Financial Technologies

The Directors have great pleasure in presenting the Twentieth Annual
 Report of your Company together with the Audited Statement of Accounts
 for the year ended March 31, 2008.
 
 FINANCIAL RESULTS
 
 Total Income                       13,474.77       1,741.32
 Total Operating Expenditure           926.50         554.69
 Operating Profit                   12,548.27       1,186.62
 Interest                              109.31           2.78
 Depreciation  amortization             23.53          15.38
 Profit before tax and before
 exceptional/non-recurring itms     12,415.43       1,168.47
 Provision for taxation              2,802.91         178.75
 Net Profit after Tax
 (before exceptional item)           9,612.52         989.71
 Less: Exceptional Item
 (net of deferred tax)                   -            (16.41)
  Net Profit after Tax
 (after exceptional item)            9,612.52        1,006.12
 Less: Short provision for income
 tax in respect of earlier year
 Profit after tax (before adjustment
 for minority interest)              9,612.52        1,006.12
 Add: Share in profit’s of Associates    NA              NA
 Less: Minority Interest                 NA              NA
 Net Profit available after
 Minority Interest                   9,612.52        1,006.12
 Add: Balance b/f from previous yea    743.42          247.71
 Balance available for appropriati  10,355.94        1,253.83
 Appropriations
 Final dividend (proposed)             183.53           88.19
 Interim dividend                      731.47          264.43
 Tax on dividend                       155.50           56.79
 Transfer to General Reserve           970.00          101.00
 Balance c/f to Balance Sheet        8,315.44          743.42
 Earnings per share 
 (after exceptional items)
 Basic                                 214.15           22.85
 Diluted                               208.10           20.91
 
                      Rs. in Millions
 
 14,195.51                3,172.85
  2,425.40                1,539.09
 11,769.72                1,633.76
    123.28                    8.46
     97.47                   88.88
 11,548.97                1,536.42
  2,940.23                  517.32
  8,608.74                1,019.10
 (16.41)                       -
  8,608.74                1,035.51
      1.99                     -
  8,608.74                1,033.52
    249.05                    Nil
    163.19                  319.24
  8,694.60                  714.28
    522.21                  447.48
  9,216.81                1,161.76
    183.53                   88.19
    731.47                  264.43
    176.79                  141.11
    970.00                  145.82
  7,155.02                  522.21
    193.70                   16.22
    187.66                   14.14
 
 RESULTS OF OPERATIONS
 
 The consolidated financial results for the year ended March 31, 2008,
 are not comparable with the consolidated financial figures of previous
 year as one of the material subsidiary of your Company - Multi
 Commodity Exchange of India Limited (MCX), ceased to be the subsidiary
 of the Company w.e.f October 29, 2007.
 
 For the year ended March 31, 2008, your company has reported a
 consolidated net profit (before minority interest) of Rs. 8,608.74
 million on the back of total income aggregating Rs.14,195.11 million.
 As compared to previous year figures, the total income is higher by
 347% and net profit (before minority interest) is up by 733%.
 
 On a standalone basis, the company has reported a 674% increase in
 total income to Rs.13,474.77 million.
 
 Net profit grew by 855% to Rs.9,612.52 million.
 
 During the year, the net installed base of licenses for its STP range
 of products has substantially grown by 95% to 320,000 as compared to
 164,000 as on March 2007.
 
 Product Developments and new version releases during the fiscal year
 2008:
 
 ODIN version 9.0: As a mark towards “constant innovation”, we have
 released one more version of our flagship product, with two new modules
 namely the Collateral Module and Margin Funding (MTF).
 
 ODIN Netz: ODIN Netz will increase the number of concurrent users with
 optimum results. It eliminates about 40% of the memory load from ODIN
 Manager and also increases ODIN’s Order Processing speed by about 60%.
 
 E-Mutual Fund: An online mutual fund facility wherein the client can
 invest in various mutual fund schemes by accessing the relevant
 website.
 
 Portfolio Tracker: This is a facility to create investment portfolios
 for online investors and also help them with real-time portfolio
 valuation with the help of various reports.
 
 Net. net Lite: A browser-based trading platform that creates a
 multimode environment, an option of streaming, using innovative
 tunneling technologies to make it operational behind a firewall.
 
 DMA Release: DMA solutions for its front office suite of products in
 line with SEBI’s announcement and guidelines for Direct Market Access
 for market participants.
 
 Network Solutions: FIX Transaction Hub (FT Net) would enable automation
 of the pre- trade flows from those desirous of investing from and in to
 international financial markets.
 
 DIVIDEND
 
 During the year under review, your company paid three interim dividends
 totalling to 800% (Rs. 16/- per share on par value of Rs.2/-). The
 Directors recommend a final dividend of 200%, i.e. Rs.4/- per share on
 par value of Rs. 2/-, subject to the approval by the shareholders at
 the ensuing Annual General Meeting.
 
