The Directors present herewith the Fourteenth Annual Report on the
 Business and Operations of the Company together with the Audited
 Financial Statements for the year ended March 31, 2011.
 
 1.  FINANCIAL RESULTS
 
 The Companys operating performance during the year ended March 31,
 2011 as compared to the previous year is indicated in brief below:
 
                                                    (Rs. in Lakhs)
                                              2010-2011  2009-2010
 
 Total Income                                    11,004     11,162
 
 Profit before interest, depreciation 
 and taxation                                     1,496      1,704
 
 Depreciation                                       228        223
 
 Profit before taxation                           1,268      1,481
 
 Provision for taxation                             377         87
 
 Exceptional Item                                    64        Nil
 
 Profit after taxation and Exceptional Item         827      1,394
 
 Balance brought forward                          4,866      4,197
 
 Profits available for appropriation              5,694      5,591
 
 Less: Transfer to General Reserves                  83        139
 
 Dividend (Proposed)                                300        500
 
 Corporate Dividend Tax                              49         85
 
 Balance carried forward                          5,262      4,867
 
 2.  DIVIDEND
 
 Your Directors are pleased to recommend payment of a dividend of Rs.
 3/- per equity share of Rs. 10/- each during the year subject to the
 approval of the shareholders. (Previous year Rs. 5.00/- per share of
 Rs. 10/- each).
 
 3.  OPERATING RESULTS AND BUSINESS
 
 During the year under review, total income of the Company was Rs. 110
 Crore from Rs. 112 Crore, i.e.; a decline of 2%.  On a consolidated
 basis, total income declined 5% to Rs. 129 Crore.
 
 The global recession continued to dominate the economic scenario for IT
 companies as well as other industries for a large part of FY10-11.
 Despite decrease in sales volumes, your company was able to maintain
 its profitability. It was mainly the result of prudent hedging of
 foreign currency thereby virtually eliminating forex losses, tight
 control over costs and continued insistence on higher manpower
 productivity and other operational efficiencies. The net profit after
 tax on a consolidated basis for the year ended March 31, 2011 was Rs.
 8.39 Crore as compared to Rs. 13.78 Crore for the last financial year.
 
 4.  INVESTMENTS
 
 The Company invests its surplus funds in debt based mutual funds which
 are considered safe. As on March 31, 2011 about Rs. 17 Crore were
 invested in liquid debt mutual fund schemes.
 
 5.  SUBSIDIARY COMPANIES AND CONSOLIDATED FINANCIAL STATEMENTS
 
 The Company at present has following two subsidiary companies:
 
 a) Blue Star Infotech America, Inc. (Formerly, USIN International,
 Inc.)
 
 A 100% wholly owned subsidiary of the Company, Blue Star Infotech
 (America), Inc. posted a total income of US$ 13,617,635 (equivalent of
 Rs. 6,206 Lakhs) for the financial year ending March 31, 2011 [Previous
 year
 
 US$ 16,284,543 (equivalent of Rs. 7,728 Lakhs)]. The Company reported
 net loss of US$ 168,575 (equivalent of about Rs. 75 Lakhs) this year
 compared to a net profit of US$ 24,932 (equivalent of about Rs. 3
 Lakhs) last year.
 
 As at the year end, there was an erosion in the net worth of Blue Star
 Infotech America Inc. which is reflected as negative net worth of the
 subsidiary. The management is of the view that this business loss is a
 temporary phenomenon arising in recessionary market conditions. As
 economic growth in the U.S. resumes, it is expected that the new year
 will see the company post better financial results. Hence, no
 impairment of the investment in the subsidiary is deemed necessary at
 this time.
 
 b) Blue Star Infotech (UK) Ltd.
 
 The total income of this wholly owned subsidiary of the Company was £
 3,298,601 (equivalent of Rs. 2,335 Lakhs) [Previous Year of £ 28,42,865
 (equivalent of Rs. 16 Lakhs)]for the financial year ending March 31,
 2011. It registered a net profit of £ 97,082 (equivalent of Rs. 69
 Lakhs) for the financial year ending on March 31, 2011 compared to net
 profit of £ 24,932 (equivalent of Rs. 16 Lakhs) for the previous year.
 
 Section 212(8) of the Companies Act, 1956 exempts the holding company
 from attaching the Balance Sheet and Profit and Loss Account of its
 Subsidiaries, subject to the approval of the Central Government.
 Accordingly, the Board in their meeting held on 25th January 2011, had
 resolved to make an application to the Central Government to waive the
 requirement of attaching the Balance Sheet and profit and loss account
 of the companys subsidiaries in the Annual Report. The ministry vide
 its circular No. 2/2011 dated 8th February, 2011 granted subject to
 certain terms and conditions, permission on a general basis, to the
 Board of Directors of the holding company to allow for publication of
 the Annual Report without the subsidiary companys financials.
 Accordingly, the Balance Sheet, Profit and Loss Account, Report of the
 Board of Directors and the Report of the Auditors of the Subsidiary
 Companies have not been attached with the Balance Sheet of the Company.
 The Company will make available these documents/ details upon request
 by any member of the Company interested in obtaining the same. However,
 pursuant to Accounting Standard AS-21 issued by the Institute of
 Chartered Accountants of India, Consolidated Financial Statements
 presented by the Company include the financial information of its
 subsidiaries.
 
