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Directors Report of Lycos Internet Ltd.

Mar 31, 2014

Dear Members,

The Directors are pleased to present the 15th Annual Report of the Company for the Financial year 2013-14.

1. Financial Highlights

(Rs in Lakhs)

Particulars Consolidated Standalone

FY 2013-14 FY 2012-13 FY 2013-14 FY 2012-13

Total Revenue 167487.28 161538.85 61006.68 60213.67

Gross Profit before Interest, Depreciation & Tax 36864.98 12100.26 9038.85 4623.77

Less: Interest 2694.40 3516.77 2375.45 2319.25

Depreciation 6883.36 2603.08 5287.98 1247.26

Profit Before Tax 27287.22 5980.41 1375.41 1057.25

Less: Provision for Tax 5113.26 1059.97 468.07 221.13

Deferred Tax Liability 77.69 383.83 (8.32) 383.83

Add: MAT Credit Entitlement NIL 562.88 NIL 562.88

Profit After Tax 22096.28 5099.49 915.65 1015.18 Balance Brought forward from the previous year 37444.10 32375.06 12146.35 11161.63

Profit available for appropriations 59540.38 37474.55 13062.00 12176.81

Transferred to General Reserve 27.47 30.46 27.47 30.46

Profit Carried to Balance Sheet 59512.91 37444.10 130 34.53 12146.35 2. DIVIDEND

In order to strengthen the financial viability and in view of the future plans of the company, your directors have expressed their inability to recommend any dividend for the financial year 2013-14.

3. TRANSFER TO GENERAL RESERVE

The Company proposes to transfer an amount of Rs 27.47 lakhs to the General Reserve out of the amount available for appropriations.

4. PERFORMANCE REVIEW

On Consolidation basis, your company has achieved a total revenues of Rs. 1674.87 Crores for financial year 2013-14 as against Rs 1615.39 Crores in previous financial year, an increase of around 4% year on year basis. After considering write off current year and last year, the profit for the year was Rs. 221 crores as against Rs. 51 crores in previous year. The revenues from digital division for the year was Rs.1216 crores, an increase of 41% year-on-year basis.

5. BUSINESS REVIEW

The Management Discussion and Analysis Section of the Annual Report presents a detailed business review of the company.

6. SUBSIDIARY COMPANIES.

The Company has 18 subsidiaries as on date and the details of investments made by the company in the subsidiaries during the financial year 2013-14 and the value of investments as on March 31, 2014 have been furnished vide Note 12 to Notes to Accounts.

In accordance with the Ministry of Corporate Affairs General circular dated February 8, 2011, the Balance sheet and the Statement of Profit and loss and other documents of the Sub- sidiary companies are not being attached to the Balance sheet of the Company. A Statement containing the brief details of financials of the Subsidiary Companies for the financial year ended March 31, 2014 is attached to this Annual Report.

The Annual accounts of the Subsidiary companies shall be made available to the members who seek such information and are also made available for inspection by the members of the company at the Registered office of the Company on any working day during business hours.

7. CONSOLIDATED FINANCIAL STATEMENTS

In terms of Clause 32 of the Listing Agreement with the Stock Exchanges, Consolidated Financial Statements of the Company prepared in accordance with Accounting Standards issued by Institute of Chartered Accountants of India, are attached and forms part of the Annual Report.

8. FIXED DEPOSITS

During year under review, your company has neither invited nor accepted any Fixed Deposits from the public.

9. CORPORATE GOVERNANCE

As stipulated under Clause 49 of the Listing Agreement with the Stock Exchanges, the Report on the Corporate Governance is annexed to this report and forms part of the Annual Report.

The requisite certificate from the Auditors of the Company confirming the compliance of the conditions stipulated under Clause 49 of the Listing Agreement is attached to the Report on Corporate Governance.

10. MANAGEMENT DISCUSSION AND ANALYSIS REPORT

As stipulated under clause 49 of the Listing Agreement with the Stock Exchanges, the Report on Management Discussion and Analysis is annexed to this report and forms part of the Annual Report.

11. POLICY ON CODE OF CONDUCT

The Company has laid down a "Code of Conduct & Ethics" for all Board members and Senior Management Personnel. Pursuant to Clause 49(I)(D)(ii) of the Listing Agreement, the Declaration by the Chairman and Managing Director affirming the compliance with the Code of Conduct & Eth- ics is attached to the Report on Corporate Governance.

