Notes to Accounts of HCL Infosystems Ltd.

Mar 31, 2025

2.15 Provisions, contingent liabilities and contingent assets

a) Provisions

Provisions are recognised when the Company has a present legal or constructive obligation as a result
of past events, it is probable that an outflow of resources will be required to settle the obligation and
the amount can be reliably estimated. Provisions are not recognised for future operating losses.

Provisions are measured at the present value of management''s best estimate of the expenditure required
to settle the present obligation at the end of the reporting period. The discount rate used to determine
the present value is a pre-tax rate that reflects current market assessments of the time value of money
and the risks specific to the liability. The increase in the provision due to the passage of time is recognised
as interest expense.

b) Contingencies

Contingent liabilities are disclosed when there is a possible obligation arising from past events, the
existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain
future events not wholly within the control of the Company or a present obligation that arises from past
events where it is either not probable that an outflow of resources will be required to settle or a reliable
estimate of the amount cannot be made. Information on contingent liability is disclosed in the notes to
the financial statements.

Contingent assets are possible assets that arises from past events and whose existence will be confirmed
only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the
control of the Company. Contingent assets are disclosed where an inflow of economic benefits is probable.

2.16 Foreign currency translation

(i) Functional and presentation currency

Items included in the financial statements are measured using the currency of the primary economic
environment in which the Company operates (? the functional currency''). The Company''s operations
are primarily in India. The financial statements are presented in Indian rupee (INR), which is the Company''s
functional and presentation currency.

(ii) Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates at
the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such
transactions and from the translation of monetary assets and liabilities denominated in foreign currencies
at year end exchange rates are recognised in statement of profit and loss.

Foreign exchange differences regarded as an adjustment to borrowing costs are presented in the
statement of profit and loss, within finance costs. All other foreign exchange gains and losses are
presented in the statement of profit and loss on a net basis within other income.

Non-monetary items that are measured at fair value in a foreign currency are translated using the
exchange rates at the date when the fair value was determined. Translation differences on assets and
liabilities carried at fair value are reported as part of the fair value gain or loss.

2.17 Revenue recognition

Contracts involving provision of services and material

Revenue is recognized when, or as, control of a promised service or good transfers to a customer, in an
amount that reflects the consideration to which the Company expects to be entitled in exchange for transferring
those products or services. To recognize revenues, the following five step approach is applied: (1) identify the
contract with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction
price, (4) allocate the transaction price to the performance obligations in the contract, and (5) recognize
revenues when a performance obligation is satisfied. A contract is accounted when it is legally enforceable
through executory contracts, approval and commitment from all parties, the rights of the parties are identified,
payment terms are defined, the contract has commercial substance and collectability of consideration is
probable.

Time-and-material / Volume based / Transaction based contracts

Revenue with respect to time-and-material, volume based and transaction based contracts is recognized as
the related services are performed through efforts expended, volume serviced transactions are processed
etc. that correspond with value transferred to customer till date which is related to the right to invoice for
services performed.

Fixed Price contracts

Revenue related to fixed price contracts where performance obligations and control are satisfied over a
period of time are recognized based on progress towards completion of the performance obligation using
percentage-of-completion (POC) method of accounting. Revenue is recognized based on the costs incurred
to date as a percentage of the total estimated costs to fulfill the contract. Any revision in cost to complete
would result in increase or decrease in revenue and such changes are recorded in the period in which they are
identified.

Revenue related to other fixed price contracts providing maintenance and support services, are recognized
based on the right to invoice for services performed for contracts in which the invoicing is representative of
the value being delivered. If invoicing is not consistent with value delivered, revenues are recognized as the
service is performed based on the cost to cost method described above.

The Company recognizes an onerous contract provision when the expected unavoidable costs of meeting
the future obligations exceed the expected economic benefits to be received under a contract. Such provision,
if any, is recorded in the period in which such losses become probable and is included in cost of revenues.

Estimates of revenue, costs or extent of progress towards completion are revised if circumstances change.
Any resulting increases or decreases in estimated revenues or costs are reflected in statement of profit and
loss in the period in which the circumstances that give rise to the revision become known by management.

Interest income

Interest income is recognised as the interest accrues using the effective interest method, under which the rate
used exactly discount estimated future cash receipts through the expected life of the financial asset to the net
carrying amount of the financial asset.

2.18 Employee benefits
Defined benefit plans
Gratuity

The liability recognised in the balance sheet is the present value of the defined benefit obligation at the end
of the reporting period less the fair value of plan assets. The defined benefit obligation is calculated annually
by actuaries using the projected unit credit method.

The present value is determined by discounting the estimated future cash outflows by reference to market
yields at the end of the reporting period on government bonds that have terms approximating to the terms
of the related obligation.

The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit
obligation and the fair value of plan assets. This cost is included in employee benefit expense in the statement
of profit and loss.

Remeasurement gains and losses arising from experience adjustments and changes in actuarial assumptions
are recognised in the period in which they occur, directly in other comprehensive income. They are included
in retained earnings in the statement of changes in equity and in the balance sheet.

Changes in the present value of the defined benefit obligation resulting from plan amendments or curtailments
are recognised immediately in statement of profit and loss as past service cost.

Actuarial gains/losses are recognized immediately in the balance sheet with a corresponding debit or credit
to other comprehensive income in the year in which they occur.

Defined contribution plans

A defined contribution plan is a post-employment benefit plan where the Company''s legal or constructive
obligation is limited to the amount that it contributes to a separate legal entity. The Company makes specified
monthly contributions towards Government administered provident fund scheme. Obligations for contributions
to defined contribution plan are expensed as an employee benefits expense in the statement of profit and
loss in period in which the related service is provided by the employee. Prepaid contributions are recognised
as an asset to the extent that a cash refund or a reduction in future payments is available.

The Company makes defined contributions to a Superannuation Trust established for the purpose. The
Company has no further obligation beyond the monthly contributions.

Other benefits
Compensated absences

Accumulated compensated absences, which are expected to be availed or encashed within 12 months from
the end of the year end are treated as short term employee benefits. The obligation towards the same is
measured at the expected cost of accumulating compensated absences as a result of the unused entitlement
as at the year end.

Accumulated compensated absences, which are expected to be availed or encashed beyond 12 months from
the end of the year end are treated as other long term employee benefits. The Company''s liability is actuarially
determined (using the Projected Unit Credit method) at the end of each year. Actuarial losses/ gains are
recognised in the statement of profit and loss in the year in which they arise.

Long term employee benefits

Employee benefits, which are expected to be availed or encashed beyond 12 months from the end of the
year, are treated as other long term employee benefits. The Company''s liability is actuarially determined
(using the Projected Unit Credit method) at the end of each year.

2.19 Borrowing costs

General and specific borrowing costs that are directly attributable to the acquisition, construction or production
of a qualifying asset are capitalised during the period of time that is required to complete and prepare the
asset for its intended use or sale. Qualifying assets are assets that necessarily take a substantial period of time
to get ready for their intended use or sale.

Investment income earned on the temporary investment of specific borrowings pending their expenditure on
qualifying assets is deducted from the borrowing costs eligible for capitalisation.

Other borrowing costs are expensed in the period in which they are incurred.

2.20 Earnings per share

(i) Basic earnings per share

Basic earnings per share is calculated by dividing:

• the profit attributable to owners of the Company

• by the weighted average number of equity shares outstanding during the financial year

(ii) Diluted earnings per share

Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to
take into account:

• the after income tax effect of interest and other financing costs associated with dilutive potential
equity shares, and

• the weighted average number of additional equity shares that would have been outstanding
assuming the conversion of all dilutive potential equity shares.

2.21 Exceptional items

Items which are material either because of their size or their nature, and which are non-recurring, are highlighted
through separate disclosure. The separate reporting of exceptional items helps provide a better understanding
of the Company''s underlying performance.

Note: Previous year figures are given in brackets.

The following methods/assumptions were used to estimate the fair value

i) The carrying value of bank deposits, trade receivables, cash and cash equivalents, trade payables, security
deposits, loans, borrowings and other current financial assets and other current financial liabilities measured at
amortised cost approximate their fair value due to the short-term maturities of these instruments. The Company''s
investments consist of investment in debt linked mutual funds which are determined using quoted prices or
identical quoted prices of assets or liabilities in active markets and are classified as Level 1. Investments in
unquoted equity shares of subsidiaries company are valued at amortised cost.

ii) There were no transfers between any levels for Fair value measurements.

32 Financial Risk Management

The Company''s activities expose it to market risk, liquidity risk and credit risk. The Company''s financial risk management
is an integral part of how to plan and execute its business strategies.

In order to minimize any adverse effects on the financial performance of the Company, derivative financial instruments,
such as foreign exchange forward contracts are entered to hedge certain foreign currency exposures that can be
hedged. Derivatives are used exclusively for hedging purposes and not as trading or speculative instruments.

This note explains the sources of risk which the entity is exposed to and how the entity manages the risk and the
impact of hedge accounting in the financial statements

Credit risk arise from possibility that customer may default on its obligation resulting into financial loss. The
maximum exposure to the credit risk is primarily from trade receivables.

Credit risk on cash and cash equivalent and bank balances is not significant as it majorly includes deposits with
bank and financial institutions with high credit ratings assigned by international and domestic credit rating
agencies.

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails
to meet its contractual obligations, and arises principally from the Company''s receivables from customers,
loans and investments in debt securities. The carrying amounts of financial assets and contract assets represent
the maximum credit exposure.

The credit risk through credit approvals, establishing the financial reliability of the customers taking into account
the financial condition, analysis of historical bad debts and ageing of accounts receivables. Individual limits are
set accordingly by the Company''s credit control department.

The Company uses a provision matrix to compute the expected credit loss for trade receivables. The provision
matrix takes into consideration historical credit loss experience and other relevant available external and internal
credit risk factors.

Financial Risk Management
32 (ii) Liquidity risk:

Liquidity risk is the risk that the Company will not be able to settle or meet its obligations on time or at a
reasonable price. The Company''s treasury department is responsible for liquidity, funding as well as settlement
management. In addition, processes and policies related to such risks are overseen by senior management.
Management monitors the Company''s net liquidity position through rolling forecasts on the basis of expected
cash flows. (Also refer note 53)

(i) Mutual Fund risk

Market risk may arise due to changes in economic conditions, monetary policies, and geopolitical events.
Group has investment in short term debt mutual funds.

(ii) Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate
because of changes in market interest rates. The Group''s does not have any exposure to the risk of changes
in market interest rates as there is no such borrowings.

(iii) Foreign currency risk

The Company''s major operations are in India and are in INR and therefore, the Company is not exposed to
significant foreign currency risk. The Company evaluates the exchange rate exposure arising from foreign
currency transactions and the Company follows established risk management policies which are approved
by the senior management and the Audit Committee, including the use of derivatives like foreign exchange
forward contracts to hedge exposure to foreign currency risk.

(a) Foreign currency risk exposure

The Company''s exposure to foreign currency risk at the end of the reporting period expressed in INR are as
follows.

# The Company had made investment and also extended loan to Pimpri Chinchwad eServices Limited to support its
operations. However, the management does not foresee any cash generating operations in the company to enable
the repayment of loan. Moreover, the subsidiary has been making continuous losses and its net worth is fully
eroded. Hence, a provision for impairment of investment in such subsidiary as well as loss allowance against loan
given to such subsidiary has been made during the year.

* The Company has made provision of '' 1,277.17 lakhs (2024- '' 1,504.00 lakhs), on account of accumulated losses
and erosion of net worth of HCL Infotech Limited, as at the balance sheet date. HCL Infotech Limited has been
incurring operational losses during the last few years due to various reasons including delay in collections of
receivables, challenging market conditions, cost overruns and legal expenses in respect of long-term contracts.
Considering the fact that most of these long-term contracts were originally entered with the Company and transferred
to HCL Infotech Limited through the Scheme of Arrangement in the past, there is a constructive obligation for the
Company to provide operational and financial support to HCL Infotech Limited for execution of its contracts. This
constructive obligation is also supported by the past practice followed by the Company wherein it has been, from
time to time, voluntarily extending financial support to its subsidiaries, even during challenging market circumstances.
Such continuous and timely support from the Company has helped fund the losses of its subsidiaries and enabled
them to meet their financial obligations without any delays/ defaults. Basis the same, the Company is creating
provision for losses of subsidiary in the standalone financials to the extent of accumulated losses and erosion of net
worth of subsidiary, as at the reporting date. This has been treated as a present obligation of the Company wherein
it is probable that an outflow of resources will be required to support HCL Infotech and pay its liabilities that are
more than its assets as on reporting date, as required by IndAS 37.

* The company has deposited '' 12,466.00 lakhs (2024 - '' 12,681.01 lakhs) under protest against these claims.

The amounts shown in item (a) represents the best possible estimates arrived at on the basis of available
information. The uncertainties and possible reimbursements are dependent on the outcome of the different
legal processes which have been initiated by the Company or the claimants as the case may be and therefore
cannot be predicted accurately. It is not practicable for the Company to estimate the timing of cash outflows, if
any, in respect of the above pending resolution of the respective proceedings.

b) Other litigations :

The Company is involved in various lawsuits, claims and proceedings that arise in the ordinary course of business.
Some of these matters include speculative and frivolous claims. The Company believes that the amount or
estimable range of reasonably possible loss, will not, either individually or in the aggregate, have a material
adverse effect on its business, financial position, results of the Company, or cash flows with respect to loss
contingencies for legal and other contingencies as at 31 March 2025.

c) As at 31.03.2025, the Company has certain sales tax and other indirect tax litigation matters against which
provision amounts to '' 1,230.93 lakhs (2024 - '' 1,230.36 lakhs) is outstanding. Provision amounting to '' 63.82
lakhs (2024 - '' 200.06 lakhs) was created and '' 63.25 lakhs (2024 - '' 273.31 lakhs) was utilized during the year
i.e towards repayment under one time settlement/ amnesty schemes.

40 Leases:

Cancelable Operating Leases
As a Lessee

In terms of criteria specified in Ind AS 116 Leases, the company does not have any lease other than with short term
period. Rent expenses in respect of short term leases amounting '' 66.89 lakhs (2024 - '' 63.95 lakhs) is expensed off
on straight line basis over lease term as rent expenses (refer note 30).

41 Earnings/(Loss) per share (EPS)

Basic earnings per share is calculated by dividing the net loss for the year attributable to equity shareholders by the
weighted average number of equity shares outstanding during the year. The loss considered in ascertaining the
Company EPS represent loss for the year after tax. Diluted EPS 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.

42 Segment Reporting

The Company had reported three segments till year ended 31 March 2024 - Hardware Products and Solutions,
Distribution and Learning. However, management has reassessed the segment disclosure and believes that with the
scale down of the Distribution business which is limited to providing IT support services (primarily annual maintenance
activities) and progressive decline in learning operations, the Chief Operating Decision maker primarily focusses on
combined business in making decisions on operating matters and on allocating resources in evaluating performance.
Accordingly, the Company has aggregated its segments into a single segment which is providing IT support services
and hence no separate disclosure is required for Segment as per Ind AS 108 ''Operating Segments''.

As of 31.03.2025, every 0.5 percentage point increase / decrease in discount rate will affect gratuity benefit
obligation by approximately by '' 1.40 lakhs.

As of 31.03.2025, every 0.5 percentage point increase / decrease in weighted average rate of increase in
compensation levels will effect gratuity benefit obligation by approximately '' 1.37 lakhs.

The estimates of future salary increases considered in actuarial valuation take account of inflation, seniority,
promotion and other relevant factors such as supply and demand in the employment market.

Description of Risk Exposures:Valuations are based on certain assumptions, which are dynamic in nature and
vary over time. As such company is exposed to various risks as follow-

A) Salary Increases- Actual salary increases will increase the Plan''s liability. Increase in salary increase rate
assumption in future valuations will also increase the liability.

B) Investment Risk - If Plan is funded then assets liabilities mismatch & actual investment return on assets
lower than the discount rate assumed at the last valuation date can impact the liability.

C) Discount Rate : Reduction in discount rate in subsequent valuations can increase the plan''s liability.

D) Mortality & disability - Actual deaths & disability cases proving lower or higher than assumed in the valuation
can impact the liabilities.

E) Withdrawals - Actual withdrawals proving higher or lower than assumed withdrawals and change of
withdrawal rates at subsequent valuations can impact Plan''s liability.

47 In order to reduce Company''s debt obligations, the Company has decided to monetize Company owned properties
in a phased manner. The remaining Company''s properties are not being fully utilized due to changes in the business
of the Company, therefore as a part of ongoing property monetisation plan, during the year ended, March 31,2025,
the Company has disposed one property situated in Mumbai, having net carrying amount of '' 51.12 lakhs, for a
consideration of '' 635 lakhs, resulting in overall gain of '' 583.88 lakhs. (similar gain recognised of '' 1,196.36 lakhs
for the year ended March 31, 2024).

48 The Board of Directors of the Company in its meeting held on March 23, 2021, had consented to adjust the unsecured
loan advanced to HCL Infotech Limited, a wholly-owned subsidiary, amounting to '' 40,000 lakhs, against the
subscription money payable by the Company to HCL Infotech Limited, for subscription of the 40,00,000 (numbers)
0.1% Optionally Convertible Debentures (OCD) of a face value of '' 1,000 each (Indian Rupees One thousand only)
issued, on private placement basis to the Company, pursuant to terms of OCD Subscription Agreement dated March
31, 2021 between the Company and HCL Infotech Limited. The outstanding number of OCDs as on March 31, 2025
is 39,66,437 (2024- 39,66,437).

49 The Company and HCL Infotech Limited, has agreed that the OCDs as mentioned in note 48, issued to the Company
shall be redeemed only from and to the extent of the proceeds from certain specified book receivables and favourable
awards received by the HCL Infotech Limited in accordance with the terms set out in the OCD Subscription Agreement.
Accordingly, HCL Infotech Limited transferred its rights to receive cash flows from those specified book receivables
and favourable awards to the Company and the aforesaid transaction meets the pass-through arrangement criteria,
as per the requirements of Ind AS 109 Financial Instruments. Therefore, the outstanding balance of specified books
receivables of '' 1,892 lakhs (including amount of '' 867 lakhs of the contract assets) derecognized in the financial
statements of HCL Infotech Limited and recognized at fair value against the OCDs by the Company as at March 31,
2021. The fair value of such OCDs is '' Nil as at March 31,2025 (2024- '' Nil), also refer note 54.

50 Based on the detailed assessment performed by Management which also included, wherever considered necessary,
performing reconciliation with the parties and obtaining legal opinion wherever considered necessary, the Company
has credited its Statement of Profit and Loss on account of write back of certain provisions of '' 166.02 lakhs, for the
year ended March 31,2025 (2024: '' 501.42 lakhs) and reversal of loss allowance for doubtful debts '' 134.67 lakhs, for
the year ended March 31, 2025 (2024: '' 159.86 lakhs).

53 The Company has continuously made losses during past years and its net worth has been fully eroded. Further the
Company has incurred a net loss of '' 2,185.14 lakhs, during the year ended March 31, 2025 (year ended March 31,
2024: net loss '' 1,554.88 lakhs) and the Company''s current liabilities exceeded its current assets by '' 44,909.53 lakhs
as at March 31, 2025 (March 31, 2024: '' 42,556.82 lakhs). The losses are primarily a result of delayed receipts on
certain system integration contracts, historical low margin contracts, large litigations and their costs which are at
different stages of progression.

The Company had originally entered into multiple long term contracts forming part of erstwhile ''Hardware Solutions
Business'' which was transferred to HCL Infotech Limited through Scheme of Arrangement with the remaining term
of ongoing contract upto year 2031. Therefore, there is a constructive obligation for the Company to provide
operational and financial support to HCL Infotech Limited for execution of its contracts (also refer note 34). Further,
such transferred business has continued to face challenges in obtaining timely customer acceptance and sign-offs
for completed projects, leading to delays in receiving payments. As a result, though the number of contracts reaching
closure has increased, there is no significant progress in recovering outstanding receivables from customers. To
address this issue, the Company has initiated arbitration proceedings against several customers to recover the dues
owed. Accordingly, the management will ensure continuity of operations to support execution of long terms contracts
originally assigned to the Company and recovery of dues owned by HCL Infotech Limited that are held up for a long
time.

To ensure the necessary financial support for above operations, the Board of Directors of HCL Corporation Private
Limited (a significant promoter shareholder) has approved support in the form of corporate guarantees to banks of
'' 39,600 lakhs [utilised '' 5,704.77 lakhs (2024 - '' 305.04 lakhs)] and interest free unsecured loans of '' 35,500 lakhs
[utilised '' 35,500 lakhs (2024 - '' 35,500 lakhs)] to HCL Infosystems Limited out of total authorized limit of '' 1,50,000
lakhs. This had been approved by the shareholders of the Company, vide their resolution dated September 14, 2017.
Considering the above support, the management and the Board of Directors have a reasonable expectation that the
Company will be able to realise its assets and discharge its contractual obligations including long term contracts
transferred to HCL Infotech Limited and liabilities as they fall due in the near future in the normal course of business.
Accordingly, these standalone financial results have been prepared on a going concern basis.

54 HCL Infosystems Limited (HCLI) has initiated Arbitration Proceedings with respect to dispute against the customers
for contracts which were originally awarded to HCLI and were subsequently transferred to HCL Infotech Limited
(Infotech) under the Scheme of Arrangement in 2013 as approved by Delhi High Court. Further as part of issuance of
Optionally Convertible Debentures (OCDs), in earlier years the Infotech has transferred its rights to receive cash
flows from these projects to the HCLI and as per the terms of OCDs, cash collected shall be utilized to redeem OCDs.

Against one of such contract, Infotech has received an amount of '' 12,341.73 Lakhs in earlier years against equivalent
Bank Guarantee. For another contract, part payment of '' 1,330.52 Lakhs was received during the year ended March
31, 2025 against equivalent Bank Guarantee. However, since counterparty''s appeal in these matters is sub-judice
(pending disposal) before the High Court, amount has not been utilized for redemption of OCDs in accordance with

the terms of OCDs arrangement and hence shown as amount collected under litigation as a part of other current
liabilities in the financial statement of HCL Infotech Limited.

55 The Company in earlier years entered into Share Purchase Agreement (SPA) dated May 31, 2018 with Karvy Data
Management Services Limited for sale of shares in HCL Services Limited As per clause 2.3 of SPA, business consideration
of '' 648.81 lakhs represents the Second Stage Consideration linked with the Income Tax refunds receivable for the
period upto the Financial Year March 31, 2018. The above amount represents refunds due for the Assessment Years
2015-16 and 2018-19 held up due to appeals pending for these Assessment Years from 2015-16 to 2018-19. Karvy
is obligated to pay these amounts only on receipt of the same from the Income tax department. The management
has assessed the probability of these tax refunds basis which a favourable outcome is expected accordingly refunds
will be received from the Income tax department for all the years.

56 No funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other
sources or kind of funds) by the Company to or in any other person or entity, including foreign entities
("Intermediaries") with the understanding, whether recorded in writing or otherwise, that the Intermediary shall lend
or invest in party identified by or on behalf of the Company (Ultimate Beneficiaries). The Company has not received
any fund from any party (Funding Party) with the understanding that the Company shall whether, directly or indirectly
lend or invest in other persons or entities identified by or on behalf of the Company ("Ultimate Beneficiaries") or
provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

57 Other Statutory Information

a) The company does not have any benami property, where any proceeding has been initiated or pending against
the company for holding any Benami property.

b) The company is not declared a wilful defaulter by any bank or financial institution or any other lender.

c) The Company has complied with the number of layers prescribed under section 2(87) of the Companies Act,
2013 read with Companies (Restriction on number of Layers) Rules, 2017.

d) The company does not have any such transaction which is not recorded in the books of accounts that has been
surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961
(such as, search or survey or any other relevant provisions of the Income Tax Act, 1961).

e) The company has not traded or invested in Crypto currency or Virtual Currency during the financial year.

f) There is no immovable properties not held in the name of the company.

g) The company has not entered into any scheme of arrangement which has an accounting impact on current or
previous financial year.

