SOURCE: HCL Technologies

August 13, 2007 12:35 ET

HCL Tech Announces Results for Year Ended June 30, 2007

Annual Revenues at US $1.4 Billion, up 42% and Net Income up 83%; Q4 Revenues up 45% and Net Income up 136%; Core Software Services Revenues Cross US$ 1 Billion; 4th Consecutive Quarter With Sequential Growth Above 9%

SUNNYVALE, CA and NOIDA, INDIA--(Marketwire - August 13, 2007) -


Highlights for the Year (US$)

--  Revenues at US$ 1389.6 mn; up 42.4% YoY
--  Net Income at US$ 314.9 mn; up 82.9% YoY
--  All 4 quarters in the fiscal had a sequential growth above 9% (10.3%,
    10.2%, 9.5% and 9.2%)
--  Total dividend payout of 400% (post issuance of 1:1 during the fiscal)
--  9,400 net additions in headcount taking employee strength to 42,000 as
    of 30th June 2007
    

Highlights for the Quarter (US$)

--  Revenues at US$ 395.7 mn; up 45.3% YoY and 9.2% sequentially
--  Net Income at US$ 119.5 mn; up 136.1% YoY and 56.7% sequentially
--  Final dividend of 100%; 18th consecutive quarterly dividend
--  1,868 net additions in headcount
    

The Transformation journey that HCL Technologies spearheaded in mid-2005 has borne fruit by creating a leadership position in winning multi-million, multi-service deals, and winning accolades and recognition by analysts and industry experts. The impressive sequential QoQ revenue growth that we have had in the last quarters of 10.3%, 10.2% and 9.5% continues in this quarter with a robust sequential growth of 9.2%.

The transformation journey that focuses on value centricity in customer relationships and on exploring new uncontested market opportunities through a Blue Ocean strategy has now entered into the next phase, where the focus will be on a selective partnership approach to augment domain depth, capability and service innovation to enhance value and accelerate growth.

"HCL has a time tested ability to anticipate change and the most recent transformation that began in 2005 is paying off. Our emphasis on value centricity delivered with our multi service capability, linked to business benefit linked outcomes, premised on Trust, Transparency and Flexibility in dealing with customers has resulted in growing our large existing relationships besides new transformational deals. We have managed to face the challenges in the financial environment well, through our foresight and prudent treasury management measures. The future looks bright and we are poised well for success," states Shiv Nadar, Chairman and CEO, HCL Technologies.

Commenting on the results, Vineet Nayar, President, HCL Technologies, states, "The past year has been spectacular for us for three reasons. Firstly, for four consecutive quarters, we have grown sequentially over 9%. Secondly, thanks to our unique Employee First focus, we have not only been able to manage our attrition, but more importantly, we have been able to attract leadership talent in key positions. Thirdly, we have put India on the map by leading the way in Total IT Outsourcing deals, similar to what we did with Remote Infrastructure Management (RIM). This combined with our dominant leadership in winning and executing large transformational multi-million dollar deals, puts us in a unique position in the industry."

Ranjit Narasimhan, Executive Vice President, HCL Technologies and Head, HCL BPO Operations, states, "HCL BPO is the first BPO organization in the world to achieve Maturity Level 3 in the People Capability Maturity Model (PCMM), a recognition that indicates our total focus and commitment towards people and quality processes. Revenues from our Indian operations grew by over 60% during the fiscal year and this business continues to be on a profitable growth track. HCL BPO has also set up a new state-of-the art facility in Chennai to cater to future growth."

Key Catalysts for Growth

--  Among geographies, Australia-New Zealand (ANZ) and Europe have been
    the trailblazers.
--  Among Service Lines, Infrastructure services, Engineering and R&D
    services (ERS) and BPO witnessed accelerated growth, reaffirming HCL's
    dominant market position as a leader in Multi-Service Delivery offerings.
--  Among the verticals, the fastest growth was recorded in Aerospace &
    Automotive, Life Sciences & Financial Services.
--  The traction from existing larger customers maintains its momentum in
    this quarter as well, which is reflected in the company average growth
    rate.
    

Particulars     Segment                               CQGR            YoY
                US$ Growth                           (Last 4 quarters)


Consolidated    For the company                        9.8%           45.3%

Geography       ANZ                                   20.0%          107.5%
                Europe                                11.4%           54.0%

Service         Infrastructure Services               14.9%           74.5%
Offering        BPO                                   10.4%           48.6%
                Engineering and R&D services (ERS)     9.8%           45.3%
                Enterprise Application Services (EAS)  8.9%           40.6%

Industry        Aerospace & Automotive                16.6%           84.9%
                Financial Services                    15.3%           76.7%
                Life Sciences                         14.7%           72.8%
                Telecom                               10.9%           51.0%
                Media & Entertainment                 10.1%           46.9%

Clients         Top 5  (annual)                        9.5%           43.9%
                Top 10 (annual)                       10.0%           46.3%
                Top 20 (annual)                       10.4%           48.7%

