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Directors Report of Datamatics Global Services Ltd.

Mar 31, 2015

Dear Members,

On behalf of the Board of Directors, I am happy to present the 27th Directors' Report of your Company with the Balance Sheet and Profit & Loss Account for the year ended March 31,2015.

FINANCIAL PERFORMANCE

Your Company's financial performance for the year ended March 31, 2015 as compared to the previous financial year ended March 31,2014 is summarized below:

Particulars (Rs in Million) Consolidated 2014-15 2013-2014

Income 8,347 7,411

Profit Before Interest, Depreciation & Tax 918 976

Interest 68 40

Profit Before Depreciation and Tax 850 936

Depreciation 210 161

Profit Before Tax 640 775

Provision for Taxation 155 194

Profit After Tax 485 581

Balance Brought Forward from Previous Year 901 586

Profit Available for Appropriation 1,332 1,073

Depreciation pursuant to the Transitional Provisions as per Companies Act, 2013 25 -

Dividend 77 116

Tax on Dividend 15 20

Transfer to General Reserve 30 47

Balance Carried Forward 1,185 890

(Rs in Million) Standalone 2014-2015 2013-2014

Income 1,965 2,224

Profit Before Interest, Depreciation & Tax 426 566 Interest 51 16

Profit Before Depreciation and Tax 375 550

Depreciation 84 65 Profit Before Tax 291 485

Provission for Taxation 38 70

Profit Tax 253 415

Balance Brought Forward from Previous Year 1,242 948 Profit Available for Appropriation 1,495 1,362

Depreciation pursuant to the Transitional 18 - Provisions as per Companies Act, 2013

Dividend 59 74

Tax on Dividend 8 5

Transfer to General Reserve 25 41

Balance Carried Forward 1,385 1,242

OVERVIEW OF COMPANY'S FINANCIAL PERFORMANCE

Your Company is a global IT and ITeS organization focused on delivering proactive and smart, next-generation business solutions helping enterprises across the world address their business challenges. Datamatics has become the 2nd fastest growing IT & BPO Company listed on the BSE Limited and National Stock Exchange of India Limited.

On a Consolidated basis, your Company achieved a total revenue of Rs. 8,347 million as compared to Rs. 7,411 million in the previous year at a growth rate of 12.62%. The profit after tax for the current year was Rs. 485 million as against Rs. 581 million in the previous year.

The total revenue on a standalone basis is Rs. 1,965 million as compared to Rs. 2,224 million in the previous year. The profit after tax for the current year was Rs. 253 million as against Rs. 415 million in the previous year. This was partly due to your Company hiving off its publishing BPO business into a subsidiary which was subsequently merged into PreMedia Global Private Limited, Chennai to form Lumina Datamatics Limited.

CRISIL RATINGS

Credit Rating Information Services of India Limited (CRISIL),

a subsidiary of S&P, has reaffirmed "A1 " credit rating for 3rd year in succession on the total bank loan facilities of the Company. This rating signifies that your Company has a strong degree of safety regarding timely payment of financial obligations. This rating reaffirms the financial stability and the low risk profile of the Company.

DIVIDEND

During the year, your Board of Directors had declared and paid an interim dividend of Rs. 0.35 per equity share (7%).

In addition to the interim dividend and based on the Company's performance, your Directors are pleased to recommend for approval of members, a final dividend of Rs. 0.65 per equity share (13%) for Financial Year 2014-15. The total dividend for the Financial Year 2014-15 amounts to Rs. 1 per equity share (20%) of face value of Rs. 5 each.

TRANSFER TO RESERVES

The Company has transferred Rs. 30 million to the General Reserve from the amounts available for appropriation. An amount of Rs. 1,185 million is proposed to be retained in the Profit and Loss Account.

TRANSFER OF UNCLAIMED DIVIDEND TO INVESTOR EDUCTION AND PROTECTION FUND

In terms of Section 125 of the Companies Act, 2013, any unclaimed or unpaid Dividend relating to the financial year 2007-08 is due for transfer on October 28, 2015 to the Investor Education and Protection Fund established by the Central Government.

ACCEPTANCE OF FIXED DEPOSITS

The Company has not accepted any fixed deposits during the year.

SUBSIDIARY COMPANIES

The Company has the following Indian subsidiaries (including the step down subsidiaries) as on March 31,2015:

1. Datamatics Software Services Limited

2. Cybercom Datamatics Information Solutions Limited

3. Lumina Datamatics Limited

4. CIGNEX Datamatics Technologies Limited

5. Datamatics Vista Info Systems Limited

The Company has the following overseas subsidiaries (including the step down subsidiaries) as on March 31,2015:

1. Datamatics Global Services, Inc. (US)

2. Datamatics Global Services GmbH (Germany)

3. Datamatics Global Technologies GmbH (Germany) *

4. Datamatics Global Solutions GmbH (Germany)

5. Datamatics Global Services GmbH d.o.o. in Bosnia (Switzerland)

6. Datamatics Technologies UK Limited (UK)

7. Datamatics Infotech Limited (UK)

8. Datamatics Global Services Pty Limited (Australia)

9. Datamatics Global Technologies Limited (Mauritius)

10. Datamatics Global Holding Corporation (BVI) @

11. Datamatics Global Technologies AG (Switzerland) #

12. Datamatics Global Services FZ-LLC (Dubai)

13. Lumina Datamatics Inc. (US)

14. Lumina Datamatics GmbH (Germany)

15. CIGNEX Datamatics Corporation (BVI)

16. CIGNEX Datamatics, Inc. (US)

17. CIGNEX Datamatics, Inc. (Michigan) $

18. CIGNEX Datamatics GmbH (Germany) $$

19. CIGNEX Datamatics Pte. Limited (Singapore)

* In the process of winding-up.

@ Dissolved and struck off from the Register of Companies, BVI w.e.f. March 23, 2015.

# In the process of liquidation.

$ Incorporated in the Michigan during the year.

$$ Incorporated in Germany during the year.

During the year, the Board of Directors reviewed the performance and financial position of the subsidiaries. Pursuant to the provisions of Section 136 of the Companies Act, 2013 the financial statements of the Company including consolidated financial statements along with the relevant documents and separate audited financial statements in respect of subsidiaries are available on the website of the Company. A statement containing salient features of the financial statements of the Company's subsidiaries in "Form AOC-1" is annexed to the financial statements of the Company.

DATAMATICS' DELIVERY CENTRES IN TIER II CITIES

Tier II cities are the most favored destination of highly cost- sensitive BPO service providers. As a business strategy, major BPO players have been moving to and expanding their operations in Tier II cities. Datamatics was early to realize this business imperativeness and set up its first Tier II delivery centre at Nashik during July 2007 followed by the Puducherry site in October 2011. These initiatives have helped the Company leverage on the vast untapped talent pool at these locations as compared with Tier I cities while simultaneously keeping the attrition within manageable limits.

Puducherry

After its successful foray into the publishing business at Puducherry, the site is now home for one more BPO service line viz. Document Management Solutions. From a value creation perspective, the site is a cost-effective location. Our headcount at the Centre is more than 448 staff members.

Nashik

After successfully executing all our BPO service lines, the site is currently gearing up to tap the IT talent potential of Nashik. Datamatics is among the top 10 Employers at Nashik. The Company has been set up to employ locals in IT & BPO sector. The 55,000 sq. ft. state-of-the-art-facility is the single largest

facility which accommodates 1,232 employees. The guest house is located in close proximity to the office.

The Company owns approximately 12 acres of land situated on the Bombay-Agra Highway (NH-3), about 10 kms away from our existing office. The Company intends to build a campus in the future.

In addition to its primary role as the Delivery Centre of Excellence, both these sites are also functioning as Business Continuity Centre to support all other delivery units of the Company. The success of business operations at the above two Tier II sites enables the Company to stay ahead of competition and provides impetus to the Company's focus on such strategic initiatives.

FUTURE GROWTH STRATEGY

The Company made significant progress in the last fiscal year in key accounts, owing to efficient execution of projects. In the current fiscal year, we plan to continue to maintain focus on select verticals which include BFSI, eRetail, International Organizations, Manufacturing, Publishing and Transport. We will continue to offer IT & BPO offerings and also the new age disruptive technologies which include SMAC and BPM offerings, to deliver next generation solutions to our global customers, using Open Source platforms as well as proprietary technologies.

To capitalize on the new growth opportunity that is being created by the disruptive digital trend, we are focusing on select few areas and have made disciplined investments in these growth areas, which include:

Consulting & Advisory Practice

This year we have institutionalized our Consulting & Advisory practice. The focus of this practice is twofold. First, to help clients establish their Technology, Business Process Management (BPM), and Digital Transformation Strategy, which covers areas like Mobility, Analytics, Cloud, and Enterprise Content Management. The second is to facilitate Datamatics in moving up the value chain and provide higher value added services and function as a strategic partner to the clients.

Digital Transformation

Our strategic focus during the last 18 months to invest in the upcoming technological advancements have positioned us well to capture the new growth opportunities in the Digital Transformation space. Today, Datamatics team is well placed to help its clients to transform into a truly digital, data-driven enterprise and empower them to take advantage of the digital revolution to innovate, differentiate and grow. Datamatics team can help its clients to formulate their Digital Strategy; define their mobile strategy; create solutions for their customers and their employees that provide access to applications from anywhere on any device.

Data-to-Intelligence

Underlying every business insight is data and this data is growing exponentially. This is forcing enterprises to integrate new technologies and find new ways to use data and insights as a competitive advantage. Datamatics team has the expertise and experience to walk its clients through their Data-to- Intelligence journey; from Data Capture & Collation to Data Management, Data Cleansing & Migration to Analytics and extracting Intelligence from Enterprise Data, including analysing of unstructured data. And this would differentiate us from other IT service providers.

QUALITY

It would not be an exaggeration to claim that Quality is a way of life in our Company. Our Company believes in the very philosophy that quality encompasses and permeates every action and thought process. This year our strategic theme has been Delivery as per Commitment and Quality of Solutions. In this wake, several initiatives have been rolled out to transform the way we look at our customer and execute our projects. Winning accolades and awards for the quality of our deliverables has almost become a habit. We have been continuously winning best quality and service awards at events organized by our various prestigious Fortune 500 customers. This year too we won several such awards.

Your Company is the first and the only I.T. Company to have won the "International Asia Pacific Award" for Quality in Services sector. The Award was won against competition from hundreds of companies from 38 countries spread across the world, including the US, Japan, Australia, New Zealand, Russia, Canada, China, Israel, South Korea, Peru and Mexico. Your Company also won the prestigious "IMC IT Award for Quality" in January, 2014. Further significant initiatives of your Company towards quality are:

1) Lean Six Sigma Initiative

Leveraging the proven, effective and recognized Lean Six Sigma continues to be one of the key strategies to bring in exponential improvements in efficiencies, productivity and customer delight. This initiative continues to deliver significant benefits to the Company with improvements in Productivity, Efficiency, Quality and Customer Satisfaction. Over 320 Lean Six Sigma Projects and 1600 Kaizen Projects have been completed since the launch of this initiative in 2007. For the past consecutive four years, our improvement projects have been ranked within the top 5 projects out of around 80 projects from multiple industries and organizations in QIMPRO Conventions.

In the last financial year, an overall benefit that includes tangible and intangible benefits, of Rs. 15 million with an ROI of more than 200% was achieved through these performance improvement methodologies.

The Company has about 18 Six Sigma Green Belt and 25 Six Sigma White Belt certified professionals along with 3 Six Sigma Black Belt and 1 Six Sigma Master Black Belt certified professionals. The Company spent over 4500 person hours of training around continuous improvement in the last financial year.

2) Certifications

Your Company, keeping true to its commitment of designing and implementing its Quality Management Systems as per the global standards and benchmarks has been assessed and certified on standards such as ISO 9001:2008, SEI - CMMI Version 1.3, and ITIL. New centers that we added last year have also been assessed and certified for compliance to these standards. This year we are also in the process of upgrading the SEI-CMMi certification to level 5.

As you are aware, the thrust and demands on information security is increasingly becoming stricter. In line with the demands as well as our own analysis of the information security landscape, we continue to lay great emphasis on the Information Security Management Systems (ISMS). Last year, we not only retained the ISO 27001:2005 certification for our ISMS, but also brought all our centers under the purview of the information security management. We have further strengthened our ISMS by incorporating the guidelines of and getting assessed and certified for international standards such as SSAE 16 and HIPAA.

3) Customer Satisfaction Tracking

Last year, we conducted a comprehensive branding survey among our customers as to assess their priorities and their perceptions about the Company against these priorities. We are happy to share with you that there is no jarring incongruence between the two. However, as an organizational improvement initiative, we have identified, as shared earlier, delivery as per commitment and quality of solutions.

The Customer Satisfaction and Loyalty index measuring process continues to provide invaluable insights into our customer's expectations and our performance vis-a-vis these expectations. This is done once every six months and captures customer's feedback on a wide range of parameters that encompass each aspect of service excellence. We feel proud to share with you that overall our Customer Satisfaction Index has been 4.73 on a scale of 1-6 (1 being the lowest and 6 being the highest) with a significant number of customers rating us a perfect 6/6 on all the parameters. Over 25 key customers have rated perfect 6/6 on the organization improvement theme of Delivery as per commitment and quality of solutions. In addition to this formal mechanism, we also have systems that capture customer feedback received through other formal and informal channels. The results of these also show an improving trend.

4) Metrics and Process Compliance Index

We use a Delivery Index to measure and compare the performance for each Line of Business (LOB). It incorporates the three key indicators of performance of any project viz Quality, Effort and Schedule adherence and a stop light (red-amber-green) dashboard is used to display the performance.

In addition, regular process compliance checkups and speedy follow-ups on the corrective and preventive actions have helped us significantly to keep non-compliances in check and thereby reduce rework and defects at the source. Process Compliance Index (PCI) measures and compares the compliance levels for the different LOBs. The PCI are well above the defined targets.

The defined quality gates ensure that we are adhering to process requirements and deliverables at each of the critical stages of the project. A regular review of this with Senior Management ensures that the processes are on track.

In order to create processes at par with global best practices, we have also tied up with a number of global forums such as ISBSG, CSI and PMI to understand and benchmark ourselves against key metrics.

We have also introduced advanced statistical tools and analysis and simulation techniques to improve our ability to predict the performance of the projects and thereby take proactive steps and measures to improve the performance.

PROCESS ENGINEERING (PE) CELL

The PE cell of our Company is given the mandate of process improvement and development of innovative IP solutions. These solutions are used for its BPO service offerings as well as for providing the same to our clients to use it in their own offices.

The PE Cell had a good year since some of the solutions based in i-Q and i-Bridge (earlier Robokey) got a very favorable response from BFSI sector. The solutions devised for trade finance operations and tab based KYC compliance for Banks were adopted by a leading private sector Bank of India. With their reference many other banks are following suite.

PE Cell also developed an intelligent auto-classification solution for its large e-retail clients and this software called ClassyFire is getting a very good response for all our clients.

These solutions are enabling our clients to make their process paperless and carry out their transactions swiftly, improve accuracy and lower these efforts. Some of our clients won recognition and awards for these solutions including the Information Week Edge Award by two of our clients.

We are creating an R&D team at our Nashik office to accelerate this product development further, derive additional benefits and provide more business for the Company.

INTELLECTUAL PROPERTY RIGHTS

Your Company is leading towards innovation in tools, products and platform, resulting in more intellectual property rights being created. It has always invested in building a core intellectual property that is offered to our clients through our products and innovative solutions. Our policy is to protect our competitive position, among other methods, by filing Indian and international intellectual property applications to protect the identity and recognition of our Company and to protect the technology and improvements that we consider important to the development of our business.

Your Company currently has 17 copyrights registered till date for its proprietary processes and various logos. It has also registered 36 proprietary logos as Trade Mark and Service Mark in India, UK, USA, Australia, China, Norway, Switzerland, EU and its 28 member countries.

During the fiscal year 2015, your Company's subsidiary "Lumina Datamatics Limited" has filed two (2) trademark applications for logo "Lumina Datamatics" and tagline "Lumina Datamatics We Manage Knowledge" in the United States Patent and Trademark Office (USPTO), Indian Registrar of Trademarks Office and European Union (EU) Community Trademark Office. The logo "Lumina Datamatics" and tagline "Lumina Datamatics We Manage Knowledge" has been successfully registered in the EU and its 28 member countries.

LEARNING & DEVELOPMENT (L&D)

L&D at Datamatics successfully conducted the following during FY 2014-15:

The Eagles@Datamatics Program Phase VII was flagged off in April 2014, with 36 Eagles & 23 Game Changers. This team was mentored by 6 senior members and a strong leadership team. The duration of the program was 7 months. The objective of Eagles VII team was to enhance footprints within existing clients with the help of Game Changers. This helped the organization in creating passion and zest among all the team members. The team members explored and enhanced their creativity, resourcefulness, bonding, accountability, influencing skills and belief in themselves. This phase of the Eagles was regarded as the most successful program as it helped the organization generate the additional revenue of Rs. 23 crores and a healthy pipeline of app.Rs. 53 crores.

1) Blended Learning

Training via the WebEx Training tool: The L&D team has expanded their horizons for training execution to be done via WebEx for employees across the organization. With the help of the tool L&D is able to address the global learning audience with ease and also large audiences effectively. This helps the L&D teams to execute training and participants to participate in training from any location. It's a win-win situation for all the parties involved. The L&D team

records the training for future usage and executes the pre- recorded training via WebEx. Recorded WebEx training is made available to employees as and when they feel the need to revisit any training in case they have missed this during the live session. This has imbibed a continuous learning attitude amongst the employees.

2) Learning Foreign Languages

L&D team supported to create a new language skill set on both Italian & German language - Level 1. The employees were trained and all of them successfully completed the Level 1 certification.

3) Project Management Preparatory Course (PMP) - 5th Edition

Being a Registered Education Provider for PMP, a 5-day PMP training was scheduled in Mumbai, MIDC premises for those engaged in an activity that contributes to the management of a project, portfolio, or program, as part of the project management profession.

With all the above, the L&D team has clocked 240,337 man-hours in the year 2014-2015 as compared with 210,515 man-hours in the year 2013-2014 with an average feedback of 4 out of 5.

HUMAN RESOURCES MANAGEMENT (HRM) AND EMPLOYEE RELATIONS

The IT business is chiefly talent-based and a people driven business. Employees therefore, play an indispensable and significant role in the success of the Company, and are the key assets of the Company. Hence, we precisely term them as 'Human Capital'. Our Company's endeavour is to create a work environment that imbibes a positive attitude for excellent performance. The key areas of the Company's HRM strategy include a comprehensive approach to managing people, the workplace culture and environment.

Managing a strong employer and employee relationship leads to the ultimate success of an organisation. A strong relationship at any work centre will lead to more qualitative & efficient productivity, generate cohesion among the employees and create a smooth functional environment.

The HR department of the Company regularly conducts the following programs:

"Climate Survey" and "Open House" to ensure that employees views and opinions are taken on board, as well as the Company's larger strategy is discussed and shared with them. Both these initiatives have HR Head, CEO and leadership teams of each LOB to bring a shared understanding of the larger organizational direction.

New Entrant Observation (NEO): It is a session conducted by HR for new entries after they complete 30 days to get their feedback.

Client site visit: To establish connect, to address various issues, and for continuous to & fro performance related information exchange with our employees based at different client locations.

Saarathi: With a view to ensure smooth integration of new entries into the processes, systems and work culture "Buddy System" which is known as "SAARATHI" has been introduced. Saarathis is the Point of contact, friend and guide for the new joinee during initial days within the organization. A Saarathi card is given to Saarathi during Euphoria.

Euphoria-Monthly Departmental Meet: A monthly meeting is conducted by the HR, offering the team an opportunity to interact with each other, come together and celebrate.

