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Directors Report of SQS India BFSI Ltd.

Mar 31, 2017

We are pleased to present the report on our business and operations for the year ended March 31, 2017.

1. Financial highlights for the year ended March 31, 2017:

(Rs. in Mn.)

Consolidated

Standalone

March 31, 2017

March 31, 2016

March 31, 2017

March 31, 2016

Total Revenue

2,606

2,706

2,605

2,693

Employee benefits expense

1,592

1,676

1,058

1,061

Depreciation and amortization expense

52

40

52

40

General, administrative and other expenses

599

425

1,158

1,091

Finance cost

2

3

1

2

Total Expenses

2,245

2,144

2,269

2,194

Profit Before Tax

361

562

336

499

Tax expense

130

193

120

180

Profit After Tax

231

369

216

319

Earnings per Equity share (Par value of Rs.10 each)

Basic (Rs.)

21.61

34.85

20.27

30.09

Diluted (Rs.)

21.56

34.62

20.22

29.90

2. Business and Operations Review:

Total operating revenue was Rs.2,599 Mn for the Financial Year 2016-17 as compared to Rs.2,642 Mn in the previous year, a decline of 1.6%.

During the year under review, repeat business from existing clients accounted for 88% of revenue, increased from 82% in the previous year. New client acquisitions contributed to 12% of revenue.

Profit after tax stood at Rs.216 Mn, (representing 8.3% of revenues) as against Rs.319 Mn (12% of revenues) in the previous year. Currency fluctuations resulted in a loss for the year of Rs.84 Mn, compared to a gain of Rs.43 Mn in the previous year.

Geographically, despite the Brexit impact, revenue from Europe increased by 6% compared to the previous year while revenues from India, the Middle East, Asia and Australia grew by 3.8% over the previous year. Business derived from Europe was 54.9% of our revenues (previous year 51.0%) 35.2% from India, the Middle East, Asia and Australia (previous year 33.3%) and 9.9% from US (previous year 15.7%). The proportion of onsite to offshore revenue stood at 63.3%/36.7% compared to 61.8%/38.2% in the previous year. This has reflected in increase of 0.8% in onsite revenue from Rs.1,631 Mn to Rs.1,645 Mn during the year under review.

The revenue from Group clients for the financial year 2016-17 increased to 17% of revenue as against 11% of revenues during the previous year. On the practice front, Insurance practice grew by 100% compared to the previous year, contributing 13.5% of revenues.

Employee strength, as on March 31, 2017, for the standalone entity was 815 (consolidated 919) compared to 939 (consolidated 1,076) in the previous year. Women employees for the standalone entity count stood at 240 (29% of the total) compared to 288 (31%) in the previous year. For the consolidated, women employees stood at 255 (28%) compared to 309 (29%) in the previous year. The attrition rate increased to 23% for the year ended March 31, 2017 compared to 21% in the previous year.

3. Capital expenditure:

During the financial year 2016-17, we added Rs.70 Mn to our gross block with capital expenditure, which comprised of Rs.22 Mn on account of technology infrastructure, Rs.38 Mn through physical infrastructure, Rs.3 Mn through vehicles and the balance Rs.8 Mn through intangible asset addition.

During the financial year 2016-17, we added a new 250-seater facility. The new facility has been designed as a ‘Delivery Only Center’. The focus was on creating additional project delivery seats and strengthening existing offshore capability. The new floor also includes an inbuilt-training room equipped to deliver technical and non-technical training. The training facility comprises an in-built Video Conference (VC) facility which can facilitate training across all locations. The facility is equipped with a Variable Refrigerant Variant (VAV) High Volume Air Condition (HVAC) system, which will result in energy conservation. The facility is built around existing certification requirements and was recently certified as compliant under Payment Card Industry Data Security Standard (PCI-DSS) requirements.

4. Liquidity:

The Company continues to maintain comfortable cash balances to meet its strategic objectives. The liquid assets as at the end of the year stood at Rs.568 Mn (against Rs.893 Mn in the previous year). Our receivables balance stood at Rs.271 Mn. as compared to Rs.348 Mn. in the previous year. This reflects a validation of customer relationship and a more structured follow-ups practice.

5. Share capital:

At the end of the financial year under review, the Company’s Paid-up Equity Share Capital stood at Rs.106.80 Mn, consisting of 10,679,881 fully Paid-up Equity Shares of Rs.10 each. The exercise of employee share options granted under Thinksoft ESOP Scheme, 2011, resulted in the allocation of 41,132 equity shares during the financial year 2016-17 to employees. As a result, the Company’s paid-up Equity share capital increased from Rs.106.39 Mn to Rs.106.80 Mn. The details of the Thinksoft ESOP Scheme, 2011 and the requirement as specified under Regulation 14 of SEBI (Share Based Employee Benefits) Regulations, 2014 is available at the Company’s website at http:// www.sqs-bfsi.com/investors/corporate-governance-policies.php. The disclosure in compliance of Rule 12 of Companies (Share Capital and Debentures) Rules, 2014, is attached to this report as Annexure I.

6. Net worth:

The Company’s net worth increased to Rs.1,039 Mn as at March 31, 2017 from Rs.871 Mn at the end of the previous year. This works out to a per share net worth of Rs.97.

7. Transfer to general reserve:

During the financial year, the Company transferred Rs.22 Mn, (previous year - Rs.32 Mn) to the general reserve, which represents 10% of the net profit of the Company. As a result, the total amount of general reserve as on March 31, 2017 was Rs.153 Mn (previous year - Rs.131 Mn).

8. Dividend:

The Board of Directors is pleased to recommend a final Dividend of Rs.20/-per share (200% on face value of Rs.10/- each) for the financial year 2016-17. The Board had also declared an interim dividend of Rs.4/-per equity share (40% on face value of Rs.10/- each) on October 20, 2016, which was paid on November 15, 2016.

The final dividend, if approved by the shareholders in the ensuing Annual General Meeting, would result in a total dividend of Rs.24/- per equity share (240% on face value of Rs.10/- each) for the financial year ended March 31, 2017 (previous year - 240% on face value of Rs.10/- each, i.e. Rs.24/- per equity share).

9. Subsidiaries:

The Company operates internationally through five wholly-owned subsidiaries:

a) SQS BFSI Pte. Ltd., Singapore

b) SQS BFSI Inc., USA

c) SQS BFSI UK Ltd., UK

d) SQS BFSI FZE., UAE

e) Thinksoft Global Services (Europe) GmbH, Germany

The Company has initiated action towards voluntary winding up of the German subsidiary. The Company also has branches/place of business in Belgium, Malaysia, Australia and Hong Kong.

The Board of Directors of the Company reviewed the affairs of the Wholly Owned Subsidiaries of the Company for the financial year 2016-17. In accordance with Section 129(3) of the Companies Act, 2013, the Company has prepared the Consolidated Financial Statements of the Company, which forms part of this Annual Report. Further, a separate section on the salient features, performance and financial position of each of the subsidiaries and their contribution to the overall performance of the Company during the period under report, as prescribed under Section 129(3) of the Companies Act, 2013, read with Rule 5 and Rule 8(1) of Companies (Accounts) Rules, 2014, can be found in Annexure II.

The Audited Annual Accounts and related information of subsidiaries, wherever applicable, will be made available to shareholders upon request and will also be available for inspection during normal business hours at the registered office of the Company. The Audited Annual Accounts shall also be available on the website of the Company.

10. Annual Return:

The extracts of the Annual Return for the financial year ended March 31, 2017, as prescribed under Section 92(3) and Section 134(3)(a) of the Companies Act, 2013, read with Rule 12 of Companies (Management and Administration) Rules, 2014, is attached to this report as Annexure III.

11. Number of meetings of the Board:

The Board met four times during the financial year. The dates on which the said meetings were held are as follows: April 28, 2016; July 28, 2016; October 20, 2016 and February 02, 2017. The details of the same are given in the Corporate Governance Report. The intervening gap between the meetings was within the period prescribed under the Companies Act, 2013, and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

12. Corporate Governance and Management Discussion Analysis Report:

A separate section on Corporate Governance, forming part of the Directors’ Report and the certificate from the Company’s auditors confirming compliance with Corporate Governance norms, as stipulated in the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, are included in the Annual Report. The Company has taken adequate steps for strict compliance with the Corporate Governance guidelines, as amended from time to time.

A separate Management Discussion and Analysis Report is also attached and forms part of this report.

13. Declaration given by Independent Directors:

All the Independent Directors of the Company have given their declaration under Section 149(7) of the Companies Act, 2013, confirming that they are in compliance with the criteria of independence as laid down in Section 149(6) of the Companies Act, 2013, and Regulation 25 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, for being an Independent Director of the Company.

14. Policy on Directors’ appointment and remuneration:

The policy of the Company on Directors’ appointment and remuneration, including criteria for determining qualifications, positive attributes, independence of a Director and other matters, as required under Section 178(3) of the Companies Act, 2013, and Regulation 19 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, is available. There has been no change in the policy since the last financial year. The details of the remuneration policy is covered in the Corporate Governance Report.

15. Particulars of loans, guarantees or investments:

The Company did not give any loan to any person or other body corporate, given any guarantee or provided security in connection with a loan to any other body corporate or person or acquired by way of subscription, purchase or otherwise, the securities of any other body corporate. As specified under Section 186 of the Companies Act, 2013, the Company has the following investments in its wholly-owned subsidiaries:

Particulars

March 31, 2017

Rs.

March 31, 2016

Rs.

Unquoted equity instruments (in subsidiaries)

100,000 equity shares (Previous year-100,000 equity shares) of SGD 1/-each in SQS BFSI Pte. Ltd., Singapore

2,658,023

2,658,023

3,000 equity shares (Previous year-3,000 equity shares) of USD 0.01/- each in SQS BFSI Inc., USA

4,625,400

4,625,400

EUR 50,000/-(Previous year-EUR 50,000) in Thinksoft Global (Europe) GmbH, Germany

2,714,774

2,714,774

350,000 equity shares (Previous year-350,000 equity shares) of GBP 1/- each in SQS BFSI UK Ltd., UK

24,168,000

24,168,000

6,000 equity shares (Previous year-6,000 equity shares) of AED 1,000/- each in SQS BFSI FZE., UAE

8,696,000

8,696,000

16. Particulars of contracts or arrangements with related parties:

During the year 2016-17, the contracts and arrangements entered by the Company with related parties were on an “arm’s length” basis and in the ordinary course of business. The contracts and transactions with the promoters M/s SQS Software Quality Systems AG, along with its subsidiaries has exceeded the threshold limit of 10% on the previous year consolidated turnover of the Company. Hence, the transactions with M/s. SQS Software Quality Systems AG and its subsidiaries have become “Material Transactions” as per SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. A transaction limit up to Rs.975 Mn per annum for rendering of services and a limit up to Rs.975 Mn per annum for availing of services for every financial year have been approved by the shareholders in the

Annual General Meeting of the Company held on July 23, 2015. The aforesaid transactions fall within the limits approved by the members. There are no material significant related party transactions made by the Company with Directors, Key Managerial Personnel or other designated persons, which may have a potential conflict with the interests of the Company at large. All related party transactions are placed before the Audit Committee and the Board of Directors for their approval.

In respect of transactions with the wholly owned subsidiaries which are foreseen and repetitive in nature, prior omnibus approval of the Audit Committee is obtained on an annual basis. The transactions entered into pursuant to the omnibus approval so granted are tracked and verified. A statement giving details of all related party transactions is placed before the Audit Committee and the Board of Directors for their approval on a quarterly basis.

The policy on Materiality of Related Party Transactions as approved by the Board of Directors is available on the Company’s website. None of the Directors has any pecuniary relationships or transactions vis-a-vis the Company.

The details of contracts or arrangements with related parties entered during the year are given in a separate annexure to the report in Annexure IV.

17. Material changes and commitments, if any, affecting the financial position of the Company:

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

18. Transfer to Investor Education and Protection Fund:

As required under the provisions of Section 124, other applicable provisions of Companies Act, 2013, and the rules made there under, the Company is required to transfer the dividends that remain unpaid/unclaimed for a period of seven years and all the shares, in respect of which unpaid/unclaimed dividend has been transferred to Investor Education and Protection Fund (IEPF), if the dividend pertaining to those shares remains unclaimed/unpaid for a period of seven consecutive years to an IEPF, an account administered by the Central Government. On transfer of the amounts to IEPF, no claim shall lie in respect of those amounts against the Company. During the financial year 2016-17, an amount of Rs.65,500/-, which was lying in the IPO refund account of the Company was transferred to the IEPF on completion of 7 years.

Members who have so far not encashed their dividend warrant(s) or those yet to claim their dividend amounts, may write to the Company Secretary/Company’s Registrar and Share Transfer Agent (Karvy Computer Share Private Limited).

19. Conservation of energy, research and development, technology absorption, foreign exchange earnings and out go:

(A) Conservation of energy:

(i) The steps taken that impact conservation of energy:

Following on the eco-friendly and go-green initiatives started earlier, the Company continues to work on reducing its carbon footprint, energy conservation and usage of alternative energy, wherever possible. The Company has completely moved to usage of Ultra Small Form Factor (USFF) / Small Form Factor (SFF) based desktops to reduce the power requirement.

The Company has replaced all the conventional lights used for perimeter lighting with LEDs which is expected to reduce the overall power consumption. The Company also continues to implement light sensors in all cabins and have implemented Variable Refrigerant Flow (VRF) systems in the new premises to reduce power wastage in unoccupied cabins and meeting rooms.

The Company has also planted new trees across its Madras Export Processing Zone (MEPZ), Tambaram, premises to compensate the ones which fell during the recent cyclone in Chennai.

(ii) Steps taken by the Company for utilizing alternate sources of energy - The Company’s registered office is located in a tech park wherein close to 50% of the energy consumed is being sourced from the grid using wind turbines, thus promoting ‘Green Energy’.

(iii) Capital investment on energy conservation equipment - Nil

(B) Research & Development and Technology absorption:

i) The Company is focusing on latest technologies in Big Data, IoT (Internet of Things), DevOps, mobile and machine learning (artificial intelligence) areas to stay ahead of its competition and to provide the best of its services to the customer.

(ii) The Company continues to focus on tools and frameworks in test automation, performance testing, security testing and performance engineering and data centric testing to improve its offering to the customers.

(iii) The Company has successfully setup the group’s first Big Data lab in Chennai and has become the Big Data testing and analytics hub for the entire SQS group of companies. The Company has also setup the first DevOps lab in Chennai and has trained its employees in Big Data and DevOps areas to be ready for the markets.

(iv) The Company developed a tool called FaXimme. This is a simulator that aids issuers, acquirer and network providers to rapidly test payment transactions in a simulated/automated environment. This in fact helps testing the software systems for messaging compliance without a physical connection in a live production environment. This has been developed to work in hosted/cloud environment, allows multiple users and instances to be deployed. The product has generated substantial interest amongst the clients, who have experienced it. The Company as such is confident of making progress in marketing the tool to its existing and prospective clients.

(v) The Company has absorbed appropriate technology advancements in providing the best services to its customers, with a focus of providing the same without any major financial implications to the organization. The Company has invested in infrastructure which is compliant and has been certified under established standards including SSAE 16 (Statement on Standards for Attestation Engagements), ISAE 3402 (the International Standard on Assurance Engagements) and Payment Card Industry Data Security Standard (PCI-DSS).

(vi) The Company is working on a test process improvement by leveraging its domain knowledge to further bring in more efficiency in requirements and test planning. This process re-engineering, can help to generate requirements, high level and detailed test scripts along with navigation steps. The heart of this process is right blend of ‘technical re-usable components’ and ‘domain re-usable components’ in accordance with business process, to achieve test automation much faster, quicker and better, there by reflecting true shift-left. This process enhancement can take testing to the next level, where the customers can benefit from standardized high quality test assets, with comprehensive test coverage.

(vii) The video conference systems have been enhanced and the Company has moved towards using Microsoft Skype for business as its primary business-meeting platform, with an objective of reducing travel cost.