12. DIRECTORS

Pursuant to provisions of Section 152 of the Companies Act, 2013, Mr.Vijay Kancharla, Director retires by rotation at the ensuing Annual General Meeting and being eligible offers himself for re-appointment. In terms of Clause 49 of the Listing Agreement with the Stock Exchanges, the Company had designated Mr.M.Vijaya Bhasker Reddy, Mr.Y.Ramesh Reddy and Mr. A Raghunath as Independent Directors of the company. As per the provisions of the Section 149 of the Companies Act, 2013 (Act) which came into force from April 1, 2014, every listed company is required to have one-third of the total number of Directors as Independent directors. The above named directors, who are designated as Independent Directors pursuant to Listing Agreement, are now being appointed as Independent Directors to hold the office for tenure as specified in the notice to the AGM, un- der the provisions of Section 149 of the Companies Act, 2013. The Board of Directors recommends the appointment of above named directors as Independent Directors.

13. AUDITORS

M/s.P.Murali & Co., Statutory Auditors of the company holds the office until the conclusion of the ensuing Annual General Meeting and are eligible for re-appointment.

The Company has received a letter from the Statutory Auditors that their appointment, if made, would be within the limits prescribed under the provisions of the Companies Act, 2013 and that they are not disqualified for re-appointment. The Board of Directors recommends the reappointment of M/s.P.Murali & Co., as Statutory Auditors of the Company.

14. PARTICULARS OF EMPLOYEES

In terms of provisions of Section 217(2A) of the Compa-nies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, as amended, the names and other particulars of the employees are required to be set out in the Annexure to the Directors'' Report. However, as per the pro- visions of Section 219(1)(b)(iv) of the said Act, the Annual Report, excluding the aforesaid information, is being sent to all the members of the Company and others entitled thereto. Members who are desirous of obtaining such particulars are requested to write to the Company Secretary of the Company.

15. DISCLOSURES OF PARTICULARS WITH RESPECT TO CONSERVATION OF ENERGY, RESEARCH & DEVELOPMENT, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS & OUTGO:

The particulars, as prescribed 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, are as following:

(i) Details of Conservation of Energy

The operations of your company do not consume high levels of energy. The Company uses electric energy for its equip- ment such as computer terminals, air conditioners, lighting and utilities in the work premises. Adequate measures have been taken to conserve energy by using energy efficient computers and equipment with the latest technologies. However, the requirement of disclosure of particulars with respect to conservation of energy as prescribed in the Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 are not applicable to the Company and hence not provided.

(ii) Research & Development and Technology Absorption

The Information Technology (IT) and Information Technology Enabled Services (ITES) Industry are subject to high rate of technological obsolescence. The Company''s business is Digital Marketing and Software Development. The change in the industry paradigm is dynamic. The Company is continuously updating these changes and constantly evaluating these developments to improve its capabilities towards the industry. Accordingly, research and development of new services, display advertising, platforms and methodologies, continue to be of importance to us. This allows us to enhance quality, productivity and customer satisfaction through continuous improvements and innovations. As part of the continuous thrust on R&D, the company is also focused on Solutions Research and Vertical Focus Research. These would identify new ideas which would enable business process improvement for customers and would be aligned with the business strategy and growth opportunities of the organization.

(a) R & D Initiative:

The Company believes that technological obsolescence is a practical reality. It invests and encourages continuous innovation. Its R & D is always focused to provide unique benefits to our customers and other stakeholders by working both proactively (self-driven research) and reactively (customer-driven research). Our technical team also works to optimize the existing software applications and to be able to optimally use the existing hardware on a continuous basis.

(b) Specific areas for R&D at the company & the benefits derived there from:

The Company is continuously working on its all business areas specifically digital marketing division for bringing about significant improvements in its services offered at competitive. The R& D activities taken up by the company helps it to remain competitive.

(c) Future plan of action:

The Company is constantly keep working on finding/evaluating new technologies, processes, frameworks and methodologies to enable us in improving the quality of our offering and better ways to service at competitive at all levels.

(d) Expenditure on R & D for the year ended March 31, 2014:

Our R & D activities are not capital intensive and we do not specifically provide for the same in our books.

