We have pleasure in presenting to you the Nineteenth Annual Report of
 your Company for the financial year ended 31 October 2010.
 
 CONSOLIDATED FINANCIAL PERFORMANCE
 
 (Rs. million)
 
 Particulars                           Year Ended     Year Ended
                                  31 October 2010     31 October 2009
 
 Revenues                               50,365          42,639
 
 Cost of Revenues                       35,007          28,793
 
 Gross Profit                           15,358          13,846
 
 Operating Profit                       11,011           9,252
 
 Profit Before Taxation                 12,099           9,728
 
 Net Profit                             10,908           9,087
 
 Provision for Proposed Dividend           840             733
 
 Tax on Dividend                           140             125
 
 Transfer to General Reserve               997             837
 
 Transfer to Capital Redemption Reserve      5              -
 
 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.
 
 DIVIDEND
 
 Your Directors are pleased to recommend a final dividend of Rs.4.00 per
 equity share of Rs.10 each for the year ended 31 October 2010, subject
 to your approval at the ensuing Annual General Meeting.
 
 OUTLOOK
 
 The year 2009 - 2010 reflected a comeback for the global economy in
 general and Indian economy in particular.  The western economies
 stowed-off a serious collapse but there continues to be an uncertainity
 about the future. This uncertainity results in business deferring
 investment decisions.
 
 While emerging from the challenging environment, your Company has
 through relentless execution and sustained performance, delivered
 strong financial results with record EPS and EPS growth - the highest
 in the history of your Company. Your Companys EPS on a consolidated
 basis, for the year ended 31 October 2010 stood at Rs.52.00 as against
 Rs.43.45 in FY 2009. Your Company reported a stellar performance by
 crossing the USD One Billion Revenue Mark. These results are a
 reflection of your Companys focus on execution.
 
 Looking ahead at the next stage of growth, your Company has challenged
 the current model of operation. The new structure allows effectively
 growing the direct business as well as to further the partnered
 business with Hewlett Packard; decentralize and move closer to the
 Customer; increase overall organizational effectiveness; and incubate
 new business ideas and innovate.
 
 Building long term and deep relationship with our customers and
 employees remains an on-going focus. Your Companys partnership with
 Hewlett Packard has played an important role in creating larger
 opportunities for growth and in success.
 
 Your Companys efforts to maintain operational efficiencies and grow
 business through strategic and geographic expansion will continue. With
 proactive action to transform for the next phase of growth, your
 Company will strive to build an organization that is deeply aligned
 with customers and empowers employees.
 
 SHARE CAPITAL
 
 The Issued Share Capital of the Company as on 31 October 2010 stood at
 Rs.2,099 million (including Rs.1.48 million held by the BFL Employees
 Equity Reward Trust) and Reserves and Surplus of the Group stood at
 Rs.30,887 million. There has been an increase in the capital on account
 of allotments during the year consequent to exercise of stock options
 under stock option plans of the Company and release of a few bonus
 shares, earlier kept under abeyance.
 
 CORPORATE GOVERNANCE
 
 A note on corporate governance and the auditors certificate on
 corporate governance are annexed to this Report.
 
 OTHER DEVELOPMENTS
 
 Mergers
 
 Eldorado Computing Inc, USA
 
 The Company had in March 2005, acquired Eldorado Computing Inc., a US
 based healthcare benefits management solutions company to strengthen
 footprint in US and enter in the healthcare insurance and payment
 market. Considering the operational synergy and administrative
 convenience, the Board had during the year approved merger of Eldorado
 Computing Inc. with MphasiS Corporation, USA. Accordingly, the said
 entity is merged with MphasiS Corporation, USA effective 1 March 2010.
 
 MphasiS FinSolutions Private Limited
 
 Your Company had during 2008-2009, to further establish its presence in
 insurance solutions, acquired AIG Systems Solutions Private Limited
 (since name changed to MphasiS FinSolutions Private Limited), a
 subsidiary of American International Group Inc, USA. Further to this,
 considering the operational synergies, the Board approved amalgamation
 of MphasiS FinSolutions Private Limited with the Company. Pursuant to a
 Scheme of Merger approved by the High Courts of Karnataka and Madras,
 dated 5 July 2010 and 17 September 2010, respectively, the merger of
 MphasiS FinSolutions Private Limited was consummated effective 1
 November 2009 and the accounting to this effect has been carried out as
 per the Court Orders.
 