(viii) The procurement system continuously ensures cost effective purchases of the hardware, more through local vendors, thereby reducing imports dependency. Where required, the Company also imports servers, switches etc., and using foreign currency from out of its Exchange Earners’ Foreign Currency (EEFC) accounts.

(ix) There are no imported technologies during the last three financial years.

(C) Foreign exchange earnings and outgo:

The year 2016-17 was challenging for us, considering the effects of Brexit, currency volatility and increasing protectionism being witnessed across regions.

Foreign exchange earned during the year in terms of actual inflows was Rs.2,347 Mn. Foreign exchange outgo during the year in terms of actual outflows was Rs.1,128 Mn.

20. Risk management:

The Company is committed to effectively manage its operational, financial and other risk with a view to achieve a balance between acceptable levels of risk and reward. The Company has a policy on risk assessment and minimization procedures which describes the risk management methodology, structures and systems involving personnel at all levels of the Company to manage various business uncertainties and to enable arriving at the right decisions pertaining to all business divisions and corporate function. Risk Management in the Company includes identification, assessment, monitoring and mitigation of various risks through a comprehensively evolved process over the years.

This includes:

- Quarterly internal audits by an independent firm;

- Regular process compliance audits for ISO 9001 and ISO 27001 standards;

- Periodic audits of compliance to other regulatory frameworks;

- Annual capital and revenue budget planning followed by monthly reviews; annual sales planning with monthly/periodic monitoring;

- Annual perspective and strategic planning exercise with yearly update; a conservative approach in planning funding requirements.

The Company has developed, over the last few years, a comprehensive internal financial control processes and procedures that could effectively mitigate the overall organizational risks. These processes and controls form part of review, verification and improvement by our internal audit and process teams, as detailed in the following section.

21. Adequacy of Internal Financial Controls:

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

An extensive programme of internal audits and management reviews supplements the process of Internal Financial Control framework. Properly documented policies, guidelines and procedures are laid down for this purpose. The Internal Financial Control framework has been designed to ensure that the financial and other records are reliable for preparing financial and other statements and for maintaining accountability of assets. In addition, the Company has identified and documented the risks and controls for each process that has a relationship to the financial operations and reporting.

The Company also has an Audit Committee, comprising of 4 (Four) Directors, who interact with the Statutory Auditors, Internal Auditors and Management in dealing with matters within its terms of reference. This Committee mainly deals with accounting matters, financial reporting and internal controls.

The frame work for the Internal Financial Controls was made by:

- Defining controls, governance and standards, which includes policies and procedures, organizational structures and performance objectives.

- Establishing control designs, which includes roles and responsibilities, risk identification and capacity to deliver business objectives.

- Evolving controls including control systems and improvements.

- Compliance and control monitoring through internal resource or through audit or a combination of both.

The internal audit team along with the process team monitors and evaluates the efficacy and adequacy of internal control systems in the Company, its compliance with operating systems, accounting procedures and policies of the Company. Based on the report of internal audit, corrective actions, if any, in the respective areas are undertaken and controls strengthened. Significant audit observations and responses/corrective actions, if any, are presented to the Audit Committee of the Board.

During the year, review of Internal Financial Control (IFC) has been carried out by the Statutory Auditors and the report thereat annexed as part of Independent Auditor’s Report.

22. Corporate social responsibility:

The essence of Company’s policy on Corporate Social Responsibility (CSR) is to contribute towards education, supporting differently abled, supporting clean and green environment and sensitizing employees on their responsibility towards society and encouraging them to take active part in various Company initiatives.

The Company has been supporting Vidya Sagar, (earlier known as the Spastics Society of India) a Non-Government Organization (NGO) in Chennai providing support to needy children/people with disability, focusing on early intervention, special education, physiotherapy, vocational training, communication therapy, etc. The Company makes periodical contributions by way of an endowment fund to ensure generation of certain fixed income to take care of their day-to-day operational expenses over a period of time. Employees are encouraged to contribute to Vidya Sagar in support of this initiative, the Company contributes an amount equal to the employee’s contribution to Vidya Sagar. The Company has contributed for installation of hybrid type solar panels with back-up facility in Vidya Sagar.

The Company has also contributed to an NGO, World Vision India, towards improvement of sanitation facilities in a Government School in Erukampattu Village, in Vellore district and to another school in Dyaneshwar, Mumbai, towards renovating their dilapidated classrooms, providing bench and chairs for the classrooms and towards setting up a computer center.

During the year 2016-17, the Company included Agastya International Foundation, an NGO, as one more beneficiary under the CSR initiatives. Agastya’s mission is “To spark curiosity, nurture creativity and instill confidence” in economically-disadvantaged children and government school teachers by bringing innovative, hands-on science education and peer-to-peer learning to government schools and villages across India. The Company contributed to 3 nos. of TechLaBike projects to ensure good number of exposures to students in schools in Chitoor, Palamaner and Tirupati.

The details about the policy developed and implemented by the Company on Corporate Social Responsibility and initiatives taken during the year are given as Annexure V as required under Companies (Corporate Social Responsibility Policy) Rules, 2014.

23. Composition of Audit Committee:

The Audit Committee of the Company has been constituted in line with the provisions of Section 177 of Companies Act, 2013 read with Regulation 18 of the SEBI (Listing Obligations Disclosure Requirements) Regulations, 2015.

The members of the Audit Committee are as follows:

1) Prof. K Kumar, Chairman

2) Prof. S Rajagopalan, Member

3) Mr. Rajiv Kuchhal, Member

4) Mr. Rene Gawron, Member

24. Recommendation of Audit Committee:

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

25. Vigil mechanism:

The Company has formulated and adopted a vigil mechanism for employees to report genuine unethical and improper practices or any other wrongful conduct in the Company to the Chairman of the Audit Committee. The Policy provides opportunities for employees to access the Audit Committee in good faith, if they observe unethical and improper practices. The Whistle Blower Policy of the Company is available in the website of the Company. The link for the same is http:// www.sqs-bfsi.com/investors/corporate-governance-policies.php

26. Directors’ Responsibility Statement as required under Section 134(5) of the Companies Act, 2013:

Pursuant to Section 134(5) of the Companies Act, 2013, the Directors confirm that:

a. In the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

b. Accounting policies had been selected and applied consistently; made judgments and estimates that were reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit and loss of the Company for that period;

c. Proper and sufficient care was taken for the maintenance of adequate accounting records in accordance with the provisions of this Act to safeguard the assets of the Company, to prevent and detect fraud and other irregularities;

d. Annual accounts were prepared on a going concern basis;

e. Adequate Internal Financial Controls were laid down by the Company and that such internal financial controls are adequate and these were operating effectively;

f. Proper systems were devised to ensure compliance with the provisions of all applicable laws and such systems were adequate and operating effectively.

27. Board evaluation:

Pursuant to the provisions of the Companies Act, 2013, and SEBI (Listing Obligations Disclosure Requirements) Regulations, 2015, the Board of Directors of the Company in their meeting held on April 27, 2017, evaluated its own performance, that of its committees and individual directors including Independent Directors. No Director participated in his/ her own evaluation.

The Independent Directors reviewed the performance of the Non-Executive Directors, Chairman and the Board at a meeting of Independent Directors held on February 02, 2017. The Board of Directors were evaluated on various criteria including attendance, participation in board meetings, their involvement by way of providing advice, guidance, suggestions on the business front and the willingness and commitment to devote their extensive time necessary to fulfill his/her duties.

The Independent Directors were also evaluated based on the professional conduct, roles and duties as specified in Schedule IV to the Companies Act, 2013. The evaluation of the Board as a whole was based on composition and statutory compliance, understanding of business risks, adherence to process and procedures; overseeing management’s procedures for enforcing the organization’s code of conduct, ensuring that various policies, including the whistle blower policy of the Company, were in force and actions were taken as appropriate.

28. Criteria for making payment to non-Executive Directors:

The Nomination and Remuneration Committee and the Board of Directors, while deciding up on the payments to be made to the non-executive directors have considered the following criteria for making payments to non-executive directors:

- Performance of the Company

- Maintenance of independence & adherence to Corporate Governance

- Contributions during the meeting and guidance to the Board on important policy matters of the Company

- Active participation in strategic decision making and informal interaction with the management

29. Familiarization programs:

The Company has a familiarization program for Independent Directors pursuant to Regulation 25(7) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The aim of the familiarization program is to provide insights into the Company to the Independent Directors to enable them to understand the Company’s business in depth and contribute significantly to the Company. The overview of the familiarization process and details of the familiarization programs imparted to the Independent Directors have been updated in the Company’s website at http://www.sqs-bfsi.com/investors/corporate-governance-policies.php.

30. Policy for determining material subsidiaries:

Pursuant to Regulation 16(1)(c) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, a policy for determining material subsidiaries has been formulated by the Company. The same is dealt with elsewhere in the Annual Report.

31. Particulars of employees:

In accordance with the provisions of Section 197 of the Companies Act, 2013 read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended, a statement containing the names of every employee employed throughout the financial year and in receipt of a remuneration of Rs.1.02 crore or more per annum or employed for part of the financial year and in receipt of Rs.8.5 lakhs per month the required information is annexed and forms part of this Report in Annexure VI A and the ratio of remuneration of each director to that of median employees’ remuneration as per Section 197 (12) of Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended, forms part of this Report in Annexure VI B.

32. Directors & Key Managerial Personnel:

Mr. Reji Thomas Cherian (DIN-00505540) has resigned as Non-Executive Director of the Company with effect from April 27, 2017. He was appointed as a Non-Executive Director of the Company by the shareholders in the Annual General Meeting held on July 28, 2016. We thank him for his support and contribution as Non-Executive Director and wish him well in his new ventures.

In accordance with the provisions of the Companies Act, 2013 and the Articles of Association of the Company, Mr. Rene Gawron (DIN-06744645) retires by rotation, and being eligible, offers himself for reappointment.

33. Public deposits:

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

34. Status of application money refund:

An amount of Rs.65,500/- was lying unpaid/unclaimed in the IPO refund account of the Company. As per Section 124 and 125 of the Companies Act, 2013, the said amount was transferred to the Investor Education and Protection fund on November 4, 2016 upon completion of seven years as required under the Companies Act, 2013.

35. Statutory Auditors:

M/s PKF Sridhar & Santhanam LLP, Chartered Accountants, Chennai, is the Auditors of the Company. They were appointed in the 16th Annual General Meeting till the conclusion of third consecutive Annual General Meeting of the Company and subject to ratification by the shareholders at every Annual General Meeting.

Pursuant to the provisions of Section 139 of the Companies Act, 2013 read with The Companies (Audit and Auditors) Rules, 2014 and based on the recommendation made by the Members of Audit Committee, the Board of Directors at their meeting held on April 27, 2017, considered and recommended to the Members of the Company, for their approval, the appointment of M/s. Kalyaniwalla & Mistry LLP, Chartered Accountants, Mumbai, as the Statutory Auditors of the Company from the conclusion of 19th Annual General Meeting till the conclusion of 24th Annual General Meeting, subject to ratification of such appointment, at every Annual General Meeting.

The report issued by the Auditors to the members for the financial year ended March 31, 2017 does not contain any qualification, reservation or adverse remark or disclaimer.

36. Secretarial Audit Report:

Pursuant to Section 204 of the Companies Act, 2013 and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed M/s. M. Alagar & Associates, Practicing Company Secretary as the Secretarial Auditor of the Company in the Board Meeting held on July 28, 2016 for the financial year 2016-17. The Secretarial Audit Report issued by M/s M. Alagar & Associates is annexed and forms part of this Report in Annexure VII.

The Secretarial Audit Report does not contain any, reservation or adverse remark for the year under review.

37. Material orders passed by the regulators, courts or tribunals:

There are no significant and material orders passed by the regulators or courts or tribunals that may have an impact for the Company as a going concern and/or Company’s operations.

38. Human potential:

The Company continues to invest in its employees to enhance its core competence and competitive market position. Training is designed to build domain knowledge, technical skill, language proficiency and ability to proactively respond to emerging developments in a dynamic market.

Aligned with our focus on enriching our human resource capabilities, we ensured average training of about 47 hours per person during the financial year 2016-17 to maintain the industry average. The number of employees with zero training hours sharply declined to 5% during 2016-17 (11% in the previous year). Employees’ with more than five years’ experience with the Company was at 32% (26% in the previous year). The workplace diversity was maintained at 29%, represented by women.

Going into 2017-18, we intend to continue to focus on employee training and reskilling in the face of fast changing technology in a digitalizing world, with an emphasis on artificial intelligence and machine learning.

39. Quality, Technology and Systems:

All offshore testing centers of the Company adhere to certification for Quality Management System ISO 9001: 2015 and ISO 27001: 2013 Information Security Management System.

The Company recognizes its quality assurance in independent software testing services to Banking, Financial Services and Insurance organizations using its proven offshore delivery model. The framework established as part of service delivery compliance ensures that the company’s independent software testing services and offerings maintain consistent quality and processes, employing best practices, and using a proven project management methodology to enhance customer satisfaction and to ensure continuous improvement.

SSAE 16 (Statement on Standards for Attestation Engagements)/ISAE 3402 (the International Standard on Assurance Engagements):

Data protection is critical for the Company in maintaining its services to clients. The offshore TCoE (Testing Centre of Excellence) of the Company in Chennai is fully compliant with ISAE 3402 (the International Standard on Assurance Engagements) and SSAE 16 (Statement on Standards for Attestation Engagements). SSAE 16/ ISAE 3402 is an independent assessment report that provides the confidence on control procedures, adequacy and reasonable assurance in our service delivery and information security, data privacy related controls.

PCI-DSS (Payment Card Industry Data Security Standard):

The Company is also compliant with PCI-DSS, (Worldwide Data security standard defined by the Payment Card Industry Security Standards Council) which ensures data security and reduces the risk of data breaches. Data protection controls include Complete Secured Physical/Logical Work Environments, Multilayer Encryption for data at transmission, Processing and Storage, Comprehensive Privacy Framework, Detailed Risk and Governance Framework, Wireless Intrusion and Prevention System, Enhanced HR Security Controls, Intensive Vulnerability Management Program by Authorized Scan Vendors (ASV) and automated monitoring controls.

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

The Company has a Policy on Sexual Harassment Prevention in place, in line with the requirements of “The Sexual Harassment of Women at Work place (Prevention, Prohibition and Redressal) Act, 2013”. The Internal Complaints Committee (ICC) has been set up to redress any complaints received regarding sexual harassment. All employees are covered under this policy.

The following is the summary of the complaints received / cases filed and disposed-off during the financial year 2016-17:

a) No. of complaints received/cases filed: Nil

b) No. of complaints disposed-off: Nil

41. Listing fees:

The Company confirms that it has paid the annual listing fees for the financial year 2016-17 to both National Stock Exchange of India Limited and Bombay Stock Exchange Limited.

42. Acknowledgments:

We thank our customers, bankers and service providers for their continued support during the year. We place on record our appreciation for the contribution made by our employees at all levels. Our success was made possible by their hard work, loyalty, cooperation and support.

We thank the Government of India, particularly the Ministry of Communication and Information

Technology, the Ministry of Commerce, the Ministry of Finance, the Ministry of Corporate Affairs, the Customs and Excise Departments, the Income Tax Department, the Reserve Bank of India, the State Governments, Madras Export Processing Zone (MEPZ) and other government agencies for their support and look forward to their continued support in the future. We also thank the Governments of various countries where we have operations.

The Directors also wish to place on record their appreciation of business constituents like SEBI, NSE, BSE, NSDL, CDSL etc. for their continued support for the growth of the Company.

The Directors also thank investors for their continued faith in the Company.

For and on behalf of Board of Directors of SQS India BFSI Limited

Place: Chennai David Bellin

Date: April 27, 2017 Chairman & Director


Mar 31, 2015

To the Members,

We are presenting herewith, the report on our business and operations for the year ended March 31,2015.

