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Directors Report of Firstsource Solutions Ltd.

Mar 31, 2015

Dear Members,

Directors of your Company take great pleasure in presenting the Fourteenth Annual Report on the business and operations of your Company and the Audited financial statements for the financial year ended March 31, 2015.

FINANCIAL RESULTS

The performance of the Company for the financial year 2014-15 is summarised below:

(Rs in Million) Consolidated Particulars FY 2014-15 FY 2013-14

Total Income 30,411.75 31,078.80

Profit Before Interest and Depreciation 3,872.85 3,641.29

Interest and Finance Charges (net) 710.86 851.47

Depreciation 721.82 757.02

Profit Before Tax 2,440.17 2,032.80

Provision for Taxation (including Deferred Tax Charge/ Credit) 95.40 100.89

Profit After Tax Before Minority Interest 2,344.77 1,931.91

Minority Interest 1.59 2.29

Net Profit After Tax 2,343.18 1,929.62

Balance in Profit & Loss Account 9,347.43 7,417.81

Adjustment of Amalgamation Deficit Account (3,691.34) - (Refer Note 13 to Consolidated Financial Statements)

Closing Balance in Profit & Loss Account 7,999.27 9,347.43

Earning Per Share (Rs) - Basic 3.53 2.93

Earning Per Share (Rs) - Diluted 3.34 2.82





(Rs in Million) Standalone Particulars FY 2014-15 FY 2013-14

Total Income

Profit Before Interest and 9,328.06 9,325.41 Depreciation

Interest and Finance Charges (net) 2,265.71 2,049.08

Depreciation 202.23 177.19

Profit Before Tax 464.30 527.19

Provision for Taxation (including 1,599.18 1,344.70 Deferred Tax Charge/ Credit)

Profit After Tax Before Minority (38.36) - Interest

Minority Interest 1.637.54 1,344.70

Net Profit After Tax

Balance in Profit & Loss Account 1.637.54 1,344.70

Adjustment of Amalgamation 6,543.28 5,198.58 Deficit Account (Refer Note 13 to Consolidated Financial Statements)

Closing Balance in Profit & Loss 8,180.82 6,543.28 Account

Earning Per Share (Rs) - Basic 2.47 2.04

Earning Per Share (Rs) - Diluted 2.33 1.96

RESULT OF OPERATIONS

The consolidated total income decreased from Rs. 31,078.80 Million to Rs. 30,411.75 Million, reduction of 2.1% over the previous financial year. The consolidated Net Profit After Tax increased from Rs. 1,929.62 Million to Rs. 2,343.18 Million, a growth of 21.4% over the previous financial year. The detailed analysis of the consolidated results forms part of the Management Discussion & Analysis Report provided separately as part of the Annual Report.

The standalone total income increased from Rs. 9,325.41 Million to Rs. 9,328.06 Million, an increase of 0.03% over the previous financial year. The standalone Profit After Tax increased from Rs 1,344.70 Million to Rs. 1,637.54 Million, an increase of 21.8% over the previous financial year.

With a view to conserve cash reserves to meet current financial obligations of the Company, the Directors of your Company do not recommend any dividend for financial year 2014-15.

INCREASE IN SHARE CAPITAL

During the year, your Company issued 6,556,583 equity shares of the face value of Rs. 10/- each on the exercise of stock options under

Firstsource Solutions Employee Stock Option Scheme, 2002 (ESOS 2002) and Firstsource Solutions Employee Stock Option Scheme, 2003 (ESOS 2003). Consequently, the outstanding, issued, subscribed and paid up capital of the Company has increased from 659,734,876 shares to 666,291,459 shares of Rs. 10/- each aggregating to Rs. 6,662.91 Million as on March 31, 2015.

GLOBAL DELIVERY FOOTPRINT

The Company, on a consolidated basis had 47 global delivery centers as on March 31, 2015. The centers are located across India, USA, UK, Philippines and Sri Lanka. 22 of the Company''s delivery centers are located in 16 cities in India, 15 in the USA, 6 in UK, 3 in Philippines and 1 in Sri Lanka. The Company''s established global delivery footprint enables it to deliver wide range of services and strengthen relationships with existing customers.

During the year, the Company incurred capital expenditure of Rs. 687 Million mainly towards refurbishment and maintenance of delivery centers and establishment of new centers in USA.

QUALITY INITIATIVES

The Company follows the global best practices for process

excellence and is certified by COPC Inc. (Customer Operations Performance Center). Firstsource Dialog Solutions (Pvt.) Limited, joint venture subsidiary of the Company in Sri Lanka has been recertified for COPC (5.0a) Standard. Also, as part of the Quality Management System, the Company has embraced ISO 9001:2008. The Company continues to follow process improvement methodologies like Six Sigma, Lean and Kaizen.

AWARDS AND ACCOLADES

The Company received the following awards and accolades during the year.

-Awarded the ''Outsourcing Partnership of the Year'' at the European Call Centre and Customer Service Awards 2014 (ECCCSA) for our long-standing relationship with giffgaff.

-The "Outsourcing Excellence Award 2014" for the "Best Business Process" category in partnership with BSkyB.

-Received the "Innovator of the Year" for Excellence in Voice of Customer Analytics by Verint Technologies. This award is in recognition for the First Customer Intelligence (FCI) solution.

-Received the awards for - "Best Outsourced Customer Service Team" and "Best Business Process Outsourcing" at National Outsourcing Association''s Outsourcing Professional Awards (Global) in partnership with giffgaff.

-Awarded the "Telecommunications Utilities and High-Tech Outsourcing Project of the Year Award 2014" for the partnership with giffgaff at the National Outsourcing Association''s (NOA) awards 2014.

-First Customer Intelligence, the Company''s flagship product, won the "2014 Technology Leadership Award" at the 2014 Ventana Research Summit. The award was for the development of First Customer Intelligence (FCI) solution, using Verint technology.

-The Company has been ranked #12 by The International Association of Outsourcing Professionals (IAOP) in the 2014 Global Outsourcing 100® rankings.

-The Company has been ranked #16 in Business World''s biggest employers List.

-The Company has retained 7th position in the Top 15 BPM Exporters rankings released by NASSCOM for 2014.

HUMAN RESOURCES

On a consolidated basis, the Company has 25,080 employees as of March 31, 2015.

Particulars of the Employees and Related Disclosures:

Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 form part of this Report and are annexed as Annexure I.

In terms of the provisions of Section 197(12) of the Act read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, a statement showing the names and other particulars of the employees drawing remuneration in excess of the limits set out in the said rules form part of this Report and is annexed as Annexure II.

PUBLIC DEPOSITS

During the year, your Company has not accepted any deposits under Section 73 of the Act (herein after referred to as the "Act") and as such, no amount on account of principal or interest on public deposits was outstanding as of March 31, 2015.

PARTICULARS OF LOANS, INVESTMENTS, GUARANTEES AND SECURITIES

Particulars of loans given, investments made, guarantees given and securities provided along with the purpose for which the loan or guarantee or security is proposed to be utilised by the recipient are provided in the notes to the standalone financial statement. (Please refer to Note 12, 16, 19 & 32 to the standalone financial statement)

CORPORATE SOCIAL RESPONSIBILITY INITIATIVES

The Company seeks to be a good corporate citizen in all aspects of its operations and activities. The Company seeks to undertake programmes in the areas of Healthcare, Education, Environment, Arts & Culture, Promotion of Sports as well as support initiatives towards Gender Equality and Empowerment of Women.

The Board of Directors of the Company (hereinafter referred to as the "Board") constituted a Corporate Social Responsibility (CSR) Committee during the year, pursuant to section 135 of the Act, consisting of Shashwat Goenka (Chairman) and Rajesh Subramaniam, Subrata Talukdar & Pradip Roy (Independent Director) as its members. The CSR Committee held 3 meeting during the year. The details of CSR Committee and its meetings are given in Report on Corporate Governance forming part of the Annual Report. The CSR Committee has framed and formulated a CSR Policy indicating the activities to be undertaken by the Company, in accordance with schedule VII of the Act and the Companies (Corporate Social Responsibility Policy) Rules, 2014 issued under the Act. The same has also been approved by the Board. The CSR policy is available at the website of the Company at the link http://www.firstsource.com/articles/ fsl-corporate-social-responsibilitv-policv.pdf . The Annual Report on CSR Activities, as stipulated under the Act and the Listing Agreement forms an integral part of this Report and is appended as Annexure III. The details of focus areas of engagement as mentioned in the CSR Policy of the Company are mentioned in the said Annual Report on CSR Activities.

The CSR activities, as per the provisions of the Act, may also be undertaken by the Company through a registered trust. Accordingly, "RP - Sanjiv Goenka Group CSR Trust" ("CSR Trust") was formed by the Company, along with other group companies to pursue CSR activities as mentioned in the CSR Policy of the Company which include promoting healthcare, education, skill development, livelihood opportunities to improve the overall quality of life, promotion of sports, arts, etc. During the year, the Company has spent an amount of Rs. 18.25 million, being 2% of the average net profits of the Company for the last 3 years on CSR activities as mentioned in the CSR Policy. Out of the said amount, majority of the amount has been contributed by the Company towards the corpus of the CSR Trust, which would be spent by the CSR Trust on the focus areas as mentioned in the CSR Policy of the Company.

Besides the focus areas of engagement as mentioned in the CSR Policy of the Company, the Company also voluntary undertakes various CSR activities. The CSR at the Company is a platform for giving back to the communities in which we live and work. The Company through its employee engagement activities has contributed in a variety of areas. Our Social Initiative areas across the geographies are as follows:

1. Employee Volunteering

2. Payroll Giving

3. Response to disasters

4. Participating in popular fundraising events

Joy of Giving:

-Donated rice of over 6 tonnes to help the flood victims of Jammu & Kashmir.

-Raised funds from employees of the Company through centers in India for a Bangalore based NGO "Unnati," which works towards developing the livelihood skills of deprived youth.

-The Company has partnered with the organization "Grow Trees" to help employees plant a tree. The first 200 employees to participate received an e-certificate stating that trees have been planted on behalf of the employees and paid for by the Company. 200 trees were planted on behalf of the Company via the Organisation Grow Tree.

The Company is a Global Company & operates in various geographies through its overseas subsidiaries and branch offices. Some of the highlights of its CSR initiatives in other countries in which the Company operates through its subsidiaries are as follows:

UK & Ireland:

Fund raising activities

-World Autism Day: Employees in Belfast office organised a ''wear blue'' dress day for the National Autistic Society of Northern Ireland.

-National Society for the Prevention of Cruelty towards Children: Employees in Cardiff supported this charity.

-Cork Penny Dinners:

i.The office in Cork Organised a "Wax or Sponge" event in the aid of the charity which provides hot meals for the homeless and needy.

ii.Employees volunteered to be waxed by a beautician or sponged by their colleagues in aid of this.

-Irish Heart Foundation: Employees in Dublin organised an Easter Hamper Raffles to support this charity.

-Mc Millan Cancer Group: Employees of Belfast & Derry gathered to support local Man Darren Rob''s Sail for Cancer Initiatives for Mc Milan Cancer, the group that supported him in his battle against cancer.

-CLIC Sargent: Employees from Linenhall and Oyster Housein Belfast took partin the team relay race in the Belfast Deep River rockMarat to support CLIC, a charity that provides support to young people and children living with cancer.

-Butterwick Hospice:

i.Middlesbroughorganised a charity event for this local organisation which offers wide range supportive measures to terminally ill people and their families.

ii.Employees came to work wearing yellow; a tambola event with prizes including chocolates were organized.

Food bank collection at Cardiff

-As the harsh winter months increase everyone''s expenditure on heating, many of the least privileged people in society rely on food banks in order to survive. This inspired HR in Cardiff to encourage staff to donate non-perishable goods to Cardiff Food bank.

- Between January 26 and January 29, 2015, colleagues at the Discovery House centre donated over 400 items of food which were then put on display in the reception area in the form of a 5ft castle for all staff and visitors to see how successful the campaign was. The Cardiff Food Bank receives donations from schools,churches, businesses, individuals, and through supermarket collections.

USA:

Annual Book Bag Challenge

-In the Company''s office in La Porte, USA, Employees conducted their ''Annual Book Bag Challenge'', where essential school supplies are gifted to children in need.

-The employees formed five teams and competed to see which team can put together the highest number of ''book bags''.

-A total of 72 complete book bags filled with school supplies were collected at the end of the event.Fundraising at Birmingham

-A group of local business people in the Helena, AL community, a suburb of Birmingham, AL, undertook a fundraiser to raise money for "The Wounded Warrior Project" to raise awareness and enlist the public''s aid for the needs of injured service members. The Employees raised USD 6,437 which was donated directly to the project.

