Geodesic - Annual Director's Report - 2007-2008

GEODESIC INFORMATION SYSTEMS LIMITED

ANNUAL REPORT 2007-2008

DIRECTOR'S REPORT

To,The Members ofGeodesic Information Systems Limited

We are delighted to present our report on the business and operations of the company for the year ended March 31st 2008.

FINANCIAL RESULTS (Rs In Lacs)Particulars Year ended 31st March

2008 2007 Audited Audited

Net Sales/ Income from Operations 25,545.56 16,508.69

Other Income 1,387.20 774.20

Total Income 26,932.76 17,282.89

Total Expenditure 10,466.72 5,722.75

Gross Profit before interest, depreciation and taxes 16,466.04 11,560.14

Finance Cost 738.44 10.77

Depreciation & Amortization 3,120.73 2,065.04

Profit before tax 12,606.87 9,484.33

Provision for taxation 1,760.00 154.87

Profit before deferred tax 1,0846.87 9,329.46

Deferred Tax (Credit/Charge 192.26 238.47

Prior period expenses 1.29 133.99

Net Profit after tax 11,040.42 9,433.94

Appropriations:

Balance brought forward 14,383.63 6,176.10

Transfer to General Reserve 1,104.04 943.39

Dividend:

Interim (equity) 184.31 1,18.33

Final (equity) 368.61 1,18.33

Preference dividend 5.45 8.25

Tax on dividend:

Interim (equity) 31.33 16.60

Final (equity) 62.66 20.11

Preference dividend 0.93 1.40

Balance carried to Balance Sheet 23,663.12 14,383.63

Paid - up equity share capital 1843.06 1,183.31

Paid - up reference share capital - 165.00

Reserves excluding revaluation reserves 42,093.25 28897.15

Earning per share 12.09 10.57

Diluted Earning per share 12.00 10.47

Your Company recorded a significant growth in its performance in the fiscal year 2007-08.

Your company recorded a turnover of Rs. 269.33 crore which was higher by 64% as compared to last year. Income other than income from operations grew by 56% and stood at Rs. 1 387.20 Lacs as against Rs. 774.2 Lacs for the previous year. The profit after tax also showed a remarkable growth and grew by Rs. 9433.94 Lacs to Rs. 11,040.42 Lacs. A growth of almost 86%. Post Bonus, the EPS growth has been recorded at 12.09%. Your management made all efforts to keep its promise of increasing revenues and market share while developing new products. The year witnessed wonderful results and the coming years hold promises with lot of new development in the company.

BUSINESS RESULTS

Your Company recorded a significant growth in its performance in the fiscal year 2007-08.

Your company recorded a turnover of Rs. 269.33 crore which was higher by 64% as compared to last year. Income other than income from operations grew by 56% and stood at Rs. 1387.20 Lacs as against Rs. 774.20 Lacs for the previous year. The profit after tax also showed a remarkable growth and grew by Rs. 9433.94 Lacs to Rs. 1 1,040.42 Lacs. A growth of almost 86%. Post Bonus, the EPS growth has been recorded at 12.09%. Your management made all efforts to keep its promise of increasing revenues and market share while developing new products. The year witnessed wonderful results and the coming years hold promises with lot of new development in the company.

REVIEW OF OPERATIONS AND FUTURE OUTLOOK

Your company had a successful fiscal 2008 and directors are pleased to report excellent performance for the year under review. We continued to build exceptional market opportunities, broadened customer base and exerted to create a global community without barriers across platforms, devices and operating systems as best we can.

The year gone by was very dynamic and encouraging. Your Company has been privileged to be associated with MIO Technology Limited, a leading maker of GPS devices as the latter has opted Mundu IM to be pre-loaded onto the Mio Digiwalker A702 GPS PDA Phone which was launched in September 2007. During the year under review, your Company along with Gothenburg Post, Sweden has launched GP-Qrir, an interoperable Instant Messenger on the desktop and mobile platform. The evolved capabilities of Mundu IM V4 has been introduced on Windows Mobile based Pocket PC devices, popular Sony Ericsson phones and iPhone Edition for the Apple iPhone and thus enable its users to have access to seamless chat across leading IM services AIM., MSN.. Yahoo, and Google Talk -all through a single chat window.

Geodesic Mundu Radio scaled new peaks by achieving Symbian Signed status for latest Nokia Smart phones. Geodesic signed an agreement with loWorld Media, one of the world's largest internet radio stations to offer access to Internet radio stations as presets on its Mundu Radio. The synergy with to World Media will not only allow Mundu radio users to enjoy high quality mobile music experience but also bestow on them a large selection of music leading to a new era in mobile entertainment.

Geodesic along with IDEA Cellular jointly launched 'IDEA Radio' - a breakthrough technology, designed and optimized for mobile operations, enables IDEAs 20 million subscribers to seamlessly tune into a range of exciting entertainment channels.

AWARDS AND RECOGNITIONS

Your Company has won several accolades and recognition during the fiscal 2008.

Its Mundu Radio won the CNET 'Webware 100' Award for the Mobile Category. Winning this award in the Company of high caliber nominees such as google and yahoo proves the merit of our products. Additionally, PC Magazine-a renowned technology Magazine has rated Mundu IM V4 as one of the top 12 mobile applications in 2007. Munduspeak won Product of the year awards 2007 -for innovative communication solutions awarded by TMCnet-Technology Marketing Corporation.

Geodesic has reoriented itself to stay focused on providing users the power to communicate with family, friends and colleagues, efficiently over cost effective and preferred medium, access to data at home, office or on the web or simply tune into more than one lakh music streaming channels.

Your management feels that the ensuing year will be full of ventures and adventures. The time to come should assure us in our business growth as well as creating an international brand.

CONSOLIDATED FINANCIAL STATEMENTS

The Company has received exemption from the Ministry of Company Affairs pursuant to the requirement of Section 212(8) of the Companies Act, 1956, from annexing the subsidiary stand alone accounts and the documents mentioned in the aforesaid section in the Annual Report 2007-08. However, the Company has presented in the annual report, the Consolidated Financial Statements of its subsidiaries duly audited by the statutory auditors.

