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Directors Report of Mastek Ltd.

Mar 31, 2016

Dear Shareholders,

The Board of Directors has pleasure to forward the following Report for the year ended March 31, 2016.

1. FINANCIAL RESULTS - CONSOLIDATED RESULTS OF MASTEK LIMITED AND ITS SUBSIDIARIES

Rs,In Lakhs

PARTICULARS

Year Ended March 31, 2016

Year Ended March 31, 2015

Revenue

Income from IT Services

52,526.65

100,196.28

Other operating revenue

166.58

1,062.11

Total Operating Revenue

52,693.23

101,258.39

Other Income

1,738.82

1,711.34

Total Revenue

54,432.05

102,969.73

Expenses

50,873.27

95,695.96

Depreciation and amortization expenses

1,605.31

3,733.43

Finance costs

50.31

147.10

Exceptional items

254.28

1,166.12

Profit before tax

1,648.87

2,227.12

Tax expense

274.41

454.07

Profit after tax

1,374.46

1,773.05

FINANCIAL RESULTS - MASTEK LIMITED

PARTICULARS

Year Ended March 31, 2016

Year Ended March 31, 2015

Revenue

Income from IT services

37,843.96

66,048.24

Other operating revenue

22.81

463.73

Other Income

1,647.49

2,305.40

Total Revenue

39,514.26

68,817.37

Expenses

35,633.73

58,769.70

Depreciation and amortization expenses

1,488.51

2,702.38

Finance costs

23.68

27.43

Exceptional Items - gain / (loss), net

(300.20)

494.95

Profit before tax

2,068.14

7,812.81

Tax expense

731.57

374.06

Profit after Tax

1,336.57

7,438.75

Add: Profit brought forward from Previous Year

36,037.15

29,311.97

Profit available for appropriation

37,373.71

36,750.72

Adjustment & Pursuant to Scheme of Arrangement

(21,879.69)

-

Dividend

(577.07)

(563.94)

Dividend Distribution Tax

70.66

(30.37)

Transfer to General Reserves

-

180

Balance carried to Balance Sheet

14,846.30

36,037.15

2. RESULTS OF OPERATIONS

A) Mastek Consolidated Operations Financials

On a consolidated basis, the Group registered total operating revenue of Rs, 52,693 lakhs for the year ended March 31, 2016 as compared to Rs, 101,258 lakhs for the year ended March 31, 2015. The Group registered a net profit of Rs, 1,374 lakhs in the year ended March 31, 2016 as compared to Rs, 1,773 lakhs in the year ended March 31, 2015.

Breakup of the Operating Revenue by regions

Region

Yearended March 31,2016

Year ended March 31, 2015

Rs,in Lakhs

%of

Revenue

Rs, in Lakhs

% of Revenue

UK

50,370

95.6

52,788.6

52.1

North

America

-

-

40,494.7

40.0

Others (India/ Asia

Pacific)

2,323

4.4

7,975.0

7.9

Total

Operating

Revenue

52,693

100

1,01,258.4

100

Post demerger, the Insurance Products and Services business across various geographies was demerged into Majesco.

The U.K. operations contributed Rs, 50,370 lakhs in revenue for the year 2015-16, of which Rs, 27,785 lakhs (i.e. 55%) was contributed by the Government vertical and Rs, 7,117 lakhs by the Retail vertical.

The share of total operating revenue of other regions, i.e. India and Asia Pacific as a percentage of total operating revenue of the Group was 4.5%.

Breakup of the Operating Revenue by Verticals

Vertical

2015-16 Rs,in Lakhs

%of

Revenue

2014-15 Rs,in Lakhs

% of Revenue

Insurance

-

-

45,716

45.1

Government

29,151

55.1

29,902

29.6

Financial

Services

9,977

19.0

11,297

11.2

Retail

Services

7,115

13.5

-

-

IT & Other Services

6,450

12.3

14,343

14.0

Total

52,693

100

101,258

100

Profitability

During the Year ended March 31, 2016, the Group earned a profit ofRs, 1,374 lakhs as compared to Rs, 1,773 lakhs for the year ended March 31 2015. The profits for the year ended

2015-16 were on account of the following:

1. Cost over-run of Rs, 3,200 lakhs on one customer account due to requirement of Onsite Security cleared resources

2. Exceptional cost on account of reorganization and de-merger related expenses of Rs, 254 lakhs.

3. Share of loss from Legal Practice Technologies (LPT) JV in UK region of Rs, 1,071.5 lakhs.

Mastek standalone operations

On a standalone basis, Mastek reported an operating income of Rs, 37,867 lakhs for the year ended March 31,

2016, as compared to Rs, 66,512 lakhs for the year ended March 31, 2015. The Company made a Net profit ofRs, 1,337 lakhs for the year ended March 31, 2016 as compared to Net Profit of Rs, 7,439 lakhs for the year ended March 31,

2015.

Update on progress of Demerger

On April 30, 2015, the Hon. High Court of Gujarat and Hon. High Court of Bombay approved the Scheme of Arrangement, which was earlier approved by the Stock Exchanges on December 09, 2014. The Scheme envisaged creation of independent listed Insurance business company by demerger of Insurance business of Mastek to MCPL (renamed as Majesco Limited - "Majesco"). Post demerger Majesco achieved automatically listing with stock exchanges and all the shareholders of Mastek as on June 15,2015 were allotted shares in Majesco in the same proportion (shares entitlement being 1:1 pursuant to Part II of the Scheme of Arrangement in terms of clause 11.1.1).

3. HOLDING AND SUBSIDIARIES

Your Company continues to be the Holding Company of Mastek (UK) Limited, which in turn has IndigoBlue Consulting Ltd, UK and Digility Inc. USA as its subsidiaries.

During the year under review, Mastek Ltd sold its entire shareholding in Mastek Asia Pacific Pte, Ltd. to Majesco Sdn Bhd, Malaysia for a consideration of SGD 380,000. Mastek Asia Pacific Pte Limited ceased to be a Subsidiary of your Company effective October 31, 2015.

Your Company has one direct subsidiary, and two step down subsidiaries as at March 31, 2016 and the statement containing salient features of the financial statement of the subsidiary, in Form AOC-1 is given in Annexure 1.

4. INDUSTRY SCENARIO

According to NASSCOM strategic Review 2016, Indian IT Services and BPM industry is expected to grow at 10-12% in FY17 in constant currency terms. By 2020, India''s IT-BPM sector is projected to reach $ 200-225 billion revenue and $ 350-400 billion by 2025. Digital Technologies is expected to increase the addressable market for global technology services to $ 4 trillion by 2025. Over 80% of incremental expenditures over the next decade will be driven by digital technologies, such as platforms, cloud-based applications, big data analytics, mobile systems, social media, cyber security, and integration services with legacy technologies. Digital technologies will continue to drive the sector and reach 23%/>38% share by 2020/ 2025.

According to Gartner''s latest report, worldwide IT spending is forecast to total $3.54 trillion in CY2016, marginal increase of

0.6% over CY2015 spending of $3.52 trillion; largest U.S. dollar drop in IT spending since Gartner began tracking IT spending mainly impacted due to currency headwinds. By CY2019, spending

is forecast to exceed $3.8 trillion. Global revenue in the business intelligence (BI) and analytics market is forecast to reach $16.9 billion in CY2016, an increase of 5.2% from CY2015.

According to Gartner, Software market in India is expected to grow at 12.8% to reach $5.3 billion in CY2016. The enterprise software marketplace is dynamic and ever-changing. The growth is being driven by trends like increasing adoption of Software as a service (SaaS) and open source software (OSS), changing buying behaviors, Digital India initiative of the Indian government, mobility, influence of other emerging markets, cloud-based implementations and new consumption models.

BI and Data Analytics Trends:

According to Gartner, the BI and analytics market is in the final stages of a multiyear shift from IT-led, system-of-record reporting to business-led, self-service analytics. As a result, the modern business intelligence and analytics (BI&A) platform has emerged to meet new organizational requirements for accessibility, agility and deeper analytical insight.

According to 451 research report, ''Software 2016: Analytics, Acceleration and Agility'', data analytics will become more prevalent throughout the layers of technology businesses use, from development to IT management, and databases to customer experience management. This is happening as the natural result of the increasing digitization of business, which throws off massive amounts of new data. Along with that, new tools, techniques, and architectures provide the opportunity to analyze what could not previously be analyzed, and the chance exists for companies to differentiate themselves based on how they take advantage of that opportunity, the report says.

Data Analytics will surge further ahead in the form of contextual analytics, according to 451 Research - that is, the combination of text and advanced analytics with Machine Learning to uncover insight from a combination of structured and unstructured data. Applying advanced analytics with Machine Learning has been an industry goal for the last decade, the report says. Adoption will kick into higher gear now that algorithms are better at understanding unstructured data like text, so that intelligence can be derived from it in context with existing structured data.

IT Spending: Market Size

Worldwide IT spending is forecast to total $3.54 trillion in 2016, marginal increase of 0.6% over CY2015 spending of $3.52 trillion impacted mainly due to currency volatility. In 2015 U.S. multinationals'' faced currency headwinds however, in 2016 experts expect to go away these headwinds and they expect an additional 5% growth.

Spending in the IT services is expected to return to growth in 2016, following a decline of 4.5% in 2015. IT services spending is projected to reach $940 billion in 2016, up 3.1% from 2015. This is due to accelerating momentum in cloud infrastructure adoption and buyer acceptance of the cloud model.

According to a study released by Computer Economics, based on projections of IT spending plans by 86 organizations in the US and Canada, indicated that IT operational budgets appear to be growing at slower rate at about 2% in 2016 as compared to 3% growth rate in 2015.

The Computer Economics study also looked at what areas of IT organizations plan to invest money. A net of 46% of IT organizations plan to spend more on business applications in CY2016. The trend of investing more heavily in business applications has been growing for several years and appears to be accelerating, researchers said. A net 53% of organizations said they plan to spend more on cloud applications and 37% plan to spend more on cloud infrastructure.

The IT industry is increasingly turning to cloud-based services. While this means that businesses have a much greater ability to scale and procure the infrastructure and software that they need when they need it, it also means that the channel is ultimately selling less physical infrastructure than before. This trend is particularly prominent in the UK, with the country spending 33% of total IT spend on IT services compared to the global average of 18%.

BMI research report has maintained a relatively robust growth outlook for UK IT spending over the medium term in the Q1CY2016 update, with spending growth expected to outperform most other developed European markets with a CAGR of 3.4% over 2016-2019. The stronger economic environment is a key differentiator with other Western European markets, while the large financial sector will also make the UK a lucrative market for advanced software and services vendors. Market development will however be uneven, and researchers envisage a stagnant hardware market, while growth will be driven by areas such as the app economy, cloud computing and digitization.

5. BUSINESS OUTLOOK

This was first year post demerger where Mastek represented itself as a standalone company. During this period, the management was committed to remain focused on its core business across key verticals - Government, Retail and Financial Services.

The key highlight during the year was acquisition of Indigo Blue, a leading UK consultancy specializing in Agile programme and project management. The acquisition brings together Indigo Blue''s Agile consulting and programme management expertise with Mastek''s world-class technology delivery capability. Together, these synergistic offerings provide a compelling proposition across combined client base. This will allow company to offer a fully end-to-end transformational service/solution delivery to new as well as existing customer base of Mastek. Indigo blue has a robust customer acquisition method which will help the company to build its business mainly in UK and the company will also look at leveraging Indigo''s capability in other parts of the world going forward. The company has successfully completed the acquisition and now it is fully integrated with Mastek. The company will continue to invest in agile methodologies to get through its aspiration of being involved in large and complex transformation programs which will help its customers to leverage digital opportunities in agile manner.

On Government side, it had been muted during the year, but post UK election, now it is in place and the UK Government is ready to restart on its IT initiatives. The pipeline will start building up and the company expects to see revenue growth and profitability in these verticals going forward next year.

Retail business has started picking up the growth momentum. The company has added new logos this year. A few small pilot programs with large Retailers were seen and company expects them to start growing over a period of time.

On Financial Services with insurance exiting, the company had to re-strategize its position here. The company has an existing base of business with customers like IPF who are in the micro lending space but have now brought in a new Financial Services head to re-strategize this business and spearhead the growth in this segment within UK.

From the India geography perspective, the growth momentum got a bit slowed down last year due to elections but now as new government is focused on IT, the company is bidding in quite a few large deals and expect to grow that part of the business in this financial year.

Company has started focusing more on digital capabilities and it might make some acquisitions in this area where it wants to establish and grow over a period of time.

Overall business focus that has got by demerging, by completely focusing on digital solutions, deal momentum is going up and better pipeline is seen going forward. The company expect to have a very good growth in the business over the next 3to4 years.

6. DIVIDEND & RESERVES

The Board of Directors approved payment of First Interim Dividend of Rs, 1.50 per Equity share and was paid on February 04, 2016. The Board of Directors also approved payment of Second Interim Dividend of Rs, 1/- per Equity share and was paid on March 29,

2016. Having declared two Interim Dividends, your Board has not recommended payment of Final Dividend for the year ended March 31, 2016.

During the year, under review, no amount from profit was transferred to General Reserves.

7. PARTICULARS OF LOANS, GUARANTEE OR INVESTMENT UNDER SECTION 186.

Details of Loans, Guarantees, Investments covered under provisions of Section 186 of the Companies Act 2013 are given in the notes to the financial statements.

8. DISCLOSURES UNDER THE COMPANIES ACT, 2013

i) Extractor Annual Return:

Pursuant to section 92(3) of the Companies Act, 2013 (''the Act'') and rule 12(1) of the Companies (Management and Administration) Rules, 2014, extract of Annual Return is Annexed as Annexure 2.

ii) Number of Board Meetings:

The Board of Directors met 9 (Nine) times during the financial year 2015-16. The details of the board meetings and the attendance of the Directors thereat are provided in the Corporate Governance Report, appearing elsewhere as a separate section in this Annual Report.

iii) Change in Share Capital:

During the year, the Company allotted 4,50,602 Equity Shares of face value of Rs, 5/- each for a total nominal value of Rs, 22,53,010/- to the eligible employees of the Company, who exercised their vested Employee Stock Options. These Equity Shares rank pari passu in all respects with the existing Equity Shares of the Company.

As on March 31, 2016, the issued, subscribed and paid up share capital of your Company stood at Rs, 11,49,86,370/comprising 2,29,97,274 Equity shares of Rs, 5/- each.

iv) Composition of Audit Committee

Mastek has an Audit Committee that currently comprises of three Independent Directors, one Non-Executive and one

Executive Promoter Director. The Chairman of the Audit Committee is an Independent Director. The Independent Directors are accomplished professionals from the corporate fields. The Chief Financial Officer of the Company attends the meetings on invitation. The Company Secretary is the Secretary of the Committee.

During the year ended March 31, 2016 the Committee met 6 (Six) times. The attendance of the members at the meetings is stated below:

Name of Member

Status

No. Of

Meetings

attended

Mr. S. Sandilya

Chairman

5

Mr. Ashank Desai

Member

6

Ms. Priti Rao

Member

6

Mr. Venkatesh Chakravarty Resigned w.e.f. June 19, 2015

Member

2

Mr. Atul Kanagat

Inducted w.e.f. October 15, 2015

Member

1

Mr. Sudhakar Ram

Inducted w.e.f. October 15, 2015

Member

2

The other details of the Audit Committee are given in the Corporate Governance Report, appearing elsewhere as a separate section in this Annual report.

During the year all the recommendations of the Audit Committee were accepted by the Board.

v) Related Party Transactions:

All the Related Party Transactions are entered into on an arm''s length basis and are in compliance with the applicable provisions of the Act and SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015 (''Regulations''). There are no materially significant related party transactions made by the Company with Promoters, Directors or Key Managerial Personnel etc., which may have potential conflict with the interest of the Company at large.

All the Related Party Transactions are presented to the Audit Committee and Board for their approval. Omnibus approval is given by Audit Committee for the transactions which are foreseen and are repetitive in nature. A statement of all Related Party Transactions is presented before the Audit Committee and the Board on a quarterly basis, specifying the nature, value and terms and conditions of the transactions. The said transactions are approved by the Audit Committee as well as by the Board.

The Related Party Transactions Policy as approved by the Board is uploaded on the Company''s website at the web link:www.mastek.com/Related-Party-Transactions-Policy. Detailed explanation on transactions with related parties given in Annexure 3.

9. MANAGEMENT OF RISKS OF FRAUD, CORRUPTION AND UNETHICAL BUSINESS PRACTICES Whistle Blower Policy / Vigil mechanism

In compliance with the requirement of the Companies Act, 2013 and Listing Regulations, the Company has established a Whistle Blower Policy / Vigil mechanism policy and the same is placed on the web site of the Company, viz www.mastek.com/investors/ corporate-governance.

The employees of the company are made aware of the said policy at the time of joining the Company.

10. AWARDS AND RECOGNITION

Mastek, either directly or through its clients was also recipient of many awards in India, notable among those being:

- Mastek ranked 71st in the Leader category in the ''The 2014 Global Outsourcing 100(R)'' service providers list by The International Association of Outsourcing Professional (IOAP);

- Mastek U.K., named as one of the top 41 fastest growing Indian companies in the UK;

- Mastek chosen by TEST Magazine as one of the 20 leading software testing providers 2014.

11. DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to the requirement of clause (c) of sub-section (3) of Section 134 of the Companies Act, 2013, your Directors confirm that:

To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors make the following statements in terms of Section 134(3)(c) of the Companies Act, 2013:

(a) that in the preparation of the annual financial statements for the year ended March 31, 2016, the applicable accounting standards had been followed along with proper explanation relating to material departures, if any;

(b) that such accounting policies as mentioned in Note 1 of the Notes to the Financial statements have been selected and applied consistently and judgments and estimates have been made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company as at March 31, 2016 and of the profit of the company for the year ended on that date;

(c) that proper and sufficient care has been taken 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) that the annual financial statements have been prepared on a going concern basis;

(e) that proper internal financial controls to be followed by the company have been laid down and that such internal financial controls are adequate and were operating effectively; and

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

12. STATUTORY AUDITORS, THEIR REPORT AND NOTES TO FINANCIAL STATEMENTS

At the 32nd Annual General Meeting (AGM) held on July 23, 2014, M/s. Price Waterhouse, Chartered Accountants, LLP, were appointed as the Statutory Auditors of the Company for a period of 3 years. Ratification of appointment of Statutory Auditors is being sought from the members of the Company at the ensuing AGM for the third year.

Further, the report of the Statutory Auditors along with notes to Schedules is enclosed to this report. The observations made in the Auditors'' Report are self-explanatory and does not contain any qualification. Therefore it does not call for any further comments.

13. SECRETARIAL AUDIT

In terms of Section 204 of the Act and Rules made there under, M/s. V. Sundaram & Co., Practicing Company Secretary, Mumbai have been appointed Secretarial Auditors of the Company. The report of the Secretarial Auditors is enclosed as Annexure 4 to this report. The report is self-explanatory and does not contain any qualification. Therefore it does not call for any further comments.

14. HUMAN RESOURCES

Mastek Group deploys its intellectual capability to create and deliver intellectual property (IP)-led solutions that make a business impact for its global clients. For this, the key success enabler and most vital resource is world-class talent. Mastek Group continually undertakes measures to attract and retain such high quality talent.

As on March 31, 2016 Mastek Group had a total Head count of 1298. The Directors wish to place on record their appreciation for the contributions made by employees to the Company during the year under review.

Information as per Section 197 of the Companies Act, 2013 and the rules there under forms part of this report. However, as per the provisions of Section 136 (1) of the Companies Act, 2013 the report and accounts, excluding the Statement of Particulars are being sent to all members. Any member interested in obtaining a copy of the Statement of Particulars may write to the Company Secretary at its Registered Office.

The other disclosure required under Section 197(12) of the Companies Act, 2013 read with the Rule 5 of the Perquisites (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is annexed as Annexure 5 and forms on report of this part.

15. EMPLOYEE STOCK OPTIONS

The Board of Directors confirms that there is no material change in the ESOP Scheme and all the ESOP Schemes are in compliance with the SEBI Guidelines. The required disclosures are enclosed as Annexure 6.

16. RISK MANAGEMENT POLICY

In terms of the requirement of the Act, the Company has developed and implemented the Risk Management Policy and the Audit Committee, Governance Committee of the Board quarterly reviews the risks and remedial measures taken.

The risks are identified and discussed by Risk Committee at its meeting at regular intervals. The various risks are categorized as High risk, Medium risk and Low risk and appropriate mitigation steps/measures are taken/initiated to mitigate the identified risks from time to time.

17. CHANGES AMONG DIRECTORS AND DECLARATION BY INDEPENDENT DIRECTORS

Mr. S. Sandilya, Ms. Priti Rao, and Mr. Atul Kanagat have been the Independent Directors on the Board of your Company as at March 31, 2016.

In the opinion of the Board and as confirmed by these Directors, they fulfill the conditions specified in section 149 of the Companies Act, 2013 and the Rules made there under about their status as Independent Directors of the Company.

Dr. Rajendra Sisodia (Independent Director), resigned from the Directorship of Mastek Ltd. with effect from April 17, 2015.

Due to the De-merger of the Insurance Products and Services business to Majesco Ltd, the following Directors resigned from the Directorship of Mastek Ltd:

Dr. Arun Maheshwari, Indepenendent Director - effective June 01, 2015;

Mr. Radhakrishnan Sundar, Executive Director - effective June 01, 2015;

Mr. Ketan Mehta, Non-Executive Director - effective June 01, 2015; and

Mr. Venkatesh Chakravarty, Independent Director - effective June 19, 2015.

The Board places on record its sincere appreciation of the valuable services rendered by the above Board members during their tenure as Board members.

18. COMPANY''S POLICY ON APPOINTMENT AND REMUNERATION

The Company has a policy on remuneration of Directors and Senior Management Employees. The policy is approved by the Nomination & Remuneration Committee and the Board. The policy covers:

1. Directors'' appointment and remuneration; and

2. Remuneration of Key Managerial Personnel and other employees.

Details on the same are given in the Corporate Governance Report.

19. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS

During the year under review, no significant and material orders were passed by the regulators or courts or tribunals impacting the going concern status and company''s operations.

20. INTERNAL CONTROL SYSTEM

A strong internal control system is pervasive in the Company. The Company has documented a robust and comprehensive internal control system for all the major processes to ensure reliability of financial reporting.

21. INTERNAL CONTROLS OVER FINANCIAL REPORTING

The Company has in place adequate internal financial controls commensurate with the size, scale and complexity of its operations.

During the year, such controls were tested and no reportable material weakness in the design or operations were observed. The Company has policies and procedures in place for ensuring proper and efficient conduct of its business, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records and the timely preparation of reliable financial information.

