HCL Annual Report 2009-2010

Description
The report for the financial year 2009 - 2010 of HCL.

CONTENTS
Board of Directors Management’s Discussion and Analysis Directors’ Report Corporate Governance Report Declaration on Code of Conduct CEO and CFO Certificate Financial Statements Indian GAAP Standalone Consolidated Statements Statement under Section 212 Statement regarding Subsidiary Companies 2 3 16 33 57 57 59 64 103 140 142

BOARD OF DIRECTORS
MR. SHIV NADAR Chairman & Chief Strategy officer MR. VINEET NAYAR CEO & Whole-time Director MR. T. S. R. SUBRAMANIAN Non-Executive Director MS. ROBIN ABRAMS Non-Executive Director MR. AJAI CHOWDHRY Non-Executive Director MR. SUBROTO BHATTACHARYA Non-Executive Director MR. AMAL GANGULI Non-Executive Director MR. P. C. SEN Non-Executive Director

Auditors
S.R. Batliboi & Co. Chartered Accountants Gurgaon

Bankers
Citibank, N.A. Global Corporate & Investment Banking DLF Centre, 5th Floor Parliament Street New Delhi–110001 Deutsche Bank AG Corp. Office – DLF Square 4th floor, Jacaranda Marg, DLF City, Phase – II Gurgaon-122002 Standard Chartered Bank Corporate & Institutional Banking Credit Operations, India H -2, Connaught Circus New Delhi–110001 State Bank of India Corporate Accounts Group Branch 11th / 12th Floor Jawahar Vyapar Bhawan 1, Tolstoy Marg New Delhi-110001

2

MANAGEMENT DISCUSSION AND ANALYSIS
Investors are cautioned that this discussion contains forward looking statements that involve risks and uncertainties. When words like ‘anticipate’, ‘believe’, ‘estimate’, ‘intend’, ‘will’, and ‘expect’ and other similar expressions are used in this discussion, they relate to the Company or its business and are intended to identify such forward-looking statements. The Company undertakes no obligations to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. Actual results, performances or achievements could differ materially from those expressed or implied in such statements. Factors that could cause or contribute to such differences include those described under the heading ‘Risk Factors’ in the Prospectus filed with the Securities and Exchange Board of India (SEBI) as well as factors discussed elsewhere in this report. Readers are cautioned as not to place undue reliance on the forwardlooking statements as they speak only as of their dates. The following discussion and analysis should be read in conjunction with the Company’s financial statements included herein and the notes thereto.

IT Services contributed to 55% of the IT Exports during FY10. BPO and Engineering Services contributed 25% and 20% respectively. This share distribution has remained somewhat constant over past several years.

Industry Overview
Current State of Indian IT Industry Indian IT Industry has witnessed a decade of growth. Indian IT exports have grown from $4bn in FY2000 to $50bn in FY2010 at a 10-year CAGR of 28.8%. During the first half of the decade, Indian IT exports grew at a 5-year CAGR of 35% from $4bn in FY2000 to $18bn in FY2005. During the second half of the decade, Indian IT exports grew at a 5-year CAGR of 23% from $18bn in FY2005 to $50bn in FY2010. Within IT Services, the share of Custom Application Development Services came down from 49% to 37% during the 3-year period, whereas the share of Remote Infrastructure Management and System Integration services increased from 11% to 20%. Application Management Services grew much faster than Application development services at a 3-year CAGR of 24%. Other IT Services (such as IT Consulting, Support & Training, Software Testing, SOA/Web Services etc.) grew at a 3-year CAGR of 17%.

The industry can be segmented as per the (a) Verticals (b) Service Lines (c) Geographies. BFSI, Hi-tech/Telecom, and Manufacturing were the dominant verticals contributing to over 3/4th of the exports over past several years. BFSI contributed to 40% of Indian IT Exports during FY10. Hitech/Telecom and Manufacturing contributed 20% and 16% respectively. Emerging verticals (Media & Entertainment, Retail, Healthcare, Utilities, and Transportation) have contributed to nearly 1/4th of the exports.

US and UK were the dominant regions receiving over 3/4th of the Indian IT exports over past several years. US received 61% of Indian IT Exports during FY10, whereas UK received 18%. Continental Europe and APAC received 12% and 7% of exports

3

respectively. The Geo distribution has not changed much over past several years.

– particular into large accounts – will be critical for the company’s growth in the coming years. Figure: Opportunities for Growth
Existing customers

Cross-sell

Up-sell

New Propositions

New customers

HCL has grown faster than Indian IT Industry during the last decade. While HCL growth was lagging behind Indian IT Industry growth during the first half of the decade, HCL came back strongly during the second half of the decade. During the first half of the decade, HCL revenues grew at a 5-year CAGR of 30% from $207mn in FY2000 to $764mn in FY2005. During the second half of the decade, HCL revenues grew at a 5-year CAGR of 29% from $764mn in FY2005 to $2705mn in FY2010. Overall, HCL revenues grew at a 10-year CAGR of 29.3%.

Vendor consolidation

New verticals

New geos

New Propositions

Growth opportunities from new customers can come from Vendor consolidation, New Verticals, New Geographies, and New Propositions. Vendor consolidation means reducing the number of vendor engagements to an efficient “core” capable of providing all needed services, software, systems, and partnering relationships. It offers the following business benefits to customers: reduced total cost of ownership (TCO), streamlined vendor relationship management, reduced number of support contracts to negotiate and manage, increased procurement process leverage, and reduced training, certification, and administration expenses. The trend of vendor consolidation will contribute significantly to greater offshore content in global IT services. For growth opportunities from new customers, the NASSCOMMcKinsey 2020 report provides useful inputs. Published in April 2009, the NASSCOM-McKinsey 2020 report is the third report published by NASSCOM and McKinsey on the future of IT Industry. The report discusses seven Global Megatrends that will drive the increase in global sourcing and domestic outsourcing addressable market opportunity from $500 bn to $1.5 trn by 2020.

Drivers for Future Growth While Indian IT exports grew at a 10-yr CAGR of 29% during the last decade, Global IT services spending grew at a 10-yr CAGR in lower single digits during the same period. This is a story of ‘market-share gains’ or ‘replacement revenue’. At the start of the last decade, in the year 2000, Top Indian 5 IT players Market Share in the Global IT Services spending was just about 0.1%. By the end of the decade, in the year 2009, their Market share increased to about 2.4%. There is still big headroom for growth for Indian IT Industry. According to a customer satisfaction (CSAT) survey of HCL customers in 2009, cost reduction was considered to be the most important business priority across all the verticals and geographies. With continued cost pressures across the businesses and India’s still attractive 30-40% cost advantage, the next level of replacement revenue is about to begin. Growth opportunities for HCL can come from existing customers as well as new customers. From existing customers, opportunities are in cross-sell, up-sell, and new propositions such as business-aligned IT, cloud computing, platform-based BPO, and green IT. HCL’s ability to grow customer relationships

The NASSCOM-Mckinsey 2020 report examines the total addressable global sourcing market along four dimensions: 1. Core Market Opportunities: The total addressable market for core markets (large enterprises in developed countries in verticals such as telecom, banking, insurance, and manufacturing) was $500 bn in 2008. It is expected to reach $700 bn by 2020. New Verticals: Over the next 12 years, several emerging verticals will become the next major segments after the core verticals. The four emerging verticals are: Public sector & defense, Healthcare Providers, Utilities, and Media. The addressable market for these emerging verticals is expected to reach $190 bn by 2020. New Geographies: BRIC countries will offer a domestic outsourcing market of $380 bn by 2020. New Customer segments: The global sourcing addressable market for SMBs in core geographies is likely to be around $230 bn in 2020.

2.

3. 4.

While core markets will present an additional $200 bn addressable market by 2020, new verticals and new geographies will present a $580 bn addressable market by 2020—three times the additional opportunity presented by core verticals.

4

When looking at the growth opportunities, another dimension to explore is that of new propositions such as cloud computing, virtualization, platform-based BPO, green IT, digital technology & marketing, industry-specific smart Solutions, and advanced business analytics. Of all these propositions, Cloud computing is being touted as the most disruptive proposition that has the potential to change the way IT services are delivered. The key reason for that are the trends of the Industralization and Consumerization of IT. Industralization of IT refers to the standardization of IT services and covers predesigned and preconfigured solutions that will be highly automated, efficient, repeatable, scalable, reliable, and available. Consumerization of IT refers the changing buyer behavior in IT. Buying centers will shift from IT to business. Buyers will buy services instead of skills – Infrastructure as a Service, Application as a Service, Platform as a Service, or even Business as a service. The key driver for the Consumerization of IT is the movement towards decreased IT hardware/software assets. Virtualization is making underlying hardware (and its ownership) non-strategic. Buyers are looking for scalability, pay-as-you-go, and freedom from infrastructure build-out and less capex sensitivity. Industry Outlook The first decade of the 21st Century was somewhat unique. It saw everything from highly volatile Oil prices, increasingly rising commodity prices, bulls and bears of stock markets, focus/defocus on climate change, and debates/concerns about scarcity of natural resources. It started with a recession and it is ending with a recession. But, there is big difference between the two. While the previous recession was led by the slowdown in business spending, the current recession is led by the slowdown in both business and consumer spending. Consumer confidence has completely shaken due to increasing job losses, salary freeze/cuts, and memory of loan foreclosures. Consumers are taking precautionary approach to spending and reducing their debt levels. They are spending on what they need rather than what they want. Banks have started adopting tighter credit and stricter lending standards towards consumers, as they side-step Risk with ‘Be Prepared’ approach instead of a ‘Just do it’ approach. All this is leading to the phenomenon of ‘New Normal’. The ‘New Normal’ means we will be living in a world of moderated business growth during next few years. The businesses across the world won’t be growing at the same pace as they were growing from 2005-08. The customers will be demanding more for less. They will look for business benefits than IT benefits. They would want vendors to put skin in the game and co-invest in the transformation initiatives. Indian IT Industry will also witness lesser growth rates in the next decade than in the last decade. As per NASSCOM Mckinsey 2020 report, the total global sourcing industry will grow at a CAGR of 15% from 2008 until 2020. It is likely to expand more than five-fold by 2020 from $80 bn in revenues in 2008 to $450 bn by 2020 (based on a penetration of 40% of the total addressable market of $ 1.1 trn). The Indian global sourcing industry will grow at a slightly lower CAGR of 13% and is likely to expand four-fold by 2020 from $40 bn in revenues in 2008 to $175 bn by 2020. This will imply a decline in India’s share of the global market from 51% to around 40% by 2020. The companies with disruptive business models will be able to

buck this trend and grow at much faster growth rates. HCL Strategy HCL’s strategy of focusing on growth, service innovation, and unique positioning in the marketplace has improved the company’s competitive standing. HCL has achieved profitable growth over the last five years, including through the recession. HCL’s transformation journey starting in 2005 was the product of choices. By 2005, the Indian IT industry had come of age, but HCL was lagging. Y2K-related work and expanded global delivery offerings fueled industry-wide growth from 2000 to 2005 – and HCL itself grew its annual revenue from $207 m to $764 m during the period – but HCL’s market share in Indian IT exports had fallen. At risk of drifting into irrelevance in the industry – and mindful of intensifying competition from the likes of IBM and Accenture in India – HCL charted a multi-pronged strategy to differentiate itself in the marketplace. To make up for its loss in market share, HCL chose to focus on growth and worked to diversify its revenue base through new service offerings. To rejuvenate its employee base and be seen as an employer of choice, HCL launched a portfolio of initiatives around Employees First Customers Second. To deliver increased value for clients, HCL created new operating processes and methodologies for customer relations through Trust, Transparency, and Flexibility and offered outcome-based engagements before its peers. The company also worked to nurture customer intimacy through initiatives such as the annual Global Customer Meet. After falling behind Indian competitors during the first half of the decade, HCL increased its market share from 2005 to 2010. Over the course of the last five years, HCL has acquired capabilities and adapted organizationally to a changing market and intensifying competition. HCL has been able to upgrade some lines of business, such as infrastructure services and engineering and R&D services, organically. Infrastructure services, for example, offered network and security services in 2005 but has since added world-class architecture and consulting capabilities. HCL identified Enterprise Application Services as a promising line of business as clients shifted from custom to packaged applications, but saw gaps in its capabilities that could not be filled organically. The company acquired Axon, the biggest acquisition in the history of the Indian IT industry, to add consulting and solutioning capabilities to EAS and successfully retained Axon’s top leaders through a reverse merger. Organizationally, HCL simplified and consolidated its fragmented structure and established clear lines of accountability. Through Dual GTM, HCL presented its horizontal and vertical depth to potential customers. New offerings, domain depth, and consulting capabilities enabled HCL to position itself as a provider of end-to-end services, not just skills. Just as HCL was catching up to its Indian rivals, the financial crisis and recession of 2008-09 hit the Indian IT industry. The pain of the recession was particularly acute for HCL and its peers because it was the industry’s first major recession. HCL responded to the recession by demonstrating value to its existing customers and ensuring security to its employees. Through the assurance that no HCLite would be left behind and a collaborative process of consulting with 10,000 employees before imposing new policies, HCL managed internal strain through the recession. The company also saw

5

the downturn as a rare opportunity to acquire new business and quality customers, and HCL’s performance during the period surpassed many rivals. HCL grew at 23% YoY in CY09, whereas most Indian/Global peers witnessed negative revenue growth during the same period. Going forward, HCL will continue to focus on revenue growth through existing and new customers. HCL will continue to evolve Account Management practices to make them “best in class”. HCL will offer increased value to its existing customers through ecosystem alliances and partnerships. HCL will do joint solution development with Partners to build Industryspecific and cross-industry solutions that are high value and differentiated. HCL will offer increased portfolio of services for existing clients, thus blocking new entrants into its client base. HCL will target new customers with a focused program for sourcing advisors. HCL will have dedicated hunters who will follow a Named Account strategy to target Fortune Global 500 clients. HCL will continue to make investments in high value services and Global delivery model.

accountability, transparency and trust’ by Wall Street Journal; ranked #1 employer of 2009 in a study done by Hewitt; #1 among the top 50 best managed global outsourcing vendors of 2009 by Brown & Wilson’s Black Book of Outsourcing; listed as one of the 44 Most Democratic Workplaces in the world by WorldBlu and featured as a case study in Harvard, London Business School, Darden Business Publishing, and more recently, David G Thomson’s book, “Blueprint to a billion - 7 essentials to exponential growth”. Indeed, HCL is more comfortable in forging its own trail rather than following the expected – thereby bringing about unexpected and path breaking results. Service Offerings HCL believes in the good practice of regularly re-structuring and re-energizing its diversified portfolio of service offerings. By re-evaluating and realigning this portfolio from time to time, HCL is able to develop a robust and resilient business model. No single service line contributes more than 32% to the total revenue even while maintaining a leading edge in key verticals where HCL chooses to focus.

Company Overview
About HCL Technologies Ltd HCL is a global technology enterprise and a name to reckon with in the industry. The passion of its founder and the entrepreneurial zeal of its employees have made its software services arm, HCL Technologies, a leading provider of business transformation, enterprise and custom applications, infrastructure management, business process outsourcing, and engineering services. HCL delivers solutions across a wide range of verticals like financial services, manufacturing, consumer services, public services and healthcare. Its global delivery model is spread across 26 countries around the globe and its empowered ‘transformers’ are busy working with over 500 forward looking customers, seeking to shift paradigms and transform the way business is being done. Change has been the winning formula at HCL. The ability to transform businesses across the world comes from the organization’s own readiness to transform itself in its relentless drive to better serve its customers. In 2005, HCL commenced on its transformation journey based on the foundation of ‘Employees First’. Today, this unique management philosophy has been recognized and praised worldwide for empowering employees to become the drivers of growth. And this in turn has led to extraordinary growth in the past 5 years, where HCL experienced: • Tripling of revenue and operating profit • Twenty percent year-on-year growth in market share • Seventy percent of deals being won against the Big Four international IT companies • Fivefold increase in the number of large ($20mn+) customers • Nearly fifty percent decline in employee attrition rates • Seventy percent increase in employee satisfaction scores The phenomenal performance has won its share of approval. Today, HCL is proud to be on Business Week’s 5 most influential companies to ‘watch’ list; considered ‘disruptive’ by IDC; ranked in the top 10 outsourcers with the ‘highest

Custom Application Services The Custom Application Services division at HCL leverages a domain-driven approach to design, and implements scalable, reliable, robust, secure, and easily maintainable applications that provide our customers with business differentiation through IT. Service offerings include application development, management, support, re-engineering, modernization, migration, and independent verification and validation. With more than 10,000 domain and technology experts supporting more than 100 clients across geographies, this group contributes over 29% of HCL’s revenues, and services at least two of the top five players in various industries like retail, banking, insurance, media & publishing, gaming and life sciences. A customer centric focus keeps HCL continuously investing and inventing robust methodologies, tools, and processes. HCL’s BAIT is a new framework that allows the efficient alignment of IT with business; it provides a unified view of all business processes with the underlying IT landscape and helps reduce cycle time while providing the lowest IT cost on a business transaction. Our unique Knowledge Transfer methodology - ASSETTM ensures minimum cost with a smooth transition to offshore, for customers. And right now HCL is investing significantly in niche technologies and areas like cloud computing, pay as you go services and hosted services. With our dedicated CoEs, skills are continuously being upgraded, and customers are enjoying faster time to market as they leverage our extensive research and development

6

on reusable components and frameworks. Technology partnerships nurtured with leading global solutions providers like Microsoft, TIBCO, WebMethods, Oracle, Digite, and IBM, SUN Microsystems and others, enable HCL provide best-inclass services and solutions to customers. Additionally, all our software development centers are certified with ISO 9001:2000, CMM Level 5 and British Security Standard—BS7799, in keeping with our customers’ information security requirements. Our customized software and application services have been rated as much higher than the industry average on the parameters of productivity, efficiency, and lower defects, and we provide 100% transparency to our clients through CXO dashboards with online SLA tracking and status reporting. Engineering and R&D Services [ERS] HCL is one of the few Indian companies with significant focus on engineering services. Contributing to over 19% of the company’s revenues, this group brings a balance to the service portfolio unlike some of our peers. The ERS group offers end-toend engineering services and solutions in hardware, embedded, mechanical and software product engineering to industry leaders across Aerospace & Defence, Automotive, Consumer Electronics, Industrial Manufacturing, Medical Devices, Networking & Telecom, Office Automation, Semiconductor, Servers & Storage and Software Products. HCL well understands the importance of Research & Development (R&D) in augmenting its customers businesses and is committed to providing these world-class services to them. Over a decade of operating in complex multi-vendor environments and customer value chains, we have the ability to seamlessly integrate into their existing R&D ecosystem, working with other innovation partners, captive centers, universities, industry bodies and manufacturing partners. The group has recently started a business unit with a dedicated team to focus on Defense, Space & Security (DSS). It has also developed the Business Aligned Test Framework to specifically address the industry need for a standard and cost-effective approach to testing and verification activities in hardware, software, mechanical, system safety assessment, test engineering, prototyping, design assurance and new product realization. The group has rich experience in developing safety-critical embedded products involving cutting edge hardware, complex middleware, rich applications and interactive GUI across multiple processor families and real time operating systems. This group is Boeing’s 787 software partner developing subsystems for Boeing’s Tier-1 & Tier-2 partners. In addition, HCL reengineered the flight test system that is being used for certification and regulatory approvals for Boeing 787. For the Swiss division of a global medical devices major, HCL was responsible for the complete development of a Class III implantable drug delivery medical device that has recently been launched in the market. HCL’s ERS was selected by an Italian Aerospace major to reengineer the complete aero structure of a transporter aircraft. With more than 35,000 parts, the complete reengineering program reduced operational cost of upto 15% across various systems. HCL runs the largest third party engineering centre for a global networking OEM company. For a European Tier-1 automotive company, HCL helped develop a complete infotainment solution for a leading French car series. HCL foresees a shift towards clients preferring outsourcing companies to share their long-term vision, risks, and rewards

in developing product-based ecosystems that impact clientexperience. Towards this, HCL is investing heavily in developing its own IPs and solutions to help customers’ impact the overall product ecosystem faster and better. Solutions include a unified communication platform, a remote diagnostic reusable module, telematics and test platforms in multiple verticals. Some of our key IPs today are: Agora (HCL SaaS platform), Nimbo (private cloud enablement solution), Cirrus (Microsoft Azure enablement solution), Athena (sentiment analytics solution), Retail Track and Trace solution, UECPX (unified communications platform), ASPIRE (product portfolio management system), Telematics platform, and H-PAC (Aerospace verification platform), amongst others. This is what it takes to make an R&D ecosystem truly business aligned. And this, coupled with HCL’s 360 degree partnership approach, unique propositions like Concept to Manufacture, Engineering Portfolio Optimization (EPO) and First 2.0, full lifecycle expertise, IPs and frameworks and a strong vertical solutioning capability have positioned us as the Business Aligned R&D partner to several global technology giants. Enterprise Application Services [EAS] HCL’s Enterprise Applications Services (EAS) division provides best-in-class services and solutions to customers in ERP, SCM, CRM, HCM, EPM, BI and Middleware. This is enhanced by leveraging strong strategic partnerships with SAP, Oracle and Microsoft. The EAS division accounts for over 22% of HCL’s revenue and is one of the key areas of growth. By acquiring Axon group plc, HCL made one of the biggest acquisitions by an Indian company, in recent times. HCL reverse merged its SAP practice with Axon and created HCL AXON, the largest dedicated SAP Global Partner in the world. HCL won the FT ArcelorMittal ‘Boldness in Business’ award in 2009 for this strategic acquisition. AMR Research believes that the Axon acquisition puts HCL in the Top 10 of SAP service providers, with a combined SAP consulting and support capability that is 60% larger than its closest India-based competitor. The success of the acquisition has been recognized by analysts and clients. This year AMR published a case study on the HCL AXON SAP implementation for Birmingham City Council, highlighting the ‘huge business value’ generated (£400M worth of savings), and categorized this as a ‘business transformation’ case. More recently, IDC’s Marketscape report on SAP System Integrators has ranked HCL higher than its competition. This has been supported by HCL AXON winning strategic deals at, GSK, Vodafone and ITT. Additional success includes winning the Frost & Sullivan Aerospace IT Solutions Provider 2010 award for outstanding performance. This was followed up by HCL AXON announcing that its iMRO solution that can reduce cost, complexity and risk for large and small airlines manufacturers and third-party providers is now a SAPendorsed ERP add-on. The second element of HCL’s EAS service line is Oracle Universe (OU), which provides the entire range of end-to-end application life-cycle management services. The group delivers high value solutions in Oracle, PeopleSoft, Siebel, JD Edwards, Hyperion, Agile, Oracle Transportation Management, Stellent, and other Oracle Edge applications and technology products. HCL’s OU has proven solution accelerators and proprietary tools, built to support this Oracle product suite, providing real value to

7

clients. In addition to professional services, OU provides product engineering on Oracle Applications and Fusion Middleware, building connectors for Oracle’s Content Management products, and testing services for Oracle product suites. HCL’s EAS service line is completed by its Microsoft group. This team enjoys a pivotal partnership with Microsoft’s Business Solutions group. It has built capabilities on key Microsoft Dynamics product lines, particularly Microsoft Dynamics AX and Microsoft Dynamics CRM. The team provides life cycle services and solutions for these products across retail, insurance, media and entertainment, hi-tech, and manufacturing verticals. Being a Global Systems Integrator and Gold Certified Partner of Microsoft has enabled the team work with Microsoft to identify niche market opportunities in the Dynamics space and develop solutions to address specific client pain points. HCL is also one of the seven offshore Upgrade Partners worldwide for Microsoft Dynamics AX 4.0. To complement its Dynamics capability HCL recently launched the XpressMigrate suite of offerings for Windows 7 migration, enabling enterprises to minimize risk, bring higher visibility and reduce Windows 7 deployment costs by up to 25%. HCL’s EAS team has achieved Capability Maturity Model Integration (CMMI) Level 3 for Oracle Universe and Microsoft Dynamics as confirmed by SEI. The audit spanned multiple lines, locations and types of projects. Enterprise Transformation Services (ETS) HCL’s Enterprise Transformation Services assists customers in developing a transformation roadmap by aligning business with IT strategy. HCL partners with customers and helps them identify the initiatives driving change, manage the transformation process, and implement supporting technology solutions that add value to the organization. HCL’s ETS offers an integrated approach for enabling transformations through the “Advise to Execute” services portfolio. The service portfolio consists of Process Transformation Services, Data Management Services, Integration Services, Architecture Services, Disruptive Technology Services (Including Cloud related services) and IT Strategy and Change Management services. This is offered through the bouquet of best-in-class services in key areas including Middleware & SOA, Data Warehousing & Business Intelligence Services, Enterprise Content Management & Portals, Independent Verification & Validation, Mainframe and Midrange Services, Business Consulting and Technology Consulting. HCL’s ETS services is backed by a rich set of IPs, frameworks and accelerators, domain solutions, robust methodologies, niche skills and strong infrastructure and BPO capabilities that puts ETS in a unique position to offer guaranteed benefits of transformation to its customers. Methodologies employed are compliant with industry standard frameworks such as ITIL, Six Sigma and CMM-I. Some of the propositions and frameworks that the group has launched in 2009-2010 include CoQ (Cost of Quality), “Test Factory in a Box”, EBITS (Enterprise Business Intelligence Transformational Services), Social intelligence and xFIT (xFIT addresses challenges in EAI, SOA and BPM testing). HCL’s ETS has recently won several accolades from advisors and partners for its propositions, frameworks and methodologies, technical depth, innovation and process delivery including accolades for bolt-on framework FraME [Framework for Manufacturing Execution], Visible Demand and

EAD [Enterprise Analytics Dashboard]. In 2009, Butler Group has profiled HCL’s Middleware and SOA practice as having a comprehensive service suite encompassing the SOA lifecycle and various integration requirements - IPs and frameworks that reduce the time to value. HCL featured in the joint top spot for overall SOA client work and account management and its maturity in current offerings of SOA and BPM services. Highly purposed and focused, Enterprise Transformation Services is a key area for HCL to drive value in customer engagements. In the past year, in conjunction with the EAS division, this group has bagged several global transformational high impact and high value deals. Infrastructure Management Services (IMS) HCL’s Infrastructure Management Services group is the fastest growing business line and contributes to over 22% of HCL Technologies’ total revenues. Through its differentiated value proposition - “Industrialized IT Management and co-sourcing model”, this practice has been able to carve a credible growth story and solid foundation for the future. Today, it has close to 200+ customers globally, out of which, 100 are G/F 1000 companies - world leaders in their own space. The IMS division has been recognized as the leader in Global Delivery of Infrastructure Management by several Industry analysts, and is said to be the “leading light in RIM” by NASSCOM. HCL was the co-founder of the “NASSCOM IMS forum”, which comprises of the leading industry players. David G Thomson in his global best seller, “Blueprint to a Billion” has compared HCL’s Infrastructure Services’ Division (ISD) growth story to world leaders like Cisco, Microsoft and Google. IMS delivery is structured into six horizontal strategic business units such as End User Computing Services, Data Center Services, Cross Functional Services, Enterprise Network Services, Security Services, Integrated Operation Management, and Mainframe & AS400 Services. Its vertical reach spans 15 industries – Automotive, Chemical, Energy (Oil & Gas) and Utilities, Financial Services, Hi-Tech, Insurance, Manufacturing, Retail, Travel, Tourism & Logistics, Banking, Consumer Electronics, Food, Beverages & Tobacco, Independent Software Vendor (ISV), Life Science, Healthcare & Pharmaceuticals, and Telecom, Media, Publishing & Entertainment. IMS has a robust global delivery network with 17 delivery centres across the globe of which, six are outside India. The scale of IMS operations today stands at: • 250,000 large/mid-range servers and over 200,000 distributed computing servers • More than 60 PB of storage • More than 250,000 network and security devices • 800,000 mail boxes, and 10 million helpdesk trouble tickets • Over 12,000 employees This group has received its share of accolades: TPI recognizes HCL among the Top 10 Infrastructure Providers in the world; Datamonitor’s Black Book of Outsourcing ranks HCL as the #1 vendor in both Traditional IT Outsourcing as well as RIM Outsourcing; Forrester featured HCL in their research study on Managed Desktop Services in EMEA. HCL was among the only two Indian MNCs featured in the report; Gartner Market Scope for Data Center Outsourcing, North America, rated HCL ‘positive’

8

with the necessary technical skills and resources to support most client requirements, and offer high-quality services; Gartner Magic Quadrants for Helpdesk and Desktop Services in EMEA features HCL - the only Indian MNC to be featured. Business Process Outsourcing (BPO) HCL’s BPO Business Services accounts for over 6% of the company’s revenues. This division of HCL Technologies is heading towards a maturity level where a new form of BPO called ‘Transformational BPO’ is evolving which constitutes Full Process and Multiple Process outsourcing. With over 11,000 professionals operating out of India, Northern Ireland and USA, it serves customers in Telecom, Retail, Media Publishing Entertainment (MPE), Energy Utility & Public Services, Banking & Financial Services, Insurance, and Healthcare. HCL BPO Business Services runs 25 delivery centers across India, UK and USA and offers 24x7 multi-channel, multi-lingual support in eight European and eight APAC languages. It also services various operations across Customer Relationship Management, Technical Support Services, Knowledge Process Management, Finance and Accounting Outsourcing (FAO), Human Resources Outsourcing (HRO), and other niche services. HCL’s BPO Business Services leadership credentials are myriad, including running the largest telecom engagement in India; the first Indian BPO to enter the Telecommunications Expense Management (TEM) market; the first Indian company and 3rd in the world to be COPC certified in the specialized area of collections; the first BPO company in the world to be successfully appraised at Maturity Level 5 of People CMM. BPO Business Services is also the first BPO in the world to evolve and adopt ‘Integrated Business Management System’ a collation of best practices catering to multiple standards such as COPC, ISO 9001, OHSAS 18001 and ISO 14001. HCL’s BPO Business Services tops the Black Book of Outsourcing’s list of Top Cross Industry BPO Vendors; the organization ranks among the Top 10 ITeS-BPO companies in India (according to NASSCOM & Dataquest); HCL is the largest BPO service provider in Northern Ireland, won the largest engagement in Indian BPO history, and is the largest provider of Telecom BPO services in Asia. HCL pioneered the blended shore operations for Indian BPO service providers. HCL’s BPO Business Services division won the CIO ‘Ingenious 100’ Award 2009 for the second consecutive year (2009) for its IT Service Management Platform which enables a process-driven blend of people and technology resulting in 99.9% of service uptime. The annual award program by IDG India’s CIO magazine recognizes organizations that exemplify the highest level of operational and strategic excellence in information technology.

rapidly dynamic IT industry. HCL’s differentiation strategy is four fold which includes Employee First initiative, Value centricity and Trust, Transparency and Flexibility. Employee Related Risks – Managing Talent Global economy is recovering from the bottoms of one of the deepest recession era which means more and more opportunities are available to the skilled manpower. However, due to cost cutting measures already in places, organizations are finding it difficult to increase the monetary incentives. Due to manpower intensive business model, IT service organizations are heavily impacted by this. In India, there is uptick in attrition in companies operating in IT vertical. Consequently, attrition for HCL has also increased from 13% in June 2009 to 15.7% in June 2010. HCL Strategy HCL continues with its “Employees First” initiative which has now entered in its fifth year of successful implementation. The focus on employees as key resources has led to introduction of several employee friendly policies. Success of this program continues to be hailed globally as it won various accolades. HCL has been ranked the No. 1 Employer in India and Best Employer in Asia by Hewitt 2009 Study and was also voted as the Most Innovative Company in the world for its workforce practices and won the Optimas award instituted by Workforce Management in US. In addition, HCL was declared Leaders in the category Human Capital Development and ranked 3rd amongst the 100 best global IT service provider companies that made it to the Global Services 100 list 2009. In Europe, HCL was named as one of Britain’s Top Employers 2009 for the third successive year by CRF International, an independent business research organisation. HCL has been taking adequate steps to improve and augment the supply of experienced manpower. It has partnered with select local engineering colleges/institutes and imparts quality and contemporary technical education. HCL continues to make investment in Employee Development initiatives through Up-gradation of skills, re-skilling and leadership development. These programs have not only helped in ensuring that there is no skill mismatch and building high motivation levels of employees through skill enhancement. Technology Risks HCL operates in an ever evolving and dynamic technology environment and it is of utmost importance that the Company continuously reviews and upgrades its technology, resources and processes lest it faces technology obsolescence. HCL Strategy The Company keeps itself abreast and updated on the contemporary developments in technology landscape through participation in key technology forums, in-house training and development initiatives and its intensive focus on core research and development activities. The Company is not dependent on any single technology or platform. HCL has developed competencies in various technologies, platforms and operating environment and offers the wide range of technology options to clients to choose from, for their needs. Further, HCL has a dedicated Delivery Excellence Group (DEX) which offers consulting to various delivery teams in

Risks and Concerns
Competition Related Risks New competitors are emerging from adjacent markets and distant geographies. The Company faces competition not only from the India based IT service providers but increasingly from the multinational IT vendors who are expanding their presence in the country owing to attractiveness of the Offshoring model. HCL Strategy HCL’s differentiation strategy incorporating its unique business approach has led to its emerging as a “Thought Leader” in the

9

developing best practices, development of reusable code and registering patents for methodologies and tools developed. This group works closely with Technology Research Council (TRC) of respective Vertical Delivery Units for adopting and implementing the latest technological enhancements in their respective domains. Exchange Rate Risks Global financial position continues to remain volatile during current fiscal with swings in both the directions on Indian Rupee impacting the IT industry. This trend is expected to continue in near to medium term with added complexity of cross -currency movements. HCL Strategy As a risk containment strategy, HCL has taken forward covers to hedge its receivables and forecast revenues against the foreign currency fluctuations. This strategy ensures certainty in revenue collection and also provides safeguards against any unfavorable movement to stakeholder. The treasury department of the Company continues to track the foreign exchange movements and takes advice from financial experts to decide its hedging strategy from time to time. Further, there is an increased focus on Europe, Asia Pacific and Rest of World for generating business which not only insulates from dependency on a single chosen economy but also ensures that the revenue streams are denominated in multiple currencies thereby de-risking the currency risk. Physical Security Increased risk to human life and assets due to frequent incidents of terror assault remains major risk for companies operating in third world. The impact would be more on service companies as against manufacturing companies due to manpower intensive business model applicable to IT/ ITeS companies. HCL Strategy HCL has stringent security levels on all its facilities and ODCs. Comprehensive security is provided by leveraging on People, Processes and Technologies. Formation of ERT (Emergency Response Team), Evacuation plan and strengthening of Disaster Recovery and Business Continuity Plan (DR-BCP) are other related steps in this direction to minimize the loss of human life and to provide continuity of operations with minimal disruptions. Compliance with regulatory requirements As HCL is operating in no. of developing countries alongwith new destinations added in Africa, Latin America, China etc., therefore there is an increased risk of non-compliance to local regulatory requirements. This risk in terms of ensuring total compliance with regulatory framework increases with increase in global reach and operations. HCL Strategy HCL has put in place a comprehensive Regulatory Compliance framework in place to manage the regulatory compliance related issues. Detailed checklists are available with respective process owners to ensure compliance with legal requirements. Besides Specialized legal function helps in creating awareness around the regulatory framework and focuses on various local compliance related aspects being faced by business entities in respective countries.

Business Continuity & Information Security HCL is dealing in maintaining, developing and operating time critical Business and IT applications for various customers. Any natural or man-made catastrophe may halt business activities and cause irreparable damage to brand reputation of the company resulting into loss of Business. Similarly, confidentiality and security of confidential data also pose risk of compromise of information. HCL Strategy HCL has put in place comprehensive Business Continuity program to ensure that HCL meets its Business Continuity and Disaster Recovery related requirements as agreed with Customer. Similarly, there is Information Security team to assess and manage the information security and data privacy and related risks by leveraging on People, Processes & Technology. Internal Control Systems and their adequacy The company has put in place an adequate system of internal control commensurate with its size and nature of business. These systems provide a reasonable assurance in respect of providing financial and operational information, complying with applicable statutes, safeguarding of assets of the company and ensuring compliance with corporate policies. The company has a dedicated Internal Audit team which ensures that: • Adequate processes, systems, internal controls are implemented and these controls are commensurate with the size and operations of the company. Transactions are executed in accordance with policies and authorization. Resources have been deployed as per the business plan, policies and authorization.

• •

The company has a rigorous business planning system to set targets and parameters for operations which are reviewed with actual performance to ensure timely initiation of corrective action, if required. The company’s audit committee comprising of 4 independent directors, which is a sub-committee of the board, reviews adherence to internal control systems, internal audit reports and legal compliances. This committee reviews all quarterly and yearly results of the company and recommends the same to Board for their approval. Discussion on Financial Performance The financial performance of the Company as per Indian GAAP is discussed hereunder in two parts: 1. 2. HCL Technologies Limited (Consolidated) which includes the performance of its subsidiaries and joint ventures. HCL Technologies Limited (Standalone) which excludes the performance of its subsidiaries and joint ventures.

The Financial Statements have been prepared in compliance with the requirements of Companies Act 1956, and Indian Generally Accepted Accounting Practices (GAAP). HCL Technologies Limited (consolidated) The Management Discussion and Analysis in this paragraph relates to the consolidated financial statements of HCL

10

Technologies Limited and its subsidiaries. The discussion should be read in conjunction with the financial statements and related notes to the consolidated accounts of HCL Technologies Limited for the year ended 30 June 2010. RESULTS OF OPERATIONS (CONSOLIDATED) (Rs. in Crores)
For the Year Ended June 30, 2010 % of Amount Revenue 12,136.3 100.0% 12,136.3 443.6 6,253.7 3,498.5 418.1 10,613.9 1,522.4 204.1 154.1 1,472.4 213.4 (0.2) 1,259.1 100.0% 3.7% 51.5% 28.8% 3.4% 87.5% 12.5% 1.7% 1.3% 12.1% 1.8% 0.0% 10.4% For the Year Ended June 30, 2009 % of Amount Revenue 10,229.4 100.0% 10,229.4 205.5 5,194.4 3,000.1 375.5 8,775.5 1,453.9 112.4 262.2 1,603.7 284.3 (0.2) 1,319.6 100.0% 2.0% 50.8% 29.3% 3.7% 85.8% 14.2% 1.1% 2.6% 15.7% 2.8% 0.0% 12.9% Growth % Increase 18.6% 18.6% 115.9% 20.4% 16.6% 11.3% 20.9% 4.7% 81.6% -41.2% -8.2% -24.9% -5.0% -4.6%

Geography wise breakdown of revenue The company also reviews its business on a geographic basis. The following table classifies total revenue by geographic areas: (Rs in Crores)
For the Year Ended June 30, 2010 % of Amount Revenue 6,852.2 56.5% 3,430.5 1,853.6 12,136.3 28.3% 15.3% For the Year Ended June 30, 2009 % of Amount Revenue 5,568.8 54.4% 2,986.8 1,673.8 10,229.4 29.2% 16.4% Growth % Increase 23.0% 14.9% 10.7% 18.6%

Geographical Mix US Europe Rest of the World Total Revenue

Particulars Revenue Total Revenues Cost of Goods Sold Personnel Expenses Operating and other expenses Depreciation Total Expenditure Profit before Interest, Other Income & Tax Interest Other Income Profit before Tax Provision for tax Minority Interest Profit after tax

Revenues from US geography have grown by 23% resulting in increase in its shares in total revenue from 54.4% to 56.5%. Europe has grown by 14.9%. Personnel ExpensesRs in Crores)
For the Year Ended June 30, 2010 % of Amount Revenue 5,572.7 45.9% 593.8 37.4 49.8 6,253.7 4.9% 0.3% 0.4% 51.5% For the Year Ended June 30, 2009 % of Amount Revenue 4,605.0 45.0% 496.8 36.5 56.1 5,194.4 4.9% 0.4% 0.5% 50.8% Growth % Increase 21.0% 19.5% 2.5% -11.3% 20.4%

Particulars Salaries, wages and bonus Contribution to provident fund and other employee benefits Staff welfare expenses Employee stock compensation expense Total

Fiscal Year 2010 compared with 2009 Revenues:Revenues during fiscal 2010 have grown by 18.6% compared to Fiscal 2009. The Company derives its revenue from three segments viz Software, Infrastructure services and Business Process Outsourcing services. Among the three segments, revenues from Infrastructure services have registered highest growth rate of 65.1%. Revenue from BPO segment have declined by 15.0% compared to fiscal 2009 which is partly on account of reduction in volume of business as a result of world wide recession and partly because of weakening of GBP and USD against INR. Segment wise details are given below: (Rs in Crores)
For the Year Ended June 30, 2010 Particulars Software Services Infrastructure Services Business Process Outsourcing Services Total Revenue Amount 8,427.6 2,757.8 950.9 12,136.3 % of Revenue 69.4% 22.7% 7.8% For the Year Ended June 30, 2009 Amount 7,440.3 1,670.0 1,119.1 10,229.4 % of Revenue 72.7% 16.3% 10.9% Growth % Increase 13.3% 65.1% -15.0% 18.6%

Personnel costs have increased to Rs 6,253.7 crores in 2010 from Rs 5,194.4 crores in 2009, an increase of 20.4%. The increase is primarily on account of – (a) Increase in number of employees during the year from total of 54,216 at the end of fiscal 2009 to 64,366 at the end of fiscal 2010 and (b) increase in proportion of onsite employees (based outside India). Personnel costs as a percentage of revenues have increased from 50.8% in 2009 to 51.5 % in fiscal 2010. In respect of Software services division, total software professional persons- months increased to 381,453 from 344,781 person- months during previous year. Of this billed person-months are 305,662 for the current year as compared to 274,481 person months for the previous year. The non billable and trainee person months are 75,791 during the current year compared to 70,220 during previous year. The utilization of billable software persons are as followsarticulars Offshore - including trainees Offshore - excluding trainees For the Year Ended June 30, 2010 75.3% 77.9% For the Year Ended June 30, 2009 74.8% 75.3%

Operating and other expensesRs in Crores)
For the Year Ended June 30, 2010 % of Amount Revenue 249.7 2.1% 118.1 948.4 894.8 145.8 66.4 1,075.3 3,498.5 1.0% 7.8% 7.4% 1.2% 0.5% 0.0% 8.9% For the Year Ended June 30, 2009 % of Amount Revenue 236.7 2.3% 123.9 844.9 488.9 118.4 52.9 239.1 895.3 3,000.1 1.2% 8.3% 4.8% 1.2% 0.5% 2.3% 8.8% Growth % Increase 5.5% -4.7% 12.2% 83.0% 23.1% 25.4% 20.1% 16.6%

The Segmentation of software services income by delivery location is as followsarticulars Onsite Offshore For the Year Ended June 30, 2010 58.7% 41.3% For the Year Ended June 30, 2009 53.6% 46.4% Particulars Rent Power & Fuel Travel and conveyance Outsourcing Cost Communication costs Recruitment Training & Development Exchange differences Others Total

The segmentation of IT revenue (Software and Infrastructure Services) by project types is as followsarticulars Fixed Price Time and Material For the Year Ended June 30, 2010 40.3% 59.7% For the Year Ended June 30, 2009 37.2% 62.8%

11

Outsourcing costs includes (a) outsourcing of several customer related activities e.g. hosting services, facilities management, disaster recovery, maintenance, break fix services etc in Infrastructure Division. (b) hiring of third party consultants from time to time to supplement the in house teams in Software Division. These costs increased to Rs 894.8 crores in fiscal 2010 from Rs 488.9 crores in fiscal 2009. The company derives over 90% of its revenues in foreign currencies while over 40% of it’s costs are incurred in INR. This exposes the company to risk of adverse variation in foreign currency exchange rates. The company uses foreign exchange forward contracts to mitigate the risk of movements in foreign exchange rates associated with receivables and forecasted transactions in certain foreign currencies. During the fiscal year the company has earned net exchange gain of Rs. 4.2 crores (Included in other Income) versus loss of Rs. 239.1 crores during the fiscal 2009 mainly on account of mark to market of forward covers and restatement of foreign currency assets and liabilities. The company follows cash flow hedge accounting in respect of forward covers taken against forecasted revenues. Exchange gain / (loss) arising on those forward covers where cash flow hedge accounting is followed has been reported under revenues. Exchange rates for major currencies are given below:Average Rate For the Year Ended June 30, 2010 For the Year Ended June 30, 2009 Depreciation/(appreciation) (%) Period Ended As at June 30, 2010 As at June 30, 2009 Depreciation/(appreciation) (%) USD 46.60 48.12 -3.2% USD 46.44 47.90 -3.0% GBP 73.53 76.84 -4.3% GBP 69.73 79.48 -12.3% EURO 64.58 65.82 -1.9% EURO 57.03 67.64 -15.7% AUD 41.08 35.64 15.3% AUD 39.57 38.97 1.5%

interest cost to Rs. 204.1 crores against Rs. 112.4 crores during the previous year. Taxation:The net tax expense for 2010 was Rs. 213.4 crores compared to Rs. 284.3 crores in 2009. Tax as a %age of Profit before tax has reduced to 14.5% in 2010 from 17.7% in 2009. Reduction in tax expenses is primarily on account of:• Abolition of fringe benefit tax by Finance Bill 2009 with effect from 1 April 2010. • Reversal of tax provision of Rs 32 crores during the current year on account of retrospective amendment in Section 10AA of the Income Tax Act as per Finance Bill 2010 removing the anomaly in the definition for computing the income tax relating to SEZ. The provision for taxation includes tax liabilities in India and any tax liabilities arising overseas on incomes sourced from those countries. Company’s operations are conducted through Software Technology Parks (“STPs”) and Special Economic Zones (“SEZs”). Income from STPs are tax exempt for the earlier of 10 years commencing from the fiscal year in which the unit commences the software development, or March 31, 2011.Income from SEZs is fully tax exempt for the first 5 years, 50% exempt for the next 5 years and 50% exempt for another 5 years subject to fulfilling certain conditions. The tax exempt income of the Company attributable to export operations of units situated in STPs is subject to Minimum Alternate Tax (MAT). Any MAT paid for a year is available for set-off against tax liability for ten subsequent years. The Company foresees that an additional tax burden will arise due to the expiry of tax holiday period by 2011. Accordingly, the Company has recognized deferred tax assets for such tax credit amounting to Rs. 77.9 crores and Rs. 196.0 crores as at June 30, 2009 and 2010 respectively. Acquisitions Consummated during the year:The Company has made following acquisitions during the year:-

Profit before Interest, Other Income & Tax The Company’s Operating profit has increased to Rs.1522.5 crores in fiscal 2010 from Rs. 1454.0 crores in 2009, increase of 4.7%. Other Income The details of Other Income are as followsRs in Crores)
Particulars Interest Income Divided Income Gain on sale of investment Exchange difference Others Total For the Year Ended June 30, 2010 98.8 27.7 5.6 4.2 17.8 154.1 For the Year Ended June 30, 2009 130.9 5.2 117.8 8.3 262.2

? UCS Solutions holding (pty ) Limited
On August 1, 2009, the group, through its subsidiary, acquired Enterprise Solution SAP practice of UCS Group in South Africa for a cash consideration of Rs.38.4 Crores (ZAR 57.1mn) and Rs.44.1 crores as earn out payable on achieving specified targets over the next 2 years. The transaction has been accounted by following the purchase method and resulted in goodwill aggregating to Rs. 82.4 Crores. The goodwill has been allocated to Software segment.

? RKV Technologies
On March 31’2010, the group through its subsidiary, acquired unemployment Insurance Practice for a total cash consideration of Rs 22.2 crores (USD 5mn), and earn out payable on achieving specified terms as specified in Business purchase agreement. The transaction has been accounted by following the purchase method and resulted in goodwill aggregating to Rs. 23.2 crores. The goodwill has been allocated to Software segment FINANCIAL POSITION Share capitalRs in Crores) Particulars Authorized Share Capital Issued Subscribed & Paid Up 2010 150.0 135.8 2009 150.0 134.1

Interest: The Company was net cash positive company till it acquired AXON in December’2008 when Company took a bridge loan of USD 585Mn to fund the purchase consideration of Rs 3,302.4 crores. During the year the Company has repaid short term foreign currency bridge loan of Rs 2,491.9 ($585Mn) and substituted the same by long term foreign currency borrowing of Rs 1,212.1 crores ($261Mn) and secured redeemable Debentures of Rs 1000 crores( $200Mn). Current year finance cost has full year impact of such borrowings which has resulted in the increase in

12

Authorized Share Capital consists of 750,000,000 equity shares of Rs 2 each. During the year, employees exercised 2355096, 3688408 and 2480108 equity shares under the employees stock options plan 1999, 2000 & 2004 respectively. Consequently issued, subscribed and paid capital increased by 8,527,212 equity shares and share capital increased by Rs 1.71 crores. Reservesebenture Redemption Reserveuring the year company has raised Rs 1000 crores through secured redeemable non convertible debentures of Rs 10 lacs each which is redeemable in tranches of 2, 3 & 5 years. As per Section 117C of the Companies Act 1956, Company is required to create debenture redemption reserve to which adequate amounts should be credited from out of its profits until such debentures are redeemed. Accordingly Company has apportioned Rs 295 crores out of its current year profits towards debenture redemption reserve. Borrowings:Company has outstanding borrowings of Rs. 2,724.2 crores as of June 30 2010 primarily consisting of the following:• Secured redeemable non convertible debentures of Rs 10 lacs each issued for Rs. 1000 Crores redeemable in tranches of 2, 3 & 5 years and have an interest cost varying between 7.55% to 8.80%. Secured long term foreign currency loan of Rs. 1212.1 crores (USD Equivalent 261.0 Mn) crores from banks repayable within a period eight half yearly equal installments starting from May 2011 carrying interest ranging from 3% to 4%.

(Rs in Crores) Particulars Debt Mutual Funds Bonds Fixed Deposits with Banks Inter corporate deposits with HDFC Limited Total 2010 782.1 50.0 1,099.2 100.0 2,031.3 2009 20.0 20.0 1,494.6 1,534.6

CASH FLOWS Cash Flows from Operating Activities:Cash generated from operations provides the major source of funds for the growth of the business. Net cash provided by operating activities was Rs. 1,791.2 crores and Rs. 1,117.8 crores in fiscal 2010 and 2009 respectively. Cash Flows from Investing Activities:In fiscal 2010, an amount of Rs. 646.8 crores was invested in fixed assets. Rs.50.8 crores were used for payment for business acquisitions. Cash Flows from Financing Activities:Cash flow from financing activities in the year under review had an outflow of Rs. 727.8 crores against inflow of Rs 2,249.9 crores in 2009. This is mainly because of repayment of short term foreign currency loan of Rs 2395.0 crores (USD 585Mn) and Rs 315.2 crores pertaining to the final dividend declared in the previous fiscal year as well as the interim dividends paid during the year. HCL Technologies Limited (Standalone):The Consolidated Financial Statements brings out comprehensively the performance of the Company and are more relevant for understanding the Company’s Performance. The discussion in the paragraph 1 which follows should be read in conjunction with the financial statements and related notes relevant to HCLT Limited (Standalone) for the year ended 30 June ‘2010. RESULTS OF OPERATIONS (STANDALONE) (Rs. in Crores)
For the Year Ended June 30, 2010 % of Amount Revenue 5,078.8 100.0% 5,078.8 85.5 2,187.7 1,449.2 274.0 3,996.4 1,082.4 101.4 171.8 1,152.8 96.2 1,056.6 100.0% 1.7% 43.1% 28.5% 5.4% 78.7% 21.3% 2.0% 3.4% 22.7% 1.9% 20.8% For the Year Ended June 30, 2009 % of Amount Revenue 4,675.1 100.0% 4,675.1 1,930.2 1,539.0 251.9 3,721.1 954.0 28.1 265.8 1,191.7 194.4 997.3 100.0% 41.3% 32.9% 5.4% 79.6% 20.4% 0.6% 5.4% 25.5% 4.2% 21.3% Growth % Increase 8.6% 8.6% 13.3% -5.8% 8.8% 7.4% 13.5% 260.9% -35.4% -3.3% -50.5% 5.9%

•

Fixed Assets:The Company has made additions of Rs. 678.8 crores during 2010 in the gross block of fixed assets which comprises computers, software, other equipments and investment in facilities. Additions include Rs. 105.6 crores being assets (including goodwill) acquired on consummation of acquisition during the year. Gross block of fixed assets as at the end of fiscal 2010 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 its campuses at NOIDA, Chennai, Bangalore and Manesar. These campuses are spread over a combined area of 121 acres. 8400 seats have already become operational at these campuses and 16,000 seats are under development at these campuses. All the campuses excluding Manesar are approved SEZ locations. Expenditure incurred till end of fiscal 2010 for the facilities under construction is appearing under capital work in progress. Treasury Investments:The guiding principle of the Company’s treasury investment is Safety, liquidity & Return. The Company has efficiently managed its surplus funds through careful treasury operations. The Company deploys its surplus funds primarily in debt mutual funds and bank fixed deposits with a limit on investments with individual fund/bank. As at the end of fiscal 2010, almost entire surplus funds are invested in fixed deposit with nationalized banks.

