Annual Report - Infotech Enterprises - 2009-2010

INFOTECH ENTERPRISES LIMITED

ANNUAL REPORT 2009-2010

DIRECTOR'S REPORT

To
The Members

Dear Members,

Your Directors have pleasure in presenting the 19th Directors' Report on
the business and operations of your Company, on a standalone basis, for the
financial year ended March 31, 2010.



FINANCIAL HIGHLIGHTS ON STANDALONE BASIS:

(Amount in Rs. Million)

Particulars 2009-10 2008-09

Total Income 6,079.50 5,438.11
Operating Profit (PBIDT) 1,960.04 1,123.30
Interest 4.71 35.14
Depreciation 407.07 426.64
Profit before Tax 1,548.26 661.52
Current Tax 190.30 110.00
Earlier Years Tax 45.30 -
MAT Credit (109.90) -
Fringe Benefit Tax - 17.00
Deferred Tax 154.91 (174.10)
Profit after Tax 1,267.65 708.62
Basic Earnings per share (Rs.) 22.90 13.30
Diluted Earnings per share (Rs.) 22.82 13.28
Dividend recommended (Rs./Share) 2.00 1.50
Dividend recommended (%) 40 30
Paid up Equity Share Capital 277.50 276.15
Reserves 7,760.85 6,622.86

RESULTS OF OPERATIONS:

Your Company has firmly established itself as a global Engineering Services
and Geospatial Information Services Company and has excelled in gaining
expertise in all service offerings.

Following are the results of operations for the financial year (FY) 2009-
10:

BUSINESS PERFORMANCE:

Revenues:

The total income of the Company for the FY 2009-10 comprises operating
revenues of Rs. 5,617.99 million as against Rs. 5,665.72 million in FY
2008-09 and other income of Rs. 461.50 million for the current year as
against Rs. (227.61)million in the previous year. Total sales degrew by
0.8% over the last financial year primarily due to adverse exchange rate
fluctuations.

Profits:

Profit Before Tax (PBT) stood at Rs. 1,548.26 million as against Rs. 661.52
million for the previous year. Profit After Tax (PAT) stood at Rs. 1,267.65
million as against Rs. 708.62 million for the previous year.

APPROPRIATIONS:

Dividend:

Your Directors have recommended a final dividend of Rs. 2 per share (40%)
on par value of Rs. 5 per share (pre-bonus issue). The total dividend
including dividend distribution tax amount is Rs. 129.86 million as against
Rs. 96.92 million for the previous year. Dividend (including dividend
distribution tax) as a percentage of profit after tax is 10.24% as compared
to 13.68% in the previous year.

Transfer to Reserves:

Your Directors have proposed to transfer Rs. 1,000 million to the General
Reserve retaining Rs. 224.79 million in the Profit and Loss Account.

SHARE CAPITAL:

Allotment of Shares:

Your Company has allotted 269,728 equity shares of Rs. 5 each to the
associates of the Company and its subsidiaries upon exercise of an equal
number of stock options vested in them pursuant to the extant Stock Option
Schemes of the Company.

In view of the above allotments, the outstanding shares of the Company
during the year has increased from 55,229,796 equity shares of Rs. 5 each
to 55,499,524 equity shares of Rs. 5 each.

SIGNIFICANT EVENTS:

* Completed 6 years of partnership with Bombardier Transportation

* Strengthened market presence in APAC region by setting up a branch in
Malaysia

* Rail groups achieved IRIS (International Rail Industry Standard)
certification

* Signed a long term engineering services contract with Hamilton
Sundstrand; a contract in the avionics segment with an opportunity to add
400 engineers in three years

* Won the Urban Property Ownership Records - Technical Service Provider
project for five towns in Karnataka (Awarded by the Department of Survey,
Settlement and Land Records, Government of Karnataka)

* The Company's wholly owned subsidiary in the US, Infotech Enterprises
America Inc., acquired Daxcon Engineering Inc., a Peoria, Illinois, US
based corporation in an all cash deal.

VERTICAL WISE PERFORMANCE:

Utilities, Telecom & Government:

This vertical provides geospatial technology solutions and data management
services. With wide-ranging customer engagements, this has enabled the
Company to emerge as one of the largest and most accomplished firms in the
industry today.

Focused on electric, gas and water utilities, telecom network operators,
transportation companies and government agencies, the Company helps its
customers leverage geospatial technology and data to improve the way they
do business.

Driven by strong traction from the existing customers, this vertical
generated revenues of Rs. 2,540.35 million as against previous year's
Rs.2,441.10 million, at a growth rate of 4.07%. As a percentage of
operating revenues, this vertical contributed 45.21%. Associates strength
of the vertical stood at 3,727 as at 31 March 2010.

Engineering:

This vertical has developed a unique track record in supporting leading
Automotive, Aerospace, Energy, Marine, Plant Engineering, Rail and other
engineering industries in their product development support and optimizing
their development time & processes.

The Engineering vertical of your Company offers a unique combination of
engineering skills, domain experience, and application know-how. The
Company's expert teams in engineering span the complete product development
cycle, from concept development through after market support in the areas
of Mechanical Design, Electronics Design, Technical publication and
Engineering Software Development.

The vertical generated revenues of Rs. 3,077.65 million as against last
year's revenues of Rs. 3,224.60 million, resulting in a decrease of 4.54%.
This vertical contributed 54.79% of the total operating revenues.
Associates assigned to this vertical as on 31 March 2010 are 2,611.

SUBSIDIARIES:

Infotech Enterprises Europe Limited, U.K. (IEEL):

IEEL reported revenues of GBP 16.46 million (Rs. 1,246.9 million) as
against previous year's GBP 14.10 million (Rs. 1,091.90 million). The net
profit for the year was GBP 0.72 million (Rs. 54.60 million) as against GBP
0.73 million (Rs. 57.18 million) in the previous year.

Infotech Enterprises America, Inc. (IEAI):

IEAI reported revenues of USD 72.86 million (Rs. 3,448.2 million) as
against previous year's USD 73.85 million (Rs. 3,399.8 million). The net
profit for the year was USD 3.24 million (Rs. 157.9 million) as against USD
3.66 million (Rs. 173.3 million) in the previous year. During the year,
IEAI acquired a wholly owned subsidiary i.e., Daxcon Engineering Inc.

Infotech Enterprises GmbH (IEG):

IEG reported revenues of Euro 32.91 million (Rs. 2,208.13 million) as
against previous year's Euro 29.07 million (Rs. 1,893.50 million),
representing a growth of 13.20%. The net profit for the year was Euro 2.24
million (Rs. 150.7 million) as against Euro 1.02 million (Rs. 67.0 million)
in the previous year.

