Your Directors have immense pleasure in presenting the TwentySeventh Annual Report of HCL Technologies Limited ("HCL" or the"Company") together with the audited fi nancial statements for the fi nancialyear ended March 31 2019.
1. FINANCIAL RESULTS
Key highlights of the fi nancial results of your Company prepared asper the Indian Accounting Standards (Ind AS) for the fi nancial year ended March 31 2019are as under:
| || || || ||(र in crore) |
| || |
|Particulars || |
| ||March 31 2019 ||March 31 2018 ||March 31 2019 ||March 31 2018 |
|Revenue from operations ||60427 ||50569 ||26012 ||22073 |
|Other income ||943 ||1217 ||805 ||702 |
|Total Income ||61370 ||51786 ||26817 ||22775 |
|Total Expenditure ||48748 ||40775 ||16886 ||13650 |
|Profi t before tax ||12622 ||11024 ||9931 ||9125 |
|Tax Expense ||2502 ||2302 ||1746 ||1763 |
|Profi t for the year ||10120 ||8722 ||8185 ||7362 |
|Other comprehensive income / (loss) ||190 ||260 ||24 ||(226) |
|Total comprehensive income / ||10310 ||8982 ||8209 ||7136 |
|(loss) for the year || || || || |
|Earnings per share of र 2 each || || || || |
|Basic (in र) ||73.58 ||62.23 ||59.69 ||52.54 |
|Diluted (in र) ||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 globalenterprises reimagine and transform their businesses through Digital technologytransformation. The Company focuses on providing an integrated portfolio of servicesunderlined by its Mode 123 growth strategy. Mode 1 encompasses the coreservices in the areas of Applications Infrastructure BPO and Engineering and R&Dservices leveraging DRYiCETM Autonomics to transform clients' business and ITlandscape making them lean' and agile'. Mode 2 focuses onexperiencecentric and outcomeoriented integrated offerings of Digital &Analytics IoT WoRKS Cloud Native Services and Cyber security & GRC services todrive business outcomes and enable enterprise digitalization. Mode 3 strategy isecosystemdriven creating innovative IPpartnerships to build products andplatforms business.
The Company leverages its global network of integrated co-innovationlabs and global delivery capabilities to provide holistic multiservice delivery inkey industry verticals including Financial Services Manufacturing TelecommunicationsMedia Publishing Entertainment Retail & CPG Life Sciences & Healthcare Oil& Gas Energy & Utilities Travel Transportation & Logistics and Government.
During the fi nancial year 2018-19 the Company achieved a revenue fromoperations of र 26012 crore on standalone basis and र 60427 crore onconsolidated basis as compared to र 22073 crore on standalone basis and
र 50569 crore on consolidated basis for the fi nancial year2017-18.
During the fi nancial year 2018-19 profi t for the year was
र 8185 crore on standalone basis and र 10120 crore onconsolidated basis as compared to र 7362 crore on standalone basis and र 8722crore on consolidated basis for the fi nancial year 2017-18.
The state of affairs of the Company is presented as part of theManagement Discussion and Analysis Report forming part of the Annual Report.
During the fi nancial year ended March 31 2019 your Directors haddeclared and paid four interim dividends as per the details given below:
|Interim dividend paid during fi nancial year ended March 31 2019 ||Date of Declaration ||Rate of Dividend per share (face value of र 2 each) ||Amount of Dividend paid ||Dividend Distribution Tax paid by the Company (र in crore) ||Total Outfl ow |
|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 ||1099.42 ||221.82 ||1321.24 |
The Board of Directors in its meeting held on May 9 2019 declared aninterim dividend of र 2 per equity share of face value of र 2 each fullypaid-up for the fi nancial year 2019-20. The Board of Directors did not recommend any final dividend for the fi nancial year ended March 31 2019.
4. TRANSFER TO GENERAL RESERVES
No amount was transferred to the General Reserves for the fi nancialyear ended March 31 2019.
5. SHARE CAPITAL
During the fi nancial year under review the Company issued andallotted 396120 fully paid-up equity shares of
र 2 each under its Employees Stock Option Plan.
Also the Company on October 11 2018 extinguished / physicallydestroyed its 36363636 fully paid-up equity shares of र 2 each consequent to theBuy-back offer of the Company.
Consequently the issued subscribed and paid-up share capital of theCompany as on March 31 2019 was र 2712557736/- divided into 1356278868equity shares of face value of र 2 each.
6. MANAGEMENT DISCUSSION AND ANALYSIS
The Management Discussion and Analysis Report in terms of Regulation34(3) of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 (the"Listing Regulations") is attached and forms a part of this Report.
Acquisitions consummated during the fi nancial year 2018-19 aresummarized as below
Telerx Marketing Inc.
