MindTree

The Directors have pleasure in presenting their Ninth Annual Report on
 the business and operations of your Company and its working results for
 the year 2007-08.
 
                                                    Rs Million
 Profit and Loss Statement         For the year ended         % Growth
                                   Mar 31, 08  Mar 31, 07
 Income from
 software development
 Overseas                           6,864.86     5,534.43       24.0%
 Domestic                             533.00       369.10       44.4%
 Total Revenue                      7,397.86     5,903.52       25.3%
 Total Costs                        6,143.96     4,807.17       27.8%
 EBITDA                             1,253.90     1,096.36       14.4%
 Depreciation                         356.04       244.36       45.7%
 EBIT(OPM)                            897.86       852.00        5.4%
 Other income                         279.44        73.65      279.4%
 Interest                              59.03        29.99       96.9%
 PBT                                1,118.27        895.66      24.9%
 Provision for Tax                    128.90         41.49     210.6%
 Deferred tax charge/(credit)         -43.49        -46.36      -6.2%
 PAT                                1,032.87        900.52      14.7%
 PAT % (of Revenue)                     14.0%         15.3%
 PAT % (of Rev + Other Income)          13.5%         15.1%
 
 Business Performance:
 
 For the year ended March 31, 2008, our income from software development
 grew to Rs 7,398 million, which represents an increase of 25.3% over
 the previous years Rs 5,904 million. We saw strong growth across both
 overseas and domestic markets. Export revenues grew 24.0% to Rs 6,865
 million whereas domestic revenues grew 44.4% to Rs533 million.
 
 During the course of the year, we mitigated the steep 12% appreciation
 of the Rupee vs. the US Dollar through a combination of operational
 efficiency and productivity improvements. In the context of the
 challenging environment, the Profit After Tax fell to 13.5% as compared
 to 15.1% in the previous year (as % to Software Revenue and Other
 Income). However, in absolute terms, the Profit After Tax for the year
 grew 14.7% to Rs 1,033 million as compared to Rs 901 million in the
 previous year.
 
 Our IT Services business provides a range of services to ClOs across a
 variety of industry segments. Our R&D Services business works with
 Technology companies to help build innovative products by providing
 Product Realization services. Our domain experts deliver business-
 enabling solutions by leveraging a consulting led, framework-based and
 IP-driven approach.
 
 For the year, the IT Services business grew 28.5% to Rs 5,730 million
 and the R&D Services business grew 15.5% to Rs 1,668 million. The
 robust growth was driven by strong performance across all the
 geographies. The U.S. remains the largest market and contributed 65.5%
 of our revenues and Europe contributed 18.2% of our revenues.  We work
 across Middle East, Singapore, Japan and Australia, which together
 contributed 9.8%. India continues to be a key market for us and
 contributed 6.5% of our revenues.
 
 Within IT Services, we derive a significant proportion of our revenues
 from the Manufacturing and Travel & Transportation industry groups;
 while in R&D Services we get significant revenues from the industry
 groups Storage and Consumer Appliances.
 
 Over the last few years, we have strengthened our capability in the
 traditional areas of Application Development, Maintenance consulting
 and Packaged Software Implementation, Independent Testing, and
 Infrastructure Management & Tech Support which continue to show strong
 traction in the market.
 
 As part of expanding our geographical footprint, we opened up new
 offices in Cologne (in Germany), The Hague (in Netherlands), Toronto
 (in Canada), Piano, Texas and Seattle, Washington (in USA). With this,
 we have 22 sales offices across 1 3 countries and 5 development centers
 across Bangalore, Chennai and New Jersey.
 
 Dividend
 
 Your directors recommended a final dividend of Re. 1 per share (10% on
 par value of Rs.1 0). This coupled with the interim dividend of Re. 1
 per share already paid during October, 2007, aggregated to Rs. 2.00 per
 share (20% on par value of Rs.10) for the year 2007-08. The total
 dividend amount is Rs. 75.748 million for the year.
 
