MIRA
INFORM REPORT
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Report Date : |
31.12.2008 |
IDENTIFICATION DETAILS
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Name : |
HCL TECHNOLOGIES LIMITED |
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Registered Office : |
806, Siddharth, 96, |
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Country : |
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Financials (as on) : |
30.06.2008 |
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Date of Incorporation : |
12.11.1991 |
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Com. Reg. No.: |
46369 |
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CIN No.: [Company
Identification No.] |
L74140DL1991PLC046369 |
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TAN No.: [Tax
Deduction & Collection Account No.] |
DELH01586E |
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Legal Form : |
Public Limited Liability Company. The Company shares are listed on the
stock exchange. |
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Line of Business : |
Subject is a global technology and software service company offering
a suite of services targeted at technology vendors, software product
companies and organisations. |
RATING & COMMENTS
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MIRA’s Rating : |
A |
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RATING |
STATUS |
PROPOSED CREDIT LINE |
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56-70 |
A |
Financial & operational base are regarded healthy. General
unfavourable factors will not cause fatal effect. Satisfactory capability for
payment of interest and principal sums |
Fairly Large |
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Maximum Credit Limit : |
USD 160000000 |
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Status : |
Good |
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Payment Behaviour : |
Regular |
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Litigation : |
Clear |
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Comments : |
Subject is a well-established and reputed company having satisfactory
track records. Trade relations are fair. Business is active. General financial
position is good. Payments are reported as usually correct and as per
commitments. The company can be considered good for normal business dealings. |
LOCATIONS
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Registered Office : |
806, Siddharth, 96, |
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Tel. No.: |
91-11-26444812 |
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Fax No.: |
91-11-26436336 |
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Website : |
DIRECTORS
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Name : |
Mr. Shiv Nadar |
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Designation : |
Chairman and Chief Strategy Officer |
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Name : |
Mr. Vineet Nayar |
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Designation : |
Chief Executive Officer and Whole-time Director |
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Name : |
Mr. T. S. R. Subramanian |
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Designation : |
Non-Executive Director |
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Name : |
Ms. Robin Abrams |
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Designation : |
Non-Executive Director |
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Name : |
Mr. Ajai Chowdhry |
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Designation : |
Non-Executive Director |
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Name : |
Mr. Subroto Bhattacharya |
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Designation : |
Non-Executive Director |
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Name : |
Mr. Amal Ganguli |
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Designation : |
Non-Executive Director |
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Name : |
Mr. P. C. Sen |
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Designation : |
Non-Executive Director |
MAJOR SHAREHOLDERS / SHAREHOLDING PATTERN
(As on 30.09.2008)
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Category |
No. of Shares |
Percentage of
Holding |
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Shareholding of Promoter and Promoter Group |
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Indian |
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Bodies Corporate |
327771491 |
49.02 |
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Directors & their
Relatives |
394 |
0.00 |
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- Trust |
11259 |
0.00 |
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Foreign |
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Individuals (Non-Resident individuals/Foreign Individuals) |
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Bodies Corporate |
122259208 |
18.28 |
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Public shareholding |
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Institutions |
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Mutual Funds/UTI |
12655820 |
1.89 |
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Financial Institutions/ Banks |
412344 |
0.06 |
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Insurance Companies |
18622127 |
2.78 |
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Foreign Institutional Investors |
118287928 |
17.69 |
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- Foreign Bank |
7988434 |
1.19 |
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Non-institutions |
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Bodies Corporate |
16962997 |
2.54 |
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Individuals |
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I. Individual shareholders holding nominal share capital up to Rs.
0.100 million |
23515077 |
3.52 |
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II. Individual shareholders holding nominal share capital in excess of
Rs. 1 0.100 million |
4850532 |
0.73 |
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Any Other |
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- Trust |
2707 |
0.00 |
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Directors &
their Relatives |
2094836 |
0.31 |
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Foreign Nationals |
119236 |
0.02 |
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Non-Resident
Indians |
3669285 |
0.55 |
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Overseas Corporate
Bodies |
8825238 |
1.32 |
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Clearing Members |
448308 |
0.07 |
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Hindu Undivided
Families |
184599 |
0.03 |
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GRAND TOTAL |
668681820 |
100.00 |
BUSINESS DETAILS
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Line of Business : |
Subject is a global technology and software service company offering
a suite of services targeted at technology vendors, software product
companies and organisations. |
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Products : |
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GENERAL INFORMATION
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Customers : |
·
Accenture ·
AG Life Insurance ·
Air ·
British Telecom ·
Cisco Systems ·
Compaq ·
Credit Suisse
First ·
ECRI ·
ECM ·
·
Hewlett-Packard ·
·
IBM Global
Services ·
Johnson and
Johnson ·
LexisNexis ·
Lockheed Martin ·
Marconi ·
Mercedes-Benz ·
NTT Data ·
Panasonic ·
Parket Hannifin ·
Samsung ·
Seagate Technolog ·
Standard Chartered
Grindlays Bank ·
Sun Microsystems ·
Toshiba ·
World Bank |
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Bankers : |
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Citibank, N.A. Global Corporate and Investment Banking, DLF Centre, 5th Floor,
Parliament Street, New Delhi–110 001, ·
Deutsche Bank AG Corp. Office – ·
Standard
Chartered Bank Corporate and Institutional Banking, Credit Operations, ·
ICICI Bank
Limited ·
HDFC Bank
Limited B-6/3, Safdarjung Enclave, DDA Commercial
Complex, Opp. |
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Facilities : |
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Banking
Relations : |
Good |
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Auditors : |
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Name : |
Price Waterhouse Chartered Accountants |
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Address : |
Gurgaon |
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Subsidiaries : |
·
HCL America Inc., ·
HCL Great Britain Limited, ·
HCL ( ·
HCL ·
HCL ·
HCL ·
HCL Comnet Limited, ·
HCL Bermuda Limited, ·
HCL Holdings ·
HCL Enterprise Solutions Limited, ·
Intelicent India Limited, ·
DSI Financial Solutions Pte. Limited, ·
HCL BPO Services (NI) Limited, ·
HCL Jones Technologies (Bermuda) Limited, ·
HCL Technologies ( ·
HCL America Inc., ·
HCL Great Britain Limited, ·
HCL ( ·
HCL ·
HCL ·
HCL ·
HCL Australia Services Pty. Limited, ·
HCL ( ·
HCL Hong Kong SAR Limited, ·
HCL Comnet Systems and Services Limited, ·
HCL Comnet Limited, ·
HCL Bermuda Limited, ·
Intelicent India Limited, ·
HCL Jones Technologies (Bermuda) Limited, ·
HCL ·
HCL ( ·
HCL EAI Services Limited, ·
HCL Technoparks Limited, ·
HCL BPO Services (NI) Limited, ·
HCL Technologies ( ·
HCL ·
HCL EAI Services Inc., |
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Holding Company : |
HCL Corporation Limited |
CAPITAL STRUCTURE
(As on 30.06.2008)
Authorised Capital :
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No. of Shares |
Type |
Value |
Amount |
|
750000000 |
Equity Shares |
Rs.2/- each |
Rs.1500.000 millions |
Issued, Subscribed & Paid-up Capital :
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No. of Shares |
Type |
Value |
Amount |
|
666340272 |
Equity Shares |
Rs.2/- each |
Rs.1332.700
millions |
Notes
·
Paid up share
capital includes:
a
84899958 (previous year 84,899,958) equity shares
of Rs. 2 each allotted as fully paid up, pursuant to contracts for
consideration other than cash.
