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A STUDY ON FINANCIAL PERFORMANCE OF HCL Pro

The document discusses various areas of finance including personal finance, corporate finance, and public finance. It provides details on financial performance analysis and the goals and methods of each area of finance. For example, it states that personal finance involves paying for education and investments while saving for retirement, and corporate finance deals with sources of funding and capital structure for corporations.

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100% found this document useful (1 vote)
908 views26 pages

A STUDY ON FINANCIAL PERFORMANCE OF HCL Pro

The document discusses various areas of finance including personal finance, corporate finance, and public finance. It provides details on financial performance analysis and the goals and methods of each area of finance. For example, it states that personal finance involves paying for education and investments while saving for retirement, and corporate finance deals with sources of funding and capital structure for corporations.

Uploaded by

shirley
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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A STUDY ON FINANCIAL PERFORMANCE OF HCL

Chapter-1

INTRODUCTION

Finance is broad term that describes activities associated with banking, leverage or debt,
credit, capital markets, money, and investments. Finance also encompasses the oversight,
creation, and study of money, banking, credit, investments, assets, and liabilities that make up
financial systems. Financial performance is a subjective measure of how well a firm can use
assets from its primary mode of business and generate revenues. The term is also used as a
general measure of a firm’s overall financial health over a given period.

Finance is the study of money and how it is used. Specifically, it deals with the questions
of how an individual, company or government acquires the money needed - called capital in the
company context - and how they then spend or invest that money. Finance is, correspondingly,
often split into three areas: personal finance, corporate finance and public finance. At the same
time, finance is about the overall "system" - the financial markets that allow the flow of money,
via investments and other financial instruments, between and within these areas; this "flow" is
facilitated by the financial services sector. A major focus within finance is thus investment
management called money management for individuals, and asset management for institutions
and finance then includes the associated activities of securities trading, investment
banking, financial engineering, and risk management.

More abstractly, finance is concerned with the investment and deployment


of assets and liabilities over "space and time": i.e. it is about performing valuation and asset
allocation today, based on risk and uncertainty re future outcomes, incorporating the time value
of money (determining the present value of these future values, "discounting", requires a risk-
appropriate discount rate). As an academic field, finance theory is studied and developed within
the disciplines of management, (financial) economics, accountancy and applied mathematics.
Correspondingly, given its wide application, there are several related professional
qualifications, that can lead to the field. As the debate to whether finance is an art or a science is
still open,[3] there have been recent efforts to organize a list of unsolved problems in finance.

The Financial System:

An entity whose income exceeds its expenditure can lend or invest the excess income to
help that excess income produce more income in the future. Though on the other hand, an entity
whose income is less than its expenditure can raise capital by borrowing or
selling equity claims, decreasing its expenses, or increasing its income. The lender can find
a borrower—a financial intermediary such as a bank—or buy notes or bonds (corporate
bonds, government bonds, or mutual bonds) in the bond market. The lender receives interest,
the borrower pays a higher interest than the lender receives, and the financial intermediary earns
the difference for arranging the loan.

A bank aggregates the activities of many borrowers and lenders. A bank accepts deposits
from lenders, on which it pays interest. The bank then lends these deposits to borrowers. Banks
allow borrowers and lenders, of different sizes, to coordinate their activity. Finance is used by
individuals (personal finance), by governments (public finance), by businesses (corporate
finance) and by a wide variety of other organizations such as schools and non-profit
organizations. In general, the goals of each of the above activities are achieved through the use
of appropriate financial instruments and methodologies, with consideration to their institutional
setting.

Finance is one of the most important aspects of business management and includes


analysis related to the use and acquisition of funds for the enterprise. In corporate finance, a
company's capital structure is the total mix of financing methods it uses to raise funds. One
method is debt financing, which includes bank loans and bond sales. Another method is equity
financing – the sale of stock by a company to investors, the original shareholders (they own a
portion of the business) of a share. Ownership of a share gives the shareholder certain
contractual rights and powers, which typically include the right to receive declared dividends
and to vote the proxy on important matters (e.g., board elections). The owners of both bonds
(either government bonds or corporate bonds) and stock (whether its preferred stock or common
stock), may be institutional investors – financial institutions such as investment banks
and pension funds  or private individuals, called private investors or retail investors.