Sri Lanka:

FDS Water Project

-Fundraiser organised the Water Project to aid victims of the drought.

-All employees got together and raised funds to purchase 10,000 Litres of pure drinking water which was then distributed across 500 families in need.

Philippines:

Turning the Frowns upside down

-Employees of the Company''s office in Manila embarked on a CSR journey as part of its annual CSR programme, in collaboration with the Chosen Children Village Foundation, Inc., an internationally acclaimed facility geared towards securing the future of the physically, mentally, and emotionally challenged children.

-The village is founded to support children who are abandoned at an early age- 8 months and below.

-As the employees arrived at the location, they were first given a tour of the village, which houses multiple classrooms, libraries, art rooms, crafts and artifacts museum, mini-canteen, indoor basketball court, children''s nursery, an aqua therapy pool, indoor and outdoor playground and an activity centre.

RISK MANAGEMENT

The Company has implemented a comprehensive and fully integrated ''Enterprise Risk Management'' framework in order to anticipate, identify, measure, manage, mitigate, monitor and report the principal risks and uncertainties that can impact its ability to achieve its strategic business objectives.

The Company has introduced several improvements to Enterprise Risk Management and processes to drive a common integrated view of risks and optimal risk mitigation responses. This integration is enabled by alignment of Risk Management, Internal Audit, Legal and compliance methodologies and processes in order to maximise enterprise value of the Company and ensure high value creation for our stakeholder over a time.

The details of the Enterprise Risk Management framework with details of the principal risks and the plans to mitigate the same are given in the ''Risk Management Report'' section of the ''Management Discussion and Analysis Report'' which forms part of this Annual Report.

INTERNAL FINANCIAL CONTROLS

The Company has in place adequate internal financial controls with reference to financial statements. Such controls were tested during the financial year and no material weaknesses in the design or operation were observed.

WHISTLE BLOWER POLICY

The Company has a Whistle Blower Policy (the "WB Policy") with a view to provide vigil mechanism to Directors, employees and other stakeholders to disclose instances of wrongdoing in the workplace and report instances of unethical behavior, actual or suspected fraud or violation of the Company''s code of conduct or ethics policy. The WB Policy also states that this mechanism should also provide for adequate safeguards against victimization of Director(s)/ Employees who avail of the mechanism and also provide for direct access to the Chairman of the Audit Committee in exceptional cases. The Whistle Blower Policy has been posted on the website of the Company and the details of the same are explained in the Report on Corporate Governance forming part of this Annual Report. The Whistle Blower Policy is available at the website of the Company at the link http://www.firstsource.com/ articles/Whistle-Blower-Policy.pdf

PREVENTION OF SEXUAL HARRASSMENT POLICY

The Company has a Prevention of Sexual Harassment Policy in force in terms of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. The objective of this Policy is to ensure a safe, secure and congenial work environment where employees will deliver their best without any inhibition, threat or fear. The Company has Zero Tolerance to any form of harassment especially if it is sexual in nature. The complaints filed under the Policy are reported to the Audit Committee at its quarterly meetings with details of action taken thereon.

BOARD OF DIRECTORS

During the year, K. P. Balaraj resigned as a Director of the Company w.e.f. May 21, 2014, Ananda Mukerji resigned w.e.f. August 18, 2014, Haigreve Khaitan resigned w.e.f. September 19, 2014 and Dr. Shailesh J. Mehta resigned w.e.f. March 30, 2015. The Board places on record its appreciation for the contribution made by them during their tenure as Directors of the Company.

The Board appointed V. K. Sharma and Ms. Grace Koshie (Woman Director) as Additional Directors as Independent Directors with effect from November 14, 2014 and February 9, 2015 respectively. They hold office upto the date of forthcoming Annual General Meeting (AGM). Pradip Kumar Khaitan was appointed as non- executive non-independent Director w.e.f. November 14, 2014 in the casual vacancy caused by resignation of Haigreve Khaitan

and holds office upto the date of forthcoming AGM. He represents Spen Liq Private Limited, the Promoter, on the Board of the Company. The Company has received notices alongwith the requisite deposit from these Directors pursuant to Section 160(1) of the Act signifying their candidature for appointment as Directors of the Company at the forthcoming AGM.

The Board recommends appointment of V. K. Sharma and Ms. Grace Koshie as Independent Directors for a period of 5 years expiring on November 13, 2019 and February 8, 2020 respectively, for approval of members of the Company at the AGM. The Company has received the declarations from V. K. Sharma and Ms. Grace Koshie confirming that they meet the criteria of independence as prescribed under Section 149(6) of the Act and clause 49 Listing Agreement .

The other Independent Director of the Company have also given declarations that they meet the criteria of independence as laid down under Section 149(6) of the Act and Clause 49 of the Listing Agreement.

Subrata Talukdar retires by rotation and being eligible, has offered himself for re-appointment at the forthcoming AGM.

Board and Audit Committee Meetings

During the year, 4 Board Meetings were held on May 2, August 1 & November 14 in 2014 and on February 9 in 2015. Time gap between any two meetings was not more than 4 months. Further, 4 meetings of the Audit Committee were held during the year on May 2, July 31 & November 13 in 2014 and February 9 in 2015. The time gap between any two meetings was not more than 4 months. The full details of the said meetings are given in the Report on Corporate Governance forming part of this Annual Report.

The Familiarisation Programmes for Independent Directors

The Company has put in place a system to familiarise its Independent Directors with the Company, their roles, rights & responsibilities in the Company, nature of the industry in which the Company operates, business model of the Company, etc. The details of such familiarisation programmes are put up on the website of the Company at the link: http://www.firstsource.com/ articles/policy-on-familiarisation-of-independent-directors.pdf

BOARD EVALUATION

(i) Performance Evaluation of the Independent Directors and other Individual Directors

The Board, on the recommendation of the Nomination & Remuneration Committee, has framed a Policy for Appointment of Directors and Senior Management and Evaluation of Directors'' Performance. The said Policy sets out criteria for performance evaluation of Independent Directors, other Non-Executive Directors and the Executive Director(s).

Pursuant to the provisions of the Act and Clause 49 of the Listing Agreement, the Board has carried out an annual evaluation of the performance of Directors individually. The evaluation of the performance of the Non-Independent Directors including the Managing Director and CEO and the Chairman of the Board was carried out by the Independent Directors of the Company. The evaluation of performance of the Independent Directors and other individual Directors was also made by the entire Board on the basis of recommendation of the Nomination and Remuneration Committee and the criteria mentioned in the Policy for Appointment of Directors and Senior Management and Evaluation of Directors'' Performance. The Board decided that the performance evaluation of Directors should be done by the entire Board of Directors excluding the Director being evaluated and unanimously agreed on the following assessment criteria for evaluation of Directors'' performance:

a.Attendance and participation in the Meetings

b.Preparedness for the Meetings

c.Understanding of the Company and the external environment in which it operates and contribution to strategic direction

d.Raising of valid concerns to the Board and constructive contribution to issues and active participation at meetings

e.Engaging with and challenging the management team without being confrontational or obstructionist

The criteria for Directors'' appointment and for determining qualification , positive attributes , independence of a director and for evaluation of performance of Directors as mentioned in the Policy for Appointment of Directors and Senior Management and Evaluation of Directors'' Performance are mentioned below:

Appointment criteria and qualifications:

1.The Committee shall identify and ascertain the integrity, qualifications, expertise and experience of the person for appointment as Director, KMP or at Senior Management level and recommend to the Board his / her appointment.

2.A person should possess adequate qualifications, expertise and experience for the position he / she is considered for appointment. The Committee has discretion to decide whether qualifications, expertise and experience possessed by a person are sufficient / satisfactory for the concerned position.

3.The Company shall not appoint or continue the employment of any person as Managing Director/ Whole time Director who has attained the age of seventy years. Provided that the term of the person holding this position may be extended beyond the age of seventy years with the approval of shareholders by passing a special resolution based on the explanatory statement annexed to the notice or such motion indicating the justification for extension of appointment beyond seventy years.

Performance Evaluation:

The performance evaluation of Independent Directors shall be done by the entire Board of Directors (excluding the director being evaluated).

On the basis of the report of performance evaluation, it shall be determined whether to extend or continue the term of appointment of the Independent Director.

The Independent Directors of the Company shall hold at least one meeting in a year, without the attendance of non independent Directors and members of management.

The Independent Directors in the meeting shall:

i.Review the performance of non independent Directors and the Board as a whole.

ii.Review the performance of the Chairperson of the Company, taking into account the views of executive Directors and non executive Directors.

Criteria for Evaluation of Independent Directors and the Board

Following are the criteria for evaluation of performance of Independent Directors and the Board:

(A)Executive Directors

The performance of Managing Director and Chief Executive Officer and other Executive Directors, if any, shall be evaluated on the basis of achievement of performance targets/ criteria given to them by the Board from time to time.

(B)Non Executive Directors including Independent Directors

The performance of Non Executive Directors including Independent Directors shall be evaluated on the basis of the following criteria i.e. whether they:

(a)Act objectively and constructively while exercising their duties;

(b) Exercise their responsibilities in a bona fide manner in the interest of the company;

(c)Devote sufficient time and attention to their professional obligations for informed and balanced decision making;

(d)Do not abuse their position to the detriment of the Company or its shareholders or for the purpose of gaining direct or indirect personal advantage or advantage for any associated person;

(e)Refrain from any action that would lead to loss of his independence;

(f)Inform the Board immediately when they lose their independence;

(g)Assist the Company in implementing the best corporate governance practices;

(h)Strive to attend all meetings of the Board of Directors and its

Committees of which they are chairpersons or members;

(i)Participate constructively and actively in the Committees of the Board in which they are chairpersons or members;

(j)Strive to attend the general meetings of the Company;

(k)Keep themselves well informed about the Company and the external environment in which it operates;

(l)Does not unfairly obstruct the functioning of an otherwise proper Board meeting or Committee meeting of the Board;

(m)Moderate and arbitrate in the interest of the Company as a whole, in situations of conflict between management and shareholders'' interest;

(n)Abide by Company''s Memorandum and Articles of Association, Company''s policies and procedures including Code of Conduct, Insider Trading Code etc."

(ii)Performance Evaluation by the Board of its own performance and its Committees:

Pursuant to the provisions of the Act and Clause 49 of the Listing Agreement, the Board also carried out an annual evaluation of its own performance and that of its Committees namely the Audit Committee, the Nomination & Remuneration Committee, the Stakeholders Relationship Committee and the Corporate Social Responsibility Committee.

The evaluation was made in the overall context of the effectiveness of the Board and the respective Committees in providing guidance to the operating management of the Company, level of attendance in the Board/ Committee meetings, constructive participation in the discussion on the Agenda items, effective discharge of the functions and roles of the Board/ Committees. A detailed discussion followed on the basis of the aforesaid criteria and the Board collectively agreed that the Board and all its Committees fulfilled the above criteria and positively contributed in the decision making process at the Board/ Committee level.

COMMITTEES OF THE BOARD

A detailed note on the Board and its Committees is provided in the Report on Corporate Governance forming part of this Annual Report. The composition of the major Committees is an follows :

Audit Committee

As at March 31, 2015, the Audit Committee comprised of 2 Independent Directors namely Y. H. Malegam (Chairman) & Charles Miller Smith and 1 Non-Independent Director namely Subrata Talukdar. At the Board meeting held on May 5, 2015, Ms. Grace Koshie, a woman Independent Director was also inducted as a member of the Audit Committee. All the recommendations made by the Audit Committee were accepted by the Board. Further details relating to Audit Committee are given in the Report on Corporate Governance forming part of this Annual Report.

Nomination and Remuneration Committee

As at March 31, 2015, the Nomination and Remuneration Committee comprised of 2 Independent Directors namely Y. H. Malegam & Charles Miller Smith and 1 Non-Independent Director namely Subrata Talukdar. At the Board meeting held on May 5, 2015, Pradip Roy, an Independent Director was also inducted as a member of the Nomination and Remuneration Committee and Y. H. Malegam was appointed as the Chairman of the Committee in place of Dr. Shailesh J. Mehta, who resigned as a Director w.e.f. March 30, 2015.

Corporate Socal Responsibility Committee (CSR Committee)

As at March 31, 2015, CSR Committee comprised of Shashwat Goenka (Chairman), Rajesh Subramaniam, Subrata Talukdar and Pradip Roy (Independent Director).

Stakeholders Relationship Committee

As at March 31, 2015, Stakeholders Relationship Committee comprised of Subrata Talukdar and Rajesh Subramaniam. Dr. Shailesh J. Mehta, who was Chairman of the Committee, resigned as a Director w.e.f. March 30, 2015. The Board, at its meeting held on May 5, 2015, appointed Subrata Talukdar (Non-Executive Director), as Chairman of the Committee.

