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Directors Report of MphasiS Ltd.

Mar 31, 2023

We have pleasure in presenting you the thirty second Annual Report of your Company for the year ended 31 March 2023. FINANCIAL PERFORMANCE

Key aspects of the financial performance of the Company are as follows:				('' million)
	CONSOLIDATED		STANDALONE
Particulars	Year ended 31 March 2023	Year ended 31 March 2022	Year ended 31 March 2023	Year ended 31 March 2022
Total Income	1,39,601	1,21,219	95,431	75,128
Expenses	1,17,870	1,02,090	76,612	58,926
Profit before taxation	21,731	19,129	18,820	16,202
Net Profit	16,379	14,309	14,139	12,353
Transfer to General Reserve	Nil	Nil	Nil	Nil

Note: The figures are rounded off to the nearest Rupee.

A detailed analysis of the performance is available in the section, titled Management Discussion and Analysis of Financial Condition and Results of Operations, of this Annual Report.

OUTLOOK

This yearâs NASSCOMâs strategic review report is themed âPriming for a âNo Normalâ Futureâ; as the Indian technology Industry has displayed resilience and growth in the wake of global uncertainty, as well as strengthened its position as a trusted global technology leader over the past several years.

Midway through 2022, uncertainty resulting from recent global events largely centered on persistent inflation, fiscal tightening, market volatility and geopolitical tensions, signalled that the world economy was headed towards a potentially prolonged downturn, foreshadowing a likely global recession.

According to McKinseyâs recent Global Economics Intelligence summary, the growth estimates for 2023 and 2024 have become less acute pointing towards a shorter slowdown, with an anticipated rebound in 2024. Even in the backdrop of this dynamic environment, enterprise IT spending has remained strong and is projected at $4.6 trillion in 2023, an increase of 5.5% from 2022, according to the latest forecast by Gartner.

This duality in the environment is a result of the different economic realities being faced by consumers and enterprises. Enterprises are continuing to increase spending on digital business initiatives despite the slowdown.

A divergence from previous cyclical downturns can be explained by modern enterprises prioritizing segments of technology spend as a means of transforming their business and becoming more innovative, with a view towards optimizing current revenue streams or creating new ones. This is echoed by NASSCOMâs report which states that technology will continue to be a strategic imperative, which is a critical component of business innovation and transformation, as well as a source of improving operational and cost efficiencies. This is also evident by the fact that leaders in enterprise technology are growing five times faster than laggards today, whereas this gap was only two times before the pandemic. Leveraging technology is going to be a critical factor in an enterpriseâs catalyst of the future.

In this dynamic environment, your Company continues to move forward from a position of strength. Your Company has a foundation of strong industry solutions, marquee client base and earnings and cash flow; all these aspects will help your Company to continue to execute its growth strategy and insulate it from the market challenges. Your Companyâs lead indicators are positive with the second highest deal wins on record where BFSI continues to generate highest share of the pipeline. Even with the recent disruption in the US banking system that impacted smaller community banks, the Companyâs larger portfolio of clientele, focused on organizations that are tightly governed, remains protected from the resulting after-effects. Your Companyâs business from US regional banks is a low single digit percentage contribution to the overall revenue. Your Company will continue to work with its clients to build their transformation capabilities and get them future-ready. Your Companyâs continuously evolving Tribes and Squads model driving the themes of cloud-led transformation is the steering force behind strong TCV. This model has helped your Company to scale its ability to service the growing pipeline; your Companyâs overall pipeline for large deals remain strong and well-distributed across all verticals. Some of the pipelines that have been built up over vendor consolidation may translate into additional TCV in near future. At this stage, your Company is focusing on the micro while being attentive to the developing macro-environment.

Your Company made the right choices a few years ago - technology as a service, consumer and cost - are now converging in this backdrop. The technology investing super cycle that started in 2021 is still underway and your Company foresees that enterprises will continue to prioritize investments in areas such as cloud, data engineering and strategic data assets, as well as areas like cybersecurity, customer experience and support transformation, as the latter also leads to a significant cost takeout opportunities. This will necessitate a pivot for the entire industry from maintenance and infrastructure services to transformation that can enable clients to deliver better services to customers and go-to-market faster using data analytics. Having built the foundation to leverage this exact moment, your Company is focused on winning large deals aided by the opportunities present in the market as well our fundamental strengths to stand apart from its peers.

Your Company will continue to invest in the engines of growth by:

â¢ Focusing on our core business services and smaller verticals, outside of BFS such as Healthcare. The growth of smaller verticals reflects the success of your Companyâs New Client Acquisition strategy;

â¢ Adding new marquee logos, with large spend pools, provides further growth visibility, as well as differentiation in new segments in addition to BFS; and

â¢ Growing top accounts sequentially, sustaining your Companyâs market share gains.

Your Company is confidently embracing this unique environment and leading it by staying true to its purpose, implementing deal archetype playbooks, to protect the core, ensure repeatable growth in capability-led transformation and to accelerate from âRunâ to âChangeâ, at the speed of our clients.

DIVIDEND

Your directors are pleased to recommend a final dividend of '' 50 per equity share of '' 10 each for the financial year ended 31 March 2023, subject to your approval at the ensuing Annual General Meeting.

ENTERPRISE RISK MANAGEMENT

A detailed analysis of monitored risks and their mitigation plans are available in the section headed Management Discussion and Analysis of Risks and Concerns, in this Annual Report.

CORPORATE GOVERNANCE

A report on Corporate Governance along with a certificate from the Secretarial Auditors, confirming the compliance for the year ended 31 March 2023, as required under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, is annexed and forms part of this Report.

EMPLOYEES

At Mphasis, the ecosystem is powered by Employees - a diverse group of best-in-class talent, who are focused on being future-ready. Your Company embarked on a journey to hyper personalize HR Programs last year which has been enhanced this year through digitization. Your Company has retained its winning culture of equality, fairness, collaboration and transparency.

With the changing IT Industry terrain, your Company focus is to invest in top talent that enables it to navigate dynamic shifts in customer expectations. To meet supply and demand challenges, your Company has enhanced its digital platform with skill-based hiring capabilities and innovative processes to actively pursue the right talent. Your Companyâs talent philosophy commits being an equal opportunity employer prioritizing Diversity and Inclusion. Your Company has established the Diversity, Equity and Inclusion Council and allyship program with leaders globally to support Mphasians from diverse backgrounds. From enhancements in insurance plan for gender affirmation and differently abled employees to a more inclusive workspace, your Company is recognized as one of the top employers in the Diversity, Equity and Inclusion space.

Talent Management programs including hire-to-retire policies, customized pay models and career progression frameworks encourage meritocracy and skill development. This has helped your Company in engaging with talent segments and skill communities. Talent Next, a flagship program, coupled with our X2C², strategy (read as âAnything to Cloud powered by Cognitiveâ: i.e., capability development in NextGen Digital skills) runs across the HR ecosystem. In FY23, this program was further evolved by integrating talent acquisition, talent development, performance management, employee productivity, engagement and total rewards along with catering to employeeâs aspirational needs. Since its inception there has been multifold increase in the number of people certified and deployed on NextGen digital skills suiting business requirements.

Accolade, a cloud-based recognition platform, builds a culture of recognition and makes hyper-personalized rewards a reality. Employee achievements are published across the organization fostering the Employees to celebrate their wins regularly. The prestigious Annual ACE awards was conducted entirely on cloud digital platform and encouraged participation from the entire workforce including employee families, creating a sense of belongingness.

As your Company continues to operate in a hybrid work environment, Employees across remote teams and geographies look to collaborate and engage in the office workspace speaking to our Hi-Touch, Hi-Tech and Hi-Trust proposition. All people programs focus employee experience, wellness and their continued growth. Through regular eSAT pulse surveys, the Company gets a real-time insights into employee experiencing, their needs, and the areas to improve. Your Company analyzes the data to identify trends, patterns and opportunities for growth, which enables to make data-driven decisions and take actions that align with our goals and values.

Mphasis has been recognized as one of the 100 Best Companies for Women (BCWI) apart from winning an âExemplar of Inclusionâ in the Most Inclusive Companies Index (MICI) by Avtar and Seramount and a champion in the organizational self-assessment for LGBTQ inclusion by Interweave.

COMMUNITY OUTREACH

CORPORATE SOCIAL RESPONSIBILITY (CSR)

Your Companyâs CSR is committed to bringing social change by applying the power of technology and disruptive solutions. Our belief is that the use of technology, tools and resources responsibly could play a transformational role for positive outcomes in the areas of education, livelihood, sustainability and equitable development. Our 2-pronged approach to sustainability, enables us to deliver value to the community and our stakeholders, by applying tech for the good of our business and society. This has led us to undertake several CSR programs that aim to benefit socially excluded and economically disadvantaged target groups, including support for vulnerable communities, afforestation and rainwater conservation. We also focus larger goal to become a corporate technology partner of choice, for certain Indian higher educational institutions, to enable the development of demonstrable, applied research projects that are of social relevance, thereby also bridging the gap between corporate and academia.

CSR at Mphasis is implemented through Mphasis F1 Foundation (an independent registered Trust). During the year, the Company spent '' 323.98 million on the CSR expenditure as against the mandated spend of '' 323.81 million. The CSR Annual Report for the year ended 31 March 2023 is annexed and forms part of this Report.

The highlights of your Companyâs CSR activities are described in detail on the website of the Company at: https://www.mphasis.com/ home/corporate/communitv-social-responsibilitv.html.

PREVENTION OF SEXUAL HARASSMENT (POSH)

Your Company is committed to ensuring workplace free from sexual harassment and providing a mechanism for redressal of complaints of sexual harassment without fear or threat of reprisals in any form or manner whatsoever to all its employees irrespective of their gender and sexuality.

Your Company has Sexual Harassment policies covering PoSH India policy which is in adherence to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 (the âPOSH Actâ) which is applicable for women employees in India and a Global POSH policy which applies to all other employees except women employees in India.

During FY23, 50 sexual harassment complaints were filed, of which 45 complaints were disposed and 5 complaints are under progress for being resolved, which are within the prescribed time limits.

ESTABLISHMENT OF VIGIL MECHANISM

Mphasis Code of Conduct requires directors, officers, and employees to observe high standards of business and personal ethics in the conduct of their duties and responsibilities. The Company has a Whistleblower Policy to enable persons who observe unethical practice (whether or not a violation of law), or violation of the Code of Business Conduct, other than matters covered by the POSH Policy to approach the Whistleblower Custodian without revealing their identity, if they choose to do so. Further the complaint can be reported to the Ombudsperson (Chairman of the Audit Committee) where the Complainant feels that the complaint has not been addressed or actioned in a timely and appropriate manner. Also, if the complaint is against any member of the Whistleblower Committee or the Executive Council, the same would be made to the Ombudsperson. This Policy governs reporting and investigation of allegations that are breach of Code of Business Conduct and violation under code for prevention of Insider Trading. The Policy covers all Mphasis group companies and its affiliates, Directors and further extends to all Mphasis suppliers and contractors engaged in rendering the services.

DIRECTORS AND KMP

In accordance with Section 152 of the Companies Act, 2013, Mr. Amit Dixit (DIN: 01798942), Mr. Marshall Jan Lux (DIN: 08178748) and Mr. Kabir Mathur (DIN: 08635072) will retire by rotation at the ensuing Annual General Meeting and are eligible for re-election.

The Board recommends the re-appointment of the above directors for approval of the members. Necessary resolutions in connection with the above are being placed for approval of the members at the ensuing Annual General Meeting.

STATUTORY AUDITORS

The members at the twenty seventh Annual General Meeting held on 7 August 2018, approved appointment of B S R & Co. LLP, Chartered Accountants (Firm Registration No. 101248W/W-100022), as the Statutory Auditors to hold office from the conclusion of the twenty seventh Annual General Meeting till the conclusion of the thirty second Annual General Meeting. Consequently, B S R & Co. LLP will complete their term of five consecutive years as the statutory auditors of the Company at the conclusion of this Annual General Meeting.

The Board of Directors of the Company (âBoardâ), based on the recommendation of the Audit Committee, in its meeting held on 27 April 2023, unanimously approved the re-appointment of B S R & Co. LLP, as the Statutory Auditors of the Company, for a further consecutive term of five years from the conclusion of thirty second Annual General Meeting till the conclusion of thirty seventh Annual General Meeting, at a remuneration as may be mutually agreed between the Board and the Statutory Auditors and recommended the same for approval of the shareholders.

B S R & Co. LLP have consented to their re-appointment as the Statutory Auditors and have confirmed that the re-appointment, if made, would be within the limits specified under Section 141(3)(g) of the Companies Act, 2013 and that they are not disqualified to be re-appointed as the Statutory Auditors in terms of the provisions of Sections 139 and 141 of the Companies Act, 2013 and the Rules made thereunder.

As required under the Companies Act, 2013, approval of the members is being sought for re-appointment of B S R & Co. LLP, Chartered Accountants, (Registration No.101248W/W-100022) as the Statutory Auditors of the Company and to fix their remuneration, by means of an Ordinary Resolution. The Board recommends the re-appointment of BSR & Co., LLP for approval of the members at the ensuing Annual General Meeting.

There are no qualifications, reservations or adverse remarks made by the Statutory Auditors in their audit reports on the financial statements for the year ended 31 March 2023.

SECRETARIAL AUDITOR

The Board had in its meeting held on 19 January 2023 appointed Mr. S P Nagarajan, Practicing Company Secretary (CP No. 4738), as the Secretarial Auditor for the financial year ended 31 March 2023. In addition, as required under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the secretarial audit of Msource (India) Private Limited, a material subsidiary, has also been carried out.

As required under the Section 204 of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the secretarial audit reports of the Company and its material subsidiary for FY23 are annexed and forms part of this Report. The audit reports do not contain any qualification, reservation or adverse remarks.

DIRECTORSâ RESPONSIBILITY STATEMENT

Information as per Section 134(5) of the Companies Act, 2013, is annexed and forms part of the Report. Further, based on the confirmation and certificates received, the Board confirms that the Company has complied with the Secretarial Standards on the Board Meetings issued by the Institute of Company Secretaries of India, as applicable to the Company, during the financial year ended 31 March 2023.

BUSINESS RESPONSIBILITY AND SUSTAINABILITY REPORT (BRSR)

Sustainability and social responsibility have always been the cornerstone of your Company. As a responsible and conscious corporate citizen, your Company is committed to integrating sustainability across its operations and demonstrate what it means to be a leader in the industry by setting exceptional standards driven by a purpose-led approach to solving challenges. Your Company is striving to accelerate its commitment to tackle climate change by investing in renewable energy, efficient waste and water management and other green initiatives. To have a long-term influence on the planet and all its stakeholders, your Company has integrated environmental goals into the business strategy, risks, and procedures. As an organization that is fuelled by innovation, your Company places great value on people to grow as a company and maximize positive outcomes by focusing on certain key areas - diversity, equity, and inclusion, learning and development and employee well-being. The details of ESG initiatives are available on our website at https://www.mphasis.com/home/esg.html.

Your Company has reported BRSR for FY23 and the same detailing the business responsibility and sustainability practices is uploaded on the website of the Company at www.mphasis.com under financials and filling section of the Investor page and forms part of the Annual Report.

OTHER DISCLOSURES SUBSIDIARIES

As on 31 March 2023, your Company has subsidiaries in Australia, Belgium, Canada, France, Germany, India, Ireland, Mauritius, Netherlands, Peopleâs Republic of China, Philippines, Poland, Singapore, the United Kingdom and the United States of America. In addition, the overseas subsidiaries have branches in Argentina, Canada, Costa Rica, France, Hungary, Japan, Malaysia, Mexico, Peopleâs Republic of China, Sweden, Switzerland and Taiwan.

In accordance with Section 129 (3) of the Companies Act, 2013 the consolidated financial statements are attached to this Annual Report. Further, a statement containing salient features of the financial statements of subsidiaries in the prescribed Form AOC-1 is annexed to this Report. The statements provide the performance and financial position of each of the subsidiaries.

The audited financial statements of the subsidiaries are available for inspection of the members at the Registered Office of the Company and are also being uploaded on the website of the Company, www.mphasis.com. A translated copy of the financial statements has been provided where such financial statements are in the foreign language.

A copy of the above financial statements shall be sent to the members upon request.

EMPLOYEES STOCK OPTION PLANS AND RESTRICTED STOCK UNIT PLANS

The Companyâs Employee Stock Option Plans (ESOPs) are administered through the Mphasis Employees Equity Reward Trust and the Restricted Stock Unit Plans (RSUs) are administered through the Mphasis Employees Benefit Trust. Further, all the plans are administered by the ESOP Compensation Committee of the Board.

The Company currently has three stock option plans in operation, namely, Mphasis Employees Stock Option Plan - 1998 (ESOP 1998) (Version I & II), Mphasis Employees Stock Option Plan - 2016 (ESOP 2016) and Restricted Stock Units Plan 2021 (RSU 2021). During the year ended 31 March 2023, the Company has allotted 582,327 equity shares pursuant to the exercise of stock options and restricted stock units. Further, during the year ended 31 March 2023, the ESOP Compensation Committee granted 188,550 stock options and 33,550 stock units to the eligible employees.

The information to be disclosed as per SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021, for the year ended 31 March 2023 is annexed to the Boardâs Report and is also uploaded on the website of the Company at www.mphasis.com.

DIRECTORSâ INTEREST AND RELATED PARTY DISCLOSURES

No director was interested in any contracts or arrangements existing during or at the end of the year that was significant in relation to the business of the Company. No director holds any shares or stock options in the Company as on 31 March 2023 except Mr. Davinder Singh Brar, Chairman, who holds 28 shares and Mr. Nitin Rakesh, Chief Executive Officer and Managing Director, who holds 159,429 shares ( and holds 981,226 stock options and 310,677 stock units). None of the directors had any other interest in the share capital of the Company as at 31 March 2023. All the transactions entered into with Related Parties as defined under Section 2(76) of the Companies Act, 2013 and Regulation 23 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, during FY23 were in the ordinary course of business and at armâs length basis.

The Company has a policy for dealing with Related Party Transactions which has been uploaded on the Companyâs website at www.mphasis.com. The particulars of the contract or arrangements with the Related Parties in form AOC-2 is annexed and forms part of this Report.

The related party disclosures are made to the Stock Exchanges on a half yearly basis as required under Regulation 23(9) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and the same is available on our website at www.mphasis.com.

SHARE CAPITAL

During the year under review, the Company has allotted, on various dates, 582,327 equity shares pursuant to the exercise of stock options and restricted stock units. The Issued Share Capital of the Company as on 31 March 2023 stood at ''1,884 million and Reserves and Surplus stood at ''77,464 million (consolidated basis) and ''48,203 million (standalone basis) respectively.

PARTICULARS OF EMPLOYEESâ REMUNERATION

The statement containing particulars of employees as required under Section 197(12) of the Companies Act, 2013 read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, are given in an annexure and forms part of this report.

However, in terms of Section 136(1) of the Companies Act, 2013, the report is being sent to the Members excluding the aforesaid annexure and shall be available for inspection of the members, till the date of the Annual General Meeting, at the registered office of the Company during working hours. Any Member interested in obtaining a copy of the annexure may write to the Company Secretary at the Registered Office of the Company.

In terms of proviso to Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, particulars of the employees posted and working in a country outside India is not circulated to the members, but same shall be filed with the Registrar of Companies while filing the Financial Statements and Boardâs Report.

ANNUAL RETURN

The Annual Return of the Company as at 31 March 2023 in Form MGT-7 is uploaded on the website of the Company under financials and filings section at https://www.mphasis.com/home/corporate/investors.html. The Annual Return will be filed with the Registrar of Companies, after the Annual General Meeting, within the prescribed time.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

The particulars of Loans, Guarantees and Investments under Section 186 of the Companies Act, 2013 are disclosed in the financial statements of the Company.

DEPOSITS

Your Company has not accepted any deposits from the public and as such no principal or interest was outstanding as on the date of the Balance Sheet.

PARTICULARS REGARDING CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGOA. CONSERVATION OF ENERGY:

Your Company is committed towards energy conservation. We recognize energy efficiency plays central role in lowering your Companyâs operational Green House Gas emissions. Various improvements and initiatives are implemented to enhance efficiency through technological upgrades and effective monitoring of operational and maintenance activities. Your Company has been able to reduce the electricity consumption and carbon footprint over the years through effective energy management and sustainable initiatives including installation of LED lamps, hydrogen sensors for data rooms, occupancy sensors at the office premises and procurement of new state of art/energy efficient VRV AC units and PAC units which replaced the old and inefficient AC units. The new AC equipmentâs are with R407c and R410a refrigerants which donât deplete Ozone layer, hence are environment friendly.

Your Company has been one of the early adopters of renewable energy and strives to move towards the same. Your Company has Installed solar panels with a capacity of 10KW at Mangalore facility and solar inverters at identified facilities to promote sustainable energy usage. Year on year target has been set for reduction of energy consumption by 5% and carbon footprint by 1% and the set targets are consistently achieved. The energy and carbon footprints are monitored through in-house developed Energy Management System Application.

One of the Companyâs facilities at Bengaluru has been certified LEED (Leadership in Energy and Environmental Design) Gold by United States Green Building Council (USGBC). The key facilities have been awarded with 5-star, 4-star and 3-star rating by Bureau of Energy Efficiency, Government of India (BEE) for the last 7 years. The rating is a nationally accepted industry benchmark and Mphasis is certified by BEE in India. The Company has been awarded, by Confederation of Indian Industry, an Environment, Health and Safety (EHS) Award with a ??? (3 star) and ???? (4 star) rating for the facilities at Bengaluru appreciating its sustainable initiatives. Some of the Companyâs facilities in Bengaluru are certified for ISO 14001:2015 by British Standards Institution (BSI) showcasing the demonstration and competence towards the environmental management system.

B. TECHNOLOGY ABSORPTION:

Particulars relating to technology absorption are not applicable.

C. FOREIGN EXCHANGE EARNINGS OR OUTGO:		('' million)
(a)	Foreign Exchange earned in terms of actual inflows during the year	87,377
(b)	Foreign Exchange outgo in terms of actual outflows during the year	37,821

D. DETAILS OF SIGNIFICANT AND MATERIAL ORDERS:

During the year under review, there were no significant material orders passed by the Regulators or the Courts, Tribunals impacting the going concern status and the Companyâs operations in future.

ACKNOWLEDGMENT

Your directors acknowledge with thanks the continued support and valuable co-operation extended by the business constituents, investors, vendors, bankers and shareholders of the Company. The directors place on record their appreciation for the support from the Software Technology Parks of India, the Department of Communication and Information Technology, the Government of India, Government of Karnataka, Telangana, Maharashtra, Tamil Nadu, Reserve Bank of India, other governmental agencies, Trade Associations and NASSCOM. Your directors also thank the government agencies of various other countries where your Company has operations.

Your directors would like to place on record their appreciation for the Employees of the Company and its subsidiaries, at all levels, for their hard work and commitment. Their dedication and competence have ensured that the Company continues to be a significant and leading player in the industry.

For and on behalf of the Board of Directors

New Delhi, India D S Brar

27 April 2023 Chairman

Mar 31, 2021

We have pleasure in presenting you the thirtieth Annual Report of your Company for the year ended 31 March 2021.

FINANCIAL PERFORMANCE

Key aspects of the financial performance of the Company are as follows: ('' million)

Particulars	CONSOLIDATED		STANDALONE
Particulars	Year ended 31 March 2021	Year ended 31 March 2020	Year ended 31 March 2021	Year ended 31 March 2020
Total Income	98,553	90,214	56,507	46,704
Expenses	82,246	75,060	42,049	32,828
Profit before taxation	16,306	15,154	14,458	13,876
Net Profit	12,168	11,848	11,104	12,051
Transfer to General Reserve	Nil	1,205	Nil	1,205

Note: The figures are rounded off to the nearest Rupee.

A detailed analysis of the performance is available in the section titled Management Discussion and Analysis of Financial Condition and Results of Operations, in this Annual Report.

OUTLOOK

Much has been said and written about 2020, but looking back, we can all agree that it was a landmark year that will leave an indelible mark on the foreseeable future. The economic shock and hardship caused by COVID -19 to global communities, is estimated to be three times worse than the 2008 financial crisis - for the human cost suffered, itâs been a crisis like no other. And while we are not completely out of it yet, there are signs that the worst could be behind us. The latest Global Financial Stability Report from International Monetary Fund (IMF) shows that the announcements and distribution of earlier-than-anticipated COVID-19 vaccines have boosted market sentiment and paved the way for global economic recovery.

Thanks to modern medicine and vaccinations, we do see the light at the end of the tunnel, however the speed of the recovery will depend crucially on production, distribution networks and access to vaccines. According to the January 2021 World Economic Outlook update, âcontinued monetary and fiscal support remain vital to lessen lingering uncertainties, build a bridge to the recovery, and ensure financial stability. Yet, despite persistent uncertainties surrounding the economic outlook, investors appear to remain confident about growth prospects in 2021, betting that continued policy support will offset any possible near-term disappointment.â

As we step onto the other side of the pandemic with the hindsight of a full year and the vaccines providing some measure of relief, enterprises have a long road ahead to future-proof themselves. While most of 2020 was spent trying to adapt to the extraordinary circumstances which businesses found themselves in 2021. This year is going to be a year of transition. Enterprises have been laser-focused in identifying their priorities for most of the past year and will have to start actioning them with a view to leverage the crisis-led opportunity transformation. Several outcomes of the crisis on businesses were a culmination of few underlying trends that already existed in the environment and according to McKinseyâs 2021 report on the ânew normalâ, the great acceleration in the use of technology, digitization, and new forms of working is going to be sustained with the crisis having created an imperative for companies to reconfigure their operationsâand an opportunity to transform them. It is evident that thereâs no going back.

Organizations are preparing to pivot and adapt to weather all types of disruptions well beyond the pandemic. With that future in mind, enterprises are transitioning from what used to be known as an omni-channel experience to a digital-first or in many cases, digital-only experience. To that end, there will be a continued reallocation of resources into areas such as customer experience, data and personalization, workplace modernization, predictive analytics and as-a-service economy to leverage cost and time-to-market efficiencies, as well as transformation programs to reduce the technical deficit that has been built up over decades. Gartner predicts technology trends, in 2021, to fall along three themes: people centricity, location independence and resilient delivery. This fundamental shift is replete with examples in media and entertainment, financial services, healthcare, supply chains to all forms of retail, even including auto sales and restaurants.

The pandemic has disproportionately impacted different industries. While some suffered badly, there were others that were able to leverage the crisis by aligning themselves to the needs of the customers. However, according to McKinseyâs report, âWhen the economy settles into its next normal, such sectoral differences can be expected to narrow, with industries returning to somewhere around their previous relative positions. What is less obvious is how the dynamics within sectors are likely to change. In previous downturns, the strong came out stronger, and the weak got weaker, went under, or were bought. The defining difference was resilienceâthe ability not only to absorb shocks but to use them to build a competitive advantage.â

Your Companyâs resilience and its resulting success amid the pandemic was largely due to its differentiators - strategic investments made much earlier in next gen technologies anticipating the needs of a future-ready business. This gave Mphasis the maturity and competitive edge to be a true partner to its clients in their time of need earning âcustomers for lifeâ. While 2021 will see continued investments by enterprises in digital transformation with clients starting to frame medium to long-term plans, your Company will continue to stay close to them and help them navigate their unique transformation journeys with constant renewal of its offerings to solve their immediate as well as long-term needs.

Your Company sees opportunity around these trends broadly fitting in four buckets; customer engagement using digital channels and design, use of data in driving customer and operational analytics, adoption of infrastructure and application transformation elements using cloud, and finally, investments to transform core business operations.

Mphasis has often talked about technology tribes as a competency build-up framework, and the agile organizational design of tribes and squads being a true differentiator. The strength of these tribes is not just the expertise in high-demand tech areas, but also in how multiple tribes collaborate to structure and execute on deals. Tribes function collaboratively to construct, design, propose and deliver on more complex deal archetypes, and we are witnessing increased traction in constructing such archetypes. For example, Zero Cost Transformation architype leverages four of our tribes: Modernization, NextGen IT Ops, DevOps and Data. Another example, our NextGen IT Ops tribe merges our Application Management and Infra Management Services tribes to position us for larger and integrated deals. The evolution of these tribes and the way they have come together creates higher order deal archetypes favoring increasing deal sizes. Because tribes do not operate in a rigid hierarchy but as agile tech competency streams, we believe that the easy, yet intimate collaboration, enabled by the organizational design is a source of competitive advantage.

