SOURCE: HCL Technologies

January 17, 2008 09:50 ET

HCL Tech Announces Second Quarter Results

Half Yearly Revenues at US $890 mn, Up 41% and Net Income Up 36%; Q2 Revenues Up 39% and Net Income Up 31%

SUNNYVALE, CA and NOIDA, INDIA--(Marketwire - January 17, 2008) -


Highlights for the Half Year 07-08 (US$)

--  Revenues at 890 mn; up 40.9% YoY
--  Net Income at US $ 161.9 mn; up 35.8% YoY
--  Total dividend payout of 200%
--  5937 net additions in headcount, taking employee strength to 48,000
    

Highlights for the Quarter (US$)

--  Revenues at 461 mn; up 39.2% YoY and 7.4% sequentially
--  LTM (last twelve months) revenues at US $ 1.65 bn
--  Net Income at US $ 84.5 mn; up 30.6% YoY and 9.1% sequentially
--  Interim dividend of 100%, the 20th consecutive quarterly dividend
--  2312 net additions in headcount
    

When HCL began its Transformation journey in 2005, it spotted an early inflection point in the industry to focus on value as opposed to volume. The first phase of the company's Transformation journey, centered around Employee First, Multi-Service offerings and Outcome based pricing led HCL to be recognised as a thought leader and enabled us to win large transformational deals. HCL is now into the second phase of this journey and this quarter marks the establishment of the strong foundation of Collaborative Transformation as a way of business. This collaborative approach with customers and partners will create a deeper and more sustained impact, expand and create new markets.

"HCL pioneered modern computing three decades ago, and has continued to be a thought leader by gauging inflection points early and changing the paradigm in a dynamic market scenario. In our Transformation journey, we are now focused on co-creating value through strategic partnerships that we believe will become yet another industry trend in the coming years," said Shiv Nadar, Chairman and Chief Strategy Officer, HCL Technologies.

"Our Blue Ocean approach to business continues to pay rich dividends and we are proud to be ranked No. 1 ahead of all global players in Remote Infrastructure Management (RIM) by the Black Book of Outsourcing and awarded the Highly Commended Vendor title by the National Outsourcing Association in Europe. Our commitment to Trust and Transparency in every aspect of business has helped us be voted as the best company for Investor Relations in India by Asiamoney. All these are proof points that our Transformation journey is on the right track," said Vineet Nayar, CEO, HCL Technologies.

"This quarter, HCL BPO witnessed a 31.9% YoY increase in revenue and 76.8% EBIT. Despite the rise in rupee against the dollar, HCL BPO's EBITDA is maintained at 26.0%. Further endorsing our strength is the National Outsourcing Association that honored HCL BPO with the Special Award for consistent excellence in outsourcing practices across all disciplines," said Ranjit Narasimhan, President & CEO, HCL Technologies-BPO Services.

Key Catalysts for Growth

--  Asia-Pacific from a geography perspective this quarter. The US region
    has been growing well with a QoQ growth of 8.9%
--  Among Service Lines, Infrastructure Services, Engineering & R&D
    Services (ERS) and Custom Application Services witnessed accelerated
    growth, reaffirming HCL's dominant market position
--  Continuing the trend of the last two quarters, the fastest growth
    among verticals, was recorded in Life Sciences, Financial Services and
    Telecom
--  The traction from existing larger customers maintains its momentum in
    this quarter as well, which is reflected in the company average growth rate
    

Leading the way with Collaborative Transformation

HCL highlights some of its unique, strategic and transformational partnerships that are proof points of its success in leading the way with Collaborative Transformation.

