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HCL Infosystems Ltd.
Investor Presentation
Index•HCL Infosystems - An Overview
•Corporate Governance
•Key Partnerships
•HCL Infosystems- Information Processing
•HCL’s Production Facilities
•HCL Direct Support Infrastructure
•HCL Infinet
•Financials
HCL Infosystems
•Pioneers for the past 26 years in the IT space
•A Home-grown IT Powerhouse
•Leadership through Information Enabling
Our Key Strengths
•Relationships
•Technology
•Reach
•Best support in the industry
•Stakeholders,
•Employees,
•Business Partners &
•Principals
give us a unique edge
Relationships that have thrived for over two decades
Our Strong Relationships with
-giving the right technology at the right time
-having the ability to service & support technology
-having the domain knowledge of understanding a host of diverse technologies and the ability to put together a solution using a multitude of technologies
We leverage Technology for leadership advantage by -
-Pan-Indian footprint of sales, service, support & storage locations ensures fastest addressal of our customers’ requirements
-Gives us a unique strategic differentiation
-Gives us the ability of “fastest time-to-market”
-Helps us track ever-changing consumer needs & expectations
Reach
Key Partnerships
Management Depth
HCL Infosystems -
•is led by practical leaders who have seen all aspects of business
•Has a management team that has seen business cycles from close quarters
•Has a team for which Technology is a familiar area
•Has leaders that have risen from ranks
•leading to solid in-depth functional know-how and mature thinking capability
•Has a team that still imbibes the basic HCL spirit - that of pride & passion
CORPORATE GOVERNANCE
• At HCL Infosystems corporate governance has been a long-standing policy to promote openness in policies and action, empowerment for decision-making and a framework for effective management control.
• “Endeavor to maximise economic value and stakeholders wealth” is the edifice on which the Corporate Governance initiative of HCL Infosystems Ltd. is built. The essence of Corporate Governance influenced its voluntary adoption proactively ahead of mandatory implementation.
CORPORATE GOVERNANCECOMPOSITION OF BOARD
Engineer from BMS College of Engineering, Bangalore and a graduate of International Management Program from University of Hawaii, with 25 years experience. Associated with HCL since 1980 after a brief stint of 2 1/2 years with Fujitsu Ltd. Japan.
Executive DirectorMr.Ravi
Thumboochetty
Engineer from Trichur Government Engineering College, having over 38 years of experience. Associated with HCL since 1983. Currently overseeing the domestic operations of the Company.
Executive DirectorMr.T.S.Purushothaman
Graduate in Commerce from Calcutta University. Has more than 29 years of experience in the electronic industry.
Promoter and non-executive
Director
Mr.D.S.Puri
A graduate in Electronics and Telecommunication, Mr.Chowdhry has over 30 years of experience in the IT industry in India and abroad.
Promoter and Executive
Director
Mr.Ajai Chowdhry
Brief BackgroundCategoryName
CORPORATE GOVERNANCE
COMPOSITION OF BOARD (Contd…)
A management graduate from Jamnalal Bajaj Institute with over 22 years of experience in HR Consulting.
Independent, non-executiveMs.Anita
Ramachandran
Graduate from Emmanuel College, Cambridge (U.K). He held various positions with the U.P.Govt. and Govt. of India including Chief Secretary, UP Govt. and Secretary to the Govt.of India.
Independent, non-executiveMr.R.P.Khosla
A Chartered Accountant, with rich experience in the areas of Corporate Strategy, Project Studies, Diversification Studies and Govt.Policy/Legislation’s impact on business.
Independent, non-executiveMr.E.A.Kshirsagar
A Chartered Accountant with vast experience in the area of Finance.