Infotech Enterprises Japan KK (IEJ):

IEJ reported revenues of Rs. 9.44 million and a net loss of Rs. 21.98
million during the financial year 2009-10; it is expected to improve its
business in the coming years.

Infotech Geospatial (India) Limited (IGIL):

IGIL reported revenues of Rs. 61.64 million as against Rs. 78.26 million
last year. It reported a net loss of Rs. 18.38 million as against a net
loss of Rs. 0.79 million last year.

TTM Institute of Information Technology Private Limited (TIIT):

Total income from training was Rs. 1.7 million. TIIT reported a net loss of
Rs. 4.47 million.

Infotech Enterprises Information Technology Services Private Limited
(IEITSPL):

Formerly known as Infotech Enterprises Engineering Services Private
Limited, the name and objects of this company were changed during the year
to exclusively focus on information technology services. This company will
start its operations in the FY 2010-11.

TTM (India) Private Limited (TTM):

Pursuant to the scheme of amalgamation as approved by Hon'ble High Court of
Judicature, Andhra Pradesh, the erstwhile TTM has been amalgamated with the
company effective April 1, 2009, under the provisions of Sections 391 and
394 of the Companies Act, 1956 (the Act).

PARTICULARS PURSUANT TO SECTION 212 OF THE COMPANIES ACT, 1956:

Pursuant to the provisions of Section 212 of the Act, documents in respect
of the various subsidiaries viz., Directors' Report, Auditor's Report,
Balance Sheet and Profit and Loss Account, are required to be attached to
the Balance sheet of the Holding Company. However, in terms of the
provisions of Section 212(8) of the Act, the Government of India, Ministry
of Corporate Affairs, has granted exemption from the provisions of Section
212(1) of the Act. Accordingly, the annual report does not contain the
financial statements of the subsidiaries of the Company. However, the
Company will make available the audited annual accounts and related
detailed information of the subsidiaries to the shareholders upon request
in accordance with the applicable law. These documents are also available
for inspection at the Registered Office of the Company during business
hours. The details of accounts of individual subsidiary companies will also
be available on the website of the Company.

FIXED DEPOSITS:

Your Company has not accepted any deposits and as such, no amount of
principal or interest was outstanding as on 31 March 2010.

DIRECTORS:

Appointments:

During the FY 2009-10, Mr. K. Ramachandran and Mr. Jaithirth Rao were
appointed as Additional Directors by the Board on 20 July 2009. Further,
Mr. Alain De Taeye was also appointed as Additional Director by the Board
on 21 April 2010.

The offices of Mr. K. Ramachandran, Mr. Jaithirth Rao and Mr. Alain De
Taeye as Additional Directors of the Company will expire at the ensuing
Annual General Meeting (AGM). The Company has received notices from three
members in accordance with the provisions of Section 257 of the Act,
proposing their candidacy as Directors.

Pursuant to Article 56 of the Articles of Association of your Company and
the provisions of Section 256 of the Act, Mr. B.V.R. Mohan Reddy and Mr.
G.V. Prasad retire by rotation at the ensuing AGM and being eligible, offer
themselves for reappointment.

None of the Directors of the Company is disqualified under the provisions
of the Companies Act, 1956 or under the Listing Agreement with the Stock
Exchanges.

Pursuant to the provisions of Clause 49 of the Listing Agreement, brief
particulars of the retiring directors who are proposed to be re-appointed
as well as directors being appointed under the provisions of Section 257 of
the Act are provided as an annexure to the Notice convening the AGM.

Cessations:

Mr. Ranjan Chak and Mr. William Patrick Henry ceased to be directors on the
Board effective 14 October 2009 and 21 April 2010 respectively.

The Board places on record its appreciation and gratitude to the said
directors for their valuable contributions.

AUDITORS:

M/s Deloitte Haskins & Sells (DHS), Chartered Accountants (ICAI Reg. No.
008072S) were appointed as statutory auditors of the Company at the 18th
AGM of the Company. They are eligible for re-appointment for the FY 2010-
11. The Company has received the consent/confirmation of DHS for their re-
appointment as statutory auditors and that the same, when made by the
members of the Company in the 19th AGM will be within the permitted limits
under the provisions of Section 224(1B) of the Act.

SECRETARIAL AUDIT:

As a measure of good corporate governance and as recommended by the
Ministry of Corporate Affairs' (MCA) Corporate Governance Voluntary
Guidelines, 2009, the Company has voluntarily got a secretarial audit done
for the FY 2009-10. The secretarial audit covered the provisions of the
Act, the Depositories Act, 1996 the Listing Agreement with the Stock
Exchanges and the SEBI guidelines/regulations on Employee Stock Options,
Insider Trading and Takeover Code.

Mr. S. Chidambaram, Company Secretary in Practice, performed the
secretarial audit and the report thereon is enclosed as Annexure - A to
this report.

EMPLOYEE STOCK OPTION PLANS:

During the year under report, the Company had the following Schemes in
operation for granting stock options to the Associates of the Company and
its Wholly Owned Subsidiaries, in accordance with the Securities Exchange
Board of India (Employee Stock Option Scheme and Employee Stock Purchase
Scheme) Guidelines, 1999.

Infotech Associate Stock Option Plan - 2002
Infotech Associate Stock Option Plan - 2004
Infotech Associate Stock Option Plan - 2008

Disclosures pursuant to Para 12 of the Securities Exchange Board of India
(Employee Stock Option Scheme and Employee Stock Purchase Scheme)
Guidelines, 1999 are enclosed as Annexure - B to this report.

CONSERVATION OF ENERGY, RESEARCH AND DEVELOPMENT, TECHNOLOGY ABSORPTION,
FOREIGN EXCHANGE EARNINGS AND OUTGO:

The particulars as prescribed pursuant to provisions of Section 217(1)(e)
of the Act read with Companies (Disclosure of particulars in the report of
Board of Directors) Rules, 1988, is enclosed as Annexure - C to this
Report.

PARTICULARS OF EMPLOYEES:

The particulars of employees as required under the provisions of Section
217(2A) of the Act read with the Companies (Particulars of Employees)
Rules, 1975.

MANAGEMENT DISCUSSION & ANALYSIS:

Pursuant to the provisions of Clause 49 of the Listing Agreement, a report
on Management Discussion & Analysis is enclosed as Annexure - D to this
Report.

DIRECTORS RESPONSIBILITY STATEMENT:

Pursuant to the provisions of Section 217(2AA) of the Act, the Directors
confirm that:

i) in the preparation of the Annual Accounts, the applicable accounting
standards have been followed along with proper explanation relating to
material departures;

ii) they 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 of the Company
for that period;

iii) they 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) they have prepared the Annual Accounts on a going concern basis.