b
82986872 (previous year 82,986,872) equity shares
of Rs. 2 each issued as bonus shares in ratio of one share for every two held
by capitalisation of general reserve and 325453918 (previous year 325453918)
equity shares of Rs. 2 each issued as bonus shares in ratio of one share for
every share held by capitalisation of securities premium account.
c
39866246 (previous year 39130762) equity shares of
Rs. 2 each allotted to employees of the Company and its subsidiaries on
exercising of vested stock options issued under Employee Stock Option Plan 1999
of the Company.
d
16310380 (previous year 15241280) equity shares of
Rs. 2 each allotted to employees of the Company and its subsidiaries on
exercising of vested stock options issued under Employee Stock Option Plan 2000
of the Company.
e
2540548 (previous year 1,687,976) equity shares of
Rs. 2 each allotted to employees of the Company and its subsidiaries on
exercising of vested stock options issued under Employee Stock Option Plan 2004
of the Company.
·
HCL Corporation Limited, which ceased to be the
Holding Company w.e.f. 27 March 2007, held 326003539 (previous year 326015674)
equity shares on the date of the Balance Sheet
FINANCIAL DATA
[all figures are
in Rupees Millions]
ABRIDGED BALANCE
SHEET
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SOURCES OF FUNDS |
30.06.2008 |
30.06.2007 |
30.06.2006 |
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SHAREHOLDERS FUNDS |
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1] Share Capital |
1332.700 |
1327.400 |
646.900 |
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2] Share Application Money |
17.100 |
0.000 |
13.300 |
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3] Reserves & Surplus |
30798.500 |
32922.800 |
25111.800 |
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4] (Accumulated Losses) |
0.000 |
0.000 |
0.000 |
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NETWORTH |
32148.300 |
34250.200 |
25772.000 |
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LOAN FUNDS |
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1] Secured Loans |
252.400 |
407.700 |
131.700 |
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2] Unsecured Loans |
0.900 |
1.200 |
2.100 |
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TOTAL BORROWING |
253.300 |
408.900 |
133.800 |
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DEFERRED TAX LIABILITIES |
0.000 |
0.000 |
0.000 |
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TOTAL |
32401.600 |
34659.100 |
25905.800 |
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APPLICATION OF FUNDS |
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FIXED ASSETS [Net Block] |
7252.900 |
6700.900 |
5256.800 |
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Capital work-in-progress |
4190.300 |
2128.600 |
1636.300 |
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INVESTMENT |
17973.400 |
19888.600 |
19077.600 |
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DEFERREX TAX ASSETS |
1406.000 |
298.400 |
178.300 |
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CURRENT ASSETS, LOANS & ADVANCES |
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Inventories |
0.000
|
0.000 |
0.000 |
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Sundry Debtors |
9800.200
|
7124.800 |
6459.800 |
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Cash & Bank Balances |
6868.800
|
3809.400 |
1062.200 |
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Other Current Assets |
2303.600
|
3853.000 |
829.600 |
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Loans & Advances |
5226.400
|
4039.500 |
2756.200 |
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Total
Current Assets |
24199.000
|
18826.700 |
11107.800 |
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Less : CURRENT
LIABILITIES & PROVISIONS |
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Current Liabilities |
22620.000
|
13184.100 |
11351.000 |
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Provisions |
0.000
|
0.000 |
0.000 |
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Total
Current Liabilities |
22620.000
|
13184.100 |
11351.000 |
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Net Current Assets |
1579.000
|
5642.600 |
(243.200) |
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MISCELLANEOUS EXPENSES |
0.000 |
0.000 |
0.000 |
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TOTAL |
32401.600 |
34659.100 |
25905.800 |
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PROFIT & LOSS
ACCOUNT
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PARTICULARS |
30.06.2008 |
30.06.2007 |
30.06.2006 |
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Sales Turnover |
46153.900 |
37686.200 |
30329.200 |
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Other Income |
1704.000 |
4394.200 |
833.400 |
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Total Income |
47857.900 |
42080.400 |
31162.600 |
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Profit/(Loss) Before Tax |
8752.500 |
11776.900 |
6538.300 |
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Provision for Taxation |
946.000 |
758.700 |
154.500 |
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Profit/(Loss) After Tax |
7806.500 |
11018.200 |
6383.800 |
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Earnings in Foreign Currency : |
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Income from Services |
45458.600 |
37260.500 |
29942.000 |
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Interest Income |
0.300 |
0.400 |
0.700 |
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Total Earnings |
45458.900 |
37260.900 |
29942.700 |
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Imports : |
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Capital Goods |
677.800 |
508.400 |
648.800 |
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Total Imports |
677.800 |
508.400 |
648.800 |
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Expenditures : |
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Cost of revenues |
24481.800 |
20059.100 |
16349.900 |
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Administrative Expenses |
12254.200 |
8332.600 |
6759.000 |
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Finance charges |
190.700 |
129.700 |
127.400 |
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Depreciation & Amortization |
2178.700 |
1782.100 |
1388.000 |
|
Total Expenditure |
39105.400 |
30303.500 |
24624.300 |
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QUARTERLY RESULTS
|
PARTICULARS |
30.09.2008 |
|
Type |
1st
Quarter |
|
Sales
Turnover |
11758.000 |
|
Other
Income |
498.600 |
|
Total
Income |
12256.000 |
|
Total
Expenditure |
8863.700 |
|
Operating
Profit |
3392.900 |
|
Interest |
25.600 |
|
Gross
Profit |
3367.300 |
|
Depreciation |
624.200 |
|
Tax |
205.200 |
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Reported
PAT |
2537.900 |
KEY RATIOS
|
PARTICULARS |
|
30.06.2008 |
30.06.2007 |
30.06.2006 |
|
PAT / Total Income |
(%) |
16.31
|
26.18 |
20.49 |
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Net Profit Margin (PBT/Sales) |
(%) |
18.96
|
31.25 |
21.56 |
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Return on Total Assets (PBT/Total Assets} |
(%) |
27.83
|
46.13 |
39.95 |
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Return on Investment (ROI) (PBT/Networth) |
|
0.27
|
0.34 |
0.25 |
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Debt Equity Ratio (Total Liability/Networth) |
|
0.71
|
0.40 |
0.45 |
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Current Ratio (Current Asset/Current Liability) |
|
1.07
|
1.43 |
0.98 |
LOCAL AGENCY FURTHER INFORMATION
HISTORY
Subject was incorporated in 1991, as HCL Overseas Limited.
