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DIRECTOR'S REPORT

HCL Technologies Ltd.

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Market Cap. (₹) 145666.62 Cr. P/BV 3.52 Book Value (₹) 304.98
52 Week High/Low (₹) 1188/920 FV/ML 2/1 P/E(X) 14.39
Bookclosure 17/08/2019 EPS (₹) 74.61 Div Yield (%) 0.74
Year End :2019-03 

Dear Shareholders,

The Directors have immense pleasure in presenting the Twenty Seventh Annual Report of HCL Technologies Limited (“HCL” or the “Company”) together with the audited financial statements for the financial year ended March 31, 2019.

1. FINANCIAL RESULTS

Key highlights of the financial results of your Company prepared as per the Indian Accounting Standards (Ind AS) for the financial year ended March 31, 2019 are as under:

(Rs. in crore)

Particulars

Consolidated

Standalone

Year ended

Year ended

March 31, 2019

March 31, 2018

March 31, 2019

March 31, 2018

Revenue from operations

60,427

50,569

26,012

22,073

Other income

943

1,217

805

702

Total Income

61,370

51,786

26,817

22,775

Total Expenditure

48,748

40,775

16,886

13,650

Profit before tax

12,622

11,024

9,931

9,125

Tax Expense

2,502

2,302

1,746

1,763

Profit for the year

10,120

8,722

8,185

7,362

Other comprehensive income / (loss)

190

260

24

(226)

Total comprehensive income / (loss) for the year

10,310

8,982

8,209

7,136

Earnings per share of Rs. 2 each

Basic (in Rs.)

73.58

62.23

59.69

52.54

Diluted (in Rs.)

73.55

62.19

59.66

52.50

2. BUSINESS OVERVIEW AND STATE OF AFFAIRS

The Company is a leading global IT services company that helps global enterprises re-imagine and transform their businesses through Digital technology transformation. The Company focuses on providing an integrated portfolio of services underlined by its Mode 1-2-3 growth strategy. Mode 1 encompasses the core services in the areas of Applications, Infrastructure, BPO and Engineering and R&D services, leveraging DRYiCE™ Autonomics to transform clients’ business and IT landscape, making them ‘lean’ and ‘agile’. Mode 2 focuses on experience-centric and outcome-oriented integrated offerings of Digital & Analytics, IoT WoRKS™, Cloud Native Services and Cyber security & GRC services to drive business outcomes and enable enterprise digitalization. Mode 3 strategy is ecosystem-driven, creating innovative IP-partnerships to build products and platforms business.

The Company leverages its global network of integrated co-innovation labs and global delivery capabilities to provide holistic multi-service delivery in key industry verticals including Financial Services, Manufacturing, Telecommunications, Media, Publishing, Entertainment, Retail & CPG, Life Sciences & Healthcare, Oil & Gas, Energy & Utilities, Travel, Transportation & Logistics and Government.

During the financial year 2018-19, the Company achieved a revenue from operations of Rs. 26,012 crore on standalone basis and Rs. 60,427 crore on consolidated basis, as compared to Rs. 22,073 crore on standalone basis and Rs. 50,569 crore on consolidated basis for the financial year 2017-18.

During the financial year 2018-19, profit for the year was Rs. 8,185 crore on standalone basis and Rs. 10,120 crore on consolidated basis, as compared to Rs. 7,362 crore on standalone basis and Rs. 8,722 crore on consolidated basis for the financial year 2017-18.

The state of affairs of the Company is presented as part of the Management Discussion and Analysis Report forming part of the Annual Report.

3. DIVIDEND

During the financial year ended March 31, 2019, your Directors had declared and paid four interim dividends as per the details given below:

S. No.

Interim dividend paid during financial year ended March 31, 2019

Date of Declaration

Rate of Dividend per share (face value of Rs. 2 each)

Amount of Dividend paid

Dividend Distribution Tax paid by the Company

Total Outflow

(Rs. in crore)

1

1st Interim Dividend

May 2, 2018

2.00

278.46

57.08

335.54

2

2nd Interim Dividend

July 27, 2018

2.00

278.48

57.08

335.56

3

3rd Interim Dividend

October 23, 2018

2.00

271.23

52.11

323.34

4

4th Interim Dividend

January 29, 2019

2.00

271.25

55.55

326.80

Total

1,099.42

221.82

1,321.24

The Board of Directors in its meeting held on May 9, 2019 declared an interim dividend of Rs. 2 per equity share of face value of Rs. 2 each fully paid-up, for the financial year 2019-20. The Board of Directors did not recommend any final dividend for the financial year ended March 31, 2019.

4. TRANSFER TO GENERAL RESERVES

No amount was transferred to the General Reserves for the financial year ended March 31, 2019.

5. SHARE CAPITAL

During the financial year under review, the Company issued and allotted 3,96,120 fully paid-up equity shares of Rs. 2 each under its Employees Stock Option Plan.

Also, the Company, on October 11, 2018, extinguished / physically destroyed its 3,63,63,636 fully paid-up equity shares of Rs. 2 each consequent to the Buy-back offer of the Company.

Consequently, the issued, subscribed and paid-up share capital of the Company as on March 31, 2019, was Rs. 2,71,25,57,736/- divided into 1,35,62,78,868 equity shares of face value of Rs. 2 each.

6. MANAGEMENT DISCUSSION AND ANALYSIS

The Management Discussion and Analysis Report, in terms of Regulation 34(3) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (the “Listing Regulations”), is attached and forms a part of this Report.

7. ACQUISITIONS

Acquisitions consummated during the financial year 2018-19 are summarized as below -

Telerx Marketing, Inc.