Our Company has rich diversity in its employees with a common aim to excel. A culture of cooperation and solidarity is infused by celebrating National holidays and festivities such as Independence & Republic Day, Diwali, Dandiya & Christmas. Initiatives such as JOSH, where employees offer their innovative ideas help to unleash their creativity, maintain a balance between work & life and create a deep sense of bonding among employees.

REWARDS AND RECOGNITION

Rewards & Recognition programs aren't just about making employees feel good, though that's a crucial part of the process. These programs can help to boost up employee morale & productivity and induces improvement in performance level. Therefore, continuous scaling exercises are carried out to identify the outstanding performer and rightly reward and recognize such individuals and teams.

Annual Awards: Datamatics believes in the need to recognize top performers and thank them for their hard work and commitment shown throughout the year. This is done in a high profile large scale ceremony held companywide wherein all the employees are invited. There are various categories of awards such as merit, excellence to leadership awards catering to each area of the business.

Instant Performance Recognition (EoM & Spot Award):

The objective is to encourage high performers by conferring the instant awards. The aim is to instantly recognize significant achievement, excellence in performance and special contributions by individuals and teams. There are 3 kinds of spot awards: a). Spot Individual; b) Spot Team; c) Employee of the month.

Rendezvous: Coffee with the Line of Business Heads (LoBH): Instant Award winner are invited to have coffee with the

LoBH. Personal notes are inscribed on the NOTEivate cards by the LoBH are presented to all the awardees.

Praise for Performance: This program aims to recognize the hard working employees who have received client appreciation. It aims to recognize the efforts of employees in front of a larger audience to induce a sense of pride and contentment.

iAppreciate: These cards are awarded by the Reporting Manager to appreciate their team members at right time for good work and efforts.

Employee Relations & Engagement has become a top business priority in this rapid-cycle economy. HR knows that having a high-performing workforce is essential for growth and survival. They recognize that a highly engaged workforce can increase innovation, productivity, and bottom-line performance. Additionally, HR grossly performs to workout in selecting the outstanding performers for the work centres spread out widely. Thus, the pillars of success of the Company are delineated clearly to obtain future directions towards progress & architect definite shape to remain as competitive player in the global market.

AWARDS & ACHIEVEMENTS

During the year, in recognition of its performance and initiatives, the Company received several awards, some of which are:

- Datamatics was awarded the 'Fastest Growing Indian Company Excellence Award - 2014' at the 6th International Achievers Summit & Awards ceremony on 'Global Corporate Achievements & Social Responsibilities' held in Bangkok;

- Datamatics was voted India's most Respected Software Company in Corporate Governance at the 5th Annual India Leadership Conclave & Indian Affairs Business Leadership Award;

- Datamatics entered the Leader Category for the 2014 IAOP Global Outsourcing 100;

- Datamatics was awarded for 'Excellence in Quality' at IMC - IT Awards 2014;

- Datamatics won the 'Global Quality Challenge Award' by United Healthcare at their Semi-Annual UHC Operations Global Quality Challenge for the seventh time in a row;

- Won the 'Information Week Edge Award' for providing cutting edge DMS solution for MMRDA;

- Won the 'Information Week Edge Award' for process improvement project for a leading private Insurance company;

- Datamatics won the 'Technology Partner for Global Transit Revenue Systems award' at the 4th Annual Metro Rail India Summit;

- Datamatics won the coveted 'Global Achievers Award' for Business Excellence at the 75th International Achievers Conference;

- Datamatics made it to the Technology Fast 500TM ranking by Deloitte - a list that recognizes the fastest growing companies in Asia-Pacific;

- Dr. Lalit Kanodia, Chairman & Whole time Director received the prestigious 'Asia Pacific Entrepreneurship Award' under the Special Achievement category;

- Mr. Rahul Kanodia, Vice Chairman & CEO, was felicitated with 'CEO of the Year' award at the Asian Leadership Awards held in Dubai;

- Mr. Rahul Kanodia, Vice Chairman & CEO was presented with the 'IT Leadership Award' at the National Awards For IT Excellence.

SHARE CAPITAL

As on March 31,2015, the Paid-up Share Capital of the Company is ' 294,746,685/- divided into 58,949,337 equity shares of ' 5/- each fully paid up. During the year, there has been no change in the Share Capital of the Company.

BOARD OF DIRECTORS AND KEY MANAGERIAL PERSONNEL

Retirement by rotation

In accordance with the provisions of the Companies Act, 2013 ("Act") and the Articles of Association of the Company, Mrs. Asha L Kanodia and Mr. Rahul L. Kanodia, retires by rotation at the ensuing Annual General Meeting and being eligible offer themselves for re-appointment.

Resignation of Independent Director

Mr. Dileep C. Choksi resigned from the position of directorship of the Company with effect from April 2, 2015 due to his other commitments and pre-occupation. The Board placed its sincere appreciation for his valuable contribution during his tenure as a director of the Company.

Independent Director

Pursuant to the provisions of Section 161(1) of the Act and the Articles of Association of the Company, Mr. Vinay Aggarwal was appointed as an Additional Director designated as Non- Executive Independent Director with effect from May 27, 2015 and he shall hold office up to the date of ensuing Annual General Meeting. The Company has received requisite notice in writing from a member proposing appointment of Mr. Vinay Aggarwal as a Director of the Company. As per the provisions of the Act, Independent Directors are required to be appointed for a term of five consecutive years, but shall be eligible for re-appointment on passing of a special resolution by the Company and shall not be liable to retire by rotation.

The Company has received declarations from all Independent Directors of the Company confirming that they meet the criteria of independence as prescribed both under the Act and Clause 49 of the Listing Agreement entered with the Stock Exchanges.

Re-appointment of Dr. Lalit S. Kanodia, Chairman & Whole Time Director

Dr. Lalit S. Kanodia was appointed as a Chairman & Whole Time Director of the Company for a period of five years with effect from May 15, 2010. On the recommendation of the Nomination & Remuneration Committee, the Board of Directors at its meeting held on May 27, 2015, has re-appointed Dr. Lalit S. Kanodia as a Chairman & Whole Time Director of the Company for a further period of five years with effect from May 15, 2015, subject to the approval of the members.

POLICY ON DIRECTOR'S APPOINTMENT AND REMUNERATION AND OTHER DETAILS

In accordance with Section 178 and other applicable provisions if any, of the Companies Act, 2013 read with the Rules issued thereunder and Clause 49 of the Listing Agreement, as amended from time to time, the Board of Directors at their meeting held on August 12, 2014 formulated the Remuneration Policy of your Company on the basis of recommendations of the Nomination and Remuneration Committee. The policy on Director's appointment and remuneration including criteria for determining qualifications, positive attributes, independence of Director, and also remuneration for Key Managerial Personnel and other employees, forms part of Corporate Governance Report of this Annual Report.

PARTICULARS OF EMPLOYEES

Disclosures with respect to the remuneration of Directors and employees as required under Section 197 of Companies Act, 2013 read with Rule 5(1) Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are annexed as "Annexure - A" to this Report.

A statement containing names of every employee employed throughout the financial year and in receipt of remuneration of Rs. 60 Lakh or more, or employed part of the year and in receipt of Rs. 5 Lakh or more a month, under Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is annexed as "Annexure - A" to this Report.

Details of employees remuneration as required under provisions of Section 197 of the Companies Act, 2013 and Rule 5 of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are available at the Registered Office of the Company during working hours before 21 days of the Annual General Meeting and shall be made available to any shareholder on request. The full annual report including the

information required under Rule 5 is being sent electronically to all those members who have registered their email addresses and such details are also available on your Company's website: www.datamatics.com/investors/AnnualReports.

MEETINGS OF THE BOARD

Five meetings of the Board of Directors were held during the year. For further details of the meetings of the Board, please refer to the Corporate Governance Report, which forms part of this Annual Report.

BOARD AND COMMITTEE EVALUATION

Clause 49 of the Listing Agreement mandates that the Board shall monitor and review the Board evaluation framework. The Companies Act, 2013 ("Act") states that a formal annual evaluation needs to be made by the Board of its own performance and that of its committees and individual directors. Schedule IV of the Act states that the performance evaluation of independent directors shall be done by the entire Board of Directors, excluding the director being evaluated. The Board of Directors has carried out an annual evaluation of its own performance, Board Committees and individual directors pursuant to the Act and the corporate governance requirements as prescribed by SEBI under Clause 49 of the Listing Agreement.

The performance of the Board was evaluated by the Board after seeking inputs from all the directors on the basis of the criteria such as the Board composition and structure, effectiveness of board processes, information and functioning, etc. The performance of the committees was evaluated by the Board after seeking inputs from the committee members on the basis of the criteria such as the composition of committees, effectiveness of committee meetings, etc.

The Board and the Nomination and Remuneration Committee reviewed the performance of the individual directors on the basis of the criteria such as the contribution of the individual director to the Board and committee meetings like meaningful and constructive contribution and inputs in meetings, etc. In addition, the Chairman was also evaluated on the key aspects of his role.

In a separate meeting of independent Directors, performance of non-independent directors, performance of the board as a whole and performance of the Chairman was evaluated, taking into account the views of executive directors and non-executive directors.

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to Section 134(5) of the Companies Act, 2013, the Board of Directors, to the best of their knowledge confirms that:

(i) in the preparation of the annual accounts for the year ended March 31,2015, the applicable accounting standards read with requirements set out under Schedule III to the Act, have been followed and there are no material departures from the same;

(ii) they have selected such accounting policies and applied them consistently and made judgements 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 the year ended on that date;

(iii) they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(iv) they have prepared the annual accounts on a 'going concern' basis;

(v) they have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and are operating effectively; and

(vi) they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.

AUDITORS

Statutory Auditors

The Statutory Auditors, M/s. Kanu Doshi Associates, Chartered Accountants, Mumbai, hold office until the conclusion of the forthcoming Annual General Meeting and have confirmed their eligibility and willingness to accept the office of the Statutory Auditors, if reappointed. The Company has received a certificate from the above Auditors to the effect that if they are reappointed, it would be in accordance with the provisions of Section 141 of the Companies Act, 2013.

Secretarial Auditor

Pursuant to the provisions of Section 204 of the Companies Act, 2013 ("Act")and the Companies (Appointment & Remuneration of Managerial Personnel) Rules, 2014, the Company with the approval of the Board, appointed Mr. Tushar Shridharani, Practicing Company Secretary, to undertake the secretarial audit for the financial year ended March 31, 2014. Mr. Tushar Shridharani has submitted the Report confirming compliance with the applicable provisions of the Act and other rules and regulations issued by SEBI/other regulatory authorities for corporate law. The Secretarial Audit Report for the financial year ended March 31, 2015 is annexed as "Annexure - B" to this Report.

INFORMATION ON AUDITORS' OBSERVATIONS

1) Statutory Auditors:

Observations of Auditors mentioned in the Independent Auditors Report under the heading 'Emphasis of Matter' regarding non-provisioning for diminution in the value of investments in the subsidiaries has been adequately explained in Notes to Accounts. These investments are for long term and of strategic nature. It is clarified that though the net worth of these subsidiaries has declined, the management is confident of turning around these subsidiaries in the near future. Hence, it is decided not to make any provision for diminution in the value of investments made in the subsidiaries. The other observations are self-explanatory and do not require further comments in this report.

2) Secretarial Auditor:

There were no qualifications, reservations or adverse remarks made by the Secretarial Auditors in their report.

CORPORATE GOVERNANCE

A Report on Corporate Governance together with a certificate from the Statutory Auditors of the Company forms part of the Annual Report.

MANAGEMENT DISCUSSION AND ANALYSIS

The Management Discussion and Analysis forms an integral part of this Report and gives detail of the overview of the industry, overview of the business, outlook, internal controls systems and their adequacy, risk and concerns and discussion on financial performance during the financial year.

COMPOSITION OF THE COMMITTEES OF THE BOARD

Audit Committee

The Audit Committee consists of the following members: Mr. R. K. Saraswat, Chairman; Mr. Sudhir Deshpande, Member and Mr. Shahzaad Dalal, Member.

Nomination & Remuneration Committee

The Nomination and Remuneration Committee consists of the following members: Mr. Sudhir Deshpande, Chairman; Mr. R. K. Saraswat, Member and Dr. Lalit S. Kanodia, Member

Stakeholders Relationship Committee

The Stakeholders Relationship Committee consists of the following members: Mr. R. K. Saraswat, Chairman and Mr. Sudhir Deshpande, Member.

Corporate Social Responsibility Committee

The Corporate Social Responsibility Committee consists of the following members: Mr. Rahul L. Kanodia, Chairman; Mr. R. K. Saraswat, Member; Mr. Vidur V. Bhogilal, Member and Mr. Sameer L. Kanodia, Member.

EMPLOYEE STOCK OPTION PLANS

Details of the shares issued under Employee Stock Option Plan (ESOP), as also the disclosures in compliance with Section 62 of Companies Act, 2013 and Rule 12 of Companies (Share Capital and Debentures) Rules, 2014 and SEBI (Share Based Employee Benefits) Regulations, 2014 and SEBI (Employees Stock Option Scheme and Employees Stock Purchase Scheme) Guidelines, 1999 are annexed as "Annexure - C" to this Report.

PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS

Loans, guarantees and investments covered under Section 186 of the Companies Act, 2013 form part of the notes to the standalone financial statements provided in this Annual Report.

CONTRACTS AND ARRANGEMENTS WITH RELATED PARTIES

In line with the requirements of the Companies Act, 2013 and the Listing Agreement, your Company has formulated a Policy on Related Party Transactions which is also available on Company's website at http://www.datamatics.com/investors/ corporate-governance. The Policy intends to ensure that proper reporting, approval and disclosure processes are in place for all transactions between the Company and related parties.

All contracts / arrangements / transactions entered by the Company during the financial year with related parties were in the ordinary course of business and on an arm's length basis. No Material Related Party Transactions were entered during the year by your Company. Accordingly, the disclosure of Related Party Transactions as required under Section 134(3) (h) of the Companies Act, 2013 in Form AOC-2 is not applicable. Your Directors draw attention of the members to Notes to accounts of the financial statement which sets out related party disclosures.

INTERNAL FINANCIAL CONTROL SYSTEMS RELATED TO FINANCIAL STATEMENTS

The Company's internal control systems are commensurate with the nature of its business and the size and complexity of operations. The Audit Committee reviews adequacy and effectiveness of the Company's internal control environment and monitors the implementation of audit recommendations, including those relating to strengthening of the Company's risk management policies and systems. Your Company has adopted accounting policies which are in line with the Accounting Standards prescribed in the Companies (Accounting Standards) Rules, 2006 that continue to apply under Section 133 and other applicable provisions, if any, of the Companies Act, 2013 read with Rule 7 of the Companies (Accounts) Rules, 2014 and relevant provisions of the Companies Act, 1956, to the extent applicable. These are in accordance with Generally Accepted

Accounting Principles in India. Changes in policies, if any, are approved by the Audit Committee in consultation with the Auditors.

The policies to ensure uniform accounting treatment are prescribed to the subsidiaries of your Company. The accounts of the subsidiary companies are audited and certified by their respective Auditors for consolidation.

Your Company operates in SAP, an ERP system, and has many of its accounting records stored in an electronic form and backed up periodically. The ERP system is configured to ensure that all transactions are integrated seamlessly with the underlying books of account. Your Company has automated processes to ensure accurate and timely updation of data in the underlying ERP system.

The Management periodically reviews the financial performance of your Company and takes necessary action, wherever necessary.

WHISTLEBLOWER/VIGIL MECHANISM

The Company is committed to adhere to the highest standards of loyalty, honesty, integrity, transparency and conduct of business operations in an ethical manner. In compliance with Companies Act, 2013 ("Act"), rules framed thereunder and the Listing Agreement entered with Stock Exchanges and principles of good corporate governance, the Audit Committee of the Company is committed to adopting procedures to receive and address any concern or complaint regarding accounting or auditing matters, internal accounting controls, reporting of fraudulent financial information or any other company matters involving fraud, employee misconduct, illegality or health and safety and environmental issues which cannot be resolved through normal management channels. Accordingly, the Board of Directors have formulated a Whistleblower Policy/Vigil Mechanism in compliance with the provisions of Section 177(10) of the Act and Clause 49 of the Listing Agreement and is also available on the Company's website http://www.datamatics. com/investors/corporate-governance. This Policy provides for a framework and process whereby concerns can be raised by its employees against any kind of discrimination, harassment, victimization or any other unfair practice being adopted against them. The Company has also provided direct access to the Chairman of the Audit Committee on reporting issues concerning the interests of employees and the Company.

RISK MANAGEMENT

Your Company has a well defined, robust and effective Information Security and Risk mitigation system. The information security management system based on international standard ISO 27001 addresses all concerns and apprehensions towards handling information that is sensitive and confidential effectively. The risk mitigation system ensures that all potential risks

associated with business, processes and infrastructure are within control. Business Continuity Plan (BCP) and Disaster Recovery (DR) plans are integral plans of the project plans and they are periodically audited as per predefined schedule to ensure the readiness and effectiveness with minimal impact on the business as usual. BCP also ensures that the organization is well prepared for risks related to hardware, software, infrastructure and people. The applicability and effectiveness BCP and DR are also regularly reviewed during Management Information Security Forum (MISF) that takes place once in every quarter.

Risk management is controlled by the Risk Management Policy. In line with the requirements of the Companies Act, 2013 and the Listing Agreement, the Board of Directors has approved the Risk Management Policy to monitor the risks and their mitigating actions. There are some of the risks which may pose challenges are set out in the Management Discussion and Analysis which forms part of this Report.

CORPORATE SOCIAL RESPONSIBILITY

The brief outline of the Corporate Social Responsibility (CSR) Policy of the Company and the initiatives undertaken by the Company during the financial year 2014-15 are annexed as "Annexure - D" to this Report in the format prescribed in the Companies (Corporate Social Responsibility Policy), Rules, 2014.

SIGNIFICANT/MATERIAL ORDERS PASSED BY THE REGULATORS

There are no significant/material orders passed by the Regulators or Courts or Tribunals impacting the going concern status of your Company and its operations in future.

EXTRACT OF ANNUAL RETURN

Extract of Annual Return of the Company is annexed as "Annexure - E" to this Report.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO

The information required in connection with conservation of energy, technology absorption and foreign exchange earnings and outgo, under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014, the Directors furnish herein below the required information:

A. CONSERVATION OF ENERGY:

i) Our Company being in IT & ITeS industry, our operations are not energy intensive. Adequate measures have been taken to conserve energy.

ii) The Company has not taken any steps for utilising alternate sources of energy.

iii) There were no additional capital investment on energy consumption equipments and proposals if any, being implemented for reduction of consumption of energy as the nature of your Company's operations entails a very low level of energy consumption.

B. TECHNOLOGY ABSORPTION:

i) Every effort is made by the Company to update the technological skills of its technical staff in order to ensure that they possess adequate skills to enable them to service the Company's clients.

ii) Your Company has not imported any technology during the year under review.

iii) Your Company is predominantly a service provider and therefore has not set up a formal R&D unit. However, it continues to develop software tools and products in its existing delivery setup.

For and on behalf of the Board

Dr. Lalit S. Kanodia Chairman (DIN: 00008050)

Place : Mumbai Date : May 27, 2015


Mar 31, 2014

Dear Mmbers,

On behalf of the Board of Directors, I am happy to present the 26th Directors'' Report of your Company with the Balance Sheet and Profit & Loss Account for the year ended March 31, 2014.