The Company through its step-down wholly-owned subsidiary HCL AmericaInc. acquired Telerx Marketing Inc. (doing business as C3i Solutions) a Delawarecompany. C3i Solutions is a leader in multi-channel customer engagement services for lifesciences and consumer packaged goods industries.
Pursuant to this acquisition Telerx Marketing Inc. and all itssubsidiaries have become the wholly-owned step-down subsidiaries of the Company witheffect from April 06 2018 being the date of completion of the acquisition.
The Company through its step-down wholly-owned subsidiary HCL AmericaInc. entered into a Joint Venture agreement dated April 12 2018 with Sumeru EquityPartners a technology and growth-focused private equity fi rm. The purpose of the JVarrangement was to acquire Actian Corporation a Delaware company. Actian Corporation is aleader in hybrid data management cloud integration and analytics solutionspowersinsight-driven enterprises around the globe.
In terms of the said JV agreement 80% of the shareholding in the JVcompany named HCL Technologies SEP Holdings Inc. is held by HCL America Inc. 19.50% isheld by Sumeru Equity Partners and the balance 0.5% is held by the CEO of ActianCorporation. 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 allsubsidiaries have become the step-down subsidiaries of the Company with effect from July17 2018 being the date of completion of the acquisition.
Honigsberg & Duvel Datentechnik GmbH
The Company through its step-down wholly-owned subsidiary HCLTechnologies Germany GmbH acquired Honigsberg & Duvel Datentechnik GmbH an IT andengineering service provider headquartered in Wolfsburg Germany.
Pursuant to this acquisition Honigsberg & Duvel Datentechnik GmbHand all its subsidiaries have become the wholly-owned step-down subsidiaries of theCompany with effect from October 2 2018 being the date of completion of acquisition.
IBM Software Products
The Company entered into a defi nitive agreement with IBM CorporationUSA for the asset purchase of IBM's seven software products for an aggregate amountof 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 thecompletion of applicable regulatory approvals.
Acquisitions after the close of the fi nancial year:
Strong-Bridge Holdings Inc.
The Company through its step-down wholly-owned subsidiary HCL AmericaInc. acquired Strong-Bridge Holdings Inc. (doing business as Strong-Bridge Envision orSBE) a Delaware company. SBE is a provider of digital transformation strategy consultingdigital / agile program management and organizational change management.
Pursuant to this acquisition Strong-Bridge Holdings Inc. and itssubsidiaries have become the wholly-owned step-down subsidiaries of the Company witheffect 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 associatecompanies 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 businessof the subsidiaries.
As per the provisions of Section 129(3) of the Act a statementcontaining the salient features of the fi nancial statements of the Company'ssubsidiaries associates and joint ventures in Form AOC-1 forms part of this AnnualReport.
In accordance with the provisions of Section 136 of the Act andRegulation 46 of the Listing Regulations the standalone and consolidated fi nancialstatements of the Company along with relevant documents and the fi nancial statements inrespect of the subsidiaries are available on the website of the Company. The Companywould provide the fi nancial statements of the subsidiaries and the related detailedinformation to the shareholders on specifi c request made in this regard by theshareholders.
Subsidiaries incorporated during the year
HCL Technologies Vietnam Company Limited a private limited companywas incorporated under the laws of Vietnam.
HCL Guatemala Sociedad Annima a private limited company wasincorporated under the laws of Guatemala.
Subsidiaries closed during the year
Pursuant to the Merger Agreement dated April 12 2018 OctavianAcquisition Corp. was merged with and into its wholly-owned subsidiary Actian Corporationupon the successful completion of the acquisition of Actian Corporation.
HCL Mortgage Holdings LLC a Delaware company was incorporated by theCompany as its step-down wholly-owned subsidiary solely for the purposes of acquisitionof Urban Fulfi llment Services LLC. Since the acquisition was successfully completedduring the previous fi nancial year HCL Mortgage Holdings LLC was voluntarily dissolvedduring the year.
Ingres Canada Corporation a subsidiary of Actian Corporation becamethe step-down wholly-owned subsidiary of the Company pursuant to the acquisition of ActianCorporation. However it was not in operation and was therefore voluntarily dissolvedduring the year.
Other restructurings during the year
Pursuant to the stock transfer agreement(s) executed between HCLAmerica Inc. and HCL Technologies UK Limited wholly-owned step-down subsidiaries of theCompany the entire shareholding of HCL Italy SRL and HCL Great Britain Limited wastransferred 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 CeleritiFinTechLimited was formed in which the Company held 51% stake through HCL Technologies UKLimited a wholly-owned step-down subsidiary of the Company and the balance stake was heldby DXC. CeleritiFinTech Italy S.r.l was incorporated as a wholly-owned subsidiary ofCeleritiFinTech Limited.
