Avaya GlobalConnect

1.  The Directors hereby present the Twenty Second Annual Report and
 the audited statement of accounts for the year ended September 30,
 2008.
 
 2. Financial Results                                    Rs. in crores
                                Year ended 30/09/2008     Period ended 
                                                            30/09/2007
                                           (12 months)      (18 months)
 
 Sales & Services (Gross)                      573.07           847.77
 
 Sales & Services (Net)                        566.95           837.89
 
 Profit before interest, 
 depreciation & tax (EBIDA)                     34.44            84.05
 
 Add : Interest and finance charges (Net)        4.00             5.36
 
 Less : Depreciation                            10.16            15.48
 
 Profit before tax                              28.28            73.93
 
 Less : Provision for tax 
 (including deferred tax
 and fringe benefit tax)                        11.07            26.31
 
 Profit after tax                               17.21            47.62
 
 Balance brought forward 
 from previous year                             48.98            27.60
 
 Amount available for appropriation             66.19            75.22
 
 Appropriations :
 
 Proposed dividend                               4.98             9.61
 
 Corporate Dividend Tax                          0.85             1.63
 
 Transfer to General Reserve                     5.00            15.00
 
 Balance carried to Balance Sheet               55.36            48.98
 
 Note : These results pertain to Avaya GlobalConnect Limited - India
 operations only.
 
 3.  Dividend
 
 Your Directors are pleased to recommend the payment of dividend at the
 rate of Rs. 3.50 per share (35.00%) on 1,42,33,232 Equity Shares of Rs.
 10/- each for the year ended September 30, 2008, subject to the
 approval of the shareholders in the ensuing Annual General Meeting.
 
 4.  Financial Performance
 
 The Company, for the year ended September 30, 2008 recorded a gross
 turnover of Rs. 573.07 crores, as against Rs. 847.77 crores for the
 period ended September 30, 2007. The profit before tax is Rs. 28.28
 crores for the year ended September 30, 2008 as against Rs. 73.93
 crores for the previous financial year.  The profit after tax is Rs.
 17.21 crores as against Rs.47.62 crores for the previous financial
 year.
 
 Note : During the financial year 2004-05, the Company had switched to
 new Revenue Recognition Method / Policy based on Project completion.
 
 5.  Operations
 
 Your Company strengthened its approach on Industry Verticals to have a
 differentiation for its products and services. The vertical approach
 builds on the 3C (Converged Communications, Contact Centers and
 Customer Services) strategy based on applications specifically targeted
 for Banking & Financial sector, IT & BPO sector, Education, Government,
 Travel & Hospitality and Manufacturing & Logistics sector.
 
 The Company launched new initiatives to strengthen its leadership in
 Convergence and Call Center under the Intelligent Communication
 branding. The initiatives were directed to communicate strategy on
 business impact and benefits in form of enhanced employee productivity,
 higher customer satisfaction and quicker return on costs.
 
 Avaya GlobalConnect Customer Responsiveness Awards 2008 - one of the
 most prestigious and coveted recognitions for companies in India and an
 initiative that organizations view with a great degree of seriousness -
 were presented by Economic Times to Indias well known names in the
 world of business. The third Awards event, was held in Mumbai in
 January 2008 and honoured companies in various vertical categories.
 160 applicants and over 65,000 customer responses were received. The
 staggering statistics of 2008, meanwhile were indicative of the fact
 that Indian organizations had embraced the initiative with open arms
 and were committed to it on a long term basis.
 
 The Awards were presented for various vertical categories and featured
 a new inclusion - the Customer Responsive Business Practices Award,
 which were conferred, for the very first time, on five winners.
 
 Customer Service continues to be a key focus area and your Company
 ensures enhancing the skills of the employees through training and
 developing competencies. The Company is focused on supporting its
 customers for the installed systems and technology up-gradation as new
 technologies emerge.
 
 During the period under review, GlobalConnect Australia Pty Ltd (GCA),
 the wholly owned subsidiary of your Company, has expanded its
 geographical and customer base to ensure revenue growth in Australia.
 Initially starting the operation from Sydney, today GCA has presence in
 Sydney, Melbourne and Adelaide with Perth and Brisbane to be added
 shortly. GCA has around 50 staff and over 100 customers. In order to be
 in line with the growth with the market place, GCA has expanded its
 Customer Care, Professional Services and Applications Division. In
 October 2008, GCA completed four years of operations in Australia.
 
 As GCA continues to expand its presence in a very competitive
 Australian market there would definitely be many more milestones to add
 to its journey.
 
 On October 26, 2007 Avaya Inc., Silver Lake and TPG Capital announced
 that Silver Lake and TPG Capital completed their acquisition of Avaya.
 Avayas common stock ceased trading on the New York Stock Exchange
 (NYSE) before the commencement of trading on October 26, 2007 and has
 been delisted from the NYSE.
 
 6.  Business Outlook
 
 The Indian Communications Industry continues to login high growth to
 touch more than 300 million subscribers in 2008. The number of mobile
 subscribers has overtaken the fixed landline subscribers indicating
 higher growth in the mobile subscriber base. The higher availability of
 telecommunication lines contributes to the growth of enterprise
 telephone and other communication needs.
 