The Company, through its step-down wholly-owned subsidiary HCL America Inc., acquired Telerx Marketing, Inc. (doing business as C3i Solutions), a Delaware company. C3i Solutions is a leader in multi-channel customer engagement services for life sciences and consumer packaged goods industries.

Pursuant to this acquisition, Telerx Marketing, Inc. and all its subsidiaries have become the wholly-owned step-down subsidiaries of the Company with effect from April 06, 2018, being the date of completion of the acquisition.

Actian Corporation

The Company, through its step-down wholly-owned subsidiary HCL America Inc., entered into a Joint Venture agreement dated April 12, 2018 with Sumeru Equity Partners, a technology and growth-focused private equity frm. The purpose of the JV arrangement was to acquire Actian Corporation, a Delaware company. Actian Corporation is a leader in hybrid data management, cloud integration and analytics solutions-powers insight-driven enterprises around the globe.

In terms of the said JV agreement, 80% of the shareholding in the JV company named HCL Technologies SEP Holdings Inc., is held by HCL America Inc., 19.50% is held by Sumeru Equity Partners and the balance 0.5% is held by the CEO of Actian Corporation. The JV Company had a wholly-owned subsidiary, Octavian Acquisition Corp., which ultimately acquired 100% stake in Actian Corporation.

Pursuant to this acquisition, Actian Corporation and its all subsidiaries have become the step-down subsidiaries of the Company with effect from July 17, 2018, being the date of completion of the acquisition.

Honigsberg & Duvel Datentechnik GmbH

The Company, through its step-down wholly-owned subsidiary HCL Technologies Germany GmbH, acquired Honigsberg & Duvel Datentechnik GmbH, an IT and engineering service provider headquartered in Wolfsburg, Germany.

Pursuant to this acquisition, Honigsberg & Duvel Datentechnik GmbH and all its subsidiaries have become the wholly-owned step-down subsidiaries of the Company with effect from October 2, 2018 being the date of completion of acquisition.

IBM Software Products

The Company entered into a definitive agreement with IBM Corporation, USA, for the asset purchase of IBM’s seven software products for an aggregate amount of USD 1.8 billion, across three portfolios - Security – AppScan and BigFix; Marketing - Commerce Software, Unica and DX Software and Collaboration Solutions - Notes/Domino and Connections.

The transaction is expected to close by mid-2019, subject to the completion of applicable regulatory approvals.

Acquisitions after the close of the financial year:

Strong-Bridge Holdings, Inc.

The Company, through its step-down wholly-owned subsidiary HCL America Inc., acquired Strong-Bridge Holdings, Inc. (doing business as Strong-Bridge Envision or SBE), a Delaware company. SBE is a provider of digital transformation strategy consulting, digital / agile program management and organizational change management.

Pursuant to this acquisition, Strong-Bridge Holdings, Inc. and its subsidiaries have become the wholly-owned step-down subsidiaries of the Company with effect from April 1, 2019 being the date of completion of acquisition.

8. SUBSIDIARIES, ASSOCIATES AND JOINT VENTURES

As on March 31, 2019, the Company has 133 subsidiaries and 8 associate companies within the meaning of Sections 2(87) and 2(6) of the Companies Act, 2013 (the “Act”) respectively. There has been no material change in the nature of business of the subsidiaries.

As per the provisions of Section 129(3) of the Act, a statement containing the salient features of the financial statements of the Company’s subsidiaries, associates and joint ventures in Form AOC-1 forms part of this Annual Report.

In accordance with the provisions of Section 136 of the Act and Regulation 46 of the Listing Regulations, the standalone and consolidated financial statements of the Company along with relevant documents and the financial statements in respect of the subsidiaries, are available on the website of the Company. The Company would provide the financial statements of the subsidiaries and the related detailed information to the shareholders on specific request made in this regard by the shareholders.

Subsidiaries incorporated during the year -

- HCL Technologies Vietnam Company Limited, a private limited company, was incorporated under the laws of Vietnam.

- HCL Guatemala, Sociedad Anonima, a private limited company, was incorporated under the laws of Guatemala.

Subsidiaries closed during the year -

- Pursuant to the Merger Agreement dated April 12, 2018, Octavian Acquisition Corp. was merged with and into its wholly-owned subsidiary Actian Corporation, upon the successful completion of the acquisition of Actian Corporation.

- HCL Mortgage Holdings, LLC, a Delaware company, was incorporated by the Company as its step-down wholly-owned subsidiary, solely for the purposes of acquisition of Urban Fulfillment Services LLC. Since the acquisition was successfully completed during the previous financial year, HCL Mortgage Holdings, LLC was voluntarily dissolved during the year.

- Ingres Canada Corporation, a subsidiary of Actian Corporation, became the step-down wholly-owned subsidiary of the Company pursuant to the acquisition of Actian Corporation. However, it was not in operation and was therefore voluntarily dissolved during the year.

Other restructurings during the year -

- Pursuant to the stock transfer agreement(s) executed between HCL America Inc. and HCL Technologies UK Limited, wholly-owned step-down subsidiaries of the Company, the entire shareholding of HCL Italy SRL and HCL Great Britain Limited was transferred from HCL America Inc. to HCL Technologies UK Limited.

- HCL had entered into a joint venture agreement with DXC Technology (DXC) in July 2015 pursuant to which a joint venture company namely CeleritiFinTech Limited was formed, in which the Company held 51% stake through HCL Technologies UK Limited, a wholly-owned step-down subsidiary of the Company and the balance stake was held by DXC. CeleritiFinTech Italy S.r.l was incorporated as a wholly-owned subsidiary of CeleritiFinTech Limited.