The Company has adopted accounting policies which are in line with the Accounting Standards and the Act. These are in accordance with generally accepted accounting principles in India. Changes in policies, if required, are made in consultation with the Auditors and are approved by the Audit Committee.

The Company has a robust financial closure, certification mechanism for certifying adherence to various accounting policies, accounting hygiene and accuracy of provisions and other estimates.

22. INDIAN ACCOUNTING STANDARDS (IND AS) - IFRS CONVERGED STANDARDS

The Ministry of Corporate affairs vide its notification dated February 16, 2015 has notified the Companies (Indian Accounting Standards) Rules, 2015. In pursuance of this notification , the Company will adopt IND AS with effect from April 01, 2017, with the comparatives for the periods ending March 31, 2016.

The implementation of IND AS is a major change process for which the Company has established a project team and is dedicating considerable resources. The impact of the change on adoption of IND AS is being assessed.

23. DIRECTORS AND KEY MANAGERIAL PERSONNEL (KMP)

Mr. Ashank Desai, Director retires by rotation at the forthcoming Annual General Meeting and being eligible, offers himself for reappointment.

The Shareholders at the Extra Ordinary General Meeting held on March 05, 2015 had approved the appointment of Mr. S. Sandilya, Ms. Priti Rao and Mr. Atul Kanagat as Independent Directors of the company for a term of four (4) years from April 01, 2015 to March 31, 2019.

The information relating to remuneration paid to director as required under section 197(12) of the Act, is given in the notes to accounts.

Pursuant to the provisions of Section 203 of the Companies Act, 2013 the following changes took place in the KMPs during the year under review:

Mr. Farid Kazani, Group CFO and Finance Director''s services were transferred to Majesco Limited as a result of the De-merger on June 01, 2015. Mr. Jamshed Jussawalla was appointed as Chief Financial Officer effective June 01, 2015. Mr. Bhagwant Bhargawe, Company Secretary retired during the year effective from August 31, 2015 and Mr. Dinesh Kalani was appointed as Company Secretary effective September 01, 2015.

24. EVALUATION OF THE BOARD''S PERFORMANCE

In compliance with Companies Act, 2013 and Listing Regulations, the performance evaluation of the Board as a whole and of the individual Directors was carried out during the year under review.

With the help of an Expert, a structured questionnaire was prepared after taking into consideration inputs received from the Directors, covering various aspects of the Board''s functioning, such as adequacy of the composition of the Board and its Committees, Board culture, execution and performance of specific duties, obligations and governance.

A separate exercise was carried out to evaluate the performance of individual Directors including the Chairman of the Board, who were evaluated on parameters of contribution to Board Processes and Outcomes including independence of judgment, safeguarding the interest of the Company and its minority shareholders, etc. The Directors expressed satisfaction with the evaluation process.

25. PUBLIC DEPOSITS

Your Company has not accepted any deposits from public in terms of Section 73 and/or 74 of the Companies Act, 2013.

26. MANAGEMENT DISCUSSION AND ANALYSIS

Management Discussion and Analysis comprising an overview of the financial results, operations / performance and the future prospects of the Company forms part of this Annual Report.

27. DETAILS OF CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO

(a) Conservation of energy

Conservation of Energy: As a software Company, energy costs constitute a small portion of the total cost and there is not much scope for energy conservation.

(i)

the steps taken or impact on conservation of energy.

Not

Applicable

(ii)

the steps taken by the company for utilizing alternate sources of energy.

(iii)

the capital investment on energy conservation equipments.

(b) Technology absorption: Not Applicable

(i)

the efforts made towards technology

absorption.

(ii)

the benefits derived like product improvement, cost reduction, product development or import substitution.

(iii)

in case of imported technology (imported during the last three years reckoned from the beginning of the financial year) -

Not

Applicable

(a) the details of technology imported;

(b) the year of import;

(c) whether the technology been fully absorbed;

(d) if not fully absorbed, areas where absorption has not taken place, and the reasons thereof;

(iv)

the expenditure incurred on Research and Development

(c) Foreign exchange earnings and outgo

Total foreign Exchange used and earned by Mastek Limited is as follows

Rs, in Lakhs

Particulars

Year Ended March 31, 2016

Year Ended March 31, 2015

Exchange used

22,722.22

28,896.99

Exchange Earned

35,490.75

63,172.14

28. CORPORATE GOVERNANCE

The Company has complied with Corporate Governance requirement under the Companies Act, 2013 and as per Listing Agreement and SEBI Listing Regulations. A separate section on Corporate Governance practices followed by the Company together with the Certificate from M/s. V. Sundaram & Co. Practicing Company Secretary, Mumbai, appearing elsewhere in this report, forms an integral part of this report.

29. CORPORATE SOCIAL RESPONSIBILITY

In compliance with the provisions of Section 135 of the Companies Act, 2013 the Board of Directors of the Company have already formed a Corporate Social Responsibility (CSR) Committee. The committee met four times during the year and a detailed report about CSR is given in Annexure 7.

The Committee has formulated a Corporate Social Responsibility Policy. The contents of the policy are as follows:-

Mastek CSR programmes shall fall under the following categories:

1. Promoting education, enhancing skills of children, and development of children and women working in red-light areas. We are also involved in special education and employment-enhancing vocation skills especially among women, elderly and the differently abled, and livelihood enhancement projects.

2. Eradicating hunger, poverty and malnutrition, promoting preventive health care and sanitation and making safe drinking water available.

3. Promoting gender equality and empowering women: Activities include setting up homes / hostels for women and orphans, old age homes and other such facilities for senior citizens, day care centers, and measures to reduce inequalities faced by socially and economically backward groups.

4. Protection and up gradation of environmental conditions: These include ensuring environmental sustainability, ecological balance, protection of flora and fauna, animal welfare, agro-forestry, conservation of natural resources and maintaining the quality of soil, air and water.

5. Any other projects with the approval of the Board.

Corpus:

The corpus of the CSR policy includes:

- 2% of the average net profit of the preceding three years

- Any income arising there from

- Surplus arising out of the above activities

- Payroll contribution from the employees

- Fund-raising events

Mastek may pool its resources and CSR spending with other groups or associate companies on collaborative efforts that qualify as CSR spending.

Roles and Responsibilities:

- Decide CSR projects or programmes or activities to be taken up by the company.

- Place before the board the CSR activities proposed to be taken up by the company for approval each year.

- Oversee the progress of the initiatives rolled out under this policy every quarter.

- Define and monitor the budgets for carrying out the initiatives.

- Submit a report to the Board of Directors on all CSR activities during the financial year. This will be displayed on the company''s website - www.mastek.com

- Monitor and review the implementation of the CSR policy.

CSR Committee Composition:

The Chairperson of the Committee is Ms. Priti Rao, an Independent director. The other members are, Mr. Sudhakar Ram and Mr. Ashank Desai. The Company Secretary is the Secretary of the Committee. Dr. Rajendra Sisodia ceased to be a member during the year w.e.f. April 17, 2015.

During the year ended March 31, 2016 the Board approved Donations of Rs, 94.36 Lakhs. Of this, a sum of Rs, 74.51 Lakhs was spent on Projects approved under Section 135 of the Companies Act, 2013 on CSR activity and Rs, 19.85 lakhs was towards the salary and other Administrative Expenses of Mastek Foundation, relating to CSR activities of the Company.

As per provision of Section 135 of the Companies Act, 2013, the Company has to spend, in every financial year, at least 2% of the average net profits of the Company made during three immediately preceding financial years, pursuant to Corporate Social Responsibility policy.

Based on the Average net profit of the Company for three immediately preceding financial years, the amount to be spent on CSR activities during the year 2015-16 was Rs, 94.03 Lakhs. The amount of Rs, 94.03 lakhs was arrived at based on the net profit of the Company for 2012-13, 2013-14 and of the continuing operations of the company for 2014

15, since the Company''s Insurance Products and Services business was demerged effective April 01, 2014.

The Company has spent Rs, 85.36 lakhs (including Rs, 19.85 lakhs was towards the salary and other Administrative Expenses of Mastek Foundation) on various projects approved under Section 135 of the Companies Act, 2013.

The shortfall is due to the following reasons:

a) Rs, 6.00 lakhs donation made to a very well-known non-profit organization, Goonj, located in Mumbai for victims of earthquake in Nepal, cannot be considered as an eligible expenditure under Section 135, since the relief work was done outside India.

b) Rs, 3.00 lakhs was unspent on establishment of shelter home - Suraksha under Aasara Trust at Neral, Maharashtra, since the milestone of the project was not achieved by March 31, 2016.

30. TRANSFER OF AMOUNTS TO INVESTOR EDUCATION AND PROTECTION FUND

Your Company has transferred a sum of Rs, 11,41,859/- during the financial year 2015-16 to Investor Education and Protection Fund (IEPF), established by Central Government in compliance with section 205C of the Companies Act, 1956. The said amount represents unclaimed Dividends which were lying with the company for a period of 7 (seven) years from their respective due dates of initial payment.

Pursuant to the provisions of the Investor Education Protection Fund (Uploading of information regarding unpaid and unclaimed amounts lying with companies) Rules, 2012, the Company has already filed the necessary form and uploaded the details of unpaid and unclaimed amounts lying with the Company, as on the date of last AGM (i.e. August 17, 2015), with the Ministry of Corporate Affairs.

31. NUMBER OF CASES FILED, IF ANY, AND THEIR DISPOSAL UNDER SECTION 22 OF THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013:

Your Company has zero tolerance towards any action on the part of any executive which may fall under the ambit of ''Sexual Harassment'' at workplace, and is fully committed to uphold and maintain the dignity of every women employee working in the Company. The Company''s Policy provides for protection against sexual harassment of women at workplace and for prevention and redressal of such complaints. During the year, no such cases were reported.

32. ACKNOWLEDGEMENT

Your Directors place on record their appreciation for employees at all levels, who have contributed to the growth and performance of your Company.

Your Directors also thank the clients, vendors, bankers, shareholders and advisers of the Company for their continued support.

Your Directors also thank the Central and State Governments, and other statutory authorities for their continued support.

For and on behalf of the Board

Sudhakar Ram S. Sandilya

Managing Director & Group CEO Non- Executive Chairman and

Independent Director

Date : April 19, 2016

Place : Mumbai


Mar 31, 2015

Dear Shareholders,

The Board of Directors has pleasure to forward the following Report for the year ended March 31, 2015.

1. FINANCIAL RESULTS - CONSOLIDATED RESULTS OF MASTEK LIMITED AND ITS SUBSIDIARIES

Rs. in Lakhs Year Ended Year Ended PARTICULARS March 31, March 31, 2015 2014

Revenue

Income from IT Services 100,196.28 90,956.76

Other operating revenue 1,062.11 1,345.53

Total Operating Revenue 101,258.39 92,302.29

Other Income 1,711.34 1,125.91

Total Revenue 102,969.73 93,428.20

Expenses 95,695.96 83,298.20

Depreciation and amortization expenses 3,733.43 3,287.28

Finance costs 147.10 67.98

Exceptional items 1,166.12 -

Profit before tax 2,227.12 6,774.74

Tax expense 454.07 1,595.18

Profit after tax 1,773.05 5,179.56

FINANCIAL RESULTS - MASTEK LIMITED

Year Ended Year Ended PARTICULARS March 31, March 31, 2015 2014

Revenue

Income from IT services 66,048.24 54,459.34

Other operating revenue 463.73 598.00

Other Income 2,305.40 2,129.94

Total Revenue 68,817.37 57,187.28

Expenses 58,769.70 49,766.64

Depreciation and amortization 2,702.38 2,566.34 expenses

Finance costs 27.43 26.87

Exceptional Items - (gain) / loss,net (494.95) 1,555.01

Profit before tax 7,812.81 3,272.42

Tax expense 374.06 575.31

Profit after Tax 7,438.75 2,697.11

Add:Profit brought forward from 29,311.97 28,157.93 Previous year

Profit available for appropriation 36,750.72 30,855.04

Dividend (563.94) (1,040.59)

Dividend Distribution Tax* (30.37) (17.52)

Transferred to General Reserve 180.00 520.00

Balance carried to Balance Sheet 36,037.15 29,311.97

* Net of credit received in respect of tax paid under Section 115BBD of Income Tax Act, 1961

2. RESULTS OF OPERATIONS

A) Mastek Consolidated Operations Financials

On a consolidated basis, the Group registered total operating revenue of Rs. 101,258.39 lakhs for the year ended March 31, 2015 as compared to Rs. 92,302.29 lakhs for the year ended March 31, 2014, i.e. a growth of 9.7%.. The Group registered a net profit of 1,773.05 lakhs in the year ended March 31, 2015 as compared to Rs. 5,179.56 lakhs in the year ended March 31, 2014, i.e. a de-growth of 65.8%.

Breakup of the Operating Revenue by regions

Region Year ended Year ended March 31, 2015 March 31, 2014 Rs. in Lakhs % of Rs. in Lakhs % of Revenue Revenue

UK 52,788.62 52.1 43,225.73 47.5

North 40,494.73 40.0 41,949.20 45.1 America

Others 7,975.04 7.9 7,127.36 7.4 (India/ Asia Pacific)

Total 1,01,258.39 100.0 92,302.29 100.0 Operating Revenue

The U.K. operations contributed Rs. 52,788.62 lakhs in total operating revenue as compared to Rs. 43,225.73 lakhs during the year ended March 31, 2014, representing an increase of 22.1%. This was due to 28.0% growth in revenues from the UK government vertical which constituted 53.8% of UK operations.

The North America operations, on the other hand, registered a decrease in its total operating revenue by Rs. 1,454.47 lakhs (3.5%), primarily on account of 8.21 % decrease in revenues from the traditional IT services business and a drop of 8.18% in the insurance vertical linked to a project being put on hold as guided at the beginning of year.

The share of total operating revenue of other Regions, i.e. India and Asia Pacific as a percentage of total operating revenue of the Group increased by 0.5%.

Breakup of the Operating Revenue by Verticals

2014-15 % of 2013-14 % of Vertical (in Rs. Lakhs) Revenue (in Rs. Revenue Lakhs)

Insurance 45,716.4 45.6 44,865.0 49.3

Government 29,902.3 29.8 23,868.1 26.3

Financial 11,296.5 11.3 9,732.3 10.7 Services

IT & Other 13,281.1 13.3 12,491.4 13.7 Services

Total - IT 1,00,196.3 100.0 90,956.8 100.0 services revenue

Other operating 1,062.1 1,345.5 Revenue

Total 1,01,258.4 92,302.3

The insurance vertical as a proportion to total IT services revenue dropped by 3.7% in FY 2014-15 as compared to the previous year primarily due to the drop in the insurance revenue in North America linked to a project being put on hold at the start of the year. However, in rupee terms the revenues grew marginally by 1.9%. The government vertical witnessed a robust growth in the UK region which resulted in the overall share of revenue growing by 3.5% in FY 2014-15 as compared to the previous year. In rupee terms the government revenue grew at a healthy rate of 25.3% helped by a better exchange rate in FY 2014-15. The IT and other services vertical grew by 6.3% in rupee terms with good growth in the retail clients in the UK region.

Profitability

During the year ended March 31, 2015, the Group earned a profit of Rs. 1,773.1 Lakhs as compared to Rs. 5,179.6 lakhs for the year ended March 31, 2014, reflecting a drop of 65.8% largely on account of:

1. Exceptional costs on account of reorganization and merger related expenses of Rs. 1166.1 lakhs.

2. Share of loss from the Legal Practice Technologies (LPT) JV in the UK region of Rs. 1,127.0 lakhs.

3. Higher product development expenses by Rs. 509.0 lakhs and increase in amortization of expenses by Rs. 119.0 lakhs on account of the acquisition of the insurance consulting business ofAgile technologies.

4. And balance due to lower operating margins in the UK region with requirement to service onsite clients with security cleared resources in the government vertical.

Mastek standalone operations

On a stand-alone basis, Mastek reported an operating income of Rs. 66,512.0 lakhs for the year ended March 31, 2015, as compared to Rs. 55,042.7 lakhs for the year ended March 31, 2014. The Company made a Net profit of Rs. 7,438.8 lakhs for the year ended March 31, 2015 as compared to Net Profit of Rs. 2,697.1 lakhs for the year ended March 31, 2014, representing a growth of 176%, on account of higher revenues, better margins on offshore projects in FY 2014-15 and the exceptional loss incurred in the previous year of Rs. 1555.0 lakhs due to provision for other than temporary decline in value of investments in Majesco Canada Limited.

Update on progress of Demerger

Pursuant to the Scheme of Arrangement (the "Scheme") under Sections 391 to 394 read with Sections 100 to 103 and other applicable provisions, if any, of the Companies Act, 1956 and other applicable provisions, if any of the Companies Act, 2013, the Board of Directors of Mastek Limited (the "Company" or "Mastek"), in its meeting held on September 15, 2014, had approved the demerger of the Insurance Products and Services business of the Company, into a new company, Minefields Computers Limited ("Minefields"), to be renamed as Majesco Limited ("Majesco India"), to be followed by transfer by Majesco India of the offshore insurance operations business in India to Majesco Software and Solutions India Private Limited ("MSSIPL"), a wholly owned subsidiary of Majesco Software and Solutions Inc., USA ("MSSUS"). The Appointed date of the Scheme will be April 1, 2014 or any other date as decided by the Board of Directors and the appointed date for the offshore insurance operations business transfer will be November 1, 2014 or any other date as decided by the Board of Directors - both these dates will be subject to approval by the Hon''ble High Court of Bombay and Hon''ble High Court of Gujarat. On approval of the Scheme by the respective High Courts, Mastek shareholders will get one equity share of Majesco India for every share held in Mastek, over and above their existing Mastek shares. Majesco India is proposed to be listed on the BSE and NSE, being exchanges where Mastek is currently listed. Under the proposed restructuring, Mastek will continue with the Solutions business. The company has obtained necessary approval for the scheme under Clause 24 (f) of the Listing Agreements with BSE and NSE from SEBI on December 9, 2014 and is in the process of obtaining requisite approval from the respective High Courts.

The Insurance Products and Services business of the Company as well as its investment in Majesco, USA will be transferred to Minefields on approval of the Scheme from the respective High Courts (Collectively the "Transferred Undertakings").

3. HOLDING AND SUBSIDIARIES

Your Company continues to be the Holding Company of Mastek UK Limited, Majesco USA and newly created Minefields Computers Limited.

During the year under review, as part of the demerger plan approved for the Insurance Products and Services business, Majesco Canada Ltd and Majesco Msc Sdn Bhd, Malaysia, ceased to be the Subsidiary Companies of your Company. Further during the year, Minefields Computers Limited became a subsidiary Company of your Company. Statement containing salient features of the financial statement of subsidiaries/ associate companies/ joint venture are given in Annexure 1

4. INDUSTRY SCENARIO

In FY2016, NASSCOM expects the industry to add revenues of $20bn to the existing industry revenues of $146bn. Export revenues for FY2016 is projected to grow by 12-14% and reach $110-112 bn. Domestic revenues (including ecommerce) for the same period will grow at a rate of 15-17% and is expected to reach $55-57 bn during the year.

According to Gartner''s latest quarter forecast, worldwide IT spending in 2015 is expected to shrink by 1.3%, down from 2.4% growth forecast in last quarter''s update; recent depreciation ofGBP, Euro and AUD against USD has led to drop in the forecast. On a constant currency basis, growth figure is 3.1%, only off 0.6% from last quarter''s update. IT services spending is expected to contract slightly to $942 bn in CY 2015; down from $948 bn in CY 2014.

Gartner stated that emphasis on ''Digital India'' initiative and use of technology to deliver citizen services is expected to help IT spending in the government sector in India to grow 5% to touch $7.2 bn in CY 2015.

IT & Outsourcing Trends for the North American Insurance Industry

The past few years have been challenging for the insurance industry as it tries to grow in spite of economic, regulatory and business challenges. Despite these challenges, many industry experts indicate that there are growth opportunities on the horizon. By looking at IT as a strategic enabler, insurers are continuously investing in people, processes, and technologies that can help them streamline operations, improve their value proposition, and support robust growth strategies.

IT Spending: Market Size

The U.S economy continues to recover and the insurance industry witnessed overall business growth in 2013. To capture growth opportunities, insurers are investing in operating technologies that can drive down frictional costs and help them stay ahead. According to a recent industry study by SMA of U.S. insurers, more than 70 percent predict that their IT spending will increase in the next two years. According to Celent, IT spending in the insurance industry across North America was USD 51.1 bn in 2013, contributing approximately 37 percent of the total worldwide insurance IT insurance spending. These figures are expected to reach USD 58.4 billion in 2015 at a CAGRof five percent as North American insurance firms are looking to modernize business systems in a race to address current market challenges.

In the North American insurance industry, the lines of businesses that spend the most on IT are Life and P&C. P&C insurers account for nearly half of total North American IT spending and are also the biggest buyers of insurance industry outsourcing. On average insurers spend between 3 to 4 percent of their direct written premiums (DWP) on IT. Insurers of all sizes are looking to better align IT investments with business objectives to address current challenges as well as capitalize on growth opportunities, evidenced by the finding that half of all contract signings during the last three years were made by small/mid-sized insurers.

A major growth impediment for the entire insurance industry is legacy systems. Many carriers are still running on systems that are 15 to 25 years old that cannot keep up with current evolving business demands. In the past five years, the insurance industry has experienced a new wave of modernizing or replacing policy administration, billing, and claims systems and insurers view this core replacement as an opportunity to position their carrier for the future. Celent reports that replacing core systems is one of the top priorities for insurers and more than 50 percent of North American insurers plan to do this in the next 12 to 18 months.

The insurance industry is also looking to leverage data and analytics to grow bottom line profits. Insurers are investing in internal data and systems capabilities to yield information advantage, improve decision-making capabilities, and streamline business processes such as underwriting, claims, and risk management and compliance. In addition, in an effort to become more customer centric, insurers need to build an agile IT framework that leverages technologies such as mobile, analytics, and cloud computing.

Many insurers have aggressive plans to develop mobile tools for agents and intermediaries that can lead to product innovation, faster time to market, enhancing distribution channels, and improving sales and marketing tactics. Many CIOs are requiring an integrated service delivery model that combines technology solutions, operational excellence, and analytics-led insights.

5. BUSINESS OUTLOOK

The demerger is a win-win as the insurance and solutions businesses will get enhanced management focus and operational flexibility apart from independently pursuing their growth plans through organic/ inorganic means. The arrangement also creates a platform for both businesses to enhance their financial flexibility.