 The Converged Communications Market for your Company comprises of
 Contact Center and the Enterprise Converged Networks. In the Contact
 Center, the growth has been somewhat lower during the financial year
 under review, with 3rd party outsourcers coming through consolidation
 and number of captive units for MNCs being lower than the previous
 years.
 
 The focus of the Business Process Outsourcing (BPO) companies will be
 on enhanced productivity and moving up the value chain to deliver
 higher value services to their customers, thereby opening up
 opportunities for applications.
 
 The India based BPO companies have started to look at domestic market
 and de-risk their operations by opening centers in low cost
 destinations like Philippines, East Europe and South America.
 
 The Enterprises continue to adopt IP Telephony on a growing scale which
 should augur well for your Company. The Enterprises are also expected,
 in the near future, to deploy Modular Messaging, Unified Communications
 and high-end Videoconferencing Solutions and so on thus further
 enhancing the scope for the products / solutions provided by your
 Company.
 
 7.  Recognitions conferred on the Company
 
 During the period under review, your Company continued to earn
 recognition at prestigious national and international forums. The
 Company also received appreciation and awards for contributions made in
 the field of Enterprise Communication Solutions.
 
 Your Company received the Voice and Data Award in the year 2008 for
 Leadership in Enterprise Voice Solutions.
 
 The Company was conferred Frost & Sullivans Market Leadership Award in
 2007 and 2008 for Enterprise Telephony and Contact Centers.
 
 VARlndia awarded the Company in 2007 for being the Best Unified
 Communications Solutions Provider.
 
 In addition, the Company also received Polycoms Platinum Partnership
 Award in the year 2007 and Junipers J-Partner Elite Award in 2008.
 
 8.  New Products
 
 Your Company continues to enhance the product portfolio to address the
 enterprise customers need for converged communication services
 covering Voice, Data and Video Networks and also Contact Center
 Solutions. During the year under review, your Company launched the Next
 Gen Polycom Telepresence solutions including RealPresence™ High
 Definition solutions having :
 
 - Unprecedented High Definition Video in a Cinematic view
 
 - Extraordinary StereoSurround™ Audio
 
 - High-resolution content
 
 in a truly immersive meeting environment that provide ultimate meeting
 experience for executives linking sites across the globe.
 
 9.  Organizational Initiatives
 
 Your Company continues to work towards its Vision to be recognized as
 the Most Customer Responsive Company by building on initiatives
 across functions.
 
 The Company has focused its approach on Industry Verticals to have
 differentiation for its products and services. The vertical approach is
 based on applications specifically targeted for various industry
 verticals like Banking & Financial Sector, IT & BPO Sector, Education
 Sector, etc. The Company has further expanded its portfolio to address
 large set of needs of its customers in the Contact Center and
 Enterprise Communication Area.
 
 The Company has launched special initiative to acquire new customers.
 The target customers are named large customers in different key
 verticals as well as competition accounts to fuel growth in market
 share of your Company. The Company is also focusing to develop domain
 knowledge of Banking and Financial Services, Retail and Manufacturing
 and Travel and Logistics. The Companys endeavour is to tap large
 investments in these sectors by developing and deploying new
 applications / solutions and thereby create an Experiential Selling
 environment.
 
 The Company continued to focus on competency development of its
 employees through different training programs on management and
 technology. Your Company had identified new roles in tune with the
 market requirements, and initiated recruitment from the industry to
 meet its specific objectives.
 
 As a part of social responsibility initiative, your Company encourages
 its employees to engage in social development projects. A web page had
 been created for employees on the intranet portal, to log the
 initiatives undertaken by them as a team and / or individually. The
 Company also organized an Annual Athletic Meet for schools located at
 Gandhinager, Gujarat. The objective of this meet is to promote
 discipline and competitive spirit amongst the youth.
 
 10.  Fixed Deposits
 
 The Company has not accepted any Fixed Deposits during the year.
 
 11.  Directors
 
 In accordance with the provisions of the Companies Act, 1956 and the
 Articles of Association of the Company, Mr. Amarnath K. Pai and Mr. S.
 Ramakrishnan, retire by rotation and being eligible, offer themselves
 for re-appointment.
 
 During the financial year under review, Mr. Rohit Menezes resigned from
 the directorship of the Company w.e.f. 23rd January 2008.
 
 During the period ended September 30, 2008, Mr. David Manganello was
 appointed as an Additional Director of the Company. He holds office up
 to the date of the ensuing Annual General Meeting and is eligible for
 re-appointment. The Company has received notice under Section 257 of
 the Companies Act, 1956, proposing his appointment as Director, subject
 to retirement by rotation.
 
 Also, during the financial year, Mr. C. B. Bhave resigned from the
 directorship of the Company w.e.f. 15th February 2008 and Mr. David P.
 Johnson resigned from the directorship of the Company w.e.f. 8th May
 2008. Further, at the meeting of the Board of Directors of the Company
 held on 24th November 2008, the resignations of Mr. Mark Leigh w.e.f.
 20th October 2008 and Mr. Niru Mehta w.e.f 1st January 2009 were noted.
 The Board places on record its sincere appreciation for the services
 rendered by Mr. Rohit Menezes, Mr. C. B. Bhave, Mr. David P. Johnson,
 Mr. Mark Leigh and Mr. Niru Mehta.
 
