Tech Mahindra

The Directors present their Twenty-first Annual Report together with
 the audited accounts of your Company for the year ended 31st March
 2008.
 
 FINANCIAL RESULTS                                       Rs. in Million
 For the year ended 31st March                   2008        2007
 
 Income                                        37,023      27,586
 Profit before Depreciation and tax             9,083       6,980
 Depreciation                                    (736)       (463)
 Profit before tax                              8,347       6,517
 Provision for taxation                          (689)       (615)
 Profit after tax before non-recurring / 
 exceptional items                              7,658       5,902
 Non-recurring / exceptional items             (4,401)     (5,250)
 Profit for the year after tax and 
 non-recurring / exceptional items              3,257         652
 Provision in respect of earlier 
 years written back                               165         339
 Balance brought forward from previous year     4,261       4,540
 Profit available for appropriation             7,683       5,531
 Dividend – Interim (Paid)                        NIL        (266)
 Final (Proposed)                                (668)        NIL
 Tax on dividend - On interim dividend            NIL         (37)
 On final dividend                               (113)        NIL
 Transfer to General Reserve                   (1,700)        (65)
 Balance carried forward                        5,202       5,163
 
 
 DIVIDEND
 
 Your Directors have recommended a dividend of 55% (Rs. 5.50 per share
 of face value of Rs. 10) for the financial year ended on 31st March
 2008.
 
 CHANGES IN SHARE CAPITAL
 
 During the year under review, your Company allotted 146,168 shares of
 Rs. 10 each on the exercise of stock options under its various Employee
 Stock Option Plans which increased the number of issued, subscribed and
 paid-up equity shares from 121,216,701 to 121,362,869.
 
 BUSINESS PERFORMANCE / FINANCIAL OVERVIEW
 
 Your Company continues to excel in providing effective business
 solutions to its customers. Your Company’s strategy of providing end to
 end solutions to leading telecom companies around the world by
 leveraging its telecom domain knowledge, excellence in technology and
 robust processes has resulted in strong growth in engagements of larger
 scale and scope. Your Company has emerged as an integrated service
 provider, combining its strength in the areas of Application
 Development and Maintenance, Infrastructure Management Services, IT
 Enabled Services, Business Process Management, Security Services and
 Business Intelligence Services.
 
 During the year, your Company made significant progress in partnering
 customers in the networked IT solution space, helping Telecom Service
 Providers (TSPs) deliver services to enterprise customers. Substantial
 growth has been achieved in the billion dollar business transformation
 deal signed with BT last year. Your Company’s ability to learn,
 delivery capability, domain expertise and project management capability
 has been greatly appreciated by the client.
 
 In continuation with its efforts to enhance its leadership in the
 telecom domain, your Company continues to invest in developing
 competence in its chosen areas of focus.  Your Company has made
 progress in delivering services for network solutions which form a
 significant area of spend by TSPs and cover traditional areas of
 network operations as well as new technologies such as WiMax and IPV6.
 These emerging businesses, in the opinion of your Company, have
 significant potential to scale up in the coming years.
 
 Keeping in line with its strategy of expanding service offerings, your
 Company has significantly ramped up its BPO operations during the year
 under review. Your
 
 Company offers focused BPO and KPO solutions in the areas of service
 provisioning, service activation, incident and problem management,
 contract management, market research, customer care and billing.
 
 During the year under review, your Company has made good progress on
 its strategy to target multi-year deals with end to end ownership of
 customer systems and the Company processes. This initiative has helped
 the Company further its objective of long term partnership with the
 customers. The Company seeks to become an integral part of the
 customer’s transformation journey by offering superior value
 propositions.
 
 Your Company has been continuously pursuing growth opportunities in
 related industries where the strong capabilities acquired by your
 Company can be leveraged effectively. In the previous year, your
 Company has been successful in making inroads into the cable industry.
 Your Company continues to invest in strengthening its marketing
 infrastructure across geographies.
 
 Your Company continued to see strong and profitable growth in the
 financial year 2007-08 across all markets driven by good performance in
 existing and new areas of business.
 
 During the year under review, total income increased to Rs. 37,023
 Million from Rs. 27,586 Million in the previous year, at a growth rate
 of 34%. On a consolidated level, total income increased to Rs. 38,705
 Million from Rs. 29,350 Million in the previous year.
 
 During the year, 77% revenue came from Europe, 17% came from USA and 6%
 came from Rest of the World (ROW).  Your Company added 24 new clients
 across geographies, which include large global corporations.
 
 The Profit before depreciation amounts to Rs. 9,083 Million (25% of
 revenue) as against Rs. 6,980 Million (25% of revenue) in the previous
 year.
 