CORPORATE GOVERNANCE:

Pursuant to the provisions of Clause 49 of the Listing Agreement with the
Stock Exchanges, a report on Corporate Governance features as a part of
Annual Report. Further, the Company has substantially complied with the
MCA's Corporate Governance Voluntary Guidelines, 2009. As required under
Clause 49 of the Listing Agreement, the Auditors' Certificate regarding
compliance of conditions of corporate governance is enclosed as Annexure-E.

Your company will continue to implement and adhere in letter and spirit to
the policies of good corporate governance.

CEO's DECLARATION:

Pursuant to the provisions of Clause 49(I)(D)(ii) of the Listing Agreement,
a declaration by the Chairman and Managing Director of the Company
declaring that all the members of the Board and the Senior Management
Personnel of the Company have affirmed compliance with the Code of Conduct
of the Company, is enclosed as Annexure - F to this Report.

ACKNOWLEDGMENTS:

Your Directors wish to place on record their gratitude to the Company's
shareholders, customers, vendors, bankers and all other stakeholders for
their continued support to its growth initiatives. Your Directors also wish
to place on record, their appreciation of the contribution made by
associates at all levels, who, through their competence, sincerity, hard
work, solidarity and dedicated support, have enabled your Company to make
rapid strides in its business initiatives. Your Directors also thank the
Central and State Governments and their various agencies, particularly, the
Ministry of Communication & Information Technology, Software Technology
Parks of India, Departments of Customs and Central Excise, MCA, SEBI, Stock
Exchanges, Reserve Bank of India, APIIC, and other governmental agencies
for extending their support during the year and look forward to their
continued support.

For and on behalf of the Board

Place : Hyderabad B.V.R. Mohan Reddy
Date : April 21, 2010 Chairman and Managing Director

Annexure - A:

Secretarial Auditors' Report:

To
The Board of Directors
Infotech Enterprises Limited
Hyderabad.

I have examined the registers, records, books and papers of Infotech
Enterprises Limited as required to be maintained under the Companies Act,
1956 (the Act) and the rules made there under and also the provisions
contained in the Memorandum and Articles of the Company for the financial
year ended on 31st March, 2010. In my opinion and to the best of my
information and according to the examinations carried out by me and
explanations furnished to me by the company, its officers and agents,
according to the provisions of:

The Companies Act, 1956;

The Depositories Act, 1996 and the Regulations and Bye-laws framed under
that Act;

The Securities and Exchange Board of India (Substantial Acquisition of
Shares and Takeovers) Regulations, 1997;

The Securities and Exchange Board of India (Prohibition of Insider Trading)
Regulations, 1992;

The Securities and Exchange Board of India (Employee Stock Option Scheme
and Employee Stock Purchase Scheme) Guidelines, 1999 and

The Equity Listing Agreements with Bombay Stock Exchange Limited and
National Stock Exchange of India Limited

I report the following:

1. The Company:

(a) has maintained various statutory registers and documents;

(b) has closed its Register of Members during the Financial Year for the
purpose of Annual General Meeting and Dividend;

(c) has filed Forms, returns, documents and resolutions required to be
filed with the Registrar of Companies and Central Government;

(d) has duly conducted Board meetings/Committee Meetings;

(e) has sent the notices as required to its Members;

(f) has duly conducted the Annual General Meeting on 01.07.2009;

(g) has duly passed a resolution in respect of managerial remuneration
through postal ballot;

(h) has maintained minutes of proceedings of Board Meetings/Committee
Meetings and General Meetings;

(i) has complied with all the applicable provisions with regard to
constitution of the Board of Directors/Committee(s) of directors and
appointment, retirement and their re-appointment including that of Managing
Director/Whole-time Directors;

(j) has complied with all the applicable provisions with regard to payment
of remuneration to the Directors including the Managing Director and Whole-
time Directors;

(k) has complied with all the applicable provisions with regard to
appointment and remuneration of Auditors;

(l) has delegated power to the Registrar and Transfer Agent to process and
approve the transfers and transmissions of the Company's shares;

(m) has complied with the all the applicable provisions with regard to
allotment of shares and delivery of original and duplicate certificates of
shares;

(n) has complied with the provisions of the Companies Act, with regard to
declaration and payment of dividends;

(o) has transferred Rs. 68,245/- unclaimed dividend pertaining to financial
year 2001-02 to the Investor Education and Protection Fund during the
financial year;

(p) has complied with the provisions of Section 372A of the Companies Act,
1956;

2. I further report that:

(a) the Directors have complied with the requirements as to disclosure of
interests and concerns in contracts and arrangements, shareholdings /
debenture holdings and directorships in other companies and interests in
other entities;

(b) the Directors have complied with the disclosure requirements in respect
of their eligibility of appointment, their being independent and compliance
with the code of Business Conduct & Ethics for Directors and Management
Personnel as per Clause 49 of the Listing Agreement;

(c) there was no prosecution initiated against or show cause notice
received by the Company and no fines or penalties were imposed on the
Company during the year under review under the Companies Act, SEBI Act,
SCRA, Depositories Act, Listing Agreement and Rules, Regulations and
Guidelines framed under these Acts against the Company, its Directors and
Officers, except to the extent that the Company has received a notice from
Registrar of Companies for not attaching certain documents while uploading
Annual Reports for the financial year 2006-07 and 2007-08, however the
company has uploaded revised Reports with the Registrar of Companies;

3. I further report that the Company has complied with the provisions of
the Depositories Act, 1996 and the Byelaws framed thereunder by the
Depositories with regard to dematerialisation/rematerialisation of
securities and reconciliation of records of dematerialised securities with
all securities issued by the Company.

4. I further report that:

(a) the Company has filed the requisite returns, documents, information as
per the requirements under the Equity Listing Agreements entered into with
the Bombay Stock Exchange Limited and the National Stock Exchange of India
Limited;

(b) the Company has duly complied with the provisions of the Securities and
Exchange Board of India (Substantial Acquisition of Shares and Takeovers)
Regulations, 1997 including the provisions with regard to disclosures and
maintenance of records required under the Regulations;

(c) the Company has filed returns, documents, information as required under
the provisions of the Securities and Exchange Board of India (Prohibition
of Insider Trading) Regulations, 1992;

(d) the Company has complied with the provisions of the Securities and
Exchange Board of India (Employee Stock Option Scheme and Employee Stock
Purchase Scheme) Guidelines, 1999 with regard to implementation of Employee
Stock Option Scheme, grant of Options and other aspects.

