Securities PremiumAccount.

c) 1,15,84,715 (2008 - 1,15,22,340) Equity Shares of Rs.2/- each issued pursuant to the exercise of options grantedunder Employee Stock Option Scheme 2000.

d) 80,021 (2008 - 80,021) Equity Shares of Rs.2/- each issued pursuant to the exercise of options granted underEmployee Stock Based Compensation Plan 2005.

2 Of the above subscribed shares, 7,58,79,734 (2008 - 7,46,51,388) Equity Shares of Rs.2/- each are held by HCLCorporation Limited.

2- Reserves and Surplus As at Additions/ Deductions/ As at[Schedule-21, Notes 18 and 23] 01.07.2008 Adjustments Adjustments 30.06.2009

Rs./Crores Rs./Crores Rs./Crores Rs./Crores

Capital Reserve 0.00 - - 0.00[Represents Rs. 37,135 (2008 -Rs.37,135)] (0.00) ( - ) ( - ) (0.00)

Securities Premium Account 124.91 0.80 0.09 125.62(108.79) (22.66) (6.54) (124.91)

General Reserve 141.11 26.05 - 167.16(110.64) (30.47) ( - ) (141.11)

Revaluation Reserve (Adj.) 3.20 2.54 5.74 -(2.92) (17.03) (16.75) (3.20)

Debenture Redemption Reserve - 4.00 - 4.00 ( - ) ( - ) ( - ) ( - )

Profit and Loss Account 702.81 100.76 2.23 801.34(589.03) (113.78) ( - ) (702.81)

972.03 134.15 8.06 1098.12(811.38) (183.94) (23.29) (972.03)



As at As at30.06.2009 30.06.2008


3- Secured Loans

Long Term

Debentures 80.00 -

Loans from Others:-Long Term Loan 21.85 -

101.85 -

Notes:-1) The Company issued 800 Rated Taxable Secured Redeemable Non- Convertible Debentures of face value of Rs. 10

lakhs each, aggregating to Rs. 80.00 Crores, at a coupon rate 12.75% per annum payable annually on private placementbasis to Life Insurance Corporation of India on December 19, 2008. These Debentures are redeemable at par at the endof 5th year from the date of allotment, with a call option excercisable by the issuer, only at the end of 3 years from thedate of allotment. Debentures are secured by way of first mortgage and charge on identified immovable and movableassets of the company.

2) Term loan from others is secured by way of first charge on IT and Telcommunication assets. Payable within one yearRs.4.82 crores (2008-Rs. Nil Crores).

4- Unsecured Loans

Public Deposits - 0.01

Short Term Loans

From Banks - Commercial Paper 20.00 20.00

- Foreign Currency Loan - 106.21

Other Loans

- Commercial Paper 105.00 145.00

- Others - 81.44

125.00 352.66

1) Amount payable within one year is Rs. 125.00 Crores (2008 - Rs. 352.66 Crores)



5- Fixed Assets[Schedule-21, Notes 1, 2, 19(b) and 23] Rs./Crores

Gross Block Depreciation Net Block

As at Additions/ Deductions/ As at As at Additions/ Deductions/ As at As at As at

01.07.2008 Adjustments Adjustments/ 30.06.2009 01.07.2008 Adjustments Adjustments/ 30.06.2009 30.06.2009 30.06.2008

during Retired during during Retired during

the year the year the year the year

Tangible :

Land - Leasehold 7.97 4.98 - 12.95 0.58 0.19 - 0.77 12.18 7.39

Land - Freehold 25.61 0.06 - 25.67 - - - - 25.67 25.61

Buildings 75.15 8.04 0.03 83.16 13.44 1.98 0.01 15.41 67.75 61.71

Plant & Machinery and 43.91 4.53 5.61 42.83 23.93 5.81 5.44 24.30 18.53 19.98

Air Conditioners

Furniture, Fixtures and 59.64 13.80 8.66 64.78 38.06 9.20 7.19 40.07 24.71 21.58

Office Equipment

Vehicles 1.48 0.19 0.20 1.47 0.89 0.25 0.18 0.96 0.51 0.59

Intangible :

Software 2.92 0.67 0.35 3.24 1.21 0.84 0.09 1.96 1.28 1.71

TOTAL 216.68 32.27 14.85 234.10 78.11 18.27 12.91 83.47 150.63 138.57

Previous Year 162.31 58.93 4.56 216.68 63.83 16.40 2.12 78.11


[Including capital advances of Rs.0.86 Crores (2008 - Rs.3.84 Crores)] 160.13 152.46

Notes :-1. Land-Freehold and Building at Ambattur amounting to Rs.0.57 Crores (2008 - Rs.0.57 Crores) are pending registration in the name of the company.

2. For current year, additions to gross block and depreciation include Rs.5.05 Crores and Rs.0.96 Crores respectively on account of transfer of fixed assets

of the amalgamating company as on July 1, 2008 (Refer Note 23 on Schedule 21). During the year capital work in progress of Rs.0.80 Crores as on July

01, 2008 relating to Natural Technologies Private Limited was capitalised.

3. Software comprise of cost of acquiring licences and implementation charges.

6- Investments[Schedule-21, Notes 15, 23 and 25]

As at As at Face As at As at30.06.2009 30.06.2008 Value 30.06.2009 30.06.2008

Units Units Rs. Rs./Crores Rs./Crores

Unquoted (Trade) : Long Termin Subsidiary Company

HCL Security Limited-Equity Shares 4,050,000 50,000 10 4.05 0.05Natural Technologies Private Limited-Equity Shares - 484,856 10 - 8.41HCL Infinet Limited-Equity Shares(Formerly known as Microcomp Limited) 2,701,810 1,701,810 100 11.68 1.68HCL Infocom Limited 330,000 - 10 0.33 -

16.06 10.14

Unquoted Others : CurrentDividend Options

HSBC Ultra Short Term Bond Fund -Institutional Plus 17,901,873 - 10 18.00 -HSBC Liquid Plus - 10,438,484 10 - 10.47


SCHEDULES TO THE BALANCE SHEET | AS AT JUNE 30, 2009

As at As at Face As at As at30.06.2009 30.06.2008 Value 30.06.2009 30.06.2008


Note :- Net asset value of Unquoted (Others) Current Investments in Mutual Funds as on June 30, 2009 is Rs. 260.07Crores (2008 - Rs. 204.95 Crores)

As at As at30.06.2009 30.06.2008


7- Inventories[Schedule-21, Notes 8(c)]

Raw materials and Components [Including in TransitRs. 13.15 Crores (2008 -Rs. 36.81 Crores)] 89.25 119.67

Stores and Spares 66.64 64.23Finished Goods [Including in Transit Rs.149.30 Crores(2008-Rs. 118.23 Crores)] 731.21 712.79Work-In-Progress 1.16 1.68

888.26 898.37

IDFC Floating Rate Fund - Long Term Plan 17,986,279 29,051,418 10 18.02 29.14ICICI Prudential Flexible Income Plan 25,691,455 40,575,673 10 27.08 42.80Kotak Flexi Debt- Quarterly Dividend 19,762,322 24,946,136 10 20.13 25.37Kotak Flexi Debt- Daily Dividend 14,948,452 - 10 15.02 -Principal Cash Management Fund 38,790,521 20,034,216 10 39.00 20.04Reliance Liquid Plus 200,214 320,890 1,000 20.06 32.15Reliance Money Manager FundInstitutional Option- Weekly Dividend 179,924 - 10 18.02 -Tata Floater Fund 26,444,252 19,630,564 10 26.66 19.79UTI Liquid Cash Plan - 167,269 1,000 - 17.11HDFC Cash Management Fund 33,970,011 7,995,757 10 34.03 8.01IDFC Money Manager Fund -Institutional Plus 23,984,230 - 10 24.02 -

260.04 204.88

276.10 215.02


As at As at30.06.2009 30.06.2008


8- Sundry Debtors - Unsecured

Debts outstanding for a period exceeding six months :- Considered Good 529.54 364.27- Considered Doubtful 19.95 1.74

549.49 366.01Other debts

- Considered Good 968.72 877.191518.21 1243.20

Less : Provision for Doubtful Debts 19.95 1498.26 1.74 1241.46

1498.26 1241.46

9- Cash and Bank Balances[Schedule -21, Note 23]

Cash balance on hand 0.29 0.42Cheques in Hand 51.75 99.84Balances with Scheduled Banks:

- On Current Account 135.42 213.63 Less :- Money held in Trust 0.02 135.40 0.39 213.24

- On Dividend Account 3.22 2.94 - On Margin Account 0.32 0.43

- On Fixed Deposits [Includes EscrowAccount Rs. 3.35 Crores (2008. Rs. Nil)] 4.32 0.34Less :- Money held in Trust 0.32 4.00 0.32 0.02

Balances with Non-Scheduled Banks:- On Current Account

Standard Chartered Bank, Singapore-USD 7.99 0.44[Maximum amount outstanding during the yearRs. 11.15 Crores (2008-Rs.1.05 Crores)]

Standard Chartered Bank, Singapore- SGD 0.02 8.01 0.03 0.47[Maximum amount outstanding during the yearRs. 0.04 Crores (2008-Rs.0.03 Crores)]

202.99 317.36

10- Other Current Assets - Unsecured[Schedule-21, Notes 3 (c), 19(a) and 23]

Considered GoodDeposits 32.22 26.43Lease Rental Recoverable 20.09 35.63Unbilled Revenue 50.04 30.20

Considered Doubtful 0.38 -Less: Provision for Doubtful Assets 0.38 - - -

102.35 92.26



As at As at30.06.2009 30.06.2008


11- Loans and Advances - Unsecured[Schedule-21, Note 17, 23 and 27]

Considered Good- Amounts recoverable in cash or in kind or for value 159.19 120.47 to be received- Advances and Loans to Subsidiaries 2.76 1.63- Balances with Customs, Port Trust, Excise and Sales 29.95 17.84 Tax Authorities

Considered Doubtful 5.49 -Less: Provision for Doubtful Loans and Advances 5.49 - - -

191.90 139.94

12- Current Liabilities and Provisions[Schedule-21, Notes 4, 5, 6, 22, 23 and 27]

Current Liabilities:Acceptances 438.16 252.82Sundry Creditors

- Due to Subsidiaries 2.21 0.01- Due to Micro and Small Enterprises 1.76 0.60- Other than Micro and Small Enterprises 1169.59 1173.56 1156.21 1156.82

Sundry Deposits 4.15 4.31Interest accrued but not due:

- On Secured Loans 5.51 -- On Unsecured Loans - 1.73

Investor Education and Protection Fund :- Unclaimed Dividend * 3.22 2.94

Advances from Customers 31.91 24.74Deferred Revenue 155.87 142.50Other Liabilities 70.59 34.39

1882.97 1620.25

Provisions:Proposed Dividend 25.68 34.23Corporate Dividend Tax on Proposed Dividend 4.36 5.82For Income Tax [Net of Advance Income Tax ofRs. 381.77 Crores (2008-Rs. 364.10 Crores)] 23.28 5.07For Warranty Liability 4.28 5.61For Gratuity and Other Employee Benefits 24.29 20.12

81.89 70.85

1964.86 1691.10

* There are no amounts due and outstanding to be credited to Investor Education and Protection Fund as at June 30, 2009.These shall be credited and paid to the fund as and when due.

SCHEDULES TO THE BALANCE SHEET | AS AT JUNE 30, 2009


SCHEDULES TO THE PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED JUNE 30, 2009

Year ended Year ended30.06.2009 30.06.2008


13- Business Income[Schedule-21, Notes 8(c)]

Sales and Related Income 11724.25 11945.40Services 612.56 421.37

12336.81 12366.77

14- Other Income[Schedule-21, Notes 19(a) and Note 30]

Interest : - On Lease Rental 4.63 5.28 - On Fixed Deposits (Gross) 0.76 0.20 [Tax deducted at source Rs. 0.07 Crores

(2008 - Rs.0.03 Crores)] - On Other Loans and Advances 0.01 0.01 - Others 1.75 7.15 2.32 7.81

Dividend from (Others) Current Investments 4.38 14.02Insurance Claims 0.27 0.03Provisions/Liabilities no longer required written back 15.59 15.17Profit on disposal of (Others) Current Investments 0.93 1.75Profit on Foreign Exchange Fluctuation - 1.66Miscellaneous Income 5.28 7.31

33.60 47.75

15- Cost of Goods and Services Sold[Schedule-21, Notes 8(b), 8(c), 9 and 10]

Raw Materials and Components Consumed 1860.66 1753.94Purchase of Traded Goods 8927.75 9270.16Purchase of Services 223.66 91.66Stores and Spares Consumed 28.46 29.38Power and Fuel 1.72 1.60Labour and Processing Charges 10.93 10.50Royalty 93.22 99.52

11146.40 11256.76Closing Stock - Finished Goods (Including in Transit) 731.21 712.79 [Including excise duty of Rs. 3.97 Crores

(2008 - Rs. 3.43 Crores)] - Work-In-Progress 1.16 1.68

732.37 714.47Opening Stock - Finished Goods (Including in Transit) 712.79 623.43 [Including excise duty Rs. 3.15 Crores (2008 - Rs. 3.77 Crores)] - Work-In-Progress 1.68 1.23

714.47 624.66(Increase)/Decrease in Stocks of Finished Goods andWork-In-Progress : (17.90) (89.81)

11128.50 11166.95


SCHEDULES TO THE PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED JUNE 30, 2009



16- Personnel[Schedule-21, Note 22]

Salaries, Wages, Allowances, Bonus and Gratuity 305.66 275.43Contribution to Provident Fund and Other Funds 11.93 9.90Staff Welfare Expenses 8.39 7.63

325.98 292.96

17- Administration, Selling, Distribution and Others [Schedule-21, Note 19 (b) and Note 30]

Rent 22.85 18.39Rates and Taxes 11.90 9.70Printing and Stationery 3.92 5.05Communication 10.57 12.00Travelling and Conveyance 30.45 32.82Packing, Freight and Forwarding 51.68 55.32Legal and Professional 23.04 18.80Training and Conference 4.32 4.92Office Electricity and Water 7.48 6.82Insurance 7.64 7.22Advertisement, Publicity and Entertainment 57.06 71.53Hire Charges 1.55 1.86Commission on Sales 22.14 18.73Bank Charges 10.52 9.41Provision for Doubtful Debts 19.47 1.29Provision for Doubtful Loans and Advances 5.49 -Provision for Other Current Assets 0.38 -Loss on Sale of Fixed Assets 0.30 0.00Fixed Assets Written Off 0.12 0.00Loss on Foreign Exchange Fluctuation 26.39 -Diminution in the value of current investments 0.04 0.21Miscellaneous 27.91 13.20

345.22 287.27Less : Operating Cost Recovered from Subsidiaries 0.49 0.55

344.73 286.72

18- Repairs

Plant and Machinery 0.60 0.46Buildings 0.91 0.83Others 7.82 10.21

9.33 11.50

19- Finance Charges

Interest on :- Debentures 5.42 -- Other fixed loans 22.80 32.76- On Others 16.44 44.66 14.81 47.57

44.66 47.57


SCHEDULES TO THE BALANCE SHEET & PROFIT AND LOSS ACCOUNT

SCHEDULE 20 - SIGNIFICANT ACCOUNTING POLICIES

1. BASIS OF ACCOUNTING

The financial statements of the Company have been prepared and presented under the historical cost convention onthe accrual basis of accounting in accordance with the accounting principles generally accepted in India and complywith the mandatory Accounting Standards notified under section 211(3C) of the Companies Act, 1956 and therelevant provisions of the Companies Act, 1956.

2. FIXED ASSETS

Fixed Assets including in-house capitalisation and Capital Work-in-Progress are stated at cost except those which arerevalued from time to time on the basis of current replacement cost / value to the Company, net of accumulateddepreciation.

Assets taken on finance lease on or after 1.4.2001 are stated at fair value of the assets or present value of minimumlease payments whichever is lower.

Intangible Assets are stated at cost net of amortization.

3. DEPRECIATION

(i) Depreciation has been calculated as under:

(a) Depreciation on fixed assets is provided on a prorata basis using the straight–line method based on economicuseful life determined by way of periodical technical evaluation.

Economic useful lives which are not exceeding those stipulated in Schedule XIV of the Companies Act,1956 are as under:

Plant and machinery 4-6 yearsBuilding - Factory 25-28 years

- Others 50-58 years- Capitalised prior to 1.5.1986 As per Section 205(2)(b) of the Companies

Act, 1956- Acquired on or after 1.5.1986 At the rates specified in Schedule XIV and before 16.12.1993 of the Companies (Amendment) Act, 1988

Furniture & Fixture 4-6 yearsAir Conditioners 3-6 yearsVehicles 4-6 yearsOffice Equipment 3-6 yearsComputers 3-5 years

(b) The assets taken on finance lease on or after April 1, 2001 over their expected useful lives.

(ii) Leasehold assets viz land are amortised over the period of lease. Leasehold improvements are amortised onstraight line basis over the period of three years or lease period whichever is lower.

(iii) Intangible Assets are amortised over a period of 1-3 years.

(iv) Individual assets costing Rs.5,000 or less are depreciated/ amortised fully in the year of acquisition

4. INVESTMENTS

Long-term investments are stated at cost of acquisition inclusive of expenditure incidental to acquisition. Any declinein the value of the said investment, other than a temporary decline, is recognised and charged to Profit and LossAccount.

Current Investments are carried at lower of cost or fair value where fair value for mutual funds is based on net assetvalue.

5. INVENTORIES

Raw Materials and components held for use in the production of inventories and Work-in-progress are valued at cost ifthe finished goods in which they will be incorporated are expected to be sold at or above cost. If there is a decline inthe price of materials/ components and it is estimated that the cost of finished goods will exceed the net realisable


value, the materials/components are written down to net realisable value measured on the basis of their replacementcost. Cost is determined on the basis of weighted average.

Finished Goods and Wok in Progress are valued at lower of cost and net realisable value.

Cost of Finished Goods and Work in Progress include cost of raw materials and components, direct labour andproportionate overhead expenses. Cost is determined on the basis of weighted average.

Stores and Spares are valued at lower of cost and net realisable value. Adequate adjustments are made to the carryingvalue for obsolescence. Cost is determined on the basis of weighted average.

Goods in Transit are valued inclusive of custom duty, where applicable.

6. FOREIGN CURRENCY TRANSACTIONS

a) Foreign currency transactions are recorded at the exchange rates prevailing at the date of transaction. Exchangedifferences arising on settlement of transactions, are recognised as income or expense in the year in which theyarise.

b) At the balance sheet date, all assets and liabilities denominated in foreign currency, are reported at the exchangerates prevailing at the balance sheet date and the resultant gain or loss is recognised in the profit and lossaccount.

c) Pursuant to notification under section 211(3C) of the Companies Act, 1956 issued by Ministry of CorporateAffairs on March 31, 2009 amending Accounting Standard - 11 (AS - 11) ‘The Effects of Changes in ForeignExchange Rates (revised 2003), exchange differences arising on translation of long term foreign currency monetaryitems having a term of 12 months or more are recognised as stated below:

(i) Exchange differences relating to long term foreign currency monetary items, arising during the year, in so faras they relate to the acquisition of a depreciable capital asset are added to or deducted from the cost of theasset and depreciated over the balance life of the asset.

(ii) In other cases, such differences are accumulated in the “Foreign Currency Monetary Translation DifferenceAccount” and amortised over the balance period of the long term assets / liabilities but not beyond March31, 2011.

d) In case of forward foreign exchange contracts where an underlying asset or liability exists at the balance sheetdate, the difference between the forward rate and the exchange rate at the inception of the contract is recognisedas income or expense over the life of the contract.

e) In case of forward foreign exchange contracts taken for highly probable /forecast transactions, the net loss, if any,calculated on ‘Mark to Market’ principle as at the balance sheet date is recorded.

f) Profit or loss arising on cancellation or renewal of a forward contract is recognised as income or expense in theyear in which such cancellation or renewal is made.

7. EMPLOYEE BENEFITS

Defined Benefit:

Liability for gratuity and leave encashment is provided as determined on actuarial valuation made at the end of theyear which is computed using projected unit credit method. Gains/losses arising out of actuarial valuation are recognisedimmediately in the profit and loss account as income/expense.

Defined Contribution:

Company’s contributions towards recognised Provident Fund and Superannuation Fund are accounted for on accrualbasis. The Company has an obligation to make good the shortfall, if any, between the return from the investment of theprovident fund trust and the notified interest rate.

The Company makes defined contributions to a superannuation trust established for the purpose. The Company has nofurther obligation beyond the monthly contributions.

8. REVENUE RECOGNITION

(a) Sales, after adjusting trade discount, are inclusive of excise duty and the related revenue is recognised (afterproviding for expenses to be incurred connected to such sale) on transfer of all significant risks and rewards ofownership to the customer and when no significant uncertainty exists regarding realisation of the consideration.



(b) Composite contracts, outcome of which can be reliably estimated, where no significant uncertainty exists regardingrealisation of the consideration, revenue is recognised in accordance with the percentage completion method,under which revenue is recognised on the basis of cost incurred as a proportion of total cost expected to beincurred. The foreseeable losses on the completion of contract, if any, are provided for immediately.