Multi-service, Multi-year, Multi-million dollar deals drive growth

This quarter, HCL inked 7 multi-service, multi-year, multi-million dollar deals, namely:

--  Fonterra: As part of the unique outsourcing contract, Fonterra will
    outsource application development, maintenance and support (across all
    platforms) to HCL. Fonterra is New Zealand's largest company and the fifth
    largest dairy company of the world.
--  Alenia Aeronautica: Under this deal, HCL Technologies will redesign
    the C27J Spartan aircraft, a project that emphasizes the growing strategic
    importance of India to the global aviation industry.  Alenia Aeronautica is
    a major player in the aerospace industry and the Italian leader in
    aeronautics.
--  Konica Minolta: Under this deal, HCL Technologies will provide
    software services for Konica Minolta's Multi-Function Peripherals (MFPs),
    printer and medical equipment business lines. Konica Minolta is a leading
    company in photo imaging business.
--  CMS Cameron McKenna LLP: HCL Technologies has entered into an IT co-
    sourcing agreement with Cameron McKenna under which HCL will be providing
    integrated IT services, covering IT infrastructure management and
    application development. CMS Cameron McKenna LLP is a major UK and
    international law firm.
--  A large treasury bank: For this large treasury bank entrusted with
    managing monetary stability, HCL Technologies will provide end-to-end
    application and infrastructure management.
--  A large music company: For this large, independent music company, HCL
    Technologies will provide integrated applications and infrastructure
    management.
--  A leading global solutions provider of specialty chemicals: Under this
    deal, HCL Technologies will provide end-to-end Infrastructure management,
    including SAP Basis and SAP security.
    

HCL Technologies also demonstrated leadership in execution experience with the large transformational engagements the company started in the last two years (e.g., Autodesk, DSGi, Teradyne, Skandia) that have moved in a steady state and are beginning the subsequent phases of IT transformation.

Transformation @ HCL Tech

HCL Technologies has moved into its next phase focusing on a selective partnership approach to augment domain depth, capability and service innovation to enhance customer value and accelerate growth. In its continued pursuit to focus on providing a Transformational platform for customers, experts and thought leaders alike, HCL Technologies will be hosting the third chapter of "Explore & Transform," a unique conclave that brings together visionaries in the world of business and technology to debate on the most topical issues on technology, transformation and cross-border collaboration, on Oct 29-30, 2007. More than 250 CXOs are expected to congregate at the conclave this year.

HCL Technologies being taught at Harvard Business School

Harvard Business School has published a case study on HCL Technologies, authored by Prof. Tarun Khanna, Prof. Linda Hill and Ms. Emily Stecker focusing on its unique transformation over the last 2 years, highlighting its Employee First strategy. The case study is being taught in the Strategy and Leadership classes at Harvard Business School

Recognitions

--  Forbes Asia in its cover story on HCL Technologies says, "For eight-
    year-old HCL technologies, the quietest of India's outsourcing tigers,
    relationships have always been key... The company is courting deals where
    it bundles several IT functions, often involving remote management of
    computer or communication systems, for a single client."
--  Business Week lists HCL Technologies among the Top 100 fastest growing
    Tech companies in the world.
--  The Economist has observed that "Other multinationals are becoming
    increasingly nervous about the fifth-biggest Indian outsourcer, HCL
    Technologies."
--  Ovum says, "HCL's matching or bettering the extraordinary growth rates
    of TCS and Infosys suggests that its strategy is working on the top line.
    HCL is the fifth largest Indian outsourcer, but its service line portfolio
    is much more diversified. Also, HCL is one of the select vendors that
    actively drives, and boasts more than an insignificant number of clients on
    business outcome-based SLAs."
--  IDC acknowledges HCL Technologies as the "disruptive force" capable of
    leading the future of IT services industry and believes that HCL's
    willingness not to compete on price is a long-term strategy; while for the
    short term, cost saving is a powerful means to gaining momentum in the
    European competitive arena, especially in those verticals in which IT
    budgets are still under pressure. It is worth noting that the value-add
    strategy is very forward looking and can provide a competitive advantage to
    HCL.
--  London Business School has published a report in their annual
    "Business Strategy Review" recognising "Organisational Innovation" in 10
    notable global organisations, including HCL Technologies, the lone Indian
    company featured. The report talks about "Employee First" as a new model of
    management and talks about "HCL heading in the right direction."
--  The UK Government recognised HCL with the UKTI Investor of the year
    award.
    

