ANNUAL REPORT 2005-2006
 
 DIRECTOR'S REPORT
 
 To 
 The Members of 
 Hewlett-Packard GlobalSoft Limited
 
 The  Directors are pleased to present their Annual Report on  the  business 
 and operations of Hewlett-Packard GlobalSoft Limited (hereafter referred to 
 as  'Company') and the Financial Accounts for The Financial Year  April  1, 
 2005 to March 31, 2006.
 
 1.0 FINANCIAL HIGHLIGHTS:
 
 Financial Year ended 	Financial Year ended
 
 	                      March 31, 2006	  March 31, 2005
 	                           Rs. Mn.	      Rs. Mn.
 
 Income from Operations	           10,295	       8,140
 
 Other Income	                      166	          99
 
 Total Revenue	                   10,461	       8,239
 
 Profit Before Depreciation 
 and exceptional item	            1,719	       1,706
 
 Less: Depreciation	              561	         454
 
 Profit before Taxation	            1,158	       1,252
 
 Provision for Tax	              157 	         150
 
 Profit After Taxes	            1,001	       1,102
 
 Profit/(Loss) Brought forward	    4,802	       3,700
 
 Profit available for 
 Appropriation	                    5,803	       4,802
 
 Less: Dividends on 
 Equity Shares	                        -	           -
 
 Tax on Dividend	                        -	           -
 
 Transfer to General Reserve	        -	           -
 
 Profit carried to 
 Balance Sheet	                    5,803	       4,802
 
 2.0 RESULTS OF OPERATIONS:
 
 2.1  Business Performance:
 
 2.1.1 Revenues:
 
 Total revenues for the year ended March 31, 2006 amounted to Rs.10,461  Mn, 
 as against Rs.8,239 Mn in year ended March 31, 2005.
 
 2.1.2 Profits:
 
 Profit  before  taxes  for the Financial Year 2005-06 was  Rs.1,158  Mn  as 
 against Rs.1,252 Mn in 2004-05. The Profit after Tax for the Financial Year 
 2005-06 was Rs.1,001 Mn as against Rs.1,102 Mn in 2004-05.
 
 2.1.3 Dividend:
 
 The  Company  is  in a growth mode and is desirous of  utilising  its  cash 
 surpluses  for investing in the new facilities in Chennai and also for  the 
 expansion  and upgradation of its existing campus in Bangalore. Hence,  the 
 Board has not recommended any dividend for the financial year 2005-06.
 
 2.1.4 Business highlights during the year:
 
 The  year 2005-06 was a successful year for the Company as  we  experienced 
 growth  on  multiple fronts. Company plays a significant role  in  Hewlett-
 Packard's (HP's) global delivery initiative and today is a flagship  center 
 for HP's Global Service Delivery organisation .The company's high  quality, 
 cost  optimised  software  services has helped HP  win  global  application 
 services  contracts and is positioning HP as a credible and cost  effective 
 offshore application services player.
 
 Company experienced healthy growth in its business. There were  significant 
 wins  for  HP with global customers resulting in a large  inflow  of  fresh 
 projects  for the Company. A significant part of the business  growth  also 
 came  through work extensions from existing customers,  highlighting  their 
 satisfaction in our delivery.
 
 Overall,  Company's new customers were evenly spread across the globe,  and 
 all  service towers namely Application Services,  Infrastructure  Services, 
 and  Global  Solutions/Foundation  Services have  each  registered  healthy 
 progress.  The trend seems to continue as the number of customer visits  to 
 Company has gone up nearly 40% over the previous year.	
 
 During  the year, the Company experienced severe cost pressures on  account 
 of salary increases to its employees and fringe benefit tax imposed by  the 
 Government  of  India.  In  addition,  the  Company  has  made  significant 
 investments  in  training  centers as part of  its  overall  campus  hiring 
 program.   All  these  measures  have  had  an  impact  on  the   Company's 
 profitability during the year.
 
 New Initiatives:
 
 Another highlight for Company was its expansion to a new center in Chennai. 
 The  center commenced operations in June 2005 and will soon be moving  into 
 its new facility 'Olympia Technology Park'. The center is now 500+ strong.
 