(c) Service income includes income

i) From maintenance of products and facilities under maintenance agreements and extended warranty, which isrecognised upon creation of contractual obligations rateably over the period of contract, where no significantuncertainty exists regarding realisation of the consideration.

ii) From software services

(a) The revenue from time and material contracts is recognised based on the time spent as per the terms ofcontracts.

(b) In case of fixed priced contracts revenue is recognised on percentage of completion basis. Foreseeablelosses, if any, on the completion of contract are recognised immediately.

9. GOVERNMENT GRANTS

Revenue grants, where reasonable certainty exists that the ultimate collection will be made are recognized on asystematic basis in profit and loss statement over the periods necessary to match them with the related cost which theyare intended to compensate.

10. ROYALTY

Royalty expense, net of performance based discounts, is recognised when the related revenue is recognised.

11. LEASES

a) Assets taken under leases where the Company has substantially all the risks and rewards of ownership areclassified as Finance leases. Such assets are capitalised at the inception of the lease at the lower of fair value orthe present value of minimum lease payments and a liability is created for an equivalent amount. Each leaserental paid is allocated between the liability and the interest cost, so as to obtain a constant periodic rate ofinterest on outstanding liability for each period.

b) Assets taken on leases where significant portion of the risks and rewards of ownership are retained by the lessorare classified as operating leases. Lease rentals are charged to the Profit and Loss account on straight-line basisover the lease term.

c) Profit on sale and leaseback transactions is recognised over the period of the lease.

d) Assets given under finance lease are recognised as receivables at an amount equal to the net investment in thelease. Inventories given on finance lease are recognised as deemed sale at fair value. Lease income is recognisedover the period of the lease so as to yield a constant rate of return on the net investment in the lease.

e) Assets leased out under operating leases are capitalised. Rental income is recognised on accrual basis over thelease term.

f) Initial direct costs relating to the finance lease transactions are included as part of the amount capitalised as anasset under the lease.

12. INCOME TAXES

The current charge for income taxes including fringe benefit tax is calculated in accordance with the relevant taxregulations.

Deferred tax assets and liabilities are recognised for timing differences between the financial statements carryingamounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measuredusing the tax rates that have been enacted or substantially enacted at the balance sheet date. Deferred tax asset isrecognized and carried forward when it is reasonably certain that sufficient taxable profits will be available in futureagainst which deferred tax assets can be realised.



13. PROVISIONS AND CONTINGENCIES

The company creates a provision when there is a present obligation as a result of a past event that probably requires anoutflow of resources and a reliable estimate can be made of the amount of the obligation. A disclosure for a contingentliability is made when there is a possible obligation or a present obligation that probably will not require an outflow ofresources or where a reliable estimate of the amount of the obligation cannot be made.

14. USE OF ESTIMATES

The preparation of financial statements in conformity with Generally Accepted Accounting Principles requires themanagement to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosureof contingent liabilities at the date of the financial statements and the results of operations during the reportingperiod. Examples of such estimates include estimate of cost expected to be incurred to complete performance undercomposite arrangements, income taxes, provision for warranty, employment retirement benefit plans, provision fordoubtful debts and estimated useful life of the fixed assets. The actual results could differ from those estimates. Anyrevision to accounting estimates is recognised prospectively in current and future periods.

15. EMPLOYEE STOCK OPTION SCHEME

The Company calculates the employee stock compensation expense based on the intrinsic value method wherein theexcess of market price of underlying equity shares as on the date of the grant of options over the exercise price of theoptions given to employees under the Employee Stock Option Scheme of the Company, is recognised as deferred stockcompensation expense and is amortised over the vesting period on the basis of generally accepted accounting principlesin accordance with the guidelines of Securities and Exchange Board of India.

16. BORROWING COSTS

Borrowing costs to the extent related /attributable to the acquisition/construction of assets that necessarily takesubstantial period of time to get ready for their intended use are capitalised along with the respective fixed asset up tothe date such asset is ready for use. Other borrowing costs are charged to the Profit and Loss Account.

17. SEGMENT ACCOUNTING

The segment accounting policy is in accordance with the policies consistently used in the preparation of financialstatements. The basis of reporting is as follows: -

a) Revenue and expenses distinctly identifiable to a segment are recognised in that segment. Identified expensesinclude direct material, labour, overheads and depreciation on Fixed Assets. Expenses that are identifiable with/allocable to segments have been considered for determining segment results.

Allocated expenses include support function costs which are allocated to the segments in proportion of theservices rendered by them to each of the business segments. Depreciation on Fixed Assets is allocated to thesegments on the basis of their proportionate usage.

b) Unallocated expenses/income are enterprise expenses/income, which are not attributable or allocable to any ofthe business segment.

c) Assets and liabilities which arise as a result of operating activities of the segment are recognised in that segment.Fixed Assets which are exclusively used by the segment or allocated on a reasonable basis are also included.

d) Unallocated assets and liabilities are those which are not attributable or allocable to any of the segments andincludes liquid assets like Investments, Bank Deposits and Investments in assets given on finance lease.

e) Segment revenue resulting from transactions with other business segments is accounted on the basis of transferprice which is at par with the prevailing market price.



SCHEDULE 21 - NOTES TO ACCOUNTS

1. Land and Buildings and certain Plant and Machinery were revalued by registered valuers after considering depreciationupto that date on the governing principle of current replacement cost/value. The amounts added/reduced on aforesaidrevaluation in 1992, 2005, 2006 and 2007 were as under:

Date of Revaluation Rs./CroresLand June 30, 1992 4.44Land November 1, 2006 16.78Leasehold Land March 27, 2006 and

August 13, 2007 2.53Buildings June 30, 1992 6.44Buildings November 1, 2006 0.25Plant and Machinery June 30, 1992 (1.01)

Total 29.43

Less : Goodwill 5.70Transferred to Revaluation Reserve 23.73Less:-Expenditure incurred on acquisition of business in 1992 0.86-Loss on sale of Land 0.15-Depreciation and Amortisation 0.33-Adjusted on amalgamation of Stelmac Engineering Private Limited(Refer Note 23 (b)) 16.70-Adjusted on amalgamation of Natural Technologies Private Limited(Refer Note 23 (a)) 5.69Balance as at June 30, 2009 -

2. Estimated value of contracts on capital account, excluding capital advances, remaining to be executed and not providedfor amount to Rs 1.46 Crores (2008-Rs.5.81 Crores).

3. Contingent Liabilities:

a) Claims against the Company not acknowledged as debts:


Sales Tax* 21.19 8.64Excise* 10.86 14.87Income Tax* 2.94 1.41Industrial Disputes, Civil Suits and Consumer Disputes 8.40 8.37

* Includes sum of Rs. 5.21 Crores (2008 - Rs. 2.88 Crores) deposited by the Company against the above.

The amounts shown in the item (a) represents the best possible estimates arrived at on the basis of available information.The uncertainties and possible reimbursements are dependent on the out come of the different legal processes whichhave been initiated by the company or the claimants as the case may be and therefore cannot be predicted accurately.

b) (i) Corporate Guarantee of Rs. 6.50 Crores (2008-Rs. 6.50 Crores) was given to a Bank for working capitalfacilities and Rs. 6.07 Crores (2008- Rs. Nil) was given to a non-banking finance company for operating leasesanctioned to a 100% subsidiary, HCL Infinet Limited (Formerly Microcomp Limited) against which the totalamount utilised as at June 30, 2009 is Rs. 4.25 Crores and Rs. 6.07 Crores (2008- Rs. 2.25 Crores) respectively.

(ii) Corporate Guarantee of Rs. 5.00 Crores has been given to a Bank for working capital facilities sanctioned to a100% subsidiary, HCL Security Limited against which the total amount utilised as at June 30, 2009 isRs. 0.99 Crores (2008 Rs. Nil).

c) The Company has transferred Financial Assets (Lease Rental Recoverable) to a bank under a financing arrangementfor which the balance outstanding with the bank as on June 30, 2009 is Rs. 21.12 Crores (2008 – Rs. 30.55Crores). The transfer of these Financial Assets is with recourse to the Company.



Rs./Crores

As at Movement during As at30.06.08* the year 30.06.09

AssetsAllowances doubtful debts/ Advances / Other Current Assets 0.58 7.53 8.11Expense accruals (Bonus, Gratuity, Leave Encashment andProvision for warranty) 10.44 1.67 12.11Depreciation 1.26 (0.56) 0.70Total (A) 12.28 8.64 20.92LiabilitiesLease rental recoverable 9.80 (5.15) 4.65Cenvat balances with excise authorities 5.62 (1.43) 4.19Taxes deposited under protest for excise duty,custom duty and sales tax 0.83 4.16 4.99Other timing differences 2.88 0.13 3.01Total (B) 19.13 (2.29) 16.84Net Deferred Tax Assets / (Liability) (A)-(B) (6.85) 10.93 4.08Previous Year (12.48) 5.63 (6.85)

Note:

1. The Finance (No.2) Act, 2009, which was introduced in the parliament on July 6, 2009 has received assentof President of India on August 19, 2009, has abolished Fringe Benefit Tax with effect from April1,2009.Consequently, no Fringe Benefit Tax has been provided for the period April 1, 2009 to June 30, 2009.

2 *Excludes Deferred Tax Assets on amalgamation of Natural Technologies Private Limited of Rs. 0.13 Crores[Refer Note 23 (a)].

6. Disclosure of Micro, Small and Medium Enterprises based on information available with the company:2009 2008


a. (i) Principal amount remaining unpaid to any supplier as at the end of the year. 1.76 0.60(ii) Interest due on the above amount. 0.06 0.02

b. (i) Amount of interest paid in terms of section 16 of the Micro, Small andMedium Enterprises Development Act, 2006 (Act). Nil Nil

(ii) Amount of payments made to the suppliers beyond the appointedday during the year. 6.75 1.31

c. Amount of interest due and payable for the period of delay in making paymentbut without adding the interest specified under the Act. Nil Nil

d. Amount of interest accrued and remaining unpaid at the end of the year. 0.06 0.02e. Amount of further interest remaining due and payable even in the succeeding Nil Nil

years, until such date when the interest dues as above are actually paid to thesmall enterprises.

4. The company has the following warranty provision in the books of accounts:


Opening Balance as on July 1 5.61 3.80Additions during the year 12.90 13.28Utilised/Reversed during the year 14.23 11.47Closing Balance as on June 30 4.28 5.61

The warranty provision has been recognised for expected warranty claims for the first year of warranty on products soldduring the year. Due to the very nature of such costs, it is not possible to estimate the timing of cash outflows due touncertainties relating to the outflows of economic benefits.

5. Taxation:

a) Provision for taxation has been computed by applying the Income Tax Act, 1961 to the profit for the financial yearended June 30, 2009, although the actual tax liability of the Company has to be computed each year by referenceto the taxable profit for each fiscal year ended March 31.

b) Deferred Tax:Major Components of Deferred Tax arising on account of temporary timing difference along with their movement asat June 30, 2009 are:



7. Expenditure on Research and Development:2009 2008


Capital 0.01 0.31Revenue (Depreciation, Personnel, Travel and Other administration expenses) 4.63 3.99

Total 4.64 4.30

8. Capacities, Production, Stocks and Sales:

• Sales, Purchases, Opening and Closing stocks have been given in terms of value and /or, where ascertainable,in numbers.

• Bought out Computers and certain peripherals have been included in stock/sales of systems.

a) Particulars of goods manufactured:

Class of Product Installed Actualcapacity Production

Computers/Micro processor based systems Nos. 1230000 643330(1230000) (738636)

Data Graphic/Display Monitor/Terminals, Hubs etc. Nos. 846600 476263 (713250) (396854)

Note: Installed capacity being a technical matter has been certified by the management.

b ) Information in respect of purchase of traded goods:

Nos. Value Rs./Crores

Computers 3099 10.28(32800) (119.70)

Photocopiers/ Electronic Equipments 23430 174.77(29286) (191.38)

Printers/Scanners/UPS/CVT 178396 181.98(173513) (180.30)

Cellular Phones 30715588 7510.91(31420517) (7984.10)

EPABX Systems 545 57.73(900) (77.58)

Others * 992.08(717.09)

Total 8927.75(9270.15)

*Does not include any item which in value individually accounts for 10% or more of the total value of purchase oftraded goods.



c) Stocks and Sales:

Unit Sales/Adjustments Opening Stock Closing StockClass of Products Qty Value# Qty Value Qty Value

Rs./Crores Rs./Crores Rs./Crores

Computers/Micro Nos. 636938 1493.68 37523 96.31 47014 97.23Processors based Systems (767129) (1754.99) (33216) (91.60) (37523) (96.31)Photocopiers/ Nos. 23444 234.59 4924 38.73 4910 31.93Electronic/Equipments (28842) (243.30) (4480) (28.55) (4924) (38.73)Printers/Scanners/UPS/ CVT Nos. 175432 217.75 10495 9.09 13459 11.88

(176878) (200.93) (13860) (11.97) (10495) (9.09)Cellular Phones Nos. 30774057 7781.11 1568617 387.91 1510148 384.56

(30714602) (8207.97) (862702) (309.56) (1568617) (387.91)EPABX Systems Nos. 553 71.05 179 12.07 171 10.97

(922) (87.82) (201) (11.50) (179) (12.07)Others* 1926.07 168.68 194.64

(1450.39) (170.25) (168.68)

Total 11724.25 712.79 731.21(11945.40) (623.43) (712.79)

# Except trade discount, no other discount has been adjusted.

*Does not include any item which in value individually accounts for 10% or more of the total value of sales/stock.Note: Previous year’s figures are given in brackets.

d) The Ministry of Company Affairs, Government of India vide its Order No. 46/4/2009-CL-III dated May 21, 2009issued under section 211(4) of the Companies Act, 1956 has exempted the Company from disclosure of quantitativedetails in the Profit and Loss Account, for those class of goods which form less than 10% of the total value ofturnover, purchase, traded, sales, consumption of raw material etc. as the case may be, for the financial yearended June 30, 2009, under Para 3(ii)(d) of Part-II, Schedule-VI to the Companies Act, 1956 as amended videNotification No. GSR494(E), dated October 30, 1973.

9. Value of imported and indigenous raw materials and components consumed during the year (excluding value ofconsumption of stores and spares which is not readily ascertainable) classified on the basis of ratio between purchaseof imported and indigenous raw materials and components during the year:

2009 2008Rs./Crores % of Consumption Rs./Crores % of Consumption

Imported 1376.40 74% 1342.61 77%Indigenous 484.26 26% 411.34 23%

Total 1860.66 100% 1753.95 100%

10. Details of raw materials and components consumed (in value):2009 2008


Mother Boards and Assemblies 414.79 412.61Hard Disk Drives 172.70 193.41Processors 246.53 230.11Monitors 242.38 233.34CRT Key Tops PCBs and Cabinets 11.84 55.18Networking Products 618.89 467.24Others 153.53 162.06

Total 1860.66 1753.95

Note: Separate quantitative numbers of raw material and components (including for resale) are not readily ascertainable.



11. Value of Imports calculated on CIF basis:2009 2008


a) Raw materials and components 1634.09 1617.17b) Stores and spares 36.01 45.51c) Capital goods 0.20 0.23d) Traded items 450.56 368.16

Total 2120.86 2031.07

12. Expenditure in Foreign Currency: (On cash basis)


a) Travel 0.38 0.60b) Royalty (Net of tax deducted at source) 87.61 103.30c) Interest 9.56 3.41d) Technical Fee 0.43 -d) Others (Include Consultancy, Certifications charges, License) 1.07 1.29

Total 99.05 108.60

13. Earnings in Foreign Currency:2009 2008

Rs./Crores Rs./Croresa) Commission 0.65 0.14b) FOB value of exports (including deemed exports) 68.75 73.63c) Others (including reimbursement of expenses) 26.05 24.02

Total 95.45 97.79

14. Remuneration to Auditor:2009 2008


a) As Auditor * 1.20 1.00b) In Other Capacity

Tax Audit * 0.20 0.17Certification * 0.05 0.02Management Services* - 0.25Out-of-Pocket Expenses 0.07 0.05

Total 1.52 1.49

* Excluding service tax

15. Details of Investments purchased, reinvested and sold on various dates within the financial year are as follows:-

Name of the Fund Face Value * No. of Units CostRs. per unit Rs./Crores

HSBC Ultra Short Term Bond Fund - Growth 10 17188186 21.01HSBC Cash Fund - Institutional Plus - Growth 10 7992502 11.00HDFC Cash Management Fund -Treasury Advantage Plan - Wholesale - Growth 10 10401491 20.00HDFC Liquid Fund- Premium Plan - Growth 10 5674242 10.00IDFC Money Manager Fund - Institutional Plan - Growth 10 22006789 30.00ICICI Prudential Flexible Income Plan - Growth 10 26332353 43.01Kotak Flexi Debt - Growth 10 13935340 15.00Tata Floater Fund - Growth 10 19114116 25.01Principal Cash Management Liquid Option - InstitutionalPremium Plan - Growth 10 23288700 32.01



Name of the Fund Face Value * No. of Units CostRs. per unit Rs./Crores

16. Managerial Remuneration:

(i) Computation of net profit under Section 349 of the Companies Act, 1956.


Profit before Taxation 373.86 434.47Add:Managerial Remuneration Paid/payable 4.65 4.49Depreciation 17.27 16.35Loss on Sales of Fixed Assets (Net) 0.30 0.00Fixed Assets Written Off 0.12 0.00Provision for Doubtful Debts, Loans and Advancesand Others Current Assets 25.34 1.29

47.68 22.13421.54 456.60

Less:Depreciation under Section 350 of the Companies Act, 1956 17.27 16.35Profit on Disposal of (Others) Investments (Net) 0.93 1.75

18.20 18.10Net Profit under Section 349 403.34 438.50Calculation of Commission underSection 309 of the Companies Act 1956 @ 1% 4.03 4.38Restricted to 0.28 0.20

(ii) Paid/payable to the Wholetime Directors

a) Salaries, Allowances and Bonus* 3.81 3.76 Contribution to Provident and Superannuation Funds** 0.20 0.19Perquisites 0.30 0.29

4.31 4.24b) Directors’ Sitting Fees 0.06 0.05

Commission to Non Wholetime Directors 0.28 0.20Managerial remuneration under Section 198 4.65 4.49of the Companies Act, 1956

* Includes profit linked bonus on actual payment basis.** Does not include employee stock compensation expense accounted as per intrinsic value method and retirement benefits on account

of Gratuity and Leave Encashment as these benefits are determined actuarially for the Company as a whole and separate figuresapplicable to individual employees are not readily available.


Reliance Money Manager Fund - Growth 1000 83645 10.00DWS Insta Cash Plus Fund - Institutional Plan - Dividend 10 9000000 9.00HSBC Cash Fund - Institutional Plan - Dividend 10 139135619 142.00HDFC Liquid Fund - Premium Plan - Dividend 10 117175137 131.01IDFC Money Manager Fund - Treasury Plan - Dividend 10 33334326 63.10IDFC Cash Fund - Dividend 10 10117767 112.01ICICI Prudential Liquid Plan - Dividend 10 30412002 160.02Templeton India Treasury Management Account - Dividend 1000 558766 57.06UTI Liquid Cash Plan - Dividend 1000 510386 52.22

* Represents total of transactions on account of renewals and reinvestments.


17. Unaccrued forward exchange cover as on June 30, 2009 of Rs. 2.91 Crores (2008- Rs.1.81 Crores) has been includedunder amounts recoverable in cash or in kind or for value to be received.

18. Employee Stock Option Plan (ESOP)The Company has established Employee Stock Option Scheme 2000 and Employee Stock Based Compensation Plan2005, for a total grant of 31,90,200 and 33,35,487 options respectively to the employees of the Company and itssubsidiaries. These options vest over a period of 42 and 60 months respectively from the date of grant and are to beexercised with in a maximum period of 5 years from the date of vesting.

The Board of Directors/Committee approves the grant of options, including the grant of options that lapse out of eachgrant.

Each option of Rs.10/- confers on the employee a right to five equity shares of Rs.2/- each.

Exercise Price is market price as specified in the Employee Stock Option Scheme and Employee Stock PurchaseScheme Guidelines, 1999 issued by the Securities and Exchange Board of India (“SEBI”).

