Cranes Software International

The Directors have pleasure in presenting to you the twenty-third
 Annual Report together with the audited accounts on the business and
 operations of the Company for the year ended March 31, 2008 by itself
 and its fifteen subsidiaries, viz.
 
 1.  Systat Software Asia Pacific Ltd., India
 
 2.  Systat Software Inc., USA
 
 3.  Cranes Software International Pte Ltd., Singapore
 
 4.  Systat Software GmbH, Germany
 
 5.  Cranes Software Inc., USA.
 
 6.  Analytix Systems Pvt Ltd.,India
 
 7.  Tilak Autotech Pvt Ltd., India
 
 8.  Proland Softwares Pvt Ltd., India
 
 9.  Caravel Info Systems Pvt Ltd., India
 
 10.  Engineering Technology Associates Inc.,USA (WOS of Cranes Software
 Inc., USA)
 
 11.  Dunn Solutions Group Inc., USA (WOS of Cranes Software Inc., USA)
 
 12.  Cranes Software UK Ltd., (WOS of Systat Software Inc., USA)
 
 13.  Engineering Technology Associates (Shangai) Inc., (WOS of
 Engineering Technology Associates Inc., USA)
 
 14.  Esqube Communciation Solutions Pvt Ltd., India
 
 15.  EMRC Engineering Mechanics Research (India) Ltd., India (upto
 September 30, 2007)
 
 The Audited Accounts for the same period, of the above subsidiary
 companies have also been incorporated as per relevant regulations in
 the Consolidated Financial Statements:
 
 Financial Performance                             2007-08      2006-07
 
 Sales and Operating Revenues                     2,820.88     2,476.07
 Profit Before Tax                                1,132.37     1,050.64
 Taxes                                              183.23       127.85
 Profit After Tax                                   949.14       922.79
 Add: Prior Period Tax Adjustments                       -         6.12
 Net Profit                                         949.14       928.91
 Surplus Brought Forward                            900.68       405.92
 Amount Available for Appropriation               1,849.82     1,334.83
 
                                                          (Rs. million)
                                                   2007-08      2006-07
                                                       Consolidated
 
                                                  3,986.42     2,848.57
                                                  1,341.73     1,009.12
                                                    191.97       144.03
                                                  1,149.76       865.09
                                                      0.05         6.14
                                                  1,149.81       871.23
                                                    846.77       409.70
                                                  1,996.58     1,280.93
 
 Business
 
 During the year, your Company on a standalone basis achieved a Sales
 and Operating Revenue of Rs. 2,820.88 million from Rs.2,476.07 million
 - a growth rate of 14%. The Profit before Tax increased by 8% from
 Rs.1,050.64 million to Rs.1,132.37 million while Net Profit increased
 to Rs. 949.14 million from Rs. 928.91 million (higher by 2.17 %).
 
 On a consolidated basis, during the year, your Company together with
 its above named subsidiaries, achieved a Sales and Operating Revenue of
 Rs. 3,986.42 million from Rs.2,848.57 million - a growth rate of 40%
 while Net Profit increased from Rs 871.23 million to Rs. 1,149.81
 million (an increase of 32%).
 
 Operations
 
 During the year under review, the following developments were
 noteworthy :
 
 Your Company acquired Engineering Technology Associates Inc, USA along
 with its subsidiary in China through Cranes Software Inc, USA in an all
 cash deal.
 
 Your Company acquired the entire shareholdings of Proland Softwares Pvt
 Ltd, thereby making it a wholly owned subsidiary of the Company.
 
 Prolands experience is in the areas of designing, developing and
 supporting software products in the data security space with a global
 customer base. It offers anti-virus and anti spam solutions for every
 platform of importance.
 
 During the year under review your Company also acquired the entire
 paid-up capital of Caravel Info Systems Pvt Ltd. Caravel provides
 consulting services in the areas of complete embedded product
 development, hardware design, embedded software design, intranet based
 applications development, Groupware application development and
 customization services.
 
 As a part of business restructuring the shares of EMRC Engineering
 Mechanics Research (India) Ltd., (EMRC) has been divested since the
 active business of the Company had been taken over by the Company w.e.f
 01.01.06. At the time of this sale, there was no business conducted in
 the name of EMRC.
 
 During the year, the Board approved an increase in stake (from 15% to
 76%) in Esqube Communication Solutions Pvt Ltd., a Company which has
 domain knowledge in providing innovative products and R&D solutions in
 the areas of Digital Signal Processing, wireless and wired
 communications and in which Cranes has already a stake.
 
 Appropriation
 
 Your Directors, are pleased to recommend a regular dividend of 20% and
 a special dividend of 40% on the equity shares (thereby aggregating to
 60%) for the year under review.
 
