HCL

MANAGEMENT DISCUSSION AND ANALYSIS
The Year 2004-05 has been a landmark year, with the company having crossed USD 1 Billion in revenue during the course
of the year. The Company has consolidated its position as the market leader in the various product segments it operates in.
Further it has taken several initiatives in opening new markets, partnering with global leaders to offer additional products,
and increasing its sales and support reach in the ICT space.
As the adoption of IT and Communication becomes more prevalent in business and daily use, the company with these new
initiatives is poised to harness the same.
Info Processing Business
HCL Infosystems is one of the very few organizations that cater to the IT products, infrastructure & services needs of
customers over the entire spectrum of users ranging from Large Enterprises, Government, Banking, Financial services,
Education & Research, SME, SoHo & Home. The Company has built a large & loyal customer base in each of the above
segments across the country.
During the last year the PC & Server range saw volumes grow. The Company retained its leadership position in the
Commercial PC segment for the fifth year in a row. It increased its market share to 14.2 %, with the IDC rating it as the
largest selling PC brand of the country. The year saw introduction of several new models both in PCs and Servers. The
Company maintained its track record of launching new technology products in India at the same time as they were released
worldwide.
Some of the new innovative products launched in the commercial space were the 6 in 1 PC, a product that provides six
users simultaneously an independent secure computing experience on one PC. The company released a secure PC for the
ITES segment, a product specifically designed to reduce the incidence of data theft in an ITES environment. On the server
front the company released rack server products typically required by high density users, in addition to the launch of a
number of programs towards adoption of servers by enterprises in the mid market segment. Some of them are the ISV
Partner programs, the program for certification of servers by leading software vendors etc.
The Company augmented its support network, which now has 2000+ trained engineers and a direct presence at 300+
locations. The Company has improved processes to ensure faster and accurate deliveries to customers across the country,
to meet up with the growing numbers.
The year saw the Company acquire a large number of new customers. The Company continues to bag large prestigious
orders from our existing clients like the State Bank of India, Canara Bank, ACC, Department of Posts, Sun Pharmaceuticals,
Seimens, Hindustan Aeronautics Ltd, HDFC Standard Life Insurance etc.
The initiatives on the System Integration front saw the Company successfully commission and handover the country’s
largest internet backbone network to M/s. BSNL Limited. Another major project executed and handed over was the School
computerization project from the “Department of School Education”, Government of Punjab. HCL did a turnkey job of
supplying, installing and commissioning computers and related infrastructure in 1287 schools across rural and urban
Punjab. The Company has won several prestigious projects on solutions around Oracle, SAP, Broad Vision, Filenet, among
others. The Company today is addressing a number of opportunities in the system integration space by leveraging its
understanding of multiple technologies and the domain knowledge of various customer businesses.
In the consumer PC segment, the Company emerged as the most preferred PC brand, increasing its market share from
4.9% in 2003 to 12.8% in 2004. The Company broke the PC price barrier by launching EzeeBee Pride at Rs. 12990/-,
making branded PCs more affordable than ever before. The company launched another first in the Indian Market, a PC on
EMI scheme @ Rs. 499/-. Taking a leadership role it worked with the banking and finance industry in bringing out such a
scheme, to address the latent potential among the middle-income group consumers. Other initiatives include launch of
HCL-BSNL Broadband PC, Govt. Aided PC Purchase Program (GAPP). In a strategic tie up with leading technology partners
the Company launched for state governments, a low cost HCL Ezeebee with Operating system for Rs. 18000/-.
In addition to this, the Company also introduced digital cameras, MP3 players and inkjet printers for its Home/SoHo users.
As lifestyle are getting more digital, these products will increasingly find acceptance amongst the customers. HCL Ezeebee,
the value PC launched last year, notched up good volumes this year, indicating high acceptance at the customer level.
Going forward, the Company is targeting newer segments like retail and rural to capitalize on the emerging opportunities.
Continuing its innovative strategy, the Company launched RP2 system for the semi urban & rural areas, a solution for
providing uninterrupted power for four to six hours for a computer user in areas with power shortage.
On the whole, the Company will endeavor to continue to offer leading-edge technology and provide best value for money
products & services to its customers.
Imaging & Communications Business
The year saw your Company rapidly increase its customer base by offering new products and solutions.
On the Imaging front, the Company was ranked No. 1 in India for the Toshiba A3 Multi Functional products it takes to
4
market. The Company also maintained its leadership position in digital projectors, for the Infocus & Toshiba range of
multimedia projectors that it markets. The Company cornered a market share of 35% of the total market with these two
products.
The Company introduced new products like Konica Minolta printers, LCD TVs and Audio Visual System Integration (AVSI)
solutions. The introduction of AVSI solutions met with encouraging response from customers. The Company bagged major
orders from HDFC, Deccan Aviation, Tamil Nadu Police, Reliance Petro, Lafarge, Ranbaxy, Chennai Police, Essar, DHL,
Hutch, Bharti Infotel, Aviva & ONGC.
In corporate networking and managed networks segment, the Company continued to add more customers for its range of
solutions and services. The Company services prestigious clients from different business verticals across the country. The
Company has invested in infrastructure and services that ensures a consistent level of service delivery to each of its
customers, thereby keeping up its commitment of maximizing customer satisfaction. During the course of the year the
Company launched a complete End-to-End enterprise IP telephony and Global IP VPN services for its customers in India in
partnership with Virtela. The Company added some prestigious customers like Royal Airways, Millennium Care, Balmer &
Lawrie, Suzlon to name a few.
On the telecom front, the Company consolidated its position as a trusted provider of communication equipments for
Enterprise connectivity. In Telecom Services business, the Company in partnership with Ericsson launched a slew of
products for Business Conferencing, Broadband and Mini Link Radio. The Company emerged as a major player in video
conferencing business in the country.
The Company formally handed over the largest EPABX installation in the country at IIT Kharagpur, which consists of 14000
lines providing traditional telephony, IP telephony & ADSL broadband connectivity to the entire campus. On the Telecom
System Integration space the Company executed orders for integrated voice & data solution (Police Dial 100) for the Police
Force – a solution that helps the Police force to deploy its resources in a timely and more efficient manner and in turn
enable it to serve the citizens better.
The Company ramped up its sales & distribution network and support infrastructure to service the growth in customer
demand for GSM telephones. The Company leveraged its distribution network strength to introduce a slew of new handset
models at various price points based on different technologies. All this contributed to the increase in market share of Nokia
GSM phones.
5
FINANCIAL COMMENTS ON CONSOLIDATED OPERATIONS FOR THE YEAR ENDED 30TH JUNE, 2005
FINANCIAL PERFORMANCE
1. Gross Revenue:
Revenue grew by 76% from Rs. 4412 crores in the previous year to Rs. 7784
crores in the current year.
Revenue for the Parent Company grew by 29% from Rs. 1522 crores in the
previous year to Rs. 1967 crores in the current year.
2. Other Income:
Other income for the current year is Rs. 51 crores as against Rs. 29 crores in
the previous year. It includes income from investment in Mutual Funds Rs.
11 crores (Previous Year Rs. 12 crores), interest income Rs. 12 crores (Previous
Year Rs. 9 crores) and gains from foreign exchange fluctuation Rs. 14 crores (Previous Year Rs. 4 crores).
3. Gross Margins:
Gross margins for the current year are at Rs. 603 crores as against Rs. 445 crores in the previous year.
Gross margins for the Parent Company are at Rs. 332 crores as against Rs. 282 crores in the previous year.
4. Personnel Costs:
Staff Costs Staff cost for the current year increased to Rs. 145 crores from Rs. 108 crores in
the previous year. Manpower increased from 3287 as at June 2004 to 3879 as at
June 2005. Staff cost is 1.9% of sales for the current year as against 2.5% in the
previous year.
Staff cost for the Parent Company for the current year is Rs. 102 crores as against
Rs. 78 crores in the previous year.
#FY 03 exclude discontinued Software business
5. Administrative, Selling, Distribution and Others:
Expenses amounted to Rs. 190 crores, as against Rs. 127 crores in the previous year. The expenses as a % to sales
declined to 2.4% from 3.0%.
Expenses for the Parent Company amounted to Rs. 105 crores, as against Rs. 80 crores in the previous year.
6. Operating Profit (EBIDT):
Operating profit excluding ‘Other income’ grew by 28% from Rs. 209 crores in the previous year to Rs. 268 crores.
7. Finance Charges:
Finance charges for the year is Rs. 8 crores as against Rs. 9 crores in the previous year.
8. Profit Before Tax:
PBT grew by 40% from Rs. 212 crores in the previous year to Rs. 296 crores in the current year.
PBT for Parent Company grew by 16% from Rs. 128 crores in the previous
year to Rs. 149 crores in the current year.
9. Profit After Tax:
Profit after tax grew by 30% from Rs. 175 crores in the previous year to Rs.
228 crores. The profits for the current year are after a provision for Rs. 65
crores for current tax expense, Rs. 2 crores for deferred tax expense and Rs. 1
crore for Fringe Benefit Tax applicable from April 05.
Profit after tax for the Parent Company grew by 10% from Rs. 121 crores in
the previous year to Rs. 133 crores.
6
Dividend 10. Dividend:

310% The Company continued with the practice of declaring quarterly dividends.
210% Accordingly, it distributed dividends @ 70% in each of the first three quarters. The
company proposes to pay a final dividend of 100% per fully paid up equity share of
100% Rs. 2/- each. The interim dividends paid together with proposed final dividend total
to 310% for the current year, entailing an outflow of Rs. 117 crores, including
distribution tax.
FY 03 FY 04 FY 05
11. Earning Per Share:
Consolidated Basic EPS grew from Rs. 10.9 in the previous year to Rs. 13.7 in
the current year. Diluted EPS grew from Rs. 10.2 in the previous year to
Rs. 12.9 in the current year.
Basic EPS of the Parent Company grew from Rs. 7.5 in the previous year to
Rs. 8.0 in the current year. Diluted EPS grew from Rs. 7.0 in the previous year
to Rs. 7.5 in the current year.
Calculated on equity shares of Rs. 2/- each
7
FINANCIAL CONDITIONS
1. Net Worth/Shareholders Funds: Net Worth as on 30th June 2005 is Rs. 555 crores. Share capital as at 30th June, 2005
is Rs. 33.4 crores divided into 16.7 crores shares of Rs. 2/- each. Reserves & surplus as at 30th June 2005 is Rs. 521
crores after appropriating Rs 117.3 crores for three quarterly interim and final dividends.
Net worth of the Parent Company is Rs. 435 crores. The book value per Rs. 2/- share of the Parent Company increased
from Rs. 24 as on 30th June 2004 to Rs. 26 as on 30th June 2005.
During the year, the Company allotted 5.46 lakh shares of Rs. 10/- each (sub divided into 27.32 lakh shares of
Rs. 2/- each) under the Employee Stock Options realizing Rs. 21.5 crores. The increase in share capital on account of
ESOP is Rs. 0.5 crores and increase in reserves is Rs. 21.0 crores.
2. Borrowings: Year-end loan balances marginally increased from Rs. 72 crores

as on 30th June 2004 to Rs. 81 crores as on 30th June 2005. The Debt:Equity
dropped from 15% to 13%.
3. Fixed Assets: Net block as on 30th June 2005 is Rs. 76 crores. During the
current year, the Company made capital expenditure of Rs. 27 crores mainly
for acquisition of Land in Uttaranchal, expanding customer support network,
one time license fee to DOT for Internet Business and additions to Plant &
Machinery. The Company retired various assets with a Gross block of Rs. 25
crores and a net book value of Rs. 0.1 crores.
Net block of Parent Company as on 30th June 2005 is Rs. 53 crores.
4. Inventories: Inventories increased from Rs. 280 crores as on 30th June 2004 to Rs. 349 crores as on 30th June 2005.
The inventory turn over on sales grew from 15.7 times in the previous year to 22.3 times in the current year.
Inventories of Parent Company increased from Rs. 161 crores as on 30th June 2004 to Rs. 188 crores as on 30th
June 2005. The inventory turn over on sales grew from 9.4 times in the previous year to 10.5 in the current year.
5. Debtors: Debtors increased from Rs. 416 crores as on 30th June 2004 to Rs. 532 crores as on 30th June 2005.
Debtors as number of days of sale stands reduced to 25 days as on 30th June 2005 from 34 days as on 30th June
2004.
Debtors of Parent Company increased from Rs. 295 crores as on 30th June 2004 to Rs. 370 crores as on 30th June
2005. Debtors as number of days of sale stands reduced to 69 days as on 30th June 2005 from 71 days as on 30th
June 2004.
6. Liquid Assets (Investment in Mutual Funds and Fixed Deposits with Banks): Liquid Assets as on 30th June 2005 are
at Rs. 253 crores as against Rs. 254 crores as on 30th June 2004. These exclude cash in hand & balances with bank
in collection and disbursement accounts.
7. Other Current Assets including Loans and Advances: Other current assets increased from Rs. 70 crores as on 30th June
2004 to Rs. 154 crores as on 30th June 2005.
Other current assets of the Parent Company increased from Rs. 40 crores as on 30th June 2004 to Rs. 111 crores as
on 30th June 2005. Lease rent recoverable as on 30th June 2005 is Rs. 60 crores.
8. Current Liabilities & Provisions: Current liabilities and provisions increased from Rs. 697 crores as on 30th June 2004
to Rs. 863 crores as on 30th June 2005.
Current liabilities and provisions of the Parent Company increased from Rs. 398 crores as on 30th June 2004 to Rs.
468 crores as on 30th June 2005.
9. Cash Flow: The cash generation from operating activities in the current year is Rs. 127 crores.
The cash generation of Parent Company from operating activities in the current year is Rs. 27 crores.
The consolidated financial results include the results of the company’s 100% subsidiary, HCL Infinet Ltd.
8
SEGMENT PERFORMANCE
The Company recognises Computer Systems and related products & services, Office Automation & Telecommunication,
and Internet & related services as its’ three primary segments.
Computer Systems and Related Products & Services:
The segment operations comprises of sale of computer hardware and system

integration products and providing a comprehensive range of IT services including
system maintenance, facilities management etc. in different industries.
Segment revenue grew by 29% from Rs. 1522 crores in the previous year to Rs.
1967 crores in the current year. Segment results (PBIT) grew by 12% from Rs. 123
crores in the previous year to Rs. 138 crores in the current year. Capital Employed
in the segment is Rs. 359 crores as on 30th June 2005 as against Rs. 205 crores
as on 30th June 2004. The capital employed as at 30th June 2005 includes Rs. 73
crores of Cash and Bank balances (PY Rs. 35 crores). Return on Capital Employed
is 38%.
Office Automation & Telecommunication:

Office Automation & Telecommunication
The segment addresses telecommunication products, office equipment products
and related comprehensive maintenance services.
Revenue of the segment for the current year grew by 101% from Rs. 2877 crores in
the previous year to Rs. 5779 crores. PBIT grew by 76% from Rs. 83 crores in the
previous year to Rs. 146 crores in the current year. Capital Employed in the segment
is Rs. 56 crores as on 30th June 2005 as against Rs. 65 crores as on 30th June
2004. The Return on Capital Employed for the current year is 261% as against
128% in the previous year.
Internet & Related Services:
The segment provides Virtual Private Network, Internet Access services, other connectivity services and related hardware.
Revenue of the segment showed a marginal drop of 2% from Rs. 44 crores in the previous year to Rs. 43 crores in the
current year. Despite revenue drop, segment registered a profit of Rs. 2 crores as against a loss of Rs. 2 crores in the
previous year. This has been achieved through increase in the capacity utilization of leased lines and other cost reductions.
Rs. crores FY 03 FY 04 FY 05
Revenue 32 44 43
PBIT -13 -2 2
9
CORPORATE INFORMATION
BOARD OF DIRECTORS Chairman & Chief Executive Officer

Ajai Chowdhry
Whole-time Directors
J.V. Ramamurthy (appointed from 11-08-05)
Ravi Thumboochetty (retired as whole-time Director from 10-08-05)
Directors
R.P. Khosla
S. Bhattacharya
D.S. Puri
E.A. Kshirsagar
Anita Ramachandran
T.S. Purushothaman (retired as whole-time Director from 20-07-05 and
appointed as Director from 21-07-05)
COMPANY SECRETARY K.R. Radhakrishnan
AUDITORS Price Waterhouse, New Delhi
BANKERS State Bank of India

Canara Bank
HDFC Bank Ltd.
ICICI Bank Ltd.
Societe Generale
Standard Chartered Bank
State Bank of Patiala
State Bank of Saurashtra
REGISTERED OFFICE 806, Siddharth,

96, Nehru Place, New Delhi- 110 019.
CORPORATE OFFICE E - 4,5,6, Sector XI, Noida-201 301 (U.P.)
WORKS ♦ RS Nos: 34/4 to 34/7 and Part of RS No: 34/1, Sedarapet,

Pondicherry- 605 111.
♦ RS Nos: 107/5,6 & 7, Sedarapet, Pondicherry— 605 111.
♦ 78, South Phase, Ambattur Industrial Estate, Chennai- 600 058.
♦ Spl- A2, Industrial Estate, Thattanchavadi, Pondicherry- 605 005.
10
FIVE YEAR FINANCIAL OVERVIEW
Revenue and Profitability

Rs/Lacs
YEAR ENDED JUNE 30 2005 2004 2003 2002 2001
Total Revenue 199886 154295 166604 127003 116843

PBIDT 15634 14523 11491 6784 9005
Interest 96 656 805 371 193
Depreciation 651 1019 1109 1268 1225
Effect of Impairment 0 0 3322 0 0
Profit before Tax 14887 12848 6255 5145 7587
Provision for Tax 1610 759 82 532 690
Profir after Tax (PAT) 13277 12090 6173 4613 6897
Diminution in value of advances 0 0 0 0 1060
Profit available for Appropriation 37161 32816 24944 20030 18461
Equity Dividend 10321** 6841 3191 798 2234
Basic Earning Per Share (Rs.)* 8.0 7.5 3.9 2.9 3.7
Operating Margin (%) 8% 9% 7% 5% 8%
Profit before Tax/ Revenue (%) 7% 8% 4% 4% 7%
Return on Net worth(%) # 30% 30% 19% 14% 23%
Return on Capital Employed(%)# 25% 26% 14% 10% 17%
Equity Dividend (%) 310** 210 100 25 70
* Based on equity shares of Rs. 2/- each on Balance Sheet date.

** Includes interim dividends aggregating to 210% and proposed final dividend of 100% amounting to
Rs. 6975 Lacs and Rs.3346 Lacs respectively.
# Calculated on “PAT”
Assets and Liabilities Rs/Lacs