With a view to leveraging the capabilities of the Company and DXC thejoint venture arrangement was discontinued w.e.f. September 30 2017 and the Companyentered into a new arrangement (IP Partnership) with DXC. Pursuant to the termination ofthe JV agreement the 51% stake held by HCL Technologies UK Limited in CeleritiFinTechItaly S.r.l was transferred to DXC.
9. DIRECTORS AND KEY MANAGERIAL PERSONNEL
The composition of the Board of Directors is in accordance with theprovisions of Section 149 of the Act and Regulation 17 of the Listing Regulations with anoptimum combination of Executive Non-Executive and Independent Directors.
BOARD OF DIRECTORS
As on the date of this Annual Report the Board of Directors of theCompany consists of ten members of which three are Women Directors. The Board consists ofone Whole-time Director and nine Non-Executive Directors of whom eight are IndependentDirectors. The Whole-time Director is the Promoter Director who is designated as theChairman & Chief Strategy Offi cer of the Company.
Appointment(s) / Re-appointment(s)
The Board of Directors of your Company appointed / re-appointed thefollowing Directors during the fi nancial year:
a. Mr. James Philip Adamczyk (DIN - 08151025) was appointed as anAdditional Director in the capacity of Independent Director by the Board of Directors ofthe 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 wasappointed as an Independent Director of the Company in terms of Section 149 of the Act tohold offi ce for a period of fi ve years.
b. At the Twenty Second AGM of the Company held on December 4 2014Mr. R. Srinivasan Ms. Robin Ann Abrams Dr. Sosale Shankara Sastry and Mr. S. Madhavanwere appointed as Independent Directors of the Company for a period of fi ve consecutiveyears and therefore their fi rst term of appointment shall end at the conclusion of theensuing Twenty Seventh AGM of the Company to be held in the year 2019. Considering theirimmense contributions towards the Company and pursuant to the recommendations of theNomination & Remuneration Committee the Board in its meeting held on May 9 2019recommended to the shareholders of the Company the re-appointment of Mr. R. SrinivasanMs. Robin Ann Abrams Dr. Sosale Shankara Sastry and Mr. S. Madhavan as IndependentDirectors for a second term of fi ve consecutive years from the conclusion of the TwentySeventh AGM of the Company scheduled to be held in the year 2019 till the conclusion ofthe Thirty Second AGM to be held in the year 2024.
The Independent Directors have furnished the certifi cate ofindependence stating that they meet the criteria of independence as mentioned underSection 149 (6) of the Act and Regulation 16 (1)(b) of the Listing Regulations. Based onthe disclosures received from all Independent Directors and also in the opinion of theBoard the Independent Directors fulfi ll the conditions as specifi ed in the Act and theListing Regulations and are independent of the Management.
Retirement by Rotation
In accordance with the provisions of Section 152 of the Act and theArticles of Association of the Company Mr. Shiv Nadar was re-appointed as the ManagingDirector of the Company in the category of Non-Retiring Director in the AGM held onSeptember 21 2017 for a period of fi ve years. However pursuant to the Articles ofAssociation of the Company if at any time the number of Directors liable to retire byrotation fall below one-third of the total number of Directors (excluding IndependentDirectors) the term of Mr. Shiv Nadar as a Director shall be liable to retire by rotationfor the time such number is below one-third.
Currently the number of Directors liable to retire by rotation hasfallen below one-third. Accordingly Mr. Shiv Nadar shall retire by rotation at theensuing AGM and being eligible has offered himself for re-appointment as Director of theCompany. However his term as the Managing Director of the Company would continueuninterrupted post his re-appointment as Director.
Necessary resolutions in respect of re-appointment of Directorsmentioned above are included in the Notice convening the ensuing AGM. Your Boardrecommends the re-appointments of Mr. Shiv Nadar Mr. R. Srinivasan Ms. Robin Ann AbramsDr. Sosale Shankara Sastry and Mr. S. Madhavan. The particulars in respect of theseDirectors as required under Regulation 36(3) of the Listing Regulations are mentionedelsewhere in the Notice of AGM.
Mr. Sudhindar Krishan Khanna (DIN - 01529178) who was a Non-ExecutiveNon-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 forMr. Khanna's valuable services guidance and contribution to the Company during histenure as a member of the Board and its Committees.
KEY MANAGERIAL PERSONNEL
During the fi nancial year under review Mr. Prateek Aggarwal wasappointed as the Chief Financial Offi cer of the Company on October 1 2018 in place ofMr. Anil Kumar Chanana who stepped down from the position of Chief Financial Offi cer.
The Board placed on record its sincere appreciation and gratitude forMr. Chanana's valuable services guidance and contribution to the Company during histenure 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. Thedetails of the meetings are provided in the Corporate Governance Report which forms partof this Annual Report.