FINANCIAL RESULTS

Your Company''s operating performance for the year ended March 31, 2014 as compared to the previous financial year ended March 31,2013 is summarized below:

Particulars (Rs.in Million) (Rs.in Million) Consolidated Standalone

2013-2014 2012-2013 2013-2014 2012-2013

Income 7,411.34 5,589.65 2,223.75 1,998.15

Profit Before Interest, Depreciation and Tax 976.26 567.62 565.92 448.19

Interest 39.84 34.64 16.30 25.79

Profit Before Depreciation and Tax 936.42 532.98 549.62 422.40

Depreciation 160.64 120.28 65.30 68.86

Profit Before Tax 775.78 412.70 484.32 353.54

Provision for Taxation 193.72 98.14 70.42 59.80

Profit After Tax 582.06 314.56 413.90 293.74

Balance Brought Forward from Previous Year 625.63 480.74 948.33 745.09

Profit Available for Appropriation 1207.69 795.30 1,362.23 1,038.83

Dividend 115.68 109.35 73.69 58.95

Tax on Dividend 19.66 18.32 5.24 1.55

Transfer to General Reserve 47.40 42.00 41.40 30.00

Balance Carried Forward 890.30 625.63 1,241.90 948.33

BUSINESS PERFORMANCE

Your Company is a global IT and ITeS organization focused on delivering proactive and smart, next-generation business solutions helping enterprises across the world address their business challenges. Datamatics has become the 2nd fastest growing IT & BPO Company listed on the BSE Limited and National Stock Exchange of India Limited. Fiscal year 2013- 14 was a remarkable year for your Company.

The consolidated revenues of the Company recorded a total growth of almost 33% as against NASSCOM predicted Y-o-Y growth rate of 14% for the FY 2013-14 and the EBIDTA increased by nearly 72% during the year. This performance was achieved amidst stiff macro headwinds globally and a slowing domestic growth.

The total revenue on a standalone basis increased to Rs.2,223.75 million as against Rs.1,998.15 million in the previous year - a growth of 11.29%. The profit after tax for the current year was Rs.413.90 million as against Rs.293.74 million in the previous year - a growth of 40.91%.

On a Consolidated basis, your Company achieved a total revenue of Rs.7,411.34 million as against Rs.5,589.65 million in the previous year - a growth of 32.59%. The profit after tax for the current year was Rs.582.06 million as against Rs.314.56 million in the previous year - a growth of 85.04%.

CRISIL RATINGS

The Company was awarded "A1 " highest rating by Credit Rating Information Services of India Limited (CRISIL).

This rating signifies that your Company has a strong degree of safety regarding timely payment of financial obligalitions. This rating reaffirms the financial stability and the low risk profile of the Company.

DIVIDEND

In line with the excellent performance during the year, your Directors are pleased to recommend for approval of members, a final dividend of Rs.1.25 per share (25%) for Financial Year 2013-14.

TRANSFER TO RESERVES

The Company has transferred Rs.47.4 million to the General Reserve from the amounts available for appropriation. An amount of Rs.890.30 million is proposed to be retained in the Profit and Loss Account.

TRANSFER OF BUSINESS/UNDERTAKING

During the year under review, the Company has transferred its Digital Publishing & eRetail Solutions (DPeRS) business/ undertaking with all its assets and liabilities, as a going concern on a slump sale basis to erstwhile Datamatics eRetail & Publishing Limited, a wholly owned subsidiary of the Company.

ACQUSITION OF SHARES IN LUMINA DATAMATICS LIMITED

During the year, your Company, through its wholly owned subsidiary - erstwhile Datamatics eRetail & Publishing Limited acquired a 73.12% stake in Lumina Datamatics Limited (Formerly known as Lexicon Publishing Services Private Limited) by way of a Scheme of Arrangement/Amalgamation sanctioned by Hon''ble High Court of Madras.

INVESTMENT IN SUBSIDIARIES

As on March 31, 2014, your Company has made investments worth Rs.563.76 million in its overseas subsidiaries and Rs.577.60 million in its Indian subsidiary.

SUBSIDIARY COMPANIES

During the year under review, following are the significant developments with respect to the subsidiary companies:

- Your Company has expanded its operations by forming a wholly owned subsidiary in Dubai in the name of Datamatics Global Services FZ-LLC;

- Invested USD 9.3 million in preference shares of Datamatics Global Technologies Limited, the wholly owned subsidiary of the Company and also redeemed USD 5 million preference shares of Datamatics Global Technologies Limited, the wholly owned subsidiary of the Company;

The Company has the following Indian subsidiaries (including the step down subsidiaries) as on March 31, 2014:

1. Datamatics Software Services Limited

2. Cybercom Datamatics Information Solutions Limited

3. CIGNEX Datamatics Technologies Limited

4. Datamatics Vista Info Systems Limited

5. Lumina Datamatics Limited (Formerly known as Lexicon Publishing Services Private Limited)

6. Datamatics eRetail & Publishing Limited @

The Company has the following overseas subsidiaries (including the step down subsidiaries) as on March 31, 2014:

1. Datamatics Global Services, Inc. (US)

2. Datamatics Global Services GmbH (Germany)

3. Datamatics Global Technologies GmbH (Germany)

4. Datamatics Global Solutions GmbH (Germany) $

5. Datamatics eRetail & Publishing GmbH (Germany) $*

6. Datamatics Global Services GmbH d.o.o. in Bosnia (Switzerland)

7. Datamatics Technologies UK Limited (UK)

8. Datamatics Infotech Limited (UK)

9. Datamatics Global Services Pty Limited (Australia)

10. Datamatics Global Technologies Limited (Mauritius)

11. Datamatics Global Holding Corporation (BVI)

12. Datamatics Global Technologies AG (Switzerland)

13. Datamatics Global Services FZ-LLC (Dubai) $$

14. Lumina Datamatics, Inc. (US) (Formerly known as Premedia Global, Inc.)

15. CIGNEX Datamatics Corporation (BVI)

16. CIGNEX Datamatics, Inc. (US)

17. CIGNEX Datamatics Pte. Limited (Singapore)

@ Incorporated in India during the year and amalgamated with Lumina Datamatics Limited with effect from March 31,2014.

$ Incorporated in Germany during the year.

$$ Incorporated in Dubai during the year.

* Renamed as Lumina Datamatics GmbH w.e.f. August 19, 2014.

Pursuant to Section 212(8) of the Companies Act, 1956, the Ministry of Corporate Affairs, Government of India, vide its Circular No. 2/2011 dated February 8, 2011, has granted a general exmeption from attaching the Balance Sheet, statement of Profit & Loss Account and other documetns of subsidiary companies with the balance sheet of the Company. A statement containing the brief financial details of the Company''s subsidiaries for the financial year ended March 31, 2014 is included in the annual report. The annual accounts of these subsidiaries and the related information will be made available for inspection to any member of the Company at the registered office of the Company.

DATAMATICS'' DELIVERY CENTRES IN TIER II CITIES

Tier II cities are the most favored destination of highly cost- sensitive BPO service providers. As a business strategy, major BPO players have been moving to and expanding their operations in Tier II cities. Datamatics was early to realize this business imperativeness and set up its first Tier II delivery centre at Nashik during July 2007 followed by the Puducherry site in October 2011. These initiatives have helped the Company leverage on the vast untapped talent pool at these locations at a relatively lower wage as compared with Tier I cities while simultaneously keeping the attrition within manageable limits.

Nashik

After successfully executing all our BPO service lines, the site is currently gearing up to tap the IT talent potential of Nashik. The 55,000 sq. ft. state-of-the-art-facility is the single largest facility under one roof that the Company has. Our headcount at the Centre is now in excess of 1000 staff members. The guest house is located in close proximity to the office.

The Company owns approximately 12 acres of land situated on the Bombay-Agra Highway (NH-3), about 10 kms away from our existing office. The Company intends to build a campus in the future.

Puducherry

After its successful foray into the publishing business at Puducherry, the site is now home for one more BPO service line viz. Document Management Solutions. From a value creation perspective, the site is a cost-effective location.

In addition to its primary role as the Delivery Centre of Excellence, both these sites are also functioning as Business Continuity Centre''s to support all other delivery units of the Company. The success of business operations at the above two Tier II sites enables the company to stay ahead of competition and provides impetus to the Company''s focus on such strategic initiatives.

INTELLECTUAL PROPERTY RIGHTS

"Intellectual property is not just about product but process as well".

As a policy to ensure sustainable means of wealth creation, your Company has 17 copyrights registered till date for its proprietary processes and various logos. It has also registered its proprietary logos as Trade Mark and Service Mark in India, the UK, the USA and the European Union (EU) and its 27 member countries.

During the year under review, your Company''s subsidiary "CIGNEX DATAMATICS Inc." has successfully registered the tagline "MAKING OPEN SOURCE WORK" in the USA. The logo of "CIGNEX DATAMATICS Making Open Source Work" has been registered in the USA, the EU and its 27 member countries.

Your Company has also registered the ''iQ logo'' with the tag words ''Intelligent Accurate Quick'' in India, the EU and its 27 member countries. The Company also succeeded in registering the tag line "Smart Document Processing" in India.

The Company''s brand name "DATAMATICS" is registered as Trade Mark as well as Service Mark in India, UK, USA, Australia, China, Norway, Switzerland, EU and its 27 member countries and its logo is also registered in India, the UK, USA , EU and its 27 member countries.

LEARNING & DEVELOPMENT

A large number of programs were successfully conducted by the Learning & Development (L&D) team during the year 2013- 2014:

The Eagles @ Datamatics Program Phase VI was flagged off in August 2013, with 25 Eagles, 5 mentors and a strong Leadership team of 6 members. The Duration of the program was 7 months. This phase of the Eagles was regarded as the most successful program as it helped the Company to build 21 alliance partners. The teams also developed systems which will benefit the organization in the long run.

Game Changer - The Lead Generation Program:

Lead generation and associated market research is the most important and critical aspect of any business. It is important for the teams associated with these activities to demonstrate very high levels of commitment and passion. With this objective, a unique program called the "Game Changer" was launched in July 2013 with 31 fresh MBA Graduates of different specialties and 7 mentors. The first season of this program concluded with great success on March 31, 2014. It helped the organization in creating passion and high levels of energy across the lead generation and market research teams with focus on their passion, creativity, resourcefulness, accountability, influencing skills and belief in themselves. As a result, the teams successfully contributed a large number of qualified leads/ opportunities for our Company.

Other Initiatives by the L&D team:

1) Blended Learning:

Training via the WebEx Training tool: The L&D team has expanded their horizons for training execution to be done via WebEx for employees across the organization. With the help of the tool L&D is able to address the global learning audience with ease and also large audiences effectively. This helps the L&D teams to execute training and participants to participate in training from any location. It''s a win-win situation for all the parties involved. The L&D team records the training for future usage and executes the pre-recorded training via WebEx. Recorded WebEx training is made available to employees as and when they feel the need to revisit any training in case they have missed this during the live session. This has imbibed a continuous learning attitude amongst the employees.

2) Learning Foreign Languages:

The L&D Team has flagged off Level 1 Italian & German language training for its employees. The employees are being trained to complete the level 1 Certification as soon as this training comes to an end. For now this has been implemented in Puducherry & Nashik premises.

3) Project Management Preparatory Course (PMP) - 5th Edition:

Being a Registered Education Provider (REP) for PMP, a 5-day training was scheduled in Mumbai, MIDC premises for those engaged in an activity that contributes to the management of a project, portfolio, or program, as part of the project management profession.

With all the above, the L&D team has clocked 210,515 man-hours in the year 2013-2014 as compared with 179,140 man-hours in the year 2012-2013 with an average feedback of 4 out of 5.

SIGNIFICANT AWARDS & ACHIEVEMENTS

During the year, in recognition of its performance and initiatives, the Company received several awards, some of which are:

- Datamatics along with the Market Research Society of India (MRSI) and the European Society for Opinion & Marketing Research (ESOMAR) instituted the Dr. Lalit S. Kanodia Laureate Award for Technology Excellence in Market Research;

- Datamatics became the only software company in India to win the Computer Society of India''s Award for IT Excellence in Corporate Business Collaboration Solutions twice;

- Won the prestigious IMC-IT award for Quality;

- Won the Information Week EDGE Award along with our client for the implementation of technological solutions that helped automate client''s Mutual Fund process;

- Received the Most Valuable IT Software Company in India award at the 4th Annual India Leadership Conclave & Indian Affairs Business Leadership Awards;

- Received the award for Best Corporate Social Responsibility Practices; an award endorsed by World CSR Day, Asian Confederation of Business and World Federation of CSR Professionals;

- Received the award for Best HR Strategy in Line with Business at the 8th Employer Branding Awards, World HRD Congress;

- Won the Best Communications Campaign Award at the Corporate Excellence Awards 2013;

- Included in the Leader Category for the 2014 Global Outsourcing 100® providers'' list released by the International Association of Outsourcing Professionals. Ranked amongst the Best 20 Companies in India for the third time in a row and included in the prestigious Global Services 100 list of the Best 100 IT outsourcing companies for the fourth year in a row;

- Won the prestigious Sitecore Website of the Year 2013 award in the ''Not-for-Profit Website'' category;

- CIGNEX Datamatics Technologies Limited received the Innovator in Technology of the Year award at the National Trial Lawyers summit in Miami for their solution titled Social Media Sentiment Analytics;

- Datamatics team was felicitated by a global client with their Global Quality Challenge Award for the 5th time in a row;

- Dr. Chandra Mauli Dwivedi - Datamatics'' Global Head, HR & CSR - was listed among the 50 Most Talented Global HR Leaders in Asia for 2014 at the 22nd World HRD Congress;

- Ms. Divya Kumat, Corporate Head - Legal & Company Secretary, won the General counsel of the Year - Female award at the 7th edition of the Legal Counsel Congress Awards;

- Ms. Varad Kamini, Head-Marketing Communications at Datamatics, won the prestigious Women Super Achiever Award for Excellence in the Marketing Communications category at the World Women Leadership Congress & Awards;

- Ms. Ankita Singh, Head - Employee Relations & OD at Datamatics, won the prestigious Leading HR Women Award at the 5th Annual Women Leaders in India Summit.

FUTURE GROWTH STRATEGY

In the last fiscal, the Company made good progress in their strategic initiatives to drive high business growth. In the current fiscal, we shall continue our growth trajectory with renewed focus on growth through a mix of organic and non-organic initiatives. The Company''s priority this year is to continue to emphasize on our core business areas. We shall at the same time capitalize on opportunities that are being created in the new growth areas.

The four key elements of our strategy for continued business growth include:

- Digital Transformation: The digital economy is entering a new age that presents unforeseen challenges. With extensive experience in understanding the digital economy, Datamatics is strategically placed to help its clients deliver excellent service through services, and business process through digital value added services.

- Enterprise Content Management (ECM) & Portal

Solution: Driven by advances in consumer technology, user expectations have also evolved. Datamatics team has the expertise to create and develop ECM solutions that are portal-based, intuitive and personalized and easy to use across multiple applications. We have had good success in this area and expect to maintain this growth trend.

- Open Source: Open Source is fast emerging as a platform of choice, and we expect this to continue to accelerate and attract growth. We are in a very strong position to capitalize on this opportunity, as CIGNEX Datamatics, one of our subsidiary company is a leader in Open Source space.

- Platform-based BPO: Customers are moving away from traditional outsourcing models to vendors that can provide Technology BPO services. Catching on this trend early enough, Datamatics has been successfully providing platform based BPO services to its clients. We plan to leverage our technological prowess, combined with a focus on process excellence and high quality BPO services to increase our client base.

- Inorganic Growth/ Eco-system partnerships: Our strategy is to build strong partnerships in the areas of domain, technology and geography with the objective of driving differentiated solutions whilst working with an active partner ecosystem. It could be in the form of investments through M&A or an alliance partner.

QUALITY

Your Company continues to focus on quality. This year, your Company won the Award for Excellence in Quality at the IMC Information Technology Awards. We have been continuously winning best quality and service awards at events organized by our various prestigious Fortune 500 customers. This year too we won several such awards. Your Company is the first and the only I.T Company to have won the "International Asia Pacific Award" for Quality in Services sector. The Award was won against competition from hundreds of companies from 38 countries spread across the world, including the US, Japan, Australia, New Zealand, Russia, Canada, China, Israel, South Korea, Peru and Mexico. Further significant initiatives of your Company towards quality are:

1) Six Sigma Initiative

We have adopted the proven Lean Six Sigma methodology in conjunction with Kaizen to make our processes efficient, robust and defect free and also to improve productivity and cost effectiveness. This initiative continues to deliver significant benefits to the Organization with improvements in Productivity, Efficiency, Quality and Customer Satisfaction. Overall 300 Six Sigma Projects and 1502 Kaizen Projects have been completed since the launch of this initiative in 2007. For the past consecutive three years, our improvement projects have been ranked within the top 5 projects out of around 80 projects in QIMPRO Conventions.

In the last financial year, an overall benefit that includes tangible and intangible benefits, of Rs.22 million with an ROI of more than 200% was achieved through these performance improvement methodologies.

The Company has about 14 Six Sigma Green Belt and 20 Six Sigma White Belt certified professionals along with 3 Six Sigma Black Belt and 1 Six Sigma Master Black Belt certified professionals. The Company spent over 4500 person hours of training around Continuous Improvement in the last financial year.

2) Certifications

Your Company, keeping true to its commitment of designing and implementing its Quality Management Systems as per the global standards and benchmarks has been assessed and certified on standards such as ISO 9001:2008, SEI - CMMI Version 1.3, and ITIL. New centre''s that we added last year have also been assessed and certified for compliance to these standards

In addition, we retained the ISO 27001:2005 certification for our Information Security Management Systems. Our US unit has been certified compliant to PCI standard requirements. We have further strengthened our Information Security Management Systems (ISMS) by incorporating the guidelines and being certified for international standards such as SSAE 16 and HIPAA.

3) Customer Satisfaction Tracking

The Customer Satisfaction and Loyalty index measuring process continues to provide invaluable insights into our Customer''s expectations and our performance vis- a-vis these expectations. This is done once every six months and captures Customer''s feedback on a wide range of parameters that encompass each aspect of service excellence. We feel proud to share with you that overall our Customer Satisfaction Index has been 4.90 on a scale of 1-6 (1 being the lowest and 6 being the highest) with a significant number of Customers rating us a perfect 6/6 on all parameters. In addition to this formal mechanism, we also have systems that capture customer feedback received through other formal and informal channels.

4) Metrics and Process Compliance Index

We use a Delivery Index to measure and compare the performance for each Line of Business (LOB). It incorporates the three key indicators of performance of any project viz Quality, Effort and Schedule adherence and a stop light (red-amber-green) dashboard is used to display the performance.

I n addition, regular Process Compliance checkups and speedy follow-ups on the corrective and preventive actions have helped us significantly to keep non- compliances in check and thereby reduce rework and defects at the source. Process Compliance Index (PCI) measures and compares the compliance levels for the different LOBs.

The defined Quality Gates ensure that we are adhering to process requirements and deliverables at each of the critical stages of the Project. A regular review of this with Senior Management ensures that the processes are on track.

I n order to create processes at par with global best practices, we have also tied up with a number of global forums such as ISBSG, CSI and PMI to understand and benchmark ourselves against key metrics. We re- visit and revise our metrics regularly to ensure that our performance levels are comparable to the best-in-class.

PROCESS ENGINEERING (PE) CELL

The PE Cell of the Company has the task of increasing productivity and quality of our BPO/ ITeS processes. To accomplish this goal, this Cell has developed several proprietary and copyrighted Software products that include and Robokey. They are also focusing on creating IP which can result in a recurring revenue stream. and Robokey have won recognition and awards. Datamatics has become the only Software Company in India to have won this award twice from the Computer Society of India in 2013 and 2011. Datamatics has also won the Information Week Edge Award twice in 2013 and 2010. These awards have been won for software developed by the PE Cell.

These products have resulted in a significant increase in quality, productivity and profitability in several projects outsourced to Datamatics by its clients. These products also give a significant edge to the Company while bidding for large BPO outsourcing projects.

The PE Cell was also instrumental in developing CATALISTS which is deployed by GS1, an organization that develops and maintains standards for Retail, Healthcare, Transport & Logistics, Automotive, Finance and Defense sectors. Datamatics has been included as a US solution program partner of GS1, which includes companies such as Oracle.

