3i Infotech

The Directors have pleasure in presenting the Fifteenth Annual Report
 of the Company with the audited statement of accounts for the year
 ended March 31, 2008.
 
 FINANCIAL HIGHLIGHTS
 
 Consolidated financials of the Company and its subsidiaries:
 
 In the financial year 2007-08, your Company recorded a revenue of Rs.
 12,235.67 million, a growth of 82.4% over ihe corresponding period of
 the previous year. Profit after tax was Rs.1,831.98 milion, a growth of
 75.3% over he corresponding period of the previous year. It is
 noteworthy that the revenue and profit after tax for this financial
 year have been substantially higher than those of the previous
 financial year 2006-07. Earnings per share (EPS) increased to Rs. 13.40
 from Rs.8.99 (adjusted for the bonus issue) in the corresponding period
 of the previous year. The brief financial highlights with comparison of
 previous year are as below:
 
                                                    Rs. in Million
 Particulars                                  Year ended     Year ended
                                          March 31, 2008  March 31, 2007
 
 Total Income                                  12,235.67       6,707.72
 Profit/ (Loss) before taxation                 1,983.17       1,098.29
 Provision for taxation (current and deferred)    151.19          53.45
 Profit/ (Loss) after taxation and before       1,831.98       1,044.84
 extraordinary items
 Exceptional item                                    --          120.06
 Profit after exceptional item                  1,831.98       1,164.90
 Less provisions for contingency                      --        (120.06)
 Profit after provision for contingency         1,831.98       1,044.84
 Earnings Per Share (Basic is Rs.) 
 (After exceptional item)                          13.40           8.99
 adjusted for the bonus issue
 
 Financials of the Company on a standalone basis:
 
 The Profit & Loss Account of your Company on standalone basis shows a
 profit after tax of Rs.1,004.57 million. The disposable profit is
 Rs.1,064.36 million, taking into account the balance of Rs.658.68
 million brought forward from the previous year, subject to adjustments
 pertaining to that year. The brief financial highlights are as below:
 
                                                     Rs. in Million
 
 Particulars                                    Year ended     Year ended
                                             March 31,2008 March 31, 2007
 
 Total Income                                     4,637.38      3,479.08
 Profit before tax                                1,041.44        510.47
 Provision for taxation (current and deferred)       36.87         16.08
 Profit after tax and before exceptional Item     1,004.57        494.39
 Exceptional Item                                       --        268.59
 Provision for contingency                              --       (120.06)
 Profit after exceptional item and contingency    1,004.57        642.92
 Balance brought forward from previous year         658.68        269.62
 Disposable Profit                                1,613.73        912.54
 Transfer to General Reserve                        101.00         49.44
 Profit available for distribution                1.064.36        863.10
 Earning Per Share ( Basic in Rs.) 
 (After exceptional item)                             7.37          5.32
 adjusted for the bonus issue
 
 DIVIDEND
 
 After taking into account the preference dividend of Rs. 63.68 million,
 the profit available for distribution of equity divid.nc works out to
 Rs.1,000.68 million. Considering the current financial markets and the
 financial needs for expansion and growth, your Directors have
 recommended a dividend of 15% for this year on the enhanced, post bonus
 equity capital the details of appropriation of profit are as under:
 
                                                    Rs. in Million
 Particulars                                   Year ended   Year ended
                                           March 31,2008 March 31,2007
 
 Profit available for distribution,            1,064.36        863.10
 Transfer to General Reserve                     101.00         49.44
 Dividend on Preference shares                    63.68         63.50
 Proposed Dividend - Equity shares               195.80        112.60
 Corporate Dividend Tax                           44.49         28.04
 Balance carried to Balance Sheet                746.98        658.681
 
 TRANSFER TO RESERVE
 
 Your Company proposes to transfer Rs.101.00 million to the general
 reserve. An amount of Rs.746.98 million is proposed to be retained in
 the profit and loss account.
 
 TRANSFER OF UNPAID DIVIDEND
 
 Your Company does not have any unpaid dividend meant to be transferred
 to Investor Education and Protection Fund under Section 205C of the
 Companies Act, 1956 for this financial year.
 
 OVERVIEW Business:
 
 Your Company, over a period of time, through sustained in-house
 research and product development, coupled with acquisition of some good
 software product companies, has created a pool of software solutions
 for a wide range of areas in the Banking, Financial Services and
 Insurance (BFSI) Industry. The present offerings of your Company
 include a wide range of BFSI products, ERP Products, Technology and
 Managed IT Services, BPO Services and System Integration Services. Your
 Company also undertakes large e-Govemance projects. Your Company is
 also consciously working on offering its software platforms on a
 transaction services/ASP model.
 
