HCL Technologies Q4-2011- IR Release
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HCL Technologies reported strong financial results for Q4 FY2011 and full year FY2011. Q4 revenues were up 30.5% year-over-year to US$963 million and net income was up 55.3% to US$114 million. For the full year, revenues increased 31.1% to US$3,545 million and net income grew 34.9% to US$378 million. The company also saw increases in employee headcount and several key operating metrics. HCL's performance was driven by growth across geographies, service lines, and industry verticals.
![Segment wise Profitability
A. Consolidated IT Services (Software Services [A1] & Infrastructure services [A2])
Amount in US $ million
Income Statement Quarter ended Growth Year ended Growth
30-Jun-10 31-Mar-11 30-Jun-11 YoY QoQ 30-Jun-10 30-Jun-11 YoY
Revenues 692.1 864.7 915.2 32.2% 5.8% 2,490.7 3,350.2 34.5%
Direct Costs 453.8 581.0 612.3 1,600.3 2,254.9
Gross Profits 238.3 283.7 302.9 27.1% 6.8% 890.4 1,095.2 23.0%
SG & A 95.7 123.7 124.1 342.8 478.1
EBITDA 142.6 159.9 178.8 25.4% 11.8% 547.6 617.2 12.7%
Depreciation 19.4 20.2 22.2 73.9 83.6
Amortisation 3.7 3.3 3.7 23.7 14.6
EBIT 119.5 136.4 152.9 27.9% 12.1% 450.0 519.0 15.3%
Gross Margin 34.4% 32.8% 33.1% 35.7% 32.7%
EBITDA Margin 20.6% 18.5% 19.5% 22.0% 18.4%
EBIT Margin 17.3% 15.8% 16.7% 18.1% 15.5%
B. BPO Services
Amount in US $ million
Income Statement Quarter ended Growth Year ended Growth
30-Jun-10 31-Mar-11 30-Jun-11 YoY QoQ 30-Jun-10 30-Jun-11 YoY
Revenues 45.5 49.8 47.7 4.7% -4.4% 213.9 195.1 -8.8%
Direct Costs 39.8 40.4 38.5 164.5 158.2
Gross Profits 5.7 9.4 9.2 49.4 36.9
SG & A 10.8 11.0 10.1 43.9 46.1
EBITDA (5.2) (1.6) (0.9) 5.5 (9.1)
Depreciation 2.4 2.9 3.0 9.9 11.4
Amortisation (1.1) 0.1 - 0.1 0.5
EBIT (6.5) (4.5) (3.9) (4.5) (21.0)
Gross Margin 12.5% 18.9% 19.2% 23.1% 18.9%
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![Employee Metrics
Manpower Details 30-Jun-10 31-Mar-11 30-Jun-11
Total Employee Count 64,557 73,420 77,046
IT Services (Software Services [A1] + 53,333 62,536 66,485
Infrastructure Services [A2])
Technical 47,716 56,188 59,944
Support 5,617 6,348 6,541
Gross Addition 8,293 4,407 7,086
Net Addition 5,409 1,617 3,949
Gross Lateral Employee Addition 6,854 3,457 3,781
Attrition (LTM)* - IT Services
(Software Services + Infrastructure Services) 15.7% 17.0% 16.5%
BPO Services - Total 11,224 10,884 10,561
Technical 9,864 10,022 9,677
Support 1,360 862 884
Gross Addition 3,295 3,127 2,486
Net Addition 1,019 (464) (323)
Gross Lateral Employee Addition 1,297 2,527 2,486
Offshore Attrition – Quarterly 15.3% 11.0% 9.2%
Offshore Attrition - Quarterly
(excluding attrition of joinees less than 6 months) 7.2% 8.5% 7.4%
* Excludes involuntary attrition
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![Segment wise Profitability
A. Consolidated IT Services (Software Services [A1] & Infrastructure Services [A2])
Amount in Rs crores
Income Statement Quarter ended Growth Year ended Growth
30-Jun-10 31-Mar-11 30-Jun-11 YoY QoQ 30-Jun-10 30-Jun-11 YoY
Revenues 3,164.1 3,912.7 4,086.7 29.2% 4.4% 11,589.7 15,151.1 30.7%
Direct Costs 2,074.6 2,629.0 2,734.2 7,443.8 10,198.1
Gross Profits 1,089.5 1,283.7 1,352.5 24.1% 5.4% 4,145.9 4,953.0 19.5%
SG & A 437.7 560.0 554.2 1,595.2 2,162.7
EBITDA 651.8 723.7 798.3 22.5% 10.3% 2,550.7 2,790.2 9.4%
Depreciation 88.6 91.6 99.0 344.2 378.1
Amortisation 16.8 15.0 16.7 111.2 66.0
EBIT 546.4 617.1 682.6 24.9% 10.6% 2,095.3 2,346.2 12.0%
Gross Margin 34.4% 32.8% 33.1% 35.8% 32.7%
EBITDA Margin 20.6% 18.5% 19.5% 22.0% 18.4%
EBIT Margin 17.3% 15.8% 16.7% 18.1% 15.5%
B. BPO Services
Amount in Rs crores
Income Statement Quarter ended Growth Year ended Growth
30-Jun-10 31-Mar-11 30-Jun-11 YoY QoQ 30-Jun-10 30-Jun-11 YoY
Revenues 208.0 225.6 212.8 2.3% -5.7% 998.5 883.1 -11.6%
Direct Costs 182.1 183.0 171.9 766.5 715.9
Gross Profits 25.9 42.6 40.9 232.0 167.2
SG & A 49.6 49.7 45.0 204.3 208.7
EBITDA (23.7) (7.1) (4.1) 27.7 (41.5)
Depreciation 11.0 13.0 13.2 46.1 51.4
Amortisation (5.0) 0.3 - 0.7 2.3
EBIT (29.6) (20.4) (17.3) (19.1) (95.1)
Gross Margin 12.5% 18.9% 19.2% 23.1% 18.9%
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![Note: The other income is after taking net negative impact of Rs 18.8 Crores on account of the following :-
1. During the quarter and year ended June 30, 2011, certain pre-acquisition claims provided for in respect of the acquired
entities, got settled. Accordingly, the excess provision of Rs. 100.6 Crores was reversed.
2. During the quarter and year ended June 30, 2011 the Company tested all intangibles, keeping in mind its strategy for
investment and focus on few service lines which will drive future growth. It also evaluated certain customer related
intangibles which were being amortized over their useful life. The evaluation was also done with reference to specific
customers acquired through acquisition by re-estimating the cost of capital, revenues, profits and the likely period of
relationship. Accordingly the Company recorded a onetime impairment charge of Rs. 119.3 Crores.