Independent, non-executiveMr.S.Bhattacharya
Brief BackgroundCategoryName
CORPORATE GOVERNANCE
August 1998Customer Satisfaction
CONSTITUTED INCOMMITTEES
August 1998Key Result Area
February 2000Shareholders/Investors Grievance
August 1998Employee Compensation & Satisfaction
August 1998Accounts & Audit
BOARD COMMITTEES
HCL Infosystems
“ITs our World”
Focusing on Indian IT, Communication & Imaging Products & Services opportunity
(estimated size Rs. 32,000 crores)
Continuous Range of Products & Services Offering
Mobile Phone
Products & Services
Solutions
Internet Access pack (Retail) PC
ServersMFD
Laptop CopierHigh-endProjects
Rs. 250 AMCFM
Networking Services BOT Rs. Multi crore
OpportunityIndia Hardware & Related Services
• PCs Rs 8637Cr• Laptops Rs. 567 Cr• Servers Rs. 1444 Cr• Workstations Rs. 101 Cr• Peripherals Rs. 2533 Cr• Networking Rs 2520 Cr• Storage Rs. 993 Cr• Total Hardware Products Rs. 16795 Cr
• Packaged Software Rs. 2732 Cr• IT Services Rs. 6504 Cr• Other Rs. 2732 Cr• Total IT Hardware & Related Services Rs 28,763 Cr.
• Source : IDC India , (Expected Market FY 0203)
OpportunityCommunication , Imaging & Networking Services
Market( Addressable by HCL Infosystems)
• Telecom Products Rs. 1400 Cr
• ISP & Networking Services Rs .1124 Cr
• Imaging Products Rs. 310 Cr
• Related Services Rs. 200 Cr
• Other Services ( ITES support) Rs. 200 Cr
• Total Rs. 3234 Cr
*Internal estimates of market size
Leadership through
Information Enabling
•Video Conferencing•MFDs•Mass Mailing Solution•Switches•PBXs•Call Centre Products•Digital Copiers•VoIP Equipment•Mobile Phones•ISP Packs
•Tablet PCs•High End Servers•Laptops
•Servers & workstations•PCs
•Speech Recognition S/w•Networking Equipment•Storage Solutions
•AMC
•FM Services
•Network Mgmt Services
•BOT Based Services
•Multi-location Project Services
•Network Security Services
•Multi Vendor Support
•Bandwidth
•VPN
•Call Center Consulting
•FM for Call Centers
•Value-added Network Services
HCL Infosystems Limited
Information Processing
Voice & Data Integration
Retail
Call Centers
•VoIP Equipment•Internet Access Packs
•MobilePhones
•Bandwidth
•Call Center Consulting•Network Intgn/FM/System Intg.
•VPN •Network Solution•VoIP Services
•Imaging •Mobile Phones•Projectors
•Mailing Solution•Telecom Equipment
Enterprise Customer
Exploiting Synergies of Leadership - Voice & Data Integration
Office Automation
HCL Infinet
HCL Infosystems Ltd
Information Processing
ENTERPRISEENTERPRISE
Small BusinessSmall BusinessHOMEHOME
•Beanstalk - India’s first Home PC
•EzeeBee - HCL’s LowCost PC
•BusyBee - India’s First Desktop (‘86)
HCL’s Offerings in Info-Processing ProductsHCL’s Offerings in Info-Processing Products
•NetManager - Intel Servers
•Toshiba - LapTops•Toshiba - Handheld PCs•Toshiba - Tablet PCs
•Infiniti PCs- India’s Largest installed PC
•Global Line - Intel Servers for Enterprise applications
•SUN Servers & Workstations
•Networking Products
•Information Kiosks
THE ECONOMIC TIMES - 11 DEC ‘02
Desktop Computers
Desktop Computers
• Enterprise PCs - Infiniti – Largest installed base in the Country– Always pioneers in giving Cutting Edge Technology– Best Value for Money Brand– Serving all Enterprise domains– Consistently dominating Indian Commercial Desktop Market– Strong presence in verticals like Government, Banking & Finance
• Consumer PCs
– Market Segments Products/Brands Software Platform – Premium Home Beanstalk Microsoft WindowsXP
– Value for Money EzeeBee Open Source– Small Business Busybee Windows/Open Source
Servers
