Home  »  Company  »  Educomp Solutions  »  Quotes  »  Directors Report
Enter the first few characters of Company and click 'Go'

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


Mar 31, 2012

Dear Shareholders,

The Directors of your Company have pleasure in presenting herewith the 18th Annual Report of your Company together with the audited accounts for the Financial Year ended 31st March 2012

1. Financial Performance :

The consolidated and standalone audited financial results for the year ended 31st March 2012 are as follows:

(Rs. in million)

Particulars Consolidated Standalone Year Ended Year Ended Audited Audited

31.03.2012 31.03.2011 31.03.2012 31.03.2011

Sales and other Income 15,224.36 13970.24 10920.37 10617.73

Profit ( )/Loss(-) Before 1945.30 4083.07 2444.80 4363.05 tax

Provision for Tax 574.74 677.74 555.77 474.37

Net Profit ( )/Loss(-) 1,370.56 3405.33 1889.03 3888.68 after tax

Minority interest and 15.2 38.61 equity in earnings/ (losses) in affiliates/ Pre acquisition Loss/(profit)

Net profit for the year 1,355.36 3366.72 1889.03 3888.68 Appropriations

Interim Dividend - 13.20 - -

Proposed Dividend on 45.62 57.59 28.99 57.59 equity shares

Corporate Tax on 5.57 (0.30) 4.70 (0.29) distributed dividend

Transfer to Debenture 209.39 349.95

Redemption Reserve Transfer to General 99.45 389.11 94.45 388.87 Reserve

2. Dividend:

Based on the Company's performance, and keeping in view future fund requirements of the Company, Your Directors have recommended a dividend of Rs.0.30 per Equity Share (15% on face value of Rs.2/-each) for the Financial year ended as on 31st March, 2012, which on approval at the forthcoming Annual General Meeting, will be paid:

(i) to those Equity Shareholders, holding shares in physical form, whose name appear on the Register of Members of the Company at the close of business hours on 21st September 2012 after giving effect to all valid transfers in physical form lodged with the Company or its Registrar and Share Transfer Agent till 21st September 2012

(ii) to those beneficial owners, holding shares in electronic form, whose name appear in the statement of beneficial owners furnished by the Depositories to the Company as at the close of business hours on 21st September 2012

The final dividend on the Equity Shares, if approved by the members would involve a cash outflow of Rs.41.63 million including dividend tax for the Financial Year 2011-12 as against total dividend payout of Rs.66.92 million for the previous year

The register of members and share transfer books will remain closed from 22nd September 2012 to 26th September 2012 (both days inclusive). The Annual General meeting of the Company will be held on 26th September 2012.

3. Transfer to Reserves:

The Company proposes to transfer Rs.94.45 million (Previous year Rs.388.87 million) to the General Reserve out of the amount available for appropriations. An amount of Rs.9,055.70 million (Previous year Rs.7,294.81 million) has been proposed to be retained in the Profit and Loss Account.

4. Operating Results and Business:

In year 2011-12, Company's performance was quite satisfactory and has shown a CAGR over a period of 5 years of 39.1% on consolidated basis and 32.7% on standalone basis.

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 6114 new customers taking the total number of schools to 12652 as on March 31, 2012 as compared to 6538 as on March 31, 2011.

In Edureach (formerly ICT) business segment, we have an ongoing partnership with twelve state Governments and are catering to 11535 Government schools in various states as on March 31, 2012 as compared to 10572 Government schools in various states as on March 31, 2011.

On Standalone basis Company's Total revenue increased to Rs.10,920.37 million as on March 31, 2012 from Rs.10,617.73 million as on March 31, 2011, registering a growth of 2.85%.The profit before tax and after prior period items stand at Rs.2444.80 million as on March 31, 2012 as against Rs.4,363.05 million as on March 31, 2011.The profit after tax stands at Rs.1,889.03 million as on March 31, 2012 as against Rs.3,888.68 million as on March 31, 2011.

On Consolidated basis Company's Total revenue increased to Rs.15,224.36 million as on March 31, 2012 from Rs.13,970.24 million as on March 31, 2011, registering a growth of 8.98%. The profit before tax and after prior period items stands at Rs.1,945.30 million as on March 31, 2012 as against Rs.4,083.07 million as on March 31, 2011. The profit after tax, minority and pre-acquisition profits stands at Rs.1,355.36 million as on March 31, 2012 as against Rs.3,366.72 million as on March 31, 2011.

Segmental Performance (Standalone):

The EBIT margins in the School learning solutions (SLS) Segment of the Company for the year amounted to Rs.4,275.39 million or 40.81% of SLS revenues as on March 31, 2012 as compared to Rs.5,201.96 million or 52.08% of SLS revenues as on March 31, 2011.

The EBIT margins in the Higher learning solutions (HLS) segment of the Company for the year amounted to Rs.43.48 million or 32.03% of HLS revenues as on March 31, 2012 as compared to Rs.48.26 million or 28.57% of professional development revenue as on March 31, 2011.

The EBIT margins in the K-12 Segment of the Company for the year amounted to Rs.13.81 million or 97.85% of K-12 segment revenues as on March 31, 2012 as compared to Rs.8.99 million or 34.37% as on March 31, 2011.

The EBIT margins in Online and Retail segment of the Company for the year amounted to Rs.-19.01 million as on March 31, 2012 as compared to Rs.-59.48 million of Online and Retail revenues as on March 31, 2011.

Expenditure(Standalone):

Cost of Goods Sold (COGS) has increased to 35.38% of our revenue as on March 31, 2012 from 26.91% as on March 31, 2011. This increase is on account of product upgradation and depreciation in rupee.

Personnel expenses have increased to 16.20% of our revenue as on March 31, 2012 from 13.34% as on March 31, 2011. This increase is due to the fact that our company is growing rapidly.

Administration & other expenses have increased to 13.73% as on March 31, 2012 from 8.61% of our revenue as on March 31, 2011.

Our Profit after tax amounted to Rs.1,889.03 million or 17.30% of revenue as on March 31, 2012 as compared to Rs.3,888.68 million or 36.62% of revenue as on March 31, 2011.

5. Changes in Capital Structure :

Authorized Share Capital

Shareholders of the company on 26th July, 2011 by passing special resolution through postal ballot approved increase in Authorised Share Capital of the Company.

Authorised Share Capital of the Company is Rs.30,00,00,000/- (Rupees Thirty crore) divided into 15,00,00,000 (Fifteen crore) equity shares of Rs.2/- (Rupees Two) each.

Issued and Paid-up Share Capital

During the year under review, the Company allotted 4,84,405 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.

On 20th April 2011, the Company has allotted 35,129 Equity Shares of the face value of Rs.2/- each at a premium of Rs.536/- per share on Preferential Basis under Chapter VII of SEBI (ICDR) Regulations, 2009.

