Firstsource Solutions

The Directors take great pleasure in presenting their Seventh Annual
 report on the business and operations of the Company and the audited
 financial statements for the year ended March 31,2008.
 
 FINANCIAL RESULTS
 
 The performance of the Company for the financial year 2007-08 is
 summarised below:
 
                                                        (Rs. in million)
 Particulars                   Consolidated   Standalone   
                               Fiscal 2008    Fiscal 2007  Fiscal 2008 
                                                           Fiscal 2007
 
 Total Income                  13,337.2       8,382.1  5,046.9  4,392.7
 Operating Profit Before 
 Interest and Depreciation      2,658.7       1,728.3  1,124.8  1,178.7
 Interest                         366.0          60.5    123.2      3.6
 Depreciation                     860.8         641.4    532.8    412.5
 Profit Before Tax              1,431.9       1,026.4    468.8    762.6
 Provision for Taxation 
 (including Deferred Tax 
 Charge/Credit)                   126.5          60.2   (107.6)    19.8
 Profit After Tax Before 
 Minority Interest              1,305.4         966.2    576.4    742.8
 Minority Interest                (10.2)         (6.3)
 After Tax                      1,315.6         972.5    576.4    742.8
 Balance Brought Forward        1,296.9         324.4    884.2    141.4
 Appropriations                     5.4          -         -         -
 Accumulated Balance in 
 Profit & Loss Account          2,607.1       1,296.9  1,460.6    884.2
 Earning Per Share (Rs.)            3.09          3.67     1.35     2.80
 Earning Per Share (Rs.) -
 Diluted                            2.83          2.50     1.24     1.91
 RESULT OF OPERATIONS
 
 
 The consolidated total revenue increased from Rs. 8,382.1 million to
 Rs. 13,337.2 million, a growth of 59.1% over the previous financial
 year.The consolidated Net Profit After Tax increased from Rs. 972.5
 million to Rs. 1,315.6 million,a growth of 35.3 % over the previous
 financial year.
 
 The standalone total revenue increased from Rs. 4,392.7 million to Rs.
 5,046.9 million, a growth of 14.9% over the previous financial year.The
 standalone Profit After Tax decreased from Rs. 742.8 million to Rs.
 576.4 million, down by 22.4% over the previous financial year.The
 decline in Net Profit is mainly on account of mark to market loss on
 Foreign Currency Convertible Bonds (FCCBs) and foreign currency loans
 amounting to Rs. 218.9 million in fiscal 2008 as compared to gain of
 Rs.2.2 million in fiscal 2007 and higher depreciation of Rs. 532.8
 million in fiscal 2008 as compared to Rs.412.5 million in fiscal 2007
 due to setting up of new delivery centers.
 
 Given the growth requirements of the business, it is necessary for the
 Company to plough back its profits into the business, and hence the
 Directors do not recommend any dividend for fiscal 2008.
 
 INCREASE IN SHARE CAPITAL
 
 During the year under review, 2,228,668 equity shares of the face value
 of Rs. 10 each were issued under the Employee Stock Option Schemes of
 the Company. As on March 31, 2008, the equity share capital stood at
 Rs. 4,273,129,640 divided into 427,312,964 equity shares of Rs. 10
 each.
 
 STRATEGIC ACQUISITION MEDASSIST HOLDING, INC.
 
 During the year, the Company acquired MedAssist Holding, Inc.
 (MedAssist) along with its subsidiaries. MedAssist is a leading
 provider of revenue cycle management services to the healthcare
 provider industry in USA.The purchase consideration was US $ 332.8
 million. MedAssist has a leading market presence and is one of the
 largest players providing revenue cycle management services to the
 Healthcare industry with a strong management team, broad and integrated
 service offerings, long standing client relationships and a good
 financial profile.The Company believes that there are significant
 opportunities which would create value for the Company in the long run.
 
