SQL Star International

It gives me immense pleasure to share with you the performance of the
 Company for the financial year 2008-09.
 
 The year 2008-09 will possibly be known as a year in which principles
 of economics were challenged, longstanding beliefs were broken and
 business strategies were put to test. In the widespread slowdown
 globally, industries across wide spectrum in every country around the
 world were severely impacted. The largest, most successful and most
 profitable businesses that no longer exist bear testimony to this very
 fact.
 
 While your Company is not immune to the severe economic challenges and
 uncertainty around the globe, I am happy to say that your Company has
 been able to weather through this rough phase by adopting some
 significant strategic steps and thus, emerged out of this as a strong
 and resilient Company. Many companies, similar in size to your Company
 and offering services similar in nature, have either closed its
 operations or struggling to sustain through this rough phase. Thus, we
 remain confident in our proven ability to perform well in a hostile
 business environment by maintaining our commitment in delivering value
 to our customers.
 
 The year 2008-09 comprised of two radically different halves. In the
 first half of 2008-09, your Company reported moderate growth in
 revenues and the future prospects looked promising, however as the
 events did not unfold as anticipated owing to unprecedented economic
 crisis; the second half was extremely difficult, with the revenues and
 profitability dipping, as compared to the first half.
 
 Global recession continues to affect the IT investments made by
 businesses. Keeping in view the macro-economic conditions and
 uncertainty on recovery of the US economy in the near term, the
 management has decided to take a conservative approach and hence, has
 provided for 100% impairment of goodwill and other intangible assets in
 its wholly owned subsidiary Company in US. As a consequent, the
 Management has made provision to the extent of Rs. 26.90 Cr towards
 diminution in the value of its investments made in the USA subsidiary.
 
 Your Company offers a wide variety of services encompassing Software
 Development and Services viz., Technology Training, Consulting Services
 and Technology backed e-Governance services. We believe that our key
 competitive strengths and unique value propositions which include
 market focused expertise and capabilities, strong business model, deep
 Understanding of our customers and their needs, and robust systems and
 processes, enable us to find traction in the marketplace even in
 challenging market conditions. Some of our compelling solutions
 especially in Embedded Wireless and Software(EWS) services have
 been built by us on substratum of engineering excellence, depth in
 technical capabilities and a keen understanding of the business
 processes.
 
 Your Company operates in the following primary business segments:-
 
 - Knowledge Services
 
 - E-Governance
 
 - Software Development & Services
 
 Allow me to give you some insights into each of these business
 segments.
 
 1 KNOWLEDGE SERVICES
 
 From a macro perspective, it is readily apparent that the demand for
 education within India is and will be significant.  Education and skill
 enhancement is the top priority on the agenda of both the government
 and the private sector.  Education remains one of the powerful factors
 in providing individuals with the ability to improve their quality of
 life, increase earning power, and provide the basic foundation for
 future economic growth. While the spending on supplementary IT
 education has seen a slowdown with lower employment opportunities, the
 main driver for IT education going forward will be to meet the skill
 shortage that the IT industry is currently facing. Although investment
 in new technology and off-shoring has witnessed a slowdown, committed
 investments in IT will need skilled manpower to maintain and support
 existing infrastructure. Applied Learning and Online supplemental
 education can be a huge boost to improving skills and your Company is
 well positioned itself to play pivotal role in bridging the skill-set
 gap between the academia and industry and enabling the Students/Learner
 in being productive from the very start of his/ her professional
 employment.
 
 On-line learning is now the buzz in the era of internet and keeping in
 pace with the changing times, your Company has developed the Technology
 Enabled Learning Platform www.thelearningport.com to deliver blended
 Learning solutions which has been well accepted in the market. Using
 this platform, blended Learning Solutions (combining classroom study
 with e-learning programs to deliver rich education using web 2.0 tools)
 are being offered to Students/Learners and has become an integral
 component of current products/course offerings.
 