The certificate of commencement of business was received on 10th February 1992.
On July 14, 1994, the name of the Company was changed to HCL Consulting
Limited. The company provides software-led IT solutions, remote infrastructure
management services and BPO. In 1996 the 50:50 joint venture with Perot Systems
Corporation was formed to provide access to high value client base of Perot
Systems under the name of HCL Perot Systems NV. Subject focuses on
Transformational Outsourcing, working with clients in areas that impact and
re-define the core of their business after its IPO in 1999 with aim of foray
into the global IT landscape and in the same year again the Company changed its
name to HCL Technologies Limited. The company encompasses global offshore
infrastructure and its global network of offices in 18 countries to deliver
solutions across selected verticals including Financial Services, Retail and
Consumer, Life Sciences and Healthcare, Hi-Tech and Manufacturing, Telecom and
Media and Entertainment (M and E).
Subject started to create wholly owned subsidiaries to cater specific geographic
regions from the year 1999. Subject has the widest service portfolio among
Indian IT service providers, with each of its services having attained critical
mass. In the year of 2000 the company has set up a dedicated offshore
development centre in Chennai for KLA-Tencor Corporation, a supplier of process
control and yield management solutions for the semiconductor and related
microelectronics industry and HCL Comnet, the wholly owned subsidiary of
subject in association with its new partner Globeset Inc for scouting largest
Internet Service Providers and payment gateways in India to introduce Net
security management solutions. The Company launched the Nokia professional
centre in
In 2002 the company acquired Gulf Computers Inc, USA and formed a JV with
Answerthink, Inc., a leading US based provider of technology enabled business
transformation solutions to Global 2000 firms. A strategic technology joint
venture was made with Jones Apparel Group, Inc. Jones Apparel Group, Inc. a
Fortune 500 Company in the same year and also entered into a joint venture with
M.A. Partners, a management consulting firm to address software services opportunities
in Global Finance Markets, especially in the areas of Investment Banking, Asset
Management and Private Banking. M.A. Partners brings a wealth of domain
expertise and clients including many of the top Global Investment Banking firms
to the JV. In the year 2003, BT Group UK's telecom service provider gave a
contract worth of $160 million for BPO service operations and the company has
set up an exclusive centre in Noida for exeucting the orders given by BT Group.
The software business of HCL Infosystems Limited was transferred to subject
additionally. HCL Comnet, a wholly- owned flagship of HC Technologies, secured
Rs.310 millions network management order from National Insurance Corporation
(NIC).
Subject sets up
During the year 2005 SEBI ties up with subject for market surveillance and the
company formed joint venture with NEC,
As on January 2008, HCL's Electro Magnetic Compatibility (EMC) and Durability
Test Lab located in Chennai, the first of its kind private Technology facility
sector to obtained the ISO/IEC 17025 Accreditation from NABL (National Board
for Accreditation of Testing and Calibration Laboratories, India) and a new
partnership with Mark Logic Corporation, provider of the industry's leading XML
content server was made on same month of the year. As on February 2008 the
acquired Capital Stream, Inc., a US based leader in providing comprehensive
end-to-end lending and straight through processing solutions to commercial
banks and finance companies in North America worth about US $ 40 Million and in
same month company expanded global services partnership with SAP AG (NYSE:
SAP). During April 2008 subject announced to launch of its new SaaS Service
Delivery Platform (SDP) AGORA - at Software 2008 in Las Vegas and in the same
month of the same year the company launched an innovative on-demand software
testing lab at Software 2008 that allows Independent Software Vendors (ISVs) to
reduce their software testing cycle times and lower their capital expenditure
on testing hardware and software.
OVERVIEW
During the financial year 2007-08, on a stand-alone basis, your Company's
revenues stood at Rs.46153.900 millions registering a growth of 22.47% over the
previous year and on a consolidated basis, the Company's revenues for the year
2007-08 stood at Rs.75627.800 millions registering a growth of 24.62% over the
previous year.
SUBSIDIARIES FORMED DURING THE YEAR
HCL Technologies (
During the year, the Company has incorporated its wholly owned subsidiary viz.
HCL Technologies (
Capital Stream Inc.
During the year, the Company acquired all of the outstanding capital stock of
Capital Stream Inc., a company incorporated in USA for a cash consideration of
Rs.1600 millions (USD 39.03 million). Capital Stream
Inc. is engaged in providing comprehensive end to end solutions for the automation
of front office functions of commercial lending institutions. This transaction
was structured as reverse merger.
EXISTING
SUBSIDIARIES/ JOINT VENTURES - FURTHER INVESTMENT/ AMALGAMATION/ CLOSURE DURING
THE YEAR
HCL EAI Services Inc.:
In order to consolidate its position in Enterprise Application Integration
('EAI') space, the Company has acquired the balance 49% stake in its Joint
Venture Company viz. HCL EAI Services Inc., a California corporation for a
consideration of Rs.133.200 millions (USD 3.49 million) through its downstream
subsidiary HCL America Inc., a company incorporated in USA. With this
acquisition, HCL EAI Services Inc. has become 100% subsidiary of the
Company.
Further w.e.f. July 01, 2008, HCL EAI Services Inc. has been
amalgamated with HCL America Inc.
HCL Jones Technologies (
In June 2002, the Company entered into an agreement with Jones Apparel Group
Inc. ('Jones'), under which two new Companies were established in Bermuda and
In December 2007, the Company and Jones had entered into an agreement
('Termination Agreement') to terminate the Joint Venture agreement entered in
June 2002. As a part of the termination agreement, a subsidiary of the Company
has obtained binding commitments for the provision of IT services to Jones,
with an aggregate contract value of Rs.968.000 millions (USD 22.5 million) upto
2012.
Further, pursuant to this termination, the Joint Venture Company in Bermuda
viz. HCL Jones Technologies (
HCL Enterprise Solutions Limited
HCL Enterprise Solutions Limited was incorporated in
BRANCHES FORMED DURING THE YEAR
In order to scale the operations in new geographies, the Company has set up
four branches at the following locations:
SUBSIDIARIES - FINANCIALS
The Company has 30 subsidiaries as on June 30, 2008. The Company has been
granted exemption for the year ended June 30, 2008 by the Ministry of Corporate
Affairs from annexing the accounts and other information of the subsidiaries
along with the accounts of the Company, as required under section 212 of that
Companies Act, 1956.
As required under the Listing Agreements with the Stock Exchanges, consolidated
financial statements of the Company.
INDUSTRY
OUTLOOK
·
As per NASSCOM Strategic Review 2008,
Worldwide IT Outsourcing Market is expected to grow from $183 Billion in 2007
to $242 Billion in 2011 at a CAGR of 7.2%. At the same time, The BPO market is
expected to grow from $462 Billion in 2007 to $677 Billion in 2011 at a CAGR of
10%.