(iii) Foreign Exchange Earnings and outgo The particulars of earnings and expenditure in foreign exchange during the year are given vide note no 31 & 30 in notes to Standalone financial statements.

16. DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to the provisions of Section 217(2AA) of the Companies Act, 1956, the Board of Directors hereby state that:

(a) in preparation of annual accounts containing financial Statements for the financial year ended March 31, 2014 the applicable accounting standards have been followed.

(b) the accounting policies are consistently followed and your Directors have applied them to give a true and fair view of the state of affairs of the Company and the profit/loss 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, 1956, for safe- guarding the assets of the Company and for preventing and detecting fraud and other irregularities.

(d) Annual accounts have been prepared on a going concern basis.

17. ACKNOWLEDGEMENTS AND APPRECIATIONS

We thank our Customers, Vendors, governmental authorities, Banks, Financial Institutions and esteemed Shareholders for their continued support. We place on record our appreciations of the contribution made by the employees at all levels.

For and on behalf of the Board of Directors YBRANT DIGITAL LIMITED

SD/- M. Suresh Kumar Reddy Chairman & Managing Director Place: Hyderabad Date: July 26, 2014


Mar 31, 2013

To The Members

The Directors have great pleasure in presenting the Fourteenth Annual Report on the business and operations of the Company for the financial year ended March 31, 2013. Rs. in Lakhs

For the financial year ended 31st March, Financial Results Consolidated Standalone 2013 2012 2013 2012

Total Income 161538.85 129751.10 60213.67 51315.46

Gross Profit before Interest, 12100.26* 27208.05 4623.77* 8967.57

Depreciation & Tax

Less: Interest 3516.77 2765.63 2319.25 2295.34

Depreciation 2603.08 1675.91 1247.26 687.89

Provision for Tax 1059.97 3274.24 221.13 994.91

Profit after Tax 4920.44 19492.27 836.13 4989.43

Less: Provision for Deferred Tax 383.83 312.12 383.83 212.41

Liability

Add: MAT Credit Entitlement 562.88 0 562.88 0

Net Profit for the year 5099.49 19180.15 1015.18 4777.02

Balance Brought forward from the 32375.06 14445.24 11161.63 7634.94 previous year

Profit available for appropriations 37474.55 33625.39 12176.81 12411.96

Provision for proposed Dividend 0 952.50 0 952.50

Tax on Dividends 0 154.52 0 154.52

Transferred to General Reserve 30.46 143.31 30.46 143.31

Profit Carried to Balance Sheet 37444.10 32375.06 12146.35 11161.63

* Figures are after write off of Rs.59.93 Crs and Rs.134.94 Crs in Standalone and Consolidated balance sheet respectively.

DIVIDEND

In order to strengthen financial viability and in view of future plans of the company, the directors of your company expresses their inability to recommend any dividend for the financial year 2012-2013.

TRANSFER OF UNPAID DIVIDEND

Your company docs not have any unpaid dividend required to be transferred to the Investor Education and Protection Fund (1KPI1) under section 205C of the Companies Act, 1956 in the financial year 2012-13.

TRANSFER TO RESERVES

The Company proposes to transfer Rs.30,45,536/-to the General Reserve out of the amount available for appropriations and an amount of ^3,74,44,10,781/- is proposed to be retained in the Consolidated Profit and Loss account and an amount of Rs. 12,14,634,326/- is proposed to be retained in the Stand Alone Profit and Loss account

OPERATIONAL RESULTS & BUSINESS

During the year under review, the standalone total income was 76,02,13,67,206/- as againstRs.5,l 3,15,46,250/- in the previous year. The consolidated total income was Rs.16,15,38,85,005/- as againstRs. 12,97,51,10,298/- in previous year. The financial performance was discussed elsewhere in this Annual Report.

Your Company caters to its clients through a network of global presence by its established offices and a relentless effort is on the leash for bringing out constant improvements.

ACCOUNTS OF SUBSIDIARIES

Your Company has Eighteen subsidiaries and names and relevant information was given elsewhere in this Annual Report. There has been no material change in die nature of the business of the subsidiaries. As required under the Listing Agreement with the Stock F.xchanges, consolidated financial statements have been prepared and included in this Annual Report.