1. Financial Highlights for the year ended March 31, 2015 Consolidated

Rs. in Mn March 31, 2015 March 31, 2014

Total Revenue 2,159 2,046

Employee benefits expense 1,361 1,182

Depreciation and amortization expense 52 57

General, administrative and other expenses 410 365

Finance cost 16 20

Total expenses 1,839 1,624

Profits Before Taxes 320 422

Taxes 104 122

Profit for the year 216 300

Earnings per Equity share (Par value of Rs.10 each)

Basic 20.86 29.53

Diluted 20.57 28.66



Standalone

Rs. in Mn March 31.2015 March 31.2014 Total Revenue 2,159 2,031

Employee benefits expense 812 786

Depreciation and amortization expense 52 56

General, administrative and other expenses 998 799

Finance cost 16 20

Total expenses 1,878 1,661

Profits Before Taxes 281 370

Taxes 96 116

Profit for the year 185 254

Earning per Equlity share (Par value of Rs.10 each)

Basic 17.81 25.01

Diluted 17.56 24.27

2. Business and Operations Review:

Total Operating Revenues increased, in Rupee terms by 10%, to Rs.2,141.55 Mn during the 2014-2015 financial year, from Rs.1,944.44 Mn in the previous year. In US dollar terms this also amounts to an increase of 10%.

- During the year, repeat business from existing clients accounted for 91% of revenues, up from 79% the previous year. New client acquisition contributed 9% of revenues. New business is expected to grow as synergies within the SQS Group feed through the sales pipeline.

- Profit after tax at Rs.185 Mn, representing 8.6% of revenues as against Rs.254 Mn (13.1%) for the previous year. Currency fluctuations resulted in a loss for the year of Rs.37 Mn compared to a gain of Rs.62 Mn in the previous year.

- Geographically, 46.24% of revenues came from Europe (previous year 48.62%), 31.58% from India, Middle East, Asia and Australia Regions (previous year 31.76%), 22.18% from America (previous year 19.62%) and the proportion of onsite to offshore revenues stood at 55.34% /44.66% compared to 53.49% / 46.51% in the previous year. This is reflected in the increase of 14% onsite Revenue from Rs.1,040.04 Mn to Rs.1,185.21 Mn during the year under review.

- Employee expenses increased due to higher onsite deployments with onsite revenue increasing to 55% of the total Revenue (previous year 53%).

- Employee strength, as at March 31,2015 for the standalone entity was 767 (consolidated 907) compared to 803 as at March 31,2014 (consolidated 905). Women employees standalone count stood at 221 (29% of the total) compared to 223 (28%) in the previous year. For the consolidated group women employees stood at 250 (28%) compared to 252 (28%) in the previous year. The attrition rate remained at 17% for the year ended March 2015.

3. Capital Expenditure:

During the year, Rs.20.61 Mn of capital expenditure was added to a gross block comprising of Rs.14.86 Mn on technology infrastructure, Rs.1.95 Mn on physical infrastructure, Rs.1.44 Mn on Vehicles, Rs.2.36 Mn addition on intangible assets.

4. Liquidity:

The company continues to maintain sufficient cash to meet its strategic objectives. The liquid assets at the end of the year stood at Rs.1,034.72 Mn (as against Rs.878.70 Mn previous year). Year-end Account Receivables stood at Rs.549.81 Mn (94 days sales) as against Rs.517.86 Mn previous year (97 days sales). The increase in Accounts Receivables is mainly attributed to increased revenues.

5. Share Capital:

As at the end of the financial year the Company''s Equity Share Capital stands at Rs.105.45 Mn, consisting of 10,545,299 fully paid up Equity Shares of Rs.10 each.The exercise of employee share options granted under Thinksoft ESOP Scheme 2011 resulted in the allocation of 277,618 equity shares during the Financial Year 2014- 15 to employees. As a result, the paid-up capital of the company increased from Rs.102.68 Mn to Rs.105.45 Mn. The disclosure in compliance of Rule 12 of Companies (Share Capital and Debentures) Rules, 2014 is attached to this report as Annexure I.

6. Net Worth:

The net worth of the Company moved to Rs.848.56 Mn as at March 31,2015 from Rs.946.32 Mn at the end of the previous fiscal. This reduction reflects the Proposed Final Dividend of Rs.20/- per share. This works out to a per share net worth of Rs.80.47.

7. Transfer to Reserves:

During the financial year, the Company has transferred Rs.18.48 Mn, (previous year Rs.25.44 Mn) to reserves, which represents 10% of the net profits of the Company. As a result, the total amount of General Reserve as on March 31,2015 was Rs.99.49 Mn (Rs.81.01 Mn as at the end of the previous year).

8. Dividend:

Based on the Company''s performance, the Net Cash Position of the Company and the first year anniversary of integration with the SQS Group, the Board of Directors is pleased to recommend a final Dividend of Rs.20/- per share (200% on face value of Rs.10/- each) for the financial year 2014-15. This consists of Rs.5 being the normal dividend and Rs.15 as a one-off special dividend. The Board had also declared an interim dividend of Rs.4/- per equity share (40% on face value of Rs.10/- each) on October 30, 2014.

The Final Dividend, if approved by the Shareholders in the General Meeting, would result in a total dividend of Rs. 24/- per equity share (240% on face value of Rs.10/- each) for the financial year ended March 31,2015. (Previous year 90% on face value of Rs.10/- each, i.e. Rs.9 /- per equity share).

9. Change of Name of the company:

As approved by the Shareholders in the Sixteenth AGM, the name of the Company has been changed from Thinksoft Global Services Limited to SQS India BFSI Limited.

The company continues to have a global presence through its subsidiaries, branches and places of business.

10. Subsidiaries:

a. Change of names of Subsidiaries:

During the year the names of the Wholly Owned Subsidiaries were changed to reflect the branding of the SQS Group, except for the subsidiary in Germany, which is being wound up. The company now has the following five wholly owned subsidiaries:

a) SQS BFSI Pte. Ltd (formerly Thinksoft Global Services Pte. Ltd.,), Singapore

b) SQS BFSI Inc. (formerly Thinksoft Global Services Inc.,), USA

c) Thinksoft Global Services (Europe) GmbH, Germany (being wound up)

d) SQS BFSI UK Ltd (formerly Thinksoft Global Services UK Ltd.,), UK

e) SQS BFSI FZE (formerly Thinksoft Global Services FZE.,), UAE

The names of overseas branches have also adopted the SQS BFSI identity. The Company has branches in Belgium, Malaysia, Australia, Hong Kong, UK and Cyprus. During the year the company initiated steps for the closure of the branch in Cyprus, due to uncertain economic and political conditions there.

b. Financial Statement of Subsidiaries:

A separate section on the salient features of the financial statements of subsidiaries, as prescribed under Section 129(3) of the Companies Act, 2013 read with Rule 5 of Companies (Accounts) Rules, 2014 can be found in Annexure II.

The Audited Annual Accounts and related information of subsidiaries, wherever applicable, will be made available to shareholders upon request and will also be available for inspection during normal business hours at the registered office of the company. The Audited Accounts shall also be available at the website of the Company.

11. Annual Return:

The Company filed its Annual Return for the year 2013-14 on September 09, 2014. It was filed in Form 20B as per the provisions of Companies Act, 1956. The extracts of the current Annual Return for the present financial year as prescribed under Section 92 read with Rule 12 of Companies (Management and Administration) Rules, 2014 is attached to this report as Annexure III.

12. Number of meetings of the Board:

Eight Board Meetings were held during the year and the gap between any two meetings did not exceed 120 days. The dates on which the said meetings were held are as follows: April 03, 2014, April 23, 2014, June 02, 2014, June 13, 2014, June 21,2014, July 24, 2014, October 30, 2014 and January 22, 2015. The details of the same are given in the Corporate Governance Report. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013.

13. Corporate Governance and Management Discussion Analysis Statement:

A separate section on Corporate Governance forming part of the Directors'' Report and the certificate from the Company''s auditors confirming compliance with Corporate Governance norms as stipulated in Clause 49 of the Listing Agreement with National Stock Exchange of India (NSE) and Bombay Stock Exchange (BSE) is included in the Annual Report. The Company has taken adequate steps for strict compliance with the Corporate Governance guidelines, as amended from time to time.

A separate Management Discussion and Analysis Report is also attached and forms part of this report.

14. Declaration given by Independent Directors:

All the Independent Directors of the Company have given their declaration under Section 149 (6) of the Companies Act 2013, confirming that they are in compliance with the criteria as laid down in the above said Section for being an Independent Director of the Company.

15. Policy on Directors'' Appointment and Remuneration including criteria for determining qualifications, positive attributes, independence of a director:

The Board has, on the recommendation of the Nomination & Remuneration Committee, framed a policy for the selection and appointment of Directors, Senior Management and their remuneration. The Remuneration Policy is stated in the Corporate Governance Report.

16. The Board observed that there are no qualifications or reservations by the Auditors as well as by the Secretarial Auditor in their reports.

17. Particulars of loans, guarantees or investments:

The Company has not given any loan to any person or other body corporate, given any guarantee or provided security in connection with a loan to any other body corporate or person or acquired by way of subscription, purchase or otherwise, the securities of any other body corporate. As specified under Section 186 of the Companies Act 2013. The company has the following investments in its Wholly Owned Subsidiaries:

Particulars March 31,2015 Rs.

Unquoted equity instruments (in subsidiaries) 100.000 equity shares (Previous year -100,000 equity shares) of SGD 1/- each in SQSBFSI Pte. Ltd (formerly Thinksoft Global Services Pte. Ltd.,) Singapore 2,658,023

3.000 equity shares (Previous year -3,000 equity shares) of USD 0.01/- each in SQS BFSIInc. (formerly Thinksoft Global Services Inc.,) USA 4,625,400

EUR 50,000/- (Previous year - EUR 50,000) in Thinksoft Global (Europe) GmbH, Germany 2 714 774 350.000 equity shares (Previous year -350,000 equity shares) of GBP 1/- each in SQS BFSI UK Ltd (formerly Thinksoft Global Services UK Ltd.,)UK 24,168,000

24 equity shares ( Previous year - 24 equity shares) of AED 25,000/- each in SQS BFSIFZE (formerly Thinksoft Global Services FZE.,) UAE 8,696,000

Particulars March 31,2014 Rs.

Unquoted equity instruments (in subsidiaries) 100.000 equity shares (Previous year -100,000 equity shares) of SGD 1/- each in SQS BFSI Pte. Ltd (formerly Thinksoft Global Services Pte. Ltd.,) Singapore 2,658,023

3.000 equity shares (Previous year -3,000 equity shares) of USD 0.01/- each in SQS BFSIInc. (formerly Thinksoft Global Services Inc.,) USA 4,625,400

EUR 50,000/- (Previous year - EUR 50,000) in Thinksoft Global (Europe) GmbH, Germany 2,714,774

350.000 equity shares (Previous year -350,000 equity shares) of GBP 1/- each in SQSBFSI UK Ltd (formerly Thinksoft Global Services UK Ltd.,) UK 24,168,000

24 equity shares ( Previous year - 24 equity shares) of AED 25,000/- each in SQS BFSIFZE (formerly Thinksoft Global Services FZE.,) UAE 8,696,000

18. Particulars of contracts or arrangements with related parties:

During the year 2014-15 the contracts and arrangements entered by the Company with related parties were on an "arm''s length" basis and in the ordinary course of business. There are no materially significant related party transactions made by the Company with Promoters, Directors, Key Managerial Personnel or other designated persons, which may have a potential conflict with the interests of the Company at large. All Related Party Transactions are placed before the Audit Committee and also the Board for approval. Prior omnibus approval of the Audit Committee is obtained on an annual basis for the transactions which are foreseen and repetitive in nature. The transactions entered into pursuant to the omnibus approval so granted are verified and a statement giving details of all related party transactions is placed before the Audit Committee and the Board of Directors for their approval on a quarterly basis.

The policy on materiality of Related Party Transactions as approved by the Board is uploaded on the Company''s website. None of the Directors has any pecuniary relationships or transactions vis-a-vis the Company.

The details of contracts or arrangements with related parties entered during the year were given in a separate annexure to the report in Annexure IV.

19. Material changes and commitments, if any, affecting the financial position of the company:

There are no material changes or commitments affecting the financial position of the company, which have occurred between the end of the financial year of the company to which the financial statements relate and the date of the report.

20. Transfer to Investor Education and Protection Fund:

As required under the provisions of Section 205A and 205C and other applicable provisions of Companies Act, 1956 (the corresponding provisions in the Companies Act, 2013 have not been notified, and hence the earlier law is still applicable in respect of these provisions), the Company is required to transfer the dividends that remain unpaid/ unclaimed for a period of seven years, to an Investor Education and Protection Fund ("IEPF"), an account administered by the Central Government. On transfer of the amounts to IEPF, no claim shall lie in respect of those amounts against the Company. During the financial year 2014-15, no unpaid or unclaimed dividend was transferred to the IEPF. There is no requirement to transfer any funds to the Investor Education & Protection Fund during the year 2015-16.

All Members who have so far not encashed their dividend warrant(s) or those yet to claim their dividend amounts, may write to the Company/Company''s Registrar and Share Transfer Agent, Karvy Computershare Private Limited.

21. Conservation of energy, research and development, technology absorption, foreign exchange earnings and outgo:

(A) Conservation of energy:

(i) The steps taken that impact on conservation of energy:

The Company continues its drive on ''going green'' and has initiated steps to conserve resources, reduce its carbon footprint and create sustainable alternatives wherever feasible. The Company''s current operations do not require high-energy consumption and the company continues its drive to adopt various measures to optimize energy usage.

The conservation steps include:

- Deployment of low power consuming desktops, reducing total power consumption.

- Managing business expansions without additional data centers.

- Deployment of human detector sensors to automatically switch off lights when no human presence is detected.

- Shutting down air conditioners on a budgeted hours basis.

- Switching to CFL lighting.

- Utilising more Video conferencing (VC) to reduce travel costs and improve energy savings.

- Continuing the disposal of e-waste generated in-house through vendors who adopt "Safe disposal practices", recycling and re-manufacture of printers, toners and cartridges.

All these initiatives are taken forward at a sustained pace.

(ii) The steps taken by the company for utilising alternate sources of energy - Nil

(iii) The capital investment on energy conservation equipment - Nil

(B) Technology absorption:

(i) The efforts made towards technology absorption:

SQS India BFSI Limited has absorbed appropriate technology advancements in providing the best services to its customers, with a focus of providing the same without any major financial implications to the organization. The company has invested in infrastructure which is compliant and has been certified under established standards including SSAE 16, ISAE 3402 and PCI-DSS.

(ii) The benefits derived in terms of product development and improvement, cost reduction, and import

substitution:

There has been a continuous effort towards improving the systems and hardware through local / procurement from national and local vendors, thereby reducing import dependency.

(iii) In case of imported technology (imported during the last three financial years):

(a) The details of technology imported;

(b) The year of import;

(c) Whether the technology been fully absorbed;

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

(iv) The expenditure incurred on Research and Development

These sections (iii & iv) are not applicable.

For and on behalf of Board of Directors of SQS India BFSI Limited

(Formerly Thinksoft Global Services Limited)

Place : Chennai David Bellin Date : May 18, 2015 Chairman & Director


Mar 31, 2014

To the Members,

SQS Software Quality Systems AG Acquires Majority Stakes in Thinksoft:

SQS Software Quality Systems AG, entered into an agreement, on November 8, 2013, with the promoters of Thinksoft Global Services Limited, to acquire majority stakes in Thinksoft Global Services Limited and made an Open Offer to the public shareholders according to SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011. As a result, SQS Software Quality Systems AG, had acquired majority stakes in the Company by acquiring up to 53.35% of the shares in Thinksoft Global Services Limited and the Company has become a subsidiary of SQS Software Quality Systems AG.

This acquisition will create a platform for accelerated growth with the potential to increase sales and shareholder returns.

