Spanco

The Directors have pleasure in presenting this 25th Annual Report of
 your Company together with the Audited Accounts for the year ended
 March 31, 2008.
 
 Financial Results:
                                                      (Amount in Lacs)
 Particulars                                Year ended     Year ended
                                        March 31, 2008 March 31, 2007
 
 Income from operations and other incom    e 57,322.99      42,893.57
 
 Profit before interest & finance 
 charges, depreciation & taxation             9,186.54       6,734.91
 
 Less: Depreciation                           1,002.53         885.85
 
 Less: Interest & finance charges             2,178.75       1,063.09
 
 Profit before taxation                       6,005.25       4,785.97 
 
 Less: Provision for tax
 
 - Current                                    1,925.00       1,382.00
 
 - Deferred                                       3.64         126.55
 
 - Fringe benefits tax                           72.00          45.10
 
 - Wealth tax                                     1.75            -
 
 Less: Taxation for earlier years               176.43         (34.77)
 
 Profit after tax                             3,826.43       3,267.09
 
 Add: Balance of Profit & Loss 
 Account brought forward                      4,756.09       3,458.21
 
 Amount available for appropriations          8,582.52       6,725.30
 
 Proposed Dividend                              413.00         371.70
 
 Tax on Proposed Dividend                        70.19          63.17
 
 Transfer to Debenture Redemption Reserve     3,592.03       1.284.34
 
 Transfer to General Reserve                    290.00         250.00
 
 Balance carried to Balance Sheet             4,217.30       4,756.09
 
 Review of Operations
 
 During the year under review, your Company achieved a 32 55% with
 Income from operations at Rs.  56,544.95 Lacs as compared to Rs.
 42,659.12 Lacs in the previous year Profit before interest & finance
 charges, qepreciation & taxation was Rs. 9,186.54 Lacs as against Rs,
 6,734.91 Lacs thereby registering an increase of 36.40 %.  Profit after
 tax stood at Rs 3,826.43 Lacs as compared to Rs.  3,267.09 Lacs in the
 previous year registering an increase of Managent Discussion and
 Analysis Report:
 
 Management Discussion and Analysis Report for the year under review as
 stipulated under Clause 49 of the Listing Agreement is presented in a
 separate section forming part of Annual Report.
 
 Dividend
 
 Your Directors are pleased to recommend the payment of dividend of Rs.
 2/- (20%) per Equity share [Previous year Rs 1.80/- (18%) per Equity
 share] for the financial year ended on March 31. 2008. The payout would
 involve an outflow of Rs 413 Lacs towards dividend and Rs.70.19 Lacs
 towards dividend tax, resulting in a total outgo of Rs. 483.19 Lacs.
 
 Directors
 
 The Board has appointed Mr Ketan Chokshi as an Additional Director of
 the Company with effect from October 11, 2007. Mr Chokshi holds the
 office till the date of ensuing Annual General Meeting. The Company has
 received a notice together with the requisite deposit, pursuant to
 Section 257 of the Companies Act, 1956, from a shareholder proposing
 the appointment of Mr. Ketan Chokshi as a Director, liable to retire by
 rotation Mr. Ramesh Sharma, Director and Mr. Deepak Bhagchandaney,
 Whole Time Director of the Company, retire by rotation at the ensuing
 Annual General Meeting and being eligible, offer themselves for
 re-appointment. Brief resume of the Directors proposed to be
 appointed/re-appointed, as stipulated under clause 49 of the Listing
 Agreement with Bombay Stock Exchange Limited are given elsewhere in
 this Annual Report.
 
 Directors Responsibility Statement
 
 As required under Section 217(2AA) of the Companies Act, 1956 your
 Directors confirm that:
 
 - In the preparation of the Annual Accounts for the year ended March
 31, 2008 the applicable accounting standards have been followed and
 there are no material departures from the same;
 
 - The selected accounting policies were applied consistently and the
 Directors 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 as at March 31, 2008 and of the profit of the Company for the
 year ended as on that date;
 
 - Proper and sufficient care has been taken for the maintenance of
 adequate accounting records in accordance with the provisions of the
 Companies Act, 1956, to safeguard the assets of the Company and to
 prevent and detect fraud and other irregularities;
 
 - The annual accounts have been prepared on a going concern basis.
 