S. Chidambaram
Place : Hyderabad Practising Company Secretary
Date : April 17, 2010 C.P. No: 2286

Annexure-B:

Details of Stock Options pursuant to SEBI guidelines:

Infotech Associate Stock Option Plans (Infotech ASOPs):

Description ASOP 2002 ASOP 2004

1. Options granted during the year Nil 33,000

2. Pricing formula Market price as defined
in SEBI (ESOS & ESPS)
Guidelines, 1999

3. Options vested 27,213 922,143

4. Options exercised Nil 269,728

5. Total no. of shares arising as a result
of exercise of options Nil 269,728

6. Options lapsed 5,975 162,005

7. Variation of terms of options Nil Nil

8. Money realized by exercise of Options (INR) Nil 27,961,300

9. Total no of options in force 108,850 1,186,910

10. Employee wise details of options granted to:

i) Senior Managerial Personnel:

Venkat Vardhineni Nil 10,000

Ajay Desai Nil 5,000

ii) Any other employee who received a grant
in any one year of options amounting to 5%
or more of options granted during the year. Nil Nil

iii) Identified employees who were granted
option, during any one year, equal to or Nil Nil
exceeding 1% of the issued capital (excluding
outstanding warrants and conversions) of the
company at the time of grant.

11. Diluted EPS as per Accounting Standard
20 (INR) 22.82

Notes: 1. Shares pursuant to exercise of options granted under ASOP 2001
have already been allotted/lapsed; hence there is no balance under this
plan.

2. No options under ASOP 2008 have yet been granted to the associates of
the Company.

12. i) Method of calculation of employee compensation cost:

The Company has calculated the employee compensation cost using the
intrinsic value of the stock options.

ii) Difference between the employee compensation cost so computed at (i)
above and the employee compensation cost that shall have been recognized if
it had used the fair value of the options:

Rs. 57.98 Million (increase)

iii) The Impact of this difference on profits and on EPS of the Company:

Profit After Tax (PAT) Rs. 1,267.65 million

Less: Additional employee compensation
cost based on fair value Rs. 57.98 million

Adjusted PAT Rs. 1,209.67 million

Adjusted EPS Rs. 21.86

iv) Weighted average exercise price and fair value of Stock Options
granted:

Stock Options Weighted average Weighted average Closing market
granted on exercise price Fair value price at NSE
(in Rs.) (in Rs.) on the date of
grant (in Rs.)

27/04/01 36.00 53.76 36.00
24/10/02 133.00 85.71 133.00
23/06/03 108.00 67.26 108.00
28/04/04 124.00 65.99 124.00
20/10/04 142.00 84.87 142.00
19/05/05 125.25 148.87 281.60
19/10/05 131.57 189.76 394.55
19/01/06 114.25 260.77 513.75
18/10/06 231.00 106.44 231.00
17/01/07 355.00 148.65 341.20
17/12/07 294.00 118.72 293.45
19/02/08 238.00 99.62 241.20
13/06/08 250.00 108.13 251.15
12/05/09 169.00 70.46 164.70
16/09/09 271.00 119.02 269.50

v) Description of the method and significant assumptions used during the
year to estimate the fair value of the options, including the following
weighted average information:

The Binomial Lattice option pricing model was developed for estimating fair
value of traded options that have no vesting restrictions and are fully
transferable. Since option pricing models require use of substantive
assumptions, changes therein can materially affect fair value of options.
The option pricing models do not necessarily provide a reliable measure of
fair value of options.

vi) The main assumptions used in the Binomial Lattice option-pricing model
during the year were as follows:

Risk free interest rate : 1.69%
Expected life of options from the date(s) of grant : 3.50 years
Expected volatility : 49.05%
Dividend yield : 0.42

On behalf of the Board of Directors

Place : Hyderabad B.V.R. Mohan Reddy
Date : April 21, 2010 Chairman and Managing Director

Annexure-C:

PARTICULARS PURSUANT TO COMPANIES (DISCLOSURE OF PARTICULARS IN THE REPORT
OF BOARD OF DIRECTORS) RULES, 1988:

1. Conservation of Energy:

The operations of the Company are not energy intensive. However, adequate
measures have been taken to conserve and reduce the energy consumption by
using energy efficient hardware and other equipment. Air-conditioners are
used only when required and air-conditioned areas have been treated with
heat resistant material like sun control film to reduce heat absorption. We
believe that energy saved is energy produced.

2. Research and Development:

Your Company has a modern R&D facility with a state of-the-art Technology
Centre working on various R&D projects.

a) Currently the R&D team is working in the following areas:

1. iGEMS for Gas and Electric data capture:

iGEMS stores spatial data in industry standard graphic format and non
spatial data in RDBMS. iGEMS has data model import and configuration
functionalities which ensure that feature relationships and data integrity
are maintained as designed in the customer-defined data model. Furthermore,
iGEMS offers a complete range of data creation, validation, and cleanup
tools. It can be quickly configured and setup for the project execution
irrespective of the format in which the data is to be delivered. All these
factors help the Company in minimizing the project start-up time thereby
helping the customers to enjoy their return on investment (ROI) much
earlier than they have anticipated.

2. 3D Surface Generation (3D Texturing):

This technology enables the Company to conduct more accurate and detailed
simulation or analysis of urban areas. Examples of such simulations are
wind simulation around high-rise buildings, fire propagation simulation,
flooding analysis, and propagation/reflection analysis of electric waves
for telecommunication. The final outcome from this approach is the kmz file
which can be attached / imported into Google Earth so it can be overlaid on
the most up to date land base information.

3. TRU Shift:

Your company's R&D team has developed a breakthrough technology for the PAI
(Positional Accuracy Improvement) or Automated Conflation requirements of
customers in Utilities, Telco and Government. This technology has been
instrumental in winning a large Conflation project recently. Tru Shift
helps in automating the shifting of Network or Assets information from an
older version data into a newer and more accurate land base which is
available from many sources. As a result of this shifting and the increased
positional accuracy, the utility can make quicker and better decisions in
planning, design and maintenance of the network.

