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Directors Report of Educomp Solutions Ltd.

Mar 31, 2014

Dear Shareholders,

The Directors of your Company have pleasure in presenting herewith the 20th Annual Report of your Company together with the audited accounts for the Financial Year ended 31st March 2014.

1. FINANCIAL PERFORMANCE:

The highlights of the consolidated and standalone audited financial results for the year ended 31st March 2014 are as follows:

(Rs. in million)

Particulars Consolidated Year Ended Audited

31.03.2014 31.03.2013

Sales and other Income 7,246.97 13,264.29

Net profit/ (Loss) (4,616.96) (1,532.94)

before tax

Provision for Tax (758.15) (104.17)

(3,858.81) (1,428.77)

Net profit/ (Loss) after tax

Minority interest and (251.24) (100.40) equity in earnings/ (losses) in affiliates/ Pre acquisition Loss/(profit)

Net profit/ (Loss) (3,607.56) (1,328.37) after tax for the year

Appropriations

Interim Dividend - 30.06

Proposed Dividend on 16.65 22.09 equity shares

Corporate Tax on - 5.99 distributed dividend

Transfer to Debenture - 89.00 Redemption Reserve

Transfer to General 4.45 3.69 Reserve



Particulars Standalone Year Ended Audited

31.03.2014 31.03.2013

Sales and other Income 3171.77 8,204.04

Net profit/ (Loss) (3319.28) (489.76)

before tax

Provision for Tax (196.98) (82.56)

(3122.30) (407.20)

Net profit/ (Loss) after tax

Minority interest and - - equity in earnings/ (losses) in affiliates/ Pre acquisition Loss/(profit)

Net profit/ (Loss) (3122.30) (407.20) after tax for the year

Appropriations

Interim Dividend - -

Proposed Dividend on - - equity shares

Corporate Tax on - - distributed dividend

Transfer to Debenture - - Redemption Reserve

Transfer to General - - Reserve

2. DIVIDEND AND TRANSFER TO RESERVE:

In view of the losses incurred by the Company, your Directors have not recommended any dividend for the financial year ended March 31, 2014.

In view of the losses incurred by the Company, no amount has been transferred to reserve for the financial year ended March 31, 2014.

3. OPERATING RESULTS AND BUSINESS:

We enjoy long-term annuity relationships with both private schools as well as government customers, ranging from three to five years. Our revenues are predictable & locked in for three to five years on account of the contractual nature of our business.

In the Smart Class ™ segment, we have added 327 new customers taking the total number of schools to 15,126 as on March 31, 2014.

In Edureach (formerly ICT) business segment, we have an ongoing partnership with 14 State Governments and reaches to 10711 Government schools in various states and 7.9 million students as on March 31, 2014.

On Standalone basis Company''s total revenue stands at Rs. 3,171.77 million as on March 31, 2014 as compared to Rs. 8,204.04 million as on March 31, 2013, a decline of 61.34%. The loss before taxes is Rs. 3,319.28 million as on March 31, 2014 as against loss before taxes of Rs. 489.76 million as on March 31, 2013.

On Consolidated basis Company''s t2tal revenue stands at Rs. 7,246.97 million as on March 31, 2014 as compared to Rs. 13,264.29 million as on March 31, 2013, registering a decline of 45.36%. The loss before tax and after prior period items/exceptional items stands at Rs. 4,616.96 million as on March 31, 2014 as against loss of Rs. 1,532.94 million As on March 31, 2013.

SEGMENTAL PERFORMANCE (STANDALONE):

The EBIT margins in the School learning solutions (SLS) Segment of the Company for the year amounted to Rs. (1,698.62) million or (83.53%) of SLS revenues as on March 31, 2014 as compared to Rs. 1,089.70 million or 17.37% of SLS revenues as on March 31, 2013.

The EBIT margins in the Higher learning solutions (HLS) segment of the Company for the year amounted to Rs. 38.73 million or 50.78% of HLS revenues as on March 31, 2014 as compared to Rs. 10.34 million or 11.11% of HLS revenues as on March 31, 2013.

The EBIT margins in the K-12 Schools Segment of the Company for the year amounted to Rs. 3.28 million or 46.33% of K-12 segment revenues as on March 31, 2014 as compared to Rs. 15.52 million or 93.38% of K-12 segment revenues as on March 31, 2013.

The EBIT margins in Online Supplemental and Global (OSG) segment of the Company for the year amounted to Rs. (15.89) million or (2.25%) of OSG segment revenues as on March 31, 2014 as compared to Rs. 15.23 million or 1.61% of OSG revenues as on March 31, 2013.

EXPENDITURE (STANDALONE):

Cost of Goods Sold (COGS) has decreased to 37.1% of our total revenue as on March 31, 2014 from 40.90% as on March 31, 2013. This decrease is on account of change in revenue and cost recognition method from upfront recognition to recognition our the period of rendering services.

Personnel expenses have increased to 44.90% of total revenue as on March 31, 2014 from 23.96% as on March 31, 2013. Other expenses have increased to 39.81% as on March 31, 2014 from 17.55% of total revenue as on March 31, 2013. This increase is essentially because of the fall in revenues and the absolute expanses have infact reduced.

DEBT RESTRUCTURING

One of the biggest accomplishments in addressing the cash flow issue has been successful completion of Corporate Debt Restructuring ("CDR") mechanism for two of the main companies where major debt resided, i.e., Educomp Solutions Limited and Educomp Infrastructure and School Management Limited. During the process of CDR, consortium of lenders performed a detailed assessment of company''s business fundamentals keeping in mind next 10-15 years and restructured their debts accordingly. This is a big vote of confidence by the bankers of the business prospects of the company.

4. CHANGES IN CAPITAL STRUCTURE:

AUTHORIZED SHARE CAPITAL

Authorised Share Capital of the Company is Rs. 40,00,00,000/- (Rupees Forty Crores Only) divided into 20,00,00,000 (Twenty Crores) equity shares of Rs. 2/- (Rupees Two Only) each.

ISSUED AND PAID-UP SHARE CAPITAL

During the year under review, the Company allotted 33575 Equity Shares of face value of Rs. 2/- each upon exercise of stock options under Employee Stock Option Scheme 2006.

In year 2012-13, on 26th July, 2012, the company had issued and allotted 11,479,096 warrants to M/s. A P Eduvision Pvt. Ltd, a promoter group entity, at an issue price of Rs. 193.74 per warrant, as per the provisions of Chapter VII of SEBI (ICDR) Regulations, 2009, convertible into equal number of equity shares of the face value of Rs. 2/- each and convertible within a period of 18 months from the date of allotment. In 2012-13, out of the total warrant issued, 2,979,939 equity shares of face value of Rs. 2 each at a premium of Rs. 191.74 were allotted to M/s A P Eduvision Pvt. Ltd. upon the conversion of warrants issued under provisions of Chapter VII of SEBI (ICDR) Regulations, 2009.

Further, as per the terms of issue, M/s A P Eduvision Pvt. Ltd was entitled to apply for and obtain one equity shares of par value of Rs. 2/- each against the remaining 8,499,157 warrants held as per the terms of issue of these warrants, upon payment of exercise price of Rs. 193.74 per warrant, as reduced by the 25% upfront money paid at the time of the allotment of warrants. The last date for the exercise of the conversion option/said right was January 25, 2014 i.e. 18 months from the date of their allotment.

