We have pleasure in presenting your Companys Twenty Second Annual
 Report, together with the Audited Statement of Accounts, for the year
 ended March 31, 2011.
 
 1.  FINANCIAL RESULTS – Consolidated
 
                                                          (Rs. in crore)
 
 For the Year Ended March 31,   2011  % of revenue   2010  % of revenue
 
 revenue from operations        270.48     100.00    291.78      100.00
 
 Software Development Expenses  183.40      67.81    196.17       67.23
 
 Gross Profit                    87.08      32.19     95.61       32.77
 
 Selling and Marketing Expenses  30.21      11.17     22.66        7.77
 
 General and Administration 
 Expenses                        26.39       9.76     18.87        6.47
 
 operating Profit (EBitDA)       30.48      11.27     54.08       18.53
 
 Depreciation                     9.28       3.43     11.33        3.88
 
 Operating Profit After 
 Interest and Depreciation       21.20       7.84     42.75       14.65
 
 Other Income                     9.40       3.48      9.62        3.30
 
 Foreign Exchange Gain/ (Loss)   (0.74)     (0.27)    (8.03)      (2.75)
 
 Profit Before tax               29.86      11.04     44.34       15.20
 
 Withholding Taxes                2.69       0.99      0.43        0.15 
 
 Provision for Taxation
 
 - Current (Net of MAT credit 
 entitlement)                     2.96       1.09      6.84        2.34
 
 - Other taxes                   (2.13)     (0.79)    (1.33)      (0.46)
 
 Profit After tax                26.34       9.74     38.40       13.16 
 
 Earning Per share (in rs. per
 Equity share of face value 
 rs.10 each)
 
 - Basic                          8.13                11.86
 
 - Diluted                        8.13                11.86
 
 FiNANCiAL rEsULts – Nucleus software Exports Limited       (Rs. in crore)
 
 For the Year Ended March 31,     2011  % of revenue   2010  % of revenue
 
 revenue from operations        199.55     100.00    194.15      100.00
 
 Software Development Expenses  133.16      66.73    125.48       64.63
 
 Gross Profit                    66.39      33.27     68.67       35.37
 
 Selling and Marketing Expenses  18.60       9.32     14.12        7.27
 
 General and Administration 
 Expenses                        22.10      11.07     14.95        7.70
 
 operating Profit (EBitDA)       25.69      12.87     39.60       20.40
 
 Depreciation                     8.10       4.06      9.80        5.05
 
 Operating Profit After Interest 
 and Depreciation                17.59       8.81     29.80       15.35
 
 Other Income                    29.61      14.84     15.63        8.05
 
 Foreign Exchange Gain/ (Loss)    0.99       0.50     (5.71)      (2.94)
 
 Profit Before tax              48.19      24.15     39.72       20.46
 
 Withholding Taxes                1.33       0.67      0.43        0.22 
 
 Provision for Taxation
 
 - Current (Net of MAT credit 
 entitlement)                    3.10        1.55      6.83        3.52
 
 - Other taxes                  (2.00)      (1.00)    (1.28)      (0.66)
 
 Profit After tax              45.76       22.93     33.74       17.38
 
 Dividend                        8.10                  8.09
 
 Tax on Dividend                (0.01)                 0.15
 
 Transferred to General Reserve  4.58                  3.37
 
 Profit Retained in Profit & 
 Loss Account                   33.09                 22.13
 
 Earning Per share (in rs. per 
 Equity share of face value 
 rs.10 each)
 
 - Basic                        14.13                 10.42
 
 - Diluted                      14.12                 10.42
 
 2.  RESULTS OF OPERATIONs
 
 The financial statements of the Company are prepared in compliance with
 the Companies Act, 1956 and Generally Accepted Accounting Principles in
 India (Indian GAAP). The Company has six subsidiary companies, all of
 which are wholly- owned. The Company discloses stand-alone audited
 financial results on a quarterly and annual basis, consolidated
 un-audited financial results on a quarterly basis and consolidated
 audited financial results on an annual basis.
 
