Search Now


Wednesday, September 16, 2009

Annual Report - Sasken - 2008-2009




Your Directors have pleasure in presenting the report on the business and
operations of the Company along with the Audited Accounts for the financial
year ended March 31, 2009.

Result of Operations (Consolidated) - Extract

Amount in Rs. lakhs

Particulars Year ended Year ended
March 31, 2009 March 31, 2008

Revenues 69,781.33 57,017.71
Cost of Revenues 43,842.05 37,372.24
Gross Profit 25,604.13 17,482.15
Non-operating Income (net) (3,539.51) 2,342.66
Exceptional Item 1,519.70 -
Profit before Income taxes 7,082.68 5,680.95
Income Taxes Expense, net (including FBT) 2,852.27 1,742.52
Profit After Tax 4,230.41 3,938.43
Proposed Equity Dividend 1,084.44 1,142.43
Dividend Tax 184.30 194.16
Transfer to General Reserve for the year 257.45 249.36

(Previous year's figures have been regrouped wherever necessary to conform
to the current year's presentation)

'A true soldier does not argue as he marches, how success is going to be
ultimately achieved. But he is confident that if he only plays his humble
part well, somehow or other the battle will be won. It is in that spirit
that every one of us should act. It is not given to us to know the future.
But it is given to everyone of us to know how to do our own part well' -
Mohandas Karamchand Gandhi

These are challenging times across the world. Almost every business, every
individual is being impacted in these times and your Company is no
exception to it. This is the time for us to show what we are made up of -
we must work harder and smarter, delight our customers, now, more than
ever. The true Sasian spirit is founded on our enthusiasm, on our constant
will to renew, on our cost consciousness, on our willingness to assume
responsibility and to ensure that we succeed. Your Company, backed by a
list of marquee customers and remarkable engineering talent resources, was
able to face those challenges by bolstering talent and cost effective
programs across the Company.

Our focus areas include:

* Drive an aggressive sales plan to tap more Tier-1,Tier-2 & Tier-3

* Ensure that we balance the need for preserving our financial resources
with the need to provide employees with jobs while the economic situation
is difficult.

* Keep operational costs under a tight check and thereby ensure that the
organization tides over these difficult times.

Your Company has seen robust growth; revenues have increased by 22% in
rupee terms, from Rs.57,017.71 lakhs in 2007-08 to Rs.69,781.33 lakhs in
2008-09. Software Services, including Network Engineering Services, grew at
21%, contributing 91% to the revenues, while the Software Products revenues
contributed 9%. The net profits grew from Rs.3,938.43 lakhs in FY08 to
Rs.4,230.41 lakhs during the year, registering a growth of 7%. This has
also translated to an Earnings Per Share of Rs.15.17 in 2008-09 vs.
Rs.13.80 in 2007-08.

The Tier 1 services strategy continues to be focal point for us. We now
have a total of 4 customers, giving us greater than $10M in revenues per
annum, and one of these customers have crossed the $40M revenues per annum
mark. This is a validation of the fact that our Tier 1 customers value
their engagements with Sasken and are looking to further entrench their
business with us.


The Board recommends a dividend of 40% (Rs.4 per equity share) this year.

Buy-Back of Shares

In terms of decision of the Board of Directors dated April 18, 2008 and in
accordance with the applicable regulations, your Company offered to buy-
back its equity shares of face value of Rs.10 each, upto a maximum amount
of Rs.4,000 lakhs at a maximum price of Rs. 260 per share from open market.
Your Company commenced the buy-back on September 15, 2008 and concluded it
on November 3, 2008. Your Company has bought back 1,449,742 equity shares
at an average price of Rs.106.80 per share, utilizing a sum of Rs.1,548.37
lakhs. The amount paid towards buy-back of shares, in excess of the face
value, has been appropriated out of General Reserve.

In terms of the provisions of Section 77A of the Companies Act, 1956 and
SEBI (Buy Back of Securities) Regulations 1998, your Company has
extinguished the above mentioned 1,449,742 shares as on March 31, 2009 and
has created Capital RedemptionReserve of Rs. 144.97 lakhs towards the face
value of 1,449,742 shares of Rs. 10 each by way of appropriation out of
General Reserve.

Scheme of Arrangement

Your Board of Directors, at its meeting held on December 15, 2008 resolved
to approach the Hon'ble High Court of Karnataka, Bangalore to create a
Business Restructuring Reserve to be carved out from Securities Premium
account in terms of a Scheme under Section 391 / 394 of the Companies Act,
1956 whereby inter-alia, the losses on impairment of capitalized software
products and other business restructuring expenses will be adjusted against
the said Reserve. The Scheme has been approved by the shareholders and
creditors and has been notified to the stock exchanges and is pending
before the Hon'ble High Court of Karnataka. The Company has provided for
impairment loss of Rs. 1,519.70 lakhs during the year ended March 31, 2009
as an exceptional item in respect of capitalized software products, which
is subject to reversal in terms of the Scheme after its becoming effective
in law.

Employees Stock Option Plan (ESOP)

The Company's ESOP continues with the philosophy of sharing wealth with its
employees and encourages the employees to be partners in the growth of the

ESOP 2000 Scheme

No new grants were made under this scheme during the year under review.
There were 181,173 options outstanding with employees as of March 31, 2009.

ESOP 2006 Scheme

New grants made under this scheme during the year are detailed in Annexure
1. The options outstanding with employees and Directors as of March 31,
2009 are 240,750 options. There are 2,859,250 unissued options as on March
31, 2009.

The details required under SEBI (Employee Stock Option Scheme & Employee
Stock Purchase Scheme), Guidelines 1999, as on March 31, 2009 are given in
Annexure 1 forming part of this Report.


Members will be proud to note that our Annual Report for financial year
2006-07 has won the Platinum Award in telecom category of the 2007 Vision
Awards Annual Report Competition, held by the League of American
Communications Professionals (LACP). This is icing on the cake for your
Company which had won the Gold for the previous year's report (05-06).

Our Annual Report has also been recognized again as one of the Top 100
Annual Reports of 2007 across categories internationally. This is the
second consecutive year, wherein your Company's Annual Report has been the
only Indian Annual Report featuring in the Top 100.

Corporate Social Responsibility (CSR)

A week long CSR drive was conducted across India based facilities of your
Company by a large team of enthusiastic volunteers, in order to generate
support for the NGOs like Ashadeep, Divyadeepa, Indiasudar, Sambhav and
Sundar Trust. The focus was to generate funds for the smaller NGOs working
for the community, under-privileged and differently abled that typically
are not able to mobilize adequate funding and support like their larger
counterparts. The drive was kicked off at Chennai, Pune and Bangalore with
employee cook-offs and donation drives for collecting useful articles such
as books, clothing and other useful items and concluded with a dance and
music performance by the visually impaired children from Karnataka Welfare
Association for the Blind and with a dance and music concert by employees
of your Company. As a result of the drive, Rs.4 lakhs was generated and
distributed for the identified NGOs.