The Company has disclosed in the consolidated balance sheet of the Company with regard to Capital, reserves, total assets and liabilities, details of investment, profit before taxation, provision for taxation, profit after taxation and proposed dividend of each subsidiary. The detailed information will be made available to the investors seeking such information at any point of time. Further, the annual accounts of the subsidiaries will also be kept for inspection at the registered office of the Company and also be made available at the annual general meeting.

The Consolidated Financial Statements presented by your company is prepared in strict compliance with the Listing Agreement' as prescribed by SEBI and in accordance with Accounting Standard (AS 21) issued by the Institute of Chartered Accountants of India.

APPROPRIATIONS

Dividend

In view of the Company's profitable performance, the Directors declared an interim dividend of 10% on January 29th 2008 which was paid on February 20th 2008

Your Board is further pleased to recommend for approval of shareholders a final dividend @ 20% on equity shares of Rs. 2 each fully paid shares and any further shares that may be allotted by the company on conversion of ESOP's warrants prior to August 11, 2008 (being the beginning date of book closure period for the purpose of dividend entitlement). Together with the interim dividend, the total dividend for the year shall be 30% amounting to Rs. 553.13 Lakhs.. Distribution Tax both on the interim and final dividend is being borne by the Company.

The dividend pay out for the year under review has been formulated in accordance with the Company's policy of striving to pay stable dividend linked to long term performance, keeping in view the Company's need for capital for its growth plans and the intent to finance such plans through internal accruals to the maximum. Your company continues to stick to policy of dividend payment in January and July every year.

Transfer to reserves

Your Company proposes to transfer Rs. 1 104.04 lakhs to the General Reserve out of the amount available for appropriations and an amount of Rs.23878.75 lakhs is proposed to be retained in the Profit and Loss Account.

Amalgamation of Picopeta Simputers Pvt Ltd, Bangalore (Picopeta) and Edot Solutions India Pvt. Ltd, Mumbai (Edot) with the Company.

By an order dated November 23rd 2007 and December 13, 2007 the Hon'ble High Court at Bombay Judicature and Bangalore Judicature respectively has approved the Scheme of amalgamation of Picopeta and E dot with the Company. Merger of Picopeta and Edot with your Company is w.e.f. April O1st 2007.

The merger of these two companies has lead to streamline of the holding company structure and has bestowed a strong foundation and widespread pool of products, skills, talent under one umbrella which would help your company to become an international brand and to further widen its scope. Geodesic product spread is also widened with the merger, offering end to end solutions to the users.

SUBSIDIARIES

With your support and confidence in the company, your company has been growing at apace. As on date your company has six (6) wholly owned subsidiaries in India and abroad.

Foreign Subsidiaries

Geodesic Information systems Inc (GISI), USA, Engage Solutions Limited (ESL), Hong Kong, Geodesic Information Systems AB (GISAB), Sweden, Geodesic Information Systems Pte Ltd. (GISPL), Singapore, Geodesic Technology Solutions Limited (GTSL), Hong Kong.

Your Board has applied to ACRA (Accounting & Corporate Regulatory Authority) for the closure of Singapore subsidiary due to changes in policies and various management strategies, the management feels it isn't feasible to instigate its business operations in Singapore.

Your Company has incorporated Geodesic Holdings Limited, wholly owned subsidiary in Mauritius to streamline the Company's stake in its subsidiaries and for a better integration and a smoother flow of information and operation. The Company was incorporated on April 08th 2008. The effect of this company will be seen in the years to come.

Indian Subsidiary

During the fiscal 2008, Picopeta Simputers Pvt. Limited, wholly owned subsidiary of the company merged into the Company leading to a stronger foundation and a widespread pool of products. As on date, the Company has only one Indian subsidiary -Chandamama India Limited

Chandamama India Limited (Chandamama)

Chandamama, a Geodesic group company and India's oldest Children's literature house commemorated its 60 years of history by releasing an Anniversary Book on April 17th 2008. The book comprises select stories spanning the different genres of stories that the magazine has published in the last six decades. The release was done by Mr. Amitabh Bachchan at a function held in Mumbai.

Post acquisition Chandamama is on a major expansion drive. The print product is being re-launched and aggressively promoted across India and overseas. Chandamama is also foraying into films and video production with its bank of over 12,000 exclusive stories. Interactive books and CDs are also part of Chandamama's efforts to reach out, educate and entertain today's young minds.

Chandamama made a rights issue for 25,00,350 equity shares of Rs. 10 each at par for an amount aggregating to Rs. 250.035 lakhs to the equity shareholders on rights basis in the ratio of one equity share for every two equity shares held on the record date i.e. 15th December 2007 ('issue'). Your Company was allotted 23,38,350 equity shares on the right basis. As on date of this report, your company has acquired 94.91% shareholding in Chandamama subsidiary.

A statement under section 212 of the Companies Act 1956, in respect of the wholly owned subsidiaries of your company also forms a part of the annual report. This statement talks of both Indian as well as foreign subsidiaries of the company.

COMPANY FINANCE

Equity Share Capital

The paid up equity share capital of the company has been increased from Rs.1183.30 Lacs divided into 59,165,257 equity shares of Rs. 2 each to Rs.1843.06 Lacs divided into 92,152,939 shares of Rs. 2 each (as on 31st March 2008) consequent to:

Date of Number of Allotted underAllotment Equity Shares

As on 1st 59165257April 2007

09-Apr-07 130896 ESOP Conversion

09-Apr-07 1040000 Warrant conversion b Rakesh Mathur Issue on Shares Swap Basis to

07-May-07 306296 Chandamama shareholders

06-Jul-07 64795 ESOP Conversion

06-Aug-07 72332 ESOP Conversion

03-Sep-07 30389788 Bonus @ 1:2

12-Oct-07 130330 ESOP Conversion

07-Jan-08 191595 ESOP Conversion

Issue shares on preferential basis under29-Jan-08 661650 Scheme of Amalgamation

Notes:

1. Exercise of 589,948 option by the employees of the company, granted under Geodesic ESOP scheme 2002; and

2. Mr. Rakesh Mathur was allotted 13,40,000 warrants in the AGM held on 24th August 2005. In partial conversion of these warrants Mr. Mathur converted 1,040,000 warrants into 1,040,000 equity shares of Rs. 2 each. As on date all warrants issued to Mr. Rakesh Mathur have been converted by him.

