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Directors Report of Hexaware Technologies Ltd.

Dec 31, 2014

Dear Members,

The Directors are pleased to present their Twenty-Second Annual Report, on the business and operations of the Company, Hexaware Technologies Limited (hereafter referred to as ''The Company'') together with audited accounts for the financial year ended December 31, 2014.

Financial Performance:

Global Operations: (USD million)

Year ended December 31,2014 FY 2014 FY 2013

Income from operations 422.40 387.79

EBITDA 78.09 86.58

Profit from operations * 70.89 80.00

Profit before tax and exceptional item 69.49 81.47

Profit before tax 68.43 81.47

Profit after tax 52.38 64.43

(Rs. million)

Year ended December 31 FY 2014 FY 2013

Income from operations 25,816.77 22,853.48

EBITDA 4,775.60 5,122.30

Profit from operations * 4,335.88 4,736.26

Add: Exchange rate (loss) / gain (net) (307.84) (311.99)

Less: Interest 8.98 2.04

Add: Other income 227.76 372.74

Profit before tax and exceptional items 4,246.82 4,794.97

Less: Exceptional items 65.63 -

Profit before tax 4,181.19 4,794.97

Less: Provision for taxation 979.67 1,003.62

Profit after tax 3.207.52 3.797.35

*excludes Exchange rate difference, Interest, Other income and Provision for taxation

India Operations: (Rs. million)

Year ended December 31,2014 FY 2014 FY 2013

Income from operations 11,545.56 10,199.54

EBITDA 3,918.89 4,320.12

Profit from operations * 3,527.20 4,009.82

Add: Exchange rate (loss) / gain (net) 295.89 (241.43)

Less: Interest 8.35 1.35

Add: Other income 594.80 333.23

Profit before tax 3,817.76 4,100.27

Less: Provision for taxation 633.80 760.61 Profit after tax 3,183.96 3,339.66

Add : Balance brought forward from previous year 2,703.83 3,822.01

Add: On merger of Caliber Point Business Solutions Limited 352.91

Add: Transfer from Special economic zone reinvestment Reserve 118.93

Balance available for appropriation 6,359.63 7,161.67

Appropriation

Transfer to general reserve - 334.00

Interim dividend 2,840.97 3,030.77

Proposed final dividend - 300.27

Tax on dividends 479.69 568.86

Transfer to Special economic zone reinvestment Reserve 176.38 223.94

Balance carried to balance sheet 2,862.59 2,703.83

Results of Operations

a) Global operations:

Income from operations increased to Rs. 25,816.77 million in 2014 from Rs. 22,853.48 million in 2013, growth of 12.97%. The growth in Dollar terms was 8.9%, reaching USD 422.40 million. Growth was driven largely by volume increase, aided by increased realized bill rates, however there was an adverse impact of cross currency. Profit from Operations (profit before Exchange rate difference, Interest, Other income and Provision for taxation) was at Rs. 4,335.88 million in 2014 as against Rs. 4,736.26 million in 2013. The decrease was largely on account of increase in onsite business which is primarily low margin business in comparison of offshore, additional investment in sales and increased admin cost for growth.. Profit after tax stood at Rs. 3,201.52 million in 2014 as compared to a profit of Rs. 3,791.35 million in 2013. PAT margins were at 12.4% in Rupee terms.

Material changes from end of financial year till date of report

There are no material changes and commitments, affecting the financial position of the Company which have occurred between the end of the financial year of the Company to which the financial statements relate and the date of the report other than those disclosed in the financial statements.

Company''s major achievements in 2014

During the year 2014, 44 new clients were added. This took the total number of active clients to 236 in Q4-2014.

During 2014, the number of clients registering annual revenues in excess of USD 20 million each increased from 4 to 5; 3 clients in the USD 10 million - USD 20 million range, 13 clients in the USD 5 million - USD 10 million range, 40 clients in the USD 1 million - USD 5 million category.

b) India operations:

In the year 2014, the revenue of the standalone legal entity increased by 13.2% to Rs. 11,545.56 million. This is in comparison with revenue of standalone legal entity at Rs. 10,199.54 million in the previous year. The net profit after tax was Rs. 3,183.96 million as compared to a profit of Rs. 3,339.66 million in 2013.

Share capital

The paid-up Share Capital of the Company as on December 31, 2014 was Rs. 601.85 million comprising of 300,923,472 Equity Shares of Rs. 2/- each. During the year 1,047,525 shares were issued under different ESOP schemes.

The market capitalization of the Company as on December, 31, 2014 was at Rs. 60,094 million (USD 973.98 million). The market capitalization is calculated on the basis of closing prices of Rs. 199.70 on The National Stock Exchange and the closing exchange rate of 1 USD = Rs. 61.70 as of December 31, 2014.

Reserves

The Company did not transfer any amount to General Reserve this year. During the year due to merger of wholly owned subsidiary Caliber Point Business Solutions Limited (CP) an amount of Rs. 258.88 million, Rs. 41.12 million and Rs. 352.91 million has been added to General Reserve, Securities premium and to the Profit and Loss Account respectively. With this addition, the total General Reserve as on December 31, 2014 is at Rs. 2,135.75 million. Further, the balance in the P&L Account is Rs. 2,862.59 million.

Forex Mark-To-Market: The year-end Hedging Reserve stood at a loss of Rs. 253.01 million, as compared to loss of Rs. 1,176.45 million in the previous year. This is in accordance with the principles of recognition and measurement for accounting of forward exchange contracts and derivative contracts of Accounting Standard (AS)-30. In summary, total reserves stood at Rs. 9,771.53 million, including Rs. 4,741.93 million of Securities Premium account.

Dividend

During the year 2014, the Company paid four interim dividends on equity shares, Q1 - Rs. 3.00 (150%), Q2 - Rs. 1.60 (80%), Q3 - Rs. 2.35 (117.5%), Q4 - Rs. 2.50 (125%). This brings the interim dividends for the four quarters of 2014 to Rs. 9.45 per share (472.5%).

The Board of Directors has not recommended payment of any final dividend. The total cash outgo for dividend declare in 2014 on account of interim dividend & tax thereon amounts to Rs. 3,374.57 million.

The break-up of dividend is as under: (Rs. million)

Q1 Q2 Q3 Q4 Total

Dividend 900.97 480.52 707.17 752.31 2,840.97

Tax 153.12 81.66 144.79 154.03 533.60

Total 1,054.09 562.18 851.96 906.95 3,374.57

Investment

Subsidiaries and Branches:

During the year Caliber Point Business Solutions Limited, a wholly owned subsidiary of the Company got merged into Hexaware Technologies Limited as approved by the Bombay High Court vide order dated October 10, 2014 with the appointed date of April 1,2013. The merger has been accounted as per pooling of interest method. Hexaware has additionally invested in another wholly owned subsidiary Company, Risk Technology International Limited to the tune of Rs. 8.5 crores by subscribing to its share capital. Infrastructure:

A tangible signature of the Company''s growth aspirations is its investment in infrastructure. The Company has invested Rs. 604 million in 2014 for expanding its physical and technical (IT) infrastructure globally. The majority of investment was done in Siruseri phase 1, phase 2 (new project) and in Pune for starting new project for creating new SEZ facilities. Company is planning to cater need of long term future and ensure that it motivates its dynamic team to provide quality support for its global sales and delivery operations.

Delivery Centers

India based Global Delivery Centers

Mumbai:

The Company has three Offshore Development Centers (ODCs) at Millennium Business Park in Mahape, Navi Mumbai. One of these is the registered office of the Company. There are 1500 employees working from these centers having capacity of 1650 employees. The Company''s BPS arm operates out of another building in the same complex, with 800 employees - providing BPS services to its global clients.

Chennai:

There are around 3200 employees working from the Company''s 27 acre campus in Chennai. This campus houses all employee-friendly amenities like recreation center, library and gymnasium facilities - offering plenty of avenues for relaxation and rejuvenation as well as knowledge enhancement through Hexavarsity - the Company''s in- house Learning and Development University. The Company''s Chennai "green campus" conforms to eco-friendly norms and regulations, like optimal use of solar energy, use of eco- friendly building materials and a judicious spread of landscaped spaces around seating facilities across various levels. Currently seating capacity is expanded to 6,000 seats in Phase 1. The Company has just started with construction for Phase 2, with planned completion by June 2016 with approximately 3,700 seats. The BPS arm also operates out of another facility in Chennai with over 600 employees working from the facility.

Pune:

In Pune, the Company has ODC at Rajiv Gandhi InfoTech Park in Hinjewadi SEZ (currently on lease) with 509 employees working from the centre. Company is also planning to create new facility - SEZ development centre for 2000 seats through its wholly owned subsidiary - Risk Technology International Limited which got approval for developing SEZ facility on land acquired from MIDC at Hinjewadi phase 3.

Nagpur:

The Company owns 20 acres of land in Nagpur, a tier II city, at an SEZ location. This facility is currently operational with around 170 professionals and has seating capacity to accommodate 1000 professionals.

Bengaluru:

This facility in the India''s IT capital of Bengaluru has capacity of 400 seats & the number of employees seated at office is around 300. This facility mainly houses the delivery operations for a major global client and is now being staffed with senior managerial roles in line with our increasing focus in solving their business-critical challenges. Coimbatore:

Hexaware BPS arm has a facility in Coimbatore with 231 employees working from the facility.

Overseas Global Delivery Centers

New Jersey (USA):

The Company has an established Global Delivery Centre (GDC) at Secaucus, New Jersey (USA) for a few years now to cater specifically to its American clients. While this proximity centre offers benefits such as the same time zone, direct communication and enables convenient management oversight, it also further enables the clients to outsource mission-critical tasks and share secure information that would have otherwise not been shipped beyond the shores. The Company also has a GDC at Jamesburg to cater to the needs of the customer.

Alpharetta, GA (USA)

The Company has Global Delivery Centre (GDC) at Alpharetta in the state of Georgia, USA with employees strength of around 140.

Herndon, VA (USA)

The Company has Global Delivery Centre (GDC) at Herndon in the state of Virginia, USA with employees strength of around 100.

Saltillo (Mexico):

The Company has a strong presence in Mexico with a near-shore Delivery Centre at Saltillo with employee''s strength of around 300 While Mexico offers cost competitiveness compared to the United States of America, the country also provides immense benefits in the form of same time zone, enables immediate response and access to a vast talent pool and an untapped emerging market. The Company intends to leverage its near shore Delivery Centre to cater to several global clients as an addition to the other existing options of continuing operations in the USA or in the Company''s locations in India.

Global Cash Position

The cash generated from operations in 2014 was Rs. 4,129 million. Inflow on account of treasury operations (interest income on the investments made and dividend received from Mutual Funds) was Rs. 268 million. The Company has redeemed money from Mutual Fund amounting to Rs. 1,528 million. The Company has invested Rs. 604 million in fixed assets. During the year, the Company paid dividend including dividend tax of Rs. 5,400 million. The Company has received Rs. 48 million from issue of shares. As of December 31, the cash position of the Company was Rs. 3,088 million, equivalent in USD 49 million. Including the Mutual Fund investments (cash equivalent), the total cash & cash equivalents was at Rs. 4,939 million equivalent USD 78.35 million.

Human Resource Capital

The Company recognizes that "Human Capital" is the most valuable asset and its focus is to have more passionate employees. The Company has a robust and inclusive ecosystem in place which encourages meritocracy, innovation and excellence.

The net headcount has increased by adding 1,162 new professionals as of December 31, 2014, the Company is focused towards attracting and retaining high caliber employees through sound and resilient human resource management process. The Company''s head count was 10,016 as on December 31, 2014. At around 85.9 %, it has the industry leading retention rates at the year end. The Company consciously enhanced gender diversity with 28 % of our employees being women.

Recognising the fact that the workforce lives your brand, the HR team has embarked on a major branding exercise to build an engaging organisation.

The Company is focusing on HR analytics for workforce analysis, aiming towards introducing predictive analysis that will drive workforce planning, talent management and retention.

The employee engagement platform is inclusive and empowering. It connects the employees with leaders and peers. Forums such as Open Houses, Happy Hours and Grow More Round Table Series, provide interactive platforms for sharing information and feedback. This initiative has not only helped to manage the diversified workforce around the globe but has also kept the employees motivated.

The Company has embarked on a journey to create a passionate environment towards work and make Hexaware a great place to work. The Company worked with a leading agency to conduct a survey and intend to work closely with our delivery leaders to work on identified areas which would go a long way to bring employee satisfaction and enhance work passion.

Hexaware Edge

Hexaware''s impressive suite of software solutions features several unique advantages that ensure high quality expertise and cost efficiency. It gives holistic solution for customer needs. It has expertise to help at all stages of IT initiatives- whether they are in small, midsize or large global enterprise. It can create a tailored roadmap, complete end to end solution, combining both technology and business understanding.

These include: Outsourcing models Hexaware has an enviable track record in building, operating and delivering solutions for large offshore development centers (ODC). The Company offers proven business model for customers looking to exploit delivery capabilities across the globe. The models provide a framework for outsourcing large application and product management services and provide the customer with economies of scope and scale.

Leadership in niche areas

Hexaware has demonstrated leadership and expertise in focus areas.

* The Company is a global market leader in PeopleSoft services

* The Company is amongst the leading IT solution providers for the Airlines Industry

* The Company is also fast emerging among the top Indian IT services provider in Germany

The enterprise class solution offerings combined with best-of- class enterprise integration skills are our key differentiators against competitors.

Focus versus generic strategy

In alignment with its focus on select areas, the Company''s investment and focus is dedicated on growing to attain leadership in each sector. This has helped the Company to compete and win in these areas against much larger and more established vendors.

Domain expertise

Another key differentiator is the emphasis on bringing in domain experts in focused niche areas and has been continuously reinventing itself. Company has centre of excellence that houses well defined tools, accelerators and innovations in new products. This helps in boosting the productivity and reducing project development time and cost.

Our size-the right size

Being a right-sized Company, Hexaware has the ability to demonstrate adaptability and flexibility in its operations to suit the dynamic needs of its customers. The Company has demonstrated capability in meeting resource and infrastructure requirements for large projects, at the same time remaining small enough for relationship comfort.

Effective delivery

The Company has invested in building significant onsite delivery and consulting capability to absorb the process overheads of offshore by locating its business practice leaders, account managers and top management team at onsite. This structure enables quicker decision-making and ease of access to customers.

Innovative & Flexible Contract Mechanism

As a mid-size vendor, Hexaware provides a great deal of flexibility in both the contractual and delivery models. This includes using innovative pricing and payment models that meet the unique expectations of its clients, as also optimizing its SEI CMMI Level 5 processes to meet specific customer requirements. Working relationships stretch from fixed time/fixed fee to time and material.

Multi-Cultural Dimension

Hexaware operates on a global platform, working with several Fortune 500 customers in North America, Europe and Asia Pacific. This gives a unique understanding and access to not only the business practices but also the cultural and work-ethics in different regions and industry sectors.

Process and Methodologies

Hexaware has institutionalised a number of processes and innovative methodologies, which has built in risk mitigation strategies and cost efficiencies. Its approach addresses the key issues of transition management and operational efficiency improvement.

Quality Initiatives

Hexaware has adopted and achieved the following international standards for process definition and improvement at its global development centers :

* ISO 9001-2008 & Tick IT

* ISO/IEC 27001:2005

* ISO 20000-1:2011

* CMMI - DEV & SVC Version 1.3 - Level 5

Information security

Information Security management at IT outsourcing centers has become one of the important areas of concern for organizations. Stringent information security measures are in place at Hexaware to ensure business continuity and reduce business damage by preventing and minimizing the impact of security incidents. ISO 27001 is a globally recognized information security standard used to identify, manage and reduce the range of threats to which information is subjected. The standard provides guidelines and directions to safeguard organizational assets and emphasizes continuous improvement for information.

Quality Assurance

We have also undertaken various initiatives such as implementing an organization wide Defect Prevention Program, Metrics Program, automation of processes and introduction of new tools. The Quality Improvement Program is based on the business needs, technology changes, customer feedback, suggestions and process performance. The Company has also undertaken various initiatives such as implementing an organization wide Defect Prevention Program, Metrics Program, automation of processes and introduction of new tools. The Company has instituted processes that enable transition to new technologies and enable continuous process improvement.

Benefits:

The customers / clients have benefited as a result of fewer defects, reduction in cycle time and improved delivery capabilities. Hexaware has provided value-additions through improvement in the performance of the systems that have been outsourced, a reduction in the problems and failures, and improved stability. This has resulted in high levels of customer satisfaction and repeat business. Implementing the processes has trained the organization and people to be methodical and process-driven. The Company has introduced and improved upon best-of-breed industry practices and standards and thereby improved our delivery capability. Focus on quality has led to lower costs and improved efficiency within the organization.

Company focused on Corporate Governance

The Company has two "Big 4" firms as auditors - Deloitte Haskins & Sells LLP as its Statutory Auditors and KPMG as its Internal Auditors. Ernst & Young are the tax advisors of the Company. The Company''s Board of Directors comprises eminent professionals in their respective fields with rich experience in policy-making and strategy formulation. All the major committees of the Board are headed by Independent Directors, and the Company has followed Cadbury Committee''s recommendation of having two different individuals as Chairman & CEO for several years. The Company won the Special Commendation of the prestigious Golden Peacock Award for the year 2009 and 2013 for excellence in Corporate Governance and was the winner of the award in the year 2011.

Awards:

The Company won the following awards in 2014:

* Hexaware has received the "CISO Hall Of Fame" award from CISO Platform (India) for its excellence in the deployment and sustenance of Information security within the Organization. This award has been given in recognition of receiving the Top 100 CISO Awards for the last four years continuously.

* Hexaware Business Process Services (BPS) has won the award for ''Operational Excellence and Quality in BPO Industry'' category at the recent summit for Asia Pacific HRM Congress Awards, 2014. This award aims to honor organizations who have significantly impacted or influenced the society, the corporate world, and the HR Community in the area of Human Development. Recipients of these Awards are role models with unquestionable integrity.

* Hexaware Business Process Services (BPS) was recognized at the National Awards for Excellence in Outsourcing & BPO 2014 for "Best Finance & Accounts Outsourcing Team". This award demonstrates the Company''s creativity and ability to sustain a competitive advantage, providing business transformation and achieving value. It also recognizes organizations and Individuals to be a benchmark in terms of best practices and business excellence.

* Hexaware''s annual report for the year 2013 was awarded Plaque for the excellence in financial reporting for the second year in a row by the apex body of Chartered Accountants in India, the Institute of Chartered Accountants of India.

* During the last quarter, Hexaware was presented the IDC Insights Award 2014 for "Excellence in Employee Engagement".

* Hexaware''s data scientists have been very active in various crowdsourcing analytics forums and data analytics challenges, such as Kaggle, Crowd Analytix, Dextra, etc., tackling a wide range of problems, such as copper spot price prediction, crime rate prediction in US cities, marketing buzz prediction, IPL cricket results prediction, product opinion prediction, etc. Hexaware has recently won multiple prizes and awards in such forums, which serves as a testimony to the depth of the Company''s expertise and capability in advanced analytics and data science.

* Silver winner of PeopleSoft Category at UK Oracle User Group Partner of the Year Awards 2014-2015.

* Ranked in the ''Forbes Asia''s 200 Best Under a Billion List.''

* Listed among the ''Top 100 Innovative Service Providers'' by Global Services 100.

* Ranked among leading IT service providers in International Association of Outsourcing Providers (IAOP) Global Outsourcing 100 list.

* EMC Transformers award for Cloud and Disaster Recovery (DR) implementation.

* ''Best in Corporate Responsibility Practic'' award by Indy''s Awards. * ''CIO 100'' award by IDG.

Risk Management

The Company has well defined Enterprise-wide Risk Management (ERM) framework in place. The primary objective of ERM function is to implement a framework that augments risk response decisions and reduce surprises. ERM programme involves risk identification, assessment and risk mitigation planning for strategic, operational, financial and compliance related risks across various levels of the organization.

The Board of Directors and senior management team recurrently assess the operations and operating environment to identify potential risks and take necessary mitigation actions. The Banking, Investments & Operations and Forex Committee oversee activities related to Foreign Exchange matters and the Banking, Investments & Operations respectively.

Key elements of risks

1. Global Economic Situation: The economic environment around the world is showing sign of growth. For IT service Industry, the demand momentum is looking positive. The IT spending is increasing however there are still pockets of global markets where there are still uncertainties. The Company on its part is helping existing customers drive efficiencies, demonstrate value addition.

2. Business Model Redundancy: The new technologies, such as cloud, big data, mobile smart devices and social media are impacting the behavior of the consumers. The Company continuously scan business environment for early detection of emerging trend.

3. Cost pressure: Increasing employee cost and operating expenses may create pressure on margin. The Company is focusing on improving productivity and put up framework for cost management.

4. Regulatory risks: Any change in regulations in any of the jurisdiction of its operations may hamper growth and cause decline in revenue.

5. Delivery and operational risk: The growth and success depends on its ability to hire, attract, motivate, retain and train highly- skilled technology personnel. Failure to complete fixed price, fixed time framed or transaction based pricing contracts within budget and on time may significantly affect our profitability.

The risk faced by the Company is discussed in detail in the Management Discussion and Analysis section of this Annual Report.

Internal Audit & Controls

The Company continues to engage KPMG as its Internal Auditor. During the year, the Company continued to implement their suggestions and recommendations to improve the control environment. Their scope of work includes review of processes for safeguarding the assets of the Company, review of operational efficiency, effectiveness of systems and processes, and assessing the internal control strengths in all areas.

Internal Auditors findings are discussed with the process owners and suitable corrective actions taken as per the directions of Audit Committee on an ongoing basis to improve efficiency in operations. Talent Management - Asset Development The Company believes that its employees are the heart of the organisation; hence a large part of the management focus is to care and support its employees The Company is future focused and is fully aware about what it needs from its talent. A significant portion of senior management focus is invested in engaging with the employees. The Company strengthens its talent pool by providing employees with growth and talent enhancement opportunities. It believes that performance needs to be quantified and hence the Performance Management System is revamped to be more metrics driven. The Company also believes that employees stick to the organisation to build career. Hexaware''s new Career Management framework will help in defining career pillars, tracks and bands for employees to identify their role and the expectation from the new CMS System. The new CMS system will also help define entrant criteria''s for a role and job description to help individuals perform at their best. The New CMS system will also help individuals to make long term career plan and the organisation would enable them to achieve their career objective by various training program.

The Company is future focused and is fully aware about what it needs from its talent. It has a systematic structured approach of attracting, identifying, developing, engaging/retaining and deploying of those individuals with high potential who are of particular value to an organization, either in view of their high potential for the future or because they are fulfilling business/ operation critical roles.

The Company has a pipelined approach of identifying future talent needed by the organization, also with the Planned Development Programs nurturing them for future top positions. The HR/Learning and Development team provides clarity about expectations and the differentiated capabilities required at different levels also helping them to work on the identified skill gap with some prominent development programs at each level. The Company continued its focus on employee motivation through revamping the Rewards and recognition system incorporating more categories to encourage talent. Most importantly this is devised along with delivery managers to make it relevant and appropriate. The Company focuses on talent management through interventions like smooth process (from Hiring to retention), managing the programs as per diversity of the work force, and supporting high performers with an effective talent management system.

HexaVarsity

Learning & Development

HexaVarsity is Hexaware''s Learning & Development Team whose core responsibility is to provide learning solutions to every role within the organization by designing training frameworks to match the dynamic & ever evolving business trends.

In the year 2014, HexaVarsity trained 518 campus recruits. In the Fresher Training Program lots of enhancements have been done in terms of the program design, curriculum, approach and evaluation.

New Initiatives

Business Analyst to Business Consultant Program

HexaVarsity had launched the ''BA2BC'' Program - Business Analyst to Business Consultant. These are highly interactive sessions with more real-time case-studies, Group discussions, role-plays, live- work packets, Quizzes and Tests. Participants are from different groups from various verticals & horizontals. The Target audience for this program was Business Analyst, Functional Lead, and Functional Consultant. This program was well received by the participants.

Customer Focus

The newly launched ''Customer Focus'' Program under the umbrella of Business Professional Development initiative was well received by the participants and the Company extended this to 4 batches covering 40 consultants in different areas.

Bullet Proof Manager Program

HexaVarsity had re-launched the enhanced Bullet Proof Manager Program, a leadership development program for about 150 consultants in India and Mexico.

HexMasters

HexaVarsity had re-launched the enhanced version of "HexMasters: The Stage for improving the Public speaking skills" with certification model at different levels.

Incentive Policy

The Company introduced Incentive Policy for those who contribute to the training delivery, elearning content creation and question bank creation. This incentive policy motivates people to contribute more towards learning & development activities.

LearnToGrow

HexaVarsity had launched its ''LearnToGrow'' Initiative - A campaign to promote a learning culture and to improve the Learning Quotient of the organization. With the eLearning platform HexaGuru the eLearning hours had been tremendously increased.

HexaVarsity had also launched an initiative offering curated MOOCs (Massive Open Online Courses) on a variety of subjects, technology and business, from across the globe to employees.

Professional Certification Drives

HexaVarsity continuously conducts the Professional Certification Drives, once in a quarter, at office premises itself to serve its customers better.

Hexavarsity had signed an MOU with Chennai Mathematical Institute (CMI) to collaborate and create business solutions for our customers.

As part of the Corporate Social Responsibility (CSR) and Industry- Academia interactions, the Company closely collaborated with the ICT Academy of Tamil Nadu to support its Bridge programs and have a representative in their Board of Studies.

The Company Participated in the BRIDGE Conference conducted by ICTACT in association with NASSCOM on 26th and 27th February 2014 where Hexaware was a principal sponsor of the event.

