Sasken Communication Technologies

The Directors have pleasure in presenting the report on the business
 and operations of the Company along with the Audited Accounts for the
 financial year ended March 31, 2008.
 
 Result of Operations (Consolidated) - Extract
  
                                                     Amount in Rs.Lakhs
                                           Year ended        Year ended
 Particulars                           March 31, 2008    March 31, 2007
 
 Revenues                                   57,017.71         47,712.90
 Cost of Revenues                           40,910.68         31,715.69
 Gross Profit                               16,107.03         15,997.21
 Non-operating Income                        2,342.66            974.68
 Profit Before Income Taxes                  5,680.95          5,433.47
 Income Taxes Expense/(Credit), Net 
 (including Fringe Beneft Tax)               1,742.52          1,006.53
 Profit After Tax                            3,938.43          4,426.94
 Appropriation:
 Proposed Equity Dividend                    1,142.43          1,140.01
 Dividend Tax                                  194.16            193.74
 Transfer to General Reserve for the year      249.36            381.31
 
 (Previous year’s figures have been regrouped wherever necessary to
 conform to the current year’s presentation)
 
 During the year under review, the global industry in general and the
 communications industry in particular were faced with tough challenges
 such as currency volatility, shorter technology life cycles and margin
 pressures. While the challenges are across the communications industry,
 your Company, backed by a list of marquee customers and remarkable
 engineering talent resources, was able to face those challenges by
 bolstering talent and cost effective programs across the Company.
 
 While challenges are continuing to daunt the communications industry,
 your Company is confident of meeting those challenges by further
 strengthening
 
 - The performance management system
 
 - Strong and committed business and engineering processes
 
 - Targeted delivery schedule and increased customer satisfaction
 
 The consolidated revenues have grown by 19.5% during the year ended
 March 31, 2008 to Rs.57,017.71 Lakhs from Rs.47,712.90 Lakhs during the
 year ended March 31, 2007. The software services revenues witnessed
 growth of 15% during the year to Rs.48,958.06 Lakhs from Rs.42,551.05
 Lakhs during the previous year.
 
 The proportion of the software services business stands at 85.86% of
 total revenue during the year as against 89.2% of total revenue during
 the previous year.
 
 The revenues from network engineering services were marginally lower
 and stand at 6.0% of the total revenue during the year as against 6.1%
 during the previous year. The revenues from software products were
 higher by 3.3% and stand at 8.1% of the total revenue during the year
 ended March 31, 2008 as against 4.8% during the year ended March 31,
 2007.
 
 The segmental profits during the year were Rs.13,739.85 Lakhs as
 against Rs.13,829.02 Lakhs during the previous year. Segmental profit
 margin for software services was 28.8% during the year as against 35.1%
 during the previous year. Segmental profit for network engineering
 services were lower to 23.4% during the year as against 32.9% during
 the previous year.
 
 Dividend
 
 The Board recommends a dividend of 40% (Rs.4 per equity share) this
 year.
 
 Buy-Back Proposal
 
 The Board of Directors has decided on buy-back of Company’s fully paid
 up equity shares of Rs.10 each from the existing owners of shares from
 open market through stock exchanges in accordance with the provisions
 of Section 77A, 77AAand 77B of the Companies Act, 1956 and the SEBI
 (Buy-back of Securities) Regulations, 1998 at a price not exceeding
 Rs.260 per share payable in cash for an aggregate amount not exceeding
 Rs.40 Crores. The offer size represents 9.45% of the aggregate of the
 Company’s paid up equity capital and free reserves as on March 31,
 2008.
 
 Exercise of Stock Options during the year 2007-08
 
 During the year the Company allotted 60,657 equity shares of Rs.10 each
 arising out of exercise of ESOP. A chronology of allotment of shares on
 exercise of ESOP during the year is given in the following table:
 
                             Amount of Equity Capital  Amount of Premium
 Date of Allotment  No. of Shares     (Rs.)              Received (Rs.)
 
 October 31,2007       53,150        531,500              9,163,918
 January 8, 2008        7,507         75,070              1,511,670
 Total                 60,657        606,570             10,675,588
 
 The Company’s ESOP continues with the philosophy of sharing wealth with
 its employees and encourages the employees to be partners in the growth
 of the organization.
 
 ESOP 2000 Scheme
 
 No new grants were made under this scheme during the year under review.
 There were 277,516 options outstanding with employees as on March 31,
 2008.
 
 ESOP 2006 Scheme
 
 During the year, your Company granted 335,000 options to its employees
 under this scheme. The options outstanding with employees and Directors
 as on March 31, 2008 are 539,250 options. There are 2,946,250 unissued
 options as on March 31, 2008.
 
 The details required under SEBI (Employee Stock Option Scheme and
 Employee Stock Purchase Scheme), Guidelines 1999, as on March 31, 2008
 are given in Annexure 1 forming part of this Report.
 