Area of Finance:

Personal Finance:

Personal finance] is defined as the mindful planning of monetary spending and saving, while
also considering the possibility of future risk. The following steps, as outlined by the Financial
Planning Standards Board, suggest that an individual will understand a potentially secure
personal finance plan after:

 Purchasing insurance to ensure protection against unforeseen personal events


 Understanding the effects of tax policies (tax subsidies or penalties) management of
personal finances
 Understanding the effects of credit on individual financial standing
 Developing of a savings plan or financing for large purchases (auto, education, home)
 Planning a secure financial future in an environment of economic instability
 Pursuing a checking and/or a savings account
 Preparing for retirement/ long term expenses.

Personal finance may involve paying for education, financing durable goods such as real
estate and cars, buying insurance, e.g. health and property insurance, investing and saving
for retirement.
Corporate Finance:

Corporate finance deals with the sources of funding and the capital structure of corporations,
the actions that managers take to increase the value of the firm to the shareholders, and the tools
and analysis used to allocate financial resources. (Capital is of two types in the main, equity,
and debt). Although it is in principle different from managerial finance which studies the
financial management of all firms, rather than corporations alone, the main concepts in the
study of corporate finance are applicable to the financial problems of all kinds of firms. Short
term financial management is often termed "working capital management", and relates
to cash-, inventory- and debtors management. In the longer term, corporate finance generally
involves balancing risk and profitability, while attempting to maximize an entity's assets, net
incoming cash flow and the value of its stock, and generically entails three primary areas of
capital resource allocation.

 In the first, "capital budgeting", management must choose which "projects" (if any) to
undertake. The discipline of capital budgeting may employ standard business
valuation techniques or even extend to real options valuation; see Financial modeling.
 The second, "sources of capital" relates to how these investments are to be funded:
investment capital can be provided through different sources, such as by shareholders, in the
form of equity (privately or via an initial public offering), creditors, often in the form
of bonds, and the firm's operations (cash flow). Short-term funding or working capital is
mostly provided by banks extending a line of credit. The balance between these elements
forms the company's capital structure.
 The third, "the dividend policy", requires management to determine whether any
unappropriated profit (excess cash) is to be retained for future investment / operational
requirements, or instead to be distributed to shareholders, and if so, in what form.

Financial risk management, an element of corporate finance, is the practice of creating and
protecting economic value in a firm by using financial instruments to manage exposure to risk,
particularly credit risk and market risk. (Other risk types include foreign exchange,
shape, volatility, sector, liquidity, inflation risks, etc.) It focuses on when and how
to hedge using financial instruments; in this sense it overlaps with financial engineering. Similar
to general risk management, financial risk management requires identifying its sources,
measuring it (see: Risk measure#Examples), and formulating plans to address these, and can be
qualitative and quantitative. In the banking sector worldwide, the Basel Accords are generally
adopted by internationally active banks for tracking, reporting and exposing operational, credit
and market risks.

Financial management overlaps with the financial function of the accounting profession.


However, financial accounting is the reporting of historical financial information, whereas as
discussed, financial management is concerned with the allocation of capital resources to
increase a firm's value to the shareholders and increase their rate of return on the investments.

Public Finance:

Public finance describes finance as related to sovereign states and sub-national entities
(states/provinces, counties, municipalities, etc.) and related public entities (e.g. school districts)
or agencies. It usually encompasses a long-term strategic perspective regarding investment
decisions that affect public entities. These long-term strategic periods usually encompass five or
more years.[10] Public finance is primarily concerned with:

 Identification of required expenditure of a public sector entity


 Source(s) of that entity's revenue
 The budgeting process
 Debt issuance (municipal bonds) for public works projects

Central banks, such as the Federal Reserve System banks in the United States and Bank of


England in the United Kingdom, are strong players in public finance, acting as lenders of last
resort as well as strong influences on monetary and credit conditions in the economy.

Financial Theory
Financial Economics:

Financial economics is the branch of economics studying the interrelation of


financial variables, such as prices, interest rates and shares, as opposed to goods and services.
Financial economics concentrates on influences of real economic variables on financial ones, in
contrast to pure finance. It centres on managing risk in the context of the financial markets, and
the resultant economic and financial models.

It essentially explores how rational investors would apply risk and return to the problem
of an investment policy. Here, the twin assumptions of rationality and market efficiency lead
to modern portfolio theory (the CAPM), and to the Black–Scholes theory for option valuation;
it further studies phenomena and models where these assumptions do not hold, or are extended.