58 Subsequent Events

The Company evaluated all events or transactions that occurred after March 31, 2025 through May 23, 2025, the
date the Company issued these financial statements. During this period, the Company did not have any material
recognizable subsequent events.

As per our report of even date attached

For B S R & Associates LLP For and on behalf of the Board of Directors of

Chartered Accountants HCL Infosystems Limited

ICAI Registration Number-116231W/W-100024

Girish Arora Pawan Kumar Danwar Raghu Venkat Chivukula

Partner Director Director

Membership Number - 098652 DIN - 06847503 DIN - 00520704

Alok Sahu Raj Kumar Sachdeva Twinkle Monga

Chief Financial Officer Manager Company Secretary

New Delhi: May 23, 2025 Noida : May 23, 2025

---

Mar 31, 2024

2.16 Provisions, contingent liabilities and contingent assets

a) Provisions

Provisions are recognised when the Company has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation and the amount can be reliably estimated. Provisions are not recognised for future operating losses.

Provisions are measured at the present value of management''s best estimate of the expenditure required to settle the present obligation at the end of the reporting period. The discount rate used to determine the present value is a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The increase in the provision due to the passage of time is recognised as interest expense.

b) Contingencies

Contingent liabilities are disclosed when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company or a present obligation that arises from past events where it is either not probable that an outflow of resources will be required to settle or a reliable estimate of the amount cannot be made. Information on contingent liability is disclosed in the notes to the financial statements.

Contingent assets are possible assets that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company. Contingent assets are disclosed where an inflow of economic benefits is probable.

2.17 Foreign currency translation

(i) Functional and presentation currency

Items included in the financial statements are measured using the currency of the primary economic environment in which the Company operates ( the functional currency''). The Company''s operations are primarily in India. The financial statements are presented in Indian rupee (?), which is the Company''s functional and presentation currency.

(ii) Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies at year end exchange rates are recognised in statement of profit and loss.

Foreign exchange differences regarded as an adjustment to borrowing costs are presented in the statement of profit and loss, within finance costs. All other foreign exchange gains and losses are presented in the statement of profit and loss on a net basis within other income.

Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined. Translation differences on assets and liabilities carried at fair value are reported as part of the fair value gain or loss.

2.18 Revenue recognition

Contracts involving provision of services and material

Revenue is recognized when, or as, control of a promised service or good transfers to a customer, in an amount that reflects the consideration to which the Company expects to be entitled in exchange for transferring those products or services. To recognize revenues, the following five step approach is applied: (1) identify the contract with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract, and (5) recognize revenues when a performance obligation is satisfied. A contract is accounted when it is legally enforceable through executory contracts, approval and commitment from all parties, the rights of the parties are identified, payment terms are defined, the contract has commercial substance and collectability of consideration is probable.

Time-and-material / Volume based / Transaction based contracts

Revenue with respect to time-and-material, volume based and transaction based contracts is recognized as the related services are performed through efforts expended, volume serviced transactions are processed etc. that correspond with value transferred to customer till date which is related to the right to invoice for services performed.

Fixed Price contracts

Revenue related to fixed price contracts where performance obligations and control are satisfied over a period of time are recognized based on progress towards completion of the performance obligation using percentage-of-completion (POC) method of accounting. Revenue is recognized based on the costs incurred to date as a percentage of the total estimated costs to fulfill the contract. Any revision in cost to complete would result in increase or decrease in revenue and such changes are recorded in the period in which they are identified.

Revenue related to other fixed price contracts providing maintenance and support services, are recognized based on the right to invoice for services performed for contracts in which the invoicing is representative of the value being delivered. If invoicing is not consistent with value delivered, revenues are recognized as the service is performed based on the cost to cost method described above.

The Company recognizes an onerous contract provision when the expected unavoidable costs of meeting the future obligations exceed the expected economic benefits to be received under a contract. Such provision, if any, is recorded in the period in which such losses become probable and is included in cost of revenues.

Estimates of revenue, costs or extent of progress towards completion are revised if circumstances change. Any resulting increases or decreases in estimated revenues or costs are reflected in statement of profit and loss in the period in which the circumstances that give rise to the revision become known by management.

Interest income

Interest income is recognised as the interest accrues using the effective interest method, under which the rate used exactly discount estimated future cash receipts through the expected life of the financial asset to the net carrying amount of the financial asset.

2.19 Employee benefits Defined benefit plans Gratuity

The liability recognised in the balance sheet is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets. The defined benefit obligation is calculated annually by actuaries using the projected unit credit method.

The present value is determined by discounting the estimated future cash outflows by reference to market yields at the end of the reporting period on government bonds that have terms approximating to the terms of the related obligation.

The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation and the fair value of plan assets. This cost is included in employee benefit expense in the statement of profit and loss.

Remeasurement gains and losses arising from experience adjustments and changes in actuarial assumptions are recognised in the period in which they occur, directly in other comprehensive income. They are included in retained earnings in the statement of changes in equity and in the balance sheet.

Changes in the present value of the defined benefit obligation resulting from plan amendments or curtailments are recognised immediately in statement of profit and loss as past service cost.

Actuarial gains/losses are recognized immediately in the balance sheet with a corresponding debit or credit to other comprehensive income in the year in which they occur.

Defined contribution plans

A defined contribution plan is a post-employment benefit plan where the Company''s legal or constructive obligation is limited to the amount that it contributes to a separate legal entity. The Company makes specified monthly contributions towards Government administered provident fund scheme. Obligations for contributions to defined contribution plan are expensed as an employee benefits expense in the statement of profit and loss in period in which the related service is provided by the employee. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in future payments is available.

The Company makes defined contributions to a Superannuation Trust established for the purpose. The Company has no further obligation beyond the monthly contributions.

Other benefits Compensated absences

Accumulated compensated absences, which are expected to be availed or encashed within 12 months from the end of the year end are treated as short term employee benefits. The obligation towards the same is measured at the expected cost of accumulating compensated absences as a result of the unused entitlement as at the year end.

Accumulated compensated absences, which are expected to be availed or encashed beyond 12 months from the end of the year end are treated as other long term employee benefits. The Company''s liability is actuarially determined (using the Projected Unit Credit method) at the end of each year. Actuarial losses/ gains are recognised in the statement of profit and loss in the year in which they arise.

Long term employee benefits

Employee benefits, which are expected to be availed or encashed beyond 12 months from the end of the year, are treated as other long term employee benefits. The Company''s liability is actuarially determined (using the Projected Unit Credit method) at the end of each year.

2.20 Borrowing costs

General and specific borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalised during the period of time that is required to complete and prepare the asset for its intended use or sale. Qualifying assets are assets that necessarily take a substantial period of time to get ready for their intended use or sale.

Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation.

Other borrowing costs are expensed in the period in which they are incurred.

2.21 Earnings per share

(i) Basic earnings per share

Basic earnings per share is calculated by dividing:

• the profit attributable to owners of the Company

• by the weighted average number of equity shares outstanding during the financial year (ii) Diluted earnings per share

Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account:

• the after income tax effect of interest and other financing costs associated with dilutive potential equity shares, and

• the weighted average number of additional equity shares that would have been outstanding assuming the conversion of all dilutive potential equity shares.

2.22 Exceptional items

Items which are material either because of their size or their nature, and which are non-recurring, are highlighted through separate disclosure. The separate reporting of exceptional items helps provide a better understanding of the Company''s underlying performance.

2.23 Changes in material accounting policies

Material accounting policy information The Company adopted Disclosure of Accounting Policies (Amendments to Ind AS 1) from 1 April 2023. Although the amendments did not result in any changes in the accounting policies themselves, they impacted the accounting policy information disclosed in the financial statements. The amendments require the disclosure of ''material'' rather than ''significant'' accounting policies. The amendments also provide guidance on the application of materiality to disclosure of accounting policies, assisting entities to provide useful, entity-specific accounting policy information that users need to understand other information in the financial statements.

32 (iii) Market Risk

(i) Mutual Fund risk

Market risk may arise due to changes in economic conditions, monetary policies, and geopolitical events. Group has investment in short term debt mutual funds.

(ii) Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Group''s does not have any exposure to the risk of changes in market interest rates as there is no such borrowings.

(iii) Foreign currency risk

The Company''s major operations are in India and are in '' and therefore, the Company is not exposed to significant foreign currency risk. The Company evaluates the exchange rate exposure arising from foreign currency transactions and the Company follows established risk management policies which are approved by the senior management and the Audit Committee, including the use of derivatives like foreign exchange forward contracts to hedge exposure to foreign currency risk.

(a) Foreign currency risk exposure

The Company''s exposure to foreign currency risk at the end of the reporting period expressed in '' are as follows

b) Other litigations:

The Company is involved in various lawsuits, claims and proceedings that arise in the ordinary course of business. Some of these matters include speculative and frivolous claims. The Company believes that the amount or estimable range of reasonably possible loss, will not, either individually or in the aggregate, have a material adverse effect on its business, financial position, results of the Company, or cash flows with respect to loss contingencies for legal and other contingencies as at 31 March 2024.

c) As at 31.03.2024, the Company has certain sales tax and other indirect tax litigation matters against which provision amounts to '' 1,230.36 lakhs (2023 - '' 1,312.22 lakhs) is outstanding. Provision amounting to '' 200.06 lakhs (2023 - '' 168.72 lakhs) was created and '' 273.31 lakhs (2023 - '' 44.86 lakhs) was utilized during the year.

47 In order to reduce Company''s debt obligations, the Company has decided to monetize Company owned properties in a phased manner. Several of Company''s properties are not being fully utilized due to changes in the business of the Company, therefore as a part of ongoing property monetisation plan, during the year ended, March 31, 2024, the Company has disposed one property situated in Chennai, having net carrying amount of '' 303.65 lakhs, for a consideration of '' 1,500.00 lakhs, resulting in overall gain of '' 1,196.35 lakhs. ('' 1,383.89 lakhs for the year ended March 31, 2023).

48 The Board of Directors of the Company in its meeting held on March 23, 2021, had consented to adjust the unsecured loan advanced to HCL Infotech Limited, a wholly-owned subsidiary, amounting to '' 40,000 lakhs, against the subscription money payable by the Company to HCL Infotech Limited, for subscription of the 40,00,000 (forty lakhs) 0.1% Optionally Convertible Debentures (OCD) of a face value of '' 1,000 each (Indian Rupees One thousand only) issued, on private placement basis to the Company, pursuant to terms of OCD Subscription Agreement dated March 31, 2021 between the Company and HCL Infotech Limited.

49 The Company and HCL Infotech Limited, has agreed that the OCDs as mentioned in note 48, issued to the Company shall be redeemed only from and to the extent of the proceeds from certain specified book receivables and favorable awards received by the HCL Infotech Limited in accordance with the terms set out in the OCD Subscription Agreement. Accordingly, HCL Infotech Limited transferred its rights to receive cash flows from those specified book receivables and favourble awards to the Company and the aforesaid transaction meets the pass-through arrangement criteria, as per the requirements of Ind AS 109 Financial Instruments. Therefore, the outstanding balance of specified books receivables of '' 1,892 lakhs (including amount of '' 867 lakhs of the contract assets) derecognized in the financial statements of HCL Infotech Limited and recognized by the Company against the value of OCDs as at March 31, 2021.

Further, due to change in expected realisation value of above referred specified books receivable, the company has recognised loss of '' 1,556 lakhs as change in fair value of OCD through Profit & Loss account during the year ended March 31, 2022.

50 Based on the detailed assessment performed by Management which also included, wherever considered necessary, performing reconciliation with the parties and obtaining legal opinion, the Company has credited its Statement of Profit and Loss with '' 661.28 lakhs, for the year ended March 31,2024 (2023: '' 755.97 lakhs), on account of write back of certain credit balances including provisons and advances.

53 For past several years, the Company has continuously made losses and its net worth has been fully eroded. Further the Company has incurred a net loss of '' 1,554.88 lakhs, during the current year (March 31,2023: net loss '' 3,837.11 lakhs) and the Company''s current liabilities exceeded its current assets by '' 42,556.82 lakhs (March 31, 2023: '' 43,080.79 lakhs) as at March 31, 2024. The losses are primarily a result of delayed receipts on certain system integration contracts, historical low margin contracts, large litigations and their costs which are at different stages of progression.

The management of the Company, has been pursuing strategies which include scale down of loss-making businesses like scaling down of the distribution business (refer note 55), sale of certain non-core properties and reduction in outstanding debts. To ensure the necessary financial support for its operations, the Board of Directors of HCL Corporation Private Limited has approved support in the form of corporate guarantees to banks of '' 33,035 lakhs and interest free unsecured loans of '' 35,500 lakhs to HCL Infosystems Limited out of total authorized limit of '' 1,50,000 lakhs. This had been approved by the shareholders of the Company, vide their resolution dated September 14, 2017. Considering the above support, the management and the Board of Directors have a reasonable expectation that the Company will be able to realise its assets and discharge its contractual obligations and liabilities as they fall due in the near future in the normal course of business. Accordingly, these standalone financial statements have been prepared on a going concern basis.

54 HCL Infosystems Limited was awarded the order for supply, installation and commissioning of communication infrastructure, on turnkey basis, for CWG (Commonwealth Games) and later the work of re-deployment of equipment in MTNL''s network in Delhi and Mumbai was also included. Disputes arose between both the parties with regard to completion of the project and Arbitration proceedings were initiated by HCL Infosystems Limited to recover the pending amount. In August 2014, the Arbitral Tribunal passed an Award in favour of HCL Infosystems Limited, whereby allowing majority of its claim and dismissing all the counter-claims of MTNL. MTNL challenged the Award before the High Court of Delhi and the same was dismissed. MTNL filed an Appeal before the Division Bench of the High Court challenging the said dismissal, wherein during the March 2016, the MTNL was directed to deposit a total sum of '' 9,130 Lakhs ('' 8,035 Lakhs principal and '' 1,095 Lakhs interest) with the Court in the form of a Fixed Deposit. This contract was part of Hardware Solutions business transferred to HCL Infotech Limited under Scheme of Arrangement in 2013. HCL Infotech Limited filed an application for release of the aforesaid Fixed Deposit (including accumulated interest accrued thereon till date of release of '' 4,307 Lakhs including TDS) of '' 12,342 Lakhs. Accordingly, the same has been released on adhoc basis vide order of the Hon''ble High Court of Delhi dated September 28, 2022 against a Bank Guarantee which is backed by Corporate Guarantee provided by HCL Corporation Limited on behalf of HCL Infotech Limited.

As part of issuance of Optionally Convertible Debentures (OCDs) (as referred to in note 48 & 49 above), HCL Infotech Limited has transferred its rights to receive cash flows from MTNL to the HCL Infosystems Limited and as per the terms of OCDs, cash collected shall be utilized to redeem OCDs. However, since MTNL''s Appeal is sub-judice (pending disposal) before the Division Bench of the High Court, amount has not been utilized for redemption of OCDs.

55 In view of the current financial stress faced by the Enterprise and Consumer Distribution businesses resulting in decline in sales and increase in losses, the Board of Directors had appointed a reputed independent consulting firm to review these businesses. Based on the report of the consulting firm and the inputs of the management team, the Board of Directors in their meeting dated January 27, 2020 decided that because of low margin contracts, tough market conditions and the current financial position of the Company, the Distribution businesses of the Company were not financially sustainable. Consequently, the Board recommended that in order to limit future financial losses, the Enterprise and Consumer Distribution Business has been substantially scaled down.

56 The Board of Directors of HCL Infosystems Limited in its meeting held on February 10, 2021 had approved to sell the entire shareholding held by HCL Infosystems Limited in HCL Infotech Limited at "Net Asset Value" as on closing date to Novezo Consulting Private Limited, after acquiring the undertaking which shall comprise of the business relating to two specific projects through a business transfer agreement, certain other assets and liabilities through assignment deed and HCL Investments Pte. Limited, Singapore & its step down subsidiary through a share purchase agreement. However, despite rigorous and best efforts for closure of the deal, the Conditions Precedent were not fulfilled even after lapse of a considerable period from the date of execution of the Share Purchase Agreement. The objective and purpose of the transaction completely changed and given that the changed circumstances created a fundamentally different situation which the Parties never envisaged or agreed to in the first place, the Share Purchase Agreement got frustrated as the object and purpose of executing the Share Purchase Agreement cannot be met and has undergone a fundamental change beyond the contemplation of the parties. Accordingly, the company issued a letter intimating Novezo Consulting Private Limited that the Share Purchase Agreement has been frustrated on March 11, 2023. HCL Infotech Limited will continue to be operated in the ordinary course of business.

57 The Company entered into Share Purchase Agreement (SPA) dated 31.05.2018 with Karvy Data Management Services Limited for sale of shares in HCL Services Limited. As per clause 2.3 of SPA, business consideration of '' 648.81 lakhs represents the Second Stage Consideration linked with the Income Tax refunds receivable for the period upto the FY 31.03.2018. The above amount represents refunds due for the AYs. 2015-16 and 2018-19 held up due to appeals pending for these AYs. Karvy is obligated to pay these amounts only on receipt of the same from the IT Dept. The management has assessed favourable outcome for all these years and refund will be received from the IT department for all the years.

58 No funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other person(s) or entity(ies), including foreign entities ("Intermediaries") with the understanding, whether recorded in writing or otherwise, that the Intermediary shall lend or invest in party identified by or on behalf of the Company (Ultimate Beneficiaries). The Company has not received any fund from any party(s) (Funding Party) with the understanding that the Company shall whether, directly or indirectly lend or invest in other persons or entities identified by or on behalf of the Company ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

59 Other Statutory Information

a) The company does not have any benami property, where any proceeding has been initiated or pending against the company for holding any Benami property.

b) The company is not declared a wilful defaulter by any bank or financial institution or any other lender.

c) The Company has complied with the number of layers prescribed under section 2(87) of the Companies Act, 2013 read with Companies (Restriction on number of Layers) Rules, 2017.

d) The company does not have any such transaction which is not recorded in the books of accounts that has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (such as, search or survey or any other relevant provisions of the Income Tax Act, 1961).

e) The company has not traded or invested in Crypto currency or Virtual Currency during the financial year.

f) There are no immovable properties not held in the name of the company.

As per our report of even date attached

For B S R & Associates LLP For and on behalf of the Board of Directors of

Chartered Accountants HCL Infosystems Limited

ICAI Registration Number-116231W/W-100024

Girish Arora Pawan Kumar Danwar Raghu Venkat Chivukula

Partner Director Director

Membership Number - 098652 DIN - 06847503 DIN - 00520704

Alok Sahu Raj Kumar Sachdeva Komal Bathla

Chief Financial Officer Manager Company Secretary

New Delhi: May 22, 2024 Noida : May 22, 2024

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Mar 31, 2018

1. Corporate information

HCL Infosystems Limited (‘the Company’) is domiciled and incorporated in India and publicly traded on the National Stock Exchange of India Limited (‘NSE’) and the BSE Limited (‘BSE’) in India. The registered office of the Company is situated at 806, Siddharth, 96, Nehru Place, New Delhi - 110019.

The Company is primarily engaged in value-added distribution of technology, mobility and consumer electronic products. The financial statements were approved by the Board of Directors and authorised for issue on May 29, 2018.

Notes:

(i) Paid up share capital includes :

a) 1,16,29,885 (2011 - 1,16,29,885) equity shares of Rs. 2/- each issued pursuant to the exercise of options granted under Employee Stock Option Scheme 2000.

b) 187,221 (2011 - 87,221) equity shares of Rs. 2/- each issued pursuant to the exercise of options granted under Employee Stock Based Compensation Plan 2005.

(i) Rights attached to equity shares:

The Company has only one class of equity share having a face value of Rs. 2/- each. Each holder of equity shares is entitled to one vote per share held. The Company declares and pays dividend in Indian Rupees. The dividend proposed by the Board of Directors is subject to the approval of the Shareholders in ensuing Annual General Meeting, except in case of interim dividend.

In the event of liquidation of the Company, the holders of equity shares will be entitled to receive the remaining assets of the Company after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by Shareholders.

(ii) Shares reserved for issue under options:

For detail of shares reserved for issue under Employee Stock Option Plan of the Company, refer Note 42.

Notes:

1. Secured term loan from bank and others amounting to Rs. 19.46 Crores (2017 - Rs. 38.04 Crores), out of which Rs. 12.18 Crores (2017 - Rs. 14.57 Crores) is shown under current maturity of long term debt, is secured by way of (a) First pari passu charge on identified immovable assets and all movable and intangible assets of the HCL Infosystems Limited and it’s material subsidiaries (b) First pari-passu charge on all Current Assets of the HCL Infosystems Limited & it’s Material Subsidiaries (except Lease Rental Receivables). (c) Negative lien on Two Identified Properties (d) Exclusive charge on Debt Service Reserve Account created by way of lien on mutual funds of Rs. 55.60 Crores. The loan is repayable in 13 quarterly installments starting from September 2016 and carries interest @ 10.05 % to 11.00% p.a.

2. Unsecured term loans from others amounting to Rs. 192.96 Crores (2017 - Rs. 191.87 Crores), out of which Rs.106.73 Crores (2017 - Rs. 82.93 Crores) is shown under current maturity of long term debt, is repayable in 12 to 20 equal quarterly instalments from the date of the disbursement which carries interest @ 11.02% to 12.50% p.a.

3. Unsecured terms loan from others amounting to Rs. 1.70 Crores (2017- Rs. 3.82 Crores), out of which Rs. 1.70 Crores (2017Rs. 2.02 Crores) is shown under current maturity of long term debt is repayable in 1 quarterly, 1 half yearly and balance 16 quarterly instalments from the date of the disbursement which carries interest @ 13.04% p.a.

4. Long term borrowings, Short term borrowings and Current maturities of long term debts is net of the loan amounting to Rs. 0.19 Crores (2017 - Rs. 2.16 Crores) and Rs. 1.76 Crores (2017 - Rs. 19.87 Crores) respectively that the Company has transferred to its subsidaries pursuant to the scheme of arrangement. However Company shall make repayments of such principal amounts and payments of interest or any other dues thereon on behalf of the respective Transferee Companies (HCL Infotech Limited, HCL Services Limited and HCL Learning Limited) and the respective Transferee Companies shall be under an obligation to place with HCL Infosystems Limited funds at the relevant time so as to enable HCL Infosystems Limited to make payments to the lenders on or before their respective due dates. Note: Material Subsidiaries include HCL Infotech Limited, HCL Services Limited and HCL Learning Limited.

Note:

1. Secured term loan from banks amounting to Rs. 99.80 Crores (2017 - Rs. 124.78 Crores) is secured by way of (1) First pari passu charge on all immovable, movable and intangible assets of the HCL Infosystems Limited and it’s material subsidiaries (2) First pari-passu charge on all current assets of the HCL Infosystems Limited & it’s material subsidiaries (except lease rental receivables). (3) Negative lien on two identified properties, along with non-fund based facilities from banks. It carries interest @ 9.95% to 11.50 % p.a.

2. Short term loan of Rs. 24.97 Crores (2017 - Rs. 99.14 Crores ) is secured by way of subservient charge on stock and receivables of the Company and against support from HCL Corporation Private Limited. It also carries a lien on Mutual Funds of NiL (2017 - Rs. 50.31 Crores). Short Term Loan of Rs. 24.97 Crs is repayable in one year from the date of disbursement and carries interest @ 9.50 % p.a.