AS AT JUNE 30 2005 2004 2003 2002 2001
Sources of Funds
Equity Funds 3344 3289 3191 3191 3191
Reserves and Surplus 40191 36552 29454 29493 26431
Loan Funds 8132 7137 11787 12597 11241
Deferred Tax Liabilities (Net) 681 308 563 1004 0
Total 52348 47286 44995 46285 40863
Application of Funds
Net Block 5329 4925 4954 5552 5171
Investments 12277 28060 21289 13668 8501
Current Assets 81533 54091 45042 55985 51401
Current Liabilities 46791 39790 26290 28920 24210
Net Current Assets 34742 14301 18752 27065 27191
Total 52348 47286 44995 46285 40863
11
DIRECTORS’ REPORT
To the Members,
Your Directors have pleasure in presenting their Nineteenth Annual Report together with the Audited Accounts for the
financial year ended 30th June, 2005.
Financial Highlights
(Rs. in Crores)
Particulars Consolidated Parent Company
2004-05 2003-04 2004-05 2003-04
Net Sales and other income 7794.93 4335.36 1959.57 1437.60
Profit before Interest, Depreciation and Tax 319.01 238.35 156.34 145.23
Finance Charges 7.76 8.83 0.96 6.56
Depreciation 15.24 18.01 6.51 10.19
Profit before Tax 296.01 211.51 148.87 128.48
Provision for Taxation: Current 65.94 20.99 12.37 10.14
Deferred 2.36 15.41 3.74 (2.55)
Net Profit after Tax 227.71 175.11 132.77 120.90
Profit available for appropriation 490.80 352.42 371.61 328.16
Appropriations
Interim Dividend (includes tax on dividend) 79.13 51.15 79.14 51.15
Proposed Dividend (includes tax on dividend) 38.16 26.08 38.16 26.08
Transfer to General Reserve 13.28 12.09 13.28 12.09
Balance of Profit carried forward to next year 360.23 263.10 241.03 238.84
Performance
The consolidated revenue of the Company was Rs. 7784 crores as against Rs. 4412 crores in the previous year. The
consolidated profit before tax was Rs. 296 crores as against Rs. 212 crores in the previous year.
The gross revenue and profit before tax of the Parent Company were Rs. 1967 crores and Rs. 149 crores respectively.
The gross revenue and profit before tax for the previous year were Rs.1522 crores and Rs.128 crores respectively.
Your Directors are pleased to recommend final Dividend @ 100% on the fully paid-up equity shares of Rs.2/- each for the
financial year ended on 30th June, 2005. During the first nine months, three interim (quarterly) dividends of 70% each
were declared taking the total dividend for the year 2004-05 to 310 %.
Infoprocessing Business:
Your Company, in its true leadership style, stood up and took on the challenges and opportunities and performed like never
before. It consolidated its position as India’s leading IT infrastructure hardware and services vendor.
The latest annual IDC Report placed your Company at Number one in the Desktop PC segment for the year 2004, thus
making it the most preferred PC brand in the country. Your Company led the market with a market share of 13.7 %, up from
9.2% in the year 2003, thus maintaining its leadership position for the fifth year in a row.
On the consumer PC front, the Company launched several new models including the announcement of a new PC ‘EzeeBee
Pride’ at a very affordable price of Rs. 12,990. Your Company initiated a number of large consumer contact programs to
scale up the volumes during festive seasons.
The Company in a first of its kind program in the country, launched PCs on an installment scheme of just Rs. 499 a month,
bringing a computer within the reach of a larger section of the middle income consumers in our country. The Company also
announced the launch of the Six in One PC, a product that offers upto six users to a system. This new desktop solution
allows users to efficiently utilize the power of the PC to be shared by multiple users.
On the System Integration front, the Company successfully completed the rollout and commissioning of the country’s
largest Internet backbone network for Bharat Sanchar Nigam Limited (BSNL).
During the course of the year, the Company strengthened its product offering, its sales & services network towards tapping
the growing ICT market.
Imaging & Communications Business (HCL Infinet)
The year has seen your Company launch several new products and services in the field of Imaging and Communications.
Among the many products launched are the Toshiba LCD TV’s, Ericsson range of solutions for Business conferencing,
Broadband and Mini Link Radio. It launched complete end-to-end solutions for IP telephony and Global IP VPN services.
HCL continued to lead in the various product categories that we take to market. IDC Survey 2005 has rated HCL – Toshiba
12
DIRECTORS’ REPORT
as No. 1 in the sales of A3 MultiFunction Devices for the year 2004-2005. The Company also maintained lead position in
Infocus & Toshiba Multimedia projectors in India with a total market share of 35% (Source: PMA Feb 2005)
In the GSM handset distribution business, the Company leveraged its distribution network strength to introduce a slew of
new handset models at various price points. It upgraded and strengthened its support network for phones, all this contributing
to the increase in market share of Nokia GSM phones.
Quality Initiatives
During the year 2004-05 under review significant milestones were achieved on the quality initiatives front.
Annual Customer Satisfaction Survey for all our business divisions was conducted. Apart from getting the highest response
rate in the surveys over the last 5 years, we also got the highest Customer Satisfaction levels. Customer loyalty has
improved, with more than 76% customers rating ‘Very Likely’ to continue to purchase products from the Company. Similarly
in other areas like product quality, delivery of machines and support the customers have given the Company the highest
ratings over the last 5 years.
Your Company is continuing to send Machine Uptime Status Reports to our Key Customers. The support reach across the
country of the Company has increased to more than 260 locations and your Company continues to be ranked No. 1 in PCs.
Employee Stock Option Plan
Employees Stock Option Plan 2000
Pursuant to the approval of the shareholders at the Extra-Ordinary General Meeting held on 25th February, 2000 for grant
of options to the employees of the Company and its subsidiaries (the ESOP 2000), the Board of Directors had approved the
grant of 30,18,000 options including the options that had lapsed out of each grant.
Employees Stock Based Compensation Plan 2005
The shareholders of the Company have approved the Employees Stock Based Compensation Plan 2005 through a Postal
Ballot for grant of 33,35,487 options to the employees of the Company and its subsidiary. The Board of Directors has
granted 31,96,840 options (each option confers on the employee a right for five equity shares of Rs. 2/- each) at an
exercise price of Rs. 228.80 being the market price as specified in the SEBI (Employee Stock Option Scheme and
Employee Stock Purchase Scheme) Guidelines, 1999 on the date of grant.
Credit Ratings
The credit rating by ICRA continued at ‘A1+’ rating indicating highest safety to the Company’s Commercial Paper program
of Rs. 75 crores.
Fixed Deposits
As on June 30, 2005, 79 depositors whose deposits amounting to Rs.10,15,000/- had become due for repayment did not
claim their deposits. During the year net fixed deposits repaid amounted to Rs. 61,000/-.
There has been no delay in making the payment of Fixed Deposits on maturity and in fulfilment of the terms and conditions
of the Company’s scheme.
De-listing of Equity Shares
As approved by the shareholders the Company had made applications to the stock exchanges at Delhi, Chennai and Kolkata
for de-listing the equity shares of the Company from these stock exchanges. The equity shares of the Company were de-
listed from the Delhi Stock Exchange Association Limited and The Madras Stock Exchange Ltd. The application is under
process with the Calcutta Stock exchange Association Ltd, Kolkata.
The shares of the Company will continue to be listed at The Bombay Stock Exchange Limited and National Stock Exchange
of India Limited.
Directors
In accordance with the Articles of Association of the Company, Mr. R.P. Khosla, Mr. D.S. Puri and Mr. E.A. Kshirsagar,
Directors will retire by rotation at the forthcoming Annual General Meeting and being eligible, offer themselves for re-
appointment.
Mr.T.S.Purushothaman and Mr.Ravi Thumboochetty , retired as wholetime directors. Mr. Purushothaman and Mr. J.V.
Ramamurthy were co-opted as additional directors with effect from July 21, 2005 and August 11, 2005 respectively.
Mr. Purushothaman will hold office as non executive director and Mr. J.V. Ramamurthy will hold office as wholetime
director designated as Head of Operations with effect from the dates of their appointments. Mr. Purushothaman and Mr.
Ramamurthy will hold office till the conclusion of the forthcoming Annual General Meeting. The Company has received
notices under Section 257 of the Companies Act, 1956 from some members signifying their intentions to propose the
appointment of Mr. Purushothaman and Mr. Ramamurthy as Directors of the Company.
13
DIRECTORS’ REPORT
Your Directors while welcoming Mr. Ramamurthy on the Board place on record their sincere appreciation for the contributions
of the outgoing directors during their association with the Company.
Directors’ Responsibility Statement
Pursuant to Section 217(2AA) of the Companies Act, 1956, the Directors confirm:
a. that in the preparation of the annual accounts, the applicable accounting standards had been followed along with
proper explanation relating to material departures, if any
b. that appropriate accounting policies have been selected and applied consistently, and that the judgements and
estimates made are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as
at June 30, 2005 and of the profit of the Company for the said period;
c. that proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with
the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and
detecting fraud and other irregularities;
d. that the annual accounts have been prepared on a going concern basis.
Personnel
Industrial Relations during the period under review continued to be peaceful and harmonious. No man-day was lost due to
any Industrial dispute.
Your Company successfully participated in DMA Watson Wyatt Award for Excellence in Innovative HR Practices in 2004 &
was placed amongst the Top 10 companies.
Your Company also successfully participated in DQ Best Employer Survey 2004 and was ranked 11th.
Information in accordance with sub-section (2A) of Section 217 of the Companies Act, 1956 read with the Companies
(Particulars of Employees) Rules, 1975 forms part of this report. However as per the provisions of Section 219(1)(b)(iv) of
the Companies Act, 1956, the report and the accounts are being sent to all the members excluding the statement of
particulars under Section 217(2A). Any member interested in obtaining a copy of the statement may write to the Company.
Additional information relating to Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and
Outgo.
The additional information required in accordance with sub-section (1)(e) of Section 217 of the Companies Act, 1956,
read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules,1988, is appended to and
forms part of this report.
Particulars of subsidiary company
The Company has obtained permission from the Ministry of Company Affairs, Government of India, vide their letter No: 47/
41/2005-CL-III dated March 15, 2005 for not annexing the accounts of HCL Infinet Limited, the wholly owned subsidiary
of the Company.
The detailed annual accounts of the subsidiary are available at the Registered Office of the Company on any working day
to the shareholders requiring such information.
Acknowledgement
Your Directors wish to place on record their appreciation for the continued co-operation the Company received from various
departments of the Central and State Government, Bankers, Financial Institutions, Dealers, Partners and Suppliers and
also acknowledge the contribution made by the employees.
The Board also wish to place on record its gratitude to the valued Customers, Members and Investing public for their
continued support and confidence reposed in the Company.
On behalf of the Board of Directors
AJAI CHOWDHRY
August 18, 2005 Chairman and Chief Executive Officer.
14
INFORMATION RELATING TO CONSERVATION OF ENERGY, R&D, TECHNOLOGY ABSORPTION AND INNOVATION, AND
FOREIGN EXCHANGE EARNINGS / OUTGO FORMING PART OF THE DIRECTORS’ REPORT IN TERMS OF SECTION 217
(1) (e) OF THE COMPANIES ACT, 1956.
A. Conservation of energy
The entire product range including Personal Computers, Servers & Peripherals are designed keeping in view the optimum
energy conservation. Several environment friendly measures have been adopted by the Company such as
1. Use of recycled materials in packaging.
2. Rain water harvesting.
3. Use of solar pasteurizing system for water purification instead of electrical heating.
4. Conservation of electrical energy by using natural day light with glare control measures in the factory thus avoiding
usage of tube lights and bulbs in the day time in the operations area.
5. Use of displacement ventilation, eliminating Air-conditioning in the operations area.
6. Automatic power shutdown of machines in the Reliability testing area once the testing is completed thus eliminating
excess electricity consumption for the testing of computers.
B. Research & Development
1. Specific areas in which R&D is carried out by the company:
company:
The Company has introduced a variety of winning solutions during the year
• To address the High Performance Computing market, the R&D function has enhanced HCL HPC Cluster Suit
with support for both 32 and 64 bit architectures on various platforms. The function has ported many industry
standard and open source software on this suit and bagged many orders from prestigious corporate, research
and academic institutions
• Introduced 6 in 1 PC which attaches 6 users to a single Desktop CPU cutting down the cost of PC / user.
• Introduced RP2, 6 to 8 hrs power backup solution for PC
• Developed Platform Independent Disaster Recovery software supporting both Windows and Linux, HCL Max
Value restoration s/w supporting backup of data on same Hard disk on a tape drive, CD writer, remote Hard Disk
or even in hidden partition in the same disk in Windows
The Peripherals Division of the Company has many models in the existing product range and a variety of new
products too.
In the CRT Monitors, the Peripherals Division of the Company released several models in 15”/17”/19” range and
some models were customized for OEMs also. In the 19” series, a Real Flat model HCM 985RFM was introduced.
Many of the models were certified at Semko, Sweden for MPR II compliance. In the TFT LCD Monitors range, the
Peripherals Division of the Company released LCD TV Display models to address both home and office environment.
In Plasma, 42” Plasma display was released to address various verticals.
In Thin Client range, the Peripherals Division of the Company released models in WINBee 3000/4000/5000 series
based on various embedded OS viz. WinCE, Linux, and WinXPe with a host of user preferred features. WINBee
4000 and WINBee 5000 were customized to suit Core Banking Requirements and largely address the Banking and
Insurance sector.
HCS 1600 is a 16 Port Console server which can be used for securely monitoring and managing multiple networking
devices and system console through serial ports. The system administrator can securely access the serial console
port of remote systems such as servers, Ras, routers, power management devices (UPS and power switches),
telecom equipments, network switches, firewalls and other serial accessible devices using LAN.
Various switches were introduced to cover the broader spectrum of networking requirements.
2. Benefits derived as a result of the above R&D:
The Company added more innovative features to its running Management S/W products for Servers and Desktops in
both Windows and Linux.
• Device Lock : Software lock for restricting access to USB Storage device, floppy drive, CD drive and logical drives.
When USB storage is locked user can use other USB devices
• HCL ‘s own IPMI solution for Server Management S/W in both Windows and Linux on various platforms
• Platform independent browser based software for receiving In band and Out of band alerts from Mother Board
• HCL SMART: Hard disk Monitoring tool supporting SATA, Proactive backup based on Pre failure alert to CD and
15
remote tape drive in Windows and Linux
• HCL Migration: aids the user to capture and restore the User, System and network setting and data from the old
machine to new machine
• HCL software Deployment is a software which will help to install software which has Microsoft software installer
setup remotely to a client machine from the administrator
• HCL Flash BIOS update (Remote): Flash the BIOS from on top of OS (Windows) from the administrator to the
remote client machine
• Monitor Information including serial no
For a Fortune100 Company in the USA, R&D of the Peripherals Division of the Company designed and developed two
serial communications cables with built-in embedded electronics for connecting Blood glucose Meters to the COMM /
USB ports of PCs. Both these products are manufactured as per the FDA prescribed Quality Systems Regulations and
are being exported to the USA.
The Peripherals Division of the Company also undertook many high-speed multi-layer PCB designs for various customers
and also augmented its EMI /EMC service setup to address wide spectrum of clients.
The following new products were introduced by CNC :
1. IP 41 rack for Tele-com applications.
2. Customised Projector rack for digital cinema theater.
3. Kiosk for E-Governance applications.
These solutions have contributed immensely to retain the leadership in PC sales, improved the figure in server sales, as
well as Laptops.
3. Expenditure on R & D :
(Rs./ Lacs )
Capital 7.31
Revenue 76.29
Total 83.60
C. Technology absorption, adaptation and innovation
The Company introduced a series of new products for its Server, Desktop, Workstation, Notebook, POS range of systems
under various brands like Infiniti Global Line, Infiniti Xcel Line, NetManager, Infiniti Challenger, Infiniti Pro, Infiniti
Orbital, Beanstalk, Busybee, EzeeBee, Infiniti Powerlite and BeePOS.
NEBS certified Ruggedised Servers are launched for Telecom applications. 8 way to 32 way Servers based on Intel
Itanium processors have been launched and the servers have the capability to run multiple Operating Systems together.
Launched servers with capabilities to handle any kind of memory errors by employing latest technologies – Memory
Sparing, Memory Mirroring, RAID memory and hot pluggability. New 4 way server based on Opteron processor is
introduced. Received certification from SAP for our servers confirming their superiority in terms of performance &
quality.
New range of Servers & Desktops launched based on latest technology processors having dual core. Introduced range of
systems based on 800FSB processors and supporting EM64T technology. Added 64 bit Operating System support for
Servers & Desktops with EM64T & AMD64 technology based processors. Range of systems supporting high speed PCI
Express bus technology and latest DDR2 memory technology are also launched.
New Sempron processor based Desktop range of products are introduced. Microsoft Windows XP Starter Edition operating
system, an unique offer, is added into product port folio. Systems supporting multiple Indian languages are launched.
In the arena of home entertainment, products are launched including Windows XP Media Center Edition 2005 operating
system. Many products & accessories added through various initiatives in the area of Digital Office, Digital Home &
Ergonomics.
Innovative products like desktops using low power, multiple users using same PC and rural power solution – RP2
systems using car battery for delivering 8 hours of power back up are introduced.
New range of Notebooks supporting Centrino Mobile Technology are also introduced.
D. Foreign exchange earnings / outgo
During the period under review, the Company’s earnings in foreign currency were Rs. 4700.88 Lacs (Previous Year Rs.
4227.36 lacs). The expenditure in foreign currency including imports during the year amounted to Rs. 99950.95 Lacs
(Previous year Rs. 67858.69 lacs).
16
The details of the options granted under the HCL Infosystems Ltd., Employee Stock Option Schemes as on 30th June,
2005 are given below:-
Description Scheme 2000 Scheme 2005

Options Granted 30,18,000 which confer a right to get 1 equity 31,96,840 which confer a right to get 5
share of Rs.10/- each. equity shares of Rs.2/- each.
Pricing Formula The members of the Company at the Extra Subject to the approval of the members of
Ordinary General Meeting held on February the Company, the options would be granted
25, 2000 approved the exercise price as the at the market price on the date of grant or
price which will be not less than 85% of the such price as the Board of Directors may
fair market value of the shares on the date on determine in accordance with the
which the Board of Directors of the Company Regulations and Guidelines prescribed by
approved the Grant of such options to the the Securities and Exchange Board of India
employees or such price as the Board of or other relevant authority from time to time.
Directors may determine in accordance with For this purpose, the market price as
the regulations and guidelines prescribed by specified in the amended provisions of SEBI
SEBI. The members of the Company at the (Employee Stock Option Scheme and
Annual General Meeting held on October 21, Employee Stock Purchase Scheme)
2004, approved the amendment to the pricing Guidelines, 1999 and the regulations/
formula that the options granted but not yet guidelines prescribed by SEBI or any
exercised by the employees or options that relevant authority from time to time to the
would be granted in future, would be at the extent applicable.
market price on the date of grant. For this
purpose the market price as specified in the
amended provisions of SEBI (Employee Stock
Option Scheme and Employee Stock Purchase
Scheme) Guidelines, 1999 and the
regulations / guidelines prescribed by the
Securities and Exchange Board of India or any
relevant authority, from time to time to the
extent applicable.
Options vested (i) For the options granted on Not yet vested
10-8-2000, 4,01,506 options
had been vested.
(ii) For the options granted on
28-1-2004, 3,65,152 options
had been vested.
The vesting schedule for the rest of the grants

are as follows :
30% - 12 months after the grant date

30% - 24 months after the grant date
40% - 42 months after the grant date.
Options exercised Out of the options granted in August, 2000 Not applicable
and January 2004, 12,97,026 and 2,29,869
options respectively were exercised.
Total number of 15,26,895 equity shares of Rs.10/- each. Not applicable

shares arising as a
result of exercise of
option.
17
Options lapsed The details of options lapsed are as under : Not applicable
Date of Options Grant price

Grant lapsed (Rs.)
10/8/2000 0 289.00
28/1/2004 2,21,351 538.15
25/8/2004 54,360 603.95
18/1/2005 18,910 809.85
15/2/2005 15,520 809.30
15/3/2005 2,800 834.40
15/4/2005 0 789.85
14/5/2005 0 770.15
15/6/2005 2,560 756.15
Variance of terms of The market price has been defined to mean No variation made.
options the market price as specified in the amended
provisions of SEBI (Employee Stock Option
Scheme and Employee Stock Purchase
Scheme) Guidelines, 1999 and the regulations/
guidelines prescribed by SEBI or any relevant
authority, from time to time to the extent
applicable.
Money realized by Rs.49,85,44,516.35 Not applicable

exercise of options
Total number of Date of Options Grant price Date of Options Grant price
options in force Grant in force (Rs.) Grant in force (Rs.)
10/8/2000 84,894 289.00 13/8/2005 31,96,840 228.80
28/1/2004 9,87,304 538.15
25/8/2004 1,71,758 603.95
18/1/2005 2,72,950 809.85
15/2/2005 8,400 809.30
15/3/2005 57,416 834.40
15/4/2005 23,384 789.85
14/5/2005 17,400 770.15
15/6/2005 18,400 756.15
Employee-wise Name No. of option Name No.of options

details of options shares
granted to- Mr.T.S.Purushothaman 40,000 Mr. J.V.Ramamurthy 7,500
(i) Senior Mr. Ravi Thumboochetty 30,000 Mr. George Paul 7,500
Management Mr. J.V.Ramamurthy 27,500 Mr. Rajiv Asija 7,500
Mr. Sandeep Kanwar 25,000 Mr. Rakesh Mehta 7,500
Mr. Rajendra Kumar 25,000 Mr. Sandeep Kanwar 7,500
Mr. M.L.Taneja 18,000 Mr. Hari Bhaskaran 7,500
Mr. Hari Bhaskaran 15,000 Mr. Rajendra Kumar 7,500
Mr. George Paul 14,000 Mr. M.L.Taneja 7,500
Mr. Rajiv Asija 14,000 Mr. Suman Ghose Hazra 7,500
Mr. Rakesh Mehta 14,000 Mr. K.R.Radhakrishnan 6,500
Mr. Suman Ghose Hazra 12,500
Mr. K.R. Radhakrishnan 8,000
(ii) Employees NIL NIL

holding 5% or more
of the total number
of options granted
during the year
18
(iii) Identified NIL NIL
employees who were
granted options during
any one year equal to
or exceeding 1% of the
issued capital
(excluding outstanding
warrants and
conversions) of the
Company at the time of
grant.
Diluted EPS pursuant 7.51 ——

to issue of shares on
exercise of options
(Rs.)
Fair value 1252.46 —— -

compensation cost for
options granted (Rs./
Lacs) :
Weighted average 418.97 —— -

exercise price of
options granted :(Rs.)
Weighted average fair 1039.18 —— -

value of options
granted :(Rs.)
Earning Per Share (FV Rs. 2/-)

As reported Basic Rs. 8.01
Diluted Rs. 7.51
Adjusted pro forma (FV Rs. 2/-) Basic Rs. 7.25

Diluted Rs. 6.80
Significant Assumptions
Dividend yield % 3.80% to 3.91%
Expected life 24 to 54 months
Risk free interest rates 6.02% to 6.69%
Volatility 47.68% to 68.28%
19
AUDITORS’ CERTIFICATE
We have examined the books and records of the HCL Infosystems Limited Stock Option Scheme 2000 and Employee Stock
based Compensation Plan 2005 (“The Scheme”) as produced before us and based on such books and records and
according to the information and explanations given to us, we hereby certify that HCL Infosystems Limited (“The Company”)
has implemented The Scheme in accordance with the SEBI (Employee Stock Option Scheme and Employee Stock Purchase
Scheme) Guidelines ,1999 and in conformity with the resolutions passed by the shareholders in the Extra-Ordinary General
Meeting of The Company held on February 25,2000 and through postal ballot, the results whereof declared on June
13, 2005.
V. Nijhawan
Membership Number F-87228
Partner
For and on behalf of
Place: New Delhi Price Waterhouse
Date: August 18, 2005 Chartered Accountants
20
REPORT ON CORPORATE GOVERNANCE
1. A BRIEF STATEMENT ON COMPANY’S PHILOSOPHY ON CODE OF GOVERNANCE :

The Company’s philosophy on Corporate Governance envisages attainment of the highest levels of transparency,
accountability and equity in all facets of its operations and in all its interactions with its stakeholders including
shareholders, employees, lenders and the Government. The Company is committed to achieve and maintain the highest
standards of Corporate Governance. The Company believes that all its actions must serve the underlying goal of enhancing
overall shareholder value over a sustained period of time.
2. BOARD OF DIRECTORS :
The Board of Directors has an optimal combination of executive, non-executive and independent directors. The Board
is headed by an executive Chairman. The composition and category of Directors is as per the table given below. During
the financial year the Board of Directors of the Company met four times on the following dates: 25th August, 2004,
20th October 2004, 18th January 2005 & 19th April, 2005.
Name Designation Category Directorship in Committee No. of Board Whether
other public Membership Meetings Attended
Companies of other public last AGM
Companies Held Attended
Ajai Chowdhry Chairman & Chief Promoter and Executive 5 4 4 4 Yes

Executive Officer Director
J.V. Ramamurthy* Head of Operations Executive Director 1 – 4 N/A N/A
T. S. Purushothaman** Director Non-executive Director 1 Nil 4 4 Yes
Ravi Thumboochetty*** Whole-time Director Executive Director 3 Nil 4 3 Yes
R.P. Khosla Director Independent, non-executive 2 1 4 4 Yes
S. Bhattacharya Director Independent, non-executive 9 7 4 4 Yes
D. S. Puri Director Promoter and non-executive 1 1 4 3 Yes

Director
E.A. Kshirsagar Director Independent, non-executive 3 5 4 4 Yes
Anita Ramachandran Director Independent, non-executive 2 3 4 3 No
• * Appointed as wholetime director with effect from August 11, 2005.