 Acquisitions
 
 Fortify Infrastructure Inc, USA
 
 Remote Infrastructure Management (RIM) is one of the fastest growing
 segments in the Infrastructure Services Market. In order to give
 impetus to the direct ITO business with a focus on the SME segments,
 the Company acquired Fortify Infrastructure along with Inc. its wholly
 owned subsidiaries, Fortify North America Inc. and Wide Area Management
 Services Inc.  Fortify is a USD 20 million company headquartered in
 Santa Clara, California, USA with over 20 customers for Remote =
 Infrastructure Management (RIM) based services in the mid market
 segment. The acquisition is expected to augment the capabilities of
 your Company in Infrastructure Services and enable the Company to move
 towards an offshore development model and further provide synergetic
 operational integration. Further to the acquisition, Fortify
 Infrastructure Services Inc. has been renamed as MphasiS
 Infrastructure Inc.
 
 Setting up of off-shore delivery centres
 
 Considering the need to move to low cost delivery centres and counter
 the margin pressures, your Company evaluates its locational strategy
 and enhances its off shore delivery centres. Accordingly, the Company
 has set up an off shore global delivery centre in Colombo, Sri Lanka
 and a Near Shore Delivery Center in Poland.
 
 Your Company also opened its near shore integrated development and
 delivery centre in Australia at the University of Wollongong. The
 strategic location of the centre has enabled your Company to work
 closely with the University of Wollongong on a range of initiatives
 including training, recruitment and research and development in the
 Information and Communications Technology (ICT) space.
 
 The setting up of these new global delivery centres spells opportunity
 and is an important milestone in your Companys future journey.
 
 EMPLOYEES
 
 Your company holds its employees to the highest standards of ethics and
 compliance. To this effect, we have instituted our Winning Culture-the
 MphasiS Values System that governs our actions and decisions in all
 aspects of work.  We are dedicated to driving a value based approach to
 work and building an organization that values learning and a talent
 hierarchy.
 
 Your Company, to nurture and retain its top talent and high potential
 employees has set in place programs such as the Executive Talent Pool
 and the Leadership Talent Pool at different levels of the organization.
 These programs aim to  train, coach, and groom the next line of
 leadership to take on the challenges that come from our expanding and
 ambitious business plans. We also strongly believe that empowerment of
 those closest to the customer will deliver good results. Hence, we have
 introduced the Front Line Manager (FLM) program, giving more authority,
 responsibility and visibility to our front line managers in all units.
 Learning is a key component to ensuring that our talent is ready to
 take advantage of the opportunities that will come our way. Your
 Company has invested extensively in Reflections the 360 degree
 feedback and self development program in addition to expanding the
 courses offered on our Learning Portal, your Company works diligently
 with all business units to identify specific programs that will make
 them more effective in their operations.
 
 Your Company believes that good work should be rewarded and celebrated.
 Rewards and recognition are one of the key drivers to achieve a
 motivated and dedicated work force. We have institutionalized the
 rewards and recognition programs at MphasiS to cater to the various
 roles and responsibilities our employees perform. This is capped with
 an Annual Awards function, where we celebrate the Heroes of MphasiS.
 
 Your Company also believes in giving to the communities it operates in
 and to this effect, we have setup the Employee Contribution Portal
 where employees can donate funds to authorized NGOs directly from their
 salaries, making donations transparent and easy.
 
 The total employee strength grew from 33,524 employees on 31 October
 2009 to 37,268 employees on 31 October 2010.
 
 EMPLOYEES STOCK OPTION PLAN AND RESTRICTED STOCK UNITS PLANS
 
 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 stock option 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. The Company has a Restricted Stock Units
 2010 plan, in respect of which no RSUs have been granted to the
 employees. The said plan is administered through MphasiS Employees
 Benefit Trust.
 
 The Board of Directors of the Company, in its meeting held on 22
 November 2010, as a recognition of successfully crossing the One
 Billion Dollar Revenue Mark (subject to the approval of the
 shareholders and applicable laws) approved a Restricted Stock Units
 2011 Plan. The proposed plan, approving each of the permanent employees
 of the Company and its subsidiaries, as at 1 November 2010, being
 granted 10 Restricted Stock Units entitling them to 10 equity shares of
 Rs.10 each of the Company at the end of the vesting period, which is
 one year from the date of grant. The shares are offered at a nil
 exercise price at the end of the vesting period. The shares are
 proposed to be acquired from the market through an employee welfare
 trust. The necessary resolution for the approval will be considered at
 the ensuing Annual General Meeting.
 