Mphasis NEXT Labs was recently awarded a U.S. patent for its revolutionary deep learning-based framework, Autocode.AI, which applies Artificial Intelligence (AI) to automatically generate code and streamline software development process. Autocode.AI is a deep learning-based solution, which enables users to quickly transition from whiteboards to code in hours and rapidly prototype applications through hyper-personalized designs and code. Code creation process in software development is manual, time, cost and effort intensive and it involves converting large number of wireframes and screenshots created by designers into computer code. Autocode.AI drastically reduces the time taken for software prototyping and development time through the automation of repetitive and standard code blocks. It reduces the cost of software development and maintenance enabling customers to mobilize technology for higher benefits.

Mphasis achieved the Amazon Web Services (AWS) Travel and Hospitality Competency status last year. This status recognizes Mphasisâ demonstrated expertise in helping customers transform their business, from behind-the-scenes operational efficiencies to guest-facing customer experiences. Achieving the AWS Travel and Hospitality Competency differentiates Mphasis as the AWS Partner with deep domain expertise in one or more of the following categories including, Data 360, Digital Customer Engagement, Smart Assets, Core Travel and Hospitality Applications, and superior Consulting Services offering strategic guidance and deployment services.

In order to address the evolving needs and challenges which clients face regarding their complex IT environment, your Company has leveraged various start-up and innovation organizations through acquisition or partnership, including:

â¢ Datalytyx - acquired to provide NextGen Data Engineering, Data Ops and Master Data Management solutions on Snowflake and Talend environments to clients globally;

â¢ Upswot - partnered to offer marketing insights through alternative data for business banking;

â¢ R3 - partnered to develop a blockchain based payments and financing network for global supply chains; and

â¢ Planwatch - partnered to deliver customized health benefit management tools.

Mphasis will continue to scale, transform and stay ahead of technology advancements as an âapplied tech companyâ, at the forefront of innovation and initiative. As we step into yet another year of uncertainty, what will remain unchanged is our character, spirit and our commitment to help the world reimagine its future.

DIVIDEND

Your directors are pleased to recommend a final dividend of '' 65/- per equity share (inclusive of a special dividend of ''27/- per equity share) of '' 10 each for the financial year ended 31 March 2021, subject to your approval at the ensuing Annual General Meeting.

ACQUISITION OF DATALYTYX LIMITED, UK

Your company through its wholly owned subsidiary Mphasis Consulting Limited, acquired Datalytyx Limited (together with its subsidiaries Dynamyx Limited and Datalytyx MSS Limited) on 19 November 2020. The acquisition provides access to strengthen Mphasis NextGen Data GTM Strategy and provide higher value partnership status with Snowflake and Talend for cloud-based data services. The acquisition also provides access to highly skilled data professionals and sales professionals thereby creating an offshore pool of Snowflake and Talend expertise. Headquartered in London, United Kingdom, Datalytyx provides NextGen Data Engineering, Data Ops and Master Data Management solutions on Snowflake and Talend environments to clients globally.

CHANGE IN CONTROL

As a result of the completion of the sale and purchase of shares (the completion of which was subject to the required statutory approvals) pursuant to the Share Purchase Agreement executed on 26 April 2021, for sale of shares in the Company by Marble II Pte.Ltd., (âOutgoing Promotersâ) to BCP Topco IX Pte. Ltd., along with Blackstone Capital Partners Asia NQ L.P and Blackstone Capital Partners (CYM) VIII AIV - F L.P (the âCurrent Promotersâ), the Current Promoters had acquired the entire stake from the Outgoing Promoters, on 10 August 2021, being 104,799,577 Equity Shares, representing 55.97% of the paid up Share Capital (âChange of Controlâ). Consequent to the Change of the Control, the Outgoing Promoter have ceased to (i) hold any shares in the Company, (ii) hold control of the Company, and (iii) be promoter of the Company. In addition, further to the completion of acquisition of shares by the Current Promoters under the open offer (âOpen Offerâ) to the Public Shareholders, as per the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 (âRegulationsâ), the Current Promoter had acquired 65 Equity Shares, from a public shareholder, under the Open Offer.

The shareholding of the Current Promoters, post the acquisition and Open Offer, is 104,799,642 equity shares representing 55.97% of the paid-up share capital of the Company.

Further to the above, your Company continues to be part of Blackstone group under another fund of Blackstone.

ENTERPRISE RISK MANAGEMENT

A detailed analysis of monitored risks and their mitigation plans are available in the section headed Management Discussion and Analysis of Risks and Concerns, in this Annual Report.

CORPORATE GOVERNANCE

A report on Corporate Governance along with a certificate from the Practising Company Secretary confirming the compliance for the year ended 31 March 2021 as required under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, is annexed and forms part of this Report.

EMPLOYEES

At Mphasis we strongly believe that our employees are our biggest asset and we keep empowering them to perform their best. Our HR programs are designed on the principles of equality, collaboration and transparency to reinforce our deep-rooted winning culture. In this digital era, we focus on investing in a best-in-class, future-ready talent. Towards this end, we have implemented various innovative processes and enhanced our digital platform, using state-of-the-art technology and hiring tailor-made for specific skill communities. We ensure that our talent management programs like pay models and career progression encourage meritocracy and skill development.

From being just a robust learning platform, our Talent Next Program has now evolved into a comprehensive HR ecosystem through a holistic talent transformation. The primary focus in the previous year was aligning the competency development requirements to the X2C² â¢ strategy (read as capability building in NextGen skills) and reward people for learnability. In FY21, the focus has shifted to amalgamating Talent Next with the overall Hire to Retire (H2R) processes. This conversion became the focal point for all strategic talent programs - integrating talent acquisition, talent development, performance management, employee productivity, engagement, total rewards and retention efforts.

Talent Next matured into a cognitive automation tool with a âlearning recommendation engineâ that provides suggestions based on both business requirements as well as employeeâs aspirational needs. Further, it is powered with a host of immersive learning features and diverse learning resources for over 750 skills. On the learning adoption front, there has been a four-fold increase compared to the previous year, especially in the NewGen skills.

The world transformed in multiple ways due to the pandemic and brought lot of changes in the way we live and work. Offices have always played a major role in corporate culture and furthering employee engagement. The workplace has acted as a focal point in collaboration and bonding. Hence, the remote work mode could impacted our team morale, productivity, employee engagement and stress levels. To alleviate the challenge, we introduced a range of services to our employees covering all avenues that helped them adjust to new working conditions holistically.

Most importantly, we celebrated our employees through our largest socialist rewards and recognition program - Mettle of Honor. This was entirely about the exemplary contribution made by our heroes in adapting to the new normal. Multiple teams and individuals played a huge part in running business as usual without an impact on Companyâs performance during the lockdown and beyond. With all these special initiatives on top of our existing engagement framework, we helped to cement our efforts in keeping employees informed, engaged and recognized without compromise.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

Mphasis CSR programs drives impact through disruptive and tech-based solutions in the areas of Education, Livelihood and Inclusion that aim to benefit socially excluded and economically disadvantaged target groups. Mphasis CSR programs expand across its geographies of operation including disaster affected regions in India and has also supported COVID-19 relief measures towards vulnerable communities in FY21, through distribution of dry ration kits, supporting livelihood recovery programs and supporting startups working in COVID contact tracing and diagnostics.

CSR at Mphasis is implemented through Mphasis F1 Foundation (an independent registered trust). Mphasis F1 Foundation invests in the areas of focus through non-profits and social enterprises (via incubators). The selection process of these projects/programs includes due diligence through primary and secondary research, reference checks with existing partners, along with a formal review by the CSR Advisory Committee to drive the most innovative solutions in the social space. Through this approach, it has been possible to build strategic relationships in the social sector that has the potential to deliver targeted social impacts.

During the year, the Company spent '' 254.5 million on the CSR expenditure as against the mandated spend of ''254.2 million. The CSR Annual Report for the year ended 31 March 2021 is annexed and forms part of this Report.

The highlights of your Companyâs CSR activities are described in detail in the Business Responsibility Report forming part of the Boardâs Report.

PREVENTION OF SEXUAL HARASSMENT

The Company is committed to the provision of a workplace, free of Sexual Harassment (âSHâ) and to provide a redressal mechanism for all complaints of SH without fear or threat of reprisals in any form or manner whatsoever to all its employees irrespective of their gender and sexuality.

It is confirmed that during the year the Company has complied with applicable provisions in relation to Sexual harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, including the provisions relating to the constitution of Internal Complaints Committee under the said Act.

During FY21, 18 sexual harassment complaints were filed, out of which 16 complaints were disposed as on 31 March 2021. The remaining 2 complaints have been since disposed off, as at the date of the report, within the prescribed time limits.

ESTABLISHMENT OF VIGIL MECHANISM

Mphasis Code of Conduct requires directors, officers and employees to observe high standards of business and personal ethics in the conduct of their duties and responsibilities. The Company has a Whistleblower Policy to enable persons who observe unethical practices (whether or not a violation of law), to approach the Whistleblower Custodian without revealing their identity, if they choose to do so. This Policy governs reporting and investigation of allegations that are breach of Code of Business Conduct and violation under code for prevention of Insider Trading. This Policy covers all Mphasis group companies and its affiliates and further extends to all Mphasis suppliers and contractors engaged in rendering the services.

DIRECTORS AND KMP

The members, at the twenty sixth Annual General Meeting held on 26 July 2017, appointed Mr. Nitin Rakesh (DIN:00042261) as the Chief Executive Officer and Executive Director for a term of five years effective from 29 January 2017. Accordingly, the current term of Mr. Nitin Rakesh expires on 28 January 2022. Pursuant to Section 196(2) of the Companies Act, 2013, Mr. Nitin Rakesh is eligible for being re-appointed as the Chief Executive Officer and Executive Director for another term of five years. Pursuant to the recommendation of the Nomination and Remuneration Committee, the Board at its meeting held on 31 August 2021, approved, subject to approval of the members at the ensuing Annual General Meeting, the re-appointment of Mr. Nitin Rakesh as the Chief Executive Officer and his appointment as the Managing Director for a period of five years effective 1 October 2021.

In accordance with Section 152 of the Companies Act, 2013, Mr. Amit Dixit (DIN: 01798942) and Mr. Marshall Jan Lux (DIN: 08178748) will retire by rotation at the ensuing Annual General Meeting and are eligible for re-election.

The Board recommends the re-appointment of the above directors for approval of the members. Necessary resolutions in connection with the above are placed for approval of the members at the ensuing Annual General Meeting.

Mr. Paul James Upchurch (DIN: 07593638) resigned as a director effective 31 December 2020. The Board places on record its appreciation for the services rendered by Mr. Upchurch during his tenure as a director.

Mr. V Suryanarayanan concluded his role as the Chief Financial Officer effective 14 May 2020 and superannuated from the services in October 2020. The Board places on record its appreciation for the services rendered by Mr. Suryanarayanan during his tenure with the Company. The Board had at its meeting held on 16 March 2020, appointed Mr. Manish Dugar as the Chief Financial Officer effective 15 May 2020.

STATUTORY AUDITORS

The members have at the twenty seventh Annual General Meeting held on 7 August 2018, appointed M/s. B S R & Co. LLP (Registration No.101248W/W-100022), Chartered Accountants, as the Statutory Auditors of the Company under Section 139 of the Companies Act, 2013, for a period of 5 years, from the conclusion of Twenty Seventh Annual General Meeting till the conclusion of Thirty Second Annual General Meeting.

There are no qualifications, reservations or adverse remarks made by the Statutory Auditors in their audit reports on the financial statements for the year ended 31 March 2021.

SECRETARIAL AUDITOR

The Board had in its meeting held on 21 January 2021 appointed Mr. S P Nagarajan, Practicing Company Secretary (CP No. 4738), as the Secretarial Auditor for the financial year ended 31 March 2021. In addition, as required under the SEBI (Listing Obligations and Disclosure Requirements) (Amendment) Regulations, 2019, the secretarial audit of Msource (India) Private Limited, a material subsidiary, has also been carried out.

As required under the Section 204 of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) (Amendment) Regulations, 2019, the secretarial audit reports of the Company and its material subsidiary for the FY21 are annexed and forms part of this Report. The audit reports do not contain any qualification, reservation or adverse remarks.

DIRECTORSâ RESPONSIBILITY STATEMENT

BUSINESS RESPONSIBILITY REPORT (BRR)

Business Responsibility at Mphasis is enabled by a suite of frameworks, environmental, social, governance, objectives, codified culture, charters, policies, code of conduct and management systems integrated with the business process. The report detailing the business responsibility practices for the FY21 is uploaded on the website of the Company at www.mphasis.com and forms part of the Annual Report.

OTHER DISCLOSURES SUBSIDIARIES

As on 31 March 2021, your Company has subsidiaries in Australia, Belgium, Canada, France, Germany, India, Ireland, Mauritius, Netherlands, Peopleâs Republic of China, Philippines, Poland, Singapore, the United Kingdom and the United States of America. In addition, the overseas subsidiaries have branches in Canada, Costa Rica, France, Hungary, Japan, Malaysia, Mexico, Sweden, Switzerland and Taiwan.

A copy of the above financial statements shall be sent to the members upon request.

EMPLOYEES STOCK OPTION PLANS AND RESTRICTED STOCK UNIT PLANS

The Company currently has two stock option plans in operation, namely, Mphasis Employees Stock Option Plan - 1998 (ESOP 1998) (Version II) and Mphasis Employees Stock Option Plan - 2016 (ESOP 2016). During the year ended 31 March 2021, the Company has allotted 505,526 equity shares pursuant to the exercise of stock options.

With a view to achieve management participation in the ownership and growth of the Company and to encourage value creation and value sharing with key employees and to retain such key employees, the Board in its meeting held on 31 August 2021, has proposed to institute Restricted Stock Unit Plan 2021 (RSU Plan 2021) with the underlying shares not exceeding 3,000,000 equity shares of '' 10 each.

Under the RSU Plan 2021, the exercise price of each unit will be the par value of the underlying equity share of the Company i.e. '' 10 (Ten Rupees) for each unit. The RSU Plan 2021 would confirm to the Securities and Exchange Board of India (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 and applicable provisions of the Companies Act, 2013. In line with the provisions of the above regulations, necessary resolutions in relation to the RSU Plan 2021 are placed for approval of the members at the ensuing Annual General Meeting. The Board recommends the above for approval of the members by means of special resolutions.

Information to be disclosed as per Securities and Exchange Board of India (Share Based Employee Benefits and Sweat Equity) Regulations 2021, for FY21 is annexed to the Boardâs report and is also uploaded on the website of the Company at www.mphasis.com.

DIRECTORSâ INTEREST AND RELATED PARTY DISCLOSURES

No director was interested in any contracts or arrangements existing during or at the end of the year that was significant in relation to the business of the Company. No director holds any shares or stock options in the Company as on 31 March 2021 except Mr. Davinder Singh Brar, Chairman, who holds 28 shares and Mr. Nitin Rakesh, Chief Executive Officer and Executive Director, who holds 979,000 stock options. None of the directors had any other interest in the share capital of the Company as at 31 March 2021. All the transactions entered into with Related Parties as defined under Section 2(76) of the Companies Act, 2013 and Regulation 23 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, during the financial year were in the ordinary course of business and are at an armâs length basis.

SHARE CAPITAL

During the year under review, the Company has allotted, on various dates, 505,526 equity shares pursuant to the exercise of stock options and 700 shares pursuant to release of bonus shares earlier kept in abeyance. The Issued Share Capital of the Company as on 31 March 2021 stood at '' 1,870 million and Reserves and Surplus stood at '' 63,397 million (consolidated basis) and '' 41,230 million (standalone basis) respectively.

PARTICULARS OF EMPLOYEESâ REMUNERATION

The statement containing particulars of employees as required under Section 197(12) of the Companies Act, 2013 read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is given in an annexure and forms part of this report.

However, in terms of Section 136(1) of the Companies Act, 2013, the report is being sent to the Members excluding the aforesaid Annexure and shall be available for inspection of the members, till the date of the Annual General Meeting, at the registered office of the Company during working hours. Any Member interested in obtaining a copy of the Annexure may write to the Company Secretary at the Registered Office of the Company.

In terms of proviso to Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the particulars of the employees posted and working in a country outside India is not circulated to the members, but the same shall be filed with the Registrar of Companies while filing the Financial Statements and Boardâs Report.

ANNUAL RETURN

The Annual Return of the Company as at 31 March 2021 in Form MGT-7 is uploaded on the website of the Company under financials and filings section at https://www.mphasis.com/home/corporate/investors.html. The Annual Return will be filed with the Registrar of Companies, after the Annual General Meeting, within the prescribed time.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

The particulars of Loans, Guarantees and Investments under Section 186 of the Companies Act, 2013 are disclosed in the financial statements of the Company.

DEPOSITS

Your Company has not accepted any deposits from the public and as such no principal or interest was outstanding as on the date of the Balance Sheet.

PARTICULARS REGARDING CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGOA. CONSERVATION OF ENERGY:

Your Company is committed towards Energy conservation. We recognize energy efficiency plays a central role in lowering our operational Green House Gas emissions. Various improvements and initiatives are implemented to enhance efficiency through

technological upgrades and effective monitoring of operational and maintenance activities. We have been successfully able to reduce our electricity consumption and carbon footprint over the years through effective energy management and various sustainable initiatives including installation of LED lamps, hydrogen sensors for data rooms, occupancy sensors at the office premises.

We have been one of the early adopters of renewable energy and we strive to move towards the same. We have Installed solar panels with a capacity of 10KW at Mangalore facility and solar inverters at identified facilities to promote sustainable energy usage. Year on year target has been set for reduction of Energy consumption by 5% and Carbon footprint by 1% and the set targets are consistently achieved.

One of our Companyâs facilities at Bengaluru has been certified LEED (Leadership in Energy and Environmental Design) Gold by United States Green Building Council (USGBC). The key facilities have been awarded with 5-star, 4-star and 3-star rating by Bureau of Energy Efficiency, Government of India (BEE) for the last 7 years. The rating is a nationally accepted industry benchmark and Mphasis is certified by BEE in India. Our Company has been awarded, by Confederation of Indian Industry, an Environment, Health and Safety (EHS) Award with a ???(3 -star) and -star) rating for the facilities at Bengaluru appreciating its sustainable

initiatives. Our corporate facility at Bengaluru is also certified for ISO 14001:2015 by British Standards Institution (BSI) showcasing the demonstration towards the Environmental management system.

B. TECHNOLOGY ABSORPTION:

Particulars relating to technology absorption are not applicable.

C. FOREIGN EXCHANGE EARNINGS OR OUTGO:

('' million)
(a)	Foreign Exchange earned in terms of actual inflows during the year	49,950
(b)	Foreign Exchange outgo in terms of actual outflows during the year	16,540

D. DETAILS OF SIGNIFICANT AND MATERIAL ORDERS:

During the year under review, there were no significant material orders passed by the Regulators or the Courts, Tribunals impacting the going concern status and the Companyâs operations in future.

ACKNOWLEDGMENT

Your directors acknowledge with thanks the continued support and valuable co-operation extended by the business constituents, investors, vendors, bankers and shareholders of the Company. The directors place on record their appreciation for the support from the Software Technology Parks of India, the Department of Communication and Information Technology, the Government of India, Government of Karnataka, Telangana, Maharashtra, Tamil Nadu, Reserve Bank of India, other governmental agencies, Trade Associations and NASSCOM. We also thank the government agencies of various other countries where we have our operations.

Your directors specially thank the front line employees and support staff who acted selflessly to keep the business continuity during the challenging times of COVID-19 and have supported to serve our clients and other stakeholders.

For and on behalf of the Board of Directors

New Delhi, India D S Brar

31 August 2021 CHAIRMAN

Mar 31, 2018

Dear Shareholders,

The have pleasure in presenting you the twenty seventh Annual Report of your Company for the year ended 31 March 2018.

FINANCIAL PERFORMANCE

Key aspects of the financial performance of the Company are as follows :

(Rs. million)

Particulars	CONSOLIDATED		STANDALONE
Particulars	Year ended 31 March 2018	Year ended 31 March 2017	Year ended 31 March 2018	Year ended 31 March 2017
Revenues	67,079	63,150	33,965	32,051
Expenses	55,803	52,158	24,660	23,788
Profit before taxation	11,276	10,992	9,305	8,263
Net Profit	8,375	7,916	7,398	6,250
Transfer to General Reserve	740	625	740	625

Note: The figures are rounded off to the nearest integer.

A detailed analysis of the performance is available in the section titled Management Discussion and Analysis of Financial Condition and Results of Operations, in this Annual Report.

OUTLOOK

As digital technologies have become synonymous with business transformation and dominate boardroom conversations, organizations are metamorphosing into cognitive enterprises. Artificial Intelligence (AI) and Machine Learning (ML) are contributing to the steady build-up of the âIntelligent Digital Meshâ as described in Gartnerâs Top 10 Strategic Technology Trends for the year 2018 and are expected to be the game changers of the coming decade. The ability to use AI to augment decision making, reinvent business models and ecosystems, and re-create customer experience will drive the payoff for digital initiatives in the years leading to 2025. A recent Gartner survey showed that 59% of the organizations are still gathering information to build their AI strategies, while others have already made progress in piloting or adopting AI solutions.

Today, there are over 5,000 cognitive engines, and in the next five years, they are expected to be well over a million engines. The âintelligent digital organizationsâ are poised to grow further beyond 2018. As enterprises leverage the potential of these cognitive platforms, they will experience disruptive and creative revolution at an unprecedented level. CIOs view making progress with AI initiatives as one of their top five priorities for the year 2018. By 2020, 85% of CIOs will be piloting AI programmes through a combination of buy, build and outsource models.

Mphasis is focused on architecting these new business models as the Company continually develops and adapts to the changing marketplace realities. We have architected our Front2Back^TM transformation strategy to empower our clients so that they can reimagine their digital future. Customers (C) are at the core of our âInverted Tâ strategy, an integrated domain-technology play that ensures focus on industry expertise and technology. Our expertise to leverage the exponential power of cloud and cognitive (X2C^2TM) technologies helps to provide hyper personalised (n=1) experience. Thus, C=X2C^2TM=1 aims to deliver high-impact business outcomes of speed, innovation, and cost-effectiveness along with Service Transformation.

DeepInsights^TM was developed by Next Labs, the research and innovation hub of Mphasis, a part of Mphasisâ commitment to the leverage cutting-edge technology for its clients. DeepInsightsâ¢ is a cognitive intelligence platform that enables enterprises to harness insights from data. State-of-the-art algorithms in machine learning, neural networks, deep learning, semantics, image analytics, graph theory, predictive analytics, and natural language processing power the platform. DeepInsightsâ¢ allows enterprises to engage with their customers through personalised experiences and explore newer business models that leverage the potential of anywhere, anytime on any device computing capabilities.

Mphasis launched Sparkles, an innovation lab, which offers startups a platform to showcase innovative solutions to large enterprises and incorporate such products into Mphasis solutions. Sparkles Lab is fostering a unique partnership between global enterprises and promising technology start-ups. It aims to co-create new, disruptive solutions that can have a positive impact on enterprise clientsâ business addressing their challenges. Mphasisâ vast technology experience helps tie together integration services, domain capabilities, and disruptive technologies from startups. The collaboration will not only lead to new insights into the impact of these disruptive technologies but also offer go-to-market solutions for our enterprise clients.

As a part of Sparkles, Mphasis partnered with Plug and Play Tech Center, a global startup ecosystem and venture fund specializing in the development of technology startups. Mphasis will offer mentoring support to the emerging technology startups, develop domain-focused solutions, extend access to its enterprise clients, and help them scale. We identify and nurture promising technology startups and help them to succeed.

Mphasis is geared up to achieve greater success through its C= X2C^2TM=1 framework integrated with consumer-centric Front2Back^TM and Service Transformation approach to drive a growth that is profitable, responsible, competitive, and consistent, thus re-defining the strategic direction of the Company.

DIVIDEND

Your directors are pleased to recommend a final dividend of Rs.20/- per equity share of Rs.10 each for the financial year ended 31 March 2018, subject to your approval at the ensuing Annual General Meeting.

BUYBACK

During the year under review, the Company had completed a buyback of 17,370,078 equity shares of the Company, representing 8.26% of the total paid up equity share capital of the Company, at a price of Rs.635 per share, for an aggregate amount of Rs.11,030 million from the existing shareholders of the Company, on a proportionate basis under the Tender Offer method in accordance with the provisions of Securities and Exchange Board of India (Buyback of Securities) Regulations, 1998, the Companies Act, 2013 and rules made thereunder, and all compliances have been duly completed. Consequently, the paid up equity share capital of the Company is reduced to the extent of the shares bought back by the Company.

ENTERPRISE RISK MANAGEMENT

Enterprise risk management at Mphasis encompasses practices relating to identification, assessment, monitoring, mitigation and reporting of strategic, operations, financial, compliance and information risks. The program is aligned with the business strategy of the Company and has the following objectives:

1. Make risk-informed decisions - no big mistakes;

2. Find the unexpected before it finds you - no big surprises; and

3. Improve readiness to tackle uncertainty - bring clarity

The program is bench marked to COSO guidelines and ISO 31000 and the risk assessments are reviewed by the Audit Committee on a quarterly basis.

A detailed analysis of monitored risks and their mitigation plans are available in the section titled Management Discussion and Analysis of Risks and Concerns of this Annual Report.

INTELLECTUAL PROPERTY RIGHTS

Mphasis recognizes Intellectual Property to be a key business enabler in augmenting both linear and non-linear revenues while increasing customer confidence and enterprise valuations. Mphasis has launched the service transformation initiative for the development of intellectual property assets to enable execution of projects for its Customers by way of providing seamless customer experience and faster time to market. Mphasis NEXT Labs continues to focus on research and innovation on emergent and future paradigms related to Mphasisâ focus areas through disruptive world-class innovations, thought leadership, and industry relevant solutions.

CORPORATE GOVERNANCE

A report on corporate governance along with a certificate from the Auditors confirming the compliance for the year ended 31 March 2018 as required under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 is annexed and forms part of this report.

EMPLOYEES

In FY18, Mphasis continued to maintain the focus on attracting, hiring, training, and inducting top talent of the Industry. On the hiring front, we recruited exceptional talent from the top-run engineering and management colleges across the country. To train the fresh talent, we focused on optimised training duration, exhaustive coverage of all foundation skills, greater emphasis and stress on knowledge application, continuous monitoring of trainee performance, and exposure to project environment through a real-life lab.

Mphasis continually enables and encourages its employees to be empowered, happy, and enthused about work. Our total rewards program is based on principles of equality and is designed to support the Companyâs culture of high performance and innovation. We introduced a variety of flexi-benefit choices including meal benefits for Indian employees and commuter benefits for onsite employees. We continued to base our pay philosophy and variability in compensation on âPay for Performanceâ ideology for all employees

We introduced TalentNext with the aim to transform our culture into one that values and rewards learning. TalentNext is tightly linked to our strategy of C=X2C^2TM =1, cutting across all our lines of businesses and geographies where each employee will be actively engaged and benefitted. As our first milestone on the TalentNext journey, we are implementing Oracle Cloud HCM, which will help us to achieve seamless integration of HR processes, real-time data, better decision making, and best-in-class employee experience.

We celebrated diversity within Mphasis by hosting an array of activities from financial awareness for women employees to talks with successful industry leaders to honor the achievements and contributions of women.

To propagate fun, bonding, and celebration at work, we hosted our flagship events such as Bring Your Child to Work, Bring your Parents to Work, and Mphiesta. We organised yoga, health talks, and awareness sessions to promote it as a crucial element of engagement at work. We also maintain active communities for photography and sports to provide employees a platform to express their creativity.

COMMUNITY OUTREACH

CORPORATE SOCIAL RESPONSIBILITY (CSR)

The Mphasis F1 Foundation has been working to promote equity, inclusion and empowerment of the under-represented and underserved communities much before the CSR regulation came into force. It invests in the areas of Education, Inclusion and Livelihood through non-profits and social enterprises. Its constant endeavor has been to support initiatives in the chosen focus areas of CSR, including certain unique initiatives. It has attempted to look into the solutions to disrupt the status quo and bring in fresh thinking to the existing problems of exclusion, deprivation and poverty. Mphasis F1 Foundation focuses on supporting and experimenting with initiatives that leverage technology and has supported disability inclusion and advocacy related causes since its inception. It follows an âinch wide - mile deepâ approach in all its initiatives and goes beyond focusing just on service delivery programs.