The focus of the two day event was on Leadership and Academic Excellence.

The schedule included keynote address by Executive Director & President Global Delivery, Hexaware Technologies. HexaVarsity Team has been part of this event.

The Company has hosted several seminars and workshops in Colleges, provided 25 internships, facilitated 3 In-plant visits for students this year.

Corporate Governance and Management Discussion and Analysis

The Company endeavors to maximize the wealth of the shareholders by managing the affairs of the Company with a pre-eminent level of accountability, transparency and integrity. A report on Corporate Governance including the relevant Auditors'' Certificate regarding compliance with the conditions of Corporate Governance as stipulated in Clause 49 of the listing agreement with stock exchanges is annexed. Management Discussion and Analysis is also annexed.

Directors'' Responsibility Statement

Pursuant to Section 217(2AA) of the Companies Act, 1956, the Directors confirm the following:

1. In the preparation of the annual accounts, the applicable standards have been followed.

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 at the end of financial year and of the profit of the Company for the period.

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

4. The Directors have prepared the attached Statement of Accounts for the year on a going concern basis.

Employee Stock Option Plans (ESOP)

Pursuant to the approval of the shareholders, the Company has instituted various Employee Stock Option Schemes for all eligible employees, directors (excluding promoter directors) of the Company and employees of its subsidiaries. All the plans are administered by the Nomination & Remuneration Committee of the Board. During the year 2014, following were the movements under ESOPs: 1,047,525 options were exercised and the Company allotted 1,047,525 equity shares of Rs. 2/- each to Directors and employees on such exercise. These shares have been listed on the Bombay Stock Exchange Limited and National Stock Exchange of India Limited. No options were granted under any of the schemes during the year 2014.

Fixed deposits

During the year under review, the Company did not accept or invite any deposits from the public.

Insurance

The Company has sufficiently insured itself under various insurance policies to mitigate risks arising from third party or customer claims, property/casualty, etc.

Errors & Omissions / General Liability

In a global services business, customers insist on taking suitable Insurance covers including Errors & Omission (Professional Indemnity) and Commercial General Liability. The Company has taken appropriate insurance covers with reputed insurers & re- insurers to protect the Company from any third party liability claims that may arise at any point of time.

Directors'' & Officer''s Liabilities (D&O) /Employment Practices Liability Insurance (EPLI) / Crime

D&O policy covers the Directors & Officers of the Company against the risk of third party actions arising out of their actions / decisions, which may have resulted in financial loss to any third party. The Company has appropriately insured itself to mitigate such risks coming from any third party. EPLI Insurance protects the Company from claims from employees or third parties on account of any actual or alleged Employment Practice Violation. Crime insurance protects the Company from loss of money, securities or other financial loss arising from any fraudulent or criminal activity of employees or third parties.

Property / Casualty

The Company has insured its various properties & facilities against the risk of fire, theft etc. so that financials are not impacted in the unfortunate event of such events. The employees of the Company are covered under various employee benefit insurance against Hospitalization, Accidental Disability and Death.

Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo

The information relating to Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo required under Section 217(1) (e) of the Companies Act, 1956 read with Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 is annexed and forms part of this Report.

Related party transactions

All related party transactions that were entered into during the financial year were on an arm''s length basis and were in the ordinary course of business. There are no materially significant related party transactions made by the Company with Promoters, Directors, Key Managerial Personnel or other designated persons which may have a potential conflict with the interest of the Company at large.

All Related Party Transactions are placed before the Audit Committee as also the Board for approval, if required. The policy on Related Party Transactions is uploaded on the Company''s website.

Subsidiaries

The Ministry of Corporate Affairs has granted general exemption from attaching the Balance Sheet, Profit and Loss Account and other documents of the subsidiary companies with the Balance Sheet of the Company. The Board of Directors of the Company has by a resolution given consent for not attaching the Balance Sheet of the subsidiaries concerned. A statement containing brief financial details of the Company''s subsidiaries for the financial year ended December 31, 2014 is included in the Annual Report. The annual accounts of these subsidiaries and the related detailed information will be made available to any member of the Company seeking such information at any point of time and are also available for inspection by any member of the Company at the registered office of the Company. The Company shall furnish a copy of annual accounts of subsidiaries to any member on demand.

Directors

Mr. P R Chandrasekar retired as the CEO of the Company w.e.f July 28, 2014 but continues as the Non-Executive Director and Vice Chairman of the Company. The Board of Directors on the recommendation of the Nomination & Remuneration Committee appointed Mr. R Srikrishna as Chief Executive Officer w.e.f. July 28, 2014 and thereafter as an Additional Director and Whole time Director designated as Executive Director of the Company with effect from October 17, 2014. The Members of the Company at the Extra Ordinary General Meeting held on December 19, 2014 approved his appointment and terms of remuneration as the whole time director & CEO of the Company.

At the said EGM the Members had also appointed the existing Independent Directors viz. Mr. Bharat Shah & Mr. Dileep Choksi as Independent Directors under the Act each for a term of two years with effect from October 17, 2014.

Mr. Abhay Havaldar resigned as a director of the Company w.e.f February 13, 2014. Mr. R V Ramanan resigned as the Executive Director of the Company w.e.f. September 16, 2014. Mr. Jack Hennessy was appointed as an additional director w.e.f November 5, 2014.

Mr. Basab Pradhan, Mr. Christian Oecking and Dr. Punita Kumar- Sinha were appointed as additional directors in the capacity of independent non-executive directors w.e.f June 9, 2014 , June 26, 2014 and March 26, 2015 respectively for a period of two years.

In accordance with the Articles of Association of the Company, Mr. P R Chandrasekar and Mr. Atul Nishar, Directors of the Company, retire by rotation at this Annual General Meeting and, being eligible; offers themselves for re-appointment at the Annual General Meeting.

The information of Directors seeking appointment / re- appointment at the Annual General Meeting to be given to the shareholder as per Clause 49 VIII (E) pertaining to their brief resume, expertise in functional areas, names of companies in which they are Directors is being provided separately in the Annexure on Page No. 70 & 71 of this Annual Report. Members are requested to refer the said section of the Corporate Governance Report.

Whistle blower policy

The Company has established a vigil mechanism/framed a whistle blower policy. The policy enables the employees and other stakeholders to report to the management instances of unethical behaviour, actual or suspected fraud or violation of the Company''s code of conduct or ethics policy. This policy is reviewed annually by the Audit Committee to check the effectiveness of the policy. No personnel has been denied access to the Audit Committee.

Auditors

M/s. Deloitte Haskins & Sells LLP retire at this Annual General Meeting and being eligible, offer themselves for re-appointment. Pursuant to the recommendation of the Audit Committee at their meeting held on February 9, 2015 recommending re-appointment of M/s. Deloitte Haskins & Sells LLP as Statutory Auditors of the Company, for the financial year 2015, the Board of Directors have, subject to the approval of the shareholders, at their meeting held on February 10, 2015 approved the re-appointment of Deloitte Haskins & Sells LLP as the Statutory Auditors of the Company for the financial year 2015 and to hold office till the conclusion of the next Annual General Meeting. In terms of provisions of section 139 of the Companies Act, 2013 M/s. Deloitte Haskins & Sells LLP have furnished a certificate that their appointment, if made, will be within the limits prescribed under the said section of the Act. There are no qualifications in the audit reports.

Particulars of employees

As required by section 217 (2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975, the particulars of employees forms part of this report. However, as permitted by section 219(1)(b)(iv) of the Companies Act, 1956, the report and accounts are being sent excluding the statement containing the particulars to be provided under section 217(2A) of the Act. Any member interested in obtaining such particulars may inspect the same at the Registered Office of the Company or write to the Company Secretary for a copy thereof.

Acknowledgment

The Directors place on record their sincere appreciation of the customers, Government of India and of other countries, Registrar and Share Transfer Agents, vendors, bankers and Technology Partners for the support extended. The Directors are also deeply touched by the efforts, sincerity and loyalty displayed by the employees without whom the growth of the Company is unattainable. The Directors wish to thank the investors and shareholders for placing immense faith in them. The Directors seek, and look forward to the same support during the future years of growth.

The Ministry of Corporate Affairs vide its Circular No. 08/2014 dated April 4, 2014 clarified that the financial statements and the documents required to be attached thereto, the Auditor''s and Boards'' Report in respect of the financial year under reference shall continue to be governed by the relevant provisions of the Companies Act, 1956, schedules and rules made thereunder. Accordingly, the financial statements, the Auditor''s Report and Boards'' Report as aforesaid are prepared as per the requirements of the Companies Act, 1956. However, the Company, has to the extent possible provided the information in the Annual Report as

For and on behalf of the Board of Directors

Atul K. Nishar Chairman Date: April 2, 2015 Place: Mumbai


Dec 31, 2013

To the Members,

The Directors are pleased to present their Twenty-first Annual Report, on the business and operations of the Company, Hexaware Technologies Limited (hereafter referred to as The Company'') together with audited accounts for the financial year ended December 31, 2013.

Financial Performance:

Global Operations: (USD Million)

Year ended December 31 2013 2012 Y-o-Y Growth %

Income from Operations 387.79 364.48 6.40%

EBITDA 86.58 76.28 13.50%

Profit from Operations* 80.00 70.21 13.93%

Profit before Tax 81.47 75.77 7.52%

Profit after Tax 64.43 61.51 4.75%

(Rs. Million)

Year ended December 31 2013 2012 Y-o-Y Growth %

Income from Operations 22,853.48 19,481.78 17.31%

EBITDA 5,122.30 4,040.37 26.78%

Profit from Operations* 4,736.26 3,716.23 27.45%

Less: Exchange Rate Loss (net) 311.99 113.33 175.29%

Less: Interest 2.04 1.61 26.71%

Add: Other Income 372.74 438.28 -14.95%

Profit before Tax 4,794.97 4,039.57 18.70%

Less: Provision for Taxation 1,003.62 763.1 31.52%

Profit after Tax 3,791.35 3,276.47 15.71%

* excludes Exchange Rate Difference, Interest, Other Income and Provision for Taxation

India Operations: (Rs. Million)

Year ended December 31 2013 2012 Y-o-Y Growth %

Income from Operations 10,199.54 9,124.74 11.78%

EBITDA 4,320.12 3,295.25 31.10%

Profit from Operations* 4,009.82 3,025.80 32.52%

Less: Exchange Rate Loss (net) 241.43 71.13 239.42%

Less: Interest 1.35 1.05 28.57%

Add: Other Income 333.23 458.52 -27.32%

Profit before Tax 4,100.27 3,412.14 20.17%

Less: Provision for Taxation 760.61 556.11 36.77%

Profit after Tax 3,339.66 2,856.03 16.93%

Add: Balance brought forward from previous year 3,822.01 3,129.17

Balance available for appropriation 7,161.67 5,985.20

Appropriation

Transfer to General Reserve 334.00 300.00

Interim Dividend 3,030.77 1,247.27

Proposed Final Dividend 300.27 355.85

Tax on Dividends 568.86 260.07

Transfer to Special Economic Zone Reinvestment Reserve 223.94 -

Balance carried forward 2,703.83 3,822.01

Results of Operations

a) Global operations:

ncome from operations increased toRs.22,853.48 million in 2013 from Rs. 19,481.78 million in 2012, growth of 17.31%.The growth in Dollar terms was 6.4%, reaching USD 387.79 million Growth was driven largely by volume increase, aided by increased realized bill rates.

Profit from Operations (profit before Exchange Rate Difference, Interest, Other Income and Provision for Taxation) was at Rs.4,736.26 million in 2013 as against Rs. 3,716.23 million in 2012, growth of 27.45%. Profitability growth was driven by significant SG&A leverage, improved cost efficiency, 0.7% shift in favor of offshore, higher realized bill rates as well as currency benefits. Profit after Tax stood at Rs. 3,791.35 million in 2013 as compared to a profit of Rs. 3,276.47 million in 2012, growth of 15.71%. PAT margins were at 16.59% in Rupee terms.

Some of the major achievements of the Company in the year 2013 were:

During the year 2013,48 new clients were added. This took the total number of active clients to 233, up from 218 in December 2012.

During 2013, the number of clients registering annual revenues in excess of USD 20 million each increased from 3 to 4; 5 clients in the USD 10 million - USD 20 million range, 7 clients in the USD 5 million- USD 10 million range, 39 clients in the USD 1 million- USD 5 million category.

The Company has achieved two new milestones in Quarter 4 of 2013. The Company has for the first time crossed $ 100 million quarterly revenue and Rs. 100 Crores quarterly PAT

Significant Developments during CY 2013

Change in promoters of the Company:

HT Global IT Solutions Holdings Limited has become the new promoter of the company along with Parel Investment Holdings Limited through acquisition of shares under the Share Purchase Agreements from the erstwhile promoters and an investor and pursuant to the open offer under SEBI (SAST) Regulations. The promoters hold 70.87% of the share capital of the company as on March 21, 2014.

Other developments:

In 2013 many significant achievements have been recorded in various quarters. The company has strengthened its domain capability, increased breadth and depth of its service lines, have added significantly to the sales field organization and has made new investments to expand its focus on management program.

The Company signed a deal with revenue expected at USD 30 million for a period of three years, with an existing US based Fortune 500 Corporate to cater to multiple business users across different technology platforms.

Hexaware also launched a new Manufacturing Vertical to add to our growing presence in Banking & Financial Services, Global Travel and Transportation as well as Healthcare & Insurance.

Customer centricity is a major focus area at the Company. In the last year, the Company launched several new service offerings to deliver value to its customers.

Business Initiative on SMAC Technologies

Over the last few Quarters, Hexaware has built significant competency in SMAC (Social, Mobility, Analytics and Cloud) technologies. The use of SMAC technologies is already helping organizations to work more collaboratively by effectively using real time data. Hexaware has built proprietary accelerators which enable quicker adoption of these technologies by enabling organizations to virtualized their IT infrastructure and use real time unstructured data from social networks, to integrate with organizational data and provide real time analytics through Mobile devices. Hexaware is helping its customers realize the full potential of SMAC by stitching together these technologies cohesively and also by adopting business models which enable use of real time analysis.

Recognitions in SMAC Arena

Hexaware has been mentioned as one of the sample vendors of Cloud-Driven Business and IT Services, in the Gartner report titled "Hype Cycle for Bank Operations Innovation, 2013" dated July 24, 2013 by analyst Mary Knox.

Hexaware has been mentioned as one of the sample vendors of Cloud-Driven Business and IT Services in the Gartner report titled

"Hype Cycle for IT Infrastructure and Outsourcing Services, 2013" dated July 31, 2013 by analyst Christine Tenneson.

Hexaware has been mentioned as system integrators/cloud HCM vendors that have deployed cloud-based talent management solutions in the Gartner report titled "Best Practices in Deploying Talent Management in the Cloud" dated September 11, 2013 by analysts Sunil Padmanabh, Ron Hanscome.

Business Updates on Quality Assurance &Testing Services

Hexaware has developed a tool which can be used for automated testing of reports on data migration and Business Intelligence testing projects. Further, it has also developed a new performance testing solution on the cloud using Meter and Amazon Web Services (AWS). In addition, the Company has built significant expertise over HP ALM (Application Lifecycle Management) toolkit which allows customers to integrate source code and build application management tools. Through Hexaware''s Center of Excellence Labs, the Company has developed a proprietary Accelerator for testing on Health information Exchange, which is widely used in the US Healthcare Industry.

Other service offerings

- By virtue of being a Platinum-level member of the Oracle Partner Network, the Company has leveraged this strategic relationship to create value to the common customers by building its Intellectual Property (IP) assets on Oracle''s PeopleSoft product using its proprietary PTF framework. Leveraging the Centers of Excellence (CoE) set up to foster innovation, the Company has developed in excess of 5,500 functional test scripts. These scripts were developed using Oracle PeopleSoft Test Framework (PTF) automation tool to provide customer with a library of scripts. These scripts can be customized and deployed for individual customers. This initiative will help customers develop test scripts, identify change impacts using the power of automation and debug the code. PTF also provides functionality that interfaces with other PeopleSoft automation tools like Data Mover, PeopleSoft Query, and Process Scheduler.

This vast library of scripts, an Intellectual Property asset of Hexaware, will directly benefit clients who are planning for either upgrading to PeopleSoft 9.2 or for new implementations. This initiative will provide a significant jumpstart in the planning and the execution phases. Automating the testing process by leveraging Oracle''s PTF will enable business users and functional testers to execute the scripts with a greater accuracy in a shorter period of time, ensuring wider coverage of business functionality.

- Hexaware has partnered with Expedites to provide customers with See Test, a robust solution for end-to-end mobile application test automation. With Expertise’s Sweetest, Hexaware will be able to steer a client''s mobile test automation requirements in the right direction with consultants who are available to translate a client''s needs into an effective application test solution through in-house frameworks.

Mobile application test automation faces many challenges today, with most commercial solutions on the market falling short on delivery expectations in real life testing scenarios. Expertise’s See Test overcomes these limitations with its enriched mobile test implementation capabilities, including same test runs on multiple devices with no jail-breaking required, local mobile device connectivity or through an on- site cloud, multiple object identification methods, and the ability to record actions based on the visualization of the device with no need for coding. See Test also identifies objects by their Native or Web properties, which ensures low maintenance of the scripts since they are not sensitive to interface changes in the application.

- The Company has also formed a new horizontal focused on Human Capital management (HCM) to build on its strengths in HR IT and BPO. It will work across all products in this space including the cloud based SAAS products as well as the Republic SAAS initiative on the HR.

b) India operations:

In the year 2013, the revenue of the standalone legal entity increased by 11.78% to Rs. 10,199.54 million. This is in comparison with revenue of standalone legal entity at Rs. 9,124.74 million in the previous year. The net profit after tax was Rs. 3,339.66 million as compared to a profit of Rs. 2,856.03 million in 2012, an increase of 16.93%.

Reserves

The Company has transferred Rs. 334 million to General Reserve almost same as transferred in the previous year. With this addition, the total General Reserve as on December 31,2013 is at Rs. 1,876.87 million. Further, the balance in the P&L Account is Rs. 2,703.83 million.

Forex Mark-To-Market: The Company has adopted AS-30 principles of recognition and measurement for accounting of forward exchange contracts and derivative contracts and the year-end Hedging Reserves stood at loss of Rs. 1,176.45 million, as compared to Rs. 697.62 million in the previous year. In summary, total reserves stood at Rs. 8,285.52 million, including Rs.4,654.45 million of Securities Premium account.

Dividend

During the year 2013, the Company paid three interim dividends on equity shares, Q1 - Rs. 1.20 (60%), Q2 - Rs. 1.40 (70%), Q4 - Rs. 7.50 (375%).

The Board of Directors has recommended a payment of final dividend of Re. 1.00 per share (50%) on an equity share of Rs. 2/- each, at its meeting held on February 7, 2014, due for approval at the AGM. Including this, the total dividend for the year inclusive of interim dividends would amount to Rs. 11.10 per share (555%) on equity shares.

The total cash out go on account of interim dividend and final dividend & tax there on amounts to Rs. 3,894.68 million.

The break-up of dividend is a sunder:

(Rs. Million)

Q1 Q2 Q4 Final Total

Dividend 358.35 418.30 2,252.00 300.27 3,328.92

Tax 60.90 71.09 382.73 51.03 565.75

Total 419.26 489.39 2,634.73 351.30 3,894.68

Share capital

The paid-up Share Capital of the Company as on December 31,2013 was Rs. 599.75 million comprising of 299,875,947 Equity Shares of Rs.2/-each. During the year 3,331,156 shares were issued under ESOP under different schemes.

The market capitalization of the Company as on December 31, 2013 was at Rs. 39,508.6 million (USD 639.30 million). The market capitalization is calculated on the basis of closing price of Rs. 131.75/- on the National Stock Exchange and the closing exchange rate of 1 USD = Rs. 61.80 as of December 31, 2013.

Investment

Subsidiaries and Branches:

No additional investments in subsidiaries / branches were made during the year 2013.

The Board of Directors of the Company has approved the scheme of merger of Caliber Point Business Solutions Limited, the 100% subsidiary, with the Company. The company is in the process of seeking necessary approvals and filing application with the High Court, Mumbai and various other Government Agencies.

Infrastructure:

A tangible signature of the Company''s growth aspirations is its investment in infrastructure. The Company has invested Rs.411 million in 2013 for expanding its physical and technical (IT) infrastructure globally. This is indicative of its passion to motivate a dynamic team to provide quality support for its global sales and delivery operations.

Delivery Centres

i) India based Global Delivery Centres

Mumbai:

The Company has three Offshore Development Centers (ODCs) at Millennium Business Park in Mahape, Navi Mumbai. One of these is the registered office of the Company. There are 1500 employees working from these centers having capacity of 1650 employees. The Company''s wholly owned subsidiary Caliber Point Business Solutions Limited also operates out of another building in the same complex, with 800 employees - providing BPM services to its global clients.

Chennai:

There are around 3200 employees working from the Company''s 27 acre campus in Chennai. This campus now houses all employee- friendly amenities like recreation center, library and gymnasium facilities - offering plenty of avenues for relaxation and rejuvenation as well as knowledge enhancement through Hexavarsity - the Company''s in-house Learning and Development University. The Company''s Chennai'' green campus" conforms to eco-friendly norms and regulations, like optimal use of solar energy, use of eco-friendly building materials and a judicious spread of landscaped spaces around seating facilities across various levels. Currently seating capacity is expanded to 5000 seats. The wholly owned subsidiary, Caliber Point Business Solutions Limited also operates out of another facility in Chennai with over 450 employees working from the facility.

Pune:

In Pune, the Company has ODC at Rajiv Gandhi InfoTech Park in Hinjewadi SEZ with 435 employees working from the centre.

Nagpur:

The Company and Caliber Point, the wholly owned subsidiary company, together own 20 acres of land in Nagpur, a tier II city, at an SEZ location. This facility is currently operational with over 300 professionals ofCaliberPoint.lt has seating capacity to accommodate 1000 professionals.

Bengaluru:

This facility in the India''s IT capital now seats in excess of 450 employees. This facility mainly houses the delivery operations for a major global client and is now being staffed with senior managerial roles in line with our increasing focus in solving their business- critica challenges.

Coimbatore:

Caliber Point Business Solutions Limited, the Company''s wholly owned subsidiary, has a facility in Coimbatore with 150 employees working from the facility.

ii) Overseas Global Delivery Centers

New Jersey (USA):

The Company has an established Global Delivery Centre (GDC) at Secaucus, New Jersey (USA) for a few years now to cater specifically to its American clients. While this proximity centre offers benefits such as the same time zone, direct communication and enables convenient management over sight, it also further enables the clients to outsource mission - critical tasks and share secure information that would have otherwise not been shipped beyond the shores. The Company also has a GDC at Jamesburg to cater to the needs of the customer.

Saltillo (Mexico):

The Company has a strong presence in Mexico with a near-shore Delivery Centre at Saltillo with employee''s strength of around 250. While Mexico offers cost competitiveness compared to the United States of America, the country also provides immense benefits in the form of same time zone, enables immediate response and access to a vast talent pool and an untapped emerging market. The Company intends to leverage its near shore Delivery Centre to cater to several global clients as an addition to the other existing options of continuing operations in the USA or in the Company''s locations India. Earlier this year, the Company also inaugurated its third Globa Delivery Center (GDC) in Saltillo, Mexico.

Frisco, near Dallas:

During the second quarter, the company inaugurated its new Globa Delivery Centre (GDC) at Frisco, near Dallas in the state of Texas, USA with employee''s strength of around 40. The new onshore delivery center is situated in a prime location and in close proximity to several key clients. The state of the art infrastructure enables the Company to undertake critical IT projects, thereby adding value to existing and new customers alike.

Global Cash Position

The cash generated from operations in 2013 was Rs. 3,358 million. Inflow on account of treasury operations (interest income on the investments made and dividend received from Mutual Funds) was Rs. 266 million. The Company has invested in Mutual Fund, an additional amount of Rs. 1,035 million. The Company has invested Rs. 411 million in fixed assets. During the year, the Company paid dividend of Rs. 1,332 million. The Company has received Rs. 79 million from issue of shares. As of December 31, the cash position of the Company was Rs. 3,186 million, equivalent in USD 51.55 million, including the Mutual Fund investments (cash equivalent), the total cash & cash equivalents was at Rs. 6,564 million equivalent USD 106.21 million.

Human Resource Capital

The company recognizes that "Human Capital" is the most valuable asset. The company has a robust and inclusive ecosystem in place which encourages meritocracy, innovation and excellence.

The Company''s head count was 8,854 as on December 31,2013

- The Company is focused towards attracting and retaining high caliber employees through sound and resilient human resource management process.

- The Company is focusing on HR analytics for workforce analysis, aiming towards introducing predictive analysis that will drive workforce planning, talent management and retention.

- The Company realizes the importance of connect with its employees and hence have embarked on a program called CPO speak. This is to provide a platform to meet with various teams and spans across geographies.

- Business meets at company level, departmental level as well as at the entry level are appropriate platforms for knowledge management and sharing information.

- These initiatives have not only helped to manage the diversified workforce around the globe but has also kept the employees motivated.