Particulars Revenue Total Revenue Cost of Goods Sold Personnel Expenses Operating and other expenses Depreciation Total Expenditure Profit before Interest, Other Income & Tax Interest Other Income Profit before Tax Provision for tax Profit after tax

13

FISCAL 2010 COMPARED TO FISCAL 2009 Revenues:Revenue during the fiscal 2010 has grown by 8.6% as compared to fiscal 2009. The Company derives its revenue from three segments viz Software, infrastructure and business process outsourcing services. Among the three segments, revenues from Infra services have registered highest growth rate of 306.0%. Revenue from BPO segment have declined by 29.0% compared to fiscal 2009 which is partly on account of reduction in volume of business as a result of worldwide recession and partly because of weakening of GBP and USD against INR. Segment wise details are given below: (Rs in Crores)
For the Year Ended June 30, 2010 % of Amount Revenue 4,084.3 80.4% 617.3 377.2 5,078.8 12.2% 7.4% For the Year Ended June 30, 2009 % of Amount Revenue 3,991.8 85.4% 152.0 531.3 4,675.1 3.3% 11.4% Growth % Increase 2.3% 306.0% -29.0% 8.6%

Operating and other expensesRs in Crores)
For the Year Ended June 30, 2010 % of Amount Revenue 158.6 3.1% 86.9 388.7 44.2 18.7 47.8 404.8 299.5 1,449.2 1.7% 7.7% 0.9% 0.4% 0.9% 8.0% 5.9% 28.5% For the Year Ended June 30, 2009 % of Amount Revenue 155.8 3.3% 100.3 290.0 56.6 23.1 174.3 462.1 276.8 1,539.0 2.1% 6.2% 1.2% 0.5% 3.7% 9.9% 5.9% 32.9% Growth % Increase 1.8% -13.3% 34.0% -21.9% -19.4% -72.6% -12.4% 8.2% -5.8%

Particulars Rent Power & Fuel Travel and conveyance Communication costs Recruitment Training & Development Exchange differences Outsourcing Costs Others Total

Particulars Software Services Infrastructure Service Business Process Outsourcing Services Total Revenue

Geography wise breakdown of revenue The company also reviews its business on a geographic basis. The following table classifies total revenue by geographic areas: (Rs in Crores)
For the Year Ended June 30, 2010 % of Amount Revenue 3,376.7 66.5% 1,205.8 496.3 5,078.8 23.7% 9.8% For the Year Ended June 30, 2009 % of Amount Revenue 3,072.2 65.7% 1,230.3 372.6 4,675.1 26.3% 8.0% Growth % Increase 9.9% -2.0% 33.2% 8.6%

The Company derives almost entire revenues in foreign currencies while almost entire costs are incurred in INR. This exposes the company to risk of adverse variation in foreign currency exchange rates. The company uses foreign exchange forward contracts to mitigate the risk of movements in foreign exchange rates associated with receivables and forecasted transactions in certain foreign currencies. During the fiscal year the company has exchange loss of Rs. 47.8 crores versus loss of Rs. 174.3 crores mainly on account of mark to market of forward covers and restatement of foreign currency assets and liabilities. The company follows cash flow hedge accounting in respect of forward covers taken against forecasted revenues. Exchange gain / (loss) arising on those forward covers where cash flow hedge accounting is followed has been reported under revenues. The Company also subcontracts certain projects to subsidiaries or hires consultants from third parties. These costs decreased to Rs 404.8 crores in fiscal 2010 from Rs. 462.1 crores in fiscal 2009, decrease of 22.8%. Profit before Interest & Other Income & Tax The Company’s Operating profit has increased to Rs.1082.4 crores in fiscal 2010 from Rs. 954.0 crores in 2009, increase of 13.5%. Taxation:The net tax expense for 2010 was Rs. 96.2 crores compared to Rs. 194.4 crores in 2009. Tax as a %age of Profit before tax has reduced to 8.3% in 2010 from 16.3% in 2009. Reduction in tax expenses is primarily on account of:• Abolition of fringe benefit tax by Finance Bill 2009 with effect from 1 April 2010. • Reversal of tax provision of Rs 32 crores during the current year on account of retrospective amendment in Section 10AA of the Income Tax Act as per Finance Bill 2010 removing the anomaly in the definition for computing the income tax relating to SEZ.. Company’s operations are conducted through Software Technology Parks (“STPs”) and Special Economic Zones (“SEZs”) .Income from STPs are tax exempt for the earlier of 10 years commencing from the fiscal year in which the unit commences the software development, or March 31, 2011. Income from SEZs is fully tax exempt for the first 5 years, 50%

Geographical Mix US Europe Rest of the World Total Revenue

Personnel ExpensesRs in Crores)
For the Year Ended June 30, 2010 % of Amount Revenue 2,044.0 40.2% 74.4 19.5 49.8 2,187.7 1.5% 0.4% 1.0% 43.1% For the Year Ended June 30, 2009 % of Amount Revenue 1,789.4 38.3% 62.2 22.5 56.1 1,930.2 1.3% 0.5% 1.2% 41.3% Growth % Increase 14.2% 19.6% -13.6% -11.2% 13.3%

Particulars Salaries, wages and bonus Contribution to provident and other funds Staff welfare expenses Employee stock compensation expense Total

Personnel costs have increased to Rs 2,187.7 crores in 2010 from Rs 1,930.2 crores in 2009, an increase of 13.3% in personnel costs have been driven primarily by an increase in number of employees during the year from total of 38,525 at the end of fiscal 2009 to 47,072 at the end of fiscal 2010 and increase in average cost per employee. Personnel costs as a percentage of revenues have increased from 41.3% in 2009 to 43.1 % in fiscal 2010.

14

exempt for the next 5 years and 50% exempt for another 5 years subject to fulfilling certain conditions. The tax exempt income of the Company attributable to export operations of units situated in STPs is subject to Minimum Alternate Tax (MAT). Any MAT paid for a year is available for setoff against tax liability for ten subsequent years. The Company foresees that an additional tax burden will arise due to the expiry of tax holiday period by 2011. Accordingly, the Company has recognized deferred tax assets for such tax credit amounting to Rs. 53.4 crores and Rs. 179.4 crores as at June 30, 2009 and 2010 respectively. FINANCIAL POSITION Reservesebenture Redemption Reserveuring the year company has raised Rs 1000 crores through secured redeemable non convertible debentures of Rs 10 lacs each which is redeemable in tranches of 2, 3 & 5 years. As per Section 117C of the Companies Act 1956, Company is required to create debenture redemption reserve to which adequate amounts should be credited from out of its profits until such debentures are redeemed. Accordingly Company has apportioned Rs 295 crores out of its current year profits towards debenture redemption reserve. Borrowings:Company has outstanding borrowings of Rs. 1,397.4 crores as of June 30 2010 primarily consisting of the following:• Secured redeemable non convertible debentures of Rs 10 lacs each issued for Rs. 1000 Crores redeemable in tranches of 2, 3 & 5 years and have an interest cost varying between 7.55% to 8.80%. Fixed Assets:The Company has made additions of Rs. 366.7 crores during 2010 in the gross block of fixed assets which comprises computers, software, other equipments and investment in facilities. Gross block of fixed assets as at the end of fiscal 2010 stood at Rs. 2293.4 crores and capital work in progress (including capital advances) stood at Rs. 477.2 crores. The Company is in the process of developing facilities in its campuses at NOIDA, Chennai, Bangalore and Manesar. These campuses are spread over a combined area of 121 acres. 8400

seats have already become operational at these campuses and 16,000 seats are under development at these campuses. All the campuses excluding Manesar are approved SEZ locations. Expenditure incurred till end of fiscal 2010 for the facilities under construction is appearing under capital work in progress. Treasury Investments:The guiding principle of the Company’s treasury investment is Safety, liquidity & Return. The Company has efficiently managed its surplus funds through careful treasury operations. The Company deploys its surplus funds primarily in debt mutual funds and bank fixed deposits with a limit on investments with individual fund/bank. As at the end of fiscal 2010, almost entire surplus funds are invested in fixed deposit with nationalized banks.
(Rs in Crores) Particulars Debt Mutual Funds Bonds Fixed Deposits with Banks Inter corporate deposits with HDFC Limited Total 2010 748.2 50.0 924.6 100.0 1,822.8 2009 20.0 20.0 1.221.8 1,261.8

CASH FLOWS Cash Flows from Operating Activities:Cash generated from operations provides the major sources of funds for the growth of the business. Net cash provided by operating activities was Rs. 739.3 crores and Rs. 590.1 crores in fiscal 2010 and 2009 respectively. Cash Flows from Investing Activities:In fiscal 2010, an amount of Rs. 400.3 crores was invested in fixed assets and Rs 752.7 crores were invested in Debts Mutual funds and Bonds during the current fiscal. Cash Flows from Financing Activities:Cash flow from financing activities in the year under review has an inflow of Rs. 583.4 crores against outflow of Rs 227.9 crores in 2009. This is mainly because of issue of secured redeemable non convertible debentures of Rs 10 each issued for Rs. 1000 Crores during the current fiscal and outflow of Rs. 315.2 crores pertaining to the final dividend declared in the previous fiscal year as well as the interim dividends paid during the year.

15

DIRECTORS’ REPORT
Dear Shareholders, Your Directors have pleasure in presenting this Eighteenth Annual Report together with the Audited Accounts for the year ended June 30, 2010. FINANCIAL RESULTS The highlights of the consolidated financial results of your Company and its subsidiaries prepared under Indian GAAP are as follows: (Rs. in crores) Year ended Year ended June 30, 2010 June 30, 2009 Income Revenues 12,136.29 10,229.41 Other income 154.12 262.20 12,290.41 10,491.61 Expenditure Cost of goods sold 443.55 205.47 Personnel Expenses 6,253.70 5,194.38 Operating and other expenses 3,498.48 3000.06 Finance costs 204.14 112.44 Depreciation and amortization 418.11 375.47 10,817.98 8,887.82 Profit before tax and minority interests 1,472.43 1,603.79 Provision for tax (213.43) (284.34) Profit before minority interests 1259.00 1,319.45 Share of minority shareholders 0.19 0.18 Net Profit 1,259.19 1,319.63 The highlights of financial results of your Company as a stand-alone entity prepared under Indian GAAP are as follows: Year ended June 30, 2010 Income Revenues Other income Expenditure Cost of goods sold Personnel Expenses Operating and other expenses Finance Charges Depreciation and amortization Profit before tax Provision for tax Profit after tax Balance in Profit and Loss Account brought forward Amount available for appropriation Appropriations Proposed final dividend [including Rs. 0.29 crores (previous year Rs. 0.87 crores) paid for previous year] Corporate dividend tax on proposed final dividend [including Rs.0.05 crores (previous year Rs.0.15 crores) paid for previous year] Interim dividend Corporate dividend tax on interim dividend Transfer to general reserve Transfer to debenture redemption reserve Balance carried forward to the balance sheet Total 5,078.76 171.77 5,250.53 85.47 2,187.66 1,449.19 101.36 274.03 4,097.71 1152.82 (96.24) 1,056.58 1,920.97 2,977.55 68.16 11.32 202.33 34.13 105.66 295.00 2260.95 2,977.55 (Rs. in crores) Year ended June 30, 2009 4,675.09 265.81 4,940.90 1,930.22 1,539.00 28.09 251.89 3,749.20 1,191.70 (194.39) 997.31 1,572.73 2,570.04 67.90 11.54 401.71 68.19 99.73 1,920.97 2,570.04

16

TRANSFER TO RESERVES Your Company has transferred Rs. 105.66 crores to the General Reserve Account and Rs. 295 crores to the Debenture Redemption Reserve Account as at June 30, 2010. An amount of Rs. 2,260.95 crores is proposed to be carried forward in the Profit & Loss Account. OVERVIEW During the financial year 2009-10, on a standalone basis, your Company’s revenues stood at Rs. 5,078.76 crores registering a growth of 8.63% over the previous year and on a consolidated basis, the Company’s revenues for the year 2009-10 stood at Rs. 12,136.29 crores registering a growth of 18.64% over the previous year. A detailed analysis on the Company’s performance is included in the Management‘s Discussion and Analysis Report titled as “Management’s Discussion and Analysis”, which forms part of this Annual Report. DIVIDENDS Your directors are pleased to recommend a final dividend of Re.1 per equity share for the financial year ended June 30, 2010, subject to the approval of the shareholders at the ensuing Annual General Meeting of the Company. During the year under review, your directors had declared and paid three interim dividends as per the details given hereunder: S. No. Interim dividend paid during the year ended June 30, 2010 1st Interim Dividend 2nd Interim Dividend 3rd Interim Dividend Rate of dividend (Per Share) Re. 1/Re. 1/Re. 1/Amount of dividend paid 67.19 67.45 67.69 Dividend Distribution tax paid by the Company (Rs. in crores) 11.42 11.46 11.25 Total Outflow

1. 2. 3.

78.61 78.91 78.94

The total amount of dividends (including interim dividends paid) for the year ended June 30, 2010 shall be Rs. 270.20 crores. Dividend distribution tax paid / payable by the Company for the year would amount to Rs. 45.40 crores. SCHEME OF AMALGAMATION During the year under review, the Board of Directors of the Company, subject to requisite approvals, had approved the Scheme of Amalgamation (“Scheme”) under section 391 to 394 of the Companies Act, 1956 for amalgamation of HCL Technoparks Limited, wholly owned subsidiary of the Company with the Company. The Company has filed the petition before the Hon’ble High Court of Delhi for approval of the Scheme of Amalgamation. The Scheme, if approved, shall be effective from April 1, 2009. SUBSIDIARIES/ BRANCHES FORMED DURING THE YEAR HCL Technologies Denmark ApS and HCL Technologies Norway AS In view of the new business prospects of the Company, the Company has set up its step down subsidiaries in Denmark viz. HCL Technologies Denmark ApS and in Norway viz. HCL Technologies Norway AS. During the year, your Company has also set up its branch office in U.S.A. EXISTING SUBSIDIARIES-CLOSURE DURING THE YEAR Your Company had acquired Axon Group Ltd. (“Axon”) in 200809 which is a leading U.K. based SAP consulting Company. Axon had set up subsidiaries in various countries. As a rationalization process, the applications for winding up were filed with the appropriate authorities for the two dormant entities viz. Aspire Solutions Sdn. Bhd., a company incorporated in Malaysia and Axon EBT Trustees Limited, a company incorporated in U.K. as their businesses were integrated with other entities in these countries.

SUBSIDIARIES - FINANCIALS The Company has 56 subsidiaries as on June 30, 2010. 3 subsidiaries of the Company are not required to prepare the financials as on June 30, 2010 as they have been incorporated during the current year and the first financial year of these companies shall close subsequent to June 30, 2010. The Company has been granted exemption under section 212 of the Companies Act, 1956 by the Ministry of Corporate Affairs from annexing the accounts and other information for its subsidiaries along with the accounts of the Company for the year ended June 30, 2010. As per the terms of the exemption letter, a statement containing brief financial details of the Company’s subsidiaries for the year ended June 30, 2010 shall form part of the Annual Report. As required under the Listing Agreement with the Stock Exchanges, consolidated financial statements of the Company and its subsidiaries are attached. CHANGES IN CAPITAL STRUCTURE Issue of shares under Employee Stock Option Plans During the year ended June 30, 2010, the Company allotted 85,27,212 equity shares of Rs. 2/- each fully paid up under its Employees Stock Option Plans. Issued and Paid-up Share Capital As on June 30, 2010, the issued and paid-up share capital of the Company was Rs. 135,75,67,624/- (previous year: Rs. 134,05,13,200/-) comprising 67,87,83,812 (previous year: 67,02,56,600) equity shares of Rs. 2/- each fully paid-up. SHARES UNDER COMPULSORY DEMATERIALIZATION The equity shares of your Company are included in the list of specified scrips where delivery of shares in dematerialized (demat) form is compulsory effective from July 24, 2000, if the same are traded on a stock exchange , which is linked to a depository. As of June 30, 2010, 99.93% shares were held in demat form.

17

DEBENTURES During the year, the Company has issued rated, secured, taxable, redeemable non-convertible debenture(s) as per details given hereunder: Date of Issue August 25, 2009 August 25, 2009 September 10, 2009 Amount (Rs. in crores) 170 330 500 Coupon Rate ( Payable quarterly) 7.55% p.a. 8.20% p.a. 8.80% p.a. Maturity Period 2 years 3 years 5 years

AUDITORS The auditors, M/s. S.R. Batliboi & Co. Chartered Accountants, retire at the conclusion of the ensuing Annual General Meeting and they have confirmed their eligibility and willingness to be re-appointed. GROUP As per the intimation received from the Promoter(s), for the purposes of availing exemption from applicability of the provisions of Regulations 10 to 12 of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997, pursuant to Regulation 3(1) (e)(i) thereof, persons constituting ‘Group’ as defined in the (Monopolies and Restrictive Trade Practices Act, 1969) include the following: Name of the Companies/Trust HCL Corporation Ltd. HCL Holdings Pvt. Ltd. Guddu Investments (Pondi) Pvt. Ltd. Vama Sundari Investments (Pondi) Pvt. Ltd. Shiv Nadar Investments (Pondi) Pvt. Ltd. SSN Investments (Pondi) Pvt. Ltd. Shiv Nadar Investments (Chennai) Pvt. Ltd. Shivkiran Investments (Chennai) Pvt. Ltd. Vamasundari Investments (Delhi) Pvt. Ltd. SSN Investments (Delhi) Pvt. Ltd. SSN Trust Shiv Nadar Foundation Vamasundari Scholarship Trust FIXED DEPOSITS Your Company has not accepted any fixed deposits. AWARDS AND RECOGNITIONS As your Company pursues excellence relentlessly, your Company is delighted to receive phenomenal share of recognitions and awards this year, not just from the media, but also from analysts, governing bodies, academic institutions, partners and even customers. Some of the key accolades received during the year include: • Ranked No. 1 among the top 50 best managed global outsourcing vendors of 2009 by Brown & Wilson’s Black Book of Outsourcing. Chosen from among more than 188 corporate entries, your Company won the prestigious ‘Golden Peacock Innovation’ award for its MTaaSTM (a Business Service Management centric service delivery platform) offering in the IT Sector category. Ranked No.1 amongst the 2009 Top Cross-Industry BPO Vendors by the Black Book of Outsourcing. Ranked No.1 in the traditional IT Outsourcing space by Datamonitor’s, Black Book of Outsourcing 2009-10. Ranked No. 1 in the RIMO (Remote Infrastructure Management Outsourcing) space and scores highest in 18 significant ITO criteria and 13 significant RIMO criteria surveyed.

A debenture trust deed in favour of IDBI Trusteeship Services Limited for the aforesaid issues has been executed. The Debentures are secured by way of mortgage(s) and/ or charges on the movable / immovable properties of the Company whether existing / future. The said debentures have been listed on Wholesale Debt Segment of the National Stock Exchange of India Limited. INTERNAL CONTROL SYSTEM The Company has in place adequate internal control systems commensurate with its size and nature of business. These systems provide a reasonable assurance in respect of providing financial and operational information, compliance with applicable statutes and safeguarding of assets of the Company. These systems ensure that transactions are executed in accordance with specified policies and resources are deployed as per the business plans and policies. The Company has an in-house internal audit division and the head of internal audit function reports directly to the Audit Committee to ensure independence of this function. CORPORATE GOVERNANCE The report of the Board of Directors of the Company on Corporate Governance is given as a separate section titled ‘Corporate Governance Report 2009-10’, which forms part of this Annual Report. Certificate of the Statutory Auditors of the Company regarding compliance with the Corporate Governance requirements as stipulated in clause 49 of the Listing Agreement with the stock exchanges is annexed with the Corporate Governance Report. MANAGEMENT’S DISCUSSION AND ANALYSIS The Management’s Discussion and Analysis is given separately and forms part of this Annual Report. INSIDER TRADING REGULATIONS Based on the requirements under SEBI (Prohibition of Insider Trading) Regulations, 1992, as amended from time to time, the Code of Conduct for prevention of insider trading and the Code for corporate disclosures are in force. DIRECTORS In accordance with the Articles of Association of the Company, Mr. Subroto Bhattacharya, Mr. Vineet Nayar and Mr. Amal Ganguli, shall retire by rotation as Directors at the ensuing Annual General Meeting and being eligible, they have offered themselves for re-appointment.

•

• • •

18

•

HCL AXON rated a leader in the Forrester Wave for SAP Implementation Providers making it a serious contender across all phases of the SAP implementation life cycle.

QUALITY Quality policy of your Company is to satisfy the customers by delivering quality products and services that meet their requirements on time, every time. To operate the quality system in your Company, we have developed a system called Organizational Management System (“OMS”) which conforms to the ISO 9001:2000 standard, CMM Ver1.1 and CMMI version 1.2, IEEE (referenced) for the design and development of software and hardware products and related services. The OMS is designed to achieve the Company’s quality policy and objectives. The OMS has been developed to keep in mind the following objectives: • • • • Standardize engineering and management practices across all level of businesses of the Company. To enhance productivity and effectiveness of the Company’s operations and reduce the learning curve. Unified approach to our business acquisition and delivery methods. Align with other common corporate initiatives like SAP, KROSS, PM Smart etc.

provide our employees a work environment and culture that they can take pride in. Employees First is our means of getting into the very core of the individual and decoding their individuality and diversity, unleashing their potential and equipping them with the necessary tools to enhance the value zone. We believe that the maximum value is created at the employeecustomer interface. Therefore we empower our employees to generate delight for our customers, every step of the way. The 5 core values of Employees First are Honesty, Transparency, Accountability, Individuality and Collaboration. In order to strengthen these values, many initiatives have been introduced by your Company. Some key initiatives are: • Smart Service Desk, where employees can raise SLAbound tickets on any internal service provider, and only employees can close these tickets, if satisfied. This brings in a culture of reverse accountability. CEO Connect through U&I, where the CEO is personally available online to every employee, tours every location and holds interactive discussions complemented by a fully functional blog. This infuses a culture of transparency and open communication between the CEO and the employee. Open 360 Degree Feedback, where employees can rate their managers, even the CEO, and the feedback/rating is made public across the organization. This inverts the pyramid and makes the employee a part of the development journey of the manager and also the CEO. Talent Transformation is designed to build behavior based competencies in individuals. Employees First Academy, comprising three levels: Employees First Lifestyle, Employees First Leadership, and Harvard Emerging Leader Program, to initiate and nurture effective leaders. Directions, an annual event where the CEO and senior management conduct a face-to-face meeting with all employees to discuss the Company’s strategy and direction. It is a ‘mirror, mirror’ exercise between the employees and senior management.

•

•

Quality Initiatives taken during the year: • • • • Six Sigma Earned Value Management Next Generation OMS Beyond CMMI L5

• •

Quality Journey of HCL Technologies Ltd.: • • First company to get assessed for CMMI Level 5 in ‘Investment banking IT services provider’ group. First software company to get certified for AS 9100 in India.

•

Organizational Management System of your Company is compliant to multiple industry and domain specific standards. It has also been enhanced for domain standards like TL 9000 and ISO 16949 and models like CMMI (Dev) V1.2 L5 and CMMI for services. EMPLOYEES FIRST Around five years ago, your Company initiated a unique employees focused program that places the needs of employees before that of customers. Your Company believes that employees bring strategic value to an organization and are critical to its success in the global marketplace. The future growth and competitiveness of any organization depends more than ever before on attracting the best talent and engaging and empowering them to achieve their own, and the organization’s goals. Your Company always believes that happy and passionate employees offer better value in engagements and directly impact customer satisfaction. Towards this, your Company practices Employees First – the first of its kind of articulation, which is at the core of our efforts to

Employees First, Customers Second: Mr. Vineet Nayar, CEO and Whole-time Director of the Company has written a book on his innovative concept of Employees First, Customers Second (EFCS). Employees First, Customers Second is a book published by Harvard Press. Admired by many global thought leaders viz. Mr. Tom Peters, Mr. Tony Hsieh, Mr. Gary Hamel, Ms. Judy McGrath, Mr. Ram Charan, and Mr. Victor K. Fung. The Book got rave reviews from Fortune, CIO Insight, Economist, Washington Post, Sunday Times, Hindu, FOX Business, CNBC Europe, Bloomberg Radio Surveillance and many others. Talent Transformation and Intrapreneurship Development (T2ID) T2ID in your Company identifies and recognizes the need to groom and develop employees for developing the future leaders. T2ID rolls out a series of end to end programs that would continuously enhance the value that an employee adds to the Company. In your Company, employees are not just one of the assets but THE Assets. The quintessential “Customer is King” has been replaced by “Employees First”; the bottom line

19

being, if the employee is satisfied, happy and skilled, then only will he/she be able to serve his customer better so that they in turn bring value-add to their clients. Key Initiatives of T2ID TOP GUN – Next generation Leadership development program— This Leadership Program builds the leadership pipeline of the Company by focusing on equipping the next generation of leaders with the Company’s identified leadership competencies in order to create World Class Leaders. HCL-HARVARD Emerging Leaders Program— To groom business leaders and prepare them to drive strategic initiatives in a very dynamic business environment, your Company has launched Emerging Leaders Program which aims to create a capable and distinctive leadership culture. This is a 20-week program with the focus on five critical areas of leadership development. Employee Passion Indicative Count (EPIC)— EPIC is a self assessment tool which aims to measure Top 5 Passion Indicators of an employee that drive him to do his day to day work. During the year, 25,100 employees participated in the EPIC assessment and found out their passion drivers. Good Practices Conferences— Good Practices is an initiative from delivery excellence for systematic collation, evaluation, sharing and adoption of good practices across the Company. Good Practices Conference 2010 is a platform for individuals/ teams to share their good practices as well as lessons learnt from failures. iLearn— iLearn has been launched to seamless online registration and tracking of instructor led training sessions (technical and domain) and quick online feedback mechanism including collection, compilation and analysis. HCL Scholar— It is a knowledge enhancement program aimed at providing a structured and robust platform to assess employees of the Company on their understanding about the Company and their respective areas of operation. It aims at promoting a culture of continuous learning and capabilities building within the Company. CONSERVATION OF ENERGY, RESEARCH AND DEVELOPMENT,TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO Disclosures of particulars as required by the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, are set out in the Annexure 1 included in this Report.

DIRECTORS’ RESPONSIBILITY STATEMENT A statement of responsibility of the Directors relating to compliance with the financial accounting and reporting requirements in respect of the financial statements, as specified under section 217(2AA) of the Companies Act, 1956 inserted by the Companies (Amendment) Act, 2000, is annexed as Annexure 2 to this Report. STOCK OPTIONS PLANS 1999 Stock Option Plan / 2000 Stock Option Plan / 2004 Stock Option Plan The details on these plans have been annexed as Annexure 3 to this report. DISCLOSURES UNDER SECTION 217 OF THE COMPANIES ACT, 1956 Except, as disclosed elsewhere in the report, there have been no material changes and commitments, which can affect the financial position of the Company between the end of the financial year and the date of this report. As required under section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, as amended, the names and other particulars of employees are set out in the Annexure 4 included in this Report. ACKNOWLEDGEMENTS The Board wishes to place on record its appreciation to the contribution made by the employees of the Company and its subsidiaries during the year under review. The Company has achieved impressive growth through the competence, hard work, solidarity, cooperation and support of employees at all levels. Your Directors thank the customers, clients, vendors and other business associates for their continued support in the Company’s growth. The Directors also wish to thank the Government Authorities, Financial Institutions and Shareholders for their cooperation and assistance extended to the Company. For and on behalf of the Board of Directors

Noida (U.P.), India July 29, 2010

SHIV NADAR Chairman and Chief Strategy Officer

20

ANNEXURE 1 TO THE DIRECTORS’ REPORT
Particulars pursuant to the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 a) (i) Conservation of Energy Building Infrastructure: The Go Green Transformation Initiative launched in 2008 has ensured a transformational effect on our universe’s eco footprints. This is a voluntary initiative combined with corporate action, and targets the reduction of Green House Gas (GHG) emissions and carbon foot prints. Your company has engaged a consultant for measuring the carbon foot print consumption and for LEED certification under USGBC LEED :EB:O&M rating system for its campus building. The recommendations are being implemented to achieve the LEED certification status. All buildings under construction are as per green building principles and have been optimized for energy performance and occupant comfort. Your Company has also received a star rating for our energy efficient buildings by the Bureau of Energy Efficiency. Our Energy Efficiency drive includes: • • • Normal bulbs replaced by CFLs. All air conditioners, lights and PCs are shutdown after 18 30 hrs. All facilities have an optimum ratio of glass windows to utilize natural daylight and proper insulation/ventilation to balance temperature and reduce heat. Regular sensitization campaigns: • HCL celebrated ‘earth hour’ on the 9th September 2009, by switching off the lights of all its facilities at 9 pm for 9 minutes. b) Research and Development (“R& D”) (i) Specific areas in which R&D was carried out Your Company is one of the few Indian companies with significant focus on engineering services. The Engineering, Research and development Services group offers end-to-end engineering services and solutions in hardware, embedded, mechanical and software product engineering to industry leaders across aerospace and defence, automotive, consumer electronics, industrial manufacturing, medical devices, networking and telecom, office automation, semiconductor, servers and storage and software products. Your Company understands the importance of R&D in augmenting its customers businesses and is committed to providing these world-class services to them. Over a decade of operating in complex multivendor environments and customer value chains, we have the ability to seamlessly integrate into their existing R&D ecosystem, working with other innovation partners, captive centers, universities, industry bodies and manufacturing partners. The group has recently started a business unit with a dedicated team to focus on Defense, Space and Security. It has also developed the Business Aligned Test Framework to specifically address the industry need for a standard and costeffective approach to testing and verification activities in hardware, software, mechanical, system safety assessment, test engineering, prototyping, design assurance and new product realization. In addition, your Company reengineered the flight test system that is being used for certification and regulatory approvals for Boeing 787. For the Swiss division of global medical devices major, your Company was responsible for the complete development of a Class III implantable drug delivery medical device that has recently been launched in the market. Your Company foresees a shift towards clients preferring outsourcing companies to share their longterm vision, risks, and rewards in developing productbased ecosystems that impact client-experience. Towards this, your Company is investing heavily in developing its own IPs and solutions to help customers’ impact the overall product ecosystem faster and better. Solutions include a unified communication platform, a remote diagnostic reusable module, telematics and test platforms in multiple verticals. (ii) Benefits derived as a result of above R&D Your Company’s solutions and frameworks are focused in creating value to customers in specific micro verticals. The direct benefits to our customers include quicker time to market, reduced cost, increased quality and increased efficiency of customer business processes. Our solutions like Business Aligned IT will result in enhanced business performance through improved KPIs, visibility, discovered landscape, stability, cost reduction and structured business future planning.

•

•

State-of-art power utility equipment with high energy efficiency.

(ii) IT Infrastructure: Your Company has taken various steps to build a Green enterprise internally, as well as has developed various frameworks that help its customers achieve an ideal Green IT state. Over the past couple of years we have reduced our server footprints owing to a massive internal IT optimization and rationalization exercise that dramatically reduced our Datacenter carbon footprint. Through our pioneered global remote infrastructure management model, we ensure that IT infrastructure services are delivered through e-service or remote management, which has reduced the physical contact and travel of IT engineers. (iii) Carbon Footprint measurement: Your Company has formed a Green Council to address the response to Global Warming. The first decision of the council has been to start publishing in the annual Green House Gas (Carbon) emissions reports. The measurement is being done by using Company’s developed Carbon accounting framework, manage Carbon.

21

(iii) Future plan of action Your Company will continue to focus on R&D activities and will make investments therein from time to time. (iv) Expenditure on R&D for the years ended June 30, 2010 and 2009 are as follows: (Rs. in crores) Particulars Revenue expenditure Capital expenditure Total R&D expenditure R&D expenditure as a percentage of revenues 2010 40.53 40.53 0.80% 2009 40.86 40.86 0.87%

Activities relating to exports, initiatives taken to increase the exports, development of new exports markets for products and services and export plans— During the year, a substantial portion of the revenue of the Company was derived from the exports. During the year, your company has set up subsidiaries in Denmark and Norway to enhance its business. The various global offices of the Company are staffed with sales and marketing specialists, who promote and sell services to large international clients. The foreign exchange earned and spent by the Company during the year under review is as follows: Particulars Foreign exchange earnings Foreign exchange outgo - Expenditure in foreign currency - CIF value of imports - Dividend remitted in foreign currency (Rs. in crores) 2010 2009 4,968.24 4,572.53 688.50 114.91 48.58 851.99 702.29 108.03 110.65 920.97

(c) Technology absorption, adaptation and innovation Your Company’s core businesses demand absorption of emerging technologies to stay at the cutting edge of technology. New methods for absorbing, adapting and effectively deploying new technologies have been developed. Your Company has made investments in applications and other software tools required for engineering design work in all its Software Development Centers. (d) Foreign exchange earnings and outgo Your Company is an export-oriented unit and the majority of the Information Technology (IT) services and Business Process Outsourcing (BPO) services by the Company are for clients outside India.

For and on behalf of the Board of Directors

Noida (U.P.), India July 29, 2010

SHIV NADAR Chairman and Chief Strategy Officer

ANNEXURE 2 TO THE DIRECTORS’ REPORT
Directors’ Responsibility Statement as required under Section 217(2AA) of the Companies Act, 1956 as inserted by the Companies (Amendment) Act, 2000 i) The financial statements have been prepared in accordance with the accounting standards issued by the Institute of Chartered Accountants of India and the requirements of the Companies Act, 1956, to the extent applicable to the Company. There have been no material departures from prescribed accounting standards while preparing these financial statements; The Board of Directors has selected the accounting policies described in the notes to the accounts, which have been consistently applied, except where otherwise stated. The estimates and judgments relating to the financial statements have been made on a prudent basis, in order that the financial statements reflect in a true and fair manner, the state of affairs of the Company as at June 30, 2010 and the profit of the Company for the year ended on that date; iii) The Board of Directors has taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; The annual accounts have been prepared on the historical cost convention, as a going concern and on the accrual basis. For and on behalf of the Board of Directors

iv)

ii)

Noida (U.P.), India July 29, 2010

SHIV NADAR Chairman and Chief Strategy Officer

22

ANNEXURE 3 TO THE DIRECTORS’ REPORT
DETAILS ON STOCK OPTION PLANS
1999 Stock Option Plan / 2000 Stock Option Plan / 2004 Stock Option Plan Pursuant to the approval of the shareholders, your Company had instituted the 1999 Stock Option Plan (“1999 Plan”), 2000 Stock Options Plan (“2000 Plan”) and 2004 Stock Option Plan (“2004 Plan”) for all eligible employees of the Company and its subsidiaries. The 1999 Plan, 2000 Plan and 2004 Plan are administered by the Compensation Committee of the Board and provide for the issuance of 20,000,000; 15,000,000 and 20,000,000 options, respectively. Each option granted under the 1999 Plan, 2000 Plan and 2004 Plan, entitles the holder to four equity shares of the Company at an exercise price, which is approved by the Compensation Committee. The details of the options granted under the 1999 , 2000 and 2004 Plans are given below: S. No. Description 1. Total number of options granted (gross) 2. The pricing formula 1999 Plan 26,600,874 Market price / internal valuation 17,531,472 12,785,145 51,140,580 12,292,872 None 434.00 1,522,857 1,967,175 3-7 years 2000 Plan 17,747,401 Market price 2004 Plan 4,716,172 Market price / price determined by Compensation Committee 2,622,478 1,896,116 7,584,464 740,944 None 6.19 2,079,112 1,350,000 1.02-5 years

3. 4. 5. 6. 7. 8. 9. 10.

Number of options vested Number of options exercised Total number of shares arising as a result of exercise of options Number of options lapsed Variation in terms of options Money realized by exercise of options (Rs. crores) Total number of options in force as on June 30, 2010 Grant to Senior Management Number of Options Vesting Period

10,467,938 5,578,893 22,315,572 9,817,327 None 314.33 2,351,180 254,904 2-7 years

The diluted earnings per share were Rs. 15.33 and Rs.14.73 for the fiscal years ended June 30, 2010 and 2009 respectively. HCL TECHNOLOGIES LIMITED EMPLOYEES TRUST In April 2001, HCL Technologies Limited Employees Trust (“Trust”) was formed for the purpose of acquiring the shares of the Company and thereby providing such shares to the eligible employees and directors of the Company and/or its subsidiaries at any time pursuant to the Stock Option Plans of the Company. The Company would provide this Trust interest free loan(s) from time to time up to a limit of Rs.150 crores for this purpose. As on June 30, 2010, an amount of Rs. 6.52 crores is outstanding as loan from the Company and Nil shares of the Company are held by the trust. The Company has made provision of Rs. 6.52 crores against the same.

23

ANNEXURE 3 TO THE DIRECTORS’ REPORT (Contd.) Details of Stock Option Plans for the year ended June 30, 2010
Particulars Total number of options outstanding as on July 1, 2009 Number of options granted during the year Pricing formula 1999 Plan 2,399,885 Market price / internal valuation 725,540 588,774 2,355,096 288,254 None 43.00 1,522,857 None None N.A. N.A. N.A. N.A. N.A. N.A. N.A. 2000 Plan 3,473,285 Market price 2004 Plan 2,545,431 240,000 Market price / price determined by Compensation Committee 1,364,615 831,719 922,102 620,927 3,688,408 2,483,708 200,003 85,392 None None 57.14 2,351,180 None None N.A. N.A. N.A. N.A. N.A. N.A. N.A. 2.31 2,079,112 None None N.A. N.A. N.A. N.A. N.A. N.A. N.A.

Number of options vested during the year Number of options exercised during the year Total number of shares arising as a result of exercise of options during the year Number of options lapsed during the year Variation in terms of options Money realised by exercise of options during the year (Rs. crores) (includes issued through Trust) Total number of options in force as on June 30, 2010 Employees granted options equal to 5% or more of the total number of options granted during the year Employees granted options equal to or exceeding 1% of the issued capital during the year Fair value compensation cost for options granted (Rs. crores) Weighted average exercise price of options granted above market price Weighted average fair value of options granted above market price Weighted average exercise price of options granted at market price Weighted average fair value of options granted at market price Weighted average exercise price of options granted below market price (Rs.) Weighted average fair value of options granted below market price (Rs.) Method and significant assumptions used during the year to estimate the fair values of options Method Significant assumptions Risk free interest rate Expected life Expected Volatility Expected Dividend The price of the underlying options in market at the time of grant (Rs.)

Black schole Black schole 8.10% 8.10% upto 35 months upto 35 months 26.67% 26.67% 3.65% 3.65% N.A. N.A.

Black schole 8.10% upto 35 months 26.67% 3.65% N.A.

Pre IPO Details of Stock Option Plan Particulars Number of options granted pre IPO Pricing formula Number of options vested Number of options exercised Total number of shares arising as a result of exercise of options Number of options lapsed Variation in terms of options Money realised by exercise of options (Rs. crores) Total number of options in force as on June 30, 2010 Fair value compensation cost for options granted (Rs. crores) Weighted average exercise price of options granted (Rs.) Weighted average fair value of options granted (Rs.) Method used to estimate the fair values of options Significant assumptions Risk free interest rate Expected life Expected volatility Expected dividends As on June 30, 2010 ESOP 1999 Plan 14,223,832 Internal valuation 11,648,957 10,234,702 40,938,808 3,989,130 None 259.41 43.96 255.00 36.65 Black-Scholes Method 10.00% 12 to 110 months 0.10%

24

ANNEXURE 3 TO THE DIRECTORS’ REPORT (Contd.) Employee Compensation Cost based on fair value of the options
Year ended 30 June 2010 (Rs. in Crores) 1,056.58 49.84 83.54 1,022.88 Rs. 15.68 15.33 15.18 14.84 Black-Scholes Method 3.65% upto 35 months 8.10% 26.67%

Net income, as reported Add: Stock-based employee compensation expense included in reported net income Deduct: Total stock-based employee compensation expense determined under fair value based method for all awards Proforma net income Earnings per share As reported Adjusted pro forma - Basic - Diluted - Basic - Diluted Method used to estimate the fair values of options Significant assumptions Dividend yield % Expected life Risk free interest rates Volatility

Details of options granted to Senior Managerial Personnel of the Company during the year ended June 30, 2010 Ranjit Narasimhan 24-Aug-09 65,000 Vineet Nayar 24-Aug-09 175,000

Details of options granted to employees amounting to 5% or more of the options granted during the year ended June 30, 2010 None Details of options granted to employees during the year ended June 30, 2010, amounting to 1% or more of the issued capital of the company at the time of the grant None

For and on behalf of the Board of Directors

Noida (U.P.), India July 29, 2010

Shiv Nadar Chairman and Chief Strategy Officer

25

ANNEXURE 4 TO THE DIRECTORS’ REPORT
INFORMATION FOR DIRECTOR’S REPORT U/S 217(2A) OF THE COMPANIES ACT, 1956
A. EMPLOYED FOR FULL FINANCIAL YEAR - 2009-10
Sr. Name No. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 Ajay Davessar Ajit Sarangi Akash Srivastava Amit Roy Anand Pillai Anand Srinivasan Ananth Vaidyanathan Anantha Padmanabhan J Ananthanarayanan Subramanian Anil Chanana Anil Chowdhary Anil Gupta Anil Sethi Anup Dutta Anupam Ghosh Apparao V V Archana Awasthi Arjun Raghunathan Ashish Srivastava Ashok Kumar M. Ashutosh Dhawan Balasubramanian Irulandy Chandrasekharan Kasinarayanan Charles Regis Dakshina Chunduri Davidson Devavaram Debgiri Sanyal Deepak Aggarwal Devanathan Ranganathan Dharmander Kapoor Dilip Srivastava Dinesha L G Dipak Anand Gade Rao Ganesh Nerur Goutam Rungta Gunaseelan Narayanan Harsh Kumar Harsha Mutt Age (in yrs.) 41 44 38 51 51 46 41 41 45 52 50 55 41 51 45 48 40 53 41 49 42 39 49 46 41 51 40 36 45 44 51 52 64 52 57 37 55 52 46 Designation Educational Qualification BBA MBA B.Tech -Computer Science B. Com, CA PGD, FMS/CSMS BE - Instrumentation BE - Electronics Graduation MBA CA B.Tech - Electrical B.Tech,M.Tech MBA BE-Electrical, M.TechElectrical BE -Computer Science B.Tech, M.Tech MBA Remuneration (in Rs.) Date of Joining Experience in Yrs. 18 23 16 26 27 23 20 21 21 29 6 33 19 29 20 26 17 29 19 25 18 15 24 21 19 26 17 13 24 17 27 30 45 29 35 14 30 31 24 Previous Employment Designation held in previous employment Associate Director Delivery Manager Group Project Manager Vice President- Taxation President & Chief Mentor Principal Consultant Associate Vice President Vice President Regional Mananger Previous Employment held since Dec.06 Feb.98 Aug.06 Sep.06 Sep.03 Jul.03 Jan.92 Aug.01 Feb.01 Dec.85 Jun.07 Jan.03 Jun.07 Jul.81 Aug.04 Aug.96 Mar.08 Aug.81 Oct.05 Jun.2000 Dec.04 Jun.05 Dec.03 Aug.05 Feb.93 Aug.95 Aug.02 Jul.2000 Aug.01 Mar.02 May.05 Apr.01 Nov.94 Nov.80 Feb.97 Jul.03 Aug.79 Oct.86 Aug.86

Associate Vice President Operations Director Deputy General Manager Vice President - Taxation Senior Vice President Quality & T2Id Associate Vice President Senior Vice President General Manager Associate Vice President Chief Financial Officer Operations Director Vice President Associate Vice President Senior Vice President Deputy General Manager Senior Vice President National Manager

2,512,456 12.05.2009 3,509,053 12.09.2008 2,472,036 25.08.2008 7,182,484 16.07.2007 5,440,101 01.06.2005 3,605,790 04.08.2008 4,664,379 21.05.2007 2,655,632 26.04.2007 2,949,535 21.04.2003 10,146,653 01.10.1998 2,827,021 04.12.2008 4,229,922 06.05.1998 3,210,531 11.04.2008 3,516,556 01.07.1996 2,538,787 22.09.2008 5,686,788 10.03.2003 2,743,856 30.06.2009 2,792,589 01.03.2008 3,013,981 01.10.2008 3,735,389 17.08.2006 4,895,316 07.04.2008 2,416,667 17.01.2008 3,190,086 20.12.2007 2,639,656 01.06.2007 3,000,203 01.07.1996 4,414,127 02.04.2003 3,000,475 14.07.2008 2,974,571 22.02.2007 3,411,134 23.07.2008 2,762,468 21.04.2003 6,882,889 07.06.2005 3,075,769 06.10.2003 2,629,000 02.06.2008 4,701,524 01.07.1996 2,614,039 25.07.2003 3,245,362 01.03.2007 4,865,674 01.07.1996 3,064,754 14.07.1994 5,025,014 07.08.2006

Capgemini Infosys Technologies Ltd Infosys Technologies Ltd Samsung Electronics Ltd. Clime Satyam Computer Services Ltd. Infosys Technologies Ltd. Polaris Software Lab Future Software Ltd.

HCL Technologies America Inc. Executive Vice PresidentFinance Self Employed Counseller HCL Japan Ltd. Prudent IT Services Pvt. Ltd. HCL Hewlett Packard Ltd. Keane India Ltd Ascend Technologies Ltd. IBM Ltd. HCL Hewlett Packard Ltd. Satyam Computer Services Ltd. HCL Infinet Ltd., Aricent Technologies Ltd. EDS - Mphasis Aztecsoft Ltd. J&B Software Ltd. HCL Hewlett Packard Ltd. DSQ Software Limited Wipro Technologies Ltd. Infosys Technologies Ltd. Adaptec India Pvt. Ltd. Xavient Techniologies Ltd. Vanguard Solutions Ltd. I-Flex Solutions Ltd. Vice President Vice President & Member of The Board Senior Manager Director Director/Center Head Insurance Industry Solutions Leader Senior Manager Associate Vice President Head & Vice President Associate Vice President Delivery Manager General Manager Head Services Project Manager Chief Operating Officer Principal Consultant Senior Manager Risk Management Senior Engineering Manager Program Manager Vice President-HR Principal Consultant

Global Technology Director M.Tech Associate Vice President Vice President Vice President - Internal Audit Operations Director Associate Vice PresidentETS Operations Director- BFSI Global Practice DirectorERS Senior Vice President Practice Director Finance Director Engineering Manager Associate Vice President Corporate Vice President Associate Vice President Consultant Corporate Vice President Associate Vice President Vice President Senior Corporate Vice President Vice President - Sales & Marketing Vice President - Operations MBA BE - Electronics MBA - Finance ME - Metallurgy MSc. MS BSc. MSc.,MS - Aviation BSc., MSc. CA BE - Electronics MCA MSW (HR & IR) MSc., PGD (Finance & Marketing) B.Tech - Electrical BE - Electronics BSc. CA M.Tech - Computer Science MBA - Marketing Management B.Tech (Mech.Engg.), CA

Tata Consultancy Services Ltd. Global Head Gis. HCL Hewlett Packard Ltd. HCL Infosystems Ltd. General Mototors India Pvt. Ltd. HCL Hewlett Packard Ltd. ICIM Ltd. Infosys Technologies Ltd. Senior Manager - R&D General Manager General Manager General Manager Regional Manager Vice President & Head of Delivery,Banking & Capital Markets Senior Vice President Director (India Offshore Head) Head - Business Development Director(Engg.) Project Manager

40 41 42 43 44

J Kalyanaraman Jagdish Prasad Jyoti Das Kaleeswaran Viswanathan Kanad Chatterjee

50 45 51 48 48

Head - APAC Associate Vice President Associate Vice President Deputy General Manager Vice President & Head - BPR

PGDBM - XLRI M.Tech - Production Engineering MBA - Computer Science, MSc. (Finance) M. Tech (Physical Engg.) MBA - Systems & Finance

2,975,262 01.12.1995 4,753,898 17.03.2008 3,436,724 01.05.2006 2,880,165 03.11.2006 2,604,141 03.07.2000

30 24 23 24 24

HCL Comnet Ltd. Diebold Software Services Pvt. Ltd. Raffles Software Pvt. Ltd Future Software Ltd. Tata Technologies (India) Ltd.

Dec.95 Aug.04 Jun.04 Apr.97 Aug.86

26

ANNEXURE 4 TO THE DIRECTORS’ REPORT (Contd.) Information for Director’s Report U/S 217(2A) of the Companies Act, 1956
A. EMPLOYED FOR FULL FINANCIAL YEAR - 2009-10
Sr. Name No. 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 Kannan Veeraraghavan Kavita Khushalani Krishnamurti Rao Krishnan Chatterjee Madan Srinivasan Mahalingam Sundararajan Manas Chakraborty Mandeep Jolly Manjunatha Hebbar Manoj Sahai Milind Padalkar Mukund Garg Nalin Mittal Namrata Bhattacharyya Nand Avantsa Navin Kumar Nitin Pande Om Dutt Sharma Pawan Danwar Prabhakara Rao Arrabolu Prahlad Rai Bansal Pramod Gupta Prasad Chodavarapu Prasanna Venkatesan Valapet Santhanam Premkumar Seshadri Puneet Mehra Purushothaman T.S. Raj Malik Raj Walia Rajan Pillai Rajbir Singh Rajeev Pandey Rajgopal S Kishore Rajiv Sodhi Rajiv Swarup Rajnesh Avtar Rakesh Singh Ramachandran Kalpathy Ramakrishna Venkatraman Ramakrishnan Venkatraman Ramamurthy Vaidyanathan Raman Subrahmanyan Ramana Nyapathi Ramanathan Sivasubramaniam Age Designation (in yrs.) 52 Vice President 40 53 38 41 42 41 43 43 48 52 40 38 36 50 52 39 40 44 53 53 49 38 48 General Manager Associate Vice President Vice President Associate Vice President Vice President Deputy General Manager Vice President Associate Vice President Head - Applications Business Associate Vice President Associate Vice President Associate General Manager Associate Vice President Global Head - EHS Associate Vice President General Manager Senior Vice President Educational Qualification B.Com & Certificate Courses Post Graduate-Legal MBA - Management MBA - Marketing Management MBA - PM & IR B.Tech (Chemical Engg.), PGDM M.Sc. MBA - Computer Science BE - Electrical & Electronics, MSc. MBA B.Tech - Electrical CA PGD - Finance BA - General CA MBA - Personnel, HR & IR BE -Computer Science CA Remuneration (in Rs.) Date of Joining Experience in Yrs. 28 19 29 15 20 19 16 21 20 24 32 18 17 14 26 26 17 16 21 29 31 26 14 26 Previous Employment Designation held in previous employment Executive Director - Software Process Manager Project Head Vice President Associate Vice President Strategic Planning Anchor & Senior Consultant Senior Engineer Previous Employment held since Jun.95 Feb.06 May.81 Jun.95 Aug.03 Feb.04 Nov.08 Feb.90 Apr.04 Aug.89 Nov.88 Jun.04 Jul.93 Jul.98 Jun.07 Aug.97 Apr.04 Nov.05 May.96 Jun.02 Sep.89 Jul.2000 Feb.98 Jun.08

5,489,730 01.08.2005 2,530,814 07.07.2008 3,048,278 08.12.1997 3,097,381 01.12.2004 4,439,857 02.05.2007 3,024,307 14.11.2005 2,563,832 17.11.2008 2,479,838 20.11.1992 4,127,238 19.07.2007 4,408,019 01.10.2008 6,460,538 18.02.2009 3,876,644 18.02.2008 3,922,758 01.04.1998 2,410,365 12.05.2008 3,783,815 14.07.2008 2,713,293 25.06.2007 2,603,410 20.06.2005 2,437,108 01.09.2008 3,046,770 30.11.2001 3,104,744 01.09.2004 5,037,381 01.12.1994 3,347,479 26.09.2001 3,160,333 01.05.2008 2,432,768 01.09.2008

KPMG Peat Marwick Accenture Services Ltd. ITC Ltd. Pepsico India Holdings Pvt. Ltd. J. Walter Thompson Infosys Technologies Ltd. Escorts Ltd. Igate Global Solutions Ltd.