SHIFTING OF REGISTERED OFFICE

The Company''s registered office has been shifted from Unit No. 117-120, SDF 4, SEEPZ, Andheri (East), Mumbai - 400 096 to "Knowledge Centre, Plot No. 58, Street No. 17, MIDC, Andheri (East), Mumbai - 40 0093", with effect from January 29, 2014.

SECRETARIAL AUDIT

Dr. K.R. Chandratre, Practicing Company Secretary, conducted Secretarial Audit for the financial year ended March 31, 2014. Dr. K.R. Chandratre has submitted the Report confirming compliance with the applicable provisions of Companies Act, 1956 and other rules and regulations issued by SEBI/other regulatory authorities for corporate law. The Secretarial Audit Report for the financial year ended March 31,2014 is provided in the Annual Report.

SHARE CAPITAL

As on March 31, 2014, the Paid-up Share Capital of the Company is Rs.294,746,685 divided into 58,949,337 equity shares of Rs.5 each fully paid up. During the year, there has been no change in the Paid-up share capital of the Company.

DIRECTORS

In accordance with the provisions of the Companies Act, 1956 and the Articles of Association of the Company, Mr. Vidur V. Bhogilal and Mr. Sameer L. Kanodia, retire by rotation at the ensuing Annual General Meeting and being eligible offer themselves for re-appointment.

The Company has, pursuant to the provisions of Clause 49 of the Listing Agreements entered into with Stock Exchanges, appointed Mr. R. K. Saraswat, Mr. Sudhir Deshpande, Mr. Shahzaad Dalal and Mr. Dileep Choksi as Independent Directors of the Company. In accordance with the provisions of Section 149(4) and proviso to Section 152(5) of the Companies Act, 2013, these Directors are being appointed as Independent Directors to hold office as per their tenure of appointment mentioned in the Notice of the forthcoming AGM of the Company.

Pursuant to the provisions of Section 161(1) of the Companies Act, 2013 and the Articles of Association of the Company, Mr. Dilip D. Dandekar and Mrs. Asha L. Kanodia were appointed as Additional Directors designated an Independent Director and Non-Executive Non-Independent Director respectively w.e.f. August 12, 2014 and they shall hold office up to the date of the ensuing Annual General Meeting. The Company has received requisite notice in writing from a member proposing Mr. Dilip D. Dandekar and Mrs. Asha L. Kanodia for appointment as an Independent Director and Non-Executive Non-Independent Director respectively.

The Company has received declarations from all the Independent Directors of the Company confirming that they meet with the criteria of independence as prescribed both under sub-section (6) of Section 149 of the Companies Act, 2013 and under Clause 49 of the Listing Agreement entered with the Stock Exchanges.

During the year under review, Dr. Habil Khorakiwala resigned from the position of directorship of the Company. The Board placed its sincere appreciation for his valuable contribution during his tenure as a director of the Company. .

AUDITORS

The Statutory Auditors, M/s. Kanu Doshi Associates, Chartered Accountants, Mumbai, hold office until the conclusion of the forthcoming Annual General Meeting and have confirmed their eligibility and willingness to accept the office of the Auditors, if reappointed.

INFORMATION ON AUDITORS'' OBSERVATIONS

Observations of Auditors mentioned in the Independent Auditors Report under the heading ''Emphasis of Matter'' regarding non-provisioning for diminution in the value of investments in the subsidiaries has been adequately explained in Note No. 42 of the Notes to Accounts. These investments are for long term and of strategic nature. It is clarified that though the net worth of these subsidiaries has declined, the management is confident of turning around these subsidiaries in the near future. Hence, it is decided not to make any provision in diminution in the value of investments made in the subsidiaries. The other observations are self-explanatory and do not require further comments in this report.

CORPORATE GOVERNANCE

A Report on Corporate Governance together with a certificate from the Auditors of the Company forms part of the Annual Report.

DISCLOSURE UNDER SECTION 217(1)(e) OF THE COMPANIES ACT, 1956

I. CONSERVATION OF ENERGY:

The information required in connection with conservation of energy, under Section 217(1)(e) of the Companies Act, 1956 read with Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, the Directors furnish herein below the required additional information:

(a) Conservation of Energy - Our Company being in IT & ITeS industry, our operations are not energy intensive. Adequate measures have been taken to conserve energy.

(b) There were no additional investments and proposals if any, being implemented for reduction of consumption of energy as the nature of your Company''s operations entails a very low level of energy consumption.

(c) I mpact of the measures at (a) and (b) above for reduction of energy consumption and consequent impact on the cost of production of goods - N.A.

(d) Total energy consumption and energy consumption per unit of production - N.A.

FORMA: FORM FOR DISCLOSURE OF PARTICULARS WITH RESPECT TO CONSERVATION OF ENERGY

A. Power and fuel consumption: NIL

B. Consumption per unit of production: NIL

II. TECHNOLOGY ABSORPTION:

Every effort is made by the Company to update the technological skills of its technical staff in order to ensure that they possess adequate skills to enable them to service the Company''s clients.

FORM B: FORM FOR DISCLOSURE OF PARTICULARS WITH RESPECT TO TECHNOLOGY ABSORPTION ETC.

i. Research & Development (R&D): Your Company is predominantly a service provider and therefore has not set up a formal R&D unit. However, it continues to develop software tools and products in its existing delivery setup.

ii. Technology Absorption, Adaptation and Innovation: Your Company has not imported any technology during the year under review other than purchase of software.

III. FOREIGN EXCHANGE EARNINGS AND OUTGO:

I . Earnings in Foreign Exchange during the year: Rs.1,966.40 million

II. Foreign Exchange Outgo during the year: Rs.74.29 million.

EMPLOYEE STOCK OPTION PLANS (ESOP)

The details of ESOP required to be provided as per Clause 12 of the SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 are as per "Annexure A" to this report.

HUMAN RESOURCES MANAGEMENT (HRM) AND EMPLOYEE RELATIONS

The IT business is primarily talent-led and a people driven business. Employees therefore, form a crucial and critical part of the success of the Company, and are the most important resources and assets of the Company.

Our Company''s endeavor is to provide a work environment that encourages a positive attitude and superior performance. The key elements of the Company''s HRM strategy include a comprehensive approach to managing people, the workplace culture and environment.

The HR department of your Company regularly conducts

"Climate Survey" and "Open House" to ensure that employees views and opinions are taken on board, as well as the Company''s larger strategy is discussed and shared with them. Both these initiatives have HR Head, CEO and leadership teams of each LOB to bring a shared understanding of the larger organizational direction.

Your Company has rich diversity in its employees with a common goal of excellence. A culture of cooperation and camaraderie is enthused by celebrating National holidays and festivals such as Independence Day and Diwali. Initiatives such as JOSH, where employees can bring their children to office for a day, back to school and monsoon mania also help create a deep sense of bonding among employees and their families.

REWARD AND RECOGNITION

Reward and Recognition spurs people to excel further, helps to sharpen the winning edge through people and thereby stimulate a culture of high performance. Therefore, our constant endeavor is to seek, groom, nurture, facilitate and suitably reward & recognize individuals and teams who make significant contributions to business. The objective of this is to set the guidelines for motivating high performing individuals, helps them to keep striving and reward teams by conferring appropriate awards such as:

Annual Awards: Datamatics believes in the need to recognize top performers and thank them for their hard work and commitment shown throughout the year. This is done in a high profile large scale ceremony held companywide wherein all the employees are invited. There are various categories of awards such as merit, excellence to leadership awards catering to each area of the business.

Spot Awards: Spot Awards are introduced to ensure that the tempo of high performance does not go unnoticed. There are 3 kinds of spot awards: a) Individual Spot Award; b) Team Awards; c) Employee of the month.

Praise for Performance: This program is introduced to recognize the hard work of employees who have earned client appreciation. It aims to recognize the efforts of employees in front of a larger audience which gives them a sense of pride and contentment.

PARTICULARS OF EMPLOYEES

Information pursuant to Section 217(2A) of the Act read with the Companies (Particulars of Employees) Rules, 1975, as amended by the Companies (Particulars of Employees) Amendment Rules, 1999 forms part of this Report. However, as per the provisions of Section 219(1)(b)(iv) of the Companies Act, 1956, the Report and Accounts are being sent to all members of the Company excluding the aforesaid information. Any member desirous of obtaining this information may write to the Company Secretary at the Registered Office of the Company.

ACCEPTANCE OF FIXED DEPOSITS

The Company has not accepted any fixed deposits during the year.

DIRECTORS'' RESPONSIBILITY STATEMENT

As required under Section 217(2AA) of the Companies Act, 1956, it is hereby stated that:

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

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

3. the 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 your Company and for preventing and detecting fraud and other irregularities; and

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

ACKNOWLEDGEMENTS

The Directors thank the Company''s customers, suppliers, vendors, bankers, financial institutions, Central and State Government of India and Governments of various countries where we have our operations for their continued support during the year. We place on record our appreciation of the contribution made by our employees at all levels. Our consistent growth was made possible by their hard work, solidarity, cooperation and support.

For and on behalf of the Board

Dr. Lalit S. Kanodia Chairman

Place : Mumbai Date : August 12, 2014


Mar 31, 2012

Dear Members,

On behalf of the Board of Directors, I am happy to present the 24th Director's Report of your Company with the Balance Sheet and Profit & Loss Account for the year ended March 31,2012.

Financial Results

Your Company's operating performance for the year ended March 31, 2012 as compared to the previous financial year ended March 31,2011 is summarized below:

(Rs. in Million) (Rs. in Million) Consolidated Standalone

2011-2012 2010-2011 2011-2012 2010-2011

Income 4519.04 2919.94 1729.67 1545.19

Profit before interest, Depreciation and tax 506.74 316.95 343.97 274.62

Interest 16.14 2.84 6.56 2.59

Profit before Depreciation and tax 490.60 314.11 337.41 272.03

Depreciation 115.33 89.70 60.94 53.22

Profit before tax 375.27 224.41 276.47 218.81

Provision for Taxation 92.73 16.42 57.43 6.20

Profit after tax 282.54 207.99 219.04 212.61

Balance brought forward from previous year 299.58 217.02 627.44 516.21

Profit available for appropriation 582.12 425.01 846.48 728.82

Dividend 44.21 61.01 44.21 44.21

Tax on Dividend 7.17 9.96 7.17 7.17

Transfer to General Reserve 50.00 54.46 50.00 50.00

Balance carried forward 480.74 299.58 745.10 627.44

Dividend

Your Company has a consistent track-record of dividend payments. In the last five years, your Company has disbursed dividend payout to the tune of Rs. 300.87 million to its shareholders. In line with excellent performance for the year, the Directors are pleased to recommend for approval of the members, a final dividend ofRs. 0.75 per share for the year 2011 - 2012.

Transfer to Reserves

The Company has transferred Rs. 50 million to the General Reserve out of the amounts available for appropriations. An amount of Rs. 745.10 million is proposed to be retained in the Profit and Loss Account.

Performance Overview

Your Company is a global IT and ITeS organization focused on delivering proactive and smart, next-generation business solutions that help enterprises across the world address their business challenges. Fiscal year 2011-2012 was a momentous year for your Company. The revenues of the Company recorded a total growth of approximately 60% and the EBIDTA increased by approximately 146% during the year.This performance is outstanding as it was achieved amidst strong macro headwinds globally and slowing domestic growth.

Total revenue for the year on standalone basis amounted to Rs. 1729.67 million as against Rs. 1545.19 million for the corresponding period last year. The consolidated revenues in 2011-2012 increased to Rs. 4519.04 million from Rs. 2919.94 million in 2010-2011. The standalone profit after tax was at Rs. 219.04 million as against the previous year's profit after tax ofRs. 212.61 million. The consolidated profit after tax was Rs. 282.54 million as against Rs. 207.99 million for the previous year.

Datamatics' Delivery Centres in Tier II Cities

Tier II cities are the lifeline of Indian IT / ITeS Industry. Statistically, 58% of IT / ITeS professionals originate from Tier II cities. However, due to lack of opportunities, they often work in Tier I cities. In addition, Tier II cities yield a better quality of life, lower cost of living, lower people costs and reduced cost of infrastructure. They even assist in business continuity planning.

Nashik

Since its commencement in 2007, our operation in Nashik has been growing from strength to strength. Our headcount at the Centre is in excess of 1000 staff members, servicing each of our BPO service lines. Recently, the Company has also started executing software projects at the Centre, which will provide the necessary additional impetus for the growth at the Centre.The 55,000 sq.ft. state-of-the- art-facility, which has 4 training rooms and an auditorium as well, is the single largest facility under one roof that the Company has. It has been extensively used for training and leadership programs also. During the year under review, we also completed furnishing of an impressive 16 bedroom guest house which can accommodate 28 people at any given time.

In addition, the Company has acquired approximately 12 acres of land in Nashik. The property is situated on the Bombay-Agra Highway (NH-3), located about 10 kms away from the existing office of Datamatics. The Company intends to build a campus in future. When the campus is built, it will be self-contained and will cater to all operational, training, recreational, accommodation and future expansion needs of the Company.

Puducherry

The Company commenced its operations in Puducherry in October 2011. Subsequently, in April 2012, the 350-seater state-of-the-art facility was inaugurated by Shri M. Chandhrakasu, the Hon. Industry and Commerce Minister of Puducherry. The Company plans to use this facility for its IT/ ITeS businesses.The Centre has approximately 275 staff members.

The above 2 Centres will strengthen the Company's resilience and will help the Company's thrust to open additional Delivery Centres in Tier II cities in the country. In India, the Puducherry Centre is the 6th Centre of Excellence for Datamatics, and the 3rd Centre in Southern India.

Global Outlook and Investments

Global companies are increasingly turning to offshore technology service providers in order to meet their needs for high quality, cost competitive technology solutions. As a result, spending in several IT categories is expected to expand and thus, the need to infuse investments in the infrastructure of the Company will increase.

During the year under review,your Company has made investments worth Rs. 503.10 million in its overseas subsidiaries and Rs. 129.20 million in its Indian subsidiary as on March 31,2012. Your Company has subscribed to 8,550,000 fully paid up Non-Cumulative Redeemable 8% Preference shares and 950,000 fully paid up ordinary shares of US$ 1 each of Datamatics Global Technologies Limited, its subsidiary in Mauritius.The Company also subscribed to 1,000,000 ordinary fully paid up shares of € 1 each of Datamatics Global Services GmbH, a company incorporated in Germany. The Company also subscribed to 112,920,000 8% Optionally Convertible Non-Cumulative Redeemable Preference shares of Rs. 10 each in Datamatics Software Services Limited, its Indian subsidiary.

Strategic Acquisitions and Alliances

1. Cybercom Datamatics Information Solutions

Your Company has a Joint Venture with Cybercom Group AB called Cybercom Datamatics Information Solutions Limited. Cybercom Group AB is headquartered in Sweden and has its wings spread across in China, Denmark, Finland, Poland, Romania and Singapore. The combined synergy of this venture is helping the Company achieve profitable growth and sustainable presence in the global market, particularly in Scandinavian countries.

2. CIGNEX Datamatics

We believe Open Source will be the next wave just as ERP was about a decade ago. Open Source eliminates the cost of software licenses and thereby reduces the investment in software development.This is invaluable in a global economy, going through a downturn. To meet our plans, the Company through its wholly owned subsidiary, acquired a majority controlling stake in the CIGNEX group of companies (CIGNEX), a global leader in commercial Open Source & SAP Connect solutions for over 10 years. CIGNEX Datamatics provides a bridge between the Open Source software developer and the end user. CIGNEX is headquartered in California and has offices in Colorado and Texas.

This acquisition follows a year after your Company entered into a Joint Venture partnership with CIGNEX. Post acquisition, CIGNEX has become a step-down subsidiary of your Company. The acquisition and collaboration with CIGNEX draws on historic and treasured legacy that both companies have earned, and has positioned us to achieve profitable growth. We expect CIGNEX to be a valuable component in our effort to accelerate our growth through strategic investments. It will increase the Company's global footprint. With a more robust portfolio, we are confident to be looked upon as a Company of choice and a preferred partner by our clients and customers.

3. Datamatics Vista Info Systems

Datamatics Software Services Limited,the domestic subsidiary of Datamatics Global Services Limited, acquired a controlling stake in Vista Info Systems Private Limited (Vista), an unlisted company specializing in the Embedded Systems space. The Bangalore-headquartered Vista has a significant presence in the embedded space and caters to delivery centres of large companies like Honeywell, Samsung, Philips, Visteon, etc. It has competencies in industries like automotive, aerospace, telecom and semiconductors. This acquisition is in line with the Company's growth plans for the Indian market and is in line with the Company's strategy to increase its presence in India, which is one of the key markets for us. We are confident that with combined synergies, we would be able to provide a cost-effective and valuable solution to our customers.

Other Significant Events

- Datamatics Global Services Limited has set up operations in Bosnia. Being a near-shore country, Bosnia is strategically located to provide European language support to the clients. In the first phase the Bosnian company has employed people proficient in the German language with plans to expand the team to include experts in Dutch, French, Spanish, Italian, Polish and Portuguese.

- Datamatics has entered into a partnership with MAIA Intelligence, a leading provider of Business Intelligence (Bl) software products. Datamatics will provide consulting, implementation, training and support for MAIA's award- winning 1 KEY suite of Bl solutions to customers globally.

- CIGNEX Datamatics, a step-down subsidiary of Datamatics Global Services Limited has partnered with lOgen, the company behind MongoDB. CIGNEX Datamatics is the global leader in implementing enterprise-level Open Source solutions and MongoDB is an Open Source, document- oriented database that has been designed to provide scalability as well as development agility.

Corporate Growth Strategy

Last year, the Company aligned its growth strategy to its core, which is, 'data & content management'. The Company's performance in the 2011 fiscal year and the strength with which we have entered the 2012 fiscal year demonstrates the success of this growth strategy through focused execution.

The Company's priority this year is to continue to emphasize on our core business and at the same time to capitalize on new growth opportunities that are being created in the area of big data,analytics, mobility, cloud computing, etc. Our strategic choices are:

Analytics & Big Data: With huge influx of data from multiple source points, big data & analytics are gaining traction in terms of demand, in both established and developing markets. We have partnered with IBM for its analytics suite of products & lOgen (Hadoop) for big data. We are already seeing good traction in this niche space and have a healthy pipeline of key opportunities.

Open Source initiative is another area that is continuously accelerating and attracting growth. Open Source is fast emerging as a platform of choice. We are in a very strong position to capitalize on this opportunity, as CIGNEX Datamatics, one of our subsidiary company is a leader in Open Source space.

Enterprise Content & Document Management: We continue to focus on Enterprise Content Management & Enterprise Document Management solutions. Our varied practices offering these solutions, viz. Open Source, DMS and Workflow (IMP) practices, all are having a good year and have built a strong pipeline. We expect to maintain this growth trend.

Digital Publishing & Retail: Our focus on Portals, eRetail and Digital Publishing are showing robust growth. We have acquired several strategic global accounts and are growing rapidly in this domain.

Integrated Solutions Model: Our integrated solutions model, effectively combining the IT & KPO services provides us a competitive edge and would be another critical element to our continued growth. Besides being a differentiator, this model has been appreciated by many of our customers.

Inorganic Growth: In addition to sustaining strong organic growth, the Company continues to look at strategic acquisitions that are akin to our business. We believe that this would enable us to expand our geographic presence and our capabilities more rapidly. Last year we made two acquisitions that have created new capabilities, led to geographical expansion and synergistic growth.

Account Management Program: We have introduced a program for account mining and cross selling of our services across our 300 clients, under the guidance of the Account Review Committee. During the year, we launched 'Client Partner Program'and 'Account Mining Program'. These have been well accepted by clients. We expect good results in growth and account penetration through these programs.

Intellectual Property Rights

" if protection of Intellectual Property begins to disappear, creative companies will disappear or never get started."