During the year, the Company spent Rs.129.12 million on the CSR expenditure as against the mandated spend of Rs.168.56 million. The Company could not spend the mandated CSR expenditure owing to delays in obtaining statutory approvals from the Government agencies for two of the flagship programmes in the areas of Education and Inclusion, which had resulted in non-disbursement of the allocated funds.

Education

One of our flagship programs in education is Arivu-Disha, in partnership with Headstreams. One of the central tenets of the program is to integrate play into learning for better learning outcomes. Among others, this includes developing play-based content, setting up play based learning environments in schools and motivating teachers to take ownership to integrate play in teaching. Over the last three years, the program has evolved continuously and has generated exceptional results. The program has reached out to more than 3000 students in Bengaluru, Hosakote and Kolar districts in Karnataka.

We also realized the need to support social entrepreneurs who are working on innovative technology-based solutions in education and accessibility. Towards this, the F1 Foundation has partnered with NASSCOM Foundation to provide seed funding and mentoring to the top ICT based solutions in the space of primary and secondary education and accessibility, allowing us to scale sustainable models for social enterprises.

Inclusion

Mphasis has partnered with the National Centre for Promotion of Employment for Disabled People (NCPEDP) on the program âMake India Accessibleâ. The focus of the program is on promoting awareness and striving for policy changes to improve accessibility for persons with disabilities. This program has been a stellar success with a lot of positive legislative changes regarding accessibility, the most significant of which is the passage of the Rights of Persons with Disabilities Act.

In keeping with our focus on promoting accessibility, we launched a program in partnership with Uber to address the acute need for accessible cabs for people with reduced mobility. Two of Uberâs new services - uberASSIST and uberACCESS - were launched in October 2017.

UberASSIST- Care-Giver Trained Driver Partners: uberASSIST is designed to provide for additional assistance for senior citizens and the disabled. Drivers are specially trained to assist riders into the vehicles and they can accommodate folding wheelchairs, walkers and scooters. Since its launch, the service has completed more than 97,000 rides in Bengaluru.

Uber ACCESS : This wheel-chair accessible vehicle service, along with specially trained drivers, will have wheel-chair accessible vehicles with a hydraulic lift for transportation. The uber ACCESS service is expected to become functional in FY19.

Livelihood

Through digital empowerment and vocational training, Mphasis strengthens local communities with digital and technological literacy and specific skills that enable youth to improve their lifetime earning potential. By scaling global technologies to the local level, we tailor-make our efforts to meet specific needs on the ground.

Mphasis-Nudge Gurukul is a program under Livelihood, which was started with the objective to alleviate poverty by providing vocational skills as well as foundational skills training to underprivileged youth in the age group of 18-25 years and place them in jobs in an urban setting along with a life-long support system. So far, in the last two years, the program has trained around 400 students from under-privileged background.

Another program under Livelihood is integrated digital clusters in partnership with DEF. The program is intended to transform the lives of artisans and the weaversâ community in Musiri, Trichy in Tamilnadu by training them on new age digital design techniques, reducing information asymmetries, fostering entrepreneurship and establishing direct market linkages. The program had an impact on more than 1,500 weaver families so far.

PREVENTION OF SEXUAL HARASSMENT

Your Companyâs Code of Business Conduct (COBC) provides broad directions as well as specific guidelines for all business transactions. The emphasis is on human rights, prevention of fraudulent and corrupt practices, avoidance of conflict of interest, prevention of sexual harassment and unyielding integrity at all times. Mphasis is committed to the provision of a workplace, free of Sexual Harassment (âSHâ) and to provide a redressal mechanism for all complaints of SH without fear or threat of reprisals in any form or manner whatsoever. The work place in context of SH is not restricted to the office but includes extended work areas such as Clientâs place, work related travel, cafeterias and Company sponsored events, to name a few.

In compliance with the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, the Company has established Internal Complaints Committees at all its locations. During FY 2018, 41 complaints were received, out of which 38 complaints were disposed of in terms of the aforesaid Act as on 31 March 2018. Outstanding complaints have since been investigated and disposed within the prescribed time limits.

ESTABLISHMENT OF VIGIL MECHANISM

Mphasis Code of Conduct requires directors, officers and employees to observe high standards of business and personal ethics in the conduct of their duties and responsibilities. As employees and representatives of the Company, they must practice honesty and integrity in fulfilling their responsibilities and comply with all applicable laws and regulations. The Company has a Whistleblower Policy to enable persons who observe unethical practices (whether or not a violation of law), to approach the Whistleblower Custodian without revealing their identity, if they choose to do so. This Policy governs reporting and investigation of allegations that are a breach of Code of Business Conduct. This Policy covers all Mphasis group companies and its affiliates and further extends to all Mphasis suppliers and contractors engaged in rendering the services.

There are various channels to report actual or suspected fraud or violation of the Companyâs Code of Conduct or Ethics policy i.e. through e-mail to the Whistle Blower office at [email protected], a written complaint can be dropped into the whistle blower drop box at the respective Companyâs location or through the Tele-Hotline. The Chairman of the Audit Committee is the Ombudsperson under Whistleblower Policy. A complaint can be reported to the Ombudsperson ([email protected]) where the complainant feels that the complaint has not been addressed or actioned in a timely and appropriate manner or if the complaint is against any member of the Whistleblower Committee or the Executive Council.

The Whistleblower policy is published on the Mphasis website making it accessible to all. Mphasis will keep the whistleblowerâs identity confidential and prohibits retaliation against a whistleblower with the intent or effect of adversely affecting the terms or conditions of employment (including but not limited to, threats of physical harm, loss of job, punitive work assignments, or impact on salary or wages).

DIRECTORS AND KMP

The members have, at the 24^th Annual General Meeting held on 9 September 2015, appointed Mr. Narayanan Kumar as an Independent Director of the Company to hold office for a term of 5 (five) consecutive years with effect from 1 April 2014. Accordingly, the current term of Mr. Kumar expires on 31 March 2019. In terms of Section 149 of the Companies Act, 2013, Mr. Kumar is eligible for being appointed as an Independent Director for another term of 5 consecutive years effective 1 April 2019. The Company has received a Notice in writing from a member proposing his re-appointment as an Independent Director of the Company for another term of five consecutive years effective 1 April 2019.Pursuant to the recommendation of the Nomination and Remuneration Committee, the Board of Directors of the Company at its meeting held on 10 May 2018, approved, subject to the approval of the members at the ensuing Annual General Meeting, the re-appointment of Mr. Kumar as an Independent Director for another term of five consecutive years commencing from 1 April 2019.

In accordance with Section 152 of the Companies Act, 2013, Mr. Amit Dalmia and Mr. David Lawrence Johnson will retire by rotation at this Annual General Meeting and are eligible for re-election.

The profiles of the present directors including the directors seeking re-appointment at the ensuing Annual General Meeting are provided in the Annual Report.

The Board recommends the re-appointment of the above directors for approval of the members.

During the year, Mr. A Sivaram Nair, EVP, Company Secretary, General Counsel and Ethics Officer of the Company resigned from the services of the Company with effect from 31 October 2017. The Board of Directors places on record its appreciation for the services rendered by Mr. Nair during his tenure with the Company.

Consequent to the resignation of Mr. Nair, the Board on the recommendation of the Nomination and Remuneration Committee, appointed Mr. Subramanian Narayan as Company Secretary and Compliance Officer of the Company effective 1 November 2017.

STATUTORY AUDITORS

In terms of the Companies Act, 2013, M/s. S R Batliboi & Associates LLP, Chartered Accountants, were appointed as the Statutory Auditors of the Company for a term of three years, from the conclusion of twenty fourth Annual General Meeting till the conclusion of twenty seventh annual general meeting. Accordingly, the term of M/s. S R Batliboi & Associates LLP would be completed upon the conclusion of this Annual General Meeting. As per the provisions of the Companies Act, 2013, M/s. S R Batliboi & Associates LLP, are not eligible for re-appointment. The Board places on record its appreciation for the services rendered by M/s. S R Batliboi & Associates LLP during their tenure as the Statutory Auditors of the Company.

The Board of Directors, after considering the recommendations of the Audit Committee, at its meeting held on 10 May 2018 has recommended the appointment of M/s. B S R & Co. LLP, Chartered Accountants, as the Statutory Auditors of the Company for a period commencing from the conclusion of this Annual General Meeting till the conclusion of the thirty second Annual General Meeting.

The Company has received a certificate from M/s. B S R & Co. LLP, Chartered Accountants to the effect that the appointment, if made, would be in accordance with limits specified under the Companies Act, 2013. As required under SEBI Regulations, they have confirmed that they hold valid certificate issued by the Peer Review Board of the Institute of Chartered Accountants of India.

A resolution proposing their appointment, from the conclusion of this Annual General Meeting till the conclusion of the thirty second Annual General Meeting of the Company, at a remuneration to be fixed by the Audit Committee and/or Board of Directors and billed progressively, is submitted at the Annual General Meeting for approval of the members. The Board recommends the appointment of M/s. B S R & Co. LLP, Chartered Accountants as the Statutory Auditors, for approval of the members.

SECRETARIAL AUDITOR

The Board had in its meeting held on 24 January 2018 appointed Mr. S P Nagarajan, Practicing Company Secretary, as the Secretarial Auditor of the Company for the financial year ended 31 March 2018. As required under the Section 204 of the Companies Act, 2013, the secretarial audit for the financial year 2018 has been concluded and the Secretarial Audit Report in Form No. MR-3 is annexed and forms part of the Report. The audit report does not contain any qualification, reservation or adverse remarks.

DIRECTORSâ RESPONSIBILITY STATEMENT

Information as per Section 134(5) of the Companies Act, 2013, is annexed and forms part of the Report.

Further, based on the confirmation and certificates received, the Board of Directors confirms that the Company has complied with the Secretarial Standards on the Board Meetings issued by the Institute of Company Secretaries of India, as applicable to the Company, during the financial year ended 31 March 2018.

BUSINESS RESPONSIBIHTY REPORT (BRR)

Your Companyâs business responsibility ingrains the spectrum of nine principles of National Voluntary Guidelines issued by the Ministry of Corporate Affairs, Government of India, along with their key elements. This is enabled by a suite of frameworks, governance, social objectives, codified culture, charters, policies, code of conduct and management systems integrated with the business process. Your Company reported its performance for the financial year 2018 as per the BRR framework, describing initiatives taken from an environmental, social and governance perspective. A report detailing the business responsibility practices for the financial year ended 31 March 2018 is uploaded on the website of the Company at www.mphasis.com and forms part of the Annual Report.

OTHER DISCLOSURES

SUBSIDIARIES

As on 31 March 2018, your Company has subsidiaries in Australia, Belgium, Canada, France, Germany, India, Ireland, Mauritius,Netherlands, Peopleâs Republic of China, Philippines, Poland, Singapore, the United Kingdom and the United States of America.

The latest financial statements of the subsidiaries including the audited financial statements, wherever such accounts are audited, are available for inspection of the members at the Registered Office of the Company and are also being uploaded on the website of the Company, www.mphasis.com. A translated copy of the financial statements which are not in English language have been provided where such accounts are in the foreign language.

A copy of the above financial statements shall be sent to the members upon request.

EMPLOYEES STOCK OPTION PLANS AND RESTRICTED STOCK UNIT PLANS

Your Companyâs Employee Stock Option Plans (ESOP) are administered through the Mphasis Employees Equity Reward Trust and the Restricted Stock Unit Plans (RSUs) are administered through the Mphasis Employees Benefit Trust. Further, all the plans are administered by the ESOP Compensation Committee of the Board.

Your Company currently has two stock option plans in operation, namely, Mphasis Employees Stock Option Plan - 1998 (ESOP 1998) (Version I and II) and Mphasis Employees Stock Option Plan - 2016 (ESOP 2016), in addition to the Mphasis Restricted Stock Unit Plan - 2014 (RSU 2014) and Mphasis Restricted Stock Unit Plan - 2015 (RSU 2015). During the year the Company has allotted 213,180 shares pursuant to the exercise of stock options and RSUs under ESOP 1998, ESOP 2016, RSU 2014 and RSU 2015 Plans.

The information to be disclosed as per Securities and Exchange Board of India (Share based Employee Benefits) Regulations 2014, for the financial year ended 31 March 2018 is annexed to the Boardâs report and also uploaded on the website of the Company at www.mphasis.com.

DIRECTORSâ INTEREST AND RELATED PARTY DISCLOSURES

No director was interested in any contracts or arrangements existing during or at the end of the year that was significant in relation to the business of the Company. No director holds any shares or stock option in the Company as on 31 March 2018 except Mr. Nitin Rakesh, Chief Executive Officer and Executive Director, who holds 909,000 stock options. None of the directors had any other interest in the share capital of the Company as at 31 March 2018. All the transaction entered into with Related Parties as defined under Section 2(76) of the Companies Act, 2013 and Regulation 23 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, during the financial year were in the ordinary course of business and are at an armâs length basis. The Company has a policy for dealing with Related Party Transactions which has been uploaded on the Companyâs website at www.mphasis.com.The particulars of the contract or arrangements with the Related Parties in form AOC-2 is annexed and forms part of this report.

SHARE CAPITAL

The Issued Share Capital of the Company as on 31 March 2018 stood at Rs.1932.60 million and Reserves and Surplus stood at Rs.52,885 million (consolidated basis) and Rs.37,141 million (standalone basis) respectively.

PARTICULARS OF EMPLOYEESâ REMUNERATION

The statement containing particulars of employees as required under Section 197(12) of the Companies Act, 2013 read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014,is given in an annexure and forms part of this report.

However, in terms of Section 136(1) of the Companies Act, 2013, the report is being sent to the members excluding the aforesaid Annexure and shall be available for inspection of the members, till the date of the ensuing Annual General Meeting, at the registered office of the Company during working hours. Any Member interested in obtaining a copy of the Annexure may write to the Company Secretary at the Registered Office of the Company.

In terms of proviso to Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, particulars of the employees posted and working in a country outside India is not circulated to the members, but the same shall be filed with the Registrar of Companies while filing the Financial Statements and Boardâs Report.

EXTRACT OF ANNUAL RETURN

The extract of the Annual Return as at 31 March 2018 in Form MGT-9 is annexed and forms part of this Report.

PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS

The particulars of loans, guarantees and investments under Section 186 of the Companies Act, 2013 are disclosed in the Financial Statements of the Company.

DEPOSITS

Your Company has not accepted any deposits from the public and as such no principal or interest was outstanding as on the date of the Balance Sheet.

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

A. CONSERVATION OF ENERGY :

Your Companyâs operations involve low energy consumption. Mphasis is committed to conserving energy and efficient use of energy. The key facilities have been awarded a 5 star, 4 star or 3 star rating by the Bureau of Energy Efficiency, Government of India (BEE) in the last five years. The rating is a nationally accepted industry benchmark and Mphasis in India is certified by BEE. Your Company has been awarded by the Confederation of Indian Industry, an Environment Health and Safety (EHS) award with a rating 3 for one of its facilities in Bengaluru for its sustainable initiatives.

The Company has installed lighting energy savers and LED light fixtures, occupancy sensors, enthalpy system, automatic operation of AC system at data center to minimize power consumption and solar inverters at certain facilities to promote sustainable energy usage. The carbon foot-print is monitored every month. One of the Companyâs facilities in Bengaluru has been certified LEED (Leadership in Energy and Environmental Design) Gold by United States Green Building Council (USGBC).

The Company has also installed energy consumption monitoring tools to monitor the energy consumption and the carbon foot-print at each location. The data collected by the tool helps the management in monitoring and optimizing the energy consumption at the locations. Your Company is one of the few IT companies in India who have implemented captive renewable energy generation in multi-locations as part of its sustainability initiatives.

B. TECHNOLOGY ABSORPTION :

Particulars relating to technology absorption are not applicable.

SIGNIFICANT AND MATERIAL ORDERS

There were no significant material orders passed by the Regulators or the Courts, Tribunals impacting the going concern status and the Companyâs operations in future.

ACKNOWLEDGEMENT

Your Directors acknowledge the continued support and valuable co-operation extended by the business constituents, investors, vendors, bankers and shareholders of the Company. The directors place on record their appreciation for the support from the Software Technology Parks of India, the Department of Communication and Information Technology, the Government of India, Government of Karnataka, Telangana, Maharashtra, Tamil Nadu, Reserve Bank of India, other governmental agencies, trade associations and NASSCOM. We also thank the government agencies of various other countries where we have our operations.

Your Directors would like to place on record their appreciation for the employees of the Company and its subsidiaries, at all levels, for their hard work and commitment. Their dedication and competence have ensured that the Company continues to be a significant and leading player in the industry.

For and on behalf of the Board of Directors

Bengaluru Davinder Singh Brar

10 May 2018 Chairman

Mar 31, 2017

BOARDâS REPORT

Dear Shareholders,

We have pleasure in presenting to you the twenty sixth Annual Report of your Company for the year ended 31 March 2017.

FINANCIAL PERFORMANCE

Key aspects of the financial performance of the Company are tabulated below:

(Rs, million)

Particulars	CONSOLIDATED		STANDALONE
Particulars	Year ended 31 March 2017	Year ended 31 March 2016	Year ended 31 March 2017	Year ended 31 March 2016
Revenues	63,150	62,721	32,051	30,818
Expenses	52,158	53,822	23,788	24,747
Profit before taxation	10,992	8,899	8,263	6,071
Net Profit	7,916	6,315	6,250	4,571
Transfer to General Reserve	625	458	625	458

Note: the figures are rounded off to the nearest integer.

A detailed analysis of performance is available in the section headed Management Discussion and Analysis of Financial Condition and Results of Operations in this Annual Report.

OUTLOOK

Future of enterprises powered by Cloud and Cognitive Computing.

The traditional services market has deaccelerated over the past few years, but underneath there is a new segment that is beginning to emerge: digital platforms. Here there is substantial growth of 25% to 30% and this is creating significant new opportunity across several dimensions including cloud, analytics, mobile, IoT and whole list of new digital opportunities. Digitization is changing industry boundaries and dynamics; growth is shifting; disruption is accelerating.

Thanks to the current pace of innovation, a prodigious wave of ecosystem revolution anchored by digitization, machine learning and life sciences is plotting the inflection point of technology explosion. Robotics, autonomous, cognitive computing, internet of things and predictive data analytics is not a futuristic strategy, it is the current reality. This wave of technologies are poised to re-create industries and customer experience as they move from periphery to mainstream revolutionizing how we live, work or do business.

Cloud technologies coupled with cognitive computing capabilities such as Robotic Process Automation (RPA), Artificial Intelligence (AI), Natural Language Processing (NLP) have been successfully embedded and scaled in multiple organizations. These are being designed around the company''s existing value drivers and strengths, including the product portfolio, technical competence and customer proximity. Projects and partnerships too are designed with the linked objectives of digitizing core processes, upgrading IT platforms and conquering new business terrain.

As our customers embark on their digital transformation journey, Mphasis is focused on future proofing them with cognitive solutions on cloud that enable agile processes and predictive analytics resulting in competitive advantage. Even as the organization is building the new capabilities that digital businesses require, it must deploy its existing capabilities very differently in order to achieve scale and speed. The challenge is to balance all of the conflicting demands.

A good case in point is the complete Digital Transformation journey (Strategy to Implementation) enabling a Retail Insurance company to achieve measurable business value - 3x Revenue by embracing Customer Centricity and Fast IT. This was significant milestone for Mphasis as it was the:

- First end to end Digital Marketing Program;

- First Program for Digital Transformation Consulting Services;

- Digital Maturity Index & Design Thinking; and

- Aligned to Mphasis'' Cloud and Cognitive Strategy - Cloud and Cognitive Cloud native, Cognitive, API-fication and DevOps.

Mphasis launched Mphasis NEXT Labs for Cloud to focus on emergent and future paradigms related to Cloud Computing. Mphasis NEXT Labs for Cloud would focus on creation of Intellectual Property, industry leading innovations and thought leadership to open new strategic opportunities and enable differentiation in the Cloud Computing services space. We also acquired an âAdvanced Consulting Partner'' status with Amazon Web Services (AWS), just one level below our next goal - Premier Partner!

To leverage the start-up ecosystem and bring disruptive solutions to customers, Mphasis introduced âSparks'' - a Digital Acceleration Program in collaboration with FinTech startups globally. The collaboration with industry leaders in RPA drives technology-enabled business process services and adopt digital automation capabilities.

Similarly, in the cognitive space, we launched Next Anglesâ¢ Cognitive Regulatory Compliance Suite, a smart data and artificial intelligence based software that reduces cost and workflow burdens for compliance personnel and enables new compliance professionals to work like experts.

Through our new majority shareholder - Blackstone, we are finding synergies with its group companies across multiple areas of operations and most importantly, by putting forward a compelling value proposition to translate them into customers. We also see potential with DXC Technology, the IT services company, created by the merger of CSC and the Enterprise Services business of Hewlett Packard Enterprise. Mphasis has been working with EDS and the legacy HP Enterprise Services for over ten years now.

Mphasis is poised to achieve higher levels of operational efficiency while becoming effective Cloud services and Cognitive computing business. Our services would help clients realize higher levels of automation and convert core IT activities into managed services that drive innovation and reduce operational costs. Mphasis will also assist in modernizing legacy systems and creating core platforms, processes and infrastructure that support digital business across the extended enterprise and deliver higher levels of performance.

DIVIDEND

Your directors are pleased to recommend a final dividend ofRs,17/- per equity share ofRs,10/- each for the financial year ended 31 March 2017, subject to your approval at the ensuing Annual General Meeting.

BUY-BACK

The Board of Directors and the shareholders of the Company, during the year, approved Buyback of up to 17,370,078 Equity Shares of the Company, representing 8.26% of total paid-up equity share capital of the Company, at a price ofRs,635/- per equity share payable in cash for an aggregate amount of up toRs,11,030 million (Rupees Eleven Thousand and Thirty Million only), excluding any expenses incurred or to be incurred for the Buyback, on a proportionate basis under the tender offer method in accordance with the provisions contained in the Securities and Exchange Board of India (Buy Back of Securities) Regulations, 1998 and the Companies Act, 2013 and rules made there under.

Further to the above, the Company has dispatched the letter of offer to the eligible shareholders, holding shares as at the record date i.e. 31 March 2017, after obtaining necessary approvals and complying with the necessary statutory formalities. The Buyback offer opened on 12 May 2017 and closed on 25 May 2017. The Company shall make payment to shareholders for the accepted tenders as per the Securities and Exchange Board of India (Buy Back of Securities) Regulations, 1998.

ENTERPRISE RISK MANAGEMENT

The Company has an elaborate Enterprise Risk Management (ERM) Programme to proactively identify, assess, mitigate, monitor and report risks across the enterprise. ERM at Mphasis seek to minimize the adverse impact of the risks on our business objectives through risk assessment and mitigation while providing reassurance to Customers, Shareholders, Employees, etc. The updates on the development and implementation of the ERM Programme are reviewed by the Audit Committee on a quarterly basis. A detailed analysis on the formulation, implementation and monitoring of the Risk Management Plan is available in the section headed Management Discussion and Analysis of Risks and Concerns.

INTELLECTUAL PROPERTY RIGHTS

Mphasis recognizes Intellectual Property to be a key business enabler. Your Company has been leveraging its Intellectual Property Assets for delivering differentiated value offerings to its customers and deliver next-gen experiences. During the year, NEXT Labs has filed two patent applications in the area of digital and analytics. Mphasis NEXT Labs focuses on research and innovation on emergent and future paradigms, through disruptive world class innovations, thought leadership and industry- relevant solutions, thereby building an Intellectual Property asset portfolio for the Company.

CORPORATE GOVERNANCE

A report on Corporate Governance along with a certificate from the Auditors confirming the compliance for the year ended 31 March 2017 as required under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 is annexed and forms part of this report.

EMPLOYEES

In FY''17, Mphasis made significant strides in its quest to attract, hire, train and induct best-in-class talent. In line with our culture of Experimentation and Customer Centricity, we ensured to not only hire exceptional talent but also nurture them. On the hiring front, Mphasis recruited exceptional talent from the top run engineering colleges across the country and on the training front, the foundation program was entirely revamped to suit the customer needs. This included some of the salient features as optimized training duration, exhaustive coverage of all foundational skills, greater emphasis and stress on knowledge application, continuous monitor of trainee performance and exposure to Project environment through Real-life Lab.

As we maintained our focus on fresh talent, your Company is also committed to ensuring a workforce that is empowered, happy and enthused about work. Our total rewards programs reflects our egalitarian philosophy and is designed to support the company''s culture of high performance and innovation. A variety of benefit choices were introduced last year to assist employees with life stage decisions and optimize their finances through better tax planning options. âPay for Performance'' continues to be the underlying philosophy for variability in compensation. This was further extended to all managerial levels (for existing employees) and all new joiners in the Americas, ensuring an inclusive and accountable work environment.

As Mphasis completed 25 years in the business, we looked to give back to society in ways most meaningful to employees - who are the reason for our growth. The launch of the âMphasis Care Policy'' for tenured employees is a testimony to this. Eligible employees can now apply for interest free loans. Mphasis will also partake in providing educational assistance to deserving children of employees.

At Mphasis, we also believe in creating a stimulating workplace, one which creates more avenues for employees to break the monotony at work. In its true sense we have been steadily bringing an element of Care and a Sense of pride by driving focused engagement initiatives from Rewards to Diversity, from Fun at workplace to Health, from Interest Group Communities to Communications.

âThe beauty of the world lies in the diversity of its people'' and at Mphasis, we believe in the same. Every year we celebrate this diversity and strengthen it further by hosting an array of activities from financial awareness for women employees to Leader talks with successful Leaders from the Industry and many such initiatives to honour the achievements and contributions of women as showcased by them to inspire and to be rivalled.

Mphasis also hosts mega flagship events such as Bring Your Child to Work, Bring your Parents to Work and Mphiesta which are consortium of fun, bonding and celebration at work. Our focus on health has been paramount and our endeavour through initiatives like Yoga, Health Talks and Awareness Sessions is to bring it in as a crucial element of engagement at work. We also maintain active communities such as Photography and Sports to keep the enthusiasm and the novelty alive at workplace.

COMMUNITY OUTREACH

CORPORATE SOCIAL RESPONSIBILITY

As front-runners of innovative solutions, Mphasis'' efforts in Corporate Social Responsibility hone in on these strengths â bringing âdisruptive'' technologies into the realm of Education, Livelihood and Inclusion covering the following. By adopting tech-centric models to generate and scale social impact, Mphasis strives to propel the inclusion and empowerment of underserved and underrepresented communities. The programs expand across the organization''s geographies of operation as well as disaster affected regions in India. The Company has a CSR Policy as required under the provisions of law and the same is hosted on the website of the Company; www.mphasis.com . The CSR Committee of the Board approves the CSR Budget and monitors the implementation of the CSR Policy. Our CSR activities are carried out through Mphasis F1 Foundation.

Education

Mphasis'' CSR projects in the space of education endeavors to drive technology-led innovation for the Base of the Pyramid (BoP) population, by developing solutions to address gaps across the education value chain.

Headstreams'' âArivu-Dishaâ Program and NASSCOM Foundation''s Social Innovation Award for Education are the flagship programs supported by the Company under the ambit of Education. Through seed funding and mentorship, the award winning program partners strive to improve the quality of schooling among marginalized communities using tech-centric models of execution. In 2016, âArivu-Dishaâ was awarded the NASSCOM Social Innovation Award for Education for its innovative approach to improving learning outcomes among government school children.

Livelihood

Mphasis'' objective within the skilling ecosystem is to leverage technology to empower youth with employable skills required to break the cycle of poverty in a single generation. The Company''s livelihood programs harness digital tools to foster job security, reduce information asymmetries and propel sustainable socio- economic progress among underserved communities.

Flagship programs in the livelihood space include Mphasis-DEF Integrated Digital Clusters, SkillTrain Mobile App and Mphasis-Nudge Gurukul and are executed in partnership with Digital Empowerment Foundation, SkillTrain, Villgro Innovations Foundation and Nudge Foundation respectively. SkillTrain won the Manthan Award in e-Education 2016 for its inventive approach to ensuring digital inclusion in skilling.

