Blue Star Infotech

The Directors present the Eleventh Annual Report on the Business and
 Operations of the Company together with the Audited Statement of
 Accounts for the year ended March 31,2008.
 
 1.  FINANCIAL RESULTS
 
 The Companys operating performance during the year ended March 31,
 2008 as compared to the previous year is summarized below:
 
                                                       (Rs. in million)
 
                                             2007-2008        2006-2007
 
 Total Income                                 1118.78          822.95
 
 Profit before interest, depreciation 
 and taxation                                   78.13          111.15
 
 Interest                                        Nil             Nil
 
 Depreciation                                   26.98           24.17
 
 Profit before taxation                         51.15           86.95
 
 Provision for taxation                         (4.04)           7.37
 
 Fringe Benefit Tax                              5.09            3.70
 
 Profit after taxation                          50.08           75.88
 
 Balance brought forward                       344.24          322.15
 
 Profits available for appropriation           394.32          398.03
 
 Less: Transfer to General Reserves              5.02            7.59
 
 Interim Dividend Paid                           Nil            20.00
 
 Corporate Dividend Tax                          Nil             2.81
 
 Final Dividend (Proposed)                      25.00           20.00
 
 Corporate Dividend Tax                          4.25            3.39
 
 Balance carried forward                       360.05          344.24
 
 2.  DIVIDEND
 
 Your Directors are pleased to recommend payment of a dividend of Rs.
 2.50/- per equity share of Rs. 10/- each during the year subject to the
 approval of the shareholders. (Previous year Rs. 4/- per share of Rs.
 10/- each i.e. interim dividend Rs. 2/- plus final dividend Rs. 2/-).
 
 3.  OPERATING RESULTS AND BUSINESS
 
 During the year under review, total income of the Company rose to Rs.
 1119 million from Rs.823 millions growth of 36%. On a consolidated
 basis, total income growth 21 % to Rs. 1457 million.
 
 While the consolidated sales revenue has grown 36% in US dollar terms,
 it grew only 21% in rupee terms due to sharp appreciation of rupee at
 the beginning of the year.This was to tally unexpected and took even
 the foreign exchange pundits by surprise. This factor has adversely
 affected the sales as well as profit for the year under review. The
 Company has taken necessary steps to a dequately hedge its foreign
 exchange exposures.
 
 Mainly due to the aforesaid adverse exchange rate impact, the profit
 after tax has come down from Rs. 75.88 million to Rs. 50.08 million.
 
 During the previous year ended March 31,2008, the Company achieved
 highest per month billing ever. During the current year also, the same
 growth trend is seen to be continuing. Barring unforeseen
 circumstances, your Directors are hopeful of better financial
 performance in the current year.
 
 4.  INVESTMENTS
 
 The Company invests its surplus funds in debt-based mutual funds which
 are considered safe. There are no outstanding short- term investments
 made as on March 31,2008.
 
 5.  SUBSIDIARY COMPANIES AND CONSOLIDATED FINANCIAL STATEMENTS
 
 The Company at present has the following two subsidiary companies:
 
 a) Blue Star lnfotech America,Inc.(formerly,USIN International,Inc.)
 
 The 100% wholly owned subsidiary of the Company, Blue Star Infotech
 (America), Inc. posteda total income of US,174,277 (equivalent of
 Rs.652 million) for the financial year ending March 31,2008. The
 Company reported net loss of US$ 446,299 (equivalent of about Rs. 18
 million) this year.
 
 b) Blue Star lnfotech (UK) Ltd.
 
 The total income of this 100% wholly owned subsidiary of the Company 
 was £3,373,677 (equivalent of Rs. 270 million) for the financial year 
 ending March 31, 2008. It registered a net profit of £ 194,042 (equivalent 
 of Rs. 15.5 million) for the financial year ending on March 31,2008.
 
 In terms of approvals granted by the Central Government, Ministry of
 Corporate Affairs vide its letter no. 47/257/2008-CL- III dated April
 29, 2008 under Section 212(8) of the Companies Act, 1956, a copy of the
 Balance Sheet, Profit and Loss Account, Report of the Board of
 Directors and the Report of the Auditors of the Subsidiary Companies
 has 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 Vaswani and Mr. Naresh Malhotra retire by
 rotation and, being eligible, offer themselves for reappointment at the
 ensuing Annual General Meeting.  Brief profile of these Directors is
 given in the notes to the notice of the ensuing AGM.
 
 7.  EMPLOYEE STOCK OPTION PLAN (ESOP)
 
 The 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 (6) of Schedule J Significant Accounting Policies
 and Notes, forming part of the Accounts.
 
 8.  DIRECTORS RESPONSIBILITY STATEMENTS
 
 The Directors would like to inform the members that the Audited
 Accounts for the financial year ended March 31,2008 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) 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.
 
 c) 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.
 
 d) 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 has 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(1 B) 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
 
 A Management Discussion and Analysis Report has 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 informationand 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 OUT GO
 
 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 eamings and outgoings respectively, 
 is annexed and forms part of this Report.
 
 14. 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
                            Blue Star Infotech Limited
 
                            Suneel M Advani
                            Chairman and Managing Director
 
 Mumbai
 May 7,2008