Details of Grants made under Employee Stock Option Scheme 2000

Date of Exercise price Options Options Options Options Options Options Optionsgrant of the option outstanding granted forfeited exercised expired outstanding exercisable

for five equity at the during during during during at the end at the endshares of beginning the year the year the year the year of the of the

Rs. 2/- each of the year year year

10/Aug/00 289.00 18025 - - 12195 5830 - -(35195) (-) (-) (10460) (6710) (18025) (18025)

28/Jan/04 538.15 225619 - - 280 11176 214163 214163(560758) (-) (1864) (310058) (23217) (225619) (225619)

25/Aug/04 603.95 59072 - - - 8139 50933 50933(89619) (-) (4736) (19775) (6036) (59072) (59072)

18/Jan/05 809.85 185309 - - - 13227 172082 172082(225350) (-) (6912) (23897) (9232) (185309) (97457)

15/Feb/05 809.30 1600 - - - - 1600 1600(3500) (-) (-) (1900) (-) (1600) (-)

15/Mar/05 834.40 30170 - - - 4098 26072 26072(44488) (-) (5004) (3794) (5520) (30170) (18224)

15/Apr/05 789.85 5784 - - - - 5784 5784(13848) (-) (3072) (960) (4032) (5784) (3470)

14/May/05 770.15 8270 - - - - 8270 8270(9240) (-) (-) (970) (-) (8270) (4574)

15/Jun/05 756.15 2435 - - - 1760 675 675(11840) (-) (1280) (3565) (4560) (2435) (35)

15/Jul/05 978.75 11978 - - - 1536 10442 10442(18384) (-) (2784) (1318) (2304) (11978) (7754)

13/Aug/05 1144.00 24990 - 2560 - 4800 17630 17630(25630) (-) (640) (-) (-) (24990) (15378)

15/Sep/05 1271.25 13620 - 1792 - 2688 9140 9140(13620) (-) (-) (-) (-) (13620) (8172)

15/Mar/07 648.75 144300 - 2100 - 900 141300 82100(158000) (-) (7000) (6700) (-) (144300) (38600)

23/Jan/08 898.25 88200 - 13598 - 1777 72825 22316(105000) (16800) (-) (-) (88200) (-)

TOTAL 819372 - 20050 12475 55931 730916 621207(1209472) (105000) (50092) (383397) (61611) (819372) (496380)

Note: Previous year’s figures are given in brackets



Details of Grants made under Employee Stock Based Compensation Plan 2005

Date of Exercise price Options Options Options Options Options Options Optionsgrant of the option outstanding granted forfeited exercised expired outstanding exercisable

for five equity at the during during during during at the end at the endshares of beginning the year the year the year the year of the of the


13/Aug/05 1144.00 2207129 - 107644 - 117360 1982125 1197061(2430660) (-) (139190) (9074) (75267) (2207129) (891173)

19/Oct/05 1157.50 60950 - 7420 - 6750 46780 28368(67340) (-) (4090) () (2300) (60950) (24588)

15/Nov/05 1267.75 21200 - 2310 - 1940 16950 10170(22928) (-) (1400) (-) (328) (21200) (8720)

15/Dec/05 1348.25 21100 - 3480 - 2970 14650 8790(25260) (-) (2130) (-) (2030) (21100) (8470)

14/Jan/06 1300.00 24550 - 3540 - 3200 17810 10866(31754) (-) (5160) () (2044) (24550) (10060)

15/Feb/06 1308.00 5874 - 360 - 464 5050 3030(7374) (-) (1200) (-) (300) (5874) (2388)

16/Mar/06 1031.00 37740 - 8664 - 5976 23100 14740(39940) (-) (1760) (-) (440) (37740) (15216)

17/Apr/06 868.75 10820 - 2160 - 1760 6900 4140(15400) (-) (3200) (-) (1380) (10820) (4520)

15/May/06 842.50 19330 - 1830 - 1800 15700 9420(30150) (-) (8830) (-) (1990) (19330) (8080)

15/Jun/06 620.50 24480 - 4270 - 2260 17950 10710(31510) (-) (5256) (430) (1344) (24480) (9630)

17/Jul/06 673.75 27470 - 3480 - 2200 21790 8812(36380) (-) (7160) (80) (1670) (27470) (5526)

15/Mar/07 648.75 402820 - 10640 - 4220 387960 155220(431100) (-) (21860) (6420) (-) (402820) (77700)

23/Jan/08 898.25 256050 - 44280 - 780 210990 42630(-) (293475) (37425) (-) (-) (256050) (-)

TOTAL 3119513 - 200078 - 151680 2767755 1503957

(3169796) (293475) (238661) (16004) (89093) (3119513) (1066071)

Note: Previous year’s figures are given in brackets.



Assumptions

The fair value of each stock option granted under Employee Stock Option Scheme 2000 and Employee Stock BasedCompensation Plan 2005 as on the date of grant has been computed using Black- Scholes Option Pricing Formula and themodel inputs are given as under:

Employee Stock Employee Stock BasedOption Scheme 2000 Compensation Plan 2005

Volatility 45% to 68% 47% to 62%Risk free rate 4.57% to 7.99% 6.49% to 7.98%Exercise Price Rs.538.15 to Rs.1271.25 Rs.620.50 to Rs.1348.25Time to Maturity (years) 2.20 to 5.50 2.50 to 7.00Dividend Yield 9% to 28% 10% to 28%Life of options 8.5 Years 10 YearsFair Value of options as at the grant date Rs.35.10 to Rs.203.14 Rs.24.75 to Rs.262.97

Notes:1. Volatility: Based on historical volatility in the share price movement of the Company.2. Risk Free Rate: Being the interest rate applicable for maturity equal to the expected life of options based on yield curve

for Government Securities.3. Time to Maturity: Vesting period and volatility of the underlying equity shares have been considered for estimation.4. Dividend Yield: Based on historical dividend payouts.

The impact on the profit of the Company for the year ended June 30, 2009 and the basic and diluted earnings per sharehad the Company followed the fair value method of accounting for stock options is set out below:

Proforma disclosures


Profit/(Loss)after tax as per Profit and Loss Account (a) 260.44 304.75Add: Employee Stock Compensation Expense as per Intrinsic Value Method - -Less: Employee Stock Compensation Expense as per Fair Value Method[Net of amount attributable to employees of subsidiary Rs. 0.16 Crores(2008-Rs.0.19 Crores)] 4.62 8.07Profit/(Loss) after tax recomputed for recognition of employee stock compensation 255.82 296.68expense under fair value method (b)*Earning Per Share based on earnings as per (a) above: (Refer note 20) - Basic Rs. 15.21 Rs. 17.88 - Diluted Rs. 15.21 Rs. 17.64Earning Per Share had fair value method been employed foraccounting of employee stock options: - Basic Rs. 14.94 Rs. 17.41 - Diluted Rs. 14.94 Rs. 17.18

* Excludes impact on tax expense of employee stock compensation expense.



19. Leases:

a) Finance Leases:

(i) The Company has given on finance lease certain Assets/ Inventories which comprise of computers and officeequipments etc. These leases have a primary period, which is fixed and non-cancelable. There are no exceptional/restrictive covenants in the lease agreements.

(ii) The gross investment in the assets given on finance leases as at June 30, 2009 and its present value as at thatdate are as follows [Refer Note 3(c)]:

Total minimum Interest included in Present value oflease payments minimum lease minimum lease

receivable payments paymentsreceivable receivable

Rs./Crores Rs./Crores Rs./Crores

Not later than one year 16.91 2.57 14.34(24.28) (3.80) (20.48)

Later than one year and not later than five years 6.90 1.15 5.75(17.05) (1.90) (15.15)

Total 23.81 3.72 20.09(41.33) (5.70) (35.63)


b) Operating Leases:

(i) Cancelable Operating leases

(a) The Company has taken various residential /commercial premises under cancelable operating leases. Theseleases are normally renewable on expiry.

(b) The rental expense in respect of operating leases is Rs. 22.85 Crores (2008-Rs 18.39 Crores)(c) The gross block, accumulated depreciation and depreciation expense in respect of building and office

automation products i.e. photocopying machines given on operating lease are as below:


Gross Block 15.28 13.43Accumulated Depreciation 5.21 3.37Net Block 10.07 10.06Depreciation Expense 1.84 1.42

(ii) Non-Cancelable Operating leases

As Lessee:

(a) The Company has taken computer systems and furniture and fixture on non-cancelable operating leases thefuture minimum lease payments in respect of which are:


Not later than one year 1.62 1.62Later than one year and not later than five years 2.98 4.60

Total 4.60 6.22

(b) Minimum Lease Payments in respect of assets taken on lease recognised as an expense in the Profit and LossAccount for the year ended June 30, 2009 are Rs. 1.92 Crores (2008 - Rs. 0.45 Crores)

As Lessor:

The company has given photocopying machines on non-cancelable operating leases the future minimum leasereceipts in respect of which are:


Not later than one year 0.00 0.01Later than one year and not later than five years - -

Total 0.00 0.01



Segment wise performance for the year ended June 30, 2009 Rs./Crores

Primary Segments Computer Systems & Telecommunication Inter-segment TotalOther Related Products & Office Automation Elimination

and Services

(i) RevenueExternal Revenue 3486.58 8850.23 12336.81

(3365.26) (9001.51) (12366.77)Intersegment Revenue 53.44 21.98 -75.42

(23.15) (18.80) (-41.95)

Total Gross Revenue 3540.02 8872.21 -75.42 12336.81(3388.41) (9020.31) (-41.95) (12366.77)

Less: Excise Duty 126.08 - 126.08(157.84) (0.16) (158.00)

Total Net Revenue 3413.94 8872.21 -75.42 12210.73

(3230.57) (9020.15) (-41.95) 12208.77

(ii) Results 177.27 250.81 428.08(199.77) (285.45) (485.22)

Less: Unallocable Expenditure 24.43(30.06)

Operating Profit 403.65(455.16)

Add: Other Income (Excluding Operational Income) 14.87(26.88)

Less: Finance Charges 44.66(47.57)

20. Earnings per share (EPS)

The earnings considered in ascertaining the Company’s EPS represent profit for the year after tax. Basic EPS iscomputed and disclosed using the weighted average number of equity shares outstanding during the year. Dilutedearnings per share is computed and disclosed using the weighted average number of equity and dilutive equivalentshares outstanding during the year except when results would be anti dilutive.

Calculation of EPS:

Particulars 2009 2008

Profit after tax (Rs./Crores) 260.44 304.75Weighted average number of shares considered 171,180,498 170,454,520as outstanding in computation of Basic EPSAdd dilutive impact of stock options: - Exercised 11,554 264,066 - Lapsed 4,521 110,209 - Issued for no consideration - 1,900,787Weighted average number of shares outstanding 171,196,573 172,729,582in computation of Diluted EPSBasic EPS (of Rs.2/- each) Rs. 15.21 Rs.17.88Diluted EPS (of Rs.2/- each) Rs. 15.21 Rs.17.64

21. Segment Reporting

The Group recognises the following segments as its primary segments.

a) The operations of Product and Related Services consists of sale of Computer Hardware and System Integrationproducts and providing a comprehensive range of IT services including System Maintenance and Facility Managementin different industries.

b) The businesses of Telecom products, Office Automation and services consist of sale of telecommunication products,office equipment products and related services.

Secondary segmental reporting is based on the geographical location of the customers. Details of secondary segmentsare not disclosed as more than 90% of the Company’s revenues results and assets relate to the domestic market.



Profit Before Tax 373.86(434.47)

Less: Tax Expense- Current Tax 122.77

(131.50)- Deferred Tax (10.80)

(-5.63)- Fringe Benefit Tax 1.45

(3.85)Profit After Tax 260.44

(304.75)(iii) Segment Assets 2109.32 857.49 2966.81

(1781.36) (975.93) (2757.29)Unallocated Corporate Assetsa) Liquid Assets 264.04

(215.04)b) Others (including investment in assets

given on finance lease) 89.14(84.55)

c) Deferred Tax Asset 4.08(-)

Total Assets 3324.07(3056.88)

(iv) Segment Liabilities 1233.72 669.46 1903.18(837.73) (798.13) (1635.86)

Unallocated Corporate Liabilities a) Current Liabilities 61.68

(55.24) b) Deferred Tax Liability - -

(6.85)c) Loan Funds 226.85

(352.66)Total Liabilities 2191.71

(2050.61)(v) Capital Expenditure 17.63 4.56 22.19

(35.72) (5.44) (41.16)

(vi) Depreciation 12.31 4.06 16.37(11.61) (4.18) (15.79)

(vii) Other Non Cash Expenses 45.45 16.60 62.05(21.09) (7.02) (28.11)

Note: Previous year’s figures are given in brackets


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

(a) Defined Contribution Plans

(i) Provident Fund

(ii) Superannuation Fund

During the year the Company has recognised the following amounts in the Profit and Loss account:


Employers Contribution to Provident Fund* 3.89 3.26

Employers Contribution to Superannuation Fund* 1.14 1.01

(b) State Plans

(i) Employee State Insurance

(ii) Employee's Pension Scheme 1995



During the year the Company has recognised the following amounts in the Profit and Loss account:


Employers contribution to Employee State Insurance * 2.45 1.98

Employers contribution to Employee's Pension Scheme 1995 * 4.45 3.65

* Included in Contribution to Provident Fund and Other Funds under Personnel Cost (Refer Schedule-16)

(c) Defined Benefit

(i) Gratuity

(ii) Leave Encashment/Compensated Absence

In accordance with Accounting Standard 15 (revised 2005), an actuarial valuation was carried out in the respect of theaforesaid defined benefit plans based on the following assumptions.

Employees Leave Encashment/Gratuity Compensated

Fund Absence

2009 2008 2009 2008

Discount Rate (per annum) 7.00% 8.00% 7.00% 8.00%

Rate of increase in compensation levels 7.00% 7.00% 7.00% 7.00%

Rate of return on plan assets Not Not Not NotApplicable Applicable Applicable Applicable

Expected Average remaining working 25.47 25.70 25.47 25.70lives of employees (years)

The estimates of future salary increases considered in actuarial valuation take account of inflation, seniority, promotionand other relevant factors such as supply and demand in the employment market.

Rs./Crores

2009 2008

Gratuity Leave Gratuity LeaveEncashment Encashment

Reconciliation of opening and closing balances of thepresent value of the defined benefit obligation:Present value of obligation at the beginning of the year 12.20 7.92 10.76 6.76Current service cost 1.75 1.92 1.23 1.36Interest cost 0.85 0.54 0.83 0.47Actuarial (gain)/loss 0.79 (0.71) 0.06 0.46Benefits (paid) (0.69) (0.28) (0.68) (1.13)Present value of obligation at the end of the year 14.90 9.39 12.20 7.92Reconciliation of the present value of the defined benefitobligation and the fair value of the plan assets:Present value of the obligation as at the end of the year 14.90 9.39 12.20 7.92Fair value of plan assets at the end of the year - - - -Assets/(Liabilities) recognised in the Balance Sheet. (14.90) (9.39) (12.20) (7.92)Cost recognised for the year (included under Salaries,Wages, Allowances (Bonus and Gratuity)Currents service cost 1.75 1.92 1.23 1.36Interest cost 0.85 0.54 0.83 0.47Actuarial (gain)/loss 0.79 (0.71) 0.06 0.46Net cost recognised for the year * 3.39 1.75 2.12 2.29

* Included in Salaries Wages Allowances Bonus and Gratuity under Personnel Cost (Refer Schedule- 16)


23. (a) The Scheme of Amalgamation (“Scheme”) for merging the wholly owned subsidiary Natural Technologies PrivateLimited (NTPL) with the Company under sections 391 to 394 of the Companies Act, 1956 sanctioned by Hon’bleHigh Courts of Delhi and Rajasthan vide their respective orders dated August 11, 2008 and May 29, 2009 hascome into effect on July 6, 2009 from the appointed date of July 1, 2008. On the scheme becoming effectiveNTPL stands dissolved without winding up.

Pursuant to the Scheme:

The amalgamation of erstwhile NTPL with the Company has been accounted for under the ‘pooling of interestmethod’ in the manner specified in the Scheme and complies with the Accounting Standard notified u/s 211(3C)of the Companies Act,1956 and the following balances as at July 1, 2008 of erstwhile NTPL have been adjustedwith the profit and loss account forming part of reserves of the Company:

Rs./Crores

Assets

Fixed assets ( Including Captial Work in Progress Rs. 0.80 Crores ) 4.09Deferred Tax Assets 0.13Sundry Debtors 3.34Cash & Bank Balance 0.78Other Current Assets 2.19Loans & Advances 0.03Total 10.56LiabilitiesCurrent Liabilities and Provisions 3.68Secured Loan 1.52Unsecured Loan 1.34Total 6.54Net assets acquired on amalgamation (a) 4.02Transfer of balances of Amalgamated CompanySecurities Premium Account 0.45Profit and Loss 0.55Revaluation Reserve 2.54Total Reserves and Surplus (b) 3.54Less:-Adjustment for cancellation of Company’s investment in Transferor Company (c) 8.41Shortfall arising on Amalgamation (a) – (b) – ( c) = ( d ) (7.93)Adjusted with :-- Revaluation Reserve 5.70- Profit and Loss Account 2.23Total 7.93

The transactions including income and expenses for the period from July 01, 2008 to June 30, 2009 when thebusiness was being run and managed in trust by erstwhile Natural Technologies Private Limited have also beenincorporated in these accounts which do not have any material impact on the profit for the year and net assets atthe balance sheet date.

23. (b) The Scheme of Amalgamation (“Scheme”) for merging the wholly owned subsidiary Stelmac Engineering PrivateLimited (Stelmac) with the company under sections 391 to 394 of the Companies Act, 1956 sanctioned byHon’ble High Court of Delhi vide order dated December 07, 2007 was concluded in the previous year. Theamalgamation of erstwhile Stelmac with the Company was accounted for under the ‘pooling of interest method’ inthe manner specified in the Scheme and complies with the Accounting Standard notified u/s 211(3C) of theCompanies Act,1956.The accounts of the Company for the year ended June 30, 2008 included the results of saidbusiness which did not have any material impact on the profit for that year and net assets as at that balance sheetdate.

24. Pursuant to the approval given by the Board of Directors, the “Committee of Directors (Securities)” at the meeting heldon August 14, 2009 approved -

a) Issuance of Convertible Warrants not exceeding Rs 322 crores, including premium to the promoters of the Company.

b) Issuance in the form of Equity shares or Equity linked securities in the domestic and /or international offerings and/or Qualified Institutional Placements for a value not exceeding Rs 500 crores, including premium.

c) An Extra - ordinary General Meeting is scheduled to be held on September 23, 2009 for taking the shareholdersapproval for the same.



25. During the year, the Company has incorporated HCL Infocom Limited as a wholly owned subsidiary. HCL InfocomLimited holds 49% of the equity share capital of Scout Mobile Internet Services Limited, a Joint Venture with NokiaCorporation, Finland.


26. Pursuant to clause ix (b) of section 227 (4A) of the Companies Act, 1956, the details of disputed dues are as follows:

SL. Name of Statute Nature of the dues Amount Amount Period to which Forum where disputeNo. (Rs./crores) Deposited the amount is pending

under protest relates(Rs./crores)

1.1 U.P. Trade Tax Act, 1948.** Sales Tax (Including Penalty)* 0.01 - 1998-1999 Joint Commissioner(Appeals) of Commercial Tax,Noida

1.2 Sales Tax (Including Penalty)* 1.12 0.13 2002-2003 Commercial Tax Tribunal,Noida

1.3 Sales Tax (Including Penalty)* 0.07 0.07 2002-2003 High Court, Allahabad.1.4 Sales Tax (Including Penalty)* 0.18 0.36 2003-2004 Commercial Tax Tribunal,

Noida1.5 Sales Tax (Including Penalty)* 1.67 0.75 2004-2005 Joint Commissioner (Appeals)

of Commercial Tax, Noida1.6 Sales Tax (Including Penalty)* 3.26 0.80 2005-2006 Joint Commissioner (Appeals)

of Commercial Tax, Noida1.7 Sales Tax (Including Penalty)* 2.29 0.49 2006-2007 Additional Commissioner

(Appeals) of Commercial Tax,Noida

1.8 Sales Tax (Including Penalty)* 4.22 0.71 2006-2007 Joint Commissioner (Appeals)of Commercial Tax, Noida

1.9 Sales Tax (Including Penalty)* 0.25 0.19 2007-2008 Joint Commissioner (Appeals)of Commercial Tax, Noida

1.10 U.P.Value Added Tax Act-2008** Commercial tax (Including Penalty)* 0.13 0.12 2008-2009 Joint Commissioner (Appeals)of Commercial Tax, Noida

1.11 Commercial tax (Including Penalty)* 0.01 0.01 2009-2010 Joint Commissioner (Appeals)of Commercial Tax, Noida

2.1 Delhi Sales Tax Act, 1975** Sales Tax* 0.26 0.001 1999-2000 Additional Commissioner ofSales Tax, Delhi

2.2 Sales Tax* 0.00 - 2001-2002 Additional Commissioner ofSales Tax, Delhi

2.3 Sales Tax* 0.20 0.004 2003-2004 Deputy Commissioner(Appeals) of Sales Tax, Delhi

2.4 Sales Tax* - - 2003-2004 Deputy Commissioner(Appeals) of Sales Tax, Delhi

2.5 Sales Tax* 0.56 0.03 2004-2005 Additional Commissioner ofSales Tax, Delhi

2.6 Delhi Value Added Tax Act-2004** Trade Tax* 0.17 - 2005-2006 Deputy Commissioner(Appeals) of Sales Tax, Delhi

3.1 Tamil Nadu General Sales Tax Sales Tax* 0.04 0.04 1998-1999 Tribunal Commercial Tax,Act, 1959.** Chennai

3.2 Sales Tax* 0.07 - 2001-2002 Commercial Tax Officer,Chennai

3.3 Sales Tax* 0.44 0.10 2002-2003 Assistant AppellateCommissioner, Chennai

3.4 Sales Tax* 0.13 - 2004-2005 Commercial Tax Officer,Chennai

4.1 West Bengal Sales Tax Act, 1994.** Sales Tax* 0.005 - 2000-2001 Joint Commissioner (Appeals)of Sales Tax, Kolkata

4.2 Sales Tax* 0.02 - 2005-2006 Joint Commissioner (Appeals)of Sales Tax, Kolkata

5.1 Assam General Sales Tax, 1993.** Sales Tax* 0.01 - 2001-2002 Superintendent, Sales Tax,Guwahati

5.2 Sales Tax* 0.03 - 2002-2003 Superintendent, Sales Tax,Guwahati

5.3 Sales Tax* 0.01 0.01 2003-2004 Superintendent, Sales Tax,Guwahati

6.1 Rajasthan Sales Tax Act, 1994.** Sales Tax* 0.06 0.01 1998-1999; Deputy Commissioner2000-2001; (Appeals) of Sales Tax, Jaipur2001-2002 and2003-2004.