 During the year, your Company was able to demonstrate its
 competitiveness in the BFSI segment with a number of notable customer
 wins across all geographies, which has laid a strong foundation to take
 the organization ahead to newer and unprecedented heights.
 
 The several awards that your Company has won during the year, some of
 which are mentioned in subsequent paragraphs, also strengthen the
 belief that we are poised to grow at a faster pace. Your Company is
 already among top 4 Indian Software Product companies*.
 
 Your Company has implemented and is in the process of implementing
 various software and services projects for Central and State
 Governments. In this year, your Company has won several deals for
 setting up over 12,000 kiosks, spread across various States in India,
 for providing citizen services centers to be used for dispensing G2C
 (Government to Citizen) and B2C (Business to Customer) services. Your
 Company takes pride that these kiosks will transform the way Government
 services are rendered to citizens of this country.
 
 One more major accomplishment during the year was the launch of the
 Companys first International Data Centre (IDC) in Chennai, which
 offers managed hosting services for applications and disaster recovery
 solutions.
 
 * Source - Dataquest
 
 Geographical reach:
 
 Your Company has its presence world wide, with its offices spread
 across 12 countries and clients spread over in more than 50 countries.
 The range of services and wide geographical reach has enabled the
 Company to become a formidable player in the global ITfield.
 
 All of our geographies and business segments have contributed towards
 the growth of the Company. The share of the geographies in the total
 revenue for the year has been: South Asia 34%, USA29%, Western Europe
 15%, MEARC (Middle East, Africa, Russia, and CIS countries etc.) 14%
 and APAC (Asia Pacific region comprising of Singapore, Malaysia, Japan,
 Korea, Mongolia, Australia, New Zealand, Thailand, Philippines,
 Myanmar, etc) 8 %.
 
 The contribution of the various business segments to the revenue for
 the year has been: Banking products 14%, Insurance productsl 3%,
 Capital Market products 14%, ERP 8%, Technology Services 39% and
 BPO/Transactions processingl 2%.
 
 Unique Strength:
 
 The Companys unique strength lies in its:
 
 1) Range and Reach:
 
 * the Company operates across the world, selling its products and
 services to several customers in about 50 countries, across 5
 continents through its offices located in 12 countries.
 
 * it has a range of software product IPRs across the BFSI vertical
 complimented by technology services, managed services, BPO /
 transaction services, all of which are built by deep domain expertise;
 
 * it is this range and reach, which enables the Company to grow
 exponentially across different markets and
 
 * this range and reach has also enabled the Company to de-risk from
 
 * Geography concentration
 
 * Customer concentration
 
 * Currency concentration
 
 * Product/service concentration
 
 2) Excellent assimilation of acquired entities:
 
 The Company has been very acquisitive since inception and has acquired
 several companies. In acquisition of companies, the challenges are
 assimilation, integration and deriving benefits of synergies. The
 Company has been successful in ensuring quick assimilation and
 integration, thereby deriving the benefits of synergies.
 
 3) Organic Growth:
 
 Though the Company has done a number of acquisitions, the organic
 growth rate has also been very high. Out of the compounded Annual
 growth rate of 61% over the last 4 years, 41% has been organic, which
 is much higher than the organic growth rate achieved by other mid sized
 IT Companies.
 
 SUBSIDIARY COMPANIES Acquisitions:
 
 During the year under review, the growth story continued in the organic
 and inorganic modes. Your Company has acquired various companies
 directly or through its subsidiaries across geographies. In USA, your
 Company acquired 51 % stake in Professional Access, (a company
 specialised in e-commerce solutions for Banking and Retail); 100% stake
 in Lantern System Inc, (a company specialised in IT infrastructure
 Services and Solutions), e-Power Inc, Objectsoft Group and Objectsoft
 Global Services, (engaged in Software Consultancy services), J&B
 Software Inc., (specialised in payment and remittance processing
 solutions). In UK, 100% stakes were acquired in Accounting Framework
 Limited, (providing software solutions for Venture Capital and Private
 Equity funds) and Exact Technical Services Limited, (providing multi-
 currency agency stock broking solutions).
 
 In India, the Company-acquired 100% stake in KNM Services Private
 Limited, 50.5% in aok In-house BPO Services Limited and aok In-house
 Factoring Services Private Limited, 51% in HCCABusiness Services
 Private Limited, 26% stake in Taxsmile.com India Private Limited and
 59.5% in Linear Financial & Management Systems Private Limited. In
 Manipal Informatics Private Limited, 70% stake was acquired by Delta
 Services (India) Private Limited, a subsidiary of your Company.
 
 Your Company also acquired Transworks Kazakhstan LLC in Kazakhstan, to
 expand its market share in Russia and CIS Countries.
 
