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Nucleus Software Directors Report, Nucleus Softwar Reports by Directors

Nucleus Software

BSE: 531209  |  NSE: NUCLEUS  |  ISIN: INE096B01018  |  Computers - Software Medium/Small

Explore Nucleus Softwar connections « Mar 07
Directors Report Year End : Mar '08
The have pleasure in presenting the nineteenth Annual Report together
 with the Audited Statement of Accounts for the year ended March 31,
 2008.
 
 1.  FINANCIAL RESULTS – Nucleus Software Exports Ltd.
 
                                                 (Rs in crore)
 
 For the Year Ended March 31,        2008       % of    2007    % of
                                               Revenue          Revenue
 
 Revenue from Operations           196.95     100.00   146.53   100.00
 
 Software Development Expenses     109.93      55.81    73.54    50.19
 
 Gross Profit                       87.02      44.19    72.99    49.81
 
 Selling and Marketing Expenses     14.12       7.17    12.07     8.24
 
 General and Administration 
 Expenses                           15.61       7.93    11.59     7.91
 
 Operating Profit (EBITDA)          57.29      29.09    49.33    33.67
 
 Depreciation                        8.10       4.11     5.20     3.55
 
 Withholding Taxes Charged off       4.15       2.11     4.67     3.19
 
 Operating Profit after Interest,   45.04      22.87    39.46    26.93
 
 Depreciation and Withholding Taxes
 
 Other Income                       17.02       8.64     4.66     3.18
 
 Profit Before Tax                  62.06      31.51    44.12    30.11
 
 Provision for Taxation
 
 - Current                           6.20       3.15     0.31     0.21
 
 - MAT Credit Entitlement           (5.41)     (2.75)     -       0.00
 
 - Fringe Benefit                    0.72       0.36     0.61     0.42
 
 - Deferred                         (0.22)     (0.11)    0.29     0.20
 
 - Earlier Year Tax                   -         0.00     0.01     0.01
 
 Profit After Tax                   60.77      30.85    42.90    29.28 
 Dividend                            9.71                5.64
 
 Tax on Dividend                     1.65                0.79
 
 Transferred to General Reserve      6.08               10.00
 
 Profit Retained in Profit and Loss 
 Account                            43.33               26.47 
 EPS (In Rs. for
 Equity Share of par value 
 Rs.10/- each)
 Basic                              18.78               13.29*
 
 Diluted                            18.63               13.22*
 
 * Adjusted for the issue of Bonus Shares in ratio 1:1 in August 2007.
 
 (Rs in Crore)
 
 For the Year Ended March 31,          2008      % of    2007    % of
                                                Revenue         Revenue
 
 Revenue from Operations             288.72     100.00  221.19  100.00
 
 Software Development Expenses       174.52      60.45  125.11   56.56
 
 Gross Profit                        114.20      39.55   96.08   43.44
 
 Selling and Marketing Expenses       20.63       7.15   17.93    8.11
 
 General and Administration Expenses  20.16       6.98   14.87    6.72
 
 Operating Profit (EBITDA)            73.41      25.43   63.28   28.61
 
 Depreciation                         11.85       4.10    6.88    3.11
 
 Withholding Tax Charged off           4.15       1.44    4.68    2.12
 
 Operating Profit After Interest, 
 Depreciation
 and Withholding Taxes                57.41      19.88   51.72   23.38
 Other Income                          7.05       2.44    5.62    2.54
 
 Profit Before Tax                    64.46      22.33   57.34   25.92
 
 Provision for Tax
 
 - Current                             8.30       2.87    0.96    0.43
 
 - MAT credit entitlement             (5.96)     (2.06)    -        -
 
 - Fringe benefit                      0.71       0.25    0.61    0.28
 
 - Deferred                           (0.28)     (0.10)   0.39    0.18
 
 - Earlier year tax                   (0.05)     (0.02)   0.23    0.10
 
 Profit After Tax                     61.74      21.38   55.15   24.93
 
 EPS (In Rs. for Equity Share 
 of par value Rs.10/- each)
 
 Basic                                19.08      17.09*
 
 Diluted                              18.93      16.99*
 
 * Adjusted for the issue of Bonus Shares in ratio 1:1 in August 2007.
 
 2. RESULTS OF OPERATIONS
 
 a) Nucleus Software Exports Ltd.
 
