Annual Report - Mindtree - 2009-2010

MINDTREE LIMITED

ANNUAL REPORT 2009-2010

DIRECTOR'S REPORT

Dear Shareholders,

Your directors have pleasure in presenting their eleventh report on the
business and operations of your Company for the financial year ended March
31, 2010.



Financial Performance Rs. in 000's

Particulars FY 10 FY 09

Income from software development

- Overseas 11,417,496 9,484,196

- Domestic 915,002 641,503

Total Revenue 12,332,498 10,125,699

Software development expenses 7,673,555 5,694,373
Administrative and other expenses 2,365,179 3,554,091

Operating profit before interest,
depreciation, other income and tax 2,293,764 877,235

Interest 25,278 161,992

Depreciation 610,557 468,580

Operating profit before tax 1,657,929 246,663

Other income 804,237 78,790

Profit before tax 2,462,165 325,453

Provision for taxation including FBT 349,500 80,296

Deferred tax charge/(credit) 31,700 (54,895)

Net profit after tax 2,080,966 300,052

Balance in profit and loss account
brought forward 2,220,675 1,972,609

Amount available for appropriation 4,301,640 2,272,661

Dividend

Interim 39,187 38,023

Proposed 79,030 -

Total dividend 118,217 38,023

Dividend tax 20,091 6,462

Amount transferred to
general reserve 208,097 7,501

Balance in profit and loss account

carried forward 3,955,234 2,220,675

Business Performance

The global economy went through an unprecedented crisis and many industries
including the Indian IT industry were affected by it. This affected both
revenues and profits of many of the Industry players. Even in this tough
environment, improved sales mix, tight control on operations and expenses
and better utilization has helped the Company to improve its profits.

Your Company received good traction for its services and its expertise in
chosen segments continues to hold it in good stead. Your Company re-aligned
its processes, updated services, enhanced technology offerings,
restructured the organization, upgraded brand image and continued to
deliver superior value to its customers. Your Company today is much more
focused and is executing at a much higher efficiency than a year ago. Your
Company's investment in training and talent transformation is beginning to
pay off.

The demand for your Company's services continues to look robust, and the
focus on our select verticals continues to resonate with target customers.
The new go-to-market strategy is already yielding strong positive results
and the pipeline looks significantly better than what we had at the
beginning of the previous year. Your Company has been able to add strategic
customers with good revenue potential and strengthened its existing
customer relationships. Your Company would be collaborating with many more
customers across new sectors thus expanding the portfolio and delivering
superior value to customers. Your Company continues to operate as a long-
term value addition player to its customers and provide the entire life-
cycle services addressing their end-to-end requirements.

Your Company's income from software development grew to Rs. 12,332 million
for the year ended March 31, 2010, which represents an increase of 22% over
the previous year's Rs 10,126 million. We saw growth across both overseas
and domestic markets. Export revenues grew 20% to Rs. 11,417 million
whereas domestic revenues grew 42% to Rs. 915 million.

Our operating profits for the year 2009-10 has grown to Rs 1,657 million,
which is a growth of 572% over the previous year. We have achieved good
results and our Profit After Tax (PAT) increased to Rs. 2,080 million.

Dividend

Your directors have paid an interim dividend of Re. 1 per share (10% on par
value of Rs. 10) during November, 2009. Shareholders approval is sought to
ratify the payment of interim dividend. Your directors are also pleased to
recommend final dividend which is payable on obtaining members approval in
the eleventh annual general meeting of Rs. 2 per share (20% on par value of
Rs. 10) which includes a special dividend of Re. 1 per share on the
occasion of MindTree's 10th Anniversary, making the dividend for the year
2009-10 to 30% as compared to 10% in FY 2008-09.

The dividend payout amount for the current year inclusive of additional tax
on dividend will be Rs.138 million as compared to Rs. 44 million in the
previous year.

Transfer to Reserves

We propose to transfer Rs. 208.09 million to the general reserve in
accordance with the Companies (Transfer of Profit to Reserves) Rules, 1975.
Your Company also proposes to retain Rs.3,955 million in the profit and
loss account (on standalone basis).

Changes to Equity Share Capital

Your Company also issued 1,518,308 equity shares of Rs. 10 each to various
MindTree Minds on exercise of stock options and also to shareholders of
erstwhile Aztecsoft Limited as per the Scheme of Amalgamation.
Consequently, the paid-up equity share capital has increased from
Rs.379,966,860to Rs. 395,149,940.

Infrastructure

During the year, your Company has added a built-up capacity of 106,000 sq
ft. and added 1,000 seats. With this, the total built up capacity of your
Company in India stands at 1, 326, 000 sq ft.

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

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

Strategic Acquisitions

Kyocera Wireless Private Limited (KWI)

In October 2009, your Company announced the acquisition of KWI which was
the captive RFtD center of Kyocera Wireless Corporation (KWC). Subsequently
KWI became a wholly owned subsidiary of your Company. Established in 2003,
KWI is engaged in product development in the areas of cellular handsets and
cellular infrastructure, and supports full product engineering for KWC's
global product portfolio and Kyocera Japan's wireless base stations. KWI,
has approximately 630 people and a development center in Bangalore. It
continues to provide engineering services to various Kyocera entities on a
contract basis. Integration of KW I into MindTree has been progressing well
and we are seeing many areas of synergy.

During the year, the Company filed a petition with the Honourable High
Court of Karnataka to merge KWI into MindTree via a Scheme of Amalgamation
approved by the shareholders and creditors in their respective Court
convened meetings held on April 20, 2010.

Sevenstrata IT Services Private Limited (7Strata)

Your Company on April 22, 2010 announced that it has entered into a
definitive agreement to acquire the business (including people, customer
contracts and Intellectual Properties) of 7Strata, a Remote Infrastructure
Management (RIM) services provider. The acquisition was effective from May
1, 2010.

7Strata is a Chennai-based, privately held company that offers endto-end,
fully integrated, remote IT monitoring and management services. 7Strata
began its operations in October 2007 and the 7Strata team has developed a
proprietary infrastructure management software platform to offer RIM
services. The ITILcompliant platform helps customers save money and improve
service levels by having an automated and integrated tool to manage IT
operation processes.