 Profit after tax, before exceptional items, has increased to Rs. 7,658
 Million from Rs. 5,902 Million. On a consolidated level, profit after
 tax, before exceptional items, increased to Rs. 7,695 Million from Rs.
 6,127 Million in the previous year, a growth of 26%.
 
 During the year, your Company has entered into an agreement with a
 customer under which the Company has made an exclusivity payment of Rs.
 4,401 Million to the customer. Accordingly, this payment has been
 disclosed as an exceptional item in the Profit and Loss account.
 
 MANAGEMENT DISCUSSION AND ANALYSIS REPORT
 
 A detailed analysis of your Company’s performance is discussed in the
 Manaement Discussion and Analysis Report, which forms part of this
 Annual Report.
 
 INITIAL PUBLIC OFFERING (IPO)
 
 Pursuant to the Listing Agreement with the Stock Exchanges, given below
 is the utilisation statement of the funds raised through IPO:
 
                                            Rs. in Million
 Year                 Projections           Actual
 
 Fiscal 2007              842                281
 Fiscal 2008              269                830
 Total                  1,111              1,111
 
 AMALGAMATION OF SUBSIDIARIES
 
 With a view to streamline the operations, it was considered appropriate
 to merge two of the wholly owned subsidiaries of your Company, namely,
 iPolicy Networks Limited and Tech Mahindra (R & D Services) Limited
 with your Company.  Necessary approvals were obtained from the
 respective Boards of Directors and Shareholders after which petitions
 were filed with the jurisdictional High Courts. The Hon’ble High Court
 of Bombay, the Hon’ble High Court of Karnataka and the Hon’ble High
 Court of Delhi, at their hearings held on 28th March 2008, 3rd April
 2008 and 4th April 2008 respectively have approved the Scheme of
 Amalgamation between Policy Networks Limited and Tech Mahindra (R & D
 Services) Limited with your Company. The necessary Orders of the Courts
 have been received and filed with the respective Registrar of Companies
 and effective 20th May 2008 iPolicy Networks Limited and Tech Mahindra
 (R & D Services) Limited stand dissolved without winding-up.
 
 QUALITY
 
 Your Company remains committed to the highest quality standards and has
 achieved several quality accreditations like ISO 9001:2000, ISO/IEC
 20000-1:2005, ISO/IEC 27001:2005, SEI-CMMI Level 5 P-CMM Level 5 and
 SSE-CMM Level 3. These accreditations are a manifestation of the
 strength of your Company’s processes and maturity of its system.
 
 Your Company’s Quality Management Group (QMG) is responsible for
 continuously improving business processes which are bench marked
 against the highest industry standards. Your Company’s goal is to
 ensure greater customer satisfaction by improved quality, productivity
 and cycle time.
 
 HUMAN RESOURCES
 
 During the fiscal year 2007-08, your Company along with its
 subsidiaries made a net addition of 3,135 employees.  The employee
 strength increased to 22,884 as at 31st March 2008, compared to 19,749
 a year before, an increase of 16%. BPO services registered significant
 growth, almost doubling the headcount to 3,445 from 1,755, a year
 before.
 
 Employee Learning and Development/Interface with Academia
 
 The endeavour at your Company is to foster a competency driven
 organization and instill a culture of high performance.
 
 Career enrichment is of key importance and the Education Services Group
 (ESG) at your Company actively involves itself in fostering a learning
 culture among all employees.  Extending higher education opportunities
 for employees forms a core focus of the ESG and it coordinates post-
 graduate education programs from IIT Mumbai and BITS Pilani.
 
 Along with technical know-how, your Company also ensures an all round
 development of its employees through its in-house soft skill training
 programs. The Behavioral training team handles mentoring, guidance and
 career outlining for all employees and is focused on facilitating
 organization-wide capability building through continuously enhancing
 the knowledge, skills and attitude.
 
 Leadership Development
 
 In order to strengthen organization capability, your Company continues
 to focus on developing talent through two unique programs the ‘Global
 Leadership Cadre’ (GLC) and the Management Trainee (MT) program which
 hires the best talent from top academic campuses and grooms them
 through a focused program to take up higher managerial and decision
 making responsibilities.
 
 In addition, the Technical GLC program is offered to internal
 candidates who have been outstanding performers in their current
 assignments and have the potential to take up techno commercial roles
 at critical positions.
 
 INFRASTRUCTURE
 
 Your Company continued to invest in creating best in class facilities
 across the world in accordance with its business plans. Your Company is
 in final stages of completion of the first phase of its campus in
 Hinjewadi SEZ in Pune with 9,000 seats. During the year, your Company
 set up a development center at Belfast, Northern Ireland, having a
 seating capacity of 400 to provide end to end IT and BPO solutions to
 customers primarily in the European and US markets. A new development
 center with state of the art facilities was also opened in Chennai SEZ
 with a capacity of 1,400 seats.
 