 Auditors
 
 M/s. S.R.Batliboi & Co., Chartered Accountants, the Statutory Auditors
 of your Company, will retire at the ensuing Annual General Meeting and
 are eligible for re-appointment. The Company has received a letter from
 them to the effect that their appointment, if made, would be within the
 limit prescribed under Section 224(1 B) of the Companies Act, 1956.
 
 Your Directors recommend their appointment as Statutory Auditors of the
 Company for the Financial Year 2008-2009 and to hold office upto the
 conclusion of the next Annual General Meeting of the Company.
 
 The comments/observations of the Auditors, if any, are self explanatory
 and do not call for any further explanation or clarification except in
 respect of observation of auditors under clause No. (xix) of the
 annexure to the Auditors Report, it is clarified that the security or
 charge created in respect of partly secured debentures issued by the
 company is in accordance with the terms and conditions as mutually
 agreed upon.
 
 Consolidated Financial Statements
 
 In accordance with the Accounting Standard AS-21 on Consolidated
 Financial Statement read with Accounting Standard AS-23 on Accounting
 for Investment in Associates, the Audited Consolidated Financial
 Statements are provided in this Annual Report.
 
 Subsidiary Companies/Joint Ventures
 
 Pursuant to the approval granted by the Central Government (vide its
 Letter No. 47/393/2008-CL-lll dated June 25, 2008) under Section 212
 (8) of the Companies Act, 1956 copies of Balance Sheet, Profit and Loss
 account, Reports of the Board of Directors and Auditors of the
 subsidiary Companies, have not been attached with the Balance Sheet of
 the Company.  These documents will be made available upon request by
 any member of the Company interested in obtaining the same.  These
 documents will be made available for inspection during business hours
 at the Registered Office of the Company and that of the respective
 subsidiary companies. The major relevant financials of the said
 subsidiaries are attached to this Annual report. The Consolidated
 Financial Statements presented by the Company include Financial Results
 of its subsidiary companies.
 
 During the year under review, your Company has incorporated four
 Companies in India viz. Spanco Respondez Services Limited, Spanco BPO
 Ventures Limited (SBVL), Spanco BPO Services Ltd. (SBSL) and Spanco
 Respondez BPO Pvt. Ltd.  (SRBPL) as its wholly owned subsidiary
 companies During the year under review, your Company transferred its
 entire holding in SBSL and SRBPL to SBVL resulting in SBSL and SRBPL
 becoming wholly owned subsidiaries of SBVL during the year under
 review.
 
 During the year under review, your Company has also incorporated Spanco
 International Pte Ltd. in Singapore as its wholly owned subsidiary with
 a view to explore new avenues and opportunities abroad.
 
 Your Company through its wholly owned subsidiary (WOS) Spanco BPO
 Ventures Ltd. has entered into a Joint Venture (JV) with MRS INC, USA
 to form a JV Company namely MRS BPO LLC, New Jersey. MRS BPO LLC will
 operate Internationa!  BPO and Call centre business and other related
 activities.
 
 Transfer of Domestic and International Call Centre Business
 
 In order to restructure BPO business of the Company, the Company has
 transferred with effect from 1st March, 2008 its newly set up Domestic
 Call Centre division DCC and International Call Centre division
 Respondez to its indirect wholly owned subsidiaries viz; Spanco BPO
 Services Limited and Spanco Respondez BPO Pvt Ltd. respectively, by way
 of slump sale pursuant to the consent of the members obtained by means
 of ordinary resolution passed through postal ballot process in terms of
 Section 192A of the Companies Act, 1956 read with the Companies
 (Passing of the Resolution by Postal Ballot) Rules, 2001.
 
