HCL Infosystems Ltd.

HCL Infosystems realigns businesses

Increases focus on core strength of domestic IT, communications and imaging products, solutions and related services

December 18, 2002 - HCL Infosystems, India's premier information enabling company, today announced its decision to redefine and realign its businesses with a view to focus on its core strengths. The Board of HCL Infosystems Ltd at their meeting held today approved a restructuring proposal. Taking advantage of the synergies within the company and companies under the HCL banner, HCL Infosystems will demerge its software export business to HCL Technologies and transfer its Office Automation division to HCL Infinet. Post the realignment, HCL Infosystems will strategically focus on the domestic IT, communications and imaging products, solutions and related services business.

The software export business unit of HCL Infosystems, also known as the Professional Services Organisation (PSO), will now be demerged with HCL Technologies. The entitlement ratio has been based on the recommendation valuation carried out by two independent valuers, Price Water House Coopers Pvt Ltd & Bansi S Mehta. Based on this, HCL Technologies will issue shares to the shareholders of HCL Infosystems Ltd. The scheme of arrangement, valuation report, and share entitlement ratio has also met with Board's approval.

Making the announcement, Ajai Chowdhry, Chairman & CEO, HCL Infosystems, said, "We have constantly evolved with changing times and hence have retained our leadership and profitability for all our stakeholders. The last one year has seen the global market for software services change significantly and today for any Indian software company to compete globally in this space it has to have a certain scalability to retain its profitability and competitiveness. We have realised that for this unit to achieve its potential, it is best to give it the operational scalability of a company like HCL Technologies. We, going forward would like to focus on the domestic hardware products, solutions & related services market, wherein lie our core strength."

As part of the demerger, employees and customers of the PSO division of HCL Infosystems will move to HCL Technologies.

In another move towards increasing profitability by aligning synergistic business within the HCL Infosystems fold, HCL Infosystems will integrate the Office Automation division with its 100 % owned, networking subsidiary, HCL Infinet. The two divisions, with synergistic product offerings in the communications space so far have been individually targeting a common base of customers in the retail and corporate sector. With the communications business growing rapidly, the two will now amalgamate and combine forces under the HCL Infinet banner.

With this re-engineering HCL Infosystems will have two focused business units. While HCL Infosystems will concentrate on the IT products, solutions and related services business, Infinet will focus on the rapidly growing communication and imaging products, solutions and services industry.

The domestic IT products, solutions and related services business which includes, PC's, servers, networking products, Tablet PC's, Handheld PC's, network security, remote management, project management services, etc is estimated at Rs 28,763 crores. HCL Infosystems is currently among the leading players in all the segments comprising this industry. The communications & imaging products and services business which includes Telecom Products, web switches, VoIP products, imaging products, call center products, mass mailing solutions, value added networking solutions, ISP, and mobile phones is estimated at over Rs 3,100 crores. With the comprehensive focus of the new business unit, HCL Infinet aims to lead the agenda.

Further illustrating the benefits of the alignment, Chowdhry said, "Through the new business model we will leverage our core competencies and be able to straddle the entire landscape of information enabling technology far more comprehensively, effectively and competitively."

The proposed realignment will be filed with the High Court at Delhi and will be subject to various approvals including those from shareholders, regulatory authorities and creditors/lendors.

About HCL Infosystems

HCL Infosystems, India's premier information enabling and integration company, offers its customers technology solutions across multiple platforms. It has partnerships with some leading global player like Intel, Toshiba, HP, Ericsson, Microsoft, Nokia and Sun Microsystems among others.

HCL Infosystems has direct customer services center across 160 locations and two ISO 9001 certified state-of-the-art manufacturing facilities. With a mission to provide world-class information technology solutions and services to enable its customers to serve their customers better, HCL Infosystems is forever setting new standards of IT in the country.