REMUNERATION POLICY

The Board, on the recommendation of the Nomination & Remuneration Committee framed a Remuneration Policy for Non Executive Directors (including Independent Directors) and a Remuneration Policy for Key Managerial Personnel and Other Employees of the Company. The Remuneration Policy for Non Executive Directors is provided as Annexure IVA and Remuneration Policy for Key Managerial Personnel and Other employees of the Company is provided as Annexure IVB to this Report.

RELATED PARTY TRANSACTIONS

All the contracts/ arrangements/ transactions that were entered into by the Company during the financial year with related parties were on an arm''s length basis and in the ordinary course of business. During the year, the Company had not entered into any contract/ arrangement/ transaction with related parties which could be considered material in accordance with the policy of the Company on materiality of related party transaction. All Related Party Transactions are placed before the Audit Committee for approval.

The policy on Related Party Transactions as approved by the Board is available on website of the Company at the link: http:// www.firstsource.com/articles/Related-Partv-Transaction-Policv. pdf

Details of Related Party Transactions are given at Note No. 28 to the Standalone Financial Statements. None of the Directors of

the Company has any pecuniary relationships or transactions vis-a-vis the Company.

EMPLOYEES STOCK OPTION SCHEME

With a view to provide an opportunity to the employees of the Company to share the growth of the Company and to create long-term wealth, the Company has an Employee Stock Option Scheme (ESOS), namely, the Firstsource Solutions Employee Stock Option Scheme, 2003 (ESOS 2003). The earlier ESOS introduced in 2002 is in force for the limited purpose of exercise of options granted pursuant to the scheme. The Scheme is applicable to the eligible employees that include employees and Directors of the Company and its subsidiary companies. Disclosures in compliance with Clause 12 of the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Regulations, 1999, as amended, are set out below:

ESOS 2003

a)Total number of options under the Plan: 66,204,769

b)Options granted during the year 2014-15: 5,900,000

c)Pricing formula: The ''Pricing formula'' or ''Exercise Price'' for the purpose of the grant of Options shall be the ''market price'' within the meaning set out in the SEBI (Employee Stock Option Scheme & Employee Stock Purchase Scheme) Guidelines, 1999 i.e., the latest available closing price, prior to the date when options are granted/shares are issued, on that Stock Exchange where there is highest trading volume on the said date. The Compensation Committee has the power to change/modify the exercise price or pricing formula and fix the exercise price at such discount to the market price of the equity shares as may be deemed appropriate provided that the grant/exercise price shall not be below the face value of the shares and shall be in accordance with the applicable laws in this regard.

d)Options vested during the year 2014-15: 10,747,500

e)Options exercised during the year 2014-15: 6,484,083* (including 20,000 stock options which were exercised in March, 2015 and were pending for allotment of shares)

f)Total number of shares arising as a result of exercise of options during the year 2014-15: 6,526,583

g)Options lapsed during the year 2014-15: 4,713,500#

(#The stock options which are cancelled/ lapsed/ forfeited can be re- issued by the Company)

h)Exercise Price (for 5,900,000 Options granted during the year 2014-15)

No. of options Exercise price(Rs)

5,000,000 28.90

500.000 31.30

400.000 40.35

i)Variation of terms of options during the year 2014-15: Nil

j)Money realised by exercise of options during the year 2014- 15 (Amount in Rs.): 112,555,047@

(@Including money realised with respect to 20,000 options which were exercised in March, 2015 and shares are pending for allotment as at March 31, 2015)

k)Total number of options in force: 42,308,052

l)Employee wise details of options granted during the year 2014-15 to:

i)Key Managerial Persons: Rajesh Subramaniam (Managing Director & CEO) - 1,000,000, Dinesh Jain (CFO) - 250,000, Sanjay Gupta (Company Secretary) - 50,000

ii) Other Senior Managerial personnel*: Sanjay Venkataraman - 250,000, Venkataraman K R - 250,000, Shalabh Jain - 175,000, Ms. Stephanie Wilson - 175,000, Satish M - 175,000, Ms. Stephen W. Ogilvie- 100,000, Arjun Mitra - 75,000 and Gavin Snell - 500,000

(* Options granted to employes who resigned during the year have not been considered).

iii)Any other employee, who has been granted options amounting to 5% or more of options granted during the year 2014-15: Nil

iv)Identified employees who were granted options, equal to or exceeding 1% of the issued capital of the Company, during the year 2014-15: Nil

m)Diluted Earnings Per Share (EPS) pursuant to issue of shares on exercise of options calculated in accordance with Accounting Standard (AS) 20 - ''Earnings Per Share'': i) Standalone EPS - Rs. 2.33 per share. ii) Consolidated EPS - Rs 3.34 per share.

n)Where the Company has calculated the employee compensation cost using the intrinsic value of the stock options, the difference between the employee compensation cost so computed and the employee compensation cost that shall have been recognised if it had used the fair value of the options. The impact of this difference on profits and on EPS of the Company: Please refer to Note No. 27 of the Standalone Financial Statements.

o)Weighted average exercise price and weighted average fair value of options separately for options whose exercise price either equals or exceeds or is less than the market price of the stock: i) Weighted average exercise price - Rs. 26.06 per option. ii) Weighted average fair value as per the Black Scholes Model - Rs. 13.97 per option.

p)A description of the method and significant assumptions used during the year to estimate the fair values of options, including the following weighted average information: a) Risk free interest rate b) Expected life c) Expected dividends and d) The price of the underlying share in market at the time of option grant: Please refer to Note No. 27 of the Standalone Financial Statements.

Prior to the Initial Public Offering (IPO), the Company had granted options to employees at the fair market value, as certified by an independent valuer. Post IPO, the exercise

price of the options granted equals the market price of the stock i.e. the latest available closing price, prior to the date when options are granted, on that Stock Exchange where there is highest trading volume on the said date.

ESOS 2002

a)Total number of options under the Plan : 2,347,500

b)Options granted during the year 2014-15 : Nil

c)Options vested during the year 2014-15 : Nil

d)Options exercised during the year 2014-15: Nil

e)Total number of shares arising as a result of exercise of op- tion during the year 2014-15: 30,000#

(#These 30,000 options were exercised in March, 2014 and allotment was made in September, 2015)

f)Options lapsed during the year 2014-15: Nil

g)Variation in the terms of option during the year 2014-15: Nil

h)Money realised by exercise of options during the year 2014- 15 (Amount in Rs.): Nil@ (@Money for 30,000 options exercised in March, 2014 was re- alised in the same month. However, shares were pending for allotment)

i)Total number of options in force: Nil

j)Weighted average exercise price and weighted average fair value of options separately for options whose exercise price either equals or exceeds or is less than the market price of the stock: i) Weighted average exercise price - Nil ii) Weighted average fair value as per the Black Scholes Mod- el - N.A.

SUBSIDIARY COMPANIES

As on March 31, 2015, your Company had 12 subsidiaries:

Domestic subsidiaries:

1. Anunta Tech Infrastructure Services Limited [Wholly Owned Subsidiary (WOS) of the Company]

International subsidiaries:

1.Firstsource Solutions UK Limited, UK (WOS of the Company)

2.Firstsource Solutions S.A., Argentina (Subsidiary of First- source Solutions UK Limited)

3.Firstsource Group USA, Inc., USA (WOS of the Company)

4.MedAssist Holding LLC, USA* (WOS of Firstsource Group USA, Inc)

5.Firstsource Business Process Services, LLC, USA (WOS of Firstsource Group USA, Inc.)

6.Firstsource Advantage LLC, USA (WOS of Firstsource Busi- ness Process Services, LLC)

7.One Advantage LLC, USA** (WOS of Firstsource Business Pro- cess Services, LLC)

8.Firstsource Solutions USA, LLC, USA (WOS of MedAssist Hold- ing LLC)

9.Firstsource Transaction Services, LLC, USA (WOS of First- source Solutions USA, LLC)

10.Firstsource BPO Ireland Limited (WOS of the Company)

11.Firstsource Dialog Solutions (Private) Limited (Subsidiary of the Company)

Notes:

1.MedAssist Holding, Inc., USA got merged with MedAssist Acquisition, LLC, a new entity formed as WOS of Firstsource Group USA, Inc., w.e.f. March 31, 2015. Post merger, the name of this entity was changed to MedAssist Holding, LLC.

2.One Advantage LLC was incorporated as a WOS of First- source Business Process Services, LLC, USA a subsidiary of the Company, during the year. Consequently, One Advan- tage LLC also became a subsidiary of the Company.

Names of the companies which have become subsidiaries of the Company during the year:

1.One Advantage LLC, USA

2.MedAssist Holding, LLC, USA

Names of the companies which have ceased to be subsidiaries of the Company during the year:

1. MedAssist Holding, Inc., USA Further, no company has become/ ceased to be a joint venture or associate during the financial year 2014-15.

Report on the Performance and Financial Position of Subsidiaries:

A report on the performance and financial position of each of the subsidiaries as per the Act, in the prescribed format AOC - 1 is annexed to the consolidated financial statement and hence not repeated here for the sake of brevity. The Policy for determining material subsidiaries may be accessed on the Company''s website at the link: http://www.firstsource.com/ articles/Material-Subsidiarv-Policv.pdf

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

Management Discussion and Analysis Report for the year as stipulated under Clause 49 of the Listing Agreement is separately given and forms part of this Annual Report.

REPORT ON CORPORATE GOVERNANCE

The adherence to the corporate governance practices by the Company not only justifies the legal obedience of the laws but dwells deeper conforming to the ethical leadership and stability. It is the sense of good governance that our leaders portray, which trickles down to the wider management and is further maintained across the entire functioning of the Company. The Company is committed to maintain the highest standards of corporate governance and adhere to the corporate governance requirements set out by SEBI. The report on Corporate Governance as stipulated under Clause 49 of the Listing Agreement is separately given and forms part of this Annual Report. The requisite certificate from a Practicing Company Secretary confirming compliance of the conditions of corporate

governance is attached to the Report on Corporate Governance.

CONSOLIDATED FINANCIAL STATEMENTS

In accordance with section 129(3) of the Act and Accounting Standard (AS) - 21 on Consolidated Financial Statements, the Company has prepared consolidated financial statements of the Company and all its subsidiaries, which form part of this Annual Report.

EXTRACT OF ANNUAL RETURN

The details forming part of the extract of the Annual Return in Form MGT- 9 is annexed herewith as Annexure V.

STATUTORY DISCLOSURES OF PARTICULARS

A) Conservation of Energy

The Company has made progress towards energy conservation across all its delivery centers. The Company is continuously monitoring the earlier initiatives of reducing energy consumption in the computers which are used in its delivery centers. All the CRT monitors were replaced with LCD/TFT monitors and the Physical standalone servers are being replaced by the Virtual Servers and Storages. These initiatives have contributed in reducing energy consumption. The Company, similar to its previous years'' initiatives of GREEN IT, continued to replace the normal Desktops with Mini Desktops as the power consumption of mini desktop was 2.5 times less than the power consumed by normal desktops and nearly 5 times less during standby mode. Scripts are being tested out to shut down the Desktops/Thin clients which are not being used for more than 1 hour and would be successfully implemented in coming months which would save lot of energy.

B) Absorption of Technology

The Company has been innovating consistently to absorb newer technology offerings which can benefit business to improve operational efficiency with a cost effective manner. During the year, the Company started using the Hosted Shared Desktops (HSDs) through which with the same hardware, more people can use the shared desktops by sharing the resources more efficiently. The Company also started using new technology, as part of preventing data loss or intrusion due to virus infection, by using offline AntiVirus Software tool, which would help to scan the endpoint with fewer resources. These new technologies have helped the Company to have a cost effective end points with more computing speed.

C) Foreign Exchange Earnings and Outgo Activities relating to exports, initiatives taken to increase exports, development of new export markets for services and export plans.

The Company''s income is diversified across a range of geographies and industries. During the year, 49.7% of the Company''s revenues were derived from exports. The Company provides BPO services mostly to clients in North America, UK and Asia Pacific region. The Company has established direct marketing network around the world to boost its exports.

SECRETARIAL AUDIT

Pursuant to the provisions of Section 204 of the Act and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed Ms. Amrita D.C. Nautiyal, a Company Secretary in Practice to undertake the Secretarial Audit of the Company. The Secretarial Audit Report is annexed to this Report as Annexure VI. There is no qualification, reservation or adverse remark(s) in the Secretarial Audit Report.

