Hexaware forex scam

Hexaware Technologies Ltd on November 26, 2007 reported that its Board of Directors has appointed a special committee to conduct an internal investigation and make recommendations for changes to its foreign exchange management practices. This action is due to certain actively concealed and potentially fraudulent foreign exchange Option transactions conducted by one Hexaware official. The Hexaware official, who exercised unauthorised fiduciary powers, has been immediately suspended, pending Investigation. Hexaware plans to provision between US$ 20-25 million to cover any potential exposure as a result of these transactions.

The series of forex transactions in question were initiated over the last few months. These transactions were unauthorised and outside the Company's normal hedging program. The information regarding these transactions was intentionally withheld from the senior management and the 8oard of Directors and was not included in internal reports. The first transaction came to light on November 22, 2007. Preliminary investigations conducted over Friday, Saturday and Sunday led to uncovering of more such transactions.

"The need for provisioning is because or direct actions of one individual which were actively concealed," said Rusi Brij, Vice Chairman and CEO.

A meeting of the Board of Directors was called on November 26, 2007, where it was decided to appoint a Special Committee comprising the following independent directors, to conduct a thorough investigation into the transactions:

- Mr. Shailesh Haribhakti, Chairman of the Audit Committee
- Ms. Preeti Mehta, Partner, Kanga & Co.
- Mr. L S, Sarma, Member of Audit Committee

"As immediate steps, an embargo has been placed on all Option deals; future forex deals will necessarily have to be transacted jointly by two signatories out of the designated four from amongst the top management; the Company's authorised dealers are being informed about this procedure and the internal auditors (KPMG) are being asked to conduct a thorough audit of the function. The Company will continue to maintain the normal hedging strategy to protect against the rupee appreciation," said Shailesh Haribhakti, Chairman of the Audit Committee.

The Company will take all measures and actions as advised by the Special Committee of the Board of Directors, Statutory Auditors (Deloitte) and Legal Advisers, to mitigate the impact or the transactions and prevent recurrence of similar situations in the future.

"The Company's business remains robust and its future growth trajectory unaffected. Our order book, as of September 30, 2007, stands at over US$300 million. We will continue to build on that," added Rusi Brij.

Hexaware Technologies

Hexaware Technologies Ltd on October 04, 2007 has announced that it has won a large engagement with a leading German Financial Institution. The order is worth 5 mn Euros.

This is a major development project which entails building a new core application for the client, The scope of the build also involves integration of the new built solution with the back-end system involving three different businesses of the client. A fairly large J2EE programming team and Oracle experts have already been deployed on the project.

Sunil Surya, President - European Operations, Hexaware Technologies said, "Our client has initiated a technology modernization program which alms at improving operational efficiency and achieve better business performance. Hexaware has been selected as a partner In their initiative to stay ahead of competition, which would drive their operational efficiency and also give a boost to their revenue growth."

Company had set- up a Global Development Centre in Bad Homburg, Germany in 2004. Currently a team of over 110 professionals including domain experts are delivering solutions from this center to the German Market. The European region contributes to about 27% of the global revenue.

Hexaware Technologies Ltd

Hexaware Technologies Ltd on September 25, 2007 has announced that it has been positioned by Gartner Inc. in the niche quadrant for the recently published 'Magic Quadrant for ERP Service Providers, North America 2007' report. The report states, 'Niche players focus on a particular segment of the market, as defined by such characteristics as functional area vertical industry, client size or project complexity. A niche player has invested in more-defined ERP technology skills.'

According to Gartner, the Magic Quadrant for ERP Service Providers, North America, 2007, analyzes the market for ERP solution implementation services. The relative positioning of vendors in this Magic Quadrant is based on factors determined by Gartner as relevant to this market.

"The consolidated ERP market is projected to grow by 6.3% through 2010 generating revenues of over 32 bn $. we are now increasing our breadth of capabilities to address a larger number of core ERP domains along with servicing new vertical segments," said Atul Nishar, Executive Chairman, of the Company, adding, "Our focused offerings in targeted segments are being valued by our clients. Additionally our positioning in the Niche Players quadrant corroborates our potential in our areas of operation."

The Company currently has ERP expertise in the PeopleSoft, SAP, Oracle, Siebel and Microsoft domains. The number of clients in the ERP space grew by 38% in the first half of 2007 to take the total to 69 clients. In the quarter ending June 30, 2007, 32.7% of revenues were generated from the ERP domain. Recently, the Company was also positioned in the Niche Players Quadrant for North American Offshore Applications Services 2007 Magic Quadrant.

Hexaware Technologies

Hexaware Technologies Limited has informed the Exchange that "The Board of Directors of the Company at their meeting held on September 11, 2007 have approved allotment of unregistered American Depository Receipts (ADR) represented by underlying 10,555,700 equity shares of Rs.2/- each resulting out of conversion of 1,055,570 2.95% Series A Redeemable and/or Optionally Convertible Preference Shares in accordance with the Special Resolution passed by the members of the Company on April 13, 2006. Further the Company has submitted a copy of press release dated September 11, 2007 titled "General Atlantic converts Hexaware's preference shares into equity share @ 142.10 per share".

CLSA - Hexaware Technologies

CLSA has a UNDERPERFORM on Hexaware Technologies

Revenue growth likely to be muted

Management changes at US likely

12 month Price target of Rs 130

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