We have enlarged the patent reporting beyond US to cover India and Japan
patents. This year your Company has been granted many Indian patents and
one Japanese patent. Thus, the data related to all the worldwide
applications is included this year. The following table gives details about
the various patent applications made by your Company till date:

US India Other Acquired

Applied 40 21 9 -
Granted 23 8 1 1
Granted since last report 4 7 1 -
Abandoned 5 7 2 -
Pending 12 6 6 -

There has been a conscious effort on the part of the Company to obtain a
return on investment on the patents. Your Company has been actively
exploring various options such as licensing and sale of patents, through
well established Intellectual Property consultants.

Corporate Governance

Your Company is committed to maintain the highest standards of Corporate
Governance. Your Directors adhere to the standards set out by the
Securities and Exchange Board of India's (SEBI) Corporate Governance
practices and accordingly have implemented all the major stipulations
prescribed. Your Company's Corporate Governance Compliance Certificate
dated July 17, 2009 in line with Clause 49 of the Stock Exchange Listing
Agreement is given in Annexure 2 forming part of this Report.

Directors' Responsibility Statement

As stipulated in Section 217(2AA) of the Companies Act 1956, your Directors
subscribe to the 'Directors' Responsibility Statement' and confirm that:

* In the preparation of the annual accounts, the applicable accounting
standards have been followed along with proper explanation relating to
material departures.

* The 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.

* The Directors have taken proper and sufficient care of the maintenance of
adequate accounting records in accordance with the provisions of the Act
for safeguarding the assets of the Company and for preventing and detecting
fraud and other irregularities.

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

Subsidiary Companies

As required under Accounting Standard 21, Consolidated Financial Statements
incorporate the results of the following subsidiary companies, viz. (a)
Sasken Network Engineering Ltd. (b) Sasken Network Solutions Inc, USA (c)
Sasken Communication Technologies Mexico S.A. de C.V. (d) Sasken
Communication Technologies (Shanghai) Co. Ltd. (e) Sasken Communication
Technologies Oy and (f) Sasken Finland Oy (g) Sasken Inc. USA and (h)
Sasken Japan KK.

In terms of the Central Government approval under Section 212(8) of the
Companies Act, 1956, the audited Financial Statements along with the
reports of the Board of Directors and the Auditors pertaining to the above
subsidiaries have not been attached to this Report. The Financial
Statements of the said subsidiaries will be kept for inspection by any
investor at the registered office of your Company and that of the
subsidiary companies. Investors who want to have a copy of the above may
write to the Company Secretary at the registered office.


Dr. Ashok Jhunjhunwala and Mr. Jyotindra B. Mody retire by rotation at the
ensuing Annual General Meeting and being eligible offer themselves for re-

Mr. Bharat P. Mehta has been appointed as an Alternate Director for Mr.
Jyotindra B. Mody on October 16, 2008, in place of Mr. Shirish B. Mody who
was hitherto an Alternate Director for him.

Mr. Vinod K. Dham has resigned from the Board of your Company effective
January 17, 2009 and in his place Mr. Bharat V. Patel was co-opted as a
Director on July 16, 2009.

Your Company places on record its appreciation of services rendered by Mr.
Shirish B. Mody and Mr. Vinod K. Dham during their tenure.

Remuneration payable to Executive and Independent Directors are detailed in
the notice convening the Annual General Meeting for members' approval.

Conservation of Energy, Technology Absorption and Foreign Exchange Outgo

Annexure 3 forming part of this Report gives information in accordance with
the provisions of Section 217(1)(e) of the Companies Act, 1956 read with
Companies (Disclosure of Particulars in the Report of Board of Directors),
Rules 1988 regarding conservation of energy, technology absorption and
foreign exchange earnings and outgo.

ISO 14001

Sasken is compliant with the Environmental Management System International
Standard ISO 14001. Sasken is committed to be a responsible member of the
communities in which it works. This reaffirms your Company as a responsible

corporate citizen.

ISO 27001

Sasken adheres to the Information Security Practices International Standard
ISO 27001. This is important for assuring our customers of our commitment
in protecting their IP as well as sensitizing all employees about
confidentiality and integrity of information.

TL 9000

Sasken is compliant with the telecom industry specific International
Standard TL 9000, which by definition includes the ISO 9001:2000

Particulars of Employees

We present the abridged accounts under Section 219 of the Companies Act,
1956. Pursuant to the Rules and Forms read with Section 219 of the
Companies Act, 1956, the particulars of employees as required by Section
217 (2A) of the Companies Act 1956, read with the Companies (Particulars of
Employees) Rules, 1975 have not been provided. However, these particulars
are available for inspection at the Registered Office of the Company and
upon written request from a shareholder, we will arrange to mail these
details. It may be noted such particulars will not include details of
employees of the Company posted and working outside India as per the rules
amended in March, 2004.


Your Company has neither accepted nor renewed any deposits during the year.
As such, no amount of principal and / or interest is outstanding as on the
balance sheet date.


M/s. S.R. Batliboi & Co., auditors of the Company retire at the forthcoming
Annual General Meeting and have confirmed their eligibility for re-


Your Directors place on record their appreciation of co-operation and
support extended by customers, shareholders, vendors, bankers and all
governmental and statutory agencies. Your Directors thank the employees for
their valuable contribution during the year and look forward to their
continued support.

For and on behalf of the Board of Directors

Bangalore Rajiv C. Mody
July 17, 2009. Chairman & Managing Director


Disclosures under SEBI (Employee Stock Option Scheme & Employee Stock
Purchase Scheme), Guidelines 1999

Description ESOP 2000 ESOP 2006

1 Total number of Options outstanding
as on April 1, 2008 277,516 539,250

2 Total number of Options granted during the year Nil 87,000

3 Total number of Options vested (but not
exercised) cumulative till March 31, 2009 159,723 122,100

4 Total number of Options exercised during the year Nil Nil

5 Total number of shares arising as a
result of exercise of option Nil Nil

6 Total number of Options lapsed (due to
resignation, etc.) during the year
ended March 31, 2009 96,343 385,500

7 Total number of Options outstanding
as on March 31, 2009 181,173 240,750

8 Money realized by the exercise
of Options (in Rs.) Nil Nil

9 Total number of Options in force 181,173 240,750

10 Variation of terms of Options Nil Nil

11. Pricing formula for the grant:

Pricing of the Option will be the weighted average of the stock traded
price, as on the last day of the quarter previous to the month of grant of
Option with a progressive increase for subsequent years or as may be
determined by the Compensation Committee from time to time. The first lot
of Options will vest after one year from the date of grant of Option and
the subsequent lots will vest thereafter. The Option-holder will have 2
years from the date of vesting to exercise the Options. On the expiry of
the exercise period, Options that have not been exercised will lapse and
cease to be valid. However, the exercise period can be extended for
exceptional cases based on approval by the Compensation Committee.