However, the warrant holder has not exercised its option to convert the aforesaid 84,99,157 warrants into equity shares of the company. Accordingly, as per the term, the company during the financial year 2013-14 had forfeited 8,499,157 warrants, due to non receipt of balance 75% of the issue price in the stipulated period of 18 months from the date of issuance of these warrants.

Post 31st March, 2014 & till 12th August 2014, the Company has allotted 26100 Equity Shares of face value of Rs. 2/- each upon exercise of stock options by the eligible employees/Directors of the Company/subsidiaries under Employee Stock Option Scheme 2006.

The paid up capital after taking the effect of aforesaid changes, stood at Rs. 24,49,34,336/- consisting of 122467168 of the face value of Rs. 2/- each as on 12th August, 2014.

5. FOREIGN CURRENCY CONVERTIBLE BONDS

US$ 10 Million Zero Coupon Foreign Currency Convertible Bonds In Year 2012-13, the Company had raised US$ 10 million, Zero Coupon Foreign Currency Convertible Bonds (FCCB) for redemption of outstanding Zero Coupon Foreign Currency Convertible Bonds. The Bond holders, as per the agreement, have the option to convert these bonds into Equity Shares, at a price of Rs. 188.62 per share with in 5 years and 1 day from the date of disbursement. The FCCB are redeemable at a premium of 33.15 % on principal after 5 years and 1 day. The FCCB were raised for the purposes of redemption of earlier FCCB of the Company. As on March, 31, 3014 US$ 10 million (previous year US$ 10 million) FCCB were outstanding for conversion into equity shares of Rs. 2 each.

6. SECURED, REDEEMABLE, NON-CONVERTIBLE DEBENTURES & EXTERNAL COMMERCIAL BORROWINGS

Non-Convertible Debentures

As on 31st March 2014, the Company has outstanding Secured Non- Convertible Debentures for an aggregate value of Rs. 45 Crores comprising 350, 13.5% Secured Non-Convertible Debentures (Listed on Bombay Stock exchange) of the face value of Rs. 10,00,000/- each aggregating to Rs. 35 Crores and 100, 13.25% Secured Non-Convertible Debentures of the face value of Rs. 10,00,000/- each aggregating to Rs. 10 Crores.

External Commercial Borrowings

In Year 2012-13, the Company has raised US$ 70 million through External Commercial Borrowing (ECB) comprising US$ 30 million from International Financial Corporation (IFC) a member of the World Bank Group and US$ 40 million from Societe De Promotion Et De Participation Pour La Cooperation Economique (PROPARCO), a French development financial institution. The ECB has a term of 8.5 years with a 3 years moratorium and the coupon rate is LIBOR 4.5%. The ECB has been raised for purposes of redemption of existing FCCB. The said ECB is outstanding at the Financial Year ending on March 31, 2014.

7. PUBLIC DEPOSITS:

During the year under review, the Company did not accept any deposits with in the meaning of the provisions of Section 58A of the Companies Act, 1956.

8. SUBSIDIARIES/JOINT VENTURE/ASSOCIATES

As on March 31, 2014, the Company had 47 Subsidiaries, 1 Joint ventures having 1 subsidiaries and 1 Associates.

During the year under review, Company has sold its entire 50% stake in the loss making vocational training business (IndiaCan Education Private Limited), to its JV partner Pearson.

9. PARTICULARS REQUIRED AS PER SECTION 212 OF THE COMPANIES ACT, 1956 & CONSOLIDATED FINANCIAL STATEMENT:

Ministry of Corporate Affairs, vide its circular dated February 8, 2011 has granted general exemption from attaching the Balance Sheet, Profit and Loss Account and other documents of the subsidiary companies with the Balance Sheet of the Company.

Board of Directors of the Company in its meeting held on 26th May 2014 consented for not attaching the balance sheet of the subsidiary companies. A statement containing 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 detailed information will be made available to any member of the Company/its subsidiaries seeking such information at any point of time and are also available for inspection by any member of the Company/its subsidiaries at the registered office of the Company. The annual accounts of the said subsidiaries will also be available for inspection, as above, at the head offices/registered offices of the respective subsidiary companies. The Company shall furnish a copy of details of annual accounts of subsidiaries to any member on demand.

Further the annual report of the Company contains the consolidated audited financial statements prepared, pursuant to Clause 41 of The Listing Agreement entered into with the stock exchanges and prepared in accordance with the accounting standards notified by Ministry of Corporate Affairs under Accounting Standard Rules 2006.The financial data of the subsidiaries has been furnished along with the statement pursuant to Section 212 of the Companies Act, 1956 forming part of the Annual Report.

10. DIRECTORS:

As on 31st March 2014, Board of Directors of Educomp Solutions Limited comprises of two Executive Directors namely Mr. Shantanu Prakash, Chairman & Managing Director and Mr. Vinod Kumar Dandona, Whole Time Director and Four Independent Non-Executive Directors, namely Mr. Shonu Chandra, Mr. Rajat Khare, Mr. Vijay Kumar Choudhary and Dr. Venkata Subbarao Valluri.

During the year Dr. Shyama Chona had resigned from the Board on 29th July, 2013 and Dr. Venkata Subbarao Valluri was appointed as an additional Director of the Company w.e.f 31st July 2013. Mr. Jagdish Prakash and Mr. Sankalp Srivastava had resigned from the Board with effect from 13th November 2013 and Mr. V K Dandona, Mr. Rajat Khare and Vijay K Choudhary were appointed as additional Director(s) of the Company w.e.f 13th November 2013. Mr. Rajiv Krishan Luthra and Mr. Roy Campbell II had resigned from the Board with effect from 22nd November 2013 and 15th January 2014, respectively.

The Board of Directors records its appreciation & recognition of the valuable contribution and services rendered by the director(s) resigned.

Mr. Vijay Kumar Choudhary; Mr. Rajat Khare; and Mr. Vinod Kumar Dandona will hold office of the Additional Director up to the date of the ensuing Annual General Meeting. The Company has received Notice under Section 160 of the Companies Act, 2013 from a member signifying his intention to propose the candidature of Mr. Vijay Kumar Choudhary; Mr. Rajat Khare; Mrs. Swati Sinha; Mr. Shonu Chandra; Dr. Venkata Subbarao Valluri and Mr. Vinod Kumar Dandona for the office of Director(s) at the ensuing Annual General Meeting.

The Company, pursuant to the applicable provisions of the Companies Act, 2013 and listing agreement, proposes the appointment of Mr. Vijay Kumar Choudhary; Mr. Rajat Khare; Mrs. Swati Sinha; Mr. Shonu Chandra and Dr. Venkata Subbarao Valluri as Independent Directors of the Company. The Company has received declarations from the said Independent Directors confirming that they meet the criteria of independence as prescribed both under sub-section (6) of Section 149 of the Companies Act, 2013 and under the said Clause 49. In accordance with the provisions of Section 149 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.

In terms of the Companies Act, 2013, directors other than independent directors shall only be considered for ascertaining the directors liable to retire by rotation. Further as per section 152 of the Companies Act, 2013 Mr. Shantanu Prakash is the Director liable to retire by rotation and further being eligible, offers themselves for re-appointment at the ensuing Annual General Meeting.

The brief resume and other details relating to the directors, who are to be appointed/ re-appointed as stipulated under Clause 49(IV)(G) of the Listing Agreement, are furnished in the Notice of AGM forming part of the Annual Report.