The two acquisitions on the insurance business will strengthen the overall portfolio of products to cater to the growing market in North America and will enable Majesco to actively compete for larger and more complex assignments in the future.

On the solutions side, Mastek sees traction building up in the UK through the G-Cloud framework. This is largely a Uk government initiative to structure smaller deals and procure directly through the small medium players rather than go on for large huge programs which have had a high failure rate which plays to our advantage. On the UK retail front too where apart from a large marquee client, the company has plans to service other Tier-I accounts. On the UK financial services side, the focus is on micro-lending clients.

The Joint Venture with The Law Society of England and Wales (TLS), United Kingdom named Legal Practice Technologies Limited (LPTL) is in the process of building a platform which is a conveyancing portal branded as "Veyo" to be used by solicitors on real estate transactions and it has already garnered sufficient interest from the legal community in the UK. The Veyo portal should do well in terms of getting a good market share of all the real estate transactions happening in the UK.

In India, the business was a bit slow last year due to the elections but the new government has announced its intentions of bolstering the IT framework and we do believe that there will be a lot of large unbundled opportunities that Mastek can address.

6. RESERVES

The Company proposes to carry Rs. 180 lakhs to reserves.

7. DIVIDEND

An Interim Dividend of Rs. 1.50 per Equity Share of Rs. 5/- was declared by the Board of Directors and was paid in February 2015. Your Directors are pleased to recommend a final dividend of Re. 1/- per Equity Share for the year ended March 31, 2015 on the paid up Equity Share Capital ofthe Company, payable to those shareholders whose names appear in the Register of Members as on the book closure date. The total dividend for the year amounted to Rs. 2.50 per share (Previous Year- Rs. 4.50 per share).

8. PARTICULARS OF LOANS, GUARANTEE OR INVESTMENT UNDER SECTION 186.

Details of Loans, guarantees, Investments covered under provisions of Section 186 of the Companies act 2013 are given in the notes 11 and 20 to the financial statements.

9. DISCLOSURES UNDER THE COMPANIES ACT, 2013

i) Extract of Annual Return:

Pursuant to section 92(3) of the Companies Act, 2013 (''the Act'') and rule 12(1) of the Companies (Management and Administration) Rules, 2014, the extract of annual return is Annexed as Annexure 2.

ii) Number of Board Meetings:

The Board of Directors met 9 (nine) times during the year 2015. The details ofthe board meetings and the attendance of the Directors thereat are provided in the Corporate Governance Report, appearing elsewhere as a separate section in this Annual report.

iii) Change in Share Capital:

During the year, the Company allotted 3,85,992 Equity Shares at face value of Rs. 5/- each with aggregate nominal value of Rs. 1,929,960/- to the employees/ Directors of the Company, who exercised their vested Employee Stock Options as per the approved employee stock option plans. These Equity Shares rank pari passu in all respects with the existing Equity Shares of the Company.

As on 31st March, 2015, the issued, subscribed and paid up share capital of your Company stood at Rs. 112,733,360 /-, comprising 22,546,672 Equity shares of Rs. 5/- each.

iv) Composition of Audit Committee

Mastek has an Audit Committee that currently comprises of three Independent Directors and one Non-Executive Promoter Director. The Chairman of the Audit Committee is an Independent Director. The Independent Directors are accomplished professionals from the corporate fields. The Managing Director and Group CEO, the Group CFO and Finance Director and the Chief Financial Officer ofthe Company attend the meetings on invitation. The Company Secretary is the Secretary of the Committee.

During the year ended March 31, 2015 the Audit Committee met 6(six) times. The attendance of the members at the meetings is stated below:

Name of Member Status No. of Meetings attended

Mr. S. Sandilya Chairman 5

Mr. Ashank Desai Member 5

Ms. Priti Rao Member 6

Mr. Venkatesh Chakravarty Member 6

The other details of the Audit Committee are given in the Corporate Governance Report, appearing elsewhere as a separate section in this Annual report.

v) Related Party Transactions:

All the Related Party Transactions are entered into on arm''s length basis and are in compliance with the applicable provisions of the Act and the Listing Agreement. There are no material significant related party transactions made by the Company with Promoters, Directors or Key Managerial Personnel etc. which may have potential conflict with the interest of the Company at large.

All the Related Party Transactions are presented to the Audit Committee and Board for their approval. Omnibus approval is given by Audit committee for the transactions which are foreseen and repetitive in nature. A statement of all Related Party Transactions is presented before the Audit Committee and Board on quarterly basis, specifying the nature, value and terms and conditions of the transactions. The said transactions are approved by Audit Committee as well as by Board.

The Related Party Transactions Policy as approved by the Board is uploaded on the Company''s website at the web link:http://www.mastek.com/images/pdf/Related-Party- Transactions-Policy- Detailed explanation on transactions with related parties is given in Annexure 3.

10. MANAGEMENT OF RISKS OF FRAUD, CORRUPTION AND UNETHICAL BUSINESS PRACTICES.

Whistle Blower Policy/ Vigil mechanism

In compliance with the requirement of the Companies Act, 2013 and Listing Agreement guidelines, the Company has established a Whistle Blower Policy /Vigil mechanism and the same is placed on the web site of the Company, viz http://www.mastek.com/investors/ corporate-governance.

The employees of the company are made aware of the said policy at the time of joining the Company.

11. AWARDS AND RECOGNITION

Your Company has received an award as Prolific Industry Performer, Technology from Patch for excellence in the field of I.T. Innovation and Consulting.

12. DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to the requirement clause (c) of sub-section (3) of Section 134 ofthe Companies Act, 2013, your Directors confirm that:

To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors make the following statements in terms of Section 134(3)(c) of the Companies Act, 2013:

a) that in the preparation of the annual financial statements for the year ended 31st March 2015, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;

b) that such accounting policies as mentioned in Note 1 of the Notes to the Financial Statements have been selected and applied consistently and judgement and estimates have been made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31st March, 2015 and of the profit of the Company for the year ended on that date;

c) that proper and sufficient care has been taken 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) that the annual financial statements have been prepared on a going concern basis;

e) that proper internal financial controls to be followed by the Company have been laid down and that the financial controls are adequate and were operating effectively.

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

13. STATUTORY AUDITORS, THEIR REPORT AND NOTES TO FINANCIAL STATEMENTS

At the last Annual General Meeting(AGM) held on July 23, 2014, M/s. Price Waterhouse, Chartered Accountants, LLP. have been appointed as the Statutory Auditors of the Company for a period of 3 years. Ratification of appointment of Statutory Auditors is being sought from the members ofthe Company at the ensuing AGM.

Further, the report of the Statutory Auditors is enclosed to this report. The observations made in the Auditors'' Report are self-explanatory and does not contain any qualification. Therefore it does not call for any further comments.

14. SECRETARIAL AUDIT

In terms of Section 204 of the Act and Rules made there under, M/s. V. Sundaram & Co., Practicing Company Secretary, Mumbai has been appointed Secretarial Auditor of the Company. The report of the Secretarial Auditor is enclosed as Annexure 4 to this report. The report is self-explanatory and does not contain any qualification. Therefore it does not call for any further comments.

15. HUMAN RESOURCES

Mastek Group deploys its intellectual capability to create and deliver intellectual property (IP)-led solutions that make a positive business impact for its global clients. For this, the key success enabler and most vital resource is world-class talent. Mastek Group continually undertakes measures to attract and retain such high quality talent.

As on March 31, 2015, Mastek Group had a total Head count of 3252. The Directors wish to place on record their appreciation for the contributions made by employees to the Company during the year under review.

Information as per Section 197 of the Companies Act, 2013 and the rules thereunder forms part of this report. However, as per the provisions of Section 136 (I) of the Companies Act, 2013 the report and accounts, excluding the Statement of Particulars are being sent to all members. Any member interested in obtaining a copy of the Statement of Particulars may write to the Company Secretary at its Registered Office.

16. EMPLOYEE STOCK OPTIONS

Nature and extent of employee share-based payment plans that existed during the year:

i. Plan III

The Company passed special resolutions at its Annual General Meeting held on September 20, 2004 approving the allocation of 700,000 stock options to the eligible employees of the Company and its subsidiaries.

The Company subsequently established a new scheme in 2004 for granting 700,000 stock options to the employees referred to above, each option representing one equity share of the Company. The exercise price is as governed by the guidelines issued by SEBI. The scheme is governed by the Employee Stock Option Scheme and Employee Stock Purchase Guidelines issued in 1999 by SEBI and as amended from time to time. The first vesting of the stock options shall happen only on completion of one year from the date of grant and the options are exercisable within two years from the date of vesting. As per the SEBI guidelines, the excess of market price of the underlying equity shares as of the date of the grant of the options over the exercise price of the option is to be recognized and amortized on a straight line basis over the vesting period. No options have been granted under the scheme at below market price and consequently, there is no compensation cost in the current year. In April, 2006 the Company issued Bonus Shares in the ratio of 1:1 and the number of unvested and unexercised options and the price of the said options have been adjusted accordingly.

(No. of Options) Year ended Year ended March 31, March 31, 2015 2014

Opening Balance - 42,125

Granted during the year - -

Exercised during the year - -

Cancelled during the year - (42,125)

Balance unexercised options - -

ii. Plan IV

The Shareholders of the Company through Postal Ballot on August 9, 2007 approved the allocation of 1,000,000 stock options to the eligible employees of the Company and its subsidiaries.

The Company subsequently established a new scheme in 2007 for granting 1,000,000 stock options to the employees referred to above, each option representing one equity share of the Company. The exercise price is as governed by the guidelines issued by SEBI. The scheme is governed by the Employee Stock Option Scheme and Employee Stock Purchase Guidelines issued in 1999 by SEBI and as amended from time to time. The first vesting of the stock options shall happen only on completion of one year from the date of grant and the options are exercisable within two years from the date of vesting. During the year ended June 30, 2011, the Company has extended the vesting period from two years to seven years. As per the SEBI guidelines, the excess of market price of the underlying equity shares as of the date of the grant of the options over the exercise price of the option is to be recognized and amortized on a straight line basis over the vesting period. No options have been granted under the scheme at below market price and consequently, there is no compensation cost in the current year.

(No. of Options) Year ended Year ended March 31, March 31, 2015 2014

Opening Balance 411,707 412,986

Granted during the year - -

Exercised during the year (15,118) -

Cancelled during the year (25,564) (1,279)

Balance unexercised options 371,025 411,707

iii. Plan V

The Company introduced a new scheme in 2008 for granting 1,500,000 stock options to the employees, each option representing one equity share of the Company. The exercise price as may be determined by the Nomination & Remuneration Committee ("Committee") and such price may be the face value of the share from time to time or may be the Market Price or any price as may be decided by the Committee and will be governed by the guidelines issued by SEBI. The scheme is governed by the Employee Stock Option Scheme and Employee Stock Purchase Guidelines issued in 1999 by SEBI and as amended from time to time. The first vesting of the stock options shall happen only on completion of one year from the date of grant and the options are exercisable within seven years from the date of vesting. As per the SEBI guidelines, the excess of market price of the underlying equity shares as of the date of the grant of the options over the exercise price of the option is to be recognized and amortized on a straight line basis over the vesting period. During the financial year ended June 31,2011, 50,000 options were granted at price less then the market price. There is no compensation cost in the current year, as the cost of discounted options has been charged off in earlier years.

(No. of Options) Year ended Year ended March 31, March 31, 2015 2014

Opening Balance 673,514 853,514

Granted during the year - -

Exercised during the year (91,575) -

Cancelled during the year (273,000) (180,000)

Balance unexercised options 308,939 673,514

iv. Plan VI

The Company introduced a new scheme in 2010 for granting 2,000,000 stock options to the employees, each option representing one equity share of the Company. The exercise price as may be determined by the Committee and such price may be the face value of the share from time to time or may be the Market Price or any price as may be decided by the Committee and will be governed by the guidelines issued by SEBI. The scheme is governed by the Employee Stock Option Scheme and Employee Stock Purchase Guidelines issued in 1999 by SEBI and as amended from time to time. The first vesting of the stock options shall happen only on completion of one year from the date of grant and the options are exercisable within seven years from the date of vesting. As per the SEBI guidelines, the excess of market price of the underlying equity shares as of the date of the grant of the options over the exercise price of the option is to be recognized and amortized on a straight line basis over the vesting period. During the year ended March 31, 2015, 256,957 options have been granted under the scheme at below market price. Consequently, the amortised compensation cost for the exercisable options is Rs. 96.06 lakhs, out of which Rs. 82.67 lakhs have been charged to the subsidiaries based on the employees where they are employed and balance of Rs. 13.39 lakhs have been charged to the statement of profit and loss during the current year.

(No. of Options) Year ended Year ended March 31, March 31, 2015 2014

Opening Balance 1,892,300 1,123,800

Granted during the year 326,957 1,003,750

Exercised during the year (279,299) (6,500)

Cancelled during the year (624,519) (228,750)

Balance unexercised options 1,315,439 1,892,300

v. Plan VII

The Company introduced a new scheme in 2013 for granting 2,500,000 stock options to its employees, employees of its subsidiaries and its Independent Directors, each option giving a right to apply for one equity share of the Company on its vesting. The exercise price as may be determined by the Committee and such price may be the face value of the share from time to time or may be the Market Price or any price as may be decided by the Committee and will be governed by the guidelines issued by SEBI. The scheme is governed by the Employee Stock Option Scheme and Employee Stock Purchase Guidelines issued in 1999 by SEBI and as amended from time to time. The first vesting of the stock options shall happen only on completion of one year from the date of grant and the options are exercisable within seven years from the date of vesting. As per the SEBI guidelines, the excess of market price of the underlying equity shares as of the date of the grant of the options over the exercise price of the option is to be recognized and amortized on a straight line basis over the vesting period. During the year ended March 31, 2015, 46,373 options have been granted under the scheme at below market price. Consequently, the amortised compensation cost for the exercisable options is Rs. 35.69 lakhs. The entire cost have been charged to the subsidiaries based on the employees where they are employed and Rs. Nil have been charged to the statement of profit and loss during the current year.

(No of Options) Year ended Year ended March 31, March 31, 2015 2014

Opening Balance - -

Granted during the year 1,069,373 -

Exercised during the year - -

Cancelled during the year (172,000) -

Balance unexercised options 897,373 -

Disclosure required under SEBI (ESOS& ESPS) Guidelines, 1999

In order to enable the Company to continue with its ESOP, the Company passed special resolutions through postal ballot in January, 2002 for issue of 700,000 stock options to its employees. At the Annual General Meeting held on September 20, 2004, the Company passed special resolutions to issue 700,000 stock options to its employees. The Company passed special resolutions through postal ballot in August 9, 2007 for issue of 1,000,000 stock options to its employees. On March 20, 2009, the shareholders of the Company approved the further issue of 1,500,000 options to the employees. At the Annual General Meeting of the Company held on October 1, 2010, the shareholders of the Company approved the further issue of 2,000,000 options. At the Annual general Meeting of the Company held on July 17, 2013, the Shareholders of the Company approved further issue of 2,500,000 options.

a) Options granted: Opening 29,77,521

b) Issued during the year 13,96,330

c) Pricing formula Market Price as defined by SEBI from time to time or face value or such price as may be decided by the Compensation committee from time to time

d) Options vested: 10,99,691

e) Options exercised 385,992

f) Total Number of shares arising as a result of exercise of option 385,992

g) Options lapsed: 10,95,083

h) Variations of terms of options NIL

i) Moneyrealizedbyexerciseofoptions Rs. 558.80 lakhs

j) Total number of options in force 2,892,776

k) Employee-wise details of options granted to

(1) Senior managerial personnel: 3

(2) Any other employee who receives a grant in any one year of option amounting to 5% or more of option granted during that year Prahlad Koti - 75,040 options Anil Chitale - 82,710 options Prateek Kumar - 1,08,770 options

(3) Identified employees who were granted option, during any one year, equal to or exceeding 1% of the issued capital (excluding outstanding warrants and conversions) of the Company at the time of grant

NIL

Diluted EPS pursuant to issue of shares on exercise of option calculated in accordance with Accounting Standard (AS) 20 Rs. 31.75

m) The impact of this difference on profits and on EPS of the Company.

(Rs. in Lakhs) Year Ended Year Ended March 31, March 31, 2015 2014

Profit After Tax (PAT) 7,438.75 2,697.11

Less : Change in Employee (90.18) (36.49) compensation cost based on Fair value

Add : Employee stock compensation 13.39 - expenses based on intrinsic value

PAT as per Fair value method 7,361.96 2,660.62

Proforma Basic EPS (in Rs.) 32.98 10.83

n) Weighted-average exercise price and fair value of Stock Options granted during the year:

Stock options Weighted Weighted Closing market granted on average Average fair price at BSE exercise price value on the date of (in Rs.) grant (in Rs.)

May 23rd 2014 179.00 82.76 178.35

May 23rd 2014 5.00 150.38 178.35

July 24th 2014 5.00 172.81 201.00

Oct 21st 2014 261 128.89 260.90

(o) Description of the method and significant assumptions used during the year to estimate the fair value of the options, including the following weighted average information:

: The Black Scholes option pricing model was developed for estimating fair value of traded options that have no vesting restrictions and are fully transferable. Since Option pricing models require use of substantive assumptions, changes therein can materially affect fair value of options. The option pricing models do not necessarily provide a reliable measure of fair value of options.

The option pricing models do not necessarily provide a reliable measure of fair value of options.

The main assumptions used in the Black-Scholes option-pricing model during the year were as follows:

Serial Grant Date May 23rd July 24th Oct No. 2014 2014 22nd 2014

1 Risk Free Interest Rate 8.75% 8.75% 8.47%

2 Expected Life (years) 6 6 6

1 Expected Volatility 47.81% 47.50% 47.58

4 Dividend Yield 2.52% 2.24% 1.72%

17. RISK MANAGEMENT POLICY

In terms of the requirement of the Act, the Company has developed and implemented the Risk Management Policy and the Audit Committee, Governance Committee of the Board quarterly reviews the risks and remedial measures taken.

The risks are identified and discussed by Risk Committee at its meeting at regular intervals. The various risks are categorized as High risk, Medium risk and Low risk and appropriate steps/measures are taken/initiated to mitigate the identified risks from time to time.

18. DECLARATION BY INDEPENDENT DIRECTORS

Mr. S. Sandilya, Mr. Venkatesh Chakravarty, Ms. Priti Rao, Dr. Rajendra Sisodia, Mr. Atul Kanagat and Dr. Arun Maheshwari have been the Independent Directors on the Board of your Company, during the year under review.

In the opinion of the Board and as confirmed by these Directors, they fulfil the conditions specified in section 149 of the Act and the Rules made thereunder about their status as Independent Directors of the Company.

Dr. Rajendra Sisodia, resigned as a Board member with effect from April 17, 2015. The Board places on record its sincere appreciation of the valuable services rendered by him during his tenure as a Board member.

19. COMPANY''S POLICY ON APPOINTMENT AND REMUNERATION

The Company has a policy on remuneration of Directors and Senior Management Employees. The policy is approved by the Nomination & Remuneration Committee and the Board. The policy covers:

1. Directors'' appointment and remuneration; and

2. Remuneration of Key Managerial Personnel and other employees.

The more details on the same are given in the Corporate Governance Report.

20. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS

During the year under review, no significant and material orders were passed by the regulators or courts or tribunals impacting the going concern status and company''s operations.

21. INTERNAL CONTROLS SYSTEM

A strong internal control system is pervasive in the Company. The Company has documented a robust and comprehensive internal control system for all the major processes to ensure reliability of financial reporting.

22. DIRECTORS AND KEY MANAGERIAL PERSONNEL

Mr. Ashank Desai, Director retires by rotation at the forthcoming Annual General Meeting and being eligible, offers himself for reappointment.

During the year, as approved by the Shareholders at their Extra Ordinary General Meeting held on March 05, 2015 Mr. S. Sandilya, Ms. Priti Rao and Mr. Atul Kanagat were appointed as Independent Directors of the company for a term of four (4) years from April 1, 2015 to March 31, 2019.

Pursuant to provisions of section 203 of the Companies Act, 2013 which has come into effect from April 1, 2014 the appointment of Mr Sudhkar Ram, Managing Director & Group CEO, Mr. Farid Kazani, Group CFO & Finance Director and Mr. Bhagwant Bargawe, Company Secretary as key managerial personnel were formalised.

23. EVALUTION OF THE BOARD''S PERFORMANCE

In compliance with Companies Act, 2013, and Clause 49 of the Listing Agreement, the performance evaluation of the Board as a whole and of the Individual Directors was carried out during the year under review.

With the help of an external consultant, a structured questionnaire was prepared after taking into consideration inputs received from the Directors, covering various aspects of the Board''s functioning such as adequacy of the composition of the Board and its Committees, Board culture, execution and performance of specific duties, obligations and governance.

A separate exercise was carried out to evaluate the performance of individual Directors including the Chairman of the Board, on parameters such as level of engagement and contribution, independence of judgment, safeguarding the interest of the Company and its minority shareholders etc.

The Directors expressed satisfaction with the evaluation process.

24. PUBLIC DEPOSITS

Your Company has not accepted any deposits from public in terms of Section 73 and/or 74 of the Companies Act, 2013.

25. MANAGEMENT DISCUSSION AND ANALYSIS

Management Discussion and Analysis comprising an overview of the financial results, operations / performance and the future prospects of the Company forms part of this Annual Report.

26. DETAILS OF CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO

(a) Conservation of energy

Conservation of Energy: As a software Company, energy costs constitute a small portion of the total cost and there is not much scope for energy conservation.

(i) the steps taken or impact on conservation of energy

(ii) the steps taken by the company for utilizing Not

alternate sources of energy Applicable

(iii) the capital investment on energy conservation equipments

(b) Technology absorption: Not Applicable

(i) the efforts made towards technology absorption

(ii) the benefits derived like product improvement, cost reduction, product development or import substitution

(iii) in case of imported technology (imported during the

last three years reckoned from the beginning of the financial year)-_ Not

(a) the details oftechnology imported; Applicable

(b) the year of import;

(c) whether the technology been fully absorbed;

(d) if not fully absorbed, areas where absorption has not taken place, and the reasons thereof;_

(iv) the expenditure incurred on Research and Development

(c) Foreign exchange earnings and Outgo

Total foreign Exchange used and earned by Mastek Limited

Rs. in Lakhs Particulars Year ended Year ended March 31, 2015 March 31, 2014

Exchange used 28,154.30 22,001.45

Exchange Earned 63,172.14 54,386.98

27. CORPORATE GOVERNANCE

The Company has complied with Corporate Governance requirement under the Companies Act, 2013 and as per Listing Agreement. A separate section on Corporate Governance practices followed by the Company together with the Certificate from M/s. V. Sundaram & Co. Practicing Company Secretary, Mumbai, appearing elsewhere in this report, forms an integral part of this report.