Inclusion

As pioneers in the field of Disability Inclusion, Mphasis works towards enhancing Accessibility, Universal Design and Digital and Mobility solutions for persons with disabilities. Additionally, the Company engaged in rehabilitation of families affected by floods as well as environmental rejuvenation of lakes.

Flagship programs under the domain of Inclusion are executed in collaboration with National Centre for the Promotion of Employment for Disabled People (NCPEDP), Indian Institute of Management- Bangalore (IIMB), United Way of Bengaluru and Habitat for Humanity. The âMake India Accessible'' Campaign launched in collaboration with NCPEDP was instrumental in the enactment of the Rights of Persons with Disabilities (RPWD) Act, 2016.

During the year, the Company spent INR 133.56 Million as against mandated spend ofRs,129.80 Million.

PREVENTION OF SEXUAL HARASSMENT

Your Company''s Code of Business Conduct (COBC) provides broad directions as well as specific guidelines for all business transactions. The emphasis is on human rights, prevention of fraudulent and corrupt practices, avoidance of conflict of interest, prevention of Sexual Harassment and unyielding integrity at all times. Mphasis is committed to the provision of a workplace, free of Sexual Harassment (âSHâ) and to provide a redressal mechanism for all complaints of SH without fear or threat of reprisals in any form or manner whatsoever. The work place in context of SH is not restricted to the office but includes extended work areas such as Client''s place, work related travel, cafeterias and Company sponsored events, to name a few.

In compliance with the Sexual Harassment of women at workplace (Prevention, Prohibition and Redressal) Act, 2013, the Company has established Internal Complaints Committees at all its locations. During FY 2016-17, 39 complaints were received, out of which 38 complaints were disposed off in terms of the aforesaid Act as on 31 March 2017. Complaint outstanding has since been investigated and disposed within the prescribed time limits.

ESTABLISHMENT OF VIGIL MECHANISM

Mphasis Code of Conduct requires directors, officers and employees to observe high standards of business and personal ethics in conduct of their duties and responsibilities. As employees and representatives of the Company, they must practice honesty and integrity in fulfilling their responsibilities and comply with all applicable laws and regulations. The Company has a Whistleblower Policy to enable persons who observe unethical practices (whether or not a violation of law), to approach the Whistleblower Custodian without revealing their identity, if they choose to do so. This Policy governs reporting and investigation of allegations that are breach of Code of Business Conduct. This Policy covers all Mphasis group companies and its affiliates and further extends to all Mphasis suppliers and contractors engaged in rendering the services.

There are various channels to report actual or suspected fraud or violation of the Company''s Code of Conduct or Ethics policy i.e. through e-mail to the Whistle Blower office at [email protected], written complaint can be dropped into the Whistle blower drop box at the respective Company''s location and through Telephone where a complaint can be left at the Whistle blower Hotline. The Chairman of the Audit Committee is the Ombudsperson under Whistle blower Policy. A complaint can be reported to the Ombudsperson ([email protected]) where the Complainant feels that the complaint has not been addressed or actioned in a timely and appropriate manner or if the complaint is against any member of the Whistle blower Committee or the Executive Council.

The Whistle blower policy is published on the Mphasis website making it accessible to all. Mphasis will keep the whistle blower''s identity confidential and prohibits retaliation against a whistle blower with the intent or effect of adversely affecting the terms or conditions of employment (including but not limited to, threats of physical harm, loss of job, punitive work assignments, or impact on salary or wages).

DIRECTORS

The Board of Directors of the Company at its meeting held on 27 January 2017, appointed Mr. Nitin Rakesh as an additional director on the Board and further as the Chief Executive Officer and Whole time Director of the Company for a period of 5 years with effect from 29 January 2017. The appointment was subject to approval of the shareholders of the Company at the ensuing Annual General Meeting. Prior to joining Mphasis, Mr. Nitin Rakesh was the Chief Executive Officer and President of Syntel (a NASDAQ listed IT Services Company). Mr. Nitin Rakesh has a proven track record of delivering profitable growth at industry leading operating margins. The Board is confident that his diverse expertise and deep domain experience will benefit the Company in the times ahead. The Company has received a notice from a member under Section 160 of the Companies Act, 2013, proposing his candidature to the office of director. Accordingly, necessary resolutions seeking approval of the members for appointing Mr. Nitin Rakesh as a director and further as the CEO and Whole time Director of the Company is placed before the members for their approval.

Mr. Nitin Rakesh took over as the Chief Executive Officer and Whole time Director from Mr. Ganesh Ayyar, whose tenure expired on 28 January 2017. The Board places on record its appreciation for the services rendered by Mr. Ganesh Ayyar during his tenure.

In accordance with section 152 of the Companies Act, 2013, Mr. Dario Zamarian and Mr. Paul James Upchurch will retire by rotation and are eligible for re-election.

The profiles of the present directors including the directors seeking appointment at the ensuing Annual General Meeting are provided in the Annual Report.

The Board recommends the appointment of the above directors for approval of the members.

STATUTORY AUDITORS

S R Batliboi & Associates LLP (registration No.101049W), Chartered Accountants, were appointed as the statutory Auditors of the Company under Section 139 of the Companies Act, 2013, for a term of 3 years, from the conclusion of Twenty Fourth Annual General Meeting till the conclusion of Twenty Seventh Annual General Meeting subject to annual ratification.

The Company has received a certificate from the Statutory Auditors to the effect that the ratification of appointment, if made, would be in accordance with limits specified under the Companies Act, 2013. As required under SEBI Regulations, the Auditors have confirmed that they hold valid certificate issued by the Peer Review Board of the Institute of Chartered Accountants of India.

A resolution proposing ratification of their appointment, from the conclusion of this Annual General Meeting till the conclusion of the next Annual General Meeting of the Company, at a remuneration to be fixed by the Board of Directors and billed progressively, is submitted at the Annual General Meeting for approval of the members.

SECRETARIAL AUDITOR

The Board had in its meeting held on 31 January 2017 approved appointment of Mr. S P Nagarajan, Practicing Company Secretary, as the Secretarial Auditor of the Company for the financial year ended 31 March 2017. As required under the provisions of Section 204 of the Companies Act, 2013, the secretarial audit for Financial year 2017 has been concluded and the Secretarial Audit Report in Form No. MR-3 is annexed and forms part of the Report.

DIRECTORSâ RESPONSIBILITY STATEMENT

Information as per Section 134(5) of the Companies Act, 2013, is annexed and forms part of the Report.

BUSINESS RESPONSIBILITY REPORT

Your Company''s business responsibility ingrains the spectrum of nine principles of National Voluntary Guidelines issued by the Ministry of Corporate Affairs, Government of India, along with their key elements. This is enabled by suite of frameworks, governance, social objectives, codified culture, charters, policies, code of conduct and management systems integrated with the business process. A report detailing the business responsibility practices for the year ended 31 March 2017 is uploaded on the website of the Company at www.mphasis.com and forms part of the Annual Report.

OTHER DISCLOSURES

SUBSIDIARIES

As on 31 March 2017, your Company has subsidiaries in Australia, Belgium, Canada, France, Germany, India, Ireland, Mauritius, Netherlands, People''s Republic of China, Republic of Indonesia, Philippines, Poland, Singapore, the United Kingdom and the United States of America.

In accordance with section 129 (3) of the Companies Act 2013 the Consolidated Financial Statements are attached to the Annual Report. Further, a statement containing salient features of the financial statements of subsidiaries in the prescribed Form AOC-1 is annexed to this Report. The statements provides the performance and financial position of each of the subsidiaries.

The latest audited accounts of the subsidiary Companies are available for inspection of the members at the Registered Office of the Company and is also being uploaded on the website of the Company, www.mphasis.com. A copy of the same shall be sent to the members upon request.

EMPLOYEES STOCK OPTION PLANS AND RESTRICTED STOCK UNIT PLANS

Your Company''s Employee Stock Option Plans (ESOPs) are administered through the Mphasis Employees Equity Reward Trust (earlier BFL Employees Equity Reward Trust) and the Restricted Stock Unit Plans (RSUs) and Mphasis Employees Stock Option Plan - 2012 (ESOP 2012 Plan) are administered through Mphasis Employees Benefit Trust. Further, all the plans are administered by the ESOP Compensation Committee of the Board.

The shareholders at its Annual General Meeting held on 4 November 2016 approved the Mphasis Employee Stock Option Plan - 2016 (ESOP 2016) with the underlying shares not exceeding 8.4 million equity shares. The Company had obtained in-principle approval for the Mphasis Employee Stock Option Plan - 2016 (ESOP 2016) from BSE Limited on 21 November 2016 and The National Stock Exchange of India Limited on 9 November 2016. Further to this, the ESOP Compensation Committee had granted 3,261,900 stock options to eligible employees on 4 January 2017 at a price ofRs,500 per option.

Your Company currently has three stock option plans in operation, namely, Mphasis Employees Stock Option Plan - 1998 (ESOP 1998 Plan) (Version I and II), Mphasis Employees Stock Option Plan - 2004(ESOP 2004) and Mphasis Employee Stock Option Plan - 2016 (ESOP 2016), in addition to Mphasis Restricted Stock Unit Plan - 2014 (RSU 2014) and Mphasis Restricted Stock Unit Plan - 2015 (RSU 2015).

During the year, 2,960 shares were issued pursuant to exercise of options under ESOP 1998 Plan Version II, 408 shares were issued pursuant to exercise of options under ESOP 2004 Plan and 115,975 shares were transferred under ESOP 2012 Plan against exercise of options by the employees. Further, pursuant to exercise applications made by the employees, the Company has issued 226,595 equity shares towards exercise of RSUs under RSU 2014 Plan and transferred 218,900 equity shares pursuant to exercise of RSUs under RSU 2015 Plan.

The information to be disclosed as per Securities and Exchange Board of India (Share based Employee Benefits) Regulations, 2014, for the year ended 31 March 2017 is annexed to the Board''s Report and also uploaded on the website of the Company at www.mphasis.com.

DIRECTORS'' INTEREST AND RELATED PARTY DISCLOSURES

No director was interested in any contracts or arrangements existing during or at the end of the year that was significant in relation to the business of the Company. No director holds any shares or stock option in the Company as on 31 March 2017 except Mr. Nitin Rakesh, Chief Executive Officer and Whole time Director, who holds 6,55,000 Stock Options. None of the directors had any other interest in the share capital of the Company as at 31 March 2017. All the transaction entered into with related parties, as defined under Section 2(76) of the Companies Act, 2013 and Regulation 23 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, during the financial year were in the ordinary course of business and are at arm''s length basis. The Company has a policy for dealing with Related Party Transactions which has been uploaded on the Company''s website at www.mphasis.com .The particulars of the contract or arrangements with the Related Parties in form AOC-2 is annexed and forms part of this report.

SHARE CAPITAL

The Issued Share Capital of the Company as on 31 March 2017 stood atRs,2104.24 million and Reserves and Surplus stood atRs,59,420 million (consolidated basis) andRs,44,849 million (standalone basis) respectively.

PARTICULARS OF EMPLOYEES'' REMUNERATION

The statement containing particulars of employees as required under Section 197(12) of the Companies Act, 2013 read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is given in the annexure and forms part of this report.

However, in terms of Section 136(1) of the Companies Act, 2013, the report is being sent to the members excluding the aforesaid Annexure and shall be available for inspection of the members till the date of the Annual General Meeting at the registered office of the Company during working hours. Any Member interested in obtaining a copy of the Annexure may write to the Company Secretary at the Registered Office of the Company.

EXTRACT OF ANNUAL RETURN

The extract of the Annual Return as at 31 March 2017 in Form MGT-9 is annexed and forms part of the Report.

PARTICULARS OF LOANS, GUARANTEE AND INVESTMENTS

The particulars of Loans, Guarantees and Investments under Section 186 of the Companies Act, 2013 are disclosed in the financial statements of the Company.

DEPOSITS

Your Company has not accepted any deposits from the public and as such no amount of principal or interest was outstanding as on the date of the Balance Sheet.

PARTICULARS REGARDING CONSERVATION OF ENERGY. TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO

A. CONSERVATION OF ENERGY :

Your Company''s operations involve low energy consumption. Mphasis is committed to conserving energy and efficient usage of energy. The key facilities have been awarded 5 star, 4 star or 3 star rating by Bureau of Energy Efficiency, Government of India (BEE) in the last 5 years. The rating is nationally accepted industry benchmark and Mphasis in India is certified by BEE. Your Company has been awarded by Confederation of Indian Industry an Environment Health and Safety (EHS) award with a rating 3 for one of its facility at Bengaluru appreciating its sustainable initiatives.

The Company has installed lighting energy savers and LED light fixtures, occupancy sensors, enthalpy system, automatic operation of AC system at data centers to minimize power consumption and solar inverters at certain facilities to promote sustainable energy usage. The carbon foot prints are monitored on a monthly basis and reported to Carbon Disclosure Project (CDP), an international, not-for-profit organization providing the only global system for companies and cities to measure, disclose, manage and share vital environmental information. One of the Company''s facility at Bengaluru has been certified LEED (Leadership in Energy and Environmental Design) Gold by United States Green Building Council (USGBC).

The Company has also installed energy consumption monitoring tool to monitor the energy consumption and the carbon foot prints at each location. The data collected by the tool helps the management in monitoring and optimize the energy consumption at the locations. Our Company is one of the few IT companies in India who have implemented captive renewable energy generation in multi-locations as part of its sustainability initiatives.

B. TECHNOLOGY ABSORPTION :

Particulars relating to technology absorption are not applicable.

C. FOREIGN EXCHANGE EARNINGS OR OUTGO :

(Rs, million)

(a)	Foreign Exchange earned in terms of actual inflows during the year	25,017
(b)	Foreign Exchange outgo in terms of actual outflows during the year	5,581

D. DETAILS OF SIGNIFICANT AND MATERIAL ORDERS:

There were no significant material orders passed by the Regulators or the Courts, Tribunals impacting the going concern status and companies operations in future.

ACKNOWLEDGEMENT

Your directors acknowledge with thanks the continued support and valuable co-operation extended by the business constituents, investors, vendors, bankers and shareholders of the Company. The directors place on record their appreciation for the support from the Software Technology Parks of India, the Department of Communication and Information Technology, the Government of India, Government of Karnataka, Telangana, Maharashtra, Tamil Nadu, Reserve Bank of India, other governmental agencies, Trade Associations and NASSCOM. We also thank the government agencies of various other countries where we have our operations.

Your directors would like to place on record their appreciation for the employees of the Company and its subsidiaries, at all levels, for their hard work and commitment. Their dedication and competence has ensured that the Company continues to be a significant and leading player in the industry.

For and on behalf of the Board of Directors

Bengaluru Davinder Singh Brar

25 May 2017 Chairman

Mar 31, 2016

Dear Shareholders,

The have pleasure in presenting to you the twenty fifth Annual Report of your Company for the year ended 31 March 2016.

FINANCIAL PERFORMANCE

Key aspects of the financial performance of Mphasis are tabulated below:

(Rs. million)

CONSOLIDATED STANDALONE

Particulars Year ended Year ended Year ended Year ended 31 March 2016 31 March 2015 31 March 2016 31 March 2015

Revenues 62,839 59,915 30,890 31,886

Expenses 52,901 50,507 24,379 24,569

Profit before taxation 9,390 9,377 6,090 7,317

Net Profit 6,694 6,746 4,584 5,530

Transfer to General Reserve 458 553 458 553

Note: the figures are rounded off to the nearest integer.

A detailed analysis of performance is available in the section headed Management Discussion and Analysis of Financial Condition and Results of Operations in this Annual Report.

OUTLOOK

Disruptive technological innovations are transforming the world around us in unpredictable ways. The emergence of digital business has given way to new business designs by blurring the digital and physical worlds. While technologies such as mobility and cloud have been dominating the imagination of enterprises for the past couple of years, new disruptive trends like Artificial Intelligence (AI) and automation have only now started having a tangible presence. Trends such as the growing use of Internet of Things (IoT) and social media networks are generating considerable amounts of data both structured and unstructured which will prove useful only if deciphered to one''s advantage. Graph theory based algorithms and AI driven business is emerging and will define the future of our business.

While our Customers continue to focus on digitally transforming their organizations, we are committed to providing our Clients with the most innovative solutions to help them succeed in their digital transformation journey. In order to enable our customers to successfully ride this wave of generational shift, we have brought and will continue to offer dedicated centers and several transformational initiatives and industry-specific offerings for our clients.

In the automation space, we launched InfraGraf, a Big Data complex event processing engine which enables our Customers to innovate and make strategic decisions regarding their technology infrastructure. In Artificial Intelligence, we are building solutions for regulatory risk and compliance, incorporating cognitive models and smart data that empower intelligent system behaviours.

To further our commitment towards Digital, Mphasis has established a dedicated Digital Organization to unify the series of offerings under Digital Transformation, Experience, Operations and Engineering that Mphasis has offered since 2014. Our charter is to take digital to our focused vertical (BCM & Insurance) with a very solutions-centric focused approach grounded in bringing digital visions to life. Our commitment to innovative solutions will further be strengthened with establishment of cognitive hubs in select domain areas such as Risk and Compliance.

Mphasis has been established as a unique brand and recognized as the partner of choice in digital transformation. This is an ongoing journey, we must continue to nurture our culture of experimentation to stay ahead.

At Mphasis, we believe in continuous transformation to re-invent ourselves to co-create with our Clients and deliver higher value, thus staying in the path of relevance. In the past twelve months, we had interesting wins in Digital, Regulatory Risk and Compliance and Application Management Services (AMS). These wins were enabled by our intense focus, individual brilliance and hand to hand combat. Next phase of wins would require a concerted strategy and Mphasis will continue to bring a differentiated value proposition to our Clients.

We expect our Direct Business to grow faster than the market, fueled by new generation services. We will see growth coming in areas such as Digital, Risk & Compliance, Automated Infrastructure Management and Robotic automation infused Business Process Management. Protectionism and immigration tightening could cause some turbulence.

Digital Risk is focused on reducing volatility and injecting new generation technology. Mortgage Risk and Compliance areas continues to be subjected to changes in regulatory environment. Cognitive models will bring radical change in this arena and we are committed to working with our Customers in their transformation journey. Interest Rate changes in the US will have a significant bearing on the transaction volume. We are confident of leveraging our brand and staying ahead of the curve.

Hewlett Packard Enterprise (HPE) is an important Customer and with the new MSA with committed volume, we have to focus on generating greater value for HPE. HPE''s spin-merger partnership with CSC for HPES business, presents us with an opportunity to build new relationships. This will be more towards FY18 and beyond. Having experienced decline of business over many years, we expect stability to return in the second half of FY17.

In summary, we look at the future with greater confidence and optimism.

DIVIDEND

Your directors are pleased to recommend a final dividend of Rs.20 per equity share of Rs.10 each for the financial year ended 31 March 2016, subject to your approval at the ensuing Annual General Meeting.

CHANGE IN CONTROL

As a result of the completion of the sale and purchase of shares pursuant to the Share Purchase Agreement executed on 4 April 2016, for sale of shares in the Company by EDS Asia Pacific Holdings, EDS World Corporation (Far East) LLC and EDS World Corporation (Netherlands) LLC ("Outgoing Promoters") to Marble II Pte. Ltd. (the "Current Promoter"), the Current Promoter had acquired the entire stake from the Outgoing Promoters on 1 September 2016, being 127,106,266 (one hundred twenty seven million, one hundred six thousand two hundred and sixty six) Equity Shares, representing 60.47% of the paid up Share Capital ("Change of Control").Consequent to the Change of the Control, the Outgoing Promoters have ceased to (i) hold any shares in the Company, (ii) hold control of the Company, and (iii) be promoters of the Company. In addition, further to the completion of acquisition of shares by the Current Promoter under the open offer ("Open Offer") to the Public Shareholders, as per the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 ("Regulations"), the Current Promoter had acquired 2,178 (Two thousand one hundred seventy eight) Equity Shares, from the Public Shareholders, under the Open Offer.

The shareholding of the Current Promoter, post the acquisition and Open Offer, is 127,108,444 equity shares representing 60.47% of the paid up share capital of the Company.

Further to the above, your Company forms part of Blackstone group of companies.

HPE AGREEMENT

Further to approval of the members under the Listing Regulations, vide the results of the Postal Ballot declared on 23 May 2016, your Company has entered into an Amended and Re-stated Standard Services Agreement with Hewlett Packard Enterprise Co., Palo Alto, USA ("HPE") for availing and/or rendering services to HPE, its subsidiaries, group companies, and associates. The agreement is for an initial term of 5 years which shall automatically renew for 3 consecutive terms of 2 years. The Minimum Revenue Commitment by HPE is $990 Million in 5 years.

ENTERPRISE RISK MANAGEMENT

The Company has an elaborate Enterprise Risk Management (ERM) Programme to proactively identify, assess, mitigate, monitor and reports risks across the enterprise. ERM at Mphasis seek to minimize the adverse impact of the risks on our business objectives through risk assessment and mitigation while providing reassurance to Customers, Shareholders, Employees, etc. The updates on the development and implementation of the ERM Programme are reviewed by the Audit Committee on a quarterly basis. A detailed analysis on the formulation, implementation and monitoring of the Risk Management Plan is available in the section headed Management Discussion and Analysis of Risks and Concerns.

CORPORATE GOVERNANCE

A report on Corporate Governance along with a certificate from the Auditors confirming the compliance for the year ended 31 March 2016 is annexed and forms part of this report.

EMPLOYEES

Mature People Practices are the hallmark of a great organization. In 2010, the Mphasis HR team embarked on a journey committed to establishing mature people practices and systems. As a first step, in this journey, Mphasis was assessed and certified at Level 3 of People Capability Maturity Model (PCMM) in April 2013. However, the need of the hour is to create predictive and optimized people processes. In January 2016, Mphasis was assessed and certified at Level 5 of PCMM. What makes this certification significant is that it covered a total of 22 process areas with workforce practices spanning across various business units in the organization. This is a critical step to ensure integration of people practices and complete alignment to the organizational strategy.

As the focus on Digital continues, building an organization that is agile and customer-centric becomes imperative. This means there is a need for faster decision making such that the customer experiences quick and effective responses in every interaction. One of the ways by which your Company enabled this was through creating a group of Empowered Leaders with decision making authority similar to that of the Executive Committee Leaders. Each empowered leader thus became the owner of the business he works with and is empowered to take decisions that are beneficial to the Client. This was a big step in our transformation to a nimble and client centric organization with a high level of autonomy and ownership.

Even as Mphasis empowers the leaders, the focus is also to enable the workforce with the right skills. Towards this endeavor, the entire training curriculum for the Campus Hires has been revamped. An exclusive engagement plan targeting specific areas of interest, leadership communication, networking and fun at work is being promoted for the fresh talent at Mphasis.

Building and nurturing the architect community has been another important focus area. To be the company of choice, to be perceived as an organization where one can learn, build new capabilities and have an edge over the competition have been the driving forces for this initiative. This has been achieved by providing differentiated learning opportunities through internationally recognized certification along with a host of other benefits. Organization restructuring has been a key component of the transition leading to delayering for better Employee Engagement & Communication.

HR processes were also exposed to the digital disruption. The year 2016 was a technology revolution in the staffing process with job seekers increasingly using digital channels and devices to search for jobs in Mphasis. Along with social recruiting activities, your Company has been successful in taking the Employee Engagement on to a digital platform by showcasing culture, fun at work and commitment to social responsibilities.

Your Company reached more than 500,000 people on Facebook, creating more than 1,000,000 impressions & growing followers by 200%. More than 450,000 organic impressions were created on Twitter and the engagement rate increased by more than 1900%.

Every year at Mphasis, the Company recognizes stellar performance and celebrates the brightest stars across the Company in the Annual Rewards and Recognition Program.

Integrated Leadership Development (ILD) is our indigenous and innovative approach to identifying and grooming top talent. Open to all Middle and Senior Level Managers, the ILD framework focuses on the individual taking charge and displaying key behaviors that are indicative of one''s ''will'' to invest one''s time and effort in becoming part of the top talent at Mphasis. This ''will'' is measured through participation in a variety of opportunities that define leadership behavior. Since its inception in 2013, we have now completed 2 cycles of ILD and a set of 13 leaders are part of talent pool through a rigorous set of assessments.

COMMUNITY OUTREACH

CORPORATE SOCIAL RESPONSIBILITY

Mphasis has always been committed to meaningful Corporate Social Responsibility (CSR) and it is closely aligned with the organization''s mission of being at the confluence of People, Profit and Planet. Our CSR activities are being carried out through Mphasis F1 Foundation. The Company has a CSR Policy as required under the provisions of law and the same is hosted on the website of the Company (www.mphasis.com) at http://www.mphasis.com/CorporateGovernance.html. The CSR Committee of the Board approves the CSR Budget and monitors the implementation of the CSR Policy.

At Mphasis, we understand the need to impact our societies beyond the world of business. As front-runners in technology related-solutions, our efforts in Corporate Social Responsibility hone on these strengths- bringing ''disruptive'' technologies into the realms of Education, Livelihood and Inclusion and covered the following:

EDUCATION

Our goal is to create a world where children want to stay in school(s) that improve their learning outcomes and equip them for future that is poverty-free. Using the latest technologies, our partners develop tailor-made tools to cater to the specific needs on the ground. Headstreams- the Arivu -Disha Program and Nasscom Social Innovation Awards for Education are classic programs which the Company has been supporting under the focus for Education.

LIVELIHOOD

Sustainable livelihood is the axle on which education, poverty alleviation and empowerment rest. Our vision is to capture India''s demographic dividend by equipping young men and women with skills that match the demands of local markets.

Through digital empowerment and vocational training, we strengthen local communities with technological literacy and specific skills that enable youth to improve their lifetime earnings potential. By scaling global technologies to the local level, we tailor-make our efforts to meet specific needs on the ground. Mphasis - Nudge Gurukul and wifi Villages are few programmes of Mphasis under the focus for Livelihood.

INCLUSION

We are committed to breaking barriers of exclusion and marginalization through education, empowerment and awareness. Through our partnerships, we work tirelessly to ensure that persons with disabilities, marginalized clusters and women have every opportunity to learn, grow and advance in their careers. In parallel, we sensitize communities on the need for accessibility and universal design- creating an inclusive, barrier-free culture. As pioneers in the space of disability inclusion, our efforts galvanize the strengths of technology and universal design to ensure accessibility across spaces of academia, work and travel. Make India Accessible with The National Centre for Promotion of Employment for Disabled People (NCPEDP), Habitat for Humanity and Kickstart Cabs are support by the Company under the focus for Inclusion.

During the year, the Company spent Rs.123.7 Million as against mandated spend of Rs.138.60 Million.

The Company could not expend the mandated CSR spent as the Company focused on on boarding credible implementation partners who had FCRA registration and co creating programs that had the potential to create long lasting social impact in our chosen focus areas. Our CSR spend has increased from Rs.21.8 Million during FY14-15 to Rs.123.7 Million in FY15-16.

PREVENTION OF SEXUAL HARASSMENT

Your Company''s Code of Business Conduct (COBC) provides broad directions as well as specific guidelines for all business transactions. The emphasis is on human rights, prevention of fraudulent and corrupt practices, avoidance of conflict of interest, prevention of Sexual Harassment and unyielding integrity at all times. Mphasis is committed to the provision of a workplace, free of Sexual Harassment ("SH") and to provide a redressal mechanism for all complaints of SH without fear or threat of reprisals in any form or manner whatsoever. The work place in context of SH is not restricted to the office but includes extended work areas such as Client''s place, work related travel, cafeterias and Company sponsored events, to name a few.

In compliance with the Sexual Harassment of women at workplace (Prevention, Prohibition and Redressal) Act, 2013, the Company has established Internal Complaints Committees at all its locations. During FY 2015-16, 45 complaints were received, out of which 39 complaints were closed in terms of the aforesaid Act, as on 31 March 2016. Complaints outstanding have since been investigated and disposed within the prescribed time limits.