Post 31st March, 2012 & till 13th August 2012, the Company has allotted 5,33,894 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.

Shareholders of the Company through Special Resolution passed in the Extra Ordinary General Meeting of the Company held on 16th July, 2012 approved Preferential Issue of Equity Shares and Warrants as per the provisions of Chapter VII of SEBI (ICDR) Regulations, 2009 to Promoter and Non Promoter Group.

Further the Company has allotted following Equity Shares and Warrants as per the provisions of Chapter VII of SEBI (ICDR) Regulations, 2009;

(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. 25% of the Warrant price have been received and the balance 75% of the Warrant Price will be payable within a period of 18 months from the date of allotment.

The paid up capital after taking the effect of changes as above, stood at Rs.23,88,11,808/- consisting of 119,405,904 shares of the face value of Rs.2/- each as on 13th August 2011.

6. Foreign Currency Convertible Bonds

US$ 80 Million Zero Coupon Foreign Currency Convertible Bonds

Post Balance Sheet date the Company has redeemed outstanding US$ 78.5 Million Zero Coupon FCCBs at 141.087 redemption premium of principal amount on July 26, 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 F.Y 2007-08.

US$ 10 Million Zero Coupon Foreign Currency Convertible Bonds

Post Balance Sheet date the Company has raised US$ 10 million, Zero Coupon Foreign Currency Convertible Bonds for redemption of outstanding FCCB. 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 is redeemable at a premium of 34.07 % on principal after 5 year and 1 day. The FCCB has been raised for purposes of redemption of existing FCCB.

7. 13.5% Secured, Redeemable, Non-Convertible Debentures & External Commercial Borrowings.

Non-Convertible Debentures

The Company on 24th May, 2012 has allotted 350, 13.5% Secured Non- Convertible Debentures of the face value of Rs.10,00,000/- each aggregating to Rs.35 crore Above mentioned Debentures are issued in DEMAT form and are listed on Bombay Stock Exchange Limited.

Further Company on 20th July, 2012 has allotted 100, 13.25% Secured Non-Convertible Debentures of the face value of Rs.10,00,000/- each aggregating to Rs.10 crore.

External Commercial Borrowings

After Balance sheet date, 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.

8. Subsidiaries/Joint Venture/Associates of the Company:

As on March 31, 2012, Company had 52 Subsidiaries, 2 Joint ventures having 3 Subsidiaries & 1 Associates. During the Year the Company has sold its stake in Zeebo Interactive Studio Pvt Ltd.

9. Particulars required as per section 212 of the Companies Act, 1956:

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 2012 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, 2012 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:

Board of Directors of Educomp Solutions Limited comprises of two Executive Promoter Directors namely Mr. Shantanu Prakash, Chairman cum Managing Director and Mr. Jagdish Prakash, Whole Time Director and five Independent Non-Executive Directors, namely Mr. Shonu Chandra, Mr. Sankalp Srivastva, Mr. Gopal Jain. Dr. Shayama Chona and Mr. Rajiv Krishan Luthra.

On 26th July, 2012 Mr. Manav Saraf was appointed as additional directors by the Board in the category of Non Independent Non-Executive. Mr. Gopa Jain has resigned from the Board with effect from 27th July, 2012.

Mr. Manav Saraf will hold office of the Additional Director up to the date of the ensuing Annual General Meeting. Board proposes to regularize him as Director in the forthcoming Annual General Meeting.

As per section 255 and 256 of the Companies Act, 1956 Dr. Shayama Chona, and Mr. Shonu Chandra are the Directors liable to retire by rotation and further being eligible, offers themselves for re-appointment at the ensuing Annual General Meeting. Board recommends their re-appointment for your approval.

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 4 members out of which 3 are Non-Executive Independent Directors and one is Executive Director. Chairman of Audit Committee is Independent Non-Executive Director.

After resignation of Mr. Gopal Jain w.e.f. 27-07-2012 he ceases to be the member of the Audit Committee.

11. Statutory Disclosures:

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 Act and Clause 49 of the Listing Agreement.

12. Human Resource Management:

Educomp is an equal opportunity employer with total employee strength of 16,609 as on March 31, 2012 as compared to 13,917 as on March 31, 2011.

Educomp's HR policies and processes are aligned to effectively drive its expanding business and making inroads into emerging opportunities. 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), we hereby confirm that:

1) That in the preparation of the Annual Accounts for the period ended as on 31st March 2012, 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 2012 and of the Profit and Loss Account for the financial year ending as on 31st March 2012

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 2012 have been prepared on the going concern basis.

14. Auditors & Auditors' Report:

M /s Anupam Bansal & Co, Chartered Accountants & M/s. Haribhakti & Co., Chartered Accountants Joint statutory auditors of the Company, will retire at the conclusion of the ensuing Annual General Meeting of the Company. M/s Anupam Bansal & Co, Chartered Accountants has shown his unwillingness for reappointment as Statutory Auditor. 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 notes on accounts referred to in the auditors' report are self- explanatory and therefore don't call for any further comments by the Board of directors.

There are no qualifications or adverse remarks in the Auditors' Report which require any clarification or explanation.

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 year 2012-13 has already been paid to BSE and NSE.

19. 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.

20. 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.

21. Ratings, Awards, Achievements & Recognitions: Ratings

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

Long term facilities: Revised 'CARE A' (Single A) rating to 'CARE A ' (Single A Plus) to our long term facilities i.e. facilities having tenure of more than one year, aggregating to Rs.382.70 crore.

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

Commercial Paper : Reaffirmed CARE A1 ( A One) for the CP Issue for Rs.100 crore. Reaffirmed CARE A1 ( A One ) for the CP Issue for Rs.80 crore (carved out of working capital issues).

In September 2010, Fitch, Inc. assigned us a long-term issuer rating of 'A (ind)' and an 'F1' rating for both our short-term debt and working capital facilities.

Dun & Bradstreet assigned a 5A1 rating to us. The rating comprises two parts, a rating of our financial strength (5A) and a rating based on a composite credit appraisal (1). The former is an indication of our tangible net worth whilst the latter is linked to the level of risk in our business and is an overall evaluation of creditworthiness. The 5A1 rating, in summary, reflects that we have a tangible net worth in excess of Rs.645,950,000 and that the overall creditworthiness is high.

Awards, Achievements & Recognitions:

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. In March 2012 Business Today featured Educomp is one of the "Top 10 best companies to work for in 2011" in its - People Strong Best Companies to Work For, study.