 Transfer to Reserves
 
 We propose to transfer Rs. 104.18 million to the General Reserve and
 retain Rs. 1963.68 million in Profit & Loss account.
 
 Changes to Share Capital
 
 Your Company also issued 167,981 shares of Rs. 10 each to the MindTree
 Minds on exercise of stock options. Consequently, the share capital has
 been increased from Rs. 377,525,770 to Rs. 379,205,580.
 
 Infrastructure
 
 During the year, your company has added a built-up capacity o 1 78,300
 sft. With this, the total built up capacity of your company in India
 stands at 598,000 sft.
 
 These built up facilities include space for workstations, conference
 rooms, meeting rooms, labs as well as training facilities.
 
 Your company purchased two buildings in the Global Village, Bangalore
 campus which together have a capacity of 285,600 sft. As planned, your
 company started its operations in Chennai (called a; MindTree
 Coromandel) within an SEZ. This has a total capacity to accommodate
 approximately 2500 MindTree Minds with a curreni built-up capacity for
 560 Minds.
 
 In addition, your company has setup world-class communication
 infrastructure which is required to take care of the various needs of
 ou customers. This includes interoffice data links, internet access
 links, customer specific data links and dedicated data/voice links for
 supporting our customers.
 
 Strategic Acquisitions
 
 i) TES PV: In November 2007, MindTree acquired Bangalore-based
 TES-Purple Vision (TES-PV) for an all-cash consideration of USD 6.55
 million. Founded in 2000, has multiple full-chip turnkev designs to its
 credit and has participated in over 1 50 silicon designs with a success
 rate of over 95% in the first pass silicon. TES-PV had well known
 technology companies in the US, Europe, Japan and India as their
 customers. This acquisition helped MindTree double our IC design
 team-size and strengthen our presence in the Japanese market. Post
 acquisition, the name of the acquired company was changed to Mind Tree
 Technologies Pvt. Limited. Financial results of MindTree Technologies
 Pvt. Limited have been consolidated with MindTree results w.e.f.
 December 2007.
 
 Your company has filed a petition before the High Court of Karnataka on
 March 28, 2008 for merger of MindTree Technologies Pvt. Limited into
 MindTree. The notice for extraordinary general meeting along with
 scheme of amalgamation is being sent across to all members seeking
 their approval for merger.
 
 (ii) Aztecsoft: On May 2, 2008, your company announced that it had
 signed a definitive agreement with e4e Holdings Mauritius to acquire
 their entire 32.57% shareholding in Aztecsoft Limited at a price of Rs.
 80 per share in cash. This transaction valued Aztecsoft equity at USD
 90 million (approx. Rs. 360 crores). In accordance with the Indian
 takeover regulations, MindTree also announced an open offer to acquire
 up to an additional 20% stake in the company for Rs. 80 per share in
 cash. These purchases will be funded through the internal accruals of
 MindTree. After the open offer process is over, MindTree intends to
 merge Aztecsoft with itself. All this is subject to customary
 regulatory filings, clearances and approvals.
 
 The open offer process is likely to be completed by August 2008, after
 which we would be able to consolidate the two companys financial
 results. The merger process might take another 6 to 8 months.
 
 Aztecsoft is a leading player in the fast growing outsourced product
 development (OPD) and testing markets. For the FY ending March 31, 2008
 their revenues were Rs. 253 crores with profit after tax of Rs. 1 7.38
 crores. They had over 2,100 people on their rolls serving more than 80
 customers.
 
 Your company already has a significant presence in the IC design and
 embedded software segments of the OPD market. Combination with
 Aztecsoft will provide us a solid presence in the platform, middleware
 and application software segments too, thus enabling us to cover the
 entire product development stack. In addition, the combined team-size
 in testing services will be 2000+, making us a much stronger player in
 the industry. There is minimal overlap of customers across the two
 companies, providing us the opportunity to cross-sell to each others
 customers. There is high degree of culture match across the two
 organizations, which gives your management the confidence of
 integrating the two entities in a smooth and effective manner.
 