The Ministry of Corporate Affairs (MCA), Govt of India, has granted subject to fulfillment of certain conditions, general exemption from attaching the annual accounts and other reports of Company''s subsidiaries, as required under section 212 of the Companies Act, 1956. Copies of these annual accounts and related information will be made available at the Registered Office of the Company during business hours and also at the venue during the Annual General Meeting. The financial information as required in the above referred notification for each subsidiary is published at the end of the consolidated financial statements in the Annual Report for the year 2012-13. A statement pursuant to Section 212 of the Companies Act, 1956 related to Subsidiary Companies given at the end of the consolidated financial statement in the Annual Report. CONSOLIDATED FINANCIAL STATEMENTS

In accordance with Accounting Standards AS-21 on Consolidated Financial Statements, the Audited Consolidated Financial Statements are included in this Annual Report.

FIXED DEPOSITS

The Company has not invited/accepted any fixed deposits from the public for the financial year ended March 31,2013.

PARTICULARS OF EMPLOYEES

Particulars of employees pursuant to section 217(2A) of the Companies Act, 1956 arc part of the Director''s Report. However, having regard to the provisions of Section 219(i)(b)(iv) of the Companies Act, 1956, the Annual Report excluding the aforesaid information is being sent to all the shareholders of the Company and others entitled thereto. Any shareholder interested in obtaining a copy of the same may write to the Company Secretary at the Registered Office of the Company.

AUDITORS

M/s. P. Murali & Co., Chartered Accountants, Auditors of the Company will retire at the conclusion of the Annual General Meeting and arc eligible for re-appointment. They have conveyed their willingness to accept re-appointment and confirmed their eligibility under Section 224(1-B) of the Companies Act, 1956. The Auditors'' Report to the shareholders docs not contain any qualification or adverse remarks which require any clarification or explanation. DIRECTORS

The Board of Directors has accepted the resignation of Mr.S.Pulla Reddy, Independent director on the board w.e.f June 24, 2013 and placed its deep sense of appreciation for his services during the tenure of his association as Board member. Mr.Y.Ramesh Reddy, Director, retires by rotation at the ensuing Annual General Meeting and being eligible, offers himself for re-appointment. Your Directors recommends the resolution for his re-appointment as director of your Comparand the additional information furnished in the notice of the fourteenth Annual General Meeting pursuant to the provisions of Clause 49 of the Listing Agreement

REPORT ON CORPORATE GOVERNANCE

The Report on Corporate Governance as stipulated under Clause 49 of the 1 .isting Agreement forms part of this .Annual Report.

MANAGEMENT DISCUSSION & ANALYSIS

The Management Discussion and Analysis Report (MDA) is forming part of this Annual Report.

DECLARATION ON CODE OF CONDUCT

Pursuant to provisions of Clause 49 (I) (D) (ii) of the Listing Agreement, a Declaration declaring that all the members of the Board and the Senior Management Personnel of the Company have affirmed compliance with the Code of Conduct of the Company, is forming part of the Corporate Governance Report attached herewith.

DISCLOSURE ON COMPANY''S EMPLOYEES STOCK OPTIONS

During the year under review no scheme is in force and no options were granted, hence no information / disclosures are being made under SEBI (ESOS / ESPS) Guidelines 1999. LGSL Foundation is holding 783509-shares as on March 31,2013 after successfully implementation of various Employees Stock Option Schemes in earlier years. Ybrant Employees Welfare Trust (ESOP Trust) is holding 73,50,000-shares as on March 31, 2013 after successfully implementation of various Employees Stock Option Schemes in earlier years in Ybrant Digital Limited (Transferor Company). No fresh ESOP was implemented during the year under review .

CASH FLOW STATEMENT PURSUANT TO CLAUSE 32

The Cash Flow Statement pursuant to Clause 32 of the Listing Agreement entered into with Stock F.xchangc(s) is appended to this Annual Report.