Educomp featured in Asia's 'Best under a billion' list released by Forbes Asia (15-Sep-2011). Educomp is among the 35 Indian companies who have made the mark. In its definitive Ranking of India's Biggest Companies, Business World (October 24, 2011), chose Educomp in 2 of its lists of top 500 biggest companies in India. Educomp features in top 500 non financial companies with a rank of 217. We are also ranked 39th of the top 500 in the list of "The Biggest Employers". Shantanu Prakash our Managing Director & CEO was conferred with the prestigious Wisitex International Shiksha Ratna of the Decade Award 2011 (14-Sep-2011). Malgosia Green who heads our Learnhub business was named one of the 20 Young Women in Power by Canadian Business Magazine (30-Aug-2011).

Our JRE Business School was selected as 'Asia's Promising Business Schools' by World Brand Congress in Singapore from amongst B-schools of 29 countries on 22nd July 2011. Educomp and its associate companies won the highest number of awards at the 2011 edition of the prestigious World Education Awards held on 14th July. Among the awards bagged by Educomp were Best Public Choice Award for Innovation in Teaching Pedagogy bagged by Educomp R&D for EFES (Empowering Facilitators with Effective Strategies); Best Public Choice Award for Learning Initiative of the Year bagged by Educonnect: Language Connects (Educomp- IndiaCan English Speaking Program), and AuthorGen Technologies (an Educomp subsidiary) won the Best Public Choice Award for Innovation in Open & Distance Learning. On 5th July 2011, Sangeeta Gulati, CFO of Educomp received the prestigious Business Today Best CFO award in the category 'Sustained Wealth Creation (mid size)' from Finance Minister, Mr. Pranab Mukherjee. Educomp was conferred with Excellence Award by Institute of Economic Studies on 30th June 2011 and Soumya Kanti, President of Edureach (PPP & ICT Division of Educomp) was awarded the "Udyog Rattan Award". Franchise India presented "Entrepreneur of the Year" award to Educomp CEO, Mr. Shantanu Prakash in April 2011. The awards were organized by: Indian Education Awards 2011" to recognize and acknowledge the initiatives and achievements of certain individuals and institutions that have contributed significantly towards the growth of the education sector in India in the recent times. Dare Magazine in its April 2011 issue chose Shantanu in its list of Inspiring 50 Entrepreneurs – 2011 because "Shantanu Prakash, founder of Educomp, is the man who is responsible for bringing the much-awaited change in the Indian education system". In March 2011 Shantanu Prakash, won the prestigious ET Now 'Leap of Faith' Award in the category of Education.

22. 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.

23. 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 2012 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 to this report.

24. Notes to Accounts:

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

25. 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 to the Director's Report.

26. Group

Pursuant to intimation from the Promoters, the names of the Promoters and entities comprising 'Group' are disclosed in the Annual Report for the purpose of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997.

27. Public Deposits:

During the year, The Company has not accepted any deposits within the meaning of the provisions of Section 58A of the Companies Act, 1956.

28. Employees Stock Option Schemes (ESOPs)

The exponential 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 and ESOP-2011 for its employees and employees of its subsidiary companies.

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

Post 31st March 2012, 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 2600000 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.

29. Disclosure Pursuant To Clause 5A of Listing Agreement

Pursuant to insertion of clause 5A in listing Agreement as per SEB 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, 2012 is as under.

Description No. of Cases No. of Shares

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 2011-12

3. Number of shareholders to whom 0 0 shares were transferred from suspense account during the year 2011-12 aggregate number of shareholders and 3 750 the outstanding shares in the suspense account lying as on March 31, 2012

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.

30. 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.

With a view to strengthening the Corporate Governance framework, the Ministry of Corporate Affairs has incorporated certain provisions in the Companies Bill 2009. The Ministry has issued a set of voluntary guidelines in the second half of December 2009 for adoption by the companies. 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, it has initiated appropriate action for compliance.

31. 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

Place : Gurgaon (Shantanu Prakash)

Date : 13th August, 2012 Chairman & Managing Director


Mar 31, 2011

Dear Shareholders,

The Directors of your Company have pleasure in presenting herewith the 17th Annual Report of your Company together with the audited accounts for the Financial Year ended 31st March 2011

1. Financial Performance:

The consolidated and standalone audited financial results for the year ended 31st March 2011 are as follows:

(Rs. in million)

Particulars Consolidated Standalone

Year Ended Year Ended

Audited Audited

31.03.2011 31.03.2010 31.03.2011 31.03.2010

Sales and other Income 13970.24 11650.16 10617.73 8727.12

Profit ( )/Loss(-) Before tax 4083.07 4391.73 4363.05 3718.27

Provision for Tax 677.74 1584.19 474.37 1499.61

Net Profit ( )/Loss(-) after tax 3405.33 2807.54 3888.68 2218.66

Minority interest and equity in earnings/ (losses) in affiliates/ Pre acquisition 38.61 48.90 - -

Loss/(profit) Net profit for the year 3366.72 2758.64 3888.68 2218.66

Appropriations

Interim Dividend 13.20 103.24 - 94.93

Proposed Dividend on equity shares 57.59 187.67 57.59 171.72

Corporate Tax on distributed dividend (0.29) 46.59 (0.29) 43.87

Transfer to Debenture Redemption Reserve 349.95 0.00 - -

Transfer to General Reserve 389.11 239.48 388.87 221.87

2. Dividend:

Based on the Company's performance, and keeping in view future fund requirements of the Company, Your Directors have recommended a dividend of Rs. 0.60 per Equity Share (30% on face value ofRs. 2/- each) for the Financial year ended as on 31st March, 2011, which on approval at the forthcoming Annual General Meeting, will be paid

(i) to those Equity Shareholders, holding shares in physical form, whose name appear on the Register of Members of the Company at the close of business hours on 16th September 2011 after giving effect to all valid transfers in physical form lodged with the Company or its Registrar and Share Transfer Agent till 16th September 2011

(ii) to those beneficial owners, holding shares in electronic form, whose name appear in the statement of beneficial owners furnished by the Depositories to the Company as at the close of business hours on 16th September 2011

The final dividend on the Equity Shares, if approved by the members would involve a cash outflow ofRs. 66.92 million including dividend tax for the Financial Year 2010-11 as against total dividend payout of Rs. 305.83 million for the previous year

The register of members and share transfer books will remain closed from 17th September 2011 to 24th September 2011 (both days inclusive). The Annual General meeting of the Company will be held on 24th September 2011.

3. Transfer to Reserves:

The Company proposes to transfer Rs. 388.87 million (Previous year Rs. 221.87 million) to the General Reserve out of the amount available for appropriations. An amount of Rs. 7294.81 million (Previous year Rs. 3852.30 million) has been proposed to be retained in the Profit and Loss Account.

4. Operating Results and Business:

In year 2010-11 , Company's performance was quite satisfactory and has shown a CAGR over a period of 3 years of 28.5% on consolidated basis and 26.8% on standalone basis.