STATUTORY AUDITORS AND AUDITORS'' REPORT

M/s. B S R & Co. LLP, Chartered Accountants, who were appointed as the Statutory Auditors of the Company by the Members at their previous Annual General Meeting (AGM), shall retire on conclusion of the ensuing AGM and are eligible for re-appointment. Members are requested to consider their re-appointment for a period of 2 years from the conclusion of forthcoming Annual General Meeting (AGM) until the conclusion of AGM for the financial year 2016-17, subject to ratification by members at the next AGM, at a remuneration to be decided by Audit Committee of the Board of Directors. The Company has received a letter of confirmation from M/s. B S R & Co. LLP, Chartered Accountants to the effect that their appointment, if made, will be within the limits of Section 139 of the Act.

The Notes on financial statement referred to in the Auditors'' Report are self-explanatory and do not call for any further comments. The Auditors'' Report does not contain any qualification, reservation or adverse remark. However, there are Emphasis of Matter in the Auditors'' Report which are self explanatory.

GENERAL

Your Directors state that no disclosure or reporting is required in respect of the following matters as there were no transactions on these matters during the financial year 2014-15:

1. Issue of equity shares with differential rights as to dividend, voting or otherwise.

2. Issue of shares (including sweat equity shares) to employees of the Company under any scheme save and except Employees Stock Option Scheme as referred to in this Report.

3. The Managing Director & CEO does not receive any remuneration or commission from any of its subsidiaries.

4. No significant or material orders were passed by the

Regulators or Courts or Tribunals which impact the going concern status and the Company''s operations in future.

DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to the requirement under Section 134 of the Act, Directors of your Company state and confirm that:

(a) In the preparation of the annual accounts for the financial year 2014-15, the applicable accounting standards have been followed and there are no material departures from the same;

(b) The directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31st March, 2015 and of the profit and loss of the Company for year ended on that date;

(c) The directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safe guarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(d) The directors had prepared the annual accounts on a going concern basis; and

(e) The directors had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively.

(f) The directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

ACKNOWLEDGEMENTS

The Directors wish to place on record their sincere appreciation for the support and co-operation extended by all the customers, vendors, bankers and business associates. The Company also expresses its gratitude to the Ministry of Telecommunications, Collector of Customs and Excise, Director - Software Technology Parks of India and various Governmental departments and organisations for their help and co-operation.

The Board places on record its appreciation to all the employees for their dedicated service. The Board appreciates and values the contributions made by every member across the world and is confident that with their continued support, the Company will achieve its objectives and emerge stronger in the coming years.

For and on behalf of the Board of Directors

Sanjiv Goenka Chairman

Mumbai May 5, 2015


Mar 31, 2014

Dear Members,

The Directors of your Company take great pleasure in presenting the Thirteenth Annual Report on the business and operations of your Company and the Audited financial statements for the financial year ended March 31, 2014.

FINANCIAL RESULTS

The performance of the Company for the financial year 2013-14 is summarised below:

(Rs. in Million)

Particulars Consolidated Standalone FY 2013-14 FY 2012-13 FY 2013-14 FY 2012-13

Total Income 31,078.80 28,649.30 9,325.41 9,733.91

Profit Before Interest and Depreciation 3,641.29 3,259.57 2,049.08 2,278.45

Interest and Finance Charges (net) 851.47 783.65 177.19 527.98

Depreciation 757.02 883.98 527.19 576.58

Profit Benefit Tax 2,032.80 1,591.94 1,344.70 1,173.89

Provision for Taxation (including Deferred Tax Charge/ 100.89 129.23 - - Credit)

Profit After Tax Before Minority Interest 1,931.91 1,462.71 1,344.70 1,173.89

Minority Interest 2.29 -3.21 - -

Net Profit After Tax 1,929.62 1,465.92 1,344.70 1,173.89

Balance Brought Forward 7,417.81 6,285.13 5,198.58 3,401.52

Accumulated Balance of Rev IT Systems Private Limited - - - 623.17 brought forward pursuant to Scheme of Amalgamation

Total Profits available for Appropriations 9,347.43 7,751.05 6,543.28 5,198.58

Adjustment of Amalgamation Deficit pursuant to Scheme - 333.24 - - of Amalgamation of Rev IT Systems Private Limited with the Company

Accumulated Balance in Profit & Loss Account 9,347.43 7,417.81 6,543.28 5,198.58

Earning Per Share (Rs.) - Basic 2.93 2.91 2.04 2.33

Earning Per Share (Rs.) - Diluted 2.82 2.82 1.96 2.29

RESULT OF OPERATIONS

The consolidated total income increased from 28,649.30 Million to 31,078.80 Million, a growth of 8.5% over the previous financial year. The consolidated Net Profit After Tax increased from 1,465.92 Million to 1,929.62 Million, a growth of 31.6% over the previous financial year. The detailed analysis of the consolidated results forms part of the Management Discussion & Analysis (MD&A) Report provided separately as part of the Annual Report.

The standalone total income reduced from 9,733.91 Million to 9,325.41 Million, a decline of 4.2% over the previous financial year. The standalone Profit After Tax increased from 1,173.89 Million to 1,344.70 Million, an increase of 14.5% over the previous financial year.

With a view to conserve cash reserves to meet current financial obligations of the Company, the Directors of your Company do not recommend any dividend for financial year 2013-14.

INCREASE IN SHARE CAPITAL

During the year, your Company issued 2,061,125 equity shares of the face value of 10/- each on the exercise of stock options under First source Solutions Employee Stock Option Scheme, 2003. Consequently, the outstanding, issued, subscribed and paid up capital of the Company has increased from 657,673,751 shares to 659,734,876 shares of 10/- each aggregating to 6,597.35 Million as on March 31, 2014.

GLOBAL DELIVERY FOOTPRINT

The Company, on a consolidated basis had 46 global delivery centres as on March 31, 2014. The centres are located across India, USA, UK, Philippines and Sri Lanka. 22 of the Company''s delivery centres are located in 16 cities in India, 14 are in the USA, 6 in UK, 3 in Philippines and 1 in Sri Lanka. The Company''s established global delivery footprint enables it to deliver wide range of services and strengthens relationships with existing customers.

During the year, the Company incurred capital expenditure of 357 Million mainly towards refurbishment and maintenance of delivery centres and establishment of new centres in Philippines and USA.

QUALITY INITIATIVES

The Company follows the global best practices in process excellence and is certified by COPC Inc. (Customer Operations Performance Centre). First source Dialog Solutions (Pvt.) Limited, joint venture subsidiary of the Company in Sri Lanka, has been recertified for COPC (5.0a) Standard. Also, as part of the Quality Management System, the Company has embraced ISO 9001:2008. The Company continues to follow process improvement methodologies like Six Sigma, Lean and Kaizen.

AWARDS AND ACCOLADES

The Company received the following awards and accolades during the year.

- The Silver accreditation by Investors-in-People (IIP) in the UK. This achievement highlights and benchmarks our good practices in relation to investing in people and commitment to continuous improvement.

- Featured among the 100 best BPO companies by Global Services Annual GS100 2013. This recognition highlights Company''s commitment and efforts in going the extra mile to meet client satisfaction. The Company has received this recognition for the third year in a row.

- The Company has been ranked #24 by The International Association of Outsourcing Professionals (IAOP) in the 2013 Global Outsourcing 100® rankings.

- Received the Frost & Sullivan 2013 North American - "New Product Innovation award" for Contact Center Outsourcing for its analytics proposition - First Customer Intelligence.

- Recognised as one of UK''s leading outsourcing providers by the National Outsourcing Association (NOA) Awards. The Company also won two other prestigious awards:

- BPO Project of the Year 2013 (for our work with Sky)

- Outsourcing Service Provider of the Year.

- Awarded the ''Outsourcing Partnership of the Year'' in the European Call Centre and Customer Service Awards 2013 for our longstanding relationship with Sky.

- ''Employer of the Year 2013'' in Northern Ireland by the UTV Business Eye Awards. This is in addition to the Business in the Community'' Employer of Choice'' and Irish News'' Innovative Employer''.

- The "Outsourcing Excellence Award 2013"atthe 17th Annual Outsourcing Excellence Awards held in Texas, US, for the "Best Business Process" category in partnership with Giffgaff Ltd.

- Awarded the Employer of Choice at the annual Business in the Community Northern Ireland (BITCNI) Awards in Belfast, Northern Ireland.

- The lrish News Workplace and Employment Awards awarded the Company with the Innovative Employer Award 2013 in Ireland.

HUMAN RESOURCES

On a consolidated basis, the Company has 27,666 employees as of March 31, 2014.

The statement of particulars of employees required in accordance with Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975, as amended, forms part of this Report. However, as permitted under section 219(1)(b)(iv) of the Companies Act, 1956, the Annual Report is being sent to all members and other entitled persons thereto excluding the above statement. Any member interested in obtaining a copy of the said statement may write to the Company Secretary at the Registered Office of the Company. The said statement is also available for inspection at the Registered Office during working hours upto the date of the forthcoming Annual General Meeting (AGM).

PUBLIC DEPOSITS

During the year, your Company has not accepted any deposits under Section 58A of the Companies Act, 1956 and as such, no amount on account of principal or interest on public deposits was outstanding as of March 31, 2014.

BOARD OF DIRECTORS

Mr. Ananda Mukerji and Mr. Shashwat Goenka retire by rotation and, being eligible, have offered themselves for re-appointment at the forthcoming AGM.

Pursuant to section 149 of the Companies Act, 2013 ("the Act") the tenure of the Independent Directors is upto five consecutive years from the commencement of the Act.

The Board recommends appointment of Mr. Y. H. Malegam, Dr. Shailesh J. Mehta, Mr. Charles Miller Smith, Mr. Donald W. Layden Jr. and Mr. Pradip Roy as Independent Directors for a term of upto 5 consecutive years for approval of members of the Company at the ensuing Annual General Meeting. The Company has received the declarations from all the Independent Directors of the Company confirming that they meet the criteria of independence as prescribed under Section 149 (6) of the Act.

EMPLOYEES STOCK OPTION SCHEME

With a view to provide an opportunity to the employees of the Company to share the growth of the Company and to create long-term wealth, the Company has an Employee Stock Option Scheme (ESOS), namely, the First source Solutions Employee Stock Option Scheme, 2003 (ESOS 2003). The earlier ESOS introduced in 2002 is in force for the limited purpose of exercise of options granted pursuant to the scheme. The Scheme is applicable to the eligible employees that include employees and Directors of the Company and its subsidiary companies. Disclosures in compliance with Clause 12 of the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999, as amended, are set out below:

ESOS 2003

a) Total number of options under the Plan: 65,018,269

b) Options granted during the year 2013-14: 11,075,000

c) Pricing formula: The ''Pricing formula'' or ''Exercise Price'' for the purpose of the grant of Options shall be the ''market price'' within the meaning set out in the SEBI (Employee Stock Option Scheme & Employee Stock Purchase Scheme) Guidelines, 1999 i.e., the latest available closing price, prior to the date when options are granted/ shares are issued, on that Stock Exchange where there is highest trading volume on the said date. The Compensation Committee has the power to change/ modify the exercise price or pricing formula and fix the exercise price at such discount to the market price of the equity shares as may be deemed appropriate provided that the grant/ exercise price shall not be below the face value of the shares and shall be in accordance with the applicable laws in this regard.

d) Options vested during the year 2013-14: 9,413,750

e) Options exercised during the year 2013-14: 2,123,625*

*Including 62,500 stock options which were exercised in March, 2014 and shares are pending for allotment.

f) Total number of shares arising as a result of exercise of options during the year 2013-14: 2,061,125

g) Options lapsed during the year 2013-14: 9,294,272# #The stock options which are cancelled/ lapsed/ forfeited can be re- issued by the Company.

h) Variation of terms of options during the year 2013-14: Nil

i) Money realised by exercise of options during the year 2013-14 (Amount in ): 26,210,225@

@Including money realised with respect to 25,000 options which

were exercised on March 21, 2014 and shares are pending for allotment.

j) Total number of options in force: 47,605,635

k) Employee wise details of options granted to: i) Senior Managerial personnel during the year 2013-14: Mr. Rajesh Subramaniam - 2,000,000, Mr. Sanjay Venkataraman - 400,000, Mr. Dinesh Jain - 400,000, Ms. Stephanie Wilson - 500,000, Mr. Shalabh Jain - 250,000, Mr. Joseph C Gibson - 200,000, Mr. Peter Van Riper - 375,000, Mr. Deep Babur- 150,000, Mr. Vishwajit Negi - 200,000, Mr. Iain Regan - 100,000, Mr. Arjun Mitra - 100,000, Mr. Venkataraman K R - 400,000, Ms. Mitzi Winters - 230,000, Mr. Satish M - 250,000, Ms. Gayatri Anandh - 150,000 and Mr. Stephen W. Ogilvie- 200,000 ii) Any other employee, who has been granted options amounting to 5% or more of options granted during the year 2013-14: Nil iii) Identified employees who were granted options, equal to or exceeding 1% of the issued capital of the Company, during the year 2013-14: Nil

l) Diluted Earnings Per Share (EPS) pursuant to issue of shares on exercise of options calculated in accordance with Accounting Standard (AS) 20 - ''Earnings Per Share'': i) Standalone EPS - 1.96 per share. ii) Consolidated EPS - 2.82 per share.

m) Where the Company has calculated the employee compensation cost using the intrinsic value of the stock options, the difference between the employee compensation cost so computed and the employee compensation cost that shall have been recognised if it had used the fair value of the options. The impact of this difference on profits and on EPS of the Company: Please refer to Note No. 26 of the Standalone Financial Statements.

n) Weighted average exercise price and weighted average fair value of options separately for options whose exercise price either equals or exceeds or is less than the market price of the stock: i) Weighted average exercise price - 23.66 per option. ii) Weighted average fair value as per the Black Scholes Model - 12.87 per option.

o) A description of the method and significant assumptions used during the year to estimate the fair values of options, including the following weighted average information: a) Risk free interest rate b) Expected life c) Expected dividends and d) The price of the underlying share in market at the time of option grant: Please refer to Note No. 26 of the Standalone Financial Statements.