DISCLOSURES OF PARTICULARS WITH RESPECT TO CONSERVATION OF ENERGY, RESEARCH & DEVELOPMENT, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS & OUTGO:

The particulars, as prescribed under Section 217(l)(c) of the Companies Act, 1956, read with Companies (Disclosure of particulars in the Report of Board of Directors) Rules, 1988, are as following:

(i) Details of Conservation of Energy

''ITie operations of your company do not consume high levels of energy. The Company uses electric energy for its equipment such as computer terminals, air conditioners, lighting and utilities in the work premises. Adequate measures have been taken to conserve energy by using energy-efficient computers and equipment with the latest technologies. However, the requirement of disclosure of particulars with respect to conservation of energy as prescribed in the Section 217(l)(c) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 are not applicable to the Company and hence not provided. As an ongoing process, the following measures are undertaken to conserve energy :

(a) Implementation of viable energy audit proposals.

(1)) Installation of automatic power factor controllers to save maximum demand charges and energy.

(c) Training front-end operational persons on the opportunities and importance of energy conservation.

(d) Automation of air conditioners is taken up in all locations.

(e) Precision temperature controllers are installed in all locations.

(f) Awareness and training sessions for maintenance personnel were conducted by experts.

(g) Optimum usage of air-conditioning equipment is made within the office space.

(h) F.fforts are on to provide for intelligent lighting, automatic lighting system based on sensors for optimum use of power.

(ii) Research & Development and Technology Absorption

The Information Technology (IT) and Information Technology Enabled Services (1TES) Industry are subject to high rate of technological obsolescence.

The Company''s business is Digital Marketing and Software Development. The change in the industry paradigm is dynamic. The Company is continuously updating these changes and constantly evaluating these developments to improve its capabilities towards the industry. Accordingly, research and development of new services, display advertising, platforms and methodologies, continue to be of importance to us. This allows us to enhance quality, productivity and customer satisfaction through continuous improvements and innovations. As part of the continuous thrust on R&D, the company is also focused on Solutions Research and Vertical Focus Research. These would identify new ideas which would enable business process improvement for customers and would be aligned with the business strategy and growth opportunities of the organization.

(a) R&D Initiative:

The Company believes that technological obsolescence is a practical reality. It invests and encourages continuous innovation. Its R& D is always focused to provide unique benefits to our customers and other stakeholders by working both proactively (self-driven research) and reactively (customer-driven research). Our technical team also works to optimize the existing software applications and to be able to optimally use the existing hardware on a continuous basis.

(1)) Specific areas for R&D at the company & the benefits derived there from:

The Company is continuously working on its all business areas specifically digital marketing division for bringing about significant improvements in its services offered at competitive. The R& D activities taken up by the company helps it to remain competitive.

(c) Future plan of action:

The Company is constantly keep working on finding/evaluating new technologies, processes, frameworks and methodologies to enable us in improving the quality of our offering and better ways to sen-ice at competitive at all levels.

(d) Expenditure on R& D for the year ended March 31, 2013:

Our R & D activities are not capital intensive and we do not specifically provide for the same in our books.

(iii) Foreign Exchange Earnings and outgo

The particulars of earning and expenditure in foreign exchange during the year arc given vide note no.31 & 32 in notes to Standalone financial statements.

DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to the provisions of Section 217(2AA) of the Companies Act, 1956, the Board of Directors hereby state that:

(a in preparation of annual accounts containing financial statements for the financial year ended March 31, 2013 the applicable accounting standards have been followed.

(b) the accounting policies are consistently followed and your Directors have applied them to give a true and fair view of the state of affairs of the Company and the profit/loss 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, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

(d) annual accounts have been prepared on a going concern basis.

ACKNOWLEDGEMENTS AND APPRECIATIONS

We thank our Customers, Vendors, governmental authorities, Banks, Financial Institutions and esteemed Shareholders for their continued support. We place on record our appreciations of the contribution made by the employees at all levels.

For and on behalf of the Board of Directors

YBRANT DIGITAL LIMITED

(Formerly LGS Global Limited)

Sd/-

M. Suresh Kumar Reddy

Chairman

Place : Hyderabad

Date: August 08, 2013.


Mar 31, 2010

The Directors have great pleasure in presenting the Eleventh Annual Report on the business and operations of the Company for the financial year ended 31st March 2010.