Salient Features and Compelling Value Proposition

At the Company, we believe in providing a holistic solution for our customers'' needs. That is why the Company has the expertise to help customers at all stages of their IT initiatives. Whether they area small, mid-sized entity, or a large global enterprise, the Company can create a tailored road map with complete end-to-end solutions, combining both technology and business understanding. Across all industry verticals, corporations have trusted us to be there throughout their application life cycle. This includes advisory, rollout and implementation, development and testing, maintenance and support and Business Process Management. The Company''s impressive suite of software solutions features several unique advantages that ensure high quality expertise and cost efficiency. These include:

Leaders in niche sectors

Over the years, the Company has developed and demonstrated leadership and expertise in focus areas. Our enterprise class solution offerings combined with best of the class enterprise integration skills are our key differentiators against competitors. The following are some of the niche sectors where we are the market leaders:

o One of the global market leader in PeopleSoft services

o Among the leading IT solution providers for the Airline industry

o Fast emerging among the top two Indian IT services provider in Germany

o Developed innovative solutions in capital market especially in Asset management

Strong domain knowledge

One of the biggest competitive advantages of the Company is the deep insight and strong domain knowledge in the niche areas that the Company has been focusing. In order to continue its leadership position and continue moving up in the value chain the Company has been reinvesting in itself continuously. The Company has created product Centre of Excellences that houses well defined framework, checklists, tools and accelerators. The employees have been dedicatedly working in these Centre of Excellences by leveraging modern tools and processes for developing solutions of tomorrow which will boost productivity and reduce project development in time.

Strong talent pool

The Company believes that its employees are the leaders of tomorrow and has been investing in them. The employees undergo several skill enhancement workshops and programs in order to hone their skills. The training structure ensures appropriate mix of domain and technical certification, soft skills training and cross cultural sensitization programs. The eLearning platform HexaGuru benefits the onshore associates working at client locations to continuously learn and upgrade their skills and enhance service delivery.

Flexible

As a mid-size vendor, the Company provides a great deal of flexibility in both the contractual and delivery models. This includes using innovative pricing and payment models that meet the unique expectations of the clients, as also optimizing the SEI CMMI Level 5 processes to meet specific customer requirements. The adaptable working relationships of the Company stretch from fixed time/ fixed fee/time and material to Shared services model.

Committed top management

The management team at Hexaware takes personal interest in developing every client relationship to ensure that the customer comes first. The relationship and account managers ensure single point of contact and the well-defined escalation and risk management and mitigation procedures ensures high client satisfaction as visible through high contribution of the repeat business to the extent of 95.5% to the overall revenues.

Responsiveness

The Company is committed to making investments in account management and in building long-term, trusted relationships. One of the advantages brought from Hexaware is flexibility in terms of business model, engagement model and relationship model to ensure that clients derive greatest benefit from this relationship.

Effective delivery models

The Company has invested in building significant onsite delivery and consulting capability to absorb the process overheads of offshore by locating the business practice leaders, account managers and top management team. This structure enables quicker decision-making and ease of access to customers.

The Company has an enviable track record in building, operating and delivering solutions from very large offshore development centers (ODC). The Company offers proven business model for customers looking to exploit delivery capabilities across the globe. The models provide a framework for outsourcing large application and product management services and provide the customer with economies of scope and scale.

Program Risk Management

The Company continues to manage an initiative to monitor critica projects based on criticality index derived from few identified parameters. A separate Steering Committee of senior executives in the Company has been formed who hold regular meetings and continuously watch over the progress of such projects. There are established processes to identify and mitigate any risk during the transition process as well as when the relationship is stable. The processes are invoked to ensure the overall risk or delays, which can hinder the success of the ODC, are minimized.

Process and Methodologies

The Company has institutionalized a number of processes and innovative methodologies, which has built in risk mitigation strategies and cost efficiencies. The Company''s approach addresses the key issues of transition management and operational efficiency improvement.

Your company continues its process improvement journey. In the year 2013, your company has acquired additional certifications on ISO/IEC 2000-1:2011 and was appraised at Level 3 of SEI-CMMI Services Version 1.3. This is in addition to existing certifications like ISO 9001:2008, SEI CMMI Development Version 1.2 Level 5, ISO 27001, SSAE16 & ISAE 3402-Type II assessment at Organization level.

The Company have been assessed at Level 5 of CMMI Multi Model Version 1.3 for Development and Services recently. Less than 10 companies in the world are appraised at Level 5 using the Multi- model approach.

Company focused on Corporate Governance

The Company has two" Big 4"firms as auditors - M/s. Deloitte Haskins & Sells LLP as its Statutory Auditors and KPMG as its internal auditors.

Ernst Young are the tax advisors of the Company. The Company''s Board of Directors comprises eminent professionals in the respective fields with rich experience in policy-making and strategy formulation. All the major committees of the Board are headed by Independent Directors, and the Company has followed Cadbury Committee''s recommendation of having two different individuals as Chairman & CEO for several years. The Company won the Special Commendation of the prestigious Golden Peacock Award for the year 2009 and 2013 for excellence in Corporate Governance and was the winner of the award in the year 2011.

Awards:

The company won the following awards in 2013:

Hexaware was the winner of ''Special Commendation'' for the Golden Peacock Award for Excellence in Corporate Governance, 2013.

Hexaware was the winner of the'' IT Excellence'' Award conferred by Vmware in association with CNBC.

Hexaware won the ''EMC Transformers'' Award conferred by the DG group.

Hexaware''s Annual Report for the year 2012 received Plague award for excellence in financial reporting from Institute of Chartered Accountants of India.

Hexaware has been assessed at Level 5 of CMMI Multi Model Version 1.3 for Development and Services recently. Less than 10 companies in the world are appraised at Level 5 using the Multi-model approach.

Caliber Point Business Solutions Limited, Hexaware''s wholly owned subsidiary, won the ''Health Insurance BPO Provider'' Award at the BPO excellence awards 2012-13.

Caliber Point Business Solutions Limited won the ''Best Outsourcing Service Provider'' Award at the Asian Outsourcing Excellence Awards in 2013.

Risk Management

The Company has put in place an'' Enterprise-wide Risk Management'' (ERM) programme based on the framework recommended by the ''Committee of Sponsoring Organisations'' (COSO) formed by the Tread way Commission. The risk reports prepared by the Risk Officer are reviewed by the Board of Directors at regular intervals.

The risk management process is revisited and reviewed annually in order to keep it aligned with the changing global and business risks. The operations risk management process is automated and accessible to all units of operation across the globe and the same is reviewed by the risk office on regular basis.

The primary objective of ERM function is to implement a framework that augments risk response decisions and reduce surprises. ERM programme involves risk identification, assessment and risk mitigation planning for strategic, operational and financial and compliance related risks across various levels of the organization.

The Board of Directors and senior management team recurrently assess the operations and operating environment to identify potential risks and take necessary mitigation actions. The Banking, investments & Operations and Forex Committee of the Board oversee activities related to Foreign Exchange matters and the Banking, Investments & Operations respectively.

Key elements of risks

1. Micro - economic risks: The economic environment, pricing pressure and decreased employee utilization rates could negatively impact its revenues and operating results. Company''s major revenues come from client based in US and Europe. An economic slowdown or any other factor that affects economic health of US and Europe, may affect its business.

2. Delivery and operational risks: The growth and success depends on its ability to hire, attract, motivate, retain and train highly-skilled technology personnel. Failure to complete fixed price, fixed time framed or transaction based pricing contracts within budget and on time may significantly affect our profitability.

3. Accounts risks: Competition and shifts in customer''s perspective may affect its business. Some of our long term contracts contain benchmarking provisions which if triggered, could result in lower future revenues and profitability under the contract.

4. Regulatory risks: any change in regulations in any of the jurisdiction of its operations may hamper growth and cause decline in revenue. The restriction on immigration may affect its ability to compete and provide services to customers in US, Europe and other jurisdiction.

The risk faced by the Company is discussed in detail in the Management Discussion and Analysis section of this Annual Report

Internal Audit & Controls

The Company continues to engage KPMG as its internal auditor. During the year, the Company continued to implement their suggestions and recommendations to improve the control environment. Their scope of work includes safeguarding the assets of the Company, review of operational efficiency, effectiveness of systems and processes, and assessing the internal control strengths in all areas.

Internal Auditors findings are discussed with the process owners and suitable corrective actions taken as per the directions of Audit Committee on an ongoing basis to improve efficiency in operations.

Talent Management - Asset Development.

The Company is future focused and is fully aware about what it needs from its talent. It has a systematic structured approach of attracting , identifying, developing, engaging/retaining and deploying of those individuals with high potential who are of particular value to an organization, either in view of their high potential for the future or because they are fulfilling business/operation critical roles.

The company has a pipelined approach of identifying future talent needed by the organization, also with the Planned Development Programs nurturing them for times when they are escalated to the top positions.

The HR/Learning and Development team provides clarity about expectations and the different capabilities required at different levels also healing their skill gap with some prominent development programs at each level.

The company continued its focus on employee motivation through revamping the Rewards and recognition system incorporating more categories to encourage talent. Most importantly this is devised along with delivery managers to make it relevant and appropriate.

The Company focuses on talent management through interventions like smooth process (from Hiring to retention), managing the programs as per diversity of the work force, and supporting high performers with an effective talent management system.

Hexa Varsity

Learning & Development

The Company''s drive to excel through a talented workforce is spearheaded by Hexa Varsity, the Corporate University for Learning & Development (L&D). Hexa Varsity handles learning & development of the Campus Hires and current employees to equip and prepare the associates with cutting edge skills and develop continuous talent in- house.

During the year Hexa Varsity trained 215 campus recruits and successfully brought them on board. The enhancement training program this year covered new areas like Mobile technologies and Cloud, mini class room projects and higher cut-off for assessment which ensured induction of excellent new talent into the organization.

During the year, Hexa Varsity launched several new initiatives aligned to the business goals of the Company. Hexa varsity launched enhanced ''Role based Learning Plans'' comprising technical and behavioral plans to help the associates prepare themselves well for their role and career progression. The Company leveraged its practioners to develop and launch new courses for Program Management and Pre-Sales support as new Step Up programs for the middle managers. The Company also launched a new Step Up program for Certified Information Security Auditors this year. Under its Business Professional development initiatives, the Company launched new programs on Customer Focus and Cross-culture integration this year.

The year also saw several continuous improvements to its learning & development methodologies. The Company designed and launched a Learning Index to objectively track its learning progression. Based on industry best practices, the Company formed a new Learning Council and designated Learning Champions that has given a fillip to learning initiatives. The eLearning platform Hexa Guru was further enhanced with the roll out of eBooks with over 12000 titles this year. This will benefit the onshore associates working at client locations to continuously learn and upgrade their skills and enhance service delivery. With the active participation of its in-house talent, the company also produced about 56 days worth of online learning content in-house that helps in learning and knowledge management of its specialized skills.

The path breaking Competency Development Framework has also been enhanced with learning plans for Vertical specific roles, new areas like Cloud Applications, Mobile and User Interface design this year.

The blended learning approach with two prong thrust on eLearning and classroom learning enhances efficiency and scalability to handle the Global workforce of the Company - the average learning days per associate has increased by 1 day this year.

As part of the Corporate Social Responsibility and Industry- Academia interactions, the company actively supported Student and Faculty development programs during the year. The Company closely collaborates with the ICT Academy of Tamil Nadu to support its Bridge programs and have a representative in their Board of Studies. The company has hosted several seminars and workshops in Colleges, provided 30 internships, facilitated 3 In-plant visits for students and faculty of a learning Management Institute from Thiruvananthapuram this year which was well appreciated by them.

Corporate Governance and Management Discussion and Analysis

The Company endeavors to maximize the wealth of the shareholders by managing the affairs of the Company with a pre-eminent level of accountability, transparency and integrity. A report on Corporate Governance including the relevant Auditors'' Certificate regarding compliance with the conditions of Corporate Governance as stipulated in Clause49of the listing agreement with stock exchanges is annexed. Management Discussion and Analysis is also annexed.

Directors'' Responsibility Statement

As required under Section 217 (2AA) of the Companies Act, 1956, your Directors hereby state and confirm that:

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

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

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

Employee Stock Option Plans (ESOP)

Pursuant to the approval of the shareholders, the Company has instituted the Employee Stock Option Scheme, 2002, Employee Stock Option Scheme, 2007 and Employee Stock Option Scheme, 2008 for all eligible employees, directors (excluding promoter directors) of the Company and employees of its subsidiaries. All the plans are administered by the Remuneration & Compensation Committee of the Board.

During the year 2013, following were the movements under ESOPs: 3,331,156 options were exercised and the Company allotted 3,331,156 eguity shares ofRs. 2/- each to Directors and employees on exercise of Stock Options. These shares have been listed on the Bombay Stock Exchange Limited and National Stock Exchange of ndia Limited. No options were granted under any of the schemes during the year 2013. ESOP Disclosures in terms of SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines are given on page no. 47 to 49 of the Annual Report.

Fixed deposits

During the year under review, the Company did not accept or invite any deposits from the public.

Insurance

The Company has sufficiently insured itself under various insurance policies to mitigate risks arising from third party or customer claims, property/casualty, etc.

Errors & Omissions / General Liability

In a global services business, customers insist on taking suitable insurance covers including Errors & Omission (Professional indemnity) and Commercial General Liability. The Company has taken appropriate insurance covers with reputed insurers & re- insurers to protect the Company from any third party liability claims that may arise at any point of time.

Directors & Officer''s Liabilities (D&O) /Employment Practices Liability Insurance (EPLI) /Crime

D&O policy covers the Directors & Officers of the Company against the risk of third party actions arising out of their actions/decisions, which may have resulted in financial loss to any third party. The Company has appropriately insured itself to mitigate such risks coming from any third party. EPLI Insurance protects the Company from claims from employees or third parties on account of any actual or alleged Employment Practice Violation. Crime insurance protects the Company from loss of money, securities or other financial loss arising from any fraudulent or criminal activity of employees or third parties.

Property / Casualty

The Company has insured its various properties & facilities against the risk of fire, theft etc. so that financials are not impacted in the unfortunate event of such events. The employees of the Company are covered under various employee benefit Insurance against Hospitalization, Accidental Disability and Death.

Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo

The information relating to Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo required under Section 217(1) (e) of the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 is annexed and forms part of this Report.

Subsidiaries

Pursuant to the provision of Section 212(8) of the Companies Act, 1956, the Ministry of Corporate Affairs vide its circular dated February 8, 2011 has granted general exemption from attaching the Balance Sheet, Profit and Loss Account and other documents of the subsidiary companies with the Balance Sheet of the Company. The Board of Directors of the Company has by a resolution given consent for not attaching the Balance Sheet of the subsidiaries concerned. A statement containing brief financial details of the Company''s subsidiaries for the financial year ended December 31, 2013 is included in the Annual Report. The annual accounts of these subsidiaries and the related detailed information will be made available to any member of the Company seeking such information at any point of time and are also available for inspection by any member of the Company at the registered office of the Company.

The Company shall furnish a copy of annual accounts of subsidiaries to any member on demand.

The Board of Directors of the Company has also approved the scheme of merger of Caliber Point Business Solutions Limited, the 100% subsidiary, with the Company. The company is in the process of seeking necessary approvals and filing application with the High Court, Mumbai and other Government Agencies.

Directors

In accordance with the Articles of Association of the Company, Mr. Bharat Shah, Director of the Company, retires by rotation at this Annual General Meeting and, being eligible; offers himself for re-appointment.

The information to shareholders as per Clause 49 of the Listing Agreement pertaining to brief resume, expertise in functional areas, names of companies in which Mr. Bharat Shah is a Director etc. is being provided separately in the Annexure on Page No. 67 of the Corporate Governance Report of this Annual Report. Members are requested to refer the said section of the Corporate Governance Report.

Auditors

In terms of provisions of Section 224 of the Companies Act, 1956, M/s. Deloitte Haskins & Sells LLP retire at this Annual General Meeting and being eligible, offer themselves for re-appointment. Pursuant to the recommendation of the Audit Committee at their meeting held on February 7, 2014 recommending re-appointment of M/s. Deloitte Haskins & Sells LLP as Statutory Auditors of the Company, for the financial year 2014, the Board of Directors have, subject to the approval of the shareholders, at their meeting held on February 7, 2014 approved the re-appointment of M/s. Deloitte Haskins & Sells LLP as the Statutory Auditors of the Company for the financial year 2014 and to hold office till the conclusion of the next Annual General Meeting.

In terms of provisions of section 224(1 B) of the Companies Act, 1956. M/s. Deloitte Haskins & Sells LLP have furnished a certificate that their appointment, if made, will be within the limits prescribed under the said section of the Act.

Particulars of employees

As required by section 217 (2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975, the particulars of employees forms part of this report. However, as permitted by section 219(1)(b)(iv) of the Companies Act, 1956, the report and accounts are being sent excluding the statement containing the particulars to be provided under section 217(2A) of the Act.

Any member interested in obtaining such particulars may inspect the same at the Registered Office of the Company or write to the Company Secretary for a copy thereof

Acknowledgment

The Directors place on record their sincere appreciation of the customers, Government of India and of other countries, Registrar and Share Transfer Agents, vendors, bankers and Technology Partners for the support extended. The Directors are also deeply touched by the efforts, sincerity and loyalty displayed by the employees without whom the growth of the Company is unattainable. The Directors wish to thank the investors and shareholders for placing immense faith in them. The Directors seek, and look forward to the same support during the future years of growth.

For and on behalf of the Board of Directors

Atul K.Nishar

Chairman

Place: Mumbai

Date: March 28, 2014


Dec 31, 2012

To the Members,

The Directors are pleased to present their Twentieth Annual Report, on the business and operations of the Company, Hexaware Technologies Limited (hereafter referred to as The Company'') together with audited accounts for the financial year ended December 31, 2012.

Financial Performance:

Global Operations: (USD Million)

2012 2011 Y-o-Y Growth % Income from Operations 364.48 308.11 18.30%

EBITDA 76.28 55.46 37.54%

Profit from Operations * 70.21 50.19 39.89%

Profit before Tax 75.77 65.09 16.41%

Profit after Tax 61.51 56.45 8.96%

(Rs. Million)

Year ended December 31 2012 2011 Y-o-Y Growth %

Income from Operations 19,481.78 14,505.12 34.31%

EBITDA 4,040.37 2,613.44 54.60%

Profit from Operations * 3,716.23 2,366.41 57.04%

Add: Exchange Rate (Loss) / Gain (net) (113.33) 248.26 -145.65%

Less: Interest 1.61 21.49 -92.51%

Add: Other Income 438.28 482.10 -9.09%

Profit before Tax 4,039.57 3,075.28 31.36%

Less: Provision for Taxation 763.10 405.01 88.42%

Profit after Tax 3,27647 2,670.27 22.70%

* excludes Exchange Rate Difference, Interest, Other Income and Provision for Taxation

India Operations: (Rs. Million)

Year ended December 31 2012 2011 Y-o-Y Growth %

Income From Operations 9,124.74 6,785.80 34.47%

EBITDA 3,295.25 2,064.73 59.60%

Profit from Operations * 3,025.80 1,875.76 61.31%

Add: Exchange Rate Gain/ (Loss) (net) (71.13) 233.31 -130.49%

Less: Interest 1.05 14.40 -92.71%

Add: Other Income 458.52 449.37 2.04%

Profit before Tax 3,412.14 2,544.04 34.12%

Less: Provision for Taxation 556.11 224.23 148.01%

Profit after Tax 2,856.03 2,319.81 23.11%

Add : Balance brought forward from previous year 3,129.17 2,471.69

Balance available for appropriation 5,985.20 4,791.50

Appropriation

Transfer to General Reserve 300.00 300.00

Interim Dividend 1,247.27 732.81

Proposed Final Dividend 355.85 440.04

Tax on Dividends 260.07 189.48

Balance carried to Balance Sheet 3,822.01 3,129.17

Results of Operations

a) Global operations:

Income from operations increased toRs. 19,481.78 million in 2012 fromRs. 14,505.12 million in 2011, growth of 34.3%. The growth in Dollar terms was 18.3%, reaching USD 364.48 million Growth was driven largely by volume increase, aided by increased realized bill rates as well as cross currency conversion benefits and 2.4 % shift in favour of offshore.

Profit from Operations (profit before Exchange Rate Difference, Interest, Other Income and Provision for Taxation) was at Rs. 3,716.23 million in 2012 as againstRs. 2,366.41 million in 2011, growth of 57%. Profitability rose to 1.57 times, driven by significant SG&A leverage, improved cost efficiency through better employee pyramid, higher realized bill rates as well as currency benefits. Profit after Tax stood atRs. 3,276.47 million in 2012 as compared to a profit ofRs. 2,670.27 million in 2011, growth of 22.7%. PAT margins were at 16.8% in Rupee terms.

Some of the major achievements of the Company in the year 2012 were:

During the year 2012,47 new clients were added. This took the total number of active clients to 218, up from 192 in December 2011.

During 2012, the number of clients registering annual revenues in excess of USD 20 million each remained steady at 3; clients in the USD 10 million - USD 20 million range increased to 5, 7 clients in the USD 5 million - USD 10 million range, 40 clients in the USD 1 million - USD 5 million category and 55 clients with USD 1 million range - all on a trailing twelve months basis.

Significant Developments during CY 2012

The year 2012 was marked with several significant achievements across various quarters. The Company has strengthened its domain capabilities, increased the breadth and depth of its service lines, has added significantly to the field sales organization and has made several investments to enable expand its focus on account management program.

The Company has delivered above industry revenue growth on the back of several significant large deal wins in the last one year. Winning these deals continue to demonstrate the client''s recognition of the Company''s positioning, domain knowledge, intellectual property (IP) assets and the Company''s execution excellence.

The Company signed a deal worth in excess of USD 10 million with an existing US based Fortune 500 Corporate to help its client reduce its total cost of ownership (TCO) on its ERP applications.

The Company also signed orders in excess of USD 10 million with an existing US based Fortune 20 company by which the customer would outsource application management of its corporate HR systems.

Further, the Company entered into a strategic alliance with a multi- billion global corporate to establish a large, secure Enterprise Resource Planning (ERP) Application Outsourcing services unit for its global customers across multiple geographies and industry verticals on a Build Operate and Transfer model. This is expected to bring revenues estimated to the tune of USD 100 million cumulatively over the next 4 years.

The Company bagged a multi-million Dollar deal with a new logo in the Financial Services domain in Europe. This multi-year dea includes services ranging from vertical specific, BA / BI, Remote IMS and Emerging Technologies. This win establishes a key foundation in pursuing multiple prospects in a strong area of strength, Capita Markets, in a key market.

This success seen with large deals renders the Company with potency to compete for new business and expand its footprint across geographies.

Customer centricity is a major focus area at the Company. In the last year, the Company has launched several new service offerings to deliver value to its customers.

As mobile devices become more popular and the demand for mobile business applications increase, the Company launched Mobile Testing Solutions as a new service offering in Enterprise Mobility. The Company designed a unique automated mobile application testing and life cycle management solution which offers a holistic strategy to enhance user experience while meeting business demands for cost and time to market.

The Company also rolled out its proprietary Enterprise Data Management (EDM) Intellectual Property Asset called AIM (Analytics for Investment Management). AIM is a prebuilt repository of dashboards, KPIs and reports supported by a dimensional data model for Investment reporting for a 360 degree view of the Portfolios and Assets under Management (AUM) they manage, in conjunction with the Trades, Performance and Risk related thereto. At the core of the toolkit lies a flexible and an integrated data model that helps manage the key dimensions and metrics across the mentioned nvestment Management functions. This service predominantly solves the problem of traditional data warehouse, provides quicker access to business data, and offers a 360 degree view of Portfolio, Performance and Risk and supports ad-hoc reports, self-service and advanced dashboard capabilities.

The Company has been consistently focusing on New Initiatives and has been regularly investing in multiple Centers of Excellence (CoE) in order to tap into the huge market potential of these emerging technologies.

The Company announced multiple initiatives on the Cloud such as Rainmaker, the Company''s private cloud, Cloudview and cloud- based Software as a Service (SaaS) platform for offering HR services, Republic. The Company is actively working on various client engagements on migrating applications to public cloud platforms such as Amazon, Google and Microsoft.

The Company is progressively extending its business boundaries to accommodate the plethora of mobile devices with the necessary infrastructure to support the various platforms and a strategy to make the right investment decision among the many competing options that are available. The Mobile Computing Practice at the Company offers application development and maintenance capability around Apple® iOS, Google Android, Microsoft Windows 7.x/8 and Research In Motion Blackberry®. The application development capability is backed by a strong User Experience (UX) team which is growing to keep up with the customers need. The Company has also built implementation and governance capability with proven vendors in this space. To accelerate the development and roll-out of mobile applications, the Company has worked on a solution based on industry standards ready to be adopted and implemented. The solution accelerator built by the Company branded as "WorkQuikr" makes it easy to push applications to Android and iOS based devices.

The Company kick-started a specific CoE focused on Big Data as part of its Business Intelligence and Analytics practice. This CoE enabled the Company to build core competencies in this area such as Hadoop ecosystem, MapReduce programming, advanced / predictive analytics, statistical modeling and text mining & analytics. The Company has also been broadening existing strategic partnerships to include Big Data related platforms and forming alliances with focused technology companies gaining access to certain solutions on Big Data platforms.

In the last year, the Company has been bestowed with various Awards and honored with recognition which continued to exemplify its innovation skills, its services and its commitment. The Company was selected for the International Association of Outsourcing Providers® (IAOP®) Global Outsourcing 100® list. The Company was recognized for its global expertise overall and for its work in key areas such as Human Resources Services, Transaction Processing Services and Air Transportation.

The Company won the EMC Transformers Award for its Cloud and Disaster Recovery (DR) implementation. This Award recognizes innovation and the change brought in Indian enterprises through smart and judicious use of IT.

The Company was awarded the prestigious UK Oracle User Group (UKOUG) Partner of the Year Award for the year 2012 in London. This Award was presented in recognition of the Company''s innovative solutions, excellent service delivery, high quality talent and top-notch client relationships. This award further reinforces the leadership the Company enjoys in PeopleSoft services market for over 15 years now.