The Company also has Audit Committee which is constituted as per requirement of Section 292A of the Companies Act, 1956 and Section 177 of the Companies Act, 2013 and Clause 49 of Listing Agreement. Audit Committee has 4 members out of which 3 are Non-Executive Independent Directors and one is Executive Director. Chairman of Audit Committee is an Independent Non-Executive Director.

11. STATUTORY DISCLOSURES:

The Company has received Form DD-A from all Directors as required under the provisions of Section 274(1)(g) of the Companies Act, 1956 read with Companies (Disqualification of Directors under Section 274 (1) (g) of the Companies Act, 1956) Rules, 2003.

None of the Directors of your Company is disqualified as per provision of Section 274(1)(g) of the Companies Act, 1956. The Directors of the Company have made necessary disclosures, as required under various provisions of the Companies Act, 1956 and Clause 49 of the Listing Agreement.

12. HUMAN RESOURCE MANAGEMENT:

Educomp is an equal opportunity employer with total employee strength of 10927 as on 31st March, 2014 as compared to 16919 as on 31st March, 2013.

The Company has a suitable recruitment and human resource management process, which enables us to attract and retain high caliber employees. Company has created incentive driven remuneration policies which act as an effective retention tool.

13. DIRECTORS RESPONSIBILITY STATEMENT:

In pursuance of provisions of Section 217(2AA) of the Companies Act, 1956, we hereby confirm that:

1) That in the preparation of the Annual Accounts for the period ended as on 31st March 2014, the applicable Accounting Standards have been followed and no material departure has been identified.

2) Accounting Policies have been consistently applied in a reasonable and prudent manner so as to give true and fair view of the state of affairs of the Company for the financial year ending 31st March 2014 and of the Profit and Loss Account for the financial year ending as on 31st March 2014

3) Proper and sufficient care has been taken for the maintenance of adequate records in accordance with the applicable provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

4) The Annual Accounts for the Financial Year ended on 31st March 2014 have been prepared on the going concern basis.

14. auditors & auditors'' REPORT:

Haribhakti & Co. LLP, Chartered Accountants (ICAI Firm Registration No. 103523W), who are the Statutory Auditors of the Company, hold office until the conclusion of the ensuing Annual General Meeting. It is proposed to re-appoint M/s Haribhakti & Co. LLP, Chartered Accountants (ICAI Firm Registration No. 103523W) to examine and audit the accounts of the Company for Five years to hold office from the conclusion of this AGM till the conclusion of the Twenty Fifth AGM of the Company to be held in the year 2019 subject to ratification of their appointment at every AGM. M/s Haribhakti & Co. LLP have, under Section 139(1) of the Companies Act, 2013 and the Rules framed thereunder furnished a certificate of their eligibility and consent for re-appointment.

M/s Haribhakti & Co converted itself into a Limited Liability Partnership (LLP) under the provisions of the Limited Liability Partnership Act, 2008 and is now known as Haribhakti & Co LLP. In terms of the Ministry of Corporate Affairs, Government of India, General Circular No. 9/2013 dated April 30, 2013, if a firm of CAs, being an auditor in a company under the Companies Act, 1956, is converted into an LLP, then such an LLP would be deemed to be the auditor of the said company.

The Directors refer to the auditors'' qualification, matter of emphasis, observation in the Annexure to Independent Auditors'' Report and as required under Section 217(3) of the Companies Act, 1956, provide their explanation as under:

management''s RESPONSE TO AUDITORS'' QUALIFICATION, MATTER of emphasis and auditors'' observations -

Management Response to the Qualification in the consolidated audit report for the Financial Year ending 31st March 2014:

As per the terms of MRA and approved CDR scheme of Educomp Infrastructure & School Management Limited, a subsidiary of the company, there are certain assets which have been identified for sale in a time bound manner. The lead bank carried out a valuation of these assets which are indicative in nature. Market valuations have not been carried out by the Company as some of these assets are not ready for sale due to pending regulatory approvals/permissions.

Based on recent firm offers and latest valuation reports, the management believes that the market value of investments may be higher than as considered under the indicative valuation reports used for CDR Scheme. Differences, if any, will be adjusted at the time of sale of such assets.

Management Response to the Matter of Emphasis in the consolidated audit report for the Financial Year ending 31st March 2014:-

Response to point (a)

In this regard the management of the Company and Educomp Infrastructure & School Management Limited (EISML) are in the process of making necessary application to the Central Government to obtain its approval for the waiver/approval of the remuneration so paid, in due course.

Response to point (b)

The Company as part of its regular recoverability evaluation process, identified certain trade receivables amounting to Rs. 11,654 lacs as doubtful of recovery. Consequently, the management provided the said amount as doubtful debts, out of which Rs. 7,000 lacs has been provided for during the quarter end March 31, 2014 which has been disclosed as exceptional item. Further, the auditors have specifically provided that their opinion is not qualified in this regard.

Response to point (c)

Due to longer than expected gestation period of schools, recoverability of trade receivables from trusts, due to the subsidiary Company EISML has been slow. The management of EISML, is regularly monitoring the growth in schools and their future projections, based on which, the management believes that the trade receivables from the trusts are fully recoverable. Further, the auditors have specifically provided that their opinion is not qualified in this regard.

Response to point (d)

The Company assessed the business projections of its 2 subsidiaries Educomp Online Supplemental Services Limited and Educomp Child Care Private Limited and one of its associates Greycells18 Media Limited and concluded that their business is sustainable on a going concern basis.

The Company evaluated the recoverability of its share of net assets held through these Companies, using business valuations performed by independent experts. The said evaluation is based on the long term business plans of its subsidiaries/associates and concluded no adjustments to the carrying value of its share in net assets is required to be recorded in the Consolidated financial statements of the Company for the year ended March 31, 2014. Further, the auditors have specifically provided that their opinion is not qualified in this regard.

Response to point (e)

The management is continuously monitoring the settlement of these balances and is regularly following up with respective parties for recovery of the said capital advances. The management believes that other capital advances, which have not been provided for, although have been long outstanding but are fully recoverable and hence the management believes that existing provision recorded in books is sufficient to cover any possible future losses on account of non recovery of such capital advances. Further, the auditors have specifically provided that their opinion is not qualified in this regard.

Response to point (f)

The Company has evaluated the recoverability, using valuations performed by an independent valuation expert, of intangible assets in the form of Brand "Universal". The said evaluation is based on long term business plans and underlying assumptions used for the purpose of valuation, which in view of the management are realistic and achievable by the subsidiary. Accordingly, the management has concluded that no adjustments to the carrying value of the intangible assets aggregating to Rs. 9,268 lacs is required to be recorded in the financial statements for the year ended March 31, 2014. Further, the auditors have specifically provided that their opinion is not qualified in this regard.

Response to point (g)

As at year end, the joint venture of the Group, Educomp Raffles Higher Education Limited has foreign currency receivables of Rs. 164.70 lacs which are outstanding for a period greater than one year. As per the Reserve Bank of India''s (RBI) Master Circular on Export of Goods and Services, foreign currency receivables should be realized, except with prior approval of RBI, within a period of one year. Further, as at year end the joint venture has netted off foreign currency payables of Rs. 122.55 lacs against its foreign currency receivables. As per the Reserve Bank of India''s (RBI) Master Circular on Export of Goods and Services, foreign currency receivables cannot be set off against foreign currency payables except with prior approval of RBI. The management of the Company believes that the non compliance emphasized by the auditors of the joint venture is procedural in nature and it does not expect any significant penalties or fines to be levied on account of this matter. The joint venture is in the process of making application with the concerned authorities for regularization of this matter. Further, the auditors have specifically provided that their opinion is not qualified in this regard.