 ISSUE OF FOREIGN CURRENCY CONVERTIBLE BONDS
 
 During the year, the Company concluded the issue of US $ 275 million
 zero coupon Foreign Currency Convertible Bonds (FCCBs). Proceeds from
 the FCCBs issue were utilized to subscribe to the shares of Firstsource
 Solutions USA, Inc., wholly owned subsidiary of the Company, with the
 end use to repay the debt taken for acquisition of MedAssist.The bonds
 have a maturity of 5 years and 1 day.The bonds are convertible at any
 time into equity shares of the Company from January 14,2008 upto
 November 23,2012, at the option of the holders, at Rs. 92.2933 per
 equity share, representing a conversion premium of 35% over the
 reference share price.
 
 There will be an increase of 117,010,135 equity shares in the share
 capital of the Company, if all the bonds get converted into equity
 shares. If not converted, the bonds would be redeemed on December
 4,2012 with a yield to maturity of 6.75% per annum. The bonds are
 listed on Singapore Exchange Securities Trading Limited.
 
 GLOBAL DELIVERY FOOTPRINT
 
 The Company on a consolidated basis has increased the number of its
 global delivery centers from 24 as of March 31, 2007 to 36 as of March
 31,2008.The centers are located across India, USA, UK, Argentina and
 Philippines. 17 of the Companys delivery centers are located in 11
 cities in India, 15 are in the USA (including seven operational hubs of
 MedAssist), 2 are in the UK, 1 is located in Argentina and 1 is located
 in Philippines.The Companys established global delivery footprint
 enables it to deliver a wide range of services and deepen relationships
 with existing customers.
 
 QUALITY INITIATIVES
 
 The Company follows the global best practices for process excellence
 and is certified by COPC (Customer Operations Performance Cehter).The
 Companys delivery center at Bangalore has been recertified with ver
 4.0 COPC-2000®, Customer Service Provider (CSP) base standard for its
 customer service and back office capabilities.The Company also follows
 Process Improvement methodologies like Six Sigma, Lean and Kaizen.
 
 AWARDS AND ACCOLADES
 
 The Company received the following awards and accolades during the
 year:
 
 * Secured first position in the Best Defect Elimination in Services &
 Transaction category at International Quality and Productivity Center
 (IQPC) Six Sigma Excellence Awards, London.
 
 * Secured first position in the Best Defect Elimination in Services &
 Transaction category and Best Design for Six Sigma category at IQPC
 Six Sigma Excellence Awards, Singapore.
 
 * Secured second position in the Best Six Sigma Deployment
 Leadercategory and third position in theBest Six Sigma project in
 Services and Transaction category at IQPC Six Sigma Excellence Awards,
 Orlando, USA.
 
 * Telecommunications Outsourcing Project of the Yearfor its work with
 a leading telecom Company in UK from National Outsourcing Association
 (NOA), UK.
 
 * Offshore Agency of the Year from a leading financial services
 client in USA in Collections.
 
 * Runners up in Define Measure Analyze Improve Control ( DMAIC) -
 Services category at Symbiosis Centre for Management & Human Resource
 Development (SCMHRD) - Sakaal Lean & Six Sigma Excellence Awards 07.
 
 HUMAN RESOURCES
 
 On a consolidated basis, the Company has grown from 14,396 full-time
 employees as of March 31, 2007 to 17,369 employees as of March 31,2008.
 The statement of particulars required pursuant to Section 217 (2A) of
 the Companies Act, 1956 read with the Companies (Particulars of
 Employees) (Amendment) Rules, 2002, forms part of the Report. However,
 as permitted under the Companies Act, 1956, the Report and Accounts are
 being sent to all members and other entitled persons excluding the
 above statement. Those interested in obtaining a copy of the said
 statement may write to the Company Secretary at the registered office
 and the same will be sent by post.The statement is also available for
 inspection at the registered office, during working hours upto the date
 of the forthcoming Annual General Meeting (AGM).
 
 PUBLIC DEPOSITS
 
 During the year, the Company had not accepted any deposits under
 section 58A of the Companies Act, 1956.
 
 DIRECTORS
 
 Dr. Ashok Ganguly, Mr.Charles Miller Smith and Mr.Y.H.Malegam retire by
 rotation at the forthcoming AGM and are eligible for re-appointment.
 The Board recommends their re-appointment as Directors at the
 forthcoming AGM.
 