Core Software Services Highlights

--  Core software revenues cross US$ 1 billion
--  Our strategy of focussing on domain expertise and developing service
    offerings in select verticals continues to bring rich dividends. The growth
    in Aerospace & Automotive continues to be the fastest at YoY growth of 85%,
    where we work with some of the leading players. In Life Sciences and
    Healthcare, the company has posted an impressive YoY growth of 73% with
    several marquee clients in this space among our top contributors. Our
    leadership in the medical device micro-vertical was further strengthened by
    opening 6 new medical device accounts in 06-07. We have also started work
    with the world's largest diagnostic chain and CRO. Additionally, AMR
    research has ranked HCL as the leader in Manufacturing IT amongst offshore
    IT providers
--  HCL Technologies has been designated as Chair for SAP's Partner
    Advisory Board in Singapore.
--  HCL Technologies has enhanced its market leadership in Middleware and
    SOA services with a YoY growth of over 90% and added 15 marquee Fortune 500
    accounts with the launch of two products, CrossFIT for BPM & SOA Testing
    and ProcessWatch for Transaction Monitoring.
--  Revenues for Q4 at US$ 282.4 mn, up 39.8% YoY; Revenues for Fiscal'07
    at US$ 1009.8 mn, up 37.7%.
--  EBITDA (before non cash charge) for Q4 at US$ 61.5 mn, up 31% YoY;
    EBITDA (before non cash charge) for Fiscal'07 at US$ 228.7 mn, up 36.5%.
--  EBIT at US$ 51.3 mn, up 28.4% YoY; EBIT for Fiscal'07 at US$ 194.6 mn,
    up 35.8%.
    

Infrastructure Services Highlights

--  PC Quest awarded UIIC, one of HCL ISD's largest customers, with "Best
    IT Implementation Award."
--  HCL ISD launched first ever 'Blackbook' on Remote Infrastructure
    Management.
--  HCL ISD ranked No.1 in NMS, No.2 in Network Integration and No. 1 in
    Network Security Services by Voice & Data 100.
--  Forrester rated HCL ISD as "LEADER" in Global IT Infrastructure
    Outsourcing vendor evaluation study 2007.
--  Butler Group's Technology Audit reinforced HCL's leadership in Remote
    Infrastructure Management.
--  Cisco recognizes HCL ISD as its 'APAC Technology Partner of the year.'
--  Revenues for Q4 at US$ 59.3 mn, up 74.5% YoY; Revenues for  Fiscal'07
    at US$ 195.7 mn, up 74.7%.
--  EBITDA (before non cash charge) at US$ 9.9 mn, up 66.6% YoY; EBITDA
    (before non cash charge) for Fiscal'07 at US$ 33.9 mn, up 96.5%.
--  EBIT at US$ 6.7 mn up 85.4% YoY; EBIT for Fiscal'07 at US$ 22.9 mn, up
    144.4%.
    

BPO Highlights

--  HCL BPO added 13 new clients during the fiscal, 9 in India and 4 in
    Northern Ireland.
--  HCL BPO has built capability in Legal Process Outsourcing and Decision
    Support Services.
--  HCL BPO was successfully appraised at ISO 27001; it became the first
    service organization in the world to develop and implement Integrated
    Business Management System (IBMS) to ensure that the organization follows
    the most innovative and best practices of all Quality certifications (ISO
    9001, ISO 14001, OHSAS 18001, and COPC).
--  The organization was ranked 4th in the Most Preferred BPO Employer
    list by Dataquest, was ranked among the Top 25 Best Employers in India by
    the Hewitt survey conducted in association with The Economic Times.
--  HCL BPO was ranked among the Top 3 Contact Centers in Asia Pacific by
    Frost & Sullivan.
--  The International Association of Outsourcing Professionals (IAOP)
    ranked HCL BPO 15th among Global Service Providers.
--  HCL BPO was ranked 3rd globally for Highest Client Satisfaction in
    business process outsourcing by The Black Book of Outsourcing, June 2007.
--  Revenues for Q4 at US$ 54.0 mn, up 48.6% YoY48.6%; Revenues for
    Fiscal'07 at US$ 184.1 mn, up 40.8%.
--  EBITDA (before non cash charge) at US$13.9 mn, up 67.9% YoY; EBITDA
    (before non cash charge) for Fiscal'07 at US$ 45.3 mn, up 43.2%.
--  EBIT at US$ 10.3 mn, up 90.5% YoY; EBIT for Fiscal'07 at US$ 31.9 mn,
    up 51.8%.
    

Complete Audited Financial results for the quarter and year ended June 30th, 2007 can be found at: http://www.hcltech.com/investors/Downloads/FR/Q4%20FY07.pdf

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 17 countries to deliver solutions across select verticals including Financial Services, Retail & Consumer, Life Sciences & Healthcare, Hi-Tech & Manufacturing, Aerospace and Automotive, Telecom and Media & Entertainment (M&E). For the year ended 30th June 2007, HCL Technologies, along with its subsidiaries, had revenues of US$ 1.4 billion (Rs. 6034 crores) and employed 42,000 professionals. For more information, please visit www.hcltech.com

About HCL Enterprise

HCL Enterprise is a 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 46,000 professionals of diverse nationalities, who operate from 17 countries including 300 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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