"Financial economics", at least formally, also considers investment under "certainty"


(Fisher separation theorem, "theory of investment value", Modigliani–Miller theorem) and
hence also contributes to corporate finance theory.

Financial econometrics is the branch of financial economics that uses econometric


techniques to parameterize the relationships suggested.

Although they are closely related, the disciplines of economics and finance are distinct.
The "economy" is a social institution that organizes a society's production, distribution, and
consumption of goods and services, all of which must be financed.

Financial Mathematics:

Financial mathematics is a field of applied mathematics, concerned with financial markets. The


subject has a close relationship with the discipline of financial economics, which is concerned
with much of the underlying theory that is involved in financial mathematics.
Generally, mathematical finance will derive, and extend, the mathematical or numerical models
suggested by financial economics. In terms of practice, mathematical finance also overlaps
heavily with the field of computational finance (also known as financial engineering).
Arguably, these are largely synonymous, although the latter focuses on application, while the
former focuses on modeling and derivation (see: Quantitative analyst). The field is largely
focused on the modelling of derivatives, although other important subfields include insurance
mathematics and quantitative portfolio problems. See Outline of finance: Mathematical
tools; Outline of finance: Derivatives pricing.

Experimental Finance:

Experimental finance aims to establish different market settings and environments to observe


experimentally and provide a lens through which science can analyze agents' behavior and the
resulting characteristics of trading flows, information diffusion, and aggregation, price setting
mechanisms, and returns processes. Researchers in experimental finance can study to what
extent existing financial economics theory makes valid predictions and therefore prove them,
and attempt to discover new principles on which such theory can be extended and be applied to
future financial decisions. Research may proceed by conducting trading simulations or by
establishing and studying the behavior, and the way that these people act or react, of people in
artificial competitive market-like settings.

Behavioral Finance:

Behavioral finance studies how the psychology of investors or managers affects financial


decisions and markets when making a decision that can impact either negatively or positively
on one of their areas. Behavioral finance has grown over the last few decades to become central
and very important to finance.[12]

Behavioral finance includes such topics as:

1. Empirical studies that demonstrate significant deviations from classical theories.


2. Models of how psychology affects and impacts trading and prices
3. Forecasting based on these methods.
4. Studies of experimental asset markets and the use of models to forecast experiments.

A strand of behavioral finance has been dubbed quantitative behavioral finance, which uses
mathematical and statistical methodology to understand behavioral biases in conjunction with
valuation. Some of these endeavors has been led by Gunduz Caginalp (Professor of
Mathematics and Editor of Journal of Behavioral Finance during 2001–2004) and collaborators
including Vernon Smith (2002 Nobel Laureate in Economics), David Porter, Don Balenovich,
Vladimira Ilieva, Ahmet Duran). Studies by Jeff Madura, Ray Sturm, and others have
demonstrated significant behavioral effects in stocks and exchange traded funds. Among other
topics, quantitative behavioral finance studies behavioral effects together with the non-classical
assumption of the finiteness of assets.

METHODS OF ANALYZING A FINANCIAL STATEMENT

Evaluating the performance of a business can be challenging, and requires a systematic


collection and review of financial information. Financial statements provide this summary of
collected data. The three primary statements include income, balance sheet and statement of
cash flows. Public companies also have a statement of equity. Reviewing and analyzing
financial statements provide the user with trends and indicators to compare operations and
management.

1. Comparative Statements,

2. Ratio Analysis,

3. Trend Analysis,

4. Common-size statements,

5. Fund Flow Analysis,

6. Cash Flow Analysis and


7. Cost-Volume-Profit Analysis.

Comparative Statements

Under comparative statement, financial statements like balance sheet and income
statement are prepared in comparative form for financial analysis. The items of financial
statements are shown in a comparative form to give an idea of financial position of the business
at two or more periods. As the items are shown in a comparative form so the analysts are able to
draw useful conclusion out of it. For example, when sales figure of current period is compared
with the previous periods then the analysts will be able to study the trend of sales over different
period. A COMAPARATIVE ANALYSIS OF CAPITAL STRUCTURE BETWEEN ULTRA-
TECH CEMENT AND SHREE CEMENTS.

The two comparative statements are;


• Comparative Balance Sheet and
• Comparative Income Statement.