Tata Consultancy Services Ltd. Senior Consultant

Global Operations Director MSW - Software Systems

Associate Vice President- IT Delivery Tata Consultancy Services Ltd. Principal Consultant Patni Computer Ltd. Satyam Computer Services Ltd. PWC Siemens Information System Ltd. Tech Mahindra Ltd. Senior Vice President Associate Vice President Articleship Senior Consultant Head Delivery

Hewitt Associates (India) Associate Pvt.Ltd. Office Tiger Database Systems Associate Vice President-HR India Pvt. Ltd. iSmart Panache Deputy Genenral Manager HCL Infosystems Ltd. Birla Soft HCL Limited Ariba Technologies India Savera Systems Inc. Freelance Consultant Manager Global Head - HR Deputy General Manager Technical Director SMTS Consultant

Senior Vice President - HR B. Com, MBA Corporate Vice PresidentFinance Vice President Associate Vice President Practice Director - BIS CA MBA MS - Mechanical Graduate

69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88

51 40 71 50 44 54 46 39 46 51 58 42 44 53 58 50 55 69 42 47

Senior Corporate Vice Presedent Associate Vice President Consultant Vice President Senior Vice President Associate Vice President Practice Director - CRM General Manager

MBA CA B-Tech - Electrical B.Tech - Electrical B.Com, CWA MBA MBA - Marketing Management BE - Mechanical

8,594,309 29.08.2003 2,943,910 19.08.2003 3,174,194 01.04.2008 3,556,562 28.07.1997 3,466,841 05.06.1995 2,759,764 11.09.2001 3,015,942 14.04.2004 2,657,007 02.08.2007 4,959,675 09.03.2009 5,127,816 24.07.1997 4,384,431 08.03.2000 2,885,691 31.07.2006 2,584,948 01.05.2006 2,598,774 09.04.2001 5,729,989 23.07.2003 2,727,260 08.08.2006 5,260,890 01.07.1996 6,003,600 14.03.2008 2,502,770 20.12.2000 2,467,489 25.09.2008

27 15 5 28 23 32 22 12 21 29 37 20 20 32 36 27 32 32 18 25

Fugen IT Ltd. HCL Comnet Ltd HCL Infosystems Ltd. Commonwealth Bank Pifizer Ltd. Oracle India Pvt. Ltd. Infosys Technologies Ltd. HCL America Inc.

Founder & Chief Executive Officer Deputy General Manager Finance Chief Operating Officer Project Manager Accounts Officer Consulting Industry Manager Senior Project Manager Vice President - BI Services

May.98 Aug.03 Jan.83 May.96 Jul.93 Sept.01 Oct.02 May.06 Mar.09 Aug.81 Sep.99 May.95 Dec.05 Oct.2000 Apr.97 Jul.05 Jul.81 Apr.97 Jun.98 Oct.04

HCL Technologies America Inc. Program Manager

Vice President-BI Services BSc. (Mech. Engg.), MSc (Industrial Mgmt.) Corporate Vice President B.Tech, MBA Corporate Vice President Associate Vice President Practice Director - MMS Associate Vice President Senior Corporae Vice President Associate Vice President Executive Vice President Advisor General Manager General Manager MBA MBA MCA B.Tech - Electrical M.Tech (Electrical Engineer) MSc. - Electronics B.E. - Metallurgy BTech - Electronics MS - Computer Science M.Sc - Physics

Tata Consultancy Services Ltd. Manager Systems Modicorp Ltd. HP (USA) FCS Software Solutions Ltd. Dusk Valley Technology Ltd., Director Bussiness Development Senior Software Manager Vice President- Delivery Chief Innovation Officer

Eximsoft Technologies Pvt.Ltd. Managing Director Accenture Services Pvt. Ltd. HCL Hewlett Packard Ltd. HCL Technologies Ltd. Savera Systems Mastek Limited Senior Manager Deputy General Manager - R&D President Member of Technical Staff Head Special Accounts

27

ANNEXURE 4 TO THE DIRECTORS’ REPORT (Contd.) Information for Director’s Report U/S 217(2A) of the Companies Act, 1956
A. EMPLOYED FOR FULL FINANCIAL YEAR - 2009-10
Sr. Name No. 89 90 91 92 93 94 95 96 97 98 Ramani Balakrishnan Ramasubramanian Krishnamoorthy Ramesh Ganesh Ramesh Nathawani Rangarajan Vijayaraghavan Ranjit Narasimhan Ravi Menon Ravi Shankar B Ravindra Gajulapalli Ravindra Nuguri Age Designation (in yrs.) 45 Practice Director - BFSI 50 44 47 45 56 57 50 48 45 General Manager Associate Vice President Associate Vice President Vice President Executive Vice President Educational Qualification MBA - Finance ICWA ME - Electrical Engg. BE - Computer Science MA MBA Remuneration (in Rs.) Date of Joining Experience in Yrs. 20 30 20 24 23 32 23 28 21 23 Previous Employment Designation held in previous employment General Manager Previous Employment held since Sep.03 Feb.08 Sep.90 Oct.2000 May.99 Nov.87 Aug.95 Jul.2000 Aug.04 Jun.2000

2,752,324 13.10.2008 2,798,089 07.07.2008 2,885,379 07.04.1997 3,172,031 01.03.2002 4,286,907 22.05.2009 6,555,446 15.04.1999 3,178,714 01.04.2005 4,888,552 05.07.2004 3,081,081 18.08.2008 2,887,014 04.02.2004

Birla Soft (India)

Thinksoft Global Services Delivery Manager Pvt Ltd The Tata Hydro-Electric Power Deputy Executive Engineer Supply Co. Ltd. Planet Asia Head-ADG Satyam Computer Services Ltd. Riviera Confectionery Pvt.Ltd. HCL Infosystems Ltd. Lister Technologies Pvt.Ltd. Lim, Ahmedabad Tektronx Engineering Limited Vice President Managing Director Associate Vice President President Associate Professor Program Manager

Sales Director -India BA Enterprise Vetrical Senior Vice President - HR MBA - HR & IR Associate Vice President Associate Vice President MBA, Phd. BE Elec. & Communication, PGD Software Technologies ME - Electrical Engineering BE - Electronics & Communication CA BE (Electrical Communication Engg.) CA

Ravindranath Lakshman Rao 100 Ravishankar Sethuraman 101 Rita Gupta 102 S Sivaguru 103 Saiseshan Srivatsan 104 Sameer Jain 105 Sandeep Bansal 106 Sandeep Jain 107 Sandip Gupta 108 Sanjay Mendiratta 109 Sanjeev Nikore 110 Santanu Mukherjee 111 Sateesh Tiptur 112 Saurav Adhikari

99

45 43 48 53 43 40 35 45 51 45 50 55 51 52

Practice Director - ISV Solutions Vice President Vice President Associate Vice President General Manager

2,671,799 17.03.2008 3,040,452 08.07.1999 3,257,674 01.07.1994 3,337,353 08.09.2004 2,512,471 07.02.2005 2,542,066 01.01.1999 2,803,179 04.08.2008 3,393,704 24.04.2008 5,878,274 01.10.2005 2,981,430 17.01.2008 11,844,404 01.10.2005 4,653,120 02.04.2008 3,647,325 22.01.2001 9,314,614 01.11.2002

20 21 23 30 17 18 11 23 28 20 28 33 28 30

Hexaware Technologies Ltd. DSQ Software Limited HCL Hewlett Packard Ltd. Global Automation India (Pvt.) Ltd. Ssi Technologies Ltd. HCL Infosystems Ltd. Larsen & Tubro HCL Comnet Systems & Services Ltd. Attest Testing Services Ltd. HCL Comnet Ltd. Genpact India Mphasis-BFI Ltd. HCL Infinet Ltd.

Project Director Project Manager Manager - Finance Vice President Senior Business Analyst Sales Manager Assistant General Manager Vice President Deputy Vice President COO Vice President Assistant General ManagerTechnical President

Oct.06 Apr.97 Nov.88 Jun.95 Jan.2000 Jul.92 Jan.07 Jul.87 Oct.98 Oct.03 Jul.92 Jun.06 Oct.99 Jan.2000

BMG Director - Large Deal MBA - Marketing Management Deputy General Manager PG-MBA Associate Vice President Deputy Chief Financial Officer Associate Vice President Senior Corporate Vice President Senior Vice President Campus Infrastructure Associate Vice President B.Tech (Electronics) CA PG - Master of Finance & Control MBA B.Tech Phd.

Tata Consultancy Services Ltd. Principal Consultant

113 Shashi Verma 114 Sheela Mohan 115 Shivkumar Krishnamurthy 116 Shridhar Ramanujam 117 Shushil Kumar Saxena 118 Sidhartha Chowdhury 119 Simson Ponnuduraisamy 120 Soami Narang 121 Sreelal Ramachandran 122 Sridhar Chandrasekar 123 Sridhara Rajan 124 Srinath Sriram 125 Srinivasan Govindan 126 Sriram Balasubramanian 127 Sriram Vaitheeswarankovil 128 Subhash Rastogi 129 Sundar Rajan

47 46 53 50 53 55 52 49 42 49 47 50 39 51 53 61 37

Senior Corporate Vice MBA President & PresidentCorporate Strategy Global Operations Director B.Tech - Mechanical Associate Vice President Vice President - Business Developmet (OEM) Associate Vice President General Manager Vice President Global Practice Director Vice President Deputy General Manager Associate Vice President Senior Principal Associate Vice President HR Director - CMHP Associate Vice President Corporate Vice President Head - EAS Academy Associate Vice President M.Tech - Computer Science B.Tech - Mechanical B.Tech (Mechanical), M.Tech MBA MBA - Finance MSc. - Maths MBA - Marketing Management BE- Computer Science MS - I.T. / Computer Science MSc - I.T. / Computer Science BSc - General MSW - Personnel, HR & IR BSc., PGD-Marketing MBA - Management Phd - Medicine PGD - Personnel, HR & IR

2,440,847 18.01.1995 2,970,999 06.12.1999 2,628,999 01.01.2004 2,789,080 25.07.2003 2,814,510 25.07.2003 2,920,380 08.08.2000 2,424,834 25.07.2003 4,521,007 24.04.2006 2,630,980 08.05.2008 4,167,460 03.11.2008 3,768,527 12.12.2005 2,482,384 17.11.2003 2,514,748 11.09.2006 2,866,653 18.02.2008 5,310,544 01.10.2001 2,383,337 01.06.2009 2,568,148 12.05.2003

24 24 29 27 23 32 28 25 18 26 25 29 17 27 32 26 14

Self Employed

Consultant

Aug.92 May.98 May.04 Nov.95 Apr.80 Jun.86 Oct.82 May.2000 Sep.2000 May.08 Jun.92 Apr.2000 Oct.05 Dec.05 Nov.88 Dec.05 May.03

Cadence Design Systems Ltd. Program Manager HCL America Inc. HCL Infosystems Ltd. Bharat Electronics Ltd. Ei&T Computers Ltd. HCL Infosystems Ltd. Satyam Computer Services Ltd. Saksoft Ltd Patni Computer Systems Ltd. Vice President Deputy General Manager Manager Manager - EDP General Manager Vice President Senior Vice PresidentDelivery & Quality Vice President

Tata Consultancy Services Ltd. Senior Consultant Bahwan Cybertek Isoft R&D Private Ltd. Dell International Ltd. Citicorp Oversease Software Ltd. Infosys Technologies Ltd. HCL E-Serve Ltd. Chief Executive Officer Deputy General Manager - HR Senior Tech Support Area Manager Centre Head Assocaite Vice President & Head ES Academy Service Delivery Leader Operation

28

ANNEXURE 4 TO THE DIRECTORS’ REPORT (Contd.) Information for Director’s Report U/S 217(2A) of the Companies Act, 1956
A. EMPLOYED FOR FULL FINANCIAL YEAR - 2009-10
Sr. Name No. 130 Sunita Gajwani 131 Suresh Sundaram 132 Swaminathan Nagarajan 133 Tirthankar Banerjee 134 Tom Thomas 135 Udai Saklani 136 Udayakumar Nalinasekaren 137 Uma Devi Siddavaram 138 Unni Krishnan 139 Vaidyanathan Kumar 140 Vasudevan Aravamudhan 141 Venkatanathan Aravamudan 142 Venkatesan Muthukumaraswami 143 Vijay Guntur 144 Vijay Mallya 145 Vikram Sarathy 146 Vikrant Dhawan 147 Vineet Nayar 148 Vineet Vij 149 Vinit Bahri 150 Vinodh Chelambathodi 151 Vittal Devarajan Age Designation (in yrs.) 47 Senior Vice President 43 45 48 46 45 50 49 57 53 51 43 52 42 46 48 42 48 43 45 44 41 Educational Qualification M.Com Remuneration (in Rs.) Date of Joining Experience in Yrs. 27 22 22 22 22 23 25 5 33 21 27 20 27 21 25 28 19 25 18 22 20 17 Previous Employment Designation held in previous employment Assistant Vice President Previous Employment held since Aug.97 July.88 Jul.02 Oct.2000 Apr.02 Jul.87 Jul.84 Oct.06 Apr.03 Feb.04 Dec.82 Jun.03 Jul.87 Jun.89 May.85 Jan.97 Jan.07 Jan.95 Jan.07 May.99 Feb.07 Feb.01

4,057,969 01.10.2005 3,316,205 01.05.1998 2,924,320 27.11.2003 3,400,201 03.09.2007 9,399,235 01.08.2005 2,571,984 08.12.1999 4,326,447 02.07.1984 2,517,192 16.10.2008 2,431,266 14.07.2004 3,215,546 27.09.2007 3,232,603 29.06.1996 2,405,367 13.03.2009 2,499,811 30.09.1998 4,140,140 14.07.1994 3,371,760 26.09.2001 3,017,975 03.02.2003 3,490,248 28.04.2008 45,436,349 01.08.2008 3,049,033 03.09.2007 2,519,452 25.07.2003 4,708,151 02.05.2007 2,463,075 31.03.2006

HCL Comnet Systems & Services Ltd.

Senior Vice President B.Tech - Mechanical Marketing Global Operations Director MBA General Manager Vice President Practice Director - MMS Executive Vice President General Manager Associate Vice President Associate Vice President Vice President Associate Vice President B.Tech - Electronics MBA - Marketing Management BA (Honours), PGDRM ME - Computer Science MA - Sociology BE - Mechanical, M.Tech - Indl. Engg. & Mgmt. B.Tech, MBA BE - Electronics

HCL Technologies America Inc. Account Manager India Software Group Sun Microsystems India Self Employed Principal Consultant Head - Software Sales Consultant

Tata Consultancy Services Ltd. Consultant Hewlett Packard Ltd. UST Global Rave Technologies India Pvt.Ltd. Paragon Asst Recovery HCL Hewlett Packard Ltd. Satyam Computer Services Ltd. Alstom HCL Hewlett Packard Ltd. State Bank of India Al Bank Alsaudi Glaxo Smith Kline Consumer Healthcare Ltd. HCL Comnet Systems & Services Ltd. American Express India Pvt. Ltd. Apollo Tyres Ltd. Aricent Technologies Ltd. Ramco System Ltd. Group Project Manager CEO Director Delivery Head Vice President - New Technologies Manager - R&D Assistant Vice President Area Manager Deputy Manager Associate Manager Department Manager General Manager - Legal Chief Executive Officer Service Delivery Leader(Head Comp.&Ind) Manager Assistant Vice President - HR Head - Corporate Marketing

BE - Electrical & Electronics Engg. Vice President -Operations ME - Electronics Senior Vice President Associate Vice President Associate Vice President Associate Vice President Chief Executive Officer & Whole-time Director Legal Director Vice President Vice President MSc. Comp.Science, MBA MBA MS - Finance LLB MBA LLB CA MBA - Personnel, HR & IR

Global Director - BET ERS MBA - Marketing Management

B. EMPLOYED FOR PART OF THE FINANCIAL YEAR - 2009-10
Sr. Name No. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 Abhijit Ganguly Abinsam Ambujakshan Ajay Nair Amitabha Sinha Amitava Sengupta Amruta Mohanty Anand Rajaganesan Anand Rajaganesan Anandaraman Viswanathan Anil Verma Anupam Chandra Arun Nirmala Arunachalam Venkataraman Asha Subramanian Ashish Puri Atul Gupta Badrinath Krishna Age Designation (in yrs.) 49 Operations Director - TSP 33 42 52 40 42 37 37 35 44 33 39 38 39 44 36 53 Group Project Manager Vice President Vice President Global Solutions Head - Retail Deputy General Manager Educational Qualification M.Tech -Communication Engineering BE Electronics & Instrumentation MBA MBA Remuneration (Rs.) Date of Joining Experience in Yrs. 25 11 13 28 16 12 11 12 13 22 12 7 16 17 6 15 31 Previous Employment Designation held in previous employment Senior Group Manager Senior Technology Architect Chief Information Officer Managing Consulting Partner Previous Employment held since Aug.95 Apr.08 Jul.07 Sep.06 Apr.94 Aug.98 N.A. Oct.09 Jan.04 Feb.2000 Jun.05 Feb.03 Aug.07 Sep.07 May.06 Mar.02 Apr.93

2,305,436 09.09.2002 266,386 14.06.2010 1,353,268 09.10.2009 2,626,214 24.03.2008 2,065,482 26.10.2009 967,256 10.04.2008 1,171,684 04.05.1998 1,598,847 01.02.2010 277,289 27.05.2010 2,238,171 17.09.2007 236,253 03.09.2007 458,656 14.07.2003 1,021,046 10.03.2010 1,240,525 30.12.2009 1,032,614 10.05.2007 203,719 01.10.2002 562,944 19.12.2005

Usha Communications Microsoft R&D Ltd. GE Capital Services India Limited Keane Worldzen

Maste of Computer Science & Engineering MCA - I.T. / Computer Science HR Director-Organizational MBA - Personnel, HR & IR Effectiveness Associate Vice President MBA - Personnel, HR & IR Technical Manager Associate Vice President Senior Manager Senior Project Manager BE. Electronics and Communication PGD - Marketing Management MBA - Finance B. Sc

Tata Consultancy Services Ltd. Senior Consultant / LOU Head Infosys Technologies Ltd. None Bharti Airtel Ltd Wipro Technologies Ltd. Xansa India Ltd. NIIT Technologies Ltd. Baehal Software Cerner Cranes Software IBM India Pvt.Ltd. Indus Creative Synergy Log-In Systems Ltd. Assistant Project Manager N.A Head Talent Management& OE Architect Vice President Senior Business Manager Project Leader Senior Program Manager Consultant Deputy General Manager Creative Consultant Whole Time Director

Global Operations Director MBA Operations Director General ManagerComverse Manager-Shared Services Client Director MA - Statistics MCA - I.T. / Computer Science BA - General MBA

29

ANNEXURE 4 TO THE DIRECTORS’ REPORT (Contd.) Information for Director’s Report U/S 217(2A) of the Companies Act, 1956
B. EMPLOYED FOR PART OF THE FINANCIAL YEAR - 2009-10
Sr. Name No. 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 Bala Chander D M Bhaskaran Radhakrishnan Bholanath Pal Bibhuti Das Bijay Dasgupta Dakshina Murthy Chaganti Debabrata Bhattacharyya Debasis Dash Deval Shah Durga Kancherla Ganesan Subramanian Gautam Sehgal Harbinder Bindra Hitesh Jain Indumathy Mayuranathan Jai Yeshwanth Shamraj Jaiveer Singh Chand Janardanan Ramachandran Jasmohan Mamak Kamna Ramashankar Prasad KGY Narayan Age Designation Educational (in Qualification yrs.) 47 General Manager - Internal CA, CS, ICWA Audit 53 Group Project Manager ICWA 56 55 30 56 52 42 43 41 56 44 44 39 34 42 36 46 48 34 Vice President - OEM MBA - Finance Operations General Manager - Quality MSc. - Electronics Manager-Finance & Account Associate Vice President B.Com - Finance MA, PGDM Remuneration (in Rs.) Date of Joining Experience in Yrs. 23 29 31 32 6 32 26 18 18 17 33 16 21 14 12 20 4 24 29 10 Previous Employment Designation held in previous employment Previous Employment held since Jan.95 Jul.03 Feb.98 Dec.86 Aug.03 Dec.78 Feb.94 Apr.09 Mar.2000 Mar.07 Feb.77 Nov.05 Jul.06 Mar.09 Sep.98 Feb.06 Apr.06 Jul.96 Mar.06 N.A.

1,241,874 03.01.2005 281,454 26.07.2007 2,067,503 16.11.2009 1,027,893 28.10.1997 244,846 27.01.2004 2,338,364 01.05.2003 434,313 03.05.2010 1,293,930 02.02.2010 2,415,230 03.12.2001 1,396,013 07.05.2008 1,081,714 27.02.2001 1,116,241 15.03.2010 2,572,332 04.01.2010 3,048,144 03.12.2009 224,096 25.07.2003 713,165 29.03.2010 407,174 22.09.2008 2,285,426 25.03.2010 587,141 01.10.2007 343,151 01.05.2000

Lovelock & Lewes - Chartered Senior Manager Accountants Intell Group As Manager Motorola Altos India Ltd. M/s Kaushal & Associates HCL Infosystems Ltd. Director - GSG Assistant General Manager Articled Clerk Associate Vice President

Global Operations Director B.Tech - Computer Science Global Operations Director MBA Global Operations Director BE.-Electronics, MSComputer Science Operations Director MBA - Finance Lead Specialist Associate Vice President Vice President & Practice Head - HRO Vice President Project Manager Associate Vice President Associate General Manager Senior Vice President Associate Vice President Associate General Manager Deputy General Manager-BU Practice Director Deputy General Manager Group Manager - Product B.Com CA MBA - Finance BE - Electronics Engineering BE- Computer Science B.Tech, PGD - Business Administration Post Graduation-MBA M.Tech - Aeronautical Engineering CA PGD - Marketing Management BTech - Mechanical Engineering, M.ScEngineering Mechanics PGD - Marketing Management MBA - I.T. / Computer Science MBA - Finance

Tata Consultancy Services Ltd. Principal Consultant CNSI India HPS Associate Vice President Project Director

Miracle Software Systems Ltd. Vice President Indian Bank Xerox India Ltd. Mphasis IBM Malaysia Broadline Computer Systems Ltd. Satyam Computer Services Ltd. RMSI Birlasoft Saksoft Ltd. None Manager Associate Director Director Leader MBPS - Asean Programmer Associate Vice Presedent Manager CEO Global Sales Director N.A.

38

56

1,315,391 02.06.2003

33

Sasken Communication Technologies Ltd. Wipro Technologies Ltd. Systems Adviser ABN Amro Bank Adaptec India Pvt. Ltd. The 5Th Medium Ltd. NIIT Technologies Ltd.

Vice President

May.2000

39 40 41 42 43 44 45

Krishna Sathyanarayanan Krishnan Muralidharan Lakyntina Lakshmanan Madhan Muruganantham Manav Sehgal Manickavasagam Ramalingam Manish Kumar

44 48 40 37 36 54 41

206,936 26.05.2010 256,910 06.10.2008 602,745 11.12.2006 1,696,910 23.07.2008 441,272 01.05.2008 1,909,479 01.08.2008 1,453,271 29.05.2008

24 21 15 15 18 27 17

Principal Consultant Professional Services Manager Assistant ManagerRelationship BIOS Manager Vice President Vice President

Oct.05 Oct.05 Jul.99 Feb.05 Sep.07 May.06 Jul.94

Engineering Manager-BIOS MCA - I.T. / Computer Science General Manager BE -Computer Science Associate Vice President Deputy General Manager MSc. MTech - Electronics & communication engineering BE- Computer Science

Tata Consultancy Services Ltd. Senior Consultant

46 47 48 49 50 51 52 53 54 55 56

Fazzullah Mohammed Salman Muhammad Haneef AR Nagabushan Chitagudigi Nandakumar Nachimuthu Nikhil Datar Pankaj Modi Payal Misra Porres Soosaimichael Pushpak Banerjee Rahul Singh

37 49 44 53 37 38 49 34 59 40 47

Contract Retainer Vice President

1,869,430 03.04.2009 1,771,625 10.11.2006 339,736 26.09.2001 319,054 15.06.2010 300,198 24.05.2010 714,726 02.11.2009 1,325,059 04.01.2010 850,770 15.02.2010 656,168 01.12.2000 290,376 15.11.2007 4,378,934 03.05.2010

7 25 20 28 14 16 26 14 36 17 24

Westpac-BT Financial Group Perot Systems Ltd.

Manager of Testing General Manager

Mar.03 Jun.03 Aug.90 Mar.06 Oct.08 Apr.09 Mar.98 Aug.07 Apr.97 Dec.02 Apr.08

MBA - Marketing Management Project Manager MCA - I.T. / Computer Science Global Operations Director BSc - Physics Senior Technical Specialist BE. Agricultural Engineering General Manager MBA - Information Systems Vice President MBA - Marketing Management General Manager - HR MBA - HR & IR Group Manager General Manager MBA - Marketing Management BE - Mechanical

Electronic Systems Punjab Ltd. Senior Engineer Wachovia Corporation Cosmosys Software Quinnox Consultants Satyam Computer Services Ltd. ICICI Prudential Metamor Global Infosys Technologies Ltd. TCS - e-Serve Limited Chief Architect/IT Project Lead (Vice President) Senior Architect Head - Global Bi Practice Vice President Assistant Vice President Manager Group Project Manager CEO & Managing Director

Corporate VP & President - MBA - Finance Business Services

30

ANNEXURE 4 TO THE DIRECTORS’ REPORT (Contd.) Information for Director’s Report U/S 217(2A) of the Companies Act, 1956
B. EMPLOYED FOR PART OF THE FINANCIAL YEAR - 2009-10
Sr. Name No. 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 Rajashree S C Rajesh Gupta Ramachandra Kerur Ramachandran Subramanyam Ranganathan Krishnan Rao Poduri Ravi Gorremuchu Ravi Ranganathan Ravishankar Chandrasekaran Ravitta Valia Ronald D'Mello Sandeep Raizada Sanesh Kumar Kariyadan Sanjay Kalra Sanjay Logabiraman Sanjay Sapra Sanjay Saroop Sashikant Mohanty Satish Chandrasekaran Satish Gore Seshadri Bhoovaraghan Siva Kumar Nuti Sridhar Kamath S Srinivas Sarva Srinivas Tumuluri Srinivasa Moorthy Satthenjeri Asthagi Subir Biswas Subrat Chakravarty Sujit Chakravarty Sukhamoy Hazra Sunil Kumar Suresh Chaudhary Suresh Kothandaraman Suresh Seetharamu Sushil Bansal Swaminath Ganesh Kettavarampalayam Tanmoy Roy Choudhury Tarun Gupta Thirumalai Srinivasan Uttama Mukherjee V Sriram Designation Age (in yrs.) 41 Deputy General Manager 50 58 42 41 41 41 46 44 44 46 44 36 42 39 45 39 37 43 57 37 41 39 43 40 50 40 42 32 41 51 44 34 45 46 45 40 37 55 43 42 Vice President - Taxation Program Director Vice President Global Practice Director Operations Director Manufacturing Associate General Manager Deputy General Manager Operations Director Vice President Associate Vice President Associate Vice President Technical Specialist Vice President Educational Qualification BE Electronics CA M.Tech - Electronics MBA BE - Electronics & Communication MBA - Business Administration ME Computer Engineering BE/BTech - Electronics MCA - I.T. / Computer Science MBA, CA CS BE - Electrical Engg MCA MBA - Finance Remuneration (in Rs.) Date of Joining Experience in Yrs. 16 24 33 19 20 19 17 21 19 21 23 22 12 20 18 22 14 13 22 35 16 20 18 21 13 25 16 17 10 12 30 18 10 21 22 13 19 16 12 21 19 Previous Employment Designation held in previous employment Assistant Manager VP Taxation Chief Executive Officer Senior Vice President Lead Architect Director Group Project Manager Manager General Manger Vice President Legal Head Program Manager Software Engineer General Manager - Business Operations Senior Manager Senior Software Engineer Previous Employment held since Aug.95 May.09 Feb.02 Feb.99 Jul.2000 May.08 Aug.07 Mar.95 Jul.08 Nov.07 Jul.05 Feb.03 Jul.99 Nov.07 Nov.03 Feb.88 Oct.09 Jul.07 Aug.07 Jun.03 Dec.2000 Jun.02 Mar.92 Sep.09 Apr.04 May.2000 Oct.05 Mar.09 Apr.09 Sep.05 Jan.94 May.06 May.07 Sep.2000 Feb.88 Oct.05 Mar.06 Jul.94 Jun.98 Mar.05 Jun.06

1,169,776 26.09.2001 1,452,302 17.03.2010 1,779,531 17.06.2002 1,298,688 15.02.2010 1,685,709 24.06.2002 430,021 17.05.2010 223,793 31.05.2010 1,280,155 27.04.1995 1,078,462 08.02.2010 2,173,280 01.02.2010 224,534 07.06.2010 929,725 19.12.2005 518,777 16.02.2000 554,686 07.06.2010 1,202,499 04.01.2010 1,636,351 16.02.1993 1,238,179 04.03.2010 721,010 02.06.2008 4,312,818 14.01.2010 1,208,036 18.02.2010 806,618 11.03.2010 2,292,150 16.04.2009 234,416 01.03.2004 529,280 20.05.2010 418,554 10.07.2006 2,137,959 17.03.2003 599,000 27.09.2006 3,264,976 29.10.2009 280,094 03.06.2010 1,025,798 04.01.2007 2,332,463 01.08.1996 248,165 22.10.2007 260,728 27.05.2010 855,973 16.09.2002 763,235 05.04.2010 1,068,394 22.09.2006 303,459 10.12.2007 611,527 04.04.2002 621,343 25.07.2003 2,168,659 18.01.2007 317,873 26.05.2010

Electronic Calculations & Company Ltd. JSL Limited Nuntius Systems Ltd. Keane India Ltd. E2E Technologies Pvt. Ltd. CSC Infosys Technologies Ltd. Shuttle Technologies Ltd. Covansys India TCS e-Serve Limited Syntel Limited Hewlett Packard Global Soft Ltd. Banyan Networks IBM Daksh Business Process Services Pvt. Ltd. United Healthcare DCM Data Products

Global Operations Director MBA - Business Administration Operations Director B.Tech - Computer Science Practice Director - Data MBBS Analytic & CDM Associate General BTech - Mechanical Manager Engineering Senior Vice PresidentMBA - Business Head of Retail Administration Consultant PGD - Management Deputy General Manager Vice President BE- Computer Science MSc.

Tata Consultancy Services Ltd. Associate Vice President KPMG Advisory Services Pvt. Ltd. Target Corp. India Pvt. Ltd. Satyam Computer Services Ltd. Infosys Technologies Ltd. Satyam Computer Services Ltd. Canbank Computers Sumadhura Geomatica Infotech Enterprises Banyan Networks Adea Solutions Hewitt Associates IBM Wyse Technology Tata Unisys Tech Mahindra Ltd. Aricent Technologies Ltd. Manager - ERP Advisory Vice President Senior President Delivery Manager Vice President Senior Programmer Chief Information Officer Program Manager Vice President-Special Projects Practice Lead Group Manager Project Manager Project Manager Group Manager Senior Technical Arichitect Senior Manager - HR

Senior Business Specialist PGD - Business Administration Vice President MS - Engineering, PhD. Group Project Manager Vertical Practice Head System Engg. Deputy General Manager Associate Vice President Technical Manager Associate General Manager Associate Vice President Senior Project Manager Group Manager Associate General Manager Associate Vice President General Manager India Head - Captive Center Business Deputy General Manager Group Project Manager MBA - Marketing Management MSc - Electronics MBA - Marketing Management MBA - Personnel, HR & IR BE/Computer Science and Engineering BE/Computer Science and Engineering M.Tech (Mgt. & Systems) PGD - Marketing Management MBA - HR/Industrial relations CS M.Tech MSc. MBA - Marketing Management BE - Electrical

Satyam Computer Services Consultant Ltd. Tata Consultancy Services Ltd. Senior Consultant Cognizant Technologies Ltd. Microsoft Corporation India Pvt.Ltd Tata Infotech Limited HCL Infosystems Ltd. Patni Computers Ltd. Hexaware Technologies Ltd. Consultant Inside Sales Manager Associate Consultant Senior Consultant Senior Manager Associate Vice President-HRHead-Location

MSc - I.T. / Computer Science Practice Director-Business BE - Electrical Intelligence Associate Vice President MSW - HR & IR

31

ANNEXURE 4 TO THE DIRECTORS’ REPORT (Contd.) Information for Director’s Report U/S 217(2A) of the Companies Act, 1956
B. EMPLOYED FOR PART OF THE FINANCIAL YEAR - 2009-10
Sr. Name No. 98 V.K. Mahna Age Designation (in yrs.) 55 Senior Vice PresidentGlobal S. C. & Administration 33 Senior Technical Manager 56 49 34 42 Vice President - Campus Infrastructure Associate Vice President Senior Technical Manager General Manager Educational Qualification Diploma in Electronics Engineering PGD - Marketing Management CA M.Tech - Computer Science BE - Mechanical MBA - Marketing Management Remuneration (in Rs.) Date of Joining Experience in Yrs. 27 Previous Employment Designation held in previous employment Senior Vice President Previous Employment held since Feb.95

936,000 01.04.2010

HCL Comnet Ltd.

99

Varinder Singh

229,466 27.05.2010 1,511,059 05.03.2007 1,366,113 17.03.2010 243,572 03.06.2010 583,743 02.11.2000

11 31 25 13 21

Conexant/Ikanos TVS Electronics Ltd. Target Corporation Sasken Communications Maars Software International Ltd.

Principle Software Architect Vice President Director Lead Engineer Business Development Manager

Apr.05 Jun.2000 May.06 Nov.05 Nov.98

100 Vasudevan Ramanujam 101 Venkatesh Patil 102 Vijay Wilson 103 Vijaykumar Ganapathe

Notes: 1. 2. 3. None of the employees listed above is a relative of any director of the Company. The nature of employment is contractual in all the above cases. None of the employee listed above owns 2% or more of the paid-up equity share capital of the Company.

32

CORPORATE GOVERNANCE REPORT 2009-10
Corporate Governance is about commitment to values and ethical business conduct. It is a set of laws, regulations, processes and customs affecting the way a company is directed, administrated, controlled or managed. This includes its corporate and other structures, culture, policies and the manner in which it deals with the various stakeholders. Corporate Governance is based on the principles of integrity, fairness, equity, transparency, accountability and commitment to values. Good governance practices stem from the culture and mindset of the organization. As stakeholders across the globe evince keen interest in the practices and performance of companies, Corporate Governance has emerged on the centre stage. Some of the important best practices of Corporate Governance framework are timely and accurate disclosure of information regarding the financial situation, performance, ownership and governance of the Company. Our Company is in compliance with the requirements of the revised guidelines on Corporate Governance stipulated under Clause 49 of the Listing Agreements with the Stock Exchanges. The Company believes that good Corporate Governance is critical to enhance and retain investors’ trust. The Board of Directors exercises its fiduciary duties in the widest sense of the term. The Company always endeavors to enhance long term shareholder value and respect minority rights in all its business decisions. Our disclosures always seek to attain the best practices in Corporate Governance. Our actions are governed by our values and principles, which are reinforced at all levels within the Company. We are committed to doing things the right way which means taking business decisions and acting in a way that is ethical and is in the compliance with the applicable legal requirements. We acknowledge our individual and collective responsibilities to manage our business activities with integrity. Philosophy on Code of Governance Our Corporate Governance philosophy is based on the following principals: • Satisfy the spirit of the law and not just the letter of the law. Corporate Governance standards should go beyond the law. Be transparent and maintain a high degree of disclosure levels. When in doubt, disclose it. Make a clear distinction between personal convenience and corporate resources. Communicate externally, in a truthful manner, about how the Company is run internally. Have a simple and transparent corporate structure driven solely by business needs. Comply with the laws in all the countries in which we operate. Management is the trustee of the shareholders’ capital and not the owner. In addition to complying with the statutory requirements, effective governance systems and practices towards improving transparency, disclosures, internal control and promotion of ethics at work place have been institutionalized. The Company recognizes that good governance is a continuing exercise and reiterates its commitment to pursue highest standards of Corporate Governance in the overall interest of all its stakeholders. Role of various entities Board of Directors (“Board”) – The primary role of the Board is that of trusteeship to protect and enhance shareholders value through strategic supervision of the Company and its subsidiaries. The Board plays a critical role in overseeing how the management serves the short and long term interests of shareholders and other stakeholders. This is reflected in our governance practices, under which we strive to maintain an active, informed and independent Board. The Board is entrusted with the ultimate responsibility of the management, general affairs, direction and performance of the Company and has been vested with the requisite powers, authorities and duties. Board committees – The Board committees play a crucial role in the governance structure of the Company and are being set out to deal with specific areas /activities which concern the Company and need a closer review. The Board committees are set up under the formal approval of the board, to carry out the clearly defined role which is considered to be performed by members of the Board, as a part of good corporate governance. The Board supervises the execution of its responsibilities by the committee and is responsible for their action. Executive Directors- The Executive Directors contribute to the strategic management of the Company’s businesses within Board approved directions and framework. As directors are accountable to the Board for business/ corporate functions, they assume overall responsibility for strategic management, including governance processes and top management effectiveness. Independent Directors- Independent Directors play a critical role in imparting balance to the Board processes by bringing independent judgements on issues of strategy, performance, resources, standards of the Company, conduct etc. In accordance with Clause 49 of the Listing Agreement with the Stock Exchanges in India, the report containing the details of governance systems and processes at HCL Technologies Limited is as under: Board Size and Composition The Board of Directors is at the core of our Corporate Governance practices and oversees how the management serves and protects the long term interests of all our stakeholders. We believe that an active, well informed and independent Board is necessary to ensure highest standards of Corporate Governance. The Board of Directors (“Board”) of the Company has an optimum combination of Executive and Independent Non-Executive Directors who have an in-depth knowledge of business, in addition to the expertise in their areas of specialization. The Board provides leadership, strategic guidance and an

• • • • • •

Corporate Governance is an integral part of the philosophy of the Company in its pursuit of excellence, growth and value creation.

33

independent view to the Company’s management. During the year, a majority of the Board comprised of independent Directors. As on June 30, 2010, the Board consisted of eight members, of which, two are executive and the other six are Independent Non-Executive Directors. Out of two Executive Directors, one is Promoter Director who is also the Managing Director of the Company and is designated as Chairman and

Chief Strategy Officer of the Company and the other is Chief Executive Officer (“CEO”) of the Company who is designated as CEO and Whole-time Director of the Company. The NonExecutive Directors bring an external and wider perspective in Board deliberations and decisions. The size and composition of the Board conform to the requirements of Clause 49 of the Listing Agreement with the Stock Exchanges.

Composition of the Board and the Directorships held as on June 30, 2010 Name of Director Position in the Company Directorships Directorships Committee in other Indian in all other memberships public limited companies in other companies (including overseas companies* companies) 1 3 1 1 5 4 12 2 5 8 3 15 6 1 10 Chairmanships in committees of other companies in which they are members# 4 5 -

Mr. Shiv Nadar Mr. Vineet Nayar Mr. T. S. R. Subramanian Mr. Subroto Bhattacharya Mr. Ajai Chowdhry Ms. Robin Abrams Mr. Amal Ganguli Mr. P. C. Sen

Chairman & Chief Strategy Officer Chief Executive Officer and Whole-time Director Independent Non Executive Director Independent Non Executive Director Independent Non Executive Director Independent Non Executive Director Independent Non Executive Director Independent Non Executive Director

Note: None of the Directors of the Company has any relationship with other Directors of the Company. *represents membership of Audit Committee and Shareholders’ Grievance Committee of Indian Public Limited Companies. #represents Chairmanship of Audit Committee and Shareholders’ Grievance Committee of Indian Public Limited Companies. Brief Profile of the Board Members Shiv Nadar Mr. Shiv Nadar, aged 65 years, is an Electrical Engineer from the PSG College in Coimbatore. Mr. Shiv Nadar established HCL as a startup in 1976. Acknowledged as a visionary by the IT industry and his peers, Shiv Nadar has often made daring forays based on his conviction of the future. Albeit a more recent entrant in the software services space, HCL is already among top Indian IT software majors and a force to reckon with for global technology giants. Shiv Nadar has been conferred the “Padma Bhushan Award” - the third highest civilian honor conferred by the President of India - in January 2008, in recognition of not just his contribution to trade & industry in India but also his deep commitment to public good. In February 2009, Forbes Magazine featured him in its list of 48 Heroes of Philanthropy in the Asia Pacific region. In September 2009, the UK Trade & Investment India presented Shiv Nadar the 2009 Business Person of the Year Award in acknowledgement of HCL’s pioneering investment in the UK. In November 2009, he was conferred in the CNBC Asia Business Leader Award 2009 for Corporate Social Responsibility and the Asia Viewers’ Choice Award; as well as the CNBC’s ‘The India Business Leader Award’ for 2009. Determined to give back to the society that nurtured him, Shiv Nadar has been quietly supporting many critical social causes through the Shiv Nadar Foundation. The Foundation is committed to provide the means to empower individuals to bridge the socio-economic divide and to contribute to the creation of a more equitable, meritocracy based society, and aims to achieve this primarily through outstanding educational institutions of higher learning. The Foundation has established the not-for-profit SSN College of Engineering in Chennai, India’s top ten private engineering college. Shiv Nadar is also running “VidyaGyan” public school in Uttar Pradesh that provides free, world class education to rural toppers from economically disadvantaged backgrounds. Concerned with the public health issues in India, Shiv Nadar is involved with the Public Health Foundation of India (PHFI), working to establish standards in public health education and to create a network of innovative world class India relevant institutes of public health. He is a Global Charter Member of The Indus Entrepreneurs (TiE), which works to promote entrepreneurs and entrepreneurship globally. He also supports initiatives for the girl child and the empowerment of women. Nature of expertise in specific functional area- Mr. Shiv Nadar has an extensive experience and expertise in the Information Technology sector coupled with strategic planning and management experience. Mr. Shiv Nadar is a member of Shareholders’ Committee and Employees Stock Option Allotment Committee of the Company. He is also the Chairman of the Nominations Committee of the

34

Company. As on June 30, 2010, he is holding 184 Equity Shares of Rs. 2/- each fully paid-up in his own name. Mr. Vineet Nayar Mr. Vineet Nayar, aged 48 years, has a Bachelor’s degree in Technology and a Masters degree in Business Administration. Mr. Nayar started his career with HCL group in 1985. After spending about seven years of his career as engineer, product manager, sales and marketing head at HCL, he played a key role in enabling HCL to enter into the business for providing IT infrastructure and networking services and today HCL is highly placed in Remote Infrastructure Management space. He became President of HCL Technologies in April 2005 and Chief Executive Officer in October 2007. In August 2008, he was designated as CEO and Whole-time Director of the Company. Mr. Vineet Nayar was instrumental in instituting several radical transformational programs across the organization. His mantra of “Employees First” and a strong belief in value-based leadership has been recognized globally as an example of “Organisational Innovation”. The Harvard Business School has written a case study on his transformation at HCL, based on his innovation and radical leadership. He is one of the founding members of the Asia Gender Parity Group at WEF and has also established a non-profit organization called SAMPARK in 2004 which has a vision of “creating a million smiles”. The primary focus of SAMPARK is to create smiles through improving the quality, infrastructure and opportunity for education to the underprivileged. With his continued commitment to promoting eco-sustainability, Vineet is also an active member of India Council for Sustainable Development (ICSD) steering committee and one of the CEO’s to endorse the Climate Policy Recommendations to G8 Leaders by World Economic Forum. Nature of expertise in functional area – Mr. Vineet Nayar has an expertise in business management and administration, and in information technologies (IT) sector. Mr. Vineet Nayar is a member of the Employees Stock Option Allotment Committee and Nominations Committee of the Company. As on June 30, 2010, his shareholding in the Company was 10,00,000 Equity Shares of Rs. 2/- each fully paid-up which are held in the name of family trust. Ms. Robin Abrams Ms. Robin Abrams, aged 59 years holds both a Bachelor of Arts and a Juris Doctor degree from the University of Nebraska. Ms. Robin Abrams was the interim CEO at ZiLOG. She had been the President of Palm Computing and Senior Vice President at 3Com Corporation. Ms. Abrams was formerly the President and CEO at VeriFone. Before joining VeriFone in 1997, Abrams held a variety of senior management positions with Apple Computers. As Vice President and General Manager of the Americas, she oversaw sales and channel management for U.S., Canada and Latin America. Prior to that, she was the Vice President and General Manager of Apple Asia, where she was responsible for sales and marketing in the region. Ms. Abrams spent eight years with Unisys in several seniorlevel positions. Her responsibilities included managing the delivery of business solutions focused on banking, airlines,

government and networking. A portion of her tenure at Unisys included a five-year stint in Asia Pacific. The first twelve years of her career were in various management positions at Wells Fargo Bank (formerly known as Norwest Bank). Ms. Abrams has served several U.S. public company boards including ZiLOG and BEA Systems (until it was acquired by Oracle) and currently serving Sierra Wireless and Openwave Systems. Ms. Abrams also serves on the Anita Borg Institute Board and several academic advisory committees. Nature of expertise in specific functional area – Ms. Robin Abrams has nearly 36 years of experience in computing and computing services, strategic planning and management. Ms. Robin Abrams is the Chairperson of the Compensation Committee and member of the Audit Committee and Risk Management Committee of the Board of Directors of the Company. As on June 30, 2010, her shareholding in the Company was 1,37,000 Equity Shares of Rs. 2/- each fully paid-up in her own name. Mr. T. S. R. Subramanian Mr. T. S. R. Subramanian, aged 71 years, is an Ex-Cabinet Secretary to the Government of India. He obtained his first degree in Mathematics at St. Xavier’s College, Kolkata and thereafter his Master’s Degree at Calcutta University. He also studied at Imperial College, London where he obtained his diploma and has a Master’s Degree in Public Administration from Harvard University, specializing in economics. Mr. T. S. R. Subramanian joined the Indian Administrative Service in 1961 and during his career with the Service he held various positions; he rose to the highest post in Indian Administration, that of Cabinet Secretary. As Cabinet Secretary to the Government of India, Mr. Subramanian took a number of initiatives to modernize and develop the Infrastructure Sector in India, especially in the Power, Telecom and Surface Transport Sectors. Nature of expertise in functional area – Mr. T. S. R. Subramanian has expertise in business administration, and in modernization & development of infrastructure sector. Mr. T. S. R. Subramanian is the Chairman of the Audit Committee, Risk Management Committee and the Shareholders’ Committee of the Company. He is also a member of the Employees Stock Option Allotment Committee and Nominations Committee of the Company. As on June 30, 2010, his shareholding in the Company was 4,600 Equity Shares of Rs.2/- each fully paid-up in his own name. Mr. Ajai Chowdhry Mr. Ajai Chowdhry, aged 59 years, has a bachelor’s degree in electronics and communication engineering, and has attended the Executive Program at the School of Business Administration at the University of Michigan in the US. Mr. Ajai Chowdhry is the Chairman & CEO of HCL Infosystems Ltd. He is also responsible for the significant international growth of HCL Infosystems Ltd. and brings with him substantial experience of the South East Asian markets including Malaysia, Thailand, Hong Kong, Indonesia, People’s Republic of China and Singapore. He was also part of the IT Task Force set up by the Prime Minister of India, to give shape to India’s IT strategy.

35

Nature of expertise in functional area – Mr. Ajai Chowdhry has an expertise in business management and administration, and in information technologies sector. Mr. Ajai Chowdhry is a member of the Shareholders’ Committee of the Company. As on June 30, 2010, his shareholding in the Company was 19,420 Equity Shares of Rs.2/- each fully paidup in his own name. Mr. Subroto Bhattacharya Mr. Subroto Bhattacharya, aged 69 years, is a Chartered Accountant. He spent his early career with DCM Limited where he rose to the position of a Director on its board. In the late eighties, he joined the HCL Group and subsequently joined the Board of the flagship company HCL Limited. Nature of expertise in specific functional area: Mr. Bhattacharya has an experience of over 34 years with specialization in Finance and Management Consultancy. He has a vast experience in financial management, accounts and audit. Mr. Subroto Bhattacharya is a member of the Audit Committee, Shareholders’ Committee, Employee Stock Options Allotment Committee and Risk Management Committee of the Company. As on June 30, 2010, his shareholding in the Company was nil. Mr. Amal Ganguli Mr. Amal Ganguli, aged 70 years, is a Chartered Accountant. He was earlier associated with Price Waterhouse Coopers, India as its Senior Partner. In a distinguished career spanning nearly four decades, Mr. Ganguli was involved with the India practice of Price Waterhouse Coopers and has an authority on matters related to audit, taxation, mergers and acquisitions and corporate restructuring.

Nature of expertise in functional area- Mr. Amal Ganguli has expertise in areas relating to financial reporting, audit, taxation, mergers and acquisitions and corporate restructuring. Mr. Amal Ganguli is a member of the Audit Committee and Risk Management Committee of the Company. As on June 30, 2010, his shareholding in the Company was nil. Mr. P. C. Sen Mr. P. C. Sen, aged 66 years, is a graduate of St. Stephens College, Delhi and a post graduation in M.A. (History) and Diploma in Social Anthropology from King’s College, Cambridge U.K. and M.Sc. (Economics) from University of Swansea, U.K. He joined the Indian Administrative Service in Madhya Pradesh Cadre in 1967. He has held a variety of assignments both with the Government of Madhya Pradesh and the Government of India. He was the Director of Archaeology and Museums, M.P., Managing Director of M.P. State Tourism Corporation, Principal Secretary of Housing and Environment, Principal Secretary of Commerce and Industry and IT in the Government of M.P., Director General of Civil Aviation, Chairman and Managing Director of Indian Airlines and Chairman of Air India. He retired as Secretary General, National Human Rights Commission in April 2003. He held the position of Director of India International Centre from May 2003. Mr. P. C. Sen was conferred the `National Citizen’s Award’ presented by the Prime Minister of India, the `Shiromani Award’ presented by the Speaker of the Lok Sabha and the `Wings of History Award’ for his tenure in Indian Airlines. Nature of expertise in specific functional area: Mr. P. C. Sen has an expertise in business management and administration. Mr. P. C. Sen is a member of the Compensation Committee of the Company. As on June 30, 2010, his shareholding in the Company was nil.

The names of the other companies/ entities in which the current directors are interested being a director/committee member(s) as on June 30, 2010 are as under: 1. Mr. Shiv Nadar Name of the Company/ Entity in which interested HCL Corporation Limited Nature of Interest (Directorships/ Committee Memberships) • • • • • • • Director Member of Audit Committee Member of Selection Committee Member of Asset Liability Management Committee Member of Risk Management Committee Member of Nominations Committee Chairman of Treasury Committee

S. No. 1.

2. 3. 4. 5. 6. 7. 8. 9.

Indian School of Business HCL America Inc. Guddu Investments (Chennai) Pvt. Limited Vama Sundari Investments (Chennai) Pvt. Limited Julian Investments (Chennai) Pvt. Limited Blueberry Investments (Chennai) Pvt. Limited SKN Investments (Chennai) Pvt. Limited Slocum Investments (Pondi) Pvt. Limited

• Director • Director • Director • Director • Director • Director • Director • Director

36

2.

Mr. T. S. R. Subramanian Name of the Company/ Entity in which interested Micronutrient Initiative India SKOL Breweries Limited • Director Nature of Interest (Directorships/ Committee Memberships) • Chairman, Board of Trustees

S. No. 1. 2. 3.

Mr. Subroto Bhattacharya Name of the Company/ Entity in which interested HCL Corporation Limited Nature of Interest (Directorships/ Committee Memberships) • • • • • • • • • Director Chairman of Audit Committee Member of Asset Liability Management Committee Member of Treasury Committee Member of Risk Management Committee

S. No. 1.

2.

HCL Infosystems Limited

Director Member of Accounts & Audit Committee Member of Shareholders’/ Investor Grievances Committee Member of Employees Compensation and Employees Satisfaction Committee • Member of Committee of Directors (Share Allotment) • Member of Committee of Directors (New Business) • • • • • • Director Chairman of Audit Committee Chairman of Compensation/ Remuneration Committee Member of Share Allotment Committee Member of Debenture Allotment Committee Member of Borrowing Committee

3.

NIIT Limited

4.

NIIT Technologies Limited

• Director • Chairman of Audit Committee • Member of Compensation/ Remuneration Committee • Director • Chairman of Accounts and Audit Committee

5.

HCL Infinet Limited (formerly known as Microcomp Ltd.)

4.