 Incorporations:
 
 Your Company continues to tread the path of expansion with
 incorporation of various wholly owned entities in India and abroad,
 which include 3i Infotech Consultancy Services Limited for doing
 software and IT service business, 3i Infotech Insurance & Re-insurance
 Brokers Limited to take up the activities of Insurance and Re-insurance
 Broking, as well as related software and solutions activities. The
 Company also incorporated 3i Infotech (Middle East) FZ LLC in Dubai, 3i
 Infotech (Australia) Pty Limited in Australia and 3i Infotech
 (Bangladesh) Services Private Limited, in Bangladesh to represent the
 Company in those regions and cater to the clients in that geography.
 
 Mergers and Amalgamations:
 
 Your Company has completed the mergers of SDG Software Technologies
 Limited and Datacons Private Limited with the Company. Whizinfo
 Technologies Inc was merged with 3i Infotech Consulting Inc. 3i
 Infotech Investment Inc, 3i Infotech Insurance Solutions Inc. and 3i
 Infotech Enterprise Solutions Inc. were merged with 3i Infotech Inc.
 The Company is also in the process of merging some of the acquired
 entities whose businesses are fully integrated with the Company.
 
 Accounts of the Subsidiaries:
 
 As per section 212 of the Companies Act, 1956, your Company is required
 to attach the Directors Report, Balance Sheet and Profit and Loss
 Account of the subsidiaries to its Balance Sheet. Your Directors
 believe that the Audited Consolidated Accounts presents a full and fair
 picture of the state of affairs and financial conditions of the Company
 and its subsidiaries.
 
 Hence, the Company had made an application to the Central Government,
 seeking exemption from the requirement of attaching the Directors
 Report, Balance Sheet and Profit and Loss Account of the subsidiaries
 to its Balance Sheet. The approval of the Central Government is
 awaited. Accordingly, the Annual Report of your Company does not
 contain separate financial statements of these subsidiaries, but
 contains audited consolidated financial statements of the Company and
 its subsidiaries.
 
 The approval of the Central Government has since been received vide
 letter reference no.47/132/2008-CL-lll dated June 3, 2008.
 
 However, a statement of the Companys interest in the subsidiaries and
 a summary of the financials of the subsidiaries are given along with
 the consolidated accounts. The annual accounts of the subsidiaries,
 along with the related information, will be made available to the
 Members seeking such information at any point of time. The annual
 accounts of the subsidiaries are also available for inspection during
 business hours at the Registered Office of the Company and its
 respective subsidiaries.
 
 FUTURE OUTLOOK
 
 According to Forrester Research Report, the Global Annual IT
 (Information Technology) spend is projected to be USD 1.695 trillion
 for the year 2008. For 2008, a global growth in IT spend of 6% has been
 projected as against 12% in 2007.  Though the overall growth projected
 is only 6% in software, IT services and outsourcing, which is the
 segment in which the Company operates, an overall growth of 8% to 9%
 has been projected. If we analyze the composition of this growth, while
 the growth in USA and Europe are projected at 5% to 6%, the growth in
 Eastern Europe and Middle East and rest of Asia has been projected at
 14% to 16%. Further, the growth in India has been projected at 18%.
 
 Another important factor to note is the diversity of IT spend, with
 Asian IT spend getting almost equal to US and European IT spend. As you
 have seen earlier, your Company derives significant revenues of 46%
 from high growth Asian markets, of which 36% comes from the very high
 growth driven Indian market.
 
 Thus, your Company is ideally poised for capturing the growth in Asian
 markets, including the high growth Indian market where it also enjoys a
 good brand recognition.
 
 In developed markets like UK and USA, the Company would be able to
 improve its market share by offering certain niche solutions, which
 would, enable the customer to get cost advantage.
 
 CAPITAL
 
 a) Increase in Authorised Capital
 
 The Authorized Capital of the Company was increased from Rs. 2,500
 Million, divided into Rs. 1,000 Million, consisting of 200 Million
 Redeemable Preference Shares of Rs. 5 each and Rs. 1,500 Million
 divided into 150 Million Equity Shares of Rs. 10 each, to Rs. 4,000
 Million, divided into Rs. 1,000 Million consisting of 200 Million
 Redeemable Preference Shares of Rs. 5 each and Rs. 3,000 Million
 divided into 300 Million Equity Shares of Rs. 10 each.
 
 b) Increase in Paid-Up Capital i) Issue of Bonus Shares:
 
 In view of the Company having crossed many a milestone and as an
 acknowledgement of the continued support provided by the shareholders,
 the Company made a Bonus Issue of equity shares in the ratio of 1:1.
 Pursuant to this, 64,787,631 Bonus Shares were allotted on August
 30,2007.
 
 ii) Foreign Currency Convertible Bonds (FCCBs):
 
 Pursuant to the conversion notices received from the FCCB holders, your
 Company has allotted 8,675,030 shares during this year to the
 Bondholders.
 