6.2 Rajasthan Value Added Tax Act-2003** Commercial tax * 0.17 - 2006-2007 and Deputy Commissioner (Appeals)2007-2008 of Commercial Tax, Jaipur

7.1 Kerala General Sales Tax Act, 1963.** Sales Tax* 0.05 0.02 2000-2001 Deputy Commissioner(Appeals) of Sales Tax, Kochi



7.2 Sales Tax* 0.34 0.13 2001-2002 Deputy Commissioner(Appeals) of Sales Tax, Kochi

8.1 Maharashtra Sales Tax Act, 1969.** Sales Tax* 0.01 0.01 2003-2004 Deputy Commissioner(Appeals) of Sales Tax, Mumbai

9.1 Himachal Pradesh Sales Tax (Including Penalty)* 0.08 0.08 2006-2007 Additional Commissioner ofValue Added Tax Act-2005** Sales Tax, Shimla

10.1 Karnataka Value Added Tax Act,2003.** Sales Tax* 0.47 - 2006-2007 Assessing Officer, Bengaluru11.1 Andhra Pradesh Sales Tax* 0.14 - 2006-2007 Commissioner Appeals,

Value Added Tax Act, 2005** Hyderabad11.2 Sales Tax* 0.77 - 2007-2008 Commissioner Appeals,

Hyderabad12.1 Punjab General Sales Tax Act, 1948** Sales Tax (Including Penalty)* 0.06 - 2004-2005 Deputy Commissioner

Appeals, Mohali12.2 Punjab Value Added Tax Act-2005** Sales Tax (Including Penalty)* 0.44 0.11 2007-2008 Deputy Commissioner

Appeals, Mohali13.1 Jammu & Kashmir Sales Tax (Including Penalty)* 2.75 0.08 2007-2008 and Deputy Commissioner Appeals,

Value Added tax Act-2005** 2008-2009 Jammu14.1 Uttarakhand Value Added Tax Act-2005 ** Sales Tax (Including Penalty)* 0.70 1.00 2007-2008 and Joint Commissioner

2008-2009 Commercial Tax, DehradunSub Total (a) 21.19 5.25*

Central Excise Act, 1944. Excise Duty (Including Penalty) 0.95 - 2002-2003 and CESTAT, Chennai2003-2004

Excise Duty (Including Penalty) 0.04 - March 2006 to Commissioner (Appeals),December 2006 Chennai

Excise Duty (Including Penalty) 0.01 - August 2006, Commissioner (Appeals),November 2006, ChennaiDecember 2006

Excise Duty (Including Penalty) 3.24 0.60 1980-1981; CESTAT Delhi1981-1982;1982-1983 and1983-1984

Excise Duty (Including Penalty) 0.25 0.15 March 2006 CESTAT, ChennaiExcise Duty (Including Penalty) 1.08 0.10 Cenvat balance CESTAT, Chennai

as on March1, 2006Excise Duty (Including Penalty) 1.14 - January 2006 to CESTAT, Chennai

September 2006Excise Duty 0.08 - July 2006 to Commissioner (Appeals),

December 2006 ChennaiExcise Duty (Including Penalty) 0.01 - Balance as on Commissioner (Appeals),

March 1, 2006 ChennaiExcise Duty (Including Penalty) 0.02 - March 2006 to Commissioner (Appeals),

September 2006 ChennaiExcise Duty (Including Penalty) 0.05 - As on March 1, 2006Commissioner (Appeals),

ChennaiExcise Duty reversed 0.04 - January 2007 to Commissioner (Appeals),

March 2007 ChennaiExcise Duty reversed 0.04 - April 2007 to Commissioner (Appeals),

July 2007 ChennaiExcise Duty reversed - - October 2006 to Commissioner (Appeals),

December 2006 ChennaiExcise Duty (Including Penalty) - - August 2007 to Commissioner (Appeals),

January 2008 ChennaiInterest on reversal of Cenvat 1.03 - July 2003 to CESTAT, ChennaiCredit (Including Penalty) September 2005Interest on reversal of Cenvat 1.63 - July 2003 to CESTAT, Chennai Credit (Including Penalty) March 2006Excise Duty (Including Penalty) 0.44 - October 2006 to Commissioner (Appeals),

June 2007 ChennaiExcise Duty (Including Penalty) 0.34 - September 2005 Commissioner (Appeals),

to September 2006 ChennaiExcise Duty (Including Penalty) 0.34 - September 2005 Commissioner (Appeals),

to September 2006 ChennaiExcise Duty (Including Penalty) 0.13 - January 2007 to Commissioner (Appeals),

June 2007 ChennaiSub Total (b)# 10.86 0.85

SL. Name of Statute Nature of the dues Amount Amount Period to which Forum where disputeNo. (Rs./crores) Deposited the amount the amount relates




27. Disclosure of related parties and related party transactions.

a) Company having substantial interest:HCL Corporation Ltd due to substantial interest in the voting power

b) List of Parties where control exists/existed:Wholly owned Subsidiaries:HCL Infinet Limited (Formerly known as Microcomp Limited)HCL Infocom Limited (Refer Note 25)HCL Security LimitedNatural Technologies Private Limited (Refer Note 23)

c) Other related parties with whom transactions have taken place during the year and/or where balances exist:HCL Technologies LimitedHCL Comnet LimitedHCL Comnet Systems and Services LimitedHCL Peripherals LimitedHCL BPO Services (NI) LimitedOthers (where significant influence exist):SSN College of EngineeringShri Sivasubramaniya Nadar Educational and Charitable Trust

Key Management Personnel

Mr. Ajai ChowdhryMr. J. V. RamamurthyMr. Sandeep KanwarMr. C.S. DwivediMr. George PaulMr. Hari BaskaranMr. Rajeev AsijaMr. Rajendra KumarMr. Rakesh Mehta1

Mr. S.R. BishtMr. Suman Ghose HazraMr. Sushil Kumar JainMr. Vivek Punekar

d) Summary of Related Party disclosures

Note: All transactions with related parties have been entered into in the normal course of business.

1Resigned w.e.f June 30, 2008

SL. Name of Statute Nature of the dues Amount Amount Period to which Forum where disputeNo. (Rs./crores) Deposited the amount the amount relates


Income Tax Act 1961 Income Tax 0.37 - 1989-1990 High Court, Delhi(Representative Assessee)Income Tax 0.16 0.16 1990-1991 High Court, Delhi(Representative Assessee)Income Tax 0.87 - 2005-06 Commissioner (Appeals), Delhi(Regular Assessment oferstwhile HCL Infinet Limited )Income Tax 1.54 - 2006-07 Commissioner (Appeals), Delhi(Regular Assessment oferstwhile HCL Infinet Limited )

Sub Total (c) 2.94 0.16

Total (a) + (b) + (c ) 34.99 6.26

Notes:

1 *Deposits under sales tax are adjustable against demand of other assessment years.

2 ** Including balances under Central Sales Tax Act, 1956 with relevant rules of respective states.

3 # Excludes interest for which there is no demand on the Company.


(Rs./Crores)

A. Transactions Company having Subsidiaries Others Key Management Totalsubstantial interest Personnel

Jun-09 Jun-08 Jun-09 Jun-08 Jun-09 Jun-08 Jun-09 Jun-08 Jun-09 Jun-08

Sales and Related Income 2.27 2.22 2.60 1.05 84.15 68.70 0.02 0.01 89.04 71.98- HCL Technologies Limited. 79.02 57.37- HCL Infinet Limited. 2.16 1.05Services 0.40 - 0.91 2.47 24.00 10.09 25.31 12.56- HCL Technologies Limited. 17.34 9.27- HCL Infinet Limited. 0.77 2.47Other Income 1.23 1.31 1.23 1.31- HCL Technologies Limited. 1.23 1.31Purchase of Goods 4.50 - - 0.33 4.50 0.33- HCL Security Limited. 4.50 -- HCL Technologies Limited. - 0.33Purchase of Services 2.53 1.75 8.54 5.71 11.07 7.46- HCL Technologies Limited. 7.32 4.37- HCL Comnet Limited. 0.53 0.25- HCL Peripherals Limited. 0.61 0.73- HCL Infinet Limited. 2.43 1.75Purchase of Investment 14.33 8.46 14.33 8.46- HCL Infinet Limited. 10.00 -- HCL Security Limited. 4.00 0.05- Natural Technologies Private Limited. - 8.41Loans and Advances Given 2.76 1.63 2.76 1.63- HCL Security Limited. 1.66 -- Natural Technologies Private Limited. - 1.28- HCL Infinet Limited. 1.02 0.25Donations Given- Shri Sivasubramaniya - 0.48 - 0.48Nadar Educational and Charitable Trust - 0.48Assets Purchased - 0.66 - 0.66- HCL Technologies Limited. - 0.66Remuneration 9.27 9.01 9.27 9.01- Mr. Ajai Chowdhry 3.25 3.25- Mr. Rajeev Asija 1.00 1.00- Mr. J V Ramamurthy 1.06 0.99- Mr. Sandeep Kanwar 0.93 0.86Reimbursements towards expenditurea) Received 0.05 0.05 0.49 0.56 0.06 0.11 0.60 0.72

- HCL Technologies Limited. 0.05 0.09- HCL Comnet Limited. 0.01 0.02

- HCL Infinet Limited. 0.49 0.56b) Made 0.06 0.05 0.02 0.02 0.81 0.04 0.89 0.11 - HCL Technologies Limited. 0.70 0.01 - HCL Comnet Limited. 0.02 0.03 - HCL Infinet Limited. 0.02 0.02

B. Amount due to / from related partiesInvestment 16.06 10.13 16.06 10.13Accounts Receivables 0.89 1.81 0.75 1.61 38.87 21.25 40.51 24.67Other Recoverables 2.76 1.63 0.47 0.46 3.23 2.09Creditors 2.21 0.01 2.08 0.99 4.29 1.00Other Payables 0.03 0.01 0.56 0.88 0.59 0.89



28. Additional disclosure as per Clause 32 of the Listing Agreement2009 2008

Rs./Crores Rs./CroresDisclosure of amounts at the year end and the maximum amount ofloans/advances/investments outstanding during the year ended June 30, 2009. (Refer Note 23)

A. Loans and Advances in the nature of Loans to Subsidiary.a. Name Natural Technologies

- Private Limitedb. Balance outstanding at the year end Nil 1.00c. Maximum amount outstanding during the year ended June 30, 2009 Nil 1.00

B. Loans and Advances in the nature of loans to Fellow Subsidiaries

a. Name - Nilb. Balance outstanding at the year end Nil Nilc. Maximum amount outstanding during the year ended June 30, 2009 Nil Nil

C. Loans and Advances in the nature of Loans where there is no repayment schedule

a. Name - Natural TechnologiesPrivate Limited

b. Balance outstanding at the year end Nil 1.00c. Maximum amount outstanding during the year ended June 30, 2009 Nil 1.00

D. Loans and Advances in the nature of loans where no interest or interestbelow Section 372A of Companies Act is charged

a. Name - Natural TechnologiesPrivate Limited

b. Balance outstanding at the year end Nil 1.00c. Maximum amount outstanding during the year ended June 30, 2009 Nil 1.00

Loans given to employees under various schemes of the Companyhave been considered to be out of purview of disclosure requirement.

E. Loans and Advances in the nature of loans to firms/companies inwhich directors are interested Nil Nil

F. Disclosure of Investment in the Company's own shares

a. Name of the Loanee - -b. Balance outstanding at the year end Nil Nilc. Maximum amount outstanding during the year ended June 30, 2009 Nil Nild. Investments made by the Loanee Nil Nile. Maximum amount of Investment during the year ended June 30, 2009 Nil Nil

29. Pursuant to notification u/s 211(3C) of the Companies Act, 1956 issued by the Ministry of Corporate Affairs on March31, 2009, the Company has opted to accumulate the exchange difference arising on translation of foreign currencyitems having a term of 12 months or more and amortize such exchange difference over the useful life of the item.Accordingly, the profit before tax for the year ended June 30, 2009 is lower by Rs.0.12 Crores on account of abovementioned exchange difference, which will be amortised in future period(s) but not beyond March 31, 2011.

30. i) An amount of Rs. 0.23 Crores (2008- Rs. 0.05 Crores), being profit on sale of fixed assets has been adjustedagainst the loss on sale of fixed assets.

ii) The Profit/ loss on account of foreign exchange fluctuations and on disposal of current investments are disclosedafter deducting or adding related loss or profit, as the case may be, on similar transactions.

iii) Advertisement, Publicity & Entertainment expenses, wherever on sharing basis, are shown at amounts borne by thecompany.



31. Derivative Instruments outstanding at the Balance Sheet date:

The Company has following outstanding forward contracts to buy foreign currency as at June 30, 2009:

Currency Foreign Currency Average Rate Maximum Maturity PeriodValue/Crores

2009 2008 2009 2008 2009 2008

USD $9.57 $ 8.19 49.61 41.72 5 Months 5 MonthsSEK - Kr 0.48 - 7.06 - 3 MonthsJPY ¥ 2.66 ¥ 15.12 50.31* 40.20* 1 Month 3 Months

*Average rate of JPY/INR is for 100 Yen.

The above forward contracts have been undertaken to hedge the foreign currency exposures on Import/Royalty payablesas at June 30, 2009.

As on June 30, 2009, the foreign currency exposure that is not hedged by a derivative instrument or otherwise isRs.188.88 Crores (2008-Rs.165.86 Crores).

32. Amount due from companies under the same management under section 370(IB) of the Companies Act, 19562009 2008

Rs./Crores Rs./CroresHCL Technologies Limited 35.82 17.81HCL Comnet Limited 0.40 0.13HCL Comnet Systems and Services Limited 0.21 0.38HCL BPO Services (NI) Limited 0.61 1.36HCL Peripherals Limited 0.05 -

Loans and Advances and Other RecoverablesHCL Comnet Limited 0.05 0.04HCL Peripherals Limited 0.42 0.42

33. The company remits the dividends to its non resident shareholders in Indian Rupees.

34. Previous year’s figures have been regrouped / recasted, where necessary, to confirm to current year’s presentation.



Registration DetailsCorporation Identity Number (CIN)

L 7 2 2 0 0 D L 1 9 8 6 P L C 0 2 3 9 5 5

State Code

5 5

Balance Sheet Date

3 0 0 6 2 0 0 9

D D M M Y Y Y Y

Capital Raised During the Year (Amount in Rs. Thousands)

Public Issue Rights Issue

N I L N I L

Bonus Issue Private Placement

N I L N I L

Position of Mobilisation and Deployment of funds (Amount in Rs. Thousands)

Total Liabilities Total Assets

Sources of Funds 1 3 5 9 2 0 6 9 1 3 5 9 2 0 6 9

Paid-up Capital Reserves and Surplus

3 4 2 4 2 4 1 0 9 8 1 1 5 1

Secured Loans Unsecured Loans

1 0 1 8 4 9 4 1 2 5 0 0 0 0

Application of Funds Net Fixed Assets Investments

1 6 0 1 3 0 9 2 7 6 0 9 5 7

Net Current Assets Misc. Expenditure

9 1 8 8 9 8 4 N I L

Accumulated Losses

N I L

Performance of Company Turnover Total Expenditure

1 2 2 4 4 3 3 0 3 1 1 8 7 0 4 6 9 9

(Please tick Appropriate box Profit/ Loss before Tax Profit/ Loss After Tax

+ for Profit, - for Loss) + 3 7 3 8 6 0 4 + 2 6 0 4 3 7 1

Earning Per Share in Rs. Dividend Rate (%)

1 5 . 2 1 3 2 5

Generic Name of Three Principal Products/ Services of Company (as per monetary terms.)

Item Code No. (ITC Code) 8 4 7 1

Product Description C O M P U T E R S


Product Description T E L E C O M M U N I C A T I O N P R O D U C T S


Product Description O F F I C E A U T O M A T I O N P R O D U C T S

BALANCE SHEET ABSTRACT AND COMPANY’S GENERAL BUSINESS PROFILE

CONSOLIDATED ACCOUNTS


AUDITORS’ REPORT

Report of the Auditors’ to the Board of Directors of HCL Infosystems Limited on the Consolidated Financial Statements ofHCL Infosystems and its Subsidiaries.

1. We have audited the attached consolidated Balance Sheet of HCL Infosystems Limited and its subsidiaries and jointventure of a subsidiary (the Group), as at June 30, 2009, the consolidated Profit and Loss Account and consolidatedCash Flow Statement for the year ended on that date annexed thereto, which we have signed under reference to thisreport. These consolidated financial statements are the responsibility of Company’s management. Our responsibility isto express an opinion on these consolidated financial statements based on our audit.

2. We conducted our audit in accordance with the auditing standards generally accepted in India. Those standardsrequire that we plan and perform the audit to obtain reasonable assurance about whether the financial statements areprepared, in all material respects, in accordance with an identified financial reporting framework and are free ofmaterial misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosuresin the financial statements. An audit also includes assessing the accounting principles used and significant estimatesmade by management, as well as evaluating the overall financial statement presentation. We believe that our auditprovides a reasonable basis for our opinion.

3. We did not audit the financial statements of the joint venture of a subsidiary whose financial statements reflect totalassets of Rs. 0.50 crores as at June 30, 2009 and there is no revenue for the period ended on that date, consideredin the consolidated financial statements. Attention is invited to Note No. 19 of Notes to Accounts (Schedule 21)regarding the Joint Venture whose financial statements are unaudited, the impact of which is not likely to be material.

4. We report that the consolidated financial statements have been prepared by HCL Infosystems Limited’s managementin accordance with the requirements of Accounting Standard (AS) 21, Consolidated Financial Statements and AccountingStandard (AS) 27 Financial Reporting of Interests in Joint Ventures, notified under Section 211(3C) of the CompaniesAct, 1956 and on the basis of the separate audited financial statements of HCL Infosystems Limited and its subsidiariesand joint venture, included in the consolidated financial statements.

5. On the basis of the information and explanations given to us and on consideration of the separate audit reports onindividual audited financial statements of HCL Infosystems Limited and its aforesaid Subsidiaries and joint venture, inour opinion, the consolidated financial statements give a true and fair view in conformity with the accounting principlesgenerally accepted in India:

a. in case of the Consolidated Balance Sheet, of the consolidated state of affairs of the Group as at June 30, 2009;

b. in case of the Consolidated Profit and Loss Account, of the consolidated results of operations for the Group foryear ended on that date; and

c. in case of the Consolidated Cash Flow Statement, of the Consolidated Cash Flows of the Group for the year endedon that date.