Amalgamation of Aztecsoft Limited (Aztec)

Your Company had filed an application with the Hon'ble High Court of
Karnataka for the Amalgamation of Aztec with the Company. During the
current year approval of the Amalgamation was received from the Hon'ble
High Court of Karnataka on June 3, 2009. Under the scheme, Aztec was
amalgamated with the Company with effect from April 1, 2009.

People

The total number of MindTree Minds as on March 31, 2010 was 7,657 as
against 6,091 as on March 31, 2009. During the year, your Company saw an
increase in attrition levels towards the end of the financial year and the
annual attrition for the year was 13.6% as against 11.8% in the year
before. However, due to our Industry leading people practices, our
attrition is lower than most other industry players.

To remain at the cutting edge and to be the best, your Company's focus has
been not only business strategies but equally important is developing
innovative & robust people practices. Your Company strongly believes, it is
people alone who provide greatest sustainable, competitive advantage.
During the year under review, the Company made substantial investments on
people development and focused on improving productivity.

Your Company's multiple-award winning HR practices and great work
environment helped to attract and retain talent. Your Company's people
function works to align people's interests to the business goals. This
creates a favorable environment and promotes innovation and merit. This
strong alignment of our people's interests and business interests, led the
organization to achieve its objectives and thus create value for people and
customers. This in turn delivers good financial performance. We have
dedicated programs to help our people build new skills and competencies
which promotes knowledge sharing, building effective teams, etc. Your
Company continues to innovate in knowledge management so that (earnings are
captured & disseminated across teams.

Employee Stock Option Plans

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

The Company currently administers six stock option programs viz. ESOP 1999,
ESOP 2001, ESOP 2006(a), ESOP 2006(b), ESOP 2008 (A) and DSOP 2006. The
details as required under SEBI (Employee Stock Option Scheme and Employee
Stock Purchase Scheme) Guidelines, 1999 have been disclosed under Notes
to Accounts Schedule 16 item 6 and forms part of the Annual Report. There
has been no variation in the terms of ESOP programs and no employee was
granted options, during the year, equal to or exceeding 1% of the issued
capital.

The weighted average exercise price is Rs 10 under ESOP 1999, Rs 50 under
ESOP 2001, Rs 250 under ESOP 2006(a), Rs 345.60 under ESOP 2006(b),
Rs.406.50 under ESOP 2008 A, Rs 292.21 under DSOP 2006.

The weighted average exercise price for stock options exercised during the
year ended March 31, 2010 was Rs 231.55. The options outstanding at March
31, 2010 had a weighted average exercise price of Rs 325.40 and a weighted
average remaining contractual life of 3.87 years.

The Company has recorded compensation cost for all grants using the
intrinsic value-based method of accounting, in line with prescribed SEBI
guidelines.

Had compensation been determined under the fair value approach described in
the guidance note on, 'Accounting for employee share based payments', the
Company's net profit and basic and diluted earnings per share would have
reduced to the proforma amounts as indicated:

Amount in Rs.

Particulars Year ended Year ended
March 31, 2010 March 31, 2009

Net profit as reported 2,080,965,209 300,052,129

Add: Stock-based 5,140,592 9,982,210
employee compensation
expense (intrinsic value
method)

Less: Stock-based 95,935,045 127,468,678
employee compensation
expense (fair value
method)

Pro forma net profit 1,990,170,756 182,565,661

Basic earnings per share 53.04 7.94
as reported

Pro forma basic 50.73 4.83
earnings per share

Diluted earnings 51.13 7.86
per share as reported

Pro forma diluted 48.90 4.78
earnings per share

The weighted average fair value of each option granted during the year
ended March 31, 2010, estimated on the date of grant was Rs 368.70 using
the Black-Scholes model with the following assumptions:

Grant date share price : Rs. 253 - Rs. 580

Exercise price : Rs. 253 - Rs. 580

Dividend yield (%) : 0.04% - 0.17%

Expected life : 3-5 years

Risk free interest rate : 5.46% - 8.06%

Volatility : 61.64% - 89.72%

Details of options granted to senior managerial personnel during the year
are as under:

Name of Senior Designation Stock options
Managerial granted
Personnel

Amit Banerji Vice President 20,000

MindTree Reorganization

With the objective of establishing leadership positions, MindTree is
organized into the following seven business areas: IT Services,
Infrastructure Management and Technical Support (IMTS), Independent
Testing, Knowledge Services and Product Engineering Services, which
comprises the R & D Services business, the Software Product Engineering
(SPE) business, and NIW or Next in Wireless business.

The CEOs of the various MindTree's businesses are:

* IT Services: Anjan Lahiri

* Group CEO, Product Engineering Services: SJanakiraman

* SPE: Ashok Krishnamoorthy

* R&D Services: Vinod Deshmukh

* NIW or Next in Wireless: Samartha Nagabhushanam

* Independent Testing: N.S. Parthasarathy, supported by Ananda Rao Ladi

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

* Knowledge Services: Scott Staples

We now have strong & dedicated teams which focus on each of the market
segments we address. This helps create greater specialization within each
area & have higher accountability.

Directors

There were no changes in the Board of Directors during the year under
review. As per Article 29 of the Articles of Association, the following
Directors retire by rotation and being eligible, offer themselves for re-
appointment.

1. Dr. Albert Heironimus

2. Mr. V G. Sidhartha

3. Mr. R. Srinivasan

Brief resumes of these directors are included in the notice for the
eleventh annual general meeting.

Your Directors recommend that the resolutions relating to the re-
appointment of Dr. Albert Heironimus, Mr. V G. Sidhartha and Mr. R.
Srinivasan as Directors of your Company be passed.

Liquidity

Your Company maintains sufficient cash to meet its operations and strategic
objectives. As on March 31, 2010 your Company had liquid assets of Rs.1,614
million as against Rs 477 million at the previous year-end. These funds
have been invested in deposits with banks and in money market mutual funds.