 The total revenue from operations of your Company for the year
 increased by 34% to Rs.196.95 crore from Rs.146.53 crore in the
 previous year. Total operating expenses for the year were Rs.139.66
 crore against Rs.97.20 crore in the previous year, an increase of 44%.
 Operating profit (EBITDA) increased to Rs.57.29 crore, 29% of revenue,
 from Rs.49.33 crore, 34% of revenue in the previous year. In absolute
 terms, the operating profit grew by 16.15% over the previous year.
 
 With other income increasing to Rs.17.01 crore from Rs.4.66 crore in
 the previous year, Profit after Tax for the year increased by 42% to
 Rs.60.77 crore from Rs.42.90 crore in the previous year.
 
 b) Consolidated Operations
 
 Your Company’s revenue from operations, on a consolidated basis,
 increased by 31% to Rs.288.72 crore for the year against Rs.221.19
 crore in the previous year. Total operational expenses for the year at
 Rs.215.31 crore were 36 % higher than Rs.157.91 crore in the previous
 year. Operating profit (EBITDA) increased to Rs.73.41crore, 25% of
 revenue, from Rs.63.28 crore, 29% of revenue in the previous year. In
 absolute terms, the operating profit grew by 16 % over the previous
 year.
 
 Profit after Tax for the year increased by 12% to Rs.61.74 crore from
 Rs.55.15 crore in the previous year.
 
 3. DIVIDEND
 
 Your Directors are pleased to recommend a dividend of 30% (Rs.3.00 per
 Equity Share of Rs.10.00 each) on post-bonus capital, subject to the
 approval by the Shareholders at the forthcoming Annual General Meeting.
 
 The total amount of dividend payout will be Rs.9.71 crore (on
 post-bonus capital consequent to a 1:1 bonus issue in August 2007), 16
 % of consolidated profits for the year against a payout of Rs.5.64
 crore, 10% of consolidated profits in the previous year.
 
 The Register of Members and Share Transfer Books shall remain closed
 during the period 1 July to 8 July 2008 (both days inclusive) for the
 purpose of 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, 2008, 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, 2008.
 
 Pursuant to the provisions of Sec 205A (5) of the Companies Act, 1956,
 the Company has transferred Rs.28,762, being unpaid / unclaimed
 dividend for the financial year ended March 2001 , to the Investor
 Education and Protection Fund (IEPF) established by the Central
 Government.
 
 4. BONUS SHARES
 
 The Shareholders had approved a bonus issue of one share for each
 equity share held at the Annual General Meeting held on July 6, 2007.
 The bonus shares were allotted on August 8, 2007, and were admitted for
 trading.
 
 5. INCREASE IN SHARE CAPITAL
 
 During the year, the authorised share capital of the Company was
 increased from Rs.20 crore to Rs.40 crore consisting of 4 crore equity
 shares of Rs.10.00 each.
 
 Paid up share capital of the Company increased from 16,160,312 equity
 shares of Rs.10.00 each on March 31, 2007 to 32,367,024 equity shares
 of Rs.10.00 each on March 31,2008.
 
 The increase in paid up capital is consequent to :
 
 - Allotment of 24,400 fully paid up equity shares of Rs.10.00 each in
 pursuance of stock options exercised in July 2007 and October 2007.
 Stock options exercised in October 2007 , (post- bonus allotment ) have
 been adjusted for bonus issue in the ratio of 1:1.
 
 - Allotment of 16,182,312 fully paid up equity shares of Rs.10.00 each
 as bonus shares by capitalization of Securities Premium account in the
 ratio of 1:1 to shareholders holding equity shares of the Company on
 August 6, 2007, the record date.
 
 The Company received listing and trading approval for the above
 mentioned equity shares from National Stock Exchange of India Ltd.,
 Bombay Stock Exchange Ltd. and Madras Stock Exchange Ltd.
 
 6. REVIEW OF BUSINESS & OUTLOOK
 
 The Indian software industry truly symbolizes India’s strength in the
 knowledge-based global economy. Highly skilled human resources coupled
 with world-class quality processes have transformed India into a global
 powerhouse in the Information Technology (IT) sector.
 
 With a clear vision of developing ‘Products’, your Company continues
 its focus on innovative product solutions for the Banking & Financial
 Services sector. Within this space, it has carved a niche for itself in
 the “Retail Loans” segment. Leading the Indian software product growth
 story, Finn OneTM, the flagship product of your Company has secured the
 No. 2 position globally amongst the Retail Lending Solution Providers
 for the year 2007, as reported by IBS Publishing.
 