3. Secured Loan ( Cash Credit,WCDL and Buyer’s Credit ) from Banks amounting to Rs.139.08 (2017 - Nil) are secured by way of (1) First pari passu charge on all immovable, movable and intangible assets of the HCL Infosystems Limited and it’s Material Subsidiaries (2) First pari-passu charge on all current assets of the HCL Infosystems Limited & it’s Material Subsidiaries (except Lease Rental Receivables). (3) Negative lien on two identified properties.

4. Short Term Loan of Rs. 20 Crores (2017 - Nil ) is secured by way of subservient charge on current and movable fixed assets of the Company. Short Term Loan of Rs. 20 Crores is repayable in 4 months from the date of disbursement and carries interest @ 8.95% p.a.

5. Secured Term Loan from Banks amounting to Rs. 50 Crores (2017 - Nil) is secured by way of (1) First pari passu charge on identified immovable assets and all movable and intangible assets of the HCL Infosystems Limited and it’s Material Subsidiaries (2) First pari-passu charge on all current assets of the HCL Infosystems Limited and it’s Material Subsidiaries (except lease rental receivables). (3) Negative lien on two identified properties, along with non-fund based facilities from Banks.It carries interest @ 9% p.a.

6. Short Term Loan of Rs.100 Crores (2017 - Nil ) is secured by way of subservient charge on current and movable fixed assets of the Company. Short Term Loan of Rs. 100 Crores is repayable in 3 months from the date of disbursement and carries interest @ 8.25% p.a.

7. Unsecured term loans from others amounting to Rs. 149.16 Crores (2017 - Rs. 149.36 Crores) and against Support from HCL Corporation Private Limited is repayable in 1 yearly instalments from the date of the disbursement which carries interest @ 8.80% p.a.

8. Unsecured commercial papers from others amounting to Rs. 147.41 Crores (2017 - Rs. 195.00 Crores) is repayable in next 12 months from the date of availament of each tranche, which carries interest @ 8% to 10.80% p.a.

9. Unsecured intercorporate loan from HCL Corporation Private Limited amounting to Rs. 20.00 Crores (2017 - Nil Crores) is repayable in next 2 months from the date of availament of each tranche, which carries interest @ 10% p.a.

Fair Value hierarchy

This section explains the judgements and estimates made in determining the fair values of the financial instruments that are recognized and measured at fair value. To provide an indication about the reliability of the inputs used in determining fair values, the Company has classified its financial instruments into the three levels prescribed under the accounting standard. An explanation of each level follows underneath the table.

*There were no transfers between the Level 1, Level 2 and Level 3 during the year.

* There is no change in the valuation technique during the year.

Valuation techniques used to derive Level 2 fair values

Investment in mutual funds have been fair valued using published statement for NAV’s.

2 Financial Risk Management

The Company’s activities expose it to market risk, liquidity risk and credit risk. The Company’s financial risk management is an integral part of how to plan and execute its business strategies.

In order to minimize any adverse effects on the financial performance of the Company, derivative financial instruments, such as foreign exchange forward contracts are entered to hedge certain foreign currency exposures. Derivatives are used exclusively for hedging purposes and not as trading or speculative instruments.

This note explains the sources of risk which the entity is exposed to and how the entity manages the risk and the impact of hedge accounting in the financial statements.

The Company’s risk management is carried out by the Treasury and Credit Control department under policies approved by the senior management and audit committee.

Financial Risk Management Credit Risk

“Credit risk arise from possibility that customer may default on its obligation resulting into financial loss. The maximum exposure to the credit risk is primarily from trade receivables.

Credit risk on cash and cash equivalent and bank balances is not significant as it majorly includes deposits with bank and financial institutions with high credit ratings assigned by international and domestic credit rating agencies.

Investment primarily includes investment in liquid debts mutual funds.

The credit risk is managed by the Company through credit approvals, establishing the financial reliability of the customers taking into account the financial condition, analysis of historical bad debts and ageing of accounts receivables. Individual limits are set accordingly by the Company credit control department.

The Company uses a provision matrix to compute the expected credit loss for trade receivables. The provision matrix takes into consideration historical credit loss experience and other relevant available external and internal credit risk factors. Following table provides agewise breakup of receivables

Financial assets are written off when there is no reasonable expectation of recovery, such as a debtor failing to engage in a repayment plan with the Company. The Company categorises a trade receivable for write off when a debtor fails to make contractual payments greater than 3 years past due. Where loans or receivables have been written off, the Company continues to engage in enforcement activity to attempt to recover the receivable due. Where recoveries are made, these are recognised in statement profit and loss.

The summary of life time expected credit loss allowance made on customer balances during the year and balance at the year end is given below:

Financial Risk Management Liquidity risk:

Liquidity risk is the risk that the Company will not be able to settle or meet its obligations on time or at a reasonable price. The Company’s treasury department is responsible for liquidity, funding as well as settlement management. In addition, processes and policies related to such risks are overseen by senior management. Management monitors the Company’s net liquidity position through rolling forecasts on the basis of expected cash flows.

Note: Previous period’s figures are given in brackets.

Financial Risk Management

Market Risk

(i) Interest rate risk

The Company’s main interest rate risk arise from borrowings with variable interest rates, which expose the Company to Cash flow interest rate risk. As on 31.3.2018, the Company has Rs. 77.52 Crores (2017- Rs. 38.74 Crores) of borrowings with variable interest rates. In order to optimize the Company’s position with regards to interest expenses and to manage the interest rate risk, treasury performs a comprehensive corporate interest rate risk management by balancing of fixed rate and floating rate financial instruments in its total portfolio.

(a) Interest rate risk exposure

The exposure of the Company’s borrowing to interest rate changes at the end of the reporting period are as follows:

Financial Risk Management Market Risk

(ii) Foreign currency risk

The Company’s major operations are in India and are in INR and therefore, the Company is not exposed to significant foreign currency risk. The Company evaluates the exchange rate exposure arising from foreign currency transactions and the Company follows established risk management policies which are approved by the senior management and the Audit Committee, including the use of derivatives like foreign exchange forward contracts to hedge exposure to foreign currency risk.

(a) Foreign currency risk exposure

The Company’s exposure to foreign currency risk at the end of the reporting period expressed in INR are as follows

3. Capital Management Risk Management

The Company’s objective when managing capital are to safeguard their ability to continue as going concern so that they can continue to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.

The capital structure as of 31.03.2018 and 31.03.2017 are as follows:

4 Exceptional items include :

a) The Company has made provision of Rs. 80.19 Crores (FY 16-17 - Rs. 70.19 Crores) against loan given to HCL Infotech Limited. The Company, considering that HCL Infotech Limited has negative net worth as on 31.3.2018 due to continuous loss incurred by entity and based on future plan of this entity, may not be able to recover the loans given to HCL Infotech Limited upto the value of its negative net worth.

b) In respect to investment in HCL Services Limited, the Company considering the impending transactions for sale of Domestic Enterprises Services Business to Karvy Data Management Services Limited has recognised an impairment charge of Rs. 428.97 Crores, being excess of carrying value over the recoverable value.

c) In respect of HCL Learning Limited, the Company in current year has recognised an impairment charge of Rs. 44.46 Crores being excess of carrying value of investment over the recoverable value.

5 a) Contingent Liabilities :

Claims against the Company not acknowledged as debts:

* Includes sum of Rs. 124.97 Crores (2017 - Rs. 102.24 Crores) deposited by the Company against the above.

The amounts shown in item (a) represents the best possible estimates arrived at on the basis of available information. The uncertainties and possible reimbursements are dependent on the out come of the different legal processes which have been initiated by the Company or the claimants as the case may be and therefore cannot be predicted accurately.It is not practicable for the Company to estimate the timing of cash outflows, if any, in respect of the above pending resolution of the respective proceedings.

b) Corporate Guarantees :

Corporate Guarantee of Rs. 362.45 Crores (2017 - Rs. 484.40 Crores) was given to Banks and Financial Institutions for working capital facilities sanctioned to subsidiaries of which the total amount utilised as at 31.03.2018 is Rs. 70.05 Crores (2017 - Rs. 143.40 Crores).

c) Other Litigations :

(i) The Company has been named in a supplementary charge sheet filed with the Court with respect to a Contract awarded to the Company in 2009 by the UP state Government, amounting to Rs. 4.94 Crores, for the supply of computer hardware and related services under the National Rural Health Mission and therefore summons have been issued by the Court. The matter is currently pending for adjudication before the Special Court CBI. The management is of the view that the company has not engaged in any wrong doing.

(ii) The Company has certain sales tax and other related litigation amounting to Rs. 3.71 Crores (2017 Rs. 1.62 Crores) against which provision have been made. Provision amounting to Rs. 2.09 Crores was created during the year.

6 As per provisions of Section 135 of the Companies Act, 2013, the Company has to provide at least 2% of average net profits of the preceeding three financial years towards Corporate Social Responsibility (“CSR”). Accordingly, a CSR Committee has been formed for carrying out CSR activities as per Schedule VII of the Companies Act, 2013. The Company was not requred to spend/contribute to CSR activity during the year as per Section 135 of the Companies Act, 2013 as average net profit for the last three financial year is negative.

7 Employee Stock Option Plan (ESOP):

(a) The Company has established Employee Stock Option Scheme 2000 and Employee Stock Based Compensation Plan 2005, for which a total grant of 31,90,200 and 33,35,487 options have been set aside respectively for the employees of the Company and its subsidiaries. These options vest on a graded basis over a period of 42 and 60 months respectively from the date of grant and are to be exercised with in a maximum period of 5 years from the date of vesting.

The Board of Directors/Committee approves the grant of options, including the grant of options that lapse out of each grant. Each option of Rs. 10/- confers on the employee a right to five equity shares of Rs. 2/- each.

Exercise price is market price as specified in the Employee Stock Option Scheme and Employee Stock Purchase Scheme Guidelines, 1999 issued by the Securities and Exchange Board of India(“SEBI”).

(b) Fair Value of options Assumptions

The fair value of each stock option granted under Employee Stock Option Scheme 2000 and Employee Stock Based Compensation Plan 2005 as on the date of grant has been computed using Black-Scholes Option Pricing Formula and the model inputs are given as under:

Notes:

1. Volatility: Based on historical volatility in the share price movement of the Company.

2. Risk Free Rate: Being the interest rate applicable for maturity equal to the expected life of options based on yield curve for Government Securities.

3. Time to Maturity: Vesting period and volatility of the underlying equity shares have been considered for estimation.

4. Dividend Yield: Based on historical dividend payouts.

8 Leases:

a) Cancelable Operating Leases As Lessee:

(i) The Company has taken various residential/commercial premises under cancelable operating leases. These leases are for a period of eleven months to three years and are normally renewable on expiry.

(ii) The rental expense in respect of operating leases is Rs. 6.94 Crores (FY 16-17 - Rs. 7.57 Crores) which is disclosed as Rent expense under ‘Other expenses’.

As Lessor:

The gross block, accumulated depreciation and depreciation expense in respect of the assets given on operating lease are as below:

9 Earnings per share (EPS)

Basic earnings per share is calculated by dividing the net loss for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year. The loss considered in ascertaining the Company EPS represent loss for the year after tax. Diluted EPS 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.

10 Segment Reporting

The Company publishes standalone financial statements along with the consolidated financial statements in the annual report. In accordance with Indian Accounting Standard 108, Operating Segments, the Company has disclosed the segment information in the consolidated financial statements.

11 Employee benefits

The Company has calculated the various benefits provided to employees as under:

(a) Defined Contribution

During the year, the Company has recognised the following amounts in the statement of profit and loss:

* Included in Contribution to Provident and Other Funds under Employee benefits expense (Refer Note 31).

(b) Defined Benefit

(i) Gratuity

(ii) Provident Fund#

The Company contributes to the employee provident fund trust “Hindustan Computers Limited Employees Provident Fund Trust” which is managed by the Company. The Company’s Provident Fund Trust is exempted under Section 17 of Employees’ Provident Fund Act, 1952. Conditions for grant of exemptions stipulate that the employer shall make good deficiency, if any, in the interest rate declared by the trust vis-a-vis statutory rate. As per Ind AS - 19, Employee Benefits, provident funds set up by employers, which requires interest shortfall to be met by the employer, needs to be treated as defined benefit plan.

The Trust includes employees of the Company as well as of it’s Indian wholly owned subsidiaries. In view of the same, it is a multi employer defined benefit plan.

The Trust has been investing the provident fund contributions of the employees of it’s Indian wholly owned subsidiaries in a composite manner and the same cannot be separately identified entity wise.

In view of the same an actuarial valuation, in accordance with the Ind AS-19, was carried out at composite level. As per actuarial certificate there is no shortfall in the earning of fund against statutorily required “interest rate guarantee” and accordingly, the “liability on account of interest rate guarantee is nil.

In accordance with Ind AS 19, an actuarial valuation was carried out in the respect of the aforesaid defined benefit plan based on the following assumptions:

As of 31.03.2018, every 0.5 percentage point increase / decrease in discount rate will affect gratuity benefit obligation by approximately by Rs. 0.07 Crores.

As of 31.03.2018, every 0.5 percentage point increase / decrease in weighted average rate of increase in compensation levels will effect gratuity benefit obligation by approximately Rs. 0.07 Crores.

The estimates of future salary increases considered in actuarial valuation take account of inflation, seniority, promotion and other relevant factors such as supply and demand in the employment market.

Description of Risk Exposures:

Valuations are based on certain assumptions, which are dynamic in nature and vary over time. As such company is exposed to various risks as follow-

A) Salary Increases- Actual salary increases will increase the Plan’s liability. Increase in salary increase rate assumption in future valuations will also increase the liability.

B) Investment Risk - If Plan is funded then assets liabilities mismatch & actual investment return on assets lower than the discount rate assumed at the last valuation date can impact the liability.

C) Discount Rate : Reduction in discount rate in subsequent valuations can increase the plan’s liability.

D) Mortality & disability - Actual deaths & disability cases proving lower or higher than assumed in the valuation can impact the liabilities.

E) Withdrawals - Actual withdrawals proving higher or lower than assumed withdrawals and change of withdrawal rates at subsequent valuations can impact Plan’s liability.

* Included in salaries, wages, bonus and gratuity for gratuity and contribution to provident and other funds for provident fund under employee benefits expense (Refer Note 31).

@ The Company’s contribution to provident fund for the year is Rs. 1.02 Crores (FY 1617 - Rs. 1.14 Crores) and the remaining relates to other related companies as mentioned above.

The major categories of plan assets are as follows:

12 Disclosure of related parties and related party transactions:

a) Company having substantial interest:

HCL Corporation Private Limited

b) List of parties where control exists/existed:

Subsidiaries:

HCL Infotech Limited HCL Learning Limited HCL Services Limited

Digilife Distribution and Marketing Services Limited

QDigi Services Limited (formerly known as HCL Computing Products Limited)

Pimpri Chinchwad eServices Limited (85% Shareholding of HCL Infosystems Limited)

HCL Insys Pte. Limited, Singapore

HCL Investments Pte. Limited, Singapore

HCL Touch Inc., USA (dissolved with effect from 04.04.2018)

HCL Infosystems MEA FZE, Dubai

HCL Infosystems LLC, Dubai (49% Shareholding of HCL Infosystems MEA FZE)

HCL Infosystems MEA LLC, Abu Dhabi (49% Shareholding of HCL Infosystems MEA FZE)

HCL Infosystems Qatar, WLL (49% Shareholding of HCL Infosystems MEA FZE)

c) Others (Enterprises over which, individual having indirect significant influence over the company, has significant influence) and with whom transactions have taken place during the year and/or where balances exist:

HCL Technologies Limited

HCL Comnet Limited

HCL Talent Care Private Limited

Koura & Co.

VAMA Sundari Investments (Delhi) Private Limited

Shiv Nadar Foundation

Naksha Enterprises Private Limited

d) Key Management Personnel:

Mr. Premkumar Sheshadri* (Executive Vice Chairman & Managing Director, till 31.03.2018)

Mr. Rangarajan Raghavan (Managing Director,with effect from 01.04.2018)

Mr. S G. Murali (Group CFO till 15.09.2017)

Mr. Kapil Kapur (Deputy CFO with effect from 15.09.2017)#

Mr. Sushil Jain (Company Secretary)

*Remuneration has been paid by HCL Corporation Private Limited

# Appointed as CFO with effect from 1.04.2018

Note: Parties with whom transactions are more than 10% of the total value have been disclosed separately.

Notes:

# Sales and Related Income, Sale of Services, Purchase of Goods and Purchase of Services are net of transactions between HCL Infosystems and HCL Infotech on account of pending Novation of Contracts of System Integration Business.

* Related to Corporate Guarantee of Rs. 1,146 (2017- Rs. 325 Crores) taken from HCL Corporation Private Limited Amount due to / from related parties are unsecured and are repayable/to be received in cash.

13 Taxation:

(a) Provision for taxation has been computed by applying the Income Tax Act, 1961 and other relevant tax regulations in the jurisdiction where the Company conducts the business to the profit for the year. Deferred tax assets and deferred tax liabilities are offset, if a legally enforeable right exists to set-off current tax assets against current tax liabilities and the deferred tax assets and deferred tax liabilities relates to the same taxable entity and the same taxation authority.

(b) Deferred Tax:

Major components of Deferred tax arising on account of timing difference along with their movement as at 31.03 2018 are:

14 The Board of Directors of HCL Infosystems Limited (the Company) in its meeting held on 31.01.2018 had approved the sale of CARE business, a division of HCL Services Limited (wholly owned subsidiary) on slump sale basis, to QDigi Services Limited (Formerly known as HCL Computing Products Limited (HCPL) and then transfer of entire shareholding of QDigi Services Limited to Quess Corp Limited for a total consideration of Rs. 30 Crore.

Pursuant to above, the CARE Business division has been transferred to QDigi Services Limited on 31.03.2018 and entire shareholding of QDigi Services Limited has been transferred to Quess Corp Limited on 11.04 2018.

The Board of Directors of HCL Infosystems Limited (the Company) in its meeting held on 09.02.2018 had approved, sale of HCL Services Limited (consisting of Domestic Enterprise Services Business), a wholly owned subsidiary to Karvy Data Management Services Limited for a consideration of Rs.108 Crore approximately (including tax refunds of Rs. 87 Crore payable to the extent received). The consideration is subject to final adjustments at time of closing date.

This transaction excludes;

i) Care Business (for divestment to Quess Corp Limited)

ii) IT & Facility unit (transferred to HCL Infosystems Limited)

iii) Investment in HCL Insys Pte Limited, Singapore including its subsidiaries (transferred to HCL Learning Limited). Pursant to the above developement, the investment in HCL Services as at 31.03.2018 is classified and disclosed as assets held for sale.

15 During the year ended 31.03.2018, the Company has raised Rs. 499.09 Crores by allotment of 106,190,299 equity shares of Rs. 2/- each at a price of Rs. 47.00 per equity share including a premium of Rs. 45.00 per equity share through Right Issue on 08.12.2017.

16 The disclosures regarding details of specified bank notes (SBNs) held and transacted during 8.11.2016 to 30.12.2016 has not been made since the requirement does not pertain to financial year ended 31.03.2018. Corresponding disclosure as appearing in the audited standalone financial statements for the year ended 31.03.2017 have been disclosed as follows-

17 Previous year’s figures have also been regrouped/recasted, wherever necessary, to conform to the Current year’s presentation.

---

Mar 31, 2017

1. New standards that are not yet effective and have not been early adopted:

As set out below, amendments to standards are effective for annual periods beginning on or after April 1, 2017, and have not been applied in preparing these financial statements. None of these is expected to have a significant effect on the Financial Statements of the Company:

Amendments to Ind AS 102, Share-based Payment

The amendment to Ind AS 102 clarifies the measurement basis for cash-settled share-based payments and the accounting for modifications that change an award from cash-settled to equity-settled.

Since the Company does not have any cash-settled share based payments outstanding at the reporting date, the above mentioned amendment will not have any impact on the Financial Statements of the Company.

Amendments to Ind AS 7, Statement of Cash Flows

The amendment to Ind AS 7 introduces an additional disclosure that will enable users of Financial Statements to evaluate changes in liabilities arising from financing activities. The said amendment will not have any impact on the Company''s Cash Flow Statement.

There are no other Ind ASs that are not yet effective that would be expected to have a material impact on the Consolidated Cash Flow Statement.

it''s Material Subsidiaries (2) First pari-passu charge on all Current Assets of the HCL Info systems Ltd & it''s Material Subsidiaries (except Lease Rental Receivables). (3) Negative lien on Two Identified Properties (4) Exclusive charge on Debt Service Reserve Account created by way of lien on mutual funds of Rs, 70.42 Crs . The Hypothecation of the movable assets has been created on 22nd May''2017 and the mortgage of the immovable assets is under process. The loan is repayable in 13 quarterly installments starting from September 2016 and carries interest @ 11 % to 11.10% p.a.

(ii) Secured Long Term Loan of Nil ( 2016- Nil, 2015 - Rs, 5.73 Crores ) out of which Nil (2016 - Nil, 2015 - Rs, 5.73 Crores ) is shown under current maturity of debt, is secured by way of subservient charge on stock and receivables of the Company. It also carries a lien on Mutual Funds of Rs, 50.31 Crores (2016 - Rs, 50.16 Crores, 2015 - Rs, 49.99 Crores). Short Term Loan of Rs, 74.14 Crores is repayable in one year from the date of disbursement and carries interest @ 9.50 % p.a. and Rs, 25 Crores is repayable in three months from the date of disbursement and carries interest @ 11.50 % p.a.

(iii) Secured Term Loan from Banks amounting to Nil (2016 - Nil, 2015 - Rs, 143.48 Crores), out of which Nil (2016 - Nil, 2015 - Rs, 143,48 Crores) is shown under current maturity of long term debt, was secured by way of subservient charge on current assets of the Company. It had a lien on Mutual Funds of Rs, 100.01 Crores . The loan was repayable in 23 monthly equal installments starting from July 2014 and carries interest @ 11.25 %.

(iv) Secured Term Loan from Banks amounting to Nil (2016 - Nil, 2015 - Rs, 99.07 Crores), out of which Nil (2016 - Nil, 2015 - Rs, 19.92 Crores ) is shown under current maturity of long term debt, was secured by way of Hypothecation over the receivable from a particular project. The loan was repayable in 15 quarterly equal installments having a moratortium of 3 months and carries interest @ 11.25 % p.a.

2. (i) Unsecured Term loans from Others amounting to Rs, 191.87 Crores (2016 - Rs, 154.85 Crores, 2015 - Rs, 142.05 Crores), out of which Rs, 82.93 Crores (2016 - Rs, 89.89 Crores, 2015 - Rs, 73.32 Crores) is shown under current maturity of long term debt, is repayable in 12 to 20 equal quarterly installments from the date of the disbursement which carries interest @ 11.25% to 12.50% p.a.

(ii) Unsecured Term loans from Others amounting to Rs, 3.72 Crores (2016 - Rs, 19.34 Crores, 2015 - Rs, 41.70 Crores), out of which Rs, 2.02 Crores (2016 - Rs, 15.63 Crores, 2015 - Rs, 26.07 Crores) is shown under current maturity of long term debt, is repayable in 1 quarterly, 1 half yearly and balance 16 quarterly installments from the date of the disbursement which carries interest @ 13.04 % p.a.

(iii) Unsecured Term loans from others amounting to Nil (2016 - Nil, 2015 - Rs, 2.36 Crores), out of which Nil (2016 - Nil, 2015

- Rs, 2.36 Crores) is shown under current maturity of long term debt, were repayable in 19 equal quarterly installments from the date of the loans.