3. Issue of 306,296 Geodesic equity shares to shareholders of Chandamama India Limited on share swap basis for the acquisition of more than 94% shareholding in Chandamama India Limited as per the shareholders approval on March 31th 2007.

4. Your Company allotted Bonus shares to all the existing holders of equity shares of the Company in the ratio of 1:2 i.e. 1 equity share for every 2 existing equity shares as bonus.

5. As per Scheme of Amalgamation of Picopeta Simputers Pvt. Limited and a dot Solutions India Pvt. Limited with your Company, and order of hon'ble High Court, Mumbai, the Company has issued 6,61,650 fully paid up equity shares (including bonus shares) to the edotshareholders.

FCCB Issue

The Company had successfully launched US$125 million unsubordinated, unsecured foreign currency zero coupon convertible bonds due 2013 (the 'Bonds') in January 2008 with the approval of RBI. The Bonds are listed on the official list of the Singapore Exchange Securities Trading Ltd (the 'Singapore Stock Exchange'). The Bonds will be convertible into Geodesic ordinary shares, quoted in Indian Rupees ('Rs'). The five year Bonds are expected to carry a yield to maturity of 6.60% per annum. The Bonds will be issued at par and redeemed at 138.3826% on maturity. Citigroup Global Markets Limited was the Sole Global Coordinator and Lead Manager for the offering. The Company intends to use all or substantially all of the proceeds from the issue of the Bonds for overseas acquisitions and investments in joint ventures/wholly owned subsidiaries and for any other use as may be permitted under applicable laws or regulations from time to time.

EMPLOYEE STOCK OPTIONS

Your management believes that grant of stock options to employees is a time tested and well established mechanism to align the interest of employees with those of the Company, to provide them with an opportunity to share the growth of the Company as also to foster long-term commitment.

Geodesic ESOP Plan 2002 has been a very effective tool for rewarding and retaining the employee talent in Geodesic for past 5 years now.

The Employees Stock Compensation Committee, constituted in accordance with the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 administers and monitors the Scheme.

Your management has granted 12,00,000 options to the eligible employees of the company and its subsidiary during the year. Also 4,00,000 options vested during the year. As on 31 st March 2008, out of the total options granted and vested, employees have exercised 589,948 options that are converted into even number of equity share of Rs. 2 each. A total of 21,60,295 options are outstanding to be exercised under the ESOP plan as on that date.

Neither any employee has been granted Options equal to or exceeding 1% of the issued capital (excluding outstanding warrants and conversions) of the Company at the time of grant, nor has any employee been granted options amounting to 5% or more of the total options granted during the year.

As on the date of this report, after closure of the financial year 53,635 options were exercised and converted into even number of equity shares of Rs.2/- each.

FDisclosure required under SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme), Guidelines, 1999 as to the status of options as on 31st March 2008:

a) As on 1st April 2007, options 15,62,743 optionsgranted and not exercised (in force)

b) Options granted during the 9,00,000 and 3,00,000 options Year: convertible into equity shares of Rs.2 each granted on April 09th 2007 and September 24th 2007 respectively

c) Pricing formula: Market price as per SEBI guideline as on date of rantd) Options vested: 4,00000 options

e) Options exercised 589,948 options convertible into equity shares of Rs. 2 each

f) Total number of shares arising 589,948 converted into equity shares ofas a result of exercise of options even number of Rs. 2 each.

g) Options lapsed 12500 options

h) Variations of terms of NILoptions

i) Money realized by exercise Rs. 64.44 lacsof options:

j) Total number of options : 21,60,295 options convertible into Rs. 2in force each (options ranted but not exercised)

k) Employee-wise details of options granted to(1) Senior managerial personnel: 1,57,350 options(details enclosed)

(2) Any other employee who 60,000 optionsreceives a grant in any oneyear of options amounting to5% or more of option granted during that year (details enclosed)

(3) Identified employees who were NILgranted options, during any one year, equal to or exceeding 1 % of the issued capital (excluding outstanding warrants and conversions of the Company at the time of grant

I) Diluted EPS pursuant to issue 12.00of shares on exercise of options calculated in accordance with Accounting Standard (AS) 20 is

Details of exercise price for stock Options outstanding at the end of the year are:

Year End A B C D

31st Mar 08 Rs.79.82-Rs.210.05 21,60,295 42.76 154.36

31st Mar 07 Rs.40.22-Rs. 119.73 1,562,743 53.95 161.30

A = Range of Exercise Price (Rs.) B = No. of Options Outstanding C = Weighted average remaining contractual life (in months) D = Weighted average exercise price

LISTING OF EQUITY SHARES

Your company's scrip is listed on the NSE (National Stock Exchange of India Limited) and BSE (The Bombay Stock Exchange Limited, Mumbai). Further the new allotment of equity shares (Rs. 2 each) on account of issue of bonus shares, conversion of warrants and employees stock options were duly listed with BSE as well as NSE. The entire paid up equity capital is listed on both the exchanges as on date.

Your scrip forms a part of BSE 500 and BSE MIDCAP indices on BSE.

LISTING OF FCCB BONDS

Your Company has issued FCCB Bonds aggregating to US $ 125 million and the said Bonds are listed and traded on Singapore Exchange Securities Trading Limited (SGX-ST)

FIXED DEPOSITS

The Company has not accepted any fixed deposit from the public during the year under review.