• ** Retired as wholetime director with effect from July 20, 2005.
• *** Retired as wholetime director with effect from August 10, 2005.
Some of the items discussed at the Board meetings are listed below :
1. Annual Business Plan.
2. Investments.
3. Review of operations of subsidiary.
4. Status of independence of directors.
5. Sub-division of the equity shares of the Company.
6. Delisting of the equity shares of the Company from The Delhi Stock Exchange Association Ltd.
7. Quarterly/ half yearly / annual financial results and dividend.
8. Employee Stock Option Scheme and matters related thereto.
3. ACCOUNTS & AUDIT COMMITTEE :

The Accounts & Audit Committee of Directors was formed in August 1998, to review various areas of Accounting &
Audit. Mr. E.A. Kshirsagar, Mr. S. Bhattacharya and Mr. R.P. Khosla are the members of this Committee. Mr.Ajai
Chowdhry is an ex-officio member. Mr. E.A. Kshirsagar is the Chairman.
The Committee met 4 times during the financial year 2004-2005 on the following dates: 24/8/2004; 20/10/2004;
18/1/2005 and 19/4/2005. All members attended all four meetings.
4. EMPLOYEE COMPENSATION AND EMPLOYEE SATISFACTION COMMITTEE :
The Employees Compensation & Employees Satisfaction Committee was constituted in August 1998.
Ms. Anita Ramachandran, Mr. Ajai Chowdhry, Mr. S. Bhattacharya and Mr. R.P. Khosla are the members of this
Committee. Ms. Anita Ramachandran is the Chairperson.
21
The Committee met 3 times during the financial year 2004-2005 on the following dates: 25/8/2004, 18/01/2005,
& 19/4/2005 and all the members attended all three meetings.
a) Details of remuneration to all the directors for the period from 1/7/2004 to 30/6/2005:
(Rs./Lacs)
Name of Director Salary & Perquisites Performance Commission Sitting
Allowances linked bonus Fees
Mr. Ajai Chowdhry 60.72 27.32 85.00 - -

Mr. T.S. Purushothaman* 33.82 8.49 50.00 - -
Mr. Ravi Thumboochetty* 27.08 9.42 15.00 - -
Mr. R.P. Khosla - - - 3.30 0.80
Mr. S. Bhattacharya - - - 3.60 0.80
Mr. D.S. Puri - - - - -
Mr. E.A. Kshirsagar - - - 2.25 0.80
Ms. Anita Ramachandran - - - 1.99 0.60
The above remuneration excludes reimbursement of expenses on actual to Directors for attending meetings of the
Board/Board Committees.
* Mr. T.S. Purushothaman and Mr.Ravi Thumboochetty were granted 40000 and 30000 options respectively and all
the options granted are now vested and exercised.
5. SHAREHOLDERS’/INVESTORS’ GRIEVANCE COMMITTEE :
Mr. R.P. Khosla, Mr. E.A. Kshirsagar and Mr. S. Bhattacharya are the members of the Shareholders’/ Investors’ Grievance
Committee. Mr. Ajai Chowdhry is an ex-officio member. Mr. R.P. Khosla is the Chairman.
The Committee met 4 times during the financial year 2004-2005 on the following dates: 25/8/2004, 20/10/2004,
18/1/2005 and 19/4/2005. All the members attended all the four meetings.
Mr. K.R. Radhakrishnan, Company Secretary is the Compliance Officer of the Company.
During the period from 01-07-2004 to 30-6-2005, the Company has received 19 complaints from SEBI/Stock Exchanges/
DCA and were replied to the satisfaction of shareholders. There were no complaints not solved to the satisfaction of
shareholders and there were no shares pending for transfer as on 30th June, 2005.
6. CUSTOMERS’ SATISFACTION COMMITTEE :
The Customers’ Satisfaction Committee was constituted in August 1998 to review and formulate strategies for continuous
improvement of customer satisfaction.
Mr. D.S. Puri, Mr. Ajai Chowdhry and Mr. R.P. Khosla are the members of this Committee. Mr. Ajai Chowdhry is the
Chairman.
The Committee met 3 times during the financial year 2004-2005 on the following dates: 08/11/2004, 14/01/2005
and 30/05/2005 and all the members attended the three meetings.
7. GENERAL BODY MEETINGS :
Location and time of last 3 Annual General Meetings :
Year Location Date Day Time
2003-2004 FICCI Auditorium, 1, Tansen Marg, New Delhi-110 001 21-10-2004 Thursday 10.00 A.M.
2002-2003 FICCI Auditorium, 1, Tansen Marg, New Delhi-110 001 25-11-2003 Tuesday 10.00 A.M.
2001-2002 FICCI Auditorium, 1, Tansen Marg, New Delhi-110 001 18-12-2002 Wednesday 10.00 A.M.
8. POSTAL BALLOT :
During the year, the ordinary/special resolutions contained in the notice dated April 19, 2005, were passed by the
members of the Company through Postal Ballot pursuant to Section 192A of the Companies Act, 1956 read with the
Companies (Passing of the Resolutions by Postal Ballot) Rules, 2001.
Mr. R.K. Pandey, Former Executive Director of the Delhi Stock Exchange Association Limited was appointed as Scrutinizer
for conducting the postal ballot process.
22
As per the Report dated June 11,2005, submitted by Mr. R.K. Pandey, scrutinizer appointed for the Postal Ballot conducted
by the Company vide Notice dated April 19, 2005, the results of the postal ballot are as follows:-
Description Total no. Total no. of For Against Invalid

of Postal shares
Ballot
Forms
No. of No. of No. of No. of No. of No. of
Postal shares Postal shares Postal shares
Ballot Ballot Ballot
Forms Forms Forms
SPLIT OF 1533 21981342 1472 21975501 18 1119 43 4722

SHARES 96.03% 99.97% 1.17% 0.01% 2.80% 0.02%
ALTERATION 1428 21965163 1361 21958748 23 1494 44 4921

OF ARTICLES 95.31% 99.97% 1.61% 0.01% 3.08% 0.02%
ESOP TO 1392 21962641 1259 21948575 88 9094 45 4972

EMPLOYEES 90.45% 99.94% 6.32% 0.04% 3.23% 0.02%
OF COMPANY
ESOP TO 1387 21961621 1252 21946440 90 10209 45 4972

EMPLOYEES 90.27% 99.93% 6.49% 0.05% 3.24% 0.02%
OF SUBSIDIARY
AMENDMENT 1381 21960697 1260 21947271 78 8754 43 4672

TO ESOP 2000 91.24% 99.94% 5.65% 0.04% 3.11% 0.02%
All the five resolutions mentioned in the Postal Ballot Notice dated April 19, 2005 were duly approved with requisite
majority by the shareholders of the Company.
9. DISCLOSURES
RELATED PARTY TRANSACTIONS :
Related Party transactions are defined as transactions of the Company of material nature, with Promoters, the Directors
or the Management, their subsidiaries or relatives etc. that may have potential conflict with the interest of the Company
at large.
There are no material transactions during the year 2004-2005 that are prejudicial to the interest of the Company.
NON COMPLIANCE BY THE COMPANY, PENALTIES, STRICTURES :
The Company has complied with the requirements of the Stock Exchange/ SEBI/ any Statutory Authority on all matters
related to capital markets during the last three years. There are no penalties or strictures imposed on the Company by
Stock Exchange or SEBI or any statutory authorities relating to the above.
10. MEANS OF COMMUNICATION
a) At present quarterly results are sent to each household of shareholders.
b) The quarterly/half yearly and annual results are published in English and Hindi Newspapers and displayed on the
website of the Company – ‘www.hclinfosystems.in’ alongwith official news releases and presentations.
c) The Management Discussion and Analysis forms a part of the Annual Report.
23
11. GENERAL SHAREHOLDERS’ INFORMATION

a) Annual General Meeting
Date : Thursday, 20th October, 2005
Time : 10.00 A.M.
Venue : FICCI Auditorium, 1, Tansen Marg, New Delhi-110 001.
b) Financial Calendar (Tentative Calendar for the financial year 2005 - 2006)
Adoption of Results for the quarter ending 30th September, 2005 : 19th October, 2005
st
Adoption of Results for the quarter ending 31 December, 2005 : 17th January, 2006
Adoption of Results for the quarter ending 31st March, 2006 : 17th April, 2006
Adoption of Results for the quarter ending 30th June, 2006 : 23th August, 2006
c) Book Closure : From Monday, 24th October, 2005
to Tuesday 25th October, 2005
d) Dividend payment date : Before 19th November, 2005
e) Listing on Stock Exchanges
The shares of the Company are listed on the National Stock Exchange of India Ltd., The Bombay Stock Exchange
Ltd. and the Calcutta Stock Exchange Association Ltd.
Listing fees for the period April 2005 to March 2006 have been paid to the Bombay Stock Exchange Ltd. and the
National Stock Exchange of India Ltd. The Company has applied for delisting from the Calcutta Stock Exchange
Association Ltd, Kolkata.
f) Stock Code
Trading Symbol on ‘National Stock Exchange of India Ltd.’ : HCL-INSYS
Trading Symbol on ‘The Bombay Stock Exchange Ltd., Mumbai’ : Physical Form – 179
Electronic Form-500179
g) Market price data (Rs.)
Historical Stock Chart
MONTH HIGH LOW
July 2004 635.00 541.25
August 2004 680.00 581.50
September 2004 658.00 550.00
October 2004 698.90 576.00
S&P CNX NIFTY INDEX in points

HCL Insys Share Price in Rs.
November 2004 812.50 611.10

December 2004 849.00 760.00
January 2005 842.00 782.00
February 2005 865.00 800.00
March 2005 869.90 796.00
April 2005 844.00 713.05
May 2005 795.50 618.40
June 2005 817.00 695.00
S&P CNX NIFTY HCL Insys Share Price
(Source : The National Stock Exchange of India Ltd.)
h) Registrar and Share transfer agents
As per the provisions of Listing Agreements entered with the Stock Exchanges, the Company has appointed
M/s. MCS Limited, as the Common Registrar and Share Transfer Agents for the shares of the Company held in both
physical and electronic modes. All correspondence with regard to share transfers and matters related therewith may
directly be addressed to the Registrar and Share Transfer Agents at the address given below:-
MCS Limited
Sri Venkatesh Bhawan
W-40, Okhla Industrial Area, Phase II
New Delhi-110 049
Phone Nos: 011 –2638 4917-20; Fax No: 011 – 26384908
Email : mcsdel@vsnl.com
24
i) Share Transfer System

The shares received in physical mode by the Company’s Registrar and Share Transfer Agents are transferred within
a period of 15 days from the date of receipt.
j) Distribution of Shareholding as on 30th June, 2005
Category No. of Shares % holding
A. Promoters’ holding
1. Promoters
- Indian Promoters 20,441,222 61.13%
- Foreign Promoters Nil
2. Persons acting in concert Nil
Sub Total 20,441,222 61.13%
B. Non-Promoters’ holding
3. Institutional Investors
a. Mutual Funds and UTI 2,172,129 6.50%
b. Banks, Financial Institutions, Insurance Companies (Central/
State Government Institutions/Non-government institutions) 1,134,049 3.39%
c. FIIs 6,283,337 18.79%
Sub Total 9,589,515 28.68%
4. Others
a. Private Corporate Bodies 395,838 1.18%
b. Indian Public 2,918,104 8.73%
c. NRI/OCBs 91,675 0.27%
d. Any other Nil Nil
Sub Total 3,405,617 10.19%
Grand Total 33,436,354 100.00%
k) Dematerialisation of shares and liquidity

Dematerialisation of shares :
The shares of the Company are compulsorily traded in dematerialised form by all categories of investors w.e.f. 31st May,
1999. As on 30th June, 2005, 84.42% shares of the Company are held in dematerialised form.
Liquidity of shares :
The shares of the Company are traded in the “A”/Forward Group in BSE.
l) There are no outstanding GDRs/ADRs/Warrants or any Convertible instruments.
m) Plant locations
• R.S. Nos: 34/4 to 34/7 and part of Rs No: 34/1, Sedarapet, Pondicherry-605 111.
• R.S. Nos: 107/5, 6 & 7, Sedarapet, Pondicherry-605 111.
• 78, South Phase, Ambattur Industrial Estate, Chennai-600 058.
• Spl. A2, Industrial Estate, Thattanchavadi, Pondicherry-605 005.
n) Address for Correspondence
The shareholders may address their communication/ suggestions/ grievances/ queries to the Registrar and Share Transfer
Agents at the address mentioned above or to
The Company Secretary
HCL Infosystems Ltd.
E – 4, 5, 6, Sector – XI,
NOIDA (U.P.) – 201 301.
Tel. No. : 0120-4526518, 4526519, 4526993
Fax: 0120-4525196
Email : cosec@hclinsys.com
25
AUDITORS’ CERTIFICATE ON COMPLIANCE WITH THE CONDITIONS OF
CORPORATE GOVERNANCE UNDER CLAUSE 49 OF THE LISTING AGREEMENT
To the Members of HCL Infosystems Limited

1. We have reviewed the implementation of Corporate Governance procedures by HCL Infosystems Limited (the Company)
during the year ended June 30, 2005, with the relevant records and documents maintained by the company, furnished
to us for our review and the report on Corporate Governance as approved by the Board of Directors.
2. The compliance of conditions of Corporate Governance is the responsibility of the management. Our examination was
limited to procedures and implementation thereof, adopted by the Company for ensuring the compliance of the conditions
of Corporate Governance, it is neither an audit nor an expression of opinion on the financial statements of the Company.
We further state that such compliance is neither an assurance as to the future viability of the Company nor the
efficiency or effectiveness with which management has conducted the affairs of the Company.
3. As required by the Guidance Note issued by the Institute of Chartered Accountants of India, we state that no investor
grievances were pending exceeding a period of one month as per the records maintained by the Shareholders/ Investors
Grievance Committee.
4. On the basis of our review and according to the information and explanations given to us , the conditions of Corporate
Governance as stipulated in Clause 49 of the listing agreement with the Stock Exchanges have been complied with in
all material respect by the Company.
V.Nijhawan
Partner
26
AUDITORS’ REPORT
To
The Members of HCL Infosystems Limited
th
1. We have audited the attached Balance Sheet of HCL Infosystems Ltd, as at 30 June 2005, and the related Profit and
Loss Account and Cash Flow Statement for the year ended on that date annexed thereto, which we have signed under
reference to this report. These financial statements are the responsibility of the company’s management. Our responsibility
is to express an opinion on these financial statements based on our audit.
2. We conducted our audit in accordance with the auditing standards generally accepted in India. Those Standards
require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
3. As required by the Companies (Auditor’s Report) Order, 2003, as amended by the Companies (Auditor’s Report)
(Amendment) Order, 2004, issued by the Central Government of India in terms of sub-section (4A) of Section 227 of
‘The Companies Act, 1956’ of India (the ‘Act’) and on the basis of such checks of the books and records of the
company as we considered appropriate and according to the information and explanations given to us, we further
report that:
(i) (a) The company is maintaining proper records showing full particulars including quantitative details and
situation of fixed assets.
(b) The fixed assets are physically verified by the management in a cycle of one to three years, which in our
opinion, is reasonable having regard to the size of the company and the nature of its assets. Pursuant to the
programme, a portion of the fixed assets has been physically verified by the management during the year
and no material discrepancies between the book records and the physical inventory have been noticed.
(c) In our opinion and according to the information and explanations given to us, a substantial part of fixed
assets has not been disposed of by the company during the year.
(ii) (a) The inventory, excluding stocks with third parties, has been physically verified by the management during
the year. In respect of inventory lying with third parties, these have substantially been confirmed by them.
In our opinion, the frequency of verification is reasonable.
(b) In our opinion, the procedures of physical verification of inventory followed by the management are reasonable
and adequate in relation to the size of the company and the nature of its business.
(c) On the basis of our examination of the inventory records, in our opinion, the company is maintaining proper
records of inventory. The discrepancies noticed on physical verification of inventory as compared to book
records were not material.
(iii) The company has neither granted nor taken any loans, secured or unsecured, to/from companies, firms or other
parties covered in the register maintained under Section 301 of the Act.
(iv) In our opinion, there are adequate internal control procedures commensurate with the size of the company and
the nature of its business for the purchase of inventory, fixed assets and for the sale of goods and services.
Further, on the basis of our examination of the books and records of the company, and according to the
information and explanations given to us, we have neither come across nor have been informed of any continuing
failure to correct major weaknesses in the aforesaid internal control procedures.
(v) In our opinion and according to the information and explanations given to us, there are no transactions that
need to be entered into the register in pursuance of Section 301 of the Act. Accordingly clause (v) (b) of the
Companies (Auditor’s Report) Order, 2003 is not applicable to the Company for the current year.
(vi) In our opinion and according to the information and explanations given to us, the company has complied with
the directives issued by Reserve Bank of India and the provisions of Sections 58A and 58AA of the Act and the
Companies (Acceptance of Deposits) Rules, 1975 with regard to the deposits accepted from the public. According
to the information and explanations given to us, no Order under the aforesaid Sections has been passed by the
Company Law Board or National Company Law Tribunal or Reserve Bank of India or any Court or any other
Tribunal on the company.
(vii) In our opinion, the company has an internal audit system commensurate with its size and nature of its business.
27
AUDITORS’ REPORT
(viii) We have broadly reviewed the books of account maintained by the company in respect of products where,
pursuant to the Rules made by the Central Government of India, the maintenance of cost records has been
prescribed under clause (d) of sub-section (1) of Section 209 of the Act and are of the opinion that prima facie,
the prescribed accounts and records have been made and maintained. We have not, however, made a detailed
examination of the records with a view to determine whether they are accurate or complete.
(ix) (a) According to the information and explanations given to us and the records of the company examined by us,
in our opinion, the company is generally regular in depositing the undisputed statutory dues including
provident fund, investor education and protection fund, employees’ state insurance, income-tax, sales-tax,
wealth tax, service tax, customs duty, excise duty, professional tax, cess and other material statutory dues
as applicable with the appropriate authorities.
(b) According to the information and explanations given to us and the records of the company examined by us,
the particulars of dues of sales-tax and excise duty as at June 30, 2005 which have not been deposited on
account of a dispute have been stated below.
S. Name of the Nature Amount Amount deposited Period to Forum where

No statute of the (Rs./Lacs) under protest which the dispute is
dues (Rs./Lacs) amount relates pending
1. U.P. Sales Tax Sales Tax 3.75 3.75 2002-2003 Joint Commissioner
(including (Appeals) of Sales Tax
interest)
Sales Tax 4.05 4.05 2003-2004 Joint Commissioner
(including (Appeals) of Sales Tax
interest)
Sales Tax 17.23 10.13 2004-2005 Joint Commissioner
(including (Appeals) of Sales
interest) Tax
2. Delhi Sales Tax Sales Tax 25.57 0.05 1999-2000 Assistant
Commissioner of
Sales Tax
Sales Tax 29.80 29.80 2002-2003 Deputy
Commissioner
(Appeals) of Sales Tax
3. Tamil Nadu Sales Tax 5.48 3.36 1998-1999 Tamil Nadu Tribunal,
Sales Tax Chennai
4. Kerala Sales Tax 6.56 1.34 2000-2001 Deputy
Sales Tax Commissioner
(Appeals) of Sales
Tax
5. Rajasthan Sales Tax 0.37 0.06 2000-2001 Deputy
Sales Tax Commissioner
(Appeals) of Sales
Tax
Sales Tax 0.60 0.35 2001-2002 Deputy
Commissioner
(Appeals) of Sales
Tax
6. Orissa Sales Tax 116.10 - 1998-1999 Orissa Tribunal,
Sales Tax Cuttack
Total 209.51 52.89
7. Excise Act Excise Duty 46.12 25.00 1996-1997 CEGAT, Chennai
Customs Act Custom Duty 90.57 90.57 1998-1999 Commissioner
(Appeals)
(x) The company has no accumulated losses as at June 30, 2005 and it has not incurred any cash losses in the
financial year ended on that date or in the immediately preceding financial year.
(xi) According to the records of the company examined by us and the information and explanation given to us, the
28
AUDITORS’ REPORT
company has not defaulted in repayment of dues to any financial institution or bank or debenture holders as at
the balance sheet date.
(xii) The company has not granted any loans and advances on the basis of security by way of pledge of shares,
debentures and other securities.
(xiii) The provisions of any special statute applicable to chit fund / nidhi / mutual benefit fund/societies are not
applicable to the company.
(xiv) In our opinion, the company is not a dealer or trader in shares, securities, debentures and other investments.
(xv) In our opinion and according to the information and explanations given to us, the terms and conditions of the
guarantees given by the company, for loans taken by others from banks or financial institutions during the year,
are not prejudicial to the interest of the company.
(xvi) In our opinion, and according to the information and explanations given to us, on an overall basis, the term loans
have been applied for the purposes for which they were obtained.
(xvii) On the basis of an overall examination of the balance sheet of the company, in our opinion and according to the
information and explanations given to us, there are no funds raised on a short-term basis which have been used
for long-term investment.
(xviii) The company has not made any preferential allotment of shares to parties and companies covered in the register
maintained under Section 301 of the Act during the year.
(xix) The company has not issued any debentures which have remained outstanding at the year-end.
(xx) The company has not raised any money by public issues during the year.
(xxi) During the course of our examination of the books and records of the company, carried out in accordance with
the generally accepted auditing practices in India, and according to the information and explanations given to
us, we have neither come across any instance of fraud on or by the company, noticed or reported during the year,
nor have we been informed of such case by the management.
4. Further to our comments in paragraph 3 above, we report that:
(a) We have obtained all the information and explanations, which to the best of our knowledge and belief were
necessary for the purposes of our audit;
(b) In our opinion, proper books of account as required by law have been kept by the company so far as appears
from our examination of those books;
(c) The Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report are in agreement
with the books of account;
(d) In our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report
comply with the accounting standards referred to in sub-section (3C) of Section 211 of the Act;
(e) On the basis of written representations received from the directors, as on June 30,2005 and taken on record by
the Board of Directors, none of the directors is disqualified as on June 30,2005 from being appointed as a
director in terms of clause (g) of sub-section (1) of Section 274 of the Act;
(f) In our opinion and to the best of our information and according to the explanations given to us, the said financial
statements together with the notes thereon and attached thereto give in the prescribed manner the information
required by the Act and give a true and fair view in conformity with the accounting principles generally accepted
in India:
(i) in the case of the Balance Sheet, of the state of affairs of the company as at June 30,2005;
(ii) in the case of the Profit and Loss Account, of the profit for the year ended on that date; and
(iii) in the case of the Cash Flow Statement, of the cash flows for the year ended on that date.
V. NIJHAWAN
Partner
29
BALANCE SHEET AS AT 30TH JUNE, 2005
2005 2004
Schedule Rs./Lacs Rs./ Lacs
Sources of Funds:
Shareholders’ Funds :
Capital 1 3343.65 3289.00
Reserves and Surplus 2 40191.43 36551.57
Loan Funds:
Secured Loans 3 5521.35 6903.70
Unsecured Loans 4 2610.39 233.45
Deferred Tax Liabilities (Net) 21(5) 681.41 307.73
52348.23 47285.45
Application of Funds:
Fixed Assets: 5
Gross Block 9526.41 10947.48
Less: Depreciation 4288.84 6035.17
Net Block 5237.57 4912.31
Capital Work-In-Progress 91.21 12.62
(Including Capital Advances) 5328.78 4924.93
Investments 6 12277.44 28059.88
Current Assets, Loans & Advances:
Inventories 7 18809.81 16125.89