On Standalone basis Company's Total revenue increased to Rs. 10617.73 million as on March 31, 2011 from Rs. 8727.12 million as on March 31, 2010, registering a growth of 21.66%.The profit before tax and after prior period items increased to Rs. 4363.05. million (42.75% of Net Sales) as on March 31, 2011 from Rs. 3,718.27 million (44.68% of Net Sales) as on March 31, 2010.The profit after tax & prior period items increased to Rs.3888.68 million (38.10% of Net Sales) as on March 31, 2011 from Rs. 2,218.66 million (26.66 % of Net Sales) as on March 31, 2010.

On Consolidated basis Company's Total revenue increased to Rs.13970.24 million as on March 31, 2011 from Rs. 11,650.15 million as on March 31, 2010, registering a growth of 19.91%.The profit before tax and after prior period items increased to Rs.4083.07 million (30.22% of Net Sales) as on March 31, 2011 from Rs. 4,391.73 million (42.25 % of Net Sales) as on March 31, 2010.The profit after tax, minority and pre-acquisition profits & prior period items increased to Rs.3366.72 million (24.92% of Net Sales) as on March 31, 2011 from Rs. 2,758.64 million (26.54 % of Net Sales) as on March 31, 2010.

The Company's performance over the years has shown a consistent and upward trend. The Profit Before Depreciation, Tax & Interest & Misc. expenditure (operating profit) decreased by Rs. 212.91 million to Rs. 5903.00 million (42.25% of total revenues) as on March 31, 2011 from Rs. 6,115.91 million (52.50% of total revenues) as on March 31, 2010.

Segmental Performance (Standalone):

The EBIT margins in the School learning solutions (SLS) Segment of the Company for the year amounted to Rs. 5201.96 million or 52.08% of SLS revenues as on March 31, 2011 as compared to Rs. 4,517.74 million or 56.27% of SLS revenues as on March 31, 2010.

The EBIT margins in the K-12 Segment of the Company for the year amounted to Rs.8.99 million or 34.37% of K-12 segment revenues as on March 31, 2011 as compared to Rs. 6.20 million or 7.11% as on March 31, 2010.

The EBIT margins in the Higher learning solutions (HLS) segment of the Company for the year amounted toRs. 48.26 million or 28.57% of HLS revenues as on March 31, 2011 as compared to Rs. 55.93 million or 28% of professional development revenue as on March 31, 2010.

The EBIT margins in Online and Retail segment of the Company for the year amounted to Rs.-59.48 million as on March 31, 2011 as compared to Rs.-5.02 million of Online and Retail revenues as on March 31, 2010.

Expenditure(Standalone):

Personnel expenses have increased from 13.25% of our revenue as on March 31, 2011 from 11.45% as on March 31, 2010. This increase is due to the fact that our company is growing rapidly.

Administration & other expenses have decreased to 9.81% as on March 31, 2011 from 12.33% of our revenue as on March 31, 2010.

We have benefited due to economies of scale and our net profits after tax for the year has registered a growth of 75.27%. Our Profit after tax amounted to Rs.3888.68 million or 36.62% of revenue as on March 31, 2011 as compared to Rs. 2,218.66 million or 25.42% of revenue as on March 31, 2010.

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 3461 new customers taking the total number of schools to 6538 as on March 31, 2011 as compared to 3077 as on March 31, 2010.

In Edureach (formerly ICT) business segment, we have an ongoing partnership with twelve state Governments & are catering to 10572 Government schools in various states as on March 31, 2011 as compared to 15426 Government schools in various states as on March 31, 2010.

5. Changes in Capital Structure:

Authorized Share Capital

Shareholders of the company on 26th July, 2011 by passing special resolution through postal ballot approved increase in Authorised Share Capital of the Company.

Authorised Share Capital of the Company as on 4th August 2011 is Rs.30,00,00,000/- (Rupees Thirty Crore) divided into 15,00,00,000 (Fifteen Crore) equity shares of Rs. 2/-(Rupees Two) each.

Issued and Paid-up Share Capital

During the year under review, the Company allotted 4,74,102 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, 2007 & 2008.

On 29th September 2010, Company in accordance with Chapter VII of SEBI (ICDR) Regulations, 2009, has allotted 55,643 Equity Shares on Preferential Basis. The said shares are under Lock in for a period of one year from the date of allotment.

Post 31st March, 2011 & till 4th August 2011, Company has allotted 4,53,434 Equity Shares of Rs.2/- each under Employee Stock Option Scheme 2006 & on Preferential Basis in accordance with Chapter VII of SEBI (ICDR) Regulations, 2009

The paid up capital after taking the effect of changes as above, stood at Rs.19,19,95,660/- as on 4th August 2011.

6. Foreign Currency Convertible Bonds

US$ 80 Million Zero Coupon Foreign Currency Convertible Bonds

In year 2007-08, the company had issued at par 5-year, Zero Coupon Foreign Currency Convertible Bonds (FCCB) at an exercise price of Rs.2949.83 per share aggregating to US $ 80 million (Rs.3,237.60 million as on the date of issue) for financing overseas acquisition, capital expenditure and other expenditure as per RBI regulation. As per terms and condition of the Offering Circular issued by the company for FCCB, the Bond are convertible by holders of the Bonds (the "Bondholders") into fully paid equity shares of the company with full voting rights with par value Rs.2 per share of the Company (the "Shares") at any time on or after 4th September 2007 (or such earlier date as is notified to the Bondholders by the Company) and prior to the close of business on 19th July 2012, unless previously redeemed, converted or repurchased and cancelled.

The Bonds may be redeemed in cash in whole, but not in part, at their Early Redemption Amount, at the option of the Company at any time on or after 25th July 2009 and on and prior to 19th July 2012, subject to satisfaction of certain conditions. These bonds are redeemable at 141.087% of the principal amount on July 26, 2012 unless previously converted, redeemed or purchased and cancelled. As on date US$ 78.5 Million Zero Coupon Foreign Currency Convertible Bonds are outstanding. The Company intends raise fresh FCCB to utilize the proceeds to pay existing bondholders and will take necessary regulatory approvals, if applicable.

7. Subsidiaries/Joint Venture/Associates of the Company:

As on March 31, 2011, Company had 50 Subsidiaries, 2 Joint ventures & 2 Associates . Post March 31st, 2011 Company has acquired majority stake in Gateforum Education Services Pvt. Ltd. and it has become Subsidiary of the Company. Company has announced a new Joint Venture with Zeebo Inc., USA. by investing in Zeebo Interactive Studio Pvt Ltd which is an Associate Company.

8. Particulars required as per section 212 of the Companies Act, 1956:

Ministry of Corporate Affairs, pursuant to the provision of Section 212(8) of the Act, 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 2011 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, 2011 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.