• Global Line – Intel Architecture based– For the multi-platform , multi-use , rugged
versatile servers– Installed in leading enterprises from various
sectors – Share a special relationship with Intel
• Headstart in New Products (P4 based Server)• Intel Solution Centre
- A Partnership that leverages HCL Infosystems’ SI & Support expertise for solutions in SAP , e-governance solutions, Telecom & Core Banking
-Helping us serve better in verticals like Telecom, Finance, Government, Manufacturing & Education
A Complementing Relationship
Mobile Computing Products
Marketing, Sales, Distribution and Support of Toshiba Notebook Computer, Pocket PC and Tablet PC
• Market Segment– Originally: Global & Indian corporates– Enhanced Focus: SOHO, SME, Higher Education,
Corporates, PSU and Government• Market Share - 18.5 percent (source IDC; Q3 ‘02)
HCL: Production Facilities • State-of-the-art manufacturing facilities include :
– ISO 9001 and ISO 14001 certified facilities at Pondicherry ;
– 4 facilities for Peripheral manufacturing , 2 each at Chennai & Pondicherry
Location Products Manufactured
Pondicherry (2) PCs , Business Servers, Workstations
Chennai (2) CNC Racks, Cabinets, Information Kiosks
Pondicherry PC Keyboards,Networking products
PondicherryColor Monitors, Terminals, Thin clients & Passive Networking products
Pondicherry Manufacturing Facilities
– Three hours from Air & Sea Port
– Sales Tax exemptions
– Income Tax exemptions
– Disciplined work force
– Proximity to vendors
– Established outward transportation network
– Running since 1995
– Local vendor development & localization engineering capability
HCL Labs
R & D Facility at Pondicherry
A technically sound team having focus on Management software, a
range of solutions, New Technologies, Testing and Benchmarking a wide range of Hardware
& Software products
HCL Labs
Some recent achievements•PIDR (Platform Independent Disaster Recovery)
•ASR, Raid Manager for non-safte cages
•Release & Certification of fibre channel products under clustering environment
•Automatic back-up of Hard Disk on pre-failure alert
•Desktop Management Software
•Server Management Software (Remote Manager & Asset Tracker)
•Linux Management Software
•Successful benchmarking for NIC, DACNET, CPT
HCL Support - Unmatched Direct Support Infrastructure
Test & Test & Repair:Repair:2626++ •Established Automated Call management
Systems
•Largest pool of IT trained manpower capable of providing multi-vendor , multi-product support in 162 locations
•Support base of 6000+ Servers & 400,000+ desktops
IRC +RRC :IRC +RRC :66++
Spare Spare Points :Points :162 162
Training Centre : 1Training Centre : 16464++ seater seater residentialresidential
162 service locations staffed by 1600162 service locations staffed by 1600++ engineersengineers
Facilities Management (FM)•Entire range of FM services including
•Onsite support, System Administration, Desktop Management, E-mail Management
•Rollout, Relocation, Migration and Education Services
•Capability to address Multi-Vendor, Multi Platform Hardware, O/S, Database & Middleware
•Networking Services
•Network design & consulting, Deployment, Support services
•Network Management and Audit Services
HCL Services Bouquet-helping our customers serve their customers better
•Complete Range of Security Services
- for Internal, Perimeter Network, Data Center
-Start to End services including Policy Framework Design, Solution Design, Deployment, Monitoring & Surveillance, Audit Services
•Complete Range of Storage Services
-Design & Selection, Deployment, Support , Management and Audit.