 SUBSIDIARY COMPANIES
 
 During the year under review, Tech Mahindra (Malaysia) Sdn Bhd. and
 Tech Mahindra (Beijing) IT Services Limited became subsidiaries of your
 Company.
 
 As on 31st March 2008, your Company has 11 subsidiaries and 2 step-down
 subsidiaries. There has not been any material change in the nature of
 the business of the subsidiaries. As already reported in the previous
 Annual Report, Tech Mahindra (R&D Services) Pte. Limited, Singapore, a
 dormant step-down subsidiary of your Company had applied for voluntary
 closure and was struck off the Register of Companies with effect from
 8th April 2007.
 
 As required under the Listing Agreements with the Stock Exchanges, the
 Consolidated Financial Statements of your Company and all its
 subsidiaries are attached. The Consolidated Financial Statements have
 been prepared in accordance with Accounting Standard AS 21, AS 23 and
 AS 27 issued by The Institute of Chartered Accountants of India and
 show the financial resources, assets, liabilities, income, profits and
 other details of your Company and its subsidiaries and associate
 companies as a single entity, after elimination of minority interest.
 
 Your Company has been granted exemption for the year ended 31st March
 2008 by the Ministry of Corporate Affairs vide its letter dated 12th
 March 2008 from attaching to its Balance Sheet, the individual Annual
 Reports of each of its subsidiaries. Documents of the subsidiaries will
 be submitted on request to any member wishing to peruse a copy, on
 receipt of such request by the Assistant Company Secretary of the
 Company. However, as directed by the Central Government, the financial
 details of the subsidiaries have been separately furnished forming part
 of this Annual Report. These documents will also be available for
 inspection by any member at the registered office of the Company and
 the office of the respective subsidiary companies during working hours
 upto the date of Annual General Meeting.
 
 EMPLOYEE STOCK OPTION PLAN
 
 Details required to be provided under the Securities and Exchange Board
 of India (Employee Stock Option Scheme and Employee Stock Purchase
 Scheme) Guidelines, 1999 are set out in Annexure I to this Report.
 
 CORPORATE SOCIAL RESPONSIBILITY
 
 Your Company, as a responsible corporate entity, believes firmly in
 meeting its social responsibility towards the development of the
 underprivileged in today’s society. The Tech Mahindra Foundation is the
 CSR arm of your Company. Your Company contributes 1% of its PAT every
 year to fund the CSR activities undertaken on its behalf by the
 Foundation. During the year 2007-08, the Tech Mahindra Foundation has
 made total donations of Rs. 30 Million to meet its charitable
 objectives. Your Company and its employees have added Rs. 84 Million to
 the corpus account which stands at Rs. 304 Million.
 
 The Tech Mahindra Foundation believes in the power of education to
 bring about a transformation in the lives of the underprivileged,
 besides being the essential and critical element in national
 development. The Foundation has focused on bringing about positive
 changes in the area of education for the economically disadvantaged by
 developing partnerships with reputed NGOs who share the Foundation’s
 vision. It also seeks out organizations which have effective vocational
 training programs to enable young people to advance towards a better
 economic future.
 
 Some of the activities undertaken by the Foundation in association with
 its NGO partners include providing educational support to the children
 of waste pickers and construction workers and to children with various
 physical disabilities. The Foundation has supported organizations
 running educational centres for slum children and seeking to improve
 quality of education in municipal schools. It has encouraged its
 partners to pay special attention to the needs of the girl child.
 
 The year under review saw the Foundation launching some innovative
 initiatives such as:
 
 setting up of an employability portal which will help towards personal
 development and training of persons with disability; the software will
 be developed by employees of your Company;
 
 development of an English language competence course for
 underprivileged school dropouts; and a scheme to improve education in
 Delhi Municipal schools by instituting a scheme to recognize and honour
 outstanding teachers (Shikshak Samman Scheme).
 
 Your Company continued its policy of donating computer hardware to
 schools and charitable institutions.
 
 During the year under review, your Company set up an educational Trust,
 “Mahindra Education Foundation”, along with another company from the
 Mahindra Group for the purpose of setting up educational college
 campuses to improve the availability of qualified professionals for
 industry.
 
 CORPORATE GOVERNANCE PHILOSOPHY
 
 Your Company believes that Corporate Governance is a voluntary code of
 self-discipline. In line with this philosophy, it follows healthy
 Corporate Governance practices and reports to the shareholders the
 progress made on the various measures undertaken. Your Directors have
 reported the initiatives on Corporate Governance adopted by your
 Company which are included in the section ‘Corporate Governance’ in the
 Annual Report.
 
 DIRECTORS
 
 Mr. Bharat N. Doshi, Hon. Akash Paul and Mr. Arun Seth retire by
 rotation, and being eligible, offer themselves for re-appointment.
 