— Steve Jobs

The Company has a long tradition of nurturing creativity and innovation.To promote a strong culture of recognizing innovations, the Company has consistently focused on having Intellectual Property Rights.The Company's IP strategy seeks to build an effective portfolio of Intellectual Property Assets for future monetization, collaboration and risk mitigation.The Datamatics Logo is registered in India, the UK, the USA as well as in the European Union (EU) and its 27 member countries. The Datamatics word-mark is registered in India as a Trade Mark as well as a Service Mark. It is also registered in the UK and the EU and its 27 member countries. Your Company has succeeded in registering Datamatics word mark in Australia, China, Norway and Switzerland under World Intellectual Property Organization.

The Company recently registered "iQ" trade mark logo in Classes 9, 35 & 42 at the EU Trade Mark Registry. The iQ design and logo was also successfully registered in United States of America. The Company won a 2 year long battle against an US entity for protection of its brand name Datamatics. Our brand name is now adequately protected in the US geography also. D with G logo of Datamatics is already registered in the US, the UK and the EU and its 27 member countries and was also finally registered in India. During the year, your Company registered 2 Copyrights. This takes the total IPR wealth of the Company in terms of Copyrights as 17.

Subsidiaries

The Company has the following Indian subsidiaries (including the step down subsidiaries) as on March 31,2012:

1. Datamatics Software Services Limited

2. Datamatics Vista Info Systems Private Limited

3. CIGNEX Datamatics Technologies Private Limited

The Company has the following overseas subsidiaries (including the step down subsidiaries) as on March 31, 2012:

1. Datamatics Global Services, Inc. (US)

2. Datamatics Infotech Limited (UK)

3. Datamatics Technologies UK Limited (UK)

4. Datamatics Global Services GmbH (Germany)

5. Datamatics Global Technologies GmbH (Germany)

6. Datamatics Global Services Pty Limited (Australia)

7. Datamatics Global Technologies Limited (Mauritius)

8. Datamatics Global Technologies AG (Switzerland)

9. Datamatics Global Services GmbH d.o.o. in Bosnia, Switzerland

10. Datamatics Global Holding Corp (BVI)

11. CIGNEX Datamatics, Inc. (US)

12. CIGNEX Datamatics Pte. Limited (Singapore)

13. CIGNEX Global Holding Corp (BVI)

14. CIGNEX Technologies Ltd. (UK)

The Ministry of Corporate Affairs, Government of India, has granted a general exemption under Section 212(8) of the Companies Act, 1956 from the requirement to attach detailed financial statements of each subsidiary. In compliance with the exemption granted, we have presented summary financial information for each subsidiary. The detailed financial statments and the audit reports of each of the subsidiaries are available for inspection at the registered office of the Company during office hours between 11 am to 1 pm and upon written request from any shareholder. The Company will arrange to send the financial statements of subsidiary companies to such shareholder.

IPO Fund Utilization

Your Company completed its Initial Public Offer (IPO) and the Equity Shares were listed on the National Stock Exchange of India Limited (NSE) and Bombay Stock Exchange Limited (BSE) on April 12,2004.

The entire IPO proceeds were estimated to be utilized by the Company for the development and growth of business. The details are as follows:

(Rs. in Million) (Rs. in Million) Particulars As on March 31,2012 As on March 31,2011

Funds raised 935.00 935.00

Funds utilized

Expenses relating to IPO 60.87 60.87

Investment in Subsidiaries 146.00 146.00

Repayment of Secured Loans 64.74 64.74

Investment in Fixed Assets 47.00 47.00

Corporate purposes including strategic initiatives and acquisitions 616.40 471.78

Total 935.00 790.38

Balance unutilized (invested in Mutual Funds) - 144.62

Certifications

Your Company has received the following certifications during the year 2011-2012:

1. Compliance Certifications:

Certifications to various global standards and requirements are an outcome of the commitment of the management to meet or exceed the organization's objectives, requirements of customer as well as complying with regulations. They provide a structured way of continual improvement, which is very important in the given market conditions. Additionally, they provide common language between customers and suppliers, irrespective of market / geography segment. Above all, they motivate employees as they can "feel" the quality that they have built into products and services that they deliver.

Your Company has the following Certifications:

a) ISO 9001:2008

Your Company has been certified for ISO 9001:2008 certification for its quality management system. The certification was accomplished without any instance of non-compliance across your Company.

The ISO 9001:2008 certification specifies that a company needs to demonstrate an ability to consistently provide products and services that meet customer and applicable statutory and regulatory requirements. Such company should also aim to enhance customer satisfaction through the effective application of the system, including processes for continual improvement of the system and the assurance of conformity to customer and applicable statutory and regulatory requirements.

Your Company received this certification after a rigorous and extensive external audit carried out by DNV (Det Norske Veritas), an international independent company doing ISO certifications worldwide, via 300 offices in about 100 countries. DNV audits project and support functions based on their respective Internal Service Level Agreement (ISLA).To prepare for the audits, the corporate quality team conducted Internal Quality Audits (IQA) to ensure the quality compliance associated with every project and support functions.

b) SEI-CMMi (Dev) Ver 1.3 Level 3

Your Company has been successfully assessed for SEI-CMMi (Dev) Version 1.3 Level 3 for software development. The Mumbai and Ahmedabad Delivery Centres have been assessed for CMMi requirements by a third party assessment agency, KPMG. CMMi in software engineering and organizational development is a process improvement approach that provides organizations with the essential elements for effective process improvement. CMMi helps integrate traditionally separate organizational functions, set process improvement goals and priorities, provide guidance for quality processes,and provide a point of reference for appraising current processes. This assessment further validates our focus on robust processes and continual improvement.

c) ISO 27001

Your Company was re-certified for ISO 27001 Information Security Management System. The certificate is awarded by the STQC IT Certification Services, which functions under the Ministry of Communications and Information Technology, Government of India.

ISMS-certified offices of your Company are located in Mumbai (MIDC and SEEPZ-SEZ, Andheri - East), Chennai, Nashik, Ahmedabad, Bangalore, Gurgaon, Livonia and Burlington (USA).

The certification affirms the management's commitment towards an established Information Security Management System that fulfills the requirements of the standard, involving risk management and prevention of data security threats, risks, impacts and vulnerabilities. The system is constantly monitored and reviewed.

d) SSAE -16

Your Company's Finance & Accounting services have been certified for Statement on Standards for Attestation Engagements (SSAE) No. 16 by the American Institute of Certified Public Accountants (AICPA). This standard has replaced erstwhile SAS-70.The certification represents the in-depth audits carried out by an outsourcing service provider of the control objectives for the client organization. This SSAE 16 Audit is conducted and report certified by the independent 3rd party auditing firm, Deloitte and Touche.This is applicable to Mumbai, Nashik, Chennai and US locations.

e) HIPAA

Your Company has also been certified compliant to the requirements of Health Insurance Portability and Accountability Act (HIPAA) Title II. Compliance to these requirements validates the robust processes and controls around data security and privacy. Mumbai and Nashik locations are covered within the scope of this assessment.

This assessment was carried out by a 3rd party British Standards Institution (BSI).

2. Learning & Development:

Learning & Development (L&D) conducted the following programs during the year 2011-2012:

Eagle @ Datamatics: The Eagles @ Datamatics Program was flagged off in November 2011, with 22 Eagles, 5 mentors and a strong leadership team. Duration of the program was for 4 months and the entire team was divided into 5 groups. The objective of the program was to increase sales by doing cross- selling and penetrating more into the key accounts.This season of Eagles was regarded as a successful initiative as it helped the Company to venture into newer avenues. The topics identified during these products were Captive Centers, Smart Analytical Skills and ePM.

TNA (Training Need Analysis) based trainings for Datamatics: L&D put together the Training Need Analysis of the employees of Datamatics group companies on the basis of an appraisal conducted in FY 2011-2012.Training calendar was designed and focused on completion of TNA such that the required gap can be filled and at the same time employee satisfaction increases with respect to asked v/s attended trainings.

Nashik Trainee Model: L&D prepared new Nashik Student Trainee Model as a roadmap of training to be undergone by Student Regular (STR) in Nashik location.These trainings consist of induction, quality, soft skills and functional-job related training which trainees must undergo and upon successful completion, they can be taken as full-time employees at DGSL This is a one-year course which ends with an examination. Successful students are awarded the certificate for the course.

Project Management Preparatory Course (PMP): Being a REP (Registered Education Provider) for PMP, the 5-day training was scheduled in Mumbai, MIDC premises for those who are engaged in an activity that contributes to the management of a project, portfolio or program, as part of the project management profession.

Behavioral training programs: L&D team has bought dynamic change in the behavioral training programs that is getting launched every month such as Low Self Esteem: Mother of all Evils, MOJO - A Spirit to live, Apology Program, Vision Creation, Anger Management, Six Thinking Hats, Wisdom Tooth, Dress for Success (Men and Women separately), Work Life Balance, Diet Session, Yoga at Work, From Illness to Wellness, Be Confident- Be Successful, Session on Skin Care (only for women employees). Every program was accepted and appreciated by all the employee participants.

Team Building: During the year, L&D Team designed and delivered various programs to meet the training needs of professionals across various echelons within the organization. Such continuous training has created professionals who are trained on the latest technologies, tools and techniques, and who work as highly-cohesive, coordinated teams to meet the organization's vision and mission. Keeping this in mind apart from technical and behavioral programs L&D at your Company has designed Synergy - The Team Building Workshop which is an outbound program which follows the methodology of experiential learning.

SPIN Selling Skills & Account Strategy for Major Sales (ASMS):

ASMS was successfully flagged off for our Sales & Marketing Team in Sun City Hotel. This program teaches a combination of strategic concepts, planning processes and skills. Its over- riding objective is to ensure that trainees improve their effectiveness by integrating research theory into their real life selling strategy.

Learning & Development has clocked 166,952 man-hours in the year 2011-2012 as compared to 124,389 man-hours in the year 2010-2011.

Significant Awards & Achievements

- Datamatics won four prestigious awards in the 22nd World HRD Congress 2012, held at Taj Lands End, Mumbai. Datamatics also was conferred with two highly acclaimed awards - "Edward De Bono Award for Innovation in HR" and "Organisation with Innovative HR Practices" - at the Global HR Excellence Awards 2011-2012.

- Datamatics and Blue Star Limited, one of India's largest central air conditioning and commercial refrigeration company, were awarded with the 'CSI 2011 Award for Excellence in IT' during 46th Annual National Convention of Computer Society of India 2011. The Company was adjudged '1 st Runner up' in product/ manufacturing sector for Channel Partner Bill Processing System designed and developed as per requirements given by Blue Star Limited.

- Gujarat Electronics & Software Industries Association (GESIA) awarded CIGNEX Datamatics as the 'Best Software Company- Gujarat in the enterprise category' at its 5th Annual Award presentation ceremony on February 15,2012.

- CIGNEX Datamatics launched its fourth book on Alfresco - 'Alfresco Share'. Alfresco Share is a comprehensive guide for business users and content managers who can leverage dynamic site generation capabilities of Alfresco Share for better participation amongst enterprise personnel. This book focuses on business needs rather than technical syntax and builds a case study for an easier and practical understanding of Alfresco Share.

- CIGNEX Datamatics is ranked among the 100 best companies to work for in "India's Best Companies to Work for Survey 2011". The survey was conducted by The Great Place to Work Institute, India and India's leading financial daily, The Economic Times. The survey ranked companies on a combination of qualitative and quantitative data comprising of trust index and culture audit.

- Datamatics has been ranked amongst the top 20 leaders in financial services by IAOP in the insurance, banking and markets segment, a sub list of the Global Outsourcing 100 for service providers.

Dr. Chandra Mauli Dwivedi, President and Global Head HR,DGSL was honored with the prestigious "Pride of HR Profession Award" at the IPE Leadership Awards 2012. Ms. Shilpa Tawte, Head - Resourcing was also honored with the Leadership Award at the 8th Recruiting And Staffing Best In Class (RASBIQ Awards.

- Ms. Divya Kumat,Vice President - Legal and Company Secretary won the "Women Leaders in India Awards 2011". She was adjudged as the Leading Woman Company Secretary of the year 2011 in the 3rd edition of Women Leaders in India Awards.

Datamatics Women Connect

Women employees have shouldered responsibilities with elan in every sphere in this world. Women have successfully marked their presence in the corporate world and at the same time continue to manage personal and professional goals. Datamatics has always supported and valued the potential of women employees. With an aim to provide platform to our women employees to unleash their potential we have initiated a program "Datamatics Women Connect" exclusively for our women employees.

Asa part of this program, we have introduced an online networking platform, a portal with a women-centric focus which would allow the women employees to connect with each other in an hour of need. A platform to share their learnings, success stories, inspiring moments, discussions on thought provoking subjects or career related topics. Way to go Women Power.

Client Partnership Program

Technology transformation and ongoing economic turmoil both continue to pose challenges and bring changes in the corporate world. We need to reinforce our association with existing clients. We have made progress with our current key clients, but we need to do much more.To accelerate growth and take it to the next level of engagement, we have formed a core client partnership team.

This team is responsible for leveraging and exploring opportunities to grow business with our existing key clients. Our Client Partnership Program is driven by strategies, processes and systems with the client at the centre of the organisation. As a part of this process, there is a team of key personnel accountable for client engagement, while account/ delivery head are responsible for ensuring great customer experience. Satisfied customers are crucial to the continued success of our business. This is the main aim of this program.

Quality

Your Company continues to focus on quality. Your Company is the only I.T. Company to have won the International Asia Pacific Award for Quality for Services. 38 countries that included USA, Canada, Russia, Japan and Australia, countries that border the Pacific Ocean competed for this Award. This is a feather in the cap of your Company. Further significant initiatives of your Company towards quality are:

1) Six Sigma Initiative:

Six Sigma is a performance improvement methodology adopted by high-performing companies all over the world to make their processes efficient, robust and defect free and improve productivity and cost effectiveness exponentially.This methodology employs the cycle of Define, Measure, Analyze, Improve and Control abbreviated and better known as DMAIC to drive these improvements. Your Company's Six Sigma initiative saw 27 Six Sigma projects and 231 Kaizen Projects being implemented. These projects delivered significant benefits to the Company. 284 Six Sigma Projects and 1350 Kaizen Projects have been completed since the launch of this initiative.

The vigor of the previous year continued in accomplishing productivity and performance improvements through Six Sigma Initiatives. This initiative has under its umbrella all productivity improvements using the Six Sigma methodology, as well as using any other methodology and also Quick Hit projects, which are Kaizen type of improvements. In the last financial year, an overall benefit, including tangible and intangible benefits, of Rs. 36 million with an ROI of more than 200% was achieved through these performance improvement methodologies.

The Company already has about 10 Six Sigma Green Belt and 15 Six Sigma White Belt certified professionals along with 3 Six Sigma Black Belt and 1 Six Sigma Master Black Belt certified professionals. The Company spent over 4200 person hours of trainings around continuous improvement in the last financial year.

2) Certifications:

Last financial year, we also focused on bringing our Quality Management Systems as per the global benchmarks. In addition to the ISO 9001:2008 certification, we applied for CMMi Ver 1.3 Level 3 certification and we have been successfully assessed by SEI through KPMG. This certainly helps to bring our Quality Management Systems and Processes in line with the global best practices.

In addition, we have further strengthened our Information Security Management Systems (ISMS) by incorporating the guidelines of and getting certified for international and rigorous standards like SSAE 16 and HIPAA. Our ISMS is already certified for ISO 27001:2005.

3) Customer Satisfaction Tracking:

Last financial year, we also strengthened and streamlined the process and methodology to capture customer feedback, satisfaction and loyalty indices. This is a wholly automated process and it speeds up the entire process of capture and analysis of the feedback received from the customer. This is done once in a quarter and captures customer's feedback on a wide range of parameters that encompass each aspect of service excellence.

4) Metrics and Process Compliance Index:

Metrics is a concept of measuring Delivery Index for each Line of Business (LOB) and each Support Department. The Quality of all deliverables is monitored on a regular basis and a feedback is given to the Department Heads. This index not only provides the snapshot health of a LOB but also provides a mechanism to compare various LOBs. It incorporates the three key indicators of performance of any project viz Quality, Effort and Schedule adherence.Tracking and using the Delivery Index has helped the Company to focus on improving key processes.

In addition, regular process compliance checkups and speedy follow-ups on the corrective and preventive actions have helped us significantly to keep non-compliances in check and thereby reduce rework and defects at the source.

In order to create processes at par with global best practices, we have tied up with a number of global forums such as ISBSG, CSI and PMI to understand and benchmark ourselves against key metrics.This also involves a re-look and implementation of state-of-art processes and methodologies around requirements management, estimation, decision analysis and review processes and risk management. Our metrics are regularly re- visited and revised to incorporate the current performance levels as well as best-in-class levels.

Process Engineering

The R&D cell at Datamatics made a significant progress this year. There are several milestones achieved for its flagship product iQ and its variants.

The historical information is now being saved under the latest feature of knowledge management (KM) enabling the dynamic template creation automatically and auto correction. This has resulted in further savings from 15% to 40% in data capture stage.

There was a need felt to offer transaction based license and machine independent floating license and this was made possible this year yielding quick closures.

It implemented projects for some strategic local clients like - Deutsche Bank, Saint Gobain, Agility, Bluestar, HSL, Alfa Laval etc., making our domestic foot print stronger.

IQ was integrated with Open Source workflow Alfresco besides having already integrated with SAP, Oracle, Filenet, Documentum, Sharepoint and therefore it is expected to garner better attention across the globe.

We released iQ latest version 4.02 with security features and i-Mark got its updated version 4.02 with inbuilt OCR facility enabling runtime data capture.

Finally, we won recognition as one of our iQ and ePM implementation at Bluestar got an Award by Computers Society of India (CSI).

Share Capital

As on March 31,2012, the Paid-up Share Capital of the Company is Rs.294,746,685 divided into 58,949,337 equity shares of Rs.5/- each

fully paid up. During the year there has been no change in the Paid up Capital of the Company.

Directors

The Board recommended re-appointment of Mr. Rahul L. Kanodia, Mr. Sameer L Kanodia and Mr. Dileep C.Choksi.We seek your support in confirming their appointment as directors liable to retire by rotation. The Board of Directors re-appointed Mr. Rahul L. Kanodia as Vice- Chairman and CEO of the Company for a further period of five years with effect from February 22, 2012. This re-appointment is subject to the approval of the shareholders of the Company at the ensuing Annual General Meeting.

Auditors

M/s. Kanu Doshi Associates, Chartered Accountants, Mumbai, hold office until the conclusion of the forthcoming Annual General Meeting and have confirmed their eligibility and willingness to accept the office of the Auditors, if reappointed.

Information on Auditors' Observations

Observations of Auditors' in Point No. 4 (vi) of Auditor's Report regarding the non-provisioning for the diminution in the value of investments in the subsidiaries has been adequately explained in note 42 of Notes of Accounts. Moreover, during the year under review, the Company's subsidiaries in India, the UK, the USA and Australia have already witnessed a positive turnaround. The management is confident of turning around the other subsidiaries as well in near future. Hence, it is decided not to make any provision for diminution in the value of investment made in the overseas subsidiaries.

The other observations are self-explanatory and do not require to be further commented upon in this report.

Audit Committee

The Audit Committee of the Board of Directors reviews, acts upon and reports to the Board of Directors with respect to various auditing and accounting matters. The primary responsibilities of the Committee are compliance with legal and statutory requirements, auditing and accounting matters, integrity of company's financial statements, performance of Company's internal audit functions and accounting practices and review of related party transactions.

All the members of Audit Committee are Independent Directors and financially literate. Our CFO & Executive Director Mr. Vidur V. Bhogilal and other corporate officers make periodic presentations to the Audit Committee on various issues. The present Audit Committee of the Board comprises of Mr. R. K. Saraswat, Mr. Sudhir C. Deshpande and Mr. Shahzaad S. Dalai. Mr. R. K. Saraswat is the Chairman of the Committee.