2. Long term borrowings, Short term borrowings and Current maturities of long term debts is net of the loan amounting to Rs, 2.16 Crores (2016 - Rs, 23.09 Crores, 2015 - Rs, 46.46 Crores), Nil (2016 - Nil, 2015 - Rs, 26.13 Crores) and Rs, 19.87 Crores (2016

- Rs, 29.51 Crores, 2015 - Rs, 68.94 Crores) respectivley that the Company has transferred to its subsidaries pursuant to the scheme of arrangement. However Company shall make repayments of such principal amounts and payments of interest or any other dues thereon on behalf of the respective Transferee Companies (HCL Infotech Ltd, HCL Services Ltd and HCL Learning Ltd) and the respective Transferee Companies shall be under an obligation to place with HCL Infosystems Limited funds at the relevant time so as to enable HCL Infosystems Ltd to make payments to the lenders on or before their respective due dates

Note: As per Ind AS provisions, the term loan balances are adjusted with the transaction/processing fees paid on the facility. Note: Material Subsidiaries include HCL Infotech Ltd., HCL Services Ltd. and HCL Learning Ltd.

Note:

1. (i) Secured Term Loan from Banks amounting to Rs, 124.78 Crores (2016 - Rs, 124.61 Crores, 2015 - Rs, 139.90 Crores) is secured by way of (1) First pari passu charge on all immovable, movable and intangible assets of the HCL Infosystems Ltd and itRs,s Material Subsidiaries (2) First pari-passu charge on all Current Assets of the HCL Infosystems Ltd & it''s Material Subsidiaries (except Lease Rental Receivables). (3) Negative lien on Two Identified Properties, along with non-fund based facilities from Bank.The Hypothecation of the movable assets has been created post balance sheet date and the mortgage of the immovable assets is under process. It carries interest @ 11.50 % p.a.

(ii) Short Term Loan of Rs, 99.14 Crores (2016 - Rs, 100.00 Crores, 2015 - Rs, 75 Crores ) is secured by way of subservient charge on stock and receivables of the Company and against Support from promoter company. It also carries a lien on Mutual Funds of Rs, 49.97 Crores (2016 - Rs, 49.97 Crores). Short Term Loan of Rs, 74.14 Crs is repayable in one year from the date of disbursement and carries interest @ 9.50 % p.a. and Rs, 25 Crs is repayable in three months from the date of disbursement and carries interest @ 11.50 % p.a. (Refer Note 21).

(iii) Secured Loan from Banks amounting to Nil (2016 - Rs, 73.92 Crores, 2015 - Rs, 61.08 Crores) are secured by way of (1) First pari passu charge on all immovable, movable and intangible assets of the HCL Infosystems Ltd and it''s Material Subsidiaries (2) First pari-passu charge on all Current Assets of the HCL Infosystems Ltd & it''s Material Subsidiaries (except Lease Rental Receivables). (3) Negative lien on Two Identified Properties. The Hypothecation of the movable assets has been created on 30th March ''2017 and the mortgage of the immovable assets is under process.

(iv) Unsecured Term loans from Others amounting to Rs, 149.36 Crores (2016 - Nil, 2015 - Nil) and against support from promoter company, is repayable in 1 yearly installments from the date of the disbursement which carries interest @ 9.50% p.a.

(v) Unsecured commercial papers from Others amounting to Rs, 195.00 Crores (2016 - Rs, 125.00 Crores, 2015 - Rs, 300.00 Crores ) is repayable in next 3 to 6 months from the date of availament of each tranche, which carries interest @ 10.50% to 11% p.a.

Note: As per Ind AS provisions, the term loan balances are adjusted with the transaction/processing fees paid on the facility.

Note: Material Subsidiaries means HCL Services Ltd., HCL Infotech Ltd. and HCL Learning Ltd.

Fair Value hierarchy

This section explains the judgments and estimates made in determining the fair values of the financial instruments that are recognized and measured at fair value. To provide an indication about the reliability of the inputs used in determining fair values, the Company has classified its financial instruments into the three levels prescribed under the accounting standard. An explanation of each level follows underneath the table.

*There were no transfers between the Level 1, Level 2 and Level 3 during the year.

* There is no change in the valuation technique during the year.

Valuation techniques used to derive Level 2 fair values

a) Investment in mutual funds have been fair valued using published statement for NAV''s.

3 Financial Risk Management

The Company''s activities expose it to market risk, liquidity risk and credit risk. The Company''s financial risk management is an integral part of how to plan and execute its business strategies.

In order to minimize any adverse effects on the financial performance of the Company, derivative financial instruments, such as foreign exchange forward contracts are entered to hedge certain foreign currency exposures. Derivatives are used exclusively for hedging purposes and not as trading or speculative instruments.

This note explains the sources of risk which the entity is exposed to and how the entity manages the risk and the impact of hedge accounting in the financial statements.

The Company''s risk management is carried out by the Treasury and Credit Control department under policies approved by the senior management and audit committee.

Financial Risk Management

Credit Risk

Credit risk arise from possibility that customer may default on its obligation resulting into financial loss. The maximum exposure to the credit risk is primarily from trade receivables.

Credit risk on cash and cash equivalent and Bank balances is not significant as it majorly includes Deposits with Bank and financial institutions with high credit ratings assigned by international and domestic credit rating agencies.

Investment primarily includes investment in Mutual funds

The credit risk is managed by the group through Credit approvals, establishing the financial reliability of the customers taking into account the financial condition, analysis of historical bad debts and ageing of accounts receivables. Individual limits are set accordingly by the group credit control department.

The Company uses a provision matrix to compute the expected credit loss for trade receivables. The provision matrix takes into consideration historical credit loss experience and other relevant available external and internal credit risk factors.

Following table provides age wise breakup of Receivables

Financial assets are written off when there is no reasonable expectation of recovery, such as a debtor failing to engage in a repayment plan with the Company. The Company categorizes a trade receivable for write off when a debtor fails to make contractual payments greater than 3 years past due. Where loans or receivables have been written off, the company continues to engage in enforcement activity to attempt to recover the receivable due. Where recoveries are made, these are recognized in profit or loss.

Financial Risk Management Liquidity risk:

Liquidity risk is the risk that the Company will not be able to settle or meet its obligations on time or at a reasonable price. The Company''s treasury department is responsible for liquidity, funding as well as settlement management. In addition, processes and policies related to such risks are overseen by senior management. Management monitors the Company''s net liquidity position through rolling forecasts on the basis of expected cash flows.

Financial Risk Management

Market Risk

(i) Interest rate risk

The Company''s main interest rate risk arise from borrowings with variable interest rates, which expose the Company to Cash flow interest rate risk. As on March 31, 2017 the Company has Rs, 38.75 Crores (2016- Rs, 123.93 Crores, 2015- Rs, 163.69 Crores) of borrowings with variable interest rates. In order to optimize the Company''s position with regards to interest expenses and to manage the interest rate risk, treasury performs a comprehensive corporate interest rate risk management by balancing of fixed rate and floating rate financial instruments in its total portfolio.

(ii) Foreign currency risk

The Company''s major operations are in India and are in INR and therefore, the Company is not exposed to significant foreign currency risk. The Company evaluates the exchange rate exposure arising from foreign currency transactions and the Company follows established risk management policies which are approved by the senior management and the Audit Committee, including the use of derivatives like foreign exchange forward contracts to hedge exposure to foreign currency risk.

(b) The Company''s foreign currency exposure as at the reporting date is not significant, hence, sensitivity analysis has not been reported.

4 Capital Management

(a) Risk Management

The Company''s objective when managing capital are to safeguard their ability to continue as going concern so that they can continue to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.

The Company is not subject to any externally imposed capital requirements for the year ended March 31, 2017, nine months ended March 31, 2016 and year ended June 30, 2015

Commentary :

a) Land & Building was sold during the nine months period ended March 31, 2016 which management believes was of exceptional nature.

b) In respect to Investment in HCL Learning Limited, the Company in 2015-16 recognized an impairment charge of Rs, 122 Crores , being excess of carrying value of investment over the recoverable value. This impairment was due to modification in the business model and changes in the overall business environment for the segment

Recoverable value of business was calculated based on value in use and discounting rate used for the ''value in use'' calculation was 12-18%, based on the pre tax risk adjusted weighted average cost of capital.

c) The Company has made provision of Rs, 70.19 Crores (2015-16 - Rs, 39.79 Crores) against loan given to HCL Infotech Limited. The Company, considering that HCL Infotech Limited has negative net worth as on March 31, 2017 due to continuous loss incurred by entity and based on future plan of this entity, may not be able to recover the loans given to HCL Infotech Ltd upto the value of its negative net worth.

d) In respect to Investment in HCL Services Limited, the Company considering the past business performance in the markets wherein Group operates in, changes in the market dynamics, current business strategy and focus areas in the future years, the management has computed recoverable value based on value in use and provided for an impairment charge of Rs, 250 crores, being excess of carrying value over the recoverable value. Though the group is optimistic about the future growth prospects, the management has taken a holistic view of its past performance while designing the future outlook, with renewed strategy. No impairment was identified during the nine months period ended March 31, 2016.

Discounting rate used for the ''value in use'' calculation was 16.5-20%, based on the pre tax risk adjusted weighted average cost of capital.

"* Includes sum of Rs, 102.24 Crores (2016 - Rs, 84.69 Crores, 2015 - Rs, 20.83 Crores) deposited by the Company against the above.

The amounts shown in item (a) represents the best possible estimates arrived at on the basis of available information. The uncertainties and possible reimbursements are dependent on the outcome of the different legal processes which have been initiated by the Company or the claimants as the case may be and therefore cannot be predicted accurately. It is not practicable for the Company to estimate the timing of cash outflows, if any, in respect of the above pending resolution of the respective proceedings.

b) Corporate Guarantees :

(i) Corporate Guarantee of Rs, 484.40 Crores (2016 - Rs, 663.92 Crores, 2015 - Rs, 624.52 Crores) was given to Banks and Financial Institutions for working capital facilities sanctioned to subsidiaries of which the total amount utilised as at March 31, 2017 is Rs, 143.40 Crores (2016 - Rs, 183.55 Crores, 2015 - Rs, 164.80 Crores).

(ii) Corporate Guarantee of Nil (2016 - Rs, 40.76 Crores, 2015 - Rs, 20.8 Crores) was given by the Company, on behalf of its subsidiaries, to third parties for assigning credit limit to subsidiaries."

c) Other Litigations :

(i) The Company has been named in a supplementary charge sheet filed with the Court with respect to a Contract awarded to the Company in 2009 by the UP state Government, amounting to Rs, 4.94 Crores, for the supply of computer hardware and related services under the National Rural Health Mission and therefore summons have been issued by the Court. The matter is currently pending for adjudication before the Special Court CBI . The management is of the view that the company has not been engaged in any wrong doing.

(ii) The Company has certain sales tax and other related litigation amounting to Rs, 1.62 Crores (2016 Rs, 1.58 Crores,

2015 - Rs, 1.65 Crores) against which provision have been made. Provision amounting to Rs, 0.04 Crores was created during the year."

d) Commitments :

Estimated value of contracts on capital account for Property, plant & equipment, excluding capital advances, remaining to be executed and not provided for amount to Nil (2016 - Nil, 2015 - Rs, 6.85 Crores).

The warranty provision has been recognized for expected warranty claims for the first year of warranty on products sold during the year. Due to the very nature of such costs, Outflows of economic benefits against this provision is expected to happen within one year.

5 As per provisions of Section 135 of the Companies Act, 2013, the Company has to provide at least 2% of average net profits of the preceding three financial years towards Corporate Social Responsibility ("CSR"). Accordingly, a CSR Committee has been formed for carrying out CSR activities as per Schedule VII of the Companies Act, 2013. The Company was not required to spend/contribute to CSR Activity during the year as per Section 135 of the Companies Act, 2013 as average net profit for the last three financial year is negative.

* Excluding service tax.

6 Employee Stock Option Plan (ESOP):

(a) The Company has established Employee Stock Option Scheme 2000 and Employee Stock Based Compensation Plan 2005, for which a total grant of 31,90,200 and 33,35,487 options have been set aside respectively for the employees of the Company and its subsidiaries. These options vest on a graded basis over a period of 42 and 60 months respectively from the date of grant and are to be exercised within a maximum period of 5 years from the date of vesting.

The Board of Directors/Committee approves the grant of options, including the grant of options that lapse out of each grant. Each option of Rs, 10/- confers on the employee a right to five equity shares of Rs, 2/- each.

Exercise price is market price as specified in the Employee Stock Option Scheme and Employee Stock Purchase Scheme Guidelines, 1999 issued by the Securities and Exchange Board of India(""SEBI"").

Notes:

1. Volatility: Based on historical volatility in the share price movement of the Company.

2. Risk Free Rate: Being the interest rate applicable for maturity equal to the expected life of options based on yield curve for Government Securities.

3. Time to Maturity: Vesting period and volatility of the underlying equity shares have been considered for estimation.

4. Dividend Yield: Based on historical dividend payouts.

7 Leases:

a) Cancelable Operating Leases As Lessee:

(i) The Company has taken various residential/commercial premises under cancelable operating leases. These leases are for a period of eleven months to three years and are normally renewable on expiry.

(ii) The rental expense in respect of operating leases is Rs, 7.57 Crores (2016 - Rs, 7.46 Crores) which is disclosed as Rent expense under ''Other expenses''.

Note: Previous year''s/period''s figures are given in brackets.

8 Loss per share (EPS)

Basic loss per share is calculated by dividing the net loss for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the period. The loss considered in ascertaining the company''s EPS represent loss for the period after tax. Diluted EPS 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.

9 Segment Reporting

The Company publishes standalone financial statements along with the consolidated financial statements in the annual report. In accordance with Indian Accounting Standard 108, Operating Segments, the Company has disclosed the segment information in the consolidated financial statements.

10 The Company has calculated the various benefits provided to employees as under:

(a) Defined Contribution

During the year, the Company has recognized the following amounts in the Statement of Profit and Loss:

(b) Defined Benefit

(i) Gratuity

(ii) Provident Fund#

The Company contributes to the employee provident fund trust "Hindustan Computers Limited Employees Provident Fund Trust" which is managed by the Company. The Company''s Provident Fund Trust is exempted under Section 17 of Employees'' Provident Fund Act, 1952. Conditions for grant of exemptions stipulate that the employer shall make good deficiency, if any, in the interest rate declared by the trust vis-a-vis statutory rate. As per Ind AS - 19, Employee Benefits, provident funds set up by employers, which requires interest shortfall to be met by the employer, needs to be treated as defined benefit plan.

The Trust includes employees of the Company as well as of its Indian wholly owned subsidiaries and of HCL Corporation Private Limited, a related party. In view of the same, it is a multi employer defined benefit plan.

The Trust has been investing the Provident fund contributions of the employees of all the six companies in a composite manner and the same cannot be separately identified entity wise.

In view of the same an actuarial valuation, in accordance with the Ind AS-19, was carried out at composite level. As per actuarial certificate there is no shortfall in the earning of fund against statutorily required "interest rate guarantee" and accordingly, the "liability on account of interest rate guarantee"" is nil.

In accordance with Ind AS 19, an actuarial valuation was carried out in the respect of the aforesaid defined benefit plan based on the following assumptions:

As of March 31, 2017, every 0.5 percentage point increase / decrease in discount rate will affect our gratuity benefit obligation by approximately by Rs, 0.06 Crores.

As of March 31, 2017, every 0.5 percentage point increase / decrease in weighted average rate of increase in compensation levels will affect our gratuity benefit obligation by approximately Rs, 0.06 Crores

The estimates of future salary increases considered in actuarial valuation take account of inflation, seniority, promotion and other relevant factors such as supply and demand in the employment market.

Description of Risk Exposures:

Valuations are based on certain assumptions, which are dynamic in nature and vary over time. As such company is exposed to various risks as follow -

A) Salary Increases- Actual salary increases will increase the Plan''s liability. Increase in salary increase rate assumption in future valuations will also increase the liability.

B) Investment Risk - If Plan is funded then assets liabilities mismatch & actual investment return on assets lower than the discount rate assumed at the last valuation date can impact the liability.

C) Discount Rate : Reduction in discount rate in subsequent valuations can increase the plan''s liability.

D) Mortality & disability - Actual deaths & disability cases proving lower or higher than assumed in the valuation can impact the liabilities.

E) Withdrawals - Actual withdrawals proving higher or lower than assumed withdrawals and change of withdrawal rates at subsequent valuations can impact Plan''s liability

52 Disclosure of related parties and related party transactions:

a) Company having substantial interest:

HCL Corporation Private Limited

b) List of parties where control exists/existed:

Subsidiaries:

HCL Infotech Limited HCL Learning Limited HCL Services Limited

Digilife Distribution and Marketing Services Limited HCL Computing Products Limited

Pimpri Chinchwad eServices Limited (85% Shareholding of HCL Infosystems Limited)

RMA Software Park Private Limited (up to September 24 , 2014)

HCL Insys Pte. Limited, Singapore HCL Investments Pte. Limited, Singapore HCL Touch Inc., USA HCL Infosystems MEA FZE, Dubai

HCL Infosystems LLC, Dubai (49% Shareholding of HCL Infosystems MEA FZE)

HCL Infosystems MEA LLC, Abu Dhabi (49% Shareholding of HCL Infosystems MEA FZE)

HCL Infosystems Qatar, WLL (49% Shareholding of HCL Infosystems MEA FZE)

HCL Infosystems South Africa Pty. Limited Joint Venture :

Nokia HCL Mobile Internet Services Limited

(The Company has sold its investments in Nokia HCL Mobile Internet Services Limited during the current year)

c) Others (Enterprises over which, individual having indirect significant influence over the company, has significant influence) and with whom transactions have taken place during the year and/or where balances exist:

HCL Technologies Limited HCL Comnet Limited

HCL Comnet Systems and Services Limited HCL Avitas Private Limited HCL Talent Care Private Limited HCL IT City Lucknow Private Limited SSN Trust

RMA Software Park Private Limited (with effect from September 25, 2014)

Vama Sundari Investments (Pondi) Private Limited

Shiv Nadar Foundation

Naksha Enterprises Private Limited

d) Key Management Personnel:

Mr. Premkumar Seshadri * (Executive Vice Chairman Managing Director)

Mr. SG Murali (Group CFO with effect from April 1, 2015)

Mr Sushil Jain (Company Secretary)

*Remuneration has been paid by HCL Corporation Private Limited

Note: Parties with whom transactions are more than 10% of the total value have been disclosed separately.

11. Taxation:

(a) Provision for taxation has been computed by applying the Income Tax Act, 1961 and other relevant tax regulations in the jurisdiction where the Company conducts the business to the profit for the year. Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set-off current tax assets against current tax liabilities and the deferred tax assets and deferred tax liabilities relates to the same taxable entity and the same taxation authority.

(b) Deferred Tax:

Major components of Deferred tax arising on account of timing difference along with their movement as at March 31, 2017 are:

Note: MAT credit movement for the financial year 2015-16 includes adjustment of ''5.60 Crores. There is no impact on Statement of Profit & Loss for this adjustment as this is a Balance Sheet movement.

12. First-time adoption of Ind AS

Transition to Ind AS

These are the Company''s first financial statements prepared in accordance with Ind AS.

The accounting policies set out in Note 1 have been applied in preparing the financial statements for the year ended 31 March 2017, the comparative information presented in these financial statements for the nine months period ended 31 March 2016 and the opening Ind AS balance sheet at 1 July 2015 (the Company''s date of transition). In preparing its opening Ind AS balance sheet, the Company has adjusted the amounts reported previously in financial statements prepared in accordance with the accounting standards notified under Companies (Accounting Standards) Rules, 2006 (as amended) and other relevant provisions of the Act (previous GAAP or Indian GAAP). An explanation of how the transition from previous GAAP to Ind AS has affected the group''s financial position, financial performance and cash flows is set out in the following tables and notes.

Reconciliation between previous GAAP and IND AS

13. In compliance with the Section 2(41) of Companies Act, 2013, during 2015-16 , the company had changed its accounting period from July - June to April - March in 2015-16. Therefore, the previous year''s figures are for the nine month period from July 1, 2015 to March 31, 2016 as against twelve months in the 2016-17, hence are not comparable. Previous year''s figures have also been regrouped / recasted, wherever necessary, to conform to the current year''s presentation.

---

Mar 31, 2016

Notes:

1. (i) Secured Term Loan from Bank amounting to Rs.50.00 Crores (2015 - NIL), out of whichRs.11.25 Crores (2015 - NIL) is shown under current maturity of long term debt, is secured by way of (1) First pari passu charge on all immovable, movable and intangible assets of the HCL Info systems Ltd and Identified subsidiaries (except few identified properties) (2) First pari passu charge on all receivables and rights under Contract in Progress, Bills Receivables and Unbilled Receivables from Identified contracts & Lease Rental receivables of HCL Info systems Ltd and Identified Subsidiaries. The creation of security''s charge is under process. The loan is repayable in 13 quarterly installments starting from September 2016 and carries interest @ 11.15 % p.a.

(ii) Secured Term Loan from Banks amounting toRs.NIL (2015 -Rs.143.48 Crores), out of whichRs.NIL (2015 -Rs.143.48 Crores) is shown under current maturity of long term debt, was secured by way of subservient charge on current assets of the Company. It was carrying a lien on Mutual Funds ofRs.99.86 Crores . The loan was repayable in 23 monthly equal installments starting from July 2014 and carries interest @ 11.25 % p.a.

(iii) Secured Long Term Loan from Banks amounting toRs.NIL (2015 -Rs.5.73 Crores) out of whichRs.NIL (2015 -Rs.5.73 Crores) is shown under current maturity of debt and Secured Short Term Loan amounting toRs.100.00 Crores (2015 -Rs.75.00 Crores), is secured by way of subservient charge on current assets of the Company. It also carries a lien on Mutual Funds ofRs.49.97 Crores (2015 -Rs.49.97 Crores). Short Term Loan ofRs.100.00 Crores is repayble in 1 year from the date of disbursement and carries interest @ 11.50 % p.a.

(iv) Secured Term Loan from Banks amounting toRs.NIL (2015 -Rs.99.91 Crores), out of whichRs.NIL (2015 -Rs.19.92 Crores) is shown under current maturity of long term debt, was secured by way of Hypothecation over the receivable from a particular project. The loan was repayable in 1 half yearly and 14 quarterly equal installments starting from the date of disbursement and carried interest @ 11.25 % p.a.

2. (i) Unsecured Term loans from Others amounting toRs.Nil (2015 -Rs.2.36), out of which Rs.Nil (2015 -Rs.2.36 Crores) is shown under current maturity of long term debt, were repayable in 19 equal quarterly installments from the date of the loans which are interest free.

(ii) Unsecured Term loans from Others amounting toRs.154.85 Crores (2015 -Rs.142.05 Crores), out of whichRs.89.89 Crores (2015 -Rs.73.32 Crores) is shown under current maturity of long term debt, is repayable in 11 to 12 equal quarterly installments from the date of the disbursement which carries interest @ 11.74 % to 12.50 % p.a.

(iii) Unsecured Term loans from Others amounting toRs.19.34 Crores (2015 -Rs.41.70 Crores), out of whichRs.15.63 Crores (2015 -Rs.26.07 Crores) is shown under current maturity of long term debt, is repayable in 2 quarterly, 2 half yearly and balance 16 quarterly installments from the date of the disbursement which carries interest @ 13.00 % p.a.

3. Long term borrowings, Short term borrowings and Current maturities of long term debts is net of the loan amounting toRs.23.09 Crores (2015 -Rs.46.46 Crores),Rs.Nil (2015 -Rs.26.13 Crores) andRs.29.51 Crores (2015 -Rs.68.94 Crores) respectively which the Company (Transferor Company) had transferred to its subsidiaries (Transferee Companies) pursuant to the scheme of arrangement (Refer Note 50).However, the Transferor Company shall make repayments of such principal amounts and payments of interest or any other dues thereon on behalf of the respective Transferee Companies, and the respective Transferee Companies shall be under an obligation to place with the Transferor Company''s funds at the relevant time so as to enable the Transferor Company to make payments to the lenders on or before their respective due dates.

