Mindtree - 2008-2009 Annual Report

MINDTREE LIMITED

ANNUAL REPORT 2008-2009

DIRECTOR'S REPORT

Dear Shareholders,

Your Directors have pleasure in presenting their Tenth report on the
business and operations of your company and its working results for the
year 2008-09.

Rs. Million
Profit and Loss Statement FY 09 FY 08

Income from software development

Overseas 9,484.20 6,830.59

Domestic 641.50 507.81

Total Revenue 10,125.70 7,338.40

Total Costs (Direct+SG&A) 7,484.52 6,080.47

EBITDA 2,641.18 1,257.93

Interest 161.99 58.95

Depreciation 468.58 349.34

Operating Profit 2,010.61 849.64

Foreign Exchange (Loss) / gain (1,763.95) 39.93

Other income 78.79 237.69

Profit before tax 325.45 1,127.26

Provision for Tax including fringe 80.30 128.96
benefit tax

Deferred tax charge/(credit) (54.90) (43.49)

Profit After Tax (PAT) 300.05 1,041.79

PAT % (of Revenue) 3.0% 14.2%

PAT % (of Revenue + Other Income) 2.9% 13.8%

Business Performance:

The global economy is going through an unprecedented crisis and many
industries are affected by it directly or indirectly. The Indian IT
industry has also been affected by this crisis.

MindTree's income from software development grew to Rs. 10,126 million for
the year ended March 31, 2009, which represents an increase of 38% over the
previous year's Rs. 7,338 million. In US dollar terms, total revenues grew
21% over the previous year, which is amongst the highest reported in the
Indian IT industry in this challenging year.

We saw growth across both overseas and domestic markets. Export revenues
grew 39% to Rs. 9,484 million whereas domestic revenues grew 26% to Rs. 641
million.

Since your company earns most of its revenues in foreign currency, mainly
the US dollar, while most of the costs are in Indian rupee we hedge our
foreign currency receivables. Foreign currency transactions are accounted
by us in accordance with AS11 'Accounting for the Effects of Changes in
Foreign Exchange Rates' and AS30 'Financial Instruments Recognition and
Measurement'.

During the year, the Indian rupee depreciated against the US dollar by
about 25%. While this helped in improving our operating margins, we had to
make provisions on 'mark-to-market' losses for our outstanding hedges.
Since these hedges were entered into in 2007-08 when the Rupee was on an
appreciating trend, these instruments currently have a significant negative
mark-to-market value. This is only a notional accounting provision and not
a cash loss.

Our operating profits for the year 2008-09 have grown to Rs. 2,011 Million,
which is a growth of 137% over the previous year. The high mark-to-market
provisions caused a wide divergence between our operating profits, where we
have achieved good results and our Profit After Tax (PAT). Our PAT fell 71%
compared to the last year.

Dividend:

Your directors have paid an interim dividend of Re. 1 per share (10% on par
value of Rs. 10) during November, 2008. Shareholders approval is sought to
ratify the payment of interim dividend. No final dividend is recommended
for the year 2008-09.

Transfer to Reserves:

We propose to transfer Rs. 7.50 Million to the general reserve in
accordance with the Companies (Transfer of Profit to Reserves) Rules, 1975.

Changes to Share Capital:

Your company also issued 76,128 shares of Rs.10 each to various MindTree
Minds on exercise of stock options. Consequently, the share capital has
been increased from Rs. 379,205,580 to Rs. 379,966,860.

Infrastructure:

During the year, your company has added a built-up capacity of 160,420 sft.
and added 1,639 seats. With this, the total built up capacity of your
company in India stands at 758,420 sft.

The new capacity was built in an SEZ unit in our Mysore Road Campus. This
new infrastructure includes space for workstations, conference rooms,
meeting rooms and labs.

In addition, your company has added world-class communication
infrastructure to support our customers. This includes interoffice data
links, internet access links, customer specific data links and dedicated
data/voice links.

Strategic Acquisitions:

TES-PV:

In December 2007, MindTree acquired Bangalore-based TES-PurpleVision (TES-
PV). TES-PV had well known technology companies in the US, Europe, Japan
and India as their customers. This acquisition helped us double our IC
design team-size and strengthen our presence in the Japanese market. During
the year TES-PV (re-named MindTree Technologies Pvt. Ltd.) was merged into
MindTree through an order by Hon'ble High Court of Karnataka and fully
integrated.

Aztecsoft:

During the year your company acquired substantial stake in Aztecsoft, a
company listed in India and headquartered in Bangalore. The all-cash
acquisition was made through a negotiated deal with the promoters of
Aztecsoft, an open offer for the public shareholders and market purchases.
As of March 31,2009, MindTree had 80% shareholding in Aztecsoft.

Aztecsoft is a leading player in the fast growing Outsourced Product
Development (OPD) and Testing markets. Combination with Aztecsoft, MindTree
is able to cover the entire product development stack: chip design,
embedded software, platform software, middleware and application software.
In addition, the combined team-size in Testing services making us one of
the top players in the Indian industry. There is minimal overlap of
customers across the two companies, providing us the opportunity to cross-
sell to each other's customers. There is high degree of culture match
across the two organizations.

Integration of Aztecsoft with MindTree has been progressing well and we are
seeing many synergy areas. Our new organization structure (described in a
subsequent section) reflects the combined strengths of the two
organizations.

During the year the company had filed a petition with the Honorable High
Court of Karnataka to merge the two companies via a Scheme of Amalgamation
approved by the shareholders in the EGM held on December 22, 2008.
According to the Scheme,

MindTree will issue 2 shares of MindTree in return for 11 shares of
Aztecsoft and acquire the balance shareholding in Aztecsoft.

People:

The total number of MindTree Minds as on March 31, 2009 was 6,091, as
against 5,640 as on March 31, 2008. During the year, your company saw a
steady decline in attrition levels. Our annual attrition for the year 2008-
09 was 11.8% as against 15.8% in the year before.

Being recognized as an 'Employer of Choice' is important for your company
to retain its eminent position to attract and retain the best industry
talent. In 2008-09, for the fourth year in a row, MindTree was recognized
among the 'Best Workplaces' in India as per the study conducted by Great
Places to Work Institute. Your company was also chosen for a special
recognition and adjudged the most admired workplace for women in India.