·
As per NASSCOM-BAH study titled 'Globalization of Engineering Services - The
next frontier for
·
As per NASSCOM Strategic Review 2008, the currently low levels of market
penetration reflect enough headroom for growth. The total value of
technology-related services from offshore locations is expected to reach $70-76
billion in FY08. Of that,
·
US and
·
To compete globally, Indian IT vendors
would develop competencies in the consulting space since consulting engagements
increasingly trickle down to large deals.
·
The BPO and Infrastructure sectors are 3-4 times the size of application
development and maintenance. They are likely to be key focus areas of growth
given their ability to address the talent shortage with acceptance of graduates
not limited to professionally qualified workforce.
·
In the Infrastructure Management Services space, the reducing hardware costs
are offset by the increasing labour costs. Clients therefore prefer IT vendors
who do not take over assets but are able to deliver services remotely in low
cost countries. Remote infrastructure delivery would likely form a key
component of large sized outsourcing deals in future.
·
In the BPO space, non voice and platform based assignments would likely
dominate and the Indian IT vendors are geared well to capitalize on the
opportunities having steadily built capabilities in the past few years.
·
With business transformation playing an important role in sourcing deals,
Outcome-based pricing/output based pricing that aligns sourcing interests is
increasingly gain in acceptance. Revenues in such arrangements depend on the
value provider can add. Providers are expected to put their skin into the game.
·
Continued growth across product development and engineering services reflects
·
Larger deals are likely to be unbundled resulting in reduced deal size for
incumbents while still being bigger for Indian IT. This could be challenging
for incumbents and serve as an opportunity for Indian IT vendors since the
former may need to prove cost and delivery advantages for execution of such
deals. Moreover, the earlier advantage of taking over people / assets may no
longer hold good.
·
COMPANY OVERVIEW:
(Information provided in this section pertains to subject and its subsidiaries
on a consolidated basis)
About HCL Technologies Limited:
Subject ('HCL or the Company') is one of India's global IT services companies
providing software-led IT solutions, remote infrastructure management services
and Business Process Outsourcing (BPO) services. Subject has been in operation
since 1999 and focuses on transformational outsourcing, working with clients in
areas that impact and re-define the core of their business. The company
leverages its extensive global offshore infrastructure spread across 60
locations and its global network of offices in 18 countries to deliver
solutions across select verticals like Financial Services, Retail and Consumer,
Life Sciences and Healthcare, Hi-Tech, Telecom and Media and Entertainment.
Subject has established key business relationships with clients across
geographies belonging to Fortune 500/1000 category offering mix of IT and BPO
services.
Financial Revenue in EBITDA in EBIT inYear
SERVICE OFFERINES
Subject offers a diversified portfolio of service offerings as defined below.
It is important to note that no single service line contributes more than 37%
to the total revenue, while maintaining a leading edge in key verticals where
the company has chosen to focus. Moreover, Subject has built sustainable
business models in each of its service lines long term perspective. Today, each
of these service lines has a robust and resilient business model in
place.
FY'08:
BPO Services 11.9%
1. Custom Application Services
Customized software and applications are transforming the way organizations are
doing businesses to achieve their specific objectives. Recognizing the growing
industry need of custom applications and outsourcing requirements, Subject is
committed to provide world-class application development, maintenance, and
consulting outsourcing services to satisfy customers to help increase their
productivity and minimize their total cost of ownership. The service line
accounts for 36.5% to the total revenue.
Subject offers services ranging from custom application development,
deployment, and integration to maintenance, and production support. Subject was
one of the first to bring multi-service delivery capability that combines
customized application services with other key services like packaged
application services, remote infrastructure management, and enterprise
transformation services.
The company adds value to customer's businesses enabling IT technology
transformation that brings transition and transforms approach with unique
combination of multi service capability, outcome based pricing, tools and
methodologies like ASSETM for transition.
With a focus on quality and keeping with the customers' information security
requirements, all company software development centers are certified with ISO
9001:2000, Level 5 of Software Engineering Institute's Capability Maturity
Model (CMM Level 5) standards, and British Security Standard-BS7799.
2. Engineering and R and D
Services
Engineering and R and D Services account for 25.5% of the Company's revenues.
Subject understands the importance of Research and Development (R&D) for
its customers businesses and is committed to provide world-class R and D and
Technology Services to them. Subject offers comprehensive range of R and D and
Engineering services to component vendors, OEMs, ODMs and ISVs across multiple
industry segments and domains. The company has a proven track record in
providing 'end to end solutions' that span concept to manufacture and ability
to consistently deliver complex and critical products.
With its significant product engineering strength and experience, Subject
provides full lifecycle product engineering services, spanning from
requirements definition to prototype architecture, development, testing, and
manufacturing technical help desk to field support, maintenance and
upgrades.
Other services offered include unique integrated services that span hardware,
software, electronic packaging, and value-added services to customers,
especially in mission-critical, complex product engineering areas. The
investments in test labs (the first private sector lab in
Subject has initiated the first real business outcome based engagement model -
Global Risk Reward Partnership (GRRP). GRRP is based on the fundamental of joint
outcome ownership of a product. HCL has successfully partnered with global
technology leaders to positively influence revenues of their products under a
risk-reward sharing partnership.
Subject offers a unique end-to-end Software as a Service (SaaS) offering which
encompasses consulting, development, hosting and management through integrated
SaaS. This integrated offering speeds up the time to market by 40%. Subject's
SaaS offerings leverage subject 's investments in SaaS such as 'Agora' SaaS Delivery
Platform and more than a decade of SaaS experience with 80+ clients.
3.
This service accounts for about 11.1% of the Company's revenue. Subject's
Enterprise Application Services line of business is focused on providing
package and platform-led services ranging from blue printing, development,
deployment, global rollouts, helpdesk support, to application maintenance in
areas such as ERP, CRM, SCM, and Middleware. The EAS group uses a
platform-focused approach to provide technology-based business
optimization.
Technology-based business optimization is the cornerstone of subject 's
enterprise applications line of business that is achieved through Stage-based
offerings and Process-driven optimization. Stage-based offerings are focused on
application consolidation, global single instance, platform development, and
service enablement, while Process-driven optimization deals with processes like
partner integration, unified customer view and single sign-on to deliver business
optimization.
Some of the EAS unique service offerings include State-based offerings like
Upgrade Competency Center and eZ.Migrate, Integrated offerings like iERP
(integrated applications, infrastructure and helpdesk support),
Competency-based offerings like Middleware integration competency center for
WebMethods and Tibco, SOAdriven integration etc., Platform-based services like
SAP NetWeaver and Fusion Middleware and Consulting services like Application
Portfolio Optimization and platform section.
Subject enjoys mufti-faceted relationships and high-level strategic
partnerships with some of the biggest ISVs and IT and Technology firms like
Microsoft, SAP, Oracle, TIBCO, etc. Subject has recently joined the SAP Global
Partner - Services program where both firms teamed up for solution definition
and co-develop new and extended functionalities to implement enterprise SOA
based services.
