HCL Technologies Limited (hereinafter referred to as 'HCL' or the
'Company') is primarily engaged in providing a range of software
services, business process outsourcing and infrastructure services. The
Company was incorporated in India in November 1991. The Company
leverages an extensive offshore infrastructure and its global network
of offices in various countries and professionals to deliver solutions
across select verticals including Retail, Aerospace and defense,
Automotive, Telecom, Financial Services, Government, Hi-tech, Media and
Entertainment, Travel, Transportation and Logistics, Energy and
utilities, Life Sciences and Healthcare.
4. Segment reporting
Identification of Segments
The Company's operating businesses are organized and managed separately
according to the nature of products and services provided, with each
segment representing a strategic business unit that offers different
products and serves different markets. The analysis of geographical
segments is based on the areas in which major operating divisions of
the Company operate.
(i) Business Segments
The operations of the Company predominately relate to providing
Software services, infrastructure services including sale of networking
equipment and business processing outsourcing services, which are in
the nature of customer contact centers and technical help desks. The
Chairman of the Company, who is the Chief Strategy Officer, evaluates
the Company's performance and allocates resources based on an analysis
of various performance indicators by types of service provided by the
Company and geographic segmentation of customers.
Accordingly, revenue from service segments comprises the primary basis
of segmental information set out in these financial statements.
Secondary segmental reporting is performed on the basis of the
geographical location of customers.
Revenue in relation to service segments is categorised based on items
that are individually identifiable to that segment, while expenditure
is categorised in relation to the associated turnover of the segment.
Assets and liabilities are also identified to service segments.
(ii) Geographic Segments
Geographic segmentation is based on the location of the respective
client. The principal geographical segments have been classified as
America, Europe and others. Europe comprises business operations
conducted by the Company in the United Kingdom, Sweden, Germany, Italy,
Belgium, Netherlands, Finland, Switzerland, Ireland and Poland. Since
services provided by the Company within these European entities are
subject to similar risks and returns, their operating results have been
reported as one segment, namely Europe. All other customers, mainly in
Japan, Australia, New Zealand, Singapore, Malaysia, Israel, South
Korea, India, China, Hong Kong, Czech Republic, Macau, UAE, Portugal
and Russia are included in others.
(iii) Segment accounting policies
The accounting principles consistently used in the preparation of the
financial statements and consistently applied to record revenue and
expenditure in individual segments are as set out in Note 1 to this
schedule on significant accounting policies. The accounting policies in
relation to segment accounting are as under:
a) Segment assets and liabilities
All segment assets and liabilities have been allocated to the various
segments on the basis of specific identification.
Segment assets consist principally of fixed assets, sundry debtors,
loans and advances, cash and bank balances and unbilled receivables.
Segment assets do not include unallocated corporate and treasury
assets, net deferred tax assets and advance taxes.
Segment liabilities include sundry creditors and other liabilities.
Segment liabilities do not include share capital, reserves, secured
loans, unsecured loan and provision for taxes.
b) Segment revenue and expenses
Segment revenue is directly attributable to the segment and segment
expenses have been allocated to various segments on the basis of
specific identification. However, segment revenue does not include
miscellaneous income, income from investments and other income. Segment
expenses do not include premium amortized on bonds, diminution
allowance in respect of current and trade investments, other than
temporary diminution in the value of long term investment, charge taken
for stock options issued to employees, corporate expenses and finance
5. Related party transactions
a) Related parties where control exists
HCL Comnet Systems and Services Limited
HCL Bermuda Limited
HCL Technologies (Shanghai) Limited
HCL Great Britain Limited
HCL (Netherlands) BV
HCL Belgium NV
HCL Sweden AB
HCL Italy SLR
HCL Australia Services Pty. Limited
HCL (New Zealand) Limited
HCL Hong Kong SAR Limited
HCL Japan Limited
HCL Comnet Limited
HCL America Inc.
HCL Holdings GmbH
HCL Global Processing Services Limited (formerly Intelicent India
DSI Financial Solutions Pte. Limited
HCL BPO Services (NI) Limited
HCL Jones Technologies LLC
HCL Singapore Pte. Limited
HCL (Malaysia) Sdn. Bhd.
HCL EAI Services Limited
HCL Poland sp. z o.o
Capital Stream, Inc.
HCL EAS Limited
HCL Insurance BPO Services Limited
HCL Expense Management Services Inc.
Axon Group Limited.
Axon Solutions (Canada) Inc.
Axon Solutions Schweiz Gmbh
Axon Solutions Pty. Limited
Axon Solutions Inc.
Axon Acquisition Company, Inc.
Axon Solutions Limited
Axon Solutions Sdn. Bhd.