Consequent to MindTree acquiring a substantial stake in Aztecsoft, a lot of
effort went into streamlining policies, practices, processes and systems to
ensure that we are seamlessly able to work like an integrated entity. The
focus of the integration blue-print revolved around open, transparent and
continuous communication, inclusion of people in decision making, adopting
the approach of marrying best from both organizations and on-the-ground
program management. Aztecsoft has seen a significant drop in their
attrition level since the announcement of MindTree acquiring the stake. We
are confident that the integration of Aztecsoft will be a success and will
also create value for all the stakeholders, including people.

In 2008-09, your company continued its focus on rolling out new people
practices in several areas. Subroto Bagchi, who has taken over as the
Gardener, initiated his work in nurturing and developing the senior
leadership capability and competence. The program has been well accepted
and encouraged by its response and impact, Subroto is planning to enlarge
the coverage. Your company has a unique practice of articulating its
Mission, Vision a Values in consultation with MindTree Minds. To continue
with this spirit of inclusion, we engaged people in MindTree and Aztecsoft
to get their inputs on the re-articulation of MindTree's Mission & Vision.
These together with our Values and DNA which form our constant core, will
become the beacon for MindTree in the years ahead.

In 2009-10, your company will focus on introducing new policies, practices
and systems in the area of Performance Management, Recognition, Talent
Management 6 Talent Engagement.

MindTree Reorganization:

With effect from April 1, 2009, Ashok Soota assumed the role of the
Executive Chairman of MindTree. He was earlier the Chairman and Managing
Director (MD) of the company. In his new role, Ashok Soota will focus on
strategic initiatives and long-term development. He will continue to be the
Chairman of the Board of Directors. Krishnakumar Natarajan, the Chief
Executive Officer (CEO) of MindTree took over as the CEO and MD of the
company with effect from April 1, 2009. He will be responsible for
MindTree's day-to-day operations and will look after the businesses and
enabling functions.

With the objective of establishing leadership positions in each, MindTree
will focus on six business areas: IT Services, Infrastructure Management
and Technical Support (IMTS), Independent Testing, Knowledge Services and
Product Engineering Services, which comprises the R & D Services business
and the Outsourced Product Development (OPD) services business.

S Janakiraman would be the President & Group CEO of the Product Engineering
Services business. The CEOs of MindTree's businesses will be as follows:

* ITServices : Anjan Lahiri

* Knowledge Services : Scott Staples

* R&D Services : Vinod Deshmukh

* OPD : Ashok Krishnamoorthy

* IMTS : N.S. Parthasarathy, supported by
business head Ram C. Mohan

* Independent Testing : N.S. Parthasarathy, supported by
co-heads Ananda Rao Ladi and Subodh
Parulekar

IMTS and Independent Testing are the high-growth areas of IT market today.
We already have a presence in these segments and want to increase our focus
through a dedicated business unit.

The initial focus of MindTree's Knowledge Services will be providing
services in 'analytics' area, helping our customers gain deeper insights
into their business processes.

The re-organization will help MindTree have more growth engines to take
advantage of the emerging opportunities in the global market. It draws from
the strengths of both MindTree and Aztecsoft and positions us as the
leading mid-sized player.

Directors:

During the year, Mr. Lip-Bu Tan resigned as Director with effect from
February 1, 2009. The Board of Directors places its appreciation for the
valuable services rendered by Mr. Lip-Bu Tan during his tenure as Director
of the Company.

During the year the Board has appointed another independent director Prof.
David B Yoffie with effect from December 1, 2008 and Mr. Rajesh
Subramaniam, nominee of Walden International with effect from February 1,
2009.

The following Directors retire by rotation and being eligible, offer
themselves for re-appointment.

1. Mr. Vittal N
2. Mr. Mark Runacres
3. Mr. George Scalise

Brief resumes of these directors are included in the notice for the Annual
General Meeting.

Liquidity:

Your company maintains sufficient cash to meet its operations and strategic
objectives. As on March 31, 2009 your company had liquid assets of Rs. 477
million as against Rs. 1,942 million at the previous year-end. These funds
have been invested in deposits with banks and in money market mutual funds.

Fitch Rating:

Your company has been assigned a rating of 'AA(ind)' on long term
borrowings and a rating of 'F1 +(ind)' on short term borrowings by Fitch
Ratings. Further, the agency has rated the Outlook as 'stable'. Fitch is a
leading global rating agency that provides credit opinions. Long-term
rating ['AA(ind)'] indicates very low credit risk. The Short-term
'F1+(ind)' rating, which is the highest in the category, covers fund-based
working capital limits and non-fund based working capital limits.

Awards and Recognitions during FY 2008-09:

* National Award for Excellence in Corporate Governance for 2007-08

* First Indian company to receive Texas Instruments Supplier Excellence
Award from Texas Instruments which is a key customer of the company

* Asian Most Admired Knowledge Enterprise (MAKE) Award (top-ranked)

* Indian MAKE Award winner

* Named in Leaders Category of 2009 Global Outsourcing 100 List by
International Association of Outsourcing Professionals (IAOP)

* Ashok Soota was bestowed Most Innovative People Award in Knowledge
Innovation at the World Summit on Innovation and Entrepreneurship 2008

* SAP Ace Award for Customer Excellence 2008

* Recruitment and Staffing Best in Class (RASBIC) industry leader of the
year 2008.

Litigation:

No material litigation is outstanding as on March 31, 2009.

Deposits:

In terms of the provision of Section 58A of the Companies Act, 1956 read
with the Companies (Acceptance of Deposits Rules) 1975, the company has not
accepted any fixed deposits during the year under review.

Corporate Governance:

Your company has been practicing the principles of good corporate
governance. A detailed report on Corporate Governance is given as Annexure
to this Annual Report

Certificate of the auditors regarding compliance with the conditions of
Corporate Governance as stipulated in Clause 49 of the listing agreement is
also given in this annual report.

Corporate Governance Award:

The year under review brought many coveted recognitions for MindTree. One
of the most prestigious was the National Award for Excellence in Corporate
Governance for 2007-08 among all listed companies in India by the Institute
of Company Secretaries of India (ICSI).

The Jury for the award was chaired by former Chief Justice of India, Shri R
C Lahoti, and included 19 other eminent members from the industry and
regulatory bodies. Apart from the nomination papers your company had
submitted, the Jury also sought feedback from regulatory agencies like the
Stock Exchanges and the Registrar of Companies. Your company's good track
record in terms of adherence to all applicable regulations, prompt filings,
good disclosure, conservative business practices, etc. helped win this
award.