28. Corporate Social Responsibility

In compliance with the provisions of Section 135 of the Companies Act, 2013 the Board of Directors of the Company have formed a Corporate Social Responsibility Committee vide Board Resolution dated April 24, 2013. A detailed report about Corporate Social Responsibility is given in Annexure 5.

The Committee has formulated and recommended to Board a Corporate Social Responsibility Policy. The contents ofthe policy are as follows:-

Mastek CSR programmes shall fall under the following categories:

1. Promoting education, enhancing skills of children, and development of children of women working in red-light areas. We are also involved in special education and employment- enhancing vocation skills especially among women, elderly and the differently abled, and livelihood enhancement projects.

2. Eradicating hunger, poverty and malnutrition, promoting preventive health care and sanitation and making safe drinking water available.

3. Promoting gender equality and empowering women. Activities include setting up homes/ hostels for women and orphans, old age homes and other such facilities for senior citizens, day care centres, and measures to reduce inequalities faced by socially and economically backward groups.

4. Protection and up gradation of environmental conditions. These include ensuring environmental sustainability, ecological balance, protection of flora and fauna, animal welfare, agro- forestry, conservation of natural resources and maintaining the quality of soil, air and water.

5. Any other projects with the approval of the board. Corpus:

The corpus of the CSR policy includes:

- 2% of the average net profit of the preceding three years

- Any income arising therefrom

- Surplus arising out ofthe above activities

- Payroll contribution from the employees

- Fund-raising events

Mastek may pool its resources and CSR spending with other groups or associate companies as a collaborative effort that qualifies as CSR spend.

Roles and Responsibilities:

- Decide CSR projects or programmes or activities to be taken up by the company.

- Place before the board the CSR activities proposed to be taken up by the company for approval each year.

- Oversee the progress of the initiatives rolled out under this policy every quarter.

- Define and monitor the budgets for carrying out the initiatives.

- Submit a report to the Board of Directors on all CSR activities during the financial year. This will be displayed on the company''s website -- www.mastek.co.in

- Monitor and review the implementation of the CSR policy. CSR Committee Composition:

The Chairperson of the Committee is Ms. Priti Rao, an Independent Director. The other members are Dr. Rajendra Sisodia, Mr. Sudhakar Ram and Mr. Ashank Desai. The Company Secretary is the Secretary of the Committee.

During the year, the Company gave Donations totaling to Rs. 84.94 lakhs. Of this, a sum of Rs. 67.32 Lakhs was spent on Projects approved under Section 135 of the Companies Act 2013 on CSR activity and Rs. 17.67 lakhs was towards the salary and other Administrative Expenses of Mastek Foundation.

As per provision of Section 135 of the Companies Act, 2013, the Company has to spend, in every financial year, at least 2% of the average net profits ofthe Company made during three immediately preceding financial years, in pursuant of Corporate Social Responsibility policy.

Based on the Average net profit of the Company for three immediately preceding financial years, the amount to be spent on CSR activities during the year 2014-15 was Rs. 47.84 Lakhs. However, it spent Rs. 84.94 lakhs on CSR activities..

The said expenditure is within the prescribed limits and the company is in compliance of the provisions of Section 135 of the Companies Act 2013.

29. Transfer of Amounts to Investor Education and Protection Fund

Your Company has transferred a sum of Rs. 10.23 Lakhs during the financial year 2014-15 to Investor Education and Protection Fund (IEPF), established by Central Government in compliance with section 125 of the Companies Act 2013.The said amount represents unclaimed Dividends which were lying with the company for a period of 7(seven) from their respective due dates of payment.

Pursuant to the provisions of the Investor Education Protection Fund (Uploading of information regarding unpaid and unclaimed amounts lying with companies) Rules, 2012, the Company has already filed the necessary form and uploaded the details of unpaid and unclaimed amounts lying with the Company, as on the date of last AGM (i.e. July 23, 2014), with the Ministry of Corporate Affairs.

30. ACKNOWLEDGEMENT

Your Directors place on record their appreciation for employees at all levels, who have contributed to the growth and performance of your Company.

Your Directors also thank the clients, vendors, bankers, shareholders and advisers of the Company for their continued support.

Your Directors also thank the Central and State Governments, and other statutory authorities for their continued support.

For and on behalf of the Board MASTEK LIMITED

Sudhakar Ram S. Sandilya Managing Director & Group CEO Non-Executive Chairman & Independent Director

Date : April 22, 2015 Place : Mumbai


Mar 31, 2014

The Board of Directors has pleasure to forward the following Report for the year ended March 31, 2014.

1. FINANCIAL RESULTS - CONSOLIDATED RESULTS OF MASTEK LIMITED AND ITS SUBSIDIARIES



Rs. in lakhs

Year Ended Nine month PARTICULARS March 31, period 2014 ended

March 31, 2013

Revenue

Income from IT Services 90,956.76 67,376.60

Other operating revenue 1,345.53 959.81

Other Income 1,125.91 910.68

Total Revenue 93,428.20 69,247.09

Expenses 83,298.20 62,623.47

Depreciation and amortization expenses 3,287.28 2,203.13

Finance costs 67.98 39.65

Profit before tax 6,774.74 4,380.84

Tax expense 1,595.18 948.59

Profit after tax 5,179.56 3,432.25



FINANCIAL RESULTS - MASTEK LIMITED

Rs. in Lakhs Year Ended Nine month PARTICULARS March 31, period 2014 ended March 31, 2013

Revenue (including Other Income) 57,187.28 43,101.23

Profit before Exceptional Item and Tax 4,827.43 3,249.62

Exceptional Item 1,555.01 -

Profit before tax 3,272.42 3,249.62

Tax expense 575.31 230.65

Profit after Tax 2,697.11 3,018.97

Add: Profit brought forward from 28,157.93 26,353.73

Previous Period

Profit available for appropriation 30,855.04 29,372.70

Dividend 1,040.59 739.15

Corporate Dividend Tax* (17.52) 125.62

Transferred to General Reserve 520.00 350.00

Balance carried to Balance Sheet 29,311.97 28,157.93



* indicates Net of credit received in respect of tax paid under section 115BBD of Income Tax Act, 1961

2. RESULTS OF OPERATIONS

A) Mastek Consolidated Operations

Continuing on the traction witnessed last year particularly in the Insurance segment in North America, the current fiscal saw the company improve its operational performance. This coupled with uptick in the UK with direct wins in the Government segment through the G-cloud aided the improved performance. The only exception being the drop in revenue primarily due to re- prioritization of a North America client during the fourth quarter.

The Group consolidated its leadership position in the insurance space in North America with key wins in the billing as well as the policy admin areas in the Property & Casualty (P&C) Insurance segment. During the year ended March 31, 2014, the Group has added 13 new logos as compared to 13 in FY2013 and ended the year with a twelve month order backlog of Rs. 54,180.0 lakhs as compared to Rs. 47,800.00 lakhs as at March 31, 2013.

Financials

On a consolidated basis, the Group registered total operating revenue of Rs. 92,302.29 lakhs in the year ended March 31, 2014. The Group registered a net profit ofRs. 5,179.56 lakhs in the year ended March 31, 2014 as compared to Rs. 3,432.25 lakhs in the nine month period ended March 31, 2013.

Break up of the Operating Revenue by regions



Region Year ended March Nine month period 31, 2014 ended March 31, 2013 Rs. in Lakhs % of Rs. in Lakhs % of Revenue Revenue

UK 43,225.73 46.8 32,461.11 47.5

North America 41,949.20 45.4 30,846.50 45.1

Others (India/ 7,127.36 7.8 5,028.80 7.4 Asia Pacific)

Total Operating 92,302.29 100.0 68,336.41 100.0 Revenue



The U.K. operations contributed Rs. 43,225.73 lakhs in revenue as compared to Rs. 32,461.11 lakhs during the nine month period ended March 31, 2013. Even though the overall revenues from BT reduced with the anticipated drop in the onsite project, the company was able to make good the gap with business in the retail and financial services. The company''s strong presence in the government sector has helped in winning strategic deals in the Home Office of department of the UK Government through the G-cloud framework. The company has also witnessed growing opportunities in the Retail space with one of its existing customer. The pipeline for the UK geography is much stronger than last year and the company is making necessary investments for the same.

The North American operations, registered an annualized growth of 1.9 % primary due to growth in the insurance segment both in the Life & Annuity (L&A) and Property & Casualty (P & C) space. The company''s continued investments in the insurance segment in North America has resulted in the company attaining the top 3 vendor status. Going ahead, this segment will continue to drive growth for the company

The annualized growth of 6.3% in the India Asia Pacific region was driven by good level of wins from the India Government side. The Company''s strong IP-based solutions for Government and Insurance business verticals continue to drive new client wins and deeper engagements with existing clients.

Breakup of the Operating Revenue by Verticals

Vertical 2013-14 % of 2012-13 % of (Rs. in Revenue (9 months) Revenue Lakhs) (Rs. in Lakhs)

Insurance 44,865.0 45.0 27,718.6 41.1

Government 23,868.1 26.2 20,006.1 29.7

Financial 9,732.3 10.6 10,569.9 15.7 Services

IT & Other 12,491.4 18.2 9,082.0 13.5 Services

Total - IT 90,956.8 100.0 67,376.6 100.0 services revenue

Other operating 1,345.5 959.8 revenue

Total 92,302.3 68,336.4



The key driver for the 21.4% annualized growth in the insurance segment has been the North America market i.e. both P&C and L&A.

The Government vertical de-grew by 10.5% on an annualized basis, primarily due to the anticipated drop in the Revenues from BT

The Financial Services de-grew significantly with the anticipated drop in the services revenue in North America, whereas the IT and other services vertical grew by 3.2% on annualized basis with expansion of business with the retail segment in UK and travel business in India.

Profitability

During the year ended March 31, 2014, the Group earned a profit of Rs. 5,179.6 lakhs as compared to Rs. 3,432.3 lakhs for the nine month period ended March 31, 2013. The strong profitability was driven by the following:

- Higher proportion of Insurance revenue from North America.

- Improved operating efficiencies and higher utilization levels.

- Higher foreign exchange realizations as compared to previous period.

On an annualised basis, while operating revenues grew 1.3%, the employee benefits expense together with consultancy charges paid to sub-contractors decreased by 2.1%. Travel costs grew by 11.3%. Other operating expenses increased by 8%, depreciation and amortization expenses increased by 11.9%. Forex loss during the year ended March 31, 2014 was Rs. 141.6 lakhs as compared to a Forex gain of Rs. 29.7 lakhs during the nine month period ended March 31, 2013.

(A more detailed discussion of the Company''s strategy and performance appears in the Management Discussion & Analysis section of this annual report.)

B) Mastek standalone operations

On a stand-alone basis, Mastek reported an operating income of Rs. 55,042.7 lakhs for the year ended March 31, 2014, as compared to Rs. 40,101.8 lakhs for nine month period ended March 31, 2013. The Company made a Net profit of Rs. 2,697.11 lakhs for the year ended March 31, 2014 as compared to Net Profit of Rs. 3,019.0 lakhs for the nine month period ended March 31, 2013.

C) Update on Board of Directors

Mastek Board currently has 10 members, of which 6 are Independent Directors and the remaining 4 are Promoter Directors.

During the year under review, Dr. Arun Maheshwari was appointed as an Additional Director of the Company with effect from October 24, 2013 and is proposed to be appointed as an Independent Director in the ensuing Annual General Meeting. He is an Independent Director on the Board.

Mr. Ashank Desai - Approval from Ministry of Corporate Affairs, New Delhi.

As approved by Shareholders in the Annual General Meeting held on October 05, 2012, the Company had made an application to Ministry of Corporate Affairs, New Delhi for approval to make payment of certain benefits/ Perquisites to Mr. Ashank Desai, Non- Executive Director of the Company for a period of 3 years from July 01, 2012 up to June 30, 2015.

The Company has received approval thereto from Ministry of Corporate Affairs, New Delhi vide their letter no. SRN B64202435/4/2012-CL-VII dated September 19, 2013.

3. BUSINESS OUTLOOK

The Company''s strategy of sustained product development in the insurance segment (both in P&C and L&A) seems to be paying off. It expects growth to be led by improved business opportunities in the insurance vertical in North America. The opportunities in the Government segment in the UK and India continue to remain attractive and the company will continue its sales & marketing spends to take advantage of the upcoming opportunities.

4. BUY BACK OF SHARES OF THE COMPANY

During the year, the Company had initiated a share buyback scheme intending to buy a maximum of 3,200,000 equity shares of the Company at a price not exceeding Rs. 250/- per share for a total amount not exceeding Rs. 5,450 lakhs. The company under the said scheme bought back 2,484,007 equity shares for an average price of Rs. 218.08 per share at a total value of Rs. 5,417.09 lakhs. All the shares bought back have been extinguished and necessary returns have been filed with the respective authorities.

5. LIQUIDITY

The Group continues to maintain a reasonable level of Current Investments and Cash and Bank balances which enable it to not only eliminate short and medium-term liquidity risks but also provide the leverage to scale up operations at a short notice. As at March 31, 2014 the amount of Current Investments and Cash and bank balances stood at Rs. 17,113.3 lakhs (Rs. 15,904.5 lakhs) which amounted to 71 (68 days) of expenses and Rs. 77.2 (Rs. 64.5) per share.

During the year, Mastek invested surplus funds in Liquid Schemes and Fixed Maturity Plans of leading Mutual Funds.

6. OTHER THAN TEMPORARY DECLINE IN VALUE OF INVESTMENT IN MAJESCOMASTEK CANADA LIMITED

The Company continuously evaluates the carrying value of its investments in its Subsidiaries. During the year, based on the review of the operations of its wholly owned subsidiary viz. Majescomastek Canada Limited (MCAN), it has determined and accounted for other than temporary decline in the carrying value of the Investment amounting to Rs. 1,555.01 lakhs.

7. AUDITED ACCOUNTS OF SUBSIDIARY COMPANIES

In view of the Circular No.2/2011 dated February 8, 2011 issued by the Government of India, Ministry of Corporate Affairs, New Delhi, the accounts of subsidiary companies are not attached to the audited accounts of the Company. The Board of Directors of the Company at its meeting held on April 23, 2014 has given its consent for not attaching the Balance Sheets of the subsidiaries. We, hereby, undertake that the Annual Accounts of subsidiary companies and related detailed information shall be made available to the shareholders at any point of time. Copies of the annual accounts of subsidiary companies shall also be available for inspection by any shareholder at the registered office of the Company. The Annual Accounts of subsidiary companies can be downloaded from Company''s website www.mastek.com.

8. DIVIDEND

An Interim Dividend of Rs. 1.75 per Equity Share of Rs. 5/- was declared by the Board of Directors and was paid in November 2013.

Your Directors are pleased to recommend a final dividend of Rs. 2.75 per Equity Share for the year ended March 31, 2014 on the paid up Equity Share Capital of the Company, payable to those shareholders whose names appear in the Register of Members as on the book closure date.

9. DIRECTORS'' RESPONSIBILITY STATEMENT

The Board of Directors of the Company confirms:

i. that in preparation of the annual accounts, the applicable accounting standards have been followed and there has been no material departure;

ii. that the selected accounting policies were applied consistently and the Directors made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as on March 31, 2014, and of the profit/(loss) of the Company for year ended on that date.

iii. that proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, to safeguard the Company''s assets and prevent and detect fraud and other irregularities.

iv. that the annual accounts have been prepared on a going concern basis.

10. DIRECTORS RETIRING BY ROTATION

As per Section 152 of the Companies Act, 2013 read with Article 134 of Articles of Association of the Company, Mr. Ashank Desai, Non- Executive Director of the Company retires by rotation and, being eligible, offers himself for re-appointment subject to retirement by rotation.

Mr. Venkatesh Chakravarty, Director retires by rotation at the forthcoming Annual General Meeting and is proposed to the members for appointment as an Independent Director of the Company under Section 149 of the Companies Act, 2013 and would not be subject to retirement by rotation.

11. AUDITORS

You are requested to appoint Auditors and fix their remuneration. The retiring auditors, M/s. Price Waterhouse, Chartered Accountants, (Firm Registration No. 012754N) have confirmed their availability within the limits of section 139(1) of the Companies Act, 2013.

12. HUMAN RESOURCES

Mastek deploys its intellectual capability to create and deliver intellectual property (IP)-led solutions that make a business impact for its global clients. For this, the key success enabler and most vital resource is world-class talent. Mastek continually undertakes measures to attract and retain such high quality talent.

As on March 31, 2014, Mastek Group had a total of 3123 employees. The Company has resumed recruitment of fresh talent for its different projects.

The Directors wish to place on record their appreciation for the contributions made by employees to the Company during the year under review.

Information as per Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, forms part of this report. However, as per the provisions of Section 219(1)(b)(iv) of the Companies Act, 1956 the report and accounts, excluding the Statement of Particulars under Section 217(2A), are being sent to all members. Any member interested in obtaining a copy of the Statement of Particulars may write to the Company at its Registered Office.

13. EMPLOYEE STOCK OPTIONS

Plan III

The Company passed special resolutions at its Annual General Meeting held on September 20, 2004 approving the allocation of 700,000 stock options to the eligible employees of the Company and its subsidiaries.

The Company subsequently established a new scheme in 2004 for granting 700,000 stock options to the employees referred to above, each option representing one equity share of the Company. The exercise price is as governed by the guidelines issued by SEBI. The scheme is governed by the Employee Stock Option Scheme and Employee Stock Purchase Guidelines issued in 1999 by SEBI and as amended from time to time. The first vesting of the stock options shall happen only on completion of one year from the date of grant and the options are exercisable within two years from the date of vesting. As per the SEBI guidelines, the excess of market price of the underlying equity shares as of the date of the grant of the options over the exercise price of the option is to be recognized and amortized on a straight line basis over the vesting period. No options have been granted under the scheme at below market price and consequently, there is no compensation cost in the current period. In April, 2006 the Company issued Bonus Shares in the ratio of 1:1 and the number of unvested and unexercised options and the price of the said options have been adjusted accordingly.

(No. of options) Year Ended Nine month period Particulars March 31, ended March 31, 2014 2013

Opening Balance 42,125 94,750

Granted during the year - -

Exercised during the year - -

Cancelled during the year (42,125) (52,625)

Balance unexercised options - 42,125

Plan IV

The Shareholders of the Company through Postal Ballot on August 9, 2007 approved the allocation of 1,000,000 stock options to the eligible employees of the Company and its subsidiaries.

The Company subsequently established a new scheme in 2007 for granting 1,000,000 stock options to the employees referred to above, each option representing one equity share of the Company. The exercise price is as governed by the guidelines issued by SEBI. The scheme is governed by the Employee Stock Option Scheme and Employee Stock Purchase Guidelines issued in 1999 by SEBI and as amended from time to time. The first vesting of the stock options shall happen only on completion of one year from the date of grant and the options are exercisable within two years from the date of vesting. During the year ended June 30, 2011 the Company has extended the vesting period from two years to seven years. As per the SEBI guidelines, the excess of market price of the underlying equity shares as of the date of the grant of the options over the exercise price of the option is to be recognized and amortized on a straight line basis over the vesting period. No options have been granted under the scheme at below market price and consequently, there is no compensation cost in the current year.

(No. of options) Particulars Year Ended Nine month period March 31, ended March 31, 2014 2013

Opening Balance 277,915 319,834

Granted during the year - -

Exercised during the year - -

Cancelled during the year (1,279) (41,919)

Balance unexercised options 276,636 277,915

Plan V

The Company introduced a new scheme in 2008 for granting 1,500,000 stock options to the employees, each option representing one equity share of the Company. The exercise price as may be determined by the Compensation Committee and such price may be the face value of the share from time to time or may be the Market Price or any price as may be decided by the Committee and will be governed by the guidelines issued by SEBI. The scheme is governed by the Employee Stock Option Scheme and Employee Stock Purchase Guidelines issued in 1999 by SEBI and as amended from time to time. The first vesting of the stock options shall happen only on completion of one year from the date of grant and the options are exercisable within seven years from the date of vesting. As per the SEBI guidelines, the excess of market price of the underlying equity shares as of the date of the grant of the options over the exercise price of the option is to be recognized and amortized on a straight line basis over the vesting period. During the financial year ended June 30, 2011, 50,000 options were granted at a price less than the market price. Consequently, amortized compensation cost of Rs. NIL (Previous Year Rs. 35.0 Lakhs) in respect of options granted in earlier periods has been charged to the Profit and Loss account.

(No. of options) Particulars Year Ended Nine month period March 31, ended March 31, 2014 2013

Opening Balance 853,514 895,458

Granted during the year - -

Exercised during the year - -

Cancelled during the year (180,000) (41,944)

Balance unexercised options 673,514 853,514

Plan VI

The Company introduced a new scheme in 2010 for granting 2,000,000 stock options to the employees, each option representing one equity share of the Company. The exercise price as may be determined by the Nomination and Remuneration Committee and such price may be the face value of the share from time to time or may be the Market Price or any price as may be decided by the Committee and will be governed by the guidelines issued by SEBI. The scheme is governed by the Employee Stock Option Scheme and Employee Stock Purchase Guidelines issued in 1999 by SEBI and as amended from time to time. The first vesting of the stock options shall happen only on completion of one year from the date of grant and the options are exercisable within seven years from the date of vesting. As per the SEBI guidelines, the excess of market price of the underlying equity shares as of the date of the grant of the options over the exercise price of the option is to be recognized and amortized on a straight line basis over the vesting period. No options have been granted under the scheme at below market price and consequently there is no compensation cost in the current year.



(No. of options) Particulars Year Ended Nine month period March 31, ended March 31, 2014 2013

Opening Balance 1,123,800 1,054,200

Granted during the year 1,003,750 84,600

Exercised during the year (6,500) -

Cancelled during the year (228,750) (15,000)

Balance unexercised options 1,892,300 1,123,800

PLAN VII

The Company introduced ESOP VII scheme in 2013 for granting 2,500,000 stock options to its employees, employees of its subsidiaries each option giving a right to apply for one equity share of the Company on its vesting. The exercise price as may be determined by the Nomination & Remuneration Committee and such price may be the face value of the share from time to time or may be the Market Price or any price as may be decided by the Committee and will be governed by the guidelines issued by SEBI. The scheme is governed by the Employee Stock Option Scheme and Employee Stock Purchase Guidelines issued in 1999 by SEBI and as amended from time to time. The first vesting of the stock options shall happen only on completion of one year from the date of grant and the options are exercisable within seven years from the date of vesting. As per the SEBI guidelines, the excess of market price of the underlying equity shares as of the date of the grant of the options over the exercise price of the option is to be recognized and amortized on a straight line basis over the vesting period.