Mr. Ajai Chowdhry S. No. 1. 2. Name of the Company/ Entity in which interested Appollo Trading and Finance Pvt. Ltd. HCL Infosystems Limited Nature of Interest (Directorships/ Committee Memberships) • Director • Chairman & Whole-time Director • Member of Employees Compensation and Employees Satisfaction Committee • Member of Committee of Directors (Share Allotment) • Member of Committee of Directors (Securities) • Chairman of Committee of Directors (Operations) • Chairman of Committee of Directors (Customer Satisfaction) • Director • Member of Accounts & Audit Committee • Director • Director • Director

3. 4. 5. 6. 7.

HCL Infinet Limited (formerly known as Microcomp Ltd.) HCL Security Limited RMA Software Park Pvt. Ltd. HCL Infocom Limited

BFL Investments and Financials Consultants Pvt. Ltd. • Director

37

5.

Ms. Robin Abrams Name of the Company/ Entity in which interested HCL Bermuda Limited Sierra Wireless Openwave Systems Nature of Interest (Directorships/ Committee Memberships) • Director • Director • Director • Member of Audit Committee

S. No. 1. 2. 3.

6.

Mr. Amal Ganguli S. No. 1. 2. Name of the Company/ Entity in which interested Hughes Communications India Ltd. Aricent Technologies (Holdings) Ltd. Nature of Interest (Directorships/ Committee Memberships) • Director • Chairman of Audit Committee • • • • Director Chairman of Audit Committee Member of Remuneration Committee Director

3. 4.

ML Infomap Private Limited Tube Investments of India Limited

• Director • Member of Audit Committee • Member of Remuneration Committee • Director • Chairman of Audit Committee • Member of Remuneration Committee • • • • • • • • • Director Chairman of Audit Committee Director Member of Audit Committee Director Director Member of Audit Committee Director Chairman of Audit Committee

5.

New Delhi Television Limited

6. 7. 8. 9. 10. 11. 12. 13. 14. 15.

Tata Communications Limited Century Textiles and Industries Ltd. AVTEC Limited ICRA Limited Maruti Suzuki India Limited AIG Trustees Company (India) Pvt. Ltd. Ascendas Property Fund Trustees Ltd. Aptuit Laurus Private Limited Tata Teleservices (Maharashtra) Ltd. Triveni Engineering and Industries Ltd.

• Director • Member of Audit Committee • Director • Member of Investment Committee • Director • Director • Director • Member of Audit Committee

7. Mr. Vineet Nayar— As on June 30, 2010, Mr. Vineet Nayar does not hold directorship in any other Company. 8. Mr. P. C. Sen— As on June 30, 2010, Mr. P. C. Sen does not hold directorship in any other Company. Independent Directors As on June 30, 2010, out of eight directors on Board of the Company, six directors are independent non-executive directors. According to Clause 49 of the Listing Agreement with the Indian Stock Exchanges, an Independent Director means a non executive director of the Company who: a. apart from receiving director’s remuneration, does not have any material pecuniary relationships or transactions with the company, its promoters, its directors, its senior management or its holding company, its subsidiaries and associates which may affect independence of the director; b. is not related to promoters or persons occupying management positions at the board level or at one level below the board; has not been an executive of the company in the immediately preceding three financial years; is not a partner or an executive or was not partner or an executive during the preceding three years, of any of the following: i. the statutory audit firm or the internal audit firm that is associated with the company, and ii. the legal firm(s) and consulting firm(s) that have a material association with the company.

c. d.

38

e.

is not a material supplier, service provider or customer or a lessor or lessee of the company, which may affect independence of the director; is not a substantial shareholder of the company i.e. owning two percent or more of the block of voting shares. is not less than 21 years of age.

• •

f. g.

Evaluating the overall effectiveness of the Board and its Committees. To attend the Board, Committee and shareholders meetings.

The Company has adopted the above mentioned definition of Independent Director as mentioned under clause 49 of the listing agreement and all the independent directors of the Company have certified their independent status to the Board as on June 30, 2010. The tenure of Independent Directors The tenure of independent directors on the Board of the Company shall be 9 years. For the current independent directors on Board, the period of 9 years shall be w.e.f. July 1, 2008 and for new appointments, the said term shall be from the date of the appointment. Retirement Policy of the Board of Directors The Board has formulated a retirement policy pursuant to which there shall be an age limit of 75 years for all the Directors who shall serve on the Board of the Company. Succession Planning Succession planning for certain key positions in the Company viz. Chief Executive Officer (CEO), Chief Operating Officer (COO), Chief Financial Officer (CFO) is part of the charter of the Nominations Committee of the Company. The Committee shall identify, screen and review candidates, inside or outside the Company and provide its recommendations to the Board. Memberships on other Boards Executive Directors are also allowed to serve on the Board/ Committee of Corporate(s) or Government bodies whose interest are germane to the future of software business, or on the Board of key economic institutions of the nation or whose primary objective is benefiting society. Independent Directors are expected not to serve on the Board/ Committees of competing companies. Other than this, there is no limitation on the Directorships /Committee memberships except those imposed by law and good corporate governance. Directors’ Responsibilities (a) The principal responsibility of the Board members is to oversee the management of the Company and in doing so, serve the best interests of the Company and its stakeholders. This responsibility shall include: • • • Reviewing and approving fundamental operating, financial and other corporate plans, strategies and objectives. Evaluate whether the corporate resources are being used only for appropriate business purposes. Establishing a corporate environment that promotes timely and effective disclosure (including robust and appropriate controls, procedures and incentives), fiscal responsibility, high ethical standards and compliance with all applicable laws and regulations. Evaluating the performance of the Company and its senior executives and taking appropriate action, including removal, where warranted.

(b) Exercise business judgment: In discharging their fiduciary duties of care and loyalty, the directors are expected to exercise their business judgment to act in what they reasonably believe to be in the best interests of the Company and its stakeholders. (c) Understand the Company and its business: The directors have an obligation to remain informed about the Company and its business, including the principal operational and financial objectives, strategies and plans of the Company, relative standing of the business segments within the Company and vis-a-vis the competitors of the Company, factors that determine the Company’s success, results of operations and financial condition of the Company and the significant subsidiaries and business segments. (d) To establish effective systems: The directors are responsible for determining that effective systems are in place for periodic and timely reporting to the Board on important matters concerning the Company including the following : • Current business and financial performance, degree of achievement of approved objectives and the need to address forward-planning issues. Compliance programs to assure the company’s compliance with laws and corporate polices. Material litigation and governmental and regulatory matters.

• •

Board/ Committee meetings functioning and procedure The Board of Directors is the apex body constituted by the shareholders for overseeing the overall functioning of the Company. The Board provides and evaluates the strategic directions of the Company, management policies and their effectiveness and ensures that the long term interests of the shareholders are being served. The probable dates of the board meetings for the forthcoming year are decided in advance and published as part of the Annual Report. The Board meets at least once in a quarter to review the quarterly results and other items of the agenda. Whenever necessary, additional meetings are held. In case of business exigencies or urgency of matters, resolutions are passed by circulations. The meetings are generally held at the Technology HUB of the Company at Noida. Each director is expected to attend the Board meetings. The Company effectively uses teleconferencing facility to enable the participation of Directors who could not attend the same due to some urgency. All divisions/ departments of the Company are advised to schedule their work plans in advance, particularly with regard to matters requiring discussions/ approval/ decision of the Board/ Committee meetings. All such matters are communicated to the Company Secretary in advance so that the same could be included in the Agenda for the Board/ Committee meetings. The Board is given presentations covering finance, sales, marketing, major business segments and operations of the Company, global

•

39

business environment including business opportunities, business strategy and the risk management practices before taking on record the financial results of the Company. The directors are provided free access to officers and employees of the Company. Management is encouraged to invite the Company personnel to any Board meeting at which their presence and expertise would help the Board to have a full understanding of matters being considered. The information regularly provided to the Board includes: • • • Annual operating plans and budgets including capital budgets and any updates. Quarterly results of the Company and its operating divisions or business segments. Minutes of meetings of Audit Committee, Compensation Committee, Risk Management Committee and Shareholders Committee of the Board. The information on recruitment and remuneration of senior officers just below the Board level, including appointment or removal of Chief Financial Officer and the Company Secretary. Show cause, demand, prosecution notices and penalty notices which are materially important. Fatal or serious accidents, dangerous occurrences, any material effluent or pollution problems. Any material default in the financial obligations to and by the Company, or substantial non-payment for goods sold / services provided by the Company. Any issue, which involves possible public or product liability claims of substantial nature, including any judgment or order which, may have passed strictures on the conduct of the Company or taken an adverse view regarding another enterprise that can have negative implications on the Company. Details of any joint venture or collaboration agreement. Transactions that involve substantial payment towards goodwill, brand equity, or intellectual property. Any significant development in Human Resources / Industrial Relations front. Sale of material nature of investments, subsidiaries, assets, which is not in normal course of business. Quarterly details of foreign exchange exposures and the steps taken by the management to limit the risks of adverse exchange rate movement, if material. Non-compliance of any regulatory, statutory nature or listing requirements and shareholders service such as nonpayment of dividend, delay in share transfer etc. Statutory compliance report of all laws applicable to the Company, as well as steps taken by the Company to rectify instances of non-compliances, if any. Minutes of the board meetings of the subsidiaries along with their financial statements and the investments made by these companies. Details of the transactions with the related parties. General notices of interest of directors.

The independent directors meet periodically without the executive directors and the management. The independent directors also periodically have one on one meetings with the statutory auditors and internal auditors, where neither the executive directors nor any person from the management is present. Board material distributed in advance The agenda for each board meeting is circulated in advance to the Board members. All material information is incorporated in the agenda facilitating meaningful and focused discussions in the meeting. Where it is not practicable to attach any document in the agenda, the same is tabled before the meeting. Every board member is free to suggest items for inclusion in the agenda. Post meeting follow-up mechanism The guidelines for Board and Committee(s) meetings facilitate an effective post meeting follow up review and reporting process for the decisions taken by the Board and Committee(s) thereof. The important decisions taken at the Board/ Committee(s) meetings are promptly communicated to the concerned departments/ divisions. Action taken report on the decisions of the previous meeting(s) is placed at the immediately succeeding meeting of the Board/ Committee(s) for information and review by the Board/ Committee(s). Number of Board Meetings held and the dates on which held There were seven board meetings held during the year ended June 30, 2010. These were held on July 08, 2009, August 10, 2009, August 24-25, 2009, October 27-28, 2009, January 07, 2010, January 24-25, 2010 and April 20-21, 2010. The following table gives the attendance record of the directors in the board meetings and at the last Annual General Meeting. Name of Director No. of board meetings held 7 7 7 7 7 7 7 7 No. of board meetings attended 7 7* 7* 6** 4 7 6 7 Whether attended last AGM Yes Yes Yes No Yes Yes Yes No

•

• • •

•

• • • • •

•

•

Mr. Shiv Nadar Mr. Vineet Nayar Mr. T. S. R. Subramanian Ms. Robin Abrams Mr. Ajai Chowdhry Mr. Subroto Bhattacharya Mr. Amal Ganguli Mr. P. C. Sen

•

* includes one meeting attended through conference call. **includes two meetings attended through conference call.

Independence of Statutory Auditors The Board ensures that the statutory auditors of the Company are independent and have arm’s length relationship with the Company. Rotation of Statutory Auditors While appointing/ re-appointing the statutory auditors of the Company, the Board ensures that the statutory auditors has a policy in place for rotation of audit partners.

• •

Discussion with Independent Directors Independent Directors are regularly updated on performance of each line of business of the Company, business strategy going forward and new initiatives being taken/ proposed to be taken by the Company.

40

Review of legal compliance reports The Board periodically reviews the compliance report of the laws applicable to the Company as well as steps taken by the Company to rectify the instances of non-compliances, if any. Re-appointment of Directors Mr. Subroto Bhattacharya, Mr. Vineet Nayar and Mr. Amal Ganguli shall retire by rotation at the ensuing Annual General Meeting and being eligible offer themselves for re-appointment. The details and profile of the aforesaid directors seeking reappointment are furnished above in this report. Materially significant related party transactions There have been no materially significant related party transactions, monetary transactions or relationships between the Company and its directors, management, subsidiary or relatives, except for those disclosed in the financial statements for the year ended June 30, 2010. Code of Conduct The Board has prescribed a Code of Conduct (“Code”) for all Board members and senior management and other employees of the Company. The code of conduct covers transparency, behavioral conduct, a gender friendly workplace, legal compliance and protection of Company’s property and information. The Code is also posted on the website of the Company. All Board members and senior management personnel have confirmed compliance with the Code for the year 2009-10. A declaration to this effect signed by the Chairman & Chief Strategy Officer and Chief Executive Officer of the Company is provided elsewhere in the Annual Report. Board Committees Currently, the Board has six Committees viz. Audit Committee, Compensation Committee, Nominations Committee, Risk Management Committee, Shareholders’ Committee and Employees Stock Options Allotment Committee. Keeping in view the requirements of the Companies Act, 1956 as well as Clause 49 of the Listing Agreement, the Board decides the terms of reference of various committees and the assignment of members to various committees. The recommendations of the Committees are submitted to the Board for approval. Audit Committee The Audit Committee comprises of four Independent Directors, namely: a) b) c) d) Mr. T. S. R. Subramanian (Chairman) Ms. Robin Abrams Mr. Subroto Bhattacharya Mr. Amal Ganguli

The Board of Directors has approved the following terms of reference for the Audit Committee. a) Statutory auditors Recommend to the Board the appointment and removal of the statutory auditors, fixation of audit fee and also approve payment for any other services. b) Review independence of statutory auditors In connection with recommending the firm to be retained as the Company’s statutory auditors, review the information provided by the management relating to the independence of such firm, including, among other things, information relating to the non-audit services provided and expected to be provided by the statutory auditors. The Committee is also responsible for: (i) Actively engaging in dialogue with the statutory auditors with respect to any disclosed relationship or services that may impact the objectivity and independence of the statutory auditors, and Recommending that the Board takes appropriate action in response to the statutory auditors’ report to satisfy itself of their independence.

(ii)

c)

Review audit plan Review with the statutory auditors their plans for, and the scope of, their annual audit and other examinations.

d)

Conduct of audit Discuss with the statutory auditors the matters required to be discussed for the conduct of the audit.

e)

Review audit results Review with the statutory auditors the proposed report on the annual audit, areas of concern, the accompanying management letter, if any, the reports of their reviews of the Company’s interim financial statements, and the reports of the results of such other examinations outside of the course of the statutory auditors’ normal audit procedures that they may from time to time undertake.

f)

Review financial statements Review the Company’s financial reporting process and the disclosure of its financial information to ensure that the financial statements are accurate, sufficient and credible. The Audit Committee reviews with appropriate officers of the Company and the statutory auditors, the annual and interim financial statements of the Company prior to submission to the Board or public release thereof, focusing primarily on: i) ii) Any changes in accounting policies and practices. Major accounting entries based on exercise of judgement by management. iii) Qualifications in draft audit report. iv) Significant adjustments arising out of audit. v) The going concern assumption. vi) Compliance with accounting standards. vii) Compliance with stock exchange and legal requirements concerning financial statements. viii) Any related party transactions i.e. transactions of the Company with its subsidiaries, promoters or the

The Deputy Company Secretary acts as a Secretary to the Committee. Terms of Reference The constitution and terms of reference of the Audit Committee meet all the requirements of Section 292A of the Companies Act, 1956 as well as Clause 49 of the Listing Agreement.

41

g)

management, or their relatives, etc. that may have conflict with the interest of the Company at large. ix) Contingent liabilities. x) Status of litigations by or against the Company. xi) Claims against the Company and their effect on the accounts. Review policies Review the Company’s financial and risk management policies.

o)

Reporting to Board Report its activities to the Board in such manner and at such times, as it deems appropriate.

p)

Investigation The Audit Committee has the authority to investigate any matter in relation to the items specified in Section 292A of the Companies Act, 1956 or referred to it by the Board and for this purpose; it has full access to the information contained in the records of the Company. It can also investigate any activity within its term of reference. It has the authority to look into the reasons for substantial defaults in the payment to the depositors, debenture holders, shareholders (for non payment of declared dividends) and creditors, if any.

h)

Review internal audit function Review the adequacy of internal audit function, including the structure of internal audit department, staffing and seniority of the official heading the department, reporting structure coverage and frequency of internal audit.

i)

Review internal audit plans Review with the senior internal auditing executive and appropriate members of the staff of the internal auditing department the plans for and the scope of their ongoing audit activities.

q)

Seek information / advice The Audit Committee can seek information from any employee and can obtain from outside any legal or other professional advice. It can also secure attendance of outsiders with relevant experience, if it considers necessary.

j)

Review internal audit reports Review with the senior internal auditing executive and appropriate members of the staff of the internal auditing department the annual report of the audit activities, examinations and results thereof of the internal auditing department, any significant findings and follow up thereon. The Audit Committee also reviews the findings of any internal investigations by the internal auditors into the matters where there is suspected fraud or irregularity or a failure of internal control system of a material nature and reporting the matter to the Board.

r)

To attend Annual General Meeting The Chairman of the Audit Committee attends the Annual General Meetings of the Company to provide any clarification on matters relating to audit sought by the members of the Company. Statutory Auditors of the Company are special invitees to the Audit Committee meetings, wherein they participate on discussions related to the review of financial statements of the Company and any other matter that in the opinion of the statutory auditors needs to be brought to the notice of the Committee. Eight meetings of the Audit Committee were held during the year, on the following dates:

k)

Review systems of internal accounting controls Review with the statutory auditors, the senior internal auditing executive and, if and to the extent deemed appropriate by the Chairman of the Committee, members of their respective staffs the adequacy of the Company’s internal accounting controls, the Company’s financial, auditing and accounting organizations and personnel and the Company’s policies and compliance procedures with respect to business practices.

l)

Review recommendations of auditors Review with the senior internal auditing executive and the appropriate members of the staff of the internal auditing department, the recommendations made by the statutory auditors and the senior internal auditing executive, as well as such other matters, if any, as such persons or other officers of the Company may desire to bring to the attention of the Committee.

August 10, 2009 August 23, 2009 August 24, 2009 October 27, 2009 December 08, 2009 January 24, 2010 April 20, 2010 May 19, 2010 Attendance details of each member at the Audit Committee meetings held during the year ended June 30, 2010 are as follows: Name of the Number of Number of Committee Member Meetings held Meetings attended Mr. T. S. R. 8 8 Subramanian Ms. Robin Abrams 8 7* Mr. Subroto 8 8 Bhattacharya Mr. Amal Ganguli 8 8 * includes two meetings attended through conference call. Compensation Committee The Compensation Committee of the Board consists of following members: a) Ms. Robin Abrams (Chairperson) b) Mr. P. C. Sen

m) Review the functioning of Whistle Blower Policy Updates are sent to the Audit Committee in case of any instances. n) Review other matters Review such other matters in relation to the accounting, auditing and financial reporting practices and procedures of the Company as the Committee may, in its own discretion, deem desirable in connection with the review functions described above.

42

Note: Mr. Shiv Nadar ceased to be the member of the committee w.e.f. January 24, 2010. Terms of Reference The role of the Compensation Committee has been defined as under: a) b) c) d) e) f) Review and recommend to the Board the remuneration policy for the Company; Review and approve/recommend the remuneration for the Corporate Officers or Whole-Time Directors of the Company; Approve inclusion of senior officers of the Company as Corporate Officers. Approve promotions within the Corporate Officers. Regularly review the Human Resource function of the Company. Approve grant of stock options to the employees and / or Directors of the Company and subsidiary companies and perform such other functions and take such decisions as are required under the various Employees Stock Option Plans of the Company; Discharge such other function(s) or exercise such power(s) as may be delegated to the Committee by the Board from time to time. Make reports to the Board as appropriate. Review and reassess the adequacy of this charter periodically and recommend any proposed changes to the Board for approval from time to time.

During the year, the composition of the Board consists of only two Executive Directors viz. Mr. Shiv Nadar and Mr. Vineet Nayar. During the year under review no remuneration has been paid to Mr. Shiv Nadar. The remuneration paid to Mr. Vineet Nayar for the year ended June 30, 2010 is as under:
Particulars Salary Allowances and Perquisites Contribution to Provident Fund Total Rs. in crores 1.20 3.20 0.14 4.54

Mr. Vineet Nayar was also granted stock options of the Company. The details of the same as on June 30, 2010 are as under:
Grant Date Number Grant Price Vesting Details# of Options Per Option No. of Options Vesting Granted* (Rs.) Vested / Dates to be vested 24-10-2005 7,50,000 8.00 2,50,000 01-Jul-08 2,50,000 2,50,000 24-08-2009 1,75,000 8.00 1,75,000 01-Jul-09 01-Jul-10 31-Aug-10 Options Exercised so far 2,50,000 2,50,000 Nil Nil

g)

h) i)

* Each option entitles 4 equity shares of face vale of Rs. 2/- each. # The options are exercisable within 5 years from the date of vesting.

Four meetings of the Compensation Committee were held during the year, on the following dates: August 24, 2009 October 27, 2009 January 24, 2010 April 20, 2010 Attendance details of each member at the Compensation Committee meetings during the year ended June 30, 2010 are as follows: Name of the Number of Number of Committee Member Meetings held Meetings attended Ms. Robin Abrams 4 4 Mr. Shiv Nadar 2* 2** Mr. P. C. Sen 4 4
*Number of meetings held till Mr. Shiv Nadar was the member of the committee. ** Number of meetings attended till Mr. Shiv Nadar was the member of the committee.

As on June 30, 2010, Mr. Vineet Nayar held 10,00,000 equity shares of Rs. 2/- each fully paid up of the Company in the name of his family trust. Non-Executive Directors During the year, the Company paid sitting fee to its Non-Executive Directors for attending the meetings of the Board of Directors and Audit Committee of the Company. The Company pays commission to its Non-Executive Directors as approved by the Board within the limits approved by the shareholders of the Company. The amount of such commission, taken together for all Non-Executive Directors, does not exceed 1% of the net profits of the Company in a financial year. The said commission is decided each year by the Board of Directors and distributed amongst the Non-Executive Directors based on their attendance and contribution at the Board and certain Committee meetings, as well as the time spent on operational matters other than at meetings. Remuneration to Directors The sitting fees and commission paid/ payable to the NonExecutive Directors are as under:
Name of the Director Sitting Fees for Commission for Shareholding in the year ended the year ended the Company June 30, 2010 June 30, 2010 as on June 30, Rs. in lacs Rs. in lacs 2010 0.80 Nil 19,420 2.80 1.40 1.80 3.00 2.80 15 15 15 15 55 Nil Nil 1,37,000 Nil 4,600

Remuneration Policy and criteria of making payments to Executive and Non-Executive Directors The remuneration policy of the Company is aimed at rewarding performance, based on review of achievements on a regular basis and is in consonance with the existing industry practice. The criteria for making payments to Executive and NonExecutive Directors of the Company are as under: Executive Directors The remuneration of the Executive Directors is recommended by the Compensation Committee to the Board and after approval by the Board; the same is put up for the shareholders approval in the Annual General Meeting. Executive Directors do not receive any sitting fees for attending the Board and Committee meetings.

Mr. Ajai Chowdhry Mr. Amal Ganguli Mr. P. C. Sen Ms. Robin Abrams Mr. Subroto Bhattacharya Mr. T. S. R Subramanian

During the year, there were no other pecuniary relationships or transactions of the Non-Executive Directors vis-à-vis the Company.

43

Nominations Committee The Nominations Committee consists of the following members: a) b) c) Mr. Shiv Nadar (Chairman) Mr. Vineet Nayar Mr. T. S. R. Subramanian

Shareholders’ Committee The Shareholders’ Committee consists of the following members: a) b) c) d) Mr. T. S. R. Subramanian (Chairman) Mr. Shiv Nadar Mr. Subroto Bhattacharya Mr. Ajai Chowdhry

Terms of Reference The role of Nominations Committee has been defined as under: a) Succession planning for certain key positions in the Company viz. Chief Executive Officer (CEO), Chief Operating Officer (COO), Chief Financial Officer (CFO). The Committee to identify, screen and review candidates, inside or outside the Company and provide its recommendations to the Board. Reviewing the Company’s corporate Governance guidelines periodically and recommending such amendments to the Board as it deems necessary. Review and reassess the adequacy of this charter periodically and recommend any proposed changes to the Board for approval from time to time.

Mr. Manish Anand, Deputy Company Secretary is the Compliance Officer of the Company. Terms of Reference In view of the SEBI Corporate Governance norms, which have been incorporated in the Listing Agreement, the Shareholders’ Committee has been formed to undertake the following activities: a) To review and take all necessary actions for redressal of investors’ grievances and complaints as may be required in the interests of the investors. To approve requests of rematerialisation of shares, issuance of split and duplicate share certificates.

b)

c)

During the year under review, the Committee met 2 times. Risk Management Committee The Risk Management Committee consists of the following members: a) b) c) d) Mr. T. S. R. Subramanian (Chairman) Ms. Robin Abrams Mr. Subroto Bhattacharya Mr. Amal Ganguli

b)

The details relating to the number of shareholders’ complaints received and resolved and number of pending transfers have been provided in this report under the shareholders information section. During the year under review, the Committee met 10 times. Employees Stock Option Allotment Committee The Employees Stock Option Allotment Committee consists of following members: a) b) c) d) e) Mr. Shiv Nadar, Chairman & Chief Strategy Officer Mr. Vineet Nayar, CEO & Whole-time Director Mr. T. S. R. Subramanian, Director Mr. Subroto Bhattacharya, Director Mr. Anil Chanana, Chief Financial Officer

During the year under review, the Committee met 3 times. Terms of Reference The role of Risk Management Committee has been defined as under: a) Assist the Board in fulfilling its corporate governance in overseeing the responsibilities with regard to the identification, evaluation and mitigation of operational, strategic and external environmental risks. Review and approve the Risk management policy and associated framework, processes and practices of the Company. Assist the Board in taking appropriate measures to achieve prudence balance between risk and reward in both ongoing and new business activities. Evaluating significant risk exposures of the Company including business continuity planning and disaster recovery planning. Assessing management’s actions in mitigating the risk exposures in a timely manner. Review and reassess the adequacy of this charter periodically and recommend any proposed changes to the Board for approval from time to time. The Committee shall have access to any internal information necessary to fulfill its oversight role. As and when required the Committee can assign tasks to the Internal Auditor and Risk management team in the Company who will provide their findings to the Committee.

b)

This Committee has been formed to allot shares to the employees who have exercised their stock options under the Stock Option Plans of the Company. During the year under review, the Committee met 13 times. Employees Council, Customers Advisory Council and Corporate Social Responsibility Council The Company has formed councils to address the concerns of employees and customers of the Company and to enhance the Corporate Social Responsibilities of the Company. The role and work done by these councils during the year are as under: a) Employees Councils The Employees Councils have been formed primarily to provide a communication link between employees and the management of the Company. These councils serve as discussion forums for matters of general concern to the employees. The Company has formed few employees councils which take care of the issues relating to (a) improvement at work place; (b) awareness of the community needs;(c) enthusiasm at the work place

c)

d)

e) f)

g)

44

by organizing sports events, quizzes and various other competitions; (d) avenues for learning, self expression and display of talents; (e) health and well being of the employees. During the year, the work done by these councils included various philanthropic initiatives such as “Teach at Office”, Meri Delhi Meri Yamuna (cleaning the Yamuna), Child Rescue & Rehabilitation Efforts etc. b) Customers Advisory Council The Company’s Customers Advisory Council is a collaborative forum where some of our key customers, representing a cross section of our customer base, meet on a regular basis to advise us on industry trends, business priorities, and strategic direction. This ‘Voice of the customers’ serves as the basis for business requirements and technology needs and is applied to the creation of our next generation solutions for customers across industries. The Company also works towards creating an exceptional opportunity/platform for customers and its industry peers to exchange ideas, best practices and network among themselves. The discussions are then converted into action plans which make sure that the recommendations are applied and turned into value and innovation for its customers. Currently, we have representations from most of our major customers in North America. The members comprise of key decision makers, primarily CIOs and other senior personnel. The members meet twice in a year with a definitive agenda and conclude with recommendations for directions for service offerings by the Company. This council also ensures that the customers are able to reach out to the Chief Executive Officer (CEO), if required. The said council is headed by the CEO and supported by two corporate officers of the Company. c) Corporate Social Responsibility Council The Company understands that for effective corporate social responsibility, it must become an integral part of the Company’s strategy and operations. The Company has become more sensitive about the impact of its business on society and the environment, and understands the concerns of all its key stakeholders. The Company defines Corporate Social Responsibility (“CSR”) as developing socially responsible products and services for customers, ensuring a low carbon footprint through Green data centers and following a robust environmental policy, engaging and empowering employees to become agents of social change, and making a commitment with significant investments into the community around it. An essential component of the Company’s CSR initiatives is to care for the community around it, and education and health have been identified as the primary objectives in the Company’s community development programs. Inspiring the lives of the underprivileged, the Company facilitates programs and gives direct assistance and resources to individuals, families and other charitable organizations. The Company endeavors to make a positive contribution to society supporting a wide range of socio-economic,

educational and health initiatives, and almost all of these projects and programs are driven by active participation from the employees of the Company. The CSR Council led by the Chief Executive Officer and supported by two corporate officers of the Company focuses on providing leadership and resources to take greater social and environmental responsibilities within our communities while minimizing the global impact of the business of the Company. Sexual Harassment Policy In order to ensure an additional available mode for the employees, under the Sexual Harassment Policy, to voice their concern and bring it to the organization’s notice, a mechanism is in place for employees to have a critical direct access to the Chief Executive Officer to report any issues, abuse, etc. under the said policy of the Company. Whistle Blower Policy The Company has adopted a Whistle Blower Policy to provide appropriate avenues to the employees, contractors, clients, vendors, internal or external auditors, law enforcement / regulatory agencies or other third parties to bring to the attention of the management any issues which are perceived to be in violation or in conflict with the fundamental business principles of the Company. The employees are encouraged to raise any of their concerns by way of whistle blowing. All cases registered under the Whistle Blower Policy of the Company are reported directly to the CEO. Corporate Governance Voluntarily Guidelines 2009 During the year, Ministry of Corporate Affairs, Government of India has published the “Corporate Governance Voluntarily Guidelines 2009” which is recommendatory in nature. The Corporate sector has been advised to voluntarily adopt these guidelines with the objective of using better corporate governance practices which the Ministry believes will enable the Indian corporate sector to enhance not only the economic value of the Company but also the value for every shareholder who has contributed in the success of the Company. These guidelines broadly focus on the areas like Board of Directors, responsibilities of the Board, Audit Committee’s functions, roles and responsibilities, appointment of auditors, Compliances and a mechanism for Whistle Blower support. The Company is already majorly in compliance with these guidelines and some other recommendations are being reviewed. Observance of the Secretarial Standards issued by the Institute of Company Secretaries of India The Institute of Company Secretaries of India (ICSI), one of the premier professional body in India, has issued secretarial standards on important aspects like board meetings, general meetings, payment of dividend, maintenance of registers and records, minutes of meetings, transmission of shares and debentures, passing of resolution by circulation, affixing of common seal, forfeiture of shares and board’s report. Although these standards are optional in nature, the Company however substantially adheres to the standards voluntarily.

45

General Body Meetings The location and time of the General Meetings held during the preceding 3 years are as follows:
Year Date Venue Time Annual General Meetings 2006-2007 December 13, 2007 FICCI Auditorium, 11.00 A.M. Federation House, Tansen Marg, New Delhi. 2007-2008 October 22, 2008 FICCI Auditorium, 11.00 A.M. • Federation House, Tansen Marg, New Delhi. Special Resolution -

Approval u/s 309 (4)(b) of the Companies Act, 1956 for payment of commission not exceeding one percent of the net profits of the Company to all the Non-Executive Directors of the Company collectively in each financial year over a period of five years beginning from July 1, 2008 Approval u/s 372A of the Companies Act, 1956 to make investment(s) from time to time by way of subscription, purchase and/or otherwise in the securities of any other body corporate as the Board may in its absolute discretion deem beneficial and in the interest of the Company, upto Rs. 4,000 Crores (Rupees Four Thousand Crores) over and above the limits that are specified under section 372A of the Companies Act, 1956. Approval u/s 198, 269, 309, and all other applicable provisions of the Companies Act, 1956, (Act) read with Schedule XIII to the said Act, to re-appoint Mr. Shiv Nadar, Chairman & Chief Strategy Officer as Managing Director of the Company for a period of 5 years w.e.f. September 13, 2009 with the designation of Chairman & Chief Strategy Officer or such other designation as the Board/ Compensation Committee may decide from time to time.

•

2008-2009

December 8, 2009

FICCI Auditorium, 11.00 A.M. • Federation House, Tansen Marg, New Delhi.

During the last year, no resolution was passed through Postal Ballot and presently, no resolution has been proposed to be passed through postal ballot. Subsidiary Companies During the year, none of the subsidiaries was a material nonlisted Indian subsidiary Company as per the criteria given in clause 49 of the Listing Agreement. The Audit Committee of the Company reviews the financial statements and investments made by the unlisted subsidiary companies. The minutes of the board meetings as well as the statements of significant transactions and arrangements entered into by the unlisted subsidiary companies, if any, are placed before the Board of Directors of the Company from time to time. CEO/ CFO Certification The Certificate as stipulated in clause 49(V) of the Listing Agreement was placed before the Board along with the financial statements for the year ended June 30, 2010 and the Board reviewed the same. The said Certificate is provided elsewhere in the Annual Report. Disclosures a) Related party transactions The details of the transactions with related parties or others, if any, as prescribed in the Listing Agreement, are being placed before the Audit Committee from time to time. During the year under review, the Company has not entered into any transaction of a material nature with its subsidiaries, promoters, directors or the management, their relatives, etc., that may have any potential conflict with the interest of the Company. b) Compliances by the Company The Company has complied with the requirements of the Stock Exchanges, SEBI and other statutory authorities on all matters relating to capital markets during the last three a) d) years. No penalties or strictures have been imposed on the Company by the Stock Exchanges, SEBI or any other statutory authorities relating to the above. c) Material transactions with senior managerial personnel During the year, no material transaction has been entered into by the Company with the senior management personnel where they had or were deemed to have any personal interest that may have a potential conflict with the interest of the Company. The Company has obtained requisite declarations from all senior management personnel in this regard and the same were placed before the Board of Directors. Other Disclosures The Company has also laid down the procedures to inform the Board members about the risk assessment and minimization procedures. During the year, the Company did not raise any money through public issue, right issues or preferential issues and there was no unspent money raised through such issues. Means of Communication Quarterly Results: Quarterly Results of the Company are generally published inter alia, in Financial Express and Jansatta newspapers. Website: Company’s corporate website www.hcltech.com provides comprehensive information on company’s portfolio of businesses. The website has entire section dedicated to Company’s profile, its core values, corporate governance, business lines and industry sections. An exclusive section on ‘Investors’ enables them to access information at their convenience. The entire Reports as well as quarterly, half yearly, annual financial statements, releases and

b)

46

shareholding patterns are available in downloadable format as a measure of added convenience to the investors. c) News Releases, Presentations, etc.: Official news releases, detailed presentations made to media, analysts, institutional investors, etc. are displayed on the Company’s website www.hcltech.com. Official media releases are also sent to the Stock Exchanges. Annual Report: Annual Report containing, inter alia, Audited Annual Accounts, Consolidated Financial Statements, Directors’ Report, Auditor’s Report and other important information is circulated to members and others entitled thereto. The Annual Report of the Company is available on the Company’s website in a user- friendly and downloadable form. Management Discussion and Analysis: The Management’s Discussion and Analysis (MD & A) Report forms part of the Annual Report. Intimation to the Stock Exchanges: The Company intimates the Stock Exchanges all price sensitive information or such other matters which in its opinion are material and of relevance to the Shareholders. Corporate Filing and Dissemination System (CFDS): Pursuant to clause 52 of the Listing Agreement, the Company during the year has uploaded financial information like annual and quarterly financial statements, segmentwise results and shareholding pattern on the CFDS website www.corpfiling.co.in. National ECS facility: As per RBI notification, with effect from October 1, 2009, the remittance of money through ECS is replaced by National Electronic Clearing Services (NECS) and banks have been instructed to move to the NECS platform. NECS essentially operates on the new and unique bank account number, allotted by banks post implementation of Core Banking Solutions (CBS) for centralized processes of inward instructions and efficiency in handling bulk transactions. The Company is using NECS mandate for remittance of dividend either through NECS or other electronic modes failing which the bank details available with Depository Shareholders’ Information a) General Information i)

Participants are printed on the dividend warrant. All the arrangements are subject to RBI guidelines, issued from time to time. Designated Exclusive email- id: The Company has the following designated email-id [email protected] exclusively for investors servicing.

Code for Prevention of Insider Trading The Company has comprehensive guidelines on prevention of insider trading in line with the SEBI (Prohibition of Insider Trading) Regulations, 1992. The Code for prevention of Insider Trading inter-alia prohibits purchase/sale of shares of the Company by employees/directors while in possession of unpublished price sensitive information in relation to the Company. Investor Relations-Boosting Investor Confidence In today’s challenging and competitive business environment, corporates recognize the necessity and responsibility to develop direct contact with market participants as the operating economic environment has become more reliant on global private capital flows. We understand that global investors are concerned about geopolitics, global business environment, micro aspects of our performance, both business and financials and also our governance structure. They need timely, accurate and relevant information that helps them in making informed investment decisions. We have put in place a consistent, visible and proactive Investor Relations programme that helps to build a fabric of familiarity and trust between us and the global investment community that can contribute to stability during the periods of stress. Investors Relations (“IR”) helps in creating two way active interactive forums with all the market participants across the world that enables better understanding of the Company’s objectives, business strategies and overall performance. To deliver effective financial communication, our IR uses effective tools like the Annual Report; Quarterly Earnings Investor Release; Conference Calls, Investor Meets, Annual General Meetings and Internet (Web Investor Page). In addition, press releases, frequent conversation with investors, etc. are also part of the communication link and are used effectively to stay in touch with the investors.

d)

e)

f)

g)

h)

Dates of book closure Date, time and venue of the ensuing Annual General Meting

October 26, 2010 to October 28, 2010 (both days inclusive) October 28, 2010, 11.00 A.M. FICCI Auditorium, Federation House, 1, Tansen Marg, New Delhi 110 001 On or before November 27, 2010 The National Stock Exchange of India Ltd. (NSE) Exchange Plaza, 5th Floor, Plot No. C/1 G Block, Bandra Kurla Complex, Bandra East, Mumbai – 400 051, India. Tel.: +91-22-26598236, Fax: +91-22-26598237

Dividend Payment Date (subject to the approval of the shareholders) Listing of Equity Shares on stock exchanges in India at

47

The Bombay Stock Exchange Ltd. (BSE) Phiroze Jeejeebhoy Towers, Dalal Street, Mumbai – 400 001, India Tel.: +91-22-22721233, Fax: +91-22-22723121 Listing of Non-Convertible Debentures on stock exchanges in India at Listing fees Stock Code Registered Office The Wholesale Debt Market Segment of NSE. Paid to all the above stock exchanges for the Year 2010-2011. National Stock Exchange – “HCLTECH” Bombay Stock Exchange – “532281” 806, Siddharth, 96, Nehru Place, New Delhi – 110 019, India Tel.: +91-11-26444812, Fax: +91-11-26436336 Homepage: www.hcltech.com Alankit Assignments Limited 205-208, Anarkali Market, Jhandewalan Extension, New Delhi – 110 055, India. Tel.: +91-11-42541234, 23541234 Fax: +91-11-42541967 E-mail: [email protected] IDBI Trusteeship Services Limited Asian Building, Ground Floor, 17, R Kamani Marg, Ballard Estate Mumbai 400 023 • Share certificate(s) along with Demat Requisition Form (DRF) is to be submitted by the shareholder to the Depository Participant (DP) with whom he/she has opened a Depository Account. DP processes the DRF and generates a unique number viz. DRN. DP forwards the DRF and share certificates to the Company’s Registrar & Shares Transfer Agent. The Company’s Registrar & Shares Transfer Agent after processing the DRF confirm or reject the request to the Depositories. Upon confirmation, the Depository gives the credit to shareholder in his/her depository account maintained with DP.

Registrar & Shares Transfer Agent

Debenture Trustee

b)

Share Transfer System The Company’s share transfer authority has been delegated to the Company’s officials who generally consider and approve the share transfer requests on a fortnightly basis. The shares sent for physical transfer are generally registered and returned within a period of 15-20 days from the date of receipt of request, if the documents are complete in all respects. As per the requirements of clause 47(c) of the Listing Agreement with the Stock Exchanges, the Company has obtained half-yearly certificates from Practising Company Secretary for due compliance of share transfer formalities.

• • •

c)

Secretarial Audit As required under Regulation 55A of SEBI (Depositories and Participants), Regulations, 1996, the secretarial audit for reconciling the total admitted capital with National Securities Depository Limited (“NSDL”) and Central Depository Services (India) Ltd. (“CDSL”) and the total issued and listed capital for each of the quarter in the financial year ended June 30, 2010 was carried out. The audit report confirms that the total issued/ paid-up share capital is in agreement with the total number of shares in physical form and the total number of dematerialized shares held with NSDL and CDSL.

•

The process of dematerialization takes approx.15 days from the date of receipt of DRF by the Registrar & Shares Transfer Agent of the Company. As on June 30, 2010, about 99.93% of the equity shares issued by the Company are held in dematerialized form. Company’s ISIN in NSDL & CDSL for Equity Shares: INE860A01027. Company’s ISIN in NSDL & CDSL for Debentures: INE860A07016, INE860A07024 and INE860A07032. Since the trading in the shares of the Company can be done only in electronic form, it is advisable that the shareholders who have the shares in physical form get their shares dematerialized. Dividend The Board of Directors at their meeting held on July 27-29, 2010 recommended a final dividend of Re. 1/- each on equity

d)

Dematerialization of Shares Effective July 24, 2000, the shares of the Company have been placed by SEBI under compulsory dematerialization (“Demat”) category and consequently, shares of the Company can be traded only in electronic form. The system for getting the shares dematerialized is as under:

48

shares of face value of Rs. 2/- each, for approval of the shareholders at the Annual General Meeting. Together with the 3 interim dividends of Re. 1 per share each time on equity shares of face value of Rs. 2/- each, the total dividend for the year works out to Rs. 4/-. The final dividend, if approved by the shareholders, will be paid on or before November 27, 2010. Dates of transfer of Unclaimed Dividend to Investor Education and Protection Fund (IEPF) Pursuant to section 205A of the Companies Act, 1956, unclaimed balance of the dividends lying in the dividend Financial Year 2002-03 2003-04 Type of Dividend Final 1st Interim 2nd Interim 3rd Interim Final 1st Interim 2nd Interim 3rd Interim Final 1st Interim 2nd Interim 3rd Interim Final 1st Interim 2nd Interim 3rd Interim Final 1st Interim 2nd Interim 3rd Interim Final 1st Interim 2nd Interim 3rd Interim Final 1st Interim 2nd Interim 3rd Interim

accounts till April, 2003 have been transferred to the Investor Education and Protection Fund (IEPF) established by the Central Government. The dividends for the following years, which remain unclaimed for seven years, will be transferred to the IEPF in accordance with the schedule given below. Shareholders who have not encashed their dividend warrants relating to the dividend specified in table below are requested to immediately send their request for issue of duplicate warrants. Once unclaimed dividend is transferred to the IEPF, no claim shall lie in respect thereof either with the Company or IEPF.

2004-05

2005-06

2006-07

2007-08

2008-09

2009-10

Date of Declaration December 20, 2003 October 31, 2003 January 29, 2004 April 26, 2004 December 17, 2004 October 25, 2004 January 25, 2005 April 25, 2005 December 16, 2005 October 25, 2005 January 18, 2006 April 19, 2006 December 14, 2006 October 16, 2006 January 15, 2007 April 17, 2007 December 13, 2007 October 16, 2007 January 17, 2008 April 15, 2008 October 22, 2008 October 15, 2008 January 23, 2009 April 22, 2009 December 08, 2009 October 28, 2009 January 25, 2010 April 21, 2010

Due Date for transfer to IEPF January 19, 2011 November 30, 2010 February 28, 2011 May 26, 2011 January 16, 2012 November 24, 2011 February 24, 2012 May 25, 2012 January 15, 2013 November 24, 2012 February 17, 2013 May 19, 2013 January 13, 2014 November 15, 2013 February 14, 2014 May 17, 2014 January 12, 2015 November 15, 2014 February 16, 2015 May 15, 2015 November 21, 2015 November 14, 2015 February 22, 2016 May 22, 2016 January 07, 2017 November 27, 2016 February 24, 2017 May 21, 2017

e)

Distribution of shareholding as on June 30, 2010 Number of Equity Shares held 1 – 100 101 – 200 201 – 500 501 – 1000 1001 – 5000 5001 – 10000 10001 and above Total No. of Shareholders 59,382 9,479 4,882 1,770 2,435 576 774 79,298 Shareholders (%) 74.88 11.95 6.16 2.23 3.07 0.73 0.98 100.00 No. of Shares 2,117,155 1,676,705 1,715,246 1,353,983 5,947,423 4,127,889 661,845,411 670,256,600 Shares (%) 0.31 0.25 0.25 0.20 0.88 0.61 97.50 100.00

49

f)

Categories of shareholders as on June 30, 2010 Number of shares held 443,356,864 19,358,047 446,254 15,784,045 144,355,150 1,244 19,911,475 23,001,210 11,096,534 229,088 35,783 180,644 1,027,474 678,783,812 Voting Strength (%) 65.32 2.85 0.07 2.33 21.27 0.00 2.93 3.39 1.63 0.03 0.01 0.03 0.15 100.00

Category Promoters Mutual Funds/ UTI Financial Institutions/ Banks Insurance Companies Foreign Institutional Investors Foreign Banks Bodies Corporate Individuals NRIs / OCBs Foreign Nationals Trusts HUF Clearing Members Grand Total g) Stock market data

Monthly high and low quotations, as well as the volume of shares traded at the National Stock Exchange of India Limited (“NSE”) and the Bombay Stock Exchange Limited (“BSE”), for fiscal year are as follows: Month High (Rs.) 257.00 319.90 352.20 345.80 355.95 388.00 388.90 371.75 385.00 398.00 410.00 398.00 NSE Low (Rs.) 162.25 239.10 290.00 290.05 275.00 323.30 318.90 317.55 351.30 340.00 349.10 353.00 Volume (Number) 29,209,769 41,866,187 28,966,318 27,036,892 21,656,671 25,727,432 28,868,801 16,259,060 12,747,306 29,755,296 18,231,118 23,161,325 High (Rs.) 257.00 315.40 350.50 347.00 350.00 377.45 388.00 371.70 383.25 398.55 448.80 396.75 BSE Low (Rs.) 163.50 240.00 290.00 294.15 276.50 327.90 318.30 324.50 350.10 338.00 349.50 347.00 Volume (Number) 4,354,410 7,137,306 5,540,279 4,100,862 3,488,735 4,552,885 3,916,804 1,597,174 1,214,319 3,690,327 2,225,480 32,143,499

July 2009 August 2009 September 2009 October 2009 November 2009 December 2009 January 2010 February 2010 March 2010 April 2010 May 2010 June 2010 h) Liquidity

The Company’s shares are among the most liquid and actively traded shares on NSE and BSE. The monthly trading volumes of the Company’s shares on these exchanges are given in the table above in the Paragraph (g) titled `Stock Market Data’. i) Share price performance in comparison to broad based Indices
Share Price Performance during the Year (2009-10) 450.00 400.00 17,000.00 350.00
Share Price- HCLTECH

HCL TECH

SENSEX

Share Price Performance during the Year (2009-10) 450.00

HCL TECH

NIFTY

18,000.00

7000.00

400.00 6500.00 350.00

300.00 250.00

16,000.00
Share Price- HCLT TECH

300.00
S SENSEX

6000.00
NIFT TY

250.00 5500.00 200.00

15,000.00 200.00 150.00 100.00 13,000.00 50.00 0.00
09 09 9 9 10 10 0 0 9 0 ov -0 ec -0 -1 -1 9 ct -0 l-0 nbr-1 gpay ar Ju n -1 0 Au Se Ap Fe Ju Ja M M O N D

14,000.00

150.00

5000.00

100.00 4500.00 50.00

12,000.00
0.00 4000.00

09

9

9

9

10

10

0

0

9

0

ov -0

ec -0

-0

-1

-1

9

ct -0

Ju l-0

n-

b-

r-1

g-

Se p

ay

ar

Ap

M

Date

Date

50

M

O

N

Ju n

Au

Fe

Ja

D

-1

0

j)

Shareholders Services (i) Complaints received during the year 2009-2010 The Company gives utmost priority to the interests of the shareholders. All the requests / complaints of the shareholders have been resolved to the satisfaction of the shareholders within the statutory time limits. The status of shareholders’ complaints received during the financial year is as follows: Source of Complaint Directly from the Investors Through SEBI, Stock Exchanges, etc. Total Received 58 8 66 Resolved 58 8 66

(ii) Share Transfers – As on June 30, 2010, No equity share was pending for transfer. (iii) Electronic Clearing Services (ECS)/ National Electronic Clearing Services (NECS) facility The divided remittances to shareholders happen predominantly through ECS/NECS as per the locations approved by RBI from time to time. If you are located at any of the ECS/ NECS centers and have not registered your ECS/NECS, please arrange to forward your ECS/NECS mandate to your depository participant if the shares are held in demat form, or to the Company/Registrars, if the shares are held in physical form, immediately. k) l) Outstanding GDRs/ ADRs/ Warrants or any Convertible Instruments, conversion date and likely impact on equity The Company has not issued any GDRs/ ADRs/ Warrants or other instruments, which are pending for conversion. Financial Calendar (tentative and subject to change) Financial reporting for the first quarter ending September 30, 2010 Financial reporting for the second quarter ending December 31, 2010 Financial reporting for the third quarter ending March 31, 2011 Financial reporting for the year ending June 30, 2011 Annual General Meeting for the year ending June 30, 2011 m) Address for Shareholders’ correspondence The Secretarial Department HCL Technologies Limited A-10 & 11, Sector - 3, Noida – 201 301 U.P., India Tel. +91-120-2520917 / 937 Fax: +91-120-2526907 E-mail: [email protected] n) Compliance Certificate on the Corporate Governance from the Auditors The certificate dated July 29, 2010 obtained from Statutory Auditors of the Company, M/s. S.R. Batliboi & Co., confirming compliance with the Corporate Governance requirements as stipulated under clause 49 of the Listing Agreement, is annexed hereto. o) Centers’ Locations October 19-20, 2010 January 18-19, 2011 April 19-20, 2011 July 29, 2011 October / November 2011

Chennai – Centers 50-53, Greams Road Chennai- 600 006, India Tel. : +(91) 44 2829 3298 Fax :+(91) 44 2829 4969 PM Tower, 37 Greams Road Chennai- 600 006, India Tel. : +(91) 44 2829 1735 Fax :+(91) 44 2829 1738 Thapar House 43 / 44, Montieth Road, Egmore Chennai- 600 008, India Tel. : +(91) 44 2851 1293 Fax :+(91) 44 2851 1986 Raheja Towers facility Module 812, 8th Floor Mount Road Chennai- 600 002, India Tel: +(91) 44 2860 3091 Fax: +(91) 44 2860 3087 No.184-188, 190,192 & 196 Arcot Road, Vadapalani Chennai- 600 026, India Tel. : +(91) 44 2372 8366 Fax :+(91) 44 24806640

34 & 35 Haddows Road Chennai- 600 034, India Tel. : +(91) 44 4220 9999 Fax :+(91) 44 4213 2749

51

158, Arcot Road Vadapalani Chennai- 600 026, India Tel. : +(91) 44 2375 0171 Fax :+(91) 44 2375 0185 64 & 65, Second Main Road Ambattur Industrial Estate Ambattur (AMB-3) Chennai- 600 058, India Tel. : +(91) 44 2652 1077 Fax :+(91) 44 4206 0485 8,South Phase, MTH Road Ambattur Industrial Estate Ambattur (AMB-6) Chennai- 600 058, India Tel: +(91) 44 4396 8000 Fax:+(91) 44 4396 7004 No. 51, J.N. Road, Guindy (GUINDY-1) Chennai- 600 097, India Tel. : +(91) 44 2231 960/65 Fax :+(91) 44 2234 4256 601-602, 604 Tidel Park 4 Canal Road, Taramani Chennai- 600 113, India Tel. : +(91) 44 2254 0473 Fax :+(91) 44 2254 0308