Caliber Point Business Solutions Ltd., a wholly owned subsidiary of the Company won ''Best IT Enablement in BPO'' Award at the BPO Excellence Awards 2011 - 12. This award showcases Caliber Point''s expertise to ''c.r.e.a.t.e. Value.'' for its customers by adopting and implementing cutting-edge technology while crafting business solutions.

The Company won the Best CIO of India Award conferred by the Stars of the Industry Group and Asian Confederation of Businesses. This award was presented to recognize the best performing CIO in the IT Sector and acknowledges the Company''s IT-agility and project and IT performance.

The Company received the prestigious CIO100 Award, from IDG and has also featured on their Hall of Fame -2012 for winning it over the last 4 consecutive years.

The Company was also conferred with the Information Mastermind Award 2012 by IDG.

b) India operations:

In the year 2012, the revenue of the standalone legal entity increased by 34.47% to Rs. 9,124.74 million. This is in comparison with revenue of standalone legal entity at Rs. 6,785.80 million in the previous year. The net profit after tax was Rs. 2,856.03 million as compared to a profit ofRs. 2,319.81 million in 2011, an increase of 23.11%.

Reserves

The Company has transferred Rs. 300 million to General Reserve same as transferred in the previous year. With this addition, the total General Reserve as on December 31, 2012 is atRs. 1,542.87 million.

Further, the balance in the P&L Account is Rs. 3,822.01 million.

Forex Mark-To-Market: The Company has adopted AS-30 principles of recognition and measurement for accounting of forward exchange contracts and derivative contracts and the year-end Hedging Reserve stood at a loss of Rs.697.62 million, as compared toRs. 904.93 million in the previous year. In summary, total reserves stood at Rs. 9,253.03 million, including Rs. 4,578.74 million of Securities Premium account.

Dividend

During the year 2012, the Company paid interim dividend on quarterly basis on equity shares, Q1 Rs. 1.50 (75%), Q2 Rs. 1.50 (75%), Q3 - Rs. 1.20 (60%).

The Board of Directors has recommended a payment of fina dividend ofRs. 1.20 per share (60%) on an equity share ofRs. 2/- each, at its meeting held on February 11, 2013, due for approva at the AGM. Including this, the total dividend for the year inclusive of interim dividends would amount to Rs. 5.40 per share (270%) on equity shares.

The total cash outgo on account of interim dividend and fina dividend & tax thereon amounts toRs. 1,859.74 million.

The break-up of dividend is as under:

(Rs. Million) Q1 Q2 Q3 Final Total

Dividend 443.94 444.51 355.85 355.85 1,600.15

Tax 72.02 72.11 57.73 57.73 259.59

Total 515.96 516.62 413.58 413.58 1,859.74

The members are requested to confirm the interim dividends declared by the Company on the Equity shares and approve the fnal dividend.

Share capital

The paid-up Share Capital of the Company as on December 31, 2012 was Rs. 593.09 million comprising of 296,544,791 Equity Shares of Rs. 2/- each. During the year 3,186,363 shares were issued under ESOP under different schemes.

The market capitalization of the Company as on December 31, 2012 was at Rs. 25,235.96 million (USD 458.88 million). The market capitalization is calculated on the basis of closing price ofRs. 85.10/- on the National Stock Exchange and the closing exchange rate of 1 USD = Rs. 54.9950 as of December 31, 2012.

Investment

A) Subsidiaries and Branches:

No additional investments in subsidiaries/branches were made during the year 2012. The Company made application to the Registrar of Companies for striking off the name of its wholly owned subsidiary M/s. Rampran Infotech Limited from the register of companies. The Subsidiary Company stands dissolved w.e.f February 12, 2013.

B) Infrastructure:

A tangible signature of the Company''s growth aspirations is its investment in infrastructure. The Company has invested Rs. 744 million in 2012 for expanding its physical and technica (IT) infrastructure. This is indicative of its passion to motivate a dynamic team to provide quality support for its global sales and delivery operations.

In 2012, the Company initiated the scaling up of its Mumbai delivery operations. The seating capacity is enhanced to accommodate an additional 300 employees. Likewise, the Company''s centre in Pune has now expanded to accommodate 700 employees. With the in- house Hexavarsity classrooms and learning centres, it also provides amenities to enable the employees to recharge after solid and creative work.

Specific updates from the different facilities are provided below:

India based Global Delivery Centres

Mumbai:

The Company has three Offshore Development Centres (ODCs) at Millennium Business Park in Mahape, Navi Mumbai. One of these is the registered office of the Company; these centres currently accommodate a headcount of over 1,500 employees. The Company has unveiled the new wing of the Mumbai delivery centre with a seating capacity of 300 professionals. The Company''s wholly owned subsidiary Caliber Point Business Solutions Limited also operates out of another building in the same complex, seating over 800 employees - providing BPO services to its global clients.

Chennai:

The Company''s 27 acre campus in Chennai currently accommodates employee strength of over 3400 - an increase of over 1,000 employees since December 2011.This campus now houses all employee-friendly amenities like recreation centre, library and gymnasium facilities - offering plenty of avenues for relaxation and rejuvenation as well as knowledge enhancement through Hexavarsity - the Company''s in- house Learning and Development University.

The Company''s Chennai "green campus" conforms to eco-friendly norms and regulations, like optimal use of solar energy, use of eco- friendly building materials and a judicious spread of landscaped spaces around seating facilities across various levels.

The wholly owned BPO subsidiary, Caliber Point Business Solutions Limited also operates out of another facility in Chennai and accommodates over 400 employees.

Pune:

In Pune, the Company has moved into a new facility at Rajiv Gandhi nfoTech Park in Hinjewadi SEZ. It has a seating capacity of 700 employees in line with our expansion strategy.

Nagpur:

The Company and Caliber Point, the wholly owned subsidiary company, together have acquired 20 acres of land in Nagpur, a tier II city, at an SEZ location. This facility currently has a capacity to accommodate 1000 professionals and is presently operational with over 300 professionals of Caliber Point.

Bengaluru:

This facility in the India''s IT capital now seats in excess of 250 employees. This facility mainly houses the delivery operations for a major global client and is now being staffed with senior managerial roles in line with our increasing focus in solving their business-critical challenges.

Coimbatore:

During the last quarter, Caliber Point Business Solutions Limited, the Company''s wholly owned subsidiary, has inaugurated a new facility in Coimbatore with a seating capacity of 248 Seats.

Overseas Global Delivery Centres

New Jersey (USA):

The Company has an established Global Delivery Centre (GDC) at Secaucus, New Jersey (USA) for a few years now to cater specifically to its American clients. While this proximity centre offers benefits such as the same time zone, direct communication and enables convenient management oversight, it also further enables the clients to outsource mission-critical tasks and share secure information that would have otherwise not been shipped beyond the shores.

The Company also has a GDC at Jamesburg to cater to the needs of the customer.

Saltillo (Mexico):

The Company has a strong presence in Mexico with a near-shore Delivery Centre at Saltillo with employees strength of around 300. While Mexico offers cost competitiveness compared to the United States of America, the country also provides immense benefits in the form of same time zone, enables immediate response and access to a vast talent pool and an untapped emerging market. The Company intends to leverage its near shore Delivery Centre to cater to severa global clients as an addition to the other existing options of continuing operations in the USA or in the Company''s locations in India.

Global Cash Position

The cash generated from operations in 2012 was Rs. 2,199 million. Inflow on account of treasury operations (interest income on the investments made and dividend received from Mutual Funds) was Rs. 383.88 million.The Company has invested more money in Mutua Fund amounting to Rs. 2,127 million. The Company has invested Rs. 743.68 million in fixed assets. During the year, the Company paid dividend ofRs. 1,955.89 million. The Company has received Rs. 60.2 from issue of shares. As of 31st December, the cash position of the Company was Rs. 2,122.37 million, equivalent in USD 38.59 million. ncluding the Mutual Fund investments (cash equivalent), the total cash & cash equivalents was at Rs. 4,472.20 million equivalent USD 81.32 million.

Human Resource Capital

The Company recognizes that "Human Capital" is the most valuable asset. The Company has a robust and inclusive ecosystem in place which encourages meritocracy, innovation and excellence.

The Company has grown several notches in revenues, client base, geographies as well as human resources over the last quarters. Last year alone, the Company added 752 professionals world-wide to an existing workforce of over 8317 people - primarily across our offshore development centres (ODCs). This includes 525 fresh engineering graduates - our way of balancing rich professional experience with fresh insights from academics for a well-balanced workforce. Technical personnel comprised 92.3% of the total workforce. Going forward, in 2013, the Company also plans to induct more employees across various onsite and offshore locations- the best of global talent for a sustained quality and thought leadership.

The Company''s head count was 9,069 as on December 31, 2012.

The Company has scalable and robust human resource management process which helps us to attract and retain high calibre employees

To attract and retain people, the Company provides a judicious combination of attractive career, personal growth and performance-based / Market competitive compensation

The Company''s Employee engagement programs have helped in improving productivity and retention of employees.

The Company is focusing on HR analytics for workforce analysis, aiming towards introducing predictive analysis that will drive workforce planning, talent management and retention.

Salient Features and Compelling Value Proposition

At the Company, we believe in providing a holistic solution for our customers'' needs. That is why the Company has the expertise to help customers at all stages of their IT initiatives. Whether they''re a small, mid-sized entity, or a large global enterprise, the Company can create a tailored roadmap with complete end-to-end solutions, combining both technology and business understanding. Across all industry verticals, corporations have trusted us to be there throughout their application lifecycle. This includes advisory, roll out and implementation, development and testing, maintenance and support and Business Process Outsourcing.

The Company''s impressive suite of software solutions features several unique advantages that ensure high quality expertise and cost efficiency. These include:

Leadership in niche areas

The Company has demonstrated leadership and expertise in focus areas. The Company is one of the global market leader in PeopleSoft services

The Company is amongst the leading IT solution providers for the Asset Management Business & Airlines Industry The Company has emerged as a strong service provider of Quality Assurance and Testing services and also in the area of Business Intelligence / Business Analytics

The enterprise class solution offerings combined with best-of-class enterprise integration skills is the Company''s key differentiators against competitors.

Focus strategy to strengthen multi-niche specialization

In alignment with the focus on select areas, the Company''s investment and focus is dedicated on growing to attain leadership in each sector. This has helped the Company to compete and win in these areas against much larger and more established vendors.

Innovating service delivery is a very high priority for the Company. It is with this objective that the Company consciously invests in its Innovations Lab. The Innovations Lab is tasked with creating innovative tools and methodologies that accelerate value creation for the customers. The Innovations lab has industry leading tools like AKIVA (Data Masking application), Data Migrator Workbench (ERP data migration), PROBE (ERP Upgrade and Customizations Estimator) and many more.

Hexaware size-the right size

Being a right-sized company, the Company has the ability to demonstrate adaptability and flexibility in its operations to suit the dynamic needs of its customers. The Company has demonstrated capability in meeting resource and infrastructure requirements for large projects, at the same time remaining small enough for relationship comfort.

Working closely with 50 Fortune/Global 500, the Company does not believe that one size fits all. The Company weaves together the right ecosystem with its project, making sure the engagement gets the full attention it deserves. It''s this scalable and customized approach that has kept the customers coming back to the Company at an astonishing 93% rate.

Innovative Execution Model

As a mid-size vendor, the Company provides a great deal of responsiveness in both the contractual and delivery models. This includes using innovative pricing and payment models that meet the unique expectations of its clients, as also optimizing its SEI CMMI Level 5 processes to meet specific customer requirements. The Company''s adaptable working relationships stretch from fixed time/ fxed fee/ time and material to Shared services model. Part of this fexibility derives from its unique size. As a "right-sized" company, the Company has the ability to demonstrate adaptability and flexibility in its operations to suit the dynamic needs of its customers. The Company can meet the resource and infrastructure requirements for large projects, while also remaining small enough to deliver excellent customer service.

Committed Top Management

The management team at the Company takes personal interest in developing every client relationship to ensure that the customer comes first. The relationship and account managers ensure single point of contact and the well-defined escalation and risk management and mitigation procedures has ensured repeat business to the extent of 93%.

Flexibility and Responsiveness: Committed to making investments in account management and in building long-term, trusted relationships. One of the advantages that the Company deserves is flexibility in terms of business model, engagement model and relationship model to ensure that the clients derive greatest benefit from this relationship.

Effective delivery & Outsourcing models

The Company has invested in building significant onsite delivery and consulting capability to absorb the process overheads of offshore by locating the business practice leaders, account managers and top management team in North America. This structure enables quicker decision-making and ease of access to customers.

The Company has an enviable track record in building, operating and delivering solutions from large offshore development centres (ODC). The Company offers proven business model for customers looking to exploit delivery capabilities across the globe. The Company''s models provide a framework for outsourcing large application and product management services and provide the customer with economies of scope and scale.

The Company''s team of experienced consultants comes with industry and domain expertise that is truly unmatched in the IT outsourcing industry. The Company''s "partner-in-business" approach means it makes the necessary investments in people, processes and technologies to ensure success for its customers. The Company''s key interest is to ensure business success for its customers. It ensures this by providing not just a superior technology platform, but also by helping run processes on these applications more efficiently and effectively. Caliber Point, The Company''s BPO subsidiary is trusted by organizations all over the world to run its HR, Healthcare, Finance and Knowledge process areas. Together with Caliber Point, the Company offers end-to-end solutions that meets all the IT and IT- enabled process needs.

Program Risk Management

The Company continues to manage an initiative to monitor critical projects based on criticality index derived from few identified parameters. A separate Steering Committee of senior executives in the Company has been formed who hold regular meetings and continuously watch over the progress of such projects. The Company has established processes to identify and mitigate any risk during the transition process as well as when the relationship is stable. The Company invokes such processes to ensure the overall risk or delays, which can hinder the success of the ODC, are minimized.

Program risk management delivers the following values:

Contributes to project success;

Recognizes uncertainty and provides forecasts of possible outcomes;

Produces better business outcomes through more informed decision making;

Is a positive influence on creative thinking and innovation;

Offers better control and improved decision making - less time wasted, greater focus on benefits;

Multi-Cultural Dimension

The Company operates on a global platform, working with severa Fortune 500 customers in North America, Europe and Asia Pacific. The Company''s global footprints span across 5 continents, 20 countries and 35 locations. This gives a unique understanding and access to not only the business practices but also the cultural and work-ethics in different regions and industry sectors.

The Company''s workforce is drawn from many nationalities, spanning over multiple countries globally. The Company''s choice of office locations merely reflects a desire to harness talent irrespective of languages, social-economic-cultural background both in India and overseas. Employees are drawn from all age groups.

The Company coined a term ''cohesive diversity'' to recognise, encourage and appreciate multiplicity in our workforce. The employees align their individual profiles, skills, aspirations and interests to move forward collectively with the organisational objectives.

Process and Methodologies

The Company has institutionalised a number of processes and innovative methodologies, which has built in risk mitigation strategies and cost efficiencies. The Company''s approach addresses the key issues of transition management and operational efficiency improvement.

The Company has received numerous certifications till date, including ISO 9001:2008, Tick IT, SEI - CMMI Level 5 and ISO 27001. The Company is also a recepient of SSAE16 & ISAE-3402 - Type II certification at an organization level. The Company is also a recipient of SAS 70 -Type II certification at an organization level. The wholly owned BPO subsidiary-Caliber Point, was awarded SAS 70-Type II certification during 2010.

The Company is now certified for ISO 20000. ISO 20000 is an IT Service Management Standard which incorporates best practices from ITIL. The Company started working on process definitions based on ITIL & ISO 20000 in Feb 2012, followed by implementation across locations and a final certification audit by Bureau Veritas in Jan 2013. ISO 20000 is the international IT service management standard that enables IT organizations (whether in-house, outsourced or external) to ensure that their IT service management processes are aligned both with the needs of the business and with international best practices.

Company focused on Corporate Governance

The Company has two "Big 4" frms as auditors - Deloitte Haskins & Sells as its Statutory Auditors and KPMG as its internal auditors. Ernst & Young are the tax advisors of the Company. The Company''s Board of Directors comprises eminent professionals in their respective fields with rich experience in policy-making and strategy formulation. All the major committees of the Board are headed by Independent Directors, and the Company has followed Cadbury Committee''s recommendation of having two different individuals as Chairman & CEO for several years.

The Company won the prestigious Golden Peacock Award for the year 2011 for excellence in Corporate Governance.

Other initiatives

High Risk Project Management: The Company has a special cell called High Risk Project Monitoring (HRPM) group which systematically identifies potential high risk projects and works along with various internal stakeholders to mitigate those risks. A framework called CIBI (Criticality Index and Benefit Index) is used to identify such projects. Once identified as a High Risk project, these projects are monitored very closely for proactive identification and resolution of issues. A steering committee meeting is held to discuss high risk projects at regular intervals. The steering committee includes Global head delivery, unit heads, function heads, CFO and CPO

Risk Management

The Company has put in place a Enterprise Risk Management (ERM) function which oversees the risk management of the Company on an ongoing basis. The primary objective of ERM function is to implement a framework that augments risk response decisions and reduce surprises.

The ERM policy, approved by the Board, has laid down the risk management process, governance and reporting structure. The policy also stresses on risk governance to ensure risk management principles are followed throughout the organization and a risk culture is inculcated. Risk Management is an integral part of the Company''s business model. The business practices at the Company are oriented to leverage the risk management to generate maximum reward while keeping risks below a defined level. Annual risks survey is conducted across the Company to get a perspective on key risks.

The ERM process is executed through the Risk Management Committee (RMC) represented by the business and functional heads within the Company. The RMC is responsible for setting policy and strategy for enterprise risk management and ensuring that risk management policies are implemented. The Board of Directors and senior management team recurrently assess the operations and operating environment to identify potential risks and take necessary mitigation actions. The Forex Committee and the Banking, nvestments & Operations Committee of the Board oversee activities related to Foreign Exchange matters and the Banking, Investments & Operations respectively.

Key elements of risks

Macro-economic risks:

The slowdown in global economy especially Europe and US economies, the regulatory or political changes, and alterations in the competitive landscape may affect the Company''s operations and outlook. This risk is mitigated to some extent due to the Company''s presence in multiple, diverse markets from North America to Europe and Asian region.

Competition-led risks:

The Company operates in a highly competitive environment in both ndia and abroad. Shifts in clients'' and prospective clients'' outlooks may affect its business. This is mitigated as the Company has strong domain expertise, robust delivery capabilities, and significant project experience.

Account risks:

The Company''s strategy is to engage with a few strategic customers and build long-term relationships with them. Any change in customer priorities and internal strategies can have an adverse impact on the Company''s operations and outlook though the Company has well rooted and involved in their critical and strategic initiatives. Therefore, client concentration related risks are mitigated to an extent.

Delivery and operational risks:

The Company''s operating performance is subject to risks associated with factors that may be beyond its control, such as the termination or modification of contracts and non-fulfillment of contractua obligations by clients due to their own financial difficulties or changed priorities or other reasons. The Company does have mechanisms in place to prevent such situations. The Company does take necessary insurance or related cover in cases as necessary.

Internal Audit & Controls

The Company continues to engage KPMG as its internal auditor. During the year, the Company continued to implement their suggestions and recommendations to improve the control environment. Their scope of work includes safeguarding the assets of the Company, review of operational efficiency, effectiveness of systems and processes, and assessing the internal control strengths in all areas.

Internal Auditors findings are discussed with the process owners and suitable corrective actions taken as per the directions of Audit Committee on an ongoing basis to improve efficiency in operations.

Talent Management - Asset Development

The Company focuses on attracting and retaining the key skills needed to achieve organizational objectives, achieving organizational goals through performance management process/ system and improving capabilities by implementing robust employee development programmes.

The Company has a systematic process of identifying future leaders needed by the organization and preparing them to take higher positions by implementing a robust leadership development program.

The HR/organization development team implemented the fast tracker program and conducted leadership development program for the Management team. The Company also implemented an exhaustive training programme especially designed for first time managers to equip them on people management and other relevant skills.

The Company continued its focus on programs that foster sound employee relations, improve employee engagement, promoting the wellbeing of its employees, and ensuring competitive rewards for employees.

The Company focuses on talent management that has created right impact on productivity and contributed towards creating value.

HexaVarsity

Learning& Development

The Company is now 9000 member team of high achievers with a proven record of superior development and delivery through established quality and process standards across various development centers worldwide. As the Company increases its footprint globally, it inducts many new hires each year and sets on the task of mainstreaming them into diverse project and delivery teams for sustained future growth. Likewise, skilled lateral resources come in with an innate desire and need to know the culture of quality, focus and more. The eternal challenge for a growing organization remains continued conformance and consistency with established institutional practices, skills and methodologies. All this and more, is addressed by the Company''s in-house Training, Learning and Development Center - Hexavarsity, the school within an office environment for a well-tailored approach to enhance skillsets of all types, roles and grades of employees.

In 2012, Hexavarsity trained 525 campus recruits through the Foundation Training Program (FTP) which apart from a hands-on approach to get first-hand experiences of their future technical roles, also included soft skills training and skills development programs for their overall development. For professionals with work experience, Hexavarsity offers customized soft skills enhancement and Behaviora Training programs. Hexavarsity is also well equipped to provide support for conducting any relevant training programs as required by the specific Execution Units (Delivery Units). To equip its top talent with business skills for sustained and profitable growth, the Company launched several new Business aligned training programs. In this year, Hexavarsity launched two Business Professional Development Programs, Energize and Elevate, as part of a renewed focus on Soft Skills and Behavioral Competency Development. The Energize prog ram is for the graduates of the Foundation Training Program (FTP) during the first year of their employment with the Company, to help transition them into the professional world. The Elevate Program is for all employees, to build soft skill competency which would propel the employee to better and hire role. Also in this year Hexavarsity launched the Management and Leadership Development program.

For global employees this year the Company migrated and enhanced its Online Learning Management System - from HexaGuru to HexaGuru . HexaGuru covers a wide range of enterprise needs with Search Engine, Business Certifications with mentoring options and Collaborative Networking Module for Knowledge Sharing. This year the Company started new Library facility in Chennai Development Center, which has provision to house 25,000 books, seating for 100 people and E-learning room. This year Technical Competency Development Framework (TCDP) enhanced - includes training materials and assessment question bank.

As part of the industry and academia collaboration the Company hosted a three day workshop for a leading College of Engineering. The workshop covered an overview of the functioning of an IT Service provider and key expectations in terms of domain and technology and other requirements. The work shop ended with the staff of Engineering College acknowledging the relevance of the workshop by summarizing the key takeaways which they would try and incorporate in their curriculum.

Corporate Governance and Management Discussion and Analysis

The Company endeavors to maximize the wealth of the shareholders by managing the affairs of the Company with a pre-eminent level of accountability transparency and integrity.

A report on Corporate Governance including the relevant Auditors'' Certificate regarding compliance with the conditions of Corporate Governance as stipulated in Clause 49 of the listing agreement with stock exchanges is annexed.

Management Discussion and Analysis is also annexed.

Directors'' Responsibility Statement

As required under Section 217(2AA) of the Companies Act, 1956, your Directors hereby state and confirm that:

(i) In the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanations relating to material departures;

(ii) 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 fnancial year and of the profit of the Company for that period;

(iii) 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 safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(iv) The Directors have prepared the annual accounts on a going concern basis.

Employee Stock Option Plans (ESOP)

Pursuant to the approval of the shareholders, the Company has instituted the Employee Stock Option Scheme, 2002, Employee Stock Option Scheme, 2007 and Employee Stock Option Scheme, 2008 for all eligible employees, directors (excluding promoter directors) of the Company and employees of its subsidiaries. All the plans are administered by the Remuneration & Compensation Committee of the Board.

During the year 2012, following were the movements under ESOPs: 3,186,363 options were exercised and the Company allotted 3,186,363 equity shares ofRs. 2/- each to Directors and employees on exercise of Stock Options. These shares have been listed on the Bombay Stock Exchange Limited and National Stock Exchange of ndia Limited.

No options were granted under any of the schemes during the year 2012.

Fixed deposits

During the year under review, the Company did not accept or invite any deposits from the public.

Insurance

The Company has sufficiently insured itself under various insurance policies to mitigate risks arising from third party or customer claims, property/casualty, etc.

Errors & Omissions / General Liability:

In a global services business, customers insist on taking suitable nsurance covers including Errors & Omission (Professiona ndemnity) and Commercial General Liability. The Company has taken appropriate insurance covers with reputed insurers & re- insurers to protect the Company from any third party liability claims that may arise at any point of time.

Directors& Officer''s Liabilities (D&O) /Employment Practices Liability Insurance (EPLI) / Crime:

D&O policy covers the Directors & Officers of the Company against the risk of third party actions arising out of their actions / decisions, which may have resulted in financial loss to any third party. The Company has appropriately insured itself to mitigate such risks coming from any third party.

EPLI Insurance protects the Company from claims from employees or third parties on account of any actual or alleged Employment Practice Violation.

Crime insurance protects the Company from loss of money, securities or other financial loss arising from any fraudulent or criminal activity of employees or third parties.

Property / Casualty:

The Company has insured its various properties & facilities against the risk of fire, theft etc. so that financials are not impacted in the unfortunate event of such events.

The employees of the Company are covered under various employee benefit Insurance against Hospitalization, Accidental Disability and Death.

Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo

The information relating to Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo required under Section 217(1) (e) of the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 is annexed and forms part of this Report.