V. NijhawanPartner

Membership No. F – 87228For and on behalf of

Place : New Delhi Price WaterhouseDate : September 8, 2009 Chartered Accountants


CONSOLIDATED BALANCE SHEET AS AT 30TH JUNE

This is the Consolidated Balance Sheet The schedules referred to above form an integral part ofreferred to in our report of even date the Consolidated Balance Sheet


V. NIJHAWAN AJAI CHOWDHRY J.V. RAMAMURTHY SANDEEP KANWARPartner Chairman and Chief Operating Officer Chief Financial OfficerMembership Number F-87228 Chief Executive OfficerFor and on behalf ofPrice Waterhouse SUSHIL KUMAR JAINChartered Accountants Company Secretary

Place : New DelhiDate : September 08, 2009

As at As atSchedule 30.06.2009 30.06.2008(Note No.) Rs./Crores Rs./Crores

Sources of Funds:

Shareholders’ Funds :Capital 1 34.24 34.23Reserves and Surplus 2 1087.66 981.96Loan Funds:Secured Loans 3 101.85 1.52Unsecured Loans 4 125.00 353.00Deferred Tax Liabilities (Net) 21 (5 b) - 6.72

1348.75 1377.43

Application of Funds:

Fixed Assets: 5Gross Block 290.16 270.87Less: Depreciation 122.21 116.36Net Block 167.95 154.51Capital Work-in-Progress 17.26 185.21 15.30 169.81(Including Capital Advances)Investments 6 260.04 215.61Deferred Tax Assets (Net) 21 (5 b) 5.64 -Current Assets, Loans and Advances:Inventories 7 889.09 898.53Sundry Debtors 8 1506.31 1248.08Cash and Bank Balances 9 210.07 319.20Other Current Assets 10 104.68 95.20Loans and Advances 11 201.44 143.51

2911.59 2704.52

Less: Current Liabilities and Provisions 12Current Liabilities 1935.40 1643.36Provisions 78.33 69.15

2013.73 1712.51

Net Current Assets 897.86 992.01

1348.75 1377.43

Consolidated Significant Accounting Policies 20Consolidated Notes to Accounts 21


CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 30TH JUNE

Year ended Year endedSchedule 30.06.2009 30.06.2008(Note No.) Rs./Crores Rs./Crores

IncomeBusiness Income 13 12378.49 12402.62Less : Excise Duty 126.08 12252.41 158.00 12244.62Other Income 14 37.13 49.94

12289.54 12294.56ExpenditureCost of Goods and Services Sold 15 11160.87 11188.62Personnel 16 338.23 301.17Administration, Selling, Distribution and Others 17 359.42 294.61Repairs 18 11.68 11.63Finance Charges 19 44.66 47.60License Fees 2.12 2.18Depreciation and Amortisation 5 21.30 18.67Less : Transfer from Revaluation Reserve 0.05 21.25 0.05 18.62

11938.23 11864.43

Profit before Tax 351.31 430.13Tax Expense 21 (5 b)- Current [Wealth tax Rs. 0.02 Crores(2008 - Rs. 0.02 Crores)] 122.17 131.50- Fringe Benefit 1.55 4.11- Deferred (12.36) 111.36 (5.63) 129.98Profit after Tax 239.95 300.15Add: Balance in Profit and Loss Account brought forward 713.14 603.57Adjustments due to scheme of arrangement (1.91) -

Profit available for Appropriation 951.18 903.72

Less: Appropriations:Debenture Redemption Reserve 4.00 -Proposed Dividend 25.68 34.23Corporate Dividend Tax on Proposed Dividend 4.36 5.82Interim Dividend [including Rs. 0.00 Crores(2008-Rs. 0.20 Crores) paid for previous year] 85.59 102.61Corporate Dividend Tax on Interim Dividend 14.55 17.44Transfer to General Reserve 26.05 30.47Balance Carried over 790.95 713.14

951.18 903.72Earning per equity share (in Rs.)Basic (of Rs. 2/- each) 21 (9) 14.02 17.61Diluted (of Rs. 2/- each) 21 (9) 14.02 17.38Consolidated Significant Accounting Policies 20Consolidated Notes to Accounts 21

This is the Consolidated Profit and Loss Account The schedules referred to above form an integral part ofreferred to in our report of even date the Consolidated Profit and Loss Account





CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 30TH JUNE



1 Cash Flow from Operating Activities:

Net profit before tax 351.31 430.13

Adjustments for:

Depreciation 21.25 18.62

Interest Expense 44.66 47.60

Interest Income (7.47) (7.87)

Dividend Income (4.61) (14.50)

Loss on Sale of Fixed Assets 0.30 -

Fixed Assets Written Off 0.12 -

(Profit)/Loss on sale of Investments (0.93) (1.75)

Provision for Doubtful Debts and Bad Debts written off 26.00 2.34

Provision Doubtful Loans and Advances 5.49 -

Provision For Other Current Assets 0.38 -

Provisions/Liability no longer required written back (18.32) (16.66)

Provision for Gratuity and other Employee Benefits 5.56 4.43

Provision for diminution in value of Investments 0.04 0.21

Unrealised foreign exchange (gain) /loss 7.70 8.54

Provision for warranty liability 12.90 93.07 13.32 54.28

Operating profit before working capital changes 444.38 484.41

Adjustments for changes in working capital :

- (Increase)/Decrease in Sundry Debtors (282.15) (238.15)

- (Increase)/Decrease in Other Current Assets, (76.58) (72.99)

Loans and Advances

- (Increase)/Decrease in Inventories 9.45 (106.65)

- Increase/(Decrease) in Current Liabilities and Provisions 276.98 (72.30) 236.84 (180.95)

Cash generated from operations 372.08 303.46

- Taxes (Paid)/Received (Net of Tax Deducted at Source) (107.73) (152.12)

Net cash from Operating Activities (A) 264.35 151.34

2. Cash Flow from Investing Activities:

Purchase of fixed assets

Additions during the period (excludes Exchange Fluctuation) (36.99) (52.23)


Proceeds from Sale of fixed assets 1.71 2.51

Proceeds from Sale of Investments 1,990.83 3,611.33

Purchase of investments (2034.37) (3,553.81)

Interest Received 7.59 7.92

Dividend Received 4.61 14.50

Net cash from/(used in) investing activities (B) (64.35) 41.73


3. Cash Flow from financing activities:Share Capital issued 0.01 0.40Share Premium Received (Net) 0.26 16.12Secured Loan

Short term received/(paid) (1.52) (4.50)Long term received 103.59 -Long term paid (1.74) (6.00)

Unsecured LoanShort term received/(paid) (147.47) 183.33Long term received - 67.94Long term paid (81.45) (123.06)

Interest Paid (40.90) (46.43)Dividend Paid (119.55) (136.12)Dividend Tax Paid (20.36) (23.20)

Net cash from/(used in) financing activities (C) (309.13) (71.52)

Net Increase/(Decrease) in Cash & Cash Equivalents (A+B+C) (109.13) 121.55

Opening Balance of Cash and Cash Equivalents 319.20 197.65Closing Balance of Cash and Cash Equivalents 210.07 319.20[Includes exchange rate fluctuation of Rs. 1.04 Crores(2008-Rs. 0.14 Crores)]Cash and cash equivalents comprise 210.07 319.20Cash,Cheques and Drafts (in hand) 52.62 100.62Balance with Scheduled Banks in Current Accounts 140.95 217.32Balance with Scheduled Banks in Deposits Accounts 8.49 0.79Balance with Non-Scheduled Banks in Current Accounts 8.01 0.47

Notes:1 The above Consolidated Cash Flow Statement has been prepared under the indirect method set out in Accounting

Standard-3, notified u/s 211(3C) of Companies Act, 1956.2 Cash and cash equivalents include the following balances with scheduled banks which are not available for use by the

company:Year ended Year ended


Deposit Accounts 3.35 -Unclaimed Dividend 3.22 2.94Margin Money for Bank Guarantee 0.32 0.43

3 Schedule 1 to 21 form integral part of the Consolidated Cash Flow Statement4 Figures in brackets indicate cash outgo.

CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 30TH JUNE



This is the Consolidated Cash Flow Statementreferred to in our report of even date





SCHEDULES TO THE CONSOLIDATED BALANCE SHEET AS AT 30TH JUNE

As at As at30.06.2009 30.06.2008


1- Capital[Schedule-21, Note 6 & 13]

Authorised:55,00,00,000 (2008 - 55,00,00,000 Equity shares of Rs. 2/- each) 110.00 110.005,00,000 (2008 - 5,00,000) Preference Shares of Rs. 100/- each 5.00 5.00

115.00 115.00

Issued, Subscribed and Paid up:17,12,12,031 (2008 - 17,11,49,656) Equity shares of Rs. 2/- each,fully paid up. 34.24 34.23

Add : Shares Forfeited 0.00 0.00[Represents Rs. 1000 (2008 - Rs. 1000)]

34.24 34.23Notes:-

1. Paid up share capital includes :

a) 5,04,47,295 (2008 - 5,04,47,295) Equity Shares of Rs. 2/- each issued pursuant to contract without payment being received incash.

b) 5,31,82,765 (2008 - 5,31,82,765) Equity Shares of Rs. 2/- each Bonus shares issued from Securities Premium Account.c) 1,15,84,715 (2008 - 1,15,22,340) Equity Shares of Rs. 2/- each issued pursuant to the exercise of options granted under

Employee Stock Option Scheme 2000.d) 80,021 (2008 - 80,021) Equity Shares of Rs. 2/- each issued pursuant to the exercise of options granted under Employee Stock

Based Compensation Plan 2005.

2. Of the above subscribed shares, 7,58,79,734 (2008 - 7,46,51,388) Equity Shares of Rs. 2/- each are held by HCL CorporationLimited.

2- Reserves and Surplus As at Additions/ Deductions/ As at[Schedule-21, Notes 6 and 15] 01.07.2008 Adjustments Adjustments 30.06.2009

Rs./Crores Rs./Crores Rs./Crores Rs./Crores

Capital Reserve 0.00 - - 0.00[Represents Rs. 37,135 (2008 - Rs. 37,135)] ( - ) ( - ) ( - ) ( - )

Securities Premium Account 124.91 0.80 0.09 125.62(108.79) (22.66) (6.54) (124.91)

General Reserve 141.04 26.05 - 167.09(110.57) (30.47) ( - ) (141.04)

Debenture Redemption Reserve - 4.00 - 4.00

Revaluation Reserve (Adj.) 2.87 - 2.87 -(2.92) ( - ) (0.05) (2.87)

Profit and Loss Account 713.14 77.81 - 790.95(603.57) (109.57) ( - ) (713.14)

981.96 108.66 2.96 1087.66(825.85) (162.70) (6.59) (981.96)

Notes:-1 Addition to the Securities Premium Account is in respect of allotment of equity shares of Rs. 2 each to employees of the

company and its subsidiaries under the Employee Stock Option Scheme 2000 and Employee Stock Based CompensationPlan 2005 is Rs. 0.36 Crores (2008 Rs. 22.66 Crores ) .

2 Deduction from the Securities Premium Account is in respect of the amount paid towards Fringe benefit tax on exerciseof options granted under Employee Stock Option Scheme 2000 and Employee Stock Based Compensation Plan 2005.

3 Previous year’s figures are given in brackets.



As at As at30.06.2009 30.06.2008


3- Secured Loans

Long Term

Debentures 80.00 -

Loans from Banks:

- Cash Credits - 1.46

Loans from Others:

- Long Term Loan 21.85 -

Finance Lease Obligation - 0.06

101.85 1.52

Notes:-

1) The Company issued 800 Rated taxable Secured Redeemable Non-Convertible Debentures of face value of Rs. 10 lakhseach, aggreagating to Rs. 80.00 Crores, at a coupon rate 12.75% per annum payable annually on private placementbasis to Life Insurance Corporation of India on December 19, 2008. These Debentures are redeemable at par at the endof 5th year from the date of allotment, with a call option excercisable by the issuer, only at the end of 3 years from thedate of allotment. Debentures are secured by way of first mortgage and charge on identified immovale and movableassets of the company.

2) Cash Credits along with non-fund based facilities from Banks are secured by way of hypothecation of stock-in-trade,book debts as first charge and by way of second charge on all the immovable and movable assets of the Company. Thecharge ranks pari-passu amongst Bankers.

3) Term loan from others is secured by way of first charge on IT and Telcommunication assets.

4) Payable within one year Rs. 4.82 crores (2008-Rs. 1.52 Crores).

4- Unsecured Loans

Public Deposits - 0.01

Short term Loans– From Banks– Commercial Paper 20.00 20.00– Foreign Currency Loan - 106.21– Others - 0.34

From Others– Commercial Paper 105.00 145.00– Others - 81.44

125.00 353.00

Note: Amount payable within one year is Rs. 125.00 Crores (2008 - Rs. 353.00 Crores)


5- Fixed Assets[Schedule-21, Notes 1, 2, 7(b), and 15] Rs./Crores

Gross Block Depreciation Net Block

As at Additions/ Deductions/ As at As at Additions/ Deductions As at As at As at

01.07.2008 Adjusments during Adjustments/ Retired 30.06.2009 01.07.2008 Adjustments Adjustments/ Retired 30.06.2009 30.06.2009 30.06.2008

the Year during the Year during the Year during the Year

Tangible:

Land - Leasehold 10.88 2.05 - 12.93 0.62 0.15 - 0.77 12.16 10.26

Land - Freehold 25.61 0.06 - 25.67 - - - - 25.67 25.61

Leasehold Premises 1.82 - - 1.82 0.09 0.03 - 0.12 1.70 1.73

Buildings 75.19 8.05 0.03 83.21 13.42 1.98 0.01 15.39 67.82 61.77

Plant and Machinery, 82.17 15.69 7.74 90.12 57.08 9.22 7.35 58.95 31.17 25.09

Air Conditioners andNetworking Equipments

Furniture, Fixtures and 61.68 14.42 8.25 67.85 40.44 8.99 6.89 42.54 25.31 21.24Office Equipment

Vehicles - Owned 1.48 0.19 0.20 1.47 0.92 0.25 0.18 0.99 0.48 0.57

- Leased 0.16 - 0.16 - 0.09 - 0.09 - - 0.06

Intangible :

Goodwill 4.22 - 4.14 0.08 - - - - 0.08 4.22

Software 5.16 0.87 1.52 4.51 3.45 0.88 1.26 3.07 1.44 1.71

License Fees 2.50 - - 2.50 0.25 0.13 - 0.38 2.12 2.25

TOTAL 270.87 41.33 22.04 290.16 116.36 21.63 15.78 122.21 167.95 154.51

Previous Year 223.78 52.19 5.10 270.87 99.37 19.64 2.65 116.36

Capital Work-in-Progress 17.26 15.30

[Including Capital Advances of Rs. 0.87 Crores (2008 - Rs. 3.92 Crores)] 185.21 169.81

Notes:-

1. Land-Freehold and Building at Ambattur amounting to Rs.0.57 Crores (2008 - Rs.0.57 Crores) are pending registration in the name of the company.

2. Software comprise of cost of acquiring licences and implementation charges.


6- Investments

As at As at Face As at As at

30.06.2009 30.06.2008 Value 30.06.2009 30.06.2008


Unquoted (Others) : Current

Dividend Options

HSBC Liquid Plus 17,901,873 10,438,484 10 18.00 10.47

IDFC Floating Rate Fund - Long Term Plan 17,986,279 29,051,418 10 18.02 29.14

IDFC Money Manager Fund 23,984,230 - 10 24.03 -

ICICI Prudential Flexible Income Plan 25,691,455 40,575,673 10 27.07 42.80

Kotak Flexi Debt- Quarterly Dividend 19,762,322 24,946,136 10 20.13 25.37

Kotak Flexi Debt- Daily Dividend 14,948,452 - 10 15.02 -

Reliance Liquid Plus 200,214 320,890 1000 20.06 32.15

Reliance Money Manager Fund Institutional

Option- Weekly Dividend 179,924 - 10 18.02 -

Tata Floater Fund 26,444,252 19,630,564 10 26.66 19.79

UTI Liquid Cash Plan - 167,269 1000 - 17.11

HDFC Cash Management Fund 33,970,011 7,995,757 10 34.03 8.01

Principal Cash Management Fund 38,790,521 20,034,216 10 39.00 20.04

Grindlays Cash Fund - Daily Dividend - 10,135,922 10 - 10.73

260.04 215.61

Note:- Net asset value of Unquoted (Others) Current Investments in Mutual Funds as on June 30, 2009 is Rs. 260.07 Crores (2008 -

Rs. 215.69 Crores).



As at As at30.06.2009 30.06.2008

Rs./Crores Rs./Crores7- Inventories

Raw materials and Components [Including in TransitRs. 13.15 Crores (2008 - Rs. 36.81 Crores)] 89.25 119.67Stores and Spares 66.64 64.22Finished Goods [Including in Transit Rs. 149.30 Crores(2008 - Rs. 118.23 Crores)] 732.04 712.96Work-In-Progress 1.16 1.68

889.09 898.53

8- Sundry Debtors - Unsecured

Debts outstanding for a period exceeding six months : - Considered Good 529.78 364.49 - Considered Doubtful 20.35 3.25

550.13 367.74

Other Debts :- Considered Good 976.53 883.59

1526.66 1251.33Less : Provision for Doubtful Debts 20.35 1506.31 3.25 1248.08

1506.31 1248.08

9- Cash and Bank Balances

Cash balance on hand 0.29 0.43Cheques in hand 52.33 100.19Balances with Scheduled Banks :

- On Current Account 137.43 214.34Less :- Money held in Trust 0.02 137.41 0.39 213.95

- On Dividend Account 3.22 2.94- On Margin Account 0.32 0.43- On Fixed Deposits [Includes Escrow AccountRs. 3.35 Crores (2008 Rs. Nil)] 8.81 1.11Less :- Money held in Trust 0.32 8.49 0.32 0.79

Balances with Non-Scheduled Banks:- On Current Account

Standard Chartered Bank, Singapore-USD 7.99 0.44[Maximum amount outstanding during the yearRs. 11.15 Crores (2008 - Rs.1.05 Crores)]Standard Chartered Bank, Singapore- SGD 0.02 8.01 0.03 0.47[Maximum amount outstanding during the yearRs. 0.04 Crores (2008 - Rs.0.03 Crores)]

210.07 319.20Note:-1) Fixed Deposit includes Rs. 0.06 Crores (2008 - Rs. 0.07 Crores) under lien as margin money on bank guarantee.2) Balance with current accounts includes Rs. 0.25 Crores which represent 49% share in bank balance of Scout Mobile

Internet Services Limited, a Joint Venture with Nokia Corporation, Finland (Refer Note 14 on schedule 21).

10- Other Current Assets- Unsecured[Schedule-21, Notes 3(c) and 7]

Considered GoodDeposits 34.55 27.40Lease Rental Recoverable 20.09 35.63Unbilled Revenue 50.04 32.17Considered Doubtful 0.38 -Less: Provision for Doubtful Assets 0.38 - - -

104.68 95.20



11- Loans and Advances - Unsecured[Schedule - Notes 8]

Considered Good

- Amounts Recoverable in cash or in kind

or for value to be received 169.76 124.93

- Balances with Customs, Port Trust,

Excise and Sales Tax Authorities 31.68 18.58

Considered Doubtful 5.49 - - -

Less: Provision for Doubtful Loans and Advances 5.49 - - -

201.44 143.51

12- Current Liabilities and Provisions[Schedule-21, Notes 4, 5 and 12]

Current Liabilities:Acceptances 438.40 252.82

Sundry Creditors :

- Due to Micro and Small Enterprises 1.76 0.60

- Other than Micro and Small Enterprises 1199.92 1201.68 1170.22 1170.82

Sundry Deposits 4.15 4.31

Interest accrued but not due :

- On Secured Loans 5.51 -

- On Unsecured Loans - Others - 1.73

Investor Education and Protection Fund :

- Unclaimed Dividend * 3.22 2.94

Advances from Customers 36.94 26.82

Deferred Revenue 174.05 147.14

Other Liabilities 71.45 36.78

1935.40 1643.36

Provisions:Proposed Dividend 25.68 34.23

Corporate Dividend Tax on Proposed Dividend 4.36 5.82

For Income Tax [Net of Advance Income Tax of

Rs. 387.82 Crores (2008 - Rs. 368.60 Crores)] 19.00 3.02

For Warranty Liability 4.28 5.65

For Gratuity and other Employee Benefits 25.01 20.43

78.33 69.15

2013.73 1712.51

*There are no amounts due and outstanding to be credited to Investor Education and Protection Fund as at June 30, 2009.

These shall be credited and paid to the fund as and when due.

As at As at30.06.2009 30.06.2008



SCHEDULES TO THE CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 30TH JUNE

13- Business Income

Sales and Related Income 11724.82 11944.40Services 653.67 458.22

12378.49 12402.62

14- Other Income[Schedule-21, Notes 7(a)]

Interest :- On Lease Rental 4.63 5.28- On Fixed Deposits 1.08 0.26 [TDS Rs. 0.13 Crores (2008 - Rs. 0.06 Crores)]- On Other Loans and Advances 0.01 0.01- On Others 1.75 7.47 2.32 7.87

Dividend from (Others) Current Investments 4.61 14.50Insurance Claims 0.27 0.10Provisions/Liabilities no longer required written back 18.32 16.66Profit on disposal of (Others) Current Investments 0.93 1.75Profit on Foreign Exchange Fluctuation - 1.66Miscellaneous Income 5.53 7.40

37.13 49.94

15- Cost of Goods and Services SoldRaw Materials and Components Consumed 1860.34 1753.81Purchase of Traded Goods 8928.35 9269.33Purchase of Services and Network Operating Cost 256.41 114.32Stores and Spares Consumed 28.46 29.38Power and Fuel 1.72 1.60Labour and Processing Charges 10.93 10.49Royalty 93.22 99.52

11179.43 11278.45Closing Stock

- Finished Goods (Including in Transit) 732.04 712.96 [Including excise duty of Rs. 3.97 Crores (2008 - Rs. 3.43 Crores)]- Work-in-Progress 1.16 1.68

733.20 714.64Opening stock

- Finished Goods (Including in Transit) 712.96 623.58 [Including excise duty Rs. 3.15 Crores (2008 - Rs. 3.77 Crores)]- Work-in-Progress 1.68 1.23

714.64 624.81

(Increase)/Decrease in stocks of Finished Goods and Work-in-Progress : (18.56) (89.83)

11160.87 11188.62

16- Personnel[Schedule-21, Note 12]

Salaries, Wages, Allowances, Bonus and Gratuity 317.23 283.02Contribution to Provident and Other Funds 12.32 10.16Staff Welfare Expenses 8.68 7.99

338.23 301.17




SCHEDULES TO THE CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 30TH JUNE

17- Administration, Selling, Distribution and Others

[Schedule-21,Note 7 (b)]

Rent 26.62 19.50

Rates and Taxes 12.02 9.75

Printing and Stationery 3.99 3.98

Communication 8.79 10.71

Travelling and Conveyance 31.52 33.64

Packing, Freight and Forwarding 51.71 55.32

Legal and Professional 23.93 19.00

Training and Conference 4.53 5.02

Office Electricity and Water 10.90 8.34

Insurance 7.71 7.27

Advertisement, Publicity and Entertainment 57.31 71.61

Hire Charges 4.19 4.15

Commission on Sales 22.39 20.03

Bank Charges 10.56 9.43

Provision for Doubtful Debts 20.19 2.36

Provision for Doubtful Loans and Advances 5.49 -

Provision for Other Current Assets 0.38 -

Loss on Sale of Fixed Assets 0.30 -

Fixed Assets written off 0.12 -

Loss on Foreign Exchange Fluctuation 26.35 -

Diminution in value of Current Investment 0.04 0.21

Miscellaneous 30.38 14.29

359.42 294.61

18- Repairs

Plant and Machinery 1.62 1.62

Buildings 1.40 0.84

Others 8.66 9.17

11.68 11.63

19- Finance Charges

Interest on :

- Debentures 5.42 -

- Other fixed loans 22.80 32.76

- On Others 16.44 14.84

44.66 47.60




SCHEDULES TO THE CONSOLIDATED BALANCE SHEET & PROFIT AND LOSS ACCOUNT

SCHEDULE 20 - CONSOLIDATED SIGNIFICANT ACCOUNTING POLICIES

1. GROUP COMPANIES

HCL Infosystems Limited (The Company) has three wholly owned subsidiary companies and Joint venture (JV) (TheGroup), as given in the following table.

