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Directors Report of Hexaware Technologies Ltd.

Dec 31, 2018

To

THE MEMBERS,

The Directors are pleased to present their Twenty Sixth Annual Report, on the business and operations of Hexaware Technologies Limitec (hereafter referred to as -the Group- or -The Company-) together with audited financial statements for the financial year ended December 31, 2018.

The financial statements are prepared in accordance with Indian Accounting Standards (-Ind AS-). In accordance with the notification issued by Ministry Corporate Affairs, the Group had adopted Ind AS with effect from January 1, 2017.

Financial Performance:

Consolidated Operations: (USD million)

FY 2018

FY 2017

Income from Operations

677.67

607.49

EBITDA before ESOP/ RSU cost

112.12

106.41

EBITDA after ESOP/ RSU cost

106.65

101.02

Profit from Operations *

97.14

91.26

Profit before Tax

105.67

98.75

Profit after Tax including share in profit of associate

84.86

77.03

Total Customers

224

221

Average account size

3.03

2.75

(Rs. million)

FY 2018

FY 2017

Income from Operations

46,477.62

39,420.14

EBITDA before ESOP/RSU cost

7,711.93

6,901.14

EBITDA after ESOP/RSU cost

7,338.19

6,551.64

Profit from Operation *

6,687.64

5,918.87

Add: Exchange Rate Gain (net)

471.45

449.62

Add: Other Income

105.48

35.82

Less: Interest

(0.42)

(1.19)

Profit before share in profit of associate

7,264.15

6,403.12

Add: Share in profit of associate

1.66

2.70

Profit before Tax

7,265.81

6405.82

Less: Provision for Taxation

1,431.18

1,410.56

Profit after Tax

5,834.63

4,995.26

Other Comprehensive Income (OCI)

122.22

91.86

Total Comprehensive Income

5,956.85

5,087.12

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

India Operations: (Rs. million)

FY 2018

FY 2017

Income from Operations

17,940.25

15,241.07

EBITDA after ESOP/RSU cost

5,470.42

4,894.66

Profit from Operations *

4,976.35

4,401.30

Add: Exchange Rate Gain (net)

516.82

537.40

Add: Other Income

24.95

29.16

Less: Interest

(0.28)

(0.62)

Profit before Tax

5,517.84

4,967.24

Less: Provision for Taxation

988.25

857.64

Profit after Tax

4,529.59

4,109.60

Add: Balance brought forward from previous year

7,948.96

4,886.20

Other Comprehensive Income (OCI)

33.00

84.53

Add: Transfer from Special Economic Zone Reinvestment Reserve

297.25

487.22

Balance available for appropriation

12,808.80

9,567.55

Appropriation

Interim dividend including tax on dividend

2,506.03

1,428.09

Transfer to Special Economic Zone Reinvestment Reserve

749.63

178.35

Expense on buyback of shares

-

12.15

Balance carried to Balance Sheet

9,553.14

7,948.96

Results of Operations

a) Consolidated Operations:

Income from operations increased to Rs. 46,477.62 million in 2018 from Rs. 39,420.14 million in 2017, growth of 17.9%. The growth in Dollar terms was 11.6%, reaching USD 677.67 million in 2018 from USD 607.49 million in 2017. Revenue in constant currency was USD 677.41 million in 2018, growth of 11.5%. Growth was driven largely by volume increase, aided by higher onsite mix.

EBITDA after RSU costs increased to USD 106.65 million in 2018 compared to USD 101.02 million in 2017, growth of 5.6%. In INR terms, it saw growth of 12.0% and increased to Rs. 7,338.19 million in 2018 compared to Rs. 6,551.64 million in 2017.

Profit from Operations (profit before Exchange rate difference, Interest, Other income and Provision for taxation) was at Rs. 6687.64 million in 2018 as against Rs. 5,918.87 million in 2017, growth of 13.0%.

Profit before tax grew 13.4% to Rs. 7,265.81 million in 2018 compared to Rs. 6,405.82 million in 2017.

Profit after tax stood at Rs. 5,834.63 million in 2018 as compared to a profit of Rs. 4,995.26 million in 2017, growth of 16.8%. PAT margins in INR terms were at 12.6% in 2018 compared to 12.7% in 2017.

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.

Company-s major achievements in 2018

The Company to maintain its growth momentum of double digit growth with year-on-year growth both in revenue and profits.

- In 2018, growth in revenue over 2017 was 17.9% in INR terms and 11.6% in USD terms.

- EBITDA after ESOP/RSU cost grew 12.0% in INR terms during the year 2018.

- Profit for the year grew at 10.2% in USD terms and 16.8% in INR terms.

- Diluted EPS grew by 16.6% in 2018 over 2017.

- Return on net-worth continues to be above 26.5%.

Over the past few years the focus has been on adding anc growing clients with meaningful revenue base. This has led to revenue growth being higher than growth in number of accounts, leading to increased revenue per client. In 2018, the Company added 1 client to the $20-$30 million category, 11 in the $5-$10 million category. Significant expansion in the $5-$20 million revenue category was a real highlight for the Company. Overall the Company added 11 clients in the > $1M category.

Revenue from top 5 customers has increased by 5%, from next 5 increased by 3% and from next 10 increased by 13%. The Company is poised to see the shaping of pyramid.

b) India operations:

In the year 2018, the revenue of the standalone legal entity increased by 17.7% to Rs. 17,940.25 million in comparison with revenue of Rs. 15,241.07 million in the previous year. The net profit after tax was Rs. 4,529.59 million as compared to Rs. 4,109.60 million in 2017 showing growth of 10.2%.

Share capital

The paid-up Share Capital of the Company as on December 31, 2018 was Rs. 594.72 million comprising of 297,360,989 Equity Shares of Rs. 2/- each. During the year 557,232 shares were exercised under different ESOP schemes.

The market capitalization of the Company as on December, 31,

2018 was at Rs. 98991.47 million (USD 1418.72 million). The market capitalization is calculated on the basis of closing prices of Rs. 332.90 on The National Stock Exchange and the closing exchange rate of 1 USD = Rs. 69.7750 as at December 31, 2018.

Other equity (Reserve and surplus and other comprehensive income)

The Standalone total other equity increased to Rs. 16,776.08 million as compared to Rs. 14,823.34 million as of FY 2017, increased of Rs. 1,952.74 million.

The Consolidated other equity increased to Rs. 23,323.93 million as compared to Rs. 19,479.14 million as of FY 2017, increased of Rs. 3,844.79 million.

The Securities premium reserve balances stood at Rs. 3635.69 million.

The balance of the Retained earnings after the appropriations for the year is Rs. 9553.14 million.

Forex Mark-To-Market: The year-end cash flow hedging reserve (net of tax) stood at a loss of Rs. 14.86 million, as compared to a gain of Rs. 465.83 million in the previous year recognised in accordance with the hedge accounting provision of IndAS 109 Financial Instruments.

The Company recorded Rs. 991.75 million in Employee stock named as Share options outstanding a reserve being amortisation of compensation cost of RSUs granted to the employees of the Group.

There was no transfer to General reserve during the year. The general reserve balance as at the end of the year is Rs. 2,117.71 million

Dividend

During the year 2018, the Company paid Rs. 2,506.03 million in aggregate by way of four interim dividends on equity shares, Q4 2017 - Rs. 1.00 (50%), Q1 2018 - Rs. 1.00 (50%), Q2 2018 - Rs. 2.50 (125%), Q3 2018 - Rs. 2.50 (125%) totalling to Rs. 7.00 per share (350%).

The Board of Directors at its meeting held on January 30, 2019 declared interim dividend of Rs. 2.50 (125%) for the Q4 2018, with this the total dividend declared for the year 2018 aggregated to Rs. 8.50 (425%) per share.

The Board of Directors have not recommended payment of any final dividend and interim dividends as aforesaid be considered as final.

The break-up of dividend paid is as under:

(Rs. in million)

Q1

Q2

Q3

Q4

Total

Dividend

296.84

296.85

742.14

743.4

2,079.23

Tax

60.43

61.02

152.55

152.80

426.80

Total

357.27

357.87

894.68

896.21

2,506.03

In accordance with Regulation 43A of the Listing Regulations, the Company has formulated a -Dividend Distribution Policy- and details of the same have been uploaded on the Company-s website at http:// hexaware.com/investors/

Particulars of loan, guarantee or investments

Loan, guarantees and investments covered under section 186 of the Companies Act, 2013 form part of the notes to the financial statements provided in this Annual Report. Please refer note no. 6A, 6B, 8A, 8B and note no. 23 of Standalone Financial Statements.

Subsidiaries and associates

During the year 2018, the Company has made an initial investment in the wholly owned Subsidiary as given below:

Sr. No.

Name of Company

Rs. in Million

1

Hexaware Information Technology (Shanghai) Limited

3.71

During the year, the Company has closed two Subsidiary Companies, M/s. Hexaware Technologies Do Brazil Limitec w.e.f July 24, 2018 and Step down subsidiary M/s. Digitech Technologies Inc w.e.f September 27, 2018.

In accordance with Section 129(3) of the Companies Act, 2013, consolidated financial statement of the Company and all its subsidiaries, forms part of the Annual Report. Further, a statement containing the salient features of the financial statement of our subsidiaries in the prescribed format AOC - 1 is appended as Annexure 1 to the Board-s report. The statement also provides the details of performance, financial positions of each of the subsidiaries.

In accordance with Section 136 of the Companies Act, 2013, the audited financial statements, including the consolidated financial statements and related information of the Company and audited financial statements of each of its subsidiaries, are available on our website www.hexaware.com. These documents will also be available for inspection during business hours at the registered office of the Company.

Cash Flow

The cash generated from operations in 2018 was Rs. 5,487.03 million. The Company has invested Rs. 608.68 million in property, plant and equipment and intangible assets, mainly for new development centre in Chennai and Pune. During the year, the Company paid dividend including dividend tax of Rs. 2,506.03 million.

The Company has received Rs. 4.24 million from issue of shares. As of December 31, 2018 the cash position of the Company was Rs. 8,340.64 million including the restricted bank balance and Mutual Fund investments (cash equivalent), equivalent to USD 119.54 million . The total cash & bank balance was at Rs. 8,050.55 million equivalent to USD 115.38 million.

Business Strategy - The details on Business Strategy are provided on page 1, 12, 13 & 14 of the Annual report.

Delivery Centers

India based Global Delivery Centres (GDC)

Mumbai:

The Company has two Offshore Development Centers (ODCs) at Millennium Business Park in Mahape, Navi Mumbai. One of these is the registered office of the Company. Both these ODC-s houses around 1100 employees.

The Company-s BPS arm operates out of two service centers in the same complex, with around 1800 employees providing BPS services to its global clients in shift mode.

The Company has also taken premises on long-term lease for its IT and BPS operation in the SEZ facility named Loma IT Park, Ghansoli, Navi Mumbai with seating capacity of 1850 employees including for BPS operations. There are around 1400 employees working from this center.

Chennai:

There are around 4800 IT professional employees working from the Company-s 27acre campus in Chennai. This campus houses 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 inhouse 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 said green campus also houses state of the art customer experience center.

Currently seating capacity is expanded to 5,500 seats in Phase 1. The Phase 2 will add 3,300 seats.

The BPS arm also operates out of another two facilities in Chennai of which one is in SEZ with seating capacity of 1739. The combined strength of around 830 employees operates from the facilities.

Pune:

In Pune, the Company has own SEZ campus at Hinjewadi. The first phase of this campus has seating capacity of 1900 seats. Around 650 IT and BPS employees are currently operating from this campus.

Nagpur:

The Company owns 20 acres of land in MIHAN SEZ, Nagpur, a tier II city. This facility is currently operational with around 807 BPS employees and has seating capacity to accommodate 1104 professionals in different shifts.

Bengaluru:

This facility in India-s IT capital of Bengaluru has capacity of 50 seats. This facility is currently operational with around 27 employees.

Coimbatore:

Hexaware BPS arm has a facility in Coimbatore with seating capacity of 256 employees and around 196 BPS employees are working from this facility for providing BPS services to its global clients in shift mode.

Noida:

The Company has opened New Delivery Centre at Noida. It has seating capacity of 32 employees. This delivery Centre is in operation at its 100% capacity.

Overseas Global Delivery Centres New Jersey (USA):

The Company has GDC at New Jersey, USA with seating capacity of 64 employees and currently 40 IT Professional Employees are working from this delivery center.

Alpharetta, GA (USA):

The Company has GDC at Alpharetta in the state of Georgia, USA with seating capacity of 166 employees and currently 83 IT Professional Employees are working from this delivery center.

Dunwoody, GA (USA):

The Company has GDC at Dunwoody in the state of Georgia, USA with seating capacity of 211 and currently 191 IT Professional employees are working from this delivery centre.

Reston, Virginia (USA):

The company has delivery centre at Sunrise Valley in the state of Virginia with seating capacity of 70 and currently 35 IT Professional employees are working from this delivery centre.

Amsterdam (Netherlands):

The Company has GDC at Amsterdam with seating capacity of 12 and currently 08 IT Professional employees are working from this delivery centre.

Mexico:

The Company has a strong presence in Mexico with a nearshore Delivery Centre at Saltillo with employee-s seating capacity of 487. 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. Currently around 427 IT and BPS professional employees are working from this delivery centre.

The Company also has Global Delivery Centre at Monterrey, Mexico with seating capacity of 54 and currently 30 IT professional employees are working from this delivery centre

Tver (Russia):

The Company has a center in Russia for its BPS operation which has a seating capacity of 156 employees. Currently around 120 employees are working from this location for providing BPS services to a Global Client.

China:

The Company has center in Guangzhou and Shanghai, China for its BPS operations with a small office.

Human Resource Capital

Human Resource Capital and the value that it creates form a big part of Hexaware-s growth story. The industry today is changing rapidly with many disruptive business models necessitating a need for human capital to adapt in an agile manner. Automation and digitization have become buzzwords today. The focus of the Company has been to leverage digital re-imagination to drive growth and efficiency of its business models, products and services, business processes as well as the workplace. This helps the Company to deliver a superior experience to every key stakeholder, viz. customers, employees, investors and the community at large.

Exceeding customers- expectations requires a high level of focus, competence and technical expertise. The Company strengthened its recruitment efforts through continued employee referrals, job fairs, social media & campus recruitment drives. Over the last year, the Company has added 2500 employees, taking the total strength to 16205 as at December 31, 2018 from 13705 at the end of the previous year. The Company is focused towards attracting and retaining high calibre employees through comprehensive Hiring and on-going Deployment processes. Gender Diversity is more evident now with a healthy 31.05% of our workforce being women.

The Company takes pride in its continued focus on employee retention. In its sustained efforts to make Hexaware a Great Place to Work, the focus has been on furthering employees- career aspirations. The Company believes that its workforce lives its brand and to that end the HR team is always working on initiatives that helps build an engaging organization. Today, the youthfulness and the agility in its talent reflects the new brand identity of Hexaware.

To sustain its Human Capital Strategy, the Company has identified and consolidated strong performance indicators. This has led to an increased focus on accountability and ownership from all.

Hexaware conducted the EMPPOWER survey, an employee engagement survey in collaboration with Great Place to Work®. Hexaware has invested in building a better workplace and the survey analysis will help the Company to precisely measure the underlying level of trust within the Company and help it to take steps to improve the work environment through the qualitative and quantitative data that the Company has collected.

The EMPPOWER survey closed with a good response and resulted in an increase in the overall rating to 3.74 from 3.66 in 2017. The rating on the overriding question also increased to 3.86 from 3.79 in 2017.

The Company is committed to remain focused on its journey to be in the ranked list of Great Places to Work and this year-s rating will further boost the chances and help the Company make measurable and impactful changes for employee engagement and welfare.

Talent Management - Asset Development

The Company believes that great talent is the biggest source of competitive advantage. Keeping its talent pool at the centre of all the management strategies is prime focus of the Company. And the senior leadership team is clear in its expectations from the vast reservoir of talent that the Company has.