4.
The competitive environment with increasing customer demand for innovation and
higher value is transforming the current business processes in all the
industries. The clients are looking for new business models that are aligned to
changed business scenario to improve productivity, efficiency, market share and
profitability in the market place. Subject's ETS practice offers Business
Consulting services to customers to satisfy the demand of innovation and higher
value of their customers.
Subject's ETS group offers services that bring Business, Technology,
Application and Data Transformation to customers. Services like Application
Portfolio Optimization and Management analyzes and audits the applications, and
develops a business plan that aligns applications with business needs and
organizational objectives.
Subject offers end-to-end data warehouse & Business Intelligence (DW/BI)
services at all levels of enterprise through unique Data Transformation
Methodology (DTM) and reduces the complexity of data view across various data
types and complex business processes.
Quality Process Consulting services offer process improvement services that
span the entire continuum ranging from Process definition, implementation and
training to Process assessments for model and non-model based improvement
initiatives.
Subject's Technology Transformation Services are designed to ensure that IT
systems are optimized and managed to transform business functions and ensure
operational efficiency.
5. Infrastructure Management Services
(IMS)
Subject is the pioneer of Infrastructure Management Services (IMS) in
A focused player in the IT services arena, Subject's
Infrastructure Management Services seek to provide simplified infrastructure
solutions through delivering high-performance management services for complex,
distributed infrastructure environments encompassing the Internet, Client and
legacy based infrastructures.
Subject's IMS accounts for about 15% of the Company revenues. It has, over the
past few years, evolved into an 'End-to-End' Remote Infrastructure Services
provider.
Subject has grown from being a pure play IT Operations player to offering
'Design - Implement - Operate' services across the IT Infrastructure
Lifecycle.
Subject addresses the growing demand for the cost-effective management of
technology infrastructure across geographically dispersed locations. With a
mission to develop innovative solutions for enterprises worldwide, the company
has developed and pioneered a unique model for Remote IT infrastructure
management that enables customer organizations to achieve superior
infrastructure performance and significantly reduced costs.
Subject's Remote Infrastructure Management (RIM) services provide a single
window that cater all IT infrastructure needs and aim at transforming the IT
infrastructure of customers that not only ensure a well managed Infrastructure
support services but also provide competitive advantage by delivering more
value to the end user.
The company's IMS services include, End User Computing, Datacenter, Network
Services, Information Security Services, Pioneer IOMC and emerging areas like
IT Service Management. These services are delivered through an ISO 9002, ISO
27001 and ISO 20000 certified
6. Business Process Qutwurcing
(BPO):
HCL's BPO services contribute to about 11.9% of the company's revenue. HCL BPO
focuses on a combination of voice and non voice based processes that relate
to:
·
Business Generation (Contact
Scoring/Customer acquisition/Post Sales Service),
·
Operations Management (Technical desk
support/ Procurement Services/ Transaction Processing/ Collection Services
etc.) and,
·
Management Support (Primary/ Secondary
Research/ Data Analysis and Modeling)
The driving objective is to enhance business performance of clients while at
the same time cost optimization through matured off shoring processes. HCL BPO
has made significant investments in its service delivery capabilities like
technology, human resources, intellectual property and capacity. The suite of BPO
services is configured to address the generic and specific requirements of
existing and potential client base. HCL BPO has vertical driven business
strategy spanning verticals such as Telecom, BFSI, Retail and Hi Tech. The
division boasts of global delivery centers in
The-HCL
Strategy:
Differentiation Strategy
During the early phase of the Transformation journey,
Subject spotted an inflection point in the industry driven by a need for
transformation, dissatisfaction with large deals, an insatiable desire to
optimize and reduce cost, performance based pay and increased adoption of
Global Delivery in emerging areas. This meant a shift in focus from pure cost
considerations to innovation, value creation and flexibility for clients
premised on trust, transparency and flexibility in relationships.
The initial years of transformation was focused on key initiatives like
'Employee First', Multi Service offerings, Innovative Pricing models etc.
Subject has also established a strong foundation of Collaborative
Transformation as a way of business. Subject's unique business approach has
resulted in creation of a 'Differentiated Positioning' in the market place.
This strategy has helped subject to grow not only its existing relationships
but also resulted in new wins of transformational deals in different markets.
Today Subject leads in execution of large integrated multi service
transformational deals.
Subject continues to be a 'Thought Leader' by gauging and anticipating
inflection points early in the industry and changing the paradigm in a rapidly
dynamic IT environment.
The HCL differentiation strategy is four
fold
Execution of Integrated Employee First Services designed to alignIT with
Business Blue Ocean Strategy Trust, Transparency and Flexibility
The 'Employee First' philosophy at HCL
At the core of subject's Employee First philosophy is the concept of talent
transformation-recognition and enablement of competencies, as opposed to
skilling employees in necessary technical, business and behavioral areas. HCL
follows a five fold path of individual enlightenment - Support, Knowledge,
Empowerment, Transformation and Recognition. Technology is heavily used in this
path resulting in the enlightenment of nearly 50,000 employees. The strategy is
based on the fact that employee enlightenment transpires to customer enlightenment.
Subject's Employee First philosophy has been captured by the Harvard Business
School in a case study and is now being taught to future business leaders in
their Strategy and Leadership' classes.
In 2005, Subject adopted a 'Blue Ocean' approach by gauging early-on that the
new generation outsourcers needed more transformational gains, value and
innovative business models.
Subject has a four Pronged Blue Ocean Strategy all of which have legitimacy
with proof points:
1. Pricing Innovation : Output Based Pricing Model 2. Technology Disruption :
Business led Transformation 3. Market Creation : Building new service markets
4. Service Innovation : Through heavy investments in IP and
Solution Accelerators
Subject is uniquely positioned with its perfect blend of onshore presence and
offshore economics. Building competitive advantage also demands a shift from
the earlier fee-driven/ service provider model to a new age
outcome-based/partnership model. At Subject, IT driven business innovation,
emergence of new disruptive technologies, business models, and widespread
acceptance of global delivery models are some of the transformational forces at
work today.
Subject being a disruptive force in technology is one amongst the leading
organizations that offer SOA driven integration to global organizations.
Subject's SOA driven integration solutions for business processes are aided by
IP and Frameworks to enable automated offshore development to continuously
optimize the customer's business processes.
Subject 's investment in this arena has won several accolades for the company.
CrossfitTM, an automation SOA testing framework has won the Technology
Innovation award at the Financial Services Outsourcing Annual Summit
2008.
Execution of Integrated Services
designed to align IT with Business:
Subject's integrated service offerings, backed by its investments in innovative
IPs and Frameworks, help customers to align their application and IT portfolio
with Business objectives. These frameworks not only strengthen subject’s
execution capabilities but also provide a single window to client to monitor
the progress of their projects. ASSET' is once such framework that provides a
comprehensive and re-usable end-to-end framework to professionally Advice,
Plan, Execute and Manage transition in large deals.