Note:

1. (i) Secured Loan from Banks amounting toRs.124.90 Crores (2015 -Rs.139.90 Crores) is secured by way of (1) hypothecation of stock-in-trade, book debts as first charge of the Company and its demerged subsidiaries, pursuant to the scheme of arrangement and (2) by way of second charge on all the immovable and movable assets of the Company, along with non-fund based facilities from Banks. The charge ranks pari-passu amongst Bankers and carries interest @ 11.50 % p.a.

(ii) Secured Loan from Banks amounting toRs.100.00 Crores (2015 -Rs.75.00 Crores), is secured by way of subservient charge on current assets of the Company and carries interest @ 11.50 % p.a. Also refer Note 4 (iii).

(iii) Secured Loan from Banks amounting toRs.73.92 Crores (2015 -Rs.61.08) are secured by way of first charge over stock-in-trade and book debts of the company and its demerged subsidiaries and by way of second charge over movable and immovable fixed assets of the Company, pursuant to court approved scheme of arrangement. The charge ranks pari-passu amongst Bankers.

4. Estimated value of contracts on capital account, excluding capital advances, remaining to be executed and not provided for amount toRs.Nil (2015 -Rs.6.85 Crores). For Commitments on account of lease Refer Note 42.

5. a) Contingent Liabilities

Claims against the Company not acknowledged as debts:

* Includes sum ofRs.84.69 Crores (2015 -Rs.20.83 Crores) deposited by the Company against the above.

The amounts shown in item (a) represents the best possible estimates arrived at on the basis of available information. The uncertainties and possible reimbursements are dependent on the outcome of the different legal processes which have been initiated by the Company or the claimants as the case may be and therefore cannot be predicted accurately. It is not practicable for the Company to estimate the timing of cash outflows, if any, in respect of the above pending resolution of the respective proceedings.

6. b) Corporate Guarantees :

(i) Corporate Guarantee ofRs.663.92 Crores (2015 -Rs.624.52 Crores) was given to Banks and Financial Institutions for working capital facilities sanctioned to subsidiaries of which the total amount utilized as at March 31, 2016 isRs.183.55 Crores (2015 -Rs.164.80 Crores).

(ii) Corporate Guarantee ofRs.40.76 Crores (2015 -Rs.20.8 Crores) was given by the Company, on behalf of its subsidiaries, to third parties for assigning credit limit to subsidiaries.

7. c) Other Litigations :

(i) The Company has been named in a supplementary charge sheet filed with the Court with respect to a Contract awarded to the Company in 2009 by the UP state Government, amounting toRs.4.94 Crores, for the supply of computer hardware and related services under the National Rural Health Mission and therefore summons have been issued by the Court. The Company has challenged the jurisdiction and the matter is currently pending for adjudication before the Supreme Court. The management is of the view that the company has not been engaged in any wrong doing.

(ii) The Company has certain sales tax and other related litigation amounting toRs.1.58 Crores (2015 -Rs.1.65 Crores) against which provision have been made. Provision amounting toRs.0.07 Crores was utilized during the year.

8. Employee Stock Option Plan (ESOP):

The Company has established Employee Stock Option Scheme 2000 and Employee Stock Based Compensation Plan 2005, for which a total grant of 31,90,200 and 33,35,487 options have been set aside respectively for the employees of the Company and its subsidiaries. These options vest on a graded basis over a period of 42 and 60 months respectively from the date of grant and are to be exercised within a maximum period of 5 years from the date of vesting.

The Board of Directors/Committee approves the grant of options, including the grant of options that lapse out of each grant.

Each option ofRs.10/- confers on the employee a right to five equity shares ofRs.2/- each.

Exercise price is market price as specified in the Employee Stock Option Scheme and Employee Stock Purchase Scheme Guidelines, 1999 issued by the Securities and Exchange Board of India ("SEBI").

9. The Company has calculated the various benefits provided to employees as under:

(a) Defined Contribution

(b) Defined Benefit

(i) Gratuity

(ii) Provident Fund#

The Company contributes to the employee provident fund trust "Hindustan Computers Limited Employees Provident Fund Trust" which is managed by the Company. The Company''s Provident Fund Trust is exempted under Section 17 of Employees'' Provident Fund Act, 1952. Conditions for grant of exemptions stipulate that the employer shall make good deficiency, if any, in the interest rate declared by the trust vis-a-vis statutory rate. As per guidance note on AS - 15, Employee Benefits (Revised 2005), provident funds set up by employers, which requires interest shortfall to be met by the employer, needs to be treated as defined benefit plan.

The Trust includes employees of the Company as well as of it''s Indian wholly owned subsidiaries and of HCL Corporation Private Limited, a related party. In view of the same, it is a multi employer defined benefit plan

The Trust has been investing the Provident fund contributions of the employees of all the six companies in a composite manner and the same cannot be separately identified entity wise.

In view of the same an actuarial valuation, in accordance with the AS-15 (Revised), was carried out at composite level. As per actuarial certificate there is no shortfall in the earning of fund against statutorily required "interest rate guarantee" and accordingly, the "liability on account of interest rate guarantee" is nil.

10. Disclosure of related parties and related party transactions:

a) Company having substantial interest:

HCL Corporation Private Limited

b) List of parties where control exists/existed:

Subsidiaries:

HCL Infotech Limited HCL Learning Limited HCL Services Limited

Digilife Distribution and Marketing Services Limited HCL Computing Products Limited

Pimpri Chinchwad eServices Limited (85% Shareholding of HCL Info systems Limited)

RMA Software Park Private Limited (up to September 24 , 2014)

HCL Insys Pte. Limited, Singapore HCL Investments Pte. Limited, Singapore HCL Touch Inc., USA HCL Info systems MEA FZE, Dubai

HCL Info systems LLC, Dubai (49% Shareholding of HCL Info systems MEA FZE)

HCL Info systems MEA LLC, Abu Dhabi (49% Shareholding of HCL Info systems MEA FZE)

HCL Info systems Qatar, WLL (49% Shareholding of HCL Info systems MEA FZE)

HCL Info systems South Africa Pty. Limited Joint Venture :

Nokia HCL Mobile Internet Services Limited

c) Others (Enterprises over which, individual having indirect significant influence over the company, has significant influence) and with whom transactions have taken place during the year and/or where balances exist:

HCL Technologies Limited

HCL Comnet Limited

HCL Comnet Systems and Services Limited HCL Avitas Private Limited HCL Talent Care Private Limited HCL IT City Lucknow Private Limited SSN Trust

RMA Software Park Private Limited (with effect from September 25, 2014)

Vama Sundari Investments (Pondi) Private Limited Shiv Nadar Foundation

d) Key Management Personnel:

Mr. Premkumar Seshadri¹ (Executive Vice Chairman & Managing Director)

Mr. SG Murali (Group CFO with effect from April 1, 2015)

Mr Sushil Jain (Company Secretary)

Mr. Harshavardhan Madhav Chitale (Resigned as director with effect from December 31, 2014.)

Mr. Sandeep Kanwar (Resigned as CFO with effect from March 31, 2015)

50. The Hon''ble High Court of Delhi sanctioned a Composite Scheme of Arrangement (the "Scheme") applicable from 1st January, 2013 between the Company and its wholly owned subsidiaries namely HCL Infotech Limited, HCL Services Limited and HCL Learning Limited (collectively the "Transferee Companies") and HCL Infocom Ltd and their respective shareholders and creditors under the provisions of section 391 to 394 of the Companies Act, 1956, vide its order dated September 18, 2013 received on October 30, 2013. The Scheme became effective from November 1, 2013 on filing a certified copy of the High Court order with the office of the Registrar of the Companies, NCT of Delhi & Haryana and is applicable from January 1, 2013 (the "Appointed date"). According to the Scheme, as on 1st January, 2013, the Hardware Solutions Business, Services Business and Learning Business (collectively the "Transferred Undertakings") of the Company was transferred to HCL Infotech Limited , HCL Services Limited and HCL Learning Limited (collectively the "Transferee Companies") respectively, the wholly owned subsidiaries. Also with effect from the appointed date, HCL Infocom Limited was merged with the Company.

As detailed in the scheme, the Company transferred net assets as on 1st January, 2013 having book value ofRs.1,118.13 Crores for Hardware Solution Business to HCL Infotech Limited for Nil Consideration, net assets having book value ofRs.79.31 Crores for Services business to HCL Services Ltd for a consideration ofRs.61.00 Crores and net assets having book value ofRs.111.84 Crores of Learning business to HCL Learning Limited at a consideration ofRs.113.00 Crores. On such transfers,Rs.1,135.28 Crores, being the difference of the net assets transferred and the consideration received was debited to Business Restructuring Reserve, on merger of HCL Infocom LtdRs.959.48 crores, being the difference between fair value of net assets and the Company''s investment in HCL Infocom Limited, was credited to capital reserve, and the Business restructuring reserve so arising was adjusted from capital reserveRs.959.48 Crores and from Securities Premium accountRs.175.80 Crores. The Fair values as at December 31, 2012 of the transferred undertakings and assets/liabilities recorded by the transferee companies as at appointed date, were determined by the independent value appointed by the Company.

Subsequent to the effective date, the Company is in the process of entering into novation agreements with the relevant third parties, including customers and vendors, pertaining to the HCL Infotech Limited. These financial statements have been prepared with the assumption that such notation will be granted by respective parties. The Management expects it to be concluded within a reasonable period of time and does not anticipate any material impact on the financial results of the Company.

11. In compliance with the Section 2(41) of Companies Act, 2013, the company has changed its Financial year end from June 30 to March 31. Accordingly, the current year''s figures are for the nine month period from July 1, 2015 to March 31, 2016 and to the extent are not comparable with those for the previous year. Previous year''s figures have also been regrouped / reacted, wherever necessary, to conform to the current period''s presentation.

---

Jun 30, 2015

1. Rights attached to Equity Shares:

The Company has only one class of equity share having a face value of Rs. 2/- each. Each holder of equity shares is entitled to one vote per share held. The Company declares and pays dividend in Indian Rupees. The dividend proposed by the Board of Directors is subject to the approval of the Shareholders in ensuing General Meeting, except in case of interim dividend.

In the event of liquidation of the Company, the holders of equity Shares will be entitled to receive the remaining assets of the Company after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by Shareholders.

2. Shares reserved for issue under options:

For detail of shares reserved for issue under Employee Stock Option Plan of the Company, refer Note 41.

(iii) Shareholders holding more than 5% of the aggregate shares in the Company

3. (i) Secured Term Loan from Banks amounting to Rs. NIL (2014 - Rs. 26.67 Crores), out of which Rs. NIL (2014 - Rs. 26.67 Crores) is shown under current maturity of long term debt, secured by way of first charge on movable and immovable fixed assets of the Company. The loan is repayable in 6 half yearly installments from the date of the loan which carries interest @ 11.25 % per annum.

(ii) Secured Term Loan from Banks amounting to Rs. 143.48 Crores (2014 - Rs. 300.00 Crores), out of which Rs. 143.48 Crores (2014 - Rs. 156.56 Crores ) is shown under current maturity of long term debt, is secured by way of subservient charge on current assets of the Company. It also carries a lien on Mutual Funds of Rs. 99.86 Crores . The loan is repayable in 23 monthly equal instalments starting from July 2014 and carries interest @ 11.25 % per annum.

(iii) Secured Long Term Loan from Banks amounting to Rs. 5.73 Crores (2014 - Rs. 29.15 Crores), out of which Rs. 5.73 Crores (2014 - Rs. 23.34 Crores ) is shown under current maturity of long term debt, and Secured Short Term Loan amounting to Rs. 75.00 Crores (2014 - Rs. Nil ), is secured by way of subservient charge on current assets of the Company. It also carries a lien on Mutual Funds of Rs. 49.98 Crores . The long term loan is repayable in 8 quarterly equal instalments starting from the date of disbursement and carries interest @ 11.67 % per annum and Short Term Loan of Rs. 75.00 Crores is repayble one year from the date of disbursement and carries interest @ 11.50 % per annum.

(iv) Secured Term Loan from Banks amounting to Rs. 99.91 Crores (2014 - Rs. NIL), out of which Rs. 19.92 Crores (2014 - Rs.NIL ) is shown under current maturity of long term debt, is secured by way of Hypothecation over the receivable from a particular project. The loan is repayable in 1 half yearly and 14 quarterly equal instalments starting from the date of disbursement and carries interest @ 11.25 % per annum.

4. (i) Unsecured Term loans from Others amounting to Rs. 2.36 Crores (2014 - Rs. 11.36 Crores), out of which Rs. 2.36 Crores (2014 - Rs. 9.00 Crores) is shown under current maturity of long term debt, are repayable in 19 equal quarterly installments from the date of the loans which are interest free.

(ii) Unsecured Term loans from Others amounting to Rs. 142.05 Crores (2014 - Rs. 164.85 Crores), out of which Rs. 73.32 Crores (2014 - Rs. 55.12 Crores) is shown under current maturity of long term debt, is repayable in 11 to 12 equal quarterly instalments from the date of the disbursement which carries interest @ 11.80% to 12.25% per annum.

(iii) Unsecured Term loans from Others amounting to Rs. 41.70 Crores (2014 - Rs. 17.58 Crores), out of which Rs. 26.07 Crores (2014 - Rs. 10.87 Crores) is shown under current maturity of long term debt, is repayable in 2 quarterly, 2 half yearly and balance 16 quarterly instalments from the date of the disbursement which carries interest @ 13% per annum.

5. Long term borrowings, Short term borrowings and Current maturities of long term debts is net of the loan amounting to Rs. 46.46 Crores (2014 - Rs. 112.89 Crores), Rs. 26.13 Crores (2014 - Rs. 28.65 Crores) and Rs. 68.94 Crores (2014 - Rs. 145.81 Crores) respectivley that the Company has transferred to its subsidaries pursuant to the scheme of arrangement (Refer Note 51).The Company is in the process of transferring the loan agreements to the respective subsidary companies.

6. (i) Secured Loan from Banks amounting to Rs. 139.90 Crores (2014 - Rs. Nil )is secured by way of (1) hypothecation of stock-in-trade, book debts as first charge of the Company and its demerged subsidiaries, persuant to the scheme of arrangement and (2) by way of second charge on all the immovable and movable assets of the Company, along with non-fund based facilities from Banks. The charge ranks pari-passu amongst Bankers and carries interest @ 11.30 % per annum on loan amounting to Rs. 99.90 Crores and 10.40% per annum on loan amounting to Rs. 40.00 Crores.

(ii) Secured Loan from Banks amounting to Rs. 75.00 Crores (2014 - Rs. Nil ), is secured by way of subservient charge on current assets of the Company. It also carries a lien on Mutual Funds.Also refer Note 4 (iii).

(iii) Secured Loan from Banks amounting to Rs. 61.08 Crores (2014 - Rs. 196.43) are secured by way of first charge over stock-in-trade and book debts of the company and its demerged subsidiaries and by way of second charge over movable and immovable fixed assets of the Company, pursuant to court approved scheme of arrangement. The charge ranks pari-passu amongst Bankers.

7. Estimated value of contracts on capital account, excluding capital advances, remaining to be executed and not provided for amount to Rs. 6.85 Crores (2014 - Rs. Nil). For Commitments on account of lease Refer Note 42.

8. a) Contingent Liabilities

Claims against the Company not acknowledged as debts:

Sales Tax* 142.35 41.53

Excise* 96.72 14.05

Income Tax* 5.39 2.95

Industrial Disputes, Civil Suits and Consumer Disputes 2.70 12.10

*Includes sum of Rs. 20.83 Crores (2014 - Rs. 12.49 Crores) deposited by the Company against the above.

The amounts shown in item (a) represents the best possible estimates arrived at on the basis of available information. The uncertainties and possible reimbursements are dependent on the out come of the different legal processes which have been initiated by the Company or the claimants as the case may be and therefore cannot be predicted accurately.It is not practicable for the Company to estimate the timing of cash outflows, if any, in respect of the above pending resolution of the respective proceedings.

9. b) Corporate Guarantees :

(i) Corporate Guarantee of Rs. 624.52 Crores (2014 - Rs. 534.37 Crores) was given to Banks and Financial Institutions for working capital facilities sanctioned to subsidiaries of which the total amount utilised as at June 30, 2015 is Rs. 164.80 Crores (2014 - Rs. 218.85 Crores).

(ii) Corporate Guarantee of Rs. 20.80 Crores (2014 - Rs. 58.80 Crores) was given by the Company, on behalf of its subsidiaries, to third parties for assigning credit limit to the subsidiaries.

10. c) Other Litigations :

(i) During the year, the Company has been named in a supplementary charge sheet filed with the Court with respect to a Contract awarded to the Company in 2009 by the UP State Government, amounting to Rs. 4.94 Crores, for the supply of computer hardware and related services under the National Rural Health Mission and summons have been issued by the Court. The Matter is currently pending adjudication before the Supreme Court through Special Leave Petition filed by the Company. The Management is of the view that the Company has not been engaged in any wrong doing.

(ii) The Company has certain sales tax and other related litigation amounting to Rs. 5.62 crores (2014 - Rs. 5.93 crores) against which provision have been made. Provision amounting to Rs. 0.31 Crores was utilised during the year.

11. As per provisions of Section 135 of the Companies Act, 2013, the Company has to provide at least 2%of average net profits of the preceeding three financial years towards Corporate Social Responsibility ("CSR"). Accordingly, a CSR Committee has been formed for carrying out CSR activities as per Schedule VII of the Companies Act, 2013. The Company was not required to spend/contribute to CSR Activity during the year as per Section 135 of the Companies Act, 2013 as average net profit for the last three financial year is negative.

12. Employee Stock Option Plan (ESOP):

The Company has established Employee Stock Option Scheme 2000 and Employee Stock Based Compensation Plan 2005, for a total grant of 31,90,200 and 33,35,487 options have been set aside respectively for the employees of the Company and its subsidiaries. These options vest on a graded basis over a period of 42 and 60 months respectively from the date of grant and are to be exercised with in a maximum period of 5 years from the date of vesting.

The Board of Directors/Committee approves the grant of options, including the grant of options that lapse out of each grant.

Each option of Rs. 10/- confers on the employee a right to five equity shares of Rs. 2/- each.

Exercise price is market price as specified in the Employee Stock Option Scheme and Employee Stock Purchase Scheme Guidelines, 1999 issued by the Securities and Exchange Board of India ("SEBI").

1. Volatility: Based on historical volatility in the share price movement of the Company.

2. Risk Free Rate: Being the interest rate applicable for maturity equal to the expected life of options based on yield curve for Government Securities.

3. Time to Maturity: Vesting period and volatility of the underlying equity shares have been considered for estimation.

4. Dividend Yield: Based on historical dividend payouts.

42. Leases:

a) Cancelable Operating Leases As Lessee:

(i) The Company has taken various residential/commercial premises under cancelable operating leases. These leases are for a period of eleven months to three years and are normally renewable on expiry.

13. Earnings / (Loss) per share (EPS)

Basic earnings per share is calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period. The earnings considered in ascertaining the company's EPS represent profit/(loss) for the year after tax. Diluted EPS 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.

14. Segment Reporting

The Company recognises the following segments as its primary Segments :

(i) Hardware Products & Solution business comprise of :

(a) Sale of IT products & solutions to enterprise and government customers

(b) Sale of HCL branded products to enterprise and government customers including sale to consumer through channel partners.

(ii) Distribution segment comprises of distribution of :

(a) Consumer Products including telecommunication, digital lifestyle products and consumer electronic & home appliances

(b) Enterprise products including IT products, Enterprise software and Office Automation products.

Details of secondary segments are not disclosed as more than 90% of the Company's revenues, results and assets relate to the domestic market.

(c) Defined Benefits

(i) Gratuity

(ii) Provident Fund#

The Company contributes to the employee provident fund trust "Hindustan Computers Limited Employees Provident Fund Trust" which is managed by the Company. The Company's Provident Fund Trust is exempted under Section 17 of Employees' Provident Fund Act, 1952. Conditions for grant of exemptions stipulate that the employer shall make good deficiency, if any, in the interest rate declared by the trust vis-a-vis statutory rate. As per guidance note on AS - 15, Employee Benefits (Revised 2005), provident funds set up by employers, which requires interest shortfall to be met by the employer, needs to be treated as defined benefit plan.

The Trust includes employees of the Company as well as of its wholly owned Indian subsidiaries and of HCL Corporation Private Limited, a related party. In view of the same, it is a multi employer defined benefit plan. The Trust has been investing the Provident fund contributions of the employees of all the six companies in a composite manner and the same cannot be separately identified entity wise.

In view of the same an actuarial valuation, in accordance with the AS-15 (Revised), was carried out at composite level. As per actuarial certificate there is no shortfall in the earning of fund against statutorily required "interest rate guarantee" and accordingly, the ''liability on account of interest rate guarantee'' is nil.

In accordance with Accounting Standard 15 (revised 2005), an actuarial valuation was carried out in the respect of the aforesaid defined benefit plan based on the following assumptions:

15. The Company remits the dividends to its non resident shareholders in Indian Rupees.

16. Pursuant to the approval of the shareholders and in terms of Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009, the Company has:

(a) On receipt of 25% subscription money, allotted 2,10,59,515 warrants priced at Rs. 152.90 per warrant to certain promoters on a preferential basis on October 7, 2009. Subsequently, 1,64,38,848 warrants have been converted into equal number of equity shares of Rs. 2/- each on October 29, 2009 and 46,20,667 on April 5, 2011 on receipt of the balance 75% subscription money.

(b) Raised Rs. 472.67 Crores by allotment of 3,05,55,713 equity shares of Rs. 2/- each at a price of Rs. 154.69 per equity share including a premium of Rs. 152.69 per equity share through Qualified Institutional Placement on October 21,2009.

17. Disclosure of related parties and related party transactions:

a) Company having substantial interest:

HCL Corporation Private Limited

b) List of parties where control exists/existed:

Subsidiaries:

Digilife Distribution and Marketing Services Limited

RMA Software Park Private Limited (up to September 24,2014)

HCL Insys Pte. Limited, Singapore HCL Computing Products Limited HCL Infosystems MEA FZE, Dubai

HCL Infosystems LLC, Dubai (49% Shareholding of HCL Infosystems MEA FZE)

HCL Infosystems South Africa Pty. Limited

HCL Infotech Limited

HCL Learning Limited

HCL Services Limited

Joint Venture :

Nokia HCL Mobile Internet Services Limited

c) Others (Enterprises over which, individual having indirect significant influence over the company, has significant influence) and with whom transactions have taken place during the year and/or where balances exist:

HCL Technologies Limited HCL Comnet Limited

HCL Comnet Systems and Services Limited

HCL Avitas Private Ltd

HCL Talent Care Privatet Limited

SSN College of Engineering

SSN Trust

RMA Software Park Private Limited (with effect from September 25, 2014)

Vama Sundari Investments (Pondi) Pvt Limited

d) Key Management Personnel:

Mr. Premkumar Seshadri* (Executive Vice Chairman & Managing Director with effect from January 1,2015)

Mr. Harshavardhan Madhav Chitale (Resigned as director with effect from December 31,2014.)