Disclosure under Section 217(1)(E) of the Companies Act, 1956

I. Conservation of Energy

The information required in connection with conservation of energy, under section 217(1)(e) of the Companies Act, 1956 read with Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, the Directors furnish herein below the required additional information:

(a) Conservation of Energy - Our Company being in IT & ITeS industry, our operations are not energy intensive. Adequate measures have been taken to conserve energy.

(b) There were no additional investments and proposals if any, being implemented for reduction of consumption of energy as the nature of your Company's operations entails a very low level of energy consumption.

(c) Impact of the measures at (a) and (b) above for reduction of energy consumption and consequent impact on the cost of production of goods - N.A.

(d) Total energy consumption and energy consumption per unit of production - N.A.

Form A: Form for disclosure of particulars with respect to Conservation of Energy

A Power and fuel consumption: NIL

B. Consumption per unit of production: NIL

II. Technology Absorption

Every effort is made by the Company to update the technological skills of its technical staff in order to ensure that they possess adequate skills to enable them to service the Company's clients.

Form B: Form for disclosure of particulars with respect to Technology Absorption etc.

I Research & Development (R&D): Your Company is predominantly a service provider and therefore has not set up a formal R&D unit. However, it continues to develop software tools and products in its existing delivery setup.

II Technology Absorption, Adaptation and lnnovation:Your Company has not imported any technology during the year under review other than purchase of software.

III. Foreign Exchange Earnings and Outgo

I Earnings in Foreign Exchange during the year: Rs. 1590.87 million

II Foreign Exchange outgo during the year: Rs. 128.29 million.

Corporate Governance

A report on Corporate Governance together with a certificate from the Auditors of the Company forms part of the Annual Report.

Employee Stock Option Plans (ESOP)

In the Annual General Meeting held on September 11,2011 for the financial year 2010-2011, the shareholders of the Company approved the proposal for modification and continuation of Key ESOP 2006,

General ESOP 2007 & Key ESOP 2007 schemes.These ESOP schemes were modified and new options were granted under Key ESOP 2006 and Key ESOP 2007.

The shareholders of the Company approved the proposal for introduction of new Key ESOP 2011 and new General ESOP 2011 schemes in the Annual General Meeting held on September 11, 2011 for the financial year 2010-2011. As on current date, the active ESOP schemes of the Company are Key ESOP 2006, General ESOP 2007, Key ESOP 2007, General ESOP 2011 and Key ESOP 2011.

The details of ESOP required to be provided as per clause 12 of the SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 are as per Annexure "A" to this report.

Human Resources Management

Your company strongly believes that its ability to maintain and continue its growth depends to a large extent on its strength in attracting, developing, motivating and retaining the talent. We believe that people are the most valuable asset of the Company as they contribute individually as well as collectively to the achievement of business objectives. Our Company's endeavor is to provide a work environment that encourages a positive attitude and superior performance. The key elements of your Company's human resource management strategy include talent acquisition, learning and development. Human Resource policies of the Company though business focused, are employee friendly, clear and concise, thereby providing employees with appropriate opportunities to grow professionally as well as personally.

The global manpower strength of your Company is approximately 4600 employees.

Employee Relations

'Josh' team of the Company is responsible for involving the organisation as a whole in several fun and joy activities. This team ensures that the activities in the organisation add to the productivity and morale of the human resource force in the Company. Maintenance of a cordial and supportive environment is a pre-requisite for the smooth functioning of any organization. This requires the management and the employees to fully understand and respect each other. Acting as a link between these two important entities, the role of dedicated 'employee relations' team is to build a healthy environment which is conducive to performance. On an ongoing basis, this team identifies and recommends to the management, necessary measures to maintain a positive climate and improve performance levels.

Training and Development go hand in hand for development and growth of the Employees. The strategic initiatives for talent development through learning and development programs and experimental learning ensure that the Company has right competencies in its workforce to meet business demand. Apart from providing new platforms for associates to enhance their business acumen,your Company has implemented various training programs to provide them with relevant industry exposure. The Company expended 166,000 training person hours during 2011 - 2012.

Rewards and recognition in the form of monetary and non- monetary benefits stimulate greater performance.We are constantly

recognizing and rewarding Employees who make a significant contribution to the Company's business. Our Reward system includes Spot Awards, Employee of the Month Award and also our Annual Awards. All of these Awards recognize outstanding and consistent performance. Employees who have served the Company for long duration are also felicitated.

Corporate Social Responsibility

We have christened our CSR initiatives as 'ASHA'. Acting responsibly has always been a part of our DNA and it remains an ongoing commitment. In the past, we have pioneered the unique 'Knowledge Associate' model, which has benefited a large section of our society. This program has been supporting capable and talented differently- abled professionals and those who otherwise were unable to grow professionally due to personal reasons.

We have identified the areas that we would like to focus viz., Employability & Environment. Realizing the criticality of these on the quality of life of the communities that we serve, we would like to support these two causes on a long-term basis.

To begin with, we have launched the following initiatives under Environment:

Grow Trees: GrowTrees.com is an official campaign partner of the United Nations Environment Program's Billion Tree Campaign & is also the official partner of WWF Cities for forest campaign. On employees' birthday, a tree is planted for the employee by Datamatics through Growtrees.com. An E-certificate is given to employees on their birthday. Till date we have planted 1170 trees.

RecycleKaro.com: RecycleKaro is a provider of recycling and renewable energy solutions. RecycleKaro collects paper from our various offices and in turn provide us with Notepads with DGSL branding and a pulping certificate. Till date, we have recycled 579 kgs of paper.

Under Employability as CSR focus: Our focus is to provide employability to underprivileged and differently abled people as part of Asha initiatives. Datamatics Global Services Limited recognizes the underutilized potential of the educated and skilled physically-challenged professionals. Such individuals have a tremendous zeal to learn and are highly motivated to succeed against all odds. Your Company has provided such individuals an opportunity to contribute to the organization's growth while ensuring that they too benefit through the Knowledge Associates (KA) program.

Datamatics has tied up with a non-governmental organization called NASEOH (National Society for Equal Opportunities for the Physically Handicapped) and Sujaya Foundation where nearly 20 physically- challenged individuals work as Knowledge Associates in the Outsourcing Management Team. Apart from these, nearly 200 KAs work from home.

Through the KA program, Datamatics has provided such individuals the satisfaction of being financially independent, thus improving their status in society. The program is tailor-made for individuals who cannot commit themselves to full-time employment or travel any distance to the place of work.

Datamatics has also enabled NGOs to provide opportunities for the physically-challenged by donating PCs to facilitate their IT set-up. Trainers from the organization visit the NGOs and homes of the KAs to conduct training and feedback sessions. In some instances, a mentor coordinator is stationed at the NGO for 3-6 months to coordinate training & hardware setup.

As professionals, Datamatics treats the physically-challenged KAs on par with other employees, while ensuring the project managers take extra care and show empathy while managing these KAs.

We have also launched a Payroll Giving Program, to mobilize corporate citizenship. This program would enable employees to donate a small part of their salary towards our CSR initiatives. It is completely voluntary, and employees have the option to change or discontinue their monthly contribution.

Go Green Initiative

Ministry of Corporate Affairs has recently permitted companies to send electronic copies of Annual Report, notices, etc. to the email ids of the shareholders. We have accordingly arranged to send soft copies of these documents to the email ids of the shareholders wherever applicable. In case any of the shareholders would like to receive physical copies of these documents, the same shall be forwarded on written request by the Company or by Registrars M/s. Datamatics Financial Services Limited.

Particulars of Employees

The particulars of employees as required under Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 as amended, forms a part of this Report. However, in pursuance of Section 219(1)(b)(iv) of the Companies Act, 1956, this Report is being sent to all the shareholders of the Company, excluding the aforesaid information and the said particulars are made available at the registered office of the Company. Members interested in obtaining such particulars may write to the Company Secretary at the corporate office of the Company.

Acceptance of Fixed Deposits

The Company has not accepted any fixed deposits during the year.

Directors' Responsibility Statement

As required under Section 217(2AA) of the Companies Act, 1956, it is hereby stated that:

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

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

3. the 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 your Company and for preventing and detecting fraud and other irregularities; and

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

Acknowledgements

The Directors thank the Company's customers, suppliers, vendors, bankers,financial institutions, Central and State Government of India and Governments of various countries where we have our operations for their continued support during the year. We place on record our appreciation of the contribution made by our employees at all levels. Our consistent growth was made possible by their hard work, solidarity, cooperation and support.

For and on behalf of the Board

Dr. Lalit S. Kanodia Chairman

Place: Mumbai Date : May 30,2012


Mar 31, 2011

Dear Members,

The Directors take pleasure in presenting the Twenty Third Annual Report together with the Audited Accounts of your Company for the Financial Year ended March 31,2011.

FINANCIAL RESULTS

Your Company's operating performance for the year ended March 31, 2011 as compared to the previous financial year ended March 31,2010 is summarized below:

(Rs in million) (Rs in million) Consolidated Standalone

2010-2011 2009-2010 2010-2011 2009-2010

Gross Income 2,919.94 2,754.94 1,545.19 1,445.44

Profit before tax 224.41 263.67 218.81 277.32

Less: Provision for Taxation 16.42 41.75 6.20 34.01

Profit after tax 207.99 221.92 212.61 243.31

Dividend on Equity Shares (Including Dividend Tax) 70.97 85.92 51.38 85.92

Balance brought forward from the previous year 217.02 137.18 516.21 408.82

Surplus carried to Balance Sheet including General Reserve 354.03 273.18 677.44 566.21

DIVIDEND

Your directors recommend final dividend of Rs 0.75 per share to be appropriated from the profits of the financial year 2010-2011.

TRANSFER TO RESERVES

The Company has transferred Rs 50.00 million to the General Reserve out of the amounts available for appropriations. An amount of Rs 627.44 million is proposed to be retained in the Profit and Loss Account.

PERFORMANCE OVERVIEW

During the year under review, Company's revenues (on a standalone basis), increased to Rs 1,545.19 million from Rs 1,445.44 million in 2009-10. The consolidated revenues also registered a growth of 5.99% by increasing to Rs 2,919.94 million in 2010-11 from Rs 2,754.94 million in 2009-10. The standalone profit after tax was at Rs 212.61 million as against the previous years' profit after tax of Rs 243.31 million. The consolidated profit after tax was Rs 207.99 million as against Rs 221.92 million for the previous year. The decline in profit after tax was due to foreign exchange fluctuation coupled with modest increase in revenues and increase in employee costs.

DATAMATICS DELIVERY CENTRE OF EXCELLENCE, NASHIK

The Datamatics Delivery Centre of Excellence at Nashik is housed in a 56,500 square feet building named as 'Suyojit Datamatics Knowledge Centre' situated on the Mumbai- Nashik highway. The total employee strength based in the centre increased from 560 as on March 31, 2010 to 650 as on March 31, 2011. The Centre witnessed improvement in repeat business and commendations from the customers. The projects delivered from the Centre met 100% of their time and quality objectives and were managed by Company's teams based at Nashik, Mumbai and Livonia, USA. The Centre is ISO 27001 - certified for meeting information security and management systems standards.

During the year under review, the Company quadrupled capacities of training facilities at its Nashik Centre of Excellence. From the earlier three training rooms with a total capacity of 42 seats, the Centre now has five training rooms, including a 60-seater auditorium, with a total capacity of over 180 seats.

In addition, a new guest house named 'Casa Datamatics' has been commissioned at Nashik. The spacious 5,732 square feet four-storey building with modern amenities has a capacity to accommodate 28 guests.

INVESTMENT IN OVERSEAS SUBSIDIARIES

Your Company has successfully managed to establish in Mauritius as a Category 1 Global Business License Company under the Companies Act, 2001. Your Company had already infused initial capital of Rs 56.24 million in Datamatics Global Technologies Limited, Mauritius.

During the year under review, your Company has made investments worth Rs 22.36 million in its overseas subsidiaries by subscribing to 1,700,000 fully paid Non Cumulative Redeemable 8% Preference shares of Datamatics Global Technologies Limited, a Company incorporated in Mauritius.

We are pleased to share that the Company's U.S. Subsidiary i.e. Datamatics Global Services, Inc. has been turnaround resulting in a profit before tax of $ 399,975 as compared to previous year's loss of $ 542,571.



SIGNIFICANT EVENTS

Bosnia

Datamatics Global Services GmbH, a wholly owned subsidiary of your Company has successfully registered its 100% subsidiary in Bosnia named Datamatics Global Services GmbH d.o.o., thereby expanding German operations in Switzerland.

United Kingdom

The two subsidiaries of your Company, namely, Datamatics Technologies UK Limited and Datamatics Infotech Limited, entered into a slump sale agreement for transfer of business and assets as on March 31,2011.

Intellectual Property Rights

As a strategy to ensure sustainable means of wealth creation, your Company has consistently focused on creating products having Intellectual Property Rights. Your Company has 8 (Eight) Copyrights registered for its proprietary processes. Datamatics Logo is registered successfully in UK, US and also in European Union's (EU) 27 member countries. Datamatics word mark is registered in India as a Trade Mark as well as a Service Mark. It is also registered in UK and EU and its 27 member countries. Your Company has succeeded in registering DATAMATICS word mark in Australia, China, Norway and Switzerland under World Intellectual Property Organization. Recently your Company registered its Trade Mark 'homes-Hosted Meter Solution' in the EU and its 27 member countries.

Branding Exercise

Your Company has a new brand identity and website. This change has been brought about to take your brand to the next level of marketing excellence. The logo has a contemporary look-and-feel, symbolizing the Company's global aspirations. The new logo, while continuing to have the original brand mark with 'G' written inside 'D', will have DATAMATICS in capital letters. Besides the new logo, the new tagline reads'Next Generation Solutions'.

The new logo is as follows:

In sync with the new brand identity, your Company also has a improved corporate website. The website content and look and feel positions your Company as a provider of smart, next generation solutions. The website content is now more customer-centric and solution-focused.

SUBSIDIARIES

The Company has one Indian subsidiary, Datamatics Software Services Limited.

The Company has the following foreign subsidiaries as on March 31,2011:

1. Datamatics Global Services, Inc. (US).

2. Datamatics Infotech Limited (UK).

3. Datamatics Technologies UK Limited (UK).

4. Datamatics Global Services GmbH (Germany).

5. Datamatics Global Services Pty Limited (Australia).

6. Datamatics Global Technologies Limited (Mauritius).

7. Datamatics Global Technologies AG (Switzerland).

The Company's Switzerland subsidiary i.e. Datamatics Global Technologies AG has its own subsidiary in Germany named as Datamatics Global Technologies GmbH. The Company's German subsidiary i.e. Datamatics Global Services GmbH has its own subsidiary with the name Datamatics Global Services GmbH d.o.o. in Bosnia, Switzerland.

As per Section 212 of the Companies Act, 1956, the Company is required to attach the Directors' Report, Balance Sheet, and Profit & Loss Account of its subsidiaries. The Ministry of Corporate Affairs, Government of India vide its Circular No. 2/2011 dated February 8, 2011 has granted an exemption to companies from complying with Section 212, provided such companies publish the Audited consolidated financial statements in the Annual Report. Accordingly, the Annual Report 2010-2011 contains the summary of financial statements of our Company's subsidiaries duly audited by its respective statutory auditors. Relevant information for each subsidiary has been disclosed in the consolidated balance sheet.

We hereby undertake that annual accounts of subsidiary companies and the related detailed information shall be made available to shareholders of holding and subsidiary companies seeking such information at any point of time. The Annual Accounts of subsidiary companies shall be kept for inspection by any shareholders in the registered office of the Holding Company and of the subsidiary companies. We shall furnish the hard copies of details of accounts of subsidiaries to any shareholder on demand within a reasonable period of time.

JOINT VENTURE

Your Company has an existing Joint Venture Agreement named Cybercom Datamatics Information Solutions with Cybercom Group Europe AB.

During the year under review, Datamatics Global Services, Inc., the U.S. subsidiary of your Company and CIGNEX Technologies, Inc. the U.S. subsidiary of CIGNEX Global Holding Corporation, provider of commercial Open Source solutions globally, announced the creation of a Joint Venture called "Datamatics CIGNEX, LLC:

This Joint Venture will market innovative, next-generation Open Source solutions to enterprises globally.

The economic turmoil has highlighted the benefits of Open Source software, which offers credible alternatives to high- cost, proprietary enterprise applications at a fraction of the cost without recurring high upgrade and maintenance costs of enterprise applications. This Joint Venture will leverage the domain and technology strengths of both organizations to address the business challenges of customers worldwide.

IPO FUND UTILIZATION

During the previous year and current year, the Company has capitalised property at Nashik and its infrastructure development cost. The below amount includes advance against capital expenditure of Rs 164.59 million (P.Y Rs 64.68

million). The investment ofRs 78.61 million (P.Y. Rs 56.24 million) made in Subsidiaries at Mauritius is also included below:

(Rsin million)

Particulars Proposed Actual Balance utilization utilization amount of funds as of funds available stated in as on prospectus March 31, 2011

Investment in subsidiaries & Associates 146 146 Nil

Repayment of Secured Loans 99 65 34

Investment in Fixed Assets 47 47 Nil

Corporate purposes including strategic initiatives and acquisitions 568 472 96

Issue expenses 75 61 14

Total 935 791 144



SIGNIFICANT ACHIEVEMENTS

1. Microsoft Gold Certification

Gold Certified Partners are the top level of Microsoft solutions partners and have access to the tools and support they need to help them stand out in the market place. As a Microsoft Gold Certified body, a Company can have the opportunity to build the closest working relationship with Microsoft and are guaranteed, at minimum, telephone-based account engagement from Microsoft, along with other top-level benefits such as a priority listing in the Microsoft Resource Directory. During the year, your Company received the highest Microsoft Gold Certification for the Custom Development Solution and Information Worker Solution. The benefits associated with the certification are access to the tools and support that partners need to help themselves stand out in the marketplace. At this level, we have the opportunity to build a close working relationship with Microsoft. Also, we receive several software licensing and support benefits like training, subscription and promotion. This relationship allows us to get technical resolutions quickly with Microsoft expertise.

2. IBM PartnerWorld Advanced

The term 'Advanced level Business Partner' implies demonstration of a high level of skills and market success. It means commitment to maintain a prosperous business relationship with IBM. IBM upgraded its partnership with your Company to Advanced. As a result, the benefits have also expanded.This also means thatyour Company can now leverage the incremental resources of the PartnerWorld Industry Networks and help to generate more leads and accelerate sales. With IBM PartnerWorld Advanced, your Company will have accessibility to IBM business intelligence reports and with partnership programs the partners are known worldwide, enabling global visibility for Datamatics through IBM partner programs.

3. Datamatics-Jahia Partnership

Jahia, a premier provider of Web Content Integration software combining web, document and portal features, entered into a strategic partnership with your Company. Your Company will now provide cost-effective and scalable content management solutions for international organizations. The two companies share a strong commitment to corporate social responsibility, including open source and Java development. Your Company will partner Jahia on projects for international, humanitarian and healthcare organizations.

4. Excellence Award Certificate for Innovation

Your Company's Telecom & Embedded Engineering Services received the Excellence Award Certificate for Innovation at ACREX India 2010 for i-AC for embedded software that makes window air conditioners intelligent. The Competition included 250 companies like ABB, Larsen & Toubro, Bajaj, Carrier, Daikin, Emerson Network, Hitachi Home, Honeywell, LG, Lucas TVS, Mitsubishi and Pidilite.

ACREX India is the largest international exhibition and conference catering to the air conditioning, refrigeration, ventilation and building services'industries.This exhibition happens only once in 2 years. Datamatics showcased i-AC along with its partner Shanti Engineering.

i-AC is an innovative endeavor towards making a Green Earth. Both corporate and individual consumers using i-AC can save up to 20% of energy used by their ACs. It uses infra-red sensors to detect the presence of people in a room and accordingly directs air. It can also switch between Air Conditioner and Fan according to the room's temperature variations. It also controls the ceiling fan's speed.