FINANCIAL RESULTS

(Rupees in Lakhs)

For the financial year ended 31st March

Financial Results Consolidated Standalone

2010 2009 2010 2009

Income from Operations 38446.69 29458.56 24074.54 18514.07

Other Income (360.85) 401.50 (360.85) 401.50

Total Income 38085.84 29860.06 23713.69 18915.57

Operating expenditure 32403.80 25407.09 21015.78 15259.20

Gross Profit before Interest, Depreciation & Tax 5682.04 4452.97 2697.91 3656.37

Less: Interest 1133.75 681.01 1030.70 616.71

Depreciation 480.70 462.03 331.24 329.34

Provision for Tax 774.22 599.77 262.63 426.09

Profit after Tax 3293.37 2710.16 1073.34 2284.23

Less: Provision for Deferred Tax Liability 24.96 11.44 24.96 11.44

Profit after Deferred Tax 3268.41 2698.72 1048.38 2272.79

Net Profit for the year 3268.41 2698.72 1048.38 2272.79

Balance Brought forward from the previous year 6879.46 4255.10 5248.09 3049.65

Profit available for appropriations 10147.87 6953.82 6296.47 5322.44

Provision for proposed Dividend 254.24 63.56 254.24 63.56

Tax on Dividends 43.21 10.80 43.21 10.80

Transferred to General Reserve 63.56 0.00 63.56 0.00

Profit Carried to Balance Sheet 9786.86 6879.46 5935.46 5248.08

DIVIDEND

Your Directors take pleasure in recommending a dividend of Re. 1 per Equity share (10%) on face value of Rs. 10/- per share for the approval of the members for the financial year ended 31st March 2010. The dividend, if declared as above, would involve an outflow of Rs. 2,54,23,667/- towards dividend and Rs. 43,20,752/- towards dividend tax, resulting in a total outflow of Rs. 2,97,44,419/- .

TRANSFER TO RESERVES

The Company proposes to transfer Rs. 63,55,917/- to the General Reserve out of the amount available for appropriations and an amount of Rs. 97,86,86,237/- is proposed to be retained in the Consolidated Profit & Loss Account.

The Company proposes to transfer Rs. 63,55,917/- to the General Reserve out of the amount available for appropriations and an amount of Rs. 59,35,46,580/- is proposed to be retained in the Standalone Profit & Loss Account.

OPERATIONAL RESULTS & BUSINESS

FY 2009-10 showed a strong performance compared to the previous year with skillful financial management in the face of challenging economic conditions. During the year under review, the standalone total income was Rs. 23713.69 lakhs as against Rs. 18915.57 lakhs in the previous year. The consolidated total income was Rs. 38085.84 lakhs as against Rs.29860.06 in previous year.

Your Company caters to its clients through a network of global presence by its established offices and a relentless effort is on the leash for bringing out constant improvements.

SUBSIDIARIES

Your Company has three subsidiaries namely Techorbit Inc, Global IT Inc situated in USA and LGS Global FZE in United Arab Emirates.

There has been no material change in the nature of the business of the subsidiaries.

As required under the Listing Agreement with the Stock Exchanges, consolidated financial statements have been prepared and included in this Annual Report.

STATEMENT UNDER SECTION 212 OF THE COMPANIES ACT, 1956

As per Section 212 of the Companies Act, 1956, we are required to attach the directors report, balance sheet, and profit and loss account of the subsidiaries. The Ministry of Corporate Affairs (MCA), Government of India has granted exemption from complying with Section 212 vide its approval letter No.47/573/2010-CL-III, Dtd.18.06.2010. In compliance with the terms of the exemption we have presented summary of financial information through statements for each subsidiary. Summary financial information includes Share Capital, Reserves & Surplus, Total Assets, Total Liabilities, our holding in the subsidiary, details of Investment, turnover, Profit before taxation, provision for taxation, Profit after taxation etc.. Accordingly, the annual report does not contain the financial statements of these subsidiaries. The Annual Accounts of the Subsidiary Companies and the related detailed information will be made available to the Holding and Subsidiary Companies investors seeking such information at any point of time. The Annual Accounts of the Subsidiary Companies will also be kept for inspection by any investor at the Registered Office of the Company and that of Subsidiary Companies concerned.

A statement pursuant to Section 212 of the Companies Act, 1956 related to Subsidiary Companies given elsewhere in this Annual Report.

CONSOLIDATED FINANCIAL STATEMENTS

In accordance with Accounting Standards AS-21 on Consolidated Financial Statements, the Audited Consolidated Financial Statements are included in this Annual Report.