 Mind Tree 2.0 /Branding Initiative:
 
 Name Change: To begin with, we changed our name to MindTree Ltd.  Our
 new name now allows us to offer newer areas of services to our
 customers. MindTree Limited will now become the umbrella name under
 which future acquisitions can take the form of divisions or
 subsidiaries. MindTree will continue to stand for our unique culture,
 commitment towards high customer satisfaction and our innovative people
 practices. We will continue to build an organization that has a place
 among the best in our industry. The change in our name is in line with
 our strategy towards the next phase of growth, termed MindTree 2.0.
 
 Reorganization: With an eye on the next phase of growth, MindTree also
 announced its first major organizational restructuring since its
 inception.
 
 Chief Operating Officer Subroto Bagchi, who is currently based out of
 the U.S., will return to India to take on the first-ever position of
 Gardener within MindTree. This unusual move is being made to focus on
 further strengthening the emotional infrastructure of MindTree for
 which the Company has been known as having differentiated itself.
 Bagchi will spend one-on-one time with the Top-100 leaders at MindTree
 on their personal-professional issues; expand leadership capacity;
 and build readiness for taking MindTree into the billion-dollar revenue
 level. In addition, Bagchi will work at the grassroots by making
 himself available to the 45+ Communities of Practice that foster
 organizational learning, innovation and volunteerism. He will spend
 time on MindTrees relationship with the educational community in India
 and abroad to create inroads of learning from unusual sources and take
 MindTrees learning to the world at large.
 
 Krishnakumar Natarajan, who was the President and CEO of MindTrees IT
 Services business, has assumed responsibility as the Chief Executive
 
 Officer of MindTree. In this capacity, Krishnakumar will have the
 overall responsibility of both the IT Services and the R&D Services
 businesses of MindTree.
 
 MindTrees IT Services business now has a two-in-a-box structure led by
 Scott Staples and Anjan Lahiri as President and Co-CEOs. Scott and
 Anjan will be responsible for designated Industry Groups, Practices and
 Geographies. The R&D Services business will continue to be led by S.
 Janakiraman as President & CEO. In order to create bandwidth for him to
 nurture newer Industry Groups and Practices, Vinod Deshmukh will assist
 him as President and Co-CEO of the R&D Services business.
 
 Executive Vice President N.S. Parthasarathy will be designated Chief
 Operating Officer and report into Krishnakumar.
 
 These changes at MindTree will bring forward several young leaders into
 key positions in preparation for MindTrees goals for the future. This
 is about creating MindTree Version 2.0. With this, we are now ready for
 the next big thing. As a team, we see ourselves as builders. What we
 have achieved in the last eight years is just the foundation for the
 future. The new structure will unleash leadership capacity as MindTree
 prepares for the next leap forward.
 
 Website: As part of our long-term goal of enhancing our visibility on
 the Internet space, we revamped our Web site, www.mindtree.com. The new
 site carries a new look and feel and is rich with information and
 content on MindTree and our businesses. We believe that our Web site
 will become the hub of MindTrees future activities on the Internet.
 
 Directors
 
 During the year, Mr. Vivek Kalra has resigned w.e.f. January 22, 2008.
 The Board of Directors places appreciation for the services rendered by
 Vivek Kalra during his tenure as Director of the company.
 
 The following Directors retire by rotation and being eligible, offer
 themselves for re-appointment.
 
 1.  Mr.SiddharthaVG
 
 2.  Mr. Lip-BuTan
 
 3.  Mr. Srinivasan R
 
 Brief resumes of these directors are included in the notice for the
 Annual General Meeting.
 
 People
 
 The total number of MindTree Minds as on March 31, 2008 was 5,640
 against 4,162 as on March 31, 2007, a net addition by 35%. The
 attrition levels during the year have been below industry level and the
 attrition rate for the year was 15.8%.
 