 6.  DIRECTORS
 
 In accordance with the provisions of the Companies Act, 1956, two of
 the Directors, Mr. Sanjay N Vaswani and Mr. Suresh N Talwar retire by
 rotation and, being eligible, offer themselves for reappointment at the
 ensuing Annual General Meeting. Brief profiles of these Directors are
 given in the notes to the notice of the ensuing AGM.
 
 Further, the Board of Directors unanimously decided at their meeting
 held on 15th to appoint Mr. Sunil Bhatia as the Companys Managing
 Director & CEO and Mr. K. P. T. Kutty as an independent Director of the
 company with effect from 15th April 2011, subject to the approval of
 the shareholders in the ensuing AGM. Brief profiles of these new
 Directors are given in the notes to the notice of the ensuing AGM.
 
 7.  EMPLOYEES STOCK OPTION PLAN (ESOP)
 
 Disclosures required to be made under SEBI (Employee Stock Option
 Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 ESOP are
 given in note no. B (5) of Schedule J Significant Accounting Policies
 and Notes, forming part of the Accounts.
 
 Further, amendment in the ‘Blue Star Infotech Employees Stock Option
 Scheme, 2003 is proposed for members approval at the ensuing Annual
 General Meeting. Details of the modification proposed are contained in
 the notes to the notice of the ensuing AGM.
 
 8.  DIRECTORS RESPONSIBILITY STATEMENTS
 
 The Directors would like to inform the members that the Audited
 Accounts for the financial year ended March 31, 2011 are in full
 conformity with the requirement of the Companies Act, 1956. The
 Directors hereby confirm that:
 
 a) In the preparation of the annual accounts, the applicable accounting
 standards have been followed.
 
 b) For recognising exchange gains or loss on foreign exchange, the
 Institute of Chartered Accountants of India has announced and
 recommended new accounting standard AS30 to be adopted. Your Directors
 have thought it prudent and appropriate to adopt this standard with
 effect from April 1, 2008 although it is yet to become mandatory. In
 accordance with this standard, foreign exchange gains or losses not
 related to the operations for the period are transferred to an account
 called Hedging Reserve in the Balance Sheet.
 
 c) The accounting policies are consistently applied, and reasonable,
 prudent judgments and estimates are made 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 profits of the Company for that period.
 
 d) The Directors have taken proper and sufficient care for the
 maintenance of adequate accounting records in accordance with the
 provisions of the Act for safeguarding the assets of the Company, and
 for providing and detecting frauds and other irregularities.
 
 e) The Directors have prepared the annual accounts on a going concern
 basis.
 
 9.  AUDITORS
 
 The Statutory Auditors M/s Walker, Chandiok & Co, Chartered
 Accountants, Mumbai, who retire at the conclusion of the ensuing Annual
 General Meeting, being eligible offer themselves for re-appointment. A
 written certificate from the proposed Auditors have been obtained by
 the Company to the effect that the re-appointment, if made, would be in
 accordance with the limits specified under Section 224(1B) of the
 Companies Act, 1956.
 
 10. CORPORATE GOVERNANCE
 
 The Company has complied with all the recommendations of the Corporate
 Governance code as provided in clause 49 of the Listing Agreement with
 the stock exchanges.
 
 A separate section on corporate governance, together with a certificate
 from the Companys Auditors confirming compliance, is set out
 separately, forming part of this Report.
 
 11. MANAGEMENT DISCUSSION AND ANALYSIS REPORT
 
 The Management Discussion and Analysis Report have been attached, and
 forms part of the Directors Report.
 
 12. PARTICULARS OF EMPLOYEES
 
 Particulars of employees as required under Section 217(2A) of the
 Companies Act, 1956, read with the Companies (Particulars of Employees)
 Rules, 1975, as amended, form part of this report. However, in
 pursuance of Section 219(1) (b) (iv) of the companies Act, 1956, this
 report is being sent to all the shareholders of the company excluding
 the aforesaid information. The said particulars will be made available
 on request, and also made available for inspection at the Registered
 Office of the Company. Members interested in obtaining such particulars
 may write to the Company Secretary at the Registered Office of the
 company.
 
 13. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE
 EARNINGS AND OUTGO
 
 Information as per 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, relating to the conservation of energy,
 technology, absorption, foreign exchange earnings and outgoings
 respectively, is annexed and forms part of this report.
 
 14. GREEN INTIATIVE IN THE CORPORATE GOVERNANCE
 
 The Ministry of Corporate Affairs has taken a “Green Initiative in the
 Corporate Governance” by allowing paperless compliances by the
 Companies after considering Sections 2,4,5 and 81 of the Information
 Technology Act, 2000 for legal validity of compliances under Companies
 Act, 1956 through electronic mode.
 
 In this regard, the Company intends to implement this green initiative
 of sending the Notice with Balance Sheet, Profit & Loss Account,
 Auditors Report, Directors Report and Explanatory Statement etc.
 through email after obtaining consent of the shareholders who are
 willing to receive the aforementioned document through electronic mode.
 
 The company has printed 15,000 copies of the Annual report this year as
 compared to 16,500 copies last year.
 
 15. ACKNOWLEDGEMENT
 
 The Board wishes to place on record its appreciation of the sincere
 efforts put in by employees of the Company, in helping it reach its
 current growth levels.
 
 Your Directors place on record their appreciation for the support and
 assistance received from customers, investors, business associates,
 bankers, vendors, regulatory and governmental authorities.
 
 For and on behalf of the Board of Directors of Blue Star Infotech
 Limited
 
 Suneel M Advani
 Chairman and Managing Director
 
 Mumbai, May 19, 2011