With a view to leveraging the capabilities of the Company and DXC, the joint venture arrangement was discontinued w.e.f. September 30, 2017 and the Company entered into a new arrangement (IP Partnership) with DXC. Pursuant to the termination of the JV agreement, the 51% stake held by HCL Technologies UK Limited in CeleritiFinTech Italy S.r.l was transferred to DXC.

9. DIRECTORS AND KEY MANAGERIAL PERSONNEL

The composition of the Board of Directors is in accordance with the provisions of Section 149 of the Act and Regulation 17 of the Listing Regulations, with an optimum combination of Executive, Non-Executive and Independent Directors.

BOARD OF DIRECTORS

As on the date of this Annual Report, the Board of Directors of the Company consists of ten members, of which three are Women Directors. The Board consists of one Wholetime Director and nine Non-Executive Directors of whom eight are Independent Directors. The Whole-time Director is the Promoter Director who is designated as the Chairman & Chief Strategy Officer of the Company.

Appointment(s) / Re-appointment(s)

The Board of Directors of your Company appointed / re-appointed the following Directors during the financial year:

a. Mr. James Philip Adamczyk (DIN - 08151025) was appointed as an Additional Director in the capacity of Independent Director by the Board of Directors of the Company w.e.f. July 26, 2018. Subsequently, at the Twenty Sixth Annual General Meeting (‘AGM’) of the Company held on September 18, 2018, Mr. James Philip Adamczyk was appointed as an Independent Director of the Company in terms of Section 149 of the Act, to hold office for a period of five years.

b. At the Twenty Second AGM of the Company held on December 4, 2014, Mr. R. Srinivasan, Ms. Robin Ann Abrams, Dr. Sosale Shankara Sastry and Mr. S. Madhavan were appointed as Independent Directors of the Company for a period of five consecutive years and therefore, their first term of appointment shall end at the conclusion of the ensuing Twenty Seventh AGM of the Company to be held in the year 2019. Considering their immense contributions towards the Company and pursuant to the recommendations of the Nomination & Remuneration Committee, the Board in its meeting held on May 9, 2019 recommended to the shareholders of the Company, the re-appointment of Mr. R. Srinivasan, Ms. Robin Ann Abrams, Dr. Sosale Shankara Sastry and Mr. S. Madhavan as Independent Directors for a second term of five consecutive years from the conclusion of the Twenty Seventh AGM of the Company scheduled to be held in the year 2019 till the conclusion of the Thirty Second AGM to be held in the year 2024.

The Independent Directors have furnished the certificate of independence stating that they meet the criteria of independence as mentioned under Section 149 (6) of the Act and Regulation 16 (1)(b) of the Listing Regulations. Based on the disclosures received from all Independent Directors and also in the opinion of the Board, the Independent Directors fulfill the conditions as specified in the Act and the Listing Regulations and are independent of the Management.

Retirement by Rotation

In accordance with the provisions of Section 152 of the Act and the Articles of Association of the Company, Mr. Shiv Nadar was re-appointed as the Managing Director of the Company in the category of Non-Retiring Director in the AGM held on September 21, 2017 for a period of five years. However, pursuant to the Articles of Association of the Company, if at any time, the number of Directors liable to retire by rotation fall below one-third of the total number of Directors (excluding Independent Directors), the term of Mr. Shiv Nadar as a Director shall be liable to retire by rotation for the time such number is below one-third.

Currently, the number of Directors liable to retire by rotation has fallen below one-third. Accordingly, Mr. Shiv Nadar shall retire by rotation at the ensuing AGM and being eligible, has offered himself for re-appointment as Director of the Company. However, his term as the Managing Director of the Company would continue uninterrupted post his re-appointment as Director.

Necessary resolutions in respect of re-appointment of Directors mentioned above are included in the Notice convening the ensuing AGM. Your Board recommends the re-appointments of Mr. Shiv Nadar, Mr. R. Srinivasan, Ms. Robin Ann Abrams, Dr. Sosale Shankara Sastry and Mr. S. Madhavan. The particulars in respect of these Directors as required under Regulation 36(3) of the Listing Regulations, are mentioned elsewhere in the Notice of AGM.

Resignations

Mr. Sudhindar Krishan Khanna (DIN - 01529178), who was a Non-Executive Non-Independent Director of the Company, resigned from the Board of the Company w.e.f. April 8, 2019.

The Board placed on record its sincere appreciation and gratitude for Mr. Khanna’s valuable services, guidance and contribution to the Company during his tenure as a member of the Board and its Committees.

KEY MANAGERIAL PERSONNEL

During the financial year under review, Mr. Prateek Aggarwal was appointed as the Chief Financial Officer of the Company on October 1, 2018, in place of Mr. Anil Kumar Chanana, who stepped down from the position of Chief Financial Officer.

The Board placed on record its sincere appreciation and gratitude for Mr. Chanana’s valuable services, guidance and contribution to the Company during his tenure as the Key Managerial Person of the Company.

10. NUMBER OF MEETINGS OF THE BOARD

During the year, nine meetings of the Board of Directors were held. The details of the meetings are provided in the Corporate Governance Report which forms part of this Annual Report.

11. BOARD COMMITTEES

The following 8 (eight) Committees have been constituted by the Board of Directors of the Company:

i) Audit Committee

ii) Corporate Social Responsibility Committee

iii) Nomination & Remuneration Committee

iv) Finance Committee

v) Stakeholders’ Relationship Committee

vi) Employee Stock Options Allotment Committee

vii) Risk Management Committee

viii) Diversity Committee.