We are presenting herewith, the report on our business and operations for the year ended March 31, 2014.

1) Financial Highlights for the year ended March 31, 2014.

Consolidated Standalone Rs. Millions (Mns) March 31, 2014 March 31, 2013 March 31, 2014 March 31, 2013

Total Revenue 2,046 1,639 2,031 1,601

Employee benefits expense 1,182 946 786 607

Depreciation and amortization expense 57 46 56 46

General, administrative and other expenses 365 367 799 704

Finance cost 20 15 20 14

Total expenses 1,624 1,374 1,661 1,371

Profits Before Taxes 422 265 370 230

Taxes 122 70 116 67

Profit for the year 300 194 254 163

Earnings per Equity share (Par value of Rs.10 each)

Basic 29.53 19.32 25.01 16.20

Diluted 28.66 19.03 24.27 15.95

2) Business and Operations Review:

Total Operating Revenues increased, in Rupee terms by 20 %, to Rs. 1944.44 Mns this year, from Rs. 1614.43 Mns in the previous year (In US dollar terms this amounts to an increase in revenues of 8% ).

- While the existing customers continue to support us, Revenues from new business increased from 7% in the previous year to 19% in the current year.

- Profit after tax at Rs. 300 Mns constituted 15.4% of revenues as against Rs. 194 Mns (12.0 %) for the previous year. Exchange Gain contributed Rs. 77 Mns during this year compared to Rs. 10 Mns in the previous year.

- Geographically, 48.62% of the revenues came from Europe (previous year 35.09 %), 31.76% from India, Middle East, Asia and Australia Regions (Previous year 37.53%), 19.61% from America (Previous year 27.38%) and the proportion of onsite to offshore revenues stood at 53.49 % /46.51 % compared to 47.54%/52.46% in the previous year. This is reflected in an increase of 35 % in onsite Revenue from Rs. 767.57 Mns to Rs. 1040.04 Mns during the current year.

- Employee expenses increased due to increase in the number of employees from 782 from March 31, 2013 to 905 by end of March 31, 2014. Onsite revenue increase from 47% in the previous year to 53% increase in the current year and consequent increase in salary cost. There was a one-time payment of Rs. 50 Mns (previous year - nil), towards severance pay to two of the Whole Time Directors during the current year.

- The general administrative and other overheads marginally decreased due to consolidation of facility centres to owned facilities resulting in savings in rent and other associated costs.

- Employee strength was 905 (women 27.8%) at the end of the year compared to 782 (women 26.0%) previous fiscal. The attrition rate increased to 17.4% for the year ended March 2014, compared to 15.9% during the previous year.

3) Capital Expenditure:

During the year, we spent an amount of Rs. 19.25 Mns adding to our gross block comprising of Rs. 9.03 Mns on technology infrastructure, Rs. 1.95 Mns on physical infrastructure, Rs. 8.27 Mns addition on intangible assets.

4) Liquidity:

The company continues to maintain sufficient cash to meet its strategic objectives. The liquid assets at the end of the year stood at Rs. 1060.27 Mns (as against Rs. 800.53 Mns previous year). Year-end Account Receivables stood at Rs. 557.78 Mns (104 days sales) as against Rs. 413.23 Mns previous year (96 days sales). The increase in Accounts Receivables is mainly attributed to increase in volume of Revenue.

5) Share Capital:

As at the end of the financial year the Company''s Equity Share Capital stands at Rs. 102.68 Mns, consisting of 10,267,681 fully paid up Equity Shares of Rs. 10 each. In pursuance of exercise of options granted under Thinksoft ESOP Scheme 2011 by the employees, the company has allotted 144,000 equity shares during the Financial Year 2013-14 to the employees'', as a result of which the paid-up capital of the company increased from 101.24 Mns to 102.68 Mns. The disclosure in compliance with the Clause 12 of the SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines 1999, as amended is attached to this report as ANNEXURE 1.

6) Net Worth:

The net worth of the Company rose to Rs. 1082.36 Mns as at March 31, 2014 from Rs. 881.89 Mns at the end of the previous fiscal. This works out to a per share net worth of Rs. 105.41.

7) Dividend:

Based on the Company''s performance, the Directors are pleased to recommend a final Dividend of Rs. 4/- per share (40% on face value of Rs.10/- each) for the financial year 2013-14. The Board has also declared an interim dividend of Rs. 5/- per equity share (50% on face value of Rs.10/- each) on October 17, 2013.

The Final Dividend, if approved by the Shareholders in the General Meeting would result in a total dividend of Rs. 9/- per equity share (90 % on face value of Rs.10/- each) for the financial year ended March 31, 2014. (Previous year 60% on face value of Rs. 10/- each, i.e. Rs.6 /- per equity share).

8) Transfer to Reserves:

During the financial year, the Company has transferred Rs. 25.44 Mns, (previous year Rs. 16.40 Mns) which represents 10% of the net profits of the Company. As a result, the total amount of General Reserve as on March 31, 2014 is Rs.81.01 Mns (As at March 31, 2013 - Rs. 55.57 Mns).

9) Subsidiaries:

The company is having its global presence through its subsidiaries, branches and places of business. The company has the following five wholly owned subsidiaries

a) Thinksoft Global Services Pte. Ltd., Singapore

b) Thinksoft Global Services Inc., USA

c) Thinksoft Global Services (Europe) GmbH, Germany

d) Thinksoft Global Services UK Limited, UK

e) Thinksoft Global Services FZE, UAE

In view of meager/no direct Revenues flowing out of the German subsidiary and also since SQS Software Quality Systems AG has its headquarters located in Germany, it was felt there was no need to maintain a subsidiary and incur administrative expenses. Therefore action has been initiated for a voluntary winding up of the German subsidiary.

10) Financial Statement of Subsidiaries:

As per Section 212 of the Companies Act, 1956, we are required to attach the Directors'' Report, Balance Sheet and Profit and Loss account of our subsidiaries. Ministry of Corporate Affairs vide its General Circular no. 02/2011 dated February 8, 2011, exempted Companies from attaching the Financial Statements of Subsidiary Companies. However, as per said circular the Companies are required to provide only the consolidated financial statement in the annual report, accordingly, the Annual Report contains the consolidated financial statements. Further the Ministry of Corporate Affairs vide General Circular 08/2014 dated April 4, 2014 has clarified that the financial statements, auditors report and Boards report in respect of financial year that commenced earlier than April 1, 2014 shall be governed by the relevant provisions/ Schedules/Rules of the Companies Act, 1956. The Audited Annual Accounts and related information of subsidiaries, wherever applicable, will be made available to shareholders upon request and will also be available for inspection during normal business hours at the registered office of the company. A Statement of Subsidiaries under Sec 212 of the Companies Act 1956 is attached to the report as ANNEXURE 2.

11) Directors:

During the year, Mr. Mohan Parvatikar, whole time Director resigned from the Board effective Dec 27, 2013. The Board places on record the special appreciation to Mr. Mohan Parvatikar for the valuable contribution he made during his tenure as Director of the Company.

With effect from March 01, 2014, Mr. A. V. Asvini Kumar and Ms. Vanaja Arvind stepped down as Managing Director and Executive Director of the Company respectively. The Board places on record its deep sense of appreciation to Mr. A. V. Asvini Kumar and Ms. Vanaja Arvind for promoting the Company and tremendous contribution made by them for the growth and success of the Company.

During the year Mr. David Bellin and Mr. Ulrich Bäumer were appointed as Independent Directors of the Company. Pursuant to execution of shareholders agreements with the existing promoters for acquisition of shares, SQS has nominated Mr. Gireendra Kasmalkar, Mr. René Gawron, Mr. Ralph Gillessen and Mr. Riccardo Brizzi as the Non - Executive Directors of the Company and Dr. Martin Müller as the Executive Director of the Company. The Members have approved the aforesaid appointments through Postal Ballot on March 17, 2014.

In accordance with Articles 142 and 143 of the Articles of Association of the Company and the provisions of the Companies Act, 2013, Mr. Gireendra Kasmalkar, Non-Executive Director is liable to retire by rotation in the ensuing Annual General Meeting and is eligible for re-appointment. Mr. K. Kumar, Dr. S. Rajagopalan, Mr. Rajiv Kuchhal and Mr. Ulrich Bäumer, Directors of the Company, are being appointed as Independent Directors for a term of 5 consecutive years up to March 31, 2019 as per the provisions of Section 149 and other applicable provisions of the Companies Act, 2013.

12) Auditors:

M/s. PKF Sridhar & Santhanam, Chartered Accountants, Chennai retire as the Auditors of the Company at conclusion of the ensuing Annual General Meeting and being eligible offers themselves for re-appointment to hold office from the conclusion of this Annual General Meeting, until the conclusion of third consecutive Annual General Meeting, subject to ratification by the shareholders annually. The Auditors have also confirmed that the appointment, if made, shall be in accordance with the provisions of Companies Act, 2013. The Audit Committee and the Board of Directors in their meeting held on April 23, 2014 has recommended the reappointment of M/s. PKF Sridhar & Santhanam, Chartered Accountants, Chennai.

13) Conservation of energy, research and development, technology absorption, foreign exchange earnings and outgo:

The Company has taken initiatives on automating its testing methodologies and also taken initiatives towards building products. During the year 2013-14, the company has spent an amount of Rs. 6.60 Mns and the same has been capitalized in the books of the company. The company also has taken initiatives to build an automated framework for its offering.

The particulars as prescribed under Sub-section (1)(e) of Section 217 of the Companies Act, 1956, read with the Companies (Disclosure of particulars in the report of the Board of Directors) Rules, 1988, are provided in the ANNEXURE 3 of this report.

14) Particulars of employees:

In accordance with the provisions of Section 217(2A) of the Companies Act 1956 and the rules framed there under, the required information is annexed and forms part of this Report. (Please refer ANNEXURE 4)

15) STPI status:

During the current year, the company has exited from the STPI, by filing necessary documents with them. We have received official communication from STPI Chennai Directorate confirming our exit from STPI. Similar letter is yet to be received from STPI Bangalore.

16) Human Potential:

The Company strongly believes that the organizational effectiveness can be significantly enhanced by focusing on the human side of the enterprise.

As part of its ongoing regular training programs, during the year, about 140 training programs were conducted for the employees, clocking an average of 37 hours training per employee per year.

New programs on Technical skills, Business analysis, Leadership and Managerial skills were launched to align the employee competencies with the business growth avenues.

The overall employee strength increased from 782 to 905 during the end of the year.

17) Quality, Technology and Systems:

Enterprises Resource Planning (ERP):

The plan of an Enterprise platform implementation at Thinksoft was initiated in November, 2011 and is successfully deployed. During the year the working in the ERP package was stabilized and is working fine.

PCI DSS (Payment Card Industry Data Security Standard):

Business requires information that is suitably protected and it is critical for the company in maintaining the credibility of such stored information. Considering this Thinksoft''s offshore TCoE (Testing Centre of Excellence) in Prince Infocity II, Chennai is compliant with ISAE 3402 (International Standard on Assurance Engagements) / SSAE 16 (Statement on Standards for Attestation Engagements), this compliance goes to demonstrate third-party assurance, providing coverage to users of outsourced services.

PCI DSS, (worldwide data security standard defined by the Payment Card Industry Security Standards Council). This implies Complete Secured Physical/Logical Work Environments, Multilayer Encryption for data at Receipt, Processing and Storage, Comprehensive Privacy Framework, Detailed Risk and Governance Framework, Wireless Intrusion and Prevention System, Enhanced HR Security Controls, Intensive Vulnerability Management Program by Authorized Scan Vendors (ASV), Business Continuity Program meeting ISO 22301 standards.

Thinksoft also is certified compliant of ISO 27001 and ISO 9001.

18) Environmental awareness:

The Company continues its drive on ''going green'' and has initiated steps to conserve resources and also reduce its carbon footprint and create sustainable alternatives wherever feasible.

The conservation steps include;

- Continuing to deploy less power consuming desktops reducing total power consumption.

- Deployment of Human detector sensors across the facility to auto power off lights when no human presence is detected. Video conferencing (VC) usage has increased steadily during the last couple of years, which in turn has reduced the travel cost and improved energy savings.

- Continuing to dispose the e-waste generated in-house through vendors who adopt ''Safe disposal practices'', recycle and re- manufacture the used e-waste like printers, toners and cartridges.

All these initiatives are taken forward at a sustained pace.

19) Corporate Governance and Management Discussion Analysis Statement:

A separate section on Corporate Governance forming part of the Directors'' Report and the certificate from the Company''s auditors confirming compliance of Corporate Governance norms as stipulated in Clause 49 of the Listing Agreement with National Stock Exchange of India (NSE) and Bombay Stock Exchange (BSE) is included in the Annual Report. The Company has taken adequate steps for strict compliance with the Corporate Governance guidelines, as amended from time to time.

A separate Management Discussion and Analysis Report are also attached and forms part of this report.

20) Risk Management:

Risk Management at Thinksoft includes identification, assessment, monitoring and mitigation of various risks that the company may face in its business. The Company''s enterprise Risk Management approach consists of identifying major risk categories - Operations, Industry, Resources and Regulatory environment to effectively manage its Operational, Financial, Clients and Market risks with a view to achieve a balance between acceptable levels of risk and reward.

As part of Risk Management approach, during the year the company had undertaken various activities, including the following, to identify, monitor and mitigate the risks:

- Quarterly Internal Audits by an independent firm;

- Regular Process Compliance audits for ISO 9001 and ISO 27001 Standard;

- Periodic audits of compliance to other regulatory frameworks;

- Annual Capital and Revenue Budget Planning followed by monthly reviews;

- Annual Sales Planning with Monthly / Periodic Monitoring;

- Annual Perspective and Strategic Planning exercise with yearly update;

- Conservative approach to funds planning.

21) Status of Application money refund:

As on date an amount of Rs.72,000/- is lying unpaid in the account. The members who had not availed the refund may please write to "The Registrar and Transfer Agent" of the Company.

22) Fixed deposits:

The Company has not accepted any fixed deposits and as such, no amount of principal or interest was outstanding as of the Balance Sheet date.

23) Corporate Social Responsibility:

For Thinksoft, Corporate Social Responsibility (''CSR'') is about how we manage our impact on society and the environment. The activities under the Corporate Social Responsibility are given below:

Involvement:

- Thinksoft works closely with Vidya Sagar (formerly known as the Spastic Society of India), an NGO dedicated to the welfare and development of differently abled Children.

- Of particular importance is our association with the Toda tribe in Nilgris and our endeavour to make a difference in their general well-being by promoting their crafts and thus making an impact in the preservation of their Tribal heritage.

Contributions:

As a part of Corporate Social Responsibility during the year the company contributed

- Rs. 1.12 Mns Vidhya Sagar''s Spastics society, an NGO dedicated to the welfare and development of differently abled Children.

- Rs. 0.20 Mn to Ability Foundation, Chennai NGO working for the betterment of people with disabilities, sponsoring part of the costs for the India International Disability Film Festival.

- Rs. 0.03 Mn to Nathan Academy of Dance, Bangalore, aiding Navchetana Trust to support mentally challenged children.

- Rs. 0.18 Mn towards Uttarakhand Flood Relief.

24) Directors'' responsibility statement as required under Section 217 (2AA) of the Companies Act, 1956:

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

(i) they accept responsibility for the integrity and objectivity of these accounting statements.

(ii) the financial statements are prepared in accordance with the guidelines and standards of the ICAI and the Companies Act 1956, to the extent applicable. There are no material departures from the above mentioned standards.

(iii) such standard accounting policies have been applied consistently, except as otherwise stated.

(iv) the judgments and estimates have been made on a reasonable and prudent basis so that the financial statements provide a true and fair view of the state of affairs of the Company at the end of the financial year.

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

(vi) the Annual Accounts are prepared on a going concern basis and on an accrual basis.