Following is a snapshot of Vesting Schedule applied at different grants:

Options granted Vesting Schedule Price Range (Rs.)

2004 - 05 July 2005 - July 2008 160 - 256

2005 - 06 July 2006 - July 2009 225 - 321

2006 - 07 July 2007 - July 2009 234 - 321
Oct 2007 - Oct 2010 298 - 394
Jan 2008 - Jan 2011 367 - 559

2007 - 08 Apr 2008 - Apr 2011 475 - 667
July 2008 - July 2011 554 - 746
Oct 2008 - Oct 2011 410 - 602

2008 - 09 Apr 2009 - July 2009 120

12. Details of Options granted to some of the senior managerial personnel
during the year under review:

Name No. of Options Vesting Schedule Range of
Exercise Price
per share (Rs.)

Dr. G Venkatesh 17,000 Apr 2009 - July 2009 120
Ms. Neeta S Revankar 17,000 Apr 2009 - July 2009 120
Mr. N. Hariharan Iyer* 15,000 Apr 2009 - July 2009 120
Mr. Srikanth Kannankote* 38,000 Apr 2009 - July 2009 120

* since resigned

13. Employee-wise details of Options granted to:

Any other Employees who were in receipt of grants amounting to 5% or more
of total Options granted during the year : Nil

Employees who were granted 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 : Nil

14. Consolidated Diluted Earnings Per Share (EPS) pursuant to issue of
shares on exercise of Option calculated in accordance with the Indian
Accounting Standard 20: Rs.15.17 per share.

15. Description of method and significant assumptions used during the year
to estimate fair value of Options:

The method applied was the Black - Scholes - Merton formula with the
following assumptions:

April 2008

Average risk free interest rate 7.95%
Weighted average expected life of options granted in (years) 1.13
Expected dividend yield 2.91%
Volatility (annualized) * 67.36%
Weighted average market price 144.00

* Based on historical market price of the Company's shares for the period
since listing.

Particulars pursuant to the provisions of Section 217(1)(e) of the
Companies Act, 1956, read with Companies (Disclosure of Particulars in the
Report of Board of Directors) Rules, 1988.

A) Conservation of Energy - Environmental Management System (EMS)

As a responsible corporate citizen, Sasken's focus on the environment is
equal to its focus on its business. We believe that by empowering our
employees we have opened the door for environmental conservation to four
times our company's strength. It's not about just being environment
friendly but being a change agent to the ecosystem around us through one of
our most important stakeholders - our employees.

Our sustained execution revolves around

* 100% compliance to all applicable legislations

* Creating awareness on the consumption of environment's resources

* Recycling and re-using in our Business operations

* Promoting environment friendly products

Sasken is committed to achieving high standards of environmental quality
and product safety, as well as providing a safe and healthy workplace for
its employees, contractors and communities.

As part of contributing to conserve the environment in the year 2008-2009,
extensive environmental related awareness drives were initiated with
participation from employees to drive the point home. We conducted sales of
environment friendly products under the'Prakruti Mela' initiative, to help
employees understand the importance of natural resource conservation.

We have been successful in reducing our energy consumption by about 5%,
waste generation by about 25% and paper consumption by 12%. We have also
successfully carried out various waste recycling programs. Set of
guidelines has been put in place by the EMS team to ensure that EMS
awareness is driven at the design stage of all hardware and software
related projects.

At Sasken, our commitment to continuous improvement on environmental
performance is integrated into our programs. This is driven by individual
commitment of various team members and strong support from the management

B) Research and Development and Technology Absorption

The Company continued its efforts during the year on product R&D.
Specifically, the Multimedia Subsystem and the Wireless Protocol Stacks
were enhanced.

During the year, the Company worked closely with a leading Japanese
customer and has been part of many successful handset launches with
Sasken's Multimedia Subsystem offering designed into them. Continuing with
the success story, the Company is currently engaged with this customer to
provide next generation multimedia codec components with Sasken RCI
Framework. This IP is part of the handsets that was launched in Q2'09. The
Company also enhanced its offering to include various Media engines and a
MultiMedia Data Base.

The GSM/GPRS Wireless Protocol Stack product has been enhanced to support
Dual SIMs. The Company is also working with a lead customer in the
satellite communication space to re-engineer the GSM protocol stack to
GMR2+ satellite communications standard. Due to the severe downturn in the
global economy, which has affected every entity, the Company has taken a
conscious decision to postpone investments in in-house corporate R&D.
However, the Company has retained its focus on Femtocells, Broadband
Wireless and Security domains. It has continued to participate in R&D
efforts in these domains through industrial forums, such as CEWiT (Centre
of Excellence in Wireless Technology) and IU-ATC (Indo-UK Advanced
Technology Center).

CEWiT is a public-private partnership, with the Indian government being the
major partner. Sasken is a founding member of this organization. Sasken is
also member of the BWCI (Broadband Wireless Consortium of India), which is
an initiative of CEWiT. Sasken has been participating in the work groups of
BWCI and has been closely looking for opportunities to commercialize some
of the contributions of the work groups. In particular, the contribution on
Indian language SMS to the 3GPP standard is being considered for commercial

IU-ATC is a bilateral initiative of the Indian and UK governments to derive
benefit by co-operation. Sasken is a member of this consortium and is
supporting some proposals made by this body to DST (Department of Science
and Technology). As part of this exercise Sasken will contribute in kind to
the exploration of setting up an end-to-end Indo-UK transnational wireless
test bed.

Sasken is also supporting the research of Dr. Ranjan Mallik and Dr. Robert
Schober, one of the awardees of the International Research Chairs
Initiative, instituted by the Government of Canada. Some of the themes of
research - MIMO OFDM and Cooperative Communications - are very relevant to
the core business of Sasken.

Continuing its efforts since last year, Sasken has successfully delivered a
3G UMTS Femto Access Gateway product to a Tier-2 OEM vendor based out of
the US. Sasken continues to prove and establish its dominance in its RAN
offering and has extended its capabilities to provide a complete offering
to RAN OEMs for R&D outsourcing and product development.