Sundry Debtors 8 36992.01 29454.44
Cash and Bank Balances 9 14582.65 4463.47
Other Current Assets 10 7942.35 1450.88
Loans and Advances 11 3206.06 2596.01
81532.88 54090.69
Less:Current Liabilities
& Provisions 12
Current Liabilities 41724.28 35902.18

Provisions 5066.59 3887.87
46790.87 39790.05
Net Current Assets 34742.01 14300.64
52348.23 47285.45
Significant Accounting Policies 20

Notes to Accounts 21
This is the Balance Sheet referred to The schedules referred to above form an integral part of
in our report of even date the Balance Sheet
For and on behalf of the Board of Directors
V.NIJHAWAN AJAI CHOWDHRY S. BHATTACHARYA
Partner Chairman and Director
Membership Number F-87228 Chief Executive Officer
Price Waterhouse
Chartered Accountants
Place : New Delhi K.R. RADHAKRISHNAN
Dated : 18th August, 2005 Company Secretary
30
PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 30TH JUNE, 2005
2005 2004
Schedule Rs./Lacs Rs./Lacs
Income
Business Income 13 196737.57 152203.09
Less : Excise Duty 3928.37 192809.20 10534.39 141668.70
Other Income 14 3148.07 2091.65
195957.27 143760.35
Expenditure
Cost of Sales and Services 15 159651.19 113500.33

Personnel 16 10162.42 7799.36
Administration, Selling, Distribution and Others 17 10026.75 7475.76
Repairs and Maintenance 18 483.17 461.48
Finance Charges 19 95.99 656.07
Depreciation 655.30 1023.56
Less : Transfer to Revaluation Reserve 4.58 650.72 4.58 1018.98
181070.24 130911.98
Profit before Tax 14887.03 12848.37
Tax expense 21 (5)

-Current [ Wealth tax Rs.2.00 lacs(2004-Rs.2.00 lacs )] 1188.00 1014.00
- Fringe Benefit 48.60 —
-Deferred 373.68 1610.28 (255.27) 758.73
Profit after Tax 13276.75 12089.64

Balance in Profit and Loss Account brought forward 23883.98 20726.52
Profit available for appropriation 37160.73 32816.16
Appropriations:
Interim Dividend 6974.52 4534.01
Proposed Final Dividend 3346.94 2306.82
Tax on Interim Dividend 938.82 580.92
Tax on Proposed Final Dividend 469.41 301.47
Transfer to General Reserve 1327.66 1208.96
Balance Carried Over 24103.38 23883.98
37160.73 32816.16
Earning per equity share
Basic ( of Rs.2/- each) (in Rs.) 21 (22) 8.01 7.50
Diluted (of Rs.2/- each) (in Rs.) 21 (22) 7.51 7.01
Significant Accounting Policies 20
Notes to Accounts 21
This is the Profit and Loss Account The schedules referred to above form an integral part of
referred to in our report of even date the Profit and Loss Account
Price Waterhouse
31
CASH FLOW STATEMENT FOR THE YEAR ENDED 30TH JUNE, 2005
2005 2004
Rs./Lacs Rs./Lacs
1. Cash Flow from Operating Activities
Adjustments for:

(Profit)/Loss on sale of Fixed Assets(Net) (14.47) (5.24)
(Profit)/Loss on disposal of
(Others) Investments (Net) (831.41) (777.55)
Interest on borrowings 712.56 827.60
Interest and Dividend income (413.22) (768.52)
Unrealised (Gain) / Loss on Foreign
Exchange Fluctuation (Net) (18.40) 179.77
Provision for Doubtful Debts 49.85 25.00
Provisions/Liabilities no longer required written back (643.81) (41.21)
Prior period expenses (62.00) -
Fixed Assets written off 4.73 (565.45) 0.01 458.84
Operating profit before Working Capital Changes 14321.59 13307.21
Adjustments for:
Trade and Other Receivables (14510.69) (7106.68)

Inventories (2683.92) (7221.11)
Trade Payables and Other Liabilities 6419.13 (10775.48) 14311.50 (16.29)
Cash generated from Operation 3546.11 13290.92
Direct Tax (paid)/ Refund (Net) (870.54) 415.42

(Including Interest)
Net Cash from Operating activities (A) 2675.57 13706.34
2 Cash Flow from Investing Activities
Interest and Dividend Received (Gross) 93.13 784.06

Purchase of Fixed Assets (1066.66) (1104.17)
Sale of Fixed Assets 99.56 15.61
Purchase of Investments (53075.99) (59249.81)
Disposal/Redemption of Investments 65489.84 52087.36
Investment in bonds of Subsidiary - (4200.00)
Redemption of Bonds / Purchase
Consideration received from Subsidiary 4200.00 9,404.67
Capital Work-in-Progress (78.59) 93.12
(Including Capital Advances)
Net cash from / (used in) Investing activities (B) 15661.29 (2169.16)
32
CASH FLOW STATEMENT FOR THE YEAR ENDED 30TH JUNE, 2005
2005 2004
Rs./Lacs Rs./Lacs
3 Cash Flow from Financing Activities
Share Capital Issued 54.65 98.04

Interest Paid (890.58) (934.33)
Share Premium Received 2097.38 2,735.36
Secured Loans - Short Term Received/(Paid) (2354.59) 377.37
Secured Loans - Long Term Received 4000.00 2007.89
Secured Loans - Long Term (Paid) (3027.19) (3930.44)
Unsecured Loans Received / (Paid) 2377.05 (3104.32)
Dividend Paid (including dividend tax) (10474.40) (8661.71)
Net cash from Financing Activities (C) (8217.68) (11412.14)
Opening Balance of Cash and Cash Equivalents 4463.47 4338.43

Closing Balance of Cash and Cash Equivalents 14582.65 4463.47
[(Includes Exchange Rate Fluctuation of
Rs {-1.13} Lacs (2004-Rs 3.42 Lacs)]
[Includes unclaimed dividend of
Rs. 146.38 lacs (2004-Rs. 99.15 lacs)]
Net Increase /(Decrease) in Cash

and Cash Equivalents 10119.18 125.04
Total (A)+(B)+(C) 10119.18 125.04
Note -
The above Cash Flow Statement has been prepared under the indirect method set out in AS-3 issued by Institute of
Chartered Accountants of India.
This is the Cash Flow Statement For and on behalf of the Board of Directors
referred to in our report of even date

Price Waterhouse
33
SCHEDULES TO THE BALANCE SHEET AS AT 30TH JUNE, 2005
2005 2004
Rs./Lacs Rs./Lacs
1- Capital
(Schedule-21, Note 19)
Authorised:
40,00,00,000 Equity Shares of Rs.2/- each
(2004 - 8,00,00,000 Equity shares of Rs.10/- each) 8000.00 8000.00
5,00,000 (2004-5,00,000) Preference Shares of Rs. 100/- each 500.00 500.00
8500.00 8500.00
Issued, Subscribed and Paid up:

16,71,81,770 Equity shares of Rs.2/- each,
fully paid up. (2004-3,28,89,873 Equity shares of
Rs.10/- each, fully paid up) 3343.64 3288.99
Add : Shares Forfeited 0.01 0.01
3343.65 3289.00
1. The shareholders of the Company through postal ballot, results whereof declared on June 13, 2005 authorised the sub
division of Equity shares, in accordance with the provisions of Section 94 of the Companies Act, 1956. Accordingly,
each Equity share was sub-divided from face value of Rs. 10/- each into 5 Equity shares of face value of Rs. 2/- each.
2. The Company had fixed July 15, 2005 as the Record Date for determining the shareholders entitled to the sub-division
of the shares. The credit of Equity Share of Rs.2/- each has been given to respective beneficiary accounts of the
shareholders, holding shares in electronic form, by the depositories. For the Equity Shares held in physical form
new share certificate of face value of Rs. 2/- each is to be issued on receipt of the old share certificate of face value of
Rs. 10/- each. The Equity shares of the face value of Rs. 2/- each of the Company are being traded on stock exchange
since July 16, 2005.
3. Paid up share capital includes :
a) 5,04,47,295 Equity Shares of Rs. 2/- each (2004 - 1,00,89,459 Equity Shares of Rs. 10/- each) issued pursuant
to contract without payment being received in cash.
b) 5,31,82,765 Equity Shares of Rs. 2/- each (2004- 1,06,36,553 Equity Shares of Rs. 10/- each) bonus shares
issued from Share Premium Account.
c) 76,34,475 Equity Shares of Rs. 2/- each (2004- 9,80,414 Equity Shares of Rs. 10/- each) issued pursuant to the
exercise of options granted under ESOP Scheme 2000.
4. Out of the total paid up share capital, 8,30,19,205 Equity Shares of Rs. 2/- each (2004 - 1,66,03,841 Equity Shares
of Rs. 10/- each) are held by HCL Corporation Limited. During the year ended June 30, 2005, 27,32,405 equity shares
of Rs. 2/- each fully paid up were issued pursuant to the exercise of options granted under ESOP Scheme 2000.
Consequently, HCL Corporation Limited’s shareholding percentage reduced from 50.48% as on June 30, 2004 to
49.66% as on June 30, 2005.
2- Reserves and Surplus As At As At

01.07.2004 Additions Deductions 30.06.2005
Rs./Lacs Rs./Lacs Rs./Lacs Rs./Lacs
General Reserve 5622.20 1327.66 - 6949.86

(4413.24) (1208.96) (-) (5,622.20)
Profit and Loss Account 23883.98 219.40 - 24103.38
(20726.52) (3157.46) (-) (23883.98)
Share Premium 6739.37 2097.38 - 8836.75
(4004.01) (2735.36) (-) (6739.37)
Revaluation Reserve (Adj.) 305.65 - 4.58 301.07
(310.23) (-) (4.58) (305.65)
Capital Reserve 0.37 - - 0.37
(0.37) (-) (-) (0.37)
36551.57 3644.44 4.58 40191.43
Previous year (29454.37) (7101.78) (4.58) (36551.57)
34
2005 2004
Rs./Lacs Rs./Lacs
3- Secured Loans
Loans and Advances from Banks:
Cash Credits 530.07 -
Foreign Currency loan
External Commercial Borrowings 554.61 1589.15
Others 436.67 2287.36
Term Loan
Foreign currency - 875.60
Others 4000.00 2151.59
5521.35 6903.70
a) Cash Credits along with non-fund based facilities and Foreign Currency Loans from Bank are secured by way of
hypothecation of stock-in-trade, book debts as first charge and by way of second charge on all the immovable and
movable assets of the Company. The charge ranks pari-passu amongst Bankers.
b) Term loan in Indian rupees from a Bank is secured by way of hypothecation of all movable assets subject to prior charge
in favour of Company’s bankers on book debts and stock in trade for working capital facilities.
c) Amount payable within one year from the Balance Sheet date is Rs.4991.28 Lacs (2004-Rs.6903.70 Lacs)
2005 2004
Rs./Lacs Rs./Lacs
4- Unsecured Loans
Public Deposits 10.15 10.76
Interest accrued and due 1.91 2.02
Short Term Loans and Advances:
- From Banks -Commercial Paper 2500.00 -
Other Loans and Advances:
- From a Financial Institution 59.72 146.74
Deferred Lease Obligations 38.61 73.93
2610.39 233.45
Notes:-
1) Amount payable within one year Rs.2593.39 Lacs (2004-Rs.63.94 Lacs)
2) Public Deposits include unclaimed matured deposits.
35
5- Fixed Assets
(Schedule -21, Notes 1 & 8) Rs./Lacs
Gross Block Depreciation Net Block

As at Additions/ Deductions/ As at Upto Additions Deductions Upto As at As at
01.07.2004 Adjustment Adjustments/ 30.06.2005 01.07.2004 during during 30.06.2005 30.06.2005 30.06.2004
during Retired during the year the year
the year the year
Tangible :
Land - Leasehold 398.96 252.41 - 651.37 20.30 9.87 - 30.17 621.20 378.66
Land - Freehold 379.76 - 59.33 320.43 - - - - 320.43 379.76
Buildings 3626.22 146.79 0.60 3772.41 827.27 97.37 0.60 924.04 2848.37 2798.95
Plant & Machinery and 2476.91 252.27 1000.64 1728.54 1740.99 207.11 989.09 959.01 769.53 735.92
Air Conditioners
Furniture, Fixtures & 2966.77 384.81 530.09 2821.49 2420.88 315.49 512.54 2223.83 597.66 545.89
Office Equipment
Vehicles 218.32 34.10 20.25 232.17 145.19 25.46 18.86 151.79 80.38 73.13
Intangible :
Acquired Software 880.54 - 880.54 - 880.54 - 880.54 - - -
TOTAL 10947.48 1070.38 2491.45 9526.41 6035.17 655.30 2401.63 4288.84 5237.57 4912.31
Previous Year 10056.27 1097.45 206.24 10947.48 5207.47 1023.56 195.86 6035.17
[Including Capital Advances of Rs.50.57 lacs (2004-Rs.1 lacs)] 5328.78 4924.93
Notes :
1. Land - Freehold and Building at Ambattur amounting to Rs. 57.33 lacs (2004-Rs.101.01 lacs) and building at
Mumbai amounting to Rs.43.54 lacs (2004-Rs.43.54 lacs) are pending registration in the name of the Company .
2. Addition to Plant and Machinery includes Rs.Nil (2004- Rs.1.82 ) representing restatement of assets during the year
due to exchange rate fluctuation.
6- Investments
(Schedule -21, Notes 15)
Opening Purchased / Redemption Closing Face As at As at
Units Reinvested Units Units Value (Rs) 30.06.2005 30.06.2004
Units Rs.in Lacs Rs.in Lacs
Unquoted (Others) Current :
Growth Options
Birla Cash Fund 1300465 - 1300465 - 10.00 - 225.00

Birla Floating Rate Fund - Long Term - 4183930 - 4183930 10.00 450.00 -
Deutsche Floating Rate Fund 5008219 - 5008219 - 10.00 - 516.30
Deutsche Premier Bond Fund 884877 - 884877 - 10.00 - 98.12
DSP Merrill Lynch Bond Fund 983628 2234443 3218070 - 10.00 - 200.00
DSP Merrill Lynch Liquidity Fund 3934839 18229669 22164508 - 10.00 - 603.49
DSP Merrill Lynch Short Term Fund 5879080 - 5879080 - 10.00 - 634.00
DSP Merrill Lynch Floating Rate Fund 3079868 4601806 - 7681674 10.00 825.00 325.00
Grindlays Cash Fund 7137082 87874020 87032835 7978267 10.00 1000.00 850.00
Grindlays Dynamic Bond Fund 20141503 - 20141503 - 10.00 - 2138.32
Grindlays Floating Rate Fund - Long Term 2358869 20633398 11057342 11934925 10.00 1205.44 250.00
Grindlays Floating Rate Fund - Short Term - 446030 - 446030 10.00 50.00 -
Grindlays Super Saver Income Fund - IP 6095319 - 6095319 - 10.00 - 879.02
36
Unquoted (Others) - Current

Opening Purchased / Redemption Closing Face As at As at
Units Reinvested Units Units Value (Rs) 30.06.2005 30.06.2004
Units Rs.in Lacs Rs.in Lacs
Grindlays Super Saver

Income Fund - Short Term 6214319 - 6214319 - 10.00 - 750.00
Grindlays Super Saver Medium Term Fund 6394887 - 6394887 - 10.00 - 650.00
HDFC Floating Rate Fund - Short Term 5596545 9170592 10177229 4589908 10.00 503.75 600.00
HDFC Institutional Plan -
Cash Management Fund 4179122 - 4179122 - 10.00 - 547.44
HSBC Cash Fund 5777355 53955907 56633174 3100089 10.00 350.00 625.00
HSBC Income Fund - Short Term - 4526398 - 4526398 10.00 515.00 -
JM Floating Rate Fund - Long Term - 994085 - 994085 10.00 100.00 -
Kotak Dynamic Income Plan 4572838 - 4572838 - 10.00 - 464.98
Prudential ICICI Blended Plan - 5000000 - 5000000 10.00 500.00 -
Prudential ICICI Flexible Income Plan 16310812 - 16310812 - 10.00 - 1842.76
Prudential ICICI Floating Rate Plan 11786732 20165206 21832903 10119035 10.00 1064.65 1250.00
Prudential ICICI Income Plan 1565051 4756179 6321230 - 10.00 - 281.53
Prudential ICICI Liquid Plan 12653943 68558284 74281698 6930529 10.00 1148.65 1972.07
Prudential ICICI Short Term Plan - 13197876 8716523 4481353 10.00 565.00 -
Prudential ICICI Very Cautious Plan 500000 - 500000 - 10.00 - 50.00
Reliance Fixed Maturity Plan 5020650 12618165 15121776 2517039 10.00 251.70 502.06
Reliance Floating Rate Fund - 992349 - 992349 10.00 100.00 -
Tata Floating Rate Fund Short Term 4898503 - 4898503 - 10.00 - 500.00
Tata Dynamic Bond Fund 947320 - 947320 - 10.00 - 99.51
Templeton Floating Rate
Income Fund - Long Term 22517971 3029189 15184992 10362168 10.00 1197.57 2591.97
Templeton India Income Builder 2350428 2169717 4520145 - 10.00 - 411.37
Templeton India Short Term - 40932 - 40932 10.00 500.00 -
Templeton Treasury Management A/c 7897 - 7897 - 1000.00 125.38
Dividend Options
Templeton India Liquid Fund 5753271 - 5753271 - 10.00 - 575.33
Prudential ICICI Fixed Maturity Plan 8500000 4079883 12579883 - 10.00 - 850.00
JM Fixed Maturity Plan 5005536 - 5005536 - 10.00 - 500.55
10326.76 21909.20
Unquoted (Trade) : Long Term
In Subsidiary Company
HCL Infinet Limited - Equity Shares 19506750 - - 19506750 10.00 1950.68 1950.68
HCL Infinet Limited - Optionally
Convertible Bonds 4200000 - 4200000 - 100.00 - 4200.00
1950.68 6150.68
12277.44 28059.88
Note :- Net asset value of Unquouted (Others) Current Investments in Mutual Funds as on 30th Jun ’05 - Rs.10692.50 Lacs(2004- Rs.22367.08 Lacs)
37
2005 2004
Rs./Lacs Rs./Lacs
7- Inventories
[Schedule-21, Note 8(c)]
Raw materials and Components ( Including in Transit ) 7793.60 6126.95
Stores and Spares 2987.10 2621.56
Finished Goods ( Including in Transit ) 7245.30 6506.15
Work-in-Progress 783.81 871.23
18809.81 16125.89
8- Sundry Debtors -Unsecured

Debts exceeding six months :
-Considered Good 6024.16 1646.56
-Considered Doubtful 134.09 69.80
6158.25 1716.36
Less : Provision for Doubtful Debts 134.09 6024.16 69.80 1646.56
Other debts -Considered Good 30967.85 27807.88
36992.01 29454.44
9- Cash and Bank Balances

Cash in Hand and in Transit 128.97 118.33
Cheques in Hand 2787.37 1718.06
Balances with Scheduled Banks:
-On Current Account 4202.50 1585.89
Less :- Money held in Trust 0.63 4201.87 0.98 1584.91
- On Unpaid Dividend Account 146.38 99.15

- On Margin Account 38.97 2.00
- On Fixed Deposits 7314.09 977.02

14582.65 4463.47
10-Other Current Assets

(Schedule-21, Notes 17 & 20)
Deposits 1038.16 818.11
Prepaid Expenses 886.43 285.67
Lease Rental Recoverable 6017.76 347.10
7942.35 1450.88
38
2005 2004
Rs./Lacs Rs./Lacs
11-Loans and Advances

Unsecured Considered Good

- Amounts recoverable in cash or in kind or for value to be received 2723.03 1986.68
- Advances and Loans to Subsidiary 218.88 370.91
- Balances with Customs, Port Trust and Excise Authorities 264.15 238.42
3206.06 2596.01
12-Current Liabilities and Provisions

(Schedule-21 Notes 6 & 21)
Current Liabilities:
Acceptances 19554.80 16838.51
Sundry Creditors
- Due to Subsidiary 41.83 188.75
- Due to SSI undertakings 130.36 146.87
- Others 11129.87 11302.06 12223.94 12559.56
Sundry Deposits 201.38 220.85

Interest accrued but not due:
- On Secured Loans 4.03 182.32
- On Unsecured Loans 1.26 0.88
Investor Education and Protection Fund :
- Unclaimed Dividend * 146.38 99.15
Advances from Customers 741.99 1110.57
Other Liabilities 2816.86 2123.30
Unaccrued Revenue 6955.52 2767.04
41724.28 35902.18
Provisions:

Provision for Tax [ Net of Advances
Rs.3549.11 Lacs (2004-Rs.3646.05 Lacs )] 314.07 97.92
For Warranty Liability 180.94 559.39
For Gratuity and Other Employee Benefits 755.23 622.27
5066.59 3887.87
46790.87 39790.05
* There is no amount due and outstanding to be credited to Investor Education and Protection Fund as at 30th June,
2005.These amounts shall be credited and paid to the fund as and when due.
39
SCHEDULES TO THE PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 30TH JUNE
2005 2004
Rs./Lacs Rs./Lacs
13- Business Income
[Schedule-21, Note 8 (c)]
Sales and Related Income 184733.31 142148.56
Services 12004.26 10054.53
196737.57 152203.09
14- Other Income
Interest :
- Refund from Income Tax Authority 149.91 328.73
- Others 5.75 0.15
Dividend from (Others) Current Investments 12.17 268.11
Miscellaneous Income 242.77 253.54
Insurance Claims 21.10 1.71
Provisions/Liabilities no longer required written back 643.81 41.21
Profit on Sale of Fixed Assets (Net) 14.47 5.24
Profit on disposal of (Others) Current Investments (Net) 831.41 777.55
Profit on Foreign Exchange Fluctuation (Net) 1226.68 415.41
3148.07 2091.65
15- Cost of Sales and Services
[Schedule-21, Notes 8(b) & (c), 9,10 & 18]
Raw Materials & Components Consumed 97971.31 57775.14
Purchase of Finished Goods & Services 51822.22 50750.02
Stores and Spares Consumed 1227.05 1546.34
Power and Fuel 122.26 112.57
Labour and Processing Charges 280.01 381.73
Royalty 8880.07 6277.37
160302.92 116843.17
(Increase)/Decrease in Stocks of Finished Goods & Work - In - Progress :
Closing Stock
- Finished Goods (Including in Transit) 7245.30 6506.15
- Work-in-progress 783.81 871.23
8029.11 7377.38
Opening Stock
- Work-in-Progress 871.23 487.68
7377.38 4034.54
(651.73) (3342.84)
159651.19 113500.33
16- Personnel
Salaries, Wages, Allowances, Bonus & Gratuity 9494.44 7161.42
Contribution to Provident Fund & Other Funds 387.07 281.26
Staff Welfare Expenses 531.03 548.89
Prior period expenses ( Allowances ) 62.00 -
10474.54 7991.57
Less : Operating Cost recovered 312.12 192.21
10162.42 7799.36
40
SCHEDULES TO THE PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 30TH JUNE
2005 2004
Rs./Lacs Rs./Lacs
17- Administration, Selling, Distribution and Others
Rent 504.81 495.31
Rates and Taxes 310.19 328.99
Printing and Stationery 230.45 219.05
Communication 540.23 472.29
Travelling and Conveyance 1345.52 1127.17
Packing, Freight & Forwarding 2411.15 1715.81
Legal and Professional 692.44 403.95
Training and Conference 144.27 137.01
Office Electricity and Water 281.95 261.91
Miscellaneous 1171.07 793.22
Insurance 298.79 242.20
Advertisement, Publicity & Entertainment
(Net of Reimbursements) 1057.71 472.61
Hire Charges 174.87 125.23
Commission on Sales 358.11 261.53
Bank Charges 678.65 587.61
Fixed Assets Written Off 4.73 0.01
10254.79 7668.90
10026.75 7475.76
18- Repairs and Maintenance

Plant and Machinery 24.26 13.51
Buildings 52.16 11.18
Others 428.32 452.55
504.74 477.24
483.17 461.48
19- Finance Charges

(Schedule-21, Notes 20(a))
Interest paid :
- On Fixed Loans 225.46 512.67
- On Public Deposits - 0.07
- On Others 487.10 712.56 314.86 827.60
Less : Interest received :

- On Lease Rental 371.18 103.12
[TDS Rs .48.45 Lacs (2004-Rs.17.86 lacs)]
- On Other Loans and Advances 3.59 616.57 5.83 171.53
95.99 656.07
41
SCHEDULES TO THE BALANCE SHEET & PROFIT AND LOSS ACCOUNT
SCHEDULE 20 - SIGNIFICANT ACCOUNTING POLICIES
1. BASIS OF ACCOUNTING
The financial statements are prepared on mercantile basis under the historical cost convention in accordance with the
Generally Accepted Accounting Principles in India and comply with the mandatory Accounting Standards issued by
the Institute of Chartered Accountants of India.
2. FIXED ASSETS
Fixed Assets including in-house capitalisation and Capital Work-in-Progress are stated at cost except those which are
revalued from time to time on the basis of current replacement cost / value to the Company, net of depreciation.
Assets taken on finance lease on or after 1.4.2001 are stated at fair value of the assets or present value of minimum
lease payments whichever is lower.
Intangible Assets are stated at cost net of amortization.
3. DEPRECIATION
(i) Depreciation has been calculated under Straight Line Method on:
a) Buildings capitalised prior to 1.5.1986 at the rates computed in the respective years of acquisition of those
assets as per Section 205(2)(b) of the Companies Act, 1956.
b) Assets acquired on or after 1.5.1986 and before 16.12.93 on a prorata basis at the rates specified in
Schedule XIV of the Companies (Amendment) Act, 1988. These assets are subject to annual technical
evaluation for their economic useful life and additional depreciation is charged if there is any reduction in
economic useful life as re-evaluated.
c) Assets acquired on and after 16.12.1993 on a prorata basis based on economic useful life determined by
way of periodical technical evaluation. Economic useful lives which are not exceeding those stipulated in
Schedule XIV of the Companies Act, 1956 are as under:
Plant and machinery 4-6 years

Building - Factory 25-28 years
- Others 50-58 years
Furniture & Fixture 4-6 years
Air Conditioners 3-6 years
Vehicles 4-6 years
Office Equipment 3-6 years
Computers 3-5 years
(d) The assets taken on finance lease on or after April 1, 2001 over their expected useful lives.
(ii) Leasehold land, premises and improvements are amortised over the primary lease period.
(iii) Intangible Assets are amortised over a period of 1-3 years.
4. INVESTMENTS
Long-term investments are stated at cost of acquisition inclusive of expenditure incidental to acquisition. Any decline
in the value of the said investment, other than a temporary decline, is recognised and charged to Profit and Loss
Account.
Current Investments are carried at lower of cost or fair value.
Income from investments (Dividend Option) is recognised in the accounts in the year in which it is accrued.
5. INVENTORIES
Raw Materials and components held for use in the production of inventories are valued at cost if the finished goods in
which they will be incorporated are expected to be sold at or above cost. If there is a decline in the price of materials
/ components and it is estimated that the cost of finished goods will exceed the net realisable value, the materials/
components are written down to net realisable value measured on the basis of their replacement cost.
42
Stores and Spares are valued at lower of cost and net realisable value. Adequate adjustments are made to the carrying
value for obsolescence.
Work in progress and Finished Goods are valued at lower of cost and net realisable value. Cost of Finished Goods and
Work in Progress includes direct labour and proportionate overhead expenses. Cost is determined on the basis of
weighted average.
Goods in Transit are valued inclusive of custom duty, where applicable.
6. FOREIGN CURRENCY TRANSACTIONS

Transactions in foreign currency are recorded at the exchange rate prevailing on the date of the transactions.
Foreign currency monetary assets and liabilities are restated at the exchange rates prevailing at the year end and the
overall net gain/loss including those arising out of fluctuations in exchange rates on settlement during the period is
adjusted to the Profit and Loss Account, except in cases of liabilities relating to acquisition of fixed assets which are
adjusted in the cost of respective assets.
Foreign currency monetary assets and liabilities covered by forward contracts are stated at the forward contract rates
and the difference between the forward rate and the exchange rate at the inception of the forward contract is recognised
in the Profit and Loss Account over the life of the contract, except in cases of liabilities relating to acquisition of fixed
assets which are adjusted in the cost of respective assets.
7. RETIREMENT BENEFITS TO EMPLOYEES

a) Liability for gratuity and leave encashment is provided as determined on actuarial valuation made at the end of
the year which is computed using projected unit credit method.
b) Company’s contributions towards recognised Provident Fund and Superannuation Fund are accounted for on
accrual basis.
8. REVENUE RECOGNITION
a) Sales, net of discount, are inclusive of excise duty and the related revenue is recognised (after providing for
expenses to be incurred connected to such sale) on transfer of all significant risks and rewards of ownership to the
customer and when no significant uncertainty exists regarding realisation of the consideration.
(b) Service income includes income
i) From maintenance of products and facilities under maintenance agreements and extended warranty, which
is recognised upon creation of contractual obligations rateably over the period of contract, where no significant
uncertainty exists regarding realisation of the consideration.
ii) From software services
(a) The revenue from time and material contracts is recognised based on the time spent as per the terms of
contracts.
(b) In case of fixed priced contracts revenue is recognised on percentage of completion basis. Foreseeable
losses, if any, on contract completion are recognised immediately.
9. GOVERNMENT GRANTS
Revenue grants, where reasonable certainty exists that the ultimate collection will be made are recognized on a
systematic basis in profit and loss statement over the periods necessary to match them with the related cost which
they are intended to compensate.
10. LEASES
a) Lease transactions entered into prior to April 1, 2001:
i) Assets leased out are stated at cost and amortised over the primary lease period.
ii) Lease rentals in respect to the assets taken/given on lease are recognised in the Profit and Loss Account on
accrual basis.
43
b) Lease transactions entered into on or after April 1, 2001:

i) Assets taken under leases where the Company has substantially all the risks and rewards of ownership are
classified as Finance leases. Such assets are capitalised at the inception of the lease at the lower of fair value
or the present value of minimum lease payments and a liability is created for an equivalent amount. Each
lease rental paid is allocated between the liability and the interest cost, so as to obtain a constant periodic
rate of interest on outstanding liability for each period.
ii) Assets taken on leases where significant portion of the risks and rewards of ownership are retained by the
lessor are classified as operating leases. Lease rentals are charged to the Profit and Loss account on straight-
line basis over the lease term.
iii) Profit on sale and leaseback transactions is recognised over the period of the lease.
iv) Assets given under finance lease are recognised as receivables at an amount equal to the net investment in
the lease. Inventories given on finance lease are recognised as deemed sale at fair value. Lease income is
recognised over the period of the lease so as to yield a constant rate of return on the net investment in the
lease.
v) Assets leased out under operating leases are capitalised. Rental income is recognised on accrual basis over
the lease term.
vi) Initial direct costs relating to the finance lease transactions are included as part of the amount capitalised as
an asset under the lease.
11. INCOME TAXES

The current charge for income taxes is calculated in accordance with the relevant tax regulations.
Deferred tax assets and liabilities are recognised for the future tax consequences attributable to timing differences
between the financial statements carrying amounts of existing assets and liabilities and their respective tax bases.
Deferred tax assets and liabilities are measured using the enacted or substantially enacted tax rates as on the balance
sheet date. Deferred tax asset is recognized and carried forward when it is reasonably certain that sufficient taxable
profits will be available in future against which deferred tax assets can be realised.
12. PROVISIONS AND CONTINGENCIES

The company creates a provision when there is a present obligation as a result of a past event that probably requires
an outflow of resources and a reliable estimate can be made of the amount of the obligation. A disclosure for a
contingent liability is made when there is a possible obligation or a present obligation that probably will not require an
outflow of resources or where a reliable estimate of the amount of the obligation cannot be made.
13. EMPLOYEE STOCK OPTION SCHEME

The Company applies the intrinsic value method to compute the compensation cost for stock options granted to the
employees under its Employee Stock Option Scheme (ESOP). Under this method, pursuant to the amended provisions
of the Employee Stock Option Scheme and Employee Stock Purchase Scheme Guidelines, 1999 issued by the Securities
and Exchange Board of India (“SEBI”), the excess of market price of underlying equity shares as of the date of the
grant of the options over the exercise price of the options given to employees under the ESOP of the Company, is
recognized as employee compensation cost and is amortised over the vesting period.
14. BORROWING COSTS

Borrowing costs to the extent related /attributable to the acquisition/construction of assets that necessarily take
substantial period of time to get ready for their intended use are capitalised along with the respective fixed asset up to
the date such asset is ready for use. Other borrowing costs are charged to the Profit and Loss Account.
44
SCHEDULE 21 - NOTES TO ACCOUNTS
1. Land and Buildings and certain Plant and Machinery were revalued by registered valuers’ after considering depreciation
upto that date on the governing principle of current replacement cost/value to the Company. The amounts added/
reduced on aforesaid revaluation were as under:
Rs./Lacs
Land 444.39
Buildings 643.81
Plant & Machinery (100.78)
Total 987.42
Less : Goodwill 570.00
Transferred to Revaluation Reserve 417.42
Less:
- Expenditure incurred on acquisition of business in 1992 86.31
- Loss on sale of Land 15.16
315.95
2. Estimated value of contracts remaining to be executed on capital account and not provided for (net of advances) are
Rs. 58.50 lacs (2004 - Rs. 7.38 lacs)
3. Contingent Liabilities:
a) Claims not acknowledged as debts for:
- Sales Tax* – Rs. 409.45 lacs ( 2004 – Rs. 205.07 lacs)

- Excise* – Rs. 63.72 lacs (2004 – Rs. 640.05 lacs)
- Income Tax* – Rs. 53.52 lacs (2004 – Rs. 68.04 lacs)
- Other Statutory Claims – Rs. 535.16 lacs (2004 – Rs. 497.95 lacs)
* Against the above, the Company has deposited a sum of Rs. 110.61 Lacs (2004 - Rs. 2.49 Lacs)
b) Corporate Guarantee of Rs. 27450.00 lacs (2004 - Rs. 6950.00 lacs) was given to Banks for working capital
facilities sanctioned to the 100% subsidiary, against which total amount utilised is Rs. 19729.54 lacs (2004-
Rs. 3739.35 lacs).
c) Non fund based facilities amounting to Rs. 13.83 lacs (2004 - Rs. 20.30 lacs) related to the demerged business.
4 The company has the following warranty provision in the books of accounts:
Rs./lacs
Outstanding at the beginning of the year 559.39

Additions during the year 355.60
Utilised/Reversed during the year 734.05
Balance as on 30th June 05 180.94
The warranty provision has been recognised for expected warranty claims for the first year of warranty on products sold
during the year. Due to the very nature of such costs, it is not possible to estimate the timing / uncertainties relating
to the outflows of economic benefits.
From the current year the cost for warranty to be provided beyond one year will be accounted for as and when the
related warranty revenue amounting to Rs. 3364.09 lacs is recognised.
5. Taxation:
a) Provision for taxation has been computed by applying the Income Tax Act, 1961 to the profit for the financial year
ended 30th June, 2005, although the actual tax liability of the Company has to be computed each year by
reference to the taxable profit for each fiscal year ended 31st March.
b) The significant components and classification of deferred tax asset and liability on account of timing differences
are as follows:
45
Deferred tax assets 2005 2004

Rs./Lacs Rs./Lacs
Allowances for doubtful debts 38.42 23.53
Demerger Scheme Expenses 13.50 21.29
Expense accruals 348.57 400.49 385.75 430.57
Deferred tax liabilities
Other timing differences 737.13 1081.90 424.83 738.30
Deferred tax liabilities (Net) 681.41 307.73
6. There are no Small Scale Industrial Undertakings to whom the Company owes money where the dues are outstanding
for more than 30 days from the mutually agreed due dates as at the Balance Sheet date.
7. Expenditure on Research and Development:
2005 2004
Rs./Lacs Rs./Lacs
Capital 7.31 85.66
Revenue 76.29 40.63
Total 83.60 126.29
8. Capacities, Production, Sales & Stocks:
• Sales, Purchases, Opening and Closing stocks have been given in terms of values and/or, where ascertainable, in
numbers.
• Bought out Computers and certain peripherals have been included in the stock/sales of systems.
• Sales value are net of capitalisation of the Company’s products at cost-Rs.305.94 Lacs (2004 - Rs. 64.34 Lacs)
a) Particulars of goods manufactured:
Class of Product Installed Actual

capacity Production
Computers/Micro processor Based systems Nos. 600000 448121

(525000) (295192)
Data Graphic/Display Monitor/Terminals, Hubs etc Nos. 425000 406917
(350000) (297991)
Note: Installed capacity being a technical matter has been certified by the management.
b) Information in respect of purchase of finished goods and services:
Nos. Value
Rs./Lacs
Computers 27015 14226.11

(16282) (18428.74)
Printers/Scanners/UPS/CVT 216839 15053.47
(158536) (14962.95)
Cellular Phones 1932 129.20
(46131) (2588.97)
Others 22413.44
(14769.36)
Total 51822.22
(50750.02)
46
c) Stocks and Sales:
Class of Products Unit Sales/Adjustments Opening Stock Closing Stock

Qty. Value Qty. Value Qty. Value
Rs./Lacs Rs./Lacs Rs./Lacs
Computers/Micro Nos 472051 136626.63 10799 3189.99 13884 4659.59
processor based Systems (307270) (101668.83) (6595) (1774.38) (10799) (3189.99)
Printers/Scanners/ Nos 214197 18738.21 8185 565.14 10827 577.88
UPS/CVT’S (154273) (16708.50) (3922) (180.01) (8185) (565.14)
Cellular Phones Nos 3246 220.25 1386 103.95 72 9.74
(48778) (2803.94) (4033) (246.32) (1386) (103.95)
Others 29148.22 2647.07 1998.09
(20967.29) (1346.15) (2647.07)
Total 184733.31 6506.15 7245.30
(142148.56) (3546.86) (6506.15)
Note: Previous year’s figures are given in brackets.
9. Value of imported and indigenous raw materials and components consumed during the year (excluding value of
consumption of stores and spares which is not readily ascertainable) classified on the basis of ratio between purchase
of imported and indigenous raw materials and components during the year:
2005 2004
Rs./Lacs % of Consumption Rs./Lacs % of Consumption
Imported 70784.27 72.25 42129.63 72.92

Indigenous 27187.04 27.75 15645.51 27.08
Total 97971.31 100.00 57775.14 100.00
10. Details of raw materials and components consumed (in value):

2005 2004
Rs./Lacs Rs./Lacs
a) Mother Boards and Assemblies 18945.21 11533.96

b) Hard Disk Drives 13101.04 9416.17
c) Processors 30970.74 15590.55
d) Monitors 6997.19 1394.26
e) CRT, Key Tops, PCBs & Cabinets 12661.44 8832.95
f) Others 15295.69 11007.25
Total 97971.31 57775.14
Note: Separate quantitative numbers of raw materials & components (including for resale) are not readily ascertainable.
11. Value of Imports calculated on CIF basis:

2005 2004
Rs./Lacs Rs./Lacs
a) Raw materials & components 75137.71 49653.43

b) Stores and spares 316.07 191.98
c) Capital goods 132.58 253.73
d) Traded items 17176.63 12879.05
Total 92762.99 62978.19
47
12. Expenditure in Foreign Currency:

(On actual payment basis)
2005 2004
Rs./Lacs Rs./Lacs
a) Travel 23.79 31.03
b) Royalty (Net of tax) 7051.91 4683.68
c) Interest 44.38 122.09
d) Others 67.88 43.70
Total 7187.96 4880.50
13. Earnings in Foreign Currency:

2005 2004
Rs./Lacs Rs./Lacs
a) Commission 63.98 60.12
b) FOB value of exports (including deemed exports) 3316.72 3207.59
c) Others (including reimbursement of expenses) 1320.18 959.65
Total 4700.88 4227.36
14. Remuneration to Auditor:

2005 2004
Rs./Lacs Rs./Lacs
a) As Auditor* 25.00 16.00
b) In Other Capacity:
Tax Audit* 9.00 9.00
Certification* 1.00 1.00
Out-of-Pocket Expenses 2.50 2.32
Total 37.50 28.32
* Excluding service tax
15. Details of Investments purchased, reinvested and sold on various dates within the financial year are as follows.
Name of the Fund Face Value * No. of Units Cost

Rs. per unit Rs./Lacs
Growth Options
Prudential ICICI Income Plan 10 2894610.337 560
HDFC Income Fund 10 6406525.756 1000
HDFC Liquid Fund 10 17289221.196 2250
HDFC High Interest Fund 10 841318.851 100
Kotak Bond 10 2933824.670 500
Kotak Liquid 10 3900528.601 512
Reliance Short Term Fund 10 6710187.280 753
Principal Cash Management Fund 10 3937128.576 500
Grindlays Dynamic Bond Fund 10 1025754.118 103
Prudential ICICI Liquid Fund 10 621372.740 100
Reliance Treasury Plan 10 947591.853 150
Grindlays Cash Fund 10 11843382.220 1425
Dividend Options
Templeton India TMA 1000 38161.301 577
DSP Merrill Lynch Floating Rate Fund 10 2219012.640 222
Grindlays Floating Rate Plan 10 9102157.441 919
Grindlays Cash Fund 10 945036.667 100
Templeton Floating Rate Income Fund 10 3295619.544 336
Reliance Liquid Fund 10 899914.894 100
*Represents total of transactions on account of renewals and reinvestments.
48
16. Managerial Remuneration :
(I) Computation of net profit under Section 349 of the Companies Act, 1956.
2005 2004
Rs./Lacs Rs./Lacs
Profit before Taxation 14887.04 12848.37

Add:
Directors Remuneration Paid/payable 330.98 309.94
1031.55 1353.92
15918.59 14202.29
Less:
Depreciation under Section 350 of the
Companies Act, 1956 650.72 1018.98
Profit on Disposal of (Other) Investments (Net) 831.41 777.55
Profit on sale of Fixed Assets (Net) 14.47 5.24
1496.60 1801.77
Net Profit under Section 349 14421.99 12400.52
Calculation of Commission under Section 309 of
the Companies Act, 1956 @ 1% 144.22 124.01
Restricted to 11.14 15.82
(II) Paid/payable to the Wholetime Directors
a) Salaries, Allowances & Bonus 271.62 242.81
Contribution to Provident and Superannuation Funds 16.84 15.55
Perquisites 28.38 32.56
316.84 290.92
b) Directors’ Sitting Fees 3.00 3.20
Commission to Non Wholetime Directors 11.14 15.82
Managerial remuneration under Section 198
of the Companies Act, 1956 330.98 309.94
17. Unaccrued forward exchange cover as on 30th June, 2005 of Rs. 0.30 lacs (2004- Rs. 7.78lacs) has been included in
prepaid expenses.
18. Duty drawback recognised during the year of Rs. 576.27 lacs (2004 – Rs. 121.78 lacs) has been adjusted against
cost of sales and services.
19. Employee Stock Option Plan (ESOP)
a) ESOP 2000
Pursuant to the approval of the shareholders at the Extra-Ordinary General Meeting held on 25th February, 2000
for grant of options to the employees of the Company and its subsidiaries (the ESOP 2000), the Board of Directors
had approved the grant of following options including the grant of options that had lapsed out of each grant.
Subsequent to the sub-division of shares, the above grant of options confer a right to get five (5) equity shares of
Rs. 2/- each.
30,18,000 Options granted at the exercise price of Rs. 289 2005 2004
Options outstanding at the beginning of the year 401,506 2,108,500
Less: Exercised during the year 316,612 980,414
Lapsed during the year – 726,580
Options outstanding at the end of the year 84,894 401,506
16,06,100 Options granted at the exercise price of Rs. 538.15