 FY 08 has been characterized by the sub-prime crisis in the US followed
 by large mark-to-market losses reported globally by banks and the
 collapse of venerable financial institutions. While one can witness
 reduced IT spending in markets like the US, we believe this is
 short-term and that increased perception of risk will drive demand for
 technology solutions and improve demand for software products globally
 in the medium term. The sub-prime crisis has not had any visible impact
 on the business of your Company given our current minuscule sales in
 the US. Emerging markets and Japan continue to constitute the bulk of
 our business and we continue to do well in these markets. As the global
 market for innovative solutions evolves further, your Company finds
 itself strategically placed with wide array of products to cater to the
 demand. We believe that in the future, Indian product Companies will
 gain greater market share in the global software market.
 
 With a product centric strategy, your Company will continue to invest
 in both functional and technology-related developments.  While
 penetrating new markets will be our focus, we will strive to achieve
 higher level of customer satisfaction in our existing markets and
 continue to acquire and build talent.
 
 7.  NOTABLE ACCOLADES RECEIVED DURING THE YEAR
 
 Nucleus Software has been listed amongst the top ‘15 most exciting
 emerging IT/BPO companies to work for by Nasscom.
 
 Nucleus Software has been listed among the ‘Best 200 Under a Billion
 Companies in Asia’ (2007) by Forbes Asia magazine.
 
 Nucleus Software’s flagship product FinnOne™ was recognized as the “No.
 2 Best Selling Retail Lending Software” by IBS Publishing for the year
 2007.
 
 Nucleus Software was selected as one of the top 25 companies adopting
 “Good Corporate Governance Practices” by the Institute of Company
 Secretaries of India for the second consecutive year in 2007.
 
 Nucleus Software conferred as “Partner of the Year - 2007, Fastest
 Growth in ISV by Oracle” at India Partner Forum 2007
 
 Nucleus Software was adjudged as “one of the fastest growing companies
 in Asia Pacific” under Deloitte Technology Fast 500 -2007
 
 8.  SUBSIDIARIES
 
 The Company had following wholly owned subsidiaries as on March 31,
 2008:
 
 Name of Subsidiary                            Incorporated in
 
 Nucleus Software Solutions Pte. Ltd.          Singapore
 
 Nucleus Software Inc.                         USA
 
 Nucleus Software Japan Kabushiki Kaiga        Japan
 
 Nucleus Software (Australia) Pty Ltd.         Australia
 
 Nucleus Software (HK) Ltd.                    Hong Kong
 
 Virstra I- Technology Services Ltd.           India
 
 Nucleus Software Netherlands BV               Netherlands
 Step Down Subsidiary
 
 Virstra I- Technology (Singapore) Pte. Ltd.   Singapore
 
 A new wholly-owned subsidiary ‘Nucleus Software Limited has been
 incorporated in the month of April 2008 in India, with its registered
 office in New Delhi. The main object of this Company is to develop
 software products and provide software services, from our new
 additional location to be set up at Jaipur.
 
 Your Company received an interim dividend of Rs.10 crore from Virstra
 I-Technology Services Ltd., a wholly owned subsidiary during the year.
 
 As per Section 212 of the Companies Act, 1956, a Company is required to
 attach the Directors’ Report, Balance Sheet and Profit and Loss Account
 of all subsidiaries to its balance sheet. Your Company has been
 presenting the audited consolidated accounts in the Annual Report in
 the past in accordance with Indian GAAP, which give a full and fair
 presentation of the Company’s financials in keeping with global best
 practices. Accordingly, your Company applied to the Central Government
 for an exemption from attaching detailed accounts of the subsidiaries.
 The Government has granted exemption to the Company from Section 212 of
 the Companies Act, 1956 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 Company’s registered office and
 at the concerned subsidiary’s offices.
 
 9.  INFRASTRUCTURE
 
 The construction of Phase 2 facility at our NOIDA, India campus is now
 complete. This facility consisting of basement and eight floors
 includes a parking area for 125+ two wheelers, a 6,000 square feet
 cafeteria and food zone for seating 300+ employees, a 1,220 square feet
 data centre and six floors of seating capacity occupying 6,070 square
 feet per floor. With this, our NOIDA office has a total constructed
 area of 2,00,000 square feet.
 
 During the year, the Company’s development centre at Chennai moved to
 new premises. With a capacity of over 200 seats, this centre is a
 state-of-the-art facility with world-class infrastructure to support
 growing customer needs. The marketing and support centre in Mumbai also
 commenced operations from its new premises. A new marketing and support
 center in Dubai Internet City shall start operations shortly.
 