5. Special Butler Audit Report

Butler analysts do a rigorous analysis of the technology or product in focus keeping in view of the demand trends, comparing it with similar products in the markets and assessing its ability to address buyer needs. A report is published only for a product that the analyst believes offers significant differentiated value to buyers. The report covers the product's features and benefits and also business value offered by the product to its users. The Datamonitor Group has released a special Butler Audit Report on Datamatics iQ™, one of Datamatics'innovative platforms for intelligent information management.

6. Datamatics' customer won the InformationWeek EDGE - Enterprises Driving Growth and Excellence (using IT) Award

Finolex, a Datamatics customer won the InformationWeek EDGE award in the category of "Enterprises Driving Growth & Excellence Using IT" Datamatics intelligent solution framework deployed by Finolex is a key driver for the breakthrough business benefits that Finolex enjoys today, thus demonstrating the innovative use of IT that helped win the award.

7. GS100 - Listing among Top 20 industry specific BPO providers globally

Datamatics has been listed among Global Services 100 listing, which is a significant international recognition, considering Datamatics has been listed among TOP 20 Industry Specific BPO providers globally.

8. IAOP Global 100 - Listing among global listing of "Best 20 Companies by Service Provided - Financial Management Services

The International Association of Outsourcing Professionals (IAOP) has listed Datamatics among the global listing of "Best 20 Companies by Service Provided - Financial Management Services';

9. Received Global HR Strategy Award & HR Leadership Award at Asia's Best Employer Brand Awards 2010

Your Company has won the Global HR strategy Award while Dr. C. M. Dwivedi, President and Global HR Head, received the 'Most Powerful HR Professionals of India' and 'HR Leadership' awards. The awards were presented at the Asia's Best Employer Brand Awards 2010 held on July 23, 2010 at Singapore. The awards are particularly remarkable as there were over 29,000 entries from 35 countries and competition included LG, Microsoft, Infosys, ICICI, IBM, GE, Google, Yahoo, Tech Mahindra, TCS, Cisco etc.

10. Nominated for global ESOMAR Excellence Award

Mr. Sandeep Arora, Head - Research & Analytics Business Unit has been nominated as the Country Representative of ESOMAR for India. ESOMAR is one of the largest

and most reputed global industry associations in the field of Market Research. Mr. Sandeep Arora's research paper titled "Billion Dollar Baby" on deploying Mobile Technology was nominated for ESOMAR Excellence Award globally.

QUALITY

Your Company continues to focus on quality. Earlier your Company was the only I.T. Company to have won the International Asia Pacific Award for Quality for Services. 38 countries that included USA, Canada, Russia, Japan and Australia, countries that border the Pacific Ocean had competed for this Award. This is a feather in the cap of your Company. The significant initiatives of your Company towards quality are:

1. Six Sigma Initiative

Six Sigma is a performance improvement methodology which is adopted by high-performing companies all over the world to make their processes efficient, robust and defect free and improve productivity and cost effectiveness exponentially. This methodology employs the cycle of Define, Measure, Analyze, Improve and Control. This process is better known as DMAIC. Your organization's Six Sigma initiative saw 26 Six Sigma projects and 179 Quick Hit Projects being implemented. These projects delivered significant benefits to the Organization. 257 Six Sigma Projects and 1101 Quick Hit Projects have been completed since the launch of the initiative.

The vigor of the previous year continued in doing Productivity and Performance improvements through Six Sigma Initiatives. The initiative takes under its cap all productivity improvements using the Six Sigma methodology, as well as using any other methodology, and also Quick Hit projects, which are Kaizen type of improvements. In the last financial year, an overall benefit, including tangible and intangible benefits, of Rs 38 million with an ROI of more than 200% was achieved through these performance improvement methodologies.

2. Metrics

Metrics is a concept of measuring Delivery Index for each Line of Business (LOB) and each Support Department. The Quality of all deliverables is monitored on a regular basis and a feedback is given to the Department Heads. This index not only provides the snapshot health of a LOB but also provides a mechanism to compare various LOBs. It incorporates the three key indicators of performance of any project viz Quality, Effort and Schedule adherence. Tracking and using the Delivery Index has helped the Organization significantly to focus on improving key processes.

PROCESS ENGINEERING

Process cell continued doing its research and development to innovate new products and technologies and created various solutions around its products this year, which are well received in the market.

There was a need to build process specific solutions around its state of art technologies meeting specific requirements of Datamatics clients. The intelligent data extraction tools were therefore complimented with workflow enabling their customer to derive maximum efficiency and higher accuracy. It was then supported by ERP integration tools and archival and retrieval solutions.

This solution is finding much wider acceptance, as they are addressing the exact needs of the customer and are easy and quick to implement. Datamatics is projected to be one of the leaders in back office automation and their solutions enable the clients to bring down expenses by certain percentage.

The clientele included some prestigious international and domestic names. Some of the large industry leaders from various segments like manufacturing, media, telecommunication, banks and insurance agreed to have Datamatics solutions implemented in their offices for deriving maximum benefits and enable better process control.

Process cell also developed its open office based OCR engine.

SHARE CAPITAL

As on March 31,2011, Paid-up Share Capital of the Company is Rs 294,746,685 divided into 58,949,337 equity shares of Rs 5/- each fully paid up. During the year there has been no change in the Paid up capital of the Company.

DIRECTORS

Mr. Shahzaad Dalai and Dr. Habil F. Khorakiwala retire by rotation and being eligible offer themselves for reappointment. Mr. Dileep Choksi was appointed as an Additional Director with effect from February 9, 2011. He holds office upto the date of conclusion of ensuing Twenty Third Annual General Meeting of the Company. The Company has received notice from members proposing the candidature of Mr. Dileep Choksi as a Director of the Company in terms of Section 257 of the Companies Act, 1956.

AUDITORS

M/s. Kanu Doshi Associates, Chartered Accountants, Mumbai, hold office until the conclusion of the forthcoming Annual General Meeting and have confirmed their eligibility and willingness to accept the office of the Auditors, if reappointed.

INFORMATION ON AUDITORS'OBSERVATIONS

Observations of Auditors in Point No. 4 (vi) of Auditor's Report regarding the non-provisioning for the diminution in the value of investments in the subsidiaries has been adequately explained in note 2(vii) of Schedule N of Notes to Accounts. However it is further clarified that though the net worth of these overseas subsidiaries has declined, the management is confident of turning around the subsidiaries in near future. Hence it is decided not to make any provision for diminution in the value of investment made in the overseas subsidiaries. The other observations are self explanatory and need not be required to be further commented in this report.

AUDIT COMMITTEE

The present Audit Committee of the Board comprises of Mr. R. K. Saraswat, Mr. Sudhir Deshpande and Mr. Shahzaad Dalai. Mr. R. K. Saraswat is the Chairman of the Committee.

DISCLOSURE UNDER SECTION 217(1)(e) OF THE COMPANIES ACT, 1956

I. CONSERVATION OF ENERGY

The information required in connection with conservation of energy, under Section 217(1)(e) of the Companies Act, 1956 read with Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, the Directors furnish herein below the required additional information:

(a) Conservation of Energy - Our Company being in IT & ITeS industry, our operations are not energy intensive. Adequate measures have been taken to conserve energy.

(b) There were no additional investments and proposals if any, being implemented for reduction of consumption of energy as the nature of your Company's operations entails a very low level of energy consumption.

(c) Impact of the measures at (a) and (b) above for reduction of energy consumption and consequent impact on the cost of production of goods - N.A.

(d) Total energy consumption and energy consumption per unit of production - N.A.

FORM A: FORM FOR DISCLOSURE OF PARTICULARS WITH RESPECT TO CONSERVATION OF ENERGY

A. Power and fuel consumption: NIL.

B. Consumption per unit of production: NIL.

II. TECHNOLOGY ABSORPTION

Every effort is made by the Company to update the technological skills of its technical staff in order to ensure that they possess adequate skills to enable them to service the Company's clients.

FORM B: FORM FOR DISCLOSURE OF PARTICULARS WITH RESPECT TO TECHNOLOGY ABSORPTION ETC.

I. Research & Development (R&D): Your Company is predominantly a service provider and therefore has not set up a formal R&D unit. However, it continues to develop software tools and products in its existing delivery setup.

II. Technology Absorption, Adaptation and Innovation: Your Company has not imported any technology during the year under review other than purchase of software.

CORPORATE GOVERNANCE

A Report on Corporate Governance together with a certificate from the Auditors of the Company forms part of the Annual Report.

EMPLOYEE STOCK OPTION PLANS (ESOP)

Continuation of Key ESOP 2006, Key ESOP 2007 and General ESOP 2007

In the Key ESOP 2006, out of 2,00,000 options 1,80,000 options were initially granted. However due to resignation of certain key employees 97,500 options were lapsed and added back to the total available options. Further, out of the above, only 82,500 options were vested and the entire 82,500 options were exercised. As per resolution passed in the AGM held on July 26, 2006, it was mentioned that upon approval of any new Key Employee stock option plan, the existing Key ESOP 2006 shall lapse.

As per resolutions passed in the AGM held on September 28, 2007 for Key and General ESOP 2007, it was mentioned that upon approval of any new General/Key Employee stock option plan, the existing Key/General employee stock option plan shall lapse.

Your approval is required for the partial modification of the above mentioned resolutions passed giving effect to the continuation of Key ESOP 2006, Key ESOP 2007 and General ESOP 2007 upon introduction of new ESOP schemes.

Introduction of new Key Employee Stock Option Plan 2011 and new General Employee Stock Option Plan 2011

The Compensation Committee in its meeting held on May 27, 2011 proposed the introduction of a new Key ESOP plan 2011 and subsequently, the Board of Directors have accorded their consent in its meeting held on May 27, 2011 for the introduction of new Key and General ESOP 2011. Your approval is required for the said scheme in the ensuing AGM.

The details of Key ESOP 2006 and Key and General ESOP 2007 required to be provided as per clause 12 of the SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 are as per Annexure "A" to this report.

HUMAN RESOURCES MANAGEMENT

We believe that people are the most valuable asset of the Company as they contribute individually as well as collectively to the achievement of business objectives. Your Company's endeavor is to provide suitable work environment that encourages positive attitude and superior performance. Human Resource policies of the Company though business focused, are employee friendly, clear and concise, thereby providing employees with appropriate opportunities to grow professionally as well as personally.

The global manpower strength of your Company is 3,130 employees.

EMPLOYEE RELATIONS

Maintenance of a cordial and supportive environment is a prerequisite for the smooth functioning of any organization. This requires the management and the employees to fully understand and respect each other. Acting as a link between these two important entities, the role of the dedicated 'employee relations' team is to build a healthy environment which is conducive to performance. On an ongoing basis, this team identifies and recommends to the management, necessary measures to maintain a positive climate and improve performance levels. Involving the organization as

a whole in several fun & joy activities in the name of 'Josh', this team ensures that the activities in the organization adds to the productivity and morale of the work force in the entity.

Training and Development are keys to the development and growth of employees. Training needs constant identification of employees current knowledge and skills vis-a-vis their skills required for the job. The gaps if any are met through training programs published in the calendar. These programs include Workshops, Seminars, Webinars, etc.

Internal Training Programs are encouraged, since we believe teaching is the best form of learning. The Company expended 1,24,355 training person hours during 2010-11.

Rewards and recognition in the form of monetary and non- monetary benefits stimulate greater performance. We are constantly recognizing and rewarding employees who make a significant contribution to the Company's business. The Reward system includes Spot Awards, Employee of the Month and also Annual Awards. All of these Awards recognize outstanding and consistent performance. Employees who have served the Company for long duration are also felicitated.

CORPORATE SOCIAL RESPONSIBILITY

Datamatics Global Services Limited has recognized the underutilized potential of the educated and skilled physically- challenged professionals. Such individuals have a tremendous zeal to learn and are highly motivated to succeed against all odds. Your Company has provided such individuals an opportunity to contribute to the organization's growth while ensuring that they too benefit through the Knowledge Associates (KA) programme.

Datamatics has tied up with a non-governmental organization called NASSEOH (National Society for Equal Opportunities for the Physically Handicapped) and Amar Seva Sangam where nearly 60 physically-challenged individuals work as Knowledge Associates in the Outsourcing Management Team. Apart from these, nearly 20 KAs work from home.

Through the KA programme, Datamatics has provided such individuals the satisfaction of being financially independent, thus improving their status in society. The programme is tailor-made for individuals who cannot commit themselves to full-time employment or travel any distance to the place of work.

Datamatics has also enabled NGOs to provide opportunities for the physically-challenged by donating PCs to facilitate their IT set up. Trainers from the organization visit the NGOs and homes of the KAs to conduct training and feedback sessions. In some instances, a mentor co-coordinator is stationed at the NGO for 3-6 months to coordinate training & hardware setup.

As professionals, Datamatics treats the physically-challenged KAs at par with other employees, while ensuring the project managers take extra care and show empathy while managing these KAs.

GO GREEN INITIATIVE

Very recently the Ministry of Corporate Affairs, Government of India, through its Circular Nos. 17/2011 and 18/2011 dated April 21, 2011 and April 29, 2011 respectively, has allowed companies to send the annual reports and other official documents to their shareholders electronically as part of its green initiatives in Corporate, provided the e-mail address of the shareholder is obtained by the Company from the shareholders.

This action of the Ministry will benefit the society at large through reduction in paper consumption and contribution towards a Greener Environment. It will also ensure prompt receipt of communication and avoid loss in postal transit.

Keeping in view the above, your Company proposes to send documents such as the Notice of the Annual General Meeting, Audited Financial Statements, Directors' Report, Auditors' Report, etc., henceforth to the shareholders in Electronic Form, to the e-mail address provided by them and/or made available to the Company by the Depositories.

All the shareholders who hold their shares in physical form and whose e-mail address are not available with the Company, may if they wish to receive the Annual Report in electronic form, log on to the URL mentioned below and register their e-mail address.

URL: http://www.datamatics.com/shareholder/emailupdate

The Company solicits active cooperation of shareholders in helping to implement the e-governance initiatives of the Government.

PARTICULARS OF EMPLOYEES

The particulars of employees as required under Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 as amended, forms a part of this Report. However, in pursuance of Section 219(1)(b)(iv) of the Companies Act, 1956, this Report is being sent to all the shareholders of the Company, excluding the aforesaid information and the said particulars are made available at the registered office of the Company. Members interested in obtaining such particulars may write to the Company Secretary at the corporate office of the Company.

ACCEPTANCE OF FIXED DEPOSITS

The Company has not accepted any fixed deposits during the year.

DIRECTORS' RESPONSIBILITY STATEMENT

As required under Section 217(2AA) of the Companies Act, 1956, it is hereby stated that:

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

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

3. the 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 your Company and for preventing and detecting fraud and other irregularities; and

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

ACKNOWLEDGEMENTS

The Directors thank the Company's customers, suppliers, bankers, financial institutions, Central and State Government and shareholders for their consistent support to the Company. The Directors also sincerely acknowledge the significant contribution made by all the employees of the Company and its subsidiaries during the year under review.

For and on behalf of the Board

Dr. Lalit S. Kanodia Chairman

Place : Mumbai

Date : May 27,2011


Mar 31, 2010

The Directors take pleasure in presenting the Twenty Second Annual Report together with the Audited Accounts of your Company for the Financial Year ended March 31, 2010.

FINANCIAL RESULTS

Your Companys operating performance for the year ended March 31, 2010 as compared to the previous financial year ended March 31, 2009 is summarized below:



(Rupees in Millions) (Rupees in Millions)

Consolidated Standalone

2009-10 2008-09 2009-10 2008-09

Gross Income 2,754.94 3,106.92 1,445.44 1,701.21

Profit before tax 263.67 329.08 277.32 326.45

Less: Provision for Taxation 41.75 53.73 34.01 48.53

Profit after tax 221.92 275.35 243.31 277.91

Dividend on – Equity Shares (Including Dividend Tax) - 0.03 - 0.03

Proposed Dividend on Equity Shares (Including Dividend Tax) 85.92 86.15 85.92 86.15

Dividend on – Preference Shares (Including Dividend Tax) - 20.72 - 20.72

Balance brought forward from the previous year 137.18 18.75 408.82 287.82

Surplus carried to Balance Sheet including General Reserve 273.18 187.18 566.21 458.82



DIVIDEND

Your directors recommend final dividend of Rs. 1.25 per share to be appropriated from the profits of the financial year 2009-2010.

TRANSFER TO RESERVES

The Company has transferred Rs. 50 million to the General Reserve out of the amounts available for appropriations. An amount of Rs. 602.14 million is proposed to be retained in the Proft and Loss Account.

BUSINESS

During the year under review, on a standalone basis, revenue declined from Rs. 1,701.21 million to Rs. 1,445.44 million. The consolidated revenue also reduced from Rs. 3,106.92 million to Rs. 2,754.94 million. The standalone profit after tax was at Rs. 243.31 million as against the previous years profit after tax of Rs. 277.91 million. The consolidated profit after tax was Rs. 221.92 million as against Rs. 275.35 million for the previous year.

DATAMATICS DELIVERY CENTRE OF EXCELLENCE, NASHIK

The Datamatics Delivery Centre of Excellence at Nashik is housed in a 55,000-square feet building named as "Suyojit Datamatics Knowledge Centre" situated on the Mumbai-Nashik highway. Its manpower strength has increased to 560 as on March 31, 2010.

This year too, the Centre saw repeated business and commendations from the customers. The projects delivered from the Centre met 100% of their time and quality objectives, and were managed seamlessly by teams based at Nashik, Mumbai and Livonia, USA.

The Centre is ISO 27001 – certified for meeting information security and management systems standards.

Your Company has finalized the purchase of residential premises in Nashik for guest house purposes of about 8,000 sq. ft.

INVESTMENT IN OVERSEAS SUBSIDIARIES

During the year under review, your Company infused capital of Rs. 56.24 million in Datamatics Global Technologies Limited, Mauritius. The Company has made investments worth Rs. 767.75 million in its overseas subsidiaries as on March 31, 2010.

SIGNIFICANT EVENTS

1. Acquisition of BSS Accelerators Kernel Programs of Devoteam Danet GmbH

During the year under review, Datamatics Global Technologies AG [Companys wholly owned subsidiary in Switzerland] acquired the BSS Accelerators Kernel Programs and all transferable rights in the Customer Specific BSS Accelerators Software from Devoteam Danet GmbH, a German IT consulting and services company. The solution automates individual business processes, from order entry to payment collection for telecommunications operators and utility organizations such as integrated service delivery, billing and settlement, mediation and output management. The acquisition will further strengthen the Companys portfolio.

2. Incorporation of Datamatics Global Technologies GmbH

In order to better serve the existing customers of Devoteam Danet GmbH, Datamatics Global Technologies AG incorporated a wholly owned subsidiary in Germany, under the name and style of "Datamatics Global Technologies GmbH". Since Datamatics Global Technologies AG is a wholly owned subsidiary of Datamatics, Datamatics Global Technologies GmbH is also a subsidiary of Datamatics pursuant to the provisions of section 4(c) of the Companies Act, 1956.

SUBSIDIARIES

The Company has the following foreign subsidiaries as on March 31, 2010:

1. Datamatics Global Services, Inc. (US).

2. Datamatics Infotech Limited (UK).

3. Datamatics Technologies UK Limited (UK).

4. Datamatics Global Services GmbH (Germany).

5. Datamatics Global Technologies GmbH (Germany).

6. Datamatics Global Services Pty Limited (Australia).

7. Datamatics Global Technologies Limited (Mauritius).

8. Datamatics Global Technologies AG (Switzerland).

The Company has received an exemption from the Central Government under Section 212(8) of the Companies Act, 1956 with regard to attaching the balance sheet, profit and loss account and other documents of the subsidiaries for the year ended March 31, 2010. The accounts of the subsidiaries will be made available for inspection by any member of the Company at its registered office and also at the registered office of the concerned subsidiaries. The accounts of the subsidiary companies will be made available to the members upon receipt of request from them. The summary of the key financials of the Companys subsidiaries is included in this annual report.