The Company-s focus is to develop a strong internal pipeline of talent and to provide a platform for talented individuals to shine, innovate and create value for our clients. The company focusses on Talent Management through interventions at every step of the way, right from Hiring to Retention.

The Company believes that appreciation propels people to give their best at work and the robust Rewards & Recognition portal of the Company bears testimony to that. Managers are continuously encouraged to ingrain a culture of appreciation and nominate deserving employees for awards such as Spot/ Ace/Star, Best Debutant and Best Team etc. Winners are guaranteed global recognition in the Hexaware world creating a memorable employee experience that is paramount to our Rewards & Recognition strategy. The Company has also linked this system to the Performance Management System.

To help smoothen the process of Performance Management and to familiarize the people with the nuances of its tool, the Company has regular connect sessions and specific learning modules designed by the HR team. The Performance Management System has an inbuilt structured and streamlined process to objectively evaluate one-s performance against pre-defined goals. The new dynamic Project End Feedback system ensures that consultants get feedback for every project that they work on and are aware of their areas of improvement.

The Company focuses on holistic employee development. In its quest for consistency and excellence, the Company rewards its top performers and one of its exclusive clubs continues to be the High Performers Club (HPC) program, the membership to which is restricted only to consistent top achievers.

Another popular initiative that helps the Company tap into the collective intelligence of its talent is Brainbox. This is a platform for the consultants to post ingenious ideas that go a long way in helping the customers save time and money.

Employee Engagement is a binding force that helps the Company work globally. The Company understands the need for employees to connect with the Hexaware world on a global platform and the internal social networking tool, Facebook@ Work helps to collaborate, brainstorm, provide real-time feedback and communicate with the leaders directly. The Fun Work activities throughout the year helps the consultants to relax, rewind and rejuvenate themselves. These activities run by the different Funsters groups along with unit picnics, project lunches, ODC based fun initiatives are all geared towards team bonding and strengthening the common goal of working together as one Hexaware despite being spread out in various locations worldwide.

Hexaware-s structured talent development programs through various initiatives such as Challenger, Catapult, Distinguished Engineers and other learning and development programs fully help in leveraging talents of the employees.

Hexaware-s Talent Management approach is to bring about transformation and growth opportunities for its consultants keeping in mind the evolving industry trends and people practices pivots on a culture that embraces and nurtures talent, rewards top performance and focusses on Customer delight.

Detailed Description of key HR initiatives are given on page 26 & 27 of the Annual Report.

Information Security

Information Security is considered an enabler of business assurance at the board level today and hence its governance and management are of paramount importance to the Company. Beyond compliance, being the expectation of the customers in today-s competitive business, managing dynamic landscapes of threats and vulnerabilities is key to information security assurance. The business operations of the Company being aligned with the technology adoption of cloud, virtualization, innovation, Artificial Intelligence, Robotics, Machine Learning, Deep Learning, Digital Transformation and more, along with industry best practices of security being a core strength. Substantial investment by the Company in security through latest tools, systems and devices provides competitive advantage as well as Nextgen and Hybrid security cover to business operations of the Company. Information security management through Confidentiality, Integrity and High Availability are being time tested by external certification audits and assessments throughout the year as per ISO and Industry standards. The governance review of Information security management encompasses all measures recommended and expected by the international standards, legal and regulatory requirements and also the customer contracts. Initiatives on Threat intelligence, risk hunting and automated discovery of vulnerabilities have strengthened the security and minimized the risk during the year elapsed. External assessment and expert guidance on GDPR compliance, adoption of latest frameworks and strategies to strengthen the security program were also highlights of the recent past, as part of the continuous improvement strategy of the Company. Cyber Security resilience to manage various technical, man-made, natural and perceived scenarios are part of Company-s business continuity management program. Role based security education and timely awareness on emerging security challenges are important features of security trainings imparted to the employees, contractors and associated resources.

Quality Assurance

The Company has sustained its commitment to the highest levels of quality, best-in-class service management, robust information security practices and mature business continuity processes that have collectively helped achieve significant milestones during the year. While sustaining existing external benchmarks and certifications, the Company has added new certifications and further enhanced its programs and initiatives.

The Company continues to adhere to international quality standard certifications such as ISO 9001-2015, ISO 27001:2013, ISO 20000-1:2011, CMMI - DEV & SVC Version 1.3 - Level 5, ISAE3402 and SSAE16 SOC-2 Type II.

The Company commissioned a survey on customer delight for 2018 by Feedback Insights, an independent market research firm to capture customer expectations and measure customer experience. On a scale of -100 to 100, the Company scored the highest score of 74.4 as against an industry score ranging from 53.6 to 74.4. There is significant improvement across key business metrics, as well as in the overall score of 53.0 achieved in fiscal 2015.

Benefits to customers:

“Brain Box” is the platform to encourage the employees to bring their ideas, value addition to the customers and systematically mange the ideation process.

The Company harnesses the power of knowledge gained by its employees working on their customer accounts, by encouraging them to create value addition ideas. In the year 2018, 61% of the employees have proudly participated in this initiative and have posted over 3888 ideas proposing value additions under categories like bring automation / productivity improvement, financial savings, and accelerate the time to market the customer-s products and services. 2676 of these ideas have been successfully delivered generating saving of over USD 71.15 million and around 1,496,386 hours of effort saved last year, which is being approved by esteemed customers of the Company. The Brain Box platform has promoted the culture of deep expertise, value creation attitude, extraordinary proficiency in the customer-s business function, technical engineering, knowledge sharing and problem solving approach thereby identifying and delivering values to the customers at no extra cost to them. Through a structured governance and rewards program, the company suitably rewards its employees- passion and best values adds on quarterly basis, which is personally driven by the CEO, which made more and more employees becoming part of this CVA culture.

The customers / clients have benefited as a result of the 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.

The customers have benefited as a result of the high quality of delivery and support, stringent information security practices and flexible and proactive approach. The Company-s understanding of customer-s business and technology landscape enables it to provide comprehensive multi-service solutions along with cost reduction for the customer. This has resulted in high levels of customer delight and repeat business. Implementing the best in class processes and providing training on it has enabled the organization and people to be methodical and process driven. The usage of latest technologies and industry best practices has improved delivery capability and added business value. Focus on quality and automation has resulted in cost reduction and improved productivity within the organization.

Company focused on Corporate Governance

The composition of the Board of Directors of the Company represents an optimum combination of professionalism, knowledge and experience. The Board comprises of ten (10) Directors, of these, nine Directors are Non-Executive and six amongst them are Independent Directors. Directors being 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 and Kotak Committee-s recommendation of having two different individuals as Chairman & CEO for several years. The Company was the winner of the prestigious Golden Peacock Award for excellence in Corporate Governance for the year 2011, 2015 and 2018 and won the Special Commendation in the year 2009 and 2013.

In compliance with Regulation 34 of the Listing Regulations, a separate report on Corporate Governance alongwith a certificate from the Auditors on its compliance, is attached and forms part of this Report.

Risk Management

The risk management framework in the current business environment is changing dynamically with the dimensions of Cyber security, Information Security, Business Continuity and Data Privacy in the risk charts of most of the organizations. Systematic and proactive identification of risks and mitigation thereof enables effective or quick decision-making and boosts the performance of the organization.

To identity and mitigate the risk, 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, and financial and compliance related risks across various levels of the organization.

A separate section on Risk identification and mitigation is discussed in detail in the Management Discussion and Analysis section of this Annual Report.

Insurance

In today-s environment, Company-s Business, Assets, Directors & Officers, Employees are exposed to financial risks mainly arising out of claims from customers, third parties, regulators, employees as well as stakeholders. In order to mitigate the financial impact that can emanate from such unforeseen risks, the company sufficiently insures itself under various policies like Workers Compensation and Employers Liability, Commercial General Liability, Errors & Omissions, Cyber Liability, Crime, Employment Practices Liability, Directors & Officers Liability, Property Insurance to name a few. Given the evolving nature of the business and the associated risks, individual policy needs and coverage are reviewed on an ongoing basis and changes are effected as deemed prudent. Additionally, the Company has also taken Insurance for employees and their dependents to safeguard the financial interests of the employees and their families in case of unforeseen events like hospitalization, accident and death.

INTERNAL FINANCIAL CONTROL SYSTEMS

The Company has an Internal Control System, commensurate with the size, scale and complexity of its operations. The Management has laid down proper and adequate system for internal financial controls to be followed to ensure safeguarding of its assets, the prevention and detection of frauds and errors, adherence to the Company-s policies, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial disclosures. This ensures that all transactions are authorised, recorded and reported correctly and assets are safeguarded and protected against loss from unauthorized use or disposition. In addition there are operational controls.

The internal auditor monitors and evaluates the efficacy and adequacy of internal control system in the Company, its compliance with operating systems, accounting procedures and policies at all locations of the Company and its subsidiaries.

The Company appointed PWC as its Internal Auditor for the year ended December 31, 2018. 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 ongoing basis to improve efficiency in operations. During the year, the Company continued to implement suggestions and recommendations by the internal auditors and the audit committee to improve the control environment.

Further details on internal financial control are included in the Management Discussion and Analysis section which form part of this report. Report of statutory auditor on the internal financial control is also included in this report on page 161.

HexaVarsity

The multi-faceted learning and development process at Hexavarsity enriches and empowers individuals by making them multi-talented and agile to business requirements.

The goal at Hexavarsity is to develop an empowered and multi-skilled workforce with market relevant skills. This is enabled for all functions and levels in the organization, using an experiential learning methodology backed by state-of-the-art learning management systems, assessment frameworks, technologies and tools.

The mission is -to create an environment that motivates learning and empowers employees to grow and succeed in their chosen career path relevant to the business.

Evolve

The company is constantly focused on delivering industry leading solutions for its customers. Hexavarsity plays a vital role in this, helping the employees transform into a dynamic and multi-skilled workforce that is ready to handle the next big wave of technology evolution. Ensuring that the workforce is obsolescence proof also ensures that the Company meets employee aspirations to stay cutting edge and minimize attrition due to this reason.

Mission: To enable employees to upgrade their skills to perform roles relevant to the market.

Hexavarsity launched an industry leading transformational program called “Evolve” during the year. Evolve is focused on creating a multi-skilled consultant suitable for a Role as its customers require, to provide them with the very best in service and quality. An assessment driven framework that tests technical, functional and soft skills and application of these skills in the work environment makes this program exceptional and powerful.

Benefits of the program

- Helps employees own their career progression the way they have visualized it

- Upskill them towards aspirational roles and be aligned to roles that are in great demand

- Acquire multiple and much sought-after skills Fresher Training Program (FTP)

Hexaware-s Fresher Training Program (FTP) is designed to nurture the concepts of -Learning to Learn- and -Learn by Doing- which encourages and helps build every Fresher-s ability to become more resourceful and self-reliant and help prepare them for business demands and challenges. The FTP Foundation is a Full Stack Developer training followed by a Technology focused training. A robust and comprehensive assessment mechanism is followed in the program to ensure retention of knowledge and test practical application of concepts and successful trainees are assigned to projects. During the year, 540 freshers successfully completed the program and were allotted to projects.

During the year, Hexavarsity also conducted a training program for Senior Management Trainees and Management Trainees. This program covers technology and Vertical orientation, leadership programs and behavioral training. A total of 10 Senior Management Trainees and 8 Management Trainees successfully completed their training and were inducted into your organization.

Behavioral Assessments

During the year, HexaVarsity also launched a blue chip Behavioral Assessment that helps in creation of a balanced and effective team, leveraging complementary strengths of individuals. This assessment also helps us in hiring the right talent for senior roles in the organization.

Professional Certifications

The company also continues to invest on external certifications for its consultants.

Related party transactions

During the financial year 2018, the Company has entered into transactions with related parties as defined under Section 2(76) of the Companies Act, 2013 read with Companies (Specification of Definitions Details) Rules, 2014, all of which were in the ordinary course of business and on arm-s length basis and in accordance with the provisions of the Companies Act, 2013, read with the rules issued thereunder and the Listing Regulations.

There are no materially significant related party transactions made by the Company with its 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 and Board.

Policy on dealing with related party transaction is available on the website of the Company. http://hexaware.com/investors/

The details as required to be provided under Section 134(3)

(h) of Companies Act, 2013 are disclosed in form AOC-2 as Annexure 2 and forms part of this Annual Report.

Policy on determining material subsidiaries of the Company is available on the website of the Company, http://hexaware. com/investors/

Employee Stock Option Plans (ESOP)

The Company has set up various employee stock option plans/restricted stock unit plans from time to time to attract and retain talent, motivate, incentivize and reward employees of the Company and employees of Subsidiary Companies. The Nomination and Remuneration Committee of the Board administers these plans. The stock option plans are in compliance with Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014 (“Employee Benefits Regulations”).

During the year 2018, following were the exercises made by employees and grants made to employees/director under ESOP plan: 5,57,232 options were exercised and the Company allotted 5,57,232 equity shares of Rs. 2/- each to the employees/director on such exercise. These shares have been listed on the BSE Limited and National Stock Exchange of India Limited. 6,13,725 Restricted Stock Units (RSUs! were granted under 2015 scheme during the year 2018 as explained below:

- February 07, 2018 - 69,000 RSUs.

- May 2, 2018 - 300,000 RSUs.

- July 24, 2018 - 109,739 RSUs granted to Mr. R Srikrishna, CEO & Executive Director and 79,986 to other employees

- October 24, 2018 - 55,000 RSUs.

Details of the shares issued under Employee Stock Option Plan (ESOP), and also the disclosures in compliance with Rule 12 of Companies (Share Capital and Debentures) Rules, 2014 and Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014 are available on the website of the company at the following link : http:// hexaware.com/investors/ No employee was issued Stock Option, during the year equal to or exceeding 1% of the issued capital of the Company at the time of Grant.

Fixed deposits

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

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 134(3) (m) of the Companies Act, 2013 read with Companies (Accounts) Rules, 2014 is annexed and forms part of the report.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

A detailed analysis of the Company-s performance is disclosed in the Management Discussion and Analysis Report, which forms part of this Annual Report.

Investor Education and Protection Fund (IEPF)

Details of unclaimed Dividend and Shares transferred to IEPF during 2018 are given in Corporate Governance Report.

Directors- Responsibility Statement

Pursuant to Section 134 (3) (c) and (5) of the Companies Act, 2013, the Directors confirm the following:

(a) in the preparation of the annual accounts, the applicable accounting standards have been followed and there were no material departures;

(b) 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;

(c) the directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

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

(e) the directors, have laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively.

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

Directors and Key Managerial Personnel

Mr. P R Chandrasekar having DIN 02251080 was reappointed as an Independent Non - Executive Director of the Company for three years w.e.f January 1, 2019 on existing terms and conditions including remuneration.

Mr. Vikash Kumar Jain has been appointed as the Chief Financial Officer of the Company w.e.f. October 25, 2018.

Erstwhile CFO, Mr. Rajesh Kanani retired from the Company from close of Business hours on December 31, 2018.

In accordance with the provisions of Companies Act, 2013, Mr. Kosmas Kalliarekos, Director of the Company, retires by rotation at this Annual General Meeting and, being eligible; offers himself for re-appointment at the Annual General Meeting.

The information of Directors seeking appointment / reappointment at the Annual General Meeting to be given to the shareholders as per regulation 36 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and Secretarial Standards on General Meetings is being provided in Corporate Governance Report.

Number of Meetings of the Board

Seven Meetings of the Board were held during the year. For details of the meetings of the Board, you may refer to the corporate governance report, which forms part of this Annual report.

Declaration by Independent directors

The Independent Directors have submitted a declaration that each of them meets the criteria of independence as provided in Section 149(6) of the Companies Act, 2013 and there has been no change in the circumstances which may affect their status as independent director during the year.