Options outstanding at the beginning of the year 1,438,524 –
Add: Granted during the year – 1,511,484
Less: Exercised during the year 229,869 –
Lapsed during the year 221,351 72,960
Options outstanding at the end of the year 987,304 1,438,524
49
Granted during the year
Date of grant Options granted Grant Price Options lapsed out

of the grant
25/8/2004 2,26,118 Rs. 603.95 54,360

18/1/2005 2,91,860 Rs. 809.85 18,910
15/2/2005 23,920 Rs. 809.30 15,520
15/3/2005 60,216 Rs. 834.40 2,800
15/4/2005 23,384 Rs. 789.85 -
14/5/2005 17,400 Rs. 770.15 -
15/6/2005 20,960 Rs. 756.15 2,560
b) Employees Stock Based Compensation Plan 2005

The shareholders of the Company have approved the Employees Stock Based Compensation Plan 2005 through
a Postal Ballot for grant of 3,335,487 options to the employees of the Company and its subsidiary. The Board of
Directors has granted 3,196,840 options (2004 – NIL) (each option confers on the employee a right for five
equity shares of Rs. 2/- each) at an exercise price of Rs. 228.80 being the market price as specified in the SEBI
(Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines 1999 on the date of grant.
20. Leases:
a) Finance Leases:
(i) Assets acquired under Sale and Leaseback arrangements comprises of Computers. There are no exceptional/restrictive
covenants in the lease agreements.
(ii) The minimum lease payments and its present value as at 30th June, 2005 in respect of assets acquired under finance
lease are as follows:
Total minimum Interest included in Present value of

lease payments minimum lease minimum lease
outstanding payments payments
Not later than one year 40.28 (2.54) 37.74

(42.43) (7.11) (35.32)
0.88 0.01 0.87
Later than one year and not later than five years (41.16) (2.55) (38.61)
Total 41.16 2.55 38.61
(83.59) (9.66) (73.93)

(iii) The Company has given on finance lease certain Assets/ Inventories, which comprise of computers. These leases have
a primary period, which are fixed and non-cancelable. There are no exceptional/restrictive covenants in the lease
agreements.
(iv) The gross investment in the assets given on finance leases as at 30th June, 2005 and its present value as at that date
are as follows:
Receivable payments receivable payments receivable
Not later than one year 1648.89 339.54 1309.35

(274.44) (58.18) (216.26)
5432.80 724.39 4708.41
Total 7081.69 1063.93 6017.76
(455.84) (108.74) (347.10)
[includes minimum sub lease receivable Rs. 22.20 Lacs (2004 - Rs. 68.67 Lacs)]
50
B) Operating Lease:
(i) The Company has taken various residential/commercial premises under cancellable operating leases. These leases
are normally renewable on expiry.
(ii) The rental expense in respect of operating leases is Rs. 504.81 Lacs (2004 - Rs. 495.31 Lacs)
21. Disclosure of related parties and related party transactions.
a) Holding Company:
HCL Corporation Ltd.

(Upto 10th February 2005 and having substantial interest in the voting power after that)
b) List of Parties where control exists/existed:
Subsidiary:
HCL Infinet Ltd.
c) Other related parties with whom transactions have taken place during the year and/or balances exist:
Fellow Subsidiaries:
[Refer note 21(a)]
- HCL Technologies Ltd

- HCL Comnet Ltd.
- HCL Technologies BPO Services Ltd.
- Shipara Technologies Ltd.
- Infosystems (Europe) Ltd.
- HCL Technologies Singapore Pte. Ltd.
- HCL Peripherals Ltd
- HCL Infosolutions Ltd.
- Network Ltd. (Ceased to be a related party w.e.f. November 2004)
Others (where there is significant influence):
Shri Sivasubramaniya Nadar Educational and Charitable Trust.
Key Management Personnel
i) Directors:
Mr. Ajai Chowdhry
Mr. T.S. Purushothaman*
Mr. Ravi Thumboochetty**
Mr. J. V. Ramamurthy***
* Ceased to be whole time director w.e.f. 20th July 05
** Ceased to be whole time director w.e.f. 10th August 05
*** Appointed as whole time director w.e.f. 11th August 05
ii) Other Key Management Personnel:

Mr. George Paul
Mr. Hari Bhaskaran
Mr. K.R. Radhakrishnan
Mr. Manohar Lal Taneja
Mr. Rajeev Asija
Mr. Rajendra Kumar
Mr. Rakesh Mehta
Mr. Sandeep Kanwar
Mr. S. Pattabiraman
Mr. Suman Ghose Hazra
d) Summary of Related Party disclosures (Rs./Lacs)
Note: All transactions with related parties have been entered into in the normal course of business.
51
Related Party Transactions for 12 months ended 30th June 2005 and Balances as on that date
(Rs./Lacs)
A. Transactions *Holding Company 100% Subsidiary Fellow Subsidiaries Associates Key Management Total
[See note 21(a)] [See note 21(c)] & Others Personnel
June 05 June 04 June 05 June 04 June 05 June 04 June 05 June 04 June 05 June 04 June 05 June 04
Sales & Related Income 15.57 0.13 243.63 234.84 3933.09 2916.01 40.21 128.25 4232.50 3279.23
Services 31.30 63.15 298.54 89.25 5.51 5.22 335.35 157.62
Other Income 98.93 108.39 98.93 108.39
Purchase of Goods 203.52 2673.66 7.21 40.44 210.73 2714.10
Purchase of Services 76.60 24.60 877.63 386.92 954.23 411.52
Donations Given 48.00 48.00
Impairment/Debts written off 3.74 2.17 3.74 2.17
Assets Purchased 8.20 15.60 8.20 15.60
Assets Sold 2.85 2.85
Remuneration 650.40 485.15 650.40 485.15
Reimbursements towards expenditure
a) Received 3.46 4.04 571.28 346.46 57.79 80.63 0.66 632.53 431.79
b) Made 2.43 5.47 5.85 0.66 8.56 3.09 19.88
B. Amount due to / from related parties Holding Company 100% Subsidiary FellowSubsidiaries Associate Key Management Total
[See note 21(a) [See note 21(c) & Others Personnel
Jun-05 Jun-04 Jun-05 Jun-04 Jun-05 Jun-04 Jun-05 Jun-04 Jun-05 Jun-04 Jun-05 Jun-04
Investment 1950.68 6150.68 1950.68 6150.68

Accounts Receivables 14.07 67.34 30.02 400.83 362.85 0.63 482.87 392.87
Loans & Advances & Other Recoverables 0.09 218.88 370.91 62.80 91.05 281.68 462.05
Creditors 41.83 188.75 83.16 63.86 124.99 252.61
Other Payables 0.04 41.56 56.05 4.43 8.00 8.00 49.60 68.48
* HCL Corporation Ltd. has ceased to be the holding company since 10th February 2005.
22. Earnings per share (EPS)
The earnings considered in ascertaining the Company’s EPS represent profit for the year after tax. Basic EPS is
computed and disclosed using the weighted average number of equity shares outstanding during the year. Diluted
earnings per share is computed and disclosed using the weighted average number of equity and dilutive equivalent
shares outstanding during the year, except when results would be anti dilutive.
Calculation of EPS:
Particulars 30.06.2005 30.06.2004

Profit after tax (Rs./Lacs) 13,276.76 12,089.64
Weighted average number of shares
considered as outstanding in computation of Basic EPS * 1,65,774,340 1,61,095,395
Add dilutive impact of stock options:
- Outstanding 6,843,750 5,061,930
- Exercised 1,407,430 3,353,970
- Lapsed 690,895 1,276,655
- Issued for no consideration 2,079,700 1,585,835
Weighted average number of shares
outstanding in computation of Diluted EPS* 1,76,796,115 1,72,373,785
Basic EPS (of Rs. 2/- each) Rs. 8.01 Rs. 7.50
Diluted EPS (of Rs. 2/- each) Rs. 7.51 Rs 7.01
*Consequent to the approval of the shareholders through postal ballot, results whereof declared on June 13, 2005,
each equity share of face value of Rs. 10/- were sub-divided into five equity shares of face value of Rs. 2/- each. 15th
July 2005 was fixed as record date for this purpose. The previous year weighted average number of equity shares and
diluted number of equity shares have been adjusted accordingly.
23. The Company is significantly operating in a single segment, hence segment reporting is not applicable.
52
24. Additional disclosure as per Clause 32 of the Listing Agreement
Disclosure of amounts at the year end and the maximum amount of loans/advances/investments outstanding during
the year ended 30th June, 2005.
A. Loans and Advances in the nature of Loans to Subsidiary.

a. Name. Nil
b. Balance outstanding at the year end Nil
c. Maximum amount outstanding during the year ended 30th June, 2005 Nil
B. Loans and Advances in the nature of loans to Fellow Subsidiaries
a. Name Nil
C. Loans and Advances in the nature of loans where no interest or interest below Section 372 A of Companies Act
is charged - Nil.
Loans given to employees under various schemes of the Company have been considered to be out of purview of
disclosure requirement.
D. Loans and Advances in the nature of loans to firms/Companies in which directors are interested-
Nil.
E. Disclosure of Investment in the Company’s own shares
a. Name of the Loanee Nil

d. Investments made by the loanee Nil
e. Maximum amount of Investment during the year ended 30th June, 2005 Nil
25. Previous year’s figures have been regrouped/recasted, where necessary, to conform to current year’s
presentation.
53
BALANCE SHEET ABSTRACT AND COMPANY’S GENERAL BUSINESS PROFILE
Registration Details
Registration No. State Code
0 2 3 9 5 5 5 5
Balance Sheet Date

3 0 0 6 2 0 0 5
D D M M Y Y Y Y
Capital Raised During the Year (Amount in Rs. Thousands)
Public Issue Rights Issue

N I L N I L
Bonus Issue Private Issue

N I L N I L
Position of Mobilisation and Deployment of funds (Amount in Rs. Thousands)
Total Liabilities Total Assets
Sources of Funds 5 2 3 4 8 2 3 5 2 3 4 8 2 3
Paid-up Capital Reserves and Surplus

3 3 4 3 6 5 4 0 1 9 1 4 3
Secured Loans Unsecured Loans
5 5 2 1 3 5 2 6 1 0 3 9
Application of Funds Net Fixed Assets Investments

5 3 2 8 7 8 1 2 2 7 7 4 4
Net Current Assets Misc. Expenditure
3 4 7 4 2 0 1 N I L
Accumulated Losses
N I L
Performance of Company Turnover Total Expenditure
1 9 5 9 5 7 2 7 1 8 1 0 7 0 2 4
(Please tick Appropriate box Profit/ Loss before Tax Profit/ Loss After Tax
+ for Profit, - for Loss) + 1 4 8 8 7 0 3 + 1 3 2 7 6 7 5
Earning Per Share in Rs. Dividend Rate (%)
8 . 0 1 3 1 0
Generic Name of Three Principal Products/ Services of Company (as per monetary terms.)
Item Code No. (ITC Code) 8 4 7 1 0 0

Product Description C O M P U T E R S
Item Code No. (ITC Code) 8 4 7 1 6 0

Product Description C O M P U T E R P E R I P H E R A L S
54
AUDITORS’ REPORT ON THE CONSOLIDATED FINANCIAL STATEMENTS
To,
The Board of Directors of HCL Infosystems Limited,

1. We have audited the attached Consolidated Balance Sheet of HCL Infosystems Limited and its subsidiaries, as at 30th
June 2005, the Consolidated Profit and Loss Account for the year ended on that date annexed thereto, and the
Consolidated Cash Flow Statement for the year ended on that date, which we have signed under reference to this
report. These consolidated financial statements are the responsibility of the management. Our responsibility is to
express an opinion on these consolidated financial statements based on our audit.
2. We conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require
that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are prepared,
in all material respects, in accordance with an identified financial reporting framework and are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides
a reasonable basis for our opinion.
3. We report that the consolidated financial statements have been prepared by HCL Infosystems Limited’s Management
in accordance with the requirements of Accounting Standard 21, Consolidated Financial Statements, issued by the
Institute of Chartered Accountants of India.
4. In our opinion and to the best of our information and according to the explanations given to us, the consolidated
financial statements give a true and fair view in conformity with the accounting principles generally accepted in India:
(a) in the case of the consolidated balance sheet, of the consolidated state of affairs of HCL Infosystems Limited
and its subsidiary as at 30th June 2005;
(b) in the case of the consolidated profit and loss account, of the consolidated results of operations of HCL Infosystems
Limited and its subsidiary for the year ended on that date; and
(c) in the case of the consolidated cash flow statement, of the consolidated cash flows of HCL Infosystems Limited
and its subsidiary for the year ended on that date.
V. NIJHAWAN
Partner
Date: 18th August, 2005 Chartered Accountants
55
CONSOLIDATED BALANCE SHEET AS AT 30TH JUNE
2005 2004
Sources of Funds:
Shareholders’ Funds :
Capital 1 3343.65 3289.00

Reserves and Surplus 2 52110.90 38977.19
Loan Funds:
Secured Loans 3 5521.35 6903.70
Unsecured Loans 4 2610.39 298.49
Deferred Tax : 21 ( 4 )
Deferred Tax Assets (760.31) (591.24)
Deferred Tax Liabilities 1495.08 734.77 1090.47 499.23
64321.06 49967.61
Application of Funds:
Fixed Assets: 5
Gross Block 15215.22 15040.38
Less: Depreciation 7718.91 8594.64
Net Block 7496.31 6445.74
Capital Work-In-Progress 105.95 7602.26 124.61 6570.35
Investments 6 14345.66 21909.20

Current Assets, Loans & Advances:
Inventories 7 34939.32 28042.02
Sundry Debtors 8 53239.10 41643.22
Cash and Bank Balances 9 25077.39 14523.22
Other Current Assets 10 10812.05 4478.83
Loans and Advances 11 4567.25 2520.78
128635.11 91208.07
Less: Current Liabilities & Provisions 12
Current Liabilities 80803.83 65270.42
Provisions 5458.14 4449.59
86261.97 69720.01
Net Current Assets 42373.14 21488.06
64321.06 49967.61
Consolidated Significant Accounting Policies 20
Consolidated Notes to Accounts 21
This is the Balance Sheet referred to The schedules referred to above form an integral part of
in our report of even date the Balance Sheet
V. NIJHAWAN AJAI CHOWDHRY S. BHATTACHARYA
Price Waterhouse
56
CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 30TH JUNE
2005 2004
Income
Business Income 13 778360.81 441178.35
Less : Excise Duty 3928.37 774432.44 10534.39 430643.96
Other Income 14 5060.27 2892.22
779492.71 433536.18
Expenditure
Cost of Sales and Services 15 714092.73 386123.75
Personnel 16 14522.93 10861.64
Administration, Selling, Distribution and Others 17 18118.43 11826.23
Repairs and Maintenance 18 857.60 889.10
Finance Charges 19 776.13 882.68
Less : Transfer to Revaluation Reserve 4.58 1524.25 4.58 1801.45
749892.07 412384.85
Tax Expense 21 ( 4 )
-Current [Wealth tax Rs. 2.00 lacs (2004-Rs. 2.00 lacs)] 6510.59 2099.00
- Fringe Benefit 83.90 –
-Deferred 235.55 6830.04 1540.87 3639.87
Profit after Tax 22770.60 17511.46

Balance in Profit and Loss Account brought forward 26309.60 17730.32
Profit available for Appropriation 49080.20 35241.78
Appropriations:
Interim Dividend 6974.52 4534.01
Tax on Interim Dividend 938.82 580.92
Transfer to General Reserve 1327.66 1208.96
Balance Carried Over 36022.85 26309.60
Earning per equity share

Basic ( of Rs. 2/- each) (in Rs.) 21 ( 9 ) 13.74 10.87
Diluted (of Rs. 2/- each) (in Rs.) 21 ( 9 ) 12.88 10.16
Consolidated Significant Accounting Policies 20

Consolidated Notes to Accounts 21
This is the Profit and Loss Account The schedules referred to above form an integral part of
referred to in our report of even date the Profit and Loss Account
Price Waterhouse
Dated :18th August, 2005 Company Secretary
57
CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 30TH JUNE
2005 2004
Rs./Lacs Rs./Lacs
1. Cash Flow from Operating Activities
Adjustments for:
(Profit)/Loss on sale of Fixed Assets (Net) (15.81) (3.71)
(Profit)/Loss on disposal of Investments (Net) (850.53) (795.58)
Interest on borrowings 776.13 882.68
Interest and Dividend income (688.10) (1321.14)
Unrealised (Gain) / Loss on Foreign Exchange
Fluctuation (Net) (55.41) 240.80
Prior period expenses (62.00) -
Liabilities no longer required written back (839.71) (70.72)
Diminution in the value of Current Investments 0.53 -
Fixed Assets written off 4.73 (61.69) 0.01 881.80
Operating profit before Working Capital Changes 29538.96 22033.13
Adjustments for:
Trade and Other Receivables (19934.11) (15933.86)

Inventories (6897.30) (4232.81)
Trade Payables and Other Liabilities 16432.29 (10399.12) 14717.64 (5449.03)
Cash generated from Operation 19139.84 16584.10

Direct Tax (paid)/ refund (Net) (6465.23) (443.93)
(Including Interest)
Net Cash from Operating Activities (A) 12674.61 16140.17
2. Cash Flow from Investing Activities
Interest and Dividend Received (Gross) 362.08 1331.99

Purchase of Fixed Assets (2678.31) (1806.83)
Sale of Fixed Assets 107.56 34.88
Purchase of Investments (167566.08) (73024.56)
Disposal/Redemption of Investments 175979.63 73761.84
Capital Work-in-Progress 19.39 10.84
Net cash from/(used in) Investing activities (B) 6224.27 308.16
58
CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 30TH JUNE
2005 2004
Rs./Lacs Rs./Lacs
3. Cash Flow from Financing Activities
Share Capital Issued 54.65 98.04

Interest Paid (954.15) (989.41)
Share Premium Received 2097.38 2735.36
Secured Loans - Short Term Received/(Paid) (2354.59) 411.07
Secured Loans - Long Term Received 4000.00 2007.89
Secured Loans - Long Term (Paid) (3027.19) (3930.44)
Unsecured Loans Received / (Paid) 2313.59 (3148.36)
Dividend Paid (including dividend tax) (10474.40) (8661.72)
Net cash from Financing activities (C) (8344.71) (11477.57)
Opening Balance of Cash and Cash Equivalents 14523.22 9552.46

Closing Balance of Cash and Cash Equivalents 25077.39 14523.22
[(Includes Exchange Rate Fluctuation of
Rs. (-1.13) Lacs (2004-Rs 3.42 Lacs)]
[Includes unclaimed dividend of
Rs. 146.38 lacs (2004-Rs. 99.15 lacs)]
Net Increase /(Decrease) in Cash

and Cash Equivalents 10554.17 4970.76
Total (A)+(B)+(C) 10554.17 4970.76
Note -
The above Cash Flow Statement has been prepared under the indirect method set out in AS-3 issued by Institute of
Chartered Accountants of India.
This is the Cash Flow Statement For and on behalf of the Board of Directors
referred to in our report of even date

Membership Number - F-87228 Chief Executive Officer
Price Waterhouse
59
SCHEDULES TO THE CONSOLIDATED BALANCE SHEET AS AT 30TH JUNE
2005 2004
Rs./Lacs Rs./Lacs
1- Capital
Authorised:
40,00,00,000 Equity Shares of Rs. 2/- each (2004 - 8,00,00,000
Equity shares of Rs. 10/- each) 8000.00 8000.00
5,00,000 (2004 - 5,00,000) Preference Shares of Rs. 100/- each 500.00 500.00
8500.00 8500.00
Issued, Subscribed and Paid up:

16,71,81,770 Equity shares of Rs. 2/- each, fully paid up.
(2004 - 3,28,89,873 Equity shares of Rs. 10/- each, fully paid up) 3343.64 3288.99
Add : Shares Forfeited 0.01 0.01

3343.65 3289.00
Notes:-
1 The shareholders of the Company through postal ballot, results whereof declared on June 13, 2005 authorised the sub division of
Equity shares, in accordance with the provisions of Section 94 of the Companies Act, 1956. Accordingly, each Equity share was sub-
divided from face value of Rs. 10/- each into 5 Equity shares of face value of Rs. 2/- each.
2 The Company had fixed July 15, 2005 as the Record Date for determining the shareholders entitled to the sub-division of the shares.
The credit of Equity Share of Rs. 2/- each has been given to respective beneficiary accounts of the shareholders, holding shares in
electronic form, by the depositories. For the Equity Shares held in physical form new share certificate of face value of Rs. 2/- each is
to be issued on receipt of the old share certificate of face value of Rs. 10/- each. The Equity shares of the face value of Rs. 2/- each
of the Company are being traded on stock exchange since July 16, 2005.
3 Paid up share capital includes :
a) 5,04,47,295 Equity Shares of Rs. 2/- each (2004 - 1,00,89,459 Equity Shares of Rs. 10/- each) issued pursuant to contract
without payment being received in cash.
b) 5,31,82,765 Equity Shares of Rs. 2/- each (2004 - 1,06,36,553 Equity Shares of Rs. 10/- each) Bonus shares issued from
Share Premium Account.
c) 76,34,475 Equity Shares of Rs. 2/- each (2004 - 9,80,414 Equity Shares of Rs. 10/- each) issued pursuant to the exercise of
options granted under ESOP Scheme 2000.
4 Out of the total paid up share capital, 8,30,19,205 Equity Shares of Rs. 2/- each (2004 - 1,66,03,841 Equity Shares of Rs. 10/-
each) are held by HCL Corporation Limited. During the year ended June 30, 2005, 27,32,405 equity shares of Rs. 2/- each fully paid
up were issued pursuant to the exercise of options granted under ESOP Scheme 2000. Consequently, HCL Corporation Limited’s
shareholding percentage reduced from 50.48% as on June 30, 2004 to 49.66% as on June 30, 2005.
2- Reserves and Surplus As At Deductions/ As At