 (a) Consolidated operations
 
 Your Companys revenue from operations for the year is Rs.270.48 crore
 against Rs.291.78 crore in the previous year, a fall of 7%. Overall
 operational expenses at Rs.240.00 crore for the year remained under
 control, with only a marginal increase of 1% over Rs.237.70 crore in
 the previous year.  Lower revenue coupled with significant investments
 in people, products and sales & marketing and under-utilization of
 infrastructure resulted in a decline in the operating margins.  The
 Operating Profit (EBITDA) achieved is Rs.30.48 crore, 11% of revenue,
 against Rs.54.08 crore, 19% of revenue in the previous year.
 
 Profit After Tax for the year at Rs.26.34 crore, 10% of revenue, lower
 by 31% over Rs.38.40 crore, 13% of revenue in the previous year.
 
 (b) standalone operations
 
 The total revenue from operations of your Company for the year is
 Rs.199.55 crore against Rs.194.15 crore in the previous year, an
 increase of 3%. Total operational expenses for the year are at
 Rs.173.86 crore against Rs.154.55 crore in the previous year, an
 increase of 12%. Operating Profit (EBITDA) is at Rs.25.69 crore, 13% of
 revenue, against Rs.39.60 crore, 20% of revenue in the previous year.
 
 Profit After Tax for the year at Rs.45.76 crore, 23% of revenue, higher
 by 36% over Rs.33.74 crore, 17% of revenue, for the previous year. This
 is after considering dividend receipt of Rs.21.00 crore from a
 Companys subsidiary (Rs.7.00 crore in the previous year).
 
 3.  DiViDEND
 
 Your Directors are pleased to recommend a dividend of 25% (Rs.2.50 per
 equity share of Rs.10 each), subject to the approval by the
 Shareholders at the forthcoming Annual General Meeting.  The total
 dividend payout will be Rs.8.10 crore, being 31% of consolidated
 profits for the year against a payout of Rs.8.09 crore, 21% of
 consolidated profits in the previous year.
 
 The Register of Members and Share Transfer Register shall remain closed
 during the period 1st July to 8th July, 2011 (both days inclusive) for
 the purpose of the Annual General Meeting and for payment of dividend.
 The dividend, if approved at the Annual General Meeting, will be
 payable to Members whose names appear on the Register of Members of the
 Company on July 1, 2011, being the first day of Book-Closure and to
 those whose names appear as beneficial owner in the records of National
 Securities Depositories Ltd. and Central Depository Services (India)
 Ltd. on close of business as on June 30, 2011.
 
 Pursuant to the provisions of Section 205A (5) of the Companies Act,
 1956, the Company transferred the following unpaid / unclaimed
 dividends relating to the following three years to the
 
 Investor Education and Protection Fund (IEPF) established by the
 Central Government.
 
 Dividend for the Year                             Amount of
                                                   Unpaid Dividend
 
 2000-2001 – Interim Dividend                      Rs.28,762
 
 2000-2001 – Final Dividend                        Rs.74,339
 
 2001-2002 – 1st Interim Dividend                  Rs.58,921
 
 2001-2002 – 2nd Interim Dividend                  Rs.50,979
 
 2002-2003 – Final Dividend                        Rs.50,142
 
 4.  sHARE CAPITAL
 
 The paid-up share capital as on March 31, 2011 is 32,382,524 equity
 shares of Rs.10 each against 32,370,024 equity shares of Rs.10 each as
 on March 31, 2010. The increase in the paid-up share capital of the
 Company during the year has been due to allotment of 12,500 shares on
 exercise of Employee Stock Options as per ESOP 2002.
 
 5.  REVIEW OF BUsINESS & OUTLOOK
 
 We are a Software Product Company operating in the Banking and
 Financial Services domain. Our primary customers are banks and
 non-banking financial institutions and our products are largely in the
 origination and management of Retail Loans and the management of
 corporate liquidity by banks.
 