Subsidiaries

Pursuant to the provision of Section 212(8) of the Act, the Ministry of Corporate Affairs vide its circular dated February 8, 2011 has granted general exemption from attaching the Balance Sheet, Profit and Loss Account and other documents of the subsidiary companies with the Balance Sheet of the Company. The Board of Directors of the Company has by a resolution given consent for not attaching the Balance Sheet of the subsidiaries concerned.A statement containing brief financial details of the Company''s subsidiaries for the financia year ended December 31, 2012 is included in the Annual Report. The annual accounts of these subsidiaries and the related detailed information will be made available to any member of the Company seeking such information at any point of time and are also available for inspection by any member of the Company at the registered office of the Company. The Company shall furnish a copy of annua accounts of subsidiaries to any member on demand.

The wholly owned subsidiary company, M/s. Rampran Infotech Limited stands dissolved w.e.f February 12, 2013.

Directors

In accordance with the Articles of Association of the Company, Mr. Ashish Dhawan, Mr. S Doreswamy and Mr. P R Chandrasekar, Directors of the Company, retire by rotation at this Annual General Meeting and, being eligible; offer themselves for re-appointment at the ensuing Annual General Meeting.

The information to shareholders as per Clause 49 of the Listing Agreement pertaining to brief resume, expertise in functiona areas, names of companies in which Mr. Ashish Dhawan, Mr. S Doreswamy and Mr. P R Chandrasekar are Directors etc. is being provided separately in the Annexure on Page No. 68 of the Corporate Governance Report of this Annual Report. Members are requested to refer the said section of the Corporate Governance Report.

Auditors

In terms of provisions of Section 224 of the Companies Act, 1956, M/s. Deloitte Haskins & Sells retire at this Annual General Meeting and being eligible, offer themselves for re-appointment. Pursuant to the recommendation of the Audit Committee at their meeting held on February 8, 2013 recommending re-appointment of M/s. Deloitte Haskins & Sells as Statutory Auditors of the Company, for the financial year 2013, the Board of Directors have, subject to the approval of the shareholders, at their meeting held on February 11, 2013 approved the re-appointment of M/s. Deloitte Haskins & Sells as the Statutory Auditors of the Company for the financial year 2013 and to hold office till the conclusion of the next Annual General Meeting. In terms of provisions of section 224(1B) of the Companies Act, 1956

M/s. Deloitte Haskins & Sells have furnished a certificate that their appointment, if made, will be within the limits prescribed under the said section of the Act.

Particulars of employees

As required by section 217 (2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975, the particulars of employees forms part of this report. However, as permitted by section 219(1)(b)(iv) of the Companies Act, 1956, the report and accounts are being sent excluding the statement containing the particulars to be provided under section 217(2A) of the Act. Any member interested in obtaining such particulars may inspect the same at the Registered Office of the Company or write to the Company Secretary for a copy thereof.

Acknowledgment

The Directors place on record their sincere appreciation of the customers, Government of India and of other countries, Registrar and Share Transfer Agents, vendors, bankers and Technology Partners for the support extended. The Directors are also deeply touched by the efforts, sincerity and loyalty displayed by the employees without whom the growth of the Company is unattainable. The Directors wish to thank the investors and shareholders for placing immense faith in them. The Directors seek, and look forward to the same support during the future years of growth.

For and on behalf of the Board of Directors

Atul K. Nishar

Chairman

Place: Mumbai

Date: March 29, 2013


Dec 31, 2011

The Directors are pleased to present their Nineteenth Annual Report, on the business and operations of Hexaware Technologies Limited (hereafter referred to as 'Hexaware') together with audited accounts for the financial year ended December 31, 2011.

Financial Performance

Global Operations: (US$ Million)

Year ended December 31 2011 2010 Y-o-Y Growth %

Income from Operations 308.11 231.16 33.3%

EBITDA 55.46 20.53 170.1%

Profit from Operations * 50.19 15.22 230%

Profit before Tax and exceptional item 65.09 20.68 215%

Profit before Tax 65.09 25.07 160%

Profit after Tax 56.45 23.04 145%

(Rs. Millions)

Year ended December 31 2011 2010 Y-o-Y Growth %

Income from Operations 14,505.12 10,545.64 37.6%

EBITDA 2,614.94 905.49 188.8%

Profit from Operations 2,367.91 663.17 257%

Add: Exchange Rate Gain/ (Loss) (net) 248.26 (247.55)

Less: Interest 21.49 26.04 17.5%

Add: Other Income 482.10 554.56 13.1%

Profit before Tax and exceptional items 3,076.78 944.14 226%

Add: Exceptional items - 224.08

Profit before Tax 3,076.78 1,168.22 163%

Less: Provision for Taxation 406.51 92.33 340%

Profit after Tax 2,670.27 1,075.89 148%

excludes Exceptional items, Exchange Rate Difference, Interest, Other Income and Provision for Taxation

India Operations: (Rs. Millions)

Year ended December 31 2011 2010 Y-o-Y Growth %

Income From Operations 6,785.80 4,236.51 60.2%

EBITDA 2,066.22 581.15 255.5%

Profit from Operations * 1,877.25 404.95 363.6%

Add: Exchange Rate Gain/ (Loss) (net) 233.31 (258.61)

Less: Interest 14.40 14.41 -0.07%

Add: Other Income 449.37 519.07 -13.4%

Profit before Tax and exceptional items 2,545.53 651.00 291%

Add: Exceptional items 0 366.40

Profit before Tax 2,545.53 1,017.40 150%

Less: Provision for Taxation 225.72 89.13 153%

Profit after Tax 2,319.81 928.27 150%

Add: Balance brought forward from previous year 2,471.69 2,251.97

Balance available for appropriation 4,791.50 3,180.24

Appropriation_

Transfer to General Reserve 300.00 200.00

Interim Dividend 732.81 232.50

Proposed Final Dividend 440.04 203.99

Tax on Dividends 189.48 72.06

Balance carried to Balance Sheet 3,129.17 2,471.69

excludes Exceptional items, Exchange Rate Difference, Interest, Other Income and Provision for Taxation

Results of Operations a) Global operations:

Income from operations increased to Rs. 14,505.12 million in 2011 from Rs. 10,545.64 million in 2010, growth of 37.6%. The growth in Dollar terms was 33.3%, reaching $ 308.1 Mn. Growth was driven largely by 35% volume increase, aided by increased realized bill rates as well as currency benefits, despite 4.2% shift in favour of offshore.

Profit from Operations (profit before Exceptional items, Exchange Rate Difference, Interest, Other Income and Provision for Taxation) was at Rs. 2,367.91 million in 2011 as against Rs. 663.17 million in 2010, growth of 257%. Profitability rose to 3.5 times, driven by significant SG&A leverage, higher realized bill rates, improved margin from higher off shoring, higher utilization as well as currency benefits. Profit after Tax stood at Rs. 2,670.27 million in 2011 as compared to a profit of Rs. 1,075.89 million in 2010, growth of 148%. PAT margins at 18.4% in Rupee terms.

Some of the major achievements of your Company in the year 2011 were:

- During the year 2011, 51 new clients were added. This took the total number of active clients to 192, up from 174 in December 2010.

- During 2011, your Company billed 52 clients USD 1 million dollar or more each. Of these, 40 clients were in the range of $ 1-$ 5 million, 7 clients were in the range of $ 5-$ 10 million, 2 clients were in the range of $ 10-$ 20 million and 3 clients billed more than $ 20 million each.

The year 2011 was marked with several significant achievements. Some of the key developments include: In Q4, 2011, your Company signed a contract estimated at $ 250 million, with an existing client headquartered in United Kingdom for an additional 5 years starting January 1, 2012. The value of the contract, projected at a quarter of a billion, is the single largest agreement signed by your Company till date.

In Q3 2011, your Company secured a large contract worth potentially $ 177 million over a five-year term. Agreement signed with an existing US client; incremental business potential worth $ 100 million while extending existing business worth another $ 77 million over five years. In Q2 2011, your Company clinched a $ 25 million deal over 3-year duration for providing Remote Infrastructure Management Services (Remote IMS) for an existing European client. Under the terms of this agreement, your Company will manage all aspects of Infrastructure Support for this client whose footprint covers the Americas, Europe and Asia Pacific regions.

In Q1 2011, your Company signed a deal worth between $ 10 million and $ 15 million per annum with an existing North American client in the BFSI vertical, to support the Client's Banking and Investment Management business by leveraging its technological capabilities in the Enterprise Solutions Space; and tapping its intellectual assets (tools, methodologies and solutions) in the Asset Management domain.

Your Company set up the first of its kind HP Software Virtual Lab in the Latin America region which strengthens your Company's Elite Partnership status with HP Software. Through the Company's in-house innovation labs, your Company has developed One Source solutions and several unique Hexaware Testing Accelerators and the Electronic Signature solutions that enable optimal use of HP Software throughout the complete application lifecycle management process resulting in significant cost savings to customers.

b) India operations:

The revenue of the standalone legal entity increased by 60.17% to Rs. 6,785.80 million in 2011 from Rs. 4,236.51 million in the previous year. The net profit after tax was Rs. 2,319.81 million as compared to a profit of Rs. 928.27 million in 2010, an increase of 149.91%.

Reserves

Your Company has transferred Rs. 300 million to General Reserve higher then Rs. 200 million transferred in the previous year. With this addition, the total General Reserve as on December 31, 2011 is at Rs. 1,242.87 million.

Further, the balance in the P&L Account is Rs. 3,129.17 million.

Forex Mark-To-Market: Your Company has adopted AS-30 principles of recognition and measurement for ascertaining fair value of forward exchange contracts and derivative contracts and the year-end Hedging Reserve stood at a loss of Rs. 904.93 million, as compared to a profit of Rs. 249.79 million in the previous year. This was due to the large depreciation in the Rupee-Dollar exchange rate in the last 4 months of the year. In summary, total reserves stood atRs. 7,998.70 million, including Rs. 4,521.83 million of Securities Premium account.

Dividend

During the year 2011, your Company paid interim dividend on quarterly basis on equity shares, Q1 - Rs. 0.50 (25%), Q2 - Rs. 1 (50%), Q3 - Rs. 1 (50%).

The Board of Directors has recommended a payment of final dividend of Rs. 1.50 per share (75%) on an equity share of Rs. 2/- each, at its meeting held on February 2, 2012, due for approval at the AGM. Including this, the total dividend for the year inclusive of interim dividends would amount to Rs. 4 per share (200%) on equity shares.

The total cash outgo on account of interim dividend and final dividend & tax thereon amounts to Rs. 1,362.33 million. The break-up of dividend is as under:

(Rs. Millions)

Q1 Q2 Q3 Final Total

Dividend 146.38 293.07 293.36 440.04 1,172.85

Tax 22.96 47.54 47.59 71.39 189.48

TOTAL 169.34 340.61 340.95 511.43 1,362.33

The members are requested to confirm the interim dividends declared by the Company on the Equity shares and approve the final dividend.

Share capital

The paid-up Share Capital of your Company as on December 31, 2011 was Rs. 586.72 million comprising of 293,358,428 Equity Shares ofRs. 2/- each. During the year 2011, 145,545,781 shares were allotted under bonus issue in the ratio of 1:1 on March 2,

2011 as approved by you at the Extra-Ordinary General Meeting held on February 15, 2011 and 2,611,667 shares were allotted under ESOP under different schemes.

The market capitalization of your Company as on December 31, 2011 was atRs. 22,031.22 million (US$ 414.86 million). The market capitalization is calculated on the basis of closing price of Rs. 75.10/- on the National Stock Exchange and the closing exchange rate of 1 USD = Rs. 53.105 as of December 31, 2011.

The market capitalization of your Company as on February 1,

2012 was at Rs. 25,830.21 million (US$ 524.36 million). The market capitalization is calculated on the basis of closing price of Rs. 88.05/- on the National Stock Exchange and the closing exchange rate of 1 USD = Rs. 49.26 as of February 1, 2012.

Investment

A) Subsidiaries and Branches:

No additional investments in subsidiaries/branches were made during the year 2011. However, the process of winding up of one of the subsidiary in Argentina has been started.

B) Infrastructure:

Your Company has grown several notches in revenues, client base, geographies as well as human resources over past few quarters. Last year alone, your Company added 1,806 professionals world-wide to an existing workforce of over 6,511 people - mainly across our multiple development centres operating offshore (ODCs). Going forward, in 2012, your Company also plans to induct about 1,500 employees across various onsite and offshore locations. Investments in best-in-class infrastructure is yet another employee engagement initiative your Company takes pride in, and indicative of its passion to motivate a dynamic team to provide quality support for its global sales and delivery operations.

In 2011, your Company initiated the scaling up of its Mumbai delivery operations by enhancing its seating capacity to accommodate an additional 300 employees. Likewise, your Company is expanding its presence in Pune to accommodate 700 people. All the up gradation of existing infrastructure is done with the singular purpose of providing quality ambience and work environment to yet another section of our stakeholders - the employees.

Specific updates from our different facilities are provided below:

India based Global Delivery Centres

Mumbai:

Your Company has two Offshore Development Centres (ODCs) at Millennium Business Park in Mahape, Navi Mumbai that currently accommodate a headcount of over 1,400 employees, one being the registered office of the Company. Your Company is in process of developing another ODC with a planned seating capacity of 300 personnel. Your Company's wholly owned subsidiary Caliber Point Business Solutions Limited also operates out of another building in the same complex, seating over 800 employees to provide BPO services to its global clients.

Chennai:

Your Company's 27 acre campus in Chennai currently accommodates employee strength of over 3,000 - an increase of over 1,000 employees since December 2010. Your Company is building capacity for another 1,700 employees over the first half of 2012. This is in line with the current expansion road-map, and expected to ramp up with new inductions in future.

This campus now houses all employee-friendly amenities like recreation centre, library and gymnasium facilities - offering plenty of avenues for relaxation and rejuvenation as well as knowledge enhancement through Hex varsity - your Company's in-house Learning and Development University.

Your Company's Chennai "green campus" conforms to eco-friendly norms and regulations, like optimal use of solar energy, use of eco-friendly building materials and a judicious spread of landscaped spaces around seating facilities across various levels.

The wholly owned BPO subsidiary, Caliber Point Business Solutions Limited also operates out of another facility in Chennai and accommodates over 400 employees.

Pune:

In Pune, your Company is based out of its facility at E-Space, that is spread over 37,892 sq. feet and currently accommodates around 350 professionals. Additionally, your Company has acquired 97,010 sq. meters of land at the Rajiv Gandhi InfoTech Park in Hinjewadi SEZ which will be developed later on. Meanwhile, in 2012, your Company is taking a new facility on rent in Hinjewadi SEZ that can accommodate a headcount of 700 - in line with 2012 expansion initiatives.

Nagpur:

Your Company and Caliber Point together have acquired 20 acres of land in Nagpur, a tier II city, at an SEZ location. At present, a facility with 1,000-seat capacity has been constructed and is currently operational with over 350

employees conducting BPO operations through Caliber Point.

Bangalore:

Your Company marked the first anniversary of its operations in Bangalore in 2011. This facility now seats in excess of 250 employees and marks your Company's presence in India's IT capital - thus widening its landscape by being able to cater to many global organizations with their presence in Bangalore region. This facility mainly houses our delivery operations for a major global client and is now being staffed with senior managerial roles in line with our increasing focus in solving their business-critical challenges.

Coimbatore:

Your Company has started a new centre with around 190 BPO employees through Caliber Point.

Overseas Global Delivery Centres New Jersey (USA):

Your Company has an established Global Delivery Centre (GDC) at Secaucus, New Jersey (USA) for a few years now to cater specifically to its American clients. While this proximity centre offers benefits such as the same time zone, direct communication and enables convenient management oversight, it also further enables the clients to outsource mission-critical tasks and share secure information that would have otherwise not been shipped beyond the shores.

Saltillo (Mexico):

Your Company has a strong presence in Mexico with a near-shore Delivery Center at Saltillo which also includes Hexaware's wholly owned subsidiary - Focus Frame. While Mexico offers cost competitiveness compared to the United States of America, the country also provides immense benefits in the form of same time zone, enables immediate response and access to a vast talent pool and an untapped emerging market. Your Company intends to leverage its near shore Delivery Centre to cater to several global clients as an addition to the other existing options of continuing operations in the USA or in Hexaware's locations in India.

Global Cash Position

The cash generated from operations in 2011 was Rs. 1,413.39 million. Receipts from Treasury operations (interest and MF dividend) were Rs. 454.46 million. Company has invested Rs. 632.99 million in fixed assets. During the year, your Company paid dividend of Rs. 1,242.59 million and repaid the loan taken by Caliber Point (Nagpur) plus interest on the same, amounting to Rs. 126.66 million. As of December 31, the cash position of the Company was Rs. 4,377.19 million, equivalent in US$ 82.43 million. Including the Mutual Fund investments (cash equivalent), the total cash & cash equivalents was at Rs. 4,605.96 million equivalent to US$ 86.73 million.

Human Resource Capital

Your Company recognizes that "Human Capital" is its principal asset. Your Company has further strengthened the Executive Management team to bring leadership skills which are directly relevant to our growth at this stage.

- Your Company's head count was 8,317 as on December 31, 2011.

- To attract and retain people, your Company provides a judicious combination of attractive career, personal growth and a lucrative performance-based compensation structure.

- Your Company has focused towards providing better employee experience by automating processes in on- boarding, payroll, attendance and leave management.

Salient Features and Compelling Value Proposition

Your Company commits steadfast adherence to corporate ethics, quality, standard processes and practices to fulfil its obligations towards its clients and partners, vendors, shareholders and finally its own employees. Your Company strives to implement strong and solid steps to drive growth across several dimensions - business growth from clients' perspective, corporate growth where shareholders are paramount, and better quality and delivery processes where employee engagement and motivation is critical.

Our salient features and value proposition consist of:

1. Quality Processes and Methodologies

Your Company has institutionalized and implemented a company-wide project management tool and has developed several transition/ change management tool kits and methodologies. These well-defined tools and processes enable minimal errors and ensure timely and consistent delivery of superior quality technology solutions for high customer satisfaction.

Certifications:

Your Company has received numerous certifications till date, including ISO 9001:2000, SEI - CMM Level 5, Tick IT, BS7799 and ISO 27001. Your Company is also a recipient of SAS 70 - Type II certification at an organization level. The wholly owned BPO subsidiary - Caliber Point, was awarded SAS 70 - Type II certification during 2010. In 2011, your Company was recommended for ISO 9001:2008 re-certifications for its Mexico and India offices. The US offices (Jamesburg-New Jersey and New York) are now certified for ISO 27001:2005. These offices now comply with Information Security Processes and Controls to execute Projects from US. Your Company's Bangalore center has been brought under ISO 9001:2008 and was successfully appraised at CMMI Level 5 (Version 1.2 for development) by KPMG. One of the zones in Siruseri,

Chennai has been re-certified for PCI-DSS (Payment Card Industry - Data Security Standard) V2.0 Compliance. Your Company has now been successfully assessed with SAS70 Type-2 Assessment at an enterprise level in 2011.

2. Focus Areas

Your Company has proven leadership and skilled expertise in niche technology segments like Enterprise Solutions - specifically PeopleSoft; Quality Assurance and Testing Services (QATS) - Automated Testing and rapidly scaling up its expertise and operations in Business Intelligence and Analytics (BA/ BI). The dedicated approach to strengthening sales and delivery operations in these focus areas has begun to yield results - with several large deals signed in last few quarters for repeat and incremental business. A new area of focus lately has been the Remote Infrastructure Management (RIM) services, with attention on innovative concepts like Cloud-Based Infrastructure to reduce clients' IT spending.

On the domain side, your Company is a leading IT solutions provider with core competencies in Asset Management, Capital Markets and multiple reference able customers in the Airlines Industry, as well as HR-IT and HRO (Human Resource Operations) in the BPO space.

3. Agile & Nimble

Approximately 94% of your Company's revenues are linked to repeat engagements with existing clients. Hexaware's Top 10 customers consistently generated over 51% of its revenues on a trailing twelve months basis since past few quarters, and your Company started several fresh and high- volume engagements in 2011 - an illustration of strategic relationships with customers and execution excellence to deliver large and complex engagements over an extended period. Being just the right size for scope, scale as well as managerial attention to the projects, companies like yours are preferred IT partners for several big global players - unique differentiator vis-à-vis competitors.

4. Multi-cultural dimension

Your Company now operates from 7 delivery centers spread over India, United States and Mexico. Your Company has 5 offshore development centers across different regions in India, a proximity center in Secaucus (USA) and a near shore center in Saltillo (Mexico). Your Company now has presence in 20 countries with employees stationed in many more countries globally, from diverse nationalities, languages and ethnicities. With a rich client roster of 192 marquee names - several of them FORTUNE 500 companies, who use our solutions sometimes across multiple continents, Hexaware possesses a unique understanding and access to not only the business practices but also the cultural and work-ethics in different regions globally.

5. Company focused on Corporate Governance

Your Company has two "Big 4" firms as auditors - Deloitte Haskins & Sells as its Statutory Auditors and KPMG as its internal auditors. Your Company's Board of Directors comprises of eminent professionals in their respective fields with rich experience in policy-making and strategy formulation. All the major committees of the Board are headed by Independent Directors and we have followed Cadbury Committee's recommendation of having two different individuals as Chairman & CEO for several years.

Your Company won the prestigious Golden Peacock Award for the year 2011 for excellence in Corporate Governance.

Your Company has been rated amongst the Top 25 for Excellence in Corporate Governance by Institute of Company Secretaries of India for several years now.

Other initiatives

- High Risk Project Management: Your Company continues to manage an initiative to monitor critical projects based on criticality index derived from few identified parameters. A separate Steering Committee of senior executives in the Company has been formed who hold regular meetings and continuously watch over the progress of such projects.

- Your Company has a clear focus on bringing up the security awareness level within the Organization with various initiatives like launch of the Information Security Portal, Annual Training Calendar, workshops and continuous trainings.

Risk Management

Your Company has put in place an Enterprise-wide Risk Management (ERM) programme. The Enterprise Risk Management (ERM) at Hexaware encompasses practices relating to identification, assessment, monitoring and mitigation of various risks to business. ERM seeks to facilitate mitigation of risks that may affect the achievement of the business objectives and impact shareholders value. Risk Management is an integral part of your Company's business model. The business practices at Hexaware are oriented to leverage the risk management to generate maximum reward while keeping risks below a defined level. Annual risks survey is conducted across the Company to get a perspective on key risks. The recently appointed Risk Officer is taking various steps to increase risk awareness and effectively engage the organization in managing the risks under the guidance of Risk Management Committee (RMC).

The risk categories covered under the ERM programme includes strategic, operational and financial as well as compliance related risks across various levels of the organization. This includes risk assessment and mitigation at the Company level, business/ functional unit level and project level.

The risk management system focuses on identification and tracking of all material risks. The Risk Management office is in the process of strengthening Risk Management framework affecting their units and take inputs of RMC into consideration for taking appropriate actions. The internal control system is designed to prevent operational risks through a framework of Internal controls and processes. The internal control system procedures ensure that all business transactions are recorded in a timely manner and the financial records are complete. A mix of automated and manual controls is used to ensure proper preparation and reliability of accounting records.

Major risk identified includes currency fluctuations; A Foreign Exchange Risk Management Policy is in place to mitigate the key operational risks and risks of adverse exchange rates. Further the Forex Committee of the Board oversees activities related to Foreign Exchange matters. The Banking, Investments & Operations Committee of the Board has also pro-actively reviews the Investment Policy of your Company, which has led to a timely change in investments, ensuring safety, liquidity and returns on the surplus funds.

Internal Audit & Controls

Your Company continues to engage KPMG as its internal auditor. During the year, your Company continued to implement their suggestions and recommendations to improve the control environment. Their scope of work includes safeguarding the assets of your Company, review of operational efficiency, effectiveness of systems and processes and assessing the internal control strengths in all areas.

Internal Auditors findings are discussed with the process owners and suitable corrective actions taken as per the directions of Audit Committee on an ongoing basis to improve efficiency in operations.

Talent Management - Asset Development

Your Company places great importance on nurturing and retaining the best skills in the industry. Moreover, it is careful in aligning the needs of your Company with aspirations of the employees.

Your Company has the distinction of being amongst India's best IT employer for five consecutive years, also ranking among the top 20 in Dataquest-IDC Annual Best Employer Survey from 2005 to 2010. At the end of the year, your Company's employee strength stood at 8,317. Your Company has, over the years, made consistent efforts to retain and nurture talent by providing quality work, development and a work culture of meritocracy, learning and initiative. Your Company also provides world class infrastructure and facilities to employees and offers wealth creation programs like ESOPs.

Hexa Varsity

Learning and Development

Hexaware is now a 8,317 member team of high achievers with a proven record of superior development and delivery through established quality and process standards across various development centers worldwide. As your Company increases its footprint globally, it inducts many new hires each year and sets on the task of mainstreaming them into diverse project and delivery teams for sustained future growth. Likewise, skilled lateral resources come in with an innate desire and need to know the Hexaware culture of quality, focus and more. The eternal challenge for a growing organization remains continued conformance and consistency with established institutional practices, skills and methodologies. All this and more, is addressed by Hexaware's in- house Training, Learning and Development Center - Hexavarsity, the school within an office environment for a well-tailored approach to enhance skill sets of all types, roles and grades of employees. In 2011, Hexavarsity trained 565 campus recruits through the Foundation Training Program (FTP) which apart from a hands-on approach to get first-hand experiences of their future technical roles, also included soft skills training and skills development programs for their overall development. For professionals with work experience, Hexavarsity offers customized soft skills enhancement and Behavioral Training programs. Your Company has now implemented an updated version of Technical Competency Development Program (TCDP) introduced last year, which requires all technical employees to follow a Technology Quotient (TQ) framework based on their roles, levels of expertise and streams of specialization. The progress made on the TQ framework is tracked at every employee level and is an integral component of the annual Performance Management System. Hexavarsity is also well equipped to provide support for conducting any relevant training programs as required by the specific Execution Units (Delivery Units). To equip its top talent with business skills for sustained and profitable growth, your Company launched several new Business aligned training programs this starting year.