ESTABLISHMENT OF VIGIL MECHANISM

Mphasis Code of Conduct requires directors, officers and employees to observe high standards of business and personal ethics in conduct of their duties and responsibilities. As employees and representatives of the Company, they must practice honesty and integrity in fulfilling their responsibilities and comply with all applicable laws and regulations. The Company has a Whistleblower Policy to enable persons who observe unethical practices (whether or not a violation of law), to approach the Whistleblower Custodian without revealing their identity, if they choose to do so. This Policy governs reporting and investigation of allegations that are breach of Code of Business Conduct. This Policy covers all Mphasis group companies and its affiliates and further extends to all Mphasis suppliers and contractors engaged by the Company.

There are various channels to report actual or suspected fraud or violation of the Company''s Code of Conduct or Ethics policy i.e. through Email to the Whistle Blower Committee at [email protected], written complaint can be dropped into the Whistle blower drop box at the respective Company''s location and through telephone where a complaint can be left at the Whistle blower Hotline. The Chairman of the Audit Committee is the Ombudsperson under Whistle blower Policy. A complaint can be reported to the Ombudsperson (Ombudsperson@ mphasis.com) where the Complainant feels that the complaint has not been addressed or actioned in a timely and appropriate manner or if the complaint is against any member of the Whistle blower Committee or the Executive Council.

The Whistle blower policy is published on the Mphasis website making it accessible to all. Mphasis will keep the whistle blower''s identity confidential and prohibits retaliation against a whistle blower with the intent or effect of adversely affecting the terms or conditions of employment (including but not limited to, threats of physical harm, loss of job, punitive work assignments, or impact on salary or wages).

DIRECTORS & KEY MANAGERIAL PERSONNEL

Further to resignation of Dr. Friedrich Froeschl, the Board of Directors of the Company unanimously elected Mr. Davinder Singh Brar as the Chairman of the Board effective 11 December 2015.

Pursuant to provisions of Section 149 of the Companies Act, subject to approval of the shareholders, Ms. Jan Kathleen Hier was appointed as an Independent Director (Additional Director) on the Board for a period of 5 years effective from 11 December 2015. The Company has received declarations from Ms. Jan Kathleen Hier confirming that she meets the criterion of independence as per law and have consented for being appointed as an Independent Director. Pursuant to Section 161 of the Companies Act, 2013, Ms. Jan Kathleen Hier holds office until the date of ensuing Annual General Meeting. However the Company has received notice under Section 160 of the Companies Act, 2013, from a member along with requisite deposit proposing her candidature to the office of the Directorship. The Board of directors recommends her appointment as an Independent Director to the members of the Company.

Further to Change of Control, Mr. Amit Dixit, Mr. Amit Dalmia, Mr. David Lawrence Johnson, Mr. Paul James Upchurch and Mr. Dario Zamarian were appointed as the Non-Executive Additional Directors of the Company by the Board of Directors vide their resolution dated 1 September 2016. Pursuant to Section 161 of the Companies Act, 2013, the additional directors hold office until the date of the ensuing Annual General Meeting. However, the Company has received notices under Section 160 of the Companies Act, 2013, from a member along with requisite deposits proposing their candidatures to the office of directorship. Accordingly, necessary resolutions in relation to the appointment of the above directors are placed before the members at the ensuing Annual General Meeting and the Board recommends their appointment as Directors of the Company.

During the year, Dr. Friedrich Froeschl, Independent Director and Mr. Shankar Maitra, Director, resigned from the Board of the Company effective 26 October 2015. Dr. Froeschl was the Chairman of the Board. Further to Change of Control, Mr. James Mark Merritt, Mr. Lakshmikanth K Ananth, Mr. Stefan Antonio Lutz, Ms. Mary Teresa Hassett and Mr. Jeff Thomas Ricci resigned as the directors of the Company effective the closing hours of 1 September 2016. The Board places on record its appreciation for the services rendered by the resigned directors during their tenure.

As all the Non-Executive (Non-Independent) directors are additional directors there are no director liable to retire by rotation under Section 152 of the Companies Act, 2013. The additional directors are being proposed for the appointment as directors under Section 160 of the Companies Act, 2013 in the ensuing Annual General Meeting.

The profiles of the present directors including the directors seeking appointment at the ensuing Annual General Meeting are provided in the Annual Report.

STATUTORY AUDITORS

S R Batliboi & Associates LLP (registration No.101049W), Chartered Accountants, were appointed as the Statutory Auditors of the Company under Section 139 of the Companies Act, 2013, for a term of 3 years, from the conclusion of Twenty Fourth Annual General Meeting till the conclusion of Twenty Seventh Annual General Meeting to be held on 2018 subject to annual ratification.

The Company has received a certificate from the Statutory Auditors to the effect that the ratification of appointment, if made, would be in accordance with limits specified under the Companies Act, 2013. As required under SEBI Regulations, the Auditors have confirmed that they hold valid certificate issued by the peer Review Board of the Institute of Chartered Accountants of India.

A resolution proposing ratification of their appointment, from the conclusion of this Annual General Meeting till the conclusion of the next Annual General Meeting of the Company, at a remuneration to be fixed by the Board of Directors and billed progressively, is submitted at the Annual General Meeting for approval of the members.

As regards the observations made by the Statutory Auditors regarding the internal Financial Control with respect to Intercompany Revenue/ Cost allocation, your directors would like to clarify that the Management has taken necessary steps to strengthen the Internal Financial Controls with respect to transactions relating to intercompany revenue / cost allocation process.

SECRETARIAL AUDITOR

The Board had in its meeting held on 4 February 2016 approved the appointment of Mr. S P Nagarajan, Practicing Company Secretary, as the Secretarial Auditor of the Company for the financial year ended 31 March 2016. As required under the provisions of Section 204 of the Companies Act, 2013, the Secretarial Audit for Financial Year 2016 has been concluded and the Secretarial Audit Report in Form No. MR-3 is annexed and forms part of the Report.

DIRECTORS'' RESPONSIBILITY STATEMENT

Information as per Section 134(5) of the Companies Act, 2013, is annexed and forms part of the Report.

OTHER DISCLOSURES SUBSIDIARIES

As on 31 March 2016, your Company has subsidiaries in Australia, Belgium, Canada, France, Germany, India, Ireland, Mauritius, the Netherlands, People''s Republic of China, Republic of Indonesia, Philippines, Poland, Singapore, the United Kingdom and the United States of America.

In accordance with section 129 (3) of the Companies Act, 2013 the Consolidated Financial Statements are attached to the Annual Report. Further, a statement containing salient features of the financial statements of subsidiaries in the prescribed Form AOC-1 is annexed to this Report. The statements provides the performance and financial position of each of the subsidiaries.

The latest audited accounts of the subsidiary Companies are available for inspection of the members at the Registered Office and is also being uploaded on the website of the Company, www.mphasis.com. A copy of the same shall be sent to the members upon request.

EMPLOYEES STOCK OPTION PLANS AND RESTRICTED STOCK UNIT PLANS

Your Company''s Employee Stock Option Plans (ESOPs) are administered through the Mphasis Employees Equity Reward Trust (earlier BFL Employees Equity Reward Trust) and the Restricted Stock Unit Plans (RSUs) and Mphasis Employees Stock Option Plan - 2012 (ESOP 2012 Plan) are administered through Mphasis Employees Benefit Trust.

The shareholders at its Annual General Meeting held on 9 September 2015 approved the Restricted Stock Units Plan 2015 (RSU 2015) with the underlying shares not exceeding 25,00,000 shares. During the year, the Company obtained in-principle approval for the Restricted Stock

Units Plan 2015 (RSU 2015) from BSE Limited on 6 October 2015 and the National Stock Exchange of India Limited on 27 October 2015. Further to this, the ESOP Compensation Committee granted 440,550 stock units to eligible employees on 12 November 2015.

Your Company currently has three stock option plans in operation, namely, Mphasis Employees Stock Option Plan - 1998 (ESOP 1998 Plan) (Version I and II), Mphasis Employees Stock Option Plan - 2004(ESOP 2004) and Mphasis Employees Stock Option Plan - 2012 (ESOP 2012), in addition to, Mphasis Restricted Stock Unit Plan - 2010 (RSU 2010), Mphasis Restricted Stock Unit Plan - 2014 (RSU 2014) and Mphasis Restricted Stock Unit Plan - 2015 (RSU 2015).

During the year, 6,200 shares were transferred under ESOP 1998 Plan II and 89,850 shares were transferred under ESOP 2012 against exercise of options by the employees. Further, pursuant to exercise applications made by the employees, the Company has transferred 4,075 equity shares towards exercise of RSUs under RSU 2010 Plan and 40,094 equity shares under RSU 2014.

The information to be disclosed as per Securities and Exchange Board of India (Share based Employee Benefits) Regulations, 2014, for the year ended 31 March 2016 is annexed and is also uploaded on the website of the Company at www.mphasis.com.

FORMULATION OF EMPLOYEE STOCK OPTION PLAN 2016

The Board of Directors of the Company, in its meeting held on 27 September 2016, has proposed to institute Mphasis Employee Stock Option Plan 2016 (ESOP 2016) with the underlying shares not exceeding 8.4 million equity shares, with a view to achieve management participation in the ownership and growth of the Company and to encourage value creation and value sharing with the Non-Executive Directors (other than the Independent Directors) and Employees.

The ESOP 2016 are proposed to be granted upto 20% discount to the Market Price or such other price as may be determined by the Board/ ESOP Compensation Committee. The ESOP 2016 Plan would confirm to the Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014 and applicable provisions of the Companies Act, 2013. In line with the provisions of the law, necessary resolutions in relation to the ESOP 2016 are placed before the members for their approval.

EXTENSION OF TIME FOR HOLDING THE 25th ANNUAL GENERAL MEETING

Considering the Change of Control, the Company had made application to the Registrar of Companies, Karnataka, under Section 96 of the Companies Act, 2013, seeking extension of time for holding the Twenty Fifth Annual General Meeting till 31 December 2016. The Registrar of Companies, Karnataka, has vide its order dated 28 July 2016, approved extension of time for holding the Annual General Meeting till 31 December 2016. Accordingly, the Company has convened the 25th Annual General Meeting, on 4 November 2016, post completion of Change of Control processes.

DIRECTORS'' INTEREST AND RELATED PARTY DISCLOSURES

No director was interested in any contracts or arrangements existing during or at the end of the year that was significant in relation to the business of the Company. No director holds any shares or stock option in the Company as on 31 March 2016 except Mr. Balu Ganesh Ayyar, Chief Executive Officer, who holds 26,764 shares and Restricted Stock Units and Stock Options aggregating to 128,120 units. None of the directors had any other interest in the share capital of the Company as at 31 March 2016. The particulars of the contract or arrangements with the Related Parties in form AOC-2 is annexed and forms part of this report.

SHARE CAPITAL

The Issued Share Capital of the Company as on 31 March 2016 stood at Rs.2,102 million and Reserves and Surplus stood at Rs.60,829 million (consolidated basis) and Rs.43,173 million (standalone basis) respectively.

PARTICULARS OF EMPLOYEES'' REMUNERATION

The statement containing particulars of employees as required under Section 197(12) of the Companies Act, 2013 read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 as amended by Companies (Appointment and Remuneration of Managerial Personnel) Amendments Rules, 2016, is given in an annexure and forms part of this report. However, in terms of Section 136(1) of the Companies Act, 2013, the Report is being sent to the Members excluding the aforesaid Annexure and shall be available for inspection of the members, till the date of the Annual General Meeting, at the registered office of the Company during working hours. Any Member interested in obtaining a copy of the Annexure may write to the Company Secretary at the Registered Office of the Company.

In terms of proviso to Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the particulars of the employees posted and working in a country outside India is not circulated to the members, but the same shall be filed with the Registrar of Companies while filing the Financial Statements and Board''s Report.

EXTRACT OF ANNUAL RETURN

The extract of the Annual Return as at 31 March 2016 in Form MGT-9 is annexed and forms part of the Report.

PARTICULARS OF LOANS, GUARANTEE OR INVESTMENTS

The particulars of Loans, Guarantees and Investments under Section 186 of the Companies Act, 2013 are disclosed in the financial statements of the Company.

DEPOSITS

Your Company has not accepted any deposits from the public and as such no amount of principal or interest was outstanding as on the date of the Balance Sheet.

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

A. CONSERVATION OF ENERGY:

Your Company''s operations involve low energy consumption. Mphasis is committed to conserving energy and efficient usage of energy. The key facilities have been awarded 5 star, 4 star or 3 star rating by Bureau of Energy Efficiency, Government of India (BEE) in the last 5 years. The rating is nationally accepted industry benchmark and Mphasis in India is certified by BEE.

The Company has installed lighting energy savers and LED light fixtures, occupancy sensors, enthalpy system, automatic operation of AC system at data center to minimize power consumption and solar inverters at certain facilities to promote sustainable energy usage. The carbon foot prints are monitored on a monthly basis and reported to Carbon Disclosure Project (CDP), an international, not-for-profit organization providing the only global system for companies and cities to measure, disclose, manage and share vital environmental information. One of the Company''s facility at Bengaluru has been certified LEED (Leadership in Energy and Environmental Design) Gold by United Sates Green Building Council (USGBC).

The Company has launched an energy consumption monitoring tool to monitor the energy consumption and the carbon foot prints at each location. The data collected by the tool helps the management in monitoring and optimize the energy consumption at the locations. Your Company is one of the few IT companies in India who have implemented captive renewable energy generation in multi-locations as part of its sustainability initiatives.

B. TECHNOLOGY ABSORPTION:

Particulars relating to technology absorption are not applicable.

ACKNOWLEDGEMENT

Your directors acknowledge with thanks the continued support and valuable co-operation extended by the business constituents, investors, vendors, bankers and shareholders of the Company. The directors place on record their appreciation for the support from the Software Technology Parks of India, the Department of Electronics, the Government of India, Government of Karnataka, Maharashtra, Tamil Nadu, Reserve Bank of India, other governmental agencies, Trade Associations and NASSCOM.

Your directors would like to place on record their appreciation for the contribution made by the employees of the Company and its subsidiaries and associates.

For and on behalf of the Board of Directors

New York Davinder Singh Brar

27 September 2016 Chairman

Mar 31, 2015

Dear Members,

We have pleasure in presenting to you the twenty fourth Annual Report of your Company for the year ended 31 March 2015.

FINANCIAL PERFORMANCE

Key aspects of the financial performance of Mphasis are tabulated below:

(Rs. million)

CONSOLIDATED STANDALONE

Particulars Year ended Period Year ended Period ended ended 31 March 31 March 31 March 31 March 2015 2014* 2015 2014*

Revenues 59,915 26,460 31,886 13,752

Profit before taxation 9,377 4,218 7,317 3,074

Net Profit 6,746 3,027 5,530 2,231

Provision for Proposed Dividend 3,362 1,471 3,362 1,471

Tax on Dividend 685 250 685 250

Transfer to General Reserve 553 223 553 223

Note: Rounded off to the nearest integer.

* Represents five months period ended 31 March 2014. Accordingly, the previous year's figures are not comparable.

A detailed analysis of performance is available in the section headed Management Discussion and Analysis of Financial Condition and Results of Operations in this Annual Report.

OUTLOOK

Your Company's Customers and the market place are investing in becoming a Digital Enterprise. This trend is very potent and visible. Your Company has been transforming and investing to bring greater value to our clients in this space. The Service Excellence and Customer Centricity in traditional IT and BPO services has laid a good foundation for the Company to be invited for the Digital space. In FY 2015, we had some good wins in the Digital area.

Your Company has always been invested in working with clients to work with them in enabling customer facing channels, systems and processes. This expertise has enabled the Company to launch Digital Customer Experience Management Solution. Omni Channel Interaction, Persona based Digital Marketing, Closed Loop Experience Management are some of the aspects of this solution. These are examples of the strides that your Company is making in Digital area. Road ahead for all IT Services Companies is one of intense transformation while retaining some core values of Service Excellence and Customer Centricity. There seem to be gold rush towards Digital, such a rush does create lot of noise in the system. Your Company's role would be to bring real value to the clients, helping them generate good Returns on their Investment (ROI). This would require sustained commitment, deep expertise and good blend of domain expertise, specialized partnership, technology and process expertise.

Your Company's clients, especially in BFSI industry are investing heavily in Governance, Risk and Compliance (GRC) solutions and processes. Your Company has been playing an active role in this area, acquisition of Digital Risk in FY 2013 has further strengthened the Company's ability to serve the Clients in GRC. Your Company is focused on bringing innovation to help the Clients to be compliant with minimal disruption enabling them to leverage their existing investment. Such an innovation will be of great value and the Company is poised to test this innovation through pilots in FY 2016. Your Company will take greater stride in this team in FY 2016 to be acknowledged as a specialized player bringing unique value to our Clients.

Traditional IT Services and BPO space will experience greater cost compression. This trend will accelerate in FY 2016 and beyond. Innovative business/commercial model combined with ROI based automation will be key to success. Future success in this area is predicated on transformation from human heavy services to human light services by leveraging automation. Such a transformation would require management delicate stakeholder balance. Your Company will continue to stay committed for delivering to all the stakeholders including customers, employees and the society that we operate in. Building long term sustained value will be our main endeavor and we are confident, our customer intensity, our talented team and our track record give us the confidence that we will emerge successful as the world shifts to Digital.

SALE OF DOMESTIC BPO BUSINESS *

Your Company had executed a Business Transfer Agreement on 30 June 2015 for transfer of significant portion of domestic India business to Hinduja Global Solutions Limited. Further to this, a second definitive agreement was executed on 10 July 2015, to transfer certain portion of your Company's domestic India business to Karvy Data Management Services Limited. The execution of the above agreements is subject to regulatory approvals and fulfillment of closing conditions. The sale of the domestic business will result in transfer of about 10,000 employees of the Company.

Your directors are confident that the above transactions would release the bandwidth of the Senior Management and enable the Company to intensify the focus in Global business in Digital, Governance Risk and Compliance (GRC), Application Maintenance Services (AMS), International BPO business and Infrastructure Services (IS).

DIVIDEND

Your directors are pleased to recommend a final dividend of Rs. 16 per equity share of Rs. 10 each for the financial year ended 31 March 2015, subject to your approval at the ensuing Annual General Meeting.

INTELLECTUAL PROPERTY RIGHTS

The Company has filed its third patent application in the area of "Governance Risk and Compliance" (GRC) for the Banking and Capital Markets sector. This patent is a method and system for regulatory compliance for financial institutions using intelligent learning systems and transforms the experience of compliances for the users.

The Mphasis NEXT Labs and a Virtual Innovations Lab has been set up which work on developing core technologies, tools, utilities, solutions, thought leadership and frameworks thereby building an intellectual property asset portfolio for the Company. "HyperGraf" is the first Mphasis Next Labs solution, which is an Omni-channel digital 360Â° solution that transforms enterprise decision making by providing accurate, real-time and actionable Customer Engagement Insights across millions of data points spread over multiple customer engagement channels.

ENTERPRISE RISK MANAGEMENT

The Company has an elaborate Enterprise Risk Management (ERM) Programme to proactively identify, mitigate, monitor and reports risks across the enterprise. The updates on the development and implementation of the ERM Programme are reviewed by the Audit Committee on a quarterly basis. A detailed analysis on the formulation, implementation and monitoring of the Risk Management Plan is available in the section headed Management Discussion and Analysis of Risks and Concerns.

CORPORATE GOVERNANCE

Your Company strongly believes that the spirit of Corporate Governance fetches beyond the statutory acquiescence. Corporate Governance is a driver of sustainable corporate growth and long term value enhancement for the stakeholders. Your Company endeavors to meet the growing aspirations of the stakeholders and is committed to maintain the highest standards of transparency, fairness, accountability and equity in its operations. Your Company has complied with the requirements of revised Clause 49 of the Listing Agreement with the Stock Exchanges and the governance requirements under the Companies Act, 2013. A report on Corporate Governance is annexed and forms part of this report.

EMPLOYEES

In line with your Company's refreshed brand promise - Unleash the Next, the Human Resources (HR) Strategy too unleashed new dimensions of people practices in FY 2015. The rebranding exercise was a key milestone for your organization, and translating the new mission, vision and values into behaviors and actions was the core focus in the first quarter. Interactive workshops on Mphasis values, new lanyards and refreshed appreciation cards for peer recognition helped to bring the new brand to life for every employee.

Through the course of the year, HR at Mphasis expanded its footprint into the digital space as well. We reached thousands of candidates through Mphasis Careers on Facebook, Twitter, LinkedIn and Google . In an active effort to integrate social networks into our hiring process, we launched the #MphasisIntern campaign to recruit interns through Twitter and Slideshare. #MphasisIntern achieved 21.5 Million views through 46,600 tweets/retweets leading to a 300% increase in the followers of @mphasiscareers.

The Employee Engagement Team hosted several initiatives this year, with special focus on our employees' health and wellness. Going beyond the work place, we celebrated 'Bring your Child to Work' and 'Bring your Parents to Work', thus opening our doors to the extended Mphasis' families as well. To recognize long standing loyalty and support to your Company, 550 employees were felicitated for their tenure as part of the annual 'Pillars' program. An exclusive Mphasis Anthem was unveiled featuring Mphasis employees in the video which has achieved over 9000 views on Youtube. At Mphasis, we have created a group, known as 'Samaritan', of well-meaning individuals who have come together under the Employee Engagement banner to help make our Corporate Social Responsibility a more engaging and meaningful experience on a larger scale. These 'Samaritans' volunteer to contribute to various areas in our society dealing with issues relating to women, children, disability and education.

In our constant effort to enrich Mphasis as a workplace, we launched the MAPLE Survey in FY 2015. This survey is an indigenous employee survey, based on the net promoter score methodology. Taking employee empowerment to another level, many policy changes were implemented as per the recommendations shared by a closed group of employees.

Learning continues to be a key priority and an entire week was dedicated to it in FY 2015. The Learning Week, spread across five days of self-directed learning events, offered a total of 95 programs covering technical, domain and leadership topics. Leader Talks, Panel Discussions and 'Lessons from Movies' were offered as exclusive sessions and excitement was created through the use of social media with live tweets and contests for innovative tweets. Client University framework has been developed to cater to the needs of focused learning for each of our accounts.

In keeping with our strategy for FY 2015, Digital Guild was launched as one of the initiatives to promote the growth of specialists in the digital space at Mphasis. It is based on the traditional concept of an association of artisans or merchants. The framework will help us to create a group of specialists in certain fields that are aligned to our strategy.

While our flagship leadership programs such as Future Leaders Programs (FLP) and Aarambh, continued to build stronger leadership pipelines from young talent, our Integrated Leadership Development framework helped us to create a pool of ready leaders at front, middle and senior levels within Mphasis.

In order to enable employees to manage their careers better, the Career Management Portal was launched for all Mphasis employees. It enables employees to gather role related information, understand their roles better, gauge themselves accurately, check role requirements for other profiles and find aspirational match. It also helps employees to set and work towards their career goals and design development plans with action items to achieve those goals.

Being a Company with specialists having innovative and inquisitive minds, a new concept of innovation goal was developed in FY 2015. This empowers employees to think, innovate and improve their own competencies or productivity by including a self-driven goal, in agreement with the manager, aligned to the business outcomes. This goal focuses on innovation and customer centricity.

As on 31 March 2015, our total employees and strength (inclusive of billable contractors) stands at 33,301.

COMMUNITY OUTREACH

Corporate Social Responsibility

Mphasis has always been committed to meaningful Corporate Social Responsibility (CSR) and it is closely aligned with the organization's mission of being at the confluence of people, profit and planet. Our CSR activities are being carried out through Mphasis F1 Foundation. The Company has a CSR Policy as required under the provisions of law and the same is hosted on the website of the Company at http://www.mphasis.com/CorporateGovernance.html. The CSR Committee of the Board approves the CSR Budget and monitors the implementation of the CSR Policy.

"Ensure measurable social change through self-sustenance models in locations where Mphasis has a presence, creating brand distinction and visibility for our efforts globally", is the CSR vision of Mphasis and the driving tenets of our CSR are as follows:

1. Focus on a few topic areas and drive excellence in them;

2. Maximize impact with the deployed resources; and

3. Drive innovative solutions in the social space in line with the Company's motto of "Unleash the Next".

In line with the above, the CSR Policy of the Company focuses on the following:

1. Creating opportunities for the disadvantaged with an emphasis on persons with disabilities; and

2. Technology driven community development.

Mphasis also aims to orient our CSR strategy around an open CSR platform which will provide an interaction mechanism for a wider set of stakeholders, namely, non-profit organizations, companies, individuals, research institutes and technology incubators.

A major new program that we supported during the year was NASSCOM Social Innovation Forum (NSIF), India's leading "Tech for Good" Platform to identify, fund and mentor promising social enterprises leveraging technology.

CSR Committee

In terms of Section 135 of the Companies Act, 2013 and Rules made thereunder, the Board has constituted a CSR Committee comprising Mr. Narayanan Kumar, Mr. D S Brar, Ms. Mary Teresa Hassett and Mr. Balu Ganesh Ayyar as its members. As required under the Companies Act, 2013, the CSR Annual Report in the prescribed form is annexed and forms part of this Report.

During the year, the Company had spent Rs. 33.19 million (of which Rs. 21.88 million is recognized as CSR expenses as per the law), as against mandated spent of Rs. 139.30 million. Considering the new statutory framework under the Companies Act, 2013, sizeable time and efforts were spent in formulating an impactful and coherent CSR Policy, devising the strategy, formulating internal framework for grant making process, capacity building of the CSR team, monitoring and evaluation process and identifying credible partners with innovative project proposal and evaluating proposals for scalability and policy fitment. The Board believes that initial set up undertaken during the year in terms of the CSR Policy, CSR frameworks, CSR process and controls will enable the Company to scale up the CSR activities in future and support the Company's commitment to its meaningful CSR activities.

Prevention of Sexual Harassment

Your Company's Code of Business Conduct (COBC) provides broad directions as well as specific guidelines for all business transactions. The emphasis is on human rights, prevention of fraudulent and corrupt practices, avoidance of conflict of interest, prevention of Sexual Harassment and unyielding integrity at all times. Mphasis is committed to the provision of a workplace, free of Sexual Harassment ("SH") and to provide a redressal mechanism for all complaints of SH without fear or threat of reprisals in any form or manner whatsoever. The work place in context of SH is not restricted to the office but includes extended work areas such as client place, work related travel, cafeterias and Company sponsored events, to name a few.

In compliance with the Sexual Harassment of women at workplace (Prevention, Prohibition and Redressal) Act, 2013, the Company has established Internal Complaints Committees at all its locations. During FY 2015, 60 complaints were received, out of which 53 complaints were disposed in terms of the aforesaid Act as on 31 March 2015. Complaints not yet disposed are being investigated and are within the prescribed time limits.

Establishment of Vigil Mechanism

Mphasis Code of Conduct requires directors, officers and employees to observe high standards of business and personal ethics in conduct of their duties and responsibilities. As employees and representatives of the Company, they must practice honesty and integrity in fulfilling their responsibilities and comply with all applicable laws and regulations. The Company has a Whistleblower Policy to enable persons who observe unethical practices (whether or not a violation of law), to approach the Whistleblower Custodian without revealing their identity, if they choose to do so. This Policy governs reporting and investigation of allegations that are breach of Code of Business Conduct. This Policy covers all Mphasis group companies and its affiliates and further extends to all Mphasis suppliers and contractors engaged in rendering the services.

The Chairman of the Audit Committee is the Ombudsperson under the Whistleblower Policy. The complainant is provided access to the Ombudsperson where the complainant feels that the complaint has not been addressed in a timely and appropriate manner. The Whistleblower Policy is published on the Mphasis website at http://www.mphasis.com/contact.html. The Whistleblower campaign is carried across the Company on a periodic basis to ensure that the employees are aware of the existence of such reporting mechanism.

GREEN INITIATIVE

The Companies Act, 2013 has recognized the electronic delivery of the documents. In compliance with the provisions of the Companies Act, 2013, rules made thereunder and to support the green initiative in Corporate Governance, the Company proposes electronic delivery of Notices for General Meetings, Annual Reports and other communications to the members through e-mail. The e-mail addresses indicated in the respective Depository Participant (DP) accounts will be deemed to be the registered e-mail address of the members holding shares in dematerialized form and shall be used for electronic delivery of the documents. Members holding shares in physical form who have consented in writing for receiving documents by electronic mode shall be considered for electronic delivery of the documents. Members holding shares in electronic or physical mode, who have not registered their e-mail addresses and changes therein, are therefore requested to get their e-mail addresses registered or updated with the DP or the Company, as the case may be.