Response to point (h)

During the year, the Company has reviewed business plan of its joint venture, Educomp Raffles Higher Education Limited which has advanced loans to Jai Radha Raman Education Society (Society) and its subsidiary Millennium Infra Developers Limited which has receivable from same society under contractual obligation. The Company has considered the business plan of the society and estimated market value of its net assets based on which no adjustment is required in carrying value of its share of net assets in such joint venture. Further, the auditors have specifically provided that their opinion is not qualified in this regard.

Management response to the Matter 2f Emphasis in the standalone audit report for the Financial Year ending 31st March 2014:-

Response to point (a)

In this regard the management of the Company is in the process of making necessary application to the Central Government to obtain its approval for the waiver/approval of the remuneration so paid, in due course.

Further, the auditors have specifically provided that their opinion is not qualified in this regard.

Response to point (b)

The Company as part of its regular recoverability evaluation process, identified certain trade receivables amounting to Rs. 11,654 lacs as doubtful of recovery. Consequently, the management provided the said amount as doubtful debts, out of which Rs. 7,000 lacs has been provided for during the quarter end March 31, 2014 which has been disclosed as exceptional item. Further, the auditors have specifically provided that their opinion is not qualified in this regard.

Response to point (c)

During the year, the Company assessed the business projections of its 2 subsidiaries Educomp Online Supplemental Services Limited and Educomp Child Care Private Limited and one of its associates Greycells 18 Media Limited and concluded that their business is sustainable on a going concern basis. The Company evaluated the recoverability of its share of net assets held through these Companies, using business valuations performed by independent experts. The said evaluation is based on the long term business plans of its subsidiaries/associates and concluded no adjustments to the carrying value of its share in net assets is required to be recorded in the financial statements of the Company for the year ended March 31, 2014. Further, the auditors have specifically provided that their opinion is not qualified in this regard.

Explanation to the observations in the Annexure to Independent Auditors'' Report, as required under the companies Act, explanation on the same as under:

(ix) (a) In respect of auditors'' observation in standalone financial statements regarding delay in the depositing statutory dues.

In this regard it has been clarified that the delays arose on account of mismatches of cash inflow and outflows which were subsequently rectified.

(x) In respect of auditors'' observation in standalone financial statements regarding cash losses incurred by the company during the Financial Year.

In this regard, it has been clarified that the cash losses were occurred due to higher finance cost. Further, management is continuously taking corrective steps to reduce the cash losses by way increasing revenue and along with minimizing cost.

(xi) In respect of auditors'' observation in standalone financial statements regarding certain default in repayment of dues to financial institutions and banks.

It was clarified that the delay in payment of dues was from mismatches of cash inflows and outflows. Further management believes that, with improved business scenario, the company will be able to meet its obligation in time.

(xix) In respect of auditors'' observation in standalone financial statements regarding creation of partial security on the Non Convertible Debentures (NCD).

It was clarified that the company is taking necessary steps to create security in respect of NCD of the company.

15. SHARE REGISTRATION ACTIVITY:

Company has appointed "LINK INTIME INDIA PRIVATE LIMITED" a category-I Registrar and Share Transfer Agent reregistered with SEBI to handle the work related to Share Registry.

16. CONSOLIDATED FINANCIAL STATEMENTS:

As required under the Listing Agreements with the Stock Exchanges Consolidated Financial Statements of the Company and all its subsidiaries are attached. The consolidated Financial statements have been prepared in accordance with Accounting standard 21 ,Accounting standard 23 and Accounting standard 27 issued by The Institute of Chartered Accountants of India and showing the financial resources, assets, liabilities, income, profits and other details of the Company and its subsidiaries as a single entity, after elimination of minority interest.

17. LISTING OF SHARES:

The Equity Shares of your Company are listed on National Stock Exchange of India Limited (NSE) and Bombay Stock Exchange Limited (BSE). The Listing fee for the financial year 2014-15 has already been paid to BSE and NSE.

18. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, ADOPTION AND INNOVATION, FOREIGN ExCHANGE EARNINGS AND OUTGO:

The particulars are prescribed under section 217(1) (e) of the Companies Act, 1956, read with the Companies (Disclosure of particulars in the report of Board of Director s) Rules, 1988 are set out in an Annexure A attached to this report.

19. RATINGS, AWARDS, ACHIEVEMENTS & RECOGNITIONS:

Ratings

Credit Analysis & Research Ltd, or CARE, has reaffirmed the following ratings in relation to our long term and short term financing facilities:

Long term facilities: ''CARE D'' (Single D) to our long term facilities i.e. facilities having tenure of more than one year, aggregating to Rs. 299.07 Crore.

Short term facilities: ''CARE D'' ( Single D) to our short term facilities i.e. facilities having tenure of less than one year, aggregating to Rs. 410 Crore.

Receivable assignment facilities: ''CARE D'' ( Single D) to our Receivable Assignment facilities, aggregating to Rs. 404.08 Crore.

Non-Convertible Debentures (NCDs): ''CARE D'' (Single D) to our NCD issuance of Rs. 45 crore.

AWARDS, ACHIEVEMENTS & RECOGNITIONS:

In exploring the horizons of what learning can be, accolades and awards have come our way, awards which have reiterated our resolve to live our vision everyday and fulfill our mission.

Over the year, Educomp, its affiliates and it leadership has won recognition from several renowned institutions.

* PricewaterhouseCoopers (PwC) report ranks Educomp at No. 85 among the top 100 software vendors in the emerging markets, commanding a combined revenue of $797 million, and among the 16 Indian companies that have made it to the list.

* Educomp ranked No. 12 in Business World''s India''s fastest growing companies (May 2013).

* Educomp Childcare Pvt. Ltd. received World Education Award in category "Best Tablet Providers in Education", for unique and innovative initiatives in the field of education globally, after rigorous screening by eminent jury members and by receiving substantial online public votes.

* JRE School of Management ranked 39th in India''s Best B-Schools-Career Connect (December 2013)

* Karman Singh, a student of Grade 7 of The Millennium School Patiala, won gold medal in 200 meters race in The Special Olympics 2013 Asia Pacific Games. He was part of the 527-member Indian contingent which took part in the games held at Newcastle, NSW, Australia, in December 2013.

20. Report on Corporate Governance and Management Discussion & Analysis

Committed to good corporate governance practices, your company fully conform to standards set out by SEBI and other regulatory authorities and has implemented and complied with all of its major stipulations. As per clause 49 of the Listing Agreement, a report on Corporate Governance along with Compliance Certificate from the Practicing Company Secretary and Management Discussion and Analysis Report are annexed and forms part of this Annual Report.

21. CODE OF CONDUCT:

As per Clause 49 (I) (D), the Board of the Company has laid down Code of Conduct for all the Board members of the Company and Senior Management as well and the same has been posted on Website of the Company. Annual Compliance Report for the year ended 31st March 2014 has been received from all the Board members and senior management of the Company regarding the compliance of all the provisions of Code of Conduct. Declaration regarding compliance by Board members and senior management personnel with the Company''s Code of Conduct is hereby attached as Annexure B to this report.

22. NOTES TO ACCOUNTS:

They are self-explanatory and do not require any explanations.