CHANGES & DEVELOPMENTS DURING THE YEAR AND THEREAFTER

Your Company has obtained approval to set up a unit in Special Economic Zone (SEZ) at Sundew Properties Private Limited (formerly K Raheja IT Park (Hyderabad) Private Limited), Mindspace, Cyberabad, Madhapur, Hyderabad, A.P. The SEZ Unit commenced its operations from April 08, 2010.

The Equity Shares of the Company are listed in Madras Stock Exchange with effect from 13th September, 2010.

FIXED DEPOSITS

The Company has not accepted any fixed deposits from the public for the financial year ended March 31, 2010.

HUMAN RESOURCES

Your company recognizes the importance of human resources as it forms the backbone for its success. Your company strongly believes in nurturing and encouraging human resources. The prime focus of the company is to enhance the professional value of its employees and create win-win situations for both the organization and its employees. Your company continues to adopt best HR practices to recruit and retain talented employees. Your company is confident of reaping the best from its talent pool and sharing the benefits with its employees on an equitable basis in the years to come.

PARTICULARS OF EMPLOYEES

Particulars of employees as required under section 217(2A) of the Companies Act, 1956 and the Companies (Particulars of Employees) Rules, 1975 as amended, forms part of this report given as annexure to the Directors Report.

AUDITORS

M/s. P. Murali & Co., Chartered Accountants, Auditors of the Company will retire at the conclusion of the Annual General Meeting and are eligible for re-appointment. They have conveyed their willingness to accept re-appointment and confirmed their eligibility under Section 224(1-B) of the Companies Act, 1956.

The Auditors Report to the shareholders does not contain any qualification or adverse remarks which require any clarification or explanation.

DIRECTORS

Mr. Pradeep Kumar Dev Vyricherla, Director, retires by rotation and being eligible offers himself for re- appointment. Mr. G. Ramesh had submitted the resignation to the directorship of the company with effect from April 16, 2010 and the same was accepted by the Board. Your Board placed on record its appreciation to the outgoing Director for the valuable services rendered during his tenure on the Board of the Company.

GROUP FOR INTER-SE TRANSFER OF SHARES

Pursuant to an intimation from the promoters, the names of the promoters and entities comprising group as defined under the Monopolies and Restrictive Trade Practices (MRTP) Act, 1969 (and any enactment or re-enactment thereof) for the purpose of the SEBI(Substantial Acquisition of Shares and Takeovers) Regulations, 1997, include:

Venkateswara Rao Kadiyala Sirisha Yarlagadda

Venkata Subba Rao Karusala Sridevi Potu

Fiora Enterprises Ltd Probus Capital Ltd

Mundi Enterprise Ltd Fingrowth Co. Ltd

REPORT ON CORPORATE GOVERNANCE

In line with the recommendation of the Securities Exchange Board of India (SEBI) on Corporate Governance, your company had constituted the Board with optimum combination of Executive and Non Executive and independent and Non independent Directors. Your Company also constituted various committees to comply with the provisions of the Corporate Governance under the Listing Agreement of the Stock Exchanges.

The Report on Corporate Governance as stipulated under Clause 49 of the Listing Agreement forms part of this Annual Report.

The requisite Certificate from the Auditors M/s. P. Murali & Co., Chartered Accountants, confirming compliance with the conditions of Corporate Governance as stipulated under the aforesaid Clause 49, is attached to this Report.

MANAGEMENT DISCUSSION & ANALYSIS

Management Discussion and Analysis Report (MDA) of the Company forms part of this Annual Report.

DECLARATION ON CODE OF CONDUCT

Pursuant to provisions of Clause 49 (I) (D) (ii) of the Listing Agreement, a Declaration declaring that all the members of the Board and the Senior Management Personnel of the Company have affirmed compliance with the Code of Conduct of the Company, is forming part of the Corporate Governance Report attached herewith.

LISTING OF SHARES & ANNUAL LISTING FEE

The Securities of the Company are listed at Bombay Stock

Exchange Limited (BSE) and Madras Stock Exchange Limited (MSE). The Listing fee for BSE and MSE has been paid and there are no outstanding dues. Your company has filed listing application along with necessary documents and also paid Initial Listing Fees and Annual Listing Fees for listing of its shares at National Stock Exchange of India Limited (NSE). Your company is waiting for listing approval from NSE.