Segment wise Profitability
A. Consolidated IT Services (Software Services [A1] & Infrastructure Services [A2])
Amount in Rs crores
Income Statement Quarter ended Growth Year ended Growth
30-Jun-10 31-Mar-11 30-Jun-11 YoY QoQ 30-Jun-10 30-Jun-11 YoY
Revenues 3,214.1 3,855.6 4,090.5 27.3% 6.1% 11,569.3 14,982.7 29.5%
Direct Costs 2,107.3 2,590.7 2,736.8 7,431.1 10,084.6
Gross Profits 1,106.7 1,265.0 1,353.7 22.3% 7.0% 4,138.2 4,898.1 18.4%
SG & A 444.6 551.8 554.7 1,592.7 2,138.2
EBITDA 662.1 713.2 799.0 20.7% 12.0% 2,545.5 2,759.9 8.4%
Depreciation 90.0 90.3 99.0 343.5 373.7
Amortisation 17.1 14.8 16.7 110.9 65.2
EBIT 555.0 608.1 683.2 23.1% 12.3% 2,091.0 2,321.0 11.0%
Gross Margin 34.4% 32.8% 33.1% 35.7% 32.7%
EBITDA Margin 20.6% 18.5% 19.5% 22.0% 18.4%
EBIT Margin 17.3% 15.8% 16.7% 18.1% 15.5%
B. BPO Services
Amount in Rs crores
Income Statement Quarter ended Growth Year ended Growth
30-Jun-10 31-Mar-11 30-Jun-11 YoY QoQ 30-Jun-10 30-Jun-11 YoY
Revenues 211.3 222.3 213.0 0.8% -4.2% 995.7 872.7 -12.3%
Direct Costs 185.0 180.3 172.1 764.6 707.5
Gross Profits 26.3 41.9 40.9 231.1 165.2
SG & A 50.3 49.0 45.1 203.8 206.1
EBITDA (24.0) (7.0) (4.1) 27.3 (40.8)
Depreciation 11.2 12.8 13.2 46.0 50.8
Amortisation (5.1) 0.3 - 0.6 2.2
EBIT (30.1) (20.1) (17.3) (19.3) (93.8)
Gross Margin 12.5% 18.9% 19.2% 23.1% 18.9%
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HCL Technologies Q4-2011- IR Release
- 1. HCL Technologies Annual Results FY 2011 Q4 Revenues at US$ 963 mn; up 5.3% QoQ & 30.5% YoY Net Income at US$ 114 mn; up 10.5% QoQ & 55.3% YoY Annual Revenues at US$ 3,545 mn; up 31.1% YoY Net Income at US$ 378 mn; up 34.9% YoY Q4 Revenues at Rs. 4,300 crores; up 3.9% QoQ & 27.5% YoY Net Income at Rs. 510 crores; up 9.0% QoQ & 51.7% YoY Annual Revenues at Rs. 16,034 crores; up 27.4% YoY Net Income at Rs. 1,709 crores; up 30.9% YoY Financial Highlights 2 Corporate Overview 3 Business Highlights 4 Financials 12 Segment wise Profitability 15 Revenue Analysis 17 Constant Currency Reporting 18 Client Metrics 19 Operational Metrics - Software Services 20 Employee Metrics 21 Facilities 23 Cash and Cash Equivalents, Investments & Borrowings 23 Financials in INR as per convenience translation - Average Exchange Rate 24 - Closing Exchange Rate 28
- 2. Financial Highlights Highlights for the Quarter (US$) : Q4 2011 ?at US$ 963 mn; up 30.5% YoY & 5.3% sequentially Revenue ? 149 mn; up 31.8% YoY & 13.0% sequentially EBIT at US$ ? at US$ 114 mn; up 55.3% YoY & 10.5% sequentially Net Income ? final dividend of Rs. 2 per share, 34th consecutive quarter of dividend payout, taking Announces the total dividend for the year to Rs. 7.5 per share ? Employee addition of 9,572 & 3,626 respectively taking total headcount to 77,046 Gross & Net Highlights for the Year (US$) : FY 2011 ? US$ 3,545 mn; up 31.1% YoY Revenue at ? at US$ 378 mn; up 34.9% YoY Net Income ? Employee addition of 37,270 & 12,489 respectively taking total headcount to 77,046 Gross & Net Highlights for the Quarter (Rs.) : Q4 2011 (Rs. convenience translation at an Average Rate of Rs.44.65/US$) ?at Rs. 4,300 crores; up 27.5% YoY & 3.9% sequentially Revenue ? 665 crores; up 28.7% YoY & 11.5% sequentially EBIT at Rs. ? at Rs. 510 crores; up 51.7% YoY & 9.0% sequentially Net Income ? final dividend of Rs. 2 per share, 34th consecutive quarter of dividend payout, taking Announces the total dividend for the year to Rs. 7.5 per share ? Employee addition of 9,572 & 3,626 respectively taking total headcount to 77,046 Gross & Net Highlights for the Year (Rs.) : FY 2011 ?at Rs 16,034 crores; up 27.4% YoY Revenue ? at Rs. 1,709 crores; up 30.9% YoY Net Income ? Employee addition of 37,270 & 12,489 respectively taking total headcount to 77,046 Gross & Net 2
- 3. Corporate Overview HCL continues to respond well to the changing market dynamics by maintaining a high win ratio of multi-service deals and investing in ‘blue ocean’ markets “Over the last few years HCL Technologies has been investing in creating new capabilities and markets which have given a new face and shape to the company. Additionally our focus on diversity and localizing footprints have tremendously increased our competitiveness in the global IT space”, said Shiv Nadar, Founder, HCL and Chairman, HCL Technologies and Shiv Nadar Foundation. Commenting on the results Vineet Nayar, Vice Chairman and CEO, HCL Technologies said, “In these times of dynamic demand and swiftly changing customer priorities, HCL is focusing on building an innovation engine that is agile, business-aligned and employee driven. We continue to balance this thought leadership with an equally rewarding financial performance quarter by quarter”. “We ended the financial year with impressive all round performance. Our Revenues grew by 31% Year on Year, Net Income grew by 35% while cash flow conversion (ratio of cash flow from operations to Net Income) stands at 100% backed by efficient working capital management. We continued our journey of gaining market share by reporting 5.3% revenue growth this quarter (last 4 quarters’ CQGR at 6.9%), expanded margins by 105 bps during the quarter and reported 10.5% growth in Net Income”, added Anil Chanana, CFO, HCL Technologies. 3
- 4. Performance Highlights Overall Company Performance - Last 3 Financial Years Consolidated Revenues Employee Base 77,046 3,545 64,557 Employees in USD Mn 2,705 54,216 19.3% YoY 2,180 31.1% YoY (FY11 over (FY11 over FY10) FY10) 2009 2010 2011 2009 2010 2011 Cash Conversion 119% DSO Movement 101% 107% Conversion at 100% 84 80 71 Number of Days 68 66 in US$ mn 206 380 384 54 264 378 281 2009 2010 2011 2009 2010 2011 Operating Cash Flows Net Income OCF/NI Conversion (2 Year Rolling Average) Overall DSO DSO– Billed Customer Bucket Movement Market Capitalization 7.5 73 58 5.3 Customers in USD bn 41.5% YoY 43 35 (FY11 over 24 FY10) 20 2.6 9 4 5 2009 2010 2011 Number of $10 Mn+ Clients Number of $20 Mn+ Clients Number of $50 Mn+ Clients 30-Jun-09 30-Jun-10 30-Jun-11 4
- 5. Key Catalysts for Growth ? grow by 5.3% QoQ with Americas at 5.5% QoQ and Europe at 5.9% QoQ leading the Revenues growth. For FY11 All geographies reported positive growth with Americas at 23.5% YoY, Europe at 28.9% YoY ? and ROW at 69.0% YoY. Broad based growth across service offerings with Infrastructure Services and Custom ? Applications Services posting 44.7% YoY and 37.9% YoY respectively. ? report positive growth led by Healthcare at 45.8% YoY, Retail & CPG at 45.4% YoY, All verticals Energy-Utilities-Public Services at 39.1% YoY and Manufacturing at 34.2% YoY. Reported Currency US $ Growth Particulars Segments YoY (FY'11 AMJ ’11 CQGR* over FY'10) QoQ Consolidated For the Company 31.1% 5.3% 6.9% Geography Europe 28.9% 5.9% 9.5% Americas 23.5% 5.5% 3.7% Rest of World 69.0% 3.8% 14.7% Service Offering Infrastructure Services 44.7% 10.5% 9.3% Engineering and R&D Services 26.3% 5.5% 4.4% Custom Application Services 37.9% 4.6% 8.8% Industry Energy-Utilities- Public Sector 39.1% 20.1% 12.0% Media Publishing & Entertainment (MPE) 22.4% 12.2% 5.6% Manufacturing 34.2% 8.0% 7.6% Financial Services 30.4% 4.7% 8.1% Healthcare 45.8% 3.5% 5.9% Retail & CPG 45.4% -3.6% 6.0% * CQGR numbers are for 4 quarters beginning from Apr-Jun'10 quarter 5