 Awards
 
 Members will be proud to note that your Company received the following
 recognitions during the year:
 
 November 15, 2007 :
 
 The Company was one of the winners of the National Award for
 outstanding in-house R&D Achievements (2007) in Computer Software
 Design awarded by the Department of Scientific and Industrial Research
 (DSIR), Ministry of Science and Technology, for development and
 optimization of Multimedia Subsystems.
 
 August 7, 2007 :
 
 Mr. Rajiv C Mody, Chairman and CEO, was awarded the ‘Technovator of the
 year’ award by Voice & Data, an Indian magazine on the business of
 Information Technology and Communications.
 
 July 13, 2007 :
 
 Sasken Annual Report (2006-2007) was given the gold award in the
 Telecom Category by the League of American Communications Professionals
 (LACP) at the Vision Awards Annual Report Competition.
 
 Corporate Social Responsibility (CSR)
 
 As a responsible Corporate Citizen, your Company is committed to
 contributing to the society, environment and community. The focus areas
 in which your Company strives to ‘Make a Difference’ are the community,
 the environment, differently abled citizens, children, the
 underprivileged and the academia. Sasken translates this into action by
 providing financial and non-financial support, as well as extending and
 encouraging volunteer participation in CSR initiatives. Your Company
 has partnered with Samarthanam, F.A.M.E India, Parikrma and Navjyoti
 foundation for its CSR activities. Your Company also extends its
 support to other non governmental voluntary organizations on a
 case-by-case basis.  ‘Prakruti Mela’ is conducted every year at Sasken
 premises to promote sale of environmentally friendly products through
 partner vendors. Awareness programs on AIDS, Sexual Harassment and CSR
 are conducted at regular intervals. Support for setting up stalls is
 provided for non profit organizations for sale of their products to
 employees. Provision also has been made in the payroll system to enable
 employees make direct donations to the partner organizations.
 
 Patents
 
 Protecting Intellectual Property by fling of patents continues to be a
 key feature of the Company’s business strategy. Your Company encourages
 the employees to file for Patents, so that the R&D investment
 translates into economic benefit for the organization.  The Company
 has, as on date, filed a total of 41 Patent applications. Out of these,
 19 have been granted, 4 since the last report. one patent has been
 added through the acquisition of Botnia Hightech Oy, Finland. Thus, the
 patent portfolio of your Company stands at 20.  two patents have been
 allowed by the US Patent and Trademark Office (USPTO). These are
 expected to be granted within a few months.
 
 The patent applications granted by the USPTO since the last report
 related to:
 
 (a) Universal Rake Receiver.
 
 (b) A technique for reducing processing power in 3G systems.
 
 (c) An adaptive Radio Link Protocol (RLP) to improve performance of TCP
 in wireless environment for CDMAOne and CDMA2000 systems.
 
 (d) Method to improve performance and reduce complexity of turbo
 decoder.
 
 The patent added through the acquisition of Botnia Hightech related to
 a method for optimizing network traffic.
 
 The patents allowed for grant by the USPTO during the year related to:
 
 (a) System and Method for Echo cancellation.
 
 (b) Technique to improve the performance of Transmission Control
 Protocol (TCP) in lossy networks.
 
 There has been a conscious shift in the Company’s strategy in the fling
 of patents, over the year. New patents are being fled under the PCT
 (Patent Cooperation Treaty) which allows the fling of a patent in any
 PCT country and claim preference when fling later in other PCT
 countries. Also, recognizing the potential of the Indian market, new
 patents are being fled in India as PCT applications.
 
 Corporate Governance
 
 Your Company is committed to maintain the highest standards of
 Corporate Governance. Your Directors adhere to the standards set out by
 the Securities and Exchange Board of India’s (SEBI) Corporate
 Governance practices and accordingly have implemented all the major
 stipulations prescribed. Your Company’s Corporate Governance Compliance
 Certificate dated April 18, 2008 in line with Clause 49 of the Stock
 Exchange Listing Agreement is given in Annexure 2 forming part of this
 Report.
 
 Directors’ Responsibility Statement
 
 As stipulated in Section 217(2AA) of the Companies Act, 1956 (the Act),
 your Directors subscribe to the “Directors’ Responsibility Statement”
 and confirm that:
 
 - In the preparation of the annual accounts, the applicable accounting
 standards have been followed along with proper explanation relating to
 material departures.
 
 - The Directors have selected such accounting policies and 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 or loss
 of the Company for that period.
 
 - The Directors have taken proper and sufficient care of the
 maintenance of adequate accounting records in accordance with the
 provisions of the Act for safeguarding the assets of the Company and
 for preventing and detecting fraud and other irregularities.
 
 - The Directors have prepared the annual accounts on a going concern
 basis.
 