Name of the Subsidiary/JV Country of Extent of holding (%)Company Incorporation as at June 30

2009 2008

HCL Infinet Ltd. India 100 100(formerly known as Microcomp Limited)

HCL Infocom Limited India 100 -(Refer Note 14 on schedule No. 21)

HCL Security Limited India 100 100

Natural Technologies Private Limited (“NTPL”) India - 100(Refer Note 15 on schedule No. 21)

Scout Mobile Internet Services Limited India 49 -(Refer Note 14 on schedule No. 21)

2. BASIS FOR PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS

The consolidated financial statements of the Group have been prepared and presented under the historical costconvention on the accrual basis of accounting in accordance with the accounting principles generally accepted inIndia and comply with the mandatory Accounting Standards notified under section 211(3C) of the Companies Act,1956 and the relevant provisions of the Companies Act, 1956.

Financial statements of the Company and the subsidiaries have been combined on a line-by-line basis by addingtogether the book values of like items of assets, liabilities, income and expenses after eliminating intra-group balances/transactions in full as per Accounting Standard 21 on Consolidated Financial Statements.

All unrealized surpluses and deficits on transactions between the Group companies are eliminated.

Accounting policies between the Group companies are consistent to the extent practicable. Appropriate disclosure ismade of significant deviations from the company accounting policies, which have not been adjusted.

3. FIXED ASSETS

Fixed Assets including in-house capitalisation and Capital Work-in-Progress are stated at cost except those which arerevalued from time to time on the basis of current replacement cost / value to the Group, net of accumulated depreciation.

Assets taken on finance lease on or after 1.4.2001 are stated at fair value of the assets or present value of minimumlease payments whichever is lower.

Intangible Assets are stated at cost net of amortization.

4. DEPRECIATION

(i) Depreciation has been calculated as under:

a) Depreciation on fixed assets is provided on a prorata basis using the straight–line method based on economicuseful life determined by way of periodical technical evaluation:

Economic useful lives which are not exceeding those stipulated in Schedule XIV of the Companies Act, 1956are as under:

Plant and Machinery 4-6 yearsBuilding - Factory 25-28 years

- Others 50-58 years- Capitalised prior to 1.5.1986 As per Section 205(2)(b) of the Companies Act, 1956- Acquired on or after 1.5.1986 At the rates specified in Schedule XIV of the Companies

and before 16.12.1993 (Amendment) Act, 1988Furniture & Fixture 4-6 yearsAir Conditioners 3-6 years


Vehicles 4-6 yearsOffice Equipment 3-6 yearsNetworking equipment 3-6 yearsComputers 3-5 years

b) The assets taken on finance lease on or after 1st April, 2001 over their expected useful lives.

(ii) Leasehold assets viz land and vehicles are amortised over the period of lease. Leasehold improvements areamortised on straight line basis over the period of three years or lease period whichever is lower.

(iii) Intangible Assets are amortised over a period of 1-3 years.

(iv) The One-time license fee capitalised is amortised equally over the balance period of license from the date ofpayment of license fee.

(v) Individual assets costing Rs. 5,000 or less are depreciated/amortised fully in the year of acquisition.

5. INVESTMENTS

Current Investments are carried at lower of cost or fair value where fair value for mutual funds is based on net assetvalue.

6. INVENTORIES

Raw Materials and components held for use in the production of inventories and Work-in-Progress are valued at cost ifthe finished goods in which they will be incorporated are expected to be sold at or above cost. If there is a decline inthe price of materials/components and it is estimated that the cost of finished goods will exceed the net realisablevalue, the materials/components are written down to net realisable value measured on the basis of their replacementcost. Cost is determined on the basis of weighted average or First in First Out (FIFO).

Finished Goods and Work in Progress are valued at lower of cost and net realisable value.

Cost of Finished Goods and Work in Progress includes cost of raw materials and components, direct labour andproportionate overhead expenses. Cost is determined on the basis of weighted average.

Stores and Spares are valued at lower of cost and net realisable value. Adequate adjustments are made to the carryingvalue for obsolescence. Cost is determined on the basis of weighted average.

Goods in Transit are valued inclusive of custom duty, where applicable.

7. FOREIGN CURRENCY TRANSACTIONS

a) Foreign currency transactions are recorded at the exchange rates prevailing at the date of transaction. Exchangedifferences arising on settlement of transactions, are recognised as income or expense in the year in which theyarise.

b) At the balance sheet date, all assets and liabilities denominated in foreign currency, are reported at the exchangerates prevailing at the balance sheet date and the resultant gain or loss is recognised in the profit and lossaccount.

c) Pursuant to notification under section 211(3C) of the Companies Act, 1956 issued by Ministry of CorporateAffairs on March 31, 2009 amending Accounting Standard - 11 (AS - 11) ‘The Effects of Changes in ForeignExchange Rates (revised 2003), exchange differences arising on translation of long term foreign currency monetaryitems having a term of 12 months or more are recognised as stated below:

(i) Exchange differences relating to long term foreign currency monetary items, arising during the year, in sofar as they relate to the acquisition of a depreciable capital asset are added to or deducted from the cost ofthe asset and depreciated over the balance life of the asset.

(ii) In other cases, such differences are accumulated in the “Foreign Currency Monetary Translation DifferenceAccount” and amortised over the balance period of the long term assets / liabilities but not beyond March31, 2011.

d) In case of forward foreign exchange contracts where an underlying asset or liability exists at the balance sheetdate, the difference between the forward rate and the exchange rate at the inception of the contract is recognisedas income or expense over the life of the contract.



e) In case of forward foreign exchange contracts taken for highly probable/forecast transactions, the net loss, if any,calculated on ‘Mark to Market’ principle as at the balance sheet date is recorded.

f) Profit or loss arising on cancellation or renewal of a forward contract is recognised as income or expense in the yearin which such cancellation or renewal is made.

8. EMPLOYEE BENEFITS

Defined Benefit:

Liability for gratuity and leave encashment is provided as determined on actuarial valuation made at the end of the yearwhich is computed using projected unit credit method. Gains/losses arising out of actuarial valuation are recognisedimmediately in the profit and loss account as income/expense.

Defined Contribution:

Group’s contributions towards recognised Provident Fund and Superannuation Fund are accounted for on accrual basis.The Company has an obligation to make good the shortfall, if any, between the return from the investment of theprovident fund trust and the notified interest rate.

The Company makes defined contribution to a superannuation trust established for the purpose. The Company has nofurther obligations beyond its monthly contributions.

9. REVENUE RECOGNITION

a) Sales, after adjusting trade discount, are inclusive of excise duty and the related revenue is recognised (afterproviding for expenses to be incurred connected to such sales) on transfer of all significant risks and rewards to thecustomer and when no significant uncertainty exists regarding realisation of the consideration.

b) Composite contracts, outcome of which can be reliably estimated, where no significant uncertainty exists regardingrealisation of the consideration, revenue is recognised in accordance with the percentage completion method,under which revenue is recognised on the basis of cost incurred as a proportion of total cost expected to beincurred. The foreseeable losses on the completion of contract, if any, are provided for.

c) Service income includes income

i) From maintenance of products and facilities under maintenance agreements, and extended warranty, which isrecognised upon creation of contractual obligations rateably over the period of contract, where no significantuncertainty exists regarding realisation of the consideration.

ii) From software services

(a) The revenue from time and material contracts is recognised based on the time spent as per the terms ofcontracts.

(b) In case of fixed priced contracts revenue is recognised on percentage of completion basis. Foreseeablelosses, if any, on contract completion are recognised immediately.

iii) Virtual private networks: Revenue is recognised on proportionate basis over the period of contract with the customer.One time charges recovered from the customers are recognised as revenue at the commencement of service.

iv) Technical help desk: The Group is engaged in providing technical and administrative help desk support to itsvarious customers through the Web. Revenue for the same has been recognised based on fulfilling obligationsas contracted in the respective agreements.

10. GOVERNMENT GRANTS

Revenue grants, where reasonable certainty exists that the ultimate collection will be made, are recognized on asystematic basis in profit and loss statement over the periods necessary to match them with the related cost which theyare intended to compensate.

11. LICENSE FEES – REVENUE SHARE

With effect from December 16th, 2004 the variable license fee computed at prescribed rate of revenue share is beingcharged to the Profit and Loss Account in the year in which the related revenue from the Group’s Networking andInternet related products and services segment arises.




12. ROYALTY

Royalty expense, net of performance based discounts, is recognised when the related revenue is recognised.

13. LEASES

i) Assets taken under leases where the Group has substantially all the risks and rewards of ownership are classifiedas Finance leases. Such assets are capitalised at the inception of the lease at the lower of fair value or the presentvalue of minimum lease payments and a liability is created for an equivalent amount. Each lease rental paid isallocated between the liability and the interest cost, so as to obtain a constant periodic rate of interest on outstandingliability for each period.

ii) Assets taken on leases where significant portion of the risks and rewards of ownership are retained by the lessor areclassified as operating leases. Lease rentals are charged to the Profit and Loss Account on straight line basis overthe lease term.

iii) Profit on sale and leaseback transactions is recognised over the period of the lease.

iv) Assets given under finance lease are recognised as receivables at an amount equal to the net investment in thelease. Inventories given on finance lease are recognised as deemed sale at fair value. Lease income is recognisedover the period of the lease so as to yield a constant rate of return on the net investment in the lease.

v) Assets leased out under operating leases are capitalised. Rental income is recognised on accrual basis over thelease term.

vi) Initial direct costs relating to the finance lease transactions are included as part of the amount capitalised as anasset under the lease.

14. SEGMENT ACCOUNTING

The segment accounting policy is in accordance with the policies consistently used in the preparation of financialstatements of the Group. The basis of reporting is as follows: -

a) Revenue and expenses distinctly identifiable to a segment are recognised in that segment. Identified expensesinclude direct material, labour, overheads and depreciation on Fixed Assets. Expenses that are identifiable with/allocable to segments have been considered for determining segment results.

Allocated expenses include support function costs which are allocated to the segments in proportion of the servicesrendered by them to each of the business segments. Depreciation on Fixed Assets is allocated to the segments onthe basis of their proportionate usage.

b) Unallocated expenses/income are enterprise expenses/income, which are not attributable or allocable to any of thebusiness segment.

c) Assets and liabilities which arise as a result of operating activities of the segment are recognised in that segment.Fixed Assets which are exclusively used by the segment or allocated on a reasonable basis are also included.

d) Unallocated assets and liabilities are those which are not attributable or allocable to any of the segments andincludes liquid assets like Investments, Bank Deposits; and Investments in assets given on finance lease.

e) Segment revenue resulting from transactions with other business segments is accounted on the basis of transferprice which is at par with the prevailing market price.

15. BORROWING COSTS

Borrowing costs to the extent related/attributable to the acquisition/construction of assets that necessarily take substantialperiod of time to get ready for their intended use are capitalised along with the respective fixed asset up to the datesuch asset is ready for use. Other borrowing costs are charged to the Profit and Loss Account.

16. INCOME TAXES

The current charge for income taxes including fringe benefit tax is calculated in accordance with the relevant taxregulations.

Deferred tax assets and liabilities are recognised for timing differences between the financial statements carryingamounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measuredusing tax rates that have been enacted or substantially enacted tax rates at the balance sheet date. Deferred tax asset


is recognized and carried forward when it is virtually certain that sufficient taxable profits will be available in futureagainst which deferred tax assets can be realised.

17. PROVISIONS AND CONTINGENCIES

The Group creates a provision when there is a present obligation as a result of a past event that probably requires anoutflow of resources and a reliable estimate can be made of the amount of the obligation. A disclosure for a contingentliability is made when there is a possible obligation or a present obligation that probably will not require an outflow ofresources or where a reliable estimate of the amount of the obligation cannot be made.

18. USE OF ESTIMATES

The preparation of financial statements in conformity with Generally Accepted Accounting Principles requires themanagement to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosureof contingent liabilities at the date of the financial statements and the results of operations during the reporting period.Examples of such estimates include estimate of cost expected to be incurred to complete performance under compositearrangements, income taxes, provision for warranty, employment retirement benefit plans, provision for doubtful debtsand estimated useful life of the fixed assets. The actual results could differ from those estimates. Any revision toaccounting estimates is recognised prospectively in current and future periods.

19. EMPLOYEE STOCK OPTION SCHEME

The Company calculates the employee stock compensation expense based on the intrinsic value method wherein theexcess of market price of underlying equity shares as on the date of the grant of options over the exercise price of theoptions given to employees under the Employee Stock Option Scheme of the Company, is recognised as deferred stockcompensation expense and is amortised over the vesting period on the basis of Generally Accepted Accounting Principlesin accordance with the guidelines of Securities and Exchange Board of India.



SCHEDULE 21 - NOTES TO ACCOUNTS

1. Land and Buildings and certain Plant and Machinery were revalued by registered valuers’ after considering depreciationupto that date on the governing principle of current replacement cost/value. The amounts added/reduced on aforesaidrevaluation in 1992, 2005, 2006 and 2007 were as under:

Date of Revaluation Rs./CroresLand June 30, 1992 4.44Land November 1, 2006 16.78Leasehold Land March 27, 2006 and 2.53

August 13, 2007Leasehold Premises April 24, 2005 1.81Buildings June 30, 1992 6.44Buildings November 1, 2006 0.25Plant and Machinery June 30, 1992 (1.01)Total 31.24Less : Goodwill 5.70Transferred to Revaluation Reserve 25.54Less:-Expenditure incurred on acquisition of business in 1992 0.86-Loss on sale of Land 0.15-Depreciation and Amortisation 0.33-Cancellation on consolidation of HCL Infinet Limited 1.81-Adjusted on amalgamation of Stelmac Engineering Private Limited 16.70-Adjusted on amalgamation of Natural Technologies Private Limited 5.69Balance as at June 30, 2009 -

2. Estimated value of contracts on capital account, excluding capital advances, remaining to be executed and not providedfor amount to Rs. 2.48 Crores (2008–Rs.8.73 Crores )

3. Contingent Liabilities:

(a) Claims against the Company not acknowledged as debts:


Sales Tax* 21.21 8.66Excise* 10.86 14.87Income Tax* 2.94 1.59Industrial Disputes, Civil Suits and Consumer Disputes 10.14 8.37

*Against the above, the Group has deposited a sum of Rs. 5.29 Crores (2008 - Rs. 3.19 Crores)

The amounts shown in the item (a) represents the best possible estimates arrived at on the basis of available information.The uncertainties and possible reimbursements are dependent on the outcome of the different legal processes whichhave been initiated by the company or the claimants as the case may be and therefore cannot be predicted accurately.

b) (i) Corporate Guarantee of Rs. 6.50 Crores (2008 - Rs. 6.50 Crores) was given to a Bank for working capitalfacilities and Rs. 6.07 Crores (2008- Rs. Nil) was given to a non-banking finance company for operating leasesanctioned to a 100% subsidiary, HCL Infinet Limited (Formerly Microcomp Limited) against which the totalamount utilised as at June 30, 2009 is Rs. 4.25 Crores and Rs. 6.07 Crores (2008 - Rs. 2.25 Crores)respectively.

(ii) Corporate Guarantee of Rs. 5.00 Crores has been given to a Bank for working capital facilities sanctioned to a100% subsidiary, HCL Security Limited against which the total amount utilised as at June 30, 2009 isRs. 0.99 Crores (2008 - Rs. Nil).

c) The Company has transferred Financial Assets (Lease Rental Recoverable) to a bank under a financing arrangementfor which the balance outstanding with the bank as on June 30, 2009 is Rs. 21.12 Crores (2008 – Rs. 30.55Crores). The transfer of these Financial Assets is with recourse to the Company.




4. The company has the following warranty provision in the books of accounts:


Opening Balance as on July 1 5.65 3.80Additions during the year 12.90 13.32Utilised/Reversed during the year 14.27 11.47Closing Balance as on June 30 4.28 5.65

The warranty provision has been recognised for expected warranty claims for the first year of warranty on products soldduring the year. Due to the very nature of such costs, it is not possible to estimate the timing of cash outflows due touncertainties relating to the outflows of economic benefits.

5. Taxation:

a) Provision for taxation has been computed by applying the Income Tax Act, 1961 to the profit for the financial yearended June 30, 2009, although the actual tax liability of the Group has to be computed each year by reference totaxable profit for each fiscal year ended March 31.

b) Deferred Tax:

Major Components of Deferred Tax arising on account of temporary timing difference along with their movement asat June 30, 2009 are:

Rs./Crores

As at Movement As at30.06.08 during the year 30.06.09

AssetsAllowances for doubtful debts/Advances/Other Current Assets 0.58 7.53 8.11Expense accruals (Bonus, Gratuity, Leave Encashment and 10.44 1.74 12.18Provision for warranty)Other timing differences - 0.01 0.01Depreciation 2.12 (1.42) 0.70Income Tax Loss - 1.48 1.48Total (A) 13.14 9.34 22.48LiabilitiesLease rental recoverable 9.80 (5.15) 4.65Cenvat balances with excise authorities - (0.16) (0.16)Taxes deposited under protest for excise duty, custom duty and sales tax - 2.89 2.89Other timing differences 10.06 (0.60) 9.46Total (B) 19.86 (3.02) 16.84Net Deferred Tax Assets/(Liability) (A)-(B) (6.72) 12.35 5.63Previous Year (12.48) 5.76 (6.72)

c) Fringe Benefit Tax:

The Finance (No. 2) Act, 2009, which was introduced in the parliament on July 6, 2009 has received assent ofPresident of India on August 19, 2009, has abolished Fringe Benefit Tax with effect from April 1, 2009. Consequently,no Fringe Benefit Tax has been provided for the period April 1, 2009 to June 30, 2009.

6. Employee Stock Option Plan (ESOP)

The Company has established Employee Stock Option Scheme 2000 and Employee Stock Based Compensation Plan2005, for a total grant of 31,90,200 and 33,35,487 options respectively to the employees of the Company and itssubsidiaries. These options vest over a period of 42 and 60 months respectively from the date of grant and are to beexercised within a maximum period of 5 years from the date of vesting.

The Board of Directors/Committee approves the grant of options, including the grant of options that lapse out of eachgrant.

Each option of Rs. 10/- confers on the employee a right to five equity shares of Rs. 2/- each.

Exercise Price is market price as specified in the Employee Stock Option Scheme and Employee Stock PurchaseScheme Guidelines, 1999 issued by the Securities and Exchange Board of India (“SEBI”).


Details of Grants made under Employee Stock Option Scheme 2000.

Date Exercise price Options Options Options Options Options Options Optionsof grant of the option outstanding granted forfeited exercised expired outstanding exercisable

for five equity at the during during during during at the end at the endShares of beginning the year the year the year the year of the of the


10/Aug/00 289.00 18025 - - 12195 5830 - -(35195) (-) (-) (10460) (6710) (18025) (18025)

28/Jan/04 538.15 225619 - - 280 11176 214163 214163(560758) (-) (1864) (310058) (23217) (225619) (225619)

25/Aug/04 603.95 59072 - - - 8139 50933 50933(89619) (-) (4736) (19775) (6036) (59072) (59072)

18/Jan/05 809.85 185309 - - - 13227 172082 172082(225350) (-) (6912) (23897) (9232) (185309) (97457)

15/Feb/05 809.30 1600 - - - - 1600 1600(3500) (-) (-) (1900) (-) (1600) (-)

15/Mar/05 834.40 30170 - - - 4098 26072 26072(44488) (-) (5004) (3794) (5520) (30170) (18224)

15/Apr/05 789.85 5784 - - - - 5784 5784(13848) (-) (3072) (960) (4032) (5784) (3470)

14/May/05 770.15 8270 - - - - 8270 8270(9240) (-) (-) (970) (-) (8270) (4574)

15/Jun/05 756.15 2435 - - - 1760 675 675(11840) (-) (1280) (3565) (4560) (2435) (35)

15/Jul/05 978.75 11978 - - - 1536 10442 10442(18384) (-) (2784) (1318) (2304) (11978) (7754)

13/Aug/05 1144.00 24990 - 2560 - 4800 17630 17630(25630) (-) (640) (-) (-) (24990) (15378)

15/Sep/05 1271.25 13620 - 1792 - 2688 9140 9140(13620) (-) (-) (-) (-) (13620) (8172)

15/Mar/07 648.75 144300 - 2100 - 900 141300 82100(158000) (-) (7000) (6700) (-) (144300) (38600)

23/Jan/08 898.25 88200 - 13598 - 1777 72825 22316(-) (105000) (16800) (-) (-) (88200) (-)

TOTAL 819372 - 20050 12475 55931 730916 621207(1209472) (105000) (50092) (383397) (61611) (819372) (496380)


Details of Grants made under Employee Stock Based Compensation Plan 2005.