Axon Solutions Singapore Pte. Limited
Axon Solutions (Shanghai) Co. Limited
HCL Axon (Proprietary) Limited
JSPC- I Solutions Sdn. Bhd.
JSP Consulting Sdn. Bhd.
HCL Technologies Canada Inc.
HCL Argentina s.a.
HCL Mexico S. de R.L.
HCL Technologies Romania s.r.l.
HCL Hungary Limited
HCL Latin America Holding LLC
HCL (Brazil) Technologia da informacao Ltda.
HCL Technologies Denmark Apps
HCL Technologies Norway AS
HCL Technologies South Africa (Proprietary) Limited
PT. HCL Technologies Indonesia Limited
HCL Arabia LLC
HCL Technologies France
Anzospan Investments PTY Limited
FILIAL ESPA¥OLA DE HCL TECHNOLOGIES, S.L(Spain)
Employee benefit trusts
HCL Technologies Limited Employees Trust Axon Group Plc Employee
Benefit Trust No. 3 Axon Group Plc Employee Benefit Trust No. 4
Jointly controlled entities
NEC HCL System Technologies Limited, India
Axon Puerto Rico Inc., Puerto Rico- through subsidiary
b) Related parties with whom transactions have taken place during the
HCL America Inc., United States of America
HCL Great Britain Limited, United Kingdom
HCL (Netherlands) BV, Netherlands
HCL GmbH, Germany
HCL Belgium NV, Belgium
HCL Sweden AB, Sweden
HCL Australia Services Pty. Limited, Australia
HCL (New Zealand) Limited, New Zealand
HCL Hong Kong SAR Limited, Hong Kong
HCL Comnet Systems and Services Limited, India
HCL Comnet Limited, India
HCL Bermuda Limited, Bermuda
HCL Technologies (Shanghai) Limited, Shanghai
HCL BPO Services (NI) Limited, Northern Ireland
HCL Singapore Pte. Limited, Singapore
HCL (Malaysia) Sdn. Bhd., Malaysia
HCL EAI Services Limited, India
HCL Global Processing Services Limited(formerly Intelicent India
HCL Poland Sp.z.o.o., Poland
Capital Stream Inc., United States of America
HCL Axon (Pty) Limited
Axon Solutions Inc. , United States of America
Axon Solutions Limited, UK
Axon Solutions Singapore Pte Limited
Axon Solutions Sdn. Bhd., Malaysia
HCL Insurance BPO Services Limited, UK
Axon Solutions (Canada) Inc., Canada
HCL Technologies Canada Inc.
Axon Group Limited.
HCL EAS Limited, UK
Jointly controlled entities
NEC HCL System Technologies Limited, India
Others (Significant influence)
HCL Corporation Limited
HCL Infosystems Limited
HCL Security Limited
HCL Infinet Limited.
HCL Holding Pvt. Limited.
HCL Insys Pte Limited., Singapore
c) Key Management Personnel
Shiv Nadar, Chairman and Chief Strategy Officer
Vineet Nayar, Chief Executive Officer and Whole-time Director
c) Guarantees have been given by the Company on behalf of various
subsidiaries against credit facilities, financial assistance and office
premises taken on lease amounting to Rs 2,283.86 crores (previous year Rs
2,219.44 crores). These guarantees have been given in the normal
course of the Company's operations and are not expected to result in
any loss to the Company on the basis of the beneficiaries fulfilling
their ordinary commercial obligations.
d) Bank guarantees of Rs 24.39 crores (previous year Rs 6.39 crores).
These guarantees have been given in the normal course of the Company's
operations and are not expected to result in any loss to the Company,
on the basis of the Company fulfilling its ordinary commercial
The amounts shown in the items above represent best possible estimates
arrived at on the basis of available information. The uncertainties
and possible reimbursements are dependent on the outcome of the
different legal processes which have been invoked by the Company or the
claimants as the case may be and therefore cannot be predicted
accurately. The Company engages reputed professional advisors to
protect its interest and has been advised that it has strong legal
positions against such disputes.
iii) The Company has a comprehensive system of maintenance of
information and documents as required by the transfer pricing
legislation under sections 92-92F of the Income Tax Act, 1961. Since
the law requires existence of such information and documentation to be
contemporaneous in nature, the Company appoints independent consultants
for conducting a Transfer Pricing Study to determine whether the
transactions with associated enterprises are undertaken, during the
financial year, on an "arms length basis". Adjustments, if any, arising
from the transfer pricing study in the respective jurisdictions are
accounted for as and when the study is completed for the current
financial year. However the management is of the opinion that its
international transactions are at arms' length so that the aforesaid
legislation will not have any impact on the financial statements.