The composition of Committees as on March 31, 2019 was as under:

S. No.

Name of the Committee

Composition

1

Audit Committee

Mr. S. Madhavan (Chairman) Mr. Deepak Kapoor Ms. Nishi Vasudeva Ms. Robin Ann Abrams

2

Corporate Social

Ms. Roshni Nadar Malhotra

Responsibility

(Chairperson)

Committee

Mr. Shiv Nadar Mr. S. Madhavan

3

Nomination & Remuneration Committee

Mr. R. Srinivasan (Chairman) Mr. Shiv Nadar Ms. Robin Ann Abrams Ms. Roshni Nadar Malhotra

4

Finance Committee

Mr. S. Madhavan (Chairman)

Mr. Shiv Nadar

Ms. Roshni Nadar Malhotra

Mr. R. Srinivasan

Mr. Sudhindar Krishan Khanna*

5

Stakeholders’ Relationship Committee

Mr. S. Madhavan (Chairman)

Mr. Shiv Nadar

Ms. Roshni Nadar Malhotra

6

Employee Stock Options Allotment Committee

Mr. Shiv Nadar Mr. S. Madhavan Mr. Prateek Aggarwal

7

Risk Management Committee

Mr. S. Madhavan (Chairman) Mr. Deepak Kapoor Ms. Nishi Vasudeva Ms. Robin Ann Abrams

8

Diversity Committee

Ms. Robin Ann Abrams (Chairperson)

Ms. Roshni Nadar Malhotra Mr. Shiv Nadar

*Mr. Sudhindhar Krishan Khanna resigned as a Director of the Company w.e.f. April 8, 2019.

The number of meetings held and other requisite details of the Board Committees are set out in the Corporate Governance Report which forms part of this Annual Report.

12. FAMILIARIZATION PROGRAMME

The details of the familiarization programme have been provided under the Corporate Governance Report which forms part of this Annual Report.

13. BOARD EVALUATION

Pursuant to the provisions of the Act and Listing Regulations, an Annual Performance Evaluation of the Board, its Committees and the individual Directors is to be carried out either by the Board or by the Nomination and Remuneration Committee or by an independent external agency and the Board is required to review its implementation and compliance.

In view of the above, the Annual Performance Evaluation was undertaken by the Board. The framework and criteria of evaluation has been approved by the Nomination & Remuneration Committee of the Company. The process and criteria of evaluation is explained in the Corporate Governance Report, which forms part of this Annual Report.

14. STATUTORY AUDITORS AND STATUTORY AUDITORS’ REPORT

Pursuant to Section 139 of the Act, and the rules made thereunder, it is mandatory to rotate the Statutory Auditors of the Company on the completion of two terms of five consecutive years, as permitted under the said Section.

M/s. S.R. Batliboi& Co. LLP, Chartered Accountants, have been the Statutory Auditors of your Company since the year 2009-10. Their first term of appointment ended at the AGM held on December 4, 2014, at which, they were reappointed as the Statutory Auditors for a second term of five consecutive years. Accordingly, their second term of appointment shall be concluding at the ensuing Twenty Seventh AGM of the Company to be held in the year 2019 and the new Statutory Auditors of the Company will be appointed at the said AGM.

Statutory Auditors’ Report

There are no qualifications, reservations, adverse remarks or disclaimer made by M/s. S.R. Batliboi & Co. LLP, Statutory Auditors in their report for the financial year ended March 31, 2019. The Statutory Auditors have not reported any incident of fraud to the Audit Committee of the Company for the financial year under review.

15. SECRETARIAL AUDITOR AND SECRETARIAL AUDIT REPORT

In terms of Section 204 of the Act, M/s. Chandrasekaran Associates, Practicing Company Secretaries were appointed as the Secretarial Auditor of the Company for the financial year ended March 31, 2019. The report of the Secretarial Auditor is enclosed as Annexure 1 to this Report. The report is self-explanatory and does not call for any further comments. There are no qualifications, reservations, adverse remarks or disclaimer made by the Secretarial Auditor in its report for the financial year ended March 31, 2019.

16. MAINTAINENCE OF COST RECORDS

The Central Government has not prescribed the maintenance of cost records under sub-section (1) of section 148 of the Act, and accordingly, such cost accounts and records are not maintained by the Company.

17. EXTRACT OF ANNUAL RETURN

Pursuant to Section 134(3)(a) and Section 92(3) of the Act, the extract of the Annual Return in Form MGT-9, for the financial year ended March 31, 2019, is enclosed as Annexure 2 to this Report.

18. POLICY ON DIRECTORS’ APPOINTMENT AND REMUNERATION

The Nomination & Remuneration Committee of the Company formulates the criteria for determining the qualifications, positive attributes and independence of Directors in terms of its charter. In evaluating the suitability of individual Board members, the Committee takes into account factors such as educational and professional background, general understanding of the Company’s business dynamics, standing in the profession, personal and professional ethics, integrity and values, willingness to devote sufficient time and energy in carrying out their duties and responsibilities effectively.

The Committee also assesses the independence of Directors at the time of their appointment / re-appointment as per the criteria prescribed under the provisions of the Act and the rules made thereunder and the Listing Regulations.

The Remuneration Policy for Directors, Key Managerial Personnel and other employees is provided in the Corporate Governance Report forming part of this Report.

19. RISK MANAGEMENT POLICY

The Board of Directors of the Company have formed a Risk Management Committee to inter-alia assist the Board in overseeing the responsibilities with regard to identification, evaluation and mitigation of operational, strategic and external environmental risks. In addition, the Audit Committee is also empowered to oversee the areas of risks and controls.

The Company has developed and implemented a Risk Management Policy that ensures appropriate management of risks in line with its internal systems and culture.