 The total dividend aggregates to 1000% (i.e. Rs. 20/- per share on par
 value of Rs. 2/- each) for the financial year ended March 31, 2008
 (previous year 400% i.e. Rs. 8/- per share on par value of Rs. 2/-).
 The total cash outgo on account of total dividend (including interim
 dividend) and tax thereon amounts to Rs.1070.51 million.
 
 The final dividend, if approved, will be paid to those members whose
 names appear in the Register of Members as on the date of the Annual
 General Meeting.
 
 SHARE CAPITAL & GLOBAL DEPOSITORY RECEIPTS (GDRS)
 
 a) Equity
 
 During the period under review, the company made allotment of 126,130
 equity shares, consequent upon exercise of stock options issued under
 the Employees Stock Option Plan - 2005, second tranche of 30%.
 
 b) Global Depository Receipts:
 
 During the year under review, the Company issued 11,639,677 Global
 Depository Receipts (GDRs) (including 1,518,216 over-allotment/green
 shoe option) at a price of U.S.$ 9.88 per GDR and raised USD 115
 million, whereby seven GDRs represents one share of nominal value of
 Rs.2/- each. These GDRs are listed on the official list of the
 Luxembourg Stock Exchange and admitted to trading on the Euro MTF
 market of the Luxembourg Stock Exchange and quoted on the International
 Order Book of the London Stock Exchange.
 
 The company issued 1,662,811 underlying equity shares consequent to the
 allotment of GDRs.
 
 As a result of the above allotments, the subscribed and paid-up equity
 share capital of the Company stood at Rs. 91.77 million as on March 31,
 2008.
 
 AWARDS/RECOGNITION
 
 Financial Technologies received following awards during the year.
 
 NASSCOM Innovation Awards 2007: Presented to Mr Dewang Neralla,
 Director Technology at Financial Technologies (India) Ltd by Mr Thiru A
 Raja, Honourable Minister for Communication and I T.
 
 Global HR Excellence Award 2007- 08: Presented to the Group Head for HR
 practices at Financial Technologies, Dr. Chandra Mouli Dwivedi, for the
 category of “Organization with Innovative HR Practices” at the Asia
 Pacific HRM Congress in February, 2008.
 
 Financial Technologies was among the few chosen Global Growth Companies
 (GGC) to be invited to the World Economic Forum (WEF) Annual Meeting
 held in Davos in January this year.
 
 NOTE ON SUBSIDIARIES
 
 The statement pursuant to Section 212 of the Companies Act, 1956,
 containing details of subsidiaries of the Company, forms part of the
 Annual Report.
 
 MD&A statement is elsewhere in this report and contains certain details
 on subsidiaries.
 
 In terms of the approval granted by the Central Government 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 Auditors
 of the Subsidiaries have not been attached with the Balance Sheet of
 the Company. These documents will be made available upon written
 request by any member of the Company interested in obtaining the same.
 However, as directed by the Central Government, the financial data of
 the subsidiaries have been furnished under ‘Statement Regarding
 Subsidiary Companies’, which forms part of the Annual Report. Further,
 pursuant to Accounting Standard AS-21 issued by the Institute of
 Chartered Accountants of India, Consolidated Financial Statements
 presented by the Company include financial information on its
 subsidiaries.
 
 Further, the Company has incorporated a 100% wholly owned subsidiary by
 the name Trans-Global Credit and Finance Limited (TCFL), in the month
 of February 2008 and Capricorn Fin Tech Private Limited, subsidiary
 company of FTME, DMCC, in the month of March 2008. As the first
 financial year of both these companies will end on 31st March 2009, the
 financial statements of Trans-Global and Capricorn are not included in
 this annual report.
 
 EMPLOYEES STOCK OPTION PLAN (ESOP)
 
 The ESOP schemes 2005 and 2006 are formulated and implemented according
 to the SEBI guidelines and are in accordance with the provisions of the
 Securities and Exchange Board of India (Employee Stock Option Scheme
 and Employee Stock Purchase Scheme) Guidelines 1999, as amended and the
 issuance of equity shares pursuant thereto will be subject to
 compliance with all applicable laws and regulations.
 
 The Shareholders of the Company at the Nineteenth Annual General
 Meeting held on 28th September 2007, passed Special resolutions to
 re-issue the lapsed stock options of the Company that lapsed due to the
 resignation or for any other reason whatsoever, to other permanent
 employees including the eligible Directors of the Company and Company’s
 subsidiary companies.
 
 The total numbers of options in force and outstanding at the end of the
 year are 2,11,800 and 4,40,000 for ESOP-2005 and ESOP-2006
 respectively. Requisite disclosure in respect of the Employee Stock
 Option Scheme in terms of Guidelines of the Securities and Exchange
 Board of India has been provided in “Annexure B” in this Report.
 
 HUMAN RESOURCE DEVELOPMENT
 
 In continuation of our policy of engaging employees as a part of our
 people strategy, major initiatives have been taken over the last year
 to offer employee-friendly policies, aimed at making us one of the
 preferred places to work.
 
 Financial Technologies continues to invest in recruiting skilled
 manpower to meet the company’s objectives. We also received the award
 in the category of “Organization with Innovative HR Practices at the
 Asia Pacific HRM Congress in February 2008.
 