DIRECTORS

Mr. Rahul Patwardhan, Non-Executive Director has resigned from the Board of Directors of the Company w.e.f. April 24, 2008 and he ceased to be a Director of the Company with immediate effect. Your Board places on record its sincere appreciation for the remarkable efforts and support provided by Mr. Patwardhan in its arduous times. Mr. Nitin Potdar, senior lawyer and partner at JSA Associates has consented to join the Board as independent director. He has expertise in Foreign Collaborations & Joint Ventures, Mergers& Acquisitions, Takeovers, Corporate Commercial, Securities laws and other allied matters.

Mr. Nitin Potdar was appointed as Additional Directors on April 24th 2008. As per the provisions of Section 260 of the Companies Act, 1956, he holds office only up to the date of the forthcoming Annual General Meeting of the Company. The Company has received notice under Section 257 of the Act along with the requisite deposit, proposing his appointment as a Director of the Company. Resolution seeking approval of the Members for the appointment of Mr. Nitin Potdar as Director of the Company have been incorporated in the Notice of the forthcoming Annual General Meeting along with brief details about them.

Your company as on date has eight (8) Directors comprising of five (5) non executive directors, this makes an optimum combination of executive and non- executive directors in compliance with the norms of corporate governance as per provisions of the listing agreement with stock exchanges.

Dr. Shashikant Kelkar and Mr. Vinod Sethi, independent directors of the company retire by rotation at the conclusion of the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment. Resolutions for the re-appointment will be placed for your approval at the forthcoming Annual General Meeting. Brief resume of the directors retiring by rotation and proposed for reappointment are given under the report on Corporate Governance section of the Annual Report.

HUMAN RESOURCE

At Geodesic, we believe highly trained and motivated people are not only critical to the success but also key driving force of the organisation. To achieve this, we focus on attracting and retaining the best people possible. A combination of strong brand name, congenial working environment and competitive compensation programs enables us to attract and retain these talented people.

At Geodesic, work culture involves challenge, healthy competition, constructive rule-breaking and above all fun. Each employee becomes apart of the Geodesic family, which extends beyond the boundaries of work. Each Geodesic employee is a unique piece which fits into the jig saw puzzle that is running this organization in achieving quality products that suit the customers' needs.

Our human resources department is centralized at our corporate headquarters in Mumbai and partially at Bangalore functions across all of the business segments. We have implemented corporate-wide recruiting, training, and performance evaluation and compensation programs that are tailored to address the needs of each of our business segments.

High retention has been achieved by continuously upgrading competencies of the employees while our focused initiatives at creating a work life balance also serves as a powerful tool to increase retention, in addition to other factors such as best pay packages and entrepreneurial work styles and vibrant work environment. Despite the entire industry reeling under high attrition rates, we take great pride in saying that the attrition rate at Geodesic is very low. At Geodesic, our employee strength worldwide is more than 350 with people at various levels joining regularly.

Our performance management system is primarily based on values and competencies. At the apex level, we closely monitor the growth and development of the top talent in the organization so that their personal ambitions and the organization's aspirations are closely matched.

Some of the key recruitments over the past one year include

* Mr. Sanjay Ramakrishnan joined us as Vice President of Web Marketing. His previous assignments included Google (Head of Marketing-Consumer Products), Intel, World Space and Spice Tele.

* Jeff Peddle joined us as Vice President-Sales and Business Development. He has a total work experience of 15 years, and was earlier associated with Acorntek Inc., Delivery Network Inc, and ADVAL Messaging Solutions.

* Arnab Ganguly joined us as AVP - Business Development and Sales. He has more than 10 years of work experience. Prior to joining us, Arnab was working with Xalted Information Systems, Ariba Inc., and IBM Global Services.

* Krishna Kant joined us as Project Manager. He has a total work experience of 8.5 yrs and was earlier working with Tata Consultancy Services.

* Sujoy Chaudhuri also joined us as a Senior Project Manager. He has around 16 years of work experience. He has been working for philanthropic research and as an independent consultant for software and application tools development.

* Navin Kumar joined us as Sr. Manager-Technical Business Development. He has a total work experience of 9 years and was earlier associated with Motorola, Mascon Communication Technologies, Infosys and Nortel.

* Your Company appointed Mr. Subramanyan as the CEO of Chandamama India Limited. Previously he was in charge of Jasubhai Digital Media.

Geodesic Culture & Knowledge Management

Geodesic's emphasis on innovation and commitment to cost containment means each employee is a hands-on contributor: There's little in the way of corporate hierarchy and everyone wears several hats. At Geodesic, we believe in transparency, flexibility, interaction, integration of thoughts, ideas, culture, values and results across the organization irrespective of hierarchy.

Though growing rapidly, Geodesic still maintains a joint family feel, At Geodesic, there are constant picnic held, various events including quiz competitions, games and also various festive celebrations.

Knowledge Management (KM) at Geodesic allows Geodesic Minds to tie together the collective experiences and knowledge towards better product delivery, individual and organizational excellence. Each employee is encouraged to come out with ideas which will aid in innovative product development or marketing strategies.

Our culture resonates with our goals to create an open and transparent organization in which knowledge is created and shared in a supportive environment where creativity and innovation are highly valued.

PARTICULARS OF EMPLOYEES

The particulars of employees of the company who are in receipt of remuneration, in excess of the limit under sub-section (2A) of Section 217 of the Companies Act, 1956, as amended, read with the Companies (Particulars of Employees) Rules, 1975, for the year ended 31st March, 2008 is annexed hereto with the report.

CORPORATE GOVERNANCE

Your Company continues to be a pioneer in benchmarking our corporate governance policies with the best in the world. Our efforts are widely recognized by our investors in India and abroad. Your company believes it to be essential towards fostering and maintaining various stakeholders' confidence.

Geodesic believes in managing its affairs with diligence, transparency, accountability and responsibility. Good corporate governance is the integral part of the Company's value system.