--  HCL and Misys plc., a leading provider of integrated, comprehensive
    solutions to organizations infinancial services and healthcare industries
    signed a landmark deal to open new markets and drive innovation, quality
    improvements and speed to market for key Misys financial services solutions
    in high growth economies
--  HCL announced a strategic technology partnership with Quest
    Diagnostics, a leading provider of diagnostic testing, information and
    services, to accelerate the launch of the latter's India operations with a
    complete management of the company's IT infrastructure
--  HCL expanded its existing relationship that began in 2004 with Merck &
    Co. Inc., global leader in pharmaceuticals and announced a new multi-year,
    multi service, global transformational engagement to provide strategic
    support to Merck's key IT initiatives
    

Transformation @ HCL

--  HCL hosted the third edition of the Global Customer Meet - 'Explore &
    Transform' 2007 on 28-30th October. The event was attended by more than 350
    CxOs, who collaborated and debated on some of the burning and relevant
    issues relating to the business of technology business around the theme of
    'Collaborative Transformation.' Once again this year, HCL set the stage for
    some of the most influential industry leaders to discuss the power of
    collaboration and how it can bring transformation to the enterprise of
    future
--  A step towards building the 'Technologies of the Future,' the HCL
    Technology Hub was inaugurated on November 1, 2007 by Mr. Kamal Nath,
    Hon'ble Minister of Commerce & Industry, in the presence of Chief Guest Dr.
    A.P.J Abdul Kalam, Hon'ble Former President of India and Mr. P.
    Chidambaram, Hon'ble Finance Minister, who presided over this function. Dr.
    Kalam, on the occasion, outlined his vision for the transformational role
    of technology in shaping the future of India and the world. He remarked
    that the emergence of institutions like HCL has facilitated global
    competitiveness and helped in transforming India as a knowledge society.
    Mr. Chidambaram and Mr. Kamal Nath also spoke about the role of technology
    in enabling growth & development. The Technology Hubs, slated to come up in
    several cities like Madurai and Nagpur in the coming years will be the
    crucible of knowledge sharing, fermentation of ideas and the incubation and
    development of powerful next generation intellectual property
--  HCL is an Industry Partner with the World Economic Forum
    

Recognitions

--  HCL Infrastructure Services Division has been ranked World No. 1 in IT
    Infrastructure Outsourcing Vendor by Independent Global User Survey by
    Brown & Wilson Black Book of Outsourcing ahead of all leading global
    players
--  The European National Outsourcing Association has awarded the Highly
    Commended Vendor title to HCL for providing businesses with leading,
    innovative collaborative outsourcing solutions and first rate customer
    service which transform business performance
--  Business Week states HCL' Employee First as a new and radical
    management philosophy which will catch on with the world sooner or later
--  USA Today believes HCL's Employee First and 'democratization' of
    management concept could 'bring about a corporate renaissance'
--  Asiamoney's Best Managed Companies Poll voted HCL as one of the best
    company in India for Investor Relations
--  Shiv Nadar received the Ernst & Young Entrepreneur of the Year Award
    2007 in the 'Services' category for being "a doyen of the Indian IT
    industry and perhaps its chief architect"
--  IDC praises HCL's shift in focus from volume to value in Asia Pacific.
    With its new value-centric approach, HCL aims to drive higher revenue and
    gain market share from the other
    

Core Software Services Highlights

--  Our Blue Ocean approach and strategy of focusing on domain expertise
    and service offerings has reaped rich dividends leading us to grow in key
    verticals. Our consistent growth in Life Sciences and Financial Services
    verticals is a good example of the same
--  HCL completed the company's first Oracle 12i implementation for
    SolFocus, a pioneer in the development of solar energy systems. The
    partnership continues to focus on the mission to develop technology to
    leverage the untapped solar energy potential and contribute to the
    environment.
--  Revenues for Q2 at US $ 334.9mn, up 38.0% YoY
--  EBITDA (before non cash charge) for Q2 at US $ 72.3mn, up 30.3% YoY
--  EBIT at US $ 60.8mn, up 28.2% YoY
    

Infrastructure Services Highlights

--  HCL also ranks amongst the 'Best Companies to Work for in India' (BT-
    TNS Mercer Survey) for the fourth consecutive year
--  HCL declared a Market Leader in Domestic Remote Infrastructure
    Management by Frost & Sullivan for second consecutive year
--  Revenues for Q2 at US $ 70.6 mn, up 52.2 % YoY
--  EBITDA (before non cash charge) for Q2 at US $ 11.9mn, up 46.6% YoY
--  EBIT at US $ 8.5 mn, up 52.8% YoY
    