D-12, 12B, Ambattur Industrial Estate Ambattur (AMB-1) Chennai- 600 058, India Tel. : +(91) 44 2623 0711 Fax :+(91) 44 2624 4213 94, South Phase Ambattur Industrial Estate Ambattur (AMB-4) Chennai- 600 058, India Tel: +(91) 44 4226 2222 Fax:+ (91) 444215 3333 Sapna Trade Centre 109/110 P H Road Chennai- 600 084, India Tel. : +(91) 44 2822 1129 Fax :+(91) 44 2821 4278 35, South Phase Guindy Industrial Estate Ekkaduthangal, Guindy (GUINDY-2) Chennai- 600 097, India Tel : + (91) 44 2231 8321 Tel : + (91) 44 2231 8320 HCL Technologies Ltd. (C-5) Module 1, Tower 1 Floor Nos. 1 & 6 “Chennai One” SEZ Unit ETL Infrastructure Services Ltd. 200 Ft., Thoraipakkam Pallavaram Ring Road Thoraipakkam, Chennai- 600 096 Tel : +(91) 044 6630 1000 HCL Technologies Ltd,(C-3) Unit-2, Block-1, No. 84 Greams Road Thousand Lights Chennai - 600 006, India Tel : +(91) 44 6622 5522

78- Ambattur industrial Estate Ambattur (AMB-2) Chennai- 600 058, India Tel. : +(91) 44 2623 2318 Fax :+(91) 44 2625 9476 73-74, South Phase Ambattur Industrial Estate Ambattur (AMB-5) Chennai- 600 058, India Tel:+(91) 44 4393 5000 Fax:+(91) 44 4206 0441 49-50, Nelson Manickam Road Chennai- 600 029, India Tel. : +(91) 44 2374 1939 Fax :+(91) 44 2374 103 Sterling Technopolis 4/293, Old Mahabalipuram Road Kandanchavadi Chennai- 600 096, India Tel. : +(91) 44 4395 7777 HCL Technologies Ltd. (C-1) #30, Ethiraj Salai Egmore Chennai- 600105, India Tel : +(91) 44 2828 9200

HCL Technologies Ltd, (C-2) Unit-2, Block-1, No. 84 Greams Road Thousand Lights Chennai- 600 006, India Tel : (91) 44 6622 5522 Chennai SEZ HCL Technologies Ltd. ETA- Techno Park Block I SPECIAL ECONOMIC ZONE 33, Rajiv Gandhi Salai, Navallur Village and Panchayat Thiruporur Panchayat Union, Chengalpet Taluk Kanchipuram Distt. Chennai- 603 103 Tel : +(91) 44 4746 1000 HCL Technologies Limited ELCOT – SEZ Unit -I Special Economic Zone 602/3, 138, Shollinganallur Village Shollinganallur - Medavakkam High Road Tambaram Taluk, Kancheepuram (Dist) Chennai- 600 119 Tamilnadu, India Tel : +(91) 44 6105 0000

HCL Technologies Ltd.(C-4) Unit-2, Block-1, No.84 Greams Road Thousand Lights Chennai- 600 006, India Tel : +(91) 44 6622 5522

HCL Technologies Ltd. ETA- Techno Park Block IV SPECIAL ECONOMIC ZONE 33, Rajiv Gandhi Salai, Navallur Village and Panchayat Thiruporur Panchayat Union, Chengalpet Taluk Kanchipuram Dist, Chennai- 603 103 Tel : +(91) 44 4746 4000

HCL Technologies Limited ELCOT – SEZ Unit -II Special Economic Zone 602/3, 138, Shollinganallur Village Shollinganallur - Medavakkam High Road Kancheepuram (Dist) Chennai- 600 119 Tamilnadu, India Tel : +(91) 44 6105 0000

52

Mumbai Center Unit No.181 B, SDF 6, First Floor SEEPZ, Andheri (East) Mumbai- 400 096, India Tel:+(91) 22 2829 1440 Tel:+(91) 22 2829 2665 Fax:+(91) 22 2829 2373 Gurgaon – Centers 3, Udyog Vihar Phase 1 Gurgaon, 122 016 Haryana, India Tel. : +(91) 124 4346400 Fax :+(91) 124 2439910 Kolkata Centers HCL Technologies Limited SDF Building, 1st & 3rd floors Module Nos. 212-214, 228-230 &413 Block – GP, Sector – V Salt Lake, Kolkata- 700 091, India Tel : +(91) 33 2357 3024/3025 Fax :+(91) 33 2357 3027 Noida Centers A 9, 10 & 11, Sector 3 Noida- 201 301 U.P., India Tel. : +(91) 120 2520917 Fax :+(91) 120 2526907 Plot No 1 & 2 Noida Express Highway Sector-125, Noida- 201301 U.P., India Tel: +(91) 120 4046000 C – 22 A, Sector 57 Noida- 201 301 U.P., India, Tel. : +(91) 120 4385000 Fax :+(91) 120 2586420 A - 22, Sector 60 Noida- 201301 U.P., India Tel: +(91) 120 2589690 Fax:+(91) 120 4347485 Noida SEZ HCL Technologies Ltd. Noida Technology Hub (SEZ) Plot No: 3A, Sector-126 Noida- 201303 U.P., India Ph: +(91) 120 4683000 Fax:+(91) 120 4683030 A- 5, Sector 24 Noida- 201 301 U.P., India Tel. : +(91) 120 4382020 Fax :+(91) 120 2411005 A 91, Sector 2 Noida- 201 301 U.P., India Tel. : +(91) 120 4502700 Fax :+(91) 120 2529000 C-39, Sector 59 Noida- 201301 U.P., India Tel: +(91) 120 2589690 Fax: +(91) 120 2589688 C-23, Sector 58 Noida 201301 U.P., India Tel: +(91) 120 4364500 Fax :+(91) 120 2490428 A11, Sector 16 Noida- 201 301 U.P., India Tel. : +(91) 120 4383000 Fax :+(91) 120 2510713 Fax :+(91) 120 4258946 A- 8 & 9, Sector 60 Noida- 201 301, U.P., India Tel. : +(91) 120 4384000 Fax :+(91) 120 2582915 A-104, Sector 58 Noida- 201301 U.P., India Tel: +(91) 120 4364200 Fax:+(91) 120 2589688 B-34 / 3, Sector 59 Noida 201301 U.P., India Tel: +(91) 120 4364488 Fax: +(91) 120 2589688 HCL Technologies Limited INFINITY Building, Tower – II 13th, 14th & 15th Floors Plot No. 3A, Block GP, Sector-V Salt Lake, Kolkata- 700 091, India Tel : +(91) 33 2357 2487-90 Fax :+(91) 33 2357 2491 HCL Technologies Ltd. - SEZ Unit M/s. Unitech Hi-Tech Structures Ltd. Special Economic Zone – IT/ITES Plot No.1, Block No. A2, 3rd & 4th Floor DH Street, 316 New Town Rajarhat, Distt. North 24 Parganas Kolkata- 700 156, India Tel : +(91) 33 3027 2350 Plot No. 244, Udyog Vihar Phase 1 Gurgaon, 122 016 Haryana, India Tel. : +(91) 124 4346200 Fax :+(91) 124 2349020 Plot No C-1, Sector-34 Gurgaon, 122 016 Haryana, India Tel : +(91) 124 6616565, 4656565 Fax :+(91) 124 2212381

53

Hyderabad Centers Ground & First Floor Jayabheri Silicon Towers Madhapur Road, Kondapur Hyderabad- 500 032, India Tel :+(91) 40 4430 2222 Fax +(91) 40 4430 1500 Bangalore – Centers Vertex Tech Park #564, Pattandur Agrahara Road Off Whitefield Road , Next to ITPL Bangalore- 560066, India Tel : +(91) 80 4187 3000 Fax : +(91) 80 4115 7474 #690, 5& 6th Floor Gold Hill Square (GHS) Bommanahalli Hosur Main Road Bangalore- 560 068, India Ph: +(91) 80 4141 5000 Fax:+(91) 80 2572 7989 Bangalore SEZ HCL Technologies Limited (SEZ) No. 129, Jigani Bomasandra Link Road , Jigani Industrial Area Bangalore- 562106, India Ph: +(91) 80 6781 0000 Fax: + (91) 80 6631 1111 The Senate # 33/1, Ulsoor Road Bangalore- 560 042, India Tel : +(91) 80 4190 6000 Fax : +(91) 80 4124 6888 Surya Sappihre, Plot No:3 1st Phase Electronic city Hosur Road Bangalore- 560 100, India Ph: + (91) 80 6626 7000 Fax: +(91) 80 2852 9100 8 & 9, G.B. Palya Off. Hosur Road Bangalore- 560 068, India Ph: +(91) 80 4158 4000 Fax:+(91) 80 2573 5516 HCL EAI Services Ltd. #6, A.S. Chambers 80 Feet Road 6th Block, Koramangala Bangalore- 560095, India Ph: +(91) 80 6644 1000 Fax: +(91) 80 6644 1117 Ascendas IT park The V, First Floor, Auriga Block Plot No.17, Software Units Layout Madhapur Hyderabad- 5000 081, India Tel: +(91) 40 4461 3557 Fax: +(91) 40 4461 3567 Tower: H08, Phoenix Infocity Pvt. Ltd. (SEZ) HITEC CITY 2 -Survey No.30, 34, 35 & 38 Hyderabad- 500 081, India Tel: +(91) 40 3094 1000 Fax: +(91) 40 4027 3333

Compliance with non-mandatory requirements of Clause 49 of the Listing Agreement
Clause 49 of the Listing Agreement mandates us to obtain a certificate either from the auditors or from the practicing company secretary regarding the compliance of conditions of corporate governance as stipulated in clause 49 of the listing agreement and annex the certificate with the director’s report, which is sent annually to the shareholders. We have obtained a certificate from our statutory auditors to this effect and the same is annexed. The clause further states that the non-mandatory requirements may be implemented as per the discretion of the Company. We comply with the following non-mandatory requirements: 1. The tenor of Independent Directors The Board has decided that Independent Directors shall have tenure, in the aggregate, a period of 9 years on the Board of the Company. The said tenure shall begin from July 1, 2008 for the current Independent Directors on the Board and for the new appointments the tenure shall begin from the date of the appointment of the Independent Director on the Board. 2. Compensation Committee The Compensation Committee of the Company is in existence from September, 1999. Ms. Robin Abrams, an independent non-executive director of the Company is the Chairperson of the Compensation Committee. The details of the Compensation Committee are provided in the Annual Report. 3. Shareholders Rights The Clause states that half- yearly declaration of financial performance including summary of the significant events in the last six months, may be sent to each shareholder. We communicate with investors regularly through e-mail, telephone and face to face meetings either in investors’ conferences, company visits or on road shows. We also leverage the internet in communicating with our investors’ base. After the announcement of the quarterly results, a business television channel in India telecasts discussions with our Management. This enables a large number of retail investors in India to understand our operations better. The announcement of quarterly results is followed by media briefing in press

54

conferences and earning conference calls. The earning calls are also webcast live on the internet. Further, transcripts of the earnings calls are posted on the website www.hcltech.com. We also publish our quarterly results in English and Hindi daily newspapers. 4. Audit Qualifications It is always the Company’s endeavor to present unqualified financial statements. There is no audit qualification in the Company’s financial statements for the year ended June 30, 2010. 5. Training to Board Members The Board has adopted a policy for training of new non-executive directors which shall inter-alia provide (a) orientation and presentations to the non-executive directors to enable them to get familiarize with the operations of the Company; (b) orientation on group structure, subsidiaries, constitution, Board procedures and matters reserved for the Board, major risks and risk management strategies, etc. and (c) training on corporate excellence. The non-executive directors are also provided with reports issued by the Company from time to time and internal policies to enable them to familiarize with the Company’s procedures and practices. The non-executive directors are regularly updated on performance of each line of business of the Company, business strategy going forward and new initiatives being taken/ proposed to be taken by the Company. 6. Whistle Blower mechanism A mechanism for the employees to have direct one on one access to the Chief Executive Officer (CEO) has been put in place. This mechanism focuses on reporting by the employees, any concerns on unethical behavior, actual/ suspected fraud, violation of the code of conduct or any such issue to the CEO.

55

AUDITORS’ CERTIFICATE
REGARDING COMPLIANCE OF CONDITIONS OF CORPORATE GOVERNANCE To the Members of HCL Technologies Limited We have examined the compliance of conditions of corporate governance by HCL Technologies Limited (the ‘Company’), for the year ended on June 30, 2010, as stipulated in clause 49 of the Listing Agreement of the said Company with stock exchanges. The compliance of conditions of corporate governance is the responsibility of the management. Our examination was limited to procedures and implementation thereof, adopted by the Company for ensuring the compliance of the conditions of the 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 Company has complied with the conditions of Corporate Governance as stipulated in the above mentioned Listing Agreement. We further state that such compliance is neither an assurance as to the future viability of the Company nor the efficiency or effectiveness with which the management has conducted the affairs of the Company.

For S.R. BATLIBOI & CO. Firm registration number: 301003E Chartered Accountants

per Tridibes Basu Partner Membership No.: 17401 Gurgaon (Haryana) July 29, 2010

56

DECLARATION BY CHIEF EXECUTIVE OFFICER PURSUANT TO CLAUSE 49(I)(D)(ii) OF THE LISTING AGREEMENT OF THE INDIAN STOCK EXCHANGES We, Shiv Nadar, Chairman & Chief Strategy Officer and Vineet Nayar, Chief Executive Officer & Whole-time Director of HCL Technologies Limited (“the Company”) confirm that the Company has adopted a Code of Conduct (“Code”) for its Board members and senior management personnel and the Code is available on the Company’s web site. We, further confirm that the Company has in respect of the financial year ended June 30, 2010, received from its Board members as well as senior management personnel affirmation as to compliance with the Code of Conduct. Noida (U.P.), India July 29, 2010 Vineet Nayar CEO & Whole-time Director Shiv Nadar Chairman and Chief Strategy Officer

CERTIFICATE BY CHIEF EXECUTIVE OFFICER (CEO) AND CHIEF FINANCIAL OFFICER (CFO) PURSUANT TO CLAUSE 49(V) OF THE LISTING AGREEMENT OF THE INDIAN STOCK EXCHANGES We, Shiv Nadar, Chairman & Chief Strategy Officer, Vineet Nayar, Chief Executive Officer & Whole-time Director, Anil Chanana, Chief Financial Officer, Sandip Gupta, Deputy Chief Financial Officer, Prahlad Rai Bansal, Corporate Vice President- Finance and Mr. Raj Kumar Walia, Senior Vice President- Finance & Accounts of HCL Technologies Limited (“the Company”) certify that: 1. We have reviewed the financial statements and the Cash Flow Statement of the Company for the year ended June 30, 2010 and that to the best of our knowledge and belief (i) (ii) 2. 3. these statements do not contain any materially untrue statement or omit any material fact or contain statements that might be misleading; these statements together present a true and fair view of the Company’s affairs and are in compliance with the existing accounting standards, applicable laws and regulations.

There are, to the best of our knowledge and belief, no transactions entered into by the Company during the year which are fraudulent, illegal or violative of the Company’s code of conduct. We accept responsibility for establishing and maintaining internal controls for financial reporting and that we have evaluated the effectiveness of internal control systems of the Company pertaining to financial reporting and we have disclosed to the auditors and the Audit Committee, deficiencies in the design or operation of such internal controls, if any, of which we are aware and the steps we have taken or propose to take to rectify these deficiencies. We have indicated to the auditors and the Audit Committee – (i) (ii) significant changes, if any, in internal control over financial reporting during the year. significant changes, if any, in accounting policies during the year and that the same have been disclosed in the notes to the financial statements; and

4.

(iii) instances of significant fraud of which we are aware and the involvement therein, if any, of the management or an employee having a significant role in the Company’s internal control system over financial reporting.

Vineet Nayar CEO & Whole-time Director Anil Chanana Chief Financial Officer Noida (U.P.), India July 29, 2010 Prahlad Rai Bansal Corporate Vice President- Finance

Shiv Nadar Chairman and Chief Strategy Officer Sandip Gupta Deputy Chief Financial Officer Raj Kumar Walia Senior Vice President- Finance & Accounts

57

Financial Statements

AUDITORS’ REPORT To the Members of HCL Technologies Limited 1. We have audited the attached balance sheet of HCL Technologies Limited (the ‘Company’) as at June 30, 2010 and also the profit and loss account and the cash flow statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. As required by the Companies (Auditors’ Report) Order, 2003 (as amended) (the ‘Order’) issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Companies Act, 1956 (the ‘Act’), we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order. Further to our comments in the Annexure referred to above, we report that: i. We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purposes of our audit; In our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of those books; The balance sheet, profit and loss account and cash flow statement dealt with by this report are in agreement with the books of account; In our opinion, the balance sheet, profit and loss account and cash flow statement dealt with by this report comply with the accounting standards referred to in sub-section (3C) of Section 211 of the Act; On the basis of the written representations received from the directors, as on June 30, 2010, and taken on record by the Board of Directors, we report that none of the directors is disqualified as on June 30, 2010 from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Act; and In our opinion and to the best of our information and according to the explanations given to us, the said accounts give the information required by the Act, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India; (a) in the case of the balance sheet, of the state of affairs of the Company as at June 30, 2010; (b) in the case of the profit and loss account, of the profit for the year ended on that date; and (c) in the case of cash flow statement, of the cash flows for the year ended on that date. For S.R. Batliboi & Co. Firm registration number: 301003E Chartered Accountants

2.

per Tridibes Basu Partner Membership No.: 17401 Gurgaon (India) July 29, 2010 Annexure referred to in paragraph 3 of our report of even date (i) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets. (b) All fixed assets were physically verified by the management in the previous year in accordance with a planned programme of verifying them once in three years which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. As informed, no material discrepancies were noticed on such verification. (c) There was no substantial disposal of fixed assets during the year. (ii) (a) The management has conducted physical verification of inventory at reasonable intervals during the year. (b) The procedures of physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business. (c) The Company is maintaining proper records of inventory and no material discrepancies were noticed on physical verification carried out at the end of the year. (iii) (a) As informed, the Company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under section 301 of the Act. Accordingly, paragraph 4 (iii) (a) to 4 (iii) (d) of the Order is not applicable. (b) As informed, the Company has not taken any loans, secured or unsecured from companies, firms or other parties covered in the register maintained under section 301 of the Act. Accordingly, paragraph 4 (iii) (e) to 4 (iii) (g) of the Order is not applicable.

3.

4.

ii.

iii.

iv.

v.

vi.

61

(iv)

In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business, for the purchase of inventory and fixed assets and for the sale of goods and services. During the course of our audit, no major weakness has been noticed in the internal control system in respect of these areas. During the course of our audit, we have not observed any continuing failure to correct major weakness in internal control system of the company. According to the information and explanations provided by the management, we are of the opinion that there are no contracts and arrangements that need to be entered into the register maintained under Section 301 of the Act. Accordingly, paragraph 4 (v) of the Order is not applicable. The Company has not accepted any deposits from the public. In our opinion, the Company has an internal audit system commensurate with the size and nature of its business. To the best of our knowledge and as explained, the Central Government has not prescribed maintenance of cost records under clause (d) of sub-section (1) of section 209 of the Act for the products of the Company. (a) The Company is generally regular in depositing with appropriate authorities undisputed statutory dues including provident fund, investor education and protection fund, employees’ state insurance, incometax, sales-tax, wealth-tax, service tax, customs duty, excise duty, cess and other material statutory dues. Further, since the Central Government has till date not prescribed the amount of cess payable under section 441 A of the Companies Act,1956, we are not in a position to comment upon the regularity or otherwise of the company in depositing the same. (b) According to the information and explanations given to us, no undisputed amounts payable in respect of provident fund, investor education and protection fund, employees’ state insurance, income-tax, wealthtax, service tax, sales-tax, customs duty, excise duty, cess and other undisputed statutory dues were outstanding, at the year end, for a period of more than six months from the date they became payable. (c) According to the records of the Company, the dues outstanding of income-tax, sales-tax, wealth-tax, service tax, customs duty, excise duty and cess on account of any dispute, are as follows:

Name of the Statute

Nature of Dues

Amount (Rs)

Income Tax Income Tax Act, 1961 Income Tax Act, 1961 Income Tax Act, 1961 Income Tax Act, 1961 Income Tax Act, 1961 Income Tax Act, 1961 Income Tax Act, 1961 Income Tax Income Tax Income Tax Income Tax Income Tax Income Tax

Period to Forum where which the dispute is amount pending relates 9,746,639 2005-06 Commissioner of Income Tax (Appeals) 4,185,346 2001-02 Delhi High Court 8,551,814 2001-02 2002-03 2003-04 2002-03 2003-04 Karnataka High Court Karnataka High Court Delhi High Court Karnataka High Court Delhi High Court Commissioner of Income Tax (Appeals) Commissioner of Income Tax (Appeals) Delhi High Court Commissioner of Income Tax (Appeals) Commissioner of Income Tax (Appeals) Delhi High Court Delhi High Court Delhi High Court Delhi High Court Commissioner of Income Tax (Appeals) Commissioner of Income Tax (Appeals) Commissioner of Income Tax (Appeals) Customs, Excise, Service Tax Appellant Tribunal, Bangalore Customs, Excise, Service Tax Appellant Tribunal, Chennai Sales Tax, Joint Commissioner Appeal, Bangalore.

(v)

56,228,452 24,964,535 56,228,452 24,964,535

(vi) (vii) (viii)

Income Tax Income Tax Act, 1961 Income Tax Income Tax Act, 1961 Income Tax Income Tax Act, 1961 Income Tax Income Tax Act, 1961

49,270,874 2003-04

11,130,000 2003-04

(ix)

17,381,669 2004-05 1,060,000 2004-05

Income Tax Income Tax 100,675,157 2005-06 Act, 1961 Income Tax Act, 1961 Income Tax Act, 1961 Income Tax Act, 1961 Income Tax Act, 1961 Income Tax Act, 1961 Income Tax Income Tax Income Tax 2,927,358 1997-98 3,883,789 1998-99 5,195,742 2002-03

Income Tax 280,170,018 2004-05 Income Tax 809,215,277 2005-06

Income Tax Income Tax Act, 1961 Income Tax Income Tax Act, 1961 Central Excise and Customs Act, 1962 Central Excise and Customs Act, 1962 Sales Tax Custom Duty

30,812,865 2002-03

355,350 2004-05

2,018,406 2003-04

Name of the Statute

Nature of Dues

Income Tax Income Tax Act, 1961 Income Tax Income Tax Act, 1961

Period to Forum where which the dispute is amount pending relates 1,855,000 2001-02 Commissioner of Income Tax (Appeals) 77,174,922 2005-06 Commissioner of Income Tax (Appeals)

Amount (Rs)

Custom Duty

210,000 2007-08

Sales Tax

2,712,000 2007-08

62

(x)

The Company has no accumulated losses at the end of the financial year and it has not incurred cash losses in the current and immediately preceding financial year. Based on our audit procedures and as per the information and explanations given by the management, we are of the opinion that the Company has not defaulted in repayment of dues to a financial institution, bank or debenture holders. According to the information and explanations given to us and based on the documents and records produced to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities. In our opinion, the Company is not a chit fund or a nidhi / mutual benefit fund / society. Therefore, the provisions of clause 4(xiii) of the Order are not applicable to the Company.

(xviii) The Company has not made any preferential allotment of shares to parties or companies covered in the register maintained under section 301 of the Act. (xix) According to the information and explanations given to us, during the period covered by our audit report, the Company had issued 10,000 debentures of Rs. 10 lakhs each. The Company has created security or charge in respect of debentures issued. (xx) The Company has not raised any money by public issue during the year.

(xi)

(xii)

(xiii)

(xxi) Based upon the audit procedures performed for the purpose of reporting the true and fair view of the financial statements and as per the information and explanations given by the management, we report that no fraud on or by the Company has been noticed or reported during the course of our audit.

(xiv) In our opinion, the Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4(xiv) of the Order are not applicable to the Company. (xv) According to the information and explanations given to us, the Company has given guarantees for loans taken by others from bank or financial institutions, the terms and conditions whereof in our opinion are not prima-facie prejudicial to the interest of the Company. For S.R. Batliboi & Co. Firm registration number: 301003E Chartered Accountants

(xvi) The Company did not have any term loans outstanding during the year. (xvii) According to the information and explanations given to us and on an overall examination of the balance sheet of the Company, we report that no funds raised on shortterm basis have been used for long-term investment.

per Tridibes Basu Partner Membership No.: 17401 Gurgaon (India) July 29, 2010

63

Balance Sheet as at 30 June 2010
(All amounts in crores of rupees) As at 30 June 2010 As at 30 June 2009

Schedule Sources of Funds Shareholders’ funds Share capital Share application money pending allotment Reserves and surplus Loan funds Secured loans Unsecured loans Application of Funds Fixed assets Gross block Less: Accumulated depreciation and amortization Net block Capital work-in-progress (including capital advances)

1 2 3 4

135.76 2.01 4,798.09 4,935.86 1,030.51 366.88 1,397.39 6,333.25

134.05 0.47 3,353.72 3,488.24 123.81 389.92 513.73 4,001.97

5 2,293.37 1,349.54 943.83 477.20 1,421.03 6 20(7) 7 8 9 10 11 12 13 2,233.20 106.16 12.04 2,084.70 989.43 408.03 1,234.74 4,728.94 1,722.48 433.60 2,156.08 2,572.86 6,333.25 1,957.86 1,100.88 856.98 417.56 1,274.54 562.75 226.00 87.01 1,489.26 1,365.83 323.24 1,267.28 4,532.62 2,215.99 377.95 2,593.94 1,938.68 4,001.97

Investments Deferred tax assets (net) Current assets, loans and advances Inventories Sundry debtors Cash and bank balances Other current assets Loans and advances (A) Less: Current liabilities and provisions Current liabilities Provisions (B) Net current assets (A-B) Significant accounting policies and notes to the accounts

20

The schedules referred to above and notes to accounts form an integral part of the Balance Sheet. As per our report of even date For HCL Technologies Limited For S. R. Batliboi & Co. Firm Registration Number: 301003E Chartered Accountants Shiv Nadar Chairman and Chief Strategy Officer Vineet Nayar CEO & Wholetime Director per Tridibes Basu Partner Membership Number: 17401 Sandip Gupta Deputy Chief Financial Officer Raj Kumar Walia Senior Vice President - Finance & Accounts Gurgaon, India 29 July 2010 Noida (UP), India 29 July 2010 T S R Subramanian Director Anil Chanana Chief Financial Officer Prahlad Rai Bansal Corporate Vice President - Finance Manish Anand Deputy Company Secretary

64

Profit and Loss Account for the year ended 30 June 2010
(All amounts in crores of rupees except share data and unless otherwise stated) Schedule Income Revenues Other income Expenditure Cost of goods sold Personnel expenses Operating and other expenses Finance expenses Depreciation and amortization Profit before tax Provision for tax - current tax - deferred tax charges - fringe benefit tax Profit after tax Balance brought forward Profit available for appropriation Appropriations Proposed final dividend [including Rs. 0.29 crores (previous year Rs. 0.87 crores) paid for previous year] Corporate dividend tax on proposed final dividend [including Rs. 0.05 crores (previous year Rs. 0.15 crores) paid for previous year] Interim Dividend Corporate dividend tax on interim dividend Transfer to general reserve Transfer to debenture redemption reserve Balance carried forward to the balance sheet Earnings per equity share of Rs 2-/ each Basic Diluted Weighted average number of shares used in computing earnings per equity share Basic Diluted Significant accounting policies and notes to the accounts 20(13) 15.68 15.33 673,741,835 689,103,382 20 14.91 14.73 669,016,035 677,115,015 14 15 16 17 18 19 5 Year ended 30 June 2010 5,078.76 171.77 5,250.53 85.47 2,187.66 1,449.19 101.36 274.03 4,097.71 1,152.82 (104.98) 4.97 3.77 1,056.58 1,920.97 2,977.55 68.16 11.32 202.33 34.13 105.66 295.00 2,260.95 2,977.55 Year ended 30 June 2009 4,675.09 265.81 4,940.90 – 1,930.22 1,539.00 28.09 251.89 3,749.20 1,191.70 (208.40) 31.88 (17.87) 997.31 1,572.73 2,570.04 67.90 11.54 401.71 68.19 99.73 – 1,920.97 2,570.04

The schedules referred to above and notes to accounts form an integral part of the Profit and Loss Account. As per our report of even date For HCL Technologies Limited For S. R. Batliboi & Co. Firm Registration Number: 301003E Chartered Accountants Shiv Nadar Chairman and Chief Strategy Officer Vineet Nayar CEO & Wholetime Director per Tridibes Basu Partner Membership Number: 17401 Sandip Gupta Deputy Chief Financial Officer Raj Kumar Walia Senior Vice President - Finance & Accounts Gurgaon, India 29 July 2010 Noida (UP), India 29 July 2010 T S R Subramanian Director Anil Chanana Chief Financial Officer Prahlad Rai Bansal Corporate Vice President - Finance Manish Anand Deputy Company Secretary

65

Cash Flow statement for the year ended 30 June 2010
(All amounts in crores of rupees) Year ended 30 June 2010 A Cash flows from Operating activities Profit before tax Adjusted for: Depreciation and amortization Interest income Dividend Income Profit on sale of investments Gain on sale of fixed assets Interest expense Amortisation of stock compensation under Employee stock option plans Other non cash charges Operating profit before working capital changes Movement in working capital Decrease/ (increase) in sundry debtors Decrease/ (increase) in inventories Decrease/ (increase) in loans and advances Decrease/ (increase) in other current assets Increase/ (decrease) in current liabilities and provisions Cash generated from operations Direct taxes paid (net of refunds) Net cash from operating activities B Cash flows from Investing activities Proceeds from / (Investment in) fixed deposits (net) Purchase of investments in mutual funds Proceeds from sale of investment in mutual funds Investment in bonds Proceeds from bonds Deposits placed with body corporate Proceeds from redemption of Preference Shares of subsidiaries Investment in subsidiaries Loans given to subsidiaries Proceeds from repayment of loans given to subsidiaries Purchase of fixed assets (including capital advances) Proceeds from sale of fixed assets Dividend and Interest income Taxes paid Net cash used for investing activities C Cash flows from Financing activities Proceeds from issue of share capital Proceeds from secured loans Repayment of secured loans Proceeds from Issue of Debentures Proceeds from unsecured loans Repayment of unsecured loans Dividends paid (including corporate dividend tax) Interest paid Principal payment on finance lease obligations Net cash from (used for) financing activities Exchange differences on translation of foreign currency cash and cash equivalents Net increase in cash and cash equivalents (A+B+C) Cash and cash equivalents at the beginning of the year Cash and cash equivalents at the end of the year Cash and Bank Balances as per Schedule - 9(refer note 1 below) Less: Fixed Deposits greater than three months Cash and cash equivalents in cash flow statement 1,152.82 274.03 (123.83) (27.23) (5.58) (2.20) 82.91 49.84 4.33 1,405.09 (591.61) 74.99 (66.06) (86.40) 177.73 913.74 (174.48) 739.26 297.24 (10,428.29) 9,705.64 (50.00) 20.00 (100.00) – (912.93) (63.92) 332.52 (400.33) 5.95 208.56 (13.55) (1,399.11) 103.99 11.42 (108.35) 1,000.00 500.75 (530.00) (315.18) (72.99) (6.26) 583.38 (2.69) (76.47) 144.00 64.84 989.43 (924.59) 64.84 Year ended 30 June 2009 1,191.70 251.89 (149.66) (5.36) (107.04) (0.10) 16.93 56.12 27.21 1,281.69 (536.24) (87.01) (16.91) (92.41) 133.60 682.72 (92.59) 590.13 (697.83) (644.96) 1,952.12 (23.00) 15.00 – 45.00 (2.56) (835.57) 159.88 (365.62) 1.79 75.70 (61.08) (381.13) 20.11 678.49 (581.64) 389.92 (704.43) (18.28) (12.05) (227.88) (18.88) 162.88 144.00 1,365.83 (1,221.83) 144.00

66

Cash Flow statement for the year ended 30 June 2010
(All amounts in crores of rupees) Notes: 1 Cash and bank balance includes the following, which are not available for use by the Company: Investor education and Protection fund - Unclaimed dividend 2.35 2.32 Bank Guarantees margin 0.01 0.01 Fixed deposits pledged with banks – 586.95 2 The previous year’s figures have been re-classified/re-grouped to conform to current year’s classification

As per our report of even date For HCL Technologies Limited For S. R. Batliboi & Co. Firm Registration Number: 301003E Chartered Accountants Shiv Nadar Chairman and Chief Strategy Officer Vineet Nayar CEO & Wholetime Director per Tridibes Basu Partner Membership Number: 17401 Sandip Gupta Deputy Chief Financial Officer Raj Kumar Walia Senior Vice President - Finance & Accounts Gurgaon, India 29 July 2010 Noida (UP), India 29 July 2010 T S R Subramanian Director Anil Chanana Chief Financial Officer Prahlad Rai Bansal Corporate Vice President - Finance Manish Anand Deputy Company Secretary

67

Schedules to the accounts
(All amounts in crores of rupees except share data and unless otherwise stated) Schedule 1: Share capital Authorised 750,000,000 (Previous year 750,000,000) equity shares of Rs. 2 each Issued, subscribed and paid up 678,783,812 (Previous year 670,256,600) equity shares of Rs. 2 each, fully paid up Notes: 1. Paid up share capital includes: • 42,449,979 (Previous year 42,449,979) equity shares of Rs. 2 each allotted as fully paid up, pursuant to contracts for consideration other than cash. • 82,986,872 (Previous year 82,986,872) equity shares of Rs. 2 each issued as bonus shares in the ratio of one share for every two held by capitalisation of general reserve and 325,453,918 (Previous year 325,453,918) equity shares of Rs. 2 each issued as bonus shares in the ratio of one share for every share held by capitalisation of securities premium account. 2. For stock option oustanding details refer Note no 2 of schedule 20 Schedule 2: Reserve and Surplus Securities Premium Account Opening Balance Add: Exercise of stock options by employees Foreign currency translation reserve Opening Balance Add: Exchange difference during the year on net investment in Non-integral operations General Reserve Opening Balance Add: Transferred from profit and loss account Debenture Redemption Reserve Opening Balance Add: Transferred from profit and loss account Hedging Reserve account (net of deferred tax) Opening Balance Movement during the year (net) Employee Stock Options Outstanding Less: Deferred employee compensation Profit and Loss Account Total (642.79) 550.33 (92.46) 216.23 16.09 200.14 2,260.95 4,798.09 (411.85) (230.94) (642.79) 259.41 45.63 213.78 1,920.97 3,353.72 295.00 295.00 588.67 105.66 694.33 488.94 99.73 588.67 0.01 1.13 1.14 0.01 0.01 1,273.08 165.91 1,438.99 1,209.94 63.14 1,273.08 Year Ended 30 June 2010 Year Ended 30 June 2009 135.76 135.76 134.05 134.05 150.00 150.00 As at 30 June 2010 As at 30 June 2009

68

Schedules to the accounts
(All amounts in crores of rupees) Schedule 3: Secured Loans Debentures (refer Note 1 below) 7.55% Secured redeemable non convertible debentures of Rs 10 lacs each 8.20% Secured redeemable non convertible debentures of Rs 10 lacs each 8.80% Secured redeemable non convertible debentures of Rs 10 lacs each From Banks Short Term Loans (refer Note 2 below) From Others -Obligation under finance lease (refer Note 3 below and Note 3(i) of Schedule 20) As at 30 June 2010 170.00 330.00 500.00 – 30.51 1,030.51 As at 30 June 2009 – – – 96.94 26.87 123.81

Notes: 1. The Company allotted 10,000 secured redeemable non convertible debentures of face value of Rs. 10 lacs each, aggregating to Rs.1,000 crores.The debentures are secured by specified movable assets,receivables from subsidiaries and land and building of the Company.Debentures are redeemable at par on following date. Maturity Date Debenture - Series August 25,2011 7.55% Redeemable non convertible debentures August 25,2012 8.20% Redeemable non convertible debentures September 10,2014 8.80% Redeemable non convertible debentures 2. Rs.Nil crores (Previous Year: Rs 96.94 crores) secured by fixed deposits pledged with banks of Rs. Nil Crore (Previous Year: Rs 586.95 crores) 3. Obligation under finance lease are secured by fixed assets taken on lease. Schedule 4: Unsecured Loans Commercial Paper (Short term) [Maximum amount raised at anytime during the year Rs. Nil crores (Previous year Rs. 150 crores)] Short term loans -From Banks Other loan -From financial institution [Due within one year Rs. Nil crores (Previous year Rs. 0.02 crores)] As at 30 June 2010 – As at 30 June 2009 150.00

366.88 – 366.88

239.90 0.02 389.92

Schedule 5: Fixed assets Refer Note 1(d), (e) and (f) of Schedule 20
PARTICULARS GROSS BLOCK ACCUMULATED DEPRECIATION AND AMORTIZATION Translation exchange differences
(0.01) (0.01) -

NET BLOCK As at 30 June 2010
0.02 63.64 112.69 361.83 136.11 98.17 99.71 39.94 1.29 30.43 943.83

Translation As at As at exchange 30 June As at Charge for 1 July 2009 Additions Deletion differences 2010 1 July 2009 the year
Goodwill Freehold land Leasehold land Buildings Plant and machinery Computers Software Furniture and fittings Vehicles - owned - leased [refer Note 3 (i) of schedule 20] Previous year 1.98 63.64 111.71 290.12 366.65 505.46 246.14 313.83 5.41 52.92 1,957.86 1,599.61 8.65 131.10 70.83 64.10 63.44 16.54 0.12 11.96 366.74 390.22 5.15 9.91 5.74 0.08 10.20 31.08 31.97 (0.04) (0.02) (0.01) (0.08) (0.15) 1.98 63.64 120.36 421.22 432.29 559.63 309.57 324.55 5.45 54.68 2,293.37 1,957.86 1.96 6.35 41.16 233.13 400.10 147.83 248.12 3.51 18.72 1,100.88 874.32 1.32 18.23 67.91 69.54 62.03 42.20 0.72 12.08 274.03 251.89

Deletion
4.86 8.18 5.70 0.07 6.55 25.36 25.33

As at 30 June 2010
1.96 7.67 59.39 296.18 461.46 209.86 284.61 4.16 24.25 1,349.54 1,100.88

As at 30 June 2009
0.02 63.64 105.36 248.96 133.52 105.36 98.31 65.71 1.90 34.20 856.98 725.29

Capital work-in-progress (including capital advances)

477.20

417.56

69

Schedules to the accounts
(All amounts in crores of rupees except share data and unless otherwise stated)

Schedule 6: Investments A) Long Term Investments (At cost) (i) In subsidiary companies Trade (Unquoted), fully paid up 12,796,404 (Previous year 12,796,404) equity shares of Rs. 10 each, in HCL Comnet Systems and Services Limited 292,670,582 (Previous year 113,170,582) equity shares of USD 1 each, in HCL Bermuda Limited, Bermuda 939,440 (Previous year 939,440) equity shares of SGD 1 each, in HCL Singapore Pte. Limited 4,900 (Previous year 4,900) equity shares of SGD 1 each, in DSI Financial Solutions Pte Limited, Singapore 1 (Previous year 1) equity shares of Euro 100 each, in HCL GmbH 1,000,000 (Previous year 1,000,000) equity shares of Rs. 10 each, in HCL Technoparks Limited HCL Technologies (Shanghai) Limited (ii) In Joint venture Trade (Unquoted), fully paid up 10,780,000 (Previous year 10,780,000) shares of Rs. 10 each, in NEC HCL System Technologies Limited (iii) Other than trade (Unquoted) Investments in bonds (refer Note 12 (i) of Schedule 20) Investments in mutual funds (refer Note 1 below & 12 (ii) of Schedule 20) Total long term investments B) Current Investments (At lower of cost and market value) (unquoted) Investments in mutual funds (refer Note 2 below & 12 (iii) of Schedule 20) less:- Diminution in the value of investment Total current investments

As at 30 June 2010

As at 30 June 2009

23.71 1,386.94 5.25 0.23 0.11 1.00 7.68 1,424.92 10.78

23.71 476.41 5.25 0.23 0.11 1.00 5.26 511.97 10.78

50.00 1,485.70

20.00 20.00 562.75

748.23 0.73 747.50 2,233.20

562.75

Notes: 1. Net asset value of long term investment in mutual funds as on 30 June 2010 Rs. Nil crores (Previous year Rs. 21.99 crores). 2. Net asset value of current investment in mutual funds as on 30 June 2010 Rs 749.60 crores (Previous year Rs. Nil crores).

Schedule 7: Inventories (at lower of cost and net realisable value) Finished goods Store and spares

As at 30 June 2010 4.49 7.55 12.04

As at 30 June 2009 87.01 87.01

70

Schedules to the accounts
(All amounts in crores of rupees) Schedule 8: Sundry Debtors Debts Outstanding for a period exceeding six months - Unsecured, considered good - Unsecured, considered doubtful Other debts - Unsecured, considered good - Unsecured, considered doubtful 1,780.89 2.48 2,108.50 Less: Provision for doubtful debts 23.80 2,084.70 1,358.02 8.19 1,522.67 33.41 1,489.26 303.81 21.32 325.13 131.24 25.22 156.46 As at 30 June 2010 As at 30 June 2009

Note: Sundry debtors include Rs. 1,550.64 crores (Previous year Rs. 984.51 crores) recoverable from subsidiaries of the company. Schedule 9: Cash and Bank balances Cash in hand Cheques in hand Remittances in transit Balances with scheduled banks - On current accounts - On fixed deposit accounts (refer Note below) - On unpaid dividend account Balance with other banks (refer Note 9 of Schedule 20) - On current accounts 7.78 989.43 0.38 1,365.83 16.56 924.60 2.35 981.65 8.27 1,221.83 2.32 1,365.45 As at 30 June 2010 0.01 38.13 As at 30 June 2009 0.01 12.51 120.51

Note: Pledged with banks as security for loan Rs. Nil crores (Previous year Rs 586.95 crores) and for guarantees Rs. 0.01 crores (Previous year Rs. 0.01 crores). Schedule 10: Other current assets Unbilled revenue (refer Note below) Deferred Cost Unrealised gain on derivative financial instruments Dividend receivable from subsidiary As at 30 June 2010 217.13 187.48 3.42 408.03 Note: Includes Rs. 111.55 crores (Previous year Rs. 105.15 crores) unbilled revenue in respect of subsidiary Companies As at 30 June 2009 179.72 143.10 0.42 323.24

71

Schedules to the accounts
(All amounts in crores of rupees) Schedule 11: Loans and advances (Unsecured and considered good, unless otherwise stated) Advances recoverable in cash or in kind or for value to be received - Considered good (refer Note 1 below) - Considered doubtful Loans to subsidiaries (refer Note 6 of schedule 20) Inter corporate deposits with HDFC Limited MAT credit entitlement Interest receivable (refer Note 2 below) Advance fringe benefit tax (refer Note 3 below) Less: Provision for doubtful advances 481.05 1.42 426.30 100.00 179.39 46.08 1.92 1,236.16 1.42 1,234.74 Notes: 1. Includes Rs. 217.17 crores (Previous year Rs. 136.39 crores) recoverable from subsidiaries of the company. 2. Includes Rs. 21.29 crores (Previous year Rs. 38.23 crores) recoverable from subsidiaries of the company. 3. Net of provision for fringe benefit tax of Rs. 85.01 crores (Previous year Rs. Nil crores). Schedule 12: Current liabilities Sundry creditors Subsidiary companies (refer Note 5 of Schedule 20) Unrealised loss on derivative financial instruments Unearned revenue (refer Note 1 below) Advance from customers (refer Note 2 below) Investor Education and Protection Fund shall be credited by following amounts (as and when due) - Unclaimed Dividend Interest accrued but not due on short term loans Other liabilities 2.35 9.89 10.44 1,722.48 Notes: 1. Includes Rs. 138.30 crores (Previous year Rs. 69.94 crores) pertaining to the subsidiaries of the company. 2. Includes Rs. 5.30 crores (Previous year Rs. 4.98 crores) pertaining to the subsidiaries of the company. 2.32 31.82 2,215.99 As at 30 June 2010 645.60 544.95 145.93 303.36 59.96 As at 30 June 2009 804.75 556.41 614.85 200.86 4.98 418.71 1.34 692.05 53.35 103.17 1,268.62 1.34 1,267.28 As at 30 June 2010 As at 30 June 2009

72

Schedules to the accounts
(All amounts in crores of rupees) Schedule 13: Provisions Provision for other staff benefits Provision for Income tax (refer Note 1 below) Provision for Fringe benefit tax (refer Note 2 below) Provision for Wealth tax (refer Note 3 below) Proposed Dividend Tax on proposed dividend

As at 30 June 2010
144.76 207.90 1.80 67.87 11.27 433.60

As at 30 June 2009
129.32 165.07 3.64 1.50 67.03 11.39 377.95

Notes: 1. Net of advance income tax of Rs. 557.92 crores (Previous year Rs. 366.58 crores). 2. Net of fringe benefit advance tax of Rs. Nil crores (Previous year Rs. 88.28 crores). 3. Net of advance wealth tax of Rs. 1.56 crores (Previous year Rs 0.72 crores). Schedule 14: Revenue Sale of hardware and software Services Year ended 30 June 2010 110.89 4,967.87 5,078.76 Year ended 30 June 2009 4,675.09 4,675.09

Schedule 15: Other income Interest - On fixed deposits [Includes, Tax deducted at source Rs. 19.81 crores (Previous year Rs.15.38 crores)] - On investments (other than trade) - On loans Dividend Income - from subsidiary companies (trade investments) - On investments (other than trade) Profit on sale of investments (other than trade) Profit on sale of fixed assets (refer Note below) Provision for doubtful debts written back Miscellaneous income

Year ended 30 June 2010 73.66 2.35 47.82 27.23 5.58 2.20 8.73 4.20 171.77

Year ended 30 June 2009 108.88 2.54 38.25 0.42 4.94 107.04 0.10 3.64 265.81

Note: Net of loss on sale of fixed assets Rs.1.67 crores (Previous year Rs. 0.69 crores) Schedule 16: Cost of goods sold Opening Stock Add: Purchases made during the year Less: Stock transferred to deferred cost Less: Closing Stock Year ended 30 June 2010 87.01 51.06 (48.11) (4.49) 85.47 Year ended 30 June 2009 87.01 87.01 -

73

Schedules to the accounts
(All amounts in crores of rupees) Schedule 17: Personnel expenses Salaries, wages and bonus Contribution to provident and other funds Staff welfare expenses Employee stock compensation expense Year ended 30 June 2010 2,043.99 74.36 19.47 49.84 2,187.66 Year ended 30 June 2010 158.62 86.93 7.13 29.99 33.42 24.69 44.20 388.74 9.46 39.32 404.78 63.96 6.75 8.46 10.39 5.63 18.65 3.26 0.30 0.01 47.75 0.73 56.02 1,449.19 Year ended 30 June 2010 69.32 13.59 6.20 8.66 3.59 101.36 Year ended 30 June 2009 1,789.38 62.20 22.52 56.12 1,930.22 Year ended 30 June 2009 155.79 100.28 7.29 30.33 35.30 29.03 56.62 290.01 11.00 26.07 462.06 60.82 7.25 11.45 3.83 3.22 23.14 27.40 0.18 0.03 174.29 23.61 1,539.00 Year ended 30 June 2009 9.45 4.77 11.16 2.71 28.09

Schedule 18: Operating and other expenses Rent Power and fuel Insurance Repairs and maintenance - Plant and machinery - Building - Others Communication costs Travel and conveyance Business promotion Legal and professional charges Outsourcing cost Software licence fee Printing and stationery Rates and taxes Advertising and publicity Books and periodicals Recruitment, training and development Provision for doubtful debts Bad debts/ advances written off Provision for doubtful advances Donations Loss on sale of investment Exchange differences Diminution in the value of investment Miscellaneous expenses

Schedule 19: Finance expenses Interest - on debentures - on bank loan - on lease assets - others Bank charges

74

Schedules forming part of the accounts
(All amounts in crores of rupees except share data and unless otherwise stated) Schedule 20: Significant accounting policies and notes to the accounts

Company Overview
HCL Technologies Limited (hereinafter referred to as ‘HCL’ or the ‘Company’) is primarily engaged in providing a range of software services, business process outsourcing and infrastructure services. The Company was incorporated in India in November 1991. The Company leverages an extensive offshore infrastructure and its global network of offices in various countries and professionals to deliver solutions across select verticals including Retail, Aerospace and defense, Automotive, Telecom, Financial Services, Government, Hi-tech, Media and Entertainment, Travel, Transportation and Logistics, Energy and utilities, Life Sciences and Healthcare. 1. Statement of Significant accounting policies a) Basis of preparation The financial statements have been prepared to comply with the Accounting Standards notified by Companies (Accounting Standards) Rules, 2006, (as amended) and the relevant provisions of the Companies Act, 1956. The financial statements have been prepared under the historical cost convention on an accrual basis. The accounting policies have been consistently applied by the Company and are consistent with those used in the previous year. b) Use of estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the results of operations during the reporting period. Although these estimates are based upon management’s best knowledge of current events and actions, actual results could differ from these estimates. c) Revenue recognition i) Software Services Revenue from Software services comprises income from time and material and fixed price contracts. Revenue with respect to time and material contracts is recognized as related services are performed. Revenue from fixed price contracts and fixed time frame contracts is recognized in accordance with the percentage completion method under which the sales value of performance, including earnings thereon, is recognized on the basis of cost incurred in respect of each contract as a proportion of total cost expected to be incurred. The cumulative impact of any revision in estimates of the percentage of work completed is reflected in the year in which the change becomes known. Provisions for estimated losses are made during the year in which a loss becomes probable based on current contract estimates. Revenue from sale of licenses for the use of software applications is recognised on transfer of title in the user license. Revenue from annual technical service contracts is recognised on a pro rata basis over the period in which such services are rendered. Income from revenue sharing agreements is recognized when the right to receive is established. ii) Infrastructure Services Revenue from infrastructure services is derived from both time based and unit priced contracts. Revenue is recognized as the related services are performed in accordance with specific terms of the contract. In case of multi-deliverable contracts where revenue cannot be allocated to various deliverables in a contract, the entire contract is accounted for as one deliverable and accordingly the revenue is recognized on a proportionate completion method following the performance pattern of predominant services in the contract or is deferred until the last deliverable is delivered. iii) Business Process Outsourcing services Revenue from Business Process Outsourcing services is derived from both time based and unit-price contracts. Revenue is recognized as the related services are performed in accordance with the specific terms of the contracts with the customer. Cost and earnings in excess of billing are classified as unbilled revenue, while billing in excess of cost and earnings are classified as unearned revenue. Incremental revenue from existing contracts arising on future sales of the customers’ products will be recognized when it is earned. Revenue and related direct costs from transition services in outsourcing arrangements are deferred and recognized over the period of the arrangement. Certain upfront non-recurring costs incurred in the initial phases of outsourcing contracts and contract acquisition costs, are deferred and amortized usually on a straight line basis over the term of the contract. The Company periodically estimates the undiscounted cash flows from the arrangement and compares it with the unamortized costs. If the unamortized costs exceed the undiscounted cash flow, a loss is recognized. The Company accounts for volume discounts and pricing incentives to customers. The discount terms in the Company’s arrangements with customers generally entitle the customer to discounts, if the customer completes a specified level of revenue transactions. In some arrangements, the level of discount varies with increases in the levels of revenue transactions. The Company recognizes discount obligations as a reduction of revenue based on the ratable allocation of the discount to each of the underlying revenue transactions that result in progress by the customer toward earning the discount. Revenues are shown net of sales tax, value added tax, service tax and applicable discounts and allowances.

