The Directors present their Sixty Eighth Annual Report together with
 the Audited Statement of Accounts for the period ended 30th September,
 2010.
 
 1.  FINANCIAL RESULTS
 
 The summarized financial results are indicated below:-
 
                                               (Rupees in 000)
 
                                         For the           For the
 
                                       12 Months         18 Months
 
                                    Period Ended      Period Ended
 
                                      30.09.2010        30.09.2009
 
                                           (Rs.)             (Rs.)
 
 Net Sales / Income from 
 Operations                            1,394,554         3,404,475
 
 Operating Expenditure                 1,492,660         3,168,805
 
 Operating Profit /(Loss)               (98,106)           235,670
 
 Add : Other Income                       33,678            57,979
 
 Less: Interest                          127,256           182,528
 
 Profit/(Loss) Before 
 Tax and Depreciation 
 and Exceptional Items
                                       (191,684)           111,121
 
 Less: Depreciation                       43,696            83,345
 
 Profit/(Loss) Before 
 Tax and Exceptional 
 Items                                 (235,380)            27,776
 
 Exceptional Items
 
 Less: Deferred Revenue 
 Expenditure 
 (Voluntary 
 Retirement Scheme)                     (10,575)            31,722
 
 Add : Profit on sale of 
 Long term Investments 
 (Associate)                                   -           135,375
 
 Add:- Profit on sale of Business        530,247                 - 
 
 Profit Before Tax                       284,292           131,429
 
 Less : Provision for 
 Tax 
 (including provision 
 for Deferred Tax and
 
 Fringe Benefit Tax                       70,270           98,630
 
 Net Profit After Tax                    214,022           32,799
 
 Balance Brought Forward                  33,216           16,434
 
 Balance available for 
 ]appropriation                          247,238           49,233
 
 Appropriated as under:
 
 Proposed Dividend                        45,635           13,690
 
 Tax on Dividend                           7,580            2,327
 
 Transfer to General Reserve              25,000                -
 
 Balance to be Carried
 Forward                                 169,023           33,216
 
 2.  DIVIDEND
 
 The Directors of your Company are pleased to recommend for the approval
 of the shareholders a dividend of 20%, including 10% as special
 dividend (Rs.2/- per share including Re. 1/- as special dividend)
 (Previous year 6%).
 
 3.  FINANCIAL HIGHLIGHTS
 
 The period under review is for 12 months as compared to the previous
 years figures which were for 18 months. During the period under
 review, the total income was Rs. 1,394,554(000) as against Rs.
 3,404,475(000) in previous year. The Company reported Profit before
 tax of Rs. 2,84,292(000) as against Rs.131,429(000) for the previous
 year. The Profit after tax was Rs. 214,022(000) as against Rs.
 32,799(000) in the previous year.
 
 4.  SALE OF BUSINESSES
 
 Your Company has constantly faced the challenge of achieving growth in
 terms of revenue and profitability due to diverse portfolio, limited
 offerings and lack of critical mass. Despite having core competencies,
 execution of prestigious projects and references built over the years
 by Traction Electronics, Industrial Drives, and Supervisory Control and
 Data Acquisition (SCADA) consisting of Industrial Supervisory Control
 Data Acquisition System (I-SCADA) and Power Sector Supervisory Control
 and Data Acquisition System (PS - SCADA) businesses (Businesses),
 these businesses were facing major challenges in achieving sustained
 viability in the future. The Board of Directors of your Company at its
 meeting held on 29th April, 2010, approved the transfer of these
 Businesses as a going concern on a slump sale basis to Crompton
 Greaves Limited (CGL) for a total consideration not exceeding Rs.
 92.00 crores, subject to necessary statutory consents and approval by
 the Members.
 
 On 14th June, 2010, the Members approved through postal ballot, the
 sale of these Businesses to CGL by passing an ordinary resolution
 pursuant to sections 293(1 )(a) and 192A of the Companies Act, 1956,
 read with the Companies (Passing of Resolution by Postal Ballot),
 Rules, 2001 .The votes cast assenting to the Ordinary Resolution were
 1,16,19,913 shares (99.96%) of the total valid votes polled. On 28th
 July, 2010 i.e. the Closing Date, the Businesses were transferred as a
 going concern to CGL on slump sale basis for a consideration of Rs. 81
 crores. The additional Rs. 11 crores has not been received as the
 financial parameters to be met by 30* September, 2010 were not
 achieved.
 
