HCL INFOSYSTEMS Chairmans Speech

Dear Shareholders,

During the Financial Year 2016-17, the growing momentum of the Enterprise Business focus combined with improved operational efficiency, enhanced productivity and thrust on digital technologies has energized our performance in the Enterprise space. Let me describe how your company performed during FY17.

Your company posted revenue of Rs. 3,738 Crore in FY17. The Enterprise Business as a whole grew marginally during the year. However, this should be seen in the context of the fact that during the year we proactively exited unprofitable engagements and variable zed our low margin services through our ASP ecosystem. Importantly, our breadth of products, strong reseller partnerships, OEM partnerships and customer value alignment has created a unique proposition forourcustomers.

The Enterprise Distribution turned in a commendable performance with a consistent growth driven by traction with key Enterprise OEMs along with strong performance across Enterprise and Channel. We have significantly enhanced our focus on Cloud through internal investments and strong collaboration with Microsoft.

The Enterprise Services business clocked revenue of Rs. 949 crore in FY17. There was a decline in revenue due to ongoing contract rationalization in the domestic services business. It is worth noting that the losses of the overall Services business have declined consistently Q-o-Q during the financial year. The foundation for expansion into higher margin service contracts has been built through capability augmentation to enable us to take advantage of key market trends in the emerging technology services.

In the Consumer Distribution business there was a considerable decline in revenue during FY17 due to transition in the business model and a challenging business environment.

I am happy to let you know that the Consumer Distribution business during the financial year has transitioned to a multi-brand, multi-channel business model since January 2017 to expand in the high-potential segments of mobile products. And the business has already achieved an early breakthrough by acquiring the General Trade distributorship in three states for a leading global brand mobility Smartphone product suite. This business is set to scale with further tie ups and launches in this financial year.

The total revenue from the System Integration & Solutions businesses for the FY stood at Rs. 355 crore. The bright spot in this business is that due to focus on timely completion of existing projects there was higher revenue collection and reduced bills receivables. For example there was an inflow of Rs. 200 Crore from a major Defense Project during this financial year. The risks associated with projects has been mitigated almost entirely with most of the projects achieving commercial closure or nearing completion. In our flagship UIDAI project we crossed another milestone of more than 113 crore Aadhaarcard enrollments.

Disciplined working capital management enabled us to see through the financial year without any significant incremental net debt whilst managing the funding of the cash losses entirely through these initiatives.

In October 2015, the company had rolled out PULSE (Personalized Unit Level Self Evaluation), a weekly self-evaluation system for employees to identify gaps and improvement opportunities at an organizational level. Consequently, many processes within functional teams were identified for overhauling and accordingly taken up for action. During the last financial year, we introduced Gold Standards. Demand Desk, an Online Ticketing System that empowers employees to demand action from their colleagues to ensure value creation. It also led to mapping role clusters which helped define full potential for all critical roles.

The transformation journey has enabled us to build a strong distribution and services business together with institutionalization of corporate governance, processes and capability building initiatives.

With the concurrent advent of multiple disruptive digital technologies and rapidly changing business dynamics we stand at an inflection point in the Industry. We are well positioned to take these challenges in our stride and gainfully address the emerging opportunities. I am confident that our continued focus on the Enterprise Business along with multiple internal and market related initiatives will help us lead HCL Info systems towards sustained growth and profitability.

With Warm Regards


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