Till date no options have been granted under ESOP VII scheme.

Disclosure required under SEBI (ESOS & ESPS) Guidelines, 1999

In order to enable the Company to continue with its ESOP, the Company passed special resolutions through postal ballot in January, 2002 for issue of 700,000 stock options to its employees. At the Annual General Meeting held on September 20, 2004, the Company passed special resolutions to issue 700,000 stock options to its employees. The Company passed special resolutions through postal ballot in August 9, 2007 for issue of 1,000,000 stock options to its employees. On March 20, 2009, the shareholders of the Company approved the further issue of 1,500,000 options to the employees. At the Annual General Meeting of the Company held on October 1, 2010, the shareholders of the Company approved the further issue of 2,000,000 options. At the Annual General Meeting of the Company held on July 17, 2013, the Shareholders of the Company approved the further issue of 2,500,000 options.

a) Options granted: Opening 2,297,354

b) Issued / Granted during the year 1,003,750

c) Pricing formula Market Price as defined by SEBI from time to time or face value or such price as may be decided by the Compensation committee from time to time

d Options vested: 1,099,691

e) Options exercised 6,500

f) Total Number of shares arising as a 6,500 result of exercise of option

g) Options lapsed: 452,154

h) Variations of terms of options NIL

i) Money realized by exercise of 598,000 options

j) Total number of options in force 2,842,450

k) Employee-wise details of options granted to

(1) Senior managerial personnel: 1

(2) Any other employee who receives NIL a grant in any one year of option amounting to 5% or more of option granted during that year

(3) Identified employees who were NIL granted option, during any one year, equal to or exceeding 1% of the issued capital (excluding outstanding warrants and conversions) of the Company at the time of grant

Diluted EPS pursuant to issue Rs. 10.84 of shares on exercise of option calculated in accordance with Accounting Standard (AS) 20

l) The impact of this difference on profits and on EPS of the Company.

(Rs. in Lakhs) Year Ended Nine months March 31, period ended 2014 March 31, 2013

Profit After Tax (PAT) 2,697.11 3,018.97

Less : Change in Empoyee (36.49) 156.90 compensation cost based on Fair value

PAT as per Fair value method 2,660.61 2,862.07

Proforma Basic EPS (in Rs.) 10.83 10.89

m) Weighted-average exercise price and fair value of Stock Options granted during the year:

Stock options Weighted Weighted Closing granted on average Average fair market price exercise price value at BSE on the (in Rs.) date of grant (in f)

26 April 2013 133.00 61.86 132.35

19 July 2013 140.00 64.82 139.45

24 October 2013 161.00 77.49 158.25

n) Description of the : The Black Scholes option pricing method and significant model was developed for estimating assumptions used during fair value of traded options that the year to estimate the have no vesting restrictions and fair value of the options, are fully transferable. Since Option including the following pricing models require use of weighted average substantive assumptions, changes information: therein can materially affect fair value of options. The option pricing models do not necessarily provide a reliable measure of fair value of options.

The main assumptions used in the Black-Scholes option-pricing model during the year were as follows:



Serial Grant Date April 26, July 19, October no 2013 2013 24, 2013

1 Risk Free Interest 7.71% 7.25% 8.68% Rate

2 Expected Life (years) 6 6 6

3 Expected Volatility 49.09% 48.90% 48.32%

4 Dividend Yield 2.27% 2.15% 1.90%

14. ADDITIONAL INFORMATION RELATING TO CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

Information under Section 217(1)(e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1968, forming part of the Directors'' Report for the period ended March 31, 2014:

a) Conservation of Energy :

As a software Company, energy costs constitute a small portion of the total cost and there is not much scope for energy conservation.

Form A is not applicable for software industry.

b) Technology Absorption : Not Applicable

c) Foreign Exchange Earnings Total foreign exchange used and Outgo and earned by Mastek Ltd.

Particulars (Rs. In Lakhs) Year Ended March Nine month period 31, 2014 ended March 31, 2013

Exchange Used 22,678.55 17,163.53

Exchange Earned 54,386.98 39,874.86

d) Expenditure on Product Development incurred by Mastek Ltd.

(Rs. in Lakhs) Description Year Ended Nine month period March 31, ended March 31, 2014 2013

Life & Annuity Products 859.50 729.85

Property & Casualty 2,657.70 1,655.87 Products

Total 3,517.20 1,785.72

15. CORPORATE GOVERNANCE

Mastek follows best practices in Corporate Governance by benchmarking them with the best in the world.

16. ACKNOWLEDGEMENTS

The Directors would like to place on record their sincere appreciation for the continued co-operation, guidance, support and assistance provided by the SEEPZ Authorities, MIDC, Department of Electronics, ICICI Bank, Standard Chartered Bank Ltd and other government departments and authorities.



By the Order of the Board



Place: Mumbai Sudhakar Ram

Dated: April 23, 2014 Managing Director & Group CEO


Mar 31, 2013

The Board of Directors has pleasure to forward the following Report for the nine month period ended March 31, 2013.

1. FINANCIAL RESULTS - CONSOLIDATED RESULTS OF MASTEK LIMITED AND ITS SUBSIDIARIES

Rs. in Lakhs

Nine month Year ended PARTICULARS period June 30, ended 2012 March 31, 2013

Revenue

Income from IT Services 67,376.60 72,296.43

Other operating revenue 959.81 1,055.12

Other Income 910.68 1,182.04

Total Revenue 69,247.09 74,533.59

Expenses 62,623.47 70,997.28

Depreciation 2,203.13 2,878.37

Interest & Financial Charges 39.65 129.94

Profit Before Tax 4,380.84 528.00

Tax Expense 948.59 477.97

Profit After Tax 3,432.25 50.03

FINANCIAL RESULTS - MASTEK LIMITED

Rs. in Lakhs

Nine month Year PARTICULARS period ended ended June 30, March 31, 2012 2013

Revenue (including Other Income) 43,101.23 46,345.50

Profit/(Loss) before Tax 3,249.62 (601.09)

Tax (expense)/credit (230.65) 43.81

Profit/(Loss) after Tax 3,018.97 (557.28)

Add: Profit brought forward from 26,353.73 24,802.08 Previous Year

Reserves on Amalgamation of Keystone - 2,108.93 Solutions Private Limited with Mastek Limited

Profit available for appropriation 29,372.70 26,353.73

Dividend 739.15 -

Corporate Dividend Tax 125.62 -

Transfer to General Reserve 350.00 -

Balance carried to Balance Sheet 28,157.93 26,353.73

2. RESULTS OF OPERATIONS

A) Mastek Consolidated Operations

Continuing on the traction witnessed last year particularly in the Insurance segment in North America, the current fiscal saw the Company improve its operational performance. This coupled with uptick in the UK Government segment and key wins in the UK retail and financial vertical aided the improved performance. The strong growth momentum along with management focus on driving operational efficiencies helped the Company report healthy profits.

The Group consolidated its leadership position in the insurance space in North America, it has had some key wins last fiscal and the pipeline continues to remain strong. During the nine month period ended March 31, 2013, the Group has added 13 new logos as compared to 21 in FY2012 and ended the year with a twelve month order backlog of Rs. 47,800.0 lakhs as compared to Rs. 48,515.1 lakhs in June 2012.

Financials

The Company has changed its Fiscal from July-June to April- March. Hence the current fiscal financials are for nine months. On a consolidated basis, the Group registered total operating revenue of Rs. 68,336.4 lakhs in the nine month period ended March 31, 2013. The Group registered a net profit of Rs. 3,432.3 lakhs in the nine month period ended March 31, 2013 as compared to Rs. 50.0 lakhs in FY 2012.

Break-up of Operating Revenue by regions

Region Nine month period Year ended ended March 31, June 30, 2012 2013 Rs. in Lakhs % of Rs. in Lakhs % of Revenue Revenue

UK 32,461.1 47.5 35,206.7 47.9

North America 30,846.5 45.1 32,404.5 44.2

Others (India/ 5,028.8 7.4 5,740.4 7.9 Asia Pacific)

Total Operating 68,336.4 100.0 73,351.6 100.0 Revenue

The UK operations contributed Rs. 32,461.1 lakhs in revenue as compared to Rs. 35,206.7 lakhs during the corresponding period last year. The annualized growth of 22.9% was led by increased business in the government vertical followed by retail and financial services. The company''s strong partnership model is positioning the company favourably to tap into opportunities in the Government segment. This segment has recently seen some uptick and Mastek has been a selected vendor for Government procurement through cloud. The Company has also witnessed growing opportunities in the Retail space with one of its existing customer. The pipeline for the UK geography is much stronger than last year and the Company is making necessary investments for the same.

The North America operations, registered an annualized growth of 26.9% primarily due to growth in the insurance segment both in the Life & Annuity (L&A) and Property & Casulty (P&C) space. The Company''s decision of continuing its investments in the insurance segment in North America has resulted in the Company attaining the top 3 vendor status. Going ahead, this segment will continue to drive growth for the Company.

The annualized growth of 16.8% in the India Asia Pacific region was driven by good level of wins from the India Government side. The Company''s strong IP-based solutions for Government and Insurance business verticals continue to drive new client wins and deeper engagements with existing clients.

Break-up of operating Revenue by Verticals

2012-13 %of 2011-12 %of Vertical (9 months) (12 months) Revenue Revenue (Rs. in Lakhs) (Rs. in Lakhs)

Insurance 27,718.6 41.1 28,302.9 39.1

Government 20,006.1 29.7 21,291.1 29.4

Financial Services 10,569.9 15.7 12,745.7 17.6

IT & Other Services 9,082.0 13.5 9,956.8 13.9

Total - IT Services 67,376.6 100.0 72,296.5 100.0 revenue

Other operating 959.8 1,055.1 revenue

Total 68,336.4 73,351.6

The key driver for the 30.6% annualized growth in the insurance segment has been the North America market i.e both P&C and L&A whereas the UK Insurance market continues to remain subdued with limited growth opportunities.

The Government vertical grew by 25.3 % on an annualized basis, led by improved level of business in the UK from existing partners and a robust deal flow from India Government.

The Financial Services witnessed growth both within the US and the UK, clocking an annualized growth of 10.6 %. IT and other services vertical grew by 21.6% on annualized basis especially from the UK.

Profitability

During the nine month period ended March 31, 2013, the Group earned a profit of Rs. 3,432.2 lakhs as compared to Rs. 50.0 lakhs for the year ended June 30, 2012. The strong profitability was driven by the following:

- Growth in business across the three geographies.

- Higher proportion of Insurance revenue from North America with increased license based revenue.

- Improved operating efficiencies and higher utilization levels.

- Cost improvement initiatives across regions and departments.

- Higher foreign exchange realizations as compared to previous year.

While operating revenue grew 24.2%, the employee benefits expense together with consultancy charges paid to sub-contractors grew by 22.9%. Travel costs grew by 7.6%. The strong cost management initiatives led to other operating expenses declining by 2.9%, depreciation and amortization expenses saw a marginal increase of 2.1%. Forex gain during the nine month period ended March 31, 2013 was Rs. 29.7 lakhs as compared to a Forex loss of Rs. 580.0 lakhs during the previous year.

(A more detailed discussion of the Company''s, strategy and performance appears in the Management Discussion & Analysis section of this annual report.)

B) Mastek standalone operations

On a stand-alone basis, Mastek reported total operating revenue of Rs. 40,101.8 lakhs for the nine month period ended March 31, 2013, as compared to Rs. 45,088.4 lakhs for year ended June 30, 2012. The Company made a Net profit of Rs. 3,019.0 lakhs for the nine month period ended March 31, 2013 as compared to Net loss of Rs. 557.3 lakhs in FY 2012.

C) Update on Board of Directors

The Mastek Board currently has 9 members, of which 5 are Independent Directors and the remaining 4 are Promoter Directors.

During the year under review, Mr. Atul Kanagat was appointed as an Additional Director of the Company with effect from January 21, 2013 and is proposed to be appointed as Director liable to retire by rotation in the ensuing Annual General Meeting. He is an Independent Director on the Board.

The Board of Directors formed a Corporate Social Responsibility Committee (CSR) as recommended by the Companies Bill 2012. The said CSR committee consists of 4 Members.

3. BUSINESS OUTLOOK

The Company''s strategy of sustained product development in the insurance segment (both in P&C and L&A) seems to be paying off. It expects growth to be led by improved business opportunities in the insurance vertical in North America.. The opportunities in the Government segment in the UK and India continue to remain attractive and the Company will continue its sales & marketing spends to take advantage of the upcoming opportunities.

4. BUY-BACK OF SHARES OF THE COMPANY

During the year the Company initiated a share buy back scheme intending to buy a maximum of 3,200,000 equity shares of the company at a price not exceeding Rs. 175.00 per share for a total amount not exceeding Rs. 3,600.0 lakhs. The Company under the said scheme bought back 2,388,000 equity shares for an average price of Rs. 150.39 per share at a total value of Rs. 3,591.4 lakhs.

5. LIQUIDITY

The Company continues to maintain a reasonable level of Current Investments and Cash and bank balances which enable it to not only eliminate short and medium-term liquidity risks but also provide the leverage to scale up operations at a short notice. As at March 31, 2013 the amount of Current Investments and Cash and bank balances stood at Rs. 15,904.5 Lakhs which amount to 68 days of expenses and Rs. 64.5 per share.

During the year, Mastek invested surplus funds in Liquid Schemes and Fixed Maturity Plans of leading Mutual Funds and Fixed Deposits with leading Banks and Housing Development Finance Corporation Ltd.

6. AUDITED ACCOUNTS OF SUBSIDIARY COMPANIES

In view of the Circular No.2/2011 dated February 8, 2011 issued by the Government of India, Ministry of Corporate Affairs, New Delhi, the accounts of subsidiary companies are not attached to the audited accounts of the Company. The Board of Directors of the Company at its meeting held on April 26, 2013 has given its consent for not attaching the Balance Sheets of the subsidiaries. We, hereby, undertake that the Annual Accounts of subsidiary companies and related detailed information shall be made available to the shareholders at any point of time. Copies of the annual accounts of subsidiary companies shall also be available for inspection by any shareholder at the registered office of the Company.

7. DIVIDEND

Directors recommend payment of a dividend of Rs. 3/- per equity share for the nine month period ended March 31, 2013 on the paid up Equity Share Capital of the Company.

8. PAYMENT OF CERTAIN BENEFITS / PERQUISITES TO MR. ASHANK DESAI

In the Annual General Meeting held on October 5, 2012, the shareholders of the Company had given consent by approving Special Resolution for payment of certain benefits / perquisites to Mr. Ashank Desai not exceeding Rs. 15 Lakhs per annum. The Company has thereafter applied to the Ministry of Corporate Affairs (MCA) for its approval to the same and the approval from the ministry is awaited.

9. DIRECTORS'' RESPONSIBILITY STATEMENT

The Board of Directors of the Company confirms:

i. that in the preparation of the annual accounts, the applicable accounting standards have been followed and there has been no material departure;

ii. that the selected accounting policies were applied consistently and the Directors 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 as on March 31, 2013, and of the profit/(loss) of the Company for the period ended on that date;

iii. that proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, to safeguard the Company''s assets and prevent and detect fraud and other irregularities;

iv. that the annual accounts have been prepared on a going concern basis.

10. DIRECTORS

As per Article 134 of Articles of Association of the Company, Ms. Priti Rao and Dr. Rajendra Sisodia, Directors of the Company retire by rotation and, being eligible, offer themselves for re-appointment.

11. CHANGE IN FINANICAL YEAR OF THE COMPANY

In order to coincide the Company''s Financial Year with the Tax Year, the Board of Directors of your Company vide their resolution dated January 21, 2013 has approved the change in the Financial Year of the Company from July 01-June 30 to April 01-March 31 every year. Therefore, current financial year of the Company is for nine months i.e. from July 01, 2012 to March 31, 2013.

12. AUDITORS

You are requested to appoint Auditors and fix their remuneration. The retiring auditors, M/s. Price Waterhouse, Chartered Accountants, (Firm Registration No. 012754N) have confirmed their availability within the limits of section 224(1B) of the Companies act, 1956.

13. HUMAN RESOURCES

Mastek deploys its intellectual capability to create and deliver intellectual property (IP)-led solutions that make a business impact for its global clients. For this, the key success enabler and most vital resource is world-class talent. Mastek continuously undertakes measures to attract and retain such high quality talent.

As on March 31, 2013, Mastek Group had a total of 3,214 employees. The Company has resumed recruitment of fresh talent for its different projects.

The Directors wish to place on record their appreciation for the contributions made by employees to the Company during the year under review.

Information as per Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, forms part of this report. However, as per the provisions of Section 219(1)(b) (iv) of the Companies Act, 1956 the report and accounts, excluding the Statement of Particulars under Section 217(2A)of the Companies Act, 1956, are being sent to all members. Any member interested in obtaining a copy of the Statement of Particulars may write to the Company at its Registered Office.

14. EMPLOYEE STOCK OPTIONS PLAN III

The Company passed special resolutions at its Annual General Meeting held on September 20, 2004 approving the allocation of 700,000 stock options to the eligible employees of the Company and its subsidiaries.

The Company subsequently established a new scheme in 2004 for granting 700,000 stock options to the employees referred to above, each option representing one equity share of the Company. The exercise price is as governed by the guidelines issued by SEBI. The scheme is governed by the Employee Stock Option Scheme and Employee Stock Purchase Guidelines issued in 1999 by SEBI and as amended from time to time. The first vesting of the stock options shall happen only on completion of one year from the date of grant and the options are exercisable within two years from the date of vesting. As per the SEBI guidelines, the excess of market price of the underlying equity shares as of the date of the grant of the options over the exercise price of the option is to be recognized and amortized on a straight line basis over the vesting period. No options have been granted under the scheme at below market price and consequently, there is no compensation cost in the current period. In April, 2006 the Company issued Bonus Shares in the ratio of 1:1 and the number of unvested and unexercised options and the price of the said options have been adjusted accordingly.

(No. of options)

Particulars Nine month Year ended period ended on June 30, 2012 March 31, 2013

Opening Balance 94,750 279,292

Granted during the year - -

Exercised during the year - -

Cancelled during the year (52,625) (184,542)

Balance unexercised options 42,125 94,750

Plan IV

The Shareholders of the Company through Postal Ballot on August 9, 2007 approved the allocation of 1,000,000 stock options to the eligible employees of the Company and its subsidiaries.

The Company subsequently established a new scheme in 2007 for granting 1,000,000 stock options to the employees referred to above, each option representing one equity share of the Company. The exercise price is as governed by the guidelines issued by SEBI. The scheme is governed by the Employee Stock Option Scheme and Employee Stock Purchase Guidelines issued in 1999 by SEBI and as amended from time to time. The first vesting of the stock options shall happen only on completion of one year from the date of grant and the options are exercisable within two years from the date of vesting. During the year ended June 30, 2011, the Company has extended the vesting period from two years to seven years. As per the SEBI guidelines, the excess of market price of the underlying equity shares as of the date of the grant of the options over the exercise price of the option is to be recognized and amortized on a straight line basis over the vesting period. No options have been granted under the scheme at below market price and consequently, there is no compensation cost in the current period.

(No of Options)

Particulars Nine month Year ended period ended on June 30, 2012 March 31, 2013

Opening Balance 319,834 407,238

Granted during the year - -

Exercised during the year - -

Cancelled during the year (41,919) (87,404)

Balance unexercised options 277,915 319,834

Plan V

The Company introduced a new scheme in 2008 for granting 1,500,000 stock options to the employees, each option representing one equity share of the Company. The exercise price as may be determined by the Compensation Committee and such price may be the face value of the share from time to time or may be the Market Price or any price as may be decided by the Committee and will be governed by the guidelines issued by SEBI. The scheme is governed by the Employee Stock Option Scheme and Employee Stock Purchase Guidelines issued in 1999 by

SEBI and as amended from time to time. The first vesting of the stock options shall happen only on completion of one year from the date of grant and the options are exercisable within seven years from the date of vesting. As per the SEBI guidelines, the excess of market price of the underlying equity shares as of the date of the grant of the options over the exercise price of the option is to be recognized and amortized on a straight line basis over the vesting period. During the financial year ended June 30, 2011, 50,000 options were granted at price less than the market price. Consequently, the amortized compensation cost of Rs. Nil (Previous Year Rs. 35.00) in respect of options granted in earlier periods has been charged to the Statement of Profit and Loss during the current period.

(No. of options)

Particulars Nine month Year ended period ended on June 30, 2012 March 31, 2013

Opening Balance 895,458 1,317,348

Granted during the year - 46,900

Exercised during the year - (75,000)

Cancelled during the year (41,944) (393,790)

Balance unexercised options 853,514 895,458

Plan VI

The Company introduced a new scheme in 2010 for granting 2,000,000 stock options to the employees, each option representing one equity share of the Company. The exercise price as may be determined by the Compensation Committee and such price may be the face value of the share from time to time or may be the Market Price or any price as may be decided by the Committee and will be governed by the guidelines issued by SEBI. The scheme is governed by the Employee Stock Option Scheme and Employee Stock Purchase Guidelines issued in 1999 by SEBI and as amended from time to time. The first vesting of the stock options shall happen only on completion of one year from the date of grant and the options are exercisable within seven years from the date of vesting. As per the SEBI guidelines, the excess of market price of the underlying equity shares as of the date of the grant of the options over the exercise price of the option is to be recognized and amortized on a straight line basis over the vesting period. No options have been granted under the scheme at below market price and consequently, there is no compensation cost in the current period.

(No. of options)

Particulars Nine month Year ended period ended on June 30, 2012 March 31, 2013

Opening Balance 1,054,200 569,600

Granted during the year 84,600 494,600

Exercised during the year - -

Cancelled during the year (15,000) (10,000)

Balance unexercised options 1,123,800 1,054,200

Disclosure required under SEBI (ESoS & ESpS) Guidelines, 1999

In order to enable the Company to continue with its ESOP, the Company passed special resolutions through postal ballot in January, 2002 for issue of 700,000 stock options to its employees. At the Annual General Meeting held on September 20, 2004, the Company passed special resolutions to issue 700,000 stock options to its employees. The Company passed special resolutions through postal ballot on August 9, 2007 for issue of 1,000,000 stock options to its employees. On March 20, 2009, the shareholders of the Company approved further issue of 1,500,000 options to the employees. At the Annual General Meeting of the Company held on October 1, 2010, the shareholders of the Company approved further issue of 2,000,000 options.

a) Options granted: Opening 2,334,642

b) Issued during the year 84,600

c) Pricing formula Market Price as defined by SEBI from time to time or face value or such price as may be decided by the Compensation Committee from time to time

d) Options vested: 917,772

e) Options exercised Nil

f) Total Number of shares arising as a result of exercise of options

Nil

g) Options lapsed: 151,488

h) Variations of terms of options NIL

i) Money realized by exercise of options

NIL

j) Total number of options in force 2,297,354

k) Employee-wise details of options granted to:

(1) Senior managerial personnel: 1

(2) Any other employee who receives a grant in any one year of option amounting to 5% or more of option granted during that year 3

(3) Identified employees who were granted option, during any one year, equal to or exceeding 1% of the issued capital (excluding outstanding warrants and conversions) of the Company at the time of grant

NIL

Diluted EPS pursuant to issue of shares on exercise of option calculated in accordance with Accounting Standard (AS) 20

l) The impact of this difference on profits and on EPS of the Company.