DISCLOSURE ON COMPANYS EMPLOYEES STOCK OPTIONS

During the year under review no scheme is in force, hence no information / disclosures are being made under SEBI (ESOS / ESPS) Guidelines 1999. However, the ESOP Trust namely LGSL Foundation is having 783509-shares as on March 31st, 2010 after successfully implementation of various Employees Stock Option Schemes in earlier years.

CASH FLOW STATEMENT PURSUANT TO CLAUSE 32

The Cash Flow Statement pursuant to Clause 32 of the Listing Agreement entered into with Stock Exchange(s) is appended to this Annual Report.

CONSERVATION OF ENERGY, RESEARCH & DEVELOPMENT, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS & OUTGO

The particulars, as prescribed 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, are as following:

(i) Details of Conservation of Energy

The operations of your company do not consume high levels of energy. The Company uses electric energy for its equipment such as computer terminals, air conditioners, lighting and utilities in the work premises. Adequate measures have been taken to conserve energy by using energy-efficient computers and equipment with the latest technologies. As an ongoing process, the following measures are undertaken to conserve energy:

(a) Implementation of viable energy audit proposals.

(b) Installation of automatic power factor controllers to save maximum demand charges and energy.

(c) Training front-end operational persons on the opportunities and importance of energy conservation.

(d) Automation of air conditioners is taken up in all locations.

(e) Precision temperature controllers are installed in all locations.

(f) Awareness and training sessions for maintenance personnel were conducted by experts.

(g) Optimum usage of air-conditioning equipment is made within the office space.

(h) Efforts are on to provide for intelligent lighting, automatic lighting system based on sensors for optimum use of power.

(ii) Research & Development and Technology Absorption

The Companys Research & Development investment would primarily focus on Solutions Research and Vertical Focus Research.

Solutions Research would identify new ideas which would enable business process improvement for customers and would be aligned with the business strategy and growth opportunities of the organization.

Vertical Focus would primarily deal with building Centers of Excellence (CoE) around verticals such as financial services, Life sciences, pharmacy, energy, retail and process / discrete manufacturing. The Company would also set up Research & Development facilities around tools supporting some of the COTS solutions and in the BI space. Specialized process oriented tools to enhance business process performance are ready for deployment. The Company would be developing products for B2B and SaaS.

The Company plans to be a player in niche technologies and lays emphasis in staying current in the new technologies. A significant budget would be set aside for building competencies in the new technologies and also building solutions in the migration space, particularly in the open source solutions.

(iii) Foreign Exchange Earnings and outgo

Export Plans and Activities relating to exports - Application Management services, Application development, Tool set development, Product development and support activities have been the primary source of revenues to the offshore delivery center and would be the focus for the future with the aid of Value added tools.

Initiatives taken to increase exports - Demonstrating the benefits to the existing client base on the offshore model in terms of Cost savings, 24/7 support, Maturity in delivery processes through CMMI and ISO, State of the art infrastructure, Competency and knowledge base.

Development of new export markets for products and services - Europe and Middle East have been the markets that are being developed through our partners.

Rs.

A) Foreign Exchange

Earnings (Received) 1,17,11,08,279/-

B) Foreign Exchange outgo

(i) for Capital Expenditure Nil

(ii) for Traveling 40,60,934/-

(iii) for Others 1,22,12,81,734/-

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to the provisions of Section 217(2AA) of the Companies Act, 1956, the Board of Directors hereby state that:

(a) in preparation of annual accounts containing financial statements for the financial year ended 31st March, 2010 the applicable accounting standards have been followed.

(b) the accounting policies are consistently followed and your Directors have applied them to give a true and fair view of the state of affairs of the Company and the profit/loss 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, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

(d) annual accounts have been prepared on a going concern basis.

ACKNOWLEDGEMENTS AND APPRECIATIONS

Your Directors seize this opportunity to thank the esteemed Shareholders, Financial Institutions, Banks, Customers, Suppliers and Regulatory and Government Authorities for their continued support to the Company. Further, the Directors wish to place on record their appreciation to all employees of the Company for their hard work, dedication and commitment.

For and on behalf of the Board of Directors

LGS GLOBAL LIMITED

Venkata Subba Rao Karusala Venkateswara Rao Kadiyala

Managing Director Joint Managing Director

Place : Hyderabad Date : 11.11.2010

 
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