20. INTERNAL FINANCIAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company’s internal financial control systems are commensurate with its size and the nature of its operations. The controls are adequate for ensuring orderly and efficient conduct of the business and these controls are working effectively. These controls have been designed to provide reasonable assurance with regard to recording and providing reliable financial and operational information, adherence to the Company’s policies, safeguarding of assets from unauthorized use and prevention and detection of frauds and errors.

21. SIGNIFICANT AND MATERIAL ORDERS

There are no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and Company’s operations in future.

22. PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS

The particulars of loans, guarantees and investments have been disclosed in the financial statements which forms part of this Annual Report.

23. TRANSACTIONS WITH RELATED PARTIES

The particulars of transactions entered into with the related parties referred to in Section 188(1) and applicable rules of the Act, have been given in Annexure 3 in Form AOC-2 which forms part of this Annual Report. The Company also has in place a ‘Related Party Policy’, which is available on the website of the Company at https://www.hcltech.com/ investors/governance-policies.

24. CORPORATE SOCIAL RESPONSIBILITY

The Corporate Social Responsibility (‘CSR’) committee comprises of three members, namely Ms. Roshni Nadar Malhotra, Mr. Shiv Nadar and Mr. S. Madhavan. The Committee is inter-alia responsible for formulating and monitoring the CSR Policy of the Company. A brief outline of the CSR Policy of the Company and the initiatives undertaken by the Company on CSR activities during the year are set out in Annexure 4 of this Report in the form as prescribed under the Companies (Corporate Social Responsibility Policy) Rules, 2014. The CSR Policy is available on the website of the Company at https://www. hcltech.com/investors/governance-policies.

25. DIVIDEND DISTRIBUTION POLICY

The Company has formulated and published a Dividend Distribution Policy which provides for the circumstances under which the shareholders may / may not expect dividend, the financial parameters, internal and external factors, utilization of retained earnings, parameters with regard to different classes of shares etc. The provisions of this Policy are in line with Regulation 43A of the Listing Regulations, and the Policy is available on the website of the Company at https://www.hcltech.com/ investors/governance-policies. The details of the Dividend Distribution Policy forms part of the Corporate Governance Report annexed with this Annual Report.

26. UNCLAIMED DIVIDENDS AND TRANSFER TO IEPF

Pursuant to the provisions of Section 124 of the Act, those dividend amounts which have remained unpaid or unclaimed for a period of seven consecutive years from the date of declaration have been transferred by the Company to the Investor Education and Protection Fund (‘IEPF’) established by the Central Government pursuant to Section 125 of the Act. The details of the unpaid / unclaimed dividend amounts which will be transferred to IEPF in the subsequent years are given in the Corporate Governance Report, annexed with this the Annual Report.

Further, according to the IEPF Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 (the “IEPF Rules”), the shares in respect of which dividends have not been paid or claimed by the shareholders for seven consecutive years or more are also required to be transferred to the demat account created by the IEPF Authority. Accordingly, during the year, the Company transferred 5,945 equity shares to the demat account of the IEPF Authority. The details of such shares are available on the website of the Company at https://www.hcltech.com/investors/iepf-details.

27. DEPOSITS

The Company has not accepted any deposits from the public.

28. CORPORATE GOVERNANCE

The Corporate Governance Report in terms of Regulation 34(3) of the Listing Regulations, along with the Statutory Auditors’ certificate is attached and forms part of this Annual Report.

29. BUSINESS RESPONSIBILITY REPORT

The Listing Regulations mandates the inclusion of Business Responsibility Report (‘BRR’) as part of the Annual Report for top 500 listed companies based on market capitalization. In Compliance with this regulation, the Company has prepared a BRR for the financial year 2018-19 which describes the initiatives taken by the Company from an environmental, social and governance perspective and the same forms part of this Annual Report.

30. INSIDER TRADING REGULATIONS

Pursuant to the provisions of SEBI (Prohibition of Insider Trading) Regulations, 2015 (as amended from time to time), the Company has formulated a Code of Conduct on Prohibition of Insider Trading (‘Insider Trading Code’) and a Code of Practices and Procedures for fair disclosure of Unpublished Price Sensitive Information (‘Fair Disclosure Code’) which are in force. The Fair Disclosure Code is available on the website of the Company at https://www. hcltech.com/investors/governance-policies.

31. AWARDS AND RECOGNITIONS

Your Company relentlessly pursues excellence and is delighted to receive phenomenal share of recognitions and awards this year, not only from the media, but also from analysts, governing bodies, academic institutions, partners and even customers. Some of the key honors received by the Company during the year include:

Awards -

1. The Company was awarded with Outstanding Achievement Award in Automation Implementation at the Asia Outsourcing Leadership Awards 2019 for EXACTO™, which harnesses the latest innovations in AI, Machine Learning and Computer Vision techniques that integrate seamlessly with Robotic Process Automation to create differentiated solutions.

2. The Company was awarded the America’s Partner of the Year award by Dell and was also included in the Dell’s President’s Circle.

3. The Company was awarded the Cisco 2018 Award for Excellence in Software and Cloud.

4. The Company’s solution DRYiCE™ XSM was conferred the ‘Award of Distinction’ at the Open Group Awards for Innovation and Excellence in Kochi in February 2019.

5. The Company was awarded the NASSCOM BPM Customer Excellence Award 2018 in co-creation category for helping its customer, a leading multinational bank and a Financial Services company to bring in customer-centricity with an innovative digital transformation of its Asset Management business and NASSCOM Artificial Intelligence Game Changer Award 2018 for Best 50 Innovative Applications of Artificial Intelligence Solution.

6. HCL Foundation, a CSR arm of the Company, was positioned amongst the top 10 Responsible Businesses in India at the Social and Business Enterprise Responsible Awards 2018 (SABERA). This award is an acknowledgement for the work being done to create a positive and inclusive environment.

