Mphasis

We have pleasure in presenting to you the Seventeenth Annual Report of
 your Company for the seven months financial period ended 31 October
 2008.
 
 At the outset, your Directors would like to inform you that the
 financial year of your Company has been changed from 1 April - 31 March
 to 1 November - 31 October effective 1 November 2008. As such, the
 financial period commencing 1 April 2008 was closed on 31 October 2008.
 The figures for the current financial period given below are for a
 seven month period and are not comparable with the figures for the
 previous financial year ended 31 March 2008.
 
 CONSOLIDATED FINANCIAL PERFORMANCE
 
                                                     (Rs. millions)
 Particulars                                 1 April 2008     2007-08
                                          31 October 2008  (12 Months)
                                               (7 Months)
 
 Revenues                                         19,065       24,230
 
 Cost of Revenues                                 14,254       18,735
 
 Gross Profit                                      4,810        5,495
 
 Operating Profit                                  2,879        2,791
 
 Profit before taxation                            3,097        2,661
 
 Net Profit                                        2,954        2,552
 
 Provision for Proposed Dividend                     417          689
 
 Tax on Dividend                                      71          117
 
 Transfer to General Reserve                         264          221
 
 A detailed analysis of performance is available in the section headed
 Management Discussion and Analysis of Financial Condition and Results
 of Operations in this annual report.
 
 OUTLOOK
 
 Despite global economic slowdown, your Company, through alignment,
 focus and relentless execution, has had a year of strong financial
 performance with record EPS and EPS growth - the highest in the history
 of your Company. Your Company has built a strong foundation for the
 future, institutionalized several initiatives to integrate and
 verticalise its business while developing capability and capacity for
 robust growth. Your Companys efforts to maintain operational
 efficiencies continue and your Company is leveraging technology at the
 workplace and accelerating the pace of customer innovation to create
 its next growth wave. With the merger of Electronic Data Systems
 Corporation into Hewlett-Packard, your Company now has a stronger
 partner to go to market and create larger opportunities for growth.
 
 SHARE CAPITAL
 
 The Issued Share Capital of the Company as on 31 October 2008 stood at
 Rs.2,089 million (which is inclusive of 156,750 shares of Rs.10/- each
 amounting to Rs.15,67,500/- held by the BFL Employees Equity Reward
 Trust) and Reserves and Surplus of the Group stood at Rs.12,213
 million. There has been an increase in the capital on account of
 allotments made during the year under various ESOP Plans to option
 holders exercising their options through the BFL Employees Equity
 Reward Trust and release of bonus shares earlier kept under abeyance
 due to dispute in the title of shares.
 
 DIVIDEND
 
 Your Directors are pleased to recommend a final dividend of Rs.2/- per
 equity share of Rs.10/- each for the 7 month period ended 31 October
 2008, subject to your approval at the ensuing Annual General Meeting.
 
 CORPORATE GOVERNANCE
 
 A note on corporate governance and the auditors certificate on
 corporate governance are annexed to this report.
 
 OTHER DEVELOPMENTS
 
 In terms of a merger agreement executed between Electronic Data Systems
 Corporation, Hewlett-Packard Company (HP) and Hawk Merger
 Corporation, the last named company merged into Electronic Data Systems
 Corporation on 26 August 2008. As a result of this merger, Electronic
 Data Systems Corporation became a 100% subsidiary of HP and was renamed
 as Electronic Data Systems LLC.
 
 Pursuant to the consummation of this merger, the ultimate parent
 company of your Company is Hewlett-Packard Company.
 
 EMPLOYEES
 
 Your Company has a strong company culture that is built on the key
 values of being Open, Transparent and Honest, Collaborative, Demanding
 Excellence and Honoring our Commitments. These values form the
 foundation of long-term client relationships and lasting partnerships.
 With offices and projects located in different parts of the globe,
 employees have immense opportunities to grow. Your Company trains,
 guides and empowers professionals to adapt to and make the best use of
 opportunities that the changing business environment offers.
 