(Schedule-21, Note 5) 01.07.2004 Additions Adjustments 30.06.2005
Rs./Lacs Rs./Lacs Rs./Lacs Rs./Lacs
General Reserve 5622.20 1,327.66 – 6949.86

(4413.24) (1208.96) (0) (5622.20)
Profit and Loss Account 26309.60 9713.25 – 36022.85
(17730.32) (8579.28) (-) (26309.60)
Share Premium 6739.37 2,097.38 – 8836.75
(4004.01) (2735.36) (0) (6739.37)
Revaluation Reserve (Adj.) 305.65 – 4.58 301.07
(310.23) (0) (4.58) (305.65)
Capital Reserve 0.37 – – 0.37
(0.37) (– ) (0) (0.37)
38977.19 13138.29 4.58 52110.90
Previous year (26458.17) (12523.60) (4.58) (38977.19)
60
2005 2004
Rs./Lacs Rs./Lacs
3- Secured Loans
Loans and Advances from Banks:
- Cash Credits 530.07 –
- Foreign Currency Loan
External Commercial Borrowings 554.61 1589.15
Others 436.67 2287.36
- Term Loan
Foreign currency Loan – 875.60
Others 4000.00 2151.59
5521.35 6903.70
a) Cash Credits along with non-fund based facilities, Foreign Currency Loans and Foreign Currency Term Loan from Banks
by the Parent are secured by way of hypothecation of stock-in-trade, book debts as first charge and by way of second
charge on all the immovable and movable assets of the Parent Company. The charge ranks pari-passu amongst Bankers.
b) Term loan in Indian rupees from a Bank taken by the Parent Company is secured by equitable mortgage on all the
immovable assets of the Parent Company and hypothecation of all movable assets subject to equitable mortgage of
specific assets under term loan from another bank and prior charge in favour of Company’s bankers on book debts and
stock in trade for working capital facilities. Term loan from another Bank by the Parent is secured by equitable mortgage
on specific assets.
c) Amount payable within one year from the Balance Sheet date is Rs. 4991.28 Lacs (2004 - Rs. 6903.70 Lacs)
2005 2004
Rs./Lacs Rs./Lacs
4- Unsecured Loans
(Schedule-21, Notes 6)
Public Deposits 10.15 10.76
Interest accrued and due 1.91 2.02
Short Term Loans and Advances:
- From Banks -Commercial Paper 2500.00 –
Other Loans and Advances:
- From a Financial Institution 59.72 146.74
Deferred Lease Obligations 38.61 138.97
2610.39 298.49
Notes:-
1) Amount payable within one year is Rs. 2593.39 Lacs (2004 - Rs. 128.29 Lacs )
2) Public Deposits include unclaimed matured deposits.
61
5- Fixed Assets
(Schedule - 21, Note 2) Rs./Lacs
Gross Block Depreciation Net Block

As at Additions/Adjusments Deductions/Adjustments/ As at As at Additions Deductions As at As at As at
01.07.2004 during Retired during 30.06.2005 01.07.2004 during during 30.06.2005 30.06.2005 30.06.2004
the Year the Year the Year the Year
Tangible:
Land - Leasehold 398.96 252.41 — 651.37 20.30 9.87 — 30.17 621.20 378.66
Land - Freehold 379.76 — 59.33 320.43 — — — — 320.43 379.76
Buildings 3673.56 146.79 0.60 3819.75 828.52 98.22 0.60 926.14 2893.61 2845.04
Plant & Machinery and 5756.54 723.06 1004.18 5475.42 3809.57 897.16 989.09 3717.64 1757.78 1946.97
Air Conditioners
Furniture, Fixtures & 3504.15 519.52 536.14 3487.53 2685.12 449.60 515.47 2619.25 868.28 819.03
Office Equipment
Vehicles 223.75 34.10 20.25 237.60 147.47 26.76 18.86 155.37 82.23 76.28
Intangible :
Acquired Software 1103.66 — 880.54 223.12 1103.66 — 880.54 223.12 — —
License Fees — 1000.00 — 1000.00 — 47.22 — 47.22 952.78 —
TOTAL 15040.38 2675.88 2501.04 15215.22 8594.64 1528.83 2404.56 7718.91 7496.31 6445.74
Previous Year 13470.19 1801.17 230.98 15040.38 6988.40 1806.03 199.79 8594.64

[Including Capital Advances of Rs. 50.86 Lacs (2004- Rs. 4.81 Lacs)] 7602.26 6570.35
Notes :
1. Land - Freehold and Building at Ambattur amounting to Rs. 57.33 lacs (2004-Rs. 101.01 lacs) and Building at Mumbai amounting to Rs. 90.88 lacs (2004 - Rs. 90.88 lacs) are pending
registration in the name of the Group .
2. Addition to Plant and Machinery includes Rs. 0.69 Lacs (2004 - Rs. 2.88 Lacs ) and Capital Work-In-Progress Rs. Nil (2004 - Rs. 0.73 Lacs ) representing restatement of assets during the
year due to exchange rate fluctuation.
6- Investments
Opening Purchase Redemption Closing Face 2005 2004
Units /Reinvest Units Units Value (Rs) Rs. in Lacs Rs. in Lacs
Unquoted (Others) Current :
Growth Options
Birla Cash Fund 1300465 – 1300465 – 10.00 – 225.00
Birla Floating Rate Fund - Long Term – 4183930 – 4183930 10.00 450.00 –
Deutsche Floating Rate Fund 5008219 – 5008219 – 10.00 – 516.30
Deutsche Premier Bond Fund 884877 – 884877 – 10.00 – 98.12
DSP Merrill Lynch Bond Fund 983628 2234443 3218070 – 10.00 – 200.00
DSP Merrill Lynch Liquidity Fund 3934839 18229669 22164508 – 10.00 – 603.49
DSP Merrill Lynch Short Term Fund 5879080 – 5879080 – 10.00 – 634.00
DSP Merrill Lynch Floating Rate Fund 3079868 4601806 - 7681674 10.00 825.00 325.00
Grindlays Cash Fund 7137082 87874020 87032835 7978267 10.00 1000.00 850.00
Grindlays Dynamic Bond Fund 20141503 – 20141503 – 10.00 – 2138.32
Grindlays Floating Rate Fund - Long Term 2358869 20633398 11057342 11934925 10.00 1205.44 250.00
Grindlays Floating Rate Fund - Short Term – 446030 – 446030 10.00 50.00 –
Grindlays Super Saver Income Fund - IP 6095319 – 6095319 – 10.00 – 879.02
Grindlays Super Saver Income
Fund - Short Term 6214319 – 6214319 – 10.00 – 750.00
Grindlays Super Saver Medium Term Fund 6394887 – 6394887 – 10.00 – 650.00
HDFC Floating Rate Fund - Short Term 5596545 9170592 10177229 4589908 10.00 503.75 600.00
HDFC Institutional Plan -
Cash Management Fund 4179122 – 4179122 – 10.00 – 547.44
HSBC Cash Fund - Institutional 5777355 53955907 56633174 3100088 10.00 350.00 625.00
HSBC Income Fund - Short Term – 4526398 – 4526398 10.00 515.00
JM Floating Rate Fund - Long Term – 994085 – 994085 10.00 100.00 –
Kotak Dynamic Income Plan 4572838 – 4572838 – 10.00 – 464.98
Prudential ICICI Blended Plan – 5000000 – 5000000 10.00 500.00 –
Prudential ICICI Flexible Income Plan 16310812 – 16310812 – 10.00 – 1842.76
62 (Contd.)
Opening Purchase Redemption Closing Face 2005 2004

Units /Reinvest Units Units Value (Rs) Rs.in Lacs Rs.in Lacs
Prudential ICICI Floating Rate Plan 11786732 20165206 21832903 10119035 10.00 1064.65 1250.00
Prudential ICICI Income Plan 1565051 4756179 6321230 – 10.00 – 281.53
Prudential ICICI Liquid Plan 12653943 68558284 74281698 6930529 10.00 1148.65 1972.07
Prudential ICICI Short Term Plan – 13197876 8716523 4481353 10.00 565.00 –
Prudential ICICI Very Cautious Plan 500000 – 500000 – 10.00 – 50.00
Reliance Fixed Maturity Plan 5020650 12618165 15121776 2517039 10.00 251.70 502.06
Reliance Floating Rate Fund – 992349 - 992349 10.00 100.00 –
Tata Floating Rate Fund Short Term 4898503 – 4898503 – 10.00 – 500.00
Tata Dynamic Bond Fund 947320 – 947320 – 10.00 – 99.51
Templeton Floating Rate Income
Fund - Long Term 22517971 3029189 15184992 10362168 10.00 1197.57 2591.97
Templeton India Income Builder 2350428 2169717 4520145 – 10.00 – 411.37
Templeton India Short Term – 40932 – 40932 10.00 500.00
Templeton Treasury Management A/c 7897 – 7897 – 1000.00 – 125.38
Dividend Options – –
Templeton India Liquid Fund 5753271 – 5753271 – 10.00 – 575.33
Prudential ICICI Fixed Maturity Plan 8500000 4079883 12579883 – 10.00 – 850.00
JM Fixed Maturity Plan 5005536 – 5005536 – 10.00 – 500.55
Principal Cash Management Liquid Fund – 72041998 62034479 10007519 10.00 1000.85 –
ABN AMRO Cash Fund – 40097536 30052069 10045467 10.00 1004.55 –
Grindlays Cash Fund – 29220100 14389345 14830755 10.00 1512.23
Templeton Mutual Fund Collection A/c – 50083 – 50083 1000.00 501.27 –
14345.66 21909.20
Note :- Net asset value of Unqouted (Others) Current Investment in Mutual Funds as on 30th Jun ’05 is Rs. 14712.00 Lacs (2004 -
Rs. 22367.08 Lacs)
63 (Contd.)
2005 2004
Rs./Lacs Rs./Lacs
7- Inventories
Raw Materials and Components (Including in Transit) 7793.60 6126.95

Stores and Spares 4316.23 3810.56
Finished Goods (Including in Transit) 22045.68 17233.28
Work-In-Progress 783.81 871.23
34939.32 28042.02
8- Sundry Debtors - Unsecured

Debts exceeding six months :
- Considered Good 6360.78 1896.24
- Considered Doubtful 227.17 186.23
6587.95 2082.47
Other debts - Considered Good 46878.32 39746.98

- Considered Doubtful 1.29 25.51
46879.61 39772.49
53239.10 41643.22
9- Cash and Bank Balances

Cash in hand and in Transit 195.05 865.57
Cheques in hand 3154.23 2656.17
Balances with Scheduled Banks :
- On Current Account 10703.16 7420.74
- On Unpaid Dividend Account 146.38 99.15

- On Margin Account 38.97 2.00
25077.39 14523.22
Note:- Fixed Deposit includes Rs. 6.86 Lacs (2004-Rs.6.86 Lacs) under lien as margin money on bank guarantee.
10- Other Current Assets

Deposits 1389.52 1148.19
Prepaid Expenses 1630.50 1069.64
Lease Rental Recoverable 7792.03 2261.00
10812.05 4478.83
64
2005 2004
Rs./Lacs Rs./Lacs
11- Loans and Advances

Unsecured Considered Good
- Amounts recoverable in cash or in kind or for value to be received 4005.52 2282.36
- Balances with Customs, Port Trust and Excise Authorities 561.73 238.42
4567.25 2520.78
12- Current Liabilities and Provisions
Current Liabilities:
Acceptances 24179.69 20670.00
Sundry Creditors :
- Due to SSI Undertakings 130.36 146.87
- Others 40878.63 41008.99 33759.56 33906.43
Sundry Deposits 271.26 286.05
Interest accrued but not due :
- On Secured Loans 4.03 182.32
- On Unsecured Loans 1.26 0.88
Investor Education and Protection Fund :
- Unclaimed Dividend* 146.38 99.15
Advances from Customers 1247.30 1556.32
Other Liabilities 4286.72 3205.40
Unaccrued Revenue 9658.20 5363.87
80803.83 65270.42
Provisions:
Provision for Tax [Net of Advances Rs. 10020.84 Lacs
(2004 - Rs. 4523.09 Lacs )] 340.23 360.88
For Warranty Liability 296.78 661.52
For Gratuity and other Employee Benefits 1004.78 818.90
5458.14 4449.59
86261.97 69720.01
* There is no amount due and outstanding to be credited to Investor Education and Protection Fund as at 30th June,2005.
These amounts shall be credited and paid to the fund as and when due.
65
SCHEDULES TO THE CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 30TH JUNE
2005 2004
Rs./Lacs Rs./Lacs
13- Business Income
Sales and Related Income 754652.42 422285.60
Services 23708.39 18892.75
778360.81 441178.35
14- Other Income

Interest :
- Refund from Income Tax Authority 149.91 330.55
- On Lease Rental 773.20 483.04
[TDS Rs. 56.28 lacs (2004 - Rs. 22.92 lacs)]
- Others 9.34 5.98
Dividend from (Others) Current Investments 237.27 417.87
Miscellaneous Income 405.75 299.54
Insurance Claims 37.45 22.52
Provisions/Liabilities no longer required written back 839.71 70.72
Profit on disposal of (Others) Current Investments (Net) 850.53 795.58
Profit on Foreign Exchange Fluctuation (Net) 1449.72 379.01
Profit on Sale of Fixed Assets 15.81 3.71
5060.27 2892.22
15- Cost of Sales and Services

Raw Materials & Components Consumed 97971.31 57775.14
Purchase of Finished Goods & Services 609141.50 319110.18
Stores and Spares Consumed 2270.25 2439.32
Power and Fuel 122.26 112.57
Labour and Processing Charges 441.49 521.93
Royalty 8880.07 6277.37
718826.88 386236.51
(Increase)/Decrease in stocks of
Finished Goods & Work-In-Progress :
Closing Stock
- Work-In-Progress 783.81 871.23
22844.60 18110.45
Opening stock
- Work-In-Progress 871.23 487.68
18110.45 17997.69
(4734.15) (112.76)
714092.73 386123.75
66
SCHEDULES TO THE CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 30TH JUNE
2005 2004
Rs./Lacs Rs./Lacs
16- Personnel
Salaries, Wages, Allowances, Bonus & Gratuity 13232.05 9843.98
Contribution to Provident Fund & Other Funds 540.71 376.52
Staff Welfare Expenses 688.17 668.47
Prior Period Expenses 62.00 –
14522.93 10888.97
Less : Operating Cost recovered – 27.33
14522.93 10861.64
17- Administration, Selling, Distribution and Others

(Schedule-21, Notes 6)
Rent 890.40 814.37
Rates and Taxes 1647.30 766.67
Printing and Stationery 340.06 326.54
Communication 782.15 623.56
Travelling and Conveyance 1914.88 1547.86
Packing, Freight & Forwarding 3136.15 2145.79
Legal and Professional 895.57 730.40
Training and Conference 359.20 255.92
Office Electricity and Water 513.42 446.83
Miscellaneous 1540.20 1121.14
Insurance 1206.63 638.50
Advertisement, Publicity & Entertainment (Net of Reimbursements) 2625.35 860.81
Hire Charges 221.15 160.70
Commission on Sales 1113.64 573.60
Bank Charges 782.84 684.48
Fixed Assets Written Off 4.73 0.01
Diminution in value of Current Investment 0.53 –
18118.43 11845.19
18118.43 11826.23
18- Repairs and Maintenance

Plant and Machinery 127.44 138.48
Buildings 52.59 12.52
Others 677.57 741.32
857.60 892.32
857.60 889.10
19- Finance Charges

Interest paid :
- On Fixed Loans 225.46 512.67
- On Public Deposits – 0.07
- On Others 550.67 369.94
67
SCHEDULES TO THE CONSOLIDATED BALANCE SHEET & PROFIT AND LOSS ACCOUNT
SCHEDULE 20 - CONSOLIDATED SIGNIFICANT ACCOUNTING POLICIES
1. BASIS OF ACCOUNTING AND CONSOLIDATION

The Consolidated Financial Statements of HCL Infosystems Ltd and its subsidiary are prepared under historical cost
convention in accordance with generally accepted accounting principles applicable in India and Accounting Standard
21 on Consolidation of Financial Statements issued by the Institute of Chartered Accountants of India to the extent
possible in the same format as that adopted by the Parent Company (HCL Infosystems Ltd) for its separate financial
statements.
Intra-group balances and intra-group transactions and resulting unrealised profits are eliminated in full. Unrealised
losses resulting from intra-group transactions are also eliminated unless cost can be recovered.
2. FIXED ASSETS
Fixed Assets including in-house capitalisation and Capital Work-in-Progress are stated at cost except those which are
revalued from time to time on the basis of current replacement cost / value to the Company, net of depreciation.
Assets taken on finance lease on or after 1.4.2001 are stated at fair value of the assets or present value of minimum
lease payments whichever is lower.
Intangible Assets are stated at cost net of amortization.
3. DEPRECIATION
Depreciation has been calculated under Straight Line Method on:
(i) a) Buildings capitalised prior to 1.5.1986 at the rates computed in the respective years of acquisition of those
assets as per Section 205(2)(b) of the Companies Act, 1956.
b) Assets acquired on or after 1.5.1986 and before 16.12.93 on a prorata basis at the rates specified in
Schedule XIV of the Companies (Amendment) Act, 1988. These assets are subject to annual technical
evaluation for their economic useful life and additional depreciation is charged if there is any reduction in
economic useful life as re-evaluated.
c) Assets acquired on and after 16.12.1993 on a prorata basis based on economic useful life determined by
way of periodical technical evaluation. Economic useful lives which are not exceeding those stipulated in
Schedule XIV of the Companies Act, 1956 are as under:
Plant and machinery 4-6 years

Building - Factory 25-28 years
Building - Others 50-58 years
Furniture & Fixture 4-6 years
Air Conditioners 3-6 years
Vehicles 4-6 years
Office Equipment 3-6 years
Networking equipment 3-6 years
Computers 3-5 years
(d) The assets taken on finance lease on or after 1st April, 2001 over their expected useful lives.
(ii) Leasehold land, premises and improvements are amortised over the primary lease period.
(iii) Intangible Assets are amortised over a period of 1-3 years.
(iv) The one-time licence fee capitalised is amortised equally over the balance period of license from the date of
payment of license fee.
4. INVESTMENTS
Current Investments are carried at lower of cost or fair value.

Income from Investments (Dividend Option) is recognised in the accounts in the year in which it is accrued.
68
5. INVENTORIES
Raw Materials and components held for use in the production of inventories are valued at cost if the finished goods in
which they will be incorporated are expected to be sold at or above cost. If there is a decline in the price of materials/
components and it is estimated that the cost of finished goods will exceed the net realisable value, the materials/
components are written down to net realisable value measured on the basis of their replacement cost.
Work in Progress and Finished Goods are valued at lower of cost and net realisable value. Cost of Finished Goods and
Work in Progress includes direct labour and proportionate overhead expenses. Cost is determined on the basis of
weighted average.
Stores and Spares are valued at lower of cost and net realisable value. Adequate adjustments are made to the carrying
value for obsolescence.
Goods in Transit are valued inclusive of custom duty, where applicable.
6. FOREIGN CURRENCY
Transactions in foreign currency are recorded at the exchange rate prevailing on the date of the transactions.
Foreign currency monetary assets and liabilities are restated at the exchange rates prevailing at the year end and the
overall net gain/loss including those arising out of fluctuations in exchange rates on settlement during the period is
adjusted to the Profit and Loss Account, except in cases of liabilities relating to acquisition of fixed assets which are
adjusted in the cost of respective assets.
Foreign currency monetary assets and liabilities covered by forward contracts are stated at the forward contract rates
and the difference between the forward rate and the exchange rate at the inception of the forward contract is recognised
in the Profit and Loss Account over the life of the contract, except in cases of liabilities relating to acquisition of fixed
assets which are adjusted in the cost of respective assets.
7. RETIREMENT BENEFITS TO EMPLOYEES

a) Liability for gratuity and leave encashment is provided as determined on actuarial valuation made at the end of
the year which is computed using projected unit credit method.
b) The contributions towards recognised Provident Fund and Superannuation Fund are accounted for on accrual
basis.
c) The Group has no further obligations beyond the yearly provisions and contributions.
8. REVENUE RECOGNITION
a) Sales, net of discount, are inclusive of excise duty and the related revenue is recognised (after providing for
expenses to be incurred connected to such sales) on transfer of all significant risks and rewards to the customer
and when no significant uncertainty exists regarding realisation of the consideration.
(b) Service income includes income
i) From maintenance of products and facilities under maintenance agreements, and extended warranty, which
is recognised upon creation of contractual obligations rateably over the period of contract, where no significant
uncertainty exists regarding realisation of the consideration.
ii) From software services
(a) The revenue from time and material contracts is recognised based on the time spent as per the terms of
contracts.
(b) In case of fixed priced contracts revenue is recognised on percentage of completion basis. Foreseeable
losses, if any, on contract completion are recognised immediately.
iii) Internet Access services: Revenue is recognised on the basis of actual usage of hours by the customer or over
the period of the validity of the pack based on the customer agreements.
iv) Virtual private networks: Revenue is recognised on proportionate basis over the period of contract with the
customer. One time charges recovered from the customers are recognised as revenue at the commencement
of service.
69
v) Technical help desk: The Group is engaged in providing technical and administrative help desk support to its
various customers through the Web. Revenue for the same has been recognised based on fulfilling obligations
as contracted in the respective agreements.
9. GOVERNMENT GRANTS
Revenue grants where reasonable certainty exists that the ultimate collection will be made are recognized on a
systematic basis in profit and loss statement over the periods necessary to match them with the related cost which
they are intended to compensate.
10. LICENCE FEES – REVENUE SHARE