 Other details such as the total bonds issued, bonds converted, number
 of shares allotted and expected number of shares to be allotted with
 respect to FCCB have been given in detail in Corporate Governance
 Report at para No. VI (o).
 
 iii) ESOS allotments:
 
 773,785 shares were also allotted under Employee Stock Options Scheme
 (ESOS) during the financial year 2007-08.
 
 As result of allotment of Bonus Shares, conversion of bonds and
 allotment of shares under ESOS, the share capital of your Company
 increased to Rs.1,305,351,850 in financial year 2007-08 from
 Rs.562,987,390 in financial year 2006-07.
 
 c) Employee Stock Option Scheme
 
 In the fiscal 2000, the Company instituted an Employee Stock Option
 Scheme (ESOS) to enable the employees and Directors of the Company and
 its subsidiaries to participate in the future growth and financial
 success of the Company.  Options granted under this scheme vest in a
 graded manner over a three-year period, with 20%, 30% and 50% of the
 grants vesting in each year, commencing one year from the date of
 grant. Options can be exercised within 10 years from the date of grant,
 orfive years from the date of vesting, which ever is later. The price
 of the options granted afterthe IPO is the closing market price on the
 stock exchange, which recorded the highest trading volume preceding the
 date of grant of option. The pricing of the stock options is in line
 with SEBI guidelines.
 
 In the last Annual General Meeting held on July 25, 2007, the approval
 of the Members was received for institution of new ESOS 2007 for grant
 of Stock Options to the employees of the Company and its subsidiaries.
 
 Pursuant to the SEBI (Employee Stock Options Scheme and Employee Stock
 Purchase Scheme) Guidelines, 1999, for all the stock options which were
 granted and outstanding, grant price has been halved and number of
 stock options has been doubled on the Record date of the Bonus Issue.
 
 a) The particulars of the options granted and outstanding upto March
 31,2008 are as under:
 
 Particulars                                    ESOS 2000    ESOS 2007
 
 Options Granted (Including Bonus)            26,553,077     2,575,000
 Options Vested                               11,056,351           NIL
 Options exercised                             2,434,257           NIL
 Number of shares allotted pursuant
 to exercise of options                        2,434,257           NIL
 Options forfeited/lapsed                      2,875,083           NIL
 Extinguishment or modification of options           NIL           NIL
 Amount realised by exercise of options(Rs.) 222,690,245           NIL
 Total number of options in force             21,501,904     2,575,000
 
 b) The following Directors and Senior Management were granted options
 during the year (The figures are post bonus):
 
 Mr.V.Srinivasan, Managing Director & CEO -1,000,000; Mr. Hariharan
 Padmanabhan, Deputy Managing Director - 500,000; Mr. Amar Chintopanth,
 Executive Director & CFO - 400,000; Mr. Anirudh Prabhakaran - 500,000;
 Dr Arvind Gupta - 150,000, Mr. Bharat Hari Gupta - 150,000; Mr.
 Chandrasekhar Sankaran - 250,000; Dr Chris Potts - 400,000; Mr. Debneel
 Mukherjee - 100,000; Mr. Jayaraman Jagnnadhan - 100,000; Mr. Jyotin
 Mehta - 200,000; Mr. Manoj Mandavgane-200,000; Mr. M. B. Battliwala -
 200,000; Mr. Padmanabhan Iyer-250,000; Mr.  Ravi Jagannathan - 400,000;
 Mr. Robert Bartlett - 250,000; Mr. Shivanand R. Shettigar - 160,000;
 Mr. Suheim Sheikh-240,000 and Mr. VivekMalhotra-400,000.
 
 The options granted to Mr. V. Srinivasan during the year 2004-05
 (570,000) exceeded 1 % of the issued capital of the Company at the time
 of grant.
 
 c) The following options granted and outstanding as at March 31, 2008
 (post bonus figures), were granted 3 years priortothe IPO to Directors
 and Senior Management:
 
 Mr. V. Srinivasan, Managing Director & CEO-1,196,000; Mr. Hariharan
 Padmanabhan, Deputy Managing Director- 500,000; Mr. Amar Chintopanth,
 Executive Director & CFO-232,600; Mr. Debneel Mukherjee-222,000, Mr.
 Manoj Mandavgane - 84,000; Mr. M.B.Battliwala - 118,700; Mr.
 Padmanabhan Iyer - 120,000; Mr. Ravi Jagannathan - 104,800, and Mr.
 Shivanand R. Shettigar-96,800.
 
 d) Diluted Earning Per Share (EPS) pursuant to issue of Equity Shares
 on exercise of options calculated in accordance with Accounting
 Standard 20:
 
 In 3 years prior to the IPO
 
 As the Stock Options granted under ESOS 2007 scheme vest only in July
 2008, the diluted EPS has been calculated without taking into account
 the options granted under ESOS 2007.
 