 Credit Rating
 
 During the year under review, your Company has received highest rating
 of PR1 + from Credit Analysis and Research Ltd.  (CARE) for issue of
 Commercial Paper / Short Term Debentures of Rs, 50 Crores (enhanced
 from Rs. 25 Crores).  The Company has also received PR1 + Rating from
 CARE for issue of Commercial papers/Short term Debentures of Rs.50
 Crores (carved out of working capital limits).
 
 During the year under review, your Company has also received AA-
 (Double A Minus) from CARE for long term facilities, having tenure of
 more than one year, from banks aggregating to Rs. 657.60 Crores.
 Further, the Company has also been assigned PR1 + (PR One Plus) rating
 from CARE for short term facilities having a tenure upto one year.
 
 During the current year, your Company has been assigned CARE AA-
 (Double A Minus) rating for issue of Non-Convertible Debentures (NCDs)
 of Rs.  100 Crores for a tenure upto 5 years.
 
 Issue of Redeemable Debentures/Commercial papers
 
 During the year under review, your Company has issued & allotted 5000
 Partly Secured Redeemable Non Convertible Secured Debentures of Rs.
 100,000/- each amounting to Rs.  500,000.000/- on private placement
 basis to LIC Mutual Fund Assets Management Company Ltd. The said
 debentures carry an interest @ 9.50% p.a., payable at the end of 364
 days from the date of allotment.
 
 During the year under review, your Company has redeemed 250 Non
 Convertible Debentures of Rs. 1,000,000/- each amounting to Rs.
 250,000,000/- on expiry of 364 days from the date of allotment.
 
 Corporate Governance
 
 Pursuant to Clause 49 of the Listing Agreement entered with the Bombay
 Stock Exchange Limited, where the shares of the Company are listed, a
 separate Report on Corporate Governance compliance alongwith Auditors
 Certificate on compliance of Corporate Governance are separately
 attached to this Annual report.
 
 Personnel
 
 The employer employee relations remained cordial throughout the year.
 The Board places on record its sincere appreciation for the valuable
 contribution made by employees across all levels of the organization.
 
 In terms of provisions of Section 217(2A) of the Companies Act, 1956
 read with the Companies (Particulars of Employees) Rules, 1975, as
 amended, the names and other particulars of the employees are given in
 the annexure to the Directors Report.
 
 Particulars of Conservation of Energy, Technology Absorption and
 Foreign Exchange earnings and outgo.
 
 (A) Conservation of energy
 
 The Company has taken adequate measures to conserve and reduce energy
 consumption by using energy efficient equipments, although the
 operations of the Company are not energy-intensive.
 
 (B) Technology absorption, research and development
 
 In its endeavor to obtain and deliver the best, your Company
 successfully deployed a growing and diverse team of R&D specialists
 with expertise covering hardware, networking systems software, database
 and application software. This helped the Company leverage the latest
 technologies and deploy/absorb cutting-edge technologies wherever
 feasible, relevant and appropriate. No separate record of the
 expenditure incurred on R&D is maintained.
 
 (C) Foreign exchange earnings & outgo
 
                                                     (Amount in Lacs)
 Particulars                                 2007-08       2006-07
 
 Foreign exchange earned                    6,773.60     11,579.23
 
 CIF value of imports                       5,190.47      9,843.15
 
 Expenditure in foreign currency            1,179.20        598.38
 
 Acknowledgements
 
 Your Directors express their gratitude for assistance and co- operation
 received from the Financial Institutions, Banks, Government
 Authorities, Customers, Vendors and Members during the year under
 review. Your Directors also wish to place on record their deep sense of
 appreciation for investors, shareholders and employees of the Company
 for their continued support towards conduct of operations of the
 Company.
 
                                    For and on behalf of the Board
 
                                                        Kapil Puri
                                    Chairman and Managing Director
 
 Mumbai,
 August 14, 2008