Prior to the Initial Public Offering (IPO), the Company had granted options to employees at the fair market value, as certified by an independent valuer. Post IPO, the exercise price of the options granted equals the market price of the stock i.e. the latest available closing price, prior to the date when options are granted, on that Stock Exchange where there is highest trading volume on the said date.

ESOS 2002

a) Total number of options under the Plan: 2,347,500

b) Options granted during the year 2013-14: Nil

c) Options vested during the year 2013-14: Nil

d) Options exercised during the year 2013-14: 30,000

(These 30,000 options were exercised in March, 2014 and shares are pending for allotment)

e) Total number of shares arising as a result of exercise of option during the year 2013-14: Nil

f) Options lapsed during the year 2013-14: 41,250

g) Variation in the terms of option during the year 2013-14: Nil

h) Money realised by exercise of options during the year 2013-14 (Amount in ): 337,500

(This amount is with respect of 30,000 options which were exercised and shares are pending for allotment.)

i) Total number of options in force: Nil

j) Weighted average exercise price and weighted average fair value of options separately for options whose exercise price either equals or exceeds or is less than the market price of the stock: i) Weighted average exercise price - Nil ii) Weighted average fair value as per the Black Scholes Model - N.A.

SUBSIDIARY COMPANIES

As on March 31, 2014, your Company had 11 subsidiaries:

DOMESTIC SUBSIDIARIES:

1. Anunta Tech Infrastructure Services Limited [wholly owned subsidiary ("WOS") of the Company]

INTERNATIONAL SUBSIDIARIES:

1. First source Solutions UK Limited, UK (WOS of the Company)

2. First source Solutions S.A., Argentina (Subsidiary of First source Solutions UK Limited)*

3. First source Group USA, Inc., USA (WOS of the Company)

4.. First source Business Process Services, LLC, USA (WOS of First source Group USA, Inc.)

5. First source Advantage LLC, USA (WOS of First source Business Process Services, LLC.)

6. Med Assist Holding, Inc., USA (WOS of First source Group USA, Inc.)

7. First source Solutions USA, LLC USA (WOS of Med Assist Holding Inc.)

8. First source Transaction Services, LLC (WOS of First source Solutions USA, LLC)

9. First source BPO Ireland Limited (WOS of the Company)

10. First source Dialog Solutions (Private) Limited (Subsidiary of the Company)

Note:

1. #First source Solutions S.A., Argentina, a subsidiary of First source Solutions UK Limited, was sold during the financial year ended March 31, 2013. However, the option to exercise the sale with the buyer has lapsed and hence the investment has been restated in the books of account.

2. Twin Lakes Property, LLC - I and Twin Lakes Property, LLC - II, subsidiaries of First source Advantage, LLC, were dissolved w.e.f. March 27, 2014.

PARTICULARS UNDER SECTION 212 OF THE COMPANIES ACT

The Ministry of Corporate Affairs, Government of India, vide General Circular No. 2/2011 dated February 8, 2011, has granted a general exemption from compliance with section 212 of the Companies Act, 1956, subject to fulfilment of conditions stipulated in the circular. Your Company has satisfied the conditions stipulated in the circular and hence is entitled to the exemption. The financial data of the subsidiaries have been furnished under ''Details of Subsidiaries'' forming part of the Annual Report. Consolidated Financial Statements of the Company and its subsidiaries for the year ended March 31, 2014, together with reports of Auditors thereon and the statement pursuant to Section 212 of the Companies Act, 1956, forms part of the Annual Report. The Annual Accounts and the related detailed information of subsidiary companies will be made available to the Members of the Company and subsidiary companies seeking such information at any point of time. The Annual Accounts of the subsidiary companies will also be available for inspection by any member at the registered/ head office of the Company and that of the subsidiary concerned.

CORPORATE GOVERNANCE AND MANAGEMENT DISCUSSION AND ANALYSIS REPORT

Reports on Corporate Governance and Management Discussion and Analysis as stipulated under Clause 49 of the Listing Agreement are separately given and form part of the Annual Report.

STATUTORY DISCLOURES OF PARTICULARS

A) Conservation of Energy

The Company has made progress towards energy conservation across all its delivery centers. For optimal utilisation of energy, stringent monitoring of usage of electric devices and lightings is done to avoid unwanted usages. These initiatives have contributed in reducing energy consumption and helped in reducing the overall power consumption by 2.5%. With the implementation of such initiatives, the Company, like previous years, continues its legacy of pursuing GREEN IT and endeavours to innovate energy conservation methods in future.

B) Absorption of Technology

The Company has been innovating consistently to absorb newer technology offerings which can benefit business to improve operational efficiency with greater quality in a cost effective manner.

During the year, the Company started using the remote desktops which is a new and enhanced architecture with virtualisation advantages and makes a flexible solution for remote access. The Company also started using new technologies as part of virtualisation which leverage the elasticity of hybrid clouds and the security of mobile device management. These new technologies have helped the Company to have a cost effective solution which delivered secure virtual desktops to the users with reduced risk of data loss or intrusion.

C) Foreign Exchange Earnings and Outgo Activities relating to exports, initiatives taken to increase exports, development of new export markets for services and export plans.

The Company''s income is diversified across a range of geographies and industries. During the year, 49.7% of the Company''s standalone revenues were derived from exports. The Company provides BPM services mostly to clients in North America, UK and Asia Pacific region. The Company has established direct marketing network around the world to boost its exports.

AUDITORS

M/s. B S R & Co. LLP (formerly known as B S R & Co.), Chartered Accountants, who were appointed as the Statutory Auditors of the Company by the Members at their previous Annual General

Meeting (AGM), shall retire on conclusion of the ensuing AGM and are eligible for re-appointment. Members are requested to consider their re-appointment from the conclusion of ensuing Annual General Meeting (AGM) upto the conclusion of next AGM at a remuneration to be decided by Audit Committee of the Board of Directors of the Company. The Company has received confirmation from M/s. B S R & Co. LLP, to the effect that their appointment, if made, will be within the limits of Section 139 of the Companies Act, 2013.

DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to the requirement under Section 217(2AA) of the Companies Act, 1956, with respect to Directors'' Responsibility Statement, Directors of your Company confirm that:

1. In the preparation of the annual accounts, the applicable accounting standards have been followed there under proper explanation relating to material departures, if any;

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

3. The Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safe- guarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

4. The annual accounts were prepared on a going-concern basis.

ACKNOWLEDGEMENTS

The Directors wish to place on record their sincere appreciation for the support and co-operation extended by all the customers, vendors, bankers and business associates. The Company also expresses its gratitude to the Ministry of Telecommunications, Collector of Customs and Excise, Director - Software Technology Parks of India and various Governmental departments and organisations for their help and co operation.

The Board places on record its appreciation to all the employees for their dedicated service. The Board appreciates and values the contributions made by every member across the world and is confident that with their continued support, the Company will achieve its objectives and emerge stronger in the coming years.

For and on behalf of the Board of Directors

Sanjiv Goenka

Chairman

Mumbai

May 2, 2014


Mar 31, 2013

Dear Members,

Directors of your Company take great pleasure in presenting the Twelfth Annual Report of your Company on its business and operations during the year alongwith the audited financial statements for the financial year ended March 31, 2013.

FINANCIAL RESULTS

The performance of the Company for the Financial Year 2012-13 is summarised below:

(Rs. in Million)

Particulars Consolidated Standalone FY 2012-13 FY 2011-12 FY 2012-13 FY 2011-12

Total Income 28,649.3 22,936.4 9,733.9 8,561.8

Profit Before Interest and Depreciation 3,259.6 2,237.3 2,278.4 1,673.0

Interest and Finance Charges (net) 783.7 584.9 527.9 655.6

Depreciation 884.0 892.6 576.6 598.8

Profit Before Tax 1,591.9 759.8 1,173.9 418.6

Provision for Taxation (including Deferred Tax Charge/ Credit) 129.2 137.7 - -35.0

Profit After Tax Before Minority Interest 1,462.7 622.1 1,173.9 453.6

Minority Interest -3.2 1.8 - -

Profit After Tax before Adjustment of Results of Rev IT Systems Private - - 1,173.9 - Limited amalgamated with the Company during the year

Profit After Tax of Rev IT Systems Private Limited - - 185.8

Net Profit After Tax 1,465.9 620.3 1,359.7 453.6

Balance Brought Forward 6,285.1 5,664.8 3,401.5 2,947.9

Accumulated balance of Rev IT Systems Private Limited brought - - 437.4 - forward pursuant to Scheme of Amalgamation

Total Profits available for Appropriations 7,751.0 6,285.1 5,198.6 3,401.5

Adjustment of Amalgamation Deficit pursuant to Scheme of 333.2 - - - Amalgamation of Rev IT Systems Private Limited with the Company

Accumulated Balance in Profit & Loss Account at the end of the year 7,417.8 6285.1 5,198.6 3,401.5

Earning Per Share (Rs.) - Basic 2.91 1.44 2.70 1.05

Earning Per Share (Rs.) - Diluted 2.82 1.44 2.66 1.05

RESULT OF OPERATIONS

The consolidated total income increased from Rs. 22,936.4 Million to Rs. 28,649.3 Million, a growth of 24.9% over the previous financial year. The consolidated Net Profit After Tax increased from Rs. 620.3 Million to Rs. 1,465.9 Million, a growth of 136.3% over the previous financial year. The detailed analysis of the consolidated results forms part of the Management Discussion & Analysis Report provided separately as part of the Annual Report.

The standalone total income increased from Rs. 8,561.8 Million to Rs. 9,733.9 Million, a growth of 13.7% over the previous financial year. The standalone Profit After Tax increased from Rs. 453.6 Million to Rs. 1,359.7 Million, a growth of 199.8% over the previous financial year.

With a view to conserve cash reserves to meet current financial obligations of the Company, the Directors of your Company do not recommend any dividend for financial year 2012-13.

PREFERENTIAL ALLOTMENT

During the year under review, your Company issued and allotted, on Preferential allotment basis, 226,897,444 equity shares of face value of Rs. 10/- each at an issue price of Rs. 12.10/- per share, aggregating to Rs. 2,745.5 Million (including a Premium of Rs. 476.5 Million), to Spen Liq Private Limited, wholly owned subsidiary of CESC Limited, part of RP-Sanjiv Goenka Group.The issue proceeds were fully utilised for redemption of outstanding Foreign Currency Convertible Bonds ("FCCBs") which were due for redemption on December 4, 2012.

AMALGAMATION

During the year, the Board approved the amalgamation of Rev IT Systems Private Limited (''''Rev IT"), a wholly owned subsidiary of the Company, with the Company, owing to beneficial impacts from synergies of operations, cost savings, strengthening of financial position and optimum utilisation of assets. The Hon''ble High Court of judicature of Bombay, dispensing the meetings of Members and Creditors of both the Companies, vide its order dated November 5, 2012, sanctioned the Scheme of Amalgamation of Rev IT with the Company. The Company and Rev IT filed certified copies of the order of Hon''ble High Court with the Registrar of Companies, Maharashtra. Consequently Rev IT stood amalgamated with the Company during the year as per the scheme of Amalgamation with appointed date being April 1, 2011.

SHARE CAPITAL

As a result of amalgamation of Rev IT Systems Private Limited with the Company, the Authorised share capital of your Company increased from Rs. 8500 Million to Rs. 8,720 Million by addition of 22,000,000 equity shares of Rs. 10/- each.