Board Evaluation

The Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 mandates evaluation of performance of Independent Directors, NonIndependent Directors and Chairperson. The Companies Act, 2013 states that a formal annual evaluation needs to be made by the Board of its own performance and that of its committees and individual Directors. The Schedule IV to the Companies Act, 2013 states that the performance evaluation of independent Directors shall be done by the entire board of Directors, excluding the director being evaluated.

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

The performance of the committees was evaluated by the board after seeking inputs from the committee members on the basis of the criteria such as the composition of committees, effectiveness of committee meetings, etc.

The Chairman of the Board / the Nomination and Remuneration Committee (“NRC”) review the performance of the individual directors on the basis of the criteria approved by the Board.

In a separate meeting of Independent Directors held on December 20, 2018, performance of Non-Independent directors, performance of the Board as a whole and performance of the Chairman was evaluated.

Training of Independent Directors

To familiarize the Independents Directors with the strategy, operations and functions of the Company, the Executive Director and Senior Managerial personnel make presentations at the Board Meetings about Company-s operations, markets, financial results, human resources and on other important aspects.

The terms and conditions of the appointment of every Independent Director is available on the website of the Company at: http://hexaware.com/investors/

The familiarization policy of the Independent Directors is available on website of the Company at http://hexaware. com/investors/

Committees of the Board

The Board of Directors has following committees:

1. Audit, Governance & Compliance Committee

2. Nomination & Remuneration Committee

3. Stakeholders Relationship Committee

4. Corporate Social Responsibility Committee

5. Strategy and Risk Committee

The details of the composition of the committee and attendance of the meetings of Committees of the Board are provided in the Corporate Governance report.

Compliance of Secretarial Standards

The Company complies with all applicable secretarial standards.

Policy on directors and Key Managerial Personnel appointment and remuneration and other details

The Company-s policy on Directors and Key Managerial Personnel appointment and remuneration and other matters provided in Section 178(3) of the Act has been disclosed in 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. The provisions of this policy are in line with the provisions of Section 177 (9) of Companies Act, 2013. The policy is available on the website of the company at : http://hexaware.com/investors/

Statutory Auditor

The Board of Directors at its meeting held on February 8, 2018 appointed BSR & Co. LLP, Chartered Accountants, Mumbai (“BSR & Co. LLP”) with Registration no. 101248W/ W-100022 as Statutory Auditors for a period of 5 years, to hold office till the conclusion of 30th Annual General Meeting, which was confirmed by the members at the 25th Annual General Meeting held on May 03, 2018.

Vide notification dated May 7, 2018 issued by Ministry of Corporate Affairs, the requirement of seeking ratification of appointment of statutory auditors by members at each AGM has been done away with. Accordingly, no such item has been considered in notice of the 26th AGM.

There are no qualifications, reservations or adverse remarks made by the statutory auditors in their audit reports on the financial statements for the year ended December 31, 2018.

Internal Auditor

Internal Audit for the year ended December 31, 2018 was done by Pricewaterhousecoopers Private Limited and Internal Audit report in accordance with internal audit program for the year was placed before the Audit Committee.

Secretarial Auditor

M/s. Makarand M Joshi & Co., Practising Company Secretary was appointed to conduct the Secretarial Audit of the Company for the year ended December 31, 2018 as per the provisions of Section 204 of the Companies Act, 2013 read with rules made thereunder. The Secretarial Audit report for the year ended December 31, 2018 is annexed to Board-s report as Annexure 3. There are no qualifications, reservations or adverse remarks made by Secretarial Auditor in his report.

Reporting of frauds by auditors

During the year under review, neither the statutory auditors nor the secretarial auditor has reported to the Audit committee, under Section 143 (12) of the Companies Act, 2013, any instances of fraud committed against the Company by its officers or employees, the details of which would need to be mentioned in the Board-s report.

Cost Records

The Company is not required to maintain cost records as specified under sub-section (1) of section 148 of the Companies Act, 2013

Significant/Material Orders Passed by the Regulators

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

Corporate Social Responsibility

Pursuant to the provisions of Section 135 of the Companies Act, 2013, the Company spent Rs. 90.46 Million towards CSR activities for the year ended December 31, 2018 which is more than the prescribed limit under section 135 of the Companies Act, 2013. The composition of contents of the CSR policy and initiatives taken by the Company on Corporate Social Responsibility during year ended on December 31, 2018 as per the format prescribed in the Companies (Corporate Social Responsibility Policy) Rules, 2014 is annexed as Annexure 4 to this Report and CSR policy of the Company is available on the website at www. hexaware.com. The Composition of CSR Committee is given in the Corporate Governance Report.

Extract of annual return

As provided under Section 92(3) of the Act, the extract of annual return in the prescribed Form MGT-9, is available on the website at www.hexaware.com and is also annexed as Annexure 5 to this report.

Financial year

The company has received an order from the Company Law Board under section 2 (41) of the Companies Act, 2013 for continuing January to December as its financial year. Hence the Company will maintain its financial year from January 1 to December 31.

Particulars of Directors and Employees

The table containing names and other particulars of Directors in accordance with the provisions of Section 197(12) of the Companies Act, 2013 read with rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is enclosed as Annexure 6 to the Board Report.

The statement containing particulars of employees as required under Section 197(12) of the Act read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is provided in a separate annexure forming part of this report. Further, the report and the accounts are being sent to the members excluding the aforesaid annexure. In terms of Section 136 of the Act, the said annexure is open for inspection at the Registered Office of the Company. Any shareholder interested in obtaining a copy of the same may write to the Company Secretary.

Disclosure as required under Section 22 of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013

The Company as an organization is committed to provide a healthy environment to all the employees and thus does not tolerate any discrimination and/or harassment in any form. The Company has in place a Prevention of Sexual Harassment (POSH) policy in line with the requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. Frequent communication of this policy is done through various programs and at regular intervals to the employees.

The Company has setup an Internal Complaints Committee (ICC) both at the registered office and at every location where it operates in India in accordance with the Act and has representation of men and women and is chaired by senior lady member and has an external women representation.

Awareness programs are conducted during induction for sensitizing the employees with the provisions of the Act.

The following is the summary of the complaints received and disposed of during the financial year 2018:

a) No. of complaints received during the year: 02

b) No. of complaints disposed off: 02

c) No. of complaints pending: NIL

Green initiatives

The Company started a sustainability initiative with the aim of going green and minimizing the impact on the environment. Like the previous years, this year too, the Company is publishing only the statutory disclosures in the print version of the Annual Report. Additional information is available on our website, www.hexaware.com.

Electronic copies of the Annual Report 2018 and Notice of the 26th Annual General Meeting are being sent to all members whose email addresses are registered with the Company / Depository Participant(s). For members who have not registered their email addresses, physical copies of the Annual Report 2018 and the Notice of the 26th Annual General Meeting are being sent in the permitted mode. Members requiring physical copies can send a request to the Company.

The Company provides e-voting facility to all its members to enable them to cast their votes electronically on all resolutions set forth in the Notice. This is pursuant to the Section 108 of the Companies Act 2013 and Rule 20 of the Companies (Management and Administration) Amendment Rules, 2014 as amended from time to time.

Business Responsibility Report: The -Business Responsibility Report- (BRR) of the Company for the year 2018 forms part of this Annual Report as required under Regulation 34(2)(f) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

Acknowledgment

The Directors place on record their sincere appreciation of the customers, Government of India and of other countries, 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

Date: March 12, 2019 Atul K. Nishar

Place: Mumbai Chairman


Dec 31, 2016

TO

THE MEMBERS,

The Directors are pleased to present their Twenty fourth Annual Report, on the business and operations of Hexaware Technologies Limited (hereafter referred to as ''The Company’) together with audited financial statements for the financial year ended December 31, 2016.

Financial Performance:

Global Operations:

(USD million)

FY 2016

FY 2015

Income from Operations

525.55

485.47

EBITDA before Employees Stock Option Compensations Cost

89.20

86.59

EBITDA after Employees Stock Option Compensations Cost

85.53

83.32

Profit from Operations *

77.23

75.82

Profit before Tax

83.04

77.96

Profit after Tax

62.06

60.65

(INR million)

FY 2016

FY 2015

Income from Operations

35,348.99

31,235.23

EBITDA before Employees Stock Option Compensations Cost

5,994.01

5,569.31

EBITDA after Employees Stock Option Compensations Cost

5,747.27

5,358.21

Profit from Operations *

5,188.84

4,875.74

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

355.93

81.40

Less: Interest

1.41

1.19

Add: Other Income

38.41

90.17

Profit before Tax

5,581.77

5,046.12

Less: Provision for Taxation

1,410.68

1,114.02

Profit after Tax

4,171.09

3,932.10

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

(INR million)

FY 2016

FY 2015

Income from Operations

13,930.41

12,935.97

EBITDA

4,552.05

4,312.32

Profit from Operations *

4,126.18

3,903.96

Less: Exchange Rate (Gain) / Loss (net)

(284.64)

(73.53)

Less: Interest

1.01

0.29

Add: Other Income

94.36

103.36

Profit before Tax

4,504.17

4,080.56

Less: Provision for Taxation

943.44

750.85

Profit after Tax

3,560.73

3,329.71

Add : Balance brought forward from previous year

3,007.25

2,862.59

Add: Transfer from Special Economic Zone Reinvestment Reserve

174.30

124.62

Balance available for appropriation

6,742.28

6,316.92

Appropriation

Interim Dividend

1,660.60

2,608.16

Tax on Dividends

338.04

528.76

Transfer to Special Economic Zone Reinvestment Reserve

177.73

172.75

Balance carried to Balance Sheet

4,565.91

3,007.25

Results of Operations

a) Global operations:

Income from operations increased to INR 35,348.99 million in 2016 from INR 31,235.23 million in 2015, growth of 13.2%. The growth in Dollar terms was 8.3%, reaching USD 525.55 million. Revenue in constant currency was USD 529.6 million, growth of 9.0%. Growth was driven largely by volume increase, aided by increased realized bill rates and higher onsite mix, 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 INR 5,188.84 million in 2016 as against INR 4,875.74 million in 2015, growth of 6.4%. The growth in profit from operations without considering RSU cost under long term incentive plan was 6.9%. During the year, the Profit after tax stood at INR 4,171.09 million in 2016 as compared to a profit of INR 3932.10 million in 2015, growth of 6.1%. PAT margins in Rupee terms were at 11.8% in 2016 compared to 12.6% in 2015.

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:

Buy back of 56,94,835 equity shares aggregating to Rs. 1,366,760,400 @ Rs. 240/- per equity shares.

On October 25, 2016, the Board gave in-principle approval for the merger of M/s. Risk Technology International Limited, Wholly Owned Subsidiary with the Company. The scheme of Merger was approved by the Board at its meeting held on March 8, 2017.

Company''s major achievements in 2016

Over the last two years the primary objective was to establish momentum in growth. The growth in revenue was 13.2% in Rupee terms and 8.3% in USD terms as compared to 2015.

We have also established good momentum for next year with new booking from new clients at $ 153 million TCV for the year and that would give us confidence about growth for 2017 and beyond.

In USD terms, EBITDA before ESOP cost grew by 3.0%, after ESOP by 2.7% and PAT grew by 2.3%.

EPS after the ESOP dilution grew at 5.9%.

During the year 2016, 30 new clients were added. We continued to improve on depth of customer relationships. On a year Q4-2016 last year to Q4-2015, the top of the pyramid has bulked up. The number of clients in $50Mn has increased from 1 to 3. Bottom of the pyramid, we have solid growth which forms the basis for a strong account base for us to grow in the future, both greater than one million and more importantly the one to five million category.

b) India operations:

In the year 2016, the revenue of the standalone legal entity increased by 7.7% to Rs. 13930.41 million in comparison with revenue of Rs. 12,935.97 million in the previous year. The net profit after tax was Rs. 3,560.73 million as compared to Rs. 3,329.71 million in 2015 showing growth of 6.9%.

Share capital

The paid-up Share Capital of the Company as on December 31 2016 was Rs. 604.06 million comprising of 302,028,195 Equity Shares of Rs. 2/- each. During the year 4,65,298 shares were exercised under different ESOP schemes. The market capitalization of the Company as on December, 31, 2016 was at INR 62,550 million (USD 921 million). The market capitalization is calculated on the basis of closing prices of INR 207.10 on The National Stock Exchange and the closing exchange rate of 1 USD = INR 67.92 as of December 31, 2016.

Reserve

The balance in the Statement of Profit and Loss after adjusting the appropriations for the year is Rs. 4,565.91 million.

Forex Mark-To-Market: The year-end Hedging Reserve stood at gain of Rs. 322.77 million, as compared Rs. 15.96 million in the previous year. This is in accordance with the recognition and measurement principles for accounting of forward exchange contracts and derivative contracts of Accounting Standard (AS)-30.

The Company recorded Rs. 455.17 million in Employee stock options outstanding a reserve being amortization of compensation cost of RSU’s granted.

There was no transfer to General reserve during the year.

In summary, total reserves stood at Rs. 12,624.16 million, including Rs. 4,808.73 million of Securities Premium account.

Dividend

During the year 2016, the Company paid four interim dividends on equity shares, Q1 - Rs. 2.50 (125%), Q2 -Rs. 1.00 (50%), Q3 - Rs. 1.00 (50%) and Q4 - Rs. 1.00 (50%). This brings the interim dividends for the four quarters of 2016 to Rs. 5.50 per share (275%).

The Board of Directors have not recommended payment of any final dividend and interim dividends as aforesaid be considered as final. The total dividend declared for 2016 on account of interim dividend & tax thereon amounts to Rs. 1,998.64 million.

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

Q1

Q2

Q3

Q4

Total

Dividend

754.63

301.88

301.94

302.15

1,660.60

Tax

153.62

61.45

61.47

61.50

338.04

Total

908.25

363.33

363.41

363.65

1,998.64

Particulars of loan, guarantee or investments

Loan, guarantees and investments covered under section 186 of the Companies Act, 2013 form part of the notes to the financial statements provided in this Annual Report. Please refer note no. 9 to 12 and note no. 15 of Standalone Financial Statements.

Subsidiaries and Associates

During the year 2016, Company has formed one step down subsidiary Company in Romania. The Company also formed one wholly owned subsidiary in Saudi (final registration is under process). The Company through its wholly owned subsidiary in Singapore also invested in one associate Company in Singapore. The total amount of initial investment in these three companies are given below:

Sr. No.

Name of Company

Rs. Million

1

Hexaware Technologies Romania SRL

1.87

2

Hexaware Technologies Saudi LLC

8.03

3

Experis Technology Solutions PTE Ltd

16.95

During the year 2016, Company has also invested further funds in the following wholly owned subsidiaries. The total further investments in these subsidiaries are given below:

Sr. No.

Name of Company

Rs. Million

1

Guangzhou Hexaware Information Technologies Company Limited

5.06

2

Hexaware Technologies LLC - Russia

68.59

Further, during the year, the Company has also granted additional loan aggregating Rs. 774.05 million to wholly owned subsidiary Risk Technology International Limited for the development of SEZ at Hinjewadi, Pune.

In accordance with Section 129(3) of the Companies Act, 2013, consolidated financial statements of the Company and all its subsidiaries, forms part of the Annual Report. Further, a statement containing the salient features of the financial statement of our subsidiaries in the prescribed format AOC - 1 is appended as Annexure 1 to the Board’s report. The statement also provides the details of performance, financial positions of each of the subsidiaries.

In accordance with Section 136 of the Companies Act, 2013, the audited financial statements, including the consolidated financial statements and related information of the Company and audited financial statements of each of its subsidiaries, are available on our website www. hexaware.com. These documents will also be available for inspection during business hours at the registered office of the Company.

Business Strategy

Company’s strategic objective is to build a sustainable organization which is important and relevant for our customers and also generates profitable growth for investors.