Mr. SG Murali (Group CFO with effect from April 1,2015)

Mr. Sandeep Kanwar (Resigned as CFO with effect from March 31,2015)

Mr. J.V. Ramamurthy (Resigned as director with effect from March 21,2014)

Mr Sushil Jain (Company Secretary)

*Remuneration has been paid by HCL Corporation Private Limited

18. The Hon'ble High Court of Delhi sanctioned a Composite Scheme of Arrangement (the "Scheme") applicable from 1st January, 2013 between the Company and its wholly owned subsidiaries namely HCL Infotech Limited (formerly known as HCL System Integration Limited), HCL Services Limited (formerly known as HCL Care Limited) and HCL Learning Limited (collectively the "Transferee Companies") and HCL Infocom Ltd and their respective shareholders and creditors under the provisions of section 391 to 394 of the Companies Act, 1956, vide its order dated September 18, 2013 received on October 30, 2013. The Scheme became effective from November 1,2013 on filing a certified copy of the High Court order with the office of the Registrar of the Companies, NCT of Delhi & Haryana and is applicable from January 1,2013 (the "Appointed date"). According to the Scheme, as on 1st January, 2013, the Hardware Solutions Business, Services Business and Learning Business (collectively the "Transferred Undertakings") of the Company stand transferred to HCL Infotech Limited , HCL Services Limited and HCL Learning Limited (collectively the "Transferee Companies") respectively, the wholly owned subsidiaries. Also with effect from the appointed date, HCL Infocom Limited has been merged with the Company.

As detailed in the scheme, the Company transferred net assets as on 1st January, 2013 having book value of Rs. 1,118.13 Crores for Hardware Solution Business to HCL Infotech Limited for Nil Consideration, net assets having book value of Rs. 79.31 Crores for Services business to HCL Services Ltd for a consideration of Rs. 61.00 Crores and net assets having book value of Rs. 111.84 Crores of Learning business to HCL Learning Limited at a consideration of Rs. 113.00 Crores. On such transfers, Rs. 1,135.28 Crores, being the difference of the net assets transferred and the consideration received was debited to Business Restructuring Reserve, on merger of HCL Infocom Ltd Rs. 959.48 Crores, being the difference between fair value of net assets and the Company's investment in HCL Infocom Limited, was credited to capital reserve, and the Business restructuring reserve so arising was adjusted from capital reserve Rs. 959.48 Crores and from Securities Premium account Rs. 175.80 Crores.

The Fair values as at December 31, 2012 of the transferred undertakings and assets/liabilities recorded by the transferee companies as at appointed date,were determined by the independent valuer appointed by the Company.

In accordance with the Scheme, the Company continued to carry on the business and activities in relation to the Transferred Undertakings on account of and in trust for the respective Transferee Companies from January 1, 2013 (the "Appointed date") till November 1,2013 (the "Effective date").

The Company transferred the profit/(loss) attributable to the Transferred Undertakings, for the period from appointed date and up to June 30, 2013, amounting to Rs. 49.79 Crores by adjusting through the Surplus in the Statement of Profit and Loss. Subsequent to the effective date, the Company is in the process of entering into novation agreements with the relevant third parties, including customers and vendors, pertaining to HCL Infotech Limited. These financial statements have been prepared with the assumption that such novation will be granted by respective parties. The Management expects it to be concluded with in a reasonable period of time and does not anticipate any material impact on financial results of the Company.

19. Previous year's figures have also been regrouped/recasted, where neccessary, to conform to the current year's presentation.

---

Jun 30, 2014

(i) Rights attached to Equity Shares:

The Company has only one class of equity share having a face value of Rs. 2/- each. Each holder of equity shares is entitled to one vote per share held. The Company declares and pays dividend in Indian Rupees. The dividend proposed by the Board of Directors is subject to the approval of the Shareholders in ensuing General Meeting, except in case of interim dividend.

In the event of liquidation of the Company, the holders of equity shares will be entitled to receive the remaining assets of the Company after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by Shareholders.

(ii) Shares reserved for issue under options:

For detail of shares reserved for issue under Employee Stock Option Plan of the Company, refer Note 44.

(iii) Shareholders holding more than 5% of the aggregate shares in the Company

1. (i) Secured Term Loan from Banks amounting to Rs. 26.67 Crores (2013 - Rs. 53.34 Crores), out of which Rs. 26.67 Crores (2013 - Rs. 26.67 Crores) is shown under current maturity of long term debt, is secured by way of first charge on movable and immovable fixed assets of the Company. The loan is repayable in 6 half yearly instalments from the date of the loan which carries interest @ 11.25 % per annum.

(ii) Secured Term Loan from Banks amounting to Rs. 300.00 Crores (2013 - Rs. 300.00 Crores), out of which Rs. 156.56 Crores (2013 - Rs. Nil ) is shown under current maturity of long term debt, is secured by way of subservient charge on current assets of the Company. It also carries a lien on Mutual Funds of Rs. 99.83 Crores . The loan is repayable in 23 monthly equal instalments starting from July 2014 and carries interest @ 11.50 % per annum.

(iii) Secured Term Loan from Others amounting to '' Nil (2013 - Rs. 0.11 Crores), out of which '' Nil (2013 - Rs. 0.11 Crores) is shown under current maturity of long term debt, is secured by way of first charge on specified assets of the Company as per the contract terms. The loans are repayable in 20 equal quarterly instalments from the date of the loans which carries interest @ 7.8 % to 8.5 % per annum.

(iv) Secured Term Loan from Banks amounting to Rs. 29.15 Crores (2013 - '' Nil), out of which Rs. 23.34 Crores (2013 - '' Nil ) is shown under current maturity of long term debt, is secured by way of subservient charge on current assets of the Company. It also carries a lien on Mutual Funds of Rs. 50.00 Crores . The loan is repayable in 8 quarterly equal instalments starting from the date of disbursement and carries interest @ 11.90 % per annum.

2. (i) Unsecured Term loans from Others amounting to Rs. 11.36 Crores (2013 - '' Nil), out of which Rs. 9.00 Crores (2013 - '' Nil) is shown under current maturity of long term debt, are repayable in 19 equal quarterly instalments from the date of the loans which are interest free.

(ii) Unsecured Term loans from Others amounting to Rs. 164.85 Crores (2013 - '' Nil), out of which Rs. 55.12 Crores (2013

- '' Nil) is shown under current maturity of long term debt, is repayable in 11 to 12 equal quarterly instalments from the date of the disbursement which carries interest @ 11.80 % to 12.25 % per annum.

(iii) Unsecured Term loans from Others amounting to Rs. 17.58 Crores (2013 - '' Nil), out of which Rs. 10.87 Crores (2013

- '' Nil) is shown under current maturity of long term debt, is repayable in 1 quarterly , 1 half yearly and balance 16 monthly instalments from the date of the disbursement which carries interest @ 13.00 % per annum.

(iv) Unsecured Term loans from Others amounting to '' Nil (2013 - Rs. 22.73 Crores) and '' Nil (2013 - Rs. 9.44 Crores), out of which '' Nil (2013 - Rs. 11.98 Crores) is shown under current maturity of long term debt, are repayable in 8 to 19 equal quarterly instalments from the date of the loans and in 3 equal yearly instalments from the date of the loan and balance payable in 4th year respectively which are interest free.

(v) Unsecured Loan under receivable buyout facility amounting to '' Nil (2013 - Rs. 89.34 Crores), out of which '' Nil (2013 - Rs. 15.57 Crores) is shown under current maturity of long term debt, are repayable in 14 to 20 equal quarterly instalments from the date of the disbursement.

(vi) Unsecured Term loans from Others amounting to '' Nil (2013 - Rs. 69.70 Crores), out of which '' Nil (2013 - Rs. 21.54 Crores) is shown under current maturity of long term debt, is repayable in 11 to 12 equal quarterly instalments from the date of the disbursement which carries interest @ 11.80 % to 12.25 % per annum.

3. Long term borrowings, Short term borrowings and Current maturities of long term debts is net of the loan amounting to Rs. 112.89 Crores, Rs. 28.65 Crores and Rs. 145.81 Crores respectively that the company has transferred to its subsidiaries pursuant to the scheme of arrangement (Refer Note 57). The company is in the process of transferring the loan agreements to the respective subsidiary company.

Secured Loan from Banks amounting to Rs. 196.43 Crores (2013 - Rs. 175.33 Crores) 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 and its demerged subsidiaries, pursuant to court approved scheme of arrangement. The charge ranks pari-passu amongst Bankers.

* There are no amount due and outstanding to be credited to Investor Education and Protection Fund under Section 205C of the Companies Act, 1956 as at June 30, 2014. These shall be credited and paid to the Fund as and when due.

1. Land (included under ''Own Assets'') and Building at Ambattur amounting to Rs. 0.57 Crores (2013 - Rs. 0.57 Crores) are pending registration in the name of the Company.

2. Software comprise cost of acquiring licences and SAP implementation charges.

3. Intellectual Property Rights comprise of designing and implementing education content.

4. Technical know how comprise of development cost of new technology/products.

@ As per the Scheme of arrangement referred in note no 57, investment in HCL Infotech Limited, HCL Services Limited and HCL Learning Limited were recorded at their respective fair value as determined by an independent valuer as on December 31, 2012. A provision of Rs. 210.00 Crores has been made for diminution in the value of investment in HCL Infotech Limited as on June 30, 2014, which has been shown as an exceptional item (refer note 58).

5. Land and Buildings and certain Plant and Machinery were revalued by external registered valuers after considering depreciation upto that date on the governing principle of current replacement cost/value. The amounts added/reduced on aforesaid revaluation in 1992, 2005, 2006 and 2007 were as under:

6. Estimated value of contracts on capital account, excluding capital advances, remaining to be executed and not provided for amount to '' Nil (2013 - Rs. 0.37 Crores). For Commitments on account of lease Refer Note 45.

7. Contingent Liabilities (Refer Note 57):

a) Claims against the Company not acknowledged as debts:

Excise* 14.05 11.13

Income Tax* 2.95 2.95

Octroi* - 4.98

Industrial Disputes, Civil Suits and Consumer Disputes 12.10 16.39

* Includes sum of Rs. 12.49 Crores (2013 - Rs. 22.58 Crores) deposited by the Company against the above.

The amounts shown in item (a) represents the best possible estimates arrived at on the basis of available information. The uncertainties and possible reimbursements are dependent on the out come of the different legal processes which have been initiated by the Company or the claimants as the case may be and therefore cannot be predicted accurately.It is not practicable for the Company to estimate the timing of cash outflows, if any, in respect of the above pending resolution of the respective proceedings.

b) Corporate Guarantee of Rs. 534.37 Crores (2013 - Rs. 453.98 Crores) was given to Banks and Financial Institutions for working capital facilities sanctioned to subsidiaries of which the total amount utilised as at June 30, 2014 is Rs. 218.85 Crores (2013 - Rs. 288.84 Crores).

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, Outflows of economic benefits against this provision is expected to happen within one year.

8. Taxation:

a) Provision for taxation has been computed by applying the Income Tax Act, 1961 to the loss for the financial year ended June 30, 2014, 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 March 31.

b) Deferred Tax:

Major components of Deferred tax arising on account of timing difference along with their movement as at June 30, 2014 are:

# Except trade discount, no other discount has been adjusted.

* Does not include any class of goods which in value individually accounts for 10% or more of the total value of sales/stock. Note: Previous year''s figures are given in brackets.

9. Employee Stock Option Plan (ESOP):

The Company has established Employee Stock Option Scheme 2000 and Employee Stock Based Compensation Plan 2005, for a total grant of 31,90,200 and 33,35,487 options respectively to the employees of the Company and its subsidiaries. These options vest on a graded basis over a period of 42 and 60 months respectively from the date of grant and are to be exercised with in a maximum period of 5 years from the date of vesting.

The Board of Directors/Committee approves the grant of options, including the grant of options that lapse out of each grant.

Each option of Rs. 10/- confers on the employee a right to five equity shares of Rs. 2/- each.

Exercise price is market price as specified in the Employee Stock Option Scheme and Employee Stock Purchase Scheme Guidelines, 1999 issued by the Securities and Exchange Board of India (“SEBI")."

Details of Grants made under Employee Stock Option Scheme 2000

Assumptions

The fair value of each stock option granted under Employee Stock Option Scheme 2000 and Employee Stock Based Compensation Plan 2005 as on the date of grant has been computed using Black-Scholes Option Pricing Formula and the model inputs are given as under:

Notes:

1. Volatility: Based on historical volatility in the share price movement of the Company.

2. Risk Free Rate: Being the interest rate applicable for maturity equal to the expected life of options based on yield curve for Government Securities.

3. Time to Maturity: Vesting period and volatility of the underlying equity shares have been considered for estimation.

4. Dividend Yield: Based on historical dividend payouts.

The impact on the profit/(loss) of the Company for the year ended June 30, 2014 and the basic and diluted earnings per share had the Company followed the fair value method of accounting for stock options is set out below:

10. Leases:

a) Finance Leases:

As Lessor:

(i) The Company has given on finance lease certain assets/inventories which comprise of computers, radio terminals and office equipments, etc. These leases have a primary period, which is fixed and non-cancelable. There are no exceptional/restrictive covenants in the lease agreements.

b) Sale and Leaseback and further sub-lease on finance lease basis

(i) The Company has entered into transaction of sale and leaseback on finance lease basis and further sub-lease on finance lease basis for certain assets/inventories which comprise of computer systems and other related products. These leases have a primary period, which is fixed and non-cancelable. There are no exceptional/ restrictive covenants in these lease agreements.

(ii) Details of mimimum lease payments and mimimum sub-lease receivables as at June 30, 2014 and its present value as at that date are as follows:

d) Cancelable Operating Leases As Lessee:

(i) The Company has taken various residential/commercial premises under cancelable operating leases. These leases are for a period of eleven months to three years and are normally renewable on expiry.

(ii) The rental expense in respect of operating leases is Rs. 12.19 Crores (2013 - Rs. 28.65 Crores) which is disclosed as Rent expense under ''Other expenses''

As Lessor:

The gross block, accumulated depreciation and depreciation expense in respect of building and office automation products i.e. photocopying machines given on operating lease are as below:

11. Earnings / (Loss) per share (EPS)

The earnings considered in ascertaining the Company''s EPS represent profit/(loss) for the year after tax. Basic EPS is computed and disclosed using the weighted average number of equity shares outstanding during the year. Diluted EPS 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:

12. Segment Reporting

The Company recognises the following segments as its primary Segments :

a) Hardware Products and Solutions business comprises of Hardware Solutions business and Computing products manufacturing facility & Channel business. Hardware Solutions business includes sale of hardware solutions & products sold directly to enterprises, government and providing System Integration solutions in different Industry verticals. Computing products manufacturing facility and Channel business includes manufacturing of computer hardware systems and sale of hardware products through channel partners.

b) The Services business provides IT infrastructure managed services, break-fix services, cloud services, enterprise application services, software development & support services, office automation maintenance services, managed print services and telecom & consumer electronics support services.

c) Learning business includes training services and educational content and related Hardware offerings for private schools, colleges and other education institutes and vocational training.

d) The businesses of distribution segment consist of distribution of telecommunication, office automation products and other digital lifestyle products.

During the current year, the Company transferred Hardware Solutions Business, Services business and Learning Business (collectively the "Transferred Undertakings") of the Company to separate wholly owned subsidiaries namely HCL Infotech Limited, HCL Services Limited and HCL Learning Limited, respectively.

The Segment disclosures for the year have been prepared after considering the effect of the above and do not include disclosure of transferred undertakings. Therefore these are not comparable with the previous year.(Refer Note 57)

Details of secondary segments are not disclosed as more than 90% of the Company''s revenues, results and assets relate to the domestic market.

Note: Previous year''s figures are given in brackets.

Segment Results include Rs. 5.33 crores (2013 - Rs. 11.22 crores) of certain Operating other income which is included in ''Other income'' in the Statement of Profit and Loss.

13. The Company has calculated the various benefits provided to employees as under:

(a) Defined Contribution

(i) Superannuation Fund

(b) State Plans

(i) Employee State Insurance

(ii) Employee''s Pension Scheme 1995

(c) Defined Benefit

(i) Gratuity

(ii) Provident Fund#

The Company contributes to the employee provident fund trust"Hindustan Computers Limited Employees Provident Fund Trust" which is managed by the Company. The Company''s Provident Fund Trust is exempted under Section 17 of Employees'' Provident Fund Act, 1952. Conditions for grant of exemptions stipulate that the employer shall make good deficiency, if any, in the interest rate declared by the trust vis-a-vis statutory rate. As per guidance note on AS - 15, Employee Benefits (Revised 2005), provident funds set up by employers, which requires interest shortfall to be met by the employer, needs to be treated as defined benefit plan.

The Trust includes employees of the Company as well as some of the employees of the related parties. In view of the same, it is a multi employer defined benefit plan.

The Trust has been investing the Provident fund contributions of the employees of all the six companies in a composite manner and the same cannot be separately identified entity wise.

In view of the same an actuarial valuation, in accordance with the AS-15 (Revised), was carried out at composite level. As per actuarial certificate there is no shortfall in the earning of fund against statutorily required"interest rate guarantee" and accordingly, the "liability on account of interest rate guarantee'''' is nil.

In accordance with Accounting Standard 15 (revised 2005), an actuarial valuation was carried out in the respect of the aforesaid defined benefit plan based on the following assumptions:

The estimates of future salary increases considered in actuarial valuation take account of inflation, seniority, promotion and other relevant factors such as supply and demand in the employment market.

* Included in Salaries, Wages, Bonus and Gratuity for Gratuity and Contribution to Provident and Other Funds for Provident Fund under Employee benefits expense (Refer Note 26).

@ The Company''s contribution to Provident Fund for the year is Rs. 1.58 Crores (2013 - Rs. 7.63 Crores) and the remaining relates to other related companies as mentioned above.

# In the absence of the relevant information from the Actuary, the above details do not include the composition of Plan assets.

14. The Company remits the dividends to its non resident shareholders in Indian Rupees.

15. Pursuant to the approval of the shareholders and in terms of Securities and Exchange Board of India (Issue of Capital and

Disclosure Requirements) Regulations, 2009, the Company has:

(a) On receipt of 25% subscription money, allotted 2,10,59,515 warrants priced at Rs. 152.90 per warrant to certain promoters on a preferential basis on October 7, 2009. Subsequently, 1,64,38,848 warrants have been converted into equal number of equity shares of Rs. 2/- each on October 29, 2009 and 46,20,667 on April 5, 2011 on receipt of the balance 75% subscription money.

(b) Raised Rs. 472.67 Crores by allotment of 3,05,55,713 equity shares of Rs. 2/- each at a price of Rs. 154.69 per equity share including a premium of Rs. 152.69 per equity share through Qualified Institutional Placement on October 21, 2009.

16. a) Loss of Rs. 0.21 Crores (2013 - Loss of Rs. 0.45 Crores) on sale of fixed assets has been adjusted against the Profit on sale of fixed assets.

b) Advertisement, Publicity and Entertainment expenses, wherever on sharing basis, are shown at amounts borne by the Company.

Notes:

1. * Deposits under sales tax are adjustable against demand of other assessment years.

2. ** Including balances under Central Sales Tax Act,1956 with relevant rules of respective states.

3. # Excludes interest for which there is no demand on the Company.

54. Disclosure of related parties and related party transactions:

a) Company having substantial interest:

HCL Corporation Private Limited

b) List of parties where control exists/existed:

Subsidiaries:

Digilife Distribution and Marketing Services Limited RMA Software Park Private Limited HCL Infocom Limited (Refer Note 57)

HCL Insys Pte. Limited, Singapore HCL Investments Pte. Limited, Singapore HCL Touch Inc., USA HCL Computing Products Limited Pimpri Chinchwad eServices Limited (85% Shareholding of HCL Infosystems Limited) HCL Infosystems MEA FZE, Dubai HCL Infosystems LLC, Dubai (49% Shareholding of HCL Infosystems MEA FZE) HCL Infosystems South Africa Pty. Limited HCL Infotech Limited (formerly known as HCL System Integration Limited)

HCL Learning Limited

HCL Services Limited (formerly known as HCL Care Limited)

Joint Venture:

Nokia HCL Mobile Internet Services Limited

c) Other related parties with whom transactions have taken place during the year and/or where balances exist:

HCL Technologies Limited HCL Comnet Limited

HCL Comnet Systems and Services Limited

Shiv Nadar School

HCL BPO Services (NI) Limited

SSN Trust

Shiv Nadar Foundation

d) Key Management Personnel:

Mr. Harshavardhan Madhav Chitale

Mr. J. V. Ramamurthy (Resigned as director with effect from March 21, 2014)

Mr. Sandeep Kanwar Mr. Sushil Jain

Note: Parties with whom transactions are more than 10% of the total value have been disclosed separately.

e) Summary of Related Party disclosures

Note: All transactions with related parties have been entered into in the normal course of business.

* The Remuneration is subject to Shareholders'' approval via a special resolution in the ensuing Annual General Meeting.

@ Out of the total remuneration of Rs. 2.09 Crores, the Company has filed an application for obtaining approval of Central Government for payment of the remuneration of Rs. 0.52 Crores on existing terms and this remuneration is subject to approval from Central Government.

# Does not include employee stock compensation expense accounted as per intrinsic value method and retirement benefits on account of Gratuity and Leave Encashment as these benefits are determined actuarially for the Company as a whole and separate figures applicable to individual employees are not readily available.

* Ceased to exist pursuant to the scheme of arrangement (Refer Note 57).

# The company has started to charge interest at the rate of 11.77% per annum with effect from April 1, 2014

17. a) Derivative Instruments outstanding at the Balance Sheet date (Refer Note 59) :

b) As on June 30, 2014 the foreign currency exposure that is not hedged by a derivative instrument or otherwise in respect of :

c) Mark-to-Market losses provided for as on June 30, 2014 of '' Nil (2013 - Rs. 0.44 Crores).

d) The unaccrued forward exchange cover has been included under ''Other current assets'' and ''Other non current assets'' as ''Unamortised Premium on Forwards Contracts''

e) Pursuant to notification u/s 211(3C) of the Companies Act, 1956 issued by the Ministry of Corporate Affairs on December 29, 2011, the Company has opted to accumulate the exchange difference arising on translation of foreign currency items having a term of 12 months or more and amortise such exchange difference over the period of the item. Accordingly, a gain/(loss) stands deferred as at June 30, 2014.

18. The Hon''ble High Court of Delhi sanctioned a Composite Scheme of Arrangement (the"Scheme") applicable from 1st January, 2013 between the Company and its wholly owned subsidiaries namely HCL Infotech Limited (formerly known as HCL System Integration Limited), HCL Services Limited (formerly known as HCL Care Limited) and HCL Learning Limited (collectively the"Transferee Companies") and HCL Infocom Ltd and their respective shareholders and creditors under the provisions of section 391 to 394 of the Companies Act, 1956, vide its order dated September 18, 2013 received on October 30, 2013. The Scheme became effective from November 1, 2013 on filing a certified copy of the High Court order with the office of the Registrar of the Companies, NCT of Delhi & Haryana and is applicable from January 1, 2013 (the"Appointed date"). According to the Scheme, as on 1st January, 2013, the Hardware Solutions Business, Services Business and Learning Business (collectively the"Transferred Undertakings") of the Company stand transferred to HCL Infotech Limited , HCL Services Limited and HCL Learning Limited (collectively the"Transferee Companies") respectively, the wholly owned subsidiaries. Also with effect from the appointed date, HCL Infocom Limited has been merged with the Company.

As detailed in the scheme, the Company has transferred net assets as on 1st January, 2013 having book value of Rs. 1,118.13 Crores for Hardware Solution Business to HCL Infotech Limited for Nil Consideration, net assets having book value of Rs. 79.31 Crores for Services business to HCL Services Ltd for a consideration of Rs. 61.00 Crores and net assets having book value of Rs. 111.84 Crores of Learning business to HCL Learning Limited at a consideration of Rs. 113.00 Crores. On such transfers, Rs. 1,135.28 Crores, being the difference of the net assets transferred and the consideration received has been debited to Business Restructuring Reserve, on merger of HCL Infocom Ltd Rs. 959.48 crores, being the difference between fair value of net assets and the Company''s investment in HCL Infocom Limited, has been credited to capital reserve, and the Business restructuring reserve so arising has been adjusted from capital reserve Rs. 959.48 Crores and from Securities Premium account Rs. 175.80 Crores. The Fair values as at December 31, 2012 of the transferred undertakings and assets/liabilities recorded by the transferee companies as at appointed date, have been determined by the independent valuer appointed by the Company.