Fitch Rating

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

Awards and Recognitions during FY 2009-10

* Your Company was adjudged No. 1 on Corporate Governance in India and 2nd
in Asia in the Corporate Governance Poll 2009 conducted by Asiamoney
magazine. Your Company's Chief Financial Officer, Rostow Ravanan, was
chosen by Asiamoney as The Best Investor Relations Officer' in India.

* Your Company was ranked amongst the fastest growing technology companies
in Asia Pacific by Deloitte Technology Fast 500 Asia Pacific 2009.

* Your Company's co-founder and Executive Chairman Mr. Ashok Soota was
conferred the Golden Peacock Award for Technology Leadership - 2010 for
his'outstanding achievements and leadership qualities'.

* Your Company was awarded the Indian Most Admired Knowledge Enterprise
(MAKE) Award by Teleos, in association with The KNOW Network.

* Your Company won the Asian Most Admired Knowledge Enterprise (MAKE) Award
by Teleos, in association with The KNOW Network.

* Your Company won the 2009 CIO 100 award instituted by IDG India's CIO
magazine that recognizes organizations that exemplify the highest level of
operational and strategic excellence in information technology.

* Your Company was ranked among the top five global R&D services providers,
by Zinnov Management Consulting Pvt. Ltd.

* Your Company was ranked # 43 across all industries and 19th amongst IT
services companies by The International Association of Outsourcing
Professionals in their annual list of the Top 100 Global Outsourcing
Companies. The selection process considers four critical criteria: size and
growth, customer references, organizational competencies and management
capabilities. MindTree has been progressively moving up the ladder and
ranking over the last few years.

* Your Company was named among the top 10 global Outsourced Product
Development (OPD) service providers for 2009 by Global Services and neoIT
in their Global Services 100 study

* Your Company became the first Indian company to receive the Texas
Instruments (TI) 2008 Supplier Excellence Award.

Litigation

No material litigation is outstanding as on March 31, 2010.

Deposits

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

Corporate Governance

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

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

Corporate GovernanceAward

We continue to adopt best practices on Corporate Governance. As mentioned
earlier in this report, your Company's good track record in terms of
adherence to all applicable regulations, prompt filings, good disclosure,
conservative business practices, etc. helped us get us the #1 ranking in
India on Corporate Governance from Asiamoney.

Green Initiatives at MindTree

A copy of the green initiatives taken by your Company is enclosed in the
annual report.

Consolidated Financial Statements

Your Company has four wholly owned subsidiaries namely Aztec Software, Inc,
Aztecsoft Disha, Inc, MindTree Wireless Private Limited & MindTree Software
(Shenzen) Co. Ltd.

Standalone and consolidated financials are disclosed elsewhere in this
report.

Dissolution of Subsidiaries

During the year, your Company applied for the dissolution of Aztec
Software, Inc & Aztecso & Disha Inc to the US regulatory authorities with
effective date as July 31, 2009 and all the assets and liabilities of the
subsidiaries as on this date were transferred to MindTree Limited.

Creation of New Subsidiary

During the year, your Company applied for the creation of a new Subsidiary.
MindTree Software (Shenzhen) Co. Ltd. with Chinese regulatory authorities
and the subsidiary was created on November 24, 2009.

Transfer to Investor Education and Protection Fund

The Company has within the statutory period transferred unpaid dividend
amount to the Investor Education and Protection Fund.

Auditors

The retiring statutory auditors, M/s. B S R & Associates, Chartered
Accountants, hold office as statutory auditors until the conclusion of the
ensuing annual general meeting and thereafter they have declined to accept
office. The audit committee of your Company has considered the matter and
recommends that M/s B S R & Co, Chartered Accountants who have confirmed
their eligibility and willingness to accept office, be appointed as the
statutory auditors to hold office until the conclusion of the twelfth
annual general meeting.

Particulars of Employees

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

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

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

Directors' responsibility statement

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

Management Discussion and Analysis Report

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

CSR Efforts

In this financial year, your Company has invested significant efforts and
funds in its aspirations to be a socially relevant organization. Some of
the highlights are:

a) Appointment of a senior industry professional as a full time CEO to run
the MindTree Foundation, with specific focus on Differently Abled people
and Primary Education.

b) Funding of internship and training of differently-abled people to help
them integrate into a world class IT company operations. One of them is
100% visually impaired, one a wheel chair user and another a person with
partial vision due to lobectomy.

c) Provision of motorized wheel chairs to employees to help them acquire
much higher mobility and independence than manual wheelchairs, thereby
increasing their morale.

d) Formation of MindTree Forest, a 8000 tree sapling plantation with native
trees, as part of our 10th Anniversary Celebrations.

e) Funding the operating expenses of children operated for severe
orthopedic deformities through the SPARSH Vachana program.

f) Donation of used computers to schools and organizations supporting the
needs of underprivileged children.

g) Launch and successful implementation of the Company wide volunteering
program called MindShare in multiple locations in India and abroad.

h) The MindShare program has encouraged direct involvement of Minds
different beneficiaries such as destitute men and women, orphans through
monthly visits and infrastructure support, schools that cater for children
from socially disadvantaged background etc.

i) Our volunteers conducted a life skills program over 16 weekends in a
Government school in Bangalore, wrote exams for students with visual
impairment and created audio books for these students.

j) During the year we productized our first assistive technology initiative
in collaboration with two Chennai based NGOs and transferred the technology
to a vendor. The product was successfully launched and orders placed by an
NGO directly on the vendor.

k) MindTree contributed to industry wide efforts to improve inclusion and
diversity through active involvement in CII and NASSCOM initiatives
dedicated to these goals.

l) Many MindTree Minds contributed a day's salary towards the Flood Relief
Funds during the devastating floods last year in North Karnataka and Andhra
Pradesh.

Acknowledgements

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

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

Your Directors appreciate and value the contribution made by MindTree Minds
at all levels.