 In the Enterprise Learning and Training Services space, your Company
 has bagged orders for providing technology training to Government
 Departments, Public Sector Undertakings, and Nationalized Banks. It is
 a matter of pride that we are strategic training partners to 4 of the
 top 5 IT Companies in India. In this context, I am happy to share with
 you that Indias 2nd largest IT Company has recognized your Company as
 preferred Training Partner for its employees and associates. I am
 pleased to inform you that your Company has been recognised as the Most
 Promising Certified Training Partner for the year 2007-08 by Red Hat
 India in the 6th Annual Red Hat Global Learning Services meet at
 Kovalam, Kerala, India.
 
 2 E-GOVERNANCE
 
 Your Company is currently executing projects on a Build, Operate and
 Transfer basis with the Madhya Pradesh Agricultural Marketing Board
 (EVKI Project) and Department of Information Technology (Project
 e-Sampark), Chandigarh Administration, Union Territory of Chandigarh.
 
 During the year 2003, your Company signed the Project Agreement (EVKI
 Project) with Madhya Pradesh Agricultural Marketing Board (Mandi
 Board) and successfully completed the 1st phase of rollout in the year
 2005. Since then, your Company is providing necessary support
 relentlessly to various stakeholders of the Project viz., the Farmers,
 the Traders, the Mandi Board and the Government, thereby meeting the
 basic objectives of the EVKI Project.
 
 Project e-Sampark was initiated to bring together the services of all
 the departments under a single umbrella and give the citizens of
 Chandigarh a multi-service, single window experience. In this
 connection, your Company had set-up and operating 10 Sampark Centers
 and 11 Jan-Sampark Centers across the LJnion Territory of Chandigarh.
 The acceptability from Citizens of Chandigarh is increasing day by day
 and in terms of number of transactions, it has increased from 1.90Lacs
 in the year 2004-2005 to 19Lacs in the year 2008-09.
 
 During the period under review, the following additional services have
 been added into the e-Sampark operations:-
 
 - Collection of school fee from 105 Govt Schools
 
 - Data entry and acceptance of VAT/CST returns from Traders
 
 - Internet payment Gateway feature
 
 - Acceptance of LIC premiums
 
 
 
 In March 09, the Department of Information Technology, Chandigarh
 Administration have conducted a survey to get the feedback from the
 citizens on the functioning of these centers. It has been found from
 the survey report that majority of citizen have given excellent
 feedback on the performance of the centers.
 
 3 SOFTWARE DEVELOPMENT & SERVICES
 
 3.1 Embedded Wireless and Software Services
 
 The new service offerings in Embedded Wireless and Software (EWS)
 business unit has enabled us to move up the value chain in Embedded
 Linux and Android platform eco-system and offer innovative solutions to
 the customers. Over the last twelve months, there has been a
 substantial swing in momentum in our target market segment in switching
 from proprietary mobile platforms to a more open and flexible mobile
 computing platform.  Your Company plans to build on its strengths in
 this fast emerging technology space and continue to add high value and
 differentiated services, thereby capitalize on the numerous
 opportunities that are being created in these uncertain times.
 
 3.2 Strategic Resourcing
 
 In order to sustain in times of economic recession, all efforts have
 been made to improve the operational efficiencies without effecting our
 customer satisfaction. We have brought down the operational costs by
 right- sizing the team structure, assigned multiple roles to the
 existing team, worked more closely with our clients to understand their
 pain areas and offered them cost effective solutions. We have replaced
 high cost under utilized consultants with resources who can be sourced
 at more aggressive costs and can be optimally utilized . We have also
 adopted many other costs saving measures due to which we have managed
 to retain our existing clients and slowly adding up to our existing
 business. We have also provided proper and timely replacement of
 consultants who left the organization. Your Company has taken this as
 an opportunity to increase its bottom line by hiring the new
 replacement resources at lower salary than the existing one. Hence,
 even in this economic slow down we managed to retain our existing
 clients and the profit margins and are slowly adding up to our existing
 business
 