75

Schedules forming part of the accounts
(All amounts in crores of rupees except share data and unless otherwise stated) Schedule 20: Significant accounting policies and notes to the accounts (Contd.) iv) Others Profit on sale of Investments is recorded on transfer of title from the Company and is determined as the difference between the sales price and the then carrying value of the investment. Interest on the deployment of surplus funds is recognised using the time-proportion method, based on interest rates implicit in the transaction. Dividend income, brokerage, commission and rent are recognised when the right to receive the same is established. Dividend from subsidiaries is recognised even if same are declared after the balance sheet date but pertains to period on or before the date of balance sheet as per the requirement of schedule VI of the Companies Act, 1956. d) Fixed assets Fixed assets are stated at the cost less accumulated depreciation and impairment losses if any. Cost comprises the purchase price and any attributable cost of bringing the asset to its working condition for its intended use. Fixed assets under construction, advances paid towards acquisition of fixed assets and cost of assets not ready for use before the year-end, are disclosed as capital work in progress. e) Depreciation and amortization Depreciation on fixed assets except leasehold land and leasehold improvements is provided on the straight-line method over their estimated useful lives, as determined by the management, at the rates which are equal to or higher than the rates prescribed under Schedule XIV of the Companies Act, 1956. Leasehold land is amortised over the period of lease. Leasehold improvements are amortised over a period of four years or the remaining period of the lease, whichever is shorter. Depreciation is charged on a pro-rata basis for assets purchased/sold during the year. Assets costing less than Rs. 5,000 are fully depreciated in the year of purchase. Intangible assets are amortized over their respective individual estimated useful life or straight line basis. The management’s estimate of the useful life of the various fixed assets is as follows: Life (in years) Buildings Plant and machinery (including office equipment, air conditioners and electrical installations) Computers Software Furniture and fixtures Vehicles-Owned Vehicle–Leased f) Impairment of assets: (i) The carrying amounts of assets are reviewed at each balance sheet date if there is any indication of impairment based on internal/external factors. An impairment loss is recognized wherever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the greater of the asset’s net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value at the weighted average cost of capital. g) Leases Where the Company is the lessee Finance leases, which effectively transfer to the Company substantially all the risks and benefits incidental to ownership of the leased item, are capitalized at the lower of the fair value and present value of the minimum lease payments at the inception of the lease term and disclosed as leased assets. Lease payments are apportioned between the finance charges and reduction of the lease liability based on the implicit rate of return. Finance charges are charged directly against income. Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased item, are classified as operating leases. Operating lease payments are recognized as an expense in the Profit and Loss account on a straight-line basis over the lease term. h) Investments Trade investments are the investments made to enhance the Company’s business interests. Investments that are readily realisable and intended to be held for not more than a year are classified as current investments. All other investments 20 4 2-4 3 4 5 Over the period of lease or 5 years, whichever is lower

76

Schedules forming part of the accounts
(All amounts in crores of rupees except share data and unless otherwise stated) Schedule 20: Significant accounting policies and notes to the accounts (Contd.) are classified as long-term investments. Current investments are carried at lower of cost and fair value determined on an individual investment basis. Long-term investments are carried at cost. However, provision for diminution in value is made to recognise a decline other than temporary in the value of the investments. i) Foreign exchange transactions i) Initial Recognition Foreign currency transactions are recorded in the reporting currency, by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of the transaction. ii) Conversion Foreign currency monetary items are reported using the closing rate. Non-monetary items which are carried in terms of historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction. iii) Exchange Differences Exchange differences arising on the settlement of monetary items, or on reporting such monetary items of company at rates different from those at which they were initially recorded during the year, or reported in previous financial statements, are recognized as income or as expenses in the year in which they arise. iv) Forward Exchange Contracts and options not intended for trading or speculation purposes The Company uses derivative financial instruments (foreign currency forward and option contracts) to hedge its risks associated with foreign currency fluctuations relating to certain forecasted transactions. The use of foreign currency forward contracts is governed by the Company’s policies, which provide written principles on the use of such financial derivatives consistent with the Company’s risk management strategy. The Company does not use derivative financial instruments for speculative purposes. Foreign currency forward contract derivative instruments are initially measured at fair value, and are remeasured at subsequent reporting dates. In respect of derivatives designated as hedges, the Company formally documents all relationships between hedging instruments and hedged items, as well as its risk management objective and strategy for undertaking various hedge transactions. The Company also formally assesses both at the inception of the hedge and on an ongoing basis, whether each derivative is highly effective in offsetting changes in fair values or cash flows of the hedged item. Changes in the fair value of these derivatives (net of tax) that are designated and effective as hedges of future cash flows are recognised directly in Hedging Reserve Account under shareholders’ funds and the ineffective portion is recognized immediately in profit and loss account. Changes in the fair value of derivative financial instruments that do not qualify for hedge accounting are recognized in profit and loss account as they arise. Hedge accounting is discontinued from the last testing date when the hedging instrument expires or is sold, terminated, or exercised, or no longer qualifies for hedge accounting. Cumulative gain or loss on such hedging instrument recognised in shareholder’s funds is retained there until the forecasted transaction occurs. If a hedged transaction is no longer expected to occur, the net cumulative gain or loss recognised in shareholders’ funds is transferred to profit and loss account for the year. The premium or discount arising at the inception of forward exchange contracts is amortised as expense or income over the life of the contract. Exchange differences on such contracts are recognised in the statement of profit and loss in the year in which the exchange rates change. Any profit or loss arising on cancellation or renewal of forward exchange contract is recognised as income or as expense for the year. v) Translation of Integral and Non-integral foreign operation The financial statements of an integral foreign operation are translated as if the transactions of the foreign operation have been those of the company itself. In translating the financial statements of a non-integral foreign operation for incorporation in financial statements, the assets and liabilities, both monetary and non-monetary, of the non-integral foreign operation are translated at the closing rate; income and expense items of the non-integral foreign operation are translated at monthly weighted average rates; and all resulting exchange differences are accumulated in a foreign currency translation reserve until the disposal of the net investment. On the disposal of a non-integral foreign operation, the cumulative amount of the exchange differences which have been deferred and which relate to that operation are recognised as income or as expenses in the same period in which the gain or loss on disposal is recognised.

77

Schedules forming part of the accounts
(All amounts in crores of rupees except share data and unless otherwise stated) Schedule 20: Significant accounting policies and notes to the accounts (Contd.) j) Inventories Finished goods are valued at lower of cost and net realisable value. Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and estimated costs necessary to make the sale. Cost of goods that are procured for specific projects is assigned by specific identification of their individual costs. Cost of goods that are interchangeable and not specific to any project is determined using weighted average cost formula. k) Employee stock compensation cost The Company calculates the compensation cost based on the intrinsic value method wherein the excess of market price of underlying equity shares on the date of the grant of options over the exercise price of the options given to employees under the employee stock option schemes of the Company, is recognised as deferred stock compensation cost and is amortised on a graded vesting basis over the vesting period of the options. l) Taxation Tax expense comprises of current, deferred and fringe benefit tax. Current income tax and fringe benefit tax is measured at the amount expected to be paid to the tax authorities in accordance with the Income-tax Act, 1961 enacted in India. Deferred income taxes reflects the impact of current year timing differences between taxable income and accounting income for the year and reversal of timing differences of earlier years. Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the balance sheet date. Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred tax assets and deferred tax liabilities relate to the taxes on income levied by same governing taxation laws. Deferred tax assets are recognised only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. In situations where the company has unabsorbed depreciation or carry forward tax losses, all deferred tax assets are recognised only if there is virtual certainty supported by convincing evidence that they can be realised against future taxable profits. At each balance sheet date the Company re-assesses unrecognised deferred tax assets. It recognises unrecognised deferred tax assets to the extent that it has become reasonably certain or virtually certain, as the case may be that sufficient future taxable income will be available against which such deferred tax assets can be realised. The carrying amount of deferred tax assets are reviewed at each balance sheet date. The company writes-down the carrying amount of a deferred tax asset to the extent that it is no longer reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available against which deferred tax asset can be realised. Any such write-down is reversed to the extent that it becomes reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available MAT credit is recognised as an asset only when and to the extent there is convincing evidence that the company will pay normal income tax during the specified period. In the year in which the Minimum Alternative tax (MAT) credit becomes eligible to be recognized as an asset in accordance with the recommendations contained in guidance Note issued by the Institute of Chartered Accountants of India, the said asset is created by way of a credit to the profit and loss account and shown as MAT Credit Entitlement. The Company reviews the same at each balance sheet date and writes down the carrying amount of MAT Credit Entitlement to the extent there is no longer convincing evidence to the effect that Company will pay normal Income Tax during the specified period. m) Employee benefits i) Contributions to provident fund, a defined benefit plan are deposited with a recognised provident fund trust, set up by the Company. The interest rate payable by the trust to the beneficiaries every year is notified by the government and the Company has an obligation to make good the shortfall, if any, between the return from the investments of the trust and the notified interest rate. for applicable employees and such contribution are charged to Profit and loss account. The Company has no further obligations to the superannuation plan beyond its monthly contributions. iii) Gratuity liability is defined benefit obligations and is provided for on the basis of an actuarial valuation on projected unit credit method made at the end of each financial year. iv) Short term compensated absences are provided for based on estimates. Long term compensated absences are provided for based on actuarial valuation at the year end. The actuarial valuation is done as per projected unit credit method. v) Actuarial gains/losses are immediately taken to profit and loss account and are not deferred. vi) The Company’s contribution to State Plans namely Employee State Insurance Fund and Employees Pension Scheme are charged to Profit and loss account.

ii) The Company makes contributions to a scheme administered by an insurance company in respect of superannuation

78

Schedules forming part of the accounts
(All amounts in crores of rupees except share data and unless otherwise stated) Schedule 20: Significant accounting policies and notes to the accounts (Contd.) n) Research and Development Revenue expenditure on research and development is expensed as incurred. Capital expenditure incurred on equipment and facilities acquired or constructed for research and development activities and having alternative future uses, are capitalised and included in fixed assets. o) Earnings per share Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity shareholders the weighted average number of equity shares outstanding during the period. For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares. p) Borrowing cost Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalized as part of the cost of the respective asset. All other borrowing costs are expensed in the period they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds. q) Provisions A provision is recognised when an enterprise has a present obligation as a result of past event; it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are not discounted to its present value and are determined based on best estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates. r) Cash and cash equivalents Cash and cash equivalents for the purposes of cash flow statement comprise cash at bank and in hand and deposit with banks with an original maturity of three months or less. 2. Employee stock option plan (ESOP) The Company has provided various share-based payment schemes to its employees. During the year ended 30 June, 2010, the following schemes were in operation: ESOP 1999 20,000,000 Equity 110 months 5 Years Service period ESOP 2000 15,000,000 Equity 104 months 5 Years Service period ESOP 2004 20,000,000 Equity 84 months 5 Years Service period

Number of options approved under the scheme Method of Settlement (Cash/Equity) Vesting Period (maximum) Exercise Period from the date of vesting (maximum) Vesting Conditions

Each option granted under the above plans entitles the holder to four equity shares of the Company at an exercise price, which is approved by the Compensation Committee. The details of activity under various plan have been summarized below:ESOP 1999 2010 Weighted average exercise price (Rs.) 765.33 636.00 730.38 899.31 753.56 Year ended 30 June 2009 Weighted average exercise price (Rs.) 773.81 657.09 650.26 955.41 765.33

Outstanding at the beginning of the year Add: Granted during the year Less: Forfeited during the year Exercised during the year Expired during the year Options outstanding at the end of the year Options exercisable at the end of the year

No of options 2,399,885 (420) (588,774) (287,834) 1,522,857 1,522,857

No of options 2,822,430 (79,280) (107,314) (235,951) 2,399,885 1,673,925

The weighted average share price for stock options exercised during the year was Rs.1,422.88.

79

Schedules forming part of the accounts
(All amounts in crores of rupees except share data and unless otherwise stated) Schedule 20: Significant accounting policies and notes to the accounts (Contd.) ESOP 2000 2010 Weighted average exercise price (Rs.) 649.37 525.55 619.63 789.97 649.20 Year ended 30 June 2009 Weighted average exercise price (Rs.) 648.06 614.87 587.12 712.26 649.37

Outstanding at the beginning of the year Add: Granted during the year Less: Forfeited during the year Exercised during the year Expired during the year Options outstanding at the end of the year Options exercisable at the end of the year

No of options 3,473,285 (1,100) (922,102) (198,903) 2,351,180 2,351,180

No of options 4,091,441 (156,680) (231,716) (229,760) 3,473,285 2,107,570

The weighted average share price for stock options exercised during the year was Rs. 1,400.89 ESOP 2004 2010 Weighted average exercise price (Rs.) 39.21 8.00 20.65 37.20 294.97 33.34 Year ended 30 June 2009 Weighted average exercise price (Rs.) 36.17 45.87 12.00 455.74 39.21

Outstanding at the beginning of the year Add: Granted during the year Less: Forfeited during the year Exercised during the year Expired during the year Options outstanding at the end of the year Options exercisable at the end of the year

No of options 2,545,431 240,000 (57,925) (620,927) (27,467) 2,079,112 679,935

No of options 3,325,543 (124,520) (640,052) (15,540) 2,545,431 496,610

The weighted average share price for stock options exercised during the year was Rs. 1,323.60 The details of exercise price for stock options outstanding at the end of the year 30 June, 2010 are: Name of the Plan Range of exercise Number Weighted average prices of options remaining outstanding contractual life of options (in years) Employee Stock Option Plan - 1999 Rs.240-Rs.750 1,082,747 3.34 Rs.985-Rs.2,444 440,110 0.10 Employee Stock Option Plan - 2000 Rs.260-Rs.470 109,880 1.50 Rs.483-Rs.823 2,109,285 3.14 Rs.1,016-Rs.1,312 132,015 0.59 Employee Stock Option Plan - 2004 Rs.8.00 2,001,617 4.85 Rs.642-Rs.741 77,495 3.32 The details of exercise price for stock options outstanding at the end of the year 30 June, 2009 are: Name of the Plan Range of exercise Number Weighted average prices of options remaining outstanding contractual life of options (in years) Employee Stock Option Plan - 1999 Rs.240-Rs.750 1,612,881 3.95 Rs.985-Rs.2,444 787,004 0.89 Employee Stock Option Plan - 2000 Rs.260-Rs.470 177,035 2.27 Rs.483-Rs.823 3,083,766 4.11 Rs.1,016-Rs.1,312 212,484 1.31 Employee Stock Option Plan - 2004 Rs.8.00 2,427,963 5.59 Rs.642-Rs.741 117,468 4.30

Weighted average exercise price(Rs.) 648.97 1,010.87 406.30 629.34 1,168.72 8.00 687.87

Weighted average exercise price(Rs.) 640.83 1,020.48 407.42 627.44 1,169.25 8.00 684.22

80

Schedules forming part of the accounts
(All amounts in crores of rupees except share data and unless otherwise stated) Schedule 20: Significant accounting policies and notes to the accounts (Contd.) The weighted average fair value of stock options granted during the year was Rs. 1,204.21. The Black Scholes valuation model has been used for computing the weighted average fair value considering the following inputs: Weighted average share price Exercise Price Expected Volatility Historical Volatility Life of the options granted (Vesting and exercise period) in years Expected dividends Average risk-free interest rate Expected dividend rate 2010 288.94 2.00 37.76% 37.76% 1.02 – 5.01 years Rs.4 7.00% 1.38% 2009 NIL NIL NIL NIL NIL NIL NIL NIL

The group has calculated the compensation cost based on the intrinsic value method i.e. the excess of market price of underlying equity shares on the date of the grant of options over the exercise price of the options given to employees under the employee stock option schemes of the Company is recognized as deferred stock compensation cost and is amortized on a graded vesting basis over the vesting period of the options. Had the Company applied the fair value method for determining compensation cost, the impact on net income and earnings per share is provided below: Year ended 30 June 2010 1,056.58 49.84 83.54 1,022.88 Year ended 30 June 2009 997.31 55.87 63.23 989.95

Net income – As reported Add:-Employee stock compensation under intrinsic value method Less:-Employee stock compensation under fair value method Net income – Proforma Earnings per share ( refer note 13) Basic - As reported - Proforma Diluted - As reported - Proforma 3. Leases In case assets taken on lease

15.68 15.18 15.33 14.84

14.91 14.80 14.73 14.62

i)

Finance leases The Company has acquired vehicles on finance leases. The lease term is 4 years, total minimum lease payments and maturity profile of finance leases at the balance sheet date, the element of interest included in such payments, and the present value of the minimum lease payments as of 30 June, 2010 are as follows: Total minimum lease payments outstanding Interest included in minimum lease payments 3.24 2.54 5.78 Present value of minimum lease payments 12.29 18.22 30.51

30 June, 2010 Not later than one year Later than one year and not later than five years Total 30 June, 2009 Not later than one year Later than one year and not later than five years Total

15.53 20.76 36.29

13.36 20.97 34.33

3.78 3.68 7.46

9.58 17.29 26.87

81

Schedules forming part of the accounts
(All amounts in crores of rupees except share data and unless otherwise stated) Schedule 20: Significant accounting policies and notes to the accounts (Contd.) ii) Operating Leases The Company leases office spaces and accommodation for its employees under operating lease agreements. The lease rental expense recognised in the profit and loss account for the year is Rs. 151.69 crores (previous year Rs. 149.58 crores). The escalation amount for non-cancellable operating lease payable in future years and accounted for by the company is Rs. 50.24 crores. Future minimum lease payments and payment profile of non-cancellable operating leases are as follows: Year ended 30 June 2010 Not later than one year Later than one year but not later than five years Later than five years 139.58 346.57 302.06 788.21 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 and its subsidiaries predominately relate to providing Software services, infrastructure services including sale of networking equipment and business processing outsourcing services, which are in the nature of customer contact centers and technical help desks. The Chairman of the Company, who is the Chief Strategy Officer, evaluates the 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 2009 126.92 350.29 328.84 806.05

82

Schedules forming part of the accounts
(All amounts in crores of rupees except share data and unless otherwise stated) Schedule 20: Significant accounting policies and notes to the accounts (Contd.) other income. Segment expenses do not include premium amortized on bonds, diminution allowance in respect of current and trade investments, other than temporary diminution in the value of long term investment, charge taken for stock options issued to employees, corporate expenses and finance cost. Financial information about the business segments for the year ended 30 June, 2010 is as follows: Business process outsourcing services 377.09 (12.22)

Software services Segment Revenues Segment results Unallocated corporate expenses Finance Expense Other Income Interest Income Net profit before taxes Tax Expense Net profit after taxes Assets Segment assets Unallocated assets Total assets Liabilities Segment liabilities Unallocated liabilities Total liabilities Others Capital expenditure (including capital work in progress) Unallocated corporate capital expenditure Total Significant non-cash adjustments Depreciation Unallocated corporate depreciation Total Provision for doubtful debts/ advances and bad debts/ advances written back 171.14 162.87 1,221.70 2,741.56 4,084.33 1,146.98

Infrastructure services 617.34 135.13

Total 5,078.76 1,269.89 (178.77) (101.36) 39.23 123.83 1,152.82 96.24 1,056.58

352.68

809.06

3,903.30 4,586.03 8,489.33

97.06

416.36

1,735.12 1,818.35 3,553.47

26.84

94.48

284.19 110.20 394.39

28.66

34.52

234.32 39.71 274.03 (8.43)

83

Schedules forming part of the accounts
(All amounts in crores of rupees except share data and unless otherwise stated) Schedule 20: Significant accounting policies and notes to the accounts (Contd.) Financial information about the business segments for the year ended 30 June, 2009 is as follows: Software services Segment Revenues Segment results Unallocated corporate expenses Finance Expense Other Income Interest Income Net profit before taxes Tax Expense Net profit after taxes Assets Segment assets Unallocated assets Total assets Liabilities Segment liabilities Unallocated liabilities Total liabilities Others Capital expenditure (including capital work in progress) Unallocated corporate capital expenditure Total Significant non-cash adjustments Depreciation Unallocated corporate depreciation Total Provision for doubtful debts/ advances and bad debts/ advances written off 3,991.80 1,090.76 Business process outsourcing services 531.26 114.33 Infrastructure services 152.03 28.78

Total 4,675.09 1,233.87 (279.89) (28.09) 116.14 149.67 1,191.70 194.39 997.31 3,265.65 3,330.26 6,595.91 1,814.45 1,293.22 3,107.67 133.75 255.00 388.75 235.10 16.79 251.89 27.58

2,538.98

441.20

285.47

1,573.65

95.32

145.48

87.11

22.74

23.90

181.81

35.13

18.16

Revenue from the geographic segments based on domicile of the customer is as follows: Year ended 30 June 2010 3,376.72 1,205.75 496.29 5,078.76 Year ended 30 June 2009 3072.20 1230.26 372.63 4675.09

America Europe Others

Assets and additions to tangible and intangible fixed assets by geographical area. The following table shows the carrying amount of segment assets by geographical area in which assets are located: Carrying amount of segment assets and Intangible assets 30 June 2010 30 June 2009 1,655.09 1,190.79 600.11 477.68 1,648.10 1,597.18 3,903.30 3,265.65

America Europe Others

84

Schedules forming part of the accounts
(All amounts in crores of rupees except share data and unless otherwise stated) Schedule 20: Significant accounting policies and notes to the accounts (Contd.) 5. Related party transactions a) Related parties where control exists Subsidiaries HCL Comnet Systems and Services Limited HCL Bermuda Limited HCL Technologies (Shanghai) Limited HCL Technoparks Limited HCL Great Britain Limited HCL (Netherlands) BV HCL GmbH HCL Belgium NV HCL Sweden AB HCL Italy SLR HCL Australia Services Pty. Limited HCL (New Zealand) Limited HCL Hong Kong SAR Limited HCL Japan Limited HCL Comnet Limited HCL America Inc. HCL Holdings GmbH Intelicent India Limited DSI Financial Solutions Pte. Limited HCL BPO Services (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. (formerly Axon Group Plc.) Axon EBT Trustee Limited Axon Solutions (Canada) Inc. Bywater Limited Axon Solutions Schweiz Gmbh Axon International Limited Axon Solutions Pty. Limited Axon Solutions Inc. Axon Acquisition Company, Inc. Axon Solutions Limited Axon Solutions Sdn. Bhd. Axon Solutions Singapore Pte. Limited Axon Solutions (Shanghai) Co. Limited HCL Axon (Proprietary) Limited JSPC- I Solutions Sdn. Bhd. JSP Consulting Sdn. Bhd. Aspire Solutions Sdn. Bhd. HCL Technologies Canada Inc. HCL Argentina s.a. HCL Mexico S. de R.L. HCL Technologies Romania s.r.l. HCL Hungary Limited HCL Latin America Holding LLC HCL (Brazil) Technologia da informacao Ltda.

85

Schedules forming part of the accounts
(All amounts in crores of rupees except share data and unless otherwise stated) Schedule 20: Significant accounting policies and notes to the accounts (Contd.) HCL Retail Solutions Australia Pty Limited HCL Technologies Denmark Apps HCL Technologies Norway AS Employee bene?t 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 Balance LLC, United States of America Axon Puerto Rico Inc., Puerto Rico b) Related parties with whom transactions have taken place during the year Subsidiaries HCL America Inc., United States of America HCL Great Britain Limited, United Kingdom HCL (Netherlands) BV, Netherlands HCL GmbH, Germany HCL Belgium NV, Belgium HCL Sweden AB, Sweden HCL Australia Services Pty. Limited, Australia HCL (New Zealand) Limited, New Zealand HCL Hong Kong SAR Limited, Hong Kong HCL Comnet Systems and Services Limited, India HCL Comnet Limited, India HCL Bermuda Limited, Bermuda HCL Technologies (Shanghai) Limited, Shanghai HCL BPO Services (NI) Limited, Northern Ireland HCL Singapore Pte. Limited, Singapore HCL (Malaysia) Sdn. Bhd., Malaysia HCL EAI Services Limited, India HCL Technoparks Limited, India HCL Poland Sp.z.o.o., Poland Capital Stream Inc., United States of America HCL Axon (Pty) Limited Axon Solutions Inc. , United States of America Axon Solutions Limited, U K Axon Solutions Singapore Pte Limited Axon Solutions Sdn. Bhd., Malaysia HCL Insurance BPO Services Limited, U K Axon Solutions (Canada) Inc., Canada HCL Technologies Canada Inc. Axon Group PLC HCL France HCL EAS Limited, U K Jointly controlled entities NEC HCL System Technologies Limited, India Others (Signi?cant in?uence) HCL Corporation Limited* HCL Infosystems Limited HCL Security Limited HCL Infinet Limited. *HCL Corporation ceases to be holding company from 24 June, 2010. As on June 30, 2010 HCL Corporation held 323,082,542 shares in the Company being 47.6% holding in HCL Technologies Limited

86

Schedules forming part of the accounts
(All amounts in crores of rupees except share data and unless otherwise stated) Schedule 20: Significant accounting policies and notes to the accounts (Contd.) c) Key Management Personnel

Shiv Nadar, Chairman and Chief Strategy Officer Vineet Nayar, Chief Executive Officer and Whole-time Director d) Transactions with related parties during the year in the ordinary course of business:
Particulars Revenues Year ended 30 June 2010 Subsidiaries -HCL America Inc. -HCL Great Britain Limited -HCL Bermuda Limited -HCL Insurance BPO Services Limited -HCL Comnet Limited -HCL EAS Limited -HCL Technopark Limited -HCL Expenses Management Service Inc. -Others Total (A) Jointly controlled entities -NEC HCL System Technologies Limited Total (B) Others (Significant influence) -HCL Infosystems Limited -Others Total (C ) Total (A+B+C) 2462.85 352.45 356.00 3171.30 2009 1904.39 460.18 267.78 2632.35 Operating & Other Expenses Year ended 30 June 2010 273.32 44.70 28.33 75.53 421.88 2009 379.47 20.39 20.76 38.39 459.01 Interest Expenses Year ended 30 June 2010 1.18 0.40 1.58 2009 7.48 7.48 Interest Income Year ended 30 June 2010 38.66 6.84 45.50 2009 36.51 1.25 37.76 Others Year ended 30 June 2010 2.31 3.16 12.63 9.78 0.92 28.80 2009 0.47 3.44 8.87 5.11 4.64 22.53

3.64 3.64 17.26 17.26 3192.20

3.54 3.54 4.89 4.89 2640.78

40.11 1.67 41.78 463.66

35.54 1.24 36.78 495.79

1.58

7.48

45.50

37.76

1.38 30.18

22.53

e)

Transactions with related parties during the year in the ordinary course of business (Continued)
Particulars Dividend income Year ended 30 June 2010 2009 0.42 0.42 0.42 Purchase of capital equipments Year ended 30 June 2010 0.20 9.09 9.29 22.91 0.25 23.16 32.45 2009 2.96 10.43 13.39 21.13 2.19 23.32 36.71 Redemption of Preference Shares Year ended 30 June 2010 2009 45.00 45.00 45.00

Investments Year ended 30 June 2010 2.42 910.51 912.93 912.93 2009 0.06 2.49 2.55 2.55

-HCL Comnet Systems and Services Limited -HCL Technologies (Shanghai) Limited -HCL Comnet Limited -HCL Bermuda Limited -HCL Singapore Pte. Limited Total (A) Others (Significant influence) -HCL Infosystems Limited -Others Total (B) Total (A+B)

-

87

Schedules forming part of the accounts
(All amounts in crores of rupees except share data and unless otherwise stated) Schedule 20: Significant accounting policies and notes to the accounts (Contd.) f) Transactions with related parties during the year in the ordinary course of business (Continued)
Particulars Loans Given (net of repayments) Year ended 30 June 2010 -HCL America Inc. -HCL Great Britain Limited -HCL Comnet Limited HCL Comnet Systems and Services Limited -HCL Bermuda Limited -HCL Technoparks Limited -HCL EAS Limited -HCL Japan Limited -HCL Insurance BPO Services Limited -HCL Jones Technologies LLC -HCL BPO Services (NI) Limited -HCL Great Britain Limited Total (A) Others (Significant influence) -HCL Infosystems Limited -HCL Peripherals Limited. Total (B ) Total (A+B) 265.75 675.70 1.28 0.57 1.85 1.85 1.83 1.83 2.09 8.60 2.19 2,219.44 2,924.74 292.15 (26.40) 265.75 2009 644.05 31.65 675.70 Payment for use of facilities Year ended 30 June 2010 2009 0.26 0.26 Receipt for use of facilities Year ended 30 June 2010 0.90 7.70 8.60 2009 2.19 2.19 Guarantees Given Year ended 30 June 2010 76.18 6.97 69.73 1,602.18 130.03 251.03 6.97 38.14 38.21 2,219.44 2009 19.16 79.48 2,754.25 71.85 2,924.74

The remuneration to Chief Executive Officer and Whole-time Director is Rs 4.54 crores (Previous year Rs. 4.25 crores) excludes provision for encashable leave and gratuity g) Outstanding balances with related parties Particulars Sundry Debtors As at 30 June 2010 Subsidiaries -HCL America Inc. -HCL Great Britain Limited -HCL Gmbh -HCL Comnet Systems and Services Limited - HCL Bermuda Limited -Others Total (A) Jointly controlled entities -NEC HCL System Technologies Limited Total (B) Others (Significant influence) -HCL Infosystems Limited -Others Total (C ) Total (A+B+C) 1215.43 224.37 0.72 2.65 107.47 1550.64 0.66 0.66 2.62 0.09 2.71 1,554.01 2009 701.55 201.89 5.28 75.79 984.51 0.75 0.75 2.36 0.15 2.51 987.77 Creditors As at 30 June 2010 138.76 114.23 8.05 84.98 45.39 153.54 544.95 9.37 0.98 10.35 555.30 2009 262.97 144.78 60.71 87.95 556.41 7.48 0.10 7.58 563.99 Unearned revenue As at 30 June 2010 123.68 14.06 0.43 0.13 138.30 10.24 10.24 148.54 2009 65.27 3.19 0.40 1.08 69.94 1.46 1.46 71.40

88

Schedules forming part of the accounts
(All amounts in crores of rupees except share data and unless otherwise stated) Schedule 20: Significant accounting policies and notes to the accounts (Contd.) h) Outstanding balances with related parties - Continued Loans outstanding As at 30 June 2010 2009 351.90 74.40 426.30 426.30 644.05 48.00 692.05 692.05 Advance received As at 30 June 2010 2009 1.67 1.96 1.50 0.17 5.30 5.30 0.10 3.38 1.50 4.98 4.98 Other receivables As at 30 June 2010 2009 64.19 14.13 32.80 1.32 50.41 58.47 221.32 0.19 0.19 1.46 0.48 1.94 223.45 135.18 29.74 36.51 1.25 30.16 1.40 45.95 280.19 0.35 0.35 3.21 0.13 3.34 283.88

Particulars

Subsidiaries -HCL America Inc. -HCL Great Britain Limited -HCL Bermuda Limited -HCL Technoparks Limited -HCL Comnet Limited -HCL Gmbh -HCL (New Zealand) Limited -HCL EAI Services Limited -HCL Comnet Systems and Services Limited -Others Total (A) Jointly controlled entities - NEC HCL System Technologies Limited Total (B) Others (Significant influence) - HCL Infosystems Limited - Others Total (C ) Total (A+B+C) 6. Name of the company HCL Technoparks Limited HCL Bermuda Limited Previous year figures are given in brackets. 7. Components of Net Deferred Tax Assets

Loans and advances in the nature of loans to subsidiaries and others Amount of loan 74.40 (48.00) 351.90 (644.05) Rate of Interest 11% (11%) 5% - 9.50% (5% - 9.50%) Maximum amount outstanding during the year 122.40 (50.20) 1445.19 (801.14)

As at 30 June 2010 Deferred Tax Assets Depreciation Accrued employee costs Unrealised loss on derivative instruments Others Total (A) Deferred Tax Liability Leased vehicles Total (B) Net Deferred Tax Assets / (Liabilities) (A-B) 8. Research and Development Expenditure Revenue Capital Year ended 30 June 2010 40.53 40.53 59.91 30.25 7.51 10.02 107.69 1.53 1.53 106.16

As at 30 June 2009 56.56 29.25 132.30 9.34 227.45 1.45 1.45 226.00

Year ended 30 June 2009 40.86 40.86

89

Schedules forming part of the accounts
(All amounts in crores of rupees except share data and unless otherwise stated) Schedule 20: Significant accounting policies and notes to the accounts (Contd.) 9. Closing Balance and Maximum balances outstanding with non scheduled banks are as follows: Non-scheduled banks Closing Balance As at As at 30 June 2010 30 June 2009 0.02 0.06 0.02 0.12 0.50 0.32 5.89 0.11 0.22 0.21 0.03 0.17 0.11 7.78 0.03 0.34 0.01 0.38 Maximum Balance Year ended Year ended 30 June 2010 30 June 2009 0.03 0.22 0.03 0.12 8.63 0.34 1.61 5.89 0.18 1.64 0.27 0.08 0.24 9.73 0.24 0.24 0.03 0.79 0.19 0.03 2.59 0.34 0.56 -

- On Current account Citi Bank N.A. Singapore-SGD Citi Bank N.A. Singapore-USD Deutsche Bank, London –Euro Deutsche Bank, Singapore -SGD Bank of America, New York -USD Deutsche Bank, London -GBP Deutsche Bank, New York -USD BNP Paribas, Israel- ILS Citi Bank, New York - USD Citi Bank Europe plc, Czech Republic - CZK Citibank , N.A – UAE- AED BNP Paribas,Ireland- EUR BNP Paribas, Switzerland - CHF BNP Paribas, Portugal- EUR BNP Paribas Zao, Russia- RUB BNP Paribas Zao, Russia- USD BNP Paribas, Israel- USD Total 10. Commitments and Contingent liabilities

As at 30 June 2010 i) Capital and other commitments a) Capital commitments Estimated amount of unexecuted capital contracts (net of advances) b) Outstanding letter of credit

As at 30 June 2009

274.15 1.76 275.91

244.09 21.20 265.29

ii)

Contingent Liabilities

a) Guarantees have been given by the Company on behalf of various subsidiaries against credit facilities, financial assistance and office premises taken on lease amounting to Rs. 2,219.44 crores (previous year Rs. 3,063.38 crores). These guarantees have been given in the normal course of the 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. b) Bank guarantees of Rs. 6.39 crores (previous year Rs. 11.34 crores). These guarantees have been given in the normal course of the Company’s operations and are not expected to result in any loss to the Company, on the basis of the Company fulfilling its ordinary commercial obligations. c) Income Tax demands (excluding interest) of Rs. 9.99 crores (previous year Rs. 9.99 crores) d) Indirect Tax demands of Rs 1.63 crores (previous year Rs Nil crores) The amounts shown in the item (c) above represent best possible estimates arrived at on the basis of available information. The uncertainties and possible reimbursements are dependent on the outcome of the different legal processes which have been invoked by the Company or the claimants as the case may be and therefore cannot be predicted accurately. The Company engages reputed professional advisors to protect its interest and has been advised that it has strong legal positions against such disputes. iii) The Company has a comprehensive system of maintenance of information and documents as required by the transfer pricing legislation under sections 92-92F of the Income Tax Act, 1961. Since the law requires existence of such information and

90

Schedules forming part of the accounts
(All amounts in crores of rupees except share data and unless otherwise stated) Schedule 20: Significant accounting policies and notes to the accounts (Contd.) 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 twelve months and the forecasted transactions are expected to occur during the same period. The Company does not use forward contracts and currency options for speculative purposes. The following table presents the aggregate contracted principal amounts of the Company’s derivative contracts outstanding: Foreign Currency Sell Covers U.S. Dollar/INR Sterling Pound/INR Euro/INR Buy Covers U.S. Dollar/INR 366.88 366.88 As at 30 June 2010 As at 30 June 2009 As at 30 June 2010 As at 30 June 2009

Rupee Equivalent 1,314.22 3,703.90 65.09 66.98 58.19 76.29 1,437.50 3,847.17

Options

Rupee Equivalent Purchase Options U.S. Dollar Range Options U.S. Dollar Euro/INR Total 65.02 139.32 28.52 232.86 -

The following table summarizes activity in the Hedging Reserve related to all derivatives classified as cash flow hedges during the years ended 30 June 2010 and 2009. Particulars Loss as at the beginning of the year Unrealized gain/ (losses) on cash flow hedging derivatives during the year Net losses reclassified into net income on occurrence of hedged transactions Net losses reclassified into net income as hedged transactions are not likely to occur Loss as at the end of the year (refer note 1 and 2 below) Year ended 30 June 2010 (775.09) 197.05 478.07 (99.97) Year ended 30 June 2009 (490.63) (591.68) 244.52 62.70 (775.09)

91

Schedules forming part of the accounts
(All amounts in crores of rupees except share data and unless otherwise stated) Schedule 20: Significant accounting policies and notes to the accounts (Contd.) As of the balance sheet date, the Company’s net foreign currency exposure that is not hedged is Rs. 3,754.76 (30 June 2009 – Rs. 2,332.10). Notes: 1. Balance as at year end is gross of deferred tax assets of Rs. 7.51 crores (previous year Rs. 132.30 crores). 2. At 30 June 2010, the estimated net amount of existing gains/ (loss) that is expected to be reclassified into the income statement within the next twelve months is Rs. 99.97 crores [previous year Rs. (609.34) crores]. 12. The details of investments in mutual funds/ bonds and their movements during the year are provided below: i) Details of Investments in bonds - Other than trade and unquoted Particulars Face Value Balance as at 30 June 2010 Units 5,000 5,000 Amount 50.00 50.00 Balance as at 30 June 2009 Units 100 100 Amount 10.00 10.00 20.00

10.75% Exim Bank Bonds 2008-09 (Series L-01) 11.10% Exim Bank Bonds 2008-09 (Series L-01) IRFC Tax Free Bonds (Series 68) Total

1000000 1000000 100000

ii) Details of Investments in mutual funds - Other than trade and unquoted-Long Term Particulars Face Value Balance as at 30 June 2010 Units Amount Balance as at 30 June 2009 Units 10,000,000 10,000,000 Amount 10.00 10.00 20.00

DSPML FMP- 12 M -Series 1 Growth DSPML FMP- 12 M -Series 3 Growth Total

10 10

iii) Details of Investments in mutual funds - Other than trade and unquoted - Current Investments Particulars Face Value Balance as at 30 June 2010 Units Amount 94,513,918 4,414 25,030,125 48,197,379 83,300,723 50,057,242 49,275,015 100,534,368 14,791,788 20,809,636 101,566,031 66,649,228 23,332,055 80,761 15,017,853 24,993,796 95.00 0.00 25.08 51.06 86.66 50.50 50.46 101.06 15.28 25.18 102.03 70.91 25.26 9.00 15.02 25.00 747.50 Balance as at 30 June 2009 Units Amount -

Growth ICICI Prudential Medium Term Plan-Prem Plus Daily Dividend IDFC Cash Fund Plan-C Weekly Dividend ICICI Prudential Banking & PSU Debt Fund Fortnightly Dividend HDFC High Interest Fund-Short Term Plan Monthly dividend Birla Sun Life Dynamic Bond Fund Birla Sunlife Medium Term Plan Birla Sunlife Saving Fund-Institutional HDFC Cash Management Fund-Treasury Advantage Plan -Whole sale HDFC Short Term Fund ICICI Prudential Short Term Plan IP IDFC Money Manager Fund-Investment Plan IP Plan B Reliance Short Term Fund SBI Short Horizon Debt Fund-Short Term TATA Liquid Fund-Super High Investment Plan Tata Fixed Income Portfolio Fund SchemeA3 Reliance Quarterly Interval Fund Series III TOTAL

10 10 10 10 10 10 10 10 10 10 10 10 10 1000 10 10

92

Schedules forming part of the accounts
(All amounts in crores of rupees except share data and unless otherwise stated) Schedule 20: Significant accounting policies and notes to the accounts (Contd.) iv) Details of units of mutual funds & bonds purchased and redeemed/ sold during the year Face Value Purchased During the Year Units Daily Dividend Birla Sunlife Cash Plus -Inst Prem Birla Sunlife Saving Fund-Institutional Birla Sunlife Short term fund-Inst DSP BlackRock Liquidity Fund-IP HDFC Cash Management Fund-Treasury Advantage Plan -Whole sale HDFC Liquid Fund -Premium Plan ICICI Prudential Flexible Income Plan Premium ICICI Prudential Inst Liquid Plan -Super IP IDFC Cash Fund Plan-C IDFC Cash Fund-Plan B IDFC Money manager fund- treasury plan- Inst Plan B IDFC Money manager fund- treasury plan- Super Plan C Reliance Liquidity Fund Daily Dividend reinvestment option Reliance Medium Term Fund Daily Dividend Plan Reliance Money Manager Fund-Institutional Option SBI Premier Liquid Fund Super IP TATA Floater Fund TATA Liquid Fund-Super High Investment Plan UTI Liquid Fund-Cash Plan UTI Treasury Advantage Fund-IP Weekly Dividend ICICI Prudential Banking & PSU Debt Fund ICICI Prudential Flexible Income Plan Premium Fortnightly Dividend HDFC High Interest Fund-Short Term Plan Monthly dividend Birla Sun Life Dynamic Bond Fund Birla Sunlife Medium Term Plan Birla Sunlife Saving Fund-Institutional DSP BlackRock Short Term Fund HDFC Cash Management Fund-Treasury Advantage Plan -Whole sale HDFC Short Term Fund ICICI Prudential Short Term Plan IP IDFC Money Manager Fund-Investment Plan IP Plan B 10 10 10 10 10 10 10 10 83,300,723 50,057,242 49,275,015 23,355,308 100,534,368 14,791,788 20,809,636 101,566,031 86.66 50.50 50.46 25.18 101.05 15.28 25.25 102.47 23,355,308 25.09 10 48,197,379 51.06 10 100 25,030,125 10,816,786 25.08 114.06 10,816,786 114.06 10 10 10 1000 10 10 100 10 10 10 10 10 10 10 1000 10 10 1000 1000 1000 625,895,420 279,331,436 60,041,435 249,945 749,598,739 801,099,201 259,318,788 666,824,399 855,633,904 292,063,839 206,888,935 239,282,381 742,127,162 155,852,253 2,683,618 24,921,466 191,647,179 3,419,511 5,679,393 3,020,886 627.12 279.52 60.07 25.00 751.96 982.13 617.49 909.10 855.85 309.05 208.34 239.32 742.40 266.44 268.68 25.00 192.33 381.11 578.98 302.15 625,895,420 279,331,436 60,041,435 249,945 749,598,739 801,099,201 259,318,788 666,824,399 855,629,490 292,063,839 206,888,935 239,282,381 742,127,162 155,852,253 2,683,618 24,921,466 191,647,179 3,338,750 5,679,393 3,020,886 627.12 279.52 60.07 25.00 751.96 982.13 617.49 909.10 855.84 309.05 208.34 239.32 742.40 266.44 268.68 25.00 192.33 372.11 578.98 302.15 Amount Sale/ Redemption Proceeds During the Year Units Amount

A. Details of units of mutual funds

93

Schedules forming part of the accounts
(All amounts in crores of rupees except share data and unless otherwise stated) Schedule 20: Significant accounting policies and notes to the accounts (Contd.) A. Details of units of mutual funds Face Value Purchased During the Year Units IDFC Money manager fund- treasury plan- super inst Plan C Reliance Money Manager Fund-Institutional Option Reliance Quarterly Interval Fund Series III Inst Reliance Short Term Fund SBI Short Horizon Debt Fund-Short Term-IP Tata Fixed Income Portfolio Fund Scheme A3 UTI Treasury Advantage Fund-IP Growth Birla Sun Life Dynamic Bond Fund Birla Sunlife Medium Term Plan Birla Sunlife Saving Fund-Institutional DSPML FMP- 12 M -Series 1 DSPML FMP- 12 M -Series 3 HDFC Cash Management Fund-Treasury Advantage Plan -Whole sale HDFC Liquid Fund -Premium Plus Plan HDFC Short Term Fund ICICI Prudential Flexible Income Plan Premium ICICI Prudential Medium Term Plan-Prem Plus IDFC Money Manager Fund-Investment Plan IP Plan B IDFC Money manager fund- treasury plan- super inst Plan C Reliance Short Term Fund UTI Treasury Advantage Fund-IP Total (A) 10 10 10 10 10 10 10 10 100 10 10 10 10 1000 55,354,828 4,889,115 28,762,080 49,776,999 22,298,408 8,413,354 3,287,363 94,513,918 70,183,309 96,609,752 28,943,091 731,090 85.00 5.00 50.00 100.00 40.00 15.00 56.00 95.00 100.00 105.00 50.00 90.00 10,428.29 70,183,309 96,609,752 28,943,091 731,090 55,354,828 4,889,115 28,762,080 10,000,000 10,000,000 49,776,999 22,298,408 8,413,354 3,287,363 85.76 5.03 50.26 11.04 11.14 100.45 40.01 15.13 56.28 100.56 105.45 50.33 90.39 9,705.64 10 1000 10 10 10 10 1000 125,442,417 150,062 24,993,796 66,649,228 23,332,055 15,017,853 904,996 Amount 125.81 15.16 25.00 71.12 25.26 15.02 90.83 904,996 Sale/ Redemption Proceeds During the Year Units 125,442,417 150,062 Amount 125.79 15.12 90.72

B. Details of units of Bonds

Face Value

Purchased During the Year Units Amount 50.00 50.00 10,478.29 5000

Sale/ Redemption Proceeds During the Year Units 100 100 Amount 10.00 10.00 20.00 9,725.64

10.75% Exim Bank Bonds 2008-09 (Series L-01) 11.10% Exim Bank Bonds 2008-09 (Series L-01) IRFC Tax Free Bonds (Series 68) Total (B) Total (A+B)

1000000 1000000 100000

94

Schedules forming part of the accounts
(All amounts in crores of rupees except share data and unless otherwise stated) Schedule 20: Significant accounting policies and notes to the accounts (Contd.) 13. Earnings per equity share (EPS) Year ended 30 June 2010 1,056.58 673,741,835 15,361,547 689,103,382 2 15.68 15.33 Year ended 30 June 2009 997.31 669,016,035 8,098,980 677,115,015 2 14.91 14.73

Net profit as per Profit and Loss Account for computation of EPS Weighted average number of shares outstanding in computation of basic EPS Dilutive effect of stock options outstanding Weighted average number of equity shares and equity equivalent shares outstanding in computing diluted EPS Nominal value of equity shares (in Rs.) Earnings per equity share (in Rs.) - Basic - Diluted 14. Micro, Small and Medium Enterprises

As per information available with the management, the dues payable to enterprises covered under “The Micro, Small and Medium Enterprises Development Act, 2006” as at 30 June 2009 and 2010 is Rs Nil crores. This has been determined on the basis of responses received from vendors on specific confirmation sought by the Company in this regard. 15. Employee Benefit Plans The Company has calculated the various benefits provided to employees as under: A. Defined Contribution Plans and State Plans Superannuation Fund Employer’s contribution to Employee’s State Insurance Employer’s contribution to Employee’s Pension Scheme. During the year the Company has recognized the following amounts in the Profit and Loss account:Year ended 30 June 2010 2.11 0.58 23.54 26.23 Year ended 30 June 2009 2.20 0.32 22.39 24.91

Superannuation Fund Employer’s contribution to Employee’s State Insurance Employer’s contribution to Employee’s Pension Scheme. Total B. Defined Benefit Plans a) Gratuity b) Employers Contribution to Provident Fund Gratuity The following table set out the status of the gratuity plan as required under AS 15 (Revised): Profit and Loss Account Net employee benefit expense (recognised in Employee Cost)

Current Service cost Interest cost on benefit obligation Expected return on plan assets Net Actuarial (gain)/loss recognised in the year Past Service cost Net benefit expense

Year ended 30 June 2010 17.06 5.07 (3.25) 18.88

Year ended 30 June 2009 13.33 4.80 2.63 20.76

95

Schedules forming part of the accounts
(All amounts in crores of rupees except share data and unless otherwise stated) Schedule 20: Significant accounting policies and notes to the accounts (Contd.) Balance Sheet Details of Provision for Gratuity Year ended 30 June 2010 Defined benefit obligations Fair value of plan assets Less: Unrecognised past service cost Plan (asset) / liability Changes in present value of the defined benefit obligation are as follows: Particulars Opening defined benefit obligations Current service cost Interest cost Actuarial (gain)/loss on obligation Benefits paid Closing defined benefit obligations Changes in fair value of the plan assets are as follows: Particulars Opening fair value of planned assets Expected returns Contribution by employer Benefits paid Actuarial (gain)/loss Closing fair value of plan assets The company expects to contribute Rs. 2.86 crores to gratuity in 2010-11 The principal assumptions used in determining gratuity for the Company’s plans are shown below: Year ended 30 June 2010 Discount rate Estimated Rate of salary increases Employee Turnover Expected rate of return on assets Amounts for the current and previous year are as follows: Year ended 30 June 2010 Defined benefit obligations Plan assets Experience adjustment on plan liabilities Experience adjustment on plan assets 85.00 2.21 Year ended 30 June 2009 71.19 7.58 Year ended 30 June 2008 53.90 4.65 7.15% 6%-10% 18% N.A Year ended 30 June 2009 6.40% 6%-10% 18% N.A Year ended 30 June 2010 0.89 (0.89) Year ended 30 June 2009 Year ended 30 June 2010 71.19 17.06 5.07 (3.25) (5.07) 85.00 Year ended 30 June 2009 53.90 13.33 4.80 2.63 (3.47) 71.19 85.00 85.00 85.00 Year ended 30 June 2009 71.19 71.19 71.19

The company has adopted AS 15 (Revised) from 1 July 2007 and thereby has not given disclosures of the above for the year ended 30 June 2007 and 2006.

96

Schedules forming part of the accounts
(All amounts in crores of rupees except share data and unless otherwise stated) Schedule 20: Significant accounting policies and notes to the accounts (Contd.) Employers Contribution to Provident Fund The Guidance on implementing AS 15, Employee Benefits (revised 2005) issued by Accounting Standard Board (ASB) states benefits involving employer established provident funds, which requires interest shortfall to be recompensed are to be considered as defined benefits plans. Pending the issuance of the guidance note from the Actuarial Society of India, the Company’s actuary has expressed an inability to reliable measure provident fund liabilities. Accordingly the company is unable to exhibit the related information. During the year ended 30 June 2010, the Company has contributed Rs. 48.13 crores (Previous year Rs. 35.78 crores) towards Employers’ contribution to the Provident Fund. 16. Joint Venture The group has an interest in the following jointly controlled entity: Name of the Company NEC HCL System Technologies Limited Axon Balance LLC, Axon Puerto Rico Inc., Shareholding 49% 50% 49% Incorporated in India United States of America Puerto Rico

The aggregate amounts of assets, liabilities, income and expenditure to the extent of the interest of the group in the above jointly controlled entities are given hereunder: Particulars Revenue from software services Other income Total Personnel expenses Other Expenses Depreciation and Amortization Total Profit Before Tax Provision for tax Net profit after tax Particulars Assets Fixed assets Investments Sundry Debtors Cash and Bank Balances Other Current Assets Liabilities Current liabilities and provisions 15.17 15.17 10.89 7.09 11.10 3.49 2.04 0.03 8.23 18.74 2.55 Year ended 30 June 2010 41.44 0.58 42.02 21.48 15.86 0.90 38.24 3.78 (0.58) 4.36 As at 30 June 2010 Year ended 30 June 2009 21.22 0.60 21.82 7.00 9.99 0.47 17.46 4.36 0.09 4.27 As at 30 June 2009

Notes: a. NEC HCL System Technologies Limited financial statements are for the year ended 31 March, 2010 and 2009 respectively. b. Axon Puerto Rico Inc. financial statements are for the period ended 31 December, 2009 and 2008 respectively.