No matter the size, Hexaware is committed in providing Personal Attention to every relationship. For the company, it’s just about more than performance. It’s more about being Transparent, Co-Innovating, predictability through Extreme Automation and striving to Shrink your IT. The company has infused fresh thinking into future technologies like Artificial Intelligence, Virtual Reality, and Digitization and provide solutions with the millennial mindset. Read about the distinctive traits that have helped Hexaware transform enterprises, through a newer, exciting human centered process based on Design Thinking in tandem with Intelligent Process Automation.

It has following strategy focus areas:

1. Delighting customers, in a different way, Co-Innovate & Make things Better: The Company challenges its team deployed in projects to think deeply about each customer problem and ReArchitect for Innovation and Smart Digitalization, to make its customers stand out. Hexaware strongly encourages Crowd sourcing (bottom-up Innovation) for each customer from 12,100 Hexawarians, as they believe the best of ideas actually come from people actually working on ground. Hexaware’s Innovation lab has built over 160 Proprietary tools & Accelerators on advanced technologies.

2. Exclusively focused on each relationship: Hexaware is focused on acquiring only a handful of new customers every quarter and building an organization with empowered Account Managers, increased accountability and improved decision making thus ensuring every client ''Executive Attention’. This has resulted in the Customers staying for Life. The average tenure of top 10 of our customers has been 11 years.

3. Our Aspiration makes us indispensable-Shrink IT Grow Digital: Shrink IT concept is based on Hexaware’s decades of IT experience, Industry predictions and firm belief that the customers IT budget could be shrunk upto 30% in the coming years. The company has championed this approach by considering factors like- Proactive Problem Management, embracing Robotic Process Automation Solution and only using Hyperconverged Technology in the infrastructure space.

4. Willingness to cannibalize our revenue for automation: Traditional service providers actually find it hard to take up automation, as they would lose out in profit on T&M of resources. While automation would be catastrophic for them, the Company is willing to cannibalize its own revenue for mutual success and a lasting relationship.

5. Pursue strategic alliances: We are developing alliances that complement our core competencies. We are planning with niche and state of art technology software service providers in creating, deploying, integrating and operating business solution for our clients.

6. Exceeded delivery promises, anti-pyramid engagement approach: The typical difference that is experienced when working with Traditional IT players is that they extensively use fresh recruits for low-level manual tasks and too much rotation. But with Hexaware, its assigned Consultants stay with the same client account for generally four/five years, which strengthens and retains customer institutional knowledge.

7. Design is the Way of Life

- Build & Manage Hybrid environments: Hexaware powers its digital transformation further by blending traditional and cloud infrastructures. Leveraging Hybrid Cloud has helped in enabling next-generation technologies like IOT, Virtual Reality for customers.

- Digital DNA for Business Intelligence: With its roots deep enriched in Enterprise data management, Hexaware is committed in modernizing and transforming application environment and undertaking end-to-end digitalization journey for its customers. The strong background in rich data sets has resulted in a robust foundation for Business Intelligence.

- Design Thinking: Hexaware uses design thinking for creative problem-solving, rapid prototyping and solution development. For all its customer engagements, Hexaware follows this human centered process that helps in identifying unique challenges and goes about delivering the best possible experience.

There is ever increasing relevance of disruptive competitiveness of service providers like Hexaware today unlike traditional players as they can scale up and down aggressively based on client needs.

Infrastructure:

A tangible signature of the Company’s growth aspirations is its investment in infrastructure. The Company invested (in terms of outflow) Rs. 2,222.67 million in 2016 mainly in expanding its physical and technical (IT) infrastructure globally. Primarily the investment is in SEZ development i.e. Phase 2 of facility in Siruseri, Chennai and phase 1 of facility in Hinjewadi, Pune. The investments are made with an intent to serve the long term need and to provide quality support for its global 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 around 1,500 employees working from these centers.

The Company’s BPS arm operates out of another building in the same complex, with 1300 employees - providing BPS services to its global clients in shift mode.

The Company has also taken premises on long-term lease for its IT and BPS operation in the SEZ facility named Loma IT Park, Ghansoli, Navi Mumbai with seating capacity of 1200 employees. This will be fully operational in 2017.

Chennai:

There are around 3,736 IT 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 5,500 seats in Phase 1. The Company has also constructed Phase 2 with approximately 3300 seats.

The BPS arm also operates out of another two facilities in Chennai of which one is in SEZ. The combined strength of around 940 employees operates from these facilities.

Pune:

In Pune, the Company had 2 ODCs on lease in Hinjewadi Rajiv Gandhi InfoTech Park SEZ. The Company surrendered aforesaid leased premises and moved to its own SEZ campus at Hinjewadi from January, 2017. The first phase of this campus has capacity of 1900 seats with 968 seats ready to be occupied. Around 440 employees are currently operating from this campus.

Nagpur:

The Company owns 20 acres of land in MIHAN SEZ, Nagpur, a tier II city. This facility is currently operational with around 680 professionals and has seating capacity to accommodate 904 professionals in different shifts.

Bangalore:

This facility in the India’s IT capital of Bengaluru has capacity of 400 seats & the number of employees seated at office is around 240. 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 284 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.

Alpharetta, GA (USA)

The Company has Global Delivery Centre (GDC) at Alpharetta and Sandy Springs in the state of Georgia, USA with employees strength of around 260.

Dunwoody, GA

The Company has Global Delivery Centre (GDC) at Dunwoody in the state of Georgia, USA with employees strength of around 180.

Herndon, VA (USA)

The Company has Global Delivery Centre (GDC) at Herndon in the state of Virginia, USA with employees strength of around 39.

Saltillo (Mexico):

The Company has a strong presence in Mexico with a nearshore Delivery Centre at Saltillo with employee''s strength of around 290. 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.

Tver (Russia):

The Company has center in Russia for its BPS operation which has 110 employees.

Bucharest (Romania):

The Centre will be made operational from 2017.

Cash Flow

The cash generated from operations in 2016 was Rs. 4,803.07 million. The Company has redeemed money from Mutual Fund amounting to Rs. 220.83 million (net). The Company has invested Rs. 2,222.67 million in fixed assets mainly for new development centre in Chennai and Pune. During the year, the Company paid dividend including dividend tax of Rs. 2,505.86 million.

The Company has received Rs. 13.06 million from issue of shares. As of December 31, the cash position of the Company was Rs. 4,293.98 million excluding the restricted bank balance, equivalent in USD 63.22 million. Including the Mutual Fund investments (cash equivalent), the total cash & bank balance was at Rs. 4,482.48 million equivalent USD 65.99 million.

Human Resource Capital

As every industry globally is being re-shaped by digital technologies, individuals are transforming themselves to stay relevant and succeed in a digital world. The focus of the Company has been to leverage digital re-imagination to drive growth and efficiency of business models, products and services, business processes as well as the workplace. This helps the Company to deliver a superior experience to every key stakeholder, viz. customers, employees, investors and the community.

The Company has proper recruitment and human resources management process. Over the last year, the Company has added 740 employees this year, taking the total strength to 12,115 from 11,375 at the end of the previous year as of December 31, 2015. The Company is focused towards attracting and retaining high caliber employees through sound and resilient human resource management process. The Company consciously enhanced gender diversity with 30% of the employees being women.

The Company continues its focus on employee retention. The Company''s efforts to make Hexaware as Great Place to work with a strong focus on employees'' career aspirations, rewards & recognition helped maintain attrition rate at 16.1% in FY 2016.

Recognizing the fact that the workforce lives your brand, the HR team has embarked on a major branding exercise to build an engaging organization. For Making Hexaware a Great Place to Work, Company has launched Employee Assistance Program for employees, Company has tied up with counseling service provider to provide professional counseling services to the employees.

Talent Management - Asset Development

The Company believes that its employees are the heart of the organization; 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. The Company is aware about the current market trends and is at the fore front of "Shrink IT, Grow Digital" mantra. The Company not only encourages its consultants but also provides them the right platform wherein they can innovate and provide value to customers. Brainbox is one such platform where consultants can post the ideas/innovation which can help the customers in saving the time & money. The platform has full support from the senior management. Appreciation and motivation goes a long way in encouraging consultants to give their best to the organization. The new Rewards & Recognition portal is the one stop solution for the same wherein managers can nominate the consultants for the rewards anytime of the year.

Feedback and appraisal is another very powerful tool to manage the talent in the Company. The new version of the Performance Management System is the right step in that direction. It provides the opportunity to the consultants to get the feedback from each of the projects they have worked and also an overall view about their performance and improvement areas. The system also assesses the consultants about their readiness for the next role/ position. The development plan provided by the managers serves as the building blocks of the training programs designed by Hexavarsity. Due to the ever changing & evolving nature of the industry, training & reskilling is not a luxury but the norm for the consultants. The up to date training modules coupled with external trainers and various hackathons organized by the service partners help in making our consultants among the best in the industry. Also, the Technical Competency Development Program (TCDP) helps to sharpen the technical skills of the consultants according to the role that they are playing.

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 also understands the need to connect with the Hexaware world on a global platform and therefore has launched Facebook@Work for consultants through which they can connect, communicate & collaborate. This also helps them in connecting with various stakeholders and gives them the chance to provide their suggestions, concerns and feedback for the improvement to make Hexaware a great place to work.

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 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.

Last but not the least, All work & No Play, makes Jack a dull boy. The Company incorporated enough Fun@Work activities for consultants to rewind, relax & rejuvenate themselves. Funsters group, project outings and project lunch helps the team to bond together and work towards a common goal thereby taking Hexaware to its goal.

Information Security

Today’s digital enterprises face an increased exposure of cyber security threats from phishing attacks, Advanced Persistent Threat (APT) and hyper-connected universe. The Company has taken proactive steps to combat these threats and provide uninterrupted service delivery to customers.

The Company has established a comprehensive system to preserve the confidentiality, integrity and availability of information and also provides global analysis, assessment, policy, and governance for risks related to information security, privacy, business continuity, third party engagements and operational activities.

Stringent information security measures are in place in the Company to ensure business continuity and to reduce business damage by preventing and minimizing the impact of security incidents. Security controls are regularly monitored and improved up on, thereby giving confidence to our customers to do business with us.

Quality Assurance

The Company has sustained its commitment to the highest levels of quality, best-in-class service management, robust information security practices and mature business continuity processes that have collectively helped achieve significant milestones during the year. While sustaining existing external benchmarks and certifications, we have added new certifications and further enhanced our programs and initiatives.

We continue to adhere to international quality standard certifications such as ISO 9001-2008 & Tick ITplus, ISO 27001:2013, ISO 20000-1:2011, CMMI - DEV & SVC Version 1.3 - Level 5, ISAE3402 and SSAE16 SOC-1 Type II

The Company commissioned a study on client satisfaction for 2016 by Feedback Consulting, an independent market research firm. On a scale of -100 to 100, Company scored 66.2 in fiscal 2016, as against an industry score in the range of 40.1 to 68.4.

Benefits:

The customers / clients have benefited as a result of higher quality of delivery and support , reduction in cycle time and improved productivity . Hexaware’s understanding of customer’s business and technology landscape enables client value additions for efficiency improvement and cost reduction for the customer. This has resulted in high levels of customer satisfaction and repeat business. Implementing the best in class 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 Corporate governance is about maximizing shareholder value legally, ethically and sustainably. At Hexaware, the goal of corporate governance is to ensure fairness for every stakeholder. We believe sound corporate governance is critical to enhance and retain investor trust. The Company always seeks to ensure that performance is driven by integrity. The Board exercises its fiduciary responsibilities in the widest sense of the term. The disclosures seek to attain the best practices in international corporate governance. The Company also endeavors to enhance long-term shareholder value and respect minority rights in all its business decisions.

The Company believes that Good corporate governance underpins the success and integrity of the organizations, institutions and markets. It is one of the essential pillars for building an efficient and sustainable environment.

The Company has two "Big 4" firms as auditors - Deloitte Haskins & Sells LLP as its Statutory Auditors till the date of the Annual General Meeting 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 was the winner of the prestigious Golden Peacock Award for excellence in Corporate Governance for the year 2011 and 2015 and won the Special Commendation in the year 2009 and 2013.

In compliance with Regulation 34 of the Listing Regulations, a separate report on Corporate Governance along with certificate from the Auditors on its compliance, is attached and forms part of this Report.

Awards & Recognition:

The Company won the following awards / recognition in 2016:

Hexaware has won 5 awards in "Asia Outsourcing Congress & Awards 2015-16"

- Fastest Growing Outsourcing Company of the year 2015

- Best Customer Experienced Delivered by a Contact Center

- Excellence in Customer Services in the Outsourcing Industry

- Health Insurance BPO Provider

- Non - Voice Excellence Company of the year

Hexaware has won an Award for Excellence in Customer Service and a Certification of Recognition for Outsourcing Organization of the year at the Golden Globe Tiger Awards (For Outsourcing Excellence) in Malaysia.

Hexaware has been recognized and honoured for its unmatched capabilities in providing Business Process Outsourcing services to global Telecom clients at the recently concluded ''National Awards for Excellence in Outsourcing 2016’ in the following categories-

- Best Outsourcing Service Providers- Telecom Industry

- Telecom Outsourcing Project of the Year

Hexaware has been awarded the prestigious CIO100 Award for Year 2016 from IDG India. The award was given in two categories for the Transformative & Collaboration initiatives done by the Company.

Hexaware has won the Brand Revitalization and Brand Excellence in IT/ITeS sector awards at the 7th CMO Asia Awards for Branding & Marketing.

Hexaware won the prestigious ''Best Process Improvement Project Award’ at Golden Star Six Sigma Awards 2016.

Hexaware received Infonavit’s Excellence Award for being an Employer of Merit, 2016.

Hexaware has been identified the "Best IT Service Provider" in Europe and UK, as rated by a survey of 600 end customers by whitelane Research

Hexaware ranks top among 27 different vendors in IT outsourcing client satisfaction study in Europe conducted by WhiteLane Research Dated 14th July 2016 by analyst John Leigh.

Hexaware has been mentioned as one of the major IT services providers to North American insurers in the Novarica report titled, "IT SERVICES PROVIDERS FOR INSURERS", dated February 2016, by analysts Rob McIsaac and Alex Effgen.

Hexaware has been mentioned in the Forrester report titled "The Future of Consulting Through 2020", dated 11 February 2016, by analyst Marc Cecere.

Hexaware’s revenue has been mentioned to have recorded a 15% jump in the Ovum report titled "India IT Services Vendor Quarterly, 4Q15", dated 23 February 2016, by analyst Hansa Iyengar.

Hexaware has been mentioned in High potential quadrant in HfS Bluprint Grid for Successfactors services, dated March 2016, by analysts Khada De Souza and Charles Sutherland.

Hexaware has been mentioned as one of the vendors in the Gartner report titled "Market Share: IT Services, 2015" dated 06 April 2016, by analysts Kathryn Hale, Dean Blackmore, Jacqueline Heng, Twiggy Lo and a few others.

Hexaware has been mentioned as one of the mid-tier player with geographic/sector specialization in API Strategy And Delivery Service Providers space in the Forrester report titled, "Vendor Landscape: API Strategy And Delivery Service Providers", dated 19 April 2016 by analyst Randy Heffner.

Hexaware has been mentioned as one of the 25 fastest-growing BPO providers in 2015 by AGR in the Gartner report titled "Market Share Analysis: Business Process Outsourcing, Worldwide, 2015" dated 10 May 2016 by analysts Cathy Tornbohm and Dean Blackmore.

Hexaware has been mentioned as one of the Midsize Players With Geographic Or Sector Specializations in the Forrester report titled, "Vendor Landscape: Integration Strategy And Delivery Service Providers", dated 23 June 2016, by analyst Randy Heffner.

Hexaware has mentioned as a Global Systems Integrator, who deployed a smartwatch application for a large retailer in the Forrester report Titled "Enterprise Business Intelligence: Now Always At Hand On Your Smartwatch-Smart watches Are No Longer Just For Collecting Data: Use Them For Instant Glanceable Insights" , by analysts Boris Evelson and Michael Facemire dated 30th June 2016.