Further, after issue of 226,897,444 equity shares to Spen Liq Private Limited on preferential allotment basis, the issued, subscribed and paid-up equity share capital of the Company has increased from 430,776,307 shares to 657,673,751 shares of Rs. 10/- each aggregating to Rs. 6,576.7 Million.

CHANGE IN CONTROL

The Preferential Allotment of equity shares to Spen Liq Private Limited ("Spen Liq"), wholly owned subsidiary of CESC Limited, constituted 34.50% of the paid up equity share capital of the Company. Further, 3 major shareholders viz. ICICI Bank Limited, Metavante Investments (Mauritius) Limited ("Metavante") and Aranda Investments Mauritius Pte. Limited ("Aranda") sold 5% each of their shareholding aggregating to 15% of the paid- up equity share capital to Spen Liq. This entitled Spen Liq to 49.50% of the paid-up share capital of the Company resulting in change in control over the Company by Spen Liq with effect from December 5, 2012. Further, Spen Liq alongwith its holding company, CESC Limited became Promoter of the Company in place of ICICI Bank Limited as per SEBI (Issue of Capital & Disclosure Requirements) Regulations, 2009, from the said date.

In terms of the provisions of SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011, Spen Liq along with Person Acting in Concert viz. CESC Limited, issued a Public Announcement for Open Offer to acquire equity shares of the Company. The Open Offer opened on January 4, 2013 and closed on January 17, 2013. Spen Liq acquired 48,428,165 equity shares from public shareholders of the Company at a price of Rs. 12.20/- per equity share under the Open Offer aggregating to 7.36% of post preferential issue paid-up equity capital of the Company.

As a result of above transactions, Spen Liq held 56.86% of total paid up capital of your Company post Open Offer. Accordingly, the Company is now a subsidiary of Spen Liq and Spen Liq being a subsidiary of CESC Limited, the Company is also a subsidiary of CESC Limited.

REDEMPTION OF FOREIGN CURRENCY CONVERTIBLE BONDS

The Company had issued Zero Coupon Foreign Currency Convertible Bonds ("FCCBs") of USD 275 Million in December 2007. The FCCBs had a maturity period of 5 years and 1 day and they were listed on Singapore Exchange Securities Trading Limited. The nominal amount of outstanding FCCBs as on March 31, 2012 was USD 169.8 Million with a maturity value of USD 236.65 Million at the time of redemption due on December 4, 2012. It is a great pleasure to announce that the said outstanding FCCBs were duly redeemed in full in cash on due date, completely discharging your Company from its obligation towards the Bondholders.

GLOBAL DELIVERY FOOTPRINT

The Company, on a consolidated basis had 47 global delivery centers as on March 31, 2013. The centers are located across India, USA, UK, Philippines and Sri Lanka. 24 of the Company''s delivery centers are located in 16 cities in India, 14 are in the USA, 6 are in UK, 2 in Philippines and 1 in Sri Lanka. The Company''s established global delivery footprint enables it to deliver wide range of services and strengthens relationships with existing customers.

During the year, the Company incurred capital expenditure of Rs. 515.3 Million mainly towards refurbishment and maintenance of delivery centers and creation of additional capacity in Philippines, India, USA and UK.

QUALITY INITIATIVES

The Company follows the global best practices for process excellence and is certified by COPC Inc. (Customer Operations Performance Center). The Company''s delivery centers in Chennai and Bangalore in India are recertified for COPC® 2000 Standard v 4.4. Firstsource Dialog Solutions (Pvt.) Limited, joint venture subsidiary of the Company in Sri Lanka is certified for COPC® 2000 Standard v 4.4. Also, as part of the Quality Management System, the Company has embraced ISO 9001:2008. The Company continues to follow process improvement methodologies like Six Sigma, Lean and Kaizen.

AWARDS AND ACCOLADES

The Company received the following awards and accolades during the year.

Best Outsourced center by Welsh Contact Centre Awards, 2012

National Outsourcing Association Awards, 2012, in following prestigious categories:

- Telecommunications, Utilities and High-Tech Outsourcing Project of the Year

- Innovation in Outsourcing

- Outsourcing Contact Centre Provider of the Year

"Outsourcer of the Year" at the European Call Centre and Customer Service Awards, 2012

"Contact Centre Agency of the Year Award" by Marketing Magazine''s Awards, 2012

Ranked # 22 in Global Outsourcing 100® rankings in 2012 by The International Association of Outsourcing Professionals

As per NASSCOM''s Annual rankings:

- Ranked amongst the Top 5 ITES-BPO companies in 2012

- Ranked amongst the Top 15 IT- BPO employers in India in 2012

Ranked amongst top Indian BPO companies in 7th Annual Global Services GS100

HUMAN RESOURCES

On a consolidated basis, the Company has grown from 30,086 fulltime employees as on March 31, 2012 to 31,872 employees as of March 31, 2013.

The statement of particulars of employees required in accordance with Section 217(2A) of the Companies Act, 1956 ("the Act"), read with the Companies (Particulars of Employees) Rules, 1975, as amended, the names and other particulars of employees forms part of this Report. However, as permitted under the Act, this Annual Report is being sent to all members and other entitled persons thereto excluding the above statement. Any Member interested in obtaining a copy of the said statement may write to the Company Secretary at the Registered Office of the Company. The said statement is also available for inspection at the Registered Office during working hours upto the date of the forthcoming Annual General Meeting (AGM).

PUBLIC DEPOSITS

During the year, your Company has not accepted any deposits under Section 58A of the Companies Act, 1956 and as such, no amount on account of principal or interest on public deposits was outstanding as on March 31, 2013.

BOARD OF DIRECTORS

During the year under review, Mr. Rajesh Subramaniam was appointed as Managing Director & Chief Executive Officer ("MD & CEO") of the Company w.e.f. May 16, 2012 to succeed Mr. Alexander Matthew Vallance, who resigned as MD & CEO w.e.f. May 15, 2012. The Directors place on record their deep appreciation for valuable contribution made by Mr. Alexander Matthew Vallance as MD & CEO.

Mr. Pravir Vohra, representing ICICI Bank Limited, erstwhile Promoter, Mr. Ram V. Chary, representing equity investor Metavante and Mr. Mohit Bhandari, representing equity investor Aranda, resigned as Directors of your Company w.e.f. December 5, 2012. The Directors place on record warm appreciation for services rendered by them.

With the successful consummation of both the preferential allotment of 34.50% of the post preferential issue equity share capital of the Company and secondary purchase of 15% in aggregate of the post issue capital from 3 major shareholders, Spen Liq held 49.50% of the post issue capital of the Company. Accordingly, Mr. Sanjiv Goenka was appointed as an Additional Director on the Board on December 3, 2012 and Mr. Shashwat Goenka, Mr. Haigreve Khaitan and Mr. Subrata Talukdar were appointed in the casual vacancies caused by resignation of Mr. Pravir Vohra, Mr. Ram V. Chary and Mr. Mohit Bhandari respectively, effective December 5, 2012. Mr. Pradip Roy was also appointed as an Additional Director effective December 3, 2012.

Dr. Shailesh Mehta stepped down as the Chairman of the Board of Directors w.e.f. December 3, 2012. The Directors place on record deep sense of appreciation for the services rendered by Dr. Mehta during his tenure as Chairman. However, Dr. Mehta continues as a Director on the Board. Mr. Sanjiv Goenka who was appointed as Director on the same date, succeeded Dr. Mehta as the Chairman of Board of Directors of the Company.

Pursuant to the provisions of Section 260 of the Companies Act, 1956 ("the Act"), Mr. Pradip Roy and Mr. Sanjiv Goenka hold office till the conclusion of the forthcoming Annual General Meeting. The Company has received notices along with the requisite deposits from the members of the Company pursuant to Section 257 of the Companies Act, 1956, proposing appointment of Mr. Pradip Roy, Mr. Sanjiv Goenka, Mr. Shashwat Goenka, Mr. Subrata Talukdar and Mr. Haigreve Khatian as Directors at the ensuing Annual General Meeting of the Company. We seek your support in confirming these appointments.

Mr. Y. H. Malegam and Mr. Charles Miller Smith, retire by rotation and being eligible, have offered themselves for re-appointment at the ensuing Annual General Meeting.

EMPLOYEES STOCK OPTION SCHEME

With a view to provide an opportunity to the employees of the Company to share the growth of the Company and to create long- term wealth, the Company has an Employee Stock Option Scheme (ESOS), namely, the Firstsource Solutions Employee Stock Option Scheme, 2003 (ESOS 2003). The earlier ESOS introduced in 2002 is in force for the limited purpose of exercise of options granted pursuant to the scheme. The Scheme is applicable to the eligible employees that include employees and Directors of the Company and its subsidiary companies. Disclosures in compliance with Clause 12 of the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999, as amended, are set out below:

ESOS 2003

a) Total number of options under the Plan: 63,237,541

b) Options granted during the year 2012-13: 12,675,000

c) Pricing formula: The ''Pricing formula'' or ''Exercise Price'' for the purpose of the grant of Options is the ''market price'' within the meaning set out in the SEBI (Employee Stock Option Scheme & Employee Stock Purchase Scheme) Guidelines, 1999 i.e., the latest available closing price, prior to the date when options are granted/ shares are issued, on that Stock Exchange where there is highest trading volume on the said date. The Compensation Committee has the power to change/ modify the exercise price or pricing formula and fix the exercise price at such discount to the market price of the equity shares as may be deemed appropriate provided that the grant/ exercise price shall not be below the face value of the shares and shall be in accordance with the applicable laws in this regard.

d) Options vested during the year 2012-13: 15,784,375

e) Options exercised during the year 2012-13: Nil

f) Total number of shares arising as a result of exercise of options during the year 2012-13: Nil

g) Options lapsed during the year 2012-13: 18,686,188-

-The stock options which are cancelled/ lapsed/ forfeited can be re- issued by the Company.

h) Variation of terms of options during the year 2012-13: Nil

i) Money realised by exercise of options during the year 2012-13 (Amount in Rs.): Nil

j) Total number of options in force: 47,948,532

k) Employee wise details of options granted to: i) Senior Managerial personnel during the year 2012-13: Mr. Rajesh Subramaniam - 2,000,000, Mr. David Matthew Strickler - 750,000, Mr. Sanjay Venkataraman - 500,000, Mr. T.N. Shekar - 400,000, Mr. Kiran Kosaraju - 400,000 and Mr. Satish M - 400,000 ii) Any other employee, who has been granted options amounting to 5% or more of options granted during the year 2012-13: Nil iii) Identified employees who were granted options, equal to or exceeding 1% of the issued capital of the Company, during the year 2012-13: Nil

l) Diluted Earnings Per Share (EPS) pursuant to issue of shares on exercise of options calculated in accordance with Accounting Standard (AS) 20 - ''Earnings Per Share'': i) Standalone EPS - Rs. 2.66 per share. ii) Consolidated EPS - Rs. 2.82 per share.

m) Where the Company has calculated the employee compensation cost using the intrinsic value of the stock options, the difference between the employee compensation cost so computed and the employee compensation cost that shall have been recognised if it had used the fair value of the options. The impact of this difference on profits and on EPS of the Company: Please refer to Note No. 28 of the Standalone Financial Statements.

n) Weighted average exercise price and weighted average fair value of options separately for options whose exercise price either equals or exceeds or is less than the market price of the stock: i) Weighted average exercise price - Rs. 25.74 per option. ii) Weighted average fair value as per the Black Scholes Model - Rs. 10.01 per option.

o) A description of the method and significant assumptions used during the year to estimate the fair values of options, including the following weighted average information:

a) Risk free interest rate

b) Expected life

c) Expected dividends and

d) The price of the underlying share in market at the time of option grant: Please refer to Note No. 28 of the Standalone Financial Statements.

Prior to the Initial Public Offering (IPO), the Company had granted options to employees at the fair market value, as certified by an independent valuer. Post IPO, the exercise price of the options granted equals the market price of the stock i.e. the latest available closing price, prior to the date when options are granted, on that Stock Exchange where there is highest trading volume on the said date.

ESOS 2002

a) Total number of options under the Plan: 2,388,750

b) Options granted during the year 2012-13: Nil

c) Options vested during the year 2012-13: Nil

d) Options exercised during the year 2012-13: Nil

e) Total number of shares arising as a result of exercise of option during the year 2012-13: Nil

f) Options lapsed during the year 2012-13: 15,625

g) Variation in the terms of option during the year 2012-13: Nil

h) Money realised by exercise of options during the year 2012-13 (Amount in Rs.): Nil

i) Total number of options in force: 71,250

j) Weighted average exercise price and weighted average fair value of options separately for options whose exercise price either equals or exceeds or is less than the market price of the stock: i) Weighted average exercise price - Rs. 11.50 per option

ii) Weighted average fair value as per the Black Scholes Model -N.A.