C) Foreign Exchange Earnings and outgo

Amount in Rs. lakhs

Foreign exchange earnings 45,883.65

Foreign exchange outgo (including capital goods
purchased Travel Expenses (Net) and Dividend
Paid in foreign currency) 8,288.27



Management's Discussion and Analysis of Financial Performance:

The consolidated financial statements have been prepared in compliance with
the requirements of the Companies Act, 1956, and Generally Accepted
Accounting Principles (GAAP) in India. The management accepts
responsibility for the integrity and objectivity of these consolidated
financial statements, as well as for various estimates and judgments used
in preparing the financial statements. The management's discussion and
analysis is based on the consolidated financial statements.

Company Brief

Sasken Communication Technologies Limited (Sasken), established in 1989 and
headquartered in Bangalore, India is an embedded communications solutions
company, which helps businesses across the communications value chain
accelerate product development life cycles through a unique combination of
research and development consultancy, wireless software products and
software services. Sasken employs 3,277 people, who work from state of the
art research and development centers in Bangalore, Chennai and Pune in
India, and near shore development centers in Finland, Mexico and China and
branch offices in Germany, Sweden, UK and US. Sasken has relationships with
many of the top Network OEMs, Semiconductor Vendors, Satellite
Communication Equipment Vendors and all of the top 5 handset vendors across
the world.

Committed to innovation, Sasken works with customers to help them get to
market ahead of the competition, and stay focused on new product
development and manufacturing. With deep understanding of the
communications industry, access to current and emerging technologies,
mature development processes, global resources and a proven track record,
Sasken creates complete solutions to help clients succeed. Clients choose
Sasken for the comprehensive range of application solutions and services,
backed by a proven reputation for expert support and high quality. Our
growth strategy is offering compelling value propositions to our customers
by spotting and exploiting opportunities to help them grow.

In addition to being directly involved in the development of a variety of
technologies, Sasken is a member of premier technology bodies including
Sasken is SEI CMM Level 5 certified and its' solutions are backed by ISO
9001:2000, ISO 27001 and TL 9000 certifications. Sasken's proprietary
quality management systems strengthen our business offerings thus ensuring
customer satisfaction. Sasken's commitment to environment is highlighted by
its ISO 14001 certification.


The economic downturn in FY 09 resulted in tightening of R&D spends by our
customers. These events have posed significant challenges for the Company.

Networks business continued to remain sluggish due to pressures faced by
Network equipment manufacturers. One of our key customers in the NEMS space
has filed for protection against bankruptcy proceedings in the North
Americas and Europe, which has impacted us significantly in terms of
business volumes declining and also collection of oustandings as on date of
bankruptcy filing. Overall, the environment continues to be challenging for
NEMS and the Company is working on solutions that enable networking vendors
to reduce expenditure (capital and operating) for their customers by
deploying efficient technology solutions. In FY 09, the Company made
certain key investments in 4G technologies such as WiMax / LTE / Femtocells
to enable the Company to address the future requirements in this place.

The handset side of the business continued to show robust growth despite
pressures from certain pockets. To increase traction with a key handset
vendor, a proximity centre has been created in Beijing and the Company
entered in to an asset transfer agreement, with its customer, in Germany
for transfer of resources. This is in line with the Company's global
delivery strategy. The proximity centers in Mexico and Finland now place
the Company in good stead to take it to the next growth phase. There are
however challenges that we continue to work on in the hardware business. We
are making all efforts through our multi site strategy, focusing on
creating and delivering cost optimal solutions.

In FY 09, a number of semiconductor vendors went through similar budget
pressures. We saw lower R&D spends from one of the key customers in this
segment. However, there are signs of stabilization and we have recently
acquired two key Tier 1 customers for our ICDS and software services
offering and migrated one of our existing relationship to a full fledged
offshore development centre. We expanded on our IC Design offering for a
key semiconductor vendor and are now offering software services to this

On the products side of the business, we continue to build on our successes
in the Japanese market and the models that carry our solutions are the
latest in the lineup of rich media phones, which have been well received by
the discerning and demanding Japanese consumer. However, we have been
cautious about further investments into our products business, in view of
the uncertain market conditions and we do not see significant opportunities
there right now.

In the last quarter, we engaged with a leading mobile satellite
communications provider to develop the next generation global dualmode
satellite phone. This engagement will position us to deliver the complete
phone design that would include hardware and antenna design, development
and testing, software development comprising protocol stacks, application
framework and test lab offerings. This engagement also marks a first for an
Indian company to be completely responsible for production ready design of
complex terminals for the satellite space, involving extensive hardware and
software capabilities.

Due to a slowdown in the automotive segment and keeping the current
environment in mind, both Sasken and the JV partner, have decided to
discontinue further investments and close down the joint venture TSAE.

Sasken has believed in striking the right balance to the commitments made
to all stakeholders, viz. customers, employees and investors. Given the
volatile and challenging environment, we wanted to ensure that as an
organization we fortify ourselves suitably to overcome the challenges that
we face in our business. Over the last six months, we have taken several
steps to control costs and make the organization agile.

We have restructured the organization to enhance the efficiencies and
utilization of organization resources in line with the prevailing tough
market conditions. We believe this will enable us to continue to focus on
our ability to connect the dots in the communication value chain and
provide robust end to end customer solutions aligned with our customer's
strategic imperative to realize more value out of their investments. We
moved into the site based delivery model during the year. Our site strategy
is composed of three interlinked elements - proximity centre, centre of
excellence and multi-site execution, in sync with requirements of our key
customers who want to address their global delivery needs. We are now
geared up to move to the next stage of managing multi-site projects, where
we offer flexibility and convenience to customers by being close to their
R&D centres while managing costs by blending delivery from both low cost
and high cost centres.

Financial Highlights for the year ended March 31, 2009

* Consolidated revenues increased by 22.4%, from Rs.57,017.71 lakhs in
fiscal 2008 to Rs.69,781.33 lakhs in fiscal 2009.

* Software Services revenue grew by 21.7%, Software Products revenue grew
by 33.7% and Network Engineering Services revenue recorded a growth of

* The revenue mix amongst Software Services, Network Engineering Services
and Software Products changed from 86:6:8 in fiscal 2008 to 85:6:9 in
fiscal 2009.

* The R&D investments have significantly decreased in the current year,
from Rs.2,367.18 lakhs to Rs.397.64 lakhs.

* Gross profit, after research and development expenses, increased from
24.1% in 2008 to 31.7% in 2009.

* Selling, General and administration costs have reduced from 17.3% in 2008
to 13.6% in 2009.

* Consolidated EBITDA margins improved from Rs.7,919.37 lakhs in FY 08 to
Rs.16,380.39 lakhs in FY 09, an increase of Rs.8,461.02 lakhs.

* Exchange gains / (losses) moved from a gain of Rs.1,799.93 lakhs in FY 08
to a loss of Rs.4,261.48 lakhs in FY 09.