 Financial Year                             Amount (in Rupees)
 
 2002-03                                         (0.09)
 2003-04                                          0.17
 2004-05                                          2.18
 
 Last three years
 Financial Year                           Amount (in Rupees)
 
 2005-06                                        5.76
 2006-07                                       17.37
 2007-08                                       12.65
 
 * Post-Bonus
 
 e) Since the exercise price of the Companys options is the previous
 days closing price on the stock exchange, which recorded the highest
 trading volume preceding the date of grant of options, there is no
 compensation cost in fiscal 2008 based on the intrinsic value of
 options. However, if the Company had used the fair value of options
 based on the Black-Scholes model, compensation cost in fiscal year
 would have been Rs.71.49 million; and proforma profit after tax would
 have been Rs.858.79 million. On a proforma basis, the Companys basic
 and diluted earning per share would have been Rs. 6.80 and Rs.6.43,
 respectively. The fair value of the options granted has been estimated
 using the Black-Scholes option pricing Model. Each tranche of vesting
 have been considered as a separate grant for the purpose of valuation.
 The assumptions used to estimate the fair value are detailed below:
 
 Risk free interest rate                         6.32% to 8.25%
 Expected life 3-10 years
 Expected volatility                             10%  to 19.60%
 Expected dividends yield                                 1.39%
 
 Price of the underlying share in the        The Shares were granted at
 market at the time of option grant          Closing price on NSE prior
 
 to the date of grant
 Date of Grant                                    Grant Price
 
 April 24, 2007                                   Rs. 139.5*
 July 25, 2007                                    Rs. 143.5*
 October 24, 2007                                 Rs. 140
 January 24, 2008                                 Rs. 120
 
 * adjusted for Bonus
 
 f) Weighted average exercise price of Options granted during the year
 whose exercise price equals market price - Rs. 139.57
 
 g) Weighted average fair value of options granted during the year whose
 exercise price equals market price - Rs. 59.09
 
 POSTAL BALLOT
 
 During the year 2007-08, no resolution was passed through postal
 ballot. The Company proposes to amend the Objects (Clause III) of the
 Memorandum of Association of the Company by seeking approval of the
 Members through postal ballot.  For more details please refer to Part
 III, Postal Ballot section in Corporate Governance Report.
 
 QUALITY
 
 Your Directors are pleased to report that the Company is continuing on
 its path of continuous process improvement. This year, the Enterprise
 Technology (Infrastructure) Group has been certified as ISO 27001:2005.
 As intimated earlier, the Company has achieved Level 5 of the CMMi
 model of SEI, the highest level for the model. This ensures delivery of
 high quality products and services to its clients. This also enables
 the Company to strengthen its position in the global markets.  The
 Company already has been certified for ISO 9001:2000 accreditation for
 its BPO group.
 
 AWARDS AND ACCOLADES
 
 Your Company has won several awards and accolades during the year. Your
 Company won Best e-Governance System Integrator Award at 4th Dataquest
 e-Governance Summit -2008 in India, and the Australian Banking &
 Finance - Insurance award for Service Provider of the Year at Insurance
 Awards Function 2007. Your Company has also won the prestigious Growth
 Strategy Leadership Award for Mid-Market Enterprise Application from
 Frost & Sullivan(F&S), India & South Asia. This is the third time that
 the Company has been recognized by F&S for its contribution to the
 Indian IT industry.  The other awards received by your Company are
 Oracles UK Technology Partner of the Year at the Oracles Annual
 Business Partner Awards - 2007, Independent Software Vendor (ISV) Award
 from Oracle Corporation - 2007 and 3i Infotech - APAC geography getting
 the Most Significant Deal in FY07 Award from Oracle Corporation.
 Kastle Universal Lending ranked 4th in the lending category of IBS
 Sales League Table - 2007, IBM Strategic Partner Award from IBM -
 2007, Integrity Partner Award from HP Singapore, 2008.
 
 PUBLIC DEPOSITS
 
 During the year, the Company has neither invited nor accepted any
 deposit under Section 58Aof the Companies Act, 1956.
 
 DIRECTORS
 
 During the year 2007-08, Ms. Madhabi Puri Buch resigned as a director
 with effect from June 01,2007. Ms.Vishakha Mulye was appointed as a
 director with effect from July 25, 2007 to fill up the casual vacancy
 caused due to the resignation cf Ms. Madhabi Puri Buch.
 