9. Directors:

Board of Directors of Educomp Solutions Limited comprises of two Executive Promoter Directors namely Mr. Shantanu Prakash, Chairman cum Managing Director & CEO and Mr. Jagdish Prakash, Whole Time Director and five Independent Non-Executive Directors, namely Mr. Shonu Chandra, Mr. Sankalp Srivastava, Mr. Gopal Jain. Dr. Shayama Chona and Mr. Rajiv Krishan Luthra.

As per section 255 and 256 of the Companies Act, 1956 Mr. Sankalp Srivastava and Mr. Rajiv K Luthra are the Directors liable to retire by rotation and further being eligible, offer themselves for re-appointment at the ensuing Annual General Meeting. Board recommends their re-appointment for your approval.

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 4 members out of which 3 are Non-Executive Independent Directors and one is Executive Director. Chairman of Audit Committee is Independent Non-Executive Director.

10. Statutory Disclosures:

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 Act and Clause 49 of the Listing Agreement.

11. Human Resource Management:

Educomp is an equal opportunity employer with total employee strength of 13,917 as on March 31, 2011 as compared to 12,101 as on March 31, 2010.

Educomp's HR policies and processes are aligned to effectively drive its expanding business and making inroads into emerging opportunities. 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.

12. Directors Responsibility statement:

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

1) That in the preparation of the Annual Accounts for the period ended as on 31st March 2011, 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 2011 and of the Profit and Loss Account for the financial year ending as on 31st March 2011

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 2011 have been prepared on the going concern basis.

13. Auditors & Auditors' Report :

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

The notes on accounts referred to in the auditors' report are self-explanatory and therefore don't call for any further comments by the Board of directors.

There are no qualifications or adverse remarks in the Auditors' Report which require any clarification or explanation.

14. 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.

15. 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.

16. 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 year 2011-12 has already been paid to BSE and NSE.

17. Strategic Acquisitions / Joint Ventures :

The Company in order to maintain & strengthen its leadership position in the industry has mad e following acquisitions and strategic investments

(i) Vidya Mandir Classes

Company acquired a strategic majority stake in Vidya Mandir Classes, India's leading IITJEE Preparation Company. Vidya Mandir Classes has built an enviable reputation for providing high quality coaching to help students achieve success in their IITJEE and other engineering entrance examinations. Its teaching and learning methodologies are well recognized in the industry and proven by the high success rate of Vidya Mandir Classes students in their IITJEE and other engineering examinations.

(ii) Zeebo Inc

Company entered in to a joint venture with Zeebo Inc., a Qualcomm funded company to launch the first wireless educational platform for children in India

(iii) Gate Forum Educational Services Pvt. Ltd

Company acquired a majority stake in Gate Forum Educational Services Pvt. Ltd, India's leading GATE test preparation company.

(iv) India Education Fund

With a view to pick up strategic minority investments in high growth, innovative companies in the education and allied sectors, Company has entered into a contribution agreement in relation to the India Education Fund (a SEBI registered venture capital fund with a commitment to invest Rs.500 million in the fund as an anchor contributor.

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 Director s) 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/affirmed the following ratings in relation to our long term and short term financing facilities:

Long term facilities: Revised 'CARE A' (Single A) rating to 'CARE A ' (Single A Plus) to our long term facilities i.e. facilities having tenure of more than one year, aggregating to Rs.339.76 Crore.

Short term facilities : Reaffirmed CARE A1 ( A One) formerly PR1(PR One) to our short term facilities i.e. facilities having tenure of less than one year, aggregating to Rs.327 Crore.

Commercial Paper : Reaffirmed CARE A1 ( A One) for the CP Issue for Rs.70 Crore.

In September 2010, Fitch, Inc. assigned us a long-term issuer rating of 'A (ind)' and an 'F1' rating for both our short-term debt and working capital facilities.

Dun & Bradstreet assigned a 5A1 rating to us. The rating comprises two parts, a rating of our financial strength (5A) and a rating based on a composite credit appraisal (1). The former is an indication of our tangible net worth whilst the latter is linked to the level of risk in our business and is an overall evaluation of creditworthiness. The 5A1 rating, in summary, reflects that we have a tangible net worth in excess of Rs.645,950,000 and that the overall creditworthiness is high.

Awards, Achievements & Recognitions:

Franchise India presented the "Entrepreneur of the Year" award to Mr. Shantanu Prakash in the Indian Education Awards 2011, organized to recognize and acknowledge the initiatives and achievements of certain individuals and institutions that have contributed significantly towards the growth of the education sector in India in the recent times.

The April 2011 issue of Dare Magazine chose Shantanu Prakash in its list of "50 Inspiring Entrepreneurs - 2011" because "Shantanu Prakash, founder of Educomp, is the man who is responsible for bringing the much-awaited change in the Indian education system".

In March 2011, Shantanu Prakash won the prestigious ET Now "Leap of Faith" Award in the category of Education. "Leap of Faith" Awards attempt to recognize the best and brightest of India's young entrepreneurs; men and women who have stood against all odds and emerged winners.

Sangeeta Gulati, our Chief Financial Officer, was presented with the ICAI Women CFO 2010 Award by the prestigious Institute of Chartered Accountants of India for exceptional performance and achievements as a chief financial officer and recently bagged best CFO award in Sustained Wealth Creation in mid-Size Category hosted by Yes Bank and Business Today.

Shantanu Prakash won the Dataquest "Pathbreaker of the Year Award" for 2010 in recognition of our business model, which aimed at making quality education available in schools across different parts of the country.

15 students trained by IndiaCan secured positions in the top 50 highest scores in the Chartered Accountancy Intermediate exam results in May 2010.

In September 2010, we were conferred the e-India 2010 "Citizen's Choice #1 Award for Teaching Learning Paradigm through ICT Intervention" in Digital Learning Magazine, in recognition of our achievement in ushering a whole new teaching learning paradigm in schools across India.

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 2011 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 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 to the Director's Report.

25. Group

Pursuant to intimation from the Promoters, the names of the Promoters and entities comprising 'Group' are disclosed in the Annual Report for the purpose of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997.

26. Public Deposits:

During the year, The Company has not accepted any deposits within the meaning of the provisions of Section 58A of the Companies Act, 1956.

27. Employees Stock Option Schemes (ESOPs)

The exponential 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 Employees Stock Option Scheme 2006 (ESOP-2006), Employees Stock Option Scheme -2007 (ESOP-2007) , Employees Stock Option Scheme-2008 (ESOP-2008) and Employees Stock Option Scheme-2010 (ESOP-2010) for its employees and employees of its subsidiary companies.

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

Post 31st March 2011, the remuneration committee of Board of Directors of the Company has granted 1,11,385 Stock Options Employees / Director of the Company and its Subsidiaries under ESOP Scheme 2006 and ESOP Scheme 2007.

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.

28. 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, 2011 is as under.