Trend Analysis
From the name of the analysis it is clear that here financial statements are analyzed based
on trends of figures in the statements. In trend analysis, percentage of each item of statement is
calculated in relation to the same item in the base year. Here the information for number of
years is taken and generally, the beginning year is taken as the base year. The base year should
be a normal year. The figure of the base year is taken as 100 and trend percentages for other
years are calculated based on base year. Down or upward trends of figures of items are seen in
this analysis.
Ratio Analysis
Ratios express a relationship between two more financial statement totals, and compare
to budgets and industry benchmarks. Five common categories of ratios exist: liquidity, asset
turnover, leverage, profitability and solvency. Reviewing ratios for performance compared with
prior periods or industry specific benchmarks provides financial statements users with
recognition of strengths and weaknesses. Risk Management Association, or RMA, publishes
data on industry specific benchmarks for more in-depth analysis.

Common-Size Statement

In common-size statements, balance sheet and income statement the figures are shown in
percentages. The figures of these statements are expressed as percentages of total assets, total
liabilities and total sales. Total assets are taken as 100 and different assets are shown as
percentage of total assets. Similarly total liabilities are taken as 100 and different liabilities are
expressed as a percentage of total liabilities. Here every item of the statements is expressed as a
percentage of the total 100.

The two common-size statements are;


• Common-Size Balance Sheet and
• Common-Size Income Statement.
Cash Flow Statement

The statement of cash flows summarizes the money generated by business activities and
the money spent by the business. Specifically, the cash flows statement illustrates the money
that comes in and out from every source including cash from operations, investments, interest
payments, financing, debt service, and expenses.
Fund Flow Statement

The fund flow statement is designed to analyze the changes in the financial condition of a
business enterprise between two periods. This statement will show the sources from which the
funds are received and the uses to which these have been put. This statement enables the
management to have an idea about the sources of fund and their uses for various purposes. This
statement helps in policy formulation and performance appraisal.
Cost-Volume-Profit Analysis

It means the amount of any given volume of output by which aggregate costs are changed
if the volume of output is increased by one unit.

Objectives of Study :

 To analysis the financial performance of HCL Company.

 To assess or evaluate the efficiency of financial performance analysis of HCL company


by Ratio and Trend analysis.

 To determine the profitability position of the company

 To offer suggestions to the company regarding its performance.

 To identify the growth of the company.


Statement of Problem:

HCL has lagged its peers on concerns over organic growth and near team profitability.
The stock has shed about 4 per cent in the last three months, compared to a 0.5% gain for the
Nifty IT index .Valuations , too, are at a 22-45 per cent discount to IT peers, and this is unlikely
to improve soon. Investments made for new deal wins and additional fixed costs for its recently
concluded IBM deal will weigh on near – term profitability and earnings. The management ,
too, had cut its FY20 margin guidance by 100 bps to the 18.5-19.5 percent range. At my point
of view the company financial performance rises in one year and decreases in one year. The
company does not have stable growth. So my analysis might find some changes r modifications
, that I will mention in finding and suggestions.

Scope of the Study:

 The study is based on the financial position on the company by using ratio analysis and
trend analysis.

 These statements helps the company analyze performance of the company, profit,
solvency, liquidity, and efficiency etc.

 This analysis will give the exact picture of the company.

 This study covers only the financial performance of the company from the year 2015-
2019.

Limitations of the Study:

 The reliability and validity of the study is basically depends upon the validity of the data
provided in the financial statement.
 It is also very difficult in the collection of relevant data for the study.

 The organization due to official busy schedule and they were busy in audit works.

Research Methodology

 The term ‘research’ refers to the systematic method consisting of enunciating the
problem, formulating a hypothesis, collecting the facts or data, analyzing the facts and
reaching certain conclusion either in the form of solutions towards the concerned problem
or in certaining generalizing for some theoretical formulation.

 The system of collecting data for research projects is known as research methodology.
The data may be collected for either theoretical or practical research.

Research Design:

A research design is the arrangement of conditions for collection and analysis of data in
a manner that aims to combine relevance to the research purpose with economy in
procedure.

Data Collection: Secondary data.

 The study is based on secondary data obtained from audited annual report of the concern.

 Company profile and certain other related information are collected from internet site and
webpage of HCL Company.
Tools used for the study:

 Ratio Analysis

 Trend Analysis

Period of study: A Study on Financial Performance of HCL Company is 2015-2019.