A certificate from the Auditor's of the Company regarding compliance with the provisions of Corporate Governance as stipulated under Clause 49 of the Listing Agreement and Corporate Governance Report is provided elsewhere in the Annual ,

DEMATERIALIZATION OF SHARES

As you are aware your company has connectivity with both the depositories functioning in India, NSDL and CDSL. The ISIN of the scrip is INE371D01029. As on 31st March 2008, 98.99% of the total equity capital of the company was held in dematerialized form.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO U/S 217(e) OF THE COMPANIES ACT, 1956.

a) Conservation of Energy

Being a software company, energy costs constitute a small portion of the total cost and such operations are not energy intensive. There is not much scope for energy conservation. However, we ensure to undertake all possible measures so as to reduce energy consumption in the company premises by using energy efficient computers and other equipments. Proper maintenance of these equipments is ensured so as to prolong the efficiency of these machines. Form A is not applicable for software industry.

b) Technology Absorption: Not Applicable

c) Foreign Exchange Earnings And Outgo

During the year your company has expanded its 100% Export oriented unit division registered with STPI. The export performance of the company scaled well. The information on Foreign Exchange earnings and outgo is contained in Point 17 to Schedule 22 to Accounts. AUDITORS

The auditors M/s Borkar & Muzumdar, Chartered Accountants retire at the conclusion of the ensuing Annual General Meeting and have confirmed their eligibility for re-appointment.

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to Section 217(2AA) of the Companies Act, 1956, your directors confirm that:

* In the preparation of the annual accounts, the applicable accounting standards have been followed and that there are no material departures;

* They have, in selection of accounting policies, consulted the statutory auditors and have 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 ended 31st March, 2008 and of the profit of the company for that year.

* They have taken proper and sufficient care to the best of their knowledge and ability 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.

* They have prepared the annual accounts on a going concern basis.

ACKNOWLEDGMENT

The Board takes this opportunity to thank all its employees for their dedicated service and firm commitment to the goals of the Company. The Board also wishes to place on record its sincere appreciation for the wholehearted support received from shareholders, bankers and all other business associates, as also from the neighborhood communities of the various Geodesic locations. We look forward to continued support of all these partners in progress.

On Behalf of the Board of Directors

Place: Mumbai Pankaj Kumar Kiran KulkarniDated: July 7th 2008 Chairman Managing Director

MANAGEMENT DISCUSSION AND ANALYSIS

FORWARD LOOKING STATEMENTS

This report contains forward-looking statements, which may be identified by their use of words like 'plans', 'expects', 'will', 'anticipates', 'believes', 'intends', 'projects', 'estimates' or other words of similar meaning. All statements that address expectations or projections about the future, including, but not limited to statements about the company's strategy for growth, product development, market position, expenditures, and financial results are forward-looking statements. Forward-looking statements are based on certain assumptions and expectations of future events. The company cannot guarantee that these assumptions and expectations are accurate or will be realized. The company's actual results, performance or achievements could thus differ materially from those projected in any such forward-looking statements. The company assumes no responsibility to publicly amend, modify or revise any forward looking statements, on the basis of any subsequent developments, information or events.

Overview:

Geodesic Information Systems Limited is a publicly traded company on the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE) of India. The Foreign Currency Convertible Bonds of the Company have been recently listed on the Singapore Stock Exchange (SGX).

Geodesic's innovative real-time presence and communication technologies help millions of people connect with their families, friends, colleagues and acquaintances over voice and text around the world. Geodesic's compelling technology provides Internet users with low cost value telephony and works seamlessly across cell phones, desktops and IP phones.

Geodesic's IM powered enterprise suite, and the retail Mundu IM suite provides businesses and retail users with measurable results, while enhancing the overall user experience across desktops and mobile phones. Geodesic is head-quartered in Mumbai, India.

Geodesic derives its revenues from the following segments

1. Institutions: Geodesic caters to a wide range of institutions including Financial Services, Manufacturing Industries, Service organizations, Portals and Publishers. Geodesic targets the institutional segment through a right mix of direct sales team, system integrators and value-added resellers.

2. Retail: Geodesic distributes Mundu- a suite of products including IM, VoIP, Radio, Email, Montage, etc to smart phone users around the world. Geodesic retails its products through its own web site (www.mundu.com) and through popular Software retailing web sites, Handset manufacturers and Carriers.

Geodesic's business model is a highly flexible combination of license/ subscription fees, per user per annum recurring revenue, pre-paid voice minutes and advertisement/ Click through revenue share.

Institutional offering: .

Geodesic delivers tremendous value to the enterprise segment by seamlessly integrating content aggregation, Customer Alignment and Retention Management (CARM) and Real time communication with collaboration. Geodesic's solution helps enterprises to:

* Derive relevance and synergies out of the huge content assimilation

* Build customer profiles dynamically

* Align product and service offerings to their customer profile and manage customer retention

* Secure real time communication and collaboration across the enterprise

Geodesic's enterprise solution combines enhanced efficiency and productivity across the enterprise and cuts communication costs drastically besides reducing customer acquisition and retention costs.

Geodesic's multi-dimensional white labeled IM provides Portals, Publishers, Handset manufacturers and Carriers a unique offering that helps these companies to:

* Acquire users at a fraction of the cost they currently spend

* Build a large community of users across the world that is hard to get away from

* Enhance and optimize advertising revenues

Geodesic's solution for Portals, Publishers, Handset manufacturers and Carriers combines referral and real time communication and collaboration leading to user generated content, building a community and enhancing advertising revenues.

Management Discussion & Analysis

Retail Solution:

Consumers have a unique behavior pattern - they seldom pay for Internet products on the desktops but pay for the same products they use on their cell phones. Geodesic provides consumers with products they care about and can use these products on their cell phones and desktops by paying a single subscription fee.

Geodesic's Mundu retail suite is available both on the desktops and cell phones (Symbian, Windows Mobile, Palm, Blackberry etc.) and provides Mundu users with a seamless experience of product portability across their desktops and mobile phones.