4. TeeM-NG:

This development is aimed at improvising the previous TEEM technology that
your company developed a few years ago. The New Generation (NG)
improvements are primarily to do with bringing the technology closer to the
way a Telco maintains its network data - as different objects. The second
most important aspect of this technology is its openness and flexibility.
The technology can be configured at the end user's level and will save
substantial development efforts that would otherwise be required.
Currently, implementation of the technology is in progress for a large
European Telco with implementation for other clients in the pipeline

5. Open Source Software:

As a part of offering new services into the market, the Company's R&D team
is exploring various Open Source mapping platforms such as GeoServer. Open
Source GIS is gaining momentum due to the lower cost of ownership and
compliance with open and interoperable standards. While the core GIS
function can still work off a popular 3P technology such as ESRI, Oracle,
Smallworld, Integraph etc., deployment of Open Source can take GIS to the
Enterprise, making GIS the front end to the operations of a Telco and
Utility.

b) Benefits derived as a result of the above R&D initiatives:

All the R&D work done by your company is aimed at one of the following
objectives:

1. Build solutions that compete with the best known names in the industry.

2. Improve operational efficiencies and maximize profitability of a
project.

3. Win new business from key customers and also offer new services into the
markets worldwide.

(Rs. in million)

Particulars FY 2009-10 FY 2008-09

Revenue Expenditure 12.63 2.02
Capital Expenditure Nil Nil
Total R&D Expenditure 12.63 2.02
R&D Expenditure as percentage of Total Revenue 0.22% 0.04%

3. Technology Absorption, Adaptation and Innovation:

Your Company continues to use state-of-the-art technology for improving the
productivity and quality of its products and services. To create adequate
infrastructure, your Company continues to invest in the latest hardware and
software.

4. Foreign Exchange Earnings and Outgo:

Most of your Company's earnings are from the export of Computer Software
and Services. During the year, export earnings accounted for 98% of the
total income. In order to promote product sales and services, your Company
participated in various exhibitions and carried product promotion
activities.

(Rs. in million)

Particulars FY 2009-10 FY 2008-09

Foreign Exchange Earning 5469.3 5,625.96
Foreign Exchange Outgo 1176.32 1,176.04

On behalf of the Board of Directors

Place : Hyderabad B.V.R. Mohan Reddy
Date : April 21, 2010 Chairman and Managing Director

MANAGEMENT DISCUSSION AND ANALYSIS OF THE GROUP FINANCIAL RESULTS
(CONSOLIDATED AS PER INDIAN GAAP) FOR THE YEAR ENDED MARCH 31, 2010:

SYNOPSIS:

The financial year 2009-10 was a mixed year with the economy just about
emerging from the throes of recession and slowdown that were so rampant in
the previous year. However, given the strong fundamentals, the efficiency
of our work force and the exemplary leadership, the Company was able to
emerge stronger with positive results. Revenues recorded a 7.1% increase
over the previous year and the Company achieved a total income of Rs.1,000
crores - a major milestone in its history.

INDUSTRY STRUCTURE AND DEVELOPMENTS:

Infotech Enterprises Limited (IEL) continues to be focused on Product
Development Engineering and Infrastructure Network Engineering Services.
IEL has excelled in gaining expertise in both these areas. With Design
Engineering Services (DES), we have made a major impact in Aerospace,
Locomotives, Heavy Engineering, Automotive, Hitech and Consumer Electronics
markets. With Infrastructure and Network Engineering (INE) services, we
continue to grow in Utilities, Telecommunications, Transport and Government
markets.

Engineering outsourcing services have gained prominence amongst leading
organizations world-wide and the demand for these services is continuously
rising. NASSCOM (in association with Booz & Co) in its study on India
Engineering Services opportunity has forecast that engineering services
from India will usher in the next wave of opportunity on the outsourcing
front and the global spend on engineering services would be about US $1.4
trillion by 2020. NASSCOM has forecast that the engineering, R&D, and
software products exports from India are expected to grow to USD 40-50
billion by 2020. Engineering Services (ES) is still at a nascent stage of
development in India and the market is presently fragmented in terms of
players and their competencies. IEL is an established Indian ES player in
the global markets and is regarded highly for its engineering competencies
in its chosen markets.

For Utilities, Telecommunication, Transportation and Government (UTG)
customers IEL provides infrastructure and network engineering services
through geospatial technology solutions and data management services. With
wide-ranging customer engagements, this vertical has enabled the Company to
emerge as one of the largest and most accomplished firms in the industry
today.

Focused on electric, gas and water utilities, telecom network operators,
transportation companies and government agencies, UTG helps its customers
leverage geospatial technology and data to improve customer satisfaction
and also asset utilization.

OPPORTUNITIES AND THREATS:

Presented below is the management's assessment of some key potential
opportunities and threats associated with its business. While the
management is looking to leverage such opportunities in an effective manner
to optimize business advantages, it is also focused to create effective
mitigation strategies for all potential threats that could impact the
business operations.

A more detailed Risk Management Report is available elsewhere in the Annual
Report.

Opportunities:

The Company, on a continuous basis, scans the market for scalable
opportunities and has over the past twelve months identified some key areas
of growth opportunities. These opportunities are in the areas of telecom,
utilities, hi-technology, heavy engineering, nuclear engineering and
transportation markets. The Company is making concerted efforts and
investments to move up the value chain in its chosen markets. A major
investment that the company made during last fiscal year was in connection
with the acquisition of Daxcon. Further, investments were made in new
competencies/services, strengthening of domain knowledge in practices,
hiring highly talented sales and marketing managers, restructuring of
businesses, project management office, investments in new geographies, etc.

The Company is experiencing significant traction from its existing
customers and is receiving several enquiries from potential customers in
its chosen markets. The Company won two large opportunities during the year
in the face of stiff competition from Indian and overseas ES players. The
Company continues to invest in building relationships with its current and
prospective customers as well as in its global delivery model to ensure the
total cost of ownership would remain low for the customer.

Threats:

Following are some of the major risks, which the management believes form a
part of the company's business and tries to address the same through
corporate actions:

1. Financial Risks - includes foreign currency rate fluctuations, liquidity
and leverage.

2. Business Portfolio Risks - includes vertical domain concentration,
service concentration, client concentrations and geographical
concentration.

3. Legal and Statutory Risks - Includes contractual liabilities & Statutory
compliance.

4. Competition Risks - New competitors may enter the markets in which your
company operates.

A more detailed analysis of the above appears in the Risk Management report
elsewhere in the Annual Report. The Company's customers are primarily
located in the US and Europe. The global financial meltdown and economic
recession which has affected North America and Europe may affect the
Company's business this year as well.

FORECAST:

* Despite the unprecedented economic downturn, the Company is confident
that it will witness sustainable growth.

* As is widely expected, the global technology related spending is expected
to grow from 2010 onwards led by adoption of outsourcing and this would
augur well for the Company.

* Greater focus on cost and operational efficiencies in the recessionary
environment is expected to enhance global sourcing.

* Like all of India Inc, the Company would remain focused on tactical
measures to achieve cost savings and greater productivity.