 Your company is continuing to focus on being an Employer of Choice to
 attract and retain the best industry talent. Several initiatives were
 undertaken during the course of the year to create tighter and deeper
 bonds with the people. One of the initiatives focused on designing an
 enhanced assimilation program for the new MindTree Minds joining us
 from Technical Campuses. For your company to continue to enhance its
 market presence, it is important that new people entering the
 organization are better skilled, differentiated and more emotionally
 attached to the organization than their industry peers. The rollout of
 this initiative has been extremely well received by the target audience
 and also by customers, opinion leaders and the media.
 
 Your company is looking and planning ahead for the future. In the
 current year, your company will focus on the theme of Empowering and
 Enabling Line Managers. This will allow decision making at the
 operating level and creation of environment that facilitates nurturing,
 development and satisfaction of people. It will allow us to build the
 second level leadership capability which will be essential for you-
 company to sustain its growth in the years ahead.
 
 Liquidity
 
 Your Company maintains sufficient cash to meet its strategic
 objectives.  As on March 31, 2008 your company had liquid assets
 including investments in money market mutual funds, of Rs. 2,201.33
 million as against Rs 2,908.51 million at the previous year-end. These
 funds have been invested in deposits with banks and in money market
 mutual funds.
 
 Awards/Recognitions
 
 This year has also been one of our best years for various recognitions
 we received for our work in the areas of Corporate Governance,
 Innovation, Knowledge Management and People Practices. All of these
 contribute towards our Vision of being among the most admired companies
 in our industry.
 
 More details about the recognitions we received are covered separately
 in the Annual Report. These awards strengthen our commitment to achieve
 more.
 
 Litigation
 
 Your company has an Arbitration pending in the matter of certain claims
 in connection with acquisition of business from ASAP Solutions Private
 Limited. We believe MindTree has a strong case and do not expect any
 material adverse ruling on this case.
 
 Deposits
 
 In terms of the provision of Section 58 A of the Companies Act, 1956
 read with the Companies (Acceptance of Deposits Rules) 1975, the
 Company has not accepted any fixed deppsits during the year under
 review.
 
 Corporate Governance
 
 Your company has been practicing the principles of good corporate
 governance. A detailed report on Corporate Governance is given as
 Annexure to this Annual Report.
 
 Certificate of the auditors regarding compliance with the conditions of
 Corporate Governance as stipulated in Clause 49 of the listing
 agreement is also given in this Annual report.
 
 During the year, your company has been recognized asoneofthetop25
 companies for having good corporate governance by ICSI in partnership
 with Ministry of Corporate Affairs.
 
 Auditors
 
 The auditors, M/s. BSR & Associates, Chartered Accountants, hold office
 as Auditors until the conclusion of the ensuing Annual General Meeting
 and have confirmed their eligibility and willingness to accept office,
 if re-appointed.
 
 Conservation of Energy, Technology Absorption and Foreign Exchange
 earnings and outgo
 
 The particulars as prescribed under sub-section (1)(e) of Section 21 7
 of the Companies Act, 1956 read with Companies (Disclosure of
 particulars in the report of Board of Directors) Rules, 1988 are given
 in the Annexure.
 
 Particulars of Employees
 
 As required under the provisions of section 21 7(2A) of the Companies
 Act, 1956, read with the Companies (Particulars of employees) Rules,
 1975, as amended, the names and other particulars of employees are set
 out in the annexure to this report. The Department of Company Affairs,
 has amended the Companies (Particulars of employees) Rules, 1975 to the
 effect that particulars of employees of companies engaged in
 Information Technology sector posted and working outside India not
 being directors or their relatives, drawing more than Rs. 2.40 million
 per financial year or Rs. 200,000 per month, as the case may be, need
 not be included in the statement but, such particulars shall be
 furnished to the Registrar of Companies. Accordingly, the statement
 included in this report does not contain the particulars of employees
 who are posted and working outside India.
 