Subject brings unique strengths to organizations engaged in
a significant business transformation exercise to create new competitive
advantages. For such organizations, Subject has one of the most mature
portfolio of services among all offshore providers-across Application Services,
Core Infrastructure support, Business Process Outsourcing, as also R and D and
Technology services. Multi-integrated solutions enable customers achieve
significant optimization not only within one area but also at interface points
(viz integrated help-desk for applications and infrastructure).
Trust, Transparency and Flexibility
At Subject, all relationships -be it with employees, customers, partners or
stakeholders - need to be built on the foundation of trust, transparency and
flexibility. Subject's Employee First philosophy has led to empowered employees
in the organization. This has been reflected in a Survey of more than 250
Customers and 830 respondents with Excellent feedback scores of Flexibility
(5.95) Trustworthy (6.31) and Loyalty (6.21) - on a scale of 7. Subject's
clients increasingly feel, 'the employees stand out as more empowered when
compared to like companies' and 'Deliver on promise, even if circumstances are
tough.'
Growth Strategy
Subject is a dominant player in its own niche and is uniquely positioned as a
co-sourcing vendor because of the experience it has created for its clients.
The unique positioning lends HCL to be different in its Business Model from
other Indian IT Services players.
During the last 3 years, Subject has focused on the following 5 strategies for
growth:
1. Create 'New markets', which it could lead. Establish growth by being 'first
to market'.
2. Create 'Diversity in Service lines'and not be dependent on one Service line
alone.
3. Secure 'higher proportion of annuity revenues' through focus on Operations,
Output-based Pricing, Risk-Reward model and Long Term contracts.
4. Create 'Differentiators' through investments in 'Disruptive Technologies'
such as SOA, BI and
5. Focus on doing more (work) for less (clients) rather than less for
more.
The creation of unique positioning of subject through its 'Run the business' approach
has been well received in the market by Fortune-1000 clients. Subject has also
made significant investments in tools/ processes/ methodologies/ business
models to gain competitive advantage in the market. Subject has proven its
superior delivery and execution capabilities by successfully moving large
engagements to a steady state. Today, Subject works with Fortune 100, Fortune
Global 500 and Fortune 1000+ clients globally. The Company has done well in
maintaining and growing its large existing customer relationships as also
securing new clients that has brought overall consistency in its growth.
Going forward, Subject will continue to focus on the aforementioned
strategies.
Opportunities, Threats, Risks and
Concerns:
Opportunities:
The Indian ITES and IT-BPO industry has come a long way from
early years in 2000 and has been successful in establishing its credentials in
delivering value based superior IT services to clients across the world through
its global delivery model. The resilience of Indian the IT industry has been
proved in facing challenging times faced last year and that emanated primarily
from a slowing US economy coupled with developments like the sub prime crisis,
elections in US, appreciating Indian Rupee against US Dollar, high inflation
rate in India and a challenging business environment with IT MNC'c increasing
their presence in India. The downtrend in the US helped subject to push forward
with the sweet spot, although the overall strategy was to de-risk US and move
towards Europe and Asia, they saw high growth potential in US.
The industry is now poised for next phase of growth with
global IT environment pointing towards increasing propensity for outsourcing /
offshoring to countries like
Within the overall industry environment as it unfolds, Subject is strategically
geared to steer its growth. Subject has always been the thought leader in
gauging the inflection points in the industry trends. It is always prepared to
capitalize on the potential opportunities made available by the external
environment.
Subject has adopted the
It has successfully identified newer markets, verticals and services to drive
its business growth. Subject's Multi-service; Multiyear; Multi-million dollar
deals drove growth in 2007-08 and contributed significantly to subject's top
line and bottom line.
The domain focused approach of the Company has yielded rich dividends
strengthening the vertical strategy. Subject has penetrated verticals like
Media Publishing and Entertainment, Life Sciences and Healthcare that are not
the conventional segments to offshore business process. The successes in its
approach in these verticals would be replicated in other micro verticals and
geographies also.
Subject has differentiated itself in the market place in being 'first to
market' its unique offerings. Subject has delivered and executed innovative
Multi Service engagements of larger size and successfully able to move forward
from 'Transition' phase to 'Steady' phase thereby establishing subject's
superior delivery and execution capabilities.
Subject has been in the forefront of developing and deploying the new breed of
technologies for its customers with ensuing value proposition.
Threats
Market-place and Competition:
The industry is becoming increasingly converging in terms of players having
wider portfolio of service offerings as well as varied business models with
similar set of value propositions to be offered to customers. This entail a
more challenging environment with increased competition and customer demands
for value creation in IT Infrastructure and IT Applications.
Increasingly, the Indian IT service provides have not only to compete among
themselves in the global market but have to face stiff competition from the
multinational IT vendors who have made significant investments in
Other low-cost countries
Further, various other countries are competing with
Increased
customer demand for value enhancement:
The evolving dynamics in the market place necessitates that players continue to
differentiate themselves in being able to offer superior value by maximizing
the client's Return on Investments (ROI) on IT deployment while retaining cost
competitiveness.
The portfolio of service mix has to be constantly reviewed in line with the
evolving business needs of the clients. This necessitates that players should
be able to continuously anticipate the future technological trends and make
suitable investments in R and D, Intellectual Property based products and tools
as also investment in HR Assets i.e. training initiatives etc. in acquiring,
developing and re-skilling the human resources.
Risks and Concerns
Operating Business Environment Risk
The business environment deteriorated sharply in the past year particularly in
US primarily due to the sub-prime banking crisis emanating in US and its spiral-down
effect to other parts of the world. Most of the IT service providers derive
significant business from the Banking, Financial Services and Insurance (BFSI)
vertical and consequent upon the US slowdown led by financial sector, the
service providers are facing challenging times with the clients adopting a
'Wait and Watch' approach before finalizing their respective IT spends.
Inflationary trend in agro-commodities and crude oil has also caused
deterioration of global macro-economic environment and spending pattern.
HCL Strategy
Subject is well diversified geographically, to reduce its dependence on any
particular market. Moreover, it has a vertically focused business approach and
offers combination of service mix reducing its dependence on any particular
service. The Company's business is spread over five distinct service lines and
no single business line contributed more than 37% of the total revenue.
Similarly, the revenue from biggest industry vertical (BFSI) is also within 30%
of overall revenue which is well lower than few of the competitors. This
diversification strategy seems to have paid-off wherein slow-down of BFSI
sector caused by sub-prime had very limited impact on subject 's revenue
projections.
The Company is confident that the long term potential for the industry is quite
favorable in view of global tech spending forecasts remaining strong, aided by
growth momentum witnessed in
Competition Related Risks
The Company faces competition not only from the India based IT services
providers but increasingly from the multinational IT vendors who are expanding
their presence in the country owing to attractiveness of the Offshoring
model.