 10. SPECIAL ECONOMIC ZONE PROJECT
 
 In line with the growing needs of business and our expansion plan, we
 have made arrangements for acquisition of 17.41 acres of land in an SEZ
 in Jaipur at a private sector multi-product Special Economic Zone,
 being developed by one of the largest industrial houses in India.
 
 Jaipur is a new destination for the IT sector and with a large pool of
 fresh engineering graduates, the industry is expected to grow at a fast
 pace. Easy accessibility from Delhi, excellent social infrastructure,
 low cost of operations, specific talent related to the industry, well
 developed infrastructure and excellent support from the Government, are
 one of the few reasons for your Company choosing Jaipur as its next
 destination.
 
 As per the Special Economic Zones Act, 2005 (“the SEZ Act”), the unit
 established in the SEZ will be eligible for a deduction of 100% of
 profits or gains derived from the export of services for the first five
 years from commencement of provision of services and 50% of such
 profits or gains for a further five years. Certain tax benefits are
 also available for a further five years subject to the unit meeting
 defined conditions.
 
 Other fiscal benefits including indirect tax waivers are being extended
 for setting up, operation and maintenance of the unit.
 
 Your Company proposes to implement the SEZ project through the new
 subsidiary, Nucleus Software Limited, which has been incorporated in
 April 2008. We expect to take possession of land in the first quarter
 of FY 09 and commence construction of the first phase subsequently. The
 project cost shall be met from internal accruals of the Company.
 
 11. QUALITY PROCESSES
 
 In the area of Quality Assurance, your Company has enhanced its process
 maturity on various aspects during this year with respect to being a
 product Company. Processes have been extended from “development,
 delivery and support” phases to “product creation and product
 management” phases.
 
 Business unit level sessions were held during the year to enable a high
 level of integrated project management environment and reference
 material has been created by experts, learning from experiences gained
 from delivered projects, to make even better delivery to future
 clients.
 
 With the introduction of configuration management tool, workflow has
 been automated to increase productivity and reduce defects. Your
 Company now has plans to move ahead to a certification under CMMI V1.2
 
 12. HUMAN RESOURCE MANAGEMENT
 
 The world today is witnessing a significant growth of the software
 industry and its enormous business potential, India is on its way to
 become one of the major players in this field. One of the key drivers
 of this success has been the availability of competent workforce.
 
 Looking at the business needs and projections, your Company has been
 consistently recruiting highly skilled professionals. We are also
 constantly focusing on developing competencies by incorporating
 objective performance measurement techniques and systems. Skills are
 mapped and a skill inventory base built up for effective and timely
 deployment of resources for customer satisfaction. Human resource
 management has been one of the key business driver. Leadership
 development, career progressions and resource utilization have also
 been the focus areas of your Company.
 
 Your Company believes that it is the human resource, driven by values,
 which makes the key difference. Towards this end, specific programs to
 ensure regular reaffirmation of personal and organizational values are
 conducted. Your Company also lays a great emphasis on providing a warm
 and open environment for employee communication.
 
 Your Company has dedicated training facilities and an exclusive
 trainers’ group consisting of voluntary internal trainers sourced
 across cross-functional areas who help in nurturing talent. During the
 year, various HR initiatives such as Competency Assessment, Competency
 Mapping, Behavioural Soft Skill Trainings including basic and advanced
 Tech trainings (technology and product oriented) have been a major
 focus. During the year, your Company tied up with a renowned Management
 Institute for two years Advanced Post Graduate Diploma in Management
 course.  This course is conducted in the Company premises in Distance
 Learning Mode for our employees.
 
 13. ADDITIONAL INFORMATION TO SHAREHOLDERS
 
 Detailed information to the shareholders in the form of “Shareholders’
 Referencer” is provided elsewhere in the report.
 
 14. SECRETARIAL AUDIT
 
 In order to strengthen the internal process of the secretarial
 department of your Company, a professional Company Secretary conducted
 a comprehensive audit for the year. The recommendations made by the
 Secretarial Auditor are being implemented in order to improve the
 processes in the secretarial department.
 
 The Secretarial Audit Report confirmed that your Company is fully
 compliant with the provisions of Companies Act 1956, SEBI regulations
 and guidelines and the Listing Agreement as applicable to the Company.
 