 Putting behind fiscal 2009-10 as a year of downturn, when the annual
 growth plunged to 6 percent after cumulative growth of 25-30 per cent
 during the previous four years, the Information Technology industry
 returned to a double-digit growth in the fiscal 2010-11, thanks to
 renewed investments by global firms across verticals in IT
 infrastructure, software and back office services.  Growth returned to
 the Industry because of transformational needs of global customers and
 changing business models favoring cost effective solutions. Our
 customers, banks and non-banking financial institutions, also were in
 the recovery mode after the economic depression, and wanted to increase
 efficiency by using technologically superior products to reduce cost,
 earn better margins and in turn offer their customers value services at
 lower costs. The Company received orders from all over the world,
 including North Africa, Mediterranean region, America, Europe,
 Australia and the Middle East. With these orders, your Company also
 added 32 new customers during the year.
 
 However, while the Product Business of the Company reflected this
 change in global economic conditions with growth in revenue of 11%, the
 Projects and Services business of the Company declined over the
 previous year due to consolidation activity by some major customers,
 leading to an overall decline of 7% in the revenue of the Company. This
 reduction, in turn, led to lower margins and reduced profits on a
 consolidated basis.
 
 The impact of the global meltdown in 2008 was felt severely by your
 company, resulting in lower revenues and profits on a consolidated
 basis in 2009-10 after a peak previous year. Significant challenges on
 account of vendor consolidation and budgetary constraints of major
 services customers have since continued resulting in further lower
 revenues in the past year. During the current year, your Company is
 confident of at least reversing the downward trend, and is gearing
 towards a higher revenue and profits in the ensuing years.
 
 The future growth of your Company will lie on how well the Company
 addresses the challenges such as attracting skilled manpower,
 controlling high attrition and provide for increased compensation on
 one hand and meeting the changing needs of its clients on the other.
 With growth strategies led by innovation and intellectual property
 becoming more mainstream, we believe that the Company is well placed
 for growth. Greater focus in the coming years will be on processes to
 improve productivity.
 
 As per the Information Technology Annual Report 2010-1 1, Banking,
 Financial Services & Insurance (BFSI) remains the largest vertical
 market accounting for over 40 per cent of the Indian IT- ITeS exports
 in year 2010-11. With market posing no significant constraints, we
 believe that your Company is now poised to move into the next orbit ,
 with its focus on delivering value to all its stakeholders.
 
 6.  NOTABLE ACCOLADEs RECEIVED DURING THE YEAR
 
 - Forrester recognized Nucleus as a Global Pursuer and stated it
 regained traction in 2010. Based on the number of deals and regions
 covered, Nucleus was ranked among top Banking Platform providers.
 Source: Global Banking Platform Deals 2010, Forrester Research, Inc.,
 31 March 2011.
 
 - FinnOneTM ranked for the third consecutive year as the Worlds No 1
 Selling Lending Software Product (for year 2010) by IBS Publishing, UK
 | 2011 & ranked third in global sales across all banking products.
 
 - Annual Report and Accounts of the Company for the year ended March
 31, 2010 adjudged as the BEST under the Category VIII - Service Sector
 (Other Than Banking & Insurance) (Turnover Less Than Rs.500 Crore) of
 the ICAI Awards for Excellence in Financial Reporting. A GOLD SHIELD
 awarded to the Company, for the third consecutive year.
 
 - South Asian Federation of Accountants (SAFA) adjudged Annual Report
 of the Company as the recipient of the joint first runners up position
 for the Best Presented Accounts Award for the year 2009 under the
 Communication and Information Technology Sector Category.
 
 - HDFC Bank, a Nucleus Software customer, won the prestigious Celent
 2010 Model Bank Award for its loan origination system, FinnOneTM.
 
 7.  SUBSIDIARIES
 
 The following table lists the subsidiaries of your Company as on March
 3 1, 201 1 . All these are wholly owned subsidiaries including one
 step-down subsidiary in Singapore.
 
 Name of subsidiary                          Location
 
 - Nucleus Software Solutions Pte. Ltd.      Singapore
 
 - Nucleus Software Inc.                     USA
 
 - Nucleus Software Japan Kabushiki Kaisha   Japan
 
 - VirStra/-Technology Services Ltd.         India
 
 - Nucleus Software Netherlands B.V          Netherlands
 
 - Nucleus Software Ltd.                     India
 
 step Down subsidiary of Nucleus software 
 Exports Ltd.
 