 Employee Stock Option Plan
 
 The Company instituted various Employees Stock Option Plans (ESOP)
 approved by the Shareholders. Under the ESOP, the Company currently
 administers five stock option programs.
 
 ESOP 1999
 Description                                              Details
 
 Total number of Options under the 
 plan (each option represents one share)                 2,892,000
 The pricing formula                                         Rs.10
 Variation in terms                                            Nil
 Options granted during the year                               Nil
 Weighted Average price per option granted during the year     Nil
 Options Vested (as of March 31, 2008)                      94,239
 Options exercised during the year                          54,700
 Money raised on exercise of options                      Rs. 0.55 
 Options Forfeited during the year                             Nil
 Options Lapsed during the year                              2,400
 Total number of options in force at the end of the year    39,539
 Grant to senior management and independent 
 directors during the year                                     Nil
 Employees receiving 5% or more of the total 
 number of options granted during the year                     Nil
 Diluted EPS pursuant to issue of shares on 
 exercise of options calculated in accordance with AS 20  Rs.26.11
 
 ESOP 2001
 Description                                                Details
 
 Total number of Options under the plan 
 (each option represents one share)                       1,966,360
 The pricing formula                                          Rs.50
 Variation in terms                                             Nil
 Options granted during the year                                Nil
 Weighted Average price per option granted during the year      Nil
 Options Vested (as of March 31, 2008)                      347,738
 Options exercised during the year                           84,984
 Money raised on exercise of options                Rs.4.25 million
 Options Forfeited during the year                           27,263
 Options Lapsed during the year                              12,027
 Total number of options in force at the end of the year    362,626
 Grant to senior management and independent 
 directors during the year                                      Nil
 Employees receiving 5% or more of the 
 total number of options granted during the year                Nil
 Diluted EPS pursuant to issue of shares on 
 exercise of options calculated in accordance with AS 20   Rs.26.11
 
 ESOP 2006 (a)
 Description                                                Details
 
 Total number of Options under the plan 
 (each option represents one share)                         406,650
 The pricing formula                                         Rs.250
 Variation in terms                                             Nil
 Options granted during the year                                Nil
 Weighted Average price per option granted during the year   Rs.250
 Options Vested (as of March 31, 2008)                       29,323
 Options exercised during the year                           10,227
 Money raised on exercise of options                Rs.2.56 million
 Options Forfeited during the year                           49,690
 Options Lapsed during the year                               4,020
 Total number of options in force at the end of the year    302,563
 Grant to senior management and independent 
 directors during the year                                      Nil
 Employees receiving 5% or more of the total 
 number of options granted during the year                      Nil
 Diluted EPS pursuant to issue of shares on 
 exercise of options calculated in accordance with AS 20   Rs.26.11
 
 ESOP 2006 (b)
 Description                                                  Details
 
 Total number of Options under the plan (each 
 option represents one share)                               3,053,750
 The pricing formula Different rates at-     Rs.300, 315, 350 and 419
 Variation in terms                                               Nil
 Options granted during the year                            1,667,500
 Weighted Average price per option granted during the year  Rs.340.96
 Options Vested (as of March 31, 2008)                        163,323
 Options exercised during the year                             14,740
 Money raised on exercise of options                  Rs.4.46 million
 Options Forfeited during the year                            178,770
 Options Lapsed during the year                                 2,570
 Total number of options in force at the end of the year    2,810,770
 Grant to senior management and independent directors *       167,000
 Employees receiving 5% or more of the total 
 number of options granted during the year                        Nil
 Diluted EPS pursuant to issue of shares on 
 exercise of options calculated in accordance with AS 20     Rs.26.11
 
 Options granted to senior management and independent directors
 
 
 Name                                          Amount of Shares issued
 
 Puneet Jetli                                          7,500
 Vishweshwar Hegde                                     7,500
 Raja V. Shanmugam                                     7,500
 Anup Mehta                                            8,000
 Salil Godika                                         10,000
 
