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Authorized Share Capital consists of 750,000,000 equity sharesof Rs 2 each. During the year, employees exercised 2355096,3688408 and 2480108 equity shares under the employees stockoptions plan 1999, 2000 & 2004 respectively. Consequentlyissued, subscribed and paid capital increased by 8,527,212equity shares and share capital increased by Rs 1.71 crores.Reserves:-Debenture Redemption Reserve:-During the year company has raised Rs 1000 crores throughsecured redeemable non convertible debentures of Rs 10lacs each which is redeemable in tranches of 2, 3 & 5 years.As per Section 117C of the Companies Act 1956, Companyis required to create debenture redemption reserve to whichadequate amounts should be credited from out of its protsuntil such debentures are redeemed. Accordingly Companyhas apportioned Rs 295 crores out of its current year protstowards debenture redemption reserve.Borrowings:-Company has outstanding borrowings of Rs. 2,724.2 crores asof June 30 2010 primarily consisting of the following:-• Secured redeemable non convertible debentures of Rs10 lacs each issued for Rs. 1000 Crores redeemable intranches of 2, 3 & 5 years and have an interest cost varyingbetween 7.55% to 8.80%.• Secured long term foreign currency loan of Rs. 1212.1 crores(USD Equivalent 261.0 Mn) crores from banks repayablewithin a period eight half yearly equal installments startingfrom May 2011 carrying interest ranging from 3% to 4%.Fixed Assets:-The Company has made additions of Rs. 678.8 crores during2010 in the gross block of xed assets which comprisescomputers, software, other equipments and investment infacilities. Additions include Rs. 105.6 crores being assets(including goodwill) acquired on consummation of acquisitionduring the year. Gross block of xed assets as at the end of scal2010 stood at Rs. 7061.6 crores and capital work in progress(including capital advances) stood at Rs. 609.1 crores.The Company is in the process of developing facilities in itscampuses at NOIDA, Chennai, Bangalore and Manesar. Thesecampuses are spread over a combined area of 121 acres. 8400seats have already become operational at these campuses and16,000 seats are under development at these campuses. Allthe campuses excluding Manesar are approved SEZ locations.Expenditure incurred till end of scal 2010 for the facilities underconstruction is appearing under capital work in progress.Treasury Investments:-The guiding principle of the Company’s treasury investment isSafety, liquidity & Return. The Company has efciently managedits surplus funds through careful treasury operations.The Company deploys its surplus funds primarily in debt mutualfunds and bank xed deposits with a limit on investments withindividual fund/bank. As at the end of scal 2010, almost entiresurplus funds are invested in xed deposit with nationalizedbanks.(Rs in Crores)Particulars 2010 2009Debt Mutual Funds 782.1 20.0Bonds 50.0 20.0Fixed Deposits with Banks 1,099.2 1,494.6Inter corporate deposits with HDFC Limited 100.0 -Total 2,031.3 1,534.6CASH FLOWSCash Flows from Operating Activities:-Cash generated from operations provides the major sourceof funds for the growth of the business. Net cash provided byoperating activities was Rs. 1,791.2 crores and Rs. 1,117.8 croresin scal 2010 and 2009 respectively.Cash Flows from Investing Activities:-In scal 2010, an amount of Rs. 646.8 crores was invested inxed assets. Rs.50.8 crores were used for payment for businessacquisitions.Cash Flows from Financing Activities:-Cash ow from nancing activities in the year under reviewhad an outow of Rs. 727.8 crores against inow