 - VirStra /-Technology (Singapore) Pte. Ltd. Singapore
 
 a) Nucleus software solutions Pte. Ltd.
 
 Nucleus Software Solutions Pte. Ltd. (NSS) is based in Singapore. It
 was incorporated in the year 1994, to expand business in South East
 Asia. Currently, it is the central entity for Asia- Pacific excluding
 Japan with full responsibility for business development, sale and
 delivery to customers in the region.
 
 b) Nucleus software inc.
 
 Nucleus Software Inc. (NSI) is based in New Jersey, USA. It was
 incorporated in the year 1997 for ensuring a business presence and
 further growth in the Americas. NSI operates as a business development
 and sales hub for the region.
 
 c) Nucleus software Japan Kabushiki Kaisha
 
 Nucleus Software Japan Kabushiki Kaisha (NSJKK) is based in Tokyo,
 Japan. It was incorporated in the year 2001 to expand business in the
 country. NSJKK operates as a business development and sales hub for
 Japan, which is the single largest market for the Company.
 
 d) Virstra i-technology services Ltd.
 
 VirStra i-Technology Services Ltd. is based in Pune, India. It was
 incorporated in the year 2004 as a development centre.  This subsidiary
 set up its own subsidiary VirStra i-Technology (Singapore) Pte. Ltd. in
 Singapore in the year 2004 to expand its service operations in
 Singapore.
 
 e) Nucleus software Netherlands B.V.
 
 Nucleus Software Netherlands B.V. (NSBV) is based in Amsterdam, The
 Netherlands. It was incorporated in the year 2006 for a business
 presence and growth of the European market. NSBV is a business
 development and sales hub for Nucleus in Europe. During the year, your
 Company made an additional investment of €100,000 in this subsidiary by
 subscribing to its equity share capital.
 
 f) Nucleus software Ltd.
 
 Nucleus Software Ltd. (NSL) is based in New Delhi, India.  It was
 incorporated in the year 2008 for facilitating business through
 operations in a Special Economic Zone. NSL acquired 17.41 acres of land
 in Mahindra World Special Economic Zone, Jaipur and, in the first
 phase, is co-developing a 250- seater facility, which will be ready by
 June 2011, for software exports.
 
 As per General Circular No: 2 /2011 issued by the Ministry of Corporate
 Affairs, Government of India, a general exemption has been provided to
 Companies for attaching the Directors Report, Balance Sheet and Profit
 and Loss Account of all subsidiaries to its balance sheet, subject to
 fulfilling certain conditions as stipulated in the circular. Your
 Company complies with those conditions and, therefore, has been
 generally exempted by the Central Government from attaching detailed
 accounts of the subsidiaries, and accordingly, the financial statements
 of the subsidiaries are not attached in the Annual Report. For
 providing information to Shareholders, the annual accounts of these
 subsidiary Companies along with related information are available for
 inspection during business hours at the Companys registered office and
 at the concerned subsidiarys offices.
 
 8.  Infrastructure
 
 Your Company has offices at several locations across the globe.  The
 office space and seating capacity of these offices as on March 31, 2011
 is detailed below:
 
 office Location                Area in          seating
                                sq. ft.          Capacity -
                                                 No. of Persons
 
 NOIDA
 
 Unit - I                       87,423              705
 
 Unit - II                      90,265              778
 
 Multi Facility Block           30,434              194
 
 total                         208,122            1,677
 
 Chennai                        13,524              209
 
 Singapore                       6,101               95
 
 New Delhi                      10,000              140
 
 Pune                            9,573              120
 
 Mumbai                          3,250               31
 
 Dubai                           1,290               17
 
 Tokyo, Japan                      728               10
 
 Amsterdam, Netherlands            561                7
 
 New Jersey, USA                   410                4
 
 total                         253,559            2,310
 
 NOIDA and Delhi premises are owned by the Company. All other office
 premises are under lease.
 