 While your Company transferred the Traction Electronics, Industrial
 Drives and the I - SCADA businesses to CGL on 28th July 2010, the PS -
 SCADA business shall be transferred at a later date after obtaining the
 requisite clearances from relevant Government / Public Sector
 Authorities. Pending this transfer, the Company received the entire
 amount of consideration i.e. Rs. 81 crores.
 
 Following the sale of these businesses, the Company intends to focus on
 building its position in Strategic Electronics, Network Systems
 (Tatanet) and pursue further synergistic opportunities in related
 areas.
 
 5.  SUBSIDIARY COMPANY
 
 The financial statement and reports of the subsidiary company, Tatanet
 Services Limited (TNSL) for the financial year 2009-10 are attached.
 The revenue of TNSL for the year ended 31st March, 2010 was Rs.
 289,975(000) [Rs. 252,368(000) for the year ended 31s* March, 2009.
 
 6.  HUMAN RESOURCE MANAGEMENT
 
 There is consistent focus on development of Human Resources (HR). HR
 plans have been defined with appropriate measurement indicators keeping
 in mind both long term goals and short term requirements.
 Employeesvoices are captured through Open Houses, the forum through
 which employees are encouraged to voice their concerns, suggest
 innovative ideas and also seek answers from the top management on
 issues of common interest. The Company constantly reviews facilities
 and benefits to enhance overall employee well being. Employee
 Satisfaction / Engagement Surveys are carried out through external
 agency to formally assess the voice of employees. Action plans have
 been prepared and are being implemented to increase employee
 engagement.
 
 Since the Company is in the high tech and high visibility areas of
 telecommunication (Tatanet Division) and Electronic Security and
 Surveillance (Strategic Electronics Division), maintaining the talent
 pool and competence building for the core areas of strength and the
 challenge of attracting and retaining talent continues. The Company has
 initiated measures like employee referral scheme, competency mapping,
 providing growth opportunities to existing employees and strengthening
 the Performance Management System (PMS) to include assessment on Tata
 Leadership Practices, training need assessment, identification of high
 potential employees and development plan for employees. Recruitment
 cycle time has been reduced and the attrition rates have been kept at a
 manageable level. The PMS recognizes individual and segment wise
 contribution through performance linked pay, thereby motivating
 employees ownership and responsibility. RACE (Reward and Recognition
 for Achievement and Contribution towards Excellence), a comprehensive
 reward and recognition scheme, has been put in place for motivation of
 employees for excellence in performance. In Tatanet Division, UNWIND,
 a monthly informal gathering on the last Friday of each month, has been
 successfully serving as a forum to foster teamwork in an informal
 manner.
 
 The Company maintained cordial industrial relations during the period
 under review. The total manpower employed during the period was 336,
 after the transfer of the employees of the Businesses hived off to CGL.
 
 7.  INTERNAL CONTROLS AND SYSTEMS
 
 The Company has an adequate system of internal controls to ensure that
 all assets are safeguarded and accounted for and business transactions
 are authorised and recorded. An external established audit firm carries
 out internal audit. This audit is based on an Annual Audit Plan and
 includes regular reviews by the Audit Committee of Directors to ensure
 adequacy of controls and adherence to laid down procedures and systems.
 The Board of Directors also carries out Company Wide Risk Assessment
 and Management on a systematic and regular basis.
 
 8.  QUALITY SYSTEMS AND TATA BUSINESS EXCELLENCE MODEL (TBEM)
 
 The Company has focused on continuous improvement through
 internationally recognized Quality Management Systems viz. TL 9000 and
 ISO 9001 for Tatanet and ISG respectively. Tatanet has already got
 certified in ISO 20000 (Information Technology Management System) and
 ISO 27001 (Information Security Management System). This certification
 for Tatanet has been a key step towards success in its Managed Services
 revenue stream. During the period under review,Tatanet has participated
 as a Strategic Business Unit in TBEM external assessment by Tata
 Quality Management Services (TQMS). Tatanet implemented Balanced Score
 Card (BSC), Strategy Deployment Matrix (SDM), Quality Function
 Deployment (QFD), Process Management and improvement, etc. After the
 TBEM external assessment,Tatanet has scored 457 points and has been
 awarded the Serious Adoption Award in TBEM. ISG has been gearing up for
 revised ISO 9000:2008 certification from the current ISO 9000:2000
 certification by Standardization, Testing and Quality Certification
 (STQC) audit.
 