7. The Company was awarded the SAP Pinnacle Award 2018 as the ‘GSSP SAP Business Transformation Partner of the Year’.

8. The Company won Silver Award by Brandon Hall group for the Best inclusion & Diversity strategy, Gold Award for the Coaching & Mentoring Program, Silver Award for Best Advance in Employee Engagement Programmes, Bronze Award in Wellness & Benefits Program where we showcased our wellness & wellbeing initiative.

Recognitions -

9. The Company was positioned as a ‘Leader’ in Gartner MQ for Managed Workplace Services, North America and Europe.

10. The Company was positioned as a ‘Leader’ in Gartner MQ for DCO & Hybrid Infrastructure Managed Services, North America and Europe.

11. The Company was positioned as a ‘Leader’ in ISG Provider Lens SIAM / ITSM: Service Design and Transition / Service Information Management.

12. The Company was positioned as a ‘Leader’ in ISG Provider Lens Next-Gen Application Development & Maintenance (ADM) Services - Next Gen ADM, Agile Services and Continuous Testing 2019.

13. The Company was positioned as a ‘Leader’ and ‘Star Performer’ in Everest’s Application Services in Global Banking PEAK Matrix 2018 Assessment.

14. The Company was positioned as a ‘Leader’ in the Forrester Wave™: Global IoT Services Wave for Connected Business Operations, Q4 2018.

15. The Company was positioned as a ‘Leader’ in IDC Market Scape Worldwide DevOps Service, 2018.

16. The Company was positioned as a ‘Leader’ in ISG Provider LensTM Research Quadrant for Digital Business Transformation 2019.

17. The Company was positioned as a ‘Leader’ in ISG Provider Lens™ Research Quadrant for Cyber Security Solutions & Services.

18. The Company was positioned as a ‘Leader’ in Everest IT Infrastructure Services Automation PEAK, 2018.

32. SUSTAINABILITY

The Company believes in a better tomorrow and based on this strong belief has embarked on a sustainability programme. The Company’s continuous focus on improving all aspects of sustainability demonstrates its commitment to a sustainable tomorrow without compromising on the well-being of its employees today. To do this, the Company partners with multiple stakeholders to form an inclusive working group to create policies, processes and other organizational measures. Today, the sustainability function runs a vital program to drive the sustainability vision within the organization.

The ongoing success of the programme depends on a consistent and sustainable vision, ease and flexibility of implementation and most importantly employee engagement. At HCL, sustainability actions are a part of everyday operations. It believes that responsible investments in sustainability will generate long term value for all the stakeholders by improving competitiveness and reducing risk.

Sustainability can be created when we are able to integrate broader societal concerns into business strategy and performance as part of the Company’s business model. This common sense of ownership can be realized by incorporating the interests of all those with whom the Company has mutually dependent relationships.

33. ORGANIZATION EFFECTIVENESS

Employee Strength and Expansion

As we close out another successful year, the Company has reached impressive employee additions and an employee strength of 1,37,965 and continues to build and support the business strategy of “Mode 1, 2 and 3”.

The emphasis and commitment to talent localization continues as can be seen in our employee expansion and tenure milestones in the course of the last financial year. The Company believes that this strategy confers competitive advantages in a tightening regulatory environment with respect to workforce mobility. The Company continues to focus on tapping the unique advantages of tier 2 cities in India. These cities enable higher operational resilience, stability and scalability.

Employee Experience Initiatives

The Company strives to enhance employee experience and equip the workforce with tools and platforms to help accelerate their professional growth. Through “Simplify HR”, a suite of tools has been revamped with simplified functionality to provide an improved user experience. The tools have been simplified and enhanced to automate the talent acquisition, talent integration, talent assessment and employee travel processes. Virtual assistance and “botification” have been enabled across multiple tools.

Talent Acquisition, Talent Development and Career Management

The talent acquisition and talent management practices of the Company are aligned to its Mode 1-2-3 strategy. The Company has leveraged digital technologies to enhance the quality and experience of talent acquisition, talent development and career management programs.

Talent Acquisition

With an impressive gross hiring of about 51,680 professionals across the globe, the Company leveraged artificial intelligence and data science to hire the right talent at the right time. “Intelligent Neural Network” engine was deployed that searches through the database of a million candidate records and supports our talent acquisition along with prescriptive insights.

Talent Development and Career Progression

Talent development offers integrated and comprehensive learning ecosystem focusing on development of HCL ideapreneurs and driving key business outcomes in alignment to the Company’s Mode 1-2-3 strategy. It offers a robust and nurturing learning framework to empower the employees with the relevant skill sets and to become 21st century leaders.

In the past financial year, the Company used demand, fulfilment and learning analytics to create a governance framework that constantly align the demand and learning systems to identify focused skills for the next 2 years and build them at scale. Structured learning journeys have been curated and learning solutions have been designed in partnership with globally benchmarked learning partners offering world class content. An entire gamut of leadership and behavioral learning journeys have also been customized, covering all aspects of defined competencies. These learning programs act as touch-points during an employee’s life-cycle, which positively impacts current performance and productivity in their respective roles and prepares them to be future ready.

The training approach at client and business line level has helped the employees to proactively identify training needs and deepen their skills in new technologies.

In the commitment to engage employees from diverse backgrounds meaningfully, the Company actively supports and fosters a number of Employee Resource Groups (‘ERGs’). These ERGs are led and driven by employees themselves and act as platforms for employees to anchor organizational change and development. The Company also undertakes various employee welfare initiatives that extend to the families of the employees. Details of such initiatives have been given in the Business Responsibility Report, forming part of this Annual Report.