MindTree was selected as the top winner based on multiple criteria such as:

* Ethical business conduct, transparency and integrity

* Effective governance through the Board of Directors

* Sustainable relationship building with major stakeholders in the
corporate family

* Corporate social responsibility

* Future vision

The Jury in particular commended MindTree for its clearly articulated CLASS
values (Caring, Learning, Achieving, Sharing and Social Responsibility) and
the processes for internalization of these values. They also recognized
MindTree's inclusive approach whereby good governance means protecting the
interests of all stakeholders, including customers, employees,
shareholders, bankers and the society at large.

Consolidated Financial Statements:

In terms of the approval granted under Section 212 (8) of the Companies
Act, 1956 by the Ministry of Corporate Affairs, Government of India vide
their letter no. 47/196/2009-CL-III dated 31.03.2009, the company has been
exempted from complying with the provisions contained in sub-section (i) of
Section 212 of the Companies Act, 1956. The information as directed by the
Ministry of Corporate Affairs has been disclosed in brief abstract forming
part of this annual report. Further the annual accounts of the subsidiary
company and the related detailed information will be made available to any
member of the company and its subsidiary seeking such information at any
point of time. The annual accounts of the subsidiary company will also be
kept for inspection by any member at the company's registered office and
corporate office and that of the respective subsidiary company. The
consolidated financial statements forms part of the annual report.

Auditors:

The auditors, M/s. BSR & Associates, Chartered Accountants, hold office as
Auditors until the conclusion of the ensuing Annual General Meeting and
have confirmed their eligibility and willingness to accept office, if re-
appointed.

Particulars of Employees:

As required under the provisions of section 217(2A) of the Companies Act,
1956, read with the Companies (Particulars of Employees) Rules, 1975, as
amended, the names and other particulars of employees are set out in the
annexure to this report. The Department of Company Affairs, has amended the
Companies (Particulars of Employees) Rules, 1975 to the effect that
particulars of employees of companies engaged in Information Technology
sector posted and working outside India not being directors or their
relatives, drawing more than Rs. 2.40 million per financial year or
Rs.200,000 per month, as the case may be, need not be included in the
statement but, such particulars shall be furnished to the Registrar of
Companies. Accordingly, the statement included in this report does not
contain the particulars of employees who are posted and working outside
India.

Employee Stock Option Plan:

Your company believes in the policy of enabling MindTree Minds to
participate in the ownership of MindTree and share in its wealth creation,
who are responsible for the management, growth and financial success of
MindTree.

The company currently administers five stock option programs viz. ESOP
1999, ESOP 2001, ESOP 2006(a), ESOP 2006(b) and ESOP 2008 (A) and a
Directors Stock Option Plan, 2006. The details as required under SEBI
(Employee Stock Option Scheme and Employee Stock Purchase Scheme)
Guidelines, 1999 have been disclosed under Notes to Accounts Schedule 16
item 5 and forms part of the Annual Report. There has been no variation in
the terms of ESOP programs.

Details of options granted under ESOP 2006 (b) to senior managerial
personnel during the year are as under:

Name of Senior Designation Stock options
Managerial Personnel granted

Gaurav Johri Vice President 18,000

Gopalakrishnan Senior Vice 25,000
Palakkil President

Rajesh Zele Vice President 17,500

Conservation of energy, technology absorption, foreign exchange earnings
and outflow:

The Particulars as prescribed under section 217(1)(e) of the Act, read with
the Companies (Disclosure of Particulars in the Report of Board of
Directors), Rules 1988 are set out in the annexure to this report.

Directors' responsibility statement:

Directors' responsibility statement pursuant to Section 217(2AA) of The
Companies (Amendment) Act, 2000 is annexed to this report.

Management Discussion and Analysis Report:

Management Discussion and Analysis Report as required under Clause
49(IV)(F) is disclosed separately in this Report.

Acknowledgements:

The Board of Directors thank the company's customers, shareholders,
investors, vendors, and bankers for their support to the company during the
year.

Your directors would like to make a special mention of the support extended
by the various departments of the Government of India, particularly the
Software Technology Parks, Special Economic Zone Authority, the Department
of Electronics, the tax authorities, the Ministry of Commerce, the
Department of Telecommunications, the Reserve Bank of India, Ministry of
Company Affairs, Securities and Exchange Board of India and others and look
forward to their support in all future endeavors.

Your directors appreciate and value the contribution made by MindTree Minds
at all levels for their contribution to the company.

For and on behalf of the Board of Directors

Place: Bangalore Ashok Soota Krishnakumar Natarajan
Date : April 27, 2009 Executive Chairman CEO & Managing Director

Annexure to the Directors' Report

Particulars under (Disclosure of particulars in the Report of Directors)
Rules, 1988 for the year ended March 31, 2009.

A. Conservation of energy, technology absorption, foreign exchange earnings
and outflow:

Report on Energy Conservation at MindTree 2008-09:

Your company is committed to following a high standard of environmental
protection and provision of a safe and healthy work place for our people,
customers and visitors. To this effect we have articulated our
environmental mission statement and also formed an advisory group 'Green
Council' to promote environmental initiatives at MindTree.

MindTree's Environmental Mission Statement:

'Work closely with all our stakeholders to identify, implement and sustain
eco-friendly initiatives to achieve a carbon-neutral footprint'

MindTree Green Council is a multi-disciplinary advisory group which
promotes and provides oversight for environmental initiatives at MindTree.
The purpose of this council includes:

* Educating MindTree Minds, our extended families and our partners on
environmental responsibility

* Identify eco-friendly initiatives and implement them through extended
teams

* Design and implement a metrics based approach for continuous improvement
of MindTree's Green initiatives

* Make our campuses environmentally friendly

* Work with other like-minded organizations with an intention to learn and
share

* Continuously review our Environmental Mission statement to ensure it
remains relevant to our business with the right balance between shareholder
value and environmental friendliness

* Strive to buy and use environmentally friendly products wherever there is
an opportunity

MindTree Green Initiatives:

MindTree Green Council carried out an exhaustive carbon foot print
measurement of MTW Phase 1 and 2 buildings in Nov-Dec 08 through Nature
First, an external consultant agency. We also have received internal
training and documentation on extending this measurement and monitoring
activity across the other facilities on a sustained basis. MindTree Green
Council, assisted by the Green Community, a group of energy conservation
volunteers, will be driving these efforts in MindTree facilities. We have
also initiated work on some of the suggestions given by Nature First to
reduce our carbon foot print.