 Mr. Anirudh Prabhakaran, was appointed as Additional Director and was
 designated as Executive Director on April 25, 2008.The Board approved
 the early retirement of Mr. Hariharan Padmanabhan, Deputy Managing
 Director w.e.f May 15, 2008.
 
 In terms of the provisions of the Articles of Association of the
 Company, Mr. Hoshang N. Sinor and & Ms Vishakha Mulya are due to retire
 by rotation at the forthcoming 15th Annual General Meeting of the
 Company and being eligible, offer themselves for re-appointment.
 
 Mr. Anirudh Prabhakaran being, Additional Director will hold the post
 till the date of Annual General Meeting. It is proposed to appoint him
 as Director at the upcoming Annual General Meeting.
 
 AUDIT COMMITTEE
 
 Presently, the Audit Committee comprises of Mr. S. Santhanakrishnan, as
 Chairman; Mr. Samir Kumar Mitter and Dr. Bruce Kogut as Members. All
 the Members of the Audit Committee are Independent Non-Executive
 Directors. During the year, the Committee met four times to review
 quarterly accounts, internal control systems, discuss the audit
 findings and recommendations of the internal and statutory auditors.
 
 BOARD GOVERNANCE COMMITTEE
 
 The Board Governance Committee comprising of Mr. Hoshang N. Sinor, as
 Chairman; Mr. Suresh Kumar and Dr. Bruce Kogut as Members, attends to
 the matters relating to governance, nomination to the Board,
 compensation to the Directors and performance bonus, stock options etc.
 to the Directors and employees of the Company. All the Members of the
 Board Governance Committee are Independent Non-Executive Directors.
 During the year under review, the Committee met four times.
 
 SHAREHOLDERS AND INVESTORS GRIEVANCES COMMITTEE:
 
 The Shareholders and Investors Grievances Committee comprising of Mr.
 Hoshang N. Sinor, as Chairman and Mr. S. Santhanakrishnan and Mr.
 Hariharan Padmanabhan, attends to the matters relating to investors
 servicing. Majority of the Members are Independent Non-Executive
 Directors. During the year, the Committee met four times. Mr. Amar
 Chintopanth, Executive Director and CFO has been inducted in place of
 Mr. Hariharan Padmanabhan to fill the vacancy caused by his early
 retirement.
 
 FUND RAISING AND ACQUISITIONS COMMITTEE
 
 The Fund Raising and Acquisitions Committee was constituted in July
 2007 to approve acquisitions upto a certain limit, to recommend
 acquisitions to the Board above a certain limit, to analyse the funding
 needs of the Company and to note and review previous acquisitions. The
 Committee comprises of Mr. Suresh Kumar, Chairman; Dr. Bruce Kogut and
 Mr. V. Srinivasan as Members. A majority of the Members are Independent
 Non-Executive Directors. The Committee met once during the year.
 
 AUDITORS
 
 The Audit Committee had recommended the appointment of Joint Auditors
 for the year 2008-09. Accordingly, the Board has proposed that M/s
 Lodha & Co., Chartered Accountants, the existing Auditors, together
 with M/s RGN Price & Co.  Chartered Accountants be appointed as the
 Joint Auditors of the Company, to hold office from the conclusion of
 the15th Annual General Meeting upto the conclusion of thel 6th Annual
 General Meeting.
 
 The Company has received letters from both the appointees, wherein they
 have consented to act as Joint Auditors and have confirmed that they
 are eligible and qualified to be appointed as Auditors pursuant to the
 Sections 224(1 B) and 226 of the Companies Act, 1956.
 
 The Company has also received Special Notice pursuant to Section 225 of
 the Companies Act, 1956 for this appointment.
 
 CONSERVATION OF ENERGY
 
 Although the operations of the Company are not energy intensive, the
 management has been highly conscious of criticality of conservation of
 energy at all the operational levels and efforts are made in this
 direction on a continuous basis. Adequate measures have been taken to
 reduce energy consumption wherever possible. The requirement of
 disclosure of particulars with respect to conservation of energy as
 prescribed in Section 217 (1) (e) of the Companies Act, 1956 read with
 the Companies (Disclosure of Particulars in the Report of Board of
 Directors) Rules, 1988, are not applicable to the Company and hence are
 not provided.
 
 TECHNOLOGY ABSORPTION
 
 Change is the only constant thing in todays technology driven world.
 In your Company also change is considered as the only constant thing,
 and this is the way your Company keeps itself aligned with changes in
 the external environment. The Company being primarily in the
 Information Technology domain, investments are continuously made in the
 latest technological tools.
 
 During the year 2007-08, your Company has undertaken the following
 activities:
 
 Migrated from conventional network across offices to latest technology
 on MPLS and also wireless technology for faster turn around time. To
 support the expansion plans of the organization, the same technology
 has been extended to the Global offices of the Company.
 