(Rs. in Lakhs) Profit after Tax (PAT) 3,018.97

Less : Change in Employee compensation cost based 156.90 on Fair value

PAT as per Fair value method 2,862.07

Proforma Basic EPS (in Rs.) 10.89

m) Weighted-average exercise price and fair value of Stock Options granted during the year:

Stock options Weighted Weighted Closing granted on average Average fair market price exercise price value at BSE on the (in Rs.) date of grant (in Rs.)

July 27, 2012 125.00 63.02 124.15

Oct 19, 2012 138.00 70.51 137.70

Feb 07, 2013 150.00 77.61 152.25

n) Description of the method and significant assumptions used during the year to estimate the fair value of the options, including the following weighted average information:

: The Black Scholes option pricing model was developed for estimating fair value of traded options that have no vesting restrictions and are fully transferable. Since Option pricing models require use of substantive assumptions, changes therein can materially affect fair value of options.

The option pricing models do not necessarily provide a reliable measure of fair value of options.

The main assumptions used in the Black-Scholes option-pricing model during the year were as follows:

Serial Grant Date July 27, Oct 19, Feb 7, no 2012 2012 2013

1 Risk Free Interest 8.10 % 8.14 % 7.89% Rate

2 Expected Life 6 6 6 (years)

3 Expected Volatility 49.72% 50.22% 49.71%

4 Dividend Yield 1.54% 1.54% 1.54%

15. ADDITIONAL INFORMATION RELATING TO CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

Information under Section 217(1)(e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1968, forming part of the Directors'' Report for the period ended March 31, 2013:

a) Conservation of Energy:

As a software Company, energy costs constitute a small portion of the total cost and there is not much scope for energy conservation. Form A is not applicable for software industry.

b) Technology Absorption : Not Applicable

c) Foreign Exchange Earnings Total foreign exchange used and and outgo: earned by Mastek Ltd.

Particulars (Rs. in Lakhs)

Nine month Year ended period ended June 30, 2012 March 31, 2013

Exchange Used 17,163.53 20,570.46

Exchange Earned 39,874.86 41,110.58

16. CORPORATE GOVERNANCE

Mastek follows best practices in Corporate Governance by benchmarking them with the best in the world.

17. ACKNOWLEDGEMENTS

The Directors would like to place on record their sincere appreciation for the continued co-operation, guidance, support and assistance provided by the SEEPZ Authorities, MIDC, Department of Electronics, ICICI Bank, Standard Chartered Bank Ltd and other government departments and authorities. By the Order of the Board

Mumbai Sudhakar Ram

April 26, 2013 Chairman & Managing Director


Jun 30, 2012

Dear Members,

The Board of Directors has pleasure to forward the following Report for the Financial Year ended on June 30, 2012.

1. FINANCIAL RESULTS – CONSOLIDATED RESULTS OF MASTEK LIMITED AND ITS SUBSIDIARIES

Rs. In lakhs

PARTICULARS Year Year ended ended June 30, June 30, 2012 2011

Income from IT Services 72,296.43 58,863.19

Other operating Revenue 123.59 547.02

Other Income 1,485.45 2011.14

Total Revenue 73,905.47 61,421.35

Expenses other than 70,369.16 61,258.37 Depreciation, Amortization expenses and Finance costs

Depreciation & Amortization 2,878.37 2878.84 Expenses

Finance Costs 129.94 116.19

Profit / (Loss) Before 528.00 (2,832.05) Exceptional Item and Tax

Exceptional item - 2,719.93

Profit / (Loss) Before Tax 528.00 (5,551.98)

Tax, Expenses 477.97 42.36

Profit / (Loss) After Tax 50.03 (5,594.34)

FINANCIAL RESULTS - MASTEK LIMITED

Rs. In lakhs

PARTICULARS Year Year ended ended June 30, June 30, 2012 2011

Income (including other Income) 46,345.50 41,323.04

(Loss) before Tax (601.09) (557.35)

Tax expense/(credit) (43.81) (423.91)

(Loss) after Tax (557.28) (133.44)

Add: Profit brought forward 24,802.08 24,935.52 from Previous Year

Reserves on Amalgamation of 2,108.93 -- Keystone Solutions Private Limited with Mastek Limited

Profit available for appropriation 26,353.73 24,802.08

Interim Dividend - -

Final Dividend - -

Corporate Dividend Tax - -

Transferred to General reserve - -

Balance carried to Balance Sheet 26,353.73 24,802.08

2. RESULTS OF OPERATIONS

A) Mastek Consolidated Operations

After a couple of years of decreasing revenues and eroding profitability, the last financial year saw the Group turnaround. The turnaround can be attributed primarily due to a focused approach by the management team driving sales enhancing strategies, margin improvement initiatives and the continued investment in product development spends in the insurance segment in North America.

The Group is witnessing a positive momentum in the business, specifically in the insurance space in North America, where the Company has garnered substantial wins in the last fiscal and expects the trend to continue. During the fiscal 2012, the Group has added 21 new logos as compared to 14 in fiscal 2011 and ended the year with a strong 12 month order backlog of Rs. 48,515.1 lakhs up 58% as compared to Rs. 30,599.1 lakhs in June 2011.

Financials

On a consolidated basis, the Group registered total operating revenue of Rs. 72,296.4 lakhs in FY2012. This represents a 22.8 % increase compared to Rs. 58,863.2 lakhs in the preceding year. As a consequence, the Group registered a net profit of Rs. 50.0 lakhs in FY 2012 as compared to a loss of Rs. 5,594.3 lakhs in FY 2011.

Break up of the Operating Revenue by regions

Region 2011-12 2010-11 Rs. % of Rs. % of in lakhs revenue in lakhs revenue

North America 31,764.1 43.9 25,804.4 43.8

Europe 34,903.3 48.3 29,090.9 49.4

Others (India / Asia Pacific) 5,629.0 7.8 3,967.9 6.8

Total Operating

Revenue 72,296.4 100.0 58,863.2 100.0

The North American operations, registered a growth of 23.1% to Rs. 31,764.1 lakhs from Rs. 25,804.4 lakhs last year primarily due to growth in the insurance segment both in the L & A and P & C space.

The European operations (primarily UK) contributed Rs. 34,903.3 lakhs in revenues, as compared to Rs. 29,090.9 lakhs during the corresponding period last year. The growth of 20% was led by increased business in the government vertical followed by financial services and others.

The growth of 41.8 % in the India Asia Pacific region was driven by good level of wins from the India Government side.

Break up of the Operating Revenue by Verticals

Vertical 2011-12 2010-11

Rs. % of Rs. % of in lakhs revenue in lakhs revenue

Insurance 28,302.9 39.1 24,574.8 41.7

Government 21,291.1 29.5 13,635.2 23.2

Financial Services 12,745.7 17.6 10,109.7 17.2

IT & Other Services 9,956.7 13.8 10,543.5 17.9

Total Operating Revenue 72,296.4 100.0 58,863.2 100.0

While the insurance vertical in the UK remained subdued, the large part of the growth of 15.2 % was led by a strong momentum in the insurance vertical in North America.

The Government vertical grew by 56.2 % supported by good level of business in the UK from existing partners and a robust deal flow from India government.

The Financial Services witnessed growth both within the US and the UK, clocking a growth of 26.1 %, whereas IT and other services saw a drop of 5.6% primarily due to volume fluctuations in North America.

Profitability

The Group ended the year with a profit of Rs. 50.0 lakhs in FY 2012 compared to a net loss of Rs. 5,594.3 lakhs in FY 2011. The return to profitability was driven by the following initiatives:

- Positioning the Group with a well-crafted sales strategy, leveraging its core competencies, resulting in improved order win ratios and expansion of the sales pipeline.

- Improving the overall productivity and efficiency at project levels across the three geographies.

- Various cost improvement initiatives.

- Higher foreign exchange realizations as compared to previous year.

While operating revenues grew 22.8%, the employee benefits expense together with consultancy charges paid to sub-contractors grew by 14.2%. Travel costs grew by 23.4% led by increased sales momentum and activities across the three geographies. While other operating expenses grew by 9.2%, depreciation and amortization expenses remained flat in absolute terms. Forex loss during the year of Rs. 580.0 lakhs was primarily on account of mark to market losses on forward covers whereas in the previous year, the Group had a forex gain of Rs. 1030.5 lakhs which is reflected as part of other income.

During the year, the Company adopted hedge accounting as per Accounting Standard 30 (AS-30) with effect from October 1, 2011.

(A more detailed discussion of the Company's business model, strategy and performance appears in the Management Discussion & Analysis section of this annual report.)

B) Mastek standalone operations

On a stand-alone basis, Mastek reported an operating income of Rs. 44,977.1 lakhs for FY 2012 as compared to Rs. 35,932.9 lakhs for FY 2011. The Company made a Net Loss of Rs. 557.3 lakhs compared to the Net Loss of Rs. 133.4 lakhs in FY 2011.

C) Update on Board of Directors

During the year under review, Mr. S. Sandilya was appointed as an Additional Director of the Company with effect from January 19, 2012 & is proposed to be appointed as Director liable to retire by rotation in ensuing Annual General Meeting. He is an Independent Director on the Board.

During the year under review, Mr. Diwan Arun Nanda and Mr. Anil Singhvi resigned as Directors of the Company due to their pre occupation,with effect from July 25, 2011 and October 18, 2011 respectively. The Board expressed its sincere appreciation of the valuable services rendered by Mr. Diwan Arun Nanda and Mr. Anil Singhvi during their tenure as Directors of the Company.

3. BUSINESS OUTLOOK

There are huge market opportunities in both the segments that we operate in - Insurance and Government. The market, in these geographies, has appreciated the fact that Mastek plays for the long term. They have seen us continuing to invest in product development, sales, marketing and capacity building. These investments have started paying off and will continue to do so in FY 2013 and beyond.

4. MERGER

The scheme of merger of Keystone Solutions India Private Limited (step down subsidiary) with the Company was approved by Hon'ble Bombay High Court vide its order dated December 2, 2011 and Gujarat High Court vide its order dated July 7, 2011. The appointed date of the merger scheme is 1st Day of July 2011.

5. LIQUIDITY

The Company continues to maintain a reasonably high level of Cash and Bank Balances and Investments in Mutual Funds which enable it to not only eliminate short and medium- term liquidity risks but also provide the leverage to scale up operations at a short notice. The amount of Cash and Bank Balances and Investments in Mutual Funds stand at Rs. 13,785.4 Lakhs which amounted to 65 days of expenses and Rs. 51.0 per share.

During the year, Mastek invested surplus funds in Liquid Schemes and Fixed Maturity Plans of leading Mutual Funds and Fixed Deposits with leading Banks.

6. AUDITED ACCOUNTS OF SUBSIDIARY COMPANIES

In view of the Circular No.2/2011 dated February 8, 2011 issued by the Government of India, Ministry of Corporate Affairs, New Delhi, the accounts of subsidiary companies are not attached to the audited accounts of the Company. The Board of Directors of the Company at its meeting held on July 27, 2012 has given its consent for not attaching the Balance Sheets of the subsidiaries. We, hereby, undertake that the Annual Accounts of subsidiary companies and related detailed information shall be made available to the shareholders at any point of time. Copies of the annual accounts of subsidiary companies shall also be available for inspection by any shareholder at the registered office of the Company.

7. ISSUE OF SHARE CAPITAL

During the year, the Company allotted 75,000 equity shares of Rs. 5/- each to its eligible employees who exercised their options under Employee Stock Option Plan.

8. DIVIDEND

In view of the loss incurred in Mastek Limited during the year and to conserve Cash resources for future business operations, the Directors do not propose a Dividend for the year ended June 30, 2012.

9. REMUNERATION PAID TO CHAIRMAN & MANAGING DIRECTOR AND EXECUTIVE DIRECTOR AND APPROVAL OF APPOINTMENT AND REMUNERATION FOR A PERIOD OF THREE YEARS WITH EFFECT FROM JULY 1, 2011 TO JUNE 30, 2014.

In the previous year's Annual General Meeting, the shareholders of the Company had given consent by approving Special Resolution for waiver for recovery of excess remuneration paid to Mr. Sudhakar Ram, Chairman and Managing Director and Mr. Radhakrishnan Sundar, Executive Director of the Company aggregating to Rs. 63.36 Lakhs and Rs. 22.50 Lakhs respectively. The Company had thereafter applied to the Ministry of Corporate Affairs (MCA) for its approval to the same. We have pleasure to inform you that both the applications were approved by MCA vide its letter No.B 22 040828/4/2011 dated March 1, 2012 and No.B 22 041347/4/2011 dated March 1, 2012.

Similarly, as approved by the shareholders of the Company by passing Special Resolutions in the previous year's Annual General Meeting, the Company had applied to the Ministry of Corporate Affairs (MCA) for their approval to the appointment and remuneration of Mr. Sudhakar Ram, as Chairman and Managing Director and Mr. Radhakrishnan Sundar as Executive Director of the Company . We have pleasure to inform you that both the applications were approved by MCA vide its letter No. B22064349/4/2011 - CL.VII dated March 1, 2012 and No. B22065346/4/2011 - CL.VII dated March 1, 2012.

10. DIRECTORS' RESPONSIBILITY STATEMENT

The Board of Directors of the Company confirms:

i. that in the preparation of the annual accounts, the applicable accounting standards have been followed and there has been no material departure;

ii. that the selected accounting policies were applied consistently and the Directors 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 as on June 30, 2012, and of the profit/(loss) of the Company for the year ended on that date;

iii. that proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, to safeguard the Company's assets and prevent and detect fraud and other irregularities;

iv. that the annual accounts have been prepared on a going concern basis;

11. DIRECTORS

As per Article 134 of Articles of Association of the Company, Mr. Ashank Desai and Mr. Ketan Mehta, Directors of the Company retire by rotation and, being eligible, offer themselves for re-appointment.

During the year ended June 30 2012 the Company has paid an amount of Rs. 648,808 to Mr. Ashank Desai towards benefits/perquisites like re-imbursement of telephone, mobile bills and credit card fees, premium of mediclaim policy and personal accident policy, use of Chauffer driven Company car maintained by Company. The Company has already received an approval of Central Government for the said payment.

The Approval given by Central Government to make payment of benefits/perquisites vide their letter No.SRN No. A71828073CL.VII dated May 13, 2010 has been for a period of 3 (three years) with effect from July 01, 2009 to June 30, 2012.

Mr. Ashank Desai, one of the founders of the Company, being a non-executive director, represents the Company at various industry and public forums, both domestic and international. In view of his long association and in-depth knowledge of the Company and the industry, the Company is immensely benefited by his continuous interaction with Government/Semi-Government organizations. He has been actively involved with industry forums such as NASSCOM, ASSOCHAM and CII. Mr. Desai is the Chairman of Mastek Limited's Corporate Governance Committee and Share Transfer cum Investor Grievance Committee.

Considering the above, the Board has proposed to continue the payment of aforesaid benefits/perquisites to Mr. Ashank Desai for a further period of 3(three) years from July 1, 2012 till June 30, 2015. The Monetary value for the said benefits/perquisites shall not exceed Rs. 15 Lakhs per annum. Taxes, if any on the above benefits/perquisites will be borne by the Company.

12. ALTERATION OF ARTICLES OF ASSOCIATION OF THE COMPANY.

Pursuant to notifications issued by Ministry of Corporate Affairs, Govt. of India, New Delhi about participation at Board Meetings and General Meetings of Members changes are sought to be introduced in the Articles of Association of the Company to permit the Company to adopt such practices.

Accordingly, following amendments have been proposed in the Articles of Association of the Company for members consideration and approval.

a. Amendment of Article 86 to conduct General Meeting through video conferencing or teleconferencing or through any other electronic or other media as permitted by law

b. Amendment of Article No. 99 to permit voting by shareholders through electronic or other media as permitted by law

c. Amendment of Article No. 147 to determine quorum of Directors participating in Board / Committee meeting through video conferencing or teleconferencing or through any other electronic or other media as permitted by law

13. AUDITORS

You are requested to appoint Auditors and fix their remuneration. The retiring auditors, M/s. Price Waterhouse, Chartered Accountants, (Firm Registration No. 012754N) have confirmed their availability within the limits of section 224(1B) of the Companies act, 1956.

14. HUMAN RESOURCES

Mastek deploys its intellectual capability to create and deliver intellectual property (IP)-led solutions that make a business impact for its global clients. For this, the key success enabler and most vital resource is world-class talent. Mastek continually undertakes measures to attract and retain such high quality talent.

As on June 30, 2012, Mastek Group had a total of 3,083 employees. The Company has resumed recruitment of fresh talent for its different projects.

The Directors wish to place on record their appreciation for the contributions made by employees to the Company during the year under review.

Information as per Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, forms part of this report. However, as per the provisions of Section 219(1)(b)(iv) of the Companies Act, the report and accounts, excluding the Statement of Particulars under Section 217(2A), are being sent to all members. Any member interested in obtaining a copy of the Statement of Particulars may write to the Company at its Registered Office.

15. EMPLOYEE STOCK OPTIONS

PLAN II

The Company established a new scheme in 2002 for granting 700,000 stock options to employees and each option representing one equity share of the Company. The exercise price is as governed by the guidelines issued by SEBI. The scheme is governed by the Employee Stock Option Scheme and Employees Stock Purchase Guidelines issued in 1999 by SEBI. There is a minimum period of twelve months for the first vesting from the date of the grant of options. The options are exercisable within two years of their vesting. As per the SEBI guidelines issued in 1999, and as amended from time to time, the excess of the market price of the underlying equity shares as of the date of the grant of the option over the exercise price of the option is to be recognized and amortized on a straight line basis over the vesting period. The options have been granted at an exercise price which is equal to the market price of the underlying equity shares. Consequently, there is no compensation cost in the current year. In April, 2006, the Company issued Bonus Shares in the ratio of 1:1 and the number of unvested and unexercised options and the price of the said options have been adjusted accordingly.

In accordance with the Guidelines, the Company has passed the necessary special resolutions in January 2002 to approve the scheme and to extend the plan to the employees of its subsidiaries.

Plan III

The Company passed special resolutions at its Annual General Meeting held on September 20, 2004 approving the allocation of 700,000 stock options to the eligible employees of the Company and its subsidiaries.

The Company subsequently established a new scheme in 2004 for granting 700,000 stock options to the employees referred to above, each option representing one equity share of the Company. The exercise price is as governed by the guidelines issued by SEBI. The scheme is governed by the Employee Stock Option Scheme and Employee Stock Purchase Guidelines issued in 1999 by SEBI and as amended from time to time. The first vesting of the stock options shall happen only on completion of one year from the date of grant and the options are exercisable within two years from the date of vesting. As per the SEBI guidelines, the excess of market price of the underlying equity shares as of the date of the grant of the options over the exercise price of the option is to be recognized and amortized on a straight line basis over the vesting period. The options have been granted at an exercise price which is equal to the market price of the underlying equity shares. Consequently, there is no compensation cost in the current year. In April, 2006 the Company issued Bonus Shares in the ratio of 1:1 and the number of unvested and unexercised options and the price of the said options have been adjusted accordingly.

Plan IV

The Shareholders of the Company through Postal Ballot on August 9, 2007 approved the allocation of 1,000,000 stock options to the eligible employees of the Company and its subsidiaries.

The Company subsequently established a new scheme in 2007 for granting 1,000,000 stock options to the employees referred to above, each option representing one equity share of the Company. The exercise price is as governed by the guidelines issued by SEBI. The scheme is governed by the Employee Stock Option Scheme and Employee Stock Purchase Guidelines issued in 1999 by SEBI and as amended from time to time. The first vesting of the stock options shall happen only on completion of one year from the date of grant and the options are exercisable within two years from the date of vesting. During the year the Company has extended the vesting period from two years to seven years. As per the SEBI guidelines, the excess of market price of the underlying equity shares as of the date of the grant of the options over the exercise price of the option is to be recognized and amortized on a straight line basis over the vesting period. The options have been granted at an exercise price which is equal to the market price of the underlying equity shares. Consequently, there is no compensation cost in the current year.

Plan V

The Company introduced a new scheme in 2008 for granting 1,500,000 stock options to the employees, each option representing one equity share of the Company. The exercise price as may be determined by the Compensation Committee and such price may be the face value of the share from time to time or may be the Market Price or any price as may be decided by the Committee and will be governed by the guidelines issued by SEBI. The scheme is governed by the Employee Stock Option Scheme and Employee Stock Purchase Guidelines issued in 1999 by SEBI and as amended from time to time. The first vesting of the stock options shall happen only on completion of one year from the date of grant and the options are exercisable within seven years from the date of vesting. As per the SEBI guidelines, the excess of market price of the underlying equity shares as of the date of the grant of the options over the exercise price of the option is to be recognized and amortized on a straight line basis over the vesting period. The options granted during the financial year ended June 30, 2012 and June 30, 2011 have been granted at an exercise price which is equal to the market price of the underlying equity shares except for nil Options (Previous Year 50,000 options), which had been granted at a price less than the market price. Consequently, amortized compensation cost of Rs. 35.00 Lakhs (Previous Year Rs. 88.50 Lakhs) in respect of options granted in earlier periods has been charged to the Profit and Loss account during the current year.

Plan VI

The Company introduced a new scheme in 2010 for granting 2,000,000 stock options to the employees, each option representing one equity share of the Company. The exercise price as may be determined by the Compensation Committee and such price may be the face value of the share from time to time or may be the Market Price or any price as may be decided by the Committee and will be governed by the guidelines issued by SEBI. The scheme is governed by the Employee Stock Option Scheme and Employee Stock Purchase Guidelines issued in 1999 by SEBI and as amended from time to time. The first vesting of the stock options shall happen only on completion of one year from the date of grant and the options are exercisable within seven years from the date of vesting. As per the SEBI guidelines, the excess of market price of the underlying equity shares as of the date of the grant of the options over the exercise price of the option is to be recognized and amortized on a straight line basis over the vesting period. No options have been granted under the scheme at below market price and consequently there is no compensation cost in the current year.