97

Schedules forming part of the accounts
(All amounts in crores of rupees except share data and unless otherwise stated) Schedule 20: Significant accounting policies and notes to the accounts (Contd.) 17. Additional information pursuant to the provisions of paragraphs 3, 4, 4C and 4D of Part II of Schedule VI to the Companies Act, 1956 17.1 Particulars of purchases, sales and closing stock of trading goods: Opening Stock Qty (Nos.) Software Licenses (Unlimited Users) Servers Storage devices Others* Total (-) 225 (-) 107 (-) 51 (-) 383 (-) Value (Rs.) 32.24 (-) 22.15 (-) 20.06 (-) 12.56 (-) 87.01 (-) Purchases Qty (Nos.) (-) (225) (107) 119,968 (51) 119,968 (383) Value (Rs.) (32.24) (22.15) (20.06) 51.06 (12.56) 51.06 (87.01) Qty (Nos.) (-) 225 (-) 107 (-) 95,373 (-) 95,705 (-) Sales Value (Rs.) 29.83 (-) 20.50 (-) 18.56 (-) 42.00 (-) 110.89 (-) Closing Stock Qty (Nos.) (-) (225) (107) 24,646 (51) 24,646 (383) Value (Rs.) (32.24) (22.15) (20.06) 4.49 (12.56) 4.49 (87.01)

ITEMS

* Does not include any item which in value individually accounts for 10% or more of the total value of sales/ stock Notes: 1. Previous year figures are given in brackets. 2. Quantities have been shown wherever determinable 17.2 a) Managerial remuneration Computation of Net Profit in accordance with Section 349 of the Companies Act, 1956 and calculation of commission payable to non whole-time directors: Year Ended June 2010 Profit before Tax as per Profit and Loss Account Add: Depreciation as per books of accounts Provision for doubtful debts/ advances Less: Depreciation under section 350 of the Companies Act, 1956 Profit on sale of fixed assets (net) Profit on sale of Investments (net) Profit as per section 349 Add: Commission to non- executive directors Profit as per section 198 Commission payable to non whole-time directors: Maximum commission under Section 309 of the Companies Act, 1956 @ 1% Commission approved by the board 1,152.82 Year Ended June 2009 1,193.92

274.03 (8.43) 265.60 274.03 2.20 4.85 281.08 1,137.34

251.89 27.58 279.47 251.89 0.10 107.04 359.03 1,114.36

1.15 1,138.49

1.15 1,115.51

11.38 1.15

11.15 1.15

98

Schedules forming part of the accounts
(All amounts in crores of rupees except share data and unless otherwise stated) Schedule 20: Significant accounting policies and notes to the accounts (Contd.) b) Managerial remuneration comprises: Year ended 30 June 2010 Salaries and allowances Contribution to provident fund Sitting fees Commission to non-executive directors 4.40 0.14 0.13 1.15 5.82 Year ended 30 June 2009 4.12 0.13 0.11 1.15 5.51

The above does not include provision for encashable leave and gratuity, which is actuarially determined on an overall basis. The wholly owned subsidiaries have made the following payments to a director of the Company: Year ended 30 June 2010 Remuneration paid to executive director 4.76 4.76 Year ended 30 June 2010 17.3 CIF value of imports Capital goods 17.4 Auditors’ remuneration * As Auditors Statutory audit Tax audit fees * excluding service tax 17.5 Expenditure in foreign currency (on accrual basis unless otherwise stated) Software development expenses Interest Travel (on cash basis) Rates and taxes Software License Fee Communication costs Professional fees Personnel Expenses Others 17.6 Earnings in foreign currency (on accrual basis) Income from Services 4,968.24 4,968.24 4,572.53 4,572.53 319.77 4.64 198.08 4.95 4.07 2.48 7.21 74.14 73.16 688.50 421.36 7.48 187.74 8.06 11.79 3.36 23.95 22.90 15.65 702.29 1.80 0.26 2.06 1.42 0.26 1.68 114.91 114.91 108.03 108.03 Year ended 30 June 2009 4.87 4.87 Year ended 30 June 2009

99

Schedules forming part of the accounts
(All amounts in crores of rupees except share data and unless otherwise stated) Schedule 20: Significant accounting policies and notes to the accounts (Contd.) 17.7 Dividend remitted in foreign currency Final dividend Number of non-resident shareholders Number of shares held Amount remitted in INR (net of tax) Amount remitted FCY Year to which it relates 1st Interim dividend Number of non-resident shareholders Number of shares held Amount remitted in INR (net of tax) Amount remitted FCY Year to which it relates 2nd Interim dividend Number of non-resident shareholders Number of shares held Amount remitted in INR (net of tax) Amount remitted FCY Year to which it relates 3rd Interim dividend Number of non-resident shareholders Number of shares held Amount remitted in INR (net of tax) Amount remitted FCY Year to which it relates Year ended 30 June 2010 81 121,961,684 12.20 $2,614,286 2008-09 84 121,998,748 12.20 $2,623,065 2009-10 79 120,920,184 12.09 $2,584,317 2009-10 74 120,947,704 12.09 $2,709,402 2009-10 Year ended 30 June 2009 89 122,925,158 36.88 $7,819,261 2007-08 89 122,925,158 36.88 $7,760,498 2008-09 90 122,910,522 24.58 $5,042,753 2008-09 90 123,074,122 12.31 $2,484,088 2008-09

18. Previous year comparatives The figures of previous year were audited by a firm of chartered accountants other than S.R. Batliboi & Co. The previous year’s figures have been re-classified/re-grouped to conform to current year’s classification. As per our report of even date For HCL Technologies Limited For S. R. Batliboi & Co. Firm Registration Number: 301003E Chartered Accountants Shiv Nadar Chairman and Chief Strategy Officer Vineet Nayar CEO & Wholetime Director per Tridibes Basu Partner Membership Number: 17401 Sandip Gupta Deputy Chief Financial Officer Raj Kumar Walia Senior Vice President - Finance & Accounts Gurgaon, India 29 July 2010 Noida (UP), India 29 July 2010 T S R Subramanian Director Anil Chanana Chief Financial Officer Prahlad Rai Bansal Corporate Vice President - Finance Manish Anand Deputy Company Secretary

100

BALANCE SHEET ABSTRACT AND COMPANY’S GENERAL BUSINESS PROFILE
(All amounts in thousands of rupees, unless otherwise stated) I. Registration details Registration No. 55-46369 Balance Sheet Date 30 June 2010 Capital raised during the year Public issue Nil Bonus issue Nil III. Position of mobilization and deployment of funds Total liabilities 63,332,541 Sources of funds Paid-up capital 1,377,702* Secured loans 10,305,141 * Includes Rs. 20,135 in respect of share application money. Application of funds Net fixed assets 14,210,301 ** Net current assets 25,728,627 Accumulated losses Nil IV. Performance of company Turnover 52,505,337 Profit before tax 11,528,225 Earnings per share (in Rs.) 15.68 (Basic) 15.33 (Diluted) V. Product description: Item code (ITC code): For HCL Technologies Limited Shiv Nadar Chairman and Chief Strategy Officer Vineet Nayar CEO & Wholetime Director Sandip Gupta Deputy Chief Financial Officer Raj Kumar Walia Senior Vice President - Finance & Accounts Noida (UP), India 29 July 2010 T S R Subramanian Director Anil Chanana Chief Financial Officer Prahlad Rai Bansal Corporate Vice President - Finance Manish Anand Deputy Company Secretary Total expenditure 40,977,112 Profit after tax 10,565,826 Dividend rate % 200% Investments 22,331,986 Misc. Expenditure Nil Deferred tax 1,061,627 Total assets 63,332,541 Reserves and surplus 47,980,905 Unsecured loans 3,668,793 State Code 55

II.

Rights issue Nil Private Placement 1,691,513

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

** Includes Rs. 4,772,049 thousands in respect of capital work-in-progress.

Generic names of Principal Products/Services of Company (as per monetary terms) Software 852490

101

Consolidated Statements

AUDITORS’ REPORT The Board of Directors HCL Technologies Limited We have audited the attached consolidated balance sheet of HCL Technologies Limited, its subsidiaries and joint ventures (together refer to as ‘Group’), as at June 30, 2010, and also the consolidated profit and loss account and the consolidated cash flow statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Group’s management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. We report that the consolidated financial statements have been prepared by the Company’s management in accordance with the requirements of Accounting Standards (AS) 21, Consolidated financial statements and Accounting Standard (AS) 27, Financial Reporting of Interests in Joint Ventures [notified pursuant to the Companies (Accounting Standards) Rules, 2006, (as amended)]. In our opinion and to the best of our information and according to the explanations given to us, the consolidated financial statements give a true and fair view in conformity with the accounting principles generally accepted in India: (a) in the case of the consolidated balance sheet, of the state of affairs of the Group as at June 30, 2010; (b) in the case of the consolidated profit and loss account, of the profit for the year ended on that date; and (c) in the case of the consolidated cash flow statement, of the cash flows for the year ended on that date.

For S.R. Batliboi & Co. Firm registration number: 301003E Chartered Accountants

per Tridibes Basu Partner Membership No.: 17401 Gurgaon (India) July 29, 2010

105

Consolidated Balance Sheet
(All amounts in crores of rupees) Schedule Sources of Funds Shareholders’ funds Share capital Share application money pending allotment Reserves and surplus Minority interest Loan funds Secured Loans Unsecured loans Application of funds Fixed assets Gross block Less : Accumulated depreciation and amortisation Net block Capital work-in-progress (including capital advances) Investments Deferred tax assets (net) Current assets, loans and advances Inventories Sundry debtors Cash and bank balances Other current assets Loans and advances (A) Less: Current liabilities and Provisions Current liabilities Provisions (B) Net current assets (A-B) 12 13 5 7,061.60 2,221.98 4,839.62 609.13 5,448.75 6 20 (7) 7 8 9 10 11 831.70 375.67 65.17 2,521.06 1,580.37 946.21 833.79 5,946.60 2,979.93 606.04 3,585.97 2,360.63 9,016.75 6,779.64 1,863.87 4,915.77 489.13 5,404.90 40.34 456.52 169.56 2,175.05 1,898.70 940.54 677.86 5,861.71 3,278.00 523.48 3,801.48 2,060.23 7,961.99 3 4 1 2 As at 30 June 2010 135.76 2.01 6,151.06 6,288.83 3.68 2,345.90 378.34 2,724.24 9,016.75 As at 30 June 2009 134.05 0.47 4,808.28 4,942.80 2.97 2,595.37 420.85 3,016.22 7, 961.99

Significant accounting policies and notes to accounts 20 The schedules referred to above and notes to accounts form an integral part of the Consolidated Balance Sheet. As per our report of even date For HCL Technologies Limited For S. R. Batliboi & Co. Firm Registration Number: 301003E Chartered Accountants Shiv Nadar Chairman and Chief Strategy Officer Vineet Nayar CEO & Wholetime Director per Tridibes Basu Partner Membership Number: 17401 Sandip Gupta Deputy Chief Financial Officer Raj Kumar Walia Senior Vice President - Finance & Accounts Gurgaon, India 29 July 2010 Noida (UP), India 29 July 2010 T S R Subramanian Director Anil Chanana Chief Financial Officer Prahlad Rai Bansal Corporate Vice President - Finance Manish Anand Deputy Company Secretary

106

Consolidated Pro?t and Loss Account
(All amounts in crores of rupees except share data unless otherwise stated) Schedule
Income Revenue Other income Expenditure Cost of goods sold Personnel expenses Operating and other expenses Finance expenses Depreciation and amortisation Profit before tax and minority interest Provision for Tax - current tax - deferred tax charges - fringe benefit tax Profit after tax and before minority interest Share of minority interest Net Profit after tax and minority interest Balance in profit and loss account brought forward Profit available for appropriation Appropriations Proposed final dividend [ including Rs. 0.29 crores (Previous year Rs.0.87 crores) paid for previous year] Corporate dividend tax on proposed final dividend [ including Rs. 0.05 crores (Previous year Rs.0.87 crores) paid for previous year] Interim dividend Corporate dividend tax on interim dividend Transfer to general reserve Transfer to debenture redemption reserve Transfer to capital redemption reserve (refer note 1 of Schedule 2) Balance carried forward to the Balance Sheet Earnings per equity share of Rs. 2 each Basic Diluted Weighted average number of equity shares used in computing earnings per equity share Basic Diluted 20 (12) 18.69 18.27 19.72 19.49 16 17 18 19 5 443.55 6,253.70 3,498.48 204.14 418.11 10,817.98 1,472.43 (270.22) 53.02 3.77 1,259.00 0.19 1,259.19 2,992.55 4,251.74 68.16 11.32 202.33 34.13 105.66 295.00 3,535.14 4,251.74 205.47 5,194.38 3,000.06 112.44 375.47 8,887.82 1,603.79 (319.20) 56.72 (21.86) 1,319.45 0.18 1,319.63 2,366.99 3,686.62 67.90 11.54 401.71 68.19 99.73 45.00 2,992.55 3,686.62 14 15 12,136.29 154.12 12,290.41 10,229.41 262.20 10,491.61

Year Ended 30 June 2010

Year Ended 30 June 2009

673,741,835 689,103,382

669,016,035 677,115,015

Significant accounting policies and notes to accounts 20 The schedules referred to above and notes to accounts form an integral part of the Consolidated Profit and Loss Account. As per our report of even date For HCL Technologies Limited For S. R. Batliboi & Co. Firm Registration Number: 301003E Chartered Accountants Shiv Nadar Chairman and Chief Strategy Officer Vineet Nayar CEO & Wholetime Director per Tridibes Basu Partner Membership Number: 17401 Sandip Gupta Deputy Chief Financial Officer Raj Kumar Walia Senior Vice President - Finance & Accounts Gurgaon, India 29 July 2010 Noida (UP), India 29 July 2010 T S R Subramanian Director Anil Chanana Chief Financial Officer Prahlad Rai Bansal Corporate Vice President - Finance Manish Anand Deputy Company Secretary

107

Consolidated Cash ?ow statement
(All amounts in crores of rupees) Year ended 30 June 2010 A. Cash flows from operating activities Profit before tax and minority interest Adjusted for: Depreciation and amortization Interest Income Dividend income Profit on sale of investments (net) Interest Expenses Gain on sale of fixed assets Amortisation of stock compensation under Employee stock option plans Other non cash charges Operating profit before working capital changes Movement in Working Capital Increase in sundry debtors Decrease / (Increase) in inventories Decrease / (Increase) in loans & advances Increase in other assets Increase in current liabilities and provisions Cash generated from operations Direct taxes paid (net of refunds) Net cash from operating activities B. Cash flows from investing activities Proceeds from / (Investments in) fixed deposits (net) Purchase of investments in mutual funds Proceeds from sale of mutual funds Investment in bonds Proceeds from sale of bonds Deposits with body corporate Purchase of fixed assets (including capital advances) Proceeds from sale of fixed assets Stake acquired from minoirity Payment for business acquisition (net of cash acquired) Income from dividend and interest Taxes paid Net cash (used for) investing activities C. Cash flows from financing activities Proceeds from issue of share capital Proceeds from Issue of Debentures Proceeds from secured loans Repayment of secured loans Proceeds from unsecured loans Repayment of unsecured loans 103.99 1,000.00 1,243.51 (2,488.99) 496.88 (610.53) 20.11 3,536.95 (1,020.39) 484.35 (8.74) 397.40 (10,628.44) 9,871.92 (50.00) 20.00 (100.00) (646.82) 14.82 (50.82) 171.45 (13.62) (1,014.11) (954.34) (654.48) 2,119.46 (23.00) 15.00 (638.77) 7.78 (0.06) (3,368.30) 85.23 (61.08) (3,472.56) 1,472.43 418.11 (98.80) (27.65) (5.59) 147.54 (2.38) 49.84 2.17 1,955.67 Year ended 30 June 2009 1,603.79 375.47 (130.86) (5.25) (117.73) 42.07 56.12 35.36 1,858.97

(417.82) 104.33 8.64 (38.23) 513.65 2,126.24 (335.06) 1,791.18

(248.75) (102.39) (134.04) (208.03) 110.21 1,275.97 (158.22) 1,117.75

108

Consolidated Cash ?ow statement
(All amounts in crores of rupees) Year ended 30 June 2010 Interest on loans Dividend paid to minority shareholders of consolidated subsidiaries Dividends paid (including corporate dividend tax) Principal payment for capital lease obligations Cash flows (used for) financing activities Effect of exchange rates on cash and cash equivalents held in foreign currency Net increase / (decrease) in cash and cash equivalents (A+B+C) Cash and cash equivalents at the beginning of the year Cash and cash equivalents at the end of the year Cash and Bank Balances as per Schedule - 9 (refer note 1 below) Less: Fixed Deposits greater than three months Cash and cash equivalents in cash flow statement Notes: 1. Cash and bank balance includes the following, which are not available for use by the Company: Investor Education and Protection Fund-Unclaimed dividend Bank Guarantees margin Fixed deposit pledged with Bank 2.35 11.87 2.32 12.54 586.95 (141.31) (315.18) (16.21) (727.84) 29.83 49.23 404.26 483.32 1,580.37 (1,097.05) 483.32 Year ended 30 June 2009 (40.14) (4.48) (704.42) (13.35) 2,249.89 38.04 (104.92) 471.14 404.26 1,898.70 (1,494.44) 404.26

2. Previous year figures have been regrouped and recast wherever necessary to conform to the current period classification. As per our report of even date. For HCL Technologies Limited For S. R. Batliboi & Co. Firm Registration Number: 301003E Chartered Accountants Shiv Nadar Chairman and Chief Strategy Officer Vineet Nayar CEO & Wholetime Director per Tridibes Basu Partner Membership Number: 17401 Sandip Gupta Deputy Chief Financial Officer Raj Kumar Walia Senior Vice President - Finance & Accounts Gurgaon, India 29 July 2010 Noida (UP), India 29 July 2010 T S R Subramanian Director Anil Chanana Chief Financial Officer Prahlad Rai Bansal Corporate Vice President - Finance Manish Anand Deputy Company Secretary

109

Schedules to the consolidated accounts
(All amounts in crores of rupees except share data unless otherwise stated) Schedule 1: Share Capital Authorised 750,000,000 (Previous year 750,000,000) equity shares of Rs. 2 each Issued, subscribed and paid up 678,783,812 (Previous year 670,256,600) equity shares of Rs. 2 each, fully paid up Notes : 1 • • Paid up share capital includes:42,449,979 (Previous Year: 42,449,979) equity shares of Rs. 2 each allotted as fully paid up, pursuant to contracts for consideration other than cash. 82,986,872 (Previous Year: 82,986,872) equity shares of Rs. 2 each issued as bonus shares in ratio of one share for every two held by capitalisation of general reserve and 325,453,918 (Previous Year: 325,453,918) equity shares of Rs. 2 each issued as bonus shares in ratio of one share for every share held by capitalisation of securities premium account. For stock options outstanding details refer Note no. 3 of Schedule 20 Year ended 30 June 2010 1,273.08 165.91 1,438.99 118.04 (303.07) (185.03) 808.62 105.66 914.28 45.00 45.00 295.00 295.00 (642.79) 550.33 (92.46) 216.23 16.09 200.14 3,535.14 6,151.06 Year ended 30 June 2009 1,209.94 63.14 1,273.08 (48.02) 166.06 118.04 708.89 99.73 808.62 45.00 45.00 (411.85) (230.94) (642.79) 259.41 45.63 213.78 2,992.55 4,808.28 As at 30 June 2010 150.00 As at 30 June 2009 150.00

135.76 135.76

134.05 134.05

2

Schedule 2: Reserve and Surplus 1 Securities Premium Account Opening balance Exercise of stock option by employees Foreign currency translation reserve Opening balance Exchange difference during the year on net investment in Non-integral operations General Reserve Opening balance Add: Transferred from profit and loss Account Capital Redemption Reserve (refer Note1 below) Opening balance Add:Transferred from Profit and Loss Account Debenture Redemption Reserve Opening balance Add:Transferred from Profit and Loss Account Hedging Reserve account (net of deferred tax) Opening balance Movement during the period (net) Employee Stock Options Outstanding Less: Deferred employee compensation Profit & Loss Account Total

2

3

4

5

6

7

8

Notes : 1 During the year ended June 30, 2009, HCL Comnet Systems and Services Limited (“the subsidiary company”), a subsidiary of the Company redeemed all of its outstanding preference share capital which was owned by the Company. Pursuant to such redemption and in compliance with the provisions of the Companies Act, 1956, the subsidiary company transferred an amount of Rs. 45 Crores out of previous years profit to Capital Redemption Reserve. The Profit and Loss Account includes profit/(loss) of Rs.4.36 Crores (Previous Year: Rs.4.27 Crores) being the company's share of profit of jointly controlled entities.

2

110

Schedules to the consolidated accounts
(All amounts in crores of rupees) Schedule 3: Secured Loans Debentures (refer note 1 below) 7.55% Secured redeemable non convertible debentures of Rs. 10 Lacs each 8.20% Secured redeemable non convertible debentures of Rs. 10 Lacs each 8.80% Secured redeemable non convertible debentures of Rs. 10 Lacs each From Banks Long Term Loans (refer Note 2 below) Short Term Loans (refer Note 3, 4 and 5 below) From Others -Finance Lease Obligations (refer Note 4(i) of Schedule 20 and Note 6 below) -Others (refer Note 7 below) 1,212.08 9.29 2,491.94 As at 30 June 2010 170.00 330.00 500.00 As at 30 June 2009 -

61.03 63.50 2,345.90

39.10 64.33 2,595.37

Notes : 1. The Company allotted 10,000 secured redeemable non convertible debentures of face value of Rs. 10 lacs each, aggregating to Rs.1,000 crores. The debentures are secured by specified movable assets, receivables from subsidiaries and specified land and building of the Company. Debentures are redeemable at par on following datesebenture - Series Maturity Date 7.55% Redeemable non convertible debentures August 25, 2011 8.20% Redeemable non convertible debentures August 25, 2012 8.80% Redeemable non convertible debentures September 10, 2014 2. Secured by pledge of equity shares of certain subsidiaries and corporate guarantee. Amount payable within one year is Rs.151.51 crores (Previous Year:Rs. Nil crores) 3. Rs.Nil crores (Previous Year: Rs 96.94 crores) secured by fixed deposits pledged with banks of Rs.Nil Crore (Previous Year: Rs 586.95 crores). 4. Rs. Nil crores (Previous Year: Rs 2,395 crores) secured by pledge of equity shares of a subsidiary and corporate guarantee. 5. Rs.9.29 crores (Previous Year: Rs.Nil crores) secured by fixed assets and current assets except vehicle of a subsidiary. 6. Obligations under finance lease are secured by fixed assets taken on finance lease obligations. Amount payable within one year is Rs. 24.26 crores (Previous Year: Rs 15.18 crores) 7. Rs.63.50 crores (Previous Year: Rs 64.33 crores) secured by hypothecation of gross block of fixed assets (Plant & Machinery) of Rs. 71.60 crores (Previous Year: Rs 65.41 crores) of a subsidiary. Amount payable within one year is Rs.15.43 crores (Previous Year: Rs. 13.87 crores) Schedule 4: Unsecured Loans Commercial Paper (short term) [Maximum amount raised at any time during the year Rs.Nil crores (Previous Year: Rs. 150 crores)] Short term loans and advances -From Banks Other Loans and advances - From financial institution [Due within one year is Rs Nil crores (Previous Year: Rs 0.02 crores)] - From Others [Due within one year is Rs 3.31 crores (Previous Year: Rs 1.66 crores)] As at 30 June 2010 As at 30 June 2009 150.00

367.79

264.65

-

0.02

10.55 378.34

6.18 420.85

111

Schedules to the consolidated accounts

(All amounts in crores of rupees)

Schedule 5: Fixed Assets Gross Block Additions Additions on Acquisition Deletions/ TranslaAdjusttion exments change differences 5.81 17.89 0.72 6.66 0.08 10.44 41.60 40.35 0.07 (0.01) 6.26 57.38 (355.24) 7,061.60 (36.16) 6,779.64 0.07 4.15 0.76 19.60 12.72 1,863.87 418.11 1,410.12 473.51 0.07 6.75 27.51 32.57 (320.43) (0.15) (3.14) (2.82) (15.80) (6.52) (6.37) 3,647.26 85.09 125.79 507.34 714.78 952.58 0.01 506.42 458.62 132.23 6.75 1.40 53.08 21.95 368.22 111.50 661.50 121.13 0.01 261.68 94.15 356.58 54.50 5.52 8.58 0.05 6.54 (5.46) (0.62) (2.27) (13.32) (5.08) (5.73) As at 30 June 2010 As at 1 July 2009 Charge for the year Deletions/ Adjustments Translation exchange differences As at 30 June 2010 As at 30 June 2010 Accumulated Depreciation / Amortisation Net Block As at 30 June 2009

(refer Note 1 (e), (f), (g) and 4 (i) of Schedule 20)

Particulars

As at 1 July 2009

Goodwill Freehold land Leasehold land Buildings Plant and machinery Computers - Owned - Leased Software Furniture and fittings - Owned - Leased Vehicles - Owned - Leased

3,862.12 85.24 117.14 346.29 608.53 841.40 0.01 409.34 448.37

8.65 164.19 114.88 144.87 104.32 23.28

105.57 -

126.77 3,520.49 85.09 8.15 117.64 74.41 432.93 471.93 242.85 760.73 191.85 0.01 350.70 155.72 398.81 59.81 0.07 (0.01) 4.83 1.43 25.57 31.81 (32.49) 2,221.98 4,839.62 12.81 1,863.87 4,915.77 609.13

3,729.89 85.24 110.39 293.21 240.31 179.90 147.66 91.79 2.08 35.30 4,915.77 1,128.42 489.13

112

0.07 6.23 0.12 54.90 12.92 6,779.64 573.23 105.57 June 30, 2009 2,538.54 822.24 3,495.37 Capital Work-in-progress (including capital advances)

Notes: 1. Gross block of plant and machinery includes Rs.1.48 crores (Previous Year: Rs.1.48 crores) in respect of assets given on operating leases. The accumulated depreciation on these assets up to 30 June 2010 and the depreciation for the year ended on that date amounted to Rs.1.48 crores (Previous Year: Rs. 1.46 crores) and Rs.0.02 crores (Previous Year: Rs. 0.10 crores) respectively.

2. Additions to fixed assets and accumulated depreciation include Rs 10.83 crores (Previous Year: Rs.0.31 crores) and Rs.0.91 crores (Previous Year: Rs. 0.47 crores) respectively in respect of the Company’s share of fixed assets on account of proportionate consolidation of joint ventures.

3. Addition to depreciation charge for the year includes Rs. Nil crores (Previous Year: 98.04 crores) acquired on acquisition (refer Note no.2B (a),(b) and (c) of Schedule 20).

Schedules to the consolidated accounts
(All amounts in crores of rupees except share data unless otherwise stated) Schedule 6: Investments A) Long Term Investments (At cost) (Non trade and unquoted) (refer Note 11 of Schedule 20) Investment in mutual funds (refer Note 1 below) Investment in bonds Total Long term investments (A) B) Current Investments (At lower of cost and market value) Unquoted (refer Note 11 of Schedule 20) Investment in mutual fund (refer Note 2 below) Less: Diminution in value of Investments written off Quoted Investment in Nil equity shares (Previous Year: 5,478 equity shares) of Technology Solution Company Inc., United States of America Less: Diminution in value of Investments written off Investment in 7,790 equity shares (Previous Year: 7,790 equity shares) of American Commercial Lines Inc., United States of America (refer Note 3 below) Total Current Investments (B) Grand Total (A) + (B) Notes: 1. Net asset value of of long term investments in mutual fund as on 30 June 2010 is Rs.Nil crores (Previous Year: Rs. 22.01crores). 2. Net asset value of current investments in mutual funds as on 30 June 2010 Rs. 784.32 crores (Previous Year: Rs. 0.01 crores). 3. The market value of the investment in shares of American Commercial Lines Inc. as on 30 June 2010 is Rs. 0.81 crores (Previous Year: Rs. 0.58 crores). Schedule 7: Inventories (at lower of cost and net realisable value) Finished goods Stores and spares Goods in transit As at 30 June 2010 55.47 7.55 2.15 65.17 As at 30 June 2009 161.61 7.95 169.56 0.30 781.70 831.70 0.10 (0.10) 0.30 0.31 40.34 782.13 (0.73) 781.40 0.01 0.01 50.00 50.00 20.03 20.00 40.03 As at 30 June 2010 As at 30 June 2009

113

Schedules to the consolidated accounts
(All amounts in crores of rupees) Schedule 8: Sundry Debtors Debts outstanding for a period exceeding six months - Unsecured, considered good - Unsecured, considered doubtful Other debts - Unsecured, considered good - Unsecured, considered doubtful Less: Provision for doubtful debts 2,412.66 6.94 2,419.60 134.97 2,521.06 Schedule 9: Cash and Bank Balances Cash on hand Cheques on hand Remittances in transit Balances with scheduled banks - On current accounts - On fixed deposit accounts (refer Note 1 below) - On unclaimed dividend account Balance with other banks - On Current accounts - On Deposit accounts 301.55 9.74 1,580.37 Note: 1. Pledged with banks as security for loan Rs.Nil crores (Previous Year: Rs. 586.95 crores) and for guarantees and letters of credit- Rs.11.87 crores (Previous Year: Rs. 12.54 crores). Schedule 10: Other Current Assets Unbilled revenue Deferred cost Unrealised gain on derivative financial instruments As at 30 June 2010 532.80 409.76 3.65 946.21 As at 30 June 2009 546.27 394.27 940.54 78.86 12.36 1,898.70 63.44 1,099.23 2.35 47.58 1,494.62 2.32 As at 30 June 2010 0.12 17.14 86.80 2,078.85 32.89 2,111.74 159.21 2,175.05 As at 30 June 2009 0.12 77.51 185.33 108.40 128.03 236.43 96.20 126.32 222.52 As at 30 June 2010 As at 30 June 2009

114

Schedules to the consolidated accounts
(All amounts in crores of rupees) Schedule 11: Loans and Advances (Unsecured and considered good, unless otherwise stated) Advances recoverable in cash or in kind or for value to be received - Considered good - Considered doubtful Interest receivable Inter corporate deposits with HDFC Limited MAT credit entitlement Advance Fringe Benefit Tax (refer Note 1 below) Finance Lease Receivables ( refer Note 4 (iii) of Schedule 20) Less: Provision for doubtful advances Note: 1. Net of provision for fringe benefit tax of Rs. 89.27 crores (Previous Year: Rs. Nil crores) Schedule 12: Current Liabilities Current liabilities Sundry creditors Unrealised loss on derivative financial instruments Advance from customers Unearned Revenue Investor Education and Protection Fund shall be credited by following amounts (as and when due) (a) Unclaimed dividend Interest accrued but not due on borrowings Other liabilities As at 30 June 2010 1,788.82 145.93 107.44 816.27 As at 30 June 2009 2,013.78 617.90 84.44 445.04 As at 30 June 2010 As at 30 June 2009

441.51 8.05 30.48 100.00 196.04 2.03 63.73 841.84 8.05 833.79

483.93 12.67 75.47 77.90 40.56 690.53 12.67 677.86

2.35 9.82 109.30 2,979.93 As at 30 June 2010 226.41 1.80 67.87 11.27 6.37 292.32 606.04

2.32 3.76 110.76 3,278.00 As at 30 June 2009 182.80 4.11 1.50 67.03 11.39 2.99 253.66 523.48

Schedule 13: Provisions Provisions for Provisions for Income Tax (refer Note 1 below) Provisions for Fringe Benefit Tax (refer Note 2 below) Provisions for Wealth Tax (refer Note 3 below) Proposed Dividend Tax on Proposed Dividend Provisions for Warranty Provisions for Other staff benefits

Notes: 1. Net of advance income tax of Rs.799.44 crores (Previous Year: Rs 546.48 crores) 2. Net of Advance fringe benefit tax of Rs.Nil crores (Previous Year: Rs 104.73 crores). 3. Net of Advance wealth tax of Rs.1.56 crores (Previous Year: Rs 0.72 crores). Schedule 14: Revenue Sale of hardware and software Services Year ended 30 June 2010 525.97 11,610.32 12,136.29 Year ended 30 June 2009 222.81 10,006.60 10,229.41

115

Schedules to the consolidated accounts
(All amounts in crores of rupees) Schedule 15: Other Income Interest income - gross - On fixed deposits [Includes, Tax deducted at source Rs.23.31 (Previous Year: Rs. 16.01 crores)] - On investment (other than trade) - Others Profit on sale of investments - other than trade Dividend from investments - other than trade Provision for liabilities no longer required written back Reversal of provision for doubtful debts Profit on sale of Assets (refer Note 1 below) Foreign exchange gain (net) Miscellaneous income Note: 1. Net of loss on sale of fixed assets is Rs.1.75 crores (Previous year Rs. Nil crores) Schedule 16: Cost of Goods Sold Opening stock Purchases Closing stock Year ended 30 June 2010 161.61 337.41 499.02 (55.47) 443.55 Year ended 30 June 2009 53.09 313.99 367.08 (161.61) 205.47 90.16 2.35 6.29 5.59 27.65 7.77 1.89 2.38 4.17 5.87 154.12 122.38 2.62 5.86 117.76 5.25 4.05 4.28 262.20 Year ended 30 June 2010 Year ended 30 June 2009

Schedule 17: Personnel expenses Salaries, wages and bonus Contribution to provident fund and other employee benefits Staff welfare expenses Employee stock compensation expense (refer Note 3 of Schedule 20)

Year ended 30 June 2010 5,572.63 593.81 37.42 49.84 6,253.70

Year ended 30 June 2009 4,604.98 496.79 36.49 56.12 5,194.38

116

Schedules to the consolidated ?nancial statements
(All amounts in crores of rupees) Schedule 18: Operating and Other expenses Rent Power and fuel Insurance Repairs and maintenance - Plant and machinery - Buildings - Others Communication costs Postage and courier Travel and conveyance Business promotion Legal and professional charges Outsourcing Cost Software license fee Software tools License and transponder fee Printing and stationery Rates and taxes Advertising and publicity Provision for doubtful advances / advances written off Donations Dues and subscription Recruitment, training and development Provision for doubtful debts net Diminution in value of investments Loss on sale of investments-other than trade Exchange differences (net) Miscellaneous expenses 39.98 45.40 48.38 145.76 5.65 948.40 27.10 111.95 894.75 88.04 1.74 23.86 16.68 23.61 11.37 1.10 0.12 9.53 66.36 0.73 0.01 586.38 3,498.48 Schedule 19: Finance expenses Interest -on debentures -on banks -on lease assets -others Bank charges (refer Note 1 below) 69.32 78.22 7.10 7.13 42.37 204.14 42.07 5.09 7.07 58.21 112.44 Year ended 30 June 2010 39.03 51.79 45.92 118.45 15.77 844.92 18.20 106.40 488.94 87.63 8.03 22.96 20.28 24.14 7.64 7.53 0.30 11.15 52.92 82.68 0.10 0.03 239.10 318.03 3,000.06 Year ended 30 June 2009 Year ended 30 June 2010 249.70 118.13 33.75 Year ended 30 June 2009 236.70 123.93 27.49

Note: 1. Includes Rs 25.07 crores (Previous Year: Rs.48.68 crores) on account of fees paid to bank for loan taken by a subsidiary.

117

Schedules to the consolidated ?nancial statements
(All amounts in crores of rupees, except share data and unless otherwise stated) Schedule 20: Significant Accounting Policies and Notes to the Accounts

Company Overview
HCL Technologies Limited (“the Company” or “the parent company”) and its consolidated subsidiaries and associates, (hereinafter collectively referred to as “the Group”) are primarily engaged in providing a range of software services, business process outsourcing and infrastructure product and management services. The Company was incorporated in India in November 1991. The Group leverages an extensive offshore infrastructure and its global network of offices in various countries and professionals to deliver solutions across select verticals including Retail and consumer, Aerospace and defense, Automotive, Telecom, Financial Services, Government, Hitech, Media and Entertainment, Travel, Transportation and Logistics, Energy and utilities, Life Sciences and Healthcare. 1. Significant Accounting Policies a) Basis of preparation

The financial statements have been prepared to comply with the Accounting Standards notified by Companies (Accounting Standards) Rules, 2006, (as amended) and the relevant provisions of the Companies Act, 1956. The financial statements have been prepared under the historical cost convention on an accrual basis. The accounting policies are consistent with those used in the previous year. b) Use of estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the results of operations during the reporting period. Although these estimates are based upon management’s best knowledge of current events and actions, actual results could differ from these estimates. c) Principles of consolidation

These consolidated financial statements relate to HCL Technologies Limited, the parent company, its subsidiaries and joint ventures which are as follows: Subsidiaries of HCL Technologies Limited are as follows:Sr. No. Name of the Subsidiaries 1 HCL Comnet Systems and Services Limited 2 HCL Bermuda Limited 3 HCL Technologies (Shanghai) Limited 4 HCL Technoparks Limited Country of Incorporation India Bermuda China India Holding Percentage 99.90% 100% 100% 100%

Step down subsidiaries of direct subsidiaries of HCL Technologies as mentioned above are as follows:Sr. No. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 Name of the Subsidiaries HCL Great Britain Limited HCL (Netherlands) BV HCL GmbH HCL Belgium NV HCL Sweden AB HCL Italy SLR HCL Australia Services Pty. Limited HCL (New Zealand) Limited HCL Hong Kong SAR Limited HCL Japan Limited HCL Comnet Limited HCL America Inc. HCL Holdings GmbH Intelicent India Limited DSI Financial Solutions Pte. Limited HCL BPO Services (NI) Limited HCL Jones Technologies LLC HCL Singapore Pte. Limited HCL (Malaysia) Sdn. Bhd. Country of Incorporation UK The Netherlands Germany Belgium Sweden Italy Australia New Zealand Hong Kong Japan India USA Austria India Singapore UK USA Singapore Malaysia Holding Percentage 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 99.90% 100% 100% 100% 100% 100% 51.00% 100% 100%

118

Schedules to the consolidated ?nancial statements
(All amounts in crores of rupees, except share data and unless otherwise stated) Schedule 20: Significant accounting policies and notes to the accounts (Contd.) Sr. No. 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 Name of the Subsidiaries HCL EAI Services Limited HCL Poland sp. z o.o Capital Stream, Inc. HCL EAS Limited HCL Insurance BPO Services Limited * HCL Expense Management Services Inc.** Axon Group Limited. (formerly Axon Group Plc.)*** Axon EBT Trustee Limited *** Axon Solutions (Canada) Inc.*** Bywater Limited*** Axon Solutions Schweiz Gmbh*** Axon International Limited*** Axon Solutions Pty. Limited*** Axon Solutions Inc.*** Axon Acquisition Company, Inc.*** Axon Solutions Limited*** Axon Solutions Sdn. Bhd.*** Axon Solutions Singapore Pte. Limited *** Axon Solutions (Shanghai) Co. Limited *** HCL Axon (Proprietary) Limited *** JSPC- I Solutions Sdn. Bhd. JSP Consulting Sdn. Bhd. Aspire Solutions Sdn. Bhd. HCL Technologies Canada Inc. HCL Argentina s.a. HCL Mexico S. de R.L. HCL Technologies Romania s.r.l. HCL Hungary Limited HCL Latin America Holding LLC HCL (Brazil) Technologia da informacao Ltda. HCL Retail Solutions Australia Pty Limited HCL Technologies Denmark Apps HCL Technologies Norway AS Country of Incorporation India Poland USA UK UK USA UK UK Canada UK Switzerland UK Australia USA USA UK Malaysia Singapore China South Africa Malaysia Malaysia Malaysia Canada Argentina Mexico Romania Hungary USA Brazil Australia Denmark Norway Holding Percentage 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%

* Acquired on 1 September 2008 (refer Note 2 (B) of Schedule 20) ** Acquired on 15 September 2008 (refer Note 2 (B) of Schedule 20) *** Acquired on 15 December 2008 (refer Note 2 (B) of Schedule 20) Sr. No. Name of the Joint Ventures Country of Incorporation India United States of America Puerto Rico Holding Percentage 49% 50% 49%

1 NEC HCL System Technologies Limited. Axon Balance LLC*** 2 Axon Puerto Rico*** 3 *** Acquired on 15 December 2008 (refer Note 2 (B) of Schedule 20)

Subsidiary companies are those in which the Group, directly or indirectly, have an interest of more than one half of the voting power or otherwise has power to exercise control over the operations. Subsidiaries are consolidated from the date on which effective control is transferred to the Company until the date of cessation of the parent-subsidiary relationship. All material inter company transactions, balances and unrealized surplus and deficit on transactions between Group companies are eliminated. Consistency in adoption of accounting policies among all Group companies is ensured to the extent practicable. Separate disclosures are made of minority interest.

119

Schedules to the consolidated ?nancial statements
(All amounts in crores of rupees, except share data and unless otherwise stated) Schedule 20: Significant accounting policies and notes to the accounts (Contd.) Investment in business entities over which the Group exercises joint control is accounted for using proportionate consolidation except where the control is considered to be temporary. Minority interest in subsidiaries represents the minority shareholders’ proportionate share of net assets and the net income of HCL’s majority owned subsidiaries. Goodwill has been recorded to the extent that the cost of acquisition, comprising purchase consideration and transaction costs, exceeds the book value of net assets in each acquired company. The goodwill arising on consolidation is not amortized but tested for impairment on a periodic basis. d) • • • i) Revenue recognition Software services; Infrastructure service; and Business process outsourcing services. Software services

The Group derives revenues primarily from:-

Revenue from Software services comprises income from time and material and fixed price contracts. Revenue with respect to time and material contracts is recognized as related services are performed. Revenue from fixed price contracts and fixed time frame contracts is recognized in accordance with the percentage completion method under which the sales value of performance, including earnings thereon, is recognized on the basis of cost incurred in respect of each contract as a proportion of total cost expected to be incurred. The cumulative impact of any revision in estimates of the percentage of work completed is reflected in the year in which the change becomes known. Provisions for estimated losses are made during the year in which a loss becomes probable based on current contract estimates. Revenue from sale of licenses for the use of software applications is recognised on transfer of title in the user license. Revenue from annual technical service contracts is recognised on a pro rata basis over the period in which such services are rendered. Income from revenue sharing agreements is recognized when the right to receive is established. ii) Infrastructure Services Revenue from sale of products is recognized when persuasive evidence of an arrangement exists, risk and reward of ownership has been transferred to the customer, the sales price is fixed or determinable and collectability is reasonably assured. Revenue from installation services is recognized when installation of networking equipment at customer site is completed and accepted by the customer. Revenue from bandwidth services is recognized upon actual usage of such services by customers based on either the time for which these service are provided or volume of data transferred or both and excludes service tax. Revenue from maintenance services is recognized ratably over the period of the contract. Revenue from infrastructure management services comprise income from time-and-material, and fixed price contracts. Revenue with respect to time-and-material contracts is recognized as related services are performed. Revenue with respect to fixed price contracts is recognized in accordance with the percentage of completion method. Warranty costs on sale of goods and services are accrued based on management estimates and historical data at the time those related revenues are recognized. Unearned income arising in respect of bandwidth services and maintenance services is calculated on the basis of unutilized period of service at the balance sheet date and represents revenue, which is expected to be earned in future periods in respect of these services. In case of multi-deliverable contracts where revenue cannot be allocated to various deliverables in a contract, the entire contract is accounted for as one deliverable and accordingly the revenue is recognized on a proportionate completion method following the performance pattern of predominant services in the contract or is deferred until the last deliverable is delivered. iii) Business Process Outsourcing services Revenue from business process outsourcing services is derived from both time based and unit-price contracts. Revenue is recognized as the related services are performed in accordance with the specific terms of the contracts with the customer. Costs and earnings in excess of billing are classified as unbilled revenue, while billing in excess of costs and earnings are classified as unearned revenue. Incremental revenue from existing contracts arising on future sales of the customers’ products will be recognized when it is earned. Revenue and related direct costs from transition services in outsourcing arrangements are deferred and recognized over the period of the arrangement. Certain upfront non-recurring costs incurred in the initial phases of outsourcing contracts and contract acquisition costs, are deferred and amortized usually on a straight line basis over the term of the contract. The Group periodically estimates the undiscounted cash flows from the arrangement and compares it with the unamortized costs. If the unamortized costs exceed the undiscounted cash flow, a loss is recognized.

120

Schedules to the consolidated ?nancial statements
(All amounts in crores of rupees, except share data and unless otherwise stated) Schedule 20: Significant accounting policies and notes to the accounts (Contd.) The Group accounts for volume discounts and pricing incentives to customers. The discount terms in the Group’s arrangements with customers generally entitle the customer to discounts, if the customer completes a specified level of revenue transactions. In some arrangements, the level of discount varies with increases in the levels of revenue transactions. The Group recognizes discount obligations as a reduction of revenue based on the ratable allocation of the discount to each of the underlying revenue transactions that result in progress by the customer toward earning the discount. Revenues are shown net of sales tax, value added tax, service tax and applicable discounts and allowances. The revenue is recognized net of discounts and allowances. iv) Others

Profit on sale of Investments is recorded on transfer of title from the Group and is determined as the difference between the sales price and the then carrying value of the investment. Interest on the deployment of surplus funds is recognized using the time-proportion method, based on interest rates implicit in the transaction. Dividend income, commission, brokerage and rent are recognized when the right to receive the same is established. e) Fixed assets, Intangible assets and Capital work-in-progress Fixed assets are stated at cost less accumulated depreciation and impairment losses if any. Cost comprises the purchase price and any attributable cost of bringing the asset to its working condition for its intended use. Fixed assets under construction, advances paid towards acquisition of fixed assets and cost of assets not ready for use before the year-end, are disclosed as capital work in progress. Intangible assets represent goodwill which arise or have been acquired through acquisitions and software. f) Depreciation and amortization Depreciation on fixed assets except leasehold land and leasehold improvement is provided on the straight-line method over their estimated useful lives, as determined by the management, at the rate which are equal to or higher than the rates prescribed under Schedule XIV of the Companies Act, 1956. Leasehold land is amortized over the period of lease. Leasehold improvements are amortized over a period of four years or the remaining period of the lease, whichever is shorter. Depreciation is charged on a pro-rata basis for assets purchased/sold during the year. Assets costing less than Rs. 5,000 are fully depreciated in the year of purchase. Intangible assets other than goodwill acquired on consolidation are amortized over their respective individual estimated useful life on a straight line basis. The management’s estimates of the useful life of the various fixed assets/intangibles are as follows: Life (in years) Fixed Assets Buildings Plant and machinery (including office equipment, air conditioners and electrical installations) Computers Furniture and fixtures Vehicles – owned Vehicles – leased Intangibles Software g) Impairment of Assets 20 4 to 5 2 to 4 4 5 Over the period of lease or 5 years, whichever is lower

3

The carrying amounts of assets are reviewed at each balance sheet date if there is any indication of impairment based on internal/external factors. An impairment loss is recognized wherever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the greater of the asset’s net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value at the weighted average cost of capital. h) Leases Where the Company is the lessee Finance leases, which effectively transfer to the Company substantially all the risks and benefits incidental to ownership of the leased item, are capitalized at the lower of the fair value and present value of the minimum lease payments at the inception of the lease term and disclosed as leased assets. Lease payments are apportioned between the finance charges and

121

Schedules to the consolidated ?nancial statements
(All amounts in crores of rupees, except share data and unless otherwise stated) Schedule 20: Significant accounting policies and notes to the accounts (Contd.) reduction of the lease liability based on the implicit rate of return. Finance charges are charged directly against income. Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased item, are classified as operating leases. Operating lease payments are recognized as an expense in the Profit and Loss account on a straight-line basis over the lease term. Where the Company is the lessor Assets given under a finance lease are recognised as a receivable at an amount equal to the net investment in the lease. Lease rentals are apportioned between principal and interest. The principal amount received reduces the net investment in the lease and interest is recognised as revenue. Assets subject to operating leases are included in fixed assets. Lease income is recognised in the Profit and Loss Account on a straight-line basis over the lease term. Costs, including depreciation are recognised as an expense in the Profit and Loss Account. i) Investments

Trade investments are the investments made to enhance the Group’s business interests. Investments that are readily realisable and intended to be held for not more than a year are classified as current investments. All other investments are classified as long-term investments. Current investments are carried at lower of cost and fair value determined on an individual investment basis. Long-term investments are carried at cost. However, provision for diminution in value is made to recognise a decline other than temporary in the value of the investments. j) (i) Foreign currency translation Initial Recognition

Foreign currency transactions are recorded in the reporting currency, by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of the transaction. (ii) Conversion

Foreign currency monetary items are reported using the closing rate. Non-monetary items which are carried in terms of historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction. (iii) Exchange Differences Exchange differences arising on the settlement of monetary items, or on reporting such monetary items of Group at rates different from those at which they were initially recorded during the year, or reported in previous financial statements, are recognized as income or as expenses in the year in which they arise. (iv) Forward Exchange Contracts and options not intended for trading or speculation purposes. The Group uses derivative financial instruments (foreign currency forward and option contracts) to hedge its risks associated with foreign currency fluctuations relating to certain forecasted transactions. The use of foreign currency forward contracts is governed by the Group’s policies, which provide written principles on the use of such financial derivatives consistent with the Group’s risk management strategy. The Group does not use derivative financial instruments for speculative purposes. Foreign currency forward contract derivative instruments are initially measured at fair value, and are remeasured at subsequent reporting dates. In respect of derivatives designated as hedges, the Group formally documents all relationships between hedging instruments and hedged items, as well as its risk management objective and strategy for undertaking various hedge transactions. The Group also formally assesses both at the inception of the hedge and on an ongoing basis, whether each derivative is highly effective in offsetting changes in fair values or cash flows of the hedged item. Changes in the fair value of these derivatives (net of tax) that are designated and effective as hedges of future cash flows are recognised directly in Hedging Reserve Account under shareholders’ funds and the ineffective portion is recognized immediately in profit and loss account. Changes in the fair value of derivative financial instruments that do not qualify for hedge accounting are recognized in profit and loss account as they arise Hedge accounting is discontinued from the last testing date when the hedging instrument expires or is sold, terminated, or exercised, or no longer qualifies for hedge accounting. Cumulative gain or loss on such hedging instrument recognised in shareholder’s funds is retained there until the forecasted transaction occurs. If a hedged transaction is no longer expected to occur, the net cumulative gain or loss recognised in shareholders’ funds is transferred to profit and loss account for the year.

122

Schedules to the consolidated ?nancial statements
(All amounts in crores of rupees, except share data and unless otherwise stated) Schedule 20: Significant accounting policies and notes to the accounts (Contd.) Exchange differences on such contracts are recognised in the statement of profit and loss in the year in which the exchange rates change. Any profit or loss arising on cancellation or renewal of forward exchange contract is recognised as income or as expense for the year. (v) Translation of Integral and Non-integral foreign operation The financial statements of an integral foreign operation are translated as if the transactions of the foreign operation have been those of the Group itself. In translating the financial statements of a non-integral foreign operation for incorporation in financial statements, the assets and liabilities, both monetary and non-monetary, of the non-integral foreign operation are translated at the closing rate; income and expense items of the non-integral foreign operation are translated at monthly weighted average rates; and all resulting exchange differences are accumulated in a foreign currency translation reserve until the disposal of the net investment. On the disposal of a non-integral foreign operation, the cumulative amount of the exchange differences which have been deferred and which relate to that operation are recognised as income or as expenses in the same period in which the gain or loss on disposal is recognised. k) Inventory Finished goods are valued at lower of the cost or net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and estimated costs necessary to make the sale. Cost of goods that are procured for specific projects is assigned by specific identification of their individual costs. Costs of goods that are interchangeable and not specific to any project is determined using weighted average cost formulae. l) Employee stock compensation cost The Group calculates the compensation cost based on the intrinsic value method wherein the excess of market price of underlying equity shares on the date of the grant of the options over the exercise price of the options given to the employees under the employee stock option schemes of the Company, is recognized as deferred stock compensation cost and is amortized on graded vesting basis over the vesting period of the options. m) Taxation Tax expense comprises of current, deferred and fringe benefit tax. Current income tax and fringe benefit tax is measured at the amount expected to be paid to the tax authorities in accordance with the Income-tax Act, 1961 enacted in India and the tax regulations in the jurisdictions where the company conducts its business. Deferred income taxes charge or credit reflects the impact of current year timing differences between taxable income and accounting income for the year and reversal of timing differences of earlier years. Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the balance sheet date. Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred tax assets and deferred tax liabilities relate to the taxes on income levied by same governing taxation laws. Deferred tax assets are recognised only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. In situations where the Group has unabsorbed depreciation or carry forward tax losses, all deferred tax assets are recognised only if there is virtual certainty supported by convincing evidence that they can be realised against future taxable profits. At each balance sheet date the Group re-assesses unrecognised deferred tax assets. It recognises unrecognised deferred tax assets to the extent that it has become reasonably certain or virtually certain, as the case may be that sufficient future taxable income will be available against which such deferred tax assets can be realised. The carrying amount of deferred tax assets are reviewed at each balance sheet date. The Group writes-down the carrying amount of a deferred tax asset to the extent that it is no longer reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available against which deferred tax asset can be realised. Any such write-down is reversed to the extent that it becomes reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available. MAT credit is recognised as an asset only when and to the extent there is convincing evidence that the Group will pay normal income tax during the specified period. In the year in which the Minimum Alternative tax (MAT) credit becomes eligible to be recognized as an asset in accordance with the recommendations contained in guidance Note issued by the Institute of Chartered Accountants of India, the said asset is created by way of a credit to the profit and loss account and shown as MAT Credit Entitlement. The Group reviews the same at each balance sheet date and writes down the carrying amount of MAT Credit Entitlement to the extent there is no longer convincing evidence to the effect that Group will pay normal Income Tax during the specified period.

