Third Ace From HCL Stables

After
HCL Infosystems and NIIT, it is now the turn of HCL Technologies
to make waves in the Indian stock markets. It might turn out to
be the third ace from the HCL group's stables.

Creating expertise
in emerging technologies and aggressive marketing has been the hallmark
of the HCL group. While it has had its share of controversies, the
entrepreneurial spirit among its employees and senior management
is unparalleled across the Indian IT sector. Despite its strengths,
the group does not enjoy a premium in valuations compared to some
of its rivals which are younger and much smaller. This is primarily
because of a less than average record in customer services. While
these have undergone a change for the better over the years, some
old prejudices remain with the customers as well as the financial
community.

As the group
moves away from its past and into top gear, mistakes of the past
if repeated could have a disastrous impact on its global ambitions.
Thus, despite the group's formidable strengths in internet and networking-key
opportunity areas for the new millenium-its weaknesses constrict
the growth of the HCL brand equity as well as its valuations in
the stock markets.

Despite all
this, the current euphoria over IT stocks and the overall strengths
of the group make the markets look expectantly at the Delhi-based
HCL Technologies' public issue of 1.42 million shares priced between
Rs500 and Rs580 per share, which will follow its book building offer.
HCL Technologies provides software services with expertise in internet
and networking. The company has a presence in 14 countries.

Background:
Global from the early days

HCL Technologies (HCL) was formed in November 1991 as HCL Overseas.
In July 1994, it was renamed as HCL Consulting and recently to HCL
Technologies. The company started its business in the onsite market
through HCL Technologies America Inc in the US. HCL Technologies
America was acquired in 1995 by HCL. It then took over the assets
and employees of the research and development division of its group
company HCL Infosystems in 1996. In 1999, HCL then acquired US-based
Intellicent, enhancing an initial 60% stake. The company today has
a strong international presence with 13 subsidiaries spread in all
over the globe. It also has seven software development centers.


HCL was promoted by Shiv Nadar who is acknowledged as a visionary
entrepreneur. Nadar is also the founder of HCL Infosystems and NIIT,
both listed on the major stock exchanges in India. HCL had revenues
of Rs275.73 crore and net profit of Rs100.97 crore for the year
ended June 1999.

Operations:
Across emerging areas

HCL is an integrated player in the software segment providing a
range of software services. The company provides services in the
area of technology development, application engineering, software
engineering and networking. It has moved at an incredible pace to
expand its activities to almost all the major global IT markets.
The company currently has 24 offices in 14 countries.

HCL has created
a niche for itself in providing services in the area of networking
and internet-related services, making up 27% of its total revenues
in June 1999. The company provides internet and ecommerce services
using technologies like CORBA, DOM and Java. Networking is another
focus area of the company wherein it provides consultancy, planning,
and integration and migration services. It has made strong inroads
into the telecom segment. HCL's other services include product re-engineering,
re-development and maintenance services. It reported a turnover
of Rs275.73 crore in June 1999 against Rs124.24 crore in June 1998.
The company earns a major share of revenue from the US market-73%
in 1999, up from 71% 1998.

HCL's consolidated
revenues in June 1999 stood at approximately Rs690 crore, up 40%
over the June 1998 figure. Out of this, revenues from Europe and
Asia Pacific stood at Rs120 crore whereas the balance was achieved
from its services in the US.

HCL has set
up seven offshore development centers in India. These centers are
based in Noida, Gurgaon, Ambattur and Chennai, all with communication
links with global offices. HCL, directly and through its subsidiaries,
has seven subsidiaries in Europe, four in the Asia Pacific region,
three in the US and one in India. The company has a total of 24
sales and marketing offices in these countries that provide round
the clock services to its clients. The company's clients include
Toshiba, Bankers Trust, Alcatel, Southern California Edison and
VDO Mannesmann among others.

Apart from the
acquisition of Intelicent Inc, a provider of IT consulting services,
HCL also bought the 50% stake that Perot Systems held in HCL Perot
Systems. This has enabled HCL to spread its business offerings.
HCL Perot Systems has five offices in North America, Europe and
Asia Pacific, and two development centers in India. HCL's subsidiary
in India, HCL Comnet (India), provides networking services.

The company's
overall employee strength, including that of its subsidiaries stood
at 2,534 in June 1999. Out of these, 1,687 are based in India, 648
in the US, 125 in Asia Pacific and 74 in Europe. Out of the total
employees, 2,051 were engineers. The company follows a stringent
recruitment policy and provides extensive training to its employees
in the emerging technologies.

Projects:
Expanding horizons