HFCL INFOTEL LIMITED CORPORATE INFORMATION Board of Directors Auditors Mr. Mahendra Nahata (Chairman) S. R. Batliboi & Associates, Chartered Accountants Mr. S. Lakshmanan Atul Kulshrestha & Co., Chartered Accountants Mr. R. K. Bansal Mr. M. P. Shukla Dr. R. M. Kastia Internal Auditors Mr. K. B. Lal Khandelwal Jain & Co., Chartered Accountants Mr. Vinay Maloo (upto 31st October, 2006) Mr. T. S. V Panduranga Sarma (upto 31st October, 2006) Compliance Officer Mr. S. Prabhakar Company Secretary & Manager & Chief Executive Officer Head – Legal & Regulatory Mr. Surendra Lunia Banks & Financial Institutions Audit Committee IDBI Bank Ltd. Mr. S. Lakshmanan (Chairman) LIC of India Ltd. Mr. Mahendra Nahata State Bank of Patiala Mr. R. K. Bansal Oriental Bank of Commerce Mr. M. P. Shukla (w.e.f 31st January, 2007) ING Vysya Bank Ltd. Mr. T. S. V Panduranga Sarma (upto 31st October, 2006) Punjab National Bank Centurion Bank of Punjab Ltd. ICICI Bank Limited Share Transfer & Investors’ Grievance Committee Dr. R. M. Kastia (Chairman) Registered Office Mr. K. B. Lal B-71, Industrial Area, Mr. M. P. Shukla (w.e.f. 31st October, 2006) Phase VII, Mohali, – 160 055, Punjab Mr. T. S. V Panduranga Sarma (upto 31st October, 2006) Remuneration Committee Registrar & Share Transfer Agents Mr. S. Lakshmanan (Chairman) Cameo Corporate Services Ltd. Mr. M. P. Shukla Unit:- HFCL Infotel Ltd. Dr. R. M. Kastia “Subramaniam Building”, No.1, Club House Road, Project Management Review Committee Anna Salai, Chennai- 600 002. Mr. M. P. Shukla (Chairman) Mr. Mahendra Nahata Mr. R. K. Bansal Mr. S. Lakshmanan Mr. K. B. Lal Contents Page No. Notice ........................................................................................................................................................... 2 - 5 Directors’ Report ........................................................................................................................................ 6 - 8 Corporate Governance Report .............................................................................................................. 9 - 18 Management Discussion and Analysis ..............................................................................................19 - 25 Auditors’ Report .....................................................................................................................................26 - 28 Balance Sheet and Profit & Loss Account with Schedules ..............................................................29 - 53 Auditors’ Report on Consolidated Accounts ...................................................................................54 - 55 Consolidated Accounts .........................................................................................................................56 - 97 Attendance Slip and Proxy Form ............................................................................................................... 98 1 HFCL INFOTEL LIMITED NOTICE NOTICE is hereby given that the Sixtieth Annual General 3. Contribution to Provident Fund & Gratuity shall Meeting of HFCL Infotel Ltd. will be held on Friday, the 28th be as per the rules of the Company. day of September, 2007, at 12:00 Noon at the Registered 4. Other terms: - Office of the Company situated at B-71, Phase – VII, a) The appointment may be terminated on either side Industrial Area, Mohali -160055, Punjab, to transact the by giving three months notice in writing or three following business: - months salary in lieu thereof. Salary here means ORDINARY BUSINESS cost to the Company. 1. To consider and adopt the Audited Balance Sheet as at b) Mr. Surendra Lunia shall be entitled to March 31, 2007, the Profit and Loss Account for the reimbursement of entertainment, travelling and all year ended on that date and the Reports of the Board of other expenses incurred for the business of the Directors and Auditors thereon; Company as per the Rules of the Company. 2. To appoint a Director in place of Mr. Mahendra Nahata, c) Mr. Surendra Lunia shall also be eligible for housing who retires by rotation and being eligible offers himself and other loans and facilities in accordance with for re-appointment; the Rules of the Company. 3. To appoint a Director in place of Mr. M. P. Shukla, who d) For all other terms and conditions not specifically retires by rotation and being eligible offers himself for spelt out above, the rules and regulations of the re-appointment; Company shall apply. 