- 6. Multi-Year, Multi-Million Dollar Transformational Deals • HCL signed 20 transformational deals this quarter representing diverse industries including Manufacturing, Media and Publishing, Telecom, BFSI, Retail, Hi-Tech and Healthcare. Some customers with whom we signed these multi-million engagements this quarter include Xerox, Mecom Group Plc, Performance Food Group, Deutsche Bank, Dex One and Yahoo. These deals spanned across all service lines. Transformation @ HCL • HCL has been recognized as one of the 52 Most Democratic Workplaces in the World by WorldBlu, a non-profit company specializing in organizational democracy. HCL has won this recognition for the second consecutive year. The WorldBlu list annually recognizes organizations that demonstrate exemplary democratic practices that contribute to high performance, engagement, innovation and profitability. • HCL MBA M-Prize, the world’s first management innovation contest for MBA students, concluded recently. A student team from Harvard Business School won the grand prize while teams from London Business School and IMD Lausanne emerged as runners-ups. The contest launched by HCL in association with the Management Innovation eXchange (MIX) attracted 100+ entries from students representing the world’s top Management Schools. • HCL recently launched a mini-book titled ‘The Clouds Roll In’, which examines the current and future trends and user case scenarios in Cloud Computing. • The French translation of the Harvard Business Press bestseller ‘Employees First, Customers Second: Turning Conventional Management Upside Down’ titled ‘Les Employes D'abord, Les Clients Ensuit: Comment Renverse les regles du management’ was launched in Paris and within a few weeks of its launch in France the book authored by Vineet Nayar, Vice Chairman & CEO, HCL Technologies became the No.1 Management bestseller on Amazon France website. • HCL launched a program called MAD LTD (Make A Difference, Lead The Difference) which invited youth across the country to come up with transformational ideas and implement them. 100,000 students from 65 colleges in 6 Indian cities participated in this contest. MAD LTD program was also extended internally within HCL and received 377 ideas from a 1000 HCLite innovators. • HCL recently organized a panel discussion on “Rebalancing the Workplace for Sustainability” at Bangalore. This event was attended by eminent speakers from Goldman Sachs, CISCO, NASSCOM and Infrahedge. • To commemorate World Environment Day, HCL launched a Personal Carbon Calculator that helps assess individual carbon footprint and facilitates in comprehending activities that impact carbon emissions. The company also received the carbon assurance certificate for FY 2010. 6
- 7. Recognitions • Shiv Nadar, Founder, HCL and Chairman, HCL Technologies and Shiv Nadar Foundation, has been conferred the Honoree 2011 Award by the American India Foundation (AIF) for his unparalleled efforts in philanthropy. The award was presented at the 10th Anniversary of the AIF in New York. • Shiv Nadar, Founder, HCL and Chairman, HCL Technologies and Shiv Nadar Foundation, has been featured as the leading philanthropist from India in the Forbes ‘48 Heroes of Philanthropy’ List in Asia Pacific released in June 2011. • HCL AXON was cited as a leader in the April 2011 Forrester Research, Inc. report ‘The Forrester Wave™: SAP Services Providers, Q2 2011’. HCL AXON scored 5 out of 5 for overall client satisfaction. According to Forrester, “HCL has long had a focus on operational and low-cost services in the SAP space. However, its 2008 acquisition of Axon makes it a compelling option for the full life cycle of implementation services starting with upfront strategy and transformational consulting through to the technical implementation and ongoing support. Key areas of industry focus include utilities, public sector, aerospace, and travel and logistics.” • HCL has been named as a Leader in the recently published Gartner’s report titled ‘Magic Quadrant* for Desktop Outsourcing Services, North America’ by William Maurer, David Edward Ackerman, Bryan Britz, Helen Huntley, 22 June 2011, Gartner Inc. • HCL has been positioned as a Niche player in Gartner’s report ‘Magic Quadrant* for Comprehensive Finance and Accounting BPO Global’, published by Analyst Cathy Tornbohm, Research Vice President, 29 June 2011, Gartner Inc. • HCL Technologies has been recognized as “one of the world’s best third party Global R&D Service Provider” in a report titled ‘Global R&D Service Provider Rating 2011’ published by Zinnov Management Consulting Pvt. Ltd, a leading Globalization Advisory and Management Consulting firm headquartered in India. • HCL has been awarded the ‘Innovation Excellence Award’ and recognized as “one of the most innovative R&D players” as part of TPI’s 2011 Americas Paragon Awards. These awards by TPI, a leading independent sourcing data and advisory firm, recognize organizations that have demonstrated exceptional leadership and best practices in sourcing and service management. The award reflects HCL’s strong engineering capabilities and its ability to innovate while achieving the commercial and performance objectives it sets with its clients. • HCL Technologies has been featured as a 2011 Global Services 100 Provider and has also featured in eight other GS100 categories including Top Global Diversified Outsourcing Vendors, Top Global ITO Vendors, Top Global Mid-Tier BPO Vendors, Top ADM Vendors, Top Enterprise Applications Vendors, Top IM Vendors, Top Engineering Services Outsourcing Vendors and Top Mid-tier Industry- Specific BPO Vendors. Moreover, HCL has also been named amongst Top 20 Employers (in terms of total employees in 2010) and Top 10 Employers (in terms of employees recruited) in this survey organized by Global Services, a leading media platform covering the global IT industry. • HCL has been awarded the ‘Excellence in Education Award’ for 2011 by the Life Office Management Association (LOMA), a premier Educational Institution in US, providing training and certification in Life & Annuity. This is the 7th time HCL has been bestowed with this Award - a unique feat achieved by any Indian IT company. *The Gartner Magic Quadrant is copyrighted 2011 by Gartner, Inc., and is reused with permission. The Magic Quadrant is a graphical representation of a marketplace at and for a specific time period. It depicts Gartner’s analysis of how certain vendors measure against criteria for that marketplace, as defined by Gartner. Gartner does not endorse any vendor, product or service depicted in the Magic Quadrant, and does not advise technology users to select only those vendors placed in the “Leaders” quadrant. The Magic Quadrant is intended solely as a research tool, and is not meant to be a specific guide to action. Gartner disclaims all warranties, express or implied, with respect to this research, including any warranties of merchantability or fitness for a particular purpose. 7
- 8. Recognitions • HCL’s client, Hallmark Services Corporation was selected as an Honoree for CIO magazine’s 24th annual CIO 100 Awards. CIO Magazine editors chose Hallmark Services Corporation as one of 100 innovative organizations that uses IT effectively to create business value. • HCL has been conferred with the HP AllianceONE Partner of the Year award in the Cloud Computing Service Provider of the Year category. These awards are presented to an exclusive set of HP alliance partners in recognition of their outstanding accomplishments in the development and delivery of innovative solutions that achieve standard-setting levels for business excellence and client satisfaction. HCL won this award for its SAP-on-Demand (SAPoD) suite, which caters to its customer’s on-demand requirements for Tier-1 application resources. 8
- 9. Business Highlights Corporate • HCL has signed a global alliance agreement with the JDA Software Group, Inc., a leader in supply chain management, to provide Supply Chain Software Services to JDA’s Enterprise Customers. This announcement expands HCL’s existing relationship with JDA, thereby extending HCL’s offerings in professional services for industries such as retail, manufacturing, CPG and Life Sciences for the Americas and Europe. • HCL became the first global IT services company to join the Advanced Message Queuing Protocol (AMQP) Working Group, which is dedicated to the development of an open standard application layer protocol for message-oriented middleware. As the only IT services provider in the group, HCL will work with other members to provide guidance in developing an industry standard for ubiquitous messaging and to drive interoperability among disparate messaging systems. Members of the AMQP Working Group include Cisco, Credit Suisse, Deutsche Boerse Systems, The Goldman Sachs Group Inc., iMatix Corporation, J.P. Morgan, Novell, Rabbit Technologies Ltd. and Red Hat Inc. • Cforia, a leading accounts receivable solutions provider and HCL inked a partnership to enhance HCL's 'Order-to-cash' business service. As part of this partnership HCL will leverage the Cforia tools to introduce several productivity and days sales outstanding (DSO) improvements for its order-to- cash (OTC) and business process outsourcing (BPO) services clients. • HCL and Epicor Software Corporation, a global leader in business software solutions for manufacturing, distribution, retail and services organizations, formed a services partnership to meet the growing demand for the award-winning next-generation Epicor 9 enterprise resource planning (ERP) suite. • Trintech, a leading financial software provider and HCL entered into a partnership to leverage Trintech’s Last Mile of Finance platform to deliver cost reduction and process improvement capabilities for its customers. • Finzsoft Solutions Limited, New Zealand finance and banking specialist and one of Australasia's leading proprietary Banking and Finance software solution companies and HCL extended their global partnership to deliver new high value technology solutions to the region's banking and finance sector. The signing ceremony was witnessed by New Zealand’s Prime Minister Rt. Hon John Key. • HCL and VMware have extended their strategic alliance and partnered under the System Integrator & Outsourcer (SI&O) & vCloud Program. The latest agreement encompasses vast VMware product portfolios that cater to all IT transformation and business agility needs, being driven by Cloud Computing. • HCL has launched the Digital Traveler solution for Airports which is a proprietary framework that enables airport operators to adopt state-of-the-art technologies to not only enhance the travelers’ experience but also increase non-air revenues. It provides user-friendly, real-time and location-based information to travelers directly onto their smart phones. The company also introduced a new mobile platform named SmartAssist for this industry that enables airlines to generate ancillary revenue or engage customers by providing offers on their smart phones. • HCL and Madras University, a premier academic institution in the country jointly launched an initiative that allows First-Right-to-Placement to HCL Technologies for around 1.5 lakh students in 120 colleges from three districts of Tamil Nadu affiliated to Madras University. • HCL launched a series of programs to strengthen its commitment to inclusion and diversity. Programs include an inspirational chain of events “Feminspiration” where eminent women personalities from the industry and society are invited to address HCLites on becoming transformational leaders. Another program, ‘Life Coach’ was launched where counselors provide 24*7 support to employees and their families on work life challenges with a special counseling facility established only for female employees. 9
- 10. Business Highlights • Seventeen of HCL’s facilities across various locations in India recently got SAS 70 certified taking its total SAS certified facility count to 22. SAS 70 is an internationally renowned auditing standard for operating effectiveness of service organizations. Americas • Xerox and HCL have signed a 5-year global product engineering services partnership agreement. HCL will provide Xerox with embedded, mechanical and software engineering services for certain Xerox printer and imaging product lines. The partnership will allow Xerox to improve the efficiency and effectiveness of its global engineering operations and continue to innovate in product development operations. • A pioneering US-based online company has signed a deal with HCL to adopt and re-architect existing platforms for alignment with its road map. HCL will deploy platform engineering services and enable adoption of the platform across multiple countries. • HCL has been awarded a transformational systems engineering services contract with a leading US networking and telecom company. As part of the program, HCL will aid the customer in lowering product cost through value reengineering and end-to-end system development services. • Dex One Corporation (NYSE: DEXO), a leading marketing solutions provider, has entered into an engagement with HCL to energize its digital operations and optimize the development of digital solutions. The initiative is part of Dex One's strategic plan to accelerate delivery of new digital offerings while reducing operational costs. • HCL has been selected by a leading global pharmaceutical company to develop and implement a Next Generation Clinical Development Platform. The multi-year transformational program will leverage the latest Oracle life sciences technologies, business processes and analytics in an integrated platform. • A global pharmaceutical company has selected HCL as a partner of choice for its CRM integration & rollout initiative for multiple geographies which include emerging market locations. • A global pharmaceutical giant has chosen HCL to transform and manage its Applications (ERP; BI; R&D) & Infrastructure (Service Desk; EUC; Data Center Hosting; RIM) portfolios. HCL will also recommend, implement and manage a holistic service management platform that will be leveraged by all service providers. • First Tennessee Bank , part of the First Horizon National Corp. (NYSE:FHN) family of companies, has selected the HCL CapitalStream™ “Straight Through Processing” (STP) solution to support its commercial banking lines of business – small business, business banking, commercial banking, commercial real estate, corporate banking and private banking. Europe • HCL has signed a 5-year multimillion dollar Application Support Transformation deal with Deutsche Bank. • HCL has entered into an agreement with Mecom Group Plc for outsourcing a significant portion of Mecom’s IT operations. HCL will initially provide Mecom with infrastructure and, in certain cases, applications management services to Mecom. 10
- 11. Business Highlights • Danfoss, a global leader within energy efficient solutions for refrigeration, air conditioning, heating and electrical motor control, has selected HCL as Engineering and Development partner to setup an India Design Centre to cater for global projects and developing new products for the global markets. This is one of the largest deals for Indian Engineering Services Outsourcing industry in Europe. HCL has also signed a five-year strategic IT and SAP Offshore Delivery Center Agreement in Europe with Danfoss. • HCL has been selected to provide application management services to IKEA, the world’s leading home furnishing retailer. • One of the largest banks in the UK has selected HCL as a strategic vendor. As part of this engagement, HCL will be providing IT outsourcing services for the bank’s core systems that support its various business units. • HCL has been awarded the Payroll Giving Award (Bronze) towards fostering a culture of philanthropy at the workplace. This award recognizes employers who have succeeded in generating sustainable income sources for UK charities through payroll giving. Rest of World (ROW) • HCL and Etisalat, a leading telecommunications corporation, signed a Memorandum of Understanding (MoU) agreement to bilaterally cooperate and explore collaborative opportunities for offering innovative ICT services to customers in the areas of mobility, cloud computing and advanced ICT services. • A global investment bank has entered into an engagement with HCL to provide support and maintenance services for its business critical IT Infrastructure. • A leading manufacturer of inspection and measurement systems in Japan has entered into an engagement with HCL for the development of a new Graphical User Interface (GUI) platform. • HCL won a deal from a global medical company for designing its orthopedics products for Japan. • HCL has been chosen to develop a Mobility Framework for a leading Polytechnic based out of Singapore. HCL will be using the Sencha Platform for the framework development, and will leverage its global enterprises mobility lab, The MERLIN, to provide these services. • HCL organized an exclusive luncheon workshop at the ‘CloudAsia 2011’ Summit in Singapore on the theme ‘Quantifying Cloud Readiness’. The workshop centered on HCL’s Cloud Readiness Index value proposition which was attended by 30+ top executives from across industries. 11