 DIRECTORS’ RESPONSIBILITY STATEMENT
 
 Pursuant to section 217(2AA) of the Companies Act, 1956, your
 Directors, based on the representation received from the Operating
 Management, and after due enquiry, confirm that:
 
 i. in the preparation of the annual accounts, the applicable accounting
 standards have been followed;
 
 ii. they have, in the selection of the accounting policies, consulted
 the Statutory Auditors and these have been applied consistently and
 reasonable and prudent judgments and estimates have been made so as to
 give a true and fair view of the state of affairs of the Company as at
 31st March 2008 and of the profit of the Company for the year ended on
 that date;
 
 iii. proper and sufficient care has been taken for the maintenance of
 adequate accounting records in accordance with the provisions of the
 Companies Act, 1956 for safeguarding the assets of the Company and for
 preventing and detecting fraud and other irregularities;
 
 iv. the annual accounts have been prepared on a going concern basis.
 
 AUDITORS
 
 M/s. Deloitte Haskins & Sells, Chartered Accountants, the Auditors of
 your Company, hold office up to the conclusion of the forthcoming
 Annual General Meeting of the Company and have given their consent for
 re-appointment.  The shareholders will be required to elect auditors
 for the current year and fix their remuneration. Your Company has
 received a written confirmation from M/s. Deloitte Haskins & Sells to
 the effect that their appointment, if made, would be in conformity with
 the limits prescribed in Section 224 of the Companies Act, 1956.The
 Board recommends the re-appointment of M/s. Deloitte Haskins & Sells as
 the Auditors of the Company.
 
 CONSERVATION OF ENERGY AND TECHNOLOGY ABSORPTION
 
 In view of the nature of activities that are being carried on by your
 Company, Rule 2A and 2B of the Companies (Disclosure of Particulars in
 the Report of Board of Directors) Rules, 1988, concerning conservation
 of energy and technology absorption, respectively are not applicable to
 your Company. Your Company being a software solution provider requires
 minimal energy consumption and every endeavour has been made to ensure
 the optimal use of energy, avoid wastage and conserve energy as far as
 possible.
 
 FOREIGN EXCHANGE EARNINGS AND OUTGO
 
 The foreign exchange earnings of your Company during the year were Rs.
 35,637 Million (Previous Year Rs. 27,381 Million), while the outgoings
 were Rs. 18,133 Million (Previous Year Rs. 16,340 Million).
 
 PARTICULARS OF EMPLOYEES
 
 Your Company had 510 employees who were in receipt of remuneration of
 not less than Rs. 2,400,000 during the year or Rs. 200,000 per month
 during any part of the said year. However, as per the provisions of
 Section 219 (1) (b) (iv) of the Companies Act, 1956, the Directors’
 Report being sent to the shareholders does not include this Annexure.
 Any shareholder interested in perusing a copy of the Annexure may write
 to the Assistant Company Secretary at the Registered Office / Corporate
 Office of the Company.
 
 DEPOSITS AND LOANS/ADVANCES
 
 Your Company has not accepted any deposits from the public or its
 employees during the year under review.
 
 The particulars of loans/advances and investment in its own shares by
 listed companies, their subsidiaries, associates, etc., required to be
 disclosed in the annual accounts of the Company pursuant to Clause 32
 of the Listing Agreement are furnished separately.
 
 AWARDS/RECOGNITION
 
 Your Company continued its quest for excellence in its chosen area of
 business to emerge as a true global brand.
 
 Several awards and rankings continue to endorse your Company as a
 thought leader in telecom industry.
 
 Awards for the year
 
 Selected in the Leaders Category in ‘The 2008 Global Outsourcing 100’
 
 (IAOP’s Annual Listing of the World’s Best Outsourcing Service
 Providers)
 
 Winners of the ‘Best Overall Recruiting & Staffing Organization of the
 Year Award’ (RASBIC Awards 2008)
 
 Employer Branding Award in ‘Innovation in the recruitment
 category’(RASBIC Awards 2008)
 
 Product Innovation Award for Enterprise DRM (Frost & Sullivan, Mar’08)
 
 Vertical Growth Leadership in Telecom Software (Frost & Sullivan,
 Mar’08)
 
 ‘Excellence in Information Technology’ (IT Peoples Award)
 
 ACKNOWLEDGEMENTS
 
 Your Directors gratefully acknowledge the contributions made by
 employees towards the success of your Company.  Your Directors are also
 thankful for the co-operation and assistance received from its
 customers, vendors, bankers, STPI, regulatory and Governmental
 authorities in India and abroad and its shareholders.
 
                                       For and on behalf of the Board
 
 Mumbai                                             Anand G. Mahindra
 28th May 2008                                               Chairman