For and on behalf of the Board of Directors

Place: Bangalore Ashok Soota Krishnakumar Natarajan
Date : April 28, 2010 Executive Chairman CEO & Managing Director

Annexure to Directors' Report

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

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

II. The board of directors have selected such accounting policies and
applied them consistently and made judgments and estimates that are
reasonable and prudent so as to give a true and fair view of the state of
affairs of the Company at the end of the financial year and of the profit
or loss of the Company for that period.

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

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

V. The financial statements have been audited by M/s B S R & Associates,
Chartered Accountants, the statutory auditors.

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

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

Report on Energy Conservation at MindTree

Your Company is committed to following a high standard of environmental
protection and provision of a safe and healthy work place for our people,
customers and visitors. To this effect we have articulated our
environmental mission statement and also formed an advisory group 'Green
Council' to promote environmental initiatives at MindTree and details about
the same are given elsewhere in this report.
MindTree's Environmental Mission Statement

'Work closely with all our stakeholders to identify, implement and sustain
eco-friendly initiatives to achieve a carbon-neutral footprin t. '

Energy Efficiency Practices at MindTree

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

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

* Programming of air conditioners through logic control systems.

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

* FRILS wires for power as well as lighting distributions.

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

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

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

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

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

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

* Usage of compact florescent lamps for lighting.

Other Energy Conservation Initiatives

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

* Sun orientation path.

* Walls and roofs are properly insulated.

* Toughened glass windows to reduce infrared radiation.

* Effective management of ventilation to ensure acceptable air quality.

* Proper positioning of fire escape routes.

* Roof surface treated to reduce the absorption of heat.

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

* Turning off monitors during weekends.

* Hibernation of desktops & notebook computers when not in use.

* Turning off lights in all floors when Minds not working.

* Operating only one lift in each building after 7.00 pm.

* Turning off the air conditioners during non peak hours and on weekends.

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

* Only ground water used at West Campus.

* Sensors in toilets to optimize water usage.

* Dish washers used in the cafe's to minimize water wastage. Sewage water
treatment plant to recycle water.

* Rain water harvesting being planned.

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

Food Waste

* Collected centrally and segregated as recyclable/ non recyclable.

* Disposed through BBMP

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

E Waste - Disposed and recycled through 'E- Parisaraa'.

Paper Waste - Recycled through the services of 'Samarthanam Trust'.

Pollution Control and Reporting - Towards achieving better environmental
standards, regular checks on air quality, monitoring of noise levels and
monitoring of fuel stock have been carried out across facilities.

Conclusion

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

B. Technology and Innovation

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

Research and Development

Your Company has a dedicated business unit for Research & Development which
delivers innovative solutions to clients and also fosters R&D within all
business units to create intellectual property in the form of re-usable
components, frameworks etc., which help drive greater productivity.
Accordingly identifiable revenue expenditure incurred for FY 2009-10 as
R&D expenditure is Rs. 84,661,819.

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

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

We also have R & D engineers including key architects/ senior personnel and
these personnel are part of customer project teams and billed accordingly.
These personnel apply the R & D findings in the course of these customer
projects to help software product companies succeed. These engineers have a
360-degree view and understanding of business problems and are skilled
technology experts who work with projects either proactively towards on-
going value addition and/or help in projects to deal with specific tactical
issues.


IT Services investments in solutions and technologies

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

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

* Amobile application on GoogleAndroid that provides support and features
post the booking process.

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

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

* Demo applications on leading Cloud platforms including Force.com, Amazon
EC2 and GoogleApp Engine.

* Frameworks to encapsulate advanced features on Google Android.

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

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

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

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

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

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

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

* A comprehensive testing framework geared towards the Banking industry.

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

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

Title Country of Year
Filing

1. Method for Step Size control technique
in echo signal cancellation us 2004

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

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

4. Power Management based on dynamic
frequency scaling us 2006

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

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

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

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

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

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

11. Outband Broadband Connectivity us 2007

12. Portable Wearable Input Apparatus India 2009

Benefits of the research and development initiative of your Company

The expertise built up by your Company through the R&D initiatives has been
instrumental in your Company's adding some of the customers during the
year. Your Company uses the expertise in the R&D team to provide technology
consulting services to some of its customers. New ways of working processes
serve to improve substantially our ability to discover, develop, design and
deliver have been implemented and these contribute to quality and output.

Plan of action

Your Company will continue to invest in R&D initiatives going forward.

Technology absorption, adaptation and innovation

Your Company provides its employees with a'state of the art' working
environment, with a view to optimize their performance.

The hardware & software used is the very latest. All employees have access
to the Internet. The excellent communication infrastructure put in place by
your Company ensures that the employees get to work on the same environment
that the customers' engineering teams work on. The communication
infrastructure also enables the employees of your Company working onsite to
work very closely with their counterparts in India, enabling a 24-hour
delivery model. These enable your Company to get a lot of work done from
the development centers in India and are vital to the offshore-centric
business model of your Company.

The adoption of latest technologies along with the investments in R&D
enables your Company to be the preferred technology solutions provider to
corporations seeking to use the technologies.

C. Earnings in foreign currency (accrual basis)

Amt in Rs.

Inflows For the year ended For the year ended
March 31, 2010 March 31,2009

Income from software development 11,417,496,007 9,484,196,140

Interest income 126,322 888,494

Other income 17,180,787 65,607

Total 11,434,803,116 9,485,150,241

Outflows: Refer Note 10 & 11 of Schedule 16.