Energy Efficiency Practices at MindTree:

Some of the energy efficient practices adopted across the facilities of the
company to reduce consumption of power are:

* Transformers with high efficiency from reputed companies maintaining
power factor of 0.98 on distribution side.

* Programming of Air conditioners through logic control systems.

* Variable frequency drives (VFD) are sequenced in operation of AHU and
secondary pumps.

* FRLS wires for power as well as lighting distributions.

* XLPE cables with higher current withstanding capability and low losses
for UPS.

* Glazing is minimized from NE and SW area so that solar rays are minimized

In our new facilities, we have adopted the following steps to aid energy
conservation:

* Installation of LCD monitors (Energy Efficient) in place of normal CRT
monitors, thereby saving energy

* Usage of Low Power Loss Electronic ballast (5W) in place of Copper
ballast (10W)

* Use of 12 pulse rectifier to keep total harmonic distortion under 5%

* Usage of compact florescent lamps for lighting

Other Energy Conservation Initiatives:

HVAC Design - the HVAC design for MindTree buildings have been based on
Energy conservation building Code 2006. Primary objective is to reduce
energy consumption by providing optimum conditions inside the building
during extreme weather conditions. Some of the considerations are:

* Sun orientation path

* Walls and roofs are properly insulated

* Toughened glass windows to reduce infrared radiation

* Effective management of ventilation to ensure acceptable air quality

* Proper positioning of fire escape routes

* Roof surface treated to reduce the absorption of heat

Power Saving - This year we devoted considerable attention on methods and
approaches to conserve power. Significant steps taken in this regard
include the following:

* Turning off monitors during week ends

* Hibernation of Desktops & notebook computers when not in use

* Turning off lights in all floors when Minds not working

* Operating only one lift in each building after 7.00 p.m.

* Turning off the Air Conditioners during non peak hours and on weekends.

Water Conservation - There has been increasing awareness of the need to
conserve water, both in usage practices and in securing our sources. Some
steps that helped create an impact include the following:

* Only ground water used at West Campus

* Sensors in toilets to optimize water usage

* Dish washers used in the cafe's to minimize water wastage

* Sewage water treatment plant to recycle water

* Rain water harvesting being planned

Waste Management - Towards reduction of waste and better disposal of
generated waste, we drove initiatives to meet the objectives.

Food Waste:

* Collected centrally and segregated as recyclable/non recyclable

* Disposed through BBMC

* Entering with an agreement with 'Samarthanam Trust' for recycling food
waste

E Waste - Disposed and recycled through E- Parisaraa

Paper Waste - Recycled through the services of 'Samarthanam Trust'
Pollution Control and Reporting - Towards achieving better environmental
standards, regular checks on air quality, monitoring of noise levels and
monitoring of fuel stock have been carried out across facilities.

Conclusion:

In keeping with MindTree's commitment to create an environment which is
sustainable and to conserve energy, our goal is to achieve a carbon neutral
profile across the organization. Our strategy to adopt the best practices,
latest technologies and high levels of efficiency in our operations will
help us build an environment where energy is conserved and carbon emissions
are significantly reduced.

B. Technology and Innovation:

As you would appreciate, technology is witnessing rapid change. Since our
customers expect us to lead them through such change, we proactively &
continuously invest in developing technology building blocks and solution
frameworks which add value to our customers' business. MindTree uses a
multi-pronged strategy for developing technology assets and to promote
innovation. These technology initiatives are driven by each business unit
based on the trends they see in their respective markets. These efforts
help us in two ways (i) gain our customers' trust & confidence; and (ii)
attract & retain key talent who see MindTree as a more exciting place to
work in.

Research and Development:

Your company carries out various research and development initiatives to
address different market segments. In addition to the programs mentioned in
the 2007-08 annual report, many of which continue even now, some of the
newer programs are listed below:

* Digital Video Surveillance: We began development of technology in Video
Surveillance area to address growing demand and technology advancements in
this space. We are building critical Intellectual Properties in Video
Analytics and Video Content Management.

* Bluetooth RF: To fill gap in our portfolio of Bluetooth IP, we began a
program on development of Bluetooth radio. This is very specialized
technology areas and very few organizations in the world have in house
capability.

IT Services investments in solutions and technologies:

MindTree's IT Services enables our global clients achieve success through
business enabling solutions using innovative and industry leading expertise
and technologies. Our team of domain experts ensures that IT initiatives
are tied to business imperatives through quantifiable metrics. Through
MindTree Labs, a unique corporate investment in research and development,
we aim to bring leading edge solutions to our clients. MindTree Labs
conducts applied research on emerging technologies and works with our
Technology Practices and Industry Groups (IG) to create differentiated
outputs.

Through MindTree Labs we developed expertise and technology frameworks in
the areas of Mobility and Cloud Computing. Some of the notable achievements
this year included:

* A mobile application on Google Android that provides support and features
post the booking process

* A mobile banking application on Google Android with two-factor
authentication and location awareness

* A mobile salesforce application built on J2ME technology with a very low
footprint

* Demo applications on leading Cloud platforms including Force.com, Amazon
EC2 and Google AppEngine

* Frameworks to encapsulate advanced features on Google Android

MindTree's Technology Practices and Industry Groups continue to bring
solution accelerators to market and help our global clients achieve their
objectives in expedited timeframes. Some of the notable solutions include:

* MindTree's SOA Solution Accelerator - Our homegrown Open Source tools
based SOA Application development platform has been adopted by a number of
our clients and helps bring down implementation cost and timeframes for SOA
based projects

* MindTree's Digital Media publishing solution that will simplify the tasks
around content management and publishing for media companies

* MindTree's SOA Services Discovery framework that will help organization
embark on the road towards Enterprise SOA

* Our SAP A1 templates for Professional Services and Construction
Industries have been certified by SAP. They will allow speedier time to
market and enable our clients to realize benefits of the solution via a
compressed timeframe

* Multiple Centers of Excellence on SAP technologies and functional areas
to bring deep expertise around our SAP implementations