 QUALITY
 
 The Quality vision at Financial Technologies is to institutionalize
 excellence in quality of software and business solutions by developing
 and deploying simple, efficient and effective processes using FTQM and
 global best practices and standards. As part of our zeal to benchmark
 our practices against global standards, your company has achieved ISO
 9001:2000 and ISO / IEC 27001:2005 (the upgraded version of BS 7799-2
 Standard) for our Quality Management System and Information Security
 Management System respectively.
 
 CORPORATE GOVERNANCE
 
 Your Company is committed to good Corporate Governance practices. The
 report on Corporate Governance, stipulated by Clause 49 of the Listing
 Agreement, is annexed hereto and forms part of this Annual Report.
 
 A Certificate from the Auditors of the Company regarding compliance
 with Corporate Governance norms stipulated in Clause 49 of the Listing
 Agreement is annexed to the report on Corporate Governance.
 
 MANAGEMENT DISCUSSION AND ANALYSIS STATEMEN
 
 A Management Discussion and Analysis Statement is attached to this
 Report.
 
 DIRECTORS
 
 In accordance with the provisions of the Companies Act, 1956, and the
 Company’s Articles of Association, Mr. C. Subramaniam, Director of the
 Company, retires by rotation at the ensuing Annual General Meeting and
 being eligible, offered himself for re-appointment.
 
 None of the Directors of the Company are disqualified for being
 appointed as Director as specified in Section 274 of the Companies Act,
 1956, as amended.
 
 DIRECTORS’ RESPONSIBILITY STATEMENT
 
 As required under Section 217 (2AA) of the Companies Act, 1956, the
 Directors hereby confirm:
 
 a.  that in the preparation of the annual accounts, the applicable
 accounting standards have been followed along with explanations
 relating to material departures;
 
 b.  that they have selected such accounting policies and applied them
 consistently and made judgments and estimates that are 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 profit of the
 company for that period;
 
 c.  that they have 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 for
 preventing and detecting fraud and other irregularities;
 
 d.  that they have prepared the annual accounts on a going concern
 basis.
 
 AUDITORS
 
 M/s. Deloitte Haskins & Sells, Chartered Accountants, the Statutory
 Auditors, hold office until the conclusion of the ensuing Annual
 General Meeting. The Company has received necessary certificate from
 the Auditors, pursuant to Section 224 (1B) of the Companies Act, 1956,
 regarding their eligibility for re-appointment.  Members are requested
 to consider appointment of M/s. Deloitte Haskins & Sells, as the
 Statutory Auditors at the ensuing Annual General Meeting.
 
 STATUTORY INFORMATION
 
 1.  Fixed Deposits
 
 Your company has not accepted any deposits and as such no amount of
 principal or interest was outstanding as on the date of the Balance
 Sheet.
 
 2.  Particulars of Employees
 
 In terms of the provisions of Section 217(2A) of the Companies Act,
 1956, read with the Companies (Particulars of Employees) Rules, 1975,
 as amended, the name and other particulars of the employees are
 required to be set out in the Annexure to the Directors’ Report.
 However, as per the provisions of Section 219(1)(b)(iv) of the said
 Act, the Annual Report excluding the aforesaid information is being
 sent to all the Members of the Company and others entitled thereto.
 Members who are interested in obtaining such particulars may write to
 the Company at its Registered Office.
 
 3.  Conservation of Energy, Technology Absorption, Foreign Exchange
 Earnings and Outgo
 
 The particulars as prescribed under sub-section (1)(e) of Section 217
 of the Companies Act, 1956, read with Companies (Disclosure of
 particulars in report of the Board of Directors) Rules, 1988, are given
 in Annexure “A” of this Report.
 
 4.  “Group” for Inter-se Transfer of Shares
 
 As required under Clause 3(e) of the Securities and Exchange Board of
 India (Substantial Acquisition of Shares and Takeovers) Regulations,
 1997, persons constituting “Group” (within the meaning as defined in
 the Monopolies and Restrictive Trade Practices Act, 1969) for the
 purpose of availing exemption from applicability of the provisions of
 Regulations 10 to 12 of the aforesaid SEBI Regulations are given in
 Annexure `C’ attached herewith and the said Annexure `C’ forms part of
 this Annual Report.
 
 ACKNOWLEDGEMENT
 
 Your Directors thank the clients, vendors, financial institutions,
 bankers, business associates and various governmental as well as
 regulatory agencies for their valuable support for Company’s growth.
 Your Directors place on record their appreciation of the contribution
 by the employees, who, through their hard work, dedication and
 commitment have enabled the Company to achieve phenomenal growth.
 
 Your Directors take this opportunity to thank the Government of India,
 particularly the Ministry of Information Technology, the Reserve Bank
 of India and the State Governments for their support.  Your Directors
 also thank the Governments of various countries, where the Company has
 operations.
 
                             For and on behalf of the Board of Directors
 
 Place: Mumbai,                                   Jignesh Shah
 Date : 12th June, 2008                          Chairman and MD