11. BOARD COMMITTEES
The following 8 (eight) Committees have been constituted by the Boardof 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 ManagementCommittee viii) Diversity Committee.
The composition of Committees as on March 31 2019 was as under:
|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 Responsibility Committee ||Ms. Roshni Nadar Malhotra (Chairperson) |
| ||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 Companyw.e.f. April 8 2019.
The number of meetings held and other requisite details of the BoardCommittees are set out in the Corporate Governance Report which forms part of this AnnualReport.
12. FAMILIARIZATION PROGRAMME
The details of the familiarization programme have been provided underthe Corporate Governance Report which forms part of this Annual Report.
13. BOARD EVALUATION
Pursuant to the provisions of the Act and Listing Regulations anAnnual Performance Evaluation of the Board its Committees and the individual Directors isto be carried out either by the Board or by the Nomination and Remuneration Committee orby an independent external agency and the Board is required to review its implementationand compliance.
In view of the above the Annual Performance Evaluation was undertakenby 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 isexplained 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 itis mandatory to rotate the Statutory Auditors of the Company on the completion of twoterms of fi ve consecutive years as permitted under the said Section.
M/s. S.R. Batliboi& Co. LLP Chartered Accountants have been theStatutory Auditors of your Company since the year 2009-10. Their fi rst term ofappointment ended at the AGM held on December 4 2014 at which they were reappointed asthe Statutory Auditors for a second term of fi ve consecutive years. Accordingly theirsecond term of appointment shall be concluding at the ensuing Twenty Seventh AGM of theCompany to be held in the year 2019 and the new Statutory Auditors of the Company will beappointed at the said AGM.
Statutory Auditors' Report
There are no qualifi cations reservations adverse remarks ordisclaimer made by M/s. S.R. Batliboi & Co. LLP Statutory Auditors in their reportfor the fi nancial year ended March 31 2019. The Statutory Auditors have not reported anyincident of fraud to the Audit Committee of the Company for the fi nancial year underreview.
15. SECRETARIAL AUDITOR AND SECRETARIAL AUDIT REPORT
In terms of Section 204 of the Act M/s. Chandrasekaran AssociatesPracticing Company Secretaries were appointed as the Secretarial Auditor of the Companyfor the fi nancial year ended March 31 2019. The report of the Secretarial Auditor isenclosed as Annexure 1 to this Report. The report is self-explanatory and does not callfor any further comments. There are no qualifi cations reservations adverse remarks ordisclaimer made by the Secretarial Auditor in its report for the fi nancial year endedMarch 31 2019.
16. MAINTAINENCE OF COST RECORDS
The Central Government has not prescribed the maintenance of costrecords under sub-section (1) of section 148 of the Act and accordingly such costaccounts 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 extractof the Annual Return in Form MGT-9 for the fi nancial year ended March 31 2019 isenclosed as Annexure 2 to this Report.
18. POLICY ON DIRECTORS' APPOINTMENT AND REMUNERATION
The Nomination & Remuneration Committee of the Company formulatesthe criteria for determining the qualifi cations positive attributes and independence ofDirectors in terms of its charter. In evaluating the suitability of individual Boardmembers the Committee takes into account factors such as educational and professionalbackground general understanding of the Company's business dynamics standing in theprofession personal and professional ethics integrity and values willingness to devotesuffi cient time and energy in carrying out their duties and responsibilities effectively.
The Committee also assesses the independence of Directors at the timeof their appointment / re-appointment as per the criteria prescribed under the provisionsof the Act and the rules made thereunder and the Listing Regulations.
The Remuneration Policy for Directors Key Managerial Personnel andother employees is provided in the Corporate Governance Report forming part of thisReport.
19. RISK MANAGEMENT POLICY
The Board of Directors of the Company have formed a Risk ManagementCommittee to inter-alia assist the Board in overseeing the responsibilities with regard toidentifi cation evaluation and mitigation of operational strategic and externalenvironmental risks. In addition the Audit Committee is also empowered to oversee theareas of risks and controls.
The Company has developed and implemented a Risk Management Policy thatensures appropriate management of risks in line with its internal systems and culture.
20. INTERNAL FINANCIAL CONTROL SYSTEMS AND THEIR ADEQUACY
The Company's internal fi nancial control systems are commensuratewith its size and the nature of its operations. The controls are adequate for ensuringorderly and effi cient conduct of the business and these controls are working effectively.These controls have been designed to provide reasonable assurance with regard to recordingand providing reliable fi nancial and operational information adherence to theCompany's policies safeguarding of assets from unauthorized use and prevention anddetection of frauds and errors.
21. SIGNIFICANT AND MATERIAL ORDERS
There are no signifi cant and material orders passed by the regulatorsor courts or tribunals impacting the going concern status and Company's operations infuture.