13/Aug/05 1144.00 2207129 - 107644 - 117360 1982125 1197061(2430660) (-) (139190) (9074) (75267) (2207129) (891173)

19/Oct/05 1157.50 60950 - 7420 - 6750 46780 28368(67340) (-) (4090) () (2300) (60950) (24588)

15/Nov/05 1267.75 21200 - 2310 - 1940 16950 10170(22928) (-) (1400) (-) (328) (21200) (8720)

15/Dec/05 1348.25 21100 - 3480 - 2970 14650 8790(25260) (-) (2130) (-) (2030) (21100) (8470)

14/Jan/06 1300.00 24550 - 3540 - 3200 17810 10866(31754) (-) (5160) () (2044) (24550) (10060)

15/Feb/06 1308.00 5874 - 360 - 464 5050 3030(7374) (-) (1200) (-) (300) (5874) (2388)

16/Mar/06 1031.00 37740 - 8664 - 5976 23100 14740(39940) (-) (1760) (-) (440) (37740) (15216)




17/Apr/06 868.75 10820 - 2160 - 1760 6900 4140(15400) (-) (3200) (-) (1380) (10820) (4520)

15/May/06 842.50 19330 - 1830 - 1800 15700 9420(30150) (-) (8830) (-) (1990) (19330) (8080)

15/Jun/06 620.50 24480 - 4270 - 2260 17950 10710(31510) (-) (5256) (430) (1344) (24480) (9630)

17/Jul/06 673.75 27470 - 3480 - 2200 21790 8812(36380) (-) (7160) (80) (1670) (27470) (5526)

15/Mar/07 648.75 402820 - 10640 - 4220 387960 155220(431100) (-) (21860) (6420) (-) (402820) (77700)

23/Jan/08 898.25 256050 - 44280 - 780 210990 42630(-) (293475) (37425) (-) (-) (256050) (-)

TOTAL 3119513 - 200078 - 151680 2767755 1503957(3169796) (293475) (238661) (16004) (89093) (3119513) (1066071)

Note: Previous year's figures are given in brackets.

Assumptions

The fair value of each stock option granted under Employee Stock Option Scheme 2000 and Employee Stock BasedCompensation Plan 2005, as on the date of grant has been computed using Black- Scholes Option Pricing Formula and themodel inputs are given as under:

Employee Stock Employee Stock BasedOption Plan 2000 Compensation Plan 2005

Volatility 45% to 68% 47% to 62%Risk free rate 4.57% to 7.99% 6.49% to 7.98%Exercise Price Rs. 538.15 to Rs. 1271.25 Rs. 620.50 to Rs. 1348.25Time to Maturity (years) 2.20 to 5.50 2.50 to 7.00Dividend Yield 9% to 28% 10% to 28%Life of options 8.5 Years 10 YearsFair Value of options as at the grant date Rs. 35.10 to Rs. 203.14 Rs. 24.75 to Rs. 262.97

Notes:1. Volatility: Based on historical volatility in the share price movement of the Company.2. Risk Free Rate: Being the interest rate applicable for maturity equal to the expected life of options based on yield curve

for Government Securities.3. Time to Maturity: Vesting period and volatility of the underlying equity shares have been considered for estimation.4. Dividend Yield: Based on historical dividend payouts.

The impact on the profit of the Company for the year ended June 30, 2009 and the basic and diluted earnings per share hadthe Company followed the fair value method of accounting for stock options is set out below:

Proforma disclosures


Profit/(Loss) after tax as per Profit and Loss Account (a) 239.95 300.15Add: Employee Stock Compensation Expense as per Intrinsic Value Method - -Less: Employee Stock Compensation Expense as per Fair Value Method 4.78 8.26Profit/(Loss) after tax recomputed for recognition of employee stock compensation 235.17 291.89expense under fair value method (b)*Earning Per Share based on earnings as per (a) above:(Refer note 9)- Basic Rs. 14.02 Rs. 17.61- Diluted Rs. 14.02 Rs. 17.38Earning Per Share had fair value method been employed for accountingof employee stock options:- Basic Rs. 13.74 Rs. 17.12- Diluted Rs. 13.74 Rs. 16.90

* Excludes impact on tax expense of employee stock compensation expense.






7. Leases :a) Finance Leases:

(i) The Company has given on finance lease certain Assets/Inventories which comprise of computers and officeequipments etc. These leases have a primary period, which is fixed and non-cancelable. There are no exceptional/restrictive covenants in the lease agreements.

(ii) The gross investment in the assets given on finance leases as at June 30, 2009 and its present value as at thatdate are as follows [Refer Note 4(c)]:

Rs./CroresTotal minimum Interest included in Present value oflease payments minimum lease minimum lease

receivable payments paymentsreceivable receivable

Not later than one year 16.91 2.57 14.34(24.28) (3.80) (20.48)

Later than one year and not later than five years 6.90 1.15 5.75(17.05) (1.90) (15.15)

Total 23.81 3.72 20.09(41.33) (5.70) (35.63)


b) Operating Leases:

(i) Cancelable Operating Leases

(a) The Group has taken various residential /commercial premises under cancelable operating leases. Theseleases are normally renewable on expiry.

(b) The rental expense in respect of operating leases is Rs. 26.62 Crores (2008-Rs. 19.50 Crores)

(c) The gross carrying amount, accumulated depreciation and depreciation expense in respect of building andoffice automation products i.e. photocopying machines given on operating lease are as below:


Gross Block 15.28 13.43Accumulated Depreciation 5.21 3.37Net Block 10.07 10.06Depreciation Expense 1.84 1.42

(ii) Non-cancelable Operating Leases

As Lessee:

a) The Group has taken computer systems, furniture and fixture, routers and networking equipments on non-cancelable operating leases the future minimum lease payments in respect of which are:


Not later than one year 3.84 3.72Later than one year and not later than five years 5.84 6.82Total 9.68 10.54

(b) Minimum Lease Payments in respect of assets taken on lease recognised as an expense in the Profit andLoss Account for the year ended June 30, 2009 are Rs. 4.37 Crores (2008 - Rs. 2.35 Crores).

As Lessor:

The company has given photocopying machines on non-cancelable operating leases the future minimum leasereceipts in respect of which are:


Not later than one year 0.00 0.01Later than one year and not later than five years - -Total 0.00 0.01

8. Unaccrued forward exchange cover as on June 30, 2009 of Rs. 2.91 Crores (2008 - Rs. 1.81 Crores) has beenincluded under amounts recoverable in cash or in kind or for value to be received.



9. Earnings per share (EPS)

The earnings considered in ascertaining the Group’s earnings per share comprise net profit for the year after tax. Basicearnings per share is computed and disclosed using the weighted average number of equity shares outstanding duringthe year. Diluted earnings per share is computed and disclosed using the weighted average number of equity anddilutive equivalent shares outstanding during the year, except when results would be anti dilutive.

Calculation of EPS:

Particulars 2009 2008

Profit after tax (Rs./Crores) 239.95 300.15Weighted average number of shares considered 171,180,498 170,454,520as outstanding in computation of Basic EPSAdd dilutive impact of stock options:- Exercised 11,554 264,066- Lapsed 4,521 110,209- Issued for no consideration - 1,900,787Weighted average number of shares outstanding 171,196,573 172,729,582in computation of Diluted EPSBasic EPS (of Rs. 2/- each) Rs. 14.02 Rs. 17.61Diluted EPS (of Rs. 2/- each) Rs. 14.02 Rs. 17.38

10. Segment Reporting

The Group recognises the following segments as its primary segments.

a) The operations of Product and Related Services consists of sale of Computer Hardware and system integrationproducts and providing a comprehensive range of IT services, including system maintenance and facility managementin different industries.

b) The businesses of Telecom products, Office Automation and services consist of sale of telecommunication products,Office equipment products, security and surveillance products and related services.

c) Internet and Related Services include Internet related products and services consisting of Internet Access services,Virtual Private Network, other connectivity services and sale of related hardware.

Secondary segmental reporting is based on the geographical location of the customers. Details of secondary segmentsare not disclosed as more than 90% of the Group’s revenues, results and assets relate to the domestic market.

Consolidated Segment wise performance for the year ended June 30, 2009 Rs. Crores

Primary Segments Products & Internet & Inter-segment TotalRelated Services Related Elimination

ServicesComputer Telecommuni-

Systems & Other cation & OfficeRelated Products Automation

and services

(i) Revenue

External Revenue 3485.40 8849.39 43.70 12378.49

(3363.45) (9000.32) (38.85) (12402.62)

Intersegment Revenue 54.62 25.10 2.36 -82.08

(25.47) (19.99) (1.75) (-47.21)

Total Gross Revenue 3540.02 8874.49 46.06 -82.08 12378.49

(3388.92) (9020.31) (40.60) (-47.21) (12402.62)

Less: Excise Duty 126.08 - - 126.08

(157.84) (0.16) - (158.00)

Total Net Revenue 3413.94 8874.49 46.06 -82.08 12252.41

(3231.08) (9020.15) (40.60) (-47.21) (12244.62)



(ii) Results 177.27 246.20 -17.81 405.66(199.52) (285.44) (-4.10) (480.86)

Less: Unallocable Expenditure 25.11(30.54)

Operating Profit 380.55(450.32)

Add: Other Income (Excluding Operational Income) 15.42(27.41)

Less: Finance Charges 44.66(47.60)

Profit Before Tax 351.31(430.13)

Less: Tax Expense- Current Tax 122.17

(131.50)- Deferred Tax -12.36

(-5.63)- Fringe Benefit Tax 1.55

(4.11)Profit After Tax 239.95

(300.15)(iii) Segment Assets 2109.32 863.85 37.59 3010.76

(1794.42) (975.93) (19.50) (2789.85)Unallocated Corporate Assetsa) Liquid Assets 268.54

(216.40)b)Others (including investment in assets given on finance lease) 77.54

(83.69)c) Deferred Tax Assets 5.64

(-)Total Assets 3362.48

(3089.94)(iv) Segment Liabilities 1233.72 676.40 46.36 1956.48

(841.04) (798.13) (21.76) (1660.93)Unallocated Corporate Liabilitiesa) Current Liabilities 57.25

(51.58)b)Deferred Tax Liabilities -

(6.72)c) Loan Funds 226.85

(354.52)Total Liabilities 2240.58

(2073.75)(v) Capital Expenditure 13.53 4.91 12.56 31.00

(44.10) (5.44) (1.63) (51.17)(vi) Depreciation 12.31 4.13 4.09 20.53

(11.63) (4.18) (2.26) (18.07)(vii) Other Non Cash Expenses 45.45 16.82 0.93 63.20

(21.09) (7.02) (1.12) (29.23)Note : Previous year’s figures are given in brackets.

Primary Segments Products & Internet & Inter-segment TotalRelated Services Related Elimination

ServicesComputer Telecommuni-

Systems & Other cation & OfficeRelated Products Automation

and services

Rs. Crores


11 Disclosure of related parties and related party transactions.

a) Company having substantial interest:

HCL Corporation Limited, due to substantial interest in the voting power

b) Related parties with whom transactions have taken place during the year and/or where balances exist:

HCL Technologies LimitedHCL Comnet LimitedHCL Comnet Systems and Services LimitedHCL Peripherals LimitedHCL BPO Services (NI) LimitedHCL EAI Services LimitedNEC HCL System Technologies LimitedHCL America Inc

Others (where significant influence exists):

SSN College of EngineeringShri Sivasubramaniya Nadar Educational and Charitable Trust.

Note: Parties with whom transactions are more than 10% of the total value have been disclosed separately.

Key Management Personnel

Mr. Ajai ChowdhryMr. J.V. RamamurthyMr. Sandeep KanwarMr. C.S. DwivediMr. George PaulMr. Hari BaskaranMr. Rajeev AsijaMr. Rajendra KumarMr. Rakesh Mehta1

Mr. S.R. BishtMr. Suman Ghose HazraMr. Sushil Kumar JainMr. Vivek Punekar1Resigned w.e.f June 30, 2008

c) Summary of Related Party disclosures

Note: All transactions with related parties have been entered into in the normal course of business.

(Rs./Crores)

A. Transactions Company having Others Key Management TotalSubstantial interest PersonnelJune-09 June-08 June-09 June-08 June-09 June-08 June-09 June-08

Sales & Related Income 2.27 2.22 85.11 68.70 0.02 0.01 87.40 70.93- HCL Technologies Ltd. 79.98 57.37Services 0.40 0.00 38.28 11.42 38.68 11.42- HCL Technologies Ltd. 10.33 8.76Other Income 1.23 1.31 1.23 1.31- HCL Technologies Ltd. 1.23 1.31Purchase of Goods - 0.33 - 0.33- HCL Technologies Ltd. - 0.33Purchase of Services 8.54 5.84 8.54 5.84- HCL Technologies Ltd. 7.32 4.37- HCL Comnet Ltd. 0.53 0.25Purchase of Investment 0.25 - 0.25 -Donations Given - 0.48 - 0.48




- Shri Sivasubramaniya Nadar Educational & Charitable Trust - 0.48Assets Purchased 0.21 0.66 0.21 0.66Remuneration 9.27 9.03 9.27 9.03- Mr. Ajai Chowdhry 3.25 3.25- Mr. Rajeev Asija 1.00 1.00- Mr. J.V. Ramamurthy 1.06 0.99- Mr.Sandeep Kanwar 0.93 0.86Reimbursements towards expenditurea) Received 0.60 0.05 0.39 0.11 0.99 0.16- HCL Technologies Ltd. 0.30 0.09- HCL Comnet Ltd. 0.01 0.02b) Made 0.06 0.05 0.81 0.04 0.87 0.09- HCL Technologies Ltd. 0.70 0.02

B. Amount due to/from related partiesAccounts Receivables 0.89 1.81 40.50 21.33 41.39 23.14Loans & Advances & Other Recoverables 0.47 0.46 0.47 0.46Creditors 2.32 1.06 2.32 1.06Other Payables 0.03 0.01 0.59 0.90 0.62 0.91

12. The Group has calculated the various benefits provided to employees as under:

(a) Defined Contribution Plans(i) Provident Fund(ii) Superannuation Fund

During the year the Group has recognised the following amounts in the Profit and Loss account:


Employers Contribution to Provident Fund* 4.05 3.34

Employers Contribution to Superannuation Fund* 1.17 1.03

(b) State Plans

(i) Employee State Insurance

(ii) Employee’s Pension Scheme 1995

During the year the Group has recognised the following amounts in the Profit and Loss account:


Employers contribution to Employee State Insurance* 2.52 2.03

Employers contribution to Employee’s Pension Scheme 1995* 4.58 3.76

* Included in Contribution to Provident Fund and Other Funds under Personnel Cost (Refer Schedule-16)

(c) Defined Benefit

(i) Gratuity

(ii) Leave Encashment/Compensated Absence

In accordance with Accounting Standard 15 (revised 2005), an actuarial valuation was carried out in respect of theaforesaid defined benefit plans based on the following assumptions.

(Rs./Crores)

A. Transactions Company having Others Key Management TotalSubstantial interest PersonnelJune-09 June-08 June-09 June-08 June-09 June-08 June-09 June-08


Employees Leave Encashment/Gratuity Fund Compensated Absence

2009 2008 2009 2008

Discount Rate (per annum) 7.00% 7.00%-8.00% 7.00% 7.00%-8.00%Rate of increase in compensation levels 7.00% 6.50%-7.00% 7.00% 6.50%-7.00%Rate of return on plan assets Not Not Not Not

Applicable Applicable Applicable ApplicableExpected Average remaining working lives 25.47-25.90 25.70-25.92 25.47-25.90 25.70-25.92of employees (years)

The estimates of future salary increases considered in actuarial valuation take account of inflation, seniority, promotionand other relevant factors such as supply and demand in the employment market.

Rs./Crores2009 2008

Gratuity Leave Gratuity LeaveEncashment Encashment

Reconciliation of opening and closing balances of thepresent value of the defined benefit obligation:Present value of obligation at the beginning of the year 12.36 8.07 10.93 6.96Current service cost 1.95 2.06 1.26 1.41Interest cost 0.86 0.55 0.84 0.48Actuarial (gain)/loss 0.85 (0.71) 0.03 0.41Benefits (paid) (0.68) (0.30) (0.70) (1.19)Present value of obligation at the end of the year 15.34 9.67 12.36 8.07Reconciliation of the present value of the defined benefitobligation and the fair value of the plan assets:Present value of the obligation as at the end of the year 15.34 9.67 12.36 8.07Fair value of plan assets at the end of the year - - - -Assets/(Liabilities) recognised in the Balance Sheet (15.34) (9.67) (12.36) (8.07)Cost recognised for the period (included under Salaries,Wages, Allowances, Bonus and Gratuity)Current service cost 1.95 2.06 1.26 1.41Interest cost 0.86 0.55 0.84 0.48Actuarial (gain)/loss 0.85 (0.71) 0.03 0.41Net cost recognised for the year* 3.66 1.90 2.13 2.30* Included in Salaries, Wages, Allowances, Bonus and Gratuity under Personnel Cost (Refer Schedule - 16)

13. Pursuant to the approval given by the Board of Directors, the “Committee of Directors (Securities)” at the meeting heldon August 14, 2009 approved -

a) Issuance of Convertible Warrants not exceeding Rs. 322 crores, including premium to the promoters of the Company.

b) Issuance in the form of Equity shares or Equity linked securities in the domestic and /or international offerings and/or Qualified Institutional Placements for a value not exceeding Rs. 500 crores, including premium.

c) An Extra-ordinary General Meeting is scheduled to be held on September 23, 2009 for taking the shareholdersapproval for the same.

14. During the year, the Company has incorporated HCL Infocom Limited as a wholly owned subsidiary. HCL InfocomLimited holds 49% of the equity share capital of Scout Mobile Internet Services Limited, a Joint Venture with NokiaCorporation, Finland.

15. The Scheme of Amalgamation (“Scheme”) for merging the wholly owned subsidiary Natural Technologies PrivateLimited (NTPL) with the Company under sections 391 to 394 of the Companies Act, 1956 sanctioned by Hon’ble HighCourts of Delhi and Rajasthan vide their respective orders dated August 11, 2008 and May 29, 2009 has come intoeffect on July 6, 2009 from the appointed date of July 1, 2008. On the scheme becoming effective NTPL standsdissolved without winding up.

The amalgamation of erstwhile Natural Technologies Private Limited (NTPL) has been accounted for under the ‘poolingof interest method’ in the manner specified in the Scheme and comply with the Accounting Standard notified undersection 211(3C) of the Companies Act, 1956.

The amalgamation of Natural Technologies Private Limited (NTPL) with the Company has no impact on the consolidatedfinancial statements.



Pursuant to scheme of Amalgamation referred above, Goodwill created on acquisition of Natural Technologies PrivateLimited during the year ended June 30, 2008 has been adjusted against revaluation reserve and profit and loss accountand amount of Rs. 0.45 Crores has been restated in securities premium account.

16. i) An amount of Rs. 0.23 Crores (2008- Rs. 0.05 Crores), being profit on sale of fixed assets has been adjustedagainst the loss on sale of fixed assets.

ii) The Profit/loss on account of foreign exchange fluctuations and on disposal of current investments are disclosedafter deducting or adding related loss or profit, as the case may be, on similar transactions.

iii) Advertisement, Publicity & Entertainment expenses, wherever on sharing basis, are shown at amounts borne by thecompany.

17. Pursuant to notification u/s 211(3C) of the Companies Act, 1956 issued by the Ministry of Corporate Affairs on March31, 2009, the Company has opted to accumulate the exchange difference arising on translation of foreign currencyitems having a term of 12 months or more and amortize such exchange difference over the useful life of the item.Accordingly, the profit before tax for the year ended June 30, 2009 is lower by Rs. 0.12 Crores on account of abovementioned exchange difference, which will be amortised in future period(s) but not beyond March 31, 2011.

18. Derivative Instruments outstanding at the Balance Sheet date:

The Company has the following outstanding forward contracts to buy foreign currency as at June 30, 2009:

Currency Foreign Currency Value/Crores Average Rate Maximum Maturity Period2009 2008 2009 2008 2009 2008

USD $9.57 $8.19 49.61 41.72 5 Months 5 MonthsSEK - Kr 0.48 - 7.06 - 3 MonthsJPY ¥2.66 ¥15.12 50.31* 40.20* 1 Month 3 Months

*Average rate of JPY/INR is for 100 Yen.

The above forward contracts have been undertaken to hedge the foreign currency exposures on Import/Royalty payablesas at June 30, 2009.

As on June 30, 2009, the foreign currency exposure that is not hedged by a derivative instrument or otherwise isRs. 188.88 Crores (2008 - Rs. 165.86 Crores).

19. The results of Scout Mobile Internet Services Limited, a Joint Venture with Nokia Corporation, Finland has been takenon the basis of unaudited financial statements for the financial year ended June 30, 2009. It is unlikely that theaudited results would be materially different from unaudited results.