123

Schedules to the consolidated ?nancial statements
(All amounts in crores of rupees, except share data and unless otherwise stated) Schedule 20: Significant accounting policies and notes to the accounts (Contd.)

n) Employee benefits
India i Contributions to provident fund, a defined benefit plan are deposited with a recognised provident fund trust, set up by the Company. The interest rate payable by the trust to the beneficiaries every year is notified by the government and the company has an obligation to make good the shortfall, if any, between the return from the investments of the trust and the notified interest rate. The Company made contributions to a scheme administered by an insurance company in respect of superannuation for applicable employees and such contributions are charged to profit and loss account. The Company had no further obligations to the superannuation plan beyond its monthly contributions. Gratuity liability and Post employment Medical Benefit liability are defined benefit obligations and are provided for on the basis of an actuarial valuation on projected unit method made at the end of each financial year. Short term compensated absences are provided for based on estimates. Long term compensated absences are provided for based on actuarial valuation at the year end. The actuarial valuation is done as per projected unit credit method. Actuarial gains/losses are immediately taken to profit and loss account and are not deferred. State Plans : The Company’s contribution to State Plans namely Employee State Insurance Fund and Employees Pension Scheme are charged to Revenue every year.

ii

iii iv v vi

Subsidiaries in the US The Company has a saving and investment plan under section 401(k) of the Internal Revenue Code of the United States of America. This is a defined contribution plan. Contributions are charged to income in the period in which they accrue. Subsidiaries in Europe The Company contributes towards pension plans of the various governments for the employees of its subsidiaries in United Kingdom, Sweden, Netherlands, Belgium, Germany and Northern Ireland. Subsidiaries in Australia As per local laws of Australia, employers must provide a minimum level of superannuation for most employees or incur a non-tax deductible superannuation guarantee charge including interest and penalties. The required level of employer superannuation contribution is a percentage of the employee’s earnings base. The Company contributes to a fund approved by the Government of Australia. Subsidiaries in Malaysia and Singapore As per local laws of Malaysia and Singapore, employers are required to contribute up to 13% of the basic salary of the employees. The Company contributes to a fund approved by the Government of the Country. o) Research and development Revenue expenditure on research and development is expensed as incurred. Capital expenditure incurred on equipment and facilities acquired or constructed for research and development activities and having alternative future use, are capitalised and included in fixed assets. p) Earnings per share Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period. For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares. q) Borrowing Cost Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalized as part of the cost of the respective asset. All other borrowing costs are expensed in the period they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds. r) Provisions A provision is recognised when an enterprise has a present obligation as a result of past event; it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are not discounted to its present value and are determined based on best estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates.

124

Schedules to the consolidated ?nancial statements
(All amounts in crores of rupees, except share data and unless otherwise stated) Schedule 20: Significant accounting policies and notes to the accounts (Contd.) Warranty Provision for warranty is calculated on the basis of the unexpired warranty period of equipment installed during the year and the annual maintenance cost of equipment. s) Cash and cash equivalent Cash and cash equivalents for the purposes of cash flow statement comprise cash at bank and in hand and deposits with banks with an original maturity of three months or less. 2. Acquisitions / Sale A. Current year acquisitions a) UCS Solutions holding (pty) Limited

On August 1, 2009, the Group, through its subsidiary, acquired Enterprise Solution SAP practice of UCS Group in South Africa for a cash consideration of Rs.38.43 Crores (ZAR 57.13mn) and Rs.44.13 crores as earn out payable on achieving specified targets over the next 2 years. The transaction has been accounted by following the purchase method and resulted in goodwill aggregating to Rs. 82.37 Crores. The goodwill has been allocated to software segment. b) RKV Technologies

On March 31, 2010, the Group through its subsidiary, acquired unemployment Insurance Practice for a total cash consideration of Rs 22.17 crores (USD 5mn). The transaction has been accounted by following the purchase method and resulted in goodwill aggregating to Rs. 23.2 crores. The goodwill has been allocated to software segment B. a) Previous year acquisitions HCL Insurance BPO Services Limited

On September 1, 2008, the Group, through one of its subsidiary, acquired 100% stake in HCL Insurance BPO Services Limited (‘IBS’) previously known as Liberata Financial Services Limited. IBS is engaged in providing back office services to its customers in insurance vertical in UK. This transaction has been accounted for by following the purchase method and resulted in goodwill aggregating to Rs 52.90 crores. The goodwill has been allocated to BPO segment. The Group believes that the acquisition would help in providing value based back office services to its customers in insurance vertical. b) HCL Expense Management Services Inc.

On September 15, 2008, the Group acquired 100% stake in HCL Expense Management Services (‘EMS’) Inc previously known as Control Point Solution Inc. through one of its subsidiary for a cash consideration of Rs. 107.65 crores. EMS is engaged in providing back office services to its customers in telecom vertical in United States of America. This transaction has been accounted for by following the purchase method and resulted in goodwill aggregating to Rs 92.47 crores. The goodwill has been allocated to BPO segment. c) Axon Group Limited.

On December 15, 2008, the Group, through one of its subsidiary, acquired 100% interest in Axon Group Limited previously known as Axon Group Plc and its subsidiaries (“Axon”) for a cash consideration of Rs. 3,302.39 crores. Axon is a SAP consultancy company which provides advisory, implementation and application management services to enterprises which have chosen SAP as their strategic platform. The acquisition of Axon would strengthen the Group’s position as a significant player in SAP implementation and consultancy services. This transaction has been accounted for by following the purchase method and resulted in goodwill aggregating to Rs 3,350.00 crores. The goodwill has been allocated to software segment. 3. Employee Stock Option Plan (ESOP)

The Group has provided various share-based payment schemes to its employees. During the year ended 30 June 2010, the following schemes were in operation: ESOP 1999 20,000,000 Equity 110 months 5 years Service Period ESOP 2000 15,000,000 Equity 104 months 5 years Service Period ESOP 2004 20,000,000 Equity 84 months 5 years Service Period

Date of Shareholders approved under the scheme Method of Settlement (Cash/Equity) Vesting Period (Maximum) Exercise Period from the date of vesting (maximum) Vesting Conditions

125

Schedules to the consolidated ?nancial statements
(All amounts in crores of rupees, except share data and unless otherwise stated) Schedule 20: Significant accounting policies and notes to the accounts (Contd.) Each option granted under the above plans entitles the holder to four equity shares of the Company at an exercise price, which is approved by the Compensation Committee. The details of activity under various plans have been summarized below:ESOP 1999 2010 No of options Weighted average exercise price (Rs.) 765.33 636.00 730.38 899.31 753.56 Year ended 30 June 2009 No of options Weighted average exercise price (Rs.) 773.81 657.09 650.26 955.41 765.33

Outstanding at the beginning of the year Add: Granted during the year Less: Forfeited during the year Exercised during the year Expired during the year Options outstanding at the end of the year Options exercisable at the end of the year

23,99,885 (420) (5,88,774) (2,87,834) 1,522,857 1,522,857

28,22,430 (79,280) (1,07,314) (2,35,951) 2,399,885 1,673,925

The weighted average share price for stock options exercised during the year was Rs.1,422.88. ESOP 2000 Year ended 30 June 2010 No of options Weighted average exercise price (Rs.) 34,73,285 649.37 (1,100) 525.55 (9,22,102) 619.63 (1,98,903) 789.97 23,51,180 649.20 23,51,180 2009 No of options Weighted average exercise price (Rs.) 40,91,441 648.06 (1,56,680) 614.87 (2,31,716) 587.12 (2,29,760) 712.26 34,73,285 649.37 21,07,570

Outstanding at the beginning of the year Add: Granted during the year Less: Forfeited during the year Exercised during the year Expired during the year Options outstanding at the end of the year Options exercisable at the end of the year

The weighted average share price for stock options exercised during the year was Rs. 1,400.89 ESOP 2004 2010 No of options Weighted average exercise price (Rs.) 39.21 8.00 20.65 37.20 294.97 33.34 Year ended 30 June 2009 No of options Weighted average exercise price (Rs.) 36.17 45.87 12.00 455.74 39.21

Outstanding at the beginning of the year Add: Granted during the year Less: Forfeited during the year Exercised during the year Expired during the year Options outstanding at the end of the year Options exercisable at the end of the year

25,45,431 240,000 (57,925) (6,20,927) (27,467) 20,79,112 6,79,935

33,25,543 (1,24,520) (6,40,052) (15,540) 25,45,431 4,96,610

The weighted average share price for stock options exercised during the year was Rs. 1,323.62.

126

Schedules to the consolidated ?nancial statements
(All amounts in crores of rupees, except share data and unless otherwise stated) Schedule 20: Significant accounting policies and notes to the accounts (Contd.) The details of exercise price for stock options outstanding at the end of the year 30 June, 2010 are: Name of the Plan Range of exercise prices Number of options outstanding 10,82,747 4,40,110 1,09,880 21,09,285 1,32,015 20,01,617 77,495 Weighted average remaining contractual life of options (in years) 3.34 0.10 1.50 3.14 0.59 4.85 3.32 Weighted average exercise price (Rs.) 648.97 1,010.87 406.30 629.34 1,168.72 8.00 687.87

Employee Stock Option Plan -1999 Employee Stock Option Plan -2000

Rs.240- Rs.750 Rs.985- Rs.2,444 Rs.260- Rs.470 Rs.483- Rs.823 Rs.1,016- Rs.1,312 Rs.8.00 Rs.642- Rs.741

Employee Stock Option Plan -2004

The details of exercise price for stock options outstanding at the end of the year 30 June, 2009 are: Name of the Plan Range of exercise prices Number of options outstanding 16,12,881 7,87,004 1,77,035 30,83,766 2,12,484 24,27,963 1,17,468 Weighted average remaining contractual life of options (in years) 3.95 0.89 2.27 4.11 1.31 5.59 4.30 Weighted average exercise price (Rs.) 640.83 1,020.48 407.42 627.44 1,169.25 8.00 684.22

Employee Stock Option Plan -1999 Employee Stock Option Plan -2000

Rs.240- Rs. 750 Rs. 985- Rs.2,444 Rs.260- Rs. 470 Rs.483- Rs. 823 Rs.1,016-Rs.1,312 Rs.8.00 Rs. 642- Rs. 741

Employee Stock Option Plan -2004

The weighted average fair value of stock options granted during the year was Rs. 1,204.21. The Black Scholes valuation model has been used for computing the weighted average fair value considering the following inputs: Particulars Weighted average share price Exercise Price Expected Volatility Historical Volatility Life of the options granted (Vesting and exercise period) in years Expected dividends Average risk-free interest rate Expected dividend rate Year ended 30 June 2010 Rs. 288.94 Rs. 2.00 37.76% 37.76% 1.02 - 5.01 years Rs.4 7.00% 1.38% 2009 -

The expected volatility was determined based on historical volatility data; historical volatility includes early years of the Company’s life; the Company expects the volatility of its share price to reduce as it matures. To allow for the effects of early exercise, it was assumed that the employees will exercise the options after the vesting date when the share price was twice the exercise price. The Group has calculated the compensation cost based on the intrinsic value method i.e. the excess of market price of underlying equity shares on the date of the grant of options over the exercise price of the options given to employees under the employee stock option schemes of the Company is recognized as deferred stock compensation cost and is amortized on a graded vesting basis over the vesting period of the options. Had the Company applied the fair value method for determining compensation cost, the impact on net income and earnings per share is provided below:

127

Schedules to the consolidated ?nancial statements
(All amounts in crores of rupees, except share data and unless otherwise stated) Schedule 20: Significant accounting policies and notes to the accounts (Contd.) Particulars Net income- As reported Add: Employee stock compensation under intrinsic value method Less: Employee stock compensation under fair value method Net income - Proforma Earnings per share (Rs.) Basic - As reported - Proforma Diluted - As reported - Proforma 4. Leases Incase of assets taken on lease i) a) Finance lease: The future lease obligations in respect of assets taken on finance lease are as follows: Total minimum lease payments outstanding as on 30 June 2010 24.26 (20.04) Later than one year and not later than 5 years 43.71 (28.69) later than 5 years (-) 67.97 (48.73 ) Previous year figures are in brackets. ii) Operating Lease a) The Group’s significant leasing arrangements are in respect of operating leases for office space and accommodation for its employees. The aggregate lease rental expense recognized in the profit and loss account for the year amounts to Rs. 243.46 crores (previous year Rs. 234.24 crores). The escalation amount for non-cancellable operating lease payable in future years and accounted for by the company is Rs 51.78 crores. Future minimum lease payments and payment profile of non-cancellable operating lease are as follows: Particulars Year ended 30 June 2010 209.80 478.74 322.01 2009 195.24 482.48 357.19 Interest included in minimum lease payments 3.90 (4.86) 3.04 (4.76) (-) 6.94 (9.63) Present value of minimum lease payments 20.36 (15.18) 40.67 (23.93) (-) 61.03 (39.10) 18.69 18.20 18.27 17.79 19.72 19.62 19.72 19.62 Year ended 30 June 2010 1,259.19 48.73 81.68 1,226.24 2009 1,319.63 52.64 59.58 1,312.69

Particulars

Not later than one year

Not later than one year Later than one year and not later than 5 years Later than five years

128

Schedules to the consolidated ?nancial statements
(All amounts in crores of rupees, except share data and unless otherwise stated) Schedule 20: Significant accounting policies and notes to the accounts (Contd.) Incase of assets given on lease iii) Finance Lease: a) The Group has given networking equipments to its customers on finance lease basis. The future lease payment receivables in respect of assets given on finance lease are as follows: Particulars Total minimum lease payments receivable as on 30 June 2010 32.42 (11.89) 43.56 (37.91) (-) 75.98 (49.80) Interest included in minimum lease payments receivable 4.77 (3.21) 7.48 (6.03) (-) 12.25 (9.24) Present value of minimum lease payments receivable 27.65 (8.67) 36.08 (31.89) (-) 63.73 (40.56)

Not later than one year Later than one year and not later than 5 years later than 5 years

Previous year figures are in brackets. iv) Operating Lease a) The Group has given networking equipment to its customers on non-cancellable operating leases for a maximum period of three years. The lease rental income recognized in the profit and loss account for the year is Rs. 5.28 crores (previous year Rs. NIL crores). 5. Segment Reporting Identification of Segments The Group’s operating businesses are organised 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 Group operate. (i) Business Segments The operations of the Group and its subsidiaries predominately relate to providing Software services, infrastructure services including sale of networking equipment and business processing outsourcing services, which are in the nature of customer contact centers and technical help desks. The Chairman of the Group, who is the Chief Strategy Officer, evaluates the Group’s performance and allocates resources based on an analysis of various performance indicators by types of service provided by the Group 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, India and others. Europe comprises business operations conducted by the Group in the United Kingdom, Sweden, Germany, Italy, Belgium, Netherlands, Northern Ireland, Finland, Poland and Switzerland. Since services provided by the Group within these European entities are subject to similar risks and returns, their operating results have been reported as one segment, namely Europe. India has been identified as a separate segment. All other customers, mainly in Japan, Australia, New Zealand, Singapore, Malaysia, Israel, South Korea, China, Czech Republic, Macau, UAE, Portugal, Russia and Hong Kong are included in others. The Group is presenting only revenue for geographic segments. (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:

129

Schedules to the consolidated ?nancial statements
(All amounts in crores of rupees, except share data and unless otherwise stated) Schedule 20: Significant accounting policies and notes to the accounts (Contd.) 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 and net deferred tax assets and advance taxes. Segment liabilities include sundry creditors, other liabilities. Segment liabilities do not include share capital, reserves, secured loan, 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 other income. Segment expenses do not include premium amortized on bonds, diminution allowance in respect of current and trade investments, other than temporary diminution in the value of long term investments, charge taken for stock options issued to employees, corporate expenses and finance cost. Financial information about the business segments for the year ended 30 June, 2010 is as follows: Particulars Software services Business process outsourcing services 950.90 950.90 (60.87) Infrastructure services Inter segment transactions Total

Revenue - External revenue - Internal revenue Total Segment results Unallocated corporate expenses Interest Expense Other Income Interest Income Net profit before taxes Tax expense Minority Interest Net profit after taxes Assets Segment assets Unallocated assets Total assets Liabilities Segment liabilities Unallocated liabilities Total liabilities Others Capital expenditure (including capital work in progress) Unallocated corporate capital expenditure Total Significant non-cash adjustments Depreciation Unallocated corporate depreciation Total Provision for doubtful debts/Advances and bad debts /advances written off

8,427.60 8,427.60 1,288.87

2,757.79 2,757.79 431.50

12,136.29 12,136.29 1,659.50 (135.15) (204.14) 53.42 98.80 1,472.43 213.43 0.19 1,259.19

7,063.70

488.67

1,817.51

-

9,369.88 3,232.82 12,602.70

4,496.17

256.17

1,103.53

-

5,855.86 458.03 6,313.89

259.04

65.53

197.23

-

521.80 110.20 632.00

259.04

65.53

197.23

209.73 209.73

46.13 46.13

122.54 122.54

-

378.40 39.71 418.11 (0.79)

130

Schedules to the consolidated ?nancial statements
(All amounts in crores of rupees, except share data and unless otherwise stated) Schedule 20: Significant accounting policies and notes to the accounts (Contd.) Financial information about the business segments for the year ended 30 June, 2009 is as follows: Particulars Software services Business process outsourcing services 1,119.09 1,119.09 119.86 Infrastructure services Inter segment transactions Total

Revenue - External revenue - Internal revenue Total Segment results Unallocated corporate expenses Interest Expense Other Income Interest Income Net profit before taxes Tax expense Minority Interest Net profit after taxes Assets Segment assets Unallocated assets Total assets Liabilities Segment liabilities Unallocated liabilities Total liabilities Others Capital expenditure (including capital work in progress) Unallocated corporate capital expenditure Total Significant non-cash adjustments Depreciation Unallocated corporate depreciation Total Provision for doubtful debts/Advances and bad debts /advances written off 7,440.36 7,440.36 1,401.45 1,669.96 1,669.96 272.62 10,229.41 10,229.41 1,793.93 (339.90) (112.44) 131.34 130.86 1,603.79 284.34 (0.18) 1319.63

7,258.15

598.57

1,383.08

-

9,239.80 2,523.67 11,763.47

5,129.82

240.69

555.93

-

5,926.44 894.23 6,820.67

109.29

47.38

160.28

-

316.95 255.00 571.95

212.01

51.21

95.44

-

358.66 16.81 375.47 90.21

The Group has four geographic segments: America, Europe, India and Others. Revenue from the geographic segments based on domicile of the customer is as follows: Particulars America Europe India Others Total Year ended 30 June 2010 6,852.19 3,430.52 660.75 1,192.83 12,136.29 Year ended 30 June 2009 5,568.83 2,986.81 550.88 1,122.89 10,229.41

131

Schedules to the consolidated ?nancial statements
(All amounts in crores of rupees, except share data and unless otherwise stated) Schedule 20: Significant accounting policies and notes to the accounts (Contd.) Assets and additions to tangible and intangible fixed assets by geographical area. The following table shows the carrying amount of segment assets and addition to segment assets by geographical area in which assets are located: Particulars Carrying amount of segment assets and Intangible assets 2010 4,539.07 2,445.70 1,782.73 602.38 9,369.88 2009 4,206.64 2,616.02 2,005.34 411.80 9,239.80

America Europe India Others Total 6. Related Parties a) Related parties where control exists 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 Axon Balance LLC, United States of America Axon Puerto Rico Inc., Puerto Rico Related parties with whom transactions have taken place during the year Key Management Personnel Shiv Nadar – Chairman and Chief Strategy Officer Vineet Nayar - CEO and Whole Time Director

b)

Others (Significant influence) HCL Infosystems Limited HCL Security Limited HCL Infinet Limited. HCL Corporation Limited ceased to be the holding company from 24 June 2010. As at 30 June 2010, HCL Corporation held 323,082,542 shares in the Company being 47.6% holding in the HCL Technologies Limited. Transactions with related parties in the normal course of business are:
Particulars Jointly controlled entities Year ended 30 June 2010 2009 Others Year ended 30 June 2010 2009 Key management personnel Year ended 30 June 2010 2009

Sale of materials and services 19.99 8.72 19.37 5.88 -NEC HCL Systems Technologies Limited 13.19 8.72 - Axon Puerto Rico 6.80 -HCL Infosystems Limited 17.43 5.62 Others 1.94 0.26 Other Receipts -NEC HCL Systems Technologies Limited Purchase of materials and services 9.43 3.52 76.40 75.95 -HCL Infosystems Limited 49.31 56.80 -HCL Infinet Limited 24.63 19.15 -NEC HCL Systems Technologies Limited -Axon Puerto Rico INC. 9.43 1.76 -Axon Balance LLC 1.76 -Others 2.46 Payment for use of facilities 0.01 -HCL Infosystems Limited 0.01 -NEC HCL Systems Technologies Limited Purchase of capital equipments 24.66 25.23 -HCL Infosystems Limited 24.31 24.44 -Others 0.35 0.79 Remuneration 9.30 9.14 CEO & Whole Time Director* 4.54 4.25 Chairman and Chief Strategy Officer 4.76 4.89 *The above does not include provision for encashable leave and gratuity which is actuarially determined on an overall basis.

132

Schedules to the consolidated ?nancial statements
(All amounts in crores of rupees, except share data and unless otherwise stated) Schedule 20: Significant accounting policies and notes to the accounts (Contd.) c) Outstanding balances Jointly controlled entities As at 30 June 2010 2009 1.45 0.58 0.87 0.19 0.19 2.22 0.96 1.26 0.48 0.03 0.45 0.24 0.24 0.64 0.30 0.34 Others As at 30 June 2010 2009 2.80 2.67 0.13 12.30 11.81 0.49 10.94 9.90 1.04 3.09 2.76 0.33 3.64 3.51 0.13 9.70 9.55 0.15 Key management personnel As at 30 June 2010 2009 -

Particulars

Debtors -HCL Infosystems Limited -HCL Infinet Limited -NEC HCL Systems Technologies Limited -Axon Puerto Rico INC. Other receivables -HCL Infosystems Limited -Others -NEC HCL Systems Technologies Limited Creditors -HCL Infosystems Limited -Others -NEC HCL Systems Technologies Limited -Axon Puerto Rico INC. 7 Components of Deferred Tax Assets / Liabilities Components of Deferred Tax Assets / Liabilities are: Particulars Deferred tax assets: Business losses Provision for doubtful debts Accrued employee costs Unrealized Loss on derivative financial instruments Depreciation and amortization Employee stock compensation Deferred Revenue (net of deferred costs) Others Gross Deferred Tax Assets Deferred tax liabilities: Depreciation and amortization Others Gross Deferred Tax Liabilities Net Deferred Tax Assets 8. Research and Development Expenditure Particulars Revenue Capital

As at 30 June 2010

As at 30 June 2009

95.98 33.20 72.65 7.51 89.03 23.81 33.34 33.96 389.48

67.27 27.69 80.15 132.30 84.75 24.92 32.66 21.46 471.2

3.01 10.80 13.81 375.67

4.53 10.15 14.68 456.52

Year ended 30 June 2010 55.01 55.01

Year ended 30 June 2009 55.36 55.36

133

Schedules to the consolidated ?nancial statements
(All amounts in crores of rupees, except share data and unless otherwise stated) Schedule 20: Significant accounting policies and notes to the accounts (Contd.)

9. Commitments and Contingent Liabilities
Particulars i) Capital & Other Commitments a) Capital commitments Estimated amount of unexecuted capital contracts (net of advances) b) ii) Outstanding letters of credit As at 30 June 2010 305.56 46.88 352.44 9.99 17.76 27.75 As at 30 June 2009 314.97 31.24 346.21 21.24 10.64 31.88

Contingent Liabilities a) Disputed Income Tax (excluding Interest) b) Others

c)

Guarantees have been given by the Group against credit facilities, financial assistance and office premises taken on lease amounting to Rs. 20.94 crores (previous year Rs. 27.93 crores). These guarantees have been given in the normal course of the Group’s operations and are not expected to result in any loss to the Group, on the basis of the Group fulfilling its ordinary commercial obligations. The Group and its various subsidiaries are required to comply with the local transfer pricing regulations, which are contemporaneous in nature. The Group appoints independent consultants annually for conducting a Transfer pricing study to determine whether transactions with associate 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 shall be accounted for as and when the study is completed for the current financial year. The management is of the opinion that its international transactions are at arms length so that aforesaid legislation will not have any impact on the financial statements.

d)

The amounts shown in the item (a) (b) and (c) above represent best possible estimates arrived at on the basis of available information. The uncertainties and possible reimbursements are dependent on the outcome of the different legal processes which have been invoked by the Group or the claimants as the case may be and therefore cannot be predicted accurately. The Group engages reputed professional advisors to protect its interest and has been advised that it has strong legal positions against such disputes. 10. Derivative Financial Instruments and Hedge Accounting (a) Foreign currency forward and option contracts The Group 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 Group’s strategy, which provide principles on the use of such forward contracts and currency options consistent with the Group’s Risk Management Policy. The counter party in these derivative instruments is a bank and the Group 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 12 months and the forecasted transactions are expected to occur during the same period. The Group does not use forward covers and currency options for speculative purposes. The following table presents the aggregate contracted principal amounts of the Group’s derivative contracts outstanding: Sell Covers Foreign Currency U.S. Dollar/INR Sterling Pound/INR Euro/INR As at As at 30 June 2010 30 June 2009 Rupee Equivalent (Rs in Crores) 1,314.22 65.09 58.66 1,437.97 3,703.90 101.95 81.36 3,887.21

Buy Covers Foreign Currency U.S. Dollar/INR Total

As at As at 30 June 2010 30 June 2009 Rupee Equivalent (Rs in Crores) 376.16 376.16 -

134

Schedules to the consolidated ?nancial statements
(All amounts in crores of rupees, except share data and unless otherwise stated) Schedule 20: Significant accounting policies and notes to the accounts (Contd.) Buy Covers As at As at 30 June 2010 30 June 2009 Rupee Equivalent (Rs in Crores)

Purchase Options U.S. Dollar Range Options U.S. Dollar Euro/INR Total 139.32 28.52 242.14 74.30 -

The following table summarizes activity in the General Reserves related to all derivatives classified as cash flow hedges during the years ended 30 June, 2010: Particulars Year ended Year ended 30 June 2010 30 June 2009 Loss as at the beginning of the year Unrealized gain/ (losses) on cash flow hedging derivatives during the year Net losses reclassified into net income on occurrence of hedged transactions Net losses reclassified into net income as hedged transaction are not likely to occur Loss as at the end of the year (refer note 1 and 2 below) (775.09) 197.05 478.07 (99.97) (490.63) (591.68) 244.52 62.70 (775.09)

As of the balance sheet date, the Company’s net foreign currency exposure that is not hedged is Rs. 2,443.36 crores (30 June, 2009 Rs. 2,065.29 crores). Notes: 1. 2. Balance as at year end is gross of deferred tax assets of Rs. 7.51 crores (previous year Rs. 132.30 crores). At 30 June 2010, the estimated net amount of existing gain/(loss) that is expected to be reclassified into the income statement within next twelve months is Rs. 99.97 crores [previous year Rs(609.34) crores]. Details of Investments in bonds - Other than trade and unquoted Face Value Balance as at 30 June 2010 Units Amount 5000 50.00 50.00 Balance as at 30 June 2009 Units Amount 100 100 10.00 10.00 20.00

11. The details of investments in mutual funds/ bonds and their movements during the year are provided below: i)

Particulars

10.75% Exim Bank Bonds 2008-09 (Series L-01) 11.10% Exim Bank Bonds 2008-09 (Series L-01) IRFC Tax Free Bonds (Series 68) Total ii)

100000

Details of Investments in mutual funds - Other than trade and unquoted-Long Term Face Value Balance as at 30 June 2010 Units Amount Balance as at 30 June 2009 Units Amount 1,00,00,000 1,00,00,000 10.03 10.00

Particulars

DSPML FMP- 12 M -Series 1 Growth DSPML FMP- 12 M -Series 3 Growth

-

Total

20.03

135

Schedules to the consolidated ?nancial statements
(All amounts in crores of rupees, except share data and unless otherwise stated) Schedule 20: Significant accounting policies and notes to the accounts (Contd.) iii) Details of Investments in mutual funds - Other than trade and unquoted - Current Investments Particulars Face Value Balance as at 30 June 2010 Units Amount 2,49,93,796 8,33,00,723 5,00,57,242 4,92,75,015 10,05,34,368 14,791,788 66,649,228 15,017,853 23,332,055 101,566,031 20,809,636 48,197,379 25.01 86.66 50.50 50.46 101.05 15.28 70.91 15.02 25.26 102.02 25.18 51.06 Balance as at 30 June 2009 Units Amount -

Quarterly Dividend Reliance Quarterly Interval Fund Series III Inst Monthly Dividend Birla Sun Life Dynamic Bond Fund Birla Sunlife Medium Term Plan Birla Sunlife Saving Fund-Institutional HDFC Cash Management Fund-Treasury Advantage Plan -Whole sale HDFC Short Term Fund Reliance Short Term Fund Tata Fixed Income Portfolio Fund Scheme A3 SBI Short Horizon Debt Fund-Short Term-IP IDFC Money Manager Fund-Investment Plan IP Plan B Monthly Dividend ICICI Prudential Short Term Plan IP Fortnightly Dividend HDFC High Interest Fund-Short Term Plan Weekly Dividend ICICI Prudential Banking & PSU Debt Fund Daily Dividend IDFC Cash Fund Plan-C TATA Liquid Fund-Super High Investment Plan Birla Sun Life savings Reliance Medium Term Fund IDFC Money Manager Fund Investment Plan Growth Fund ICICI Prudential Medium Term Plan-Prem Plus TOTAL 12. Earning Per Share The computation of earning per share is as follows: Particulars

10 10 10 10 10 10 10 10 10 10 10 10

10

25,030,125

25.08

-

-

10 1000 10 10

4,414 80,761 26,504,129 4,316,838 -

0.00 9.01 26.52 7.38 -

16,138

0.01

10

94,513,918

95.00 781.40

-

0.01

Net profit as per Profit and Loss Account for computation of EPS Weighted average number of equity shares outstanding in calculating Basic EPS Dilutive effect of stock options outstanding Weighted average number of equity shares outstanding in calculating dilutive EPS Nominal value of equity shares Earnings per equity share - Basic - Diluted

Year ended 30 June 2010 1,259.19 673,741,835 15,361,547 689,103,382 2.00

Year ended 30 June 2009 1,319.63 669,016,035 8,098,980 677,115,015 2.00

18.69 18.27

19.72 19.49

136

Schedules to the consolidated ?nancial statements
(All amounts in crores of rupees, except share data and unless otherwise stated) Schedule 20: Significant accounting policies and notes to the accounts (Contd.) 13. Employee Bene?t Plans The Group has calculated the various benefits provided to employees as under: A. Defined Contribution Plans and State Plans Superannuation Fund Employer’s contribution to Employees State Insurance Employer’s contribution to Employee’s Pension Scheme. During the year the Company has recognized the following amounts in the Profit and Loss account: Particulars Superannuation Fund Employer’s contribution to Employees State Insurance Employer’s contribution to Employee’s Pension Scheme. Total Year ended 30 June 2010 2.11 0.78 26.97 29.86 Year ended 30 June 2009 2.20 0.53 25.81 28.54

Subsidiaries in US Total contributions made to the plan by the company, for the years ended 30 June 2010 is Rs. 16.47 crores and 30 June 2009 is Rs.13.53 crores. Subsidiaries in Australia Total contributions made to the plan by the company, for the years ended 30 June 2010 is Rs. 13.35 crores and 30 June 2009 is Rs.9.2 crores. Subsidiaries in Europe Total contributions made to the plan by the company, for the years ended 30 June 2010 is Rs. 25.81 crores and 30 June 2009 is Rs.14.33 crores. Subsidiaries in Asia (excluding India) Total contributions made to the plan by the company, for the years ended 30 June 2010 is Rs. 20.67 crores and 30 June 2009 is Rs.10.74 crores. B. a) b) Defined Benefit Plans Gratuity Employers Contribution to Provident Fund

Gratuity The following table set out the status of the gratuity plan as required under AS 15 (Revised): Profit and Loss Account Net employee benefit expense (recognised in Employee Cost) Particulars Current Service cost Interest cost on benefit obligation Expected return on plan assets Net Actuarial (gain)/loss recognised in the year Past Service cost Net benefit expense Balance Sheet Details of Provision for Gratuity Particulars Defined benefit obligations Fair value of plan assets Less: Unrecognised past service cost Plan (asset) / liability Year ended 30 June 2010 94.36 0.05 94.41 94.41 Year ended 30 June 2009 78.70 78.70 78.70 Year ended 30 June 2010 19.52 5.74 (4.40) 20.86 Year ended 30 June 2009 14.92 5.20 4.49 24.61

137

Schedules to the consolidated ?nancial statements
(All amounts in crores of rupees, except share data and unless otherwise stated) Schedule 20: Significant accounting policies and notes to the accounts (Contd.) Changes in present value of the defined benefit obligation are as follows: Particulars Opening defined benefit obligations Current service cost Interest cost Actuarial (gain)/loss on obligation Benefits paid Closing defined benefit obligations Changes in fair value of the defined benefit obligation are as follows: Particulars Opening fair value of planned assets Expected returns Contribution by employer Benefits paid Actuarial (gain)/loss Closing fair value of plan assets The Group expects to contribute Rs. 3.88 crores to gratuity in 2010-11. The overall expected rate of return on assets is determined based on the market prices prevailing on that date, applicable to the period over which the obligation is to be settled. There has been significant change in expected rate of return on assets due to the improved stock market scenario. The principal assumptions used in determining gratuity for the Group’s plans are shown below: Particulars Discount rate Estimated Rate of salary increases Employee Turnover Expected rate of return on assets Amounts for the current and previous year are as follows: Particulars Year ended 30 June 2010 94.36 0.05 (2.23) Year ended 30 June 2009 78.70 (6.69) Year ended 30 June 2008 57.64 5.09 Year ended 30 June 2010 7.15% 6%-10% 18.00% Year ended 30 June 2009 6.40% 6%-10% 18.00% Year ended 30 June 2010 0.05 0.05 Year ended 30 June 2009 Year ended 30 June 2010 78.81 19.52 5.74 (4.40) (5.31) 94.36 Year ended 30 June 2009 57.65 14.92 5.20 4.49 (3.56) 78.70

Defined benefit obligations Plan assets Experience adjustment on plan liabilities Experience adjustment on plan assets

The Group has adopted AS-15 revised from 01 July 2007 and thereby has not given disclosures of the above for the year ended 30 June, 2007 and 2006. Employers Contribution to Provident Fund The Guidance on implementing AS-15, Employee Benefits (revised 2005) issued by Accounting Standard Board (ASB) states benefits involving employer established provident funds, which requires interest shortfall to be recompensed are to be considered as defined benefits plans. Pending the issuance of the guidance note from the Actuarial Society of India, the Group’s actuary has expressed an inability to reliable measure provident fund liabilities. Accordingly the Group is unable to exhibit the related information. During the year ended 30 June 2010, the Group has contributed Rs. 72.18 crores (previous year Rs. 40.37 crores) towards Employers’ contribution to the Provident Fund.

138

Schedules to the consolidated ?nancial statements
(All amounts in crores of rupees, except share data and unless otherwise stated) Schedule 20: Significant accounting policies and notes to the accounts (Contd.) 14. Joint Venture The Group has an interest in the following jointly controlled entity: Name of the Company NEC HCL System Technologies Limited Axon Balance LLC, Axon Puerto Rico Inc., Shareholding 49% 50% 49% Incorporated in India United States of America Puerto Rico

The aggregate amounts of assets, liabilities, income and expenditure to the extent of the interest of the Group in the above jointly controlled entities are given hereunder: Particulars Revenue from software services Other income Total Personnel expenses Other Expenses Depreciation and Amortization Total Profit Before Tax Provision for tax Net profit after tax Particulars Assets Fixed assets Investments Sundry Debtors Cash and Bank Balances Other Current Assets Liabilities Current liabilities and provisions Year ended 30 June 2010 41.44 0.58 42.02 21.48 15.86 0.90 38.24 3.78 (0.58) 4.36 As at 30 June 2010 10.89 7.09 11.10 3.49 15.17 Year ended 30 June 2009 21.22 0.60 21.82 7.00 9.99 0.47 17.46 4.36 0.09 4.27 As at 30 June 2009 2.04 0.03 8.23 18.74 2.55 15.17

Notes: a. NEC HCL System Technologies Limited financial statements are for the year ended 31 March, 2010 and 2009 respectively. b. Axon Puerto Rico Inc. financial statements are for the period ended 31 December 2009 and 2008 respectively. 15. Previous year comparatives The figures of previous year were audited by a firm of Chartered Accountants other than S. R. Batliboi & Co. Previous year figures have been re-classified/re-grouped to conform to current year’s classifications. As per our report of even date For HCL Technologies Limited For S. R. Batliboi & Co. Firm Registration Number: 301003E Chartered Accountants Shiv Nadar Chairman and Chief Strategy Officer Vineet Nayar CEO & Wholetime Director per Tridibes Basu Partner Membership Number: 17401 Sandip Gupta Deputy Chief Financial Officer Raj Kumar Walia Senior Vice President - Finance & Accounts Gurgaon, India 29 July 2010 Noida (UP), India 29 July 2010 T S R Subramanian Director Anil Chanana Chief Financial Officer Prahlad Rai Bansal Corporate Vice President - Finance Manish Anand Deputy Company Secretary

139

Statement regarding Subsidiary Companies pursuant to Section 212 of the Companies Act,1956
S.No Name of the Subsidiary Company Financial year to which Accounts relate Holding Company’s interest in the subsidiary at the end of ?nancial year Net aggregate amount of Subsidiary Company’s Pro?ts after deducting its losses or vice versa, so far as it concerns members of holding company which are not dealt with in the Company’s Accounts (All amounts in Rupees thousands) For the year ended June 30, 2010 For previous ?nancial years of the subsidiary since it became the holding company’s subsidiary (1,491,760) 1,676,826 (492,752) 36,816 107,911 (91,586) (39,490) (24,165) 417,319 86,235 (52,162) 18,297 4,367,619 228,236 5,099,957 (732) 285,791 533,006 29,442 793,674 228,509 55,606 (13,671) (45,213) (54,952) (305,124) (82,075) (1,966) (856,676) 3,524 1,266 (325,147) 1,686 (4,573) 386,811 (686) (87) Net aggregate amount of Subsidiary Company’s Pro?ts after deducting its losses or vice versa, so far as it concerns Members of Holding company which are dealt with in the Company’s Accounts (All amounts in Rupees thousands) For the year ended June 30, 2010 For previous ?nancial years of the subsidiary since it became the holding company’s subsidiary Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil 19610 Nil Nil Nil Nil 45245 Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil

Shareholding (No. of Shares)

Extent of holding (%)

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37

HCL Bermuda Limited HCL America Inc. HCL Great Britain Limited HCL Sweden AB HCL (Netherlands) BV HCL GmbH HCL Italy SLR HCL Belgium NV HCL Australia Services Pty. Limited HCL (New Zealand) Limited HCL Hong Kong SAR Limited HCL Japan Limited HCL Holdings GmbH Intelicent India Limited HCL Comnet Systems and Services Limited DSI Financial Solutions Pte Limited HCL BPO Services (NI) Limited HCL Comnet Limited HCL Jones Technologies LLC HCL Singapore Pte Limited HCL (Malaysia) Sdn. Bhd HCL EAI Services Limited HCL Technoparks Limited HCL Poland Sp.z.o.o. HCL Technologies (Shanghai) Limited Capital Stream Inc. HCL Expense Management Services Inc Axon Group Limited Axon Solutions Inc, Bywater Limited Axon Solutions Limited Axon Solutions Sdn. Bhd. Axon Solutions (Shanghai) Co. Ltd. Axon Solutions Singapore Pte Ltd. JSPC i-Solutions Sdn Bhd JSP Consulting Sdn. Bhd. Aspire Solutions Sdn. Bhd.

30-Jun-10 30-Jun-10 30-Jun-10 30-Jun-10 30-Jun-10 30-Jun-10 30-Jun-10 30-Jun-10 30-Jun-10 30-Jun-10 30-Jun-10 30-Jun-10 31-Dec-09 30-Jun-10 30-Jun-10 30-Jun-10 30-Jun-10 30-Jun-10 30-Jun-10 30-Jun-10 30-Jun-10 30-Jun-10 30-Jun-10 30-Jun-10 31-Dec-09 30-Jun-10 30-Jun-10 30-Jun-10 30-Jun-10 30-Jun-10 30-Jun-10 30-Jun-10 31-Dec-09 30-Jun-10 30-Jun-10 30-Jun-10 30-Jun-10

292,670,582 6,089,870 10,568,334 10,000 400 257 20,000,000 2,750 500,000 46,414 193,167 4,400 6,500,000 106,070 12,796,404 10,000 444,445 949,840 1,714,000 2,000,000 100,000 1,050,100 1,000,000 17,000 Not Applicable 10,000 1 69,601,824 3,097,000 1,129,982 100,150 10,000,000 Not Applicable 100,000 100,000 500,000 200,000

100 100 100 100 100 100 100 100 100 100 100 100 100 100 99.90 100 100 99.90 51 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100

85,211 946,406 124,956 24,579 2,741 (39,164) (17,582) (29,813) 636,547 113,654 71,330 30,217 (185,247) 22,140 1,540,553 (999) (333,657) 65,708 (4,059) 245,165 27,317 (13,114) (8,420) 1,473 (5,753) 135,173 (299,619) (25,382) 152,264 1,076 (223,484) (267,353) 498 (27,241) (125) (103) (2,581)

Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil

140

Statement regarding Subsidiary Companies pursuant to Section 212 of the Companies Act,1956
S.No Name of the Subsidiary Company Financial year to which Accounts relate Holding Company’s interest in the subsidiary at the end of ?nancial year Net aggregate amount of Subsidiary Company’s Pro?ts after deducting its losses or vice versa, so far as it concerns members of holding company which are not dealt with in the Company’s Accounts (All amounts in Rupees thousands) For the year ended June 30, 2010 For previous ?nancial years of the subsidiary since it became the holding company’s subsidiary (123,258) (85,981) 6 51,023 426 (987,041) 185 Net aggregate amount of Subsidiary Company’s Pro?ts after deducting its losses or vice versa, so far as it concerns Members of Holding company which are dealt with in the Company’s Accounts (All amounts in Rupees thousands) For the year ended June 30, 2010 For previous ?nancial years of the subsidiary since it became the holding company’s subsidiary Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil

Shareholding (No. of Shares)

Extent of holding (%)

38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 Notes: a)

Axon International Limited Axon Solution (Canada) Inc Axon Solutions Australia Pty Limited Axon Solutions Schweiz GmbH Axon Acquisition Company, Inc. Axon EBT Trustees Ltd. HCL Insurance BPO Services Ltd. HCL Technologies Canada Inc. HCL EAS Limited, HCL Axon (Proprietary) Ltd. HCL (Brazil) Technologia da informacao Ltda. HCL Technologies Romania s.r.l. HCL Hungary Limited HCL Latin America Holding LLC HCL Argentina s.a. HCL Mexico S. de R.L.

30-Jun-10 30-Jun-10 30-Jun-10 30-Jun-10 30-Jun-10 30-Jun-10 30-Jun-10 30-Jun-10 30-Jun-10 30-Jun-10 31-Dec-09 31-Dec-09 30-Jun-10 30-Jun-10 30-Jun-10 31-Dec-09

1 1,000 627,517 20,000 1,000 199 3,310,000 180,000 86,784,566 100 3,730,600 5,328 9,000,000 4,646 354,525 3,000

100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100

(98,257) (183,551) 70 (238,127) 75,188 (1,039,219) 53,836 (87,139) (941) (27) (293) (746) -

Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil

In respect of the subsidiaries whose financial year do not coincide with the financial year of the company, neither there has been change in the holding company’s interest in the subsidiary nor any material transaction has occurred, between the end of the financial year of such subsidiary and end of financial year of the company.

For HCL Technologies Limited

Shiv Nadar Chairman and Chief Strategy Officer Vineet Nayar CEO & Wholetime Director Sandip Gupta Deputy Chief Financial Officer Raj Kumar Walia Senior Vice President - Finance & Accounts Noida, UP (India) 17 September 2010

T S R Subramanian Director Anil Chanana Chief Financial Officer Prahlad Rai Bansal Corporate Vice President - Finance Manish Anand Deputy Company Secretary

The Ministry of Company Affairs, Government of India, vide its approval letter no. 47/637/2010-CL-III dated July 16, 2010, has granted exemption to the Company from annexing the accounts and other information of the subsidiaries along with the accounts of the Company, as required under Section 212 of the Companies Act, 1956, for the year ended June 30, 2010. The Company would provide the annual accounts of the subsidiaries and the related detailed information to the shareholders of the Company and its subsidiaries on specific requests made to it in this regard by the said shareholders. The annual accounts of the subsidiaries will also be kept for inspection by any shareholder at the registered office of the Company and that of the subsidiary company concerned.

141

Statement regarding Subsidiary Companies as required by the approval granted under Section 212(8) of the Companies Act, 1956.
(All amounts in Rupees thousands)

S.No

Name of the Subsidiary Company HCL Bermuda Limited HCL America Inc. HCL Great Britain Limited HCL Sweden AB HCL (Netherlands) BV HCL GmbH HCL Italy SLR HCL Belgium NV HCL Australia Services Pty. Limited HCL (New Zealand) Limited HCL Hong Kong SAR Limited HCL Japan Limited HCL Holdings GmbH Intelicent India Limited HCL Comnet Systems and Services Limited DSI Financial Solutions Pte Limited HCL BPO Services (NI) Limited HCL Comnet Limited HCL Jones Technologies LLC HCL Singapore Pte Limited HCL (Malaysia) Sdn. Bhd HCL EAI Services Limited HCL Technoparks Limited @ HCL Poland Sp.z.o.o. HCL Technologies (Shanghai) Limited Capital Stream Inc. # HCL Expense Management Services Inc. # Axon Group Limited. Axon Solutions Inc, Bywater Limited Axon Solutions Limited Axon Solutions Sdn. Bhd. Axon Solutions (Shanghai) Co. Ltd. Axon Solutions Singapore Pte Ltd. JSPC i-Solutions Sdn Bhd JSP Consulting Sdn. Bhd. Aspire Solutions Sdn. Bhd. Axon International Limited # Axon Solution (Canada) Inc. #

Share Capital

Reserves

Total Assets 18,989,404 27,284,763 6,180,492 286,371 583,841 420,662 116,800 333,703 1,507,123 194,585 198,531 533,002 4,659,397 255,278 9,539,614 5,129 747,642 6,989,771 173,928 1,627,120 170,538 115,791 1,215,959 189,803 95,537 2,166,053 1,228,381 6,616,512 10,196,933 119,320 5,061,749 4,319,607 56,340 116,324 468,702 143,737 2,870 0 590,217

Total Liabilities 4,194,111 22,984,139 5,298,620 224,497 518,741 390,633 113,522 329,815 972,549 136,071 161,016 368,042 32,482 3,841 2,579,224 1,865 440,831 5,844,920 17,853 783,865 76,618 30,869 1,205,959 178,063 13,222 374,869 510,201 117,983 7,052,272 3,327,641 3,691,041 38,519 112,995 591 86 590,217

Investments (other than in subsidiaries) -

Turnover

Pro?t before tax 85,211 1,181,812 173,697 24,579 4,233 (15,211) (17,582) (29,813) 883,279 164,810 75,528 63,656 (181,662) 32,676 2,209,153 (999) (307,159) 106,499 (7,959) 293,239 37,757 (11,862) (8,420) 1,473 (5,753) (80,711) (185,539) (25,382) 249,658 2,710 (386,163) (285,628) 498 (27,241) (119) (103) (2,581) (57,128)

Provision for tax 235,406 48,741 1,492 23,953 246,731 51,157 4,198 33,439 3,586 10,536 667,057 26,497 40,726 48,074 10,440 1,252 (215,884) 114,080 97,394 1,633 (162,679) (18,275) 7 41,129

Pro?t after tax 85,211 946,406 124,956 24,579 2,741 (39,164) (17,582) (29,813) 636,547 113,654 71,330 30,217 (185,247) 22,140 1,542,096 (999) (333,657) 65,774 (7,959) 245,165 27,317 (13,114) (8,420) 1,473 (5,753) 135,173 (299,619) (25,382) 152,264 1,076 (223,484) (267,353) 498 (27,241) (125) (103) (2,581) (98,257)

Dividend

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39

13,591,622 1,203,671 282,814 4,017,811 736,903 599 1,035 1,466 589 3,888 19,785 1,488 1,152 115,192 144,968 61,275 64,065 28,563 2,689 514,789 57,027 36,362 49,768

1,051,167

553,980 112,175 -

3,004 48,497,169 247,011 92,011 45,511 9,665,652 1,045,335 874,883 769,672 55,477 187,182 4,447,299 563,375 387,881 2,297,780 33,926 6,674,121 1,358,544 4,706,443 2,479,425 325,243 55,899 244,346 93,774 678,526 882,532 8,388,158 8,358,081 1,743,145 148,663 142,557 579,649

26,940 4,599,976 1,061 250,376

128,094 6,832,296 271 278,989 2,992 27,822

9,499 1,135,352 156,075 66,566 1,435 10,501 10,000 11,740 82,315 776,688 92,485 74,421 -

0 1,791,183 0 718,180

48,532 6,449,997 2,224,940 3,861 919,721 115,459

70 1,734,038 143,511 14,170 3,328 1,435 7,176 2,870 0 0 485,056 3,651 466,676 136,475 -

142

Statement regarding Subsidiary Companies as required by the approval granted under Section 212(8) of the Companies Act,1956
(All amounts in Rupees thousands)

S.No

Name of the Subsidiary Company Axon Solutions Australia Pty Limited Axon Solutions Schweiz GmbH Axon Acquisition Company, Inc. # Axon EBT Trustees Ltd. * HCL Insurance BPO Services Ltd. HCL Technologies Canada Inc. HCL EAS Limited, HCL Axon (Proprietary) Ltd. HCL (Brazil) Technologia da informacao Ltda. HCL Technologies Romania s.r.l. HCL Hungary Limited HCL Latin America Holding LLC HCL Argentina s.a. HCL Mexico S. de R.L.

Share Capital

Reserves

Total Assets

Total Liabilities

Investments (other than in subsidiaries) -

Turnover

Pro?t before tax

Provision for tax

Pro?t after tax

Dividend

40 41 42 43 44 45

24,831 856 0 0 230,805 9,167 6,204,628 1 99,733 696 1,802 211,258 3,118 11

1,301 3,214 75,641 4,178 55,840 -

571,109 6,751 0 0 1,777,898 167,818 37,133,420 1,026,637 169,728 3,594 4,261 211,258 3,738 11

544,977 2,681 1,547,093 83,009 30,924,614 970,796 69,995 2,898 2,460 620 -

251,344 2,722,108 397,692

(183,551) 77 (244,891) 109,909

7 6,764 34,722

(183,551) 70 (238,127) 75,188

-

46
47 48 49 50 51 52 53

- (1,039,219) 901,189 67,280 4,880 7,593 1,157 76,902 (87,139) (863) (2) (293) (1,649) -

- (1,039,219) 23,066 78 24 (577) 53,836 (87,139) (941) (27) (293) (1,072) -

Notes: @ Scheme of Amalgamation (“Scheme”) under sections 391 to 394 of the Companies Act, 1956 for amalgamation of HCL Technoparks Limited with HCL Technologies Limited was approved by the Hon’ble High Court of Delhi vide its order dated August 16, 2010. With the filing of the said order with the Registrar of Companies, NCT of Delhi & Haryana on August 27, 2010, the Scheme became effective retrospectively from April 1, 2009, the appointed date and HCL Technoparks Limited stands dissolved from the date of filing of the said order. As the accounts of HCL Technoparks Limited for the year ended 30 June 2010 were not finalized prior to the date of filing of the said order, the unaudited figures have been provided. * Axon EBT Trustees Ltd. has been dissolved w.e.f. August 17, 2010. As the accounts of Axon EBT Trustees Ltd. for the year ended 30 June 2010 were not finalized prior to the date of dissolution, the unaudited figures have been provided. The absolute amount of share capital of Axon EBT Trustees Ltd. is Rs. 139.00. # Refer table given below for absolute amount of share capital in each of the following companies:Name of the Subsidiary Company Capital Stream Inc. HCL Expense Management Services Inc. Axon International Limited Axon Solution (Canada) Inc Axon Acquisition Company, Inc. Share Capital (Rs.) 464.00 46.44 69.73 443.00 46.44

For HCL Technologies Limited

Shiv Nadar Chairman and Chief Strategy Officer Vineet Nayar CEO & Wholetime Director Sandip Gupta Deputy Chief Financial Officer Raj Kumar Walia Senior Vice President - Finance & Accounts Noida, UP (India) 17 September 2010

T S R Subramanian Director Anil Chanana Chief Financial Officer Prahlad Rai Bansal Corporate Vice President - Finance Manish Anand Deputy Company Secretary

143

Notes



doc_338316404.pdf