22. PARTICULARS OF LOANS GUARANTEES AND INVESTMENTS
The particulars of loans guarantees and investments have beendisclosed in the fi nancial statements which forms part of this Annual Report.
23. TRANSACTIONS WITH RELATED PARTIES
The particulars of transactions entered into with the related partiesreferred to in Section 188(1) and applicable rules of the Act have been given in Annexure3 in Form AOC-2 which forms part of this Annual Report. The Company also has in place aRelated Party Policy' which is available on the website of the Company athttps://www.hcltech.com/ investors/governance-policies.
24. CORPORATE SOCIAL RESPONSIBILITY
The Corporate Social Responsibility (CSR') committeecomprises 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 CSRPolicy of the Company. A brief outline of the CSR Policy of the Company and theinitiatives undertaken by the Company on CSR activities during the year are set out inAnnexure 4 of this Report in the form as prescribed under the Companies (Corporate SocialResponsibility Policy) Rules 2014. The CSR Policy is available on the website of theCompany at https://www. hcltech.com/investors/governance-policies.
25. DIVIDEND DISTRIBUTION POLICY
The Company has formulated and published a Dividend Distribution Policywhich provides for the circumstances under which the shareholders may / may not expectdividend the fi nancial parameters internal and external factors utilization ofretained earnings parameters with regard to different classes of shares etc. Theprovisions of this Policy are in line with Regulation 43A of the Listing Regulations andthe 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 partof 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 dividendamounts which have remained unpaid or unclaimed for a period of seven consecutive yearsfrom the date of declaration have been transferred by the Company to the InvestorEducation and Protection Fund (IEPF') established by the Central Governmentpursuant to Section 125 of the Act. The details of the unpaid / unclaimed dividend amountswhich will be transferred to
IEPF in the subsequent years are given in the Corporate GovernanceReport annexed with this the Annual Report.
Further according to the IEPF Authority (Accounting Audit Transferand Refund) Rules 2016 (the "IEPF Rules") the shares in respect of whichdividends have not been paid or claimed by the shareholders for seven consecutive years ormore are also required to be transferred to the demat account created by the IEPFAuthority. Accordingly during the year the Company transferred 5945 equity shares tothe demat account of the IEPF Authority. The details of such shares are available on thewebsite of the Company at https://www.hcltech.com/investors/iepf-details.
The Company has not accepted any deposits from the public.
28. CORPORATE GOVERNANCE
The Corporate Governance Report in terms of Regulation 34(3) of theListing Regulations along with the Statutory Auditors' certifi cate is attached andforms part of this Annual Report.
29. BUSINESS RESPONSIBILITY REPORT
The Listing Regulations mandates the inclusion of BusinessResponsibility Report (BRR') as part of the Annual Report for top 500 listedcompanies based on market capitalization. In Compliance with this regulation the Companyhas prepared a BRR for the fi nancial year 2018-19 which describes the initiatives takenby the Company from an environmental social and governance perspective and the same formspart 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 ofConduct on Prohibition of Insider Trading (Insider Trading Code') and a Code ofPractices and Procedures for fair disclosure of Unpublished Price Sensitive Information(Fair Disclosure Code') which are in force. The Fair Disclosure Code isavailable 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 toreceive phenomenal share of recognitions and awards this year not only from the mediabut also from analysts governing bodies academic institutions partners and evencustomers. Some of the key honors received by the Company during the year include:
1. The Company was awarded with Outstanding Achievement Award inAutomation Implementation at the Asia Outsourcing Leadership Awards 2019 for EXACTOwhich harnesses the latest innovations in AI Machine Learning and Computer Visiontechniques that integrate seamlessly with Robotic Process Automation to createdifferentiated solutions.
2. The Company was awarded the America's Partner of the Year awardby Dell and was also included in the Dell's President's Circle.
3. The Company was awarded the Cisco 2018 Award for Excellence inSoftware and Cloud.
4. The Company's solution DRYiCE XSM was conferred theAward of Distinction' at the Open Group Awards for Innovation and Excellence inKochi in February 2019.
5. The Company was awarded the NASSCOM BPM Customer Excellence Award2018 in co-creation category for helping its customer a leading multinational bank and aFinancial Services company to bring in customer-centricity with an innovative digitaltransformation of its Asset Management business and NASSCOM Artifi cial Intelligence GameChanger Award 2018 for Best 50 Innovative Applications of Artifi cial IntelligenceSolution.
6. HCL Foundation a CSR arm of the Company was positioned amongst thetop 10 Responsible Businesses in India at the Social and Business Enterprise ResponsibleAwards 2018 (SABERA). This award is an acknowledgement for the work being done to create apositive and inclusive environment.
