Zensar Technologies

The Directors are delighted to present their 45th Annual Report
 together with the Audited Accounts for the year ended 31st March, 2008.
 
 FINANCIAL HIGHLIGHTS
 
 The Financial Results for the year are as under:
 
 Zensar Technologies Limited
 
                                                        (Rs. Crore)
                                                Year ended    Year ended
                                                31st March    31st March
                                                      2008         2007
 
 Income from operations                             335.87       278.27
 Miscellaneous Income                                11.91         7.18
 Total                                              347.78       285.45
 Profit Before Taxation and Prior Period Expenses    48.67        36.34
 Profit After Taxation and Prior Period Expenses     45.38        33.86
 Proposed Dividend                                    9.11         8.37
 Transfer to General Reserves                         4.54         3.39
 
 Zensar Technologies and Subsidiaries (Consolidated)
 
                                                      (Rs. Crore)
 
                                                 Year ended  Year ended
                                                 31st March  31st March
                                                    2008          2007
 
 Income from operations                            782.93       605.86
 Miscellaneous Income                               12.19         8.97
 Total                                             795.12       614.83
 Profit Before Taxation, Prior Period Expenses 
 & Minority Interest                                81.43        74.45
 Profit After Taxation and before Minority Interest 64.50        57.64
 Minority Interest                                  (0.47)       (0.45)
 Profit After Taxation                              64.03        57.19
 
 FINANCIAL RESULTS
 
 During the financial year 2007-08, your Company recorded total income
 of Rs. 347.78 Crore comprising Income from Software Development and
 Allied Services of Rs. 335.87 Crore, and other income of Rs. 11.91
 Crore. The Company recorded a net profit of Rs. 45.38 Crore reflecting
 a growth of 34.02%.
 
 On a consolidated basis, your Company has steadily gained momentum with
 Total income of Rs. 795.12 Crore comprising Income from Software
 Development and Allied Services of Rs. 782.93 Crore and other income of
 Rs. 12.19 Crore. The Consolidated Profit before Taxation, prior period
 expenses and minority interest was Rs. 81.43 Crore reflecting a growth
 of 9.38%. The Consolidated Profit after Taxation was Rs. 64.03 Crore
 reflecting an increase of 11.96%.
 
 USA, UK and Rest of the World accounted for 51%, 22%, and 27% of the
 total revenues respectively.
 
 BUSINESS UPDATE
 
 During the year, which has been a tough one for the Software Exports
 industry as a whole with the decline of the dollar and other currencies
 and the softness in global economies, the Company was able to deliver
 good growth in revenues and a respectable growth in profits by a
 three-pronged strategy:
 
 - Extreme focus on cost minimisation and increase of utilization and
 productivity at all levels. The Company’s investments in automation of
 software development processes have begun to pay off.
 
 - Consolidation of our business in Japan through the integration of EZA
 Co. Ltd. into the newly minted Zensar Advanced Technologies Ltd. and
 consolidation of the Company’s acquisition of Thought Digital which has
 now become an integral part of our East Coast operations in the USA.
 
 - Successful exploitation of new revenue opportunities in emerging
 areas like Infrastructure Management, Testing and Customer-focused
 training and learning services and new verticals like Media,
 Pharmaceuticals and Textiles.
 
 The Company has launched a one year Global Business Transformation
 Programme under the banner ‘Zensar Center for Business Innovation’
 (ZCBI). The ZCBI programme is aimed at creating quality resources for
 the high growth sectors of Retail, Operations and Financial Services
 and is partnered by our exisiting clients in these segments.
 
 The Company also entered into a strategic alliance with SOA Software, a
 leading provider of comprehensive Integrated SOA governance solutions.
 This will strengthen the Company’s consulting offerings in the areas of
 Workflow Management, Enterprise Content and Collaboration Management
 and Services Oriented Architecture and enable entry into new global
 accounts.
 
 In July 2007, RPG Group purchased 29% shares held by Fujitsu Services
 Ltd. UK and Fujitsu Services Holdings B.V. Post acquisition, RPG Group
 now holds 50.41% shares of your Company.  The consolidation of holding
 by RPG Group has brought greater impetus to the growth being targeted
 by your Company.
 
 In early April 2007, your Company incorporated a Joint Venture, Zensar
 Advanced Technologies Limited (ZATL) in Japan. ZATL in turn acquired
 certain specified customers, assets, employees and technology including
 infrastructure capabilities and domain expertise from EZA Co. Ltd.
 ZATL now specializes in innovative Products in Media Server, Digital
 Appliances and Security space. Having acquired technology and domain
 expertise pertaining to mobile terminals, ZATL is poised to enter the
 digital home appliances and Security markets.
 
 On the organic growth front, your Company has incorporated branches in
 Hong Kong and the Netherlands. The Company has also set up a near shore
 development center in Poland for further enhancing its reach in the
 fast growing European market. The Center would allow the Company to
 exploit the huge potential of the European market.
 
 DIVIDEND
 
 In view of Companys profitable performance, your Directors are pleased
 to recommend, for your approval, final dividend at the rate of Rs. 3.8
 per share on the Equity Shares of Rs.  10/- each for the financial year
 ended 31st March, 2008. The Dividend, if approved by the shareholders
 in the ensuing Annual General Meeting, would result in an outflow of
 Rs. 10.65 Crores including Dividend Distribution Tax, Surcharge and
 Cess thereon. The Dividend would be paid to those shareholders whose
 names appear in the Register of Members on the date of the forthcoming
 Annual General Meeting.
 