The standalone financial statements of the Company for the year ended June 30, 2014 has been prepared after considering the accounting treatment specified under the scheme.

In accordance with the Scheme, the Company continued to carry on the business and activities in relation to the Transferred Undertakings on account of and in trust for the respective Transferee Companies from January 1, 2013 (the "Appointed date") till November 1, 2013 (the "Effective date"). The Company has transferred the profit/(loss) attributable to the Transferred Undertakings, for the period from appointed date and up to June 30, 2013, amounting to Rs. 49.79 Crores by adjusting through the Surplus in the Statement of Profit and Loss. Subsequent to the effective date, the Company is in the process of entering into novation agreements with the relevant third parties, including customers and vendors, pertaining to the Transferee Companies. These financial statements do not include results/ assets and liabilities pertaining to the transactions subsequent to the effective date executed by the Company on trust and benefit of HCL Infotech Limited pending entering into novation agreements with the respective parties. The revenues, costs, trade receivables, inventory and trade payables do not include revenues, costs, trade receivables, inventory and trade payables pertaining to the transactions subsequent to the effective date executed by the Company on trust and benefit of HCL Infotech Limited pending entering into novation agreements with the respective parties. Such revenues, costs, trade receivables, Inventory and trade payable amount to Rs. 102.92 Crores, Rs. 62.20 Crores, Rs. 393.01 Crores, Rs. 29.25 Crores and Rs. 393.01 Crores respectively which are reflected in the respective subsidiary financial statements. Previous year numbers include following assets, liabilities, revenue, expenses and cash flow related to"Transferred Undertakings" and therefore are not comparable with current year numbers.:

The details of carrying amounts of assets and liabilities attributable to the "Transferred Undertakings" included in June 2013 are as below :

The Revenue and expenses in respect of ordinary activities attributable to the transferred undertakings for the year ended June 2013 are as below:

19. Forward contracts and investments in subsidiaries have been transferred to its subsidiaries pursuant to Scheme of Arrangement (Refer Note 57). The Company is in the process of transferring the forward contracts and investments to the respective subsidiary Company.

20. Previous year''s figures have also been regrouped/recasted, where necessary, to conform to the current year''s presentation.

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Jun 30, 2013

1- Estimated value of contracts on capital account, excluding capital advances, remaining to be executed and not provided for amount to Rs. 0.37 Crores (2012 - Rs. 3.50 Crores). For Commitments on account of lease Refer Note 45).

2- Contingent Liabilities:

a) Claims against the Company not acknowledged as debts:

2013 2012 Rs./Crores Rs./Crores

Sales Tax* 72.99 44.89

Excise* 11.13 9.63

Income Tax* 2.95 3.68

Octroi* 4.98 4.98

Industrial Disputes, Civil Suits and Consumer Disputes 16.39 16.68

* Includes sum of Rs. 22.58 Crores (2012 - Rs. 18.70 Crores) deposited by the Company against the above.

The amounts shown in item (a) represents the best possible estimates arrived at on the basis of available information. The uncertainties and possible reimbursements are dependent on the out come of the different legal processes which have been initiated by the Company or the claimants as the case may be and therefore cannot be predicted accurately.

b)(i) Corporate Guarantee of Rs. 453.98 Crores (2012 - Rs. 207.05 Crores) was given to Banks for working capital facilities sanctioned to subsidiaries of which the total amount utilised as at June 30, 2013 is Rs. 288.84 Crores (2012 - Rs. 62.59 Crores).

(ii) Corporate Guarantee of Rs. Nil (2012 - Rs. 72.87 Crores) was given to Banks for working capital facilities sanctioned to a joint venture of a subsidiary company of which the total amount utilised as at June 30, 2013 is Rs. Nil (2012 - Rs. 72.87 Crores).

3. Taxation:

a) Provision for taxation has been computed by applying the Income Tax Act, 1961 to the loss for the financial year ended June 30, 2013, 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 March 31.

b) Deferred Tax:

Major components of Deferred tax arising on account of timing difference along with their movement as at June 30, 2013 are:

4- Employee Stock Option Plan (ESOP):

The Company has established Employee Stock Option Scheme 2000 and Employee Stock Based Compensation Plan 2005, for a total grant of 31,90,200 and 33,35,487 options respectively to the employees of the Company and its subsidiaries. These options vest on a graded basis over a period of 42 and 60 months respectively from the date of grant and are to be exercised with in a maximum period of 5 years from the date of vesting.

The Board of Directors/Committee approves the grant of options, including the grant of options that lapse out of each grant. Each option of Rs. 10/- confers on the employee a right to five equity shares of Rs. 2/- each.

Exercise price is market price as specified in the Employee Stock Option Scheme and Employee Stock Purchase Scheme Guidelines, 1999 issued by the Securities and Exchange Board of India ("SEBI").

5- Earnings per share (EPS)

The earnings considered in ascertaining the Company''s EPS represent profit/(loss) for the year after tax. Basic EPS is computed and disclosed using the weighted average number of equity shares outstanding during the year. Diluted EPS 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.

6- Segment Reporting

In the previous year, the Company was reporting "Computer Systems and Other Related Products and Services" and ''Telecommunication and Office Automation" as its primary segments.

During the current year, considering the existing internal reporting structure, the Company has reviewed existing segment reporting and has reorganized its primary business segments as "Hardware Products and Solutions business" (comprising of Hardware Solutions business, Computing products manufacturing facility and Channel business), "Services business",

"Learning business" and "Distribution business". Consequent to which Segment Disclosures for the current year and corresponding numbers for the previous year, have been presented based on the revised Segments.

The nature and the business of primary Segments are as below:

a) Hardware Products and Solutions business comprises of Hardware Solutions business and Computing products manufacturing facility & Channel business. Hardware Solutions business includes sale of office automation products, hardware solutions & products sold directly to enterprises, government and providing Sytem Integration solutions in different Industry verticals. Computing products manufacturing facility and Channel business includes manufacturing of computer hardware systems and sale of hardware products through channel partners.

b) The Services business provides IT infrastructure managed services, break-fix services, cloud services, enterprise application services, software development & support services, office automation maintenance services, managed print services and telecom & consumer electronics support services.

c) Learning business includes training services and educational content and related Hardware offerings for private schools, colleges and other education institutes and vocational training.

d) The businesses of distribution segment consist of distribution of telecommunication and other digital lifestyle products.

There is no change in the secondary segment reporting, which continues to be based upon 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.

7- The Company remits the dividends to its non resident shareholders in Indian Rupees.

8- Pursuant to the approval of the shareholders and in terms of Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009, the Company has:

(a) On receipt of 25% subscription money, allotted 2,10,59,515 warrants priced at Rs. 152.90 per warrant to certain promoters on a preferential basis on October 7, 2009. Subsequently, 1,64,38,848 warrants have been converted into equal number of equity shares of Rs. 2/- each on October 29, 2009 and 46,20,667 on April 5, 2011 on receipt of the balance 75% subscription money.

(b) Raised Rs. 472.67 Crores by allotment of 3,05,55,713 equity shares of Rs. 2/- each at a price of Rs. 154.69 per equity share including a premium of Rs. 152.69 per equity share through Qualified Institutional Placement on October 21, 2009.

The funds raised through above issues have been utilised as under:

9- (a) Loss of Rs. 0.45 crores (2012 - Profit of Rs. 0.99 Crores) on sale of fixed assets has been adjusted against the Profit/Loss on sale of fixed assets.

b) Advertisement, Publicity and Entertainment expenses, wherever on sharing basis, are shown at amounts borne by the Company.

10- Disclosure of related parties and related party transactions:

a) Company having substantial interest:

HCL Corporation Private Limited

b) List of parties where control exists/existed:

Subsidiaries:

HCL Infocom Limited

Digilife Distribution and Marketing Services Limited

RMA Software Park Private Limited

HCL Insys Pte. Limited, Singapore

HCL Investments Pte. Limited, Singapore

HCL Touch Inc., USA

HCL Computing Products Limited

Pimpri Chinchwad eServices Limited (85% Shareholding of HCL Infosystems Limited)

HCL Infosystems MEA FZCO, Dubai (100% Shareholding of HCL Insys Pte. Limited)

HCL Infosystems LLC, Dubai (49% Shareholding of HCL Infosystems MEA FZCO)

HCL Infosystems MEA LLC, Abu Dhabi (49% Shareholding of HCL Infosystems MEA FZCO)

HCL Infosystems Qatar, WLL (49% Shareholding of HCL Infosystems MEA FZCO)

HCL Infosystems South Africa Pty. Limited (100% Shareholding of HCL Investments Pte. Limited)

HCL System Integration Limited (100% Shareholding of HCL Infocom Limited)

HCL Learning Limited (100% Shareholding of HCL Infocom Limited)

HCL Care Limited (100% Shareholding of HCL Infocom Limited)

c) Other related parties with whom transactions have taken place during the year and/or where balances exist:

HCL Technologies Limited

HCL Comnet Systems and Services Limited

HCL BPO Services (NI) Limited

SSN College of Engineering

SSN Trust

d) Key Management Personnel

Mr. Ajai Chowdhry (Resigned as Whole Time Director with effect from March 31, 2012)

Mr. Harsh Chitale Mr. J.V. Ramamurthy Mr. Sandeep Kanwar

11- The Board of Directors had at its meeting held on January 14, 2013, approved a business restructuring plan consisting of a Composite Scheme of Arrangement (the Scheme) under the provisions of Section 391 and 394 of the Companies Act, 1956. The Scheme inter-alia envisages transfer of the Hardware Solutions Business, Services business and Learning Business (collectively the "Transferred Undertakings") of the Company to separate wholly owned subsidiaries namely HCL System Integration Limited, HCL Care Limited and HCL Learning Limited, respectively. The Scheme also envisages merger of HCL Infocom Limited, a wholly owned subsidiary with the Company. January 1, 2013 has been fixed as the Appointed Date. The Equity Shareholders, Secured and Unsecured Creditors of the Company have at their respective meeting, convened as per the directions of the Hon''ble High Court of Delhi accorded their approval to the Scheme. The final petition has also been filed with Hon''ble High Court of Delhi for its sanction.The Scheme is subject to requisite sanction of the Hon''ble High Court of Judicature at Delhi and other regulatory authorities. The Company continues to carry on business and activities in relation to the transferred undertakings on account of and in trust for the respective transferee companies until all the requisite approval and formalities are completed.

Detail of carrying amount of assets and liabilities, revenue and expenses and net cash flow attributable to the Transferred Undertakings are summarised as follows:

The "Services business" and "Learning Business" are separate business segments whereas Hardware Solutions business represents part of the "Hardware Products and Solutions business" segment.

12. Previous year''s figures have also been regrouped/recasted, where neccessary, to conform to the current year''s presentation.

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Jun 30, 2012

(i) Rights attached to Equity Shares:

The Company has only one class of equity share having a face value of Rs. 2/- each. Each holder of equity shares is entitled to one vote per share held. The Company declares and pays dividend in Indian Rupees. The dividend proposed by the Board of Directors is subject to the approval of the Shareholders in ensuing General Meeting, except in case of interim dividend.

In the event of liquidation of the Company, the holders of equity shares will be entitled to receive the remaining assets of the Company after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by Shareholders.

(ii) Shares reserved for issue under options:

For detail of shares reserved for issue under Employee Stock Option Plan of the Company, refer Note 44.

(iii) Shareholders holding more than 5% of the aggregate shares in the Company.

Notes:

1. The Company issued 800 Rated Taxable Secured Redeemable Non-Convertible Debentures of face value of Rs. 10 lakhs each, aggregating to Rs. 80.00 Crores, at a coupon rate of 12.75% per annum payable annually on private placement basis to Life Insurance Corporation of India on December 19, 2008. These Debentures were redeemable at par at the end of 5th year from the date of allotment, with a call option exercisable by the issuer, only at the end of 3 years from the date of allotment and secured by way of first mortgage and charge on identified immovable and movable assets of the Company. During the year, on December 19, 2011 the Company has exercised it's call option and accordingly has repaid these debentures.

2. Secured Term Loan from Others amounting to Rs. 6.19 Crores (2011 - Rs. 11.82 Crores), out of which Rs. 6.08 Crores (2011 - Rs. 5.63 Crores) is shown under current maturity of long term debt, is secured by way of first charge on specified assets of the Company as per the contract terms. The loans are repayable in 20 equal quarterly installments from the date of the loans which carries interest @ 7.8 to 8.5 % p.a.

3. Secured Term Loan from Banks amounting to Rs. 80.00 Crores (2011 - Rs. Nil), out of which Rs. 26.67 Crores (2011 - Rs. Nil) is shown under current maturity of long term debt, is secured by way of first charge on movable and immovable fixed assets of the Company. The loan is repayable in 6 half yearly installments from the date of the loan which carries interest @ 11.25 % p.a.

4. Unsecured Term loans from Others amounting to Rs. 31.26 Crores (2011 - Rs. 44.47 Crores) and Rs. 0.07 Crores (2011 - Rs. 0.21 Crores), out of which Rs. 10.15 Crores (2011- Rs. 14.23 Crores) is shown under current maturity of long term debt, are repayable in 8 to 19 equal quarterly installments from the date of the loans and in 3 equal yearly installments from the date of the loan and balance payable in 4th year respectively which are interest free.

Notes:

1. Land (included under 'Own Assets') and Building at Ambattur amounting to Rs. 0.57 Crores (2011 - Rs. 0.57 Crores) are pending registration in the name of the Company.

2. Software comprise cost of acquiring licences and SAP implementation charges.

3. Intellectual Property Rights comprise of designing and implementing education content.

1- Estimated value of contracts on capital account, excluding capital advances, remaining to be executed and not provided for amount to Rs. 3.50 Crores (2011 - Rs. 3.69 Crores).

2-Contingent Liabilities:

a) Claims against the Company not acknowledged as debts:

Sales Tax* 44.89 44.58

Excise* 9.63 9.32

Income Tax* 3.95 3.95

Octroi* 5.08 -

Industrial Disputes, Civil Suits and Consumer Disputes 16.68 8.60

* Includes sum of Rs. 18.70 Crores (2011 - Rs. 9.12 Crores) deposited by the Company against the above.

The amounts shown in item (a) represents the best possible estimates arrived at on the basis of available information. The uncertainties and possible reimbursements are dependent on the out come of the different legal processes which have been initiated by the Company or the claimants as the case may be and therefore cannot be predicted accurately.

b)(i) Corporate Guarantee of Rs. 44.85 Crores (2011 - Rs. 35.88 Crores) was given to a Bank for working capital facilities sanctioned to a 100% subsidiary, HCL Insys Pte. Limited, Singapore against which the total amount utilised as at June 30, 2012 is Rs. 44.85 Crores (2011 - Rs. 9.85 Crores).

(ii) Corporate Guarantee of Rs. 20.00 Crores (2011 - Rs. 20.00 Crores) has been given to a Bank for working capital facilities sanctioned to a 100% subsidiary, Digilife Distribution and Marketing Services Limited against which the total amount utilised as at June 30, 2012 is Rs. 1.07 Crores (2011 - Rs. 8.58 Crores).

(iii) Corporate Guarantee of Rs. Nil (2011 - Rs. 6.50 Crores) was given to a Bank for working capital facilities and Rs. Nil (2011 - Rs. 6.10 Crores) was given to a non-banking finance company for operating lease sanctioned to a 100% subsidiary, HCL Infinet Limited (ceased to be a subsidiary with effect from October 31, 2011) against which the total amount utilised as at June 30, 2012 is Rs. Nil (2011 - Rs. 4.79 Crores) and Rs. Nil (2011 - Rs. 6.07 Crores) respectively.

(iv) Corporate Guarantee of Rs. 142.40 Crores (2011 - Rs. 73.11 Crores) was given to Banks for working capital facilities sanctioned to HCL Infosystems MEA FZCO, Dubai (subsidiary of HCL Insys Pte. Limited, a subsidiary company) against which the total amount utilised as at June 30, 2012 is Rs. 16.67 Crores (2011 - Rs. 35.33 Crores).

(v) Corporate Guarantee of Rs. 72.87 Crores (2011 - Rs. 132.93 Crores) was given to Banks for working capital facilities sanctioned to Techmart Telecom Distribution FZCO, Dubai (joint venture of HCL Investments Pte. Limited, a subsidiary company) against which the total amount utilised as at June 30, 2012 is Rs. 72.87 Crores (2011 - Rs. 110.78 Crores).

3. Taxation:

a) Provision for taxation has been computed by applying the Income Tax Act, 1961 to the profit for the financial year ended June 30, 2012, 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 March 31.

b) Deferred Tax:

Major components of Deferred tax arising on account of timing difference along with their movement as at June 30, 2012 are:

4-Employee Stock Option Plan (ESOP):

The Company has established Employee Stock Option Scheme 2000 and Employee Stock Based Compensation Plan 2005, for a total grant of 31,90,200 and 33,35,487 options respectively to the employees of the Company and its subsidiaries. These options vest on a graded basis over a period of 42 and 60 months respectively from the date of grant and are to be exercised with in a maximum period of 5 years from the date of vesting.

The Board of Directors/Committee approves the grant of options, including the grant of options that lapse out of each grant. Each option of Rs. 10/- confers on the employee a right to five equity shares of Rs. 2/- each.

Exercise price is market price as specified in the Employee Stock Option Scheme and Employee Stock Purchase Scheme Guidelines, 1999 issued by the Securities and Exchange Board of India ("SEBI").

Assumptions

The fair value of each stock option granted under Employee Stock Option Scheme 2000 and Employee Stock Based Compensation Plan 2005 as on the date of grant has been computed using Black-Scholes Option Pricing Formula and the model inputs are given as under:

Notes:

1. Volatility: Based on historical volatility in the share price movement of the Company.

2. Risk Free Rate: Being the interest rate applicable for maturity equal to the expected life of options based on yield curve for Government Securities.

3. Time to Maturity: Vesting period and volatility of the underlying equity shares have been considered for estimation.

4. Dividend Yield: Based on historical dividend payouts.

The impact on the profit of the Company for the year ended June 30, 2012 and the basic and diluted earnings per share had the Company followed the fair value method of accounting for stock options is set out below:

5- Leases:

a) Finance Leases: As Lessor:

(i) The Company has given on finance lease certain assets/inventories which comprise of computers, radio terminals and office equipments, etc. These leases have a primary period, which is fixed and non-cancelable. There are no exceptional/restrictive covenants in the lease agreements.

b) Sale and Leaseback and further sub-lease on finance lease basis

(i) The Company has entered into transaction of sale and leaseback on finance lease basis and further sub-lease on finance lease basis for certain assets/inventories which comprise of computer systems and other related products. These leases have a primary period, which is fixed and non-cancelable. There are no exceptional/restrictive covenants in these lease agreements.

d) Cancelable Operating Leases As Lessee:

(i) The Company has taken various residential/commercial premises under cancelable operating leases. These leases are normally renewable on expiry.

(ii) The rental expense in respect of operating leases is Rs. 25.53 Crores (2011 - Rs. 24.94 Crores) which is disclosed as Rent expense under 'Other expenses'.

(ii) Minimum lease payments in respect of assets taken on lease recognised as an expense in the Statement of Profit and Loss for the year ended June 30, 2012 are Rs. 2.23 Crores (2011 - Rs. 2.47 Crores) which is included in Purchase of Services under 'Other direct expenses'.

6- 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 EPS 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.

7- Segment Reporting

The Company recognises the following segments as its primary segments.

a) The operations of Computer Systems and Other Related Products and Services consists of manufacturing of computer hardware systems, providing comprehensive Systems Integration, Roll out and Infrastructure management solutions in different Industry verticals, providing IT services including maintenance and facility management and ICT training.

b) The businesses of Telecommunication and Office Automation comprise of distribution of telecommunication and other digital lifestyle products, office automation products and related comprehensive maintenance and allied services and Homeland Security and Surveillance.

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.

Note: Previous year's figures are given in brackets.

Segment Results include Rs. 17.01 Crores (2011- Rs. 17.17 Crores) of certain Operating other income which is included in 'Other income' in the Statement of Profit and Loss.

8- The Company remits the dividends to its non resident shareholders in Indian Rupees.

9- Pursuant to the approval of the shareholders and in terms of Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009, the Company has

(a) On receipt of 25% subscription money, allotted 2,10,59,515 warrants priced at Rs. 152.90 per warrant to certain promoters on a preferential basis on October 7, 2009. Subsequently, 1,64,38,848 warrants have been converted into equal number of equity shares of Rs. 2/- each on October 29, 2009 and 46,20,667 on April 5, 2011 on receipt of the balance 75% subscription money.

(b) Raised Rs. 472.67 Crores by allotment of 3,05,55,713 equity shares of Rs. 2/- each at a price of Rs. 154.69 per equity share including a premium of Rs. 152.69 per equity share through Qualified Institutional Placement on October 21, 2009.

10- (a) Subsequent to the year end, the Shareholders of the Company by way of postal ballot have given their approval under Section 293(1)(a) of the Companies Act, 1956 for transfer of the Company's Computing Products Manufacturing and Channel Business as a going concern on slump sale basis, effective on such date as the Board deems fit for the Company, to a wholly owned subsidiary/group/affiliate/other entity either at book value or for such lump sum consideration being not less than the book values.

(b) The Company through its wholly owned subsidiary, HCL Insys Pte. Limited, Singapore has on August 7, 2012 acquired the remaining 40% equity stake with effect from January 1, 2012 in HCL Infosystems MEA FZCO. Consequently, HCL Infosystems MEA FZCO, with effect from January 1, 2012, has become a wholly owned subsidiary of HCL Insys Pte. Limited, Singapore.

(c) On June 29, 2012, the Company has acquired content for the K-12 education segment from 'Attano Media and Education Private Limited' at a negotiated consideration.

(d) HCL Touch Inc., USA, was Incorporated as a wholly owned subsidiary on August 29, 2011.

(e) Pursuant to Share Purchase Agreement (SPA) dated January 11, 2011, read with addendum to SPA dated August 26, 2011, the Company with effect from October 31, 2011 has sold its entire equity stake in HCL Infinet Limited, the wholly owned subsidiary.

This transaction has resulted into a loss of Rs. 11.37 Crores, out of which Rs. 7.86 Crores had already been provided against loans/ investment till June 30, 2011 and the balance loss of Rs. 3.51 Crores has been accounted for in the current year.

(f) During the year, the Company has with effect from August 1, 2011, transferred its Digital Entertainment business as a going concern basis to Digilife Distribution and Marketing Services Limited, the wholly owned subsidiary for a consideration of Rs. 35 Crores, and acquired the Security and Surveillance business of Digilife Distribution and Marketing Services Limited as a going concern on slump sale basis for a consideration of Rs. 6 Crores.

(g) Techmart Telecom Distribution FZCO, Dubai, in which a subsidiary of the Company has 20% stake, is being dissolved.