Disclosure required under SEBI (ESOS& ESPS) Guidelines, 1999

In order to enable the Company to continue with its ESOP, the Company passed special resolutions through postal ballot in January, 2002 for issue of 7,00,000 stock options to its employees. At the Annual General Meeting held on September 20, 2004, the Company passed special resolutions to issue 7,00,000 stock options to its employees. The Company passed special resolutions through postal ballot in August 9, 2007 for issue of 10,00,000 stock options to its employees. On March 20, 2009, the shareholders of the Company approved the further issue of 15,00,000 options to the employees. At the Annual General Meeting of the Company held on October 1, 2010, the shareholders of the Company approved the further issue of 20,00,000 options.

a) Options granted: Opening 25,73,478

b) Issued during the year 5,41,500

c) Pricing formula

Market Price as defined by SEBI from time to time or face value or such price as may be decided by the Compensation committee from time to time

d) Options vested: 8,48,112

e) Options exercised 75,000

f) Total Number of shares arising as a result of exercise of option

75,000

g) Options lapsed: 6,75,736

h) Variations of terms of options NIL

i) Money realized by exercise of options

Rs. 3,75,000/-

j) Total number of options in force

2,364,242

k) Employee-wise details of options granted to: (1) Senior managerial personnel: 5

(2) Any other employee who receives a grant in any one year of option amounting to 5% or more of option granted during that year

1

(3) Identified employees who were granted option, during any one year, equal to or exceeding 1% of the issued capital (excluding outstanding warrants and conversions) of the Company at the time of grant

NIL

(4) Diluted EPS pursuant to issue of shares on exercise of option calculated in accordance with Accounting Standard (AS) 20

Rs. (2.06)

(n) Description of the method and significant assumptions used during the year to estimate the fair value of the options, including the following weighted average information:

The Black Scholes option pricing model was developed for estimating fair value of traded options that have no vesting restrictions and are fully transferable. Since Option pricing models require use of substantive assumptions, changes therein can materially affect fair value of options.

The option pricing models do not necessarily provide a reliable measure of fair value of options.

16. ADDITIONAL INFORMATION RELATING TO CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

Information under Section 217(1)(e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1968, forming part of the Directors' Report for the year ended June 30, 2012:

a) Conservation of Energy:

As a software Company, energy costs constitute a small portion of the total cost and there is not much scope for energy conservation.

Form A is not applicable for software industry.

b) Technology Absorption : Not Applicable

c) Foreign Exchange Earnings : Total foreign exchange and Outgo used and earned by the Company

17. CORPORATE GOVERNANCE

Mastek follows best practices in Corporate Governance by benchmarking them with the best in the world.

18. ACKNOWLEDGEMENTS

The Directors would like to place on record their sincere appreciation for the continued co-operation, guidance, support and assistance provided by the SEEPZ Authorities, MIDC, Department of Electronics, ICICI Bank, Standard Chartered Bank Ltd and other government departments and authorities.

By the Order of the Board

Place: Mumbai Sudhakar Ram

Dated: July 27, 2012 Chairman & Managing Director


Jun 30, 2011

1. FINANCIAL RESULTS – CONSOLIDATED RESULTS OF MASTEK LIMITED AND ITS SUBSIDIARIES

Rs. in Crore

PARTICULARS Year Year ended ended June 30, June 30, 2011 2010

Income

Income from It services and 593.3 713.8 Products

Other Income 20.9 8.1

Total Income 614.2 721.9

Expenses 612.5 626.6

Depreciation 28.8 26.7

Interest and Financial Charges 1.2 1.3

(Loss)/Profit Before (28.3) 67.3 Exceptional Items and Tax

Exceptional item 27.2 –

(Loss)/Profit Before Tax (55.5) 67.3

provision for tax, net charge/ 0.4 (0.4) (credit)

(Loss)/Profit After Tax (55.9) 67.7

FINANCIAL RESULTS – MASTEK LIMITED (STANDALONE)

Rs. in Crore

PARTICULARS Year Year ended ended June 30, June 30, 2011 2010

Income 413.2 440.9

(Loss)/Profit before Tax (5.6) 24.0

Tax Expense/(Credit) (4.3) (13.0)

(Loss)/Profit After Tax (1.3) 37.0

Add: Profit brought forward 249.4 239.5 from previous year

Profit available for 248.1 276.5 appropriation

Interim Dividend - 5.4

Final Dividend - 3.4

Corporate Dividend tax - 1.5

transferred to general - 16.9 reserve

Balance carried to Balance 248.1 249.4 Sheet

2. RESULTS OF OPERATIONS

A) Group global operations

The Company’s performance for the financial year ended June 30, 2011 under review (FY 2011) was affected by a number of factors. key among those was the marked decrease in clients engaging in transformational deals due to the global economic crisis and particularly in UK where Mastek has a substantial presence. the long sales cycles as well as reduction in insurance revenues from Capita, UK added to the head winds that the Company faced this year. the above mentioned reasons along with the continued product development spends in the insurance vertical in North America and wage hikes to retain the best talent had a substantial impact on the financial performance.

On a consolidated basis, the Company registered a total income of Rs. 614.2 crore in FY2011. this represents a 14.9% decline compared to Rs. 721.9 crore in the preceding year. As a consequence, it had a loss of Rs. 55.9 crore in FY 2011 compared to the profit of Rs. 67.7 crore in FY 2010. the loss in FY 2011 is after considering an exceptional item of Rs. 27.2 crore in relation to impairment of goodwill of Vector Insurance services. Despite the adverse circumstances, the Company registered a Cash croft of Rs. 0.5 crore in FY 2011 compared to Rs. 94 crore in FY 2010.

The UK remained the largest contributor to Mastek’s business among all its operating geographies. During the year under review, the UK operations contributed Rs. 290.9 crore in revenues, amounting to 49% of overall consolidated revenues for the year. this was however a de-growth of 22% compared to Rs. 373.9 crore during the corresponding period last year. one of the key clients, Capita UK, took a relook at its strategy with respect to migrating policies of its clients on to the Elixir4 platform. the further development on this platform has been put on hold leading to a reduction in the revenues from the insurance vertical.

The North American operations, which now includes both the us and Canada businesses, also registered a de-growth of 11.9% to Rs. 258.0 crore from Rs. 292.8 crore last year primarily due to lack of new account wins in the first half of the year.

During the year under review, the Company has targeted its product development spends

in North America with the objective of building the end to end platform in the Life and Annuity space. the Company also acquired substantially all of the assets of Glastonbury, CT based SEG software, LLC, a leading provider of policy administration systems covering individual and group life, health & annuity insurance products. this acquisition reinforces the Company’s commitment to the North American insurance market and will expand its presence and capabilities in the life and annuity policy administration arena.

Mastek’s operations in the Asia-Pacific region, specifically India, were impacted on the insurance side due to the new IRDA regulations which have forced providers to become competitive to survive in the market place. expenses related to It and marketing have been slashed leading to a decreased pipeline of opportunities for the It players in the insurance space. However, there was good traction from government projects in India and have been involved in implementing niche projects on the social justice, sales tax and the education fields for various State governments in India. During FY 2011, these operations (Asia-Pacific including India & middle east) contributed Rs. 44.3 crore to overall consolidated revenues as compared to Rs. 47.1 crore in FY 2010 refecting a de-growth of 6%.

The last quarter of the year has refected improved performance with the 12 month order backlog ending higher at Rs. 309 crore. overall, the Company added 14 new clients in this financial year.

(A more detailed discussion of the Company’s business model, strategy, and performance appears in the management Discussion & Analysis section of this annual report.)

B) Mastek standalone operations

On a stand-alone basis, Mastek reported a total income of Rs. 413.2 crore for FY 2011 as compared to Rs. 440.9 crore for FY 2010. the Company made a Net Loss of Rs. 1.3 crore compared to the profit of Rs. 37 crore in FY 2010.

C) Board and management

During the year under review, Ms. Priti Rao, Mr. Venkatesh Chakravarty and Dr. Rajendra Sisodia were inducted as Independent Directors of the Company. In the same period,

Mr. Raj Nair and Mr. Amit shah resigned from the Board of the Company.

Mr. Mrinal Sattawala, group president resigned from the services of the Company in June, 2011. Mr. Sudhakar Ram, the Company’s Chairman & managing Director has now taken over responsibility of all operations and the senior leadership team reports to him directly.

3. BUSINESS OUTLOOK

FY 2012 is expected to be a better year with increased traction across the key geographies in UK and North America. positive signals of the momentum can be witnessed from the deal wins in UK in the last quarter of FY 2011, increasing pipeline of opportunities in the Non-Life (property & Casualty) space in North America, improved order backlog position and some exciting developments on the government side in India. the initiatives that were put in place at the start of the year are expected to translate into revenue growth while the Company will strive towards profitability.

4. LIQUIDITY AND CASH EQUIVALENT

The Company continues to maintain a good level of cash and cash equivalent, which enables it to not only eliminate short and medium-term liquidity risks but also provide the leverage to scale up operations at a short notice.

During the year, Mastek invested surplus funds in Liquid schemes and Fixed maturity plans of mutual Funds and Fixed Deposits with leading Banks. As of June 30, 2011, the Cash and Cash equivalent (including investment in mutual Funds) stood at Rs. 159 Crore.

5. AUDITED ACCOUNTS OF SUBSIDIARY COMPANIES

In view of the Circular No.2/2011 dated 8th February, 2011 issued by the government of India, ministry of Company Affairs, New Delhi, the accounts of subsidiary companies are not attached to the audited accounts of the Company. the Board of Directors of the Company has given consent for not attaching the Annual Accounts of the subsidiary companies. We, hereby, undertake that the Annual Accounts of subsidiary companies and related detailed information shall be made available to the shareholders at any point of time. Copies of the annual accounts of subsidiary companies shall also be available for inspection by any shareholder at the registered office of the Company.

6. ISSUE OF SHARE CAPITAL

During the year, the Company allotted 7,250 equity shares of Rs. 5 each to its eligible employees who exercised their options under employee stock option plan.

7. DIVIDEND

In view of the loss incurred by the Company during the year and to conserve Cash resources for future business operations, the Directors do not propose a Dividend for the year ended June 30, 2011.

8. EXCESS REMUNERATION PAID TO CHAIRMAN & MANAGING DIRECTOR AND EXECUTIVE DIRECTOR

In response to the paragraph 4 of the Auditor’s Report for the year ended June 30, 2011 in respect of excess remuneration paid to Chairman & managing Director and executive Director aggregating to Rs. 0.6 crore and Rs. 0.2 crore respectively, the Company is approaching the shareholders and Central government to seek their approval in respect of the waiver for recovery of excess remuneration paid as mentioned above.

9. DIRECTORS’ RESPONSIBILITY STATEMENT

The Board of Directors of the Company confirms:

- that in the preparation of the annual accounts, the applicable accounting standards have been followed and there has been no material departure;

- that the selected accounting policies were applied consistently and the Directors made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as on June 30, 2011, and of the Loss of the Company for the year ended on that date;

- that proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, to safeguard the Company’s assets and prevent and detect fraud and other irregularities;

- that the annual accounts have been prepared on a going concern basis.

10. DIRECTORS

Mr. Anil Singhvi and Dr. Rajendra Sisodia, Directors of the Company, retire by rotation and, being eligible, offer themselves for re-appointment.

The Board of Directors, in modification of existing terms, re-appointed Mr. Sudhakar

Ram as Chairman & managing Director and Mr. Radhakrishnan Sundar as executive Director effective July 1, 2011, subject to approval of shareholders and other prescribed authorities for a period of 3 years.

11. AUDITORS

you are requested to appoint Auditors and fix their remuneration. The retiring auditors, M/s. Price Waterhouse, Chartered Accountants, (Firm Registration No. 012754N) have confirmed their availability within the limits of section 224(1B) of the Companies act,1956.

12. HUMAN RESOURCES

Mastek deploys its intellectual capability to create and deliver intellectual property (IP)-led solutions that make a business impact for its global clients. For this, the key success enabler and most vital resource is world-class talent. Mastek continually undertakes measures to attract and retain such high quality talent.

As on June 30, 2011, the Company had a total of 2905 employees. the Company has resumed recruitment of fresh talent for its different projects.

The Directors wish to place on record their appreciation for the contributions made by employees to the Company during the year under review.

Information as per section 217(2A) of the Companies Act, 1956, read with the Companies (particulars of employees) Rules, 1975, forms part of this report. However, as per the provisions of section 219(1)(b)(iv) of the Companies Act, the report and accounts, excluding the statement of particulars under section 217(2A), are being sent to all members. Any member interested in obtaining a copy of the statement of particulars may write to the Company at its Registered Office.

13. EMPLOYEE STOCK OPTIONS

Plan II

The Company established a new scheme in 2002 for granting 700,000 stock options to employees and each option representing one equity share of the Company. the exercise price is as governed by the guidelines issued by SEBI. the scheme is governed by the employee stock option scheme and employees stock purchase guidelines issued in 1999 by SEBI. There is a minimum period of twelve months for the first vesting from the date of the grant of options. the options are exercisable within two years of their vesting. As per the SEBI guidelines issued in 1999, and as amended from time to time, the excess of the market price of the underlying equity shares as of the date of the grant of the option over the exercise price of the option

is to be recognized and amortized on a straight line basis over the vesting period. the options granted during the year have been granted at an exercise price which is equal to the market price of the underlying equity shares. Consequently, there is no compensation cost in the current year. In April, 2006, the Company issued Bonus shares in the ratio of 1:1 and the number of unvested and unexercised options and the price of the said options have been adjusted accordingly.

In accordance with the guidelines, the Company has passed the necessary special resolutions in January 2002 to approve the scheme and to extend the plan to the employees of its subsidiaries.

(No. of options)

Year Year ended ended June 30, June 30, 2011 2010

Opening Balance 7,750 91,520

Granted during the year – –

Exercised during the year (5,250) (14,458)

Cancelled during the year (2,500) (69,312)

Balance unexercised options – 7,750

Plan III

The Company passed special resolutions at its Annual general meeting held on September 20, 2004 approving the allocation of 700,000 stock options to the eligible employees of the Company and its subsidiaries.

The Company subsequently established a new scheme in 2004 for granting 700,000 stock options to the employees referred to above, each option representing one equity share of the Company. the exercise price is as governed by the guidelines issued by SEBI. The scheme is governed by the employee stock option scheme and employee stock purchase guidelines issued in 1999 by SEBI and as amended from time to time. The first vesting of the stock options shall happen only on completion of one year from the date of grant and the options are exercisable within two years from the date of vesting. As per the SEBI guidelines, the excess of market price of the underlying equity shares as of the date of the grant of the options over the exercise price of the option is to be recognized and amortized on a straight line basis over the vesting period. the options granted during the year have been granted at an exercise price which is equal to the market price of the underlying equity shares. Consequently, there is no compensation cost in the current year. In April, 2006 the Company issued Bonus shares in the ratio of 1:1 and the number of unvested and unexercised options and the price of the said options have been adjusted accordingly.

(No. of options)

Year Year ended ended June 30, June 30, 2011 2010

Opening Balance 546,794 898,624

Granted during the year – –

Exercised during the year – (26,938)

Cancelled during the year (267,502) (324,892)

Balance unexercised options 279,292 546,794

Plan IV

The shareholders of the Company through postal Ballot on August 9, 2007 approved the allocation of 1,000,000 stock options to the eligible employees of the Company and its subsidiaries.

The Company subsequently established a new scheme in 2007 for granting 1,000,000 stock options to the employees referred to above, each option representing one equity share of the Company. the exercise price is as governed by the guidelines issued by SEBI. The scheme is governed by the employee stock option scheme and employee stock purchase guidelines issued in 1999 by SEBI and as amended from time to time. The first vesting of the stock options shall happen only on completion of one year from the date of grant and the options are exercisable within two years from the date of vesting. During the year the Company has extended the vesting period from two years to seven years. As per the SEBI guidelines, the excess of market price of the underlying equity shares as of the date of the grant of the options over the exercise price of the option is to be recognized and amortized on a straight line basis over the vesting period. the options granted during the year have been granted at an exercise price which is equal to the market price of the underlying equity shares. Consequently, there is no compensation cost in the current year.

(No. of options)

Year Year ended ended June 30, June 30, 2011 2010

Opening Balance 513,714 614,917

Granted during the year – –

Exercised during the year (2,000) (3,047)

Cancelled during the year (104,476) (98,156)

Balance unexercised options 407,238 513,714

Plan V

The Company introduced a new scheme in 2008 for granting 1,500,000 stock options to the employees, each option representing one equity share of the Company. the exercise price as may be determined by the Compensation Committee and such price may be the face value of the share from time to time or may be the market price or any price as may be decided by the Committee and will be governed by the guidelines issued by SEBI. The scheme is governed by the employee stock option scheme and employee stock purchase guidelines issued in 1999 by AEBI and as amended from time to time. The first vesting of the stock options shall happen only on completion of one year from the date of grant and the options are exercisable within seven years from the date of vesting. As per the SEBI guidelines, the excess of market price of the underlying equity shares as of the date of the grant of the options over the exercise price of the option is to be recognized and amortized on a straight line basis over the vesting period. The options granted during the financial year ended June 30, 2011 and June 30, 2010 have been granted at an exercise price which is equal to the market price of the underlying equity shares except for 50,000 options (previous year 25,000 options), which had been granted at a price less than the market price. Consequently, compensation cost of Rs. 0.9 crore (previous year Rs. 0.6 crore) has been charged to the Profit and Loss account during the current year.

(No. of options)

Year Year ended ended June 30, June 30, 2011 2010

Opening Balance 891,000 61,000

Granted during the year 879,248 1,116,000

Exercised during the year – –

Cancelled during the year (452,900) (286,000)

Balance unexercised options 1,317,348 891,000

Plan VI

The Company introduced a new scheme in 2010 for granting 2,000,000 stock options to the employees, each option representing one equity share of the Company. the exercise price as may be determined by the Compensation Committee and such price may be the face value of the share from time to time or may be the market price or any price as may be decided by the Committee

and will be governed by the guidelines issued by SEBI. The scheme is governed by the employee stock option scheme and employee stock purchase guidelines issued in 1999 by SEBI and as amended from time to time. The first vesting of the stock options shall happen only on completion of one year from the date of grant and the options are exercisable within seven years from the date of vesting. As per the SEBI guidelines, the excess of market price of the underlying equity shares as of the date of the grant of the options over the exercise price of the option is to be recognized and amortized on a straight line basis over the vesting period.

(No. of options)

Year Year ended ended June 30, June 30, 2011 2010

Opening Balance – –

Granted during the year 569,600 –

Exercised during the year – –

Cancelled during the year – –

Balance unexercised options 569,600 –

Disclosure required under SEBI (ESOS & ESPS) guidelines, 1999

In order to enable the Company to continue with its ESOP, the Company passed special resolutions through postal ballot in January, 2002 for issue of 700,000 stock options to its employees. At the Annual general meeting held on September 20, 2004, the Company passed special resolutions to issue 700,000 stock options to its employees. the Company passed special resolutions through postal ballot in August 9, 2007 for issue of 1,000,000 stock options to its employees. on march 20, 2009, the shareholders of the Company approved the further issue of 1,500,000 options to the employees. At the Annual general meeting of the Company held on October 1, 2010, the shareholders of the Company approved the further issue of 2,000,000 options.

a) options granted: opening: 1,959,258

b) Issued during the year: 1,598,848

c) Pricing formula: Market Price as defned by SEBI from time to time or face value or such price as may be decided by the Compensation committee from time to time.

d) options vested: 781,246

e) options exercised: 7,250

f) Total number of shares arising as a result of exercise of options: 7,250

g) Options lapsed: 827,378

h) Variations of terms of options: NIL

i) money realized by exercise of options: Rs. 1,129,625

j) total number of options in force: 2,723,478

k) employee-wise details of options granted to:

(1) senior managerial personnel: 37

(2) Any other employee who receives a grant in any one year of option amounting to 5% or more of more of option granted during that year: 5

(3) Identified employees who were granted option, during any one year, equal to or exceeding 1% of the issued capital (excluding outstanding warrants and conversions) of the Company at the time of grant: Mr. Mrinal Sattawala was granted 400,000 options during the year ended June 30, 2011.

l) Diluted EPS pursuant to issue of shares on exercise of option calculated in accordance with Accounting standard (As) 20 is Rs. (0.50).

m) The impact of this difference on profits and on EPS of the Company

(Rs. in Crore)

Profit After Tax (PAT) (1.33)

Less: Additional employee 4.27 compensation based on fair value

Adjusted PAT (5.60)

Adjusted EPS (in Rs.) (2.08)

n) Weighted-average exercise price and fair value of stock options granted during the year:

Stock Weighted Weighted Closing options average Average market price granted on exercise fair value at BSE on price the date of (in Rs.) grant (in Rs.)

July, 2010 295.40 153.93 295.40

October, 242.65 124.90 242.65 2010

April, 2011 125.30 63.57 125.30

o) Description of The Black Scholes the method option pricing model and significant was developed for assumptions used estimating fair value during the year of traded options to estimate the that have no vesting fair value of the restrictions and are options, including fully transferable. the following Since option pricing weighted average models require information: use of substantive assumptions, changes therein can materially affect fair value of options. The option pricing models do not necessarily provide a reliable measure of fair value of options.

The main assumptions used in the Black- Scholes option-pricing model during the year were as follows:

Sr. Grant Date July October April no 20, 2010 13, 2010 14, 2011

1 Risk Free Interest Rate 7.54% 7.94% 7.94%

2 Expected Life (years) 6 6 6

3 Expected Volatility 53.25% 51.46% 50.00%

4 Dividend Yield 1.54% 1.54% 1.54%

14. ADDITIONAL INFORMATION RELATING TO CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

Information under section 217(1)(e) of the Companies Act, 1956, read with the Companies (Disclosure of particulars in the Report of the Board of Directors) Rules, 1968, forming part of the Directors’ Report for the year ended June 30, 2011:

a) Conservation of Energy

As a software Company, energy costs constitute a small portion of the total cost and there is not much scope for energy conservation.

Form A is not applicable for software industry.

b) Technology Absorption

Not Applicable

c) Foreign Exchange Earnings and Outgo -

Total foreign exchange used and earned by the Company

(Rs. in Crore)

June 30, June 30, 2011 2010

Exchange Used 162.1 173.3

Exchange Earned 384.0 383.1

15. CORPORATE GOVERNANCE

Mastek follows best practices in Corporate governance by benchmarking them with the best in the world.