Descrip -tion No. of Cases No. of Shares

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

2. Number of shareholders who approached the Company for transfer of shares from suspense account 0 0 during the year 2010-11

3. Number of shareholders to whom shares were transferred from suspense account during the year 0 0 2010-11

4. aggregate number of shareholders and the outstanding shares in the suspense account lying as on 3 750 March 31, 2011

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.

29. 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.

With a view to strengthening the Corporate Governance framework, the Ministry of Corporate Affairs has incorporated certain provisions in the Companies Bill 2009. The Ministry has issued a set of voluntary guidelines in the second half of December 2009 for adoption by the companies. 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, it has initiated appropriate action for compliance.

30. 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 : 04th August 2011 (Shantanu Prakash)

Place : Gurgaon Chairman & Managing Director


Mar 31, 2010

The Directors of your Company have pleasure in presenting herewith the 16th Annual Report of your Company together with the audited accounts for the Financial Year ended 31st March, 2010.

1. FINANCIAL PERFORMANCE:

The consolidated and standalone audited fnancial results for the year ended 31st March, 2010 are as follows:

(Rs. in million)

Particulars Consolidated Standalone Year Ended Year Ended Audited Audited 31.03.2010 31.03.2009 31.03.2010 31.03.2009

Sales and other Income 11650.15 6598.00 8727.12 5175.30

Proft (+)/Loss(-) Before tax 4391.73 2172.87 3718.27 2004.74

Provision for Tax 1584.19 769.51 1499.61 688.86

Net Proft (+)/Loss(-)after tax 2807.54 1403.36 2218.66 1315.88

Minority interest and equi tyinearnings/ (losses)inaf liates/ Pre acquisition Loss/(proft) 48.90 74.42 - -

Net proft for the year 2758.64 1328.94 2218.66 1315.88 Appropriations

Interim Dividend 103.24 7.36 94.93 -

Proposed Dividendonequity shares 182.98 46.03 167.03 43.28

Corporate Taxondistributed dividend 46.59 7.36 43.87 7.36

TransfertoDebenture Redem ption Reserve 0.00 83.76 - -

TransfertoGeneral Reserve 239.48 131.59 221.87 131.59

2 . DIVIDEND:

Keeping in view the current economic scenario and future fund requirements of the Company, Your Directors have recommended a dividend of Rs. 1.75 per Equity Share (87.5% on face value of Rs. 2/-) for the Financial year ended as on 31st March, 2010, which on approval at the forthcoming Annual General Meeting, will be paid

(i) to those Equity Shareholders, holding shares in physical form, whose name appear on the Register of Members of the Company at the close of business hours on 27th September, 2010 after giving efect to all valid transfers in physical form lodged with the Company or its Registrar and Share Transfer Agent till 17th September, 2010.

(ii) to those benefcial owners, holding shares in electronic form, whose name appear in the statement of benefcial owners furnished by the Depositories to the Company as at the close of business hours on 17th September, 2010.

The total proposed dividend amount shall be Rs. 194.77 million, including the dividend tax, for the Financial Year 2009-10 as against total dividend payout Rs. 50.64 million for the previous year.

During the year, the Company had already paid an interim dividend of Rs. 1 (50%) per equity share of Rs. 2 each in February, 2010. With this, the total dividend declared for the year is Rs. 2.75 (137.5%) per share.

The register of members and share transfer books will remain closed from 18th September, 2010 to 27th September, 2010 (both days inclusive). The Annual General meeting of the Company will be held on 27th September, 2010.

3. TRANSFERTO RESERVES:

The Company proposes to transfer Rs.221.87 million (Previous year Rs. 131.59 million) to the General Reserve out of the amount available for appropriations. An amount of Rs.3856.99 million (Previous year Rs.2166.04 million) has been proposed to be retained in the Proft and Loss Account.

4. OPERATING RESULTS AND BUSINESS:

In year 2009-10 ,Company’s performance was quite satisfactory despite ongoing economic global crisis . Company has shown a CAGR of98.39% over a period of 3 years.

On Standalone basis Company’s Total revenue increased to Rs. 8,727.12 million as on 31st March, 2010 from Rs. 5,175.30 million as on 31st March, 2009, registering a growth of 68.63%.The proft before tax and after prior period items increased to Rs.3,718.27 million (44.68% of Net Sales) as on 31st March, 2010 from Rs. 2,004.74 million (40.00% of Net Sales) as on 31st March, 2009.The proft after tax & prior period items increased to Rs.2,218.66 million (26.66% of Net Sales) as on 31st March, 2010 from Rs. 1,315.88 million (26.26 % of Net Sales) as on 31st March, 2009.

On Consolidated basis Company’s Total revenue increased to Rs.11,650.15 million as on 31st March, 2010 from Rs. 6,598.00 million as on 31st March, 2009, registering a growth of 76.57%.The proft before tax and after prior period items increased to Rs.4,391.73 million (42.25% of Net Sales) as on 31st March, 2010 from Rs. 2,172.87 million (34.11 % of Net Sales) as on 31st March, 2009.The proft after tax, minority and pre-acquisition profts & prior period items increased to Rs.2,758.64 million (26.54% of Net Sales) as on 31st March, 2010 from Rs. 1,328.94 million (20.86 % of Net Sales) as on 31st March, 2009.

The Company’s performance over the years has shown a consistent and upward trend. The Proft Before Depreciation, Tax & Interest & Misc. expenditure (operating proft) increased by Rs.2,825.48 million to Rs. 6,115.91 million (52.50% of total revenues) as on 31st March, 2010 from Rs.3,290.43 million (49.87% of total revenues) as on 31st March, 2009.

Segmental Performance (Standalone):

The EBIT margins in the School learning solutions (SLS) Segment of the Company for the year amounted to Rs.4,517.74 million or 56.27% of SLS revenues as on 31st March, 2010 as compared to Rs. 2,124.12 Million or 49.29% of SLS revenues as on 31st March, 2009.

The EBIT margins in the K-12 Segment of the Company for the year amounted to Rs.6.20 million or 7.11% of K-12 segment revenues as on 31st March, 2010 as compared to loss of Rs. 8.49 million as on 31st March, 2009.

The EBIT margins in the Higher learning solutions (HLS) segment of the Company for the year amounted to Rs.55.93 million or 28% of HLS revenues as on 31st March, 2010 as compared to Rs.105.39 million or 34.23% of professional development revenue as on 31st March, 2009.

The EBIT margins in Online and Retail segment of the Company for the year amounted to Rs. -5.02 million as on 31st March, 2010 as compared to Rs.205.25 million or 76.48% of Online and Retail revenues as on 31st March, 2009 due to discontiuance of traditional business of selling CDs/Books/Hardware etc and also making Mathguru free as a part of company’s online strategy.

Expenditure (Standalone):

Personnel expenses have decreased from 11.81% of our total revenue to 11.45% as on 31st March, 2010.