 15. LIQUIDITY AND CASH EQUIVALENTS
 
 Your Company retains the status as a debt-free Company. It has been
 consistently following a conservative investment policy over the years,
 maintaining a reasonably high level of cash and cash equivalents which
 enable the Company to not only eliminate short and medium term
 liquidity risks but also undertake capital expenditure for scaling up
 operations at a short notice. This approach leads to a larger
 shareholder value in the long term and is consistent with our vision of
 growth.
 
 Our liquidity position continues to be strong with cash and cash
 equivalents reaching 44% of our total assets at Rs.94.13 crore.
 
 During the year, internal cash accruals more than adequately covered
 the working capital requirements, capital expenditure and dividend
 payments. As of March 31, 2008 investments in liquid funds stood at
 Rs.76.63 crore (Rs.55.07 crore as on March 31, 2007) and are detailed
 in the accounts. Your Company has invested these funds in blue chip
 liquid plans and Fixed Maturity Plans of mutual funds.
 
 With cash and bank balances, at a consolidated level, including fixed
 deposits with banks at Rs.17.50 crore as on March 31,2008, (Rs.26.82
 crore as on March 31, 2007), the total liquid funds with the Company
 are Rs.94.13 crore as on March 31,2008, (Rs.81.89 crore as on March 31,
 2007). The Company has built up reasonable liquidity to meet all its
 medium term commitments and can easily invest in upgrading and
 enlarging the infrastructure without any borrowings.
 
 16. FOREIGN EXCHANGE RISK
 
 In April 2007, the Indian Rupee, the reporting currency of the Company,
 appreciated significantly against the US $ and continued to appreciate
 through the year under review. From Rs.43.75 to a Dollar on March 31,
 2007, the appreciation was to Rs.40.84 on June 30, 2007 and to Rs.39.90
 on March 31, 2008. With our overseas billings being largely
 dollar-denominated, this appreciation had a negative effect on our
 turnover and margins.  While our robust and product centric model
 enabled us to grow volumes and achieve a 30% growth in revenue at the
 consolidated level, profitability was a larger challenge with higher
 expenditure on product development.
 
 To mitigate risk, we have substantially enhanced hedging values and
 simultaneously instituted robust controls at the audit committee level.
 In the medium term, we will continue to examine an economic global
 product development and delivery model and look for competitive
 advantage wherever available including in overseas geographies.
 
 17. 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.
 
 18. AUDITORS
 
 BSR & Co, the Statutory Auditors of the Company, 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.
 
 19. DIRECTORS
 
 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. Arun Shekhar Aran and Mr. Sanjiv Sarin, Directors of the Company,
 shall retire at the ensuing Annual General Meeting and, being eligible,
 offer themselves for re-appointment.
 
 20. CORPORATE GOVERNANCE
 
 The Corporate Governance philosophy of your Company is to comply with
 not only the statutory requirements, but also voluntarily formulate and
 adhere to a set of strong Corporate Governance practices. We believe
 that sound Corporate Governance is critical to enhance and retain
 investors’ trust. The responsibility for this lies entirely with the
 Board of Directors and the Management of the Company. The driving
 forces of Corporate Governance at Nucleus are its core values, which
 are: belief in people, entrepreneurship, customer orientation and
 pursuit of excellence. The Company’s goal is to find creative and
 productive ways of keeping its stakeholders, such as investors,
 customers and associates informed, while fulfilling the role of a
 responsible corporate committed to best practices.
 
 The Board and the Company Management strive hard to best serve the
 interests of all stakeholders including shareholders, customers,
 Government and the society at large.
 
 In addition to being compliant with statutory provisions of Clause 49
 of the Listing Agreement, your Company has put in place several
 non-mandatory recommendations including Training of Board members,
 “Whistle Blower Policy” and “Remuneration Committee”. Significantly, 4
 out of 6 directors on the Board continue to be Independent Directors.
 
 We are pleased to state that your Company was short listed as one of
 the Top 25 Companies adopting “Good Corporate Governance Practices” by
 the Institute of Company Secretaries of India for the second successive
 year in 2007.
 
 21. EMPLOYEE STOCK OPTION PLAN
 
 Your Company has introduced various Employees Stock Option Plans (ESOP)
 providing for issue of stock options to Employees of the Company that
 can be converted into Equity Shares after a specified period.
 