BPO Services Highlights

--  Received the NOA (National Outsourcing Association) Special Award for
    consistent excellence for outsourcing practice across all disciplines
--  Ranked in the Top 10 list of the Data Quest IDC BPO E-SAT survey 2007
--  Added two new customers in KPO space
--  Revenues for Q2 at US $ 55.4 mn, up 31.9% YoY
--  EBITDA (before non cash charge) for Q2 at US $ 14.4 mn, up 49.4% YoY
--  EBIT at US $ 11.0 mn, up 76.8% YoY
--  Quarterly net addition to headcount: 603, taking the employee strength
    to 11,865
    

About HCL Technologies

HCL Technologies is one of India's leading global IT Services companies, providing software-led IT solutions, remote infrastructure management services and BPO. Having made a foray into the global IT landscape in 1999 after its IPO, HCL Technologies focuses on Transformational Outsourcing, working with clients in areas that impact and re-define the core of their business. The company leverages an extensive global offshore infrastructure and its global network of offices in 18 countries to deliver solutions across select verticals including Financial Services, Retail & Consumer, Life Sciences & Healthcare, Hi-Tech, Telecom and Media & Entertainment (M&E). For the quarter ended 31st December 2007, HCL Technologies, along with its subsidiaries had last twelve months (LTM) revenue of US $ 1.6 billion (Rs. 6715 crores) and employed 47,954 professionals. For more information, please visit www.hcltech.com.

About HCL Enterprise

HCL Enterprise is a $ 4.5 billion (Rs. 18,877 crore) leading Global Technology and IT enterprise that comprises two companies listed in India - HCL Technologies & HCL Infosystems. The 3-decade-old enterprise, founded in 1976, is one of India's original IT garage start-ups. Its range of offerings span Product Engineering, Custom & Package Applications, BPO, IT Infrastructure Services, IT Hardware, Systems Integration, and distribution of ICT products. The HCL team comprises approximately 53,000 professionals of diverse nationalities, who operate from 18 countries including 360 points of presence in India. HCL has global partnerships with several leading Fortune 1000 firms, including leading IT and Technology firms. For more information, please visit www.hcl.in.

Forward-looking Statements

Certain statements in this release are forward-looking statements, which involve a number of risks, uncertainties, assumptions and other factors that could cause actual results to differ materially from those in such forward-looking statements. All statements, other than statements of historical fact are statements that could be deemed forward looking statements, including but not limited to the statements containing the words 'planned,' 'expects,' 'believes,' 'strategy,' 'opportunity,' 'anticipates,' 'hopes' or other similar words. The risks and uncertainties relating to these statements include, but are not limited to, risks and uncertainties regarding impact of pending regulatory proceedings, fluctuations in earnings, our ability to manage growth, intense competition in IT services, Business Process Outsourcing and consulting services including those factors which may affect our cost advantage, wage increases in India, customer acceptances of our services, products and fee structures, our ability to attract and retain highly skilled professionals, our ability to integrate acquired assets in a cost effective and timely manner, time and cost overruns on fixed-price, fixed-time frame contracts, client concentration, restrictions on immigration, our ability to manage our international operations, reduced demand for technology in our key focus areas, disruptions in telecommunication networks, our ability to successfully complete and integrate potential acquisitions, the success of our brand development efforts, liability for damages on our service contracts, the success of the companies / entities in which we have made strategic investments, withdrawal of governmental fiscal incentives, political instability, legal restrictions on raising capital or acquiring companies outside India, and unauthorized use of our intellectual property, other risks, uncertainties and general economic conditions affecting our industry. There can be no assurance that the forward looking statements made herein will prove to be accurate, and issuance of such forward looking statements should not be regarded as a representation by the Company, or any other person, that the objective and plans of the Company will be achieved. All forward looking statements made herein are based on information presently available to the management of the Company and the Company does not undertake to update any forward-looking statement that may be made from time to time by or on behalf of the Company.

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