 A contract had been entered into with a customer in the year 2005, to
 whom shares were allotted preferentially, providing for certain assured
 volumes of business to be provided by that customer to the Company.
 Having regard to the very nature of that contract which provides for
 such assured business to span over a few years, it was not feasible to
 quantify the benefits that the Company may derive from that contract.
 However, insofar as it relates to orders already placed with and
 executed by the Company, the relevant revenue (as also the relative
 costs) were refected in the Profit and Loss Accounts of the respective
 years. During the year under review, the Company received a sum of
 Rs.1,038.10 Lakhs towards a charge for cancellation of the above said
 minimum assured business in a given time period.
 
 Subsidiary Companies
 
 During the year, your Company formed two wholly owned subsidiaries viz.
 Sasken Inc. USA and Sasken Japan KK. Further, the Indian Subsidiary -
 Sasken Network Engineering Ltd. incorporated its wholly owned
 subsidiary viz. Sasken Network Solutions Inc. USA.  All subsidiaries
 were floated with the object of capturing business in a cost effective
 manner and serving customers near to their locations. Sasken Inc. has
 become a partner in a Venture Capital Partnership in the USA.
 
 As required under Accounting Standard 21, Consolidated Financial
 Statements incorporate the results of (a) Sasken Network Engineering
 Ltd., (b) Sasken Communication Technologies Mexico S.A. de C.V. (c)
 Sasken Communication Technologies (Shanghai) Co. Ltd., (d) Sasken
 Communication Technologies Oy and (e) its step-down subsidiary, Sasken
 Finland Oy. (f) Sasken Inc. USA. The other subsidiaries are yet to
 commence commercial operations.
 
 In terms of the Central Government approval under section 212(8) of the
 Companies Act, 1956, the audited Financial Statements along with the
 reports of the Board of Directors and the Auditors pertaining to the
 above subsidiaries have not been attached to this Report. The Financial
 Statements of the said subsidiaries will be kept for inspection by any
 investor in the registered office of your Company and that of the
 subsidiary companies. Investors who want to have a copy of the above
 may write to the Company Secretary at the registered office.
 
 Directors
 
 Professor J Ramachandran and Mr. Vinod K Dham retire by rotation at the
 ensuing Annual General Meeting and being eligible offer themselves for
 re-appointment.
 
 Remuneration payable to Executive Directors and Independent Directors
 are detailed in the notice convening the Annual General Meeting for
 members’ approval.
 
 Conservation of Energy, Technology Absorption and Foreign Exchange
 Outgo
 
 Annexure 3 forming part of this report gives information in accordance
 with the provisions of Section 217(1)(e) of the Companies Act, 1956
 read with Companies (Disclosure of Particulars in the Report of Board
 of Directors), Rules 1988 regarding conservation of energy, technology
 absorption and foreign exchange earnings and outgo.
 
 ISO 14001
 
 Sasken continues to comply with the Environmental Management System
 International Standard ISO 14001. Sasken is committed to be a
 responsible member of the communities in which we live and work. This
 reaffirms your Company as a responsible corporate citizen.
 
 ISO 27001
 
 Sasken continues to comply with Information Security Practices
 International Standard ISO 27001. This is important for assuring our
 customers of our commitment in protecting their IP as well as
 sensitizing all employees about confidentiality and integrity of
 information.
 
 TL 9000
 
 Sasken continues to comply with the telecom industry specific
 International Standard TL 9000, which by definition includes the ISO
 9001:2000 requirements.
 
 Particulars of Employees
 
 The particulars of employees, as required under Section 217(2A) of the
 Companies Act, 1956 are given in Annexure 4 forming part of this
 Report. It may be noted that in accordance with the notification dated
 March 24, 2004 issued by the Department of Company Affairs, Government
 of India, particulars of employees posted and working in a country
 outside India, not being directors or their relatives drawing more than
 Rupees Twenty Four Lakhs per financial year or Rupees Two Lakhs per
 month, as the case may be, are not included in this statement but such
 particulars will be furnished to the Registrar of Companies. Such
 particulars will be made available to any shareholder on specific
 request made by him/her during the course of Annual General Meeting.
 
 Deposits
 
 Your Company has neither accepted nor renewed any deposits during the
 year. As such, no amount of principal and/or interest is outstanding as
 on the Balance Sheet date.
 
 Auditors
 
 M/s S R Batliboi & Co., auditors of the Company retire at the
 forthcoming Annual General Meeting and have confirmed their eligibility
 for re-appointment.
 
 Acknowledgement
 
 Your Directors place on record their appreciation of cooperation and
 support extended by customers, shareholders, vendors, bankers and all
 governmental and statutory agencies. Your Directors thank the employees
 for their valuable contribution during the year and look forward to
 their continued support.
 
                             For and on behalf of the Board of Directors
 
 Bangalore                                      Rajiv C Mody
 April 18, 2008                          Chairman and Managing Director