 Particulars
 
 (a)  Total number of options
      under the Plan
 
 (b) Pricing formula
 
 (c) Options granted during the year
 
 (d) Options vested as of
     March 31,2008
 
 (e)  (i)    Options exercised   during the
             year - Pre-bonus allotment
 
 (ii)    Total number of shares arising
         as a result of exercise of above
         option during the year – Pre
         bonus allotment
 
 (f) (i) Options exercised during
         the year - Post-bonus allotment
 
 (ii)    Total number of shares arising
         as a result of exercise of above
         option during the year- Post
         bonus allotment*
 
 (g)     Options forfeited during the year
 
 (h) Variation of terms of options
     during the year
 
 (i)  Amount realized by exercise of
      options during the year (Rs.)
 
 (j) Total number of options in
     force as on March 31,2008
 
 (k) Details of options granted during
     the year ended March 31, 2008 to:
 
 (i) Senior managerial personnel of
     the Company:
 
 (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
 
 (m)Weighted average fair value of the options
 
 1999 Plan               2002 Plan
 
 170,000                   225,000
 
 Rs.24/-                   75% of the Fair
 per option                Market Price as on
 date of grant
 
 Nil                       Nil
 
 Nil (There are            30,450
 no options vested
 and not exercised
 as on March 31,
 2008)
 
 5,700                    16,300
 
 5,700                    16,300
 
 Nil                       1,200
 
 Nil                       2,400
 
 Nil                         700
 
 Nil                         Nil
 
 79,800                5,112,000
 
 Nil                     141,550
 
 Nil                         Nil
 
 Nil                         Nil
 
 Nil                         Nil
 
  24.00                   336.50
 
 381.76                   292.09
 
 
 
 2005 Plan             2006 Plan
 
 6,00,000              1,000,000
 
 100% of the Fair      100% of the Fair
 
 Market Price as       Market Price as
 on date of grant      on date of grant
 
  Nil                           Nil
 
  42,600                      11,786
 
  Nil                           Nil
 
  Nil                           Nil
 
  Nil                           Nil
 
  Nil                           Nil
 
  Nil                         22,000
 
  Nil                            Nil
 
  Nil                            Nil
 
 142,000                     249,860
 
  Nil                            Nil
 
  Nil                            Nil
 
  Nil                            Nil
 
  356.48                      475.11
 
  183.55                      191.68
 
 *The Company has issued Bonus shares in the ratio of 1:1 in August 2007
 and in accordance with statutory approvals all existing options
 exercised after the Record Date will entitle the option holders for 2
 shares for every 1 share held.
 
 The Company has used intrinsic value of stock options to determine
 compensation cost. Had compensation cost for the ESOP been determined
 in a manner with the fair value approach, the Company’s net income and
 EPS would be impacted as given below:
 
 Net Income              As Reported                   Rs.60.77 crore
 
                         Less: Adjusted                 Rs.2.97 crore
                         Amount
 
 Adjusted Net                                          Rs.57.80 crore
 Income
 Basic and
 Diluted EPS
 
 As Reported
 
                         Basic                              18.78
 
                         Diluted                            18.63
 
                         After Adjustment
 
                         Basic                              17.86
 
                         Diluted                            17.72
 
 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                     8.00%
 
 2.    Expected life                           1-4 years
 
 3.    Expected volatility              42.06% to 149.75%
 
 4.    Expected dividend yield %                    0.84%
 
 5.    Market price grant wise,
 
 plan wise on date of grant:            (In Rs.)
 
 ESOP (1999)                             408.45
 
 ESOP (2002)                         193.95 to 505.00
 
 ESOP (2005)                         357.00 and 320.00
 
 ESOP (2006)                          368.00 to 568.00
 
 22. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, 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.
 
 23. 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, 2008
 is annexed as Annexure- B.
 
 24.  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.
 
 25.  ACKNOWLEDGMENTS
 
 Your Directors would like to place on record their gratitude for the
 cooperation received from the Government of India, the Customs and
 Excise Departments, Software Technology Park- NOIDA, Software
 Technology Park-Chennai, Software Technology Park-Pune and other
 government agencies.
 
 Your Directors also thank all the clients, vendors, shareholders and
 bankers for their support to the Company. The Board, in specific,
 wishes to place on record its sincere appreciation of the contribution
 made by all the employees towards growth of the Company.
 
                           For and on behalf of the Board of Directors
 
 Noida (U.P.)                    Lt. Gen. T. P. Singh (Retd.)
 
 April 27, 2008                          Chairman
Source : Religare Technova

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