7. The Company was awarded the SAP Pinnacle Award 2018 as theGSSP SAP Business Transformation Partner of the Year'.
8. The Company won Silver Award by Brandon Hall group for the Bestinclusion & Diversity strategy Gold Award for the Coaching & Mentoring ProgramSilver Award for Best Advance in Employee Engagement Programmes Bronze Award in Wellness& Benefi ts Program where we showcased our wellness & wellbeing initiative.
9. The Company was positioned as a Leader' in Gartner MQ forManaged Workplace Services North America and Europe.
10. The Company was positioned as a Leader' in Gartner MQfor DCO & Hybrid Infrastructure Managed Services North America and Europe.
11. The Company was positioned as a Leader' in ISG ProviderLens SIAM / ITSM: Service Design and Transition / Service Information Management.
12. The Company was positioned as a Leader' in ISG ProviderLens Next-Gen Application Development & Maintenance (ADM) Services Next GenADM Agile Services and Continuous Testing 2019.
13. The Company was positioned as a Leader' and StarPerformer' in Everest's Application Services in Global Banking PEAK Matrix 2018Assessment.
14. The Company was positioned as a Leader' in the ForresterWaveTM: Global IoT Services Wave for
Connected Business Operations Q4 2018.
15. The Company was positioned as a Leader' in IDC MarketScape Worldwide DevOps Service 2018.
16. The Company was positioned as a Leader' in ISG ProviderLensTM Research Quadrant for Digital
Business Transformation 2019.
17. The Company was positioned as a Leader' in ISG ProviderLensTM Research Quadrant for Cyber Security Solutions & Services.
18. The Company was positioned as a Leader' in Everest ITInfrastructure Services Automation PEAK 2018.
The Company believes in a better tomorrow and based on this strongbelief has embarked on a sustainability programme. The Company's continuous focus onimproving all aspects of sustainability demonstrates its commitment to a sustainabletomorrow without compromising on the well-being of its employees today. To do this theCompany partners with multiple stakeholders to form an inclusive working group to createpolicies processes and other organizational measures. Today the sustainability functionruns a vital program to drive the sustainability vision within the organization.
The ongoing success of the programme depends on a consistent andsustainable vision ease and fl exibility of implementation and most importantly employeeengagement. At HCL sustainability actions are a part of everyday operations. It believesthat responsible investments in sustainability will generate long term value for all thestakeholders by improving competitiveness and reducing risk.
Sustainability can be created when we are able to integrate broadersocietal concerns into business strategy and performance as part of the Company'sbusiness model. This common sense of ownership can be realized by incorporating theinterests 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 reachedimpressive employee additions and an employee strength of 137965 and continues to buildand support the business strategy of "Mode 1 2 and 3".
The emphasis and commitment to talent localization continues as can beseen in our employee expansion and tenure milestones in the course of the last fi nancialyear. The Company believes that this strategy confers competitive advantages in atightening regulatory environment with respect to workforce mobility. The Companycontinues to focus on tapping the unique advantages of tier 2 cities in India. Thesecities enable higher operational resilience stability and scalability.
Employee Experience Initiatives
The Company strives to enhance employee experience and equip theworkforce with tools and platforms to help accelerate their professional growth. Through"Simplify HR" a suite of tools has been revamped with simplifi ed functionalityto provide an improved user experience. The tools have been simplifi ed and enhanced toautomate the talent acquisition talent integration talent assessment and employee travelprocesses. Virtual assistance and "botifi cation" have been enabled acrossmultiple tools.
Talent Acquisition Talent Development and Career Management
The talent acquisition and talent management practices of the Companyare aligned to its Mode 1-2-3 strategy. The Company has leveraged digital technologies toenhance the quality and experience of talent acquisition talent development and careermanagement programs.
With an impressive gross hiring of about 51680+ professionals acrossthe globe the Company leveraged artifi cial intelligence and data science to hire theright talent at the right time. "Intelligent Neural Network" engine was deployedthat searches through the database of a million+ candidate records and supports our talentacquisition along with prescriptive insights.
Talent Development and Career Progression
Talent development offers integrated and comprehensive learningecosystem focusing on development of HCL
ideapreneurs and driving key business outcomes in alignment to theCompany's Mode 1-2-3 strategy. It offers a robust and nurturing learning framework toempower the employees with the relevant skill sets and to become 21st century leaders.
In the past fi nancial year the Company used demand fulfi lment andlearning analytics to create a governance framework that constantly align the demand andlearning 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 designedin partnership with globally benchmarked learning partners offering world class content.An entire gamut of leadership and behavioral learning journeys have also been customizedcovering all aspects of defi ned competencies. These learning programs act as touch-pointsduring an employee's life-cycle which positively impacts current performance andproductivity in their respective roles and prepares them to be future ready.
The training approach at client and business line level has helped theemployees to proactively identify training needs and deepen their skills in newtechnologies.