* Tool based methodology and approach for helping our clients modernize
their mainframe environments

* A comprehensive testing framework geared towards the Banking industry

* A framework of domain and technology components used for speedy delivery
of world class B1 solutions and geared towards the Insurance domain

Patents:

The patents filed by MindTree are given in the table below:

Title Country of Year
Filing
1. Method for Step Size control technique in
echo signal cancellation US 2004

2. High Speed FFT architecture for an OFDM
Processor US 2006

3. Method for data handling by file-system
offloading US 2006

4. Power Management based on dynamic
frequency scaling US 2006

5. Method and system for generating an
analytical report including a contextual
knowledge panel US 2006

6. Method For Discovering IEEE 802.11 Access
Points By a Central Controller US 2006

7. Selecting Channels In Centrally-Managed
Wireless Networks Based On Receive Signal
Strength Indicator (RSSI) And Received
Transmit Errors US 2006

8. Procedure for headset and device
authentication India, US 2007

9. Method and apparatus for multi terminal
support using Bluetooth based audio gateway India, US 2007

10. Method and apparatus for bit interleaving
and de interleaving in wireless communication
systems India, US 2007

11. Outband Broadband Connectivity US 2007

12. Portable Wearable Input Apparatus India 2009

C. Foreign exchange earnings and spending:

Amounts in Rs.
For the year ended For the year ended
March 31, 2009 March 31,2008

Income from software development 9,484,196,140 6,830,586,387
Interest income 888,494 441,867
Other income 65,607 -
Total 9,485,150,241 6,831,028,254

Directors' Responsibility Statement pursuant to Section 217(2AA) of the
Companies (Amendment) Act, 2000

I. The financial statements have been prepared in conformity with the
applicable accounting standards issued by the Institute of Chartered
Accountants of India and requirements of the Companies Act, 1956, to the
extent applicable to us; on the historical cost convention; as a going
concern and on the accrual basis had been followed. There are no material
departures from prescribed accounting standards in the adoption of the
accounting standards.

II. The board of directors have selected such accounting policies and
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 and of the profit
or loss of the company for that period.

III. The board of directors have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of this Act for safeguarding the assets of the company and for
preventing and detecting fraud and other irregularities.

IV. The board of directors have prepared the annual accounts on a going
concern basis.

V. The financial statements have been audited by M/s BSR a Associates,
Chartered Accountants, the statutory auditors.

VI. The audit committee meets periodically with the internal auditors and
the statutory auditors to review the manner in which the auditors are
discharging their responsibilities, and to discuss auditing, internal
control and financial reporting issues. To ensure complete independence,
the statutory auditors and the internal auditors have full and free access
to the members of the audit committee to discuss any matter of substance.

For and on behalf of the Board of Directors

Place: Bangalore Ashok Soota Krishnakumar Natarajan
Date : April 27, 2009 Executive Chairman CEO & Managing Director

Management Discussion and Analysis:

Readers are cautioned that this discussion contains forward looking
statements that involve risks and uncertainties. When used in this
discussion, the words 'anticipate', 'believe', 'estimate', 'intend', 'will'
and 'expect' and other similar expressions as they relate to the Company or
its business are intended to identify such forward-looking statements. The
Company undertakes no obligation to publicly update or revise any forward-
looking statements, whether because of new information, future events, or
otherwise. Actual results, performances or achievements could differ
materially from those expressed or implied in such forward looking
statements. Readers are cautioned not to place undue reliance on these
forward-looking statements that speak only as of their dates. The following
discussion and analysis should be read in conjunction with the Company's
financial statements included in this report and the notes thereto.
Investors are also requested to note that this discussion is based on the
consolidated financial results of the Company.

Synopsis:

The year has seen a series of events which have three characteristics:
rarity, extreme impact and retrospective predictability. Economy and
industries worldwide are facing recessionary pressures due to U.S financial
crisis.

According to NASSCOM, Indian IT industry grew by 12% in FY2009 to reach $71
billion in revenues.

Despite the current economic challenges, we have shown an industry leading
revenue growth. The year was a year of transformation for us and we set up
ambitious goal of becoming a $1 billion organization by FY 2014 and geared
up to meet our targets. We posted a strong consolidated annual revenue
growth of 67.3% and EBITDA Growth of 163.9% in Rupee Terms. In our Customer
Experience Survey during the year, 90% of customers gave a rating of 4 and
above (on a scale of 5) on overall satisfaction and 95% of them rated 4 and
above (on a scale of 5) on their willingness to do repeat business. We
acquired and successfully integrated Aztecsoft during the year. The
combined entity draws from the strengths of both MindTree and Aztecsoft and
strengthens our position as the best mid-sized Company.

Economy & Indian IT Industry:

The world economy has seen tremendous change. By September 2008, financial
crisis spiraled out of control with giants like Lehman Brothers, Merrill
Lynch, Washington Mutual and Wachovia falling one after other. Bail outs
and government interventions have now become commonplace. Globally many
industries are affected directly or indirectly.

The Global IT industry had a difficult year as the customers it serves
faced a slowdown. The Indian IT industry has grown in strength and value,
and today serves a significant portion of the global information technology
outsourcing needs, by leveraging its large, highly qualified and growing
talent base. As per a NASSCOM report, IT Services alone constituted 57% of
Indian IT exports in FY2009, and accounted for about $26.9 billion in
value. As a proportion of national GDP, the sector revenues have grown from
1.2% in FY 1998 to an estimated 5.8% in FY2009. An estimated 2.3 million
professionals are employed directly in this sector. Further, NASSCOM
estimates that 8 million additional jobs have been created through indirect
employment.

While Indian players have long positioned themselves as offshore service
providers', our strength is that we have created a model where we deliver
larger front-ending high-value services such as consulting and integrated
these services into our delivery models.

Today, customers worldwide are looking to their IT partners to provide
tangible business value to help them differentiate themselves in the
markets that they compete in, and to add to their portfolio of
capabilities. In such an environment, it becomes imperative that technology
providers understand the business of their customers to great depth and
incorporate a solution-based approach rather than a technology-led approach
to services. In this aspect too, we are working towards narrowing the gap
with respect to the large incumbents.

Indian IT is also playing a key role in global technology IP creation.
NASSCOM reports that exports from high-value-added services such as
engineering, R&D and offshore product development grew by 15% to reach $7.3
billion in FY2009.