 SUBSIDIARIES
 
 As on 31 October 2010, your Company had subsidiaries in Australia,
 Belgium, Germany, India, Ireland, Mauritius, The Netherlands, The
 Peoples Republic of China, Poland, Singapore, Sri Lanka, the United
 Kingdom and the United States of America.
 
 Your Company has received the approval from the Ministry of Corporate
 Affairs, New Delhi vide its letter No. 47/711/2010-CL-lll dated 19
 November 2010 granting an exemption under Section 212(8) of the
 Companies Act, 1956 from attaching the audited accounts of the
 subsidiaries to the Annual Accounts of your Company, for the financial
 year ended 31 October 2010. 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.
 
 The Annual Accounts of subsidiary companies are available for
 inspection at the registered office of the Company and the details of
 the Annual Accounts would be hosted on the website of the Company.
 
 DIRECTORS
 
 The following Directors were appointed on the Board of your Company as
 additional directors effective 15 July 2010:
 
 (i) Mr. Francesco Serafini
 
 (ii) Mr. Balu Doraisamy
 
 (iii) Mr. Juergen Reiners
 
 (iv) Mr. Gerard Brassard
 
 Pursuant to the provisions of Section 260 of the Companies Act, 1956,
 the additional directors hold office until the date of the ensuing
 Annual General Meeting. However, the Company has received a notice
 under Section 257 of the Companies Act, 1956, from a member along with
 the requisite deposit, proposing the candidatures of the additional
 directors to the office of directorship. Accordingly, necessary
 resolutions in relation to the appointment of directors are placed
 before the members at the ensuing Annual General Meeting. The Board of
 Directors recommends the appointment of the directors.
 
 Dr. Friedrich Froeschl was elected as the Chairman of the Board of
 Directors and Mr. Francesco Serafini was elected as the Vice Chairman
 of the Board of Directors, vide resolution passed by the Board of
 Directors dated 15 July 2010.
 
 The following Directors resigned during the financial year effective 15
 July 2010:
 
 (i) Mr. Andreas W Mattes
 
 (ii) Dr. Jose De La Torre
 
 (iii) Ms. Vinita Bali
 
 (iv) Mr. Craig Wilson
 
 (v) Mr. K M Suresh
 
 Your Board wishes to place on record its appreciation for the
 invaluable services rendered by these Directors during their tenure.
 
 Further, in accordance with the Articles of Association of the Company,
 Mr. Nawshir Mirza and Mr. Davinder Singh Brar will retire by rotation
 and are eligible for re-election. The Board of Directors recommends the
 re-appointment of the directors.
 
 The profiles of the present Directors of your Company are provided in
 the Annual Report.
 
 DIRECTORS INTEREST
 
 The interest of the Directors in the share capital of the Company as at
 31 October 2010 is provided herein. 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 Mr. Davinder Singh Brar, who held
 918 shares, no other director held any shares or stock option in the
 Company as on 31 October 2010.
 
 SIGNIFICANT SHAREHOLDINGS
 
 The following shareholders held more than 5% of the Companys issued
 share capital as at 31 October 2010:
 
 Name of the Shareholder Percentage Owned
 
 Hewlett Packard Corporation through its wholly owned subsidiaries,
 60.55%
 
 (EDS Asia Pacific Holdings, EDS World Corporation (Far East) and EDS
 World Corporation (Netherlands))
 
 Aberdeen Asset Managers Limited A/c Aberdeen International India
 Opportunities Fund 5.26%
 
 DIRECTORS RESPONSIBILITY STATEMENT
 
 Information as per Section 217(2AA) of the Companies Act, 1956 is
 annexed and forms part of the Report.
 
 AUDITORS
 
 M/s. S.R. Batliboi & Co., Chartered Accountants (Registration No.
 301003E), have expressed their willingness to continue in office and a
 resolution proposing their re-appointment at a remuneration to be fixed
 by the Board of Directors and billed progressively, is submitted for
 approval of the shareholders at the ensuing Annual General Meeting.
 
 As regards the observation made by the Auditors, your Directors would
 like to clarify that the delays in remittance of service tax and value
 added tax dues were due to refinement in the Companys interpretation
 of applicable tax laws. Your Company has taken adequate steps to
 strengthen relevant processes.
 
 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(l)(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 and General Counsel and Head Global Ethics and Compliance 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. 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.
 
 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 Corporation for their continued 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, Chattisgarh, Tamil Nadu,
 Pondicherry, Andhra Pradesh, Reserve Bank of India, other governmental
 agencies and NASSCOM.
 
                            For and on behalf of the Board of Directors
 
 Bangalore                                           FRIEDRICH FROESCHL
 
 5 January 2011                                                Chairman