IDC Insight provides review of the recent Hexaware''s Hexarising Event in the Report Titled "Hexaware: Transforming the Customer Experience to a Digital World" Dated 19th July by Analyst David Tapper and Peter Martson.

Hexaware has been stated as an IT Service Provider providing Targeted Analytics and Building Models for specific industry verticals in the Ovum Report titled "Market Landscape: Self-Service Visual Business Intelligence/ Analytics, 2016" dated 7th July 2016 by analyst Surya Mukherjee.

Hexaware identified as High Achiever in Nelson Hall’s NEAT Vendor Evaluation for Software Testing under Overall, Digital Focus, Efficiency Focus and Transformation Focus Market Segments Dated 26th July by Analyst Dominique Raviart.

Hexaware has been mentioned in "Aspirants" category in the Everest Report titled "Capital Markets BPO- Service

Provider Landscape with PEAK Matrix Assessment- 2016" Dated 9th August 2016 by Analyst Anupam Jain, Manu Aggarwal.

Hexaware has been mentioned in "Major Contenders" category and adjudged as "Star Performer" in the Everest Report titled "Multi Processing Human Resource Outsourcing Service Providers Assessment 2016" Dated 16th August by Analyst Anil Vijayan and Rajesh Ranjan.

Hexaware has been mentioned in "Major Contenders" category and adjudged as "Star Performer" in the Everest Report titled IT Outsourcing in Global Capital Markets Service Providers Assessment 2016 Dated 16th September by Analyst Ankur Seth and Aadithya Jain.

Hexaware has been mentioned in "Major Contenders" category and in the Everest Report titled Life Sciences Digital IT Services PEAK Matrix Assessment 2016 dated 22nd September bY Analyst Jimit Arora.

Hexaware''s Raise IT Platform has been mentioned among the vendors offering cognitive Automation platforms in the IDC Report titled "Automatic Decisions: Rise of the Service Provider Cognitive Platforms " dated 11th October 2016 by Analyst David Tapper.

Hexaware has been mentioned among the Consulting, BPO and IT Outsourcing Providers Deploying RPA solution in the Market in the Gartner Report Titled "Robotic Process Automation: Eight Guidelines for Effective Results" dated 12 October 2016 by analyst Cathy Tornbohm.

Hexaware has been mentioned as one of the established providers have pivoted to SaaS in the Forrester Report titled "Vendor Landscape: Oracle Services Providers Aggressively Pivot To Cloud Solutions" dated 19th October 2016, by analyst Liz Herbert.

Hexaware has been positioned in "Star Performer and Major Contender" category in the Everest Report Titled Health Care Payer IT AO PEAK Matrix dated 31st October 2016 by analyst Jimit Arora.

Hexaware has been positioned in "Star Performer and Major Contender" category in the Everest Report Titled ITO In Insurance PEAK Matrix dated 30th November 2016 by analyst Jimit Arora.

Hexaware has been positioned in "Major Contender" category in the Everest Report Titled Healthcare Service Providers PEAK Matrix dated 30th November 2016 by analyst Jimit Arora.

Forrester mentions Hexaware as STAR PERFORMERS in their Wave Report Titled" Application Outsourcing for MidSize Providers, Q4 2016", dated 14th December by Analyst Somak Roy.

Risk Management

The Company has well defined Enterprise 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 Board has formed Strategy and Risk Committee to oversee activities related to risk minimization.

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

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/ Cyber Liability/General Liability:

In a global services business, customers insist on taking suitable Insurance covers including Errors & Omission (Professional Indemnity), Cyber Liability 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 claims 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 emanating 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 / Employee Benefits:

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

Internal Financial Control Systems

The Company has a proper and adequate system of internal controls. This ensures that all transactions are authorized, recorded and reported correctly and assets are safeguarded and protected against loss from unauthorized use or disposition. In addition there are operational controls.

The Company has adopted accounting policies which are in line with the Accounting Standards prescribed in the Companies (Accounting Standards) Rules, 2006 that continue to apply under Section 133 and other applicable provisions, if any, of the Companies Act, 2013 read with Rule 7 of the Companies (Accounts) Rules, 2014 and relevant provisions of the Companies Act, to the extent applicable. These are in accordance with generally accepted accounting principles in India. Changes in policies, if any, are approved by the Audit Committee in consultation with the Statutory Auditors.

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

The Board has adopted the policies and procedures for ensuring the orderly and efficient conduct of its business, including adherence to the Company’s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timey preparation of reliable financial disclosures.

The Company has audit committee comprising of 5 (Five) professionally qualified and well experienced Directors, who review the operational efficiency, adequacy and effectiveness of systems, processes, and Internal finance control of the Company.

In addition to this, the Company continues to engage KPMG as its Internal Auditor. The 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. During the year, the Company continued to implement suggestions and recommendations by the Internal auditor and audit committee to improve the control environment.

The further details regarding internal financial control are included in the Management Discussion and Analysis, which form part of this report. Report of statutory auditor on the internal financial control is also included in this Annual report on page 112 and 136.

HexaVarsity

HexaVarsity - Organizational Development (OD) Initiative

The Company launched the Organizational Development (OD) initiative, Ignite, in 2015. The purpose of the OD initiative was to equip the leaders to succeed in their roles and develop the potential of the employees in the context of the organizational growth and realignment of the organization structure and process.

The philosophy of the initiative is to ''Ignite the Genius Within!’

The objective of Ignite was to design and deliver a leadership development program that:

- re-energizes and re-boots for action polishes and sharpens competencies to boost performance in leadership roles acts as a catalyst to ignite creativity

Ignite programs for key leadership roles:

- Mindset Analysis Workshops

- Bootstraps (Hard skills)

- LEAP - Leadership Excellence Achievement Program (Behavioral competencies)

Ignite programs for Managers & Leads:

- Creative Management Workshop mLEAP -Leadership Excellence Achievement Program for Managers (Behavioral competencies)

Special Programs:

- BA2BC - Business Analyst to Business Consultant

- Design Thinking Workshop

Ignite programs are built around the key competencies of Accountability and Ownership, Strategic Thinking, Planning, Collaboration and Customer Focus.

In 2015, the Company’s focus was to ensure that the initiative was perceived as truly developmental, with special focus on knowledge acquisition and retention.

The company covered 68% of its target audience by the end of 2015 and 79.6% of by mid-2016.

The programs were delivered across locations using a blend of methodologies such as Instructor-Led Training (ILT), virtual and e-learning.

The key leadership roles covered under Ignite in 2015 were ASDMs, Account Managers, Hunters, Overlay Sales, Competency Heads, and Practice and Solution Heads

In 2016 the company also extended the Ignite programs to cover the managers and leads reporting in to the leaders who had completed the Ignite program. A new set of programs were created and are being delivered across locations.

English Language Development

A key OD initiative for 2016 was to identify and use a tool for English Language Development. The company uses the Burlington English Tool for this purpose. Development on this tool is used to up-scale the English language skill and abilities of employees at various levels. The tool measures and rates the English language ability and skill of the employee before and after development on the CEFR rating scale.

The Common European Framework of Reference for Languages (CEFR) is an international standard for describing language ability. It is used around the world to describe learners’ language skills.

The company had 80 employees complete development programs on the tool in 2016 and over 25% of them have moved up to the highest CEFR level possible (C1) on the tool. Over 140 employees are undergoing development on the tool currently.

CTaDel - Customer Centric Talent Development Program

HexaVarsity has launched the CTaDel initiative in January 2015 to address the account specific learning and development needs. Dedicated team members are assigned from both HexaVarsity and the accounts to work together on this initiative.

In 2016, the Company chose the overall Category "A" accounts (including Top 20) of Hexaware to cater to their account specific learning and development needs.

The company has covered 63% of the targeted Category "A" accounts.

The following are offerings provided through the CTaDel initiative,

1. Account specific training and certifications

2. Account specific knowledge management

3. Account specific content creation

4. Account specific custom learning plan

Link-N-Learn: This is a weekly connect program to share and learn with peer group placed across locations.

The objective of this initiative is to share and learn from best practices, experiences, solutions, challenges, and successes.

This initiative was kick started in 2015 and completed around 30 sessions across various verticals and horizontals.

Fresher Training Program (FTP)

The Fresher Training Program (FTP) is a Hexavarsity initiated program designed and delivered exclusively for fresh graduate recruits, management trainees (MT) and senior management trainees (SMT). The program includes a series of technical and behavioural trainings and assessments for Engineering, Management and B.Sc. / B.Com / B.A. graduates to enable them to be work ready and deployable.

FTP courseware restructuring was completed with introduction of Gamification in courses and real-time/ practical question banks in assessments.

Technical Competency Development Program (TCDP)

The Technical Competency Development Program (TCDP) is a HexaVarsity initiative aimed at developing the technical competencies of the Hexaware workforce. The competencies mapped to each role are documented in the Technical Quotient (TQ) frameworks and are uniquely defined for each unit. Horizontals and Verticals participated in the courseware revamp to keep the courses and assessments are up to date. Role based Learning plans were enhanced with assessment tracking features.

Professional Certification and Incentives

- Currently 2,099 employees have been certified in the system.

- 1027 overall certifications in 2016 by 810 unique employees

- 8 in-house certification drives were organized in 2016 and 142 employees participated from across locations.

- 975 hours have been spent on developing internal e-contents and hosting on the knowledge management portal.

Related party transactions

During the financial year 2016, the Company has entered into transactions with related parties as defined under Section 2(76) of the Companies Act, 2013 all of which were in the ordinary course of business and on arm''s length basis and in accordance with the provisions of the Companies Act, 2013, read with the Rules issued there under and the Listing Regulations.

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 and also the Board for approval. The policy on Related Party Transactions is uploaded on the Company''s website.

The details as required to be provided under Section 134(3) (h) of Companies Act, 2013 are disclosed in form AOC-2 as Annexure 2 and form part of this Annual Report.

Policy on dealing with related party transaction is available on the website of the Company. http://hexaware.com/ investors/ Policy on determining material subsidiaries of the Company is available on the website of the Company. http://hexaware.com/investors/

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 2016, 4,65,298 options were exercised and the Company allotted 4,65,298 equity shares of INR 2/- each to the employees on such exercise. These shares have been listed on the Bombay Stock Exchange Limited and National Stock Exchange of India Limited. 1,048,312 Restricted Stock Units (RSUs) were granted under 2015 schemes during the year 2015, as explained below:

On February 03, 2016, 295120 RSUs were granted exercisable at a price of Rs. 2/- under the Employee Stock Option Scheme 2015 convertible into equal number of equity shares of the company.

On July 28, 2016, 238,592 RSU''s were granted with exercise price of Rs. 2/- to Mr. R Srikrishna, CEO & Executive Director under the Employee Stock Option Scheme 2015 convertible into equal number of equity shares of the company.

On October 24, 2016, 514,600 Restricted Stock Units (RSUs) were granted at a price of Rs. 2/- under the Employee Stock Option Scheme 2015 convertible into equal number of equity shares of the company.

Details of the shares issued under Employee Stock Option Plan (ESOP), and also the disclosures in compliance with Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014 are available on the website of the company at the following link : http://hexaware.com/investors/ No employee was issued Stock Option, during the year equal to or exceeding 1% of the issued capital of the Company at the time of grant.

Fixed deposits

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

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 134(3) (m) of the Companies Act, 2013 read with Companies (Accounts) Rules, 2014 is annexed and forms part of the report.

Directors'' Responsibility Statement

Pursuant to Section 134 (3) (c) and (5) of the Companies Act, 2013, the Directors confirm the following:

(a) in the preparation of the annual accounts, the applicable accounting standards have been followed and there were no material departures;

(b) 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 and loss of the company for that period;

(c) the directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

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

(e) the directors, have laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively.

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

Directors and Key Managerial Personnel

Mr. P R Chandrasekar having DIN 02251080 was re-appointed as Non Executive Director of the Company for one year w.e.f January 1, 2017 on the existing terms and conditions including remuneration.

Mr. Bharat Shah (DIN number 00136969) and Mr. Dileep Choksi (DIN 00016322) were re-appointed as Independent Directors for a period of three years w.e.f October 17, 2016.

Re-appointments/ Retirement by rotation

In accordance with the provisions of Companies Act, 2013, 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 reappointment at the Annual General Meeting.

The information of Directors seeking appointment / re- appointment/ retirement by rotation at the Annual General Meeting to be given to the shareholders as per regulation 36 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 is being provided separately in the on Page No. 95 & 96 of this Annual Report. Members are requested to refer the said section of the Corporate Governance Report.

Number of Meetings of the Board

Six Meetings of the Board were held during the year. For details of the meetings of the Board, you may refer to the corporate governance report, which forms part of this Annual report.

Declaration by Independent directors

The Independent Directors have submitted a declaration that each of them meets the criteria of independence as provided in Section 149(6) of the Companies Act, 2013 and there has been no change in the circumstances which may affect their status as Independent Director during the year.

Board Evaluation

The Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 mandates evaluation of performance of Independent Directors, non Independent Directors and Chairperson. The Companies Act, 2013 states that a format annual evaluation needs to be made by the Board of its own performance and that of its committees and individual Directors. Schedule IV of the Companies Act, 2013 states that the performance evaluation of Independent Directors shall be done by the entire board of Directors, excluding the director being evaluated.

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

The performance of the committees was evaluated by the board after seeking inputs from the committee members on the basis of the criteria such as the composition of committees, effectiveness of committee meetings, etc.

The Board and the Nomination and Remuneration Committee ("NRC") reviewed the performance of the individual directors on the basis of the criteria approved by the Board.

In a separate meeting of Independent Directors held on 22nd December, 2016, performance of Non-Independent directors, performance of the board as a whole and performance of the Chairman was evaluated.

Further SEBI vide its guidance note dated January 5, 2017 has suggested process / practice that may be adopted by the Companies for performance evaluation. The Company is in process of evaluating the required changes, if any, in performance evaluation process as per the SEBI guidance note.

Training of Independent Directors

To familiarize the Independent Directors with the strategy, operations and functions of the Company, the Executive Director and Senior Managerial personnel make presentations at the Board Meeting about Company’s operations, markets, financial results, human resources and on other important aspects.

The terms and conditions of the appointment of every Independent Director is available on the website of the Company at: http://hexaware.com/investors/

Details of the familiarization programme of the independent Directors are available on website of the Company at http://hexaware.com/investors/

Committees of the Board

The following Committees of the Board existed till 25th October, 2016:

1. Audit, Governance & Compliance Committee

2. Nomination & Remuneration Committee

3. Stakeholders Relationship Committee

4. Capital Issue Committee

5. Banking, Investments, Operations & Forex Committee

6. Corporate Social Responsibility Committee

7. Infrastructure Committee

8. Special Committee for Internal Automation

The Board of Directors have re-constituted all the committees in the Board meeting held on 25th October, 2016. Currently the following committees exist:

1. Audit, Governance & Compliance Committee

2. Nomination & Remuneration Committee

3. Stakeholders Relationship Committee

4. Corporate Social Responsibility Committee

5. Strategy and Risk Committee

The details of the composition of the committee and attendance of the Directors at the meetings of Committees of the Board are provided in the Corporate Governance report.

Policy on directors and Key Managerial Personnel appointment and remuneration and other details

The Company’s policy on directors and Key Managerial Personnel appointment and remuneration and other matters provided in Section 178(3) of the Act has been disclosed in 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. The provisions of this policy are in line with the provisions of Section 177 (9) of Companies Act, 2013. The policy is available on the website of the company at : http://hexaware.com/investors/

Statutory Auditor

M/s. Deloitte Haskins & Sells LLP retire at this Annual General Meeting and the Board of Directors at its meeting held on February 7, 2017 have recommended appointment of Price Waterhouse Chartered Accountants LLP, as the Statutory Auditors of the Company in place of Deloitte Haskins & Sells LLP - Chartered Accountants, Mumbai, existing Statutory Auditors of the Company.