Subsidiary's Financial Summary

1. Details of MindTree Wireless Private Limited, a subsidiaryof MindTree
Limited

(Amt in Rs. except share data)

Financial year of the subsidiary ending on March 31, 2010

(a) No. of shares held by the holding company 412,500

(b) Extent of interest on the above date 100%

Other financial details:

(a) Capital 4,125,000

(b) Reserves 312,462,750

(c) Total assets (gross) 509,244,573

(d) Total liabilities 192,656,822

(e) Details of investments -

(f) Total income 1,006,265,086

(g) Profit before taxation 157,212,665

(h) Provision for taxation 30,815,303

(i) Profit after taxation 126,397,362

(j) Proposed dividend -

2. Details of Aztec Software Inc, a subsidiary of MindTree Limited

Amt in Rs. except share data

Financial year of the subsidiary ending on March 31, 2010

(a) No. of shares held by the holding company 357,142,851

(b) Extent of interest on the above date 100%

Other financial details:

(a) Capital 229,069,140

(b) Reserves 51,233,531

(c) Total assets (gross) 280,302,671

(d) Total liabilities -

(e) Details of investments -

(f) Total income 105,947,784

(g) Profit before taxation (12,349,365)

(h) Provision for taxation -

(i) Profit after taxation (12,349,365)

(j) Proposed dividend -

3. Details of Aztecs oft DishaInc, a subsidiary of MindTree Limited

(Amt in Rs. except share data)

Financial year of the subsidiary ending on March 31, 2010

(a) No. of shares held by the holding company 1,000

(b) Extent of interest on the above date 100%

Other financial details:

(a) Capital 47,220

(b) Reserves 170,456,460

(c) Total assets (gross) 170,503,680

(d) Total liabilities -

(e) Details of investments -

(f) Total income 304,051,030

(g) Profit before taxation 57,213,095

(h) Provision for taxation -

(i) Profit after taxation 57,213,095

(j) Proposed dividend -

4. Details of MindTree Software (Shenzhen) Co. Ltd, a subsidiary of
MindTree Limited

(Amt in Rs. except share data)

Financial year of the subsidiary ending on March 31, 2010

(a) No. of shares held by the holding company -

(b) Extent of interest on the above date 100%

Other financial details:

(a) Capital 23,045,000

(b) Reserves (1,207,649)

(c) Total assets (gross) 22,367,953

(d) Total liabilities 530,602

(e) Details of investments -

(f) Total income -

(g) Profit before taxation (1,207,649)

(h) Provision for taxation -

(i) Profit after taxation (1,207,649)

(j) Proposed dividend -

For and on behalf of the Board of Directors

AshokSoota Krishnakumar Natarajan
Executive Chairman CEO & Managing Director

Place: Bangalore
Date : April 28, 2010

MANAGEMENT DISCUSSION AND ANALYSIS

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

Synopsis

We entered FY 2010 when the environment saw the unfolding of a global
economic crisis. Growth was a challenge for every industry globally. The
situation improved towards the end of FY 10. Though business activity still
remains below the pre-crisis levels, the recovery could be seen in
increased spending: by business, Government and consumers.

Despite the current economic challenges, we have shown decent revenue
growth over previous year. We posted a consolidated annual revenue growth
of 4.7% in Rupee terms and PAT growth of 310.7%. Last year, we setup
ambitious goal of becoming a $1 Bn organization and we are gearing up to
address the challenges through our growth engines. In October 2009, we
acquired Kyocera Wireless India Pvt Ltd and subsequently launched a new
business called Next In Wireless (NIW) marking our entry into the
development of ready to brand mobile handset products and Intellectual
Property in the area of cellular infrastructure. We expect to launch these
products to the market in Q3/Q4 of 2010-11. Since this is a new initiative,
the financial performance of the NIW business would depend on the success
of the products when they are launched.

In the MindTree Customer Experience Survey during the year, 92% of
customers gave a rating of 4 and above (on a scale of 5) on overall
satisfaction and 96% of them rated 4 and above (on a scale of 5) on their
willingness to do repeat business. We were ranked among the top 5 global
R&D services providers by Zinnov Management Consulting Pvt. Ltd and were
also named among the top 10 global Outsourced Product Development (OPD)
service providers for 2009 by Global Services and NeoIT in their global
services 100 study. We have been ranked 43rd in the 2010 Global Outsourcing
100 by the International Association of Outsourcing Professionals. We were
ranked No 2 in Asia and declared overall winner in India in the Asiamoney
Corporate Governance Poll 2009. We were ranked amongst the fastest growing
technology companies in Asia Pacific by Deloitte Technology Fast 500 Asia
Pacific 2009.

Economy Et Indian IT Industry

The IT industry had a difficult year as the industries it enables were
facing a slowdown. According to Gartner, in USD terms, global IT services
dropped by 4% in 2009 and is expected to grow by 5.7% in 2010 to $821 Bn.

Indian IT industry has grown in strength and value, and today serves a
significant portion of the global information technology outsourcing needs,
by leveraging its large, highly qualified and growing talent base. As per
NASSCOM, Indian IT exports is estimated to grow by 5.5% in FY201 0 to reach
$49.7Bn in value, almost touching the $50Bn landmark. IT industry
contributes over 25% of India's total exports. As a proportion of national
GDP, the sector revenues have grown from 1.2% in FY1998 to an estimated
5.8%in FY2009. NASSCOM estimates that direct employment would grow by 4%
and cross 2.3 million with over 90,000 jobs added in FY09-1 0.

After demonstrating unmatched capabilities as 'offshore service providers',
Indian IT vendors have already started building larger front-ending
presence in client locations predominantly in the US and Europe, through
high-value services such as consulting and integrating these services into
their delivery models. Today, Indian players successfully compete
aggressively for large global deals through providing a range of services
at competitive costs.

Today, customers worldwide are looking at IT to provide tangible business
value to help them differentiate themselves in the markets that they
compete in, apart from cost benefits. In such an environment, it becomes
imperative that technology providers understand the business of their
customers well and incorporate a solution-based approach rather than a
technology-led approach. In this aspect too, Indian IT companies are
working towards narrowing the gap with respect to the large incumbents. We
have been building high domain and consulting capabilities to serve our
customers better.

Indian IT is also playing a key role in global technology IP creation.
NASSCOM reports that new areas such as Engineering Services and Product
Development generated significant momentum clocking combined revenue of
over USD 10 billion in FY2010.

Financial Performance

The financial performance discussed below is based on the consolidated
financial results for the year ended March 31, 2010.

The Company had filed an application with the Hon'ble High Court of
Karnataka for the merger of Aztecsoft ('Aztec') with the Company. Approval
of the merger was received from the Hon'ble High Court of Karnataka on June
3, 2009. In terms of the scheme, Aztec was amalgamated with the Company
with effect from April 1, 2009.