 9.  FIXED DEPOSITS
 
 The Company has neither accepted nor renewed any fixed deposits during
 the period under review. However, there were outstanding unclaimed
 deposits amounting to Rs.154,000/-as on 30th September, 2010 which
 remain outstanding as some of the deposit holders have not claimed the
 repayment despite follow up by the Company.
 
 In accordance with the provisions of Investor Education Protection Fund
 (Awareness and Protection of Investors) Rules, 2001, an amount of
 unclaimed deposits with interest aggregating to Rs. 10,579/- has been
 transferred during the financial year 2009-10 to the Investor Education
 and Protection Fund.
 
 10.  SAFETY, HEALTH AND ENVIRONMENT
 
 The Company accords high priority to health, safety, and environment.
 The operations of the Company are not of a hazardous nature. However,
 the Company emphasizes on maintaining a healthy and safe environment in
 and around its facilities as well as contract sites where ongoing
 projects are under execution. Safety Awareness is inculcated through
 regular Safety Awareness Programs, basic fire safety training, mock
 drills, regular Safety Committee meetings and capturing
 employeesvoices through safety observation and near miss reporting.
 The employees working at project sites are given requisite training for
 ensuring safety during work. Periodic Safety Audit is carried out and
 action taken to eliminate unsafe conditions.
 
 There has been no incidence of any accidents reported in the past
 several years. The Company also has a disaster management system to
 take care of exigencies.
 
 11.  DISCLOSURE OF PARTICULARS
 
 Particulars required by the Companies (Disclosure of Particulars in the
 Report of Board of Directors) Rules, 1988 are given in the prescribed
 format as Annexure A to the Directors Report.
 
 Particulars of Employees: Information in accordance with Section
 217(2A) of the Companies Act, 1956 (the Act) read with the Companies
 (Particulars of Employees) Rules, 1975, as amended, regarding employees
 is given in Annexure B to the Directors Report. However, having regard
 to the provisions of section 219(1) (b) (IV) of the Act, the Annual
 Report is being sent to all the Members excluding the aforesaid
 information. Any Member interested in obtaining such particulars may
 write to the Company Secretary at the Registered Office of the Company.
 
 12.  DIRECTORS
 
 Mr. Z. J. Engineer retired as an Executive Director of the Company on
 29h July, 2010. The Board expresses its sincere gratitude for the
 guidance and contribution of Mr. Engineer during his long and fruitful
 association with the Company.
 
 In accordance with the requirements of the Companies Act, 1956 and
 Articles of Association of the Company, Mr. B. B. Dubash, Mr. S.
 Ramakrishnan and Mr. P. K. Ghose retire by rotation at the ensuing
 Annual General Meeting and are eligible for re-appointment.
 
 13.  AUDITORS
 
 M/s. Deloitte Haskins & Sells, Chartered Accountants, who are the
 Statutory Auditors of the Company, hold office until the conclusion of
 the ensuing Annual General Meeting and are eligible for re-appointment.
 
 14.  CORPORATE GOVERNANCE
 
 To comply with the conditions of Corporate Governance, pursuant to
 Clause 49 of the Listing Agreement with the Stock Exchanges, Management
 Discussion and Analysis Statement, Report on Corporate Governance and
 Auditors Certificate, are included in the Annual Report.
 
 15.  DIRECTORS RESPONSIBILITY STATEMENT
 
 Pursuant to Section 217(2AA) of the Companies Act, 1956, the Directors,
 based on the representations received from the Operating Management,
 confirm that:
 
 (i) in the preparation of the annual accounts, the applicable
 accounting standards have been followed and that there are no material
 departures therefrom;
 
 (ii) they have, in the selection of the accounting policies, consulted
 the Statutory Auditors and have 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;
 
 (iii) they have taken proper and sufficient care to the best of their
 knowledge and information, 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
 
 (iv) they have prepared the annual accounts on a going concern basis.
 
 16.  ACKNOWLEDGEMENTS
 
 Your Directors place on record their appreciation for the support and
 Co-operation received from customers, vendors, investors, business
 associates, bankers, regulatory and governmental authorities. The
 Directors acknowledge the continued support and guidance from the Tata
 Group. The Directors appreciate the contribution made by employees at
 all levels.
 
                                   On Behalf of the Board of Directors
 
                                                           P. R. Menon 
 
 Mumbai, 22nd November, 2010.                                 Chairman