In terms of provisions of section 139 of the Companies Act, 2013 M/s. Price Waterhouse Chartered Accountants LLP have furnished a certificate that their appointment, if made, will be within the limits prescribed under the said section of the Act. As required under Regulation 33 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, they have also confirmed that they hold a valid certificate issued by the Peer Review Board of the Institute of Chartered Accountants of India.

There are no qualifications, reservations or adverse remarks made by the statutory auditors in their audit reports on the financial statements for the year ended December 31, 2016.

Internal Auditor

Internal Audit for the year ended 31st December, 2016 was done by KPMG and Internal Audit report for every quarter was placed before the Audit Committee.

Secretarial Auditor

M/s. Makarand M Joshi & Co., Practising Company Secretary was appointed to conduct the Secretarial Audit of the Company for the year ended 31st December, 2016 as per the provisions of Section 204 of the Companies Act, 2013 read with rules made thereunder. The Secretarial Audit report for the year ended 31st December, 2016 is annexed to Board’s report as Annexure 3 There are no qualifications, reservations or adverse remarks made by Secretarial Auditor in his report.

Buyback of Shares:

On October 25, 2016, the Board approved a proposal for buyback up to 5,694,835 equity shares of the Company for an aggregate amount not exceeding Rs. 1,366,760,400, being 12% of the total paid up equity share capital, securities premium and free reserve as per audited accounts of the Company as on September 30, 2016 at Rs. 240 per equity share on a proportionate basis under the tender offer route in accordance with the provisions contained in the Securities and Exchange Board of India (Buy Back of Securities) Regulations, 1998 and the Companies Act, 2013 and rules made there under. The same was approved by members by passing Special Resolution on 22nd December, 2016 through postal ballot. The letter of offer was sent to all the Shareholders of the Company as on record date i.e. January 6, 2017. The Buyback offer opened on February 02, 2017 and closed on February 15, 2017. The final settlement date for buyback was February 22, 2017 and Extinguishment of Shares was completed by March 01, 2017. The Company bought back 5,694,835 equity shares of the Company for an aggregate amount of Rs. 1,366,760,400/-. The number of Equity Shares outstanding post buyback are 296,333,360 Shares of Rs. 2/- each. Further details / documents relating to buyback are available on our website at http://hexaware. com/investors/

Merger of wholly owned subsidiary :

On October 25, 2016, the Board gave an in-principle approval for the merger of M/s. Risk Technology International Limited, Wholly Owned Subsidiary with the Company and Scheme of Merger was approved by the Board at its meeting held on March 8, 2017.

Significant/Material Orders Passed by the Regulators

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

Corporate Social Responsibility

Pursuant to the provisions of section 135 of the Companies Act, 2013, the Company spent INR 41.21 Million towards CSR activities for the year ended 31st December 2016. The contents of the CSR policy and initiatives taken by the Company on Corporate Social Responsibility during year ended on 31st December 2016 as per the format prescribed in the Companies (Corporate Social Responsibility Policy) Rules, 2014 is attached as Annexure 4 to this Report and CSR policy of the Company is available on our website at www. hexaware.com. The Composition of CSR Committee is given in the Corporate Governance Report.

During the year, the Company has spent INR 41.21 Millions on its CSR activities. The projects undertaken by the Company during last year and current year were of long term period thus resulting in lesser utilization of earmarked budget for the current financial year. The Company is in continuous process of evaluating strategic avenues for

CSR expenditure. As a socially responsible company, the Company is committed to increase its CSR impact over the coming years, with its aim of playing a larger role in India''s sustainable development by embedding wider economic, social and environmental objectives.

Extract of annual return

As provided under Section 92(3) of the Act, the extract of annual return in the prescribed Form MGT-9, forms part of this report as Annexure 5 .

Financial year

The company has received an order from the Company Law Board under section 2 (41) of the Companies Act, 2013 for continuing January to December as its financial year. Hence the Company will maintain its financial year from January 1 to December 31.

Particulars of Directors and Employees

The table containing information as per rule 5 (i) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 is enclosed as Annexure 6 to the Board Report.

The statement containing particulars of employees as required under Section 197(12) of the Act read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is provided in a separate annexure forming part of this report. Further, the report and the accounts are being sent to the members excluding the aforesaid annexure. In terms of Section 136 of the Act, the said annexure is open for inspection at the Registered Office of the Company. Any shareholder interested in obtaining a copy of the same may write to the Company Secretary.

Disclosure as required under Section 22 of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013

The Company as an organization is committed to provide a healthy environment to all the employees and thus does not tolerate any discrimination and/or harassment in any form. The Company has in place a Prevention of Sexual Harassment (POSH) policy in line with the requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. Frequent communication of this policy is done through various programs and at regular intervals to the employees.

The Company has setup an Internal Complaints Committee (ICC) both at the registered office and at every location where it operates in India in accordance with the Act and has representation of men and women and is chaired by senior lady member and has an external women representation.

Workshops and awareness programmes are organized for sensitizing the employees with the provisions of the Act and orientation programmes for the members of the Internal Committee.

The following is the summary of the complaints received and disposed off during the financial year 2016:

a) No. of complaints received in the year: NIL

b) No. of complaints disposed off: NIL

c) No. of complaints pending : NIL

Green initiatives

The Company started a sustainability initiative with the aim of going green and minimizing the impact on the environment. Like the previous years, this year too, the Company is publishing only the statutory disclosures in the print version of the Annual Report. Additional information is available on our website, www.hexaware.com.

Electronic copies of the Annual Report 2016 and Notice of the 24th Annual General Meeting are being sent to all members whose email addresses are registered with the Company / Depository Participant(s). For members who have not registered their email addresses, physical copies of the Annual Report 2016 and the Notice of the 24th Annual General Meeting are being sent in the permitted mode. Members requiring physical copies can send a request to the Company.

The Company provides e-voting facility to all its members to enable them to cast their votes electronically on all resolutions set forth in the Notice. This is pursuant to the Section 108 of the Companies Act 2013 and Rule 20 of the Companies (Management and Administration) Amendment Rules, 2015.

Business Responsibility Report

The ''Business Responsibility Report’ (BRR) of the Company for the year 2016 forms part of this Annual Report as required under Regulation 34(2)(f) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

Acknowledgment

The Directors place on record their sincere appreciation of the customers, Government of India and of other countries, 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

Atul K. Nishar

Chairman

Place : Mumbai

Date : March 8, 2017


Dec 31, 2015

THE MEMBERS,

The Directors are pleased to present their Twenty- third Annual Report, on the business and operations of Hex aware Technologies Limited (hereafter referred to as ''The Company'') together with audited financial statements for the financial year ended December 31, 2015.

Financial Performance

Global Operations: (USD milli°n)

FY 2015

FY 2014

Income from Operations

485.47

422.40

EBITDA before Employee stock option compensations cost

86.59

78.09

EBITDA after Employee stock option compensations cost

83.32

78.09

Profit from Operations *

75.82

70.89

Profit before Tax and exceptional item

77.96

69.49

Profit before Tax

77.96

68.43

Profit after Tax

60.65

52.38

('' million)

FY 2015

FY 2014

Income from Operations

31,235.23

25,816.77

EBITDA before Employee stock option compensations cost

5,569.31

4,775.60

EBITDA after Employee stock option compensations cost

5,358.21

4,775.60

Profit from Operations *

4,875.74

4,335.88

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

81.40

(307.84)

Less: Interest

1.19

8.98

Add: Other Income

90.17

227.76

Profit before Tax and exceptional items

5,046.12

4,246.82

Less: Exceptional items

-

65.63

Profit before Tax

5,046.12

4,181.19

Less: Provision for Taxation

1,114.02

979.67

Profit after Tax

3,932.10

3,201.52

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

(Rs, million)

India Operations:

FY 2015

FY 2014

Income from Operations

12,935.97

11,545.56

EBITDA

4,312.32

3,918.89

Profit from Operations *

3,903.96

3,527.20

Less: Exchange Rate (Gain) / Loss (Net)

(73.53)

295.89

Less: Interest

0.29

8.35

Add: Other Income

103.36

594.80

Profit before Tax

4,080.56

3,817.76

Less: Provision for Taxation

750.85

633.80

Profit after Tax

3,329.71

3,183.96

Add : Balance brought forward from previous year

2,862.59

2,703.83

Add: On merger of Caliber Point Business Solutions Limited

-

352.91

Add: Transfer from Special Economic Zone Reinvestment Reserve

124.62

118.93

Balance available for appropriation

6,316.92

6,359.63

Appropriation

Interim Dividend

2,608.16

2,840.97

Tax on Dividends

528.76

479.69

Transfer to Special Economic Zone Reinvestment Reserve

172.75

176.38

Balance carried to Balance Sheet

3,007.25

2,862.59

Results of Operations

a) Global operations:

Income from operations increased to Rs, 31,235.23 million in 2015 from Rs, 25,816.77 million in 2014, growth of 21.0%. The growth in Dollar terms was 14.9%, reaching USD 485.47 million. Revenue in constant currency was USD 496.8 million, growth of 17.6%. Growth was driven largely by volume increase, aided by increased realized bill rates and onsite mix, 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, 4,875.74 million in 2015 as against Rs, 4,335.88 million in 2014, growth of 12.5%. The growth in profit from operations without considering Employee stock option compensations cost under long term incentive plan was 17.3%. During the year, the Profit after tax stood at Rs, 3932.10 million in 2015 as compared to a profit of Rs, 3,201.52 million in 2014, growth of 22.8%. PAT margins in Rupee terms were at 12.6% in 2015 compared to 12.4% in 2014.

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 2015

Over the last year the primary objective was to establish momentum in growth. The Company was able to beat the 12 to 14% growth Guidance of NASSCOM. The growth in revenue was 21% in Rupee terms and 14.9% in USD terms compared to 2014.

The Company has also established good momentum for next year with new booking from new clients at $120 million TCV for the year and that would give us confidence about growth for 2016 and beyond.

In USD terms, EBITDA before ESOP cost grew by 10.9%, after ESOP by 6.7% and PAT grew by 15.8% surpassing revenue growth.

EPS after the ESOP dilution grew at little over 22%.

CLIENT CONTRIBUTION TO REVENUE

ANNUAL GROWTH

Top 5

31.5%

Top 10

23.5%

Top 20

16.2%

During the year 2015, 37 new clients were added. We continued to improve on depth of customer relationships. From Q4-2014 last year to q4-2015, the top of the pyramid has bulked up. The number of clients in the $30 million to $50 million bucket has gone from one to three. Essentially clients have moved from the $20 million to $30 million bucket up, at least two of them hopped into the $30 million to $50 million bucket.

b) India operations:

In the year 2015, the revenue of the standalone legal entity increased by 12% to Rs, 12,935.97 million in comparison with revenue of Rs, 11,545.56 million in the previous year. The net profit after tax was Rs, 3,329.71 million as compared to Rs, 3,183.96 million in 2014.

Share capital

The paid-up Share Capital of the Company as on December 31 2015 was Rs, 603.13 million comprising of 301,562,897 Equity Shares of Rs, 2/- each. During the year 639,425 shares were issued under different ESOP schemes. The market capitalization of the Company as on December, 31, 2015 was at Rs, 73,400 million (USD 1,110 million). The market capitalization is calculated on the basis of closing price of Rs, 243.40 on The National Stock Exchange and the closing exchange rate of 1 USD = Rs, 66.15 as of December 31, 2015.

Market capitalization Rs, crore_

Sr. No.

Name of Subsidiary

Rs, Million

1

Guangzhou Hex aware Information Technologies Company Limited, China

1.66

2

Hex aware Technologies LLC, Russia

80.01

Reserve

The balance in the Statement of Profit and Loss after adjusting the appropriations for the year is Rs, 3,007.25 million.

Forex Mark-To-Market: The year-end Hedging Reserve stood at gain of Rs, 15.96 million, as compared to loss of Rs, 253.01 million in the previous year. This is in accordance with the recognition and measurement principles of accounting of forward exchange contracts and derivative contracts of Accounting Standard (AS)-30.

The Company recorded Rs, 232.66 Mn in Employee stock options outstanding a reserve being amortization of compensation cost of RSU''s granted.

There was no transfer to General reserve during the year.

In summary, total reserves stood at Rs, 10,496.39 million, including Rs, 4,772.37 million of Securities Premium account.

Dividend

During the year 2015, the Company paid four interim dividends on equity shares, Q1 - Rs, 2.00 (100%), Q2 - Rs, 2.00 (100%), Q3 - Rs, 2.25 (112.5%) and Q4 - Rs, 2.40 (120%). This brings the interim dividends for the four quarters of 2015 to Rs, 8.65 per share (432.5%).

The Board of Directors have not recommended payment of any final dividend and interim dividends as aforesaid be considered as final. The total cash outgo for dividend declared in 2015 on account of interim dividend & tax thereon amounts to Rs, 3,136.34 million.

The break-up of dividend is as under:

( million)

Q1

Q2

Q3

Q4

Total

Dividend

602.77

602.76

678.39

723.75

2,607.67

Tax

120.52

122.71

138.10

147.34

528.67

Total

723.29

725.47

816.49

871.09

3,136.34

Particulars of loan, guarantee or investments

Loan, guarantees and investments covered under section 186 of the Companies Act, 2013 form part of the notes to the financial statements provided in this Annual Report. Please refer note no. 9 to12 and note no. 15 of Standalone Financial Statements.

Subsidiaries and Associates

During the year 2015 Company has formed two new subsidiary companies, one in China and the other in Russia. The total amount of initial investment in these two subsidiaries are given below:

During the year Focus Frame Europe BV, Netherlands, a step down subsidiary was closed w.e.f. March 31, 2015 Further, the Company has also granted additional loan aggregating Rs, 154.50 million to wholly owned subsidiary Risk Technologies International Limited for the development of SEZ at Hinjewadi, Pune during the year.

In accordance with Section 129(3) of the Companies Act, 2013, consolidated financial statements of the Company and all its subsidiaries, forms part of the Annual Report. Further, a statement containing the salient features of the financial statement of our subsidiaries in the prescribed format AOC - 1 is appended as Annexure 1 to the Board''s report. The statement also provides the details of performance, financial positions of each of the subsidiaries.

In accordance with Section 136 of the Companies Act, 2013, the audited financial statements, including the consolidated financial statements and related information of the Company and audited financial statements of each of its subsidiaries, are available on our website www.Hex aware.com. These documents will also be available for inspection during business hours at the registered office of the Company.

Business Strategy

Hex ware’s overarching theme is of Shrink IT, Grow Digital that allows clients to significantly shrink commodity IT spend while partnering with them for their digital transformation journey.

Shrink IT

As per industry predictions, most clients'' spend much more than they should on commodity IT services. Hex aware has positioned itself as the go-to service provider to help clients reduce their commodity IT expenditure through the "Shrink IT" proposition, with the focus on reduction of quantity through intelligence driven automation.

The Company has identified certain specific set of levers to enable reduction of quantity by investing significantly in creating a platform centric approach to deliver ITO Services for both Application and Infrastructure Management services, and embracing Robotic Process Automation.

Grow Digital

Client decisions are increasingly being driven by the disruptive force of digital technology. Hex aware is at the forefront in enabling clients to embrace digitization by changing the way they interact with their end customers, employees and supply chain, transforming consumer experiences and improving efficiency of business processes.

The Company intends to continue to invest in digital offering and provide value to its clients by harnessing the power of data to derive real-time actionable insights, re-engineering business processes, modernizing application and infrastructure landscapes and building systems of engagement.

Infrastructure

A tangible signature of the Company''s growth aspirations is its investment in infrastructure. The Company invested '' 1,366.69 million in 2015 for expanding its physical and technical (IT) infrastructure globally. Primarily the investment is in SEZ development i.e. Phase 2 of facility in Siruseri, Chennai and phase 1 of facility in Hinjewadi, Pune. The investments are made with an intent to serve the long term need and to provide quality support for its global delivery operations and global sales.