 Your Company encourages skill and knowledge enhancement on the job and
 conducts regular training programs in popular technical, soft-skills
 and management areas. Your Company also invests in the development of
 its employees through training programs for basic leadership skills,
 Leadership Development and Leadership Excellence. The EDS Learning fit
 Leadership Academy (ELLA) established by your Company at Mangalore aims
 to provide training in technology, business domain, processes, tools
 and interpersonal skills to new graduates joining the Applications
 Delivery Unit. The Academy offers on-going support and mentoring in
 areas of leadership and business skills in all levels of the
 organization.
 
 During the year, your Company initiated the Metamorphosis program to
 facilitate movement of employees through cross-skilling. Your Company
 also initiated the Certified Trainers Program under College Connect
 through which fresh campus recruits are trained early, reducing the
 time taken to put them on projects. Your Company also launched the
 Beacon program through which best practices were shared across towers.
 Through these initiatives your Company is striding towards its goal of
 becoming an Employer of Choice.
 
 The total employee strength grew from 27,047 employees on 1 April 2008
 to 28,795 employees on 31 October 2008.
 
 EMPLOYEES STOCK OPTION PLAN
 
 Your Companys Employee Stock Option Plan is administered through the
 BFL Employees Equity Reward Trust.
 
 The information to be disclosed as per SEBI (Employees Stock Option
 Scheme and Employee Stock Purchase Scheme) Guidelines, 1999, is annexed
 to this Report.
 
 Your Company currently has four Plans in operation, namely, ESOP 1998
 Plan (Version I and II), ESOP 2000 Plan, ESOP 2003 Plan and ESOP 2004
 Plan. Since July 2006, the Company has not granted any options to its
 employees.
 
 SUBSIDIARIES
 
 As on 31 March 2008, your Company had subsidiaries in Australia,
 Belgium, Germany, India, Ireland, Mauritius, Netherlands, Peoples
 Republic of China, Singapore, the United Kingdom and the United States
 of America.
 
 Your Company has sought the approval of the Ministry of Corporate
 Affairs, New Delhi for exemption from attaching the audited accounts of
 the subsidiaries to the Annual Accounts of your Company, for the
 financial period ended 31 October 2008. Your Company, however,
 continues to publish the consolidated financial statements of the
 Group. Further, the information regarding each subsidiary with regards
 to capital, reserves, total assets, total liabilities, details of
 investment, turnover, profit before taxation, provision for taxation,
 profit after taxation and proposed dividend is given as an annexure to
 the Directors Report.
 
 Your Directors wish to inform you that the annual accounts of
 subsidiary companies are available for inspection at the registered
 office of the Company.
 
 DIRECTORS
 
 The following Directors were appointed on the Board of your Company
 after the last Annual General Meeting:
 
 (i) Mr. Anthony Glasby as Additional Director with effect from 8
 October 2008; 
 
 (ii) Mr. Andreas Mattes as Additional Director with effect from 8
 October 2008;
 
 As Additional Directors, the tenure of the aforesaid directors comes to
 an end at the forthcoming Annual General Meeting and they have been
 proposed for appointment as Directors liable to retire by rotation at
 the same meeting.
 
 Further, in accordance with the Articles of Association of the Company,
 Mr. Nawshir Mirza, Mr. Davinder Singh Brar and Ms. Vinita Bali will
 retire by rotation and are eligible for re-election.
 
 The profiles of the present Directors of your Company are provided in
 the Annual Report.
 
 The following Directors resigned during the seven month period ended 31
 October 2008:
 
 (i) Mr. Thomas Erhardt (resigned on 6 October 2008)
 
 (ii) Mr. Michael Koehler (resigned on 6 October 2008) 
 
 (iii) Mr. Jeroen Tas (resigned on 13 October 2008)
 
 Mr. Jeya Kumar, CEO, resigned on 8 December 2008. However, he continues
 as CEO and a Director on the Board of the Company, until such time that
 a successor is identified and smooth transition is ensured.
 
 Your Board wishes to place on record its appreciation for the
 invaluable services rendered by these Directors during their tenure.
 