Full text of the above said documents will also be displayed on the website of the Company, www.mphasis.com and all other applicable requirements under the provisions of the Companies Act, 2013 and rules made thereunder will be duly complied with. In case any member would like to receive physical copies of these documents, the same shall be forwarded upon request.

Pursuant to Section 108 of the Companies Act, 2013 (Companies Management and Administration) Rules, 2014 and Clause 35B of the listing agreement, your Company is pleased to provide the e-voting facility to its members to vote on the resolutions proposed at the ensuing Annual General Meeting. The detailed instructions in connection with the e-voting are given in the Corporate Governance Report and notice of the Annual General Meeting.

DIRECTORS & KEY MANAGERIAL PERSONNEL

Ms. Mary Teresa Hassett was appointed on the Board as an additional director effective 30 September 2014. Pursuant to the provisions of Section 161 of the Companies Act, 2013, the additional director holds office until the date of the ensuing Annual General Meeting. However, the Company has received notice under Section 160 of the Companies Act, 2013, from a member along with requisite deposit proposing the candidature of the additional director to the office of directorship. Accordingly, necessary resolution in relation to the appointment of the director is placed before the members at the ensuing Annual General Meeting. The Board recommends the appointment of the director. Ms. Mary Teresa Hassett is also the Woman Director appointed under the provisions of the law.

The Company has received notices from a shareholder proposing the appointment of all the existing Independent Directors for tenure as allowed under the provisions of the law. Accordingly, necessary resolution in relation to appointment of Independent Directors is also placed before the members at the ensuing Annual General Meeting. The Company has received declarations from all the Independent Directors confirming that they meet the criterion of independence as per law and have consented for being appointed as an Independent Director.

All of above Independent Directors are eminent personalities in their respective fields. Considering their vast experience and knowledge, the Board considers that their continued association would be of immense benefit to the Company.

Mr. Chandrakant D Patel resigned from the Board effective closing hours of 30 September 2014. He joined the Board in December 2012. The Board places on record its appreciation for the valuable services rendered by him during his tenure as a director.

Further, in accordance with Section 152 of the Companies Act, 2013, Mr. Shankar Maitra and Mr. Stefan Antonio Lutz will retire by rotation and are eligible for re-election.

Further to review of the assessment carried out and taking in to account the recommendations of the Nomination and Remuneration Committee, the Board recommends the appointment of the above directors in the ensuing Annual General Meeting.

The profiles of the present directors including the directors seeking appointment and re-appointment at the ensuing Annual General Meeting are provided in the Annual Report.

During the year, Mr. V. Suryanarayanan, Interim Chief Financial Officer was appointed as the Chief Financial Officer of the Company effective 1 August 2014.

STATUTORY AUDITORS

S R Batliboi & Associates LLP (registration No.101049W), Chartered Accountants have completed 7 years tenure as the Statutory Auditors of the Company. In view of the provisions of Companies Act, 2013 and the rules made thereunder, they are eligible to be re-appointed as auditors for another term of 3 years.

S R Batliboi & Associates LLP (registration No.101049W), Chartered Accountants, being eligible for re-appointment, in terms of provisions of Section 141 of the Companies Act, 2013, have expressed their willingness to continue in office from the conclusion of this Annual General Meeting till the conclusion of twenty seventh Annual General Meeting. A resolution proposing their re-appointment from the conclusion of this Annual General Meeting till the conclusion of the twenty seventh Annual General Meeting of the Company subject to ratification of their appointment at every Annual General Meeting, at a remuneration to be fixed by the Board of Directors and billed progressively, is submitted at the Annual General Meeting.

The Board recommends the appointment of the Statutory Auditors.

SECRETARIAL AUDITOR

The Board in its meeting held on 13 February 2015 approved the appointment of Mr. S P Nagarajan, Practising Company Secretary, as the Secretarial Auditor of the Company for the financial year ended 31 March 2015. As required under the provisions of Section 204 of the Companies Act, 2013, the secretarial audit for FY 2015 has been concluded and the Secretarial Audit Report in Form No. MR-3 is annexed and forms part of the Report.

DIRECTORS' RESPONSIBILITY STATEMENT

Information as per Section 134(5) of the Companies Act, 2013, is annexed and forms part of the Report.

OTHER DISCLOSURES

SUBSIDIARIES

As on 31 March 2015, your Company has subsidiaries in Australia, Belgium, Bulgaria, Canada, France, Germany, India, Ireland, Mauritius, the Netherlands, People's Republic of China, Republic of Indonesia, Philippines, Poland, Singapore, the United Kingdom and the United States of America.

As per Section 129 of the Companies Act, 2013, statement containing salient features of the financial statements of subsidiaries in the prescribed form is annexed to this Report.

During the year, the Hon'ble High Court of Karnataka had approved the amalgamation of Mphasis Finsource Limited with the Company vide its Order dated 18 August 2014 with effect from 1 April 2013, being the effective date of the amalgamation. The copy of the Order was filed with the Registrar of Companies as required under Companies Act, 2013 and with the Stock Exchanges.

The latest audited accounts of the subsidiary Companies are available for inspection of the members at the Registered Office of the Company and is also being uploaded on the website of the Company, www.mphasis.com. A copy of the same shall be sent to the members upon request.

EMPLOYEES STOCK OPTION PLANS AND RESTRICTED STOCK UNIT PLANS

Your Company's Employee Stock Option Plans (ESOP) are administered through the BFL Employees Equity Reward Trust and the Restricted Stock Unit Plans (RSUs) and Mphasis Employees Stock Option Plan - 2012 (ESOP 2012 Plan) are administered through Mphasis Employees Benefit Trust.

Your Company currently has three stock option plans in operation, namely, ESOP 1998 Plan (Version I and II), ESOP 2004 and ESOP 2012, in addition to the RSU 2010 Plan and RSU 2014 Plan. During the year, 1,300 shares were allotted under ESOP 1998 Plan II and 4,702 shares were allotted under ESOP 2004 against exercise of options by the employees. Further, pursuant to exercise applications made by the employees, the Company has transferred 26,675 equity shares towards exercise of RSUs under RSU 2010 Plan.

The Company is in the process of aligning to the Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014 and shall comply with the new regulations within the statutory time limits prescribed thereunder. The information to be disclosed as per SEBI (Employees Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 and Companies (Share Capital and Debentures) Rules, 2014, are annexed and forms part of this Report.

Further to approval of the shareholders at its Annual General Meeting held on 30 July 2014, during the year, the Company obtained in-principle approval for the Restricted Stock Units Plan 2014 (RSU 2014) from Bombay Stock Exchange Limited on 28 August 2014 and the National Stock Exchange of India Limited on 1 September 2014. Further to this, the ESOP Compensation Committee granted 470,000 stock units to eligible employees on 20 October 2014.

DIRECTORS' INTEREST AND RELATED PARTY DISCLOSURES

No director was interested in any contracts or arrangements existing during or at the end of the year that was significant in relation to the business of the Company. No director holds any shares or stock option in the Company as on 31 March 2015 except Mr. Balu Ganesh Ayyar, Chief Executive Officer, who holds 17,010 shares and Restricted Stock Units and Stock Options aggregating to 94,000 units. None of the directors had any other interest in the share capital of the Company as at 31 March 2015. The particulars of the contract or arrangements with the Related Parties in form AOC-2 is annexed and forms part of this report.

FORMULATION OF RESTRICTED STOCK UNITS PLAN 2015 *

The Board of Directors of the Company, in its meeting held on 29 July 2015, has proposed to institute Mphasis Restricted Stock Unit Plan 2015 (RSU 2015) with the underlying shares not exceeding 2.5 million equity shares, with a view to achieve management participation in the ownership and growth of the Company and to encourage value creation and value sharing with key employees and to retain such key employees.

The RSUs are proposed to be granted at the face value of Rs. 10 per share and the shares arising out of the exercise of RSUs is proposed to be acquired from market. The RSU 2015 Plan would confirm to the Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014 and applicable provisions of the Companies Act, 2013. In line with the provisions of the law, necessary resolutions in relation to the RSU 2015 are placed before members for approval.

SHARE CAPITAL

The Issued Share Capital of the Company as on 31 March 2015 stood at Rs. 2,101 million and Reserves and Surplus stood at Rs. 52,696 million (consolidated basis) and Rs. 38,394 million (standalone basis) respectively.

PARTICULARS OF EMPLOYEES' REMUNERATION

The statement containing particulars of employees as required under Section 197(12) of the Companies Act, 2013 read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is given in an Annexure and forms part of this report. However, in terms of Section 136(1) of the Companies Act, 2013, the Report is being sent to the Members excluding the aforesaid Annexure and shall be available for inspection of the members, till the date of the Annual General Meeting, at the registered office of the Company during working hours. Any Member interested in obtaining a copy of the Annexure may write to the Company Secretary at the Registered Office of the Company.

In terms of proviso to Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the particulars of the employees posted and working in a country outside India is not circulated to the members, but the same shall be filed with the Registrar of Companies while filing the Financial Statements and Board's Report.

EXTRACT OF ANNUAL RETURN

The extract of the Annual Return as at 31 March 2015 in Form MGT-9 is annexed and forms part of the Report.

PARTICULARS OF LOANS, GUARANTEE OR INVESTMENTS

The particulars of Loans, Guarantees and Investments under Section 186 of the Companies Act, 2013 are disclosed in the financial statements of the Company.

PARTICULARS REGARDING CONSERVATION OF ENERGY. TECHNOLOGY ABSORPTION. FOREIGN EXCHANGE EARNINGS AND OUTGO AND DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY REGULATORS

A. CONSERVATION OF ENERGY:

Your Company's operations involve low energy consumption. Mphasis is committed on conserving energy. The key facilities have been awarded 5 star, 4 star or 3 star rating by Bureau of Energy Efficiency, Government of India (BEE). The rating is nationally accepted industry benchmark and Mphasis has been the twelfth Company in India to be certified by BEE. The Company has installed lighting energy savers and LED light fixtures, occupancy sensors, enthalpy system, automatic operation of AC system at data center and solar inverters at certain facilities to minimize power consumption. The carbon foot prints are monitored on a monthly basis and reported to Carbon Disclosure Project (CDP), an international, not-for-profit organization providing the only global system for companies and cities to measure, disclose, manage and share vital environmental information. CII Godrej Green Building Council has awarded 'Greenco' rating for Mphasis Mangalore facility. One of our facility, WTC 4 Bengaluru, has been certified LEED (Leadership in Energy and Environmental Design) Gold by United Sates Green Building Council (USGBC). During FY 2015, the Company has invested Rs. 126 Million towards energy conservation equipments. Your Company is one of the few IT companies in India who has implemented captive renewable energy generation in multi-locations as part of its sustainability program.

B. TECHNOLOGY ABSORPTION:

Particulars relating to technology absorption are not applicable.

C. FOREIGN EXCHANGE EARNINGS OR OUTGO :

(Rs. million)

(a) Foreign Exchange earned in terms of actual inflows during the year 24,581

(b) Foreign Exchange outgo in terms of actual outflows during the year 4,321

D. DETAILS OF SIGNIFICANT AND MATERIAL ORDERS:

There were no significant material orders passed by the Regulators or the Courts, Tribunals impacting the going concern status and companies operations in future.

DEPOSITS

Your Company has not accepted any deposits from the public and as such no amount of principal or interest was outstanding as on the date of the Balance Sheet.

ACKNOWLEDGMENT

Your directors acknowledge with thanks the continued support and valuable co-operation extended by the business constituents, investors, vendors, bankers and shareholders of the Company. Your directors wish to thank Hewlett-Packard Company for their continued support. The directors place on record their appreciation for the support from the Software Technology Parks of India, the Department of Electronics, the Government of India, Government of Karnataka, NCT Delhi, Maharashtra, Tamil Nadu, Gujarat, Madhya Pradesh, Chhattisgarh, Pondicherry, Orissa, Rajasthan, Reserve Bank of India, other governmental agencies, Trade Associations and NASSCOM.

Your directors would like to place on record their appreciation for the contribution made by the employees of the Company and its subsidiaries and associates.

For and on behalf of the Board of Directors

Santa Clara, CA (USA) FRIEDRICH FROESCHL 22 May 2015 Chairman

Oct 31, 2013

The revenues for the year grew by 7.5% from Rs. 54,907 million to Rs. 59,041 million. Total Direct channel revenue grew from Rs. 23,906 million in the previous year to Rs. 32,989 million in the current year. The revenues from the HP channel declined on account of the loss of certain clients by HP and also because of shift of certain businesses to HP''s captive delivery centres. At the end of the last quarter of this financial year, the share of HP business is at 40% of the overall revenues.

(Rs. millions)

Segment FY 13 % FY12 %

HP channel 26,052 44% 31,001 57%

Mature Market - Direct channel 28,931 49% 17,771 32%

Emerging Market - Direct channel 4,058 7% 6,135 11%

Total 59,041 100% 54,907 100%

Client concentration based on ultimate customer

Given below is the analysis of Client Concentration.

FY 13 FY 12

Revenues from Top Client 9% 9%

Revenues from Top 5 Clients 30% 31%

Revenues from Top 10 Clients 45% 43%

Clients Contributing more than:

$ 1 million Revenues 117 130

$ 5 million Revenues 41 39

$ 10 million Revenues 21 25

$ 20 million Revenues 11 9

During the year, the Company won several large deals with total contract value of in excess of $250 Mn to be executed over multiple years. Of the 76 new clients that were added during the year, 42 were Direct channel clients.

A segment analysis of the revenues for the current financial year is given below:

(Rs. millions)

FY 13 % FY 12 %

Banking and Capital Market 21,308 36% 14,164 26%

Insurance 6,985 12% 6,320 11%

Information Technology, Communication & Entertainment 11,592 20% 14,550 27%

Emerging Industries 19,156 32% 19,873 36%

Total 59,041 100% 54,907 100%

Banking and Capital Markets which is one of the focus areas has grown by 50% and the contribution to revenue has increased from 26% in 2012 to 36% of the aggregate revenues in 2013. Insurance segment has grown by 11% during the financial year as we continue to focus on increasing the wallet share from the existing key clients.

The Information Technology, Communication and Entertainment segment has declined during the financial year largely because a very significant portion of revenues from HP-based business which are classified in this segment had declined. The decline in Emerging Industries is largely driven by the Company''s decision to exit the India Government business where the collection timelines are putting a strain on the Company''s cash-flows and profitability.

Revenues by Geography

(Rs. millions)

FY 13 % FY 12 %

AMERICAS 42,230 72% 35,501 65%

EMEA 7,895 13% 8,146 15%

INDIA 4,871 8% 6,698 12%

ROW 4,045 7% 4,562 8%

Total 59,041 100% 54,907 100%

The acquisition of Digital Risk has increased our presence in the US market and is reflected in the increase in share of Americas revenue. The Company has decided to exit from the India Government business owing to long collection timeline involved which impacts our cash-flows and profitability.

Revenues by Service Type

(Rs. millions)

Service Type FY 13 % FY 12 %

Application Maintenance & Other Services 18,505 31% 18,179 33%

Application Development 13,021 22% 14,528 26%

Customer Service 3,105 5% 3,039 6%

Service / Technical Help Desk 2,025 3% 2,127 4%

Transaction Processing Service 2,857 5% 2,890 5%

Infrastructure Management Services 11,527 20% 13,443 24%

Knowledge Processes 7,622 13% 332 1%

License Income 379 1% 369 1%

Total 59,041 100% 54,907 100%

Application Maintenance involves maintenance of existing customer software and is mostly undertaken on annuity terms.

Application Development refers to customised software development services based on the requirements and specifications given by customers and documented in a Statement of Work.

Customer Services include receivables collection support, product support, enrolment etc. provided to clients through BPO operations.

Service/Technical Help Desk comprise of inbound and outbound customer interaction programs including technical product support, customer care and allied services.

Transaction Processing includes claims and mortgage processing, account opening and maintenance, data processing and management.

Infrastructure Management Services include end-to-end managed mobility solutions covering workplace management & other support services, hosting services which comprise of mainframe or midrange, application & web hosting services and data centre services focused on migration, automation & other software services.

Knowledge Processes refer to the outsourcing of relatively high-level processes of the customer such as HR processes.

License Income pertains to the income from license sale in the health care space of the Company''s product,Javelina, developed by its foreign subsidiary and from Wynsure, a product of Wyde Corporation, acquired by the Company in 2011.

Revenues by Delivery Location

The following tables give the composition of revenues based on the location where services are performed.

(Rs. millions)

Delivery Location FY 13 % FY 12 %

Onsite 24,896 42% 17,548 32%

Offshore 34,145 58% 37,359 68%

Total 59,041 100% 54,907 100%

The increase in onsite revenue is on account of acquisition of Digital Risk.

Headcount * and Utilization

Management has continued its focus upon delivering quality at lower cost. A very important element of this is a sharp improvement in utilization rates which has meant that the same volume of business was delivered with fewer employees. The table below clearly depicts this strategic action.

FY 13 FY 12

Onsite

- Application Services 2,397 2,475

- ITO Services 244 301

- BPO Services 1,909 111

Offshore

- Application Services 8,868 9,727

- ITO Services 6,631 6,709

- BPO Services 15,525 15,912

Sales and Marketing 363 369

General and Administration 1,119 1,025

Total 37,056 36,629

* Note: Including billable contractors

Utilization Rates FY 13 FY 12

Excluding Trainees

Onsite

- Application Services 93% 93%

- ITO Services 94% 84%

Offshore

- Application Services 87% 83%

- ITO Services 92% 86%

- BPO Services 73% 79%

Blended

- Application Services 88% 85%

- ITO Services 92% 86%

- BPO Services 73% 79%

Including Trainees

Onsite

- Application Services 93% 93%

- ITO Services 94% 84%

Offshore

- Application Services 85% 78%

- ITO Services 89% 84%

- BPO Services 62% 70%

Blended

- Application Services 86% 81%

- ITO Services 89% 84%

- BPO Services 62% 70%

Revenues by Project Type

(Rs. millions)

FY 13 % FY 12 %

Time and Material 51,230 87% 47,519 87%

Fixed Price 7,811 13% 7,388 13%

Total 59,041 100% 54,907 100%

Significant revenues are generated principally from services provided on time-and-material (T&M) which are recognised in the period that services are performed.

Cost of Revenues

Cost of revenues primarily comprise of direct costs to revenues and includes direct manpower, travel, facility expenses, network and technology costs.

The consolidated cost of revenues of the Company is '' 43,396 million in FY 13 representing an increase of 9.1% over FY12 which is mainly due to Digital Risk. Cost of revenues were 74.9% of revenues compared to 74.3% during the previous financial year.

Selling Expenses

Selling expenses of '' 3,052 million for FY13 represented an increase of '' 170 million or 5.9% from FY12. Increase in selling expenses is on account of increased focus on Direct channel and reinvestment of the company profits for sales promotion activities in FY13.

General and Administrative Expenses

General and administrative expenses of '' 2,401 million for the year FY13 represented an increase of '' 304 million or 14.5% from FY12. General and administrative expenses in FY13 stood at 4.1% of revenues.The overall expense increase in current year includes expenses of Digital Risk.

Operating Profit

The operating profit in FY13 increased to '' 8,888 million from '' 8,766 million in FY12.Operating profit improved by '' 122 million in FY13 despite increase in manpower costs due to effective operational leverages.

Other Income

The other income for the year FY13 was '' 1,360 million as compared to '' 1,478 million in FY12. The reduction is due to provision for Mark to Market loss of '' 118 million made during the year. The gain on foreign exchange for FY13 was '' 34 million as against a gain of '' 182 million in FY12. The lower gain was mainly on account of exchange rate fluctuation arising out of restatement of assets and liabilities.

Interest expenses

Interest expense for FY13 was '' 330 million as against '' 147 million for FY12. The increase in interest expense was mainly on account of loan taken for the acquisition of Digital Risk.

Income Taxes

Income taxes were '' 2,514 million in the year FY13 as compared to '' 2,356 million in the year FY12. The effective tax rate has increased to 25.3% in FY13 from 22.9% in FY12 due to increase in surcharge and 2 units came out of the 100% tax holiday in the current financial year.

Net Profit

The net profit after taxes was '' 7,438 million for the year FY13, a decrease of '' 485 million or 6.1% over the net profit of '' 7,923 million in FY12. Cash provided from financing activities

In FY13, the Company paid '' 4,150 million on account of dividend and dividend tax as against '' 1,587 million in FY12. In FY13, the Company raised a loan of '' 4,893 Million to part fund the acquisition of Digital Risk.

Cash and cash equivalents

The Company''s cash and bank balances are held in various locations throughout the world. Cash and bank balances comprise of investments in mutual funds and deposits of any kind with banks. These balances also include amounts that are restricted in use, either as margin monies given to banks for guarantees issued in the normal course of business or amounts held in escrow accounts attributable to acquisitions/ commitments made.

An analysis of restricted cash balances as at 31 October 2013 and 2012 is given below.

(Rs. millions)

As at As at 31 October 2013 31 October 2012

Fixed Deposits - Escrow Account 11 31

Unclaimed Dividends 6 4

Total 17 35

Restricted cash as a % of total cash balances 0.3% 0.8%

Company''s treasury policy

The Company''s treasury policy calls for investing only in fixed deposits of highly rated banks, units of debt mutual funds and fixed maturity plans (FMP) for maturities up to 6 months. Stringent guidelines have been set for de-risking counter party exposures. The Company maintains balances both in Indian Rupee and foreign currency accounts in India and overseas. The investment philosophy of the Company is to ensure capital preservation and liquidity in preference to returns.

Off balance sheet arrangements

As part of its ongoing business, the Company does not participate in transactions that generate relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or Special Purpose Entities ("SPEs"), which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. As of 31 October 2013 the Company was not involved in any material unconsolidated SPE transactions.

Directors'' Report

Dear Shareholders,

We have pleasure in presenting to you the twenty second Annual Report of your Company for the financial year ended 31 October, 2013.

CONSOLIDATED FINANCIAL PERFORMANCE

Key aspects of the financial performance of MphasiS Group are tabulated below:

(Rs. million)

Year Ended Year Ended Particulars 31 October 2013 31 October 2012

Revenues 59,368 55,254

Profit before taxation 9,952 10,279

Net Profit 7,438 7,923

Provision for Proposed Dividend 3,572 3,572

Tax on Dividend 607 580

Transfer to General Reserve 540 611

A detailed analysis of performance is available in the section headed Management Discussion and Analysis of Financial Condition and Results of Operations in this Annual Report.

DIVIDEND

Your directors are pleased to recommend a final dividend of '' 17 per equity share of ''10 each for the year ended 31 October 2013, subject to your approval at the ensuing Annual General Meeting.

OUTLOOK

Customers are transforming the way they operate in response to the volatile economic conditions and fast-changing consumer preferences. As a result, their expectations from their technology spend and consequently, their service providers are changing to reflect the business priorities. While they continue to focus on their core business objectives of revenue growth, cost-efficiency and asset-efficiency, they are also focusing on enhancing the customer experience and responding to their changing preferences better.

Emerging technologies like Mobility and Data & Analytics are driving this transformation. The focus of technology spend is shifting from the back-end to the Customer, where it is being used on real-time basis to enhance customer experience and gain insights into customer behavior to drive growth and differentiation.

Your Company has always been customer-centric and responsive to changing customer needs. In 2013, your Company made rapid strides in emerging technologies - formed a dedicated unit and made significant investments in Mobility and Data & Analytics.

In the Mobility space, we launched Mobile Testing-as-a-Service covering Mobile Application Security Testing, an offering bundled with tools, processes and people in a pay-per-use model. In Digital Marketing, we are building solutions to address the customer experience across channels ranging from mobility to web and social media. In the Analytics space, we are building Data Discovery and Visualization Centre of Excellence and co-investing with our key clients to build industry specific solutions.

We are happy to report that our strategy resonates with our Customers and continues to deliver results. In 2013, our direct business grew 38% year on year and we added 42 direct clients. The business mix between HP and direct channel shifted from 57:43 in 2012 to 44:56 in 2013 thereby, reducing the client concentration risk.

While driving growth, your Company has been equally focusing on sustaining profitability within the band. We have sustained our gross margins at 25.10%. This has been possible because your Company had taken several actions to improve the operational efficiencies. These included consolidation of real estate, better workforce pyramid management, lean initiative and increased utilization across service lines.

We acquired Digital Risk in February 2013 to strengthen our capabilities in Mortgage Services in the US. During the year, we successfully completed the integration of Digital Risk and won 2 large deals with total contract value greater than $ 200 Million.

During the year, we received recognition from the analyst community on specific offerings in Capital Markets, Wealth Management, BPO services in Banking, European Life Insurance Policy Administration, Insurance Distribution Management Systems for Asia-Pacific region and Insurance billing and collection management solutions.

As we look at the year ahead, we will continue to improve our customer-centricity through strategic partnerships and drive growth in direct business. Towards this, we will;

- Expand service footprint in key clients by understanding their needs and aligning offerings that meets their business objectives.

- Enhance our focus and investments in strengthening key profitable portfolios (Testing, Enterprise Resource Planning, Customer Relationship Management, Mobility, Analytics and Platform Business Processing Outsourcing) to partner with our clients to drive growth, efficiency and customer-centricity.

- Transform delivery to enhance customer value and profitability - through innovation, tools & automation, LEAN and other cost optimization programs.

- Implement "Go-To-Market" transformation initiative aimed at driving higher sales productivity.

- Invest in grooming customer facing talent (delivery and Go-To-Market).

Your Company has witnessed early success in delivering above industry growth in our direct business over the last three years. We are confident of our strategy delivering our medium term goals. Your Company will continue to align with our Customer expectations, build relevant capabilities and engage with employees.

INTELLECTUAL PROPERTY RIGHTS

During the year, your Company has filed its first ever patent application - "Methods and Systems for Least - Cost Routing of Transactions for Merchants". This invention is a result of Company''s focus on Banking and Capital Market solutions and is expected to strengthen its offering in this vertical.

OTHER DEVELOPMENTS

Merger of MphasiS FinsourcE Limited

The Board had in its meeting held on 27 September 2013, considering the operational synergies and administrative convenience, approved amalgamation of MphasiS FinsourcE Limited with the Company effective 1 April 2013. Accordingly, the Company is in the process of submitting necessary application to the High Court of Karnataka.

MphasiS FinsourcE Limited, a wholly owned subsidiary of the Company, was formed in June 2006, exclusively for carrying out the outsourcing services for State Bank of India. The merger is approved consequent to non-renewal of the contract by State Bank of India.

Completion of Acquisition of Digital Risk

The Company completed the acquisition of Digital Risk and its subsidiaries in February 2013. The acquisition is the first by MphasiS in the Banking and Capital Markets Industry vertical. With the acquisition of Digital Risk, MphasiS is on its way to attain leadership position in US mortgage services market and has enhanced its on-shore presence in the US Market.

Digital Risk is headquartered in Florida and has about 1950 employees in US.

Change in the Financial year of the Company

The Companies Act, 2013 mandates a uniform financial year ending 31 March for the companies. The Board approved the change in the financial year of the Company from November - October to April - March every year with effect from 1 November 2013, in its meeting held on 27 September 2013. Accordingly, the financial year 2013 -14 will be for a five months period ending 31 March 2014.

Change in the Registered Office of the Company

Your Company has shifted its Registered Office from Bagmane Technology Park, Byrasandra, C V Raman Nagar, Bengaluru - 560 093 to Bagmane World Technology Center, Marathalli Outer Ring Road, Doddanakhundi Village, Mahadevapura, Bengaluru - 560 048, effective 15 March 2013.

SHARE CAPITAL

The Issued Share Capital of the Company as on 31 October 2013 stood at '' 2,101 million and Reserves and Surplus of the Group stood at '' 47,243 million.

CORPORATE GOVERNANCE

Your Company strongly believes that the spirit of Corporate Governance fetches beyond the statutory acquiescence. Corporate Governance is a driver of sustainable corporate growth and long term value enhancement for the stakeholders. Your Company endeavors to meet the growing aspirations of the stakeholders and is committed to maintaining highest standards of transparency, fairness, accountability and equity in its operations. Your Company has complied with the requirements of Clause 49 of the listing agreement with the Stock Exchanges. A report on Corporate Governance is annexed to this report.

