As we get into the new fiscal, let me share with you some of the
 challenges as well as the achievements during the year gone by. I would
 also like to broadly outline how we shaped as an organization and how
 we have now defined our strategy to transform Nucleus into a next
 generation corporation.
 
 The emerging IT industry
 
 The software industry is currently undergoing a sea change across the
 entire spectrum, from the structure of its business models to the
 delivery of products and services to the customers. As the industry
 recovers from the downturn of 2008-2009, many companies are now
 focusing on how best to take advantage of the plethora of changes
 brought about by innovation and technology advancements.
 
 The Information Technology industry contributes to the overall
 productivity and growth of an economy because of the high levels of
 competitiveness and innovation it brings to almost the entire gamut of
 manufacturing and services, and the enabling role it plays in changing
 the way all businesses are done every day. The industry faces mutually
 reinforcing forces; for example, cloud computing and mobile computing
 are reshaping software provider strategies in several areas; the design
 and deployment of software, the delivery channels for software, and the
 economics of software licensing. This nascent trend is already
 reshaping software provider and customer strategies away from the
 traditional packaged/on-premise software model to a flexible, on-demand
 services model across a range of platforms: mobile, desktop, data
 centre, and cloud. The industry has a strong track record of
 successfully adapting to change, and it will surely benefit and draw
 new strengths from these changes.
 
 Developing and commercializing software products has traditionally had
 significant challenges like investments in product development,
 branding, and marketing. With growth strategies led by innovation and
 intellectual property becoming more main stream, we believe that the
 Indian software product industry is now well placed for the next phase
 of growth. For Nucleus, value creation is driven by customer
 relationships and the ability to develop products that can meet their
 evolving needs.
 
 An year of challenges, and of investments for Nucleus
 
 The year gone by has been an extremely challenging one for your Company
 with a falling top line. This, along with significant investment in
 people, products and marketing, led to a major decline in
 profitability. Investing in new markets for growth meant an increase in
 marketing expenditure. In addition, we continued to face intense
 pressure on employee compensation on one hand and high attrition rate
 on the other. The Board took some major decisions to reorganize the
 Companys top management team, necessary to take a major leap forward.
 
 Looking back with satisfaction
 
 Our investments in marketing have started yielding results. During the
 preceding year, despite global competition, we booked record orders.
 Nucleus was recognized as a Global Pursuer in a survey of vendors of
 globally deployed banking platforms by Forrester Research Inc., in
 recognition of our global banking platform deals in 2010. Your
 Companys flagship product FinnOne™ was recognized for the third
 consecutive year in 2010 as the number one bestselling Retail Lending
 Software by IBS Publishing.
 
 Our products FinnOne™and Cash@Will™ have been recognized worldwide with
 our products serving numerous countries across the globe. More
 importantly, we have made life simpler and better for the common man,
 the ultimate beneficial owner, across many countries by enabling
 financial institutions to process and manage loans.
 
 We have gone through difficult times primarily on account of the global
 crisis which created a tight credit squeeze and liquidity, leading to
 most banks and financial institutions postponing their decisions on the
 lending systems. 2010 was the beginning of revival and with the orders
 that we have now won, we are preparing to move into a new direction.
 
 Looking ahead
 
 We expect our concentrated efforts and enhanced market share in
 products to translate into better realizations. We are implementing a
 new strategy for increasing visibility in the European markets with
 strategic tie-ups. We believe that major growth would be led by larger
 engagements and value offerings. We are also planning to associate with
 some large companies especially in Europe to get a better access to the
 developed economies as also a deeper penetration in our existing
 markets. Your Company has also now decided to look at inorganic growth
 seriously.
 
 As we enter the new year, we do so with the satisfaction of knowing
 that through personal, professional and organizational determination,
 we have overcome several elements of challenges. We are also better
 geared to take on new challenges that will keep appearing. To
 accomplish this objective, your Company will continue to pursue
 innovation through new product developments, investment in growth
 opportunities and evaluate new markets and geographies for expansion.
 
 On another front, in recognition of transparency, compliance with
 accounting and secretarial standards and investor-friendly disclosures,
 I am pleased to inform you that your Company won the Gold Shield for
 the third year in a row for excellence in financial reporting from the
 Institute of Chartered Accountants of India.
 
 Acknowledgments
 
 I wish to express my sincere thanks to the various officials of the
 State and Central Government, banks and financial institutions for
 their on-going support and assistance to your Company.
 
 I would also like to thank all our dealers, customers and vendors who
 have contributed immensely to building our strong foundation and who we
 are sure would be with us as we drive into the future.
 
 But above all, our people are our core strength. Their ability to
 navigate through highly challenging situations is the DNA of Nucleus.
 For our people, the consistent hallmarks remain: respectful and
 conscientious care of customers, keen sense of their evolving needs and
 employing the best resources to provide analytical, flexible and
 tailor-made solutions.
 
 I would also like to thank my fellow Board members, business associates
 and shareholders who have always supported the Company whole-heartedly.
 
 Janki Ballabh
 
 Chairman
 
 Date: May 1, 2011