FINANCIAL OVERVIEW:

The financial statements have been prepared in compliance with the
requirements of the Companies Act, 1956 and Generally Accepted Accounting
Principles in India. The management of the company accepts responsibility
for the integrity and objectivity of the financial statements as well as
for the various estimates used therein. The financial statements have been
prepared on a prudent and reasonable basis to reflect in a true and fair
manner the state of affairs of the company.

RESULTS OF OPERATIONS:

Total Income:

(In Rs. million)

Particulars Year ended March 31 Growth
2010 % 2009 % %

Income from Export
sales 9,370.57 93.75% 8,742.03 101.62% 7.19%

Income from
Domestic sales 160.63 1.61% 155.47 1.81% 3.32%

Total Sales 9,531.20 95.36% 8,897.50 103.43% 7.12%

Other Income 463.70 4.64% (294.50) (3.43%) (257.45)%

Total Income 9,994.91 100.00% 8,603.00 100.00% 16.18%

The Company's total income increased by 16.18% to Rs. 9,994.91 million from
Rs. 8,603.00 million due to increased revenue from top 10 customers. Other
income went up due to exchange fluctuation gains during the year.

Segment wise Performance:

Particulars 2010 2009

UTG 3,349.9 3,094.0
Engineering 6,204.9 5,823.8

* Inter-vertical revenues worth Rs. (23.6) million for FY 2009-10 and
(20.3) for FY 2008-09 has been adjusted.


Geographical Mix:

Particulars 2010 2009

North America 4,509.5 4,465.9
Europe 4,156.8 3,488.5
APAC* 865.0 943.1

* The de-growth in APAC is an account of foreign exchange variation.

Customer Concentration:

Particulars 2010 2009

Top 5 Customers 43.40% 40.50%
Top 10 Customers 58.70% 56.40%

Top 5 customers contribution was stable and Company got good revenue growth
through next 5 five customers as well during financial year. The support
from top 10 customers has been extremely encouraging.

Offshore/Onsite Revenue Mix:

Particulars 2010 2009

Offshore 55.90% 57.10%
Onsite 44.10% 42.90%
Total 100.00% 100.00%

Offshore and onsite revenues mix has been in line with our expectations and
is stable.

Expenditure:

During the year, the personnel costs of the Company increased by 10.87% due
to increase in manpower and acquisition of Daxcon. There is a decrease in
travel and operating and administrative expenditure by 15.14% and 6.24%
respectively despite acquisition of Daxcon and increase in revenue.

Profitability:

(In Rs. million)

Particulars Year ended March 31

% of % of Growth
2010 Total 2009 Total %
Income Income

Earnings before
interest,
depreciation and
tax (EBIDTA) 2082.6 20.84% 1785.2 20.75% 16.66%

Financial Expenses 31.3 0.31% 40.3 0.47% -22.33%

Depreciation 435.7 4.36% 465.6 5.41% -6.42%

Other Income 463.7 4.64% -294.6 -3.42% -257.40%

Profit Before Tax 2079.3 20.80% 984.7 11.45% 111.16%

Tax 505.0 5.05% 140.2 1.63% 260.20%

Profit for the Year 1,708.30 17.09% 924.8 10.75% 84.72%

Earnings before Interest, Tax & Depreciation and Amortization (EBITDA):

The company registered a 16.66% growth in EBITDA. While EBITDA increased to
Rs. 2,082.6 million as against Rs. 1,785.2 million, PAT increased to Rs.
1,708.30 millions as against Rs. 924.80 million in previous year due to
increase in other income as a result of exchange fluctuation gain.

Financial Expenses:

Financial Expenses decreased by 22.5%; this was due to repayment of
outstanding packing credit taken from banks during the year.

Depreciation:

Depreciation has gone down by 6.42% due to amortization decrease as a
result of merger of acquired companies TA (India), Vargis, etc.

Provision for Taxation:

The provision for taxation for FY 2009-10 is Rs. 505.00 million.

Liquidity:

The growth of the company is largely financed by internal cash generations
through operations. As of March 31, 2010 the company had cash and cash
equivalents of Rs. 3,841.78 million, an increase of 15.22% as compared to
the previous year's Rs.3,333.50 million, despite an investment of Rs.274.23
million in Daxcon.

The Company's policy is to maintain sufficient cash to fund the ongoing
capex requirements, operational expenses and other strategic initiatives
for the next year and to maintain business continuity in case of any
exigencies.

Internal Control:

The Company has in place adequate systems of internal control commensurate
with its size and the nature of its operations. These have been designed to
provide reasonable assurance with regard to recording and providing
reliable financial and operational information, complying with applicable
statutes, safeguarding assets from unauthorized use or losses, executing
transactions with proper authorization and ensuring compliance of
applicable corporate policies.

The Company has appointed M/s Bhaskara Rao & Co., to oversee and carry out
an internal audit of the Company's activities. The audit is based on an
Internal Audit Plan, which is reviewed each year in consultation with the
statutory auditors (Deloitte Haskins & Sells) and the Audit Committee. The
Company also appointed M/s. KPMG as the Risk Auditors. There is good
coordination and communication among the auditors.

The Internal Audit process is designed to review the adequacy of internal
control checks in the system and covers all significant areas of the
Company's operations. Safeguarding of assets and their protection against
unauthorized use are also a part of these exercises. The Company has an
Audit Committee, the details of which have been provided in the Corporate
Governance Report. The Audit Committee reviews Audit Reports submitted by
the Internal Auditors. Suggestions for improvement are considered and the
Audit Committee follows up on the implementation of corrective actions.

The Committee also meets the Company's statutory auditors to ascertain,
inter alia, their views on the adequacy of internal control systems in the
Company and keeps the Board of Directors informed of its major observations
at periodic intervals.

CAUTIONARY STATEMENT:

Certain statements made in the Management Discussion and Analysis Report
relating to the Company's objectives, projections, outlook, expectations,
estimates and others may constitute 'forward looking statements' within the
meaning of applicable laws and regulations. Actual results may differ from
such expectations, projections and so on whether express or implied.
Several factors could make significant difference to the Company's
operations. These include climatic conditions and economic conditions
affecting demand and supply, government regulations and taxation, natural
calamities and so on over which the Company does not have any direct
control.

Readers are cautioned not to place undue reliance on this forward looking
statement. The following discussion and analysis should be read in
conjunction with our financial statements included herein and the notes
thereto.

On behalf of the Board of Directors

Place : Hyderabad B.V.R. Mohan Reddy
Date : April 21, 2010 Chairman and Managing Director

Risk Management:

Change the changeable, accept the unchangeable, and remove yourself from
the unacceptable.