•Complete Range of Disaster Recovery Services & Solutions
IT Products & Services
* NIC
* PNB
*ONGC
- Strong hold on Key growth verticals like Government, Banking & Finance, Education & Research
-Well established SI relationship with potential repeat business (Rate Contracts)
* NICSI
* DGS & D
* Punjab & Sind Bank
Key Rate Contracts
IT Products & Services
*LIC *NIC*PNB *ALCOT*Indian Overseas Bank *NICSE*Canara bank *The Hindustan Times*Syndicate Bank *Asian Paints*Bank of India *ACC*Ministry of Defence *Sun Pharma*HARTRON *Bajaj Auto*ONGC *Voltas
Some Key Customers
HCL Infinet*
Communication & Imaging
Products & Services
*Post Statutory approvals & restructuring
Imaging & Telecom Solutions
Communications & Imaging Solutions to Enhance Business
Call Centrewith CTI
Mobility Solutions
CorporateNetwork
Desktop
Voicemail
Secretary
Businesscordless
Pager
Cellularphone
Workflow Applications
Interactive Voice Response Systems
Voice DataNetworking
•Imaging
HCL Office Automation Solutions
• First to launch paper Copiers in India (1981)
• First to launch Digital Duplicators in India (1988)
• First to launch EPABX Systems in India (1989)
• Over 28,000 customers
Imaging Product Offerings
• Toshiba : Copiers & MFDs• Range of Analog , Digital and Color Copiers and MFDs for all
segments
• Infocus and Toshiba : Multimedia Projectors• Ultra Portable , Fixed and Conference Room models
• Duplo : Digital Duplicators• High speed printing solutions and Finishing equipment
• Pitney Bowes : Mailing systems• High speed mailing , inserting and franking equipment
Telecom Offerings
• Nokia• All ranges of Nokia GSM Cellular Phones
• Ericsson• PBX,KTS,DECT Cordless,Call Centre,IP Telephony,WLAN,Unified Messaging
• Mediasoft• IVR systems
• Onyx• CRM Solutions
•Cellular subscribers in country : 10 mn
•Growth experienced in 2001 - 2002 : 80 %
•HCL Infosystems is Nokia’s largest distributor in the country
•Sound market understanding
•Over 6000 dealers
•Over 35 Stockists and Redistributors
•Over 60 Support centres
•HCL - Nokia relationship is now 6 years old and growing
Nokia Phones
Riding the Telecom explosion
Solution Offerings
Business Areas:
•Facilitating incorporation of Tele Solutions in the existing Process
–Voice, Data & Wireless Networks
–Migration of Back office work
•Telecom Solutions as a replacement of existing Process
–Call Centers including Automated call Handling
–CTI, IVR
Servicing the ITES Opportunity•India slated to ride high on ITES boom
•Projected size by 2008 : USD 17 billion (NASSCOM-McKinsey)
•Growth in 2001 - 2002 : 73%
•HCL to provide Single Window Provision of services
•Application Development and System Integration
•Consultancy & Project Management
•Recruitment & Training
•Facility Management
•Outsourcing of Operations and Processes
UC Wireless - Wireless Internet Product Applications
• Wireless Internet access• Interconnection of private LANs• Wireless ( fractional ) T1 for data• Wireless backhaul for voice networks ( including
cellular/PC)• Remote Video Monitoring• System Control and Data Acquisition (SCADA)
Business Communication Solutions
Communication and Imaging Business•Some Key Customers
•BHEL
•Income Tex Deptt.
•Karnataka Police
•Rajasthan Police
•IIT Kanpur
•Convergys Services ……..
•Some Key Rate Contracts with
•DGS & D
•NCCF
• Facilitate/ provide technology through their collaborator Stratasoft USA.
• Assist Entrepreneur to create facility.• Assist Entrepreneur in recruitment & training in India & overseas. • Technology and Process transitions• Carry out all system integration.• On going audit of the Call Center Practices• New Business opportunities and Rate negotiations• Facility Management• Technology Upgrades and support
Depth and Breadth of HCL i8 Services
Call Center Solutions Call Center Solutions
HCL’s i8 Initiatives
I 8
HCL/ SCMS
HCL/ GES HCL/ Industele
HCL/ Bizibi
HCL/ Convergence
HCL/ Dial M
HCL/ Srimata
HCL/ MPL
Knowledge Credentials:Providing Legal consulting,Creation of facilities & Infrastructure,Process consulting and training,providing customer access from day one technical facility management
< in 12 Months
The Infinet NetworkThe Infinet Network
- the vehicle for service delivery
ManagedHosting
ManagedHosting
ApplicationsHosting
ApplicationsHosting
Services Road MapServices Road Map
CPE-based services
CPE-based services
Network based services
Network based services
Access& Transport
Access& Transport
Co-location Co-location
PersonalizedContent Delivery
PersonalizedContent Delivery
TIME
2002
Managed Firewalls
Network based IP/FR VPNs
VoIP
HCL InfiNet - Revenue Streams -xSP•Networking (NSP)
•Virtual Private networks (Internet, Intranet & Extranet)
•Consumer - SOHO - SME space
•Application Service Provision (ASP)
•Messaging Solutions (Mission Support)
•Long term to evolve in enterprise space (Mission Critical)
•Remote Support Services(RSS)
•Managed Service Provision (IT Infra Services)
•Managed Hosting Sevices
•Content Delivery Services (Akamai Tie-up)
•New Services
•VOIP
xSP MARKETxSP MARKET
• VPN and corporate services
• Industry Growth is 65% for VPN and Internet Gateway Services and VPN hardware.