SUBSIDIARY COMPANIES

As on March 31, 2013, your Company had 13 subsidiaries:

Domestic subsidiaries:

1. Anunta Tech Infrastructure Services Limited [wholly owned subsidiary ("WOS") of the Company]

International subsidiaries:

1. Firstsource Solutions UK Limited, UK (WOS of the Company)

2. Firstsource Solutions S.A., Argentina (Subsidiary of Firstsource Solutions UK Limited)-

3. Firstsource Group USA, Inc., USA (WOS of the Company)

4. Firstsource Business Process Services, LLC, USA (WOS of Firstsource Group USA, Inc.)

5. Firstsource Advantage LLC, USA (WOS of Firstsource Business Process Services, LLC)

6. Twin Lakes Property, LLC - I, USA @(WOS of Firstsource Advantage, LLC)

7. Twin Lakes Property, LLC - II, USA -@(WOS of Firstsource Advantage, LLC)

8. MedAssist Holding, Inc., USA (WOS of Firstsource Group USA, Inc.)

9. Firstsource Solutions USA, LLC, USA (WOS of MedAssist Holding Inc.)

10. Firstsource Transaction Services, LLC, USA (WOS of Firstsource Solutions USA, LLC)

11. Firstsource BPO Ireland Limited, Ireland (WOS of the Company)

12. Firstsource Dialog Solutions (Private) Limited, Sri Lanka (Subsidiary of the Company)

Following changes in the subsidiaries of the Company took place during the year:

I. The Hon''ble High Court of Bombay approved Scheme of Amalgamation of Rev IT Systems Private Limited, wholly owned subsidiary of the Company, with the Company vide its order dated November 5, 2012 and consequently Rev IT was amalgamated with the Company w.e.f. November 30, 2012.

II. #Firstsource Solutions S.A., Argentina, a subsidiary of Firstsource Solutions UK Limited, has been sold during the first quarter of financial year ended March 31, 2013, pending transfer of shares to buyer.

III. -Twin Lakes Property LLC - II became the subsidiary of Firstsource Advantage, LLC ("FAL") w.e.f. April 1, 2012 wherein 80% stake was held by FAL.

IV. @On December 29, 2012, FAL increased its stake in Twin Lakes Property, LLC - I and Twin Lakes Property LLC - II to 100% making them wholly owned subsidiaries of FAL.

PARTICULARS UNDER SECTION 212 OF THE COMPANIES ACT

The Ministry of Corporate Affairs, Government of India, vide General Circular No. 2/2011 dated February 8, 2011, granted a general exemption from compliance with Section 212 of the Companies Act, 1956 ("the Act"), subject to fulfilment of conditions stipulated in the circular. Your Company has satisfied the conditions stipulated in the circular and hence is entitled to the exemption. The financial data of the subsidiaries has been furnished under ''Details of Subsidiaries'' forming part of the Annual Report. Consolidated Financial Statements of the Company and its subsidiaries for the year ended March 31, 2013, together with reports of Auditors thereon and the statement pursuant to Section 212 of the Act, form part of the Annual Report. The Annual Accounts and the related detailed information of subsidiary companies will be made available to the Members of the Company and subsidiary companies seeking such information at any point of time. The Annual Accounts of the subsidiary companies will also be available for inspection by any member at the registered/ head office of the Company and that of the subsidiary concerned.

CORPORATE GOVERNANCE AND MANAGEMENT DISCUSSION AND ANALYSIS REPORT

Reports on Corporate Governance and Management Discussion and Analysis as stipulated under Clause 49 of the Listing Agreement are separately given and form part of the Annual Report.

STATUTORY DISCLOURES OF PARTICULARS

A) Conservation of Energy

The Company has made progress towards energy conservation across all its delivery centers. For optimal utilisation of energy, more than 1800 old IT equipment (CRT monitors, desktops, servers etc.) were replaced with new energy efficient ones and 12 high energy consuming servers were consolidated. Further physical servers & desktops were migrated into Virtual Servers & Virtual Desktops. Avoiding physical desktops & servers enabled the Company to mitigate overall power consumption as well as cooling requirements for production centers and data centers. Consolidation of delivery centers was also carried out.

All these initiatives have contributed immensely in reducing energy consumption. These initiatives have helped reduce power consumption by 25%. With the implementation of such initiatives, the Company, like previous years, continues its legacy of pursuing GREEN IT and endeavours to innovate energy conservation methods in future.

B) Absorption of Technology

The Company has been innovating consistently to absorb newer technology offerings which can benefit business to improve operational efficiency with greater quality in a cost effective manner.

During the year, the Company embarked upon setting up Remote Infrastructure Management (RIM). RIM refers to remotely managing information technology (IT) infrastructure such as workstations (desktops, laptops, notebooks, etc.), servers, network devices, storage devices, IT security devices, etc.

Major sub-services included in RIM setup at the Company are:

Service desk/ Help desk

Proactive monitoring of server and network devices

Workstation management

Server management

Storage management

Application support

IT security management

C) Foreign Exchange Earnings and Outgo

Activities relating to exports, initiatives taken to increase exports, development of new export markets for services and export plans.

The Company''s income is diversified across a range of geographies and industries. During the year, 60.2% of the Company''s revenues were derived from exports. The Company provides BPO services mostly to clients in North America, UK and Asia Pacific regions. The Company has established direct marketing network around the world to boost its exports.

Foreign Exchange earned and used

The Company''s foreign exchange earnings and outgo during the year were as under:

AUDITORS

M/s. B S R & Co., Chartered Accountants, who were appointed as the Statutory Auditors of the Company by the Members at their previous Annual General Meeting (AGM), shall be retiring on conclusion of the ensuing AGM and are eligible for re-appointment. Members are requested to consider their re-appointment from the conclusion of ensuing AGM upto the conclusion of AGM for the financial year 2013-14 at a remuneration to be decided by Audit Committee of the Board. The Company has received confirmation from M/s. B S R & Co., to the effect that their appointment, if made, will be within the limits of Section 224(1B) of the Companies Act, 1956.

DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to the requirement under Section 217(2AA) of the Companies Act, 1956, with respect to Directors'' Responsibility Statement, Directors of your Company confirm that:

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

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

3. The Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safe-guarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

4. The annual accounts were prepared on a going-concern basis.

ACKNOWLEDGEMENTS

The Directors wish to place on record their sincere appreciation for the support and co-operation extended by all the customers, vendors, bankers and business associates. The Company also expresses its gratitude to the Ministry of Telecommunications, Collector of Customs and Excise, Director - Software Technology Parks of India and various Governmental departments and organisations for their help and co-operation.

The Board places on record its appreciation to all the employees for their dedicated service. The Board appreciates and values the contributions made by every member across the world and is confident that with their continued support the Company will achieve its objectives and emerge stronger in the coming years.

For and on behalf of the Board of Directors

Sanjiv Goenka

Chairman

Mumbai

May 7, 2013


Mar 31, 2012

Dear Members,

The Directors take great pleasure in presenting their Eleventh Annual Report on the business and operations of your Company and the audited financial statements for the year ended March 31, 2012.

FINANCIAL RESULTS

The performance of the Company for the financial year 2011-12 is summarized below:

(Rs.in Million)

Particulars Consolidated Standalone

FY 2011-121 FY 2010-11 FY 2011-12 FY 2010-11

Total Income 22,936.4 20,759.1 8,561.8 7,589.2

Profit Before Interest and Depreciation 2237.3 3038.2 1673.0 1537.5

Interest and Finance Charges (net) 584.9 394.4 655.6 268.1

Depreciation 892.6 890.8 598.8 573.8

Profit Before Tax 759.8 1,753.0 418.6 695.6

Provision for Taxation (including Deferred Tax Charge/ Credit) 137.7 349.3 -35.0 32.7

Profit After Tax Before Minority Interest 622.1 1,403.7 453.6 662.9

Minority Interest 1.8 18.6 - -

Net Profit After Tax 620.3 1,385.1 453.6 662.9

Balance Brought Forward 5,664.8 4,279.7 2,947.9 2,285.0 Appropriations - -

Accumulated Balance in Profit & Loss Account 6285.1 5,664.8 3,401.5 2,947.9

Earnings Per Share (Rs.) - Basic 1.44 3.22 1.05 1.54

Earnings Per Share (Rs.) - Diluted 1.44 2.91 1.05 1.52

RESULT OF OPERATIONS

The consolidated total income increased from Rs 20759.1 Million to Rs 22,936.4 Million, a growth of 10.5% over the previous financial year. The consolidated Net Profit After Tax reduced from Rs 1,385.1 Million to Rs 620.3 Million, decline of 55.2% over the previous financial year. The detailed analysis of the consolidated results forms part of the Management Discussion & Analysis (MD&A) Report provided separately as part of the Annual Report.

The standalone total income increased from Rs 7,589.2 Million to Rs 8561.8 Million, a growth of 12.8% over the previous financial year. The standalone Profit After Tax declined from Rs 662.9 Million to Rs 453.6 Million, decline of 31.6% over the previous financial year.

The reduction in net profits in the financial year 2011-12 was due to increase in finance charges and overall escalation in costs during the year under review. With a view to conserve cash reserves to meet the current financial obligations of the Company, the Directors do not recommend any dividend for fiscal 2012.

CHANGE IN REGISTERED OFFICE

During the year, the Company has shifted its Registered Office from 6th Floor, Peninsula Chambers, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 to 5th Floor, Paradigm 'B' Wing, Mindspace, Link Road, Malad (West), Mumbai - 400 064.

INCREASE IN SHARE CAPITAL

During the year, the Company issued 138,125 equity shares of the face value of Rs10 each on the exercise of stock options under the Employee Stock Option Schemes of the Company. Consequently, the outstanding, issued, subscribed and paid-up equity share capital of the Company increased from 430,638,182 shares to 430,776,307 shares of Rs 10 each as on March 31, 2012.

REPURCHASE OF FOREIGN CURRENCY CONVERTIBLE BONDS

The Company had issued Zero Coupon Foreign Currency Convertible Bonds (FCCBs) of USD 275 Million in December 2007. The FCCBs have a maturity period of 5 years and 1 day and they are listed on Singapore Exchange Securities Trading Limited. Up to March 31, 2012, the Company had repurchased and cancelled its FCCBs of the nominal amount of USD 105.2 Million. The nominal amount of Bonds outstanding after cancellation as on March 31, 2012 was USD 169.8 Million.

GLOBAL DELIVERY FOOTPRINT

The Company, on a consolidated basis had 48 global delivery centers as on March 31, 2012. The centers are located across India, USA, UK, Philippines and Sri Lanka. 26 of the Company's delivery centers are located in 15 cities in India, 14 are in the USA, 5 are in UK and 2 in Philippines and 1 in Sri Lanka. The Company's established global delivery footprint enables it to deliver wide range of services and strengthens relationships with existing customers.

During the year, the Company incurred capital expenditure of Rs 582.6 Million mainly towards refurbishment and maintenance of existing delivery centers and creation of additional capacity in Philippines, India, USA, UK and Sri Lanka.

QUALITY INITIATIVES

The Company follows the global best practices for process excellence and is certified by COPC Inc. (Customer Operations Performance Center). The Company's delivery centers in Bangalore and Chennai in India and First source Dialog Solutions (Pvt.) Limited, joint venture subsidiary of the Company in Sri Lanka have been recertified for COPC® 2000 CSP Standard v 4.4. Also, as part of the Quality Management System, the Company has embraced ISO 9001:2008. The Company continues to follow process improvement methodologies like Six Sigma, Lean and Kaizen.

AWARDS AND ACCOLADES

The Company received the following awards and accolades during the year:

- 2011 CII Quality Awards Winners in Service Category

- 2011 Golden Peacock Award for Innovation Management in IT, BPO sector

- 2012 UHG Semi Annual Quality Challenge Winner

HUMAN RESOURCES

On a consolidated basis, the Company has grown from 26,413 full- time employees as of March 31, 2011 to 30,086 employees as of March 31, 2012. The statement of particulars required pursuant to Section 217 (2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Amendment Rules, 2011, forms part of this Report. However, as permitted under the Companies Act, 1956, this Report and Accounts are being sent to all members and other entitled persons excluding the above statement. Those interested in obtaining a copy of the said statement may write to the Company Secretary at the Registered Office. The statement is also available for inspection at the registered office during working hours up to the date of the forthcoming Annual General Meeting (AGM).

PUBLIC DEPOSITS

During the year, the Company has not accepted any deposits under Section 58A of the Companies Act, 1956.