We have now started to provide value beyond traditional services offerings
like custom application development. Knowledge Services is our newest
practice line which was formally launched on 1st April 2009 and has already
seen early wins. In this segment, we are focusing on Analytics which aid
critical day to day decision support for our customers.

Financial Performance:

The financial performance discussed below is based on the consolidated
financial results for the year ended March 31, 2009.

On December 17, 2007, MindTree Ltd ('MindTree' or 'the Company') acquired
100% of the outstanding equity shares of TES PV Electronic Solutions
Private Limited (TES PV), which was subsequently renamed as MindTree
Technologies Private Limited (MTPL). In the current year, subsequent to the
acquisition, the company, vide a scheme of amalgamation proposed to merge
MTPL with itself. The approval from the High Court of Karnataka was
received in January 2009 and the scheme was effective April 1, 2008.
Consequently, the standalone MindTree results include that of MTPL.

During the year, the Company acquired 79.9% of the outstanding equity
shares of Aztecsoft Limited (Aztec). Aztec is now a subsidiary of MindTree
Limited. From the date of acquiring control (July 31, 2008), the revenues
are consolidated. The Company has filed an application with the High Court
for the merger of Aztec with the company effective April 1, 2009.

Income:

Income from software development:
Rs. in Million
Revenue Year ended % Year ended % Growth %
March 31, March 31,
2009 2008

Overseas 11,609 93.8 6,865 92.8 69.1
Domestic 766 6.2 533 7.2 43.7
Total 12,375 100.0 7,398 100.0 67.3

Our revenues for the year is Rs. 12,375 million and have shown a strong

growth of 67.3%.

We have 261 active customers as at March 31, 2009 of which 37 are Fortune
500 accounts.

Our million dollar client count is follows:

No. of million dollar clients March 31, 2009 March 31, 2008

$1 million clients 64 46
$5 million clients 13 6
$10 million clients 3 2

We provide our software development services on time-and-material basis or
fixed-price basis. Revenue from software development on time-and-material
basis is recognized as and when the related services are rendered. Revenue
from fixed price contracts is recognized using the proportionate completion
method, which is determined by relating the actual project cost of work
performed to date to the estimated total project cost for each contract.
Our revenues by project type are as follows:

Project Type March 31, 2009 March 31, 2008

Fixed price 13.1% 21.1%
Time and Material 86.9% 78.9%
Total 100.0% 100.0%

Our revenue breakdown by service offerings is given below:

Service offerings March 31, 2009 March 31, 2008

Development 48.4% 55.4%
Maintenance 22.4% 28.5%
Consulting and IP Licensing 3.7% 3.8%
Package Implementation 3.8% 3.9%
Independent Testing 18.3% 5.0%
Infrastructure Management and
Tech Support 3.4% 3.4%
Total 100.0% 100.0%

We derive revenues from services provided both offshore and onsite.
Offshore revenues consist of revenues from software services work conducted
in our offshore facilities in India. Onsite revenues consist of revenues
from software services work conducted at clients' premises or from our
premises outside India. Services performed at a client site or our premises
located outside India typically generate higher revenues per-capita at a
lower gross margin than the same services performed at our facilities in
India. The mix in this category is as follows:

March 31, 2009 March 31, 2008
Effort mix
Onsite 12.6% 13.4%
Offshore 87.4% 86.6%
Total 100.0% 100.0%
Revenue mix
Onsite 29.8% 27.8%
Offshore 70.2% 72.2%
Total 100.0% 100.0%

We have classified our revenues into four geographic segments comprising
the Americas, Europe, India and Rest of the World. The geographic break
down of revenues contained in the following table is based on the location
of the specific client entity for which the project has been executed,
irrespective of the location where the invoice is rendered or whether the
work for a specific client entity is performed onsite or from our offshore
delivery centres in India.

Rs. in Million
Year ended March 31, 2009 % March 31, 2008 %

America 8,080 65.3 4,865 65.7
Europe 2,439 19.7 1,366 18.5
India 780 6.3 421 5.7
Rest of World 1,076 8.7 746 10.1
Total 12,375 100.0 7,398 100.0

Our operations predominantly relate to providing software services in 3
primary business segments viz. IT Services and R&D Services and the OPD
area acquired from Aztec. Revenues in these segments are as follows:

Rs. in Million
Year ended March 31, % March 31, % Growth %
2009 2008

IT Services 7,925 64.1 5,730 77.5 38.3
R&D Services 2,193 17.7 1,668 22.5 31.5
Aztecsoft business 2,257 18.2 - - -
Total 12,375 100.0 7,398 100.0 67.3

Under IT Services and R&D Services, we are organized by Industry Groups
(Verticals). The revenue mix of these verticals in 2008-09 as compared to
2007-08 is as follows:

IT Services March 31, 2009 March 31, 2008

Banking, Financial and Insurance 27.3% 25.4%
Manufacturing 25.2% 27.1%
Travel and Transportation 19.9% 17.7%
Hitech 9.9% 16.1%
Others 17.7% 13.7%
Total 100.0% 100.0%

R&D Services March 31, 2009 March 31, 2008

Storage and Servers 34.8% 38.7%
Consumer Appliances 33.0% 29.6%
Communication Systems 12.8% 11.6%
Automotive and Industrial Systems 13.7% 16.0%
Others 5.7% 4.1%
Total 100.0% 100.0%

Other income:

Other income for the year ended March 31, 2009 is Rs. 115 million and has
decreased by about 59% over the previous year (Rs. 279 million). This is
mainly because of

* Reduction in investments as they were redeemed for Aztec acquisition.
Consequently dividend from investment and interest on deposits has reduced
(Rs. 107 million).

* In the previous year, there was an exchange gain of Rs. 41 million. In
the current year, there is a loss (explained later).

Analysis of expenses:

* Software development expenses (Rs. 6,968 million) has increased by about
47% as compared to the previous year, but reduced as a % of revenue from
64% to 56% in the current year. Since Aztec was not part of the previous
year's results, the increase looks high. If Aztec is excluded, the increase
over the previous year will be only 20.5%, which is in line with the
business growth.

* Administrative expenses (excluding exchange loss) as % of revenue has
decreased from 19% in the previous year to 17% in the current year. In
absolute terms, there was an increase of Rs. 678 million (48% over the
previous year). If Aztec is excluded, the increase over the previous year
will be only 26%.