23. PARTICULARS OF EMPLOYEES:

In Terms of the provisions of Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975 as amended, the names and other particulars of the employees are set out in the Annexure -"C" to the Director''s Report.

24. EMPLOYEES STOCK OPTION SCHEMES (ESOPS)

The growth of the Company has, in large measure, been possible owing to the wholehearted support, commitment and teamwork of its personnel. Accordingly, the Company has introduced ES0P-2006, ES0P-2007, ESOP- 2008, ESOP-2010, ESOP-2011 and ESOP-2012 for its employees and employees of its subsidiary companies.

The details of options granted under ESOP-2006, ESOP-2007, ESOP - 2008, ESOP - 2010, ESOP - 2011 and ESOP - 2012 is attached as Annexure D

A certificate from Statutory Auditors, with respect to the implementation of the Company Employee''s Stock Option schemes, would be placed before the shareholders at the ensuing Annual General Meeting, and a copy of the same shall be available for inspection at the registered office of the Company.

25. DISCLOSURE PURSUANT TO CLAUSE 5A OF LISTING AGREEMENT

Pursuant to insertion of clause 5A in listing Agreement as per SEBI notification no. SEBI/CFD/DIL/LA/1/2009/24/04 dated April 24, 2009 the details in respect of the shares lying in the suspense account till March 31, 2014 is as under.

Description No. of No. of Shares Cases

1. Aggregate number of shareholders 3 750 and the outstanding shares in the initiation of suspense account.

2. Number of shareholders who 0 0 approached the Company for transfer of shares from suspense account during the year 2013-14

3. Number of shareholders to whom shares were transferred from 0 0 suspense account during the year 2013-14

4. Aggregate number of shareholders 3 750 and the outstanding shares in the suspense account lying as on March 31, 2014

All the unclaimed shares are being credited to a DEMAT suspense account and all the corporate benefits in terms of securities, accruing to on these unclaimed shares shall be credited to such account. Voting rights on these shares shall remain frozen till the rightful owner of such shares claims the shares.

26. CORPORATE GOVERNANCE:

The Company has always been committed to maintain the highest standards of Corporate Governance and adhere to the Corporate Governance requirements as set out by Statutory Bodies.

The Ministry of Corporate Affairs, Government of India, introduced the Corporate Governance Voluntary Guidelines, 2009. These guidelines have been issued to provide Corporate India a framework to govern themselves voluntarily as per the highest standards of ethical and responsible conduct of business. The Guidelines broadly outline conditions for appointment of directors (including independent directors), guiding principles to remunerate directors, responsibilities of the Board, risk management, the enhanced role of Audit Committee, rotation of audit partners and firms and conduct of secretarial audit. Your company is already by and large complying with the voluntary guidelines Corporate Governance various requirements.

27. ACKNOWLEDGEMENT:

Your Directors wish to place on record their appreciation for the Co-operation and support received from the Government and Semi-Government agencies.

Your Directors are also thankful to all the bankers and financial institutions for their support to the Company. The Board places on record its appreciation for continued support provided by the esteemed customers, suppliers, consultants and shareholders.

The directors also acknowledge the hard work, dedication and commitment of the employees of the Company and its subsidiaries. The enthusiasm and unstinting efforts of the employees have enabled the Company to continue being a leading player in the Education field.

For and on Behalf of the Board of Directors

Sd/- Date : 12th August 2014 (Shantanu Prakash) Place : Gurgaon, Haryana Chairman & Managing Director


Mar 31, 2013

Dear Shareholders,

The Directors of your Company have pleasure in presenting herewith the 19th Annual Report of your Company together with the audited accounts for the Financial Year ended 31st March 2013.

1. FINANCIAL PERFORMANCE :

The highlights of the consolidated and standalone audited financial results for the year ended 31st March 2013 are as follows:

(Rs. in million)

Particulars Consolidated Year Ended Standalone Year Ended Audited Audited

31.03.2013 31.03.2012 31.03.2013 31.03.2012

Sales and other 13,264.29 15,224.36 8,204.04 10,920.37

Income Net Profit/(Loss) (1,532.94) 1,945.30 (489.76) 2,444.80 before tax

Provision for Tax 104.17 574.74 82.56 555.77

Net Profit/(Loss) (1,428.77) 1,370.56 (407.20) 1,889.03 after tax

Minority interest and 100.40 15.201 equity in earnings/ (losses) in affiliates/

Pre acquisition Loss/ (Profit)

Net Profit/(Loss) (1,328.37) 1,355.36 (407.20) 1,889.03 after tax for the year

Appropriations

Interim Dividend 30.06

Proposed Dividend 22.09 45.62 28.99 on equity shares

Corporate Tax on 5.99 5.57 4.70 distributed dividend

Transfer to 89.00 209.39 Debenture Redemption Reserve

Transfer to General 3.69 99.45 94.45

Reserve

2. DIVIDEND:

In view of the losses incurred by the Company, your Directors have not recommended any dividend for the financial year ended March 31, 2013.

3. OPERATING RESULTS AND BUSINESS:

We enjoy long-term annuity relationships with both private schools as well as government customers, ranging from three to five years. Our revenues are predictable & locked in for three to five years on account of the contractual nature of our business.

In the SmartClass segment, we have added 2,171 new customers taking the total number of schools to 14,823 as on March 31, 2013.

In Edureach (formerly ICT) business segment, we have an ongoing partnership with thirteen state Governments and reaches to 10,771 Government schools in various states and 5.1 million students as on March 31, 2013.

On Standalone basis Company''s total revenue stands at Rs. 8,204.04 million as on March 31, 2013 as compared to Rs. 10,920.37 million as on March 31, 2012, a decline of 24.87%. The loss before tax is Rs. 489.76 million as on March 31, 2013 as against profit before tax of Rs. 2444.80 million as on March 31, 2012.

On Consolidated basis Company''s total revenue stands at Rs.13,264.29 million as on March 31, 2013 as compared to Rs.15,224.36 million as on March 31, 2012, registering a decline of 12.87%. The loss before tax and after prior period items stands at Rs.1,532.94 million as on March 31, 2013 as against profit of Rs. 1,945.30 million as on March 31, 2012.

SEGMENTAL PERFORMANCE (STANDALONE):

The EBIT margins in the School learning solutions (SLS) Segment of the Company for the year amounted to Rs. 1,089.70 million or 17.37% of SLS revenues as on March 31, 2013 as compared to Rs.4,275.39 million or 40.81% of SLS revenues as on March 31, 2012.

The EBIT margins in the Higher learning solutions (HLS) segment of the Company for the year amounted to Rs. 10.34 million or 11.11% of HLS revenues as on March 31, 2013 as compared to Rs.43.48 million or 32.03% of HLS revenues as on March 31, 2012.

The EBIT margins in the K-12 Schools Segment of the Company for the year amounted to Rs.15.52 million or 93.38% of K-12 segment revenues as on March 31, 2013 as compared to Rs. 13.81 million or 97.85% of K-12 segment revenues as on March 31, 2012.

The EBIT margins in Online Supplemental and Global (OSG) segment of the Company for the year amounted to Rs. 15.23 million or 1.61% of OSG segment revenues as on March 31, 2013 as compared toRs. (19.01) million of OSG revenues as on March 31, 2012.

EXPENDITURE(STANDALONE):

Cost of Goods Sold (COGS) has increased to 40.90% of our revenue as on March 31, 2013 from 35.38% as on March 31, 2012. This increase is on account of implementation of Assam State Government 1054 Schools in Edureach Segment.