 9.  SPECIAL ECONOMIC ZONE (SEZ) PROJECT
 
 Nucleus Software Ltd. (NSL), a wholly-owned subsidiary of the Company,
 had acquired 17.41 acres of land in a SEZ in Jaipur at a private sector
 multi-product Special Economic Zone, Mahindra World City in the year
 2008-09. SEZs are eligible for a host of fiscal benefits, incentives
 and concessions both from the State and Union Government.
 
 During the year, NSL acquired the status of Co-Developer for the above
 land along with Mahindra World City, Jaipur Ltd. (MWCJL).  This was
 pursuant to approval granted by Board of Approvals (BOA) of the
 Ministry of Commerce and Industries, Government of India, in their
 meeting held on June 8, 2010, for developing, operating and marinating
 the area of 17.41 acres in the SEZ. Your Company i.e. Nucleus Software
 Exports Ltd., has received the approval from Ministry of Commerce and
 Industries, Government of India, to set up a unit with a covered area
 of 2,063 sq meters for a 250-person facility, which will be ready by
 June 2011.
 
 Your Company had two units registered under Software Technology Parks
 in India during the year which were entitled to income tax exemption as
 per applicable laws. Despite numerous industry representations, there
 has been no extension of tax holiday enjoyed by units in STP/ FTZ under
 Section 10A of the IT Act beyond 31 March 2011 and there is
 additionally increase in the rate of Minimum Alternate Tax (MAT) from
 existing 15% to 18% (plus applicable surcharge and education cess) for
 future years.
 
 The tax implication for all the units in India will be higher w.e.f the
 financial year 2011-12.
 
 10.  QUALITY PROCESSES
 
 This year, your Company further strengthened its focus on quality.
 Many new initiatives were launched during the year.
 
 The year started with a renewed focus on closer interaction between
 delivery and quality, which contributed to an increase of process
 awareness for adoption of better practices resulting in better
 productivity, reduced defect density and shorter development cycle.
 
 Key focus of the new initiatives was automation of project health
 dashboards and reports generation. A Project Management Tool- PMP which
 was launched last year, was enhanced with new features, enabling the
 project teams to have a better and more comprehensive perspective on
 the project progress. Parameters for monitoring of project health were
 revised to reflect project health from multiple view points, which
 provides a closer to accurate status of the projects health to the
 project team and the senior management.
 
 Your Company understands the importance of having good processes, and
 is continuously working on improving its processes by ensuring that
 they meet the business objectives. There is a clear focus on
 implementation of Industry Best Practices. A dedicated team is
 responsible for collecting improvement suggestions from across the
 organization and incorporating them in the organization standard
 processes.
 
 Defect prevention has become the prime focus and in this regard, new
 trainings have been launched and project teams are being trained. This
 is expected to result in further reduction of rework effort and defect
 density, which are benchmarks for measuring product quality.
 
 11.  HUMAN RESOURCE MANAGEMENT
 
 Your Company operates in a knowledge-based industry where high
 intellectual human capital leads to a significant competitive
 advantage. With a global explosion in market opportunities in the IT
 sector, the shortage of manpower both in numbers and skills is becoming
 a prime challenge. The related issues are varied indeed:
 
 - Recruitment of world-class workforce and their retention,
 
 - Compensation and career planning,
 
 - Technological obsolescence and employee turnover.
 
 In todays world, the HR function assumes a bigger role of an HR
 facilitator, one that facilitates the change processes. The HR
 facilitator needs to involve the entire organisation in this process
 and act as a guide, coach and counselor.
 
 The year gone by witnessed business growth challenges and
 consolidation. The Companys HR function continued its focus on
 managing most of the requirements with internal resource movements and
 improving productivity of the existing teams.  Post-recession, the
 attrition rate in the IT industry has risen again and has become one of
 the major challenges faced by the industry. As the industry recovers
 fully from the economic downturn, lateral hiring has reached its peak
 which in turn has resulted in widespread attrition. The Company has
 reworked on its freshers hiring programme. Besides depending upon
 campus recruitments, it has established Nucleus School of Banking and
 Technology (NSBT), as a division of your Company to provide focussed
 role-based training programs specializing in the Banking & Financial
 Service Industry Technology segment. In the past one
 
 year, over two hundred NSBT trained freshers were inducted in your
 Company. In future too, more trained freshers would be hired from NSBT.
 