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 1,630 employees working from these centers having capacity of 1,650 employees. The Company''s BPS arm operates out of another building in the same complex, with 877 employees - providing BPS services to its global clients.

Chennai:

There are around 4,295 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 Hex varsity - 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.

The Company has started with construction for Phase 2 with approximately 3,300 seats.

The BPS arm also operates out of another facility in Chennai with around 777 employees working from the facility.

Pune:

In Pune, the Company has 2 ODC''s on lease in Hinjewadi, Pune one being an SEZ in Rajiv Gandhi InfoTech Park . On a combined basis 495 employees operate from these ODC''s. The Company commenced construction of new facility - SEZ development centre through its wholly owned subsidiary - Risk Technology International Limited The first phase with seating capacity of 1,900 is expected to be completed in later half of 2016.

Nagpur:

The Company owns 20 acres of land in MIHAN SEZ, Nagpur, a tier II city. This facility is currently operational with around 221 professionals and has seating capacity to accommodate 900 professionals.

Bengaluru:

This facility is in the India''s IT capital of Bengaluru has capacity of 400 seats & the number of employees seated at office is around 302. 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:

Hex aware BPS arm has a facility in Coimbatore with 272 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.

Alpharetta, GA (USA):

The Company has Global Delivery Centre (GDC) at Alpharetta and Sandy Springs in the state of Georgia, USA with employees strength of around 280.

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 308. 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.

Russia:

The Company has center in Russia for its BPS operation which has 25 employees.

Cash Flow

The cash generated from operations in 2015 was Rs, 3,931.96 million. The Company has redeemed money from Mutual Fund amounting to Rs, 1,441.63 million (net). The Company has invested Rs, 1,366.69 million in fixed assets mainly for new development centre in Chennai and Pune. During the year, the Company paid dividend including dividend tax of Rs, 3,172.17 million. The Company has received Rs, 31.27 million from issue of shares. As of December 31, the cash position of the Company was Rs, 4,018.55 million, equivalent in USD 60.74 million. Including the Mutual Fund investments (cash equivalent), the total cash & bank balance was at Rs, 4,427.88 million equivalent USD 66.93 million.

Human Resource Capital

The Company recognizes that "Human Capital" is the most valuable asset and its focus is to have more passionate employees. To ensure good human resources management at Hex aware, the Company focuses on all aspects of the employee lifecycle. The Company has a robust and inclusive ecosystem in place which encourages meritocracy, innovation and excellence.

The Company continues to grow its footprints globally with diverse talent base of 11,375 employees. The net headcount has increased by adding 1,359 new professionals as of December 31, 2015, the Company is focused towards attracting and retaining high caliber employees through sound and resilient human resource management process. The Company consciously enhanced gender diversity with 28% of the employees being women.

Recognizing the fact that the workforce lives your brand, the HR team has embarked on a major branding exercise to build an engaging organization. For Making Hex aware a Great Place to work the Company has launched Employee Assistance Program for employees, the Company has tied up with 1to1help.net counseling service provider to provide professional counseling services to the 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.

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 Hex aware a great place to work. The Company worked with a leading agency to conduct a survey and intend to work closely with the delivery leaders to work on identified areas which would go a long way to bring employee satisfaction and enhance work passion.

Talent Management - Asset Development

The Company believes that its employees are the heart of the organization; 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. The Internal Job Postings are getting published on our internal portal, Explore thereby providing the view of all the open positions in the Company. It believes that performance needs to be quantified and hence the Performance Management System is revamped to be more metrics driven. Also, the deserving & capable employees need faster career growth and to fulfill this Company has introduced Potential Appraisal as well in the current Performance Management System. The Company also believes that employees stick to the organization to build career. Hex ware’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 to 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 organization would enable them to achieve their career objective by various training program.

Hex aware is always looking forward to grow in an environment where technology changes are inevitable. The organization values knowledge & technology and is ready to adopt the changes from time to time. Keeping this aspect in mind, the organization is always ready to invest in enriching the knowledge and skills of its young & energetic consultants. The organization is also interested in retaining strong technically qualified and result oriented consultants who can sustain the challenges in the fast growing global market environment.

Hex aware is hence committed to invest in the future growth of its employees by providing higher education to its employees through a learning platform to enhance their skills, knowledge and also provide an opportunity to "Learn while Earn". The Company has partnered with BITS, Pilani to provide the M.Tech (Software Engineer) course to its employees.

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.

Hex aware Edge

Hex ware’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

Hex aware 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

Hex aware has demonstrated leadership and expertise in focus areas.

- The Company is pioneer in managing/ servicing asset management companies.

- 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 innovation lab 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, Hex aware 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 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, Hex aware 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 CM MI Level 5 processes to meet specific customer requirements. Working relationships stretch from fixed time/ fixed fee to time and material.

Multi-Cultural Dimension

Hex aware operates on a global platform, working with 25 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

Hex aware has institutionalized 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

Adoption of International Standards

Hex aware has adopted and implemented the following international Standards and frameworks across its global development centers:

- ISO 9001-2008 & Tick ITplus

- ISO 27001:2013

- ISO 20000-1:2011

- CMMI - DEV & SVC Version 1.3 - Level 5

- ISAE3402 and SSAE16 SOC-1 Type II

Information Security

Hex ware’s information security management system preserves the confidentiality, integrity and availability of information. We perform risk management to identify, manage and reduce a range of threats to which information is subjected. Stringent information security measures are in place in the Company to ensure business continuity and to reduce business damage by preventing and minimizing the impact of security incidents. Security controls are regularly monitored and improved up on, thereby giving confidence to our customers to do business with us.

Quality Assurance

The Company has introduced and improved upon best-of-breed industry practices and standards, thus improving our delivery capability. The quality team is aligned to the business verticals and takes accountability for optimizing the processes in that vertical, which results in improving efficiency and effectiveness of delivery. We capture and augment the knowledge about the customers'' business needs which helps in knowledge retention and to develop a deep understanding of customer environment. This has resulted in high levels of customer delight and repeat business. We integrate various tools developed in-house seamlessly with our standardized delivery processes. The Company has a framework for crowd sourcing of ideas which promotes innovation in the Company and provides a direct business benefit to the customer.

Client Satisfaction Survey

We believe that client satisfaction is a key driver and indicator of future revenue of the Company. According to a Company-commissioned study conducted by Feedback Consulting, an Independent market research firm, the Company achieved a composite client satisfaction score, on a scale of -100 to 100, of 66.4 in fiscal 2015, as compared to 53.0 in fiscal 2014 and an industry average of 57-60 in fiscal 2015.

Benefits:

The customers / clients have benefited as a result of fewer defects, reduction in cycle time and improved delivery capabilities. Hex aware 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 is committed to the high standards of transparency, openness, probity and accountability. In working to ensure compliance with corporate governance laws, regulations and policies, Company is focusing on building business processes and infrastructures that not only ensure compliance but also increase company''s capacity for efficiency, agility and responsive management. The push today is towards putting into place a combination of internal controls, explicit business processes and systems for corporate governance that can also build business value.

The Company firmly believes that it is only through good corporate governance practices can we achieve sustainable growth of the organization and create long term shareholder value. Hence, our endeavor has always been to go beyond the letter of the law and observe corporate governance practices in the true spirit of the law, with high levels of accountability, transparency and integrity.

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 was the winner of the prestigious Golden Peacock Award for excellence in Corporate Governance for the year 2011 and 2015 and won the Special Commendation in the year 2009 and 2013.

Awards & Recognition:

- The Company won the following awards / recognition in 2015:

- Hex aware has been declared as the Winner of ''Golden Peacock Award for Excellence in Corporate Governance'' for the year 2015, by the Golden Peacock Awards Secretariat -Institute of Directors.

- Hex aware was recognized as the "100 MOST TALENTED GLOBAL HR LEADERS " during World HRD Congress held by CHROASIA.

- Hex aware received the NASSCOM Recognition for ''Innovative Application of Analytics for Business Solutions'', 2015.

- Hex aware awarded the Yuva Gratitude Award, 2015 for contribution towards CSR activities.

- Hex aware has been mentioned in different Gartner reports during 2015. These reports are titled:

1. "Market Trends: SAP Service Provider Opportunities in a Post modern ERP World"

2. "Market Guide for Midmarket SAP Service Providers"

3. "The Gartner CRM Vendor Guide, 2015"

4. "Market Guide for Higher Education Student Information Systems"

5. "Market Share: IT Services, 2014"

6. Market Trends: Digital Business Awakens Optimism as New Growth Opportunities Arise in Western European Application Service Market"

7. "IT Services Contracts Monthly Round up, March 2015"

8. "Market Guide for Business Intelligence Service Providers, Asia / Pacific and Japan"

9. "IT Services Contracts Monthly Round up, April 2015"

10. "Hype Cycle for Application Services, 2015", dated July 16, 2015

11. "Hype Cycle for Business Process Services and Outsourcing, 2015", dated July 29, 2015

12. "Market Guide for BI and Analytics Service Providers", dated August 06, 2015

13. "Innovation Insight for Digital Insurance Services in the P&C and Life Insurance Market", dated August

27, 2015

- An advanced analytics solution from the Company has been recognized among Top 50 Solutions in Analytics Excellence by NASSCOM (National Association of Software and Services Companies).

- Hex aware has been mentioned as one of the notable application development deals due to expire in the next 6 months in the Ovum report titled "IT Services Contracts Monthly Roundup, March 2015" dated May 05, 2015 by analyst Mohammed Habeebuddin.

- Hex aware has been mentioned as one of the India''s centric service provider of Digital Business in the Gartner report titled "Market Trends: Digital Business Awakens Optimism as New Growth Opportunities Arise in Western European Application Service Market" dated May 06, 2015 by analysts Susanne Matson, Gilbert van der Heiden.

- Hex aware has been mentioned as one of the India-based Business Intelligence service providers in the Gartner report titled, "Market Guide for Business Intelligence Service Providers, Asia/Pacific and Japan" dated May 27, 2015 by analysts Twiggy Lo and Daniel Yuen.

- Hex aware has been mentioned in the Ovum report titled, "India IT Services Vendor Quarterly, 2Q15" dated August 31, 2015, by analyst Hansa Iyengar.

- Hex aware has been mentioned as one of the major contenders in the Everest Report titled "Multi-Process Human Resource Outsourcing (MPHRO) -Service Providers'' Assessment", by analysts Rajesh Ranjan, Arkadev Basakand Harsh K.

- Hex aware''s revenue has been mentioned to have recorded a 14% jump Year-on-Year in the Ovum report titled "India IT Services Vendor Quarterly, 3Q15", dated December 08,

2015, by analyst Hansa Iyengar.

- Hex aware has been mentioned as one of the IT service providers having Critical Capabilities for SAP Application Management Services, Worldwide, dated October 15, 2015 by analysts Gilbert van der Heiden, Kris Doering, Frances Karamouzis.

- Hex aware has been mentioned as one of the IT service providers having Critical Capabilities for Oracle Application Management Services, Worldwide, dated October 15, 2015 by analysts Gilbert van der Heiden, Kris Doering, Frances Karamouzis.

- Hex aware has been mentioned as one of the three Application-management-service-centric providers of

Workday in the Gartner report titled "Market Guide for Workday Service Providers", dated November 19, 2015, by analysts Susan Tan, Frances Karamouz is and Dean Blackmore.

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 oversees 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.

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.

Internal Financial Control Systems

The Board has adopted the policies and procedures for ensuring the orderly and efficient conduct of its business, including adherence to the Company''s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timey preparation of reliable financial disclosures.

In addition to this Company continues to engage KPMG as its Internal Auditor. Their scope of work includes review of processes for safeguarding the assets of the Company, review of operational efficiency, adequacy and effectiveness of systems, processes, and internal finance controls.

Internal Auditors findings are discussed with the process owners and suitable corrective actions are taken as per the directions of Audit Committee on an ongoing basis to improve efficiency in operations. During the year, the Company continued to implement suggestions and recommendations of the Internal auditor and audit committee to improve the control environment.

The further details regarding internal financial Control are included in the Management Discussion and Analysis, which form part of this report.

HexaVarsity

Hex aware''s Learning and Development Team New Initiatives

HexaVarsity - Organizational Development (OD) Initiative

We launched the Organizational Development (OD) initiative, Ignite, in 2015. The purpose of this OD initiative was to equip our leaders to succeed in their roles. With the organizational growth and realignment of the organization structure and process, our leaders needed to be equipped to succeed in their roles as well as exploit the potential of employees.

The philosophy of the initiative is to ''Ignite the Genius Within!'' The objective of Ignite is to design and deliver a leadership development program that:

- re-energizes and re-boots for action

- polishes and sharpens competencies to boost performance in leadership roles

- acts as a catalyst to ignite creativity

In 2015, our focus was to ensure that the initiative was perceived as truly developmental, with special focus on knowledge acquisition and retention. The Company has covered 68% of our target audience by the end of 2015.

Ignite programs:

- Mindset Analysis Workshops

- Bootstraps - Hard skills for key roles

- Leadership Excellence Achievement Program (LEAP) -Behavioral competencies for key roles)

The programs are delivered across locations using a blend of methodologies such as Instructor-Led Training (ILT), virtual and e-learning.

Ignite is built around the key competencies of Accountability and Ownership, Strategic Thinking, Planning, Collaboration and Customer Focus.

CTaDel - Customer Centric Talent Development Program

HexaVarsity has launched the CTaDel initiative in January 2015 to address the account specific learning and development needs. Dedicated team members are assigned from both HexaVarsity and the accounts to work together on this initiative.

In 2015, we chose the top 20 accounts of Hex aware to cater to their learning and development needs.

Link-N-Learn: This is a weekly connect program to share and learn with peer group placed across locations.

The objective of this initiative is to share and learn from best practices, experiences, solutions, challenges, and successes. Figure 1 provides an overview of the expected outcomes of the initiative:-

Fresher Training

The Fresher Training Program (FTP) is a Hexavarsity initiated program designed and delivered exclusively for fresh graduate recruits, management trainees (MT) and senior management trainees (SMT). The program includes a series of technical and behavioural trainings and assessments for Engineering, Management and B.Sc. / B.Com / B.A. graduates to enable them to be work ready and deployable.

In 2015, a total of 702 fresh graduates completed the FTP and were successfully deployed in their new roles. The program underwent a major overhaul in approach and assessment including introduction of ''gasification'' into the training and behavioral assessments in addition to technical assessments. Furthermore, all the lab sessions (Foundation / Java / BI / Testing) are now conducted in a state-of-the art cloud environment.

Additional information and changes in the FTP can be found on the new and dynamic FTP portal.

Technical Competency Development Program (TCDP)

The Technical Competency Development Program (TCDP) is a HexaVarsity initiative aimed at developing the technical competencies of the Hex aware workforce. The competencies mapped to each role are documented in the Technical Quotient (TQ) frameworks and are uniquely defined for each unit. The TCD Program has been completely restructured and revamped in 2015 to align with the Competency Management System (CMS). Along with the TQ framework for all units, the course material and content including the Instructor Led Training (ILT), self-learning course (eLearning) courses and Seminar on Demands (SODs) are being created afresh.

The revamped TCDP will go live shortly in 2016.

Professional Certification and Incentives

- Currently 2,130 employees have been certified in the system.

- 641 certifications added in 2015 by 551 unique employees.

- 12 in-house certification drives were organized in 2015 and 302 employees participated from across locations.

- 650 hours have been spent on developing internal e-contents and hosting on the knowledge management portal.

Varsity Cloud

A new initiative was launched in 2015 to migrate all the technical training programs to the cloud which was called "Varsity Cloud". In 2015, the Company have successfully conducted technical programs for fresher’s and laterals in the Varsity Cloud.

The units have extended full support to move the software to Varsity Cloud.