Personnel expenses have increased to 23.96% of revenue as on March 31, 2013 from 16.20% as on March 31, 2012. Other expenses have increased to 17.55% as on March 31, 2013 from 13.73% of revenue as on March 31, 2012.

DEBT RESTRUCTURING

As your Company was growing at a CAGR of 39.1% on consolidated basis and 32.7% on standalone basis during 2007 to 2012, it had considerably grown its balance sheet with investment in long term assets funded partly by equity and debt. In the present phase of economic slowdown, it became imperative to match the maturity profile of its liabilities with the long term nature of its assets and return thereon. Therefore, the Company has opted for a formal method of loan restructuring and in July 2013, the Company has initiated the process under Corporate Debt Restructuring (CDR) Mechanism envisaged under the Reserve Bank of India (RBI) guidelines and has made reference to the CDR Cell. It has filed the proposal for restructuring its rupee denominated liabilities through CDR process, The proposal is under consideration by the Corporate Debt Restructuring - Empowered Group (CDR-EG).

In June 2013, Educomp Infrastructure & School Management Limited, subsidiary of the Company also approached to the CDR Cell for restructuring its Debts through CDR process, The proposal is also under consideration by the Corporate Debt Restructuring - Empowered Group (CDR-EG).

The CDR process is expected to give your Company critical support to tide over the present difficult business environment.

4. CHANGES IN CAPITAL STRUCTURE : Authorized Share Capital

Shareholders of the Company in their Extra Ordinary General Meeting held on 15th November, 2012 approved the increase in Authorised Share Capital of the Company.

Authorised Share Capital of the Company is Rs.40,00,00,000/- (Rupees Forty Crores Only) divided into 20,00,00,000 (Twenty Crores) equity shares of Rs.2/- (Rupees Two Only) each.

Issued and Paid-up Share Capital

During the year under review, the Company allotted 5,55,544 Equity Shares of face value of Rs.2/- each upon exercise of stock options under Employee Stock Option Scheme 2006.

During Company has allotted following Equity Shares and Warrants as per the provisions of Chapter VII of SEBI (ICDR) Regulations, 2009 pursuant to shareholders approval by way of Special Resolution on 16th July, 2012;

(a) 43,04,661 Equity Shares of the face value of Rs.2/- each at premium of Rs.191.74 to Promoter Group Entity.

(b) 1,85,03,419 Equity Shares of the face value of Rs.2/- each at premium of Rs.147.16 to Non Promoter Group.

(c) 1,14,79,096 Warrants at Issue price of Rs.193.74 convertible in to equal number of Equity Shares of the Face Value of Rs.2/- each to Promoter Group Entity. 29,79,939 Equity Shares of face value of Rs.2/- each at a premium of Rs.191.74/- per share were allotted upon conversion of warrants issued under provisions of chapter VII of SEBI (ICDR) Regulations, 2009.

Further there were no material variations between the projected and the actual utilization of the proceeds of the aforesaid preferential issue as stated in the explanatory statement to the notice of the extra ordinary general meeting held on 16th July, 2012 for considering the aforesaid preferential issues.

Post 31st March, 2013 & till 13th August 2013, the Company has allotted 33,575 Equity Shares of face value of Rs.2/- each upon exercise of stock options by the eligible employees/Directors of the Company/subsidiaries under Employee Stock Option Scheme 2006.

The paid up capital after taking the effect of aforesaid changes , stood at Rs.24,48,82,136/- consisting of 12,24,41,068 of the face value of Rs.2/- each as on 13th August, 2013.

5. FOREIGN CURRENCY CONVERTIBLE BONDS

Redemption of US$ 80 Million Zero Coupon Foreign Currency Convertible Bonds

During the Financial Year Company has redeemed the outstanding US$ 78.5 Million Zero Coupon FCCBs at 141.087 redemption premium of principal amount on 26th July, 2012. Out of US$ 80 Million Zero Coupon FCCBs raised in Financial Year 2007-08 for 5 years, US$ 1.5 million Zero coupon FCCBs were converted in to 20,710 Equity shares of Rs.10/- each in the FY 2007-08.

US$ 10 Million Zero Coupon Foreign Currency Convertible Bonds

During the Financial Year, the Company has raised US$ 10 million, Zero Coupon FCCBs for redemption of outstanding FCCBs. The Bond holders, as per the agreement, have the option to convert these bonds into Equity Shares, at a price of Rs.188.62 per share with in 5 years and 1 day from the date of disbursement. The FCCBs are redeemable at a premium of 34.07 % on principal after 5 years and 1 day. The FCCBs were raised for the purposes of redemption of existing FCCBs.

6. SECURED, REDEEMABLE, NON-CONVERTIBLE DEBENTURES & EXTERNAL COMMERCIAL BORROWINGS.

Non-Convertible Debentures

During the financial year, the Company issued Secured Non-Convertible Debentures for an aggregate value of Rs.45 Crores. Company allotted 350, 13.5% Secured Non-Convertible Debentures ( Listed on Bombay Stock exchange) of the face value of Rs.10,00,000/- each aggregating to Rs.35 Crores and 100, 13.25% Secured Non-Convertible Debentures of the face value of Rs.10,00,000/- each aggregating to Rs.10 Crores.

External Commercial Borrowings

During the Financial Year, the Company has raised US$ 70 million through External Commercial Borrowing (ECB) comprising US$ 30 million from International Financial Corporation (IFC) a member of the World Bank Group and US$ 40 million from Société De Promotion Et De Participation

Pour La Coopération Économique (PROPARCO), a French development financial institution. The ECB has a term of 8.5 years with a 3 years moratorium and the coupon rate is LIBOR 4.5%. The ECB has been raised for purposes of redemption of existing FCCB.

7. PUBLIC DEPOSITS:

During the year under review, the Company did not accept any deposits with in the meaning of the provisions of Section 58A of the Companies Act, 1956.

8. SUBSIDIARIES/JOINT VENTURE/ASSOCIATES

As on March 31, 2013, the Company had 47 Subsidiaries, 2 Joint ventures having 3 subsidiaries and 1 Associates.

During the year under review, your company as a part of business transformation agenda had focus on its core businesses which is

(a) digital content & IP offerings and

(b) Asset-backed offerings like schools and colleges and

Business(s) which have been identified as "non-core" were divested or shut down to arrest loss and cash drain thereof. In the process, Company has successfully completed sale of stake in Eurokids International Limited and Authorgen Technologies Limited.

After 31st March 2013 Company sold its entire 50% stake in the loss making vocational training business (IndiaCan Education Private Limited), to its JV partner Pearson.

9. PARTICULARS REQUIRED AS PER SECTION 212 OF THE COMPANIES ACT, 1956 & CONSOLIDATED FINANCIAL STATEMENT:

Ministry of Corporate Affairs, vide its circular dated February 8, 2011 has granted general exemption from attaching the Balance Sheet, Profit and Loss Account and other documents of the subsidiary companies with the Balance Sheet of the Company.

Board of Directors of the Company in its meeting held on 30th May 2013 consented for not attaching the balance sheet of the subsidiary companies. A statement containing brief financial details of the Company''s subsidiaries for the financial year ended March 31, 2013 is included in the Annual Report. The annual accounts of these subsidiaries and the related detailed information will be made available to any member of the Company/its subsidiaries seeking such information at any point of time and are also available for inspection by any member of the Company/its subsidiaries at the registered office of the Company. The annual accounts of the said subsidiaries will also be available for inspection, as above, at the head offices/registered offices of the respective subsidiary companies. The Company shall furnish a copy of details of annual accounts of subsidiaries to any member on demand.