* Consolidated Profit After Tax (PAT) increased by Rs.291.98 lakhs from the
previous year's PAT of Rs.3,938.43 lakhs to Rs.4,230.41 lakhs In FY 09.

* Consolidated basic Earnings Per Share (EPS) for fiscal 2009 was Rs.15.17
(Rs.13.80 - fiscal 2008) and diluted Earnings Per Share was Rs.15.17
(Rs.13.80 fiscal 2008). EPS from services business (including Network
Engineering Services) is Rs.19.58 for the year March 31, 2009.

* Cash and cash equivalents (including investments in mutual funds) stood
at Rs.13,229.97 lakhs as on March 31, 2009.

* Headcount of the group stood at 3,277 as on March 31, 2009.

* In the current year, the Company invested Rs.387.87 lakhs in its
subsidiary in Japan and China and Rs.486.20 lakhs in ConnectM, its joint
venture with IDG.

* The Board of Directors recommended a dividend of 40%.

Results of Operations:

Particulars Year ended March Year ended March
31, 2009 31, 2008
Rs. in % Rs. in % Increase/
lakhs lakhs (Decrease)

Revenues 69,781.33 100.0 57,017.71 100.0 22.4

Cost of Revenues 47,228.54 67.7 40,889.99 71.7 15.5

Gross Profit 22,552.79 32.3 16,127.72 28.3 39.8

Research and Development 397.64 0.6 2,367.18 4.2 (83.2)

Gross Profit after
Research and Development 22,155.15 31.7 13,760.54 24.1 61.0

Selling and Marketing
Expenses 2,902.34 4.2 3,055.76 5.4 (5.0)

Administrative and
General Expenses 6,842.12 9.8 6,450.10 11.3 6.1

ESOP Compensation Cost (251.22) (0.4) 359.71 0.6 (169.8)

Profit from Operations 12,661.91 18.1 3,894.97 6.8 225.1

Amortization of
Non-compete Fees 20.54 0.0 154.10 0.3 (86.7)

Other Income 721.97 1.0 542.73 1.0 33.0

Exchange Gain /
(Loss) (Net) (4,261.48) (6.1) 1,799.93 3.2 (336.8)

Provision for Diminution
in Value of Investments 117.71 0.2 - - -

Profit Before Interest
and Income Taxes 8,984.15 12.9 6,083.53 10.7 47.7

Interest 381.77 0.5 402.58 0.7 (5.2)

Exceptional Item 1,519.70 2.2 - - -

Profit Before Taxes 7,082.68 10.1 5,680.95 10.0 24.7

Income Taxes including
FBT, Net 2,852.27 4.1 1,742.52 3.1 63.7

Profit After Taxes 4,230.41 6.1 3,938.43 6.9 7.4

Segmental Revenue and EBITDA Amount in Rs. lakhs

Year ended Year ended
March 31, 2009 March 31, 2008

Total Revenue 69,781.33 57,017.71
Telecom Software Services 59,561.06 48,958.06
Network Engineering Services 4,013.45 3,438.72
Telecom Software Products 6,146.43 4,597.19
Automotive, Utilities and Industrial 60.39 23.74
EBITDA Margins 16,380.39 7,919.37
Telecom Software Services 13,725.95 8,185.91
Network Engineering Services 768.22 382.08
Telecom Software Products 2,615.74 (176.56)
Automotive, Utilities and Industrial (729.52) (472.06)
EBITDA Margins in % 23.5% 13.9%
Telecom Software Services 23.0% 16.7%
Network Engineering Services 19.1% 11.1%
Telecom Software Products 42.6% (3.8%)
Automotive, Utilities and Industrial (1208.0%) (1988.5%)

The USD revenues in the current year increased by 5.9% at the consolidated
level. The revenue in INR terms increased by 22.4% year on year. The rupee
depreciated by 15.5%, against the USD, from an average revenue booking rate
of Rs.40.14 in FY 08 to Rs.46.38 in FY 09. The Company experienced revenue
growth in all the business segments, both in USD and INR terms, in the
current year. The revenues in the services segment, including network
engineering services, grew by 5% in USD terms. The products segment
witnessed a growth of 15.8% in USD terms, for FY 09.

The revenues from network engineering services continued to contribute 5.8%
to the consolidated revenues during the year ended March 31, 2009. The
revenues from software products increased to 8.8% during the year ended
March 31, 2009 from 8.1% during the year ended March 31, 2008. The Company
had higher royalty revenues, from our product offerings in the current
year. The product line continues to see good traction in the Asian markets
as new models are being launched.

EBITDA margins from telecom software services business, in the current year
has increased to 23.0% from 16.7%. This was driven by the favourable rupee
rates, increase in volumes and efficiencies in SG&A costs.

EBITDA margins from network engineering services, in the current year has
increased to 19.1% from 11.1%. The segment witnessed growth in our US

EBITDA margins from telecom software products, in the current year has
increased to 42.6% from negative 3.8%. This segment witnessed an increase
of Rs.1,549.24 lakhs in revenue, mainly from royalties and a cost decrease,
largely driven by reduction in employment costs, in the current year.

Cost of Revenues

Cost of revenues comprise of costs incurred by the business units, towards

revenue generation activities, and operating costs allocated to the
business unit, based on the related utilization by each of the segments.
Cost of revenues increased to Rs.47,228.54 lakhs during the year ended
March 31, 2009 from Rs.40,889.99 lakhs during the year ended March 31,
2008, an increase of 15.50% and by Rs.6,338.55 lakhs in absolute terms. The
employment costs have increased by Rs.4,868.71 lakhs. The Company entered
into an asset transfer agreement, with one of its customers, in Germany by
which some assets and employees in the development centre were transferred
to the Company. The employee costs in Germany, along with related
professional charges and rental costs have contributed to the increase in
cost of revenues. Rupee depreciated against Euro in FY 09, due to which the
cost of revenues of our subsidiary in Finland have increased. The
depreciation charge in the current year has increased by Rs.490.38 lakhs
due to additional investments in fixed assets and a one time accelerated
depreciation charge on some of the facilities that we have exited.
Capitalized software was amortized only for 6 months in FY 09 as against 12
months in the previous year FY 08. The balance of capitalized software of
Rs.1,519.70 lakhs has been completely charged off as an exceptional item.
The consolidated results also include cost of revenues incurred by the
joint ventures TSAE and ConnectM.

Research and Development Expenses

Research and Development expenses include the costs of product development,
and modifications and enhancements to products. In absolute terms, there
has been a decrease in the amount of expenses incurred in research and
development by Rs.1,969.54 lakhs, which represents a decrease of 83% year
on year. During the current year, the consolidated R&D costs have
significantly reduced as (a) investments in product R&D has reduced (b)
some of the earlier R&D projects have moved in to maintenance mode and
these costs are included in cost of revenues. R & D incurred by our JV,
TSAE, whose operations have been discontinued, has also led to reductionin
the R&D charges for the current year.