 Mr. Dinesh Vaswani, Mr. Donald W. Layden Jr. and Mr. K. P. Balaraj are
 the Nominee Directors appointed on the Board of the Company by Aranda
 Investments (Mauritius) Pte. Limited (Aranda), Metavante Investment
 (Mauritius) Limited (Metavante) and Westbridge Ventures Investment
 Holdings (Westbridge) respectively. As per Share Subscription
 Agreements and Amended and Restated Shareholders Agreement (Agreement)
 among the Company and Aranda, Metavante Corporation, Westbridge and
 Western India Trustee & Executor Company Limited executed on March
 31,2006 and the Articles of Association of the Company, it was agreed
 that all rights and obligations of the parties to the Agreements would
 get terminated upon successful completion of Initial Public Offer (IPO)
 of the Company, except the rights relating to appointment of Nominee
 Directors by Aranda and Metavante, which shall continue for a period of
 12 months from the date of completion of IPO.The rights of parties to
 the aforesaid agreements stood terminated on successful completion of
 IPO on February 22,2007, except the rights of Aranda and Metavante,
 which stood terminated on February 22,2008. As the rights pursuant to
 the aforesaid Agreements and the Articles of Association of the Company
 have ceased, shareholders approval under section 257 of the Companies
 Act, 1956 is required to continue them as Directors of the Company.
 Keeping in view their expertise, experience and knowledge, the Board
 considers it desirable to continue to avail their services.  The
 Company has received notices along with the requisite deposit pursuant
 to section 257 of the Companies Act, 1956, proposing their appointment
 at the forthcoming AGM of the Company. The Board recommends their
 appointment as Directors.
 
 AUDITORS
 
 M/s. BSR & Co., Chartered Accountants, who were appointed as the
 Statutory Auditors of the Company by shareholders at their previous
 AGM, shall be retiring on conclusion of the forthcoming AGM and are
 eligible for re-appointment. Members are requested to consider their
 re-appointment for the financial year ending March 31,2009 at a
 remuneration to be decided by the Board of Directors or Committee
 thereof, as set out in the Notice convening the meeting. The Company
 has received written confirmation from M/s. BSR & Co., to the effect
 that their appointment, if made, will be within the limits of section
 224(1 B) of the Companies Act, 1956.
 
 EMPLOYEES STOCK OPTION SCHEME
 
 With a view to provide an opportunity to the employees of the Company
 to share the growth of the Company and to create long term wealth, the
 Company has an Employees Stock Option Scheme (ESOS), namely, the
 Firstsource Solutions Employees Stock Option Scheme, 2003 (ESOS
 2003).The earlier ESOS introduced in 2002 is in force for the limited
 purpose of exercise of options granted pursuant to the scheme.
 
 SUBSIDIARY COMPANIES
 
 As on March 31,2008, the Company had 17 subsidiaries:
 
 Domestic subsidiaries:
 
 1.  RevIT Systems Private Limited
 
 2.  Pipal Research Analytics and Information Services India Private
 Limited (A wholly owned subsidiary of Pipal Research Corporation, USA
 
 International subsidiaries:
 
 1.  Firstsource Solutions USA Inc.
 2.  Firstsource Solutions UK Limited
 3.  Firstsource Solutions S.A., Argentina
 4.  FirstRing lnc.,USA
 5.  Firstsource Advantage LLC, USA (A subsidiary of FirstRing Inc.)
 6.  Pipal Research Corporation, USA
 7.  Sherpa Business Solution Inc., USA (A wholly owned subsidiary of
 RevIT Systems Private Limited)
 