 Several  initiatives were undertaken to improve the efficiency of  internal 
 processes like billing and resource management through the development  and 
 deployment of in-house solutions/tools.
 
 Significant  investments  were made for modernising  the  Electronics  City 
 campus  infrastructure. We have added capacity for including another  2000+ 
 people  across  5 new blocks. A state-of-the-art Learning Center  is  under 
 construction.  Both the campus and our Surya Park facility  in  Electronics 
 City  have been equipped with control centers for security, access  control 
 and surveillance.
 
 3.0 EMPLOYEES:
 
 In  terms  of  headcount Company continued to scale  up  and  hire,  train, 
 transition  and  utilise  the workforce  efficiently.  There  were  several 
 employee  focused  initiatives  including the launch  of  various  activity 
 clubs,  employee  newsletters  and extended  education  programs  aimed  at 
 ensuring an all-round satisfactory work experience for employees.
 
 4.0 THOUGHT LEADERSHIP:
 
 Along with growth in business, Company continues to grow as a leader within 
 HP on service delivery processes. Company was successfully certified at SEI 
 CMMI  level  5  and also received the BS7799 certification,  which  is  the 
 world's most widely recognised security standard.
 
 Company's  IQMS (Integrated Quality Management System) has been adopted  as 
 the  new  HP  Global Method for Applications and has  been  translated  and 
 implemented by regional centers. We have been mentoring various Centers and 
 providing guidance on achieving certification standards.
 
 Company's contribution was pivotal in rolling-out the Centers of Excellence 
 (CoEs)  for  HP's  Application Services. The  CoEs  are  strategic  thought 
 leadership  engines that focus on innovation in IT  technology,  discipline 
 and Industry processes and leverage the Global Delivery resources to ensure 
 seamless delivery to customers.
 
 Company  continues to play a leading role at both the regional  and  global 
 levels of HP's technology landscape. It hosted the 3rd chapter of  'Techcon 
 India'  in  November; the event had unprecedented levels  of  international 
 participation  and  attendance  for paper submissions  as  well  as  senior 
 management involvement.
 
 5.0 OUTLOOK:
 
 Company's priorities for the next Financial Year are growth across all  the 
 towers and this growth is expected to come from repeat business orders from 
 existing key accounts through better servicing and also through acquisition 
 of new customers.
 
 As always excellence in delivery and rigorous adherence to processes remain 
 top priorities. To facilitate better customer management, Company is poised 
 to  have a more efficient 'Early Alert' system that helps  identify  issues 
 and resolve escalations speedily. Plans to develop more efficient  resource 
 management, disaster recovery and business continuity plans are also on the 
 anvil.
 
 While  the  Company  will continue to focus  on  sharpening  skills  across 
 technologies,  processes  and  project management, there  are  several  new 
 efforts being made under the new 'Year of Excellence' initiative.
 
 6.0 SOCIAL RESPONSIBILITY:
 
 During  the just concluded fiscal year, your Company  continued  initiating 
 and  espousing  various  social  and environmental  causes  in  areas  that 
 included  primary  education, healthcare, day care services  and  community 
 development. Donations of computers were made to various deserving  schools 
 and orphanages.
 
 7.0 OUR MODEL OF GOVERNANCE:
 
 Your Company continues to practice its unique governance model wherein  the 
 focus is transparency and enhanced value for all stakeholders. The  Company 
 has  institutionalised  Corporate  Governance as a 'Way of  Life'  and  has 
 believed in going beyond statutory compliance. 	
 
 8.0 RESPONSIBILITY STATEMENT OF THE BOARD OF DIRECTORS:
 
 As required under section 217(2AA) of the Companies (Amendment) Act,  2000, 
 the Directors confirm that to the best of their knowledge and on the  basis 
 of representations provided by management and according to the explanations 
 given to them:
 
 1. The financial statements are in conformity with the requirements of  the 
 Companies Act, 1956 and the Generally Accepted Accounting Principles (GAAP) 
 in India. There are no material departures.
 