4. To consider and if thought fit, to pass, with or without e) Mr. Surendra Lunia shall be entitled to an increase modifications, if any, the following resolution(s) as an in remuneration at any time within a period of ORDINARY RESOLUTION: three years, subject to a limit of 100% increase in the basic salary in three years. “RESOLVED THAT pursuant to the provisions under Sections 224, 225 and other applicable provisions, if RESOLVED FURTHER THAT in accordance with the any, of the Companies Act, 1956, M/s S. R. Batliboi & final approval granted by the Central Government, the Board of Directors of the Company (hereinafter “the Associates, Chartered Accountants, New Delhi and Board” which term shall be deemed to include the M/s Atul Kulshrestha & Co., Chartered Accountants, remuneration Committee constituted by the Board), be New Delhi be and are hereby appointed as Auditors of and are hereby authorised to alter and vary the terms the Company, to hold office from the conclusion of this and conditions of the said appointment and meeting up to the conclusion of the next Annual General remuneration including salary, perquisites and other Meeting of the Company on remuneration as may be allowances, as may be agreed to between the Board of decided by the Board of Directors”. Directors and Mr. Surendra Lunia. SPECIAL BUSINESS By Order of the Board 5. To consider and, if thought fit, to pass, with or without for HFCL Infotel Limited modification(s), the following resolution as a SPECIAL RESOLUTION: Sd/- Place: New Delhi (S.Prabhakar) “RESOLVED THAT pursuant to the provisions of Date : 31st July, 2007 Company Secretary & Section(s) 198, 269, 385, 386, 387 and 388 read with Head - Legal & Regulatory Section 2(24) and all other applicable provisions, if any, of the Companies Act, 1956 (‘the Act’) (including any Notes: statutory modification or re-enactment thereof, 1. A MEMBER ENTITLED TO ATTEND AND VOTE AT guidelines for managerial remuneration issued by the THE MEETING OF THE COMPANY IS ENTITLED TO Central Government from time to time) read with APPOINT A PROXY TO ATTEND AND VOTE Schedule XIII to the Act, subject to approval of the INSTEAD OF HIMSELF/HERSELF AND THE PROXY lenders, Central Government and such other approvals NEED NOT BE A MEMBER OF THE COMPANY. THE as may be necessary, consent of Company be and is PROXY SHALL NOT BE ENTITILED TO VOTE hereby accorded for the appointment of Mr. Surendra EXCEPT ON A POLL. DULY COMPLETED PROXY Lunia , as Manager in terms of the Companies Act, FORMS SHOULD BE LODGED WITH THE COMPANY 1956, for a term of three years with effect from 25th July, NOT LATER THAN 48 HOURS BEFORE THE 2007, on the following terms and conditions including COMMENCEMENT OF THE MEETING. the remuneration as set out hereafter:- 2. The Register of Members and the Transfer Books of the st 1 . Remuneration:- Company will remain closed from 21 September 2007 to 28th September 2007 (both days inclusive). a) Basic Salary:- Upto a maximum of Rs.2,00,000/- per month; 3. In case the members wish to seek any information about the accounts and operations of the Company, they are b) Performance Linked Incentive (PLI)/ Bonus: requested to send their queries 7 days before the date of - Up to 150% of the Basic Pay. the meeting so that information can be made available 2. Allowances and Perquisites as given below, at the meeting. limited to 200% of the Basic Pay which includes:- 4. Members who hold shares in dematerialised form are a) House Rent Allowance requested to notify immediately any change of address to their Depository Participants (DPs) and those who b) Personal Pay hold shares in physical form are requested to write to the c) Company Car with Driver Company’s Registrar & Share Transfer agents, M/s. Cameo d) Allowances (Including Medical, Leave Travel Corporate Services Ltd., “Subramaniam Building”, Concessions and Special Allowance) No.1,Club House Road, Anna Salai, Chennai - 600 002. e) Perquisites (including Credit card, Club 5. Members who are holding shares under more than one Membership and hard furnishings) folio are requested to send the relative share certificates 2 HFCL INFOTEL LIMITED to the Registered Office of the Company for consolidation EXPLANATORY STATEMENT PURSUANT TO SECTION of the holding under one folio. The certificates after 173(2) OF THE COMPANIES ACT, 1956 consolidation will be returned by Registered Post. Item No. 5 6. Members/Proxies are requested to fill the enclosed In accordance with the requirements of Section 269 of Attendance Slip and deposit the same at the entrance of the meeting hall. the Companies Act, 1956, every Company having paid up Capital Rs.5 crores or more shall have a Managing 7. Pursuant to the provisions of Section 205A of the Director or Whole time Director or a Manager and the Companies Act, 1956 the amount of dividend which Board in its meeting held on 26 th July, 2004 had remains unclaimed for a period of 7 years from the date appointed Mr. Surendra Lunia as Manager with in the of declaration would be transferred to the “Investor meaning of the Companies Act, 1956