Selling and Marketing Expenses

Selling and marketing expenses primarily include costs related to
employment and travel expenses of the marketing and sales staff, rent for
foreign offices, provision for doubtful debts and bad debts. The selling
and marketing expenses were at Rs.2,902.34 lakhs in FY 09, as compared to
Rs.3,055.76 lakhs in FY 08, amounting to a decrease of Rs.153.42 lakhs year
on year. The decrease has been on account of rationalization of the onsite
sales team in the current year, which has led to reduction in overseas
salaries and travel costs. During the current year, there was also a
provision for doubtful debts amounting to Rs.542.99 lakhs, of which a
significant portion was on account of one of our largest customers filing
for bankruptcy protection.

Administrative and General Expenses

Administrative and general expenses primarily include costs related to
employment expenses of the leadership team, corporate functions, rent,
professional, legal and consultancy fees and training expenses.
Administrative and general expenses increased by Rs.392.02 lakhs during the
year ended March 31, 2009. Costs have increased due to discontinued
operation charges incurred by the JV, TSAE and due to additional charges
relating to indirect taxes in India.

Employee Stock Compensation Cost

During FY 09, the Company issued 87,000 options, which carry a vesting
period of one year at an exercise price of Rs.120.00 per share. The Company
accounts for stock compensation expenses based on the fair value of the
options granted on the date of grant. A reversal of Rs.251.22 lakhs is
recorded as compensation cost to the Profit and Loss Account during the
year ended March 31, 2009, due to (a) non exercise of options granted in
current year and previous years, and (b) vesting conditions not being
satisfied, as against a charge of Rs.359.71 lakhs during the year ended
March 31, 2008.

Amortization of Non Compete Fees

During the year ended March 31, 2006, the Company paid non-compete fees of
Rs.493.08 lakhs to some of its senior employees under a non-compete and
non-solicitation agreement entered into with these employees. The non-
compete fee for one of the employees has been fully amortized in FY 08.
Accordingly, the amortization is lesser in the current year and the balance
of Rs.20.54 lakhs has been fully charged in FY 09.

Other Income and Exchange Gain / (Loss)

Other income and exchange gain / (loss) amounted to Rs.721.97 lakhs and
Rs.(4,261.48) lakhs respectively, constituting 1.0% and (6.1%), of total
revenues during the year ended March 31, 2009. The average investments in
FY 09 were higher due to which the returns were higher as compared to FY

The Company manages its foreign exchange exposures in line with its hedging
policy. The policy is not so much to make profit from currency movements
but to ensure that foreign exchange exposures on exports and imports are
properly monitored, limiting risks to tolerable levels. Thus, risk
limitation / reduction is the prime objective. The exchange gain / loss is
primarily on account of exchange differences on forward contracts and
related underlying assets. FY 09 witnessed a rupee depreciation of around
15.5% as compared to FY 08, resulting in a loss for the year.

Provision for Diminution in Value of Investments

Long-term investments are carried at cost. However, provision for
diminution in value is made to recognize a decline other than temporary in
the value of the investments. We have recorded a provision for diminution
in the value of some of our long term unquoted investments.

Exceptional Item

The Board of Directors of the Company, at its meeting held on December 15,
2008 resolved to approach the High Court of Karnataka, Bangalore to create
a Business Restructuring Reserve to be carved out from Securities Premium
account in terms of a Scheme under Section 391 / 394 of the Companies
Act,1956 whereby inter-alia, the losses on impairment of capitalized
software products will beadjusted against the said Reserve. The Scheme has
been approved by the shareholders and creditors and has been notified to
the stock exchanges. Pending approval of the Scheme by the Honourable High
Court of Karnataka, the Company has provided for impairment loss of
Rs.1,519.70 lakhs in respect of capitalized software products, as
exceptional item, included in Telecom Software Product Segment, which is
subject to reversal in terms of the Scheme after its becoming effective in


Interest expense in FY 09 was Rs.381.77 lakhs as compared to Rs.402.58
lakhs in FY 08. The interest payment is largely on account of the loan of
13 Million Euros, used towards acquisition of Sasken Finland in August

Income Taxes

The income tax expense was 4.1% of revenues during FY 09, while the income
tax for FY 08 was 3.1% of revenues. The Group incurs taxation of 26% and
29% in the subsidiaries in Finland and Mexico respectively. The higher
taxation in absolute amount has been a result of increased profits, higher
overseas branch taxation in US and Germany, withholding tax on royalty and
licensing revenues and an increase of domestic income. The effective tax
rate for the year, including FBT, for the Group is 40.3%.

Profit After Taxation

Consolidated profit after taxation was at 6.1% in FY 09, as compared to
6.91% in FY 08. The profit after taxation, for fiscal 2009, stood at

Financial Position:

As at As at
March 31, 2009 March 31, 2008 lakhs % lakhs %

Share Capital (including
Share Application) 2,711.11 5.0 2,856.08 5.2
ESOP Outstanding 273.64 0.5 524.86 1.0
Reserves & Surplus 45,305.56 82.9 42,502.87 77.8
Borrowing 6,372.01 11.7 8,764.22 16.0
Total Liabilities 54,662.32 100.0 54,648.03 100.0


Net Fixed Assets 31,978.03 58.5 30,723.30 56.2
Capitalized Software Product
Costs (Net of Amortization) - - 2,123.62 3.9
Investments 2,019.98 3.7 2,664.05 4.9
Deferred Tax Asset 216.66 0.4 125.30 0.2

Current Assets

Cash and equivalents 11,715.34 21.4 5,693.34 10.4
Receivables 13,896.79 25.4 13,326.05 24.4
Other Current Assets 8,589.95 15.7 8,968.68 16.4
Total Current Assets 34,202.08 62.6 27,988.07 51.2
Current Liabilities 13,754.43 25.2 8,976.31 16.5
Net Current Assets 20,447.65 37.4 19,011.76 34.8
Total Assets 54,662.32 100.0 54,648.03 100.0

Share Capital:

The issued share capital decreased to Rs.2,711.11 lakhs as at March 31,
2009 as against Rs.2,856.08 lakhs as at March 31, 2008. The decrease was
due to buyback of 14,49,742 equity shares under the buyback scheme.

Employee Stock Options (Net of Deferred Compensation Cost)

The employee stock option outstanding (net of deferred compensation cost)
has decreased to Rs.273.64 lakhs. During the current year the Company
issued 87,000 options to its employees under the ESOP Scheme. The ESOP
outstanding has reduced as 481,843 options have lapsed, due to non exercise
by the employees and vesting conditions not being satisfied.