 2. The Board of Directors have selected and adopted appropriate  accounting 
 policies  and the same have been applied consistently. The  judgements  and 
 estimates  made are reasonable and prudent, so as to give a true  and  fair 
 view of the state of affairs of the company as at March 31, 2006 and of the 
 profit for the year ended on that date.
 
 3.  The Board has 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 frauds and irregularities.	
 
 4.  The Board of Directors have prepared the financial statements  for  the 
 financial year ended March 31, 2006, on a going-concern basis.
 
 9.0 FIXED DEPOSITS:
 
 The  Company  has not accepted deposits from the public during  the  period 
 under review.
 
 10.0 SECTION 217(2A):
 
 A   statement  providing  the  particulars  of  employee  remuneration   in 
 accordance  with  Section 217(2A) of the Companies Act, 1956,  is  attached 
 with this Report.
 
 11.0 DIRECTORS:
 
 During  the period under review, the following changes in the Directors  of 
 the Company have taken place:
 
 Ms.  Marjorie Thomas, who retired by rotation in the AGM held on  September 
 19, 2005 was re-appointed.
 
 12.0 AUDITORS:
 
 The Auditors, M/s S. R. Batliboi & Co, Chartered Accountants, retire at the 
 ensuing  Annual General Meeting. They have confirmed their  willingness  to 
 accept office, if re-appointed.
 
 13.0 ACKNOWLEDGEMENTS:
 
 The Directors thank the Company's customers, partners, suppliers, investors 
 and  bankers  for  their continued support. The Directors  also  thank  the 
 employees for their valuable contribution to the Company's growth.
 
 Directors  also  place  on record their  deep  gratitude  and  appreciation 
 towards the Government of India, the Government of Karnataka and all  other 
 Government agencies for their continued support and encouragement.
 
 Directors look forward to their continued support in the future as well.
 
                                              For and on behalf of the Board
 
 	                                     Som Mittal
 	                                     Managing Director
 	  
                                              Thomas T. Thoppil
 	                                     Director
 
 Bangalore	                             Ganesh Murthy
 June 14, 2006	                             (Alternate Director to 
                                              Marjorie Thomas)
 
 
 Annexure to Directors' Report FY 2005-06
 
 Particulars  as prescribed under sub section (1)(e) of section 217  of  the 
 Companies Act, 1956, read with 	Companies (Disclosure of Particulars in the 
 Report of Board of Directors) Rules.
 
 A. CONSERVATION OF ENERGY AND NATURAL RESOURCES
 
 During  the  Financial year, company took major steps in the  direction  of 
 energy conservation and optimizing use of other natural resources.
 
 A  comprehensive Energy and Water audit was conducted by a consulting  firm 
 at  the  various facilities of the Company. Company is in  the  process  of 
 implementing  the  recommendations  of  the  consultant  and  the  same  is 
 resulting  in  savings  in  energy.  Lighting  transformers  and   variable 
 frequency drives have been installed as a part of the initiative.
 
 The  company has worked towards putting in place an Environment  Management 
 System  and a core team working on this has made major progress during  the 
 period.  Feasibility  study  for rain water harvesting in  the  campus  was 
 carried out and Company plans to implement rain water harvesting during the 
 current Financial Year.	
 
 Paper  recycling and water treatment and reuse continued effectively.  Over 
 40 tonnes of paper, wood and cardboard boxes have been recycled and  reused 
 to make business cards, files and notepads.
 
 B. TECHNOLOGY ABSORPTION:
 	
 1. Research and Development (R&D):
 	
 a) R&D initiatives:
 		
 To  enhance its capability and customer service, the Company  continues  to 
 make  significant and strategic investments in Research & Development.  The 
 Technology  Innovation  and Leadership Group (TILL) continued  to  explore, 
 incubate,  and  market emerging technologies. There were  also  significant 
 enhancements to the archiving and EDI product lines that are engineered and 
 marketed out of the Company. 		
 