The Board of Directors re-appointed Mr. Sudhakar Ram as Chairman & managing Director and Mr. Radhakrishnan Sundar as executive Director with effect from July 1, 2011, subject to approval of shareholders and other prescribed authorities for a period of 3 years on the following terms and conditions:

Mr. Sudhakar Ram, Chairman & Managing Director

Basic Salary:

Rs. 3,35,000/- month (Rupees three Lakhs thirty Five thousand only), with an option of annual increment as may be decided by the Compensation Committee/ Board of Directors, from time to time.

Bonus:

Based on the performance as may be evaluated by the Board of the Directors/Compensation Committee, from time to time on the basis of Actual (1) order booking (2) Revenue and (3) Net profits for each year.

Company Accommodation:

The Company will provide rent-free furnished accommodation to Mr Ram and his family members and the annual cost to the Company thereof shall not exceed Rs. 20 Lakhs (Rupees twenty Lakhs only).

Special Allowance:

Rs. 332,000/- month (Rupees three Lakhs thirty two thousand only).

Car Facility:

Car facility with driver to be used for the business of the Company.

Club Fees:

Re-imbursement of Club Fees.

Education Expenses:

Reimbursement of education expenses for one dependent child, not exceeding Rs. 11 Lakhs per annum.

Telephone:

Free telephone facility at his residence to be used for the business of the Company.

Provident Fund Contribution:

Company’s contribution towards provident fund as per rules of the Company, but not exceeding 12% of the salary.

Gratuity:

As per rules of the Company.

Perquisites:

As may be permitted as per the policy of the Company or by the Board of Directors and/or the Compensation Committee of the Board of Directors.

For the purposes of calculating the above ceilings, perquisites shall be evaluated as per Income-tax Rules, wherever applicable. In the absence of any such Rules, perquisites shall be evaluated at actual basis. provision of car and telephone for use of the Company’s business and telephone at the Chairman and managing Director’s Residence will not be considered as perquisites. the following shall not be included for the purposes of computation of the Chairman and managing Director’s remuneration or perquisites as aforesaid:

(i) the Company’s contribution to provident fund,

(ii) encashment of leave at the end of the tenure of office of the Chairman and Managing Director,

(iii) Gratuity payable at the rate not exceeding half a month’s salary for each completed year of service.

Notice Period: six months notice or Notice pay equivalent to six months basic salary.

Severance Fees: The Company has not made any special provisions for severance fees.

Stock Options: NIL

Mr. Radhakrishnan Sundar, Executive Director

Basic Salary:

Rs. 2,35,000/- (Rupees two Lakhs thirty Five thousand only) per month, with an option of annual increment as may be decided by the Compensation Committee/ Board of Directors, from time to time.

Bonus:

Based on the performance as may be evaluated by the Board of the Directors/Compensation Committee, from time to time on the basis of Actual (1) order booking (2) Revenue and (3) Net profits for each year.

House Rent Allowance:

The Company will provide furnished accommodation to Mr Sundar. However, where no accommodation is provided by the Company to Mr Sundar or Mr Sundar does not opt for the accommodation provided by the Company, then he shall be entitled to House Rent Allowance subject to a ceiling of 50% of the basic salary i.e Rs. 1,17,500/- (Rupees one Lakh seventeen thousand Five hundred only) per month.

Adhoc Allowance:

Rs. 2,31,000 (Rupess two Lakhs thirty one thousand only) per month.

Car Facility:

Car facility with driver to be used for the business of the Company.

Telephone:

Free telephone facility at his residence to be used for the business of the Company.

Provident Fund Contribution:

Company’s contribution towards provident fund as per rules of the Company, but not exceeding 12% of the salary.

Gratuity:

As per rules of the Company.

Perquisites:

As may be permitted as per the policy of the Company or by the Board of Directors and/or the Compensation Committee of the Board of Directors.

For the purposes of calculating the above ceilings, perquisites shall be evaluated as per Income-tax Rules, wherever applicable. In the absence of any such Rules, perquisites shall be evaluated at actual basis.

Provision of car and telephone for use of the Company’s business and telephone at the executive Director’s Residence will not be considered as perquisites. the following shall not be included for the purposes of computation of the executive Director’s remuneration or perquisites as aforesaid:

(i) the Company’s contribution to provident fund,

(ii) encashment of leave at the end of the tenure of office of the Executive Director,

(iii)Gratuity payable at the rate not exceeding half a month’s salary for each completed year of service.

Notice Period: six months notice or Notice pay equivalent to six months basic salary.

Severance Fees: the Company has not made any special provisions for severance fees.

Stock Options: NIL

The report on corporate governance is included in the Annual Report.

16. ACKNOWLEDGEMENTS

The Directors would like to place on record their sincere appreciation for the continued co- operation, guidance, support and assistance provided by the sEEPZ Authorities, MIDC, Department of electronics, ICICI Bank, standard Chartered Bank Ltd and other government departments and authorities.

By the Order of the Board

Ashank Desai Director

Mumbai July 25,2011


Jun 30, 2010

The Directors herewith present the 28 Annual Report and Audited Statement of Accounts of Mastek Ltd for the year ended June 30, 2010.

1. FINANCIAL RESULTS - CONSOLIDATED RESULTS OF MASTEK LIMITED AND ITS SUBSIDIARIES

Rs. in Mn.

Year Year

Ended Ended

PARTICULARS

June 30 June 30

2010 2009

Income from IT services 7,138 9,426

Other Income 81 224

Total Income 7,219 9,650

Expenses 6,266 7,835

Depreciation 267 295

Interest & Financial Charges 13 48

Profit Before Tax 673 1,472

Provision for Tax (4) 60

Profit after Tax 677 1,412

FINANCIAL RESULTS- MASTEK LIMITED

Rs. in Mn.

Year Year

Ended Ended

PARTICULARS

June 30 June 30

2010 2009

Income 4,409 5,978

Profit before tax 240 946

Provision for tax (130) (10)

Profit After Tax 370 956

Add : Balance b/f from last year 2,395 1,991

Profit available for appropriation 2,765 2,947

Interim Dividend 54 66

Final Dividend 34 202

Corporate Dividend Tax 14 45

Transfer to General Reserve 169 239

Balance carried to Balance Sheet 2,494 2,395

2. RESULTS OF OPERATIONS

A) Group global operations

The Company s performance for the financial year under review (FY 2010) reflects the impact of slower uptake in demand following the recent global economic crisis, adverse forex conditions, ramp-down of the remainder phase of the BT/ NHS project development revenues, increased hiring, some wage hikes implemented during the year, and induction of multiple senior business leaders across geographies.

On a consolidated basis, the company registered a total income of Rs 7.22 billion in FY2010. This represents a 25% decline compared to Rs 9.65 billion in the preceding year.

Profit after Tax (PAT) declined by 52% in FY2010 to Rs 677 million from Rs 1,412 million in FY2009.

The UK remained the largest contributor to Mastek s business among all its operating geographies. During the year under review, the UK operations contributed Rs 3,739 million in revenues, amounting to 52% of overall consolidated revenues for the year.

The North American operations, which now includes both the US and Canada businesses, also registered a de-growth of 12% to Rs 2,928 million from Rs 3,328 million last year.

The company s P&C division (resulting from the acquired subsidiary STGMastek that is focused on the non-life insurance segment) has delivered a noticeably strong performance during the year. During the year, the recently established (in February 2009) Canadian subsidiary of the Company acquired its initial set of customers and began generating revenues.

Mastek s operations in the Asia-Pacific region including India witnessed some progress during the year that are strategically significant, such as the successful launch of ElixirAsia where the Company also secured a deal with a Thailand- based insurance company and initiatives in the Government vertical that positions the Company well for future opportunities in areas like GST implementation. During FY2010, these operations (Asia-Pacific including India & Middle East and Germany) contributed Rs 470.6 million to overall consolidated revenues.

(A more detailed discussion of the Company s business model, strategy, and performance appears in the Management s Discussion & Analysis section of this annual report.)

B) Mastek standalone operations

On a stand-alone basis, Mastek reported a total income of Rs.4.41 billion for FY2010, as compared to Rs.5.98 billion for FY2009. Profit after Tax stood at Rs. 370 million in FY2010 as compared to Rs. 956 million in the preceding year.

C) Board and management & sales team expansion

During the year under review, Mr. Anil Singhvi was inducted as Director of the Company. In the same period, Mr. Rajesh Mashruwala resigned from the Board of the Company.

The Company also expanded and strengthened its leadership and sales teams globally, with multiple senior-level appointments during the year under review. These appointments are aimed at reinforcing Mastek s business and sales organization and creating the necessary capabilities to extend the Company s presence in existing and new markets.

3. BUSINESS OUTLOOK

The Company s performance during the year under review reflects the combined influence of several factors including subdued uptake in demand for I solutions that depend on discretionary spending and transformational initiatives by clients as well as macroeconomic pressures such as volatility in foreign currency exchange rates. The Company did accomplish some strategically important successes during the year, from gaining a foothold in the North American insurance market for its Elixir platform based solutions to moving its Capita relationship to the next phase. Mastek intends to build upon all the progress made by it so far on the operational and strategic fronts, and will take concrete steps aimed at adding new accounts, growing partnerships, and expanding its order book. An expanded order backlog and enhanced market presence in its key verticals should create a solid platform for the Company to deliver revenue and earnings growth in the subsequent years. The Company is also committed to restoring its margins and will be implementing initiatives towards that end during the next financial year. Mastek continually strives to develop strategic customer accounts and new partnerships where necessary, and this in turn should over time result in better quality of revenues and much deeper client engagement.

4. LIQUIDITY AND CASH EQUIVALENTS

The Company continues to maintain a reasonably high level of cash and cash equivalents, which enable it to not only eliminate short and medium-term liquidity risks but also provide the leverage to scale up operations at a short notice.

During the year, Mastek invested surplus funds in Liquid Schemes and Fixed Maturity Plans of Blue-chip Mutual Funds and Fixed Deposits with leading Banks. As of June 30, 2010, the Cash and Cash Equivalents stood at Rs. 1.98 billion which amounted to 39 days of expenses and Rs. 73.48 per share.

5. AUDITED ACCOUNTS OF SUBSIDIARY COMPANIES

In view of the approval granted by the Government of India, Ministry of Company Affairs, New Delhi, vide its letter dated June 8, 2010, the accounts of subsidiary companies are not attached to the audited accounts of the Company. We, hereby, undertake that the audited annual accounts of subsidiary companies shall be made available to the investors at any point of time. Copies of the audited annual accounts of subsidiary companies shall also be available for inspection by any investor at the registered office of the company.

6. ISSUE OF SHARE CAPITAL

During the year, the Company allotted 44,443 equity shares of Rs. 5 each to its eligible employees who exercised their options under Employee Stock Option Plan.

7. DIVIDEND

At the Board Meeting held on July 21, 2010 , the Board proposed a final dividend of Rs. 1.25 per share. Resultantly, the total effective dividend for the year 2009-10 is 65 % compared to 200% for the year 2008- 09.

8. DIRECTORS RESPONSIBILITY STATEMENT

The Board of Directors of the company confirms:

i. that in the preparation of the annual accounts, the applicable accounting standards have been followed and there has been no material departure;

ii. that the selected accounting policies were applied consistently and the Directors made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company as on June 30, 2010, and of the profit of the company for the year ended on that date;

iii. that proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, to safeguard the company s assets and prevent and detect fraud and other irregularities;

iv. that the annual accounts have been prepared on a going concern basis;

9. DIRECTORS

Mr. Ashank Desai and Mr. Ketan Mehta, Directors of the company, retire by rotation and being eligible, offer themselves for re-appointment.

10. AUDITORS

The retiring Auditors, M/s. Price Waterhouse, Chartered Accountants (Firm Registration No. 007568S), have expressed their unwillingness to be re-appointed for the year 2010-11. You are requested to appoint M/s. Price Waterhouse, Chartered Accountants (Firm Registration No. 012754N) as the Auditors of the Company for the year 2010-11. The Company has received a certificate from M/s. Price Waterhouse, Chartered Accountants (Firm Registration Number 012754N), confirming that their appointment, if made, will be within the limits of Section 224 (1B) of the Companies Act, 1956.

11. HUMAN RESOURCES

Mastek deploys its intellectual capability to create and deliver intellectual property (IP)-led solutions that make a business impact for its global clients. For this, the key success enabler and most vital resource is world-class talent. Mastek continually undertakes measures to attract and retain such high quality talent.

As on 30 June 2010, the Company had a total of 3,243 employees. The Virtual Bench, which had been created in FY2009 in view of the worldwide financial meltdown and the resulting downward revision of growth outlook, came to an end during FY2010, and the Company has resumed recruitment of fresh talent.

The Directors wish to place on record their appreciation for the contributions made by employees to the Company during the year under review.

Information as per Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, forms part of this report. However, as per the provisions of Section 219(1)(b)(iv) of the Companies Act, the report and accounts, excluding the Statement of Particulars under Section 217(2A), are being sent to all members. Any member interested in obtaining a copy of the Statement of

Particulars may write to the Company at its Registered Office.

12. EMPLOYEE STOCK OPTIONS

Plan II

The Company established a new scheme in 2002 for granting 700,000 stock options to employees and each option representing one equity share of the Company. The exercise price is as governed by the guidelines issued by SEBI. The scheme is governed by the Employee Stock Option Scheme and Employees Stock Purchase Guidelines issued in 1999 by SEBI. There is a minimum period of twelve months for the first vesting from the date of the grant of options. The options are exercisable within two years of their vesting. As per the SEBI guidelines issued in 1999, and as amended from time to time, the excess of the market price of the underlying equity shares as of the date of the grant of the option over the exercise price of the option is to be recognized and amortized on a straight line basis over the vesting period. The options granted during the year have been granted at an exercise price which is equal to the market price of the underlying equity shares. Consequently, there is no compensation cost in the current year. In April, 2006, the Company issued Bonus Shares in the ratio of 1:1 and the number of unvested and unexercised options and the price of the said options have been adjusted accordingly.

In accordance with the Guidelines, the Company has passed the necessary special resolutions in January 2002 to approve the scheme and to extend the plan to the employees of its subsidiaries.

(No. of options)

Year Year

ended ended

June 30 June 30

2010 2009

Opening Balance 91,520 250,579

Granted during the year - -

Adjusted for the issue of bonus shares in ratio of 1:1

Exercised during the year (14,458) (10,629)

Cancelled during the year (69,312) (148,430)

Balance unexercised options 7,750 91,520

Plan III

The Company passed special resolutions at its Annual General Meeting held on September 20, 2004 approving the allocation of 700,000 stock options to the eligible employees of the Company and its subsidiaries.The Company subsequently established a new scheme in 2004 for granting 700,000 stock options to the employees referred to above, each option representing one equity share of the Company. The exercise price is as governed by the guidelines issued by SEBI. The scheme is governed by the Employee Stock Option Scheme and Employee Stock Purchase Guidelines issued in 1999 by SEBI and as amended from time to time. The first vesting of the stock options shall happen only on completion of one year from the date of grant and the options are exercisable within two years from the date of vesting. As per the SEBI guidelines, the excess of market price of the underlying equity shares as of the date of the grant of the options over the exercise price of the option is to be recognized and amortised on a straight line basis over the vesting period. The options granted during the year have been granted at an exercise price which is equal to the market price of the underlying equity shares. Consequently, there is no compensation cost in the current year. In April, 2006 the Company issued Bonus Shares in the ratio of 1:1 and the number of unvested and unexercised options and the price of the said options have been adjusted accordingly.

(No. of options)

Year Year

ended ended

June 30 June 30

2010 2009

Opening Balance 898,624 1,071,038

Granted during the year - -

Adjusted for the issue of bonus shares in ratio of 1:1

Exercised during the year (26,938) (8,664)

Cancelled during the year (324,892) (163,750)

Balance unexercised options 546,794 898,624

Plan IV

The Shareholders of the Company through Postal Ballot on August 9, 2007 approved the allocation of 1,000,000

stock options to the eligible employees of the Company and its subsidiaries.The Company subsequently established a new scheme in 2007 for granting 1,000,000 stock options to the employees referred to above, each option representing one equity share of the Company. The exercise price is as governed by the guidelines issued by SEBI. The scheme is governed by the Employee Stock Option Scheme and Employee Stock Purchase Guidelines issued in 1999 by SEBI and as amended from time to time. The first vesting of the stock options shall happen only on completion of one year from the date of grant and the options are exercisable within seven years from the date of vesting. As per the SEBI guidelines, the excess of market price of the underlying equity shares as of the date of the grant of the options over the exercise price of the option is to be recognized and amortised on a straight line basis over the vesting period. The options granted during the year have been granted at an exercise price which is equal to the market price of the underlying equity shares. Consequently, there is no compensation cost in the current year.

(No. of options)

Year Year

ended ended

June 30 June 30

2010 2009

Opening Balance 614,917 248,876

Granted during the year - 413,484

Adjusted for the issue of bonus shares in ratio of 1:1

Exercised during the year (3,047) -

Cancelled during the year (98,156) (47,443)

Balance unexercised options 513,714 614,917

Plan V

The Company introduced a new scheme in 2009 for granting 1,500,000 stock options to the employees referred to above, each option representing one equity share of the Company. The exercise price as may be determined by the Compensation Committee and such price may be the face value of the share from time to time or may be the Market Price or any price as may be decided by the Committee and will be governed by the guidelines issued by SEBI. The scheme

is governed by the Employee Stock Option Scheme and Employee Stock Purchase Guidelines issued in 1999 by SEBI and as amended from time to time. The first vesting of the stock options shall happen only on completion of one year from the date of grant and the options are exercisable within Seven years from the date of vesting. As per the SEBI guidelines, the excess of market price of the underlying equity shares as of the date of the grant of the options over the exercise price of the option is to be recognized and amortised on a straight line basis over the vesting period. The options granted during the year in certain cases were less than the market price of the underlying equity shares. Consequently, Rs 57,00,000 has been provided as compensation cost for the current year.

The Shareholders of the Company through Postal Ballot on March 20, 2009 approved the Scheme, which contained the allocation of 1,500,000 stock options to the eligible employees of the Company and its subsidiaries.

(No. of options)

Year Year

ended ended

June 30 June 30

2010 2009

Opening Balance 61,000 -

Granted during the year 11,116,000 61,000

Adjusted for the issue of bonus shares in ratio of 1:1

Exercised during the year - -

Cancelled during the year (286,000) -

Balance unexercised options 891,000 61,000

Disclosure required under SEBI (ESOS & ESPS) Guidelines, 1999

In order to enable the Company to continue with its ESOP, the Company passed special resolutions through postal ballot in January, 2002 for issue of 7,00,000 stock options to its employees. At the Annual General Meeting held on September 20, 2004, the Company passed special resolutions to issue 7,00,000 stock options to its employees. The Company passed special resolutions through postal ballot in August 9, 2007 for issue of 10,00,000 stock options to its employees. On March 20, 2009, the shareholders of the Company

approved the further issue of 15,00,000 options to the employees.

a) Options granted: Opening: : 1,666,061

b) Issued during the year: 1,116,000

c) Pricing formula: Market Price as defined by SEBI from time to time or face value or such price as may be decided by the Compensation committee from time to time.

d) Options vested: 6,99,942

e) Options exercised: 44,443

f) Total number of shares arising as a result of exercise of options: 44,443

g) Options lapsed: 778,360

h) Variations of terms of options: NIL

i) Money realized by exercise of options: Rs. 10,524,952

j) Total number of options in force: 1,959,258

k) Employee-wise details of options granted to:

(1) Senior managerial personnel: 25 (Twentyfive)

(2) Any other employee who receives a grant in any one year of option amounting to 5% or more of option granted during that year: 3 (three)

(3) Identified employees who were granted option, during any one year, equal to or exceeding 1% of the issued capital (excluding outstanding warrants and conversions) of the Company at the time of grant: 1 (One)

l) Diluted EPS pursuant to issue of shares on exercise of option calculated in accordance with Accounting Standard (AS) 20 is Rs 13.66 per share

m) The impact of this difference on profits and on EPS of the Company

(Rs in lacs)

Profit After Tax (PAT) 3699.84

Less Additional employee

compensation based on fair value 372.91

Adjusted PAT 3326.93

Adjusted EPS 12.34

n) Weighted-average exercise price and fair value of Stock Options granted during the year:

Stock options Weighted Weighted Closing

granted on average Average market

exercise fair value price at

price BSE on

(in Rs) the date

of grant

(in Rs.)

July, 2009 247 127.65 246.55

October, 2009 295 154.27 294.90

January, 2010 399 212.08 398.75

April, 2010 353 185.42 352.80

(o) Description of the The Black Scholes

method and significant option pricing model assumptions used was developed for

during the year to estimating fair value

estimate the fair value of traded options that of the options, have no vesting

including the restrictions and are

following weighted fully transferable.

average information: Since Option pricing

models require use of substantive assumptions, changes therein can materially affect fair value of options. The option pricing models do not necessarily provide a reliable measure of fair value of options.

The main assumptions used in the Black-Scholes option-pricing model during the year were as follows

Sr. Grant July 22, October 8, January 12, April 12,

no Date 2009 2009 2010 2010

1 Risk Free Inte rest

Rate 6.77% 7.08% 7.36% 7.77%

2 Expected

Life (years) 6 6 6 6

3 Expected

Volatility 54.08% 54.24% 55.13% 53.04%

4 Dividend

Yield 1.49% 1.49% 1.49% 1.49%



13. ADDITIONAL INFORMATION RELATING TO

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

Information under Section 217(1)(e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1968, forming part of the Directors Report for the year ended June 30, 2010:

a) Conservation of Energy

As a software company, energy costs constitute a small portion of the total cost and there is not much scope for energy conservation.

Form A is not applicable for software industry.

b) Technology Absorption Not Applicable

c) Foreign Exchange Earnings and Outgo -

Total foreign exchange used and earned by the company

(Rs. in Mn.)

30.6.2010 30.6.2009

Exchange used 1,733 2,310

Exchange earned 3,831 5,592

14. CORPORATE GOVERNANCE

Mastek follows best practices in Corporate Governance by benchmarking them with the best in the world.

The report on corporate governance is included in the latter part of this Annual Report.

15. ACKNOWLEDGEMENTS

The Directors would like to place on record their sincere appreciation for the continued co-operation, guidance, support and assistance provided by the SEEPZ Authorities, MIDC, Department of Electronics, ICICI Bank, Standard Chartered Bank Ltd and other government departments and authorities.

By the Order of the Board

Place: Mumbai Sudhakar Ram

Dated: July 21, 2010 Chairman and Managing Director