With effect from January 1, 2005 the variable licence fee computed at prescribed rate of revenue share is being
charged to the Profit and Loss Account in the year in which the related revenue from ISP Operations arises.
11. LEASES
a) Lease transactions entered into prior to April 1, 2001 by the parent and it’s Indian subsidiary:
i) Assets leased out are stated at cost and amortised over the primary lease period.
ii) Lease rentals in respect to the assets taken/given on lease are recognised in the Profit and Loss Account on
accrual basis.
b) Other lease transactions
i) Assets taken under leases where the Company has substantially all the risks and rewards of ownership are
classified as Finance leases. Such assets are capitalised at the inception of the lease at the lower of fair value
or the present value of minimum lease payments and a liability is created for an equivalent amount. Each
lease rental paid is allocated between the liability and the interest cost, so as to obtain a constant periodic
rate of interest on outstanding liability for each period.
ii) Assets taken on leases where significant portion of the risks and rewards of ownership are retained by the
lessor are classified as operating leases. Lease rentals are charged to the Profit and Loss Account on straight
line basis over the lease term.
iii) Profit on sale and leaseback transactions is recognised over the period of the lease
iv) Assets given under finance lease are recognised as receivables at an amount equal to the net investment in
the lease. Inventories given on finance lease are recognised as deemed sale at fair value. Lease income is
recognised over the period of the lease so as to yield a constant rate of return on the net investment in the
lease.
v) Assets leased out under operating leases are capitalised. Rental income is recognised on accrual basis over
the lease term.
vi) Initial direct costs relating to the finance lease transactions are included as part of the amount capitalised as
an asset under the lease.
12. SEGMENT ACCOUNTING

The segment accounting policy is in accordance with the policies consistently used in the preparation of financial
statements of the Group. The basis of reporting is as follows: -
a) Revenue and expenses distinctly identifiable to a segment are recognised in that segment. Identified expenses
include direct material, labour, overheads and depreciation on Fixed Assets. Expenses that are identifiable with/
allocable to segments have been considered for determining segment results.
Allocated expenses include support function costs which are allocated to the segments in proportion of the
services rendered by them to each of the business segments. Depreciation on Fixed Assets is allocated to the
segments on the basis of their proportionate usage.
b) Unallocated expenses are enterprise expenses, which are not attributable or allocable to any of the business
segment.
70
c) Assets and liabilities which arise as a result of operating activities of the segment are recognised in that segment.
Fixed Assets which are exclusively used by the segment or allocated on a reasonable basis are also included.
d) Unallocated assets and liabilities are those which are not attributable or allocable to any of the segments and
includes liquid assets like Investments, Bank Deposits and Non-attributable Cash and Bank balances.
e) Segment revenue resulting from transactions with other business segments is accounted on the basis of transfer
price which is at par with the prevailing market price.
13. BORROWING COSTS

Borrowing costs to the extent related/attributable to the acquisition/construction of assets that necessarily take substantial
period of time to get ready for their intended use are capitalised along with the respective fixed asset up to the date
such asset is ready for use. Other borrowing costs are charged to the Profit and Loss Account.
14. INCOME TAXES

The current charge for income taxes is calculated in accordance with the relevant tax regulations.
Deferred tax assets and liabilities are recognised for the future tax consequences attributable to timing differences
between the financial statements carrying amounts of existing assets and liabilities and their respective tax bases.
Deferred tax assets and liabilities are measured using the enacted or substantially enacted tax rates as on the balance
sheet date. Deferred tax asset is recognized and carried forward when it is reasonably certain that sufficient taxable
profits will be available in future against which deferred tax assets can be realised.
15. PROVISIONS AND CONTINGENCIES

The company creates a provision when there is a present obligation as a result of a past event that probably requires
an outflow of resources and a reliable estimate can be made of the amount of the obligation. A disclosure for a
contingent liability is made when there is a possible obligation or a present obligation that probably will not require an
outflow of resources or where a reliable estimate of the amount of the obligation cannot be made.
16. EMPLOYEE STOCK OPTION SCHEME

The Company applies the intrinsic value method to compute the compensation cost for stock options granted to the
employees under its Employee Stock Option Scheme (ESOP). Under this method, pursuant to the amended provisions
of the Employee Stock Option Scheme and Employee Stock Purchase Scheme Guidelines, 1999 issued by the
Securities and Exchange Board of India (“SEBI”), the excess of market price of underlying equity shares as of the date
of the grant of options over the exercise price of the options given to employees under the ESOP of the Company, is
recognized as employee compensation cost and is amortised over the vesting period.
71
SCHEDULE 21 - NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. The Consolidated Financial Statements have been prepared in accordance with the Accounting Standard (AS) 21 -
“Consolidated Financial Statements” issued by the Institute of Chartered Accountants of India.
The subsidiary (which along with HCL Infosystems Ltd., the parent, constitute the Group), considered in preparation
of Consolidated Financial Statements is as under: -
Name of the Subsidiary Country of Extent of holding (%)

Company Incorporation as at 30th June
2005 2004
HCL Infinet Ltd India 100 100
2. Estimated value of contracts remaining to be executed on capital account and not provided for (net of advances) are
Rs 72.70 lacs (2004 - Rs. 15.96 lacs)
3. Contingent Liabilities:
(i) Claims not acknowledged as debts for:
- Sales Tax*- Rs. 1542.43 lacs ( 2004 - Rs. 286.42 lacs)
- Excise*- Rs. 63.72 lacs (2004 - Rs. 640.05 lacs)
- Income Tax*- Rs. 53.52 lacs (2004 - Rs. 68.04 lacs)
- Other Statutory Claims- Rs. 608.97 lacs (2004- Rs. 529.12 lacs)
*Against the above, the Company has deposited a sum of Rs. 132.53 Lacs (2004 - Rs. 24.50 Lacs)
(ii) Non fund based facilities amounting to Rs. 13.83 Lacs (2004 - Rs. 20.30 Lacs) related to the demerged business.
4. Taxation
The significant components and classification of deferred tax asset and liability on account of timing differences as at
30th June are as follows:
Deferred tax assets 2005 2004
Rs./Lacs Rs./Lacs
Allowances for doubtful debts 64.45 72.25
De-Merger Scheme expenses 13.50 21.29
Expense accruals 419.02 426.01
Deferred tax liability
Depreciation/Amortisation 757.95 665.64
Net deferred tax (liability)/ assets (734.77) (499.23)
5. Employee Stock Option Plan (ESOP)

(a) ESOP 2000
Pursuant to the approval of the shareholders at the Extra-Ordinary General Meeting held on 25th February, 2000 for
grant of options to the employees of the Company and its subsidiaries (the ESOP 2000), the Board of Directors had
approved the grant of following options including the grant of options that had lapsed out of each grant.
30,18,000 Options granted at the exercise price of Rs. 289 2005 2004
Options outstanding at the beginning of the year 401506 2108500
Less:Exercised during the year 316612 980414
Lapsed during the year – 726580
Options outstanding at the end of the year 84894 401506
16,06,100 Options granted at the exercise price of Rs. 538.15 2005 2004
Options outstanding at the beginning of the year 1438524 –
Add: Granted during the year – 1511484
Less: Exercised during the year 229869 –
Lapsed during the year 221351 72960
Options outstanding at the end of the year 987304 1438524
72
Granted during the year
Date of grant Options granted Grant Price Options lapsed out of the grant
25/8/2004 2,26,118 Rs. 603.95 54,360
18/1/2005 2,91,860 Rs. 809.85 18,910
15/2/2005 23,920 Rs. 809.30 15,520
15/3/2005 60,216 Rs. 834.40 2,800
15/4/2005 23,384 Rs. 789.85 –
14/5/2005 17,400 Rs. 770.15 –
15/6/2005 20,960 Rs. 756.15 2,560
(b) Employees Stock Based Compensation Plan 2005
The shareholders of the Company have approved the Employees Stock Based Compensation Plan 2005 through
a Postal Ballot for grant of 3,335,487 options to the employees of the Company and its subsidiary. The Board of
Directors has granted 3,196,840 options (2004 – NIL) (each option confers on the employee a right for five
equity shares of Rs. 2/- each) at an exercise price of Rs. 228.80 being the market price as specified in the SEBI
(Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines 1999 on the date of grant.
6. Leases:
(a) Finance Leases:
(i) Assets acquired under sale and leaseback arrangements comprise mainly computers and office equipment.
There are no exceptional/ restrictive covenants in the lease agreements.
(ii) The minimum lease rentals and its present value as at 30th June, 2005 in respect of assets acquired under
finance leases are as follows:
outstanding payments payments
(111.40) (11.73) (99.67)
0.88 0.01 0.87
Total 41.16 2.55 38.61
(153.27) (14.30) (138.97)
(iii) The Group has given on finance lease certain assets/inventories. These comprise computers and office
equipment. These leases have a primary period, which are fixed and non-cancellable. There are no exceptional/
restrictive covenants in the lease agreements.
(iv) The gross investment in the assets given on finance lease as at 30th June, 2005 and its present value as at
that date are as follows:
receivable payments payments
receivable receivable
(1208.07) (382.54) (825.53)
6865.71 1042.27 5823.45
Total 9515.13 1723.11 7792.03
(3101.51) (840.51) (2261.00)
[includes minimum sub lease receivable Rs. 76.93 lacs (2004 - Rs. 184.86 lacs)]
73
b) Operating Lease:
(i) Cancellable Operating leases
(a) The Group has taken various residential/ commercial premises under cancellable operating leases. These
leases are normally renewable on expiry.
(b) The rental expense in respect of operating leases is Rs. 890.40 lacs. (2004 - Rs. 796.37 lacs).
(ii) Non cancellable leases
a) The future minimum lease payments under non cancellable operating leases are:
Rs./Lacs
Not later than one year 23.14
(18.00)
Later than one year and not later than five years 92.16
–
Total 115.30
(18.00)
b) Lease Payments recognised in the Profit & Loss Account for the year ended 30th June, 2005.
Minimum Lease Payments 18.38
(18.00)
Contingent Rents –
7. Disclosure of related parties/related party transactions.

(i) Holding Company:
HCL Corporation Ltd.
(Upto 10th February 2005 and having substantial interest in the voting power after the date)
(ii) Related parties with whom transactions have taken place during the year and/or balances exist
Fellow Subsidiaries:
[Refer note 7(i)]
- HCL Technologies Ltd.
- HCL Comnet Ltd.
- HCL Comnet Systems and Services Ltd.
- HCL Technologies BPO services Ltd.
- Shipara Technologies Ltd.
- Infosystems (Europe) Ltd.
- HCL Technologies Singapore Pte. Limited
- HCL Peripherals Ltd
- HCL Office Automation Ltd.
- HCL Infosolutions Ltd.
- Network Ltd. (Ceased to be a related party w.e.f Nov 2004)
Others (where there is significant influence):
Shri Sivasubramaniya Nadar Educational & Charitable Trust.
(iii) Key Management Personnel
a) Directors:
Mr Ajai Chowdhry
Mr. T.S. Purushothaman*
Mr. Ravi Thumboochetty**
Mr. J.V. Ramamurthy***
* Ceased to be whole time director w.e.f. 20th July 05
** Ceased to be whole time director w.e.f. 10th August 05
*** Appointed as whole time director w.e.f. 11th August 05
b) Other Key Management Personnel:
Mr. George Paul
Mr. Hari Bhaskaran
Mr. J. V. Ramamurthy
Mr. K. R .Radhakrishnan
Mr. Manohar Lal Taneja
74
Mr. Rajeev Asija

Mr. Rajendra Kumar
Mr. Rakesh Mehta
Mr. Sandeep Kanwar
Mr. S. Pattabiraman
Mr. Suman Ghose Hazra
(iv) Summary of Related party disclosures (Rs./Lacs)
Note: All transactions with related parties have been entered into in the normal course of business.
Summary of Consolidated Related Party Disclosures

(Rs./Lacs)
A. Transactions Holding Fellow Associates Key Management Total
Company Subsidiaries & Others Personnel
June 05 June 04 June 05 June 04 June 05 June 04 June 05 June 04 June 05 June 04
Sales & Related Income 54.03 5.67 4352.54 3183.75 42.35 189.06 4448.92 3378.48
Services 1.00 945.21 881.85 6.35 5.87 952.56 887.72
Other Income 98.93 108.39 98.93 108.39
Demerger/Transfer of Business
Interest Income
Purchase of Goods 29.88 84.03 29.88 84.03
Purchase of Services 982.51 510.45 982.51 510.45
Donations Given 48.00 48.00
Impairment/Debts written off 3.74 2.17 3.74 2.17
Assets Purchased
Assets Sold
Remuneration 650.40 485.15 650.40 485.15
Reimbursements towards expenditure
a) Received 3.46 4.04 63.90 83.02 0.66 67.36 87.72
b) Made 2.43 5.47 0.84 16.54 3.27 22.01
B. Amount due to/from related Holding Fellow Key Management Total

parties Company Subsidiaries Others Personnel
June 05 June 04 June 05 June 04 June 05 June 04 June 05 June 04 June 05 June 04
Accounts Receivables 53.55 0.01 493.21 448.00 1.47 1.08 548.23 449.09
Loans & Advances & Other Recoverables 0.09 62.80 91.62 62.80 91.71
Creditors 138.17 90.82 138.17 90.82
Other Payables 0.04 57.36 81.04 4.43 8.00 8.00 65.40 93.47
8. Segment Reporting
The Group recognises the following segments as its primary segments.
a) The operations of Product & Related Services consists of sale of Computer Hardware & system integration products
and providing a comprehensive range of IT services, including system maintenance and facility management in
different industries.
b) Internet & Related Services include Internet related products & services consist of Internet Access services, Virtual
Private Network, other connectivity services and sale of related hardware.
c) The businesses of Office Automation, Telecom products and services consist of sale of telecommunication products,
office equipment products and related comprehensive maintenance services.
Secondary segmental reporting is based on the geographical location of the customers. Details of secondary segments
are not disclosed as more than 90% of the Company’s revenues, results and assets relate to the domestic market.
75
Consolidated Segment wise performance for the year ended 30th June, 2005 Rs./Lacs
Primary Segments Product & Related Services Internet & Inter- Total
Computer Office Automation & Related segment
Systems Telecommunication Services Elimination
(i) Revenue
External Revenue 196469.94 577697.56 4193.31 778360.81
(151907.71) (284950.66) (4319.98) (441178.35)
Intersegment Revenue 267.63 231.94 129.90 -629.47 –
(295.38) (2726.6) (95.94) (-3117.92) –
Total Gross Revenue 196737.57 577929.50 4323.21 -629.47 778360.81
(152203.09) (287677.26) (4415.92) (-3117.92) (441178.35)
Less: Excise Duty 3928.37 3928.37
(10534.39) (10534.39)
Total Net Revenue 192809.20 577929.50 4323.21 -629.47 774432.44
(141668.7) (287677.26) (4415.92) (-3117.92) (430643.96)
(ii) Results 13782.60 14627.55 155.65 28565.80
(12298.98) (8325.34) (-194.87) (20429.45)
Less: Unallocable Expenditure 910.28
(746.17)
Operating Profit 27655.52
(19683.28)
Add: Other Income (Excluding gains on Exchange Rate Fluctuations and Other Operational Income) 1652.88
(1778.15)
Less: Interest (Net of interest income Rs. 1068.37 Lacs, Previous Year Rs. 572.57 Lacs) -292.24
(310.11)
Profit Before Tax 29600.64
(21151.32)
Less: Tax Expense
- Current 6510.59
(2099.00)
- Deferred 235.55
(1540.87)
- Fringe Benefit Tax 83.90
Profit After Tax 22770.60
(17511.45)
(iii) Segment Assets 78327.90 43725.30 2299.75 124352.95
(56897.41) (34893.33) (1723.2) (93513.94)
Unallocated Corporate Assets
a) Liquid Assets 25300.71
(25408.33)
b) Deferred Tax Assets 760.31
(591.24)
c) Others 929.37
(765.35)
Total Assets 151343.34
(120278.86)
(iv) Segment Liabilities 42467.52 38113.25 1334.34 81915.11
(36417.27) (28396.78) (1459.35) (66273.4)
Unallocated Corporate Liabilities
a) Current Liabilities 4346.86
(3446.61)
b) Deferred Tax Liabilities 1495.08
(1090.47)
c) Loan Funds 8131.74
(7202.19)
Total Liabilities 95888.79
(78012.67)
(v) Capital Expenditure 1070.38 268.17 1337.33 2675.88

(1097.45) (503.98) (199.74) (1801.17)
(vi) Depreciation 627.10 198.27 708.88 1534.25
(892.25) (179.96) (626.11) (1698.32)
(vii) Other Non Cash Expenses -144.83 -55.47 53.83 -146.47
(204.77) (153.11) (30.94) (388.82)
76
9. Earnings per share

The earnings considered in ascertaining the Group’s earnings per share comprise net profit for the year after tax. Basic
earnings per share are computed and disclosed using the weighted average number of equity shares outstanding
during the year. Diluted earnings per share is computed and disclosed using the weighted average number of equity
and dilutive equivalent shares outstanding during the year, except when results would be anti dilutive.
Calculation of EPS:
Particulars 30.06.2005 30.06.2004
Profit after tax (Rs./lacs) 22,770.61 17,511.46

Weighted average number of shares considered as outstanding in
computation of Basic EPS* 1,65,774,340 1,61,095,395
Add dilutive impact of stock options:
- Outstanding 6,843,750 5,061,930
- Exercised 1,407,430 3,353,970
- Lapsed 690,895 1,276,655
- Issued for no consideration 2,079,700 1,585,835
Weighted average number of shares outstanding in computation of Diluted EPS* 1,76,796,115 1,72,373,785
Basic EPS (of Rs. 2/- each) Rs. 13.74 Rs 10.87
Diluted EPS (of Rs. 2/- each) Rs. 12.88 Rs 10.16
*Consequent to the sub division of equity shares having a face value of Rs. 10 each to equity shares having a face
value of Rs. 2 each on 15th July 2005, the previous year weighted average number of equity shares and diluted
number of equity shares have been adjusted.
10. Previous year’s figures have been regrouped/recasted, where necessary, to conform to current year’s presentation.
77
Financial Summary of HCL Infinet Limited, a wholly owned subsidiary as at 30th June, 2005
Particulars Amount in Rs.

2004-05
Share Capital 195067570

Reserves 1196696224
Total Assets 1397100986
Total Liablities 1397100986
Details of investment (except in case of investment in subsidiary) 401889266
Turnover 58353209637
Profit before taxation 1469266551
Provision for taxation/Deferred Tax Charge/(credit) 521976366
Profit After Taxation 947291185
Proposed Dividend -
AJAI CHOWDHRY S. BHATTACHARYA

Chairman and Director
Chief Executive Officer
Dated : August 25, 2004 Company Secretary
78

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MANAGEMENT DISCUSSION AND ANALYSIS

Info Processing Business

Imaging & Communications Business

#FY 03 exclude discontinued Software business

5. Administrative, Selling, Distribution and Others:

6. Operating Profit (EBIDT):

8. Profit Before Tax:

9. Profit After Tax:

Dividend 10. Dividend:

11. Earning Per Share:

Calculated on equity shares of Rs. 2/- each

2. Borrowings: Year-end loan balances marginally increased from Rs. 72 crores

Computer Systems and Related Products & Services:

The segment operations comprises of sale of computer hardware and system

Office Automation & Telecommunication:

Internet & Related Services:

BOARD OF DIRECTORS Chairman & Chief Executive Officer

COMPANY SECRETARY K.R. Radhakrishnan

AUDITORS Price Waterhouse, New Delhi

BANKERS State Bank of India

REGISTERED OFFICE 806, Siddharth,

CORPORATE OFFICE E - 4,5,6, Sector XI, Noida-201 301 (U.P.)

WORKS ♦ RS Nos: 34/4 to 34/7 and Part of RS No: 34/1, Sedarapet,

Revenue and Profitability

Total Revenue 199886 154295 166604 127003 116843

Equity Dividend 10321** 6841 3191 798 2234

* Based on equity shares of Rs. 2/- each on Balance Sheet date.

Assets and Liabilities Rs/Lacs

Total 52348 47286 44995 46285 40863

Total 52348 47286 44995 46285 40863

On behalf of the Board of Directors

Description Scheme 2000 Scheme 2005

The vesting schedule for the rest of the grants

30% - 12 months after the grant date

Total number of 15,26,895 equity shares of Rs.10/- each. Not applicable

Date of Options Grant price

Money realized by Rs.49,85,44,516.35 Not applicable

Employee-wise Name No. of option Name No.of options

(ii) Employees NIL NIL

Diluted EPS pursuant 7.51 ——

Fair value 1252.46 —— -

Weighted average 418.97 —— -

Weighted average fair 1039.18 —— -

Earning Per Share (FV Rs. 2/-)

Adjusted pro forma (FV Rs. 2/-) Basic Rs. 7.25

1. A BRIEF STATEMENT ON COMPANY’S PHILOSOPHY ON CODE OF GOVERNANCE :

Ajai Chowdhry Chairman & Chief Promoter and Executive 5 4 4 4 Yes

J.V. Ramamurthy* Head of Operations Executive Director 1 – 4 N/A N/A

T. S. Purushothaman** Director Non-executive Director 1 Nil 4 4 Yes

Ravi Thumboochetty*** Whole-time Director Executive Director 3 Nil 4 3 Yes

R.P. Khosla Director Independent, non-executive 2 1 4 4 Yes

S. Bhattacharya Director Independent, non-executive 9 7 4 4 Yes

D. S. Puri Director Promoter and non-executive 1 1 4 3 Yes

E.A. Kshirsagar Director Independent, non-executive 3 5 4 4 Yes

Anita Ramachandran Director Independent, non-executive 2 3 4 3 No

• * Appointed as wholetime director with effect from August 11, 2005.

3. ACCOUNTS & AUDIT COMMITTEE :

Mr. Ajai Chowdhry 60.72 27.32 85.00 - -

Description Total no. Total no. of For Against Invalid

SPLIT OF 1533 21981342 1472 21975501 18 1119 43 4722

ALTERATION 1428 21965163 1361 21958748 23 1494 44 4921

ESOP TO 1392 21962641 1259 21948575 88 9094 45 4972