Reserves and Surplus

Reserves and surplus as at March 31, 2009 was Rs.45,305.56 lakhs, as
against Rs.42,502.87 lakhs as at March 31, 2008. The increase in reserves
and surplus is due to a mix of:

(i) Transfer of profits to the reserves.

(ii) Recognition of Translation reserve on non integral operations in
Finland and Mexico.

(iii) Off set by a reduction due to payment of premium on buyback of shares
over the face value.

Secured Loans

Secured loans have reduced to Rs.6,345.63 lakhs as at March 31, 2009, as
against Rs.8,233.25 lakhs as at March 31, 2008. The secured loan is
primarily represented by the debt arrangement for acquisition of Sasken

Unsecured Loans

Unsecured loans have decreased to Rs.26.38 lakhs as at March 31, 2009, from
Rs.530.97 lakhs as at March 31, 2008. The working capital loan, outstanding
at the beginning of the year in Sasken Mexico, has been completely settled
in the current year.

Fixed Assets

The Net Fixed Assets, including capital work-in-progress, represents 58.50%
of the total assets. The fixed assets, as at March 31, 2009, were at
Rs.31,978.03 lakhs as against Rs.30,723.30 lakhs as at March 31, 2008. The
increase in fixed assets during FY 09 is primarily attributable to:-

(i) Creation of new SEZ and STP facility space in India operations.

(ii) Additional investments in Computer equipment and software tools.

(iii) Increase in goodwill due to exchange rate movements between Euro and

(iv) Acquisition of assets in Germany, due to asset transfer agreement with
a customer.

Capitalized Software Product Costs (Net of Amortization)

The capitalized software product costs comprises of development costs of
Sasken Application Framework' (SAF). The Company recorded amortization for
2 quarters and has impaired the balance Rs.1,519.70 lakhs as an exceptional


The investments, representing 3.70% of the total assets, as at March 31,
2009 were Rs.2,019.98 lakhs, as against Rs.2,664.05 lakhs, as at March 31,

The Company invests surplus funds in highly rated Mutual Fund papers,
considering the safety and liquidity as the key determinants for the
investment in a fund.

Deferred Tax Asset and Liability

Deferred income taxes reflect the impact of current year timing differences
between taxable income and accounting income for the year and reversal of
timing differences of earlier years. Deferred tax assets and deferred tax
liabilities across various countries of operation are not set off against
each other as the Company does not have a legal right to do so. The
Deferred tax assets have been recognized on Mexico and Network engineering
services operations, since there is reasonable certainty that sufficient
future taxable income will be available against which such deferred tax
assets can be realized.


Inventories represent (a) Work-in-progress - that is costs related to
project milestones that have not been met. The Work-in-progress, as at
March 31, 2009 was at Rs.59.53 lakhs, as against Rs.226.32 lakhs as at
March 31, 2008. (b) Stock-in-trade - costs related to stock of software /
hardware held for sale. The Stock-in-trade, as at March 31, 2009 was at
Rs.40.39 lakhs, as against Rs.86.74 lakhs as at March 31, 2008.

Sundry Debtors

Sundry debtors, representing 25.4% of the total assets, as at March 31,
2009 were at Rs.13,896.79 lakhs, as against Rs.13,326.05 lakhs as at March
31, 2008. The increase in debtors is primarily due to the increase of
revenue in business. The collection days have reduced from 110 days to 91
days in FY 09, reflecting improved collections. The management periodically
reviews the quality of receivables and makes provision where necessary.

Cash and Bank Balances

Cash and Bank balances, representing 21.4% of the total assets, as at March
31, 2009 were at Rs.11,715.34 lakhs, as against Rs.5,693.34 lakhs as at
March 31, 2008. The Company maintains sufficient cash balance for
operational requirements and invests surplus funds in highly rated Mutual
Fund papers and fixed deposits. With a view to safeguarding the
investments, the Company invested some surplus funds in fixed deposits,
ranging between 15 to 180 days, in Public sector Indian banks.

Other Current Assets

Other Current Assests, representing 6.7% of the total assets, as at March
31, 2009 were at Rs. 3,671.32 lakhs, as against Rs.3,918.14 lakhs as at
March 31, 2008. The decrease is primarily due to decrease in unbilled
revenue for March 2009. Unbilled revenue represents amounts recognized
based on services performed in accordance with contract terms and where
invoices have not been raised.

Loans and Advances

Loans and advances, representing 8.8% of the total assets, as at March 31,
2009 were at Rs.4,818.71 lakhs, as against Rs.4,737.48 lakhs as at March
31, 2008. The increase is primarily due to amounts paid in response to
demands raised by taxation authorities in connection with disputed taxes.

Current Liabilities and Provisions

Current liabilities and provisions, representing 25.2% of the total assets,
as at March 31, 2009 were at Rs.13,754.43 lakhs, as against Rs.8,976.31
lakhs as at March 31, 2008. The increase is significantly due to increase
in business operations, increase in liability for forward contracts,
statutory liabilities and provision for employee compensated absences.

Cash Flow

The net cash from operating activities was Rs.13,288.55 lakhs during the
year ended March 31, 2009 as against Rs.5,952.71 lakhs during the year
ended March 31, 2008.

The inflow on account of Operating profits before working capital changes
was Rs.14,880.38 lakhs during the year ended March 31, 2009 as against
Rs.10,927.75 lakhs during the year ended March 31, 2008, an increase of
Rs.3,952.63 lakhs. The increase was mainly on account of improved
collections on debtors, higher profits before taxes, depreciation and
amortization compared with that of the previous year. The inflow on account
of working capital was Rs.1,134.47 lakhs for the year ended March 31, 2009
as against an outflow of Rs.3,078.53 lakhs during the year ended March 31,

The net cash used in investing activities was Rs.1,987.05 lakhs during the
year ended March 31, 2009 as against Rs.1,091.13 lakhs net cash used during
the year ended March 31, 2008. In the current year, the funds were used for
purchase of fixed assets in new premises, computer and software

The net cash used in financing activities was Rs.5,955.14 lakhs during the
year ended March 31, 2009 as against net cash used of Rs.2,711.21 lakhs
during the year ended March 31, 2008. The outflow was on account of buyback
of 1,449,742 shares and due to repayment of the long term loan, which the
Company had borrowed for Sasken Finland acquisition.

Opportunities and Threats

We continue to face challenges due to pressures on R&D spend by key
customers and increased competition from other players in the market,
leading to pricing pressures.