 DIRECTORS INTEREST
 
 The interest of the Directors in the share capital of the Company as at
 31 October 2008 is provided herein. The Directors interest includes,
 where appropriate, ordinary shares held in the form of stock options,
 subject to satisfying the relevant vesting conditions. No Director was
 materially interested in any contracts or arrangements existing during
 or at the end of the financial year that was significant in relation to
 the business of the Company.  Other than Dr. Jose de la Torre, who held
 140,000 shares, no other director held any shares or stock options in
 the Company as on 31 October 2008.
 
 SIGNIFICANT SHARE HOLDINGS
 
 The following shareholders held more than 5% of the Companys issued
 share capital as at 31 October 2008:
 
 Name of the Shareholder                        Percentage Owned
 
 EDS through its wholly owned subsidiaries            60.84%
 
 (EDS Asia Pacific Holdings, EDS World Corp. 
 Far East & EDS World Corp. Netherlands)
 
 Baring India Investments Limited, PCC                 7.52%
 
 DIRECTORS RESPONSIBILITY STATEMENT
 
 Information as per Section 217(2AA) of the Companies Act, 1956 is
 annexed and forms part of the Report.
 
 AUDITORS
 
 We propose to appoint M/s S R Batliboi & Co. (Ernst & Young) as
 statutory auditors, in order to align our audit firm with that of HP. A
 resolution proposing their appointment at a remuneration to be fixed by
 the Board of Directors and billed progressively, is submitted to the
 Annual General Meeting.
 
 The Board wishes to place on record, its appreciation for the services
 of M/s BSR & Co. (KPMG).
 
 PARTICULARS OF EMPLOYEES REMUNERATION
 
 Information as per Section 217(2A) of the Companies Act, 1956 read with
 the Companies (Particulars of Employees) Rules, 1975 forms part of this
 Report. However, in terms of Section 219(1 )(b)(iv) of the Companies
 Act, 1956, the Report and Accounts are being sent to the shareholders
 excluding the aforesaid annexure. Any shareholder interested in
 obtaining a copy of the said annexure may write to the Company
 Secretary & General Counsel at the Registered Office of the Company.
 
 In terms of the Notification No.G.S.R.212(E) dated 24 March 2004 issued
 by the Department of Company Affairs, Ministry of Finance, Information
 Technology companies have been exempted from providing the particulars
 of employees including their remuneration, if they have been posted /
 working in a country outside India. The particulars of these employees
 are not provided in the annexure. Members desirous of getting these
 details may write to the Company for the information.
 
 PARTICULARS REGARDING CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND
 FOREIGN EXCHANGE EARNINGS AND OUTGO
 
 Your Companys operations involve low energy consumption. However,
 efforts to conserve energy will continue.  Particulars relating to
 technology absorption are not applicable. Information relating to
 foreign exchange earnings or outgo during the year under review is
 provided in the financial statements forming part of this Annual
 Report.
 
 FIXED DEPOSITS
 
 Your Company has not accepted any deposits from the public and as such
 no amount of principal or interest was outstanding as on the date of
 the Balance Sheet.
 
 ACKNOWLEDGMENTS
 
 Your Directors would like to place on record their appreciation of the
 contribution made by the employees at all levels, who, through their
 competence, hard work, solidarity, co-operation, support and commitment
 have enabled the Company to achieve its strong growth.
 
 Your Directors acknowledge with thanks the continued support and
 valuable co-operation extended by the business constituents, investors,
 vendors, bankers and shareholders of the Company. Your Directors wish
 to thank Hewlett-Packard Company and Electronic Data Systems
 Corporation, parent companies, for their support.  They also wish to
 place on record their appreciation for the support from the Software
 Technology Parks of India, the Department of Electronics, the
 Government of India, Governments of Karnataka, Maharashtra, Gujarat,
 Uttar Pradesh, Madhya Pradesh, Tamil Nadu, Pondicherry, Andhra Pradesh,
 Reserve Bank of India, other governmental agencies and NASSCOM.
 
                           For and on behalf of the Board of Directors
 
 Bangalore                                              MICHAEL COOMER
 11 December 2008                                             Chairman