- 12. Financials Consolidated financial results for the Quarter and Year ended 30th June, 2011 drawn under US GAAP Consolidated Income Statement Amount in US $ million Income Statement Quarter ended Growth Year ended Growth 30-Jun-10 31-Mar-11 30-Jun-11 YoY QoQ 30-Jun-10 30-Jun-11 YoY Revenues 737.6 914.5 962.9 30.5% 5.3% 2,704.6 3,545.3 31.1% Direct Costs 493.6 621.4 650.8 1,764.8 2,413.1 Gross Profits 244.0 293.1 312.0 27.9% 6.5% 939.8 1,132.2 20.5% SG & A 106.6 134.7 134.2 386.6 524.2 EBITDA 137.4 158.4 177.8 29.4% 12.3% 553.1 608.0 9.9% Depreciation 21.8 23.1 25.1 83.8 94.9 Amortisation 2.6 3.4 3.7 23.8 15.1 EBIT 113.0 131.9 149.0 31.8% 13.0% 445.5 498.1 11.8% Foreign Exchange Gains/(loss) (29.5) (2.5) 1.9 (101.7) (17.8) Other Income, net (4.5) 2.8 1.6 (11.5) 5.7 Provision for Tax 5.5 28.7 38.1 51.8 107.5 Share of income / (loss) of minority shareholders (0.0) 0.0 0.1 (0.0) (0.0) Net Income 73.6 103.5 114.3 55.3% 10.5% 280.6 378.4 34.9% Gross Margin 33.1% 32.0% 32.4% 34.7% 31.9% EBITDA Margin 18.6% 17.3% 18.5% 20.5% 17.1% EBIT Margin 15.3% 14.4% 15.5% 16.5% 14.0% Net Income Margin 10.0% 11.3% 11.9% 10.4% 10.7% Earnings Per Share (EPS) - Annualized in US $ Basic 0.43 0.60 0.67 54.8% 10.1% 0.42 0.55 31.8% Diluted 0.43 0.59 0.65 51.7% 10.4% 0.41 0.54 32.5% “Weighted average Number of Shares used in computing EPS” Basic 677,150,453 684,973,440 687,153,050 673,741,835 683,508,571 Diluted 692, 126,211 700,495,078 700,936,391 689,471,254 696,437,890 Note: - The above result does not take into account the non cash employee stock options charge computed under FAS 123R, as per details given here:- Quarter Ended Year Ended Particulars (in US $ mn) 30-Jun-10 31-Mar-11 30-Jun-11 30-Jun-10 30-Jun-11 Options Charge 5.2 5.7 4.8 20.0 21.6 Tax benefit 0.2 0.7 0.4 1.2 1.7 Option Charge (net-of tax benefit) 5.1 5.0 4.4 18.8 19.9 Outstanding Options (in equivalent no of shares) 30-Jun-10 31-Mar-11 30-Jun-11 Options at market price 15,806,128 10,608,748 9,134,072 Options at less than market price 8,006,468 17,153,764 15,503,052 The options will vest in tranches till 2016 12
- 13. Note: The other income is after taking net negative impact of $ 4.2 mn on account of the following :- 1. During the quarter and year ended June 30, 2011, certain pre-acquisition claims provided for in respect of the acquired entities, got settled. Accordingly, the excess provision of $ 22.5 mn was reversed. 2. During the quarter and year ended June 30, 2011 the Company tested all intangibles, keeping in mind its strategy for investment and focus on few service lines which will drive future growth. It also evaluated certain customer related intangibles which were being amortized over their useful life. The evaluation was also done with reference to specific customers acquired through acquisition by re-estimating the cost of capital, revenues, profits and the likely period of relationship. Accordingly the Company recorded a onetime impairment charge of $ 26.7 mn. Consolidated Balance Sheet Amount in US$ million Particulars As on 30-Jun-10 30-Jun-11 Assets Cash and Cash Equivalents 100.9 116.3 Accounts Receivables, net 541.3 579.6 Unbilled Receivables 115.4 182.5 Fixed Deposits with Banks 235.0 241.3 Deposits with HDFC Ltd. 21.5 - Investment Securities, available for sale 168.4 143.8 Other Current Assets 190.5 280.7 Total current assets 1,373.0 1,544.2 Property and Equipments, net 398.1 495.9 Intangible Assets, net 928.6 937.0 Investment Securities, held to maturity 10.8 21.2 Deposits with HDFC Ltd. - 11.2 Fixed Deposits with Banks - 24.6 Investments in Equity Investee 4.5 5.2 Other Assets 207.6 232.5 Total assets 2,922.4 3,271.9 Liabilities & Stockholders' Equity Current Liabilities 674.6 755.4 Borrowings 573.5 475.2 Other Liabilities 159.0 154.1 Total Liabilities 1,407.1 1,384.7 Total Stockholders Equity 1,515.3 1,887.1 Total Liabilities and Stockholders Equity 2,922.4 3,271.9 13
- 14. Consolidated Cash Flow Statement Amount in US $ million Particulars For the Quarter For Year Ended ended Jun'11 Jun'11 CASH FLOWS FROM OPERATING ACTIVITIES Net Income 114.4 378.4 Adjustments to Reconcile Net Income to Net Cash provided by Operating Activities Depreciation and Amortization 28.9 110.0 (Profit) /Loss on Redemption of Mutual Fund Investments - (1.2) Others 29.6 (6.1) Changes in Assets and Liabilities, net Accounts Receivable (19.8) (81.1) Other Assets 3.2 (86.4) Current Liabilities 16.4 66.4 Net Cash provided by operating Activities 172.6 380.0 CASH FLOWS FROM INVESTING ACTIVITIES Purchase of Property and Equipment (net) (48.9) (172.1) (Purchase) / Sale of Investments (64.6) 21.6 Deposits with Banks 51.1 (21.6) Deposits with HDFC Ltd. - 11.1 Payment for Deferred consideration on Business Acquisition - (2.2) Payments for Business Acquisitions, net of cash acquired (0.1) (13.4) Proceeds from Sale of Business 3.2 3.2 Net Cash used in Investing Activities (59.3) (173.4) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from Issuance of Employees Stock Options 2.5 19.9 Dividend (35.6) (114.7) Loans (75.2) (107.6) Others (0.7) (1.3) Net Cash provided by (used in) Financing Activities (109.1) (203.6) Effect of Exchange Rate on Cash and Cash Equivalents 1.2 12.5 Net Increase/ (Decrease) in Cash and Cash Equivalents 5.4 15.4 CASH AND CASH EQUIVALENTS Beginning of the Period 110.9 100.9 End of the Period 116.3 116.3 14
- 15. Segment wise Profitability A. Consolidated IT Services (Software Services [A1] & Infrastructure services [A2]) Amount in US $ million Income Statement Quarter ended Growth Year ended Growth 30-Jun-10 31-Mar-11 30-Jun-11 YoY QoQ 30-Jun-10 30-Jun-11 YoY Revenues 692.1 864.7 915.2 32.2% 5.8% 2,490.7 3,350.2 34.5% Direct Costs 453.8 581.0 612.3 1,600.3 2,254.9 Gross Profits 238.3 283.7 302.9 27.1% 6.8% 890.4 1,095.2 23.0% SG & A 95.7 123.7 124.1 342.8 478.1 EBITDA 142.6 159.9 178.8 25.4% 11.8% 547.6 617.2 12.7% Depreciation 19.4 20.2 22.2 73.9 83.6 Amortisation 3.7 3.3 3.7 23.7 14.6 EBIT 119.5 136.4 152.9 27.9% 12.1% 450.0 519.0 15.3% Gross Margin 34.4% 32.8% 33.1% 35.7% 32.7% EBITDA Margin 20.6% 18.5% 19.5% 22.0% 18.4% EBIT Margin 17.3% 15.8% 16.7% 18.1% 15.5% B. BPO Services Amount in US $ million Income Statement Quarter ended Growth Year ended Growth 30-Jun-10 31-Mar-11 30-Jun-11 YoY QoQ 30-Jun-10 30-Jun-11 YoY Revenues 45.5 49.8 47.7 4.7% -4.4% 213.9 195.1 -8.8% Direct Costs 39.8 40.4 38.5 164.5 158.2 Gross Profits 5.7 9.4 9.2 49.4 36.9 SG & A 10.8 11.0 10.1 43.9 46.1 EBITDA (5.2) (1.6) (0.9) 5.5 (9.1) Depreciation 2.4 2.9 3.0 9.9 11.4 Amortisation (1.1) 0.1 - 0.1 0.5 EBIT (6.5) (4.5) (3.9) (4.5) (21.0) Gross Margin 12.5% 18.9% 19.2% 23.1% 18.9% 15
- 16. A1. Software Services Amount in US $ million Income Statement Quarter ended Growth Year ended Growth 30-Jun-10 31-Mar-11 30-Jun-11 YoY QoQ 30-Jun-10 30-Jun-11 YoY Revenues 526.8 650.9 679.0 28.9% 4.3% 1,919.0 2,523.3 31.5% Direct Costs 335.3 426.3 443.7 1,194.1 1,654.7 Gross Profits 191.5 224.6 235.3 22.9% 4.8% 724.8 868.6 19.8% SG & A 80.0 105.4 102.9 283.7 406.1 EBITDA 111.4 119.2 132.4 18.8% 11.0% 441.1 462.6 4.9% Depreciation 13.1 13.1 14.6 53.3 55.6 Amortisation 3.7 3.3 3.7 23.7 14.6 EBIT 94.6 102.8 114.0 20.4% 10.8% 364.1 392.4 7.8% Gross Margin 36.3% 34.5% 34.7% 37.8% 34.4% EBITDA Margin 21.2% 18.3% 19.5% 23.0% 18.3% EBIT Margin 18.0% 15.8% 16.8% 19.0% 15.6% A2. Infrastructure Services Amount in US $ million Income Statement Quarter ended Growth Year ended Growth 30-Jun-10 31-Mar-11 30-Jun-11 YoY QoQ 30-Jun-10 30-Jun-11 YoY Revenues 165.3 213.7 236.2 42.9% 10.5% 571.7 826.8 44.6% Direct Costs 118.5 154.7 168.6 406.2 600.2 Gross Profits 46.8 59.1 67.6 44.3% 14.4% 165.5 226.6 36.9% SG & A 15.7 18.4 21.2 59.0 72.0 EBITDA 31.1 40.7 46.4 49.1% 14.0% 106.5 154.6 45.1% Depreciation 6.3 7.2 7.5 20.6 28.0 EBIT 24.9 33.5 38.9 56.3% 15.9% 85.9 126.6 47.3% Gross Margin 28.3% 27.6% 28.6% 29.0% 27.4% EBITDA Margin 18.8% 19.0% 19.6% 18.6% 18.7% EBIT Margin 15.0% 15.7% 16.5% 15.0% 15.3% 16