EMPLOYEES

HR at MphasiS rallied around the foundation of our People Strategy-Autonomy, Purpose and Mastery. This powered, along with the support of the Leadership Team and the MphasiS Winning Culture and Values, us to reach new milestones of success.

Through the course of the year, learning has gone beyond mere learning hours to focus on the relevance of learning by differentiating between mandatory learning, role-relevant competency-based learning and other account / project specific learning. Moreover, there has been an increased focus on Individual Development Plans and Competency Development.

One of the key organizational differentiators in 2013 has been the launch of Integrated Leadership Development (ILD) wherein leadership development and talent management tracks were merged, a holistic perspective to developing a robust leadership pipeline. This approach moves away from the traditional manager-driven process of identifying talent. Leadership credits are earned through an array of leadership behaviors displayed through Action Learning Projects, Workplace Mentoring, Championing Competencies etc. These credits qualify leaders to be assessed on critical competencies to become part of the High Potential pool. Leaders thus identified go through an Accelerated Development program that grooms them for larger roles in the organization. With this approach, the initiative rests with the individual, thus building greater autonomy and mastery towards the end goal of joining the High Potential program.

Other leadership programs such as FLP (Future Leaders Program) and Aarambh have been institutionalized to build a leadership pipelines at different levels in the organization.

Towards our journey to be people processes organization, we reached a landmark this year in April 2013 with the PCMM Level 3 certification. This maturity level signifies that all workforce practices at MphasiS are based on competencies. The Global Learning Team at MphasiS was also recognized for its efforts and awarded two Best-in-Class Learning and Development awards by World HRD Congress: Best eLearning Adopter and Best Frontline Manager Training.

A major area of focus was the engagement of employees. A structured approach was designed to create a climate where employees value, believe-in and enjoy the work they do to help your Company to be successful.

Our total employees strength (inclusive of billable contractors) stands at 37,056 as at 31 October 2013.

EMPLOYEES STOCK OPTION PLAN AND RESTRICTED STOCK UNITS PLANS

Your Company has stock option schemes with the philosophy of encouraging the employees to be partners in the business and to support the growth of the organization by creating value to its stakeholders.

Your Company''s Employee Stock Option Plan is administered through the BFL Employees Equity Reward Trust and the Restricted Stock Unit Plans and MphasiS Employee Stock Option Plan - 2012 are administered through MphasiS Employee Benefit Trust.

The second tranche of Restricted Stock Units granted under Restricted Stock Units Plan 2010 (RSU 2010 Plan) and the first tranche of Stock Options granted under MphasiS Employee Stock Option Plan - 2012 (ESOP 2012 Plan) vested during the year. Pursuant to the exercise applications made by the employees, the Company has transferred, out of the MphasiS Employees Benefit Trust, 45,125 equity shares towards exercise of RSUs under RSU 2010 Plan and 2,350 equity shares towards exercise of options under ESOP 2012 Plan.

Further to the Circulars of the Securities Exchange Board of India dated 17 January 2013 and 13 May 2013 on prohibition of acquisition of shares from secondary market, the Compensation Committee vide its resolutions dated 18 March 2013 and 5 June 2013 approved certain alignments in RSU 2010 Plan and ESOP 2012 Plan. The aligned schemes provides for allotment of shares upon exercise of RSUs / options by the employees. However, in respect of the grants already made under RSU 2010 Plan and ESOP 2012 Plan, the trust would continue to transfer the shares already acquired from the secondary market upon exercise of the RSUs / options by the employees from time to time. As at the date of the report, the MphasiS Employees Benefit Trust held 3,08,765 shares.

Your Company currently has three stock option plans in operation, namely, ESOP 1998 Plan (Version I and II), ESOP 2004 and ESOP 2012 in addition to RSU 2010 Plan. During the year 18,140 shares were allotted under ESOP 1998 Plan (Version I and II) and 1,402 shares were allotted under ESOP 2004, against exercise of options by the employees.

The information to be disclosed as per SEBI (Employees Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999, is annexed to this Report.

COMMUNITY OUTREACH

Corporate Social Responsibility

Corporate Social Responsibility (CSR) is not just philanthropic giving, but also about values of collaboration and honoring commitments. It is about setting standards where quality of service and benefit goes directly to the beneficiary, especially those that are marginalized. MphasiS'' CSR activities are being carried out through MphasiS F1 Foundation Trust. The CSR at MphasiS focuses on Education, Employability and Entrepreneurship Development. The Trust has supported programs that have impacted the lives of the communities which have remained at the periphery of the development.

The significant CSR initiatives at MphasiS involve programs aimed at promoting quality education of children, providing skill based employment opportunities to semi-educated youth in rural and urban areas and entrepreneurship program aimed at training youth who are school-dropouts, in urban slums of Bengaluru and Chennai.

During the year, MphasiS was awarded the Disability Matters Asia Pacific Award, 2013 by Spring Board Consulting.

Prevention of Sexual Harassment

Your Company''s Code of Business Conduct (COBC) provides broad direction as well as specific guidelines for all business transactions. The emphasis is on human rights, prevention of fraudulent and corrupt practices, avoidance of conflict of interest, prevention of Sexual Harassment and unyielding integrity at all times. MphasiS is committed to the provision of a workplace, free of Sexual Harassment ("SH") and to provide a redressal mechanism for all complaints of SH without fear or threat of reprisals in any form or manner whatsoever. The work place in context of SH is not restricted to the office but includes extended work areas such as client place, work related travel, cafeterias and company sponsored events, to name a few.

In compliance with the Sexual Harassment of women at workplace (Prevention, Prohibition and Redressal) Act, 2013, the Company has established an Internal Complaints Committee at all its locations.

GREEN INITIATIVE

In compliance with the Circular of the Ministry of Corporate Affairs (MCA) and to support the green initiative in Corporate Governance, the Company proposes electronic delivery of Notices for General Meetings, Annual Reports and other communication to the members through e-mail.

The e-mail addresses indicated in the respective Depository Participant (DP) accounts will be deemed to be the registered e-mail address of the members and shall be used for electronic delivery of the documents. Full text of the above said documents will also be displayed on the website of the Company, www.mphasis.com and all other requirements of the aforesaid MCA circular will be duly complied with.

Members holding shares in electronic mode are therefore requested to keep their e-mail addresses updated with the Depository Participant. Members holding shares in physical mode are also requested to participate and support the Company in this initiative by registering their e-mails IDs with the Company.

In case any member would like to receive physical copies of these documents, the same shall be forwarded upon request.

SUBSIDIARIES

As on 31 October 2013, your Company has subsidiaries in Australia, Belgium, Canada, France, Germany, India, Indonesia, Ireland, Mauritius, the Netherlands, Bulgaria, People''s Republic of China, Philippines, Poland, Singapore, the United Kingdom and the United States of America.

As the business prospects were not forthcoming in Srilanka, during the year, the Srilankan operations were ramped down. Consequently, after complying with necessary statutory formalities, it is proposed to close MphasiS Lanka (Private) Limited.

As per Section 212 of the Companies Act, 1956, companies are required to attach the directors'' report, balance sheet and the statement of profit and loss of their subsidiaries. The Ministry of Corporate Affairs vide its Circular No. 2/2001 dated 8 February 2011 has exempted companies from complying with Section 212 of the Companies Act, 1956. Your Company is in compliance of the section read with the provisions of the circular and will not be attaching the accounts of the subsidiaries. Your Company has presented the consolidated financial statements of the Group. The required information regarding each of the subsidiary is annexed to this report.

The annual accounts of subsidiary companies are available for inspection to the members at the registered office of the Company. A copy of the same shall be sent to the members upon request.

DIRECTORS

The following persons were appointed on the Board of your Company as additional directors:

(a) Mr. Narayanan Kumar and Mr. James Mark Merritt effective 15 February 2013;

(b) Mr. Lakshmikanth K Ananth effective 28 February 2013; and

(c) Mr. Shankar Maitra effective 5 December 2013

Pursuant to the provisions of Section 260 of the Companies Act, 1956 (presently Section 161 of the Companies Act, 2013), the additional directors hold office until the date of the ensuing Annual General Meeting. However, the Company has received notices under Section 257 of the Companies Act, 1956, from a member along with requisite deposit proposing the candidatures of the additional directors to the office of directorship. Accordingly, necessary resolutions in relation to the appointment of the directors are placed before the members at the ensuing Annual General Meeting. The Board recommends the appointment of the directors.

Mr. Francesco Serafini and Mr. Balu Doraisamy resigned from the Board effective 14 February 2013. Mr. Francesco Serafini and Mr. Balu Doraisamy joined the Board in July 2010. Mr. Francesco Serafini was also the Vice Chairman of the Board. Mr. Antonio F Neri resigned from the Board effective closing hours of 5 December 2013. Mr. Antonio F Neri was appointed as a director effective 1 March 2012. He was also the Vice Chairman of the Board.

The Board places on record its appreciation for the valuable services rendered by Mr. Francesco Serafini, Mr. Balu Doraisamy and Mr. Antonio F Neri during their tenure as directors.

Further, in accordance with the Articles of Association of the Company, Dr. Friedrich Froeschl, Mr. V Ravichandran and Mr. Chandrakant D Patel will retire by rotation and are eligible for re-election.

The Board of Directors recommends the re-appointment of Dr. Friedrich Froeschl, Mr. V Ravichandran and Mr. Chandrakant D Patel.

The profiles of the present directors of your Company are provided in the Annual Report.

DIRECTORS'' INTEREST

There was no interest of the directors in the share capital of the Company as at 31 October 2013. No director was materially interested in any contracts or arrangements existing during or at the end of the financial year that was significant in relation to the business of the Company. No director holds any shares or stock option in the Company as on 31 October 2013 except Mr. Balu Ganesh Ayyar, Chief Executive Officer, who holds 17,010 shares and Restricted Stock Units and Stock Options aggregating to 58,000 units.

SIGNIFICANT SHARE HOLDINGS

The following shareholders held more than 5% of the Company''s issued share capital as at 31 October 2013:

Name of the Shareholder Percentage Owned

Hewlett Packard Corporation through its wholly owned subsidiaries 60.49%

(EDS Asia Pacifc Holdings, EDS World Corporation (Far East) LLC & EDS World Corporation (Netherlands)) LLC Aberdeen Asset Managers Limited A/C

Aberdeen Global Indian Equity (Mauritius) Limited 8.80%

DIRECTORS'' RESPONSIBILITY STATEMENT

Information as per Section 217(2AA) of the Companies Act, 1956 is annexed and forms part of the Report.

STATUTORY AUDITORS

S R Batliboi & Associates LLP (registration No.101049W), Chartered Accountants, have expressed their willingness to continue in office and a resolution proposing their re-appointment at remuneration to be fixed by the Board of Directors and billed progressively, is submitted at the Annual General Meeting.

As regards the observation made by the Auditors, your directors would like to clarify that the following :

- Management has already taken necessary steps to strengthen the internal control system by integrating the operations of infrastructure business with the mainstream, thereby introducing controls which are applicable for the entire organization.

- The Automated Teller Machine (ATM) thefts have been done by third parties and no employees were involved. Management has taken additional precautions to prevent such thefts. All the ATMs are fully insured against risk of theft.

- The investigation regarding the supply of the leased assets in deviation of the purchase order is in progress and appropriate action will be taken after conclusion of the investigation. Moreover, the vendor who has not supplied items as per specification has agreed to make good the loss to the Company.

- The representations of the vendor to the Income Tax Department regarding the amounts owed by the Company are false and suitable legal proceedings have been initiated against the vendor.

- The investigation regarding the observations on the purchase order pertaining to infrastructure services business in India are currently under progress. As a matter of good governance, the management has initiated an investigation on receipt of observations and the same is under progress.

PARTICULARS OF EMPLOYEES'' REMUNERATION

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, in terms of Section 219(1)(b)(iv) of the Companies Act, 1956, the Report and Accounts are being sent to the shareholders excluding the aforesaid annexure. Any shareholder interested in obtaining a copy of the said annexure may write to the Company Secretary at the Registered Office of the Company

In terms of the Notification No.G.S.R.212(E) dated 24 March 2004 issued by the Department of Company Affairs, Ministry of Finance, Information Technology companies have been exempted from providing the particulars of employees including their remuneration, if they have been posted / working in a country outside India.

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

Your Company''s operations involve low energy consumption. MphasiS is committed on conserving energy. The key facilities have been awarded 5 star, 4 star or 3 star rating by Bureau of Energy Efficiency, Government of India (BEE). The rating is nationally accepted industry benchmark and MphasiS has been the twelfth Company in India to be certified by BEE. The Company has installed lighting energy savers, occupancy sensors, enthalpy system, automatic operation of AC system at data center and solar inverters at certain facilities to minimize power consumption. The carbon foot prints are monitored on a monthly basis and reported to Carbon Disclosure Project (CDP), an international, not- for-profit organization providing the only global system for companies and cities to measure, disclose, manage and share vital environmental information.

Particulars relating to technology absorption are not applicable. Information relating to foreign exchange earnings or outgo during the year under review is as follows:

(a) Activities relating to Export Export of Computer Software related services to Americas, Europe, Asia and Australia

(b) Initiatives taken to increase the exports Marketing efforts are being made through the subsidiaries and branches to increase exports.

(c) Development of new export market for product and services Marketing efforts are being made in emerging markets

(d) Total Foreign Exchange used ('' million) 6,585

(e) Total Foreign Exchange Earnings ('' million) 28,999

DEPOSITS

Your Company has not accepted any deposits from the public and as such no amount of principal or interest was outstanding as on the date of the Balance Sheet.

ACKNOWLEDGMENT

Your directors acknowledge with thanks the continued support and valuable co-operation extended by the business constituents, investors, vendors, bankers and shareholders of the Company. Your directors wish to thank Hewlett-Packard Company for their continued support. The directors place on record their appreciation for the support from the Software Technology Parks of India, the Department of Electronics, the Government of India, Governments of Karnataka, Maharashtra, Tamil Nadu, Gujarat, Madhya Pradesh, Chhattisgarh, Pondicherry, Orissa, Reserve Bank of India, other governmental agencies, Trade Associations and NASSCOM.

Your directors would like to place on record their appreciation for the contribution made by the employees of the Company and its subsidiaries and associates.

For and on behalf of the Board of Directors

Bengaluru FRIEDRICH FROESCHL

5 December 2013 Chairman

Oct 31, 2011

Dear Shareholders,

We have pleasure in presenting to you the twentieth Annual Report of your Company for the financial year ended 31 October 2011.

CONSOLIDATED FINANCIAL PERFORMANCE

(Rs. million)

Year Ended Year Ended Particulars 31 October 2011 31 October 2010

Revenues 50,980 50,365

Cost of Revenues 38,430 35,007

Gross Profit 12,550 15,358

Operating Profit 8,294 11,011

Profit before taxation 10,046 12,099

Net Profit 8,218 10,908

Provision for Proposed Dividend 1,365 840

Tax on Dividend 222 140

Transfer to General Reserve 782 997

Transfer to Capital Redemption Reserve - 5

A detailed analysis of performance is available in the section headed Management Discussion and Analysis of Financial Condition and Results of Operations in this Annual Report.

DIVIDEND

Your Directors are pleased to recommend a final dividend of Rs. 6.50 per equity share of Rs. 10 each for the year ended 31 October 2011, subject to your approval at the ensuing Annual General Meeting.

OUTLOOK

2011 can best be described as a year of volatility and macro economic uncertainties. We undertook the transformation journey to tackle (1) concentration risk of our HP business; (2) absence of growth in Direct channel business; and (3) creating greater value for our customers through industry vertical approach.

Our results for FY11 demonstrate good progress in Direct channel business, with our Infrastructure business leading the growth story. We made inroads into select verticals and are beginning to be known for our focus in the chosen spots. We also established a good foundation for business beyond HP ES, growing areas in HP Non ES. While all these efforts yielded encouraging results, our concentration of HP ES business had a negative impact due to its decline affecting our share of that business. We had pressures on margins, that we took steps to arrest, which yielded results in Q4.

Looking ahead towards FY12, economic uncertainty around Europe and absence of growth in US markets is leading many companies to believe in a long period of muted growth. On the IT services front, many enterprises have tightened their spend on discretionary projects. We expect the sales cycle to be longer and some customers may also go for vendor consolidation. We believe that the entire IT offshore industry will experience a lower rate of growth.

As we look ahead for MphasiS, we have laid a good foundation for direct business growth and we feel optimistic around our growth with HP in newer areas.

Our focus going forward is to:

- Have a cost structure which is able to respond to the changing market dynamics.

- Continue to stay invested in our direct business growth and this will be done through increased focus in specific solutions, infrastructure business and in emerging markets.

- Accelerate our growth engine with newer areas of HP Non ES Business.

- Sharpen our value proposition in specific areas with HP ES.

- Accelerate our strategy execution, utilizing both our existing assets and selectively making acquisitions.

We will continue to strive and build an organization that is deeply aligned with our customers and will focus on delivering consistent results.

SHARE CAPITAL

The Issued Share Capital of the Company as on 31 October 2011 stood at Rs. 2,100 million and Reserves and Surplus of the Group stood at Rs. 36,780 million. There has been an increase in the capital during the year due to allotments on exercise of stock options and release of bonus shares, kept un issued due to dispute of title.

CORPORATE GOVERNANCE

A note on corporate governance and the Auditor's certificate on corporate governance are annexed to this report.

ACQUISITION OF WYDE

The Company acquired Wyde Corporation (Wyde) and its subsidiaries in August 2011. This strategic investment by the Company reinforces its focus on the Insurance vertical to deliver business value through domain specific solutions. Wyde is an international software vendor and creator of Wynsure - an industry leading Insurance Policy Administration Solution.

Wyde is headquartered in Minneapolis, USA, with a modern Research & Development (R&D) centre in Paris, France. Wyde has developed and deployed Wynsure at many leading insurance carriers in North America and Europe.

This investment is the second acquisition by MphasiS in the Insurance industry vertical, after acquiring AIG Software Systems Private Limited, the AIG captive subsidiary in India, in 2009. With the acquisition of Wyde, MphasiS can help customers transform their business across the entire insurance value chain.

EMPLOYEES

At MphasiS, we are striving to create a strong winning culture, driven by values and augmented by capability. Our people and leadership practices have all been aligned to enable this end objective. We have been successfully building a committed workforce which lays emphasis on the MphasiS value system even while sporting a relentless winning attitude and focusing on realization of organizational goals.

Our people management practices are getting structured towards inverting the traditional hierarchical pyramid and putting power in employees' hands. All our processes are being simplified with the objective of making the life of the employee easier by treating them as responsible adults. Our career progression framework provides them greater control over their future and growth at MphasiS. Our training strategy too is centered around building the requisite competencies for the growing employee population. The Mblaze program, an interactive workshop that focuses on foundational competencies and values, was delivered to more than 25,000 employees.

We covered a wide cross-section of developmental needs across behavioral, technical, domain, sales and leadership competencies. The focus on training this year has resulted in us providing 50 hours of training per employee.

We strongly believe that empowerment of those closest to the customer and of our people, across all roles, will create the maximum positive impact on our performance. Hence, we have introduced the Front Line Manager (FLM) program, giving more authority, responsibility and visibility to our front line managers in all units. A carefully constructed training roadmap for the Frontline Managers equips them to excel in their enhanced roles.

Talent Management has emerged as another key differentiator for MphasiS. Through various concerted initiatives, we have been able to create a healthy leadership pipeline at all layers of employees.

The Company, in order to nurture and retain its top talent and high potential employees, has set in place programs such as the Executive Talent Pool, Future Leader Program, Aarambh and the Leadership Talent Pool at different levels of the organization. These programs aim to train, coach and groom the next line of leadership to take on the challenges that come from an expanding and ambitious business such as ours. The top talent amongst the target groups are inducted into these talent pools after a stringent identification process. As part of these programs, the leaders go through a series of assessment, development interventions and coaching. The success of the programs is clearly evident from the induction of leaders from these talent pools into some of the critical positions across the Company.

Our uniquely designed Rewards and Recognition program reinforces our focus on inculcating a Winning Culture based on a strong value system. Employees get rewarded for delivering exceptional performances while living by the MphasiS values. This is capped with an Annual Awards program, where we identify the Heroes of MphasiS and celebrate them throughout the year.

The total employee strength grew from 39,962 employees on 31 October 2010 to 40,426 employees on 31 October 2011.

EMPLOYEES STOCK OPTION PLAN AND RESTRICTED STOCK UNITS PLANS

Your Company's Employee Stock Option Plan is administered through the BFL Employees Equity Reward Trust and the Restricted Stock Units Plans are administered through MphasiS Employees Benefit Trust.

Grants were made during the year under the Restricted Stock Units Plan 2010 and Restricted Stock Units Plan 2011. As a gesture of appreciation for their contribution in attaining the "One Billion Dollar Revenue Mark", the Company introduced the latter plan, under which it granted, on 1 April 201 1, 10 Restricted Stock Units to each eligible employee, entitling them to 10 equity shares of the Company.

In addition to the Restricted Stock Unit Plans, your Company currently has four stock option plans in operation, viz., ESOP 1998 Plan (Version I and II), ESOP 2000 Plan, ESOP 2003 Plan and ESOP 2004 Plan. Since July 2006, the Company has not granted any options to its employees under these Plans.

The information to be disclosed as per SEBI (Employees Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999, is annexed to this Report.

The Board of Directors of the Company, in its meeting held on 30 November 2011, has proposed to institute MphasiS Employees Stock Option Plan 201 2 (ESOP 201 2) with the underlying shares not exceeding 2,000,000 equity shares. This is done with a view to reward key managerial talent in line with the shareholders return and to encourage value creation and value sharing with such key employees. The options are proposed to be granted at market price as per the SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999. The ESOP 201 2 would conform to applicable SEBI guidelines and applicable provisions of the Companies Act, 1956. In line with the provisions of the Act, the Company has sought Members' approval of this proposal by means of postal ballot.

COMMUNITY OUTREACH

Corporate Social Responsibility

The Company attaches highest importance to Corporate Social Responsibility (CSR) and believes that CSR is not just philanthropic giving, but is also about values of empathy and honoring commitments. It is also about setting standards where quality of service and benefit goes directly to the beneficiary, especially those most marginalized.

The Company works with the voluntary sector in implementing projects in the communities that we live and work in. Further the Company seeks to involve employees, clients, and other stakeholders, and encourage them to actively contribute their skills, time and expertise to such initiatives in the three focus areas of Education, Employability and Entrepreneurship development.

Amongst others CSR initiatives, the Company had undertaken training two villages on sanitation and hygiene, including constructing the toilet facilities, training and employment of 1 20 youth with disabilities and imparting of skill based training to semi-educated youths in rural areas.

Through its CSR, MphasiS this year entered into supporting Vidya Poshak's nurture merit program. Under this program, MphasiS provides scholarship for higher education to 50 SC/ST students. Overall, it has been supporting education of over 2,000 children across Karnataka, Maharashtra and Uttar Pradesh.

Prevention of Sexual Harassment Policy

The Company has a Policy for the Prevention of Sexual Harassment since 2008. The Policy is implemented by a Complaints Committee and Executive Committee. The Chairperson and Co-Chairperson are both external eminent women representing NGO's and with experience in the area for the Prevention of Sexual Harassment in the workplace. The Complaints Committee, among other things, administers the policy, investigates cases, recommends action and undertakes preventive activities in the Company.

Prevention of Sexual Harassment Awareness Campaign is conducted regularly across all MphasiS locations.

GREEN INITIATIVE OF MINISTRY OF CORPORATE AFFAIRS

MCA has implemented "Green Initiative in the Corporate Governance" vide Circular Nos. 17/2011 dated 21 April 2011 and 1 8/201 1 dated 29 April 2011 enabling electronic delivery of Notices for General Meetings, Annual Report containing Balance Sheet, Profit & Loss Account, Auditor's Report, Directors' Report and other communications to the members through e-mail.

With an intent to participate in the Green Initiative and in compliance with the provisions of the circular mentioned herein the Company proposes to send such documents in electronic form to the e-mail addresses of the members as available with the Depositories. The e-mail addresses indicated in the respective Depository Participant (DP) accounts, deemed to be the registered e-mail address of the members and shall be used for serving Notices for General Meetings, Annual Reports and other communications. Full text of the above said documents will be also be displayed on the website of the Company, www.mphasis.com and all other requirements of the aforesaid MCA circular will be duly complied with.

Members holding shares in electronic mode are therefore requested to keep their e-mail addresses updated with the Depository Participant. Members holding shares in physical mode are also requested to provide their e-mail addresses, quoting their Folio Number, to our Registrar and Share Transfer Agent, in the form provided by the Company. However, physical copy of the Annual Report would be provided to such shareholder upon request.

SUBSIDIARIES

As on 31 October 2011, your Company had subsidiaries in Australia, Belgium, Canada, France, Germany, India, Indonesia, Ireland, Mauritius, The Netherlands, Peoples Republic of China, Poland, Singapore, Sri Lanka, Tunisia, The United Kingdom and The United States of America.

As per Section 212 of the Companies Act, 1956, companies are required to attach the Directors' Report, Balance Sheet & Profit & Loss Account of their subsidiaries. The Ministry of Corporate Affairs vide its Circular No. 2/2011 dated 8 February 2011 has provided an exemption to companies from complying with Section 212. Your Company is in compliance of the section read with the provisions of the circular and will not be attaching the accounts of the subsidiaries. Your Company has presented the consolidated financial statements of the Group. The required information regarding each subsidiary is annexed to the this Report.

The annual accounts of subsidiary companies are available for inspection at the registered office of the Company and upon written request from any shareholder, your Company will send a copy.

DIRECTORS

The Board had, in its meeting held on 15 September 2011, subject to the approval of the shareholders, approved the re-appointment of Mr. Balu Ganesh Ayyar as the Chief Executive Officer (CEO) of the Company for a period of 5 years with effect from 29 January 2012 on revised terms. The necessary resolution for approving his re-appointment together with the terms thereof is in the notice of the Annual General Meeting. In November 2011, Mr. Ayyar received the Asia Viewer's Choice Award in the 10th CNBC Asia Business Leader Awards 2011.

Your directors regret to report the sad demise of Mr. juergen Reiners on 7 May 2011. Mr. Reiners joined the Board in July 2010. He held a variety of international senior management position at HP and other companies. His expertise and contribution in the Board were noteworthy. The Board places on record its grief over the sudden demise and expresses its gratitude for the contributions.

Mr. Prakash jothee resigned from the Board effective 14 November 2011. Mr. jothee had joined the Board in February 2009. The Board wishes to place on record its appreciation for the valuable services rendered by Mr. jothee during his tenure as a director.

Further, in accordance with the Articles of Association of the Company, Dr. Friedrich Froeschl and Mr. Balu Doraisamy will retire by rotation and are eligible for re-election. The Board of Directors recommends their re-election.

The profiles of the present Directors of your Company are provided in the Annual Report.

DIRECTORS' INTEREST

There was no interest of the Directors in the share capital of the Company as at 31 October 2011. No Director was materially interested in any contracts or arrangements existing during or at the end of the financial year that was significant in relation to the business of the Company. No director holds any shares or stock option in the Company as on 31 October 2011 except Mr. Balu Ganesh Ayyar, Chief Executive Officer, who holds 17,01 0 Restricted Stock Units of the Company.

SIGNIFICANT SHAREHOLDINGS

The following shareholders held more than 5% of the Company's issued share capital as at 31 October 2011:

Name of the Shareholder Percentage Owned

Hewlett Packard Corporation through its wholly owned subsidiaries 60.52% (EDS Asia Pacific Holdings, EDS World Corporation (Far East) & EDS World Corporation (Netherlands))

Aberdeen Asset Managers Limited A/c Aberdeen Global Indian Equity Fund 7.82%

DIRECTORS' RESPONSIBILITY STATEMENT

Information as per Section 217(2AA) of the Companies Act, 1956 is annexed and forms part of the Report.

STATUTORY AUDITORS

M/s. S.R.Batliboi & Co. (Registration No. 301003E), Chartered Accountants, have expressed their willingness to continue in office and a resolution proposing their re-appointment at remuneration to be fixed by the Board of Directors and billed progressively, is submitted at the Annual General Meeting.

As regards the observation made by the Auditors, your directors would like to clarify that the delays in remittance of service tax dues were on account of certain legal positions adopted by the Company as regards discharge of liability of service tax.