Operators face an increasingly competitive environment as the dominant
source of ARPU shifts from traditional circuit switched voice, data and SMS
messaging into a diverse set of packet data services. In the wireless
domain there are a large number of service providers, service life cycles
are becoming shorter and operators are under pressure to invest in new
service capabilities. Operators and Network equipment vendors continue to
upgrade their networks using 3G / 4G technologies like HSDPA, HSUPA & WiMax
and they face significant challenges in testing, integration and migration
of their platforms. This presents great opportunities for us and we are
making appropriate investments in key technologies that would help us in
addressing these opportunities.

The global handset market growth is being driven by the smart phone
segment, and your Company with competencies and recognized strengths in the
Multimedia segment is well placed to exploit this trend. We are developing
capabilities in Google's Android framework to service our customers'
requirements in this technology. We have put in place a robust capability
development and training programme to address our challenges of scaling up
and to drive efficiencies.

We see a trend of semiconductor vendors increasing R&D spend on integrated
application processors and niche connectivity applications. Again, here
your Company is well positioned to exploit this trend and we see
significant demand for services in this segment.

We are working on strategies to address the opportunities in emerging
markets like China and India.

The Company is consciously moving towards increasing the proportion of
fixed price contracts and exploring other risk-reward sharing with our
customers, which would help in realizing higher efficiencies and improve
your Company's profitability. The Company is also investing in market
spaces adjacent to telecom, which would help propel growth in the coming

Material Developments in HR

Our total employee head count, excluding contractors, stood at 3,277
employees as of March 31, 2009. Our attrition rate for the full year was
around 26% and this continues to be an area of concern for us. However we
are putting in efforts to get this number down. Our focus this year was to
increase the touch time with the employees, increase the extent of
communication of the leadership team with employees, increase training for
first time managers, increase the linkage between performance and total
compensation. We have introduced a variable pay plan that links variable
pay to the Company's and individual's performance. This, we believe, would
help in creating a culture of high performance within the organization and
will also help the Company by way of making expenses vary with performance.

Risk and Concerns

The management of Sasken actively takes steps to manage the various risks
that the Company is exposed to. The major activities to this end are as

Business Risks

One of the key aspects of our strategy has been to remain focused on the
telecom vertical. This exposes us to the risks associated with operating in
a single industry vertical, as compared to our peers in the industry, who
are more diversified. Revenues from software products were approximately
8.8% of the Company's revenues in FY 2009.

Our product business by nature is unpredictable and hence it is not
appropriate to look at past performance and derive future trends. The
contribution of our top 5 customers has reduced to 66% of the total
revenues in the last quarter of the financial year. Some of our key
customers are facing challenges and we have seen trends of volume decline
with these customers, in the second half of FY 2009.

In the current financial year, we added more key tier 1 customers. We
increased the number of tier 1 customers from 23 in FY 08 to 27 in FY 09.
This is in line with our stated intent to mitigate business risks by
diversifying our key customer accounts.

Protection of Intellectual Property

It is the prime and foremost responsibility of any company in the knowledge
industry to safeguard its own intellectual property. The management has
taken the following measures to protect its IP:

Infosec Actions

Sasken ISMS (Information security management system) is defined on the best
practices derived out of ISO 27001. We are compliant and certified with ISO
27001 for our information security practices. This framework requires us to
comply with 133 controls and ensures adherence to international
requirements in information security. Additionally, customer security
standards are met by restriction of physical and logical access, to the
customer's Intellectual Property.

Filing of Patents

The Company actively encourages employees to file patents to protect its
intellectual property. Apart from serving the purpose of protection, these
patents, as and when granted, could lead to revenues from their license, or
to other benefits, by cross licensing of these patents, in exchange for
others that we may want to use.

Filing of Trademarks

Trademarks have acquired much importance to Sasken with the software market
focusing on branding of software products and services. We have also
applied for registration of certain trademarks in USA, EU, Russia, Japan,
China and India.

Protection of Confidentiality

Sasken assigns much importance to the confidentiality of its software,
trade secrets, internal data, systems and processes. Sasken ensures that
the employees, clients, prospects, subcontractors, advisors, consultants,
vendors, prospective investors who are exposed to any of the confidential
information of Sasken, are contractually bound to keep it confidential.

Contracting Process for Limitation of Liability

Each and every contract entered into by Sasken, including both customer and
vendor contracts, undergoes a well-settled legal and commercial contract
review process. The process ensures that, the clauses, which may be imposed
by the customer / vendors that expose Sasken to risks, are proportionate
with the benefits accruing from the contract. Sasken is also protected by
insurance coverage.

Financial risks:

Foreign Exchange Fluctuation Risk

Most of Sasken revenues are in US Dollars and Euros, while its expenses are
in Indian Rupees. Operating profits are therefore subject

to fluctuations in exchange rates. The exchange rate between the Rupee and
the US Dollar has changed substantially in the recent year. In FY 09, Rupee
depreciated by around 15.5%, against USD and was volatile through out the
year, closing at Rs.50.75 to a Dollar.

The following are the de-risking measures we adopt to minimize the impact
of exchange fluctuations.

The Company periodically reviews its foreign exchange exposures and takes
appropriate hedges regularly. The policy of the Company is to take hedges
for risk mitigation and not for profit maximization. The Company has pre
set loss limits and unhedged exposures are subject to these loss limits for
the purpose of deciding the hedge.

Liquidity Risk

The Board reviews the liquidity position periodically and determines the
need for infusion of equity and debt capital into the business. The Group
has met its working capital requirements through internal cash accruals
during the current year. The Company has fund based and non fund based
lines of credit available, to satisfy any working capital requirements, if

Internal Control Systems

The Company continues to comply with the requirements of Enterprise Risk
Management (ERM), which is mandated by Clause 49 of the listing agreement.
Apart from identifying and documenting Entity level' risks and controls,
the exercise involves identifying all significant (a) locations and (b)
business processes, followed by (c) documenting each of the process flows
(d) creation of risk registers and (e) an assessment of controls by way of
testing. The risk register captures all areas of potential financial risks
and operational risks and, the associated internal controls that are
already in place or have been identified. Annual certification is an
important procedure which ends with the CEO and CFO certification.It starts
from the control' owner and then on to the process' owner and upwards,
leading to the CXOs.

As part of the assessment exercise conducted, certain proposed controls
identified in previous periods have been implemented and tested for their
effectiveness, and other proposed controls are being implemented.
Additionally, certain new controls have been identified for matters of
significant importance or relevance, for implementation in the coming

The Company continues to capture and track', risks and controls. The
Company continues to do a regular assessment of the risks and controls for
the existing and new process flows. The processes followed by other
subsidiary companies would also be brought under the purview of ERM.

Further, as a good corporate governance measure, all matters of significant
importance or relevance have been reported to the Audit Committee and the
Company's Statutory Auditors.