20. Previous year’s figures have been regrouped/recasted, where necessary, to conform to current year’s presentation.



FINANCIAL SUMMARY OF SUBSIDIARIES AS AT JUNE 30, 2009

HCL Infinet Limited

Particulars Amount in Rs. #

Share Capital 270181000Reserves 16909056Total Assets 287090056Total Liabilities 287090056Investments -Turnover 594671380(Loss) before taxation (185436855)Provision for taxation (Current/FBT) 1140837(Loss) after taxation (186577692)Proposed Dividend -

#. The figures are for 15 months period

HCL Security Limited

Particulars Amount in Rs.

Share Capital 40500000Reserves -Total Assets 40500000Total Liabilities 40500000Investments -Turnover 71753928(Loss) before taxation (46116697)Provision for taxation (Current/FBT) (15468145)(Loss) after taxation (30648552)Proposed Dividend -

HCL Infocom Limited

Particulars Amount in Rs.

Share Capital 3300000Reserves -Total Assets 3300000Total Liabilities 3300000Investments -Turnover -(Loss) before taxation (925186)Provision for taxation (Current/FBT) -(Loss) after taxation (925186)Proposed Dividend -


1

NOTICEHCL Infosystems Limited

Regd. Office: 806, Siddharth, 96, Nehru Place, New Delhi-110 019.

NOTICE is hereby given that the Twenty Third Annual General Meeting of the Company will be held on Friday, the 23rd dayof October, 2009 at FICCI Auditorium, 1, Tansen Marg, New Delhi-110 001 at 10.00 A.M. to transact the followingbusiness:

ORDINARY BUSINESS:

1. To receive, consider and adopt the audited Balance Sheet of the Company as at 30th June, 2009, the Profit and LossAccount for the financial year ended on that date and the Reports of the Directors and Auditors thereon.

2. To declare Dividend.

3. To appoint a Director in place of Mr. Ajai Chowdhry who retires by rotation and being eligible, offers himself for re-appointment.

4. To appoint a Director in place of Mr. S. Bhattacharya who retires by rotation and being eligible, offers himself for re-appointment.

5. To appoint a Director in place of Ms. Anita Ramachandran who retires by rotation and being eligible, offers herself for re-appointment.

6. To appoint Auditors to hold office from the conclusion of this Meeting until the conclusion of the next Annual GeneralMeeting and to fix their remuneration. M/s. Price Waterhouse, Chartered Accountants, the retiring Auditors, beingeligible, offer themselves for re-appointment.

SPECIAL BUSINESS:

7. To consider and if thought fit, to pass, with or without modification(s) the following resolution as an Ordinary Resolution:

“RESOLVED that pursuant to Sections 198, 309, 310, Schedule XIII and other applicable provisions, if any, of theCompanies Act, 1956, approval of the Company be and is hereby accorded for payment of enhanced remuneration toMr. Ajai Chowdhry, Chairman and Chief Executive Officer, w.e.f. 1st July, 2009 as recommended by the EmployeesCompensation and Employees Satisfaction Committee and as set out in the explanatory statement attached to thenotice of this Annual General Meeting.”


“RESOLVED that pursuant to Sections 198, 309, 310, Schedule XIII and other applicable provisions, if any, of theCompanies Act, 1956, approval of the Company be and is hereby accorded for payment of the enhanced remunerationto Mr. J. V. Ramamurthy, Whole-time Director and Chief Operating Officer, w.e.f. 1st July, 2009 as recommended by theEmployees Compensation and Employees Satisfaction Committee and as set out in the explanatory statement attachedto the notice of this Annual General Meeting.”


“RESOLVED that Mr. Nikhil Sinha, who was appointed as an additional Director, in terms of Section 260 of theCompanies Act, 1956 read with Article 92 of the Articles of Association of the Company to hold office till the conclusionof this Annual General Meeting of the Company and in respect of whom the Company has received a notice in writingfrom a member under section 257 of the said Act proposing his appointment, be and is hereby appointed as Director ofthe Company with office term subject to retirement by rotation.”

By Order of the Board for HCL Infosystems Ltd.

Sd/-New Delhi Sushil Kumar JainSeptember 8, 2009 Company Secretary

2

Notes :

1. The explanatory statement, pursuant to Section 173(2) of the Companies Act, 1956 in respect of the business underitems 7, 8 & 9 is attached hereto.

2. A MEMBER ENTITLED TO ATTEND AND VOTE AT THE MEETING IS ENTITLED TO APPOINT A PROXY TO ATTENDAND VOTE INSTEAD OF HIMSELF AND THE PROXY NEED NOT BE A MEMBER. A BLANK PROXY FORM IS ENCLOSEDFOR THE USE BY MEMBERS, IF REQUIRED, WHICH MUST BE SUBMITTED WITH THE COMPANY’S REGISTEREDOFFICE AT LEAST 48 HOURS BEFORE THE COMMENCEMENT OF THE MEETING.

3. The Registers of Members and the Share Transfer Books of the Company shall remain closed from Tuesday, the 3rd dayof November 2009 to Wednesday, the 4th day of November, 2009 (both days inclusive) for the purpose of payment ofdividend.

4. The dividend when declared will be paid to the Members whose names appear in the Register of Members on Friday, the30th day of October, 2009 and the beneficial owners as on Friday, the 30th day of October, 2009 as furnished by NSDL/CDSL.

5. All correspondence with regard to share transfers/dividends and matters related therewith may directly be addressed tothe Company’s Share Registrar and Transfer Agents (RTA) at the address given below:

M/s. Alankit Assignments Ltd.Alankit House,2E/21, Jhandewalan Extension,New Delhi – 110 055Phone : 011-23541234Fax : 011-42541967Email : [email protected] : www.alankit.com

6. The Members are requested to lodge/notify the transfer deeds, communication for change of address, Bank details,ECS details, wherever applicable, mandates (if any) with the Company’s RTA for shares held in physical mode.

The Members holding shares in electronic form are requested to lodge the above details to their depository participantsand not to the Company or RTA of the Company as the Company is obliged to use only the data provided by theDepositories while making payment of dividend.

7. In order to enable the Company to include the contact details of the shareholders in the shareholders database maintainedby the Company, the Members are requested to provide their phone number and e-mail address along with their FolioNo./DP ID and Client ID No. This will facilitate quick communication by the Company/RTA to its shareholders. Thedetails may be addressed to the Company at its Corporate Office at E-4,5,6, Sector XI, Noida (U.P) or by mailing it [email protected].

This can also be sent by SMS. For sending SMS, please type SHDB, Client ID-DP ID, eMail ID and send it to+919911115555 eg. SHDB,IN300513-15289788,[email protected] in case the shares are held in electronicform. For shares held in physical form, please type SHDB,Folio No.,eMail ID and send it to +919911115555 eg.SHDB,R000551,[email protected].

8. Members/Proxy holders are requested to produce at the entrance of the auditorium the enclosed admission slip dulycompleted and signed.

9. The certificate from the Auditors of the Company certifying that the Employees Stock Option Schemes of the Companyare being implemented in accordance with the SEBI (Employee Stock Option Scheme and Employee Stock PurchaseScheme) Guidelines, 1999 and in accordance with the resolution passed by members shall be placed at the AGM.

10. Pursuant to the provisions of Section 205A of the Companies Act, 1956, dividend declared for the financial year 2001-2002, which remains unpaid and unclaimed for a period of seven years will be due for transfer to the Investor Educationand Protection Fund (Fund) of the Central Government on January 24, 2010. Shareholders who have not encashed thedividend warrant(s) are requested to return the unpaid dividend warrant(s) for revalidation or write to the Company atthe above address to obtain duplicate dividend warrant immediately. Please note that after such transfer no claims shalllie against the Fund or the Company in respect of individual amounts and no payment shall be made in respect of anysuch claims.

3

Name of Director

Date of Birth

Age (years)

Date of Appointment

Qualifications

Expertise in specificfunctional area

Directorships held inother Companies ason date

11. Information under the Listing Agreement of the Directors proposed to be appointed/re-appointed:

(i) Directors seeking appointment/re-appointment in Annual General Meeting scheduled to be held on October 23, 2009

(Pursuant to Clause 49 (IV)(E) and 49 (IV)(G)(i) of the Listing Agreement)

Mr. NIKHIL SINHA

August 3, 1960

49

July 29, 2009

B.A.(Hons), M.A.,Ph.D

- A leadinginternational experton information andcommunicationtechnologyindustries

EMR TechnologyVentures PrivateLimited

Mr. AJAICHOWDHRY

August 29, 1950

59

April 01, 1989

Graduate inElectronics andTelecommunication

- Over 37 yearsexperience incomputer industryin India andabroad. Associatedwith the Companysince its inception.A key force indriving the growthof the Company

- HCL TechnologiesLimited

- Appollo Trading &Finance PrivateLimited

- HCL Infinet Limited- HCL Security

Limited- HCL Infocom

Limited- Junior Achievement

India Services- BFL Investments &

FinancialConsultants PrivateLimited

Mr. S.BHATTACHARYA

October 12, 1940

69

April 22, 1994

CharteredAccountant

- Vast experience inarea of Finance andAccounts

- HCL CorporationLimited

- NIIT Limited- HCL Peripherals

Limited- HCL Technologies

Limited- NIIT Technologies

Limited- HCL Infinet Limited

Ms. ANITARAMACHANDRAN

April 28, 1955

54

August 28, 1998

ManagementGraduate fromJamnalal BajajInstitute

- 23 years ofexperience in HRConsultancy

- ConnexusConsultants PrivateLimited

- Geometric Limited- Force Motors

Limited- Godrej & Boyce

Mfg. Co. Limited- UTI AMC Limited- UTI Venture Funds

Mgmt. Co. PrivateLimited

- Swaadhar FinServePrivate Limited

- CerebrusConsultants PrivateLimited

4

Name of Director Mr. NIKHIL SINHA Mr. AJAICHOWDHRY

Mr. S.BHATTACHARYA

Ms. ANITARAMACHANDRAN

Membership/Chairmanship inCommittees of othercompanies as ondate

Number of sharesheld in the Companyas on date

NIL Accounts & AuditCommittee- HCL Infinet LimitedShareholdersCommittee- HCL Technologies

Limited

198490

Accounts & AuditCommittee- HCL Technologies

Limited- NIIT Technologies

Limited*- NIIT Limited*- HCL Corporation

Limited*- HCL Infinet

Limited*ShareholdersCommittee- HCL Technologies

LimitedEmployees StockOption AllotmentCommittee- HCL Technologies

LimitedCompensation/RemunerationCommittee- NIIT Technologies

Limited- NIIT LimitedShare AllotmentCommittee- NIIT LimitedDebenture AllotmentCommittee- NIIT LimitedAsset LiabilityManagementCommittee- HCL Corporation

Limited

NIL

Accounts & AuditCommittee- Geometric LimitedHR Committee- UTI AMC Limited*ShareholdersGrievance Committee- UTI AMC Limited*Compensation/RemunerationCommittee- Geometric Limited

NIL

* Chairman of the Committee

NIL

5

12. The Company has obtained permission from the Ministry of Corporate Affairs, Government of India, vide its letternumber 47/104/2009-CL-III dated April 13, 2009 for not annexing the accounts of the wholly owned subsidiaries,namely, HCL Infinet Limited, HCL Security Limited, Natural Technologies Private Limited and HCL Infocom Limited.

The accounts of the subsidiaries are available at the Registered Office of the Company for inspection on any workingday to the shareholders of the Company requiring such information.

The Company has obtained permission from the Ministry of Corporate Affairs, Government of India, vide their letter No:46/4/2009-CL-III dated May 21, 2009 for not disclosing the quantitative details in compliance of para 3(ii) (d) of Part-II, Schedule-VI to the Companies Act, 1956 for the year ended 30th June, 2009 subject to such terms and conditionsas mentioned in the aforesaid permission letter.

EXPLANATORY STATEMENT PURSUANT TO SECTION 173(2) OF THE COMPANIES ACT, 1956

Item No. 7

At the Twenty Second Annual General Meeting held on October 24, 2008, the shareholders of the Company had accordedtheir consent for re-appointment of Mr. Ajai Chowdhry as Whole-time Director of the Company for a period of five yearseffective from April 1, 2009.

Mr. Chowdhry, aged 59 years, is a graduate in Electronics and Telecommunication with over 37 years experience in computerindustry in India and abroad.

It is proposed to enhance the remuneration of Mr. Chowdhry for the period from July 1, 2009 to June 30, 2010 as under:

Basic Salary: from Rs. 4,50,000/- per month to Rs. 5,00,000/- per month (with increase of Rs. 50,000/- per month onyearly basis)

Consolidated Allowance: Rs. 20,000/- per month

City Compensatory Allowance: @ 12% of Basic Salary

Performance Linked Bonus: Annually payable as approved by the Board of Directors/Board Committee.

Perquisites:

Part A:

Company Leased Accommodation / House Rent Allowance, Electricity, Gas, Water and Hard and Soft Furnishings, MedicalReimbursement, Leave Travel Assistance, Club Fee, Medical Insurance, House Repairs / Distemper Expenses, SecurityGuards and Domestic help at residence : As per the scheme of the Company applicable to the Whole-time Directors.

Part B:

Contribution to Provident Fund, Superannuation Fund and Annuity Fund:

As per the rules of the Company, which shall be limited to the extent these either singly or put together are not taxable underthe Income Tax Act, 1961.

Gratuity: Which shall be limited to half a month’s salary for each completed year of service, as per the scheme of theCompany.

Part C:

Use of own or Company’s car with driver and reimbursement of related expenses on running, maintenance, etc., andtelephone at the residence.

Provided further that the aggregate of the aforesaid salary, perquisites and other benefits, as per the scheme of the Companyapplicable to the Whole-time Directors, shall not exceed five percent of Company’s net profit for the Whole-time Directorand the aggregate of remuneration to all Whole-time Directors shall not exceed ten percent of the Company’s net profits asprovided under the provisions of section 198, 309, Schedule XIII and other applicable provisions, if any of the CompaniesAct, 1956.

Minimum Remuneration

The remuneration as set out above may be paid as the minimum remuneration to Mr. Ajai Chowdhry, Chairman and ChiefExecutive Officer, in the absence or inadequacy of profits in any financial year, provided that the total remuneration by wayof salary, perquisites and any other allowance shall not exceed the ceiling of Rs. 24,00,000/- per annum or Rs. 2,00,000/- per month and the perquisites provided in Section II of Part II of Schedule XIII of the said Act or such other amount andperquisites as may be provided in the said Schedule XIII as may be amended from time to time or an equivalent statutoryre-enactment thereof.

6

The payment of enhanced remuneration to Mr. Ajai Chowdhry is subject to the approval of the Shareholders.

The Directors recommend the resolution set out at item No. 7 for your approval.

Except Mr. Chowdhry, none of the Directors of the Company are interested in this resolution.

Item No. 8

At the Twenty Second Annual General Meeting held on October 24, 2008, the shareholders had approved the remunerationto Mr. J. V. Ramamurthy for the year July 1, 2008 to June 30, 2009.

Mr. J.V. Ramamurthy, aged 56 years is an Engineer from Madras University and a post graduate in Applied Electronics fromMadras Institute of Technology, Madras. He has over 30 years experience and a long association with electronic industry.

It is proposed to enhance the remuneration of Mr. Ramamurthy for the period from July 1, 2009 to June 30, 2010 as under:

Basic Salary: from Rs. 1,70,000/- per month to Rs. 2,25,000/- per month

Consolidated Allowance: from Rs. 46,000/- per month to Rs. 60,000/- per month

City Compensatory Allowance: @ 12% of Basic Salary

Performance Linked Bonus: Annually payable as approved by the Board of Directors/Board Committee.

Perquisites:

Part A:

Company Leased Accommodation / House Rent Allowance, Electricity, Gas, Water and Hard and Soft Furnishings, MedicalReimbursement, Leave Travel Assistance, Club Fee, Medical Insurance, House Repairs / Distemper Expenses, SecurityGuards and Domestic help at residence : As per the scheme of the Company applicable to the Whole-time Directors.

Part B:

Contribution to Provident Fund, Superannuation Fund and Annuity Fund:

As per the rules of the Company, which shall be limited to the extent these either singly or put together are not taxable underthe Income Tax Act, 1961.

Gratuity: Which shall be limited to half a month’s salary for each completed year of service, as per the scheme of theCompany.

Part C:

Use of own or Company’s car with driver and reimbursement of related expenses on running, maintenance, etc., andtelephone at the residence.

The limit of remuneration being paid to Mr. J.V. Ramamurthy for reimbursement of electricity, gas, water, soft furnishing,LTA, club fee, house repairs/distemper expenses, expenses on running and maintenance of own or company’s car, driversalary, security guard and domestic help at residence shall stand increased from existing Rs. 11,70,000/- per annum to Rs.14,52,193/- per annum.

Provided that consequent upon the increase in the basic salary, the perquisites and other allowances related to basic salaryshall also stand revised. There shall be no change in other terms and conditions of appointment of Mr. J.V. Ramamurthy.

Provided further that the aggregate of the aforesaid salary, perquisites and other benefits, as per the scheme of the Companyapplicable to the Whole-time Director, shall not exceed five percent of the Company’s net profit for the Whole-time Directorand the aggregate of remuneration to all Whole-time Directors shall not exceed ten percent of the Company’s net profits asprovided under the provisions of Section 198, 309, Schedule XIII, of the Companies Act and other applicable provisions, ifany.

Minimum Remuneration

The remuneration as set out above may be paid as the minimum remuneration to Mr. J.V. Ramamurthy, Whole-Time Director,in the absence or inadequacy of profits in any financial year, provided that the total remuneration payable by way of salary,perquisites and any other allowance shall not exceed the ceiling of Rs.24,00,000/- per annum or Rs.2,00,000/- per monthand the perquisites provided in Section II of part II of Schedule XIII of the said Act or such other amount and perquisite maybe provided in the said Schedule XIII as may be amended from time to time or an equivalent statutory re-enactment thereof.

The payment of enhanced remuneration to Mr. J.V. Ramamurthy is subject to the approval of the Shareholders.

The Directors recommend the resolution set out at item No. 8 for your approval.

7

Except Mr. Ramamurthy, none of the Directors of the Company are interested in this resolution.

Item No. 9

Mr. Nikhil Sinha was appointed as an Additional Director on the Board pursuant to the Board Resolution dated July 29,2009 and holds office till the conclusion of this Annual General Meeting.

Due notice under Section 257 of the Companies Act, 1956 along with requisite deposit has been received from a member,proposing the appointment of Mr. Nikhil Sinha as Director with office term subject to retirement by rotation.

Mr. Nikhil Sinha is B.A., M.A. and Ph.D. He is a leading international expert on Information and Communication Technologyindustries, and has held important positions in many reputed bodies. He has published numerous articles and papers inscholarly journals on international business and global communications.

His appointment as a Director shall be in the interest of the Company.

The Directors recommend the resolution as set out at Item No. 9 for approval.

Except Mr. Nikhil Sinha, none of the Directors of the Company are interested in this resolution.

By Order of the Board for HCL Infosystems Ltd.

Sd/-New Delhi Sushil Kumar JainSeptember 8, 2009 Company Secretary

�

HCL INFOSYSTEMS LIMITEDRegd. Office : 806, Siddharth, 96, Nehru Place, New Delhi-110 019

ATTENDANCE SLIP23rd Annual General Meeting - October 23, 2009

DP ID NO. __________________________ CLIENT ID NO. _______________________ FOLIO NO. ______________________(Electronic Mode) (Electronic Mode) (Physical Mode)

(Please mention both DP ID & Client ID Nos.) (Please mention the Folio No.)

I certify that I am a registered Member/Proxy of the registered Member of the Company.

I hereby record my presence at the 23rd ANNUAL GENERAL MEETING of the Company held on Friday, October23, 2009 at FICCI Auditorium, 1, Tansen Marg, New Delhi-110 001 at 10.00 A.M.

__________________________________________________ ________________________________Member’s/Proxy’s name in BLOCK LETTERS Member’s/Proxy’s Signature

Note : Please fill in this attendance slip and hand over at the entrance of the Meeting Hall.

FOR THE KIND ATTENTION OF SHAREHOLDERS

NO GIFTS WOULD BE DISTRIBUTED AT THE AGM

— — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — —

AffixRe. 1

RevenueStamp

HCL INFOSYSTEMS LIMITEDRegd. Office : 806, Siddharth, 96, Nehru Place, New Delhi-110 019

PROXY FORM23rd Annual General Meeting - October 23, 2009

DP ID NO. __________________________ CLIENT ID NO. ______________________ FOLIO NO. _______________________(Electronic Mode) (Electronic Mode) (Physical Mode)

(Please mention both DP ID & Client ID Nos.) (Please mention the Folio No.)

I/We ________________________________________________________________________ of _________________________________________ being

a Member/Members of the above named Company, hereby appoint _________________________________________

of __________________________________________________________________________________________________________ or failing

him __________________________________________________________ of ____________________________________________

______________________________________________________________ as my/our proxy to vote for me/us on my/our

behalf at the 23rd ANNUAL GENERAL MEETING of the Company to be held on Friday, October 23, 2009 at FICCI

Auditorium, 1, Tansen Marg, New Delhi-110 001 at 10.00 A.M. and at any adjournment thereof.

Signed this _____________________ day of _____________________ 2009

Signature of Proxy _________________________ Signature of the Member ____________________________________

Note : The proxy form in order to be effective must be duly stamped, completed and signed and must bedeposited at the Registered Office of the Company not less than 48 hours before the meeting.

NO GIFTS WOULD BE DISTRIBUTED AT THE AGM