- Denis Waitley

The management cautions readers that the risks outlined below are not
exhaustive and are for information purposes only. This report also contains
statements which are forward looking in nature and investors are requested
to exercise their own judgment in assessing various risks associated with
the Company and to refer to the discussions of risks in the Company's
earlier Annual Reports.

As is known, 2010 was one of the most challenging years in recent memory.
Continuing from the down turn of late 2008, the current financial year saw
significant challenges across the globe. After consistent growth between 3
& 5% YoY for most part of the decade, the world GDP growth has slowed to +%
in PPP terms and negative in real terms. Advanced economies which have
traditionally represented our markets have de-grown by 2%. These are the
slowest rates of growth since the 1940s.

The Company uses foreign exchange forward contracts and options to hedge
its exposure to movements in foreign exchange rates. The use of these
foreign exchange forward contracts and options reduces the risk or cost to
the Company and the Company does not use the foreign exchange forward
contracts or options for trading or speculation purposes.

We have a risk management team to support our business initiatives in these
changing times. Vertical heads are responsible for the identification of
risk and for isolating the risk reward option in the business concerned
vertical.

We have classified our business into 2 major verticals:

1. UTG (Utilities telecom and Government)
2. Engineering

Each of these vertical heads has set frameworks within which the risk and
rewards are operated. Risks involved in each project is identified by the
respective Project Managers and informed accordingly to the Senior Managers
at the review meetings held every month. The same is evaluated and brought
to the notice of the Chairman and to the Board of Directors. The Board of
Directors are responsible for addressing the risk levels with Audit
Committee providing the overall directions on the risk management policies
to be followed by the Company. The Board of Directors is also responsible
for putting in place required checks and balances whereas the Executive
Management handles the implementation of risk mitigation measures.
Proactive risk management is facilitated by formal reporting and control
mechanisms, which ensure timely availability of information.

During the year under review, M/s. KPMG were appointed to audit the risk
mitigation procedures and provide necessary directions. The risk report has
been submitted to the management and the findings are currently being
addressed.

The risks identified by the management and which form part of the Company's
business are:

1. Financial Risks
2. Business Portfolio Risks
3. Internal Process Risks
4. Legal and Statutory Risks
5. Political Risks
6. Competition Risks
7. Macro Economic Risks

RISK FRAME WORK OF THE COMPANY:

1. Financial risks:

* Foreign currency rate fluctuations
* Liquidity
* Leverage

1.1 Foreign currency rate fluctuations:

The Company derives a significant portion of its revenues in Foreign
Currencies. Principal currencies dealt with by the Company include US
Dollar, Australian Dollar, Euro, and Great Britain Pound. The Company is
also exposed to deriving revenue from 25 different countries. A large
proportion of its expenses are in Indian rupees therefore the operating
profits are subject to foreign currency rate fluctuations. While the
depreciation of the Indian rupee would have a favourable bottom-line
impact, an appreciation would affect the company's profitability adversely.
Such volatility would also affect the assets located at various locations
worldwide in terms of their carrying value.

1.2 Liquidity:

It is essential for every Company that apart from having a good fixed
assets base, it shall also have a high level of liquidity so as to enable
itself to re-align to any dynamic business changes. Therefore, as a
strategy, the Company always believes in having a liquid balance sheet. The
cash flow of the Company is largely dependent on the credit terms extended
to clients and the effective recovery of the same from them. Delays in
recovery have a direct impact on the liquidity position of the Company. As
on 31 March 2010, the following is the liquidity position of the Company:

Ratio 2010 2009

Days of sales receivable 73 97

Cash and Cash Equivalents 34.74% 31.68%
as % of assets*

Cash and Cash Equivalents 55.33% 50.19%
as % of revenue*

* Cash and cash equivalents for FY2010 includes investment in Mutual funds
amounts to Rs. 15,031.27 Lakhs.

The also has a policy to settle its payables well within stipulated time
frames. Further, the nature of business is such that significant
investments may have to be made in sales & marketing, training and research
and development activities. All these factors call for considerable
liquidity.

1.3 Leverage:

The Company does not have any debts as against Rs. 186.67 millions for the
previous year. All the secured term loans were repaid fully during the
year.

2. Business portfolio risks:

A business is subject to the risks involved with respect to the service
lines being offered by it, the geographies in which it operates clients on
which it is highly dependent, etc. The Company is also subject to these
kinds of risks and therefore has steps in place to prevent undue
concentration in one service, vertical, client or geography. The following
are the risks addressed:

* Vertical domain concentration
* Service concentration
* Client concentration
* Geographical concentration

2.1 Vertical domain concentration:

Vertical domains relate to the industry in which the clients operate. The
Company has a client base, which operates in Utilities (comprising Telecom
& Power), Transportation, Aerospace, Railways, Automobile, Technical
Publications, chips & embedded work and Heavy Engineering.

During the previous year, most of the Company's revenues were derived from
Engineering. During the year, the Company mitigated this risk to a certain
extent by bagging new contracts in the areas of Aerospace, Railways and
from Government agencies.

Excess dependence in any one or a few verticals may lead to risks aligned
due to downturn in any of the Industries. Therefore, the Company has its
risks divided between the various verticals so as to insure itself in the
long run from downturn in any particular vertical.

During the year, the Company had its revenues distributed in the ratio of
45:55 among the UTG and Engineering verticals respectively.

2.2 Service concentration:

The Company has an array of service offerings across its Business
Verticals, namely, Geospatial Data Services, Geospatial Technical Services,
Engineering Design Services etc. The Company has carefully crafted its
service offerings which are focused and specialized to provide expert
solution in its chosen verticals. These service offerings are purely client
based and there can be a possibility that the clients may not require the
same in the future.

The Company mitigates such risk by identifying the services needed by the
clients by closely working with the client group.

2.3 Client concentration:

This risk emanates primarily from excessive exposure to a few large clients
and any fluctuation in revenue streams emanating from these clients will
potentially impact the profitability adversely and increases, credit risk.

During the year under review, the Company had added 14 new clients as
against to 37 customers last year and further reduced the concentration
from its top 5 clients and top 10 clients. (Details provided in Management
Discussion & Analysis Report). This is mostly on account of traction in
smaller existing clients and new clients. Contributions from top clients
are generally higher among the companies in the growth phase and hence the
management believes that the dependence on a few clients would further
reduce in the coming years.

2.4 Geographical concentration:

Concentration of revenue in a particular geography is subject to risks
arising due to economic conditions, trade policies, work culture and
political situation of that particular geography. However, no limitations
can be set to particular geographies since each market has distinct
characteristics of future growth prospects.