 At the said meeting, the Board also appointed Mr. John DiLullo, as an
 Additional Director of the Company.  He holds office up to the date of
 the ensuing Annual General Meeting and is eligible for re-appointment.
 The Company has received notice under Section 257 of the Companies Act,
 1956, proposing his appointment as Director, subject to retirement by
 rotation.
 
 12.  Auditors and their observations
 
 Members are requested to appoint Auditors for the current year and to
 authorize the Board of Directors to fix their remuneration. M/s.
 Lovelock & Lewes, Chartered Accountants, the retiring Auditors have
 under Section 224 (1B) of the Companies Act, 1956, furnished a
 certificate of their eligibility for re-appointment.
 
 13.  Personnel
 
 The Board places on record its appreciation for the hard work and
 dedicated efforts put in by all the employees. The relations between
 the management and employees continue to remain cordial on all fronts.
 
 In terms of the provisions of Section 217(2A) of the Companies Act,
 1956, read with the Companies (Particulars of Employees) Rules, 1975 as
 amended, the names and other particulars of the employees are required
 to be set out in the Annexure to the Directors Report. However, as per
 the provisions of Section 219(1)(b)(iv) of the said Act, the Annual
 Report excluding the aforesaid information is being sent to all the
 Members of the Company and others entitled thereto. Member who is
 interested in obtaining such particulars may write to the Company
 Secretary at the Registered Office of the Company.
 
 14.  Particulars required to be furnished by the Companies (Disclosure
 of Particulars in the Report of Board of Directors) Rules, 1988
 
 (i) Part A pertaining to conservation of energy is not applicable to
 the Company.
 
 (ii) Part B pertaining to particulars relating to technology absorption
 is as per Annexure B to this report.
 
 (iii) Part C pertaining to foreign exchange earnings and outgoings is
 as contained in item nos. 21, 22 and 23 of Schedule 21 of the accounts.
 
 15.  Directors Responsibility Statement as per Section 217 (2AA)
 
 Pursuant to Section 217 (2AA) of the Companies Act, 1956, the Directors
 based on the representations received from the Operating Management
 confirm that -
 
 (i) in the preparation of the annual accounts, the applicable
 accounting standards have been followed and that there are no material
 departures;
 
 (ii) they have, in the selection of the accounting policies, consulted
 the Statutory Auditors and have applied them consistently and made
 judgements 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 year and of the profit of the Company for that period;
 
 (iii) they have taken proper and sufficient care, to the best of their
 knowledge and ability, 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;
 
 (iv) they have prepared the annual accounts on a going concern basis.
 
 16.  Audit Committee
 
 Mr. C. B. Bhave resigned from the directorship of the Company w.e.f.
 15th February 2008 and consequently from the membership of the Audit
 Committee. The details relating to Audit Committee are mentioned in the
 Corporate Governance Report, which forms a part of the Annual Report.
 
 17.  Shareholders / Investors Grievance Committee
 
 Mr. C. B. Bhave resigned from the directorship of the Company w.e.f.
 15th February 2008 and consequently from the membership of the
 Shareholders / Investors Grievance Committee. The details relating to
 Shareholders / Investors Grievance Committee are mentioned in the
 Corporate Governance Report, which forms a part of the Annual Report.
 
 18.  Ethics & Compliance Committee
 
 Mr. C. B. Bhave resigned from the directorship of the Company w.e.f.
 15th February 2008 and consequently from the membership of the Ethics &
 Compliance Committee. The details relating to Ethics & Compliance
 Committee are mentioned in the Corporate Governance Report, which
 forms a part of the Annual Report.
 
 19.  Remuneration Committee
 
 Mr. C. B. Bhave resigned from the directorship of the Company w.e.f.
 15th February 2008 and consequently from the membership of the
 Remuneration Committee. The details relating to Remuneration Committee
 are mentioned in the Corporate Governance Report, which forms a part
 of the Annual Report.
 
 20.  Corporate Governance
 
 Pursuant to Clause 49 of the Listing Agreement with Stock Exchanges, a
 Management Discussion and Analysis Report, Corporate Governance Report
 and Auditors Certificate regarding compliance of conditions of
 Corporate Governance are made a part of the Annual Report.
 
 21.  Acknowledgements
 
 The Board is thankful to the Bankers of the Company for their continued
 support. It also takes this opportunity to express gratitude to its
 foreign promoter; Avaya, USA and its major partners for their continued
 co-operation, support and assistance. Above all, the Board expresses
 its appreciation to each and every employee for his / her contribution,
 dedication and sense of commitment to the Companys objectives.
 
                            For and on behalf of the Board of Directors
 
                                      JOHN DILULLO           NIRU MEHTA
                                          Chairman      Vice-Chairman &
                                                      Managing Director
 Mumbai
 24 November, 2008