• Current trends in adoption is hot in Manufacturing Segment, Cold in Banking & Finance and Government.
• Average Value per deal will increase with VOICE solutions. This will compensate for drop in prices because of fewer opportunities and more players
• Managed Services space is maturing and enterprise portal deployment will accelerate the market .
xSP MARKETxSP MARKET
• Internet Access Market is consolidating among three major players - VSNL / TATA (6.5L), SIFY (6L), HCL InfiNet (2.0 L)
• Prices have bottomed out and are steadily rising, Consumer Shift to established players is already happening
• Bandwidth prices continue to go down .
VoIP and Internet Telephony in IndiaVoIP and Internet Telephony in India• Deregulated from 1st April 2002 ,rules out foreign players playing
directly in Indian market.
• Long distance players can use VOIP technology for carrying Voice over their backbone to reduce costs. (NLDO* / ILD* players )
Market addressal• Product tie up - with Net2Phone
- Market Leader- ~ 70% market share- Comprehensive device strategy. - Strategic partnership model in India
• Marketing tie up -With Indiatimes.com
*NLDO – National Long Distance Operators
*ILD – International Long Distance
Key AchievementsKey Achievements
•All India coverage through 36 locations
•150 + corporate customers in one year
•Lowest cost, highly scalable network
•200000+ retail subscribers
•Won the largest Networking contract in the country
•Dominantly customers are conversions out of existing relationship corroborating our sales leverage strategy
•Added prestigious corporates as our customers like Pepsi, LG, Electrolux, ITC to name a few
Key DifferentiatiorsKey Differentiatiors•Stayed away from high investment, low return areas like Internet Gateways and Data Centres
•HCL Infinet’s strategy is to invest incrementally as we grow - not ahead of the curve.
•Relatively faster cash break-even
•Very low investments in portal and related B2C field.
•Efficient investment in latest technology resulting in the lowest cost network in the country.
•Leveraging on existing purchasing/integration capability to lower investments and operating cost
•High scalability as business matures
•Encouraging potential vis-à-vis global growth metrics
Financial PerformanceFinancial Performance
Overhead as % sales
5
10
15
20
J AS 01 OND 01 J FM 01 AMJ 02 J AS 02 OND 02
%
PBIDT
0
20
40
JAS 01 OND 01 JFM 01 AMJ 02 JAS 02 OND 02
Rs./
Crs.
Profi t Bef ore Tax *
0
20
40
JAS 01 OND 01 JFM 01 AMJ 02 JAS 02 OND 02
Rs.
/ Crs
.
* B e f o r e i mpa i r me nt o f c ur r e nt a s s e t s
C o n s o l i d a t e d R e v e n u e s
185 223 303 354 361549
50 4948 49 49
48257 299
624
436432379
J A S 01 O N D 01 J F M 02 A M J 02 J A S 02 O N D 02
H a r d w a r e S e r v I c e s C o n s o l i d a t e d
Financial PerformanceFinancial Performance
Receivables
73 7371
FY 00 FY 01 FY 02
No.
of
Day
sCurrent Ratio
1.92.12.1
FY 00 FY 01 FY 02
Inventory Turnover
11.2
10.5
8.6
FY 00 FY 01 FY 02
No.