Geodesic's products address the needs of most mobile users. The products let people effectively use their data plans; enhance convenience and reduce their costs:

* Communicate over voice and text at almost 1/10th their airtime costs * Generate textual and multimedia content on the go * Be entertained by unlimited audio and video streams over IP

We believe the factors that influence the success of our product suite across institutional and the retail segments include the following:

* Business Relevance, Objectivity and a truly Multi-platform product

* Dynamic customer alignment, and efficient customer relationship management

* Building a compelling community

* Aids revenue generation for portals

* Flexible business model

* Reduced communication costs and convenience

* Information, communication, collaboration and entertainment all rolled into one application suite

* Accessibility across IP phones, access lines, desktops, cell phones, and Wi-Fi devices

* Easy to use interface on the cell phones and desktops

We believe our retail subscription revenues are affected by the following factors:

* Cell phone Internet access/ data plan subscriptions

* Our ability to reach out to the ever growing three billion cell phone users globally

* Our ability to sign up with portals and carriers who retail mobile software

* Upgrading the existing products and innovating new products for the retail segment

We derived 95% of our revenues from licensing and subscriptions for our product suite and services to institutions and the retail segments. The balance revenues came in from treasury management and licensing of other products and services.

During FY08:

* We have launched new products for different segments and have covered new geographic territories and new market segments with our unique marketing and acquisition strategies.

* We successfully launched Mundu Montage -for touch screen Windows Mobile phones. Montage lets users create a collage of text, video, images and multimedia content and post it to users' favorite social networking sites or simply e-mail/ID to their friends, family and colleagues.

* We successfully launched Mundu Speak during the third quarter of FY 2008 and have seen steady growth in subscriptions and usage. The product has already been recognized as the product of the year by no less than TMCNET in the mobile communication space.

* We successfully rolled out Mundu Radio for carriers - a carrier grade entertainment product in conjunction with IDEA Cellular in the last quarter of FY 2008. The response to the white labeled IDEA Radio has been phenomenal.

* The Company raised US$ 125 million in the form of Foreign Currency Convertible Bonds at YTM of 6.6% with tenure of 5years for overseas acquisitions and investments in joint ventures & wholly owned subsidiaries.

* We launched our Instant Messaging on a wider range of mobile phones including Blackberry phones and BREW phones (CDMA Version) during the fourth quarter of FY 2008

* We acquired Chandamama-India's most popular children's magazine to build our value added services. We are in the process of digitizing and mobilizing Chandamama content to ensure that our products provide relevant content to a section of the target audience.

* We acquired E-dot solutions-Web technology specialists to enhance our retail web site and provide a scalable web site to cater and support millions of users worldwide.

Trends in Our Business

The mobile space is the fastest growing space and the number of mobile handsets has touched a whopping 3 billion globally. Almost 12% of these handsets are smart phones and the smart phone market is growing at 30% annually. Mundu addresses the growing smart phone market and has applications that will make smart phone users more productive and cost effective. Mundu successfully integrates communication, entertainment and information access.

In-Stat forecasts that by 2011, 38% of broadband households worldwide will subscribe to VoIP services. Consumer VolP revenue will grow from $15 billion to nearly $44 billion over the next five years.

Global Messaging market was US$ 65 billion for 2007 and is predicted to touch US$ 117 billion by 2012 according to Portia Research Report, Juniper.

Portio Research Report, Juniper predicts global music to be US$ 33 Billion by 201 1 and the Internet/mobile music market is pegged at 24%.

Financial Performance:

Total Revenues:

(Rs. in Lacs.)Year 2007-08 2006-07 % Increase

Revenues 33027.42 17,566.88 88%Earnings 14860.59 9,1 16.25 63%

Our business has grown since inception, resulting in substantially increased revenues and earnings. We expect our business will continue to grow and so will our revenues and earnings. Our revenues in fiscal 2008 increased to Rs. 3302.74 million or 88% over fiscal 2007. Net income for fiscal 2008 increased 63% to Rs. 1486.0 million and diluted earnings per share increasing to Rs. 16.15 per share. Our operating margins have been in the range of 58% - 62% and we have reasons to believe that these margins might decrease marginally as a result of enhanced marketing spend, infrastructure costs, higher employee costs and possible competition going forward. However, the main focus of our software suite is to expand our user base, to stay ahead of possible competition and provide relevant and useful products and services to our users, reflecting our commitment to constantly improve their overall usage experience. As a result, we may launch a couple of free products for the retail segment in a bid to acquire and broad base our users globally. Seasonal trends will likely cause fluctuations in our quarterly results, including fluctuations in sequential revenue growth rates.

Gross Profit: Gross profit as a percentage of revenues has improved to 65% in fiscal 2008 as compared to 67% and in fiscal 2007. Growth in our revenues from FY 2007 to FY 2008, resulted primarily from growth in addressing newer segments, deepening existing institutional relationships, expanding our institutional and retail product line, signing up with more system integrators and increasing our user base across the retail segment. We have expanded our product portfolio for the institutional segment to ensure a faster sales cycle and provide Geodesic with more revenue generating opportunities. Our revenues from retail segment from our web site and partner web sites resulted primarily from increases in the total number of paid download for the expanded product offering. The increase in the number of paid downloads was due to an increase in aggregate traffic on our product web sites, broad basing of the product to support more platforms, higher conversion rates and an increase in the number of Geodesic distribution partners viz. more portals, handset manufacturers and carriers. We believe that the increase in the number of our Institutional and retail customers is the result of our commitment to improving value and cost efficiency for customers and prospects, the relevance, usability and quality of our products.

Expenses: Total Expenses as a percentage of revenues were 50% in fiscal 2008 as compared to 48% in fiscal 2007 as the company continues to develop new products and upgrade existing ones. We expect our cost of revenues to continue to increase and may increase as a percentage of revenues in FY 2009 and in future periods compared to FY 2008, primarily as a result of forecasted increases in user acquisition costs, data center costs and credit card and other transaction fees.

We are heavily investing in building the necessary employee and systems infrastructures required to manage our growth and develop and promote our products and services, and this may cause our operating margins to decrease. We have experienced and expect to continue to experience substantial growth in our operations as we build our research and development programs, expand our base of users and increase our presence in international markets. In addition, we are incurring significant costs and expenses to promote the distribution of certain products and promote the adoption of Mundu IM and Montage by hand set manufacturers and consumers. Our headcount growth has required us to make substantial investments in property and equipment. Our full-time employee headcount has significantly increased from 275 last year to more than 400. In addition, our capital expenditure has grown substantially and we expect to continue to make significant capital expenditure investments in FY 2009, including information and technology infrastructure and corporate facilities. As a result, the growth rate of our costs and expenses may exceed the growth rate of our revenues in FY 2008.