25) Acknowledgments:

We thank our customers, vendors, investors and bankers for their continued support during the year. We place on record our appreciation of the contribution made by our employees at all levels. Our consistent growth was made possible by their hard work, solidarity, cooperation and support.

We thank the governments of various countries where we have operations. We also thank the Government of India, particularly the Ministry of Communication and Information Technology, the Customs and Excise Departments, the Income Tax Department, the Ministry of Corporate Affairs, the Ministry of Commerce, the Ministry of Finance, the Reserve Bank of India, the State Governments, the Madras Export Processing Zone (MEPZ), the Software Technology Parks (STPs) and other Government Agencies for their support and look forward to their continued support in the future.

For and on behalf of Board of Directors

of Thinksoft Global Services Limited

Place : Chennai David Bellin

Date : April 23, 2014 Chairman & Director


Mar 31, 2013

To the Members,

The are presenting herewith, the report on our business and operations for the year ended March 31, 2013.

1) Financial Highlights for the year ended 31st March 2013:

(INR In Millions) Consolidated Stand Alone

Description 2012-13 2011-12 2012-13 2011-12 Current Year Previous Year Current Year Previous Year

Export Revenue 1,513.03 1,121.27 1,476.92 1,025.84

Domestic Revenue 101.40 93.15 101.40 93.15

Total Revenue 1,614.43 1,214.42 1,578.32 1,118.99

Delivery expenses 955.42 813.28 1104.68 852.74

Gross profits 659.01 401.14 473.64 266.24

Selling and Marketing expenses 161.75 147.81 39.29 51.06

General and Administrative expenses 195.35 126.28 166.61 110.31

Profit before Interest, Depreciation & Taxes 301.91 127.05 267.74 104.87

Less: Depreciation 46.42 37.40 46.20 37.17

Less: Interest 14.94 0.26 14.18 0.26

Operating Profit Before Taxes 240.55 89.39 207.36 67.43

Other Income 24.26 95.61 22.47 88.91

Net profit before taxes 264.81 185.00 229.83 156.34

Provision for taxation 75.90 65.88 72.31 60.28

Deferred Tax (5.50) 5.35 (5.50) 5.35

Net Profit after tax 194.41 113.77 163.02 90.71

Profit brought forward from previous year 466.64 420.34 408.00 384.76

Profit available for appropriation 661.05 534.11 571.02 475.47

Appropriations : Interim Dividend 30.16 20.10 30.16 20.10

Transfer to General Reserve 16.40 9.10 16.40 9.10

Proposed Final Dividend 30.37 30.16 30.37 30.16

Tax on Dividend 9.82 8.11 9.82 8.11

Profit carried to Balance sheet 574.30 466.64 484.27 408.00

EPS basic 19.32 11.32 16.20 9.03

EPS diluted 19.03 11.30 15.95 9.01

2) Business and Operations Review:

Total revenues increased, in Rupee terms by 33%, to INR 1,614.43 million this year, from INR 1,214.42 million in the previous year (In US dollar terms this amounts to an increase in revenues of 17%).

Distribution of Revenue by Geography

- Profit after tax at INR 19441 million constituted 1204% of revenues as against INR 11377 million (937%) for the previous year ''Exchange Gain'' contributed to INR 1049million

- Geographically 3509 % of the revenues came from Europe (previous year 4269 %) 3753% from IMEA (last year 3424%) 2738 % from America (last year 2307%) and the proportion of onsite to offshore revenues stood at 4754% /5246 % compared to 5054%/4946% in the previous year This is reflected in an increase of 25 % in onsite Revenue from INR 61374 Million to INR 76757 Million during the current year

- Delivery expenses have decreased to 5918 % of Revenue as against 6697% in the previous year This is a result of better utilization compared with previous year The overall utilization increased to 6837 % compared to 654% in the previous year

- The Gross Profit at INR 65901 million worked out to 4082 % of total revenues (excluding other income) compared with 3303% during the previous year while the PBITDA was at 1870 % as against 1046% for the previous year After Tax profits (including other income increased to 1204 % (previous year 937%)

- General and Admin Expenses registered an increase in absolute terms It was INR 19535 million at 1210 % during the current year as against INR 12628 million at 1040 % previous year

- The company increased its investments in S&M activity consequently sales and marketing costs increased in absolute terms to INR 16175 million at 1002 % of revenue as against INR 14781 million at 1217% recorded during the previous year

- Revenues from repeat business marginally increased to 93 % compared to 87% in the previous year

- Employee strength was 782 (Women 2600 %) at the end of the year compared to 742 (Women 278%) last fiscal The attrition rate decreased to159 % for the year ended March 2013 compared to 172% during the previous year

3) Capital Expenditure:

During the year we capitalized INR 25069 million to our gross block comprising of INR 1758 million on technology infrastructure INR 232.33 million on physical infrastructure INR 078 million addition on intangible assets

4) Utilization of IPO proceeds:

Out of INR 153151 Lakhs(net of issue expenses) raised through IPO INR 67923 Lakhs has been utilized for setting up the testing facility at TIDEL Park and MEPZ Chennai and INR 85228 Lakhs utilized for normal capital expenditure During the year Company has utilized the IPO proceeds fully for the purposes as approved

5) Liquidity:

The company continues to maintain sufficient cash to meet its strategic objectives The liquid assets at the end of the year stood at INR 80053 million (as against INR 63642 million previous year) Year end Account Receivables stood at INR 41323 million (96 days sales) as against INR 23577million previous year (71 days sales) The increase in Accounts receivables is mainly attributed to increase in volume of Revenue

6) Share Capital:

As at the end of the financial year the Company''s Equity Share Capital stands at INR 10124 million consisting of 1 01 23 681 fully paid up Equity Shares of INR 10 each In pursuance of exercise of options granted under Thinksoft ESOP Scheme 2011 by the employees the company has allotted 72 100 equity shares on 24th January 2013 to the employees'' as a result of which the paid-up capital of the company increased from 10052 million to 10124 million The disclosure in compliance with the Clause 12 of the SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines 1999 as amended is attached to this report as Annexure III

7) Net Worth:

The net worth of the Company rose to INR 88189 million as at 31st March 2013 from INR 75509 million at the end of the previous fiscal This works out to a per share net worth of INR 8711

8) Dividend:

For the financial year ended 31st March 2013 your Board has recommended a final dividend of Rs 3/- per equity share (30% on face value of Rs 10/- each) subject to the approval of the Shareholders in the ensuing Annual General Meeting

Your Board has also declared an interim dividend of Rs.3/- per equity share (30% on face value of Rs.10/- each) on 25th October 2012. This would result in a total dividend of Rs.6/- per equity share (60% on face value of Rs.10/- each) for the financial year ended 31st March 2013. (Previous year Rs.5/- per equity share of face value of Rs.10/- each).

9) Subsidiaries:

The company is having its global presence through its subsidiaries, branches and places of business. The company has the following five wholly owned subsidiaries

a) Thinksoft Global Services Pte. Ltd., Singapore

b) Thinksoft Global Services Inc., USA

c) Thinksoft Global Services (Europe) GmbH, Germany

d) Thinksoft Global Services UK Limited, UK

e) Thinksoft Global Services FZE, UAE

10) Financial Statement of Subsidiaries:

As per Section 212 of the Companies Act, 1956, we are required to attach the Directors'' Report, Balance Sheet, and Profit and Loss account of our subsidiaries. Ministry of Corporate Affairs vide its General Circular no. 02/2011 dated 8th February 2011, exempted Companies from attaching the Financial Statements of Subsidiary Companies. However, as per said circular the Companies are required to provide only the consolidated financial statement in the annual report, accordingly, the Annual Report contains the consolidated financial statements. The Audited Annual Accounts and related information of subsidiaries, where ever applicable, will be made available to shareholders upon request and will also be available for inspection during normal business hours at the registered office of the company.

11) Directors:

Mr. K. Kumar, Director, who was appointed as Director on 17th September, 2008 is liable to retire by rotation at the ensuing Annual General Meeting and being eligible offers himself for reappointment as Director.

12) Auditors:

M/s. PKF Sridhar & Santhanam, Chartered Accountants, Chennai retire as the Auditors of the Company at conclusion of the ensuing Annual General Meeting and being eligible offers themselves for re-appointment. The Audit Committee in their meeting held on 25th April, 2013 has recommended the reappointment of M/s. PKF Sridhar &Santhanam, Chartered Accountants, Chennai.

13) Conservation of energy, research and development, technology absorption, foreign exchange earnings and outgo:

The particulars as prescribed under Sub-section (1)(e) of Section 217 of the Companies Act, 1956, read with the Companies (Disclosure of particulars in the report of the Board of Directors) Rules, 1988, are provided in the Annexure 2 to the Directors'' Report section.

14) Particulars of employees:

In accordance with the provisions of Section 217(2A) of the Companies Act 1956 and the rules framed there under, the required information is annexed and forms part of this Report. However, as per the provisions of Section 219(1) (b) (iv) of the Companies Act, 1956, the Directors Report is being sent to all the Shareholders of the Company excluding the said 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.

15) Human Potential:

The overall employee strength increased from 742 to 782 during the end of the year.

The Company strongly believes that the organizational effectiveness can be significantly enhanced by focusing on the human side of the enterprise.

As part of its ongoing regular training programs, during the year, about 183 training programs were conducted for the employees, clocking an average of 30 hours training per employee per year. The company further endeavors through its special talent management initiatives, to make its key employees result oriented and business savvy.

The individual practices are mandated with the task of optimizing the deployment of resources across practices and geographies, based on the business needs.

16) Quality, Technology and Systems:

Enterprises Resource Planning (ERP):

The plan of an Enterprise platform implementation at Thinksoft was initiated in November, 2011, towards streamlining and integrating activities & processes across departments and enables collaborative working. After due approvals from the Board, the process of defining organization-wide requirements, floating an RFP and selecting the right vendor was kicked off.

After a detailed process of evaluating options, the cloud-based ERP, Netsuite, was selected. The ERP is intended to support the global planning, operational and reporting needs of the Finance & Accounting, Purchasing and Asset Management functions, and also well-suited to handle the end- to-end requirements of the Human Resources function.

ERP is being implemented in phases. While phase I, representing finance and Accounts, Human resources, Sales order tracking of the ERP implementations, went live during November, 2012, Phase 2, comprising Project Management, Customer service, Performance and Travel Management currently in progress and expected to be completed by middle of this financial year. ERP is expected to enhance productivity of operations, minimizing duplication of data, enabling consistent reporting, higher accuracy levels and enhanced controls in access to organization- level information.

PCI DSS (Payment Card Industry Data Security Standard):

Information is a valuable business asset and the key to the success and growth of any company. Hence it is essential that this business asset is suitably protected. In the modern networked world this becomes crucial for success and maintaining credibility. Considering this Thinksoft''s offshore TCoE (Testing Centre of Excellence) in PRINCE Info city, Chennai is compliant with PCI DSS and ISO 27001. PCI DSS is a worldwide Data security standard defined by the Payment Card Industry Security Standards Council.

Thinksoft''s compliance with PCI DSS implies Complete Secured Physical/Logical Work Environments, Multilayer Encryption for data at Receipt, Processing and Storage, Comprehensive Privacy Framework, Detailed Risk and Governance Framework, Wireless Intrusion and Prevention System, Enhanced HR Security Controls, Intensive Vulnerability Management Program by Authorized Scan Vendors (ASV), Business Continuity Program meeting BS 25999 standards.

Thinksoft Global is currently one of the few companies that can count this Information Security among its achievements. Through this compliance and certification the company has reinforced its commitment to its BFSI clients of its ability to meet the stringent global standards of information security, data privacy, data security and business continuity in its offshore delivery centers. As pioneers in Independent Testing services Thinksoft has proven that it is ahead of the market in proactively meeting client''s expectations in terms of Data/Information security.

17) Environmental awareness:

The Company continues its ''go green'' initiatives to conserve resources and also reduce its carbon footprint and create sustainable alternatives wherever feasible. All steps required for conserving power across all delivery centers are being undertaken. During the current year Thinksoft Delivery centers have been deployed with less power consuming Ultra Small form factor desktops which are likely to consume only ¼ th of the power consumed by regular desktops.

Human detector sensors have been deployed across the facility to auto power off lights when no human presence. Video conferencing (VC) usage has increased steadily during the last couple of years, which in turn has reduced the travel cost and improved energy savings. During the current year, Video conference facility has been extended to on hand held devices and PDA to reduce the travel time even to the nearest Thinksoft office.

Thinksoft will explore the opportunity of using alternative energy (Wind / Solar) during the course of the year to reduce the usage of electrical power.Towards contributing for Green IT for a safe environment, Thinksoft continues to dispose the e-waste generated in-house through vendors who adopt "Safe disposal practices", recycle and re-manufacture the used e-waste like printers, toners and cartridges. These initiatives are taken forward at a sustained pace.

18) Corporate Governance:

A separate section on Corporate Governance forming part of the Directors'' Report and the certificate from the Company''s auditors confirming compliance of Corporate Governance norms as stipulated in Clause 49 of the Listing Agreement with National Stock Exchange of India (NSE) and BSE Ltd. (BSE) is included in the Annual Report.

The Company has taken adequate steps for strict compliance with the Corporate Governance guidelines, as amended from time to time. A separate Management Discussion and Analysis Report is also attached and forms part of this report.

19) Status of Application money refund:

Your company sent reminder for three times for the refund of application money. The money lying in the account as on 31st March 2013 is Rs. 72,000/- for 85 members. The members who had not availed the refund may please write to the Registrar and Transfer Agent.

20) Fixed deposits:

We have not accepted any fixed deposits and, as such, no amount of principal or interest was outstanding as of the Balance Sheet date.

21) Corporate Social Responsibility:

The activities under the Corporate Social Responsibility function have been explained in detail in another section in this report. Of particular importance is our association with the Toda tribe in their Nilgiris and our endeavor to make a difference in their general well-being.

22) Shifting of Registered Office:

During the current year, the Registered office of the Company has been shifted, to its own premises, situated at 6A, Sixth Floor, Prince Infocity II, No.283/3 & 283/4, Rajiv Gandhi Salai (OMR), Kandanchavadi, Chennai – 600 096.

23) Directors'' responsibility statement as required under Section 217 (2AA) of the Companies Act, 1956:

Pursuant to Section 217(2AA) of the Companies Act, 2000, the Directors confirm that:

(i) They accept responsibility for the integrity and objectivity of these accounting statements

(ii) The financial statements are prepared in accordance with the guidelines and standards of the ICAI and Companies Act 1956, to the extent applicable. There are no material departures from the abovementioned standards.

(iii) Such standard accounting policies have been applied consistently, except as otherwise stated.

(iv) The judgments and estimates have been made on a reasonable and prudent basis so that the financial statements provide a true and fair view of the state of affairs of the Company at the end of the financial year. (v) The directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(vi) The Annual Accounts are prepared on a going concern basis and on an accrual basis

24) Acknowledgments:

We thank our customers, vendors, investors and bankers for their continued support during the year. We place on record our appreciation of the contribution made by our employees at all levels. Our consistent growth was made possible by their hard work, solidarity, cooperation and support.

We thank the governments of various countries where we have operations. We also thank the Government of India, particularly the Ministry of Communication and Information Technology, the Customs and Excise Departments, the Income Tax Department, the Ministry of Corporate Affairs, the Ministry of Commerce, the Ministry of Finance, the Reserve Bank of India, the state governments, the Madras Export Processing Zone (MEPZ), the Software Technology Parks (STPs) and other Government Agencies for their support, and look forward to their continued support in the future.

For and on behalf of Board of Directors of

Thinksoft Global Services Limited

Place: Chennai A V Asvini Kumar Vanaja Arvind

Date: April 25, 2013. Managing Director Executive Director


Mar 31, 2012

We are presenting herewith, the report on our business and operations for the year ended March 31, 2012.