CHAPTER SCHEME

Chapter I: It deals with Introduction and Statement of the Problem, Objectives of the study,
Scope of the study, Research Methodology, Significance of the study, Limitations of the study
and the Chapter Scheme.
Chapter II: It provides the summary of the literature available in the area relevant to the study.
Chapter III: It consists of profiles of the companies: HCL
Chapter IV: It deals with the analysis of data with the help of ratios and statement of changes
in capital structure of the companies.
Chapter V: It presents the Summary of Findings, Suggestions, and Conclusion
CHAPTER - II
REVIEW OF THE RELATED LITERATURE

INTRODUCTION:
Review of literature has vital relevance with any research work, due to literature review
the possibility of repetition of study can be eliminated and another dimension can be selected
for the study. The literature reviews helps researcher to remove limitations of existing work or
may assist to extend prevailing study. Several researchers have been conducted to analyze the
different aspects of performance of different companies all over India. Only very few researches
are listed below.

Ram Kumar Mishra(2000) in the study “A Study on Financial Performance of Ashok Leyland
Finance Limited”, concluded that the overall financial position of the company is sound and the
net sales have increased when compared to the previous year.

Kennedy and Muller (2002) in the study on “Financial Performance of Non - Banking
Financial Companies in India”, concluded that there existed a significant variation in the
profitability ratios, leverage ratios and liquidity ratios of various categories of non banking
financial companies. Also, concluded that the analysis of variance along with the details of
average ratio may become a useful guide to companies so as to decide for continuation (or)
otherwise in same line of business considering the overall profitability within the regulatory
framework.
Peeler J.Patsula (2004)have made a study on the “Financial Performance of Software
Companies”, with special focus on examining the structure of liquidity position, leverage and
profitability. The study has revealed a favorable position of liquidity and working capital in
software companies. The study has also pointed out that the companies relied more on internal
financing and the overall profitability had been increasing at a moderate rate.

Vijay Kumarand Venkatachalam(2004 – 2006) in the project “A Study on Financial


Performance of Lakshmi Ring Travelers”, concluded that the short – term solvencyand
profitability position was really good. Long – term solvency position was satisfactory and the
management of current asset as efficient.

Miss F. Infanta Beena (2005 – 2007)in the study “A Study on Financial Performance of ELGI
Equipment Limited”, concluded that the overall financial position of ELGI equipment limited
was good and the company is under action to implement effective measures for their growth
and improvements to earn a better status in the coming future.

Ghosh and Maji (2005–2007) in the study “A Study on Financial


Performance of Lakshmi Vilas Bank Limited” concluded that the liquidity position and the
banks management efficiency are up to the optimum level. The earning quality of the bank is
also in the satisfactory level. Thus, the overall performance of the bank is better and also in the
satisfactory level.

Maria Abraham (2007 – 2008) in the study “A Study on Financial Performance of Lakshmi
Works Limited”concluded that the overall financial position of the company was good and the
company has undertaken to implement effective measures for their growth and make
improvements to earn a better status in the future.

Sathyamoorthi and Wally-Dima (2008 – 2010) in the study “A Study on Financial


Performance of Stanes Amalgamated Estates Limited” concluded that the overall financial
position of the company is good and the profitability position is also good. The sales profit and
the stock also had an increase in trend which indicates the overall financial performance of the
concern is good.

E.C.Gomathi(2010-2012) in her study in “Financial Performance of Chettinad Cement


Corporation Ltd Chennai concluded that the short term solvency position of the company and
long term position of the company was not good. The profitability position of the company was
also not satisfactory the company should take proper steps to improve short term long term
solvency position and profitability of the company.

Gulnar Zara (2011-2013) in her study a study of “Financial Performance of Pricol Ltd”
concluded that the liquidposition was satisfactory the company did not have enough and more
cash and equivalents to meet their current obligation the long term solvency position of the
company was satisfactory.
CHAPTER 3

COMPANY PROFILE

INTRODUCTION TO THE COMPANY:

HCL Ltd is one of the pioneers in the Indian IT market, with its origins in 1976. For over
quarter of a century, HCL have developed and implemented solutions for multiple market
segments, across a range of technologies in India.HCL have been in the forefront in introducing
new technologies and solutions. HCL  (HCLI) draws its strength from 30 years of experience in
handling the ever changing IT scenario , strong customer relationships, ability to provide the
cutting edge technology at best-value-for-money and on top of it, an excellent service & support
infrastructure. Today, HCL is country's premier information enabling company. It offers one-
stop-shop convenience to its diverse customers having an equally diverse set of requirements.
IT industry is expected to grow by 20% over 2007, as per IDC, which is amongst the highest
rates of growth in the world. With employment to 2.13 crore households already in place, the
National e-Governance Plan (NEGP) is surging ahead with investments of Rs. 23,000
crore planned for initial five years, for identified core projects.HCL Infosyst em s Lt d,
wit h annual r evenue of US $ 2.7 Bn (Rs.11,855 cror es) is India’s  premier
information enabling and ICT System Integration company offering a wide spectrum of ICT
products that includes Computing, Storage, Networking, Security, Telecom, Imaging
and Retail. 

, Casio, Kodak, Toshiba, Bull, Ericsson, Cisco, Microsoft, Konica Minolta and
many India’s leading System Integration and Infrastructure Management Services
Organization,HCL has specialized expertise across verticals including Telecom,
BFSI, E-Governance &Power.HCL has India’s largest distribution and retail network,
taking to market a range of Digital Lifestyle products in partnership with leading
global ICT brands, including Nokia, Applemore.

HCL today has India’s largest vertically integrated computer manufacturing facility with
over t hree decades of elect roni c manufact uri ng exper ience HCL deskt ops are
t he l ar gest selling brand into the enterprise space. With India’s largest ICT services network
that reaches to every corner of India, HCL’s award winning Support Services makes it the
preferred choice of enterprise and consumers alike.HCL Enterprise is a leading global
technology and IT enterprise with annual revenues of US$4.1 Bn (Rs. 17,889 crores).
The HCL team comprises over 47,000 professionals of diverse nationalities, who operate from
17 countries including 360 points of presence in India. HCL has global partnerships with
several leading Fortune 1000 firms, including leading IT and Technology firms

COMPANY PROFILE

Type : Public
Industry : IT sector
Founder : Mr.ShivNadar
Services : IT and outsourcing services
Revenue : 11,024.14 crore
Operating income : 256.58 crore

Net income : 177.23 crore

HISTORY OF HCL
HCL Info systems Ltd is one of the pioneers in the Indian IT market, with its
origins in 1976. For over quarter of a century, we have developed and implemented solutions
for multiple market segments, across a range of technologies in India. We have been in the
forefront in introducing new technologies and solutions.

The highlights of the HCL saga are summarized below:

 1976- Hindustan Computer limited (HCL) is born.


 1977- Forms distribution alliance with Toshiba for copier & Notebooks.
 1978- HCL Successfully ships in house designed micro-computer at the same time as
Apple.
 1983- Indigenously develops an RDBMS, a Networking OS & a client server
architecture, at the same time as global.
 1986- HCC Becomes the largest IT Company in India.
 1989- Introduce fine grained Multiprocessor UNIX 3 yr a head of “sun& HP”
 1991- HCL Hewlett Packard J. Develops Multi Processor UNIX of HP & Heralds
HCLS entry into contract R&D.
 1994- Forges distribution alliances with Ericsson Switches & Nokia cell Phone.
 1997- HCL‟s R&D spinoff as HCL Technology Mark advent info Software services.
 2007- HCL Becomes the first company to cross the 1,00,000 unit Milestone in the
Indian Desktop PC Market.
 2008- HCL Technologies Get accorded by Meta Spectrum with leader status in off
have out sourcing.
 2009- JV with NEC, Japan -HCL Set up first Power PC Architecture design centre
outside of IBM.
 2010- HCL info system ties up with Apple for iPod distribution. -HCL Technologies
sign largest over, software services deal with DSG.
 2011- HCL as an enterprise sources the $ 4 billion watermark.-HCL announces
opening of its second European outsourcing facility in June with the establishment of
the delivery centre in Krakow Poland.
HCL ENTERPRISE:

HCL Enterprise is a US $ 5 billion leading Global Technology and IT enterprise


that comprises two companies listed in India - HCL Technologies & HCL Info systems. The
3-decade-old enterprise, founded in 1976, is one of India's original IT garage start-ups. Its
range of offerings spans Product Engineering, Custom & Package Applications, BPO, IT
Infrastructure Services, IT Hardware, Systems Integration, and distribution of ICT products.