11- Disclosure of related parties and related party transactions:

a) Company having substantial interest:

HCL Corporation Private Limited (Formerly known as 'Guddu Investments (Pondi) Private Limited')

b) List of parties where control exists/existed:

Wholly owned Subsidiaries:

HCL Infinet Limited *

HCL Infocom Limited

Digilife Distribution and Marketing Services Limited

RMA Software Park Private Limited

HCL Insys Pte. Limited, Singapore

HCL Investments Pte. Limited, Singapore

HCL Touch Inc., USA

Others Subsidiaries:

Pimpri Chinchwad eServices Limited (85% Shareholding of HCL Infosystems Limited)

HCL Infosystems MEA FZCO, Dubai (100% Shareholding of HCL Insys Pte. Limited) **

HCL Infosystems LLC, Dubai (49% Shareholding of HCL Infosystems MEA FZCO)

HCL Infosystems MEA LLC, Abu Dhabi (49% Shareholding of HCL Infosystems MEA FZCO)

HCL Infosystems Qatar, WLL (49% Shareholding of HCL Infosystems mEa FZCO)

HCL Infosystems South Africa Pty. Limited (100% Shareholding of HCL Investments Pte. Limited)

* HCL Infinet Limited ceased to be a subsidiary with effect from October 31, 2011

** 60% Shareholding till December 31, 2011

c) Other related parties with whom transactions have taken place during the year and/or where balances exist:

HCL Technologies Limited

HCL Comnet Systems and Services Limited

HCL BPO Services (NI) Limited

SSN College of Engineering

SSN Trust

d) Key Management Personnel

Mr. Ajai Chowdhry (Resigned as Whole Time Director with effect from March 31, 2012)

Mr. Harsh Chitale

Mr. J.V. Ramamurthy

Mr. Sandeep Kanwar

e) Summary of Related Party disclosures

Note: All transactions with related parties have been entered into in the normal course of business.

12. a) Loss of Rs. 0.99 crores (2011 - Profit of Rs. 0.16 Crores) on sale of fixed assets has been adjusted against the Profit/Loss on sale of fixed assets.

b) Advertisement, Publicity and Entertainment expense, wherever on sharing basis, are shown at amounts borne by the Company.

b) As on June 30, 2012, the foreign currency exposure that is not hedged by a derivative instrument or otherwise in respect of Trade Payable are Rs. 209.29 Crores (2011 - Rs. 316.77 Crores) and in respect of Trade Receivables are Rs. 38.80 Crores (2011 - Rs. 13.05 Crores).

c) Mark-to-Market losses provided for as on June 30, 2012 of Rs. 0.27 Crores (2011 - Rs. Nil)

d) The unaccrued forward exchange cover as on June 30, 2012 of Rs. 7.06 Crores (2011 - Rs. 1.50 Crores) has been included under 'Other current assets' as 'Unamortised Premium on Forwards Contracts'

e) Pursuant to notification u/s 211(3C) of the Companies Act, 1956 issued by the Ministry of Corporate Affairs on December 29, 2011, the Company has opted to accumulate the exchange difference arising on translation of foreign currency items having a term of 12 months or more and amortise such exchange difference over the period of the item. Accordingly, a loss of Rs. 11.47 Crores (2011 - Rs. Nil) stands deferred as at June 30, 2012.

13- The financial statements for the year ended June 30, 2011 had been prepared as per the then applicable, pre-revised Schedule VI to the Companies Act, 1956. Consequent to the notification of Revised Schedule VI under the Companies Act, 1956, the financial statements for the year ended June 30, 2012 are prepared as per Revised Schedule VI. Accordingly, the previous year figures have also been reclassified to conform to this year's classification. The adoption of Revised Schedule VI for previous year figures does not impact recognition and measurement principles followed for preparation of financial statements.

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Jun 30, 2011

1. Estimated value of contracts on capital account, excluding capital advances, remaining to be executed and not provided for amount to Rs. 3.69 Crores (2010 - Rs. 7.24 Crores).

2. Contingent Liabilities:

a) Claims against the Company not acknowledged as debts:

2011 2010 Rs./Crores Rs./Crores

Sales Tax* 54.12 30.98

Excise* 9.32 10.91

Income Tax* 3.95 2.94

Industrial Disputes, Civil Suits and Consumer Disputes 8.60 8.89

* Includes sum of Rs. 9.12 Crores (2010 - Rs. 7.65 Crores) deposited by the Company against the above.

The amounts shown in the item (a) represents the best possible estimates arrived at on the basis of available information. The uncertainties and possible reimbursements are dependent on the out come of the different legal processes which have been initiated by the Company or the claimants as the case may be and therefore cannot be predicted accurately.

b) (i) Corporate Guarantee of Rs. 35.88 Crores (2010 - Rs. 32.77 Crores) was given to a Bank for working capital facilities sanctioned to a 100% subsidiary, HCL Insys Pte. Limited, Singapore against which the total amount utilised as at June 30, 2011 is Rs. 9.85 Crores (2010 - Rs. 0.25 Crores).

(ii) Corporate Guarantee of Rs. 20.00 Crores (2010 - Rs. 15.00 Crores) has been given to a Bank for working capital facilities sanctioned to a 100% subsidiary, Digilife Distribution and Marketing Services Limited (Formerly known as HCL Security Limited) against which the total amount utilised as at June 30, 2011 is Rs. 8.58 Crores (2010 - Rs. 12.85 Crores).

(iii) Corporate Guarantee of Rs. 6.50 Crores (2010 - Rs. 6.50 Crores) was given to a Bank for working capital facilities and Rs. 6.10 Crores (2010 - Rs. 6.07 Crores) was given to a non-banking finance company for operating lease sanctioned to a 100% subsidiary, HCL Infinet Limited against which the total amount utilised as at June 30, 2011 is Rs. 4.79 Crores (2010 - Rs. 3.89 Crores) and Rs. 6.07 Crores (2010 - Rs. 6.07 Crores) respectively.

(iv) Corporate Guarantee of Rs. 73.11 Crores (2010 - Rs. Nil) was given to Banks for working capital facilities sanctioned to HCL Infosystems MEA FZCO, Dubai (subsidiary of HCL Insys Pte. Limited, a subsidiary company) against which the total amount utilised as at June 30, 2011 is Rs. 35.33 Crores (2010 - Rs. Nil).

(v) Corporate Guarantee of Rs. 132.93 Crores (2010 - Rs. Nil) was given to Banks for working capital facilities sanctioned to Techmart Telecom Distribution FZCO, Dubai (joint venture of HCL Investments Pte. Limited, a subsidiary company) against which the total amount utilised as at June 30, 2011 is Rs. 110.78 Crores (2010 - Rs. Nil).

c) The Company has transferred Financial Assets (Lease Rental Recoverable) to a bank under a financing arrangement for which the balance outstanding with the bank as on June 30, 2011 is Rs. Nil (2010 - Rs. 10.87 Crores). The transfer of these Financial Assets is with recourse to the Company.

3. Taxation:

a) Provision for taxation has been computed by applying the Income Tax Act, 1961 to the profit for the financial year ended June 30, 2011, 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 March 31.

4. The unaccrued forward exchange cover as on June 30, 2011 of Rs. 1.50 Crores (2010 - Rs. 2.62 Crores) has been included under amounts recoverable in cash or in kind or for value to be received.

5. Employee Stock Option Plan (ESOP):

The Company has established Employee Stock Option Scheme 2000 and Employee Stock Based Compensation Plan 2005, for a total grant of 31,90,200 and 33,35,487 options respectively to the employees of the Company and its subsidiaries. These options vest on a graded basis over a period of 42 and 60 months respectively from the date of grant and are to be exercised with in a maximum period of 5 years from the date of vesting.

The Board of Directors/Committee approves the grant of options, including the grant of options that lapse out of each grant.

Each option of Rs. 10/- confers on the employee a right to five equity shares of Rs. 2/- each.

Exercise price is market price as specified in the Employee Stock Option Scheme and Employee Stock Purchase Scheme Guidelines, 1999 issued by the Securities and Exchange Board of India (“SEBI”).

6. Leases:

a) Finance Leases:

As Lessor:

(i) The Company has given on finance lease certain assets/inventories which comprise of computers, radio terminals and office equipments, etc. These leases have a primary period, which is fixed and non-cancelable. There are no exceptional/restrictive covenants in the lease agreements.

b) Sale and Leaseback and further sub-lease on finance lease basis

(i) The Company has entered into transaction of sale and leaseback on finance lease basis and further sub-lease on finance lease basis for certain assets/inventories which comprise of computer systems and other related products. These leases have a primary period, which is fixed and non-cancelable. There are no exceptional/restrictive covenants in these lease agreements.

d) Cancelable Operating Leases

As Lessee:

(i) The Company has taken various residential/commercial premises under cancelable operating leases. These leases are normally renewable on expiry.

(ii) The rental expense in respect of operating leases is Rs. 24.94 Crores (2010 - Rs. 22.34 Crores) which is disclosed as Rent expense under Schedule 17 ‘Administration, Selling, Distribution and Others’.

7. 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 EPS 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.

8. Segment Reporting

The Company recognises the following segments as its primary segments.

a) The operations of Computer Systems and Other Related Products and Services consists of manufacturing of computer hardware systems, providing comprehensive Systems Integration, Roll out and Infrastructure management solutions in different Industry verticals, providing IT services including maintenance & facility management and ICT training.

b) The businesses of Telecommunication and Office Automation comprise of distribution of telecommunication and other digital lifestyle products, office automation products and related comprehensive maintenance and allied 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.

9. The Company remits the dividends to its non resident shareholders in Indian Rupees.

10. Pursuant to the approval of the shareholders and in terms of Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009, the Company has:

(a) On receipt of 25% subscription money, allotted 2,10,59,515 warrants priced at Rs. 152.90 per warrant to certain promoters on a preferential basis on October 7, 2009. Subsequently, 1,64,38,848 warrants have been converted into equal number of equity shares of Rs. 2/- each on October 29, 2009 and 46,20,667 on April 5, 2011 on receipt of the balance 75% subscription money.

(b) Raised Rs. 472.67 Crores by allotment of 3,05,55,713 equity shares of Rs. 2/- each at a price of Rs. 154.69 per equity share including a premium of Rs. 152.69 per equity share through Qualified Institutions Placement on October 21, 2009.

11. (a) Details of long term investments made during the year:

(i) Pimpri Chinchwad eServices Limited was incorporated as a wholly owned subsidiary of the Company on September 21, 2010, to provide e-Services and other related services within the territorial jurisdiction of the Pimpri Chinchwad Municipal Corporation (PCMC) and to the citizens of PCMC.

(ii) HCL Investments Pte. Limited, Singapore was incorporated as a wholly owned subsidiary on November 29, 2010, to manage the Company’s overseas investments.

(iii) HCL Infosystems South Africa Pty. Limited, South Africa was incorporated as a wholly owned Subsidiary of HCL Investments Pte. Limited, Singapore (wholly owned subsidiary of the Company) on May 9, 2011, to engage in business operations in System Integration (SI) and Services with particular focus on Banking and Financial Services and Insurance, Utilities, e-Governance and Infrastructure Services.

(b) During the year, the Company through its wholly owned subsidiary, HCL Insys Pte. Limited, Singapore has on July 4, 2010 acquired a majority equity stake (60%) in HCL Infosystems MEA FZCO (Formerly known as NTS FZCO), which is a Dubai based IT Infrastructure solutions provider for a consideration of US $ 6.45 million (Rs.28.65 Crores).

(c) During the year, the Company through its wholly owned subsidiary, HCL Investments Pte. Limited, Singapore, has on February 3, 2011 acquired 20% equity shares in Techmart Telecom Distribution FZCO, Dubai, which is a distributor of Nokia Smartphones in Middle-East and Africa for US$ 0.8 million (3.55 Crores) paid upfront and US$ 0.4 million (1.77 Crores) to be paid over a period, subject to fulfilment of certain conditions.

(d) (i) Pursuant to the approval of the shareholders obtained in accordance with Section 293(1)(a) of the Companies Act, 1956, on July 28, 2011 the Company has, with effect from August 1, 2011, transferred its Digital Entertainment business as a going concern on slump sale basis, to Digilife Distribution and Marketing Services Limited (Formerly known as HCL Security Limited), the wholly owned subsidiary, for a consideration of Rs. 35 Crores. As on June 30, 2011, the carrying amount of assets and liabilities of Digital Entertainment business is Rs. 73.54 Crores and Rs. 71.56 Crores respectively and its turnover and gross profit for the year ended on that date is Rs. 407.96 Crores and Rs. 21.84 Crores respectively. (ii) The Company has acquired the Security and Surveillance business of Digilife Distribution and Marketing Services Limited (Formerly known as HCL Security Limited) as a going concern on slump sale basis for a consideration of Rs. 6 Crores.

As on June 30, 2011, the carrying amount of assets and liabilities of Security and Surveillance business is Rs. 33.37 Crores and Rs. 25.17 Crores respectively and its turnover and loss before tax for the year ended on that date is Rs. 56.61 Crores and Rs. 8.07 Crores respectively.

(e) The Company has signed a Share Purchase Agreement (SPA) with a Buyer in January 2011 for the sale of its entire equity stake in HCL Infinet Limited, the wholly owned subsidiary.

During the current year, the Company has made a provision of Rs. 0.34 Crores as permanent diminution in the value of long term investment and Rs.7.52 Crores as a provision for loan (inter corporate deposit) given to HCL Infinet Limited. The sale/transfer of the entire equity stake in HCL Infinet Limited shall be given effect on receipt of necessary regulatory approvals.

12. Disclosure of related parties and related party transactions:

a) Company having substantial interest:

Guddu Investments (Pondi) Private Limited (Refer Note 2 on Schedule 1)

b) List of parties where control exists/existed:

Wholly owned Subsidiaries:

HCL Infinet Limited

HCL Infocom Limited

Digilife Distribution and Marketing Services Limited (Formerly known as HCL Security Limited)

RMA Software Park Private Limited

HCL Insys Pte. Limited, Singapore

Pimpri Chinchwad eServices Limited

HCL Investments Pte. Limited, Singapore

HCL Infosystems South Africa Pty. Limited

Others Subsidiaries:

HCL Infosystems MEA FZCO, Dubai (Subsidiary of HCL Insys Pte. Limited - 60% Shareholding)

NTS Technology LLC, Dubai (49% Shareholding of HCL Infosystems MEA FZCO)

HCL Infosystems MEA LLC, Abu Dhabi (49% Shareholding of HCL Infosystems MEA FZCO)

c) Other related parties with whom transactions have taken place during the year and/or where balances exist:

HCL Technologies Limited

HCL Comnet Limited

HCL Comnet Systems and Services Limited

Erstwhile HCL Peripherals Limited (Merged with HCL Corporation Limited w.e.f. March 12, 2010)

HCL BPO Services (NI) Limited

HCL America Inc.

HCL EAI Services Limited

Others (where significant influence exists):

SSN College of Engineering

SSN Trust (Formerly known as Shri Siva Subramaniam Nadar Educational and Charitable Trust)

d) Key Management Personnel

Mr. Ajai Chowdhry Mr. Harsh Chitale Mr. J.V. Ramamurthy Mr. Sandeep Kanwar

13. a) An amount of Rs. 0.16 Crores (2010 - Rs. 0.01 Crores), being profit on sale of fixed assets has been adjusted against the loss on sale of fixed assets.

b) The profit/(loss) on account of foreign exchange fluctuations and on disposal of current investments are disclosed after deducting or adding related loss or profit, as the case may be, on similar transactions.

c) Advertisement, Publicity and Entertainment expenses, wherever on sharing basis, are shown at amounts borne by the Company.

14. Previous year’s figures have been regrouped/recasted, where necessary, to confirm to current year’s presentation.

---

Jun 30, 2010

1. Estimated value of contracts on capital account, excluding capital advances, remaining to be executed and not provided for amount to Rs. 7.24 Crores (2009 - K 1.46 Crores).

2. Contingent Liabilities:

a) Claims against the Company not acknowledged as debts:

2010 2009 Rs./Crores Rs./Crores

Sales Tax* 30.98 21.19

Excise* 10.91 10.86

Income Tax* 2.94 2.94

Industrial Disputes, Civil Suits and Consumer Disputes 8.89 8.40

* Includes sum of Rs. 7.65 Crores (2009 -Rs.5.21 Crores) deposited by the Company against the above.

The amounts shown in the item (a) represents the best possible estimates arrived at on the basis of available information. The uncertainties and possible reimbursements are dependent on the out come of the different legal processes which have been initiated by the Company or the claimants as the case may be and therefore cannot be predicted accurately.

b) (i) Corporate Guarantee ofRs. 32.77 Crores (2009 -Rs. Nil) was given to a Bank for working capital facilities sanctioned to a 100% subsidiary, HCL Insys Pte. Limited, Singapore against which the total amount utilised as at June 30, 2010 is Rs. 0.25 Crores (2009 - Rs. Nil).

(ii) Corporate Guarantee ofRs. 15.00 Crores (2009 -Rs.5.00 Crores) has been given to a Bank for working capital facilities sanctioned to a 100% subsidiary, HCL Security Limited against which the total amount utilised as at June 30, 2010 is Rs. 12.85 Crores (2009 - Rs. 0.99 Crores).

(iii) Corporate Guarantee of Rs. 6.50 Crores (2009 - Rs. 6.50 Crores) was given to a Bank for working capital facilities and ^6.07 Crores (2009 -Rs. 6.07 Crores) was given to a non-banking finance company for operating lease sanctioned to a 100% subsidiary, HCL Infinet Limited (Formerly Microcomp Limited) against which the total amount utilised as at June 30, 2010 is Rs. 3.89 Crores (2009 - Rs. 4.25 Crores) and Rs. 6.07 Crores (2009 - Rs. 6.07 Crores) respectively.

c) The Company has transferred Financial Assets (Lease Rental Recoverable) to a bank under a financing arrangement for which the balance outstanding with the bank as on June 30, 2010 is Rs. 10.87 Crores (2009 - Rs. 21.12 Crores). The transfer of these Financial Assets is with recourse to the Company.

3. Taxation:

a) Provision for taxation has been computed by applying the Income Tax Act, 1961 to the profit for the financial year ended June 30, 2010, 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 March 31.

4. Capacities, Production, Stocks and Sales:

- Sales, Purchases, Opening and Closing stocks have been given in terms of value and/or, where ascertainable, in numbers.

- Bought out Computers and certain peripherals have been included in stock/sales of systems.

5. Leases:

a) Finance Leases:

As Lessor:

(i) The Company has given on finance lease certain assets/inventories which comprise of computers and office equipments, etc. These leases have a primary period, which is fixed and non-cancelable. There are no exceptional/ restrictive covenants in the lease agreements.

b) Sale and Leaseback and further sub-lease on finance lease basis

(i) The Company has entered into transaction of sale and leaseback on finance lease basis and further sub-lease on finance lease basis for certain assets/inventories which comprise of computer systems and other related products. These leases have a primary period, which is fixed and non-cancelable. There are no exceptional/restrictive covenants in these lease agreements.

c) Cancelable Operating Leases

As Lessee:

(i) The Company has taken various residential/commercial premises under cancelable operating leases. These leases are normally renewable on expiry.

(ii) The rental expense in respect of operating leases is Rs. 22.34 Crores (2009 - Rs. 22.85 Crores).

6. Earnings per share (EPS)

The earnings considered in ascertaining the Companys 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 EPS 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.

7. Segment Reporting

The Company recognises the following segments as its primary segments.

a) The operations of Computer Systems and Other Related Products and Services consists of manufacturing of computer hardware systems, providing comprehensive Systems Integration, Roll out and Infrastructure management solutions in different Industry verticals, providing IT services including maintenance & facility management and ICT training.

b) The businesses of Telecommunication and Office Automation comprise of distribution of telecommunication and other digital lifestyle products, office automation products and related comprehensive maintenance and allied 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 Companys revenues, results and assets relate to the domestic market.

8. The Scheme of Amalgamation (“Scheme”) for merging the wholly owned subsidiary Natural Technologies Private Limited (NTPL) with the Company under sections 391 to 394 of the Companies Act, 1956 sanctioned by Honble High Courts of Delhi and Rajasthan vide their respective orders dated August 11, 2008 and May 29, 2009 has come into effect on July 6, 2009 from the appointed date of July 1, 2008. On the scheme becoming effective NTPL stands dissolved without winding up in the previous year.

Pursuant to the Scheme:

The amalgamation of erstwhile NTPL with the Company was accounted for under the pooling of interest method in the manner specified in the Scheme and complies with the Accounting Standard notified u/s 211(3C) of the Companies Act,1956 and the following balances as at July 1, 2008 of erstwhile NTPL was adjusted with the profit and loss account forming part of reserves of the Company:

9. Pursuant to the approval of the shareholders and in terms of Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009, the Company has:

(a) On receipt of 25% subscripton money, alloted 2,10,59,515 warrants priced atRs. 152.90 per warrant to certain promoters on a preferential basis on October 7, 2009. Subsequently, 1,64,38,848 warrants have been converted into equal number of equity shares of Rs.2 each on October 29, 2009 on receipt of the balance 75% subscription money.

(b) Raised Rs. 472.67 Crores by allotment of 3,05,55,713 equity shares of Rs. 2/- each at a price of Rs. 154.69 per equity share including a premium ofRs. 152.69 through Qualified Institutions Placement on October 21, 2009.

10. (a) During the year on December 17, 2009, a wholly-owned subsidiary was incorporated in Singapore with the name of HCL Insys Pte. Limited. HCL Insys Pte. Limited is engaged in the business of IT and related activities including manufacturing and trading of laptops, desktops and other related IT products.

(b) During the year, the Company has acquired the entire equity share capital of RMA Software Park Private Limited (RMAS) for a consideration ofRs. 38.84 Crores. On acquisition, RMAS has become the wholly-owned subsidiary of the Company.

(c) Subsequent to the year end, the Company through its wholly owned subsidiary, HCL Insys Pte. Limited, Singapore has on July 4, 2010 acquired a majority equity stake (60%) in HCL Infosystems MEA FZCO (Formerly known as NTS FZCO), which is a Dubai based IT Infrastructure solutions provider for a consideration of US $ 6.45 million.

11. Disclosure of related parties and related party transactions:

a) Company having substantial interest:

HCL Corporation Limited due to substantial interest in the voting power

b) List of parties where control exists/existed:

Wholly owned Subsidiaries:

HCL Infinet Limited

HCL Infocom Limited

HCL Security Limited

RMA Software Park Private Limited (Refer Note 25)

HCL Insys Pte. Limited (Refer Note 25)

c) Other related parties with whom transactions have taken place during the year and/or where balances exist:

HCL Technologies Limited

HCL Comnet Limited

HCL Comnet Systems and Services Limited

Erstwhile HCL Peripherals Limited (Merged with HCL Corporation Limited w.e.f. March 12, 2010)

HCL BPO Services (NI) Limited

HCL America Inc.

HCL EAI Services Limited

Others (where significant influence exists):

SSN College of Engineering

SSN Trust (Formerly known as Shri Sivasubramaniya Nadar Educational and Charitable Trust)

d) Key Management Personnel

Mr. Ajai Chowdhry Mr. J.V. Ramamurthy Mr. Sandeep Kanwar

12. Pursuant to notification u/s 211(3C) of the Companies Act, 1956 issued by the Ministry of Corporate Affairs on March 31, 2009, the Company has opted to accumulate the exchange difference arising on translation of foreign currency items having a term of 12 months or more and amortise such exchange difference over the useful life of the item. Accordingly, the profit before tax for the year ended June 30, 2010 is higher by Rs. 1.99 Crores (2009 - Profit before tax lower by Rs. 0.12 Crores) on account of above mentioned exchange difference, which will be amortised in future period(s) but not beyond March 31, 2011.

13. a) An amount of Rs.0.01 Crores (2009 - Rs.0.23 Crores), being profit on sale of fixed assets has been adjusted against the loss on sale of fixed assets.

b) The profit/(loss) on account of foreign exchange fluctuations and on disposal of current investments are disclosed after deducting or adding related loss or profit, as the case may be, on similar transactions.

c) Advertisement, Publicity and Entertainment expenses, wherever on sharing basis, are shown at amounts borne by the Company.

14. The Company remits the dividends to its non resident shareholders in Indian Rupees.

15. Previous years figures have been regrouped/recasted, where necessary, to conform to current years presentation.