of Rs 2,249.9crores in 2009. This is mainly because of repayment of shortterm foreign currency loan of Rs 2395.0 crores (USD 585Mn)and Rs 315.2 crores pertaining to the nal dividend declaredin the previous scal year as well as the interim dividends paidduring the year.HCL Technologies Limited (Standalone):-The Consolidated Financial Statements brings outcomprehensively the performance of the Company andare more relevant for understanding the Company’sPerformance.The discussion in the paragraph 1 which follows should be readin conjunction with the nancial statements and related notesrelevant to HCLT Limited (Standalone) for the year ended 30June ‘2010.RESULTS OF OPERATIONS (STANDALONE)(Rs. in Crores)For the Year EndedJune 30, 2010For the Year EndedJune 30, 2009Growth% of% of %ParticularsAmount Revenue Amount Revenue IncreaseRevenue 5,078.8 100.0% 4,675.1 100.0% 8.6%Total Revenue 5,078.8 100.0% 4,675.1 100.0% 8.6%Cost of Goods Sold 85.5 1.7% - - -Personnel Expenses 2,187.7 43.1% 1,930.2 41.3% 13.3%Operating and other1,449.2 28.5% 1,539.0 32.9% -5.8%expensesDepreciation 274.0 5.4% 251.9 5.4% 8.8%Total Expenditure 3,996.4 78.7% 3,721.1 79.6% 7.4%Prot before Interest, 1,082.4 21.3% 954.0 20.4% 13.5%Other Income & TaxInterest 101.4 2.0% 28.1 0.6% 260.9%Other Income 171.8 3.4% 265.8 5.4% -35.4%Prot before Tax 1,152.8 22.7% 1,191.7 25.5% -3.3%Provision for tax 96.2 1.9% 194.4 4.2% -50.5%Prot after tax 1,056.6 20.8% 997.3 21.3% 5.9%13
FISCAL 2010 COMPARED TO FISCAL 2009Revenues:-Revenue during the scal 2010 has grown by 8.6% as comparedto scal 2009.The Company derives its revenue from three segments vizSoftware, infrastructure and business process outsourcingservices. Among the three segments, revenues from Infraservices have registered highest growth rate of 306.0%.Revenue from BPO segment have declined by 29.0% comparedto scal 2009 which is partly on account of reduction in volumeof business as a result of worldwide recession and partlybecause of weakening of GBP and USD against INR.Segment wise details are given below:(Rs in Crores)For the Year EndedJune 30, 2010For the Year EndedJune 30, 2009Growth% of% of%ParticularsAmount Revenue Amount Revenue IncreaseSoftware Services 4,084.3 80.4% 3,991.8 85.4% 2.3%Infrastructure Service 617.3 12.2% 152.0 3.3% 306.0%Business Process377.2 7.4% 531.3 11.4% -29.0%Outsourcing ServicesTotal Revenue 5,078.8 4,675.1 8.6%Geography wise breakdown of revenueThe company also reviews its business on a geographic basis.The following table classies total revenue by geographicareas:(Rs in Crores)For the Year EndedJune 30, 2010For the Year EndedJune 30, 2009Growth% of% of %Geographical MixAmount Revenue Amount Revenue IncreaseUS 3,376.7 66.5% 3,072.2 65.7% 9.9%Europe 1,205.8 23.7% 1,230.3 26.3% -2.0%Rest of the World 496.3 9.8% 372.6 8.0% 33.2%Total Revenue 5,078.8 4,675.1 8.6%Personnel Expenses:-For the Year EndedJune 30, 2010For the Year EndedJune 30, 2009(Rs in Crores)Growth% of% of %ParticularsAmount Revenue Amount Revenue IncreaseSalaries, wages and bonus 2,044.0 40.2% 1,789.4 38.3% 14.2%Contribution to provident74.4 1.5% 62.2 1.3% 19.6%and other fundsStaff welfare expenses 19.5 0.4% 22.5 0.5% -13.6%Employee stock49.8 1.0% 56.1 1.2% -11.2%compensation expenseTotal 2,187.7 43.1% 1,930.2 41.3% 13.3%Personnel costs have increased to Rs 2,187.7 crores in 2010from Rs 1,930.2 crores in 2009, an increase of 13.3% inpersonnel costs have been driven primarily by an increase innumber of employees during the year from total of 38,525 atthe end of scal 2009 to 47,072 at the end of scal 2010 andincrease in average cost per employee.Personnel costs as a percentage of revenues