JOINT VENTURE

Your Companys Joint Venture Agreement namely Cybercom Datamatics Information Solutions Limited incorporated in India has progressed significantly during the year. It has generated revenues of Rs. 192.56 million compared to previous years revenues of Rs. 144.70 million. Its headcount increased from 119 to 182 during the year.

Your Companys other Joint Venture Company, viz, Datamatics Yash Technologies Private Limited has been sold during the year.

IPO FUND UTILIZATION

During the previous year and current year, the Company has capitalized property at Nashik and its infrastructure development cost. The below stated amount includes advance against capital expenditure of Rs. 64,676,662/- ( P. Y. Rs. 25,834,000/-) and the investment of Rs. 56,244,000/- ( P. Y. Rs. 4,779,875/-) made in Subsidiary at Mauritiu (P. Y. Mauritius and Switzerland).



(Rs. in million)

Particulars Proposed Actual Balance

utilization utilization amount

of funds as of funds available

stated in as on

prospectus March 31,

2010

Investment in

subsidiaries & Associates 146 146 Nil

Repayment of Secured

Loans 99 65 34

Investment in Fixed

Assets 47 47 Nil

Corporate purposes

including strategic

initiatives and

acquisitions 568 317 251

Issue expenses 75 61 14

Total 935 636 299



CERTIFICATIONS

Your Company has received the following certifications during the year 2009-2010:

1. Information Security Management System (ISMS) Certifications

(a) ISO 9001:2008

Your Company has been certified for the recently-introduced ISO 9001:2008 certification for its quality management system. The certification was accomplished without any instance of non-compliance across the organization.

The new ISO 9001:2008 certification specifies that an organization needs to demonstrate an ability to consistently provide products and services that meets customer and applicable statutory and regulatory requirements. The organization should also aim to enhance customer satisfaction through the effective application of the system, including processes for continual improvement of the system and the assurance of conformity to customer and applicable statutory and regulatory requirements. Your Company received the certification after a rigorous and extensive external audit carried out by DNV (Det Norske Veritas), an international independent company doing ISO certifications worldwide, via 300 offices in about 100 countries. DNV audited projects and support functions based on their respective Internal Service Level Agreement (ISLA). To prepare for the audits, the corporate quality team conducted Internal Quality Audits (IQA) to ensure the quality compliance associated with every project and support functions.

(b) ISO 27001

Your Company was recertified for ISO 27001 Information Security Management System. The certificate is awarded by the STQC IT Certification Services, which functions under the Ministry of Communications and Information Technology, Government of India.

ISMS-certified offices of your Company are located in Mumbai (MIDC and SEEPZ-SEZ, Andheri – East), Chennai, Nashik, Livonia and Burlington (USA).

The certification affirms the managements commitment toward an established information security management system that fulfills the requirements of the standard, involving risk management and prevention of data security threats, risks, impacts and vulnerabilities. The system is constantly monitored and reviewed.

2. SAS 70

Your Companys Finance & Accounting services have been certified for Statement on Auditing Standards (SAS) No. 70 (SAS 70) by the American Institute of Certified Public Accountants (AICPA). The certification represents the in-depth audits carried out by a outsourcing services provider of the control objectives for the client organization.

3. Learning & Development

Your Company launched a long-term learning & development initiative called Team Eagle @ Datamatics in

the past year. The programme aims at creating execution excellence and passion, infuencing change, and inculcating high energy and drive. The programme leverages business-critical projects to develop a new generation of leaders. EAGLE expands to Execution, Accountability, Go-getter, Lets-do-it-right-now attitude and Energize.

Team Eagle @ Datamatics programme involves on-the-job learning, strategic project-based capability building, executive coaching, study missions and participating in professional forums. For the programme, your Company tied up with Right Management, the worlds largest talent and career management consulting firm.

In 2009-10, a team of 21 Datamaticians delivered large productivity gains in the projects they were associated with.

Your Companys Learning & Development team also launched an outdoor experiential learning programme called Synergy. During the year, your Companys Learning & Development team designed and delivered various programmes to meet the training needs of professionals right from a trainee software engineer to President. Such continuous training has created professionals who are trained on the latest technologies, tools and techniques, and who work as highly-cohesive, coordinated teams to meet the organizations vision and mission.

Apart from this, over 40 professionals were certified as Project Management Professionals by the Project Management Institute, USA, in the past year. PMP – certified professionals are well-versed in tools and techniques required to contribute to the quality, efficiency and business results across the organization. Apart from this, hundreds of professionals successfully completed and received certifications such as Information Technology Infrastructure Library (ITIL) V 3.0, Sun Certified Java Programmer (SCJP) 5.0, HP Quick Test Professional 9.2, Microsoft Certified Technical Specialist, PRINCE 2 Practitioner and Executive Coaching Certification.

Your Company clocked 1,06,728 training person hours, during the year 2009-2010 by executing 714 training programs across locations.



SIGNIFICANT ACHIEVEMENTS

1. Excellence Award Certificate for Innovation

Your Companys Telecom & Embedded Engineering Services received the Excellence Award Certificate for Innovation at ACREX India 2010 for i-AC for embedded software that makes window air conditioners intelligent. The Competition included 250 companies like ABB, Larsen & Toubro, Bajaj, Carrier, Daikin, Emerson Network, Hitachi Home, Honeywell, LG, Lucas TVS, Mitsubishi and Pidilite.

ACREX India is the largest international exhibition and conference catering to the air conditioning, refrigeration, ventilation and building services industries that happens only once in 2 years. Datamatics showcased i-AC along with its partner Shanti Engineering.

i-AC is an innovative endeavor towards making a Green Earth. Using i-AC consumers, both corporate and individual home owners, can save up to 20% of energy used by their ACS. It uses infra-red sensors to detect the presence of people in a room and accordingly directs air. It can also switch between Air Conditioner and fan according to the rooms temperature variations. It also controls the ceiling fans speed.

2. Microsoft Gold Certification

This year, your Company received the highest Microsoft Gold Certification for the Custom Development Solution and Information Worker Solution. The benefits associated with the certification are access to the tools and support that partners need to help themselves stand out in the marketplace. At this level, we have the opportunity to build a close working relationship with Microsoft. Also, we received several software licensing and support benefits like training, subscription and promotion.

3. IBM Partner World Advanced

IBM upgraded its partnership with your Company to Advanced. As a result, our benefits have also expanded. This also means that Datamatics can now leverage the incremental resources of the Partner World Industry Networks helping us generate more leads and accelerate sales.

4. Datamatics-Jahia Partnership

Jahia, a premier provider of Web Content Integration software combining web, document and portal features, entered into a strategic partnership with your Company. Your Company will now provide cost-effective and scalable content management solutions for international organizations. The two companies share a strong commitment to corporate social responsibility, including open source and Java development. Your Company will partner Jahia on projects for international, humanitarian and healthcare organizations.

QUALITY

Your Company continues to focus on quality. Earlier your Company was the only Company to have won the International Asia Pacific Award for Quality for Services. 38 countries that included USA, Canada, Russia, Japan and Australia, countries that border the Pacific Ocean competed for this Award. This is a feather in the cap of your Company. The significant initiatives of your Company towards quality are:

(1) Six Sigma Initiative

Your organizations Process Improvement initiative saw 30 Six Sigma projects and 372 Quick Hit Projects being implemented. These projects delivered significant benefits to the organization. Till date, 231 Six Sigma Projects and 933 Quick Hit Projects have been completed since the launch of the initiative.

The vigor of the previous year continued in doing Productivity and Performance improvements through Six Sigma Initiatives. The initiative takes under its cap all productivity improvements using the Six Sigma methodology, as well as using any other methodology, and also Quick Hit projects, which are Kaizen type of improvements.

(2) Metrics

Your Company continued with the concept of measuring Delivery Index for each Line of Business and each Support Department. The initiative was introduced in 2008-09. The quality of all deliverables was monitored on a regular basis and feedback given to the Department Heads. Similarly the Schedule and Efforts were tracked. Having devised a measurement system for all of these we could give precise feedback. This has improved our performance and productivity.

SHARE CAPITAL

As on March 31, 2010, Paid-up Share Capital of the Company is Rs. 294,746,685 divided into 58,949,337 equity shares of Rs. 5/- each fully paid up.

During the year under review, the Company redeemed 8% 1,400,000 preference shares of Rs. 10/- each fully paid-up with fixed tenure, 8% 7,300,000 preference shares of Rs. 10/- each fully paid-up without fixed tenure and 9% 11,950,000 preference shares of Rs. 10/- each fully paid-up without fixed tenure.

DIRECTORS

Mr. Vidur V. Bhogilal and Mr. Sudhir C. Deshpande retire by rotation and being eligible offer themselves for reappointment. Dr. Lalit S. Kanodia is being reappointed as a Chairman and Whole Time Director for five years w.e.f. 15th May, 2010.

AUDITORS

M/s. Kanu Doshi Associates, Chartered Accountants, Mumbai, hold office until the conclusion of the forthcoming Annual General Meeting and have confirmed their eligibility and willingness to accept the office of the Auditors, if reappointed.

INFORMATION ON AUDITORS OBSERVATIONS

Observations of Auditors in point no. (iv) of Auditors Report regarding non-provisioning for diminution in the value of investments in the subsidiaries has been adequately explained in note 23 of Notes to the Accounts. However, it is further clarified that though the net worth of these overseas subsidiaries has declined, the management is confident of turning around the subsidiaries in near future. Hence it is decided not to make any provision for diminution in the value of investment made in the overseas subsidiaries. The other observations are self explanatory and need not be required to be further commented in this report.

AUDIT COMMITTEE

The present Audit Committee of the Board comprises of Mr. R. K. Saraswat, Mr. Sudhir C. Deshpande and Mr. Shahzaad Dalal. Mr. R. K. Saraswat is the Chairman of the Committee.

DISCLOSURE UNDER SECTION 217(1)(e) OF THE COMPANIES ACT, 1956

I. CONSERVATION OF ENERGY:

The information required in connection with conservation of energy, under section 217(1) (e) of the Companies Act, 1956 read with Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, the Directors furnish herein below the required additional information:

(a) Conservation of Energy - Our Company being in IT & ITeS industry, our operations are not energy intensive. Adequate measures have been taken to conserve energy.

(b) There were no additional investments and proposals, if any, being implemented for reduction of consumption

of energy as the nature of your Companys operations entails a very low level of energy consumption.

(c) Impact of the measures at (a) and (b) above for reduction of energy consumption and consequent impact on the cost of production of goods – N.A.

(d) Total energy consumption and energy consumption per unit of production – N.A.

FORM A: FORM FOR DISCLOSURE OF PARTICULARS WITH RESPECT TO CONSERVATION OF ENERGY

A. Power and fuel consumption: NIL.

B. Consumption per unit of production: NIL.

II. TECHNOLOGY ABSORPTION

Every effort is made by the Company to update the technological skills of its technical staff in order to ensure that they possess adequate skills to enable them to service the Companys clients.

FORM B: FORM FOR DISCLOSURE OF PARTICULARS WITH RESPECT TO TECHNOLOGY ABSORPTION ETC.

I. Research & Development (R&D): The Research & Development Centre, the hub of innovation in your Company, develops a range of innovative solutions and off-the-shelf products. Some of these solutions and products were powered by i-Q, the Artificial Intelligence-based smart document processing solution developed at our Research & Development Centre.

These solutions include Explanation of Benefts Processing, Healthcare Claims Processing, Account Opening Form Processing, Airway Bill, Bill of Lading, Interline Bills Processing, Stub Processing, i-CnC (Click-n-Capture), i-16A (Form 16 A Processing), and i-DART (Document, Archival, Retrieval and Tracking).

Process engineering and innovation are major focus areas in your Company. This focus has been the driving force behind the organization pioneering new processes. The clients of Datamatics have recognized the contribution of these innovations as being crucial to improving their productivity, efficiency and profitability.

The Research & Development Centre, the Software Support Group and F&A domain experts worked together to launch eProcess Manager+, an out-of-the-box solution with pre- defned workflow scenarios based on best business practices to manage business documents efficiently and effectively. This solution not only enables companies to streamline their business processes but also provides consistency and visibility over the process helping companies to comply with given regulations.

This is an addition to the existing ePayables/Manager solution portfolio, that your Company has been successfully implemented in 70 different projects across the globe. Other solutions in the family include eRM (eReceivableManager), eGL(eGeneralLedger), eTM (eTaxManager), eSurvey and ePledge.

Your Companys latest significant innovation is i-AC. Using i-AC consumers, both corporate and individual home owners, can save up to 20% of energy used by their air-conditioners.

Various other solutions launched during the year are:

- i-Architect - Intelligent application health check solution, software tool built on an extensible eclipse framework

- i-Mask - Masking sensitive data on documents

- i-CAT - Coding of open-ended responses from a range of market research methodologies

- Clinic - Integrated clinic management system

- i-DART - Intelligent document archival, retrieval and tracking solution

- DARTENIUM - High-productivity automation framework for web testing

- DARTS - Automated regression testing suite

- MobileServe - Web-based application for developing surveys on handheld devices

Intellectual Property Owned by Datamatics Global Services Limited

Datamatics now has copyrights registered in its name for the following solutions:

-One stop solution

-i-Q

-Cross Roads

-e-Payables Manager

-i- Mark

-Prism

-Panagon P-8 Data Migration Tool

-Socket Framework

All these solutions have been conceptualized, designed and created at the Research & Development Centre of your Company. As the needs of our customers demand, we will continue to deliver solutions that solve their business problems. Your Company has a high brand recall and intrinsic brand value associated with the name "DATAMATICS". Keeping this in mind, during the past year, the trademark "DATAMATICS" was registered with the Trade Marks Registry, Great Britain and Northern Ireland. Your Company is also getting the word mark ‘DATAMATICS and accompanying image/logo registered in the United States and with the EU Trade Mark offce in Alicante, Spain, which would be binding in all twenty seven member states of the European Union.

II. Technology Absorption, Adaptation and Innovation: Your Company has not imported any technology during the year under review other than purchase of software.

III. FOREIGN EXCHANGE EARNINGS AND OUTGO

I. Earnings in Foreign Exchange during the year: Rs. 1309.09 million.

II. Foreign Exchange outgo during the year: Rs. 107.76 million.

CORPORATE GOVERNANCE

A Report on Corporate Governance together with a certificate from the Auditors of the Company forms part of the Annual Report.

DETAILS OF GRANTS UNDER ESOP AS ON MARCH 31, 2010

Under the Key Employees Stock Option Plan 2006, options were to vest in the eligible employees in two (2) vestings. The second vesting was during the year under review; i.e 2009-2010. All the eligible employees have exercised their respective options under the said scheme.

The details of Employee Stock Option Plan required to be provided as per clause 12 of the SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 are as per Annexure "A" to this report.

HUMAN RESOURCES MANAGEMENT

We believe that people are the most valuable asset of the Company as they contribute individually as well as collectively to the achievement of business objectives. Your Companys endeavor is to provide suitable work environment that encourages positive attitude and superior performance. Human Resource policies of the company though business focused, are employee friendly, clear and concise, thereby providing employees with appropriate opportunities to grow professionally as well as personally.

The global manpower strength of your Company including its subsidiaries in the USA, UK, Australia and Germany as on March 31, 2010 was 2,757 employees.

Some of the areas that the Human Resource Management function has been consistently focusing upon are as follows:

EMPLOYEE RELATIONS

Maintenance of a cordial and supportive environment is a prerequisite for the smooth functioning of any organization. This requires the management and the employees to fully understand and respect each other. Acting as a link between these two important entities, the role of the dedicated ‘employee relations team is to build a healthy environment which is conducive to performance. On an ongoing basis, this team identifes and recommends to the management, necessary measures to maintain a positive climate and improve performance levels. Involving the organization as a whole in several fun & joy activities in the name of ‘Josh, this team ensures that the activities in the organization adds to the productivity and morale of the work force in the entity.

HR has been the cornerstone of your Company. Your Company, was the 3rd Company world-wide certifed at PCM level 5. We believe in developing Leadership qualities amongst our Employees. Your Company also encourages its Employees to go for outbound programs and improve Team motivation levels.

Training and Development are keys to the development and growth of our Employees. Training needs our constant identifcation of Employees current knowledge and skills vis-à-vis their skills required for the job. The gaps if any are met through Training programs published in the Calendar. These programs include Workshops, Seminars, Webinars, etc.

Internal Training Programs are encouraged, since we believe teaching is the best form of learning. The Company expended 1,06,657 training person hours during 2009-10.

Rewards and recognition in the form of monetary and non-monetary benefits stimulate greater performance. We are constantly recognizing and rewarding Employees who make a significant contribution to the Companys business. Our Reward

system includes Spot Awards, Employee of the Month as also our Annual Awards. All of these Awards recognize outstanding and consistent performance. Employees who have served the Company for long duration are also felicitated.

CORPORATE SOCIAL RESPONSIBILITY

Datamatics has recognized the underutilized potential of the educated and skilled physically-challenged professionals. Such individuals have a tremendous zeal to learn and are highly motivated to succeed against all odds. Your Company has provided such individuals an opportunity to contribute to the organizations growth while ensuring that they too beneft through the Knowledge Associates (KA) programme.

Datamatics has tied up with a non-governmental organization called NASSEOH (National Society for Equal Opportunities for the Physically Handicapped) and Amar Seva Sangam where nearly 60 physically-challenged individuals work as Knowledge Associates in the Outsourcing Management Team. Apart from these, nearly 20 KAs work from home.

Through the KA programme, Datamatics has provided such individuals the satisfaction of being financially independent, thus improving their status in society. The programme is tailor-made for individuals who cannot commit themselves to full-time employment or travel any distance to the place of work.

Datamatics has also enabled NGOs to provide opportunities for the physically-challenged by donating PCs to facilitate their IT set up. Trainers from the organization visit the NGOs and homes of the KAs to conduct training and feedback sessions. In some instances, a mentor co-coordinator is stationed at the NGO for 3-6 months to co-coordinate training & hardware setup.

As professionals, Datamatics treats the physically-challenged KAs on par with other employees, while ensuring the project managers take extra care and show empathy while managing these KAs.

Your Company has tied up with Jindal Group Company JSoft to provide employment to spouses of farmers in Bellary distrist, Karnataka. The project involves processing Healthclaim forms using i-Q, the smart document processing solution developed by your Company.

Initially, the project will involve 25 operators who have been trained by experts from your Company‘s project delivery team. In future, the plan is to ramp up the capacity to 100 operators and start operations at 2 locations as part of contingency plan.

PARTICULARS OF EMPLOYEES

The particulars of employees as required under Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 as amended, forms a part of this Report. However, in pursuance of Section 219(1)(b)(iv) of the Companies Act, 1956, this Report is being sent to all the shareholders of the Company, excluding the aforesaid information and the said particulars are made available at the registered office of the Company. Members interested in obtaining such particulars may write to the Company Secretary at the corporate office of the Company.

ACCEPTANCE OF FIXED DEPOSITS

The Company has not accepted any fixed deposits during the year.

DIRECTORS RESPONSIBILITY STATEMENT

As required under Section 217(2AA) of the Companies Act, 1956, it is hereby stated that:

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

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

3. the 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 your Company and for preventing and detecting fraud and other irregularities; and

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

ACKNOWLEDGEMENTS

The Directors thank the Companys customers, suppliers, bankers, financial institutions, Central and State Government and shareholders for their consistent support to the Company. The Directors also sincerely acknowledge the significant contribution made by all the employees of the Company and its subsidiaries during the year under review.



For and on behalf of the Board

Dr. Lalit S. Kanodia Chairman

Place : Mumbai Date : May 25, 2010