Administration & other expenses have increased from 12.02% of our revenue to 14.01% as on 31st March, 2010.This increase is due to the fact that our company is growing rapidly and administrative expensive is increased on account of increase in Legal and professional expenses, licensing and royalty fees, and Advertisement expenses.

We have benefted due to economies of scale and our net profts after tax for the year has registered a growth of 68.61%. Our Proft after tax amounted to Rs.2,218.66 million or 25.42% of revenue as on 31st March, 2010 as compared to Rs. 1315.88 million or 25.43% of revenue as on 31st March, 2009.

We enjoy long-term annuity relationships with both private schools as well as government customers, ranging from three to fve years. Our revenues are predictable & locked in for three to fve years on account of the contractual nature of our business. In the Smart Class™ segment, we have added 1340 new customers taking the total number of schools to 3077 as on 31st March, 2010 as compared to 1737 as on 31st March, 2009.

In our Edureach (formerly ICT) business segment, we have an ongoing partnership with ffteen state Governments & are catering to 15426 Government schools in various states as on 31st March, 2010 as compared to 12012 Government schools as on 31st March, 2009.

5. CHANGES IN CAPITAL STRUCTURE

Authorised Share Capital

During the year under review, authorized share capital of the Company has been altered to the efect that authorized share capital of the Company has been sub-divided and re-classifed as Rs. 25,00,00,000 ( Rupees Twenty Five Crore ) divided into 12,50,00,000 ( Twelve Crore Fifty Lakh ) equity shares of the nominal value Rs. 2/- ( Two) each

Issued and Paid-up Share Capital

During the year under review, the Company allotted 4,30,610 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 & 2007.

Post 31st March, 2010 & till 17th August 2010, Company has allotted 4,33,052 Equity Shares of Rs. 2/- each to the eligible employees of the Company/subsidiaries under Employee Stock Option Scheme 2006, 2007 & 2008

On 13th July, 2009, Company has allotted 16,20,000 Equity Shares of Rs. 10/- each at a premium of Rs. 3,735/- per share on private placement basis to Qualifed Institutional Buyers in terms of Chapter XIIIA of the Securities and Exchange Board of India (Disclosure and Investor Protection) Guidelines, 2000.

On 19th March, 2010, Company in accordance with Chapter VII of SEBI (ICDR) Regulations, 2009, has allotted 52,616 Equity Shares to Zaptive Internet Services Pvt. Ltd. on Preferential Basis for consideration other than cash as being the part consideration for acquisition of its domain name “studyplaces.com” and its business contracts etc. The said shares are under Lock in for a period of one year from the date of allotment.

The paid up capital after taking the efect of changes as above, stood at Rs.19,08,95,406/- as on 17th August, 2010.

3. QUALIFIED INSTITUTIONAL PLACEMENT:

During the year , the company had successfully raised 6066.90 million placed through Qualifed Institutional Placement ( QIP) ,in accordance with chapter XIII –A of the SEBI Guidelines , the issuance of 16,20,000 equity shares of Rs 10 each at a price of Rs 3,745 per equity share ("Issue Price") including a premium of Rs 3,735 per equity share, as approved by a duly authorized Committee of Board of Directors (the Committee) in its meeting held on July 09, 2009 .

The Company had incurred an expenditure of Rs.132.87 million towards issue expenses of these shares .These expenses has been charged to Securities premium account as provided under section 78 of the Companies Act, 1956.

As on 31st March, 2010 Rs. 3030 million was parked with various Fixed deposits schemes of Punjab National Banks(PNB), Bank of India, Andhra Bank, Canara Bank and HDFC Bank

6. FOREIGN CURRENCY CONVERTIBLE BONDS

US$ 80 Million Zero Coupon Foreign Currency Convertible Bonds

In year 2007-08, the company had issued at par 5-year, Zero Coupon Foreign Currency Convertible Bonds (FCCB) at an exercise price of Rs. 2949.83 per share

aggregating to US $ 80 million (Rs. 3,237.60 million as on the date of issue) for fnancing overseas acquisition, capital expenditure and other expenditure as per RBI regulation. As per terms and condition of the Ofering Circular issued by the company for FCCB, the Bond are convertible by holders of the Bonds (the “Bondholders”) into fully paid equity shares of the company with full voting rights with par value Rs. 2 per share of the Company (the “Shares”) at any time on or after 4th September 2007 (or such earlier date as is notifed to the Bondholders by the Company) and prior to the close of business on 19th July 2012, unless previously redeemed, converted or repurchased and cancelled.

The Bonds may be redeemed in cash in whole, but not in part, at their Early Redemption Amount, at the option of the Company at any time on or after 25th July, 2009 and on and prior to 19th July, 2012, subject to satisfaction of certain conditions. These bonds are redeemable at 141.087% of the principal amount on July, 26, 2012 unless previously converted, redeemed or purchased and cancelled. As on date US$ 78.5 Million Zero Coupon Foreign Currency Convertible Bonds are outstanding.

7. SUBSIDIARIES/JOINTVENTURE/ASSOCIATES OFTHE COMPANY:

As on 31st March, 2010, Company had 43 Subsidiaries , 2 Joint ventures & 1 Associate . After 31st March, 2010 Knowledge Vistas Ltd. has become Indirect Subsidiary of the Company and Company has incorporated one Wholly owned Subsidiary named Educomp Investment Management Limited . Further Company has transferred its entire investment in Educomp Learning Hour Pvt. Ltd. and Authorgen Technologies Ltd. to Educomp Online Supplemental Service Ltd., subsidiary of the Company.

8. PARTICULARS REQUIRED AS PER SECTION 212 OFTHE COMPANIES ACT, 1956:

In terms of the approval granted under Section 212(8) of the Companies Act, 1956 by the Ministry of Corporate Afairs, Government of India vide its letter No. 47/578/2010-CL-III dated 14th July, 2010, and dated 12th August, 2010 the Company has been exempted from complying with the provisions contained in sub- section (1) of Section 212 of the Companies Act, 1956.

Accordingly, the balance sheet, Proft & Loss Account, Directors’ Report and Auditors’ Report of the subsidiary companies and other documents required to be attached under section 212(1) of the Act to the Balance sheet of the Company are not being attached with the Balance sheet of the Company.

However, as directed by the Ministry of the Corporate Afairs, some key information has been disclosed in a brief abstract forming part of this annual report. Accordingly, the annual report of the Company contains the consolidated audited fnancial statements prepared, pursuant to Clause 41 of The Listing Agreement entered into with the stock exchanges and prepared in accordance with the accounting standards notifed by Ministry of Corporate Afairs under Accounting Standard Rules 2006.The fnancial 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.