Career Management

The Company’s prescriptive career recommendation platform, leveraging Artificial Intelligence and Big Data achieved further traction during the financial year.

9,000 employees progressed to their destinations in their career journeys during the financial year taking the launch to date count to 17,000.

Diversity and Inclusion

As an organization, the Company believes that diversity inspires creative thinking and leads to sustained innovation within the workplace. The Company prides itself on being an organization with an open, transparent, and inclusive culture. Our focus is to create an inclusive environment for employees with diverse backgrounds combined with concerted efforts from our leaders. It has enabled to improve the diversity ratio at all levels. Our overall gender diversity rate is currently at 24.90%. Our various programs on networking, advocacy and professional development are helping to build an inclusive workforce which goes beyond demographic differences to include gender, nationality, culture, ethnicity, age and the differing abilities of individuals. The Company now has 39% more women in senior leadership roles directly aligned with business heads and gender ratio at senior leadership has just doubled. The Company ensures fair representation of diverse candidates in the hiring process to attract top talent and consider the cognitive diversity while hiring a candidate for the position.

The Company’s Diversity and Inclusion strategy focuses on talent attraction, talent growth and talent retention. These 3 strategies work in tandem to ensure a unifed experience in promoting gender diversity, cultural diversity and inclusivity across the enterprise.

With the aim of enabling strong career development for women, the Company has launched focused programs for women employees at all levels with a special focus on increasing the representation of women leaders in the leadership. These include -

- Stepping Stones - enabling mid-level women managers to connect with leadership and experience learning from globally acclaimed vendors.

- ASCEND Program - provides a platform to women leaders for their career development through range of experiential learning, powering up the network and creating visibility in the leadership forums. The program’s key elements include mentoring by senior leaders, SME guided peer coaching, leadership connect session, virtual learnings enabled by LinkedIn and Harvard.

- PRELUDE - a relatively new program launched with an objective to tap in to existing open positions and mapping with next level role of women leaders specifcally in technical domains.

- Senior Hire Integration - helps integration and assimilation of senior women hiring into the Company’s ecosystem through upwards and lateral coaching by senior leaders, peer buddies and direct reports.

- iBelieve - a program for women who wish to start or restart careers in IT. Eligible candidates enrolling into this program get trained for skilled job opportunities and post the successful completion of the training, they are employed with the Company. The program has received an overwhelming response.

- Networking and Advocacy - iMotivate, Feminspiration, Women Connect, BlogHer are the platforms wherein successful women leaders address the aspiring young leaders, help the employees gain insight into successful leadership as well as understand perspectives on gender matters.

The Company is making conscious efforts to create an environment which is more and more amenable and friendly to our employees. Some of our key initiatives include:

- Facilitating work life balance and flexible work arrangement through policies like Telecommute and Day Care;

- Quarterly lunch meet of senior women leaders with the Board Members;

- Pre and post maternity counselling for managers and new mothers;

- Workshop focusing on inclusion and unconscious biases, inclusion assessments and labs; and

- Women connect group in each geo to promote gender diversity.

Recognition of HCL Culture and Engagement Practices across the world

To reinforce alignment of core beliefs and actions, the Company continues to transform its policies, processes and practices. This has further enabled and empowered the employees, a fact that has been well recognized by various industry forums and leading associations.

- The Company was recognized as the Top Employer in the United Kingdom for the thirteenth consecutive year in recognition of its best-in-class employee engagement and people practices.

- The People Capital Index (PCI) study 2019 announced the Company in the top 50 companies for developing their people capital organized by Jombay.

- In continued recognition of its innovative HR best practices, the Company was felicitated with various Brandon Hall Group Excellence Awards under various categories including ‘Best Advance in Coaching & Mentoring Program’, ‘Best Advance in Leadership Development Strategy’, ‘Best Inclusion & Diversity Strategy’, ‘Best Advance in Employee Engagement Programmes’, ‘Best Advance in Career Management & Succession Planning at Workplace’ and ‘Best in Wellness & Benefts Program’.

34. CONSERVATION OF ENERGY, RESEARCH AND DEVELOPMENT, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO

Disclosures of particulars as required under Section 134(3) (m) of the Act, read with the Companies (Accounts) Rules, 2014 to the extent applicable to the Company, are set out in Annexure 5 to this Annual Report.

35. 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 134(3)(c) of the Act, is annexed as Annexure 6 to this Annual Report.

36. STOCK OPTIONS PLANS

1999 Stock Option Plan / 2000 Stock Option Plan / 2004 Stock Option Plan

The details of these plans have been annexed as Annexure 7 to this Annual Report.

37. PARTICULARS OF EMPLOYEES

The information required pursuant to Section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are given below:

a. The ratio of remuneration of each director to the median remuneration of the employees of the Company for the financial year:

Sl. No.

Name of Director

Ratio to median remuneration of employees

Executive Director(s)

1.

Mr. Shiv Nadar(1)

52.52

Non-Executive Director(s)

2.

Mr. Deepak Kapoor

7.00

3.

Mr. James Philip Adamczyk(2)

-

4.

Mr. Keki Mistry(3)

-

5.

Mr. S. Madhavan

9.01

6.

Ms. Nishi Vasudeva

6.94

7.

Ms. Robin Ann Abrams

13.12

8.

Ms. Roshni Nadar Malhotra

8.38

9.

Dr. Sosale Shankara Sastry

10.29

10.

Mr. R. Srinivasan

12.26

11.

Mr. Sudhindar Krishan Khanna(4)

6.44

12.

Mr. Thomas Sieber

10.29

The remuneration of Non-Executive Directors also includes sitting fees paid during the year.

(1) The ratio has been calculated after taking into account the remuneration drawn from the Company as well as the subsidiaries.