 During the year, new Development and Training programs were designed to
 enhance skills related to Project Management, Business Analysis,
 Product Knowledge and Role Realignment.  Mid-term salary revision was
 done during the year to rationalize compensation of the deserving
 employees.
 
 Various measures were initiated in the Company to improve employee
 productivity. Project Incentive policy was rolled out during the year
 to motivate employees to achieve project completions on time and
 achieve higher customer satisfaction ratings. Communication with
 employees was regularized through monthly open houses where open
 discussions were held between the Management and the Nucleites. The new
 concept of Business HR Representatives in respective IBUs was very well
 received and has proved helpful in ensuring effective and positive
 employee engagement.
 
 On a consolidated basis, the employee strength as at the end of the
 year stood at 1,720.
 
 12.  ADDITIONAL INFORMATION TO sHAREHOLDERS
 
 Detailed information to the shareholders in the form of Shareholders
 Referencer is provided later in this report.
 
 13.  SECRETARIAL AUDIT
 
 In order to strengthen the internal processes of the secretarial
 department of your Company, an assignment was given for a comprehensive
 Secretarial Audit for the calendar year 2010, to a professional Company
 Secretary firm. While the audit revealed that the Company was in
 compliance of all laws/regulations, some recommendations made by the
 Secretarial Auditor for adopting Best Practices are now being
 implemented. This is a voluntary initiative undertaken by the Company
 to adopt the best practices and procedures. Certificate obtained in
 this regard is provided as Annexure A to the Report on Corporate
 Governance.
 
 The Company endeavors to comply to the extent possible and relevant
 with the non mandatory Secretarial Standards issued by the Institute of
 Company Secretaries of India (ICSI).
 
 14.  LIQUIDITY AND CAsH EQUIVALENTS
 
 Your Company continues to retain its status of a debt-free Company. The
 Company has been conservative in its investment policy over the years,
 maintaining a reasonably high level of cash and cash equivalents which
 enables the Company to completely eliminate short and medium term
 liquidity risks.
 
 Cash and cash equivalents constitute 65% of the total assets at
 Rs.187.51 crore, at the year end, against Rs.162.41 crore, 60% of total
 assets at the close of the previous year.
 
 An amount of Rs.40.37 crore, as on March 31, 2011 was in bank fixed
 deposits at an average interest rate of 9.05% per annum and Rs.125.76
 crore in liquid schemes and fixed maturity plans of various mutual
 funds. The mix between fixed deposits, liquid schemes and fixed
 maturity plans is a function of the prevailing interest rates.
 
 15.  FOREIGN EXCHANGE RISK
 
 The Indian Rupee continued to remain volatile in FY 2010-11.  After
 closing at 45.09 per US Dollar end of March 2010, it touched 47.70 on
 the lower side in May 2010 and 44.10 on the higher
 
 side in October 2010. It closed the financial year at 44.68 per US
 Dollar, strengthened by 0.91 per cent against the US dollar during the
 year ended March, 2011. Overall, there was no significant year- end
 change compared to a year ago, but volatility during the year was a
 major challenge.
 
 While exchange rates are determined by macro level parameters in India,
 especially inward fund flows in a limited capital account.
 Convertibility scenario is incumbent upon the management to follow a
 prudent policy to hedge the foreign currency risk, without taking
 speculative positions. The Company has a conservative approach and does
 not speculate in foreign currency markets.  Forwards are held to
 maturity and regular reporting and monitoring systems are in place
 including quarterly updates to the Audit Committee.
 
 During the year, the Company followed a well-defined policy of hedging
 close to receivables through Forward Contracts which are designated as
 Highly Probable forecast transactions.  We had hedged our receivables
 at higher spot rates and with Rupee appreciation in past year, this has
 resulted in favourable contribution to the revenue. There have,
 however, been losses below the EBITDA line due to translation of
 receivables and other foreign currency current assets held in India.
 