In the commitment to engage employees from diverse backgroundsmeaningfully the Company actively supports and fosters a number of Employee ResourceGroups (ERGs'). These ERGs are led and driven by employees themselves and actas platforms for employees to anchor organizational change and development. The Companyalso undertakes various employee welfare initiatives that extend to the families of theemployees. Details of such initiatives have been given in the Business ResponsibilityReport forming part of this Annual Report.
The Company's prescriptive career recommendation platformleveraging Artifi cial Intelligence and Big Data achieved further traction during the financial year.
9000 employees progressed to their destinations in their careerjourneys during the fi nancial year taking the launch to date count to 17000.
Diversity and Inclusion
As an organization the Company believes that diversity inspirescreative thinking and leads to sustained innovation within the workplace. The Companyprides itself on being an organization with an open transparent and inclusive culture.Our focus is to create an inclusive environment for employees with diverse backgroundscombined with concerted efforts from our leaders. It has enabled to improve the diversityratio at all levels. Our overall gender diversity rate is currently at 24.90%. Our variousprograms on networking advocacy and professional development are helping to build aninclusive workforce which goes beyond demographic differences to include gendernationality culture ethnicity age and the differing abilities of individuals. TheCompany now has 39% more women in senior leadership roles directly aligned with businessheads and gender ratio at senior leadership has just doubled. The Company ensures fairrepresentation of diverse candidates in the hiring process to attract top talent andconsider the cognitive diversity while hiring a candidate for the position.
The Company's Diversity and Inclusion strategy focuses on talentattraction talent growth and talent retention. These 3 strategies work in tandem toensure a unifi ed experience in promoting gender diversity cultural diversity andinclusivity across the enterprise.
With the aim of enabling strong career development for womenthe Company has launched focused programs for women employees at all levels with a specialfocus on increasing the representation of women leaders in the leadership. These include -
Stepping Stones - enabling mid-level women managers to connectwith leadership and experience learning from globally acclaimed vendors.
ASCEND Program - provides a platform to women leaders for theircareer development through range of experiential learning powering up the network andcreating visibility in the leadership forums. The program's key elements includementoring by senior leaders SME guided peer coaching leadership connect session virtuallearnings enabled by LinkedIn and Harvard.
PRELUDE - a relatively new program launched with an objective totap in to existing open positions and mapping with next level role of women leadersspecifi cally in technical domains.
Senior Hire Integration - helps integration and assimilation ofsenior women hiring into the Company's ecosystem through upwards and lateral coachingby senior leaders peer buddies and direct reports.
iBelieve - a program for women who wish to start or restartcareers in IT. Eligible candidates enrolling into this program get trained for skilled jobopportunities and post the successful completion of the training they are employed withthe Company. The program has received an overwhelming response.
Networking and Advocacy - iMotivate Feminspiration WomenConnect BlogHer are the platforms wherein successful women leaders address the aspiringyoung leaders help the employees gain insight into successful leadership as well asunderstand perspectives on gender matters.
The Company is making conscious efforts to create an environment whichis more and more amenable and friendly to our employees. Some of our key initiativesinclude:
Facilitating work life balance and fl exible work arrangement throughpolicies 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 inclusionassessments 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 Companycontinues to transform its policies processes and practices. This has further enabled andempowered the employees a fact that has been well recognized by various industry forumsand leading associations.
The Company was recognized as the Top Employer in the United Kingdomfor the thirteenth consecutive year in recognition of its best-in-class employeeengagement and people practices.
The People Capital Index (PCI) study 2019 announced the Company inthe top 50 companies for developing their people capital organized by Jombay.
In continued recognition of its innovative HR best practices theCompany was felicitated with various
Brandon Hall Group Excellence Awards under various categoriesincluding Best Advance in Coaching & Mentoring Program' Best Advancein Leadership Development Strategy' Best Inclusion
& Diversity Strategy' Best Advance in EmployeeEngagement Programmes' Best Advance in Career Management & SuccessionPlanning at Workplace' and Best in Wellness & Benefi ts Program'.
34. CONSERVATION OF ENERGY RESEARCH AND DEVELOPMENT TECHNOLOGYABSORPTION FOREIGN EXCHANGE EARNINGS AND OUTGO
Disclosures of particulars as required under Section 134(3) (m) of theAct read with the Companies (Accounts) Rules 2014 to the extent applicable to theCompany are set out in Annexure 5 to this Annual Report.
35. DIRECTORS' RESPONSIBILITY STATEMENT
A statement of responsibility of the Directors relating to compliancewith the fi nancial accounting and reporting requirements in respect of the fi nancialstatements as specifi ed under Section 134(3)(c) of the Act is annexed as Annexure 6 tothis Annual Report.