During the year, the Company acquired 100% of equity share capital of
Kyocera Wireless (India) Private Limited ('KWI') at a cost of Rs. 437
million.

Subsequent to the acquisition, the name of KWI was changed to MindTree
Wireless Private Limited ('MWPL') and MWPL's results have been consolidated
with the company effective October 1, 2009.

The Company has filed an application with the Hon'ble High Court of
Karnataka for the merger of MWPLwith the Company effective April 1, 2010.

Income

Income from software development:

Rs. in Million

Revenue Year ended % Year ended % Growth
March 31, 2010 March 31,2009

Overseas 12,046 92.9 11,609 93.8 3.8

Domestic 914 7.1 766 6.2 19.3

Total 12,960 100.0 12,375 100.0 4.7

Our revenues for the year is Rs.12,960 million and have shown a good growth
of 4.7%.

We have 258 active customers as at March 31, 2010 of which 40 are Fortune
500 accounts.

Our million dollar client count is follows:

No of million dollar clients March 31, 2010 March 31, 2009

$1 million clients 60 64
$5 million clients 13 13
$10 million clients 5 3

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

Project Type March 31, 2010 March 31, 2009

Fixed price 25.5% 13.1

Time and Material 74.5% 86.9%

Total 100.0% 100.0%

Our revenue breakdown by service offerings is given below:

Service offerings March 31, 2010 March 31, 2009

Development 50.1% 48.4%
Maintenance 21.2% 22.4%
Consulting and IP Licensing 2.7% 3.7%
Package Implementation 4.4% 3.8%
Independent Testing 17.6% 18.3%

Infrastructure Management
and Tech Support 4.0% 3.4%

Total 100.0% 100.0%

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

March 31, 2010 March 31, 2009

Effort mix
Onsite 11.7% 12.6%

Offshore 88.3% 87.4%

Total 100.0% 100.0%

Revenue mix

Onsite 28.4% 29.8%

Offshore 71.6% 70.2%

Total 100.0% 100.0%

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

Rs. Million

Year ended March 31, 2010 % March 31, 2009 %

America 8,421 65.0 8,080 65.3
Europe 2,555 19.7 2,439 19.7
India 774 6.0 780 6.3
Rest of World 1,210 9.3 1,076 8.7
Total 12,960 100.0 12,375 100.0

Our operations predominantly relate to providing services in 2 primary
business segments viz. IT Services and Product Engineering Services (PES).
Revenues in these segments are as follows:

Rs. Million

Year ended March 31, 2010 % March 31, 2009 % Growth

IT Services 6,980 53.9 7,128 57.6 (2.1)
PE Services 5,980 46.1 5,247 42.4 14.0
Total 12,960 100.0 12,375 100.0 4.71

Revenue mix by Industry Groups (Verticals) are as follows:

Industry Groups (Year ended) March 31, 2010 March 31, 2009

Manufacturing 12.7% 16.1%
Banking, Financial and Insurance 17.2% 17.5%
Travel and Transportation 13.9% 12.7%
RFtD Services (RDS) 14.4% 17.7%
Software Product Engineering (SPE) 28.3% 24.7%
Next in Wireless (NIW) 3.4% -
Others 10.1% 11.3%
Total 100.0% 100.0%

Note: RDS, SPE & NiW form part of PE Services

Other income

Other income for the year ended March 31, 2010 is Rs. 770 million and has
increased by Rs 655 million over the previous year (Rs 115 million). This
is mainly because of exchange gains resulting from reversals in Mark To
Market (MTM) provisions, since the rupee appreciated from 50.72 to a dollar
at March 31, 2009 to 44.90 at March 31, 2010.

Analysis of expenses

Software development expenses as a % of revenues has increased from 56% to
about 62% in FY 2010. This is mainly because of increase in bonus costs for
the year linked to the higher profitability in FY201 0compared to FY2009.

Administrative expenses (excluding exchange loss) as a % of revenue has
increased from 17% in the previous year to 19.5% in the current year. We
are investing in customer facing positions such as dedicated account
managers and business development managers for some of our businesses such
as IMTS and also to bring in a consulting led approach to our clients. We
believe that this is a good investment to make, to prepare for the future.
However we are cost conscious and where we believe where we can bring in
cost optimization in other areas, we are continuously monitoring and
implementing adequate measures.

Interest decreased from Rs.162 million to Rs 27 million mainly because
loans were repaid during the year

Profitability and Margins

EBITDA margins were at 18.9% for the year ended March 31, 2010 as compared
to 27% in the previous year due to reasons explained above. Given the
current outlook on our services business, the EBITD Amargins on our
services business is likely to be stable.

Our effective tax rate based on current taxes is about 15.6% as compared to
about 11% in the previous year.

Net profits have increased significantly by about 310.7% (16.6% as a % of
revenues from 4.2% in the previous year) mainly due to reversals of MTM
provisions as explained earlier.

Significant changes in Balance Sheet items

* Increase in reserves and surplus of Rs 1,179 million due to:

- Securities premium account decreased by Rs 1,055 million because of
goodwill adjustment of Rs 1,407 million (Goodwill arising on merger of
Aztec has been set off against the securities premium account as per the
Scheme of Amalgamation). Increases are on account of allotment of shares to
shareholders of Aztec in accordance with the scheme of amalgamation (Rs 262
million) and exercise of employee stock options (Rs 90 million).

- General reserve increased from Rs 202 million to Rs 410 million due to
current year transfer to reserve on account of dividend (as per limits
prescribed by the Companies Act).

- Stock option outstanding account increased by Rs 5.1 million.

- Capital Reserve increased by Rs 1.9 million.

- In accordance with AS 30, derivative instruments which qualify for cash
flow hedge accounting, the resultant exchange gain is credited to hedging
reserves to the extent of Rs 217 million (previous year loss of Rs 98
million).

- Balance in Profit and loss account increased from Rs 2,435 million to
Rs.4,237 million due to current year profits.

* There are no secured loans outstanding at year end as all the loans have
been repaid.