 Towards providing technology services offerings to its customers, your
 Company has unveiled a new facility at Chennai, with Datacenter/DR
 Hosting Services (IDC) and Remote Infrastructure Management Services
 (RIMS).  The facility has state of the art IDC, built to offer about
 6000 sq ft, with an expansion capacity of 20,000 sq ft. The Network
 Operations Center provides 24*7 Remote Infrastructure Management
 Services. Your Companys IDC and RIMS operations have been certified to
 comply with ISO-27001 IT Security Standards, as well as globally
 acclaimed ISO 20000-1:2005, ITIL processes.
 
 To optimize usage and improve manageability
 
 The messaging service have been centralized.
 
 introduced virtualization of servers to caterto small project
 requirements.
 
 Availability of identified critical systems has been ensured
 
 High speed LAN architectures has been designed and implemented for the
 newly created support offices
 
 With the help of technology, the concept of home user was introduced in
 this year, enabling work from home and access to the data available on
 the servers in the office in a secure way.
 
 Research & Development (R&D):
 
 The Company also has set up Global Research Centre (GRC), besides
 having Global Development Centres (GDCs) for the development of its
 software products.
 
 As a part of R&D, the GDCs participate in, contribute to and obtain
 inputs from various industry forums in the respective Geographies.
 These interactions, combined with inputs from our field force,
 facilitate effective and timely understanding of market trend/ needs,
 resulting in focussed enhancement to products.
 
 GRC provides assistance to individual verticals and geographies as well
 at the enterprise level, in identifying market opportunities and to
 achieve this, conducts structured competition analysis, industry
 landscape and country studies with reference to different products and
 services.
 
 Specific areas of R&D:
 
 At the GDCs, with the increase in the number of products, releases and
 technological innovations being effected, performance of the products
 at different concurrent user levels is an aspect for constant
 monitoring. Load testing laboratory has been set up at the GDC, to
 facilitate benchmarking of major releases of your Companys products
 for high number of concurrent users related to various business
 scenarios / transactions, thereby highlighting areas for code
 optimisation and corrective action to ensure scalability of the
 products.
 
 The Quality Management Groups in the GDC have also been tailoring and
 enhancing the processes in line with CMMi Level 5, to continuously
 improve quality delivery to customers.
 
 The GRC conducts research of two kinds - Planned Research and Request
 Based Research. The Planned Research is undertaken based on the
 Companys growth plans and Request Based research is undertaken on the
 basis of requests received from other departments.
 
 Benefits derived as a result of R&D:
 
 Due to constant efforts by GDC, the solutions offered by the Company
 have become robust and versatile to tackle the complex nuances of the
 dynamic business situations in the BFSI segment. With this, the Company
 was able to cross sell its various products as a composite offering.
 The Company was able to penetrate the niche markets with a competitive
 edge, to sustain higher level of acceptability in the regions of its
 presence.
 
 The GRC has produced many planned based reports and request based
 reports which are being used for strengthening its products and for
 marketing of the products of the Company.
 
 FOREIGN EXCHANGE EARNING AND EXPENDITURE
 
 a) Activities relating to exports, initiatives taken to increase
 exports, development of new export markets for products and services,
 and export plans:
 
 More than 35% of the revenue of the Company is derived from exports.
 The Company has state of the art offshore development centers in India
 at Mumbai, Bangalore, Chennai, Hyderabad, Delhi, Kochi and onsite
 delivery and support facilities in offices located across the world.
 
 Expenditure on R&D:                               Rs. in Milion 
 Particulars                                    2007-08      2006-07
 
 Revenue Expenditure                           406.13        383.25
 Capital Expenditure
 Total                                         406.13        383.25
 Total R&D expenditure as a percentage of        8.76%        11.02%
 
 total standalone revenue
 
 The Registered Office of the Company is located at an International
 Infotech Park, Vashi, Navi Mumbai. Some of the software development
 centers of the Company in India are also registered as Software
 Technology Parks of India(STPI). due to which the Company is required
 to fulfill its export obligations as laid down by the Government for
 STPI units.
 
 b) Foreign Export earnings and expenditure
 
 During the year 2007-08, the expenditure in foreign currencies amounted
 to Rs. 1236.68 million on account of branch expenses, dividend,
 travelling & other expenses. During the same period, the Company earned
 Rs. 1928.03 million in foreign currencies, as income from its exports
 and Interest Income.
 
 PERSONNEL
 
 By acquiring companies in overseas, especially in USA and UK and by
 integrating them with the 3i Infotech Group, your Company has exhibited
 the capacity to encompass a global culture.
 