- 17. Revenue Analysis Geographic Mix (Quarter ended) 30-Jun-10 31-Mar-11 30-Jun-11 LTM Americas 61.5% 54.3% 54.4% 55.8% Europe 24.6% 27.0% 27.1% 26.9% Rest of World 13.9% 18.7% 18.5% 17.3% Service Offering Mix (Quarter ended) 30-Jun-10 31-Mar-11 30-Jun-11 LTM Enterprise Application Services 22.2% 21.4% 20.9% 21.3% Engineering and R&D Services 19.6% 17.7% 17.8% 18.1% Custom Application Services 29.6% 32.0% 31.8% 31.7% Infrastructure Services 22.4% 23.4% 24.5% 23.3% BPO Services 6.2% 5.4% 4.9% 5.5% Revenue by Contract Type for IT Services 30-Jun-10 31-Mar-11 30-Jun-11 (Quarter ended) Time & Material (T&M) 59.1% 58.0% 57.5% Fixed Price Projects 40.9% 42.0% 42.5% Revenue by Vertical (Quarter ended) 30-Jun-10 31-Mar-11 30-Jun-11 Financial Services 24.9% 26.2% 26.0% Manufacturing 27.3% 27.3% 28.0% Telecom 10.9% 10.3% 9.1% Retail & CPG 8.2% 8.7% 7.9% Media, Publishing & Entertainment (MPE) 7.4% 6.6% 7.1% Healthcare 8.2% 8.0% 7.9% Energy-Utilities-Public Sector 6.9% 7.3% 8.3% Others 6.2% 5.6% 5.7% Rupee / US Dollar Rate 30-Jun-10 31-Mar-11 30-Jun-11 Quarter Ended 46.44 44.59 44.70 Average for the Quarter 45.72 45.25 44.65 “LTM” - Last Twelve Months 17
- 18. Constant Currency (CC) Reporting Reported AMJ'10 JAS'10 OND'10 JFM'11 AMJ'11 Revenue ($ Mn) 737.6 803.8 864.1 914.5 962.9 Growth QoQ 7.7% 9.0% 7.5% 5.8% 5.3% Growth YoY 21.5% 27.6% 32.6% 33.5% 30.5% Constant Currency (QoQ) AMJ'10 JAS'10 OND'10 JFM'11 AMJ'11 Revenue ($ Mn) 747.5 792.0 856.5 906.0 950.6 Growth QoQ 9.1% 7.4% 6.5% 4.8% 3.9% Constant Currency (YoY) AMJ'10 JAS'10 OND'10 JFM'11 AMJ'11 Revenue ($ Mn) 738.1 809.6 869.7 896.9 919.7 Growth QoQ 21.6% 28.5% 33.4% 30.9% 24.7% Average Rates for Quarter AMJ'10 JAS'10 OND'10 JFM'11 AMJ'11 GBP 1.49 1.56 1.57 1.61 1.64 EURO 1.26 1.31 1.34 1.39 1.46 INR 0.02 0.02 0.02 0.02 0.02 SGD 0.72 0.74 0.77 0.79 0.81 AUD 0.87 0.92 0.98 1.01 1.08 Particulars Segment (US $) QoQ at Growth CC Consolidated For the Company 3.9% Geography Americas 5.5% Europe 3.0% Rest of World 0.7% Service Offering Enterprise Application Services 1.7% Engineering and R&D Services 5.2% Custom Application Services 2.5% Infrastructure Services 9.2% BPO Services -5.7% Industry Financial Services 2.0% Manufacturing 7.6% Telecom -8.3% Retail & CPG -5.2% Media Publishing & Entertainment (MPE) 11.7% Healthcare 2.9% Energy-Utilities-Public Sector 18.7% Others 5.5% Clients (LTM) Top 5 -0.3% Top 10 2.4% Top 20 2.6% 18
- 19. Client Metrics Client Data (LTM) 30-Jun-10 31-Mar-11 30-Jun-11 Number of Clients Active Client Relationship 408 453 467 New Client Relationship 51 58 70 Accounting for >5% of revenue 1 1 1 Number of Million Dollar Clients (LTM) 30-Jun-10 31-Mar-11 30-Jun-11 QoQ YoY Change Change 100 Million dollar + 1 1 1 - - 50 Million dollar + 5 8 9 1 4 40 Million dollar + 7 10 10 - 3 30 Million dollar + 12 19 22 3 10 20 Million dollar + 24 31 35 4 11 10 Million dollar + 58 70 73 3 15 5 Million dollar + 107 119 126 7 19 1 Million dollar + 283 324 332 8 49 Client Contribution to Revenue (LTM) 30-Jun-10 31-Mar-11 30-Jun-11 QoQ growth Top 5 Clients 17.7% 16.2% 15.4% 1.3% Top 10 Clients 25.9% 25.2% 24.6% 4.0% Top 20 Clients 36.6% 36.2% 35.3% 4.2% Client Business - (LTM) 30-Jun-10 31-Mar-11 30-Jun-11 Repeat Business - Consolidated 91.9% 94.5% 94.7% Days Sales Outstanding - 66 55 54 excluding unbilled receivables “LTM” - Last Twelve Months 19
- 20. Operational Metrics - Software Services Software Services (Quarter Ended) 30-Jun-10 31-Mar-11 30-Jun-11 Efforts Offshore 72.1% 72.9% 73.0% Onsite 27.9% 27.1% 27.0% Revenue Offshore 41.4% 42.6% 42.7% Onsite 58.6% 57.4% 57.3% Utilization Offshore - Including trainees 72.9% 71.9% 72.5% Offshore - Excluding trainees 77.0% 76.3% 76.1% Onsite 95.2% 96.5% 96.2% Blended Utilization (Excl. Trainees) 81.4% 80.9% 80.7% Software Services Efforts (Man Months) 30-Jun-10 31-Mar-11 30-Jun-11 Efforts Billed - Offshore 61,518 75,070 77,333 Efforts Billed – Onsite 23,777 27,843 28,673 Total Billed Efforts 85,295 102,912 106,006 Not Billed 19,533 24,357 25,396 Trainee 4,502 5,930 5,020 Not Billed (including trainees) 24,035 30,287 30,416 20
- 21. Employee Metrics Manpower Details 30-Jun-10 31-Mar-11 30-Jun-11 Total Employee Count 64,557 73,420 77,046 IT Services (Software Services [A1] + 53,333 62,536 66,485 Infrastructure Services [A2]) Technical 47,716 56,188 59,944 Support 5,617 6,348 6,541 Gross Addition 8,293 4,407 7,086 Net Addition 5,409 1,617 3,949 Gross Lateral Employee Addition 6,854 3,457 3,781 Attrition (LTM)* - IT Services (Software Services + Infrastructure Services) 15.7% 17.0% 16.5% BPO Services - Total 11,224 10,884 10,561 Technical 9,864 10,022 9,677 Support 1,360 862 884 Gross Addition 3,295 3,127 2,486 Net Addition 1,019 (464) (323) Gross Lateral Employee Addition 1,297 2,527 2,486 Offshore Attrition – Quarterly 15.3% 11.0% 9.2% Offshore Attrition - Quarterly (excluding attrition of joinees less than 6 months) 7.2% 8.5% 7.4% * Excludes involuntary attrition 21
- 22. A1. Software Services 30-Jun-10 31-Mar-11 30-Jun-11 Software Services - Total 41,113 47,802 50,218 Technical 36,655 42,728 44,991 Support 4,458 5,074 5,227 Gross Addition 7,088 2,939 4,763 Net Addition 4,944 867 2,416 Gross Lateral Employee Addition 5,742 1,991 2,244 Attrition (LTM) 15.5% 16.8% 16.3% A2. Infrastructure Services 30-Jun-10 31-Mar-11 30-Jun-11 Infrastructure Services - Total 12,220 14,734 16,267 Technical 11,061 13,460 14,953 Support 1,159 1,274 1,314 Gross Addition 1,205 1,468 2,323 Net Addition 465 750 1,533 Gross Lateral Employee Addition 1,112 1,466 1,537 Attrition (LTM) 16.0% 17.6% 17.0% 22
- 23. Facilities As on 30th June 2011 Completed Work in Progress Land Available Built Up area Built Up area for expansion - Delivery Locations No. of seats No. of seats in acres (Sq. ft.) (Sq. ft.) Gurgaon+Manesar 336,697 3,156 376,420 2,830 - Noida(NCR) 1,936,012 21,861 741,081 5,800 22 Chennai 3,203,385 28,849 550,000 5,300 27 Bangalore 1,112,250 10,769 313,261 3,011 13 Mumbai 12,785 153 - - - Kolkatta 95,467 1,039 - - - Hyderabad 281,141 2,242 66,000 697 - Pune 15,214 171 34,786 391 - Global (Outside India) 521,839 5,425 19,714 280 Total 7,514,790 73,665 2,101,262 18,309 62 Cash & Cash Equivalents, Investments and Borrowings Amount in US $ million 30-Jun-11 Cash and Cash Equivalents 116.3 Fixed Deposit with Banks 265.9 Deposits with HDFC Ltd. 11.2 Investment Securities, available for sale 143.8 Investment Securities, held to maturity 21.2 Grand Total 558.4 30-Jun-11 Borrowings 475.2 * Note: For details please refer: http://www.hcltech.com/investors/downloads/Details-of-Cash-&-Bank-Balances-Q4-11.pdf 23
- 24. Financials in INR as per convenience translation - Average Exchange Rate The financials in INR are based on a convenience translation using the average rate for the quarter: US$1 = Rs. 44.65 for the quarter ended on 30 Jun 2011; US $1 = Rs. 45.25 for the quarter ended on 31 Mar 2011; US$ 1 = Rs. 45.72 for the quarter ended 30 Jun 2010. Financial results for the Quarter and Year ended 30th June 2011 drawn under US GAAP Consolidated Income Statement Amount in Rs Crores Income Statement Quarter ended Growth Year ended Growth 30-Jun-10 31-Mar-11 30-Jun-11 YoY QoQ 30-Jun-10 30-Jun-11 YoY Revenues 3,372.2 4,138.2 4,299.5 27.5% 3.9% 12,588.2 16,034.2 27.4% Direct Costs 2,256.7 2,812.0 2,906.1 8,210.2 10,914.0 Gross Profits 1,115.4 1,326.2 1,393.4 24.9% 5.1% 4,377.9 5,120.1 17.0% SG & A 487.3 609.7 599.2 1,799.5 2,371.4 EBITDA 628.2 716.6 794.1 26.4% 10.8% 2,578.4 2,748.7 6.6% Depreciation 99.6 104.6 112.1 390.3 429.4 Amortisation 11.8 15.2 16.7 111.9 68.2 EBIT 516.8 596.7 665.3 28.7% 11.5% 2,076.2 2,251.1 8.4% Foreign Exchange Gains/(loss) (134.8) (11.2) 8.3 (475.7) (81.9) Other Income, net (20.5) 12.7 7.1 (53.2) 25.7 Provision for Tax 25.0 130.0 169.9 241.8 485.4 Share of income / (loss) of minority shareholders (0.0) 0.0 0.2 (0.2) 0.1 Net Income 336.5 468.2 510.5 51.7% 9.0% 1,305.8 1,709.4 30.9% Gross Margin 33.1% 32.0% 32.4% 34.8% 31.9% EBITDA Margin 18.6% 17.3% 18.5% 20.5% 17.1% EBIT Margin 15.3% 14.4% 15.5% 16.5% 14.0% Net Income Margin 10.0% 11.3% 11.9% 10.4% 10.7% Earnings Per Share (EPS) - Annualized in US $ Basic 19.9 27.3 29.7 49.5% 8.7% 19.4 25.0 29.0% Diluted 19.4 26.7 29.1 49.8% 9.0% 18.9 24.5 29.6% “Weighted average Number of Shares used in computing EPS” Basic 677,150,453 684,973,440 687,153,050 673,741,835 683,508,5 71 Diluted 692, 126,211 700,495,078 700,936,391 689,471,254 696,437,890 Note: - The above result does not take into account the non cash employee stock options charge computed under FAS 123R, as per details given here:- Quarter Ended Year Ended Particulars (in Rs. Crores) 30-Jun-10 31-Mar-11 30-Jun-11 30-Jun-10 30-Jun-11 Options Charge 24.3 25.9 21.7 92.8 98.4 Tax benefit 0.8 3.2 1.8 5.4 8.0 Option Charge (net-of tax benefit) 23.5 22.7 19.9 87.4 90.4 Outstanding Options (in equivalent no of shares) 30-Jun-10 31-Mar-11 30-Jun-11 Options at market price 15,806,128 10,608,748 9,134,072 Options at less than market price 8,006,468 17,153,764 15,503,052 The options will vest in tranches till 2016 24