 At the year end, the Company had US$ 13.75 million of hedges compared
 to US$ 10.40 million at the beginning of the year.
 
 16.  FiXED DEPosits
 
 Your Company has not accepted any deposits and, as such, no amount of
 principal or interest was outstanding on the date of the Balance Sheet.
 
 17.  AUDitors
 
 The present Statutory Auditors of the Company, Deloitte Haskins &
 Sells, retire at the forthcoming Annual General Meeting, and are
 eligible for re-appointment. The retiring Auditors have furnished a
 certificate of their eligibility for re-appointment under section 224
 (1B) of the Companies Act, 1956 and have indicated their willingness to
 continue.
 
 18.  Directors
 
 The Articles of Association of the Company provide that at least
 two-thirds of our Directors shall be subject to retirement by rotation.
 One third of these retiring Directors must retire from office at each
 Annual General Meeting of the shareholders.  A retiring Director is
 eligible for re-election.
 
 Mr. Janki Ballabh, Chairman and Mr. Prithvi Haldea, Director of the
 Company, shall retire at the ensuing Annual General Meeting, and have
 offered themselves for re-appointment.
 
 19.  CORPORATE GoVERNANCE
 
 We, at Nucleus believe that good and effective Corporate Governance is
 more of an organization culture than mere adherence to the applicable
 rules. Laws alone cannot bring changes and transformation and voluntary
 compliance both in form and in substance plays an important role in
 developing a system of good Corporate Governance.
 
 Good Corporate Governance and Risk Management frameworks at Nucleus put
 in place over the years ensure a values-driven approach, sound business
 practices, fundamentally strong control environment, strong information
 systems, effective early warning mechanisms and real-time response
 system.
 
 The Company is in compliance of all mandatory requirements regarding
 Corporate Governance as stipulated under Clause 49 of the listing
 agreement with the stock exchange(s).  For the fiscal year ending 2011,
 the compliance report is provided in the Corporate Governance section
 of this Annual Report.  A certificate issued by the statutory auditors
 of the Company on confirming compliance of the conditions of Corporate
 Governance stipulated in Clause 49 of the listing agreement with the
 stock exchange(s) is provided as Annexure B to the Report on Corporate
 Governance.
 
 20. POSTAL BALLOT
 
 During the year, one special resolution was passed by the Shareholders
 of the Company through Postal Ballot for alteration
 of main objects of the Company and alteration of the objects incidental
 or ancillary to the attainment of main objects of the Company under
 Section 17 of the Companies Act, 1956. The details of the postal ballot
 are mentioned in the report on Corporate Governance.
 
 21. CORPORATE SOCIAL RESPONSIBILITY
 
 Corporate Social responsibility (CSR) as an initiative was further
 strengthened during the year. A quarterly update on the CSR activities
 is placed before the Board every quarter for review. Employee
 participation in such CSR initiatives is actively encouraged and
 supported by the Company. A separate chapter detailing CSR activities
 of the Company is provided later in this report.
 
 22. EMPLOYEE STOCK OPTION PLAN
 
 Particulars              2002 Plan       2005 Plan     2006 Plan
 
 (a) Total number of 
 options under the Plan     225,000        6,00,000     1,000,000
 
 (b) Pricing formula     75% of the     100% of the   100% of the
                        Fair Market     Fair Market   Fair Market
                        Price as on     Price as on   Price as on
                         date of 
                          grant          date of 
                                          grant          date of 
                                                          grant
 
 (c) Options granted
  during the year                 –           3,560             –
 
 (d) Options vested as 
 of March 31, 2011           49,550          43,920        48,002
 
 (e) (i) Options exercised 
 during the year              6,250               –             –
 
 (ii) Total number of shares 
 arising as a result of 
 exercise of above           12,500               –             – 
 options during the year*
 
 (f) Options forfeited 
 during the year                  –           8,440         3,500
 
 (g) Option lapsed during 
 the year                    17,500          13,572        36,600 
 
 (h) Variation of terms of 
 options during the year          –               –             –
 
 (i) Amount realized by 
 exercise of options 
 during the year                  –               –             –
 
 (j) Total number of options 
 in force as on March 
 31,2011                     49,550          43,900        84,002
 
 (k) Details of options 
 granted during the year 
 ended March 31, 2011 to:
 
 (i) Senior managerial 
 personnel of the Company**       –              10              –
 
 (ii) any other employee who 
 receives a grant in any 
 one year of                      –               –              –
 option amounting to 5% 
 or more of option granted 
 during that year.
 