1) Financial Highlights for the year ended March 31, 2012

(INR In Million) Consolidated Stand Alone

Description 2011-12 2010-11 2011-12 2010-11 Current Year Previous Year Current Year Previous Year

Export Revenue 1,121.27 775.39 1,025.84 559.25

Domestic Revenue 93.15 53.88 93.15 53.88

Total Revenue 1,214.42 829.27 1,118.99 613.13

Delivery expenses 813.28 557.10 852.74 432.50

Funds from Operations 401.14 272.17 266.24 180.63

Selling and Marketing expenses 147.81 119.16 51.06 44.31

General and Administrative expenses 126.28 125.64 110.31 109.11

Profit before Interest, Depreciation & Taxes 127.05 27.37 104.87 27.21

Less: Depreciation 37.40 27.88 37.17 27.56

Less: Interest 0.26 - 0.26 -

Operating Profit Before Taxes 89.39 (0.51) 67.43 (0.35)

Other Income 95.61 32.55 88.91 26.44

Net profit before taxes 185.00 32.04 156.34 26.09

Provision for taxation (65.88) (12.30) (60.28) (7.62)

Deferred Tax (5.35) (1.02) (5.35) (1.02)

Net Profit after tax 113.77 18.72 90.71 17.45

Profit brought forward from previous year 420.34 413.34 384.76 379.02

Profit available for appropriation 534.11 432.06 475.47 396.48

Appropriations : Interim Dividend 20.10 - 20.10 -

Transfer to General Reserve 9.10 - 9.10 -

Proposed Final Dividend 30.16 10.05 30.16 10.05

Tax on Dividend 8.11 1.67 8.11 1.67

Profit carried to Balance sheet 466.64 420.34 408.00 384.76

EPS basic 11.32 1.86 9.03 1.74

EPS diluted 11.30 1.86 9.01 1.74

2) Business and Operations Review

- Total revenues increased, in Rupee terms by 46%, to INR 1214.42 million during the current year, from INR 829.27 million in the previous year (In US dollar terms this amounts to an increase in revenues of 38%).

Distribution of Revenue by Geography

- Profit after tax at INR 113.77 million constituted 9.37% of revenues as against INR 18.72 million (2.26%) for the previous year. 'Exchange Gain' contributed to INR 48.86 million.

- Geographically, 42.69% of the revenues came from Europe (previous year 53.64%), 34.24% from IMEA (previous year 31.11%), 23.07% from America (previous year 15.25%) and the proportion of onsite to offshore revenues stood at 50.54% / 49.46% compared to 44.35% / 55.65% in the previous year. This is reflected in an increase of 67% in onsite Revenue from INR 367.78 million to INR 613.74 million during the current year.

- Delivery expenses have marginally decreased to 66.97% against 67.18% in the previous year. This is a result of a combination of higher proportion of revenues from onsite projects and also lower offshore utilization factors. The overall utilization decreased to 65.4%, compared to 66.9% in the previous year.

- The Gross Profit (Funds from Operations) at INR 401.14 million worked out to 33.03% of total revenues (excluding other income) compared with 32.82% in the previous year, while the PBITDA was at 10.46% as against 3.30% for the previous year. After Tax profits (including other income) increased to 9.37% (previous year 2.26%).

- General and Admin Expenses registered a marginal increase in absolute terms. It is INR 126.28 million and 10.40% during the current year as against INR 125.64 million and 15.15% in the previous year.

- The company increased its investments in S&M activity, consequently, sales and marketing costs increased in absolute terms at INR 147.81 million and 12.17% versus INR 119.16 million and 14.37% recorded in the previous year.

- Revenues from repeat business marginally decreased to 87% compared to 90% in the previous year.

- Employee strength was 742 (women 27.8%) at the end of the year compared to 661 in the previous fiscal. The attrition rate decreased to 17.2% for the current year ended March 2012, compared to 31.2% during the previous year.

3) Capital Expenditure

During the current year, we capitalized INR 61.82 million to our gross block comprising of INR 13.69 million on technology infrastructure, INR 46.39 million on physical infrastructure, INR 1.74 million addition on intangible assets.

4) Utilization of IPO proceeds

Out of INR 1531.51 lakhs (net of issue expenses) raised through IPO, INR 679.23 lakhs has been utilized for setting up the testing facility at TIDEL Park and MEPZ, Chennai as on March 31, 2012 and INR 632.80 lakhs utilized for normal capital expenditure and balance INR 219.48 lakhs is available in bank as fixed deposits.

5) Liquidity

The company continues to maintain sufficient cash to meet its strategic objectives. The liquid assets at the end of the current year stood at INR 636.42 million (as against INR 629.29 million in the previous year). Year end Account Receivables stood at INR 235.77 million (71 days sales) as against INR 228.96 million in the previous year (101 days sales).

6) Share Capital

As at the end of the financial year the Company's Equity Share Capital stands at INR 100.52 million, consisting of 10,051,581 fully paid up Equity Shares of INR 10 each. During the year, the Company has granted 339,000 options under Thinksoft ESOP Scheme 2011. The disclosure in compliance with the Clause 12 of the SEBI (Employee Stock Option Scheme And Employee Stock Purchase Scheme) Guidelines 1999, as amended is attached to this report as Annexure 3.

7) Net Worth

The net worth of the Company rose to INR 755.09 million as at 31st March 2012 from INR 699.68 million at the end of the previous fiscal. This works out to a per share net worth of INR 75.12.

8) Dividend

For the financial year ended 31st March 2012, your Board has recommended a final dividend of Rs. 3/- per equity share (30% on face value of Rs.10/- each), subject to the approval of the Shareholders in the ensuing Annual General Meeting.

Your Board has also declared an interim dividend of Rs.2/- per equity share (20% on face value of Rs.10/- each) on 3rd November 2011. This would result in a total dividend of Rs.5/- per equity share (50% on face value of Rs.10/- each) for the financial year ended 31st March 2012. (Previous year Rs.1/- per equity share of face value of Rs.10/- each).

9) Subsidiaries

The company is having its global presence through its subsidiaries, branches and places of business.

The company has the following five wholly owned subsidiaries

a) Thinksoft Global Services Pte. Ltd., Singapore

b) Thinksoft Global Services Inc., USA

c) Thinksoft Global Services (Europe) GmbH, Germany

d) Thinksoft Global Services UK Limited, UK

e) Thinksoft Global Services FZE, Sharjah, UAE

10) Financial Statement of Subsidiaries

As per Section 212 of the Companies Act, 1956, we are required to attach the Directors' Report, Balance Sheet, and Profit and Loss account of our subsidiaries. Ministry of Corporate Affairs vide its General Circular no. 02/2011 dated 8th February 2011, exempted Companies from attaching the Financial Statements of Subsidiary Companies (refer Annexure 1). However, as per said circular the Companies are required to provide only the consolidated financial statement in the annual report, accordingly, the Annual Report contains the consolidated financial statements. The Audited Annual Accounts and related information of subsidiaries, whichever applicable, will be made available to shareholders upon request and will also be available for inspection during normal business hours at the Registered Office of the company.

11) Directors

Dr. S Rajagopalan, Director who was appointed as a director on 17th September 2008, is liable to retire by rotation at the ensuing Annual General Meeting and being eligible offers for re-appointment as Director.

During the year under review Mr. C N Madhusudan, Non- Executive Independent Director had resigned from the Board of Directors with effect from 21st September 2011. The Board records its appreciation of the contribution made by Mr. C N Madhusudan during his tenure as a director of the Company.

During the year under review Mr. Rajiv Kuchhal, was inducted as Additional Director in your Board with effect from 21st September 2011. Mr. Rajiv Kuchhal's term expires on the date of the Annual General Meeting. The Company has received a Notice pursuant to the provisions of Section 257 of the Companies Act, 1956 for appointment of Mr. Rajiv Kuchhal as Director of the Company, liable to retire by rotation.

The Board of Directors recommends the appointment/re-appointment of Directors as mentioned above.

12) Auditors

M/s. PKF Sridhar & Santhanam, Chartered Accountants, Chennai retire as the Auditors of the Company at conclusion of the ensuing Annual General Meeting and being eligible offers themselves for re-appointment. The Audit Committee in their meeting held on 27th April 2012 has recommended the reappointment of M/s. PKF Sridhar & Santhanam, Chartered Accountants, Chennai.

13) Conservation of energy, research and development, technology absorption, foreign exchange earnings and outgo

The particulars as prescribed under sub-section(1)(e) of Section 217 of the Companies Act, 1956, read with the Companies (Disclosure of particulars in the report of the Board of Directors) Rules, 1988, are provided in the Annexure 2 to the Directors' Report section.

14) Particulars of employees

In accordance with the provisions of Section 217(2A) of the Companies Act, 1956, and the rules framed there under, the required information is annexed and forms part of this Report. However, as per the provisions of Section 219(1) (b) (iv) of the Companies Act, 1956, the Directors' Report is being sent to all the Shareholders of the Company excluding the said 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.

15) Human Potential

The overall employee strength increased from 661 to 742 during the end of the year.

The Company strongly believes that organizational effectiveness can be significantly enhanced by focusing on the human side of the enterprise.

As part of its ongoing regular training programs, during the current year, about 137 training programs were conducted for the employees, clocking an average of 38 hours training per employee per year.

The company further endeavours through its special talent management initiatives, to make its key employees result oriented and business savvy.

A Resource Management group is mandated with the task of optimising the deployment of resources across practices and geographies.

16) Quality, Technology and Systems Enterprise Resource Planning (ERP):

The company plans to move towards a more structured, organization wide integrated application covering Finance, Sales, Order tracking, Customer service and Human resources.

The Company has selected and is in the process of implementing Netsuite, a cloud based Software-as-a-Service (SaaS) ERP system which would be completed during the financial year 2012-13. The enterprise applications are delivered over internet and managed as service by the application provider, and would be implemented to manage and co-ordinate all the resources information and functions from a shared data store. The Company already initiated the process towards implementation of an ERP system.

PCI DSS (Payment Card Industry Data Security Standard):

Thinksoft's offshore TCoE (Testing Centre of Excellence) in Tidel Park, Chennai is compliant of PCI DSS during the financial year 2011-12.

PCI DSS is a worldwide information security standard defined by the Payment Card Industry Security Standards Council. Thinksoft's compliance with PCI DSS implies Completely Secured Physical/Logical Work Environments, Multilayer Encryption for data at Receipt, Processing and Storage, Comprehensive Privacy Framework, Detailed Risk Assessment Methodology, Wireless Intrusion and Prevention System, Enhanced HR Security Controls, Intensive Vulnerability Management Program by Authorized Scan Vendors (ASV), Business Continuity Program meeting BS 25999 standards.

Thinksoft Global is currently one of the few companies that can count this among its achievements. Through this compliance and certification the company has reinforced its commitment to its BFSI customers of its ability to meet the stringent global standards on of information security, data privacy, data security and business continuity in its offshore delivery centres. As pioneer in Independent Testing services Thinksoft has proven that it is ahead of the market in proactively meeting client's expectations.

17) Environmental awareness

The Company continues its 'go green' initiatives to conserve resources and also reduce its carbon footprint and create sustainable alternatives wherever feasible.

All steps required for conserving power across all delivery centres are being undertaken. During the current year Desktop power management configuration has been extended to almost 50% of the desktops used in the delivery centres.

Video conferencing (VC) usage has increased steadily this year, which in turn has reduced the travel cost and improved energy savings.

Continues initiatives within its office buildings to reduce our electrical power, water and paper consumption.

Towards contributing for Green IT for a safe environment, the e-waste generated in-house are being discarded through vendors who adopt "Safe disposal practices", recycle and re-manufacture the used e-waste like printers, toners and cartridges. These initiatives will be taken forward at a sustained pace.

18) Corporate Governance

A separate section on Corporate Governance forming part of the Directors' Report and the certificate from the Company's auditors confirming compliance of Corporate Governance norms as stipulated in Clause 49 of the Listing Agreement with National Stock Exchange of India (NSE) and Bombay Stock Exchange of India (BSE) are included in the Annual Report.

19) Status of Application money refund

Your company already sent three reminders for the refund of application money. The money lying in the account as on 31st March 2012 is Rs. 86,250/- for 90 members. The members who had not availed the refund may please write to the Registrar and Transfer Agent.

20) Fixed deposits

We have not accepted any fixed deposits and, as such, no amount of principal or interest was outstanding as of the Balance Sheet date.

21) Corporate Social Responsibility Involvement:

- Thinksoft works closely with Vidya Sagar (formerly known as the Spastic Society of India), an NGO dedicated to the welfare and development of Spastics Children

- The Company has been organizing Blood bank campaign in its premises in collaboration with Jeevan Blood Bank and Research Centre

- The Company has been working with the Premavasam, an orphanage for special and less fortunate children in which our employees were encouraged to participate and donate gifts.

Contributions:

As a part of Corporate Social Responsibility during the current year the company contributed

- INR 0.30 million to the 'Sadhya' Program & INR 0.48 Million to Vidhya Sagar's Spastics society, an NGO dedicated to the welfare and development of Spastics Children.

- INR 0.10 million to Ability foundation for India International Disability Film Festival.

- INR 0.025 million to Narthan Academy of Dance, Bengaluru for the Medical support of Musician and Dancer through Sumangali Seva Ashrama

- INR 0.01 million to Premavasam, an orphanage for special and less fortunate children.

- INR 0.028 million to Health First India to medical support for leprosy treatment.

22) Directors' responsibility statement as required under Section 217 (2AA) of the Companies Act, 1956

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

(i) They accept responsibility for the integrity and objectivity of these accounting statements.

(ii) The financial statements are prepared in accordance with the guidelines and standards of the ICAI and Companies Act 1956, to the extent applicable. There are no material departures from the above mentioned standards.

(iii) Such standard accounting policies have been applied consistently, except as otherwise stated.

(iv) The judgments and estimates have been made on a reasonable and prudent basis so that the financial statements provide a true and fair view of the state of affairs of the Company at the end of the financial year.

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

(vi) The Annual Accounts are prepared on a going concern basis and on an accrual basis.

23) Acknowledgments

We thank our customers, vendors, investors and bankers for their continued support during the year. We place on record our appreciation of the contribution made by our employees at all levels. Our consistent growth was made possible by their hard work, solidarity, cooperation and support.

We thank the governments of various countries where we have operations. We also thank the Government of India, particularly the Ministry of Communication and Information Technology, the Customs and Excise Departments, the Income Tax Department, the Ministry of Commerce, the Ministry of Finance, the Reserve Bank of India, the State Governments, the Madras Export Processing Zone (MEPZ), the Software Technology Parks (STPs) and other Government Agencies for their support, and look forward to their continued support in the future.

For and on behalf of Board of Directors of

Thinksoft Global Services Limited

Place: Bengaluru A V Asvini Kumar Vanaja Arvind

Date: June 15, 2012 Managing Director Executive Director


Mar 31, 2011

To the Members,

We are presenting the report on our business and operations for the year ended March 31, 2011.

1. Financial highlights for the year ended March 31, 2011 (INR in million)

Consolidated Stand Alone

Description 2010-11 2009-10 2010-11 2009-10

Current Year Previous Year Current Year Previous Year

Export Revenues 775.39 782.92 559.25 699.88

Domestic Revenues 53.88 45.71 53.88 45.71

Total Revenue 829.27 828.63 613.13 745.59

Delivery expenses 557.10 507.04 432.50 464.82

Funds from Operations 272.17 321.59 180.63 280.77

Selling and Marketing expenses 119.16 111.95 44.31 92.41

General and Administrative expenses 125.64 115.79 109.11 100.83

Profit before Interest, Depreciation & Taxes 27.37 93.85 27.21 87.53

Less: Depreciation 27.88 12.78 27.56 12.78

Operating Profit Before Taxes (0.51) 81.07 (0.35) 74.75

Other Income 32.55 9.57 26.44 9.57

Net profit before taxes 32.04 90.64 26.09 84.32

Provision for taxation (12.30) (12.42) (7.62) (8.42)

Deferred Tax (1.02) 4.11 (1.02) 4.11

Net Profit after tax 18.72 82.33 17.45 80.01

Profit brought forward from previous year 413.34 350.76 379.02 318.78

Profit available for appropriation 432.06 433.09 396.48 398.79

Appropriations: Interim Dividend – 10.05 – 10.05

Transfer to General Reserve – 8.00 – 8.00

Proposed Final Dividend 10.05 – 10.05 –

Tax on Dividend 1.67 1.71 1.67 1.71

Profit carried to Balance sheet 420.34 413.33 394.81 379.03

EPS basic 1.86 8.83 1.74 8.58

EPS diluted 1.86 8.83 1.74 8.58

2. Business and Operations review - Consolidated

- Total revenues increased, in Rupee terms by 0.1%, to INR 829.27 million this year, from INR 828.63 million last year (In US dollar terms this amounts to an increase in revenues of 4%).

