Dear Shareholders
 
 FY 2011 has been a remarkable year for us. This was the year in which
 we took bold new steps in innovation and created, re-created and
 reformed several of our market leading products and services, yet
 again. This was also the year which saw some fresh new thinking from
 the government to address some of the critical challenges of the Indian
 education system. Your company has been at the forefront of creating
 unique innovative solutions for the Indian education market. Our
 products and solutions reach out to over 16 million learners and close
 to 26000 schools, making us one of the largest Education companies in
 the world, in terms of customer reach. And yet, we are just getting
 started. The shortages in the Indian Education landscape are so large
 that the market offers an almost limitless expansion opportunity.
 
 Your company is the only Education company worldwide which is present
 across the entire Education life-cycle of our customers, the students.
 Someday, we hope to create a seamless learning path for kids from 2
 years to 25 years of age. Our presence in each of the Education
 verticals is marked with technology-enabled products, high quality
 people, structured processes and entrepreneurial leadership that come
 together to deliver unmatched value to our customers. It is because of
 our obsession with high quality in everything we do, that Educomp is
 fast becoming a single trusted brand that defines Education.
 
 Over the course of the year ending March 2011, our business and our
 reach grew by leaps and bounds. Our multimedia content business
 SmartClass grew from strength to strength and we added more than 3,400
 schools to the SmartClass list of schools in a single year. This number
 was more than the cumulative number of schools that we have added for
 SmartClass over the last 7 years. Apart from that, we spread our K12
 schools presence and are now providing infrastructure and services to
 56 schools countrywide. We also received the AICTE license to launch
 Engineering and PGDM programs. We became the largest company in India
 for CA training, by using our breakthrough VSAT model technology. We
 acquired Vidya Mandir Classes and Gateforum to become the leading Test
 Prep business in India and our Online Educational ventures continued to
 grow rapidly reaching close to 3 million registered users. In the
 International markets, we signed an exclusive agreement with China
 Distance Learning, a leading education company of China, to provide our
 SmartClass content in the Chinese market in the Mandarin language.
 
 Still our market penetration, even in our biggest businesses, is in the
 low single digits in each of our businesses. There is a long runway of
 opportunity ahead of us. We have built a solid Educational platform and
 all we need to do now, is to continue building the business. The Indian
 middle class customer is hungry for quality education and is willing to
 invest a substantial amount of their income in the Education of their
 children. The regulatory environment is improving. The Education Boards
 like CBSE are encouraging schools to adopt multimedia content materials
 for teaching in schools. The government is increasingly looking at PPP
 models to address some of the critical challenges. The country is
 getting enabled by digital infrastructure like high speed broadband,
 wireless broadband and 3G. Clearly, the stage is set, for us to deliver
 continued high growth for years and years to come.
 
 I am delighted to share with you that even after years of undisputed
 leadership in the Education sector, our innovation engine continues to
 churn revolutionary products to solve key classrooms problems and add
 value to the teaching experience where its most needed. Your company
 has recently launched a new, improved version of SmartClass which will
 raise the barriers to entry for our competition even higher. The
 SmartClass Class Transformation System (or CTS) and the SmartClass
 Digital Teaching System (or DTS) are the biggest and most innovative
 initiatives in the space of digital classroom content and digital
 classroom hardware respectively. The CTS is poised to introduce the
 next generation of SmartClass in schools and is a big leap forward in
 enabling excellence in schools. It will encompass any facet of
 teaching- learning process and become an inseparable tool in the hands
 of teachers. The DTS is the world''s first fully integrated one-switch
 Digital Interactive Teaching system, designed with real classroom
 challenges and Indian classroom needs in mind. Armed with the
 SmartClass CTS and DTS, we plan to take this business to greater and
 greater heights in the years to come.
 
 The performance in other parts of our business has been equally
 impressive. The no. of K12 schools under our reach has now grown to 56
 schools making us one of the largest corporates to provide
 infrastructure and management services to private schools. Our
 businesses in higher education and vocational education have shown
 fantastic traction growing several times over, even though those
 businesses our in investment mode right now. Our ETEN students bagged
 52 All India Ranks including 4 All India No. 1 Ranks in different CA
 exams over the year. In the supplemental education area, our VMC
 students bagged 5 of the 6 students from the Delhi Zone in Top 50 of
 All India Rank List of IITJEE. 21 Gateforum students got top 10 ranks
 and 141 students were among the Top 100 ranks across 7 streams of
 engineering in GATE 2011. Our online business WizIQ has now reached 1.2
 million users growing 20% QoQ for the last 8 quarters in a row.
 
 We feel privileged to be able to serve millions of customers in India
 through our products and services. When we acquire a customer, we think
 of ways in which we can retain that customer for his/her entire
 learning life. Being an Education Ecosystem company, we can easily do
 that. Being present across the entire educational lifecycle gives us an
 opportunity to acquire the customer once and monetize the same customer
 multiple times. Our margins therefore would remain high. As we grow our
 business, we have realized that the most important thing for us to
 deliver is high quality. We are obsessed about quality. We look at our
 customers not from the perspective of a single sale, but from the eyes
 of life-long relationships. Most of our businesses have annuity style
 business models and long term contracts. We work very closely with our
 customers to make sure our products add value where it is most needed.
 
 The core DNA of your company revolves around (i) Entrepreneurship (ii)
 Leadership and (iii) Execution. I am grateful to have a highly
 entrepreneurial leadership team who have brought the Educomp enterprise
 to where it is today. Educomp reaches over 16 million students and
 26,000 schools. We operate close to 800 preschools, we have enabled 56
 high schools, 7 colleges, 1 higher education campus, close to 340
 vocational training centres, trained over 2 million teachers, installed
 SmartClass in over 6500 schools, set up 10,550 ICT labs in govt.
 Schools and have close to 3 million students enrolled in our eLearning
 websites. We have leadership in most of the areas that we operate in.
 
 FY12 and the years beyond will be an exciting phase of our growth as we
 move towards our vision of becoming one of the largest education
 companies in the world.  I am deeply thankful and grateful to our team
 members, our investors, bankers, shareholders and partners who have
 supported us at each stage of our evolution and believed in us.
 
 Warm Regards
 
 Shantanu Prakash
 
 Managing Director