HCL
Strategy
Subject's differentiation strategy incorporating its unique business approach
has led to its emerging as a 'Thought Leader' in the rapidly dynamic IT
industry. Subject’s differentiation strategy is four fold which includes
Employee First initiative,
Employee Related Risks
Managing attrition rates and availability of talented and skilled pool of
manpower are the two key challenges that are facing the industry today. The
other key industry challenge is the acute shortage of talented and experienced
manpower caused by lucrative employment opportunities offered by Indian and
foreign IT vendors.
HCL
Strategy
Subject has put in place its 'Employee First' initiative that is now in its
third year of successful implementation. The focus on employees as key
resources led to introduction of several employee friendly policies that has
helped HCL in containing its attrition rates from 20.4% in 2005 to 15.2% in
2008. Success of this program is being hailed globally by leading media houses
and global forums. Now, this is being taught as a case study in Harvard and
Subject makes continuous investments for in-house training and development
initiatives for upgradation of skills and re-skilling of employees. This not
only ensures that the Company has in-house availability of talented pool of
resources but also the motivation of employees is maintained at high level by
skill enhancement.
Technology Risks
Subject operates in an ever evolving and dynamic technology environment and it
is of utmost importance that the Company continuously reviews and upgrades its
technology resources and processes lest it faces technology obsolescence.
HCL Strategy
The Company keeps itself abreast and updated on the contemporary developments
in technology landscape through participation in key technology forums,
in-house training and development initiatives and its intensive focus on core
research and development activities. The Company is not dependent on any single
technology or platform. HCL has developed competencies in various technologies,
platforms and operating environment and offers the wide range of technology
options to clients to choose from for their needs.
Further, Subject has a dedicated Engineering Excellence Group (EEG) which
offers consulting to various delivery teams in developing best practices,
development of reusable code and registering patents for methodologies and
tools developed.
Exchange Rate Risks
One single macro-economic development that engaged the attention of the entire
industry last year was the relentless appreciation of Indian Rupee against the
US Dollar. The industry is predominantly export driven and the magnitude of
appreciation was to the tune of 12-14% and upset the industry cost dynamics. It
was at this stage that the maturity and resilience of the industry was tested
to manage the situation through variety of measures i.e. Cost-cutting
initiatives and Risk Mitigation i.e. hedging etc.
HCL Strategy
As a risk containment strategy for its foreign currency exposures, Subject has
taken forward covers to hedge its receivables and forecast revenues against the
foreign currency fluctuations. The Company does not speculate in foreign
currency. Another key pointer is gradual shift in geographical dependence away
from US and increased focus on
Business Concentration Risks
Geographical concentration
Subject has fairly well diversified portfolio of services spread over various
geographies across multiple verticals. This has ensured adequate de-risking of
the business model and protects subject from any adverse development in any
geography, vertical or for any service line. Enclosed below are the details of
subject's business concentration based on geography and verticals. In addition,
the client portfolio of subject is also adequately diversified and does not
carry any concentration risks.
HCL Strategy
Subject derives 56% of business from US and rest 44% from non US. Last year the
slowdown was mostly felt in US, but the business momentum from other non
Industry vertical concentration
While the BFSI remained the most challenged vertical against the backdrop of
HCL Strategy
Subject's has been successful in client engagements in newer growth verticals
like life sciences and media publishing and entertainment. These verticals are
not conventionally large outsourcers of business applications and therefore
present good growth potential. Subject has replicated its successful business
engagements in these verticals in newer geographies and has been successful in
gaining clients in this space.
Investment Portfolio Risks
The Company has consistently carried a high level of surplus cash and active
treasury investments. The primary area of risk for the Company's market
exposures are related to the interest rate risk on its investment
securities.
HCL Strategy
All surplus funds are invested in avenues upon review by the investment
committee. The guiding principles of all investment decisions are safety of
investments, followed by liquidity and returns. The company invests its surplus
funds in fixed deposits with reputed banks and debt based mutual funds. The
company does not invest in equity or equity related instruments.
Internal Control systems and their
adequacy
The company has put in place an adequate system of internal control
commensurate with its size and nature of business. These systems provide a
reasonable assurance in respect of providing financial and operational
information, complying with applicable statutes, safeguarding of assets of the
company and ensuring compliance with corporate policies.
The company has a dedicated Internal Audit team which ensures that:
·
Adequate processes, systems, internal
controls are implemented and these controls are commensurate with the size and
operations of the company.
·
Transactions are executed in accordance
with policies and authorization.
·
Resources have been deployed as per the
business plan, policies and authorization.
Further, management has supplemented the efforts of Internal Audit team by
having a dedicated Risk Management team. This team is responsible for Subject's
Corporate Governance program including Enterprise Risk Management Program,
Assurance on continuity of Internal Control procedures and Legal
compliances.
The company has a rigorous business planning system to set targets and
parameters for operations which are reviewed with actual performance to ensure
timely initiation of corrective action, if required.
The company's audit committee comprising of 4 independent directors, which is a
sub-committee of the board, reviews adherence to internal control systems,
internal audit reports, risk management and legal compliances.
This committee reviews all quarterly and yearly results of
the company and recommends the same to Board for their approval.
FINANCIAL PERFORMANCE:
The financial performance of the Company as per Indian GAAP is discussed
hereunder in two parts:
1. Subject (Consolidated) which includes the performance of its subsidiaries
and joint venture.
2. Subject (Standalone) which excludes the performance of its subsidiaries and
joint venture.
The Financial Statements have been prepared in compliance with the requirements
of the Companies Act 1956, and Indian Generally Accepted Accounting Practices
(GAAP).
Contingent Liabilities
|
|
(As
on 30.06.2008) Rs.
in millions |
|
Capital and other commitments |
|
|
Capital commitments Estimated amount
of unexecuted capital contracts (net of advances) |
2998.000 |
|
Outstanding letter of credit |
85.000 |
|
|
|
|
Total |
3083.000 |
·
Guarantees have been given by the Company on behalf
of various subsidiaries against credit facilities, financial assistance and
office premises taken on lease amounting to Rs.1385.200 millions (previous year
Rs. 1759.700 millions). These guarantees have been given in the normal course
of the Company’s operations and are not expected to result in any loss to the
Company on the basis of the beneficiaries fulfilling their ordinary commercial
obligations.
·
Bank guarantees of Rs.202.100 millions (previous
year Rs.72.900 millions). These guarantees have been given in the normal course
of the Company’s operations and are not expected to result in any loss to the
Company, on the basis of the Company fulfilling its ordinary commercial
obligations.
·
Income Tax demands (excluding interest) of
Rs.310.400 millions (previous year Rs.310.400 millions) The amounts shown in
the item (c) above represent best possible estimates arrived at on the basis of
available information. The uncertainties and possible reimbursements are
dependent on the outcome of the different legal processes which have been
invoked by the Company or the claimants as the case may be and therefore cannot
be predicted accurately. The Company engages reputed professional advisors to
protect its interest and has been advised that it has strong legal positions against
such disputes.