- Profit after tax at INR 18.72 million constituted 2.26% of revenues as against INR 82.33 million (9.94%) for the previous year. 'Exchange Gain' contributed to INR 15.05 million.

- Geographically, 53.64% of the revenues came from Europe (last year 43.09%), 31.11% from IMEA (last year 39.78%), 15.25% from America (last year 17.13%).

- The proportion of onsite to offshore revenues stood at 44.35%/55.65% compared to 59.47%/40.53% last year. This is reflected in a decrease of 25% in onsite Revenue from INR 492.82 million to INR 367.78 million during the year.

- Delivery expenses have increased to 67.18% against 61.19% in last year. This is a result of a combination of higher proportion of revenues from onsite projects and also lower offshore utilization factors. The overall utilization decreased to 66.9%, compared to 71.8% in the previous year.

- The Gross Profit (Funds from Operations) at INR 272.17 million worked out to 32.82% of total revenues (excluding other income) compared with 38.81% last year, while the PBITDA was at 3.30% as against 11.33% for the previous year. After Tax profits (including other income decreased to 2.26% (last year 9.94%).

- General and Admin Expenses registered a increased in absolute terms. It was INR 125.64 million and 15.15% as against INR 115.79 million and 13.97% last year.

- The company increased its investments in S&M activity, consequently, sales and marketing costs increased in absolute terms at INR 119.16 million and 14.37% versus 111.95 million and 13.51% recorded last year.

- Revenues from repeat business increased to 90% compared to 72% in the previous year

- Employee strength was 661 (women 29.8%) at the end of the year compared to 499 last fiscal. The attrition rate registered an increase of 31.2% for the year ended March 2011, compared to 17.90% during the previous year.

3. Capital expenditure

During the year, we capitalized INR 79.36 million to our gross block comprising of INR 19.37 million on technology infrastructure, INR 13.85 million on physical infrastructure, 46.14 addition on intangible assets, as against capitalization to our gross block of INR 14.21 during the previous year comprising of INR 4.01 million on technology infrastructure, INR 10.20 million on physical infrastructure.

4. Utilization of IPO proceeds

The shareholders had approved the revised utilisation of IPO Proceeds vide Postal Ballot resolution passed on May 14, 2010 as detailed below:

(INR in lakhs)

Description Cost of Project

Public Issue Expenses 155.99

Setting up of new Testing centres 679.23

Towards normal Capital Expenditure and Working Capital requirements of the Company. 852.28

Total 1,687.50

Out of INR 1531.51 lakhs raised through IPO, INR 963.61 lakhs has been utilized for setting up the testing facility at TIDEL Park and MEPZ, Chennai as on March 31, 2011 and balance amount INR 567.90 lakhs is available in bank as fixed deposits.

(Note: The TIDEL Park facility with a capacity of 281 seats has been functioning from September 30, 2010 while the MEPZ Delivery facility with a capacity of 278 seats, is operational from May 31, 2011)

5. Liquidity

The company continues to be debt-free, and maintain sufficient cash to meet our strategic objectives. The liquid assets at the end of the year stood at INR 629.29 million (as against INR 673.26 million last years). Year end Account Receivables stood at INR 228.96 million (101 days sales).

6. Share capital

As at the end of the financial year the Company's Equity Share Capital stands at INR 100.52 million, consisting of 10,051,581 fully paid up Equity Shares of INR 10 each.

7. Net worth

The net worth of the Company rose to INR 699.68 million as at March 31, 2011 from INR 692.68 million at the end of the previous fiscal.

8. Dividend

Your Board has recommended a final dividend of INR 1/= per share for the fiscal 2010-11, subject to the approval of the Shareholders in the ensuing Annual General Meeting.

9. Subsidiaries

The company is having its global presence through its subsidiaries, branches and places of business.

The company has the following five wholly owned subsidiaries

a. Thinksoft Global Services Pte. Ltd., Singapore

b. Thinksoft Global Services Inc., USA

c. Thinksoft Global Services (Europe) GmbH, Germany

d. Thinksoft Global Services UK Limited, UK (incorporated on April 1, 2010)

e. Thinksoft Global Services FZE, UAE

*(incorporated on June 15, 2010)

* The wholly owned subsidiary in UAE is yet to commence the operations.

Winding up of Thinksoft (India) Services Private Ltd:

The Office of the Registrar of Companies vide their notice under section 560 (5) of the Companies Act 1956, dated January 1, 2011, confirmed striking off the name of the wholly owned subsidiary, Thinksoft (India) Services Private Ltd, from the Register of Companies under the 'Easy Exit Scheme 2010'.

10. Financial statements of subsidiaries

As per Section 212 of the Companies Act, 1956, your Company required to attach the Directors' Report, Balance Sheet, and Profit and Loss account of our subsidiaries. Ministry of Corporate Affairs vide its General Circular no. 02/2011 dated February 8, 2011, exempted Companies from attaching the Financial Statements of Subsidiary Companies (refer Annexure I). However, as per said circular the Companies are required to provide consolidated financial statement in the Annual Report. Accordingly, the Annual Report contain the consolidated financial statements. The Audited Annual Accounts and related information of subsidiaries, which ever applicable, will be made available to shareholders upon request and will also be available for inspection during business hours at the registered office.

11. Changes in tax benefits:

The Company was enjoying tax holiday for its export earnings under section 10A of the Income tax Act 1961 till the financial year 2009-10 by virtue of being 100% Export Oriented Unit registered under Software Technology Parks of India. However the unit situated in SEZ may continue to get its tax benefits as applicable.

12. Directors

Mr. C N Madhusudan, Director who was appointed as a Director on September 17, 2008, is liable to retire by rotation at the ensuing Annual General Meeting and being eligible offers for re-appointment as Director.

13. Auditors

M/s. PKF Sridhar & Santhanam, Chartered Accountants, Chennai retire as the Auditors of the Company at conclusion of the ensuing Annual General Meeting and being eligible offers themselves for re-appointment. The Audit Committee in their meeting held on April 29, 2011 has recommended the re-appointment of M/s. PKF Sridhar & Santhanam, Chartered Accountants, Chennai.

14. Conservation of energy, research and development, technology absorption, foreign exchange earnings and outgo.

The particulars as prescribed under Sub-section (1)(e) of Section 217 of the Companies Act, 1956, read with the Companies (Disclosure of particulars in the report of the Board of Directors) Rules, 1988, are provided in the Annexure 2 to the Directors' Report section.

15. Particulars of employees

In terms of provisions of Section 217 (2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, as amended from time to time, none of our employees are covered under the above section.

16. Human potential:

The overall employee strength increased from 500 to 660 during the end of the year.

The Company strongly believes that organisational effectiveness can be significantly enhanced by focusing on the human side of the enterprise.

As part of its ongoing regular training programs, during the year, about 117 training programs were conducted for the employees, clocking an average of 43 hours training per employee per year.

The company further endeavours through its special talent management initiatives, to make its key employees result oriented and business savvy.

A Resource Management group is mandated with the task of optimising the deployment of resources across practices and geographies.

The table below shows the average distribution of resources by practice and regions for the year.

Practices %

Banking 24%

Credit Cards 53%

Capital Markets and Treasury 15%

Insurance 7%

Total 100%

17. Quality, technology and systems

Thinksoft's offshore TCoE (Testing Centre of Excellence) in Tidel Park, Chennai has become compliant during this year 2010 -2011, the following:

BITS AUP: Banking Industries Technology Secretariat – Agreed upon Procedures requirements

The BITS AUP Shared Assessments Program being pursued by more than 60 different organizations, it is the most trusted single program that is referred to whilst making large-scale outsourcing decisions. It is now used as a standardized framework that rates organisational capability in comparison with the industry's leading information security best practices

PCI DSS: Payment Card Industry Data Security Standard

PCI DSS is a worldwide information security standard defined by the Payment Card Industry Security Standards Council. Thinksoft's compliance with PCI DSS implies Completely Secured Physical/Logical Work Environments, Multilayer Encryption for data at Receipt, Processing and Storage, Comprehensive Privacy Framework, Detailed Risk Assessment Methodology, Wireless Intrusion and Prevention System, Enhanced HR Security Controls, Intensive Vulnerability Management Program by Authorized Scan Vendors (ASV), Business Continuity Program meeting BS 25999 standards

Thinksoft Global is currently one of the few companies that can count this among its achievements. Through this compliance and certification the company has reinforced its commitment to its BFSI customers of its ability to meet the stringent global standards on of information security, data privacy, data security and business continuity in its offshore delivery centres. As pioneer in Independent Testing services Thinksoft has proven that it is ahead of the market in proactively meeting client's expectations

18. Environmental awareness

The Company continues its 'go green' initiatives to conserve resources and also reduce its carbon footprint and create sustainable alternatives wherever feasible.

All steps required for conserving power across all delivery centres are being undertaken. During the current year Desktop power management configuration has been extended to almost 50% of the desktops used in the delivery centres.

Video conferencing (VC) usage has increased steadily this year, which in turn has reduced the travel cost and improved energy savings. The Company continues "go green" initiatives within its office buildings to reduce our electrical power, water and paper consumption.

Towards contributing for Green IT for a safe environment, the e-waste generated in-house are being discarded through vendors who adopt "Safe disposal practices", recycle and re-manufacture the used e-waste like printers, toners and cartridges. These initiatives will be taken forward at a sustained pace.

19. Corporate Governance

A separate section on Corporate Governance forming part of the Directors' Report and the certificate from the Company's Auditors confirming compliance of Corporate Governance norms as stipulated in Clause 49 of the Listing Agreement with National Stock Exchange of India (NSE) and Bombay Stock Exchange of India (BSE) is included in the Annual Report.

20. Status of application money refund

Your company already sent two reminders for the refund of application money which is lying in the account as on March 31, 2011 amounting to INR 93,000/- for 92 members. The members who had not availed the refund have been asked to correspond with the Registrar and Transfer Agent for the same.

21. Fixed deposits

We have not accepted any fixed deposits and, as such, no amount of principal or interest was outstanding as of the Balance Sheet date.

22. Corporate social responsibility Involvement:

- Thinksoft works closely with Vidya Sagar (formerly known as the Spastic Society of India), an NGO dedicated to the welfare and development of Spastics Children

- The Company has been organizing Blood bank campaign in its premises in collaboration with Jeevan Blood Bank and Research Centre

- The Company has been working with the Make a Wish Foundation, India for terminally ill children in which our employees encouraged to participate and donate gifts and money at the time of festivals.

Contributions:

- INR 0.30 million to the 'Sadhya' Program & INR 0.17 million to Vidhya Sagar's Spastics society.

- INR 0.01 million to Ability foundation as co-sponsor for Employability – 2010. INR 0.025 million to Ananya Arogyadhara Nidhi, Bangalore for the Medical support of Musician and Dancer through Kala Nadam festival.

- The Company sponsored a section of the "Cards and Payments Awards" function held in London UK, through which 'Make a Wish Foundation' in UK was benefited

23. Directors' responsibility statement as required under Section 217 (2AA) of the Companies Act, 1956.

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

i. They accept responsibility for the integrity and objectivity of these accounting statements

ii. The financial statements are prepared in accordance with the guidelines and standards of the ICAI and Companies Act 1956, to the extent applicable. There are no material departures from the above mentioned standards.

iii. Such standard accounting policies have been applied consistently, except as otherwise stated

iv. The judgments and estimates have been made on a reasonable and prudent basis so that the financial statements provide a true and fair view of the state of affairs of the Company at the end of the financial year

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

vi. The Annual Accounts are prepared on a going concern basis and on an accrual basis

24. Acknowledgments

We thank our Customers, Vendors, Investors and Bankers for their continued support during the year. We place on record our appreciation of the contribution made by our employees at all levels. Our consistent growth was made possible by their hard work, solidarity, co-operation and support.

We thank the Governments of various countries where we have operations. We also thank the Government of India, particularly the Ministry of Communication and Information Technology, the Customs, Central Excise and Service Tax Departments, the Income Tax Department, the Ministry of Commerce, the Ministry of Finance, the Reserve Bank of India, the State Governments, the Madras Export Processing Zone (MEPZ), the Software Technology Park of India (STPI) and other Government Agencies for their support, and look forward to their continued support in the future.

For and on behalf of Board of Directors of

Thinksoft Global Services Limited

A V Asvini Kumar Vanaja Arvind

Managing Director Executive Director

Place: Chennai

Date: April 29, 2011


Mar 31, 2010

We have great pleasure in presenting this Report on the business and operations of the company for the year ended March 31, 2010.

A) Financial Highlights for the Year Ended 31st March 2010

(Rs. in Millions) Consolidated Stand alone 2009-10 2008-09 2009-10 2008-09

Description/Head Current Previous Current Previous Year Year Year Year

Export Revenues 782.92 889.14 699.88 857.81

Domestic Revenues 45.71 31.78 45.71 31.78

Total Revenue 828.63 920.92 745.59 889.59

Delivery expenses 507.04 565.48 464.82 539.60

Funds from Operations 321.59 355.44 280.77 349.99

Selling and Marketing expenses 111.95 91.75 92.41 89.81

General and Administrative expenses 115.79 122.97 100.83 120.17

profit before Interest, Depreciation & Taxes 93.85 140.72 87.53 140.01

Less: Depreciation 12.78 15.85 12.78 15.85

Operating profit Before Taxes 81.07 124.87 74.75 124.16

Other Income 9.57 35.74 9.57 30.27

Net profit before taxes 90.64 160.61 84.32 154.43

Provision for taxation (12.42) (15.36) (8.42) (15.28)

Provision for Fringe Benefit Tax - (3.17) - (3.17)

Deferred Tax 4.11 2.81 4.11 2.81

Net profit after tax 82.33 144.89 80.01 138.79

profit brought forward from previous year 350.76 216.05 318.78 190.17

profit available for appropriation 433.09 360.94 398.79 328.96

Appropriations : Interim Dividend 10.05 - 10.05 -

Transfer to General Reserve 8.00 - 8.00 -

Proposed Final Dividend - 8.70 - 8.70

Tax on Dividend 1.71 1.48 1.71 1.48

profit carried to Balance sheet 413.33 350.76 379.03 318.78

EPS basic 8.83 17.62 8.58 16.88

EPS diluted 8.83 17.62 8.58 16.88

B) Business and Operations Review - Consolidated

- Total revenues went down, in Rupee terms by 10%, to INR 828.63 million this year, from INR 920.92 million last year (In US dollar terms this amounts to a decrease in revenues of 12%).

- profit after tax at INR 82.33 million constituted 10% of revenues as against INR 144.89 million (15.7%) for the previous year. ‘Exchange Loss contributed to INR 36.49 million.

- Geographically, 43% of the revenues came from Europe (last year 54%), 35% from IMEA (last year 30%),17% from America (last year 13%).and 5% from Rest of the World ( last year 3%).

- The proportion of onsite to offshore revenues stood at 59% /41% compared to 63% / 37% last year. This is refl ected in an decrease of 15% in onsite Revenue from INR 581 Million to INR 493 Million during the year.

- Delivery expenses maintained at more or less the same level of 61.2 % against 61.4% in last year. This is a result of a combination of higher proportion of revenues from onsite projects and also lower offshore utilization factors. The overall utilization increased to 71%, compared to 59% in the previous year.