 FIXED DEPOSITS
 
 Currently, the Company does not have any Fixed Deposit Scheme.
 
 DIRECTORS
 
 Consequent upon sale of shares by Fujitsu Services Ltd., UK and Fujitsu
 Services Holdings B.V. Mr. Jack Noble, Mr. Andrew MacNaughton, Mr Petri
 Imberg (Alternate Director to Mr.  Jack Noble) and Mr. Anthony Pipe
 (Alternate Director to Mr. Andrew MacNaughton) resigned as Directors of
 the Company. During the year, Dr. Nirmalya Kumar also resigned from the
 Board of Directors of the Company. The Board places on record its warm
 appreciation of the contributions made during their tenure as
 Directors.
 
 Mr. Venkatesh Kasturirangan was appointed Additional Director at the
 Board Meeting held on 28th January 2008. He holds office up to the date
 of the ensuing Annual General Meeting.  A notice has been received from
 Members of the Company pursuant to the provisions of Section 257 of the
 Companies Act, 1956 signifying their intention to appoint M r.
 Kasturirangan as a Director liable to retire by rotation.
 
 Mr. A.T. Vaswani and Mr. Arvind Agrawal retire by rotation at the
 ensuing Annual General Meeting and, being eligible, offer themselves
 for reappointment.
 
 CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE
 EARNINGS AND OUTGO
 
 The provisions relating to disclosure of details regarding energy
 consumption, both total and per unit of production are not applicable
 as the principal activities of the Company are Software Development,
 Networking, E-Commerce and Systems Integration which are not energy
 intensive.
 
 Particulars prescribed under sub- section (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, in respect of
 technology absorption are set out in `Annexure A to this report.
 
 Particulars regarding foreign exchange earnings and expenditure during
 the year are given in Note 12 and Note 13 of Notes to Accounts
 respectively.
 
 DIRECTORS RESPONSIBILITY STATEMENT AS REQUIRED UNDER SECTION 217 (2AA)
 OF THE COMPANIES ACT, 1956
 
 The Directors confirm that -
 
 i) in the preparation of the annual accounts, the applicable accounting
 standards have been followed and there has been no material departure;
 
 ii) appropriate accounting policies have been selected and applied
 consistently and the Directors have 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 31st March 2008 and the profit of
 the Company for the year ended 31st March 2008;
 
 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.
 
 PARTICULARS OF EMPLOYEES
 
 Information as per Section 217(2A) of the Companies Act, 1956 read with
 the Companies (Particulars of Employees) Rules, 1975 are set out in
 ‘Annexure B’ to this report.
 
 SUBSIDIARY COMPANIES
 
 As per section 212 of the Companies Act, 1956 your Company is required
 to attach the Directors Report, Balance Sheet and Profit & Loss Account
 of its subsidiaries. Accordingly, an application has been made to the
 Ministry of Corporate Affairs (MCA), Government of India, requesting an
 exemption from such attachment as the Audited Consolidated Financial
 Statements are presented in the Annual Report presenting a full and
 fair picture of the state of affairs and the financial condition of the
 Company and approval is awaited. The Company will make available the
 Annual Accounts and related information of the subsidiaries, where
 applicable, upon request by any shareholder of the Company. These
 documents are also kept for inspection during business hours at our
 registered office.
 
 CORPORATE GOVERNANCE
 
 In terms of the Listing Agreement, the Management Discussion and
 Analysis Report is annexed and forms part of the Annual Report. A
 report on Corporate Governance along with the Certificate dated 24th
 April 2008 from M/s. S. V. Deulkar & Co., Practicing Company
 Secretaries detailing compliance with the provisions of Clause 49 of
 the Listing Agreement with the Stock Exchanges on which the Companys
 shares are listed, is also annexed forming part of the Annual Report.
 
 EMPLOYEES STOCK OPTION PLAN
 
 Your Company has implemented two employee stock options schemes viz.
 2002 Employee
 
 Stock Option Plan (2002 ESOP) and 2006 Employee Stock Option Plan (2006
 ESOP) for granting term based and performance based stock options to
 employees.
 
 Disclosures in respect of the Stock Option Plans in compliance with
 Clause 12 of the Securities and Exchange Board of India (Employee Stock
 Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999, are
 set out in `Annexure C to this report.
 
 AUDITORS
 
 M/s Price Waterhouse, Chartered Accountants, Auditors of the Company,
 retire at the ensuing Annual General Meeting and, being eligible, offer
 themselves for re-appointment. The Company has received a Certificate
 from the Auditors that they are qualified under Section 224(1B) of the
 Companies Act, 1956, to act as the Auditors of the Company, if
 re-appointed.
 
 ACKNOWLEDGEMENTS
 
 The Board places on record their appreciation of the contribution of
 employees at all levels, customers, business and technology partners,
 vendors, investors and all other stakeholders towards the performance
 of the Company during the year under review.
 
                                       For and on behalf of the Board
 
                                                      H.V. Goenka
                                                       Chairman
 Place : Mumbai
 Dated : 24th April 2008