Further the annual report of the Company contains the consolidated audited financial statements prepared, pursuant to Clause 41 of The Listing Agreement entered into with the stock exchanges and prepared in accordance with the accounting standards notified by Ministry of Corporate Affairs under Accounting Standard Rules 2006.The financial data of the subsidiaries has been furnished along with the statement pursuant to Section 212 of the Companies Act, 1956 forming part of the Annual Report.

10. DIRECTORS:

As on 31st March 2013 Board of Directors of Educomp Solutions Limited comprises of two Executive Directors namely Mr. Shantanu Prakash, Chairman cum Managing Director and Mr. Jagdish Prakash, Whole Time Director and Four Independent Non-Executive Directors, namely Mr. Shonu Chandra, Mr. Sankalp Srivastava, Dr. Shayama Chona and Mr. Rajiv Krishan Luthra & One Non Independent Non Executive Director Mr. Roy Campbell II

During the year Mr. Gopal Jain had resigned from the Board with effect from 27th July 2012. Mr. Manav Saraf was appointed as Additional Directors of the Company w.e.f 26th July 2012 and upon his resignation w.e.f from 7th November 2012 and nomination by Mount Kellett Mr. Roy Campbell II was appointed as additional director w.e.f 9th November 2012 by the Board in the category of Non Independent Non-Executive.

After 31st March 2013 Dr. Shayama Chona resigned from the Board and Dr. Subbarao Valluri Venkata was appointed as Additional Director in the category of Independent Non Executive Director.

The Board of Directors records its appreciation & recognition of the valuable contribution and services rendered by Mr. Gopal Jain, Dr. Shayama Chona & Mr. Manav Saraf.

Mr. Roy Campbell and Dr. Subbarao Valluri Venkata will hold office of the Additional Director up to the date of the ensuing Annual General Meeting. The Company has received Notice under Section 257 of the Companies Act, 1956 from a member signifying his intention to propose them for the office of Director at the ensuing Annual General Meeting.

As per section 255 and 256 of the Companies Act, 1956 Mr. Sankalp Srivastava & Mr. Jagdish Prakash are the Directors liable to retire by rotation and further being eligible, offers themselves for re-appointment at the ensuing Annual General Meeting.

The brief resume and other details relating to the directors, who are to be appointed/ re-appointed as stipulated under Clause 49(IV)(G) of the Listing Agreement, are furnished in the Notice of AGM forming part of the Annual Report.

The Company also has Audit Committee which is constituted as per requirement of Section 292A of the Companies Act, 1956 and Clause 49 of Listing Agreement. Audit Committee has 3 members out of which 2 are Non-Executive Independent Directors and one is Executive Director. Chairman of Audit Committee is an Independent Non-Executive Director.

11. STATUTORY DISCLOSURES:

The Company has received Form DD-A from all Directors as required under the provisions of Section 274(1)(g) of the Companies Act, 1956 read with Companies (Disqualincation of Directors under Section 274 (1) (g) of the Companies Act, 1956) Rules, 2003.

None of the Directors of your Company is disqualified as per provision of Section 274(1)(g) of the Companies Act, 1956. The Directors of the Company have made necessary disclosures, as required under various provisions of the Companies Act, 1956 and Clause 49 of the Listing Agreement.

12. HUMAN RESOURCE MANAGEMENT:

Educomp is an equal opportunity employer with total employee strength of 16,919 as on 31st March, 2013 as compared to 16,609 as on 31st March, 2012.

The Company has a suitable recruitment and human resource management process, which enables us to attract and retain high caliber employees. Company has created incentive driven remuneration policies which act as an effective retention tool.

13. DIRECTORS RESPONSIBILITY STATEMENT:

In pursuance of provisions of Section 217(2AA) of the Companies Act, 1956, we hereby confirm that:

1) That in the preparation of the Annual Accounts for the period ended as on 31st March 2013, the applicable Accounting Standards have been followed and no material departure has been identified.

2) Accounting Policies have been consistently applied in a reasonable and prudent manner so as to give true and fair view of the state of affairs of the Company for the financial year ending 31st March 2013 and of the Profit and Loss Account for the financial year ending as on 31st March 2013

3) Proper and sufficient care has been taken for the maintenance of adequate records in accordance with the applicable provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

4) The Annual Accounts for the Financial Year ended on 31st March 2013 have been prepared on the going concern basis.

14. AUDITORS & AUDITORS'' REPORT:

M/s. Haribhakti & Co., Chartered Accountants statutory auditors of the Company, will retire at the conclusion of the ensuing Annual General Meeting of the Company. M/s. Haribhakti & Co., Chartered Accountants being eligible have expressed their willingness for appointment as statutory auditors of the company and have confirmed that appointment, if made, will be within the prescribed limits under Section 224 (1B) of the Companies Act, 1956.

The Directors refer to the auditors'' observation in the Annexure to Independent Auditors'' Report and as required under Section 217(3) of the Companies Act, 1956, provide their explanation as under:

Auditors'' observations and management''s response to auditors'' observations -

(ix) (a) & (b) In respect of auditors'' observation in standalone financial statements regarding delay in a depositing statutory dues.

It is clarified that the delays arose on account of mismatches of cash inflows and outflows which were subsequently rectified. This has been taken to note by the management for compliance.

(xi) In respect of auditors'' observation in standalone financial statements regarding certain default in repayment of dues to financial institutions and banks.

It is clarified that the delay in payment of dues was from mismatches of cash inflows and outflows which are attributable to higher implementation and finance cost which adversely affected the liquidity, investment in education subsidiaries with long gestation period, delay in timely realization of receivables from our customers. However, the management opines that with improved business scenario, your Company will be able to meet its obligation in time.

(xix) In respect of auditors'' observation in standalone financial statements regarding creation of partial security on the Non Convertible Debentures(NCD), it is clarified this was due to procedural delay in getting NOC from other lenders.

15. SHARE REGISTRATION ACTIVITY:

Company has appointed "LINK INTIME INDIA PRIVATE LIMITED" a category-I Registrar and Share Transfer Agent reregistered with SEBI to handle the work related to Share Registry.

16. CONSOLIDATED FINANCIAL STATEMENTS:

As required under the Listing Agreements with the Stock Exchanges Consolidated Financial Statements of the Company and all its subsidiaries are attached. The consolidated Financial statements have been prepared in accordance with Accounting standard 21 ,Accounting standard 23 and Accounting standard 27 issued by The Institute of Chartered Accountants of India and showing the financial resources, assets, liabilities, income, profits and other details of the Company and its subsidiaries as a single entity, after elimination of minority interest.

17. LISTING OF SHARES:

The Equity Shares of your Company are listed on National Stock Exchange of India Limited (NSE) and Bombay Stock Exchange Limited (BSE). The Listing fee for the financial year 2013-14 has already been paid to BSE and NSE.

18. QUALITY INITIATIVES:

Reinforcing its commitment to high levels of quality, a ISO 9001:2008 Certification was awarded in application of ICT (Information and Communication Technology) related to computer- aided learning, training and computer literacy projects in schools.

19. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, ADOPTION

AND INNOVATION, FOREIGN EXCHANGE EARNINGS AND OUTGO:

The particulars are prescribed under section 217(1) (e) of the Companies Act, 1956, read with the Companies (Disclosure of particulars in the report of Board of Directors) Rules, 1988 are set out in an Annexure A attached to this report.