- The Gross profit (Funds from Operations) at INR 321.59 million worked out to 38.8% of total revenues (excluding other income) compared with 38.6% last year, while the PBITDA was at 11.33% as against 15.28% for the previous year. After Tax profits (including other income decreased to 10% (last year 15.73%).

- General and Admin. Expenses registered a decrease in absolute terms. It was INR 115.79 million and 13.97% as against INR 122.97 million and 13.35 % last year. This is attributable to continued rationalization of infrastructure, travel costs and general admin expenses.

- The company increased its investments in S&M activity, consequently, sales and marketing costs increased in absolute terms at INR 102.35 million and 12.35 % versus INR 74.99 million and 8.23 % recorded last year. Revenues from repeat business remained at 85% at the same level as of previous year

- Employee strength was 499 (women 29%) at the end of the year compared to 538 last fi scal. The attrition rate registered an increase of 17.9% for the year ended March 2010, compared to 14.9% during the previous year.

C) Capital Expenditure

The Company incurred, during the year, INR 4.01 million on technology infrastructure, INR 10.20 million on physical infrastructure, Nil addition on intangible assets. During the previous year the amounts were INR 5.16 million, INR 17.70 million, INR 1.55 million respectively.

D) Liquidity

The liquid assets at the end of the year stood at INR 673.26 million (as against INR 504.16 million last year) and all available surplus cash balances have been deposited with banks. Year end Account Receivables stood at INR 159 million (72 days sales).

E) Share Capital

During the year the Company went for an Initial Public Offer (IPO). The IPO was for a total of 36,46,000 equity shares - consisting of Fresh Issue of 13,50,000 equity shares and an Offer for Sale of 22,96,000 equity shares by Selling Shareholders viz., M/s Euro Indo Investments and Mr. Vinod Ganjoor.

As at the end of the financial year the Companys Equity Share Capital stands at INR 100.52 million, consisting of 1,00,51,581 fully paid up Equity Shares of INR 10 each.

F) Net Worth

The net worth of the Company rose to INR 692.68 million as at 31st March 2010 from INR 468.96 million at the end of the previous fi scal.

G) Dividend

The company has paid an Interim Dividend of Re.1.00 per equity share (10% on par value of Rs.10/- each) on the equity capital of the Company for the financial year 2009-10 (Previous Year fi nal dividend of 10% was paid). This amounts to INR 11.76 Mn, including Dividend Tax. The Board has not recommended any fi nal dividend for the year.

H) Subsidiaries, Branches, Places of Business

The Company has fully owned subsidiaries in USA, Singapore and Germany and Branches in UK and Belgium. In Australia and Hong Kong it has place of business.

The total investments, revenues and profits from these subsidiaries stood at total assets of INR 44.41 Million as at March 31, 2010 (previous year 42.10 Million), total revenues of INR 83.03 Million (Previous year 31.33 Million) and total net profit INR 2.33 Million (Previous year 6.10 Millions) for the year

The statement on the subsidiaries under Section 212 of the Companies Act, 1956 is enclosed, as Annexure 1.

The Company is in the process of incorporating a wholly owned subsidiary at Sharjah.

With a view to have an enhanced Corporate Image for the Company in UK and improved commitment to clients in this geography, the Company has opened a Wholly Owned Subsidiary at UK with effect from 01st April 2010. Ms.Vanaja Arvind, Executive Director has been appointed as the Director of the Company with an initial capital of GBP 2,50,000/-.

The Companys 100% Indian subsidiary, Thinksoft (India) Services Private Limited, has applied for members voluntary winding-up and the liquidation is in process. However, there is no material impact on the realization value of the investments carried in the Balance Sheet.

The Company has taken on lease space at TIDEL Park, Chennai with a view to meet Customer requirements on norms concerning technology, security and other facilities which are required to meet international standards. The delivery centre has 250 seats.

During the year the Company has also taken space at Velankani Information Systems Pvt Ltd at Bangalore, which shall be a delivery centre with about 41 seats.

The company has also set up a Sales and Marketing Offi ce at Stylus Serviced Offi ces, Logitec Park, Mumbai.

I) Tax Exempted Operations

The Company continues to be a 100% Export Oriented Unit (“EOU”) registered with the Software Technology Parks of India (“STPI”). The Company enjoyed a tax holiday for its export earnings under Section 10A of the Income Tax Act, 1961 till the financial year 2009-10.

The Companys premises at TIDEL Park, Chennai and Velankani Information Systems Pvt Ltd at Bangalore have been registered as STPI Units to continue to avail Custom and Excise Tax benefi ts.

During the year company commenced the operation in The MEPZ centre in a small way with the existing infrastructure. The Income from MEPZ is eligible for Income Tax Benefi ts being a SEZ Unit. The MEPZ unit has the potential to house total of 278 seats.

J) Directors

Mr. K.Kumar, Director who was appointed as a director on 17th September 2008, is liable to retire by rotation at the ensuing Annual General Meeting and being eligible offers for reappointment as Director.

K) Auditors

M/s. PKF Sridhar & Santhanam, Chartered Accountants, Chennai retire as the Auditors of the Company at conclusion of the ensuing Annual General Meeting and being eligible offers themselves for re-appointment. The Audit Committee in their meeting held on 30th April 2010 has recommended the reappointment of M/s. PKF Sridhar & Santhanam, Chartered Accountants, Chennai.

L) Conservation of Energy, Technology Absorption, Forex Earnings and Outgo

As required under Section 217(1) of the Companies Act, 1956, and Rules made therein, the particulars of conservation of energy, technology absorption and foreign exchange earnings and outgo are given in Annexure 2, which is attached hereto and forms part of the Directors Report.

M) Delivery Excellence

The Company successfully deploys the Global Delivery Model for its customer engagements. This is supported by the two main offshore delivery centers at Chennai and with onsite presence in customer locations abroad supplemented by our offi ces in London, Singapore, Frankfurt and New Jersey.

The offerings span is from Business Requirements Review through various life cycle testing activities to User acceptance testing and Performance testing. The end goal is for the Company to build and operate a "Testing Centre of Excellence" for its clients to manage both upside and downside risks for the customer. (See diagram):-

Testing Center of Excellence Eco System

Vision

- Road Map

- Continuous Process Improvement Goals

- Organizational Design

Governance

- Dashboard

- Reporting

- Workfl ow

- Program Management

Enablers

- Domain Expertise

- Testing Expertise

- Automation Expertise

- Best Practices

Resourcing

- Core team + On Demand Resources

- Offshore-Onsite Model

Assets

- Reusable Testware/Repository

- Calculators

- Risk Prioritization Matrix

- Trace Matrix

- Training Material

Process

- KPIs

- Standardize Process & Framework

- Building Core Competence

- Knowledge Retention

The Company has been steadily building its Technical competency in non-functional Testing Practices to widen its scope of its offering to cover Performance, Security, Mobile Commerce Testing and Financial Sector Technologies (ATM, POS, etc.)

The Delivery organization handled projects involving about 970,000 person hours during the year bringing our cumulative testing track records to 9.27 Million person hours.

N) Particulars of Employees

The information required under section 217(2A) of the Companies Act, 1956, read with the Companies (Particular of Employees) Rules, 1975, forms part of this report as Annexure 3. The Department of Company Affairs has amended the Companies (Particulars of Employees) Rules 1975 to the effect that particulars of employees engaged in Information technology sector posted and working outside India, not being directors or their relatives, drawing more than INR 24 Lakh per financial year or INR 2 Lakh per month, as the case may be, need not be included in the statement. Accordingly, the statement included in this report does not contain the particulars of employees who are posted and working outside India.

O) Human Potential :

The fundamental credo of the company is “respect for merit” and it strives to inculcate this in relationships with employees and all other stakeholders. We are an equal opportunity employer and are sensitive to every employees right to be given a level playing fi eld to rise to their full potential.

Through structured training programs the in-house training department has been constantly delivering both soft-skills, domain & information security training programs for the resources. For the fi rst time, information security & domain training programs were delivered online and on successful completion of the course & quiz, an online certifi cate was issued. Over 45 training programs in Domain and Tools were conducted last year.

Domain experts in Banking and Credit card industry, conducted work-shops for the Delivery teams, sharing their practical knowledge and updating on the latest practices in the industry.

The key leaders in different functional groups were selected for a Business Leadership Training “Capstone” in IIM- Ahmedabad to enable the organization to groom the second level of operational leaders. Seniors regularly participate in various industry forums like Nasscom, Indo-American Chamber of Commerce, Indo-German Chamber of Commerce and SPIN for delivering talks on current industry trends and concerns.

A Resource Management group is mandated with the task of optimizing the deployment of resources across practices and geographies. The table below shows the average distribution of resources by practice and regions for the year.

Practices %

Banking 37

Credit Cards 39

Capital Markets and Treasury 19

Insurance 5

Total 100

Regions %

India-Chennai 60

Middle-East 24

Europe 11 Rest of the World 5

Total 100

P) Quality, Technology and Systems

The company was successfully recertifi ed for its ISO 9001:2008 and ISO 27001:2005 certifi cations in Jan 2010 for a further three year cycle. All infrastructure and technology systems are geared to maintain Data Integrity, Confi dentiality and Data Security encompassing both customer and in-house domains. This has also been successfully meeting Clients Audit requirements. In order to keep pace with the increasing demands of the financial industry, the roadmap for getting certifi ed on PCI – DSS (Payment Card Industry Data Security Standards) and BITS – AUP standards (Banking Industry Technology for Shared assessments on Information Security for Outsourcing vendors) process has begun, with the identifi cation of consulting partners and initiating those projects.

Along with signifi cant improvements brought in areas of physical security in the new premises at TIDEL Park, technological controls like Encryption, Wireless Intrusion Prevention etc., are being added. Redundancy and Resilience in internet connectivity has been achieved by implementing Border Gateway Protocol, meeting uptime of connectivity in all client networks. Initiatives towards virtualization of Servers and Desktops have been taken up for implementation during 2010-11.

A suite of Test Engineering Automation tools are being maintained and upgraded regularly and an active Process Group is in place to assist the delivery team to achieve operational excellence.

Q) Branding and Recognition

The company regularly participates in important trade shows and events of particular relevance to its business and had a presence in SIBOS (HongKong 2009) , MEFTEC (Bahrain 2009 ), European Banking Forum ( Germany 2010) etc.

The company also presented the ‘Best use of Retail Banking technology –International at Financial Services Technology Awards 2010 in London during March 2010.

The company was also featured in reports by Outsourcing advisory fi rms such as Quantum Step, UK.

During the year the Company received Commendation certifi cate for ‘Commitment to Excel by the Confederation of Indian Industry. This was declared during the award distribution ceremony conducted in Delhi to honor the winners of CII-EXIM AWARD FOR BUSINESS EXCELLENCE, 2009 jointly instituted by Confederation of Indian Industry and Export-Import Bank of India.

R) Environmental awareness

The Company is keenly aware of the need to conserve resources, reduce its carbon footprint and create sustainable alternatives wherever feasible. Towards this end we endeavor to educate and motivate all stakeholders towards applying the REDUCE, RECYCLE, RE-USE, RE-ENGINEER approach.

Some of the measures taken by the company include - Consolidation of operations through reduction in the number of Data centers, replacement of fl at monitors in the place of CRT monitors, reduced number of network devices for multiple clients, Optimization of storage devices.

The Company has also introduced various “go green” initiatives within its offi ce buildings to reduce our electrical power, water and paper consumption like: switching off the air conditioners on a budgeted hours basis, converting over to CFL lightings, replacement of plastic/ paper cups,/plastic bottles with ceramic cups/ glass bottles, Rain water harvesting, use of organic pesticides and eco-friendly housekeeping consumables, storing scanned records in our servers to save paper and considerably save paper through reduced printing.

Towards contributing for Green IT for a safe environment, the e-waste generated in-house are being discarded through vendors who adopt "Safe disposal practices", recycle and re-manufacture the used e-waste like printers, toners and cartridges. These initiatives will be taken forward at a sustained pace.

Installation of Video conferencing in our offi ces has brought down Travel Costs and, consequently, improved energy savings.

S) IPO

During the year the Company went for an Initial Public Offer (IPO). The IPO was for a total of 36,46,000 equity shares - consisting of Fresh Issue of 13,50,000 equity shares and an Offer for Sale of 22,96,000 equity shares by Selling Shareholders viz., M/s Euro Indo Investments and Mr. Vinod Ganjoor.

The Price Band was fi xed at Rs.115 to Rs.125 per share. The Issue opened on 22nd September 2009 and closed on 01st October 2009. The Red Herring Prospectus was fi led with ROC and SEBI on 07th September 2008.

The Issue Price was fi xed at Rs.125/- per share and the Prospectus was approved by the Board of Directors on 06th October 2009. The Equity Shares issued under Initial Public Offer were allotted on 14th October 2009.

The Companys Equity Shares got successfully listed on 26th October 2009 in National Stock Exchange of India Ltd (NSE) which is the Designated Stock Exchange and Bombay Stock Exchange Limited (BSE).

The Company raised Rs.168.75 millions through IPO. Public Issue Expenses were Rs.15.60 millions, resulting in net proceeds of Rs. 153.15 millions.

T) Risk Management

The companys enterprise risk management approach consists of the following:

- Quarterly Internal Audit by an independent outside fi rm

- Regular process compliance audits for ISO 9001 and ISO 27001 standards conducted by external Auditor

- Periodic audits of compliance to other regulatory frameworks

- Annual Capital and Revenue Budget Planning followed by monthly reviews

- Annual Sales Planning with monthly monitoring

- Annual Perspective and Strategic planning exercise with yearly update

- Conservative approach to funds planning with zero debt and no forex hedging

U) Corporate Governance

A separate section on Corporate Governance forming part of the Directors Report and the certifi cate from the Companys auditors confi rming compliance of Corporate Governance norms as stipulated in Clause 49 of the Listing Agreement with National Stock Exchange of India (NSE) and Bombay Stock Exchange of India (BSE) is included in the Annual Report.

V) Corporate Social Responsibility

- During the year contributed INR 0.30 Million to the ‘Sadhya Program of Vidhya Sagars Spastics society, an NGO dedicated to the welfare and development of Spastics Children.

- As a part of Corporate Social Responsibility the company contributed towards Donation for Juvenile Diabetes Research Foundation, Australia a sum of A$ 3000 (INR 0.13 Million) to Cure Diabetes

- The Company has also decided to set aside certain percentage of its profits towards contributions for such activities in the coming years.

W) Directors Responsibility

Pursuant to Section 217(2AA) of the Companies Act, 2000, the Directors confi rm that:

(i) They accept responsibility for the integrity and objectivity of these accounting statements

(ii) The financial statements are prepared in accordance with the guidelines and standards of the ICAI and Companies Act 1956, to the extent applicable. There are no material departures from the abovementioned standards.

(iii) such standard accounting policies have been applied consistently, except as otherwise stated.

(iv) the judgments and estimates have been made on a reasonable and prudent basis so that the financial statements provide a true and fair view of the state of affairs of the Company at the end of the fi nancial year

(v) the directors have taken proper and suffi cient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(vi) the Annual Accounts are prepared on a going concern basis and on an accrual basis

X) Acknowledgements

The Directors wish to place on record their appreciation and thanks for the support given by their Customers, Vendors, Bankers and Government Agencies. In particular, the directors wish to acknowledge the continued the support from Messrs. Lakshmi Vilas Bank, Chennai and Messrs. ICICI Bank, Chennai, STPI - Chennai, and Messrs. MEPZ-, Tambaram, NSE, BSE, NSDL & CDSL. We also express our gratefulness to our employees who have played their parts with dedication and commitment.

For and on behalf of Board of Directors Thinksoft Global Services Limited

A. V. Asvini Kumar Vanaja Arvind

Managing Director Executive Director

Place: Chennai

Date: April 30,2010

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