11. Derivative Financial Instruments
The Company is exposed to foreign currency fluctuations on foreign
currency assets / liabilities, forecasted cash flows denominated in
foreign currency. The use of derivatives to hedge foreign currency
forecasted cash flows is governed by the Company's strategy, which
provide principles on the use of such forward contracts and currency
options consistent with the Company's Risk Management Policy. The
counter party in these derivative instruments are banks and the Company
considers the risks of non-performance by the counterparty as
non-material. A majority of the forward foreign exchange / option
contracts mature between one to twenty months and the forecasted
transactions are expected to occur during the same period. The Company
does not use forward contracts and currency options for speculative
As of the balance sheet date, the Company's net foreign currency
exposure that is not hedged is Rs 1399.20 crores (previous year Rs
1. Balance as at year end is inclusive of deferred tax liability of Rs
4.27 crores (previous year deferred tax assets of Rs 7.51 crores).
2. At 30 June 2011, the estimated net amount of existing gain that is
expected to be reclassified into the income statement within the next
twelve months is Rs 23.51 crores (previous year loss of Rs 99.97 crores).
14. Micro, Small and Medium Enterprises
As per information available with the management, the dues payable as
at any time during the year ended 30 June 2011 and 2010 to enterprises
covered under "The Micro, Small and Medium Enterprises Development Act,
2006" is Rs Nil crores.
This has been determined on the basis of responses received from
vendors on specific confirmation sought by the Company in this regard.
15. Employee Benefit Plans
The Company has calculated the various benefits provided to employees
A. Defined Contribution Plans and State Plans
Employer's contribution to Employees' State Insurance
Employer's contribution to Employees' Pension Scheme.
B. Defined Benefit Plans
b) Employers Contribution to Provident Fund
The Company has a defined benefit gratuity plan. Every employee who has
completed five years or more of service gets a gratuity on departure at
15 days salary (last drawn salary) for each completed year of service.
The Company expects to contribute Rs 20.31 crores to gratuity in
Employer's Contribution to Provident Fund
The Guidance on implementing AS 15, Employee Benefits (revised 2005)
issued by the Accounting Standard Board (ASB) states that benefits
involving employer-established provident funds, which require interest
shortfall to be recompensed are to be considered as defined benefits
plans. Pending the issuance of the guidance note from the Actuarial
Society of India, the Company's actuary has expressed his inability to
reliably measure provident fund liabilities. Accordingly the Company is
unable to provide the related information.
During the year ended 30 June 2011, the Company has contributed Rs 58.77
crores (Previous year Rs 48.13 crores) towards employers' contribution
to the Provident Fund.
16. Joint Venture
The Company has an interest in the following jointly controlled
17. A scheme of Amalgamation ("Scheme") under sections 391 to 394 of
the Companies Act, 1956 for amalgamation without issue of shares of HCL
Technopark Limited, a wholly owned subsidiary ("Transferor Company"),
held directly, with the Company has been approved by the Hon'ble High
Court of Delhi on August 16, 2010 and is effective from April 1, 2009.
The Transferor Company was engaged in the business of a developer of
facilities for the IT industry. The amalgamation is expected to
channelize synergies and lead to optimum utilisation of available
resources and result in greater economies of scale.
The Company has accounted for the amalgamation under the 'pooling of
interest method' being an amalgamation in the nature of merger, as
prescribed by the Accounting standard "AS-14", "Accounting for
Amalgamations" as per Accounting Standards notified by Companies
(Accounting Standards) Rules, 2006, (as amended).
19. Previous year comparatives
The previous year's figures have been re-classified/re-grouped to
conform to current year's classification.
I. Registration details
Registration No. 55-46369
Balance Sheet Date 30 June 2011
State Code 55
II. Capital raised during the year
Public issue Rights issue
Bonus issue Private Placement
Note: Capital raised during the year includes share application money.
III. Position of mobilisation and deployment of funds
Total liabilities Total assets
Sources of funds Paid-up capital 1,387,419*
Secured loans 10,298,674
*Includes Rs 10,042 in respect of share application money.
Reserves and surplus 57,204,053
Unsecured loans 2,905
Application of funds
Net fixed assets Investments
Net current assets Misc. expenditure
Accumulated losses Deferred tax
** Includes Rs 5,687,337 thousands in respect of capital
IV. Performance of Company
Turnover Total expenditure
Profit before tax Profit after tax
Earnings per share (in Rs) Dividend rate (%)
17.53 (Basic) 375% 17.18 (Diluted)
V. Generic names of Principal Products/Services of Company (as per
monetary terms) Product description: Software
Item code (ITC code): 852490