(2) Mr. James Philip Adamczyk was appointed as a Director of the Company w.e.f. July 26, 2018. Hence, the said information is incomparable and not provided.

(3) Mr. Keki Mistry resigned as a Director of the Company w.e.f. April 30, 2018. Hence, the said information is incomparable and not provided.

(4) Mr. Sudhindhar Krishan Khanna resigned as a Director of the Company w.e.f. April 8, 2019.

b. The percentage increase in remuneration of each Director, Chief Executive Officer, Chief Financial Officer, Company Secretary in the financial year:

Sl. No.

Name of Director / KMP

% increase in remuneration in the financial year

Director(s)

1.

Mr. Shiv Nadar(1)

(2.64)

2.

Mr. Deepak Kapoor(2)

-

3.

Mr. James Philip Adamczyk(3)

-

4.

Mr. Keki Mistry<4-

-

5.

Mr. S. Madhavan

4.25

6.

Ms. Nishi Vasudeva

(0.31)

7.

Ms. Robin Ann Abrams

4.04

8.

Ms. Roshni Nadar Malhotra

1.04

9.

Dr. Sosale Shankara Sastry

4.98

10.

Mr. R. Srinivasan

3.77

11.

Mr. Sudhindar Krishan Khanna (5)

0.34

12.

Mr. Thomas Sieber

13.37

Key Managerial Personnel

13.

Mr. C. Vijayakumar (President & Chief Executive Officer)

(15.67)

14.

Mr. Prateek Aggarwal (Chief Financial Officer) (6)

-

15.

Mr. Anil Kumar Chanana (Chief Financial Officer) (6)

-

16.

Mr. Manish Anand (Company Secretary)

20.73

The remuneration of Non-Executive Directors also includes sitting fees paid during the year.

(1) The % has been calculated after taking into account the remuneration drawn from the Company as well as the subsidiaries and the change is on account of exchange rate difference.

(2) Mr. Deepak Kapoor was appointed as a Director of the Company w.e.f. July 26, 2017. Hence, the said information is incomparable and not provided.

(3) Mr. James Philip Adamczyk was appointed as a Director of the Company w.e.f. July 26, 2018. Hence, the said information is incomparable and not provided.

(4) Mr. Keki Mistry resigned as a Director of the Company w.e.f. April 30, 2018. Hence, the said information is incomparable and not provided.

(5) Mr. Sudhindhar Krishan Khanna resigned as a Director of the Company w.e.f. April 8, 2019.

(6) Mr. Prateek Aggarwal was appointed as the CFO of the Company w.e.f. October 1, 2018 in place of Mr. Anil Kumar Chanana who stepped down from the position of CFO. Accordingly, the said information is incomparable and not provided.

c. The percentage increase in the median remuneration of employees in the financial year: 6.4%

d. The number of permanent employees on the rolls of Company:

There were 69,853 permanent employees on the rolls of the Company. In addition, the Company had 68,112 employees on the rolls of its subsidiaries.

e. Average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration:

The average percentile increase made in the salaries of employees other than the managerial personnel in the last financial year was 4.2%.

Mr. Shiv Nadar, being the Managing Director is the managerial person of the Company. There has been no change in the overall remuneration of Mr. Shiv Nadar. Mr. Shiv Nadar receives remuneration from the overseas subsidiaries of the Company, hence, the difference in the remuneration as appearing above of -2.64% is on account of exchange rate difference.

f. Affirmation that the remuneration is as per the remuneration policy of the Company:

The Company affirms that the remuneration is as per the Remuneration Policy of the Company.

38. STATEMENT OF EMPLOYEES PURSUANT TO RULE 5(2) THE COMPANIES (APPOINTMENT AND REMUNERATION OF MANAGERIAL PERSONNEL) RULES, 2014

A list containing the top ten employees in terms of the remuneration drawn in the financial year 2018-19 and a statement containing the names of the employees employed throughout the financial year and in receipt of remuneration of Rs. 1.02 crore or more and employees employed for part of the year and in receipt of Rs. 8.50 lacs or more per month, pursuant to Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is provided as Annexure 8 to this Annual Report.

39. VIGIL MECHANISM / WHISTLEBLOWER POLICY

The Company has formulated and published a Whistleblower Policy to provide Vigil Mechanism for employees including the Directors of the Company to report genuine concerns and to ensure strict compliance with ethical and legal standards across the Company. The provisions of this Policy are in line with the provisions of the Section 177(9) of the Act and the Listing Regulations and is available on the website of the Company at https://www.hcltech. com/investors/governance-policies. The details of the Whistleblower Policy form part of the Corporate Governance Report annexed with this Annual Report.

40. DISCLOSURE UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013

The Company has in place a Prevention and Redressal of Sexual Harassment at Work Place Policy in line with the requirements of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. The Company has constituted an Internal Committee for the redressal of all sexual harassment complaints. These matters are also being reported to the Audit Committee. The details of the Policy and the complaints are given under Corporate Governance Report and the Business Responsibility Report respectively, annexed with this Annual Report.

41. ACKNOWLEDGEMENTS

The Board wishes to place on record its appreciation of the significant contributions made by the employees of the Company and its subsidiaries during the year under review. The Company has achieved impressive growth through competence, hard work, solidarity, cooperation and support of employees at all levels. Your Directors thank the customers, vendors and other business associates for their continued support in the Company’s growth. Your Directors also wish to thank the government authorities, banks and shareholders for their cooperation and assistance extended to the Company.

For and on behalf of the Board of Directors

SHIV NADAR

Chairman & Chief Strategy Officer

Place: Noida (U.P.), India

Date: May 9, 2019

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