 The amount on account of the above dividend including dividend tax and
 surcharge thereon on distributed profits works out to Rs.160.98
 million, leaving the Company with Rs.1,688.84 million, of which
 Rs.300.00 million is transferred to General Reserve and the balance of
 Rs.1,388.84 million is retained as surplus in the Profit and Loss
 Account.
 
 Subsidiary Companies / Joint Ventures
 
 As per Sec 212(1) of the Companies Act, 1956 the Company is required to
 attach to its accounts, the Directors Report, Profit & Loss Account,
 Balance Sheet of each of the above subsidiaries. Your Company applied
 to the Government of India seeking an exemption from such attachment
 since the Company is presenting its Consolidated Financial Statements
 in the Annual Report. The Company received approval for the same and
 hence the financial statements of the subsidiaries are not enclosed. As
 per the terms of this approval, certain details relating to the
 subsidiaries are being published in the Consolidated Financial
 Statements section. The Annual Accounts and the related information on
 the subsidiaries are available for inspection at the Registered Office
 of the Company and copies shall be provided on request.
 
 In accordance with the Accounting Standard AS-21 on consolidated
 financial statements, your Directors have pleasure in attaching the
 Consolidated Financial Statements which form a part of the Annual
 Report and Accounts. This along with the Company’s results, we believe,
 present a full view of the state of affairs of the Company.
 
 Deposits
 
 Your Company has not accepted deposits from the public during the
 current year.
 
 Directorate
 
 Dr. Rudra Pratap, Mr. Richard Gall and Dr. Peter Ryser retire by
 rotation in the forthcoming Annual General Meeting, being eligible,
 offer themselves for re-appointment.
 
 Conservation of Energy
 
 Even though the operations of your Company are not energy-intensive,
 adequate measures have been taken to reduce energy consumption by using
 efficient equipments. Since it is a software products Company,
 primarily dealing with scientific and engineering software products and
 product related projects, energy cost forms a very small part of total
 cost and its impact on total cost is not material.
 
 Research & Development Activities
 
 At Cranes, we have been committed to building a strong R&D culture from
 day one and have set clear R&D goals. In order to achieve these goals,
 Cranes has focused on furthering the efficacies of R&D activities as
 well as building synergies among multiple-impact technologies. For
 instance, we are architecting new software as well as re-engineering
 the old ones as independent modules so that they can be used in diverse
 applications for diverse industries. In the development of software
 products, while reinvention is a potent methodology to enhance the
 diversity of operability of software tools, reusability takes the
 foremost importance in the solutions space. At your company, a
 judicious mix of both are being used not just to prove a point to
 ourselves in the laboratory environment but to deliver products and
 solutions in such a way that it appeals to the increasingly
 knowledgeable customers, who enjoy varied choices. The statement giving
 information as required under Companies (Disclosure of Particulars in
 the Report of the Board of Directors) Rules 1988 is enclosed to this
 report.
 
 Foreign Exchange Earnings and Outgo
 
 Foreign exchange earned (FOB) during 2007-08 is Rs. 2,066.99 million
 and foreign exchange outgo is Rs.2,952.88 million during the year.
 
 Employees
 
 The particulars of employees as per Section 217 (2A) of the Companies
 Act 1956, read with the Companies (Particulars of Employees) Rules,
 1975 is enclosed.
 
 Directors Responsibility Statement
 
 Pursuant to Section 217(2AA) of the Companies Act 1956, the Directors
 hereby confirm that they have:
 
 i.  Followed the applicable accounting standards in the preparation of
 the Annual Accounts;
 
 ii.  Selected such accounting policies and applied them consistently
 and made judgments and estimates that were 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 profits of the Company for the
 year under review;
 
 iii.  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 detecting
 fraud and other irregularities;
 
 iv.  Prepared the accounts for the financial year on a ‘Going Concern’
 basis.
 
 Corporate Governance
 
 A detailed report on Corporate Governance & Management Discussion and
 Analysis are attached.
 
 The Board members and the Senior Management Personnel have affirmed
 compliance with the Code of Conduct. Declaration of Confirmation by the
 Managing Director to this effect is annexed hereto.
 
 Auditors
 
 The auditors of the Company, Messrs. S.Janardhan & Associates,
 Chartered Accountants, retire at the ensuing Annual General Meeting and
 are eligible for reappointment. The declaration under Section 224(1)(B)
 of the Companies Act 1956 has been received from them.
 
 Acknowledgement
 
 Your Directors wish to place on record their sincere appreciation for
 the assistance and co-operation received from Banks, Financial
 Institutions, Government, Customers, Suppliers, Business Partners and
 Shareholders for the year under review.
 
 Your Directors also wish to place on record their appreciation of the
 contribution made by employees at all levels of the Company, whose
 committed efforts are a reflection on the results and look forward to
 their continued support.
 
                                       for and on behalf of the Board
 
 Bangalore                              Asif Khader      Mukkaram Jan
 June 26, 2008                    Managing Director          Director