36. STOCK OPTIONS PLANS
1999 Stock Option Plan / 2000 Stock Option Plan / 2004 Stock OptionPlan
The details of these plans have been annexed as Annexure 7 to thisAnnual Report.
37. PARTICULARS OF EMPLOYEES
The information required pursuant to Section 197(12) of the Act readwith 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 medianremuneration of the employees of the Company for the fi nancial year:
|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 feespaid during the year.
(1) The ratio has been calculated after taking into account theremuneration drawn from the Company as well as the subsidiaries.
(2) Mr. James Philip Adamczyk was appointed as a Director of theCompany w.e.f. July 26 2018. Hence the said information is incomparable and notprovided.
(3) Mr. Keki Mistry resigned as a Director of the Company w.e.f. April30 2018. Hence the said information is incomparable and not provided.
(4) Mr. Sudhindhar Krishan Khanna resigned as a Director of the Companyw.e.f. April 8 2019.
b. The percentage increase in remuneration of each Director ChiefExecutive Offi cer Chief Financial Offi cer Company Secretary in the fi nancial year:
|Name of Director / KMP ||% increase in remuneration in the fi nancial 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 Offi cer) ||(15.67) |
|14. Mr. Prateek Aggarwal (Chief Financial Offi cer) (6) ||- |
|15. Mr. Anil Kumar Chanana (Chief Financial Offi cer) (6) ||- |
|16. Mr. Manish Anand (Company Secretary) ||20.73 |
The remuneration of Non-Executive Directors also includes sitting feespaid during the year.
(1) The % has been calculated after taking into account theremuneration drawn from the Company as well as the subsidiaries and the change is onaccount 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 theCompany w.e.f. July 26 2018. Hence the said information is incomparable and notprovided.
(4) Mr. Keki Mistry resigned as a Director of the Company w.e.f. April30 2018. Hence the said information is incomparable and not provided.
(5) Mr. Sudhindhar Krishan Khanna resigned as a Director of the Companyw.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 ofCFO. Accordingly the said information is incomparable and not provided.
c. The percentage increase in the median remuneration of employees inthe fi nancial year: 6.4%
d. The number of permanent employees on the rolls of Company:
There were 69853 permanent employees on the rolls of the Company. Inaddition the Company had 68112 employees on the rolls of its subsidiaries.
e. Average percentile increase already made in the salaries ofemployees other than the managerial personnel in the last fi nancial year and itscomparison with the percentile increase in the managerial remuneration and justifi cationthereof and point out if there are any exceptional circumstances for increase in themanagerial remuneration:
The average percentile increase made in the salaries of employees otherthan the managerial personnel in the last fi nancial year was 4.2%.
Mr. Shiv Nadar being the Managing Director is the managerial person ofthe 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 thedifference in the remuneration as appearing above of -2.64% is on account of exchange ratedifference.
f. Affi rmation that the remuneration is as per the remuneration policyof the Company:
The Company affi rms that the remuneration is as per the RemunerationPolicy 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 remunerationdrawn in the fi nancial year 2018-19 and a statement containing the names of the employeesemployed throughout the fi nancial year and in receipt of remuneration of र 1.02crore or more and employees employed for part of the year and in receipt of र 8.50lacs or more per month pursuant to Rule 5(2) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 is provided as Annexure 8 to this AnnualReport.
39. VIGIL MECHANISM / WHISTLEBLOWER POLICY
The Company has formulated and published a Whistleblower Policy toprovide Vigil Mechanism for employees including the Directors of the Company to reportgenuineconcernsandtoensurestrictcompliancewithethical and legal standards across theCompany. The provisions of this Policy are in line with the provisions of the Section177(9) of the Act and the Listing Regulations and is available on the website of theCompany at https://www.hcltech. com/investors/governance-policies. The details of theWhistleblower Policy form part of the Corporate Governance Report annexed with this AnnualReport.
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 SexualHarassment at Work Place Policy in line with the requirements of Sexual Harassment ofWomen at Workplace (Prevention Prohibition and Redressal) Act 2013. The Company hasconstituted 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 Policyand the complaints are given under Corporate Governance Report and the BusinessResponsibility Report respectively annexed with this Annual Report.
The Board wishes to place on record its appreciation of the significant contributions made by the employees of the Company and its subsidiaries during theyear under review. The Company has achieved impressive growth through competence hardwork solidarity cooperation and support of employees at all levels. Your Directors thankthe customers vendors and other business associates for their continued support in theCompany's growth. Your Directors also wish to thank the government authorities banksand shareholders for their cooperation and assistance extended to the Company.
|For and on behalf of the Board of Directors |
|SHIV NADAR |
|Chairman & Chief Strategy Offi cer |
|Place: Noida (U.P.) India |
|Date: May 9 2019 |