have increasedfrom 41.3% in 2009 to 43.1 % in scal 2010.For the Year EndedJune 30, 2010For the Year EndedJune 30, 2009(Rs in Crores)Growth% of% of %ParticularsAmount Revenue Amount Revenue IncreaseRent 158.6 3.1% 155.8 3.3% 1.8%Power & Fuel 86.9 1.7% 100.3 2.1% -13.3%Travel and conveyance 388.7 7.7% 290.0 6.2% 34.0%Communication costs 44.2 0.9% 56.6 1.2% -21.9%Recruitment Training &18.7 0.4% 23.1 0.5% -19.4%DevelopmentExchange differences 47.8 0.9% 174.3 3.7% -72.6%Outsourcing Costs 404.8 8.0% 462.1 9.9% -12.4%Others 299.5 5.9% 276.8 5.9% 8.2%Total 1,449.2 28.5% 1,539.0 32.9% -5.8%Operating and other expenses:-The Company derives almost entire revenues in foreign currencieswhile almost entire costs are incurred in INR. This exposesthe company to risk of adverse variation in foreign currencyexchange rates. The company uses foreign exchange forwardcontracts to mitigate the risk of movements in foreign exchangerates associated with receivables and forecasted transactions incertain foreign currencies. During the scal year the companyhas exchange loss of Rs. 47.8 crores versus loss of Rs. 174.3crores mainly on account of mark to market of forward coversand restatement of foreign currency assets and liabilities.The company follows cash ow hedge accounting in respect offorward covers taken against forecasted revenues. Exchange gain/ (loss) arising on those forward covers where cash ow hedgeaccounting is followed has been reported under revenues.The Company also subcontracts certain projects to subsidiariesor hires consultants from third parties. These costs decreasedto Rs 404.8 crores in scal 2010 from Rs. 462.1 crores in scal2009, decrease of 22.8%.Prot before Interest & Other Income & TaxThe Company’s Operating prot has increased to Rs.1082.4crores in scal 2010 from Rs. 954.0 crores in 2009, increaseof 13.5%.Taxation:-The net tax expense for 2010 was Rs. 96.2 crores compared toRs. 194.4 crores in 2009. Tax as a %age of Prot before tax hasreduced to 8.3% in 2010 from 16.3% in 2009. Reduction in taxexpenses is primarily on account of:-• Abolition of fringe benet tax by Finance Bill 2009 witheffect from 1 April 2010.• Reversal of tax provision of Rs 32 crores during the currentyear on account of retrospective amendment in Section10AA of the Income Tax Act as per Finance Bill 2010removing the anomaly in the denition for computing theincome tax relating to SEZ..Company’s operations are conducted through SoftwareTechnology Parks (“STPs”) and Special Economic Zones(“SEZs”) .Income from STPs are tax exempt for the earlier of10 years commencing from the scal year in which the unitcommences the software development, or March 31, 2011.Income from SEZs is fully tax exempt for the rst 5 years, 50%14
Page 2 and 3: CONTENTSBoard of Directors 2Managem
Page 4 and 5: MANAGEMENT DISCUSSION AND ANALYSISI
Page 6 and 7: When looking at the growth opportun
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Page 17 and 18: DIRECTORS’ REPORTDear Shareholder
Page 19 and 20: DEBENTURESDuring the year, the Comp
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Page 23 and 24: (iii) Future plan of actionYour Com
Page 25 and 26: ANNEXURE 3 TO THE DIRECTORS’ REPO
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Page 37 and 38: Nature of expertise in functional a
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Page 45 and 46: Nominations CommitteeThe Nomination
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Page 55 and 56: Hyderabad CentersGround & First Flo
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Consolidated Balance Sheet(All amou
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