The HCL team comprises approximately 60,000 professionals of diverse


nationalities, who operate from 23 countries including 500 points of presence in India. HCL
has global partnerships with several leading Fortune 1000 firms, including leading IT and
Technology firm.

In the same year, the company acquired 20 per cent equity stake in another Dubai-
based firm Tech mart Telecom Distribution FZCO through its Singapore-based subsidiary
HCL Investments PvtLtd.Part of HCL Group which includes IT services firm HCL
Technologies, HCL Infosystems Ltd offers a wide spectrum of ICT products that includes
computing, storage, networking, security, telecom, imaging and retail. Last month, the firm
had acquired education content provider Edurix, a part of Atta no Media and Education and
designs content for the K-12 education segment for an undisclosed amount. In 2008, HCL
Info acquired stake in Natural Technologies Pvt Ltd for $2.1 million.

VISION

 "To be the technology partner of choice for forward looking customers by


collaboratively transforming technology into business advantage."
MISSION

 "We will be the employer of choice and the partner of choice by focusing on our
stated values of Employees First, Trust, Transparency, Flexibility and Value
Centricity."
MILESTONE
Hancom Inc. has announced its tie up with HCL Ltd. to extend Hancom's Think Free
Mobile - Android edition on HCL Tablets. HCL is one of India’s most well known
hardware, services and ICT systems integration and Distribution Company.

The latest version of Think Free Mobile app has been embedded in 'HCL ME U1’, HCL
Info system’s recently launched range of Tablet PCs, available for Rs. 7999. In the past too,
HCL's Android tablets have had Think Free Mobile as one of their standard apps.

DEPARTMENTS IN HCL:

 Production department
 Human resource department
 Marketing department
 Administration and Operation department
 Finance department.
CHAPTER – 4

DATA ANALYSIS AND INTERPRETATION

In this chapter the analysis and interpretation of the study on a financial performance of
HCL company by Ratio and Trend analysis based on the financial data collected.

Analysis and interpretation are the two different processes. Analysis refers to the process
of breaking down a complex set of figures into simple statements. However, interpretation
means explaining the meaning and significance of these simplifies statements. Analysis and
interpretation are inter related. It is so because interpretation is not possible without analysis
and without interpretation, analysis has no value or meaning. Further, interpretation begins
where analysis ends.

The ‘Analysis’ literally means ‘To break into parts’. In the context of financial statements,
analysis is the process of breaking down a complex set of figures into simple statements in
order to have a better understanding.

The term ‘Interpretation’ literally means ‘To explain the meaning of’. In the context of
financial analysis, interpretation means explaining the meaning and significance of data. In
short, interpretation means explaining financial statements based on analysis.

Ratio Analysis:

Ratio analysis is a widely used technique of analyzing financial statements. An analysis of


financial statement with the help of ratios is termed as ratio analysis. Ratio analysis may be
defined as the process of computing and interpreting various accounting ratios for arriving at
conclusions about the financial position and performance of an enterprise.

There are four major Financial Ratios:

 Liquidity Ratios
 Profitability Ratios
 Activity Ratios
 Solvency Ratios

Liquidity Ratios:
In accounting, the term liquidity is defined as the ability of a company to meet its financial
obligations as they come due. The liquidity ratio, then, is a computation that is used to measure
a company's ability to pay its short-term debts. There are three common calculations that fall
under the category of liquidity ratios. The current ratio is the most liberal of the three. It is
followed by the acid ratio, and the cash ratio. These three ratios are often grouped together by
financial analysts when attempting to accurately measure the liquidity of a company
There are four liquidity ratios:
 Current ratio
 Quick ratio
 Absolute liquid ratio
 Current cash debt coverage ratio.
Current ratio:
The current ratio indicates a company's ability to pay its current liabilities from its current
assets. This ratio is one used to quickly measure the liquidity of a company. The formula for the
current ratio is:
Current Ratio = Current Assets ÷ Current Liabilities

TABLE: 1

Years Current asset Current liabilities Ratio

2015 29722 12299 2.416619


2016 24558 10107 2.429801
2017 26463 11335 2.334627
2018 24981.7 9828.45 2.541774
2019 23046.8 9945.05 2.317414
Ratio
2019

2018
Ratio
2017

2016

2015

2.2 2.25 2.3 2.35 2.4 2.45 2.5 2.55 2.6

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