FIXED ASSETS
·
Goodwill
·
Freehold land
·
Leasehold land
·
Building
·
Plant and machinery
·
Computers
·
Software
·
Furniture and fixtures
·
Vehicles
WEB DETAILS
Subject is a global IT
services company, working with clients in the areas that impact and redefine
the core of their businesses. Since its inception into the global landscape
after its IPO in 1999, Subject focuses on 'transformational outsourcing',
underlined by innovation and value creation, and offers integrated portfolio of
services including software-led IT solutions, remote infrastructure management,
engineering and R and D services and BPO. Subject leverages its extensive
global offshore infrastructure and network of offices in 19 countries to
provide holistic, multi-service delivery in key industry verticals including
Financial Services, Manufacturing, Aerospace and Defense, Telecom, Retail and
CPG, Life Sciences & Healthcare, Media and Entertainment, Travel, Transportation
and Logistics, Automotive, Government and Energies and Utilities. Subject takes
pride in its philosophy of 'Employee First' which empowers our 52,714
transformers to create a real value for the customers. Subject, along with its
subsidiaries, had consolidated revenues of US$ 2.0 billion (Rs.83000 millions),
as on 30th September 2008.
Subject
CMT REPORT (Corruption, Money Laundering & Terrorism]
The Public Notice information has been collected from various sources
including but not limited to: The Courts,
1] INFORMATION ON DESIGNATED
PARTY
No records exist designating subject or any of its beneficial owners,
controlling shareholders or senior officers as terrorist or terrorist
organization or whom notice had been received that all financial transactions
involving their assets have been blocked or convicted, found guilty or against
whom a judgement or order had been entered in a proceedings for violating
money-laundering, anti-corruption or bribery or international economic or
anti-terrorism sanction laws or whose assets were seized, blocked, frozen or
ordered forfeited for violation of money laundering or international
anti-terrorism laws.
2] Court Declaration :
No records exist to suggest that subject is or
was the subject of any formal or informal allegations, prosecutions or other
official proceeding for making any prohibited payments or other improper
payments to government officials for engaging in prohibited transactions or
with designated parties.
3] Asset Declaration :
No records exist to suggest that the property or assets of the subject
are derived from criminal conduct or a prohibited transaction.
4] Record on Financial
Crime :
Charges or conviction
registered against subject: None
5] Records on Violation of
Anti-Corruption Laws :
Charges or
investigation registered against subject: None
6] Records on Int’l
Anti-Money Laundering Laws/Standards :
Charges or
investigation registered against subject: None
7] Criminal Records
No available
information exist that suggest that subject or any of its principals have been
formally charged or convicted by a competent governmental authority for any
financial crime or under any formal investigation by a competent government
authority for any violation of anti-corruption laws or international anti-money
laundering laws or standard.
8] Affiliation with
Government :
No record
exists to suggest that any director or indirect owners, controlling
shareholders, director, officer or employee of the company is a government
official or a family member or close business associate of a Government
official.
9] Compensation Package :
Our market
survey revealed that the amount of compensation sought by the subject is fair
and reasonable and comparable to compensation paid to others for similar
services.
10] Press Report :
No press reports / filings exists on
the subject.
CORPORATE GOVERNANCE
MIRA INFORM as part of its Due Diligence do provide comments on Corporate
Governance to identify management and governance. These factors often have been
predictive and in some cases have created vulnerabilities to credit
deterioration.
Our Governance Assessment focuses principally on the interactions
between a company’s management, its Board of Directors, Shareholders and other
financial stakeholders.
CONTRAVENTION
Subject is not known to have contravened any existing local laws,
regulations or policies that prohibit, restrict or otherwise affect the terms
and conditions that could be included in the agreement with the subject.
FOREIGN EXCHANGE RATES7
|
Currency |
Unit
|
Indian Rupees |
|
US Dollar |
1 |
Rs.48.50 |
|
|
1 |
Rs.70.02 |
|
Euro |
1 |
Rs.67.95 |
SCORE & RATING EXPLANATIONS
|
SCORE FACTORS |
RANGE |
POINTS |
|
HISTORY |
1~10 |
7 |
|
PAID-UP CAPITAL |
1~10 |
7 |
|
OPERATING SCALE |
1~10 |
7 |
|
FINANCIAL CONDITION |
|
|
|
--BUSINESS SCALE |
1~10 |
9 |
|
--PROFITABILIRY |
1~10 |
6 |
|
--LIQUIDITY |
1~10 |
8 |
|
--LEVERAGE |
1~10 |
8 |
|
--RESERVES |
1~10 |
8 |
|
--CREDIT LINES |
1~10 |
7 |
|
--MARGINS |
-5~5 |
- |
|
DEMERIT POINTS |
|
|
|
--BANK CHARGES |
YES/NO |
YES |
|
--LITIGATION |
YES/NO |
NO |
|
--OTHER ADVERSE INFORMATION |
YES/NO |
NO |
|
MERIT POINTS |
|
|
|
--SOLE DISTRIBUTORSHIP |
YES/NO |
NO |
|
--EXPORT ACTIVITIES |
YES/NO |
NO |
|
--AFFILIATION |
YES/NO |
YES |
|
--LISTED |
YES/NO |
NO |
|
--OTHER MERIT FACTORS |
YES/NO |
YES |
|
TOTAL |
|
67 |
This score serves as a reference to assess SC’s credit risk and
to set the amount of credit to be extended. It is calculated from a composite
of weighted scores obtained from each of the major sections of this report. The
assessed factors and their relative weights (as indicated through %) are as
follows:
Financial
condition (40%) Ownership
background (20%) Payment
record (10%)
Credit history
(10%) Market trend
(10%) Operational
size (10%)
RATING EXPLANATIONS
|
RATING |
STATUS |
PROPOSED CREDIT LINE |
|
|
>86 |
Aaa |
Possesses an extremely sound financial base with the strongest
capability for timely payment of interest and principal sums |
Unlimited |
|
71-85 |
Aa |
Possesses adequate working capital. No caution needed for credit transaction.
It has above average (strong) capability for payment of interest and
principal sums |
Large |
|
56-70 |
A |
Financial & operational base are regarded healthy. General
unfavourable factors will not cause fatal effect. Satisfactory capability for
payment of interest and principal sums |
Fairly Large |
|
41-55 |
Ba |
Overall operation is considered normal. Capable to meet normal
commitments. |
Satisfactory |
|
26-40 |
B |
Unfavourable & favourable factors carry similar weight in credit consideration.
Capability to overcome financial difficulties seems comparatively below
average. |
Small |
|
11-25 |
Ca |
Adverse factors are apparent. Repayment of interest and principal sums
in default or expected to be in default upon maturity |
Limited with
full security |
|
<10 |
C |
Absolute credit risk exists. Caution needed to be exercised |
Credit not
recommended |
|
NR |
In view of the lack of information, we have no basis upon which to
recommend credit dealings |
No Rating |
|