:: HCL Infosystems Q2 net profit before tax up 61 percent ::

Board approves major Internet expansion thrust, new acquisition plan & ESOP New Delhi, January 19, 2000

HCL Infosystems Limited (HCL Insys), India's premier technology integration company, today announced its unaudited financial results for the quarter ended December 31, 1999. During this period, the company reported a 61 percent increase in net profit before tax, up from Rs 14.9 crores to Rs 24 crores in the current quarter. Profits before non-operating incomes of Rs 4.8 crores grew to Rs 19.2 crores, an increase of 29 percent over the corresponding previous period. Turnover in Q2 is reported at Rs 249.10 crores as compared to Rs 227.55 crores in the previous corresponding period.

Net profit after tax for the first half of the current year increased to Rs 36.6 crores, an increase of 34 percent over the corresponding previous period. Turnover in the first half of fiscal 1999-2000 is reported at Rs 475.85 crores as compared to Rs 432.94 crores in the previous corresponding period.

Speaking on the occasion, Ajai Chowdhry, Chairman & CEO, HCL Infosystems Ltd, said, "A major achievement for us during the first half of the current year has been in successfully tapping our knowledge and capability base towards twin objectives. The first was to continue the momentum in IT services, and the second, was in consolidating these skill sets for future growth in newer areas. With the proven capability to enter customer systems at any stage of the lifecycle, we envisage our future growth from three main areas-ISP infrastructure, e-commerce and services, specifically facilities management."

The Board of Directors also approved an Employee Stock Option Scheme on 19th January 2000 and will place the proposal for shareholders' approval at an extra-ordinary general meeting on February 25, 2000. The Scheme is pursuant to the SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999. Under the scheme, the shares to be granted shall not exceed ten percent of the aggregate equity shares as on the date of the general meeting. The Board approved grant of options to eligible employees at a grant/exercise price which shall be the closing price on the Stock Exchange where the shares are listed and which has the highest trading volume on 19.1.2000, ie the date of grant.

Mr Ajai Chowdhry said, "We intend to cover about 15 percent of the employees across the organization. The scheme is intended to both motivate and reward employees for achievement of business goals and enhanced shareholder value."

In a significant decision, the Board also approved the business plans and investments in an Internet subsidiary to exploit the growing access, networking and e-commerce opportunities. For this, it is proposed to raise Rs 125 crores through a preferential allotment of shares/warrants/FCDs/PCDs or any other financial instruments.

As per the earlier approval of the Board for acquisitions in the service area, it has also approved funding to the extent of Rs 400 crores through an empowering resolution. This could be achieved post acquisition through issue of shares/ADRs/FCDs/PCDs or any other financial instruments.

In order to seek the consent of shareholders for the above, an extra-ordinary general meeting of the Company is scheduled to be held on Friday, 25th February, 2000.

The company has yet again demonstrated its strengths in domestic, cross-segment enterprise systems sales and customized IT services by gaining large orders in Q2. Sahara India and Western Air Command awarded projects amounting to Rs 17 crores in this second quarter as did ICICI, Vijaya Bank, Punjab National Bank, Oriental Bank of Commerce and the Bombay Stock Exchange from the finance and banking sector. During this period, HCL Insys also received orders from the government sector, which include National Informatics Centre (NIC) and C-DOT. Infotech/telecom majors such as Lucent, ST Microelectronics, EHPT (Ericsson Hewlett-Packard Telecom), BPL and Veritas and IIT Kanpur, Indian Institute of Science (IISc) in Bangalore, Apparel Export Promotion Council (AEPC) have also placed significant orders. In the infrastructure sector, HCL Insys' expertise has been recognised by the Karnataka State Road Transport Corporation and Southern Railways.

Frontline Division, the distribution arm of HCL Infosystems Ltd, has also expanded its operations during the H1 period. With this, its network now encompasses 800 resellers, 80 retail outlets across 300 cities, as well as 205 "SupportNet" partners across 100 cities.

HCL Insys, a technology integrator, offers its customers technology solutions across multiple platforms. This is as a result of its expertise in developing state-of-the-art indigenous enterprise solutions; understanding of the networking technology; its design capabilities in product engineering; integrating diverse hardware components and its access to specialised technology for turnkey projects through partnerships with various world class players.

With a definite and distinct focus on enterprise solutions and personal computers, HCL Infosystems (HCL Insys) has direct customer service centres at 143 locations and state-of-the-art manufacturing facilities. HCL Insys has four overseas business entities in US, Europe, Singapore and Malaysia. With a mission statement to provide world-class information technology solutions and services to enable its customers to serve their customers better, HCL Insys is setting new standards of information technology in India.