 Well defined Human Resources Development (HRD) policies, such as
 rigorous recruitment process, training employees in the required skill
 sets and a well established appraisal system was followed unrelentingly
 this year also. This year, the concept of 360 degree appraisal for the
 senior management in South Asia Geography was also introduced. 360
 degree appraisal will ensure the dynamic growth of your Companys
 senior management as under this process not only the immediate
 reporting authority will appraise the employee but comments from
 customers, peers and subordinates will be taken and the information
 will be provided to the employee.
 
 The average age of employees is as low as 28 years. The Company has
 developed robust processes to evaluate and recruit a large numbers of
 employees from premier universities, collegesand institutes in India,
 including the Indian Institutes of Technology, regional engineering
 colleges and Indian Institutes of Management. A rigorous selection
 process, involving a series of activities, including individual and
 group interviews, technical and psychometric tests, is in place.
 
 Information in accordance with the provisions of Section 217 (2A)ofthe
 Companies Act, 1956, read with the Companies (Particulars of Employees)
 Rules, 1975, as amended, forms part of the Directors Report. However,
 as per the provisions of Section 219(1 )(b)(iv) of the Companies Act,
 1956, this report and Accounts are being sent to all the Members of the
 Company, excluding the Statement of Particulars of Employees under
 Section 217(2A)of the Companies Act, 1956. Any Member interested in
 obtaining a copy of the said statement may write to the Company
 Secretary at the Registered Office of the Company, and the same will be
 sent by post.
 
 a) Knowledge Sharing:
 
 The Company being in a knowledge-driven industry, it believes that
 knowledge sharing is the most important aspect of employee development.
 Various platforms are made available to the employees to share their
 knowledge with the employees spread all over the world. Your Company
 has a Knowledge Management portal which can be accessed by all its
 employees. This Knowledge Management portal, besides giving opportunity
 to employees to share their knowledge and resolve their queries, also
 provides the latest information about the development and progress of
 the Company.
 
 The Managing Director & CEO circulates quarterly newsletters briefing
 about the significant developments in the quarter, including the major
 client wins for the information of the employees. A monthly e-magazine
 called GDC- BLITZ, has been introduced, wherein information about the
 product developments and various trainings is provided to the
 employees. Various business divisions also circulate monthly magazines
 indicating the progress in their division to respective employees.
 
 b) Commitment Culture:
 
 Acontest to explore and reinforce the concept of commitment culture, on
 the basis of principle. Individual commitment to group efforts - that
 is what makes a team work, a company work, a society work and a
 civilization work was held during this year.
 
 Overwhelming response was received to this contest from employees and
 winners were awarded.
 
 CORPORATE GOVERNANCE
 
 In recognition of the good corporate governance practices adopted by
 the Company, ICRA Limited (an associate of Moodys Investors Service),
 a leading provider of investment information and credit rating services
 in India, has assigned a CGR2 rating to the Corporate Governance
 Practices of the Company. This rating implies that the Company has
 adopted and follows such practices, conventions and codes as would
 provide its financial stakeholders a high level of assurance on the
 quality of corporate governance. Adetailed report on Corporate
 Governance is given in the annexure to this Report.
 
 DIRECTORS RESPONSIBILITY STATEMENT
 
 As required under section 217(2AA) of the Companies Act, 1956, it is
 hereby confirmed that:
 
 a) in preparation of the annual accounts, the applicable accounting
 standards have beenfollowed along with proper explanation relating to
 material departures;
 
 b) we have selected such accounting policies and applied them
 consistently and made judgments and estimates that are reasonable and
 prudent, so as to give a true and fair view of the state of affairs of
 the Company at the end of the financial yearand of the profit of the
 Company forthat period;
 
 c) we have taken proper and sufficient care for the maintenance of
 adequate accounting records in accordance with the provisions of the
 Companies Act, 1956 for safeguarding the assets of the Company and for
 preventing and detecting fraud and other irregularities and
 
 d) we have prepared the annual accounts on a going concern basis.
 
 ACKNOWLEDGEMENTS
 
 The Directors are thankful to the Members and investors for their
 confidence and continued support. The Directors are grateful to the
 Central and State Governments, Securities & Exchange Board of India,
 Reserve Bank of India, Software Technology Park of India, Customs and
 other government authorities, banks and last but not the least, its
 trusted clients for their continued support.
 
 The Directors would like to express their gratitude for the un-stinted
 support and guidance received from the ICICI group, alliance partners
 and vendors.
 
 The Directors would also like to express their sincere thanks and
 appreciation to all the employees for their commendable teamwork and
 professionalism.
 
                                         For and on behalf of the Board
 
                                  sd/-                       sd/-
                                Hoshang N. Sinor        V. Srinivasan
                                  Chairman        Managing Director & CEO
 Mumbai, April 25,2008