 Drectors Stock Option Plan, 2006 (DSOP 2006)
 
 Description                                              Details
 
 Total number of Options under the plan 
 (each option represents one share)                        70,000
 The pricing formula                                       Rs.300
 Variation in terms                                           Nil
 Options granted during the year                              Nil
 Weighted Average price per option granted during the year Rs.300
 Opions Vested (as of March 31, 2008)                      23,330
 Options exercised during the year                          3,330
 Money raised on exercise of options              Rs.1.00 million
 Options Forfeited during the year                            Nil
 Options Lapsed during the year                               Nil
 Total number of options in force at the end of the year      Nil
 Grant to senior management and independent directors         Nil
 Employees receiving 5% or more of the total 
 number of options granted during the year                    Nil
 Diluted EPS pursuant to issue of shares on exercise 
 of options calculated in accordance with AS 20          Rs.26.11
 
 No employee has been granted option, during any one year, equal to or
 exceeding 1% of the issued capital (excluding outstanding warrants and
 conversions) of the company at the time of grant.
 
 In line with the guidance note on Accounting for employee share based
 payments issued by the Institute of Chartered Accountants of India and
 Employee Stock Option Scheme and Employee Stock Purchase Scheme
 Guidelines, 1999 issued by the Securities and Exchange Board of India,
 your company has calculated the employee compensation cost using the
 intrinsic value of stock options. Had compensation been determined
 under the fair value approach described in the guidance note, the
 Companys net income and basic and diluted earnings per share would
 have reduced to the proforma amounts as indicated:
 
                                                              Rs.
                                           Year ended      Year ended
                                        March 31, 2008   March 31, 2007
 
 Net income as reported                  1,032,865,201    900,522,971
 Add: Stock-based employee
 compensation expense
 (intrinsic value method)                   19,193,756     12,211,803 
 Less: Stock-based employee
 compensation expense
 (fair value method)                        79,179,869     38,090,174
 Proforma net income                       972,879,088    874,644,600  
 Basic earnings per share as reported            27.45          28.98
 Proforma basic earnings per share               25.86          28.15
 Diluted earnings per share as reported          26.52          27.70
 Proforma diluted earnings per share             25.13          26.94 
 
 The weighted average fair value of each option granted during the year
 ended March 31, 2008, estimated on the date of grant was Rs 127.09
 using the Black-Scholes model with the following assumptions:
 
 Grant date share price                  Rs335& 459.15
 Exercise price                             Rs 335-460
 Dividend yield%                             0.22-0.33%
 Expected life                               3-5 years 
 Risk free interest rate                     6.70-7.81% 
 Volatility                                     29%-40%
 
 Directors responsibility statement
 
 Directors responsibility statement pursuant to Section 21 7(2AA) of
 The Companies (Amendment) Act, 2000 is annexed to this report.
 
 Management Discussion and Analysis Report
 
 Management Discussion and Analysis Report as required under Clause
 49(IV)(F) is annexed to this report.
 
 Acknowledgements
 
 The Board of Directors takes this opportunity to express their
 appreciation to the customers, shareholders, investors, vendors, and
 bankers who have supported the Company during the year. Your directors
 place on record their appreciation to the MindTree Minds at all levels
 for their contribution to the Company.
 
 Your directors would like to make a special mention of the support
 extended by the various departments of the Government of India,
 particularly the Software Technology Parks, the Department of
 
 Electronics, the tax authorities, the Ministry of Commerce, the
 Department of Telecommunications, the Reserve Bank of India, Ministry
 of Company Affairs, Securities and Exchange Board of India and others
 and look forward to their support in all future endeavors.
 
                            For and on behalf of the Board of Directors,
 
                                Ashok Soota           Subroto Bagchi
                         Chairman & Managing         Director Director
 Bangalore
 May 15, 2008