* During the year, we received an additional unsecured loan from Council
for Scientific and Industrial Research (CSIR) for Rs 12.5 million. Under
the directions of Government of India, CSIR is implementing a scheme
entitled New Millennium Indian Technology Leadership Initiative (NMITLI)
that seeks to realize the vision of developed India in Science
EtTechnology. The scheme envisages to support innovation centered
scientific & technological developments as a vehicle to attain for the
country a global leadership position at least in some selected niche areas.
MindTree has been selected to do a project under 'Development of
Intelligent Video Surveillance Server (IVSS) system.

* Additions to fixed assets at March 31, 2010 was Rs 978 million (prior
year Rs 1,533 million) mainly on account of MWPL consolidation (Rs 623
million). MindTree standalone additions were not significant (Rs 355
million), which was on account of routine capital expenditure and interiors
for our Phase 3 facility at Global village.

* Investments have increased by Rs 259 million as our cash generation has
been healthy.

* Consolidation of MWPL has resulted in goodwill of Rs 154 million.

* The Days Sales Outstanding (DSO) on debtors at March 31, 2010 is 68 days
as compared to 70 days at March 31, 2009. The DSO has been stable for the
last 3 quarters and below 70 days due to focused efforts on collections.

* Loans and Advances have increased from Rs. 1,520 million to Rs. 2,068
million. The main reasons are increase in advance taxes and MAT (Rs. 314
million), unbilled revenue (Rs. 78 million), inter corporate deposits (Rs.
61 million) and other advances (Rs. 95 million) mainly due to MWPL
consolidation.

* Current liabilities and provisions have decreased by Rs. 478 million
mainly on account of reversals of MTM provisions as explained earlier and
offset by increases in proposed dividend, bonus provisions and provision
for foreign taxes.

Strengths & Opportunities

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

Long term client relationships: With time, we have demonstrated our ability
to manage large client relationships and outsourcing engagements. We are
ranked 43rd among the Leaders in the 2010 Global Outsourcing 100 list by
International Association of Outsourcing Professionals (IAOP). We are the
first Indian company to receive Texas Instruments (TI) 2008 supplier
excellence award.

We conduct a half-yearly customer experience survey with our clients to
help us understand our clients' needs and expectations and improve client
performance. We believe that our ability to be accessible to our customers,
the personal attention we give them, our flexible approach and agility to
meet customer requirements and our positive attitude in servicing customers
has helped increase customer satisfaction levels and is a competitive
strength. In the MindTree Customer Experience Survey during the year, 92%
of customers gave a rating of 4 and above (on a scale of 5) on overall
satisfaction and 96% of them rated 4 and above (on a scale of 5) on their
willingness to do repeat business.

In our client engagements, we leverage our industry experience with our
high quality processes, project management capabilities and breadth of
technical expertise. Our ability to rapidly service client requirements,
provide the right and committed resources both onsite in client geographies
and offshore in India enables us to effectively respond to the demands of
our large clients. Our senior executives and dedicated account managers
continuously maintain and develop these relationships through multiple
contacts at different levels in the clients' organizations. In addition,
for strategic clients, an identified senior executive is responsible for
the overall client relationship and conducts periodic reviews with the
client.

Comprehensive range of Services: We have developed a comprehensive range of
service offerings in the IT services, Product Engineering Services (R&D)
Services and Software Product Engineering) business and Knowledge Services
(Analytics) in order to address the varied and expanding requirements of
our clients.

To continually enhance the customer business value and be an integral part
of customer's success, we have started to provide Knowledge Services
(Analytics) as an offering. We see a good traction and demand for the
knowledge services in the market. With delivery centers in India and the
U.S., we offer IT strategy consulting, application development, data
warehousing and business intelligence, application maintenance, package
implementation, product architecture, design and engineering, embedded
software, technical support, testing, and infrastructure management
services to our customers. The R&D research team creates intellectual
property primarily in the short-range wireless communication segment, which
are licensed to our clients. We believe that our comprehensive range of
offerings help our clients achieve their business objectives.

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

Preferred place to Work: We have consistently appeared in various surveys
conducted to ascertain the best employers in India and have received
various accolades in this regard. We recruit talent from some of the best
universities, colleges and institutes in India and abroad, as well as some
of the leading IT companies in India and overseas. We believe that it is
our transparent evaluation criteria, inclusive approach to our people,
focus on training, competitive compensation packages, being a value-based
organization, open communications policies and our ability to prepare our
people for leadership roles that has resulted in lower attrition rate.
Widely known for our focus on human capital development, we have been
consistently rated among the most admired employers by several industry
surveys.

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

Experienced management team: Our management team has enormous global
experience in the IT industry. Our management team has come from diverse
backgrounds and geographies and with different areas of specialization
within the IT industry. The founding team is led by Ashok Soota, who was,
immediately prior to cofounding MindTree, Vice Chairman of Wipro Limited,
one of India's largest software companies. Ashok was conferred the Golden
Peacock Award for Technology Leadership-2010 for his 'outstanding
achievements and leadership qualities'. We are strongly consulting led in
our IT Services business and strongly IP led in our R&D Services business.

Threats, Risks & Concerns

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

Pressure on pricing: In a highly competitive environment, customers have
tough expectations on pricing. We are focusing on providing highervalue and
differentiated services to beat the pricing pressures. Our re-articulated
Mission statement showcases our focus on customer's success and innovation
like IP creation, specialization. We are looking at pillars like strong
brand and domain expertise to differentiate ourselves.

Competition: We are organized into four divisions - Information Technology
Services ('IT Services'), Software Product Engineering (SPE), Research and
Development Services ('R&D Services') and Next in Wireless ('NIW'). The
market for all these areas is highly competitive and rapidly evolving. We
primarily face competition from Indian as well as international companies
and captive offshore centers. Our mature global delivery model, range of
services offered, our level of technical expertise and talented pool of
people and our culture help differentiate us from some of our competitors.
We believe that price alone is not a sustainable competitive advantage in
an environment where IT and technology is becoming increasingly critical to
our client's core corporate strategy. We have therefore endeavored to
develop competitive strength through our ability to provide personalized
and differentiated service to our clients.