Income Tax: Geodesic, a STPI registered unit enjoys a tax holiday on international revenues. With Government introducing MAT on STPI units, there would be an additional levy of 1 1.33% in the coming year. This is more of a cash flow issue than reduction in profit as MAT would be adjusted against tax due in the coming years when the company is out of tax holiday.

Products: With the advancement of time and technology, companies need to expand their addressable market to ensure a sustained rate of growth. We have been doing this by focusing on the issues being faced by telcos and technology companies worldwide and by widening our offerings to cover those areas.

Geodesic's core competency is in building reliable and scalable product platforms to support a multitude of Internet based applications. Geodesic has been steadily consolidating its position as a leader and an innovator in the areas of communication, usergenerated content and entertainment on Computers and Mobile phones. Geodesic has built an enviable line of products that cater to our client's ecosphere and helps consumers to save costs and enhance productivity.

Mundu Interoperable Instant Messenger: It enables real time communication and collaboration between trusted list of IM contacts across popular public IM services including AIM, ICO, MSN, Yahoo and G Talk on the web, desktop and smart mobile phones. This product has predominantly been white labeled by B2C and 13213 enterprises and retailed to end consumers on smart mobile phones. Mundu Instant Messenger is available on the mobile phones in the following variants:

Mundu IM on Pocket PCMundu IM for Apple iPhoneMundu IM for BlackberryMundu IM on Palm OSMundu IM on Symbian Phones

Mundu Lite-It is a new product introduced by Geodesic to address the low end mass market phones segment. Using the Mundu Web messenger backend, the Mundu Lite product features a basic messenger which can satisfy the needs of the customer. This has led to tie ups with partners for application distribution on different carriers.

Mundu Radio has been a favorite product with customers since its launch in 2006. Geodesic innovated strategically by developing a mobile carrier version of Mundu Radio. Idea Radio was the first customer for carrier radio and more deployments are planned with other customers as well. Carrier radio also comes with a content offering license from various radio station providers.

Mundu Radio allows users to live stream over one lakh Internet Radio Stations on Mobile Phone. Mundu Radio offers users the opportunity to listen to music or content of choice from any part of the world on their mobile devices for free. Users can access various predefined digital internet radio stations and the broadest array of music and music-related content available on the web today such as Pop, Rock, Classical, Oldies, Instrumental, World News, Sports Weather, Stock updates and many more. Mundu Radio operates on mobile phones with Internet connection (Wi-Fi, GPRS, CDMA) and eliminates the need to carry separate devices for listening to high quality unadulterated music.

Mundu Speak-Mundu Speak is a software application that provides unlimited talk time to users over VoIP on smart mobile phones. Mundu Speak allows users to experience voice using smart mobile phones that run on Windows Mobile and several Symbian phones over the data service on GPRS, EDGE or Wi-Fi connectivity. One-to-one or group conference calls from mobile phone are just as easy with no charge for call duration other than a standard monthly rate. By teaming up with a telecom partner having presence in 40 countries, the new Mundu Speak was launched as a commercial product, featuring extremely affordable call rates and excellent voice quality.

Mundu Montage-It is designed to enhance messaging between mobile devices. Montage allows you to create rich and unique content that can be shared directly to another mobile device. You can have a conversation with your friends, not just with text, but a montage of handwritten notes, images and annotations. Currently, Montage works only with the Windows Mobile Pocket PC Edition. However, we will be ready with Montage for other mobile platforms soon.

Simputer: The Simputer named as Amida Simputer was built on the premise that a computer is more useful when it is easyto-use. Amida allows you to scribble on any screen using a stylus, and email it. It is the world's first and only computer that responds to your gestures-ego-you can turn the pages of an e-book with a flick of your wrist. It allows you to work and play in the language of your choice and is an easy way to carry programs, music, movies, pictures. Amida is the world's first handheld computer to have two USB slots (master and slave). It work well with a range of other devices - Samsung (SCH-191)/LG (RD2030 & RD-2130) CDMA phones (for Internet connectivity), PCs, digital cameras etc. and combines portability and power in a mannerthat no other handheld in the world does.

The Simputer is the world's first computer to have an integrated Smartcard reader/writer which can be used for identification, sharing and security.

ADePT: ADePT provides presence based self-serviced end-to-end online advertising solution for online portals and their advertisers. It helps generate revenues for our portal and publishing customers by integrating context sensitive advertisements with chats across Mundu Interoperable Instant Messenger.

Spyder: Spyder comprises a suite of tools that enhance customer retention by providing the means to track client- and prospect communication and enabling personalized responses in alignment with their specific needs. It helps in managing relationships between a distributed organization and its distributed clients, provides client activity statistics and management through the tracking of client and product related events, provides internal resource activity statistics and management, targets products to specific and relevant customer contacts, manages all documents that have been published by the firm and tracks feedback, manages the corporate mail list and automatically distributes documents through e-mail and in printed form.

IMA round: IMA round enables users to embed their presence within email, web pages and documents and broadcast it to intended recipients. IMAround enables real time chats between the user and the intended recipient without any downloads.

OLAI (Open Learning with Autonomy and Interactivity): OLAI is a web based outdoor computing platform that runs on Linux and has an expandable storage unit that can store huge amounts of information and lets students and users to read e-books, write notes and tag them with e-books and relevant content on the Internet. Other features include annotation, sharing of information and to create and record ideas and conversations. Initial reactions and feedback from the education community has been overwhelming and the product is slated for a year end launch.

Liquidity and Capital Resources: Net Working capital as of March 31st 2008 amounted to Rs.7751 million as compared with Rs. 1818 million on March 31st 2007. The increase in net current assets is on account of upgradation of infrastructure and new product development being capitalized. The quantum jump in the size of businesses of the group is evidently pointing to better receivables and cash management.