During the year, the Company witnessed a substantial change in geographic
mix with increase in the contributions from the European geography. The
ratio is 40:45:15 for North America, Europe and Other countries (Including
Domestic sales) compared to 46:38:16, last year. The company continues to
focus on the Asia Pacific region and believes the geographic concentration
risk to come down further. Over the last couple of years, the Company
started operation in Japan and Malaysia and the results thereof will start
rolling out shortly.

Additional details with regards geographical concentration have been
provided in the Management Discussion and Analysis report.

3. Internal process risks:

* Internal control systems
* Project execution
* Human resource management
* Technological obsolescence
* Disaster prevention and recovery
* Growth through acquisitions

3.1 Internal control systems:

The Company has internally developed certain standard operating procedures
which specify the procedures to be followed for performing each particular
operation and hence ensures that appropriate information reaches the
management so as to facilitate proper monitoring. Adherence to these is in
turn ensured through internal audit procedures, quality and security checks
conducted from time to time. Changes are made to these to facilitate easy
understanding of the procedures and provide flexibility in operations. The
following are some of the initiatives taken by the Company to ensure
internal control:

* Internal audit team is set up which looks into the proper functioning of
all the systems and whether procedures are in place;

* Security Audit is conducted each quarter to ensure confidentiality and
integrity;

* A Committee headed by the Chairman of the Company approves any change in
policy matters.

3.2 Project execution:

Mitigation of risk involved in each project is important as this leads to
the profitability of the Company. Reducing uncertainty in delivery,
completing the project within the budgeted cost and time are the major
elements of this risk. While the uncertainty in delivery is solved through
proper guidance to the project leaders, the risk relating to completion in
budgeted cost has been attended through implementation of Project Costing
system within the company.

3.3 Human Resource Management:

Human Resources function has turned out to be key function in every company
in the current scenario. People are considered to be the key resource for
growth of a Company. The Company has always believed in providing a
favorable work environment to its associates (employees are designated as
associates) along with balanced compensation package. In this pursuit, the
Company conducts an annual review amongst its employees on various
subjects. This ensures innovation and creativity towards the work and helps
the Company retain the talent over the years.

During the year, the attrition rate of the Company stood at 7.90% as
compared to previous year's 10.42 %. The fall in attrition represents the
interest of the associates towards their work and focus of the Human
Resources Department to provide maximum satisfaction. The associates are
categorized on the basis of performance into CAT-A, CAT-B and CAT-C.

3.4 Technological obsolescence:

With the extremely fast changing field of information technology, it is
important for every company to keep itself upgraded with the latest
technology solutions. This results in old technologies becoming redundant
and hence needs to be written off. The cost of acquiring technology also
includes the cost of installation and re-training.

The following table gives depreciation expense and software expense as a
proportion of revenues for the last two years.

Ratio FY 2010 FY 2009

Depreciation/Average Gross Block 9.94% 11.61%
Depreciation/Total Revenue 6.70% 7.85%

The company's amortization strategy reflects the requirements of the
various categories of systems.

Depreciation during the year was lower compared to previous year as some of
the assets were fully written off.

3.5 Disaster prevention and recovery:

The Company adheres to various standards to ensure that the information is
secure and is not prone to controllable disasters. Adherence to ISO
27001/BS 7799 standard has ensured that the company has a disaster
prevention and recovery system in place. The disaster recovery plans are
created and monitored for each of its work locations as well as for each
technology centres. Possible risks for all centers have been identified and
action plans are put in place to cope with any contingencies. These plans
are reviewed and updated periodically to make sure that they are in sync
with changes in technology and risks.

3.6 Growth through Acquisitions:

The Company has grown both organically and inorganically in the past few
years. Acquisitions are done for a variety of reasons, i.e., to enter new
markets, expand services offerings, acquiring new technology & domain
skills and cost synergies. It also entails risk for the company's future
growth and profitability, if the synergy expected from the acquisition does
not materialize for any external or internal reasons. To ensure
preparedness for such growth, Executive Management internally outlines
strategic objectives, evaluation guidelines and tentative implementation
mechanisms for any such possibility.

During 2009-10, the Company through its wholly owned subsidiary, IEAI,
acquired Daxcon Engineering Inc, in the US. Daxcon primarily focuses on
heavy engineering and off highway equipment market.

4. Legal and Statutory Risks:

* Contractual Liabilities
* Statutory Compliance

4.1 Contractual liabilities:

The management has clearly charted out a review and documentation process
for contracts. This process focuses on evaluating the legal risks involved
in a contract, on ascertaining the legal responsibilities of the Company
under the applicable law of the contract, on restricting its liabilities
under the contract and covering risks. The management reviews this on a
continuous basis and takes corrective action, as appropriate. As a matter
of policy the company does not enter into contracts, which have open-ended
legal obligations. To date, the company has no material litigation in
relation to contractual obligations pending against it in any court in
India or abroad.

4.2 Statutory compliance:

The Company has a compliance officer to advise the company on compliance
issues with respect to the laws of various jurisdictions in which the
company has its business activities and to ensure that the company is not
in violation of the laws of any jurisdiction where the company has
operations. The compliance officer, who is also the Company Secretary,
reports from time to time on the compliance or otherwise of the laws of
various jurisdictions to the board of directors. Generally, the company
takes appropriate business decisions after ascertaining from the compliance
officer and, if necessary, from independent legal counsels, that the
business operation of the company is not in contravention of any law in the
jurisdiction in which it is undertaken. Legal compliance issues are an
important factor in assessing all new business proposals.

5. Competition Risks:

New competitors may enter the markets the Company operates in or current
competitors could decide to focus more on these markets, and thereby
intensify the highly competitive conditions that already exist. Such
developments would enable these new and existing competitors to offer
similar services at reduced prices. This could harm the Company's business
and results of operations. The management keeps track of the market
movements and acts accordingly to mitigate this risk.

6. Political risks:

Recognizing that India's education system, its world-class professionals,
and its low cost structure give it an intrinsic comparative advantage in
software exports, successive governments have accorded a special status to
this industry. Task Forces comprising politicians, bureaucrats and
industrialists have recommended policy measures to give a fillip to the
Indian IT industry. On the whole, the Government's favourable disposition
towards the IT industry - and specifically towards software exports - is
highly encouraging. Given the consensus among all leading political parties
on the importance of the software industry, it is likely to remain a focus
area for governmental policy in the years to come.

7. Macro Economic Factors:

Changes in the global economic environment are bound to have an impact on
the progress of every company's growth. The Company has succeeded in
fighting through the tough economic conditions last year. The management
has invested significant time in meeting the clients to provide the
insights and various advantages along with the assurance, which is
important to build a global delivery model.