of
times
Debt Equity Ratio
0.31
0.28
0.28
FY 00 FY 01 FY 02
Financial PerformanceFinancial PerformanceRs Crores
AuditedParticulars year Ended
2002 2001 2002 2001 30th June, 2002
1. Net Sales/Income from Operations 597.43 271.85 1007.10 507.33 1261.322. Other Income 5.60 2.77 6.71 4.93 8.71
3. Total Expenditurea) (Increase)/Decrease in stock in trade (11.54) 0.12 (13.60) (0.94) 1.05
c) Staff cost 26.46 21.62 53.50 44.46 92.82d) Administration, Selling, repairs & others 26.73 23.89 51.01 45.17 96.154. PBIDT (1 + 2 - 3 ) 36.75 18.83 54.98 36.05 67.845. Interest (Net) 1.72 0.55 3.43 0.67 3.716. Depreciation 2.99 2.92 5.96 5.92 12.687. Profit before Tax (4-5-6) 32.04 15.36 45.59 29.46 51.458. Impact of Impairment (see note 3) 30.24 - 30.24 - - 9. Provision for Taxation
- Current -0.64 1.57 1.12 3.72 2.81 - Deferred -0.39 -0.81 0.30 -1.33 2.51
10. Net Profit After Tax (PAT) (7-8) 2.83 14.60 13.93 27.07 46.1311. Paid-up Equity Share Capital 31.91 31.91 31.91 31.91 31.91
(Face value per share in Rs.) 10.00 10.00 10.00 10.00 10.0012. Reserves excluding Revaluation Reserves 294.93
of the previous accounting year13. Basic EPS (Not annualised) Rs/share 0.89 4.57 4.37 8.48 14.46
b)
Unaudited 3 months ended31st December
867.92 387.52Cost of sales (including Material consumption / excise duty)
524.63 210.16 1012.17
31st DecemberUnaudited 6 months ended
Financial Performance – Segment WiseFinancial Performance – Segment WiseR s C rores
Audited year ended
P artic ulars 2002 2001 2002 2001 30th June,20021. S egm ent R evenue
a) P roduc ts and R elated S ervic es
- C om puter S ys tem s 238 .09 204 .62 453 .32 378 .20 886 .25 - O ffic e Autom ation & Telec om m unic ation 347 .29 49 .35 525 .19 92 .71 303 .66b) S oftw are S ervic es 12 .05 17 .88 28 .59 36 .42 71 .41Total 597 .43 271 .85 1007 .10 507 .33 1261 .32Les s : Inter s egm ent revenue - - - - - Net s ales /inc om e from operations 597 .43 271 .85 1007 .10 507 .33 1261 .32
2. S egm ent R es ults (P rofit(+ ) / Los s (-) before tax and interes t from eac h s egm ent)
a) P roduc ts and R elated S ervic es - C om puter S ys tem s 25 .81 13 .22 34 .93 22 .86 34 .17 - O ffic e Autom ation & Telec om m unic ation 12 .33 2 .51 19 .14 4 .73 15 .60b) S oftw are S ervic es (2 .07 ) 2 .98 (0 .60 ) 6 .31 13 .09Total 36 .07 18 .71 53 .47 33 .90 62 .86Les s :
i) Interes t (net) 1 .72 0 .55 3 .43 0 .67 3 .71ii) O ther un-alloc able expenditure net of 2 .31 2 .81 4 .45 3 .77 7 .70 un-alloc able inc om eTotal P rofit B efore Tax 32 .04 15 .35 45 .59 29 .46 51 .45
3. C apital E m ployed (S egm ent As s ets - S egm ent Liabilities )
a) P roduc ts and R elated S ervic es - C om puter S ys tem s 150 .04 153 .67 149 .78 - O ffic e Autom ation & Telec om m unic ation 25 .25 28 .11 32 .30b) S oftw are S ervic es 33 .84 40 .83 44 .34c ) Liquid As s ets - C om puter S ys tem s 151 .42 161 .36 156 .64 - O ffic e Autom ation & Telec om m unic ation 26 .36 6 .04d) O thers 87 .34 67 .82 65 .67Total 474 .25 451 .79 454 .77
Unaudited 3 m onths ended Unaudited 6 m onths ended31s t D ec em ber 31s t D ec em ber
S egm ent res ults for the quarter are after c ons idering alloc ated s upport func tion c os t of R s 2.29 c rores in P roduc ts and R elated s ervic es and R s 0.79 c rores in S oftw are s ervic es (Ytd R s 4.79 c rores & R s 1.64 c rores res pec tively).