DIRECTORS

During the year, Mr. Rajesh Subramaniam was appointed as Deputy Managing Director & Chief Financial Officer (Dy. MD & CFO) of the Company w.e.f. August 1, 2011.

Mr. Alexander Matthew Vallance, Managing Director & CEO (MD & CEO) resigned effective May 15, 2012 and the Board approved appointment of Mr. Rajesh Subramaniam as MD & CEO of the Company effective May 16, 2012 to succeed Mr. Vallance. Mr. Vallance was appointed as Jt. Managing Director of the Company w.e.f. January 25, 2010 and was appointed as MD & CEO of the Company w.e.f. July 28, 2010 consequent upon resignation of Mr. Ananda Mukerji as MD & CEO of the Company.

Mr. Ananda Mukerji, Mr. Donald W Layden Jr., and Mr. Ram V. Chary retire by rotation at the ensuing Annual General Meeting and are eligible for re-appointment.

EMPLOYEES STOCK OPTION SCHEME

With a view to provide an opportunity to the employees of the Company to share the growth of the Company and to create long-term wealth, the Company has an Employee Stock Option Scheme (ESOS), namely, the First source Solutions Employee Stock Option Scheme, 2003 (ESOS 2003). The earlier ESOS introduced in 2002 is in force for the limited purpose of exercise of options granted pursuant to the scheme. The Scheme is applicable to the eligible employees that include employees and directors of the Company and its subsidiary companies. Disclosures in compliance with Clause 12 of the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999, as amended, are set out below:

ESOS 2003

a) Total number of options under the Plan: 69,248,729

b) Options granted during the year 2011-12: 7,200,000

c) Pricing formula: The 'Pricing formula' or 'Exercise Price' for the purpose of the grant of Options shall be the 'market price' within the meaning set out in the SEBI (Employee Stock Option Scheme & Employee Stock Purchase Scheme) Guidelines, 1999 i.e., the latest available closing price, prior to the date when options are granted/ shares are issued, on that Stock Exchange where there is highest trading volume on the said date. The Compensation Committee has the power to change/ modify the exercise price or pricing formula and fix the exercise price at such discount to the market price of the equity shares as may be deemed appropriate provided that the grant/ exercise price shall not be below the face value of the shares and shall be in accordance with the applicable laws in this regard.

d) Options vested during the year 2011-12: 11,036,875

e) Options exercised during the year 2011-12: 138,125

f) Total number of shares arising as a result of exercise of options during the year 2011-12: 138,125

g) Options lapsed during the year 2011-12: 6,100,625*

*The stock options which are cancelled/ lapsed/ forfeited can be re- issued by the Company.

h) Variation of terms of options during the year 2011-12: Nil

i) Money realized by exercise of options during the year 2011-12 (Amount in Rs): 2,514,456

j) Total number of options in force: 53,959,720

k) Employee wise details of options granted to:

i) Senior Managerial personnel during the year 2011-12: Mr. Rajesh Subramanian - 4,000,000 and Mr. Thomas Watters: 1,000,000

ii) Any other employee, who has been granted options amounting to 5% or more of options granted during the year 2011-12: Nil

iii) Identified employees who were granted options, equal to or exceeding 1% of the issued capital of the Company, during the year 2011-12: Nil

l) Diluted Earnings Per Share (EPS) pursuant to issue of shares on exercise of options calculated in accordance with Accounting Standard (AS) 20 - 'Earnings Per Share': i) Standalone EPS - Rs 1.05 per share. ii) Consolidated EPS - Rs 1.44 per share.

m) Where the Company has calculated the employee compensation cost using the intrinsic value of the stock options, the difference between the employee compensation cost so computed and the employee compensation cost that shall have been recognized if it had used the fair value of the options. The impact of this difference on profits and on EPS of the Company: Please refer to Note No. 27 of the Standalone Financial Statements.

n) Weighted average exercise price and weighted average fair value of options separately for options whose exercise price either equals or exceeds or is less than the market price of the stock: i) Weighted average exercise price - Rs 30.67 per option. ii) Weighted average fair value as per the Black Sholes Model - Rs 12.09 per option.

o) A description of the method and significant assumptions used during the year to estimate the fair values of options, including the following weighted average information: a) Risk free interest rate b) Expected life c) Expected dividends and d) The price of the underlying share in market at the time of option grant: Please refer to Note No. 27 of the Standalone Financial Statements.

Prior to the Initial Public Offering (IPO), the Company had granted options to employees at the fair market value, as certified by an independent velour. Post IPO, the exercise price of the options granted equals the market price of the stock i.e. the latest available closing price, prior to the date when options are granted, on that Stock Exchange where there is highest trading volume on the said date.

ESOS 2002

a) Total number of options under the Plan: 2,404,375

b) Options granted during the year 2011-12: Nil

c) Options vested during the year 2011-12: Nil

d) Options exercised during the year 2011-12: Nil

e) Total number of shares arising as a result of exercise of option during the year 2011-12: Nil

f) Options lapsed during the year 2011-12: 3,750

g) Variation in the terms of option during the year 2011-12: Nil

h) Money realized by exercise of options during the year 2011-12 (Amount in Rs): Nil

i) Total number of options in force: 86,875

j) Weighted average exercise price and weighted average fair value of options separately for options whose exercise price either equals or exceeds or is less than the market price of the stock: i) Weighted average exercise price - Rs 11.74 per option ii) Weighted average fair value as per the Black Scholes Model - N.A.

SUBSIDIARY COMPANIES

As on March 31, 2012, the Company had 13 subsidiaries:

Domestic subsidiaries:

1. Rev IT Systems Private Limited*{wholly owned subsidiary (WOS) of the Company}

2. Anunta Tech Infrastructure Services Limited**(WOS of the Company)

International subsidiaries:

1. First source Solutions UK Limited, UK (WOS of the Company)

2. First source Solutions S.A., Argentina (Subsidiary of First source Solutions UK Limited)

3. First source Group USA, Inc., USA (WOS of the Company)

4. First source Business Process Services, LLC, USA (WOS of First source Group USA, Inc.)

5. First source Advantage LLC, USA***(WOS of First source Business Process Services, LLC.)

6. Twin Lakes Property, LLC (Subsidiary of First source Advantage LLC)

7. Med Assist Holding, Inc., USA (WOS of First source Group USA, Inc.)

8. First source Solutions USA, LLC USA (WOS of Med Assist Holding Inc.)

9. First source Transaction Services, LLC#(WOS of First source Solutions USA, LLC)

10. First source BPO Ireland Limited ##(WOS of the Company)

11. First source Dialog Solutions (Private) Ltd.###(Subsidiary of the Company)

Following changes in the subsidiaries of the Company took place during the year:

I. * The Board approved Amalgamation of Rev IT Systems Pvt.

Ltd., WOS of the Company, with the Company vide a circular resolution passed on April 28, 2012. The Company has applied to the Stock Exchanges for their 'in- principalRs approval to the said Amalgamation.

II. ** The Board vide a circular resolution passed on April 19, 2012, approved divestment of Anunta Tech Infrastructure Services Limited, WOS of the Company.

III. *** First source Financial Solutions LLC merged with First source Advantage LLC on September 28, 2011.

IV. # First source Transaction Services, LLC (FTSL) was incorporated as WOS of First source Solutions USA, LLC, a step down subsidiary of the Company in USA. As a result, FTSL became subsidiary of the Company.

V. ## First source BPO Ireland Limited, was incorporated as a wholly owned subsidiary of the Company with its registered office located in Dublin, Ireland.

VI. ###The Company acquired 74% stake in First source - Dialog Solutions (Private) Limited (FDS), Sri Lanka [formerly known as Dialog Business Services (Private) Limited], a joint venture between the Company and Dialog Axiata, a leading Sri Lankan telecom service provider.

PARTICULARS UNDER SECTION 212 OF THE COMPANIES ACT

The Ministry of Corporate Affairs, Government of India, vide General Circular No. 2/2011 dated February 8, 2011, has granted a general exemption from compliance with section 212 of the Companies Act, 1956, subject to fulfillment of conditions stipulated in the circular. The Company has satisfied the conditions stipulated in the circular and hence is entitled to the exemption. The financial data of the subsidiaries have been furnished under 'Details of Subsidiaries' forming part of the Annual Report. Consolidated Financial Statements of the Company and its subsidiaries for the year ended March 31, 2012, together with reports of Auditors thereon and the statement pursuant to Section 212 of the Companies Act, 1956, form part of the Annual Report. The Annual Accounts and the related detailed information of subsidiary companies will be made available to the Members of the Company and subsidiary companies seeking such information at any point of time. The Annual Accounts of the subsidiary companies will also be available for inspection by any member at the registered/ head office of the Company and that of the subsidiary concerned.

CORPORATE GOVERNANCE AND MANAGEMENT DISCUSSION AND ANALYSIS REPORT

Reports on Corporate Governance and Management Discussion and Analysis as stipulated under Clause 49 of the Listing Agreement are separately given and form part of the Annual Report.

STATUTORY DISCLOURES OF PARTICULARS

A) Conservation of Energy

The Company has been making significant efforts year after year towards energy conservation across all its delivery centers. Several new initiatives taken up by the Company during the financial year included Servers & Desktops Virtualization, Server Consolidation, replacement of more than 2500 old desktops and Cathode Ray Tube monitors with Thin Clients and Thin Film Transistor monitors, replacement of more than 5000 old IT equipment with new energy efficient one, changing the old lighting units to new energy saving units and installation of movement sensors for switching on and off the lights.

All these initiatives have contributed tremendously in reducing energy consumption. We have reduced 350 physical servers and 1000 desktops by vitalizing. Reduction of physical servers also lowered the data centre cooling requirement and moving from Desktops to Thin Clients has led to reduction of power consumption by 40%.

B) Absorption of Technology

The Company has been innovating consistently to absorb newer technology offerings which can benefit business to improve operational efficiency with greater quality in a cost effective manner.

The Company has been able to save USD 2 Million in Capex and USD half Million per annum in Opex for our server virtualization. The Company has virtualized 400 servers. On desktops, ratio was 1:55 (Physical to Virtual desktop) due to which the Company was able to save on operational costs. Currently, the Company has deployed 1000 virtual desktops. In addition to above, CPU utilization has increased from 5% to 55% in the virtualized environment. The high available solutions like clustering and dynamic resourcing pooling was implemented with 80% lesser Capex as compared to the traditional implementation of cluster solutions. Reduction in 350 physical servers has released 35 racks space in the Data Center. Further, the Company has reduced the desktop requirement by 30% by implementing the just-in time desktop delivery.

C) Foreign Exchange Earnings and Outgo

Activities relating to exports, initiatives taken to increase exports, development of new export markets for services and export plans.

The Company's income is diversified across a range of geographies and industries. During the year, 59.8% of the Company's revenues were derived from exports. The Company provides BPO services mostly to clients in North America, UK and Asia Pacific regions. The Company has established direct marketing network around the world to boost its exports.

Foreign Exchange earned and used

The Company's foreign exchange earnings and outgo during the year were as under:

(Standalone figures in Rs.Millions)

Particulars Fiscal 2012 Fiscal 2011

Foreign Exchange earnings 5117.9 4,863.8

Foreign Exchange outgo (including 362.0 313.8

capital goods and imports)

AUDITORS

M/s. B S R & Co., Chartered Accountants, who were appointed as the Statutory Auditors of the Company by the Members at their previous Annual General Meeting (AGM), shall be retiring on conclusion of the ensuing AGM and are eligible for re-appointment. Members are requested to consider their re-appointment from the conclusion of ensuing Annual General Meeting (AGM) up to the conclusion of AGM for the financial year 2012-13 at a remuneration to be decided by the Board of Directors or Audit Committee of the Board. The Company has received confirmation from M/s. B S R & Co., to the effect that their appointment, if made, will be within the limits of Section 224(1B) of the Companies Act, 1956.

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to the requirement under Section 217(2AA) of the Companies Act, 1956, with respect to Directors' Responsibility Statement, the Directors confirm that:

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

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

3. The Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safe-guarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

4. The annual accounts were prepared on a going-concern basis.

ACKNOWLEDGEMENTS

The Directors wish to place on record their sincere appreciation for the support and co-operation extended by all the customers, vendors, bankers and business associates. The Company also expresses its gratitude to the Ministry of Telecommunications, Collector of Customs and Excise, Director - Software Technology Parks of India and various Governmental departments and organizations for their help and co- operation.

The Board places on record its appreciation to all the employees for their dedicated service. The Board appreciates and values the contributions made by every member across the world and is confident that with their continued support the Company will achieve its objectives and emerge stronger in the coming years.

For and on behalf of the Board of Directors

Dr. Shailesh J. Mehta

Chairman

Mumbai

May 15, 2012

 
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