20. RATINGS, AWARDS, ACHIEVEMENTS & RECOGNITIONS: Ratings

Credit Analysis & Research Ltd, or CARE, has revised the following ratings in relation to our long term and short term financing facilities:

Long term facilities: Revised ''CARE A '' (Single A Plus) rating to ''CARE D'' (Single D) to our long term facilities i.e. facilities having tenure of more than one year, aggregating to Rs.299.07 Crore.

Short term facilities: Revised CARE A1 ( A One Plus) to CARE D ( Single D) to our short term facilities i.e. facilities having tenure of less than one year, aggregating to Rs.410 Crore.

Non-Convertible Debentures (NCDs): Revised ''CARE A '' (Single A Plus) rating to ''CARE D'' (Single D) to our NCD issuance of Rs.45 crore.

In June 2013, India Ratings revised long-term issuer rating from ''Ind A'' to ''Ind D''.

Awards, Achievements & Recognitions:

In exploring the horizons of what learning can be, accolades and awards have come our way, awards which have reiterated our resolve to live our vision everyday and fulfill our mission.

Over the year, Educomp, its affiliates and it leadership has won recognition from several renowned institutions.

- PricewaterhouseCoopers (PwC) report (May 2013) ranked Educomp at number 85 amongst the top 100 software vendors in the emerging markets commanding combined revenue of $797 million and among the 16 Indian companies that have made it to the list.

- Educomp ranked number 12 in Business World''s India''s fastest growing companies (May 2013 Issue).

- In Indian Education Awards 2013 Educomp won awards for, ''Best K12 School Chain- National for The Millennium Schools'', ''Innovation in Early Learning for Little Millennium'' and ''Best Digital Content for Smartclass''.

- At Navikaran Awards ceremony on 30th January at ''World Schools Resources Expo 2013'' Educomp was awarded as the "Corporate of the Year" and Shantanu Prakash, chairman & managing director, Educomp Solutions, was awarded "Entrepreneur of the Year". The event was organized by Creative Children Media in partnership with Zee Business.

- On November, 2012, three Learning.com products were selected for the 2012 Tech & Learning Awards of Excellence. Learning. com Marketplace and Middle School STEM both won awards in the New Product category, and Aha! Math earned recognition as a Best Upgraded Product in the prestigious 30-year-old recognition program.

- Kavin Chander of Std X at PSBB Millennium was a winner at the National Indian Robot Olympiad on 30th of September.

- Educomp was ranked amongst India''s 40 fastest growing companies by Outlook Business in its 26-May-2012 issue. Shantanu Prakash was nominated for the highest honour -"Entrepreneur of the Year" Award for his exceptional vision in uplifting the education sector in India and bestowing it with much needed change at "Entrepreneur India Awards 2012" organized by Franchise India Holdings Limited on May 18, 2012.

- Educomp Solutions won three prestigious awards - "Best Education Company to work with," "Best Innovative K 12 School" and "Best Education Webinar Series" at the Indian Education Awards (IEA) 2012 at a glittering ceremony on 28th April 2012.

21. REPORT ON CORPORATE GOVERNANCE AND MANAGEMENT DISCUSSION & ANALYSIS

Committed to good corporate governance practices, your company fully conform to standards set out by SEBI and other regulatory authorities and has implemented and complied with all of its major stipulations. As per clause 49 of the Listing Agreement, a report on Corporate Governance along with Compliance Certificate from the Practicing Company Secretary and Management Discussion and Analysis Report are annexed and forms part of this Annual Report.

22. CODE OF CONDUCT:

As per Clause 49 (I) (D), the Board of the Company has laid down Code of Conduct for all the Board members of the Company and Senior Management as well and the same has been posted on Website of the Company. Annual Compliance Report for the year ended 31st March 2013 has been received from all the Board members and senior management of the Company regarding the compliance of all the provisions of Code of Conduct. Declaration regarding compliance by Board members and senior management personnel with the Company''s Code of Conduct is hereby attached as Annexure B to this report.

23. NOTES TO ACCOUNTS:

They are self-explanatory and do not require any explanations.

24. PARTICULARS OF EMPLOYEES:

In Terms of the provisions of Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975 as amended, the names and other particulars of the employees are set out in the Annexure C to the Director''s Report.

25. EMPLOYEES STOCK OPTION SCHEMES (ESOPS)

The growth of the Company has, in large measure, been possible owing to the wholehearted support, commitment and teamwork of its personnel. Accordingly, the Company has introduced ESOP-2006, ESOP-2007 , ESOP- 2008, ESOP-2010, ESOP-2011 and ESOP-2012 for its employees and employees of its subsidiary companies.

The details of options granted under ESOP-2006, ESOP-2007, ESOP - 2008, ESOP - 2010, ESOP - 2011 and ESOP - 2012 is attached as Annexure D.

During the year, Pursuant to shareholders resolution dated 16th July 2012, Company has implemented ESOP Scheme 2012 and the remuneration committee of Board of Directors of the Company has granted 26,00,000 Stock Options Employees / Director of the Company and its Subsidiaries under ESOP Scheme 2012.

A certificate from Statutory Auditors, with respect to the implementation of the Company Employee''s Stock Option schemes, would be placed before the shareholders at the ensuing Annual General Meeting, and a copy of the same shall be available for inspection at the registered office of the Company.

26. DISCLOSURE PURSUANT TO CLAUSE 5A OF LISTING AGREEMENT

Pursuant to insertion of clause 5A in listing Agreement as per SEBI notification no. SEBI/CFD/DIL/LA/1/2009/24/04 dated April 24, 2009 the details in respect of the shares lying in the suspense account till March 31, 2013 is as under.

All the unclaimed shares are being credited to a DEMAT suspense account and all the corporate benefits in terms of securities, accruing to on these unclaimed shares shall be credited to such account. Voting rights on these shares shall remain frozen till the rightful owner of such shares claims the shares.

27. CORPORATE GOVERNANCE:

The Company has always been committed to maintain the highest standards of Corporate Governance and adhere to the Corporate Governance requirements as set out by Statutory Bodies.

The Ministry of Corporate Affairs, Government of India, introduced the Corporate Governance Voluntary Guidelines, 2009. These guidelines have been issued to provide Corporate India a framework to govern themselves voluntarily as per the highest standards of ethical and responsible conduct of business. The Guidelines broadly outline conditions for appointment of directors (including independent directors), guiding principles to remunerate directors, responsibilities of the Board, risk management, the enhanced role of Audit Committee, rotation of audit partners and firms and conduct of secretarial audit. Your company is already by and large complying with the voluntary guidelines Corporate Governance various requirements.

28. ACKNOWLEDGEMENT:

Your Directors wish to place on record their appreciation for the Co-operation and support received from the Government and Semi- Government agencies.

Your Directors are also thankful to all the bankers and financial institutions for their support to the Company. The Board places on record its appreciation for continued support provided by the esteemed customers, suppliers, consultants and shareholders.

The directors also acknowledge the hard work, dedication and commitment of the employees of the Company and its subsidiaries. The enthusiasm and unstinting efforts of the employees have enabled the Company to continue being a leading player in the Education field.

For and on Behalf of the Board of Directors

Date : 13th August 2013

Place : Gurgaon (Shantanu Prakash)

Chairman & Managing Director

 
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