Geodesic grew multifold during fiscal 2008, increased its use of cash to acquire/merge Chandamama India Limited and Eclat Solutions. Geodesic expects to fund its investments in fiscal 2008 with available cash, investments, operating cash flow and through international fund raising.

Stock Options: The Company continues to grant stock options to the company and subsidiary employees as part of the total compensation package. The plan is in line with the company's philosophy of rewarding the employees. It follows the accepted norms of fair value method of accounting for options.

Integration of Acquired Businesses

As part of our overall growth strategy, we acquire complimentary business lines from time to time. Large scale acquisitions expose the Company to financial risk in form of additional leverage. The acquisition also posses challenges in form of integration and management of business operations and systems, in retention of select personnel and in co-ordination of sales and marketing efforts. Geodesic believes that it has the financial resources and the expertise to integrate its operations spread across the globe. Geodesic has put in place suitable people practices, technology and systems to ensure smooth integration of the Group with the acquired entities.

Acquisitions may also have a negative effect on our earnings per share. In addition, acquisitions and investments may result in the incurrence of debt, large one-time write-offs, such as acquired in-process research and development costs, and restructuring charges. They may also result in goodwill and other intangible assets that are subject to impairment tests, which could result in future impairment charges.

Awards and Recognition

Geodesic is a proud recipient of several international awards including Deloitte Touche Tohomatsu Fast 500 Asia Pacific for four consecutive years, Deloitte Touche Tohomatsu Fast 50 India in 2005 and Red Herring 'Top World 100' small cap technology companies for 2005.

Human Resource

At Geodesic, Human Capital is the strength that drives growth. The Company endeavors to work with the best minds from the leading engineering and management institutes. Geodesic with its subsidiaries has an employee strength worldwide of more than 400 with a diverse background .The Human Resources department does a collation of training to address various topics like technical, non-technical, managerial development as well as personality development. Our focused initiatives at creating a balanced work life in addition to other factors such as best pay packages, entrepreneurial work styles and vibrant work environment serves as a powerful tool to increase retention. At Geodesic, we believe in transparency, flexibility, interaction, integration of thoughts, ideas, culture, values and results across the organization irrespective of hierarchy.

Certain factors that may affect our future operational results:

Potential Fluctuations in Results:

Our operating results may fluctuate as a result of a variety of factors including general economic conditions, related effects on workforce size, purchasing patterns, compliance with new regulatory requirements, mix of products and services sold ability to effectively integrate acquired businesses and industry trends. We believe that our operating results for anyone period are not necessarily indicative of results forany future period.

Product Development and Technological Change:

Continual change and improvement in computer software connectivity, computer hardware technologies characterize the markets for communication and collaboration systems. The Company's future success will depend largely on its ability to enhance the capabilities and increase the performance of its existing products and to develop new products and interfaces to third-party products on a timely basis to meet the increasingly sophisticated needs of its customers. Although the Company is continually seeking to further enhance its product offerings and develop new products and interfaces that take complete advantage of newer hardware, software and increased communication bandwidths viz. Wig MAX, Wife and 3G there can be no assurance that these efforts will succeed, or that, if successful, such product enhancements or new products will achieve widespread market acceptance, or that the Company's competitors will not develop and market products which are superior to the Company's products orachieve greater market acceptance.

Attracting and Retaining Sufficient Technical Personnel:

Geodesic has successfully managed to hire the best talent from across the globe. However, the company may encounter intense competition for experienced technical personnel for product development, technical support, marketing and sales. Any inability to attract and retain a sufficient number of qualified technical personnel could adversely affect the company's ability to develop, support and sell products in a timely manner.

Competition:

The communication, collaboration, entertainment and productivity stack, which includes Munds Instant Messenger, V6IP, Remote desktop, Mundu Radio is unique but technological changes may result in new entrants into the market. Increased competition could adversely affect our operating results through price reductions or loss of market share. With our efforts to expand our Mundu ICE stack and the expansion of our product offerings, we will have the edge but we will continue to encounter competition. Many of these competitors may be able to adapt more quickly to new or emerging technologies or to devote greater resources to the promotion and sale of their products.

Dependence on Mundu Product Line:

To date, substantial part of the company's revenues have been attributable to Mundu IM platform and services and the Company expects that to continue in the next fiscal year. The company has rapidly expanded the Mundu IM platform product scope to address various segments and the company expects to stay ahead in the communication and collaboration space. However, competitive pressures and other factors could cause the Company's products to experience significant price erosion, adversely affecting the results of the Company's operations. However the new products added through the in house development and acquisitions like Simputers, Spyder, and Chandamama etc have been explored to reduce the dependence on Mundu product line.

Dependence on Alternate Distribution Channels:

The Company markets and sells its products through its direct sales organization, independent value added resellers, OEMs and System Integrators. Substantial portion of the company's revenue was generated through sales to dealers and OEMs. Reduction in the sales efforts of the Company's major dealers and/or OEMs, or termination or changes in their relationships with the Company, could have an adverse effect on the results of the Company's operations.

Reliance on Key Vendors:

The Company depends upon the reliability and viability of a variety of software development tools owned by third parties to develop its products. If these tools are inadequate or not properly supported, the Company's ability to release competitive products in a timely manner could be adversely impacted. Also, certain parts and components used in the Company's hardware products are purchased from single suppliers. The Company has chosen to source these items from single suppliers for maintaining consistency in quality and competitive price. The company's inability to transition to alternate sources on a timely basis as and when required in the future could result in delays or reductions in product shipments which could have a material adverse effect on the Company's operating results. The Company is currently building its own software development and utility tools toga incomplete control over the entire range of the product line.

Although we believe our organization has core competencies that positions us strongly in the market, maintaining our technological and other advantages over competitors will require continued investment in research and development as well as marketing and sales programs. There can be no assurance that we will have sufficient resources to make such investments or be able to achieve the technological advances over competitors and compete successfully in the retail space. Our failure to do so could have a material adverse impact on our business, prospects, financial condition and operating results.