Further, the annual accounts of the subsidiary companies 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. The annual accounts of the subsidiary companies will also be kept for inspection by any member at the Companys registered ofce and corporate ofce and that of the respective subsidiary companies. Accounts of Individual Subsidiary are also placed at company’s website i.e www.educomp.com

9. DIRECTORS:

Board of Directors of Educomp Solutions Limited comprises of two Executive Promoter Directors namely Mr. Shantanu Prakash, Chairman cum Managing Director & CEO and Mr. Jagdish Prakash, Whole Time Director and fve Independent Non-Executive Directors, namely Mr. Shonu Chandra, Mr. Sankalp Srivastva, Mr. Gopal Jain. Dr. Shayama Chona and Mr. Rajiv Krishan Luthra.

As per section 255 and 256 of the Companies Act, 1956 Mr. Gopal Jain and Mr. Shonu Chandra is liable to retire by rotation and, being eligible, ofers themselves for re-appointment at the ensuing Annual General Meeting. Board recommends their re-appointment for your approval.

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 4 members out of which 3 are Non-Executive Independent Directors and one is Executive Director. Chairman of Audit Committee is Independent Non-Executive Director.

10. CHANGES IN LEADERSHIP OF EDUCOMP:

During the year Dr Shyama Chona and Mr. Rajiv Krishan Luthra have joined the Board as Non-Executive Members.

11. STATUTORY DISCLOSURES:

None of the Directors of your Company is disqualifed 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 Act and Clause 49 of the Listing Agreement.

12. HUMAN RESOURCEMANAGEMENT:

Educomp is an equal opportunity employer with total employee strength of 12,101 as on 31st March, 2010 as compared to 8864 as on 31st March, 2009.

Educomp’s HR policies and processes are aligned to efectively drive its expanding business and making inroads into emerging opportunities. 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 efective retention tool.

13. DIRECTORS RESPONSIBILITY STATEMENT:

In pursuance of provisions of Section 217(2AA), we hereby confrm that:

(1) That in the preparation of the Annual Accounts for the period ended as on 31st March, 2010, the applicable Accounting Standards have been followed and no material departure has been identifed.

(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 afairs of the Company for the fnancial year ending 31st March, 2010 and of the Proft and Loss Account for the fnancial year ending as on 31st March. 2010.

(3) Proper and sufcient 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 2010 have been prepared on the going concern basis.

14 AUDITORS & AUDITORS’REPORT:

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

The notes on accounts referred to in the auditors’ report are self-explanatory and therefore don’t call for any further comments by the Board of directors.

There are no qualifcations or adverse remarks in the Auditors’Report which require any clarifcation or explanation.

15. SHARE REGISTRATION ACTIVITY:

Company has appointed“LINK INTIME INDIA PRIVATE LIMITED”a category-I Registrar and ShareTransfer 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 fnancial resources, assets, liabilities, income, profts 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 year 2010-11 has already been paid to BSE and NSE.

18. STRATEGIC ACQUISITIONS / JOINT VENTURES:

The Company has been making the acquisitions or entering into Joint Ventures either directly or indirectly through its subsidiaries in order to maintain &strengthen its leadership position in the industry which your company has created & to remain always ahead of learning curve. During the year company has entered into Joint venture with Pearson llc for its vocational business, wherein company has sold its 50% stake in indirect wholly owned company EHIPL , Singapore . During the year also company has acquired strategic business of zaptive Internet services private limited to acquire the domain “ studyplaces.com” Both strategic alliances are niche in nature & are presently are making losses , but going forward over 2-3 years will be EPS accretive .

19. QUALITY INITIATIVES:

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

20. 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.

21. RATINGS & RECOGNITIONS:

The Company continues to have an“A”ratings and“ PR1”ratings from CARE in relation to the indebtedness of Educomp aggregating to Rs.5,892 million. Moreover, the Company also have“A”rating & P1 for Commercial Paper from Crisil .

During the year , company has won top honours in the for-proft category to win NASSCOM Foundation Social Innovation Honours-2010 for its exemplary work.

During the year Dun & Bradstreet has done an independent study on Smart Class & have concluded that directionally Smart_Class has a positive impact on students with majority of the classes tested having a statistically signifcant advantage.

22. REPORT ON CORPORATEGOVERNANCEAND MANAGEMENTDISCUSSION&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 Certifcate from the Practicing Company Secretary and Management Discussion and Analysis Report are annexed and forms part of this Annual Report.

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, 2010 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 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 to the Director’s Report. Having regard to the provisions of Section 219(1)(b)(iv) of the said Act, the Annual Report excluding the aforesaid information is being sent to all the members of the Company and others entitled thereto. Any member interested in obtaining such particulars may write to the Company Secretary at the Registered Ofce of the Company.

23. GROUP

Pursuant to intimation from the Promoters, the names of the Promoters and entities comprising ‘Group’ are disclosed in the Annual Report for the purpose of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997.

24. PUBLIC DEPOSITS:

During the year, The Company has not accepted any deposits within the meaning of the provisions of Section 58A of the Companies Act, 1956.

25. EMPLOYEES STOCK OPTION SCHEMES (ESOPS)

The exponential 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 Employees Stock Option Scheme 2006 (ESOP-2006), Employees Stock Option Scheme -2007 (ESOP-2007) , Employees Stock Option Scheme-2008 (ESOP-2008) and Employees Stock Option Scheme-2010 (ESOP-2010) for its employees and employees of its subsidiary companies.

The details of options granted under ESOP-2006, ESOP-2007 and ESOP – 2008 is attached as Annexure B, However, since the options in ESOP-2010 were granted post 31st March, 2010, the details required to be provided in terms of Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 have not been provided for ESOP-2010.

Post 31st March, 2010, the remuneration committee of Board of Directors of the Company has granted 8,69,250 Stock Options to eligible employees of the company and its subsidiaries and 1,00,000 Stock Options to Independent Non-Executive Directors of the Company under ESOP 2010.

A certifcate 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 ofce of the Company.

26. DISCLOSURE PURSUANTTO CLAUSE 5A OF LISTING AGREEMENT

Pursuant to insertion of clause 5A in listing Agreement as per SEBI notifcation no. SEBI/CFD/DIL/LA/1/2009/24/04 dated 24th April, 2009 the details in respect of the shares lying in the suspense account till 31st March, 2010 is as under.

All the unclaimed shares are being credited to a DEMAT suspense account and all the corporate benefts 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.

With a view to strengthening the Corporate Governance framework, the Ministry of Corporate Afairs has incorporated certain provisions in the Companies Bill 2009. The Ministry has issued a set of voluntary guidelines in the second half of December 2009 for adoption by the companies. 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 frms and conduct of secretarial audit. Though your company is already by and large complying with these various requirements, it has initiated appropriate action for compliance.

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 fnancial 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 eforts of the employees have enabled the Company to continue being a leading player in the Education feld.

For and on Behalf of the Board of Derictors

Date:17th August,2010 (Shantanu Parakash) Place:Gurgon CHIRMAN & MANAGING DIRCTOR