Geographies have hardly been a deterrent in quest for knowledge - Hexavarsity supports online learning to cater to overseas employees and professionals deployed at client locations. This Learning Management System - HexaGuru, provides the employees with the flexibility and provision to undergo the e-Learning courses at timings of their convenience. This platform is available 24x7 for all employees globally and vastly increases our ability to enable remote learning. This, in conjunction with the updated version of our Competency Development Framework rolled out this year, provides the workforce with a well-structured continuous learning path and sustained edge in the industry.

This investment has started paying off - with more than 937 Hexawarians getting successfully certified across various technologies. Your Company contributed in no small way towards many global events through abstracts and representations. For the year 2012, Hexaware expects to recruit in excess of 1,500 hires. With the strong executive commitment and investments to training, Hexavarsity is well equipped to help the employees lead the organization into a sustainable growth model.

Corporate Governance and Management Discussion and Analysis

Your Company endeavors to maximize the wealth of the shareholders by managing the affairs of the Company with a pre- eminent level of accountability, transparency and integrity.

A report on Corporate Governance including the relevant Auditors' Certificate regarding compliance with the conditions of Corporate Governance as stipulated in Clause 49 of the Listing Agreement with stock exchanges is annexed.

Management Discussion and Analysis is also annexed.

Directors' Responsibility Statement

As required under Section 217(2AA) of the Companies Act, 1956, your Directors hereby state and confirm that:

(i) In the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanations relating to material departures;

(ii) 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 of the Company for that period;

(iii) 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 safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(iv) The Directors have prepared the annual accounts on a going concern basis.

Employee Stock Option Plans (ESOP)

Pursuant to the approval of the shareholders, your Company has instituted the Employee Stock Option Plan, 2002, Employee Stock Option Plan, 2007 and Employee Stock Option Scheme, 2008 for all eligible employees, directors (excluding promoter directors) of the Company and employees of its subsidiaries. All the plans are administered by the Remuneration & Compensation Committee of the Board.

During the year 2011, following were the movements under ESOPs:

i) 2,611,667 options were exercised and your Company allotted 2,611,667 equity shares ofRs. 2/- each to Directors and employees on exercise of Stock Options. These shares have been listed on the Bombay Stock Exchange Limited and National Stock Exchange of India Limited. ii) 2,095,500 options were granted under different schemes as follows:

Pre Bonus issue

665,000 options were granted under ESOP 2007 scheme on

January 10, 2011 at a price ofRs. 118.50

80,000 options were granted under ESOP 2007 scheme on

January 12, 2011 at a price ofRs. 118.15

109,000 options were granted under ESOP 2007 scheme on

February 15, 2011 at a price of Rs. 103.95

Post Bonus, these numbers have been doubled and grant prices halved.

Post Bonus issue

60,000 options were granted under ESOP 2007 scheme on April

27, 2011 at a price of Rs. 69.95

120,000 options were granted under ESOP 2007 scheme on

April 28, 2011 at a price of Rs. 71.10

1,061,500 options were granted under ESOP 2007 scheme on

July 26, 2011 at a price ofRs. 79.85

The details of options exercised/ granted during the year are as follows:

On January 10, 2011, 89,500 options were exercised by employees under ESOP 2002 and 2007 Schemes and your Company allotted 89,500 equity shares of Rs. 2/- each to the employees on exercise of these Stock Options. These shares have been listed on the Bombay Stock Exchange Limited and National Stock Exchange of India Limited. On the same day, 665,000 options were granted under Employee Stock Option Scheme 2007 at a price of Rs. 118.50.

On January 12, 2011, 202,551 options were exercised by employees under ESOP 2007 Schemes and your Company allotted 202,551 equity shares of Rs. 2/- each to the employees on exercise of these Stock Options. These shares have been listed on the Bombay Stock Exchange Limited and National Stock Exchange of India Limited. On the same day, 80,000 options were granted under Employee Stock Option Scheme 2007 at a price ofRs. 118.15.

On February 15, 2011, 52,750 options were exercised by employees under ESOP 2002 and 2007 Schemes and your Company allotted 52,750 equity shares of Rs. 2/- each to the employees on exercise of these Stock Options. These shares have been listed on the Bombay Stock Exchange Limited and National Stock Exchange of India Limited. On the same day, 109,000 options were granted under Employee Stock Option Scheme 2007 at a price of Rs. 103.95.

Post Bonus, all the above options/shares have been doubled and grant prices halved.

On April 27, 2011, 1,523,172 options were exercised by employees under ESOP 2002, 2007 and 2008 Schemes and your Company allotted 1,523,172 equity shares of Rs. 2/- each to the employees on exercise of these Stock Options. These shares have been listed on the Bombay Stock Exchange Limited and National Stock Exchange of India Limited. On the same day, 60,000 options were granted under Employee Stock Option Scheme 2007 at a price of Rs. 69.95.

On April 28, 2011, the Board of Directors granted 120,000 options under Employee Stock Option Scheme 2007 at a price of Rs. 71.10 to six independent directors of the Company. On July 26, 2011, 456,894 options were exercised by employees under ESOP 2002, 2007 and 2008 Schemes and your Company allotted 456,894 equity shares of Rs. 2/- each to the employees on exercise of these Stock Options. These shares have been listed on the Bombay Stock Exchange Limited and National Stock Exchange of India Limited. On the same day, 1,061,500 options were granted under Employee Stock Option Scheme 2007 at a price ofRs. 79.85.

On October 20, 2011, 286,800 options were exercised by employees under ESOP 2002, 2007 and 2008 Schemes and your Company allotted 286,800 equity shares of Rs. 2/- each to the employees on exercise of these Stock Options. These shares have been listed on the Bombay Stock Exchange Limited and National Stock Exchange of India Limited.

The details of the Options granted under the 2007 and 2008 plans are given in the annexure attached herewith which forms a part of this report.

Fixed deposits

During the year under review, your Company did not accept or invite any deposits from the public.

Insurance

Your Company has sufficiently insured itself under various insurance policies to mitigate risks arising from third party or customer claims, property/ casualty, etc.

Errors & Omissions/ General Liability:

In a global services business, customers insist on taking suitable Insurance covers including Errors & Omission (Professional Indemnity) and Commercial General Liability. Your Company has taken appropriate insurance covers with reputed insurers & re-insurers to protect the Company from any third party liability claims that may arise at any point of time.

Directors' & Officers' Liabilities (D&O)/ Employment Practices Liability Insurance (EPLI)/ Crime:

D&O policy covers the Directors & Officers of the Company against the risk of third party actions arising out of their actions/ decisions, which may have resulted in financial loss to any third party. The Company has appropriately insured itself to mitigate such risks coming from any third party.

EPLI Insurance protects your Company from claims from employees or third parties on account of any actual or alleged Employment Practice Violation.

Crime insurance protects your Company from loss of money, securities or other financial loss arising from any fraudulent or criminal activity of employees or third parties.

Property/ Casualty:

Your Company has insured its various properties & facilities against the risk of fire, theft etc. so that financials are not impacted in the unfortunate event of such events.

The employees of your Company are covered under various employee benefit Insurance against Hospitalisation, Accidental Disability and Death.

Conservation of Energy, Technology Absorption, Foreign Exchange

Earnings and Outgo The information relating to Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo required under Section 217(1)(e) of the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 is annexed and forms part of this Report.

Subsidiaries

Pursuant to the provision of Section 212(8) of the Act, the Ministry of Corporate Affairs vide its circular No. 2/2011 dated February 8, 2011 has granted general exemption from attaching the Balance Sheet, Profit and Loss Account and other documents of the subsidiary companies with the Balance Sheet of the Company. The Board of Directors of your Company have by a resolution given consent for not attaching the Balance Sheet of the subsidiaries concerned. A statement containing brief financial details of the Company's subsidiaries for the financial year ended December 31, 2011 is included in the Annual Report. The annual accounts of these subsidiaries and the related detailed information will be made available to any member of the Company seeking such information at any point of time and are also available for inspection by any member of the Company at the registered office of the Company. The Company shall furnish a copy of annual accounts of subsidiaries to any member on demand.

The winding up of the subsidiary in Argentina is in process.

Directors

In accordance with the Articles of Association of the Company, Mr. L. S. Sarma, Mr. Shailesh V. Haribhakti and Mr. S. K. Mitra, Directors of the Company, retire by rotation at this Annual General Meeting and, being eligible; offer themselves for re-appointment at the ensuing Annual General Meeting.

The information to shareholders as per Clause 49 of the Listing Agreement pertaining to brief resume, expertise in functional areas, names of companies in which Mr. L. S. Sarma, Mr. Shailesh V. Haribhakti and Mr. S. K. Mitra are Directors etc. is being provided separately in the Annexure on Page No. 66 of the Corporate Governance Report of this Annual Report. Members are requested to refer to the said section of the Corporate Governance Report.

Auditors

In terms of provisions of Section 224 of the Companies Act, 1956, M/s. Deloitte Haskins & Sells retire at this Annual General Meeting and being eligible, offer themselves for re-appointment. Pursuant

to the recommendation of the Audit Committee at their meeting held on February 1, 2012 recommending re-appointment of M/s. Deloitte Haskins & Sells as Statutory Auditors of the Company, for the financial year 2012, the Board of Directors have, subject to the approval of the shareholders, at their meeting held on February 2, 2012 approved the re-appointment of M/s. Deloitte Haskins & Sells as the Statutory Auditors of the Company for the financial year 2012 and to hold office till the conclusion of the next Annual General Meeting. In terms of provisions of Section 224(1B) of the Companies Act, 1956 M/s. Deloitte Haskins & Sells have furnished a certificate that their appointment, if made, will be within the limits prescribed under the said section of the Act.

Particulars of employees

As required by Section 217 (2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975, the particulars of employees forms part of this report. However, as permitted by Section 219(1)(b)(iv) of the Companies Act, 1956, the report and accounts are being sent excluding the statement containing the particulars to be provided under Section 217(2A) of the Act. Any member interested in obtaining such particulars may inspect the same at the Registered Office of the Company or write to the Company Secretary for a copy thereof.

Acknowledgment

Your Directors place on record their sincere appreciation of the customers, Government of India and of other countries, Registrar and Share Transfer Agents, vendors, bankers and Technology Partners for the support extended. Your Directors are also deeply touched by the efforts, sincerity and loyalty displayed by the employees without whom the growth of the Company is unattainable. Your Directors wish to thank the investors and shareholders for placing immense faith in them. Your Directors seek, and look forward to the same support during the future years of growth.

For and on behalf of the Board of Directors

Atul K. Nishar Chairman

Place : Mumbai

Date : February 2, 2012


Dec 31, 2010

The Directors are pleased to present their Eighteenth Annual Report, on the business and operations of Hexaware Technologies Limited (hereafter referred to as Hexaware) together with audited accounts for the financial year ended December 3 1,2010.

Financial Performance:

The year 2010 started off on the weaker side with a slow Q1. From Q2 onwards, your Company grew at an industry-leading growth rate of 13.2%, 11.2% and 9.0% sequentially in Dollar terms (13.2%, 12.2% and 6.3% sequentially in Rupee terms). With growth returning to the industry, direct costs were an issue throughout the year, which have impacted Operating Margins (EBIT), the year ended with Q4 EBIT at 9.3%.

Global Operations: (US$ Millions)

Year ended December 31 2010 2009 Y-o-Y Growth %

Income from Operations 231.16 214.68 7.68%

Profit from Operations * 15.22 36.24 -58.00%

Profit before Tax and exceptional item 20.68 30.03 -31.50%

Profit before Tax 25.07 30.03 -16.53%

Profit after Tax 23.04 27.89 -17.41%

(Rupees in Millions)

Year ended December 31 2010 2009 Y-o-Y Growth %

Income from Operations 10,545.64 10,385.62 1.54%

Profit from Operations * 663.17 1705.10 -61.11%

Less: Exchange Rate Difference (net) 247.55 617.05 -59.88%

Less: Interest 26.04 17.46 49.14%

Add: Other Income 554.56 374.77 47.97%

Profit before Tax and exceptional items 944.14 1,445.36 -34.68%

Add: Exceptional items 224.08 - -

Profit before Tax 1,168.22 1,445.36 -19.17%

Less: Provision for Taxation 92.33 103.58 -10.86%

Profit after Tax 1,075.89 1,341.78 -19.82%

* excludes Exceptional items, Exchange Rate Difference, Interest, Other Income and Provision for Taxation

India Operations:

Year ended December 31 2010 2009 Y-o-Y Growth %

Income From Operations 4,236.51 4,862.74 -12.88%

Profit from Operations * 404.95 1562.45 -74.08%

Less: Exchange Rate Difference (net) 258.61 606.93 -57.39%

Less: Interest 14.41 0.50

Add: Other Income 519.07 341.07 52.19%

Profit before Tax and exceptional items 651.00 1,296.09 -49.77%

Add: Exceptional items 366.40 - -

Profit before Tax 1,017.40 1,296.09 -21.50%

Less: Provision for Taxation 89.13 54.08 64.81%

Profit after Tax 928.27 1,242.01 -25.26%

Add : Balance brought forward from previous year 2,251.97 1,445.60

Balance available for appropriation 3,180.24 2,687.61

Appropriation

Transfer to General Reserve 200.00 200.00

Interim Dividend 232.50 86.19

Proposed Final Dividend 203.99 115.22

Tax on Dividends 72.06 34.23

Balance carried to Balance Sheet 2,471.69 2,251.97

Results of Operations

a) Global operations:

Income from operations increased to Rs. 10,545.64 million in 2010 from Rs. 10,385.62 million in 2009. The growth in Dollar terms was 7.7%, reaching $231.2 Mn.

Profit from operations (profit before Exceptional items, Exchange Rate Difference, Interest, Other Income and Provision for Taxation) was at Rs. 663.17 million in 2010 as against Rs. 1,705.10 million in 2009. This was due to a number of factors, e.g. lower technical utilization, exchange rate impact of Rupee appreciation and the transition costs of the large deal signed in Q2.

We were partly able to offset this impact by higher Other Income.

Profit after Tax stood at Rs. 1075.89 million in 2010 as compared to a profit of Rs. 1,341.78 million in 2009, PAT margins at 10.2% in Rupee terms.

Some of the major achievements of your Company in the year 2010 were:

- During the year 2010, 45 new clients were added. This took the total number of active clients to 174.

- At the end of 2010, your Company has 50 clients billed USD 1 million dollar or more during the year. Of these, 39 clients were in the range of $1-$5 million, 7 clients were in the range of $5-$ 10 million, 2 clients were in the range of $10-$20 million and 2 clients billed more than $20 million each on a trailing twelve month basis.

The year 2010 was marked with several firsts. Some of the key developments include:

In Q2 2010, your Company secured its single largest contract till date, worth in excess of $ 110 mn. As a part of the deal, your Company supports the IT systems of a Fortune 500 US corporation. The order extends over a

5 year period and the work encompasses 13 countries covering North America, South America, UK, Continental Europe and certain countries in the Asia Pacific region. The scope of the work includes Application Development

6 Maintenance of IT Applications, Business Intelligence & Analytics, Quality Assurance & Testing Services, Remote Infrastructure Management Services (RIMS) and extending support and maintenance to several core applications, primarily different Enterprise Resource Planning (ERP) modules, on a 24 X 7 basis.

During the year, your Company signed a contract extension worth $ 60 mn. with a multi-billion dollar enterprise. The extension was for a three year period. Your company has been offering services cutting across the following horizontals - Enterprise Resource Planning (ERP), Business Intelligence/Business Analytics (BI/BA), and Quality Assurance and Testing Services (QATS) to this existing strategic customer.

Your Company has achieved Platinum Partner status in the Oracle Partner Network (OPN). This Platinum level partnership recognizes Hexawareas a System Integrator for its in-depth expertise in showcasing capabilities across the entire suite of Oracle Applications including Oracles People Soft Enterprise, the Oracle E-Business Suite, Oracles Siebel CRM and solutions such as Oracle Business Intelligence Enterprise Edition and Oracles Hyperion performance management applications on a global scale.

Your Company has recently launched Rainmaker®, its private cloud service. This platform while being flexible and providing an easy-to-manage, secure, multi-tenant storage environment today also enables your Company to build a scalable and efficient shared IT Infrastructure for future growth. Rainmaker® can be used to deliver Infrastructure as a Service (laaS), Platform as a Service

(PaaS) and Storage-as-a-Service (SaaS) coupled with high levels of Security in Multi Tenancy mode. Further, the cloud also provides integrated data protection and an outstanding user experience.

Caliber Point, the wholly-owned BPO subsidiary of your Company launched "Republic", a multi-tenant HR services delivery solution. Built on the Oracle E-Business Suite Release 12, this ready-to-use platform will cater to multiple clients under a secure and shared environment. The launch of "Republic" marked the identity of Caliber Point as one of the first BPO service providers in India and one of the few in the world to provide a complete platform-based BPO service offering.

As a testimony to the commitments made to the Innovation and IP-building Centers of Excellence (COE) at Hexaware, the Innovation team achieved a critical milestone with the Probe tool on SAP platform. As a tool, Probe can analyze any SAP environment and determine the potential impact of any upgrade. During the last 12 months, your Company has successfully deployed the tool for 3 different clients.

b) India operations:

The revenue of the standalone legal entity dipped by 12.88 % to Rs. 4,236.51 million in 2010 from Rs. 4,862.74 million in the previous year. The net profit after tax was Rs. 928.27 million as compared to a profit of Rs. 1,242.01 million in 2009 a degrowth of 25.26%.

Reserves

Your company has transferred Rs. 200 million to General Reserve similar to Rs. 200 million transferred in the previous year. With this addition, the total General Reserve as on 31st December 2010 is at Rs. 942.87 million.

Further, the balance in the P&L Account is Rs. 2,471.69 million.

Forex Mark-To-Market: Your Company has adopted AS-30 principles of recognition and measurement for ascertaining fair value of forward exchange contracts and derivative contracts and the year-end Hedging Reserve stood at a profit of Rs. 249.79 Million, as compared to a loss of Rs. 403.75 million in the previous year.

In summary, total reserves stood at Rs. 8,451.62 million, including Rs. 4773.61 Million of Securities Premium account.

Dividend

During the year 2010, your Company paid an interim dividend of Re. 0.60/- per share (30%) on equity shares aggregating to Rs. 87.30 million.

Your Company also paid a special interim dividend of Re. 1/- per share (50%) on equity shares aggregating to Rs. 145.49 million to celebrate the 20th anniversary of the company.

The Board of Directors has recommended a payment of final dividend of Rs. 1.40 per share (70%) on an equity share of Rs. 2/- each, at its meeting held on 16th February 2011. Thus, the total dividend for the year inclusive of interim dividend and the special interim dividend amounts to Rs. 3.00 per share (150%) on equity shares.

The total cash outgo on account of interim dividend and final dividend & tax thereon amounts to Rs. 508.97 million. The break-up of dividend is as under:

(Rs. in million)

Interim Special Final Interim Dividend

Dividend 87.30 145.49 203.69

Tax 14.49 24.17 33.83

Total 101.79 169.66 237.52

The members are requested to confirm the interim dividends declared by the company on the Equity shares and approve the final dividend.

Share capital

The paid-up Share Capital of your Company as on December 31, 2010 was Rs. 290.40 million comprising of 145,200,980 Equity Shares of Rs. 2/- each.

During the year 2010 1,550,245 shares were allotted under ESOP under different schemes.

The market capitalization of your Company as on December 31, 2010 was at Rs. 16,901.39 million (US$ 378.02 million). The market capitalization is calculated on the basis of closing price of Rs. 116.40/- on the National Stock Exchange and the closing exchange rate of 1 USD = Rs. 44.71 as of December 31, 2010.

Your Company allotted 145,545,781 bonus shares on March 2, 2011 as approved by you at the Extra-Ordinary General Meeting held on February 15, 2011 in the ratio of 1: 1 based on the record date of February 25, 2011.

The paid-up Share Capital of your Company after the bonus issue is Rs. 582.18 million comprising of 291,091,562 Equity Shares of Rs. 2/- each.

Promoter and Promoter Group

As referred in Clause 3(1)(e)(i) of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 persons constituting "group" (within the meaning as defined in the Monopolies and Restrictive Trade Practices Act, 1969 (54 of 1969)), that exercise or are established to be in a position to exercise, control directly or indirectly, over a Company are given below and forms part of this Annual Report:

The following persons constitute group coming within the definition of "group" as defined in the Monopolies and Restrictive Trade Practices Act, 1969 (54 of 1969) for the purpose of Regulation 3(1) (e) (i) of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997, that exercise or are established to be in a position to exercise, control directly or indirectly, over a Company:

- Atul Kantilal Nishar

- Alka Atul Nishar

- Devangi Atul Nishar

- Priyanka Atul Nishar

- Atul Kantilal Nishar - HUF

- Elder Hides and Leather Private Limited

- Aza Fashions Private Limited

- Elder Venture LLP

- Techpro Consulting Engineers Private Limited

- Caterina Consultants Private Limited Investment

A) Subsidiaries and Branches:

During the year 2010, two new wholly owned subsidiaries were formed abroad, one in Brazil and the other in Argentina.

Your company also established new branches in Spain, Austria and Italy during 2010.

B) Infrastructure:

During the year 2010, your Company added 1,374 employees. For the year ahead, your Company expects to add 1,500+ employees. This expansion plan requires the Company to be well-prepared from a physical infrastructure perspective. Over the last couple of years, your Company has consolidated its facilities to support its global sales and delivery operations as also to improve operational efficiencies.

To enable further business growth, your Company has also established an additional delivery center in Bengaluru. In terms of infrastructure, your Company provides a world class work environment to all its employees that in turn help in recruiting and retaining the best of talent.

The specific update on some of the locations are provided below:

India based Global Delivery Centers

Mumbai:

Your Company has two offshore development centers at Millennium Business Park, Mahape, Navi Mumbai, one being the Registered Office of the Company. Your companys wholly owned subsidiary, Caliber Point Business Solutions Limited also operates out of another building in the same complex, providing BPO services to its global clients.

Chennai:

In line with the corporate road-map, your Company has been expanding its presence in its state-of-the-art Green Campus expanding over 27 acres in Chennai SEZ (Siruseri). During the course of the year 2010, the workforce operating out of these SEZ facilities has increased from 900 in December 2009 to 1,450 in December 2010. This world-class facility would seat approximately 5,000 software professionals when the first phase is completely ready. -

Further, at Siruseri, your Company has started utilizing the facilities established for Hexavarsity, the in-house learning and development corporate university. Your Company has constructed a separate block that would be used for imparting training programs and organizing boot camps in an undisturbed environment. This facility was extensively utilized as your Company hired in excess of 500 fresh graduate engineers during 2010.

During the year 2010, your Company has set-up several new dedicated offshore development centers (ODC) within the Chennai SEZ for several of its key clients. Through these dedicated ODCs, the clients are offered secure and very exclusive work areas with designated entry/exit points; customized access control and a world-class work environment.

Your company also has an offshore development center, Hexaware Towers 1 at T Nagar in Chennai. The wholly owned BPO subsidiary, Caliber Point Business Solutions Limited also operates out of another building in Chennai.

Pune:

Your Company has all its operations in one building of 37,892 sq. feet at E-Space, Pune. The premise has been set up to accommodate up to 350 Professionals.

Additionally, your company has acquired 97,010 sq. meters of land at the Rajiv Gandhi Info Tech Parkin Hinjewadi SEZ. This real estate asset could come in handy when your Company expands further and wants additional capacity to seat its employees.

Nagpur:

Your Company and Caliber Point together have acquired 20 acres of land in Nagpur, a tier II city, at a SEZ location. At present, a facility with 1,000-seat capacity has been constructed and is currently operational. For starters, your Company has commenced BPO operations through Caliber Point at Nagpur with an initial occupancy of 300 employees.

Bangalore:

During the year 2010, your company has set up its latest global delivery center in the city of Bengaluru, India. In the first phase, this facility can seat 250 employees. Having an operational base in this southern metropolis further enhances Hexawares ability to cater especially to those global customers who have their India operations based in Bengaluru. It also acts as a new source of talent pool.

Overseas Global Delivery Centers

New Jersey (USA):

Your Company has an established Global Delivery Centre (GDC) at Secaucus, New Jersey (USA) for a few years now to cater specifically to its American clients. While this proximity center offers benefits such as the same time-zone, direct communication and enables convenient management oversight, it also further enables the clients to outsource mission-critical tasks and share secure information that would have otherwise not been shipped beyond the shores.

Saltillo (Mexico):

Your company has a strong presence in Mexico with a near- shore Delivery Center at Saltillo. While Mexico offers cost- competitiveness compared to the United States of America, the country also provides immense benefits in the form of same time zone, enables immediate response and access to a vast talent pool and an untapped emerging market. Your company intends to leverage its near shore Delivery Center to cater to several global clients as an addition to the other existing options of continuing operations in the USA or in Hexawares base location of India.

Global Cash Position

The cash generated from operations was Rs 122 Million. Company also generated Rs. 883 Million on sale of surplus assets net of taxes. Receipts from Treasury operations (interest and MF dividends) were Rs. 1140 Million. Company has invested Rs. 340 Million in fixed assets. During the year, your Company paid dividend of Rs. 233 Million and repaid a part of the loan taken by Caliber Point (Nagpur), plus interest on the same, amounting to Rs 46 Million. As of 31st December, the cash position of the company was Rs. 4356 Million, equivalent in US$ 97.43 Million. Including the Mutual Fund investments, the total cash & cash equivalents was at Rs. 4,753 Million equivalent US$ 106.30 Million.