 (iii) identified employees 
 who were granted option, 
 during any one                   –               –              – 
 year, equal to or exceeding 
 1% of the issued capital 
 (excluding outstanding 
 warrants and conversion) 
 of the Company at the time of
 grant.
 
 (l) Weighted average exercise 
 price of options                 –          144.00         268.64
 
 (m) Weighted average fair 
 value of the options             –           33.13         209.49
 
 Your Company has used intrinsic value of stock options to determine
 compensation cost. If the compensation cost for the ESOPs had been
 determined in a manner with the fair value approach, the Companys net
 income and EPS would have been impacted as below:
 
 Net income
 
 As reported                          rs.45.76 crore
 
 Less: Adjusted Amount                Rs.0.37 crore
 
 Adjusted Net income                  rs.45.39 crore
 
 Basic and Diluted EPs
 As reported
 
 Basic                                Rs.14.13
 
 Diluted                              Rs.14.12
 
 After Adjustment
 
 Basic                                Rs.14.02
 
 Diluted                              Rs.14.01
 
 Your Company has adopted Black Scholes option pricing model to
 determine the fair value of stock options.
 
 the significant assumptions are:
 
 1.   Risk free interest rate            7.64%
 
 2.   Expected life                      1-4 years
 
 3.   Expected volatility                51.34% to
 
                                         149.75%
 
 4.   Expected dividend yield            1.66%
 
 5.   Market price grant wise,
 
 Plan wise on date of grant:             (In Rs.)
 
 ESOP (2005)                             144.00
 
 ESOP (2006)                             117.00 to 568.00
 
 23.  CONSERVATION OF ENERGY, TECHNOLOGY ABSRPTION, FOREIGN EXCHANGE
 EARNINGS AND OUTGO
 
 The particulars as prescribed under subsection (1)(e) of Section 217 of
 the Companies act, 1956, read with the Companies (Disclosure of
 Particulars in the report of Board of Directors) Rules, 1988, are set
 out in Annexure-A which forms part of this Report.
 
 24.  PARTICULARS OF EMPLOYEES
 
 The information required under Section 217(2A) of the Companies Act,
 1956 read with Companies (Particulars of Employees) Rules, 1975, and
 forming part of the Directors Report for the year ended March 31, 2011
 is annexed as Annexure B.
 
 25.  DIRECTORS RESPONSIBILITY
 
 Pursuant to Section 217 (2AA) of the Companies (Amendment) Act, 2000
 the Directors confirm that:
 
 (i) in the preparation of the annual accounts, the applicable
 accounting standards have been followed along with proper explanation
 relating to material departures;
 
 (ii) the Directors have selected such accounting policies and applied
 them consistently, except where otherwise stated in the notes on
 accounts, 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 or loss
 of the Company for that period;
 
 (iii) the Directors have taken proper and sufficient care for the
 maintenance of adequate accounting records in accordance with the
 provisions of this Act for safeguarding the assets of the Company and
 for preventing and detecting fraud and other irregularities;
 
 (iv) the Directors have prepared the annual accounts on a going concern
 basis.
 
 26. ACKNOWLEDGMENTS
 
 Your Directors would like to place on record their gratitude for the
 co-operation received from the Government of India, the Customs and
 Excise Departments, Software Technology Park- Noida, Software
 Technology Park-Chennai, Software Technology Park-Pune and all other
 government agencies.
 
 Your Directors also thank all the customers, vendors, shareholders and
 bankers of the Company for their support to the Company, and wish to
 place on record its sincere appreciation of the contribution made by
 all the employees.
 
                            For and on behalf of the Board of Directors
 
 NOIDA (U.P.)                                             Janki Ballabh
 
 May 1, 2011                                                   Chairman