Talent acquisition: Our success depends in large part upon our highly
skilled software professionals and our ability to attract and retain such
personnel. Due to the limited pool of available skilled personnel, we face
strong competition to recruit and retain skilled and professionally
qualified staff. Our talent acquisition philosophy is to recruit for
attitude, train for skill and develop for leadership roles. We follow a
role-based selection process and place high emphasis on cultural fit of the
prospective staff members with our organizational values. We have a robust
process to evaluate needs and acquire talent in tune with our business
needs. Our talent acquisition is driven by the annual business plan
(covering number of people needed by location and their levels and roles in
the organization), which is monitored and continually adjusted based on
business visibility on a monthly basis. We are also expanding our
locational presence to tap the talent pools in newer cities.

Foreign currency rate fluctuations: A major portion of our revenues are in
foreign currencies and a significant portion of our expenses are in Indian
Rupees. The exchange rate between the Rupee and the U.S. Dollar as well as
other currencies has been very volatile in recent years and may continue
similarly in future. Our operating results are impacted by fluctuations in
the exchange rate between the Indian Rupee and the U.S. Dollar and other
foreign currencies. Judiciously hedging against adverse foreign exchange
exposures help in minimizing the impact of exchange fluctuations. We
continue to maintain a prudent and balanced forex management policy which
we expect will help us manage this risk appropriately.

Unstable law and order situation: Recent Government assessments indicate
that the software industry could be a soft target for a terrorist attack.
Nationally and internationally recognized facilities that offer ease of
access, certainty of tactical success, and the opportunity to kill in
quantity will guide target selection. As a growing and reputed company, we
have taken stock of our preparedness to face this risk and build defense
and response mechanisms. We have initiated some steps to enhance protection
at all our centers.

Our Strategy

We provide comprehensive range of services viz. Independent Testing,
Infrastructure Management & Support, IT services, Knowledge Services, RFtD
services, Software Product Engineering and Wireless Products. Our endeavor
is to create success for our customers through innovative solutions or
otherwise, delivered by happy people at workplace.

Protect and accelerate growth: We have identified certain strategic themes
for all our growth engines. This includes scale Vs depth, focus segments,
areas where we can break the dependence on the headcount model and bring in
non linearity, non-core segments etc. We believe that these themes will be
the pillars to scale up our company to the $1 Bn target. For strategic
accounts, we are investing in account management and mining to showcase our
deep domain expertise in some of the areas we operate in. We have also
identified areas where we would provide unmatched solutions. These
solutions, we believe, would help us provide scope to add tremendous value
to our customers in areas where not all IT players can match our offering
and capabilities.

Leverage inorganic growth opportunities: Growing our business by leveraging
our customer relationships and entering into new customer relationships
remains a key priority. At the same time, we are also looking to grow
inorganically if right candidates are available. We would continue to
derive synergies from acquisitions both on cost and revenue perspectives.

Strengthening the MindTree brand: We continue our focus to strengthen the
'MindTree' brand by enhancing our brand recognition and continue investing
in developing the 'MindTree' brand in our client markets within selected
industries in India and abroad. We seek to achieve this through various
marketing initiatives including targeted analyst outreach programmes, trade
shows, white papers, events, workshops, road shows, speaking engagements
and global public relations management. We believe that a strong brand will
contribute to attracting and retaining talented people and enhancing our
lead generation process and client acquisition.

Make Next in Wireless (NIW) a substantial business: Our NIW business is
developing a ready to brand 3G smart phone and IP in the area of cellular
infrastructure. We expect to launch these products to the market in Q3/Q4
of 2010-11. Since this is a new initiative, the financial performance of
the NIW business would depend on the success of the products when they are
launched. If these initiatives are successful, they will greatly enhance
our revenues and profitability.

Delivery Excellence: We intend to continue our focus on delivery
excellence. Three factors wherewe areworking on are: 1. Certainty: We aim
to deliver projects with certainty- 'on time, with quality, within budget
and expected scope'. This would be achieved through robust management
practices, using tools and methodologies, continual competency development
and new delivery structure. 2. Customer centricity: We continually focus to
go to market with stronger consulting orientation (R01, Business benefit),
build bestin-class onsite program management capability and engage in core
and critical application landscape. 3. Innovation: We continue to focus to
deliver engagements based on Industry solution frameworks and execute
engagements in a globally distributed model.

Continue to invest in MindTree culture: MindTree seeks to be one of the
most admired Companies on the areas of Customer Satisfaction, People
Management and Corporate Governance. We are known for our culture
worldwide. We continually strive to make a fun filled and joyous workplace.
We are implementing new practices for employees to improve work-life
balance, inculcate values, perform better, get recognized and transparency.
We hire local talent to bring diversity and stay close to market. We intend
to implement programs for leadership development and engage & nurture high
potential minds.

Outlook

Some of our new wins are showing good traction and are expected to step up
in the current year. On our services business, based on current trends, we
expect that we will attain growth rates higher than industry growth
estimates of 13-15% provided by NASSCOM. Main segments that will fuel
growth are BFSI, Travel and Transportation within ITS, Networking and
Consumer markets within RIDS and SaaS Engineering services within SPE. On
the products business, as discussed earlier, being a new initiative, the
financial performance will be known only when the products are launched in
the market.

Internal control systems and their adequacy

We have an audit committee which oversees the financial and operating
reporting processes and disclosure of financial information to ensure that
the financial statements are correct, sufficient and credible. The audit
committee also reviews with management, statutory and internal auditors the
adequacy of internal control systems, compliance etc. Further our internal
audit is done by a reputed external firm which periodically carries out
audits covering all critical business processes including statutory
compliance. In addition, the management team reviews the adequacy of our
internal controls at periodic intervals and appropriate action is taken
based on such reviews.

Material development in human resources / industrial relation front,
including number of people employed

Widely known for our focus on human capital development, we have been
consistently rated among the most admired employers by several industry
surveys. We have 8,297 people at March 31, 2010. This includes sales and
support of 646 people.