* As a % of revenue, both software development expenses and administrative
expenses have shown an improvement mainly due to effective control on SG&A
costs, productivity measures and rupee depreciation during the year

* With effect from 1 April 2008, the Company followed the principles of
Accounting Standard ('AS') 30 'Financial Instruments: Recognition and
Measurement' in respect of derivative instruments that are not covered by
AS 11. Derivative Instruments that do not qualify the conditions of cash
flow hedge accounting under AS 30 are fair valued and the resultant
exchange losses are debited to the Profit and Loss account. The exchange
losses comprise these Mark to Market (MTM) losses of Rs. 1,523 million and
cash losses of Rs. 566 million.

* Interest increased by Rs. 103 million to Rs. 162 million for the year
ended March 31, 2009. This is mainly due to increase in working capital
loans drawn during the year (explained under Balance Sheet items).

Profitability and Margins:

* EBITDA margins were at a robust 27% for the year ended March 31, 2009 as
compared to 17% in the previous year. Significant rupee depreciation during
the year and our focus on operational efficiency has contributed to this
margin improvement. EBITDA grew by 164% over the previous year.

* Our effective tax rate based on current taxes is about 12% as compared to
about 11.5% in the previous year.

* Net profits (Rs. 523 million) decreased by about 49% over the previous
year, mainly because of the Mark to Market (MTM) provisions as explained
above.

Significant changes in Balance Sheet items:

* Increase in reserves and surplus of Rs. 181 million :

* Securities premium account decreased by Rs. 209 million because of
goodwill adjustment of Rs. 214 million (Goodwill arising on merger of MTPL
has been set off against the securities premium account as per the Scheme
of Amalgamation) and increase of Rs. 5 million on exercise of employee
stock options.

* General reserve increased from Rs. 194 million to Rs. 201 million due to
current year transfer to reserve on account of interim dividend (as per
limits prescribed by the Companies Act).

* Stock option outstanding account increased by Rs. 10 million

* In accordance with AS 30, derivative instruments which qualify for cash

flow hedge accounting, the resultant exchange loss is debited to hedging
reserves to the extent of Rs. 98 million.

* Balance in Profit and loss account increased by Rs. 471 million due to
current year profits.

* Secured loans increased to Rs. 1,376 million at March 31, 2009 as
compared to Rs. 919 million at March 31, 2008 mainly because of increase in
working capital loans of Rs. 860 million and decrease in term loans of
Rs.371 million and decrease in Finance lease obligation of Rs. 32 million.
The overall increase in loans was due to capex expansion at our Chennai and
Bangalore SEZ facilities.

* During the year, we received an unsecured loan from Council for
Scientific and Industrial Research (CSIR) for Rs. 18 million. Under the
directions of Government of India, CSIR is implementing a scheme entitled
New Millennium Indian Technology Leadership Initiative (NMITLI) that seeks
to realize the vision of developed India in Science & Technology. The
scheme envisages to support innovation centered scientific & technological
developments as a vehicle to attain for the country a global leadership
position at least in some selected niche areas. MindTree has been selected
to do a project under 'Development of Intelligent Video Surveillance Server
(IVSS) system.

* Additions to fixed assets at March 31, 2009 was Rs. 1,533 million mainly
because of MindTree leasehold improvements at Chennai and Bangalore SEZ
units for Rs. 228 million, other MindTree assets comprising computer
systems, furniture and fixtures, electrical installations, office equipment
(Rs. 325 million) and assets of Aztec (Rs. 980 million) and Capital work in
progress decreased by Rs. 103 million mainly due to capitalizations during
the current year, as explained above.

* Investments decreased to Rs. 1,013 million at March 31, 2009 as compared
to Rs. 1,395 million at March 31, 2008. The movement on investments is as
follows:

- Investments made by MindTree reduced by Rs. 1,207 million because these
investments were redeemed for the purposes of Aztec acquisition and Capex
expansion.

- Investments made by Aztec were added to the extent of Rs. 825 million, on
consolidation.

* Consolidation of Aztec has resulted in goodwill of Rs. 1,461 million.

* The Days Sales Outstanding (DSO) on debtors at March 31, 2009 is 70 days
as compared to 87 days at March 31, 2008. The DSO has significantly
improved because of our persistent focus on receivables and collections.

* Current liabilities have mainly increased on account of MTM provisions,
as explained earlier.

Outlook for FY 2009-10:

For FY 2009-10, we have announced the following consolidated guidance:

* Revenue guidance of $290-300 Million (Rs.14,906 - 15,420 million).

* PAT of $ 37.7- 39 million (Rs. 1,938-2,005 million).

* EPS is expected to be in the range of Rs. 49.3- 50.9

The above guidance is based on an average exchange rate of INR 51.4 = 1USD

Strengths & Opportunities:

We believe that the following aspects of our business help differentiate us
from some of our competitors:

Long term client relationships: We have successfully demonstrated the
ability to manage large client relationships over long periods. We are the
first Indian company to receive Texas Instruments (TI) 2008 supplier
excellence award. We believe that our ability to be accessible to our
customers, the attention we give them, our flexible approach and agility to
meet customer requirements and our positive attitude in servicing customers
has helped increase customer satisfaction levels and is a competitive
strength. In our client engagements, we leverage our industry experience
with our high quality processes, project management capabilities and
breadth of technical expertise. In addition, for strategic clients, an
identified senior executive is responsible for the overall client
relationship and conducts periodic reviews with the client.

Comprehensive range of Services: We have developed a comprehensive range of
service offerings in the IT services, product engineering services (R&D
Services and outsourced product development) business and Knowledge
Services (Analytics) in order to address the varied requirements of our
clients. We believe that our comprehensive range of offerings help our
clients achieve their business objectives and enable us to obtain
additional business from existing clients as well as address a larger base
of potential new clients.

Global delivery model: Our hybrid delivery model OneShore represents our
method for global development that achieves a balance of quality, cost
savings and localizations. OneShore reflects our company culture. We
recognize that technology services firms cannot deliver quality and cost-
and-time savings unless they are committed to integrating people, business
processes and skill sets into a single corporate vision. OneShore
represents a fusion of global resources that is designed to enable us to
pursue the same strategy and vision for our customers at a consistently
high service level wherever they are located. The customer centric approach
inherent in the OneShore model enables us to achieve high standards of
quality in our delivery organization. This is demonstrated by our achieving
CMMI Level 5 and P-CMM Level 5 quality standards within five years of
inception.