The training programs were conducted for the following units -BI, ES, DA, and ADM.

The participants continued with the hands-on training, even after the training hours.

Once this initiative is introduced, the Company could find the benefits such as less time for installation, less troubleshooting, etc.

The major stakeholders, - the units and unit ''Single Point of Contacts'' are able to schedule the trainings in a more efficient way by utilizing the images already available and save time spent on the software installations / infrastructure related aspects.

The onsite employees have also benefited from the much needed access to the software.

The core enabling team, the STG cloud team ensured that the programs were successfully completed without any software access issues in.

The Company expect to migrate the entire technical training to Varsity Cloud in 2016 and also expand the utilization of Virtual Desktops (VDs) in phase 2.

LearnToGrow

HexaVarsity has launched its ''Learn To Grow'' initiative, a campaign to promote a learning culture and improve the learning quotient of the organization. The eLearning platform Hexa Guru has tremendously helped to increase the eLearning hours.

Having started the campaign in 2015, the Company have executed the campaign for awareness on the videos and e-books usage.

The following events were completed throughout the year:

1) Two HexaGuru marathon events on completing the e-learning courses with more numbers of hours.

2) Promotional mailers on capability of HexaGuru for e-learning courses, video, eBooks’, simulation, test preparation and mentoring for offshore as well as onsite consultants.

3) Promotional mailers on capability of HexaGuru for eLearning courses, videos and eBooks’ for units such as M&C, DA, ATM, GTT, and Capital Markets.

4) Completed events such as 5@5, 10@10 and 2@2 on short videos courses.

5) Separate mailers on Agile, SharePoint, Node JS, Big Data and niche technologies.

Varsity Point

VarsityPoint is the internal HexaVarsity portal for the employees that acts as a one stop shop for all of the L & D activities. Released in August 2015, VarsityPoint is an in-house portal created using SharePoint and is a hub for all HexaVarsity related portals.

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 Management Discussion and Analysis and the relevant Auditors'' Certificate regarding compliance with the conditions of Corporate Governance as stipulated in Clause 49 of the erstwhile listing agreement and Schedule V of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 is annexed.

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 2015, the shareholders approved the Hex aware Technologies Limited Employee Stock Options Plan 2015 ("ESOP 2015"/ "Plan"). Maximum number of Options/RSUs to be granted under ESOP 2015, in one or more tranches, shall be 10,765,025 exercisable into 10,765,025 shares in the Company of face value of '' 2/- each fully paid-up.

During the year 2015, following were the exercises made by employees and grant made to employees/Director under ESOPs: 639,425 options were exercised and the Company allotted 639,425 equity shares of '' 2/- each to Director and employees on such exercise. These shares have been listed on the Bombay Stock Exchange Limited and National Stock Exchange of India Limited. 9,192,738 RSUs were granted under 2008 and 2015 schemes during the year 2015 as explained below:

On January 21, 2015, 231,214 Restricted Stock Units (RSUs) were granted to Mr. R Srikrishna, CEO & Executive Director at a price of '' 2/- under the Employee Stock Option Scheme 2008 convertible into equal number of equity shares of the Company.

On May 8, 2015, 79,44,680 Restricted Stock Units (RSUs) were granted at a price of '' 2/- to the employees of the Company / subsidiary Companies under the Employee Stock Option Plan 2008 / 2015 convertible into equal number of equity shares of the Company.

On June 10, 2015, 281,220 Restricted Stock Units (RSUs) were granted at a price of '' 2/- to the employees under the Employee Stock Option Plan 2008 / 2015 convertible into equal number of equity shares of the Company.

On July 29, 2015, 190,024 Restricted Stock Units (RSUs) were granted to Mr. R Srikrishna, CEO & Executive Director at a price of '' 2/- under the Employee Stock Option Scheme 2015 convertible into equal number of equity shares of the Company.

On November 3, 2015, 5,45,600 Restricted Stock Units (RSUs) were granted at a price of '' 2/- to the employees of the Company / subsidiary Companies under the Employee Stock Option Plan 2015 convertible into equal number of equity shares of the Company.

On February 3, 2016, 2,95,120 Restricted Stock Units (RSUs) were granted at a price of '' 2/- to the employees of the Company / subsidiary Companies under the Employee Stock Option Plan 2015 convertible into equal number of equity shares of the Company.

Details of the shares issued under Employee Stock Option Plan (ESOP), and also the disclosures in compliance with Rule 12 of Companies (Share Capital and Debentures) Rules, 2014 and Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014 are set out in the Annexure 2 to this report and same is also available on the website of the Company at http://Hex aware.com/investors/ No employee was issued Stock Option, during the year equal to or exceeding 1% of the issued capital of the Company at the time of grant.

Fixed deposits

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

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 134(3) (m) of the Companies Act, 2013 read with Companies (Accounts) Rules, 2014 is annexed and forms part of the report.

Directors’ Responsibility Statement

Pursuant to Section 134 (3) (c) and (5) of the Companies Act, 2013, the Directors confirm the following:

(a) in the preparation of the annual accounts, the applicable accounting standards have been followed and there were no material departures;

(b) 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 and loss of the Company for that period;

(c) the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

(d) the Directors have prepared the annual accounts on a going concern basis; and

(e) the Directors, have laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively.

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

Directors and Key Managerial Personnel

Dr. Punita Kumar- Sinha, Independent Director, having DIN 05229262 was appointed as an Additional Independent Director w.e.f March 26, 2015 and resigned as a Director w.e.f January 12, 2016.

Mr. P R Chandrasekar having DIN 02251080 was reappointed as Non Executive Director of the Company for one year w.e.f January 1, 2016 on the existing terms and conditions including remuneration.

Mr. Jack Hennessy, Director of the Company having DIN 06990208 vacated the office of Director w.e.f February 9, 2016.

Mrs. Meera Shanker having DIN 06374957was appointed as an Independent Director w.e.f April 11, 2016 for a period of two years.

Mr. Basab Pradhan having DIN number 00892181 and Mr. Christian Oecking having DIN 03090264 were reappointed for a period of three years w.e.f June 9, 2016 and June 26, 2016 respectively.

Re-appointments

In accordance with the provisions of Companies Act, 2013, Mr. Jimmy Mahtani and Mr. Kosmas Kalliarekos, 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 / reappointment at the Annual General Meeting to be given to the shareholders as per regulation 36 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 is being provided separately on Page No. 86 & 87 of this Annual Report. Members are requested to refer the said section of the Corporate Governance Report.

Number of Meetings of the Board

Six Meetings of the Board were held during the year. For details of the meetings of the Board, you may refer to the corporate governance report, which forms part of this Annual report.

Declaration by Independent Directors

The Independent Directors have submitted a declaration that each of them meets the criteria of independence as provided in Section 149(6) of the Companies Act, 2013 and there has been no change in the circumstances which may affect their status as Independent Director during the year.

Board Evaluation

The board of Directors has carried out an annual evaluation of its own performance, Board committees and individual Directors pursuant to the provisions of the Act and the corporate governance requirements as prescribed under the Listing Agreement/Regulations.

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

The performance of the committees was evaluated after seeking inputs from the committee members on the basis of the criteria such as the composition of committees, effectiveness of committee meetings, functioning of the committees etc.

The performance evaluation of Independent Directors has been done by the entire Board of Directors, excluding the Director being evaluated.

The Board / Nomination and Remuneration Committee ("NRC") reviewed the performance of the individual Directors on the basis of the criteria approved by the Board.

In a separate meeting of Independent Directors held on December 15, 2015, performance of Non-Independent Directors, performance of the Board as a whole and performance of the Chairman was evaluated.

Training of Independent Directors

To familiarize the Independent Directors with the strategy, operations and functions of the Company, the Executive Director and Senior Managerial Personnel make presentations at the Board Meeting about Company''s operations, markets, financial results, human resources and on other important aspects.

The terms and conditions of the appointment of every Independent Director is available on the website of the Company at: http://Hex aware.com/investors/

Details of the familiarization programme of the Independent Directors is available on website of the Company at http:// Hex aware.com/investors/

Committees of the Board

The Board of Directors have constituted the following Committees:

1. Audit, Governance & Compliance Committee

2. Nomination & Remuneration Committee

3. Stakeholders Relationship Committee

4. Capital Issue Committee

5. Banking, Investments Operations & Forex Committee

6. Corporate Social Responsibility Committee

7. Infrastructure Committee

The details of the composition of the committee and attendance of the members at the Audit, Governance & Compliance Committee, Nomination & Remuneration Committee, Stakeholders Relationship Committee and Corporate Social Responsibility Committee of the Board are provided in the Corporate Governance report.

Policy on Directors and Key Managerial Personnel appointment and remuneration and other details

The Company''s policy on Directors and Key Managerial Personnel appointment and remuneration and other matters as provided in Section 178(3) of the Act has been disclosed in 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 behavior, 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. The provisions of this policy are in line with the provisions of Section 177 (9) of Companies Act, 2013. The policy is available on the website of the company at : http://Hex aware.com/investors/

Statutory Auditor

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 its meeting held on February 3, 2016, the Board of Directors have, subject to the approval of the shareholders, at their meeting held on February 03, 2016 approved the re-appointment of Deloitte Haskins & Sells LLP as the Statutory Auditors of the Company for the financial year 2016 and to hold office from the conclusion of the forthcoming Annual General Meeting 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. As required under Regulation 33 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Statutory Auditors have also confirmed that they hold a valid certificate issued by the Peer Review Board of the Institute of Chartered Accountants of India.

There are no qualifications, reservations or adverse remarks made by the statutory auditors in their audit reports on the financial statements for the year ended December 31, 2015.

Internal Auditor

Internal Audit for the year ended December 31, 2015 was done by KPMG and Internal Audit report for every quarter was placed before the Audit Committee. The Board of Directors at its meeting held on February 3, 2016 have re-appointed KPMG as Internal Auditor for the year ended December 31, 2016.

Secretarial Auditor

M/s. Makarand M Joshi & Co., Practicing Company Secretary was appointed to conduct the Secretarial Audit of the Company for the year ended December 31, 2015 as per the provisions of Section 204 of the Companies Act, 2013 read with rules made hereunder. The Secretarial Audit report for the year ended December 31, 2015 is annexed to Board''s report as Annexure 3. There are no qualifications, reservations or adverse remarks made by Secretarial Auditor in his 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. The details as required to be provided under Section 134(3)(h) of the Companies Act, 2013 are disclosed in Form AOC-2 as Annexure 4 and forms part of this Annual Report.

All Related Party Transactions are placed before the Audit Committee as also the Board for approval. Policy on dealing with related party transaction is available on the website of the Company. http://Hex aware.com/investors/

Policy on determining material subsidiaries of the Company is available on the website of the Company. http://Hex aware.com/ investors/

Appointment of M/s. Karvy Computershare Private Limited as Registrar & Transfer agent of your Company

Securities and Exchange Board of India vide its Ex Parte -AD - Interim Order No. WTM/RKA/MIRSD2/41/2016 dated March 22, 2016 (Order), directed all the clients of Sharepro Services (India) Private Limited (Sharepro) to carry out/switchover their activities related to a Registrar to an Issue and Share Transfer Agent, either in-house or through another Registrar to an Issue and Share Transfer Agent registered with SEBI and also directed to conduct a thorough audit of the records and systems of Sharepro for the past ten years, concerning dividend payments and transfer of securities to determine whether dividends have been paid to actual/beneficial holders and whether securities have been transferred as per the provisions of law.

Accordingly, the Company has terminated the services of Sharepro Services (India) Private Limited and have appointed Karvy Computershare Private Limited as Registrar and Share Transfer Agent of the Company.

Further the Company has also appointed Auditors for conducting the audit for past 10 years concerning dividend payments and transfer of securities as per SEBI direction.

Extension of time for holding Annual General Meeting

To ensure the smooth transfer of data from Sharepro Services (India) Private Limited to Karvy Computershare Private Limited it was decided to extend the date of the Annual General Meeting of the members for the financial year ended December 31, 2015, the due date for which was June 30, 2016. Accordingly approval from Registrar of Companies, Mumbai vide approval letter dated June 1, 2016 was received by the Company for extension of time for holding Annual General Meeting for the financial year ended December 31, 2015 upto September 30, 2016.

Significant/Material Orders Passed by the Regulators

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

Corporate Social Responsibility

Pursuant to the provisions of section 135 of the Companies Act, 2013, the Company spent '' 25.34 Million towards CSR activities for the year ended December 31 2015. The composition of the CSR committee and contents of the CSR policy and initiatives taken by the Company on Corporate Social Responsibility during year ended on December 31, 2015 as per the format prescribed in the Companies (Corporate Social Responsibility Policy) Rules, 2014 is attached as Annexure 5 to this Report and CSR policy of the Company is available on our website at http://Hex aware.com/investors/ The Composition of CSR Committee is given in the Corporate Governance Report.

These CSR projects are currently at their initial stages of Implementation and Company will be required to spent further funds in the days to come.

The Company being a foreign source, every person who receives contribution shall have separate bank Account for receipt for contribution (FCRA). While incurring CSR expenditure the Company found many implementing agencies do not have the said FCRA bank account and hence there was a delay in incurring CSR expenditure for few of the implementing agencies.

The company is also in process of further identifying impactful projects for CSR expenditure which can have a qualitative longer term impact on societal issues.

Extract of annual return

As provided under Section 92(3) of the Act, the extract of annual return in the prescribed Form MGT-9, forms part of this report as Annexure 6.

Financial year

The Company has received an order from the Company Law Board under section 2 (41) of the Companies Act, 2013 for continuing January to December as its financial year. Hence the Company will maintain its financial year from January 1 to December 31.

Particulars of Directors and Employees

The table containing information as per rule 5 (i) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 is enclosed as Annexure 7 to the Board Report.

The statement containing particulars of employees as required under Section 197(12) of the Act read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is provided in a separate annexure forming part of this report. Further, the report and the accounts are being sent to the members excluding the aforesaid annexure. In terms of Section 136 of the Act, the said annexure is open for inspection at the Registered Office of the Company. Any shareholder interested in obtaining a copy of the same may write to the Company Secretary.

Disclosure as required under Section 22 of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013

The Company as an organization is committed to provide a healthy environment to all the employees and thus does not tolerate any discrimination and/or harassment in any form. The Company has in place a Prevention of Sexual Harassment (POSH) policy in line with the requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. Frequent communication of this policy is done through various programs and at regular intervals to the employees.

The Company has setup an Internal Complaints Committee (ICC) both at the registered office and at every location where it operates in India in accordance with the Act and has representation of men and women and is chaired by senior lady member and has an external women representation.

Workshops and awareness programmes are organized for sensitising the employees with the provisions of the Act and orientation programmes for the members of the Internal Committee.

The following is the summary of the complaints received and disposed off during the financial year 2015:

a) No. of complaints received in the year: 03

b) No. of complaints disposed off: 03

c) No. of complaints pending : NIL

Green initiatives

The Company started a sustainability initiative with the aim of going green and minimizing the impact on the environment. Like the previous years, this year too, the Company is publishing only the statutory disclosures in the print version of the Annual Report. Additional information is available on our website, www.Hex aware.com.

Electronic copies of the Annual Report 2015 and Notice of the 23rd Annual General Meeting are being sent to all members whose email addresses are registered with the Company / Depository Participant(s). For members who have not registered their email addresses, physical copies of the Annual Report 2015 and the Notice of the 23rd Annual General Meeting are being sent in the permitted mode. Members requiring physical copies can send a request to the Company.

The Company provides e-voting facility to all its members to enable them to cast their votes electronically on all resolutions set forth in the Notice. This is pursuant to the Section 108 of the Companies Act 2013 and Rule 20 of the Companies (Management and Administration) Amendment Rules, 2015.

Acknowledgment

The Directors place on record their sincere appreciation of the customers, Government of India and of other countries, 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

Date: June 23, 2016

Place: Mumbai


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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