Human Resource Capital

Your Company recognizes that "Human Capital" is its principal asset. Your Company has further strengthened the Executive Management team to bring leadership skills which are directly relevant to our growth at this stage.

- Your Companys head count was 6,511 as on December 31, 2010.

- To attract and retain people, your Company provides a judicious combination of attractive career, personal growth and a lucrative performance-based compensation structure.

- Your Company has focused towards providing better employee experience by automating processes in on- boarding, payroll, attendance and leave management.

Salient Features and Compelling Value Proposition

Your company focuses extensively on rewarding all its stakeholders. From a corporate perspective - shareholders come first. From business perspective - clients are the cornerstone. From execution perspective - employees are extremely critical.

From business and operations perspective, your Company is focused on strengthening different aspects of the Company to help drive business growth. These steps enable the Company to position well in the market place enabling entry into new logos.

a. Quality Processes:

Your company has institutionalized and implemented an organization-wide project management tool and has developed several transition/change management tool kits and methodologies. These well-defined processes enable minimal errors and as a result keep any re-work to a minimum. These advancements ensure timely and consistent delivery of superior quality technology solutions to maintain a high level of customer satisfaction.

Certifications: Your company has received various certifications including IS 9001:2000, SEI - CMM Level 5, Tick IT, BS7799 and ISO 27001. During the year 2010, your Company was also awarded SAS 70 - Type I certification at an organization level. The wholly owned BPO subsidiary was awarded SAS 70-Type II certification during 2010.

b. Focus Areas:

Your company has demonstrated leadership and incredible expertise in focus areas such as Enterprise Solutions, specifically in Peoplesoft, and in automated testing. The Company has further strengthened its field presence in these focus areas to increase the reach to cover more prospective customers and enhance access to reach senior executives at all clients. Your company is also a leading IT solutions provider with extensive domain knowledge for the Asset Management, Capital Markets and multiple reference-able customers in the Travel & Transportation Industry.

c. Agile & Nimble:

The top 10 customers at your company generate 50% of the revenues on a trailing twelve month basis. This further demonstrates that your company has strategic relationships with its customers and execution excellence and capability to deliver large and complex engagements.

With the right size; your Company is in a unique position to provide appropriate management access and exhibit nimbleness to meet unique customer requirements. Such flexibility proves to be a unique differentiator while establishing strong relationship with CXO-level executive at the Client Organizations.

d. Multi-cultural dimension:

Your company has presence in 20 countries directly and has employees stationed in 32 countries globally. Your company has global delivery centers in India, in proximity center in Secaucus (USA) and a near shore center in Saltillo (Mexico). With a rich client roster of 174 marquee names, your Company possesses a unique understanding and access to not only the business practices but also the cultural and work-ethics in different regions globally.

e. Company focused on Corporate Governance:

Your company has two "Big 4" firms as auditors - Deloitte Haskins & Sells as its statutory Auditors and KPMG as its internal auditors. All the major committees of the Board are headed by Independent Directors. Your Company has followed Cadburys recommendation in having two different individuals as Chairman & CEO.

Your company was rated amongst the Top 25 for Excellence in Corporate Governance by Institute of Company Secretaries of India for several years at a stretch.

Your company Ranked 3rd among 30 companies for adopting best Corporate Governance Practices - study done by S. P. Jain Institute of Management & Research, Mumbai funded by National Foundation for Corporate Governance.

Your company has been selected for a "special commendation" by the jury for the Golden Peacock Awards for Excellence in Corporate Governance for the year 2009.

Quality and Security

Your company continues to ensure benchmarking and certification according to international standards like ISO, TickIT and SEI-CMMI. Mexico center has been brought under ISO 9001:2008 in March 2010.

The CMMI level 5 status (Version 1.2 for development) of your company is valid till March 2011. Your company is currently going through an appraisal for CMMI (SCAMPI-A) by KPMG.

Your company has been certified for PCI-DSS Compliance in April 2010. Your company was also recommended for recertification for ISO27001:2005 for India locations. Mexico Center is included in the scope for ISO2700I and recommended for fresh certification. ISO27001:2005 is valid till Dec 2012. Your company was assessed with SAS70 Type-1 Assessment in 2010.

Other initiatives

- High Risk Project Management: Your Company continues to manage an initiative to monitor critical projects based on criticality index derived from few identified parameters. A separate Steering Committee of senior executives in the Company has been formed who hold regular meetings and continuously watch over the progress of such projects.

- Your company had a clear focus on bringing up the security awareness level within the Organization with various initiatives like launch of the Information Security Portal, Annual Training Calendar, workshops and continuous trainings.

- In addition, your company has undergone audit for SAS 70 - Type II at an organization level in 2010 and waiting for the Assessment Report.

- Your company underwent a SAS 70 Type II audit for one of its top clients in 2009 successfully.

Risk Management

The Forex Committee of the Board oversees activities related to Foreign Exchange matters. A Foreign Exchange Risk Management Policy is in place to mitigate the key operational risks and risks of adverse exchange rates.

The Banking, Investments & Operations Committee of the Board has also pro-actively reviewed the Investment Policy of your Company, which has led to a timely change in investments, ensuring safety, liquidity and returns on the surplus funds.

Further, a Risk Management Committee (RMC) has been constituted consisting of the Chief Finance Officer, Chief People Officer, Chief Information Officer and President & Global Delivery Head. The Geography Sales Heads are members of this Committee. The Risk Management Committee identifies, evaluates and mitigates risk exposure of the Company from all angles and take inputs into consideration for taking appropriate actions.

Internal Audit & Controls

Your Company continues to engage KPMG as its internal auditor. During the year, your Company continued to implement their suggestions and recommendations to improve the control environment. Their scope of work includes safe guarding the assets of your Company, review of operational efficiency, effectiveness of systems and processes, and assessing the internal control strengths in all areas.

Internal Auditors findings are discussed with the process owners and suitable corrective actions taken as per the directions of Audit Committee on an on going basis to improve efficiency in operations.

Talent Management - Asset Development

Your Company places great importance on nurturing and retaining the best skills in the industry. Moreover, it is careful in aligning the needs of your Company with aspirations of the employees.

Your Company has the distinction of being among Indias best IT employer for five consecutive years ranking among the top 20 in Dataquest-IDC Annual Best Employer Survey from 2005 to 2009. As an appreciation for good work and contribution to the society, the 5th Employer Branding Awards 2010 conferred upon your Company the Award for "Best in Corporate Social Responsibility Practice".

At the end of the year, your Company employee strength stood at 6,511. Your Company has, over the years, made consistent efforts to retain and nurture talent by providing quality work, development and a work culture of meritocracy, learning and initiative. Your Company also provides world class infrastructure and facilities to employees and offers wealth creation programs like ESOPs.

HexaVarsity ¦

Learning and Development

Your Company is a congregation with 6,511 employees with varied skills, professional experiences and educational backgrounds. During the year 2010, your Company had recruited 544 fresh graduate engineers from engineering campuses. Your Company had inducted net addition of 1,374 employees through 2010. Given the diversity of the professionals, your Company imparts different training programs to ensure harmonization of knowledge levels and consistency in standards and processes.

Hexavarsity, the in-house Corporate University, provides the knowledge base which is required for all the employees ¦ to deliver software of consistent quality and comply with all institution-wide processes & practices. There are a variety of training programs including Foundation Training Program (FTP) for fresh graduate engineers recruited from campuses. The induction program includes boot-camp program providing soft skills training, skills development program. Before being formally inducted into delivery stream, the freshers are provided on-the-job training to get live first-hand experience.

For professionals with work experience, Hexavarsity offers programs that include Skill Development and Enhancement Program and Behavioral Training Programs too. As an organization-wide initiative, your Company has deployed Technical Competency Development Program (TCDP) for all its employees, which requires all employees to follow a Technology Quotient (TQ) framework based on their roles, levels of expertise and streams of specialization. The progress made on the TQ framework is tracked at every employee level and is an integral component of the annual Performance Management System. Hexavarsity is also well equipped to provide support for conducting any relevant training programs as required by the Execution Units (Delivery Units).

To cater to overseas employees and professionals deployed at client locations; Hexavarsity supports employees through an online Learning Management System which provides the employees with the flexibility and provision to undergo the e-Learning courses at timings of their convenience. Further, Hexavarsity meets the needs for content development for both Technical and Behavioral training programs.

For the year 2011, your Company expects to recruit in excess of 1,500 employees of which fresh graduate engineers comprise 700 personnel. Hexavarsity is well equipped to provide extensive foundation training programs and support continuous learning and development programs.

Corporate Governance and Management Discussion and Analysis

Your Company endeavors to maximize the wealth of the shareholders by managing the affairs of the Company with a pre-eminent level of accountability, transparency and integrity.

A report on Corporate Governance including the relevant Auditors Certificate regarding compliance with the conditions of Corporate Governance as stipulated in Clause 49 of the listing agreement with stock exchanges is annexed.

Management Discussion and Analysis is also annexed.

Directors Responsibility Statement

As required under Section 217(2AA) of the Companies Act, 1956, your Directors hereby state and confirm that:

(i) In the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanations relating to material departures;

(ii) 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 of the Company for that period;

(iii) 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 safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(iv) The Directors have prepared the annual accounts on a going concern basis.

Employee Stock Option Plans (ESOP)

Pursuant to the approval of the shareholders, your Company has instituted the Employee Stock Option Scheme, 1999, Employee Stock Option Plan, 2002, Employee Stock Option Plan, 2007 and Employee Stock Option Scheme, 2008 for all eligible employees, directors (excluding promoter directors) of the Company and employees of its subsidiaries. All the plans are administered by the Remuneration & Compensation Committee of the Board.

During the year 2010, following were the movements under ESOPs:

i) 1,550,245 options were exercised and your Company allotted 1,550,245 equity shares of Rs. 2/- each to directors and employees on exercise of Stock Options. These shares have been listed on the Bombay Stock Exchange Limited and National Stock Exchange of India Limited.

ii) 712,000 options were granted under different schemes as follows:

75,000 options were granted under ESOP 2008 scheme on 28.01.2010 at a price of Rs. 85.70/-

200,000 options were granted under ESOP 2008 scheme on 28.04.2010 at a price of Rs. 73.30/-

437,000 options were granted under ESOP 2007 scheme on 28.07.2010 at a price of Rs. 80.55/-

iii) 49,000 options were surrendered under ESOP 2002 scheme.

On 10.01.2011, 89,500 options were exercised by employees under ESOP 2002 and 2007 Scheme and your Company allotted 89,500 equity shares of Rs. 2/- each to the employees on exercise of these Stock Options. These shares have been listed on the Bombay Stock Exchange Limited and National Stock Exchange of India Limited. On the same day, 665,000 options were granted under Employee Stock Option Scheme 2007 at a price of Rs.. 118.50.

On 12.01.2011, 202,551 options were exercised by employees under ESOP 2007 Scheme and your Company allotted 202,551 equity shares of Rs. 2/- each to the employees on exercise of these Stock Options. These shares have been listed on the Bombay Stock Exchange Limited and National Stock Exchange of India Limited. On the same day, 80,000 options were granted under Employee Stock Option Scheme 2007 at a price of Rs.. 118.15.

On 15.02.2011, 52,750 options were exercised by employees under ESOP 2002 and 2007 Scheme and your Company allotted 52,750 equity shares of Rs. 2/- each to the employees on exercise of these Stock Options. These shares have been listed on the

Bombay Stock Exchange Limited and National Stock Exchange of India Limited. On the same day, 109,000 options were granted under Employee Stock Option Scheme 2007 at a price of Rs. 103.95.

The details of the Warrants / Options granted under the 1999, 2002, 2007 and 2008 plans are given in the annexure attached herewith which forms a part of this report.

Fixed deposits

During the year under review, your Company did not accept or invite any deposits from the public.

Insurance

Your Company has sufficiently insured itself under various insurance policies to mitigate risks arising from third party or customer claims, property/casualty, etc.

Errors & Omissions / General Liability:

In a global services business, customers insist on our taking suitable Insurance covers including Errors & Omission (Professional Indemnity) and Commercial General Liability. We have taken appropriate insurance covers with reputed insurers & re-insurers to protect the company from any third party liability claims that may arise at any point of time.

Directors & Officers Liabilities:

This policy covers the Directors & Officers of the Company against the risk of third party actions arising out of their actions / decisions, which may have resulted in financial loss to any third party. The Company has appropriately insured itself to mitigate such risks coming from any third party.

Property / Casualty:

Your company has insured its various properties & facilities against the risk of fire, theft etc. so that financials are not impacted in the unfortunate event of such events.

The employees of the company are covered under various employee benefit Insurance against Hospitalization, Accidental Disability and Death.

Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo

The information relating to Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo required under Section 217(1)(e) of the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 is annexed and forms part of this Report.

Subsidiaries

In accordance with the provisions laid down in Section 212 of the Companies Act, 1956 your Company is required to attach the Directors Report, Balance Sheet and Profit and

Loss Account of the subsidiaries to its Balance Sheet. As per the requirements under Section 212 (8) of the Companies Act, 1956, your Company had applied for the necessary application to the Central Government which has been conferred with the power to grant exemption from the aforesaid requirement. In this regard, your Company has received an approval from the Government of India, Ministry of Corporate Affairs; vide their letter no. 47/720/2010-CL-lll dated 12/01/2011 granting an exemption from attaching the audited accounts of the subsidiaries to this Annual Report for the financial year ended December 31, 2010. A statement, as directed by the ministry, furnishing particulars of the subsidiaries, forms part of this Annual Report. Audited Accounts of all subsidiaries of the Company are available at the Registered Office of the Company for inspection by members. The Company will make available these documents upon request by any member of the Company.

Focus Frame Mexico S de RL De CV, Mexico merged with Hexaware Technologies Mexico S de RL De CV, Mexico w.e.f. January 1, 2010.

Focus Frame UK Limited, name of the Company was struck off from the registrar of companies in U.K. w.e.f. 25th May, 2010.

Risk Technologies (UK) Limited, name of the Company was struck off from the registrar of companies in U.K. w.e.f. 1st June, 2010.

Two new step down subsidiaries were incorporated during the year namely, Hexaware Technologies SRL, Argentina and Hexaware Technologies DO Brazil Limited, Brazil, shares held by nominees of Hexaware Technologies Limited.

Directors

In accordance with the Articles of Association of the Company, Mr. P. R. Chandrasekar, Dr. (Mrs.) Alka Nishar, Mrs. Preeti Mehta and Mr. Bharat Shah, Directors of the Company, retire by rotation at this Annual General Meeting and, being eligible,offer themselves for re-appointment at the ensuing Annual General Meeting.

The information to shareholders as per Clause 49 of the Listing Agreement pertaining to brief resume, expertise in functional areas, names of companies in which Mr. P. R. Chandrasekar, Dr. (Mrs.) Alka Nishar, Mrs. Preeti Mehta and Mr. Bharat Shah are Directors etc. is being provided separately in the Annexure on Page No. 61 of the Corporate Governance Report of this Annual Report. Members are requested to refer the said section of the Corporate Governance Report.

Auditors

In terms of provisions of Section 224 of the Companies Act, 1956, M/s. Deloitte Haskins & Sells retire at this

Annual General Meeting and being eligible, offer themselves for re-appointment. Pursuant to the recommendation of the Audit Committee at their meeting held on February 15, 201 1 recommending re-appointment of M/s. Deloitte Haskins & Sells as Statutory Auditors of the Company, for the financial year 2011,the Board of Directors - have, subject to the approval of the shareholders, at their meeting held on February 16, 2011 approved the re-appointment of M/s. Deloitte Haskins & Sells as the Statutory Auditors of the Company for the financial year 201 land to hold office till the conclusion of the next Annual General Meeting. In terms of provisions of section 224(1 B) of the Companies Act, 1956 : M/s. Deloitte Haskins & Sells have furnished a certificate that their appointment, if made, will be within the limits prescribed under the said section of the Act.

Particulars of employees

As required by section 217 (2A) of the Companies Act, 1956 read with the Companies (Particular of Employees) Rules, 1975, the particulars of employees forms part of this report. However, as permitted by section 219(1)(b)(iv) of the Companies Act, 1956, the report and accounts are being sent excluding the statement containing the particulars to be provided under section 217(2A) of the Act. Any member interested in obtaining such particulars may inspect the same at the Registered Office of the Company or write to Asst Company Secretary for a copy thereof.

Acknowledgment

Your Directors place on record their sincere appreciation of the customers, bankers, Government of India and of other countries, Registrar and Share Transfer Agents, vendors and Technology Partners for the support extended. Your Directors are also deeply touched by the efforts, sincerity and loyalty displayed by the employees without whom the growth of the Company is unattainable. Your Directors wish to thank the investors and shareholders for placing immense faith in them. Your Directors seek, and look forward to the same support during the future years of growth.

For and on behalf of the Board of Directors

Atul K. Nishar Chairman

Place : Mumbai Date : March 12, 2011




Dec 31, 2009

The Directors are pleased to present their Seventeenth Annual Report, on the business and operations of Hexaware Technologies Limited (hereafter referred to as Hexaware) together with audited accounts for the financial year ended December 31,2009.

Financial Performance:

Global Operations:

(Rupees in Million)

Year ended December 31, 2009 2008 Y-o-Y Growth %

Income from Operations 10,385.62 11,519.14 -9.84

Profit from Operations * 1,687.64 895.32 88.50

Less: Exchange Rate Difference (net) 617.05 379.36 62.66

Add: Other Income 374.77 228.91 63.72

Profit before Taxation 1,445.36 744.87 94.04

Less: Provision for Taxation 103.58 155.04 -33.19

Profit after Tax 1,341.78 589.83 127.49

* excludes Exchange Rate Difference, Other Income and Provision for Taxation India Operations:

(Rupees in Million)

Year ended December 31 2009 2008 Y-o-Y Growth %

Income from Operations 4,862.74 4,981.66 (2-39)

Profit from Operations * 1,561.95 567.66 175.16

Less : Exchange Rate Difference (net) 606.93 357.78 69.64

Add : Other Income 341.07 201.94 68.90

Profit before Taxation 1,296.09 411.82 214.72

Less Provision for Taxation 54.08 44.24 22.24

Profit after Tax 1,242.01 367.58 237.89

Add : Balance brought forward from previous year 1,445.60 1,346.08

Balance available for appropriation 2,687.61 1,713.66

Appropriation

Transfer to General Reserve 200.00 100.00

Interim Dividend 86.19 71.82

Proposed Final Dividend 115.22 71.83

Tax on Dividends 34.23 24.41

Balance carried to Balance Sheet 2,251.97 1,445.60

* excludes Exchange Rate Difference, Other Income and Provision for Taxation

Results of Operations

a) Global operations

The year 2009 was a tough year for industries globally. The macroeconomic conditions were challenging worldwide. Most customers curtailed their budgets, the decision cycles were considerably longer and negotiations got delayed. This in turn impacted the demand environment in the IT and ITeS industry as well.

Even in this difficult environment we at Hexaware continued to make substantial investments in developing our domain expertise and strengthening our competencies. We continued to be committed to building our Intellectual property (IP) led growth strategy and as a testimony we built several tools and are now actively offering these to our clients as an integral part of our services.

In the year 2010, we are witnessing an increased tranction from our clients and while business is seeing recovery, we are geared and well poised to leverage our strengths.

Income from operations dipped by 9.8% overall to Rs. 10,385.62 million in 2009 from Rs. 11,519.14 million in 2008, driven by the global recession in the countries where our customers exist. About a quater of this impact is explained by a shift of 3.6% in our onsite : offshore revenue mix.

Your Company continued to focus upon Operating Profit (profit before Exchange Rate Difference, Other Income and Provision forTaxation), Operating profit grew by 88.5% to Rs. 1,687.64 million in 2009 from Rs. 895.32 million in 2008. This was driven by improvement in all business metrics such as people utilization, facilities optimization, judicious management of staffing costs, better control on travel, communication and all other costs, etc.

While the operating margin improved, the 10% depreciation of the Rupee against the Dollar led to increase in loss on forward contracts which had been taken in 2007. We were partly able to offset this impact by higher Other Income from higher cash generation.

Profit after Tax increased to Rs. 1,341.78 million in 2009 as compared to a profit of Rs. 589.83 million in 2008 an increase of 127.5%.

Some of the major achievements of your Company on the client front, in the year 2009 were:

During the year 2009,35 new clients were added. Hexaware now has 157 active clients.

At the end of 2009, your Company has 47 clients billed USD I million dollar or more during the year. Of these, 39 clients were in the range of $l-$5 million, 4 clients were in the range of $5-$ 10 million and 4 clients billed more than $ 10 million each on a trailing twelve month basis.

The year 2009 was marked with several firsts. Some of the key developments include:

As a reward for its continued focus on Innovation and IP Creation, Hexaware recorded its first license sale of Akiva, an intellectual property initiative designed and developed by the Company in the field of data masking and security solutions.

Hexaware augmented its horizontal service line by launching Remote Infrastructure Management Services (Remote IMS) in mid 2009. At the end of 2009, Remote IMS practice caters to I I customers globally.

In November 2009, Hexaware launched the QwikCheck Bar Coded Boarding Passes (BCBP) solution. This solution will help generate two dimensional (2D) Bar-coded boarding passes, enabling airlines to improve logistic efficiencies and enhance the web and mobile check-in facilities for passengers, who can now use their mobiles and other handheld devices for easy boarding.

b) India operations

The revenue of the standalone legal entity is Rs. 4,862.74 million in 2009 from Rs. 4,981.66 million in the previous year. The net profit after tax was Rs. 1,242.01 million as compared to a profit of Rs. 367.58 million in 2008 showing a growth of 238%, driven by the factors explained above.

Reserves

Your Company has transferred Rs. 200 million to General Reserve as compared to Rs. 100 million in the previous year. With this addition, the total General Reserve as on December 31,2009 is at Rs. 742.87 million.

Further, the balance in the Profit & Loss Account is Rs. 2,251.97 million.

Forex Mark-To-Market: Your Company has adopted AS-30 principles of recognition and measurement for ascertaining fair value of forward exchange contracts and derivative contracts and the year end Hedging Reserve stood at loss of Rs. 403.75 million.

In summary, total reserves stood at Rs 7,341.67 million.

Dividend

During the year 2009, your Company paid an interim dividend of Rs.0.60/- (@ 30%) per share on equity shares aggregating to Rs. 86.19 million.

The Board of Directors has recommended a payment of final dividend of Rs. 0.80 per share (40%) on an equity share of Rs. 21- each, at its meeting held on February 17, 2010. Thus, the total dividend for the year inclusive of interim dividend amounts to Rs. 1.40 per share (70%) on equity shares, up from 50% total dividend of last year.

The total cash outflow on account of interim dividend and final dividend and tax thereon amounts to Rs. 235.64 million.The breakup of dividend is as under:

(Rs. in million)

Interim Final

Dividend 86.19 115.22

Tax 14.65 19.58

Total 100.84 134.80

The members are requested to confirm the interim dividend declared by the Company on the Equity shares and approve the final dividend.

Share capital

As on December 31, 2009 the paid-up Share Capital of your Company was Rs. 287.30 million comprising of 143,650,735 equity shares of Rs.2/- each.

During the year 2009, there was no exercise of warrants / options under any Employee Stock Option Schemes.

The market capitalization of your Company as on December 31, 2009 was at Rs. 13,560.63 million (US$ 291.43 million)The market capitalization is calculated on the basis of closing price of Rs. 94.40/- on the National Stock Exchange and the closing exchange rate of I USD = Rs. 46.53 as of December 31,2009.

Investment

During the year 2009, your Company acquired the entire 15% holding of its Joint Venture Partner in the JointVenture Company Risk Technology International Limited thus making it a wholly owned subsidiary of the Company.

Further your Company also invested in forming a new wholly owned subsidiary, Rampran Infotech Limited with its main object of providing technology consulting and Information Technology development and matters thereto.

Infrastructure

Your Company has consolidated its facilities to support its global sales and delivery operations as also to improve operational efficiencies. Through the year 2009, the Company benefited from material cost savings in the General and Administration Expenses on account of consolidation of the facilities and premises. In terms of physical infrastructure, your Company provides a world- class work environment to its employees, which in turn helps in recruiting and retaining the best of talent.

In terms of technology infrastructure, your Company is making optimum investments in latest technology to enhance services for customers. Further rationalization would continue during the road ahead.The following are the updates at its different facilities:

Mumbai:

Your Company has two offshore development centers at Millennium Business Park, Mahape, Navi Mumbai,one being the Registered Office of the Company. Your Companys wholly owned subsidiary Caliber Point Business Solutions Limited also owns another building in the same complex, providing BPO services.

Chennai:

The first phase of the Chennai Green Campus is operational now and about 1,000 professionals are working at this state-of-the-art facility.This 27 acre environment friendly and world-class facility would seat approximately 5,000 software professionals when the first phase is completely ready.

During the year 2009, your Company has set-up several dedicated offshore development centers (ODC) within the Chennai SEZ for several of its key clients. Through these dedicated ODCs.the clients are offered secure and very exclusive work areas with customized access control, CCTV coverage and a world-class work environment.

Your Company also has an offshore development centre, HexawareTowers I at GN Chetty Road, Chennai. Caliber Point Business Solutions Limited also owns another building in Chennai, providing BPO services.

Nagpur:

Your Company and Caliber Point have together acquired 20 acres of land in Nagpur, a tier II city, at a SEZ location. A 1,000 seat facility is ready and the campus can be scaled up further to accommodate 3,000 people through multiple phases. As of December 2009, Caliber Point has occupied 300 seats at the SEZ facility.

Pune:

Your Company has consolidated its operations into one building of 37,892 sq. feet at A3 Building, E-Space, Nagar Road in Pune to seat 350 Software Professionals.