 3.3 Overseas Subsidiaries
 
 3.3.1 SQL Star International, Inc, USA (SQL Star, USA) is primarily
 involved in providing IT consulting and execution of Embedded Wireless
 and Software projects. The EWS business unit is an increasingly
 important part of our strategy and our expected future results. The IT
 consulting businesses across USA, which is the major revenue driver of
 SQL Star, USA, has been severely affected, directly or indirectly, due
 to reduced spending on IT by corporate houses/large system integrators.
 SQL Star, USA has not been able to insulate itself entirely from
 adverse market conditions. However, it has not been as severely
 impacted as its competitors, due to the fact that the companys major
 focus is on non-IT and non- Financial Services verticals. The EWS
 business unit has forged a strategic partnership with Texas
 Instruments, a world leader in the wireless semiconductor industry; and
 acquired five marquee customers - Qualcomm, Motorola, Texas
 Instruments, Novatel Wireless, and Kyocera Wireless. The smartphones,
 mobile internet devices, netbooks, and consumer electronics industry is
 a large, growing and vibrant market. This in turn creates numerous
 opportunities for SQL Star, USA to provide professional engineering and
 system integration services tailored for open mobile platform based
 device development. SQL Star, USA has taken quite a few initiatives in
 terms of rationalizing manpower cost and control over operating costs,
 so as to improve the profitability.
 
 3.3.2 International SQL Star Pte Ltd, Singapore (SQL Star, Singapore)
 is primarily into IT consulting and execution of Software Projects. On
 the Software Projects side, SQL Star, Singapore has established itself
 
 as one of the credible player in Business Intelligence, Microsoft
 Sharepoint and .Net Technologies. SQL Star, Singapore has been
 recognized as Microsofts most preferred Vendor on Business
 Intelligence & Share Point platforms . Due to global recession and
 consequent job cuts by clients, the revenues from consulting business
 have taken a dip from Nov 08 onwards. However, we have gained good
 traction on the projects side and bagged a few orders; some of them are
 in the Government space. SQL Star, Singapore has taken quite a few
 initiatives in terms of rationalizing Manpower Cost and control over
 operating costs, so as to improve the profitability.
 
 3.3.3 SQL Star International Pty Ltd, Australia (SQL Star, Australia)
 primarily provides IT Consulting Services In June 08, Australian
 Immigration Department cancelled the visas for certain companies
 involved in the consulting business and this has negatively impacted
 the business of SQL Star, Australia, like other Staff augmentation
 Companies operating in Austrelia. However on making a representation
 during Oct 08 to Australian Immigration Department about our product
 offerings, SQL Star, Australia was granted 10 visas and the pipeline is
 very healthy. It is proposed to completely integrate SQL Star,
 Singapore with SQL Star, Australia in terms of practices & deliveries.
 
 Way Forward
 
 Your Company is not immune to the harsh economic realities that lie
 ahead in the year 2009-10 and with this foresight; your Companys
 complete focused efforts will be towards agility, innovation and
 operational excellence. Your Company has always adapted quickly to
 changing circumstances by its responsive and creative thinking. We have
 also put in place several initiatives to obtain significant cost
 efficiencies. We believe that these measures and continued focus on
 innovation will put us firmly on the road to getting back to posting
 decent growth in revenues and normalized profitability levels.
 
 Our Strategy
 
 - Growing our current businesses organically remains a key priority
 
 - Our goal is to build enduring relationships with both existing and
 new clients.
 
 - Effectively integrate on-site and off-shore capabilities to deliver
 seamless, scalable and cost-effective services.
 
 - Pursue alliances with leading technology providers, that complement
 our core competencies
 
 - Thrust is to refocus our resources to generate increased returns from
 our more established products / service offerings.
 
 Acknowledgements to stakeholders
 
 I take this opportunity to convey my sincere thanks to all
 shareholders, alliance partners, bankers and the employees of our
 Company for all the support and encouragement given us to so far and
 hope for their continued support going forward. Let me assure you that
 the future holds new promise for your Company.
 
 Warms Regards,
 
 N.R. Ganti
 
 Chairman & Managing Director 
 SQL Star International Limited