 8.  Business Process Management, Inc., USA
 
 9.  MedPlans Partners, Inc., USA (A subsidiary of Business Process
 Management, Inc.)
 
 10.  MedPlans 2000, Inc., USA (A subsidiary of Business Process
 Management, Inc.)
 
 11.  MedAssist Holding, Inc., USA*
 
 12.  MedAssist Intermediate Holding, Inc., USA (A subsidiary of
 MedAssist Holding, Inc.)*
 
 13.  MedAssist, Incorporated, USA (A subsidiary of MedAssist
 Intermediate Holding, Inc.)*
 
 14.  Firstsource Healthcare Advantage, Inc., USA (A subsidiary of
 MedAssist, Incorporated)**
 
 15.  Twin Medical Transaction Services, Inc., USA (A subsidiary of
 MedAssist, Incorporated)*
 
 * Have become subsidiaries of the Company w.e.f. September 20, 2007
 consequent to the acquisition of MedAssist Holding Inc. by Firstsource
 Solutions USA Inc., wholly owned subsidiary of the Company.  ** The
 name of Argent Healthcare Financial Services Inc. has been changed to
 Firstsource Healthcare Advantage, Inc. w.e.f. April 1,2008.
 
 In terms of the approval received from the Central Government vide
 their letter dated March 26,2008 under section 212(8) of the Companies
 Act, 1956, the Balance Sheet, Profit and Loss Account, Reports of the
 Board of Directors and Auditors of the subsidiaries have not been
 attached with the Balance Sheet of the Company. However, as directed by
 the Central Government the financial data of the subsidiaries have been
 furnished under Details of Subsidiaries forming part of the Annual
 Report. Further, pursuant to Accounting Standard AS-21 issued by the
 Institute of Chartered Accountants of India, Consolidated Financial
 Statements of the Company and its subsidiaries for the year ended March
 31, 2008, together with reports of Auditors thereon and the statement
 pursuant to section 212 of the Companies Act, 1956, are attached.  The
 financial statements of subsidiaries will be available on a request
 made by any member of the Company and will also be available for
 inspection by any member at the registered/head office of the Company
 and that of the subsidiary concerned.
 
 CORPORATE GOVERNANCE AND MANAGEMENT DISCUSSION AND ANALYSIS REPORT
 
 Reports on Corporate Governance and Management Discussion and Analysis
 as stipulated under clause 49 of the Listing Agreement are separately
 given and form part of the Annual Report.
 
 STATUTORY DISCLOSURES OF PARTICULARS
 
 A) Conservation of Energy
 
 The Company has embarked on a journey to make its delivery centers
 energy efficient. During the year. the Company adopted
 Virtualisation, a cutting edge technology solution that makes the
 delivery centers more energy efficient.The Company extensively uses
 Thin Clientsto further reduce the power utilisation in its centers.
 
 B) Absorption of Technology
 
 The Company is committed to Technological Innovation. During the year,
 the Company implemented ISO 27001 and ISO 20000 quality processes and
 framework at all of its centers in India and UK and secured ISO 27001
 certification for its centers at Kolkata, Belfast and Londonderry. The
 Company has used virtual desktop technology for its operations in Tier
 II cities to improve security and availability of IT infrastructure at
 these locations.
 
 C) Foreign Exchange Earnings and Outgo
 
 During the year, 74.94% of the Companys revenues accrued on account of
 exports. The Companys foreign exchange earnings and outgo were as
 under:
 
 DIRECTORS RESPONSIBILITY STATEMENT
 
 The Directors confirm:
 
 1.  That in the preparation of the annual accounts, the applicable
 accounting standards have been followed along with proper explanation
 relating to material departures, if any;
 
 2.  That the Directors had 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 or loss of the Company for that period;
 
 3.  That the Directors had 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; and
 
 4.  That the annual accounts were prepared on a going-concern basis.
 
 ACKNOWLEDGEMENTS
 
 The Board of Directors thanks the Companys customers, vendors, bankers
 and business associates for their support and assistance. The Company
 also expresses its gratitude to the Ministry of Telecommunications,
 Collector of Customs and Excise, Director - Software Technology Parks
 of India and various Governmental departments and organisations for
 their help and co-operation.
 
 The Board places on record its appreciation to all the employees for
 their dedicated service. The Board appreciates and values the
 contributions made by every member across the world and is confident
 that with their continued support the Company will achieve its
 objectives and emerge stronger in the coming years.
 
                             For and on behalf of the Board of Directors
 
 
 Mumbai                                              Dr. Ashok S.Ganguly
 April 29,2008                                          Chairman