Strong People Brand: We have consistently appeared in various surveys
conducted to ascertain the best employers in India and have received
various accolades in this regard. We recruit talent from some of the best
institutes in India and abroad, as well as some of the leading IT
companies. We believe that it is our transparent evaluation criteria,
inclusive approach to our people, focus on training, competitive
compensation packages, being a value-based organization, open
communications policies and our ability to prepare our people for
leadership roles that has resulted in lower attrition rate. We were ranked
second in the survey conducted by Business Today, Mercer and TNS. We won
several recognitions in the Annual Recruitment 6t Staffing Best in Class
(RASBIC) Awards. We were selected as the Recruiting and Staffing Industry
Leader of 2009, winning in 5 out of the 7 categories including Best Overall
Recruiting and Staffing Organization of the Year, Most Innovative
Recruiting and Staffing Program/Initiative, Best Use of Technology for
Recruiting, The Most Informative Recruiting & Staffing Industry Resource.
We were ranked among the top 10 in the Great Places to Work survey
conducted by Businessworld and the Great Places to Work Institute.

Knowledge Management and Innovation: Leveraging effective knowledge
management techniques through a well planned knowledge ecosystem to nurture
share and tap knowledge. We view innovation and knowledge creation as a key
strength that is and will continue to help us deliver value to our
customers. This focus of ours has also resulted in our receiving industry
recognitions such as the #1 rank for the Asian Most Admired Knowledge
Enterprise (MAKE) Award, recognized byTeleos, in association with The KNOW
Network.

Experienced management team: The experience of our management team in
building large professional service organizations extends back over 20
years. The founding team was led by Ashok Soota, who was, immediately prior
to co-founding MindTree, Vice Chairman of Wipro Limited, one of India's
largest software companies.

Threats, Risks & Concerns:

Deterioration in Demand: Due to the current macro economic developments,
the world is seeing an economic recession. Uncertainty remains with regard
to IT budgets for 2009 ad 2010 with frequent revisions in forecasts by
Analysts. We have taken cost containment measures to tighten the belt e.g.
reduction in travel, recruitment only on need basis. There has been
increased focus on getting closer to customers e.g. more frequent visits of
top management. MindTree is trying to expand its share of revenues from
Application Management and Infrastructure Management Services which are
annuity revenue streams. We have started new service offerings e.g.
knowledge services which provides enhanced business value to our customers
till these measures make us confident that we are well prepared for the
future.

Legislation in existing markets could restrict companies to outsource:
Restrictions to outsource services to other countries have been in news for
a while. While no substantive anti-outsourcing legislation has been
introduced to date, the introduction of such legislation is possible. If
introduced, such measures may affect our growth prospects.

Risk of downward pressure on pricing: With economic downturn, customers
expect discounts and special pricing incentives. With demand deterioration,
competition tends to be more intense which also creates pressure on
pricing. We have been focused to provide Value Addition' to the customer
rather than just IT solutions.

Competition: We are organized into three divisions - Information Technology
Services ('IT Services'), Outsourced Product development (OPD) and Research
and Development Services ('R&D Services'). The market for all the three
divisions is highly competitive and rapidly evolving. We primarily face
competition from Indian as well as international technology services
companies, divisions of large multinational technology firms, and captive
offshore centers of large corporations. Our mature global delivery model,
range of services offered, our level of technical expertise and talented
pool of people and our culture help differentiate us from some of our
competitors.

Foreign currency rate fluctuations: Majority of our revenues are in foreign
currencies whereas a significant portion of our expenses are in Indian
Rupees. The USD/INR rate has fluctuated unexpectedly and widely during
2008-09 and is expected to do so in future. Our operating results are
impacted by forex movements. We continue to maintain a prudent forex
management policy which we expect will help us manage this risk
appropriately.

Our Strategy:

New service offerings: We provide comprehensive range of services viz. IT
services, R&D services, Outsourced Product development, Infrastructure
Management & Support, Knowledge Services and Independent Testing. We have
worked with leading companies from a variety of industry segments,
including Consumer Products Group, Retail, Travel, Manufacturing and
Financial Services, and Insurance.

Leverage existing client relationships to enhance our business:

We intend to continue to grow our business by enhancing our existing
relationships and increasing the scope of engagements with our clients by
providing tangible business value to our customers. We believe our
capability to provide comprehensive range of services enables us to deepen
our relationships with existing clients through cross-selling
opportunities.

Target large clients: We intend to diversify our existing client base with
the addition of new clients, typically Global 1000 companies, which offer
us the potential to develop a large relationship with them. We aim to
effectively leverage our sales and marketing teams and expand the scope of
our engagements with these clients over time. We have offices in multiple
locations in the U.S. as well as in the U.K., Germany, the U.A.E.,
Switzerland, India, Singapore, Australia and Japan. We plan to further
expand our geographical coverage by opening new offices in existing as well
as new countries. This would enable us to service existing clients in these
geographies as well acquire new clients.

Continue our focus on innovation and introduce new technologies: We intend
to continue expanding our range of service offerings in order to increase
business from our existing clients and to acquire new clients.
Historically, we have expanded our service offerings to address new market
opportunities in areas such as data warehousing and business intelligence,
ERP, mainframe maintenance and re-engineering, hardware design, testing
services, and infrastructure management and technical support.

Leverage both organic and inorganic growth opportunities:

Growing our current business organically remains a key priority. At the
same time, we are also looking to grow inorganically given the right M&A
candidates that would either help us build depth (scale) and/or breadth in
our capabilities.

Strengthen the 'MindTree' brand: We continue to intend to enhance our brand
recognition and continue investing in developing the 'MindTree' brand in
our client markets within selected industries in India and abroad. This we
believe facilitates making the brand relevant in the minds of different
stakeholders such as customers, people, investors, regulators, suppliers,
academic institutions etc. We seek to achieve this through various
marketing initiatives including targeted analyst outreach programmes, trade
shows, white papers, events, workshops, road shows, speaking engagements
and global public relations management. We believe that a strong brand will
contribute to attracting and retaining talented people and enhancing our
lead generation process and client acquisition.