Additionally,your Company has acquired 97,010 sq. mts. of land at the Rajiv Gandhi Infotech Park in Hinjewadi SEZ.

New Jersey (USA):

Your Company has established a Global Delivery Centre (GDC) at Secaucus, Newjersey (USA) to cater specifically to its North America clients. While this proximity centre offers benefits such as the same time-zone, timely communication and enables convenient management control, it also further enables the clients to outsource mission-critical tasks and share secure information. In the current economic scenario, your Company believes that North America based clients are likely to be more receptive towards the North America based Global Delivery Centers.

Saltillo (Mexico):

Your Company has a strong presence in Mexico where Hexaware has set up a near-shore Global Delivery Center. While Mexico offers cost - competitiveness compared to the United States of America, the country also provides immense benefits in the form of same time zone, enables immediate response and access to a vast talent pool and an untapped emerging market. Your Company has consolidated the operations of the wholly owned subsidiary Focus Frame and Hexawares own delivery center into one single facility at Saltillo.Your Company intends to leverage its near shore Global Delivery Center to cater to several global clients.

Global Cash Position

Your Company has consistently focused on cash generation. The cash generated from operations was Rs. 1,478 Million. Company also generated Rs 150 Million on receipt of advance against intended sale of land property. Receipts from Treasury operations (interest and MF dividends) were Rs. 142 Million. Company has invested Rs. 1,249 Million in Mutual Funds out of the above and Rs.252 Million was invested in fixed assets. During the year, your Company paid dividend of Rs. 183 Million and repaid a part of the Caliber Point (Nagpur) loan, plus interest on the same, amounting to Rs. 42 Million. As of December 31, 2009 the cash position of the Company was Rs. 2,992 Million. Including the Mutual Fund investments, the total cash & cash equivalents was at Rs. 4,262 Million.

Human Resource Capital

Your Company recognizes that "Human Capital" is its principal asset. Your Company has further strengthened the Executive Management team to bring leadership skills which are directly relevant to our growth at this stage.

Your Companys head count was 5,137 as on December 31,2009.

To attract and retain people, your Company provides a judicious combination of attractive career, personal growth and a lucrative performance - based compensation structure.

Your Company has focused towards providing better employee experience by automating processes in on boarding, payroll, attendance and leave management.

Salient Features and Compelling Value Proposition

a. Process Compliance and Quality Methodologies

Your Company has institutionalized and implemented an innovative project management tool and has developed several transition/ change management tool kits and methodologies to ensure timely and consistent delivery of superior quality technology solutions to maintain a high level of customer satisfaction.

Certifications: Your Company has received various certifications including ISO 9001: 2000, SEI-CMM Level 5,Tick IT, BS7799 and ISO 27001.

b. Right sized company

Your Company has the ability to demonstrate agility and flexibility in its operations to suit the dynamic needs of its customers. Your Company has several strategic relationships with its customers to demonstrate the execution excellence and ability to deliver large and complex engagements. Thus your Company is in a unique position to provide management control and exhibit nimbleness to meet unique customer requirements.

Your Company has demonstrated capability in meeting human capital and physical infrastructure requirements for executing complex projects, at the same time enhance its customer relationship quotient.

c. Multi-Cultural Dimension

Your Company operates on a global platform, working with a roster of 157 active customers at the end of calendar year 2009 in North America, Europe and Asia Pacific. Your Company has global delivery centers in India, a proximity center in Secaucus (USA) and a near shore center in Saltillo (Mexico). This gives your Company a unique understanding and a wholesome perspective to our clients and access not only to global talent, best practices in business and execution but also to the culture and work-ethics of different regions globally.

d. Nurturing and retainingTalent

Your Company has been bestowed the distinction of being among Indias best IT employers for several consecutive years ranking among the Top 20 in Dataquest-IDCs Annual Best Employer Survey.

The Company facilitates and supports a number of key initiatives that provide an enabling environment to enrich employee experience and stimulate employee performance. This has translated into a strong competitive advantage based on a reputation for reliable and efficient execution of business.

e. Leadership in Focus Areas

Your Company has demonstrated leadership and expertise in focus areas like attaining global leadership in PeopleSoft services. Hexaware is also a leading IT solution providers for the Asset Management and Airlines Industry and one of the fastest growing quality assurance and testing services Company.The Company is also an established IT services provider in Germany.

f. Company focused on Corporate Governance

Your Company has Deloitte Haskins & Sells as its Statutory Auditors and KPMG as its Internal Auditors

Your Company continues to strengthen its internal systems and control mechanisms in all its departments.

Your Company was rated amongst the Top 25 for Excellence in Corporate Governance by Institute of Company Secretaries of India for 3 years in a row - 2006, 2007 and 2008.

Your Company Ranked 3rd among 30 companies for adopting best Corporate Governance Practices - study done by S. P. Jain Institute of Management & Research, Mumbai funded by National Foundation for Corporate Governance.

Your Company has been selected for a "special commendation" by the jury for the Golden Peacock Awards for Excellence in Corporate Governance for the year 2009.

Quality and Security

Your Company continues to ensure benchmarking and certification according to international standards like TickIT and ISO 27001 standards. Your Company has upgraded its ISO certification to ISO 9001:2008 for its Chennai, Mumbai and Pune delivery centers.

The implementation of the Project Management Tool (Plan Arena) has been completed and is now used enterprise- wide for real-time monitoring of projects by all relevant stakeholders. The CMMI level 5 status (Version 1.2 for development) of your Company is valid till March 201 I. Your Company has initiated actions for the next CMMI Level 5 appraisal.

Your Company has been certified for PCI-DSS Compliance in April 2009. Your Company was also recommended for recertification for ISO27001:2005 for India locations. Mexico Center is included in the scope for ISO2700I and recommended for fresh certification. These certifications are valid for three years.

Other initiatives

High Risk Project Management: Your Company continues to manage an initiative to monitor critical projects based on criticality index derived from few identified parameters. A separate Steering Committee of senior executives in the Company has been formed who hold regular meetings and continuously watch over the progress of such projects.

Your Company had a clear focus on bringing up the security awareness level within the Organization with various initiatives like launch of the Information Security Portal, Annual Training Calendar, workshops and continuous trainings.

In addition, your Company is scheduled to undergo an audit for SAS 70 -Type I at an organization level in 2010.

Your Company underwent a SAS 70 Type II audit for one of its top clients in 2009 successfully. To enhance the comfort and credibility with key customers, your Company will initiate actions to attain certifications for SAS 70 -Type II at the client organization (specific account) level.

Risk Management

The Forex Committee of the Board oversees activities related to Foreign Exchange matters. A Foreign Exchange Risk Management Policy is in place to mitigate the key operational risks and risks of adverse exchange rates.

The Banking, Investments and Operations Committee of the Board has also pro-actively reviewed the Investment Policy of your Company, which has led to a timely change in investments, ensuring safety, liquidity and returns on the surplus funds.

Further, a Risk Management Committee (RMC) has been constituted consisting of the Chief Finance Officer, Chief People Officer, Chief Information Officer and President & Global Delivery Head. The Geography Sales Heads are non-permanent members of this Committee. Other attendees at the meetings of RMC are the Controller and the Company Secretary. The Risk Management Committee identifies, evaluates and mitigates risk exposure of the Company from all angles and take inputs into consideration for taking appropriate actions.

Internal Audit and Controls

Your Company continues to engage KPMG as its internal auditor. During the year, your Company continued to implement their suggestions and recommendations to improve the control environment. Their scope of work includes safeguarding the assets of your Company, review of operational efficiency, effectiveness of systems and processes and assessing the internal control strengths in all areas.

The Internal Auditors findings are discussed with the process owners and suitable corrective actions are taken as per the directions of Audit Committee on an on going basis to improve efficiency in operations.

Talent Management -Asset Development

Your Company places great importance on nurturing and retaining the best skills in the industry, moreover it is careful in aligning the needs of your Company with aspirations of the employees.Your Company has the distinction of being among Indias best IT employer for five consecutive years ranking among the top 20 in Dataquest-IDC Annual Best Employer Survey in 2005,2006,2007,2008 and 2009As an appreciation for good work and contribution to HR, the 4th Employer Branding Awards 2009 conferred us with Award for Excellence in HR through Technology, Award for Innovative Retention strategy and Award for Managing Health at Work. At the end of the year, your Company employee strength stood at 5,137. Your Company has, over the years, made consistent efforts to retain and nurture talent by providing quality work, development and a work culture of meritocracy, learning and initiative. Your Company also provides world class infrastructure and facilities to employees and offers wealth creation programs like ESOPs.

HexaVarsity

Hexavarsity, the Corporate University of Hexaware, is the backbone of training in Hexaware, providing the knowledge base which is required for its professionals to deliver quality software and services to its customers. There are a variety of training programs which have been institutionalized, including the Foundation Training Program (FTP) for Fresh Recruits from campuses, with Boot Camp providing soft skills training, Skill Development and Enhancement Program (SDEP).Technical Competency Development Program (TCDP), Behavioural Training Program and Leadership Training Program.

Your Company strongly believes that its success lies in strengthening its employees both in the technical and behavioral competencies. The Technical Competency Development Program (TCDP) has been rolled out for all the employees of Hexaware which requires its employees to follow a Technology Quotient (TQ) Framework based on their respective roles and streams of specialization. Hexavarsity has been able to provide excellent support for Just in Time (JIT) training programs as required by Delivery Units.

Hexavarsity supports employees through its online Knowledge Management (KM) portal and Learning Management System (LMS) which is essential for its employees both offshore and onsite. There are many E-learning courses made available on Technology, Domain and Behavioral skills. Hexavarsity meets the needs of training in terms of content development both for Technical and behavioral training programs with support from its practitioners.

Hexavarsity provides support for its employees to excel in their respective area of specialization by undergoing various internal and Industry Standard Assessments and Certifications. Hexavarsity has collaborated with various Universities by setting up Hexaware Academic Center of Excellence (HACE) Lab through a Memorandum of

Understanding (MoU) by which we have been able to bring industry oriented exposure to students in various campuses.This is achived by conducting case study based workshops, soft skill training programs, workshop on Business Intelligence.full time courses at premier institutes like NT, Faculty Development Programs and technical lectures for undergraduate and post graduate students. Hexavarsity also plays a key role in development and enhancement of computer science curriculum in various Universities across India.

Corporate Social Responsibility (CSR)

Introduction:

Corporate Social Responsibility is a sustained activity wherein an organization and its employees take up social causes with a view to serve the society. The real work in CSR extends beyond the statutory obligations and sees organizations and its people voluntarily taking up programmes and initiatives to improve the quality of life of the local community and also the society at large.

In our new approaches above, we have regular programmes and initiatives and also specific events to provide support to needy citizens during unforeseen and unfortunate calamities.

A new Corporate Social Responsibility (CSR) initiative in Hexaware was launched in September 2008 under the name H30 (Helping Hands from Hexaware - Outreach Program).

Objectives: Inculcate the spirit of "Giving back to society" in employees. Gets sense of satisfaction by:

> Helping the lesser-privileged sections of the society.

> Supporting people affected by natural calamities and disasters.

> By supporting institutions for visually challenged people, orphanages, old age homes and hospitals etc.

Causes Supported:

> Health

> Environment

> Education

I. Mumbai Marathon

Hexaware participated in Mumbai Marathon for the years 2008, 2009 and 2010. Your Company ran to help support community development in Mumbai. Your Company has been participating in the Corporate Challenge - DREAM RUN supporting the cause of Mentally and Physically Challenged kids of Indian council of Mental Health and the visual and hearing impaired children of Helen Keller Institute of Deaf and Deafblind.

2. Give India Program (Ongoing)

Your Company along with Givelndia has launched (in January 2008) a platform that allows employees to support a cause of their choice from about 100 NGOs that have been scrutinized by Givelndia for transparency and credibility. Every month an employee contributes towards the cause chosen and the same is deducted from the payroll and processed towards Givelndia programme. There are 40 employees who have registered for this programme.

3. Blood Donation Camps

Hexaware conducts Blood donation camps on regular basis.

Environment

The environment initiative at Hexaware is called theThink Green initiative which was launched in December 2008. Your Company constantly endeavours to have and operate this initiative at all locations. Your Company seeks to change attitudes and influence positive actions towards the environment at grassroots level. The Think Green campaign spreads environmental awareness and implements eco-friendly practices across development centers worldwide. Further, this vision is supported by voluntary groups of employees organized into eco-clubs.

Your Company being an Information Technology (IT) company is into consulting business and a service provider, which by its nature of operation has low negative impact on the environment.We have, however, taken the following steps to minimize this impact.

Awareness Campaign:

Expert Talks: Experts from NGOs working for the environment are invited periodically to Hexaware to sensitize employees on the environmental issues, and measures to be taken for conservation of the same (both at an individual and organizational level).Topics like Global Warming, Ozone Layer depletion, Carbon Credits, De- Plasticizing, Energy conservation have been discussed in this forum.

Green Day Celebrations: Seeds and saplings were distributed to all the employees on occasion of Green Day celebrations in the organization. A tree plantation activity was also conducted on the premises. The employees participated enthusiastically in the competition on the Think Green theme. Prizes were awarded to the best projects displayed. A group of employees also set up stalls to disseminate information on the harmful effects of plastic; this was highly appreciated by our employees and the judges.

Earth Day Celebrations: In line with the Think Green, Dress Greener theme, many employees donned the colours of Mother Nature in vibrant greens and browns. Some were even dressed up as Plastic Devils to depict the evils of the increased usage of plastic. Some had awareness messages pinned to their clothing!

An environmental awareness presentation was screened, and an interactive quiz was held. The signboard doubled up as a pledge wall, where employees could sign-off on an environment-friendly pledge that they intended to follow from that day on.

Switch off Lights: "Switch off lights and save energy" was one of the successful initiatives by the CSRteam during the Earth Day Celebrations, and this was appreciated by many employees.This will continue to be an on going activity.

Tree Plantation Drive: Tree Plantation Drives are organized by CSR team in collaboration with Hariyali, an NGO supporting the environmental cause.

De-plasticization Campaign: Your Company successfully concluded the De-plasticization campaign which was launched with the aim to:

a) Reduce the usage of plastic consumption in the organization in a phased manner.

b) Educate employees on harmful effects of plastic.

c) Encourage employees to use ceramic mugs or other alternatives to plastic cups.

Your Company distributed tea/coffee mugs to all the employees and has successfully minimized the usage of plastic cups.

The Road Ahead - Plan 2010

> Awareness Campaigns

> Tree Plantation Activities

> Support the education cause

> Expert Talks

> Collaborating with NGOs like Hariyali and Green Peace - Supporting the various initiatives undertaken by NGOs

> Undertaking various initiatives at the organizational level for:

Energy Conservation

De-plasticization

Recycling

Milestones

Hexaware was selected among the Leaders category for The 2009 Global Outsourcing 100 by the International Association of Outsourcing Professionals (IAOP). The Global Outsourcing 100, produced annually by the IAOP (the leading outsourcing professional association), is devoted to featuringthe best of todays leading outsourcing service providers and tomorrows rising stars.

Hexaware was mentioned in the Global Services 100 list for 2009. This list represents companies who have the maturity and capability to lead the next wave of services globalization. Hexaware was also listed as one of the top 100 innovative service providers of the year 2009.

Hexaware was ranked 18th in the NASSCOM Top 20 IT Software and Services Exporters from India (2008-2009).

Your Company was mentioned in the Application Testing Services of Gartners Hype Cycle for IT Outsourcing 2009 and Hype Cycle for Application Development 2009.

Hexaware ranked among the Top 20 Best IT employers in India by DQ-IDC for five years in a row. Hexaware was ranked 15th and was rated highly on different parameters in the survey, including a noteworthy mention on women constituting 28% of Hexawares overall workforce.

Hexaware was presented the CIO 100 Ingenious award by IDG at the 4th Annual CIO 100 Symposium and Awards Ceremony for HexaPower - An integrated suite of processes, applications and interfaces addressing the internal system automation using PeopleSoft as a core engine.

Hexaware Technologies was covered in Gartners report "The Gartner Bl, PM and IM Services Vendor Guide" by Susanne Matson et al, September 10,2009.

The Company was covered in Gartners report "BPO for Analytics in Banking and Investment Services" by Peter Redshaw, 18 August 2009.

Forrester Research, Inc. mentioned Hexaware as one of the new players growing in scale in their August 2009 report on How EuropeansTune Global IT Service Delivery Models.

Hexaware was covered in Gartners report Q&A: Customer Experiences of Migrating to SAP Business Objects XI 3.0/3.1 by James Richardson, December 11, 2009.

Forrester Research, Inc. mentioned Hexaware in their November 2009 report on Looking Beyond Global

Providers for SAP Services Smaller Providers, Regional, and Industry Specialists Offer Strong Options.

Outlook

The Year 2009 was a difficult year from the global economy perspective. As a result, your Company placed extra emphasis on shoring up its operational performance. Through 2009,the profitability metrics improved across all the levels gross margin, operating margin and PAT.

Your Company is committed to maintaining high levels of operational performance and participating in the growth opportunities as the markets open up through 2010.The current visible outsourcing trends signify higher extent of offshoring due to extensive cost pressures on the business as usual segments.

Your Companys key revenue stream for the year 2010 will continue to come from the key service offerings in the vertical and horizontal practices. PeopleSoft and other enterprise solutions, Quality Assurance and Testing Services and BPO will provide a good stimulus for growth along with the travel and transportation and capital markets verticals. These platforms continue to be the focus of your Company, on which new verticals and horizontals will be built.

With the visibility of a formidable order book, your Company is confident of strengthening business in terms of quality, client base, geographies, verticals and horizontal services by which every stakeholders value is expected to be enhanced.We verticalised the organization through 2009 with an emphasis towards institutionalizing operational excellence and integration.

Your Company has identified India - Domestic Market as an engine for growth. Despite the global economic turnmoil, India continued to remain steady and withnessed several large deals - particularly in the Government and Public Sector Undertakings (PSU). As a testimony to the focus on the Domestic Market, your Company has invested heavily in the Sales & Marketing activity focussed on this high-potential market. The Company has added seasoned sales professionals and identified dedicated vertical practitioners to increase the presence and the coverage in the domestic market.

Corporate Governance and Management Discussion and Analysis

Your Company endeavours to maximize the wealth of the shareholders by managing the affairs of the Company with a pre-eminent level of accountability, transparency and integrity.

A report on Corporate Governance including the relevant Auditors Certificate regarding compliance with the conditions of Corporate Governance as stipulated in Clause 49 of the listing agreement with stock exchanges is annexed.

Management Discussion and Analysis is also annexed.

Directors Responsibility Statement

As required under Section 2I7(2AA) of the Companies Act, 1956, your Directors hereby state and confirm that:

(i) In the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanations relating to material departures;

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

(iii) 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 safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(iv) The Directors have prepared the annual accounts on a going concern basis.

Employee Stock Option Plans (ESOP)

Pursuant to the approval of the shareholders, your Company has instituted the Employee Stock Option Scheme, 1999, Employee Stock Option Plan, 2002, Employee Stock Option Plan, 2007 and Employee Stock Option Scheme, 2008 for all eligible employees, directors (excluding promoter directors) of the Company and employees of its subsidiaries. All the plans are administered by the Remuneration and Compensation Committee of the Board.

During the year 2009, there was no allotment of shares under ESOPs. Following were the movements under ESOPs in the last twelve months:

On 25.03.2009:

18,000 options were granted under EMPLOYEE STOCK OPTION SCHEME 2002 at a price of Rs. 26.60/- and there was surrender of 673,326 performance options under Employee Stock Option Scheme 2002 by employees of the Company.

On 29.04.2009:

544,821 performance options were granted under EMPLOYEE STOCK OPTION SCHEME 2007 and 140,262 performance options were granted under EMPLOYEE STOCK OPTION SCHEME 2008, at a price of Rs. 10/- to senior executives of the Company.

On 28.01.2010, your Company allotted 369,846 equity shares of Rs. 21- each to directors and employees on exercise of Stock Options. These shares have been listed on the Bombay Stock Exchange Limited and National Stock Exchange of India Limited. On the same day, 75,000 options were granted under Employee Stock Option Scheme 2008 at a price of Rs. 85.70.

The details of the Warrants / Options granted under the 1999,2002,2007 and 2008 plans are given in the annexure attached herewith which forms a part of this report.

Fixed deposits

During the year under review, your Company did not accept or invite any deposits from the public.

Insurance

Your Company has sufficiently insured itself under various insurance policies to mitigate risks arising from third party or customer claims, property/ casualty, etc.

Errors & Omissions / General Liability

In a global services business, customers insist on our taking suitable Insurance covers including Errors and Omission (Professional Indemnity) and Commercial General Liability. We have taken appropriate insurance covers with reputed insurers and re-insurers to protect the Company from any third party liability claims that may arise at any point of time.

Directors & Officers Liabilities:

This policy covers the Directors & Officers of the Company against the risk of third party actions arising out of their actions / decisions, which may have resulted in financial loss to any third party. The Company has appropriately insured itself to mitigate such risks coming from any third party.

Property / Casualty

Your Company has insured its various properties and facilities against the risk of fire, theft, etc. so that financials are not impacted in the unfortunate event of such incidents.

The employees of the Company are covered under the mediclaim facility against hospitalization and certain day-care procedures.

Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo

The information relating to Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo required under Section 217(1) (e) of the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 is annexed and forms part of this Report.

Subsidiaries

In accordance with the provisions laid down in Section 212 of the Companies Act, 1956, your Company is required to attach the Directors Report, Balance Sheet and Profit and Loss Account of the subsidiaries to its Balance Sheet. As per the requirements under Section 212 (8) of the Companies Act, 1956, your Company had applied for the necessary application to the Central Government which has been conferred with the power to grant exemption from the aforesaid requirement. In this regard, your Company has received an approval from the Government of India, Ministry of Corporate Affairs; vide their Letter No. 47/709/2009-CL-lll dated 12/01/2010 granting an exemption from attaching the audited accounts of the subsidiaries to this Annual Report for the financial year ended December 31, 2009. A statement, as directed by the ministry, furnishing particulars of the subsidiaries, forms part of this Annual Report. Audited Accounts of all subsidiaries of the Company are available at the Registered Office of the Company for inspection by members. The Company will make available these documents upon request by any member of the Company.

Your Companys subsidiary, Risk Technology International Limited (US), has merged with another wholly owned subsidiary viz., Hexaware Technologies Inc. based in USA w e. f. April 8,2009. FocusFrame Mexico S de RL De CV, a subsidiary of Hexaware Technologies Inc. has been merged with Hexaware Technologies Mexico S de RL De CV, another subsidiary of the Company w.e.f. January 1,2010.

Directors

In accordance with the Articles of Association of the Company, Mr. L. S. Sarma, Mr. Shailesh Haribhakti and Mr. S. K Mitra, Directors of the Company, retire by rotation at this Annual General Meeting and being eligible, offer themselves for re-appointment.

Your Directors appointed Mr. Ashish Dhawan as an Additional Director with effect from May 20, 2009 and Mr. S. Doreswamy as an Additional Director w.e.f.

February 17, 2010 in accordance with the provisions of Section 260 of the Companies Act, 1956 and Article 88 of the Articles of Association of the Company. Mr.Ashish Dhawan and Mr. S. Doreswamy hold such office up to the date of forthcoming Annual General Meeting. Notice in terms of provisions of Section 257 of the Companies Act, 1956 along with the requisite deposit has been received from members proposing the candidature of Mr. Ashish Dhawan and Mr. S. Doreswamy as a Director of the Company, liable to retire by rotation.

The information to shareholders as per Clause 49 of the Listing Agreement pertaining to brief resume, expertise in functional areas, names of companies in which Mr. L. S. Sarma, Mr. Shailesh Haribhakti, Mr. S. K. Mitra, Mr.Ashish Dhawan and Mr. S. Doreswamy are Directors etc. is being provided separately in the Annexure on Page 44 of the Corporate Governance Report of this Annual Report. Members are requested to refer the said section of the Corporate Governance Report.

Auditors

In terms of provisions of Section 224 of the Companies Act, l956,M/s.Deloitte Haskins& Sells retire at this Annual General Meeting and being eligible, offer themselves for re-appointment. Pursuant to the recommendation of the Audit Committee at their meeting held on February 16, 2010 recommending re-appointment of M/s. Deloitte Haskins & Sells as Statutory Auditors of the Company, for the financial year 2010,the Board of Directors have, subject to the approval of the shareholders, at their meeting held on February 17, 2010 approved the re-appointment of M/s. Deloitte Haskins & Sells as the Statutory Auditors of the Company for the financial year 2010 and to hold office till the conclusion of the next Annual General Meeting. In terms of provisions of Section 224(1 B) of the Companies Act, 1956 M/s. Deloitte Haskins & Sells have furnished a certificate that their appointment, if made, will be within the limits prescribed under the said section of the Act.

The year 2009 saw a change in the partner in charge of your Companys audits from M/s. Deloitte Haskins & Sells.

Particulars of employees

The particulars of employees, required to be furnished under Section 217(2A) of Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975 is annexed hereto and forms part of this Report.

Acknowledgement

Your Directors place on record their sincere appreciation of the customers, bankers, Governments of India and of other countries, Registrar and Share Transfer Agents, vendors andTechnology Partners forthe support extended. Your Directors are also deeply touched by the efforts, sincerity and loyalty displayed by the employees without whom the growth of the Company is unattainable. Your Directors wish to thank the investors and shareholders for placing immense faith in them.Your Directors seek, and look forward to the same support during the future years of growth.

For and on behalf of the Board of Directors

Atul K. Nishar

Chairman

Place: Mumbai Date: March 19,2010



 
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