- 25. Note: The other income is after taking net negative impact of Rs 18.8 Crores on account of the following :- 1. During the quarter and year ended June 30, 2011, certain pre-acquisition claims provided for in respect of the acquired entities, got settled. Accordingly, the excess provision of Rs. 100.5 Crores was reversed. 2. During the quarter and year ended June 30, 2011 the Company tested all intangibles, keeping in mind its strategy for investment and focus on few service lines which will drive future growth. It also evaluated certain customer related intangibles which were being amortized over their useful life. The evaluation was also done with reference to specific customers acquired through acquisition by re-estimating the cost of capital, revenues, profits and the likely period of relationship. Accordingly the Company recorded a onetime impairment charge of Rs. 119.2 Crores. Consolidated Balance Sheet (At Quarter Closing Exchange Rate of RS. 44.70/US$) Amount in Rs.Crore Particulars As on 30-Jun-10 30-Jun-11 Assets Cash and Cash Equivalents 468.6 519.8 Accounts Receivables, net 2,513.9 2,590.7 Unbilled Receivables 535.6 815.8 Fixed Deposits with Banks 1,091.3 1,078.5 Deposits with HDFC Ltd. 100.0 - Investment Securities, available for sale 782.0 642.6 Other Current Assets 884.5 1,254.6 Total current assets 6,376.0 6,902.0 Property and Equipments, net 1,848.6 2,216.5 Intangible Assets, net 4,312.2 4,187.8 Investment Securities, held to maturity 50.0 94.9 Deposits with HDFC Ltd. - 50.0 Fixed Deposits with Banks - 110.0 Investments in Equity Investee 20.7 23.1 Other Assets 964.0 1,039.2 Total assets 13,571.5 14,623.5 Liabilities & Stockholders' Equity Current Liabilities 3,132.9 3,376.3 Borrowings 2,663.2 2,124.0 Other Liabilities 738.6 688.7 Total Liabilities 6,534.7 6,189.0 Total Stockholders Equity 7,036.8 8,434.5 Total Liabilities and Stockholders Equity 13,571.5 14,623.5 25
- 26. Segment wise Profitability A. Consolidated IT Services (Software Services [A1] & Infrastructure Services [A2]) Amount in Rs crores Income Statement Quarter ended Growth Year ended Growth 30-Jun-10 31-Mar-11 30-Jun-11 YoY QoQ 30-Jun-10 30-Jun-11 YoY Revenues 3,164.1 3,912.7 4,086.7 29.2% 4.4% 11,589.7 15,151.1 30.7% Direct Costs 2,074.6 2,629.0 2,734.2 7,443.8 10,198.1 Gross Profits 1,089.5 1,283.7 1,352.5 24.1% 5.4% 4,145.9 4,953.0 19.5% SG & A 437.7 560.0 554.2 1,595.2 2,162.7 EBITDA 651.8 723.7 798.3 22.5% 10.3% 2,550.7 2,790.2 9.4% Depreciation 88.6 91.6 99.0 344.2 378.1 Amortisation 16.8 15.0 16.7 111.2 66.0 EBIT 546.4 617.1 682.6 24.9% 10.6% 2,095.3 2,346.2 12.0% Gross Margin 34.4% 32.8% 33.1% 35.8% 32.7% EBITDA Margin 20.6% 18.5% 19.5% 22.0% 18.4% EBIT Margin 17.3% 15.8% 16.7% 18.1% 15.5% B. BPO Services Amount in Rs crores Income Statement Quarter ended Growth Year ended Growth 30-Jun-10 31-Mar-11 30-Jun-11 YoY QoQ 30-Jun-10 30-Jun-11 YoY Revenues 208.0 225.6 212.8 2.3% -5.7% 998.5 883.1 -11.6% Direct Costs 182.1 183.0 171.9 766.5 715.9 Gross Profits 25.9 42.6 40.9 232.0 167.2 SG & A 49.6 49.7 45.0 204.3 208.7 EBITDA (23.7) (7.1) (4.1) 27.7 (41.5) Depreciation 11.0 13.0 13.2 46.1 51.4 Amortisation (5.0) 0.3 - 0.7 2.3 EBIT (29.6) (20.4) (17.3) (19.1) (95.1) Gross Margin 12.5% 18.9% 19.2% 23.1% 18.9% 26
- 27. A1. Software Services Amount in Rs crores Income Statement Quarter ended Growth Year ended Growth 30-Jun-10 31-Mar-11 30-Jun-11 YoY QoQ 30-Jun-10 30-Jun-11 YoY Revenues 2,408.3 2,945.5 3,032.0 25.9% 2.9% 8,932.1 11,412.9 27.8% Direct Costs 1,532.9 1,929.2 1,981.4 5,556.3 7,484.1 Gross Profits 875.4 1,016.3 1,050.6 20.0% 3.4% 3,375.7 3,928.8 16.4% SG & A 365.9 476.8 459.6 1,320.5 1,837.2 EBITDA 509.5 539.5 591.0 16.0% 9.5% 2,055.3 2,091.6 1.8% Depreciation 60.0 59.2 65.3 248.5 251.5 Amortisation 16.8 15.0 16.7 111.2 66.0 EBIT 432.7 465.4 509.0 17.6% 9.4% 1,695.5 1,774.1 4.6% Gross Margin 36.3% 34.5% 34.7% 37.8% 34.4% EBITDA Margin 21.2% 18.3% 19.5% 23.0% 18.3% EBIT Margin 18.0% 15.8% 16.8% 19.0% 15.6% A2. Infrastructure Services Amount in Rs crores Income Statement Quarter ended Growth Year ended Growth 30-Jun-10 31-Mar-11 30-Jun-11 YoY QoQ 30-Jun-10 30-Jun-11 YoY Revenues 755.9 967.2 1,054.7 39.5% 9.0% 2,657.6 3,738.2 40.7% Direct Costs 541.7 699.8 752.8 1,887.4 2,714.0 Gross Profits 214.1 267.4 301.8 41.0% 12.9% 770.2 1,024.2 33.0% SG & A 71.9 83.2 94.6 274.8 325.5 EBITDA 142.3 184.2 207.2 45.6% 12.5% 495.5 698.7 41.0% Depreciation 28.6 32.5 33.7 95.7 126.6 EBIT 113.7 151.8 173.5 52.6% 14.3% 399.8 572.1 43.1% Gross Margin 28.3% 27.6% 28.6% 29.0% 27.4% EBITDA Margin 18.8% 19.0% 19.6% 18.6% 18.7% EBIT Margin 15.0% 15.7% 16.5% 15.0% 15.3% 27
- 28. Financials in INR as per convenience translation - Closing Exchange Rate The financials in INR are based on a convenience translation using the closing rate as of the last day of the quarter: US$1 = Rs. 44.70 for the quarter ended on 30 Jun 2011; US $1 = Rs. 44.59 for the quarter ended on 31 Mar 2011; US$ 1 = Rs. 46.44 for the quarter ended 30 Jun 2010. Financial results for the Quarter and Year ended 30th June 2011 drawn under US GAAP Consolidated Income Statement Amount in Rs Crores Income Statement Quarter ended Growth Year ended Growth 30-Jun-10 31-Mar-11 30-Jun-11 YoY QoQ 30-Jun-10 30-Jun-11 YoY Revenues 3,425.4 4,077.9 4,303.5 25.6% 5.5% 12,565.0 15,855.4 26.2% Direct Costs 2,292.3 2,771.0 2,908.8 8,195.7 10,792.1 Gross Profits 1,133.1 1,306.9 1,394.7 23.1% 6.7% 4,369.2 5,063.4 15.9% SG & A 495.0 600.8 599.8 1,796.4 2,344.3 EBITDA 638.1 706.1 794.9 24.6% 12.6% 2,572.8 2,719.1 5.7% Depreciation 101.1 103.1 112.2 389.5 424.5 Amortisation 12.0 15.0 16.7 111.5 67.4 EBIT 524.9 588.0 665.9 26.8% 13.2% 2,071.8 2,227.2 7.5% Foreign Exchange Gains/(loss) (137.0) (11.0) 8.3 (475.7) (79.9) Other Income, net (20.8) 12.5 7.1 (53.2) 25.4 Provision for Tax 25.4 128.1 170.1 240.3 480.8 Share of income / (loss) of minority shareholders 0.0 0.0 0.2 0.2 0.1 Net Income 341.8 461.3 510.9 49.5% 10.7% 1,302.7 1,691.8 29.9% Gross Margin 33.1% 32.0% 32.4% 34.7% 31.9% EBITDA Margin 18.6% 17.3% 18.5% 20.4% 17.1% EBIT Margin 15.3% 14.4% 15.5% 16.5% 14.0% Net Income Margin 10.0% 11.3% 11.9% 10.4% 10.7% Earnings Per Share (EPS) - Annualized in US $ Basic 20.2 26.9 29.7 47.2% 10.4% 19.3 24.8 28.1% Diluted 19.8 26.3 29.2 47.3% 10.7% 18.9 24.3 28.6% “Weighted average Number of Shares used in computing EPS” Basic 677,150,453 684,973,440 687,153,050 673,741,835 683,508,571 Diluted 692,126,211 700,495,078 700,936,391 689,471,254 696,437,890 Note: - The above result does not take into account the non cash employee stock options charge computed under FAS 123R, as per details given here:- Quarter Ended Year Ended Particulars (in Rs. Crores) 30-Jun-10 31-Mar-11 30-Jun-11 30-Jun-10 30-Jun-11 Options Charge 24.3 25.5 21.5 92.8 96.9 Tax benefit 0.8 3.1 1.8 5.4 7.8 Option Charge (net-of tax benefit) 23.5 22.4 19.7 87.4 89.1 Outstanding Options (in equivalent no of shares) 30-Jun-10 31-Mar-11 30-Jun-11 Options at market price 15,806,128 10,608,748 9,134,072 Options at less than market price 8,006,468 17,153,764 15,503,052 The options will vest in tranches till 2016 28