 Besides  exploring and incubating new technology areas, TILG has also  been 
 focusing on establishing a key group of lead technologists and  architects, 
 disseminating  knowledge  and facilitating thoughtful  discussions  in  new 
 areas  within  the  organisation,  besides  nurturing  and  retaining   top 
 technology  talent through evangelising technology career paths.  TILG  was 
 also  instrumental in hosting the successful Technical Conference, 2005  at 
 Bangalore, which showcased the talents in Company.
 
 Another development that has taken place over the past year is the  ability 
 of the TILG to use its senior technologists to liase with the Labs of HP so 
 that  a range of things from co-invention with the customers to  consulting 
 on top margin assignments become possible.
 
 b) Results of the R&D effort:
 
 During  the  past financial year, some of the key areas pertaining  to  R&D 
 efforts include:
 
 Microsoft  .NET  services - The .NET team has been developing  new  service 
 offerings  in  areas  of  enterprise  custom  application  development  and 
 application architectures and driving the .NET certification efforts across 
 the  organisation. Current activities include solution development  on  the 
 team services platform of Microsoft which will be rolled out, bundled  with 
 Vista.
 
 We  also  have our presence in Redmond which enables  close  and  proactive 
 working with Microsoft.
 
 Mobile Enterprise Services This team has been exploring various streams  in 
 the context of mobile enabling an enterprise and has been concentrating  on 
 working on top margin ideas from the Labs.
 
 On the RFID related service initiatives the team is evaluating the scope of 
 leveraging  Mobile Agents to form a backbone infrastructure for  a  loosely 
 coupled   global   supply  chain  integration  solutions,  IPv6   and   its 
 ramifications on RFID & specific database adaptations.
 
 Webservices/SOA  -  A  special interest group to look  at  the  issues  and 
 challenges in the context of Service Oriented Architecture, has been formed 
 to come up concrete deliverables and recommendations. Efforts for  adopting 
 SOA for internal enterprise agility is also on.
 
 High performance computing - This team, having successfully delivered on an 
 feature-enhanced version of a simulator for an advanced graphic card  along 
 with  a  live  solution to pilot on top it, is now working on  a  few  Labs 
 oriented projects.
 
 2. Plan of Action:
 
 The  Company  will continue to invest in the latest  technologies  to  suit 
 business  needs in the marketplace and focus on training its  employees  in 
 the latest relevant technologies. We will continue to scan the  environment 
 for  emerging  trends, invest in and incubate these technologies  and  roll 
 Them  out as service offerings, through business units. Further, the  focus 
 for  the  current year will be on nurturing new key areas  in  technologies 
 such as emergent mobility, security, massively parallel micro systems, rich 
 media,  wireless  sensors  and  architecture (SOA) as  also  a  few  vendor 
 specific technologies.
 
 As  specific  measures,  technology  community  development  and  proactive 
 knowledge management are being given a big thrust.
 
 Technology  Career Path (TCP) as a viable career option is  being  promoted 
 extensively across the organization so that retention and grooming of young 
 technologists becomes a possibility.
 
 3. EXPENDITURE ON RESEARCH AND DEVELOPMENT:
 
 The  Company invested Rs.12.4 Mn on Research and Development for  the  year 
 under review.
 
 4. TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATION:
 
 *  The  year had seen TILG and the Company at large, filing  a  significant 
 number of patents and also participation in patent disclosure vetting  from 
 across HP.
 
 * During the year under review, the Company had significantly enhanced  its 
 IT infrastructure and continued its focus on adoption of newer technologies 
 in line with the business growth experienced during the year.
 
 *  The  number of white papers and knowledge briefs has also  been  on  the 
 increase  just  our participation in a few  international  conferences  and 
 archival journals.
 
 * The reuse movement has been gaining momentum as also the mobilisation  of 
 the communities of practice from across the organisation.
 
 *  All technology imported during the last five years has been absorbed  in 
 the Company.
 
 C. FOREIGN EXCHANGE EARNINGS AND OUTGO:
 
 Please refer to Schedule 17, Note 7 and 8 to the Balance Sheet, for details 
 of Expenditure and Earnings in foreign currency respectively.