PARTICULARS OF EMPLOYEES' REMUNERATION

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, in terms of Section 219(1 )(b)(iv) of the Companies Act, 1956, the Report and Accounts are being sent to the shareholders excluding the aforesaid annexure. Any shareholder interested in obtaining a copy of the said annexure may write to the Company Secretary at the Registered Office of the Company.

In terms of the Notification No.G.S.R.21 2(E) dated 24 March 2004 issued by the Department of Company Affairs, Ministry of Finance, Information Technology Companies have been exempted from providing the particulars of employees including their remuneration, if they have been posted to or are working in a country outside India.

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

Your Company's operations involve low energy consumption. MphasiS is focused on conserving energy. Three key facilities have been awarded ratings by Bureau of Energy Efficiency, Government of India (BEE). Two facilities have been awarded rating of 3 star and one facility has been awarded rating of 5 star. These ratings are nationally accepted industry benchmark and MphasiS has been the twelfth Company in India to be certified by BEE.

Particulars relating to technology absorption are not applicable. Information relating to foreign exchange earnings or outgo during the year under review is as follows.

(a) Activities relating to export

Export of IT & ITES services to Americas, Europe, Asia and Australia

(b) Initiatives taken to increase the exports

Marketing efforts are being made through the subsidiaries and branches to increase the exports. The Company's M&A programme also contributes to the increase the foot print in the international market

(c) Development of new export market for product and services

Marketing efforts are being made in the emerging markets like Africa, Indonesia, Sri Lanka etc.

(d) Total Foreign Exchange Used (Rs. million)

7,204 (Standalone Financial Statements)

(e) Total Foreign Exchange Earnings (Rs. million)

30,057 (Standalone Financial Statements)

DEPOSITS

Your Company has not accepted any deposits from the public and as such no amount of principal or interest was outstanding as on the date of the Balance Sheet.

ACKNOWLEDGMENTS

Your Directors record their appreciation of the contribution made by the employees at all levels, who enabled the Company to perform well in the market place.

Your Directors acknowledge with thanks the continued support and valuable co-operation extended by the business constituents, investors, vendors, bankers and shareholders of the Company. Your Directors wish to thank Hewlett-Packard Corporation for their continued support. They also wish to place on record their appreciation for the support from the Software Technology Parks of India, the Department of Electronics, the Government of India, Governments of Karnataka, Maharashtra, Gujarat, Uttar Pradesh, Madhya Pradesh, Chattisgarh, TamilNadu, Pondicherry, Orissa and Andhra Pradesh, Reserve Bank of India, other governmental agencies and NASSCOM.

For and on behalf of the Board of Directors

Bangalore FRIEDRICH FROESCHL

12 January 2012 Chairman

Oct 31, 2010

We have pleasure in presenting to you the Nineteenth Annual Report of your Company for the financial year ended 31 October 2010.

CONSOLIDATED FINANCIAL PERFORMANCE

(Rs. million)

Particulars Year Ended Year Ended 31 October 2010 31 October 2009

Revenues 50,365 42,639

Cost of Revenues 35,007 28,793

Gross Profit 15,358 13,846

Operating Profit 11,011 9,252

Profit Before Taxation 12,099 9,728

Net Profit 10,908 9,087

Provision for Proposed Dividend 840 733

Tax on Dividend 140 125

Transfer to General Reserve 997 837

Transfer to Capital Redemption Reserve 5 -

A detailed analysis of performance is available in the section headed Management Discussion and Analysis of Financial Condition and Results of Operations in this Annual Report.

DIVIDEND

Your Directors are pleased to recommend a final dividend of Rs.4.00 per equity share of Rs.10 each for the year ended 31 October 2010, subject to your approval at the ensuing Annual General Meeting.

OUTLOOK

The year 2009 - 2010 reflected a comeback for the global economy in general and Indian economy in particular. The western economies stowed-off a serious collapse but there continues to be an uncertainity about the future. This uncertainity results in business deferring investment decisions.

While emerging from the challenging environment, your Company has through relentless execution and sustained performance, delivered strong financial results with record EPS and EPS growth - the highest in the history of your Company. Your Companys EPS on a consolidated basis, for the year ended 31 October 2010 stood at Rs.52.00 as against Rs.43.45 in FY 2009. Your Company reported a stellar performance by crossing the "USD One Billion Revenue Mark". These results are a reflection of your Companys focus on execution.

Looking ahead at the next stage of growth, your Company has challenged the current model of operation. The new structure allows effectively growing the direct business as well as to further the partnered business with Hewlett Packard; decentralize and move closer to the Customer; increase overall organizational effectiveness; and incubate new business ideas and innovate.

Building long term and deep relationship with our customers and employees remains an on-going focus. Your Companys partnership with Hewlett Packard has played an important role in creating larger opportunities for growth and in success.

Your Companys efforts to maintain operational efficiencies and grow business through strategic and geographic expansion will continue. With proactive action to transform for the next phase of growth, your Company will strive to build an organization that is deeply aligned with customers and empowers employees.

SHARE CAPITAL

The Issued Share Capital of the Company as on 31 October 2010 stood at Rs.2,099 million (including Rs.1.48 million held by the BFL Employees Equity Reward Trust) and Reserves and Surplus of the Group stood at Rs.30,887 million. There has been an increase in the capital on account of allotments during the year consequent to exercise of stock options under stock option plans of the Company and release of a few bonus shares, earlier kept under abeyance.

CORPORATE GOVERNANCE

A note on corporate governance and the auditors certificate on corporate governance are annexed to this Report.

OTHER DEVELOPMENTS

Mergers

Eldorado Computing Inc, USA

The Company had in March 2005, acquired Eldorado Computing Inc., a US based healthcare benefits management solutions company to strengthen footprint in US and enter in the healthcare insurance and payment market. Considering the operational synergy and administrative convenience, the Board had during the year approved merger of Eldorado Computing Inc. with MphasiS Corporation, USA. Accordingly, the said entity is merged with MphasiS Corporation, USA effective 1 March 2010.

MphasiS FinSolutions Private Limited

Your Company had during 2008-2009, to further establish its presence in insurance solutions, acquired AIG Systems Solutions Private Limited (since name changed to MphasiS FinSolutions Private Limited), a subsidiary of American International Group Inc, USA. Further to this, considering the operational synergies, the Board approved amalgamation of MphasiS FinSolutions Private Limited with the Company. Pursuant to a Scheme of Merger approved by the High Courts of Karnataka and Madras, dated 5 July 2010 and 17 September 2010, respectively, the merger of MphasiS FinSolutions Private Limited was consummated effective 1 November 2009 and the accounting to this effect has been carried out as per the Court Orders.

Acquisitions

Fortify Infrastructure Inc, USA

Remote Infrastructure Management (RIM) is one of the fastest growing segments in the Infrastructure Services Market. In order to give impetus to the direct ITO business with a focus on the SME segments, the Company acquired Fortify Infrastructure along with Inc. its wholly owned subsidiaries, Fortify North America Inc. and Wide Area Management Services Inc. Fortify is a USD 20 million company headquartered in Santa Clara, California, USA with over 20 customers for Remote = Infrastructure Management (RIM) based services in the mid market segment. The acquisition is expected to augment the capabilities of your Company in Infrastructure Services and enable the Company to move towards an offshore development model and further provide synergetic operational integration. Further to the acquisition, Fortify Infrastructure Services Inc. has been renamed as "MphasiS Infrastructure Inc."

Setting up of off-shore delivery centres

Considering the need to move to low cost delivery centres and counter the margin pressures, your Company evaluates its locational strategy and enhances its off shore delivery centres. Accordingly, the Company has set up an off shore global delivery centre in Colombo, Sri Lanka and a Near Shore Delivery Center in Poland.

Your Company also opened its near shore integrated development and delivery centre in Australia at the University of Wollongong. The strategic location of the centre has enabled your Company to work closely with the University of Wollongong on a range of initiatives including training, recruitment and research and development in the Information and Communications Technology (ICT) space.

The setting up of these new global delivery centres spells opportunity and is an important milestone in your Companys future journey.

EMPLOYEES

Your company holds its employees to the highest standards of ethics and compliance. To this effect, we have instituted our Winning Culture-the MphasiS Values System that governs our actions and decisions in all aspects of work. We are dedicated to driving a value based approach to work and building an organization that values learning and a talent hierarchy.

Your Company, to nurture and retain its top talent and high potential employees has set in place programs such as the Executive Talent Pool and the Leadership Talent Pool at different levels of the organization. These programs aim to " train, coach, and groom the next line of leadership to take on the challenges that come from our expanding and ambitious business plans. We also strongly believe that empowerment of those closest to the customer will deliver good results. Hence, we have introduced the Front Line Manager (FLM) program, giving more authority, responsibility and visibility to our front line managers in all units. Learning is a key component to ensuring that our talent is ready to take advantage of the opportunities that will come our way. Your Company has invested extensively in "Reflections" the 360 degree feedback and self development program in addition to expanding the courses offered on our Learning Portal, your Company works diligently with all business units to identify specific programs that will make them more effective in their operations.

Your Company believes that good work should be rewarded and celebrated. Rewards and recognition are one of the key drivers to achieve a motivated and dedicated work force. We have institutionalized the rewards and recognition programs at MphasiS to cater to the various roles and responsibilities our employees perform. This is capped with an Annual Awards function, where we celebrate the Heroes of MphasiS.

Your Company also believes in giving to the communities it operates in and to this effect, we have setup the Employee Contribution Portal where employees can donate funds to authorized NGOs directly from their salaries, making donations transparent and easy.

The total employee strength grew from 33,524 employees on 31 October 2009 to 37,268 employees on 31 October 2010.

EMPLOYEES STOCK OPTION PLAN AND RESTRICTED STOCK UNITS PLANS

Your Companys Employee Stock Option Plan is administered through the BFL Employees Equity Reward Trust.

The information to be disclosed as per SEBI (Employees Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999, is annexed to this Report.

Your Company currently has four stock option plans in operation, namely, ESOP 1998 Plan (Version I and II), ESOP 2000 Plan, ESOP 2003 Plan and ESOP 2004 Plan. Since July 2006, the Company has not granted any options to its employees. The Company has a Restricted Stock Units 2010 plan, in respect of which no RSUs have been granted to the employees. The said plan is administered through MphasiS Employees Benefit Trust.

The Board of Directors of the Company, in its meeting held on 22 November 2010, as a recognition of successfully crossing the "One Billion Dollar Revenue Mark" (subject to the approval of the shareholders and applicable laws) approved a Restricted Stock Units 2011 Plan. The proposed plan, approving each of the permanent employees of the Company and its subsidiaries, as at 1 November 2010, being granted 10 Restricted Stock Units entitling them to 10 equity shares of Rs.10 each of the Company at the end of the vesting period, which is one year from the date of grant. The shares are offered at a nil exercise price at the end of the vesting period. The shares are proposed to be acquired from the market through an employee welfare trust. The necessary resolution for the approval will be considered at the ensuing Annual General Meeting.

SUBSIDIARIES

As on 31 October 2010, your Company had subsidiaries in Australia, Belgium, Germany, India, Ireland, Mauritius, The Netherlands, The Peoples Republic of China, Poland, Singapore, Sri Lanka, the United Kingdom and the United States of America.

Your Company has received the approval from the Ministry of Corporate Affairs, New Delhi vide its letter No. 47/711/2010-CL-lll dated 19 November 2010 granting an exemption under Section 212(8) of the Companies Act, 1956 from attaching the audited accounts of the subsidiaries to the Annual Accounts of your Company, for the financial year ended 31 October 2010. Your Company, however, continues to publish the consolidated financial statements of the Group. Further, the information regarding each subsidiary with regards to capital, reserves, total assets, total liabilities, details of investment, turnover, profit before taxation, provision for taxation, profit after taxation and proposed dividend is given as an annexure to the Directors Report.

The Annual Accounts of subsidiary companies are available for inspection at the registered office of the Company and the details of the Annual Accounts would be hosted on the website of the Company.

DIRECTORS

The following Directors were appointed on the Board of your Company as additional directors effective 15 July 2010:

(i) Mr. Francesco Serafini

(ii) Mr. Balu Doraisamy

(iii) Mr. Juergen Reiners

(iv) Mr. Gerard Brassard

Pursuant to the provisions of Section 260 of the Companies Act, 1956, the additional directors hold office until the date of the ensuing Annual General Meeting. However, the Company has received a notice under Section 257 of the Companies Act, 1956, from a member along with the requisite deposit, proposing the candidatures of the additional directors to the office of directorship. Accordingly, necessary resolutions in relation to the appointment of directors are placed before the members at the ensuing Annual General Meeting. The Board of Directors recommends the appointment of the directors.

Dr. Friedrich Froeschl was elected as the Chairman of the Board of Directors and Mr. Francesco Serafini was elected as the Vice Chairman of the Board of Directors, vide resolution passed by the Board of Directors dated 15 July 2010.

The following Directors resigned during the financial year effective 15 July 2010:

(i) Mr. Andreas W Mattes

(ii) Dr. Jose De La Torre

(iii) Ms. Vinita Bali

(iv) Mr. Craig Wilson

(v) Mr. K M Suresh

Your Board wishes to place on record its appreciation for the invaluable services rendered by these Directors during their tenure.

Further, in accordance with the Articles of Association of the Company, Mr. Nawshir Mirza and Mr. Davinder Singh Brar will retire by rotation and are eligible for re-election. The Board of Directors recommends the re-appointment of the directors.

The profiles of the present Directors of your Company are provided in the Annual Report.

DIRECTORS INTEREST

The interest of the Directors in the share capital of the Company as at 31 October 2010 is provided herein. No Director was materially interested in any contracts or arrangements existing during or at the end of the financial year that was significant in relation to the business of the Company. Other than Mr. Davinder Singh Brar, who held 918 shares, no other director held any shares or stock option in the Company as on 31 October 2010.

SIGNIFICANT SHAREHOLDINGS

The following shareholders held more than 5% of the Companys issued share capital as at 31 October 2010:

Name of the Shareholder Percentage Owned

Hewlett Packard Corporation through its wholly owned subsidiaries, 60.55%

(EDS Asia Pacific Holdings, EDS World Corporation (Far East) and EDS World Corporation (Netherlands))

Aberdeen Asset Managers Limited A/c Aberdeen International India Opportunities Fund 5.26%

DIRECTORS RESPONSIBILITY STATEMENT

Information as per Section 217(2AA) of the Companies Act, 1956 is annexed and forms part of the Report.

AUDITORS

M/s. S.R. Batliboi & Co., Chartered Accountants (Registration No. 301003E), have expressed their willingness to continue in office and a resolution proposing their re-appointment at a remuneration to be fixed by the Board of Directors and billed progressively, is submitted for approval of the shareholders at the ensuing Annual General Meeting.

As regards the observation made by the Auditors, your Directors would like to clarify that the delays in remittance of service tax and value added tax dues were due to refinement in the Companys interpretation of applicable tax laws. Your Company has taken adequate steps to strengthen relevant processes.

PARTICULARS OF EMPLOYEES REMUNERATION

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, in terms of Section 219(l)(b)(iv) of the Companies Act, 1956, the Report and Accounts are being sent to the shareholders excluding the aforesaid annexure. Any shareholder interested in obtaining a copy of the said annexure may write to the Company Secretary and General Counsel and Head Global Ethics and Compliance at the Registered Office of the Company.

In terms of the Notification No.G.S.R.212(E) dated 24 March 2004 issued by the Department of Company Affairs, Ministry of Finance, Information Technology companies have been exempted from providing the particulars of employees including their remuneration, if they have been posted / working in a country outside India. Members desirous of getting these details may write to the Company for the information.

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

Your Companys operations involve low energy consumption. However, efforts to conserve energy will continue. Particulars relating to technology absorption are not applicable. Information relating to foreign exchange earnings or outgo during the year under review is provided in the financial statements forming part of this Annual Report.

DEPOSITS

Your Company has not accepted any deposits from the public and as such no amount of principal or interest was outstanding as on the date of the Balance Sheet.

ACKNOWLEDGMENTS

Your Directors would like to place on record their appreciation of the contribution made by the employees at all levels, who, through their competence, hard work, solidarity, co-operation, support and commitment have enabled the Company to achieve its strong growth.

Your Directors acknowledge with thanks the continued support and valuable co-operation extended by the business constituents, investors, vendors, bankers and shareholders of the Company. Your Directors wish to thank Hewlett Packard Corporation for their continued support. They also wish to place on record their appreciation for the support from the Software Technology Parks of India, the Department of Electronics, the Government of India, Governments of Karnataka, Maharashtra, Gujarat, Uttar Pradesh, Madhya Pradesh, Chattisgarh, Tamil Nadu, Pondicherry, Andhra Pradesh, Reserve Bank of India, other governmental agencies and NASSCOM.

For and on behalf of the Board of Directors

Bangalore FRIEDRICH FROESCHL

5 January 2011 Chairman

Oct 31, 2009

We have pleasure in presenting to you the Eighteenth Annual Report of your Company for the financial year ended 31 October 2009.

CONSOLIDATED FINANCIAL PERFORMANCE

(Rs. 000s) For the period from Year ended Particulars 01 April 2008 to 31 October 2009 31 October 2008

Revenues 42,638,827 19,065,192 Cost of Revenues 28,793,179 14,254,627 Gross profit 13,845,648 4,810,565 Operating profit 9,252,383 2,879,274 profit before taxation 9,727,520 3,097,114 Net profit 9,086,779 2,954,365 Provision for Proposed Dividend 733,498 417,846 Tax on Dividend 124,672 71,114 Transfer to General Reserve 836,872 264,514

A detailed analysis of performance is available in the section headed Management Discussion and Analysis of Financial Condition and Results of Operations in this annual report.

OUTLOOK

Your Company has, through focussed, efficient execution and sustained performance, delivered strong financial results with record EPS and EPS growth - the highest in the history of your Company. Your Companys EPS for the year ended 31 October 2009 stood at Rs.43.45. Your Companys top customers continued to stay invested and your Company saw the relationships deepen during the year. Building long term and deep relationship remains an on-going focus. Your Companys partnership with HewlettÃPackard has played an important role in creating larger opportunities for growth and success. Despite global economic challenges, your Company has held out against the tide, and delivered strong performance. Your Companys efforts to maintain operational efficiencies and grow business through strategic and geographic expansion will continue.

SHARE CAPITAL

The Issued Share Capital of the Company as on 31 October 2009 stood at Rs.2,095,779 thousand (which is inclusive of 147,992 shares of Rs.10/- each amounting to Rs.1,479 thousand held by the BFL Employees Equity Reward Trust) and Reserves and Surplus of the Group stood at Rs.21,350,582 thousand. There has been an increase in the capital on account of allotments made during the year under various ESOP Plans to option holders exercising their options through the BFL Employees Equity Reward Trust and release of bonus shares, earlier kept under abeyance due to dispute in the title of shares.

DIVIDEND

Your Directors are pleased to recommend a final dividend of Rs.3.50 per equity share of Rs.10 each for the year ended 31 October 2009, subject to your approval at the ensuing Annual General Meeting.

CORPORATE GOVERNANCE

A note on corporate governance and the auditors certificate on corporate governance are annexed to this report.

OTHER DEVELOPMENTS

Acquisition of AIG Systems Solutions Private Limited

During the year, your Company acquired AIG Systems Solutions Private Limited (AIGSS), an Indian subsidiary of American International Group Inc (AIG), USA. Based in Chennai and Kolkata, AIGSS has over 700 employees and provides IT services to AIG and its member companies. AIGSS service offerings include application development and maintenance, application implementation, testing, product development and support.

The transaction was closed on 30 September 2009 and AIGSS became a subsidiary of your Company and a part of the Application Services Business Unit with effect from 1 October 2009. AIGSS was renamed MphasiS FinSolutions Private Limited from 13 October 2009.

This acquisition is a significant step and will help your Company augment its capabilities for the insurance industry and offer domain solutions backed by a highly skilled talent pool. The acquisition adds capability to, and enhances the value of your Company and provides it new relationships in the insurance industry.

In order to further improve synergies, the Board of Directors of your Company has approved merging MphasiS FinSolutions Private Limited with your Company, subject to necessary approvals.

Setting up of off-shore delivery centre

Your Company announced its decision to set up an off-shore delivery centre in Sri Lanka on 9 December 2009. The centre will be operational by mid 2010 and will join your Companys network of Global Delivery Centres, providing an array of IT and ITES services to clients, world-wide. The setting up of this new global delivery centre spells opportunity and is an important milestone in your Companys future journey.

EMPLOYEES

Your Company strives to cultivate an organizational culture which is conducive to bringing about changes required for better governance. Our Company culture Ã the Winning Culture, is built on certain key values which are integral to the organisation and which binds the Management, the Board and the Organization.

Your Company has taken several measures for attracting talent including setting up of a world class training facility at Mangalore. Programs for retaining talent include, MetamorphosiS, a cross-skilling training program for facilitating cross-functional movements and Pillars, an employee tenure recognition program, aimed at recognizing tenured employees within MphasiS. Your Company is committed to ensuring support to its employees in their professional growth in the organization and has partnered with a global talent development agency to work with employees in assessing their strengths and areas of development. Your Companys Leadership Development Programs are tailored to equip leaders with knowledge, skills and attitude necessary to lead, develop and manage their teams.

Your Company has designed several development programs for its employees viz. Buddy Program, Cross Cultural Sensitization and Creativity. Further, in partnership with a training organization, your Company has created the MphasiS Learning Portal, which is a robust on-line learning solution that includes e-learning courses, supporting content and technology designed to enable employees to develop new skills and find answers to important questions, 24x7. The portal provides over 3,000 interactive courses and all employees of the Company are given access to the learning opportunities. Your Company also encourages its employees pursue higher education which is funded by the Company.

The total employee strength grew from 28,795 employees on 31 October 2008 to 33,524 employees on 31 October 2009.

EMPLOYEES STOCK OPTION PLAN

Your Companys Employee Stock Option Plan is administered through the BFL Employees Equity Reward Trust.

The information to be disclosed as per SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999, is annexed to this Report.

Your Company currently has four Plans in operation, namely, ESOP 1998 Plan (Version I and II), ESOP 2000 Plan, ESOP 2003 Plan and ESOP 2004 Plan. Since July 2006, the Company has not granted any options to its employees.

SUBSIDIARIES

As on 31 October 2009, your Company had subsidiaries in Australia, Belgium, Germany, India, Ireland, Mauritius, Netherlands, Peoples Republic of China, Singapore, the United Kingdom and the United States of America.

Your Company has sought the approval of the Ministry of Corporate Affairs, New Delhi for exemption from attaching the audited accounts of the subsidiaries to the Annual Accounts of your Company, for the financial year ended 31 October 2009. Your Company publishes the consolidated financial statements of the Group. The information regarding each subsidiary with regards to capital, reserves, total assets, total liabilities, details of investment, turnover, profit before taxation, provision for taxation, profit after taxation and proposed dividend is given as an annexure to the Directors Report.

The annual accounts of subsidiary companies are available for inspection at the registered office of the Company.

DIRECTORS

The following Directors were appointed on the Board of your Company after the last Annual General Meeting:

(i) Mr. Balu Ganesh Ayyar as Chief Executive Officer with effect from 29 January 2009;

(ii) Mr. Craig Wilson as Additional Director with effect from 6 February 2009;

(iii) Mr. Prakash Jothee as Additional Director with effect from 6 February 2009;

(iv) Dr. Friedrich Froeschl as Additional Director with effect from 30 March 2009;

(v) Mr. K M Suresh as Additional Director with effect from 24 November 2009;

As Additional Directors, the tenure of the aforesaid directors comes to an end at the forthcoming Annual General Meeting and they have been proposed for appointment as Directors liable to retire by rotation at the same meeting.

Further, in accordance with the Articles of Association of the Company, Dr. Jose de la Torre and Mr. Andreas W Mattes will retire by rotation and are eligible for re-election.

The profiles of the present Directors of your Company are provided in the Annual Report.

The following Directors resigned during the financial year ended 31 October 2009:

(i) Mr. Jeya Kumar (resigned on 28 January 2009)

(ii) Mr. Michael Coomer (resigned on 6 February 2009)

(iii) Mr. Joseph Eazor (resigned on 6 February 2009)

(iv) Mr. Anthony Glasby (resigned on 30 March 2009)

Your Board wishes to place on record its appreciation for the valuable services rendered by these Directors during their tenure.

Mr. Jim Bridges was terminally ill and was unable to attend meetings of the Board during the year. In terms of section 283(1)(g) of the Companies Act, 1956, he vacated office with effect from 24 November 2009 as he could not attend or seek leave of absence from attending three consecutive board meetings. Mr. Jim Bridges passed away on 30 November 2009. While remembering his valuable contribution to the Board during his tenure, the Board also extended its condolences to his family.

DIRECTORS INTEREST

The interest of the Directors in the share capital of the Company as at 31 October 2009 is provided herein. The Directors interest includes, where appropriate, ordinary shares held in the form of stock options, subject to satisfying the relevant vesting conditions. No Director was materially interested in any contracts or arrangements existing during or at the end of the financial year that was significant in relation to the business of the Company. Other than Dr. Jose de la Torre and Mr. Davinder Singh Brar, who held 93,000 shares and 1,382 shares, respectively, no other Director held any shares or stock options in the Company as on 31 October 2009.

SIGNIFICANT SHAREHOLDINGS

The following shareholders held more than 5% of the Companys issued share capital as at 31 October 2009:

Name of the Shareholder Percentage Owned

Hewlett-Packard Corporation through its wholly owned subsidiaries, 60.65% EDS Asia Pacific Holdings, EDS World Corp. Far East & EDS World Corp. Netherlands Baring India Investments Limited, PCC 5.51%

DIRECTORS RESPONSIBILITY STATEMENT

Information as per Section 217(2AA) of the Companies Act, 1956 is annexed and forms part of the Report.

AUDITORS

M/s S R Batliboi & Co., Chartered Accountants, have expressed their willingness to continue in office and a resolution proposing their re-appointment at a remuneration to be fixed by the Board of Directors and billed progressively, is submitted to the Annual General Meeting.

As regards the observations made by the auditors, your Directors would like to clarify that as a result of operating with several entities, there were exceptional occasions where the revenues could not be recognized in the appropriate contracting entity due to delay in documentation. The delays in remittance of service tax and withholding tax dues were due to refinement in Companys interpretation of applicable tax laws. Your Company has taken adequate steps to strengthen relevant processes.

PARTICULARS OF EMPLOYEES REMUNERATION

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, in terms of Section 219(1)(b)(iv) of the Companies Act, 1956, the Report and Accounts are being sent to the shareholders excluding the aforesaid annexure. Any shareholder interested in obtaining a copy of the said annexure may write to the Company Secretary & General Counsel at the Registered Office of the Company.

In terms of the Notification No.G.S.R.212(E) dated 24 March 2004 issued by the Department of Company Affairs, Ministry of Finance, Information Technology companies have been exempted from providing the particulars of employees including their remuneration, if they have been posted / working in a country outside India. Members desirous of getting these details may write to the Company for the information.

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

Your Companys operations involve low energy consumption. However, efforts to conserve energy will continue. Particulars relating to technology absorption are not applicable. Information relating to foreign exchange earnings or outgo during the year under review is provided in the financial statements forming part of this Annual Report.

DEPOSITS

Your Company has not accepted any deposits from the public and as such no amount of principal or interest was outstanding as on the date of the Balance Sheet.

ACKNOWLEDGMENTS

Your Directors would like to place on record their appreciation of the contribution made by the employees at all levels, who, through their competence, hard work, solidarity, co-operation, support and commitment have enabled the Company to achieve its strong growth.

Your Directors acknowledge with thanks the continued support and valuable co-operation extended by the business constituents, investors, vendors, bankers and shareholders of the Company. Your Directors wish to thank Hewlett-Packard Corporation, parent company, for its support. They also wish to place on record their appreciation for the support from the Software Technology Parks of India, the Department of Electronics, the Government of India, Governments of Karnataka, Maharashtra, Gujarat, Uttar Pradesh, Madhya Pradesh, Tamil Nadu, Pondicherry, Andhra Pradesh, West Bengal, Reserve Bank of India, other governmental agencies and NASSCOM.

For and on behalf of the Board of Directors

Bangalore ANDREAS W MATTES 12 January 2010 Chairman

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