- 29. Note: The other income is after taking net negative impact of Rs 18.8 Crores on account of the following :- 1. During the quarter and year ended June 30, 2011, certain pre-acquisition claims provided for in respect of the acquired entities, got settled. Accordingly, the excess provision of Rs. 100.6 Crores was reversed. 2. During the quarter and year ended June 30, 2011 the Company tested all intangibles, keeping in mind its strategy for investment and focus on few service lines which will drive future growth. It also evaluated certain customer related intangibles which were being amortized over their useful life. The evaluation was also done with reference to specific customers acquired through acquisition by re-estimating the cost of capital, revenues, profits and the likely period of relationship. Accordingly the Company recorded a onetime impairment charge of Rs. 119.3 Crores. Segment wise Profitability A. Consolidated IT Services (Software Services [A1] & Infrastructure Services [A2]) Amount in Rs crores Income Statement Quarter ended Growth Year ended Growth 30-Jun-10 31-Mar-11 30-Jun-11 YoY QoQ 30-Jun-10 30-Jun-11 YoY Revenues 3,214.1 3,855.6 4,090.5 27.3% 6.1% 11,569.3 14,982.7 29.5% Direct Costs 2,107.3 2,590.7 2,736.8 7,431.1 10,084.6 Gross Profits 1,106.7 1,265.0 1,353.7 22.3% 7.0% 4,138.2 4,898.1 18.4% SG & A 444.6 551.8 554.7 1,592.7 2,138.2 EBITDA 662.1 713.2 799.0 20.7% 12.0% 2,545.5 2,759.9 8.4% Depreciation 90.0 90.3 99.0 343.5 373.7 Amortisation 17.1 14.8 16.7 110.9 65.2 EBIT 555.0 608.1 683.2 23.1% 12.3% 2,091.0 2,321.0 11.0% Gross Margin 34.4% 32.8% 33.1% 35.7% 32.7% EBITDA Margin 20.6% 18.5% 19.5% 22.0% 18.4% EBIT Margin 17.3% 15.8% 16.7% 18.1% 15.5% B. BPO Services Amount in Rs crores Income Statement Quarter ended Growth Year ended Growth 30-Jun-10 31-Mar-11 30-Jun-11 YoY QoQ 30-Jun-10 30-Jun-11 YoY Revenues 211.3 222.3 213.0 0.8% -4.2% 995.7 872.7 -12.3% Direct Costs 185.0 180.3 172.1 764.6 707.5 Gross Profits 26.3 41.9 40.9 231.1 165.2 SG & A 50.3 49.0 45.1 203.8 206.1 EBITDA (24.0) (7.0) (4.1) 27.3 (40.8) Depreciation 11.2 12.8 13.2 46.0 50.8 Amortisation (5.1) 0.3 - 0.6 2.2 EBIT (30.1) (20.1) (17.3) (19.3) (93.8) Gross Margin 12.5% 18.9% 19.2% 23.1% 18.9% 29
- 30. A1. Software Services Amount in Rs crores Income Statement Quarter ended Growth Year ended Growth 30-Jun-10 31-Mar-11 30-Jun-11 YoY QoQ 30-Jun-10 30-Jun-11 YoY Revenues 2,446.3 2,902.5 3,034.9 24.1% 4.6% 8,916.2 11,285.1 26.6% Direct Costs 1,557.1 1,901.0 1,983.2 5,547.0 7,400.3 Gross Profits 889.2 1,001.5 1,051.6 18.3% 5.0% 3,369.2 3,884.8 15.3% SG & A 371.6 469.8 460.0 1,318.4 1,816.1 EBITDA 517.6 531.6 591.6 14.3% 11.3% 2,050.8 2,068.6 0.9% Depreciation 60.9 58.3 65.3 248.0 248.6 Amortisation 17.1 14.8 16.7 110.9 65.2 EBIT 439.5 458.6 509.5 15.9% 11.1% 1,691.9 1,754.8 3.7% Gross Margin 36.3% 34.5% 34.7% 37.8% 34.4% EBITDA Margin 21.2% 18.3% 19.5% 23.0% 18.3% EBIT Margin 18.0% 15.8% 16.8% 19.0% 15.6% A2. Infrastructure Services Amount in Rs crores Income Statement Quarter ended Growth Year ended Growth 30-Jun-10 31-Mar-11 30-Jun-11 YoY QoQ 30-Jun-10 30-Jun-11 YoY Revenues 767.8 953.1 1,055.7 37.5% 10.8% 2,653.1 3,697.6 39.4% Direct Costs 550.3 689.6 753.5 1,884.2 2,684.2 Gross Profits 217.5 263.5 302.1 38.9% 14.7% 768.9 1,013.4 31.8% SG & A 73.0 81.9 94.7 274.3 322.1 EBITDA 144.5 181.5 207.4 43.5% 14.3% 494.7 691.3 39.7% Depreciation 29.0 32.0 33.7 95.5 125.2 EBIT 115.5 149.5 173.7 50.4% 16.1% 399.1 566.1 41.8% Gross Margin 28.3% 27.6% 28.6% 29.0% 27.4% EBITDA Margin 18.8% 19.0% 19.6% 18.6% 18.7% EBIT Margin 15.0% 15.7% 16.5% 15.0% 15.3% 30
- 31. About HCL Technologies HCL Technologies is a leading global IT services company, working with clients in the areas that impact and redefine the core of their businesses. Since its inception into the global landscape after its IPO in 1999, HCL focuses on ‘transformational outsourcing’, underlined by innovation and value creation, and offers integrated portfolio of services including software-led IT solutions, remote infrastructure management, engineering and R&D services and BPO. HCL leverages its extensive global offshore infrastructure and network of offices in 26 countries to provide holistic, multi-service delivery in key industry verticals including Financial Services, Manufacturing, Consumer Services, Public Services and Healthcare. HCL takes pride in its philosophy of ‘Employee First, Customer Second’ which empowers our 77,046 transformers to create a real value for the customers. HCL Technologies, along with its subsidiaries, had consolidated revenues of US$ 3.5 billion (Rs. 16,034 crores), as on 30 June 2011 (on LTM basis). For more information, please visit www.hcltech.com About HCL Enterprise HCL is a $5.9 billion leading global technology and IT enterprise comprising two companies listed in India - HCL Technologies and HCL Infosystems. Founded in 1976, HCL is one of India's original IT garage start-ups. A pioneer of modern computing, HCL is a global transformational enterprise today. Its range of offerings includes product engineering, custom & package applications, BPO, IT infrastructure services, IT hardware, systems integration, and distribution of information and communications technology (ICT) products across a wide range of focused industry verticals. The HCL team consists of over 80,000 professionals of diverse nationalities, who operate from 31 countries including over 500 points of presence in India. HCL has partnerships with several leading global 1000 firms, including leading IT and technology firms. For more information, please visit www.hcl.com Forward-looking Statements Certain statements in this release are forward-looking statements, which involve a number of risks, uncertainties, assumptions and other factors that could cause actual results to differ materially from those in such forward-looking statements. All statements, other than statements of historical fact are statements that could be deemed forward looking statements, including but not limited to the statements containing the words 'planned', 'expects', 'believes', 'strategy', 'opportunity', 'anticipates', 'hopes' or other similar words. The risks and uncertainties relating to these statements include, but are not limited to, risks and uncertainties regarding impact of pending regulatory proceedings, fluctuations in earnings, our ability to manage growth, intense competition in IT services, Business Process Outsourcing and consulting services including those factors which may affect our cost advantage, wage increases in India, customer acceptances of our services, products and fee structures, our ability to attract and retain highly skilled professionals, our ability to integrate acquired assets in a cost effective and timely manner, time and cost overruns on fixed-price, fixed-time frame contracts, client concentration, restrictions on immigration, our ability to manage our international operations, reduced demand for technology in our key focus areas, disruptions in telecommunication networks, our ability to successfully complete and integrate potential acquisitions, the success of our brand development efforts, liability for damages on our service contracts, the success of the companies / entities in which we have made strategic investments, withdrawal of governmental fiscal incentives, political instability, legal restrictions on raising capital or acquiring companies outside India, and unauthorized use of our intellectual property, other risks, uncertainties and general economic conditions affecting our industry. There can be no assurance that the forward looking statements made herein will prove to be accurate, and issuance of such forward looking statements should not be regarded as a representation by the Company, or any other person, that the objective and plans of the Company will be achieved. All forward looking statements made herein are based on information presently available to the management of the Company and the Company does not undertake to update any forward-looking statement that may be made from time to time by or on behalf of the Company. 31
- 32. Talk to me For details, contact: MEDIA RELATIONS INVESTOR RELATIONS Ajay Davessar Sanjay Mendiratta ajay.davessar@hcl.com sanjay.mendiratta@hcl.com +91 - 9650122336 +91- 9312065108 Deepika Bansal Animesh Aggarwal deepikab@sixdegreespr.co.in animesh.a@hcl.com +91-9811292247 +91- 9560304999 HCL Technologies Ltd., A 10-11, Sector-III, Noida - 201301 www.hcltech.com Hello there. I'm from HCL. We work behind the scenes, helping our customers to shift paradigms & start revolutions. We use digital engineering to build superhuman capabilities. We make sure that the rate of progress far exceeds the price. And right now, over 80,000 of us bright sparks are busy developing solutions for over 500 customers in 31 countries across the world. How can I help you?